I cannot concur with any conclusion reached in the principal opinion. The statement of facts therein is correct so far as it states the facts, but certain conclusions from them are not warranted, I think, by any facts stated.
I. The opinion is based upon an unusual position. The plaintiff's case almost entirely was made out by oral testimony to which defendant in answer interposed a general denial. Yet, the opinion by directing a verdict refuses to allow the trial court to pass upon the credibility of that testimony. True, some of those facts are admitted in the briefs of respondent, but many facts necessary to make out a case are not admitted. Besides, inferences drawn by the opinion from the evidence are absolutely necessary to prove the plaintiff's case.
[1] In considering a demurrer to the evidence every inference from the evidence favorable to the plaintiff may be indulged. The reverse is true in a directed verdict for plaintiff. Every inference that may be drawn from the evidence against the plaintiff must be indulged and notwithstanding the plaintiff's case must be conclusively proven. Every inference and every presumption is indulged in support of the judgment of the trial court. In the majority opinion every inference and every presumption is indulged against the judgment of the trial court. The opinion assumes that all evidence favorable to plaintiff is true, and all evidence tending to show a defense is presumed to be false.
[2] II. Consider the issues. The plaintiff in its petition bases its case, as stated in its reply brief, solely on the allegation that the defendant did not pay the money called for by the checks "to any *Page 124 person or persons having a right or authority to receive the same." It is not alleged that the defendant was negligent in any manner in failing to discover the alleged forgery. Plaintiff in a belated reply, apparently after the evidence was in, attempted to bring that issue into the case by reply, which it could not do. It could not recover on a cause of action stated in a reply as we have repeatedly held. The appellant, aware of failing to plead it, in its reply brief says: "The case is not based upon defendant's negligence." For that matter there was no evidence of any such negligence. Yet the opinion assumes that a "conclusion" of such negligence is warranted. In seeking to show that Tschupp impersonated five different persons at the same bank every week for nearly two months, thus giving defendant an opportunity to identify him, the opinion, conceding there was no direct evidence of such impersonation, calls attention to an admission in defendant's brief that the defendant cashed certain checks at the defendant bank. That statement in the brief refers to the pages of the record where Tschupp says that he cashed orcaused to be cashed the checks under consideration and did notsay where they were cashed. Nor did he at any time in his deposition say that he cashed any one of them at the defendant bank. The statement in the brief that he cashed some of them at the defendant bank is clearly an inadvertence in reading his testimony for the pages where that testimony occurs are cited. Yet the opinion takes that statement in the brief, calls attention to the fact that this was a large bank with several different departments and reaches this conclusion:
"But in view of the admission in defendant's brief and such evidence as does appear in the record we think the foregoing conclusion is warranted."
Thus it is declared that an indefinite admission in a brief, combined with circumstantial evidence, entirely oral, warrants a "conclusion" of fact which authorizes a directed verdict.
[3] The plaintiff in order to prove its case introduced evidence to show the function of Mr. Simms, said to be secretary and treasurer of plaintiff. Every fact in relation to his official status, his authority and his intention, had to be proved by oral testimony. Every such fact was denied in the answer and the denial supported by strenuous arguments throughout defendant's briefs. Yet the opinion by directing a verdict assumes it was all true and all conclusions from it must be resolved in favor of plaintiff.
The preposterous statement of Simms that he intended the payee in each check to receive the money called for, is presumedto be true and the trial court is not allowed to pass upon it, although the first checks signed by Simms were payable to Dabney, and Simms knew Dabney was not entitled to the money.
[4] III. The opinion holds that a demurrer to the evidence was *Page 125 sustained and in that particular the trial court erred and we have that alleged error for consideration. The record recites that such a demurrer was filed and the opinion copies the motion, which is called a demurrer, but the record proper and the judgment entered showed that no such demurrer was sustained, nor considered by the court at all, because the judgment recites:
"Now on this day this cause having been heretofore submitted to the court upon the pleadings, evidence and proof adduced, and by the court taken under advisement, and the court being now fully advised in the premises finds the issues in favor of the defendant."
