Houghton v. First National Bank

Cole, J. To our minds the position that the in-dorsement of Buckley, in the manner in which it was made, is to be treated as his personal indorsement, and not one in his official character, binding upon the bank, is clearly untenable. In the first place, Buckley was the cashier of the bank, the person who, in the [668] regular course of business, was authorized to indorse notes for the bank. He indorsed the note in question by signing his name, “ Geo. Buckley, Cas.” Now, it is said that the name of the bank does not anywhere appear in the indorsement, and that the paper does not Bear any evidence to connect the bank with it in any manner. But the authorities cited on the brief of the counsel for the plaintiffs abundantly show that it is not necessary that the indorsement should be made in the name of the corporation, but that an indorsement by the cashier of the bank, adding the suffix “ Cashier,” or “ Cash’r,” or “ Cr.” or “ Cash.” will be regarded as an official indorsement. The reason and principle upon which these authorities proceed, are so fully stated in the opinions of the judges in those cases, that nothing further need be added here upon the point. See also, in addition to the cases cited by plaintiff’s counsel, Rockwell v. Elkhorn Bank, 13 Wis. 653; Ballston Spa Bank v. Marine Bank, 16 id. 120; Claflin v. Farmers' & Citizens’ Bank, 36 Barb. 540, which have more or less bearing upon the question. But it is insisted that this was the individual and not t!:e official act of Buckley, because it was made for the accommodation of the payees and first in-dorsees, and not for the use and benefit of the bank. The circuit court found, as a fact established by the evidence, that the indorsement was made without consideration and at the request and for the accommodation of the payees, the bank never having owned or negotiated the note, nor having any interest therein. But Buckley expressly swears that he indorsed the note to enable the payees to get it discounted in Milwaukee for the purpose of taking up paper that the bank had previously discounted for them, either due or becoming due. And the fair inference from his testimony is, that this paper referred to had been re-discounted for the bank in Milwaukee, and that he indorsed this particular note with the expectation [669] that the payees would use the money realized hy its discount to take up that paper. But however this may be, we still think that if it was an accommodation indorsement for the benefit of the payees, yet, under the circumstances, the bank is liable thereon. We have already said that the indorsement was good in form to bind the bank, and cannot he regarded as the private indorsement of Buckley. But still it is claimed that even if the indorsement was good in form to bind the hank, yet the bank is not liable •thereon, because the cashier only has authority to indorse paper owned by the bank, and cannot, in his official character, make an accommodation indorsement ; and that if he does, he acts clearly beyond the scope of his authority, and the principal is not holden on the contract. Consequently it is argued that whoever purchases paper, bearing the cashier’s indorsement, takes the risk of obtaining that which he had no authorityto indorse, and no representation of the cashier that the paper indorsed belonged to the bank, nor any other representation made by him to show that the indorsement was rightfully and legally made, can avail to bind the bank upon an indorsement not authorized. This question is not a new one in the courts. It is most elaborately and ably discussed in the North River Bank v Aymer, 3 Hill, 262; Farmers’ & Mechanics’ Bank v. Butchers’ & Drovers’ Bank, 14 N. Y. 633; Same case, 16 N. Y. 125; and conclusions were reached by the learned judges adverse to this view of the law. It is true, the decisions in those cases were not unanimous — C. J. Nelson dissenting in the first case, and Judge Comstock in the other; but the strength of the argument seems to me decidedly with the majority opinions, and we have concluded to follow them as the better rule upon this subject. The case before the court falls fully within the principle and general reasoning of those cases, and therefore we have no [670] difficulty in saying that the bank is effectually bound by the indorsement of the cashier, even if it was made for the accommodation of Wadsworth, Adams & Co. And this upon the principle, that as the cashier is the person authorized to indorse notes for the' bank, a purchaser of such paper in good faith before maturity is not bound, when he takes it thus properly indorsed, to inquire whether the bank owned it when it was indorsed or not (Bank of N. Y. v Bank of Ohio, 29 N. Y. 619; Banking Association v. White Lead Co., 35 id. 505). It is true, in this case one of the plaintiffs, before they bought the notes, applied to the cashier, Buckley, to know if his indorsement was genuine, and asked if “ it was all right,” and was told it was. Perhaps the law would not impose this duty upon the plaintiffs of inquiring of the cashier, before purchasing the note, whether it was all right; but the fact that they did exercise this diligence cannot weaken their case. It is objected that this information was not sought of the cashier while at the counter in the bank, but when he was in Milwaukee. But what earthly difference can that make? Suppose the plaintiffs had seen the cashier on the street in Elkhorn, or on the steps of the bank building, and made this inquiry in regard to the paper ? Can it be seriously claimed that they would have no right to rely upon his representations in respect to his indorsement, unless made by him while standing at the counter ? It well might be that an officer might decline to answer such inquiries when away from the bank without its books before him to refresh his recollection. But certainly if he did undertake to give the information when away from the bank, a party about purchasing a note indorsed by him would have the right to rely upon the representations which the cashier might make in regard to the nature and character of the indorsement. It is further insisted that the plaintiffs cannot be regarded as bona fide holders without notice that the [671] note never belonged to the bank. But we fail to see any circumstance attending tlie negotiation of the note which should have put them upon inquiry. It is said that the note purported to have been executed at Pentwater, Michigan, June 23,1869, and that a day or two after it bore date it was left with the plaintiffs for sale by Chase. Therefore, it is argued, the plaintiffs must have known that the note could not, in that short space of time, have passed through the bank in the regular course of business; that time, distance and circumstances rendered it impossible that it should have done so. Whatever force there might be in this view of the matter, it is a sufficient answer to say that the plaintiffs did inquire of Buckley if the indorsement was his as cashier, and were told that it was. What more were they required to do ? We see no ground for holding that the note in the hands of Wadsworth, Adams & Co. was not the subject of sale in the market like any other commercial paper. It follows from these views that the judgment of the circuit court must be reversed, and the cause. be remanded with directions to enter judgment for the amount of the note against the bank. By the Court. — Ordered accordingly.