Heavy v. Commercial National Bank of Ogden

75 P. 727, 27 Utah 222, 1904 Utah LEXIS 11

• Court: Utah Supreme Court
• Decided: February 8, 1904
• Docket: No. 1506
• Status: Published

Opinion

McCARTY, J.,

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

1 2 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.