Wright v. Bank of America National Trust & Savings Ass'n

In May of 1955, plaintiffs as partners in a contracting business had a commercial account with defendant’s Buena Center Branch in the city of Ventura; checks on that account required the joint signatures of both partners. Employed by them as office manager was one Clarke whose duties included the filling out of checks drawn by plaintiffs in payment of the firm’s obligations. Plaintiff Trimmer took a trip to Sacramento on May 3. Prior thereto, he and plaintiff Wright (who, it later appears, was not active in the management of the business from May 5 to May 9) signed several checks in blank and delivered them to Clarke. Clarke was authorized, when funds were available, to fill in the date, amount and payee creditor of the firm. On May 4, plaintiffs’ balance was $6.39, but on May 5, Clarke collected a $10,000 account receivable and deposited it in the partnership account. On May 6, Clarke handed one of the blank checks to a secretarial employee of plaintiffs and instructed her to fill in the date and the name Ben D. Clarke as payee. The employee dated the check May 7, 1955 (a Saturday); thereafter Clarke filled in the amount of said cheek in the sum of $3,500 and later

The following Monday, May 9, Clarke failed to keep certain appointments. Plaintiff Trimmer became suspicious and telephoned defendant bank between 9 and 9:30 to ascertain the status of the partnership account, at which time the bookkeeper informed him concerning the $3,500 check. Trimmer advised that the transaction was never authorized by him or his partner. Clarke subsequently pleaded guilty to grand theft and was sentenced to prison.

Plaintiffs’ present action to compel restitution by defendant was in two counts, breach of contract and negligence. The answer denied the complaint’s pivotal allegations and by way of affirmative defense pleaded an estoppel based on plaintiffs’ negligence which proximately caused the loss to occur. ITollowing a nonjury trial, judgment was rendered for defendant.

On appeal it is contended that the findings of fact are insufficient to support the judgment and that such judgment is against the law; it is also claimed that the court erred in failing to make findings, though requested to do so, on two material issues.

While it is the general rule that, as between a bank and its customers, the payment by the bank of forged or altered checks is made at its peril and cannot be charged against the depositor’s account, such payment may be justified on principles of estoppel or on the basis of negligent or misleading conduct by the depositor which directly caused the bank to pay the instrument (8 Cal.Jur.2d, Banks, 65). Recognizing this rule, appellants also concede that an estoppel will arise in favor of the drawee bank where a depositor signs checks in blank and delivers them to his agent who thereafter fraudulently fills in the blanks (Edelen v. Oakland Bank of Savings, 39 Cal.App. 302 [ 178 P. 737 ] ; Rancho San Carlos v. Bank of Italy, 123 Cal.App. 291 [ 11 P.2d 424 ]). However, say appellants, the rationale followed in the cases just cited may not be here applied because (1) the check involved was postdated and (2) in neither case,

An essential characteristic of a check is that it be payable on demand (Torrance Nat. Bank v. Enesco F. Credit Union, 134 Cal.App.2d 316 , 320 [ 285 P.2d 737 ] ; Civ. Code, § 3265a); however, a postdated check is none the less a check because postdated, being payable on or at any time after the date of its date (10 C.J.S. 412, §5c; 9 C.J.S. 696, § 345) and it has also been declared to be within the phrase “checks and drafts” used in a company’s resolution on the signature furnished by it to a bank, as well as an “order of withdrawal” authorizing the bank to assume authority as provided in section 953 of the Financial Code. (Torrance Nat. Bank v. Enesco F. Credit Union, supra.) Too, section 3093 of the Civil Code provides: “The instrument is not invalid for the reason only that it is antedated or postdated provided this is not done for an illegal or fraudulent purpose. The person to whom an instrument so dated is delivered acquires title thereto as of the date of delivery.”

Appellants do not dispute the fact that the instrument in question was complete and regular on its face and bore the genuine signatures of the plaintiffs, nor that it was a negotiable instrument albeit payable at a future date. They do contend that it was error for the court to conclude that respondent had a duty to pay the check and was therefore entitled to charge appellants’ account in the amount thereof; and argue that a postdated check confers no authority on a bank to pay the amount for which it was drawn out of the drawer’s funds before its date (Crawford v. West Side Bank, 100 N.Y. 50 [ 2 N.E. 881 , 883, 53 Am.Rep. 152 ]). They also rely on another New York case: “The common law rule of liability of a bank in paying prematurely a postdated cheek is succinctly set forth in 9 C.J.S., Banks and Banking, § 345, p. 696: ‘A postdated check is payable on or at any time after the day of its date; the bank ought not to pay it, if presented earlier, and if it does the depositor can recover his money. ’ ’ ’ (Montano v. Springfield Gardens National Bank, 207 Misc. 840 [ 140 N.Y.S.2d 63 , 65].) Cited by the editors of Corpus Juris Secundum for the proposition quoted is a Georgia case,

In the case at bar the claimed negligence of the bank was arrayed against that charged to the drawer of the instrument. The trial court found in favor of the bank, making extensive findings which are predicated on the following rule:

‘ ‘ The question of negligence cannot arise unless the depositor has, in drawing his check, left blanks unfilled, or by some affirmative act of negligence has facilitated the commission of a fraud by those into whose hands the check may come.” (Crawford v. West Side Bank, supra (N.Y., 2 N.E. 881 , 882).) (Emphasis added.) As stated in Edelen v. Oakland Bank of Savings, supra, 39 Cal.App. 302 , 303: “The plaintiff’s own negligence was the proximate cause of his loss.” The trial court expressly found the postdating of the check by the secretarial employee was accidental; since the instrument was entirely blank, except for the signatures, when it left appellants’ hands, Clarke could have filled it in for May 6, or any other time. Indeed, the record discloses that on May 5, a check in the sum of $1,613 was negotiated by Clarke at defendant’s same branch after he had filled in the necessary blanks on its face. Appellants abandoned any claim to restitution therefor on the ground that it was “currently dated and therefore due on sight.” We are of the view that this attempted distinction of the cheek in suit may not be sustained.

Elaborating further, suppose appellants had made one of themselves the payee of the instrument and mistakenly inserted May 7 as the date; could they then validly argue, after the encashment of the cheek on May 6, that their account should not be charged accordingly? The only distinguishing factor seems to be the written authority presented by Clarke, since the check involved was perfectly regular on its face and the fact of postdating did not otherwise invalidate it under the law. This authority consisted of a document dated four

Respondent has argued the applicability of section 990, Financial Code, which provides that a bank “may disregard an order stopping payment of a check unless the order is in writing, is signed by the drawer, describes with certainty the check payment of which is to be stopped, and is delivered to the particular office or branch office of the bank on which the check is drawn before the check is certified or paid. ’ ’ Appellants, of course, did not comply with the foregoing requirements, although verbal instructions were given the bank's bookkeeper by Trimmer on the morning of May’9. Contrary to the bank’s position, the check was charged to appellants’ account on May 6—the bank’s statement, received as an exhibit, so shows—and the giving of notice under section 990,' supra, would have been a useless act which the law does not require (Civ. Code, § 3532). This, therefore, would seem to make inappropriate any discussion of the question, which is argued at some length in the briefs, as to whether respondent became a holder in due course and entitled to “purchase’.’ the check with a right of offset.

While we do not wholeheartedly concur in the- court’s, conclusion that respondent was wholly free from negligence, believing that both parties to some extent failed to exercise