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his contract, and the Statute of Limi- It was held also in Crofoot v. Moore tations then began to run; that the (1831) 4 Vt. 204, that where the decontract was not one to indemnify fendant agreed to pay to a third party the plaintiff, and that the statute did the plaintiff's share of certain notes not begin to run merely when the to a third party, which were executed plaintiff was compelled to pay the by the plaintiff and another, and were debt.

due at a subsequent date, the Statute So, where a purchaser of chattels, of Limitations began to run on the who had given his note for the pur- maturity of the notes and the failure chase price, divided the property ,

of the defendant to keep his promise, with a third person, who agreed to and not when the plaintiff suffered pay half of the note, but failed to damage by payment, the contract not do so, and the maker thereof was being one merely of indemnity. subsequently compelled to pay it in On the other hand, there are author. full by an action brought against ities which, at least on the particular him by the payee, it was held in Joiner facts, have reached a contrary result. v. Perry (1846) 32 S. C. L. (1 Strobh.) Thus, in Sims v. Goudelock (1852) 76, that, as between the maker of 40 S. C. L. (6 Rich.) 100, the court the note and the third party, the regarded a contract by which one of cause of action in favor of the former the parties undertook to pay a debt arose when the note subsequently of the other to a third person as one became due and the third party failed of indemnity, and the cause of action to keep his promise, and not at the against the promisor and in favor of subsequent date when the maker was the promisee as arising only when compelled to pay the note in full; the latter paid the debt, on failure of that by postponing such payment, for the former to perform the undertakwhich the payee could look only to ing. the maker of the note, the latter could It was held also in Enos v. Andernot prevent the operation of the Stat- son (1907) 40 Colo. 395, 15 L.R.A. ute of Limitations upon the promise (N.S.) 1087, 93 Pac. 475, that where which the third party had made to one sold property under an agreement him.

with the purchaser that the latter And where a member of a firm sold would pay an indebtedness of the his interest therein to the other part- seller to a third person, which the ners, who agreed to pay the partner- seller was subsequently compelled to ship obligations, but the retiring pay, the Statute of Limitations did partner was subsequently held liable not begin to run against the seller on a note of the firm, and the judg- in favor of the purchaser until the ment rendered against him on this former had been compelled to pay the not was, more than two years there- debt. after, affirmed, and execution was And in Peterson v. Abbe (1920) 234 thereupon issued and his property Mass. 467, 125 N. E. 611, where a sold to satisfy the judgment, it was grantee of mortgaged property by the held in Rowsey v. Lynch (1876) 61 terms of the deed assumed and agreed Mo. 560, that the undertaking of the to pay the mortgages thereon and to remaining partners was not merely hold the grantor harmless, the court one of indemnity of the retiring part- held that the agreement was a conner, in which case a cause of action tract of indemnity, and that, if it were against them in favor of the latter conceded that the grantor might have would have accrued on the sale of brought suit against the grantee at his property, but was a promise to any time after the mortgages were pay a debt for which he was liable due and remained unpaid, yet he had and for which a right of action ac- the option to rely on the grantee's crued to him on their failure to make undertaking of indemnity, and until payment, which, at least, was not at obliged to make payment the statute any later date than the obtaining of did not run against him, in favor of the judgment.

the grantee.


So, the cause of action was said tee's sale, which deprived the plainin Poe v. Dixon (1899) 60 Ohio St. tiff of her remaining lot. This con124, 71 Am. St. Rep. 713, 54 N. E. 86, clusion was reaffirmed on a later apto accrue at the time the grantor peal in (1912) Tex. Civ. App. paid the debt, where the grantee, who 142 S. W. 999. It appears that in had assumed, as a part of the pur- this case the action would have been chase price of lands the payment of barred had the court held that the a mortgage thereon, and, having

and, having grantor's right of action against the failed to comply with his agreement, grantee accrued on the latter's failure the grantor was compelled to pay a to pay the mortgage notes when due. deficiency of the mortgage debt aris- And where land subject to ing on foreclosure, and brought an vendor's lien was conveyed to an asaction against the grantee to recover sociation, which in its purchase asthe amount so paid. But it may be sumed payment of the vendor's lien observed that in this instance no ques- note, it was held in Bexar Bldg. & L. tion was presented as to whether the Asso. v. Newman (1893) Tex. Civ. cause of action might have accrued App. 25 S. W. 461, that no cause at a prior date than the payment, the of action against the association and action being barred in any event by in favor of the grantor arose, until limitations, if, as the court held, the the latter had suffered damages by statute applicable to actions on an reason of the nonpayment of the note implied promise was the proper one by the association, and that in this to be invoked.

