If payment is made in counterfeit money, the creditor may treat the payment as a nullity, and recover upon his original claim.54 This is true of foreign money as well as domestic.55 The counterfeit bills must be returned without unnecessary delay, however, as a condition of rescission, for though intrinsically worthless they may enable the debtor to recoup his loss from the person from whom he received them.56 Rescission is also allowed of the transfer of securities other than money, which are forged or void for other reasons;57 but where a bank takes bills purporting to have been issued by itself it cannot rescind the transaction.58 Nor can an individual who pays a note purporting to bear his own signature as maker or indorser.59 It is doubtless the same reason, namely, a duty to discover and prevent the error, that has led to the universally prevailing rule that a drawee who pays a bill of exchange on which the drawer's name is forged, cannot recover the payment.60 It is generally held, however, that one who has thus received payment of a bill of exchange to which the drawer's name was forged, must restore the payment if guilty of negligence in failing to discover the forgery.61 And so if a bank pays a draft or check on the mistaken assumption that the drawer has sufficient fluids to his credit to meet the instrument, no recovery of payment can be made if this assumption turns out to be an error.62

52 Shovel v. Bogan, 2 Eq. Abr. 688; Hays v. Bays, 126 Ind. 92, 25 N. E. 600, 11 L. R. A. 376; Woloott v. Frick, 40 Ind. App. 236, 238, 81 N. E. 731; Henn v. McGinnis, 182 la. 131, 166 N. W. 406; Calhoun v. Teal, 106 La. 47, 30 So. 288; Tarbell v. Bowman, 103 Mass. 341; Wilson v. Randall, 67 N. Y. 338; Gallup v. Bernd, 132 N. Y. 370, 30 N. E. 743; Bailey v. Snyder, 13 S. & R. 160; Lawrence v. Staigg, 8 R. I. 256; Barnes v. Gregory, 1 Head, 230; Farenholt v. Perry, 29 Tex. 316; Ladd v. Pleasants, 39 Tex. 415; Western Mining, etc., Co. v, Peytona Co., 8 W. Va. 406.

53 Biggs v, Lexington etc. R., 79 Ky. 470, 476, and see cases in the preceding note. But see Coons v. North, 27 Mo. 73.

54Jones v. Ryde, 5 Taunt. 487; United States Bank v. Georgia Bank, 10 Wheat. 333, 6 L. Ed. 334; United States v. Morgan, 11 How. 154, 13 L. Ed. 643; Wingate v. Neidlinger, 50 Ind. 520; Salem Bank v. Gloucester Bank, 17 Mass. 1, 9 Am. Dec. 1ll; Atwood v. Cornwall, 25 Mich. 142, 28 Mich. 336, 15 Am. Rep. 219; Markle v. Hatfield, 2 Johns. 455, 3 Am. Dec. 446; Burrill v. Watertown Bank, etc., Co., 51 Barb. 105; Bank v. Buchanan, 87 Tenn. 32, 9 S. W. 202, 1 L. R. A. 199,

10 Am. St. Rep. 617; Chalmers v. Harris, 22 Tex. 265; Pindall's Ex'rs v. Northwestern Bank, 7 Leigh, 617.

55 Young v. Adams, 6 Mass. 182.

56 Simms v. Clark, 11 I11. 137; Atwood v. Cornwall, 28 Mich. 336, 15 Am. Rep. 219; Boyd v. Mexico Bank, 67 Mo. 537, 29 Am. Rep. 515; Thomas v. Todd, 6 Hill, 340; Raymond v. Baar, 13 S. & R. 318,15 Am. Dec. 603; PindalTs Ex'rs v. Northwestern Bank, 7 Leigh, 617. But some authorities hold it unnecessary to return paper which is absolutely worthless. Snyder v. Reno, 38 la. 329; Smith v. McNair, 19 Kan. 330, 27 Am. Rep. 117; Brewster v. Burnett, 125 Mass. 68, 28 Am. Rep. 203.

