Miller v. N. Bank

• Decision Date: 04 November 1941
• Citation: 300 N.W. 758,239 Wis. 12
• Parties: MILLER v. NORTHERN BANK.
• Court: Wisconsin Supreme Court

239 Wis. 12

300 N.W. 758

MILLER

v.NORTHERN BANK.

Supreme Court of Wisconsin.

Nov. 4, 1941.

Appeal from an order of the Circuit Court for Milwaukee County; William F. Shaughnessy, Circuit Judge.

Reversed.

Action commenced October 17, 1940, by Mary Miller against the Northern Bank to recover the amount of a check of which she was named payee and which was cashed by defendant on a forged indorsement. Defendant demurred to the complaint on the ground it failed to state facts sufficient to constitute a cause of action. From an order overruling the demurrer defendant appeals.

Allegations of the complaint are: that plaintiff's investments were managed by one Harry M. Lenartz and one John Lenartz who were associated as Harry M. Lenartz and Company; that sometime prior to April 1, 1940, plaintiff received notice that four $500 bonds she owned were being called; that thereafter plaintiff consulted John Lenartz; that on his advice he was given authority to collect amounts due on the bonds; that on April 10, 1940, Harry M. Lenartz and Company issued a check for $2,000 payable to plaintiff; and that the check was cashed on a forged indorsement and $2,000 credited to the personal account of Harry M. Lenartz.

In overruling the demurrer to the complaint the lower court held that the complaint stated a cause of action against the defendant in conversion or for money had and received.

Defendant points out that there was no privity of contract between plaintiff and defendant; that the execution of the check did not operate as an assignment of the drawer's funds; and that a payment on a forged indorsement is out of the bank's own funds.

Plaintiff's position is that although Wisconsin has adopted the Negotiable Instruments Law, it does not apply to this case and that in any event property belonging to the plaintiff was wrongfully converted by defendant.

James E. Coleman and John B. Frisch, both of Milwaukee, for appellant.

Zimmers, Randall & Zimmers, of Milwaukee, for respondent.

FAIRCHILD, Justice.

[1][2] Before the passage of the Negotiable Instruments Law, Ch. 356, Laws of 1899, it was the rule in this state that the giving of a check for value on an ordinary bank deposit was intended as an assignment of the fund pro tanto as between the maker and the payee. Raesser v. National Exchange Bank, 112 Wis. 591, 88 N.W. 618, 56 L.R.A. 174, 88 Am.St.Rep. 979. That rule was abolished by the Negotiable Instruments Law. Under that act a check of itself no longer operates as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder, unless and until it accepts or certifies checks. § 118.65, Stats. Dixon Shoe Co. v. Moen, 208 Wis. 389, 243 N.W. 327. The N. I. L. also provides that the acceptance must be in writing and signed by the drawee. § 118.07, Stats. There was no acceptance or certification on the part of appellant. As said by the learned trial judge in his decision, “It is well settled that the payment of a check on a forged or unauthorized indorsement and charging the same to the drawer's account do not amount to an acceptance so as to make the bank liable to the payee.”

[3][4] Since the giving of the check constitutes no assignment and there was no written acceptance, the drawer's debt to the payee is not discharged and the rights of the payee remain in their full vigor against the drawer. In Brady on Bank Checks, 2d Ed., a note to sec. 162, p. 254, cites cases which recognize the rule that “where a check is paid on a forgery of the payee's indorsement, the drawer remains liable to the payee for the obligation represented by the check.” The check involved in this...