Bankers and Banking.
594 Sect.
3.
Collection of Cheques.
Conditions of protection.
Per ])ro. indorsement.
as stamping the bank identification stamp on the cheque {h) It has been suggested (c) that the protection does not extend to cheques obtained by larceny or analogous felony, but it is submitted this is not the case [d). .
1217. The banker's dealings throughout must be in good faith and without negligence {e). The alternative liability arising from negligence renders the question of good faith practically superfluous and it is seldom, if ever, raised. Negligence in this connection is breach of a statutory duty to the possible true owner, not the customer, the duty being not to disregard the interests of such true owner (/). It binds the banker to inquiry when there is anything to raise suspicion that the cheque is being wrongfully dealt with in being paid into the customer's account. A per pro. indorsement puts the banker on inquiry as to the authority of the person so indorsing, and disregard of this intimaAnd the inquiry must include not tion constitutes negligence (g) only the authority to indorse, but the authority to deal with the indorsed cheque in the manner proposed (h). The words '^per pro." Any cheque purporting to be indorsed in a are not essential. representative capacity stands on the same footing (i). Where the indorsement is authorised, the banker is not affected by the existence and where the indorsement and of unfulfilled conditions (k) application are authorised, he is not liable for misapplication of the proceeds in the absence of any ground of suspicion (Z). Apart from a procuration signature, any indication that the customer is using for his own benefit a document prima facie created for the benefit of, and being the property of, another person should put the banker on inquiry (m). Under this head would come cheques payable to rate-collectors, secretaries of companies or charitable institutions, and the like, under their official denominations, cheques payable to a partnership and indorsed by one partner paying in to his private account (w). Apart from the fact that the .
Cheques payable to officials.
Capital and Counties Bank v. Gordon, [1903] A. C. 240. Dicta of Lord Halsbury and Lord Brampton in Great Western Rail. Co. v. London and County Banking Co., [1901] A. C. 414, have been taken to imply this. {d) The customer cannot have less than no title, the contingency against which the banker is protected under sect. 82. The section only (e) Bills of Exchange Act, 1882 (45 & 46 Vict. c. 61), s. 82. specifically mentions the receipt of the money, but negligence in taking the cheque has always been held to preclude protection as necessarily involving the subsequent (6)
(c)
receipt.
(/) Bissell
V.
Fox
(1885), 53 L. T. 193.
Bills of Alexander v. Mackenzie (1848), 6 C. B. 766 25. 46 Vict. c. 61), {h) Gompertz v. Cook (1903), 20 T. L. R. 106. [i) Balfour v. Ernest (1859), 5 C. B. (n. s.) 601. [k) Re Land Credit Co. (1869), 4 Ch. App. 460. Bryant d; Co. v. Quebec [l) Bank of Bengal v. Macleod (1849), 7 Moo. P. C. C. 35 Bank, [1893] A. C. 170 Hambro v. Biirnand, [1904] 2 K. B. 10. {m) Hannan's Lake View Central, Ltd. v. Armstrong dh Co. (1900), 16 T. L. R. 236, where tbe secretary of a company indorsed a cheque payable to the company and paid it into a private account. The position would (?i) Bevan v. The National Bank (1906)_, 23 T. L. R. 65. seem to differ from that of a partner drawing on a partnership account and paying into a private account, as to which see Backhouse v. Ciiarlton (1878), 8 Ch. D. 445. {g) Bissell v.
Fox, supra
Exchange Act, 1882
(45
k
s.'
