In Lennon v. Grauer, 159 N. Y. 433, it was held that the fact that the name of the maker of a note was forged did not discharge the indorser; the ground of the decision being that the indorsement of a promissory note implies a contract by the indorser with a subsequent bona fide holder that the instrument itself and all the signatures prior to the particular indorsement are genuine. Under the language of the statute, as applied by the above decisions, it must be held that in indorsing the note the defendant warranted its validity, and that he cannot be heard now to assert that it is void for usury, any more than for forgery or any other cause. Furthermore, apart from the provisions of section 116, it is an established rule that the obligation of an indorser is a new and independent contract, separate and distinct from the contract evidenced by the note. 4 Am. & Eng. Ency. L. (2d Ed.) p. 477, and cases cited; Morford v. Davis, 28 N. Y. 481; Donohoe v. Meeker, 35 App. Div. 43. The judgment should be reversed, and a new trial ordered, with costs to appellant to abide the event. All concur. § 116 UNITED STATES v. AMERICAN EXCHANGE NA- -- 70 FEDERAL REPORTER (DIST. CT., S. D., N. Y.) 232. — 1895. ACTION to recover the amount of a pension draft which defendant had collected, as collecting agent of another bank; it appearing that the name of the payee had been forged upon the draft after her death. The court directed a verdict for defendant, and plaintiff moved for a new trial. BROWN, D. J. The pension draft in this case was paid to the defendant bank by the subtreasury, upon the forged indorsement of the payee's name after her death. The Bellaire Bank of Ohio had previously cashed the draft upon the forged indorsement, and thereupon indorsed it" for collection" to the defendant bank at New York. The latter was the collecting correspondent of the Bellaire Bank as regards its funds in New York. The collection was made in good faith by the defendant bank and the proceeds remitted to the Bellaire Bank some months before the discovery of the forgery. The indorsement of the forged draft by the Bellaire Bank showed upon its face that the defendant was to act as collecting agent only. The defendant 8 Indorsement admits the signature and capacity of every prior party Prescott Bank v. Caverly, 7 Gray, 217. This includes the existence and capaci ty of a firm, Dalrymple v. Hillenbrand, 62 N. Y. 5; or of a corporation, Glid den v. Chamberlin, 167 Mass. 486, 494; or of a married woman, Edmunds ▾ Ross, 51 N. J. L. 547. See Hannum v. Richardson, 48 Vt. 508, ante, 432.-H. never had any property in the draft or its proceeds. The later authorities sustain the proposition that in such a case where the collecting agent pays over the funds before any notice of irregularity or fraud, the remedy is against the principal alone. Bank v. Armstrong, 148 U. S. 50; White v. Bank, 102 U. S. 685; Sweeny v. Easter, 1 Wall. 166; Wells, Fargo & Co. v. U. S., 45 Fed. 337; National Park Bank v. Seaboard Bank, 114 N. Y. 28. In such cases the indorsement by the collecting agent, who has no proprietary interest, does not import any guaranty of the genuineness of all prior indorsements, but only of the agent's relation to the principal, as stated upon the face of the draft; and as this relation is evident upon the draft itself, the payor cannot claim to have been misled by the indorsement of the agent, or any right to rely upon that indorsement as a guaranty of the genuineness of the payee's indorsement. In the case of Onondaga Co. Sav. Bk. (64 Fed. 703), as I find upon examination of the record on appeal, no question like the present arose. The Onondaga Bank was in the same situation as the Bellaire Bank in the present case. It had cashed the forged draft and was collecting the money for its own benefit as owner of the draft. Its indorsement imported a guaranty of the prior signatures; and the defendant's remedy here is against the Bellaire Bank. The direction of a verdict for the defendant upon the undisputed facts was, I think, correct, and the motion for a new trial should be denied.9 • Mr. Crawford says that the doctrine of this case has been changed by the Negotiable Instruments Law. In commenting upon § 116 on page 89 of the 3rd edition of his work on this statute, he says: As this and the preceding section include the case of every indorser, the warranty as to genuineness will apply to one to whom