Court Opinion

ID: 7817331
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:41:06.270484+00
Date Added: 2024-06-11T16:30:38.125867
License: Public Domain

J. Fred JoNes, Justice, dissenting. I do not agree with the conclusion reached by the majority in this case, nor do I agree with the decision of the chancellor. Our Uniform Commercial Code, Ark. Stat. Ann. § 85-8-202 (3) (Addn. 1961), is as follows: “Except as otherwise provided in the case of certain unauthorized signatures on issue (section 8-205 [<$ ■85-8-205]), lack of genuineness of a security is a complete defense even against a purchaser for value and without notice. ’ ’ Just what constitutes the genuineness of a security is not set out in chapter 8 of the Code on investment securities, but ■§' 85-1-201 contains forty-six numbered general definitions, one of which is as follows: “(18) ‘Genuine’ means free of. forgery or counterfeiting.” The First Methodist Church of Mena authorized the Institutional Finance. Company to print and sell $90,-000.00 worth of bonds. Under this authorization Springfield, who was executive vice-president of Institutional Finance, and who held title to church property in trust to secure the payment of the bonds, fully carried out, and in fact. exceeded by $4,000.00, the authority given him by the church. He had bonds printed with consecutive numbers from 1 through 188" in the total amount of $94,000.00. Some of these identical bonds came into the hands of the appellant, First American National Bank, as a bona fide purchaser for value under the Code. After the entire issue authorized by the church had been printed by Springfield, Mr.'Hayes, the president of Institutional Finance, had printed unauthorized duplicates of the, bonds authorized by the church and printed by Springfield, and without the knowledge of, or authority from, First Methodist, sold these duplicate bonds to Christian Foundation Life Insurance Company and to C. R. Richards, who ‘were also bona fide purchasers for value under the Code.. • It is my view that the duplicate bonds printed without authority and certainly with the apparent intent to defraud, were forged counterfeits' of the original bonds and lacked the genuineness of the original authorized bonds, and that their lack of genuineness was a complete defense even against Christian Foundation and Reverend C. R. Richards. • The Commercial Code contains numerous definitions and comments of intention for its use and operation but, it contains no definition of “forgery” or “counterfeit” as would affect the genuineness of bonds. Black’s Law Dictionary defines “forge” as follows: “To fabricate, construct, or prepare one thing in imitation of another thing, with the intention of substituting the false for the genuine, or otherwise deceiving and defrauding by the use of the spurious article. To counterfeit or make falsely. Especially, to make a spurious written instrument with the intention of fraudulently substituting it for another, or of passing it off as genuine; or to fraudulently alter a genuine instrument to another’s prejudice.” “Forgery.” is-defined as: “The falsely making, or. materially altering with intent to defraud, any writing which, ’if genuine, might apparently be of legal efficacy or the foundation of a legal liability. ” “Counterfeit” is defined in Black’s as: “To forge;-to copy or imitate, without authority or right, and .with a, view to deceive or defraud, by passr ing the copy or-thing forged for that which is original or genuine. Over one. hundred years .ago this court defined forgery as having a fixed legal meaning, “It is the fraudulent making or alteration of any. writing to the prejudice of another man’s rights, or a false making, malo animo, of any written instrument,' for the purpose of fraud or deceit * * * to forge o'r counterfeit the instrument is to create or make it.” Van Horne v. The State, 5 Ark. 249. Under the majority holding in this case, once authority is given to an unscrupulous agent to print and sell a limited number of bonds over a facsimile signature, the principal or issuer has no further protection from being bound by such individual. A revocation of authority, or even confinement in the penitentiary, would offer no protection. Such agent or ex-agent, would be able to bind his former principal, or the issuer of bonds, for as long as such agent could find innocent purchasers and access to a printing press. I would reverse the chancellor in this case and hold that the original bonds held by First American are genuine and legal bonds, but that the duplicates sold to Christian Foundation and Reverend Richardson are forged counterfeits of the originals and are not genuine but are void as binding obligations of First Methodist.