Rauch v. Ft. Dearborn Nat. Bank of Chicago

• Decision Date: 06 December 1906
• Citation: 223 Ill. 507,79 N.E. 273
• Parties: RAUCH et al. v. FT. DEARBORN NAT. BANK OF CHICAGO.
• Court: Illinois Supreme Court

223 Ill. 507

79 N.E. 273

RAUCH et al.

v.FT. DEARBORN NAT. BANK OF CHICAGO.

Supreme Court of Illinois.

Oct. 23, 1906.

Rehearing Denied Dec. 6, 1906.

Appeal from Appellate Court, First District.

Bill of interpleader by the Ft. Dearborn National Bank of Chicago against Frederick A. Rauch and others. From a judgment of the Appellate Court affirming a judgment for complaint, defendants appeal. Reversed.Henry W. Prouty, for appellants.

Musgrave, Vroman & Lee, for appellee.

Frederick A. Rauch and George L. Lamping, the appellants, were, on and subsequent to June 11, 1902, engaged in business in the city of Chicago under the firm name of F. A. Rauch & Co., and had in their employ, as a collector of their accounts, one W. Bugenhagen. In the course of his employment, between June 11, 1902, and February 3, 1903, Bugenhagen received from different persons eight checks drawn on banks in the city of Chicago, payable to the order of F. A. Rauch & Co. He indorsed the name of said firm and his own name upon these checks and took them to Charles Rein, a saloon keeper, who cashed them for him. For some time prior thereto Rein had kept a general deposit account with the Ft. Dearborn National Bank of Chicago, the appellee. He indorsed these checks and deposited them with the appellee, who received them without knowledge as to the genuineness of the indorsements of F. A. Rauch & Co. and W. Bugenhagen, but relying on the indorsements of Rein, and credited them to Rein's general deposit account, subject to an agreement that, if the checks should not prove good, the amounts thereof should be charged back against Rein's deposit account. None of these checks were drawn upon the appellee bank. Upon receiving them from Rein, appellee indorsed them, presented them for payment through the Chicago clearing house in the usual course of business, and obtained the money upon the checks from the drawee banks. Two of these checks were drawn upon the First National Bank of Chicago, two upon the Milwaukee Avenue State Bank, two upon the Union Trust Company, and two upon the Bankers' National Bank of Chicago.

On April 10, 1903, the drawee banks notified appellee that F. A. Rauch & Co. claimed that the indorsements of the firm name upon the eight checks were forgeries or were unauthorized, and demanded from appellee the repayment of the amounts paid to it upon the checks. Appellee thereupon on that date charged back against Rein's deposit account the amounts for which Rein had been given credit on account of the deposit of the checks and notified Rein of such action. Rein denied that the indorsements of the firm name upon the checks were forgeries or were unauthorized, and denied the right of appellee to charge back the amount of the checks against his deposit account. On April 27, 1903, appellants brought four suits at law, in the superior court of Cook county, against the drawee banks above named, respectively, upon checks aggregating 125 in number, drawn upon those banks by depositors, payable to the order of F. A. Rauch & Co.; it being claimed by the plaintiffs in those suits that the indorsements of the firm name upon the checks there involved were forgeries. Among the checks on which the four suits are based are the eight checks above mentioned, which were deposited by Rein with appellee and by it collected from the drawee banks through the Chicago clearing house. On May 1, 1903, the drawee banks notified appellee that said suits had been brought against them, respectively; that it was therein claimed that the indorsements of the name of F. A. Rauch & Co. upon the checks which had been paid by said banks to appellee were forged or unauthorized; and that appellee would be required to defend said suits and to pay any judgments that might be rendered against said banks on account of the checks last above mentioned. On May 25, 1903, appellee notified Rein of the bringing of said four suits, and that the eight checks indorsed by him and deposited with appellee were involved therein, and that it was claimed that the indorsements of the name of F. A. Rauch & Co. were forgeries; that appellee had been notified by the drawee banks to defend said suits, and appellee requested Rein to defend said suits in so far as said eight checks were concerned and hold appellee harmless from any judgments entered therein and costs of litigation. On May 27, 1903, Rein sent appellee a letter stating, in substance, that he would not look after any of the suits referred to in appellee's notice to him, nor would he pay to appellee any of the expenses incurred in connection therewith; that he was not in any way responsible for any of those suits, as appellee well knew; that F. A. Rauch & Co. were paid the money on every check he had cashed, and therefore could not by any possibility recover on any one of them. He also contended in this letter that appellee had no right whatever to deduct any sum from his account, as it had done. On October 28, 1903, appellee filed a bill of interpleader in the superior court of Cook county setting up the above facts, and making Frederick A. Rauch and George L. Lamping, copartners doing business under the name of F. A. Rauch & Co., the First National Bank of Chicago, Milwaukee Avenue State Bank, Union Trust Company, the Bankers' National Bank of Chicago, and Charles Rein defendants thereto. The bill alleges that Rein and his attorney have frequently threatened to sue complainant for the amount of the eight checks charged against his account, and that complainant believes that Rein, unless restrained from so doing, will carry out his threats and bring suit against complainant for the amount of said checks. The bill further alleges that complainant is advised that if F. A. Rauch & Co. shall recover judgments against said drawee banks for the amount of said eight checks, on proof that the indorsements of the firm name thereon were forged or unauthorized, and said banks shall be compelled to pay such judgments, then said banks have recourse against complainant and can compel it to pay the amounts of said checks; that Rein and said Bugenhagen claim that said indorsements were not forged, but were authorized by F. A. Rauch & Co., or, if not, that the money collected on said checks was accounted for by Bugenhagen to said firm; and that said firm has no cause of action on said checks, but complainant states that such facts are denied by F. A. Rauch & Co. The bill avers that complainant asserts no right whatever to the amount or credit of the proceeds of the checks claimed by Rein and by F. A. Rauch & Co., but is, and always has been, ready and willing to pay the same to the party or parties entitled thereto, and now offers to bring said amount into court as the court shall direct. Then follow the usual allegations that complainant does not collude with any of the defendants, but exhibits its bill because it is uncertain to whom said fund or credit belongs, and to avoid multiplicity of suits and the danger of being compelled to pay said fund or credit twice.

The prayer is that the defendants be required to answer the bill and severally set forth to which of them said credit, or any part thereof, rightfully belongs, and how in particular they make their claim thereto; that they may be impleaded to adjust their demands among themselves; that complainant be at liberty to pay said sum into court for the benefit of the defendants as they shall appear entitled thereto; that Rein be restrained from bringing any action against complainant for the amount of said checks or credit; that Frederick A. Rauch and George L. Lamping may be restrained from prosecuting their said suits against the defendant banks in so far as such actions are based upon said...