
    The Fourth & Central Trust Co. of Cincinnati v. Johnson, Jr., d. b. a. Consolidated Equipment Co.
    
      Banks and banking—Checks, forged by depositor's bookkeeper, honored by bank—Court’s introducing forged checks in evidence, not prejudicial to bank, when—Payment of deposit not pleaded by alleging insufficient funds, when— Burden upon bank to justify payment of checks, when— Forgery cannot be ratified, and bookkeeper not depositor’s agent, when—Depositor not estopped from defending against payment of forged checks, when—Forged checks void, not voidable—Section 8128, General Code.
    
    1. In action to recover money deposited in bank, where both parties questioned witnesses with reference to forged checks cashed by bank, but neither party introduced same in evidence, action of court in putting forgery in evidence, not excepted to by bank, cannot be complained of by bank on error.
    2. In action to recover bank deposit, answer denying deposits for claimed amount, and alleging that payment of plaintiff’s cheek was refused for want of sufficient funds, did not plead payment of deposit.
    3. Where action to recover bank deposit was tried on theory that deposit had been paid, evidence that checks paid by bank were forgeries' was properly admitted under rule that burden of justifying payment of check is on bank, and, if money is paid on forged check, sole defense of bank is conduct of depositor creating estoppel.
    4. In action to recover bank deposit paid by bank under forged checks of depositor’s bookkeeper, court properly refused to charge that bookkeeper was acting as depositor’s agent, since act of forger is void, and cannot be ratified.
    5. In action to recover bank deposit paid by bank under forged checks of depositor’s bookkeeper, where evidence did not show duty and opportunity to speak by depositor nor reliance of bank on his silence and injury arising thereby, depositor was not estopped from defending against payment of forged checks.
    6. In action to recover bank deposit paid by bank under forged checks of depositor’s bookkeeper, claim by bank that forged checks presented covered period of over four months, and that depositor, having control of company’s books and bookkeeper, should have discovered defalcation sooner, merely argued question of negligence which was not determinative of case.
    7. Burden of justifying payment of forged checks is on bank sued for deposit.
    8. Under Section 8128, General Code, forged checks are void, not voidable.
    (Decided January 3, 1927.)
    Error: Court of Appeals for Hamilton county.
    
      Mr. W. J. Rielly, for plaintiff in error.
    
      Messrs. Vorys, Safer, Seymour é Pease, for defendant in error.
   Hamilton, J.

The defendant in error, R. C. Johnson, Jr., who was plaintiff below, filed an action in the court of common pleas of Hamilton county, Ohio, asking a judgment for money claimed to have been deposited by him in the defendant bank, plaintiff in error here.

The substance of the petition is that plaintiff, Johnson, had deposited at various times with the bank, to his credit, and subject to his order, sums of money amounting to $2,202.70, no part of which had been withdrawn by him, or paid by the bank to him; that on the 24th day of November, 1925, he demanded payment of that sum from the defendant bank, and presented his check, demanding payment of the check, and that the bank refused to pay the check, and still refuses to do so. Plaintiff therefore prays judgment for the sum named.

The answer of the bank admits in detail all the allegations of the petition, except the amount, and denies that the deposits claimed amount to that sum. By way of second defense, the defendant alleges that payment of plaintiff’s check was refused for want of sufficient funds to the credit of plaintiff’s account to pay the same, and that, at the time of the presentation of the check, plaintiff had only the sum of $4.46 to his credit in the bank, and admits liability to the amount of $4.46 only.

The case was tried to a jury, which returned a verdict for the amount claimed in the petition, and judgment was entered on the verdict. Error is prosecuted here from that judgment.

Four specifications of error'are stressed: Error in the admission of testimony; error in the refusal of the court to give the defendant bank’s special charge relating to agency; error in the general charge; that the verdict and judgment are contrary to law.

Johnson, plaintiff below, was in business in Cincinnati for some years prior to the summer of 1925, and during this time had been a depositor in the Fourth & Central Trust Company, the defendant bank. He moved his business to Columbus, and established new banking connections in that city. He did not close his account with the defendant bank, but left a deposit with the bank in the sum of $3.20, and so the account stood on June 1, 1925. The name of his company was the Consolidated Equipment Company, and no one had authority to sign checks of his or the company’s except himself. On October 14, 1925, due to the illness of his bookkeeper, Johnson discovered that some one had been sending customer's checks for deposit in the defendant bank in Cincinnati. These deposits had amounted to the sum sued for. He communicated with the bank that something was wrong, and to stop payment of all checks on his account with the bank. Later, he discovered that seventy checks, amounting to $2,199.50, to which he claimed his name had been forged, had been paid by the bank, and that three of these checks had been paid after he had stopped payment on his account. Johnson's bookkeeper was missing, and is still missing. The deposits and withdrawals on the seventy checks extended over a period of something over four months. The proof is conclusive that the withdrawals were made on forged checks.

The claimed error in the admission of testimony grows out of the state of the pleadings. The testimony admitted arises out of the examination of witnesses relative to the claimed forgery of the seventy checks, the payment of which by the bank practically consumed all the deposits, leaving the small balance to the credit of Johnson admitted by the bank.