instance the statute had not run in Also, where the purchaser of one of favor of the grantee. two lots which were subject to a The annotation does not include mortgage agreed to pay the mortgage cases not involving the question of debt, which he failed to do, and both the Statute of Limitations, but prelots were sold to satisfy the debt, it senting the question merely of the was held in Gregory v. Green (1911) necessity of payment before recovery

Tex. Civ. App. -, 133 S. W. 481, by a debtor against one who has that the grantor's right of action assumed or agreed to pay the indebtagainst the grantee for breach of the

edness, but has failed to do so. See, contract did not accrue until the sale

for example, Meyer v. Parsons (1900) of the property, and that the claim

129 Cal. 653, 62 Pac. 216; Thomas was not, therefore, barred by the

v. Richards (1906) 124 Ga. 942, 53 Statute of Limitations. The court said that the defendant's undertaking

S. E. 400; Stokes v. Robertson (1915) was to pay off the notes and leave

143 Ga. 721, 85 S. E. 895; Trice v. the plaintiff's other lot clear, and that

Yoeman (1898) 8 Kan. App. 537, 54 this contract was not breached in such Pac. 288; Hyde v. Kirkpatrick (1915) manner that the plaintiff could main- 78 Or. 466, 153 Pac. 41, 488; Dayton tain an action against the defendant v. Gunnison (1848) 9 Pa. 347. (the grantee) thereon, until the trus

R. E. H.



Alabama Supreme Court - April 27, 1922.

(207 Ala. 527, 93 So. 416.)

Bills and notes - liability of one cashing check on forged indorsement.

1. One cashing a check on a forged indorsement and collecting it from the drawee must account to the true owner for the money received.

[See note on this question beginning on page 1068.]


Assumpsit - favored by courts. an action for money had and received.

2. Assumpsit is an action equitable although the former had no knowledge in character, liberal in form, and of the latter. greatly favored by the courts as [See 2 R. C. L. 778; 1 R. C. L. Supp. remedy.

624; 4 R. C. L. Supp. 123.] - when lies.

Bills and notes right of true owner 3. Assumpsit will lie whenever the

to maintain action. circumstances are such that the law

6. One cashing a check on a forged ex debito justitiæ will imply a prom- indorsement and collecting it from the ise.

drawee cannot defeat recovery by the [See 2 R. C. L. 745; 1 R. C. L. Supp.

one for whom it was intended, but in617.]

to whose possession it never came, on -- necessity of privity.

the theory that he had not established 4. No privity between the parties is his ownership. necessary to sustain an action of as

Assumpsit sumpsit.

to recover proceeds of [See 2 R. C. L. 780; 1 R. C. L. Supp.

check. 626.)

7. Assumpsit lies in favor of one for - money had and received when

whom a check was intended which was lies.

misappropriated without reaching 5. If one has money which ex equo

him, against the one who cashed it on et bono belongs to another, the latter a forged indorsement and collected it may, in the absence of contract modi. from the drawee, to recover the profying the general liability, maintain ceeds so collected.

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APPEAL by plaintiff from a judgment of the Circuit Court for Jefferson County (Aird, J.) in favor of defendants in an action brought to recover the proceeds of a check cashed on a forged indorsement and collected by defendants from the drawee bank. Reversed.

The facts are stated in the opinion of the court.

