Banker's Liability on Cheques.-Crossed Cheques.

373 reasonable time after he has effects; Marzetti v. Williams, 1 B. & Ad. 415; and the customer, if a trader, is entitled to temperate damages on his cheque being, under such circumstances, dishonoured, without showing special damage; Rolin v. Steward, 14 C. B. 595; 23 L. J., C. P. 148; and, a banker having been in the habit of cashing cheques of the plaintiff when there were securities of his at the bank, though the cash balance was against him, was held liable for dishonouring cheques under similar circumstances; Cumming v. Shand, 5 H. & N. 95 ; 29 L. J., Ex. 129. So, where the customer placed in his bankers' hands a sum to meet a particular bill, and the bankers, instead of meeting the bill, placed it to the credit of an overdrawn account, it was held that the bankers were liable for the amount of the bill. Hill v. Smith, 12 M. & W. 618. But, the bankers may, unless they have agreed otherwise, without notice to their customer, combine accounts he has with several branches of the bank, and dishonour his cheques, if on the whole state of account he have not sufficient assets; Garnett v. McKewan, L. R., 8 Ex. 10: for such branches form but one bank; Prince v. Oriental Bank Cor., 3 Ap. Ca. 325, P. C.; except for the purpose of honouring cheques drawn on a particular branch; Woodland v. Fear, 7 E. & B. 519; 26 L. J., Q. B. 202; and, of calculating the time for giving notice of dishonour. Clode v. Bayley, 12 M. & W. 51, ante, p. 349.

A customer is bound by the custom of bankers. Emanuel v. Robarts, 9 B. & S. 121. In this case, bankers were, on this ground, held justified in dishonouring a cheque which had been previously presented at the bank before it was due, and then marked "post-dated" by them. In consequence, however, of the repeal of the enactments prohibiting the post-dating of cheques (vide ante, p. 224) this custom no longer exists, and a banker will now pay a cheque, although it has been marked "post-dated."

Crossed Cheques.-Statute.] Sect. 76. (1) "Where a cheque bears across its face an addition of

(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;'

that addition constitutes a crossing, and the cheque is crossed generally." "(2.) Where a cheque bears across its face an addition of the name of a banker, either with or without the words 'not negotiable,' that addition constitutes a crossing, and the cheque is crossed specially, and to that banker.” Sect. 77. (1.) "A cheque may be crossed generally or specially by the drawer."

"(2.) Where a cheque is uncrossed, the holder may cross it generally or specially."

"(3.) Where a cheque is crossed generally the holder may cross it specially."

"(4.) Where a cheque is crossed generally or specially, the holder may add the words 'not negotiable.'

“(5.) Where a cheque is crossed specially, the banker to whom it is crossed may again cross it specially to another banker for collection."

(6.) Where an uncrossed cheque, or a cheque crossed generally, is sent

to a banker for collection, he may cross it specially to himself."

Sect. 78. "A crossing authorised by this Act is a material part of the cheque; it shall not be lawful for any person to obliterate or, except as authorised by this Act, to add to or alter the crossing."

66

Sect. 79. (1.) Where a cheque is crossed specially to more than one banker except when crossed to an agent for collection, being a banker, the banker on whom it is drawn shall refuse payment thereof."

(2.) Where the banker on whom a cheque is drawn which is so crossed, nevertheless pays the same, or pays a cheque crossed generally, otherwise than to a banker, or if crossed specially, otherwise than to the banker to whom it is crossed, or his agent for collection, being a banker, he is liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid.

Provided, that where a cheque is presented for payment which does not at the time of presentment appear to be crossed, or to have had a crossing which has been obliterated, or to have been added to, or altered otherwise than as authorised by this Act, the banker paying the cheque in good faith, and without negligence shall not be responsible, or incur any liability, nor shall the payment be questioned by reason of the cheque having been crossed, or of the crossing having been obliterated or having been added to or altered otherwise than as authorised by this Act, and of payment having been made otherwise than to a banker or to the banker to whom the cheque is or was crossed, or to his agent for collection being a banker, as the case may be."

