
    National Board of Marine Underwriters, App’lt and Resp’t, v. National Bank of the Republic of New York, App’lt and Resp’t.
    
      (New York Superior Court, General Term,
    
    
      Filed June, 1894.)
    
    1. Bills and notes—Indorsements—Forged.
    Though accounts have been rendered by the hank to the drawer, he is not bound to know that the indorsements upon the checks returned therewith are genuine, but has the right to assume that the bank has performed its duty by ascertaining, before making the payments, that they were made to the proper persons.
    3. Same—Presumption.
    It is more in accordance with legal presumptions to infer that the hank paid the checks to persons entitled to receive the money than that it paid on indorsements which were forged and to persons unauthorized to receive payment.
    3. Same.
    In the absence of proof that the checks were drawn in a form that required indorsement, there is nothing which calls upon the bank to prove that the checks were without indorsement, or, if indorsed, that the indorsements were genuine.
    Cross-appeals, first by the plaintiff, upon the ground that the referee should have allowed the plaintiff $4,914.62, instead of $2,803.27 ; and next by the defendant, upon the ground- that the amount allowed is excessive.
    
      George A. Black, for app’lt and resp’t, Hastings & Gleason, for app’Jt and resp’t.
   MoAdam, J.

The plaintiff was a depositor in the defendant’s bank, and sued to recover $4,914.62 as a balance of its deposits. The answer admits the deposits, and alleges (1) payment of all but $178.39, and (2) an account stated, by which the plaintiff is claimed to be concluded as to the balance due. The difference between the respective balances of the .plaintiff’s deposit account with the defendant's bank, -as figured by the two parties to the action, arose out of the payment, by the defendant, between Mav 1st, 1891, and March-31, 1892, over its counter, m money, of thirty-two checks, drawn by the plaintiff, which were charged by it agáinst the plaintiff. The payment of these thirty-two checks was the subject of controversy in the action. The course of business p.ursued by the defendant with respect to the account of the plaintiff appears to have been as follows :' At the end of each month the account was balanced, and a statement of all deposits and withdrawals entering into the account during the month was rendered by the defendant to the plaintiff, the bank" surrendering to the plaintiff, wi|h such statements, the checks so paid, as vouchers for the several items representing withdrawals. Concurrently with the rendering of such statement m writing, the bank also furnished the -plaintiff a printed form of receipt for the paid vouchers appearing m the account, upon which form was printed a request as follows : “Please examine accompanying statement, sign and return this receipt promptly. E. H. Pullen, Yice President.” The thirty-two checks in question were distributed through a period of eleven months, between May 1st, 1891, and April 1, 1892. Upon the trial it was proved that statements in writing covering the eleven months were rendered to and received by the plaintiff month by month, and the plaintiff produced such statements upon the demand of the defendant, and the same were received in evidence. No claim was asserted by the plaintiff against the bank until April 5, 1892. In the meantime it had regularly received the several statements of account, and had retained them without any objection. During the period named, plaintiff had in its employ as cashier one Thomas Yigus, to whom were entrusted the books of account of the plaintiff and the duty of making out bills, conducting correspondence, filling m the body of checks and paying bills. On April 4, 1892, the plaintiff received a letter from Yigus confessing that he was short in his casli - account to the extent .of about $3,500, and on the following day the plaintiff for the first time notified the bank of its alleged claim, which was that the names of the payees to the different checks had been forged, and that the plaintiff was in consequence not chargeable’ with their amounts. The referee held that the receipt by the plaintiff of the monthly statements of account rendered by the defendant and the retention thereof without objection for a considerable period of'time, must be held under the decisions of our courts to have the effect of such a stating of the accounts between the parties as to throw upon the plaintiff the burden of impeaching the account so rendered; and upon this principle decided that as to the accounts prior to Februan-, 1892, the presumption was that they were correct; that the onus was, therefore, cast upon the plaintiff to prove fraud, mistake or forgery; and that, as none of these elements was so proved by the plaintiff, it was concluded by said accounts. On this theory the referee found judgment in favor of the plaintiff for $178.39, the admitted balance, and for $2,654.88, the amount of the checks paid in February and March, 1892, upon the ground that as to these two months sufficient time had not elapsed to give the accounts the force of accounts stated; that the onus of proving payment to the proper persons was on the defendant and that the defendant had not sustained the burden of proof in that respect. Upon this view the referee awarded the plaintiff $2,803.27, which includes the admitted balance of $178.39 and eight checks drawn in February and March, 1892, embracing one drawn in favor of “Butler, Stillman,” intended for Butler, Stillman & Hubbard, the indorsement upon which was forged. No express assent to the accounts rendered was proved, but the plaintiff’s silence in reference thereto was claimed to imply assent. The plaintiff, in order to overcome and negative the presumption that any of its accounts became stated by reason of silence, proved that Vigus, its clerk, had possession of the accounts and checks returned by the bank, and withheld all information of the true condition of affairs from it and that it had no knowledge whatever in reference thereto. Upon this evidence the plaintiff claimed, and with reason, that it had destroyed whatever inference of acquiescence or consent that might otherwise have arisen from the retention of the checks and accounts. Welsh v. German Am. Bank, 73 N Y. 424; Shipman v. Bank of State of N. Y., 126 N. Y. 320, 37 St. Rep. 376 ; Frank v. Chemical Nat. Bank, 84 N. Y 213; Quincey v. White, 63 N. Y. 367. We think that the matter of accounts stated had nothing to do with the legal questions upon which the determination of the case depended. The accounts furnished by the bank to the plaintiff contain merely the date and amount of the payment, respecting which there was really no dispute, for the defendant proved without contradiction that the various payments had been made on the days stated in the accounts upon checks drawn by the plaintiff. So that, after all, the proposition involved is, whether the payments had been made to persons authorized to receive them, and this depends upon whether the checks were payable to the order of particular individuals and whether their indorsements thereon had been forged. The “ Butler, Stillman ” check was produced, and the bill it was intended to pay offered in evidence. This check was clearly intended to pay the claim owing to Butler, Stillman & Hubbard, and the check was intended for that firm. It was not a check drawn to the order of a fictitious person, because it represented real persons, although they were not properly named in it. The defendant was, therefore, clearly liable for $1,192.03, the amount of this check, and for $178.39, the balance of account, aggregating, without interest $1,370.42, and for this amount the referee ought to have awarded the plaintiff iudgrnent. Respecting the other thirty-one checks, these were not produced, having been destroyed by Yigus, and there was no evidence tending to show whether they were pay ■ able to particular persons or not. Yigus had defrauded the plaintiff by his dishonest conduct in withdrawing money from the •bank on genuine checks signed by the officers of the plaintiff, all of which were filled up by him, and, owing to the confidence which he enjoyed, were signed by such officers without critical examination or inspection. The only proof in the case tending to-show that these checks were made payable to particular individuals was, that the plaintiff owed certain individual bills corresponding with the amounts of the checks, which bills the plaintiff intended to pay by these checks. But it will not do to infer that, because Yigus was dishonest and made away with his employer’s money, he added to-his misconduct the independent crime of forgery, or that he drew the checks in a form to make forgery necessary, Indeed, his purpose would have been facilitated by making the checks payable to “ bearer,” or to “cash” or “petty cash and the inference that he did so make them is partly borne out by the evidence. In the absence of proof that the checks were drawn in a form that required indorsement, there was nothing which called upon the defendant to prove that the checks were without indorsement or, if indorsed, that the indorsements were genuine, for, if not payable to the order of a particular person, no indorsement was necessary.

