diction of the incorporated place is in most cases confined to the limits of the incorporation, it is necessary that these limits be definitely fixed." 1 Dillon on Municipal Corporations, 182. Upon the issues and the evidence, and the law applicable thereto, it is our judgment that the court below was in error in ordering the injunction pendente lite in favor of the appellee. The decree is reversed, and the cause is remanded for further proceedings not inconsistent with the foregoing opinion NATIONAL EXCHANGE BANK OF PROVIDENCE v. UNITED STATES. (Circuit Court of Appeals, First Circuit. January 2, 1907.) No. 617. 1. BILLS AND NOTES-PAYMENT ON FORGED INDORSEMENT-RECOVERY OF PAYMENT. The ordinary rule is that, to entitle one who through mistake has paid out money on a forged indorsement of a check or other commercial paper to recover the same back, notice of the forgery must be given to the party receiving such payment within a reasonable time after its discovery. [Ed. Note. For cases in point, see Cent. Dig. vol. 7, Bills and Notes, §§ 1272, 1273.] 2. UNITED STATES-ACTION TO RECOVER MONEY PAID BY MISTAKE-LACHES. Pension checks, or warrants, issued by a pension agent of the United States on an Assistant Treasurer, are commercial paper, and the right of the United States to recover from one to whom such a check was paid on a forged indorsement of the name of the payee is governed by the ordinary rules applicable to such paper. Aldrich, District Judge, dissenting. In Error to the Circuit Court of the United States for the District of Massachusetts. Charles K. Cobb and Theodore F. Green, for plaintiff in error. Before COLT and PUTNAM, Circuit Judges, and ALDRICH, District Judge. PUTNAM, Circuit Judge. This is an action at law, brought in the Circuit Court by the United States against the National Exchange Bank of Providence, in which a jury was waived in accordance with the statute, and the case was tried by the presiding judge on an agreed statement. The judgment was for the United States, and the defendant below sued out this writ of error. The principal facts are correctly stated in the opinion of the learned judge of the Circuit Court as follows: "This was a suit at law to recover back money paid by the plaintiffs to the defendant upon pension checks bearing forged indorsements. By the agreed statement of facts it appears that the checks were issued quarterly by the United States Pension Agent, at Boston, between 1884 and 1897. Some of the persons to whose order the checks were drawn were then dead. Others were remarried widows, not entitled to a pension. On June 18, 1897, the special examiner of the Pension Bureau reported to the Bureau that the indorsements of some of the checks in suit were probably forged by Munson. On December 18, 1897, notice of these forgeries was given to the defendant by the United States Attorney, at Providence, and the defendant was informed that at a proper time reclamation would be made upon it. At various dates between February 19 and May 28, 1898, the indorsements upon the other checks were discovered to be forgeries. On July 22d, the United States Attorney made demand upon the defendants. The writ was dated August 27, 1901." The precise form of only one of the so-called checks is shown by the record, as follows: Pay Nat. Bank of the Republic. Boston or order, for collection, for account of First National Bank, Providence, R. I. Indorsement Guaranteed. C. E. LAPHAM, Cashier. Nat'l Bank of the Republic, Boston. This is, however, understood to be a sample of the remaining checks. As they were drawn by the pension agent on the Assistant Treasurer of the United States, the question naturally arises whether, after all, they were anything more than official warrants, a question which we will turn to later. It will be observed, however, that no indorsement by the Exchange Bank appears on the sample shown in the record, and whatever indorsement there is, is simply "for collection." The only question before us was also correctly put by the learned judge of the Circuit Court, as follows: "This, therefore, is the question presented for decision: If A. by honest mistake pays money to B. upon a check bearing a forged indorsement, and then A. unnecessarily and unreasonably delays to notify B. of the discovery of the forgery, can he recover back the money paid from B. in the absence of evidence that the delay has worked damage to B.?" The learned judge said: "Upon the whole, the authorities answer this question in the affirmative." He added as follows: "Negligence without resulting damage does not create an estoppel. In the case at bar, damage was alleged, but the agreed facts contain no evidence to support the allegation." It is to be noted that this case does not involve the rule which arises out of payments by a bank of checks drawn upon itself, bearing an apparent, but forged, signature of one of its customers. only to the demand for the repayment of money paid on account of forged or false indorsements of signatures of individuals whose signatures the United States were not bound to know, as a bank is bound to know those of its customers. It is also to be noted that there is no suggestion made before us that either the bank in question here or the United States have been guilty of negligence, except in the particular to which our attention has been brought, namely, an unreasonable delay on the part of the United States in giving notice of the discovery of the false signatures or forgeries. Mr. Justice Story, in 1825, in his opinion in United States Bank v. Bank of Georgia, 10 Wheat. 