the paper has been indorsed restrictively, as, for example, where the indorsement is for collection.' This undoubtedly changes the law; for the former rule was that the indorsement of a bank to which paper had been indorsed for collection' did not import a guaranty of the genuineness of all prior indorsements, but only of the agent's relation to the principal as stated upon the face of the paper; and it was held that, in such a case, the collecting bank was not liable after it had paid the proceeds to its principal, though a prior indorsement was a forgery. United States v. American Exchange Nat. Bank, 70 Fed. 232; Nat. Park Bank v. Seaboard Nat. Bank, 114 N. Y. 28. But this rule was exceedingly inconvenient in practice, and hence it was deemed expedient to make every indorser a warrantor of genuineness. There is no hardship in this rule, for each indorser has a right of recourse against all prior parties. The former rule, however, introduced such an element of uncertainty that the clearing house associations throughout the country adopted rules to obviate its effects, and the bankers sent letters to their customers requesting that they discontinue the use of the indorsement 'for deposit,' 'for collection,' etc. In this, as in several other instances where the law was changed, the needs of the business community were deemed of more importance than technical principles." For a statement of the action of the clearing house associations, referred to above by Mr. Crawford, see also First Nat. Bank of Belmont v. First Nat. Bank of Barnesville, 58 Oh. St. 207, at p. 214. — C. § 119 6. LIABILITY OF Agent AS SELLER. WORTHINGTON v. COWLES. 112 MASSACHUSETTS, 30.- 1873. ACTION to recover back money paid by plaintiff to defendants for a promissory note signed by one Hanson, the indorsement upon which was forged. Defendants were note-brokers, who sold the note for Hanson, and paid him the purchase money, less commissions, before the forgery was discovered. Judgment for plaintiff. Defendants allege exceptions. MORTON, J. This is an action of contract upon the implied warranty of the genuineness of the signature to a note sold by the defendants to the plaintiff. The plaintiff claimed that in the purchase of the note he dealt solely with the defendants, and upon their credit. The defendants claimed that they were acting as agents of Hanson in the transaction, and that their principal was disclosed to the plaintiff. Upon these points the evidence was conflicting. The defendants asked the court to rule " that if the defendants were in fact agents for Hanson, and disclosed their agency to the plaintiff, or the plaintiff knew it, or had reasonable cause to know it, the defendants would not be liable." Considered as an abstract proposition of law, this is too broad. It omits the necessary element that, in the dealing or transaction in question, they were acting as such agents. It may be true that the defendants were agents of Hanson, and known to be such by the plaintiff, and yet if, in the purchase of this note, it was understood by the parties that the plaintiff was dealing with and upon the credit of the defendants, they would be liable. An agent may deal so as to bind himself personally; it is always a question of the intention and understanding of the parties. The presiding judge properly refused to give the instructions in the form requested by the defendants. Instead thereof, he ruled in substance that the question was, from whom did the plaintiff understand that he was buying the note from the brokers or from Hanson? and that if such a state of facts occurred, that the plaintiff understood, or ought to have understood as a man of reasonable intelligence, that he was dealing with Hanson, the defendants would not be liable. These instructions were correct, as applied to the facts of the case. The plaintiff dealt with the defendants. His evidence tended to show that he contracted with them as principals. To meet this prima facie case, the defendants undertook to show that in this transaction they were dealing as agents of a disclosed principal. Unless from their disclosures or other sources the plaintiff understood, or ought as a reasonable man to have understood, that he was dealing with Hanson, he Here had a right to assume that he was dealing with the defendants as principals. The instructions given were to this effect, and were as favorable to the defendants as the instructions requested, with the addition of the necessary qualification that the defendants were in this transaction dealing as the agents of Hanson. (Wilder v. Cowles, 100 Mass. 487; Merriam v. Wolcott, 3 Allen, 258.) V. Indorser: secondary, conditional liability. § 116 Exceptions overruled.1 1. INDORSER'S CONTRACT AS SELLER. [See preceding subdivision IV, pp. 419-442.] 