57 Brown v. Watts, 1 Taunt. 353; Jones v. Ryde, 4 Taunt. 488; Phillips v: Cockayne, 3 Camp. 119; Young v. Cole, 3 Bing. N. C. 724; Westropp v. Solomon, 8 C. B. 345; Gompertz v. Bartlett, 2 E. & B. 849; Brewster v. Burnett, 125 Mass. 68, 28 Am. Rep. 203; Clark v. Young, 231 Mass. 156, 120 N. E. 397; McGoren v. Avery, 37 Mich. 120; Wood v. Sheldon, 42 N. J. Law, 421, 36 Am. Rep. 523; Webb v. Odell, 49 N. Y. 583; Leary v. Miller, 61 N. Y. 488; Paul v. Kenosha, 22 Wis. 266, 94 Am. Dec. 598; Maldaner v. Beurhaus, 108 Wis. 25, 84 N. W. 25.

See also Hallett v. New England, etc., Co., 105 Fed. 217. Cf. Sample v. Bridg-forth, 72 Miss. 203, 16 So. 876.

58Cocks v, Masterman, 9 B. A C. 902; Simms v. Clark, 11 III. 137; Win-gate p. Neidlinger, 50 Ind. 520; At-wood v. Cornwall, 25 Mich. 142, 28 Mich. 336, 15 Am. Rep. 219; Thomas v. Todd, 6 Hill, 340; McDonald v. Allen, 8 Baxt. 446; Pindall's Ex'rs v. Northwestern Bank, 7 Leigh, 617.

59 Mather v. Maidstone, 18 C. B. 273; Hubbard v. Southern Pac. Co., 256 Fed. 761 (C. C. A.); Tyler v. Bailey, 71 111. 34, 37; Jones v. Miners A Merchants Bank, 144 Mo. App. 428, 128 S. W. 829; Johnston v. Commercial Bank, 27 W. Va. 343, 55 Am. Rep. 315. But see contra Welch v. Goodwin, 123 Mass. 71, 25 Am. Rep. 24.

60 See supra, Sec. 1160.

61 First Nat. Bank of Danvers v. First Nat. Bank of Salem, 151 Mass. 280, 24 N. E. 44, 21 Am. St. Rep. 450; State Bank v. First Nat. Bank, 87 Neb. 351, 127 N. W. 244, 29 L. R. A. (N. S.) 100; Williamsburgh Trust Co. v. Turn Suden, 120 N. Y. App. Div. 518, 105 N. Y. S. 335; Ellis v. Ohio life Ins. Co., 4 Oh. St. 628, 64 Am. Dec. 610; Greenwald v. Ford, 21 S. Dak. 28, 109 N. W. 516; People's

Bank v. Franklin Bank, 88 Tenn. 299, 12 S. W. 716, 6 L. R. A. 724, 17 Am. St. Rep. 884; Rouvant v. San Antonio Bank, 63 Tex. 610; Canadian Bank v. Bingham, 30 Wash. 484, 71 Pac. 43, 60 L. R. A. 955 (s. c. 46 Wash. 657, 91 Pac. 185). See also Bank of Williamson v. Williamson County Bank, 66 W. Va. 545, 66 S. E. 761, 36 L. R. A. (N. S.) 605; and cases decided under the Negotiable Instruments Law, cited supra, Sec. 1160.

62 Chambers v. Miller, 13 C. B. (N. S.) 125; Pollard v. Bank of England, L. R. 6 Q. B. 623; National Bank v. Burkhardt, 100 U. S. 686, 25 L. Ed. 766; St. Louis, etc., Co. v. Johnston, 133 U. S. 566, 573, 33 L. Ed. 683, 10 Sup. Ct. 390; American Nat. Bank v. Miller, 185 Fed. 338, 107 C. C. A. 456; First Nat. Bank v. Devenish, 15 Colo. 229, 25 Pac. 177, 22 Am. St. Rep. 394; American Exchange Bank v. Gregg, 138 Ill. 596, 28 N. E. 839, 32 Am. St. Rep. 171; Wasson v. Lamb, 120 Ind. 514, 517, 22 N. E. 729, 6 L. R. A. 191, 16 Am. St. Rep. 342; Manufacturers' National Bank v. Swift, 70 Md. 515,17 Atl. 336; National Exchange Bank v. Ginn & Co., 114 Md. 181, 78 Atl. 1026, 33 L. R. A. (N. S.) 963; First Nat. Bank v. Burkham, 32 Mich. 328;

A drawee who pays a genuine bill of exchange to which invalid security, as a forged bill of lading, is attached, is likewise unable to recover the payment.68

If, however, one who receives payment from a drawee or maker is not the owner of the instrument, as if he claims through a forged indorsement, the payment may be reclaimed,64

