Dorsey v. Abrams

Mr. Justice Paxson delivered the opinion of the court, November 19th 1877. This was a suit brought against the defendants, an unincorporated banking association, to recover the amount of a check held by the plaintiff, a copy of which is here given:— “ No. East Brady, Pa., Dec. 30, 1875. Citizens’ Savings Bank, East Brady, Pa., pay to P. Dorsey, Esq., or order, two thousand dollars. To hold as collateral for 1000 P. T. oil, pipage paid to Jan. 4, 1876. A. W. McCullough. Good when properly endorsed. J. Y. Foster. Endorsement on back of check, P. Dorsey.” The J. Y. Foster who certified the check is the cashier of the defendants’ bank. It was alleged upon the trial, and there is evidence tending to prove, that the certificate of Mr. Foster was a forgery. The plaintiff contended that if a forgery, Mr. Foster had recognised and confirmed it by his subsequent acts and declarations. We do not regard the question of the alleged forgery as an important element in the discussion of the case. It was conceded that at the time McCullough drew the check upon the bank, he had no funds there and no right to draw. It is also apparent that the check was entirely out of the usual course of banking business. This is plain from the face of the instrument. Instead of being a mere order upon a bank to pay a certain sum of money to a person therein designated, or to bearer, it has the significant endorsement in one corner, “ to hold as collateral for 1000 P. T. oil,” &c. This indicates plainly that the check was given merely as collateral security for the delivery of the oil. If any [302] doubt could exist upon this point it is put at rest by the testimony of Dorsey (plaintiff) himself. He says: “ The first cl^eck was given for borrowed oil; if the oil was not returned the check was to be paid ; that check was carried for thirty days ; supposed it was all right and not forged ; the second check was taken when oil was advancing, and I would not extend the check without he would give me a check which would secure me for the return of the oil.” If the certificate of Poster that the check was “ good when properly endorsed ” is to bind the bank, then the cashier has made the bank security for the delivery of 2000 barrels of oil. This he could not do without authority. It is an act entirely outside of any of the ordinary, recognised duties of the cashier of a bank. There is not a word in the evidence to show that the defendants or any of them knew of this transaction, much less sanctioned it. An attempt was made to show a similar course of dealings by the bank as to prior transactions, that is to say, to certify checks drawn without funds, to be held as collateral for oil. It was not successful, however. The checks certified were what the witnesses call “ straight checks,” by which we understand commercial checks for the payment of money free from clog or condition. As to such checks it is not perhaps outside of the line of a cashier’s duties to certify them when requested, and the drawer has the funds in the bank. It has been decided that he has a right to make such a certificate by virtue of his office s Cooke v. The Bank, 52 N. Y. 96. The effect of such a certificate we need not discuss, as the question is not before us. Nor need we consider at length the proposition that the plaintiff was a bona fide holder for value. The face of the check was notice that it was not drawn in the usual course of business; that it was not a commercial check. The plaintiff’s own testimony shows, as we have seen, that he was to hold it only as security for the oil. He had no right to draw the money upon the check until default in the delivery of the oil. There was ample to put him upon inquiry as to the authority of the cashier. We are of opinion that the learned judge of the court below was entirely accurate in his rulings embraced in the first assignment. This practically disposes of the case. We may say, however, in regard to the fifth assignment, that the point referred to was not based upon any evidence in the cause. There was no error therefore in declining to answer. Judgment affirmed.