Present:

ment to

charge drawer.

When deemed overdue.

Banker's duty to honour cheques.

case discharge the drawer. No case against an indorser has arisen in England. It is conceived that he would be discharged by the omission to present within a reasonable time, irrespective of actual damage.1

Art. 259. It is uncertain when a cheque not known to have been dishonoured is to be deemed overdue for the purpose of affecting the holder with equities of which he had no notice at the time the cheque was negotiated to him.2

ILLUSTRATION.

A. is induced by fraud to draw a cheque in favour of C. Six days after its date C. indorses the cheque to D. D. has not taken an overdue cheque, therefore if he gave value and had not notice of the fraud he has a good title.3

NOTE.--Cf. Arts. 133, 134, as to overdue bills of exchange, Art. 282 as to overdue note on demand, and see Art. 138. In America a cheque indorsed five months after date has been held to have been negotiated when overdue.

Art. 260. A banker, as such, is bound to honour his customers' cheques when duly presented to the extent of the balance which the customer then has in his hands. If the banker make default he is liable to his customer in an action for damages.5

Explanation 1.-A banker is entitled to have funds paid in a reasonable time before the customer draws against them in order that he may be aware of the state of accounts between them when the cheque is presented.

1 Cf. Smith v. Janes (1838), 20 Wend. 192, New York.

2 Serrel v. Derbyshire Ry. Co. (1850), 9 C. B. 811 at 828, 829; Cf. Bochm v. Stirling (1797), 7 T. R. 423.

3 Rothschild v. Corney (1829), 9 B. & C. 388.

4 First Nat. Bank v. Needham (1870), 29 Iowa R. 249; Cf. Himmelman v. Hotaling (1870), 6 Amer. R. 600.

5 Marzetti v. Williams (1830), 1 B. & Ad. 415; Whitaker v. Bank of England (1835), 1 C. M. & R. 744; Gray v. Johnston (1868), 3 L. R. H. L. 1, see at 14, per Ld. Westbury; Cf. Goodwin v. Robarts (1875), 10 L. R. Ex. at 351, Ex. Ch. As to the measure of damages, see Art. 209.

6 Whitaker v. Bank of England (1835), 1 C. M. & R. at 749-750, Parke, B.; Cf. Bransby v. East London Bank (1866), 14 L. T. N. S. 403.

cheques.

Explanation 2.-As regards banks having several Banker's duty to branches, where a customer has an account at one honour branch, the other branches at which he has no account are not bound to honour his cheques; but where a customer has accounts at two or more branches the bank is entitled to combine such accounts against him.2

NOTE. The combined accounts must be kept in the same right, e.g., a personal and a trust account cannot be combined. See the whole status of branch banks in regard to bills discussed by the Privy Council. Duty as to Bills.-The contract implied by law between banker and customer may of course be modified by special agreement, but apart from this money in the hands of a banker is in effect money lent, re-payable on demand, which may be either personal or by cheque. When a customer accepts a bill payable at his bankers it is an authority to the banker to pay it; 5 but qu. if the banker is bound to do so in the absence of special arrangement? In the case of a cheque he is protected against the consequences of a forged indorsement (Art. 263), in the case of a bill he is not (Art. 81). In the absence of special agreement a banker is clearly under no obligation to accept his customers bills (Art. 208), nor it seems is he bound to pay a bill, other than a cheque, drawn on him by a customer (Art. 208), and a post dated cheque known to be such is an ordinary bill of exchange payable after date. In the absence of special agreement, express or implied, founded on consideration, a banker is of course under no obligation to let a customer overdraw.8

bank

Art. 261. The authority of a banker to pay a Death or cheque drawn on him by a customer is determined ruptcy of by notice of the customer's death, or bankruptcy.10

1 Woodland v. Fear (1857), 7 E. & B. 519.

2 Garnet v. M'Kewan (1872), 8 L. R. Ex. 10.

9

3 Prince v. Oriental Bank (1878), 3 L. R. Ap. Ca. 325.

4 Cf. Pott v. Clegg (1847), 16 M. & W. 821; Foley v. Hill (1848), 2 H. L. Ca. 28.

Kymer v. Laurie (1849), 18 L. J. Q. B. 218.

6 Cf. Robarts v. Tucker (1851), 16 Q. B. at 579.

7 Forster v. Mackreth (1867), 2 L. R. Ex. 163; Cf. Emmanuel v. Robarts (1868),

9 B. & S. 121, and Art. 57.

8 Cumming v. Shand (1832), 29 L. J. Ex. at 132.

9 Rogerson v. Ladbroke (1822), 1 Bing. N. C. 93 ; Cf. Tate v. Hilbert (1793),

2 Ves. jr. at 118.

10 Vernon v. Hankey (1787), 2 T. R. 113; Ex parte Sharp (1844), 8 M. D. & D. 490.

drawer.

Death or bank

ruptcy of drawer.

Gift in

NOTE. The banker's duty to pay is determined by the fact of death or bankruptcy, but a payment made in ignorance of the fact is valid.

Art. 262. A cheque given by the drawer in conplation of templation of death must be presented for payment

contem

death.

by the donee before the drawer's death in order to entitle the donee to receive the amount out of the drawer's estate as a donatio mortis causâ.

