Case ID: dc_10/html/0054-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Humphreys", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

REES J. MILLARD v. THE NATIONAL BANK OF THE REPUBLIC.
    At Law. —
    No. 4259.
    I. A power oí attorney to prosecute a claim against the United States, and to receive any check, order, or certificate issued by the government for the payment thereof, confers no power upon the attorney to assign or endorse the paper in the name of the payee.
    II. When the drawee of such check had settled with the drawer and charged up the amount against him, there is sufficient privity between the parties to enable the payee to recover the amount upon a count for money had and received. This principle is applicable to a case where the bank had paid the check upon a forged endorsement.
    III. The statute of limitations refers to the time of the institution of the suit, and not to the time of filing an amendment to the declaration.
    STATEMENT OE THE CASE.
    The plaintiff had a claim against the United States for back pay as an officer in the army, amounting to the sum of 1859.59. In 1865 the plaintiff employed a firm of claim agents in the city of Washington to collect the same, and gave them a power of attorney for that purpose, containing a power of substitution, and to receive any check, certificate, or order for the payment of the claim, but no power to endorse plaintiff’s name upon it. That firm transferred the claim to Rutgers Teal, who prosecuted it to completion, and on January 17, 1866, received from Colonel J. A. Lawyer, paymaster U. S. A., his check upon the defendant bank, in which he was a depositor, in favor of the plaintiff', and payable to his order for the amount of the claim.
    The check was paid to said Teal upon a forged endoi’se- • ment of the plaintiff-s name.
    The original declaration sSt forth in a special count the facts and circumstances of the case. The case went to the Supreme Court of the United States, and that court decided that the action could not be maintained, on the ground that the plaintiff’ could not sue the bank for refusing to pay the check in the absence of proof that it had accepted it, or charged the amount against the drawer; but intimated that if the bank had settled with the drawer, charging him with the amount of the check, that the plaintiff could recover upon the money counts, and sent the case back to allow the declaration to be so amended. (See 10 "Wall., 152.) An amended declaration was accordingly filed March 23, 1876, by adding the money counts. On the new trial it was proved that Teal, without authority from the plaintiff, endorsed the plaintiff’s name upon the check and presented it to the bank, who paid the amount thereof to Teal, and that the plaintiff never received any satisfaction for the claim. The defendant also admitted that it had charged the said check on its books against the said Lawyer and settled with him on that basis. The defendant offered the following prayer: “The plaintiff having closed his testimony, the defendant prays the court to instruct the jury that upon the whole evidence aforesaid, if the same is believed by the jui’y, the plaintiff is not entitled to recover in this action which instruction the court refused to give, and thereupon the defendants, by their counsel, beg leave to except, and do except, thereto.
    
      R. D. Mussey, for plaintiff, cited 1 MacA., 415; 5 B. & A., 204; 3 B. & C., 280; Moore on Banking, 459; 5 Wheaton, 286.
    
      Bradley & Duvall, for defendant.
    I. The record shows a case of misplaced confidence on the part of the plaintiff, by which the defendant was innocently, without any fault on his part, led to a loss; and of these two parties, the loss must fall upon the party in fault. “ If one of two innocent persons suffers from the fraud of a third, it 'should manifestly be he who, by his laches or misplaced confidence, has enabled the third party to commit the fraud.” (Young v. Grote, 4 Bing., 253 — Eng. Com. Law, 13; Pickard v. Sears, 6 Ad. and El., 469 — Eng. Com. Law, vol. 33; Malty v. Carstair, 7 B. & C., 735.)
    
