First State Bank of Wichita Falls v. Oak Cliff Savings & Loan Ass'n

• Decision Date: 10 February 1965
• Docket Number: No. A-10273,A-10273
• Citation: 387 S.W.2d 369
• Court: Texas Supreme Court
• Parties: FIRST STATE BANK OF WICHITA FALLS, Petitioner, v. OAK CLIFF SAVINGS & LOAN ASSOCIATION, Respondent.

Page 369

387 S.W.2d 369

FIRST STATE BANK OF WICHITA FALLS, Petitioner, v. OAK CLIFF SAVINGS & LOAN ASSOCIATION, Respondent.

No. A-10273.

Supreme Court of Texas.

Feb. 10, 1965.

Rehearing Denied March 17, 1965.

Malone, Seay & Gwinn, Dallas, for petitioner.

Coke & Coke, Jere D. Turner with firm, Dallas, Bailey & Williams, Lawrence R. Maxwell, Jr., with firm, Dallas, for respondent.

NORVELL, Justice.

Upon proper motions, the trial court rendered summary judgment in favor of Oak Cliff Savings & Loan Association against American Bank & Trust Company for the sum of $6,337.67. The American Bank was awarded a recovery over against First National Bank in Dallas, which likewise recovered from First State Bank of Wichita Falls. The bank last named was also awarded a recovery over against Perry T. Grisham and Fredda B. Grisham. The actual parties at interest in this litigation are Oak Cliff Savings & Loan Association and First State Bank of Wichita Falls. The Court of Civil Appeals affirmed. 379 S.W.2d 952.

In essence, the petitioner, First State Bank of Wichita contends that the judgments below should be reversed (1) because the negligence of the respondent, Oak Cliff Savings & Loan Association, occasioned or contributed to the payment of the proceeds of a check to Fredda Grisham (this was asserted defensively and by action over against Oak Cliff), and (2) because Fredda Grisham occupied the position of an 'impostor in law' with reference to Oak Cliff, the drawer of the check, and hence the loss should be borne by the savings and loan association and not by the Wichita Falls bank, which paid out the money to the so-called impostor.

In our opinion these contentions cannot be sustained and accordingly we affirm the judgments of the courts below.

The Facts Disclosed by the Summory Judgment Evidence

This cause resulted from a swindle perpetrated by Mrs. Perry T. (Fredda) Grisham, who, in some way, learned that there was a sum of money on deposit at the Oak Cliff Savings & Loan Association at Dallas to the credit of Flora Grisham, Independant Executrix of the Estate of I. T. Grisham. Fredda Grisham was a resident of Wichita Falls, Texas, where Mrs. Flora Grisham also resided. On May 31, 1961 Fredda Grisham appeared at the First State Bank of Wichita Falls and represented that she was Flora Grisham; that she wished to withdraw such money as she might have on deposit with the Oak Cliff Savings & Loan Association and deposit the same with said First State Bank of Wichita Falls. She stated that she did not remember the exact amount on deposit with the savings and loan association; so a draft was prepared directed to Oak Cliff in favor of the Wichita Falls bank. This draft was signed by Fredda Grisham as 'Flora Grisham, Independent Executrix of the Estate of I. T. Grisham' and no certain sum was set forth therein. The word 'balance' appears on the face of the draft and the collection letter stated, 'Draft on you by Flora Grisham, Independent Executrix of the Estate of I. T. Grisham. Please remit through First National Bank in Dallas-Balance.'

It is not the practice of savings and loan associations to honor drafts as such and, accordingly, this draft was not paid. The savings and loan association, however, prepared a check dated June 2, 1961 drawn on the American Bank & Trust Company payable to 'Flora Grisham, Independent Executrix of the Estate of I. T. Grisham' for $5,669.05, the amount of the Grisham account. This check was forwarded to the First National Bank in Dallas with a request that the check be not released until the pass book of the savings account had been obtained so that it could be forwarded to Oak Cliff.

After a number of telephone calls from the First National Bank in Dallas, Mrs. Beatrice Martin, an officer in charge of accounts for Oak Cliff, received a call from J. R. Cummings, an officer of the Wichita Falls bank. As to this telephone conversation, Mrs. Martin stated in her deposition that Mr. Cummings 'identified himself as an officer of the (Wichita Falls) bank and said that we (Oak Cliff) were working a hardship on our customer by demanding that the pass book be surrendered for it seemed that the pass book had been lost and could not be surrendered. * * * I told him our standard practice was to require the pass book. He indicated that they knew the customer, that a real estate transaction was involved, and that they needed their funds desperately. * * * Upon the word of an officer of the bank, I told him we would release the check. * * * I called Mrs. Walton at the (First National) bank and told her we would release the check. * * *'

