Masonic Ben. Ass'n of Stringer Grand Lodge v. First State Bank of Columbus

• Decision Date: 29 May 1911
• Docket Number: 14,578
• Citation: 55 So. 408,99 Miss. 610
• Court: Mississippi Supreme Court
• Parties: MASONIC BENEFIT ASSOCIATION OF STRINGER GRAND LODGE v. FIRST STATE BANK OF COLUMBUS

55 So. 408

99 Miss. 610

MASONIC BENEFIT ASSOCIATION OF STRINGER GRAND LODGE v. FIRST STATE BANK OF COLUMBUS

No. 14,578

Supreme Court of Mississippi

May 29, 1911

APPEAL from the circuit court of Lowndes county, HON. JOHN L BUCKLEY, Judge.

Suit by the Masonic Benefit Association of Stringer Grand Lodge against the First State Bank of Columbus. From a judgment for defendant, plaintiff appeals.

The facts are fully stated in the opinion of the court.

Reversed and remanded.

George B. Power and L. J. Winston, for appellant.

The first proposition presented for consideration is plaintiff's demurrer to defendant's first plea which is the same proposition presented by defendant's demurrer to plaintiff's replication--and that is within what limitation does the action fall.

We contend that it comes within the six year statute--and the suit was filed within six years from the date of the payment of the check in question.

Certainly the contract between plaintiff and defendant, out of a breach of which the suit grew was one in writing; it was evidenced by the deposit tickets, the bank pass books given to and received from the defendant and the further fact that the claim is based upon the payment of a check which must have of necessity, been in writing, and the charging of said check improperly to the account of plaintiff, thereby reducing improperly the balance due by defendant to plaintiff on account of its deposits, etc.

"In some jurisdictions an action by a depositor for the balance of his account, as evidenced by his bank pass book, is an action upon an evidence of indebtedness in writing, within the meaning of the statute of limitations, and barred within the period prescribed for such actions. On the other hand however, it has been held that there is no limitation to an action against a bank to recover money deposited therein." 25 Cyc. of Law, pp. 1041, 1047.

Under the amended declaration, this is clearly an action by the plaintiff to recover the balance of its account, which account was not closed until November 14, 1904.

"Such a suit may be brought within ten years from the time the right of action accrued, where the debt is evidenced by a bank pass book or certificate of deposit, since these are written instruments on which an action at law may be brought within ten years." Palmer v. Woods, 35 N.E 1122.

Another view that would bring this case within the six year statute, is that all the circumstances make the transactions between the parties an account stated, acquiesced in by the plaintiff through a mistake and through ignorance of certain facts which it was not in a position to discover at the time of its acquiescence; as the plaintiff was not presumed to know, and as it does not appear that it in fact knew the signature of the payee, it cannot be said that plaintiff was guilty of negligence in not discovering upon receiving its pass book the fact that the payee's name had been forged or improperly endorsed upon the check; it was the duty of the defendant to ascertain the genuineness of the endorsement and the plaintiff had a right to rely, in the absence of any circumstances arousing its suspicions, upon the faithful performance of its duty in that respect by the bank.

The second proposition is that, even if the action were one that came within the bar of the three year statute, the statute did not begin to run against the plaintiff until the filing of the suit against the plaintiff by the original payee of the check as that was the first information plaintiff had or could have had putting it on notice or inquiry regarding the endorsement on the check.

While the general rule is that the plaintiff's ignorance of the wrong committed or of his rights with respect thereto cannot be considered in determining when the statute begins to run a plain exception is made where the ignorance of the plaintiff is due to no fault or negligence of his own but to the peculiar circumstances of the case.

