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reversed the judgment, and rendered judg ment against the Belmont bank, and in favor of the First National Bank of Barnesville, for the full amount of the check, with interest and costs. Thereupon the Belmont bank filed its petition in error in this court, seeking to reverse the judgment of the circuit court, and asking an affirmance of the judgment of the common pleas.

John Pollock and N. N. Kennan, for plaintiff in error. Petty & Smith, for defendant in error.

BURKET, J. (after stating the facts). Since the case of Price v. Neal, 3 Burrows, 1354, decided by Lord Mansfield in 1762, the general rule has been, and is, that, when the drawee of a check or bill pays the same to a bona fide holder, such drawee cannot recover the money back upon discovering such check or bill to be a forgery. The drawee is presumed to know the signature of the drawer, and if, when the check or bill is presented to the drawee for payment, he pays the same, and it afterwards turns out to be a forgery, he cannot recover the money back from the person to whom he paid it.

When the drawee is a bank, there is a much stronger reason for holding it to know the signature of its depositors and customers than in the case of a private individual, because banks keep a book in which are preserved the genuine signatures of their depositors, customers, and correspondents. That the general rule is as above stated is shown by the following authorities: National Park Bank v. Ninth Nat. Bank, 46 N. Y. 77; Smith v. Mercer, 6 Taunt. 76; Wilkinson v. Johnson, 3 Barn. & C. 428; National Bank of Commerce v. National Mechanics' Bank, 55 N. Y. 211; Frank v. Bank, 84 N. Y. 209; Levy v. Bank, 4 Dall. 234; Morse, Banks (3d Ed.) 463; 2 Daniel, Neg. Inst. (3d Ed.) §§ 1359, 1655; Northwestern Nat. Bank v. Bank of Commerce, 107 Mo. 402, 17 S. W. 982; Commercial & Farmers' Nat. Bank v. First Nat. Bank, 30 Md. 11; Deposit Bank v. Fayette Nat. Bank, 90 Ky. 10, 13 S. W. 339; National Bank v. First Nat. Bank, 151 Mass. 280, 24 N. E. 44; National Park Bank v. Seaboard Bank, 114 N. Y. 28, 20 N. E. 623; 5 Am. & Eng. Enc. Law (2d Ed.) 1071; Ellis v. Trust Co., 4 Ohio St. 628. This last case fully recognizes the general rule, but the majority of the court, two judges dissenting, held that there was a local custom among banks at Cincinnati to the effect that, before purchasing bills or checks drawn upon other banks in that city, the purchasing bank should have the identity of the person offering to dispose of the paper fully shown, and make careful inquiry as to his right to the paper, and as to its being genuine, and that the purchasing bank in that case, having neglected the customary precautions, was guilty of such negligence as to make it liable to pay back the money

received on the forged bills. The court was careful to say that it was dealing only with the case then under consideration; and the right to recover back the money in that case is founded upon the local custom, and the general rule is not modified further than to hold that in view of the local custom, known to both banks, the purchasing bank was guilty of such negligence in taking the bills from an unidentified stranger as to render it liable to pay back the money when the bills turned out to be forgeries.

It is urged that, as the check was presented for payment to the drawee bank by another bank in good standing, the drawee bank had a right to presume that the check was all right, and, relying upon such presumption, it was thereby thrown off its guard, and was less careful in scrutinizing the signature to the check than if the same had been presented at its counter for payment by an individual. A holding to this effect has been made in a few cases wherein the indorsements were unrestricted, but, when the indorsement is "for collection" or "for account of," it is notice to the drawee that the bank presenting the check or bill for payment is not the owner, but only the agent of the owner, and that the money is to be remitted to the owner, back through the same channel through which the check or bill was received by the collecting bank. In such cases the collecting bank acts as the agent or servant of the owner, and the drawee bank is not justified in relaxing its vigilance. Some years ago the practice of indorsing checks "for collection" or "for account of" had become almost universal; and when it was decided in the above cases of National Park Bank v. Seaboard Bank and Northwestern Nat. Bank v. Bank of Commerce that the drawee bank could not recover back the money, in the one case from the collecting bank, or in the other from the bank owning the draft, it startled the banks located in large cities, and awakened them to the dangers attending the payment of such drafts or bills; and the result was that in the year 1896 the clearing house in the city of New York adopted a rule to the effect that its members should not send through the exchanges any paper having any qualified or restrictive indorsements, such as "for collection" or "for account of," unless all indorsements were guarantied by the bank sending such paper. This action was soon followed by the clearing houses in other cities, and in some of them all indorsements are required to be either in blank, or "pay to or order." By this action of the clearing houses, indorsements "for collection" or "for account of" have fallen into disuse, and the banking business of the country is now done almost universally upon unrestricted indorsements. The decisions of the courts as to the rights and liabilities of the parties to paper with unrestricted indorsements thereon vary somewhat in dif

