Cutler v. Fidelity & Deposit Co.

SPENCE, J.

Plaintiffs brought this action to recover indemnity under a “Depositor’s Forgery Policy”. The cause was tried before the court upon an agreed statement

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of facts. Plaintiffs had judgment and from said judgment defendant appeals.

The policy issued by appellant to respondents provided indemnity “against any losses . . . which may be sustained through the payment ... by the insured ... or by any such bank: ... Of any check . . . upon which the signature of any endorser thereof shall have been forged. . . . ” Respondents were doing business as Brayton, Douglass & Co., a copartnership, and carried a payroll account with the American Trust Company. The signature card authorized the signing of checks on behalf of the copartnership by any one of the following-named persons: Bari S. Douglass, Harold Bray-ton and B. H. de Frece. Said B. H. de Frece, an employee of respondents, drew seven separate checks at various times, which checks were in the aggregate sum of $4,200. Bach of said checks was executed by said employee on behalf of the copartnership and was made payable to Bari S. Douglass. It is conceded that each of these checks was executed by said employee with the intention of endorsing the name of Bari S. Douglass thereon, cashing the check and converting the proceeds to his own use. This was done in each instance without the knowledge or consent of said Bari S. Douglass or any other respondent. Bach cheek purported • to bear the endorsement of Bari S. Douglass and B. H. de Frece and was cashed by the bank upon presentation by said B. H. de Frece.

The sole question presented on this appeal is whether the loss sustained by respondents on each check was a loss sustained by payment of a check upon which the signature of an endorser thereof had been “forged” within the meaning of the policy. Appellant contends that it was not, but we find no merit in this contention. No authority directly in point has been called to our attention, but in our opinion the unauthorized act of thn employee in signing the name of Bari S. Douglass as an endorser with intent to defraud was sufficient to make that endorsement a “forged” endorsement within the ordinary and generally accepted meaning of that term. Furthermore, the employee’s act in so doing made him guilty of the crime of “forgery” as defined by statute. (Pen. Code, sec. 470;