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Moore & Co. v. Champaign Nat. Bank

FEBRUARY 26, 1957.

HARLAN E. MOORE & COMPANY, PLAINTIFF-APPELLANT,

v.

CHAMPAIGN NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Champaign county; the Hon. CHARLES E. KELLER, Judge, presiding. Affirmed. JUDGE CARROLL DELIVERED THE OPINION OF THE COURT.

Rehearing denied April 6, 1957.

This action was brought to recover the proceeds of certain checks cashed by the defendant bank allegedly in violation of its deposit agreement with plaintiff.

There is little dispute concerning the principal facts. On or about March 2, 1951, Harlan E. Moore and Co., plaintiffs, filed with defendant the regular corporation form of signature card showing that J.W. Wilkie was authorized to sign checks for plaintiff on its general account. A similar card was filed with defendant on April 6, 1951 authorizing Wilkie to sign checks on the payroll account of plaintiff. These signature cards remained on file with the defendant until November 22, 1952 when they were canceled by H.E. Moore, president of the plaintiff corporation.

Wilkie was employed by plaintiff early in 1951 as a bookkeeper. He had charge of cash disbursements, accounts payable and purchase journal records. He also paid invoices for supplies and expenses, signed checks made to petty cash, reconciled the bank statements, made bank deposits and signed payroll checks. At the end of each month it was his duty to check the bank statements and canceled vouchers to determine whether the charges made against the bank account were correct and whether the canceled checks were in agreement with plaintiff's records.

The wages and salaries of employees and officers of plaintiff were paid by checks drawn on its payroll account with defendant. There appears to have been no deviation by plaintiff from this practice until the transactions which gave rise to this litigation occurred. The payroll account was maintained by depositing therein checks drawn weekly against plaintiff's general account for the amount of the payroll disbursements. These checks and also others drawn to petty cash were signed by Wilkie.

Plaintiff is a corporation having several subsidiary divisions, one of which is the Roofing and Insulation Supply Co., which carried an account in defendant bank. Wilkie was authorized to draw checks on the account of this subsidiary and did draw checks thereon for the petty cash and payroll accounts.

At the end of each month, during the period from May 1951 through November 1952, defendant delivered to plaintiff the ledger statement showing debits and credits as entered on plaintiff's account during the month together with canceled vouchers. At the time of delivery of each monthly statement and accompanying vouchers to plaintiffs a receipt was taken by defendant. With the exception of two which were signed by H.E. Moore, president of plaintiff corporation, all of these receipts were signed by Wilkie. The form of such receipts is as follows:

"Received of the Champaign National Bank of Champaign, Illinois,

Statement of my account to Aprl. 30, 1951, with 211 vouchers showing CREDIT balance of $21,740.99 and I agree to examine same carefully, and if not correct to give notice and make all reclamations within ten days."

Plaintiff failed to give notice of any claim of error in these statements and also failed to make any reclamation within 10 days.

Shortly after his employment by plaintiff, Wilkie devised a scheme for embezzling his employer's money which he operated in the following manner: He made out and signed certain checks on plaintiff's general account payable to "cash for payroll." He presented these checks to the bank which paid him the amounts thereof in cash, which he embezzled. He then filled in the check stub or duplicate to show the name of a supplier with which his employer ordinarily did business and made a cash disbursement entry corresponding to the check in the cash disbursement journal. When the canceled checks were returned by the bank at the end of a month, Wilkie, to whom the duty of examining and reconciling the bank statements was entrusted, would withdraw the "cash for payroll" checks and destroy the same.

By following this practice, Wilkie was able to conceal his embezzling from his employer for many months. The record shows that during that period the defendant bank cashed for Wilkie some 56 of these checks, amounting to $39,817.98.

Wilkie presented the first of the checks in question to Leroy Britton, one of defendant's tellers. On that occasion and before cashing the same Britton called the attention of Lyle Blue, another teller to the fact that Wilkie was presenting a payroll check and asked Blue for his opinion. Blue went to Britton's window and asked Wilkie why he was cashing the payroll check and if it was the intention of the plaintiff to do so in the usual course of business. Wilkie's reply was that plaintiff had crews of workmen in other areas, such as Lincoln, Decatur and Bloomington; that when these crews completed a job and returned to town, they wanted their money; that plaintiff was also employing a considerable amount of pickup labor in addition to its regular crews; that this pickup labor wanted its money every other day and this was the reason for obtaining the payroll in cash. Wilkie at that time also presented a payroll slip upon which was listed the number of $20's, 10's, 5's and 1's and pieces of silver required. Blue thereupon told Britton to go ahead and cash the check.

Wilkie's embezzlement scheme was not discovered until November 13, 1952 when an accountant for plaintiff came upon suspicious checks and check copies. The ...


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