UC-NRLF $B 37 53b LIBRARY OF THE UNIVERSITY OF CALIFORNIA. Class RT. Hon. sir JOHN LUBBOCK, BART., M.P. RICHARD B. MARTIN, ESQ., M.P. GEORGE RAE, Esq. ©reasureir. JOHN B. MARTIN, ESQ. Coutttil. H. p. BILLINGHURST London and Westminster Bank, Limited. HORACE GEORGE BOWBN Bank of England. ROBERT CAMPBELL National Bank of India, Limited. JOHN CHUMLBY Standard Bank of South Africa, Limited. NATHANIEL CORK Commercial Banking Company of Sydney, Ltd. ROBERT DAVIDSON Bank of Scotland. SIR JOSEPH COCKFIBLD DIMSDALB Messrs. Prescott, Dimsdale and Co., Limited. JOHN DUN Parr's Bank, Limited. CHAS. GOW London Joint Stock Bank, Limited. LUKE HANSARD Martin's Bank, Limited A. S. HARVEY Messrs. Glyn, Mills, Currie & Co. ALFRED HOARE Messrs. Hoare. WILLIAM HOWARD London and County Banking Co., Limited. C. T. MURDOCH, M.P Barclay & Co., Limited. R. H. INGLIS PALGRAVE, F.R.S. .. Barclay & Co., Limited, Great Yarmouth. D. G. H. POLLOCK City Bank, Limited. F. G. HILTON PRICE Messrs. Child & Co. T. G. ROBINSON National Provincial Bank of England, Limited. HON. H. D. RYDER Messrs. Coutts & Co. MARTIN RIDLEY SMITH Messrs. Smith, Payne & Smiths. GEORGE A. TUCKER Union Bank of London, Limited. J. L. WHBLEN National Bank, Limited. T. R. WILKINSON Williams Deacon and Manchester and Salford Bank, Limited, Manchester. ROBERT WILLIAMS, M.P Williams Deacon and Manchester and Salford Bank, Limited. Honorary ^tatim,\t%. LUKE HANSARD Martin's Bank, Limited. J. L. WHELBN National Bank, Limited. jankers. MARTIN'S BANK, Limited, 68, Lombard Street. Solititors. Messrs. JANSON, COBB & PEARSON, 41, Finsbury Circus, E.O. ^etularg. W. TALBOT AGAR. #fG«S. 34, CLEMENT'S LANE, B.C. ;BE:CJ.\:ii:: \:LALL, 3;, Barthclcmew Road, N.W. w Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Cdrpefration http://www.archive.org/details/bankingquestionsOOinstrich Cf|c Onstitutc of Bankers. .Questions on Banking Practice, From Vols. I — XII (inclusive) of the Journal. REVISED AND ISSUED UNDER THE SANCTION OF THE COUNCIL OF THE INSTITUTE. Classified and Indexed hy W. Talbot Agae, Barrlster-at-Law, Secretary of the Institute of BanTters. FOURTH EDITION.— ENLARGED AND REVISED. ►f^ PRICE FIVE SHILLINGS. Conbon: BLADES, EAST AND BLADES, 23, ABCHURCH LANE, E.C. EFFINGHAM WILSOX, ROYAL EXCHANGE. 1892. v\(? BLADES, EAST & BLADES, Primers, 23, ABCHTJRCn LANE, LONDON, B.C. GENERAL Prefatory Note to the First Edition. From the date of the estallishment of the Institute of Bankers the Council have received various Questions on Points of Practical Interest^ ivhich, together icith Answers thereto, have been published from time to time in the Journal. These Answers, ivithout claiming the authority of legal decisions or absolute infallibility in every detail of so murli complicated or contentious matter, are such as the Council, after careful consideration, have felt themselves justified in giving as representing the genercdly accepted practice of Bankers at the time. This book has been prepared with a view of rendering these Questions as readily accessible for reference as possible. Since the commencement of the issue of the Journcd, the passing of certain Acts of Parliament, such as the Bills of Exchange Act, the Married Woman's Property Act, and others have rendered necessary the alteration, and in some cases the entire omission, of certain Questions. The remainder have undergone careful revision by the Council, and are now issued with their approval. Note to the Fourth Edition. This Edition comprises the Questions contained in previous issues of the Work, and, in addition, those which have since appeared in the Journal of the Institute to the end of 1891. The whole Work has again undergone careful revision by the Council. 104690 QUESTIONS ON BANKING PRACTICE. BANKER— 1. — Question" : Banker A receives from his customer (or another bank through the post) a bill of £20 domiciled with bank in the same town. The bill is duly presented at maturity, and C tenders £16 in part payment, and marks the bill, "the balance £4 is promised to-morrow." Ought A to refuse the amount tendered, or, in the interest of his customer, to receive it ? Answer : A should refuse part payment. 2. — Question : Within what period must a banker present for payment cheques handed to him by his customer for credit ; and, if unpaid, when is the banker bound to return them or give notice te the customer ? Answer : A banker receiving cheques from his customer for credit has, with regard to cheques drawn on bankers and others in the same place, the whole of the day on which they are received and of the next day for presentation, and if unpaid, they should be returned to the customer either by post on the evening of the said next day or by hand on the following morning. 3. — Question : Give similar replies respecting cheques sent per post by another banker, both in the case of cheques drawn on the sendee, and of cheques drawn on bankers other than the sendee. Answer : With regard to cheques drawn on other places which have to be forwarded by post to an agent for collection, the banker has in like manner up to the evening of the day after receipt to post them to his agent, and the agent has up to the day after his receipt of them to present them to the drawees. A banker receiving cheques by post for payment drawn upon himself has the same time for presentment, it being held that he is acting as agent of the sender. (See Counsel's opinion. Question 4.) 4. — Question : A cheque drawn upon banker A. (say at Oxford), is paid to banker B (say at Bristol) by a customer for collection. B forwards it by the post of Monday to A (with whom he has no current account) with a request that the amount may be remitted in the usual 2 Questions on BanTcing Practice. BANKER — continued. course. A receives the cheque on Tuesday morning, retains it until Wednesday, and then returns it by post dishonoured to B. The usual, and it may be said almost invariable, course would have been to return it by the post of the day on which it was received, and B contends that A was under a legal obligation to do so. He argues upon the authority of the cases of Bailey v. Bodenham^ 32 L. J. (C. P.), 254 ; Prideaux v. Griddle^ 4L. R. (Q.B.),460; d^ndi Hey ivood\. Pickering, 9 L. R. (Q.B.), 432, that a presentment of the cheque through the medium of the post is a good presentment, and contends that it would be quite as reasonable for A to claim to retain a cheque pre- sented over the counter as to do so in the case of one presented through the post. A, on the other hand, contends that under the circumstances he became the agent of B for the purpose of presenting the cheque, that it was in that character, and not in his character of drawee, that the duty of returning the cheque or giving notice of dishonour to A was imposed upon him, and that, if this be so, his duty must be the same as if the cheque had been sent to him for presentation to another banker in the same town. It is admitted on both sides that in the latter case the cheque need not have been returned until "Wednesday. You are requested to advise what, under the circumstances stated, was A's legal obligation in reference to the return, or otherwise giving notice of dishonour of the cheque. (Opinion.) We are of opinion that the Oxford bank (A) on dishonouring the cheque is under no legal obligation to return the dishonoured cheque or send off notice of dishonour to the Bristol bank (B) until Wednesday, the day after the cheque was received. We think that in returning the dishonoured cheque and sending notice of dishonour the Oxford bank is acting, not in its capacity of drawee of the cheque, but as agent for the Bristol bank, and that its legal obligation is certainly fulfilled by its acting with reasonable diligence. According to all analogy, the bank would be acting with reasonable diligence if it returned the cheque and gave notice of dishonour on the Wednesday. Arthur Cohen, Q.C. M. D. Chalmers. 5. — Question : A B pays a country cheque to his account on a Monday, and being anxious to ascertain its fate without delay, requests his banker to forward it direct. The bank on which the cheque is drawn duly receives it on Tuesday, but does not return it until the following day, so that it is not received back unpaid until Questions on BanUng Practice. 3 BANKER — continued. Thursday. Not receiving it on Wednesday, the banker informed their chent that the cheque was cleared, and he acted accordins^ly. On representing the matter to the bank on which the cheque was drawn, they state that they are entitled to hold over the cheque until the second day, by the Bills oj Exchange Act Is this so ? Answer : The bank on which the cheque was drawn was entitled to hold it over until the day after receipt. See Question 4. The matter is not mentioned in the Bills of Exchange Act. 6. — Question : A bill of exchange is remitted for collection from bank A to bank B, at which office the bill has been accepted payable. Bank B, though the bill is dishonoured, retains it until the day following, then returning it by post, the bill not having been noted. Is bank B within its rights and free from all liability in thus retaining the bill and not getting it noted ? Would the answer be the same if it were a cheque drawn on bank B ? Might the Bills of Exchange Act, 1882, sec. 49, sub-sec. 6, 12, 13, and sec. 51, be quoted as a defence by bank B ? Answer : Bank B is quite in order in retaining the bill sent to him for collection until the day following receipt (See Question 4), and, if an inland bill, noting is not necessary. The retention of a cheque until the following day is equally permissible, unless it has passed through the country clearing, the rules of which require return of cheques by first post. 7. — Question : If a cheque on a bank be paid in to an account at the same bank, there being insufficient funds at the time to meet the cheque, should the cheque be returned unpaid at once ? Or, if held, should the customer who pays it in be informed that the cheque is doubtful ? Answer : The cheque may be held till the next day, and no information need be given to the customer paying it in. 8. — Question : Bearing in mind sections 49, 12 h, and 73 of the Bills of Exchange Act, 1882, it would seem that (inasmuch as a cheque is a bill of exchange payable on demand) it would be legal for a banker to retain until the day following a cheque received from another bank by post, or through the country clearing. But it would be contrary to custom to do so. If it is ruled that custom would override law, would the case be altered if notice of dishonour had been given by telegraph on the said day following ? Answer : It would be legal for a banker to retain a cheque which he had received by post from another banker till the following day, B 2 4 Questions on Banking Practice. BANKER — continued. but by the rules of the country clearing a cheque should be returned the same day, though notice by telegram the following morning would save recourse. 9. — Question : A customer of a bank pays in* to his credit a cheque draw^n by one of the bank's own customers which is received without comment. Is it open to the bank to afterwards return the cheque, and if so, within what time ? Answer : Within the day following. 10. — Question : A cash order on demand, drawn in France in francs, is remitted by a London banker to a country town for collec- tion, reaching the banker there by first postal delivery. In the evening of that day he sends a post-card acknowledging receipt, and quoting a sterling amount. At the close of business on the following or second day he returns the article unpaid. Was the country banker justified in holding over the cash order until second day without advice to remitter to that effect ? And was not his acknowledgment under such circumstances (quoting sterling amount) misleading ? Answer : The country banker was quite justified in holding over the draft in question till the next day after receipt by him, but the acknowledgment of such receii3t, with the sterling amount of the draft mentioned, might be misleading unless it were customary between the two banks to acknowledge immediately the receipt of all remittances without reference to their being encashed. 11. — Question : Can a banker return dishonoured a cheque which he has held till the evening of the day following that on which he received it, if he has acknowledged its receipt, but without stating whether paid or not ? Answer : It is the invariable practice of bankers in London, and, it is presumed, in England generally, to acknoAvledge receipt of remittances for the credit of a banking account on the day of receipt ; but such acknowledgment does not and is not intended to convey any advice that the cheques included in the remittance have been either presented or paid. On the contrary, both law and custom permit of such cheques being presented for payment either on the day of receipt or the day next following, and it is not cus- tomary to return them, if unpaid, until the evening of such following 12. — Question : A country banker sent a cheque for collection (and credit through his London Agents) to another country banker Questions on Banking Practice, 6 BANKER — continued. in England : as it was not received back unpaid the first thing on the morning of the second day after it was sent for collection, it was treated as paid. About middle-day a telegram was received, saying, the cheque was unpaid, and the cheque was returned the following morning, the drawer's banker having held it two days. They main- tain that they acted strictly within their legal rights in doing this. Is this correct ? They say the fact of their telegraphing was an act of courtesy on their part. If their contention is correct, what is gained in sending a cheque direct ? It might, apparently, just as well be sent in the ordinary course through the clearing. Answer : The drawer's bankers are right in their contention, and sending the telegram was a matter of courtesy. See Question 4. 13. — Question : May a bill, remitted by a London banker to a country banker for collection, be held by the latter without liability one day after maturity ? Case : A, of London, remits for collection and credit through London correspondent to B, of, say, Ipswich, bill due 24th inst. The acceptor requests B to hold the same until the 25th, when he will provide for it. B assents, but the bill is not met, and it is returned to A on the 25th inst., unpaid. Is B legally liable to A for the amount of the bill in this case ? Answer : A banker is legally entitled, and it is also the usual custom to hold over a bill remitted for collection until the day after maturity, if not honoured in due course ; but the notarial presenta- tion, if required, must be made on the day of maturity, although the bill be subsequently so held over. 14. — Question : May a banker in country towns, where there is no notary, retain bills sent for collection for one day after due date before returning them to their correspondents, as is done by London banks in the case of unpaid bills which are noted ? Answhr : It is quite usual, and legally correct, for bankers to retain bills in their hands that have been remitted to them for collection until the day after maturity, whether noted or not. 15. — Question : (ci) It is the custom in a provincial town to hold unpaid bills over for one day after their clue date ; can this practice be followed without prejudice to the holding bank ? Are not the holders likely to incur responsibility under section 49, subs. 12 {a and &), Bills of Exchange Act, 1882 ? {!)) How is the London custom of holding bills for one day after their maturity for the purpose of noting, reconciled with the above section. 6 Questions on Banhing Practice. BANKER — continued. Answee : (a) The custom mentioned is both usual and permissible, and the holders would not incur responsibility under the section named of the Bills of Exchange Act, 1882. (Jf) It is quite in accordance with the section in question ; the act of noting, however, always takes place on the day of maturity. 16. — Question : Can a country banker hold over — with or without notice — a cheque sent through the Clearing House, until the evening of the next day after receiving the same ? Answer : By the regulations of the Clearing House, country cheques must be paid, or returned if unpaid, on the day of receipt, and must not be held over until the following day. These regula- tions are necessary by reason of the loss of a day, in most cases, in sending the cheques up to London for clearing. 17. — Question : Country banker A forwards cheque through country clearing on country banker B. Cheque is unpaid by B and deducted from the amount paid through London the same day — but by accident it is not posted to A until the following day. Is B liable for delay ? Has B a right to hold it until the following day ? Can a country banker legally return unpaid clearing cheques through the London office ? Answer : As B has made use of the Clearing House, he must abide by its rules and return the cheque the same day. 18. — Question : It is the custom in some provincial towns for bankers to make a daily exchange, and give drafts in settlement of differences. Is a banker within his rights in returning a cheque on the following day, and is the presenting banker justified in taking it and debiting his customer ? Answer : No. 19. — Question : A crossed cheque for £280, dated London, November 15th, 1883, was drawn by Michael M. Gompertz, of London, upon the City Bank, Limited, Holborn Circus Branch, to the order of Mr. Delder, endorsed by him in blank to Mr. Jacobs, and by the latter endorsed to the Amsterdamsche Bank on November 6th, 1883. The Amsterdamsche Bank on November 6th endorsed and remitted the cheque to the Russian Bank for Foreign Trade, London, for collection. It reached the Russian Bank for Foreign Trade on November 7th, about 5 p.m. That bank paid the cheque into their account with Messrs. Glyn and Co. on November 8th, w^ho presented Questions on Banldng Practice. 7 BANKER — continued. it for payment to the Holborn Circus Branch of the City Bank on November 9th, when it was refused payment on the ground that the drawer was dead. His death occurred on November 8th. Having- regard to the nature of the cheque, the usage of the trade with regard to similar cheques, and the facts of this particular case, was the cheque presented for payment within a reasonable time after its- receipt by the Russian Bank for Foreign Trade ? And has the Amsterdamsche Bank recourse against the other endorsers ? Answer : The cheque was presented within a reasonable time, and dealt with in accordance with the custom of London bankers, and the endorsers are, therefore, not relieved from liability. 20. — Question: A, a merchant or banker, remits by post to B, a banker at another town, a cheque on the sendee for payment. It arrives on Tuesday morning. Such remittance is held to constitute B the remitter's agent for collection, and to entitle him to the whole of Wednesday for presentment. Within what time must he send off notice of dishonour ? The transaction is, by supposition, an isolated one, and the parties are strangers. Agency is, in a manner, thrust upon B. He appears to be entitled in this case, if ever, to the full legal rights of |his position. Is he bound to send off notice earlier than by post at a convenient hour on Thursday, the day following the dishonour of the cheque ? Would it make any difference if the remittance were a bill due on the day of receipt ? Answer : Notice should be sent off on Wednesday in both cases. 21. — Question : Is a banker justified in dishonouring a customer's cheque, who has sufficient funds in his hands to pay the same, on the ground merely that had he (the banker) paid the cheque there would not have been sufficient balance left on the account to pay the charges incurred to date. In other words, do a banker's charges, whether composed of interest and commission, or commission only, accrue from day to day, so that they become due and owing, and capable of being debited or set off without notice to the customer ? Answer : The banker would not be justified in dishonouring a customer's cheque under the circumstances mentioned. 22. — Question : A customer has two current accounts at his bankers. Number one is overdrawn £20, and number two is in credit £20. Would the banker be right in returning cheques drawn on number two account, in order to retain the balance on that account as a set-off to the overdraft on number one ? Answer : He would be justified in so doing; 8 Questions on Banking Practice. BANKER — continued. 23. — Question : Is a banker justified in refusing to pay an acceptance of his customer made payable to the order of the drawers, B and Co., when the signature of B and Co. on the bill as first endorsers differs entirely from the signature of B and Co. as drawers ? Answer : As in most firms more than one partner signs the signature of the firm, it occasionally happens that bills are drawn in the name of the firm by one partner and endorsed by another. A banker would not in such cases refuse payment of a bill on accouut of the difference in the signatures of the firm as drawers and as endorsers, unless he had reason to suspect the genuineness of either, although he would do so at his own risk ; whilst, on the other hand, he would pay it at his own risk. 24. — Question : A bill, dated Copenhagen, one month after date, upon a firm at Leeds, and drawn or marked payable in London, but not at any place of business or residence of some person other than the drawee. Also marked in need with Messrs. Blank, Bros., and Co., London. The bill is presented at Leeds for acceptance ; acceptance being refused, it is protested, and then sent to London to be presented to the " in need." He accepts for honour, making it payable at his bankers in London. When the bill is due, where should it be on day of maturity for presentation for payment, or protest for non-payment, if necessary ? Does sec. 51, sub-sec. 6 h govern, or does it come under sec. 67, sub-sees. 1 and 2 ? "What influence has sec. 45, sub-sec. 4 h, or sec. 97, sub-sec. 2, over the line of action to be taken in such cases ? What is the proper course to take ? Ans'wer : Assuming that the bill has been duly protested for non- acceptance in Leeds, it should be presented pro forma in London at maturity, and protested, after which application should be made to the " case of need " in London. 25. — Question : A merchant in London sends a crossed cheque to a Berlin firm, who pays it into their bank. The cheque is stamped by the Berlin bank, and endorsed by them specially to a private person in London, by whom it is presented over the counter of the London bank. Wbat is the duty of the London bank ? Should they refuse payment of the cheque over the counter on the ground of its being crossed, or should the special endorsement of tbe Berlin bank be held to annul that duty ? Answer : The endorsements to a cheque in no way alter its nature as to the crossing, and, the cheque referred to should be paid only to Questions on BanTci7ig Practice. 9 BANKER — co7itinued. a banker, such being the indication given by the drawer when crossing the cheque. 26. — Question : " Harleston, 25th March, 1884. " Norfolk and Suffolk Joint Stock Bank, " Harleston Branch. " Pay to the order of Mr. William Smith, Five Pounds. " £5 " Charles Browne. " London Agents — Jones and Co." (Crossed Norfolk and Suffolk Joint Stock Bank, Yarmouth.) The manager of the bank to whom this cheque is crossed has written to drawer intimating to him that if he wishes his cheques to be cashed over the counter, the drawer must discontinue to cross them. Drawer writes to Yarmouth manager for explanation as to the grounds for his refusing payment if he continued to cross them, and the Yarmouth manager refers drawer to Crossed Clieqiie Act, 39 and 40 Vict., chap. 81, sec. 7. The payee and the drawer's signature are both known to the bank to whom the cheque is crossed. Which is the right contention ? Answ^er : The cheque set forth at the head of this question is not drawn on the bank at Yarmouth, and if the amount be obtained by the payee from that bank it is merely an exchange operation, and the cheque is subsequently transmitted from Yarmouth to Harleston for payment in account or otherwise. Hence the crossing is quite in ■order. The section quoted of the Crossed Cheques Act refers to the duty of the banker on ichom the cheque is draivn, not to the one who merely exchanges a cheque. The Crossed Cheqiies Act, however, is repealed, but its provisions, including the section referred to, are re-enacted by the Bills of Exchange Act, 1882. 27. — Question : One branch of a hmited joint stock bank lauthorises another branch of the same bank to honour a certain cheque, the particulars of which are clearly defined. When the cheque is presented, payment is refused on the sole ground that the cheque is crossed. Is the branch which has been authorised to pay justified in their refusal ? AnsW'ER : No. (See previous Answer.) 28. — Question : Referring to Question 26, is it to be understood that there is now no duty laid upon a banker by law with regard to the exchanging of crossed cheques upon another bank ; or, in other words, can an exchanging banker treat them as if they are open and ] Questions on BanTcing Practice, BANKER — continued. uncrossed cheque, and cash them across the counter ? If the cheques are marked " not negotiable," can the exchanging banker safely cash them across the counter, or must he invariably pass them through a customer's account ? Answer : If a banker gives cash across his counter for crossed cheques on another banker, he does so at his own risk. 29. — Question : Is a banker cashing a cheque crossed " & Co." drawn on another bank, or bank in another town, bound to identify the payee, and if through neghgence the amount of such cheque were paid to a wrong person, would he, as the banker who paid the cash for such cheque, be liable to the bank on which the cheque was drawn, for the amount ? Answer : If the cheque were " to bearer " the bank would not be liable. If the cheque were " to order " the cashing bank would be liable for the amount to the true owner of the cheque. 30. — Question : A banker receives for collection from a customer or correspondent a cash order payable on demand, and takes in payment of it the drawee's cheque on his own banker, giving up the cash order in exchange. The cheque, on presentation for payment, is dishonoured. Is the collecting banker entitled to hand the dis- honoured cheque to his customer or correspondent in lieu of the order, or does he, in taking the cheque, take the whole risk and responsibility on himself. Answer : The banker is quite justified in returning the dis- honoured cheque to his customer, who thereby obtains a document possibly of more value than the cash order, inasmuch as the cheque can be sued upon. At the same time the banker assumes a responsi- bility upon himself by giving up the cash order in exchange for a cheque. 31. — Question : Would a bank be justified in paying cash over the counter for a crossed cheque presented by a loan office styling itself a bank ? Answer : A bank paying cash over the counter for a crossed cheque presented by a loan office styling itself a bank would do so at its own risk, unless the loan office had made a return as a banker to the Inland Revenue Office. 32. — Question : Is a banker liable if he pays a cheque after he has been instructed by the drawer (his client) to stop payment of the same ? Answer : Yes. Questions on Banhing Practice. 11 BANKER — continued. 33. — Question : Banker A receives a telegram from Banker B, asking whether a cheque of C's for £10, drawn on A, will, if presented, be paid. A telegraphs in reply, *' Yes, if in order." Before the cheque is actually presented, gives A instructions to stop payment of the cheque. Would A be justified in acting on such instructions, and returning the cheque with the answer " Payment stopped " .^ Answer : He would. 34. — Question : A paid to B an open cheque for £20, drawn by A on the S Bank, which B losing, he at once telegraphed particulars to the S Bank, requesting that they would stop payment of the cheque. The bank in reply telegraphed to B, " Impossible to stop " cheque without direct orders from drawer of cheque, which please " forward." What liability, if any, would have been incurred by the bank, had they, in spite of the notice, paid the cheque to an unlawful owner over the counter .^ Answer : None, unless the cheque had been drawn to the order of B who informed S Bank that he had not endorsed it, and such notice reached S Bank before presentation of the cheque. 35. — Question : A banker receives the usual notice from the drawer to stop a certain cheque ; how long does the banker remain liable under such notice for wrongful payment ? By law or by custom .^ May a banker limit his own liability on stopped cheques, say to three months ? Answer : By English banking practice a stop on a cheque is a stop in perpetuity. Cheques are generally considered stale after six or twelve months, according to the custom of different banks, so that after that period a cheque would be returned on that ground, apart from the stop. It is probable that by law the Statute of Limitations would limit a banker's liability to six years. 36. — Question : A, a bankrupt, presents an open cheque on the bank drawn by B, in the bankrupt's favour. Has the bank any right to refuse payment on the grounds of knowing the payee to be a bankrupt — the drawer at the time having funds to meet the cheque ? If refused, marked " Payee bankrupt," would an action lie against the bank for so refusing ? Answer : The banker is bound to obey his customer's instructions, and should honour the cheque. 12 Questions on Banking Practice. BANKER — continued, 37. — Question : Can a banker evade the consequences incurred by his paying a " stopped " cheque, if he give the chent notice when receiving the " stop " that he will not hold himself responsible for any loss that may be incurred if it be paid inadvertently ? Answer : Such a provision introduces a new stipulation between a banker and his customer, and must be a matter for special arrange- ment. 38. — Question : A. person wishing to stop payment of a cheque fills in and signs one of his banker's " stop" forms. This form contains a clause to the effect that, should the cheque be paid by mistake, the customer will not hold the banker liable. The cheque is eventually paid in error. . Has the customer any remedy against the banker ? Answer : No. 39. — Question : A, a banker, cashes for B, not a customer, an open cheque for £25, drawn by C, on banker I). A charges B the usual commission and sends the cheque for exchange to D, who returns it to him marked " Payment stopped." What is the proper course for A to pursue ? Answer : A's primary recourse is against B, but failing that, he would, under the circumstances, apparently have a perfect right to sue the drawer. 40. — Question: A stockbroker has a loan of £10,000 from a banker upon the security of bearer bonds. On settling day he hands to the banker his cheque for £10,000 and receives back the security, the balance on his current account being £8,000 short of the amount of the cheque. In the event of his not paying in to meet the cheque, has the banker not lost all claim upon the securities, and could he only sue the stockbroker on the cheque ? Would the banker retain his hold on the security (assuming his previous title to be un- assailable) if instead of accepting his customer's cheque, he were to require him to sign a form borrowing the security, and requesting the banker to debit his account if the security be not returned by the end of the day ? Would the banker be in a better position if, without requiring his customer to sign anything more than a receipt, instead of taking a cheque he merely made a note to debit his account with the amount ? Answer : It is to be presumed that the stockbroker to the knowledge of the banker takes the bearer bonds with the object, not of retaining them in his own custody, but of handing them over to a third person. If this be so, it seems to us that the banker's security is for all practical purposes gone when he parts with the bonds. We know of no plan consistent with the ordinary course of QuestiQus on BanUng Practice. 13 BANKER — continued. business by which a banker could reserve the right to follow the bonds in the hands of a third person to whom they had been delivered for value without notice of the banker's charge. 41. — Question" : The Clerk to the Highway Board, in the Northbridge district, A. Sharp, has sent to him from the Chalkshire County Council, a cheque for £155, for purposes connected with the Board. The cheque was crossed and made payable to Sharp's order. He, wishing to decamp with the money, takes the cheque to the Chalkshire Bank and demands payment. The bank at first demur, but upon someone satisfying them that he really is Sharp, the Clerk to the Highway Board, they pay him the money, which he goes off with. Are the bank liable ? Answer : Yes ; they should not have cashed a crossed cheque over the counter. 42. — Question : Referring to Question 41 and the Answer thereto, presumably the cheque in question was drawn upon the bankers cashing it. Would not the Chalkshire Bank still be liable had the cheque been drawn upon a bank other than themselves ? Answer : Yes. 43. — Question : A cheque drawn on the Coalfield Branch of the North Greenshire Bank is presented at Deepbrook Branch ; the cashier there, knowing the drawer to be perfectly safe, cashes it without hesitation. It is returned from Coalfield, with the state- ment, " Payment stopped." The payee turns out to be poor, and incapable of repaying the amount (practically insolvent, in fact). The drawer repudiates responsibility, having stopped the payment. Can the cashier, as innocent holder, having cashed the cheque on the faith of the drawer's signature, recover ? Will his power to do so be affected by the fact that he is an officer in a branch of the bank on which the cheque is drawn ? or, by the fact that the cheque was accidentally cancelled at Coalfield, and is marked " Cancelled in error " ? Answer : The cashier having cashed a cheque drawn on another branch, cannot recover from the drawer, nor will his liability be affected by any of the circumstances suggested. [Referring to Question 43, the attention of the Council has been called to the apparent inconsistency of the answer with that given to Question 39. The answer given to Question 43 was, however, based on the supposition that the cheque referred to was actually paid at a branch of the bank upon which it was drawn, and that having been 14 Questions on BanUng Practice, BANKER— co^ifowwe^. so paid bj the bank, ifc was not recoverable irom the drawer, if he had given instructions to the bank to stop payment. If, on the other hand, the cheque had been merely exchanged at the branch at which it was presented, and then sent forward for payment to the office on which it was drawn, there would appear to be no reason why the branch who had exchanged the cheque and given value for it, should not have recourse on the drawer as hand fide holders for value.] 44. — Question : A firm pays to its credit a cheque drawn by a customer of the bank at the same office, handing its pass-book for entry therein to its credit, which is done without reference to the account at the time. A few minutes afterwards it is found that the drawer has not funds to his credit to cover it, Avhen it is immediately returned w4th the reply " Eefer to drawer." Does the fact of the cheque having been entered in the pass-book to credit render the bank absolutely liable, leaving its only recourse against the drawer ? Answer : No. 45. — Question : A customer's credit being entered in his pass- book as "cash" when it consists of country cheques, has he the right to draw as against cash, and would the bank be culpable in dishonouring such cheques ? Answer : A banker would probably be held liable to his customers for entries of " cash " made in the pass-book, and for dishonouring cheques drawn against such entries. 46. — Question : What is a banker's position with regard to his liability for payment to the holder for value, if the banker deals as follows with his customer's cheque, drawn upon his bank : The cheque is dated April 28th, and presented on the 30th, but refused payment, with answer marked thereon, " Ee-present 7th," and after re-presentation on the 7th, again dishonoured, with the words " Re-present 7th " crossed out, and " Refer to drawer " substituted ? Answer : The answer, " Re-present 7th," is very irregular, but does not imply any promise to pay on that day, and the banker is under no liability to the holder for value. 47. — Question : F. C, who has always kept a good credit balance, and has never asked his bankers for an overdraft, writes to them as follows : — " To the Provincial Banh. " Gentlemen, — I shall feel obliged by your honouring the " cheques drawn on my behalf by Mr. John Smith, of whose Questions on Banlcing Practice, • 15 BANKER — continued. " signature I append a specimen, charging the same to my account " with you. " Yours truly, " F. 0. " Specimen of signature, ''p.p. F. C, " John Smith." John Smith, without F. C.'s knowledge, is allowed by the bankers to overdraw the account, and absconds with the money he has drawn out. The bankers apply to F. C. for payment of the overdraft, and he repudiates any liability, on the plea that his letter giving J. Smith power to sign cheques made no mention of any overdraft. Is F. 0. liable for the overdraft ? Answer : No. The bankers, under the circumstances, should not have allowed the account to be overdrawn. 48. — Question : In cases of doubtful or incomplete endorsements it is a frequent occurrence for bankers to give as an answer " Endorse- " ment irregular (or incomplete, as the case may be) ; will pay on " banker's guarantee." Supposing the acceptor of the bill or drawer of the cheque stops payment, or fails before a re-presentation can be made, is the banker bound by his answer (" will pay," &c.) ? Answer : No ; The answer given merely applies to the question of the irregularity. A second presentation stands on its own merits. 49. — Question : Whether any liability would be incurred by holding a certificate of shares in a joint stock company under an equitable charge with an undertaking to transfer, notice of such charge being given to the company, and, if so, whether there would be any liability if no notice were given ? Answer : We are of opinion that no liability could attach to a banker in respect of the shares of a joint stock company held by him as security, with or without notice of lien, unless the shares were actually transferred into his name. 50. — Question : Does any responsibility attach to a banker who, in returning a cheque unpaid, marked with one of the usual answers — "Not provided for," "Eefer to drawer," &c. — at the same time requests the bank to whom it is returned to " please " present again," and expresses an opinion that the cheque will be paid on re-presentation ? Is the banker bound to honour the cheque when it is re-presented (within a reasonable time, say return of X6 . Questions on Banking Practice. BANKEE — continued, post), if no funds have in the meantime come into the account ? or, secondly, if sufficient funds have been passed to credit, but afterwards paid away to meet other cheques, &c. ? Answer : The banker would not incur any responsibility in connection with such an answer to a cheque as that indicated, and would not be bound to honour it on re-presentation unless in funds to do so when re-presented. 51. — Question : A banker advances his customer £750 against a £1,000 debenture stock, the certificate of which is lodged with the bank, together with a transfer executed in blank, and a written authority, giving the banker power to sell the stock at any time, and apply the proceeds in payment of his customer's indebtedness. Two years after the advance was made, and during its continuance, the bank receives notice that the stock is trust money, and that his customer has no right to pledge it. Assuming the customer to fail, on whom would the loss fall, the banker wiio made the advance in the usual course of business, without knowledge of a trust, and with no trust disclosed on the face of the stock certificate, or the parties for whom the customer w^as trustee ? Answer : The loss would fall upon the banker, whose security would not be complete, under the circumstances stated in the question, unless the stock were actually transferred and registered in his name in the books of the company. (This was decided by the House of Lords in the case of the Shropshire Union Railivaijs and Canal Comimny v. The Queen. Law Eeports, English and Irish Appeals, p. 500). 52. — Question : At the request of a customer a country banker draws a draft payable to a third party upon his bankers in London. Is the country banker entitled to stop payment of it upon the instructions of his customer without enquiry, or does he incur risk by so doing ? Answer : If the country banker stops payment of the draft upon the instructions of his customer, and it turns out that the draft has come to the hands of a person who is the holder of it in due course, he (the country banker) is liable to be sued by the holder. 53. — Question : A branch bank cashes under running advice to " honour cheques " the cheques of a customer of the advising branch ; or one banker does the like under similar advice from another banker. "Would the branch or banker so cashing a cheque to order be liable in the event of forgery of the payee's endorsement, or be considered as Questions on Banking Practice, 17 BANKER — continued. merely acting for the party advising, and be free from any liability that would not also attach to the party advising ? How would the decision in Ogden v. Benas"^ affect the case ? Answer : "We think that a branch bank cashing a cheque would be subject to the same liability, and no more, as would attach to the advising branch upon which the cheque was drawn. We think one banker cashing a cheque under advice from another banker would, upon the principle laid down in Ogden v. Benas, be liable to the true owner in the event of forgery of the payee's name. Whether he would be entitled to indemnity from the advising banker would depend upon the terms of the arrangement between them, and, assuming that the arrangement was such as to entitle him to indemnity, the right of the advising banker in his turn to be indemnified by his customer would also depend upon the terms of the arrangement between them. It would be advisable in all cases where a banker is asked to cash a cheque not drawn upon him, that a clear arrangement should be made with regard to the respective liabilities, otherwise questions of great nicety might arise. 