The'adjudicated cases hold that, even if accounts had been rendered to the plaintiff, it was not bound to know that the indorsements upon checks returned therewith were genuine, but had the right to assume that the defendant had performed its duty by ascertaining before making the payments that they had been made to the proper persons. But where the form of the checks as paid does not appear in evidence, it is more in, accordance with legal presumptions to infer that the bank paid the checks to persons entitled to receive the money than that it paid on indorsement^ which were forged, and to persons unauthorized to receive payment. If the plaintiff’s, signature as drawer of the checks had been forged, other questions would have arisen; but that element does not require discussion, tor it is not in the case, and for the reasons stated the defendant is liable only for the $1,370.42 before referred to. /To hold otherwise would be to infer that because the indorsement on the “Butler, Stillman " check had been forged, the other seven checks drawn during February and March had also forged indorsements thereon. We can indulge in no such presumption, and have no more right to assume that the indorsements on these seven checks were forged than to assume that the indorsements on the whole thirty ■ two had been forged, a conclusion which would necessitate a judgment in favor of the plaintiff for the whole amount claimed.

The cross appeals, are, therefore, to be disposed of as follows: On the appeal taken by the plaintiff from the judgment as inadequate there must be an affirmance' with costs ; but on the appeal taken by the defendant the judgment must be reversed and a new trial ordered, with costs to the defendant to abide the event, unless the plaintiff stipulates to reduce the recovery to 31,370.42, with interest thereon, in which case the judgment for that amount will be affirmed, but without costs on the defendant’s appeal

Freedman, P, J., and Gildersleeve, J. concur.  