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Marjorie Strader v. Dan Haley, et al.

12 N.W. (2d) 608 31 December 1943 Justice Peterson
petitioners
Marjorie Strader
respondents
Dan Haley, Park Recreation Parlor, Inc., Frank Lux, John Esslinger, Inc., Liberty State
Bank
summary
Dan Haley and his wife lived with plaintiff Marjorie Strader. Between July 11, 1936
and June 14, 1941, 69 checks were negotiated by Haley. Strader claimed that Haley
forged her name as drawer for 2 checks and as indorser in a 57 checks. Checks varied
amounts. Park Recreation Parlor, Luz, Esslinger, and Liberty State Bank cashed the
checks. Plaintiff claimed she never made such indorsements or signed as drawer. The
trial court found that plaintiff had ratified Haleys actions and conduct in cashing the
checks. The Supreme Court of Minnesota ruled in favor of the defendants. It stated
that Strader ratified all the unauthorized signatures; that by reason of such ratification
she is precluded from setting up the fact that her signatures were unauthorized in the
actions against Haley and the other defendants. The case at bar distinguished between
forgery which amounts to a crime and one which does not, and allows ratification in the latter
case only. An unauthorized signature on a note, check, or other instrument under
circumstances not constituting the crime of forgery may be ratified.

facts of the case
Dan Haley and his wife lived with plaintiff, Marjorie Strader. Strader received her income in the form of
checks from her attorney who was her agent in collecting money due her.
Between July 1936 and June 1941, 69 checks were negotiated by Dan Haley. Marjorie Strader claimed that
Haley had forged her name as drawer on two checks. Strader also claimed that her indorsement had been
forged on multiple dividend checks. Park Recreation Parlor, Inc. cashed 31 checks; Luz cashed 20 checks;
Esslinger cashed 7 checks; and the Liberty State Bank cashed 8 checks.
Strader brought four separate actions, one against Haley, two against parties who were alleged to have
cashed checks for Haley, and an action for declaratory judgment against Liberty State Bank.
The trial court ruled in favor of Haley. It stated that Strader had ratified Haleys actions and conduct in
cashing the checks. The trial court found that Strader received from Haley all the proceeds of the checks in the
form of cash or merchandise with knowledge that such case and merchandise were the proceeds of the checks.
Strader appealed.

issues
1. Whether or not the word precluded in Sec. 23 of the NIL includes cases of ratification. YES
2. Whether or not a forgery may be ratified. YES, BUT ONLY IF THE FORGERY DOES NOT
AMOUNT TO A CRIME.
3. Whether or not there was ratification on the part of Strader. YES

ratio
ISSUE 1
Where a signature on a check or other negotiable instrument is forged or unauthorized, the rights of the
parties to the instrument are determined by Sec. 23 of the NIL. The history of the NIL shows that precluded
was intended to apply to cases of ratification. NIL is based upon copies of the English Bills of Exchange Act.
Sec. 23 of the NIL, is substantially the same Sec. 24 of the English Act, except that the English act has a proviso
that nothing in this section shall affect the ratification of an unauthorized signature not amounting to
forgery. It is clear that under the English act precluded was broad enough to include cases of ratification.
At the time the NIL was drafted, the rule was settled that an unauthorized signature not amounting to
forgery could be ratified. By dropping the proviso, no intention to change the meaning of Sec. 23 of the NIL
was shown. The process of dropping the proviso clearly shows that precluded was intended to apply to
cases if ratification. After all, a forged signature is an unauthorized one. It is preposterous to think that it was
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intended to permit a forged, but not an unauthorized, signature to be ratified and thus preclude a party. The
framers of the NIL intended that that under the act a party may be precluded by ratification.

ISSUE 2
Forgery is an unauthorized signature on an instrument or a material alteration thereof in violation of a
criminal statue. Where the unauthorized signing of anothers name to an instrument does not constitute the
crime of forgery, the party whose name was signed may ratify the signature and become bound thereby.
Where a principal accepts and retains the benefits of the unauthorized act of an agent with full knowledge of
all the facts, he ratifies the act. This rule applies to unauthorized signatures.

ISSUE 3
In the case at bar, the evidence sustains the finding that Strader received the proceeds of the checks in case
and merchandise with full knowledge of all the facts. Haley testified that he cashed the checks and delivered
the cash and merchandise to Strader pursuant to Straders directions. The fact that Strader did not complain to
her attorneys that she had not received any check in question, as was her custom when she did not receive the
checks, tends to show that her claim that she did not receive them is untrue and that she not only received
them, but that she delivered them to Haley. Furthermore, no reason appears why Haley should have paid any
money or delivered any merchandise to Strader unless the money and merchandise belonged to Strader.