(k) CLAIMS OF OWNERSHIP The next case illustrates the rule that a holder in due course takes free from equities of ownership. A holder in due course takes free from both equities of defense and equities of ownership. The most common illustration of an outstanding equity of ownership arises where the instrument was in form payable to bearer, and therefore transferable by delivery, and the same is put in circulation by a thief or finder of the instrument. In the following case, however, the actual question raised is not whether a holder in due course takes free from the equity of ownership, but whether an innocent purchaser after maturity, who was not a holder in due course, takes free from such equity. A contrary result would be reached in England and in some states in this country. No case in this country has yet gone so far as definitely to hold that an innocent purchaser of an instrument stolen and negotiated after maturity takes free from the equity of ownership, but it has been strongly argued that such a purchaser should be protected, for the reason that while a purchase after maturity does in a sense put one on notice of the possibility of a defense, arising from the fact that it is still outstanding, but that a purchase after maturity in no real sense puts one on notice of anything other than defenses. In no way does it indicate the possibility of an outstanding equity of ownership. Moreover, there would be no way of ascertaining who it was who held such equity of ownership. Such person's name may not appear on the instrument or it may have been that he never was in the chain of title, as would be the case where the holder of the equity furnished the money for the purchase of the instrument. Of course, if the purchaser after maturity bought from a holder in due course such purchaser would be protected for other reasons. GARDNER v. BEACON TRUST CO. et al. (Supreme Judicial Court of Massachusetts, 1906. 190 Mass. 27, 76 N. E. 455, 2 L. R. A. [N. S.] 767, 112 Am. St. Rep. 303, 5 Ann. Cas. 581.) MORTON, J. This is a bill in equity brought by the plaintiff, a minor, by her next friend and guardian, to compel the defendant the Beacon Trust Company to assign and deliver to her a mortgage and the note thereby secured, alleged to have been fraudulently obtained from the plaintiff's guardian by one Edwin M. Thayer, since deceased, and fraudulently assigned by him to the trust company. As to certain of the defendants the bill was dismissed, and a decree was entered in favor of the plaintiff against the trust company and other defendants. The case is here on appeal by the trust company. All of the evidence is reported. Briefly stated the facts are as follows: In January, 1903, the plaintiff was the owner of a mortgage and the note thereby secured for $1,500, on land in Quincy, given by the defendant Brown to one Hattie E. Carr and transferred by successive assignments to the plaintiff. Her mother, Mary E. Gardner, now Mary E. Wales, was her guardian. The note and mortgage had been long overdue. By means of fraudulent misrepresentations that the owner of the equity wished to pay off the mortgage, Thayer obtained from the plaintiff's guardian an assignment of the note and mortgage to himself, and subsequently assigned them to the trust company as security for a note of $2,000 for money borrowed by him of the company. The trust company took the assignment in good faith, for value, and without any notice of Thayer's fraud, or of any defect in his title, unless the fact that it took them when overdue constituted such notice. * * * The question is whether, assuming for the moment the validity of the transfer by the plaintiff's guardian to Thayer, which will be considered later, the fact that the note and mortgage were overdue when the trust company took them so affected their title as to postpone their right to that of the defrauded owner. The general rule is thus stated by Lord Herschel in London Joint Stock Bank v. Simmons [1892] A. C. 201, 215: "The general rule of law is, that where a person has obtained the property of another from one who is dealing with it without the authority of the true owner, no title is acquired as against that owner, even though full value be given, and the property be taken in the belief that an unquestionable title is being obtained, unless the person taking it can show that the true owner has so acted as to mislead him into the belief that the person dealing with the property had authority to do so. If this can be shown, a good title is acquired by personal estoppel against the true owner." He then goes on to say that there is an exception in the case of negotiable instruments, manifestly meaning those not yet due, and that as to them any person in possession of them can convey a good title, even if acting in fraud of the true owner. This is the only exception mentioned by him to the general rule which he lays down, and which would seem, therefore, to have been regarded by him as applying to overdue negotiable notes as well as to other property when circumstances brought them within it. Applying the rule thus laid down, or the rule that, where one of two innocent persons must suffer in consequence of the fraud of another, the loss must fall upon the one who, by