54. — Question : If a demand draft drawn on a bank ly its own branch bears a forged endorsement, can an innocent holder for value compel the bank to pay, either as drawer or drawee ? Answer : A bank may always refuse to pay a draft bearing a forged endorsement. 55. — Question : What is the liabihty of a banker for forged endorsements on drafts drawn by bank at a branch office on the head office, or on another branch ? (Case and Opinion). By the Bills of Exchange Act, 1882, 45 and 46 Vict., cap. 61, sec. 2, a " bill" is defined to mean a " bill of exchange," *' note " to mean " promissory note," and " holder " to mean " the payee or " indorsee of a bill or note who is in possession of it." Sec. 3 defines a bill of exchange as an unconditional order in writing addressed by one person to another. Sec. 82, sub-sec. 1, defines a promissory note as an unconditional promise in writing made by one person to another. Sec. 73 defines a cheque as a bill of exchange drawn on a banker payable on demand. By sec. 6, sub-sec. 2, it is enacted that where in a bill drawer and drawee are the same person the holder may treat the instrument at his option, either as a bill of exchange or as a promissory note. * 9 L.R.C.P., 513. 18 Questions on BanUng Practice, BANKER — continued. By sec. 60 when a bill payable to order on demand is drawn on a banker, and the banker on whom it is drawn pays the bill in good faith and in the ordinary course of business, he is deemed to have paid the bill in due course, although the endorsement has been forged. Sec. 73 is as follows : — A cheque is a bill of exchange drawn on a banker payable on demand. Except as otherwise provided in this part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque. Sec. 89, sub-sec. 1, is as follows : — Subject to the provisions in this part, and " except as by this section provided, the provisions of "this Act relating to bills of exchange apply with the necessary " modifications to promissory notes." Sec. 60 is not excepted, and therefore applies to cheques and promissory notes drawn on or by bankers as well as to bills. Sub-sec. 2 is as foUows : — In applying those provisions the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first indorser of " a note shall be deemed to correspond with " the drawer of an accepted bill payable to drawer's order." Sub-sec. 3 states the provisions which do not apply to notes. They do not appear to be material to the present case. An uncrossed draft A, payable on demand, was drawn by a Colonial bank on its head office in London. It was made payable to X, or order, and handed to him. Another uncrossed draft, B, payable on demand, was likewise drawn by the same bank on its head office in London. It was made payable to Z, or order, but handed to X, who purchased it from the bank. Both drafts were lost, the first one by X himself and the second in transmission by X to Z. They were both presented with the payee's indorsement forged and were paid by the head office in London in good faith and in the ordinary course of business. In Charles v. Blackivell^ L.R. 2, C.P. Div., p. 151, it was held that where a cheque, payable to order, had reached the payee's hands and had been stolen from him and indorsed without his authority the drawer was not liable, but that the loss fell upon the payee. If the draft had been lost before it reached the payee the loss would have fallen upon the drawer. It is submitted that in the present case the instruments must be regarded either as cheques, bills of exchange, or promissory notes, and that in either case the banker, if considered as the paying banker, is protected by sec. 60 of the Act, while as regards draft A, if he is treated as the drawer or maker of the instrument, the case of Charles v. Blachivell is a direct authority showing that he is not liable. Questions on Banking Practice, 19 BANKER — continued, Ifc is submitted that the banker is also not liable if he is treated as the drawer or maker of the instrument B, but that, following the reasoning in the case of Charles v. BlacJcwell, the answer to any action against him as drawer or maker would be that he cannot be called upon to pay over again an instrument which had already been paid to one to whom the banker was authorized to pay it by the operation of the statute. It has been argued that having regard to sec. 89, sub-sec. 2, the payee of the instrument is in the same position as the drawer of a cheque, and that as sec. 60 does not protect the paying banker where the signature of the drawer of a cheque is forged, so he is not protected here. It is submitted, however, that although the payee is, for certain purposes, put in the same position as the drawer of a bill of exchange, the instrument not the less is payable to his order and bears what purports to be his indorsement, and that, in the words of the 60th sec, the banker is deemed to have paid the bill in due course, although the indorsement has been forged or made without authority. He is placed by this sec. in the same position as if the indorsement had been authentic, in which case the indorser would have been precluded from denying the authenticity of the drawer's signature. You are requested to advise : — Whether under the circumstances stated above any liability attaches to the banker, either as drawer or paying banker. Whether the liability is the same in the case of an English bank drawing a similar instrument on one of its branches in England. 14cth January, 1888. (Opinion of Mr. Arthur Cohen, Q.C., and Mr. J. E. Paget.) We are of opinion that the bank is liable in all the cases mentioned, and as the question is one of considerable doubt and difficulty, we will state at length our reasons for arriving at this conclusion. It is clear that the draft, not being payable to bearer, was and remained the property of either X or Z ; and that if the instrument is one not falling within the provisions of the 60th sec. of the Bills of Exchange Act, one or other of them could maintain an action against the bank and recover the amount of the draft. On the other hand it is equally clear that if the instrument is within the scope of those provisions the payment by the bank was in due course, and it follows from Charles v. Blachwell, 2 O.P.D. 151, that the bank could not be made liable in any way on or in respect of the draft or the consideration received for it. The real question therefore is whether a bill drawn by a bank at a branch office on the bank at another branch or at the head office falM c 2 20 Questions on Banking Practice. BANKER — continued. within sec. 60. We are of opinion that it does not, for the following- reasons : — The Bills of Exchange Act, although it altered the law in some few particulars, had for its main object, as its title imports, to codify the existing law, and to this fact due weight must be given in the inter- pretation of the statute (see the judgment of Lord Blackburn in McLean v. Clydesdale Bajilmig Company, 9 App. Cas., at p. 106). Bearing this in mind it is not difficult to trace the object of the 60th sec. The statute 16 and 17 Yict., cap. 59, protected a banker who paid a draft with a forged indorsement on it, and enabled him to charge the drawer with the amount paid, and it was decided for the first time in Charles v. Blacktvell that as a legal consequence of this enactment the bill was discharged, and that the debt for which the cheque was given must be deemed to have been paid. Now the 24th sec. of the Bills of Exchange Act, which relates to bills with forged or unauthorised signatures on them impliedly repealed sec. 19 of the 16 and 17 Yict., cap. 59, so far as it related to bills, and thereby deprived the bankers of their protection (see Chalmers on the Bills of Exchange Act, Third Edition, p. 290). The object therefore of the 60th sec. of the Bills of Exchange Act was to restore the protection given by 16 and 17 Yict., cap. 59, and at the same time to embody the decision in Charles v. BlacJcwell, and this twofold object was effected by enacting in the first place that where a bill payable to order on demand is drawn on a banker and is paid by him, it is not incumhent on him to show that the indorsement on the bill was genuine or authorised, and in the second place that he is deemed to have paid the bill in due course, although the indorsement was forged or unauthorised. From this it seems to follow that the 60th sec. applies only to those cases in which, but for its provisions, it would be incumbent on the banker, for the purpose of discharging himself and charging the drawer, to show that he had paid a person who had a good title to the bill. We are therefore of opinion that the section does not apply to a case where the banker is himself the drawer, for then no such duty could ever be incumbent upon him in order to discharge himself or charge any other person. In short, the words used in the section prove that it must be read as if it contained a proviso that it should apply only to a bill on the banker by some person other than himself. This view is in some degree confirmed by the 3rd sec. of the Bills of Exchange Act, which defines a bill as an unconditional order in writing, addressed by one person to another, and provides that an instrument which does not comply with those conditions is not a bill of exchange. Questions on Banking Practice, 21 ^k.mi'm.— continued. It is true that sec. 5 enacts that "where in a bill drawer and *' drawee are the same person, the holder may treat the instrument at *' his option, either as a bill of exchange, or a promissory note," and that sec. 50 provides " that notice of dishonour need not be given " where the drawer and drawee of a bill are the same person." The proper way, however, of reconciling these somewhat inconsistent provisions is probably to hold that where the drawer and drawee are the same person, the instrument is not strictly a bill of exchange within the meaning of the Act, but that the holder may treat it as a bill of exchange, and even if he does so need not give notice of dis- honour to the drawer. We think, however, that the opinion at which we have arrived is more strongly confirmed by the consideration that the present case differs essentially from those cases which, as Cockburn, C.J., pointed out in Charles v. BlacTcwell, the legislature had in view when pro- tecting the banker. In those cases the banker would have paid the bill, because he was bound to do so as banker ; in the present case he would be liable to pay the drafts, not because he was a banker, but because the drafts were drawn by him. We may add that it is not open to the bank, but only to the holder, to treat the instrument as a promissory note, and that there- fore, whatever effect sec. 89 might have, it cannot be prayed in aid by the bank. For these reasons we are of opinion that the drafts in question do not fall within the provisions of sec. 60 of the Bills of Exchange Act, and that consequently the bank's liability is not discharged. 56. — Question : A branch bank issues a draft on its Head Office, and a few days after (at the request of the customer to whom it was issued) wishes the payment stopped. {a) Would the bank be justified in complying with such request if the draft be presented by the payee in order ? (h) How would the matter stand if presented by a third party to whom it has been paid in good faith for value ? (c) How if the bank be advised that the draft has been lost unendorsed, and that if presented bearing an endorsement it must be a forgery. Answer : {a) (b) The bank should not stop payment of the draft. (c) Under these circumstances the bank should demand confirma- tion of the endorsement. 57. — Question : A stranger tenders to a country banker a first of exchange on the Bank of British North Africa, Limited, London, 22 Questions on Banking Practice. BANKER — continued, payable to John Smith, and asks them to collect the amount, which they do, and on receiving' the money, they pay the same to the stranger. Next day the second of exchange is presented to the Bank of British North Africa by the real payee, John Smith, and the endorsement on the first of exchange is found to be a forgery. Is the Bank of British North Africa liable for having paid the first of exchange. Answer : Tf the draft were drawn on demand by one of the branches of the bank, it would be liable for having paid the first of exchange with a forged endorsement ; otherwise it would not. If the bill were drawn at a tenor longer than on demand, the bank would, however, be liable. 58. — Question : B gives A authority to sign cheques for him, the banker holding the said authority. A dies, but after his death a cheque is presented which had been drawn by him on B's account. Is the banker justified in returning the cheque marked " Drawer " deceased " .? Answ^er : No. 59. — Question : Two accounts are opened thus : — {ci) " St. John's Schools Building Fund. A. Smith, Treasurer." All cheques on the account are signed by the treasurer. (J) "John Brown, Treasurer, Westport Cricket Club. All cheques are signed by the treasurer. Both these accounts are overdrawn ; who is Uable for the debt ? Answer : Such accounts should never be allowed to be overdrawn, unless an agreement has been entered into by which the treasurer or some responsible person has become personally liable. 60. — Question : A bank credit is lost, and the rightful owner gives notice to the bank of the loss. A dishonest finder of the credit negotiates drafts thereunder in the name of the rightful owner. Can a purchaser for value compel the bank to pay the draft in spite of such notice ? If, before receiving notice, the bank paid a draft under the credit with the drawer's signature forged, could it debit its customer with the amount or must it bear the loss ? Answer : The bank could not be compelled to pay a draft bearing a forged signature. If it did so inadvertently it would be liable for the loss. 61. — Question : A banker at Leeds is agent for a banker at Wakefield, and has made arrangements to receive payments for the credit of the Wakefield Bank's customers. Questions on Banking Practice. 23 BANKER — continued. A cheque on London crossed " Not negotiable," is brought to the Leeds Bank by one of the Wakefield Bank's customers for the credit of his account at Wakefield. The Leeds Bank collects the cheque, which is duly paid, and advises the Wakefield Bank of the amount. It afterwards appears that the Wakefield customer is not the rightful owner of the cheque. Can either the Leeds Bank (collecting the cheque) or the London Bank (paying it) be held liable to the rightful owner for the amount of the cheque ? Answer : The paying banker (the London Bank) would be absolved from liability by sec. 80 of the Bills of Exchange Act, 1882. The liability of the collecting banker (the Leeds Bank) would depend upon whether he received payment for a customer. See sec. 82 of the same Act. In this case we think it must be considered that the Wakefield Bank is the customer of the Leeds Bank, and that consequently the latter would also be absolved from liability. 62. — Question : A B has an account with a bank at York, and has facilities for paying in money for his credit there at the bank's branch at Leeds (or any other branch). In the event of the Leeds branch omitting to advise the York bank of a payment, A B, assuming that the amount is placed to his account at York in due course, issues cheques against it, which are dishonoured. Would the bank be liable to A B for damages ? Answer : Yes. 63. — Question : Y has £80 to his credit with Z, a banker ; cheques are presented as follows : — {a) One for £70 by the morning mail and one for £60 through the local clearing (mid-day). (1)) One by mail or through clearing and the other sub- sequently presented at the counter, (c) Both cheques are received by same mail or through the same clearing. Is the banker liable for damages if he return hoth the cheques ? Answer : In the cases (a) (h) the banker would be justified in paying the cheque first received. He would probably not be liable for returning both in case (c). 64. — Question : A draws a cheque for £100 on B and Co., his bankers, which, at his request, and he having this amount to the credit of his current account, they mark thus : " Good for one " hundred pounds, B and Co." Before it is presented other cheques of A's are presented, which, if paid, would reduce A's balance to less 24 Questions on Banking Practice, BANKER — continued. than £100. Would B and Co. be justified in refusing payment of these latter cheques and holding the balance intact in favour of the marked cheque ? Answer : This mode of marking cheques is not customary in London. B and Co., having undertaken a liability on behalf of their customer, would be justified in refusing payment of the latter cheques referred to. 65. — Question : The customers of country bankers are frequently in the habit, as a matter of business convenience simply, of sending some time in advance — say a month — advice notes of acceptances made payable at the London agents of the bank. Such advices are received in advance, on the understanding that unless duly provided for immediately before maturity they will be returned to the customer, and the acceptances to which they refer be consequently unpaid. Does the bank by the act of receiving such advice notes in advance, with the understanding before referred to, render itself liable to advise such acceptances at maturity in any case ? Answer : It does not. 66. — Question : Supposing a draft issued by a banker in favour of Robert Smith is afterwards re-purchased from applicant on some apparently satisfactory representation, and the payee subsequently finds the bank had issued such draft and re-purchased it, could he hold the bank liable for the re-purchase of the draft without his (the payee's) endorsement ? Further, would the question be altered in any way as far as regards the bank's liability, were it shown that the draft in question had been handed over to the possession of the payee, and had afterwards got into the hands of the original applicant in some fraudulent manner ? The case appears, on the face of it, to be very much the same as A, who pays in £30 to the credit of B's current account, and comes in the next day, or even later in the same day, saying he had made a mistake, and asks to have the money handed back to him, which the ordinary practice would not allow the bank to do. Answer : The 21st sec. of the Bills of Exchange Ad, 1882, enacts as follows : " Every contract on a bill, whether it be the " drawer's, the acceptor's, or an endorser's, is incomplete and revocable " until the delivery of the instrument, in order to give effect thereto." Until, therefore, the draft referred to in the question has been delivered to the payee, he will, we think, have no claim thereto, and the person obtaining the draft can, at any time, sell or return it to the issuing banker, without the payee having any claim against the banker. If, however, the draft had been delivered to the payee, and Questions on Banhi7ig Practice. 25 BANKER — continued. had afterwards found its way back (unendorsed by him) to the applicant in the manner suggested in the question, we think the banker would be liable to the payee if he re-purchased the draft. 67. — Question : A cheque is presented for payment by banker A to banker B, drawn in favour of T. Gr. Stevens, and endorsed " T. Stevens," with a guarantee signed by C as manager of a branch of bank A, but not "per procuration." Would the banker B be justified, before paying the cheque, in requiring the verification of guarantor's signature, and is banker A bound by the act of his branch manager ? Answer : The Banker B would hardly be justified in requiring such verification, and banker A would be bound by the act of his branch manager. 68. — Question : Suppose a cheque crossed "generally" payable to " order " without the words " not negotiable " be drawn by A on his banker B, payable to C, and C, or any party to whom C or any subsequent endorser has conveyed a title, presents it to any other banker, D. Does the law require D only to receive such a cheque for the purpose of being placed to the credit of an account, or may cash be paid to the party presenting it ? Answer : The banker D would be quite justified, if he thought fit to do so, in cashing a crossed cheque drawn upon another banker, B, and by so doing he would incur responsibility to the true owner in case of any fraud having been perpetrated. 69. — Question : M, a customer of B, a banker, pays to his account with B a crossed cheque draAvn on B and payable to J, who is known to keep an account with another banker. Is B justified in declining to credit M with a cheque, and in requiring it to be presented by J's or some other banker ? Answer : In the absence of special circumstances the banker would not be justified in declining to credit M with the cheque. 70. — Question : Can a bank incorporated under Royal Charter, but not registered at Somerset House, demand payment of crossed cheques ? Answer : It is the custom in London to pay crossed cheques only to bankers who are members of the Clearing House, or who have been registered at Somerset House as bankers. The Colonial and other incorporated banks who are not so registered, clear their cheques through the London banks with whom they keep accounts. 26 Questions on BanTcing Practice. BANKER — continued. 71. — Question : In the case of unregistered stock, for instance, of Foreign Bonds " to bearer," with coupons attached, — the dividends in respect of which are payable to the bearer of the proper coupons on their presentation at a London bank indicated thereon, — is it now possible for the owner of the bonds, supposing them to have been lost or stolen, legally to restrain the London bank (who act as agents for the Foreign Government by whom the bonds were issued) from paying the coupons of such bonds, if presented in the ordinary course of business? The bonds and coupons in question have a distinguishing number printed on them. Is it sufhcient simply to give the bank notice by letter of the numbers, requesting them at the same time not to pay the coupons ? Will such notice legally fix the bank, so as to render them liable should they, in spite of such notice, pay the coupons ? Answer : The only person whose instructions the banker is bound to obey is his customer. In the absence of these, he is bound to pay the coupons on presentation, and he incurs no liability in so doing, in spite of notice from persons other than his customers. 72. — Question : If a banker cash a cheque on another branch of his own bank, or on another banker, for a person who is not the drawer, and without charging a commission, and it is returned to the banker unpaid, can he sue the party for whom he cashed it ? Answer : As the banker changed the cheque on the faith of its being of value, he may sue the person to whom he gave the money in exchange. 73. — Question : What is the duty of a banker when base coin is tendered to him ? Should he return the coin as he receives it, or should he cut it ? Answer : The coin should be defaced. 74. — Question : A customer having a balance at his banker's is arrested on charge of fraud, convicted and sentenced. Between the period of remand and trial, the prosecutors' solicitors warn the bankers at their risk not to part with the balance on the prisoner's account, as it is the proceeds of the fraud. Subsequently and before committal, the prisoner draws a cheque for the balance payable to " bearer." Would the banker be justified, under the circumstances, in refusing payment of the cheque until the result of the trial had been ascertained ? Answer : Yes. Questions on Banking Practice. 27 BANKER- 75. — Question : A banker in London receives, from a country client for acceptance, a bill drawn abroad upon the London office of a foreign firm which is duly lodged at the office of the drawees and called for on the following day, when the presenting banker is informed that the bill has been forwarded to the drawee's chief office at Berlin for acceptance on the ground that the representatives of the firm in London have no power to accept. Was the firm in London within its rights in so acting, and, if not, what course should the presenting banker adopt ? Answer : The firm had no right to send the bill out of the country without the holder's consent. In strictness, the presenting banker should protest for non-delivery. 76. — Question : An Inland Bill is drawn on W. J. Mulhen & Co. and accepted " W. J. Mulhen." Is a banker justified in charging such a bill to the account of W. J. Mulhen, or should the discrepancy in the name of drawee and acceptor be rectified by the acceptor before the bill is debited to his account ? Answer : The banker is quite justified in charging the bill to the account of his customer by whom it is accepted. The discrepancy between the tenor and the acceptance of the bill is a matter which affected the holder, not the banker with whom it is domiciled. 77. — Question : Bonds of a loan having a sinking fund operating by periodical drawings at par, are deposited for safe custody with a banker by his customer with instructions to cut off the coupons as they mature, and collect the proceeds to his credit. Is it incumbent upon the banker, without further instructions, to examine the published lists of the numbers of the bonds drawn, and to inform his client in the event of any of the bonds being drawn ? Answer : As a matter of fact, this is frequently done, but there is no obligation on the banker's part to do so. 78. — Question : A has a current account, and is allowed to overdraw £200 on security of joint promissory note on demand by self with B and C. A requires a further £50, making £250, and deposits, as additional security, a bill for £100, which is paid at maturity, and credited to A's account, reducing the overdraft to £150. Before the bill matures, A's banker understands that he (the customer) is likely to be in difficulties, and informs him when the bill is paid his overdraft must not exceed the amount then standing, £150, which he must now pay off. 28 Questions on Banking Practice. BK^KEiR— continued. Would the banker be perfectly justified in stopping account as stated, and returning any cheques which would exceed the £150 ? Answer : The banker would be perfectly justified unless there is some provision in the agreement between the banker and his customer inconsistent with the banker so doing. 79. — Question : A payee endorses a cheque making it payable to a third party. The third party loses the cheque and stops payment of the same. Is it necessary for the bankers also to obtain the instruc- tions of the drawer ? Answer : Yes. 80. — Question : What is the proper course for a banker to take when a bill is presented to liim for payment draivn payable to the order of A B, but accepted by the drawee thus : — " Accepted payable at Y L and Co. to A ^." Does the restrictive acceptance affect the instrument and justify the banker in requiring to be satisfied that the proceeds of the bill shall reach A B ? Answer : From the wording of the acceptance it is to be assumed that the bill was accepted without the drawer's signature, and the banker with whom the bill is domiciled has, therefore, to see that the bill is signed by A B, as drawer and endorser, before paying it. 81. — Question : A customer, indebted on balance of current account to his banker who has issued a writ upon him and obtained judgment, sends by letter a cheque upon another bank, requesting the amount to be sent to him by post. Would his banker, in such a case, be justified in placing the amount to his customer's credit in reduction, or must he send the cash, or return him the cheque ? Answer : We do not think that, under the circumstances, the banker should place the amount to his customer's credit in reduction. 82. — Question : Is it necessary for a banker to receive special instructions before charging his customer's account with acceptances, such account being an overdrawn one under an arranged limit 1 Answer : Assuming that after payment of the acceptances in question the customer's account would not be overdrawn beyond the arranged limit, any special instructions would be superfluous. 83. — Question : Is it the custom of bankers to give receipts for articles deposited with them for safe custody only, and if so, does the fact of having given a receipt place the banker under any Questions on Banking Practice. 29 BANKER — continued. responsibility which he would have avoided if he had not done so? Answer : It is not the custom for bankers to give such receipts, but the banker would not incur any additional responsibility by doing so. 84. — Question : What is the usual custom of bankers when a loan is granted, " with a margin (say) of 20 per cent. ? " Should such margin be upon the amount of the loan, or upon the value of the security? In the former case £5,000 would be advanced against securities valued at £6,000, and in the latter case £4,800 only would be advanced against the same securities. Answer : It is usual, when a loan is granted on securities with a margin, to calculate the margin on the value of the securities. 85. — Question : Is it customary amongst London bankers to give a written answer when returning dishonoured cheques, &c., on the document itself? Can the presenting party — banker or other — demand a written answer on the cheque, and, if so, on what grounds ? Or would the banker on whom the cheque is drawn be justified in offering a verbal answer only, or in attaching a slip with a written answer to the cheque ? Answer : It is customary among London bankers to give a written answer on the document, though probably it could not be legally demanded. Under certain circumstances, the banker would no doubt be justified in giving a verbal answer only, or in attaching a slip. 86. — Question : A customer has authorised certain railway com- panies to pay over dividends on stock to his credit with his bankers as they become payable. He dies, and the railway companies, not having notice of his death, continue to pay over the dividends. Are the bankers right in receiving them, or should they at once have informed the railway companies of the death, and returned the dividends ? Answer : It is usual in such cases, on the receipt of the dividends by bankers, to inform the companies of the decease of their customer, and to return the dividend warrants after probate has been taken out and registered by them. 87. — Question : A and B, bankers, receive for collection from C and D, bankers, a bill accepted payable at their bank by E F. Must A and B accept the amount, if tendered by E F or any 30 Questions on Banking Practice. ^XE'KEi'R— continued. other person, or are they justified, if they prefer, in refusing it, and returning the bill unpaid to C and D ? Answer : London bankers invariably refuse to retire bills domi- ciled with them by parties who are not customers either of themselves or of country banks for whom they act as London agents, and they consequently decline to accept money from the acceptors of such bills for the purpose of meeting them when due, and would, in the case referred to, return the bill unpaid. 88. — Question : Is it a frequent occurrence for customers of a bank to detach the coupon portion of foreign bonds, and to lodge the bond proper with one bank and the coupons with a second bank for greater safety ; and so guard against improper dealing with the securities ? Answer : It is not of frequent occurrence. 89. — Question : Is there any specific length of time required by law during which it is necessary to keep old letters, credit and debit shps, cheques, bank ledgers, &c., before destroying the same ? Answer : So far as we are aware there is no specific length of time required by law, during which it is necessary to keep old letters, credit and debit slips, cheques, bank ledgers, &c., before destroying the same. The only ground upon which it is usually thought unnecessary to retain for more than six years receipts and vouchers for payments is that at the end of that time the debt is barred by the Statute of Limitations, and consequently the voucher is no longer necessary as evidence of payment ; but there may be numerous reasons why it may be desirable to preserve evidence of business transactions for a period much longer than six years, and it seems to us impossible to lay down any general rule which will apply to every case. 90. — Question : It is the custom of bankers to retain the vouchers of an overdrawn account when giving up the pass-book. What is the object of this ? Is it sufficient to keep back the last few paid vouchers, equal in aggregate to the existing overdraft, or is it the custom to retain all the paid vouchers since the account was last in credit ? Answer : No such custom exists in London, but in the country bankers are in the habit of retaining the vouchers until the customer has made some satisfactory acknowledgment of the state of the account between them. Questions on Banking Practice. 31 BANKER — continued, 91. — Question : A crossed cheque is presented by a provincial bank in the usual daily exchange, to a bank in the same town. At the end of the day the cheque is returned for want of cover, but within hayih hours it is provided for and immediately followed. Is the bank to whom the cheque has been returned justified in refusing to accept payment on the ground that they have returned the cheque to their clients ? The contention is — the paying bank is entitled until closing time to take up the cheque. It is by courtesy the custom to settle the clearing a quarter of an hour before closing hours. Answer : The bank presenting the cheque was under no obligation to retain it after it had been dishonoured. Having returned it to its customer, it could not properly receive the amount. 92. — Question : A cheque payable to John Brown, or order, is endorsed thus : — "His "John X Brown " mark. " Witness Jno. Jones." Is the above a legal discharge ? Would the bank upon which the cheque is drawn be justified in refusing payment, and whether the address of witness is given or not ? Answer : An endorsement may be made by a mark. The banker is not precluded from enquiry, before payment, of the validity of any endorsement. It is the practice to require the address of the witness. 93. — Question : A customer of a provincial bank accepts a bill payable at the London agent of his bankers. He instructs his bankers to advise the bill and debit the amount to his account. Should his signature to the advice note be cancelled in the same manner as a cheque ? Answer : No. 94. — Question : Are bankers obhged to give particulars of their charges at the end of the half-year if called upon to do so ? Would not " Interest and commission " be sufficient, and in suing for the payment of such charges can they be called upon to give further particulars in a court of law. Answer : The banker should give particulars of charges if called upon by his customer, and no doubt if the matter were contested, would be obliged to do so. 82 Questions on Banhing Practice. BANKER — continued. 95. — Question : In the Bills of Exchange Act, 1882, edited by M. D. Chalmers, is a note (p. 9.) " Christmas Day and Good Friday *' were bank hohdays in Scotland, not common law holidays : but " in this respect Scotch law has now been assimilated to the English, *' and henceforth in Scotland, as in England, a bill falling due on " Christmas Day or Good Friday will be payable on the preceding *' business day." In Moxon's " English Practical Banking " (1888) on p. 15, it is stated " that Christmas Day and Good Friday are " bank holidays in Scotland." Also on p. 1 of the Bills of Exchange Act, already cited, it is stated in a note that " This act apphes to *' the whole of the United Kingdom, i.e., England Ireland and " Scotland." May it be inferred from these quotations that bank holidays are absolutely identical in the three countries ? Answee : Christmas Day and Good Friday continue to be Bank holidays in Scotland, as provided by the BanJc Holidays Act, 34 Vict., c. 17 ; but for the purposes of the Bills of Exchange Act they are not now regarded as bank holidays, in regard to the payment of bills of exchange maturing on those days. The Bills of Exchange Act, as stated, relates to the whole of the United Kingdom, but it does not recite the bank holidays either in England, Scotland, or Ireland. 96. — Question : A bill at sight, payable abroad, drawn against a bill of lading and to the order of A and Co., bankers, London, was paid in to them in the ordinary course for collection. It was sent out by them through a bank which subsequently suspended payment, whose agents received the money and gave up the bill of lading. These agents, being creditors of the suspended bank, appropriated the amount as against their claim, and A and Co. repudiate their liability on the ground of the notice in their pass-books, which was as follows : — " All Cheques, Notes, or Bills sent into the country or abroad for " collection will be credited only upon advice of payment. *' No charge is made for collection, and the bank will not " be responsible for any loss that may occur by delay or *' otherwise in transmission or collection." Were A and Co., justified in so doing .^ Answer : They were. 97. — Question : A cheque for £200 in favour of J. W., or order, and crossed generally, is presented at the bank on which it is drawn by a person not known but representing himself to be the payee, and who requests that £100 be lodged to the credit of A B's current Questions on Banldng Practice. 33 BANKER — continued. account with the said bank, and £100 to the credit of C D's deposit account. Can the bank suffer loss by complying with this request ? Answer : No. 98. — Question : A customer goes to his banker, A, and asks for a draft upon a foreign town. A has no agent abroad, but he gets B, another banker who has a foreign correspondent, to draw for the required amount. A hands the draft to his customer in exchange for a cheque — A's name does not appear upon the draft. Is he liable in the event of the draft being dishonoured, or does the Bills of Exchange Act, 1882, sec. 58 (2) apply in this case so as to discharge A from ail liabihty ? Would the case be different if a commission were charged by A. Answer : The 23rd sec. of the Bills of Exchange Act, 1882, enacts that no person is liable as drawer, endorser or acceptor of a bill, who has not signed it as such. A therefore is clearly not liable on the draft, nor is he liable as having guaranteed its payment, or liable at all, unless it can be shown that he act negligently. The customer's remedy is against B, and the acceptor of the draft if it was accepted. BANKRUPTCY— 99. — Question : If a banker hears that a customer of his is bankrupt, but has not had official communication on the point, is he justified in not honouring that customer's cheques ? And what is a banker's liability if he pays a customer's cheques after he has heard, from the customer himself or otherwise, that he (the customer) is in a state of insolvency ? Answer : A banker is bound to return cheques when his customer is adjudged bankrupt, or when the customer has given him instructions that the cheques should be returned. 100. — Question : Shares of a companyare deposited bya customer, on a memorandum of deposit for security for any overdraft he has from time to time. The customer eventually fails, and the bank are then thrown back to realize their security. Notice of charge was not given to the company, and the Official Eeceiver, on these grounds, claims that the bank cannot retain them from the estate. Can he stop the bank realising ? Answer : The contention of the Official Eeceiver, in view of the decision of the House of Lords in Colonial BcmJc v. Whinneg (L.K. App. Ca. 11, 426), cannot be sustained. 34 Questions on Banking Practice. '^KE^'RJJVTQY— continued. 101. — Question : A banker holds some shares in the form of an allotment letter and bankers' receipts, as the security for an advance. He sends the said allotment letter and receipts, which have not been transferred out of the customer's name,to the Secretary of the Company, for the purpose of exchanging them for a definitive certificate, at the same time requesting that it may be returned to him. Not receiving the certificate back in due course, he apphes to the Secretary, who informs him that he has sent the certificate to the registered holder, who has in the meantime sold the shares. What remedy has the bank against the Company ? Answer : Probably none. 102. — Question : A customer pays into his account a sum of money which, he instructs his bankers, is specially to meet a certain cheque. Before the cheque is presented the customer (i.e., the drawer) commits an act of bankruptcy. Is the banker bound to pay the holder, the account being overdrawn ? Answer : An order by a customer to his bankers specially to apply the money paid in to meet a certain cheque is revocable until actual appropriation or payment of the money accordingly, or until a promise has been given by the banker to the holder of the cheque to make such payment. Such revocation may be either by the customer himself, or may be by operation of law, as by the customer's bankruptcy. If, after notice of an act of bankruptcy, the banker should honour the cheque and the customer should be adjudged bankrupt on a petition presented within three months from the act of bankruptcy, the banker would be liable to repay the money to the bankrupt's trustee. Whether the banker could apply the money in reduction of the overdrawn account, is, of course, a different question. 103. — Question : Is it safe to continue the current account of a customer who has called his creditors together, and arranged with them to accept a composition of 125. in the £, payable in 3, 6, and 9 months ? The banking account being secured, the bank may or may not receive any official notice of the arrangement, but it must be assumed they have knowledge of it. No deed has been signed. If a customer may not continue his banking account, where is he supposed to place the several hundred pounds which he accumulates to pay the instalments ? Answer : It has been decided by the court* that a debtor, by calling his creditors together and making them an offer of a com- ' * Re Walsh, 52 L. T. Rep., 1885, p. 694. Questions on Banking Practice. 