Jackson v. National Bank of McMinnville

• Decision Date: 05 January 1893
• Citation: 20 S.W. 802
• Parties: JACKSON <I>et al.</I> v. NATIONAL BANK OF McMINNVILLE.
• Court: Tennessee Supreme Court

Page 802

20 S.W. 802

JACKSON et al. v. NATIONAL BANK OF McMINNVILLE.

Supreme Court of Tennessee.

January 5, 1893.

Appeal from chancery court, Warren county; W. S. BEARDEN, Chancellor.

Action by Jackson, Mathews & Harris against the National Bank of McMinnville to recover the amount of a check payable to plaintiffs, which defendant cashed on the indorsement of a commercial traveler employed by plaintiffs. From a decree in favor of defendant, plaintiffs appeal. Reversed.

T. C. Lind and Smith & Dickenson, for appellants. Murray & Fairbanks, for appellee.

HOLMAN, J.

The complainants were wholesale grocery merchants in the city of Nashville, and had in their employ as a traveling salesman or drummer one Gibson. Gibson's duty, under his employment, was to travel through the country, take orders from retail merchants for goods, and collect the bills as they became due. For complainants Gibson sold a bill of goods amounting to $228.90 to J. J. Meadows, of Warren county. On October 12, 1891, before Meadows' bill became due, and while Gibson was still in the service of complainants, he proposed to Meadows that, if he would then pay the bill, he would be allowed a discount of 2 per cent. To this Meadows agreed, and gave to Gibson his check on the defendant for $224.39, payable to the order of Jackson, Mathews & Harris. On the face of the check was inserted the statement that it was "in full of acct. to date." Upon the back of the check Gibson indorsed the names of complainants, "Jackson, Mathews & Harris, by Gibson," and presented it to the defendant bank, where it was paid to him by the cashier, and charged against the deposit account of Meadows. Gibson failed to pay over or account to complainants for this money. Complainants having learned that Gibson had collected other money due them, and failed to account for it, ordered him in, and discharged him. Gibson absconded. Subsequently complainants sent to J. J. Meadows a statement of his account, requesting payment. Meadows replied that he had paid the account to Gibson by giving him a check on the defendant bank, and had settled with the bank, and taken up the check. Complainants demanded of defendant payment to them of the check, which was refused. Complainants filed their bill to hold the bank liable, and to recover the amount of the check, alleging that Gibson had no right to indorse complainants' name, and that the payment of the check to him was unauthorized. The defendant answered, stating, in substance, that Gibson was authorized to indorse complainants' name to checks and receive the money thereon; that, if not expressly empowered, he was by implication authorized so to do; that Gibson, while in complainants' service, had frequently received checks payable to complainants, indorsed complainants' name, and received the money thereon, and that these acts of Gibson were known to and had been ratified by the complainants; that they were estopped from denying his authority, and that it was inequitable for complainants to undertake to visit the consequences of their own negligence and misplaced confidence upon respondent. The chancellor being of opinion that it would be inequitable to visit the loss of the Meadows check upon the defendant, as to it he dismissed the bill. Complainants have appealed.

In the brief of counsel for the defendant it is insisted that there is no such privity between the complainants and the defendant as will authorize the bringing of this suit; that, where a check is made payable to the order of one person, and upon the faith of a forged indorsement the bank pays to another, this is not such an acceptance by the bank as will make it liable to the payee, because the bank did not accept the check for the payee, nor promise him to pay it, but on the contrary refused to do so. To sustain this proposition, the case of Bank v. Whitman, 94 U. S. 343, is referred to. It is true that the court in that case held that a payment to a stranger...