Opinion
40558.
DECIDED JULY 9, 1964. REHEARING DENIED JULY 24, 1964.
Breach of contract. Clarke Superior Court. Before Judge Pittard from Gwinnett Circuit.
Guy B. Scott, Jr., O. J. Tolnas, for plaintiff in error.
1. The court did not err in consolidating the three cases since they all involved a breach of the same contract and similar pleas upon which the same verdict might be rendered.
2. Where a bank pays money in the cashing of forged checks and charges the amounts thereof to the depositor's account, the filing of an action by the depositor against the persons forging the checks to recover the money from them as the property of the depositor is a ratification of the forgeries and is an irrevocable election of an inconsistent remedy which bars a later action by the depositor to recover from the bank the sums so paid out on the theory that the money paid out was that of the bank.
3. The former Code § 13-2052 and Code 13-2044 apply to National Banks.
4. The auditor did not err in his findings of fact and law in rendering judgment in favor of the bank on the plea of ratification and election of an inconsistent remedy and the court did not err in approving it. The court, however, erred in striking paragraph 9 of the petition which sought to recover on a separate and distinct implied contract since there was no demurrer to this paragraph on the ground that it was improperly joined in the same count.
DECIDED JULY 9, 1964 — REHEARING DENIED JULY 24, 1964.
J. H. Winn, whose executrix is the present plaintiff in error, prior to his death on June 17, 1962, filed suit No. 14399 in Clarke Superior Court on December 23, 1959, against National Bank of Athens, defendant in error, alleging that defendant is a national banking corporation doing business in Athens, Clarke County, Ga., and that he, said J. H. Winn, doing business as Winn Finance Company, maintained a checking account at the bank, with balances in his favor exceeding the amounts charged against his account for the thirty-six purported checks, listed by dates, numbers and amounts, and the names of the alleged payees and first endorsers, amounting to a total of $9,618; that said checks so charged against his account, with the exception of one check, were not signed or drawn by him, and that the purported signatures of the payees of the respective checks were not genuine, with the exception of two of the endorsements; that on August 27, 1959, Joseph J. Gaines, Esq., then attorney for J. H. Winn, notified the defendant in error of the non-genuineness of certain of said checks, and that on October 12, 1959, said J. H. Winn notified the defendant in error that the endorsements on certain of said checks were not the signatures of the purported endorsers; that all of the checks were charged against J. H. Winn trading as Winn Finance Company account, thereby reducing the amounts of said account available to him by the amounts respectively of said checks, resulting in an indebtedness of said bank to him, the said J. H. Winn, in the amounts of said checks so charged against his account, with interest at 7% per annum from the date each check was so charged; that said J. H. Winn, to aid the defendant in error in the enforcement of an obligation of American Surety Company to it to cover the loss above set forth, furnished defendant in error machine copies of certain of said checks, at an expense of $4.12, and incurred an expense of $84 for clerical work in assembling deposit slips and $102 for an audit of Winn Finance Company books, for the purpose of showing the loss in reference to said checks, with a prayer for judgment for said amount of $9,618 and the $190.62 expense incurred for and on behalf and at the request of defendant in error, National Bank of Athens.
Defendant in error filed a demurrer to the petition, the second and fourth grounds of which were sustained.
