Wellington National Bank v. Robbins

The opinion of the court was delivered by Smith, J.: Under the agreed statement of facts in this case the defendant was responsible to the plaintiff for the money it paid out upon the check with the forged indorsement. The rule, as laid down in a note to People’s Bank v. Franklin Bank (88 Tenn. 299), in [751] volume 17 of the American State Reports, page 898,. reads: “Money paid upon a forged indorsement of a check or draft may be recovered back. The bank or drawee is not bound to know the signature of an indorser. And the holder, whether he indorses the instrument or not, warrants the genuineness of all prior indorsements. If, therefore, a check or draft upon which the name of a prior indorser has been forged is paid, the amount may be recovered back -from the party to whom it has been paid, or from any party who indorsed it subsequent to the forgery.” The case of Corn Exchange Bank v. Nassau Bank, 91 N. Y. 74, 43 Am. Rep. 655, cited by the defendant,, sustains this doctrine, but in that case it was held that the drawee was not entitled to recover the expenses of the suit, for the reason that it had not discharged its duty to the defendant as a depositor. In the case' at bar, however, the plaintiff, upon being sued for the entire amount of the check, notified the defendant in writing and requested it to assume and take charge of the defense of the case. This it was the defendant’s duty to do, and it neglected to do it. The owner of the-defendant bank, however, testified as a witness in that action, and had every opportunity to have any defense made that it could have made if it in fact had been a party. It was the duty of'the defendant to see the plaintiff harmless on its contract of warranty that the indorsement of the mercantile company on the check was genuine, and it ill becomes the defendant to say that when the plaintiff was sued it should have paid the full amount claimed and then sought to recover it from the defendant. The plaintiff defended in good faith, employed counsel in good faith and at an agreed reasonable price, and saved the defendant over $200, and is entitled to recover the full amount claimed. The agreed statement of facts embraces every question material to the determination of the case, and the evidence offered and introduced by the defendant de [752] volved neither upon the trial court nor upon this court the weighing of evidence to determine the facts. In the case of Bank v. Williams, 62 Kan. 431, 434, 63 Pac. 745, the court quotes from section 58 of Sutherland on Damages, second edition, as follows: “If one’s property is taken, injured or put in jeopardy by another’s neglect of duty imposed by contract, or by his wrongful act, any necessary expense incurred for its recovery, repair or protection is an element of the injury. It is often the legal duty of the injured party to incur such expense to prevent or limit the damages; and, if it is judicious and made in good faith, it is recoverable, though abortive.” At the trial, after the agreement as to the facts given in the statement, the plaintiff rested; The defendant then offered evidence, over the objection of the plaintiff, of the custom between the banks at Wellington, and of the understanding of the cashier of the defendant bank as to the meaning of the indorsement placed by it upon the check, all of which we think was incompetent. The act of the plaintiff in defending the action of the mercantile company was in good faith, and was not abortive, but resulted in great good to the defendant. By so much more ought the plaintiff to recover. The judgment of the district court is reversed, and the case is remanded with instructions to enter judgment for the plaintiff for $135.12, with interest at the rate of six per cent, per annum from November 19, 1901, and for costs. All the Justices concurring.