35 BANKRUPTCY— co/^^mwe^. position, does not give notice to his creditors that he has suspended payment of his debts within the meaning of sec. 4, sub-sec. 1 (h) of the Bankruptcy Act, 1883. Assuming that the deUor has done nothing more than call his creditors together and arrange for their accepting a composition, we consider that the bankers can come under no liability by continuing the banking account after notice of such meeting. 104. — Question : Does a bank incur any liability by allowing a person known to be a nominee of an undischarged bankrupt, to open and work a current account, and to draw against cheques payable to, and endorsed by, the bankrupt, and against bills of exchange dis- counted, drawn by the same person ? What risk does a bank run by opening a current account for an undischarged bankrupt ? Answer : In both these cases the banker would be liable to refund all payments. 105. — Question : Referring to Question No. 104, would a banker be justified in opening an account for the wife of an undischarged bankrupt, if she was apparently carrying on the business formerly worked by her husband ? Answer : No. ______^^___ 106. — Question : X assigns his property to a trustee for the benefit of his creditors under a duly registered deed, signed by all his creditors, with the exception of one who wishes to make X a bankrupt. During the negotiations X continues his business, transactions taking place with the bank as usual, where he has a large credit balance. What is the position of the banker with regard to the funds he has in hand, he having had no ofiicial notice of the execution of the deed ? Answer : During the negotiations the position of the banker has not been altered from the ordinary relation of banker and customer. 107. — Question : A makes a composition with his creditors, which is secured by joint and several promissory notes of himself, B and C ; these when matured are paid by A's bankers (where payable) and are charged by them to an account opened by A's instructions in the joint names of A. B and C, without the knowledge or authority of B or C, who, not hearing to the contrary, suppose the bills have been retired by A alone. Have the bankers any claim against B and C as endorsees of the bills or otherwise ? D 2 36 Questions on Banhing Practice. Bk^^-RVVTQY— continued Ais^swER : The joint account of A, B and C should not have been opened without the written authority of the three principals. If the banker paid the promissory notes of A, B and C to the debit of their duly authorised account (funds not having been previously provided by A, B and 0), he can sue them for the amount on the overdraw^n account. If their account were not duly authorised, the bank could sue all parties to the promissory notes on the notes themselves. 108. — Question : X is a customer of the Holmshire Bank, and has a sum of money standing to the credit of his account with them. The bank has informal notice (by general hearsay) of an " act of bankruptcy "committed by X. Is the bank justified in paying any cheques drawn on them by X, either in his (X's) own favour, or in favour of other persons, after he had committed the aforesaid " act of bankruptcy " ? Answer : It is stated in "Grant's Law of Bankers," p. 61, that if a banker, after knowledge of an act of bankruptcy committed by a customer, nevertheless honours his cheques, the banker will be liable to repay the money to the bankrupt's trustees. 109. — Question : The Holmshire Bank receives from a London bank a sum of money for credit of X, who is not a customer of the Holmshire Bank. The Holmshire Bank have informal notice (by general hearsay) of an " act of bankruptcy " committed by X ; but the London bank have no such knowledge. (1) Is the Holmshire Bank justified in paying X the money thus remitted ? (2) Is the London bank affected by the knowledge of the Holm- shire Bank that an *' act of bankruptcy " has been committed ? Answer : Under the circumstances the Holmshire Bank should communicate with their London correspondents before paying the cheque. 110. — Question : An undischarged bankrupt opens and carries on in the usual manner a current account, the bank having full cognisance that he has not had his discharge, (a) Does the bank incur any liability by allowing this, and (fi) could the trustee of the estate of the bankrupt demand at any time the payment to him of any money which might stand to the credit of the account ? Answer : {a) Yes. (&) Yes. Questions on Banking Practice. 37 ^k^Yi'K\JVTlQY— continued. 111. — QuESTioi^ : A customer of a bank in Ireland was adjudicated bankrupt on Tuesday without the knowledge of the banker, who on Wednesday paid a cheque of £3 and another on Friday of £8. Notice of adjudication appeared in the Gazette on Friday, but this publication could not reach the banker at that date. The Assignee in Bankruptcy claimed the £11. Was the banker bound to hand over the amount ? or could he put in the plea of being unaware of the fact of his customer having been adjudicated bankrupt ? Answer : See opinion in reply to next question. 112. — Question : (Case and Opinion of Mr. R. P. Carton, Q.C., as to the legal position in Ireland.) (Case.) On October 18th, 1887, a customer of the St. Michael's Bank in Ireland was adjudicated a bankrupt, having at the time to his credit at the Gal way branch of the bank a sum of £11 3s. Qd. October 19th. — On this date a cheque for £3, on such customer's account, was paid by the bank to the person in whose favour the cheque was drawn. On October 21st another cheque for £8 was in like manner paid by the bank. Both payments were made in ignorance of the bankruptcy pro- ceedings. It was only after the payment of the £8 cheque that the bankruptcy proceedings were first discovered by the bank. Subsequently the official assignee claimed payment of £11, amount of the two cheques so paid, and contends he is entitled to have the amount refunded to him. If the assignee's contention be sustained, it is fraught with serious possible consequences to the bank, whose managers may at any of its branches at any time cash cheques in the interval between the drawers being adjudicated and knowledge of the bankruptcy reaching the bank. Of course, it would also be a serious matter for the bank to refuse payment of any cheque, the drawer of which had at the time cash to his credit to meet such cheque. It is to be noted that bankrupts may be adjudicated on both Tuesdays and Fridays, whilst the Gazette is issued on Fridays only. The question also arises whether the assignees should not, in the first instance, seek payment from the payees of such cheque paid in ignorance of bankruptcy. Querists seek to be advised as to their position with respect to cash balances held by them to the credit of customers who may become bankrupt during the interval between the bankruptcy and notice of such reaching the bank. 38 Questions on Banking Practice. BANKRUPTCY— co;^fw^we^. Counsel will please advise — 1. What is " notice " to a banker ? 2. What is the position of the bank with respect to the cash held by it to the credit of bankrupt customers, during the period between the adjudication and knowledge of that fact reaching the bank ? 3. Unden the circumstances stated, to what notice, if any, is the bank entitled, or does publication in the DuUin Gazette act as such notice ? 4. If such publication is notice, from what time would it take effect as regards a country branch of the bank ? from date of issue of Gazette in Dublin, or receipt of it by such branch in due course of post ? 5. Is the bank in the present case liable to the bankrupt's assignees for the amount of the cheques so paid ? and Counsel will please advise generally on the case. (Opinion.) The moment a man is adjudicated a bankrupt, all his property (including all monies to his credit with his bankers) ceases to be his, and becomes the property of his assignees. Under the old law of bankruptcy, the assignee's title had relation back to the first act of bankruptcy committed subsequent to the accrual of the petitioning creditor's debt, and avoided all transactions with the bankrupt from that time, with certain statutable exceptions. This state of the law was felt to be so severe that later statutes contained provisions for protecting 'bona-fide transactions after the commission of an act of bankruptcy, but before the filing of the petition provided the persons claiming the protection had no notice of the act of bankruptcy. (20 and 21 Yict., cap. 60, sec. 328.) But there is no protection for any dealing, however bona-fide^ with the property of a bankrupt once he is adjudicated. It is not a question of notice at all. Notice is immaterial, and a person who pays away money after adjudication, which money belongs to the assignees, will, whether he knew of the adjudication or not, have to pay it to the assignees over again. I am, therefore, of opinion that the assignees are entitled to recover from the bank the amount of the two cheques paid by them after the adjudication (£11). The payment could not be supported on the ground that the monies in the bank had been appropriated by the customer before bankruptcy to the holders of the cheques. A cheque does not amount to an equitable assignment of so much of the customer's balance as will be sufficient to meet the cheque {Hoplcinson \. Porter, L.R. 19, Eq : 74). Questions on Banking Practice. 8^ BAl^KUVFTCY—contijiued. The law, as stated by me, may seem hard on bankers ; but the hardship is more apparent than real. The instances are very few^ indeed, where a bank does not know of the bankruptcy of a customer immediately on its taking place. Nor is a bank, under such circumstances, wholly without remedy ; I think the money so paid would be money paid under a mistake of fact, and not of law, and could be recovered by the bank from the person to whom it paid the money as " money received." (Signed) K. P. CARTON, 12th November, 1887. 113. — Question : Bills are held as security against an overdraft. In the event of the customer, on whose account these bills are held, failing, is the banker justified in proving on the total amount of immatured bills as well as for the amount of overdraft ? Answer : Yes ; the banker may prove on both, but he may not recover more than the amount of the overdraft. 114. — Question : The law used to be that, if the parties to a bill of exchange failed, the owner could prove for the full amount of the bill against the estate of each party, and take the dividends until he received the full amount of the bill he held. It is held now that the law has been changed, in such wise, that supposing there were four parties liable on a bill for £100, and that each in succession failed and paid 10s. in the £, the holder of the bill would only receive £92 15s. in all, though the four estates showed nearly 40s. in the £ on the £100, e.g., when A failed the holder would prove for £100 and receive £50 ; when B failed he would only be allowed to prove on £50 (being the balance remaining due to him on the bill) and receive £25 ; when C failed he, in like manner, would prove on £25 only ; and when D failed on £12 10s. only. Is the old practice still in force, or is the latter practice now insisted upon ? Answer : The first part of the question correctly states the law as it used to be in cases where, at the times the proofs were respectively made, all the parties to the bill had failed, but no dividend had been paid or declared upon any of the estates. The latter part of the question states correctly the old law and practice in regard to proofs upon bills where, at the time of proving, a dividend had been paid or declared on the bill from the estate of one or more of the other parties liable on it, or where the creditor had received part of the bill in pay- ment. The law and practice in both cases remain unaltered by the Bankruptcy Act, 1883. The alterations made by that Act affect only proofs made on current bills to entitle the creditors to vote. In such 40 Questions on Banldng Practice. 'BK^KRWTQY— continued. cases the creditor must value the habihty of all solvent persons liable on the bill antecedently to the bankrupt. See Schedule 1 to the Act, paragraphs 11 and 12. 115. — QuESTioiT : A banker has discounted bills, the acceptors of which fail two months before the bills mature. Can the banker compel the customer for whom the bills were discounted to withdraw them directly after the acceptor's petition is filed, or must he wait until they are due ? Answer : In the absence of any special arrangement, the banker must wait until the maturity of the bills. 116. — Question : D accepts a bill drawn upon him by C, which will mature on 1st May. discounts the bill with his bankers, but before maturity D becomes bankrupt. Can the bankers legally compel C to take it up at once ? Answer : They cannot. 117. — Question : Suppose in the case referred to in the last question, both parties become bankrupt before the maturity of the bill, but C has a sufficient balance at his credit, can the bankers debit his account with the acceptance before due, to the detriment of the other creditors ? Answer : They cannot, as the debt is not yet due, but they would not part with the funds until it becomes due. 118. — Question : A customer writes to his banker : " I have called " a private meeting of my creditors for "Wednesday next, and will see "you after that." Is this an act of bankruptcy, and would the banker have the right to retain the balance on the current account against bills under discount ? Answer : No, this is not an act of bankruptcy. 119. — Question : A customer deposits a policy of assurance upon his life with a bank as security for advances. The instrument of deposit contains a covenant for payment of future premiums by the assured. The customer becomes bankrupt. Can the bank, after deducting surrender value, prove against his estate for the value of future premiums, such value to be ascertained by the trustee or the Court ? Answer : No. on BanJcing Practice, 41 BANKRUPTCY— co^i^mwe^. 120. — Question : A fails, owing his banker £600, of which sum £300 is fully secured. Can the banker claim for the full amount of £600 on the bankrupt's estate, without reference to the security for £300 held by him, or must he reahse his security and claim only for the difference ? Answer : With regard to specific securities held on the property of a bankrupt or any part thereof, the Banh'uptcy Act, 1883, provides that a secured creditor may either (1) realise his security and prove for the balance due to him, after deducting the net amount realised, or (2) surrender his security to the official receiver or trustee for the general benefit of the creditors, and prove for his whole debt, or (3) assess the value of his security and receive a dividend only in respect of the balance due to him after deducting the value so assessed, a security so valued being subject to redemption or sale at the instance of the bankrupt's trustee, and the valuation being liable under certain circumstances to be amended or varied by realisation on the part of the creditor. BILLS OF EXCHANGE. 121. — Question : A bill, say for £50, was sent by a London banker to another banker, through the post, for payment, drawn in the following form : — J50, London, August ISth, 1879. Three months after date pa?j to my order the sum of Fifty Pounds for value received. To Mr. John Jones, S 75 QH.'E^qj]^^— continued. 246. — Question : Is the crossing of a demand draft, drawn abroad, payable in the United Kingdom, vahd ? And can it, for the purposes of crossing, be treated exactly as a cheque ? Answer : Yes, if drawn on a banker. 247. — Question : A cheque on a provincial bank crossed " & Co.," passing through the London Clearing House, reached the bank on which it was drawn without being crossed by a banker. Would the bank drawn on be justified in returning the cheque unpaid with answer, " Requires the crossing of a banker " ? Were such a cheque paid by the bank, without the crossing of the presenting bank, what liability would the paying bank incur should it turn out that this cheque had been fraudulently dealt with ? Answer : The bank would not be justified in returning such a cheque, nor would any liability be incurred, but the Clearing House rule would not have been complied with. 248. — Question : Sec. 10 of the Crossed- Cheques Act, 1876, reads : "Any banker paying a cheque crossed specially otherwise than " to the banker to whom the same shall be crossed, or his agent for " collection, being a banker, shall be liable to the true owner of the *' cheque for any loss he may sustain owing to the cheque having been " so paid." A cheque drawn on a country banker, specially crossed to a London banker, is presented for payment through the London Clearing House without the stamp or crossing of the London banker. Should the country banker, before paying the cheque, require it to be stamped by the London banker, as evidence of the cheque having passed through his hands ? If the stamping is not obligatory on the London banker, would the country banker, after having paid the cheque, be protected under section 9 in case it should afterwards be discovered that the cheque had been misappropriated and presented through another banker ? Answer : In the case given, the only channel through which the cheque can legally have passed is indicated by the crossing, and the paying banker pays it as to the banker named therein. Should he not have received the proceeds, the letches^ if any, does not lie with the paying banker, who is, we think, protected under sec. 9. It is the custom of the London clearing bankers to stamp their crossing on all cheques presented by them through the clearing, without exception, but this is by mutual arrangement, and does not appear obligatory if the crossing is otherwise sufficient, ^.e., already bears the name of the presenting bank. Bills of Exchange Act, 1882, sec. 79,2. 76 Questions on BanTcing Practice. CHEQUES— con^mwe^. 249. — Question : Does a bank stamp branded thus V^^^ on the face of a cheque constitute a crossing within the meaning of the Act ? Answer : It does. 250. — Question : Is it legally necessary that the signature of the drawer of the cheque or acceptor of a bill should be cancelled by running a pen through when such cheque or bill is paid by the bankers where payable, or would it be considered a sufficient cancelling if the bankers stamped their name with date anywhere on the face of such cheque or bill, or simply wrote the word "entered " and the date on the face ? Answer : There is no legal enactment compelling a banker to cancel a signature in the manner first suggested, but it is customary to do so. 251. — Question : Does the following constitute a crossing within the meaning of the Bills of Exchange Act, 1882 .^ Answer : No. See Bills of Exchange Act, 1882, sec. 76. 252. — Question : If a banker's draft is marked in the following manner (see below), does it constitute a general crossing under the Crossed Cheques Act ? Answer : The Bills of Exchange Act, 1882, provides (sec. 76^^) that "two parallel transverse lines simply shall constitute a crossing," ► Questions on Banking Practice. 77 QK^qV^^— continued. hence the drafts referred to are crossed within the meaning of the Act, notwithstanding the words written between the transverse Unes, 253. — Question : Is a perforated crossing a legal crossing within the meaning of the Act, or must it be written or printed on the face of the cheque ? Answer : Crossing a cheque by perforation does not seem to come strictly within the words of the 76th sec. of the Bills of Exchange Act, 1882. 254. — Question : A cheque has written across its face, " St. " Michael's Bank, Cornhill," without the parallel transverse lines. Does this constitute a crossing within the meaning of the Act ? Answer : Yes. 255. — Question : A cheque is crossed to two branches of the same bank. Should payment be refused in consequence ? Answer : This is a matter for discretion, a large number of cheques may be crossed with two offices of the same bank, viz., the branch where they are paid in, and the head office through whom they are collected. 256. — Question : A cheque was presented to the St. Michael's Bank, crossed in the drawer's own handwriting specially, to a certain man's account at a certain bank, but also crossed with the private crossing stamp of another customer of the same bank specially to his own account. How should the St. Michael's Bank treat this cheque ? Answer : The St. Michael's Bank, as the paying bank, would be quite justified in paying the cheque, without regard to the special crossings. 257. — Question : Is the crossing of a cheque (whether general or special) set aside by the fact of the cheque having been returned unpaid, and in the case of such cheque being subsequently paid over the counter to any other person than the loud fide holder, is the banker so paying free from any liability ? Answer : The crossing is not superseded, and the banker on whom the cheque is drawn would pay it over the counter at his own risk. 258. — Question : Is a collecting banker, who has collected a crossed cheque for a person not having an account with him, placed in any worse position, should there afterwards be a question about the true ownership of the cheque, than he would have been had the cheque come into his hands uncrossed ? 78 Questions on Banking Practice, CHEQUES— c(??z^mwed Answer : A banker collecting a cheque for a person not his own customer, does so at his own risk, nor could the fact of the cheque being uncrossed make any difference. 259. — Question : A cheque on the St. Michael's Bank is drawn : — " Pay the Chalkshire Bank or bearer." This cheque is handed to another country bank for collection. On its being presented through the Clearing House by their London agents, it is refused by the St. Michael's Bank, on the ground that it is " Crossed to two bankers." Is this correct ? Answer : Though the answer " Crossed to two bankers " is not correct, the St.' Michael's Bank were quite right in refusing to pay the cheque until they had made inquiries. 260. — Question : Suppose a cheque crossed generally or otherwise, payable either " to bearer " or " to order," is dishonoured, does the dishonour of the cheque annul the crossing, i.e., is a banker justified in paying the money to the payee (who is unknown to him) if the drawer has sufficient funds on re-presentation of the cheque by the payee himself, or does the crossing remain in force as heretofore, and require that the payee shall only receive the money through a banker ? Answer : We think the crossing would remain in force on re-presentation of the cheque. 261. — Question : A crossed cheque, drawn by A B, for £500, is presented through a banker and is returned marked n/s, there being insufficient funds on the account to meet it. The following day the cheque is presented across the counter by C D (who states he is the payee) and demands payment ; this is refused by the banker (although there is then sufficient on the account) on the ground that the cheque is crossed. A B fails next day, but in the meantime a cheque is paid which absorbs all his balance. Would the banker be responsible to C D for non-payment of the cheque when presented by him across the counter ? Answer : The banker was quite in order in refusing to pay over the counter a crossed cheque to C D, and would not be responsible to him for non-payment, except, perhaps, in Scotland, under the Bills of Exchange Act, 1882, sec. 53. See also Question 257. 262. — Question : A cheque for £20 dated March 1st, 1888, is presented on January 1st, 1888, crossed, " Commercial Bank, "Piccadilly," and returned to them marked "post dated." On March Questions on Banking Practice. 79 CHEQUES— f.) As destroying the negotiability of cheques so crossed, and thereby the essential character of a cheque. 2. As to the liability (if any) of the bankers who pay cheques drawn upon them and so crossed. 3. As to the liability of the bankers, to whom they are crossed, in the event of their failing to observe the crossing and placing the amount to the account of some other customers than those indicated. 4. As to the liability (in the case of a cheque crossed as supposed in the third specimen of crossing) either of the London bankers receiving and collecting the cheque but advising it to the account of Brown with the country bankers, or, of the country bankers who, it is to be observed, have never seen the cheque, and can only carry out the instructions of their London correspondents. (Opinion.) 1. We are of opinion that the crossings of which specimens are given in this case are not illegal in the sense of invalidating the cheque. The addition of the words " account Smith " or similar words may be regarded as not forming any part of, or bearing any relation to the " B & Co.," which is the substantive crossing, but as being in effect only a memorandum or direction to the collecting banker as to what he is to do with the proceeds of the cheque when collected. And looked at in this view the addition of such words has no effect on the negotiability of the cheque which is payable to any one, provided it be presented through B and Co. 2. In no case can the bankers on whom such cheques are drawn incur any liability by paying them to B and Co. The payee has no claim against them under sec. 79 of the Bills of Exchange Act, inas- much as they have not infringed any of the provisions of that section, and, as they cannot possibly see to the application of the proceeds or go into any question of title further than B and Co., there is no G 82 Questions on Banking Practice. CHEQUES— c(?7i^mwe^. negligence on their part which could afford any ground of action to the true owner, deprive them of the protection of sec. 80, or prevent their debiting their customer, the drawer, with the amount paid. 3. The position of the collecting bankers, "B & Co.," is a far more complicated question, and depends mainly on the method in which the customer from whom they receive the cheque had himself come into possession of it. If such customer took the cheque bearing one of the specimen indorsements and gave value for it, it would be a question for a jury whether, looking at the surrounding circumstances, the existence of the additional words constituted such an intimation that the cheque was primarily intended for the benefit of the payee as to put the person receiving it upon enquiry as to how it came to be in hands other than the payee's. As pointed out by Lord Blackburn in Jones V. Gordon, L. B. 2 App. Cas., 629, if the customer was only honestly blundering or careless in taking the cheque in the face of this intimation, he would have a good title to it, and so could giYQ a good title to the bank, but if on the facts and circumstances the jury came to the conclusion that the customer was not honestly blundering and careless, but must have had a suspicion that there was something wrong about the cheque and wilfully refrained from making enquiry for fear of injuring his own right to recover, then the customer's title would be bad, and the collecting bankers, in order to be safe, would have to make a title of their own. If the customer gave no value, or, giving value, was precluded, on the grounds above stated, from establishing a valid title, the bankers, in order to avoid liability to the true owner, would have to show that they gave value to the customer, either by paying the cheque over the counter or by definitely and immediately treating it as cash received, and further the validity of their title would have to depend on the application of the above-stated rule at the hands of a jury to the circumstances under which they took the cheque from the customer. As to what view a jury might take, much would turn on the usages of bankers with respect to such crossings, whether cheques so crossed are generally regarded as being limited to the use of the payee or pass freely from hand to hand, and whether in ordinary practice they are collected as a matter of course for the customer presenting them without regard to the words superadded. But we are not prepared to say that a jury would not be justified in finding that the intimation conveyed was too direct to be disregarded, and that the bankers must be taken to have been put on enquiry thereof. If the bank merely take the cheque for collection, giving no value for it, of course their title and liability must stand or fall solely with that of the customer from whom they take it. Questions on Banking Practice. 83 QB.'EiCiVYi^— continued. Sec. 82 affords no protection inasmuch as any circumstances invalidating the bank's title by virtue of the above-mentioned rule would clearly constitute negligence depriving them of the protection of this section. Moreover, where the bank has given value for the cheque it does not afterwards collect it for a "customer" but for itself. We have no doubt that the bank to whoui such a cheque is tendered for collection is entitled to refuse to take it, on the ground of the embarrassing and irregular nature of the crossing, at any rate, unless the person tendering the cheque satisfies the banker that he has the payee's authority to receive the amount of the cheque. 4. The country bankers incur no liability and the proceeds could not be followed into their hands. The liability of the collecting or receiving banker depends on exactly the same considerations as in the last question, and he is not relieved from liability by passing the proceeds to the country banker. {Signed) Arthur Cohen, Q.O. {Signed) J. R. Paget. Temple, 2nd Feb., 1888. 267. — Question : A cheque to order is crossed within transverse lines " Account payee." It comes to the banker through the clearing, and bearing several other endorsements in addition to the payee's. Does such crossing limit the negotiability of the cheque ? Anstver : The Bills of Exchange Act, 1882, does not recognize or provide for any such words as part of a crossing, and the use of them should be, as far as possible, discouraged. 268. — Question : May not the following cheque be regarded as crossed to two bankers : — D go J23 " i^on(@n, [10th Nov., 1891. To lhej|t. CIenJent|Ba|nk|Ldp3 Pay to ^[es'^. I^m(;, A^rmir ^Co-o or bearer One hunire^an(fehirty-gx poul^ls. , £136 Churchill & Co.' The crossing " Bank of London " in capitals, and the crossing to Henderson's a/c are impressions from stamps ? Answer : No. The paying banker can have no means of knowing to whose credit in the books of the collecting banker a cheque is passed. See Question 2(jQ. G 2 84 Questmis on Bankhuj Practice. CHEQUES— co^z^wM^e^. 269. — Question : Are bankers justified in paying to another bank, " order " clieques drawn upon tliem, endorsed " rlaced to the credit of payee, with (signed) Smith, Jones and Co.," the latter being the payee's bankers ? Should not Smith, Jones and Co. endorse such cheques for their customer jyer^;ro. ? Answer : Such endorsements are occasionally passed by the paying bankers, but they have undoubtedly the right to refuse payment, giving the answer " Payee's endorsement required." See Questions 265, 267. The banker has no authority to sign per pro. for his customer. 270. — Question : A cheque is drawn payable feo Mr. Rd. Rees^ and is endorsed thus, " Payable to my credit at the Trading Bank, " St. Michael's Town, Rd. Rees." Should the Trading Bank endorse this cheque as having been passed to tlie credit of the payee ? Answer : Yes. See Question 127. 271. — Question : A crossed cheque is drawn payable to the order of self and endorsed by the drawer A B. He however writes in the body of the cheque, but not between the transverse lines, " Pay bearer " silver. A B." Is the instrument thereby rendered an open cheque,, or must it still be presented through a banker ? Answer : Such a cheque would be treated as an open cheque. 272. — Question : Is a banker justified in paying a crossed cheque on himself over the counter to a stranger, such cheque bearing across the face of it the words " please pay cash to the bearer," accompanied by the signature or the initials of the drawer. Answer : Such cheques signed with the full name of the drawer are generally cashed. 273. — Question : Would a banker be justified in refusing tO' collect a cheque crossed otherwise than generally or to himself ? Answer : If a banker received from his customer a cheque crossed specially to any other banker, he would l)e justified in declining to collect it. 274. — Question : If A draws a cheque on his bankers (who have several other branches) payable to B, and crossed " yourselves," and the cheque is stolen in transmission by C, who hands it to a country bank for collection, they stamping it in the usual course, and forwarding it direct by post to the bank on which it is drawn, who pay the amount over in good faith, who would be liable to A for the money ? Questions mi Banhing Practice. 85 QKE^q\J^^— continued. Answer : The drawees would apparently be in error in paying the cheque mentioned, inasmuch as it is crossed to two bankers ; first to themselves, and secondly to the bankers who remitted it for payment. 275. — Question : Is a banker justified in paying a cheque crossed to two bankers, with a request upon it, written by the drawer, to pay cash ? Answer : We do not think that a banker would be justified in paying the cheque in question. The request of the drawer, if noted on the cheque at the time of issue, is subsequently nullified by the double crossing — if, on the other hand, the drawer was asked to add the request after the cheque had been vitiated by a double crossing, it should have been destroyed and a fresh cheque issued. 276. — Question : A and B are two country banks carrying on business in the same town, in the course of which they clear cheques upon one another in the usual manner. Among the cheques drawn upon B, and presented by A for payment, is one bearing the crossing of C, a bank carrying on business in another place, also the usual crossing of A. Although, presumably the cheque has been sent by C to A for collection, there is nothing upon any part of it to prove it ; is this a doubly crossed cheque within the meaning of the Act, and is it, therefore, the duty of B to refuse payment on that ground ? Answer ? The crossing, as described, is apparently a double crossing within the meaning of the Act, and the paying banker B would be legally entitled to refuse payment to A. 277. — Question : Ought not the cheque to have been crossed " *' bank to A bank for collection," or " bank to A bank " simply ? Is not this the meaning of sub-sec. 5, sec. 77, Bills of Exchcmge Act, 1882? Answer : It is the usual custom, and is very desirable, to cross cheques as stated, viz., " C bank to A bank for collection," but such crossing is not absolutely required by the Act. 278. — Question : A Manchester bank receives a cheque from its London agents, specially crossed Messrs. Thomson and Co., London (not being the agents). Would the paying banker be right in returning the cheque because it did not bear Messrs. Thomson and Co.'s stamp ? Answer : No ; a crossing need not necessarily be stamped. 86 Questions on Banhing Practice. Q'R'EiqVW>— continued. 279. — Question ; Would A, as agent of C for collection, be right m amending the crossing accordingly, say, by putting the word " to " between C's crossing and their own ? Answer : The Bills of Exchange Act, 1882, clause 77, sec. 6 (introduced at the suggestion of the Institute of Bankers), provides for such amended crossing. 280. — Question : In the case of A having a number of corres- pondents and agents, a list of which is supplied to B, would the latter then be safe in paying the cheque crossed as described in Question 276 ? Answer : In such cases it is customary to pay. 281. — Question : Is it the practice of bankers to examine minutely the crossings of cheques handed for collection ? Answer : They should in strictness do so. 282. — Question : Does a country banker, who receives a cheque for payment by post from another banker, become the "agent for " collection," within the meaning of the Bills of Exchange Act, sec. 77, sub-sec. 5, and sec. 79, sub-sec. 1 ? or, in other words, how far does one bank constitute itself the agent of another ? Answer : It has been held that a country bank receiving a cheque by post from another bank for payment does become the " agent for *' collection " of the sending bank. See the opinion of Mr. Arthur Cohen, Q.C., and Mr. M. D. Chalmers (Question 4). 283. — Question : A cheque on a country bank, payable to John Smith, and properly endorsed, is presented by Thos. Owen to a bank in another town, whom he asks to collect the same for him. In due time the money is collected, and paid to Thos. Owen. John Smith afterwards informs the collecting bank that Owen has decamped with the money. Has Smith any claim upon the bank for paying the money to Owen ? Answer : No. 284. — Question : Referring to Question 283, would the position of the collecting banker be altered (1) if the cheque were crossed, (2) if the words " Not negotiable " were added to the crossing, and would the forgery of the payee's endorsement in either case make any difference ? Questions on Banking Practice. 87 G]mq\JW^—conUnued, Answer : (1) The crossing makes no difference, (2) the words " Not negotiable " make no difference, (3) the forgery of the endorse- ment renders the collecting banker liable. 285. — Question : In the case of Bissell and Co. v. Fox Bros, and Co., it was held that the fact of the bankers crossing three cheques to their London agents did not make them crossed cheques within the meaning of sec. 82 of the Bills of Exchange Act, 1882. Was not sec. 77, sub-sec. 6, introduced into this Act for the protection of bankers in cases similar to the above ? How should a banker cross cheques received in order to benefit by the last-named sec. ? Answer : Sec. 77, sub-sec. 6, was, as stated, specially introduced into the Bills of Exchange Act for the protection of bankers in cases such as that quoted, and it can only be presumed that the attention of the judges was not called thereto. 286. — Question : If a customer of the St. Michael's Bank draws a cheque on that bank in favour of B, who also is a customer of the bank, and crosses the cheque in the ordinary way — ^ / is the bank justified in placing the amount to B's credit, or in paying him cash over the counter for it ? Answer : The banker should not pay B cash over the counter, but should place the amount to his credit. See Question 287. 287. — Question : A crossed cheque " can only be paid to a " banker." If, then, one customer of a bank draws a cheque (which he crosses generally) in favour of another customer of the same bank, who presents it for payment, how is it to be dealt with ? Must the banker refuse payment, as it is a crossed cheque, and compel his customer to negotiate it through another bank ? x^NSWER : A banker would not be justified in paying cash to a customer. A, for a crossed cheque upon himself drawn by another customer B, but he could receive a cheque for A's credit and honour his drafts against it. 288. — Question : Is a banker forbidden by the Crossed Cheques Act to pay over the counter a crossed cheque drawn upon himself if he is perfectly sure that the person presenting the cheque is the 88 Questions on Banking Practice. CHEQUES— co?i/m?/ed payee, and whether the fact of the payee being a customer or not in any way affects the case ? Answer : By the provisions of the Bills of Exchange Act, 1882, which has superseded the Crossed Cheques Act, a crossed cheque can only be paid to a banker — in the event of a cheque drawn on a bank by one customer in favour of another customer of the same bank, and crossed, the cheque could not be paid over the counter to the payee, but would be placed to his credit. 289. — Question : By sec. 79 of the Bills of Exchange Act, 1882, a banker is directed to refuse payment of a crossed cheque except to another banker. Is a banker, therefore, evading the law by placing to an account cheques drawn by another customer and crossed generally ? Is the banker protected in this custom by sec. 82 ? Answer : The banker is quite justified in so placing the cheque. 290. — Question : John Smith opens an account in the name of John Smith, trading as Smith Brothers. He authorises the bank to honour the signature of his brother (who is not a partner), and who is also to sign as " Smith Brothers," instead of per procuration. Is this strictly in order ? Answer : It is in order as between John Smith and his banker, but it would involve the brother, sp signing, in grave responsibility towards creditors of the firm. 291. — Question : Two merchants, A and B, who trade with each other, both keep their accounts at the same bank, H. A pays to B a cheque drawn by C, one of A's customers. A endorsing the same, B pays it in to his bankers, H. It is dishonoured by the drawees and returned to H, who, instead of returning it to B, debits the account of A, the payee and endorser, advising him thereof. Are the bankers H justified in doing this ? Answer : No. The cheque should have been returned to B. 292. — Question : An account is opened with a banker in the name of John Smith, the partners in which are Jane Smith, Thomas Smith, and John Jones. Should the account be opened in the ledger as " John Smith," or " Jane Smith, Thomas Smith and John " Jones, trading as ' John Smith ? '" Answer ; The account should be opened as " John Smith." Questions on Banking Practice. 89 CHEQUES— co?^/^>^^imma facie evidence that " the liabilities of the party whose signature is cancelled liave been " discharged." See "Chalmers on Bills of Exchange," Second Edition, page 211. 308. — Question : Is a cheque invalid when not dated, or can any holder fill in the date ? Answer : By the Bills of Exchange Acty 1882, clause 3, sec. 4, *' A bill (cheque) is not invalid by reason that it is not dated ; " and, by clause 12 of the same Act, any holder may insert the date. 309. — Question : Is it legal for a banker to refuse payment of an undated cheque ? Answer : It is the general custom of bankers not to pay such cheques. 310. — Question : A cheque, the date of which is incomplete, thus 1st December, 18 — , the year being omitted, is presented on the 2nd December, 1890. Is a banker legally entitled to refuse payment ? Is it the general custom to do so ? If such is the general custom is it one which it is desirable to follow ? Answer : The banker is entitled to return the cheque with the answer " Date incomplete," but there is no general custom to do so. Each particular case depends on the relations existing between the banker and his customer. 