McKaughan v. Merchants Bank & Trust Co.

Olaeic, C. J. The plaintiff having canceled the security he held for the $1,065.84, contends that though he was paid by Byerly’s check that sum out of the proceeds of the check which he handed to Byerly he is entitled to recover the full amount of the check which he made payable to Adella Byerly, and which by an endorsement unauthorized by her was paid by the bank. *546 A bank is liable for the payment of a cheek on a forged endorsement, unless the drawer was guilty of some negligence which caused the bank to pay it. “A bank is authorized to pay only to the person designated by the depositor. It cannot charge against the depositor’s account an amount paid by it • on a forged endorsement of the depositor’s check unless such payment is properly attributable to the negligence or other fault of the depositor, or unless the money has actually reached the person who the drawer intended should receive it, or the drawer himself.” 7 C. J., sec. 414, p. 686. In 2 Daniels Neg. Instruments, it is said, as quoted in note 23 to 7 C. J., 678: “Cases have arisen in which checks have been paid on forged endorsements made by the person to whom the drawer delivered the check, mistaking his identity for the one who is designated as payee; and although it be a forgery of the name of the person whom the bank took him to be, it has been considered that the bank should be protected in paying the check because the drawer was in fault in the first instance, and the person who forged the instrument was the person to whom the drawer actually delivered the instrument.” We do not think this quotation, however, is in point. For there was no mistake as to the person, W. B. Byerly, to whom the check was paid,.which was endorsed “Adella J. Byerly by W. B. Byerly.” We do not think these, and other similar authorities, have a bearing upon this question. The endorsement of the check to the bank was not forged by W. B. Byerly who obtained the money thereon. The check was obtained from the plaintiff by the forgery of a mortgage purporting to be signed by Adella Byerly, and the check procured on such forgery was handed by the drawer to W. B. Byerly, but the check was made payable to Adella J. Byerly. Whether the plaintiff was negligent or not in making a check payable to Adella J. Byerly upon the faith of a forged mortgage purported to be executed by her, and acknowledged before a notary public, who certified that Adella J. Byerly had signed the deed in trust, is not the issue in this case. The plain fact here is that the plaintiff gave a check, payable to Adella J. Byerly, and that check was paid by the bank, not upon her forged signature, but to W. B. Byerly, a depositor well known to the bank, who endorsed the check “Adella J. Byerly, by W. B. Byerly.” It is, therefore, not the case of the payment of a check upon a forged endorsement, but upon a genuine endorsement made by W. B. Byerly, and the defect is not a forgery, for there was none in this respect, but the bank negligently assumed that W- B. Byerly had authority to endorse the paper “Adella J. Byerly, by W. B. Byerly.” There was no negligence of the plaintiff shown to justify this negligence of the bank. *547 Upon tbe evidence tbe court properly directed .tbe jury to answer all tbe issues in favor of tbe plaintiff, except as to tbe fifth issue, as to wbicb be directed tbe jury to credit tbe check with tbe amount of $1,065.84, repaid to tbe plaintiff out of tbe proceeds of tbe plaintiff’s check, wbicb bad been credited to Byerly. Tbe amount returned to tbe plaintiff came out of tbe proceeds of the check issued to Adella J. Byerly, and, inasmuch as tbe plaintiff bad canceled tbe mortgage held by him against "W. B. Byerly by reason of tbe forged instrument delivered to him, such cancellation, as between tbe plaintiff and ~W. B. Byerly, was a nullity, and bis remedy as to so much of tbe proceeds ($1,065.84) as was repaid to him is to be sought by reinstatement of bis lien against Byerly; and if that has been lost by tbe sale of tbe property in tbe meantime to other parties, it is tbe plaintiff’s loss. As between tbe plaintiff and tbe bank tbe amount of tbe check paid by it on Byerly5s unauthorized endorsement should be credited with the $1,065.84, wbicb was repaid to tbe plaintiff by Byerly out of tbe proceeds of tbe check, for this measures the loss which tbe plaintiff has sustained by reason of tbe payment of tbe check upon tbe endorsement thereof by W. B. Byerly. Tbe $1,065.84, if lost by plaintiff, has been lost by bis acceptance of tbe forged security. As to both appeals we find No error.