Court Opinion

ID: 9732646
Source: CourtListenerOpinion
Date Created: 2023-08-26 16:29:41.306926+00
Date Added: 2024-06-11T15:23:25.250258
License: Public Domain

FLEMING, J.
I concur. In my view a check payable to the order of a named bank is not payable to bearer, and a bank which receives such a check is bound to exercise customary vigilance in determining who is entitled to its proceeds before disbursing them. The claim that a cheek payable to a named bank is bearer paper is to my mind highly dangerous to all banking-by-mail transactions in which payments are made to a named bank for a particular purpose. If cheeks payable to a named bank were to be considered bearer paper, logic would indicate that any custodian, finder, or thief could cash them.
The presentation of a check payable to bank is followed by two closely-related but essentially unconnected happenings: (1) the receipt by the bank of the credit, and (2) the paying out or allocation by the bank of that credit to a particular account. In taking money IN the bank need exercise very little caution or formality. Indeed the widespread existence of night depositories is illustrative of this fact. But in paying money OUT the bank is required to exercise all the caution demanded of it as the custodian of other people’s money.
In the present case Brown forged instruments under which he was able to put moneys IN a particular bank. The bank acted properly in receiving the moneys, and in this phase of the matter no harm was done. But in the second aspect of the transaction—paying moneys OUT or crediting an account from which moneys could be withdrawn—the bank failed to take any steps to determine where the credits derived from the checks properly belonged. If this determination were a matter of some difficulty which could not readily be solved, the bank should have temporarily placed the credit in a suspense account. Instead of doing this, the bank accepted Brown's request to credit them to his personal account without the slightest semblance of actual, apparent, or ostensible authority for so doing, and indeed without even requiring his *102endorsement on the checks. The entire scheme to defraud was made possible by the use of the bank’s name as payee on the checks, for if Brown had made himself payee he could never have got the checks issued. The essence of the trick was to get money IN the bank and then rely on the bank’s disinterest in what happened thereafter to get it OUT and away.
When the bank permitted moneys or credits to come into its possession, it came under a duty to disburse them under proper authority, and for its failure to do so it may be held liable. (Pacific Finance Corp. v. Bank of Yolo, 215 Cal. 357 [10 P.2d 68]; Sims v. United States Trust Co., 103 N.Y. 472 [9 N.E. 605].)