Northwestern Nat. Bank v. Bank of Commerce

• Decision Date: 02 December 1891
• Citation: 17 S.W. 982,107 Mo. 402
• Parties: NORTHWESTERN NAT. BANK OF CHICAGO v. BANK OF COMMERCE OF KANSAS CITY.
• Court: Missouri Supreme Court

17 S.W. 982

107 Mo. 402

NORTHWESTERN NAT. BANK OF CHICAGO v. BANK OF COMMERCE OF KANSAS CITY.

Supreme Court of Missouri, Division No. 2.

December 2, 1891.

BANKS — PAYMENT OF FORGED DRAFT BY DRAWEE.

W., on December 17, 1885, presented to defendant bank at Kansas City a letter of introduction from a bank at Nevada, showing his genuine signature, and also a certificate of deposit, a small portion of which he collected, leaving the balance on deposit. He rented an office, and December 22d employed a book-keeper. On the same day he deposited with defendant a draft on New York for $3,500, drawn by an Omaha bank, and on December 23d drew $2,500. On the afternoon of the same day he deposited a draft for $4,000, drawn by an Omaha bank on plaintiff bank at Chicago. On December 24th he drew $4,500, and left town. At that time his balance in defendant bank was $550. Defendant, December 24th, sent the draft of $4,000 to its correspondent in Chicago, "For collection," and it was paid by plaintiff bank the drawee, through the Chicago Clearing-House, on December 26th. January 4th it was sent to the drawer bank at Omaha, where it was found to be a forgery. The officers of the Omaha bank, as well as the clerk whose name was signed to the draft, at first thought it genuine. Due notice of the forgery was given to all parties, but W. could not be found. Held, that defendant was not negligent in its dealings with W., either before or after presentation of the draft, and that it was a bona fide owner of the draft; that by its indorsement of the same, "For collection," it only guarantied the genuineness of the payee's signature, and retained title thereto until it was paid by the drawee bank, of which fact the latter had notice by such indorsement, and an action would not lie by the drawee to recover the amount thereof.

Appeal from circuit court, Jackson county; T. A. GILL, Judge.

Action by the Northwestern National Bank of Chicago against the Bank of Commerce of Kansas City to recover the amount paid on a forged draft. Plaintiff appeals from a judgment for defendant. Affirmed.

C. O. Tichenor and Lathrop, Morrow & Fox, for appellant. Karnes, Holmes & Krauthoff, for respondent.

THOMAS, J.

