Clearfield Trust Co. v. United States

318 U.S. 363 (1943)

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Nature of the Case

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Facts

The Government (P) issued a check and mailed it. The check was never received by the proper party. An endorsement was forged, and it was cashed at J.C. Penney Co. They, in turn, endorsed it to Clearfield Trust Co. (D). D endorsed it with a guaranty of all prior endorsements and collected the amount from the Federal Reserve. None of the parties in the line of transaction suspected forgery Federal officials demanded payment from Clearfield (D) on the guaranty eight months after the forgery was discovered. D refused. P sued. The district court applied Pennsylvania law to the case and held that the delay barred P's claim. The court of appeals reversed. D appealed.