then to make known their objections.1 Sometimes forged checks are paid by bankers, and the customers to whom they are charged, after permitting their accounts to be balanced from time to time without troubling themselves with their verification, finally refuse to be debited with the forgeries. In such a case it was held that it should have been left to the jury

"to find either that the appellants had knowledge in fact that the forgeries had been committed, or that from carelessness and indifference to the rights of others they failed to inform themselves from sources of informa tion readily accessible to them, and which by the exercise of ordinary diligence as business men would have disclosed to them the fact that the forgeries had been committed."

5. Vermont suggests still another case. The owner of land stood by while a house was built on his property by the adjoining proprietor, but he did not know that it was upon his side of the boundary. Held, that he had been guilty of

"such gross carelessness and indifference to the rights of others that would estop him from setting up title in himself." 3

The court does not seem to have been so much impressed as is the present writer with the gross carelessness of the builder of the house. Had the holding been essential to the decision of the case the point might have received closer consideration.

6. For a further class of cases we are indebted to legislation. Suppose that a shipowner issues a bill of lading for goods not shipped, and that the bill is transferred for value to a bona fide purchaser; who should lose, the signer of the bill or the purchaser of the goods? Our general rule would condemn the signer "whether intentionally or not " he led the purchaser to infer the existence of the goods. By statute, however,

"the master or other person signing may exonerate himself in respect of such misrepresentation, by showing that it was caused without any default on his part, and wholly by the fault of the shipper, or of the holder, or some person under whom the holder claims."5

In the United States authorities differ, but probably the weight of them is in favor of the proposition that the shipowner will be estopped by signing a false bill of lading whether he was careful or negligent. In England the estoppel is founded upon carelessness.

1 Devaynes v. Noble (1815), 1 Mer. 536. And see cases cited with this

one in ch. XI.

2 Hardy v. Chesapeake (1879), 51 Md. 562.

3 Greene v. Smith (1884), 57 Vt. 269.

4 Ante, p. 102.

5 18 and 19 Vic. (Imp.), ch. 111, § 3; 52 Vic. (Can.), ch. 30, § 3.

6 Porter on Bills of Lading, SS 432435.

7. Bills and Notes.- The English authorities1 have excluded all questions of carelessness from a class of cases in which there is strong minority opinion for asserting that it ought to play a most important part. According to the decisions the acceptor of a bill may leave spaces in it which would tempt the virtue of many an one who would shrink from bolder feats of forgery; he may attach conditions in lead pencil, or upon marginal spaces, and if they are rubbed out or cut off throw the ensuing loss upon the shoulders of the innocent purchasers of them; and he may leave signed notes or executed blanks where they may easily be picked up, and swear that he did not think that anybody would avail himself of them;

2

3

“and that, too, though the acceptor or maker may have made the theft or fraud easy by putting the paper in an unlocked drawer in a desk to which clerks and servants and others had access."4

There is, no doubt, the case of Young v. Grote, in which the duty of carefulness as to tempting spaces is imposed upon the drawer of a check; and the case of Ingham v. Primrose, according to which if you wish to destroy your acceptance you ought to do it effectively, and not merely by tearing it in half, which would give it the appearance of separation for safe transmission merely; but these cases are far from having that subsequent sanction which the present writer could wish them. There are also some comforting cases in the Pennsylvania courts. The majority opinion, however, is that of Lord Halsbury: 8

"People are not supposed to commit forgery the protection against forgery is not the vigilance of parties excluding the possibility of committing forgery but the law of the land."

The present writer, bearing in mind the general rules relating

1 See all the cases discussed in chapters V and XXV.

2 Scholfield v. Londesborough (1894), 2 Q. B. 660; (1895) 1 Q. B. 536; (1896) A. C. 514; 63 L. J. Q. B. 649; 64 id. 293; 65 id. 593.

3 Harvey v. Smith (1870), 55 Ill. 224; Zimmerman v. Rote (1874), 75 Pa. St. 188; Cochrane v. Nebeker, 48 Ind. 459; Walsh v. Hunt (1898), 120 Cal. 46; 52 Pac. R. 115; Swaisland v. Davidson (1883), 3 Ont. 320.

