It appears to be well settled that money paid by the drawee of a negotiable instrument to the holder, under a mistake as to the genuineness of the body of the instrument,1 or of the signature of an indorser,1 is recoverable. On the other hand, it is held in most jurisdictions that the drawee cannot recover money paid under a mistake as to the genuineness of the drawer's signature.2

1 Espy v. Bank of Cincinnati, 1873, 18 Wall. (U. S.) 604; Reding-ton p. Woods, 1873, 45 Cal. 406; 13 Am. Rep. 190; Parke v. Roser, 1879, 67 Ind. 500; 33 Am. Rep. 102; Third Nat. Bank v. Allen, 1875, 59 Mo. 310; Bank of Commerce v. Union Bank, 1850, 3 N. Y. 230; Nat. Bank of Commerce v. Nat. M. B. Assn., 1873, 55 N. Y. 211; 14 Am. Rep. 232; Marine Nat. Bank v. Nat. City Bank, 1874, 59 N. Y. 67 ; 17 Am. Rep. 305 ; White v. Continental Nat. Bank, 1876, 64 N. Y. 316; 21 Am. Rep. 612; Security Bank v. Nat. Bank of Republic, 1876, 67 N. Y. 458; 23 Am. Rep. 129; Clews v. N. Y. Nat. Banking Assn., 1882, 89 N. Y. 418; 42 Am. Rep. 303; City Bank v. First Nat. Bank, 1876, 45 Tex. 203. And see Imperial Bank v. Bank of Hamilton, [1903)

A. C. 49. But see Crocker-Woolworth Nat. Bank v. Nevada Bank, 1903, 139 Cal. 564; 73 Pac. 456; 63 L. R. A. 245; 96 Am. St. Rep. 169. Professor Ames called attention to the fact that in continental Europe the holder need not refund. See 4 Harv. Law Rev. 297, 306, citing 1 Nouguier, "Lettre de Change" (4th ed.), Sec. 325; 2 Pardessus, "Cours de Droit Commercial" (3d ed.), Sec. 506; Wachter, "Wechsel-recht," 481.

1 Espy v. Bank of Cincinnati, 1873, 18 Wall. (U. S.) 604; United States p. Nat. Exch. Bank, 1909, 214 U. S. 302; 29 S. Ct. 665, (pension check); La Fayette & Bro. v. Merchants' Bank, 1905, 73 Ark. 561; 84 S. W. 700; 68 L. R. A. 231; 108 Am. St. Rep. 71; Mills v. Barney, 1863, 22 Cal. 240, (certificate of deposit); Bartlett v. First Nat. Bank, 1910, 247 111. 490; 93 N. E. 337; Cochran v. Atchison, 1882, 27 Kan. 728; Wellington Nat. Bank v. Robbins, 1905, 71 Kan. 748; 81 Pac. 487; 114 Am. St. Rep. 523; McCall v. Corning, 1848, 3 La. Ann. 409; 48 Am. Dec. 454; Carpenter v. Northborough Nat. Bank, 1877, 123 Mass. 66; First Nat. Bank v. City Nat. Bank, 1902, 182 Mass. 130; 65 N. E. 24; 94 Am. St. Rep. 637; Third Nat. Bank v. Allen, 1875, 59 Mo. 310; First Nat. Bank v. Farmers' & Merchants' Bank, 1898, 56 Neb. 149; 76 N. W. 430; Star Fire Ins. Co. v. N. H. Nat. Bank, 1881, 60 N. H. 442; Canal Bank v. Bank of Albany, 1841, 1 Hill (N. Y.) 287; Holt p. Ross, 1873, 54 N. Y. 472; 13 Am. Rep. 615; Corn Exch. Bank p. Nassau Bank, 1883, 91 N. Y. 74; 43 Am. Rep. 655; Ryan p. Bank of Montreal, 1886, 12 Ont. 39; Chambers v. Union Nat. Bank, 1875, 78 Pa. St. 205. But see London, etc., Bank v. Bank of Liverpool, [1896] 1 Q. B. 7.

