None of the theories set forth in the preceding sections seems satisfactorily to account for the denial of relief to the drawee in the case of the forgery of the drawer's signature. The true reason for the rule, it is believed, is one of policy - the policy of maintaining confidence in the security of negotiable paper by making the time and place of acceptance or payment the time and place for the final settlement, as between drawee and holder, of the question of the genuineness of the drawer's signature. In most cases, conspicuously where the drawee is the drawer's banker, the business relations between the drawer and drawee are such that, not only is the drawee thoroughly familiar with the drawer's signature and consequently well qualified to discover a forgery, but it is peculiarly convenient for him to solve any doubt by inquiring of the drawer.
Of course, confidence in the security of negotiable paper would be still further strengthened if the same rule of policy were extended to cases of forged indorsements. But on the other hand, such an extension would work a hardship to the drawee, for in general he has no closer relations with the indorsers than has the holder, and therefore is in no better position to ascertain the genuineness of their signatures.
The view that the denial of relief to the drawee in the case of the forgery of the drawer's signature rests upon grounds of policy has received most persuasive judicial support. Lord Mansfield's remark in Price v. Neal, that "this was one of those cases that could never be made clearer by argument," suggests that the origin of the rule lay in the notion of practical policy rather than in that of a definite legal principle. And in several of the strongest and most carefully considered cases, the rule has been expressly declared to be one of convenience:
Germania Bank v. Bautell, 1895, 60 Minn. 189; 62 N. W. 327; 27 L. R. A. 635; 51 Am. St. Rep. 519: Mitchell, J. (p. 193): "In view of the use of this class of paper as money, it was considered that public policy required that, as between the drawee and good-faith holders, the drawee bank should be deemed the place of final settlement where all prior mistakes and forgeries should be corrected and settled once for all, and, if not then corrected, payment should be treated as final; that there must be a fixed and definite time and place to adjust and end these things as to innocent holders; and that that time and place should be the paying bank and the date of payment; and that, if not done then, the failure to do so must be deemed the constructive fault of the payee bank, which must take the consequences."
Dedham Nat. Bank v. Everett Nat. Bank, 1901, 177 Mass. 392; 59 N. E. 62; 83 Am. St. Rep. 286: Holmes, C.J. (p. 395): "Probably the rule was adopted from an impression of convenience rather than for any more academic reason."1
1 Mr. Justice Story said, in United States Bank v. Bank of Georgia, 1825, 10 Wheat. (U. S.) 333, 355: "It is sufficient for us to declare, that we place our judgment in the present case, upon the ground, that the defendants were bound to know their own notes, and having received them, without objection, they cannot now recall their assent. We think this doctrine founded on public policy and convenience; and that actual loss is not necessary to be proved - for potential loss may exist, and the law will always presume a possible loss, in cases of this nature."
Phelps, J., in Bank of St. Albans v. Farmers' Bank, 1838, 10 Vt. 141, 145; 33 Am. Dec. 188, said that the drawee is "the person to whom the bill itself points, as the legitimate source of information to others, and if he were permitted to dishonor a bill, after having once honored it, the very foundation of confidence in commercial paper would be shaken."
See also London, etc., Bank v. Bank of Liverpool,  1 Q. B. 7, 10; Jones v. Miners' & Merchants' Bank, 1910, 144 Mo. App. 428; 128 S. W. 829.