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-money had and

lies.

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

person entitled to the money may recover it in an acreceived-when tion for money had and received, and this although he knows nothing of the party who has the right; the law itself creates the privity and the promise. Hitchcock v. Lukens, 8 Port. (Ala.) 333. This is the settled law of this state. Farmers' Bank & T. Co. v. Shut, 192 Ala. 53, 68 So. 363. But the defendant must have money, or its equivalent (192 Ala. 53, 68 So. 363), in his possession which belongs of right to the plaintiff (Levinshon v. Edwards, 79 Ala. 293). It is not denied that a forged indorsement passes no title; but plaintiff must recover on the strength of his own title. To repeat, the question, then, is whether plaintiff had any legal right to the check or its proceeds. Steiner Bros. v. Clisby, 103 Ala. 181, 15 So. 612. The foregoing are statements of the familiar law of this jurisdiction; they are reiterated here on account of some discord in the briefs.

Bills and notes

It remains to determine whether the fact that the check failed to reach the hands of plaintiff is fatal to his recovery. In the circumstances stated, it may be thought hard that defendants, if they were duly cautious, should be liable at all; but on the law and the facts heretofore recited, it is entirely clear that defendants had no property in the check, have none in the proceeds, and are liable to be sued by somebody for the money which they have received. Moreover, if plaintiff is allowed to recover from defendants, his election will put an end to the matter, for the drawer of the check intended it for plaintiff, and defendants, however innocently, received the money as upon plaintiff's indorsement, and, but for their intermeddling, however innocently, it

liability of one cashing check on forged indorsement.

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plaintiff's ownership. Shaffer v. McKee, 19 Ohio St. 526, is a case in point. There a draft payable to plaintiff's order, and mailed to him, was stolen en route, and the thief, having forged plaintiff's indorsement, sold the draft to the defendant, who in good faith collected the money from the drawee, and appropriated it to his own use. priated it to his own use. Upon these facts it was held that plaintiff was entitled to recover. Farmer v. People's Bank, 100 Tenn. 187, 47 S. W. 234, also, is squarely in point.

Appellee cites Crawford v. Barkley, 18 Ala. 270, to the proposition that "appellant cannot ratify the delivery to the impostor, and take under that." That case holds only that the principal cannot of his own mere authority ratify a transaction in part and repudiate it as to the rest. We see no inconsistency. Plaintiff adopts the act of defendants in collecting the money, but denies defendants' title. A similar contention was decided against appellee in Bobbett v. Pinkett, L. R. 1 Exch. Div. 368, 45 L. J. Exch. N. S. 555, 34 L. T. N. S. 851, 24 Week. Rep. 711. Rep. 711. In Branch Bank v. Sydnor, 7 Ala. 308, cited by appellee, the ruling was that an agent cannot sue unless there was an express promise to him as such, or unless he has an interest in the subject-matter of the suit. No such question arises in this

case.

We do not doubt that the payee may not maintain a suit against the drawer without showing a delivery by the latter to the former with intent to pass title. Appellee cites authorities to that effect. They prove nothing in this case. At this point appellee sticks too closely to the check or draft; we consider the question of liability for the money that appellee got from appellant or its agent, the St. Louis bank.

Rushville v. Rushville, 39 Ill. App. 503, cited by appellee, may be discriminated from the case at bar. In that case no wrong, other than the acceptance of money paid by mutual mistake, could be attributed to defendant in the receipt of the money

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

V.

NATIONAL CAPITAL PRESS.

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

(53 App. D. C. 59, 288 Fed. 265.)

Bank checks paid on forged indorsements

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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, Associate Justice, and Martin and Smith, Judges of the United States Court of Customs Appeals.

Messrs. Joseph A. Rafferty and P. H. Marshall, for appellant:

The payee of a check cannot sustain an action against a stranger bank, which has cashed the check for accommodation of a person claiming title through a forged indorsement.

First Nat. Bank v. Whitman, 94 U. S. 343, 24 L. ed. 229; Tibby Bros. Glass Co. v. Farmers & M. Bank, 220 Pa. 1, 15 L.R.A. (N.S.) 519, 69 Atl. 280; J. M. Houston Grocer Co. v. Farmers Bank, 71 Mo. App. 132.

Messrs. James A. Drain and Dale D. Drain, for appellee:

The owner of a check may maintain an action for money had and received against a bank which cashes the check on a forged indorsement and then collects it from the drawee.

