Acceptance or payment of a bill of exchange or check by the drawee is an admission of the drawer's signature, which the drawee is not at liberty afterwards to contradict, as against a bona fide holder of the bill. The drawer is supposed to be the drawee's correspondent and acquaintance, with whose signature he is familiar, and negligence is therefore imputed to the drawee when he pays a bill to which the drawer's name is forged. The duty of ascertaining whether the drawer's signature is genuine before acceptance or payment by the drawee, is imposed on him for the benefit and safety of the holder, who is entitled to know without delay after the presentment of the bill, whether it is accepted, or if payable at sight, whether it is paid. This knowledge is necessary to enable the holder to take immediate measures against the previous indorsers and drawer, who are liable if the bill be dishonored.
It being the duty of the drawee to satisfy himself of the genuineness of the bill before he accepts or pays: and it being important to the holder and other previous parties that he should do so, it is settled that he accepts or pays at his peril. If he accepts he is bound to pay, although the drawer's signature turn out to be forged; and if he pays he cannot recover back his money, unless the forgery is discovered and notice given immediately, or within such time as to give the holder the same advantage of proceeding against the party from whom he received the bill, as if it had been dishonored. (Price v. Neale, 3Burrow, 1354; Smith v. Chester, 1 T.R. 654; Smith v.Mercer, 6 Taunt. 76; Wilkinson v. Johnson, 3 Barn. Cres. 428; Cocks v. Masterman, 9 id. 922.) The latter case seems to enforce the rule with too much rigor, because in case of the payment of a forged bill, it requires the discovery of the forgery to be made, and notice given on the same day, so as to give to the holder even earlier information of the forgery than he would have been entitled to upon the protest of the bill for non-payment.
The drawee is entitled to see the bill, and to have an opportunity to examine and inspect it, and if necessary to inquire as *Page 153 to the drawer's signature, before he is bound to accept or pay, and it is his duty to exercise a due and proper caution, not only for his own sake but for the sake of the holder, who is not supposed to have the same means of detecting a forgery in the drawer's name, as are possessed by the drawee. It is not unreasonable to require the drawee to ascertain at his peril whether the bill is genuine before he accepts or pays. He incurs no responsibility to the drawer by refusing to accept, where there is reasonable ground of doubt; while by accepting or paying under such circumstances, the holder is induced to release his vigilance against the party from whom he took the bill, and may thereby lose the opportunity of compelling payment from him in case the bill should turn out a forgery. The rule, therefore, which requires that the drawee should by all the means in his power satisfy himself as to the drawer's signature before he accepts or pays, being reasonable and necessary, should not be departed from, or frittered away by exceptions resting on slight grounds.
The plaintiffs were not the drawees of the bill, but they were the friends and correspondents of the supposed drawers, and paid the bill for their honor. They stand in no better position in regard to the point in question, than if they had been the drawee; they were equally bound to see and examine the bill, and to decide at their peril as to its being genuine. (See casesabove referred to.) They were no more entitled than the drawees to put the holder's right in danger, by negligent payment of a forged bill. When Mr. Goddard paid the bill he knew that the account between the Canal Bank of Cleveland and the American Exchange Bank had been closed. This appears from a passage in his letter to the Canal Bank, of the 21st of September. The fact that the draft purported to be drawn on a bank with which the drawees had discontinued their dealings, ought, it seems to me, to have awakened the suspicions of Mr. Goddard in relation to the draft, so far at least, as to have induced him to look at it before he paid the money. Instead of that, however, he paid it without having seen it, and as it seems to me, without the excuse of a want of opportunity to *Page 154 see it. The draft was presented at the American Exchange Bank for payment on Saturday, the 18th of September, when payment was refused. Having heard of the draft from the teller of the Merchants' Exchange Bank, and ascertained that it was in the hands of the notary, he called at the notary's office on Monday morning before the notary had come in, for the purpose of paying the draft, and made known his business to Mr. Riker, whom he found there. He was requested to wait a few minutes until the notary came, but declined doing so, and left his check with Mr. Riker to be handed to the notary for the payment of the draft, requesting that the notices of protest which had been prepared should not be sent out, and they were withheld accordingly. The plaintiff might without any difficulty have seen the bill. It was not withheld by the notary. The plaintiff might have obtained it during the day by calling or sending to the notary's office, in season to have discovered the forgery and to have despatched the notices to the previous parties. It is true the notary was requested to send the bill to the plaintiff's office, and that this was not done; but this was a request addressed to the courtesy of the notary, and not a demand which he had a right to make, or with which the notary was bound to comply. If Mr. Goddard's business made it inconvenient for him to call for the bill, in might be equally inconvenient for the notary to send it. There was no obligation on the part of the notary to send it. Riker, who was in the notary's office, does not swear that he promised to send it; or told him it would be sent. He thinks he said that the draft would be sent down, or that he would tell the notary that Goddard wanted it sent down. This is no proof of a promise to send it; and Mr. Goddard in his letter to the Bank at Cleveland, states that he requested it to be sent, but does not prentend that Riker undertook to send it or held out any expectation that it would be sent. The evidence forms, in my opinion, no excuse to the plaintiffs for not having exercised the usual and necessary caution of looking at the bill before they paid the money.
