Question 137.— If a bank pays a cheque drawn on itself through the Clearing House, and some days afterwards discovers signature is a forgery, can it recover amount from the bank to which it was paid?

Answer.—No. The drawee who accepts a bill is precluded from denying the genuineness of the drawer's signature, so that if a cheque were accepted by the bank it could not (under ordinary circumstances) object afterwards to the holder that the drawer's signature was forged. Bills of Exchange Act, section 54, sub-section 2.

When a cheque or bill is paid the same rule applies as regards the party to whom the money was paid.