
    The First National Bank of Carthage, App’lt, v. George E. Yost, Resp’t.
    
      (Supreme Court, General Term, Fourth Department,
    
    
      Filed December 6, 1890.)
    
    1. Bills and notes—Fobgeby—Money paid by mistake.
    Defendant, a private banker, in the usual course of business and for value, received two checks drawn on plaintiff by a depositor, endorsed the same for collection and forwarded them to plaintiff, by whom they were paid and charged to the depositor’s account. The checks were forgeries, and upon learning this, plaintiff brought this action to recover the amount paid as for money paid under mistake. Held, that plaintiff was-bound to know the handwriting of its depositor,and having paid the checks was bound by its act and could not recover.
    2. Same—Endobsement.
    An endorsement of a check for collection does not, as to the drawee, guarantee the signature of the drawer.
    Appeal from a judgment entered in Jefferson county February 3, 1890, dismissing the complaint, after a trial at the Jefferson circuit December, 1889, before the court, without a jury.
    
      Killy & Kellogg, for app’lt; O. W. Thompson, for resp’t.
   Merwih, J.

The plaintiff is a National bank located at Carthage, Jefferson county, N. T, and the defendant is a private banker at Theresa in same county, and both were such in 1887. At that time and for several years before, the firm of Dickerman & Beed were customers of and depositors with plaintiff to a considerable amount and drew checks upon the plaintiff in the ordinary way. On the 26th September, 1887, there were presented to defendant at his banking house in Theresa two checks each dated at Carthage September 24, 1887, and purporting to have been drawn by Dickerman & Beed on the plaintiff to the order of W. H. Smith, . one for $170.00, and the other for $40.00. The first-named was presented by Smith and was endorsed by him and thereupon the defendant paid him the amount thereof less the usual fee for collection. The other check was presented by Zalmon Pool and was endorsed by Smith and by Pool, and thereupon the defendant paid Pool the amount thereof less the usual fee for collection. On the same day the defendant stamped upon the back of each check, with his bank stamp, as follows:

“Bemit cashier or order for collection for account of

“Geo. E. Tost, Banker.

“ Theresa, N. T.”

and sent them by mail to the plaintiff. The plaintiff received the checks, charged them to Dickerman & Beed, who then had sufficient funds on deposit to pay them, and remitted the proceeds to the defendant This method of collection was in accordance with the custom between plaintiff and defendant Dickerman & Beed did not take up their vouchers for September until the first part of December following, when they discovered that these two checks were forgeries. They then immediately returned them to plaintiff, with notice of the forgery, and plaintiff upon their demand credited back to them the amount, and on the same day forwarded the checks to the defendant with notice of the forgery, and demanded repayment. The defendant refused to pay, and this action followed.

The plaintiff, in its complaint, claims to recover the amount of the checks as for money paid under a mistake of fact, without fault upon its part

It is conceded here that the signatures of Dickerman & Beed were forged, and the question is whether the defendant is bound to refund the money.

The general principle applicable to such cases is well established. The drawee of a bill of exchange is presumed to know the handwriting of his correspondent, and if he accepts or pays a bill in the hands a bona fide holder, to which the drawer’s name has been forged, he is bound by the act, and can neither repudiate the acceptance nor recover the money. National Park Bank v. Ninth National Bank, 46 N. Y., 77, and numerous cases there cited; National Bank of Commerce v. Nat. Mechanics' Banking Assn., 55 N.Y., 211; Salt Springs Bank v. Syracuse Savings Institution, 62 Barb., 101. This rule has been repeatedly recognized in our courts, and is applicable to checks.

It is, however, claimed by the plaintiff that this rule does not control in this case, upon the grounds (1), that the answer admits that the money was paid over under a mistake, and that such payment was without fault of plaintiff; (2) that the defendant, by endorsing the checks, guaranteed their genuineness and threw the plaintiff off its guard.

The allegation in the complaint, that the payment to defendant was without fault of plaintiff, is not in terms denied in the answer, but it is there alleged that the plaintiff was negligent in the payment of the checks and in the discovery of the forgery, and that the loss or damage, if any, is the result of plaintiff’s negligence. In Clark v. Dillon, 97 N. Y., 376, it is said that an allegation in a complaint, in an action based on negligence, that the injury occurred without the fault or negligence of the plaintiff, is substantially denied by an allegation in the answer that affirmatively states the reverse of this to be true, and that such allegation constitutes a denial. Be this as it may, the record before us indicates that the trial proceeded on the basis that the fault or negligence of plaintiff -was at issue. Evidence was given on the subject without objection. And the court, upon the evidence, was justified in declining to find, upon the request of plaintiff, that the plaintiff was without fault or negligence.

The endorsement by defendant for collection did not, as to plaintiff, guarantee the signature of the drawer. There was no intention to pass the title. Hook v. Pratt, 78 N. Y., 374. As was well said by Justice Kennedy in his opinion at the trial: “ The endorsement was not made for the purpose of putting the paper in circulation, or for discount, and in my judgment can have no other or greater effect in determining the rights of the plaintiff than would have existed if the defendant had presented them at the counters of the plaintiff and, upon demand, the same had been paid. The endorsement was one of instruction merely and could not in any manner tend to throw the plaintiff off his guard or to release it from the obligation resting upon it, of knowing the genuine signature of the drawer.”

The case of National Bank of North America v. Bangs, 106 Mass., 441, cited by plaintiff, does not sustain its position. The action there was brought to recover back money paid upon a check drawn upon the plaintiff’s bank, to the order of defendants, endorsed by them, deposited with their banker and collected through the clearing house. The signature of the drawer proved to be a forgery. The defendants took it without inquiry, though in good faith and for value. It was held that the plaintiff could recover, the main circumstance relied on against the defendants being the fact that the check was payable to their own order. The court, however, say that if the suit was between the bank or drawee, and a party who took the check in the usual course of business finding it in circulation, or even by first endorsement from the payee, the loss would fall upon the bank.

The case of Lynn National Bank v. Smith, 132 Mass., 227, relates to the duty of a collecting agent, upon a qualified endorsement, to give notice of dishonor, and does not apply to the question here.

It is further suggested that the defendant did not use proper caution in taking the checks. There is no allegation in the complaint that the defendant was in fault, nor is it so found. The evidence is not of such a character as to require such a finding. The checks seem to have been taken in the usual course of business, for full value and in good faith. The defendant did not know the signature of Diclcerman & Eeed. The payee lived in the vicinity of Theresa and the defendant had previously cashed for him checks payable in Carthage.

No sufficient ground for reversal of the judgment is shown. Judgment affirmed, with costs.

Hardin, P. J., and Martin, J., concur.  