First National Bank v. Pease

Mr. Chief Justice Phillips delivered the opinion of the court: • The material question in this case is, whether the drawer of a bill or check may recover the amount named therein from a bank on which such bill or check is drawn, where the bank has paid the same on a forged indorsement of the name of the payee. If the check becomes the property of the payee by coming to his hands, the liability of the bank would be to such payee for a wrongful payment to another. If the payee named in the check or bill had no interest therein and it never passed into such payee’s hands, and the payee’s name was indorsed thereon as a forgery, then the drawer has never parted with the funds misapplied by the bank, and it is bound to replace the same. Where a bank pays a bill or check on a forged indorsement it is liable to some one for funds so wrongfully paid out. The liability must be to the drawer or to the payee. If the instrument belongs to the payee, the liability is to him;'if it has never been received by the payee and he has no interest therein, then it belongs to the drawer. Talbot v. Bank, 1 Hill, 295; Morgan v. Bank, 1 Duer, 434; Bank of British North America v. Merchants’ Nat. Bank, 91 N. Y. 106; United, States v. Nat. Bank of the Republic, 13 Mackey, (D. C.) 289; Morse on Banks and Banking, sec. 474; Daniel on Neg. Inst. sec. 1618; Dodge v. Exchange Bank, 30 Ohio St. 1; Roberts v. Tucker, 16 Q. B. 560. The evidence shows that Willis P. Baker, representing himself to be the agent of Charlotte A. Baker, applied to appellees for a loan of $3500 on real estate security. He took from their place of business a trust deed, notes and coupons, which he brought back purporting to be signed by Charlotte A. Baker, and a certificate of acknowledgment to the trust deed. These he delivered to appellees, receiving two checks, payable to Charlotte A. Baker, for $3424.55. The facts as found by the trial and Appellate Courts are that the payee of the checks never received them, never authorized the transaction and never indorsed them, but her signature thereon was a forgery, and the bank paid them. The drawer in such case would have a right to recover from the bank the amount so wrongfully paid. The facts as to whether Charlotte A. Baker executed and delivered the notes and the trust deed, and whether Willis P. Baker was an authorized agent to receive the checks, were settled adversely to appellant by the judgments of the trial and Appellate Courts. •It is insisted that it was error to allow in evidence a deposition taken on a former suit to which appellant was not a party. It was not read or considered by the court, as shown by this record, and did not affect the issue. It was harmless error. The judgment of the Appellate Court for the First District is affirmed. Judgment affirmed.