Merchants' Bank of Washington, D.C., v. National Capital Press, Inc.

• Decision Date: 03 April 1923
• Docket Number: 3840.
• Citation: 288 F. 265
• Parties: MERCHANTS' BANK OF WASHINGTON, D.C., v. NATIONAL CAPITAL PRESS, Inc.
• Court: U.S. Court of Appeals — District of Columbia Circuit

288 F. 265

MERCHANTS' BANK OF WASHINGTON, D.C., v. NATIONAL CAPITAL PRESS, Inc.

No. 3840.

United States Court of Appeals, District of Columbia.

April 3, 1923

Submitted December 14, 1922.

Appeal from the Supreme Court of the District of Columbia.

Joseph A. Rafferty and P. H. Marshall, both of Washington, D.C., for appellant.

James A. Drain and Dale D. Drain, both of Washington, D.C., for appellee.

Before VAN ORSDEL, Associate Justice, and MARTIN and SMITH, Judges of the United States Court of Customs Appeals.

VAN ORSDEL, Associate Justice.

By declaration in the common counts, appellee sued appellant in the Supreme Court of the District of Columbia for the amount of 22 checks, payable to the order of plaintiff, which were cashed by defendant bank. The bookkeeper of plaintiff extracted the checks from the mail, credited the accounts of the customers from whom they were received, indorsed the checks in plaintiff's name, cashed them at defendant bank, and appropriated the proceeds to his own use. The checks were collected by defendant from the respective banks on which they were drawn. It is conceded that the bookkeeper had no authority to indorse and cash the checks. From a verdict and judgment for plaintiff, defendant appealed.

The liability of defendant bank to plaintiff for the aggregate amount of the checks is the single question involved. Counsel for defendant seeks to establish analogy to the settled principle that the holder of a check cannot maintain a suit against the drawee bank. Bank v. Millard, 10 Wall 152, 19 L.Ed. 897; Bank v. Whitman, 94 U.S. 343, 24 L.Ed. 229. But the suit here is not against the drawee bank but against one who acquired no title to the checks obtained from a defaulter upon his forged indorsement, and in turn no title to the money collected upon the checks.

If the drawee banks had refused to cash the checks, a different case would be presented. Plaintiff would then have recourse against its customers, the drawers of the checks, whose funds in the drawee banks, against which the checks were drawn, would still be intact. Defendant, however, by collecting from the drawee banks, foreclosed the right of action by plaintiff against the drawers of the checks.

The checks, when received and collected by defendant, were the property of plaintiff, and plaintiff's title therein could not be defeated by a forged indorsement. Plaintiff's title remained the same as it was before the forgery was committed; hence, when defendant received the money on the checks, it had no more title to the money than it had to the checks, and plaintiff could recover the amount collected on the checks in an action for money had and received. This rule is sustained generally in the states, and we have not been cited to any federal authority to the contrary. Buckley v. Second National Bank, 35 N.J.Law, 400, 10 Am.Rep. 249; Talbot v. Bank of Rochester, 1 Hill (N.Y.) 295; Johnson v. First National Bank, 6 Hun(N.Y.) 124; Schaap v. First National Bank, 137 Ark. 252, 208 S.W. 309; Meyer v Rosenheim & Co., 115 Ky. 409, 73 S.W. 1129, 24 Ky. Law Rep. 2314; United States Portland Cement Co. v. United States National Bank, 61 Colo. 334, 157 P. 202, L.R.A 1917A, 145; Graton & Knight Mfg. Co. v Redelsheimer, 28 Wash. 370, 68 P. 879; Kansas City Casualty Co. v. Westport Avenue Bank, 191...