Main St. Bank Inc v. Planters Nat. Bank Of Richmond

• Citation: 116 Va. 137,81 S.E. 24
• Parties: MAIN STREET BANK, Inc. v. PLANTERS NAT. BANK OF RICHMOND.
• Decision Date: 12 March 1914
• Court: Supreme Court of Virginia

(116 Va. 137)

81 S.E. 24

MAIN STREET BANK, Inc.

v.PLANTERS NAT. BANK OF RICHMOND.

Supreme Court of Appeals of Virginia.

March 12, 1914.

1. Payment (§ 22*)—CnECK.

Since a check is not payment except by express agreement, where a debtor pays by check which is fraudulently obtained from the creditor and paid on a forged indorsement, the debt is not discharged.

LEd. Note.—For other cases, see Payment, Cent. Dig. §§ 87, 88; Dec. Dig. § 22.*]

2. Bills and Notes (§ 279*)—Fobged Indorsement—Warranty.

The indorser of a check on which the name of a prior indorser is forged warrants that he has clear title, that the instrument is genuine, and therefore becomes bound by his indorsement to all parties subsequent to him, though the paper has been discounted by a prior party.

[Ed. Note.—For other cases, see Bills and Notes, Cent. Dig. §§ 625, 632; Dec. Dig. § 279.*]

3. Bills and Notes (§ 279*)—Checks—Forged Indorsement—Recovery as Between Indorsers.

Where several successive indorsers have advanced money on paper payable to order and it appears that neither had title because the first indorsement was forged, each may recover from his immediate indorser.

[Ed. Note.—For other cases, see Bills and Notes, Cent. Dig. §§ 625, 632; Dec. Dig. § 279.*]

4. Bills and Notes (§ 279*)—Checks—Forged Indorsement — Negotiable Instruments Law.

Code 1904, p. 1470, § 65, provides that every person negotiating an instrument by delivery or by a qualified indorsement warrants that the instrument is genuine and in all respects what it purports to be, that he has a good title, and that all prior parties had capacity to contract. Held, that where a check payable to a firm was stolen by a clerk who forged the payee's indorsement, deposited the check in defendant bank, which indorsed to plaintiff bank through which it was forwarded to the payee bank for payment, plaintiff, having been compelled to refund by reason of the forgery, was entitled to recover from defendant on its indorsement.

[Ed. Note.—For other cases, see Bills and Notes, Cent. Dig. §§ 625, 632; Dec. Dig. § 279.*]

Error to Law and Equity Court of City of Richmond.

Action by the Planters' National Bank of Richmond against Main Street Bank, Incorporated. Judgment for plaintiff, and defendant brings error. Affirmed.

O'Flaherty, Pulton & Byrd, of Richmond, for plaintiff in error.

Geo. Bryan and E. C. Massle, both of Richmond, for defendant in error.

HARRISON, J. This is a controversy involving the liability of a prior indorser to a subsequent indorser upon three negotiable notes aggregating $403.71, for which sum the plaintiff in the lower court obtained judgment with interest. A jury was waived, and the whole matter of law and fact was submitted to the court, and the case is now before us upon the facts considered as upon a demurrer to the evidence.

It appears that Kingan & Co. conducted their business under the trade-name of "Albert E. Jordan, " and that their customers discharged their indebtedness for goods purchased by checks payable to "Albert E. Jordan." In accordance with this custom of the business, the payee in each of the three checks here involved was Albert E. Jordan. The same considerations are applicable alike to each of these checks, and the result as to one follows as to all. We will therefore, as typical of each, only deal with the check dated San Francisco, August 18, 1910, drawn by E. J. Boebeeg, cashier, on the Merchants' National Bank of New York to the order of Albert E. Jordan for $199.64. When this check was received by Kingan & Co., it was stolen by a check in their employment, who forged the name of Albert E. Jordan, the payee, on the back of the check, indorsed thereunder his own name, and deposited the same to his own account in the Main Street Bank, Inc., the plaintiff in error. That bank indorsed the same to the Planters' National Bank of Richmond, the defendant in error, who in turn indorsed it as follows: "Prior indorsements guaranteed. Pay to the order of any national or state bank." This indorsement was signed by the Planters' National Bank and the check forwarded to its New York correspondent for collection. There it was paid by the Merchants' National Bank of New York upon which it had been drawn. After being paid by the drawee bank and debited to the drawer, it was discovered that the payee's name had been forged and the proceeds credited by the plaintiff in error bank to the forger's account. Thereupon the drawee bank credited the amount of the check to the account of the drawer, and were themselves similarly credited by other banks through which the check had passed,...