#### The Hough Ave. Savings & Banking Company *v.*Andersson.

*Savings bank*— By-laivs *require presentation of deposit book and written order*— Part *of*contract, *when*— Payment *upon forged order*— Bank *liable to owner of deposit, when.*

T. By-laws of a savings bank, which require the presentation of the deposit book, or due notice to the bank in case of the loss of the book, as conditions precedent to payment to the depositor, or upon his written order, are reasonable -conditions and become a part of the contract between the bank and the depositor, when brought to the notice of the latter.

2. When in such case the banlj makes payment on presentation of the deposit book or pass-book, not to the depositor in person, but upon what purports to be a written order by him and which turns out to be a forgery, the bank is at least bound to act in good faith and to exercise reasonable care with the view to avoid payment to a person who is not lawfully entitled to receive payment; and if in such case it does not so act in good faith and exercise reasonable care, it will be liable to pay again to the rightful owner of the deposit.

(No. 10449

Decided June 26, 1908.)

Error to the Circuit Court of Cuvahoga county.

The defendant in error sued the plaintiff in error to recover the amount of two deposits which he had made in the plaintiff in error’s bank, alleging that some person unknown to him had stolen his pass-book and forged his name to an order authorizing the payment of the amount of his deposits, and that the plaintiff in error on the presentation of the said pass-book and forged order negligently and without due care paid out said deposits to a party who was not entitled *342thereto. The case was tried to a jury and on the trial the defendant, plaintiff in error here, requested the court to charge the jury that the bank had the right upon the presentation of the deposit book to pay the money and upon the payment by the bank on the presentation of the deposit book it was discharged from the amount so paid. And, further, that as the testimony showed that the plaintiff, the defendant in error here, did not notify the bank that his book had been stolen or lost, if the bank paid the money on the presentation of the book it would be a discharge to the bank. The court refused to so charge the jury but did charge that if they found from the evidence that the bank did not exercise reasonable care in making said payment and they also found that the alleged written order which was presented with the pass-book was forged, they should find for the plaintiff, which the jury accordingly did, and judgment was rendered for the plaintiff, and after a motion for a new trial the case was taken to the circuit court which affirmed the judgment, and it is now sought to reverse the judgments of both courts below.

It appeared on the trial that at the time the defendant in error made his first deposit he signed a deposit card by which he agreed and assented to the rules and regulations of the bank governing saving deposits, and that among those rules, which were printed in the pass-book, was the following: “5- Deposits may be withdrawn by the depositor in person, of by *written order;*but in either case this *pass-book*must be presented, that such payments may be duly entered therein. As the officers *343of the company may be unable to identify every depositor, the company will not be responsible for loss sustained where a depositor has not given notice of his or her book being stolen or lost, if such book be paid, in whole or in part,'on presentation. In all cases, a payment upon presentation of a deposit book shall be a discharge to the company for the amount so paid.”

After he made his last deposit, which was in July, 1903, he did not again go to the bank until July, 1904, during which interval he kept his bank book in his trunk and did not see it after October, 1903. One Christenson, who resided in the neighborhood of the bank and was known to the paying teller and who had cashed checks at the bank which had proved to be good, in October, 1903, appeared at the bank with a written order which transferred Andersson’s account to him and this order purported to be witnessed by one A. M. Crowl, and it appears to have been a forgery.

*Messrs. White, Johnson, McCaslin & Cannon,*for plaintiff in error,

cited and commented upon the following authorities: *Levy*v. *Bank,*117 Mass., 448; *Eaves*v. *Bank,*27 Conn., 229; *Schoenwald*v. *Bank,*57 N. Y., 418; *Burrill*v. *Bank,*92 Pa. St., 134; *Cosgrove*v. *Institution for Savings,*46 Atl. Rep., 617; *Langdale*v. *Bank,*121 Ga., 105; Morse on Banking, 620; *Goldrick*v. *Bank,*123 Mass., 320; *Dolan*v. *Institution for Savings,*127 Mass., 183.

