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126

BANKING

a specified period, are not cheques or negotiable instruments, though included in the above legislation. Bankers, therefore, would not be safe in collecting them for persons other than the actual payee, notwithstanding the crossing. The rule laid down by the House of Lords in Roger's v. Whiteley, 1892, A. C. 118, as to the course to be adopted by a banker on whom a garnishee order Ggrajsh nisi is served in respect of a judgment recovered o*™rss ee against his customer, appears to impose a hardship on the latter. The garnishee order binds all debts due or accruing due to the customer to answer the judgment debt. The House of Lords held that however much the balance to the customer’s credit exceeded the stated amount of the judgment debt, the banker, after service of the order, was entitled and indeed bound to hold the whole balance, and to dishonour all cheques of the customer presented after that date, whether drawn before the order was served or not. It was suggested in some of the judgments that steps might be taken to meats. this particular quality. It has been claimed modify this result of the process, but up to the present no that custom of the Stock Exchange to treat a alteration in the practice has been notified. Although, as before stated, a banker is entitled to security as fully negotiable is, apart from statute, the only trustworthy test. It would probably be more correct combine several accounts against the customer, he canto say, that in order to attain the status of full negotiability not do so in the face of an established course of business a security must be on its face negotiable and recognized as by which they are kept separate (Buckingham v. The such by the mercantile community of the United Kingdom London and Midland Bank, 12 Times L. R. 70). It is at large. Negotiability in the country of its origin is no further deducible from this case that a bank is not evidence of negotiability in England (Picker v. The London entitled arbitrarily to close a customer’s account when in and County Bank, 18 Q. B. D. 515). It has been contended credit by tendering him the balance, or offering to transfer on the authority of Crouch v. Credit Fancier, L. It. 8 Q. B. it to another bank. Provision must at least be made for 374, that, with regard to English securities, at any rate, outstanding cheques, and the practice of referring them to evidence of modern mercantile usage was inadmissible to another bank is not an adequate provision, as it involves affix the character of negotiability to an instrument not re- technical dishonour of the cheques. The Bankers’ Books Evidence Act, 1879, was passed cognized as negotiable by statute, or by that ancient custom of merchants which has been adopted by the common law. to obviate the inconvenience and dislocation of business The judgment of Mr. Justice Kennedy in the Bechuana- caused to bankers by their being compellable to land Exploration Company v. The London Trading Bank, produce their books in court, in legal proceedings elf*jence. Limited, 1898, 2 Q. B. 658, seems, however, to show con- to which they were not parties. It provides that clusively that this view is not in accordance with the duly authenticated copies of entries in such books shall decision of the House of Lords in Goodwin v. Robarts, be receivable as evidence of such entries, and the matters, 1 Ap. Cases, 476, and that when once a security, accounts, and transactions therein recorded, and that no whether English or foreign, is universally recognized and banker or officer of a bank shall in any legal proceedings, treated by the mercantile community of Great Britain as to which the bank is not a party, be compellable to produce negotiable, the fact of its acceptance as such being recent books or attend as a witness where such evidence could is no bar to its admission into the category of negotiable be supplied under the provisions of the Act unless a judge for special cause so orders. Provision is also made for securities. Bankers are affected or protected in certain cases by inspection of bankers’ books by parties to any legal special legislation annexing to particular classes of docu- proceedings who obtain a judge’s order for the purpose. ments incidents usually found in connexion with strictly Although the exercise of this latter power is not in terms negotiable instruments. Thus, section 95 of the Bills of limited to inspection of the account of one of the parties Exchange Act, 1882, extends to dividend warrants the to the litigation, an order will not be made for the provisions of the Act regarding crossed cheques; and inspection of the account of any other person save in sec. 17 of the Revenue Act, 1883, makes the same exceptional circumstances, such, for instance, as there provisions applicable to “any document issued by a being ground for believing that the account, though in customer of any banker, and intended to enable any another name, is substantially the account of the litigant person or body corporate to obtain payment from such (Pollock v. Garle, 1898, 1 Ch. 1 ; South Staffordshire banker of the sum of money mentioned in such document.” Tramways Co. v. Ebbsmith, 1898, 2 Q. B. 669). Banks frequently decline to open accounts under In dealing with such documents the banker must always headings denoting that the customer holds the money in a bear in mind that it is only the crossed cheques sections of the Act which are applied by the above-mentioned fiduciary capacity, such as that of trustee or executor. legislation. Unless the documents are in themselves But even if an account is so headed, or if the bank is negotiable, either as being cheques within the terms of the otherwise affected with notice of its being a trust Bills of Exchange Act, or as having acquired negotiability account, the bank is not entitled to raise any question by statute or custom, they remain non-negotiable and even whether cheques drawn on it are drawn for or applied non-transferable instruments, and must be treated as such. to proper purposes. Presumably, however, a banker The class of document, now so common, in which payment would be justified in refusing to honour a cheque Fiduciary is made conditional on an annexed receipt being signed, drawn on the account, the object of which accouats. dated, and presented with the order for payment, or in was to benefit himself, as, for instance, to pay which payment is made dependent on presentation within off an ascertained overdraft on the customer’s private

be absolute or by way of pledge, if he take it in good faith and for value, and before it is overdue, acquires an independent title, unaffected by any equities existing against previous holders. Their Lordships expressly disclaimed the idea that there was anything in the nature of the business of a stockbroker or money-dealer to put a bank on inquiry as to his authority to deal with securities in his hands tendered as cover for a personal advance. The possession by an agent of negotiable instruments is, in the absence of extrinsic suspicious circumstances, sufficient evidence of his authority to deal with them in any way he pleases. This view, being based on the essential character of negotiable instruments, only applies to such as are in their nature fully negotiable, that is, which possess the quality of vesting in a band-fide holder for value an independent title against all the world. Outside bills, notes, and cheques, the category of fully negotiable instruments is a somewhat indeterminate one. It includes all such securities as either by statute Negotiable or py ^6 custom of merchants have acquired