Sect. 80. "Where the banker, on whom a crossed cheque" (vide sect. 77, ante, p. 373) "is drawn, in good faith and without negligence pays it, if crossed generally, to a banker, and if crossed specially, to the banker to whom it is crossed, or his agent for collection, being a banker, the banker paying the cheque, and, if the cheque has come into the hands of the payee, the drawer, shall respectively be entitled to the same rights and be placed in the same position as if payment of the cheque had been made to the true owner thereof."

Sect. 81. "Where a person takes a crossed cheque which bears on it the words 'not negotiable, he shall not have and shall not be capable of giving a better title to the cheque than that which the person from whom he took it had."

Sect. 82. "Where a banker in good faith and without negligence receives payment for a customer of a cheque crossed generally, or specially to himself, and the customer has no 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."

Sect. 95. "The provisions of this Act as to crossed cheques shall apply to a warrant for payment of dividend."

The above sections replace the Crossed Cheques Act, 1876, 39 & 40 Vict., c. 81, which was in very similar terms.

By the Revenue Act, 1883, 46 & 47 Vict. c. 55, s. 17, the above sections, 76-82, "shall extend to any document, issued by a customer of any banker, and intended to enable any person or body corporate, to obtain payment from such banker, of the sum mentioned in such document, and shall so extend, in like manner, as if the said document were a cheque;" it does not, however, "render such document a negotiable instrument." It applies to such documents drawn on the Paymaster-General by public officers.

As the crossing is by sect. 78, ante, p. 373, a material part of the cheque, any alteration thereof will in general (see sect. 64 (1), ante, p. 360) avoid the cheque.

The above sections do not affect the negotiability of a cheque, whether crossed generally or specially, unless also marked "not negotiable." See Smith v. Union Bank of London, L. R., 10 C. P. 291; 1 Q. B. D. 31, C. A. Hence, it seems that the bona fide holder for value of a cheque crossed only, without the addition of the words "not negotiable," is the true owner thereof, to whom the banker paying the cheque otherwise than as directed by the crossing is liable under sect. 79(2), supra, and, that the payee or other person who was formerly holder, but lost the cheque while in a negotiable state, has

Action on Promissory Notes.

375

no remedy given him by the section. See S. C. If, however, the cheque is also marked" not negotiable," then, although it continues to be transferable so that the holder for the time being can sue thereon, yet by sect. 81 the holder can have no better title than his transferor had. A banker, however, who bona fide and without negligence collects such a cheque for a customer, is protected by sect. 82. See Matthiessen v. L. & County Bank, 5 C. P. D. 7, decided on 39 & 40 Vict. c. 81, s. 12. The drawer of a cheque may ratify the payment made by his banker to a banker other than the one named in the crossing, and thereby make the payment a good payment by himself to the holder. Bobbett v. Pinkett, 1 Ex. D. 368.

Defences generally to Actions on Cheques.

Vide ante, p. 360.

Statute.]

ACTION ON PROMISSORY NOTES.

The general provisions of the Bill of Ex. Act, 1882, relating to promissory notes are as follows:

By sect. 83. "(1.) A promissory note is an unconditional promise in writing, made by one person to another, signed by the maker, engaging to pay, on demand, or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer."

"(2.) An instrument in the form of a note payable to maker's order is not a note within the meaning of this section unless and until it is indorsed by the maker."

(3.) A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof."

"(4.) A note which is, or on the face of it purports to be, both made and payable within the British Islands is an inland note. Any other note is a foreign note.'

Sect. 84. "A promissory note is inchoate and incomplete until delivery," vide sects. 2, 21, ante, pp. 318, 321, "thereof to the payee or bearer."

Sect. 85. "(1.) A promissory note may be made by two or more makers, and they may be liable thereon jointly, or jointly and severally, according to its tenour."

"(2.) Where a note runs 'I promise to pay' and is signed by two or more persons it is deemed to be their joint and several note."

Sect. 86. "(1.) Where a note payable on demand" (vide sect. 10, ante, p. 320) "has been indorsed, it must be presented for payment within a reasonable time of the indorsement. If it be not so presented the indorser is discharged.”

