The San Francisco call., 1897-12-21
MUST PAY
FOR THE BIG
FORGERY
Nevada Bank Ordered
to Make Up the
Dean Check.
The Decision Gives the
CrOcker-WOOlworth
Co. $21,988.
It Was Not Responsible for
Errors in the Body Of
the Paper.
SOME FINE LAW POINTS.
Status Of the Clearing House and Its
Liability in Making Payments
Clearly Outlined.
It Was Not Responsible for
Errors in the Body Of
the Paper.
SOME FINE LAW POINTS.
Status Of the Clearing House and Its
Liability in Making Payments
Clearly Outlined.


dered yesterday, the Nevada Bank
must pay to the Crocker- -WoOlworth
Bank the amount of the forgery of the
now celebrated check presented by A.
H. Dean to the Nevada Bank in De-
cember of 1895. The amount of the
judgment is $21,9SS, the difference be-
tween $4,000 and $12 the original
amount of the check.
The bank of Woodland drew the
check on the Croker Woolworth Bank
in favor of Dean, and he deposited it
in the Nevada Bank, he and his part
ners, Becker and Creegan, having pre-
viously raised the amount to $22, 900.
The original check was dated Decem-
Der 8, and the date was also raised to
December 13. Dean deposited the
check on December II and on the same
day it was sent to the Crocker- Wool
worth Bank through the Clearing
House, and on the next day it was
paid by that bank also through the
Clearing House. After 10 A. NJ. on De-
cember IS Dean called at the Nevada
Bank and drew $4,000, and that was
the last seen of him until his arrest for
forgery.
The fraud was discovered by the
CrOcker- -Woolworth Bank sending the
check to the Bank of Woodland for
collection and receiving word in re-
turn that no such check had gone out
from there. Having paid the money,
however, the CrOcker-W Woolworth
Bank sought by the suit just decided
by Judge Seaweu to recover the
amount it had paid over to the Neva-
da Bank and could not collect from
the Bank of Woodland.
One of the rules of the Clearing
House is that any check found not
good shall be returned to the member
of the institution within two hours OF
the time the check appears at the
Clearing House, and the member pre-
senting it shall refund to the bank re-
turning it the amount paid upon the
worthless paper. This rule was cited
as a defense, and also the fact that the
defendant was an agent for Dean and
not the original owner OF the check
In opening his opinion Judge SeaWel
says:
Every bank is bound to know the
signatures of its depositors and the
state Of their accounts. When 1t pays
a check drawn upon it the signature
of which is forged the bank is deemed
guilty of negligence and cannot re-
cover back the money if the party
receiving has upon the face OF the
payment and before notice Of the
forgery so altered his position that it
would be unjust to require him to re-
fund. AS the bank making the pay
ment ought to have known whether
or not the signature to the check was
genuine, the other party had right
to rely and act upon the assumption
that it was so, and should not be
subjected to q loss which, without
any fault on his part, has been occa-
stoned by the negligent mistake of
the bank. But money paid upon such
check may be recovered back, how
ever negligent the bank may have
been in making the mistake, unless
change to his prejudice has been
wrought in the situation of the other
party by reason of the mistake.
Banks are not, however, presumed
or bound to know the handwriting in
the body of checks drawn upon them.
The party presenting a check for pay
ment has as good an opportunity of
ascertaininS the genuineness of the
body of the check as the draWee has.
A bank, therefore, which pays a
raised check, there being nothing in
its appearance to excite suspicion is
entitled, upon discovery of the fraud
ulent operation, to recover back the
money from the person to whom the
money was paid. If, however, the
money was paid to one who was the
agent of another and the drawee had
notice of the agency it cannot be re-
covered back if before the notice of
the alteration he has paid over the
money to his principal.
Whatever may be the theory of
bankers as to the relation which
springs up between a bank and it's
customers upon the deposit of a check
drawn by third party upon another
the depositor where the latter is
credited in his account with the
amount of the check, the. evidence
shows that they do not in fact treat
the credit given to the depositor or
their own ownership of the check as
absolute. The depoSitor is not per-
mitted as a matter of right to draw
the amount of the check before it's
collection. While bankers sometimes
honor such draft, they do so
merely as a matter of favor and be-
cause of their confidence in the
drawer, not because they recognize
the existence of an obligation. 1t is
also their custom at any time before
the check is collected to treat the
check as the property of the depos-
itor by returning it to him upon de-
mand.
1 do not deem it necessary to ex-
press any opinion upon the question
discussed by counsel whether the in
dorsement stamped upon the check
by the defendant operated as a guar
antee of the genuineneSS of the body
of the check, as well as the prior in
dorSement thereon. The mere fact
that defendant received plaintiffs
money by mistake and without con-
sideration is sufficient to render de-
fendant liable if plaintiff at the time
Of payment had no notice that it was
the agent Of Dean.
Regarding the question of agenc,
the court holds that the Croker Wool
worth Bank had no means of KNOWN
the position Of the Nevada Bank i
the transaction except that it ar
peared to be the owner of the chec
and that the check was properly in
dorsed with the Clearing house STAN,
On this point Judge Seawel said:
'In the present case the check was
presented for payment by the de-
fendant and the money was paid to
it by the plaintiff AS the defendant
appeared to be the holder of the
check when it was presented and
paid, the right of plaintiff to recover
back the money could not be affected
by any secret relation between the
defendant and Dean of which it had
no notice." Several authorities on
the subject are quoted by his Honor.
The position of the Clearing -hous
is very clearly defined, and the create
part of the opinion is devoted to i
The claim made that the check shoul