Hart v. Moore

• Decision Date: 07 January 1935
• Docket Number: 31217
• Citation: 171 Miss. 838,158 So. 490
• Court: Mississippi Supreme Court
• Parties: HART et al. v. MOORE

158 So. 490

171 Miss. 838

HART et al. v. MOORE

No. 31217

Supreme Court of Mississippi

January 7, 1935

Division A

1 PLEDGES.

Rejection of defendant's evidence in payees' suit for balance of proceeds of check after satisfaction of payee's note as security for which defendant accepted check, that plaintiff received proceeds from his agent or otherwise, held warranted.

2 EQUITY.

To save multiplicity of suits and circuity of action, equity has jurisdiction, where all parties' interests have common origin or connecting link.

3 PLEDGES.

Bank issuing and paying cashier's check for portion of balance of proceeds of personal check above amount of payee's note, as security for which check was accepted, to payee's agent, who forged payee's signature on both checks, held proper party in payee's suit for such balance.

4. BANKS AND BANKING.

Statute, providing that bank need not inquire as to lack of or limitation on power of agent, executing check payable or indorsed to him or using descriptive words in connection with signature or indorsement thereon, held inapplicable to principal's signature forged by agent (Code 1930, section 3828).

5. BANKS AND BANKING.

Payee's negligence in selecting untrustworthy agent to receive payment of check and negligence of one accepting it as security for payee's note in delivering it to such agent with knowledge of his dishonesty and unreliability did not estop them from recovering proceeds, paid by bank to such agent on his forged signature of payee's name, from bank.

6. BANKS AND BANKING. Evidence.

Law does not presume that men will act dishonestly or commit forgery, and duty of determining whether indorsement of payee's signature on check was forged rests primarily on bank paying check.

7. BANKS AND BANKING.

Bank held liable to make good loss to maker of check, paid by bank to payee's agent on latter's forged indorsement of payee's signature; bank's failure to make investigation as to genuineness of indorsement being direct and proximate cause of loss.

8. BANKS AND BANKING. Pledges.

One to whom check was delivered as security for payee's note held check and its proceeds in trust for payment to payee of balance after satisfaction of note, and such balance continued as trust fund after deposit of proceeds in bank to former's credit.

9. BANKS AND BANKING.

Bank's payment of check to payee's agent on latter's forged indorsement of payee's name after deposit of balance of proceeds above amount of payee's note to personal credit of one receiving check as security for note was payment out of bank's funds, not depositor's account (Code 1930, section 2679).

10. BANKS AND BANKING.

Bank, paying check on forged signature of payee's name, had no authority to charge amount to maker's account, and, having done so, must pay such amount to payee or fully reimburse maker after latter's payment thereof to payee.

HON. V. J. STRICKER, Chancellor.

APPEAL from the chancery court of Hinds county HON. V. J. STRICKER, Chancellor.

Suit by John P. Moore against Lee R. Hart, the Deposit Guaranty Bank & Trust Company of Jackson, and another, in which defendant Hart made his answer a crossbill against defendant bank. From a decree for plaintiff against named defendants, the latter appeal. Affirmed.

Affirmed.

Shaw & Pilgrim and R. T. Hilton, all of Jackson, for appellants.

The court below erred in, of its own volition, ordering the original suit of John P. Moore, complainant, v. Lee R. Hart et al., this appellant not being one of the original defendants in the court below, amended so as to require the complainant to bring suit against this appellant as defendant.

Federal Land Bank v. Collins et al., 127 So. 570.

Appellee was guilty of negligence or carelessness and negligent act was the direct, proximate and sole cause of the six hundred fifty-one dollars and twenty-five cents not reaching the hands of appellee.

Young v. Grote et al., 13 Eng. Com. Law Rep. 420.

As between appellant, Hart, and appellee, Moore, as a matter of equity, justice and right of law, the loss should fall upon appellee, Moore, and not on appellant, Hart.

McFadden v. Follrath, 130 N.W. 544; S. Weisberger Company, etc., v. Barberton Savings Bank Co., L. R. A. (N. S.) Ser. 34, page 1100; 84 Ohio St. 21, 95 N.E. 379.

The court below misapplied the law to the facts.

Section 3828, Code of 1930.

In all cases where it appears that the employment of the principal afforded the agent the means or opportunity, which he used while so employed, in committing an injury on a third person, the principal must be held responsible.

New Orleans, Jackson, & Great Northern Railroad Co. v. Allbritton, 38 Miss. 277; Felder v. Acme Mills, 73 So. 52; Deer Island Fish & Oyster Co. v. First Nat. Bank of Biloxi, 146 So. 116.

D. C. Enochs, of Jackson, for appellants.

It is true Crisler had no authority from Moore to endorse and collect Hart's check in his possession payable to Moore, according to the lower court. But Moore asked Hart to pay him the six hundred fifty-one dollars and twenty-five cents by check delivered to Crisler just as Hart did.

Hart having strictly complied with: the directions of Moore, by delivery of the check to Crisler, ought not to be held liable to Moore after his bank account has been reduced by the amount of the check through the misconduct of Crisler.

McFadden v. Follrath, 130 N.W. 544.

By reason and common justice it would seem that the loss should fall upon him whose agent did wrong, and not upon the drawer or drawee.

Section 3823, Code 1930; Federal Land Bank v. Collins, 156 Miss. 893, 127 So. 570.