Mr. William Henry Beatty, Jr., for judgment for defendants, after appellant.

which this appeal. Messrs. Leader & Ullman and David

Reason why the judgment should R. Solomon for appellee.

be sustained is expressed in several Sayre, J., delivered the opinion of forms, but may be fairly stated as the court:

follows: Without delivery of the The Illinois Central Railroad check to appellant or his agent, apCompany in its office in Chicago pre- pellant acquired no title, and cannot pared a check on a bank in St. Louis, maintain his action. payable to appellant, and forwarded Assumpsit is an action of an equiit to its disbursing agent at Bir- table character, liberal in form, and mingham to be delivered to appel- greatly favored by

Assumpsitlant in payment for services per- the courts as a rem- favored by formed by him for the company. In edy. Westmoreland

courts. some way unknown to the company v. Davis, 1 Ala. 299. No agreement or its employee, appellant, but prob- is necessary; assumpsit will lie ably by larceny or fraudulent imper- wherever the circumstances are such sonation of the payee, plaintiff, the that the law, ex check fell into the hands of a stran

debito justitiæ, will when lles. ger, an impostor, who forged appel imply a promise. lant's indorsement, and passed the Nor is any privity in fact between check to appellees in payment for the parties necesmerchandise. Appellees collected sary.

Where one

-necessity of

privity. the money from the bank in St. man has

money Louis, and appellant sued appellees which ex equo et bono belongs to in common assumpsit for money had another, if there be no contract and received. The trial court gave modifying the general liability, the




(207 Ala. 527, 93 8o. 416.) person entitled to the money may re- plaintiff's ownership. Shaffer v.

cover it in an ac- McKee, 19 Ohio St. 526, is a case in -money had and received-when tion for money had point.

point. There a draft payable to and received, and plaintiff's order, and mailed to him, this although he knows nothing of was stolen en route, and the thief, the party who has the right; the having forged plaintiff's indorselaw itself creates the privity and ment, sold the draft to the defendthe promise. Hitchcock v. Luk- ant, who in good faith collected the ens, 8 Port. (Ala.) 333. This is money from the drawee, and approthe settled law of this state. Farm- priated it to his own use. Upon ers' Bank & T. Co. v. Shut, 192 these facts it was held that plaintiff Ala. 53, 68 So. 363. But the defend- was entitled to recover. Farmer v. ant must have money, or its equiv- People's Bank, 100 Tenn. 187, 47 S. alent (192 Ala. 53, 68 So. 363), in W.234, also, is squarely in point. his possession which belongs of Appellee cites Crawford v. Barkright to the plaintiff (Levinshon v. ley, 18 Ala. 270, to the proposition Edwards, 79 Ala. 293). It is not that “appellant cannot ratify the denied that a forged indorsement delivery to the impostor, and take passes no title; but plaintiff must under that." That case holds only recover on the strength of his own that the principal cannot of his own title. To repeat, the question, then, mere authority ratify a transaction is whether plaintiff had any legal in part and repudiate it as to the right to the check or its proceeds.

We see no inconsistency. Steiner Bros. v. Clisby, 103 Ala. 181, Plaintiff adopts the act of defend15 So. 612. The foregoing are state- ants in collecting the money, but dements of the familiar law of this nies defendants' title. A similar jurisdiction; they are reiterated contention was decided against aphere on account of some discord in pellee in Bobbett v. Pinkett, L. R. 1 the briefs.

Exch. Div. 368, 45 L. J. Exch. N. S. It remains to determine whether 555, 34 L. T. N. S. 851, 24 Week. the fact that the check failed to Rep. 711. In Branch Bank v. Sydreach the hands of plaintiff is fatal nor, 7 Ala. 308, cited by appellee, the to his recovery.

In the circum- ruling was that an agent cannot sue stances stated, it may be thought unless there was an express promise hard that defendants, if they were to him as such, or unless he has an duly cautious, should be liable at all; interest in the subject-matter of the but on the law and the facts hereto- suit. No such question arises in this fore recited, it is entirely clear that case. defendants had no property in the

We do not doubt that the payee check, have none in may not maintain a suit against the Bills and potes, the proceeds, and

drawer without showing a delivery liability of one cashing check are liable to be sued by the latter to the former with indorsement.

by somebody for the tent to pass title. Appellee cites au

money which they thorities to that effect. They prove have received. Moreover, if plain- nothing in this case.

