State v. Abramson

• Decision Date: 07 January 1893
• Citation: 20 S.W. 1084
• Parties: STATE, to Use of MONROE COUNTY, v. ABRAMSON <I>et al.</I>
• Court: Arkansas Supreme Court

20 S.W. 1084

STATE, to Use of MONROE COUNTY, v. ABRAMSON et al.

Supreme Court of Arkansas.

January 7, 1893.

Appeal from circuit court, Monroe county; MATTHEW T. SANDERS, Special Judge.

Action by the state, for the use of Monroe county, against Rudolph Abramson and others, to set aside entry of satisfaction of a judgment, and enforce collection thereof. Judgment for defendants. Plaintiff appeals. Affirmed.

House & Cantrell, for appellant. Stephenson & Trieber, for appellees.

BATTLE, J.

On the 13th of October, 1883, appellees entered into a bond to the state of Arkansas in the sum of $2,000, conditioned that one Simon Silverman would appear in the Monroe circuit court, at its March term, 1884, and answer an indictment against him for larceny. Silverman failed to appear according to the condition of the bond, and it was declared forfeited. Thereupon the state of Arkansas, for the use of Monroe county, instituted proceedings, and recovered a judgment against the appellees on the bond for the $2,000. Some time in December, 1884, and January, 1885, Rudolph Abramson, one of the appellees, paid to the sheriff of Monroe county the amount of the judgment in Monroe county warrants, and the sheriff satisfied the judgment by an entry on the margin of the record, dated the 20th of December, 1884. Among the warrants paid were two for amounts aggregating the sum of $727. Both parties believed them to be genuine, and they were paid as such by the sheriff to the treasurer of Monroe county. On the 8th of July, 1885, the treasurer carried into the Monroe county court a large amount of warrants to be canceled and filed. Among them were the warrants received by the sheriff from Abramson, and two others; one for $250, and the other for $320. Upon examination the two received from Abramson and the two last mentioned were discovered by the court to be forgeries. This discovery was made on the 8th of July, 1885. On the 13th of May, 1888, appellant brought this action against appellees to set aside the entry made by the sheriff on the margin of the record, and to enforce the collection of the judgment, alleging that the four forged warrants had been received by the sheriff in part satisfaction of the judgment, and had been delivered by him to the county treasurer. This suit was the first notice of the forgery given to the appellees. Answering, they said that the warrants received in payment of the judgment were purchased and held by them in due course of trade, in good faith, and were accepted as genuine by the officers of the county; and that, if any of them, being forgeries, (which they denied,) had been returned within a reasonable time, they could have recovered the purchase money paid for the same, but, on account of the delay in giving notice, they were unable to do so. Should appellees be held liable in a sum equal to the amount of the forged warrants received from them by the sheriff?

As a general rule of commercial law, a party who pays a forged instrument, which is negotiable in form, and purports to be signed by or drawn upon himself, to an innocent holder for value, after he has had an opportunity to examine it, cannot recall the payment. The reason of the rule is, the party is bound to know his own handwriting in the one case, or that of his customer or correspondent in the other. The law "allows the holder to cast upon him the entire responsibility of determining as to the genuineness of the instrument, and, if he fails to discover" that it is a forgery, "imputes to him negligence, and, as between him and the innocent holder, compels him to suffer the loss." Cooke v. U. S., 91 U. S. 389, 396; Bank of St. Albans v. Farmers' & Mechanics' Bank, 10 Vt. 141, 145; National Park Bank v. Ninth Nat. Bank, 46 N. Y. 77, 80; Commercial & Farmers' Nat. Bank v. First Nat. Bank, 30 Md. 11, 18; Ellis v. Trust Co., 4 Ohio St. 628, 652; Bank of U. S. v. Bank of Georgia, 10 Wheat. 333, 342; Bank of Commerce v. Union Bank, 3 N. Y. 230, 234; Johnston v. Bank, 27 W. Va. 343, 359; 3 Rand. Com. Paper, §§ 1486, 1487; 2 Daniel, Neg. Inst. (4th Ed.) § 1359; 2 Morse, Banks, (3d Ed.) § 463. But this rule has been modified in some cases. It has been held by many courts that, in order to entitle the holder to retain money obtained from a drawee by a forgery, "he should be able to maintain that the whole responsibility of determining the validity of the signature was placed upon the drawee, and that the vigilance of the drawee was not lessened, and that he was not lulled into a false security by any disregard of duty on his own part, or by the failure of any precautions which, from his implied assertion in presenting the" paper "as a sufficient voucher, the drawee had a right to believe he had taken." First Nat. Bank of Danvers v. First Nat. Bank of Salem, 151 Mass. 280, 24 N. E. Rep. 44; Ellis v. Trust Co., 4 Ohio St. 628; Rouvant v. Bank, 63 Tex. 610; Bank v. Ricker, 71 Ill. 439; Gloucester Bank v. Salem Bank, 17 Mass. 33; Bank of Commerce v. Union Bank, 3 N. Y. 230, 234, 236; State Nat. Bank v. Freedmen's Sav. & Trust Co., 2 Dill. 11; Bank v. Bangs, 106 Mass. 441, 444; 2 Morse, Banks, (3d Ed.) pp. 772, 777; 2 Daniel, Neg. Inst. (4th Ed.) §§ 1362, 1369.

Forged bank notes have often furnished examples of the application of the rule, which is more strictly enforced as to them than other paper, because bank notes form a part of the common currency of the country, and circulate as money. A bank receiving paper purporting to be its notes is required to examine it as soon as it has the opportunity, and, if it be unwilling to receive it as genuine, return it promptly; and, if it does not, but pays it, it is negligent, and is treated as having accepted the paper, and adopted it as its own, and cannot thereafter recall the payment, notwithstanding the paper may afterwards be discovered to be a forgery. Cooke v. U. S., 91 U. S. 389, 396; Gloucester Bank v. Salem Bank, 17 Mass. 33, 45; Bank of U. S. v. Bank of Georgia, 10 Wheat. 333.

In speaking of this rule in its application to the treasury notes of the United States, in Cooke v. U. S., 91 U. S. 397, the court said: "When, therefore, a party is entitled to something more than a mere inspection of the paper before he can be required to pass finally upon its character, — as, for example, an examination of accounts or records kept by him for the purpose of verification, — negligence sufficient to charge him with a loss cannot be claimed until this examination ought to have been completed. If, in the ordinary course of business, this might have been done before payment, it ought to have been, and payment without it will have the effect of an acceptance and adoption. But if the presentation is made at a time when, or a place where, such an examination cannot be had, time must be allowed for that purpose; and, if the money is then paid, the parties — the one in paying, and the other in receiving payment — are to be understood as agreeing that a receipt and payment under such circumstances shall not amount to an adoption, but that further inquiry may be made, and, if the paper is found to be counterfeit, it may be returned within a reasonable time."

And in the same case the court further said: "So, too, if the paper is received and paid for by an agent, the principal is not charged, unless the agent had authority to act for him in passing upon the character of the instrument. ...