311. — Question : Can a banker legally refuse to honour a cheque, or bill dated or accepted on a Sunday ? Answer : He cannot. 312. — Question : A cheque is drawn on the A B Banking Co., for £5 ; after the amount in the body of the cheque is written " For Questions 07i Banking Practice. * 93 CHEQUES— con^^mwe^. " renfc of house to 25th March next." This writing is ruled through. The A B Banking Co. return cheque, marking it " Alteration in body " of cheque requires to be initialled." Are they justified in returning this cheque ? Answer : A cheque being an unconditional order to pay money,, no notice should be taken by the paying banker of the purpose for which the cheque is given. 313. — Question : A cheque was drawn payable to order as follows : — Pay to Thomas Smith, or order, one hundred pounds " in full settlement.^'' Endorsed by payee, " Thomas Smith, in part " settlement.'" Had the banker power to return the cheque so endorsed by the payee ? The " in part settlement " had been added by the payee, and ought he not to have communicated with the drawer before paying the cheque into his credit ? Answer : The instrument referred to in the question is, in our opinion, a complete cheque. It is (apart from the words " in full " settlement ") drawn in the usual form, is made payable to the order of Thomas Smith, and purports (to use the words of the Bills of Exchange Act, 1882, sec. 60) to be endorsed by him. The bankers are, therefore, clearly bound to pay it unless the additions in the body of the cheque and in the endorsement justify them in returning it. In our view the words " in full settlement " may, as between the bankers and their customer, be considered as merely an addition to an instrument already complete, and as being addressed, not to the banker, but to the payee, in order to show upon what terms that complete instrument is to be received by him. It is no part of the ordinary duty of bankers to settle accounts between their customer and his creditors. While this is our view, we think the cheque is drawn in a form calculated to embarrass, and that the bankers would> for that reason, have been justified, as between themselves and their customer, to whom alone they are responsible, in returning it. 314. — Question : A draws a cheque upon his bankers B and Co.^ post-dated " Oct. 25." It is presented for payment on October 23, and B and Co. return it marked " Not provided for." A in the meantime, on or before October 25th, pays in sufficient funds, and complains that the reply of the bankers has needlessly damaged his- credit. Has he any remedy against his bankers ? Answer : Yes. The answer given when the cheque was presented should have been " Post-dated." 315. — Question : A banker has debited his customer's account with a post-dated cheque, and subsequently refused payment of a 94 Questions on Banking Practice, CHEQUES— co^z^mwe^. cheque for want of funds. Is the banker protected from an action for dishonour, or has he a right to pay the post-dated cheque on demand if he chooses to do so ? Answer : The banker is liable for dishonouring the subsequent cheque. He should not have paid the post-dated cheque. 316. — Question : A cheque drawn abroad on a London banker was presented for payment on the day it was dated, through a country bank. Was the drawee justified in dishonouring the cheque with answer, " Post-dated ; present again in a few days ? " Answ^er : As post-dating is not illegal, the cheque in question might have been so issued ; but the banker on whom it was drawn was not justified in refusing it with the answer given when presented on the day it was dated. 317. — Question : A cheque is dated January 25 (which is Sunday), and presented the previous day. Is a banker legally justified in returning it marked " Post-dated," or does it come under sec. 14 of the Bills of Exchange Act, 1882 ? Answ^er : The answer of " Post-dated " is correct. The cheque as described does not come within sec. 14 of the Bills of Exchange Act, 1882, which relates to bills payable otherwise than on demand. 318. — Question : A cheque was presented to a banker drawn thus : " Pay Cash or Bearer " (the word Bearer having been substituted for Order, but the alteration was not initialled). The banker returned the cheque with a request that the alteration should be initialled. The customer contended that in terms of clause 3, sec. 7, of the Bills of Exchange Act, " Where the payee is a " fictitious or non-existing person the bill may be treated as payable to " bearer." But the banker asserts his right to return the cheque, under clause 1 of the same section, " Where a bill is not payable to bearer, "the payee must be named or otherwise indicated therein with sufficient " certainty." Was the banker right in returning the cheque under the circumstances stated ? Answer : It is, we believe, becoming the custom to treat cheques with an impersonal or non-existing payee as coming under clause 3 of sec. 7, Bills of Exchange Act, 1882, and, consequently, as payable to bearer. 319. — Question : A cheque uncrossed, drawn to "Bill attached or " bearer," is presented across the counter. No bill is in fact attached to the cheque. Is the banker right in paying such cheque without the bill being handed to him ? Questions on Banking Practice. 95 Q'E.Y^qjJ'E^— continued. Answer : The cheque being uncrossed, and to bearer, the banker is legally bound to pay it, but he would obviously make enquiries. 320. — Question : Are cheques to order payable to *' Wages," "Housekeeping," "Expenses," or to a number affected by this section and considered payable to bearer, or is the expression " Fictitious or non-existing person," to be taken literally ? Answer : It is, we believe, becoming the custom to treat cheques with an impersonal or non-existing payee as coming under the 7th clause of the Bills of Exchange Act, 1882, and, consequently, as payable to bearer. 321. — Question : A cheque drawn on banker A is made payable to the account of B, with C and Co., the word "order" being ruled out and initialled by the drawer, but " bearer " not inserted. Would A be justified before paying a cheque drawn thus in requiring C and Co. to state on the back that it has been placed to B's account, or would the endorsement of C and Co. without the memorandum be sufficient ? Answer : The endorsement of C and Co. would be sufficient, but is not necessary. 322. — Question : If the cheque mentioned in the last question were payable to " a/c of B with A," and it is uncrossed, would A be justified in cashing it, and if so, is it necessary he should pay the money direct to B or through an equivalent channel ? Answer : A should credit B's account with the amount, and B should draw a fresh cheque for the amount. 323. — Question : A cheque is drawn by John Smith (who banks at two places) on the A Banking Company, made payable " to my " credit at the B Banking Company ;" the words " or order " are struck out and initialled, but the words "or bearer'' are not substituted. Should the A Banking Company pay such cheque without any endorsement whatever, or should they require the B Banking Company to endorse it as having been placed to credit ? Answer : Under the circumstances, the A Banking Company would be justified in asking for the endorsement of the B Banking Company. 324.— Question : A post-dated cheque is given by A B to C D, who presents the same for payment. Can the bankers refuse payment on the ground that the cheque is post-dated, seeing that sec. 13 of the Bills of Exchange Act, 1882, expressly states that 96 Questions on Banlcincj Practice. Q,^YS^W^— continued. a bill is not invalid by reason only that it is post-dated, and by sec. 73 a cheque is payable on demand ? Would it be held that, the cheque having been issued, the date of presentation at the banker's would be the true date thereof ? Suppose a banker refuses payment of a post-dated cheque, would he be protected from an action for dishonouring his customer's cheque when it is open to the customer to allege either that the date was a mistake on his part, or that, although it was post-dated, it was, being a cheque, payable on demand ? Answer : In practice, the date on the cheque, and not the date of presentation, would be considered the true date thereof. The banker would be justified in refusing to pay such a cheque if he thought fit. 325. — Question : Is it competent for the payee, or any subsequent holder of a cheque payable to leaver, to change its tenor and make it payable to the order of an endorsee, and if not discharged by him would the banker on whom it is drawn be justified in refusing payment ? Is it the practice of London bankers to examine the endorsements of cheques payable to " bearer " ? Answer : The drawer is the only party to the cheque who can alter its tenor from " bearer " to " order." It is not usual in London to examine any endorsements on a cheque payable to " bearer." 326. — Question : The answer to the last question is that, " The " drawer is the only party to the cheque who can alter its tenor from " * bearer ' to ' order.' " In the case of a cheque so altered on the face (it is doubtful by whom, there being no initials), and not endorsed, is it the duty of the banker, who is the drawee, to disregard the alteration, or to return the cheque for endorsement ? Answer : He should return the cheque for endorsement. 327. — Question ; Some bankers have their cheques printed thus : " On demand, pay or Order." Could not a bank be compelled to pay such a cheque at the present time, though post- dated ? Answer : No. 328. — Question : Whether a cheque with the word " bearer " struck out, but the word " order " omitted, ought not to be paid by the banker if endorsed by the payee ? Answer : It is clear that a cheque with the word " bearer " struck out, but the word " order " omitted, is payable only to the particular person named, and in case of question arising the onus of showing Questions 07i Banking Practice, 97 OB.'EiqV^^— continued. that the money reached the hands of that person would be thrown upon the banker. It is for him to consider whether for the conveni- ence of business he will be satisfied to pay the cheque upon what purports to be the signature of the payee. See Bills of Exchange Act, 1882, sec. 8, sub-sec. 4. 329. — Question : " A crossed cheque," drawn " Pay bearer or " order," is duly presented, but without any endorsement. Should it be paid or returned with the answer " Eequires endorsement " ? Answ^er : The word " order " being printed in the form of the cheque, the drawer by inserting " bearer " evidently meant it to be so payable. The cheque may therefore be paid without endorsement. 330. — Question : Cheques drawn to order by corporate bodies, trustees and others are not unfrequently altered " to bearer " by a secretary or town clerk, who has countersigned, or by one of the drawers placing his initials against the alteration. If a cheque so altered be misappropriated, do the bankers upon whom it is drawn incur any liability by paying it without receiving from the several drawers their authority to do so under the altered condition of the instrument ? Answer : Yes. 331. — Question : An account with a school is opened, the com- mittee giving authority to one of their number to sign cheques. On the death of this one (no new arrangement being entered into) are the bankers justified in returning the cheques with the answer " Drawer deceased " ? Answer : If a cheque be signed in an official capacity it would not be refused by the banker, although the drawer had in the meantime died; if, however, merely signed individually, it would be refused with the answer " Drawer deceased." 332. — Question : The Municipal Acts say — " 1. The Council shall from time to time appoint a fit person, " not a member of the Council, to be the Treasurer of the " Borough." ^' 2. All payments to and out of the borough fund shall be made " to and by the Treasurer." In case the Council of the said Corporation desire to have a banking account, should it not be opened with the bank in the name of the Treasurer, as under : — "A B, Treasurer for the Mayor, Aldermen, and Burgesses of " the Borough of ." 98 Questions on BanUng Practice. QWEiq\JW>— continued. Would it not be illegal for the said Treasurer to allow the account to be opened in the name of the " Mayor, Aldermen, and Burgesses of " the Borough of ," and to allow members of the Council to sign cheques drawn on the accomit without his signature, as if it were their own account ? Answer : "We think the form of account suggested is the correct one, and that it would be illegal for the Treasurer to allow members of the Council to sign cheques drawn on the account without his signature. 333. — Question : Some banl« print upon their "order" cheques : " This cheque, must not be made payable to bearer." Can they legally do so, and would they be right in refusing to honour such "order" cheques, supposing the drawer altered the "order" to "bearer"? Answer : Acceptance by the customer of a cheque book so printed implies a contract between himself and his banker that would justify the latter in refusing payment of a cheque so altered. 334. — Question : Cheques drawn on a school a/c which is over- drawn are signed by three members of the school committee. Does the fact of their so signing render such members individually or personally liable to the bank for the amount of the cheques to which their signatures may be appended ? Answer : They would not be hable if they add words to their signature indicating that they sign in a representative character. See Bills of Exchange Act, 1882, sec. 2Q. 335. — Question : The Blankshire Bank has an account. " Treasurer of Batney Chapel, John Johnson, Treasurer." The present treasurer is well-to-do, and has been told that, in the absence of a guarantee to secure an overdraft, cheques which over- draw the account will only be paid on his responsibihty. A small debit balance now exists, which the treasurer decUnes to pay out of his own money. Is he liable after being so warned or not ? Answ^er : The treasurer would not be .liable unless it could be proved that he accepted the conditions stated. 336. — Question : Is it contrary to law or banking practice for bankers to pay cheques drawn by one firm, per procuration, for another, the firm signing being agents of the other ? Answer : No. Questions on Banhing Practice. 99 CHEQUES— co/i^mwe^. 337. — Question : A banking account is opened in the name " Overseers of A d," of whom there are four — all are empowered to sign cheques. Can they give an authority to the banker which would justify him in honouring cheques on the account signed by only two or more of the overseers ? Or are they considered as trustees, which would compel the banker to require the signatures of all the four. Answer : It is the usual practice to obtain the signatures of all the Overseers. 338. — Question : Can overseers give an authority to sign cheques on their account to another person outside their own body — say to a paid assistant ? Answer : Such cheques should in strictness be signed by all the overseers. They should not give authority to persons outside their own body to sign. 339. — Question : Is it requisite in overseers' and churchwardens' accounts to have cheques signed by the out-going in favour of the incoming overseers or churchwardens for any balance standing to their credit at the bank on the date of change : and in case of an overdrawn account for the new overseers or churchwardens to sign a cheque in favour of the old ones in order to keep the bank safe ? Answer : The accounts of overseers and churchwardens are usually opened in the names of the individuals, and the practice above suggested is commonly adopted. 340. — Question : A customer presents his own cheque over the counter payable to " self or order," and objects to endorse it because he presents the cheque himself to the bank it was drawn upon. "Would the bank be legally justified in paying such a cheque ? Answer : The bank is entitled, before paying such cheque, to demand a discharge from the payee. 341. — Question : A London banker receives from a customer a cheque on a bank in Ireland, and sends it for collection. The Irish banker remits, not a draft on demand, less commission, but a bill for the full amount at seven days' date. Is the Irish banker allowed by custom the option of remitting on demand, less commission, or in a bill at seven days without deduction ? And does the English banker incur no responsibility towards his customer in accepting the re- mittance at seven days' date, supposing the Irish banker to fail before the maturity of the bill ? H 2 100 Questions on Banking Practice. CHEQUES— con^mweJ. Answer : "We believe that the usual custom among Irish bankers is to remit a draft on demand, less commission, unless otherwise specially instructed. The London banker is entitled to a draft on demand, and unless specially instructed by his customer would accept any other at his own risk. 342. — Question : Can commission be legally claimed by a banker, re-presenting a previously unpaid cheque, from the banker on whom the cheque is drawn ? Case : A receives in customer's credit a cheque drawn on B. The cheque is returned by B, marked " N .S." Subsequently the drawer provides funds and requests that the cheque be re-presented. This is done, when A claims, in addition to the amount of the cheque, a commission for re-presentation ; can such a claim be sustained, or should not such commission be a matter entirely between A and his customer ? Answer : It is not the custom for a banker to pay commission on re-presentation of a dishonoured cheque, nor do we think such commission could be legally claimed by the presenting banker, as any charges would be a matter between him and his customer. 343. — Question : When a customer keeps a current account with a large turnover, and an inadequate credit balance, and the banker, adopting the usual course, charges a commission, can the customer refuse to pay the commission, on the ground that he had received no notice that the banker intended to make a charge ? Answer : The custom of charging commission on current accounts is so well established in the country, that possibly it would be legally enforceable against a customer. This is not so, however, in London, and in any case it is advisable that notice should be given to the customer beforehand. 344. — Question : When a cheque has been presented for payment through the post by a bank and returned unpaid (" Refer to drawer "), is it legal or customary on re-presentation to attach expenses thereto, also what remedy (if any) has the presenting bank demanding such expenses against the drawer of the cheque in the event of his declining to pay ? Answer : It is not unusual to attach a ticket of expenses to a cheque on re-presentation under the circumstances mentioned. The banker on whom the cheque is drawn would not pay the expenses unless instructed to do so by the drawer, but the latter is probably liable for such expenses as are authorised by sec. 57 of the Bills of Exchange Act. Questions on Banking Practice, 101 CHEQUES— co?i^mwe^. 345. — Question : A banker returns his client's cheque with the answer " Effects not cleared." Does he, by this answer, commit himself to pay when the effects are cleared, or, on re-presentation, does the cheque take its chance ? Answer : No ; the banker does not commit himself. The cheque takes its chance if re-presented. 346. — Question : Is the answer " Present again " a legal and sufficient answer to mark on a cheque returned by a banker to another banker when the customer by whom the cheque is drawn has not sufficient funds with the paying banker to meet it. Is not the banker who returns a cheque bound to state thereon his reason for refusing payment thereof ? Answer : The answer " Present again " is not a sufficient answer, the banker returning such cheque should state thereon a definite reason for refusing payment. 347. — Question : Is the answer " Present again," or " Please *' re-present," a proper or legal answer to affix to a cheque, payment of which has been refused ? Cannot a presenting banker demand a proper answer, such as " Kefer to drawer," " N/S," &c. ? Answer : " Present again," or " Please re-present," are usual answers, but are not in accordance with the Rules of the Clearing House. 348. — Question : Is a cheque signed " Moon Foundry Co.," only without the name of the drawer, a cheque within the meaning of the Acts of Parliament regulating such document. If a bank agrees to open an account headed thus : — "John Smith, "Moon Foundry Co." with a note in the ledger that cheques will be signed " Moon " Foundry Co.," would the bank be safe in charging the account with cheques so drawn ? Answer ; Such a document would be a cheque, and the bank w^ould be quite safe in acting as suggested. 349. — Question : Referring to Question 347, is the answer " Refer to drawer," affixed to a dishonoured cheque, in strict accord- ance with the rules of the Clearing House ? In the case of a cheque dishonoured with such an answer as " Present again " (which you think not in accordance with these rules), should it on that ground 102 Questions on BanUng Practice. CH EQUES— c(??^^^m^e^. be refused to be taken back [by the presenting banker, who, you say, has no right to demand any special form of answer ; could such refusal be upheld ? '/ Answee : The answer " Refer to drawer " is perfectly legitimate, and the answer " Present again," although, as stated, not strictly in accordance with the rules of the Clearing House, is not unusual, and would not afford ground for refusal on the part of the presenting banker to take back a cheque so answered. 350. — Question : A B and Co. and C J) and Co are two banks in the same town. A B and Co. receive from another branch of their own bank a cheque on C D and Co. for collection. On presenting it. C D and Co attach answer, " Please present to-morrow." Is such a proper answer, it being the custom to return cheques the day received if unpaid ? Answer : Such answer is irregular ; on its being received the cheque should be returned. 351. — Question : What is the correct course to pursue when a doubtful customer pays to his account uncleared cheques and draws against them ? (1) Should his bankers put the cheques to the client's account or to a suspense account ? (2) If to the client's account, do the bankers incur any liability if they return a cheque " Effects not cleared " ? Answer : The practice in London is to place all London cheques to credit when paid in, and in the event of a doubtful customer drawing against such cheques before they are encashed to refuse his drafts with the answer, " Effects not cleared." COUPONS— 352. — Question : A coupon is drawn as follows — " 9 August, 1889. " To the Banking Co. " Pay on Dec. 8th, 1889, the sum of £10." The 8th of December, 1889, was on a Sunday. Would it be correct to pay on the day previous, as with a bill ? Answer : Coupons maturing on a Sunday are payable on the next business day. Questions on Banking Practice. 103 DIVIDEND WARRANTS— 353. — Questio:n' : Cheques in payment of interest or dividends are frequently drawn payable to a party named " and another." Is a banker safe in paying on the endorsement of either party without the other, or are both necessary ? Answer : One signature only is necessary. See Chalmers' edition (1882) of Bills of Exchange Act, 1882, sec. 97, and note thereon. 354. — Question : Is a banker justified in refusing to pay a dividend warrant signed ''per jjro^ the proprietor and guaranteed by a banker ? Answer : Dividend warrants require the discharge of the pro- prietors or stockholders, and bankers are not justified in paying them without such discharge unless specially authorised to do so by the company. If a paying banker pays under a guarantee, he does so at his own risk. 355. — Question : Referring to the note {d) on p. 65 of Chalmers' book on the Bills of Exchange Act, 1882, it is stated to be the custom of bankers to cash on the signature of one payee only, dividend warrants made out in favour of two persons. This ignores the consideration that the payees may not be the owners of the stock or shares represented, but simply trustees to receive and deal with the dividend in a specific way — (1) In the event of a banker paying a dividend warrant discharged in this way, could he be held responsible, supposing that one of the payees received and misappropriated the money ? (2) Would the banker be protected by the fact that the warrant contained no notice of trust ? (3) Is there not a probability that a Court of Law would over- ride the custom (presuming such a custom to exist), and hold that the warrant to be validly discharged must bear the signature of each payee ? Answer : (1) We do not think the banker could be held respon- sible in the circumstances mentioned. (2) He is not affected by the fact that the money is trust money, nor (3) do we think it probable that a Court of Law would override this well-established custom. 356. — Question : A dividend warrant payable to two persons may be endorsed by one only. Is anything required further than one of the names without reference to the other, such as the phrase " for " self and other " .? Answer : One name only is sufficient. 104 Questions on Banhing Practice. DIVIDEND 'WKK'RK^T^^— continued, 357. — Question : The undernoted dividend warrant has been re- fused payment by the bank who give the reason " Eequires signature ^' and address of John Malcolm." (1) Are they within their legal rights in doing this ? (2) Would they be obliged to pay it to " the bearer " without the signature of either proprietor ? [Copy.] "77th Dividend to December, 1887. "No. 7864. 10 Shares Brannox Branch. ** To The Cowes Bank, Limited. " Pay John Malcolm and Mary Malcolm or Bearer. " Ten pounds. " for dividend of £1 per share to 31st December, 1887. ** £10 " James Noble, " Director." ** Mary Malcolm / Proprietor's Signature, \ V and Address / Answer : (1) It is the ordinary usage to pay dividend warrants on the signature of one of the proprietors. Special Acts of Parliament generally authorise the practice, and the general usage is preserved by sec. 97, sub. 3 {d) of the Bills of Exchange Act, 1882. (2) The document is not complete without the signature of the proprietor and should not be paid to " bearer " without such signature. DEBENTURE— 358. — Question : A Limited Liability Company have an over- drawn account with their banker, and finding their trading requires further capital, they propose to raise it by way of debentures, but without having any intention of clearing off their overdraft. How does this affect the banker's position ? Would such debentures be a first charge on the assets of the company, and rank for payment before his claim in the event of bankruptcy ? Answer : There seems to be a very common impression that a company by merely giving a particular instrument the name of " Debenture," confers upon its holder the right, in case of the com- pany's insolvency, to rank upon its assets in priority to the ordinary creditors. This impression is an erroneous one. In order to give the holders of debentures issued by a company a claim prior to that of ordinary creditors, the assets of the company, or some part thereof. Questions on Banking Practice. 106 DEBENTURE— coTi/mwe^. must be specifically charged as security for payment of those deben- tures, otherwise they are mere acknowledgments of indebtedness on the part of the company, and the holders will, in the event of its insolvency, rank equally with the other ordinary creditors, including in this particular case the bankers. DEPOSIT ACCOUNT— 359. — Question : A B has a deposit account with a banker, and is also a party to a bill lying overdue and unpaid in the same hands. Can the banker refuse payment of the deposit receipt to A B, and apply the deposit, or so much of it as is needed in payment of the overdue bill ? Answer : He can. 360. — Question : In the event of the winding up of a bank, have creditors on deposit account a prior claim on the assets to creditors on current account ? Has there been any legal decision bearing on the point ? Answee : The creditors would all rank alike. 361. — Question : A deposit receipt is granted in the names of " John Jones, " John Brown, and " James Robinson, or the survivors or survivor "of them." (a) On proof of the death of Jones and Brown, is the bank justified in repaying the money to Robinson ? (d) Jones, being dead, and a bankrupt, must the bank have an authority from the Bankruptcy Court, before repaying the money to Brown and Robinson ? (c) Is it sufficient that the deposit receipt states that the money is repayable to the survivors or survivor, or is it necessary that a letter be signed by all the persons in whose favour the receipt is granted, authorising the bank to pay on the joint receipt of the survivors or survivor ? Answers : (a) Yes. (b) No, the money may be paid to the survivors, (c) It is sufficient that the deposit receipt states that the money is repayable to the survivors, though the additional precaution of an authorising letter is sometimes taken. 362. — Question : A deposit account is opened in the joint names of A B and C B (his wife) The bank takes a mandate to pay 106 Questions on Banking Practice. DEPOSIT A.QQOV^ll—conUnued. to either or the survivor. A B dies leaving a will, and in a fortnight his wife (0 B) also dies, not having claimed the money. Has the bank power to pay to the executors of A B ? Answer : No. As K B died first, the deposit became the property of his wife. 363. — Question : Is a banker justified in opening a deposit account in the name of a firm — thus, " Brown Brothers " or " Thomas " Brown & Co." Should not the account be taken in the individual names ? Would it alter your answer, if the firm had a current account also with the bank. Answer : The bank is perfectly justified in opening the account in the name of the firm, nor would the fact that there was a current account already open make any difference. 364. — Question : Colonial and Indian banks take money on de- posit for fixed periods. It is the custom of these banks to send notices, shortly before the expiring of the period of the deposit, stating the rate of interest offered provided the money is re-deposited. Is a bank bound to pay if the deposit receipt is presented duly stamped and endorsed, or can they insist on having written notice of withdrawal as demanded in the accompanying form ? Most of those deposits come to the banks through agents, and the depositors are resident in all parts of the United Kingdom, and the apparent object of the bank in question requiring written notice of withdrawal, is to guard against fraud. If a depositor endorsed his receipt and handed it to his broker to re-deposit for another period of years, upon whom would the loss fall if the broker or one of his clerks cashed the deposit receipt and appropriated the money. (Copy of Notice.) " I beg to remind you that your deposit of £ , will be payable on ^* the , and if you desire to renew it for a further period, you will " please forward the receipt to me, duly endorsed. If you require " repayment of the deposit, the receipt must be stamped and endorsed, " and advice* must be sent to this office that the receipt will be pre- '* sented for payment." " The rates of interest allowed at the present time are as follows : — 1 year mrer," and is endorsed "pay Jones and Co. or order." Is the paying banker bound to pay any regard to the second or other endorsements ? Answer : Xo, the cheque is payable to bearer. 400. — Question : A cheque is made payable to "W T, or bearer. It is endorsed by W T and by him made payable to A B, or order ; {a) Must A B endorse this cheque ? {b) If "W T had not endorsed the cheque, could any subsequent holder endorse and make it payable to the order of some one else ? Answer : {a) The cheque being to " bearer," the banker is not bound to look at endorsements. (Jb) See Question 399. 401. — Question : Would a banker be legally justified in paying a cheque draAvn as under without its being endorsed ? Pay to the Order of A B and Co.^ or Bearer. Written by drawer. Answer : The banker should return a cheque so drawn as irregular. 402. — Question : Would cheques drawn to the order of Messrs. F. J. Hunt be correctly endorsed thus : " F. J. and F. J. Hunt " ? Answer : This endorsement is correct. 403. — Question : According to the recognized laws of endorse- ment of cheques, is a banker justified (except at his own risk) in paying a cheque with this endorsement : — " W. S. Symes, "i;ro S. Woodgate".? Answer : A banker would be legally entitled to refuse a cheque so endorsed. Questions on Banking Practice. 119 ENDORSEMENT— co/iiJmz^^. 404. — Question : Is a banker justified in returning with the answer " Endorsement irregular," a cheque payable to " Mr. Henrj " Smith, sen.," and endorsed " Henry Smith " only ? Answer : He is so justified. 405. — Question : Should a negotiable instrument drawn payable " to order," endorsed with the prefix of the word " Mr.," " Mrs.," or " Messrs.," or with a clerical, military, or other title — with or ivitliout Christian names or initials — be held to be properly endorsed ? Answer : As we understand this question, the supposition is that the negotiable instrument (be it cheque, note, or bill) has been endorsed with the same name (with the prefix to whose order it was made payable, and the only question is whether the circum- stance of the endorsement not being a signature in a usual form involves the banker cashing the instrument in liabihty. Our opinion is that it does not. We think the endorsement could only have been made in order to secure the negotiability of the instrument, and that it would be held sufficient for that purpose. And it is to be observed, in the case of cheques, that such difficulty as may arise is occasioned by the form of the instrument as framed by the drawer himself, to whom the banker would be accountable, and who ought not to be heard to complain of any consequent irregularity, if such there be, in the endorsement. If such endorsement, with the addition of the prefix " Mr.," &c., is made by the payee, it is quite valid. It is only a doubt on this point which would cause a banker to refuse payment. 406. — Question : If a cheque is payable to Mr. John Brown and endorsed by him, " Mr. John Brown," is a banker justified in returning such cheque ? And, secondly, if the prefix " Mr." is crossed out, would the bank be right in refusing payment on the grounds, in both cases, of the endorsement being irregular ? Answer : It is customary for bankers to refuse payment of cheques endorsed as stated in this question, on account of the endorsements not being in the usual form. 407. — Question : Is a banker justified in refusing payment of a cheque payable to " Mr. Barrens " or order, and endorsed " Barrens," and, if so, why ? Answer : Yes, as it is not usual in the United Kingdom to sign without initials. 408. — Question : A cheque is payable to " Messrs. Cooper," or order, and endorsed " Coopers." Is the endorsement correct .^ 120 Questions on Banlcing Practice. ENDORSEMENT— co/i^mwe^. Answer : The endorsement is probably correct, but is unusual and very inconvenient. 409. — Question : Would the endorsement " Booker" be correct on a cheque payable to Messrs. Booker ? Answer : No. 410. — Question : If a cheque is made payable to " Haywood or " order," and endorsed " Haywood," is a banker justified in returning it as incorrectly endorsed ? Answer : The cheque is drawn in an unusual and inconvenient form, and the banker is therefore justified in returning it as endorsed. At the same time such endorsements are occasionally passed. 411. — Question : Can a banker refuse payment of a cheque payable to the order of " Messrs. Barrens," and endorsed simply " Barrens " ? Answer : He cannot. 412. — Question : When the drawer of a cheque makes it payable to " self or order," is it correct to accept the endorsement ^^er^^r^?. of a person unknown to you ? Answer : No. 413. — Question : A cheque is made payable to Rev. CD. Smith, and endorsed : — ''^ per pro. Rev. C. D. Smith, " Henry Brown." Is a banker justified in returning the above with the answer " Endorsement irregular " ? Answer : No. 414. — Question : What is the general practice of bankers in regard to cheques drawn to order, where what purports to be the payee's endorsement does not appear /rs^ in order on the back of the cheque ? Sec. 32, clause 5, of the Bills of Exchange Act, 1882, provides that where there are two or more endorsements on a bill, each endorsement is deemed to have been made in the order in Avhich it appears on the bill, till the contrary is proved. Can a banker therefore pay tvith safety when no proof is tendered to him that the endorsement purporting to le the payee's does not appear first, but second or third, notwithstanding that his endorsement might in point of fact have been made first, and the others subsequently added ? Questions on Banhing Practice. 121 ENDORSEMENT— co?^^mwef?. Answer : The cheque is in order if it bears the endorsement of the payee, wherever placed. 415. — Question : A cheque payable to " W Bird, Esq., or order," was endorsed " W. Bird, pay the order of Mrs. E. Hume." Is not the fact of W. Bird's endorsement being above the further instruc- tions sufficient discharge to the paying banker, or are the bankers justified in returning the cheque with the answer, " Second endorse- *' ment required " ? Answer : We think the drawee would be justified in returning the cheque. 416. — Question : A cheque payable to " Jane Jones or order " is endorsed : — " Received Cash, " Jane Jones, " Newcastle." is such endorsement in order ? Answer : Yes. 417. — Question : A cheque payable to " Messrs. J. and J. Wood, " or order," was presented, bearing the following endorsement : — " J. and J. Wood, "per J. R. and J. T. Wood." Would it, in view of the Bills of Exchange Act, 1882, sec. 32, ss. 4, be safe to refuse payment because of irregularity of endorsement in such a case ? Answer : The banker to whom the cheque was presented would be justified under the circumstances in requiring evidence of the authority of J. R. and J. T. Wood to sign for J. and J. Wood. 418. — Question : If a cheque is payable to Mrs. John Smith, is it sufficient for it to be endorsed " M. A. Smith " ? Answer : No ; it is usual to add the words, "wife of John Smith," without which the cheque ought not to be paid, unless the drawee knows of his own knowledge that M. A. Smith is Mrs. John Smith. 419. — Question : A cheque is drawn payable to Mrs. R. Smith, and endorsed " M. A. Smith, widow of R. Smith." Is this endorse- ment correct ? Answer : Yes. 122 Questions on Banking Practice. ENDORSEMENT— co/^^^m^/e^. 420. — Question : A cheque is payable to James Smith or order, and is endorsed by him thus : — iir ^fy,Q SJJiith ^^ ^^ ^^^ practice of some London bankers to return cheques so endorsed with the answer " Endorsement irregular." Is such an endorsement irregular ? and if so, does the nearness or remoteness of the two signatures affect the question ? Answer : The cheque being duly endorsed by James Smith, which is all that is required, should be paid. The Avords " Martha Smith '* are mere surplusage, and may be disregarded. 421. — Question : W. Smith dies and leaves his business and all his property to his widow, whom he appoints sole executrix. The business is continued, and the widow endorses cheques paid in — " W. Smith, " Juha Smith," with the result that the cheques are invariably returned " Endorse- ment irregular." As the widow cannot sign ^^per pro^ nor as executrix until the will is proved, what endorsement, under the circumstances, would be correct ? Answer : No endorsement is strictly legal until probate has been granted. 422. — Question : A cheque, payable to the Order of " Mrs. Thomas " Smith," who was a widow at the time the cheque was drawn, but who has since died, is endorsed — " Alfred Jones, " M. A. Jones, " Executors of the late Dorothy Smith, widow of the late Thomas "Smith." Are the bankers, upon whom the cheque is drawn, justified in returning it, marked " Endorsement irregular." If so, in what way is the endorsement irregular, and what would be a correct endorse- ment ? Answer : The endorsement is quite in order, and the bankers therefore were not justified in returning it as stated. 423 — Question : A cheque payable to J. Jones, is endorsed "Transferred to W. Eobinson, J. Jones," and presented to the banker on whom it is drawn by T. Brown. Is Robinson's endorse- ment necessary, and would he have a remedy against the paying Questions on Banking Practice. 125 ENDORSEMENT— c(?7^^mwed banker if the cheque was not endorsed by him, and Brown had obtained the cheque fraudulently ? Answer : Robinson's endorsement would appear to be required, but he would have no remedy against the banker in the case mentioned. 424. — Question : A cheque being drawn payable to the order of Mr. J. and Mrs. S. Langdon, is endorsed " J. and S. Langdon." Is not this irregular ? Answer : It is. Mr. Langdon and Mrs. Langdon should each endorse the cheque separately. 425. — Question : A cheque payable to Mr. J. Robinson, or order, endorsed " Emma Smith, executrix of the late J. Robinson." Is a banker justified in paying on this endorsement ? Answer : It is customary to pay cheques endorsed as stated, the endorsement purporting to be that of the legal representative of the payee. 426. — Question : A cheque is payable to the order of Miss Smith, and she marries ; who should endoree the cheque, and how ? Answer : Presuming that the cheque is payable to Miss Ann Smith and that she subsequently marries John Jones, the usual form of endorsement required is as follows : — " Ann Jones (nee Smith)." 427. — Question : If a cheque is made payable to Mr. Smith, and is endorsed J. Smith, jun., is it compulsory on the banker to pay it if endorsed J. Smith v.nder the first endorsement, or is the first endorse- ment bound to be correct ? Answer : " J. Smith, jun.," is a Mr. Smith. The drawer of the cheque orders the money to be paid to some Mr. Smith. The banker would not be justified in refusing payment of the cheque described. 428. — Question : A cheque is drawn in favour of Major J. T. Smith. Would a banker be justified in returning it " Endorsement irregular," when endorsed — " J. T. Smith, " Major " ? Answer : A banker would not be justified, as the endorsement is correct. 