(dissenting).
Appellant, a Colorado corporation having its office at Denver, accepted eighteen applications (sent to it by Dan Dewberry) for loans on real estate at Texarkana, Arkansas. It sent by mail its bank check on appellee, located at Oklahoma City, Oklahoma, for the full amount of each loan to Dan Dewberry at Texarkana. He maintained an office there and was in the real estate and insurance business. The several dates of the checks and their remittance began August 11, 1926, and ended March 25, 1927. Each check named the borrower and “Dan Dewberry, Agent,” as payees and was made payable to their order. Dewberry endorsed the name of the borrower on the back of each check, signed his name as agent thereunder and obtained credit for the full amount of each cheek with the Texarkana National Bank in an account carried in the name of “Dan Dewberry, Agent” in that bank. The Tex-arkana National Bank sent the cheeks through the usual channels to the appellee bank. It paid them on demand and charged them to the account of appellant, the drawer. Some of the borrowers received from Dewberry part of the amounts to be loaned to them, either directly or by payment and discharge of prior liens on their property. Dewberry had acted for appellant in this way in closing loans it made at Texarkana since early in 1923, but it denies that he was ever its agent. Soon after receiving the eheek of March 25, 1927, and taking credit for it in his agency account as stated, Dewberry absconded and no property belonging to him or held by him for others could'be found.
Relying on the general rule that a hank pays its depositor’s forged cheek or checks with forged endorsements thereon at its peril, appellant now seeks recovery of the amounts of these checks, after giving credit for the disbursements above referred to. Of course I accept that rule of law, but in my judgment it has no application to the facts of this case.
In response appellee contends that Dewberry was appellant’s agent to close the loans represented by the eighteen checks, and that he was to disburse the money in each case in discharge of prior liens, in payment of taxes, in procurement of insurance, and to give the borrower only the -remainder, if any; that these duties imposed on Dewberry as appellant’s agent could not be discharged unless he had control of the funds, and that when the chocks and their proceeds came into Dewberry’s possession they were under Dewberry’s control as appellant intended they should be as its agent; that Dewberry could not have discharged his duties to appellant as its agent in closing the loans without custody of the checks and their proceeds; that Dewberry in endorsing the names of the borrowers committed no actionable wrong *696against appellant to its damage, and that the sole cause of the losses here sued for was embezzlement by Dewberry of his employer’s money, for which appellee is not liable. This contention was sustained by the Supreme Court of Arkansas in litigation involving some of these loans to which appellant was a party. Midland Sav. & L. Co. v. Home Bldg. & Sav. Ass’n et al., 177 Ark. 236, 6 S.W.(2d) 5; Lavender v. Buhrman-Pharr Hdwe. Co. et al., 177 Ark. 656, 7 S.W.(2d) 755. In those cases it was held on facts like those here, which will be presently recited, that Dewberry was appellant’s agent and that it must suffer the loss for his acts in embezzling the proceeds of the cheeks. In another case [Merchants’ Nat. Bank v. Home Bldg. & Sav. Ass’n, 180 Ark. 464, 22 S.W.(2d) 15] where the material facts were like those' here that court held that the bank on which the cheek was drawn was not liable to the drawer, although Dewberry had endorsed the name of the borrower as here. See, also, to the point Federal Land Bank of Omaha v. Omaha National Bank, 118 Neb. 489, 225 N. W. 471. It was held in the ease last cited that the depository is not liable to the drawer of the check where one of the payees forgéd the name of his copayee as an endorser and received the fund, if the drawer intended that he should receive it. That appellant intended that "the funds represented by these cheeks should come into the custody and control of Dewberry seems to me to be clear from the facts; and the purpose of that intention seems equally clear — that Dewberry as appellant’s agent should so safeguard, distribute, and pay out the fund for each loan as to assure appellant a first lien. The ad-' ditional and uneontradicted facts in support of the foregoing statements and conclusions are these. Appellant sent the cheeks to Dewberry, not to the borrowers. With each check it sent to Dewberry a printed letter of instructions, dated and addressed to him. After referring to the loan by a number given to it and the borrower by name, the instructions said:
“In closing this loan you act as our agent. * * *
“Have all papers signed and acknowledged by borrowers with their names and initials as above and as they appear in bodies of the instruments; and have at least two witnesses to signatures on both Mortgage Bond and Mortgage.
“When, papers are properly signed, acknowledged and witnessed, mail to us the Mortgage Bond, Certificate of stock and Insurance Policies, fire and tornado for three or five years, with our mortgage clauses attached, for at least the amount of the loan. • * *
“You Will Not Endorse Draft and Pay Out Any Money Until Abstract Is Continued, and in Your Possession, Showing Our Mortgage a First Lien and All Taxes-Paid and Insurance Written.
“You get abstract from abstractor yourself and mail it to us. If the abstract, when-continued, should show any unreleased mortgages, mechanics’ liens, judgments or suits-pending affecting the property, or any other entries of any kind, you must see that they are all cleared up, in addition to liens and-transfers mentioned in Special Instructions-(if any) and you must know of your own-knowledge, after personally examining abstract, that our mortgage is a first lien before turning over any of the money. If necessary, write us for instructions, sending abstract back for inspection. Do Not Take-Any Chances in turning over money if there is any doubt in your mind as to title and our mortgage being a first lien.
“Do not send in insurance policies to any mutual companies or in any new or local companies. If borrowers have old insurance that runs a less time, get those policies can-celled and Send In New policies. In all residence loans insurance must run for three or five years.
“You must see that all insurance premiums are paid out of draft. * * '
“Waiver must be signed and acknowledged according to printed instructions thereon, whether there .are any bills paid out of the loan or not. It must be signed by all labor and material men. After each signature (for) material, designate what they furnish.
