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afterwards brought to recover back the money paid on the draft. The sopreme court gave judgment for the plaintiffs, holding that as the loss had already occurred before the bill was either accepted or paid the holder had suffered no loss, and it ought not to be permitted to profit by the mere accident of payment. See also National Bank of Commerce v. National M. B. Ass'n, 55 N. Y. 211; 14 Am. Rep. 232.

In Rouvant v. San Antonio Nat. Bank, 63 Tex. 610, the holder of a check signed by a person in a certain name took it from the person, although he had previously taken from him a check signed in a different name. On presenting the check, which proved to be a forgery, to the bank for payment, he did not mention this fact, and he was held bound to repay the money, because of his neglect to impart this knowledge of suspicious circumstances at the time he received the money.

THE EXCEPTION NOT GENERALLY APPLICABLE TO RAISED OR ALTERED CHECKS OR DRAFTS. The exception applies only to cases in which the drawer's signature to a check or draft has been forged. It does not apply to cases where the forgery consists in altering the body of the check or draft. The bank or drawee is not bound to know the handwriting in the body of the instrument. Where, therefore, money is by mistake paid by a bank upon a raised or altered check, or by a drawee upon a raised or altered draft, neither party being in fault, it may generally be recovered back, as paid without consideration; but if either party has been guilty of negligence or carelessness, by which the other has been injured, the negligent party must bear the loss: 2 Daniel on Negotiable Instruments, 3d ed., sec. 1661; Espy v. Bank of Cincinnati, 18 Wall. 604; Redington v. Woods, 45 Cal. 406; 13 Am. Rep. 190; Parke v. Roser, 67 Ind. 500; 33 Am. Rep. 102; Third Nat. Bank of St. Louis v. Allen, 59 Mo. 310; Bank of Commerce v. Union Bank, 3 N. Y. 230; National Bank of Commerce v. National Mechanics' Banking Ass'n, 55 N. Y. 211; 14 Am. Rep. 232; Marine Nat. Bank v. National City Bank, 59 N. Y. 67; 17 Am. Rep. 305; White v. Continental Nat. Bank, 64 N. Y. 316; 21 Am. Rep. 612; Security Bank v. National Bank of the Republic, 67 N. Y. 458; 23 Am. Rep. 129; Hall v. Fuller, 5 Barn. & C. 750. But see Louisiana Nat. Bank v. Citizens' Bank, 28 La. Ann. 189; 26 Am Rep. 92.

In delivering the opinion of the court in Marine Nat. Bank v. National City Bank, 59 N. Y. 77, 17 Am. Rep. 312, Allen, J., said: "Moneys paid upon checks and drafts which have been forgeries, either in the body of the instrument or in the indorsements, or in any respect, except the name of the drawer, have uniformly been held recoverable as for money paid by mistake, and expressly upon the ground that payment, as an admission of the genuineness of the instrument, was the same as an acceptance, and only operated as an admission of the signature of the drawer. The doctrine is applied to cases of bills altered in the body by the raising of the amount for which they were drawn, and also to those in which the name of the payee has been feloniously changed, in several cases, and uniformly applied whenever the question has arisen in this state."

But if a bank on which a raised draft is drawn pays it through mistake, upon its presentation to it by a correspondent bank, as agent, to which it is forwarded for collection, the collecting bank cannot be compelled to repay it, where it has paid over to its principal before notice of the mistake: National Park Bank v. Seaboard Bank, 114 N. Y. 28; 11 Am. St. Rep. 612; National City Bank v. Westcott, 118 N. Y. 468.

