BILLS AND NOTES - RULE OF PRICE v. NEAL - APPLICATION TO NONNEGOTIABLE INSTRUMENTS AND MONEY ORDERS

Authors

Edward W. Adams, University of Michigan Law SchoolFollow

Abstract

From a Mississippi post office, B stole fifty-five postal money order blanks. Notice of the theft was sent by the Post Office Department to all post offices. B filled in twelve of the blanks, making them appear genuine in all respects, and presented them to be cashed at defendant bank. In reliance on a confirmation of the validity of the money orders, received by calling a branch post office, defendant cashed them, giving B cash and travelers checks and starting a bank account for the balance. Defendant presented the orders at the main post office, and they were paid without their spuriousness being discovered. When the money orders were forwarded to Washington, the Post Office Department discovered the fraud and sued within a reasonable time for money paid by mistake. In defense, defendant argued that the doctrine of Price v. Neal--that money paid by the drawee of a bill of exchange wherein the signature of the drawer was forged could not be recovered by drawee--should be extended to apply to money orders. Held, that the United States could recover on the ground that the doctrine of Price v. Neal, being based on public policy, does not apply to such instruments because public policy here demands that the United States acting in its sovereign capacity be free from the negligence of its employees. United States v. Northwestern Nat. Bank & Trust Co. of Minneapolis, (D. C. Minn. r940) 35 F. Supp. 484.

Recommended Citation

Edward W. Adams, BILLS AND NOTES - RULE OF PRICE v. NEAL - APPLICATION TO NONNEGOTIABLE INSTRUMENTS AND MONEY ORDERS, 40 Mich. L. Rev. 108 (1941).
Available at: https://repository.law.umich.edu/mlr/vol40/iss1/11