None of the arguments in the briefs filed in the Court of Appeals or in this court considered any such alleged ruling as the sustaining of a demurrer to the evidence. The plaintiff in its motion for new trial and its motion in arrest failed to assign error to such ruling or to mention it. The opinion, however, calls attention to the admission by defendant in its brief that such a demurrer was sustained and concludes that defendant is thereby estopped to deny that such ruling waspreserved as an error in the motion for new trial, although the plaintiff does not claim any such error was preserved in any part of its briefs. Where a peremptory instruction or declaration of law is given, the effect is to withdraw all other instructions or declarations. [Crossett v. Ferrill, 209 Mo. 704, 108 S.W. 52.] Yet the plaintiff in its motion for new trial assigns error to the refusal of every one of its instructions, some of them based on the findings of fact of the court sitting as a jury. It shows that the plaintiff did not consider that the sustaining of a demurrer was an issue in the case. On the contrary it assigned error to the alleged erroneous finding of facts of the court sitting as a jury. This point, however, is unimportant in considering the opinion for it directs a verdict for plaintiff.
[5] It should be remembered that this is a demurrer, if there was one, to the evidence filed before the court sitting as ajury. A different situation occurs from that where such a demurrer is filed in a jury case. A demurrer to the evidence in a jury trial brings up only the question whether a submissible case is made out, with all the evidence favorable to plaintiff admitted to be true and all favorable inferences therefrom in favor of the plaintiff.
Such a demurrer is often not so treated when filed before the court sitting as a jury. It was not so treated in this case. It has been ruled that in a case tried before the judge sitting as a jury where such a demurrer or motion for nonsuit is filed, the court must decide it according to the preponderance of the evidence. [38 Cyc. p. 1560; Hayward v. Jackman, 96 Iowa 77; Griffith v. Arnold, 216 N.W. 728.]
This court has held that although such a demurrer before the court sitting as a jury is sustained, if the parties treat the case as submitted for a finding of facts on the evidence, this court will so treat it. [Anthony v. Building Co., 188 Mo. l.c. 718, 719, 87 S.W. 921.] *Page 126
It is evident from the complete argument in the briefs filed in this court, from the declarations asked by plaintiff and from plaintiff's assignments of error in its motion for new trial, that both parties understood that the alleged demurrer to the evidence, if noticed at all, meant only that plaintiff did not satisfactorily prove its case.
It seems to be assumed by the leading opinion, that because defendant argues the points made by plaintiff on the latter's theory of the facts, the defendant thereby admits plaintiff's interpretation of the evidence. Yet defendants all the time repudiated such interpretations.
[6] IV. Now consider the defenses. One defense was the negligence of plaintiff. The answer alleged that the first day of each month the defendant furnished plaintiff monthly statement of account accompanied by canceled checks and voucher, and that that statement bore in bold type:
"Please examine this statement at once and report any error. If no error is reported in ten days the account will be considered correct. The items are credited subject to final payment."
The plaintiff joined issue on that allegation in its reply, denied that it failed to exercise reasonable care in examination of the checks and statements, and alleged affirmatively that itdid examine monthly the checks and statements, "to determine if there were any errors or forgeries in respect to said account, and in doing so exercised reasonable care and diligence." Having thus joined issue on that alleged negligence the plaintiff is hardly in position to claim it is not in the case. Yet the evidence of defendant's negligence is ignored by the opinion or assumed to be false, although proven by plaintiff's witnesses.
The point is made that the maker of a check is not obliged to know the signature of the payee. That is a correct statement of the law. But the argument jumps from that and reaches the conclusion that an employer is under no obligation to know its own employees; and under no obligation to know the handwriting of its much trusted payroll clerk who made out the list of employees with all the names in his handwriting. That is particularly pertinent here.
Several of the twenty-two cashed first at other banks came to defendant bank before any other checks involved were cashed by the defendant bank, the first one thirty-five days before. Eleven of those twenty-two checks were made payable to D.W. Dabney, beginning with the first one September 15, 1922, and the last one December 1, 1922. Six of them were cashed at different dates from September 15th, to October 13, 1922. The first check other than those coming from other banks was cashed October 20, 1922, thirty-five days after the cashing of six of those Dabney checks. On the first day of October when the plaintiff's pass book was returned to it, it contained *Page 127 three checks payable to Dabney: September 15, September 22, and September 29, and no other of the checks involved. At that time none of the other bogus checks had been issued. Those three checks coming through other banks in the usual course of business were returned to the plaintiff with the statement pleaded, that plaintiff examine and see if everything was correct. Plaintiff, not only as a general rule but under the particular circumstances of those checks, was negligent. Simms who, plaintiff says, was the authorized officer to execute checks, knew Dabney, said he was employed at the time. (Tschupp swore that Dabney was not then employed.) Yet Dabney "was paid in a different way than by payroll checks." He, when employed, "was engaged in out-of-town work." He was paid by checks prepared upon order of the manager of the fixture department, and which came to Simms from the cashier's office. Dabney's name had no business on the payroll list. All this Simms testified to. When asked if in signing the checks any question arose in his mind as to why payroll checks should be made to Dabney, knowing that he was paid in a different way, his answer was: "No, I signed them by the hundred."
