Court Opinion

ID: 5620579
Source: CourtListenerOpinion
Date Created: 2022-01-11 04:34:21.426773+00
Date Added: 2024-06-11T08:37:23.589083
License: Public Domain

ON MOTION FOR REHEARING.
Jenkins, P. J.
A motion for rehearing was presented by the plaintiff in error in this case, in which it is contended that the court in its decision overlooked that section of the negotiable-instruments act of 1924, embodied in Michie’s Code (1926), § 4294 (41), which reads as follows: “Where an instrument is payable to the order of two or more payees or indorsees who are not partners, all must indorse, unless the one indorsing has authority to indorse for the others.” The contention is made that under the cited section of the negotiable-instruments act the signature by the attorney of his client’s name together with his own, being without authority, amounts to nothing more than a forged indorsement of the client’s name, and that, consequently, the defendant acquired no right or protection under the unauthorized signature made on behalf of the client.
In dealing with this contention it will be assumed, as was held in another portion of the original syllabus, that the compromise of the claim was authorized. The only question now being considered is whether or not, after such valid compromise of the claim, the defendant in the court below will be protected in the payment of its check because of the alleged lack of authority of the attorney to sign his client’s name to the check given in payment of the sum agreed upon in the compromise. As we understand the case, the defendant had the right, upon the authorized settlement being agreed upon, to pay over the money to the recognized attorney in cash, or to settle the same by a check made to the plaintiff’s attorney alone, the one vital question being whether the plaintiff, directly or through' his authorized attorney, actually received the amount agreed upon. There is no dispute in this case that such was the fact. The plaintiff, through his attornejr, received the *97amount agreed upon by the compromise. The contention of the plaintiff is that because the defendant, for some reason of its own, saw proper to make the check payable both' to the attorney and the client,- the receipt of the money by the attorney, in the absence of an indorsement of the check by the client, would not operate to settle the claim. The attorney being authorized to receive the money, we know of no reason why the defendant could not have withdrawn the check thus executed by it, and substituted a payment, either in cash or by a check payable to the attorney alone, if it saw proper to do so, provided it did not thus knowingly become a party to any contemplated fraud against the rights of the plaintiff. The payment of the check as indorsed by the attorney and by the client through the attorney certainly could not amount to more than the withdrawal of the check and the substitution of a money payment. Since it was altogether unnecessary to embody the name of the client in the check, and since his name was put there solely through the voluntary and unnecessary act of the defendant, the plaintiff acquired no contractual right against the defendant by reason of his name having thus been added to the face of the check in addition to that of the attorney employed to represent him, and the status between the parties remained the same as existed prior to the execution of the check. Consequently, the payment of the amount represented by the check, either to the client or to his attorney duly authorized to receive it, amounted to a settlement of the claim, unless it could be made to appear that the defendant knowingly participated in a fraud perpetrated by the attorney against his client. In the absence of any such knowledge, it was not the duty of the defendant to protect the client in controversies between the latter and his attorney by seeing that the money represented by the cheek was transmitted by the attorney into the hands of his client, the plaintiff.
As we conceive the question involved, the section of the negotiable-instruments act cited above has no applicability. As set forth by the editor’s note to this section in Michie’s Code, the principle of law embodied therein is “but a restatement of the law-merchant. The reason for this rule is that usually the payees have distinct and adverse interests to protect and neither acts in a representative capacity for the others or for a third person. When one does act in a representative capacity for the other or for *98a third person, the reason for the rule is gone and the rule should likewise vanish.” In the instant ease the money belonged to the client; the lawyer was his duly authorized agent to receive it, not in his own right but in the right of the client by whom he had been thus employed, and, since the party who was entitled to receive the entire fund did receive it through his duly authorized agent, it must be held that the claim has been settled according to the terms of the compromise agreement entered into.

Rehearing denied.