Shepard & Morse Lumber Co. v. Eldridge
| Decision Date | 29 June 1898 |
| Citation | 171 Mass. 516,51 N.E. 9 |
| Parties | SHEPARD & MORSE LUMBER CO. v. ELDRIDGE. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
W.C. Loring and Clapp & Glover, for plaintiff.
L.S Dabney and H.P. Harriman, for defendant.
The plaintiff sues upon two checks drawn by the defendant upon his banker,--one for $446.24, dated January 25, 1895; the other for $561.97, dated July 20, 1895. Both were written to the plaintiff's order, and were mailed by the defendant to the plaintiff, in payment of bills for goods bought by the defendant of the plaintiff. Each check was duly received by the plaintiff, and the bills for which the checks were sent in payment were duly receipted by the plaintiff, and returned to the defendant,--one on January 26, 1895, and the other on July 24, 1895. The check of January 25, 1895, was presented at the bank on which it was drawn on January 30, 1895. It then purported to bear the indorsement of the plaintiff and other indorsements, one of which was that of the cashier of the Merchants' National Bank of New Bedford, by which it was presented; and on that day the amount of the check was paid by the National Bank of Wareham, on which it was drawn, to the Merchants' National Bank of New Bedford, and the same amount was charged to the defendant's account by the National Bank of Wareham. This check was returned to the defendant by his bank on June 25, 1895, and remained in his possession until January 30, 1896. The check of July 20 1895, was drawn upon the National Bank of Wareham, and was presented to that bank on July 29, 1895, purporting to bear the plaintiff's indorsement and other indorsements, one of which was that of the cashier of the Merchants' National Bank of New Bedford; and on that day the amount of the check was paid by the National Bank of Wareham to the Merchants' National Bank of New Bedford, and was charged to the defendant's account by the National Bank of Wareham, and this check was returned by that bank to the defendant on November 29, 1895, and remained in his possession until January 30, 1896. The evidence tended to show that the indorsements purporting to be those of the plaintiff upon these checks when they were paid by the Wareham National Bank were forgeries, made by a clerk in the employment of the plaintiff, which clerk had feloniously converted the checks to his own use, had forged upon them the plaintiff's indorsements, and had deposited the checks with the forged indorsements to his own credit in the Old Colony Trust Company, by which they were collected of the Wareham National Bank through the Merchants' National Bank of New Bedford. It appeared that the plaintiff, on January 29, 1896, was informed of these forgeries, and of the misappropriation by its clerk of these checks. Thereupon the plaintiff sent one Gray to the defendant to procure the checks, and the defendant handed them to Gray on January 30, 1896, under circumstances which the defendant offered to show, but evidence of which was excluded. On the same day or the next day, the plaintiff notified the indorsers of the checks that the plaintiff's indorsements upon them were forgeries. The plaintiff gave no such notice to the National Bank of Wareham, and no other notice except the oral statements of Gray made in obtaining the checks from the defendant on January 30, 1896, was given by the plaintiff to the defendant until February 10, 1896, when the plaintiff wrote to the defendant a letter which stated that the checks bore forged indorsements of the plaintiff. On February 12, 1896, the plaintiff indorsed the checks upon allonges, and forwarded them to its bankers for collection from the Wareham National Bank Payment was refused by that bank, and the checks were protested by a notary public for nonpayment on February 14, 1896, after which his suit was brought upon them by the plaintiff, the payee, against the defendant, the drawer of the checks. The National Bank of Wareham is solvent. The case was tried by a judge of the superior court without a jury, and, after a finding for the plaintiff, the defendant's exceptions are before us for consideration. It appears from the bill of exceptions that at the trial much evidence was admitted de bene which was afterwards stricken out at the plaintiff's request, and also that much evidence offered by the defendant was excluded. Two findings of specific facts were made in connection with the refusal of the court to give rulings asked by the defendant at the close of the evidence. The questions for decision will be better understood after a statement of the facts which the evidence introduced or offered tended to prove in addition to those already recited.
