Forgery may consist of a forgery or alteration in the body of a check really signed by the depositor, or it may consist of the simulation of the depositor's signature, or it may be that the name of a payee has been forged upon the check. The difference between the three cases is very marked as regards the rights of a bank on the payment of forged or altered paper. The case of payment by a bank of a check on itself, where the drawer's signature is forged, is governed by the rule that a bank is bound to know the signature of its own depositor.1 Therefore, taking the case first of certification of a check, which is a species of payment, if the bank certifies a forged check on itself, the certification ought to be, it might seem, at first blush, final and irrevocable as to an innocent holder of the check, where the forgery consists of a forgery of the name of the drawer.2 But the rule that the certification of could not stop payment of his own check given to one who had passed it to the bank, but which the bank had not paid. Charles River Nat. Bank v. Davis, 100 Mass. 413.

5 Brennan v. Merchants' Bank, 62 Mich. 343

6 Schneider v. Irving Bank, 1 Daly, 500.

7 Public, etc. Ex. v. Kune, 20 Bradw. 137. And this ought to be the rule in those jurisdictions, which do not permit the holder to sue before certification or accept-anca But see note 8 to Sec. 146, ante. The action should be for money had and received, and should not be upon the check itself.

1 The cases cited in the notes following this all recognize this very obvious proposition.

2 See the principle decided in Riverside Bank v. First Nat. Bank, 74 Fed. R 276, 38 U. S. App. 674

But the rule is that the certification of a check forged as to the name of the drawer can be revoked in the hands of the person to whom it has been certified, except as to his loss upon the certification. See Sec. 150, ante, where the authorities are given as to a mistake in the drawer's account.

3 Nolan v. Bank of New York, 67 Barb. 24

4 Meads v. Merchants' Bank, 25 N. Y. 143 The element of knowledge of the falsity is lacking to make this a case of false representation by the bank. The liability of the bank is based upon its contract of certification.

5 It may be considered either a mistake as to the existence of the subject-matter or a mistake as to its essential qualities, preferably the latter. See for the rule, Clark on Contracts, 298. See Sec. 150, ante, notes 6 and 7.

6 See Sec. 150, ante, for the reasons that govern this casa There is some question as to the rule in case of a mistake as to the state of the account. See Riverside Bank v. First Nat. Bank, supra, and note 7 to Sec. 150, ante.

7 See the cases cited in notes 13 and 14, infra.

8 In that case there would be no mistake, since the check would be genuine as to the drawer. See Levy v. First Nat Bank, 27 Neb. 557, which apparently recognizes that the bank must be liable to the drawer if it pays the check.

9 See Bank of U. S. v. Bank of Georgia, 10 Wheat 333; First Nat. Bank v. Ricker, 71 I11 439; Deposit Bank v. Fayette Bank, 10 Ky. Law R. 350; Bank of St. Albans v. Farmers' Bank, 10 Vt. 141; Germania Bank v. Boutel, 60 Minn. 189. The same rule applies on a certificate of deposit. Stout v. Benoist, 39 Mo. 277. See 2 Har. L. R. 297.

10 Levy v. First Nat. Bank, 27 Neb. 557; Merchants' Bank v. Molntyre, 2 Sandf. 431; National Bank v. Bangs, 106 Mass. 441. This last case seems to say that where a payee has given credit to the check by his indorsement, he cannot claim that the bank was bound to know its depositor's signature. But this rule only applies between banks. See next section.

11 City Bank v. First Nat. Bank, 43 Tex. 203; Rouvant v. National Bank, 63 Tex. 610; First Nat. Bank v. Ricker, 71 I11. 439; Ellis v. Ohio Life Ins. Co., 4 Ohio St 628.

12 Hardy v. Chesapeake Bank, 51 Md. 562; Hatton v. Holmes, 97 Cal. 208; Frank v. Chemical Bank, 84 N. Y. 209; Georgia Banking Ass'n v. Love and Good Will Soc, 85 Ga. 293; Leavitt v. Stanton, H. & D. Supp. 413 (a very peculiar case).

