Bankees and Banking.
624 Sect.
13.
Letters of Credit and
Documentary
Bills.
In wrong hands.
In every case the party claiming must act strictly within the terms and limitations of the letter (g), and possession of the letter is not sufficient evidence that the person presenting is the grantee (h).
1260. Letters
of credit are not negotiable. If a person, on the of credit, pays or advances money to a person other than the grantee, the banker who granted the letter of credit will not be liable to the person who advanced or paid such money.
faith of the letter
the grantee of a letter of credit has paid or deposited money and the letter, having got into wrong hands, is utilised, and money obtained, in fraud of the grantee, he will be entitled to recover the amount against the banker, and the return of the letter of credit is not a condition precedent to such claim (h). If
in respect thereof,
Mode
of
using.
1261. The sums agreed to be advanced or paid to the grantee on a letter of credit may be obtained from the banker granting it by means of a cheque or by a demand of cash according as provided by the letter (i), but the drawing of documentary bills is the more To ensure acceptance the prescribed documents usual course. must accompany the bill or reach the bankers before or at the time
they are called upon to accept the Documentary bills.
Nonacceptance.
Acceptance.
A
bill.
which prescribes the forwarding of documents as a condition of acceptance, shown to a person and acted on by him, does not confer on such person or other holder of the bill any The provision as to documents is for the right to the goods. protection of the banker or acceptor (k). If the banker do not accept the bill of exchange, he has no right to retain any documents {e.g., bills of lading) sent in respect thereof, and no property in the goods represented thereby passes to him (1). If he accept the bill on the undertaking to forward bills of lading without actually having received them, the banker acquires an letter of credit
equitable claim to the bills of lading, valid against the customer's but not against a third person who took trustee in bankruptcy (m)
them bond fide, and EfPect of
acceptance.
for value (n).
the banker's accepting the bill and the documents coming to lien over and qualified property in the goods they represent (o). If he has to pay the acceptance, he can realise the goods, but it is advisable to apply to the customer for
On
his
hands he acquires a
British and American Exchange Banking (g) Brazilum and Portuguese Bank v. Union Bank of Canada v. Cole (1877), 47 L. J. Corporation (1868), 18 L. T. 82.3 and compare Chartered Bank of India, Australia and China, v. Macfadyen (c. P.) 100 <k Co. (1895), 1 Cora. Cas. 1. 1 Macq. 513 British Linen Co. v. ill) Orr V. Union Bank of Scotland (1854), Caledonian Insurance Co. (1861), 4 Macq. 107. ii) Morgan V. Lariviere (1875), L. "R. 7 H. L. 423, at p. 432. and see Ex parte {k) Re Barned's Banking Co. (1 871), L. R. 5 H. L. 157, at p. 167 Dever, Re Suse (1884), 13 Q. B. D. 766. Compare Cahn v. (1) Sale of Goods Act, 1893 (56 & 57 Vict. c. 71), s. 19 (3). Pocketfs Bristol Channel Steam Packet Co., [1899] I Q. B. 643. (m) Lutscher v, Comptoir d'Escompte de Paris (1876), 1 Q. B. D. 709. (n) See further on this point title Sale of Goods. He does not acquire (o) Sale of Goods Act, 1893 (56 & 57 Vict. c. 71), s. 19. absolute property in them, but a sufficient interest and right of disposition to See Re Barned's Banking constitute them sufficient security for his acceptance. Co., supra ; Ex parte Brett, Re Howe (1871), 6 Ch. App. 838, at p. 841.
