Farmer v. People's Bank

• Decision Date: 18 December 1897
• Parties: FARMER v. PEOPLE'S BANK.
• Court: Tennessee Supreme Court

Page 234

47 S.W. 234

FARMER v. PEOPLE'S BANK.

Supreme Court of Tennessee.

December 18, 1897.

Appeal from circuit court, Robertson county; A. H. Munford, Judge.

Action by R. W. Farmer against the People's Bank. There was a judgment for defendant, and plaintiff appeals. Reversed.

E. A. Hicks and R. L. Peck, for appellant. L. T. Cobbs and A. E. Garner, for appellee.

BEARD, J.

This suit was brought to recover the proceeds of a check of which plaintiff in error claimed to be the owner, and which he alleged had wrongfully gone into the possession of the defendant in error, and had been collected by it. The evidence in the case tends to show that Farmer delivered to one Head a small lot of tobacco, to be put in order for market; that, when so prepared, Head sent it to his merchants in Nashville, who, having sold it, returned to him the net proceeds of the sale, in their check on the Fourth National Bank of Nashville,— payable, however, to the order of plaintiff in error; that, instead of delivering it to the payee, Head, without his knowledge or consent, indorsed the payee's name upon it, and delivered it to the defendant bank, whose officers, supposing this indorsement to be genuine, and without suspicion as to the title of Head, placed it to his credit, and permitted him to check it out; that it then forwarded the check to its correspondent, who in due time presented it to the drawee, and, receiving from it the amount thereof, remitted it to the defendant bank. Declining to pay to Farmer the sum so collected, this suit was instituted.

In the course of his charge to the jury, the trial judge said: "If you find from the evidence that the draft in question was drawn by Dortch, Carsey & Company, in favor of plaintiff, on the Fourth National Bank of Nashville, and that his name was indorsed on the back of the draft, but that such indorsement was a forgery, then the draft was not legally indorsed, and should not have been paid; but if the defendant simply received the draft from Riley Head as a deposit, placing it to Head's credit, and afterwards had it collected from the Fourth National Bank, and the defendant acted in good faith, not knowing the indorsement of plaintiff's name was a forgery, then the defendant would not be liable to plaintiff for said draft, and you should find for the defendant." While there is obscurity in the first clause of this paragraph,—the result, no doubt, of clerical omission in the transcript, —in the concluding part the jury are very distinctly told that if they should find the defendant bank simply took this check or draft as bailee for collection, in good faith and without knowledge of the forged indorsement of the payee's name, then it would not be liable, though it had received its proceeds, and paid them over to Head. There was error in giving this instruction, for which the case must be reversed. While the exact question here presented has not been heretofore raised in this state, yet the ultimate principle upon which it rests for determination has been recognized and applied by this court. In Pickle v. Muse, 88 Tenn. 381, 12 S. W. 919, the well-settled rule was announced that "a check drawn in favor of a particular payee or order is payable only to the actual payee or upon his genuine indorsement; and if the bank mistake the identity of the payee, or pay upon a forged indorsement, it is not a payment in pursuance of authority, and...