NEGLIGENCE IN FILLING UP CHECK, EFFECTt of. -If the customer of a bank draws his check in such a careless or incomplete manner that a material alteration may be readily made without leaving a perceptible mark, or giving the check a suspicious appearance, he may, if a fraud be perpetrated, be held to suffer the loss. In the case of Young v. Grote, 4 Bing. 253, a depositor in a bank, on leaving home, gave to his wife several checks signed in blank, to be filled up according to her needs. She filled up one for fifty-two pounds two shillings, but began the word "fifty" with a small letter, and wrote it in the middle of a blank line. In writing the figures in the margin, she also left a considerable space between the mark "£" and the figures "52." She gave the check in this form to her husband's clerk, to get the money, and he inserted the words "three hundred " before the "fifty," and the figure "3" before the figures "52," and drew £352 upon it. The court held that the loss must be borne by the drawer, because the careless drawing of the check had made the forgery easy and simple: 2 Daniel on Negotiable Instruments, 3d ed., sec. 1659; 2 Morse on Banks and Banking, 3d ed., sec. 480. But a merchant is not guilty of such negligence as will render him liable on his check in the hands of a holder in good faith, and for value, in sending to the post-office, by a clerk who knew its contents, a sealed letter containing such check, which was made payable to order, and which check the clerk abstracted, and passed, after altering it by forging the words “ or bearer," and obliterating the words "or order": Belknap v. National Bank of North America, 100 Mass. 376; 97 Am. Dec. 105. And in Mackintosh v. Eliot National Bank, 123 Mass. 393, it was held that a bank which pays out money on a check purporting to be signed by a depositor, but the signature on which is in fact forged by his clerk, is not, in the absence of evidence that the clerk had, or was supposed by the bank to have, authority to sign the depositor's name, exempt from liability to the depositor, by proof that the forgery was committed on a blank form taken from the depositor's check-book, which was left lying about in his office during the day; that it was stamped with a hand-stamp, sometimes used on his checks, and which was accessible to any one in the office; that the clerk was allowed to fill up checks, and was introduced by the depositor to the officers of the bank as the person who was authorized to receive money on the depositor's checks.

It is a general rule that if the loss can be traced to the fault or negligence of any party, it will be fixed upon him: 2 Daniel on Negotiable Instruments, 3d ed., sec. 1657; First National Bank v. Tappan, 6 Kan. 456; Gloucester Bank v. Salem Bank, 17 Mass. 32; Clews v. Bank of N. Y. Nat. B. Ass'n, 114 N. Y. 70. In the case last cited, a draft upon defendant was indorsed by the payee and mailed to the indorsee. It never reached him, but fell into the hands of a knave, who presented it to defendant to be certified. A memorandum show. ing the number and amount of the draft, and that it was certified, was entered in a register kept by the defendant. The drawer notified the defendant by letter of the loss of the draft, and not to pay it. The defendant then added to the memorandum: "Stop pay't; see letter." Subsequently, the knave raised the amount and changed the date and the name of the payee, and offered it to the plaintiffs in payment for certain bonds. In an action to recover the amount of the draft as raised, plaintiffs proved that they sent their messenger to the defendant to ascertain whether the certification was good. The person in attendance answered, "Yes," without referring to the register; and upon the messenger's return with this reply, the plaintiffs received the draft in payment for the bonds. The court held that there was sufficient evidence to justify the finding that the defendant was negligent in AM. ST. REP., VOL. XVII. — 57

failing to disclose the facts to the plaintiffs' messenger, and to authorize a recovery. But in Goddard v. Merchants' Bank, 4 N. Y. 147, the plaintiffs, in New York City, being informed that the draft of the drawer, residing in Ohio, had been protested, went to the notary to take it up, and the notary being out, left a check for the amount and the notary's fees. The notary paid the bank and got the draft, which plaintiffs discovered to be a forgery as soon as it was shown to them. It was held that they could recover back the money paid, and that they were not negligent, under the circumstances, in paying the money without seeing the draft.

MONEY PAID UPON FORGED INDORSEMENT OF CHECK OR DRAFT may be recovered back. The bank or drawee is not bound to know the signature of an indorser. And the holder, whether he indorses the instrument or not, warrants the genuineness of all prior indorsements. If, therefore, a check or draft upon which the name of a prior indorser has been forged is paid, the amount may be recovered back from the party to whom it has been paid, or from any party who indorsed it subsequent to the forgery.

