
    Frederick B. Dodge v. The National Exchange Bank.
    1. The rightful possession of a check, made payable to the order of a particular person, confers no authority on the drawee to pay the same to-the person having such possession, without the genuine indorsement of the payee.
    2. The duty of the drawee upon acceptance of such check, to pay the same-only upon the genuine indorsement of the payee named therein, is not affected by a eustohi among bankers as to the mode of ascertaining the-identity of the person indorsing the name of the payee and receiving payment. If the drawee relies upon false representations as to identity, for which -neither the drawer nor payee are responsible, he makes payment to a wrong person at his peril. •
    3. “Where the drawee attempts to justify payment to a person not hearing-the name of the payee, upon his unauthorized indorsement of the payee's name, on the ground that he was the person to whom the drawer intended payment to be made, though described by a false name; all the facts in regard to such intention being unknown to the drawee at the time of payment, he can not be allowed to prove a portion of the facts occurring at the time of drawing the check, and to insist upon excluding other material facts occurring at the same time tending to disprove such intention.
    4. The propositions contained in the syllabus of this case, as reported in 20 Ohio St. 234, are approved and followed.
    Error to the Court of Common Pleas of Franklin county. Reserved in the district court.
    The original action in this case was heretofore brought by plaintiff’ in error before the supreme court for review, and is fully reported in 20 Ohio St. 234. The facts of the case, as then presented, were as follows :
    The original action was brought in the court of common pleas by Frederick 13. Dodge, against the National Exchange Bank of Columbus, Ohio, to recover of the bank $600 damages for that, without the knowledge or consent of the plaintiff', the bank had wrongfully paid to a stranger, not entitled thereto, but who, in fraud of plaintiff’s rights, had forged the plaintiff’s name thereon, the amount of a certain check of which the'plaintiff was then the legal owner, and of which the following is a copy, as set out in the petition:
    “No. 3609.
    “ Columbus, O., January 22,1866.
    “The National Exchange Bank and Depository of the United States, Columbus, Ohio, pay to Frederick B. Dodge, or order, four hundred and eighty-six dollars.
    “ William S. Striker,
    “ $486tX3K-. “Paymaster U. S. Army.”
    
    The pleadings in tl^e action were the petition and answer.
    The case was tried in the common pleas on the following agreed statement of facts : .
    “ Frederick B. Dodge, the plaintiff, resided at Toledo, Ciño. A few days prior to January 22, 1866, being the owner of a certificate of indebtedness, due to him from the United States, for the sum of $486-^., he indoi'sed the same in blank, and inclosed it in a letter which was sent by mail from Toledo, to Cincinnati, Ohio, to Dwight Bannister, paymaster United States army, then stationed at Cincinnati, requesting him to pay the same, and return the money to him, by draft or check, by mail. This letter, ■with the certificate indorsed, -was stolen from the mail or post-office at Cincinnati, and the certificate was presented for payment to said Bannister, at Cincinnati, by the thief, who falsely represented himself to be Frederick B. Dodge.
    “ The paymaster declined to pay the certificate to him without proof of identity, and the person holding it went •out professedly to procure such proof, hut did not return. ‘On the 22ucl of January, 1866, the same person presented the said certificate for payment to W. S. Striker, paymaster United States army, at his office in Columbus, Ohio. The said paymaster received the said certificate, and, on requiring proof of identity, was told by the said person that- he could identify himself at the hank. The said paymaster thereupon in payment of said certificate gave to him the said check on the defendant, a copy of which is set out in the petition. He presented the said check to the defendant on the same day, representing himself to be Frederick B. Dodge, the plaintiff, indorsed the said check in that name, and received the said money, to wit, $486^^-, from the defendant in payment of said check. The plaintiff had no knowledge whatever of the said person ; never gave him any authority to act for him; and the entire transaction was wholly without his knowledge or consent. The said defendant had no knowledge of the said plaintiff at the time of the payment of the said check, nor of any of the foregoing facts that transpired prior to the .-presentation .of said •cheek for payment, nor of the object or purpose of said Striker in drawing said cheek payable to order. The said defendant, as a National Bank and United States depository, had a running account with said Striker, as paymaster, and paid the checks of said paymaster given to soldiers1 from all parts of the state; and the same party presenting' the check aforesaid claimed to be a soldier. The handwriting of the plaintiff differs entirely from that of the person who received payment of the check. After .the-payment of said check by defendant in- manner aforesaid, and before this action was commenced, the said Striker, with knowledge of the claim of the plaintiff, settled his-account with the defendant, and received and credited said1 check in said settlement. We agree that the above-facts may be considered in the above case as duly proven for the purpose of the first trial of this cause, subject to exceptions for competency and relevancy. And it is further-agreed that either party may offer further evidence on the-said trial.”
    Upon the hearing of that case the judgments of the-courts below were reversed, and the cause was remanded to the court of common pleas for trial de novo. Upon such subsequent trial by the court below, without the intervention of a jury, judgment was again rendered for the defendant, which the plaintiff now seeks to reverse, having-filed his petition in error for that purpose in the district court, where the questions arising in the case were reserved-for the decision of the supreme court. Upon the trial now brought under review, the same agreed statement of facts was again submitted to the court; but, on motion of the defendant, and against the objection of the plaintiff,, the court, on the ground of incompetency and irrelevancy, struck out so much thereof as relates to what occurred at Cincinnati between the paymaster there and the person-, who presented plaintiff's voucher to him; also so much of said statement as shows that the paymaster Striker, before-giving the check in question to the person presenting the-voucher for payment, required proof of his identity, and was told by the person that he could identify himself at the bank.
    The defendant also offered additional testimony upon the trial, tending to prove that before its payment of the: .check was completed, the defendant learned from a clerk of the paymaster who happened to come into the bank, ■that the person presenting the check, had received it -directly from the paymaster, also testimony tending to prove that defendant before paying the check required the -person presenting it to identify himself, who thereupon went out, and soon afterward returned with a young clerk from •a clothing store a few squares distant from the bank, who represented the person in question to be Frederick JDodge, ■and said that he knew him while he was in a hospital somewhere in the south during the war; — also testimony tending to prove the custom of bauks in regard to the proof of identity required of strangers presenting such cheeks ■for payment.
    To all this evidence so offered by defendant, the plantiff objected, as irrelevant and incompetent; but the objection was overruled, and the evidence received by the court, and the plaintiff excepted.
    Upon the agreed statement of facts as modified, and ■upon the evidence so offered by defendant, the court found for the defendant, overruled the plaintiff’s motion for a new trial, and entered judgment dismissing plaintiff’s .action.
    All this action of the court is here assigned for error.
    
