Nafarrete, P.

| I2023

FIRST NAT’L BANK OF PORTLAND V NOBLE (1946)

179 Ore. 26, 168 P. (2d) 354 (1946)
SUBJECT: check drawn as a refund of the payment made by John and Lilian Noble for the property purchased and
subsequently reconveyed to T.D. Lee through the drawer
DRAWER: Kelleck, a broker
DRAWEE: First National Bank of Portland Oregon
PAYEE: Lilian S. Noble

FACTS
 Mrs. Noble indorsed the check in blank and deposited it in the United States National Bank of Portland. The deposit,
on the same day, was entered as credits in the Noble’s savings account and checking account.
 The US National Bank, on Sep. 21, placed its clearing house indorsement, as of Sep. 22, on the check. The check
reached the drawee, the FNB of Portland on Sep. 22.
o The account of the drawer, Kelleck, then had but $200 to his credit.
o On discovery of this fact a teller in the FNB placed a small symbol on the check which indicated that the
check was to be rejected for want of sufficient funds.
 The check was then returned through the clearing house to the forwarding bank, the US National with the advice that
it was being dishonored for insufficient funds in the drawer’s account. The credit to the US National Bank was
canceled by the First National.
o The US National, by letter dated Sept23, informed Mrs. Noble of the dishonor of the Kelleck check and that it had
been charged back to the Noble’s account.
 Sep. 24  US National Bank by messenger presented the check over the counter of the FNB. The teller in the FNB,
to whom the check was presented the second time, mistook the rejection symbol which had been placed on
the check by another teller of the FNB, for a symbol authorizing payment.
o Acting on this mistaken assumption he prepared a cashier’s check dated Sep. 24, payable to order of the US
National in the amount of the Kelleck check, had the same duly signed by an assistant cashier of the drawee
and delivered the same to the messenger from the US National.
 The US National credited the FNB’s cashier’s check to the account of the Nobles . The FNB’s cashier’s check
was marked paid through the clearing house on Sep. 25, to the US National.
o though the courts finds that the cashier’s check was received by the FNB on Sep. 24 and marked paid on that
date though the clearing house transaction took place on the next morning.
 Sep. 25  the FNB discovered its mistake and the FNB retendered the Kelleck check as a dishonored item but the
US National refused to receive it and to return the proceeds of the cashier’s check.
o FNB brought an action of assumpsit for money had and received against the Nobles and the US National Bank to
recover the amount of the cashier’s check.
o The US National Bank filed its bill of interpleader and tendered the money into court. The plaintiff recovered
judgment in the trial court against the Nobles. The Nobles appealed.
 The court concluded that the asserted right of plaintiff to restitution must be considered exactly as if the Kelleck check
and had been paid over the counter in cash.

ISSUE: W/N the trial court erred in discharging the US National from liability – NO.

HELD:
 Rule 33 of the Restatement on Restitution must control the decision of this case. It is as follows:
o The payee is entitled to retain the money which he has received as a bona fide purchaser.
o The typical cases are those where an employee of a bank pays the holder of a check in the mistaken belief that
the drawer has sufficient funds on deposit to meet it or in forgetfulness of the fact that the drawer has directed that
payment should not be made.
 The forgery cases are said to rest, in part at least, upon the maxim that where the equities are equal the legal
title must prevail.
o That maxim appears applicable where a drawee bank pays a check so skillfully forged as to defy detection. The
holder and the drawee are equally without fault, and the holder has the money.
 The position of the defendants ITCAB is in this respect stronger than that of the one who has received payment of a
forged check. Here the equities are not equal. The representative of the plaintiff was clearly negligent.
 Nafarrete, P. | I2023

o He acted in reliance on a symbol which he had never before seen the meaning of which he had no reason to
know. A moment’s inquiry would have informed him fully concerning the meaning of the symbol and the state of
Kelleck’s account. But no inquiry was made.
 The defendants Noble are not chargeable with any neglect or inequitable conduct. Neither they nor their collecting
agent knew or were entitled to know the state of the Kelleck account, and the fact that the Kellect check was NSF on
Sep. 22 did not render it unconscionable to present it again on Sep. 24, Freeport Bank of Freeport.