HAMILTON NATIONAL BANK v. NYE. PLEADING—Answer-Verification.—An answer, in an action by the indorsee of a bank check, that the plaintiff derived title through an unauthorized indorsement by one claiming to be the agent of the payee is sufficient without any verification. (pp. 333, 334.) PLEADING Facts-Conclusions of Law.-A pleading setting forth the facts is not bad for surplusage in setting out the legal conclusions from such facts. (p. 334.) BILLS AND NOTES.-The Unauthorized Indorsement of a check confers no title. (p. 334.) BILLS AND NOTES-Unauthorized Indorsement-Subsequent Indorsees. If the first indorsement on a check is unauthorized, subsequent indorsees have no title as against the drawer. (p. 334.) BILLS AND NOTES-Unauthorized Indorsement.-The delivery of a check with an unauthorized indorsement is in effect its delivery without any indorsement, and in the hands of anyone, other than the payee, it is not negotiable paper. (p. 335.) BILLS AND NOTES-Authority of Agent to Indorse Principal's Check.-A mere selling agent has no implied authority to indorse checks payable to his principal. (p. 335.) J. S. Dodge, Jr., and B. Shane, for the appellant. S. Parker, J. H. Brubaker and W. Brubaker, for the appellee. 465 ROBINSON, J. Action by appellant upon a bank check. The complaint avers that appellee executed his check upon the Lake City Bank, payable to "Walsh, Boyle & Co., or order," and delivered the check to the payee; that afterward the check, for a valuable consideration, was indorsed by the payee to the Indiana National Bank, which bank, for a valuable consideration, indorsed the check to appellant; that afterward appellant presented the check to the Lake City Bank for payment, which was refused, of which fact appellee had notice; and that the same was duly protested. Appellee filed a verified answer admitting the execution of the check, but alleges he should not be held liable on the check, for the reason that since this action was commenced he paid the amount of the check to Walsh, Boyle & Co.; that at the time the check was drawn he was indebted to that firm to the amount of the check for goods sold by the firm to him, through their traveling salesman Underhill; that when the check was drawn it was delivered to Under hill, who, instead of sending it to the firm, as was his duty, took the same to the Indiana National Bank and wrote the words "Walsh, Boyle & Co." across the back thereof, which bank forwarded the check to appellant, which was its Chicago correspondent; that the check was not indorsed by the firm, but was indorsed with the firm's name by Underhill; that he had no authority or right so to indorse the same; and that the firm did not in any manner ratify the indorsement. It was not necessary to verify the answer. It is not a plea of non est factum. It does not deny the execution or delivery of the check. The effect of the answer is that it denies the appellant's right to sue on the check for the reason that Walsh, Boyle & Co. are the real owners of the check, the title never having passed to appellant. Whether the verification that was attempted was sufficient is not material. 466 The facts pleaded in the answer, if true, are a bar to the action: Bostwick v. Bryant, 113 Ind. 448, 16 N. E. 378. It is urged against the answer that it pleads appellee's conclusion as to what he "was bound to do in law." However, this conclusion neither adds anything to, nor takes anything from, the pleading, because the facts from which this conclusion is drawn are pleaded. The facts pleaded speak for themselves, and it was unnecessary for appellee to state what the law upon those facts required or did not require him to do. The conclusion is surplusage. The maker of the check did not undertake to pay the amount of the check to any person other than Walsh, Boyle & Co., or to some person to whom this firm should order it to be paid. When the check was drawn and delivered to the firm's agent, the title was in the firm, and remained in the firm until by some act of the firm, or its authorized agent, it passed to another. An indorsement by any other person could have no effect on the firm's title. Placing the firm's name on the back of the check and delivering it to a third person would devest the firm's title and vest the title in such third person. If the agent, without the firm's knowledge, had delivered the check without any indorsement to a third person, such delivery could not affect the firm's title, but such an act could have no greater or less effect than the delivery of the check with an unauthorized indorsement. If appellant has any title to the check, it derived it through the Indiana National Bank. But the unauthorized indorsement and delivery of the check had no effect on the payee's title and could not therefore convey anything, as against the payee, to that bank. We have nothing to do with the respective rights of the two banks as against each other. "The purchase of the check upon a forged or unauthorized indorsement conferred no title, and in contemplation of law the check remained untransferred": 467 Indiana Nat. Bank v. Holtsclaw, 98 Ind. 85. See, also, Graves v. American Exchange Bank, 17 N. Y. 205; Armstrong v. Pomeroy Nat. Bank, 46 Ohio St. 512, 15 Am. St. Rep. 655, 22 N. E. 866, 6 L. R. A. 625; Levy v. Bank of America, 24 La. Ann. 220, 13 Am. Rep. 124; Seventh Nat. Bank v. Cook, 73 Pa. 483, 13 Am. Rep. 751; Welsh v. German American Bank, 73 N. Y. 424, 29 Am. Rep. 175; National Park Bank v. Seaboard Bank, 114 N. Y. 28, 11 Am. St. Rep. 612, note, 20 N. E. 632; Baldwin v. Shuter, 82 Ind. 560; Citizens' State Bank v. Adams, 91 Ind. 280; Adams v. Citizens' State Bank, 70 Ind. 89; Elliott v. Armstrong, 2 Blackf. 