4 Bigelow on Bills and Notes, 177.

5 (1827) 4 Bing. 253; 5 L. J. C. P. 165; 12 Moo. 484.

6 (1859) 7 C. B. N. S. 82; 28 L. J. C. P. 294.

7 Brown v. Reed (1875), 79 Pa. St. 370; Leas v. Walls (1882), 101 Pa. St. 57; Robb v. Pennsylvania, etc. (1898), 40 Atl. R. 969.

8 Scholfield v. Londesborough (1896), A. C. 532; 65 L. J. Q. B. 601. See the matter fully discussed in ch. V.

to social relations, would rather agree with Mr. Justice Blackburn and others who hold that

"The person putting in circulation a bill of exchange does by the law merchant owe a duty to all parties to the bill to take reasonable precautions against the possibility of fraudulent alterations of it." 1

Were this the law, then breach of it would furnish a clear case of estoppel by carelessness. For we would have to say, not that the forged acceptance was that of the defendant, but that by his carelessness he was estopped from denying it.

THE LEADING CASES.

Passing on to consider the rules framed for estoppel by negligence, a short statement of the facts in the two leading cases and a citation of the rules in judicial language will be of advantage.

1. (1855) Bank of Ireland v. Evans. The secretary of a company having been allowed the custody of the seal fraudulently affixed it to powers of attorney for the transfer of bank shares owned by the company. In an action between the company and the bank, which had acted upon the transfers, Parke, B., said:

"It is clear, we think, that the negligence in the present case, if there be any, is much too remote to affect the transfer itself and to cause the trustees to be parties to misleading the bank in making the transfer on the forged power of attorney We concur with Mr. Justice Jack

son and Justices Ball, Compton and Towns, and the Chief Justice Leroy. in thinking that the negligence which would deprive the plaintiffs of their right to insist that the transfer was invalid must be negligence in or immediately connected with the transfer itself.” 3

2. (1859) Ex parte Swan; (1862) Swan v. North British A. Co. The owner of shares in two companies, A. and B., employed a broker to sell those in A. and gave him ten executed transfer forms in blank. The broker fraudulently used two of

1 Swan v. North British (1863), 2 H. & C. 183; 32 L. J. Ex. 277. The present writer would not, however, invoke the law merchant. See post, ch. XXIV.

25 H. L. C. 389. See a similar case, Merchants, etc. v. Bank of England (1887), 21 Q. B. D. 160; 57 L. J. Q. B. 418. But see Shaw v. Port Philip (1884), 13 Q. B. D. 103; 53 L. J. Q. B. 369.

meant by "immediately connected with the transfer itself" something almost equivalent to "in the transfer itself,” and he said "that the way to construe it is that the negligence must be proximately connected with the transfer itself." Merchants, etc. v. Bank of England (1887), 21 Q. B. D. 172.

47 C. B. N. S. 400; 30 L. J. C. P. 113. 57 H. & N. 603; 2 H. & C. 175; 31

Lord Esher thought that Parke, B., L. J. Ex. 425; 32 L. J. Ex. 273.

them to transfer the B. company shares, stealing the certificates to enable him to accomplish his purpose. Company B. acted upon these transfers, and in the action between it and the original owner of the shares it was held that the owner was not estopped from denying the execution of the transfer. Baron Wilde, in the Exchequer, formulated a rule as follows:

"That if he has led others into the belief of a certain state of facts by conduct of culpable neglect, calculated to have that result, and they have acted on that belief to their prejudice, he shall not be heard afterwards, as against such persons, to show that that state of facts did not exist." Upon appeal Blackburn, J., referring to Baron Wilde's language, said as follows:

"This is very nearly right, but in my opinion not quite, as he omits to qualify it by saying that the neglect must be in the transaction itself and be the proximate cause of the leading the party into that mistake; and also, as I think, that it must be the neglect of some duty that is owing to the person led into that belief, or, what comes to the same thing, to the general public of whom the person is one,2 and not merely neglect of what would be prudent in respect to the party himself or even of some duty owing to third persons with whom those seeking to set up the estoppel are not privy."

