National Bank of Commerce v. Mechanics' Am. Nat. Bank

• Citation: 127 S.W. 429,148 Mo. App. 1
• Parties: NATIONAL BANK OF COMMERCE IN ST. LOUIS v. MECHANICS' AMERICAN NAT. BANK et al.
• Decision Date: 05 April 1910
• Court: Court of Appeal of Missouri (US)

127 S.W. 429

148 Mo. App. 1

NATIONAL BANK OF COMMERCE IN ST. LOUIS v. MECHANICS' AMERICAN NAT. BANK et al.

St. Louis Court of Appeals. Missouri.

April 5, 1910.

Rehearing Denied April 19, 1910.

1. STATUTES (§ 253)—TIME OF TAKING EFFECT—NEGOTIABLE INSTRUMENTS LAW.

The General Assembly which enacted the negotiable instruments law (Acts 1905, p. 243 [Ann. St. 1906, §§ 463—1 to 463—197]), having adjourned March 18, 1905, and the act containing no emergency clause, and its operation not being postponed beyond the constitutional 90 days, it became effective June 16, 1905, so that the rights of the parties in connection with checks drawn August 12th would be determined by the provisions of the act, so far as applicable; section 196, providing that the law merchant shall prevail in cases not provided for in the act.

2. BILLS AND NOTES (§ 377) — BONA FIDE PURCHASER — "BILL OF EXCHANGE"—PAYMENT OF FORGED CHECK.

Negotiable Instruments Law (Acts 1905, p. 243 [Ann. St. 1906, §§ 463—1 to 463—197]) § 62, provides that the acceptor, by accepting the instrument, engages to pay it according to his acceptance, and admits the drawer's existence, the genuineness of his signature, and his capacity and authority to draw the instrument, the existence of the payee and his capacity to indorse. Section 185 provides that a check is a "bill of exchange" drawn on a bank payable on demand, and, except as otherwise provided, the provisions of the act applicable to a bill of exchange payable on demand apply to a check. Section 188 provides that, where the holder of a check procures it to be accepted, the drawer and all indorsers are discharged from liability thereon. Held, that a drawee who pays to a bona fide holder a check to which the drawer's name has been forged cannot recover the amount of such payment; the payee not being bound to determine at its peril the genuineness of the signature.

3. BANKS AND BANKING (§ 319)—CLEARING HOUSE RULES—EFFECT.

Under a clearing house rule providing that all checks received at the clearing house, and not returned to the clearing bank on the same day before 2 o'clock, shall be deemed to have been paid with like effect as though they had been paid in currency at that hour by the bank on which it was cleared, a bank which did not return within the required time a check presented by another bank for payment was chargeable with the consequences of disregarding the rule, and could not recover the amount paid thereon, though the check was forged and the payee bank was not injured by the delay.

Appeal from St. Louis Circuit Court; Matt G. Reynolds, Judge.

Action by the National Bank of Commerce in St. Louis against the Mechanics' American National Bank and another. From a judgment for defendants, plaintiff appeals. Affirmed.