ILLUSTRATIONS.

1. A. draws a cheque in favour of C., and in contemplation of death hands it to him as a gift. After A.'s death it is presented and payment refused. C. cannot claim for the amount against A.'s estate.1

2. A., in contemplation of death, draws a cheque and gives it to C. After A.'s death C. presents the cheque, and the bankers, in ignorance of A.'s death, pay it. C. can (probably) retain the money as against A.'s representatives.2

3. A., in contemplation of death, draws a cheque and gives it to C. Before A.'s death C. presents it for payment. The bankers refuse to pay it, because doubtful of A.'s signature. A. dies, and payment is subsequently refused on that ground. C., the donee, is entitled to receive the amount out of A.'s estate."

4. A., in contemplation of death, draws a cheque and gives it to C. Before A.'s death C. negotiates the cheque for value. The holder can claim for the amount against A.'s estate.*

NOTE. Cf. Art. 105. The position of the donee of a cheque is this he cannot enforce payment against the drawer's estate because he is not a holder for value (Art. 91), and the banker's authority to pay is revoked by notice of the drawer's death (Art. 261). A cheque given for value, it is conceived, is on the same footing as an ordinary bill of exchange. But, assuming that as between drawer and payee, it is a mere authority to receive the amount, still an authority coupled with an interest is not revoked by death,5

1 Hewitt v. Kaye (1868), 6 L. R. Eq. 198; Beak v. Beak (1872), 13 L. R. Eq. 489; Cf. Jones v. Lock (1865), 1 L. R. Ch. 25.

Cf. Tate v. Hilbert (1793), 2 Ves. jr. at 118. The bankers are justified in paying, see Art. 261.

Bromley v. Brunton (1868), 6 L. R. Eq. 275.

• Rolls v. Pearce (1877), 5 L. R. Ch. D. 730.

5 Cf. Hatch v. Searles (1854), 2 Sm. & G. at 151 and 155; see passim ; Snaith v. Mingay (1813), 1 M. & S at 95.

3

of cheque

forged in

Art. 263. A banker who, as drawee,' pays in good Payment faith a genuine cheque which is held under a forged held under or unauthorised indorsement, is deemed to have dorsement. paid the same in due course.*

ILLUSTRATIONS.

1. A. draws a cheque payable to C. or order. It is stolen, and C.'s indorsement is forged by the thief. The bankers on whom it is drawn pay it. They can debit A. with the amount so paid.

5

2. A., who is indebted to C., draws a cheque payable to C., or order, and gives it to X., who is C.'s agent. X., who has no authority to indorse cheques, indorses it "per proc" in C.'s name, obtains payment and makes away with the money. The loss falls

on C. He has no remedy against A. or the bankers."

3. A., who is indebted to C., draws a cheque payable to C. or order. The cheque is stolen while still in A.'s possession. C.'s indorsement is forged, and the cheque is paid. The loss falls on A., he has not paid C.; but if A. can find the person who presented the cheque for payment he can recover the money from him.8

9

Art. 264. A cheque on payment becomes the pro- Property in paid perty of the drawer, but the banker who pays it is cheque. entitled to keep it as a voucher until his account with his customer is settled.10

1 Cf. Ogden v. Benas (1874), 9 L. R. C. P. 513; see Halifax Union v. Wheelwright (1875), 10 L. R. Ex. 183, person acting in double capacity.

2 Hare v. Copland (1862), 13 Ir. C. L. R. at 433.

3 Cf. Orr v. Union Bank (1854), 1 Macq. H. L. Ca. 513.

4 16 & 17 Vict. c. 59, § 19, explained by C. A. in Charles v. Blackwell (1877) 2 L. R. C. P. D. at 156.

5 Id.

6 Charles v. Blackwell (1877), 2 L. R. C. P. D. 151, C. A.

7 Id. at 157.

8 Ogden v. Benas (1874), 9 L. R. C. P. 513.

9 R. v. Watts (1850), 2 Den. C. C. 15.

10 Cf. Charles v. Blackwell (1877), 2 L. R. C. P. D. at 162.

General and special crossings.

Who may

cross a

Crossed Cheques.

Art. 265. A cheque is crossed generally which bears across its face (a) the words " and company," or any abbreviation thereof, between two parallel transverse lines, either with or without the words "not negotiable," or (b) two parallel transverse lines simply, either with or without the words "not negotiable."

A cheque is crossed specially which bears across its face an addition of the name of a banker, either with or without the words "not negotiable."

Art. 266. An uncrossed cheque may be crossed cheque. generally or specially by any lawful holder, and a cheque crossed generally may be specially crossed by any lawful holder, and when a cheque is crossed generally or specially any lawful holder may add the words "not negotiable.'

Two or

more

special crossings.

Effect of

NOTE. Presumably a cheque may be crossed by the drawer, but the Act does not say so in terms, and as a rule the term holder does not include the drawer of a bill before issue.

Art. 267. Where a cheque is crossed specially to more than one banker, the banker on whom it is drawn must refuse payment thereof.3

Exception.--Where a cheque is crossed specially the banker to whom it is crossed may again cross it specially to another banker, his agent for collection.a

Art. 268. When the banker on whom a crossed drawer. cheque is drawn has in good faith and without negli

crossing on