Defendant in error at the same time filed an answer admitting the existence of the checking account and that the check charges were made against the account; neither admitting nor denying the genuineness of the checks listed and calling for strict proof thereof, alleging that if any of the checks were not genuine, defendant in error had no knowledge thereof or reason to suspect the same, but not otherwise alleging good faith in cashing the checks; admitting the written notice of the non-genuineness of certain of said checks, and of the oral notice of the non-genuineness of the endorsements of the payees, denying paragraphs 7, 8 and 9 of the petition; alleging that whether the checks were genuine or not, the issuance of the checks was done in a kiting scheme by reason of which said Winn did not have the balances to his credit, and alleging that the checks charged against the account were furnished to said Winn during each month, and that under the provisions of Section 13-2044, defendant in error would not be liable for such of said checks in said list as were dated prior to June 1959. Subsequently said J. H. Winn filed a suit No. 14621 against defendant in error on his account with the bank, alleging that the bank made an incorrect charge against his account for a check of $225 dated February 4, 1958, signed by him, the said J. H. Winn, which was filled in and made payable to the order of Martha L. Davis, a fictitious person, and endorsed in that name by someone without Winn's authority, using said fictitious name, Martha L. Davis, without plaintiff's consent, which the defendant in error received from some person unknown to him, and charged to the Winn account, in which suit the reasons why Section 13-2052 of the Code is not applicable are set forth, with a prayer for judgment for the amount of $225 incorrectly charged against his account. Subsequently said J. H. Winn filed an additional suit No. 14649, for $450 of his account, which was diminished by charging two checks for $200 and $250 respectively, alleged to be not genuine or authorized by him, and alleging reasons why Section 13-2044 of the Code, requiring notice of non-genuineness was not applicable because said Code section is not applicable to national banking transactions, and also that defendant in error by reason of prior endorsements of the checks by solvent forwarding bank, defendant in error would not sustain a loss. Said J. H. Winn, former plaintiff, thereupon filed an amendment to the original suit, to the effect that the purported payees in the checks sued on, with two exceptions, were fictitious, in that the checks were payable to names of persons who had no right or interest in the respective checks, and that the person who without authority signed J. H. Winn's name to the checks, except the two checks, did not intend the persons so named as payees respectively, should receive possession and payment of said checks, and alleging further that certain of said checks contained prior endorsements of The Citizens' Southern National Bank, a solvent bank able and liable to respond to such endorsements, and that other of said checks were endorsed by one Helen Bridges, who was as amply solvent at the time of said suit as at the time of the cashing of said checks, and that one of said checks had a prior endorsement by Ethel Vinson who was as solvent at the time of said suit as at the time of cashing said check, and therefore defendant in error had lost nothing by the failing of said J. H. Winn to give the notice required by Section 13-2044 of the Code. and that on June 29, 1959, he, the said J. H. Winn gave the defendant in error through certain of its officers notice of the non-genuineness of the purported signature of J. H. Winn on certain of said checks, listing them. On July 7, 1960. defendant in error, who had filed demurrers but no answers to the cases Nos. 14621 and 14649, filed a motion to consolidate the original suit No. 14399 with the two suits, cases Nos. 14621 and 14649, and in response to the rule nisi dated July 7, 1960, the then plaintiff, J. H. Winn, filed response to the effect that the checks involved in cases Nos. 14621 and 14649 were in different categories, involving separate and distinct issues or questions of fact, and the suits should not be consolidated, but were consolidated by order of the court dated July 9, 1960, to which exceptions were filed, and thereupon the case was, without disposing of other demurrers already filed, referred to Hon. Jas. Barrow, lately elevated by electorate to the judgeship of the Superior Courts of the Western Circuit, as auditor to report on the law and the facts, with power to pass on demurrers, and a series of hearings was held before said auditor, and the oral testimony with documentary evidence, including sixty-seven exhibits, and depositions, was introduced as embodied in the transcript of the evidence, including copy of the suit which had been filed by said J. H. Winn prior to the filing of the present suit, against Helen Bridges and Ethel Vinson, Case No. 14390, based in paragraphs 3 and 4 thereof on defalcations, and in paragraph 5 on all of the checks sued on in the original suit No. 14399, except the one check purportedly payable to L. R. Scarboro, No. 14515 for $160 dated February 12, 1959, but not based on nor including the checks sued on in cases Nos. 14621 and 14649, and including as an exhibit the amendment to the petition in that suit dated January 31, 1962, striking paragraph 5 based on all of the checks in Case No. 14399 except the L. R. Scarboro check, and thereafter, plaintiff in error was made party plaintiff in error in lieu of said J. H. Winn, deceased; and thereupon plaintiff in error on February 2, 1962, filed objections to, and motion to strike said evidence consisting of paragraphs 1 and 5 of the petition in said case because (a) not relevant to the issues in the case as made by the petition and pleadings of the defendant, (b) immaterial to the issues in the case as made by the petition and the pleadings of the defendant. (c) because there is no plea of estoppel or bar by election of inconsistent remedies by plaintiff. The auditor did not then and there pass on the motion and entered the following notation: "Received by auditor on February 3, 1962. Action on motion deferred pending amendment by def." Later, after defendant in error filed an amendment on December 28, 1962, the auditor overruled said motion, which was excepted to. Thereupon, defendant in error on April 22, 1963, and before the report of the auditor was filed, with the transcript of the evidence, filed motion for summary judgment, to which plaintiff in error filed response, and the auditor on May 10, 1963, thereupon filed his report with the transcript of the evidence, granting the motion for summary judgment, so far as it was in his power to do so, to which report plaintiff in error filed exceptions of law and exceptions of fact, and a motion to recommit the proceeding and case to the auditor for findings therein set forth. Honorable James Barrow, Judge S.C. W. C., being then disqualified, the case was referred to Judge Charles C. Pittard, S.C. Gwinnett Circuit, for final disposition, and final judgment was thereupon rendered by Judge Pittard, presiding, sustaining the motion for summary judgment, with directions as to the payment of costs, including the auditor's fees, stenographic bill and court costs. Plaintiff in error thereupon filed a bill of exceptions, and the case is now before this court for review. Some of the assignments of error are upon orders and findings of Honorable Carlisle Cobb. Judge S.C. W. C. retired, some upon orders and findings of the auditor, and lastly upon the orders and findings of Honorable Charles C. Pittard, Judge S.C. G. C., presiding. Plaintiff in error assigned error in the bill of exceptions on all of the rulings adverse to her, but filed no objections to the submission of the case to the auditor.
