Court Opinion

ID: 3516485
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:27:47.673277+00
Date Added: 2024-06-11T13:45:10.784273
License: Public Domain

DISSENTING OPINION.
The Oxford Production Credit Association will be designated herein as the Association, and the Bank of Oxford as the Bank. The Bank having paid these checks on forged indorsements of the payees was without the right to charge them to the account of the drawer, the Association, unless the Association "is precluded from setting up the forgery or want of authority," Section 2679, Code of 1930; in the language of this court in Masonic Benefit Ass'n v. First State Bank of Columbus, 99 Miss. 610, 55 So. 408, 413, if the Association "neither by act nor representation, induced (the Bank) to pay out the money on the forged indorsements." To the same effect see Thomas v. First Nat. Bank of Gulfport, 101 Miss. 500, 58 So. 478, 39 L.R.A. (N.S.), 355; Hart v. Moore, 171 Miss. 838, 158 So. 490; 5 Mitchie Banks and Banking, 506; 9 C.J.S., Banks and Banking, sec. 356, par. chap.; 7 Am. Jur., Banks, Section 590. The Association's deposit with the Bank was therefore not reduced by the payment of these checks and the Bank remained indebted to the Association for the amount represented thereby, which indebtedness the Association had the right to and did assign to the Fidelity  Casualty Company. This assignment vested the Fidelity  Casualty Company with the complete *Page 75 
title or ownership of this indebtedness, with all the rights incident thereto possessed by the Association against the Bank at the time of the assignment. For this no authority should be required, but if desired see 6 C.J.S., Assignments, secs. 82 and 100; 4 Am. Jur., Assignments, Sec. 95. Consequently, the Association, which, as the opinion in chief points out, sues for the benefit of the Fidelity  Casualty Company, has the right to a judgment here for the amount of that debt, unless the Association itself was precluded or estopped from setting up the forgery at the time the assignment was made. The controlling opinion does not hold that it was so precluded and I have no doubt that it was not.
But it is said, in effect, that had the assignment not been made the Fidelity  Casualty Company would have had a right of action in equity against the Bank under the doctrine of subrogation, because of the payment by it of the indebtedness due the Association by the Bank under its surety contract, and therefore notwithstanding the assignment it must recover, if at all, under that doctrine. A complete non sequitur. Had the assignment been made to a stranger to this surety contract he would undoubtedly have succeeded to all of the rights of the Association in the debt assigned, and no reason that appeals to me has been, and I feel sure I can not be, given for making a distinction in this connection between such an assignee and one who is a party to a surety contract requiring him to pay the assignor the debt assigned. The Fidelity  Casualty Company without the assignment had, of course, a right of action in equity under the doctrine of subrogation, with the assignment it had the right common to all assignees to recover in an action at law to the same extent that its assignor would have had. But, if I am mistaken as to this, the result should be the same.
After holding that the Fidelity  Casualty Company's only remedy is under the doctrine of subrogation, a majority of the court say that no relief can be afforded *Page 76 
it thereunder for the reason that the Bank's equity is superior to its; meaning, that an injustice would be done the Bank should it be required to pay the Fidelity  Casualty Company the debt it owed the Association. In support of this holding it is said in effect, (1) the Fidelity  Casualty Company in paying the debt due by the Bank to the Association simply complied with its promise to the Association so to do, for the making of which promise it had been paid a consideration; (2) the Bank was guilty of no negligence in paying the checks on the forged indorsements of the payees; and (3) payment of the checks was brought about by the wrongful acts of Henderson, for which the Bank can not be charged.
(1) The Fidelity  Casualty Company's right to subrogation, if it had to depend thereon, does not rest on equity's unwritten recognition of such a right, for that right is expressly given it by Section 2959, Code of 1930, thereby abolishing all distinction between paid and gratuitous sureties in this connection. Consequently, the fact that the Fidelity  Casualty Company was a paid surety should not, and in my judgment cannot, prevent the recovery it here seeks.
(2) Conceding, though not admitting, that the Bank was guilty of no negligence in paying these checks on forged indorsements thereof, that fact is wholly beside the mark here. Negligence vel non of the Bank has no part in the consideration of this case, for in paying a check on the indorsement of the payee therein the law charges a bank with the absolute duty to "ascertain at its peril that the indorsement is genuine." Authorities hereinbefore cited, particularly the three Mississippi cases. The Bank would be entitled to no consideration for having paid the checks even if it believed that the indorsements of the payees' names were genuine. But the fact is that it paid these checks without reference to any belief that the indorsements of the payees' names thereon were genuine but for the reason that the genuineness of the indorsements of the payees' names was guaranteed by *Page 77 
other indorsements thereon to the makers of which the Bank could look for reimbursement in event the indorsements of the payees' names should turn out not to be genuine. That the banking business would be hazardous if banks are under the absolute duty to ascertain at their peril that the indorsements of payees are genuine before paying checks is no concern of ours and has no place here, for such is the law from which we have no right to depart. That a forged signature "is wholly inoperative" unless the person aggrieved is estopped from challenging the forgery is a very old rule of the common law and is expressly embodied in Section 2679, Code of 1930. No injustice can be done this Bank by holding it to the performance of an absolute legal duty.
(3) The controlling opinion admits that the Fidelity  Casualty Company was not a party to and in no way responsible for Henderson's forgery of the indorsements on these checks, from which it should follow that its rights against the Bank should not be prejudiced thereby. Liability without fault has no place in equity or the common law.
The decree below should be reversed and one rendered here for the appellant.