On the 17th day of December, 1885, a man calling himself John Whitney presented to the paying teller of defendant bank the following letter: "Citizens' Bank of Nevada. Nevada, Mo., 12-16-85. To Bank of Commerce, Kansas City, Mo.: This will introduce to you Mr. John Whitney, who holds our certificate of deposit for $350 of this date. He will want to draw the money there. Below we give his signature for identification. Yours, truly, C. K. CALDWELL, Cashier. JOHN WHITNEY." Whitney, when at the bank, acted in the ordinary way, and there was nothing about his manners or looks that attracted the attention of the officers of the bank. He left the certificate of deposit for $350, receiving $50 cash, and a credit for the balance. He rented a room on Main street in Kansas City. On the 20th day of December he advertised in the Kansas City Times for a book-keeper, and on the 22d of that month one H. P. Brown, who went to that city in October in the same year, applied to Whitney for employment. When Brown reached Whitney's office it was wholly unfurnished, but on the same day Whitney bought a table, two chairs, and some writing material. Brown was employed at $15 per week and expenses while away. Whitney informed him that he had ordered office furniture from Chicago, and took him to defendant bank, and introduced him as his book-keeper to the officers, stating he was engaged in the cattle business, would need a good deal of currency, and would probably send checks by Brown to be cashed, and which the bank should cash when presented by him. In the afternoon of the same day Whitney handed Brown two checks for $3,500 each, drawn by the United States National Bank of Omaha on a New York bank in favor of Whitney, and directed him to deposit one with the defendant and the other with the Citizens' National Bank, which was done. The next morning Whitney drew two checks of $2,500 each, — one on defendant, and the other on the Citizens' National Bank, — both payable to the order of Brown. These were paid, and the money given to Whitney about 10 o'clock in the morning. In the afternoon of the same day (December 23d) Whitney handed Brown a draft of which the following is a copy: "United States National Bank of Omaha. $4,000. Omaha, Nebraska, Dec. 21, 1885. If duplicate unpaid, pay to the order of John Whitney four thousand dollars in current funds. To Northwestern National Bank, Chicago, Ill. M. T. BARLOW, Cashier. No. 211,573. pp. C. WILL HAMILTON. [Indorsed:] JOHN WHITNEY," — with direction to deposit it in the defendant bank, which was done, and the amount, $4,000, duly placed to the credit of Whitney. Defendant immediately indorsed this draft as follows: "Pay Metropolitan National Bank, Chicago, or order, for collection, for account of the Bank of Commerce of Kansas City, Missouri. C. J. WHITE, Cashier,"—and sent it to the latter bank at Chicago. On the morning of December 24th Whitney drew a check for $4,500 on defendant, payable to Brown, which was at once presented by Brown, and paid, the proceeds being given to Whitney. At half past 12 that day Whitney disappeared from Kansas City, and was never afterwards seen there. He told Brown he had been called by telegraph to Nevada, Mo., to buy stock, and wanted Brown to go down to Nevada on Christmas night or the next morning, giving him $75 to pay his expenses and a week's salary. Brown went to Nevada on the morning of the 26th, and stayed all day, inquiring for Whitney, but, being unable to learn anything about him, or who he was, he returned to Kansas City that night, it being Saturday night. He went to the office next morning, but found no one there. He went again Monday morning, December 28th, and, again finding no one, he went to the defendant, and inquired for him, but the officers of the bank knew nothing of him. He continued to go to the Whitney office for about a week. The draft of $4,000 reached Chicago December 25th, and on the next day — December 26th — it was presented to and paid through the clearing-house by the Northwestern National Bank (the plaintiff) to the Metropolitan National Bank, and the proceeds duly placed to the credit of defendant on the books of the Metropolitan National Bank. The items paid by plaintiff on the 26th through the Chicago Clearing-House were 1,425 in number, amounting to nearly $442,000. Its average daily clearing was about $300,000; while the entire amount paid daily through the clearing-house was about $8,500,000. The clearings are made at 11 A. M., and the items are received by the bank as soon as the messenger can make the exchanges and get back, which takes about half an hour. The items cannot be examined at the clearing-house. This must be done by the bank, and such items as it is not desired to pay must be returned to the bank sending them before 2 P. M. There is not time, under the rule, to make a critical examination of every item paid in this way. On December 26th plaintiff paid 31 other drafts of the Omaha Bank. The $4,000 was charged to this bank, and was sent to it in the regular course, with other vouchers, on January 4th. On the 11th, said bank, by letter and wire, notified plaintiff of the forgery. The telegram was received too late, so that notice was not given the Metropolitan Bank until the next day. Plaintiff, through that bank, at once gave notice to defendant. The forgery was a very dangerous one. The officers of the Omaha bank, as well as the clerk whose name was signed to the draft, at first thought it was genuine. They say it must have been lithographed on the original plate of their drafts. There was evidence showing that the channel through which a draft is presented for payment makes a difference with respect to the inspection; that in dealing with responsible parties their prudence and care is relied upon; that a draft paid through the clearing-house does not receive as close inspection as when presented over the counter by the payee. The evidence also tended to show that the letter of the cashier of the Nevada Bank was a sufficient identification of Whitney to justify a prudent bank to deal with him in the ordinary course of business. Whitney was traced by detectives to New York, where it was ascertained he had been sent to the penitentiary for five...