Metro. Cas. Ins. Co. v. First Nat. Bank in Detroit

• Decision Date: 03 January 1933
• Docket Number: No. 131.,131.
• Citation: 261 Mich. 450,246 N.W. 178
• Parties: METROPOLITAN CASUALTY INS. CO. v. FIRST NAT. BANK IN DETROIT.
• Court: Michigan Supreme Court

261 Mich. 450

246 N.W. 178

METROPOLITAN CASUALTY INS. CO.

v.FIRST NAT. BANK IN DETROIT.

No. 131.

Supreme Court of Michigan.

Jan. 3, 1933.

Appeal from Circuit Court, Wayne County; Royal A. Hawley, Judge.

Action by the Metropolitan Casualty Insurance Company against the First National Bank in Detroit. From a judgment in favor of plaintiff, defendant appeals.

Affirmed.

Argued before the Entire Bench, except FEAD, J.Lightner, Hanley, Crawford & Dodd, of Detroit, for appellant.

Stevens T. Mason, of Detroit, for appellee.

CLARK, J.

An employee, in charge of a branch office, caused to be issued by his employer, E. E. MacCrone & Co., brokers at Detroit, a number of checks; it being represented that the payees were customers of the branch office and that the several amounts were due them. The payees were nonexistent persons or, at least, there were no such customers.

The maker, MacCrone & Co., did not intend to issue checks to fictitious persons. It had no knowledge that the names of the payees did not represent real persons. The checks therefore cannot be treated as payable to bearer under 2 Comp. Laws 1929, § 9258. Los Angeles Investment Co. v. Home Savings Bank, 180 Cal. 601, 182 P. 293, 5 A. L. R. 1193.

The indorsement, by or at the instance of the employee, of these checks was forged (this is admitted of record) and is to be treated as a forgery. Houseman-Spitzley Corporation v. American State Bank, 205 Mich. 268, 171 N. W. 543;Detroit Piston Ring Co. v. Wayne County & Home Savings Bank, 252 Mich. 163, 233 N. W. 185, 75 A. L. R. 1273.

Certain of the checks bearing forged indorsements were paid by defendant, First National Bank of Detroit, and were in turn paid by the drawee bank, Peninsular State Bank of Detroit, and were by it charged to the deposit account of MacCrone & Co., which account was subject to check. MacCrone & Co. tendered back the checks to the drawee bank and demanded payment, which was refused. It appears that defendant, First National Bank, refused a like demand of the drawee bank.

MacCrone & Co. had from plaintiff a ‘depositor's forgery bond’ by which plaintiff contracted to indemnify the obligee, MacCrone & Co., and any bank of banks where the obligee carries a deposit account subject to check, for loss sustained through payment by the obligee or bank ‘of any check * * * which shall have been drawn by the obligee against * * * bank * * * and upon which the name of the payee * * * shall have been forged.’ Under this bond the drawee bank made the proofs of the loss. The plaintiff paid by check to MacCrone & Co. which was deposited to its credit in its account at such bank. The reason for payment to MacCrone & Co. instead of to the drawee bank appears to be that the bank had not yet made good on its charging the checks in question to the account of MacCrone & Co. The forgery bond provides: ‘Upon payment of any loss under this bond the Company shall be subrogated to all claims and rights of the Obligee and the Bank in any way arising or growing out of such loss.’

The plaintiff's declaration against the First National Bank, the collecting bank, is as assignee of the drawee bank, Peninsular State Bank, to recover the amount paid on the checks bearing the forged indorsements. Plaintiff had judgment in a trial without a jury. Defendant has appealed.

The...