
    THE BANK OF BRITISH NORTH AMERICA, Respondent, v. THE MERCHANTS’ NATIONAL BANK OF THE CITY OF NEW YORK, Appellant.
    
      Smiles and banking—action by depositor—payment on forged indorsement—duty to examine check and pass-book.—Statute of limitations.
    
    The right of action against a bank to recover moneys on deposit, does not accrue until a demand and refusal of payment has been made, and the presentation and demand of payment of the depositor’s check by a wrongful’ holder, the payee’s indorsement thereon being forged, is not such a demand as perfects the depositor’s cause of action.
    
      It seems, that the depositor has no right of action against the bank, based solely upon the wrongful payment of his check upon a forged indorsement.
    A depositor is under no obligation to examine his pass-book and checks, for the purpose of discovering forgeries. He has a right, as between himself and the bank, to rely upon the indorsements as genuine.
    The plaintiff made and delivered his check to the order of H., in March, 1870, which was certified and subsequently paid upon the forged indorsement of H., and was thereafter returned as a voucher with plaintiff’s pass-book written up to date. In June, 1877, soon after discovering that the indorsement was a forgery, plaintiff tendered the check and demanded payment of the amount thereof from the bank, which was refused, and in November, 1877, this action was brought. Held, that no cause of action in plaintiff’s favor arose until demand by him, and that the statute of limitations did not affect this action.
    Before Sedgwick, Ch. J., and Speir, J.
    
      Decided December 5, 1881.
    Appeal by defendant from a judgment in favor of the plaintiff, entered upon a verdict for $21,915.81.
    The following facts appeared by the admissions in the pleadings and the testimony on the trial: On March 9, 1870, the plaintiff, keeping a bank account with the defendant, drew and delivered to William Thomas Thomson and William M. Ramsay a check for $17,500, which was made payable to the order of Mrs. Margaret Halpin. On the same day the check was certified by the defendant. The plaintiff had on deposit with the defendant sufficient to pay the amount. The check subsequently came to the possession of the defendant, and by it was returned as a voucher to the plaintiff when next the plaintiff’s pass-book was written up, and the plaintiff was charged in it with the amount of the check.
    The check purported to be indorsed by Mrs. Halpin. The plaintiff had no notice or knowledge that the indorsement was not genuine until about January 24, 1877. The indorsement, was a forgery. On January 26, 1877, the plaintiff gave the defendant notice that legal proceedings had been instituted, questioning Mrs. Halpin’s signature, and on August 10, of the same year, the plaintiff notified the defendant that a suit had been commenced' against it for the recovery of the amount of the check, and that if the plaintiff were held liable, it would be obliged to hold the defendant to its legal liability. The plaintiff, on June 20, 1877, demanded payment of the amount of the check, tendered the check, and defendant refused payment.
    In November, 1877, this action was brought. When the case was closed the defendant’s counsel moved for judgment in its favor, on the ground that the action was not brought within six years after the cause of action accrued, and that the action was barred by the statute of limitations. The court denied the motion, and defendant’s counsel excepted. No other exception in the case.
    Burrell, Davidson & Burrell, attorneys, and John E. Burrell, of counsel, for appellant, urged:
    I. The plaintiff’s cause of action accrued on March 9, 1870, when the money was wrongfully paid, and deducted from plaintiff’s deposits. If the check was wrongfully paid and charged, it amounted to a conversion of the money, for which an action at once accrued.
    II. The defendant having charged the money to the plaintiff as paid, and rendered an account, a demand was unnecessary (Bank of Missouri v. Benoist, 10 Mo. 521 ; Clark v. Moody, 17 Mass. 150; Watson v. Phœnix Bank, 8 Metc. 217; Farmers’ & Mechanics’ Bank v. Planters’ Bank, 10 Gill & J. 422).
    III. Even assuming that no cause of action arose in favor of plaintiff upon the payment by defendant of the check, nevertheless a cause of action did unquestionably arise when the defendant returned the check to the plaintiff, with the account in which it was charged, claiming that they had complied with the plaintiff’s demand. If this claim was invalid, because the payment had not been made to the person to whom the plaintiffs directed the payment to be made, but to some other and different person, there was then in law and fact a refusal by defendant to comply with the plaintiff’s demand, upon which a cause of action at once arose in favor of the latter. The ignorance on the part of plaintiff of the facts on which the defendants based their claim of payment does not affect the question.
    IV. In an action for the conversion of property the statute of limitations begins to run when the conversion occurred, and ignorance of the conversion or of plaintiff’s rights is no answer to the plea (Stafford v. Richardson, 15 Wend. 302; Allen v. Miller, 17 Id. 202). So, in general, the operation of the statute will not in any case be defeated in the absence of fraudulent concealment on the part of defendant by plaintiff’s ignorance (Troup v. Smith, 20 Johns. 33; Argall v. Bryant, 1 Sandf. 98). And when the statute has begun to run it will not be arrested or defeated by a new demand (Kelsey v. Griswold, 6 Barb. 436).
    
