
    HUGH HEAVY, Respondent, v. THE COMMERCIAL NATIONAL BANK OF OGDEN, UTAH, a Corporation, Appellant.
    No. 1506.
    (75 Pac. 727.)
    1. Negotiable Instruments: Forgery: Negligence of Drawer: Bona Fide Holder: Liability.
    A bank mistakenly informed a person that a sum of money had been deposited to his credit, whereupon he wrote the bank, requesting a draft for the amount of the deposit, and on receipt of the draft he indorsed it, procuring the money. Held that his indorsement did not amount to a forgery.
    2. Same.
    A bank, haying received a deposit to the credit of a certain person, mistakenly wrote another person that a deposit had been made to his credit, and he immediately showed the letter to plaintiff, who had known him for over two years, and wrote requesting a draft for the amount of deposit, which was sent, and he indorsed it to plaintiff, who paid him the amount thereof. Held that, as between plaintiff and the bank, the latter was liable for the loss, even if the indorsement was a forgery.
    (Decided February 8,1904.)
    Appeal from the Second District Court, Weber County. —Hon. H. H. Rolapp, Judge.
    Action on a draft. From a judgment in favor of the plaintiff, the defendant appealed.
    Affirmed.
    
      Messrs. Heywood & McCormick for appellant.
    That the forgery was committed by a person having the same name as the genuine payee malms no difference. It is the signature of the genuine person that transfers the title. The mere fact that another person may have the same name gives him no power to make the transfer and the signature of such a person is just as much a forgery as if the names had been different. Third Nat’l Bank v. Merchants’ Nat’l Bank, 27 N. Y. Supplm’t on p. 1072. '
    By an Illinois court it is said:
    If an endorsement made by a person who is not the real payee, is made by such person, with knowledge that he is not the real payee, with intent to perpetrate a fraud, his endorsement can not be regarded otherwise than as a forgery. Beattie v. National Bank, 51 N. E. 603.
    The rule is that a forged endorsement is a nullity, and in law is the same as if there were .no endorsement whatever. Myer v. Rosenhein & Co., 73 S. W. 1129.
    The rightful possession of a check by no means carries with it or implies a right to demand or receive the payment of it without the genuine endorsement of the person to whose order it is made payable. Dodge v. Bank, 30 Ohio State 6.
    
      No title to the draft ever passed. There was never a delivery of it. The endorsement here was not made by the same James Malloy to whom the draft was made payable, and an endorsement by any other person gives no title whatever. Palm v. Watt, 7 Hun 317; Graves v. Bank, 17 N. T. (bottom of p. 208); Beattie v. Bank, 51 N. E. 603. (See same case in Court of Appeals, 69 Ill. App. 632.) Cochran v. Atkinson, 27 Kan. 733; Indiana Nat’l Bank v. Holtsclaw, 98 Ind. 85.
    The court’s especial attention is invited to the above case of Beattie v. Bank (69 Ill. App. 632), to show that the spurious Malloy having in his possession the letter from defendant bank, and also that there was a slight difference in the name would not alter the law of the case. (See also, s. e., 51 N. E. 603.)
    This defendant is now entitled to possession of the check or draft. Garthwaite v. Bank, 66 Pac. 326; Rossi v. Bank, 71 Mo. App. 150.
    The check belonged to the genuine Malloy. Bank v. Holtsclaw, 98 Ind. 88; Graves v. Bank, 7 N. T. 208.
    ’ The genuine Malloy stopped payment on the draft and afterwards received the cash, otherwise the draft, at his option, would have remained the property of the drawer bank defendant. 1 Hill 287.
    A case against the drawer of a check would be no stronger than one against the drawee, for the payment by any endorsee or drawee upon a forged instrument would give no right against the drawer to retain the check, or to claim a reimbursement of the amount paid. Garthwaite v. Bank, 66 Pac. 327; Rogers v. Ware, 2 Neb. 29.
    The drawee has an absolute guarantee from all endorsers that everything prior to his name is genuine. The drawer authorizes the drawee to pay only to the genuine payee or his order, and must, on return of the paper, seasonably pass upon whether it has been rightly paid or not. In the case- at bar the drawer did better, for payment was stopped before presentation to drawee. Plaintiff has pleaded no estoppel, nor has he pleaded negligence; and, as a matter of fact, it would not avail him here had he pleaded either or both. Myer v. Ros-enhein & Co., 73 S. "W. 1129; Bank v. Bank, 27 N. Y. Supp. 1073; Rossi v. Bank, 71 Mo. App. 150; Bank of Commerce v. Grinocehio, 27 Mo. App. 661.
    
