Merchants' Bank & Trust Co. v. People's Bank of Keyser
| Decision Date | 02 June 1925 |
| Docket Number | 5121. |
| Citation | 130 S.E. 142,99 W.Va. 544 |
| Parties | MERCHANTS' BANK & TRUST CO. v. PEOPLE'S BANK OF KEYSER. |
| Court | West Virginia Supreme Court |
Submitted May 20, 1925.
Rehearing Denied Dec. 1, 1925.
Syllabus by the Court.
The fact that a certificate of deposit, prepared on a printed form by the use of a typewriter, shows on its face that the words "if left," relating to the interest rate on the printed form, were "X'ed" out, evidently by the same machine, does not prima facie show on its face that the alteration was made after delivery to the payee, so as to give notice to a purchaser in due course of any infirmity in the instrument.
Without the plea of non est factum or its equivalent, putting in issue the validity of the instrument sued on, possession thereof and the offer of it in evidence constitutes prima facie evidence that the plaintiff is the holder in due course without notice of anything impeaching its validity.
It is not the law of this state that an alteration in a negotiable instrument, which was apparently made at the time and by the same hand or instrument used in the preparation thereof constitutes prima facie evidence that it was altered after delivery.
A certificate of deposit in the usual form, issued by a bank of discount and deposit, is, in legal effect, a promissory note, and constitutes a negotiable instrument, the purchaser of which in due course is protected by the provisions of the statute relating thereto.
Where it is shown that a certificate of deposit was fraudulently issued by the cashier of a bank, and the evidence tends to show that others through whose hands it passed before reaching plaintiff, a bank claiming to be a purchaser in due course, were parties to the fraudulent transaction, and gave no value therefor, and were ready to and did surrender to the bank purporting to have issued the same a number of like certificates issued at the same time, and the evidence tends to show that the reputation of the immediate indorser of the one sued on by plaintiff was not good, of which fact plaintiff's officers who purchased the paper had some notice, but made no inquiry of the bank of issue respecting the same, by wire or otherwise, as might easily have been done, and plaintiff fails to produce as a witness the officer who purchased the paper to show the bona fides of the transaction, and it does not otherwise fully appear, it has failed to sustain the burden of proof cast upon it of showing that it was a purchaser in due course for value and without notice of the fraudulent character of the instrument, and, on the submission of the case to the court in lieu of a jury the court should find for the defendant and give judgment accordingly.
When the burden of proof has been shifted to the holder of an instrument, the mere possession thereof, though accompanied by proof that he acquired it before maturity and paid value therefor, will not be sufficient. To entitle him to recover he must further prove the circumstances under which he acquired the paper, and show facts constituting the good faith required.
The mere fact that the directors of a bank, after discovering the facts relating to the fraudulent issue by its cashier of certificates of deposit for a very large amount, and of which no record was made by him, causes a memorandum of such certificates of deposit to be made on the ledger but with no intention of ratifying the fraudulent transaction, will not be treated as a ratification thereof, in favor of the purchaser of one of such certificates prior thereto, and who was unaffected thereby.
The cashier of a bank who, without authority of or notice to the directors, and with fraudulent intent, issues and delivers to another, conspiring with him, and who has made no deposit of money, certificates of deposit aggregating a very large amount, is guilty of forgery, though the purported depositor issues and delivers to the cashier his worthless note and pledges therewith bonds of a corporation of little or no value, and of which transaction the cashier makes no record on the books of the bank.
Certificates of deposit so fraudulently issued, and constituting a forgery thereof by the cashier, cannot be made the subject of ratification by the directors of the bank; and unless the bank is in some way estopped by acts prejudicial to the holder of such paper, the bank is not precluded from the defense of forgery.
The defense of forgery and want of authority to make the instrument sued on may be made under the general issue of non assumpsit.
Additional Syllabus by Editorial Staff.
"Forgery" is a fraudulent making or altering of a writing to the prejudice of another man's rights, a falsifying of an instrument to another's prejudice.
Error to Circuit Court, Mineral County.
