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Merchants & Manufacturers Association v. The First National Bank of Mesa

Supreme Court of Arizona

October 3, 1932

MERCHANTS & MANUFACTURERS ASSOCIATION, a Corporation, Appellant,
v.
THE FIRST NATIONAL BANK OF MESA, ARIZONA, a Corporation, Appellee

APPEAL from a judgment of the Superior Court of the County of Maricopa. Joseph S. Jenckes, Judge. Reversed and remanded, with directions.

Mr. K. T. Palmer, for Appellant.

Messrs. Silverthorne & Van Spanckeren, for Appellee.

OPINION

[40 Ariz. 533] ROSS, J.

This action was brought by the Merchants & Manufacturers Association, an Arizona corporation, against the defendant bank to recover $968.75 paid by the defendant to one L. F. Nachtweih upon sixteen checks payable to the order of plaintiff. Fourteen of these checks were indorsed in plaintiff's name "by L. F. Nachtweih," and two "by Clara Livingston." The questions involved are the authority of Nachtweih to indorse in plaintiff's name three of such checks, and the authority of Livingston to indorse the two she indorsed. The eleven other checks indorsed by Nachtweih the evidence conclusively shows he was authorized to indorse in behalf of plaintiff, the question as to them being whether such authority was for the purpose of deposit only and, if so, whether defendant had actual knowledge of such limited authority when it cashed them.

Eleven of the checks were drawn against the Valley Bank of Mesa by its customers, and five against defendant by its customers. The Valley Bank of Mesa paid the checks drawn on it to the defendant, and the defendant credited itself with those drawn against it.

Page 718

The case was tried to the court without a jury and resulted in a verdict and judgment in favor of the defendant. The plaintiff has appealed and contends by its assignments that the evidence does not support the judgment and that the judgment is contrary to the law.

As the question of agency is one of fact, we state the facts. The plaintiff was engaged in a general collection and credit or mercantile reporting business, with its principal office in Phoenix. In February or March of 1927 it appointed Nachtweih its agent in Mesa, to solicit business but not its agent to make collections. Nachtweih rented rooms of defendant in its bank building in Mesa and began a general collection business, and in that connection assumed, [40 Ariz. 534] without authority from plaintiff, to sign letters in plaintiff's name and to receive payment of collections and dues in the form of checks payable to plaintiff's order. He opened a personal account with the defendant and on different occasions, before August 1, 1927, presented to defendant three checks, totaling $215.63, for membership dues in plaintiff and for commissions on collections payable to the order of plaintiff, indorsed variously as "Merchants & Manufacturers Association by L. F. Nachtweih," "Merchants & Mfrs. Assn by L. F. Nachtweih," and "M & M Assn by L. F. Nachtweih," and received from defendant either the cash or a credit to his personal account.

On August 1, 1927, plaintiff, for the convenience of its Mesa members, established a branch office in Mesa and appointed Nachtweih local manager thereof and enlarged his authority to make collections, to accept checks therefor, and to indorse them for deposit with defendant for plaintiff's account. Preparatory to and before opening the Mesa branch office, plaintiff on July 25, 1927, wrote defendant a letter, of which the following is a copy:

"First National Bank

"Mesa, Arizona.

"Gentlemen: Attn. Mr. Jennings Johnson.

"Pursuant to our recent telephone conversation, we are enclosing properly signed deposit card for your records. All checks issued by this Association will be signed 'Merchants & Manufacturers Association by D. M. Gillan, Secretary.' No other person is authorized to sign checks for this ...


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