      Messrs. Henderson & MacMillan for respondent.
    “"Where both are innocent and the loss must fall upon one, it should be upon the one, who, in law, most essentially facilitated the fraud. So in respect to two persons equally innocent, where one is bound to know and act upon his knowledge, and the other has no means of knowledge, there seems to be no reason for burdening the latter with loss in exoneration of the former. ” United States v. National Exchange Bank, 45 Federal 167; Lands, Title & Trust Co. v. Northwestern National Bank, 196 P. A. 230, 50 L. R. A. 75; Burrows v. "Western Union Telegraph Co., 58 L. R. A. 433; Robertson y. Coleman, 4 N. E. 619; Tolman v. American National Bank, 52 L. R. A. 877; Emporia National Bank v. Shot-well, 11 Pac. 141.
    Counsel for appellant say that we should have pleaded an estoppel. If they will point out to this court how we can plead an estoppel in a complaint, we will receive some information that we have never yet been cognizant of. An estoppel is usually pleaded in an answer, or if the facts in the complaint are such that it shows that the plaintiff should be estopped then an es-toppel can be raised by demurrer. Bliss on Code Pleadings (2 Ed.), p.,364; 8 Encyclopedia of Pleading and Practice, p. 5; Stephen on Pleading (Heard), pp. 219 and 220; Gould’s Pleading, p. 33.
    STATEMENT OE FACTS.
    The transactions and circumstances out of which this action arose are as follows:
    _ On November 10, 1902, one P. M. Cushnahan deposited with defendant bank the sum of $375 for the credit of one James Molloy. The same day the clerk of defendant bank wrote such information upon a postal card addressed to James Molloy, Corinne, inclosed such postal card in an envelope, which he by mistake addressed to James Malloy, Denver, Colo. This card was received by one James Malloy, of Denver, who on November 17th, wrote defendant bank as follows:
    “Denver, Colo., Nov. 17, 1902.
    “T. D. Ryan, Cashier, Ogden, Utah. — Dear Sir: Yonr P. C. of the 10th, received. Please send me New York draft for the $375.00, less yonr charges.
    “James Malloy.
    “2219 Larimer Street, Denver, Colo.”
    Before sending the letter, Malloy showed it to plaintiff herein. Upon receipt of this letter, and believing it came from its depositor, in compliance therewith, defendant bank made ont the following draft:
    “No. 14,601. “Commercial National Bank,
    “Ogden, Utah, Nov. 20, 1902.
    “Pay to the order of James Malloy, three hundred and seventy-fonr and sixty one-hnndredths ($374.60) dollars.
    “R. T. Htjme, Cashier.
    “To Kountze Bros., Bankers, New York.”
    This draft was enclosed with the following letter, which was forwarded to the address indicated in Mal-loy’s letter of November 17th, which was plaintiff’s place of business:
    • ‘ ‘ Ogden, Utah, Nov. 20,1902.
    “Mr. James Malloy, Denver, Colo., 2219 Larimer St. — Dear Sir: Complying with yours of the 17th, we inclose New York draft for $374.60.
    “Yours truly,
    “ T. D. Ryau, Cashier. ’ ’
    When the draft arrived in Denver, the letter in which it was inclosed was received by plaintiff and by him handed to James Malloy, whom he had known for a couple of years. The letter was opened and the draft produced in plaintiff’s presence, and thereupon James Malloy requested plaintiff to go with him to the hank and get the money, which plaintiff did. He identified him there as James Malloy, hut was requested by the bank to place his (plaintiff’s) name upon the back of the draft. This being done, the money was handed to plaintiff, and by him then and there delivered to Malloy. On November 20th James. Molloy (the real party for whom the money was deposited) came into the bank, and it was then discovered that a mistake had been made, and the bank imposed upon by the Malloy letter of November 17th. The payment of the draft was immediately stopped in New York and an effort made to stop payment in Denver. When, in due course of business, the draft reached New York payment was refused, and the draft was protested, and returned to the Denver bank, which bank thereupon charged the amount of the draft against plaintiff’s account. James Malloy, of Denver, disappeared immediately after the draft was cashed by the Denver bank. It appears that the defendant bank was well acquainted with the signature of James Molloy, of Corinne, both from seeing it upon his checks drawn against his deposits in the bank, and also as indorsed upon the back of dividend checks; he being a stockholder of the defendant bank. The account of James Molloy in the bank was carried in the name of James Malloy, but his signature and indorsements were always “James Molloy.” The cause was tried by the court sitting without a jury. The court, after hearing the evidence, found the issues in favor of plaintiff, and rendered judgment in his behalf for the amount of the diaft and interest thereon. Defendant bank appeals.
   McCARTY, J.,

after stating the facts, delivered. the opinion of the court.

