Meridian Nat. Bank of Indianapolis v. First Nat. Bank of Shelbyville

• Decision Date: 01 February 1893
• Citation: 7 Ind.App. 322,33 N.E. 247
• Parties: MERIDIAN NAT. BANK OF INDIANAPOLIS v. FIRST NAT. BANK OF SHELBYVILLE.
• Court: Indiana Appellate Court

7 Ind.App. 322

33 N.E. 247

MERIDIAN NAT. BANK OF INDIANAPOLIS

v.FIRST NAT. BANK OF SHELBYVILLE.¹

Appellate Court of Indiana.

Feb. 1, 1893.

Appeal from superior court, Marion county; J. W. Harper, Judge.

Action by the First National Bank of Shelbyville against the Meridian National Bank of Indianapolis to recover the amount of a check cashed by plaintiff, which check had been certified by defendant.From a judgment for plaintiff, reversing a judgment of the lower court in favor of defendant, defendant appeals.Affirmed.Addison C. Harris and Linton Cox, for appellant.Lamb & Hill, for appellee.

GAVIN, J.

The appellee brought this suit in the Marion superior court upon a check certified by appellant.The case was tried at special term, and, on special findings of facts and conclusions of law by the court, judgment was rendered in favor of appellant.On appeal to the general term this judgment was reversed, and from that reversal appeal is taken to this court.The facts found, so far as material to the questions presented in this court, are as follows: “First, Heretofore, to wit, on the night of the 3d of September, 1890, William C. Milburn, with another, stole from George W. Ray, near the town of Franklin, Johnson county, Ind., two (2) head of steers, and drove them to the Indianapolis stock yards for sale, arriving there early in the morning.At that time the firm of Stockton, Gillespie & Co., live-stock brokers and dealers, had an office at, and were engaged in business in, the Indianapolis stock yards situate near the city of Indianapolis, Ind.Mr. Stockton had the transaction now to be stated early in the morning of the 4th of September, 1890.Milburn, who was a stranger to Mr. Stockton, requested him to sell the cattle.Stockton called a buyer near by, and asked for a bid, which was made at $3.25 per hundred pounds.Stockton replied that was not enough, and started off on an errand of business, when Milburn said to him (Stockton) to sell the cattle, as that price was as much as he expected to receive, and he was in haste to leave the city on the early train.Without complying with this request, Stockton stepped away for a few minutes on a matter of other business, and returned, when he found Milburn turning the cattle out of a pen in which they had been placed, to be taken to the scales and weighed, which was done.Thereupon Stockton gave a memorandum of the weight and price ($3.25 per hundred pounds) to Milburn, who carried it to Mr. Gillespie, in the office.A computation was made, showing that the cattle came to the sum of $68.15.Gillespie asked Milburn, who was an entire stranger to him, what was his name, when he answered ‘W. C. Smith,’ and thereupon Gillespie made out the following check: ‘No. 1,372.Indianapolis, Sept. 4th, 1890.Meridian National Bank.Pay to the order of W. C. Smith sixty-eight dollars and fifteen cents, ($68.15.)Stockton, Gillespie & Co.’Neither of the members of said firm then had any knowledge, other than as given aforesaid by Milburn, as to what was his proper name.Milburn and his confederate at once left the office.Stockton was suspicious that the cattle had been stolen, from the haste manifested in their sale, as above stated, and because an employe and solicitor of the firm, who had met Milburn and his confederate when they drove the said stock into the yard, told him (Stockton) that Milburn had given to him, (said solicitor,) as his (Milburn's) name, that of Davis; and so he did not ship that day the said two (2) steers, but kept them until about noon of the day following, to wit, September 5, 1890, when Mr. Ray came to the stock yards, and identified the cattle as his own in the presence of Mr. Stockton.Second.Early in the morning of the 4th of September, 1890, Milburn, who was an entire stranger to the officers of the Meridian National Bank, presented said check, unindorsed, at the said bank, to Mr. Wocker, one of the tellers, for payment.Mr. Wocker then informed him, as he was a stranger, that he must identify himself, which he said he could not do, as he was not acquainted in the city of Indianapolis.Thereupon it was suggested (but whether by Wocker or Milburn, Mr. Wocker, who was the only witness, was unable to recollect) that the check should be certified, and then it could be used at Franklin.At the defendant's bank he represented his name to be W. C. Smith.Thereupon the bank aforesaid made a certificate on the face of the said check as follows: ‘Certified.$68.15.Meridian National Bank.Wocker, Teller,’-and the said check was delivered back to Milburn.Third.During the afternoon of said September 4, 1890, Milburn and some other person, during banking hours, went into the bank of the plaintiff, at Shelbyville, Ind., and presented the said chcek to the cashier of that bank, and asked him to purchase it.The cashier did not know the person presenting it, nor the person with him.He was busily engaged in the business of the bank, and thought the face of the person with Milburn was familiar, but did not then know, nor did he know at the trial, the name of such person.Looking at the check, he saw that it was certified, but that it was not indorsed, but relying upon the certification, he thereupon asked the holder of the check to indorse it.He and the person with him turned about to a writing counter across the banking room, and soon returned with the check indorsed upon the back ‘W. C. Smith,’ and passed it to the cashier; and thereupon the cashier paid Milburn $68.15, and in the evening mail inclosed the said check to the banking house of S. A. Fletcher & Co., its Indianapolis correspondent, for collection.Fourth.On the 5th of September, and before the presentation of the check to the Meridian Bank for payment, the drawees of the check, having learned that the cattle were stolen, countermanded the payment of the check; and the Meridian Bank, on the 6th of September, refused to pay the same when presented to it through the clearing house, through which it had passed on the 5th, and the check was returned to the plaintiff in the action below.Sixth.At the time Mr. Wocker certified the said check he charged the same against the account of Stockton, Gillespie & Co., who then, and for a long time prior thereto, kept their deposits in that bank, and had a certified check account.Eighth.Milburn had never been known in the communitywhere he had lived by any other name than that of W. C. Milburn.”