Germania Bank v. Boutell, 60 Minn. 189, 103, 62 N. W. 327, 27 L. R. A. 635, 51 Am. St. Rep. 519; National Bank v. Berrall, 70 N. J. Law, 757, 58 Atl. 189, 66 L. R. A. 599, 103 Am. St. Rep. 821; Oddie v. National City Bank, 45 N. Y. 735, 6 Am. Rep. 160. Cf. Irving Bank v. Wetherald, 36 N. Y. 335); Whiting v. City Bank, 77 N. Y. 363; Hull v. Bank, Dudley (S. Car.), 259; Spokane & Eastern Trust Co. v. Huff, 63 Wash. 225, 115 Pac. 80, 33 L. R. A. (N. S.) 1023, Ann. Cas. 1912 D. 491. But see contra, Merchants' Bank v. National Eagle Bank, 101 Mass. 281, 100 Am. Dec. 120; Merchants' Bank v. National Bank, 139 Mass. 513, 2 N. E. 89 (cf. Boylston Bank v. Richardson, 101 Mass. 287).

In Second Nat. Bank v. Western Nat. Bank, 51 Md. 128, 34 Am. Rep. 300, a bank which had certified a check under the mistaken belief that the drawer's account justified it, was allowed to rescind the certification, no change of position having taken place on the faith of it.

In Kerrison v. Glyn, Mills & Co., 105 L. T. Rep. (N. S.) 721, the appellant who lived in England, had a standing arrangement with a firm of bankers in New York by virtue of which they were to honor the drafts up to 500 of a company carrying on business in Mexico, in which the appellant was interested, the appellant agreeing to put them in funds, by making needed deposits from time to time, to their credit at the respondents' bank in London. On the 21st of Oct., 1907, the New York firm wrote to the appellant informing him that the Mexican company had been credited with 500, and requesting him to pay that amount to their account with the respondents. On receipt of this letter on the 30th of Oct. the appellant paid 500 to the respondents to the credit of the New York firm. Earlier on the 30th of Oct. the New York firm became bankrupt, and the appellant on becoming aware of this fact on the 31st of Oct. immediately applied to the respondents for the repayment of the 500. The respondents claimed a right to retain it in reduction of the indebtedness of the New York firm to them. It was held that the money had been paid under a mistake of fact, and that the respondents were not entitled to retain it.

62Thiedemann v. Goldschmidt, 1 DeG, F. & J. 4; Leather v. Simpson, L. R. 11 Eq. 398; Guaranty Trust Co. v. Hannay, 119 L. T. (N. S.) 321; Hoffman v. Bank of Milwaukee, 12 Wall. 181, 20 L. Ed. 366; Goetz v. Bank of Kansas City, 119 U. S. 551, 30 L. Ed. 515, 7 Sup. Ct. 318; Alton v. First Nat. Bank, 157 Mass. 341, 32 N. E. 228, 18 L. R. A. 144, 34 Am. St. Rep. 285; First Nat. Bank v. Burkham, 32 Mich. 328; Springs v. Hanover Nat. Bank, 145 N. Y. App. Div. 188, 130 N. Y. S. 87, 209 N. Y. 224, 103 N. E. 156, 52 L. R. A. (N. S.) 241; Craig v. Sibbett, 15 Pa. 238. Cf. Guaranty Trust Co. v. Grotrian, 114 Fed. 433, 52 C. C. A. 235, 57 L. R. A. 689; Hannay v. Guaranty Trust Co., 187 Fed. 686, rev'd 210 Fed. 810, 127 C. C. A. 360.

64Esdaile v. La Nause, 1 Y. & C. 394; Star Fire Ins. Co. v. New Hampshire Bank, 60 N. H. 442; Corn Exch.

since the drawee's payment is made and received as a discharge of the instrument, and unless the person to whom payment is made is the owner, the rights of the true owner are not discharged.65 So where paper is sold (as distinguished from presented for payment) recovery may be had if the instrument is not genuine,66 or if security accompanying it is not genuine.67

But the fact that a party to the instrument is insolvent at the time of a sale of it, will not justify a rescission of the bargain,68 unless the seller knew of the insolvency. In that case the transaction is voidable,69 and indeed the seller impliedly warrants that he knows nothing which would impair the validity of the instrument or render it valueless;70 and is therefore liable in damages, if he has such knowledge, as is one who sells an instrument to which a signature is forged.71