National Bank of Commonwealth v. Grocers' National Bank

By the Court.—Van Vorst, J. The drawee of a check or bill of exchange is presumed to know the handwriting of the drawer, and the genuineness of the signatures to the paper, and having paid the same, although it should afterward be discovered that the name of the drawer was forged, he cannot recover back the money from the party to whom it was paid. This was determined quite early, in Price v. Neal (3 Burr. 1354). In that case, two forged bills were drawn upon the plaintiff. Notice of the first bill was left at the plaintiff’s house on the day it became due; plaintiff sent his servant to call on the defendant to pay it, which was done. The other bill the plaintiff accepted and paid at maturity.. On discover [291] ing the forgery, plaintiff brought an action for money had and received, to recover back the amount paid. The court held that the action would not lie. Lord Mansfield said it was incumbent upon the plaintiff to be satisfied that the bill drawn upon him was in the drawer’s hand before he accepted or paid it, but that it was not incumbent on the defendant to inquire into it. If the holder was at all implicated in the forgery, the action would lie against him (Bank of Commerce v. Union Bank, 3 N. Y. 230). In this last case, the Bank of Commerce was allowed to recover back the amount of a forged bill which it had paid to the Union Bank, but the recovery was justified on the ground that the forgery was not in counterfeiting the name of the drawer, “ but in altering the tody of the bill,” there being no presumption that the body of the bill is in, the handwriting of the drawer, or in any handwriting known to the drawee; and it is unreasonable to require of him knowledge of the handwriting of any part of the bill except the signature of the drawer. The case first above cited charges the loss of the drawee to his own negligence, in accepting or paying a bill which he should have known to have been a forgery. The last case does not question, but in terms affirms, the principle announced in Price v. Neale. The check in this case appears to have come regularly to the plaintiff in the course of business from its dealers, and under no circumstances to excite suspicion, or make inquiries necessary. The check went to the clearing-house, and was then, in an adjustment of the checks and accounts between plaintiff and defendant, in pursuance of the rules of this body, credited to plaintiff and charged to defendant. As the usage of the clearing-house is not to pass upon the genuineness of the paper which passes through it, the act of debiting the defendant with the amount of the check should not charge the defendant with having adopted or accepted the check. But the check went from the clearing-house to the defendant’s bank, and was there received, and its being charged to it at the clear [292] ing-house was acquiesced in by the defendant. It does not appear how soon the defendant ascertained the forgery, but it appears that it held on to the check for several months, and then, “ in violation of the rules prescribed by the association, and of the rights of the plaintiff,” returned same to the clearinghouse, and caused it there to be debited to the plaintiff and credited to itself. The plaintiff at once repudiated this debiting of the check to its account, and of the return of the check, by bringing this action. If the defendant can in this way, and by the instrumentality of the clearing-house, and against its rules, succeed in getting back money which it had previously paid on a forged check, it may do indirectly what it cannot do directly. It is quite clear that if the defendant had sued the plaintiff for the money as soon as the forgery was discovered, it would have failed in the action. The fact that the Bank of the Commonwealth is plaintiff rather than defendant cannot change the absolute rights of the parties. The payment by the plaintiff, on the return of the check to it, was not voluntary. It was forced by the action of the clearing-house. This action is equitable in its nature. The question really is upon whom the loss should fall. Under the circumstances of this case, I think the defendant should bear the loss. Judgment affirmed.