State v. Abramson

Citation20 S.W. 1084,57 Ark. 142
PartiesSTATE v. ABRAMSON
Decision Date07 January 1893
CourtArkansas Supreme Court

Appeal from Monroe Circuit Court in Chancery, MATTHEW T. SANDERS Special Judge.

Judgment affirmed.

House & Cantrell for appellant.

1. There can be no innocent holder of paper issued by a municipal corporation without power or in violation of law. In this case the warrant was not only issued without authority, but was absolutely forged. There is no such thing in law as an innocent holder of a forged warrant. 32 Ark 620; 131 U.S. 162; 94 id. 255; ib. 261; 10 Wall. 676; 7 id 676; Dill. Mun. Bonds, sec. 7. It was appellees' duty to examine and see if the warrant was genuine before receiving it.

2. The county is not estopped by reason of the laches of her officers. 15 Am. & Eng. Enc. Law, 1211. The defects in the warrant were patent. Where the means of detecting a fraud is open to both parties alike, the doctrine of estoppel does not arise. 21 Iowa 569; 3 McLean, 102. See also 111 U.S. 164; 101 id. 693; 131 id. 162. Conceding that the sheriff was the agent of the county, he had no authority to receive forged warrants in the satisfaction of the judgment. The satisfaction was an illegal act. 15 Am. Dec. 129, note, p. 130.

Stephenson & Trieber for appellees.

1. The proof fails to show that the sheriff received either of the forged warrants in satisfaction of the judgment.

2. But if it does, the sheriff and county have been guilty of such laches as to preclude a recovery. 17 Mass. 33; 10 Vt. 141; 10 Wheat. 340; 2 Pars. on Notes and Bills, p. 99, and note K; 91 U.S. 389.

3. Counties are exempt from the rule that the rights of the government cannot be affected by the laches of its officers. 56 Am. Dec. 637, and note; 24 Iowa 283; 95 Am. Dec. 729 and note; 91 U.S. 389; 7 Wall. 675; 15 Am. Dec. 129; Freeman, Ex. sec. 443.

OPINION

BATTLE, J.

On the 13th of October, 1883, appellees entered into a bond to the State of Arkansas, in the sum of $ 2000, 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 $ 2000. Sometime 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 cancelled 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 the 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. United States, 91 U.S. 389, 396, 23 L.Ed. 237; Bank of St. Albans v. Farmers & Mechanics Bank, 10 Vt. 141, 145; National Park Bank v. Ninth National Bank, 46 N.Y. 77, 80; Commercial & Farmers' National Bank v. First National Bank, 30 Md. 11, 18; Ellis v. Ohio Ins. & Trust Co. 4 Ohio St. 628, 652; Bank of U. S. v. Bank of Georgia, 23 U.S. 333, 10 Wheat. 333, 342, 6 L.Ed. 334; Bank of Commerce v. Union Bank, 3 Comst. 230, 234; Johnston v. Bank, 27 W.Va. 343, 359; 3 Randolph on Commercial Paper, secs. 1486, 1487; 2 Daniel on Negotiable Instruments (4th ed.), sec. 1359; 2 Morse on Banks and Banking (3d ed.), sec. 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. Salem Bank, 151 Mass. 280; Ellis v. Ohio Ins. & Trust Co. 4 Ohio St. 628; Rouvant v. San Antonio National Bank, 63 Tex. 610; First Nat. Bank of Quincy v. Ricker, 71 Ill. 439; Gloucester Bank v. Salem Bank, 17 Mass. 33; Bank of Commerce v. Union Bank, 3 Comst. 230, 234, 236; State Nat. Bank v. Freedmen's Savings & Trust Co. 2 Dillon, 11; National Bank of North America v. Bangs, 106 Mass. 441, 444; 2 Morse on Banks and Banking, (3d ed.), pp. 772, 777; 2 Daniel on Negotiable Instruments (4th ed.), secs. 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. United States, 91 U.S. 389, 396, 23 L.Ed. 237; Gloucester Bank v. Salem Bank, 17 Mass. 33, 45; Bank of United States v. Bank of Georgia, 23 U.S. 333, 10 Wheat. 333, 6 L.Ed. 334.

In speaking of this rule in its application to the treasury notes of the United States, in Cooke v. United States, 91 U.S. 389, 23 L.Ed. 237, 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 at 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. It is the negligence of the principal that binds; and that of the agent had no effect, except to the extent that it is chargeable to the principal."

Assuming that the remedy of a county against a person to whom it has paid a warrant forged upon itself is governed by this rule the statutes regulating the issue, payment, redemption and collection of county warrants, must, to some extent, determine the steps necessary for the county to take under the rule, to...

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