This means that he signed them mechanically without reading the names of the payees. If he had read Dabney's name in the checkshe would not have signed them. If he had looked over the canceledchecks returned October first he would have discovered thefraud.
He makes the bold assertion that he was under no obligation to notice the name of any payee in checks he signed nor on the canceled checks returned with request by the bank that he examine them. The checks were made out by Mrs. Hubbard from the payroll list on the payroll book which was in Tschupp's handwriting; the name of the payee in every check was in Tschupp's handwriting on the payroll list. Mrs. Hubbard knew his handwriting. Mr. Griefe testified that on the return of the checks he didn't reconcile them; he turned them over to two girl assistants working there, for reconciliation. One of his assistants was Mrs. Hubbard, the other was Miss Atkinson. Mrs. Hubbard was a witness; Miss Atkinson was no longer employed and was not a witness. Thus the reply alleges that the returned checks were examined for forgeries. Mr. Griefe's testimony is that Mrs. Hubbard was to perform that duty. Mrs. Hubbard in her testimony fails to state that in examining the checks she looked at the endorsements. She knew Tschupp's handwriting. If she had looked at the endorsements she would have found them in Tschupp's handwriting. The slightest diligence in making that examination would have discovered the fraud or forgeries if in fact Tschupp did forge the names of the payees.
Mr. Griefe testified that he finally discovered the fraud when he learned from the head of the department in which the man Peden had worked that Peden was no longer employed. Tschupp testified *Page 128 that when he received the signed checks in the first instance from Mr. Simms he delivered them, save the ones which were fraudulently issued, to the heads of the several departments. According to Mr. Griefe's testimony, an inquiry of the head of each department would have revealed the actual list of employees entitled to checks, yet no precaution as simple as that was taken.
[7] It is the duty of a bank to pay out money on a depositor's check only to the holder thereof under a genuine endorsement; yet if the bank is deceived, misled or induced to make such payment by the negligent acts of the depositor it is a good defense to an action by the depositor against the bank for the money so paid out. [Erickson Co. v. Iowa National Bank, 211 Iowa 495; Kaszab v. Greenebaum Sons Bank, 252 Ill. App. 107; Detroit Piston Ring Company v. Bank et al., 75 A.L.R. (Mich.) 1273.]
Each of those cases was a payroll case when a trusted agent caused checks to be issued payable to persons not entitled to the money, forged the endorsements of such persons and got the money. In each case the defense was negligence of the depositor in permitting checks to be put in circulation and failure to examine the canceled checks when returned with a statement similar to the one pleaded here, requesting the depositor to make such examination. In each case the negligence of the depositor was a question for the jury.
In the Illinois case the unrestrained opportunity of the bookkeeper to commit the forgeries and the failure to examine the monthly statements rendered depositor with all vouchers are mentioned as acts of negligence which barred recovery, citing numerous cases, including Morgan v. U.S. Mortgage Co., 208 N.Y. 218, and Empire Trust Co. v. Cahan, 274 U.S. 473.
In the Michigan case, 75 American Law Reports, 1280, the court mentioned the rule that a bank is not warranted in paying out money of its depositors except in strict accordance with his orders, and adds:
"The bank may justify such payment, however, by showing that the depositor was negligent in carrying out some duty which it owed the bank, in such a way as to be the cause of the improper payment." citing numerous cases, and:
"All the courts in this country are agreed that the depositor should carefully examine the bank statement, the check stubs and returned checks."
In Land Title Trust Company v. Northwest National Bank,196 Pa. 230, the court (l.c. 234) commented upon the principle, as follows:
"The reason of the rule that when a bank pays a depositor's check on a forged indorsement, or a raised check, it is held to have paid it out of its own funds and cannot charge the payment to the depositor's account, is that there is an implied agreement by the bank with its depositor that it will not disburse the money standing to his credit *Page 129 except on his order. The rule applies where a check has just been lost or stolen and the payee's name has afterwards been forged; but it does not protect a depositor who is in fault, as in entrusting a check to one who he has reason to suppose will make a fraudulent use of it, or in so carelessly filling up a check that it may readily be altered, or in issuing a check to a fictitious person. It is confined to cases in which the depositor has done nothing to increase the risk of the bank. It should not apply when the check is issued to one whom the drawer intends to designate as the payee; first, because in such a case the risk is not the ordinary risk assumed by the bank in its implied contract with the depositor, but a largely increased risk as it follows that a check thus fraudulently obtained will be fraudulently used; the bank is deprived of the protection afforded by the fact that a bona fide holder of a check will exercise care to preserve it from loss or theft, which are the ordinary risks; there is thrown upon the bank the risk of antecedent fraud practiced upon the drawer of the check, of which it has neither knowledge nor means of knowledge;"
Section 2653, Revised Statutes 1929, provides:
"Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration and every person whose signature appears thereon to have become a party thereto for value."