124 Questions on BanTcing Practice. ENDORSEMENT— con^m2/ed 429. — Question : A cheque to John Smith " or order " is endorsed — " John Smith, " F. H. S." Is this correct ? Would the knowledge that John Smith's cheques were habitually endorsed thus make any difference ? Answer : Such endorsement is incorrect in any case, assuming the initials are not descriptive merely. 430. — Question : A cheque is drawn in favour of " John Smith, *' Farm Produce Co., or Order," and is endorsed John Smith only. "Would a bank be justified in taking this, or should the words Farm Produce Co. form part of the endorsement ? Answer : The words " Farm Produce Co." should form part of the endorsement. 431. — Question : A cheque is payable to the order of the " Executors of the late A'. Brown," and is endorsed :— " C. C. Brown, for self and Co-Executors." Would a banker be justified in returning such cheque marked " Endorsement irregular " ? Answer : A banker would be justified. The endorsement should be " C. C. Brown, for self and Co-Executor of A. Brown." 432. — Question : Mr. John Jones sends a cheque payable to his order to his bankers by post. On the back of the cheque he writes " Pay to account, John Jones." Is any other endorsement required, and can the bank on whom the cheque is drawn refuse to pay it, unless endorsed by the payee's bankers ? Answer : The endorsement quoted is quite sufficient. 433. — Question : Should not a paying banker require endorse- ments other than those signed by payees to be ^'per pro.^'' which conveys an implied right to endorse, or is " for " equally good ? Are there any decisions in favour of " for " ? Answer : The style " for " is a good endorsement if the person endorsing is an agent of the payee. See Ulster Bank v. Synnott. Sir John Lubbock's " Cases affecting *' Bankers," p. 95. 434. — Question : A cheque payable to John Jones the younger, and endorsed " John Jones the younger," was returned by the bank \ Questions on Banking Practice. 125 ENDOKSEMENT— co^ifmwef?. on whom it was drawn, marked "Endorsement irregular." Was the bank justified in so doing ? Answer : Such an endorsement would be perfectly regular. 435. — Question : A cheque drawn by A on banker B, payable to the St. Michael's Insurance Company, or order, is presented to B. by the local agent for payment. It is endorsed " John Smith, agent " for Downham." The bank pays the cheque. The agent fails before accounting to the insurance company for the amount. Can the insurance company compel the bank to pay them the amount in question, on the ground that the cheque should have been endorsed by them .^ If the cheque had been endorsed "jt?er pro. the St. Michael's " Insurance Company, John Smith, agent," would that alter the case ? Answer : The first form of endorsement would not be sufficient, but the second would be considered so. See Question 455. 436. — Question : Cheque payable to W. WiUiams and Co., endorsed : — " W. Williams and Co., " by Lewis Yincent, agent for the owners." Is it regular and sufficient for the paying banker ? Answer: Had the words "for the owners" been omitted, the endorsement would have been regular. The introduction of these words may justify inquiry. 437. — Question : A cheque is drawn payable to "Sister Emma," a member of a Roman Catholic Sisterhood. It is endorsed " Sister " Emma." Is this correct, and if not what would constitute a sufficient endorsement ? Answer : The endorsement stated appears to be in order. 438. — Question : Is this a correct endorsement ? '•'■ per pro. Long and Brown. "•per pro. Thos. Smith. " Receiver, "J.James." It is presumed that the receiver is a receiver in bankruptcy. Answer : The form of endorsement is irreo:ular. 126 Questions on Banking Practice, ENDORSEMENT— co/z^m?/e^. 439. — Question : A cheque is payable to the *' Old Castle Under- ^Svriters' Association, |;er J. Jones and Sons, agents." It is endorsed — " Old Castle Underwriters' Association, ^^p.pro. J. Jones and Sons, agents, " T. WilUams." Seeing that the onlj way for such an association to endorse is by its agents, can those agents be looked upon as principals and there- fore have power to delegate their authority ? Answer : No. Such an endorsement is incorrect. 440. — Question : Is this endorsement correct ? : — " (Cheque payable to Rev. J. T. Ward), ''p.p. J. T. Ward. " (stamp) For John Ferguson & Co., Limited. "jt?. J. Brown, " Mgr." Answer : No. 441. — Question : A draft on demand payable to the order of Joh7i Smith. Is it legally discharged if endorsed J. Smith ? Answer : In our opinion the endorsement referred to is a vahd and legal discharge. 442. — Question : Would the following endorsement be considered correct 1 " Cheque payable to self," or order, and signed William Yale, but endorsed W. Vale only. Answer : Yes. 443. — Question : If a cheque, |)ayable to A B or order, is en- dorsed A B + , without the addition of any words implying that it is his mark, should it be returned as " endorsement irregular " .? Answer : Yes. 444. — Question : A cheque payable to Messrs. Brown or order is endorsed J. and J. Brown. Is this endorsement irregular ? Answer : The endorsement mentioned would be considered in order. 445. — Question : A cheque is drawn by Brown, payable to " Jones or bearer." Under Brown's signature he writes " To be ^* signed by the payee." Is the banker liable if he pay the cheque without endorsement "i Questions on BanTcing Practice. . 127 ENDOESEMENT— coyz/mz^e^. Answer : The instruction of the drawer, mentioned in the question, seems to override the tenor of the cheque, and to make it, in fact, payable to order, and therefore requiring the endorsement of the payee. 446.— Question : A cheque payable to "A B or order" is endorsed "CD or order A B." Does it require the endorsement of C D ? Answer : "We can find no case in point, but it is evidently A B's intention to endorse the cheque specially to C D or order. We think that the word "pay" would be imphed before the words "C D, or order," and that the latter's endorsement would be necessary. 447. — Question : Is a banker in London justified in returning a draft payable to " Anne Gray," because it is endorsed "Ann Gray" ? Answer : He is. Where a payee's name is mis-spelt, the cheque should be endorsed as the payee is therein described, with the addition, if it is thought fit, of the proper signature. See Bills of Exchange Act, 1882, sec. 32, sub.-sec. 4. 448. — Question : A cheque is drawn to the order of L. Dymond, and is endorsed " L. M. Dymond." Is this in order ? Answer : No. 449. — Question : A cheque is drawn to the order of " S. *' Thomson," and is endorsed " S. Thompson, described as S. Thomson." Is this correct ? Answer : The mode of endorsing a cheque in which the payee's name is incorrectly spelt is set forth in the Bills of Exchange Act, 1882, sec. 32, sub-sec. 4. 450. — Question : Is a bank bound to pay a cheque payable to "Smith and Co." or "Messrs. Smith and Co.," or order, if the same is endorsed " J. Smith and Co." ? Answer : We think the bank is not bound to pay a cheque payable to " Smith and Co." or " Messrs Smith and Co.," or order, if the same is endorsed " J. Smith and Co." It is evident that two totally distinct firms may exist, one carrying on business under the style of " Smith and Co.," the other under that of " J. Smith and Co." Suppose a cheque drawn in favour of the first to get into the hands of, and be endorsed by and in the name of the second, we think it clear that the banker honouring the cheque upon that endorsement would not be protected by the 16 and 17 Yic, cap. 59, sec. 19. 128 Questions on Banking Practice. ENDOESEMENT— cro. ? or {h) are they merely received as lodgments for accounts, as consideration for drafts, in payment of bills, and from other bankers ? Answer : In view of the decision in the case of Charles v. BlacJcivell, which is fully dealt with in the discussion on this question reported in the Journal of the Institute for November, 1879 (see pp. 144-150, Vol. I), it is considered that the banker is fully pro- tected in paying cheques, endorsed as above, without raising any question as to the agent's authority ; and, not only are cheques universally received under the conditions stated in the latter part of the question, but it is the practice of London bankers to pay cash across the counter for such cheques, although at the same time they reserve to themselves the right, for the protection of their customers, of requiring a verification of the authority to sign "^er p7^o. " should they tliink it desirable to do so. 547. — Question : A on a Friday receives an open cheque for £50 drawn by B on his banker C, payable to the order of Gr. Smith, and endorsed '''per pro, G. Smith, — David Jones." On the same day A presents the cheque across the counter for payment, when banker C, although he has funds, declines payment except Questions on BanTcing Practice, H9 ENDORSEMENT— co/2^mwe^?. through a banker, on the grounds of the cheque being endorsed per procuration. A immediately pays the cheque into his own bank for collection, and the cheque is returned on the Monday unpaid, banker having in the meantime paid other amounts on account of B, leaving, at the close of business on Saturday, less than £50 at B's credit. Was banker C, in view of the protection afforded to him under 16 and 17 Victoria, cap. 59, sec. 19, legally justified in refusing payment of the cheque on the ground stated ? Answer : It was decided by the Appeal Court, in the case of Charles v. Blachivell, 2 Law Reports, Common Pleas Division, p. 151, that a banker paying a cheque drawn to order, and endorsed ^^per pro.,"" is not hable, although it should afterw^ards prove that the agent who endorsed the cheque had not his principal's authority for so doing. If, therefore, the banker consulted his own interest only, he would, relying upon the authority of that case, pay all such cheques without question ; but although the Statute of 16 and 17 Vict., cap. 59, sec. 19, operates to exonerate him from liaUlity if he pays such a cheque, we do not think it deprives him of the rights if he chooses to exercise it in the interest of his customer, of satis- fying himself with regard to the agent's authority before he pays the cheque. We think he w^ould be justified in delaying payment to enable him to make enquiries with that object, but we doubt whether, in strictness, he is legally justified in assigning as a reason for dis- honouring such a cheque that it is not presented through a banker ; and, should he dishonour it on a ground not legally justifiable, he might be held liable to his customer for any damage occasioned to that customer by its dishonour.'* 548. — Question : A traveller or agent brings to the country bank upon which it is drawn a cheque in favour of his principals, " or order," and, after endorsing it '^ per pro.^'' requests, in exchange, a draft upon their London agents, made out in the same manner as the cheque. Is the banker right in doing this, and Avould he incur any liability in the event of the draft being afterwards cashed improperly or upon a forged endorsement ? Answer: The country bank would render themselves liable by encashing a cheque under the circumstances named for a traveller, endorsed by him " j?er jj^r^?.," should he have no authority to sign. 549. — Question : A, who is agent for B, a continental merchant, opens an account with a bank in his own name, paying in cash and cheques payable to B, which he endorses "/?er loro.^'* stating he has * See also Bills of Exchange Act, 1882, s. 60. 150 Questions on Banking Practice, ENDORSEMENT— co/ifo'/iwed authority to do so, but not exhibiting any, and at stated periods remitting his cheque to B in settlement. Eventually A absconds, being considerably indebted to B. Have the bankers of A incurred any liability to B, as the latter uoav states that A had no authority to collect cheques, payable to order of B, although the latter must have known that a number of accounts would be paid by cheques payable to B, and has further always accepted A's cheque in settlement of account periodically ? Answer : Yes. See Bissell v. Fox^ Journal of the Institute, Vol. VII, page 367. 550. — Question : A B owns a business, A B and Co., in the town of C, but lives at some distance in the town of D, leaving the conduct of his business to E F, his confidential manager. A B and Co.'s ordinary account is kept with a bank in D. These facts are known to a bank in C, with whom E F opens an account in his own name, but through which he regularly passes country cheques, payable to the order of A B and Co. From the nature of the transactions, both debit and credit, it is evident that the account is part of A B and Co.'s account, conducted for convenience or some other reason in E F's name. Supposing these country-order cheques endorsed by the manager, either — " (1) A B and Co., or (2) per pro. A B and Co., "EF," his authority in either case being unknown, does this involve the bank in any liability in the event of E F misapplying any of the money ? Answer : In the event of E F having no authority to sign for A B and Co., the banker would be liable should E F misapply the amounts of these cheques. See Bissell v. Fox^ Journal of the Institute, Vol. VII, p. 367. 551. — Question : A B is a traveller for C D and Co., Limited, and, in the course of business, receives cheques payable to the Company, and, after endorsing them — ^^p.p. C D and Co., Limited, " A B, London Manager," pays them into his own banking account. If A B fail to account for the money to his employers, would his bankers incur any liability through having received the cheques ? Answer : Yes. Bankers should exercise caution before recei^•ing such cheques for the credit of a private account. {Bissell and Co. v. Fox Brothers and Co., Journal of the Institute, Vol. VII, p. 367.) Qmstions on Banking Practice. 151 ^NDOH^m/l^'NT— continued. 552. — Question : A cheque was presented through the Country Clearing, payable to the order of Samuel Jones, and bore the following endorsements — ^^per pro. " Samuel Jones, " E. E. Jones. " Pay to the order of the Commercial Bank of London. " Chas. Brown and Son." The cheque was returned to the country bankers, by whom it was crossed, marked " Eequires 3rd endorsement." They endorsed the same and sent direct to the bank on whom it was drawn, stating that "As the first endorsement is blank, the cheque is therefore payable to " bearer, and does not require a third endorsement." Which is correct ? Answer : Previous to the passing of the Bills of Exchange Act, 1882, such third endorsement could not have been required, but by sec. 8, sub-sec. 3, such endorsement is now necessary. 553.— Question : A cheque is presented payable to " order " but not bearing the name of the payee. Should this be refused payment as irregularly drawn, or may it be taken as an instruction to pay on any person's endorsement ? Answer : It is usual to treat cheques drawn " to order," without any payee's name being specified, as requiring the endorsement of the drawer. At the same time sec. 7, sub-sec. 3, of the Bills of Exchamje Act, 1882, would seem to indicate that such a cheque may be treated as payable to bearer. 554. — Question : Is a banker, before payment of a cheque drawn on him and payable to " bearer," entitled to demand the endorsement of the party receiving the money ? It is believed that by the Scotch law every one receiving payment of money is bound, if asked, to give an acknowledgment. The English law, however, is said to be different. Answer : This question may be put in another form as follows : — Whether a banker is justified in dishonouring a cheque drawn upon him and payable to bearer on the ground that it has no endorsement ? We think there can be no doubt according to the law of England that he is not justified in so doing. 555. — Question . A draws a cheque on his banker in favour of B *' or order," and endorses the cheque. Does the fact of the cheque bearing the endorsement of the drawer exonerate the banker from obtaining the endorsement of B ? Answer : No. 162 Questions on BanUng Practice, ENDORSEMENT— coTi^mwe^. 556. — Question : An ordinary cheque on demand drawn to order. Is the banker obhged to look as to endorsements beyond that of the payee, and would he be legally liable for paying a cheque endorsed over by the ^ayee to a third party without such second endorsement ? Answer : If specially endorsed — yes. Even if there is a break in the endorsements, the banker is liable under the Bills of Exchange Act, 1882. 557. — Question : "Would a cheque payable to the order of — {a) "The Overseers of Ayre, John Brown, collector," and endorsed " John Brown " be sufficiently discharged ? (J) If it was to the order of " J B on account of the Overseers of A," would it be compulsory for the banker before paying to have that endorsement in that exact form, "J. B., *' on account of the overseers of A " ? Answer : {a) John Brown only would not be a sufficient discharge ; (J) It would not be essential that the endorsement should be in the exact form indicated, but any other set of words conveying the same meaning would suffice. For instance, the endorsement " The Overseers of Ayre, John Brown, collector," would be a sufficient discharge. 558. — Question : A cheque, payable to the Whiteburn Vestry, or order, is endorsed — " Thos. Jones, Clerk to the Whiteburn Yestry." "Would a banker run any risk in paying on such an endorsement ? If so, what form of endorsement should be required .^ Answer : Such an endorsement is correct, and the banker would run no risk in paying on it. EXECUTORS— 559.— Question : A customer of the B bank left with the manager a box for safe custody, but without any directions as to whom it must be delivered in the event of his decease. After his decease a near relative called at the bank with a key of the box, and stating that he was one of the executors under the will, wliich was in the box with other securities. On the box being opened this state- ment was confirmed, and the will was afterwards handed over on the receipt of all the executors named therein. Would the bank be legally justified in handing over to the executors under such circum- stances the remaining documents, consisting of stock and share Questions on Banking Practice, 153 'EX.'EQTJTO^^— continued. certificates, found in the box belonging to the deceased before Probate had been granted to them ? Answer : The bank should not hand over the box till after production of the Probate. 560. — Question : A sealed parcel of deeds is placed with bankers for safe custody in the names of three executors. A beneficiary takes a reversionary interest in the property comprised in the deeds, and mortgages his share, on which one of the executors with his solicitor attends, and requests to see the deeds, and to place a notice of the charge which had been served on the executors with the deeds for his protection. Is the banker right in allowing those deeds to be opened in his presence by such one executor, or must he insist on the attendance of all three executors ? Answer : It is unusual for bankers to receive parcels for safe custody from executors as such. Should, however, this have been done, the bank should not allow the deeds to be inspected for the purpose stated without the consent of all three executors. 561. — Question : John Brown dies, owing his bankers £200. His executors open an account " Executors of John Brown, James " Green and Harry Smith," on which they have a credit balance. Would the bankers be entitled to debit John Brown's balance to that account without a cheque from the executors ? If it was found later on that John Brown had died insolvent, would the bankers have any preferential claim on the money in their hands on the executors' accounts ? Answer : A cheque or order would be required from the executors. The fact of the money standing in the names of the executors imphes that it is for general distribution amongst the creditors of John Brown's estate. 562. — Question : Is it usual and right to transfer the balance of a deceased customer to the account of the executors on exhibition of probate or letters of administration without their signing a cheque for the amount, or should they sign a cheque ? Answer : The executors should be required to sign a cheque to discharge the account of the deceased. 563. — Question : A banker opens an account in the cash account ledger, ^^ Executor of William Midivinter, John Jones,'''' and trans- fers the deceased's balance, the will having been duly exhibited. John Jones signs all cheques and pays in proceeds of estate ; he, 154 Qmstions on BanMng Practice. EXECUTORS— cow^mwe^. however, draws £1,000, which he misapplies to his own use. The beneficiaries under the will claim the £1,000 from the bank. Can the bank, from the heading of the account, be held to stand in a fiduciary capacity, or be liable in any Avay ? Answer : The law with regard to the duty and liability of bankers in case of money held by them and standing to executorship account, is stated by Lord Cairns, in the case of Grciy v. Johnston, as follows : " In order to hold a banker justified in refusing to pay a demand " of his customer (the customer being an executor and drawing a " cheque), there must in the first place be some misapplication, some " breach of trust, intended by the executor, and there must in the " second place be proof that the bankers are privy to the intent to " make this misapplication of the trust funds ; and to that I think I " may safely add, that if it be shown that any personal benefit to the " bankers themselves is designed, or stipulated for, that circumstance " above all others will most readily establish the fact that the bankers " are in privity with the breach of trust which is about to be com- *' mitted." We assume that in the case supposed all that the banker has done is to honour the cheques of the executor without notice of any irregularity intended by him, and we think it is quite clear, this being so, that he is not liable in any way to the beneficiaries, although the executor may have misapplied the money drawn out by him. 564. — Question : The customer of a bank dies. His executors open an account. Is it right to open it as " The executors of John "Brown — Wilham Smith, Henry Robinson, and George Jones," or merely in the name of the executors ? Answer : The objection to opening an account, which, upon the face of it, is a trust account, does not apply to the case of an account in the names of executors. A banker, by opening an account which admits distinct notice of a trust, might find himself involved in the consequences of a breach of trust on the part of his customer, as for instance : if he should honour the cheque of one only of the trustees, although with the authority of all, and the money should be mis- applied. There is no such risk in the case of executorship accounts. The act of one executor is regarded in law as the act of all, and each executor may legally sign cheques upon the executorship account. The account may, therefore, in the case supposed, be safely and properly opened as " The executors of John Brown — William Smith, *' Henry Robinson and George Jones." 565. — Question : {a) With regard to any balance that may be standing on the testator's account at the date of his death, can one out of two or more executors draw this balance, and give an effectual Questions on Banking Practice. 165 EXECUTORS— con^^mwe^. discharge to bankers for it ? {h) Suppose the account be transferred from the testator's name, and placed in that of the two or more executors, can one executor draw upon this account so as to be a sufficient discharge to the bankers ? Answer : In each of the cases put, it is believed that one out of two or more executors can draw the balance out, and give an effectual discharge to the bankers for it. Unless in case (h) the account with the two executors had been opened with them as individuals, and not as executors, when the signatures of both would be required. 566. — Question : Does a banker need an authority signed by all the executors to pay the cheques of one ? Answee : From our foregoing answer it will be seen that a banker does not need an authority signed by all the executors to pay the cheques of one, but the usual practice is to require it. 567. — Question : An account is opened with a bank by the executors of John Smith, deceased, Abel Smith and James Smith being executors. In the absence of any special instructions respecting how the cheques are to be signed, w^ould the banker be justified in refusing to pay a cheque when signed by only one executor ? Answer : He would not. See Question 564. 568. — Question : The customer of a bank dies, leaving two executors. After probate has been exhibited, one executor writes to the bankers requesting them to pay no cheque, unless signed by both executors. After receipt of this notice, are the bankers obliged to refuse cheques signed by one executor only, or is the signature of one a sufficient discharge ? Answer : Though the signature of one executor is, in general, a sufficient discharge, the bankers w^ould not, under the circumstances, be justified in honouring cheques signed by one executor only. 569. — Question : On the production of probate, is a banker bound to be satisfied that the amount declared as liable to duty is not less than the balance he is required to transfer to the executors ? Answer : It has been decided that an executor or administrator is not entitled to recover any larger amount or value than the stamp on the grant of probate or administration is sufficient to cover. It follows that he cannot give a valid discharge for any larger amount. The 48 George III., cap. 149, contains in sections 35, 36 and 37, special provisions to meet the case, where the amount claimed belonged to 156 Questions on BanTcing Practice, EXECUTORS— co/i^mz^e^. the deceased as trustee, and is consequently not liable to probate duty as part of his estate. N.B. — The above answer embodies the opinion of the Council, but in view of the discussion that had taken place on the points raised, the Secretary was instructed to write to the Board of Inland Revenue on the subject, and the answer received from them is given below. (Copy.) Inland Revenue, Somerset House, W.C, ?>lst October, 1890. "Sir, " I have laid before the Board of Inland Revenue, your " letter of the 23rd instant, and in reply, I am directed to acquaint you, " for the information of the Council of the Institute of Bankers, that "an executor cannot recover in an action, the balance which the " banker is required to transfer, without the production of probate " showing on its face that the gross value stated on the probate of the " estate and effects shown by the account in the Affidavit is sufficient " to cover the balance in question, and that such Affidavit was duly " stamped. " In view of the above statement of law, it has ever hitherto been " the practice for a banker on the production of probate to see that the " amount declared as liable to duty is not less than the balance he is " required to transfer to the executors. " Although the banker incurs no statutory penalty for a departure " from this practice, the Board are of opinion that it is manifestly a " proper practice, and should be adhered to. " I am, Sir, " Your obedient Servant, (Signed) "W. H. Cousins, "W. Talbot Agar, Esq." '' Secretary r 570. — Question : A person of sound mind, of his own free will, signs a promissory note on demand, and hands it to the payee as a gift. No value is given, but the note bears the words " For value received." The drawer dies, and his executors, upon the ground that no value is given, refuse to admit that the payee has any claim upon the estate in respect of the note of hand. (a) Is this a valid reason for refusing payment ? (5) If the payee passes the note to another person for value, could that person obtain payment from the executors ? (c) And if so, could the executors, for the reason that the payee was not justified in making use of the note, call upon him to repay them the amount ? Questions on Banking Practice. 157 EXECUTORS— fo?2/mMe^. Answer : {a) In this case, unless the promissory note was given by the drawer in contemplation of his death, it seems clear that his executors may refuse payment on the ground that there was no consideration for the note. If it was given in contemplation of death, the case is more doubtful, although the better opinion seems to be that, as the donee did not present the note in the donor's lifetime, the executors are entitled to refuse payment, on the ground that there was no complete gift. {b) If the donee passes the note to another person for value, that person can obtain payment from the executors. (c) In either case we think the executors would have no right to call upon the donee to repay them the amount of the note where it had been passed to another person for value. 571. — Question : If the deceased customer of a bank has left no will, what action should the banker take as regards the balance of the account to avoid incurring any liability ? Answee : The banker should not allow any operation on the account until the representatives have exhibited letters of administration. 572. — Question : What is the usual practice as to transferring balance, credit and debit, of a deceased customer to his executors ? At once, or after exhibition of probate ? What is the best practice in case of executors working an account before taking out probate ? Answer : The balance of a deceased customer cannot be dealt with until the appointment of legal representatives of the deceased by probate of will or letters of administration. The transactions of a banker with the executors of a deceased customer, pending exhibition of Probate is a matter entirely of arrangement between the banker and the said executors, and the operations should be carried temporarily to a separate account. FRIENDLY SOCIETY— 573. — Question : An account being opened in the name of " John Smith (manager at Barchester of the Union Friendly Society), " 9, King Street, Barchester," would this give the society any right over the account ? Mr. Smith, when opening the account, stated that it had no connection with the society, the words "manager, &c.,'* being intended only as a description of Mr. Smith ? Answer : The words " manager, &c.," if intended to be only descriptive, should not be inserted in the heading of the ledger 158 Questions on Banking Practice, PEIENDLY ^OQIETY— continued. account. If so inserted, the effect would be that Mr. Smith's state- ment that the account had no connection with the society would not be sufficient, unless corroborated by the society itself. PORGBRY— 574. — Question : On 23rd June a tradesman receives from a stranger a cheque for £20 on a neighbouring town, in payment for goods sold over the counter, and next day pays it into his own bankers, who duly forward it to the drawees, and it is paid in the ordinary course. A month afterwards the drawee bank discover the cheque to be a forgery, and return the same to the bank, demanding repayment. Can they legally do this, or does the lapse of so long a time affect their right to do so ? Answer : It has already been decided in the case of a banker who had paid the amount of a bill purporting to have been accepted by his customer, but the acceptance to which proved to have been forged, that the banker was not entitled, where the forgery was discovered and notified the day after the payment was made, to recover back the money. The same principle seems to apply to the case of a cheque. It is manifest that great hardship might result if a banker were entitled to recover back the amount of a cheque he had once honoured. The banker presenting the cheque might, for instance, in the ordinary course of business, have paid the amount when received to a person from whom it might be difficult or impossible to get it back. If any one is to suffer loss, it necessarily should be the paying banker, who is bound to know his own customer's signature. We think that after the lapse of even a day, the paying banker's claim would be barred, and it seems even doubtful whether, if the forgery were discovered and notified on the day the cheque was paid, the money could be recovered back unless it could be proved that the position of the party receiving payment had not been altered before the discovery and notification of the mistake. 575. — Question: A draws on a 2s. stamp a bill on B for £52 10s., which B, having received lond fide value, accepts. A afterwards fraudulently adds £100, by adding " 1 " before the figures, and " one hundred and " before the word " fifty," utilising spaces apparently left on purpose. A then gets C (a banker) to discount the bill for £152 10s. Who is legally compelled to bear the £100 loss, C, who discounted the bill, or B, who by not challenging the unduly large stamp and the blank spaces between the words " of " and " fifty," thereby gave occasion for the fraudulent addition ? Questions on Banhing Practice. 159 YOnOi'E'KY— continued. Answer : C would be entitled to recover the full amount of the bill from A, for whom he discounted it ; but it is very doubtful whether he could do so from B, the acceptor. 576. — Question : A bill of exchange (drawn from Rio Janeiro), specially endorsed by the payee, was stolen from a letter in transit. The thief altered the name in the special endorsement to another, representing himself. He then caused the bill to be presented to the drawees in London for acceptance, which, being duly obtained, he endorsed, and negotiated the bill to a firm of foreign bankers. The fraud was discovered prior to maturity, and payment was consequently refused. Could the holders for value set up any claim upon the ground that the alteration in the name in the first special endorse- ment was made before the bill was accepted by the drawees ? Answer : No. 577. — Question: C is holder of a bill upon which a prior endorsement is forged. If the bill be dishonoured, can C enforce payment from any party to the bill ? Answer : Yes, from those who have endorsed it subsequent to the forged endorsement and antecedent to C. 578. — Question : A cheque on a London bank, crossed generally, and payable to order, is endorsed by the payee, and paid away to a person who loses it or has it stolen from him. The endorsement of the rightful owner is forged on the cheque, which is then taken to a country bank, by whom it is exchanged to the bearer, and it is duly honoured by the bank drawn upon. The exchanging bank does not know, and can give no information for whom they cashed the cheque. Has the rightful owner good ground to bring an action against the exchanging bank to recover the amount of cheque ? Answer : The rightful owner can sue the exchanging bank. 579. — Question : The Postmaster of Rocktown pays in to the credit of Her Majesty's Postmaster-General, at the St. Michael's Bank, £100 at 2 p.m.. At 2.30 the Postmaster receives a telegram from the General Post Office in London, instructing him to keep a reserve of £100 on hand. Would the cashier be justified in returning the £100 just lodged, on production of the telegram by the Postmaster ? Or the cashier having returned the money, the telegram proving to be a fraud, could the Post Office claim the £100 from the St. Michael's Bank? Answer : The cashier would derive no authority from the telegram to pay out money. Should he do so, the bank would be liable. 160 Questions on Banlcing Practice. GUARANTEE— 580. — Question : A cheque irregularly endorsed, bearing on the face the stamp of A B, bankers, has the endorsement guaranteed by B 0, bankers of the same town. Should the banker on whom it is drawn obtain the guarantee of the banker w^hose stamp is impressed on the face of the cheque before paying it ? The stamp of A B does not indicate that they clear for B C. Answer : The endorsement to a cheque can be guaranteed by a banker, or anyone else whose indemnity is satisfactory to the drawee, quite independently of the crossing. 581. — Question : With regard to the Statute of Limitations : — In the case of a guarantee for an overdrawn account, do the six years begin to run from the date when the guarantee is executed, or, if not, when ? Answer : The period of six years limited by the Statute begins to run from the time when the right to bring an action on the guarantee first accrues to the banker. This will vary according to the terms of the guarantee. In the case of a debt actually due at the time the guarantee is given, time will begin to run in the guarantor's favour from the date of the guarantee, unless it be provided that some condition shall be observed before taking proceedings on the guarantee, as, for instance, that notice shall be given to the guarantor ; in which case, the Statute will begin to run from the date of the notice. See Question 593. 582. — Question : A customer has an overdrawn account with a Hmit of £.500 guaranteed by another person. The guarantor gives notice that he shall withdraw from all further responsibiUty from the date of his notice, and that he wishes the banker to make his customer pay the £500 as soon as possible. The day after this notice the customer pays in £100 to his credit in the ordinary way meaning to draw against it as usual, but making no special provision. Would his banker be justified in allowing him to draw the £100 and still retain the liability of the guarantor to the extent of £500 ? Answer : After receipt by the banker of the notice from the guarantor referred to, the liability of the guarantor would be reduced by all sums paid in by the customer to his credit, and the banker would only pay against such sums at his own risk. 583. — Question : A guarantee's B's account with a guarantee of £1,000. Some time after, A gives notice to the bank that he wislies to withdraw from his liability, the account then being over- drawn only £600. Upon the following morning cheques are Questions on Banking Practice. 161 GJJA'RAl^TE^— continued. presented for £400, B having drawn them before he knew that the surety A wished to withdraw. What would be the banker's position ? Could he return the cheque ? Answer : If the banker should pay the cheques after notice from A of his withdrawal of his guarantee, he would do so at his own risk. 584. — Question : Is a banker right in refusing to pay a cheque made payable to D. Rees, and endorsed in the following manner : " For Anna Eees, widow and executrix of D. Rees, deceased — Mary " Rees " ? And further, is he justified in declining to accept the guarantee of another banking institution, indemnifying him against sustaining any loss in paying a cheque on the above endorsement ? Answer : The above is an incorrect endorsement, as the executrix, as such, cannot delegate her authority. The bank is justified in refusing payment, but it is the practice among bankers, as a matter of courtesy, to pay on a banker's guarantee, although an endorsement is irregular. 585. — Question : A opens a banking account with a limit of £200 guarantee by B. A fails ; should the banker claim on the estate of A, and subsequently claim the balance from B, or should be apply at once to B for payment of his guarantee, and leave B to claim on the estate of A ? Answer : In the absence of any special stipulation to the contrary, the banker should at once claim on the guarantee. 586. — Question : An overdrawn account with a Hmit of £500 is guaranteed jointly and severally by three persons. The form of guarantee contains a clause that "this guarantee shall be a continuing " guarantee, and shall not be withdrawn but shall continue in full " force until three calendar months after each of us shall have given " to your manager notice in writing under our respective hands of " our intention to discontinue and determine the same." One only of the parties gives notice of withdrawal. Is the notice void by reason of the other two parties not having given notice as well, or can the account be safely continued without a break, having regard to the above clause ? Answer : The account could not safely be continued after such notice had been received. 587. — Question ; C D became surety for A B for advance of £200, and joined in a note of hand for the amount. C D also signed an unstamped memorandum undertaking to assign his reversionary 162 Questions on BanMng Practice. GUARANTEE— coyz^mwe^. interest on certain property when required so to do. For upwards of six years C D has paid no interest nor acknowledged in any other way his habiUty. Is he discharged from the debt ? Answer : Assuming that more than six years have elapsed since the note of hand became due, the right to proceed against C D in respect of the debt is barred by the Statute of LimitaHons, but the rule of law is that the remedy, and not the right, is barred. Unless, therefore, C I) has been actually required to assign his reversionary interest and has failed to do so for six years, the security still remains in force. What the precise mode of enforcing the security may be depends upon its form. We assume for the present purpose that it is not a deed under seal. 588. — Question : A opens an account with his banker, who gives him permission to overdraw to the extent of £1,000 on the guarantee of B. B dies, and, at the time of his death, A is indebted to the bank £900. A new account is opened, which the banker insists upon being kept in credit. It is so kept, and in time the balance at credit becomes £1,000, which is more than sufficient to satisfy the amount owing at B's death. The banker allows A to draw out this amount, and being afterwards unable to recover from him the £900, apphes to B's executors to make it good. Are B's executors released in consequence of the new account having been in credit to a sufficient amount to discharge the old account ? Answer : In the absence of express agreement there is nothing to prevent the banker on the death of the surety from breaking the account — opening a new and distinct one — and appropriating all receipts and payments to such new and unguaranteed account. Consequently B's executors are not released from their liability, and are liable to make the whole £900 good. The Journal of the Institute contains at pages 160 and 285 of Vol. V, notes of the case of The London and County Bank v. Terry ^ which seems precisely in point. 