his trust and confidence, has enabled the perpetrator of the fraud to commit it, * * * it would seem plain that the loss in this case should fall upon the plaintiff, unless the fact that the note and mortgage were overdue makes a difference. * * * The purchaser of an overdue negotiable note takes it subject to all the equities, if any, that are attached to it at the time of the transfer in favor of the maker, the owner, or of third parties. * ** If there are no equities attached to the note the purchaser gets as good a title after as before maturity. * * * And it makes no difference that the note is dishonored. If there are equities attached to it, he takes it subject to them. This is what is meant when it is said that the purchaser has no better title, legal or equitable, than his transferror had, and that the note is subject in his hands to the same infirmities of title as against the true owner, and to the same defenses as against the maker, that it was subject to in the hands of his transferror. * * * If, for instance, an overdue note is stolen from the owner, a subsequent purchaser acquires no title as against the true owner, * * * or if an overdue note has been paid by the maker, and is fraudulently put in circulation by the payee, a purchaser, though for value and in good faith, takes it subject to the defense of payment by the maker. In such a case the very fact that the note is dishonored is sufficient to put the purchaser upon inquiry as against the naker. * * But the case is very different where the owner of an overdue note transfers it, under circumstances which enable his transferee to deal with it, though obtained by fraud, as if he were the true owner, and when an innocent purchaser for value takes it from such transferee before the transfer has been avoided. In such a case no equity attaches to the note in favor of the true owner as against the innocent purchaser for value, since it was by his own act that the perpetrator of the fraud was enabled to commit it. The true owner of an overdue note may deal with it as with any other property, and the mere fact that the note is overdue does not, in such a case, in the absence of anything in the transaction to suggest suspicion, put a purchaser upon inquiry any more than a purchaser is bound in any other case to inquire into the title of his vendor. * * *The possibility that the title may have been obtained by fraud exists in all cases; but that is not enough to put a purchaser upon inquiry. Any other view would put upon the innocent purchaser for value of overdue negotiable paper the onus of a defective title, no matter how much he may have been misled by the conduct of the true owner. We do not think that such is the law. * The above principle was recognized, though it was held that the facts did not bring the case within it. So far, therefore, as the plaintiff relies upon the fact that the note and mortgage were overdue when taken by the trust company, her contention must fail. * * * The result is that so much of the decree as adjudges that the mortgage remains and still is the property of the plaintiff, and orders the trust company to assign and convey its interest in the same to her, is reversed.1 * * * SECTION 3.-DEFENSES AND CLAIMS OF OWNERSHIP AVAILABLE AGAINST HOLDER IN DUE COURSE (a) FORGERY It is obvious that a person whose name has been forged to a negotiable instrument should not be held liable thereon to any one. The necessities of business do not require that such a risk of loss should be borne by the party whose name was forged. It is more just to throw the loss on the holder in due course, because he will always have a remedy against the party from whom he acquired the instrument. Eventually either the liability will be thrown back upon the forger, or the loss will fall upon the person who dealt with the forger. Of course, where it is not a case of technical forgery, as, for example, where an agent signs his principal's name in the absence of power to do so, there is more reason for throwing the loss on the principal; but the reasons have not 1 See the exhaustive discussion of this and related questions by Professor Zechariah Chafee, Jr., in his article on Rights in Overdue Paper, 31 Harvard Law Review, 1104. been deemed strong enough to impose such a liability upon him. The established rules of agency govern. The section involved is as follows: Section 23. Where a signature is forged or made without the authority of the person whose signature it purports to be, it 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, is precluded from setting up the forgery or want of authority. MAURMAIR v. NATIONAL BANK OF COMMERCE OF TULSA. (Supreme Court of Oklahoma, 1916. 