Fulton Nat. Bank v. United States. Trust Co. Of Georgia v. United States

Fifth Circuit

Fulton Nat. Bank v. United States. Trust Co. Of Georgia v. United States

197 F.2d 763, 1952 U.S. App. LEXIS 2687

CourtCourt of Appeals for the Fifth Circuit

DecidedJune 18, 1952

Docket13831_1

StatusPublished

Cited by4 cases

This text of 197 F.2d 763 (Fulton Nat. Bank v. United States. Trust Co. Of Georgia v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Fulton Nat. Bank v. United States. Trust Co. Of Georgia v. United States, 197 F.2d 763, 1952 U.S. App. LEXIS 2687 (5th Cir. 1952).

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HOLMES, Circuit Judge.

These two cases were argued together and submitted upon consolidated briefs. Both actions were instituted by the United States to recover on two checks, each of which was drawn on the Treasurer of the United States, and had been endorsed and collected by the holder. When the checks were presented by appellants for payment, their respective rubber-stamp endorsements appeared thereon, reading in part as follows : “All prior indorsements guaranteed.” One check indicated in the lower left hand corner that it was drawn for “1945 Tax Refund”; the other carried the following notation after the name of the payee: “A R 34222962.” Appellants’ immediate endorsers were and still are solvent.

While the common-law crime of forgery may require intent to defraud as one of its ingredients, scienter is not an essential element in illegal or unauthorized endorsements of negotiable instruments under Section 23 of the Negotiable Instruments Law of Georgia, Georgia Code, Sec. 14-223, which provides, among other things, that if the signature is “forged or made without the authority”, it is wholly inoperative. In the instant cases, the indorsements on the checks of the names of the persons, whose names appeared on the face thereof as the true payees, purported to be the signatures of the true payees, not of persons bearing the same name. United States v. National City Bank of New York, D.C., 28 F.Supp. 144, 147; Graves v. American Exchange Bank, 17 N.Y. 205; Cohen v. Lincoln Savings Bank of Brooklyn, 275 N.Y. 399, 405, 10 N.E.2d 457, 112 A.L.R. 1424.

The name by which the true payee in a check is designated has reference to the particular person who was intended by the drawer to be the payee; and a person of precisely the same name, who accidentally or wrongfully comes into possession of the check, obtains no title to it. If he obtains the money on it from the bank on which it is drawn, the bank is liable to make it good to the drawer. In J. C. Hockett Co. v. Simmonds, 84 Ohio App. 467, 87 N.E.2d 739, we find this syllabus: “Payment to a person rightfully bearing the name of the payee of a check, but not the person intended by the drawer to be the payee to whom the check was delivered, is ineffective to charge the drawer with liability on such check.”

We think that the United States-was not negligent in mailing these checks,, nor is it estopped by its failure to give earlier notice of the wrongful payments. Section 13-2052 of the Georgia Code, barring recovery upon a forged endorsement after the lapse of one year, has no application to the instant cases. In Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838, it was held that, when the United States disburses its funds or pays its debts, it is exercising a constitutional function, and its rights and duties on commercial paper so issued are governed by federal rather than local law. See also National Metropolitan Bank v. United States, 323 U.S. 454, 65 S.Ct. 354, 89 L.Ed. 383. Similarly, its right to recover money paid! to a bank on pension checks bearing the forged endorsements of the payees is not conditioned upon the giving of notice of the discovery of the forgeries, since the bank, by presenting the checks for payment, warranted their genuineness. United States v. National Exchange Bank of Providence, 214 U.S. 302, 29 S.Ct. 665, 53 L.Ed. 1006. In addition, here all prior endorsements were guaranteed by appellants.

The only bar against the Government is if damage resulted to the bank by reason of' the drawee’s failure to give' prompt notice on learning of the forgery, Clearfield case, supra, 318 U.S. at page 369, 63 S.Ct. at page 576. Both delay and resultant injury are required, which must be established and not left to conjecture. 318 U.S. 363, 369, 63 S.Ct. 573. In the instant cases, no damage is shown to have resulted to appellants by the delay; and the court below did not find that the Government was guilty of laches; neither do we. Therefore, the present situation is covered by the Clearfield case, supra, 318 U.S. at page 370, 63 S.Ct. at page 576.

