Case Title: Barnes v. Cherry Creek National Bank of Denver

Citation: 431 P.2d 471

Docket Number: 

State: colorado

Court: Colorado Supreme Court

Date: 1967-08-28T00:00:00Z

Document:
431 P.2d 471 (1967) J. Y. BARNES and Portland Cement Association, an unincorporated association, Plaintiffs in Error, v. CHERRY CREEK NATIONAL BANK OF DENVER, a national banking association, Defendant in Error. No. 21943. Supreme Court of Colorado, In Department. August 28, 1967. Rehearing Denied September 25, 1967. *472 Mitchell Benedict, Denver, for plaintiffs in error. Weller, Friedrich & Hickisch, Denver, for defendant in error. MOORE, Chief Justice. J. Y. Barnes and Portland Cement Association, hereinafter referred to as Portland, brought an action in the trial court against the defendant in error, hereinafter referred to as the bank, seeking recovery of moneys paid out by the bank under the following circumstances, none of which are in dispute. These admitted facts as set forth in the pre-trial order are as follows: and said check was mailed to Denver United States National Bank in a bank-by-mail envelope similar to plaintiff's Exhibit D, with a deposit slip similar to plaintiff's Exhibit B, with bank-by-mail folder similar to plaintiff's Exhibit C, for deposit to the account of the Portland Cement Association. Various exhibits were admitted in evidence under a stipulation entered into between the parties. They included the check issued to Barnes and forms similar to those used by him in his attempt to "Bank-by-Mail." There was also admitted on stipulation, as an exhibit offered by the bank, the card containing the signature purporting to be that of the payee of the check, actually written by the thief, which he signed in order that withdrawals might be made from the account which he opened with the deposit of the stolen check. The trial court, after argument on the law as applicable to the agreed facts, entered judgment in favor of the bank, except as to the amount of $577.03 admittedly due Barnes and Portland, being the sum still on deposit in the bank when the fraud of Woodward was discovered. As grounds for reversal counsel for Barnes and Portland argue that: C.R.S. 1963, 14-8-5, in pertinent part provides that an endorsement, The Negotiable Instruments Law (C.R.S. 1963, 95-1-36), in effect at the time involved in this action, provides in pertinent part as follows: Under these statutes by the restrictive endorsement "for deposit only" affixed to the check by the real Barnes, the negotiability of the check was destroyed and the bank became the agent of the owner of the check for the purpose of collection thereof. 9 C.J.S. Banks and Banking § 222. A restrictive endorsement preserves the title of the endorser to deposited items in the absence of contrary course of dealings. The endorsement in this case "for deposit only" being restrictive, did not transfer title to the check, and the bank in receiving it became an agent for collection. In the instant case the bank became the agent of the true owner of the check, the real J. Y. Barnes who had endorsed the check "for deposit only." The bank collected the item and permitted an imposter to withdraw most of the funds in the account, notwithstanding the fact that the payee of the check was particularly described as being "District Engineer, Portland Cement Assn., 721 Boston Bldg." Being an agent for collection of the true owner of the check, and having paid out moneys to an imposter, the bank is liable for the loss. See in this connection Sparks v. Bank of Georgia, 110 Ga.App. 198, 138 S.E.2d 86. The judgment is reversed with directions to enter judgment for the plaintiffs. McWILLIAMS and HODGES, JJ., concur.