The case was submitted to the jury on the issue of forgery. Evidence of forgery was objected to by the bank, as not being admissible under the pleadings. The defendant bank claimed that the defense to the action was payment of the account, and that, there being no reply denying this, it was entitled to judgment, and that plaintiff was not entitled to prove the forgeries of the checks.

At the time of the objection to this evidence the plaintiff stated to the court that, if a reply was necessary, it desired leave to file same, which leave was granted, but no reply was in fact filed.

Witnesses were interrogated by both parties concerning tbe checks in question, but neither party offered the same in evidence. The record discloses that both parties were seeking an advantage under the state of the pleadings. After the witnesses were fully interrogated with reference to the claimed forged checks, and neither party introduced the same in evidence, the court asked counsel if they were introducing the checks, and counsel for each party announced they were not. The court thereupon stated that the witnesses had been interrogated as to them, and that it (the court) would put them in the evidence. The plaintiff in error bank took no exception to this action of the court, and therefore it should not be heard to complain at this time of that action, or as to any evidence concerning the same otherwise properly admitted.

Further, we are of the opinion that the answer does not plead payment. But, if it could be so construed, the court gave leave to reply thereto, denying the same, and the case was tried to the jury on that theory. There was no error committed in the admission of the evidence, to the prejudice of the bank. The rule is that the burden of justifying payment of a check or draft is on the bank, and, if the money is paid out on a forged check, the sole defense under the Ohio rule would be evidence showing actions or conduct on the part of the plaintiff creating an estoppel.

The defendant bank argues that plaintiff’s bookkeeper, who was authorized to make the deposits, and who admittedly forged the checks and made the withdrawals, was acting as agent of the plaintiff, Johnson, and asked the court to so charge in a special charge, and objected to the general charge on the ground that it failed to charge on the question of agency. This question is disposed of by the case of Workman v. Wright, 33 Ohio St., 405, 31 Am. Rep., 546, wherein the Supreme Court said:

“The principle of agency, by which a principal may ratify the unauthorized act of his agent, does not apply to the alleged ratification of a forged note; the act of the agent being voidable, may be ratified; the act of the forger is void, and cannot be ratified.”

In the case of Shinew v. First Nat. Bank, 84 Ohio St., 297, 95 N. E., 881, 36 L. R. A., (N. S.), 1006, Ann. Cas., 1912C, 587, the court cites the ease of Workman v. Wright with approval, and says in the opinion, at page 306 (95 N. E., 882):

“The crime being completed it would forever remain a criminal act, and George M. Shinew could not by any subsequent conduct or admission on his part, ratify a crime that would give validity to an instrument that was absolutely void at the time of its execution.”

And, on the question of estoppel, the court, in the Shinew case, continuing, said:

“It is true, however, that, while,he might not by any act or conduct on his part ratify a forgery of his name so as to .make the instrument a valid instrument, yet he might by his conduct or even by mere silence, estop himself from defending against the payment of the same on the ground that his signature was a forgery, but before he can be estopped by mere silence facts must be alleged and proven showing a duty and opportunity to speak, that the party to be estopped knew, or had reason to believe, that the holder of the note would rely on his silence and that he did rely on his silence and was injured thereby.”

This disposes of the questions of both agency and estoppel, since the facts do not show a duty and opportunity to speak on the part of Johnson nor a reliance of the bank on his silence and an injury arising thereby. The facts do not estop Johnson from defending against payment of the forged checks. The bank claims that the numerous checks presented covered a period of over four months, and that Johnson, having control of the company’s books and his bookkeeper, should have discovered the defalcation sooner. This simply argues the question of negligence, which is not determinative of the case.

The trial court did charge on the question of negligence, and submitted that question to the jury, which would have prejudiced the plaintiff had the verdict been against him.

As heretofore stated, the burden of justifying the payment of the forged checks was on the defendant bank. People’s Bank & Savings Co. v. Cereguti, 21 C. C., (N. S.), 38 (affirmed 92 Ohio St., 525, 112 N. E., 1086); First Nat. Bank of Belmont v. First Nat. Bank of Barnesville, 58 Ohio St., 207, 50 N. E., 723, 41 L. R. A., 584, 65 Am. St. Rep., 748; Park Nat. Bank of Cleveland v. Travelers’ Ins. Co., 24 C. C. (N. S.), 485; 7 Corpus Juris, p. 756, Section 568; Robison, Jr. & Sons v. Upton, 12 C. C., (N. S.), 314.

That the forged checks were void and not voidable is settled by Section 8128, General Code, and Shinew v. First National Bank, supra.

The specifications of error have not been discussed seriatim, for the reason that they are interwoven, bnt our view on all of them is expressed in this general discussion, and the authorities cited.

As before stated, under the facts of the case, the only defense that could have been made by the bank was estoppel.' The evidence not presenting a state of facts within the rule required to create estoppel, the judgment of the court of common pleas was correct, and will be affirmed.

Judgment affirmed.

Buchwalter, P. J., and Cushing, J., concur.  