Ward v. First Nat. Bk. of Dexter

• Decision Date: 20 May 1930
• Docket Number: No. 4732.,4732.
• Citation: 27 S.W.2d 1066
• Parties: ADAM WARD, APPELLANT, v. FIRST NATIONAL BANK OF DEXTER, A CORPORATION, RESPONDENT.<SMALL><SUP>*</SUP></SMALL>
• Court: Missouri Court of Appeals

27 S.W.2d 1066

ADAM WARD, APPELLANT, v. FIRST NATIONAL BANK OF DEXTER, A CORPORATION, RESPONDENT.^*

No. 4732.

Springfield Court of Appeals, Missouri.

May 20, 1930.

Appeal from the Circuit Court of Stoddard County. — Hon. W.S.C. Walker, Judge.

REVERSED AND REMANDED.

C.A. Powell for appellant.

(1) A bank must know that the payee's endorsement is genuine. Merchants' Bank v. Ins. Co., 110 Mo. App. 62; Lieber v. Fourth National Bank, 137 Mo. App. l.c. 176-7. (2) Even though the depositor may be negligent in discovering the forgeries or in notifying the bank after he discovers the same, he is still entitled to recover unless it appear that his negligence occasioned special damage to the bank. This special damage must be proved by the bank and is not presumed. Lieber v. Bank, 137 Mo. App. l.c. 171; Wind v. Bank, 39 Mo. App. l.c. 85-88; Kenneth Investment Co. v. National Bank, 96 Mo. App. l.c. 147, also 103 Mo. App. l.c. 619. (3) There is no special damage sustained by the bank if it is in a position to recover from prior endorsers at time it learns of the forgeries. (See cases last above cited.) (4) Even though the depositor is negligent, he is not estopped from recovering from the bank unless his negligence has some connection with the forgery, that is, it must be proximate cause of the forgery, and not a mere possibility that the forgery may be committed. East St. Louis Cotton Oil Co. v. Bank, 205 S.W. l. c. 99; Bank v. Smelting & Refining Co., 178 S.W. l.c. 211. (5) Fact that checks were forged over long period of time is no evidence of negligence in failing to discover same. Kenneth Investment Co. v. Bank, 96 Mo. App. l.c. 135; Freyer v. Bank, 296 S.W. 452. Even though examination by employer would have discovered the first forgery.

Wammack, Welborn & Cooper for respondent.

(1) A depositor owes to a bank the duty of making an examination of its returned pass book and cancelled checks, within a reasonable time after he receives the same and to give the bank notice of the forgery, if any has been committed, if it could or would have been discovered had the examination been made. Kenneth Investment Co. v. Bank, 96 Mo. App. l.c. 145; McKeen v. Bank, 74 Mo. App. l.c. 290; Wind v. Bank, 39 Mo. App. l.c. 96; Bank v. Morgan, 177 U.S. 96; Kenneth Inv. Co. v. Bank, 103 Mo. App. l.c. 618; Reynolds v. Bank, 225 S.W. l.c. 903; Critton v. Bank, 57 L.R.A. 529; Bank v. Allen, 27 L.R.A. 426; Bank v. Electric Co., 7 L.R.A. (N.S.) 744. (2) If the depositor is guilty of negligence in connection with his bank account and but for such negligence the check for the amount of which recovery is asked, would not have been cashed by defendant bank, the depositor cannot recover from the bank. Wind v. Bank, 39 Mo. App. l.c. 85; Kenneth Investment Co. v. Bank, 96 Mo. App. l.c. 145; Lieber v. Bank, 137 Mo. App. l.c. 176; McKeen v. Bank, 74 Mo. App. l.c. 290. (3) Whether or not the depositor has been guilty of negligence is a question for the jury. (Cases above cited.) (4) When a series of checks have been forged by an employee, the depositor cannot recover for any of such checks paid after time when, if he had exercised diligence required of him by law, in supervising and examining his bank account and returned statements and cancelled checks, he would have first discovered the forgeries. (See cases above cited.)

SMITH, J.

This is an action in debt brought by Adam Ward, a depositor with the First National Bank of Dexter against said bank for the wrongful payment of checks drawn on the said First National Bank of Dexter, by Adam Ward and his son and agent, H.B. Ward, to various payees, which checks were never delivered to the payees named in said checks, the names of said payees being forged as endorsements on said checks, by the bookkeeper of the plaintiff, one J.G. Spears.

