the signature of the drawer he is not supposed to know an indorser's signature and does not by his acceptance admit the genuineness of, or guaranty the same.

173

§ 674. Same subject-By admission of signature.-An admission by a party that a signature purporting to be his is genuine may operate to estop him from subsequently setting up the defense that it is a forgery. So a maker was held to be estopped from denying his signature on a note where the evidence went to show that he not only had adopted and ratified such signature but that by his admissions and declarations that the note was "all right" and that if plaintiff would "hold still" he would pay him, he had knowingly and designedly induced the plaintiff to omit taking any measures to collect the note of the co-maker at the time when the latter had ample property in his hands, and a resort to whom for the collection of the note would, in all probability, have been successful; and that afterwards, while the plaintiff continued to be misled by the assurances of the defendant, the co-maker failed in business and absconded, rendering the collection of the note from him impossible.175 It has, however, been determined that in order to create an estoppel by an admission of this character it is necessary that the instrument should have been produced or identified at the time the admission was made176 and that the party to whom the admission was made acted thereon in such a manner as to create an equitable estoppel.177

173 Holt v. Ross, 54 N. Y. 472, 13 Am. Rep. 615. Compare Phillips v. Im Thurm, L. R. 1 C. P. 463, holding that where one has been induced to part with his money by a party's acceptance of a bill the latter is estopped to deny the genuineness of indorsements thereon.

174 Illinois. Hefner v. Dawson, 63 Ill. 403; Hefner v. Vandolah, 62 Ill. 483.

Indiana.-Kuriger V. Joest, 22 Ind. App. 633, 52 N. E. 764, 54 N. E. 414.

Kentucky.-Rudd v. Matthews, 79

Ky. 479.

Maine.-Casco Bank v. Keene, 53 Me. 103.

England.-Leach v. Buchanan, 4 Esp. 226.

Compare Workman v. Wright, 33 Ohio St. 405, 31 Am. Rep. 546; Brook v. Hook, L. R. 6 Exch. 89. 175 Hefner v. Dawson, 63 Ill. 403. 176 Sheller v. McKenney, 17 Ill. App. 185.

177 Sheller v. McKenney, 17 Ill. App. 185, wherein the court said: "The foundation of the doctrine of equitable estoppel is the necessity of preventing the consummation of the fraud which would result if a person who, by his words or conduct, has induced another to act so as to change his previous position, should afterward be permitted to

§ 675. Same subject-Failure to give notice of forgery.-The drawer, maker, or indorser of a bill or note will not be estopped by a delay of a few days in giving notice of a forgery to a holder of the paper provided the position of the latter has in no way been altered. for the worse. If, however, it appears that the one whose name is forged leads the holder to believe in the genuineness of the signature until he has lost some opportunity of recovering on the instrument which would have been available if he had known of the forgery it will be a sufficient alteration of the holder's position to estop him from setting up this defense.178 So where the drawer of a check discovers that it has been paid upon a forged indorsement notice of such fact should be given, without unnecessary delay to the bank which has paid it and if the drawer waits an unreasonable length of time before giving such notice he will not be permitted to recover the amount of such check from the bank.179

§ 676. Same subject-As to checks.-A depositor, by his failure to examine his pass book and the returned checks, is not necessarily guilty of such negligence as will estop him from showing that a check which has been returned from the bank is a forgery, unless the bank has thereby sustained a loss.180 But where a check is ratified by the drawer whose name is signed thereto he will be estopped to deny its validity or to show that his signature is forged where an action is brought against him by a holder in good faith.181 And where a check which is presented to a teller of a bank and purports to be certified by

deny the existence of the state of things upon the faith of which the other party has so acted. But it would certainly be a novel doctrine to hold that a party may invoke the rule of equitable estoppel, where he has not been induced to change nis previous position, but only to change his previous condition of mind. By merely changing his condition of mind or adopting a particular belief, no rights are lost or put in jeopardy, since by correcting his state of mind when the truth is ascertained he is placed completely in statu quo." Per Bailey, J.

See, also, Starr v. Yourtree, 17 Md. 341.

178 McKenzie v. British Linen Co., 44 Law T. N. S. 431.

170 United States v. National Exchange Bank, 45 Fed. 163, holding a delay of over thirty days unreasonable.

180 Janin v. London & San Francisco Bank, 92 Cal. 14, 27 Pac. 1100; Bank of British North America v. Mechanics' National Bank of New York City, 91 N. Y. 106; Ogilvie v. Mortgage Co., L. R. App. Cas. 257.

