National Metropolitan Bank v. Realty Appraisal & Title Co., 5031.

• Decision Date: 02 March 1931
• Docket Number: No. 5031.,5031.
• Citation: 47 F.2d 982,60 App. DC 86
• Parties: NATIONAL METROPOLITAN BANK v. REALTY APPRAISAL & TITLE CO.
• Court: U.S. Court of Appeals — District of Columbia Circuit

60 App. DC 86, 47 F.2d 982 (1931)

NATIONAL METROPOLITAN BANK v. REALTY APPRAISAL & TITLE CO.

No. 5031.

Court of Appeals of District of Columbia.

Argued February 9, 1931.

Decided March 2, 1931.

Hayden Johnson, Vernon E. West, and L. Harold Sothoron, all of Washington, D. C., for plaintiff in error.

George W. Offutt and Ross H. Snyder, both of Washington, D. C., for appellee.

Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.

MARTIN, Chief Justice.

A review of a judgment in an action brought against a bank by a depositor to recover because of the payment, upon a forged indorsement, of a check issued by the depositor and made payable to order.

The facts are not in dispute. In December, 1926, Clinton T. Flanagan, a negro, professing to represent Emelia Murray, applied to C. F. Waring, a broker, for a loan of $2,000, upon the security of a second deed of trust upon certain described real estate situate in the city of Washington, and owned by Emelia Murray. Waring secured the loan from William K. Hill, one of his clients. The transaction was to be closed through the office of the Realty Appraisal & Title Company, hereinafter called the title company.

On December 14, 1926, Theodosia Stevenson, a negro woman, appeared at the office of the title company, pretending to be Emelia Murray, and, acting in concert with Flanagan, forged the name of Emelia Murray upon three papers, (1) an application addressed to C. F. Waring for a loan of $2,000, to be secured as aforesaid; (2) a deed of trust note, dated December 14, 1926, for $2,000, to be secured upon the described property; and (3) a deed of trust purporting to convey the property to certain trustees to secure the payment of the note. The deed of trust was acknowledged before Annie W. Ball, the secretary and treasurer of the title company, who was also a notary public, and who executed the customary certificate that "Emelia Murray * * * personally appeared before me in said District, the said Emelia Murray being personally well known to me as the person who executed said deed and acknowledged the same to be her act and deed." In fact the real Emelia Murray had no knowledge whatever of this transaction.

The title company, misled by the fraud, examined the title of Emelia Murray to the mortgaged property and reported favorably upon it, and the proceeds of the loan were disbursed through its hands. In making such disbursement, the title company on December 26, 1926, drew its check to the order of Emelia Murray in the sum of $728.13, and on January 5, 1927, drew its second check to the order of Emelia Murray in the sum of $192.47. Both checks were drawn on the National Metropolitan Bank, and are the two checks upon which the action below was based.

The checks were delivered by the title company to Flanagan to be delivered by him to Emelia Murray. The first check on the day of its date was fraudulently indorsed by Flanagan with the name "Emelia Murray," and also that of "Clinton T. Flanagan, Trustee," and deposited to his credit in his account with The Commercial National Bank of Washington, D. C. That bank indorsed the check, "Prior indorsements guaranteed. Dec. 17, 1926," and as thus indorsed it was received and paid by the drawee, the National Metropolitan Bank. The second check followed a similar course, except that it was deposited on the day of its date by Flanagan in his account with the Mt. Vernon Savings Bank of Washington, D. C., indorsed with the names "Emelia Murray" and "Clinton T. Flanagan, Trustee," and indorsed by that bank, "Prior indorsements guaranteed," and transferred to the Commercial National Bank, by which it was indorsed, "Prior indorsements guaranteed," and collected from the National Metropolitan Bank. Both checks were charged by the latter bank to the account of the title company. Flanagan closed his account with the Commercial National Bank on January 6, 1927, and with the Mt. Vernon Savings Bank on September 12, 1927, and later absconded.

Theodosia Stevenson, who committed the first forgeries, was an ignorant laboring woman who was employed by the day to clean Flanagan's office and at times his house. She knew of course that her name was not Emelia Murray when she signed that name to the papers, but relied upon Flanagan's assurance that it would not bring her into any trouble, and she had confidence that Flanagan would not tell her to do anything "that was wrong." She never received the checks in question from Flanagan, nor did she indorse either of them or authorize Flanagan to indorse them for her, nor did she appear at any of the banks, nor receive any of the proceeds of the checks. In these particulars this case differs from Central Nat. Bank v. National Metropolitan Bank, 31 App. D. C. 391, 17 L. R. A. (N. S.) 520,...