Had Mrs. Martin's version of this conversation been incorrect or untrue Mr. Cummings could have easily corrected or contradicted it. In his affidavit Cummings simply stated that after making inquiries of the First National Bank in Dallas he 'contacted Beatrice Martin, Vice President of the Oak Cliff Savings & Loan Association, regarding the pass book and at that time she waived the presenting of the pass book and did not require us (the Wichita Falls bank) to obtain affidavit of lost pass book and she notified First National Bank in Dallas to release Oak Cliff Savings & Loan Association check to us in payment of the draft, which we had sent for collection.' The check was accordingly released to the Wichita Falls bank and delivered by it to Fredda Grisham, who endorsed it as 'Flora Grisham, Independent Executrix of the Estate of I. T. Grisham.' The proceeds thereof at the request of Fredda Grisham were deposited in the Wichita Falls bank to the credit of the account of 'Mr. and Mrs. Perry Grisham.' Seemingly, this circumstance did not arouse the suspicions of the officers of the Wichita bank. These funds were later withdrawn from the account and presumedly dissipated by Fredda Grisham and her husband.

Mrs. Flora Grisham is the widow of I. T. Grisham, deceased, who had opened the account with Oak Cliff. In the spring of 1962 she requested payment of the money in the account of 'Flora Grisham, Indepent Executrix of the Estate of I. T. Grisham.' The fraud of Fredda Grisham was then discovered. Oak Cliff paid Mrs. Flora Grisham and brought suit against American Bank & Trust Company for an unauthorized payment out of its funds on deposit with said bank. American asked for a recovery against First National upon its endorsement of the check of June 2, 1961, and that bank requested similar relief against the Wichita Falls bank. The Wichita Falls bank pleaded over against Oak Cliff, contending that the unwarranted payment of the proceeds of the check to Fredda Grisham was occasioned by the acts and omissions of Oak Cliff.

The Asserted Negligence of Oak Cliff

It is conceded by the parties that under a contract of deposit, a bank obligates itself to pay funds to such persons or entities as the depositor may direct and to no others; that a depository bank which pays out money upon a forged endorsement may not legally charge the amount so paid out to the depositor's account in the absence of unusual conditions, and that ordinarily the bank paying out funds upon a forged endorsement must stand the loss.

The Wichita Falls bank paid out the funds in the case now before us and now contends that the American bank (Oak Cliff depository bank) had a good defense against the demand of Oak Cliff for the return of the money paid out on the forged endorsement which it (the Wichita Falls bank) is entitled to assert in this suit. Seemingly, it is also asserted that there are special circumstances existing between Oak Cliff and the Wichita Falls bank which would render it unfair or inequitable for the bank to be charged with the loss occasioned by Fredda Grisham's fraudulent conduct. This position is stated by Mr. Cummings, the Wichita Falls bank official, in his affidavit as follows:

'Had we been placed on notice of any kind by Oak Cliff Savings & Loan Association that the purported signature of Flora Grisham, their own depositor, was not the true signature of Flora Grisham, the subject money would not have been delivered to Mrs. Perry Grisham, we would not have guaranteed her endorsement and we would have required additional verification of such signature before clearing such check.'

The Wichita Falls bank attempts to raise some species of estoppel which would prevent the enforcement of the general rule that the loss falls upon the party who pays out money upon a forged endorsement. In our opinion the position of the Wichita Falls bank cannot be sustained either upon the premise that such bank stood in the shoes of the Oak Cliff depository bank (American) or upon the theory that Oak Cliff misled the Wichita Falls bank and thus caused them to cash the check and deliver the proceeds to a forger. The check drawn by Oak Cliff was an order to pay 'Flora Grisham, Independent Executrix of the Estate of I. T. Grisham' the sum of $5,669.05, and unless such sum was paid to the anmed payee, it could not lawfully be charged against the Oak Cliff account. This legal situation is not modified nor the liability of the Wichita Falls bank avoided because Oak Cliff, at the time American paid the check, had no signature card in its files signed by Flora Grisham or the circumstance that it held in its files a letter signed by the genuine Flora Grisham, as well as the purported draft signed by the spurious Flora Grisham. It is not customary for banks to make inquiry of depositor's files before ascertaining the identity of persons presenting checks for payment as payees. If inquiry as to identity had been made, we might have a different situation, but a depositor is not required to volunteer information nor to anticipate that its depository will pay out funds upon foregeries. We agree with respondent that petitioner's arguments might have some application to the duty owned to one investing or depositing money with Oak Cliff, but the lack of a signature card in Oak Cliff's files does not lessen the duty...