Fletcher American Nat. Bank v. Crescent Paper Co., 23672.

• Decision Date: 07 June 1923
• Docket Number: No. 23672.,23672.
• Parties: FLETCHER AMERICAN NAT. BANK v. CRESCENT PAPER CO.
• Court: Indiana Supreme Court

193 Ind. 329

139 N.E. 664

FLETCHER AMERICAN NAT. BANK

v.CRESCENT PAPER CO.

No. 23672.

Supreme Court of Indiana.

June 7, 1923.

Appeal from Superior Court, Marion County; V. G. Clifford, Judge.

Action by Crescent Paper Company against Fletcher American National Bank. Judgment for plaintiff, and defendant appeals. Reversed with directions.Pickens, Cox & Conder, of Indianapolis, for appellant.

Charles O. Roemler and Harry O. Chamberlin, both of Indianapolis, for appellee.

EWBANK, J.

Appellee sued, as plaintiff below, to recover from appellant, defendant below, the sum of $10,087.65, alleged to have been deposited by plaintiff in a bank operated by defendant, and wrongfully paid out on ten checks drawn by plaintiff against said deposit, to a person other than the payees named in the checks. The first of these checks was drawn July 13, 1915, and the last on May 10, 1916, the others being drawn at intervals of about a month between those dates, and the last was paid on or near the day it was drawn. All named H. Lindenmeyer & Sons as payee, and bore the indorsement “For deposit H. Lindenmeyer & Sons, H. Lindenmeyer,” and also the indorsement of a bank in which they were deposited by the person who so indorsed them. But it was alleged that the indorsement of the name of H. Lindenmeyer & Sons was forged. Demurrers to certain answers were sustained and defendants excepted. A verdict in favor of the plaintiff for $51.96 having been returned, the plaintiff filed its motion for a new trial, which was sustained, and the defendant (appellant) excepted. A second verdict was returned in favor of the plaintiff for the full amount of the demand, with interest, in the total amount of $11,621.49, for which judgment was rendered. Defendant's motion for a new trial was overruled, to which ruling it excepted, and perfected a term appeal. Sustaining demurrers to each of the second and third paragraphs of answer, granting plaintiff a new trial, and overruling defendant's motion for a new trial are assigned as errors.

The complaint was in ten paragraphs, all substantially alike, except that each counted upon the alleged payment, on a forged indorsement of the name of the payee, of a check differing in amount, in date of execution, and in date of payment from the checks set in other paragraphs. The first paragraph alleged, in substance, that plaintiff kept its banking account with defendant, and had on deposit large sums of money subject to check; that on July 13, 1915, plaintiff drew its check to the order of H. Lindenmeyer & Sons for $968.85, but that the check was stolen from plaintiff's possession by an employee named Preston, who indorsed on the back the name of H. Lindenmeyer & Sons without authority so to do, and that such indorsement was a forgery; that Preston then deposited it in a designated state bank to the credit of a fictitious account which he opened with that bank in the name of H. Lindenmeyer & Sons, all without the knowledge or consent of plaintiff, or of said H. Lindenmeyer & Sons; that in due course of business said state bank presented the check, as so indorsed, to defendant for payment, and without the knowledge or consent of plaintiff or said H. Lindenmeyer & Sons, defendant paid it to said state bank, and deducted the amount from plaintiff's account; that on the fifth of the next month said check was canceled and returned to plaintiff, but was stolen from plaintiff by its said employee, and destroyed, so that a return thereof cannot be tendered; and for that reason, also, plaintiff did not learn or know of said forged indorsement until June 10, 1916, whereupon it immediately notified defendant of the same. And that on July 25, 1916, plaintiff informed defendant of its inability to tender back the check and the reason therefor, and demanded of defendant the said sum, which demand was refused.

The second paragraph differed from the first in that it counted upon a check for $655.05, dated, deposited, and paid August 13, 1915, which was canceled and returned on the 5th of the next month. And the other paragraphs, respectively, counted on checks which were drawn and paid, respectively, in September, October, and November, 1915, and in January, February, March, April, and May, 1916, each being canceled and returned on the 5th of the month after its payment, the checks differing in the amount for which they were drawn, but all the paragraphs being otherwise, in substance, the same as the first paragraph.

