Kenneth Inv. Co. v. National Bank of Republic.

• Decision Date: 06 August 1902
• Citation: 70 S.W. 173,96 Mo. App. 125
• Court: Missouri Court of Appeals
• Parties: KENNETH INV. CO. v. NATIONAL BANK OF REPUBLIC OF ST. LOUIS.<SMALL><SUP>1</SUP></SMALL>

70 S.W. 173

96 Mo. App. 125

KENNETH INV. CO. v. NATIONAL BANK OF REPUBLIC OF ST. LOUIS.¹

Court of Appeals at St. Louis, Missouri.

August 6, 1902.

BANKS—FORGED CHECKS—PAYMENT—BALANCED BANK BOOK—RETENTION—ACCOUNT STATED—EFFECT—BURDEN OF PROOF— AGENCY—IMPUTED KNOWLEDGE—FORGERIES OF AGENT—REFERENCE—LONG ACCOUNT.

1. Rev. St. 1899, § 698, authorizes a trial court to refer a case when an issue of fact requires the examination of a long account on either side. In an action by a depositor to recover an alleged balance from a bank, the only facts in issue were whether 21 alleged forged checks were in fact forged by the depositor's bookkeeper, and the fact of forgery was not seriously controverted. The correctness of all balances and charges and credits was conceded except as depending on the forgeries. Held not to authorize a compulsory reference.

2. Where a depositor receives his bank book, duly balanced, together with canceled checks, and retains it an unreasonable length of time without objection, the balance therein shown becomes an account stated, but is nevertheless only prima facie evidence of its correctness; and the depositor is not precluded from impeaching it, as based on the payment of forged checks, unless the payment of the checks was induced by his negligence, and special damage will result to the bank if compelled to make restitution.

3. Where a depositor, by retaining without objection, his bank book as balanced and returned to him, together with the canceled checks, recognizes the balance shown as an account stated, the burden of proof is on him to show that the balance was in fact based on the payment of forged checks.

4. A depositing corporation intrusted its bank book and the cashing of checks and verification of balances to its bookkeeper, who forged the president's name to certain checks, procured them to be cashed, and appropriated the proceeds. When the canceled checks and bank book, duly balanced, were returned at various times, the bookkeeper abstracted and destroyed the checks. Held, that the bookkeeper's knowledge of the fraud, obtained by him in the course of his employment when he received the balanced check book and canceled checks, was not imputable to the depositor, as the knowledge of an agent is not imputable to a principal where it would be against the agent's interest to communicate it, and consequently the depositor was not precluded, by his failure to ascertain the first of the series of forgeries and to notify the bank thereof, from recovering from the bank the sums paid on the subsequent forgeries.

5. Where the bookkeeper of a depositing corporation presents an unsigned check, which the bank pays, the bookkeeper appropriating the proceeds, such payment is negligence per se, and the bank is liable to the depositing corporation, without reference to any question of the estoppel of the corporation to recover for the payment of forged checks, because of having failed to warn the bank in advance thereof.

Appeal from St. Louis circuit court; Selden P. Spencer, Judge.

Action by the Kenneth Investment Company against the National Bank of the Republic of St. Louis. From a judgment for defendant entered on a report of the referee, plaintiff appeals. Reversed.

The substance of the petition is that plaintiff, a corporation, long prior to May, 1894, and from time to time thereafter, deposited money with the defendant bank on general account, subject to be drawn out by plaintiff's checks; that on the said 24th day of May its pass book was balanced by the bank and returned to plaintiff, showing a balance to plaintiff's credit of $579.54; that from the said 24th day of May to September 24, 1894, plaintiff made various deposits with the defendant, aggregating $12,172.54, which, with the balance of May 24th, made a total of $12,752.08 to plaintiff's credit; that against this credit plaintiff drew its checks aggregating $9,558.73, leaving a balance to plaintiff's credit of $3,193.35; that between said 24th day of May and September 24, 1894, the defendant, without the authority, consent, or knowledge of plaintiff, charged against said account at various times, as having been paid by it to plaintiff, various sums, aggregating $1,093, no part of which was received by plaintiff; and that the defendant, though often requested, has refused to credit plaintiff's account with the said sum of $1,093 erroneously charged against it, or to pay said sum to plaintiff on demand.