Appellant contends that Janies Malloy, having procured the draft by artifice and fraud, acquired no right or title to the same, and ihat his indorsement, which appellant insists was a forgery, conld not and did not in-west respondent with any legal right to recover on the instrument which Malloy himself did not possess, however innocent and free from blame the respondent may have been in the part he took in the transaction which eventually put him in possession of the draft. The rule contended for by appellant has been held to apply to cases in which the draft or bill has been lost or stolen, and then negotiated upon a forged indorsement, but the facts in this case do not bring it within that rule. • The draft in question was issued by appellant on Malloy’s order, in his fayor, and he is the man to whom it was sent. True, appellant at the time believed him to be the James Molloy, of Corinne, in whose favor the deposit was made against which the draft was supposed to have been drawn. The fact, however, remains that James Malloy, of Denver, is the man to whom the draft was sent. The record shows that when he negotiated the instrument he made no attempt to impersonate some other person, and he indorsed it by writing his own name on the back thereof without any intention that his signature should be taken for that of any other person. Under these circumstances, whatever crime Malloy may .have committed by procuring and negotiating the draft in the manner he did, it is evident that his indorsement of it did not constitute forgery. 2 Bish. Crim. Law, 583. Even if Malloy’s indorsement of 'the draft were construed to be a forgery, it could not in the face of the admitted facts in this case, and the great weight of judicial authority, affect the result. "While there are a few cases which hold to the contrary, yet the majority of the decisions which we think contain the better reasoning hold that, where a drawer of a check, draft, or bill of exchange has been induced through fraud to deliver it to an impostor, believing him to be the person named in the check, draft, or bill of exchange, and the impostor negotiates the instru'ment, and receives payment thereon from an innocent third party, as between tbe bona fide bolder and drawer tbe latter must stand tbe loss. Land, Title & Trust Co. v. No. Wes. Nat. Bank, (Pa.) 46 Atl. 420, 50 L. R. A. 75, 79 Am. St. Rep. 717; United States v. Nat. Ex. Bank, (C. C.) 45 Fed. 163; Robertson v. Coleman, 141 Mass. 231, 4 N. E. 619, 55 Am. Rep. 471; Crippen v. American Nat. Bank, 51 Mo. App. 508; Burrows v. Wes. Union Tel. Co. (Minn.), 90 N. W. 1111, 58 L. R. A. 433, 91 Am. St. Rep. 380; Emporia Nat. Bank v. Shotwell (Kan.), 11 Pac. 141, 57 Am. Rep. 171.

In tbis case it appears that appellant was well acquainted witb tbe signature of James Molloy, of Corinne, wbo was both a depositor and a stockholder of defendant bank, and that bis signature is easily distinguished from that of James Malloy, of Denver, Colo., to whom tbe draft was sent. Not only is there a marked dissimilarity between tbe signatures of tbe two men, but their names are spelled differently. Therefore it is manifest that, if appellant bad exercised ordinary care and prudence at tbe time it received tbe order from James Malloy, of Denver, for tbe draft, it would not have been possible for him to have perpetrated tbe fraud and procured tbe draft. Not only did appellant fail to exercise ordinary business care on tbis occasion, but accompanied tbe draft witb a letter which was sufficient to enable Malloy to dispel every doubt that tbe ordinary business man might entertain as to tbe regularity of the transaction that put him in possession of tbe instrument. The rule is tersely, and, we think, correctly, stated in tbe case of Crippen v. American Nat. Bank, 51 Mo. App. 508, as follows: “That when both parties to a transaction are innocent, and tbe loss must fall upon one, it should be upon tbe one wbo in law most facilitated tbe fraud.” Appellant, having issued and placed in tbe bands of an impostor its draft, a negotiable instrument that is accepted and exchanged witb almost tbe same degree of confidence in commercial centers as are national bank notes, ought not to be permitted to repudiate it, and compel respondent, wbo bon-estly and in good faith became an indorser, to stand the loss, which the record shows was made possible by appellant failing to observe the usual and customary business rules followed by banking houses and other commercial institutions in issuing this class of paper. As was said by the court in the ease of Levy v. Bank of America, 13 Am. Rep. 124: “The plaintiffs can not successfully complain that the bank failed to protect them from the devices of a person who had with so little effort deceived and defrauded them. ... It seems to us that they are endeavoring to make the bank repair a loss which they brought on themselves by their own carelessness.” In this case it is not shown, nor is it claimed, that there was any fact or circumstance connected with the transaction by which respondent became the owner of the draft in question that would have justified the slightest suspicion on his part that Malloy obtained it by fraud; but, on the other 1 and, he knew that Malloy had sent an prder for the draft, which, when issued, was forwarded to respondent’s place of business, the letter opened in his presence, and the draft produced and shown to him by a man whom he had known for two years. Under these circumstances respondent did no more in identifying Malloy and indorsing the draft than any business man of ordinary prudence would have been justified in doing under the same or similar circumstances.

We are of the opinion, and so hold, that appellant, by its own carelessness having furnished Malloy the means by which he perpetrated the fraud, ought to stand the loss occasioned thereby.

The judgment is affirmed, with costs.

BASKIN, C. J., and BARTCH, J., concur.  