589. — Question : Brown gives a bank a guarantee for Smith's account for £1,000, which runs : — " That it shall be a continuing " guarantee for the benefit of the said bank, however for the time " being constituted, until after three months'* notice in writing shall be " given by me, my executors, administrators, or assigns of determining " the same." Brown gives notice of withdrawal of his guarantee when Smith owes £500. Is it safe to continue transactions on the account after notice ; may the balance be increased ; and also will Brown be liable for the whole if it go up to £1,000 ? Questions on BanTcing Practice, IBS! Q^TJK^K^T^Yi— continued. Answee : The difficulty in answering this question arises from the ambiguous wording of the guarantee, as quoted ; had the w^ords " until after the expiry of three months' notice " been substituted for those printed in italics, Brown would probably be liable to the full extent of his guarantee until the expiry of the notice ; but under the existing terms of the guarantee we do not think that Brown would be held hable for any sum in excess of the £500 owed by Smith at the date of Brown's notice of withdrawal. On the contrary, we are of opinion that, after receipt of such notice by the banker, all sums paid in by Smith to his credit should be applied to the reduction of Brown's hability, and that the banker would only pay against such sums at his own risk. 590. — Question : An operative overdrawn account, with a hmifc of £1,000, is guaranteed jointly and severally by two persons. The form of guarantee contains a clause, " This shall be a continuing " guarantee, and shall not be withdrawn except at the expiration of " six calendar months from the day of written notice being given by *' me to you for that purpose." Notice of withdrawal is received from one guarantor, but the bank does not inform the other guarantors of the circumstances. "Would the bank be safe in continuing such an account with break, relying on the liability of the other obligants ? Answer : The bank would not be safe. 591. — Question : Would A's guarantee or agreement to secure B.'s overdrawn account, supposing it is drawn upon a Qd. agreement stamp, rank as a preference security in the event of A's bankruptcy ? Answ^er : Certainly not, because it is but a promise to pay, and gives the holder no rights beyond those of ordinary creditors on A's estate. 592. — Question : Upon the discharge of a guarantee, is the banker bound to give up the instrument ? Answer : It is usual to surrender guarantees when the purposes for which they are given are completed. 593. — Question : Would the following form of guarantee be subject to the Statute of Limitations ? — " hereby guarantee to the said banking Company " the payment of all moneys that may be or become due " on any account, and either alone or jointly with " any other person, &c., &c., under this guarantee, which is " to be a continuing one, until I shall withdraw the same by " notice in writing, &c." M 2 164 Questions o?i Banking Practice. GUARANTEE— co/i^mwefZ. Answer : The question in this as in every other similar case is, " AVhen did the right to bring an action against the guarantor first " accrue to the banker ? " We think that under a guarantee in the form stated, the right of action would accrue afresh upon each variation of the account, and that the Statute would begin to run — 1. From the date of the last item in the account, where no notice of withdrawal has been given by the guarantor. 2. Where such notice has been given, then from the date of the last item preceding the notice. 594. — Question : A B signs a guarantee which contains the following passage : " I further agree as follows, viz., that this " guarantee or engagement shall be considered a continuing guarantee, " and shall not be withdrawn, but shall continue in full force until 14 " days after notice to your manager, or one of your managers, in " writing, under my hand, of the intention to discontinue or determine " the same," to secure advances made by a banker to D, a customer r after a while A B fails, and his petition for liquidation is gazetted in the usual way, but no written notice is given to the banker. The account of C D at the time of A B's failure is in credit. Does A B's liability cease when his affairs are liquidated, or does he still remain liable to the banker for subsequent advances made to C D .^ Answee : The hability, such as it is, of A B under the guarantee is " a debt provable in bankruptcy," within the meaning of the Banhruptcy J.c^, 1883, sec. 30, sub-sec. 2, and A B, on obtaining his order of discharge, would be released from that liability, as well as from all other debts provable under the bankruptcy. The law under the Banhruptcy Act of 1869, as applicable to liquidators by arrangement would be the same. 595. — Question : A guarantees B's overdrawn account. He has an interview with B's banker, and stating that he wishes the guarantee to cease, demands that it shall be given up to him. He is told that the guarantee can only be given up when B places his account in credit, and that he had better see B and arrange with him. This he agrees to do. Would this constitute a notice of withdrawal to the banker, and would, consequently, all amounts placed to the credit of B's account have to be taken in reduction of the overdraft ? Must not a written notice of withdrawal be given to produce this effect, even if not so specified in the guarantee ? Answer : Assuming that the guarantee is terminable at will, this would constitute a notice of withdrawal to the banker, and all Questions on BayiTcing Practice. 165 GUARANTEE— 6•^?^^mwe^. amounts paid into B's account should be taken in reduction of the overdraft. A written notice, though more advisable, is not strictly necessary. 596. — Question : A, the guarantor of B's account, dies. The bank have no notice of his death, but the executors publish the usual notice as to claims, and proceed to administer the estate. On the bank hearing of A's death, twelve months later, but before the estate has been distributed, notice of claim is sent to the executors, B's account still remaining overdrawn. ^Is the estate of the deceased guarantor released from liability ? Answer : We assume that the guarantee is a continuing guarantee and contains no provision for its termination on the death of the guarantor. This being so, his estate will be liable for the amount due on B's overdrawn account at the date of the banker's receiving notice of death. The usual notice to creditors is not notice to the bankers, unless it has actually been seen by them. HUSBAND AND WIFE— 597.- -Question : A current account is opened in a bank in the joint names of husband and wife, the cheques to be signed by both. One of them dies. Has the survivor absolute right to the balance at credit of the account, as in the case of money lodged on deposit receipt, and can he or she at once draw a cheque on the bank for the amount ? Answ^er : Supposing the husband to be the survivor, it is clear that he has the absolute right to the balance standing to the credit of the account, and we think that if the wife should survive, she would be entitled to the balance, and could draw^ a cheque for the amount. It has been decided in the case of stock transferred by the husband into the joint names of himself and his wife, that on his death the stock belonged to the wife, and this on the ground that no motive for making the transfer into the joint names can be suggested other than an intention to benefit the wife. We think the same reasoning would apply in the present case, where cheques are to be signed by both. Such an arrangement cannot be made for the mere convenience of the husband, or for any reason which is apparent other than an intention to give the wife the right to receive the balance if she should survive. It would be desirable in all such cases that the banker, when the account is opened, should come to a clear understanding with his customer as to whether it is intended that the balance should belong to the survivor, whoever it may be. 166 Question s on Ban Jcing Practice. HUSBAND AND ^NIF'^— continued 598. — Question : Is a banker acting within legal limits in allowing the survivor in joint account between man and wife, opened prior to the Married Women's Property Act, 1882, being the wife, to draw the balance, or, since the passing of the said Act, is such an arrangement admissible in view of sec. 8 of the Act. Answer : The banker is acting within the limits in both cases. The provisions of the Married Women's Property Act, 1882, appear to have in view the placing of a married woman in the position of a femme sole, and, consequently, sees. 6 and 7 remove the necessity^ which formerly existed, for the husband to join in transferring stocks standing in the sole name of a married woman, and sec. 8 makes similar provisions for cases where a married woman is in joint account with other persons than her husband, it being of course necessary for the husband to join in a transfer of stock Avhere he is joint holder with his Avife. See Tyre v. Sullivan, Law Eeports 28, Chancery 705. , INSANITY— 599. — Question : A customer has money on " Current Account " and " Deposit Account " at his banker's, and is incapacitated by temporary mental derangement from dealing with such money. Who has the legal power to deal with the money ; would the banker be justified under the circumstances in paying the money to his customer's wife ? Answer : Under the above circumstances a banker would be acting strictly within his legal right were he to refuse to part with the money except to the duly appointed legcd representative of his insane customer ; indeed, if he acted otherwise, it would be entirely at his own risk. The difficulty is, however, sometimes met by the banker accepting security as a protection against any risk he might incur in parting with such moneys, e.g., a claim by the customer on his recovery for the amount standing to his credit before his temporary insanity. 600. — Question : John Smith, a customer of the X Banking Company, becomes insane. He is in confinement in an asylum, though not officially declared of unsound mind, and these facts are known to the banker. At the time of his becoming insane he has to his credit £200. Is the bank liable if it pays a cheque of his, which, supposing he recovers, he may say was obtained from him wrongly ? Should it stop the account, and what right, if any, has it to dishonour his cheques .^ "Questions on Banhing Practice, 167 m^K^YYX— continued. Answer : A man is not legally insane till found so by inquisition. Until a committee is appointed, a banker cannot refuse payment of a customer's cheque. INTEREST- GO! . — Question : What is the legal rate of interest, and upon what class of transactions is the rate enforced ? Answer : There is no legal rate of interest in this country, except in some special matters provided for by Acts of Parliament, where the rate is fixed at 4 per cent. The customary rate of interest on overdue bills and other claims, in the absence of contract or enact- ment, is 5 per cent., and that rate has been recognised both in law and equity. 602. — Question : In the case of an overdrawn current account, unsecured, when the customer dies, is the bank legally entitled to recover interest, as well as principal, from the representatives, up to date of actual payment ? Answer : Yes. JOINT ACCOUNT— 603. — Question : — A deposit is made in the joint names of A B and B, spinsters ; withdrawals are to bear both signatures. In case of the death of either, would a banker be justified in paying the balance to the survivor on her signature alone ; or, if a written request signed by both parties were given, instructing the banker, in case of the death of either, to so deal with the balance, would he then be justified in doing so ? Answer : A banker is not a trustee for his customer, but a debtor to him, and, like any other debtor, may by law safely pay over money due upon a joint account to the survivor in that account. We think the instructions given to the banker with regard to the signatures to be required in the case of withdrawals do not alter the case, but that either with or without a special request, instructing the banker to pay to the survivor, he would be justified in so doing. 604. — Question : If A lodges a sum of money at a bank in the names of A B and C without instructions, would the banker be liable if he paid the sum, or any part thereof, on the order of A ? Answer : In the absence of special instructions, he would. 168 Questmis on Banking Practice. JOINT ACGOV^^T— continued. 605. — Question : £1,000 is placed on deposit by husband and wife and receipt drawn out in their joint names ''or either." On the death of the husband can the principal and interest be paid to the survivor ? and, if so, is it liable to account duty under sec. 38 Customs and Inland Revenue Act, sub-sec. h ? Answer : The principal and interest can be paid to either, in their lifetime or, after the death of one, to the survivor. In the latter case it is probably liable to account duty, but the banker is not required to see that such duty is paid. 606. — Question : Referring to sub-sec. {hy of sec. 38 of the Customs and Inland Revenue Act, 1881 (Stamp Duties), which came into force on the 1st June of that year. Is any obHgation imposed upon bankers, before paying money to a survivor in a joint account, to see that probate-duty under that section has been paid ? Answer : A banker is not a trustee for his customer, but a debtor to him, and, like any other debtor, may by law safely pay over money due upon a joint account to the survivor in that account. The Act referred to in the question does not alter the law^ in this respect, and whatever obhgation it imposes in regard to stamp-duty in the case of a joint account is, by the 39th section, cast not upon the banker, but upon the person who, " as beneficiary trustee or otherwise," acquires possession of the money. It follows that neither by law nor by the statute is the banker under any obligation to see to the payment of probate-duty in the case supposed. 607. — Question : A deposit receipt is issued in the names of A, B and C. On the death of A the receipt is presented for payment. Is it necessary to have the endorsement of A's executors or adminis- trators, or would the bank be justified in paying the money to the survivors on production of probate of the deceased or certificate of his death ? Answer : On proof of death of a joint depositor, the deposit is payable to the survivors, and the discharge of the executors or administrators of the deceased is not required. 608. — Qltistion : Two brothers, John and Robert Jones, open an account with the Kent Banking Co., hoth to sign all cheques. * Sub-section (&) " Any property which a person dying on or after such day having been absolutely entitled thereto, has voluntarily caused or may voluntarily cause to be transferred to or vested in himself and any other person jointly whether by disposition or otherwise, so that the beneficial interest therein or in some part thereof passes or accrues by survivorship on his death to such other person." Qmstions on Banking Practice, 169 JOINT AGCOVl^T— continued. Unknown to the banker, these brothers quarrel. Robert comes to the bank and says his brother is dead, and he desires to draw the balance. Is the banker justified in paying him without production of certificate of death ? If he does pay the money and John is not dead, and sues the bank for the amount, will not the banker have to suffer the loss ? Answer : The bank is not justified in paying without proof of death, and would incur liability by so doing. 609. — Question : A sum of money is deposited in joint names, and an authority held for the amount to be paid to either, or to the survivor in case of death. One of the parties states that the other is dead and thus charges the bank with knowledge. Is the bank justified in paying the money or transferring it without proof of death ? Should a certificate of death be required ? Answer : The bank would by the terms of the deposit be justified in paying or transferring the money without production of the probate or other proof of death. 610. — Question : Shares in a limited company are registered in the joint names of husband and wife. In the event of the decease of either, is the property at the disposal of the survivor on the pro- duction of a certificate of death, without exhibition of probate ? Answer : Yes. 611. — Question : A and B have an account at a bank in their joint names, for which both signatures are required. A dies, and B is informed that A's executors have forbidden the bank to part with the money. Is the bank justified in its refusal to pay the money to B ? Would it make any difference if each party had power to draw on the account separately ? Answer : In both these cases the bank would be justified in its refusal to pay. 612. — Question : A B and open a joint account with bank I). A dies ; will it be necessary to alter the title of the account in consequence of the death of A, or can the account be continued in its present form, the two survivors working the same ? Answer : The safest course would be to open a new account. 613. — Question : Assuming an account to be opened, — (a) In the names of John Jones and Mary Jones (his wife). (b) In the names of John Brown and Charles Stokes (not partners). 170 Questions on Banhing Practice. JOINT KQGOVl^i:!— continued. (c) In the names of J. Eea, T. Ker, and F. Cook, as executors of M. Baker. {d) In the names of Eobinson, Fisher, and Dale, carrying- on business as partners. {a, l, and c.) In the event of one of these parties dying, can the bank legally pay the balance to the survivor or survivors on proof of death, or would probate of will be indispensable and signature of re- presentative to cheque ? {d) In the event of one of the partners dying or retiring, should the account be stopped and a ncAV one opened in the names of survivors, or can the survivors legally carry on the old account ? Would the fact of the balance being debtor or creditor make any difference ? If, on opening all the above accounts, the bank took a memo, signed by all the parties (in each case) requesting that in the event of the death of any one of them, the balance may be paid to the survivor or survivors, could the bank legally comply with its request ? Answer : As regard («), the bank would, for reasons given in our answer to Question 597, be justified in paying the balance to the survivor, although the wife should survive ; {p) is the ordinary case of a joint account, and the balance is payable to the survivor ; as regards (c), the act of one executor is regarded in law as the act of all, and each executor may legally sign cheques upon the executorship account. It follows that the bank may legally pay the balance to a surviving executor. As regards (cl)., on the death of a partner the surviving members of the firm become at law solely entitled to sue and liable to be sued in respect of debts owning to or by the firm. The bank may, therefore, legally pay the balance to them. After the retirement of one partner the other partners have no longer the right to use his name, they might otherwise be making him liable for the debts of a partnership of which he is not a member. The account ought, therefore, to be stopped and a new one opened. Although the same reason does not apply in the case of the decease of a partner, it is desirable in this case also to close the old account and open a new one in the names of the survivors, otherwise all payments made to the old account might become legally applicable in reduction of that account and the estate of the partner be consequently released. See as to this the case of The London and County Banldng Co. v. Terry, page 285 of the Journal for May, 1884. In the case of an account opened in more names than one, the bank may legally comply with a request signed by all that in the event of the death of any one the balance may be paid to the survivor or survivors. 614. — Question : In Hutchinson's "Practice of Banking," Vol. II, p. o76, is said, " A new power for dividends should be given by the Questions on Banhing Practice. 171 JOINT kQQO^J^T—conti7med. " survivors in a joint account, but an existing power of sale may be "acted on, if evidence of death be furnished as above. The " executors of the last survivor in a joint account, or of a deceased " holder in a sole account, must grant a power before the dividends " can be got." Is it not a fact that banks sometimes continue, by virtue of an old power of attorney, to receive the dividends on an account after all the holders are dead ? Answer : Assuming that the foregoing Question relates to powers of attorney for receipt of dividends on, or sale of, English or Colonial Government or other inscribed stocks, no new power is necessary after the death of one of the stockholders, the powers being worded " And on behalf of the survivors or survivor of us." On the death of all the stockholders, the power would become void, and a new power, if required, would have to be granted by the executors of the last survivor. Should dividends be inadvertently paid under power of attorney, after the decease of all the stockholders, the paying bank is exempted from responsibility by the terms of the power, but they would require an undertaking from the executors of the last survivor that dividends paid since his decease had been properly appropriated. 615. — Question : If a deposit stand in the name of John Brown and Maria his wife is the endorsement of the receipt by the former alone sufficient discharge for the bank ? Answer : No. The discharge of both depositors is required. LIABILITY— 616. — Question : In the case of a bank which had been registered as unlimited under the Companies^ Act of 1862, and thereby limited the liability of its shareholders to one year after leaving it, and which has now become a limited bank, how long does its obligation to depositors, who have been sent notice required by the 188th section of the Companies' Act of 1862, continue to be unlimited? It seems to be the general opinion that, as long as a depositor has not drawn his balance, the bank's obligations continue unlimited to him. This view, however, seems open to the objection that, if, after notice, the depositor has not drawn his money, it may be assumed that he is content to leave it under the new conditions. Also, that it is possible that within a short period, all the unlimited shareholders should have gone out of the concern. Answer : We are of opinion that the habiUty of the shareholders of a banking company which has already been registered as " unlimited " under the Act of 1862, becomes immediately, limited 172 Questions on Banking Practice, lAk^lLlHY— continued, on the registration of the company as " limited," nnder the Acts 1862 to 1879, so far as regards " every person and partnersliip firm " who have a banking account with the company," to whom the notice required by sec. 188 of the Act of 1862 had been duly sent ; but that (as intimated in section 196 of the Act of 1862, sub-sec. 5, and in the latter paragraph of sec. 4 of the xict of 1879, read with the 38th section of the Act of 1862) the shareholders on the register at the date of the re-registration as a limited company would, as regards creditors, other than persons or partnership firms having a banking account with the company to whom due notice had been sent, be unlimitedly liable, in the event of the company winding-up within twelve months of the date of such re-registration, as regards liabilities contracted before that date. 617. — Question : Brown opens an account with a country bank as under — " Northborough Liberal Association, " Brown, Treasurer," but signs cheques on same, " Brown, " Treasurer, Northborough Liberal Association." Does he, by so doing, incur any personal liability, and would the bank have a legal claim on him in the event of the Association dissolving ? Answer : No. 618. — Question : Brown draws a bill for £100 on Smith, w^ho accepts it in the ordinary manner. Brown then endorses the bill, and likewise induces his friend Eobinson to endorse after him. Brown then pays away the bill to Jones for consideration, but does not endorse the bill a second time below the endorsement of Eobinson. Both Smith and Brown become bankrupt. Has Jones any right of action against Eobinson to recover from him the amount of the bill ? Answer : Yes, Eobinson is liable to Jones. 619. — Question : A banker pays a bill for his customer, the third endorsement being forged, but the subsequent endorsement being genuine. Can the banker recover from the endorsers subsequent to the third, notwithstanding that they, not having received notice of dishonour in due course will presume the bill to have been duly paid ? Answer : No. Questions on BanTcing Practice. 173 lAABllilHY— continued, 620. — Question : If a banker returns an unpaid acceptance to a customer (for whom he has presented it for payment on the day it is due) debiting his account and does not send notice of dishonour to the other endorsers, does he release them from all liability in case of acceptor's failure ? Answer : The endorsers are not released by reason of the return mentioned. It is the duty of the customer to give notice to the endorser, unless he can at once recover the amount from his endorser, when the onus of giving notice passes on to the latter. 621. — Question : A banker received for a customer, for his credit, a cheque on a bank in the Channel Islands, which he remitted in due course for collection. The letter containing it was lost at sea through foundering of the steam packet. Is the banker justified in debiting his customer's account with the amount of the lost remit- tance ? Answer : It is customary for bankers to give notice to their customers that they take no risk in the transmission of drafts payable in the country or abroad. 622. — Question : (a) Whether the Liability of shareholders in American and other foreign railway companies is limited or un- limited ? {b) Whether any liability would be incurred by holding American railway shares transferred in blank, which seems to be the ordinary way in dealing in them ? Answ^er : {a) The shares of such of the American Railways as are known on the London Market are all fully -paid, and it is generally understood that there is no liability whatever attaching to the share- holders. The question of liability was suggested a little while since in connection with the Pliiladelphia and Reading Railway, and the following letter on the subject fi'om the President of that railway appeared in the Philadelpliia Ledger of the 9th January, 1879, viz. : '' In this morning's issue of one of your contemporaries there is re- " vived the old story that under the Act of 1850 the Reading share- " holders are personally Uable for the debts of the company. Will you " be kind enough to say that no such liability exists ; that under the " Constitution of the United States, as well as that of this State, the " Legislature in 1850 had no power to alter or impair in any manner " the contract previously existing between the shareholders and the " company, by which, upon payment of the subscription price, each " shareholder obtained his shares free and discharged of any personal " liability. The Act is therefore a dead letter ; and unfortunately the "company has not even the power to assess its shareholders a single 174 Questions on Bmiklng Practice. lAK^llATY— continued, " cent." It is, however, stated in some correspondence recently printed in the Times (see City Article, 18th and IDth November, 1878) that railways in the State of California are subject to exceptional legis- lation, and that the shareholders in the Central Pacific, and pre- sumably in other railways in that State, are liable for the debts and liabilities of the respective companies, the extent of their liability being thus defined, viz. : " That each stockholder of such company " shall only be individually liable to the creditors of such company for " his proportion, that is to say, the proportion that the amount of " stock held by him bears to the whole amount of the capital stock " of such company of all the debts and liabilities of the company *' contracted or incurred during the time that he was a stockholder." The shares of foreign railways known on the London market e.g.^ the leading French railways, the Lombardo-Venetian, &c., are fully paid, transferable on delivery, and impose no liability on the holders. There would appear, however, to be certain foreign shares (see paper by Mr. H. D. Jencken, Journal of the Institute of Banlcers, Vol I, p. 437), the certificates of which, although *' to bearer," represent only 40 or 50 per cent, paid on the nominal amount. Such shares would be liable to forfeiture in case of non-payment of subsequent calls, but as they are not registered there could be no actual liability to the holder if he chose to destroy his certificates. Answer : (b) The shares of American railways, although fully paid, and in most cases imposing no Uability on the holder, are almost invariably registered, and have printed on the back of the certificate a form of transfer. It is customary to sign such transfer form in blank, and the certificates are then practically deliverable to bearer. The holder, in such case, although he may incur no money liability, is subject to the following inconveniences, viz. : — \st. The dividends on the shares are payable only to the registered holder, and the actual holder has to obtain them from him and not from the company, a matter which often entails considerable trouble when the certificates have passed through several hands and the registered holder is not well known. 2nd. The actual holder occasionally finds upon tendering his certificates to the company for registration in his own name that an attachment or distringas has been placed upon the shares standing in the books of the company in the name of the registered holder mentioned in the certificates. Zrd. In the event of the death of the registered holder, difficulties would probably arise with regard to the transfer and subsequent registration. None of these disadvantages attach to the shares of foreign railways to bearer. Questions on BanUng Practice, 175 LIEN.— 623.— (Case.) 1. Bonds payable to bearer with coupons attached are deposited with a banker by his customer with instructions periodicaUy to cut off and cohect the coupons when due, placing their amount to the customer's credit. 2. Similar bonds are deposited with the banker, but the customer himself periodically cuts off the coupons and leaves them with the banker with instructions to collect and place the amount to his credit. 3. Precisely the same thing is done, with this difference — that the customer himself cuts off and collects the amount of the coupons. 4. The certificates of debenture and other stock registered in the name of the customer are deposited with ithe banker to whom by the instructions of the customer the warrants for the dividends as they become due are periodically paid by the company to be placed to the credit of the customer's account. 5. Short bills are, by the customer, deposited with or paid in to his banker for collection, and in order that the proceeds may be placed to his credit. 6. A box containing title deeds and documents, and a chest con- taining plate are left by a customer with his banker. You are requested to advise, Whether in either and which of the cases supposed the banker is entitled, in the event of the customer becoming a bank- rupt, to a lien or security upon either and which of the foregoing classes of property, viz., the bonds, the coupons thereon, the stock certificates, the warrants for dividends thereon, the short bills, the deeds and documents, and the plate, for whatever may be due to him from the customer. Opinion. The governing principle as to bankers' liens is thus laid down by Lord Campbell in the House of Lords — " A lien is an implied pledge, "and bankers have a general lien on all securities deposited with " them as danJcers, unless there be an express contract, or circum- " stances that show an imphed contract, inconsistent with lien." {Brandao v. Barnett, 3 C.B., p. 531.) A distinction is drawn between securities which are sent to, or deposited with, a banker for the purpose of being dealt with by him in his capacity of banker, and securities which are sent to, or deposited with, a banker merely for safe custody. In the latter case the banker is considered as an ordinary bailee, and has no lien (ibid). The decisions which apply these admitted principles are not consistent. The reason is this — in each case it is a question of fact, depending partly on the general usage of bankers, partly on the dealings between 176 Questions on BanJcing Practice. LIEN — continued. the particular customer and banker in question whether the securities have come into the possession of the banker q^ua banker or qua bailee. Having regard to these principles — (1.) In the first case put, I should draw the inference of fact that the bonds were deposited with the banker, qua banker, and it would follow from this that his lien attached both to bonds and coupons. (2.) In the second case put, I should draw the inference of fact that the bonds were deposited with the banker for safe custody only, and that therefore his lien attached to the coupons only when cut off by the customer and handed to the banker for collection. (3.) In the third case put, I should draw the inference of fact that both bonds and coupons were deposited for safe custody only, and it would folloAV that no lien in this case attached. See Brandao v. Barnett (ubi supra) as to exchequer bills. (4.) In the fourth case put, I think the banker's lien would attach to the dividend warrants, but as regards the certificates of debentures and other stock, I should have drawn the inference that they were merely deposited with the banker for safe custody ; there is, however, a dictum by Lord Justice James in Re United Service Company ^ L.R., 6 Ch. App. at p. 217, to the effect that in such a case the banker's lien would attach. The point was not argued, and it was unnecessary to decide it in that case. The question must be regarded as a doubtful one. (5.) In the fifth case put, I should infer that the short bills were sent in to the banker to be dealt with in his capacity of banker, and that therefore his lien would attach. See Johnson v. Roherts, 10 L.R., Ch. App. 505, where the customer was a country banker. (6.) In the sixth case put, it is clear that, apart from special agree- ment, no lien could attach. See Brandao v. Barnett^ 3 O.B., at p. 534, Leese v. Martin^ 17 L.R., Eq. 225. M. D. Chalmers. 24^A January^ 1882. 624. — Question : A customer deposits with his banker bonds for safe custody with instructions to cut off the attached coupons and collect them as they become due, placing the proceeds to the credit of his account. Is the effect of these instructions to give the banker a lien on the bonds ? If such is the effect, is the lien rendered invalid or prejudiced by reason of the banker having given an acknowledg- ment in these terms, viz., " Received bonds for safe custody and without responsibihty " ? Answer : The banker has a lien on the bonds, nor would the form of acknowledgment render it invalid. See Questions 100 and 101. Questions on Banhing Practice. 177 LIEN — continued. 625. — QuESTioJ^ : An official receiver claims that a memorandum of deposit of deeds or property, constituting an equitable charge, will not be good against him unl(^ss under seal. Is this correct ? Answer : No. A seal is not required. 626. — Question : When a cm'rent account has become overdrawn, and a sealed parcel of deeds or a locked plate chest, the key of which is in the customer's possession, is left with the banker for safe custody, would the bank have a lien thereon in case of need ? Would it make any difference if either were left with the bank whilst the current account was in credit, and which subsequently became overdrawn ? Answer : The deeds or plate-chest being deposited with the banker for safe custody only, he is regarded as an ordinary bailee, and has no lien ; nor would the condition of the current account make any difference. 627. — Question : If a debtor or customer, who has deposited shares or other personal property with his banker as security, dies, as it eventually proves, insolvent, would the banker retain his lien upon such security — (a) For the balance of the deceased customer's account if trans- ferred to an account opened by the executor or adminis- trator as such ? (Jb) For reasonable sums advanced on the executors or adminis- trator's representation that they were required for funeral expenses ? (c) For sums advanced to the executor or administrator on the understanding that they were for the purposes of administering the estate, even though they be misapplied, but without negligence or ordinary chance of discovery on the banker's part ? Answer : With regard to the first question we think that the banker would not prejudice his security by transferring the account to the executors, who are persons legally responsible for its payment, so far as the testator's assets extjend. But as to questions {Jb) and (c) we do not think that the banker would, in the absence of an agree- ment that the property should be charged with the repayment of the moneys advanced to the executor, have any hen on, or right to retain the securities as against such advances (whether the money advanced were misapplied or not). 628.— Question : In the event of the death or bankruptcy of the client would the banker referred to in Question 627 possess any legal N 178 Questions on Banking Practice. LIEN — continued. claim upon those shares, either without having served notice of their deposit with him or by virtuefof having given such notice, or by the powers under the " memo, of deposit " ? Answer : In the event of thd death of the cHent the banker would have the same claim upon the shares as against his executors or administrators as he had against the client himself, but in the •event of bankruptcy the banker would only have a claim upon the shares if he had served the company with notice of his security. Otherwise they would remain in the order and disposition of the client within the meaning of the BanTcrujjtcy Act, and passed to the trustee in bankruptcy. Amended Answer : At the time the Answer to this Question was given, it was supposed to be the law that shares were " goods " which, in the event of bankruptcy, would be in the order and disposition of the bankrupt, and would consequently belong to his trustee, but the House of Lords has since decided, in the case of the Colonial Bank v. Whinney (over-ruling the decision of the Court of Appeal), that shares are *' things in action " to which the order and disposition clause of the Bankruptcy Act does not apply, and which consequently do not "belong to the trustee. 629. — Question : In the event of such notice as in Question 628 having been registered in the books of the " A " company and of the company subsequently going into liquidation, would that registration involve any liability upon the banker for the payment of the uncalled portion of the capital of the company in liquidation ? Answ^er : The banker would not be liable unless he were registered as a shareholder. 630. — Question : A banker takes bis usual equitable lien upon deeds deposited with him, granting his customer a limit of £400. Subsequently, when the account is overdrawn only £320, he receives notice of a second charge. The banker pays a further £80, and the customer fails. Upon realisation of the security, can the banker retain £400, or must he take £320 only, and rank in with the creditors generally for the balance of £80 ? Answer : The banker can only retain £320. See Grant's " Law of Bankers," Third Edition, p. 204. 631. — Question : In the event of a customer's bankruptcy, or of his making an assignment for the benefit of his creditors, could the banker hold any balance standing to the credit of his current Questions on Banhing Practice. 179 LIEN — continued. account, as security for bills under discount, against the trustee or the customer ? Answer : Yes. 632. — Question : John Smith is managing owner or ship's husband of the barque " Adonis." He opens an account at a bank in the name " Barque Adonis, John Smith, managing owner." All cheques for disbursement are signed " a/c Barque Adonis, John Smith, managing owner." In case the account became overdrawn, and John Smith should fail to pay the balance due, could the bank have recourse to any or all of the other shareholders in the vessel ? Supposing he held no shares in the vessel and signs " ship's husband," would this bind the shareholders, and would he be free from personal liability ? Presuming the bank had a right of recourse against the shareholders, would it be bound to prove that the money drawn out had been applied to the purposes of the vessel ? Answer : A managing owner or ship's husband is merely an agent for the owners of the ship, and has no authority, as such, to overdraw a banking account. The burden of proof would lie on the bankers to show that the agent had the authority he assumed to exercise. The question in each case is one of fact, whether he has had such authority committed to him, or, if this is not in fact the case, whether he has been allowed by the owner to hold himself out as armed with such apparent authority. If he had no authority, express or implied, the owners will not be liable to the bank in respect of the overdraft. The ship's husband would, in the case pat, be personally liable. 633. — Question : Does the deposit of share certificates with blank transfer with a memo, of deposit, as security for overdraft, form a legal security, and is it necessary that notice of such deposit should be given to the company ? Answer : Such a security as here described is occasionally .accepted, but is not a complete security until the transfer is Tegistered. 634. — Question : Is the deposit of a certificate of shares with .a transfer executed in blank, a security that a banker may safely take ? Is a deposit of a policy with a memorandum any security ? Answer : Neither transactions being completed, no real security would be given thereby. 635. — Question : A B has deposited deeds, by way of col- lateral security, for an advance of £100, and signed an unstamped memorandum of deposit, undertaking to execute a mortgage when • N 2 180 Questions on BanMng Practice. LIEN — continued. required. He has also signed a promissory note for the amount payable on demand. Is it absolutely necessary that the promissory note be renewed within six years to keep the debt alive, the debtor having paid no interest nor given any other acknowledgment within the period ? Would the answer to the above query be different in case the memorandum of deposit did not give an undertaking to execute a mortgage, but merely recited the deposit, seeing that in both cases there would be a lien upon the deeds ? Answer : In either case it is necessary that the promissory note should be renewed, but the deeds may be held against the debt only if the memorandum of deposit be duly stamped according to the requirements of the recent Stamp Act. 636. — Question : In the event of a banker in the ordinary course of business making an advance to his customer upon bonds payable to bearer, and afterwards receiving notice that the bonds in question do not belong to the customer, but to trustees (say of a marriage settlement), would the banker's lien hold good as against the claim of the trustees ? Answer : Eecent decisions render this doubtful. 