If the bank was not authorized to pay Hart's check on Crisler's endorsement, the bank must restore the amount of the check to Hart's account with it, and since the funds represented by the check were trust funds as between Hart and Moore, the bank is liable to Moore for same.

Baggett v. McCormack, 73 Miss. 552, 19 So. 89, 55 Am. St. 554; Boswell v. Thigpen, 75 Miss. 308, 22 So. 823; Essex County v. Newark City National Bank et al., 48 N.J.Eq. 51, 21 A. 185; Union Stock Yards National Bank v. A. J. Gillespie et al., 137 U.S. 411, 11 S.Ct. 118, 34 L.Ed. 724.

Hart filed a cross-bill against the bank for an adjustment of the equities between them in the premises, if the bill of complaint were maintained. I think these equities could have been adjusted without a cross-bill, but a cross-bill did not hurt.

Arnold v. Miller, 26 Miss. 152.

Louis C. Hallam, of Jackson, for appellee.

Demurrers to amended bill were properly overruled. Appellee had right to trace trust funds in hands of appellant bank, and to impound them there.

Bank of Hickory v. McPherson, 102 Miss. 852, 865, 59 So. 934; Armour v. Bank, 69, Miss. 705, 11 So. 29; Essex County v. Newark City Nat. Bank, 48 N.J.Eq. 51, 21 A. 185; Union Stock Yds. National Bank v. Gillespie, 137 U.S. 411, 34 L.Ed. 724; Central Nat. Bank v. Conn. Mut. Life Co., 104 U.S. 66, 26 L.Ed. 693; 39 Cyc. 528, 531, 536; Newhouse v. First National Bank, 13 F.2d 887, 890; In re Mendel's Will (Wis.), 159 N.W. 806.

Interests of all parties to this cause spring from common source.

Middleton v. Howell, 127 Miss. 880, 90 So. 725; Roberts v. Burwell, 117 Miss. 451, 469, 78 So. 537; Tchula Commercial Co. v. Jackson, 147 Miss. 296, 321, 111 So. 874; Baker v. Nichols, 111 Miss. 673, 678, 72 So. 1.

The court below had full jurisdiction in connection with the trust.

Bank of Hickory v. McPherson, 102 Miss. 852, 865, 59 So. 934; Armour v. Bank, 69 Miss. 705, 11 So. 29; Wilkinson v. Stitt, 175 Mass. 581, 583, 56, N.E. 830; Rumberger v. Yokum, 174 F. 55; New York Life Ins. Co. v. Roulet, 24 Wend. (N. Y.) 505; Clews v. Jameison, 182 U.S. 461, 45 L.Ed. 1183; Kroll v. Coach, 45 Or. 459, 470, 78 P. 397, 80 P. 900; 49 C. J. 984, 986, and note 39; Persons v. Russell (Ala.), 103 So. 543, 545.

An agent to collect has no authority to endorse.

21 R. C. L. 871, and notes 5, 6 and 7; Jackson v. Commercial National Bank (Ill.), 93 A. S. R. 113, 115, 116, 125.

A bank is liable to its depositor for amount charged to depositor's account on payment of his check on forged endorsement of payee's name.

Masonic Benefit Assn. v. First Nat. Bank, 99 Miss. 610, 55 So. 408; Deer Island Fish & Oyster Co. v. First Nat. Bank of Biloxi, 166 Miss. 162, 146 So. 116.

Appellee was not negligent in selecting agent to receive Hart's check--court below has count on this issue of fact against appellants--bank's own negligence in paying on forged endorsement was direct and proximate cause of loss.

Deer Island Fish & Oyster Co. v. First Nat. Bank of Biloxi, 166 Miss. 162, 146 So. 116; Wherry v Latimer, 103 Miss. 534; Ex parte Crisler, 159 Miss. 250, 132 So. 103; Jones v. Board, 56 Miss. 766; United States C. S. Co. v. Cent. Mfg. D. Bank (Ill.), 74 A. L. R. 811; Jordan-Marsh Co. v. National Shawmut Bank, 201 Mass. 397, 22 L. R. A. (N. S.) 251; McIntosh v. Eliot Nat. Bank, 123 Mass. 393; Fuller v. Ill. Cent. R. R. Co., 100 Miss. 705, 717, 56 So. 783; Exchange Nat. Bank of Spokane v. Bank of Little Rock, 58 F. 140; Simmons v. Atkinson, 69 Miss. 862; Bristol Knife Co. v. First Nat. Bank, 44 Conn. 421; German Savings Bank v. Citizens Sav. Bank (Iowa), 63 Am. St. Rep. 399; Crawford v. West Side Bank, 100 N.Y. 50, 53 Am. Rep. 152; Grand Lodge v. State Bank (Kan.), L. R. A. 1915B, 815; Dodge v. National Exchange Bank (Ohio), 5 Am. Rep. 648; Harmon v. Old Detroit National Bank (Mich.), 75 A. L. R. 1273; Shepard, etc., Lbr. Co. v. Eldridge, 171 Mass. 516, 68 A. S. R. 446; Greenfield Sav. Bank v. Stowell, 123 Mass. 196, 25 Am. Rep. 67, 79; Sec. 2679, Code 1930; 8 C. J. 764; Pettyjohn v. Nat. Exchg. Bank, 101 Va. 111, 43 S.E. 203; Olsgard v. Lemke, 32 N.D. 551, 156 N.W. 102; Boone v....