Certainly the facts set forth in the pleadings in the case at bar are amply sufficient to bring it well within the exception; the plaintiff unacquainted with the payee and therefore unacquainted with the payee's signature or handwriting, had absolutely no means of determining the genuineness of the endorsement; according to law and to the custom prevailing in business circles, plaintiff had a perfect right to leave the defendant the obligation of passing upon the genuineness of the endorsement; that is one of the obligations that banks assume; that is one of the duties they undertake; plaintiff did not discover and had no means of discovering the improper endorsement, had no suspicion that the endorsement was improper and there were no facts or circumstances to put the plaintiff on inquiry until the filing of the suit by the original payee; plaintiff began this cause of action within three years from the filing of said suit and within three years from the time when plaintiff with all due diligence required of it could have learned of the improper endorsement and the improper payment of the check in question and the consequent improper charging of the amount thereof to plaintiff's account, thereby reducing plaintiff's balance.

"While no rule can be laid down that will cover every transaction between a bank and its depositor it is sufficient to say that the latter's duty is discharged when he exercises such diligence as is required by the circumstances of the particular case, including the relations of the parties and the established or known usages of banking business."

Certainly, in this case, plaintiff exercised all the diligence required by the circumstances, the relations of the parties and usages, etc.

The third proposition is that the plaintiff is barred by an estoppel in pais in that plaintiff failed or neglected to bring suit or institute any demand for the amount until such lapse of time as will preclude the defendant from making full proof of the actual untruthfulness of plaintiff's contention or from protecting itself against loss.

In the first place our court does not recognize the doctrine of laches short of the statutory bar.

Estoppel in pais only arises when manifest justice and equity as respects the rights of another require its application. Madden v. Ry. Co., 66 Miss. 258.

The manifest justice and equity in the case at bar are with the appellant; it is the party who has suffered a wrong through no fault of its own.

Estoppel in pais operates only in favor of one who, induced by the acts or representations of another so changes his situation that injury would result if the truth were known. Hart v. Foundry & M. Co., 72 Miss. 809.

No acts or representations of the appellant induced the appellee to so change its situation as to sustain injury.

The appellee in improperly paying the check in question and in improperly charging the amount to appellant committed the first fault and thereby occasioned the loss sustained by plaintiff and the appellee having committed the first fault certainly owed a duty to appellant to discover the improper endorsement and having failed in that duty it cannot visit the consequences upon the appellant, an innocent depositor, who performed its full duty to the appellee and used all due diligence required of it; we submit that appellee is hardly in a position to envoke the doctrine of estoppel in pais, for, if the appellee had performed its full duty, apellant would have been able to protect itself against a second payment of the check in question; the only duty owing from appellant was to act with that ordinary diligence and care that prudent men generally bestow on such cases, in the examination of pass books, returned vouchers, etc., to detect any errors or mistakes; more than this, under the circumstances of this case, could not have been required. It has never been held that the examination by the depositor of his account must be so close and thorough as to exclude the possibility of any error being overlooked by him.

The court will observe that it is shown by the pleadings that appellant had no knowledge of the fact that the payee's name had been improperly endorsed until the suit was filed against it--very nearly four years after appellant had every reason to believe and, as a matter of fact, did believe that all the matters between it and the original payee had been fully settled; the plaintiff had settled it in the way that it had settled many others before and in the way that it settled many others afterwards, with checks drawn upon the defendant bank.

It was contended in the lower court and will probably be argued in this court that the bank acted in "perfect good faith" in this transaction and that its good faith should be its exemption.

"And the latter (the bank) cannot avoid liability for having paid out money on a forged endorsement by showing that it acter in good faith." Morse on Banks and Banking (4 Ed.), vol. 2, p. 847.

Besides, there was equally as much good faith on the part of the plaintiff and the first fault was committed by the defendant.

We assume, of course, that it is not necessary to cite authorities to this court on the general proposition that a bank is liable to a depositor where it pays out money on the check of a depositor where the signature of the payee has been forged; the principle is so generally recognized as to need no citation of special authorities.

"Money paid on a forged endorsement may be recovered at any time that the forgery is discovered." Morse on Banks & Banking (4 Ed.), vol. 2, p. 847.

"Even where the last endorsement is genuine, the bank is not relieved from the duty of looking to the genuineness or prior endorsements." Ib., p. 849.

The bank had every facility for informing itself as to the...