First Nat. Bank v. Wood County , 294 S.W. 324 ( 1927 )

The questions in the case are, whether (1) the county of Wood is entitled to a judgment against the depository bank for the full amount of the forged checks; and, if so, (2) are the several banks to whom money was paid on such forged checks liable over to the depository bank. The trial court determined the first question in favor of Wood county, and we think correctly so. As a general rule the doctrine prevails that, unless the drawer of the check whose name be forged is, by negligence or acquiescence, rightfully responsible, the drawee bank cannot charge the amount paid in account against him. Neg. Inst. Act, § 23 (Rev.St. 1925, art. 5932); 8 C.J. p. 607; 2 Daniel on Neg. Inst. (Ed. 1903) § 1655; Morris v. Bank, 37 Tex. Civ. App. 97, 83 S.W. 36; Glasscock v. Bank,114 Tex. 207, 266 S.W. 393, 36 A.L.R. 320; and numerous other cases. It is for the reason that a bank, in paying a check drawn by a depositor, is generally held to know the signature, and, if a forged check is paid, the bank will not be heard to assert, against the depositor, a mistake as to the signature, unless under the exception stated above. An estoppel, predicated on the exception first stated above, does not arise upon the facts of the present case against Wood county, acting through its treasurer. The finding of fact, having evidence to support it, was that there was not acquiescence or negligent failure in the matter on the part of the county treasurer. He was found not blameable in the circumstances "in failing to discover the forgeries earlier than he did or in reporting said discovery to the county depository." This same finding of fact would also operate, as correctly held by the court, to deny a recovery at all by the depository bank against the county treasurer on the cross-action of the bank.

It is believed that the answer of the second question depends upon the legal effect attaching to the facts of the present case. The full fact was established, as found by the court, that the drawee bank was without actual fault or negligence in not knowing the signature and detecting the forgery of the checks before payment of the same to the several banks. The finding is warranted by the evidence. In the circumstances it reasonably appears that there was no active negligence on the part of the drawee bank in not detecting the forgery by a bare inspection of the checks without reference to anything outside of them. As further found by the court, each one of the holder banks "cashed the checks so received by them at the time the checks were received by paying to the party or parties who presented same the amounts thereof, respectively, without knowing or identifying the persons to whom the same were paid, on the faith of the signature of the county treasurer, without investigation as to the party who presented the same." The case was tried by the parties on the fact being true that the convicted parties cashed all ten checks, which were forged by one of them. There is sufficient evidence supporting the court's conclusion to warrant the finding of negligence in the matter on the part of the several banks in taking and cashing the checks. People's Bank v. Franklin Bank, 88 Tenn. 299, 12 S.W. 716, 6 L.R.A. 724,17 Am. St. Rep. 884; First Nat'l Bank v. State Bank, 22 Neb. 769, 36 N.W. 289,3 Am. St. Rep. 294. Such banks parted with their funds upon forged checks through error and fault, without due care upon their part. Therefore, under the facts, the several banks did not take the checks from the forger and cash them without fault or negligence at the time, and the drawee bank paid them the money without active fault or negligence at the time in not discovering the forgery. Under the existing rule in this state, the drawee bank would be entitled upon such facts to recover the money paid on the forged checks over against the other banks. Rouvant v. San Antonio Nat. Bank, 63 Tex. 610; Iron City Nat. Bank of Llano v. Peyton, 15 Tex. Civ. App. 184, 39 S.W. 223; Texas State Bank of Walnut Springs v. First Nat. Bank of Meridian (Tex.Civ.App.) 168 S.W. 504. See 10 L.R.A. (N.S.) page 50, note; 12 A.L.R. page 1099, note; 94 Am.St.Rep. page 642, note. But it is urged by the several banks, and the court seemingly so determined, that such rule was modified and made inapplicable by sections 62 and 187 of the Negotiable Instrument Act (Rev.St. 1925, arts. 5936, 5947). As insisted, when the drawee bank paid the checks, said bank was absolutely estopped under the provisions of such sections of the act, the same as would be any other drawee, from disputing such checks after certifying same. In other words, it is contended the payment was equivalent to an acceptance, and therefore the acceptor is absolutely precluded, as is the effect of the sections mentioned, from denying the existence of the drawer and the genuineness of his signature. It is believed that the provisions of the act cannot be given the effect contended for, in cases of forgery where the holders, as we conclude in point of fact in the present case, are not holders entirely "without negligence" in taking the checks from the forger and cashing them. The act does not directly and expressly declare such effect of absolute estoppel of mere payment by the drawee of a forged check. And the rule laid down in the cases above mentioned was not intended to be modified, in view of section 196 of the act (Rev.St. 1925, art. 5948) providing: "In any case not provided for in this act the rules of law and equity including the law merchant shall govern." As held, presentment for payment and presentment for acceptance are different acts under the Negotiable Instruments Act. First National Bank of Goree v. Tally,115 Tex. 591, 285 S.W. 612. Also, mere payment of a forged Instrument is not an acceptance within the purview of the act. Trucking Co. v. Bank (Tex.Civ.App.) 240 S.W. 1000. And the extent of the ruling in the cases dealing with the act in respect to the question here sustains the long-established view only that a drawee cannot recover over from a holder of a forged check "who has in no way contributed to the fraud, and is not guilty of negligence in the matter" (Bank v. Bank, 59 Or. 388,117 P. 293; Bank v. Union Trust Co., 33 Okla. 342, 125 P. 464; Title Guarantee Trust Co. v. Haven, 196 N.Y. 487, 89 N.E. 1082, 1085, 25 L.R.A. [N. S.] 1308, 17 Ann.Cas. 1131; Bank v. Bank, 110 Minn. 263,125 N.W. 119, 26 L.R.A. [N. S.] 849, 136 Am. St. Rep. 496; Bank v. Bank,48 Mo. App. 1, 127 S.W. 429; and other cases), nor where the fault is entirely on the drawee bank (Bank v. Bank, 141 Mo. App. 719, 125 S.W. 513).

The cited case of Bull v. Novice State Bank (Tex.Civ.App.) 250 S.W. 232, does not present or involve the same question as here. In the special circumstances of that case there was merely presumed acceptance of the drawee under section 137 of the act (Rev.St. 1925, art. 5941).

The judgment is accordingly modified so as to allow the drawee bank to recover over against each of the receiving banks the amounts paid respectively, and as so modified the judgment will be affirmed. The appellee banks will proportionally pay one-half of the costs of appeal and all the costs of the trial court incurred by each of them respectively; the appellant to pay all costs of the trial court except as taxed against appellee banks, and one-half of the costs of appeal