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During the last twenty-five years the courts with increasing frequency
have been called upon to decide where the law ought to place
the loss when a bank pays a forged check and charges it to the account
of a depositor, believing that he drew the check as presented. The
broad statement that a bank pays a check at its peril is so frequently met
with that it is likely to make the impression that a depositor enjoys an
immunity from change in his legal relations to the bank, save as the
bank pays checks that are in fact his orders. It is well settled, however,
that the failure of a depositor to notify his bank after he knows,
or ought to know, that it has paid a forged check and charged it to his
account, will, under some circumstances, result in undesirable financial
consequence to him, though its extent, as well as the basis upon which
it is imposed, are matters about which there is a variety of judicial
opinion. It is proposed to examine herein the broad principle referred
to above and seek to ascertain when and to what extent the depositor's
conduct subsequent to payment affects his legal relations to the bank.

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banking, forged checks, depositor