637. — Question : A, B and have a current account with their bankers in the name of B, D and F, the style of the firm. A and B having a business apart from C, have also a current account with the same bank, in the name of B and D. The bank has money on Deposit Account, the receipts for which are issued in the joint names of A B and C. Has the bank a lien on these moneys for any liabiUty on the current accounts of B, D and F, or of B and D ? If so, would the lien be affected if the bank had been verbally informed, when the account was first opened, that the money was placed on deposit, because it belonged to clients of the firm, though no notice was given in respect to the sum now held ? Answer : The bank would have a lien on the deposit account, in respect of the current account of B, D and F, but no lien in respect of the current account of B and D. Any such notice given to the bank, as is suggested by the last paragraph, would, as a rule, be disregarded by them. MINOR— 638. — Question : A banker receives a sum of money on deposit at interest in the name of " Jo/m Jones for William Brown, a minor. ^"^ John Jones draws the amount and interest on the 6tli May, and Questions on Banking Practice, 181 MINOR — continued. becomes a bankrupt on the 9th May, having apphed the above trust money to his own uses. The minor, by his next friend, sues the bank. Is the bank hable ? Can they be held to stand in a fiduciary capacity ? Answer : "We think the result of the cases is to establish that a banker is bound to honour an order of his customer with respect to the money belonging to that customer, although the account is opened in the name of the customer as trustee, unless the banker is aware that the trustee intends to misapply the money. If there- fore Jones could be considered as beyond question the only customer of the banker in the case supposed, we think the banker would be held justified in honouring his cheques. The difficulty in answering the question arises from the mode in which the account is opened, which appears to us both unusual and irregular. It may be contended that John Jones merely acted as agent for Brown in opening the account, and that it is not the case of a trustee opening an account in his own name, although as the trustee for another. If this view should prevail, the banker would be held liable, if, without the consent of Brown, he paid the money to John Jones, and it was misapplied. 639. — Question : An open cheque was cashed by A, a banker, drawn upon another banker for B, a minor, to whom it was made payable " or bearer." The cheque was returned unpaid, with answer " Payment stopped." No notice of the stopping had been given to the banker who cashed the cheque, or to the payee. The banker cannot sue B for the money, as he is under age. Has he not a good case against the drawer of the cheque ? Answer : Yes. 640. — Question : A deposit receipt is issued in these terms : " Received from John Smith, in trust for his son Alexander, a minor, " the sum of £100," which is placed to his credit on deposit account. The son comes of age and wants to draw the money. Is the bank safe to pay on his endorsement alone ? Answer : It is most unusual for banks to issue deposit receipts recognising a trust. Should they do so, the question would depend entirely on the terms of the trast. 641. — Question : Does a banker run any risk in opening and conducting an account in the name of a minor, («) if it is kept in credit ; (b) if it is overdrawn ag'ainst a covering security ? Answ^er : As a minor cannot sign or draw a valid cheque, except as agent, the banker would incur risk in either case. 182 Questions on BanTcing Practice. MINOE — continued. 642. — QuESTioi!T : Jones and Son open an account, the junior partner being a minor, and they desire that either partner shall draw cheques and accept bills in the name of the firm. The account is to be sometimes overdrawn. There is no deed of partnership. Is it the case that, as the senior partner is liable for his partner's contracts, a bank might safely permit an account to be opened under the above conditions ? Answer : No. " An infant cannot draw or sign a valid cheque ; in "other words, a banker cashing the cheque of an infant is not " thereby discharged ; for a person under age cannot draw a cheque, " for he cannot give a legal discharge." see Grant's "Law of Bankers," Fourth Edition, p. 26. 643. — Question : Can a customer of a banker authorise a minor to sign cheques on his behalf, and is a banker justified in accepting the signature of an infant with the consent of the customer ? Answer : There is nothing which incapacitates a minor from being an agent, and if a customer of a bank authorises a minor to sign cheques on his behalf, the banker is justified in honouring cheques so signed. MORTGAGE— 644. — Question : Are the equitable mortgagees of a lease liable for the due fulfilment of all the covenants in the event of the lessee failing to carry them out ? AVould the position of a legal mortgagee be the same ? Answer : The equitable mortgagees of a lease arc not liable for the due fulfilment of the covenants in the event of the lessee failing to carry them out. Nor is a legal mortgagee liable if his mortgage is taken in the usual form, viz., by way of underlease and not by way of assignment of the whole term. Of course, in either case the non- performance of the covenants may entail forfeiture of the lease, and the consequent loss of the security. 645.— Question : When a mortgage has been obtained on a ship to secure an account current, and has not been registered, can the mortgagee realise after the bankruptcy of the mortgagor ? Answer : We think not. 646. — Question : Building Societies which are registered under the Act of 1874 are empowered to borrow to the extent of two-thirds Questions on Banking Practice. 185 'KO'RlK^kQ^'E— continued. of the amount secured to the Society by mortgage from its members ; does the amount advanced upon preference shares form a part of the two-thirds they are empowered to borrow ? Answer : Unless there is something special in the constitution of the Society, it would not be considered to form any such part. 647. — Question : When the deeds belonging to a firm are deposited by way of equitable mortgage to secure a banking account, should the schedule be signed by the individual partners, or would the signature of one partner for the firm be sufficient ? On the with- drawal or death of a partner, should the securities be re-deposited by the survivors ? Answer : The schedule should be signed by all the parties who are stated in the deeds to be the owners of the property ; also by the firm borrowing. On any change in the firm the securities should be re-deposited. NOTES— 648. — Question : Can a party holding notes payable to bearer, on demand, of a bank in liquidation claim interest thereon from the date on which payment was stopped ? Answer : This question will be best answered by the following quotation from "Walker's "Treatise on Banking Law," p. 134 : — *' Where a company issuing notes has gone into liquidation or become " bankrupt, the holders of its notes will be allowed interest at the rate "of £5 per cent, from the date on which they demand payment from " the liquidator. {In re East of England Banking Company, L. R. 4, " Ch., Ap. 14.)" See also Grant's " Law of Bankers," Third Edition, p. 424. 649. — Question : A customer of a bank finds a £5 note on the floor outside the counter, and hands it over to the cashier. A few weeks afterwards the customer calls again, and learning that no application has been made in the meantime by the loser, claims the note. The bankers refuse to give it up, contending that it belongs to them because found on their premises. The cash balanced correctly on the date the note was found. Who has the best claim to it ? Answ^er : The finder. 650. — Question : A presents a cheque for £30 at B and Co., of Whitetown, note-issuing private bankers, who pay him in notes of another private note-issuing bank, having no branch at Whitetown, 184 Questions on Banhing Practice. ^01^^^>— continued. so as to save them the trouble and expense of remitting the notes for collection in the usual banking course. Is this legal ? And can a private note-issuing banker re-issue the notes of another private note-issuing banker, with whom he has no agency or other connection ? Answer : Such notes are not in any case legal tender, but should no objection be made to them, there is nothing to prevent the banker paying away such notes. 651. — Question : As silver is legal tender up to 40s., is the Bank of England, when a £5 note is presented for payment, justified in paying £3 in gold and the remainder in silver ? Answer : No. They are bound to pay the whole amount in standard gold coin. 652. — Question : Are Irish and Scotch notes legal tender in their respective countries ? Answ^er : No. 653. — Question : Is a bank which issues bank notes compelled to have a distinct and separate hcense, and pay a separate £30 for every town where these notes are issued, or are four licenses sufficient ? Answer : By 7 and 8 Vic, c. 32, s. 22, a banker must take out a separate license for every place where he issues notes, except that no banker who, on or before May 6th, 1844, had taken out four licenses for issuing notes at more than four places, can be required to take out more than four licenses to issue notes at the places named when the Act was passed. Should the banker issue notes at any other places, a separate hcense would be required at each of those places. ' 654. — Question : Can a country bank, issuing its own notes, issue those notes in any tow^n in which it may open a branch one day in the week or oftener, without paying an additional banker's license for each branch ? Answ^er : The country bank cannot do so without paying the charge for a license (£30). The bank would have to do this whether the branch were open one day or six days in the week. 655. — Question : In the event of a private country bank being converted into a limited liability company (since the passing of the Bank Act) does not its note issue become cancelled on account of the alteration ? Answer : By the provisions of sees. 11 and 12 of the 7 and 8 Yict., cap. 32, the Bank Act of 1844, a private country bank would lose its issue on becoming a joint stock company. Questions on BanMng Practice, 185 NOTING— 656. — Question : A bill for £140 is accepted and made payable at the A B bank. Before maturity the acceptor removes his banking account to the E F bank (nearer to his residence, and less than a mile from his former bankers) ; the bill is presented by the clerk of E. and Co., notaries (acting as collecting agents for the endorser's bankers), at the A B bank, and, pursuant to instructions left, the answer is written on the bill " Refer to E F bank." The bill is not referred by the notaries of the last-named bank for payment until the following day, with 8s. 6d notarial charges thereon. Ought the bill to have been noted ? Could payment of the charges be legally en- forced against the acceptor ? Answer : The holder of a bill of exchange is only bound to present it where domiciled ; and in the event of the acceptor not duly pro- viding for the same at the domicile he must bear the consequences thereof, including the cost of noting. It is customary in London for the clearing bankers to refer bills to one another in cases when they are domiciled at one bank and provided for at another, but it is not actually incumbent on the holder to re-present to the second bank, nor would he do so if it were situate at some distance. 657. — Question : It is usual for many country banks to send to the notary all bills to be noted twenty or thirty minutes before the bour of closing, in order to give him time to present them at the different banks before closing hours. Is this the legal course ? Can charges so incurred be recovered supposing that, in the interval, funds are tendered to retire the bill ? Answer : The presentation of a bill of exchange by a notary at any time during the twenty-four hours of the day of maturity is legal. In London the practice of bankers is to leave a notice with the acceptors of bills that are not paid on presentation, intimating that they can be taken up at the office of the presenting banker until the close of business, and it is not till after such hour that the bills are handed to the notary for notarial presentation ; the notarial charges cannot be enforced if payment is then tendered by the acceptor. 658. — Question : An acceptance is made payable at the St. Michael's Bank, Cornhill, by a customer living in Camden Road. It is presented in the usual way, and refused payment, with the Answer " Refer to acceptor." Can the notary legally demand two notarial charges for presenting at the bank where it is made payable, and also at the customer's private residence ? Is it necessary to have it presented at Camden Road at all ? 186 Questions on Banhing Practice, 'NOTING— continued. Answer : It is customary for notaries in the case of bills, which have foreign endorsements, to which such an answer is given, to present at the acceptor's private residence, and to charge for so doing. OVERDRAFT— 659. — Question : A customer has an overdraft on current account secured by a deposit of deeds of his house. The customer produces to the banker the receipt of Property Tax paid on the house, and claims as of right an allowance off the interest charged to Ms current account, in respect of the overdraft. Previously to the claim as above made, the banker has paid tax claimed under Schedule D, as trade profits. Is the customer entitled to be allowed the Property Tax claimed, and, if so, can the banker in any way re-claim it from the Inland Revenue ? Answer : It would be quite contrary to practice. 660. — Question : Goods consigned to various houses abroad are hypothecated to a bank by a customer as security for an overdraft incurred. These consignments are subsequently found to be unsale- able and the expenses of duty, warehousing, &c., exceed, in course of time, the value of the goods. Is the banker liable for the deficiency ? Answer : The banker would not be liable unless the goods had been absolutely assigned to, and taken over by, him. 661. — Question : A bank holds for security against an overdraft certain railway stocks registered in the names of the bank's nominees. Is it essential that the bank should hold an authority from the customer to realize their security in case of need, without reference ta him ? Answer : Yes ; but, as a matter of courtesy, notice is usually given to him. 662. — Question : A firm, having an overdrawn account at their bankers, fail. The partners of the firm have, at the same time, credit balances on their private accounts at the same bankers. Are the assets of the partners Uable for the firm's overdraft ? Answer : Bankers have no lien on the deposit of a partner on his separate account for a balance due to the bank from a firm. Watts V. Christie, ex parte McKenna. Walker on " Banking Law," p. 143. Questions on Banking Practice, 187 QiY^^'D^kYT— continued, 663. — Question : A garnishee order is served on a banker when his customer's account is overdrawn. {a.) Does this order attach subsequent payments to the account in the ordinary way ? (h.) If so, does it also attach payments to the account made expressly to reduce the overdraft ? (c.) Is a notice of abandonment of the garnishee proceedings by the plaintiff's solicitor a sufficient authority for not attending the Court ? Answer : («) and (Jb.) Certainly not ; the garnishee order can only affect a debt due or accruing due from the banker to his customer at the time it is served. Balances being against the customer, the debt is due from him, and there is no debt attachable. Subsequent pay- ments, whether made generally or specifically to reduce the overdraft, could not be affected. Until they overtop the overdraft there is no debt due from the banker ; and when they do, that debt was not one due or accruing due at the date of the service of the order. A debt to be accruing due must be one the liability of which exists at the time of service, although the date of payment is future. (c.) Theoretically, probably not. The order to attend, is an order of the Court, and the solicitor has no right to usurp the functions of the Court and dispense with the garnishee's attendance. PARTNERS— 664. — Question : A father and son have an account in the name of " W. Sorley and Son," either to draw in the name of the firm. The father, W. Sorley, has an account in his own name alone. Would a bank incur any liability in allowing the son to pay in a cheque, payable to "VY. Sorley and endorsed by him, to the joint account ? Answer : No. 665. — Question : A, B and C, a firm of merchants, have an overdraft at their bankers of £15,000 which is partially secured by equitable mortgage to the bank of the property owned by the firm, and valued at £10,000. A retires from the firm. When, and in what manner, would the private estate of A be relieved from liabihty on contracts existing at the time of his withdrawal, e.g., upon the deposit of the title deeds of the property ? Would A be liable, in the event of the firm's title to the property proving defective ? Answer : A is not relieved from liability until the whole of the overdraft is paid off. 188 Questions on Banking Practice. PARTNERS— coyj^mwe^. 666. — Question : An account is kept in the names of " Smith " and Jones " ; and both of them draw cheques and accept bills under the signature of " Smith and Jones." In the event of, say, Jones dying, can the banker continue to honour Smith's cheques, &c., on the account signed in the usual manner ? Answer : In the event of the death of either Smith or Jones, the balance of the account would be available to the survivor, under his usual signature of " Smith and Jones." 667. — Question : K and B, partners in trade, open a current account in their joint names, at the same time giving instructions to the banker to honour cheques signed by either of them. Subsequently a difference arises. A then writes to the banker requesting him not to honour cheques unless signed by himself as well as B. Can one partner thus restrain the other ? Answer : It is laid down in " Lindley on Partnership" that if one partner directs the bankers of the firm not to pay a cheque of the firm, the bankers incur no liability to the firm if they follow such directions. The general principle upon which each partner has power to draw cheques in the name of the firm is, that he is con- sidered the agent of the firm for so doing, but the agency, and consequently the authority to draw cheques, may be revoked by special notice by either partner. Our answer would have been the same if A and B had not been partners in trade. 668. — Question : A and B, partners in trade, have a current account with a bank in their joint names as a firm ; B dies, and at the time there is a considerable balance in hand ; A carries on the business (having power to do so under the deed of partnership) until something definite is arranged with B's executors as to the disposal of B's share : would the bank be quite safe in allowing him to do his business through the old account, and so give him the power to withdraw the balance if he so wished ? Answer : In the case put, the balance of the account would be available to the survivor without the banker incurring any liability. 669. — Question : A, Band C have an account with their bankers in the name of A and Co. When the account was opened it was arranged that cheques should be signed by all three partners. Upon the decease of C, intestate, would the bank be justified in paying the balance of the account upon the signature of the survivors, or would the signature of the administrator be necessary ? Questions on Banking Practice. 189 VKRT^Y.'R^— continued. Answer : The bank would be justified in paying to the survivors in the case of a joint account on proof of death. 670.— Question : A cheque is signed by a partner in a firm thus, " Jones, Robinson and Co." The partner signing dies before presenta- tion for payment, and the bankers have notice of his death. Can the bankers pay, or does the death of the partner act as a revocation of the power of the bank to pay upon the cheque, as in the case of an individual drawer ? Answer : The death of a partner does not invalidate the firm's signature as signed by him previous to his decease. 671. — Question : A surviving partner is able to give a good discharge for payments made to him. Js the case similar when one partner in a firm becomes bankrupt ? Would the bank be protected as against the trustee in bankruptcy, in allowing a remaining partner to draw any outstanding balance of account ? Answer : Yes. 672. — Question : An account is opened at a bank in the name of a firm A B and C, and authority is given to honour drafts signed by any of the partners on behalf of the firm. After some time A leaves the firm, and notice is given to the bank no longer to honour his signature. In the absence of special instructions, should such an order be held to include bills accepted by A on behalf of the firm prior to his retirement ? Answer : Such order would not apply to signatures written before the date of the order to the bank, but it is usual for customers to give special instructions to banks on the subject. 673. — Question : A current account is opened in the names of " Samuel and John Smith," both partners to sign " Samuel and John Smith," and cheques are so signed and paid ; but, after a time, the banker has a cheque presented to him for payment, signed, " Pro Samuel and John Smith. " Samuel Smith." If the banker is satisfied that the signature is that of Samuel Smith, the partner, ought he to pay the cheque ? Answ^er : It is difficult to see what risk a banker would incur by paying a cheque under the circumstances named. 190 Questions on BmiJci?ig Practice. POLICY OF ASSURANCE— 674. — Question : Supposing a policy of life insurance in a mutual office to be accepted as collateral security for an advance, and either assigned by deed or deposited on a memorandum, the office being notified of the lien. In the event of the liquidation of the life office, could the person accepting the assignment be put upon the list of contributories ? Answer : We think that under no circumstances could the persons with whom a policy has been merely deposited as collateral security be liable to be placed on the list of contributories. With regard to the liability of persons to- whom the policy has actually been assigned by deed, no positive answer can be given without seeing the con- stitution of the company in which the policy is effected. It is difficult however, to see how a mere mortgagee can have placed himself in the position of a proprietor, so as to render himself liable as a contribu- tory. 675. — Question : Is it safe for a banker to lend money on a life policy taken out by a husband, and expressed, on the face of it, to be for the benefit of his wife, or wife and children, under the Married Women's Property Act, if both execute the deeds of assignment ? Answer : It is against the usual practice of bankers so to do, and in the latter case it would be decidedly unsafe, as it is not possible to bind the children. 676. — Question : A deposits a policy of insurance on his own life to cover overdraft of bank to B. A second charge is given upon this policy to C, who duly notifies his claim to the bank. Subsequently B pays off his liability and demands, with the authority of A, the surrender of the policy. Can the bank so surrender the policy, or must it hold it in trust for C ? Answer : The bank, having received notice of the charge, would not be justified in giving up the policy. 677. — Question : In a case where a Hfe policy for £500 is deposited with a bank, and "all right and title therein assigned to the " extent of £500," would this carry the whole policy and bonuses, although at the end of the deed it is specified that " if there be any " surplus, then to pay the same to the said (depositor) " ? Answer : This would not carry the whole policy and bonuses ; the surplus, after satisfying the claim of the bank, would be payable to the depositor. 678. — Question : Is a written deposit and undertaking to assign a life policy, and notice given to the Insurance Co. (although the Questions on BanTcing Practice, 191 POLICY OF ASSURANCE— cow^mwe^. latter may decline to recognise it on the ground that it is not a legal assignment) a valid security for a banker ? Is the notice binding in any case on the Insurance Co. ? What is the best form in which to take such a security, having regard to the stamp duty on a legal assignment being an objectionable expense to a customer ? Answer: A written deposit and undertaking to assign a life policy, with notice to the office is a valid security, and the office could not safely disregard the notice. Such a security should be under seal, in which case, by the 19th sec. of the Conveyancing and Laiv of Property Act, the mortgagee has, among other powers, a power of sale. The stamp duty on mortgages, whether legal or equitable, and whether or not under seal, is the same, viz. : 2s. Qd. per cent. 679. — Question : When foreign-drawn bills (with documents), payable in London, already accepted, or for the acceptance, are received in a provincial town, from bankers in London, to be held in order that the acceptors may take them up under rebate, if they so desire ; when bills (with documents) are received from abroad on behalf of London bankers for acceptance to be obtained, and the bills are held in the provincial town as before stated, for the con- venience of the acceptors, does the duty of seeing that the policies of insurance are properly stamped within the legal time devolve entirely upon the acceptors ; and, failing them, upon the true owners of the bill ; or, would the provincial bank be held liable, and if so, to what extent, supposing the policies remained unstamped, and the ship, with cargo, were lost at sea ? Answer : As agents, it is incumbent on the bankers (whether London or provincial) who receive bills from abroad with documents attached, to see that the policies of insurance are duly stamped within ten days of their arrival, unless the documents are, during that period, handed over to the drawers of the bills. PROMISSORY NOTES— 680. — Question: In the case of payment of a composition of £5 5s. M. by promissory note on a ^d. stamp, is it the practice of bankers to receive such promissory notes for collection or otherwise, when it is specified in the body of the promissory note that the sum is payable by three equal instalments respectively, at say three months', seven months', and eleven months' currency ? Answer : Promissory notes in the form specified are, as a matter of practice, received by bankers for collection. 192 Questions on BanTcing Practice. PEOMISSORY l^OT-^^— continued, 681. — Question : Is a 2d. stamp sufficient in such a case as in Question 680 (if the note is dealt with), or should not the stamp be such as to cover the ad vcdorem duty on each of the instalments ? Answer : The stamp should be of the denomination required by the whole amount of the promissory note, and not for the total of the stamps that might have been required for the separate instal- ments. 682. — Question : Is such a document as is mentioned in Question 680 negotiable and recoverable at law ? Answer : "We think that, as in the case supposed, a sjwcified sum is made payable at specified times, the document is a promissory note with all the incidents of a promissory note, including negotiability, if in terms made negotiable, and giving the right to the true owner to recover at law the amount made payable thereby. 683. — Question : Is a promissory note to order, drawn at two months' notice, a regular document under the Bills of Exchange Act, 1882 ? If so, would a written notice through the post be sufficient, and would the promissory note mature from the date of postage ? Answer : It has been judicially decided that an instrument in the form described in this question is not payable " on a contingency." We think therefore, it is payable at a fixed period within the Bills of Exchange Act, 1882, and is a regular document under that Act. The note would mature from the date at which the notice was received by the maker, and not from the date of postage. 684. — Question : Is a promissory note invalid by reason of the omission of any reference to the payee, the terms of the note being simply " I promise to pay the sum of " ? Answer : Such a note does not come within the definition set forth in sec. 83 of the Bills of Exchange Act, 1882. 685. — Question : John Smith kept a current account at the Gower Bank, Limited ; the balance was oscillating, sometimes Cr. sometime Dr. In (say) January, 1880, the balance being then Dr., and the bank having called his attention to it, he sent by letter to the manager a three months' joint and several pro. note for £450, signed by himself and Peter Smith, and payable to the order of the Gower Bank, without any condition being in any way attached to the note or liability. The bank had a right to discount this note, and place the proceeds to credit of John Smith ; but instead of doing this, they held it as equivalent to £450, so long as it was not with- drawn by the makers. It matured in April, 1880, notice of the same Questions on Banking Practice, 198 PEOMISSORY '^OH^^— continued. being posted the day after its maturity to Peter Smith, calHng his attention to the matter. In the meantime John Smith's account was still oscillating Dr. and Cr. ; but at the end of the year 1880 he failed, his account being then Dr. £600. Had not the Gower Bank a claim against Peter Smith for the amount of the pro. note ? If not, how comes it that his liability ceased ? If the note were discounted, the liability would remain ; but as the bank held it in good faith as the equivalent to them of £450, does not the liability virtually remain the same ? Does not the fact of the non-withdrawal by the makers establish a liability against them ? Supposing John Smith had given the bank a lien upon all bills (not under discount) held by them, how would this affect the liability of both or either upon the pro. note for £450 ? Answer : Due notice of the non-payment being given, the liabihty of Peter Smith would remain. 686. — Question : A promissory note made payable at a bank, and drawn in favour of J. Smith " or order ^'^ is presented on the due date by the payee or by his attorney in person ; the payee has not in any way transferred or negotiated the document, nor has he written his endorsement thereon. The banker hands it back to the payee with answer " requires endorsement," but the payee states that he declines to put his name on the bill and demands payment in exchange for surrender of the document ; the banker refuses to give other answer, and the bill is dishonoured and noted. The payee is willing to give his separate receipt for the money if required to do so. Can the banker insist on endorsement as well as surrender in the above case ? Would he be liable to the maker who had sufficient funds at his credit to pay the note .^ Answer : The payee's endorsement cannot be insisted upon. (See Chalmers Bills of Exchange Act, 1882, p. 6.) Hence he would be Liable to the maker. 687. — Question : Is a banker protected by the provisions of the Bills of Exchange Act, 1882, if he pay a promissory note, payable on demand, domiciled at the bank, which bears a forged endorsement ? Answer : No. It resembles an acceptance payable at a bankers, rather than a cheque on him. 688. — Question : Is the maker of a note drawn in the following form legally responsible ? " Dublin, May 1, 1886. " £100. Three months after date we jointly and severally promise "to pay John Jones, or order, the sum of one hundred pounds " sterling, value received. " John Brown." 194 Questions on Banking Practice, PROMISSORY ^OHW^— continued. Answer : It has been decided (see Oiven v. Van Uster^ 20 L. J., C P., p. 83) that where a bill of exchange is drawn upon four, and accepted by one only, that one is liable on the bill. In this case, we think the maker is liable on the note in the hands of a holder in due course. 689. — Question : A obtains a loan from a banker D on a joint and several promissory note signed by himself, and B and as securities. When the note matures, A presents a renewal signed by himself and B, and states that C will call and sign the note in a few days ; and D, not wishing to have the bill overdue, passes the renewal, but retains the old bill. Now, supposing that C refuses to sign the renewal, can the banker D sue on the old bill or does the fact of the renewal discharge the old bill, and leave the new one to stand on its own merits ? Or if is discharged would that affect the banker's recourse against B (the other security) ? Answer : We think the circumstances are sufficient to show that the agreement, on the part of the banker, to renew the promissory note was conditional on signing the renewal, and that should he refuse to do so, the banker would be entitled to sue the sureties on the old note. 690. — Question : A and B are joint signatories to a promissory note after date. Bankers credit a joint account in the names of A and C with it. Is B discharged from his liability, when the note falls due, to the extent of all sums received to the credit of A and C's account between the date of crediting the note and the date it falls due ? Answer : No. 691. — Question : A and B pass a joint promissory note to 0, a banker. It is signed 6n the back by D, whose name is, however, not mentioned in any way on the front of the note. A and B fail to pay it at maturity. Can sue D for the amount as the security for the advance ? Answer : No. The payee of a promissory note cannot sue a subsequent endorser. 692.— Question : Referring to sec. 89 of the Bills of Exchange Act, 1882, A, for B's accommodation, puts his name as maker to a joint and several promissory note (which B also signs) in favour of C, who, at the time of its being negotiated to him, has notice of the relation in which A and B stand to each other. B does not meet Questions on Banhing Practice, 195 PROMISSOEY NOTES— co?i^mwe^. the note at maturity. Is it necessary, in order that C may preserve his rights against A, that A should have notice of dishonour ? Answer : Although desirable, it is not necessary. 693. — Question : Some years ago A resided in India, and before leaving, deposited with a bank in Madras, Government promissory notes, together with a power of attorney for them to receive the dividends and remit to England. The bank stops payment. How can A recover the notes, and what steps should he take ? Answer : Provided the suspended bank has no set off against the promissory notes, A should request the liquidator to return to him the promissory notes and cancel the power of attorney. 694. — Question : Is a promissory note drawn in the following form negotiable ? " £100. " London, 1st January, 1883. " Three months after date I promise to pay John Smith the " sum of one hundred pounds : value received. " John Robinson." Answer : Yes, under the provisions of the Bills of Exchange Act, 1882, clause 8, sec. 4. 695. — Question: Will it be sufficient for the holding banker to send notice of dishonour, should such be necessary, to the payee of the following note ? £100. January 3l5^, 1888. Three months after date we jointly and severally promise to pay A B or order One hundred pounds. Payable at St. Michael's Bank, Value received. London. C D E F GH I J The bill is endorsed " Pay the St. Michael's Bank or order. "A B." 2 196 Questions on Banhing Practice, PROMISSOKY ^OT^^— continued. Or must he, to protect his lien against all the parties, send notice to all the signatories ? Does the fact that the signatories are Governors of a charity, on whose behalf the advance is made, affect the question, although the note is signed by the Governors in their individual capacity ? Answer : The makers of a promissory note are deemed to corre- spond with the acceptors of a bill, and consequently notice of dishonour would not be absolutely necessary. It would, however, be desirable to send notice to all the makers individually, notwith- standing the fact of their representing a charity. STAMP DUTIES— 696. — Question : A cheque is drawn by the treasurer of a local board payable to order. In addition to the usual stamp, a form of receipt appears at the foot of the cheque to which a receipt stamp is affixed. Is the signature to the receipt a sufficient discharge without an endorsement on the back of the cheque in the usual manner ? Answer : The receipt at the foot of the cheque would be considered a sufficient discharge. 697. — Question : Eailway Companies and County Treasurers are adopting the idea of having a printed form of receipt on the back of cheques, which the payee has to sign. If the amount be above £2, is it necessary to affix a receipt stamp in addition to the impressed stamp on the cheque ? Answer : No. 698. — Question : Where a form of cheque, as specified below, is used, is it requisite — 1st. That the receipt should bear an adhesive stamp, in terms of the upper part of the cheque, viz., stamped, signed and dated, or would the impressed stamp be sufficient to protect the banker on whom the cheque is drawn ? 2nd. That the payee should, in addition to the receipt signed on the face of the cheque, sign his name also at the back. Would not the receipt constitute a full discharge to the banker ? There appears some superfluity about this form of cheque. Questions on BanMng Practice. 197 STAMP J)T^Tm^— continued. [Copy.] " This Cheque requires Endorsement. " No. M. April, 1886. " To Messrs. Bankers. M. ^"~^ " Pay to or order f Stamp.j " the sum named below on the receipt being duly stamped, v_^ " signed and dated. " J. J. & Co. " Received from J. J. & Co. the sum of as per " particulars furnished. " Signatures, Stamp. " Date Answer : The form given above is not an ordinary cheque, and the banker, if he pay it, must follow the special order of his customer by requiring a stamped receipt, together with the endorsement on the back of the cheque. It is an objectionable form and should be discouraged. 699. — Question : Some Trading Companies and Railway Com- panies draw on their bankers in the following forms : — " The Central Railway Company, "Jan. 1, 18—. " I am instructed to forward you the accompanying cheque upon "the Eastern Bank, who will pay the same on presentation through a " banker, the receipt being duly signed and dated. " John Smith, Secretary." " The Eastern Bank, Limited. " Pay to the order of William Jones the sum of Ten Pounds, " provided the receipt on the other side is duly signed and dated. " £10. " John Gibbs, Director." If a banker paid on the above on a forged receipt or unauthorised discharge, would he be protected by clause 60 of the Bills of Exchange Act, 1882, seeing that sub-sec. 3 defines a bill of exchange to be an unconditional order to pay ? Answee : We think the banker would not be protected. 700. — Question : Would such receipt as described in the last question require a stamp ? Answer : No. 198 Questions on BanTcing Practice. STAMP 'DVTIE^— continued. 701. — Question : A sum of money (£1,000) is cabled by a branch of a colonial bank abroad to its London office, for credit of A B. The money is placed to the credit of A B's account in London. He is advised thereof by letter, and a receipt for the amount requested, to which he replies as follows : " Your favour of the 20th inst. to hand, " advising £1,000 to my credit per cablegram." Does this receipt require to be stamped ? Answer : The answer in the above terms appears to be only an acknowledgment of advice, and does not require a receipt stamp. 702.— Question : By 55 Geo. Ill, c. 184, and 33 and 34 Yict., c. 97, Schedule Title Keceipts, " A receipt on a duly stamped cheque "does not require an additional stamp." Therefore is a banker justified in paying a cheque on himself, disregarding a notice on the back saying the cheque will not be paid unless the receipt on the hack is stamped ? Answer : If the notice placed on the back of the cheque emanates from the drawer, we think it is an instruction from the customer to his banker, and should not be disregarded by the latter. 703. — Question : A customer of a bank adopted the following form of cheque and receipt drawn on us : — [Copy.] "No. "M. Feb. ,1886. " To Messrs. , Bankers. M. " Pay to the sum named below on presentation of " the receipt duly signed and dated. " £ " J. S. and Co." f Stamp. " Received from the sum of " in settlement of account rendered. " £ " Signature " Date , 1886." [This Form of Receipt does not require a stamp.] Please state on the above : — 1. If, in your opinion, it is safe for a banker to allow such a form to be drawn on himself without an indemnity from the customer, looking at the conditions specified, " duly signed '' and dated'' ? Questions on BanTcing Practice. 19 9* STAMP TfX^Hm^—conUnued. 2. Is it not a draft " specially payable " to payee only, therefore " not transferable " ? 3. Would the banker be liable in case of (a) Forgery of receipt ; (Jb) lost or stolen ; (c) and if paid by him to second or other holder in due course of business ? 4. Would the Act as to crossed cheques apply to such a combina- tion of cheque and receipt ? 5. Is there not an evasion of the Stamp Act herein, as to the receipt not being stamped ? Answer : The form given of cheque, with receipt at foot, which is occasionally adopted by railway companies and others, is a very objectionable one from a banker's point of view, and no banker should permit his customer to draw upon him in this form without requiring an indemnity from him in respect to the hability, which might and would attach to the banker, in case of the receipt at foot bearing a forged signature. The draft would be more regular if drawn to bearer or order, but if not so drawn, in the absence of words pro- hibiting transfer, it may be considered to be transferable, also to come under the provisions of the clauses of the Bills of Exchange Act, 1882, relating to crossed cheques. We are further of opinion that one stamp will cover both cheque and receipt. 