matter was formerly regulated by the statute of 1849. The effect of that statute and the cases upon the subject was that the mere acceptance or payment of forged paper was no longer of itself a bar to the recovery of the money by the party paying, nor was such party absolutely bound to discover and give notice of the forgery on the very day of payment. All that he need do in any case was to give ample notice promptly according to the circumstances and the usage of the business, and unless the position of the party receiving the money had been altered for the worse in the meantime the date of the notice was not material. Iron City Nat. Bank v. Fort Pitt Nat. Bank, 159 Pa. St. 46, 52. As to other cases on this subject see People's Bank v. Franklin Bank, 88 Tenn. 299; First Nat. Bank of Danvers v. First Nat. Bank of Salem, 151 Mass. 280; Nat. Bank of North America v. Bangs, 106 Mass. 441; Ellis v. Insurance Company, 4 Ohio St. 268; First Nat. Bank v. Ricker, 71 Ill. 439; Rouvant v. San Antonio Nat. Bank, 63 Tex. 610; Deposit Bank of Georgetown v. Fayette Nat. Bank, 90 Ky. 10. Acceptance admits the signature of the drawer, but is no proof or admission of the indorsement by the payee, whether the bill be payable to the drawer's own order or that of another person. Williams v. Drexel, 14 Md. 566. And the drawee is not presumed to know the handwriting in the body of the instrument. Continental Nat. Bank v. Tradesman's Bank, 36 App. Div. (N. Y.) 112; Gunston v. Heat and Power Co., 181 Pa. St. 327.

(c) Thus, if the bill is drawn by a corporation, he cannot set up as a defense that it was without legal capacity to draw the bill. Halifax v. Lyle, 3 Welsby, H. & G. 446. So, if the bill is drawn by an infant, Jones v. Darch, 4 Price, 300; Taylor v. Croker, 4 Esp. 187; or a married woman, Cowton v. Wickersham, 54 Pa. St. 302.

(d) The delivery of a bill or check by one person to another for value implies a representation on the part of the drawer that the drawee is in funds for its payment, and the subsequent acceptance of such check or bill constitutes an admission of the truth of the representation, which the drawer is not allowed to retract. By such acceptance the drawee admits the truth of the representation, and having obtained a suspension of the holder's remedies against the drawer, and an extension of credit by his admission, is not afterward at liberty to controvert the fact as against a

bona fide holder for value of the bill. Heuertematte v. Morris, 101 N. Y. 63, 70. If the acceptance be for the drawer's accommodation the acceptor does not thereby become entitled to sue the drawer upon the bill; but when he has paid the bill, and not before, he may recover back the amount from the drawer in an action for money had and received. Christian v. Keen, 80 Va. 369, 377. See also Whitwell v. Brigham, 19 Pick. 117; Henderson v. Thornton, 37 Miss. 448; Suydam v. Combs, 3 Green (N. J.), 133.

(e) Thus, he would not be permitted to show that the payee at the time of the acceptance was a lunatic. Smith v. Marsack, 6 C. B. 486.

§ 113. When person deemed indorser.-A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity (a).

(a) See section 36, subdivision 6, and note. There is nothing in either section to preclude a party from assuming liability such as guarantor, etc. Thus, if he were to place above his signature the words, "I guarantee the payment of the within note," he would not be deemed an indorser but a guarantor. Where the statute fixes the status of a party to a negotiable instrument as being that of an indorser, parol evidence is not admissible to vary such status. Baumeister v. Kuntz, 42 So. 886 (Fla.). Under this section a partner, by individually indorsing a firm note adds to his liability as maker a several and distinct liability as indorser. Nat. Exchange Bank v. Lubrano (R. I.), 68 Atl. Rep. 944. See note to section 114.

§ 114. Liability of irregular indorser.—Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser in accordance with the following rules:

I. If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties.

2. If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer.

3. If he signs for the accommodation of the payee he is liable to all parties subsequent to the payee.

This section is intended to cover irregular indorsements. On this subject the decisions are very conflicting. In some jurisdictions a person placing his signature on the back of a note before the payee has indorsed was deemed a joint maker. Good v. Martin, 95 U. S. 93; National Exchange Bank v. Cumberland Lumber Co., 100 Tenn. 479; Logan v. Ogden, 101 Tenn. 392; Bank of Jamaica v. Jefferson, 92 Tenn. 537; Melton v. Brown, 25 Fla. 461; Schroeder v. Turner, 68 Md. 506. In other jurisdictions he was regarded as a guarantor. In still others he was considered an indorser. And those courts which held him to be an indorser differed as to whether he was a first or second indorser. The rule adopted in the statute is embodied in part in section 3117 of the Civil Code of California, which reads: "One who indorses a negotiable instrument before it is delivered to the payee is liable to the payee thereon, as an indorser." The California rule was adopted because it is conducive to certainty, and because it appears to accord more nearly with what must have been the intention of the parties. When a plain man puts his signature on the back of a negotiable instrument he ordinarily understands that he is becoming liable as an indorser; and if he puts it there before the instrument is delivered, he usually does so for the purpose of giving the maker or drawer credit with the payee or other person to whom it is negotiated. The following observation in Connors v. Taylor (13 Wis. 224, 229), seems to embody much practical good sense: Obviously, a person indorsing a note before delivery thereof to the payee intends rendering himself liable to the payee in some character and upon some ground. He must intend and design to secure its payment and give credit to the paper by placing his name upon it, even in the hands of the payee." In many of the cases the reasoning is highly technical, and the decisions are based upon considerations which, in all probability, never entered the heads of the parties themselves. The California Code makes no provision for a case where the

