Court Opinion

ID: 8196126
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:19:27.03157+00
Date Added: 2024-06-11T16:40:46.479840
License: Public Domain

Crown pi art, J.
{dissenting). It is conceded that the defendant was wholly innocent of any knowledge of any misconduct on the part of the cashier. We therefore have a confiding customer of the bank, who entered the bank for two perfectly lawful transactions. The first was to collect her note against the cashier. This was a purely private transaction with the cashier in his private capacity. Second, she wished to pay her note to the bank, and this was business with the bank. She received payment of the cashier by accepting the cashier’s personal check on the plaintiff bank for the amount. Then, for the time being, she had completed her business with the cashier in his personal capacity. She then attended to her business with the bank. She announced *487to the bank’s chief executive officer that she wished to pay her note to the bank. She indorsed the check she had received from the cashier, and tendered it to the bank in payment of her note to the bank, and for deposit of the balance that would be due her. The bank, through its executive officer, accepted the check, gave the defendant her note due the bank, duly paid, and credited the balance on her bank pass-book. That completed the two transactions, and for six months she rested secure that the whole matter was closed, having had no notice to the contrary.
But it then appeared that the check was in fact worthless because the drawer had no funds in the bank. The check, however, was a negotiable instrument, to which the law of negotiable instruments applies. One who negotiates to a bank a check which turns out to be worthless may be held on her indorsement of the check, provided that she be promptly notified of its dishonor. Defendant was not so notified. The bank seeks to excuse its failure by alleging the fraud of its own executive officers, through no fault of the defendant, however. But such misconduct is no defense. The misconduct was the misconduct of the bank. The situation is no different than it would have been if defendant had presented a check of a stranger to the bank, payable to her and by her indorsed. If the check should not be paid by the maker, the defendant would be liable as an indorser.
The bank seeks to make a distinction by going back of the transaction of the defendant with the bank, and making the claim that, because defendant had accepted in payment of her note against the cashier a worthless check, therefore she obtained money from the bank for which she gave no consideration, and in equity she should return the money so received. The bank, would ignore the law of negotiable instruments, specially applicable to the banking business. No legal sophistry should make the defendant responsible for the frauds of the bank’s executive officer in doing the busi*488ness of the bank in such capacity. The bank employed the cashier. The bank held him out to its customers as trustworthy. The bank gave him the power and authority to accept checks drawn on the bank, either in payment of debts or in exchange for cash or credit. That is banking business, and banks are responsible for the acts of their officers in the regular course of their business.
The court has expressed some concern for the banking public if officers of the bank may defraud the bank in this manner. The defendant is one of the banking public. If she may be defrauded by crooked banking officials, over whom she has no control, then customers of a bank are never safe in dealing with a bank. The bank may amply protect itself by requiring its officers to give bonds to carry out their trust. If they neglect this precaution their negligence should not be visited on innocent customers. Of course, the bank claims the defendant, under the facts of this case, has lost nothing by the transaction for the reason that the cashier was insolvent and she could not have collected her note against him. This is by no means established. Had the check been promptly protested, it cannot be said that relatives or friends would not have come to his aid and defendant would have been paid. Such conditions are of common occurrence, of which we must take judicial knowledge. At any rate the bank’s duty was to give her prompt notice of dishonor of the check, and leave her to pursue such remedies as she chose. Where one of two innocent parties must suffer, the one guilty of negligence must accept the loss.
It should be here noted that the cashier of the bank in this case was in fact the bank, as he was in full charge thereof. Stevenson v. Columbia Bank of Lodi, 197 Wis. 268, 221 N. W. 753.
I therefore respectfully dissent.
Eschweiler, J., joins herein.