law did not require to be numbered, although made with a fraudulent purpose.

388

Effect of Restoration.

§ 1778. But if a bill is restored to its original form after being altered, and comes into the hands of a bona fide holder, he may recover on it,389 even though there may be traces of the alteration.390 On the other hand, if a note is altered by the maker raising the amount after an accommodation indorsement and without the indorser's knowledge, and the alteration is afterwards discovered by the holder and the original amount restored with the indorser's knowledge, the indoiser will not be liable.391

Estoppel by Indorsement.

392

§ 1779. It has been held that one who indorses a bill which has been altered in any way is liable to subsequent parties, although the cases are not uniform in this view.3 An indorsement warrants the genuineness of prior signatures, and the indorser is estopped from setting up that such signature is a forgery.393 And this is true of the blank indorsement of a check for the purpose of deposit, negligently left upon it when the check was repudiated and returned, and afterwards transferred with it to a bona fide holder.3 394 So, of a second

388 Com. v. Emigrant Industrial Sav. Bank, 98 Mass. 12; Suffell v. Bank, 7 Q. B. Div. 270.

389 Benj. Chalm. Dig. art. 248; Kountz v. Kennedy, 63 Pa. St. 187. Especially where the alteration was an immaterial addition. son, 125 Mass. 496.

Whitmore v. Nicker

390 Shepard v. Whetstone, 51 Iowa, 457, 1 N. W. 753. 891 Citizens' Nat. Bank v. Richmond, 121 Mass. 110. 392 Archer v. Ward, 9 Grat. (Va.) 622. And see § 752 et seq., supra. 393 Cabot Bank v. Morton, 4 Gray (Mass.) 156; Burgess v. Bank, 4 Bush (Ky.) 600; or that the paper has been altered, Rapp v. Bank, 136 Pa. St. 426, 20 Atl. 508; Alleman v. Wheeler, 101 Ind. 141. Although he expressly refuses to guaranty the maker's solvency. Herrick v. Whitney, 15 Johns. (N. Y.) 240. And although his indorsement was obtained by a fraudulent misrepresentation as to the maker's signature. Mosher v. Carpenter, 13 Hun (N. Y.) 602. So, one who guaranties a note after inspecting it is liable to a bona fide holder, although it is afterwards discovered to be a forgery. Veazie v. Willis, 6 Gray (Mass.) 90. And see § 752, supra.

394 Turnbull v. Bowyer, 40 N. Y. 456, affirming 2 Rob. (N. Y.) 411.

indorsement, after a prior forged indorsement, although the note was discounted directly for the maker. 395 And one who transfers a note without indorsement, by mere delivery, warrants the genuineness of the prior signatures.396 And the purchaser, after discovery of the forgery, may recover the consideration paid from the party transferring to him.397 And such payment, made to a broker, may be recovered, although he had paid the money over to his principal, whom he had not disclosed.398

Estoppel by Acceptance.

1780. The acceptance of a bill warrants the genuineness of the drawer's signature.399 Thus, a bank certifying a forged check is liable on it to a bona fide holder. 400 But it is not liable, if the check has If the drawee, however, pays a

been altered in a material part.401

bill by mistake on the faith of a forged bill of lading attached to it, he cannot recover such payment.402

But the acceptor of a bill may set up the forgery of an indorsement.403 And, if he pays the bill to a stranger upon an unauthor

395 State Bank v. Fearing, 16 Pick. (Mass.) 533.

396 2 Daniel, Neg. Inst. 368; 2 Pars. Notes & B. 589. And see § 753, supra. 397 Byles, Bills, 339; Jones v. Ryde, 5 Taunt. 488, 1 Marsh. C. P. 157; Bruce v. Bruce, 5 Taunt. 495, note, 1 Marsh. C. P. 165; Gurney v. Womersley, 4 El. Morrison v. Currie, 4 Duer

& Bl. 133; Brewster v. Burnett, 125 Mass. 68; (N. Y.) 79; Smith v. McNair, 19 Kan. 330; Hargrave v. Dusenberry, 9 N. C. 326.

