Geering v. Metropolitan Bank

Scott, J.: The action is brought by a depositor against his depository batik to recover the sum of $576.52. The amount sought to be [752] recovered represents a number of checks which were deposited by plaintiff and credited to his account. Subsequently upon the ascertainment by defendant that, as it alleges, the checks had come into plaintiff’s possession through a forged indorsement, the credit was canceled. The checks in question were drawn by the North British and Mercantile Insurance Company upon the Merchants National Bank to the order of divers persons. One J. W. Walker, who was a clerk in the insurance company, in some way obtained possession of these checks, and having indorsed upon each the name of the payee to whom it was drawn, indorsed them with his own name and delivered them to plaintiff, who deposited them, as aforesaid in defendant bank. The latter received payment thereof from the Merchants National Bank. Later, when it was discovered that the indorsements of the several payees were forgeries, the defendant bank, upon demand of the Merchants National Bank, repaid to the latter the amount of the checks and canceled plaintiff’s credit for that amount. Since the judgment proceeded upon a directed verdict, the appellant is entitled to the most favorable inference that may be drawn from the evidence. In the first place it was shown by the undisputed evidence of a qualified expert that in the case of each check the indorsement of the name of the payee named in the check was written by Walicer, the clerk. This evidence, unexplained, coupled with the fact that Walker induced plaintiff to cash the checks, is sufficient prima facie to establish the fact that the indorsement of the name of the payee on each check was a forgery, and the jury might properly have so found.. Assuming that fact to be established, it is quite clear that plaintiff acquired no title to the checks and can claim nothing on their account. This is the effect of section 42 of the Negotiable Instruments Law (Consol. Laws, chap. 38; Laws of 1909, chap. 43), which reads as follows: “§42. Forged signature; effect of. Where a signature is forged or made without authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, [753] unless the party, against whom it is sought to enforce such right, is precluded from setting up the forgery or want of authority.” (See, also, Stein v. Empire Trust Co., 148 App. Div. 850; Egner v. Corn Exchange Bank, 42 Misc. Rep. 552.) Furthermore by indorsing the checks for deposit, plaintiff guaranteed the validity of the prior indorsements including the one now alleged to have been forged. The defendant was under no obligation to wait to be sued before making repayment to the Merchants National Bank. Assuming the payee’s signatures to have been forged, defendant stood in no better position toward the Merchants National Bank than plaintiff stands to defendant. It is, therefore, of no moment that defendant paid without suit. (Oriental Bank v. Gallo, 112 App. Div. 360; affd., 188 N. Y. 610.) The determination and judgment appealed from must be reversed, and a new trial granted, with costs to appellant to abide the event. McLaughlin, Clarke and Smith, JJ., concurred; Ingraham, P. J., dissented.