John P. Finan


May a Bank which pays a check by mistake recover the payment? The answer has traditionally depended upon the law of restitution as modified to fit the peculiar necessities of the law of bills and notes.' Such law determines whether payment may be recovered by balancing the equities between the parties. The leading case in this field is Price v. Neal, which holds that if the payor and the person paid are equally innocent, the law will not shift the loss from one innocent person to another. In Price the signature of the drawer was forged. Unlike the Negotiable Instruments Law which treated the problem of finality of payment or acceptance in a fragmentary manner, the Uniform Commercial Code has provided for the problem rather exhaustively in §§ 3-417 (1), and 3-418.6 Section 3-418 provides that payment or acceptance of any negotiable instrument is final in favor of a holder in due course, or a person who has in good faith changed his position in reliance on the payment. There are two exceptions. Payment is not final if a presentment warranty has been breached or if the payor bank may recover a payment improperly made by returning the item or sending notice of dishonor within the time limits of § 4-301. Sections 3-418 and 3-417 (1)8, taken together, codify prior law in those areas where the question of finality is determined by balancing the equities between the parties. T