Eastern Exchange Bank v. Fidelity & Deposit Co. of Maryland

Cardozo, Ch. J. Defendant, a surety company, issued its policy of insurance to plaintiff, a bank, whereby it agreed to indemnify plaintiff against direct loss, not exceeding $5,000, which might be sustained “ through the payment by the insured bank after the date hereof. *342 “A. Of any check * * * drawn upon the insured bank * * * upon which there shall have been forged, as the drawer, maker or acceptor thereof, the signature of a depositor * * * and /or “ Through the cashing by the Insured Bank, after the date hereof, or through the extension, by the Insured Bank, after the date hereof, of credit upon the faith, “ E. Of any check or draft drawn upon any bank, which shall bear the forged signature of any depositor of the Insured Bank as endorser.” One Harry Palmer opened a deposit account with the plaintiff under the name of John Hogan. In some way he had obtained possession of checks drawn by the Western Union Telegraph Company to the order of one John Hogan, a person other than himself. These checks he deposited with the plaintiff from time to time, and later drew out the proceeds. Plaintiff was compelled thereafter to refund the amount of the checks to the true owner. It now sues the defendant surety company for indemnity in accordance with the bond. Indemnity is due if Palmer in signing the name John Hogan to the checks forged the signature of a depositor. Plainly he did not. The signature of the depositor was genuine. It was the very signature that Palmer, alias Hogan, had written on the signature card, and that the bank had agreed to honor. What was forged was the signature of some one not the depositor. The plaintiff in opening the account had no thought of contracting with any one except the man who stood before it. The fact that for the purpose' of becoming a depositor, he assumed a fictitious name, did not alter his identity (Phelps v. McQuade, 220 N. Y. 232; Strang v. Westchester Co. Nat. Bank, 235 N. Y. 68, 70, 71). John Hogan, the rightful owner of the checks, did not become a depositor in the bank within the meaning of this bond by force of the conversion of his checks under color of a forged indorsement. The purpose of the bond was to *343 protect the insured, not against forgeries by a depositor of the name of some one else, but against forgeries by some one else of the name of a depositor. The judgment should be affirmed with costs. Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ., concur. Judgment affirmed, etc.