      C. N. Olds, for plaintiff in error.
    
      H. C. Noble, for defendant in error.
   Scott, J.

The paymaster, by drawing and delivering the check in question, in payment of plaintiff’s voucher, .set apart and appropriated for the plaintiff’s use so. much of his funds in defendant’s hands as would be necessary for its payment. This act of appropriation the plaintiff conclusively ratified by bringing this action. The defendant also assented to this appropriation, by accepting his check, by assuming to pay it, and by claiming and receiving •credit from the drawer for its payment. '

By the act of acceptance, the defendant became bound to pay to the plaintiff, or his order, the sum named in the. cheek; and for the breach of this obligation and implied promise, the plaintiff has a clear right of action. There.is no want of privity between the parties. On a promise-made on valuable consideration, by A. to B. to pay C. a sum of money, it is well settled that an action may bo maintained by C. against A. 7 Ohio St. 360; 3 Ohio St-549.

The clear duty of the bank was, either to decline accepting the check, or to comply with its direction by paying the money which it called for, to Frederick B. Dodge, or to his order.

It is claimed that the drawer of the check was in fault for not requiring the person who presented Dodge’s voucher to identify himself as Dodge; and that the plaintiff would have a right of action against him for this neglect of duty. Suppose this to be true, and that the plaintiff was not bound to regard the delivery of the check to a stranger having no authority to receive it, as a payment of hisyoueher; yet this was a question between the plaintiff and the paymaster only, with which the bank had no concern.. Wbat right has the bank to complain that the paymaster was derelict in a duty which he owed to Dodge?

This can be no justification of another and distinct breach of duty owing to the plaintiff, which was devolved on the bank, when it undertook to pay the check. Its duty was to pay the check to the plaintiff or his order only. Admitting that the plaintiff was not bound to sanction or ratify the act of delivery of the check to the stranger, yet he certainly might ratify that act, and thereby waive his right of action against the paymaster. The defendant here is not prejudiced by this waiver. The check was paid on the assumption that the party presenting it was rightfully in possession of it. And certainly, the defendant can not complain because the plaintiff, by his subsequent ratification, admits that fact. But the rightful possession of a cheek by no means carries with it or implies a right to demand or receive payment of it, without the genuine indorsement of the person to whose order it is made payable.

The evidence which was introduced upon the last trial of this case in the court below, tending to prove that the bank learned, before payment of the check, that the party in possession of it had received it from the drawer, only tended to prove that the bank had a right to assume what the plaintiff here admits, to wit, the rightful possession of the check by the party presenting it for payment. But this would be no evidence of a right to receive its proceeds without the indorsement of the payee, and does not therefore change the aspect of the case from that in which it was heretofore considered by the supreme court.

Nor is it a valid ground of defense in this action that the defendant subsequently received credit in its settlement with the drawer for the amount of the check which the defendant claimed to have paid in accordance with its terms. "With that settlement the plaintiff had no concern. As to him, it was res inter alios acta. If this could have any effect on the plaintiff’s claim, it could only he in the way of strengthening and perfecting it; for it fully completed the conversion of the plaintiff’s check to defendant’s use, if that conversion was before incomplete. But it was just and proper that the drawer having notice that the plaintiff elected to hold the defendant responsible, should give it credit for the cheek which it had cancelled, and returned to him on settlement. And that it thus realized the full value of the check is surely no ground of exemption from liability to account therefor to the owner.