Section 2688, Revised Statutes 1929, provides:
"The maker of a negotiable instrument, by making it, engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to endorse."
The plaintiff executed and put in circulation each of those checks. In doing so it indicated that the payee had the then capacity to endorse it and under Section 2653 each of those checks was deemed prima facie to be issued for a valuable consideration and every person whose signature appeared thereon to have become a party thereto for value.
The plaintiff in this case by the negligence alleged by defendant, denied by the plaintiff, and conclusively proved, permitted the fraud to be accomplished under its eyes, and justified the trial court in finding as a fact that such negligence was the proximate cause of the loss and in rendering judgment for defendant, regardless of a ruling on any other defense.
Tschupp was the only witness who knew exactly what he did in cashing the checks. He swore that he put them in circulation. If so, he could not have cashed them at defendant bank because that was to retire them from circulation. He swore that hecaused some of them to be cashed. Then he must have had a confederate. Nowhere does he say where any one of them was cashed. Those that bore the stamp of no other bank may have been cashed at another bank or cashed at a store. There is no evidence to the contrary. He *Page 130 said he wrote the names of the payees on the backs of the checks, in answer to direct questions asked by plaintiff's counsel. The trial court was not obliged to believe that statement for the plaintiff was making out its case. Indulging every presumption and every reasonable inference from the evidence in favor of the judgment it may be inferred that none of the checks were cashed in the first instance at the defendant bank; that Tschupp had authority, and sole authority, to determine who was entitled to be on the payroll, and therefore entitled to determine who should receive the checks. From the careful way in which the plaintiff's counsel avoided eliciting from Tschupp the manner in which he had accomplished the fraud, showed that it was afraid of the actual facts. From that evasion and the conduct of Simms the trial court might have believed that Tschupp's confederate was in some instances, if not all, the very payee named in the check, who, the petition falsely states, was entitled to the money.
Simms swore that it was his intention, and therefore the intention of plaintiff, that the payee named in each check should have the money called for. If he entertained the intention to which he swore, his duty was to exercise discretion in signing the checks. How can it be said that he exercised discretion when his brain did not function at all? His hands obeyed the will of Tschupp who furnished the list. It was as if Tschupp or Mrs. Hubbard had attached his rubber stamp. Names of payees meant nothing to him. His testimony shows that he did not attempt or care to know whose name appeared as payee; that it was not hisduty to know or care. He surrendered his intention to the intention of Tschupp. Whatever Tschupp intended was O.K. with him, for he intended nothing. His testimony that he intended the payees named to receive the money was obviously framed to meet plaintiff's theories of the case.
[8] The rule is that where one signs a paper without reading it, he is presumed to know its contents and is bound by its terms. [Anderson v. Drug Co., 149 Mo. App. l.c. 574, and cases cited: Crim v. Crim, 162 Mo. l.c. 552, 63 S.W. 489; Allgood v. Tarkio Elec. Water Co., 222 Mo. App. l.c. 969; Dyrssen v. Electric L. P. Co., 317 Mo. 225, 295 S.W. 116.]
Apply that principle here. Simms having signed the checks without reading them is presumed to know their contents and the purpose of issuing them. He is presumed, for instance, to know that Dabney was one payee, and he did know that Dabney was not entitled to the money. In all of them he submitted his action to the will of Tschupp. Tschupp's intention was his intention, for his discretion did not function. The act of issuing the bogus checks was the act of plaintiff. The intention to have the checks payable to fictitious persons was the intention of plaintiff from the presumed knowledge of Simms. Tschupp was the agent of plaintiff authorized to ascertain the persons *Page 131 to whom money was due for Simms exercised no discretion in the matter.
And yet in spite of all the evidence of these circumstances the opinion holds that the plaintiff conclusively proved its case authorizing a directed verdict, and that there was no evidence to be even considered by the trial court in defense nor in support of the negligence alleged in defense.
I think the opinion is not supported by the authorities, therefore I dissent. Henwood, J., concurs.