[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 420 The plaintiffs did not obtain lawful title to this check and therefore cannot enforce payment of it against the defendant unless it is in some way estopped from denying its liability to pay.
When the defendant certified the check to be good, it assumed a liability like that of an acceptor of a draft. By the certification it guarantied the genuineness of the drawer's signature, and represented that it had funds of the drawer in its possession sufficient to meet the check, and it engaged that those funds should not be withdrawn from it by the drawer, to the prejudice of any bona fide holder of the check; and the certification did not impose upon the defendant any further or greater responsibility. It did not import that the body of the check was genuine or that the funds on deposit with it were *Page 422 absolutely applicable to the payment of the precise check certified. When, therefore, a check has been raised by some person without authority before certification, the certifying bank cannot be called upon in consequence of its certification to pay the amount of the raised check; and when a bank has thus certified a raised check by mistake and subsequently pays the money thereon without any culpable negligence on its part, it can recover the amount thus paid as money paid by mistake. (NationalPark Bank v. The Ninth National Bank, 46 N.Y. 77; 7 Am. Rep. 310; The Marine Nat. Bank v. Nat. City Bank, 59 N.Y. 67; 17 Am. Rep. 305; Security Bank v. National Bank, 67 N.Y. 458; 23 Am. Rep. 129; Espy v. The Bank of Cincinnati, 18 Wall. 604.) Precisely the same rule is applicable to the acceptor of a bill of exchange. By his acceptance he guarantees the genuineness of the drawer's signature, but not the genuineness of any other names upon the paper or of the body of the paper in respect to the date and the amount thereof. If any of the names upon the paper other than the drawer's have been forged, or if the body of it has been altered by increasing the amount thereof, and the acceptor, without culpable negligence, pays the bill by mistake, not knowing of the forgery and alteration, he may recover back the amount paid as money paid by mistake; and whether the forgery and alteration were made before or after acceptance can make no difference.
Here it is conceded that if this check had been raised before the certification the defendant would not have been bound to pay the same, and that if by mistake it had paid the same it could have recovered the money back. But it is claimed that because the alteration and raising of the check took place after the certification a different rule applies, and that the defendant upon the facts of this case was properly held liable.
It is true that defendant when called upon by the plaintiffs' agent before they took the check could have discovered the alteration; but was it bound to discover it and to inform the plaintiffs? The agent of the plaintiffs called upon the defendant *Page 423 during banking hours and presented this check to the paying teller and told him that the plaintiffs wanted to know if the certification was good, and he looked at it and said yes. At that time the bank owed the plaintiffs no duty of active diligence to protect them from the fraud which the holder of the check was trying to perpetrate upon them. It was bound to act in good faith and not to do any thing or say any thing intentionally or carelessly which would mislead them or upon which they could properly rely in taking the check. The inquiry was not whether the body of the check was good or whether that check was certified and was then in the same condition in which it was at the time of the certification; nor was the inquiry whether the check was good for the amount thereof or whether the amount thereof would be paid. The attention of the teller was called to nothing but the certification. It was presented to him while he was very actively engaged in the ordinary business of the bank, paying and certifying checks. There was nothing calling his attention to the number of the check or the amount thereof, and there was nothing requiring that he should stop his business at that time and look at the records of the bank to see whether the check was then in the same condition it was in at the time of its certification. The simple inquiry was, whether the certification was good, and it went no further. Suppose the check had never been certified and the inquiry had then been whether the check was good and the teller had replied that it was, such an answer would in law only have implied that the name of the drawer was genuine, and that there were funds in the bank to meet the check; and the bank would not have been responsible for any alteration or forgery of the body of the check, and upon this point there is quite direct authority. In Marine Bank v. National City Bank (supra), which was an action to recover back money paid upon a check which was certified after it had been raised, it was held that the certificate in such a case means simply that the drawer's signature is genuine; that he has funds in the bank sufficient to meet the check, and that the bank engages that those funds will not be withdrawn from the bank by the drawer; and *Page 424 ALLEN, J., writing the opinion, said: "Hence in all reason as well as legally the inquiring of a drawee in respect to a check and the response whether verbally or in writing that it is good must be held, in the absence of circumstances indicating a wider reach of inquiry, and a broader answer, to relate to those facts and those only of which the drawee is presumed to have knowledge, viz.: the two facts before mentioned." In Espy v. The Bank ofCincinnati, which was a similar action, the facts were that a check was drawn by "S. and M." on the bank for $2,650, in favor of "H.," and was raised to $3,920, and the payee's name changed from "H.," to "E.H. Co.," and was offered to the latter by a stranger in payment for bonds and gold purchased by him. "E.H. Co." sent the check for information to the bank, whose teller replied "It is good," or "It is all right;" and it was held among other things "that when