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308 308 HARVARD LAW REVIEW, legal reasoning, is believed to be unwarranted. But as, in the result, the loss comes, where upon the principle of subrogation it ought to come, it is not worth while to be too critical. The principle by which, in a controversy between two persons having equal equities, the holder of the title shall prevail, is most commonly appHed for the benefit of a purchaser, who buys a title, without notice of equities attaching to it, in the hands of the seller, in favor of a third person.^ There is, it must be admitted, one difference between this case of the purchaser and those already discussed, in which the holder of a bill received and the drawee made payment, both acting under the mistaken belief that the bill was genuine and properly payable by the drawee to the holder. The purchaser parts with his money at the time he acquires the legal title, which he claims the right of retaining. The holder, on the other hand, unless there are prior indorsers, gives up nothing of value at the time when he acquires from the drawee the money, which he seeks to keep. He parted with his money in a prior transaction, when he obtained the worthless bill. At that moment the loss has fallen upon the holder, and it has been said that he "ought not to be permitted to throw that loss upon another inno- cent man, who has done no act to mislead him." ^ But this view Bank v. Nassau Bank, 91 N. Y. 474. Analogous to these cases of forged indorsement are those where the defendant buys a stock certificate, transferred to him by a forged power of attorney, and then surrenders it to the company, taking out a new certificate in his own name. The title of the true owner is not affected thereby. The defendant, having obtained the new certificate by means of the original one of the true owner, holds the new one as a constructive trustee for the latter. The company would be bound to issue a fresh certificate to the true owner, but would of course be entitled to have the one outstanding, to which the original shareholder is equitably entitled, de- livered up. So that the loss must fall on the innocent purchaser. Sims v. Anglo-Am. Co., 5 Q. B. D. 188; Metrop. Bank v. Meyer, 63 Md. 6. The case of Boston Co. v. Richardson, 135 Mass, 473, seems to have gone too far in holding the innocent pur- chaser liable on an implied warranty of title. The same criticism may be applied to Merchants' Bank v. First Bank, 3 Fed. Rep. 66, — a case of forged indorsement, — which was said in Leather Bank v. Merchants' Bank, 128 U. S. 26, 37, to proceed "upon grounds inconsistent with the principles and authorities above stated." In the last case the-dra wee's right, to recover of the holder under a forged indorsement, was held to be barred in six years from the time of the payment. This decision, on the theory of subrogation, is clearly right. But, if the case is regarded as an illustration of the right to recover money paid under mistake, it is not to be reconciled with the prevailing doctrine, that the cause of action does not accrue against an innocent re- ceiver until demand, or notice of the mistake. ^ In I Harv. L. Rev. 3, 4, et seq. ' Per Chambre, J., in Smith v. Mercer, 6 Taunt. 76, 84,