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instrument is drawn to the order of the maker or drawer. This is covered by subdivision 2, above. Subdivision 3 was added to provide for a case where, the payee being unable to enforce payment, there might be a question whether the indorser would be liable to a person claiming under the payee.

In New York prior to the statute a person indorsing in blank before delivery to the payee was prima facie deemed to be a second indorser, and hence not liable to the payee, who was supposed to be the first indorser. Bacon v. Burnham, 37 N. Y. 614; Phelps v. Vischer, 50 N. Y. 69. The same rule prevailed in Pennsylvania. Eilbert v. Finkbeiner, 68 Pa. St. 243; Central Nat. Bank v. Dreydoppel, 134 Pa. St. 499. And in Oregon. Deering v. Creighton, 19 Oregon, 118; Cogswell v. Hayden, 5 Oregon, 22. But as the paper itself furnished only prima facie evidence of this intention, it was competent to rebut the presumption by parol proof that the indorsement was made to give the maker credit with the payee. Coulter v. Richmond, 59 N. Y. 478. As the statute declares the liability to be that of an indorser, the holder is not permitted to show that the party so signing meant to be bound as guarantor. A. B. Farquhar Co. v. Highman (N. D.), 112 N. W. Rep. 558. The statute has changed the law in New York, New Jersey, Rhode Island, Ohio, and other States. Far Rockaway Bank v. Norton, 186 N. Y. 484; Haddock, Blanchard & Co. Inc. v. Haddock, 118 App. Div. (N. Y.) 412; Wilson v. Hendee (N. J.), 66 Atl. Rep. 413; Hibbs v. Guaraglia (N. J.), 67 Atl. Rep. 81; Rockfield v. First Nat. Bank of Springfield (Ohio), 83 N. E. Rep. 392; Deahy v. Choquet (R. I.), 67 Atl. Rep. 421. And now, where it is sought to hold an irregular indorser, demand and notice of dishonor must be shown as in other instances. See cases cited above.

This section does not, however, fix the rights of the various indorsers as between themselves; the latter liability is governed by section 118, under which evidence is admissible to show an agreement as to the order in which they shall be liable. Haddock, Blanchard & Co. Inc. v. Haddock, 118 App. Div. (N. Y.) 412; Kohn v. Consolidated Butter & Egg Co., 30 Misc. (N. Y.) 725; Wilson v. Hendee (N. J.), 66 Atl. Rep. 413. In the case last cited, it was said by the Court of Errors and Appeals of New Jersey: "It will be observed that this section deals with the rights of the payee and subsequent parties, and has not

the effect of defining the rights and liabilities of several irregular indorsers as between themselves. These are set forth in section 68, which reads as follows: 'As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that as between or among themselves they had agreed otherwise,' etc. This does not, by express mention, sanction parol evidence; neither does it expressly exclude any kind of evidence, whether written or verbal. Is parol evidence excluded by implication? If the legislative design was to admit only written evidence for the purpose indicated, it would have been unnecessary to say anything upon the subject, for by the common-law rules of evidence other writings explanatory of the real agreement would, of course, have been admissible. When we recall that a previous section had brought irregular and regular indorsers into a single category in the absence of an expressed intention to the contrary, that the first clause of section 68 renders the mere act of indorsement only prima facie evidence of the contract as between successive indorsers, and that by previous decisions parol evidence as between irregular indorsers was for all purposes admissible, and as between regular indorsers was for some purposes admissible and for other purposes not, it is easy to arrive at the conclusion that the section was intended to admit parol evidence in all cases between indorsers for the purpose of showing what was the agreement amongst themselves. This view brings our State into accord with the rule already laid down in some other jurisdictions as the common-law rule. At the same time it does not destroy the value of the instrument as a commercial instrument, for it is not against those who subsequently take the instrument in the course of commerce that the explanatory evidence is admitted. When we remember that the rules of the law merchant in this regard were established especially for the protection of subsequent holders of the instrument, and that the liability of indorser arises not from any words expressed upon the paper but from implications that originated in the necessities of trade and commerce, it is reasonable to attribute to the Legislature an intent to leave the paper open to explanation by parol as between the indorsers themselves." Wilson v. Hendee (N. J.), 66 Atl. Rep. 413, 416.