a party to whom such a check is offered sends it to the bank on which it is drawn for information the law presumes the bank has knowledge of the drawer's signature and of the state of his account, and it is responsible for what may be replied on these points, and unless there is something in the terms in which information is asked that points the attention of the bank officer beyond these two matters his response that the check is good will be limited to them and will not extend to the genuineness of the filling in of the check as to payee or amount." Here the inquiry pointed to nothing but the certification. The attention of the teller was called to nothing else, and his response when he said that it was good had reference only to the certification, and imposed no broader or greater liability upon the bank than if the check had then first been presented for certification. In Security Bank v. NationalBank (67 N.Y. 458) which was an action to recover the amount paid upon a raised check, it was held that the plaintiff was not estopped from alleging the forgery by the fact that its teller, at the time the check was presented for certification, upon doubts being expressed in regard to it by the person presenting it, stated that it was all right in every particular, and that it was no part of the teller's duty to give an assurance as to the genuineness of the check *Page 425 except in respect to the signature of the drawer, and that beyond that the bank was not bound by his representations. ANDREWS, J., writing the opinion, said: "If the reply made to the question put to him was intended as an affirmation of the genuineness of the body of the check it was simply an expression of his opinion and must have been so understood by the person who made the inquiry." The inference here is as strong as in any of the cases cited that the inquiry related only to the genuineness of the certification, because the inquirer had no knowledge whatever of any of the facts that had previously transpired in reference to the check, or that any facts were in the possession of the bank not ordinarily possessed in reference to checks certified by it. It was the ordinary inquiry whether a check was good or whether the certification was good, and the reply was the ordinary reply that it was good, and imposed upon the bank the liability which such a reply under ordinary circumstances imposes. The bank was not called upon for any of the facts in its possession in reference to this draft. But if the inquiry had been broader the bank might have been bound in good faith to have disclosed the facts and might have been chargeable with bad faith or negligence in not disclosing them, and thus made liable upon this check. But here there was no question of bad faith or negligence submitted to the jury, and they were charged that if the check was presented to the paying teller with the inquiry alleged, and he replied that it was good, the bank thereby became absolutely bound to pay the same to the plaintiffs.
If the check had been presented for payment then undoubtedly a different question would have been placed before the paying teller for his consideration. It would then have been his duty to take notice of the facts in the possession of the bank, and payment under such circumstances would have been such a careless act that it would be held that the bank could not recover back the money.
When the paying teller said that the certification was good that declaration did not import that there was the amount of money named in the check in the bank absolutely applicable to the payment of the check, in any other sense than if the *Page 426 certification had been made after the check had been raised. The certification of a check never imports that there is money in the bank absolutely applicable to the payment of the amount named in the check. On that point it simply imports that the drawer has money to the amount of the check which will not be withdrawn, and which will be paid upon the check if it is properly payable thereon; that is, by the certification the drawee bank becomes responsible to pay the holder whatever is properly due upon the check, and nothing more. The same principle would have to be applied if the defendant had been an individual acceptor of a draft. Then the inquiry would have been, whether the acceptance was genuine or good, and the answer that it was good would not have imported that the draft was good for the amount for which it then appeared to have been drawn. If the acceptor in such a case actually knows that the draft has been raised, and is thus not good for its face, he would be bound, acting in good faith, to disclose that fact. But if at the time he did not know it, and was not aware of any defect in or defense to the draft, his reply that his acceptance was good would not of itself estop him, when called upon for payment, from asserting that the draft had been raised or otherwise altered after his acceptance. He might be engaged in accepting so many drafts, or be so situated or engaged at the time that such an inquiry calling attention to nothing but his signature would not bring to his notice the fact that the draft was not then in the same condition as when his acceptance was written. When such an inquiry is made of an acceptor, all that can be required of him is that he shall answer in good faith. If the holder desires more accurate information his inquiry should be more specific and far-reaching before he can transfer a loss caused to him by the fraud of the person with whom he deals to the innocent acceptor.
Here the teller of the bank made no mistake; he answered truly the question put to him. He did not mislead the plaintiffs. They relied upon the certification which was genuine, and under such circumstances there can be no reason for giving them a remedy against the defendant. They dealt with the *Page 427 forger, and suffered wrong from him, and there can be no rules of law or justice which should, upon any facts now appearing, visit the consequences of this wrong upon the defendant.
Our conclusion is, therefore, that the judgment should be reversed and a new trial granted, costs to abide events.