Opinion of the Court, per EARL, J.

The order restraining the chamberlain was a mere preliminary or intermediate order. It was not intended to be, and could not be permanent. It was in terms to continue only "until further order in the premises;" and such further order was made when the receiver was appointed. That was the final order and the consummation of the supplementary proceedings; and and any restraint thereafter desired should have been inserted in that order. As well might a preliminary injunction in an action survive final judgment without the further order of the court. But the chamberlain had the right to pay out this fund for another reason. The order of the Court of Common Pleas of January 7, 1874, ordering him to pay the fund is a sufficient protection to him. He had nothing to do with its procurement, and was in no way responsible for the manner in which it was procured. As to him it was a valid order, and superceded the prior restraining order made by the same court.

The only restraining order remaining was that contained in the order appointing the receiver; and that restrained "Hiler, and his servants, agents, and attorneys." Did Randall violate that order? I cannot perceive upon the undisputed facts that he did. He may have been sharp and unscrupulous, he may have taken advantage of the relators and their attorney, but did he violate the order? That is the sole question. In procuring this fund from the chamberlain, he did not act for Hiler; he acted for the trustee. The fund did not belong to Hiler. He had made an absolute transfer of it to Haight; and in January, 1873, he had no interest whatever in it. The fund was not large enough to pay the debts which the trustee was directed to pay out of it. That assignment may have been, and probably was void as to Hiler's creditors who did not assent to it. (Goodrich v. Downs, 6 Hill, 438.) They could have assailed it and set it aside, and reached the property, but it was valid as between the parties thereto, and as to all creditors who assented to it. Hiler could not dispute its validity. It divested him of the property assigned as completely as if it were valid against

Opinion of the Court, per EARL, J.

the whole world. He could not revoke or annul the assignment, or do any act to impair or affect the title of the assignee. This was not, therefore, his property; and Randall, in procuring its payment to the trustee, did not act as Hiler's agent or attorney, or interfere with his property. There was no restraint upon the chamberlain, or upon him as attorney and agent of the trustee.

Hiler, when he gave the order on the chamberlain, did not interfere with his own property, but simply did an act not absolutely essential, but which aided the trustee in getting possession of property which belonged to him.

It may be that the transfer of the trust from Haight to Dusenbury was invalid. It certainly was invalid, unless all the creditors interested in it assented to the transfer. If all persons interested in the trust assented, it certainly was valid. If they were all satisfied, no one else could question it. If, however, the transfer was invalid, the title remained in Haight and was still out of Hiler.

But for another reason Randall was not guilty of violating either of these injunction orders. The one in terms operated only upon the chamberlain; and the other only upon Hiler, his servants, agents and attorneys. Neither of these orders restrained Dusenbury or his attorney. Dusenbury was not a party to the action or proceeding in which the orders were made. He did not acquire his rights pendente lite. They were antecedent to the supplementary proceedings. He was an entire stranger to the orders, and hence was in no way affected by or bound to obey them, and Randall, as his attorney, was in the same position. (1 Barb. Ch. Pr., 634; Batterman v. Finn, 32 How. Pr., 501.)

We are, therefore, of opinion that the orders appealed from should be reversed, and that the motion should be denied, with costs.

All concur, except FOLGER and ANDREWS, JJ., not voting. Order reversed, and motion denied.

Statement of case.

73

424

111

611

HENRY WELSH, Respondent, v. THE GERMAN AMERICAN
BANK, Appellant.

The drawer of a check, made payable to the order of the payee, is not bound by a payment thereof by the bank, upon a forged indorsement of the name of the payee; it is bound before payment to ascertain the genuineness of the indorsement.

A depositor owes no duty to a bank requiring him to examine his pass-
book or returned checks, with a view to the detection of forgeries in the
indorsements; he has a right to assume that the bank before paying his
checks will ascertain the genuineness of the indorsements.

The rule that notice to an agent is notice to his principal is only applicable
to cases where the agent is acting in the course of his employment.
An account stated may be impeached by evidence of fraud or mistake.
Plaintiff, a commission merchant doing an extensive business, upon presen-
tation to him by his book-keeper, who had charge of his produce and
bank books, of fictitious accounts of sales of the property of a customer,
signed checks for the amounts, payable to the order of the customer,
which were delivered to the book-keeper, who forged the indorsement of
the customer and put the checks in circulation; they were paid by the
bank, charged in plaintiff's pass-book and returned with the other vouch-
ers to the book-keeper upon balancing the account, which was done
monthly. Plaintiff did not discover the fraud or the forgeries until some
months thereafter, and immediately upon making the discovery notified
the bank. In an action to recover the balance of plaintiff's deposit, held,
that the fact that plaintiff was deceived into giving the checks by his book-
keeper did not make him responsible for the subsequent fraud upon
the bank, as his acts did not in a legal sense contribute thereto; that
plaintiff was not precluded from disputing the right of defendant to
charge the checks to his account, because of the entry thereof in the
pass-books, their return with the vouchers, and retention without ob-
jection; and that averdict for plaintiff was properly directed.