Buckley v. Second Nat. Bank, 35 N. J. L. 400, 10 Am. Rep. 249; Talbot v. Bank of Rochester, 1 Hill, 295; Johnson v. First Nat. Bank, 6 Hun, 124, affirmed without opinion in 68 N. Y. 616; Schaap v. First Nat. Bank, 137 Ark. 252, 208 S. W. 309; Meyer v. Rosenheim & Co. 115 Ky. 409, 73 S. W. 1129; Salomon v. State Bank, 28 Misc. 324, 59 N. Y. Supp. 407; United States Portland Cement Co. v. United States Nat. Bank, 61 Colo. 334, L.R.A.1917A, 145, 157 Pac. 202; Graton & K. Mfg. Co. v. Redelsheimer, 28 Wash. 370, 68 Pac. 879; Kansas City Casualty Co. v. Westport Ave. Bank, 191 Mo. App. 287, 177 S. W. 1092; Buena Vista Oil Co. v. Park Bank, 39 Cal. App. 710, 180 Pac. 12; Farmer v. People's Bank, 100 Tenn. 187, 47 S. W. 234; Indiana Nat. Bank v. Holtsclaw, 98 Ind. 85; Shaffer v. McKee, 19 Ohio St. 526; Knoxville Water Co. v. East Tennessee Nat. Bank, 123 Tenn. 364, 131 S. W.

(53 App. D. C. 59, 288 Fed. 265.)

447; Crisp v. State Bank, 32 N. D. 263, 155 N. W. 78; Hamlin's Wizard Oil Co. v. United States Exp. Co. 265 Ill. 156, 106 N. E. 623, 7 N. C. C. A. 638; People v. Bank of North America, 75 N. Y. 547; Robinson v. Chemical Nat. Bank, 86 N. Y. 404; A. Blum Jr's Sons v. Whipple, 194 Mass. 253, 13 L.R.A. (N.S.) 211, 120 Am. St. Rep. 553, 80 N. E. 501; Bristol Knife Co. v. First Nat. Bank, 41 Conn. 421, 19 Am. Rep. 517; Standard Steam Specialty Co. v. Corn Exch. Bank, 220 N. Y. 478, L.R.A.1918B, 575, 116 N. E. 386; 1 Morse, Banks & Bkg. 5th ed. § 284, p. 491; 3 Randolph, Com. Paper, 2d ed. § 1469; United States Portland Cement Co. v. United States Nat. Bank, 61 Colo. 334, L.R.A.1917A, 145, 157 Pac. 202; Schaap v. First Nat. Bank, 137 Ark. 251, 208 S. W. 309.

Van Orsdel, Associate Justice, delivered the opinion of the court:

By declaration in the common counts, appellee sued appellant in the supreme court of the District of Columbia for the amount of twentytwo checks, payable to the order of plaintiff, which were cashed by defendant bank. The bookkeeper of plaintiff extracted the checks from the mail, credited the accounts of the customers from whom they were received, indorsed the checks in plaintiff's name, cashed them at defendant bank, and appropriated the proceeds to his own use. The checks were collected by plaintiff from the respective banks on which they were drawn. It is conceded that the bookkeeper had no authority to indorse and cash the checks. From a verdict and judgment for plaintiff, defendant appealed.

The liability of defendant bank to plaintiff for the aggregate amount of the checks is the single question involved. Counsel for defendant seeks to establish analogy to the settled principle that the holder of a check cannot maintain a suit against the drawee bank. National Bank v. Millard, 10 Wall. 152, 19 L. ed. 897; First Nat. Bank v. Whitman, 94 U. S. 343, 24 L. ed. 229. But the suit here is not against the drawee bank, but against one who acquired no title to the checks obtained from a defaulter upon his forged indorsement,

and, in turn, no title to the money collected upon the checks.

If the drawee banks had refused to cash the checks, a different case would be presented. Plaintiff would then have recourse against its customers, the drawers of the checks, whose funds in the drawee banks, against which the checks were drawn, would still be intact. Plaintiff, however, by collecting from the drawee banks, foreclosed the right of action by plaintiff against the drawers of the checks.

