Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/230

 § 245.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. said, giving the opinion of the court in Farmers and Mechanics' Bank v. Butchers and Drovers' Bank: 1 "A citizen who deals directly with a corporation, or who takes its negotiable paper, is presumed to know the extent of its corporate powers. But when a paper is upon its face in all respects such as the corpo- ration has authority to issue, and its only defect consists in some extrinsic fact, such as the purpose or object for which it was issued, to hold that the person taking the paper must in- quire as to such extraneous fact, of the existence of which he is in no way apprised, would obviously conflict with the whole policy of the law in regard to negotiable paper." 2 § 245. By certifying a check in the usual form a bank cer- tifies to the genuineness of the drawer's signature, represents that he has funds in the bank sufficient to meet the check, and engages that those funds shall not be withdrawn by him to the prejudice of any bona fide holder of the check. But the certification is not an absolute guaranty that the body of the check — the amount and name of the payee — is genuine ; nor is it a guaranty that at all events the precise check certified shall be paid from funds of the drawer in the bank, or at all. 3 Therefore, when a bank cer- tifies a check which was raised before certification (the bank not being negligent in the matter) it cannot in consequence of its certification be held to pay the amount of the raised check ; and when, without negligence, a bank pays the amount of a raised check which it has certified, it can recover the money thus paid as money paid by mistake. 4 So, if subsequently to the certification the check is raised, and then sent by some one Effect of a certifica- tion. " Raised " checks. 1 16 N. Y. 129. 2 Ace. Meads v. Merchants' Bank, 25 N. Y. 143; Cooke v. State Nat. Bank, 52 N. Y. 96. A corporation is bound by its ac- commodation indorsement to a bona fide holder for value of a note, who discounts it before maturity on the faith of its being business paper. Mechanics' Banking Ass'n v. New York, etc., White Lead Co., 35 N. Y. 505. 3 See, e. <y., Goshen Nat. B'k v. Bingham, 118 N. Y. 349. 210 4 Clews v. Bank of New York, 89 N. Y. 418; Marine Nat. Bank v. Nat. City Bauk, 59 N. Y. 67; Security Bank v. Nat. Bank, 67 N. Y. 458; Espy v. Bank of Cincinnati, 18 Wall. 604. See Nat. Bank of Commerce v. Nat. Mechanics' B'k'g Ass'n, 55 N. Y. 211. Second Nat. Bank v. Western Nat. Bank, 51 Md. 128; and compare Helwege v. Hi hernia Nat. Bank, 28 La. Ann. 520. But see, contra, Louisiana Nat. Bank v. Citi- zens' Bank, 28 La. Ann. 189.