1. The court did not err in consolidating cases Nos. 14399, 14621 and 14649. All three actions involved the alleged breach of a contract between J. H. Winn, as a depositor, and the defendant bank. The last two actions involved breaches similar to those pleaded in the first action. Almost identical evidence and verdicts would be involved in all three actions. We think Code § 3-112 covers the situation here. See also Bainbridge Farm Co. v. Ball Reynolds, 165 Ga. 582, 587 ( 141 S.E. 647).
2. J. H. Winn objected to evidence introduced by the bank which consisted of part of the allegations made in an action filed by J. H. Winn prior to the filing of the three consolidated actions which allegations showed that J. H. Winn, in said prior action, had sued to recover from Helen Bridges and Ethel Vinson the proceeds of the checks alleged to have been paid by the bank to the defendants, as the property of J. H. Winn. The objections to the evidence were that there was at that time no plea of estoppel or election of an inconsistent remedy and that the evidence was therefore irrelevant and immaterial. The court did not immediately rule on these objections to the evidence of the prior action but deferred action pending an amendment of the defendant. The defendant filed an amendment setting up the defenses of ratification of the acts of the defendants in the prior action and of the election of an inconsistent remedy. The exception that the court should have excluded the evidence without waiting for the defendant to file the amendment was not error. It is reasonable to assume that the bank apprised the court of the nature of the proposed amendment and that the court reserved its ruling until after the filing of the amendment to avoid wasting time by disallowing the evidence at the time and having to go to the trouble of making another ruling after the filing of the amendment and the re-introduction of the evidence. After the filing of the amendment the court overruled the demurrer to it and admitted the evidence which showed that both the former action and the present consolidated actions involved the same checks. The court did not err in overruling the demurrer to the amendment or in admitting the evidence. These rulings are the crux of the case. If the court was correct in its rulings, a judgment in favor of the bank was demanded, and rulings on other matters by the court and auditor are unnecessary. We hold that the rulings were correct. The first action against Bridges and Vinson is based on the allegation that the money paid out by the bank and charged to J. H. Winn's account was the property of J. H. Winn and such an action amounted to a ratification of the acts of these defendants and the election of a remedy inconsistent with the present action which is based on the theory that the bank in paying out money on the forged checks or forged endorsements was paying out its own funds. The actions of forgers may be ratified. Groover v. Savannah Bank c. Co., 60 Ga. App. 357 (4) ( 3 S.E.2d 745); Greene v. Golucke, 202 Ga. 494 ( 43 S.E.2d 497). Where one is faced with having to make a choice between two or more inconsistent remedies he must make his choice before instituting an action. The choice of one remedy by filing an action is irrevocable. Land v. Hall, 46 Ga. App. 404 ( 167 S.E. 711) and cases cited; Groover v. Savannah Bank c. Co., supra; Southern Federal c. Assn. v. Firemen's Benevolent Assn., 72 Ga. App. 663 ( 34 S.E.2d 674); Crane v. Atlanta c. Nat. Bank, 40 Ga. App. 83 ( 149 S.E. 58). Hence the plaintiff could not amend his first action so as to strike so much of his first action as was inconsistent with the second. But his effort to so amend precludes him from asserting that the first action was and is void for lack of prayer for process. He cannot contend that the first action is dead and try to treat it as living. The contention that the first action was but the choice of a mistaken remedy is not tenable as shown by the foregoing authorities showing that forgeries may be ratified.