2 Price v. Neal, 1762, 3 Burr. 1354; Smith v. Mercer, 1815, 6 Taunt. 76; Redington v. Woods, 1873, 45 Cal. 406; 13 Am. Rep. 190; First Nat. Bank p. Ricker, 1874, 71 I11. 439; 22 Am. Rep. 104; First Nat. Bank p. Marshalltown State Bank, 1899, 107 la. 327; 77 N. W. 1045; 44 L. R. A. 131; Howard v. Mississippi Bank, 1876, 28 La. Ann. 727; 26, Am. Rep. 105, (virtually overruling McKleroy v. Southern Bank, 1859, 14 La. Ann. 458; 74 Am. Dee. 438); Commercial, etc., Bank v. First Nat. Bank, 1868, 30 Md. 11; 96 Am. Dec. 554; Gloucester Bank v. Salem Bank, 1820, 17 Mass. 33; Nat. Bank v. Bangs, 1871, 106 Mass. 441; 8 Am. Rep. 349; Bernheimer v. Marshall, 1858, 2 Minn. 78; 72 Am. Dec. 79; Pennington County Bank v. First State Bank, 1910, 110 Minn. 263; 125 N. W. 119; 136 Am. St. Rep. 496; 26 L. R. A. (N. S.) 849; Stout v. Benoist, 1866, 39 Mo. 227; 90 Am. Dec. 466; Weisser v. Denison, 1854, 10 N. Y. 68; 61 Am. Dec. 731; Nat. Park Bank v. Ninth Nat. Bank, 1871, 46 N. Y. 77; 7 Am. Rep. 310; Frank 9. Chemical Nat. Bank, 1881, 84 N. Y. 209; 38 Am. Rep. 501; Nat. Bank of Comm. v. Grocers' Nat. Bank, 1867, 2 Daly (N. Y. C. P.) 289; Ryan p. Bank of Montreal, 1886, 12 Ont. 39; Farmers', etc.,

The right to recover in the former cases is sometimes declared to arise from the implied warranty by the holder that the paper is genuine. Assuming that there is such an implied warranty by the indorser in the case of a sale of the paper,1 presentation and payment can hardly be regarded as a sale.2 It seems more accurate to say that the right to recover is a quasi contractual right, resting upon the doctrine that one who confers a benefit in misreliance upon a right or duty is entitled to restitution.3

Sec. 81. Same: Why is restitution denied where drawer's signature is forged? - Several attempts have been made to explain away the apparent inconsistency of allowing a recovery where an indorsement is forged or the body of the instrument altered, and denying a recovery where the signature of the drawer is forged.

Bank v. Bank of Rutherford, 1905, 115 Tenn. 64; 88 S. W. 939; 112 Am. St. Rep. 817; Bank of St. Albans p. Farmers' Bank, 1838, 10 Vt. 141; 33 Am. Dec. 188; Johnston p. Commercial Bank, 1885, 27 W. Va. 343; 55 Am. Rep. 315. See also Hoffman v. Milwaukee Bank, 1870, 12 Wall. (U. S.) 181; Young p. Lehman, 1879, 63 Ala. 519; Hardy v. Chesapeake Bank, 1879, 51 Md. 562; 34 Am. Rep. 325; First Nat. Bank of Danvers p. First Nat. Bank of Salem, 1890, 151 Mass. 280; 24 N. E. 44; 21 Am. St. Rep. 450; Star Fire Ins. C. v. N. H. Nat. Bank, 1881, 60 N. H. 442. Contra: First Nat. Bank p. Bank of Wyndmere, 1906, 15 N. D. 299; 108 N. W. 546; 10 L. R. A. (N. S.) 49; American Express Co. p. State Nat. Bank, 1911, 27 Okl. 824; 113 Pac. 711 ; 33 L. R. A. (N. S.) 188. .

The same rule prevails in continental Europe. See Ames, "The Doctrine of Price v. Neal," 4 Harv. Law Rev. 297, 298, citing: 2 Pardessus, ."Coursde Droit Commercial" (3d ed.), Sec. 501; Wachter, VWechselrecht," 482.

1 See Uniform Negotiable Instrument Law, Sec. 116; Norton on "Bills & Notes" (3d ed.), p. 162.

2 Professor Ames, in 4 Harv. Law Rev. 297, 302, says: "The notion that the holder's indorsement of his name on the bill at the time of payment is a warranty of the genuineness of the bill, although not without judicial sanction [Nat. Bank v. Banks, 1871, 106 Mass. 441; 8 Am. Rep. 349; People's Bank v. Franklin Bank, 1889, 88 Tenn. 299; 12 S. W. 716; 6 L. R. A. 724; 17 Am. St. Rep. 884], should be strenuously resisted. The so-called indorsement is not an indorsement at all, but simply a receipt of payment." Citing: Wilkinson v. Johnson, 1824, 3 Barn. & C. 428, 436; Bernheimer v. Marshall, 1858, 2 Minn. 78, 84; 72 Am. Dec. 79; Bank of St. Albans v. Farmers' Bank, 1838, 10 Vt. 141, 146-7, 33 Am. Dec. 188.

3 First Nat. Bank p. City Nat. Bank, 1902, 182 Mass. 130; 65 N. E. 24; 94 Am. St. Rep. 637.

The rule permitting a recovery in the former cases is generally conceded to be sound. The leading decision denying the right in the latter case is Price v. Neal,1 decided by Lord Mansfield in 1762. In that case a drawee-acceptor who paid two bills purporting to be drawn upon him by drawers whose signatures were in fact forged was denied a recovery from an innocent indorsee, to whom he had at maturity paid the bills. There were no special circumstances of negligence on plaintiff's part save such as may be necessarily implied from his failure to recognize the forgery, nor any special estoppel against him and in favor of the defendant other than such as may be inferred from the foregoing facts.

In an effort to support the denial of relief in this and similar cases, several theories have been advanced. They will be considered in the following sections.