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$ 49

Estoppel.

Forged

and induces him to act on that belief, or to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time: Pickard v. Sears, 6 A. & E. 469 (1837). See also Carr v. London & N. W. Ry. Co., L. R. 10 C. P. 307 (1875).

"Notice of such Forgery."-Where actual notice has been given or received, no question will arise as to when the year for action will expire. The difficulty will arise where notice or knowledge is to be inferred from the circumstances of the case, as for instance the fact of the cheque with the forged endorsement being given up to the drawer.

ILLUSTRATIONS.

1. Where defendant's name was signed by a nephew for whom he signature. was in the habit of indorsing on purchases from plaintiffs, and he had acknowledged his liability and asked for time, and only denied his liability after his nephew had absconded. Held, that he had precluded himself from disputing his liability: Pratt v. Drake, 17 U. C. Q. B. 27 (1858).

2. A cheque to the order of a company was cashed by a bank on the indorsation of the secretary. The by-laws required the signature of the president also. The secretary had on previous occasions indorsed in the same way, and the company had not objected. Held, that the bank was not liable to the company: Thorold Manufactu:ing Co. v. Imperial Bank, 13 O. R. 330 (1887); Standard Bank v. Stephens, 16 Q. L. R. 115 (1908).

3. Defendants separately called at plaintiff's bank and examined a bill to which their firm name had been forged. They both examined it closely, and one of them used words throwing doubts as to its genuineness, and gave an evasive answer as to its payment. The other promised to send a cheque for it the next day. They were held not to be precluded from setting up the defence of forgery: Merchants' Bank v. Lucas, 15 Ont. A. R. 573 (1889); affirmed in the Supreme Court: 18 S. C. Can. 704 (1890). A forged bill or note cannot be ratified: Westloh v. Brown, 43 U. C. Q. B. 402 (1878); Merchants' Bank v. Lucas, supra.

4. The holder of a promissory note whose title was derived from a forged indorsement although he acted in entire good faith, cannot recover the amount of the note from any of the previous indorsers: Larue v. Evanturel, 2 L. C. L. J. 112 (1866).

5. When the maker of a note, whose signature was forged, stated before suit that he had signed the note for the accommodation of the indorser and offered to pay if time was given, and the holder in consequence refrained from prosecuting the indorser for forgery; held that the maker was liable and was precluded from setting up the defence of forgery: Union Bank v. Farnsworth, 19 N. S. 82 (1886).

$ 49

6. Plaintiff, a sea captain, deposited with the defendants $1,000, and took a deposit receipt payable to his order, which he left with R., the managing owner of the vessel, who indorsed plaintiff's name Forged and drew the money. Plaintiff was absent three years, and on his signature. return R. confessed, promised to pay the money and gave a mortgage as security. Plaintiff was again absent two years, and when he returned R. had absconded. The jury gave a verdict for plaintiff, but held on appeal that by withholding from the bank for two years the knowledge he had, plaintiff by his laches was estopped from recovery: Scott v. Bank of New Brunswick, 31 N. B. 21 (1891).

7. Where a note is payable to the order of Henry Davis and is indorsed by another person of the same name it is a forgery and the indorsee cannot recover: Mead v. Young, 4 T. R. 28 (1790); and if he collect on the forged indorsement he is liable to refund: Johnson v. Windle, 3 Bing. N. C. 225 (1836); Robarts v. Tucker, 16 Q. B. 560 (1851); Ogden v. Benas, L. R. 9 C. P. 513 (1874); Carpenter v. Northborough National Bank, 123 Mass. 66 (1877); Ryan v. Bank of Montreal, 14 Ont. A. R. 533 (1887).

8. If a party whose name is forged on a bill acknowledges the signature, and a holder takes it on the strength of this, he is liable: Leach v. Buchanan, 4 Esp. 226 (1803).

9. Where the original indorsement of the payee's name is a forgery, a real indorsement by the payee after the bill has arrived at maturity will not give the holder any title: Esdaile v. La Nauze, 1 Y. & C. 394 (1835).

10. The name of a firm, as drawers and indorsers of a bill, was forged. The acceptor who negotiated it is estopped from setting up the defence of forgery to the indorsement as well as to the drawing: Beeman v. Duck, 11 M. & W. 251 (1843).

11. A clerk of the payee of a letter of credit forged the payee's name and gets the money from the bank. The payee can recover the amount from the bank: Orr v. Union Bank, 1 Macqueen H. L. 513 (1854).

12. A partner in a commercial firm fraudulently accepts a bill in the firm name for his private debt. The firm is estopped from setting up the fraud against a holder for value without notice: Hogg v. Skeen, 18 C. B. N. S. 432 (1865).

13. A partner fraudulently indorses for a private debt a bill payable to the firm. The indorsee collects the money. The partner becomes bankrupt. The other members of the firm and his trustee can recover the money from the indorsee: Heilbut v. Nevill, L. R. 5 C. P. 478 (1870).

14. Defendant in order to prevent the prosecution of one who had forged his name to a note wrote, "I hold myself responsible for a note dated, etc., bearing my signature." The ratification is illegal and he is not liable: Brook v. Hook, L. R. 6 Ex. 89 (1871).

