First Nat. Bank of Weslaco v. Patty, 9123.

• Decision Date: 14 June 1933
• Docket Number: No. 9123.,9123.
• Citation: 62 S.W.2d 629
• Parties: FIRST NAT. BANK OF WESLACO v. PATTY.
• Court: Texas Court of Appeals

62 S.W.2d 629

FIRST NAT. BANK OF WESLACO v. PATTY.

No. 9123.

Court of Civil Appeals of Texas. San Antonio.

June 14, 1933.

Rehearing Denied July 26, 1933.

Appeal from District Court, Hidalgo County; R. M. Bounds, Judge.

Suit by Austin Patty against the First National Bank of Weslaco, Texas. From a judgment for plaintiff, defendant appeals.

Affirmed.

S. N. McWhorter, of Weslaco, and West & Hightower, of Brownsville, for appellant.

Kelley, Looney & Norvell, of Edinburg, for appellee.

SMITH, Justice.

For several years appellee, Austin Patty, has operated a grocery store in Weslaco with the assistance of his son, Richard, now twenty-two years old. It seems that neither of them knew much about the art of bookkeeping and kept no regular set of books. In this situation appellee employed one Mrs. Christine Reid to audit the affairs and open a set of books for the business, and to teach the son, Richard, to keep the books. Mrs. Reid entered upon her duties on January 3, 1932, and at once assumed charge of the bookkeeping, including the firm's account with appellant, the First National Bank of Weslaco. Within the first week she began a series of forgeries of checks drawn against appellee's account at the bank, signing appellee's name to the checks. Twenty-one such checks were drawn during a period of four months, and the proceeds thereof, aggregating $971, were collected and appropriated by Mrs. Reid. Upon a jury trial appellee recovered said amount from the bank, which has appealed.

It appears that appellee's deposits in the bank were usually made in person by his son, except that occasionally this office was performed by Mrs. Reid. From the beginning of her employment, however, the latter in person obtained from the bank the monthly statements of appellee's account and the canceled checks covered by those statements. She would take the statement and checks to the store, where she and Richard Patty together compared and filed them away. She always wrote the forged checks upon blanks abstracted from the firm's check book, and before comparing the statements with the canceled checks she abstracted and destroyed the forged instruments and so concealed them from appellee and his son. And in checking over the statement with the books of the firm she manipulated the calls and entries, thereby completing the delusion of father and son, who, suspecting nothing, made no investigation or check or comparison which, if made, would have instantly disclosed the deception so easily practiced upon them. It was shown that appellee and his son at all times had access to the bank statements and firm books disclosing the forgeries, and that they could easily have discovered the fraud. All the bank statements bore on their faces in bold type the familiar indorsement: "Please examine at once. If no error is reported in ten days, the amount will be considered as correct." Appellee and his son trusted Mrs. Reid completely, however, although a stranger to them when appellee employed her. They put her forward in the firm's dealings with the bank, thereby holding her out to the bank as their authorized representative, at least for the purpose, sometimes, of making deposits, and always of receiving the firm's statements and canceled checks. Her forgeries were finally discovered by appellant in this way: She forged a check upon another bank and cashed it at appellant's bank, which presented it to the drawee, which refused to pay it because of "insufficient funds." Appellant thereupon called the dishonored paper to the attention of appellee, who detected the forgery, and this led to an investigation which disclosed the prior forgeries. Mrs. Reid, admitting her forgeries, was discharged by appellee, was indicted by the grand jury, and, pending her trial thereon, was the principal witness, as well, apparently, as a very willing witness, for appellee upon the trial of this cause.

Appellant defended this suit upon the obvious defense of estoppel, alleging and proving that if appellee had promptly repudiated the first forged checks appellant not only would not have paid any more of them, but would have collected the amounts already paid, thereby protecting the bank, as well as appellee, from any loss; that by acquiescing in the payment of the first of the forged instruments appellee thereby led appellant into paying those that followed and is now estopped to deny the forger's authority to bind him.

The jury found that appellee was not negligent in failing, prior to February 10, 1932, to examine his canceled checks, statements, and passbook, and discover the forgeries theretofore committed and thereby disclosed, but that he was...