United States v. NATIONAL EXCH. BANK OF BALTIMORE, MD.

• Decision Date: 29 September 1924
• Docket Number: No. 2203.,2203.
• Citation: 1 F.2d 888
• Parties: UNITED STATES v. NATIONAL EXCH. BANK OF BALTIMORE, MD.
• Court: U.S. Court of Appeals — Fourth Circuit

1 F.2d 888 (1924)

UNITED STATES v. NATIONAL EXCH. BANK OF BALTIMORE, MD.

No. 2203.

Circuit Court of Appeals, Fourth Circuit.

September 29, 1924.

A. W. W. Woodcock, U. S. Atty., of Baltimore, Md., for plaintiff in error.

G. Ridgely Sappington, of Baltimore, Md. (Charles G. Baldwin, of Baltimore, Md., on the brief), for defendant in error.

Before WOODS, WADDILL, and ROSE, Circuit Judges.

ROSE, Circuit Judge.

The parties will be designated as they were below; that is, the United States will be called the plaintiff and the National Exchange Bank of Baltimore the defendant. The District Court sustained a demurrer to the declaration. The plaintiff did not seek to amend, but, when judgment went against it, sued out this writ of error. The allegations of the declaration may be briefly summarized. On June 1, 1922, the plaintiff at Washington by its duly authorized disbursing clerk drew a Veterans' Bureau check for $47.50 in favor of one Beck. After its delivery to him, it was by some one fraudulently raised to $4,750. On June 3 Beck indorsed it over to the Bank of Commerce of Spartanburg, S. C., and was paid $4,750 for it. On the same day that bank in its turn indorsed it, "Pay to the order of any bank, banker, or trust company, all prior indorsements guaranteed," and in the usual course of business negotiated it for value to the defendant, receiving $4,750 for it. On the 5th of June the defendant indorsed it, "Received payment through the Baltimore Clearing House, indorsements guaranteed," and in the usual course of business negotiated it for $4,750 to the plaintiff's agent, the Baltimore Branch of the Federal Reserve Bank of Richmond, which sent it to the Treasurer of the United States, who paid it, without noticing that it had been raised.

It is not charged that demand for repayment was made upon the defendant until after it had in good faith parted with the money it received. Such a declaration it is said, is bad, because it shows, first, that the defendant held the check for collection only; and, second, that the plaintiff, who was both drawer and drawee of the check, paid it upon presentation. It is not claimed that defendant is liable, if it was in fact acting merely as a collection agency. National Park Bank v. Seaboard Bank, 114 N. Y. 28, 20 N. E. 632, 11 Am. St. Rep. 612; United States v. American Exchange National Bank (D. C.) 70 F. 232; Wells, Fargo & Co. v. United States (C. C.) 45 F. 337, 2 Michie on Banks and Banking, 1497.

The plaintiff, however, denies defendant's contention that the indorsement put on by the Bank of Commerce, "Pay to the order of any bank, banker, or trust company," shows that the defendant was nothing more than an agent to collect. The defendant relies upon such cases as Bank of Indian Territory v. First National Bank, 109 Mo. App. 665, 83 S. W. 527; Lippett v. Thomas Loan & Trust Co., 88 Conn. 185, 90 A. 369; Citizens' Trust Co. v. Ward, 195 Mo. App. 223, 190 S. W. 364; National Bank of Rolla v. National Bank of Salem, 141 Mo. App. 719, 125 S. W. 513.

The plaintiff answers that, since the enactment of the uniform Negotiable Instruments Act, if not before, such an indorsement is not restrictive, but, on the contrary, made the defendant a holder in due course, and cites Interstate Trust Co. v. United States National Bank, 67 Colo. 6, 185 P. 260, 10 A. L. R. 705, and National Bank of Commerce v. Bossemeyer, 101 Neb. 96, 162 N. W. 503, L. R. A. 1917E, 374. It furthermore argues that, no matter what significance might at any time or anywhere have been given to such an indorsement, when unexplained, it was always permissible to show that the indorsee who took under it was in fact the real owner of the check, and that it says it tendered itself ready to do by alleging in its declaration that the South Carolina bank "negotiated the said check for value in the usual course of business to and received from the defendant the sum of $4,750." We do not find it necessary to pass upon these interesting questions, as well of substantive law as of pleading, because in our view the plaintiff, having been both the drawer and the drawee of the check, may not, in the absence of special circumstances not here existing, recover back the money it has paid to a holder for value not chargeable with negligence or bad faith. Bank of the United States v. Bank of Georgia, 10 Wheat. 333, 6 L. Ed. 334.

It is, of course, clear that the plaintiff could not recover from such a defendant what it had paid upon a check to which there had been forged the signature of one of its officials empowered to sign for it. United States v. Chase National Bank, 252 U. S. 485, 40 S. Ct. 361, 64 L. Ed. 675, 10 A. L. R. 1401; Gloucester Bank v. Salem Bank, 17 Mass. 41; Cooke v. United States, 91 U. S. 389, 23 L. Ed. 237; United States v. Bank of New York, 219 F. 648, 134 C. C. A. 579, L. R. A. 1915D, 797. It is nothing to the point that one who pays his genuine check, upon which there has been forged the indorsement of the payee or of some intermediate holder in due course, may in the absence of negligence or estoppel compel repayment by him to whom he paid, no matter how innocent of carelessness or wrongdoing the recipient may have been. United States v. National Exchange Bank, 214 U. S. 302, 29 S. Ct. 665, 53 L. Ed. 1006, 16 Ann. Cas. 1184.

Nor does it help plaintiff that, prior to the almost universal adoption of the uniform Negotiable Instruments Act, the general rule in this country was that, when a check or draft had been fraudulently altered after issue, and had been paid by the drawee in accordance with its altered...