ferent states; but in this state the general rule that the drawee bank is bound to know the signature of the drawer has not been modified further than as permitted by local custom, as in Trust Co. Case, above cited. It is urged that the Belmont bank, having indorsed the check, thereby guarantied that the signatures of the drawer and indorsers were genuine, and some cases are cited to that effect. People's Bank v. Franklin Bank, 88 Tenn. 299, 12 S. W. 716; First Nat. Bank of Danvers v. First Nat. Bank of Salem, 151 Mass. 280, 24 N. E. 44. Other cases hold that an indorser does not guaranty that the name of the drawer is genuine, but that the drawee must determine that for hmiself, and at his own peril. Bank v. Boutell, 60 Minn. 189, 62 N. W. 327, and cases there cited. In the cases in which it has been held that the indorsement is a guaranty, to the effect that the name of the drawer is genuine, the indorsements were unrestricted, and therefore indiIcated an absolute transfer and sale of the paper. But when the indorsement is for collection only, as in this case, it indicates on its face that the indorser remains the owner of the paper, and that his successive indorsees are only his agents for the sole purpose of collecting the paper and remitting the proceeds to him. Such a restricted indorsement does not authorize a subsequent indorsee to negotiate the paper. His only power is to collect it, and the drawee bank is bound by the notice in the indorsement. Such an indorsement is not a guaranty that the name of the drawer is genuine, but only that the names of the indorsers then on the paper are genuine. Mechanics' Bank v. Valley Packing Co., 70 Mo. 643, 4 Mo. App. 200; Northwestern Nat. Bank v. Bank of Commerce, 107 Mo. 402, 17 S. W. 982. In the case now under consideration the drawer's name was a forgery, but the name of the payee indorsed on the check was genuine, having been written by the cashier at the request of the payee.

It has been urged that, if the payee had been required by the cashier to write his name upon the check, it might have shown that his name in the body of the check had been written by himself, and thus lead to a detection of the forgery. But in the above case of First Nat. Bank of Danvers v. First Nat. Bank of Salem the payee indorsed the check, and the handwriting was the same In both names, payee and indorser; and yet the forgery was not thereby detected, and the court attaches no importance to the fact in its decision of the case. In that case, and in the above case in 4 Ohio St. 628, and in nearly all the cases in which the money has been recovered back, the bank purchasing the check or bill took it from an unidentified stranger; and this has often, though not always, been held to be such negligence as would authorize a recovery of the money. But in the case at bar the

facts do not show Elwood Horner to have been a stranger to the cashier of the Belmont bank, because, as soon as he was notified of the forgery, he pointed out that Mr. Horner had died only a few days before, and that his estate was wholly insolvent. He was therefore known, and required no identification, and the cases which turn upon the unidentified stranger have no application to this case.

Again, it is conceded that J. W. Horner had no individual account with the First National Bank of Barnesville, the drawee, and that the bank charged the check to his account as administrator. This was not only irregular, but wrong. The bank should have refused payment, and allowed the check to go to protest; or, if it desired to favor Mr. Horner, it should have notified him that his check was at the bank, and no funds with which to pay the same. Had this been done, the forgery would have been discovered at once, and notice would have been given to the Belmont bank, and that bank would then have had recourse on Elwood Horner, who indorsed and sold the check. Whether he was then solvent or not does not appear, and is of no importance. The bank would have had its recourse against him within three or four days after it parted with its money, and such recourse is regarded in commercial transactions as a valuable right; and of this right the Belmont bank was deprived by the acts of the Barnesville bank in not detecting that the name of its depositor was forged to the check, and in negligently charging it to his account as administrator. It is therefore clear that the Belmont bank was guilty of no negligence, and that the loss occurred by reason of the acts of the First National Bank of Barnesville, and that it would be unconscionable to permit it to recover the money back from the Belmont bank. The judgment of the circuit court is therefore reversed, and that of the common pleas affirmed. Judgment accordingly.