The checks, when received and collected by defendant, were the property of plaintiff, and plaintiff's title therein could not be defeated by a forged indorsement. Plaintiff's title remained the same as it was before the forgery was committed; hence, when defendant received the money on the checks, it had

Bank-checks

no more title to the paid on forged money than it had indorsements

liability.

to the checks, and
plaintiff could recover the amount

collected on the checks in an action
for money had and received. This
rule is sustained generally in the
states, and we have not been cited to
any Federal authority to the con-
trary. Buckley v. Second Nat. Bank,
35 N. J. L. 400, 10 Am. Rep. 249;
Talbot v. Bank of Rochester, 1 Hill,
295; Johnson v. First Nat. Bank, 6
Hun, 124; Schaap v. First Nat. Bank,
137 Ark. 252, 208 S. W. 309; Meyer
v. Rosenheim & Co. 115 Ky. 409, 73
S. W. 1129; United States Portland
Cement Co. v. United States Nat.
Bank, 61 Colo. 334, L.R.A.1917A,
145, 157 Pac. 202; Graton & K. Mfg.
Co. v. Redelsheimer, 28 Wash. 370,
68 Pac. 879; Kansas City Casualty
Co. v. Westport Ave. Bank, 191 Mo.
App. 287, 177 S. W. 1092; Buena
Vista Oil Co. v. Park Bank, 39 Cal.
App. 710, 180 Pac. 12; Farmer
v. People's Bank, 100 Tenn. 187, 47
S. W. 234; Indiana Nat. Bank v.
Holtsclaw, 98 Ind. 85; Hamlin's
Wizard Oil Co. v. United States Exp.
Co. 265 Ill. 156, 106 N. E. 623, 7 Ñ.
C. C. A. 638; Shaffer v. McKee, 19
Ohio St. 526; A. Blum Jr's Sons v.
Whipple, 194 Mass. 253, 13 L.R.A.

(N.S.) 211, 120 Am. St. Rep. 553, 80 N. E. 501; Bristol Knife Co. v. First Nat. Bank, 41 Conn. 421, 19 Am. Rep. 517.

Similar cases have been before this court. In Crane v. Postal Teleg. Cable Co. 48 App. D. C. 54, an action for money had and received was brought by the payee of checks against the bank which cashed them on the indorsement of plaintiff's agent. The court below directed a verdict in favor of plaintiff. The judgment was reversed for failure to submit to the jury the question of

the agent's authority. This, however, implied liability on the part of the bank if the agent should be found to have been without authority to indorse the checks. Here the lack of authority of the bookkeeper was not only found by the jury, but it is conceded. A like inference is deducible from our decision in Indiana Flooring Co. v. District Nat. Bank, 51 App. D. C. 391, 280 Fed. 522.

The judgment is affirmed, with costs.

ANNOTATION.

Right of owner of check against one who cashes it on a forged or unauthorized indorsement and procures its payment by drawee.

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Alabama.-ALLEN V. M. MENDELSOHN & SON (reported herewith) ante, 1063.

Arkansas.

Schaap v. First Nat. Bank (1918) 137 Ark. 252, 208 S. W. 309.

California.-Buena Vista Oil Co. v. Park Bank (1919) 39 Cal. App. 710, 180 Pac. 12.

Colorado.-United States Portland Cement Co. v. United States Nat. Bank (1916) 61 Colo. 334, L.R.A.1917A, 145, 157 Pac. 202.

District of Columbia.-MERCHANTS' BANK V. NATIONAL CAPITAL PRESS (reported herewith) ante, 1066.

Illinois.-Hamlin's Wizard Oil Co. v. United States Exp. Co. (1914) 265 Ill. 156, 106 N. E. 623, 7 N. C. C. A. 638; Independent Oil Men's Asso. v. Ft. Dearborn Nat. Bank (1924) 311 Ill. 278, 142 N. E. 458; Lindenthal v. Northwest State Bank (1921) 221 Ill. App. 145; Higgin Mfg. Co. v. Foreman Bros. Bkg. Co. (1921) 222 Ill. App. 29. Indiana.- Indiana Nat. Bank v. Holtsclaw (1884) 98 Ind. 85.

Kansas.-Hope Vacuum Cleaner Co. v. Commercial Nat. Bank (1917) 101 Kan. 726, 168 Pac. 870.

Kentucky. Meyer v. Rosenheim. (1903) 115 Ky. 409, 73 S. W. 1129.

