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481 NOTES. 481 such cases? Is there no fundamental distinction between a forged indorsement and a forged drawing as affecting the rights between the drawee and the innocent indorsee to whom he has paid the bill ? In The London ^ River Plate Bank v. The Bafik of Liverpool, [1896] i Q. B. 7, Mathew, J. rests the two cases on the same grounds, and decides that the drawee who pays the innocent indorsee of a bill bearing a forged indorsement cannot recover back the money, on the principle that the payment by the drawee has caused the indorsee to lose his rights against prior indorsers. Undoubtedly the defendant can no longer charge prior parties as indorsers, as the time for notice of dishonor has gone by, but his rights on the warranty, implied in the sale of any chattel, remain unimpaired (2 Ames, Cases on Bills and Notes, 242, n. i), and it is doubt- ful if it is of itself any defence to one who has received money under a mistake of fact, there having been a total failure of consideration, that his rights against other parties have been changed or his relations in respect to them altered. Bobbitt v. Pinkett, L. R. i Ex. Div. 368 ; Canal Bank V. Bank of Albany, i Hill, 291 ; Rheel v. LLicks, 25 N. Y. 289 ; Koonzt v. Central National Bank^ 51 Mo. 275. It is said further, that "no single case has been produced in which, where payment has been made on a forged indorsement to the holder of it in good faith, the money has been recovered back." It is rather unfortunate that in so important a case the attention of the court was not called to Bobbett v. Pinkett., supra, a decision which is very difficult to reconcile with the principal case. The American cases in which such recovery has been allowed are collected in I Ames, Cases on Bills and Notes, 433, n. 2. In Price v. Neal, 3 Burr. 1354, it will be remembered that it was the drawer's name that was forged, and it was held that the drawee, having paid an innocent indorsee, must himself bear the loss. But the dis- tinction between such a case and one where an indorsement is forged is obviously that in the latter case the indorsee has never obtained legal title to the instrument, and, however innocent he may be, he is imme- diately liable at law to the true owner for the conversion. This principle is expressly recognized in Bobbett v. Pinkett, supra. If, as in the principal case, the drawee has paid the true owner, it would seem that the drawee should be subrogated to his rights and be enabled to compel the indorsee to account for the money received to his use. The whole subject is elaborately discussed in 4 Harvard Law Review, 297. It is to be hoped that the solution of a question of so much importance will not be left to depend on the authority of a single justice of the divi- sional court, but that the case will be carried up to the higher courts. The " Trust Fund " Theory. — In the late case of Adams &* West- lake v. Deyette (65 N. W. Rep. 471), the Supreme Court of South Dakota rests its decision on the ground " that the assets of a corporation are a trust fund for its creditors." On this theory a judgment confessed by a corporation for moifey due on an executed ultra vires contract, admitted to give a right of action for the sum recovered, was set aside as a prefer- ence of creditors. The " trust fund " doctrine seems to owe its origin to a decision by Judge Story in 1824, in the case of Wood w. Dummer (3 Mas. 308). Since that decision it has been alternately applied and rejected by courts and eulogized and condemned by text writers. Within the last two years Judge Thompson has characterized it as " the only doctrine worthy