The Great Eastern Life

Insurance Co. vs. Hongkong &

Shanghai Banking Corp.
[GR 18657, 23 August 1922]
Facts:
The Great Eastern Life Insurance
!" #GELI$ is an insurance
c!r%!rati!n, &hi'e (!ng)!ng *
+hanghai ,an)ing !r%" #(+,$
an- .hi'i%%ine /ati!na' ,an)
#./,$ are 0an)ing c!r%!rati!ns,
an- each is -u'1 'icense- t! -! its
res%ecti2e 0usiness in the
.hi'i%%ine Is'an-s"
3n 3 4a1 1925, GELI -re& its
chec) %a1a0'e t! the !r-er !f
La6ar! 4e'ic!r f!r .2,555 !n
(+, &ith &h!7 it ha- an
acc!unt"
E"4" 4aasi7 frau-u'ent'1
!0taine- %!ssessi!n !f the chec),
f!rge- 4e'ic!r8s signature, as an
en-!rser, an- then %ers!na''1
en-!rse- an- %resente- it t! ./,"
The 'atter 0an) %'ace- the sai-
a7!unt !n 4aasi79s acc!unt"
./, en-!rse- the chec) t! (+,,
&hich %ai- it, an- charge- the
a7!unt !f the chec) t! the acc!unt
!f GELI"
In the !r-inar1 c!urse !f 0usiness,
(+, ren-ere- a 0an) state7ent
t! GELI sh!&ing that the a7!unt
!f the chec) &as charge- t! its
acc!unt
A0!ut : 7!nths after the chec)
&as charge- t! the acc!unt !f
GELI, It &as -isc!2ere- that
4e'ic!r, t! &h!7 the chec) &as
7a-e %a1a0'e, ha- ne2er recei2e-
it, an- that his signature, as an
en-!rser, &as f!rge- 01 4aasi7"
;ith this )n!&'e-ge, GELI
%r!7%t'1 7a-e a -e7an- u%!n
(+, that it sh!u'- 0e gi2en
cre-it f!r the a7!unt !f the f!rge-
chec), &hich the 0an) refuse- t!
-!, an- GELI c!77ence- the
acti!n t! rec!2er the .2,555 &hich
&as %ai- !n the f!rge- chec)"
<%!n the issues 0eing =!ine-, a
tria' &as ha- an- =u-g7ent &as
ren-ere- against the %'aintiff an-
in fa2!r !f the -efen-ants, fr!7
&hich the %'aintiff a%%ea's,
c'ai7ing that the c!urt erre- in
-is7issing the case,
n!t&ithstan-ing its fin-ing !f fact,
an- in n!t ren-ering a =u-g7ent in
its fa2!r, as %ra1e- f!r in its
c!7%'aint"
3n the %etiti!n !f (+,, ./,
&as 7a-e -efen-ant" (+, -enies
an1 'ia0i'it1, 0ut %ra1s that, if a
=u-g7ent sh!u'- 0e ren-ere-
against it, in turn, it sh!u'- ha2e
'i)e =u-g7ent against ./, &hich
-enies a'' 'ia0i'it1 t! either %art1"
<%!n the issue- 0eing =!ine-, a
tria' &as ha- an- =u-g7ent &as
ren-ere- against GELI an- in
fa2!r (+, an- ./, fr!7 &hich
GELI a%%ea'e-"
Issue: ;hether !r n!t GELI can
rec!2er inas7uch as 4e'ic!r9s
in-!rse7ent &as f!rge-"
Ruing:
.'aintiff8s chec) &as -ra&n !n
+hanghai ,an) %a1a0'e t! the
!r-er !f 4e'ic!r" In !ther &!r-s,
the %'aintiff auth!ri6e- an-
-irecte- the +hanghai ,an) t! %a1
4e'ic!r, !r his !r-er, .2,555" It -i-
n!t auth!ri6e !r -irect the 0an) t!
%a1 the chec) t! an1 !ther %ers!n
than 4e'ic!r, !r his !r-er, an- the
testi7!n1 is un-is%ute- that
4e'ic!r ne2er -i- %art &ith his
tit'e !r en-!rse the chec), an-
ne2er recei2e- an1 !f its %r!cee-s"
+ecti!n 23 !f the /eg!tia0'e
Instru7ents La& is s>uare in %!int"
When a signature is forged or made
without the authority of the person
whose signature it purports to be, it is
wholly inoperative, and no right to
retain the instrument, or to give a
discharge therefor, or to enforce
payment thereof against any party
thereto, can be acquired through or
under such signature, unless the party
against whom it is sought to enforce
such right is precluded from setting up
the forgery or want of authority.
The 7!ne1 &as !n -e%!sit in
(+,, an- it ha- n! 'ega' right t!
%a1 it !ut t! an1!ne e?ce%t GELI
!r its !r-er" (ere, GELI !r-ere-
(+, t! %a1 the .2,555 t!
4e'ic!r, an- the 7!ne1 &as
actua''1 %ai- t! 4aasi7 an- &as
ne2er %ai- t! 4e'ic!r, an- he
ne2er %ers!na''1 en-!rse- the
chec), !r auth!ri6e- an1 !ne t!
en-!rse it f!r hi7, an- the a''ege-
en-!rse7ent &as a f!rger1"
(ence, (+, has n! -efense t!
the %resent acti!n"
./, cashe- the chec) u%!n a
f!rge- signature, an- %'ace- the
7!ne1 t! the cre-it !f 4aasi7,
&h! &as the f!rger" That ./, then
en-!rse- the chec) an- f!r&ar-e-
it t! (+, 01 &h!7 it &as %ai-"
./, ha- n! 'icense !r auth!rit1 t!
%a1 the 7!ne1 t! 4aasi7 !r
an1!ne e'se u%!n a f!rge-
signature" It &as its 'ega' -ut1 t!
)n!& that 4e'ic!r8s en-!rse7ent
&as genuine 0ef!re cashing the
chec)" ./,9s re7e-1 is against
4aasi7 t! &h!7 it %ai- the
7!ne1"
The +u%re7e !urt re2erse- the
'!&er c!urt8s =u-g7ent, an-
entere- an!ther in fa2!r !f GELI
an- against (+, f!r .2,555, &ith
interest there!n fr!7 8 /!2e70er
1925, at the rate !f 6@ %er annu7,
an- the c!sts !f the acti!n, an- a
c!rres%!n-ing =u-g7ent &i'' 0e
entere- in fa2!r !f (+, against
./, f!r the sa7e a7!unt,
t!gether &ith the a7!unt !f its
c!sts in the acti!n"