Page:Federal Reporter, 1st Series, Volume 3.djvu/74

 MEKCHANTS NAT. BANK ». FIRST NAT. BANK. 67 �dorff was foi^ed, sued the First National Bank to recover the amount of this credit. �The Merchants' National Bank having been notified of the suit, employed counsel to assist the First National in mak- ing a defence. Upon the trial the forgery was proven, and judgment rendered against the First National for the amount claimed. The First National paid the judgment, and then brought this suit against the Merchants' National to recover what was so paid, on the ground that the latter bank, by its indorsement of the draft and receipt of the money thereon, became responsible for the genuineness of Orndorff's signa- ture. �To this suit the Merchants' National pleaded the Maryland statute of limitations, whicb was three years, and the single question now presented is whether this statute began to run when the draft was paid, or when the judgment in favor of the United States against the First National was rendered. If the former the suit is barred, but if the latter it is not. The drawee of a bill of exchange, by accepting and paying the bill, admits the genuineness of the signatui'e of the drawer, and his own obligation to pay. An indorsee who demands and receives such a payment warrants his title to the bill from the prior parties under whom he claims. The legal effect of this warrant is that the payment is actually made to the order of the payee; and, so far as the title of the indorsee is concemed, will entitle the drawee to credit with the drawer for the amount drawn for. The undertakrng is not as to the genuineness of the bill itself, but the title of the holder. �In this case the First National got credit at the treasury of the United States for the amount of the draft. It was thus put in actual possession of what the Merchants' National guarantied it would be entitled to. The exchange of the funds of the United States in the hands of the depositorj for the bill thus became consummated, and no right of action on the warranty accrued until, at least, the United States elected to insist on the defect of title and cancel the credit. ����