Union National Bank v. Franklin National Bank

• Decision Date: 10 May 1915
• Docket Number: 61
• Parties: Union National Bank v. Franklin National Bank, Appellant
• Court: Pennsylvania Supreme Court

94 A. 1085

249 Pa. 375

Union National Bank v. Franklin National Bank, Appellant

No. 61

Supreme Court of Pennsylvania

May 10, 1915

Argued March 25, 1915

Appeal, No. 61, Jan. T., 1915, by defendant, from judgment of C.P. No. 4, Philadelphia Co., Dec. T., 1911, No. 4227, on verdict for plaintiff, in case of Union National Bank v Franklin National Bank. Affirmed.

Assumpsit to recover the amount of a forged check paid by plaintiff.

The opinion of the Supreme Court states the facts.

Verdict for plaintiff by direction of the court for $3,555.50 and judgment thereon. Defendant appealed.

Error assigned was in refusing to enter judgment for defendant n.o.v.

The assignments of error are overruled and the judgment is affirmed.

George Douglas Hay and B. Gordon Bromley, with them Thomas DeWitt Cuyler, for appellant.

Henry P. Brown, with him Joseph J. Brown, for appellee.

Before BROWN, C.J., POTTER, ELKIN and MOSCHZISKER, JJ.

OPINION

MR. JUSTICE MOSCHZISKER:

This was an action in assumpsit, instituted January 26, 1912, by the Union National Bank of Philadelphia against the Franklin National Bank of the same city, to recover $3,000, the amount of a forged check purporting to have been drawn by the Everett Bank of Everett, Pa., a depositor of the plaintiff. This check, dated November 2, 1911, was deposited on November 15, 1911, in the United States National Bank of Portland Oregon, and credited to the amount of its depositor; the check was then transmitted to the Franklin Bank "for collection and credit," received by that institution November 20, 1911, and credited on a running account kept with the United States Bank. The last endorsement upon the check is that of the United States Bank, and the fact that the Franklin Bank was merely acting as a collecting agent for the former is conceded in the paper books on both sides. After payment of the check through the clearing house to the Franklin Bank, the Union Bank, without making any comparison of the signature thereon, or other special examination, held it until November 29, 1911, and then, in accordance with a usual business custom, returned the check with others then in its possession to the Everett Bank. On December 5, 1911, the Everett Bank discovered that the signature on the check, purporting to be that of its cashier, was a forgery, and immediately gave notice of this fact to the Union Bank, which in turn notified the Franklin Bank, who forthwith telegraphed notice to the United States Bank. On November 20, 1911, when the check was originally deposited with the United States Bank, the man who made the deposit had a balance to his credit in that institution, including the amount of the check of $3,990.35; he made no further deposits, and withdrew all of this money between November 22 and December 7, 1911, when he closed his account. The defendant's evidence showed that "The United States National Bank, on November 24, 1911, received through the mail, advice of credit bearing date November 20, 1911, from the Franklin National Bank . . ., showing that said check had been paid on November 20, 1911, and that the account of said United States National Bank with said Franklin National Bank had been credited in said sum of $3,000." The account of the United States Bank on the books of the Franklin Bank showed a balance in favor of the former at the close of business on November 20, 1911, of over $33,000, and from that day until December 4, 1911, it contained debit items totaling over $46,000; but the daily balances to the credit of the United States Bank from November 20, 1911, to December 7, 1911, inclusive, always ran from $29,000 to $47,000, the balance on the last date being $31,848.32. When the forgery was discovered, the Franklin Bank refused to return the amount of the check to the Union Bank, and the latter brought the present action; binding instructions were given for the plaintiff, and a verdict was rendered accordingly, upon which judgment was entered; the defendant has appealed.

The Negotiable Instrument Act of May 16, 1901, P.L. 194, Sec. 62, provides: "The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of his acceptance, and admits: the existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument"; the appellant contends that this provision applies to the present case and bars the plaintiff's right of recovery. Somewhat similar negotiable instrument acts, containing a provision like the one just quoted, have been passed in most of the states, and the appellant cites authorities from these other jurisdictions which go far to sustain its position; but, after consideration of all the cases called to our attention, and some research, we have reached the conclusion that the present case must be determined under our own acts of assembly and the relevant Pennsylvania decisions. It may be well here to note that the cases from other jurisdictions do not deal with a situation presenting a prior statute like our Act of 1849, infra.