198. It is quite true it is possible that a remote indorsee might acquire a better title to a negotiable instrument, so far as available equities and defenses between the parties are concerned, than some prior indorser through whom the indorsee's title came. But the unauthorized indorsement had no effect on the payee's title to the check. The delivery of the check with the unauthorized indorsement was in effect the delivery of the check without any indorsement, and in the latter case it is clear that the check in the hands of anyone, other than the payee would not be negotiable paper according to the custom of merchants. The agent Underhill was engaged in selling goods, and was probably authorized as such agent to collect money for goods sold. But he had no implied authority to bind his Irincipal by the separate, original and independent contract of indorsement. In Tiedeman on Commercial Paper, section 77, the author says: "And the execution and negotiation of commercial paper are considered by the commercial world so liable to the infliction of injury on the principals, if this authority is given to agents-the general custom being to reserve this power for personal exercise that the presumption of the law is more strongly opposed to an implied authority to execute and negotiate commercial paper than to do anything else': See Knowlton v. School City of Logansport, 75 Ind. 103; Robinson v. Anderson, 106 Ind. 152, 6 N. E. 12; Runyon v. Snell, 116 Ind. 164; Blackwell 468 v. Ketcham, 53 Ind. 164, 9 Am. St. Rep. 839, 18 N. E. 522; Indianapolis Mfg. etc. Union v. Cleveland etc. R. Co., 45 Ind. 281; Reitz v. Martin, 12 Ind. 306, 74 Am. Dec. 215; Miller v. Edmonston, 8 Blackf. 291; Smith v. Gibson, 6 Blackf. 369; Kirk v. Hiatt, 2 Ind. 322; Corning v. Strong, 1 Ind. 329; Graham v. United States Sav. Inst., 46 Mo. 186. It is a general rule, applicable in cases of agency, that where one of two innocent parties must suffer through the fraud of a third party, the loss should fall upon him who put it in the power of such third person to do the wrong. But this rule is not applicable in this case, for the same reason that would prevent its application if the Indiana National Bank had brought this suit, instead of appellant. When the Indiana bank had the check indorsed to it, it was bound to know whether it was properly indorsed, and it is well settled by the above authorities that it acquired no title to the check through the unauthorized indorsement. The wrong against appellant was the statement by the Indiana bank, through its indorsement to appellant, that it was the rightful holder of the check, and that the indorsement to it was a valid indorsement. The complaint shows that the check was indorsed to the Indiana bank, and then indorsed by that bank to appellant. The evidence supports the an swer. Judgment affirmed. The Bona Fide Ownership of Negotiable Paper is the subject of a note to Bedell v. Herring, 11 Am. St. Rep. 309. The effect of forged indorsements on the rights and liabilities of persons dealing with a negotiable instrument is considered in the notes to First Nat. Bank v. City Nat. Bank, 94 Am. St. Rep. 641; People's Bank v. Franklin Bank, 17 Am. St. Rep. 889; and in the recent cases of Murphy v. Metropolitan Nat. Bank, 191 Mass. 354, 114 Am. St. Rep. 595; Wellington Nat. Bank v. Robbins, 71 Kan. 748, 114 Am. 523. St. Rep. COLUMBIAN ENAMELING AND STAMPING COMPANY v. BURKE. [37 Ind. App. 518, 77 N. E. 409.] MASTER AND SERVANT-Tools and Appliances-Duty of Master. It is the duty of the master to exercise ordinary care and diligence in providing safe and suitable tools and appliances to servants engaged in his service, and to keep them in a safe condition. The servant has a right to rely upon the master's observance of these requirements and the performance of this duty, and his failure to do so makes him liable to his servant. (p. 339.) MASTER AND SERVANT-Defective Machinery.-Notice on the part of the master of defects in machinery or appliances, and want of notice on the part of the servant, may be alleged in general terms, and such allegations will include both actual and constructive knowledge. (pp. 339, 340.) MASTER AND SERVANT-Latent Defects in Appliances.Reasonable care on the part of the master demands inspection and search for latent defects in his tools and appliances, while reasonable care on the part of the servant requires only attention and observation of open or obvious defects and perils. (p. 340.) MASTER AND SERVANT-Assumption of Risk-Pleadings.Special allegations by a servant of injuries caused by the master's negligence will not control general allegations of nonassumption of risk unless it can be held as matter of law that the servant assumed the risk. (p. 340.) MASTER AND SERVANT-Tools and Appliances-Assumption of Risks. A servant has the right to rely upon the safety of such implements as are provided by the master for his use in the master's service, unless the defectiveness is open to the observation of an ordinarily prudent man. (p. 340.) NEGLIGENCE-Conflict of Evidence-Question for Jury.-If a servant sues his master for damages for personal injury alleged to have been caused by the master's negligence, and the facts are controverted and the evidence conflicting, both the question of negligence and of contributory negligence must be submitted to the jury for determination. (p. 342.) S. M. McGregor and Lamb, Beasley & Sawyer, for the appellant. A. W. Knight, J. O. Piety and G. A. Knight, for the appellee. 519 WILEY, J. Appellee, who was plaintiff below, recovered a judgment against appellant for personal injuries received while in its employ, alleged to have resulted from its negligence. The complaint was in a single paragraph, to which a demurrer was addressed and overruled. Answer in denial. Trial by jury, resulting in a general verdict for appellee. Appellant's motion for a new trial was overruled. Am. St. Rep., Vol. 117-22 |