13 Crawford v. West Side Bank, 100 N. Y. 50, is negligence in drawing the check as to form. Smith v. Mechanics' Bank, 6 La. Ann. 610. is negligence in delivering the check. But with the last case compare Welsh v. Germ. Am. Bank, 73 N. Y. 424. The use of a rubber stamp as a fac simile signature is not negligence unless it was negligently kept. Robb v. Pennsylvania Co., 186 Pa. 456. But this proposition must be very carefully examined, because if, in spite of the depositor's antecedent negligence, the bank could have avoided the payment by the exercise of due care, the general rule see note forgery to his employer or in not notifying the bank to put him in the penitentiary.17 But, nevertheless, the bank must show that it has suffered loss,18 and, in reason, the depositor ought to be held only to the amount of that loss.19 A part of the depositor's duty is to return at once the forged check to the bank. If he holds it after knowledge of the forgery he ratifies the bank's act,20 unless it is clone at the bank's request.21 The next case to consider is where the indorsement on the check is forged. As to this matter the bank owes a duty only to its depositor.22 All other people through whose hands the check passes have an equal opportunity with itself of discovering such a forgery. Therefore, if the bank pays a check which contains a forged indorsement, it may collect the amount paid from the person to whom it was paid.23 If that person were innocent, there was a mutual mistake. If he knew of the forgery he was guilty of fraud, and the same rule exactly applies to the certification of a check.24 The bank by its certification does not in any sense warrant the indorsement upon the paper or check which it certifies. Its liability is confined to the signature of the depositor in the bank, which would be, of course, the first indorsement on a certificate of deposit.25 Now as to a forged indorsement, the bank cannot charge such a check against the depositor if it pays it;26 and the situation is different a& to the duty of the depositor. "While he is under the duty of examining returned vouchers, he is not expected to discover a forged indorsement.27 If he finds a forgery he should within a reasonable time notify the bank, and his failure to do so, if it causes injury to the bank, may be charged against him as a failure of duty.28 The depositor in some cases has been said to be bound by a forged indorsement, where he has himself been guilty of negligence in not taking care as to the payee,29 but this statement is not true. There must be an estoppel.30 The last case to be considered is that of forged or altered paper, where the amount has been raised. It is necessary to consider first the case of certification and next the case of payment. The alteration may be made either before or after certification. If made before certification, the bank by its certificate simply warrants that the drawer's signature is genuine and that he has funds. It does not warrant the amount of the check to be correct.31 Therefore the bank is not bound to even a bona fide holder upon its certificate, if it acts in good faith.32 It need not revoke the certificate, because it cannot be held on it; yet banks often take precautions to warn the public and other banks against forgeries and altered paper.33 But the law, while it does not hold the banker liable in any case upon the certificate as a contract, where paper is raised before certifying, nevertheless holds every man to fair and honest dealing towards others, so far as such dealing can be brought within legal principles. Therefore, if the certifying bank acted with such culpable negligence in not ascertaining facts which would have indicated to it the forgery that its conduct amounts to bad faith, it will be held upon its certificate. The court puts it upon the ground of negligence, but it is more consonant with legal conceptions to call it estoppel.34 If the alteration is made after the certificate was given (the drawer, of course, having the right to change the payee before he delivers the check),35 it is not liable upon the certificate,36 or at any rate for not more than the check originally was,37 and on principle, if it pay the check without being at fault, it may recover from the payee,38 although the cases are not consistent in their language.39 But there are cases which hold the bank liable where its own negligence gave an opportunity for the raising of the check.40 It will be seen that in some cases the bank, even if it has paid a check that has been raised, may charge it against the depositor41 Therefore, if it can charge the check against the depositor, where the alteration was made before certifying, the bank ought to be bound to make the certificate good to the holder, because the check has actually become genuine.42 The same rules exactly apply to payment. A certified check, when paid, is paid as the obligation of the bank, not of the drawer. Therefore the depositor is not concerned with an alteration which took place after certifying. He was no longer a party to the contract. It has already been stated that the bank paying without fault on its part a certified check, whether raised before or after certifying, may recover of the person to whom it paid.43 If it pay an uncertified raised check without fault on its part it may recover of the last payee,44 unless it can charge the check against the depositor, when in justice it ought not to recover against the payee.45 The bank, as a general rule, cannot charge forged paper altered as to amount against the depositor. But where the depositor has; been guilty of negligence in so drawing the check as to facilitate the forgery, the bank may charge the check against its depositor.46 What would be negligence in the depositor will necessarily be a difficult question to solve.47 But the bank's contributory negligence ought to be a complete defense.48 The reason of this rule is that the bank was guilty of the last clear act of negligence without which the payment would not have been made. The negligence of the depositor after payment in failing to examine the vouchers, or to compare the amounts of the checks as drawn with the checks returned, may amount to a ratification or an implied admission,49 for the depositor can always be expected to know the amounts of the checks which he has drawn.