title or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment."° 90 The provisions of the Canada act are substantially the same as the foregoing. In the first section of the Canada act, the word bank is used instead of the words and company, and throughout the text the word bank appears where banker appears in the English act. To Section 76 of the Canada act, which is otherwise a counterpart of Section 77 of the English act, the following is added: (7) A crossed cheque may be reopened or uncrossed by the drawer writing between the transverse lines, and initialling the same, the words pay cash. NEGOTIABLE QUALITY OF CROSSED CHECKS 19. Before legislation on the subject, the common-law effect of crossing checks was not to restrain their negotiability." This deprived the true owner of a stolen check of a remedy against the paying bankers, because, it was held that the negotiability of the check was not affected by the crossing." To meet this difficulty the Crossed Cheques Act of 1876" was passed, in which not-negotiable provisions were introduced, giving a remedy to the true owner of a crossed check, if it were paid contrary to the crossing. These provisions were incorporated into the present law, the Bills of Exchange Act, 1882, which repealed the act of 1876. The effect of a not-negotiable crossing is to limit the negotiable quality of a check, but it is still transferable. The holder who has a good title can still transfer it, and the transferee is entitled to receive payment; but where the title of the transferrer is defective, a subsequent holder for value is deprived of the protection ordinarily afforded to a holder. in due course." For example, where a check crossed not negotiable was drawn in favor of a firm, and one of the 90 Eng. B. of E. Act, Sec. 82. 911 Moo. & M. (Eng.) 161 (1828); 7 Exch. (Eng.) 402 (1852). 921 Q. B. Div. 33 (Eng.) (1875). 93 39 & 40 Vict., c. 81. 94 Eng. B. of E. Act, Secs. 79 (2), 81. p. 259. partners in fraud of his copartner indorsed the check to a person who cashed it, it was held that the other partner who, under the terms of the partnership agreement, was entitled to the check could recover from the person who cashed it;" by the terms of the English bills of exchange act, the latter took no better title to the check than the person from whom he received it had."" Under the English law, therefore, as established by the Bills of Exchange Act, 1882, and judicial interpretation thereof, when an instrument, such as a crossed check, contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid between the parties, but it is not negotiable." PRESENTMENT OF CHECKS FOR PAYMENT 20. Presenting a check for payment is of greater importance than in the case of a bill of exchange, since a check is presumed to be drawn against funds on deposit, and a drawer ought to be at once notified, in case the bank refuses to pay it, so that he may take steps to secure his funds." 100 There is a difference in the matter of presentment for payment between the drawers of a check and a bill. The drawer of a check being the principal debtor is not discharged in default of due presentment for payment, while the drawer of a bill would be absolutely discharged in case of negligence to present it; yet, the drawer of a check is entitled to such presentment and notice as will protect him against loss.101 The indorser of a check is discharged if presentment for payment have been neglected. In this respect, the indorsers of a bill and a check stand on the same footing.10: 21. Presentment Must Be Within Reasonable Time. In order to charge the drawer and indorsers of a check, in 96 Times L. R. (Eng.), p. 354 (1890). 97 Eng. B. of E. Act, Sec. 81. 98 (1891) 1 Q. B. Div. (Eng.) 435; Eng. B. of E. Act, Sec. 8. 992 Dan. Neg. Inst., Sec. 1,583; 10 Wall. (U. S.) 647 (1870); 31 Pa. 100 (1857). 100 22 Gratt (Va.) 743 (1872). 1012 Dan. Neg. Inst., Sec. 1,587. 1021 Ld. Raym. (Eng.) 743 (1790). 103 case it is not paid, the holder must make presentment for payment of the check within a reasonable time.' In determining what is reasonable time, regard is had to the nature of the instrument, the usage of trade and of banks and bankers, and the facts of the particular case.1o The following well-established rules govern the matter of the time within which presentment for payment must be made:105 (1) If the person who receives a check and the banker on whom it is drawn be in the same place, the check must, in the absence of special circumstances, be presented for payment on the day after its receipt;10 (2) if the person who receives a check and the banker on whom it is drawn be in different places, in the absence of special circumstances, the check must be forwarded for presentment on the day after it is received, and the agent to whom it is forwarded must, in like manner, present it or forward it on the day after he receives it; (3) in computing time, non-business days must be excluded, and when a check is crossed, any delay caused by presenting the check pursuant to the crossing is probably excused.10 A check is received when delivered at the holder's place of business, and not before, although received earlier at his regular post-office address and then forwarded in due course to his place of business." 