[1] The first paragraph of the answer was a denial. The second was addressed separately to each paragraph of the complaint, and alleged that it was, and long had been, a rule and custom in defendant's banking business to balance the accounts of depositors, including plaintiff, at the end of each month, and to return the canceled checks, with a statement of the depositor's account, and the balance owing by defendant to such depositor, which rule and custom was known to plaintiff; that pursuant thereto on a day in August, 1915, and in every succeeding month, to and including July, 1916, the defendant balanced plaintiff's account with the bank and canceled and returned its checks received during the previous month; but that plaintiff failed and neglected to examine the canceled checks when so returned, and failed and neglected to notify defendant of any error or mistake in any of the statements of account so returned to it, but acquiesced in and approved each statement of account, and the balance therein stated as owing by defendant to plaintiff. No facts were alleged tending to deny the averment in the complaint as to plaintiff's ignorance of the fact that the indorsements on the checks were forged, or tending to show that plaintiff would have known of that fact if it had exercised care in examining the canceled checks, or that plaintiff's alleged failure to examine the canceled checks and account caused defendant to pay out money on the forged checks. And since the answers fail to state facts constituting an estoppel, or facts showing that the alleged negligence of plaintiff was the proximate cause of defendant's loss in paying the checks, or that it had anything whatever to do with such payments, or with any resulting loss to defendant, it was not error to sustain a demurrer to this paragraph of answer. Jordan Marsh Co. v. National Shawmut Bank, 201 Mass. 397, 87 N. E. 740, 22 L. R. A. (N. S.) 250;Los Angeles Inv. Co. v. Home S. Bank, 180 Cal. 601, 182 Pac. 293, 5 A. L. R. 1193;Critten v. Chemical N. Bank, 171 N. Y. 219, 229, 63 N. E. 969, 57 L. R. A. 529.

[2] The third paragraph of answer differs from the second in alleging that after the canceled checks were returned to defendant, bearing the forged indorsements, they and the statements of account returned by plaintiff with them were examined by said Preston, the alleged forger, in the discharge of his alleged duties as an employee of defendant, instead of alleging as did the second paragraph that defendant failed and neglected to examine them. But nothing is stated as to what was disclosed by such examination, as distinguished from what Preston knew by reason of having, himself, purloined the checks, forged the indorsements, and made the deposits in the name of the payee. Preston was not acting within the scope of his employment when he fraudulently induced his employer to execute the checks, stole them, forged the name of the payee, and negotiated them, and his employer was not charged with any knowledge obtained by him in doing those unlawful acts. Prudential Ins. Co. v. National Bank of Commerce, 227 N. Y. 510, 125 N. E. 824, 826, 15 A. L. R. 146, 148;Shipman v. Bank of the State, 126 N. Y. 318, 27 N. E. 371, 12 L. R. A. 791, 22 Am. St. Rep. 821; Critten v. Chemical N. Bank, supra; First Nat. Bank v. Farrell (C. C. A.) 272 Fed. 371, 16 A. L. R. 651, certiorari denied, 257 U. S. 634, 42 Sup. Ct. 48, 66 L. Ed. 408. Pomeroy, Eq. Juris, § 675. See note, 15 A. L. R. 163.

[3] And since it is not made to appear by anything alleged in the third paragraph of answer that Preston learned any facts by an examination of the returned checks and account from which plaintiff would have known of the forgeries if all that he so learned had been communicated to it, this paragraph was insufficient on demurrer.

[4] Appellant complains of the insufficiency of the evidence, in that there was no evidence that plaintiff ever presented a check for the money in controversy, and was refused payment, or ever made any other than an oral demand for it. The undisputed evidence showed that the plaintiff continued to make deposits in defendant's bank, and had never attempted to close out its account. And appellant insists that the bank was under no obligations to pay out any of the money deposited with it when orally demanded, but only in payment of checks as they should be presented. But after the bank had sent to plaintiff statements of account, showing that plaintiff was charged with the amount of certain checks paid on forged indorsements, and was credited only with so much of its deposits as remained after deducting those charges, inclosing the canceled checks as vouchers, and, when asked, had refused to correct the account, and denied all liability for what had been so paid out, a formal demand by presenting a check to withdraw the balance claimed was unnecessary. A party is not required to do a useless act. After a controversy had arisen, and the bank had definitely disclaimed all liability for the amount of the canceled checks, any further demand could have served no useful purpose. First Nat. Bank v. Peck, 180 Ind. 649, 659, 103 N. E. 643;Pratt v. Union Nat. Bank, 79 N. J. Law, 117, 120, 75 Atl. 313;Holden v. Farmers' & Traders' Nat. Bank, 77 N. H. 535, 93 Atl. 1040, L. R. A. 1915E, 309, Ann. Cas. 1917E, 23;Miller v. Western Nat. Bank, 172 Pa. 197, 33 Atl. 684.

There was evidence to the effect that, during the years 1915 and 1916, plaintiff had on deposit with defen...