Massachusetts.-A. Blum Jr's Sons v. Whipple (1907) 194 Mass. 253, 13 L.R.A. (N.S.) 211, 120 Am. St. Rep. 553, 80 N. E. 501.

Mississippi.-Thomas v. First Nat.

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New Jersey. Buckley v. Second Nat. Bank (1872) 35 N. J. L. 400, 10 Am. Rep. 249. New York. Talbot v. Bank of Rochester (1841) 1 Hill, 295; People v. Bank of North America (1879) 75 N. Y. 547; Robinson v. Chemical Nat. Bank (1881) 86 N. Y. 404; Standard Steam Specialty Co. v. Corn Exch. Bank (1917) 220 N. Y. 478, L.R.A. 1918B, 575, 116 N. E. 386 (point under annotation conceded); Johnson v. First Nat. Bank (1875) 6 Hun, 124, affirmed without opinion in (1877) 68 N. Y. 616; Schmidt v. Garfield Nat. Bank (1892) 64 Hun, 298, 19 N. Y. Supp. 252, affirmed without opinion in (1893) 138 N. Y. 631, 33 N. E. 1084; Burstein v. People's Trust Co. (1911) 143 App. Div. 165, 127 N. Y. Supp. 1092; E. Moch Co. v. Security Bank (1917) 176 App. Div. 842, 163 N. Y. Supp. 277, affirmed without opinion in (1919) 225 N. Y. 723, 122 N. E. 879; Salomon v. State Bank (1899) 28 Misc. 324, 59 N. Y. Supp. 407; Rosenberg v. Germania Bank (1904) 44 Misc. 233, 88 N. Y. Supp. 952; Ellery v. People's Bank (1909) 114 N. Y. Supp. 108 (rule admitted).

North Dakota.-Crisp v. State Bank (1915) 32 N. D. 263, 155 N. W. 78. Ohio. Shaffer v. McKee (1869) 19 Ohio St. 526.

Tennessee. Farmer v. People's Bank (1897) 100 Tenn. 187, 47 S. W. 234; Knoxville Water Co. v. East Tennessee Nat. Bank (1910) 123 Tenn. 364, 131 S. W. 447.

Washington.-Graton & K. Mfg. Co. v. Redelsheimer (1902) 28 Wash. 370, 68 Pac. 879.

England.-Arnold v. Cheque Bank (1876) L. R. 1 C. P. Div. 578, 45 L. J. C. P. N. S. 562, 34 L. T. N. S. 729, 24 Week. Rep. 759.

A bank which cashed a check drawn by an insurance company payable to its state and local agents, upon the indorsement by the local agent of his own name and that of the state agent, after the bank had been expressly di

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rected not to pay the amount to the local agent, is liable to the state agent for the sum so paid, notwithstanding the local agent had been receiving insurance premium checks payable to himself and the state agent, and had been cashing these checks at the defendant bank and sending the state agent his portion of the proceeds. First Nat. Bank v. Patterson (1916) Tex. Civ. App. 185 S. W. 1018. Upon the assumption that the cashier of a branch office of a telegraph company had no right to act for the company in indorsing checks payable to the company and receiving cash thereon from a bank, and that the bank's payment to the cashier was wrongful, it was held in Crane v. Postal Teleg. Cable Co. (1918) 48 App. D. C. 54, that if the bank was able to prove that the cashier had used the money for the benefit of his principal, the principal could not recover from the bank.

The payee of a check was allowed to recover of a bank which had cashed the same upon an unauthorized indorsement in Hinton Electric Co. v. Bank of Montreal (1903) 9 B. C. 545. The headnote states that defendant bank was the drawee bank; the opinion does not make this fact clear.

In Chicago, B.,& Q. R. Co. v. Burns (1901) 61 Neb. 793, 86 N. W. 483, an action by the payee of railroad pay checks against the railroad company, for wages for which the pay checks were issued, after the pay checks had been lost and cashed upon the forged indorsement of the payee, it was urged that the railroad company was not liable to the payee, but that the bank at which the checks were made payable, and which had paid the same upon the forged indorsement, was liable. The pay checks were not drawn upon the bank in question, but were made payable at it. The court denied the liability of the bank to the payee, on the theory that, the pay checks not being orders on the bank in which the company was a depositor, so that, when issued and accepted, they amounted to an assignment of the company's funds in the bank, the payee had no remedy against it.

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