Summary
In West St. Louis Trust Co. v. American Surety Co., 222 Mo.App. 393, 5 S.W.2d 669, a customer gave the bank his $2,800 note in return for a loan.
Summary of this case from State Bk. of Poplar Bluff v. Maryland Cas. Co.Opinion
Opinion filed May 1, 1928.
1. — Insurance — Indemnity Insurance — Forgeries — Forged Collateral Deposited as Security for Loan — Common Law — Application. Where a borrower executed and delivered to a bank his negotiable promissory note and received therefor a loan which he deposited with the bank, and at the same time he delivered to the bank as collateral security for said loan two promissory notes and also a deed of trust securing said notes, the notes being payable at another bank, and the signatures to the said notes and deed of trust were forged, the note executed by the borrower was not a forgery at common law, and, therefore, not within the coverage of the bank's indemnity insurance policy against forgery as it was in all respects what it purported to be, and there was no deceit or falsity in it either as to its operation or effect, or as to the signature of the maker.
2. — Same — Same — Same — Same — Loan on Credit of Forged Collateral — Not Payment of Forged Notes Within Meaning of Policy. Under an insurance policy indemnifying a bank against direct loss which may be sustained through the payment by the insured bank of any promissory note, or domestic trade acceptance, or bank acceptance, payable at the insured bank and upon which there shall have been forged as the drawer, maker or acceptor thereof the signature of a depositor or that of any person whose signature such depositor has instructed the bank to recognize, a loan made by the bank to a borrower for which he executed and delivered his promissory note, and at the same time delivered to the bank as collateral security forged notes and deed of trust which were, not payable at the insured bank, the loan being made upon the security of said forged notes, was not within the coverage of the indemnity policy, and, therefore, the bank could not recover under the policy for the loss of the loan caused by the forged collateral.
3. — Banks and Banking — Bills and Notes — Note Payable at Bank — Equivalent to Order on Bank. Where a promissory note is made payable at a bank, it is equivalent to an order to the bank to pay the same for the account of the maker.
4. — Same — Same — Note of Depositor Payable at Bank — Equivalent to Check. The note of a depositor of a bank made payable at the bank is the equivalent of a check drawn by him on the bank.
5. — Insurance — Policy — Construction — Construed Strictly Against Insurer. Insurance contracts must be construed liberally in favor of the insured and strictly against the insurer.
6. — Same — Same — Same — Unequivocal Language Given Plain Meaning. Unequivocal language is to be given its plain meaning, though found in an insurance contract.
Appeal from the Circuit Court of the City of St. Louis, — Hon. Harry A. Hamilton, Judge.
AFFIRMED.
Greensfelder, Rosenberger Grand for appellant.
(1) It is an elementary principle of law that where separate writings are executed between the same parties and at the same time and in the course and as part of the same transaction and intended to accomplish the same general object, they will be construed as one and the same instrument. McDonald v. Wolff, 40 Mo. App. 302; Houck v. Frisbee, 66 Mo. App. 16. (2) Forgery may be the false making of an instrument calculated to induce another to give credit to it as genuine and authentic when it is false and deceptive. And this is true even although executed in one's own name. International Union Bank v. National Surety Co., 209 N.Y.S. 583; Same case, 245 N.Y. 368, 157 N.E. 269; Ex parte Hibbs, 26 F. 421.
Bryan, Williams Cave for respondent.
(1) By the terms of the policy the defendant agreed to indemnify the plaintiff for any loss it should sustain through payment of any promissory note payable at the insured bank and upon which there shall have been forged, as a drawer or maker or acceptor, the signature of a depositor, or that of any person whose signature such depositor has instructed the insured bank to recognize. The loss pleaded is a loss from a loan and not a loss from a payment of money. The agreement was to indemnify for loss occurring through the payment of a note containing a forged signature. The petition charges that the loan was made on a note containing the genuine signature of the drawer. It is very obvious that a cause of action is not stated in the petition. (2) The note signed by Wootan and upon which plaintiff loaned the money is not a forgery. (3) (a) The promissory notes containing forged signatures which were pledged as collateral security were not paid by plaintiff. (b) An exhibit filed with a petition is no part of the petition. Hubbard v. Slavens, 218 Mo. 598; Pacific, etc., Co. v. Bridge Iron Co., 286 Mo. 112; Lime Cement Co. v. Wind, 86 Mo. App. 163, 169; Val Reis Piano Co. v. Gordon, 207 S.W. 233, 234. (4) It is not necessary to limit the term "promissory note" contained in the indemnity agreement to such notes as purport to have been executed by the bank. A party who makes his note payable at a bank authorizes the bank to pay it to the payee. It is equivalent to a check drawn by him on the bank. Morris on Banks and Banking (4 Ed.), 557; Brown v. First Nat. Bank, 216 Mass. 298; Bank v. Smith, 215 N.Y. 76; Sec. 873, R.S. 1919.
