BILLS AND NOTES-WHAT NEGLIGENCE OF THE DRAWER WILL ENABLE THE DRAWEE TO CHARGE THE DRAWER'S ACCOUNT WHEN THE INDORSEMENT OF THE PAYEE IS FORGED

Authors

Abstract

An attorney, representing himself to be the agent of the owner of a certain piece of real estate, applied to the plaintiff for a mortgage loan. The loan being granted subject to title, a person represented to be the landowner appeared, signed the mortgage and note, and her acknowledgement was taken by a notary public who stated that he knew her to be the identical person described in the mortgage. The title was approved and a check payable to the landowner was delivered to the attorney, who, after forging the payee's indorsement, indorsed personally and cashed. The drawer is suing the drawee bank which has attempted to charge its account. Held, that the general rule is that the liability of the drawee bank to a depositor may be discharged only by payment according to the order of the drawer-depositor, and is not satisfied by paying on a forged indorsement of the payee, with the single exception that the drawer is estopped from setting up the forgery when he has by words or acts caused the bank, acting as prudent business men usually act, to make the payment on the forged indorsement; that this case involved no such negligence as will estop the drawer, the bank knowing nothing about the mortgage transaction and therefore certainly not relying on it. National Metropolitan Bank v. Realty Appraisal and Title Co. (App. D. C. 1931) 47 F.(2d) 982.

Recommended Citation

BILLS AND NOTES-WHAT NEGLIGENCE OF THE DRAWER WILL ENABLE THE DRAWEE TO CHARGE THE DRAWER'S ACCOUNT WHEN THE INDORSEMENT OF THE PAYEE IS FORGED, 30 Mich. L. Rev. 1108 (1932).
Available at: https://repository.law.umich.edu/mlr/vol30/iss7/11