MINSHALL, J., dissents.

PAUL v. TOWN OF WALKERTON. (Supreme Court of Indiana. May 24, 1898.) CITIES AND TOWNS-ANNEXATION OF TERRITORYSUFFICIENCY OF PETITION FOR ANNEXATION - JURISDICTION OF COURTS.

1. A petition under Burns' Rev. St. 1894, §§ 4426, 4427 (Horner's Rev. St. 1897, §§ 3389, 3390), providing for the annexation of contiguous territory to a town, set forth that many persons in such territory received the benefits and advantages of the town, without sharing its burdens, that public interest required that such territory be annexed, and that such annexation was for the public good. Held, that the petition was sufficient.

2. Burns' Rev. St. 1894. §§ 4224-4227 (Horner's Rev. St. 1897, 88 3243-3246), providing for an appeal to the circuit court by either party from the final decision of the board of

commissioners in a proceeding to annex contiguous territory to a town, confers the power to hear and determine such causes de novo, and to render final judgment annexing or refusing to annex such territory, without regard to the judgment of the board of commissioners.

3. General laws authorizing councils of cities and trustees of towns, by resolution, without notice, to annex contiguous territory which has been platted into lots and recorded, are constitutional.

Appeal from circuit court, St. Joseph county; Lucius Hubbard, Judge.

Proceeding by the town of Walkerton, before the board of commissioners of St. Joseph county, to annex contiguous territory. Louis Paul filed a remonstrance, and from a judgment annexing such territory he appealed. Reversed.

Jacob D. Henderson, Stuart MacKibbin, and Francis M. Jackson, for appellant. Walter Funk and A. L. Brick, for appellee.

MONKS, J. This proceeding was brought before the board of commissioners of St. Joseph county, under sections 4426, 4427, Burns' Rev. St. 1894 (sections 3389, 3390, Horner's Rev. St. 1897), to annex certain unplatted territory to the town of Walkerton. Appellant appeared before the board, and filed a remonstrance. A trial of said cause resulted in a finding and judgment by the board that said territory be annexed. Appellant appealed to the circuit court, where the cause was heard by a jury, and a verdict returned against appellant by direction of the court; and, over a motion for a new trial, judgment was rendered that said territory be annexed. The errors assigned, and not waived, call in question the sufficiency of the petition to annex said territory, and the action of the court in overruling appellant's motion for a new trial.

The petition sets forth the following as the reasons for asking for such annexation: "First. That the inhabitants of said territory, and the persons who own the same, enjoy all or many of the privileges of living within the said town, without paying any taxes therefor, although their lands are largely increased in value by reason of their proximity to the said town; that much of said territory is thickly settled and built up, with homes and valuable improvements, and railroad tracks, and that they have derived great income and benefit from the said town, and have become very valuable by reason of adjoining the said town; that said territory requires police surveillance, which can be better secured by a municipal control; that a highway passes through portions of such territory, on which there is much travel, and requiring, by reason thereof, to be kept in better order than at present kept in; that there are present streets in the said town that have no outlet, but end at the corporate limits, as now existing, and cannot be extended through any of said territory where needed, and none

