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

• Decision Date: 22 May 1964
• Docket Number: No. 3874,3874
• Citation: 379 S.W.2d 952
• Parties: FIRST STATE BANK OF WICHITA FALLS et al., Appellants, v. OAK CLIFF SAVINGS & LOAN ASSOCIATION et al., Appellees.
• Court: Texas Court of Appeals

Page 952

379 S.W.2d 952

FIRST STATE BANK OF WICHITA FALLS et al., Appellants, v. OAK CLIFF SAVINGS & LOAN ASSOCIATION et al., Appellees.

No. 3874.

Court of Civil Appeals of Texas, Eastland.

May 22, 1964.

Rehearing Denied June 12, 1964.

Malone, Seay & Gwinn, Robert A. Gwinn, Coke & Coke, Jere D. Turner, Dallas, for appellants.

Bailey & Williams, R. T. Bailey, Brundidge, Fountain, Elliott & Churchill, L. E. Elliott, Dallas, for appellees.

COLLINGS, Justice.

Oak Cliff Savings & Loan Association brought suit against the American Bank & Trust Company of Dallas, Texas, to recover funds paid on a forged indorsement. The American Bank & Trust Company, hereafter referred to as American Bank, brought a third party action, jointly and severally, against the First National Bank in Dallas, hereafter called First National and the First State Bank of Wichita Falls, hereafter called Wichita Falls Bank, alleging that the First National and the Wichita Falls Bank had guaranteed the forged indorsement on the check which had been paid by the American Bank. The First National also brought action against the Wichita Falls Bank on the ground that the indorsement on the check had been guaranteed by that bank. The Wichita Falls Bank brought a third party action against the forger of the check and sought judgment for any amount it might be required to pay by reason of the forged indorsement, and also brought a third party action against Oak Cliff Savings & Loan Association, hereafter referred to as Oak Cliff Savings, alleging that the loss for which the association sought recovery was caused or contributed to by various negligent acts and omissions on the part of its officers and employees.

The trial court granted the motion of Oak Cliff Savings for summary judgment against American Bank for the amount of its loss with interest thereon, granted summary judgment in favor of American Bank against the First National and the Wichita Falls Bank for any sum that American Bank might be called upon to pay to Oak Cliff Savings. A similar summary judgment was entered for the First National against the Wichita Falls Bank. The court denied the Wichita Falls Bank any recovery against Oak Cliff Savings on its claim for contribution or indemnity but did grant judgment in favor of the Wichita Falls Bank against the forger of the check and her husband in the same amount as the judgment rendered against it.

Appellant Wichita Falls Bank presents points in which it is contended that the court erred in rendering summary judgment for Oak Cliff Savings against American Bank, in rendering judgment in favor of American Bank over against the First National and the Wichita Falls Bank, and erred in rendering judgment in favor of the First National over against the Wichita Falls Bank because appellant contends there were controverted issues of fact concerning (1) whether Oak Cliff Savings was negligent in not detecting the forgery of the indorsement in question, and (2) whether the person who indorsed the check was an 'imposter in law'. Appellant Wichita Falls Bank also contends that the court erred in rendering judgment against it and in favor of Oak Cliff Savings on appellants' third party action for indemnity or contribution because there were controverted issues of fact as to whether Oak Cliff Savings was negligent in not detecting the alleged forged indorsement in time to have prevented appellant from paying the check to the wrong person.

In 8 Tex.Jur.2d on page 451 it is stated:

'Generally, a bank may not charge against its depositor the payment of any check on the forged indorsement of the payee, or of paper bearing a forged indorsement.'

On page 452 of the same volume the exception to the above stated general rule is set out as follows:

'Consequently, a depositor may compel restitution of funds paid by a bank on a forged indorsement, unless his negligence or default has misled the bank.'

Appellants' contention is that the instant case comes within the exception to the general rule as above set out. Appellant, First State Bank of Wichita Falls, contends that the record shows or at least raises an issue of fact upon the question of whether Oak Cliff Savings & Loan Association was negligent in not detecting the forgery of the indorsement in question.

It is undisputed that a person by the name of I. T. Grisham opened an account with Oak Cliff Savings in 1956, and that the association pursuant to its established policy required a signature card to be signed by I. T. Grisham and delivered a pass book to Grisham showing the amount of the account. Thereafter, I. T. Grisham died and Oak Cliff Savings, upon learning of his death, changed the name of the account to the 'Estate of I. T. Grisham' but did not attempt to reflect such account name change on the savings' pass book which had been issued to Mr. Grisham, and did not obtain a signature card from any one authorized to make deposits or withdrawals from said account. In about March 1961, Flora Grisham was appointed Independent Executrix of the estate of her husband I. T. Grisham and Oak Cliff Savings was furnished with letters testamentary granted by the Probate Court. Oak Cliff Savings thereupon changed the name of the account to 'Flora Grisham, Independent Executrix of the Estate of I. T. Grisham'. However, no change was made on the savings' pass book which had been issued to I. T. Grisham, deceased, and the association did not obtain from Mrs. Flora Grisham an authorized signature card. It is further undisputed that thereafter Flora Grisham, who was the Independent Executrix of her husband's estate, had occasion to write a letter to Oak Cliff Savings on May 1, 1961, and that said letter remained at all times thereafter with the association showing a true and correct copy of the signature of said Flora Grisham.

Oak Cliff Savings had a checking account with American Bank & Trust Company in Dallas. The amount of the account which the Savings and Loan Association owed to Flora Grisham, Independent Executrix, at the time material hereto was $5,669.05. At that time a Mrs. Perry T. Grisham, also referred to as Fredda B. Grisham, went to appellant Wichita Falls Bank and represented herself to be 'Flora Grisham, Independent Executrix of the Estate of I. T. Grisham.' After some conversation with an employee of appellant Wichita Falls Bank a sight draft was prepared on Oak Cliff Savings with the amount left blank. Mrs. Perry T. Grisham signed the draft 'Flora Grisham, Independent Executrix of the Estate of I. T. Grisham', and the draft was sent direct to First National in Dallas for collection, which in turn presented the draft to appellee Oak Cliff Savings which refused payment thereon. The Savings and Loan Association did, however, after a telephone conversation with an employee of the Wichita...