When the Act of 1901, supra, was passed, we had upon our statute books the Act of April 5, 1849, P.L. 424, which provides by section 10: "That whenever any value or amount shall be received . . . in payment of any . . . check . . . or other instrument negotiable within this Commonwealth by the holder thereof, from the endorsee or endorsees, or payer or payers of the same, and the signature . . . of any person or persons, represented to be parties thereon, whether as drawer, acceptor or endorser, shall have been forged thereon, and such value or amount by reason thereof erroneously given or paid, such endorsee or endorsees, as well as such payer or payers, respectively, shall be legally entitled to recover back from the person or persons previously holding or negotiating the same the value or amount so as aforesaid given or paid by such endorsee or endorsees, or payer or payers, respectively, to such person or persons. . . ."

In Colonial Trust Co. v. Nat. Bk. of Western Penna., 50 Pa.Super. 510, it was decided that Sec. 62 of the Act of 1901, supra, did not repeal the section of the Act of 1849 just quoted, that court, by HEAD, J., saying (p. 513): "The concrete question . . . is whether the Act of 1901 has repealed the Act of 1849; in short, whether a bank is now bound to know the signature of its depositor as it was at common law and before the Act of 1849. . . . In defining (p. 514) what shall constitute an acceptance within the intendment of the statute, section 132 of the Act of 1901 declares: 'The acceptance must be in writing and signed by the drawee'; this is practically the same language used by the legislature in the Act of May 10, 1881, P.L. 17. . . . In Clark & Co. v. Warren Savings Bank, 31 Pa.Super. 647, this (Superior) court expressly held that the payment by a bank of a check drawn on it by a depositor, where the endorsement of the payee had been forged, was not an acceptance within the meaning of the Act of 1881. . . . We . . . hold that the act of the plaintiff bank in paying the check . . . was not an acceptance of the check within the meaning of section 62 of the Act of 1901. . . . It did not, therefore, involve a conclusive admission of the genuineness of the signature of the maker . . . and does not preclude the present plaintiff from invoking the remedy provided by the Act of 1849; so far as the present plaintiff is concerned there is no inconsistency or repugnancy between the two statutes, and both may stand . . . In Hannon v. Allegheny Bellevue Land Co., 44 Pa.Super. 266, we attempted to point out that, although the legislature (Act of 1901, supra, section 185) had broadly defined a check as 'a bill of exchange drawn on a bank, payable on demand,' it yet remained quite clear that in the legislative mind a check was but one species of a larger class or family. . . . The only act of a bank, in the usual routine of the commercial world, which has the essential elements of an acceptance of a bill of exchange by the drawee is the certification of such check (see Act of 1901, supra, section 187). . . . If the legislature deemed it necessary to formally announce that the certification of a check . . . was to be treated as an acceptance . . . how much more necessary would it have been to expressly so declare if the ordinary payment . . . was to be regarded as an acceptance."

Prior to the foregoing decision by the Superior Court, this court (1908), by MESTREZAT, J., in Wisner v. First Nat. Bk. of Gallitzin, 220 Pa. 21, had construed the Act of 1901 supra, and decided that, under section 185, a check must be viewed as a bill of exchange, and, under section 137, "Where a drawee to whom a bill is delivered for acceptance . . . refused within twenty-four hours . . . to return the bill accepted or nonaccepted to the holder he will be deemed to have accepted the same," further, that failure or neglect to return a check (p. 33) to the holder or the collecting bank within twenty-four hours after delivery to the drawee bank was a refusal within the meaning of Sec. 137 of the Act of 1901, tantamount to an acceptance, the same as though the check had been formally accepted in writing, and finally (p. 31), that such a constructive acceptance was effective to charge the drawee under Sec. 132 of the Act of 1901, supra; citing with approval State Bank v. Weiss, 91 N.Y.S. 276, and saying (p. 32), in reference thereto, "It was an action on a check drawn on a branch bank of the plaintiff and was paid by plaintiff. . . . It was afterwards discovered that the drawer had no funds in the bank, and suit was brought to recover from the endorsers six days later. It was held there could be no recovery; that a check was a bill of exchange, payable on...