can be procured, however much they may be needed by the public, and however much they may be of public utility and benefit. Second. That the present limits of the town of Walkerton are in an irregular shape, and that the annexation of the proposed lands will make the limits of the said town more regular; that one reason for annexing this territory is to make the plat of the said town uniform,-regular for description upon the tax duplicates of the said county. Third. That in view of all the facts set forth, and that the inhabitants of the said tract of land enjoy the benefit of living within the said corporation, and having been gaining revenues therefrom, and have and enjoy valuable property and improvements thereon, and are at the same time exempt from the burden and costs of maintaining the town government, while enjoying its privileges and advantages, and the increase of the value of the real estate by reason of its proximity to the said town. and also that some of the inhabitants and occupants of the said territory proposed to be annexed are now reaping advantages from the said town, without bearing any of its burdens, in the way of furnishing the said town with railroad conveyance and railroad facilities, and the fact of the town having been their patrons for fifteen years or more, and for other reasons and things, and that they have full and free use of the school and the police and the fire departments of the said town, without bearing any of the burdens of it, and also of the streets of the said town." The petition shows that many persons in said territory have been receiving the benefits and advantages of the town, without bearing their share of its burdens, and that public interests require that said territory be annexed, and that it is just and equitable, and for the public good, that said petition be granted. Said petition is clearly sufficient, under the decisions of this court. Elston v. Board, 20 Ind. 272; Catterlin v. City of Frankfort, 87 Ind. 45, 52, 53; Chandler v. City of Kokomo, 137 Ind. 295, 36 N. E. 847.

The motion for a new trial assigned a number of reasons why the same should be granted, a part of which relate to the exclusion of evidence offered by appellant, and a part to the giving and refusal to give instructions. Among the causes assigned for a new trial were the following: That the court erred in directing the jury to return a verdict in favor of the appellee, and that the verdict of the jury was contrary to law, and contrary to the evidence. The only evidence given by appellee at the trial of said cause was as to the regularity of the proceedings before the board of commissioners. No evidence was given to support or prove any of the reasons set forth in the petition for annexation, or any allegation contained in said petition, except that said territory was contiguous to said town, and that the

same was unplatted. The court also excluded all evidence in support of the remonstrance. It is stated in the briefs that the trial court directed the verdict of the jury, and excluded the evidence offered by appellant, upon the theory that, under the law as it is administered in this state, the annexation of territory to a town or city is a legislative, and not a judicial, function, and that the act of the board of commissioners in granting the prayer of a petition for annexation, or refusing the same, is one of legislative discretion, and that for that reason it was not proper to give any evidence on the trial in the circuit court either to sustain or contradict the grounds set forth in the petition for annexation. The legislature in this state has provided by general laws for the incorporation of towns and cities, and for the annexation of contiguous territory to the same when incorporated. The power to hear and determine applications for the incorporation of towns and cities, and for the annexation of contiguous unplatted territory, has been vested in the boards of commissioners, and, on appeal from said boards, in the courts. Counsel for appellee insist that the enlargement of municipal bodies is a political question, to be determined by the legislature, and not judicial, to be determined by the courts, and that while the legislature may, by general laws, confer such power upon boards of commissioners as has been done in this state, it cannot confer upon courts the power to adjudge or decree the annexation of contiguous territory to a municipality, for the reason that under our constitution legislative power cannot be delegated to the courts. It is true that the power to create, enlarge, and regulate municipal corporations is a legislative power. But general laws authorizing the common councils of cities, and the boards of trustees of towns, by resolution, without notice to any one, to annex contiguous territory which has been platted into lots, and the plat recorded, have been upheld. Mayor, etc. v. Weems, 5 Ind. 547, 549; Elston v. Board, 20 Ind. 275; City of Evansville v. Page, 23 Ind. 525; Edmunds v. Gookins, 24 Ind. 169; Taylor v. City of Ft. Wayne, 47 Ind. 274, 283; Stilz v. City of Indianapolis, 55 Ind. 515; City of Indianapolis v. Patterson, 112 Ind. 344, 347, 14 N. E. 551, and cases cited; Collins v. City of New Albany, 59 Ind. 396; Mullikin v. City of Bloomington, 72 Ind. 161; Strosser v. City of Ft. Wayne, 100 Ind. 443, 446; Glover v. City of Terre Haute, 129 Ind. 593, 29 N. E. 412. See, also, Tilford v. City of Olathe, 44 Kan. 721, 25 Pac. 223; City of Emporia v. Smith, 42 Kan. 433, 22 Pac. 616; Kelly v. Meeks, 87 Mo. 396; Copeland v. City of St. Joseph, 126 Mo. 417, 29 S. W. 281; Blanchard v. Bissell, 11 Ohio St. 96; 1 Dill. Mun. Corp. (4th Ed.) §§ 183, 185; 1 Beach, Pub. Corp. | $$ 399, 406, 408. General laws providing the conditions upon which contiguous territory can be annexed, and the mode of procedure,