398 Merriam v. Wolcott, 3 Allen (Mass.) 258.

399 Benj. Chalm. Dig. art. 212; 2 Daniel, Neg. Inst. 369; 1 Edw. Bills & N. § 272; 2 Pars. Notes & B. 590; Story, Bills, § 262; Price v. Neal, 1 W. Bl. 390. 3 Burrows, 1354; Jenys v. Fawler, Strange, 946; Goetz v. Bank, 119 U. S. 551, 7 Sup. Ct. 318; Howard v. Bank, 28 La. Ann. 728. Although the drawer's name is a fictitious one. Cooper v. Meyer, 10 Barn. & C. 468. And see

§ 629, supra.

400 Hagen v. Bank, 6 Lans. (N. Y.) 490; Clews v. Association, 89 N. Y. 418. 401 Marine Nat. Bank v. National City Bank, 59 N. Y. 67; National Bank of Commerce in New York v. National Mechanics' Banking Ass'n of New York, 55 N. Y. 211; White v. Bank, 64 N. Y. 316; Clews v. Association, supra. But see Louisiana Nat. Bank of New Orleans v. Citizens' Bank of Louisiana, 28 La. Ann. 189.

402 Hoffman v. Bank, 12 Wall. 181.

403 2 Daniel, Neg. Inst. 373; 2 Pars. Notes & B. 590; Story, Bills, § 262. And see §§ 632, 666, supra. But it is otherwise if the drawer issued the bill

ized indorsement, it will not amount to an acceptance which will render him liable as acceptor to the real owner.

404

Estoppel by Conduct-Admissions.

§ 1781. If the maker sells a note with an indorsement in the payee's name, he will be liable, although the payee's signature is forged.405 So, if a bill is indorsed and delivered to one who falsely personates the rightful owner, and who afterwards indorses and transfers the note in the name of such owner to a bona fide holder, the original indorser will be estopped from denying the validity of the transfer or attacking the indorsement as a forgery.406 And one who erases his own indorsement cannot afterwards prove that it was a forgery. 407

Where a party admits his signature, he will be estopped from setting up that it is a forgery.408 But this is only true where the instrument was produced or clearly identified at the time, and where the admission has been acted on in such way as to constitute an equitable estoppel.409 Where a check, purporting to be certified by the teller of a bank, is presented to him, and pronounced by him to with the forged indorsement, and would therefore be liable to the acceptor, who paid it. Hortsman v. Henshaw, 11 How. 177.

404 First Nat. Bank of Washington v. Whitman, 94 U. S. 343.

405 Beal v. Roberts, 113 Mass. 525; Coggill v. Bank, 1 N. Y. 113; Meacher v. Fort, 3 Hill (S. C.) 227.

406 Forbes v. Espy, 21 Ohio St. 474. So, where the government delivers its check to A., believing him to be the payee, and A. introduces B. to the bank as the payee, and the check is paid to B. United States v. Bank, 45 Fed. 163.

407 Broadwell v. Stiles. 8 N. J. Law, 58; or was barred by the statute of limitations, Outhouse v. Outhouse, 13 Hun (N. Y.) 130. And he cannot object to parol evidence of the contents of an indictment for forgery. U. S. v. Britton, 2 Mason, 464, Fed. Cas. No. 14,650.

408 Byles, Bills, 203; 2 Daniel, Neg. Inst. 361, if deliberate; 1 Edw. Bills & N. § 275; Leach v. Buchanan, 4 Esp. 226; Casco Bank v. Keene, 53 Me. 103; Hefner v. Dawson, 63 Ill. 403; Hefner v. Vandolah, 62 Ill. 483, 57 Ill. 520; Rudd v. Matthews, 79 Ky. 479. And see Cooper v. Le Blanc, 2 Strange, 1051. And in such case the maker is liable for the amount of the note, and not merely for the damage caused by the misrepresentation. Casco Bank v. Keene,

supra.

409 Sheller v. McKenney, 17 Ill. App. 185. If the plaintiff was not influenced

be all right, the bank will be bound by this admission, although the certification was forged.410 And the defendant is estopped from setting up an alteration or forgery, where he has himself induced the purchaser to take the bill as authentic,411 or where he has consented to the release of a prior party expressly on that ground.12 And, where a father's name is forged to a joint note by him and his son, evidence that he had previously paid such notes with knowledge of their true character will be admissible, as tending to show an authority on the part of the son to sign for the father.413 But the mere payment of a previous similar forgery will not estop the party making the payment from defending against a later forgery.114

Estoppel by Laches.

