The First Nat'l Bank of Quincy v. Ricker

• Decision Date: 31 January 1874
• Citation: 22 Am.Rep. 104,71 Ill. 439,1874 WL 8694
• Parties: THE FIRST NATIONAL BANK OF QUINCY, ILLINOIS,v.HENRY F. J. RICKER.
• Court: Illinois Supreme Court

71 Ill. 439

1874 WL 8694 (Ill.)

22 Am.Rep. 104

THE FIRST NATIONAL BANK OF QUINCY, ILLINOIS,

v.HENRY F. J. RICKER.

Supreme Court of Illinois.

January Term, 1874.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of Adams county; the Hon. JOSEPH SIBLEY, Judge, presiding.

Messrs. SKINNER & MARSH, for the appellant.

Messrs. WHEAT & MARCY, for the appellee.

Mr. JUSTICE SCOTT delivered the opinion of the Court:

The cases are numerous that decide the drawee must be presumed to know his correspondent's signature. In case he makes payment to an innocent holder for value, he is concluded by the act, notwithstanding the bill may turn out to be a forgery. If he accepts a bill, he must pay it, and if he has paid it in the usual course of business, he can not recover the money back from the payee, or holder. Price v. Neale, 3 Burr. 1354; Wilson v. Alexander, 3 Scam. 392; Hoffman v. Bank of Milwaukee, 12 Wall. 181; Bank of U. S. v. Bank of Georgia, 10 Wheaton, 348.

The same principle, for still more politic reasons, has been held to apply to bankers in the payment of bank notes and checks. Bankers are supposed to have a better opportunity to know the signatures of their depositors to checks than a drawee that of a single correspondent, whose bills are drawn with less frequency, and are, perhaps, held to a higher degree of diligence in that regard.

The principles applicable to checks and to bills are regarded as sufficiently analogous to make a decision rendered upon one instrument a precedent for a case arising on the other. Hence, we find the case of Price v. Neale is referred to in nearly or quite all the decisions on this question.

That was an action to recover back money paid on two forged bills. It was declared the plaintiff could not recover, for the reason the defendant had received the money on the bills indorsed to him for a valuable consideration without any suspicion of forgery, and that it was incumbent on the plaintiff to be satisfied the bill drawn on him was in the drawer's hand, before he accepted or paid it, but it was not incumbent on the defendant to inquire into it.

The doctrine of this case, so far as it holds the drawee is bound to know the handwriting of his correspondent, when applied to the case of a bill accepted or paid by him, where the drawer's name has been forged, has seldom, if ever, been departed from. It is said to have its foundation in a sound public policy, and considerations of convenience in commercial transactions make it imperative it shall be enforced.

The general rule, no doubt, has its exceptional cases, and the doctrine as stated by Lord MANSFIELD, in Price v. Neale, has certainly been very much limited by more modern decisions. The difficulty does not lie in the general rule itself, for it is undoubtedly supported by reason and the weight of authority, but in its application to particular cases.

It will, perhaps, afford a clearer understanding of the points in controversy if we give a brief history of the case at bar, as made by the evidence.

On the morning of the 24th of June, 1873, Hundrack & Co. deposited with the appellant bank three checks, purporting to be drawn in their favor by business firms of the city. Among them was the check in controversy, purporting to be signed by Manning Bros., and drawn upon appellee. The party making the deposit immediately drew out nearly the entire deposit. This transaction occurred after the hour of 10 o'clock, at which hour the exchanges of checks between the several banks are usually made.

On the same day, and about the same hour, Hundrack deposited a number of checks in the Union Bank, and in like manner drew out the largest portion. Among the checks deposited with the Union Bank was one of Bagby & Wood. About 11 o'clock of that day, it was presented at the appellant bank to ascertain if it was all right, when the clerk was told there were no funds there, but probably would be by 3 o'clock. In the afternoon, the attention of Wood was called to this check, and it was, upon inquiry, found to be a forgery.

In the usual course of business, checks of other banks received after 10 o'clock would be retained until that hour the next day, when the checks would be exchanged and the balances paid. When it was discovered the checks of Bagby & Wood were forgeries, there was some uneasiness manifested among the officers of the appellant bank and those of the Union Bank in regard to these and other checks that had been deposited by Hundrack. The Union Bank had also taken from Hundrack & Co. a check of Manning Bros. on appellee's bank. Both parties were anxious to know whether the checks they had taken were genuine. On sending them to appellee's bank shortly before 3 o'clock, they were promptly paid.

There is a direct contradiction in the evidence as to what passed between the witness Mills and the teller of appellee's bank, when the former presented Manning Bros.' check, the one in controversy, for payment. It is certain, Mills did not communicate the suspicions that had been aroused on learning the Bagby & Wood checks were forgeries; that the checks of Schermerhorn Bros. & Co. drawn on the Union Bank were probably forgeries, and that T. S. Hundrack, who had made the several deposits in the name of Hundrack & Co., and who alone constituted that fictitious firm, had fled the city. All these facts were within the knowledge of some of the principal bank officers before Mills was sent to appellee's bank with the check.

The signature to the check purported to be in the handwriting of August Manning. The brother, who usually signed the checks, is Antoine. The proof shows August signed but few checks, and hence the bank's officers were not, in fact, very familiar with his signature. It was an adroit contrivance on the part of the forger to avoid detection, for it is proven August was temporarily absent from the city on that day.

The teller of appellee's bank testifies he first saw the check in the morning; that it was presented by a man who represented himself to be Hundrack, but he did not know him. He declined to pay it then, because he had doubts about the signature. When Mills presented it in the afternoon to get it certified, he says he told him he was not acquainted with the signature, but supposed it was the signature of one of the Manning Bros., with which he was not acquainted, but if he would indorse the check, he would pay him the money. Mills then indorsed it for appellant, and the teller paid him the money. He returned and told the cashier of the appellant bank what he had done--that he had indorsed the check and got the money. The reply was, “It is all right.”

Mills denies, however, much of this conversation with the teller, but admits he indorsed it because it was the custom among banks to stamp or indorse checks payable to order. He further admits, the teller said to him, “You indorse it, and I will pay you the money,” to which he replied: “I said to him, I did not know whether I was authorized to indorse it, but I would do so; and I indorsed it, and he paid me the money.”

Appellee soon discovered the checks were forgeries, and the same afternoon, within a few hours, offered to return the one in controversy to appellant, and demanded the money paid on it, which was refused. It clearly appears the forger had fled before the checks were presented for payment.

The principle that lies at the foundation of all the cases on this subject, and which is said to preclude a recovery, is, that the drawee is presumed to know the signature of the drawer. Having accepted or paid the bill, he is estopped, on considerations of public policy, from denying that which it was his duty to know. The law will not permit him to allege he was mistaken, when no fraud has been practiced upon him. The doctrine proceeds on the ground the loss has arisen through some neglect or default, and the presumption being the drawee knows his correspondent's handwriting, if he pays or accepts a forged bill, it will be presumed it was through some carelessness on his part, and the law will impose the loss on him.

The rule, however, presupposes the good faith of the transaction, that the holder was a purchaser bona fide for a valuable consideration, for the law certainly is, the drawee or payor can recover where the payee or holder is himself at fault, or has been guilty of fraudulent practices which may have thrown him off his guard. The reason assigned for the decision in Price v. Neale, is, that the defendant had received the bills for “a fair and valuable consideration, which he had bona fide paid, without the least privacy or suspicion. ...