“Contractor should sign the waiver for balance due him, but his signature is not sufficient to cover labor and material bills.
“When you are sure that our mortgage is a first lien and all bills paid, if any, Insurance Written, Taxes, Insurance Premiums and Loan Expenses Paid, then pay out the funds as instructed herein and return abstract and all other papers that have not already been sent in. * * * ”
I think the conclusion of the trial judge that Dewberry received the money on these cheeks as appellant’s agent, as it intended he should, was established by the uncontra-dieted evidence. What else could appellant *697have ricant in this letter of instructions when it .said: “In closing this loan you act as our agent. You will not endorse draft and pay out any money until etc. * * * and you must know of your knowledge, after personally examining abstract, that our mortgage is a first lien before turning over any of the money. Do not take any chances in turning over money if there is any doubt in your mind as to title and our mortgage being a 'first lien. You must see that all insurance premiums are paid out of draft.” Moreover, a fidelity insurance policy in the sum of $4,000 had been issued for the protection of appellant against Dewberry’s dishonesty as appellant’s employee, .and in its claim for the $4,000, which was paid by the surety company, appellant stated that the losses to appellant were because of the failure of Dewberry to clear titles to property on which appellant made loans and for which it had sent eheeks for the full amount of each loan to him — an admission that it was Dewberry’s duty as appellant’s employee to disburse the amount of each loan for the protection of appellant.
The learned District Judge was of the opinion, and so stated to the jury at the close of the evidence, that by the course of conduct of appellant and its instructions to Dewberry the money represented by the checks was intended to and did reach Dewberry, who was plaintiff’s agent; that appellant intended that it should reach him and be disbursed by him, and that his defalcation as agent was the proximate cause of the loss, and that no loss resulted to appellant as the result of the payment of the cheeks by appellee because the borrower’s name had been, endorsed thereon; a,nd by reason of said conclusion, with which I agree, the court, in my judgment, did not err in directing a verdict in favor of appellee. I therefore think the judgment should be affirmed.
On Petition for Rehearing.
PER CURIAM.The appellee requests that the opinion he clarified with respeet to election of remedies, and that this court affirm the judgment as to those checks where the evidence disclosed a.n election under the principles of law announced in the opinion. It is argued that the evidence offered is in writing, and that there is no occasion for the needless expense of a new trial. But we are without power, in an action at law, to direct a judgment. Slocum v. New York Life Ins. Co., 228 U. S. 364, 33 S. Ct. 523, 57 L. Ed. 879. The judg mont entered in this case is a single judgment, and our power to sort out the checks where there was evidence of an election of remedies on the record of the last trial, and affirm the judgment as to those checks, is at least doubtful. While the order is for a new trial, it does not follow that the expense of a new trial need be incurred. Where the evidence is in writing or undisputed, and where counsel involved are lawyers of standing, it is seldom that the litigants are put to the expense of another trial.
Counsel assert their doubt as to the principles of election of remedies set out in the opinion. The last sentence of the opinion, concerning credits, may be responsible for counsel’s doubt, although elsewhere in the petition for rehearing, counsel demonstrate their clear understanding of the rule announced. The opinion stated: “If the relief asked for or accepted was grounded upon the f.oet of his forgery, then under the rule laid down, supra, it elected to treat the entire proceeds of such checks as lawfully coming into his possession, and thereby ratified the act of the bank in paying out its money.”
It is questionable whether an attempt at amplification will clarify or confuse. The underlying principle is this: There was no election where the appellant pursued a borrower, even to judgment, on the assumption that the indorsement was genuine. On the assumption that the indorsement was forged, the appellant had one of two remedies, but not both. It could elect to treat the payment by appellee as unauthorized; that is, that its money wa,s still in the bank. Or it could elect to treat the payment by appellee as authorized, notwithstanding the forged indorsement, and proceed on the assumption that its money was no longer in the bank, but had passed to Dewberry or to a borrower. If it does ihe latter, it has no- claim against the bank as to that check. If appellant either asked for, or accepted, relief against Dewberry, a borrower, a bondsman, or any one else, grounded upon the fact that the proceeds of the chock, notwithstanding the forgery, had passed out of the hank, it cannot thereafter look to the bank for payment of that check or any part thereof. Each check is an entirety; it was either rightfully or wrongfully paid. A cheek cannot he split. Jones v. First Nat. Bank, 3 Neb. Unof. 73, 90 N. W. 912; Shonkweiler v. Harrington, 102 Neb. 710, 169 N. W. 258; Crook v. First Nat. Bank, 83 Wis. 31, 52 N. W. 1131, 35 Am. St. Rep. 17; Sunderlin v. Warner, 42 Idaho, 479, 246 P. 1. The statement as *698to credits, in the original opinion, must be construed in the light of this principle; and if the facts develop that all the credits are for parts of entire checks as to which there is no liability, then there will be no credits to be made.
The petition for rehearing urges a new theory to sustain the judgment, bottomed upon the accepted proposition that an indorser warrants the title of a negotiable instrument. It is urged that, when Dewberry indorsed his own name to the cheeks, he warranted that his copayee’s indorsement was genuine; that the appellant was liable on Dewberry’s warranty under the doctrine of agency. Dewbeny did not indorse appellant’s name on the check as its agent; he indorsed his own name as payee. This argument, if sound, would deny to a principal the protection afforded by making a cheek jointly payable to his agent and another, an established practice in business, and would seriously curtail the broad language of the negotiable instruments statute, which provides that where there are joint payees, all must indorse.
The petition for rehearing is denied.