Daily capital journal. (Salem, Oregon) 1903-1919, 1911-08-12

:, " S'iiu T. VI. chapman, who
thereafter refused to allow credit to
pialntin for said checks; that there
| aIter ana on or about the 9th day of
october, 1908, plaintiff discovered
that. said check was false, fraudulent.
forged and worthless and thereupon
Immediately notified said defendant
OF said facts and rendered said check
10 said defendant and demanded from
SAID defendant the repayment Of said
sum of S55; that said plaintiff paid
said sum of S55 to said defendant,
relying upon the genuineness and
validity of said check and under the
mistake that said check was genuine
and valid and the check of F. NJ.
Chapman and was drawn by said F.
NJ. Chapman and bore his genuine
signature; that in fact said check
was false, worthless and fraudulent
and the signature to the same pur-
porting to be that of F. NJ. Chapman
was forged and fraudulent; that de-
fendant refused and still refuses to
pay to this plaintiff said sum of SIS:
that by reason of the premises there
is now due and owing from said de-
fendant to this plaintiff the sum of
500, with interest at the rate of six
per cent per annum from the 9th day
of October, 1905"
The second cause of action for $50.
paid in like manner upon the forged
check of F. NJ. Chapman, and the
third cause for SIS, paid upon the
forged check of the Dieston Lumber
company, signed by H. D. Critics on
its behalf, are in substance and form
the same as the first, except as to
names, amounts, dates, and the fact
that the third check was delivered to
plaintiff at defendants bank and talk
en- to plaintiffs bank, where the for
gerry was discovered within less than
two hours and the defendant immed-
lately notified.
Bean, j. 1t will be noticed that
there is on allegation that defendant
knew or suspected the checks were
forged. Nor is defendant charged
with any act of negligence in failing
to make proper inquiry as to the
genuineness of the checks, or that
plaintiff was misled through any
fault of defendant. 1t was assumed,
upon the argument of counsel, that
plaintiff acted in entire good faith,
and it is conceded that there are no
special circumstances connected with
the case, such as the ability to OBJ
tain the money from the persons
committing the fraud.
I'M
The question is whether a banker.
upon whom a check or bill has been
drawn, and who has paid the check
- bill upon which the drawers name
has been forged, can, upon discovery
OF the forgery, recover the amount
from the holder in due course, under
the circumstances as shown by the
complaint. Upon this important
question, which is presented to this
court for the first time, there has
been a great difference Of opinion be-
tween the court and the eminent
text-writers, and before entering
into a consideration of our own stat
utes on the subject we will refer to
few of these authorities. Follow
ing the ancient case of Price " Neal,
III Burrows, 1855, decided by Lord
Hansfield, the courts of this country
have many times held that such a
recovery could not be had, maintain
ing the position that, as between the
drawee and the holder, in due course
OF a check the drawee bank is to be
deemed the place of final settlement,
where all prior mistakes and for
geries can be corrected at once and
finally, and if overlooked and pay
ment is made, the matter is at an
end, and there can be no recovery
thereafter. National Bank of Rolla
v. First National Bank, 1876 S. w.
(Mo), 513; Rodington v. Woods, As
Cal, 406; Bank of Quincy v. Kicker,
II ILL.,, 499; First National Bank v.
Northwestern Bank, 152 ILL.,, 296;
National Bank V. Ninth National
Bank, 46 N. Y, n; Ellis v. Life Ins.
Co., Ch. St., 62S; see also Dedham
Bank V. Everett Bank, III Mass,
1872.
A bank is presumed to know the
signatures of it's depositors and the
condition of their accounts and cred
its, and in those cases where the
name of the maker has been forged
to the instrument and the check or
draft has in due course finally been
presented to and accepted and paid
by the drawee, the courts have in
numerous Instances refused a recov-
cry from the indorser. Deposit
Bank v Fayette National Bank, 80
KY, 10; National Bank V. State
Bank, 107 Ia, 327; Howard V. Miss
issippi Val Bank, 2S La. Ann, 727;
Com & Farmers Nat. Bank V. Balti-
more First Nat. Bank, 80 Nd, II;
Salt Springs Bank V. Syracuse Saw
Bank, 62 Barb (N " 101; Nat
Bank Commonwealth V. Grocers Nat
Bank, 95 How. Pr IN. ", 412; Car
thage First Nat. Bank V. Yost, II N
Y. Sup, S62; Farmers & Mer. Bank
V. Bank of Rutherford, 115 Tenn, GA;
st, Adams Bank V. Farmers G. Mer
Bank, 10 VT, 141; Germania Bank v,
Boutell, 60 Mimi, 1S9.
There is line of decisions that
state the rule as follows: The
drawee of a forged check, who has
paid the same, may upon discovery
of the forgery, recover the money
paid from the party who received it,
even though the latter was a holder
in due course, provided the latter has
not been misled or prejudiced blythe
failure of the drawee at the time of
payment to detect the forgery, and
that the burden of showing that he
has been misled or prejudiced is
upon the party claiming the right to
retain the money. Lisbon Bank V.
Wyndmere Bank, Is N. D., 299; 1OS
N. W., SAG; Bank v. Bingham, II