nothing in this case. At this point tiff is allowed to recover from de- appeilee sticks too closely to the fendants, his election will put an end check or draft; we consider the to the matter, for the drawer of the question of liability for the money check intended it for plaintiff, and that appellee got from appellant or defendants, however innocently, re- its agent, the St. Louis bank. ceived the money as upon plaintiff's Rushville v. Rushville, 39 Ill. App. indorsement, and, but for their in- 503, cited by appellee, may be distermeddling, however innocently, it criminated from the case at bar. In

would have reached that case no wrong, other than the -right of true owner to main- plaintiff. There acceptance of money paid by mutual tain action.

fore, defendants do mistake, could be attributed to denot appear to be in a position to deny fendant in the receipt of the money

on forged in

in suit. The court denied plaintiff's Anderson, Ch. J., and Gardner and claim on the ground that there was Miller, JJ., concur. no privity. 4 Cyc. 322; 5 C. J. 1382.

Petition for rehearing denied We have stated the law of this state

May 18, 1922. on that subject. Our best judgment is that it was

NOTE. the duty of defendants upon demand -sufficiently shown by this action- The right of the owner of a check

to pay the money against one who cashes it on a forged Assumpsit-to recover proceeds over to plaintiff, or unauthorized indorsement and and therefore that

procures its payment by the drawee common assumpsit will lie for its is the subject of the annotation folrecovery.

lowing MERCHANTS' BANK v. NATIONAL Reversed and remanded.

CAPITAL PRESS, post, 1068.

of check.

MERCHANTS' BANK of Washington, D. C., Appt.,


District of Columbia Court of Appeals - April 3, 1923.

(53 App. D. C. 59, 288 Fed. 265.) Bank — checks paid on forged indorsements - liability.

A bank which cashes checks on forged indorsements and collects them from the drawee is liable for their amount to the payee.

[See note on this question beginning on page 1068.]

APPEAL by defendant from a judgment of the Supreme Court of the District of Columbia in favor of plaintiff in an action brought to recover the amount of certain checks, payable to its order and cashed by defendant on forged indorsements. Affirmed.

The facts are stated in the opinion of the court.

Argued before Van Orsdel, Asso- Buckley v. Second Nat. Bank, 35 N. ciate Justice, and Martin and Smith, J. L. 400, 10 Am. Rep. 249; Talbot v. Judges of the United States Court of Bank of Rochester, 1 Hill, 295; JohnCustoms Appeals.

son v. First Nat. Bank, 6 Hun, 124, afMessrs. Joseph A. Rafferty and P. firmed without opinion in 68 N. Y. 616; H. Marshall, for appellant:

Schaap v. First Nat. Bank, 137 Ark. The payee of a check cannot sus- 252, 208 S. W. 309; Meyer v. Rosentain an action against a stranger bank, heim & Co. 115 Ky. 409, 73 S. W. 1129; which has cashed the check for ac- Salomon v. State Bank, 28 Misc. 324, commodation of a person claiming 59 N. Y. Supp. 407; United States title through a forged indorsement. Portland Cement Co. v. United States

First Nat. Bank v. Whitman, 94 U. Nat. Bank, 61 Colo. 334, L.R.A.1917A, S. 343, 24 L. ed. 229; Tibby Bros. Glass 145, 157 Pac. 202; Graton & K. Mfg. Co. v. Farmers & M. Bank, 220 Pa. 1, Co. v. Redelsheimer, 28 Wash. 370, 68 15 L.R.A.(N.S.) 519, 69 Atl. 280; J. M. Pac. 879; Kansas City Casualty Co. Houston Grocer Co. v. Farmers Bank, v. Westport Ave. Bank, 191 Mo. App. 71 Mo. App. 132.

287, 177 S. W. 1092; Buena Vista Oil Messrs. James A. Drain and Dale D. Co. v. Park Bank, 39 Cal. App. 710, Drain, for appellee:

180 Pac. 12; Farmer v. People's Bank, The owner of a check may maintain 100 Tenn. 187, 47 S. W. 234; Indiana an action for money had and received Nat. Bank v. Holtsclaw, 98 Ind. 85; against a bank which cashes the check Shaffer v. McKee, 19 Ohio St. 526; on a forged indorsement and then col- Knoxville Water Co. v. East Tennessee lects it from the drawee.

Nat. Bank, 123 Tenn. 364, 131 S. W,

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