McNeely Co. v. Bank of North America

Citations

• 221 Pa. 588
• 70 A. 891
• 1908 Pa. LEXIS 536

Syllabus

<p>Banks and banking — Check—Forgery—Notice to bank of forgery.</p> <p>The duty of a depositor in a bank, upon discovering that it has paid and charged to his account either a check bearing his forged signature as drawer or his check on the forged indorsement of the payee, is to promptly notify it of the forgery.</p> <p>The relation between a bank and its depositor is a contractual one. Its undertaking with its depositor is to pay his checks if he has sufficient funds with it for that purpose, and it assumes all the risk as against him of a mispayment in paying and charging to his account a check which he has not signed or one he has signed bearing a forged indorsement of the payee. To his account it may not charge such a check. If it does, the depositor can recover from it the amount so charged. No payment by a bank on a forged signature of a depositor as drawer of a check or on a forged indorsement of his payee can affect him. His right is to get back from the bank whatever he has deposited with it, less what has been properly paid out on his orders. The responsibility of the bank to the depositor is absolute and it can retain no money deposited with it by him to reimburse it for any mispayment it has made out of such deposit; but it can recover from the forger responsible for the mispayment or from those who, by their indorsement of a check, have vouched for previous indorsements or the genuineness of the signature of the alleged drawer.</p> <p>Whenever a depositor knowingly withholds from the bank knowledge of a forgery without which the bank cannot proceed in an effort to protect itself, the depositor ought to be regarded when he comes to enforce alleged rights against the bank, as having withheld from it a substantial right without regard to what might or might not have resulted from a prompt exercise of that right. Delay on the part of the depositor leads not only to delay by the bank in proceeding against the forger, but also to possible loss of evidence, an