"(2.) In determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade, and the facts of the particular case." "(3.) Where a note payable on demand is negotiated, it is not deemed to be overdue, for the purpose of affecting the holder with defects of title of which he had no notice, by reason that it appears that a reasonable time for presenting it for payment has elapsed since its issue."

Sect. 89. "(1.) Subject to the provisions in this Part," (i.e. Part IV., comprising sects. 83 to 89) "and, except as by this section provided, the provisions of this Act" (sects. 1-72, vide ante, pp. 318-369), “relating to bills of exchange apply, with the necessary modifications, to promissory notes."

"(2.) În applying those provisions, the maker of a note, shall be deemed to correspond with the acceptor of a bill, and the first indorser of a note, shall be deemed to correspond with the drawer of an accepted bill, payable

to drawer's order."

"(3.) The following provisions as to bills do not apply to notes; namely, provisions relating thereto

(a.) Presentment for acceptance; (b.) Acceptance;

(c.) Acceptance supra protest;

(d.) Bills in a set."

(4.) Where a foreign note is dishonoured protest thereof is unnecessary." Sect. 91 (2), ante, p. 318, enables, but does not require a corporation to make a note under its common seal.

Sect. 86 (3), ante, p. 375, prevents sect. 36 (3), ante, p. 360, from applying to notes. It seems that by reason of the Stamp Acts (see sect. 97, ante, p. 319), sect. 56, ante, p. 357, does not apply to notes, vide ante, p. 231.

It follows from sect. 89, ante, p. 375, that the decisions on the corresponding sections relating to bills of exchange will apply to notes, vide ante, pp. 318-369.

Bank notes-Amount of note.] The acts relating to the issue of promissory notes payable to bearer on demand, or bank notes, are cited under Stamps— Bank notes, ante, p. 224. Such notes must not be for less than 5l., stat. 7 Geo. 4, c. 6, s. 3. Other restrictions were placed by stats. 48 Geo. 3, c. 88, s. 2, and 17 Geo. 3, c. 30, s. 1, but these are now repealed by the B. of Ex. Act, 1882, s. 96.

The plaintiff must be the holder of the note. Where a note was deposited with a stakeholder for the payee, and the stakeholder has refused to hand it over, the payee cannot sue on the note as holder. Latter v. White, L. R. 5 H. L. 578.

Payee against Maker.

Liability of Maker.] Sect. 88. "The maker of a promissory note by making it

(1.) Engages that he will pay it according to its tenour;

(2.) Is precluded from denying to a holder in due course" (vide sect. 29, ante, p. 322), "the existence of the payee and his then capacity to indorse."

Proof of making the note.] The making of the note is proved by proving the handwriting of the defendant; or, if made by an agent, by proof of the handwriting and authority of such agent. An admission by the defendant that the handwriting is his, will be sufficient proof, though it was made pending a treaty for a compromise. Waldridge v. Kennison, 1 Esp. 143. An offer on the part of the defendant, after the note has become due, to give another note to the plaintiff instead of it, is an admission of the plaintiff's title. Bosanquet v. Anderson, 6 Esp. 43. An admission of his signature by one of the parties, not being partners, will only be evidence against himself. Gray v. Palmers, 1 Esp. 135.

An agent who makes a note in his own name will be personally liable, unless he distinctly show on the face of it that he signs as agent only. See sect. 26, ante, p. 326. Thus, "On demand, we jointly and severally promise to pay E. H. or order 2501., value received, for and on behalf of the W. N. Association; P. S., J. W., Directors," was held to mean jointly and personally; and, therefore to make the persons signing individually liable. Healey v. Story, 3 Exch. 3; Penkivill v. Connell, 5 Exch. 381; Bottomley v. Fisher, 1 H. & C. 211; 31 L. J., Ex. 417. The same rule applies, where the note is a joint one only. Price v. Taylor, 5 H. & N. 540; 29 L. J., Ex. 331; Gray v. Raper, L. R., 1 C. P. 694; and Courtauld v. Sanders, 16 L. T., N. S. 562, T. T. 1867, C. P. So, where a note is signed by the directors of a company, and the seal of the company is affixed, they are personally liable, unless it appear on the note that they signed for the company only. Dutton v. Marsh, L. R., 6 Q. B. 361. But, where the defendants, being directors of the com

