Rauch v. Bankers National Bank of Chicago (143 Ill. App. 625, 1908)

Mr. Justice Brown

delivered the opinion of the court.

This is an appeal from a judgment by the Superior Court of nil capiat and for costs against the plaintiffs below (appellants here) in an action of assumpsit.

The suit was brought on six checks, in regard to each of which there were two special counts in the declaration.

The first of these counts in each case described the check as drawn by one Max Belitz on The Bankers National Bank (the defendant and appellee) and delivered by said Belitz to the plaintiffs, and then averred that on, to-wit: April 9, 1903, the plaintiffs presented the said check to the defendant, for payment thereof, and demanded payment thereof, and that at the time when said last mentioned check was so presented and payment demanded, the defendant had on general deposit in its hands sufficient moneys of the said Belitz subject to said check to pay it.

The second count in each case described the check in the same way, but then averred that after delivery of the same to the plaintiffs on to-wit, at some date (different from the others in each case), the defendant accepted the same. In each of the counts the conclusion is that by means of the matters alleged in it, the defendant became liable to pay the amount of the check described to the plaintiffs.

The following is a list of the checks thus declared on with the date of the alleged acceptance of each one (alleged under a videlicet):

Alleged

No. Date. Amount Acceptance.

154 Dec. 17, 1901. $213.56 December 19, 1901.

250 June 16, 1902. 71.00 June 20, 1902.

128 July 12, 1902. 128.00 July 14, 1902.

400 Aug. 11, 1902. 36.65 August 13, 1902.

405 Sept. 30, 1902. 70.00 October ' 2, 1902.

736 March 7, 1903. 80.00 March 10, 1903.

To these special counts the common money counts were added, including one for “money had and received for the use of the plaintiff.”

The defendant pleaded the general issue of non assumpsit. The cause was submitted to a jury, who found for the defendant, and the judgment followed after a new trial had been denied.

There were no instructions given to the jury. Those offered by the plaintiffs, except a peremptory one to find the issues for the plaintiffs, were presented in contravention of a rule of the Superior Court after the argument to the jury, and were declared by the Court to come too late and to be refused for that reason. The peremptory instruction in favor of the plaintiffs was asked in time at the conclusion of" the evidence, and denied.

The defendant also asked a peremptory instruction, which was refused.

The facts involved in the case, as claimed by the defendant, are that the plaintiffs, F. A. Bauch & Co., in 1901 and 1902, and the early part of 1903 (and for ten or twelve years before) had in their employ a salesman and collector named Bugenhagen. Bugenhagen was not authorized to indorse checks for the plaintiffs, but was expected to turn over to them any checks and all cash collected by him from their customers. He did not do so, however, but embezzled during the time of his employment a considerable sum of money— $1,500 seemed to be his own estimate and several thousands the plaintiffs’. Among the customers of F. A. Bauch & Co. was Max Belitz, who was a depositor with the defendant, The Bankers National Bank of Chicago. Bugenhagen collected from Belitz, for the plaintiffs, at various times between December, 1901, and March, 1903, and they gave him on or about the days before mentioned as their dates, the various checks sued on, running to the order of the plaintiffs. Bugenhagen, without authority, first indorsed them “F. A. Bauch & Co.,” then added the indorsement of his own name, and sold and transferred them to various parties, who again transferred them by deposit in various banks or otherwise, and they were all finally paid by The Bankers National Bank, on which they were drawn, to the various banks presenting them.

Out of the $599.21 which the checks aggregated, Bugenhagen turned over to the plaintiffs, on account of Belitz’s indebtedness to them, $344.95, for which Belitz was given credit by them. The rest he embezzled. The plaintiffs discovered in March, 1903, that Bugenhagen had been embezzling from them, and his manner of doing it. They proceeded to check up their accounts with their customers from whom Bugenhagen had been collecting, in order to ascertain the amount of money he had misappropriated, and these customers turned over to them various checks which had been given to Bugenhagen, and which had been returned to them by their respective banks. Among them were' the checks of Belitz which have been sued on, and another of $10, and with these checks, or some of them, and others, the plaintiffs confronted Bugenhagen in their private office on March 17, 1903. The embezzlement was confessed by Bugenhagen, and the amount of it on the Belitz account determined to be $254.26, for which Belitz was given an additional credit by Bauch & Co. That is, all other money which Belitz had paid in checks had evidently been reported and turned over as cash to Bauch & Co. and credited by them to Belitz on his account. It was only this amount of $254.26 of the payments by him for which he had not up to that time received credit on Bauch & Co. ’s books, and when it was thus discovered that he had actually paid that amount more than he had been given credit for, a credit entry was made in his account, under date of March 23, 1903—“W. B. $254.26”—in-dicating that although Belitz was entitled to an additional credit of that amount, Bugenhagen had embezzled it. It does not appear how the $254.26 was made up. There are, however, four of the seven checks which together make $254.65.

On the evening of March 18th there was another meeting between Bugenhagen and Bauch and his partner, Lamping, at Core’s hotel. At that time an agreement was presented to Bugenhagen, reciting his shortage and containing an undertaking on his part to pay F. A. Bauch & Co. $700 in two years, $700 in three years, $800 in four years, and to turn over a mortgage of $800 held by his wife, to make up the sum of $3,000, at which sum a settlement for the shortage had been arranged. Bugenhagen did not have the mortgage with him, and agreed to bring it the following day, but signed and delivered the agreement and notes evidencing the payments described in it.

Bugenhagen did not, however, keep his promise to bring the mortgage on the 19th, and Bauch & Co. sent for him. He went to see them on March 26th, told them he had taken the matter up with his wife and was going to bring the mortgage later. They said it was too late and destroyed the notes in his presence but retained the agreement.