181 Charles River National Bank v. Davis, 100 Mass. 413.

him is pronounced to be good, the bank will be estopped to subsequently show that the certification was forged.182

§ 677. As to statute of limitations.-The statute of limitations in the case of a certified check begins to run from the time the bank refuses to pay the same and in an action on such an instrument it has been decided that the bank is not estopped to plead such statute by the fact that it has included the check as a part of its indebtedness in its annual statement made in compliance with a statute requiring a bank to make a statement annually of its accounts with its customers.183

182 Continental National Bank v. National Bank of Commerce, 50 N. Y. 575.

183 Blades V. Grant County Deposit Bank, 21 Ky. Law R. 1761, 56 S. W. 415.

678. What constitutes a discharge 691. By assignment, transfer or sur

§ 678. What constitutes a discharge-Under statute.-The negotiable instruments law provides that: A negotiable instrument is discharged (1) By payment in due course by or on behalf of the principal debtor; (2) by payment in due course by the party accommodated, where the instrument is made or accepted for accommodation; (3) by the intentional cancellation thereof by the holder. (4) By any other act which will discharge a simple contract for the payment of money; (5) when the principal debtor becomes the holder of the instrument at or after maturity in his own right. It is further provided by that enactment that: A person secondarily liable on the instrument is discharged: (1) By any act which discharges the instrument; (2) by the intentional cancellation of his signature by the holder; (3) by the discharge of a prior party; (4) by a valid tender of payment made by a prior party; (5) by a release of the principal

debtor, unless the holder's right of recourse against the party secondarily liable is expressly reserved; (6) by any agreement binding upon the holder to extend the time of payment or to postpone the holder's right to enforce the instrument, unless the right of recourse against such party is expressly reserved.1

$679. Same subject-Maker.-A maker may be discharged by a release based upon a sufficient and valid consideration.1* Again, the satisfaction between the maker and the payee of a note not payable in bank may constitute a good defense in an action by the assignee against the maker, such satisfaction being agreed upon before notice to the maker that the note has been assigned. And the maker may set up and rely upon any defense that he may have to a note in the hands of a purchaser by mere delivery, or who takes it after maturity, and this includes a defense that the note has been satisfied by an agreement of the grantor with his grantee rescinding a sale in connection with which the note was given. If the maker and the payee enter into the state of matrimony the marriage is held to extinguish the former's liability. So non-presentment or laches in presentment of a claim against the maker's estate may constitute a good defense. And if a note is transferred after its maturity to a copartnership of which one of the makers of the paper is a partner such transfer operates to extinguish the note as to all the makers. But where one of the joint makers of a note receives it under an order of distribution of the estate of the payee the other debtor's proportion

1 Negot. Inst. Law, §§ 200, 201, Appendix herein.

2 Shade v. Creviston, 93 Ind. 591. Compare First National Bank v. 1* Ludington v. Bell, 77 N. Y. 138, Bynum, 84 N. C. 24; Wetmore v. rev'g 43 N. Y. Super. Ct. 557. Blush, Brayt. (Vt.) 55; Cowdrey v. Vandenburgh, 101 U. S. 572.

When release not available by maker see: McCann v. Lewis, 9 Cal. 246; Smith v. Smith, 80 Ind. 267; Washington College v. Duke, 14 Iowa 14; Lewis v. Westover, 29 Mich. 14.

Release of insolvent maker, see: Keeler v. Bartine, 12 Wend. (N. Y.) 110.

Maker released by election of corporation to perfect stock instead of enforcing note therefor, see: Ashton v. Burbank, 2 Dill. (U. S.) 435, Fed. Cas. No. 582.

3 Shinn v. Fredericks, 56 Ill. 439. Chapman v. Kellogg, 102 Mass. 246; Curtis v. Brooks, 37 Barb. (N. Y.) 476.

Marshall v. Perkins, 72 Me. 343; Pratt v. Lamson, 128 Mass. 529. Examine Tinker v. Babcock, 107 III. App. 78, aff'd 204 Ill. 571, 68 N. E. 445.

"Logan County National Bank v. Barclay, 20 Ky. L. Rep. 773, 46 S. W. 675.