Meyer v. Chas. Rosenheim & Co.

Opinion oe the court by JUDGE HOBSON Aefirmins. Appellees are wholesale merchants in Louisville. They had in their employ a bookkeeper named Altman, who forged their name on the back of checks belonging to them, [412] and then delivered the cheeks to appellant, who paid him the money on them or sold him jewelry therefor. 'Appellant then collected the checks from the banks on whom they were drawn. Appellees, on discovering the forgery and the misappropriation of their, property, brought this action against appellant to recover of him the amount he had collected on these checks belonging to them under the forged indorsement of their name by Altman. The checks amounted to $227.93. On final hearing the court gave judgment in favor of the plaintiffs. There is no plea of estoppel, and we see nothing in the evidence to warrant an estoppel if pleaded. Appellees were not required to anticipate a forgery. The bookkeeper had no authority as such to sign the firm’s name, and had nothing to do with the checks. He obtained them, in fact, surreptitiously, and without the line of his authority. Appellant appears to have been equally innocent, and so the precise question is on which of two equally innocent persons the loss should fall. In Morse on Banking, section 248, it is said: “If a negotiable instrument having a forged indorsement come to the hands of a bank and is collected by it, the proceeds are held for the rightful owners of the paper, and may be recovered by them, although the bank gave value for the paper, and has paid over the proceeds to the party depositing the- instrument for collection.” See, to same effect, 3 Randolph on Commercial Paper, sections 1469, 1739, 1777. The case of Farmer v. People’s Bank (decided by the Supreme Court of Tennessee) 47 S. W., 234, is much like this case. There Head, who had possession of a check payable to Farmer, indorsed Farmer’s name upon it without his knowledge or consent, and delivered it to the People’s Bank, who collected the proceeds and permitted Head to check out the money. After this, Farmer demanded the [413] money of the People’s Bank, and, it refusing to pay Mm, •sued to recover the amount collected by it on the check. The court held that the logic of the rule to the effect that a check payable to a certain person can only be properly paid upon his genuine indorsement, or to him, necessarily was that one coming into possession of such paper under a forged indorsement of his name could not successfully resist the title of the true owner, or, if it had been converted • into money, a demand for its proceeds A number of decisions from other States are collected in that opinion. The rule is that a forged indorsement is a nullity. Appellant’s position then in law is the same as if he had taken appellees’ checks and collected the money on them without any indorsement of them at all. The collection of the checks by him was a conversion of them, and he who converts the personal property of another is always liable to the owner therefor. Appellant has collected appellees’ money. He had no right in law to the money, and he can not retain it against them. The action is not based upon the writings, but upon the idea that appellant has converted the property of another, and that he can not retain as against the truel owner the proceeds of the property. Bramblett v. Caldwell, 105 Ky., 202, 20 R., 1123, 48 S. W., 982. Judgment affirmed.