Hamlins Wizard Oil Co. v. United States Express Co.

Mr. Justice McSurely delivered the opinion of the court. The defendant claims as a ground for reversal that nlaintiff was guilty of negligence in failing to discover Walsh’s misconduct, thereby causing the loss comnlained of, and, therefore, because of such negligence, nlaintiff cannot recover from the defendant. It is argued that an audit of plaintiff’s books would have ■hsclosed Walsh’s peculations, and that plaintiff owed to defendant the duty of so examining its books as to prevent such losses. The cases cited to support this contention are cases having to do with a suit by a depositor against his bank to recover the amount of a forged or altered check which the bank had improperly paid and charged a gainst the depositor’s account. In such a case it was held to be the duty of the depositor to examine within a reasonable time the returned canceled checks and to give the bank timely notice of any irregularities he might discover, so that the bank could protect itself and be on guard against similar impositions in the future. A typical case is Leather Manufacturers’ Bank v. Morgan, 117 U. S. 96, where the Court said: “If he (the depositor) had discovered that altered checks were embraced in the account, and failed to give due notice thereof to the bank, it could not be doubted that he would have been estopped to dispute the genuineness of the checks in the form in which they were paid.” But we cannot hold this rule applicable to the case before us, for the reason that the relations between the plaintiff and the defendant were not those of a depositor and his bank, but were simply those of a customer and a seller. Defendant was in the business of selling money orders to any one wishing to buy, and the plaintiff, when it desired, purchased them from defendant. Plaintiff owed defendant no higher duty than it owed to the parties from whom it bought its supplies used in its business. There were no relations of mutual trust and confidence imposing reciprocal duties as exist between a depositor and Ms bank. There being no duty owing to the defendant that couM affect plaintiff’s methods of bookkeeping, it follows that any failure by plaintiff to audit its books is not such negligence as can avail as a defense. Among the Cases sustaining this view in extended opinions are People v. Bank of North America, 75 N. Y. 547; Shepard & Morse Lumber Co. v. Eldridge, 171 Mass. 516; Dispatch Printing Co. v. National Bank of Commerce, 115 Minn. 157. In Jordan Marsh Co. v. National Shawmut Bank, 201 Mass. 397, and in Shipman v. Bank of State of New York 126 N. Y. 318, where negligence of the plaintiff was claimed as a defense, under facts similar to the facts in the case before us, it was held that the negligent manner of plaintiffs in transacting their business with reference to checks was not the proximate cause of the loss, but that the proximate cause of the checks being paid upon fraudulent indorsements was the failure of the defendants to see that the indorsements upon the checks were genuine. It should be noted that under the scheme followed by Walsh the forgeries in question would not have been readily discovered from usual bookkeeping inspection, and it would be only a guess to say that a discovery of his wrongdoing in other particulars would have led to the discovery of this particular method of obtaining money. Considerable argument is indulged in upon the point that an investigation of Walsh’s conduct would have disclosed that he was spending more for his personal wants than- the amount of his salary would warrant, and that much of his expenditures was made in saloons and other places with which plaintiff had no business connection. If we are correct In holding that plaintiff owed no duty to the defendant as to the manner in which plaintiff kept its books of account, it certainly cannot be said that plaintiff owed the defendant any duty with regard to the habits and manner of living of plaintiff’s employes. Defendant concedes that Walsh had no express authority to indorse checks and drafts, but argues that there is evidence from which such authority may be inferred. We find no such evidence in the record; in fact, the evidence negatives any such inference. No such inference can be drawn from the mere fact that Walsh was the messenger sent to defendant’s office to buy money orders with checks already indorsed. Nothing occuring between him and the defendant could be said to contain any suggestion that Walsh was indorsing the checks. They purported to be indorsed by the president or vice president of the plaintiff Company, and it is evident that Walsh conducted himself so as to inspire a belief that the indorsements were made by the persons purporting to have made them. It was not part of his scheme to lead the defendant to believe that the indorsements were made by himself, but rather that they should be considered as genuine. Defendant is in error in its contention that it was necessary for the plaintiff to prove not only that the indorsements were not genuine, but also that they were unauthorized. If defendant claimed in defense that the indorsements were authorized, the burden was upon it to make this proof, and not upon the plaintiff. It is so held in Schroder v. Harvey, 75 Ill. 638, and Jackson Paper Mfg. Co. v. Commercial Nat. Bank, 199 Ill. 151. Decisions stating the rule in criminal cases are not in point. There was no error in the use of the books of plaintiff. In the introduction of plaintiff’s evidence in chief no books were used. Defendant then called for them and used certain entries therefrom to establish its claim for credits, without making any proof required by the statute as to their regularity. Plaintiff therefore became entitled to use other entries to explain or contradict the effect claimed for the entries adduced by defendant. In Boudinot v. Winter, 190 Ill. 394, the Court said: “We know of no principle that will enable a party to a suit to call upon his adversary for the production of documentary evidence, and, when it is so produced, claim the benefit of such part or portion thereof as may be to his advantage, and, at the same time, reject such part as tends against him, and also deprive his opponent of the right to its use.” We might also say that defendant suffered no harm from this use of the books by plaintiff. Complaints are made of many rulings of the court on the admissibility of evidence. Some of the objections are highly technical. In other instances, where objections to questions were sustained, the testimony sought was already in evidence. Other points are met by what we have said concerning the absence of any duty from plaintiff to defendant in regard to plaintiff’s manner of conducting its business. The facts' are not in dispute. The only questions involved are ones of law. In our view of the case the trial court committed no error in instructing the jury as he did, and the judgment will be affirmed. Affirmed.