      John P. Kingsford, attorney, and John E. Parsons, of counsel, for respondent.
    
      
       See Thompson v. Bank of British North America (45 Super. Ct. 1; affirmed, 82 N. Y. 1).
    
   By the Court.—Speir, J.

The appellant lays much stress upon the fact that a balance had been struck on the plaintiff’s pass-book, which was written up by the defendant when the check was returned to the plaintiff. That was but the usual transaction of writing up the customer’s book, setting the debits or sums which had been paid upon his checks or drafts against the credits which were given on the book at the time when the deposits were made. It only rendered the account complete, up to the time when the balance was struck. In this case, as a fact, it has no other significance. It furnished no evidence of a change of the contract upon which the money was received in deposit. Nor did it, or the payment of the check to the wrong person, give a cause of action to the plaintiff on March 9, 1870, when, as defendant claims, the cause of action accrued to the plaintiff. It did not appear in strictness that the "defendant paid the check. Admitting that it did, the money paid was its own money, and, whatever it did with it, could be no cause of complaint which the plaintiff could make; nor would it be a cause of action accruing to , the plaintiff, much less a cause of action for a conversion of the money, as suggested on the argument.

The cause of plaintiff’s action is very simple. The money it had on deposit was sufficient to pay the amount of the check. It authorized Mrs. Halpin to make a demand for this sum, but she did not make any demand. The defendant was liable to pay it to the plaintiff, or its ord,er, on demand. The presentation of the check and demand of payment by any other person, through the forged indorsement of Mrs. Halpin, was not such a demand as would give to the plaintiff a cause of action upon which it could institute suit and recover. Before the plaintiff could bring an action for the amount of the deposit, a demand of, and a refusal by the defendant was necessary. This demand and refusal was made. The principle is now well settled upon which banks of deposit are able to do business. Howell v. Adams (68 N. Y. 314 ; see cases cited in the opinion), is so directly in point that a single quotation will serve. The learned judge (Andrews) says : “We think it is in accordance with the general understanding of the commercial community that a bank is not liable to depositors except after demand of payment. The fact that a certificate is given on a deposit being made, payable on return of the certificate, instead of leaving the deposit subject generally to check or draft, does not change the reason of the rule that the banker must first be called upon for payment before the action can be maintained. It would be unjust now to make a distinction between the cases and sustain the defense of the statutes of limitations in cases like this where parties have relied upon the doctrine announced in the cases cited.”

The jury found that the indorsement was a forgery. If the defendant paid the check, it paid a forged indorsement, and the mistake was its own, and can only be corrected by itself. It continued to hold the $17,500 of the plaintiff’s money, and until it failed to comply with a request for its payment from the plaintiff, the plaintiff was not at liberty to sue. The plaintiff was under no obligation to the defendant which required i,t to examine the pass-book for the purpose of discovering forgeries in the indorsements, and it had a right to rely upon the indorsement as genuine. It was the duty of defendant, before the check was paid, to ascertain that Mrs. Halpin’s indorsement was genuine.

Judgment should be affirmed, with costs.

Sedgwick, Ch. J., concurred.  