2. INDORSER'S CONTRACT AS ASSURER OF PAYMENT. LONG v. STEPHENSON. 72 NORTH CAROLINA, 569. — 1875. ACTION against indorser. Plaintiff alleged that the drawee refused to accept or pay, and that defendant on demand also refused to pay. Defendant alleged non-presentment to drawee and want of notice of dishonor. Judgment for defendant. SETTLE, J. The authorities cited by the defendant's counsel establish beyond controversy: 1. That the draft should have been presented for payment.2 2. That notice of non-payment should have been given in reasonable time to the defendant.3 As both of these essential requisites to the maintenance of this action are wanting, we concur with his honor that the plaintiff is not entitled to recover. Judgment affirmed.* 1 Accord: Meriden National Bank v. Gallaudet, 120 N. Y. 298; Brown v. Ames, 59 Minn. 476; Huffcut on Agency, § 186. H. 3 Post, Art. VIII. As to protest as a third requisite, see Art. XIII, post.-H. "The liability of the indorser is strictly conditional, dependent both upon due demand of payment upon the maker or acceptor, and also due and legal notice of the non-payment. The purpose and object of such demand and notice is to enable the indorser to look to his own interest, and take immediate measures for his indemnity. The demand and notice being conditions precedent to the indorser's liability, it is incumbent on the holder to make clear and satisfactory proof of them before he can recover." Lawson v. Farmers' Bank, 1 Ohio St. 206. "The indorser of a bill of exchange, whether payable after date or after sight, undertakes that the drawee will pay it, if the holder present it to him at maturity and demand payment; and if he refuse to pay it, and the holder 8 117 BRUSH v. ADMINISTRATORS OF REEVES. 3 JOHNSON (N. Y.) 439. 1808. THE plaintiff declared on a promissory note, given by one Spring to Reeves, the intestate, and payable to him or bearer. The note was indorsed over by Reeves, and the present suit was brought by the indorsee against his administrators. There was a general demurrer to the declaration, which was in the usual form against the indorser. PER CURIAM.-The note was negotiable under the statute, and transferable without indorsement; but if the payee chose to put his name on the back, he became as much bound as an indorser, as if the note had been made payable to him or order. It was ruled by Chief Justice Holt, in the case of The Bank of England v. Newman (1 Lord Raym. 442), that if a person indorses a bill payable to bearer, he becomes a new security, and is liable on the indorsement. The declaration at least is good on a special deBut the defendant may withdraw the demurrer, on payment cf costs, and pleading forthwith. murrer. Judgment for the plaintiff." § 116 OOTHOUT v. BALLARD. 41 BARBOUR (N. Y.) 33. — 1864. ACTION against indorsers on note due Nov. 29 (Saturday). Notice of dishonor received about 6 P. M. of that day. Service of summons and complaint in this action soon after on the same day. Judgment for plaintiff. By the Court, MASON, J.-The only question presented in this case is whether a suit can be maintained against the indorsers of a note payable at a bank, and which has been duly protested, where the suit is commenced on the day of the protest, or the third day of grace. The rule in England, as understood by Chitty, is that the suit on the third day of grace is premature. (See Chitty on Bills, 406, 407, 409, 8th Lond. ed.) And such I understand to be the rule cause it to be protested, and due notice to be given to the indorser, then he promises to pay it. All these conditions enter into and make part of the contract between these parties to a foreign bill of exchange; and the law imposes the performance of them upon the holder, as conditions precedent to the liability of the indorser of the bill." Musson v. Lake, 4 How. (U. S.) 262. — H. [See Rogers v. Detroit Sav. Bank, 146 Mich. 639, reported in 18 L. N. S. 530, with note entitled "Release of indorser of note by failure to enforce liability of maker." - C.] See p. 447, note (2), post. — H. |