First Nat. Bank of Mt. Vernon, Ohio v. First Nat. Bank of Lincoln, Ill.

• Decision Date: 02 March 1903
• Parties: FIRST NAT. BANK OF MT. VERNON, OHIO, v. FIRST NAT. BANK OF LINCOLN, ILL.
• Court: Ohio Supreme Court

67 N.E. 91

68 Ohio St. 43

FIRST NAT. BANK OF MT. VERNON, OHIO, v. FIRST NAT. BANK OF LINCOLN, ILL.

Supreme Court of Ohio.

March 2, 1903

Error to Circuit Court, Knox County.

Action by the First National Bank of Lincoln, Ill., against the First National Bank of Mt. Vernon, Ohio. From a judgment of the circuit court, affirming a judgment sustaining a demurrer to the answer, defendant brings error. Affirmed.

The First National Bank of Lincoln, Ill., brought suit in the court of common pleas of Knox county against the First National Bank of Mt. Vernon, Ohio, alleging a state of facts in substance as follows: On the 1st of March, 1897, one Frank Frorer executed his negotiable promissory note of that date for the sum of $2,056, payable to the order of Mrs. C. A Rowley and F. S. Rowley, her husband, at the First National Bank of Lincoln, Ill. The note came into the possession of the Lincoln bank indorsed: ‘ C. A. Rowley,’ ‘ F. S. Rowley,’ ‘ Jerome Rowley.’ ‘ Pay First National Bank Lincoln, Illinois, or order. First National Bank Mt. Vernon, Ohio. Fred E. Sturges Pres.’ The signature of Mrs. C. A. Rowley as an indorser of the note was forged. The Lincoln bank received the note in the due course of business, and, relying upon the genuineness of all the signatures appearing upon the note presented the same to the maker for payment, and the amount of the note was paid to it by the maker, and by it to the Mt Vernon bank. Mrs. Rowley thereupon brought suit in the circuit court of Logan county, Ill., against the maker of said note, to compel him to pay to her one-half of said note, she alleging that her signature as indorser of the note was forged, and that she had never received any part of the one-half of the proceeds of said note which belonged to her. She recovered a judgment for the amount claimed. Thereupon the maker of said note, relying upon the warranty of the Lincoln bank that Mrs. Rowley's signature as indorser was genuine, notified it in writing of the said forgery, and demanded that it repay to him the amount of Mrs. Rowley's judgment. The Lincoln bank thereupon notified the Mt. Vernon bank of that demand, and notified it further that it would require the Mt. Vernon bank to protect the plaintiff, and make good any sum that it might have to pay the maker of said note upon his said demand. The Mt. Vernon bank refused to pay the amount demanded either to the plaintiff or to the maker of said note, and the Lincoln bank refused to pay to the maker the sum demanded by him, and thereupon the maker of said note, Frorer, brought suit against the Lincoln bank to recover the amount which he had been adjudged to pay to Mrs. Rowley. The Lincoln bank gave notice to the Mt. Vernon bank of the bringing of said suit, furnishing it a copy of the declaration therein, and requested it to appear in said suit, and make such defense as it might desire in view of its liability to the Lincoln bank by reason of its warranty that the signatures were genuine; and afterward the Lincoln bank gave to the Mt. Vernon bank timely notice of the day upon which said cause was set for trial; but the Mt. Vernon bank made no defense to said action, nor did it render any assistance in the defense. A judgment against the Lincoln bank was recovered by the maker of the note for the sum of $1,166.81 and costs of suit, and the prayer of the present petition is that the Lincoln bank may recover that amount from the Mt. Vernon bank. The Mt. Vernon bank answered the petition of the plaintiff, the material portion of its answer being: ‘ The defendant denies that the indorsement of the name of C. A. Rowley on the back of said note was a forgery. On the contrary, it avers that said indorsement was the true and genuine signature of said C. A. Rowley.’ To this answer the Lincoln bank demurred. The demurrer was sustained, and, the defendant not desiring to answer over, a judgment was rendered in favor of the Lincoln bank for the amount which it claimed.

Syllabus by the Court

1. One who indorses and delivers a negotiable promissory note in the usual course of business thereby undertakes that the signatures of all prior indorsers are genuine.

2. In an action brought upon that undertaking by an indorsee to recover the amount which he has been adjudged to pay in consequence of the forgery of the signature of a prior indorser, the plaintiff having given to the defendant timely...