This is an action on an insurance policy. On demurrer to the petition the court gave judgment for the defendant, and plaintiff appeals.
The liability of defendant or not depends upon the proper construction of the following provision of the policy, set out in the petition, to-wit:
"In consideration of a premium to be paid annually in accordance with the application for this policy, which application is made a part hereof, the American Surety Company of New York (hereinafter called the Company) Does Hereby Agree to Indemnify West Saint Louis Trust Company (hereinafter called the Insured Bank) against direct loss, not exceeding the sum of Five Thousand Dollars, which may be sustained through the payment by the Insured Bank, after the date hereof, of any check, certified check or draft drawn upon the Insured Bank, or of any promissory note or domestic trade acceptance or bank acceptance payable at the Insured Bank, and upon which there shall have been forged as the drawer, maker or acceptor thereof, the signature of a depositor or that of any person whose signature such depositor has insured Bank to recognize."
According to the facts as alleged in the petition, Jerome L. Wootan, while the policy was in force, executed and delivered to plaintiff his negotiable promissory note for $2800, and received therefor a loan of $2800, which he deposited with plaintiff. At the same time he delivered to plaintiff as collateral security for said loan two promissory notes, one for $4000, and another for $8000, made payable to said Wootan, and also a deed of trust securing said notes. The notes were made payable at the Mayfield Kentucky National Bank. The signatures to said notes and deed of trust were forged. Relying upon the representations made by said Wootan that said notes and deed of trust were genuine, plaintiff loaned said Wootan said sum of $2800, and as a result lost said sum.
Plaintiff contends that the note executed by Wootan for $2800 was a forgery at common law, and therefore within the coverage of the policy. It is manifest, however, that this contention is untenable. The note was not a forgery in any sense. It was in all respects what it purported to be, and there was not deceit or falsity in it, either as to its operation or effect, or as to the signature of the maker.
Plaintiff next contends that the forged notes, which were delivered to the plaintiff as collateral security, were within the coverage of the policy, and that the loan of $2800 made by plaintiff to Wootan upon the credit of said notes was a payment of said notes within the meaning of the policy. This contention is likewise untenable, for the very obvious reason that the notes were not payable at the insured bank, nor was there forged upon the notes, as maker, the signature of a depositor or that of any person whose signature such depositor had instructed the insured bank to recognize. The plaintiff insists that the phrase, "payable at the insured bank," as used in the policy, does not qualify "promissory note," but qualifies only "bank acceptance." To maintain this insistence plaintiff argues thus:
"The only conceivable instance in which a bank would make payment of a promissory note presented to it would be where its patron desired to borrow money from it. This might be done in only two ways: The one where the patron himself signs the note payable to the bank and receives money for it, the other where he presents the note of any other person payable to himself and discounts it. It is a matter of common knowledge that the latter type of note is usually payable elsewhere. Yet these two situations are the only ones that could have been within the contemplation of the parties to this policy."
The argument is clearly unsound. It has long been the well-settled rule, which is now embodied in the Negotiable Instruments Law, that where a promissory note is made payable at a bank, it is equivalent to an order to the bank to pay the same for the account of the maker. The note of a depositor of a bank, made payable at the bank, is the equivalent of a check drawn by him on the bank. It is obvious that it is this sort of note that is covered by the policy in this case. To hold the defendant liable under the terms of this policy, we would have to give the policy a strained and unnatural construction, out of accord with its plain and simple language. We are mindful of the well-settled rule that insurance contracts must be construed liberally in favor of the insured and strictly against the insurer, but we cannot overlook another rule, equally well settled, that unequivocal language is to be given its plain meaning, though found in an insurance contract.
The judgment is for the right party, and should be affirmed. The Commissioner so recommends.
The foregoing opinion of SUTTON, C., is adopted as the opinion of the court. The judgment of the circuit court is accordingly affirmed. Daues, P.J., and Becker and Nipper, JJ., concur.