22. 109 107 Diligence Required in Presenting Checks. The rules which regulate diligence between drawer and payee apply as between indorser and indorsee of a check.11° Therefore, as between the latter, who becomes the holder by the indorsement, and the indorser, the check should be presented with due diligence, for, in order to entitle the holder to a suit against the indorser, he must show a demand for payment of the check and due diligence to 1032 McLean (U. S.) 19 (1839); N. Y. N. I. L., Sec. 322. 104 Eng. B. of E. Act, Sec. 74. 105 Chal. Dig. Eng. B. of E. Act (5th Ed.), p. 248. 107 30 L. J. C. P. (Eng.) 302 (1861); 30 N. 1102 Dan. Neg. Inst., Sec. 1,594. 1064 B. & Ad. (Eng.) 752 (1833); 29 W. N. Cas. (Pa.) 32 (1891). obtain the amount of it from the drawer, and also give notice of dishonor to the indorser." The indorser, to whom notice is duly given, is liable, although notice be not given by the holder to the drawer, or a prior indorser; this is the case equally as to foreign and inland bills and checks."2 113 Ordinarily, greater diligence is necessary in presenting checks for payment than is required in relation to bills of exchange.' There is no reason, generally, for the distinction as to the degree of diligence, because the fact that one instrument is drawn upon a bank and the other upon an individual can make no difference in principle concerning the duty of the holder; what is due diligence in one case is usually due diligence in the other." Apart, however, from the requirement that, to charge drawer and indorser, a check must be presented for payment within a reasonable time, according to the rules laid down, one who receives a check should exercise extra due diligence in demanding payment of it from the bank, as he may thereby avoid inconvenience and lessen the danger of probable loss to himself. For, if the holder of a check keep it an unreasonable time, he incurs great risk of loss. 115 A check is generally designed for immediate payment and not for circulation; therefore, it becomes the duty of the holder to present it for payment as soon as he reasonably may, and, if he do not, he keeps it at his own peril. By delay-` ing presentment, the effect would be, that the check not being presented for payment within a reasonable time and the bank or banker fails, the drawer having at the time of the failure sufficient money to his credit to meet the check, the drawer is discharged, and the holder is driven to an action against the banker's estate, which may not be sufficient to pay the demands upon it. If the drawer had no funds to his credit, but was authorized to overdraw, the drawer would still be discharged, but the holder could not recover against the banker's estate. 1113 Kent's Comm. (14th Ed., 1896) 176. 112 Ibid., p. 177. 113 13 Wend. (N. Y.) 549 (1835). 114 20 Wend. (N. Y.) 192 (1838). 1155 Ga. 251 (1848). The drawer of a check, as said before, is entitled to such presentment and notice as will protect him against loss; and negligence of the holder in not making presentment, or in not giving him notice of dishonor, does not absolutely discharge the drawer, unless he have suffered loss, and then only to the extent of such loss." Were it otherwise the drawer would profit by a neglect which could do him no injury; yet, the holder to recover against the drawer is put to the trouble of proving that the latter has no loss, since loss or injury to the drawer by non-presentment of a check is presumed." 116 As between the indorser and the holder of a check, the rule just stated does not apply. Neglect to make presentment within a reasonable time, notice of dishonor being given, discharges the indorser absolutely, regardless of the effect upon the drawer,' except where there be fraud on the part of the drawer in drawing the check and the indorser knew it." 118 The care used by a check holder to secure payment of the instrument is such as common prudence dictates to the careful business man. Usually, a check which is received in the morning of a business day, should be presented for payment or deposited for collection before the close of banking hours on the same day, and one received after banking hours, on the day next succeeding its receipt; secular days are here. meant.' 120 If a check drawn on a bank in Omaha, or other distant place of payment, be received in Scranton on any day after banking hours, due diligence is employed, if the check be deposited in the holder's bank to be forwarded for collection at any time the next day. If the next day be a legal holiday observed by the banks, any time on the following day will suffice to deposit the check;"" and it should be sent by the usual and accustomed channel of transmission to the distant place of payment, and need not be forwarded by the most direct route; because, if it be forwarded by a circuitous or 116 22 Gratt (Va.) 743 (1872). 1172 Dan. Neg. Inst., Sec. 1,587; 18 Conn. 360 (1847); 5 W. Va. 166 (1872). 1183 Kent's Comm. 104; 6 Cow. (N. Y.) 490 (1826). 1192 Litt. (Ky.) 297 (1822). 120 See subtitles Presentment for Payment, Bills and Notes, supra. 121 30 N. J. Law 284 (1863); 43 Neb. 791 (1895). |