(Argued April 9, 1878; decided April 23, 1878.)

APPEAL from judgment of the General Term of the Superior Court of the city of New York, affirming a judgment in favor of plaintiff, entered upon a verdict. (Reported below, 10 J. & S., 462.)

This action was brought to recover a balance alleged to be due plaintiff upon his deposit account with defendant.

The facts appear sufficiently in the opinion.

Statement of case.

D. M. Porter, for appellant. There was an account stated between the parties, and this precluded a recovery. (Bullock v. Boyd, 2 Edw. Ch., 292; Weiser v. Denison, 6 Seld., 75; Story's Eq. Jur., 526; Hutchinson v. Market Bk., 48 Barb., 321; McDougal v. Cooper, 31 N. Y., 198; Lockwood v. Thorne, 1 Kern., 170; Avery v. Leach, 9 Hun, 106; 1 Greenl. Ev., §§ 212, 291, 292; Manhattan Co. v. Lydig, 4 J. R., 377.) The payment of the checks by defendant was the same as if they had been payable to a fictitious payee. (Coggill v. Am. Ex. Bk., 1 Coms., 113.) Plaintiff's negligence in signing the checks and his long delay in questioning the transaction prevented a recovery. (Allen v. Coit, 6 Hill, 318; Aldarson v. Clay, 1 Stark., 403; 48 Barb., 322, 323; Johnson v. First Nat. Bk., 6 Hun, 124; Redlich v. Doll, 54 N. Y., 234, 239; Goucester Bk. v. Salem Bk., 17 Mass., 42.) Plaintiff's acts amount to a ratification of the acts of his bookkeeper. (Story on Ag., §§ 234-260; Lawrence v. Taylor, 5 Hill, 114; Ward v. Evans, 2 Salk., 442; 2 Raym., 928; Williams v. Mitchell, 17 Mass., 98.) Defendant in paying the checks was guilty of no negligence. (Justh v. Nat. Bk. of Comm., 56 N. Y., 480, 485; Cont'l Nat. Bk. v. Nat. Bk. of Comm., 50 id., 575, 576.). Witness was bound to know what appeared on his books. (Allen v. Coit, 6 Hill, 318; Aldarson v. Clay, 1 Starkey, 403.) Defendant was legally concluded only as to the signature of plaintiff. (Coggill v. Am. Ex. Bk., 1 Coms., 113; Nat. Bk. of Comrce. v. Nat. Mech. Bkg. Assr., 55 N. Y., 211.)

Samuel Hand, for respondent. Defendant was bound to ascertain the genuineness of the payee's indorsements before paying the checks. (Morgan v. Bk. of State of N. Y., 11 N. Y., 404; Graves v. Am. Ex. Bk., 17 id., 205; Johnson v. Bk. of Hoboken, 6 Hun, 124; affirmed by Ct. of Apps.) There was no negligence of plaintiff to excuse defendant in paying the checks upon the forged indorsements. (Palm v. Watt, 7 Hun, 357; Leavitt v. Stanton, H. & D. Supp., 413; White v. Bank, 64 N. Y., 316, 322.) In making an SICKELS-VOL. XXVIII. 54

Opinion of the Court, per ANDREWS, J.

unauthorized disposition of the checks, the book-keeper was a wrong-doer and did not represent the plaintiff. (Weisser v. Dennison, 10 N. Y., 18; Palm v. Watt, 7 Hun, 357.) This was not a case of a fictitious payee. (Am. Ex. Bk. v. City Bk., 5 N. Y. L. Obs., 18.)

ANDREWS, J. It is conceded that the balance of $3,164.11 is due to the plaintiff, unless the twelve checks drawn by him to the order of W. N. Johnson, at intervals between April 27, 1872, and March 28, 1874, are legally chargeable to the plaintiff's account.

The checks were received by the bank through the clearinghouse, and when presented to and paid by the defendant they purported to be indorsed by the payee, but the indorsements were forgeries. The bank, before paying the checks, was bound to ascertain the genuineness of the payee's indorsement. The only authority conferred by the plaintiff upon the bank was to pay the checks upon the order of Johnson, and payment upon the forged indorsements did not bind the plaintiff. (Morgan v. Bank of the State of New York, 11 N. Y., 404; Graves v. Am. Exchange Bank, 17 id., 205.)

It is claimed that the plaintiff is precluded from disputing the right of the bank to charge the checks against his account for the reason that he was debited in his pass-book with the checks, and that the checks with other vouchers were returned to him by the bank upon the monthly writing up of the account, and were retained without objection. There is no claim that the plaintiff had any knowledge of the forgeries until August, 1874, and the evidence is uncontradicted that upon discovering the fact he immediately notified the bank. The circumstances in respect to the drawing of the checks, and the dealings of the plaintiff with the bank, may be briefly stated. The plaintiff during the time covered by the checks was a commission merchant, dealing in country produce, in the city of New York, his transactions amounting each year to several million dollars, and his books contained several thousand different accounts. Among other accounts he had