Rapp v. National Sec. Bank

[435] Opinion, Mb. Chief Justice Paxson : ■'This was a suit against the defendant bank to recover an alleged balance of $900. There was no dispute that they would have been entitled to this balance but for the reason that a raised check, which they had deposited for collection, and for which they had received credit, had been charged back to them. The facts in regard to this check are substantially as follows: The plaintiffs are dealers in furniture. On the 12th of August, 1885, a stranger, introducing himself as L. H. Martin, called at their place of business to buy furniture. He selected goods to the amount of $146, and offered in payment a.check on a New York bank for $900, and requested to be paid the difference, $754, in cash. The check was marked “Good,” and there was nothing upon its face to show any irregularity. Before accepting it, Jesse Rapp, Sr., a member of the firm, called at defendant bank, in which they kept an account, and submitted the cheek to Mr. Cox, the cashier. Mr. Cox said to him: “ ‘ Mr. Rapp, if I were you, from the experience I have had in these matters, I would not touch this check. These men who are going about with raised checks are doing this very thing,—passing altered checks on innocent people, buying a small lot of goods, and getting a large amount of money in exchange.’ I said to him, ‘ I do not know that the check is good or not, or that it is properly certified; but if I were in your case I would not take the check or have anything to do with them, unless you know the parties with whom you are dealing.’ He said to me, ‘I don’t know them. They are strangers. They are there to buy the goods, and I would like to sell tbe goods.’ 4 Well,’ he said, ‘ what can you do, Mr. Cox ? ’ I said: 4 The only thing that I can do in the matter that I know of, if you just leave this check for collection, I will send it to New York to-day with the rest of the checks. If the check is kept, not forged, and not returned, then we will suppose that it is all right. That is all we can do. If you want to leave this check for collection, take it out to the discount and collection clerk, and give it to him.’ ” This is the material part of Mr. Cox’s testimony. I have given it somewhat at length, as it is the only evidence of what took place at this interview. Mr. Rapp was deceased at the [436] time of the trial, and we need not speculate as to what ,he would have testified to if living. In the absence of any com' flict of testimony, we must assume the facts to be as detailed by Mr. Cox. His advice to Mr. Rapp was just what any prudent cashier, fit for his position, would have given. This interview occurred on August 12, 1885. Before Mr. Rapp left the bank, he deposited the check in question for collection. He did not have his bank-book with him, and of course the check could not be entered therein. It came to the bank on the 14th, when the check was entered as cash. The bank forwarded it to the First National Bank of New York for collection, which bank received it, and credited the defendant bank with the amount. Nothing more was heard of it until September 12th, when the New York bank notified the defendant bank by wire and letter that the check in question had been altered from $7.75 to $900. The First National Bank of New York refunded the money to the Merchants’ National Bank, which had paid it, and charged the same to the defendant bank. The latter, on September 14th, charged the check to Rapp & Sons, who had deposited it, and at the same time notified them thereof. On the 14th of August, the second day after they had deposited the check, Rapp & Sons closed the transaction with Martin, and paid him the difference between the check and the bill. They did not wait to hear from the check, nor do they appear to have called at the bank at any time to inquire about it, until they received the notice of its dishonor. Reuben P. Rapp, one of the plaintiffs, testified: “ I never made any inquiry at the bank until after that day they notified us that the check was bad, and then brother and I went down.” The plaintiffs claim to recover against the bank for three reasons, viz.: 1. The bank was negligent. 2. The loss to plaintiffs occurred after they had been credited with the amount of the check. 3. The defendant bank was a volunteer in reimbursing the New York bank. These propositions can be readily disposed of. The defendant bank assumed no duty, and was chargeable with no duty, except that of forwarding the check for collection in the usual [437] manner. There was nothing upon the face of the check to indicate that it had been forged or raised. The mere possibility of such a thing was suggested by the cashier, not from any indications upon its face, but from the proposed transaction between Martin and Rapp & Sons. The latter were warned that it was the practice of those who altered checks to buy a small bill, and get a large amount of money in return. The signature to the cheek being admittedly genuine, and the raising of it so skilfully done as to avoid detection, it was promptly paid when presented to the Merchants’ National Bank, upon which it was drawn. In such case the fraud would only be detected when the bank came to settle the account of the depositor who drew the check. This might involve a delay of weeks. When the check was called to the attention of Edward L. Lewis, who drew it, the forgery was at once detected, and the check was promptly started on its way back to Rapp & Sons, by the same channel it had been forwarded. We see no evidence of delay or negligence in this branch of the case, and it needs no argument to show that each bank or person who received the money or a credit for this check was bound to restore it when the fraud was discovered. This is the general rule, and we need not discuss it at length, as the court below was not asked for instructions as to the effect of the payment of the check by the Merchants’ National Bank, and its right to reimbursement therefor. The proposition that the loss to the plaintiffs occurred after they had been credited with the check, and by reason thereof, cannot be sustained. Checks deposited for collection in city banks are entered as cash unless there is some reason to distrust the depositor. There was no such reason in this case, and the evidence shows that the check would have been entered as cash on August 12th, when it was deposited, but for the reason that Mr. Rapp had not his bank-book, with him. It was so entered on the 14th of August, when the book came to the bank. It has never been supposed that, when a bank credits a depositor with the amount of a check left for collection, it may not be charged back to him in case it turn out to be worthless. Such a rule would occasion much inconvenience to banks,, and much more to their customers. Upon a careful review of the case, we fail to find any evidence of negligence on the part of the [438] defendant bank. If there was negligence on the part of anyone, it was that of the plaintiffs themselves in dealing in the manner they did with an entire stranger, after warning to have nothing to do with him. In their eagerness to make a sale, they overlooked the risk; and, without waiting until assured of the genuineness of the check, they sold the goods, and advanced a large amount of money besides. Fortunately, the goods were recovered, but the money is gone unless they can make innocent parties pay it. I have not referred to the conversation between J esse Y. H. Rapp and Mr. Cox as testified to by the former, for the reason that I do not regard it as bearing upon the case. Mr. Rapp was not present at the conversation between his father and Mr. Cox at the time the check was deposited, and had no knowledge of what occurred at that time except from hearsay. His version of the transaction, so derived, was flatly denied by Mr. Cox. I have not discussed Clews v. Bank, 89 N. Y. 418; Espy v. Bank, 18 Wall. 619; National Bank v. Banking Ass’n, 55 N. Y. 215; and National Park Bank v. Seaboard Bank, 114 N. Y. 33, for the reason that I do not think they apply to the facts of this case as developed by the testimony. If it had been shown that the defendant bank had misled the plaintiffs, and that the latter had acted upon the faith of it, to their injury, we would have had a different case before us. It is true, the cause was argued upon that theory, but the facts are not so. The plaintiffs had no right to be misled by the mere credit of the check as cash; they made no inquiry at the bank after depositing the check until it was dishonored, but sold the goods and cashed the balance of the check, not only without due caution, but in the face of warning not to do so. Under such circumstances, they cannot throw their loss upon the bank. We are of opinion that the court below committed no error in refusing to charge as requested by the plaintiffs’ first and second points. Judgment affirmed.