It seems to be well established that as a general rule the certification of a check in the hands of the payee, the body of which is unaltered, releases the drawer from further liability, and creates a direct liability from the bank to the payee, while as between the bank and the drawer it operates as a payment, to that extent, on his account; and although, prior to its being certified, the check may be countermanded by the drawer, after its certification it has passed beyond his control, and he no longer has power to countermand its payment.Daniel, Neg. Inst. §§ 5, 1601-1603;Morse, Banks, § 414;Van Schaack, Bank Checks, 91, 92.Whether or not the liability of the certifying bank may, under certain circumstances, extend even further, we need not now determine.It is said in Born v. Bank, 123 Ind. 78, 24 N. E. Rep. 173, “that the drawer of a check is released if the holder, instead of presenting it for payment himself, procures it to be certified by the bank upon which it is drawn.If the holder elects to procure the certification of the check it becomes in his hands substantially a certificate of deposit.By his own hand he makes the bank his debtor, and releases the drawer of the check.”

The principal question upon which the rights of the parties in this case depend is whether or not the indorsement of the check by Milburn under the assumed name of Smith, and without identification, was such an indorsement as was effectual to pass to the appellee the title to the check.If it was, it will then be unnecessary for this court to determine a number of the propositions advanced by counsel on each side.The position of counsel for the appellant may best be stated in their own language: “In other words, the Shelbyville Bank's contention is that the acceptance of an unindorsed check implies three things: (1) That the signature of the maker is genuine; (2) that the maker has money to his credit which the bank will retain until the check is presented for payment; (3) that the holder is the payee, and is entitled to receive the money,-while the contention of the Meridian Bank is that the certification of the check, unindorsed, does not waive, but is subject to, identification and legal indorsement, (Daniel, Neg. Inst. § 1607a,) and that as the check was given for stolen cattle, and was not made payable to the real person, William C. Milburn, but to no person, without its knowledge and for a fraudulent purpose, the indorsement was invalid, and the same, in law, as if it had been passed over the counter of the Shelbyville Bank unindorsed, in which case the transferee takes it subject to all equities and defenses.”Under the view which we have taken of this case, it is not required of appellee, in order to sustain the judgment of the court below, that he should maintain the propositionNo. 3, as stated by appellant's counsel.Neither is it necessary that we should determine whether or not it would be permissible to the bank, on the ground of want of consideration or fraud, as between the payee and the drawer, to defend against a check certified by it after it has passed into the hands of an innocent holder, even though unindorsed.It is settled law that the bona fide assignee by indorsement for value takes such paper freed from any equities existing between the original parties.Daniel, Neg. Inst. §§ 1608-1652;Morse, Banks, § 419;Van Schaack, Bank Checks, 63-89.Under the facts of this case, we think...