333, closing at pages 343 and 344, 6 L. Ed. 334, a discussion of the relations between a bank and an individual from whom the bank may have received forged circulating bills, apparently its own, and other bills or notes bearing forged signatures, and explaining that, under some circumstances, there is nothing. unconscientious in retaining the sums received from the bank "which its acts have deliberately assumed to be genuine," ends as follows: "If this doctrine be applicable to ordinary cases, it must apply with greater strength to cases where the forgery has not been detected until after a considerable lapse of time. The holder, under such circumstances, may not be able to ascertain from whom he received them, or the situation of the other parties may be essentially changed. Proof of actual damage may not always be within his reach; and therefore, to confine the remedy to cases of that sort, would fall far short of the actual grievance. The law will, therefore, presume a damage, actual or potential, sufficient to repel any claim against the holder. Even in relation to forged bills of third persons, received in payment of a debt, there has been a qualification ingrafted on the general doctrine that the notice and return must be within a reasonable time; and any neglect will absolve the payer from responsibility." The concluding rule thus stated by Mr. Justice Story with regard to commercial bills became thoroughly settled as a principle of law in the United States; it being distinguished from the severer rule which existed in England. It reaches all classes of commercial paper, and never has been questioned by any authority in a positive way. In Bank of Commerce v. Union Bank, 3 N. Y. 230, 237, decided in 1850, the opinion rendered in behalf of the court by Judge Ruggles, relating to the precise question we have here, closes as follows: "In cases where no negligence is imputable to the drawee in failing to detect the forgery, the want of notice within a reasonable time is excused, provided notice of the forgery is given as soon as it is discovered." United States v. Central Bank (D. C.) 6 Fed. 134, 135, decided in 1881, was supported by the concurring opinions of Judge Butler, district judge for the Eastern district of Pennsylvania, Judge Cadwalader, also a district judge of the same district, and Judge McKennan, a circuit judge, all of them of acknowledged experience and ability. The case involved some very peculiar facts, so that the ruling was broader than anything that we are considering here. Nevertheless, the opinion referred to Cooke v. United States, 91 U. S. 389, 23 L. Ed. 237, in such a way as to adopt the recognition of the peculiar rules relative to commercial paper stated at pages 396 and 397 of 91 U. S. 23 L. Ed. 237; and, what is important here, it made no exception growing out of any question whether damage ensued from any delay in giving notice of the forgeries. There was an opinion in the same volume by District Judge Choate, of the Southern district of New York, in United States v. National Park Bank (D. C.) 6 Fed. 852, 854, which sustains the position of the United States taken before us; but it was rested on decisions none of which seem in point. Certainly, in almost every case cited by him, if not in every one, the court, or the reporter, was particular to state that notice was given immediately on the discovery of the forgery. Many related to the ordinary rule about money paid under mistake, while the rule with reference to money paid out on commercial paper, like all other rules concerning recourse to parties indorsing such paper, has long been regarded in both the United States and England as peculiar, although, to a certain extent, dealt with, as we have said, more sharply in England than with us. In United States v. Clinton Bank (D. C.) 28 Fed. 357, decided in 1886 by Mr. Justice Brewer, then a circuit judge, with regard to the rule which we maintain, the learned judge said that it seemed "to be sustained by the common voice of the authorities." Also, we refer to the notes made by Mr. Justice Holmes to Kent's Commentaries (12th Ed. 1873) vol. 3, *85, where it is stated that recovery may be had by the holder, "provided he has given notice of the forgery as soon as discovered." The same note makes comparison with the more precise rule in England. Note b to page *86, which we understand to be the personal note of Chancellor Kent, recognizes, with reference to negotiable