The petition was in two counts, the essential parts of the first count of said petition being as follows:

"For his cause of action plaintiff states that while he was a depositor with the said First National Bank of Dexter, he had money on deposit with, and an account with, said bank, in his name, subject to disbursement or withdrawal only upon due presentation of plaintiff's checks, executed by him or his agent, H.B. Ward, drawn upon the defendant bank, and demand for payment thereof made by the payee named in said checks, or the indorsees of said payees."

Then follows a description of thirty checks which were described by giving the date, the name of the payee, and the amount of each check, the first check being dated December 4, 1926, and the last check being dated July 9, 1927, with various amounts ranging from $10.47 to $148.90, the thirty checks totaling the amount of $1885.93, with the allegation that all of said checks were executed by the plaintiff, or his agent, H.B. Ward, and were drawn on the defendant bank, payable to the order of the payees therein named, but were never delivered to the payees named in the said checks.

The petition further states that:

"The names of the payees named in each of said checks were without the authority, knowledge or consent of plaintiff or said payees, wrongfully, unlawfully, and falsely forged on said checks, by one J.G. Spears and that all of said checks were deposited by him in and received by the Bank of Bell City, a banking institution in Bell City, Missouri, within a short time after the date of each of said checks; that within a reasonable time thereafter, all of said checks were then indorsed by the said Bank of Bell City, and forwarded to the First National Bank of St. Louis; that said checks were received by the said First National Bank of St. Louis, and indorsed by it, and forwarded to the defendant bank for payment, and that the defendant paid the amount called for in each check, in the said total sum of $1885.93, to the said First National Bank of St. Louis, and charged the account of the plaintiff with the amount of each of said checks, which said acts on the part of the defendant were wrongful and illegal, and against the will and consent of the plaintiff.

"Plaintiff further states that as soon as he learned that the names of the payees named in said checks were forged, and that the defendant had wrongfully and illegally paid said checks out of his funds on deposit in said bank to other than the said named payees or their endorsees, and that the defendant had charged his account with the aggregate amount of said checks, that he at once notified the defendant that said payees' names had been forged on said checks, and on or about the 1st day of November, 1927, demanded of the defendant to repay him said sum, and that he has made several such demands on the defendant, but that the defendant nor any one for it has repaid said sum to plaintiff, and that it is all still due and unpaid.

"Wherefore, the premises considered, the plaintiff prays for judgment against the defendant on this the first count of his petition, in the said sum of $1885.93, together with interest thereon at the rate of six per cent since the time of the first demand made on defendant for said sum."

The second count of the petition alleged that on April 30, 1927, a check was signed by H.B. Ward, agent of plaintiff, payable to the order of Joe Farris, in the sum of eight dollars, drawn on defendant bank, but was never delivered to Joe Farris, but after its execution it was unlawfully and illegally altered by changing the amount of said check from $8 to $80 and the name of the payee forged thereon by J.G. Spears, and that the check was endorsed and deposited by Spears in the Bank of Bell City, and endorsed and forwarded by that bank to the First National Bank of St. Louis, and that bank received, endorsed, and forwarded it to the defendant, and the defendant paid the amount to the First National Bank of St. Louis, and charged the account of plaintiff with the amount of said forged and altered check.

The petition further states that as soon as the plaintiff learned that the name of said payee had been forged and that the amount of the check had been altered and that the defendant had wrongfully and illegally paid said check out of his funds and had charged his account with the amount of $80 he at once notified the defendant that the name of said payee was forged and the amount of said check altered, and on or about the 1st day of November, 1927, demanded of the defendant to repay him said sum and that the demand for payment was refused and he prayed for judgment against the defendant on the second count in the sum of $80 with interest since the time of the demand.

The defendant's answer admits its incorporation and that plaintiff was during the time of issuance and cashing of said checks, a customer and depositor with the defendant; that the said checks were executed by the plaintiff or his agent; that H.B. Ward was the plaintiff's agent, and that the checks were endorsed and cashed and that the plaintiff's account was charged therewith, as alleged in the petition, and denied all the other allegations of the petition.

The answer further sets up that either the plaintiff or his agent negligently signed checks in blank and permitted J.G. Spears to fill them out and issue them, and thereby enabled the said Spears to issue and to put into circulation the checks mentioned, or that the plaintiff or his agent issued to the same party two checks for the same debt and entrusted the delivery of said checks to the payees to the said Spears, and issued the second one of such duplicate checks and gave it to Spears for delivery without first ascertaining whether or not the first checks issued had been destroyed, and that this was negligence on the part of plaintiff, which enabled Spears to put both checks into circulation and enabled him to collect on one of them, and the defendant alleged its lack of information as to which of the two above methods was employed in the case of said checks but alleged its belief in the last mentioned...