Pascoe, J.c.c. (temporarily assigned).
Plaintiff, a member of the New Jersey Bar, maintained two demand checking accounts in defendant bank. One account was an attorney's account (general account) and the other was a trust account (for clients). Defendant Isabelle Denning, plaintiff's secretary, forged his signature to checks drawn on defendant bank during the period August 1957 through August 1961. Plaintiff notified the bank of the forgeries on November 3, 1961 following the mysterious disappearance of Miss Denning.
The present suit is to recover $12,403.07 for some 41 checks bearing plaintiff's forged signature. At the pretrial conference it was agreed that the two-year limitation provided in N.J.S.A. 17:9A-226 was applicable to 33 of the 41 checks, and the pretrial order provided for an amendment of the demand which reduced the claim to $4,525. A default judgment was entered against defendant Isabelle Denning, so that the remaining question for this court to determine is the liability of the bank.
The facts are that although plaintiff received monthly statements charging his accounts with the forged checks, nevertheless the criminal acts of Miss Denning went undiscovered over the years. She would draw a check to her own order on plaintiff's printed checks and forge his signature. Her ordinary duties included making deposits, drawing checks for signature, and periodically making reconciliations of bank statements. From August 16, 1957 to May 22, 1958 Miss Denning possessed a power of attorney to withdraw funds from the attorney's account on her own signature.
Plaintiff left the reconciliation of bank statements to his trusted secretary and only conducted superficial spot checks personally. He stated that he was only concerned with whether the bank balance was in reasonable shape, and the
few checks he did examine were recognized by him. He did not attempt to balance his books against the bank statements. Responding to an internal audit by the bank, plaintiff confirmed his balance as of March 31, 1961, although he did not know whether or not the balance was correct.
The vice-president in charge of the bank's record-keeping department testified that the bookkeepers did not take every check and compare the signature with the depositor's signature card. Such comparison was made only when there was something about the signature which caused it to be questioned. The bank's bookkeepers relied upon their recollection of the appearance of the signature.
The accounts for regular checking accounts were broken down into alphabetical segments. A bookkeeper was assigned to each segment. This person would sort the checks in complete alphabetical sequence and examine each check for date, formality, alterations, signature and endorsements. If satisfactory, the bookkeeper would post the check to the related account.
Each bookkeeper had a partner who worked on the adjacent section of the alphabet. After posting, the partners would exchange checks and repeat the entire process of posting as a safeguard against errors. This system of bookkeeping is called dual posting as opposed to a single posting by only one bookkeeper.
As noted, the only time there is an actual comparison of signature is where the bookkeeper questions the validity of the signature or whether the correct number of signatures appears.
A handwriting expert testified that the ordinary person could not detect the forgeries involved in this case. This would be true even if the person compared the signatures on the checks with the master signature card.
A vice-president of the First Pennsylvania National Bank and Trust Company and a retired bank examiner testified that the procedures used by defendant bank during the period in question were ...