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

Plaintiff is the executor of a person who, in his capacity as treasurer of a voluntary loan association, issued a check on the association's account in the defendant bank, supposedly for a loan to a member of the association. The check, when paid, bore what purported to be the indorsement of the payee, and the signature of the president of the loan association. The supposed borrower denied the loan and his signature on the note in July, 1927, and asked to see the check, which he was shown after some months. He denied executing the indorsement and the defendant bank was then notified of the forgery. Held, that although as a general rule a forgery gives no right to the drawee to charge the drawer's account, negligence of the drawer which causes loss to the drawee will estop the former from setting up the forgery; from the mere fact of delay in investigating and finding the forgery after the time when a prudent business man would have investigated, the court will both find negligence and presume loss to the bank which will estop the drawer from setting up the forgery of the payee's signature, and recovery by the drawer is barred. Diamond v. Southwestern National Bank (Pa. 1931) 157 Atl. 626.

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. 1109 (1932).
Available at: https://repository.law.umich.edu/mlr/vol30/iss7/12