National Bank v. Nolting

Hakkison, J.,

delivered the opinion of the court.

There is no objection to the form of this action, and the demurrer was properly overruled.

The plaintiff, in keeping the account with the defendant, and in bringing suit to recover the alleged balance was acting as agent, and it is well settled that where a contract not under seal is made with, an agent, and in the agent's name for an undisclosed principal, either the agent or principal may sue upon it. 3 Rob. Prac. (new) 34; Rhoades v. Blackstone, 106 Mass. 334 .

*265 Though, the record states that the facts are certified, it appears that the evidence of each witness is certified, showing fully the conflict in the testimony. This being so, the plaintiff in error is in the position of demurring to the evidence. Read's Case, 22 Gratt. 924 .

There was no exception to the instruction s'given, and taken together they correctly state the law applicable to the case.

The assignment of error chiefly relied on is the refusal of the court to set aside the verdict as contrary to the law and the evidence.

It appears that a stranger, with whom the defendant in error sustained no business relation, and was under no obligation to accommodate, presented himself at the place of business ot Davis & Gregory Go., and secured from the cashier of that firm, the defendant in error here, a check on the National Bank of Virginia for ten dollars, in exchange for ten dollars in currency; that when this check was presented and paid it had been raised to five hundred dollars. Must this loss fall upon the bank or upon the customer?

In their relations with depositors, banks are held to a rigid responsibility. They undertake the care and custody of the customer’s money for the benefit derived from its use while in their hands, and they are bound to pay from time to time such sums as may be ordered. If, however, the banker unfortunately pays money belonging to the customer upon an order which is not genuine, he must suffer, and to justify the payment, he must show that the order is genuine, not in signature only, but in every respect. Hall v. Fuller, 5 Barnwell & Creswell 750.

The law governing in cases like this has been well stated as follows: “The rule requiring the bank to know the customer’s hand writing was always confined to having a knowledge of his signature. Neither any rule of law, nor the ordinary course of business, renders it a matter of suspicion that the body of the check or bill is not written in the hand writ *266 ing of the maker or drawer. Nevertheless, a false or fraudulent alteration in a material particular, made in the body of the check or bill, after signature, constitutes a forged instrument just as much as the. simulating the signature itself. By such alteration the instrument is vitiated, even in the hands of a bona fide holder for value, although it might not be possible to discover the change even by a careful scrutiny. Of course it follows, as between the bank and the depositor, that a payment by the bank is the loss of the bank; and such is the unquestionable rule, except in those instances wherein the negligence or laches of the drawer of the check has laid the foundation for the error of the bank. If by any negligence upon his part, as by so carelessly writing the check as to render it easily open to material alteration without leaving evident traces for detection, the customer has furnished the opportunity for the fraud which has deceived the bank, then he must suffer the just consequences of his carelessness by bearing the loss himself.” Morse on Banks and Banking, sec. 480.

The depositor is only charged with the duty of ordinary diligence and care. The character of negligence that would impose the loss upon the customer is illustrated by the old case of Young v. Grote, 4 Bing. 253, where the depositor, going away from home, left with his wife several checks which he had signed in blank, and which she was to fill up according to her needs. She filled up one for fifty-two pounds, two shillings; but she began the word fifty with a small letter, and in the middle of a blank line. In writing the marginal figures, likewise, she left a considerable space between the “pound mark” and' the figures 52. She gave the check in this form to her husband’s clerk to get the money upon it. He inserted the words “three hundred” before the word “fifty,” and the figure 3 before the figures 52, and then presented it, and drew 352 pounds upon it. Here the check had been so carelessly written that the forgery was *267 made the simplest matter in the world, and the court held that the loss must rest with the drawer.

In the case at bar, it is not pretended that there was any negligence in drawing the check. It is, however, insisted that it was negligence íd the drawer to deliver his check to a stranger, to whom he was under no manner of obligation; that this act furnished the opportunity and facilitated the forgery; and that, consequently, the drawer must bear the loss. This position is not tenable. Such negligence does not belong to the species that would impose the loss upon the drawer of the check. To make the drawer liable the negligence must be immediately connected with the forgery. The negligence here complained of is too remote. This view was taken by the House of Lords in a case where it was held that leaving the seal of a corporation exposed so as to be accessible to a forger was not sufficient evidence of negligence to discharge a bank where it had transferred stocks under a forged power of attorney to which the seal was affixed. It was said that the negligence was too remote to affect the case. Bank of I. v. Evans, 5 H. L. cases 409.

Drawing the check in favor of the stranger was not the proximate cause of the loss. The forgery was the immediate cause, and that could have been as readily perpetrated by an acquaintance. To hold that giving a check to a stranger, where no business relation existed between the drawer and himself, was sufficient evidence of negligence to excuse the bank and impose the loss upon the drawer, if the check was forged by raising it to a larger amount than it was given for, would be to release the banks from the just responsibility imposed upon them by the law as custodians of the customer’s money, and expose the depositor to a risk and danger that would greatly impair the usefulness of the bank as a safe place of deposit.

The judgment of the court below is in conformity with these views, and must be affirmed.

Affirmed.