pany, signed the following note: "Three months after date we jointly promise to pay F. S. or order, 600l., for value received in stock, on account of the L. & B. Company, Limited, J. M., H. W. W., J. H., Directors," it was held that it sufficiently appeared that the note was made in the name of the company, within 19 & 20 Vict. c. 47, s. 43; and that the defendants were not personally liable. Lindus v. Melrose, 3 H. & N. 177; 27 L. J., Ex. 326, Ex. Ch.; Aggs v. Nicholson, 1 H. & N. 165; 25 L. J., Ex. 348. So, a promissory note in the form "On demand, I promise to pay A. & Co., or order, the sum of 1500l., with legal interest thereon until paid, value received. For Mistley, Thorpe, and Walton Ry. Co., J. S. Secretary," was held not to bind the secretary personally, although the directors were not empowered by their act of incorporation to bind the company by notes. Alexander v. Sizer, L. R., 4 Ex. 102. The Companies Act, 1862, s. 47, is similar, though wider in its terms; it is not affected by the B. of Ex. Act, 1882, vide sect. 97(2b), ante, p. 319. In Aggs v. Nicholson, supra, the court also rested their decision on the fact, which they held was in effect pleaded, that the defendants did not deliver the note, nor the plaintiff's take it, except as a note on behalf of the company; this is pointed out by Bramwell, B., in Price v. Taylor, ante, p. 376; and this would, at any rate, be an equitable defence; per Wilde, B., S. C. See Courtauld v. Sanders, 16 L. T., N. S. 468; where such a plea was pleaded, and Wake v. Harrop, 6 H. & N. 768; 30 L. J., Ex. 273; S. C. in error, i H. & C. 202; 31 L. J., Ex. 451. See further cases cited, ante, pp. 333, 334. When a note payable to the maker's own order is indorsed, it becomes a note payable to bearer, or to the indorsee, or his order, according as the indorsement is in blank or to a named person. Hooper v. Williams, 2 Exch. 13; Absolon v. Marks, 11 Q. B. 19; Brown v. De Winton, and Gay v. Lander, 6 C. B. 336. And, it makes no difference that there is a foot-note to it making it payable at a particular place. Masters v. Baretto, 8 C. B. 433. By sect. 7(2), ante, p. 320, a note may now be made payable to the holder of an office for the time being: this provision is new, see Cowie v. Stirling, 6 E. & B. 333; 25 L. J., Q. B. 335, Ex. Ch. "I promise to pay A. B. or order, three months after date, 100l., as per memorandum of agreement," is on the face of it, a negotiable promissory note; and if the effect of the agreement is to make it conditional, the defendant must show it by his statement of defence. Jury v. Barker, E. B. & E. 459; 27 L. J., Q. B. 255.

Presentment for payment.] By sect. 87. (1.) "Where a promissory note is in the body of it made payable at a particular place, it must be presented for payment at that place in order to render the maker liable. In any other case, presentment for payment is not necessary in order to render the maker liable." When a place for payment is specified in the body of the note, presentment there must be proved, though the maker may not be there to pay, and may have absconded, and left no effects there or other means of payment. Sands v. Clarke, 8 C. B. 751. The words " payable at," &c., at the foot of a note is, from mercantile usage, a memorandum only; Masters v. Baretto, supra; and per curiam in Warrington v. Early, 2 E. & B. 766; 23 L. J., Q. B. 48. See the cases on presentment to acceptor, ante, pp. 344, et seq. In an action on a note payable on demand, a demand need not be alleged or proved; for the action itself is a demand. Rumball v. Ball, 10 Mod. 38. It is otherwise if payable after sight. Holmes v. Kerrison, 2 Taunt. 323. By sect. 10 (1) (a), ante, p. 320, replacing (34 & 35 Vict. c. 74), s. 2, promissory notes payable at sight, or on presentation, are payable on demand. If a note be made payable at a particular town, and the maker has no residence there, a presentment at the banking-house there will support an allegation that it was presented there to the maker. Hardy v. Woodroofe, 2 Stark. 319. If a note be payable at two places, presentment at either is sufficient.