[765]*765The judgments appealed from, in our opinion, are correct and should 'be affirmed. Affirmed.

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HOLMES, Circuit Judge.

These two cases were argued together and submitted upon consolidated briefs. Both actions were instituted by the United States to recover on two checks, each of which was drawn on the Treasurer of the United States, and had been endorsed and collected by the holder. When the checks were presented by appellants for payment, their respective rubber-stamp endorsements appeared thereon, reading in part as follows : “All prior indorsements guaranteed.” One check indicated in the lower left hand corner that it was drawn for “1945 Tax Refund”; the other carried the following notation after the name of the payee: “A R 34222962.” Appellants’ immediate endorsers were and still are solvent.

While the common-law crime of forgery may require intent to defraud as one of its ingredients, scienter is not an essential element in illegal or unauthorized endorsements of negotiable instruments under Section 23 of the Negotiable Instruments Law of Georgia, Georgia Code, Sec. 14-223, which provides, among other things, that if the signature is “forged or made without the authority”, it is wholly inoperative. In the instant cases, the indorsements on the checks of the names of the persons, whose names appeared on the face thereof as the true payees, purported to be the signatures of the true payees, not of persons bearing the same name. United States v. National City Bank of New York, D.C., 28 F.Supp. 144, 147; Graves v. American Exchange Bank, 17 N.Y. 205; Cohen v. Lincoln Savings Bank of Brooklyn, 275 N.Y. 399, 405, 10 N.E.2d 457, 112 A.L.R. 1424.

The name by which the true payee in a check is designated has reference to the particular person who was intended by the drawer to be the payee; and a person of precisely the same name, who accidentally or wrongfully comes into possession of the check, obtains no title to it. If he obtains the money on it from the bank on which it is drawn, the bank is liable to make it good to the drawer. In J. C. Hockett Co. v. Simmonds, 84 Ohio App. 467, 87 N.E.2d 739, we find this syllabus: “Payment to a person rightfully bearing the name of the payee of a check, but not the person intended by the drawer to be the payee to whom the check was delivered, is ineffective to charge the drawer with liability on such check.”

We think that the United States-was not negligent in mailing these checks,, nor is it estopped by its failure to give earlier notice of the wrongful payments. Section 13-2052 of the Georgia Code, barring recovery upon a forged endorsement after the lapse of one year, has no application to the instant cases. In Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838, it was held that, when the United States disburses its funds or pays its debts, it is exercising a constitutional function, and its rights and duties on commercial paper so issued are governed by federal rather than local law. See also National Metropolitan Bank v. United States, 323 U.S. 454, 65 S.Ct. 354, 89 L.Ed. 383. Similarly, its right to recover money paid! to a bank on pension checks bearing the forged endorsements of the payees is not conditioned upon the giving of notice of the discovery of the forgeries, since the bank, by presenting the checks for payment, warranted their genuineness. United States v. National Exchange Bank of Providence, 214 U.S. 302, 29 S.Ct. 665, 53 L.Ed. 1006. In addition, here all prior endorsements were guaranteed by appellants.

The only bar against the Government is if damage resulted to the bank by reason of' the drawee’s failure to give' prompt notice on learning of the forgery, Clearfield case, supra, 318 U.S. at page 369, 63 S.Ct. at page 576. Both delay and resultant injury are required, which must be established and not left to conjecture. 318 U.S. 363, 369, 63 S.Ct. 573. In the instant cases, no damage is shown to have resulted to appellants by the delay; and the court below did not find that the Government was guilty of laches; neither do we. Therefore, the present situation is covered by the Clearfield case, supra, 318 U.S. at page 370, 63 S.Ct. at page 576.

[765]*765The judgments appealed from, in our opinion, are correct and should 'be affirmed. Affirmed.

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