and vesting the power in boards of commissioners and courts to hear and determine the same, and order or refuse such annexation, have also been, as we think, correctly upheld. City of Wahoo v. Dickinson, 23 Neb. 426, 36 N. W. 813; City of Seward v. Connoy, 33 Neb. 430, 50 N. W. 329; City of Wahoo v. Tharp, 45 Neb. 563, 63 N. W. 840; Callen v. Junction City, 43 Kan. 627, 23 Pac. 652; Id., 41 Kan. 466, 21 Pac. 647; Steele v. City of Newton, 41 Kan. 512, 21 Pac. 644; Hurla v. Kansas City, 46 Kan. 738, 27 Pac. 143; City of Burlington v. Leebrick, 43 Iowa, 252; Kayser v. Bremen, 16 Mo. 881; State v. Weatherby, 45 Mo. 17; State v. Wilcox, Id. 458; Lammert v. Lidwell, 62 Mo. 188; Blanchard v. Bissell, supra; Gunter v. Fayetteville, 56 Ark. 202, 19 S. W. 577; Vogel v. Little Rock, 55 Ark. 609, 19 S. W. 13; Vestal v. Little Rock, 54 Ark. 321, 15 S. W. 891, and 16 S. W. 291; Foreman v. Town of Marianna, 43 Ark. 324; Dodson v. Mayor, etc., 33 Ark. 508; Forsythe v. City of Hammond, 68 Fed. 774; 1 Dill. Mun. Corp., supra; 1 Beach, Pub. Corp., supra. The decisions of the courts upon this question are not in harmony, and among the cases cited as holding the contrary doctrine are City of Galesburg v. Hawkirson, 75 Ill. 152, and State v. Simons, 32 Minn. 540, 21 N. W. 750. After the adoption of our present constitution, in 1852, and the enactment of statutes concerning annexation to cities and towns of unplatted territory contiguous thereto by proceedings before the boards of commissioners, appeals were taken from boards of commissioners in such cases to the courts, and there tried de novo, until 1871, when, in the case of Princeton v. Manck, 35 Ind. 51, this court held that there was no appeal from the decision of the board of commissioners in annexation cases, for the reason that the statutes concerning annexation expressly provided that the order of the board, or an attested copy thereof, "shall be conclusive evidence in all courts of such annexation," and that, therefore, the general provisions for appeals from the board of commissioners did not apply to such proceedings. Church v. Town of Knightstown, 35 Ind. 177; City of Indianapolis v. Sturm, 39 Ind. 159; Windman v. City of Vincennes, 58 Ind. 480, 486; Baltimore, O. & C. R. Co. v. Board of Com'rs of St. Joseph Co., 73 Ind. 213, 217, 218. In 1879, however, the legislature passed an act (sections 4224-4227, Burns' Rev. St. 1894; sections 3243-3246, Horner's Rev. St. 1897) providing for an appeal by either party to such proceedings, since which time appeals have been taken under said act from decisions of boards of commissioners refusing to annex contiguous territory to towns and cities, as well as from decisions annexing such territory. For more than 40 years this court has, under the laws authorizing the annexation of contiguous unplatted territory to towns and cities, uniformly recognized the power of the courts on appeal to hear and determine annexation