Whether some or all of the checks were forged as to the maker's signature, and whether some were forged as to the payees' endorsement or whether there were combinations of the two, the principle is the same. The bank either paid out its own money, the basis of the present action, or it paid it out as the plaintiff's property by charging the checks to his account, the basis of the first action. These two bases for recovery are inconsistent and the rule as to such remedies applies. In addition, if there were fictitious payees, in any sense of the term, and a forgery of the signature as to the maker, the forger of the maker-signatures would necessarily be a co-conspirator with the one forging the payees' signatures and a ratification of the actions of the one who forged the maker-signatures would carry with it the ratification of the forgeries of the payees' signatures. As to the check or checks having only forgeries of the payee-signature the doctrine of election of remedies alone would be enough to bar the second action because of its inconsistency with the first. As to most of the checks both pleas apply cumulatively.
The contention of Mr. Winn that the two causes of action must be the same for the doctrine of election of remedies to apply is without merit. He cites for the contention Dykes v. McVay, 67 Ga. 502. That case has reference to Code § 3-601 and does not involve the doctrine of election of an inconsistent remedy.
The defendant filed a motion for a summary judgment which the court referred to the auditor. The auditor made his report on his findings of law and fact and rendered a so-called summary judgment. The motion for summary judgment was in fact only a motion that the auditor render a judgment on the pleadings and evidence on the question of an inconsistent remedy and ratification. Both the law and the facts under the correct findings of law and fact by the auditor demanded a finding and judgment in favor of the bank on the plea and proof of the election of an inconsistent remedy and ratification. The court did not err in its findings and in overruling the exceptions of the plaintiff to the overruling of the motion to recommit the case to the auditor for further findings, the overruling of the exceptions of law and in refusing to submit the issue of fact to a jury since the facts were undisputed and demanded the judgment rendered with one exception which we shall deal with in the 4th division.
3. The bank filed a demurrer to case No. 14621, consolidated with the main case, on the ground that it was not alleged that the defendant had ever been given written notice that the payee and endorsement of the check involved was unauthorized (as required by the Code section then in effect, Code § 13-2052.) It also filed a demurrer to case No. 14649 on the ground that it was not alleged therein that written notice of the fact that the maker's signature on the two checks involved was unauthorized (as required by Code § 13-2044.) The auditor sustained these demurrers and dismissed the action as to these checks and the court approved the auditor's rulings. Winn's contention is that the demurrers were improperly sustained because the two Code sections above referred to did not and do not apply to National Banks. This contention is without merit and the court's ruling is affirmed. Lewis v. Fidelity Deposit Co. of Maryland, 292 U.S. 559 ( 54 SC 848, 78 LE 1425); National City Bank v. Continental Nat. Bank c. Co., 83 F.2d 134.
4. The petition alleged: "That the defendant carries insurance against losses by forgery with American Surety Company, and to aid the defendant in the enforcement of the obligation of said surety company to cover the loss above set forth, plaintiff at defendant's request incurred an expense of $4.12 for the making of machine copies of certain of said checks furnished to said surety company, and incurred an expense of $84 for clerical work in assembling deposit slip at said bank and $102.50 for an audit of plaintiff's records, for the purpose of showing a loss to plaintiff in reference to said checks, as well as to other transactions, for which expenses so incurred the defendant is indebted to plaintiff in the sum of one hundred ninety and 62/100 dollars." The bank demurred to this paragraph as follows: "Defendant demurs to and moves to strike Paragraph 9 on the ground that the same sets out no cause of action against this defendant; and on the further ground that same is an attempt to join in this action a wholly separate and distinct claim and cause of action; and defendant further moves to strike all references in said paragraph to insurance and American Surety Company on the ground that same is immaterial and is prejudicial to defendant." The court sustained this demurrer and struck paragraph 9 of the petition. It was error for the court to strike the entire paragraph. The facts are sufficient to show an implied promise by the bank to pay for the items listed. Code § 3-107. There was no objection that this item of indebtedness should not have been joined in a single count. A count on an implied contract may be joined with one on a special contract. Gray v. Bass, 42 Ga. 270; Ware v. Reese, 59 Ga. 588.
The rulings and judgment of the superior court affirming those of the auditor on the question of election of remedies and ratification are affirmed. The judgment of the court striking paragraph 9 of the petition is reversed with direction that the case proceed on this one issue.
Judgments originally affirmed in part and reversed in part are adhered to on rehearing. The costs are taxed against defendant in error. Frankum and Pannell, JJ., concur.