The answer is a general denial and the following pleas of new matter: First. That the plaintiff from November, 1893, to November, 1894, had at various times deposited money with plaintiff, and drew upon defendant divers checks, all of which were duly paid; that there were over 200 items of debit and credit in the account; that on May 24, 1894, the account was stated between them, and a balance found due plaintiff from defendant of $579.54 which was carried forward to plaintiff's credit; that on June 13, 1894, plaintiff and defendant stated the account, when it was ascertained that the balance to plaintiff's credit was $1,506.79; that on August 20, 1894, the account was again stated between plaintiff and defendant, when it was ascertained that plaintiff had overdrawn its account by 11 cents; that on September 3, 1894, plaintiff and defendant again stated the account, and it was ascertained that the defendant owed the plaintiff $570.59, which was carried forward to plaintiff's credit; that about September 24, 1894, the account was again stated, and it was ascertained that there was a balance of $2,100.35 to plaintiff's credit; that about October 9, 1894, the account was again stated, and a credit of $5,608.57 was carried forward to plaintiff's credit; and that on November 2, 1894, the account was again stated, when it was ascertained that defendant owed plaintiff the sum of $203.57, which sum was paid to plaintiff by defendant on November 14, 1894.

Second. For new matter constituting a further defense, the answer sets forth that plaintiff, for a ground for its suit, claims that one Frank J. Chatard, who was in its employ from April to October, 1894, as its bookkeeper, between the 24th day of May and the 13th day of June, 1894, forged a check of plaintiff on defendant for $78, and fraudulently procured the defendant to pay it; and plaintiff further claims that between June 13th and August 20, 1894, Chatard at divers times forged the name of plaintiff to 15 different checks upon defendant, aggregating the sum of $695, which he fraudulently procured the defendant to pay, and that between August 20th and September 24, 1894, Chatard forged the name of plaintiff to divers other checks, which he fraudulently procured the defendant to pay, aggregating $320; that during all these periods Chatard was the bookkeeper, and had charge of the bank pass book, and was intrusted with the keeping of plaintiff's general accounts and of its deposit account with the defendant bank, and that the greater number of said alleged forged checks have been destroyed, and that defendant has no means of knowing whether or not they were forged; that on June 13, 1894, when defendant balanced the plaintiff's pass book, it returned said book, with all of plaintiff's paid checks then in its possession, including the alleged forged check for $78, to the plaintiff; and that plaintiff then and there examined said pass book and said checks, and then and there ascertained that Chatard had forged the check for $78, and that it thereupon became its duty to notify the defendant of said forgery of the check, that the defendant might recover the amount of said check from Chatard, and be put upon its guard against future forgeries by him, but that plaintiff failed to give any such notice. The answer further alleges that, if plaintiff did not in fact examine its pass book and return the canceled checks, it was its duty to do so, within a reasonable time, and, if it had done so, it would have discovered the alleged forgery in time to notify the defendant, so that it might have recovered the amount of the forged checks, and avoided the payment of his forged checks in the future, and alleges, in the alternative, that plaintiff did examine its books and discover the forgery, or that it negligently failed to make the examination, and that the nondiscovery of the forgery was due to its neglect to make the examination, and alleges the exercise of due diligence and care on its part in the payment of the alleged forged checks, and that it was induced by the neglect of the plaintiff to notify it of the forgery of the check for $78 to pay checks of subsequent dates alleged to have been forged by Chatard, and that plaintiff should be estopped by its conduct to maintain the action. In the third paragraph of the answer, plaintiff tenders the amount of the check for $78, with legal interest and all costs of the suit to date of filing the answer.

The reply admits the balancing of plaintiff's pass book by defendant on May 24th, June 13th, August 20th, September 3d, September 24th, October 9th, and November 2d, as alleged in plaintiff's answer; admits that the balances shown by the book were as alleged in the answer, and admits the payment of the balance of $203.57 as shown by the balance stated by plaintiff on November 2d; but alleges that the balances after the settlement of May 24th were incorrect, in this: that defendant, in making up its accounts with plaintiff, had erroneously charged plaintiff with the sum of $1,093 which plaintiff had not received, and for which it had drawn no check or checks against its account after May 24, 1894; admits that it claims that Chatard from the month of April to September 24, 1894, forged checks aggregating $1,093, as alleged in the answer, and that the number of said checks were 21; admits that during all that time Chatard was the plaintiff's bookkeeper, and was intrusted with the keeping of its general accounts, as well as its deposit account...