Peppas v. Marshall & Ilsley Bank

• Decision Date: 05 November 1957
• Citation: 86 N.W.2d 27,2 Wis.2d 144
• Parties: Nicholas T. PEPPAS, Appellant, v. MARSHALL & ILSLEY BANK, Respondent.
• Court: Wisconsin Supreme Court

Page 27

86 N.W.2d 27

2 Wis.2d 144

Nicholas T. PEPPAS, Appellant, v. MARSHALL & ILSLEY BANK, Respondent.

Supreme Court of Wisconsin.

Nov. 5, 1957.

Bendinger, Hayes & Kluwin, Milwaukee, Donald J. Tikalsky, Milwaukee, of counsel, for respondent.

CURRIE, Justice.

When does a cause of action by a depositor against a bank to recover the amount of a check bearing a forged endorsement, which the bank had charged against the depositor's account, accrue so as to start the statute of limitations running? This is the sole question before us on this appeal.

In plaintiff's affidavit opposing the motion for summary judgment, he averred that he first learned that the endorsement of the check had been made by an unauthorized party when the circuit court for Milwaukee county, in November, 1952, entered its findings of fact in the action which he had commenced against the Perplies Brewing Company, drawee of the $625 check. It is plaintiff's contention on this appeal that the date of the commencement of the instant cause of action did not accrue until his discovery of the facts establishing the forgery of the payee's endorsement to the check, and, therefore, the six year statute of limitations had not run against his cause of action.

The law is well established that a general deposit in a bank, such as in a checking account, creates a debtor and creditor relationship between the depositor and the bank. No cause of action arises in behalf of the depositor for the deposit until demand has been made upon the bank and it has refused such demand, unless facts have arisen which dispense with such demand. 1 Morse on Banking (6th ed.), p. 743, sec. 322; 5B, Michie on Banks and Banking, pp. 299, 301, sec. 357a; 5 Zollmann, Banks and Banking, p. 384, sec. 3422, and p. 393, sec. 3428.

While there is some division of authority on the point, the better reasoned cases hold that the act of a bank in returning to the depositor, as a cancelled voucher, a check bearing a forged endorsement, together with a statement or passbook showing the charging of the amount of such check to the depositor's account, is a denial of liability which dispenses with the necessity of a demand as a condition precedent for the depositor suing the bank to recover the amount of such check. Union Tool Co. v. Farmers & M. Nat. Bank, 1923, 192 Cal. 40, 218 P. 424, 28 A.L.R. 1417; Kansas City Title & Trust Co. v. Fourth National Bank, 1932, 135 Kan. 414, 10 P.2d 896, 87 A.L.R. 334; and Masonic Benefit Ass'n of Stringer Grand Lodge v. First State Bank, 1911, 99 Miss. 610, 55 So. 408. These cases hold that the statute of limitations starts to run against the depositor's cause of action, to recover the amount of the check bearing the forged endorsement, as of the date the bank renders its statement to the depositor showing the charging of the check to the depositor's account. On this point see also 34 Am.Jur., Limitation of Actions, p. 102, sec. 123, and annotation, 87 A.L.R. 344.

We quote from the opinion of the Kansas court in Kansas City Title & Trust Co. v. Fourth National Bank, supra, as follows (135 Kan. at page 422, 10 P.2d at page 900):

'The relation of...