Tolman v. Am. Nat. Bank

• Decision Date: 11 March 1901
• Parties: TOLMAN v. AMERICAN NAT. BANK.
• Court: Rhode Island Supreme Court

48 A. 480

22 R.I. 462

TOLMAN

v. AMERICAN NAT. BANK.

Supreme Court of Rhode Island.

March 11, 1901.

Action by D. H. Tolman against the American National Bank. From a judgment in favor of the defendant, the plaintiff petitions the appellate division of the supreme court for a new trial. New trial granted.

Irving Champlin, for plaintiff.

Tillinghast & Murdock, for defendant.

STINESS, C. J. The plaintiff sues to recover money paid out by the defendant, on his account, upon his check, under a forged indorsement. Louis Potter, representing himself to be Ernest A. Haskell, went to the plaintiff to get a loan of money, giving the residence and occupation of Haskell as his own. The plaintiff made inquiry, and finding that Haskell was employed, and was living as represented, he agreed to make the loan. Potter, under the name of Haskell gave his note to the plaintiff, and the plaintiff gave him a check on the defendant payable to the order of Haskell, delivering it to Potter, supposing him to be Haskell. Potter indorsed Haskell's name on the back of the check, and gave it to A. R. Hines, who collected it from the bank. When the note given to the plaintiff became due, the fraud was discovered. He thereupon notified the bank, and demanded a return of the amount paid on the check to the credit of his account. At the trial a verdict for the defendant was directed, and the plaintiff petitions for a new trial.

The question is whether the bank is liable for the payment which it made on this check. It is a fundamental rule of banking that, when a bank receives money to be checked out by a depositor, it is to be paid only as the depositor shall order. The bank assumes this duty in receiving the deposit. If, therefore, it pays out money otherwise than according to such order, it is liable to the depositor for the amount so paid. The bank thus assumes the responsibility of seeing that the money gets to the party authorized to receive it. Hence, if it pays money out on a forged signature, the depositor being free from blame or negligence, it must bear the loss. In this case the plaintiff directed the money to be paid to the order of Ernest A. Haskell. It was not so paid. He did not Indorse the check. Potter forged his signature. Under these circumstances, the plaintiff's right to recover seems to be plain.

But the defendant contends that the man who made the contract received the check; that it was intended for him; that the money went to him, and so there was no forgery, and the bank is not liable. It would seem that upon so plain a proposition the decisions should be unanimous; but it is not so. To say that the money was intended for the on? who had committed the fraud is simply to say that the fraud was complete. It is a surprising doctrine that, if A. can successfully personate B., he thereby escapes being guilty of forgery in signing B.'s name on a check of C.'s. Of course, C. intended the money to go to him as an actual person, but only because he supposed that he was the person whom he represented himself to be. Can the imposition upon C. justify A.'s personation and signature of B.? If C. had sent his check to B. by A., and the latter had written B.'s indorsement thereon, no one would say that it was not forgery. How does it change the case when A. gets the check by making C. believe that he is B.? In one case C. sent it to B., and in the other he supposed that he handed it to B. directly. In both cases it was intended for B.

The plaintiff's counsel has well said in this case that any decision to the effect that a bank is protected in paying a check to an imposter who has forged the payee's name on the check, upon the ground that it carries out the actual intent of the drawee, is based upon a manifest fallacy. Moreover, of what consequence is the intent of the drawer of the check, when the direction is to pay to the party named? He has the right to assume that the bank will pay to the party as directed. In this case the money was intended for Haskell, because his was the only name suggested. He had been looked up, and found to be responsible. It is a perversion of words to say that it was intended for Potter simply because he had fraudulently impersonated Haskell, and led the plaintiff to believe that he was Haskell. The plaintiff did not intend to let Potter have money. His check showed who was to have it, because it was made payable to Haskell. When, therefore, Potter fraudulently indorsed Haskell's name on the cheek, it was a typical case of forgery. It was a false signature, with intent to deceive.

The defendant relies on Robertson v. Coleman, 141 Mass. 231, 4 N. E. 619, where the suit was by a holder against the maker of a check. The payee had assumed the name of another, and obtained the check as the price for stolen property sold by the defendants as auctioneers. The decision was for the plaintiff, and good ground is given for it in the opinion, in this: that the plaintiff was a bona fide holder without notice, and that the defendants simply supposed the payee to be Charles Barney, of Swanzey, but not from any false representation made to them. Had the opinion stopped there, no case of fraud would have appeared. But the court put these facts aside as...