§ 1782. Where part of a note is written in pencil, and the penciling is erased, the party writing it is estopped by his negligence from setting up such alteration against a bona fide holder.+15 So, if he negligently executes the paper, with a condition so written that it may be afterwards removed without detection, and this is done.416 So, if he negligently tears a bill into two pieces and throws it away, and the pieces are picked up in his presence, and afterwards put together and transferred as an uncanceled bill to a bona fide holder.*417 So, if a bank receives on deposit from a stranger a forged check on

by the representation, the defendant will not be estopped. Starr v. Yourtee, 17 Md. 341.

410 Continental Nat. Bank v. National Bank of Commonwealth, 50 N. Y. 575. 411 Phillips v. Im Thurn, L. R. 1 C. P. 463.

412 Conable v. Smith, 61 Hun, 185, 15 N. Y. Supp. 924; although the party released was insolvent.

413 Hammond v. Varian, 54 N. Y. 398; Crout v. De Wolf, 1 R. I. 393. 414 Morris v. Bethell, L. R. 5 C. P. 47; People v. Bank of North America, 75 N. Y. 547; Whiteford v. Munroe, 17 Md. 135. Especially if it was paid before the forgery was discovered. Palm v. Watt, 7 Hun (N. Y.) 317.

415 Harvey v. Smith, 55 Ill. 224;

Hunt, 120 Cal. 46, 52 Pac. 115.

Seibel v. Vaughan, 69 Ill. 257; Walsh v.

So, where the cou

416 Noll v. Smith, 64 Ind. 511; Cornell v. Nebeker, 58 Ind. 425; Phelan v. Moss, 67 Pa. St. 59; Zimmerman v. Rote, 75 Pa. St. 188. dition was detached, and a blank time of payment filled in.

54 Ill. 213.

417 Ingham v. Primrose, 7 C. B. (N. S.) 82.

RAND.C.P.-158

Elliott v. Levings,

(2513)

another bank, crediting it as a special deposit subject to be checked out when paid, and sends it through the clearing house, and it is paid by the drawee bank in the drawer's absence, although overdrawing his account, and is afterwards repudiated by him as a forgery, but the bank receiving it as a deposit had in the meanwhile paid it out on the depositor's checks, the loss will fall on the drawee.418 So, where a bank pays its own notes, which have been fraudulently raised, it cannot recover the payment, if it retains the notes for a long time before returning them.19 But a failure for 14 days to give notice. that an indorsement is a forgery will not estop the pretended indorser from setting up such defense.120 And one who deposits funds in a bank, and fails to examine his pass book and returned checks, will not be estopped by that fact alone from afterwards setting up against the bank the forgery of a check returned,421 unless his previous conduct amounts to an equitable estoppel; 422 nor by maintaining silence at the request of an agent of the bank itself.423

But a party does not waive the defense of forgery by assenting to an extension of time on further security by the maker to the holder, where the notes were not shown him and he reserved all rights against other parties.424 So, if a bank depositor gives her attorney a check for half the amount as a loan, and he draws the balance of the deposit on a forged check, and afterwards deposits a smaller sum to the credit of the depositor, and it is drawn out by her and credited on the loan, she will not be estopped from recovering from the bank the amount paid out by it on the forged check.425

Whether there has been negligence and estoppel on the defend

418 Commercial & Farmers' Nat. Bank v. First Nat. Bank of Baltimore, 30 Md. 11.

419 For 19 days, Bank of U. S. v. Bank of Georgia, 10 Wheat. 333; or for 15 days, Gloucester Bank v. Salem Bank, 17 Mass. 33.

420 McKenzie v. Linen Co., 44 Law T. 431.

421 Bank of British North America v. Merchants' Nat. Bank of New York City, 91 N. Y. 106; Janin v. Bank, 92 Cal. 14, 27 Pac. 1100.

422 Leather Manufacturers' Nat. Bank v. Morgan, 117 U. S. 96, 6 Sup. Ct. 857. And the depositor is only liable for ordinary care. Frank v. Bank, S1 N. Y. 209.

423 Ogilvie v. Mortgage Co. [1896] App. Cas. 257, distinguishing McKenzie T. Linen Co., 6 App. Cas. 82.

424 Bell v. Shields, 19 N. J. Law, 93.

425 Underhill v. Bank, 32 Hun (N. Y.) 432.