Rules. Summarized from the principal cases, then, the rules may be stated as follows:

1. There "must be the neglect of some duty that is owing to the person led into that belief."

2. "The neglect must be in the transaction itself."

3. "The omission must be the proximate cause of the leading of the person into the mistake."4

Let us now look at the criticisms of these rules by the principal text-writers:

Mr. Bigelow's Criticism.- Referring to these rules, Mr. Bigelow says: 5

"It is clear, however, that cases of estoppel arising out of negligence without a representation must be uncommon. They cannot fall within the propositions of Mr. Justice Brett,6 for the proposition itself shows that a representation (by conduct) has been made.'

12 H. & C. 181; 32 L. J. Ex. 273. 2 The learned judge illustrates this point by reference to the case of the maker of a blank note which he intends to be filled up "and delivered to a series of holders."

3 Bank of Ireland v. Evans (1855), 5 H. L. C. 931; Ex parte Swan (1859), 7 C. B. N. S. 400; 30 L. J. C. P. 113; Swan v. N. B. A. Co. (1862), 7 H. & N. 603; 31 L. J. Ex. 425; 2 H. & C.

175; 32 L. J. Ex. 273; Carr v. London (1875), L. R. 10 C. P. 307; 44 L. J. C. P. 109; Scholfield v. Londesborough (1894), 2 Q. B. 660; (1895) 1 Q. B. 536; (1896) A. C. 514; 63 L. J. Q. B. 649; 64 id. 293; 65 id. 593.

4 See Scollans v. Rollins (1899), 53 N. E. R. 863 (Mass.).

5 On Estoppel (5th ed.), 653, 654. "In Carr v. London, supra.

..

Mr. Bigelow seems to be in search of some instance "of estoppel arising out of negligence without a representation;" and he appears to assume that the rules were formulated for cases of that sort. This is the more remarkable because he observes that the cases in which the rules were formulated "cannot fall within the proposition of Mr. Justice Brett, for the proposition itself shows that a representation (by conduct) has been made." Inasmuch, then, as the cases themselves involved a representation, it would be extremely improbable that the rules framed by them should have been intended for cases in which there was no representation; more particularly when, as is asserted, it is extremely difficult to find such a case.

The solution of Mr. Bigelow's difficulty lies in the difference between personal and assisted misrepresentation, without regard to which it may be said with equal truth that there may or may not be estoppel by carelessness without misrepresentation. We may say first that there can be no estoppel of any kind unless there has been some misrepresentation—that is, unless the estoppel-asserter has by somebody been deceived. Some fact must be misrepresented before there can be estoppel against the assertion of that fact. But we may also say that there may be estoppel by carelessness without misrepresentation by the estoppel-denier. In other words, there may be estoppel by carelessness where the misrepresentation is that of a third person; that is, in cases of assisted misrepresentation. Not being able to find a case of "Estoppel by Negligence," Mr. Bigelow imagines one: 2

"Let it be supposed that a man has been fixed with constructive notice, which by reason of his neg.igence has not become knowledge to him, of the existence of some right in his favor; that this right is, to his knowl edge, about being disposed of by another as that other's property; and that it is so disposed of to a purchaser for value, without notice of the right, , and in the absence of the negligent party. Here would be a case of negli gence which could hardly be treated upon the footing of a representation; but would not an estoppel arise, supposing all the other elements of it present?

But the case is clearly one of misrepresentation - misrepresentation by a third party. The vendor is posing as owner of property in which the estoppel-denier has some interest; that

1 See the whole context, 653, 654. Bigham, J., too, thought with Mr. Bigelow. He said that Swan v. North British was a case "in which estoppel by negligence was at

tempted to be set up... The present case is one of estoppel by representation." Union v. Mersey (1899), 2 Q. B. 210; 68 L. J. Q. B. 842. 25th ed. 654.