Action by notice of motion for judgment by the Merchants' Bank & Trust Company against the People's Bank of Keyser. Judgment for plaintiff and defendant brings error. Reversed, and judgment entered for defendant.[Copyrighted Material Omitted]
Taylor Morrison and Charles N. Finnell, both of Keyser, for plaintiff in error.
Ira E. Robinson, of Grafton, R. A. Welch, of Keyser, and Abner H. Ferguson, of Washington, D. C., for defendant in error.
This is an action begun in the circuit court by notice of motion for judgment on a certificate of deposit, as follows:
"People's Bank of Keyser.
Keyser, W.Va., March 18, 1922.
Adolph Segal has deposited in this Bank five thousand & no/100 dollars, payable to the order of himself with interest at 3 per cent. per annum for six months on return of this certificate properly endorsed.
Not subject to check.
$5,000.00. T. D. Leps, Cashier."
Endorsed as follows:
"Adolph Segal.
S. M. Smith.
Merchants' Bank & Trust Company."
The notice of said motion averred the purchase of said certificate by plaintiff before maturity, in due course, and for value received. And the usual statutory affidavit was attached thereto. The only plea by defendant was non assumpsit, on which issue was joined. A jury was waived, and the case submitted to the court in lieu of a jury.
After proving by the president of defendant bank that Leps at the date of the certificate of deposit sued on was cashier of his bank and that his signature thereto as such was genuine, plaintiff introduced as a witness Edwin W. Popkins, its treasurer, and over defendant's objection was allowed to prove by him that plaintiff was owner of the certificate of deposit sued on, and that it had been purchased in due course, for value, at the price of $4,800; over like objection and exception the certificate of deposit was admitted in evidence; and this action of the court is the first point of error relied on for reversal.
In support of this point, it is urged by defendant's counsel that the paper on its face bore such evidence of its infirmity as to call upon plaintiff for affirmative proof of its validity, and to account for its supposed defects, as a condition of its reception in evidence. When offered the paper showed that it had been prepared on a printed form used by the defendant and that the parts of the instrument written in had been inserted on a typewriter. It also showed that the words "if left" between the words "per annum" and "for six months" in the printed part had been "X'ed" out, manifestly by the same machine, and the defendant's contention is that the "X'ing" out of these words constituted prima facie evidence of a material alteration of the paper after its delivery to the payee, and that until shown to have been in fact altered before delivery the paper was inadmissible.
As already indicated, there was no plea of non est factum, or any other plea putting in issue the validity of the instrument, and as plaintiff proved before introducing it in evidence, that the signature thereto was that of the cashier of defendant, this was sufficient to admit it unless it carried on its face evidence of a material alteration after it was delivered. Do the "X'ed" out words show this? We do not think so. The alteration was evidently made by the same machine used in preparing the instrument, and this change of itself constituted no suspicious fact or circumstance putting the purchaser on notice of a subsequent alteration or of any other infirmity in the instrument.
Adopting the view of some courts that any alteration in a deed or other written instrument constitutes prima facie evidence that it was altered after delivery, defendant's counsel argue the inadmissibility of this paper until this presumption was overcome by evidence. Conceding their major premise, of course, their conclusion would follow; but we do not think the proposition is sustained, either by reason or the weight of authority. Three prior decisions of this court are cited and relied on to sustain the proposition, namely Conner v. Fleshman, 4 W.Va. 693; Piercy's Heirs v. Piercy, Ex'r, 5 W.Va. 199; and Carey Mfg. Co. v. Watson, 58 W.Va. 189, 52 S.E. 515. In the first case there was a plea of non est factum, which under the statute put the plaintiff on proof of the genuineness of the instrument. But even there the court held that the instrument in question was properly admitted in evidence, it being for the jury to say whether the alteration had been made after delivery, vitiating it. The second case was in equity. The bill stated that the note sued on was filed in a mutilated condition, and the answer of one of the defendants alleged that the note had been discharged and that plaintiff had obtained it fraudulently. On this state of the pleadings the court properly held that it devolved upon plaintiff to account for the alteration appearing on the face of the instrument. In the last case cited it was...
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