United States Portland Cement Co. v. United States Nat. Bank of Denver

• Decision Date: 01 May 1916
• Docket Number: 8582.
• Citation: 61 Colo. 334,157 P. 202
• Court: Colorado Supreme Court
• Parties: UNITED STATES PORTLAND CEMENT CO. v. UNITED STATES NAT. BANK OF DENVER.

157 P. 202

61 Colo. 334

UNITED STATES PORTLAND CEMENT CO. v. UNITED STATES NAT. BANK OF DENVER.

No. 8582.

Supreme Court of Colorado

May 1, 1916

Error to District Court, City and County of Denver; William D Wright, Judge.

Action by the United States Portland Cement Company against the United States National Bank of Denver. Judgment for defendant, sustaining a demurrer to the complaint, and plaintiff brings error. Reversed and remanded.

George Q. Richmond and Jacob J. Lieberman, both of Denver, for plaintiff in error.

Rogers, Ellis & Johnson and Percy Robinson, all of Denver (Pierpont Fuller, of Denver, of counsel), for defendant in error.

HILL J.

A demurrer was sustained to the plaintiff's amended complaint. It declined to amend. For a first cause of action among other things, it alleges that the Kirchhof Lumber Company was indebted to plaintiff for cement, etc.; that on February 7, 1914, the lumber company executed its check on the Denver National Bank, payable to the order of the plaintiff, for $267, in payment of said indebtedness, and thereafter delivered and intrusted said check to one H. C. Snyder, as an employé of the plaintiff that Snyder was its employé in the capacity of sales manager, with no authority to make, sign, or indorse any check, promissory note, or bill of exchange, or to collect the fund due or payable upon the same; that his authority was limited to the sale of Portland cement; that thereafter Snyder, without authority, and without the consent of the plaintiff, and against its interest, indorsed on said check the name of the plaintiff and the name of its secretary, J. E. Zahn, and on February 11, 1914, presented it, so indorsed by him, to the defendant bank, and received as payment thereof $267, which sum has not, nor has any part thereof, been received by plaintiff, and which sum of money aforesaid has been paid to said defendant by the drawee bank upon the aforesaid check, and has been so received from said drawee bank by defendant; that the indorsement of said check by Snyder with the name of the plaintiff and its secretary was a forgery, and was made by said Snyder without any kind or character of authority, without warrant in law, and without the consent of the plaintiff; that plaintiff has demanded from defendant payment of said sum so paid to it by Snyder on said check so forged; that the defendant has not paid it, or any part thereof, to plaintiff. This is followed with 10 other alleged causes of action, which are substantially the same as the first, except that each is based upon a different check and for different amounts. The prayer is for judgment in the total amount of the 11 checks, viz., $4,323.09, with interest.

It is well settled in this jurisdiction that the holder of a bank check cannot sue the bank upon which it is drawn for refusing payment, in the absence of proof that it was accepted by the bank or charged against the drawer. Van Buskirk v. State Bank of Rocky Ford, 35 Colo. 142, 83 P. 778, 117 Am.St.Rep. 182; Boettcher v. Colorado National Bank, 15 Colo. 16, 24 P. 582; Colorada National Bank v. Boettcher, 5 Colo. 185, 40 Am.Rep. 142.

In this case the payee in the checks seeks to recover from another bank, who accepted and paid these checks upon forged indorsements, and thereafter collected the amounts upon the checks from the bank upon which they were drawn. In such case the rule in Tennessee, New Jersey, Ohio, New York, and Indiana is that the payee can recover from a bank, which accepted them from the forger and collected them from the drawee bank, as for moneys had and received, even though it has fully paid over and accounted for the same to the forger without knowledge or suspicion of the forgery. Farmer v. Bank, 100 Tenn. 187, 47 S.W. 234; Knoxville Water Co. v. East Tenn. Natl. Bank, 123 Tenn. 364, 131 S.W. 447; Buckley v. Second Natl. Bank of Jersey City, 35 N. J. Law, 400, 10 Am.Rep. 249; Shaffer v. McKee, 19 Ohio St. 526; Talbot v. Bank of Rochester, 1 Hill (N.Y.) 295; Johnson v. First Nat. Bank, 6 Hun, (N.Y.) 124; Graves v. American Exchange Bank, 17 N.Y. 205; Indiana Nat. Bank v. Holtsclaw et al., 98 Ind. 85. This same principle is laid down in volume 1 (4th Ed.) of Morse on Banks and Banking, wherein, at page 483, the author states:

'If a negotiable instrument having a forged indorsement come to the hands of a bank and is collected by it, the proceeds are held for the rightful owners of the paper, and may be recovered by them, although the bank gave value for the paper, or has paid over the proceeds to the party depositing the instrument for collection.'

These cases are based upon the theory of ratification by the payee of the collection of the check from the drawee and that the collecting bank can then be held as for moneys had and received, and that the payment by the drawee bank to the collecting bank with the forged indorsement thereon is evidence that the check was accepted and paid by the drawee bank, which acts the payee ratifies.

Counsel for the defendant in error concede that the cases last cited hold as indicated, but contend that the better rule is that announced in Pennsylvania, Illinois, Missouri, and by the Supreme Court of the United States, and which they claim is directly to the contrary, and to the effect that payment upon the forged indorsement by the drawee bank to the person who presents the...