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Rainbow Inn Inc. v. Clayton National Bank

Decided: December 18, 1964.


Conford, Kilkenny and Lewis. The opinion of the court was delivered by Kilkenny, J.A.D.


Plaintiff corporation sued defendant bank in the Gloucester County Court to recover the sum of $36,513.37, with interest, being the amount of 12 forged checks charged by the bank as drawee against plaintiff's checking account therein. After a trial without a jury, judgment was entered on August 2, 1963 in favor of plaintiff and against defendant in the sum of $33,013.37, with interest at 6% from May 14, 1961 and costs. As hereinafter noted, the difference of $3,500 between the amount sued for and the amount of the judgment represents a deposit in that amount in plaintiff's account presumably by the forger, subsequent to the forgery, which offset the first forged check in that amount. Plaintiff agrees that this $3,500 item was satisfied by the subsequent deposit. Defendant appeals from the judgment against it.

At the time in issue plaintiff was a family corporation, having its principal place of business in the Borough of Clayton, Gloucester County, and conducted a tavern and liquor package store business there. The corporation had only three stockholders, who were also its officers. Jean Wlodkowski was president of the corporation and had a 50% stock interest. Jean's nephew, Edmund Jezemski, was vice-president and owned 25% of the stock. Apolonia Jezemski, wife of Edmund, was secretary-treasurer and held the remaining 25% of the shares. The corporation had a checking account in defendant Clayton National Bank ever since 1953, and there had been no forgeries prior to the 12 in issue, all of which occurred between February 2 and May 14, 1962. Checks of the corporation required the signatures of all three officers.

It is conceded that Apolonia forged the signatures of the other two officers on the 12 checks in issue and appropriated the proceeds thereof to her own uses and purposes, without any authority from plaintiff corporation or the other officers and stockholders. It was not until May 17, 1962 that the other officers discovered the fact of Apolonia's wrongful conduct. On that day a bank statement was received at plaintiff's office

and, from a comparison of the beginning balance of $42,403.86 as of April 30, 1962 and the balance of $17,417.21 as of May 14, 1962, Edmund realized that something was amiss. He examined the checks and noted that the payees included some with whom plaintiff had no dealings. The next day Edmund and Jean informed defendant bank as to the forgeries.

Plaintiff had substantial balances in its checking account in defendant's bank at the times when the forgeries occurred. Bank statements issued at the times hereinafter noted showed the following respective balances:

January 30, 1962 $46,675.07

February 26, 1962 $47,331.71

March 23, 1962 $49,733.95

April 30, 1962 $42,403.86

May 14, 1962 $17,417.21

Statements were issued by the bank at irregular times "whenever the sheet was filled up," and were either mailed or picked up by Apolonia. As the trial court properly noted, "the procedure most often practiced was to hand them to Apolonia." She kept the books of the corporation, attended to its banking, and was entrusted with the duty of reconciling the bank statements with the corporation's books. Thus, she was in an advantageous position to hide her misconduct from the other two officers, at least temporarily until the discovery on May 17, 1962.

The first three forged checks were honored by defendant on the following dates:

$3500 February 2, 1962

$5000 March 30, 1962

$5000 April 23, 1962

The bank statements showing these deductions were never seen by plaintiff's other corporate officers but, as the trial judge found, "were picked up and hidden or destroyed by Apolonia Jezemski, the forger." She frequented defendant bank because of a series of personal loans and financing matters.

Presumably, too, she did so in the performance of her duties as secretary-treasurer of plaintiff. Her husband testified that during the period in question he did miss the statements, inquired about them once or twice at the bank, and was told on one occasion that the statements would be mailed to him and on another occasion that Apolonia had picked them up. He did not ask for duplicate statements.

The bank statement of March 23, 1962 was received by plaintiff. When sent out by the bank it showed a deposit of $3500 on March 7, 1962. This had been made by Apolonia, we presume, to cover the $3500 forged check of February 2, 1962. Thus, at this point, the bank balance coincided with the balance on plaintiff's books. But the March 7, 1962 deposit had been erased from this bank statement after it left the bank, before the other corporate principals saw the statement, thus hiding this evidence of the prior forgery. An item by item checkup would have revealed the discrepancy, but, as Edmund testified, he would usually look only at the balance on the bank statement. No running balance or list of deposits was maintained in the check book. Both Edmund and Jean Wlodkowski testified that they relied upon Apolonia to keep the books and balance the accounts.

The particulars of the other nine forged checks are as follows:

No. Date Payee Amount

3987 April 27, 1962 Apolonia A. Jazemski $3500.00

3991 May 1, 1962 Joseph Durham & Co. $4370.00

3989 May 6, 1962 Dealers Liquor Co. $423.81

3990 May 6, 1962 Majestic Wine & Liq. ...

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