National Bank of Commerce v. United States

• Decision Date: 12 July 1915
• Docket Number: 2458.
• Citation: 224 F. 679
• Parties: NATIONAL BANK OF COMMERCE v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

224 F. 679

NATIONAL BANK OF COMMERCE v. UNITED STATES.

No. 2458.

United States Court of Appeals, Ninth Circuit.

July 12, 1915

During the years 1907, 1908, and 1909 one M. P. McCoy was an examiner of surveys and special disbursing agent for the Interior Department of the United States. While McCoy was such examiner and disbursing agent, plaintiff (defendant in error here) caused to be deposited with the National Bank of Commerce (plaintiff in error) considerable sums of money to his credit, to be used by him solely for the purpose of making payment of the expenses which he was authorized to incur on account of plaintiff as such examiner and disbursing agent. The deposits were made with defendant as a government depository, and in accordance with the laws of Congress and regulations of the Treasury Department relating to the deposits and disbursements of public moneys. McCoy, at various times within the dates mentioned, fraudulently and without authority of plaintiff, drew checks on the defendant bank, aggregating $15,129.81, payable to the order of fictitious payees, and thereafter forged the indorsement of such fictitious payees upon the checks, and procured from various banks for his own use the amounts of the checks. Subsequently such checks were presented from time to time to the defendant, and were wrongfully, and without authority from plaintiff, paid by it and charged against the public funds on deposit with it to the credit of McCoy. The forgeries being discovered by plaintiff, suit was instituted on or about December 22, 1910, to recover the amount of such deposits thus paid out by the defendant bank.

Three defenses were interposed: First, that the relation of debtor and creditor existed between plaintiff and defendant; that it was not the duty of defendant to inquire as to the name of the payee on such checks; that monthly statements of account were rendered to plaintiff, and to McCoy, its agent, in accordance with the usual custom of banks; that it was the duty of plaintiff to examine such statements and the vouchers accompanying them, and to notify defendant of such forgeries within a reasonable time; and that by reason of the neglect of such duty the defendant has been damaged, and plaintiff is now estopped to maintain the action; second, that the money sued for was expended by McCoy in payment of claims against the United States that he was authorized to pay; and third that subsequent to the issuance of such checks plaintiff with full knowledge of the facts, ratified and approved the action of McCoy in drawing them in the way in which they were drawn, and the action of defendant in paying and discharging them.

James A. Kerr and Evan S. McCord, both of Seattle, Wash., for plaintiff in error.

Clay Allen, U.S. Atty., of Seattle, Wash., and G. P. Fishburne Asst. U.S. Atty., of Tacoma, Wash.

Before GILBERT and ROSS, Circuit Judges, and WOLVERTON, District judge.

WOLVERTON District Judge (after stating the facts as above).

This is the second appeal. Counsel for appellant here say:

'We again desire to present our contention that the checks in question were in legal effect negotiable instruments, payable to bearer, and that no liability resulted to the defendant bank in paying the checks as they did, even though the money was in the end misappropriated by McCoy to his own use.'

And they rely upon the provision of 2 Rem. & Bal. Code, Sec. 3400, subd. 3, which reads:

'A bill of exchange is payable to bearer: 'When it is payable to the order of a fictitious or nonexisting person, and such fact was known to the person making it so payable."

It is urged, therefore, that the checks in question were, in a legal commercial sense, payable to bearer, imputing knowledge of the fact that the checks were payable to a fictitious person to the government, because it is assumed McCoy was its agent so to issue the checks. Thus predicating their argument, counsel further rely upon Phillips v. Mercantile National Bank of New York, 140 N.Y. 556, 35 N.E. 982, 23 L.R.A. 584, 37 Am.St.Rep. 596, which it must be conceded is an analogous case, if counsel's premises are well founded. But there is this obvious distinction between that case and this: The government is a party here, and not a private person, and the government had, through its Treasury Department, promulgated Department Circular No. 102, of which the defendant, being a national depository, was bound to take notice, and it must be assumed had knowledge, in the following language:

'Any check drawn by a disbursing officer upon moneys thus deposited must be in favor of the party, by name, to whom the payment is to be made, and payable to 'order," with certain exceptions not material to the inquiry.

McCoy was a disbursing officer of the government, and of this fact the defendant also had knowledge. Thus it follows that the paper in question cannot be considered or treated as payable to bearer, so far as the defendant is concerned, it being a government depository acting and operating under the regulation above quoted, and the case of Phillips v. Mercantile National Bank of New York, supra, is wholly without application.

When the case was here upon the former appeal, this court held that the knowledge of McCoy was not to be imputed to the government, and in the end decided the very question that is now again insisted upon against the contention of counsel. United States v. National Bank of Commerce, 205 F. 433, 123 C.C.A. 501. A decision so rendered becomes the law of the case, and the litigant will not again be heard, upon a subsequent appeal, to urge the same question. Nor will the court again entertain his suit in that relation.

'It has been settled by the decisions of this court,' says the Supreme Court, 'that after a case has been brought here and decided, and a mandate issued to the court below, if a second writ of error is sued out, it brings up for revision nothing but the proceedings subsequent to the mandate. None of the questions which were before the court on the first writ of error can be reheard or examined upon the second. To allow a second writ of error or appeal to a court of last resort on the same questions which were open to dispute on the first would lead to endless litigation. In chancery, a bill of review is sometimes allowed on petition to the court; but there would be no end to a suit if every obstinate litigant could, by repeated appeals, compel a court to listen to criticisms on their opinions, or speculate on chances from changes in its members.'

So it was said by Mr. Chief Justice Strahan, in Kane v. Rippey, 22 Or. 299, 301, 29 P. 1005, 1006:

'Upon a second appeal, the opinion of the court upon the former appeal, so far as the same facts appear, becomes the law of the case and governs and controls the parties and the court in every subsequent step in the cause.'

To the same purpose see Corning v. Troy Iron & Nail Factory, 15 How. 451, 465, 14 L.Ed....