—— — Part
Business of Banking.
III.
Sub-Sect.
635
Other Negotiahh Securities.
4.
Sect.
18.
Securities
1280. AYliere a banker bond fide takes fully negotiable securities (6) as cover for an advance or overdraft, he is entitled to retain them vance until his debt is satisfied, notwithstanding that the borrower had no property in and was wrongfully dealing with the securities (c). Deposit of
Knowledge that the customer is a stockbroker or occupies a fiduciar}^ position, and that so the securities may possibly not be his own, does not put the banker on inquiry, if he have no reason to doubt the honesty of the person tendering them as security, and the latter purport to deal with them as his own property (tZ).
.
negotiable
Where the banker takes fully negotiable securities in the above circumstances, he is entitled either to have them redeemed by the true owner, or to satisfy his advances by means of them on default, or, where no time is fixed for repayment, on giving reasonable notice to the depositor (c). 1281.
If
a principal intrust
agent with securities which.
his
though not fully negotiable, purport on the face of them to convey all rights by mere transfer, especially if he hold out the agent as clothed with authority to transfer them as negotiable, such principal will be estopped from disputing the title of a banker who has taken the securities honci fide and for value from such agent, though the agent be acting for his own ends and in fraud of his principal (/) In each case the test is whether the possession by the agent and the terms of the document combined amount to a representation that the agent is invested with disposing power of a professedly negotiable instrument {g).
Dispositions agent,
.
Stjb-Sect.
1282. Stock and shares transferred to the banker {li)
.
and Shares. be utilised as security by being Advances on The method of transfer depend's on the g^^res^^
5.
Stock
may
the security. There was jio direct payment by the borrower, but this does not seem to affect the princif>le. In Jenkins v. Tongue (1860), 29 L. J. (ex.) 147, the note
was being enforced by the payee, but it is doubtful whether the effect is not confined to a hond fide holder from the payee ; see Glasscock v. Balls (1889), 24 It would be inequitable that the payee, having satisfied himself, Q. B, D. 13. should still be able to sue on the security. and cheques are fully (6) As to what securities other than bills, notes, negotiable, so as to come within this doctrine, see title Bills of Exchange etc. (c) London Joint Stock Bank v. Simmons, [1892] A. C. 201 ; Bentinck v. London Joint Stock Bank, [1893] 2 Ch. 120 Sheffield v. London Joint Stock Bank (1888), 13 App. Cas. 333, explained and distinguished in London Joint Stock Bank V. Simmons, supra. (d) London Joint Stock Bank v. Simmons, supra. (e) Deverges v. Sandeman, Clark & Co., [1902] 1 Ch. 579. (/) Goodwin v. Robarts (1876), 1 App. Cas. 476, 489 ; Easton v. London Joint Stock Bank (1886), 34 Ch. D. 95, per Bowen, L.J., at pp. 113, 114 ; Colonial Bank " If the owner V. Gady (1890), 15 App. Cas. 267, per Lord Herschell, at p. 285 of a chose in action clothes a third party with the apparent ownership and right of disposition of it, he is estopped from asserting his title as against a jjerson to whom such third party has disposed of it, and who has received it in good faith and for value." See also Lloyd's Bank, Ltd. v. Cooke, [1907] 1 K. B. 794. Farquhar(g) Colonial Bank v. Cady, supra, per Lord Halsbury, at p. 273 son Y. King, [1902] A. C. 325, per Lord Halsbury, at p. 330. For full treatment of this matter, see title Agency, pp. 201 et seq., ante. (h) For forms of memorandum of deposit, see Encyclopaedia of Forms, Vol. II.,
pp.
484—487.
