Another explanation that has been offered is that in accepting or paying a bill the signature of the drawer of which is forged, the drawee is chargeable with negligence.
1 3 Burr. 1354.
2 1762, 3 Burr. 1354, 1357.
8 Ames, "'The Doctrine of Price p. Neal," 4 Harv. Law Rev. 297, 299.
This is the theory upon which the defense in the leading case of Price v. Neal was rested. Mr. Yates, for the defendant, "denied it to be a payment by mistake: and insisted that it was rather owing to the negligence of the plaintiff; who should have inquired and satisfied himself, 'whether the bill was really drawn upon him by Sutton, or not.'" And Lord Mansfield, in the course of his opinion, said:1 "Whatever neglect there was, was on his [plaintiff's] side. The defendant had actual encouragement from the plaintiff himself, for negotiating the second bill, from the plaintiff's having without any scruple or hesitation paid the first; and he paid the whole value bona fide. . . . in this case, if there was any fault or negligence in any one, it certainly was in the plaintiff, and not in the defendant."
The notion that negligence on the part of the drawee is the basis of liability is suggested, if not relied upon, in a number of cases. The following statement is typical:
Ellis v. Ohio Life Ins. & Trust Co., 1855, 4 Ohio St. 628; 64 Am. Dec. 610: Ranney, J. (p. 652): "We admit it to be equally well settled, that, where the instrument is drawn upon, or purports to be signed by, the party paying the money, to a holder without fault, and whose situation would be thereby changed, to his prejudice if he were compelled to refund, the money cannot be recovered back. The foundations of the rule are sufficiently obvious. The party is supposed to know his own handwriting, in the one case, or that of his customer or correspondent in the other, much better than the holder can; and the law, therefore, allows the holder to cast upon him the entire responsibility of determining as to the genuineness of the instrument, and if he fails to discover the forgery, imputes to him negligence, and, as between him and the innocent holder, compels him to suffer the loss." 2
1 Price v. Neal, 1762, 3 Burr. 1354, 1357.
2 See also First Nat. Bank v. Ricker, 1874, 71 111. 439; 22 Am. Rep. 104; Gloucester Bank v. Salem Bank, 1820, 17 Mass. 33; Bern-heimer v. Marshall, 1858, 2 Minn. 78; 72 Am. Dec. 79; Stout v. Benoist, 1866, 39 Mo. 277; 90 Am. Dec. 466; Farmers', etc., Bank v. Bank of Rutherford, 1905, 115 Tenn. 64; 88 S. W. 939; 112 Am. St. Rep. 817; Bank of Williamson v. McDowell County Bank, 1910, 66 W. Va. 545; 66 S. E. 761.
There are, as Professor Ames has pointed out, two objections to this theory. In the first place, its proper application would require that the plaintiff be permitted to show, by evidence of the skillfulness of the forgery or other exculpatory circumstances, that as a matter of fact he was not negligent. It seems likely, however, that such evidence would ordinarily be excluded. In the case of Hardy v. Chesapeake Bank,1 for instance, the court said: "If the bank pays money on a forged check, no matter under what circumstances of caution, or however honest the belief in its genuineness, if the depositor himself be free of blame and has done nothing to mislead the bank, all the loss must be borne by the bank for it acts at its peril." 2 In the second place, "It is, undoubtedly, also true, as a general rule of commercial law, that where one accepts forged paper purporting to be his own, and pays it to a holder for value, he cannot recall the payment. The operative fact in this rule is the acceptance, or more properly, perhaps, the adoption, of the paper as genuine by its apparent maker. Often the bare receipt of the paper accompanied by payment is equivalent to an adoption within the meaning of the rule; because, as every man is presumed to know his own signature, and ought to detect its forgery by simple inspection, the examination which he can give when the demand upon him is made is all that the law considers necessary for his protection. He must repudiate it as soon as he ought to have discovered the forgery, otherwise he will be regarded as accepting the paper. Unnecessary delay under such circumstances is unreasonable; and unreasonable delay is negligence, which throws the burden of the loss upon him who is guilty of it, rather than upon one who is not. The rule is thus well stated in Gloucester Bank v. Salem Bank, 17 Mass. 45: 'The party receiving such notes must examine them as soon as he has opportunity, and return them immediately: if he does not, he is negligent ; and negligence will defeat his action.'
1 1879, 51 Md. 562, 585; 34 Am. Rep. 325.
2 See, however, Cooke v. United States, 1875, 91 U. S. 389. Action to recover money paid by the Assistant Treasurer of the United States in New York for the redemption of treasury notes which are now alleged to be counterfeit. Waite, C.J. (p. 396):
"When, therefore, a party is entitled to something more than a mere inspection of the paper before he can be required to pass finally upon its character, - as, for example, an examination of accounts or records kept by him for the purposes of verification, - negligence sufficient to charge him with a loss cannot be claimed until this examination ought to have been completed. If, in the ordinary course of business, this might have been done before payment, it ought to have been, and payment without it will have the effect of acceptance to deny a recovery because the plaintiff's mistake appears to have been the result of his negligence, is contrary to the general principle governing the recovery of benefits conferred by mistake, as has elsewhere been shown (ante, Sec. 15).