It is said, in argument, that the drawer of the check had no right to devolve upon the bank the burden and responsibility of identifying the payee named therein. We do not think the right of the absolute owner of a fund to direct to whom a check drawn upon it shall be paid, can be questioned. But, were it otherwise, the only result would be, that the drawee is not bouud to accept and honor the check. But if he do accept, and undertake to pay it, he must see to it, at his peril, that he pays according to the terms of the order, and to the party named therein, or to one holding it under the genuine indorsement of such payee. But the claim that the drawer of a check can legally only make it payable to bearer, and that the drawee may, therefore, make payment, without inquiry, to any "party who presents it, although it is expressly made payable only to the order of a particular person, is, in our opinion, unsupported either by reason or- authority. Nor did the defendant in this case so understand its rights.

The paymaster, in drawing this check, used a printed form, with suitable blanks, and containing the words or bearer” after the space left for the insertion of the payee’s name. These words he erased, and substituted for them, in writing, the words “ or order.” The bank was thereby notified that, for some reason deemed important by the drawer, payment was not to be made without proof of identity. And the defendant must have so understood its duty. Eor its proper officers required the party presenting the check to identify himself'as the payee named therein.

He undertook to do so, and procured a person to make false statements on the subject. On these statements the defendant chose to rely, and was thereby deceived. But the plaintiff had no agency in this deception, and can not be held accountable for it. 'The bank relied on these representations at its own risk, and can not visit upon the plaintiff the loss arising from its misplaced confidence. And this is true, whether the defendant exercised the degree of caution which bankers usually do in such cases, or not. The question is, was the check paid to the party to whom, by its terms, it was made payable ?

With this question, the custom of bankers can have nothing to do ; and the evidence offered by "defendant, in the court below, to show the custom of banks, as to the mode of establishing the identity of the payee, was clearly incompetent, and should have been excluded.

It is claimed, further, by defendant, as a vital point in the case, that the drawer of the cheek inte'nded it to be paid to the person to whom he delivered it, and whom he designated by the name of Frederick B. Dodge, because that was the name which he assumed when he presented the voucher for payment; and that the bank properly .paid-the check to the very person whom the drawer intended to designate by the name of Frederick B. Dodge. But, upon what evidence does this claim rest? The agreed .statement of facts shows that the plaintiff was the owner of the voucher in payment of which the cheek in question was drawn; that the-check was made payable to him or -his order, and that the check was paid by defendant, the •drawee, not to the plaintiff, but to a stranger, upon a false .and forged indorsement of the plaintiff’s name. This made a prima facie case, entitling the plaintiff to recover the amount.of the check. The conversation and transactions between the drawer of the check and the person to whom it was delivered, was no necessary part of the plaintiff’s ease. But the defendant had a right to show, if it •could, that the person to whom the check was delivered was, in fact, the person whom the drawer intended to designate by the name of Frederick B. Dodge.

For this purpose it might show the circumstances- under which the check was drawn, the representations of the .party to whom the check was delivered, and the action of the drawer thereupon, with his-accompanying declarations. But, as these circumstances and conversations between the •drawer and the person to whom the check was delivered, were whplly unknown to the defendant -when the check was paid, it bad no right to offer á part of tllém, and to insist upon the exclusion of another part.

Yet the court below admitted so much of the agreed .statement of facts, as showed that the person to whom the check was delivered, represented himself to be Frederick B. Dodge; but excluded so much of the same statement, as showed that the check was delivered to this per■son, only on his promise and assurance, that he could and would identify himself as Frederick B. Dodge at the bank.

We think the court below erred in admitting, for the benefit of the defendant, the evidence of a part of the transactions between the drawer of the check and the person to whom it was delivered, and excluding all evidence of another part of the same transaction. The defendant had no right to show that the person to whom the check was delivered, represented himself to he Frederick B.. Dodge, the owner of the voucher, for which the paymaster-intended to make payment, and yet to exclude the evidence-of the further fact, that the drawer of the check refused to recognize him as the owner of the voucher, without proof of identity, and, for that reason, made the check payable only to the order of Frederick B. Dodge, the owner of the voucher. The defendant might have objected to any evidence of what occurred between the drawer of the check and the person to whom it was delivered, on the ground that payment was made in ignorance of such representations and conversations; but when defendant sought to-introduce such conversations and transactions as a justification of its payment to a wrong party, it had no right to-object to a showing of the whole of the transactions between the drawer and the person to whom it was delivered. In admitting the agreed statement as to part of such transactions, and excluding the same statement as to another important part of the same transactions, against the objection of the plaintiff, we think the court below erred.

Had the whole of the agreed statement on that subject been admitted in evidence, it would have shown that the drawer of the check intended that it should be paid only to the person who should identify himself as the payee named therein, or his indorsee. Had all of the agreed statement on that subject been excluded, then the duty of the drawee must depend solely upon the clear terms of the check, which required the payment to be made only to the order of the plaintiff.

We all concur in the opinion that the last trial of this case by the court below, has developed no new facts which can affect the merits of the ease as presented to the supreme eoui’t for adjudication, on the former petition in-error. And with the former adjudication upon the questions then presented, and now renewed, we are fully satisfied, and deem it unnecessary to do more than refer to the authorities quoted in support of the judgment then rendered.

The judgment of the court of common pleas must be reversed and cause remanded.  