Christian v. California Bank

California Supreme Court Jul 1, 1947 No. L. A. 19997Published

Before: Shenk

AI Brief

AI-generated · verify before citing

Holding. The court held that the complaint sufficiently stated a cause of action against the California Bank because its active participation in striking a restrictive endorsement raised a triable issue of bad faith, while the complaint failed to state a claim against the Security-First National Bank.

Issues

Whether the complaint sufficiently alleged that the California Bank acted in bad faith by participating in the alteration of a restrictive endorsement on a check.
Whether the complaint sufficiently alleged that the Security-First National Bank had notice of any infirmity or defect in the title of the check.

Disposition. Affirmed in part and reversed in part.

Quotations verified verbatim against the opinion

“The allegations sufficiently raise an issue whether the bank acted in good faith, that is, whether at the time of acceptance of the check it had knowledge of facts which should have put it on inquiry.”

“The facts here alleged would if established justify the conclusion that the failure of the defendant California Bank to make inquiry arose from a suspicion that inquiry would disclose a vice or defect in the instrument.”

SHENK, J.

Plaintiff appeals from a judgment of dismissal entered in favor of defendant banks pursuant to an order sustaining their demurrers to the first amended complaint without leave to amend.

The first amended complaint alleges in substance the following facts, which are accepted as true in testing the sufficiency of the pleading as against general demurrer:

About the month of June, 1945, plaintiff and the defendant Rotsios orally agreed to enter into a copartnership under the name of S. & R. Produce Company, and instructed an attorney to draft articles of copartnership. It was orally agreed, among other things, that moneys of the copartnership would be withdrawn from the bank only upon the signatures of both partners. The articles of copartnership provided that neither partner should without the consent of the other “. . . sign or endorse negotiable paper. ... No check shall be drawn or voucher issued unless signed by both partners to this agreement.”

On June 4, 1945, plaintiff purchased from the defendant Security-First National Bank of Los Angeles a $3,500 cashier’s check payable to his own order. He indorsed the check and also stamped upon it, immediately below his signature, following further indorsement: “Pay to the order of 303 Bank of America 303 Trust & National Savings Association S & R Produce Co.”

Plaintiff delivered this check to Rotsios with instructions to deposit it in the Bank of America to the account of the produce company. Rotsios had no right to indorse the cheeks of the produce company without the joint signature of his co-partner and had no right to deposit them to his personal

[423]

account. However, contrary to instructions, he took the $3,500 check to a branch of the defendant California Bank, where he had a personal account. There, according to the amended complaint, Rotsios “presented said Cashier’s Check to said bank, at which time said bank, by and through its agents and servants, and the said Bill Rotsios, blocked out the stamped restrictive endorsement which the plaintiff had caused to be placed on the back of said check, and the said defendant, Bill Rotsios, then endorsed his own name on the back of said Cashier’s Check and the said defendant, California Bank, accepted said altered check and credited the same to the personal bank account of the defendant, Bill Rotsios.” This was done without the knowledge or consent of plaintiff.

Christian v. California Bank

AI Brief

SHENK, J.

More from California Supreme Court

Related research

AI Brief