And if a check is drawn payable to the order of an existing person, and the indorsement of such person is forged, and thereafter payment is made by the bank, such payment will be no acquittance to it. A payment made oth. erwise than according to the depositor's directions is no discharge of the bank's obligations to him: 2 Daniel on Negotiable Instruments, sec. 1663; 2 Morse on Banks and Banking, sec. 474; Atlanta Nat. Bank v. Burke, 81 Ga. 598; Vanbibber v. Bank of Louisiana, 14 La. Ann. 481; 74 Am. Dec. 442; Lery v. Bank of America, 24 La. Ann. 220; 13 Am. Rep. 124; Lennon v. Brainard, 36 Minn. 330; First Nat. Bank v. State Bank, 22 Neb. 769; 3 Am. St. Rep. 294; Star F. 1. Co. v. New Hampshire Nat. Bank, 60 N. H. 442; Buckley v. Second Nat. Bank, 35 N. J. L. 400; 10 Am. Rep. 249; Johnson v. First Nat. Bank, 6 Hun, 124; Canal Bank v. Bank of Albany, 1 Hill, 287; Coggill v. American Exchange Bank, 1 N. Y. 113; 49 Am. Dec. 310; Morgan v. Bank of State of New York, 11 N. Y. 404; Turnbull v. Bowyer, 40 N. Y. 456; 100 Am. Dec. 523; Thomson v. Bank of B. N. A., 82 N. Y. 1; Citizens' Nat. Bank v, Importers' and Traders' Bank, 119 N. Y. 195; Shaffer v. McKee, 19 Ohio St. 526; Dodge v. National Ex. Bank, 20 Ohio St. 234; 5 Am. Rep. 648; 30 Ohio St. 1; Pickle v. Muse, 88 Tenn. 380, post, p. 900; Leather Mfrs. Bank v. Mer chants' Bank, 128 U. S. 26.

If, however, the drawer puts in circulation a draft or check, with the indorsement of the payee already upon it, and it is purchased in the market by a bona fide holder, who presents it to the drawee, by whom it is paid, the drawee cannot recover back the money he paid to such bona fide holder: Hortsman v. Henshaw, 11 How. 177; Star F. I. Co. v. New Hampshire Nat. Bank, 60 N. H. 442; Meacher v. Fort, 3 Hill (S. C.) 227; 30 Am. Dec. 364; York Bank v. Asbury, 1 Biss. 233; 2 Morse on Banks and Banking, sec. 476. And where the drawer of a bill of exchange payable to order himself indorses the bill, and passes it to a bank, which discounts it, and collects the amount from the drawee, the latter cannot recover back from the bank the money paid to it by him: Coggill v. American Ex. Bank, 1 N. Y. 113; 49 Am. Dec. 310. Bronson, J., in delivering the opinion in this case, said: “A bona fide holder may treat it as a bill payable to bearer. The bank had a good title to the bill as against the drawers and the payee, and that was a good title against all the world. No one is injured by this doctrine. The bill has answered the end for which it was drawn. The plaintiff has paid money for the drawers in pursuance of their request; and he has the same remedy against them that he would have had if the indorsement had been genuine."

CERTIFICATION OF CHECK, EFFECT OF, ON RIGHTS OF BANK PAYING FORGED CHECK.The better opinion is, that a bank, by certifying a check, either verbally or in writing, warrants only the genuineness of the drawer's signa ture, and that it has funds to meet the check; that it does not thereby warrant the genuineness of the body of the check, or of any indorsement upon it; and that if there has been any fraudulent alteration, or forged indorsement, prior to the certification, the certification is not binding. And if the bank afterwards, through mistake, pays the sum to which the check has been raised, it may recover back the difference between that and the original sum for which it was drawn: 2 Daniel on Negotiable Instruments, sec. 1603; 2 Morse on Banks and Banking, sec. 482; Espy v. Bank of Cincinnati, 18 Wall. 604; Park v. Roser, 67 Ind. 500; 33 Am. Rep. 102; National Bank of Com merce v. National M. B. Ass'n, 55 N. Y. 211; 14 Am. Rep. 232; Marine Nat. Bank v. National City Bank, 59 N. Y. 67; 17 Am. Rep. 305; Security Bank v. National Bank of the Republic, 67 N. Y. 458; 23 Am. Rep. 129; contra, Louisiana Nat. Bank v. Citizens' Bank, 28 La. Ann. 189; 26 Am. Rep. 92.

NOTICE OF FORGERY AND DEMAND FOR RESTITUTION, WHEN TO BE GIVEN OR MADE. It is only reasonable that a party who has paid money on a forged instrument, and seeks to recover it back, should be required to give notice of the forgery, and make demand of restitution within a reasonable time. The earlier cases, both in England and in this country, required notice to be given with very great promptitude: Cocks v. Masterman, 1 Barn. & C. 902; Smith v. Mercer, 6 Taunt. 76; Gloucester Bank v. Salem Bank, 17 Mass. 33; Bank of St. Albans v. Farmers' and Mechanics' Bank, 10 Vt. 141; 33 Am. Dec. 188; 2 Daniel on Negotiable Instruments, sec. 1371; 2 Morse on Banks and Banking, sec. 488. In Cocks v. Masterman, 1 Barn. & C. 902, a delay of one day was held to be fatal.