paper, the same condition, namely, that "there be no unreasonable delay after the discovery of the forgery." This is stated unqualifiedly. So the note of the distinguished author J. C. Perkins to Chitty on Contracts (11th Am. Ed.; 1874) vol. 2, 931, says as follows: "But the one who has received such counterfeit bills or notes in payment of his debt must return, or offer to return, them in a reasonable time, or he will forfeit his rights to recover the amount of them from the payer." It is true that, in some of the decisions, the observations pertinent to this case were not strictly necessary, and were in a sense dicta. Nevertheless, what we have cited were the unqualified expressions of learned and experienced judges and authors who were not using them theoretically, but historically. None of them made any exception of the kind claimed by the United States in the case at bar, namely, that the defending bank, in order to meet the demand of the United States, is bound to establish that it suffered detriment by the delay. On the other hand, none of the authorities cited in behalf of the United States sustains them. Daniel on Negotiable Instruments (5th Ed.) §§ 1371, 1372, on which they especially rely, confirms the rule as claimed by us. At section 1371 the author says: "It is undoubtedly necessary that the maker, acceptor, or other party, who demands restitution of money, paid under a forged indorsement, or under a forged signature of the drawer of a bill, should make the demand without unreasonable delay." This is the rule. At section 1372 Mr. Daniel merely adds, "But there is high authority for the more liberal, and, I think, more just and wiser doctrine"; that is, the same as that claimed by the United States. This, so far from denying the established rule, admits it, and it only takes cognizance of some supposed expressions the other way. We have examined all of Mr. Daniel's citations in support of this suggestion, and they fail therein. The first one is Parsons on Bills & Notes, vol. 2, 598. This is probably the edition of 1879, where nothing is stated positively. The learned author there uses the word "perhaps." Another reference is to Welch v. Goodwin, 123 Mass. 71, 78, 25 Am. Rep. 24. In that case it is stated at page 71 of 123 Mass. (25 Am. Rep. 24) that notice was immediately given, and the opinion of the court, at page 78 of 123 Mass. (25 Am. Rep. 24) expressly lays aside the question we have before us. In two of the New York cases referred to, it was stated by the reporter that notice of the forgery after it was discovered was immediate. In Third National Bank v. Allen, 59 Mo. 310, and in Iron City Bank v. Fort Pitt Bank, 159 Pa. 46, 28 Atl. 195, 23 L. R. A. 615, the question before us was in no way passed on, nor was it in issue; and the other cases were ordinary suits for the recovery of money paid under mistake of fact. Among the cases not cited by Mr. Daniel, but cited to us at bar, are United States v. National Bank of the Republic, 2 Mackey (D. C.) 289, and United States v. Onondaga Bank (D. C.) 39 Fed. 259. The first of the two cases passes with those we have already explained, because, at page 297 of 2 Mackey, the opinion observes that the notice given "seems reasonably prompt, unless there are peculiar circumstances in the case that made it otherwise." In this case the defendant bank was notified within six days after the forgery of the indorsement in question was discovered. In the second case various authorities cited by us are referred to, but notice was given within three days after the forgery or fraud was discovered. All the court says on the point before us is that notice was given as we have observed. There is an allusion to this topic in Zane on Banks & Banking (1900) 271, which leaves it in precisely the same form as left by Daniel, giving the rule as we give it, with the additional statement as to certain authorities precisely as stated by him. Some of the cases in discussing the matter differ as to the equities under circumstances like those before us. Some hold that the loss should be allowed to remain where it fell. However this may be, any demand for prompt notice in cases of forgeries is wholesome. When discovered, forgeries should not be coddled, but should be made known, both to the public prosecutor and to those immediately concerned; and any attempted test with reference to the question whether the party from whom recovery is sought has suffered by delay is wholly unsatisfactory, because the determination whether one who has suffered by a forgery may recoup himself is more a matter of chances, which cannot be estimated, than the result of logical investigation of particular facts. Consequently, if this were a case of commercial paper proper as known to the law of merchants, and between individuals, it is established that unreasonable delay in giving notice after the discovery of the forgeries would have discharged the Exchange Bank, without regard, ordinarily, to any question whether it suffered damage |