*Mr. Herman J. Nord,*for defendant in error,

cited and commented upon the following authori*344ties: *Ackenhausen*v. *Bank,*110 Mich., 175; Morse on Banks and Banking, Section 620, p. 1031; Zane on Banks and Banking, Section 360, p. 640; *Gearns*v. *Bank,*135 N. Y., 557; *Wegner*v. *Bank,*76 Wis., 242; *Brown, Admr.,*v. *Bank,*67 N. H., 549; *Kimball*v. *Norton,*59 N. H., 1; *Ladd*v. *Bank,*96 Me., 510; 58 L. R. A., 288; *Chase*v. *Bank,*17 Am. Neg. Rep., 186; *Kummel*v. *Bank,*127 N. Y., 488.

Davis, J.

The plaintiff in error contends that under the contract between the parties in this case, it cannot be held liable where payment was made upon presentation of the pass-book; and that, if this contention is wrong, the testimony in this case is not such as to, charge it with negligence.

These questions are new in this state although they have been the subject of frequent adjudication in other states. These adjudications have uniformly held, where that question was involved, that by-laws of a savings bank requiring the presentation of the pass-book and notice to the bank in case of the loss of the book, as conditions precedent to payment, are' reasonable, and when brought to the notice of the depositor, become a part of the contract between the bank and the depositor. But, notwithstanding the contract relations of the parties, it has been quite as uniformly held, and it does not appear to be controverted here, that the bank is bound to exercise good faith and reasonable care in making payment so that payment shall be made to the person entitled to receive payment; and this is so because public policy will not allow the bank to so strip itself of *345responsibility by contract as. to enable it to safely pay, intentionally or heedlessly, to one who has come into possession of the pass-book fraudulently or criminally.

In this case the fact of negligence by the bank was submitted to, and found by, the jury; and we think properly so. The pass-book was not presented by the depositor, but by another person, by virtue of what purported to be the depositor’s written order. The teller of the bank, who paid the money, testified that he was not acquainted with the defendant in error, the depositor; that so far as he knew the latter had never been in the bank, except on the two occasions when he made deposits; that he was not familiar with his signature; and that he did not compare the signature to the order with the genuine signature in possession óf the bank. His only excuse for not scrutinizing the order and comparing the signatures is that he knew the man who presented the order and pass-book and that he had before cashed checks for him which had turned out to be good. This evidence was, of itself, sufficient to justify the court in submitting to the jury the question of good faith and reasonable care on.part of the'bank, and therefore the finding of the jury was conclusive upon that point and supports the judgment. *Chase*v. *Waterbury S. Bank,*77 Conn., 295.

The plaintiff in error insists that since the bylaw required the depositor to give notice that his pass-book had been stolen or lost and provided that the bank should not be responsible in default of such notice and that “in *all*cases a payment upon presentation of a deposit book shall be a *346discharge to the company for the amount so paid,” and since the defendant in error did not give notice of his loss prior to the payment, the bank is therefore discharged. Upon the assumption that the bank acted in good faith and in the exercise of due care this argument may be valid, otherwise it is not sound. If the bank may negligently or through bad motives pay to a thief who has possession of the bank book, because the owner has not given notice of a loss of which he is not then aware and of which he does not become aware for months afterwards, or if the bank may so pay in *any*case to a' person who is not lawfully entitled to receive payment, then the depositor has contracted away his right to protection in *any*case and the responsibility of the bank for good faith and reasonable care, which the law has imposed for reasons of public policy, is entirely futile.

Under the by-law which is the contract in this case, “payment upon presentation of a deposit book” could only be made to the depositor in person or to some person designated by his written order. It was not paid to him in person nor to any person designated by him. It was paid upon a forged order; and if not paid by the bank at its own peril, *Ladd*v. *Augusta Savings*Bank, 96 Me., 510, it was at least, as found by the jury, negligently paid to a person who had no right to the deposit.

The authorities cited by counsel for plaintiff in error are not applicable to the present case, because all of them, as we read them, are cases in which the bank was not negligent; and one of *347them, *Schoenwald*v. *Metropolitan Savings Bank,*57 N. Y., 418, has been distinguished several times, and so limited to the facts of that case that it cannot be regarded as of much value as an authority. *Allen*v. *Williamsburgh Savings Bank,*69 N. Y., 314; *Smith*v. *Brooklyn Savings Bank,*101 N. Y., 58; *Kummel*v. *Germania Savings Bank,*127 N. Y., 488. The judgment is

*Aíñrmed.*

Price,- C. J., Shauck, Crew, Summers and Spear, JJ., concur.