reviewed from a Canada court, that, according to the judgment of Sir Montague Smith, a certificate of deposit had all the qualities of a negotiable promissory note." The negotiability of a certificate of deposit is not destroyed by a stipulation that it is payable on return of the certificate properly indorsed, nor by a provision that it is payable in current funds, nor by a provision that it shall bear interest, nor by a provision that it shall bear interest if left for a certain period of time, but no interest after that period." 29. Necessity of Demand-Right of Action. — In general, no right of action accrues to the holder of a certificate of deposit until there has been an actual presentment and demand for payment;" though, in some states, where a certificate is made payable by the expressed words, "upon the return of this certificate properly indorsed," or by equivalent terms, presentment and demand for payment is not necessary before bringing suit to recover the amount." In the former case, the statute of limitations does not begin to run until demand is made; in the latter case, the statute begins to run from the date of issuing the certificate." The right of the bank which has issued a certificate to demand that it be delivered up to it, upon payment of the deposit to the party entitled thereto, is paramount." On the other hand, the bank is liable for the amount of the certificate to the legal holder thereof, and in a suit to recover the amount, the production of the certificate establishes a prima facie case." 8 L. R. 5 P. C. (Eng.) 461 (1874). 9 40 Neb. 484 (1894). 1052 Ind. 404 (1876); 60 N. Y. 265 (1875); 107 Pa. 336 (1884). 11 29 Cal. 503 (1866). 12 36 Mich. 494 (1877). 1359 Hun (N. Y.) 578 (1891). 14 79 III. 281 (1875); see The Law of Banks and Banking. FORGERY OF INSTRUMENTS 30. Definition. - Forgery is the altering or counterfeiting of an instrument with fraudulent intent. Where a signature is forged or made without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the instrument or to give a discharge therefor, or to enforce payment thereof against any party thereto can be acquired through or under such signature, unless the party, against whom it is sought to enforce such right, be precluded from setting up the forgery or want of authority.' ILLUSTRATION. - A bill is payable to the order of John Smith, and another person of the same name gets hold of it, and indorses it to D, who takes it as a holder in due course. D acquires no title to the bill, and cannot enforce payment against any party thereto, and should any party pay him, the payment is invalid.' Uttering is the term used to designate the delivery by a forger of a forged instrument to another person, and it is essential to constitute a forgery either by counterfeiting an instrument or by altering it. 31. Forgery By Alteration. - Forgery consists, not only in the counterfeiting of an instrument or a signature thereto, but also in the fraudulent alteration of an instrument. If the alteration of a completed instrument be by a material change in its terms, with intention to defraud, it is as complete a forgery as the counterfeiting of it. The following alterations are material, viz.: Any alterations of the date, the sum payable, or the time or place of payment; and any other material alteration in a material part of the instrument which alters the operation of the paper and the liability of the parties, whether the change be 1 Eng. & Can. B. of E. Acts, Sec. 24; N. Y.N.I. L., Sec. 42; Pa. N. I. L., Sec. 23. 2 17 N. Y. 205 (1858). beneficial or prejudicial; any tampering with an instrument, which imposes upon a party a burden or a peril, which he would not else have incurred, comes within the meaning of materially altered paper. Thus, adding a rate of interest not agreed upon after the words "with lawful interest"; changing a joint note to a joint and several one; cutting off or intentionally erasing the name of the maker of a joint and several note; adding another maker after the paper is executed; adding another surety for the maker without his consent (which act would discharge the original surety); rendering it negotiable by adding the words "to order,” when negotiability was not intended; changing "I" to "We"; cutting off part of paper so as to leave an entirely different contract; adding words which will bind a married woman's separate property; adding a condition stipulating that guaranty shall only attach when something else. happens; separating a condition already attached (if done fraudulently); making it payable in gold, or erasing the same if so payable; changing a note payable in drafts to make it payable in current funds; adding or striking out an interest clause; making it payable after sight instead of after date; adding the words "on demand"; adding a place of payment where there is none stated; adding a seal; putting on signatures as attesting witnesses when none were present- all are instances of material alterations. Immaterial alterations by which instruments are not .changed in character or operation are where pencil lines are retraced in ink; such as are made payable to a person "or bearer" and changed into person "or order'; where an indorsement in blank is converted into a special indorsement, and where the words "on demand" are added to a note in which no time of payment is expressed; and, generally, where any words are inserted which the law implies. 