      II. This action will not lie,' except upon a promise to the plaintiff, express or implied; and there are no facts in this case from which the jury could find or the court could infer either an express or implied promise by the defendant to pay to the plaintiff the money sought to be recovered-in this action ; and this, because otherwise there is no privity between the parties. (Williams v. Everett, 14 East, 582 ; Wedlake v. Hurley, 1 Cromp. & Jar., 13 (read Jones’s argument),; Crow v. Rogers, 1 Stra., 592.) The consideration must move from the plaintiff to the defendant. (Rogers v. Kelley, 2 Camp., 123.) Mistake in payment by a bank; the person to whom the money was to have been paid sues the man to whom the money was paid; cannot recover, because no privity. Mistake in payment could not change state of account, and the bank still liable to the depositor. The Supreme Court, admitting this general principle, says, at p. 157: “ It may be,” &c. But this cannot be so. The court says further that the deposit made became the money of the bank, and the bank was answerable to Lawyer for the debt. Lawyer was debtor to Millard. This did not extinguish that debt. His liability remained the same till the bank had promised Millard the payment of that debt. The case of Wharton v. Walker, 4 B. & C.., 163, (10 Eng. Com. Law, 527,) is directly in point and decisive of this question; and see cases collected in 1 Archb. N. P., 22, 23, 24, margin ; Chitty on Contracts, (Perk, ed.,) 617; 1 M. & W., 365; Bradbury et al. v. Anderton, 1 Cr. Ch. R., 494. There must be privity between the parties.
    IH. The statute of limitations is aflat bar to the plaintiff'’s right to recover.
    This action was brought 26th September, 1867. There is no evidence in the case to show when Lawyer settled his account with the bank. That settlement, according to the suggestion of the Supreme Court, is the origin of the defendant’s liability. If it was after the institution of the suit, the action will not lie. If it was before, the plaintiff was bound to have proved it.
    ' The plea of the statute refei’s to the time when the cause of action accrued, and puts the plaintiff to affirmative proof that it was within three years before action brought. Now, the cause here is set out in the amended nar., and until then the defendant had no notice of the claim on which it was founded. His plea is, that the cause of action did not accrue within three years before the filing of the amended declaration, and upon that issue was joined. It was a material issue, and the plaintiff having failed to offer any proof in support of it, the court was bound to instruct the jury that he could not recover.
    The amended nar. made a new cause of action, and abandoned the original declaration.
   Mr. Justice Humphreys

delivered the opinion of the court:

We acknowledge the correctness of the principle stated by defendant’s counsel, that “if one of two innocent persons must suffer from the fraud of a third, it should manifestly be he who, by his laches or misplaced confidence, has enabled the third party to commit the fraud.” But what is the fact in this case, as appears from the record ?, The bill of exceptions shows that the power granted by plaintiff was expressly confined to receive any check, certificate, or order issued by the government or its agents, but no power to endorse.

The check was payable to plaintiff’s order, and was paid to one Teal, who signed the name of plaintiff on the endorsement. Teal is liable to the bank, just as any bank in the city of Washington would be to another which had paid a check. Hence it is, these institutions always look to the responsibility of the person presenting a check. The check was payable to the order of Bees J. Millard; his name was endorsed upon it; but if his name was signed without his knowledge or authority it could not bind him. The object of checks and drafts is the safe transmission of funds from one point to another, payable to the order of the payee. The drawee is always advised, in some way or other, of the identity of the payee, or of the authority of any other person to represent him.

The record, as we have it printed and presented to us, states expressly, in the bill of exceptions, that Teal endorsed plaintiff’s name without his authority. The question then goes back to the proposition, whether a general power of attorney to prosecute a claim, with power to settle the claim and to receive any check or order issued for the payment of the claim, confers the power to sign an endorsement.

Powers of attorney must be construed according to their language and scope.

The parties here were employed to do a particular thing; that was, to prosecute the claim and, if the claim was allowed, to receive any check, certificate, or order. But the check was payable to the order of plaintiff. Teal had no power to assign or endorse the paper in the name of the payee. That was far beyond the scope of his powers, and could not be construed to be within the limits. The object of a power of attorney is to define the extent of the agency, and all persons dealing with a special agent must inquire into his powers. It is stated, in the bill of exceptions, that Teal, without plaintiff’s authority, endorsed the check in plaintiff’s name. The defendant asked the court to charge the jury, that, upon the whole evidence, the plaintiff was not entitled to recover, which the court refused. We think the Circuit Court did right in refusing the charge. We are informed of no further action by the court, and, of course, cannot arrest the effect of the judgment rendered. The bill of exceptions further shows that defendant had settled with the drawer of the check and charged up the amount. We think this is priority between the parties to maintain the action. The statute of limitations cannot bar if the.amendment could be made. The Supreme Court of the United States — it appears from brief of counsel for defendant — remanded this case to give an opportunity to amend, and the amendment was made.

Judgment affirmed.