OPINION
GAVIN, J.
The
appellee brought this suit in the Marion Superior Court, upon
a check certified by appellant.
The
case was tried at special term, and on special findings of
fact and conclusions of law by the court judgment was
rendered in favor of appellant.
On
appeal to the general term, this judgment was reversed, and
from that reversal appeal is taken to this court.
The
facts found, so far as material to the questions presented in
this court, are as follows:
"First.
Heretofore, to wit, on the night of the 3d of September,
1890, William C. Milburn, with another, stole from George W.
Ray, near the town of Franklin, Johnson county, Indiana, two
head of steers, and drove them to the Indianapolis stock
yards for sale, arriving there early in the morning. At that
time the firm of Stockton, Gillespie & Co., live stock
brokers and dealers, had an office at, and were engaged in
business in, the Indianapolis stock yards, situate near the
city of Indianapolis, Indiana. Mr. Stockton had the
transaction, now to be stated, early in the
morning of the 4th of September, 1890.
"Milburn,
who was a stranger to Mr. Stockton, requested him to sell the
cattle. Stockton called a buyer near by and asked for a bid,
which was made at $ 3.25 per hundred pounds. Stockton replied
that was not enough, and started off on an errand of
business, when Milburn said to him (Stockton) to sell the
cattle, as that price was as much as he expected to receive,
and he was in haste to leave the city on the early train.
Without complying with this request Stockton stepped away for
a few minutes on a matter of other business, and returned,
when he found Milburn turning the cattle out of a pen in
which they had been placed, to be taken to the scales and
weighed, which was done.
"Thereupon
Stockton gave a memorandum of the weight and price ($ 3.25
per hundred pounds) to Milburn, who carried it to Mr.
Gillespie in the office; a computation was made, showing that
the cattle came to the sum of $ 68.15. Gillespie asked
Milburn (who was an entire stranger to him) what was his
name, when he answered W. C. Smith,' and thereupon
Gillespie made out the following check:
"
No. 1372. INDIANAPOLIS, Sept. 4th, 1890.
MERIDIAN
NATIONAL BANK.
"Pay
to the order of W. C. Smith, sixty-eight dollars and fifteen
cents ($ 68.15).
STOCKTON,
GILLESPIE & Co.'"
"Neither
of the members of said firm then had any knowledge other than
as given aforesaid by Milburn, as to what was his proper
name. Milburn and his confederate at once left the office.
Stockton was suspicious that the cattle had been stolen from
the haste manifested in their sale, as above stated, and
because an employee and solicitor of the
firm, who had met Milburn and his confederate when they drove
the said stock into the yard, told him (Stockton) that
Milburn had given to him (said solicitor) as his
(Milburn's) name, that of "Davis." And so he
did not ship that day, the said two (2) steers, but kept them
until about noon of the day following, to wit, September 5th,
1890, when Mr. Ray came to the stock yards and identified the
cattle as his own in the presence of Mr. Stockton.
"Second.
Early in the morning of the 4th of September, 1890, Milburn
(who was an entire stranger to the officers of the Meridian
National Bank), presented said check unindorsed, at the said
bank, to Mr. Wocher, one of the tellers, for payment. Mr.
Wocher then informed him, as he was a stranger, that he must
identify himself, which he said he could not do, as he was
not acquainted in the city of Indianapolis. Thereupon it was
suggested (but whether by Wocher or Milburn, Mr. Wocher, who
was the only witness, was unable to recollect) that the check
should be certified, and then it could be used at Franklin.
At the defendant's bank he represented his name to be
"W. C. Smith." Thereupon the bank aforesaid made a
certificate on the face of the said check as follows:
"
Certified. $ 68.15. Meridian National Bank.
WOCHER,
Teller.'
"And
the said check was delivered back to Milburn.
"Third.
During the afternoon of said September 4th, 1890, Milburn and
some other person, during banking hours, went into the bank
of the plaintiff at Shelbyville, Indiana, and presented the
said check to the cashier of that bank and asked him to
purchase it. The cashier did not know the person presenting
it, nor the person with him. He was busily engaged in the
business of the bank, and thought the face of the person with
Milburn was familiar, but did not then know,
nor did he know at the trial, the name of such person.
