United States v. American Exchange Nat. Bank
| Decision Date | 05 September 1895 |
| Citation | 70 F. 232 |
| Parties | UNITED STATES v. AMERICAN EXCHANGE NAT. BANK. |
| Court | U.S. District Court — Southern District of New York |
Wallace Macfarlane, U.S. Dist. Atty., for the United States.
Cardoza & Nathan, for defendant.
The pension draft in this case was paid to the defendant bank by the subtreasury, upon the forged indorsement of the payee's name after her death. The Bellaire Bank of Ohio had previously cashed the draft upon the forged indorsement, and thereupon indorsed it 'for collection' to the defendant bank at New York. The latter was the collecting correspondent of the Bellaire Bank as regards its funds in New York. The collection was made in good faith by the defendant bank and the proceeds remitted to the Bellaire Bank some months before the discovery of the forgery. The indorsement of the forged draft by the Bellaire Bank showed upon its face that the defendant was to act as collecting agent only. The defendant never had any property in the draft of its proceeds. The later authorities sustain the proposition that in such a case where the collecting agent pays over the funds before any notice of irregularity or fraud, the remedy is against the principal alone. Bank v. Armstrong, 148 U.S. 50, 13 Sup.Ct. 533; White v Bank, 102 U.S. 658; Sweeny v. Easter, 1 Wall. 166; Wells, Fargo & Co. v. U.S., 45 F. 337; National Park Bank v. Seaboard Bank, 114 N.Y. 28, 20 N.E. 632.
In such cases the indorsement by the collecting agent, who has no proprietary interest, does not import any guaranty of the genuineness of all prior indorsements, but only of the agent's relation to the principal, as stated upon the face of the draft; and as this relation is evident upon the draft itself, the payor cannot claim to have been misled by the indorsement of the agent, or any right to rely upon that indorsement as a guaranty of the genuineness of the payee's indorsement.
In the case of Onondaga Co. Sav. Bank, 12 C.C.A. 407, 64 F. 703, as I find upon examination of the record on appeal, no question like the present arose. The Onondaga Bank was in the same situation as the Bellaire Bank in the present case. It had cashed the forged draft and was collecting the money for its own benefit as owner of the draft. Its indorsement imported a guaranty of the prior signatures; and the defendant's remedy here is against the Bellaire Bank.
The direction of a verdict for the defendant upon the undisputed...
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