The plaintiff's counsel insist that negligence in paying the draft *Page 155 unseen, is not imputable to the plaintiffs, because payment was made on the defendants' representation through their agent, the notary, that there was a draft of the Canal Bank in existence when in fact there was not. But this reason is unsound. The holder of an indorsed draft, as we have before seen, has not the means of knowing whether the drawer's signature is genuine or not; but the drawee has. The holder looks to the drawee for information on that point, and the drawee does not look to the holder. The drawee on accepting or paying, answers that inquiry at his peril. There was in fact, in this case, no representation that the draft was genuine. The presentment of a draft is not such a representation. If it were so, it would always excuse payment without sight of the paper, and would subvert the rule on this subject which has been long settled and rests on the soundest reasons.
What were the consequences of the negligence of the plaintiffs, in paying the bill without having seen the bill? The forgery was discovered on the next day, as soon as Mr. Goddard inspected the bill, and it would have been detected on Monday, before payment, if he had acted with the ordinary caution, of seeing the bill on that day, as he might, without any difficulty, have done. In that case, it would have been the notary's duty to have informed the Bank of Rutland of the forgery, by letter of the same day, and this we are to presume would have been done. But the plaintiffs, on Monday, paid the bill without having seen it, and thus stopped the notice of the forgery; and the Bank of Rutland lost the advantage of a day's time in taking measures to compel the repayment of the money from Moore. The delay of a day is as effectual to discharge the holder of a bill under such circumstances, as the delay of a month or a year. It is only in those cases in which the drawee pays the bill without fault on his part, that the failure to give strict notice is excused. Such was the case in The Canal Bank v. The Bank of Albany. The indorser's name was in that case forged, and the drawee had no better opportunity to know or to ascertain this than the holders. Both stood in respect to the exercise of vigilance, on the same footing. And so *Page 156 in the case of The Bank of Commerce v. The Union Bank, decided at the last term, where the body of the bill had been altered, but the signature was genuine, it was held that negligence was not imputable to the drawee in paying the bill, because, although he was bound to know or ascertain the verity of the signature, it was not so as to the body of the bill, as to which it was no more incumbent upon him than upon the holder, to discover the forgery. Neither of those cases excuse neglect on the part of the drawee, in taking the usual care and precaution against paying a forged bill. Both those decisions rest on the ground that there was no negligence or fault to be imputed to the drawees, and in that respect they differ entirely from the present. This is a case of money paid by mistake; but by a mistake which happened through the negligence of the party who paid it; a mistake which in cases of this nature, must jeopardize the rights of the holder of the bill, and which for that reason ought not, on grounds of public policy, to be made the foundation of a claim to have the money restored. Mistake by the drawee in paying a forged bill, without negligence on his part, excuses the want of notice until the forgery is discovered. But mistake arising from the drawee's carelessness in paying a forged bill without sight, when the sight of the bill would have disclosed the forgery, is no excuse for the want of notice or the delay in giving it.
In the present case, it is evident, that if Mr. Goddard had looked at the bill on Monday, the 20th of September, the forgery would have been discovered on that day; and the Rutland Bank would have had notice in time to have caused the arrest of Moore at Cleveland. The letter which the Rutland Bank sent to the Bank at Cleveland, describing his person, arrived there, notwithstanding the delay in the notice of the forgery, on the same day that a person answering to that description had offered a forged certificate of deposit at that bank, but who could not be found after the arrival of the letter. Although it is not necessary in the present case, to show that the Bank of Rutland sustained actual damage by the delay, this circumstance exemplifies the propriety of the rule which requires vigilance *Page 157 on the part of the drawee, for the benefit and safety of the prior parties to the bill.
This is perhaps a hard case upon the plaintiffs; but I am of opinion that they can not be permitted to recover, without overthrowing valuable and well settled principles of commercial law.
JEWETT, J. concurred with RUGGLES, J.
And thereupon the judgment of the superior court was affirmed.