cases de novo, and to render final judgments, annexing or refusing to annex such territory, without regard to the result before the board of commissioners. Mayor, etc., v. Weems, supra; Woodfill v. Town of Greenburgh, 18 Ind. 203; Elston v. Board, supra; Longworth's Ex'rs v. Common Council, 32 Ind. 322; Catterlin v. City of Frankfort, supra; Chandler v. City of Kokomo, supra; Manufacturing Co. v. Emery, 142 Ind. 456, 41 N. E. 814; Forsythe v. City of Hammond, 142 Ind. 505, 40 N. E. 267, and 41 N. E. 950; Wilcox v. City of Tipton, 143 Ind. 241, 42 N. E. 614. In Forsythe v. City of Hammond, supra, this court held that the board of commissioners, in considering and deciding upon the petition, acts in a judicial capacity, and that the legislature had provided for an appeal from such decision of the board to the courts. In said case the petition to annex contiguous unplatted territory had been refused by the board of commissioners; and the city appealed to the circuit court, where the same was heard de novo by the court and jury, and a verdict returned in favor of the petition for annexation; and judgment was rendered by the circuit court, annexing said territory, and said judgment was affirmed on appeal to this court. It is there said, on pages 516, 517, 142 Ind., and p. 950, 41 N. E.: "It may be conceded that annexation of territory to a city is a legislative function. This function is exercised by the common council when it resolves to annex certain described lands to the city, and to present a petition therefor to the county board. It must be admitted, however, as we think, that the after proceedings had upon the petition are of a judicial nature. The petition must give the reasons why, in the opinion of the counsel, the annexation should take place. The sufficiency of such reasons, and whether they in fact exist, calls for the decision of the tribunal appointed to hear the petition. Notice of the presentation of the petition is also provided for, and adverse parties are thus brought in. Whether the proper preliminary steps have been taken; whether the reasons given in the petition are true, and are sufficient,-seem to be questions calling for a judicial examination and decision.

*It is the law itself, as has been said, that fixes the conditions of annexation; and the office of the board and the court is to determine whether the conditions so prescribed by the law have been complied with. The legislature has expressly provided for such judicial determination by the board, and for an appeal therefrom to the courts, and this court has frequently recognized the right to such appeal. Burns' Rev. St. 1894, § 4224 (Rev. St. 1881, § 3243)." The case of Forsythe v. City of Hammond, supra, was cited with approval in Board of Com'rs of Vigo Co. v. City of Terre Haute, 147 Ind. 134, 46 N. E. 350, which was an annexation case. The statute under which this cause was appealed to the court below provides

that "the appeal shall be tried and determined as an original cause." Burns' Rev. St. 1894, § 4226 (Horner's Rev. St. 1897, 3245). In Wilcox v. City of Tipton, supra. this court held that when an action is brought by a city to annex unplatted territory, and the same is appealed to the circuit court, the petition for annexation may be amended in said court by excluding certain territory included in the original petition. and that said cause must be heard de novo in said court. This court, at page 246, 143 Ind., and page 616, 42 N. E., said: "We have a statute granting the right of appeal, and providing that 'the appeal shall be tried and determined as an original cause.' Burns' Rev. St. 1894, § 4224 et seq. (Rev. St. 1881. § 3243 et seq.). It has been settled by this court that such proceedings, on appeal to the circuit court, are tried de novo. Chandler v. City of Kokomo, 137 Ind. 295, 36 N. E. 847, and cases there cited." In Chandler v. City of Kokomo, supra, which was a proceeding to annex unplatted territory to a city. brought by the city of Kokomo before the board of commissioners of Howard county. and appealed to the circuit court, and from the judgment of the circuit court appealed to this court, the court said: "The general denial and a special remonstrance were filed before the board, and required proof of every issuable fact. Upon appeal to the circuit court every question in issue before the board was triable de novo, the decision thereof by the board having been suspended by the appeal." Under the laws of this state it is not the order and judgment of the circuit court or the board of commissioners alone that annexes the unplatted territory to a town or city, but it requires the concur rence of the common council of the city, or the board of trustees of the town. Wilcox v. City of Tipton, 143 Ind. 245–247, 42 N. E. 614; City of Peru v. Bearss, 55 Ind. 576; Windman v. City of Vincennes, 58 Ind. 480. It may be true that the laws of this state concerning the annexation of unplatted contiguous territory to towns and cities are not as full, certain, and definite, as to the conditions upon which such territory can be annexed, as are the laws of Kansas and other states where such laws have been upheld: but the courts of this state have tried and determined annexation cases under said laws for over 40 years, during which time the laws named have been recognized and acted upon as valid by all the departments of the government. To overthrow the part of such laws under which the courts exercised just jurisdiction might lead to great complications and embarrassments in public affairs. In many cases the courts on appeal may have rendered judgments annexing territory which the board of commissioners had refused to annex. Many towns and cities to which territory has been annexed by the judgments of the courts have built streets and sewers and extended water mains

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