The petition upon which this case was tried as well as the other case hereinafter referred to, the latter differing from this only in the names of the defendants and in the number of checks and in the amount, consists of two counts. By the first count it is charged that on or about the 15th of August the defendants presented to plaintiff for payment 14 certain pretended checks, each dated the 12th day of August, 1905, for various amounts, aggregating the sum of $549.25, each purporting to have been drawn on plaintiff by the St. Louis Car Company, to have been signed by said company by its president and its assistant secretary, and each purporting to be indorsed by the payee therein, each of which was indorsed by the defendants or by others and then by the defendants; that defendants represented to plaintiff that the checks were the genuine checks of the St. Louis Car Company, as they purported to be, and requested plaintiff to pay the same; that when the checks were purchased or otherwise acquired by the defendants "they negligently made no inquiry and took no action whatever to ascertain whether or not said checks were in fact the genuine checks of the St. Louis Car Company as they purported to be"; that they were indorsed by the defendants and presented to plaintiff for payment through the clearing house of the city of St. Louis, all being presented together, and that believing the representation of the defendants that the checks were the genuine checks of the car company, and such appearing to be the case from such inspection of the checks as plaintiff was able to make under the circumstances, and at the time they were presented for payment by the defendant bank, and not knowing otherwise, but relying upon the genuine indorsements thereon of the defendants, which also led plaintiffs to believe them genuine, plaintiff paid them to the defendant, the Mechanics' American National Bank; that all of the checks were forgeries, and not the genuine checks of the St. Louis Car Company, as represented by the defendants and as they purported to be, and were wholly worthless and valueless to the plaintiff; that the fact that the checks were forgeries was not discovered either by plaintiff or by any other person until on or about the 11th or 12th of September, 1905, and that immediately upon discovering that the checks were forgeries plaintiff notified defendants of the fact, and demanded refund of the amount of money paid, which defendants failed and neglected and refused to do. It is further averred that the position of the defendant was not altered or changed, and that the defendants had sustained no damage as the result of plaintiff's paying the checks to the defendant Mechanics' American National Bank as requested by defendant at the time it notified defendants that the checks were forged, and demanded a refund of the money, wherefore judgment is demanded for the amount of the checks ($549.25) with interest and costs. The second count is practically the same, with the exception that it states that each of the checks purported to be indorsed by the payee therein, and each of them was indorsed by the defendant St. Louis Brewing Association and by others, and that the defendant represented to plaintiff that the checks were the genuine checks of the car company, and that each of the checks was indorsed by the genuine signature of the payee named therein as indorser thereof as it purported to be; "that, when said checks were purchased or otherwise acquired by the defendants, they negligently made no inquiry, and took no action whatever to ascertain whether or not said checks were, in fact, the genuine checks of the St. Louis Car Company, as they purported to be, or whether the aforesaid indorsements thereon were the genuine indorsements of the parties whose names appeared thereon"; and it is averred that the indorsements of the payees and other parties thereon as indorsers thereon "are not the genuine signatures of said payees, as represented by the defendants, and as they purport to be, and all are wholly worthless and valueless to the plaintiff." The other allegations are practically as in the first count of the petition.

The answer of the defendant bank admits the incorporation of the various parties, avers that the defendants believed the checks to be genuine and valid, and that they had been duly indorsed by the payees named therein as payees, and so believing deposited the checks to the credit of the de-defendant bank on current account; that they did this in good faith and in the belief that the checks were the checks of the car company and duly indorsed by the payees therein named, and that in due course they presented the checks to the plaintiff bank for payment, through the Clearing House Association, in the usual and customary manner of collecting checks between banks in the city of St. Louis; that they were examined by the employés of the plaintiff and held by them to be the genuine checks of the car company, and defendant's account was credited with the aggregate amount of the checks; that the plaintiff and defendant were at the time of the presentation of the checks members of the Clearing House Association of the city of St. Louis, and the rule of the Clearing House Association hereafter referred to is set up, it being averred that the plaintiff did not return defendant the checks on or before 2 o'clock of the day on which they were presented to plaintiff for payment through the Clearing House Association, and did not inform defendant that the checks were as plaintiff alleges forgeries and not genuine checks of the car company, or indorsed by the payees thereof until on or about the 11th or 12th of September, 1905, which defendants say was the first and only information that it had that the checks were not the genuine checks of the car company or indorsed by the payees thereof; denies making any representations as to the genuineness of the signatures; denies knowledge and information as to whether they were forgeries and denies negligence. The answer to the second count is practically the same, with the denial of any knowledge or information as to the forgery of the names of the indorsers. The answer of the Brewing Association was a general denial except as to admissions of corporate capacity, and that the car company was a depositor and customer of the plaintiff, and engaged with plaintiff in the business usual and customary between banker and depositor. Demurrers to the petition were interposed which were overruled. The reply was a general denial. Trial was had before the court, a jury being waived, this case being tried in the lower court, and submitted and argued before us in connection with another case, in which the National Bank of Commerce in St. Louis is plaintiff and appellant, and the German-American Bank, the Bremen Bank, and the Gast Brewing Company are defendants and respondents. 127 S. W. 434. As the facts which underlie the transactions involved are identical in the two cases, change of parties and of names only and of the number of checks distinguishing one from the other, the statement which we make for brevity and convenience as well as an intelligent...