Looking at the check, he saw that it was certified, but that
it was not indorsed, but relying upon the certification, he
thereupon asked the holder of the check to indorse it; he and
the person with him turned about to a writing counter across
the banking room, and soon returned with the check indorsed
upon the back "W. C. Smith," and passed it to the
cashier. And thereupon the cashier paid Milburn $ 68.15, and
in the evening mail inclosed the said check to the banking
house of S. A. Fletcher & Co., its Indianapolis
correspondent, for collection.
"Fourth.
On the 5th of September, and before the presentation of the
check to the Meridian Bank for payment, the drawers of the
check having learned that the cattle were stolen,
countermanded the payment of the check, and the Meridian
Bank, on the 6th of September, refused to pay the same when
presented to it through the clearing house, through which it
had passed on the 5th, and the check was returned to the
plaintiff in the action below.
"Sixth.
At the time Mr. Wocher certified the said check, he charged
the same against the account of Stockton, Gillespie &
Co., who then, and for a long time prior thereto, kept their
deposits in that bank and had a certified check account.
"Eighth.
Milburn had never been known in the community
where he had lived by any other name than that of W. C.
Milburn."
It
seems to be well established that, as a general rule, the
certification of a check in the hands of the payee, the body
of which is unaltered, releases the drawer from further
liability, and creates a direct liability from the bank to
the payee, while, as between the bank and the drawer, it
operates as a payment to that extent on his account, and, although prior to its being certified, the
check may be countermanded by the drawer, after its
certification it has passed beyond his control, and he no
longer has power to countermand its payment. Daniel on Neg.
Inst., sections 1601-1603; Morse on Banking, section 414; Van
Schaack on Bank Checks, 91, 92.
Whether
or not the liability of the certifying bank may, under
certain circumstances, extend even further, we need not now
determine.
It is
said, in Born v. First Nat'l Bank, 123
Ind. 78, 24 N.E. 173: "That the drawer of a check is
released if the holder, instead of presenting it for payment
himself, procures it to be certified by the bank upon which
it is drawn. If the holder elects to procure the
certification of the check, it becomes, in his hands,
substantially a certificate of deposit. By his own hand he
makes the bank his debtor, * * * and releases the drawer of
the check."
The
principal question upon which the rights of the parties in
this case depend is whether or not the indorsement of the
check by Milburn, under the assumed name of Smith, and
without identification, was such an indorsement as was
effectual to pass to the appellee the title to the check. If
it was, it will then be unnecessary for this court to
determine a number of the propositions advanced by counsel on
each side.
The
position of counsel for the appellant may best be stated in
their own language: "In other words, the Shelbyville
Bank's contention is that the acceptance of an unindorsed
check implies three things:
"1st.
That the signature of the maker is genuine.
"2d.
That the maker has money to his credit which the bank will
retain until the check is presented for payment.
"3d.
That the holder is the payee, and is entitled to receive the
money.
"While the contention of the Meridian Bank
is that the certification of the check unindorsed does not
waive, but is subject to identification and legal
indorsement. Daniel on Neg. Inst., section 1607a.
"And
that, as the check was given for stolen cattle, and was not
made payable to the real person, William C. Milburn, but to
no person, without its knowledge, and for a fraudulent
purpose, the indorsement was invalid, and the same in law as
if it had been passed over the counter of the Shelbyville
Bank, unindorsed, in which case the transferee takes it
subject to all equities and defenses."
Under
the view which we have taken of this case, it is not required
of appellee, in order to sustain the judgment of the court
below, that it should maintain the proposition No.
"3," as stated by appellant's counsel. Neither
is it necessary that we should determine whether or not it
would be permissible to the bank, on the ground of want of
consideration or fraud as between the payee and the drawer,
to defend against a check certified by it after it has passed
into the hands of an innocent holder, even though unindorsed.
It is
settled law that the bona fide assignee, by
indorsement, for value, takes such paper freed from any
equities existing between the original parties. Daniel on
Neg. Inst., section 1608-1652; Morse on Banking, section 419;
Van Schaack on Bank Checks,...