The plaintiff is a dealer in lumber, with its place of business in Boston. The defendant is a dealer in lumber, with his place of business in Bourne. The defendant had been dealing with the plaintiff for some ten years, buying lumber of the plaintiff once in three or four months. When he bought lumber, the plaintiff sent him a bill, and he usually paid it by mailing back the bill with a check for the amount. A receipted bill was then returned to him, in which payment was usually acknowledged for the plaintiff by Harry M. Fowle, who had authority so to do, and who was the clerk who forged the plaintiff's indorsements upon the checks in suit, and converted them to his own use. Fowle entered the plaintiff's employment in January, 1889, at the age of 17 or 18, in answer to an advertisement, and was set to do office boy's work. In 1893, when 21 years old, he became the ledger clerk, and so continued until his arrest, in January, 1896. There were ten or more persons in the plaintiff's office, including its president, treasurer, and directors. Its treasurer was H.B. Shepard, and its cashier was H.S. Shepard, who took care of the money, kept the cash account, and made entries on the cash books. Fowle's duties were to receive and open letters, look over checks, statements, and settlements of accounts as they came in, and see that they were proper and in accordance with the ledger, to receipt and return to customers their paid bills, to post the ledger, and to take off trial balances. Accounts of the plaintiff's business were kept in ledgers, cash book, bill books, journals, and check books, and a trial balance which was taken by Fowle each month of the business of the last preceding month. The treasurer had his desk in the office, and at his pleasure had access to all the books, and he occasionally examined the books and the trial balances. The letters received were often opened by Fowle, and, when not opened by him, those which contained checks in payment for merchandise were placed with the bills upon his desk, for him to examine the bills and the ledger with the checks, and see if the proper settlement had been made, and to receipt the bills, and return them receipted to the customers. It was Fowle's duty after the examination to pass the checks to the cashier, and at the close of the day to give him a list of the payments; and this course of business was known to the treasurer, and was pursued with the authority and assent of the plaintiff.
The checks sued upon, with the accompanying bills, were received by mail at the office, each within a day or two after its date, and, in the usual course of business, were placed upon Fowle's desk, and intrusted to him for the usual examinations, and to be thereafter handed to the cashier as usual. A receipted bill for the payment by each of these checks was sent to the defendant, the acknowledgment of payment being stamped upon the bill with a stamp furnished for that purpose by the plaintiff, and which Fowle had authority to use in receipting bills. The plaintiffs name, as it appears in the forged indorsements, was stamped upon the backs of the checks with a stamp which the plaintiff provided to be used in making indorsements, and which was kept with other stamps in the office in the cashier's desk. The words, "H.B. Shepard, Treas.," following the plaintiff's name in the indorsements, were written by Fowle. He also sometimes stamped the checks which were to be deposited by the plaintiff with a stamp provided by the plaintiff, and to which Fowle had access, and which stamped on them the words, "For deposit only, to the credit of the Shepard & Morse Lumber Company." After the receipt by the plaintiff of the check of January 25, 1895, and the return to the defendant of the receipted bill acknowledging payment, and before the giving of the check of July 20, 1895, the defendant bought of the plaintiff two other invoices of lumber, and paid for them in the same way, with his checks mailed to the plaintiff with the bills which had been sent out by the plaintiff; and neither of these bills contained any reference to any other unpaid bill, and he received in due course receipts acknowledging the payment of both of the intervening bills. The two bills for which the checks sued upon were given appeared by the plaintiff's ledger to have been paid, and in each instance the amount of the check was credited to the defendant in the ledger account in Fowle's handwriting, with a reference in each instance to a page which should have been a page of the cash book, but the cash book had no corresponding item. An examination of the books after the credit of the check of January 25, 1895, to the defendant's account in the ledger, would have shown that no such payment appeared upon the cash book. The trial balance made by Fowle at the end of January, 1895, was forced by him by omitting from the entry of sundries credited to merchandise on January 31st, a sum equal to the amount of the check. If this trial balance had been made up by an honest clerk, the loss of the check of January 25, 1895,...
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