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122

BANKING

[legal

attributed to the trust money. As between contending sec. 53). The holder of the cheque has therefore no claims to the money, based on different breaches of trust, claim on the banker in the event of payment being refused, his remedy being against the drawer and indorser, if any. the ordinary rule of appropriation will apply. It has often been suggested that the only method of On this section is also based the custom of English bankers withdrawing money from a banker is by cheque, that the not to pay part of the amount of a cheque where there presentation of a cheque is a condition precedent to the are funds, though not sufficient to meet the whole amount. liability of the banker to repay. This is not so; such a The section does not apply to Scotland, where it would view being inconsistent with the cases establishing the seem that the bank is bound to pay over what funds it effect of the Statute of Limitations on money left in has towards satisfaction of the cheque. A banker is a banker’s hands, and with the numerous cases in which entitled to hold paid cheques as vouchers until there has a balance at a bank has been attached as a simple been a settlement of account between him and the customer. and unconditional debt by a garnishee order, as, for The entries in a pass-book constitute privid facie evidence instance, in Rogers v. Whiteley, 1892, A. C. 118. The against the banker, and when returned by the customer banker’s position with regard to cheques is that, super- without comment, against him; but in either case such added to the relation of debtor and creditor, there is an evidence may be displaced by proof that the entries have obligation to honour the customer’s cheques provided the been made by mistake and do not represent the true state banker has a sufficient and available balance in his hands of the account. It has been held, however, that where for the purpose {Foley v. Hill). If, having such funds the customer has altered his position on the faith of in his hands, the banker dishonours a cheque, he is liable entries in the pass-book showing money to have been to the customer in substantial damages without proof of received, the banker cannot afterwards deny the receipt actual injury having accrued {Rolin v. Steward, 14 C. B. of such monies or retain others in satisfaction of them 595). It would further seem a legitimate condition that {Skyring v. Greenwood, 4 B. & C. 281). Acquiescence by the cheque should be drawn in the ordinary recognized the customer in a course of business indicated in the passform, not in one raising any question or doubt as to its book will justify the banker in treating such course of validity or effect. Cheques drawn to “wages or order,” business as established for the future so long as the “ petty cash or order,” or the like, are common, and are relation of banker and customer continues. In this usually regarded as payable to bearer. Such payees are manner the banker may acquire the right to charge not, however, “fictitious or non-existent persons,” so as to interest or even compound interest on overdrafts, neither render the cheques payable to the bearer under sec. 7, of which he is entitled to do at common law. The above-mentioned rule, by which the holder of a subs. 3 of the Bills of Exchange Act, 1882, hereinafter referred to, nor can such payees indorse. Some banks, cheque has no direct recourse against the banker who distherefore, refuse to pay such cheques, and it is conceived honours it, holds good even where the banker has they are justified in so doing. Money paid in so shortly marked or certified the cheque as good for the amount, before the presentation of the cheque that there would such marking not amounting to an acceptance by the not have been time to pass it through the books of the banker. As between banker and banker, however, such bank would not be treated as available for this purpose. marking or certifying probably amounts to a binding If a person have an account at one branch of a bank, he representation that the cheque will be paid. In the is not entitled to draw cheques on another branch where United States, on the contrary, a certified cheque gives he has either no account or is overdrawn, but the bank the holder a direct claim against the banker, and if the has, as against the customer, the right to combine accounts cheque be so certified at the instance of the holder this at different lbranches and treat them as one account operates as a complete discharge to the drawer. Where legislation has intervened for the protection of {Garnet v. M Etven, L. B. 8 Ex. 10). The very questionable practice of post-dating cheques the banker, it has usually been to counterbalance some has been the source of considerable doubt and incon- particular risk which would otherwise have been imposed venience to bankers. The use of such documents enables upon him by enactments primarily intended to safeguard the drawer to obtain the results of a bill at a fixed future the customer. Thus in 1853 the Stamp Act of that year date without the expense of a regular bill-stamp. But made a penny stamp sufficient for an order cheque as well the Bills of Exchange Act, 1882, sec. 13, subs. 1, as a bearer cheque, the object being the protection of the provides that “ a bill is not invalid by reason only that drawer by making it impossible for a wrongful holder to it is ante-dated or post-dated, or that it bears date on a obtain payment without committing forgery. But it was Sunday.” It seems very possible that the drawer may be recognized that this would cast a new burden on the liable to penalties under the Stamp Act, 1891, either for banker, who would obtain no discharge by paying on a issuing a document improperly stamped, or for executing forged indorsement. A section was therefore inserted an instrument in which all the facts and circumstances in the Act, relieving the banker from responsibility in affecting its liability to stamp duty are not truly set forth, case of payment on a forged or unauthorized indorsement, inasmuch as a post-dated cheque is not really payable on and the provisions of this section are practically re-enacted demand, but only on demand after a future date. These, by sec. 60 of the Bills of Exchange Act, 1882. It appears, however, are matters with which the banker is not con- however, very doubtful whether this section protects a cerned. He cannot refuse to pay a cheque presented banker who, according to the usual custom, demands and after the apparent date of its issue on the ground that he obtains the signature of an ostensible payee on the back knows it to have been post-dated. On the other hand, of an order cheque presented by him for payment in that he is entitled and indeed bound to refuse payment if such character. Such signature is not an indorsement within a cheque is presented before the apparent date of its sec. 2 of the Act, and the payment is not made on the forged indorsement, nor to him as indorsee, but as payee. issue. So again with crossed cheques. The custom of crossing The banker is bound to observe secrecy with respect to the customer’s account, unless good cause exists for cheques originated between bankers at the Clearing House, disclosure, and the obligation does not cease if the and was adopted by the public for a consider- Crossed account becomes overdrawn {Hardy v. Veasey, L. B. 3 Ex. able period before it received any legislative cheques. 107). In England a cheque is not an assignment of recognition or efficacy. At this stage such funds in the banker’s hands (Bills of Exchange Act, 1882, crossing only operated as a warning to the banker on