Court Opinion

ID: 9443326
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:17:42.850898+00
Date Added: 2024-06-11T17:29:27.096647
License: Public Domain

RIVES, Circuit Judge
(dissenting).
I cannot agree that no damage is shown to have resulted to appellants by reason of the Government’s failure to give prompt notice on learning of the forgery. In the case of Clearfield Trust Company v. United States, 318 U.S. 363, 370, 63 S.Ct. 573, 87 L.Ed. 838 it appeared that the Clearfield Trust Company could still recover from J. C. Penny Company, the prior endorser. In the cases now before the Court, it seems to me that that is not true. Each of the prior endorsers subsequent to the payees, whose names were forged, were banks in Georgia entitled to the protection of Section 13-2052, Georgia Code of 1933, reading in pertinent part:
“No bank which has in good faith paid a check bearing a forged or unauthorized indorsement shall be liable to any person for such payment, either by reason of such payment, the indorsement of said check by such bank, or the guarantee by said bank of prior in-dorsements, unless within one year after such payment, indorsement by such bank, or guarantee of indorse-ments by such bank, the drawer of said check or some subsequent indorser or holder thereof shall notify such bank in writing that said check bore a forged or unauthorized indorsement * * *
It is true that that Section has no direct application to the rights and duties of the United States on the checks because the Clearfield case held that such rights and duties are governed by Federal rather than local law. A different question is presented, however, when we come to the possible claims of appellants against prior endorsers. Under the Uniform Negotiable Instruments Law in effect in Georgia, payment of the amounts of the checks by the appellants to the United States did not subrogate them to the rights of the United States, but remitted them to their former rights as regards all prior parties. 8 Am.Jur., Bills and Notes, Section 826. Each endorsement constitutes a separate contract. Even though the checks are drawn on the Treasurer of the United States, the rights and liabilities of an endorsee against a prior endorser on an endorsement to which the United States-is not a party are controlled by the law of the state where the endorsements were-made, that is, by Georgia law. 11 Am.Jur.,. Conflict of Laws, Section 148.
In both cases it appears that the United States learned of the forged or unauthorized endorsements long before the expiration of one year after the checks were cashed, but did not notify the appellants or any prior endorser banks that the checks bore a forged or unauthorized endorsement until more than one year after such payment. The appellants, therefore, had no opportunity so to notify prior endorser banks and under the Georgia Statute the appellants lost their . rights against such banks and were damaged by the unjustified delay of the United States. Under the holding of the Clearfield case, the damages resulting from that delay should be borne by the United States and not by the appellants. I, therefore, respectfully dissent.