158 Pac. 349.) RITTENHOUSE, C. This action was brought by Louis Maurmair to recover $1,170.30 of and from the National Bank of Commerce of Tulsa, Okl., wherein it was alleged that plaintiff deposited such sum in the bank, and the bank refused to pay the same upon demand. An answer was filed, alleging payment, except the sum of $130.30, which it was alleged is on deposit subject to plaintiff's check. A general denial was filed to the answer. The question presented at the trial related to the payment of three checks, of $90, $440, and $510, which were paid by the bank, and which plaintiff claimed were signed, either: (1) By affixing his signature thereto without his knowledge or consent, by means of deception practiced upon him by a third party placing a carbon paper under some papers to which he knowingly affixed his signature and the checks placed thereunder with such carbon paper, thereby obtaining carbon copies of his original signature written by himself; or (2) that the signatures to such checks were not his original signatures, but were affixed to said checks by some third party without the knowledge of plaintiff, by obtaining an original copy of the signature of plaintiff and undertaking to duplicate the same, making an original so similar to that of plaintiff's as to pass undetected; or (3) by means of tracing the same on carbon copies. Instruction No. 6 told the jury that if, from a preponderance of the evidence, they found that the two checks, Exhibits 11 and 12, were signed by plaintiff either by directly affixing his signature, or affixing his signature thereto without his knowledge or consent, but by means of deception practiced upon him by a third party, by placing carbon papers between some paper on which he knowingly affixed his original signature and the checks thereunder, and thereby obtained carbon copies of his original signature written by himself, in either event the law considers such signature as his original signature binding upon him, and, if the bank paid such checks, believing the signature to such checks to be genuine, the plaintiff would not be entitled to recover. The Negotiable Instruments Law of this state * * * defines the effect of forgery of a negotiable instrument as follows: [Section 23 quoted.] The instruction allowed the bank to recover if the jury found the checks were obtained through deception practiced upon. plaintiff by third parties by placing carbon papers between some papers on which he knowingly affixed his signature and the checks thereunder without his knowledge or consent. In this there was error. The procurement of the signature, as contended by plaintiff, was without his knowledge or consent. The instruments would therefore be wholly inoperative, and no one would have a right to enforce payment thereof unless plaintiff be precluded from setting up the forgery by his negligence; and under the pleadings and instructions in this case no issue was made that the plaintiff was so precluded. The test as to whether an artifice or trick of this character constitutes forgery is whether the signature is procured in such a manner as to be the voluntary act of the signer. If it is procured in such a manner that it is without the assent of the signer, and not a voluntary act on his part, then no liability attaches. The error in this instruction, as we see it, is that the jury was told that, if the signatures were procured by deception, no recovery could be had. The law is that, if the signatures were procured by deception without negligence on the part of the signer, then a recovery could be had. The question of whether or not plaintiff was precluded from setting up the forgery on account of his own negligence was not submitted to the jury and in order to have properly instructed the jury on the question of the deception in procuring the signature it would have been necessary to have told them that plaintiff could have recovered under such conditions unless he was precluded from setting up the forgery as provided in section 23, supra. The judgment should be reversed, and the cause remanded for a new trial. ROBB V. PENNSYLVANIA CO. FOR INSURANCE ON LIVES & (Supreme Court of Pennsylvania, 1898. 186 Pa. 456, 40 Atl. 969, Action by Thomas Robb against the Pennsylvania Company for Insurance on Lives & Granting Annuities. Judgment for plaintiff was affirmed by the Superior Court, and defendant again appeals. The opinion of the Superior Court is as follows (RICE, P. J.): "This was an action to recover the amount of a bank deposit. The defense was that the money had been paid out on checks purporting to be drawn by the plaintiff. The jury have determined by their verdict that the signatures were forged, and no question is raised as to the correctness of this finding. But there was evidence that the signatures were made by a third person, by the unauthorized and criminal use of a rubber stamp which the plaintiff owned and kept in his safe. Upon this evidence a novel and interesting question is raised. The defendant's first proposition is that if a depositor, without the knowledge of his bank, has a rubber stamp made, which is a substantial fac simile of his bank signature, he cannot hold the bank responsible for a loss which occurs by reason of the unauthorized signing by a third person of the depositor's signature to a check by means of this stamp. will be observed that this proposition assumes that the depositor is responsible for the loss, although there is no negligence on his part in the manner of keeping the stamp. * * * It "A bank is bound to know the signature of its depositor; and, if it pays out the money on a forged check, it cannot charge the depositor with the amount, but, as against him, must bear the loss. It may be conceded that the relation of the depositor to the bank implies a duty |