First National Bank of Chicago v. Northwestern National Bank of Chicago

Waterman, J. That the indorser of negotiable paper guarantees the genuineness of the signatures of all preceding indorsements, is undisputed. 2 Parsons on Notes and Bills, 588; Daniel on Negotiable Instruments, Sec. 1557; Bigelow on Estoppel. The First National Bank by its indorsement guaranteed that all the preceding indorsements were genuine. But a bank is bound to know the signatures of its depositors, and when these checks were presented to appellee it was bound to know that the apparent signatures of the Telephone Company were forgeries. Notwithstanding this knowledge it paid the checks. Appellant therefore claims that although it has received the money upon this forged paper, appellee can not now deny that the signatures of the Telephone Company, or of the payees, were genuine. If the signatures of the Telephone Company had been genuine, then, admittedly, appellant would have had no defense; if it has any now it is based entirely upon the fact of the forgery of the name of the maker. If appellant had lost anything by reason of the failure of appellee to at once discover the forgery or by its payment of the checks, the case would present a different aspect; but it has lost nothing by reason of anything that appellee has done. It had in its hands some forged, worthless paper; it has obtained payment thereon; and when it'pays back the money it so received it will be entitled to have restored to it the forged paper it parted with, and can then demand reimbursement from Chapin & Gore, who indorsed these checks to it. Two of the checks were certified by appellee before they were transferred to Chapin & Gore; this, doubtless, was an acknowledgment of the genuineness of the signature of the maker, and that he had sufficient funds to his credit to cover these drafts; but it was not any certificate that the signatures of the payees thereon were genuine; that was a matter concerning which the bank had not presumptively any knowledge, or to which it made by the certification either representation or undertaking, and was a matter which whoever took these checks knew he might be required to guarantee before he could obtain payment thereon. The recent case of Vagleino v. Bank of England, Law Reports, 22 Queen’s Bench Division, 103, and the same case upon appeal in Vol. 23, 243, is in many respects similar to this, being an action upon bills of exchange, the names of the drawer and payees being forgeries, which had been paid by the bank after the genuine acceptance of the drawee had been placed thereon. The forgeries amounted to the sum of £71,500. The conclusion reached was that the acceptor, Vagleino, could not be charged with payment made by the bank upon forged signatures of payees who were, as in the case at bar, real persons; that the acceptor was bound to know the signature of the drawer, and by his acceptance was estopped to deny it, but the bank as purchaser of the bills could charge them to Yagleino only upon proof of the genuineness of the signatures of the payees. The judgment of the court below is affirmed. Judgment affirmed.