32. Effect of Forgery. - The general rule as to the effect of a forged instrument, subject to the exceptions of ratification and waiver explained in this subtitle, is: The forgery of any party's signature to an instrument, or the material alteration of an instrument, extinguishes liability and is an absolute defense to an action brought upon it, even though such action be brought by a holder in due course. No one, a bona-fide holder not excepted, can recover upon a bill or note to which any signature under or through which he claims has been forged, or which has been materially altered.* A material alteration of a check, after execution and before payment, destroys its validity." And the payment of such check by the bank on which it is drawn does not entitle the bank to debit the drawer with the amount, even though it were made to a bona-fide holder.' Where any instrument is materially altered without the assent of all parties liable, it is avoided, except as against a party who has himself made, authorized, or assented, to the alteration, and subsequent indorsers; but, where a material alteration is not apparent, and the instrument is in the hands of a holder in due course, such holder may avail himself of the bill as if it had not been altered, and may enforce payment of it according to its original tenor. As, where a bill is accepted for 500 pounds and, after acceptance, the drawer fraudulently alters the amount to 3,500 pounds, and the bill gets into the hands of a holder in due course, he can recover 500 pounds. Where a bill appears to have been altered, or there are marks of erasure on it, the party seeking to enforce the instrument is bound to give evidence to show that it is not avoided thereby." Where a party, either 33. Ratification and Waiver. verbally or in writing, assents to an alteration already made in an instrument, it operates as a ratification of the alteration." The party to an instrument which has been altered must have full knowledge of the alteration, and there must be an intention on his part to ratify, else a ratification is not effective." As the English bills of exchange act is construed, a forgery cannot be ratified;" yet, a person whose signature has been forged may, by his conduct, be estopped from denying its genuineness to an innocent holder; as, where a person whose acceptance of a bill is forged has acknowledged the forged signature to be his, he ratifies the forgery in effect, or at least waives the forged acceptance and is liable on the instrument. In the negotiable instruments laws, in those of the United States which have enacted them, there is the same provision as in the English act, declaring that a forged signature or one made without authority "is wholly inoperative," and payment cannot be enforced "unless the party against whom it is sought to enforce it is precluded from setting up the forgery or want of authority." The word precluded is taken to mean estopped. 14 In the United States, a forged instrument may be ratified; as where the assent of a party to an alteration is given afterwards; also, a subsequent promise made to pay the instrument may amount to a ratification; and if a party, with knowledge of the alteration, afterwards agree to extend the time of payment on a note; or make a payment on account of principal and interest; or agree to renew the instrument." One who, with knowledge of the forged acceptance of a bill, acknowledges responsibility for the acceptance, thereby waives the alteration and ratifies the act of altering it.1 Payment made on a note which is known to be forged is a ratification of the forgery; or, where the signature is admitted to be genuine." 18 An alteration is not waived if the party against whom it is made act without knowledge of the alteration; as, where he makes a part payment, not knowing the instrument has been altered; and where a party pays, at maturity, a note on which the indorsement is forged, without knowledge of the forgery, he may recover from the party to whom he paid the amount.' 19 13 L. R. 6 Ex. (Eng.) 100 (1871). 147 Metc. (Mass.) 435 (1844); 37 Me. 322 (1853); 29 N. W. Rep. 331 (1886). 15 60 Mo. 449 (1875). 16 68 Ky. 547 (1869). 18 58 Ill. 19 (1871). 19 123 Mass. 66 (1877). ! |