But the doctrine established by the great weight of modern authority in this country is, that mere lapse of time in the abstract, however long, will not bar the right of the party to allege the forgery, and recover back the money paid, provided he gives notice and makes demand within a reasonable time after he discovers the forgery: 2 Daniel on Negotiable Instruments, sec. 1372; 2 Morse on Banks and Banking, sec. 487; Schroeder v. Harvey, 75 Ill. 368; First Nat. Bank v. Tappan, 6 Kan. 456; 7 Am. Rep. 568; Koontz v. Central Nat. Bank, 51 Mo. 275; Third Nat. Bank v. Allen, 59 Mo. 310; Canal Bank v. Bank of Albany, 1 Hill, 287; Bank of Commerce v. Union Bank, 3 N. Y. 230; Goddard v. Merchants' Bank, 4 N. Y. 147; White v. Continental Nat. Bank, 64 N. Y. 316; 21 Am. Rep. 612; Corn Ex. Bank v. Nassau Bank, 91 N. Y. 74; 43 Am. Rep. 655; Ellis v. Ohio L. I. & T. Co., 4 Ohio St. 628. But in Weinstein v. National Bank, 69 Tex. 38, 5 Am. St. Rep. 23, it was held that a bank is not liable to a depositor for money paid on forged checks, where, by reason of the depositor's negligence and delay in examining his account and reporting the forgeries, the bank loses the opportunity of recov. ering the money which it would have had, if the discovery and report had been made in a reasonable time.

MENT.

PICKLE V. MUSE.

[88 TENNESSEE, 380.1

POSSESSION OF BANK CHECK BY DRAWEE PRIMA FACIE EVIDENCE OF PAT - Possession by the bank upon which it was drawn of a check payable to a particular person or order raises a presumption that it was paid to the payee therein named. But such presumption is rebutted by the positive and uncontradicted testimony of the payee that he in fact never did collect the check, or authorize any one to collect it for him. BANK CHECK RETURNED TO DRAWER VOUCHER OF PAYMENT WHEN. — A bank check returned to the drawer after being paid and debited to his account with the indorsement of the payee, is a voucher for such payment in favor of the drawer against the payee; but without such indorsement it is not evidence, as between drawer and payee, of such payment. ACCEPTANCE OF BANK CHECK NECESSARY TO MAINTAIN SUIT AGAINST BANK.

-The holder of a bank check cannot sue the bank for refusing payment thereof, in the absence of proof that the bank accepted the check, or did some other act equivalent to and implying acceptance. ACCEPTANCE OF BANK CHECK, WHAT IS SUFFICIENT EVIDENCE OF. - -The

acceptance of a bank check and assent to the payment thereof may be inferred from proof of the fact that the bank received and retained it when presented at its counter, and subsequently charged the check to the account of the drawer, and settled with him, deducting the amount of it. And the bank cannot escape liability to the payee for the amount of the check by saying that what it did in receiving the check and in paying it, and in debiting to the account of the drawer, was all through mistake; for that would be to suffer it to escape the consequences of its own mistake by pleading its own negligence as a defense.

DELIVERY OF BANK CHECK ESSENTIAL TO PAYEE'S RIGHT TO RECOVER THEREON. The payee of a bank check cannot maintain an action thereon against the bank on which it is drawn, unless it has been delivered to him by the drawer. RATIFICATION OF Unauthorized Delivery of BanK CHECK.—The payes of a bank check may adopt and ratify an unauthorizod delivery of the check to a stranger who, without authority, presents it to and receives payment thereof from the bank on which it is drawn. And the bringing of suit by the payee is a sufficient ratification by him of the unauthorized delivery.

AUTHORITY TO RECEIVE CHECK PAYABLE TO ORDER IMPLIES NO AUTHORITY TO INDORSE IT in the name of the payee, or to collect it without such indorsement.

BILL in equity. The opinion states the case.

Cooper and Frierson, for appellant.

Myers and Dayton, and Ivie and Ivie, for the respondents.

LURTON, J. This is a bill in equity to recover the sum of Bix hundred dollars, which complainant charges is due to him from either the People's National Bank or John T. Muse, both of whom are made defendants. The bill, in substance, alleges

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