—
— Part
III.
Business of Banking.
623
the case of bills, notes, and cheques, the position of holder for value enabling the banker to realise these when due but in the case of other negotiable instruments, e.g., bearer bonds, coming into the banker's hands in circumstances rendering them liable to the lien, the character of pledgee enables the banker to sell on default if a fixed time is appointed for repayment of the advance, or, where no time is fixed, after request for repayment and reasonable notice of
intention to
sell
Sect: 12.
The Banker's Lien.
(0-
1258. No lien arises in respect of an advance of a specified When lien amount made for a definite period until the arrival of the due date, ^^c™®^no debt owing till then nor can the banker retain customer against bills discounted by him for the customer, but not yet due, except perhaps in the case of the customer's bankruptcy (a). as there
moneys
is
of the
.
Sect. 13.
Letters of Credit
and Documentary
Bills.
1259. Apart from previous arrangement, a banker is of course not bound to accept bills dra,wn on him by or for his customer, When he does so, it is usually in pursuance of a letter of credit (/>).
A
may be either general (or open), i.e., addressed to whom it may be presented, or special, i.e., addressed
letter of credit
anybody
to
to a specified person, requesting him to make payments or advances or extend credit to the person to whom the letter is granted (c).
Where
the banker grants to a customer a letter of credit, it usually authorises the customer to draw on the banker to a specified amount against shipments of goods, bills of lading, or other documents of title, undertaking to accept such bills, provided the documents are transmitted with them (c?). Such letters are given for the purpose of being shown to third parties, and create a binding contract to accept the bills on the specified conditions, enforceable against the banker by any person to whom the letter has been shown by the grantee, and who has acted on the faith of it (e). Similarly when the letter requests payments to be made or money advanced apart from acceptance of bills, and such payments or advances are made to the grantee on production of the letter, the banker becomes liable to the party making them (/).
Ex {t) Burdich v. Sewell (1884), 13 Q. B. D. 159, per Bowen, L.J., at p. 174 parte Official Receiver, Re Morritt (1886), 18 Q. B. D. 222, at p. 232 Re Richardson (1885), 30 Ch. D. 396, per Fry, L.J., at p. 403 Deverges v. Sandeman, Clark d; Co., [1902] 1 Ch. 579. It is desirable to give notice of intention to sell, even when a time is fixed for repayment. The expression used by Lord Herschell in North Western Bank v. Poynter, Son and Macdonalds, [1895] A. C. 56, at p. 69, must either have reference to Scotch law, or to the absolute and immediate right of sale given in that case. {a) See note {I), p. 606, ante. (6) For forms of letter of credit and notice of letter of credit, see Encyclopaedia of Forms, Vol. II., p. 473.
See Union Bank of Canada v. Cole (1877). 47 L. J. (c. p.) 100, at p. 109. See Re Barned's Banking Co. (1871), L. E. 5 H. L. 157. (e) Maitland v. Chartered Mercantile Bank of India, London, and China (1869), Union Bank of Canada v. Cole, supra; Re Agra and Master38 L. J. (ch.) 363 man s Bank, Ex parte Asiatic Banking Corporation (1867), 2 Ch. App. 391. (/) See Morgan v. Lariviere (1875), L. R. 7 H. L. 423. (c)
{d)
Letters of c^^^^*^-