The plaintiffs’ counsel question this statement of facts in some particulars. They say that it does not appear from the evidence that any of the money derived from the Belitz checks was turned over to F. A. Bauch & Co. But there was evidence which certainly justified the jury in drawing this inference, and if it were material we should have to hold that it inhered in their verdict that they did so find. The suggestion that Bugenhagen may have taken goods from appellants’ store and sold them to third parties and turned .in some of the cash on Belitz’s account may be true, but there is no evidence to support it.

Counsel also claim that the notes and agreement were presented and signed and the notes torn up at the same meeting of Bugenhagen and the plaintiffs, not at meetings several days apart. The plaintiff Bauch testified that it was at the same meeting that the notes were signed that they were destroyed, but the testimony of Bugenhagen was explicit that it was ou March 18th that the notes and agreement were signed, and on March 21st that the notes were destroyed. The “second interview,” to which the plaintiffs’ counsel refer in their reply brief, plainly and indeed expressly refers to the “second” interview in regard to the notes, taking place, as the witness had just stated, on March 21st. He said that he had a memorandum of the dates. The jury had the same right and, as we think, taking all the evidence together, as good reason to believe him as the witness Bauch, and we must assume that they did so if such belief was essential to their verdict.

But our decision of this case is based on other grounds, to which these matters are immaterial and which involve the following facts: On April 9, 1903, Henry W. Prouty, an attorney at law representing F. A. Bauch & Co., took the seven checks of Belitz which had been given him by Bauch & Co., to The Bankers National Bank and interviewed Mr. Judson, the assistant cashier, in regard to them. Mr. Prouty testified that he “stated to Mr. Judson the claim of Bauch & Co. with respect to the forgery of their indorsement on them, and I inquired of him what evidence he desired presented to the bank in order that it should pay the checks, and he asked me to have an affidavit made by my clients and attached to these checks, stating that the indorsement of their firm name on the checks was a forgery and placed there without their authority, and just briefly identifying the cheeks and the indorsement, and attach them and then hand them” (the checks) “with the affidavits attached, to him. I asked bim if he wanted to have the checks indorsed by Bauch & Co., and he said not.”

Mr. Judson’s account of the conversation was slightly different. He testified that when Mr. Prouty showed bim the checks and claimed that the indorsement was not genuine, he told Mr. Prouty that they had paid them once and charged them to the account of the drawer; that he had not heard of any claim being made by the drawer and that he could not recognize any claim by the payee; that he then said that it was customary, where an indorsement was claimed to be forged, for the payee to set that forth in an affidavit and have that affidavit attached to the cheek. * * * “I said that before I could take that up with the banks to whom we had paid the money, I should have to have it in the proper and usual form. That usual form was an affidavit by the payee setting forth that the indorsement as it appeared on the checks was not genuine.”

“Q. What, if anything, was said by you to Mr. Prouty about waiving the signature of F. A. Bauch on these checks, if you paid them? A. Oh, we would not waive it, no.

Q. Did you say anything of that kind? A. No.

Q. Did you say to Mr. Prouty you would pay these checks without requiring the signature of F. A. Bauch & Oo. on them? A. Certainly not.”

The checks were left by Mr. Prouty with Mr. Judson, who gave to Mr. Prouty a receipt for them, which the record shows was offered in evidence and marked Plaintiff’s Exhibit 7, but which for some unexplained reason was omitted from the transcript.

April 29th the check for $10 was paid by the defendant to Mr. Prouty, the amount of that instrument having been collected from the bank from which the defendant had received it, but the others were returned to Mr. Prouty with a refusal on the part of the defendant to pay them.

It is to be noted that the essential difference between the two accounts of what was said when Mr. Prouty presented the checks to Mr. Judson, is the direct contradiction of Mr. Prouty by Mr. Judson concerning the waiver of F. A. Bauch & Co.’s indorsement on them. If it required the belief of the jury, in order to justify their verdict, that Mr. Judson’s statement in this particular was the correct one, and Mr. Prouty’s mistake, we should be obliged to hold it was within their right and province to decide between the contradictory statements—a matter which it will be seen is important when the position of the defendant is considered. That position is that the plaintiffs did not by their evidence establish any liability on these checks on the part of the defendant bank to anybody, certainly not to the payee; and also that even if the bank would have been liable on them to P. A. Rauch & Co. on April 9th and later, had they been presented for payment with the genuine indorsement of P. A. Rauch & Co. upon them, no such liability accrued without that indorsement on the presentation of them by an attorney at law of Rauch & Co. without written authority. Further, it is insisted by the defendant that under the circumstances which the jury were at liberty to find existed, of a settlement between Rauch & Co. and Bugenhagen concerning the Relitz account, which after three days was repudiated by Rauch &. Co. by the destruction of the notes given in pursuance thereof, ratification of the indorsements on the checks by Bugenhagen of F. A. Rauch & Co.’s name and their collection by him might be properly presumed.

We do not think it' necessary to discuss this last position. As to the question of Rauch & Co. ’s genuine indorsement on the checks being essential before any legal obligation accrued which made the present suit, begun on April 27, 1903, sustainable by them, it must be said that it seems to us at least doubtful whether such indorsement was not necessary.

Had the checks been presented by Mr. Rauch or by Mr. Lamping, his partner, or if Mr. Prouty had shown written authority or otherwise affirmatively proven authority to collect the checks for them, the question would have been different. His being, an attorney at law did not affect his right to demand payment. How did his representation that he was authorized by Rauch & Co. to demand and receive payment