$ 49 Forged

15. Before discounting a bill plaintiff went to the acceptor, and asked him if he had accepted bills for the drawer. He said he had but was not shewn the bills. The jury found for the defendant; the signature. Court refused a new trial, the Judge not saying that he was dissatisfied with the verdict: Levinson v. Young, 1 T. L. R. 571 (1885).

Recovery

paid on

dorsement.

16. When a bill becomes due and is presented for payment, and is paid in good faith, and the money is received in good faith, if such an interval of time has elapsed that the position of the holder may have been altered, the money so paid cannot be recovered from the holder, although indorsements on the bill subsequently prove to be forgeries London & River Plate Bank v. Bank of Liverpool, [1896] 1 Q. B. 7.

17. Where a person assumes and is known by a name not his own, and a cheque is drawn to his order and delivered to him, the drawer believing him to be another person of the name assumed by him, a holder in due course can recover on the cheque on the ground of estoppel Robertson v. Coleman, 141 Mass. 231 (1886). Followed in First Nat. Bank v. American Exchange Nat. Bank, 49 App. Div. N. Y. 349 (1899); and Hoffman v. ibid. 96 N. W. Rep. 112 (S. C. Neb. 1901).

50. If a bill bearing a forged or unauthorized enof amount dorsement is paid in good faith and in the ordinary forged en course of business, by or on behalf of the drawee or acceptor, the person by whom or on whose behalf such payment is made shall have the right to recover the amount so paid from the person to whom it was so paid or from any endorser who has endorsed the bill subsequently to the forged or unauthorized endorsement if notice of the endorsement being a forged or unauthorized endorsement is given to each such subsequent endorser within the time and in the manner in this section mentioned.

Rights

over.

2. Any such person or endorser from whom said amount has been recovered shall have the like right of recovery against any prior endorser subsequent to the forged or unauthorized endorsement. Notice of 3. Such notice of the endorsement being a forged or unauthorized endorsement shall be given within a reasonable time after the person seeking to recover the amount has acquired notice that the endorsement is forged or unauthorized, and

forgery.

may be given in the same manner, and if sent by § 50 post may be addressed in the same way, as notice Forged or of protest or dishonour of a bill may be given or addressed under this Act. 60-61 V., c. 10, s. 1.

As stated in the notes to the last section the latter part of that section was, in the Act of 1890, added to sec. 24 of the Imperial Act in order to give some relief to a bank and to endorsers where the bank had paid a cheque upon a forged or unauthorized endorsement. As it was considered that such did not accomplish the desired result, a sub-section was added in the amending Act of 1891. This again was not deemed satisfactory, and in 1897 the present section was substituted for it.

The present action is much wider than proviso (b) and sub-sec. 2 of the preceding one. They refer only to a cheque payable to order which has been paid on a forged endorsement. This refers not only to cheques but to any bill which has been so paid.

The payment by or for the drawee or acceptor must have been made in good faith and in the ordinary course of busiAs to the meaning of "good faith" in the Act, see sec. 3 and the notes thereon.

ness.

Any endorser on receiving notice of the forgery or want of authority should give notice to any prior endorser to whom he looks for indemnity, if such notice has not been given by the drawee or acceptor.

The notice is to be given within a reasonable time after the person seeking to recover has received such notice. Reasonable time is not defined in the Act, but has been held to be a mixed question of law and fact, and to be determined by the usage of trade and the particular circumstances. In case of dishonour or protest the party desiring to preserve his recourse must give notice not later than the next following juridical or business day: sec. 97; and it would be prudent to be equally diligent in this case. The Imperial Act provides that notice of dishonour is to be given within a reasonable time, and this has been interpreted to mean that if the parties live in the same place it should be sent so as to arrive the day after dishonour, if in different places, so as to go off by the next day's post if there is one.

unauthorized endorsement.

$ 50

Notice of forgery.

Procura

tures.

It is to be given in the same manner as notice of protest or dishonour; that probably means that it may be given to all endorsers subsequent to the forged or unauthorized endorsement, or to such only as are looked to for indemnity, and these in turn would have a reasonable time to notify the prior endorsers to whom they looked. The notice may be either in writing or personal, identifying the bill and indicating the defect: sec. 98. If sent by post the requirements of sec. 103 should be observed.

The amount of recovery is determined by the amount properly paid and not by the amount of the bill.

In so far as the rights of the parties are not expressly varied by the Act, the ordinary rules as to the recovery of money paid by mistake of fact and without consideration would apply.

If there was bad faith on the part of the holder of the bill the money could be recovered back from the person to whom it was paid without complying with the section, but without any recourse over.

51. A signature by procuration operates as notice tion sign that the agent has but a limited authority to sign, and the principal is bound by such signature only if the agent in so signing was acting within the actual limits of his authority. 53 V., c. 33, s. 25. Imp. Act, ibid.

Whenever an authority purports to be derived from a written instrument, or the agent signs the paper with the words "by procuration," in such a case the party dealing with him is bound to take notice that there is a written instrument of procuration, and he ought to call for and examine the instrument itself, to see whether it justifies the act of the agent. Under such circumstances he is chargeable with enquiry as to the extent of the agent's authority; and if without examining into it when he knows of its existence and especially if he has it in his possession-he ventures to deal with the agent, he acts at his peril and must bear the loss if the agent has transcended his authority: Daniel, § 280.

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