704. — Question : A B receives a cheque for 5s.6^. in the following form : — " London, 1st May, 1890. " The East and West Bank of London, Limited. Pay to A B or " order, the sum named below, on the receipt being presented within " ten days through a banker duly signed and dated. " (Signed) Y Z " Attached to the cheque is the following form of receipt : — " Keceived from Y Z the sum of five shillings and sixpence, being " in settlement of account for contribution. " April, 1890. " Signature " 5/6 " Date Receipt Stamp Required. This receipt to be signed in lieu of endorsement. The cheque on the face of it bore an adhesive penny stamp, and was endorsed by A B, but the amount being under 40s. he did not place a stamp on the place indicated, where he merely signed his name. The bankers returned the cheque with this answer, " Must be 200 Questions on BanTcing Practice. STAMP J)VTIW>— continued. signed, over stamp." Were they justified in so doing, as the amount was under 40s. ? Answer : The cheque although irregular in form, and probably illegal (see Question 705), as containing certain conditions, having been duly stamped, it would appear that the annexed receipt need not be stamped. It seems, however, to be the intention of the drawer of the cheque that the receipt should be stamped, but in the case quoted, as the amount is under 40s., no stamp can be necessary. See also Question 703. 705. — Question .day of. " To the Bank, Limited. " Pay C D, or Order, " The amount specified below, on the receipt being duly signed " and dated. "£ : : "AB" " Received of A B the sum of *'£ : : "CD " Payee's Signature, ^date." This receipt does not require a stamp, and must be signed before presentation. Does the condition on the above form of so-called cheque, exclude it from the Bills of Exchange Act, seeing that it is not an unconditional order to pay, and in the event of the payee's signature being forged, would the banker be protected ? If the receipt be on the back above the payee's signature, and unconditional, would the answer be different ? Answer : The instrument in the form given imposes on the banker, as a condition of his paying it, the duty of seeing that the receipt is " duly " signed. This being so, the instrument does not come within the description of a cheque which, by the terms of the Bills of Exchange Act, must be an " unconditional order in writing." The banker would therefore be justified in refusing to pay the so- called cheque. If, however, he did pay it, he would not in our opinion be protected in the event of the payee's signature being forged. In such a case the receipt would not be " duly signed." If, however, the cheque on the face of it be in the usual form of a cheque to order Questions on Banking Practice. 201 STAMP DUTIES— c(?/2^mwe^. and there is at the back a mere form of receipt, we think the bankers would be entitled to pay the cheque whether the signature were above or below the receipt. The instrument in that case would be an unconditional order, and the banker would, in our opinion, be protected even if the endorsement were a forgery. "We think, however, that if the signature were above the form of receipt the banker would be justified in refusing to pay such a cheque on the ground that the payee had not signed the receipt — the evident intention of the customer (to whom alone the banker is answerable) being that he should do so. 706. — Question : In the case of a cash order {i.e., a demand draft drawn by a wholesale firm on a shopkeeper on a penny stamp) being on presentation to the drawee accepted by him payable at his bankers without any additional stamp, and thereupon presented by the holder to the bank ; is this a valid instrument which the banker can pay and debit his customer with, or if not, can it be made so by the addition of a penny stamp ? Answer : A " cash order " when made payable at a bank is a valid instrument that such banker can debit to the drawee's account, and only requires a single penny stamp. As, however, the system of " cash orders " drawn upon tradesmen constitute bankers mere debt collectors, thus imposing considerable trouble on the collecting banker, it is the practice with both London and country bankers to dis- courage the drawing of such drafts, and in some cases to refuse their collection. 707. — Question : Are not all dividend warrants drawn by a building society, if only for a few shillings, bound to bear a penny stamp ? Answer : The dividend warrants in question would require a penny stamp, whatever the amount. 708. — Question : Is a banker bound by the Stamp^ Act to put stamps on all acknowledgments by letter of money received by post or otherwise for the credit of accounts other than that of the senders ? Answer : The banker is bound to stamp such acknowledgments, as they do not come within the exemption, which is in the following words : " Eeceipt given for money deposited in any bank or with " any banker to be accounted for, and expressed to be received of the " person to whom the same is to be accounted for." ^ OF THE UNIVERSITY ) \ 202 Questions on Banking Practice. STAMP DJJUm^—conti/nued. 709. — Question : If A gives a letter of authority or standing order to his banker for B to sign cheques on his account, should such letter of authority bear a Id. Inland Revenue, or what stamp ? Answer : No stamp is necessary on such a letter. 710. — Question : Does a direction by a customer, addressed to a banker to issue a bill of exchange or draft, require a 1^. stamp. See Stamp Act, 1870, sec. 48, sub.-sec. 2 ? Answer : No. It cannot be regarded as a bill of exchange liable to stamp duty. 711. — Question : When a customer instructs a banker to make certain payments on his account as calls on shares or annual subscrip- tions, is an unstamped debit note sufficient, or should the customer's cheque be taken ? Answer : An unstamped debit note is sufficient. 712. — Question : Does a draft application form, to be used in debiting a customer's account, require to be stamped ? Answer : No. 713. — Question : Is a stamp necessary on a form signed by a customer, authorising the bank to debit his account with an acceptance ? Answer : No. 714. — Question : Is a customer holding a deposit interest receipt obliged to stamp such receipt when increasing and changing it for a larger one ? Answer : On lodging money for the credit of an account bearing interest, no stamp is required. On such accounts being withdrawn, a stamp should be fixed to the receipt. 715. — Question : Must he stamp such receipt when transferring it to his current account ? Answer : No. 716. — Question : Does the simple transfer of a customer's money from one branch to another of the same bank involve the use of a stamp ? For instance, a customer brings a current account (dormant) receipt issued by a branch of the same bank, which is used as a debit Questions on BanTcing Practice. 203 STAMP VtJJUm^— continued. voucher against that branch, the customer signing his name on the back requesting the transfer. Answer : A simple memorandum or order for the transfer of the account of a customer from one branch to another of the same bank would not require a stamp. 717. — Question : A customer gives his banker a written authority to debit his account with a stated sum monthly to be transferred to another person's account. Does such an order require a stamp, or, should the monthly debits be stamped ? Assuming a monthly payment caused the account to go debit, and month by month the amount increased by these payments until the customer's decease, could the executors (although the estate be ample) repudiate the over- draft, on the plea that the order given was only intended to be in force so long as there was a balance at credit, and in the order there was no charge made upon executors or assigns ? Answer : Assuming that the transfer be in the books of the same banker, neither the original order nor the monthly debit requires a stamp. 718.— Question : Does the following order require a penny stamp ? " Kindly transfer seventy-five pounds from my current account to " deposit account." Answer : No. 719. — Question : Does an order from one customer to transfer money to another customer's account at the same bank require a stamp ? Answer : No. See Question 717. 720. — Question : A and Co., merchants, having an ordinary drawing account and a discount account with their bankers, desire to withdraw without presentation one of their customer's acceptances before maturity, and write to the banker to debit their current account and send them the bill. Is a cheque necessary, or should such request be stamped, or is the signature of the firm on an unstamped memo- randum a sufficient authority to debit their account ? Answer : A written request to a banker, of the nature referred to, would not appear to require a stamp, being merely a transfer order operative in the books of the banker. 721. — Question : A firm of manufacturers agreed to make an advance of £200 to a customer, taking as security a promissory note 204 Questions on Banking Practice, STAMP J)VTIW^— continued. on demand for the amount. Instead of sending a promissory note, however, bearing a two-shilling stamp, the borrower forwards to the lenders a bill on demand, accepted by himself, and bearing a penny stamp, requesting lenders to sign and keep it as security. To this they object, on the score that the acceptance of a bill, payable on demand, was irregular, and never contemplated by the Stam}) Act, and that the document, being intended to be held as security for a loan, was insufficiently stamped, and should have borne a 2s. stamp. In the event of the manufacturer taking the bill, and having here- after to produce it as proof of debt, could the document be challenged on the score of form or insufficiency of stamp ? Answer : There is no reason why a draft on demand should not be accepted, and, in fact, such drafts are constantly accepted payable at the bankers of the drawees. But an accepted draft on demand with a Id. stamp would not be an available document to hold for a Eeriod as security, as the question of non-presentation and over- olding might very possibly arise. The proper document to be taken as agreed would be a promissory note on demand with a 2s. stamp. If the draft on demand were taken it could not be challenged on the score of insufficiency of stamp. 722. — Question : Referring to the Stamp Act, "A letter or power " of attorney or commission, factory, mandate, or other instrument in " the nature thereof," for the receipt of interest or dividend on any stock other than for the receipt of one payment only, is subject to a duty of 5s. A general power of scope not defined in this Act is subject to a duty of 10s. What is the practice of bankers in regard to the stamping of documents taken by them as authority for the following : — 1. The payment of dividends on their own shares to third parties at the request of the shareholders. 2. The honouring of cheques, bills, and similar documents drawn per procuration for a customer. In these cases, should the authorities not be stamped 5s. and 10s. respectively, in accordance with the provisions of the Act above quoted ? Answer : It is the practice of bankers generally to be satisfied with ordinary letters of instruction only without any stamp. 723. — Question : A draft by a branch bank on its head office on demand. In face of the 5th sec, 2nd clause of the Bills of Exchange Act, 1882, would such a draft be sufficiently stamped by having a Questions on Banking Practice. 205 STAMP DX^TIE^— continued. penny draft stamp affixed, or must it be stamped as a promissory note with an ad valorem stamp ? Answer : A Id. stamp would be sufficient. 724. — Question : An equitable mortgage, stamped up to £200, is taken at the time of discounting a promissory note for £150 " as " collateral security for the due payment of the said promissory note, "■ and of any other promissory note or promissory notes which may at " any time be discounted by the said bank for me." At maturity the discounter desires the bank to renew the pro- missory note on the same security. Will the same equitable mortgage act as a continuing security for all subsequent promissory notes dis- counted, not exceeding £200 each, or will the deed only cover such notes subsequently discounted as shall not in the aggregate exceed the amount covered by the stamp on the original deed — i.e., will this deed only cover one more note for £50. Answer : Assuming that the equitable mortgage is properly stamped, we are of opinion that so long as the original debt is kept alive, the equitable mortgage will act as a continuing security for any number of renewed promissory notes up to, but not exceeding in the aggregate, £200 at any one time. 725. — Question : A person, by stamped cheque, pays a bill for goods supplied, exceeding £2 in amount. The creditor receipts the bill, adding the words " Paid by stamped cheque," and omits to affix a receipt stamp thereto. Can the Commissioners of Inland Revenue recover the usual penalties for giving and receiving an unstamped receipt ? Answer : Yes ; the stamp on the cheque would not cover the receipt. 726. — Question : (a) A customer having an overdrawn account with a banker, remits through the post a sum of money for his credit and in reduction of his overdraft. Is the banker bound to stamp his letter acknowledging receipt of the money, or does the following exemption apply : — " A receipt for money deposited in any bank or " with any banker to le accounted for, and expressed to be received of ** the person to whom the same is to be accounted for ? " {h) If such a letter requires a stamp, does an entry of the amount in the customer's pass-book also require a stamp ? One of the rules printed in the pass- book is that no other receipt will be given for money paid in by a customer for his own credit than an entry in his pass-book, verified 206 Questions 07i Banking Practice. STAMP DVUm^— continued. by the initials of the bank's officer who receives the money, (c) What is the practice of London bankers ? Answer : Such a letter as described does not require a stamp. 727. — Question : In the exemption schedule of the Stamp Act, 1870, a clause runs as follows : — " Exemptions. (1.) Keceipt given for money deposited in any " bank, or with any banker, to be accounted for and ex- " pressed to be received of the person to whom the same is " to be accounted for." You are requested to advise whether it is necessary to affix a receipt stamp on the issue of a banker's deposit receipt drawn in any of the following forms : — (a) Received from Mr. John Jones and Mrs. Ann Jones to the credit of their deposit account {either to draw) the sum of, &c., &c. (Jb) Received from Mr. John Jones or Mrs. Ann Jones to the credit of their deposit account the sum of, &c., &c. (c) Received from Mr. John Jones and Mrs. Ann Jones to the credit of their deposit a/c {payable to either or survivor) the sum of, &c., &c. Answer : No. Not in any of these cases. 728. — Question : What is considered to be a correct form for the reverse side of a deposit receipt, and does the receipt require stamping on payment under any circumstances ? If so, when ? Answer : A deposit receipt need have no specific form on the reverse. It is the practice of some banks to print a form of discharge at the back of their deposit receipts in the shape of a cheque, which necessarily requires a penny stamp.* 729. — Question : A bill of £120, dated at Leeds, is drawn upon a firm at Cadiz and accepted payable in London. The bill gets into the hands of a holder (the fourth endorser) who lodges it with his banker. The bank points out that it is drawn on a sixpenny impressed stamp. It is not drawn in a set of 1st, 2nd, 3rd, or as an original, but simply as an ordinary inland bill would be. Can the bill be made valid by the holder drawing out on a form sufficiently stamped a copy duplicate or 2nd or 3rd and affixing it to the accept- ance ? And if so, has the wording of the acceptance to be altered or added to, so as to make it in accordance with such copy or duplicate ? * Vide Vol. V, Journal of the Institute of Banhers, p. 156. Questions on Banking Practice. 207 STAMP 1S\]Tl^^y— continued. In fact, can the holder in any way make the bill a valid one as against the acceptor and all previous parties, or must a new bill be obtained ? Answer : In such cases as above, a copy is sometimes stamped for full stamp, then endorsed and negotiated. There is, however, con- siderable doubD as to whether an action against parties in this country could be sustained in our law courts on such a document. "We think the only safe course is to obtain a fresh properly stamped bill and obtain acceptance thereto. 730. — Question: In the case of a bill drawn six months after date " Please pay C. Smith or order, the sum of one thousand pounds " with £25 as interest," is a stamp covering £1,025 required, or would a 10s. stamp be sufficient ? Answer : As the sum of £25 is named, the stamp should cover £1,025. 731. — Question : Is it necessary that the form of protest, as well as the copy of the same, should bear a Is. stamp, or will it suffice if the original only be stamped .? Answer : The original and copy must both be stamped. 732. — Question: Does the following form of advice require a stamp as coming under sec. 120 of Stam^p Act, 33 and M Vict., c. 97? " London, March 25, 1886. "Dear Sir, " We beg to inform you that the sum of £100 has been " paid to your credit by Mr. John Brown. " We are. Sir, " Yours obediently, " Rev. W. Jones." " A. B. and Co. Answer: No. 733. — Question : Is it the practice of London bankers to issue cheques to their continental clients unstamped ? If not, would it be an infringement of the Stamp Act, 1870, to do so, providing the same were stamped by the payees ? Answer: Unstamped cheques are now issued by some London bankers to continental clients. This is no infringement of the /Stamp Act. 208 Questions on Banking Practice. STAMP DVTIE^— continued. 734. — Question : If a customer withdraw money personally from his bankers, does the cheque require a stamp ? Answee : It is usual to affix a stamp in such cases. 735. — Question : (Copy Letter.) "December 4th, 1884. " Gentlemen, " I am instructed by the Council of the Institute of " Bankers to ascertain whether any stamp is required on bankers' " deposit receipts when the amount is repaid to the depositor on his " simple indorsement. The form of deposit receipt contemplated in " this inquiry is as follows : 'CoENHiLL Banking Co., Limited, ' £100 London, Dec. 4th, 1884. * Eeceived from Mr. Jolin Jones the sum of One Hundred 'Pounds sterling, to the credit of his deposit account with the * Cornhill Banking Co., Limited. 'John Smith, Manager. 'Ent^'CHAS. Robinson, Accountant.' '^When the depositor requires the return of his £100, he presents "the receipt at the bank simply indorsed 'John Jones,' and the " question at issue is whether he must also affix a penny stamp, the " document itself being exempt from Stamp Duty under the 33 and " 34 Vict., c. 97. " Requesting the favour of a reply, " I am. Gentlemen, " Your obedient Servant, " (Signed) W. Talbot Agae, " Secretary. " The Commissioners of Inland Revenue." Answer : (Copy Letter). " Inland Revenue, " Somerset House, " London, W.C, " 17th December, 1884. "Sir, " The Board of Inland Revenue have had before them your " letter of the 4th instant. " They desire me to point out that the signature of the name of the " depositor indorsed on the deposit receipt delivered to the bank " imports an acknowledgment that his claim or demand for the sum " deposited has been settled by payment of the money to him, and is Questions on Banking Practice. 209 STAMP JyJJUm^^continued. "therefore a 'receipt' within the terms of sec. 120 of the Stamp " Act, 1870. " The exemption of the deposit receipt from stamp duty has refer- " ence only to the transaction on the deposit of the money. The " receipt given by the depositor to the bank is liable to stamp duty. " I am, Sir, " Your obedient Servant, " W. Talbot Agar, Esq." " (Signed) W. W. Cousins. 736. — Question : In the case of a bill drawn at six months for £1,000, and interest at 5 per cent, per annum, is a stamp covering the interest required, or would a ten shilling stamp be sufficient ? Answer : It is stated in "Chitty on Bills of Exchange," Eleventh Edition, p. 80, sec. 6, that — " With respect to the amount on which " the stamp duty is payable it has been held {Preussincj v. Ing, and " Wills V. Noot) that the addition of interest, although reserved from " a day prior to the date of the instrument, ought not to be taken into " account in determining the proper stamp." The bill in question would, therefore, only require a ten shilling stamp. 737. — Question : A Bill of Exchange, a copy of which is given below, is negotiated in London at such an exchange as would make the amount payable in Melbourne (say) £101. What is the amount of the foreign bill stamp to be affixed in London ? Would it make any and what difference if the state of the exchanges was such that the amount payable became (say) £99 ? [Copy.] " £100 "New York, 1st November, 1890. "At sixty days after sight, pay to the order of the Bank of " America, one hundred pounds — value received — with exchange as " per endorsement. " To Mr. Brown, " Smith & Co. " Melbourne." " The bill is endorsed in London " payable with exchange at " current rate." Answer : The Council having submitted this question to the Inland Eevenue authorities, received the following reply : — " The sum of money mentioned in the bill being £100, the stamp " duty payable is one shilling." 738. — Question : A (drawer) gives B (payee) a cheque to bearer on C (as bankers), dated 10th July, but bearing in the body the 210 Questions on BanTcing Practice. STAMP DUTIES— cow^mwe^. words *' on 15th August." B passes the cheque to D (holders). Was C justified in paying the cheque before that date, and Avhat stamp is requisite ? Answer : C would not be justified in so paying the cheque. The document is a bill of exchange, and must be stamped accordingly. 739. — Question : A London Joint Stock Bank returned a cheque to a private bank with answer *' Insufficiently stamped." The cheque bore two halfpenny stamps. Was the bank justified in so doing ? Answer : The 45 and 46 Yict., c. 72, sec. 18 and 14, enacts that postage stamps may be used for stamping cheques among other documents, and provision is also made for the use of more than one stamp to make up the requisite amount ; the use of two halfpenny stamps, therefore, appears to be perfectly sufficient and legal. 740. — Question : A local sub-post-office master keeps a banking account solely for post-office monies, and remits periodically by cheque on the account to his head office. Are these cheques exempt from stamp duty under 44 and 45 Yict., c. 20, sec. 25 ? Answer : They are exempt. See 44 and 45 Yict., c. 20, sec. 5. 741. — Question : Does an order on the United States Treasury, payable in dollars at Washington, on demand, require a penny stamp when negotiated in this country ? Answer : It does. 742. — Question : With reference to sec. 4 of the Bills of Ex- change Act, 1882, do bills drawn in the islands of Man, Guernsey, Jersey, Alderney, and Sark, and negotiated here, require foreign bill stamps ? Answer : Yes. 743. — Question : Is the law now in force for bills of exchange, drawn in the Channel Islands, to bear a foreign bill stamp ? Answer : The Mercantile Laic Amendment Act, 19 and 20 Yict., cap. 97, sec. 7, enacts as follows : — " Every bill of exchange or " promissory note drawn or made in any part of the United Kingdom " of Great Britain and Ireland, the islands of Man, Guernsey, Jersey, " Alderney, and Sark, and the islands adjacent to any of them, being " part of the dominions of Her Majesty, and made payable in or drawn " upon any person resident in any part of the said United Kingdom or Questions on BanMng Practice, 211 STAMP DUTIES— co^^mwet?. " Islands, shall be deemed to be an inland bill ; but nothing herein " contained shall alter or affect the stamp duty, if any, which, but for " this enactment, would be payable in respect of any such bill or note." In accordance with this enactment bills drawn in the Channel Islands or any part of the United Kingdom are regarded as inland bills — with the exception only of the stamp — and as the fiscal arrangements of the islands are quite independent of this country, they are, for the purposes of the stamp duty, considered as foreign bills, subject to the adhesive ad valorem stamp — being treated in this respect on the same footing as bills drawn in any of our colonies on the United Kingdom. 744. — Question : Ought the adhesive stamp affixed to a draft on demand, drawn abroad, to be a penny foreign bill stamp, or a penny postage and inland revenue stamp ? Ansaver : The stamp to be affixed to a draft on demand or at sight, drawn abroad, is the penny postage and inland revenue stamp, — the ordinary impressed stamp being also sufficient on cheques. The penny foreign bill stamp is availabe only for drafts drawn abroad, otherwise than on demand, or at sight for sums not exceeding £5. See 33 and 34 Yict., c. 97 ; 34 and 35 Yict., c. 74. 745. — Question : A foreign bill, unstamped, drawn at three months' date, is presented for acceptance. The drawer pays instead of accepting it. Having been paid at sight, is a penny stamp sufficient ? Answer : No. 746. — Question : Are Poor Law Unions exempt from stamp duty on cheques issued by them ? and, if so, under what Act ? Answer : It is believed that such cheques are exempt from stamp duty under the Poor Law Act, 4 and 5 Wm. IV, cap 76. In reference to this question, the following communication has been received from Mr. Thomas J. Smith, of the Manchester and Liver- pool District Banking Company, Limited, Cheadle, Staffordshire, treasurer to the Cheadle Union : — " In ampHfication of the answer " given by the Council to the question, ' Are Poor Law Unions exempt " ' from stamp duty on cheques issued by them, and, if so, under what " ' Act ? ' I beg leave to say that cheques drawn upon the Union " treasurer by the Guardians upo?i Poor Law account are exempt, but " cheques drawn upon the Union treasurer by the Guardians acting as " a Rural Sanitary Authority are not exempt. The exemption is in *' the 86th sec. of the Poor Laiv Act, 4 and 5 Wm. IV, cap. 76 " which reads as follows ;****< ]^or any contract or agree- " ' ment or appointment of any officer made or entered into in P 2 212 Questions on Banking Practice. STAMP J)T^Tm^—continiced. ' ' pursuance of such orders or regulations, and conformable thereto, ' ' nor any other instrument made in pursuance of this Act, nor the ' ' appointment of any paid officer engaged in the administration of ' ' the laws for the relief of the poor or in the management or collec- ' * tion of the poor-rate shall be charged or chargeable with any stamp- ' ' duty whatever.' It will also be seen that, besides cheques, all ' receipts given by the treasurer for monies paid to him for the credit ' of the Poor Law accounts are exempt ; but I have the authority of ' the Board of Inland Revenue (dated 5th November, 1880) for ' saying ' that the exemption from stamp-duty conferred by the Poor ' ' Laiv Act does not extend to receipts for sums over two pounds ' ' given by the Guardians acting as sanitary authorities under the * * PuUic Health Act: " 747. — Question : Are the cheques drawn by Gruardians acting as the Rural Sanitary Authority liable to stamp duty ? Answer : Yes. 748. — Question : Are School Board cheques exempt from stamp duty ? Answer : No. 749. — Question : Are the cheques drawn by the treasurer of an Odd Fellows' Lodge Hable to stamp duty ? Answer : Yes. 750. — Question : Are cheques drawn upon a banker by the treasurer of an Odd Fellows' Lodge exempt from stamp duty by virtue of the provisions of the Friendhj Societies Act, 1875 and 1887 ? Answer : No. 751. — Question : Are orders drawn upon the treasurer, by Guardians of the Poor, acting as a Rural Sanitary Authority,, liable to stamp duty ? Answer : Orders drawn upon the Treasurer, by Guardians of the Poor, acting as a Rural Sanitary Authority under the Public Health Act, 1875, are chargeable with stamp duty. 752. — Question : Are cheques drawn by the overseers and way v/ardens of a parish exempt from stamp duty when they are cashed over the counter or when they are used as transfers from one account, to another ? Answer : They are not exempt in any case. ' Questions on BanJcing Practice, 213 STAMP BVTmS— continued. -' 753. — Question : Is a cheque drawn by a trustee in bankruptcy exempt from stamp duty ? Answer : Yes. 754. — Question : Are the cheques of local postmasters exempt from stamp duty — (a) For remittance to H.M. Postmaster-General ? (b) For local payments ? (c) For rates ? Answer : (a) Yes. (b) No. (c) No. The following is the 5th sec. of the Post Office Act, 1881, 44, 45 Yict., 20, which relates to this question. Section 5. — " Every deed, instrument, receipt, or document made " or executed for the purpose of the post office, by, to, or " with Her Majesty or any officer of the post office, shall be " exempt from any stamp duty imposed by any Act, past or " future, except where such duty is declared by the deed, " instrument, receipt, or document, or by some memorandum " endorsed thereon, to be payable by some person other "than the Postmaster- General, and except so far as any " future Act specifically charges the same." 755. — Question : Hitherto it has been the custom of some banks to take unstamped memoranda of deposit of title deeds, or other securities left with them to secure overdrafts. Under the new Stamp Act, what duty will be chargeable on such memoranda ? Do these documents come under sec. 15 of the Customs and Inland Revenue Act, 1888 ? Will guarantees for overdrafts require the ad valorem duty stamp ? Answer : Memoranda of deposit of title deeds will, under sec. 15 of this Act, be liable to Is. per cent, impressed stamp, but securities, other than title deeds, as well as guarantees for overdrafts, come under sec. 14, and require a 6^. agreement stamp. 756. — Question : Referring to Question 755 : {a) Are the " unstamped memoranda of deposit " therein mentioned (executed before the Act of 1888) liable to penalties if produced in a court of law, and, if so, what penalties ? {If) In case of borrower having a loan of, say, £500 (created before the Act of 1888), receiving a further advance, say, of £200 in 1889, on title deeds, should the stamp on the memorandum of charge cover £200 or £700 ? . (c) should all 214 Questions on Banking Practice. STAMP J)X^Tim— continued. loans now existing (created before the 1888 Act) be secured bj fresh memoranda of charge duly stamped ? Answer : (a) £20. {h) £700. (c) It is advisable. 757. — Question : Prior to the passing of the Customs and Inland Revenue Act, 1888, a banker agreed to advance in current a'c, a sum not exceeding £100, and took deeds of property worth £400, with a memorandum of deposit stating that the said deeds were held as security for " all advances made or to le made.'" He now agrees to extend the overdraft to £200. Will the extension be deemed (under clause 15, sec. 2 of said Act) to be a new and separate agreement, and render it necessary to have the memorandum of deposit stamped ? Answer : Yes. 758.— Question : Under the Neiv Stamp Duties Act, all deposits of deeds require to be stamped. Does the amount of the stamp absolutely limit the amount for which the security is availal)le, or, in the event of the amounts originally advanced, say, £1,000, being exceeded by, say, £500, could the deeds be held against all comers for the full amount, £1,500, notwithstanding the fact of the form of deposit bearing only a 10s. stamp ? Answer : In order to render the deeds a valid security for the further advance, an additional stamp must be placed on the memorandum. 769. — Question : A memorandum of deposit of deeds for securing an advance is duly stamped in accordance with the Customs and Inland Revenue Act, 1888. A further advance is decided on, necessitating an additional stamp on the memorandum. May the memorandum be stamped additionally at any time, without penalty, or must it be done before the additional advance is made ? Is it necessary to make any affidavit or declaration on the subject ? Answer : The memorandum referred to should be presented for stamping with any further duty to which it may be liable before the expiration of thirty days after the day on which the advance or loan was made in excess of the amount covered by the duty previously impressed on the memorandum. It should be accompanied by a short letter of application in suitable terms, and it would, in ordinary circumstances, be stamped with the further duty without penalty, no affidavit or declaration being required. 760. — Question : A banker has charge of bonds payable to bearer on behalf of a customer, cutting off and collecting the coupons as they fall due, and placing the proceeds to his customer's credit in the Questions on BanTcing Practice. 215- STAMP J)T]Tm^— continued. usual way. If, after the 1st of July, the customer wants a loan on the security of these bonds, will the fact of his signing a memorandum of deposit, bearing a sixpenny agreement stamp (according to sec. 14^ sub-sec. 2, of the Customs and Inland Revenue Act, 1888), constitute a transfer witliin the meaning of the Act, so that the bonds themselves will have to be stamped with the ad valorem duty of Qd. for every £50 (according to sec. 12, sub-sec. 1) ? It is presumed that the coupons will still be credited to the customer's a/c, so that the banker will not be absolute owner of the bonds unless a customer fails to fulfil the conditions of the loan. Answer : It is understood that under sec. 12 of the Customs and Inland Revenue Act, 1888, the bonds require stamping. 761. — Question : A customer wishes to deposit foreign bonds payable to bearer as security for temporary overdraft, (a) Should the usual memorandum of deposit be taken in this case, and what stamp should the memorandum bear ; (b) Should the bonds themselves be stamped under sec. 12 of the new Customs and Inland Revenue Act, when so taken ; (c) If the bonds be not surrendered until the following year, will they require to be re-stamped when surrendered ? Answer : (a) The memorandum should bear a 6d. stamp, (b), (c). Yes, unless the bonds bear a 10s. per cent, stamp on issue. 762. — Question : (a) Do bills drawn from abroad always require ad valorem adhesive foreign bill stamps ? (b) Who can put them on ? Must the presenting bank or party ? (c) Do any other biUs, besides those drawn abroad, require foreign bill stamps ? Answer : (a) Yes. (b) Under the Stamp Act, the stamps should be affixed by the parties by whom the bill is first negotiated ; but practically it is often affixed by the presenting banker, (c) No ; but it should be noted that bills, other than on demand, drawn in the Isle of Man and the Channel Islands, although under the Bills of Exchange Act, 1882, sec. 4, they are deemed " Inland Bills," require foreign bill stamps by reason of there being no stamp duties in those islands. 763. — Question : Does a foreign bill of exchange require to be stamped under the following conditions : A bill payable in the United Kingdom is negotiated by a branch of a colonial bank and remitted to its London office for collection. In due course it is presented to the drawer and refused acceptance. The London office then, without waiting until nominal due date, returns the bill to its branch. Should the bill have been stamped before being returned ? Answer : No. 216 Questions on Banhing Practice, STAMP jyVTTE^— continued. 764. — Question : A bank in the colonies forwards to its London office, for collection and remittance of proceeds, a draft on a con- tinental house, payable, say, in Paris. In such cases the bank is merely acting as an agent, they have not given any consideration for the draft. Must the London office affix bill stamps to the draft before sending it to Paris for collection ? If not, would handing the bill to the London house of some Paris bank alter the circumstances ? Answer : Stamps should be affixed by the London office. (See sec. 54 the Stamp Act, 1870, and see also sec. 35 of the Stamp Act, 1891.) 765. — Question : Does a bill drawn in England and payable in Canada, or vice versa, require the stamp ad vcdorem of both countries ? Answer : A bill drawn in England otherwise than on demand requires an English impressed stamp, and one payable in England but drawn in Canada requires an English adhesive foreign bill stamp ; there are no bill stamps in use in Canada. 766. — Question : Is a bill or cheque in the following form a negotiable instrument, and is it properly stamped when impressed with the ordinary penny stamp ? " 1st Nov., 1885. " The St. Michael's Banking Company. "Pay A B, or order, one hundred pounds by draft at " twenty-one days after date. "£100. "CD." Answer : This would not appear to be a negotiable instrument in the ordinary sense of the term. See Stamp Act, sec. 48, sub-sec. 2. 767. — Question : Bills of foreign currency, drawn and dated in England, are sold direct by the drawers to a foreign banker. Not being negotiated in this country, are they liable to English stamp duties ? Answer : Bills, otherwise than on demand, drawn in England, must be drawn on English impressed bill stamps. 768. — Question : A lodges with his banker B, under the usual memorandum of deposit, two corporation bonds — not transferable by delivery — of £1,000 each, to secure his overdraft. Would the memorandum of deposit in this case come under sec. 13, sub-sec. 1, of the Customs and Inland Ee venue Act, 1888, and require a 10s. impressed stamp ? Questions on Banking Practice, 217 STAMP J)J]T^m^— continued. Answer : Bonds of the kind mentioned should be accompanied with a duly stamped transfer, and the memorandum of deposit would be liable to a 6^. stamp under sec. 14, sub-sec. 3. 769. — Question : Does a bill drawn by an English firm upon a Trench firm in English money, and accepted by them, payable in London, require to have a French bill stamp upon it in addition to the English bill stamp ? Answer : The French law requires that bills drawn as described should be stamped in France on acceptance, and the stamp cancelled by the signature of the acceptor. 770. — Question : Would the absence of the French bill stamp upon such a bill prevent the recovery of the amount of the bill from the acceptor in a French court of law, in case the bill was not met ? Answer : The acceptor can be sued in a French court on an unstamped bill, on payment of a fine of 6 per cent, on the amount of the bill from each of the following parties — the drawer, the acceptor, and each endorser. 771. — Question : Would the absence of the French stamp render the acceptor liable to penalties according to French law ? Answer : Yes, of 6 per cent, on the amount of the bill (see answer to last question). 772. — Question : Do either of the following forms require a receipt stamp ? — 1. " St. Michael's Bank, March 1st, 1885. " Dear Sir, " I beg to acknowledge the receipt of £100, which has ** been placed to the credit of your account, per Mr. Jno. Smith. " I am, Dear Sir, Yours truly, " Jno. Brown, Esq." " Chas. Hunt, Manager. 2. " St. Michael's Bank, March 1st, 1885. " Dear Sir, " I beg to inform you that Mr. John Smith has paid in " £100 to your account. '' I am. Dear Sir, Yours truly, " Jno. Brown, Esq." " Chas. Hunt, Manager. 3. " St. Michael's Bank. " Credit John Brown, Esq., £100, per John Smith. " Jan. 2nd, 1885." Answer : No. 218 Questions on Bcmking Practice. STAMP T)J]Tim^— continued. 773. — Question : Do the following banker's memoranda of money paid to credit require a stamp ? 1. Received the sum of £ to the credit of 2. Eeceived of ^the sum of £ Answer : The first exemption from the use of receipt stamps under the Stamp Act, 1870, is as follows : — " Receipt given for *' money deposited in any bank or with any banker, to be accounted " for, and expressed to be received of the person to whom the same is " to be accounted for." 774. — Question : Is a draft drawn by a banker in the United Kingdom upon any other banker in the United Kingdom, payable to order so many days or months after date, exempt from stamp duty ? x4nsw^er : Drafts or orders drawn by any banker in the United Kingdom upon any other banker in the United Kingdom, directing the payment of any sum of money, the same not being payable to bearer or to order, and used solely for the purpose of settling or clearing any account between such bankers are exempt from duty. It is assumed, however, that these drafts are on demand. Stamp Act, 1870, 33 and 34 Vict., c. 97. Bankers in England (except within the City of London, or within three miles thereof), having taken out the necessary licence, can draw drafts on bankers in London, Westminster, or Southwark, at terms not exceeding seven days' sight or twenty-one days' date on unstamped paper, subject, however, to a composition duty. 9, Geo. IV, c. 23. Bankers in Scotland and Ireland can issue unstamped bills of exchange, subject to composition duty under certain regulations. All other drafts drawn by a banker in the United Kingdom on any other banker in the United Kingdom are subject to the customary stamp duties. 775. — Question : Do circular notes require foreign bill stamps ? Answer : The form of the circular note is an instruction from a London bank to its correspondents abroad to pay the person named thereon the equivalent of a certain amount in sterling, against the payee's draft on the London bank, for the amount in question, on a form printed at the back of the circular note. This draft, which is dated from the place abroad at which the circular note is cashed, requires the ordinary ccd valorem foreign bill stamp. 776. — Question : Does a promissory note on demand to order, containing a provision for interest, require an ad vcdorem stamp ? Questions on Banking Practice. 219 STAMP BVTim— continued. Answer : All promissory notes, whether payable on demand, or otherwise, require ad valorem stamps. 33 and 34 Victoria, c. 97. The stamp duty is not chargeable on interest secured by a promissory note. See Question 736. 777. — Question : What stamp should a guarantee of an over- draft signed and sealed by a third party, bear ? Answer : A ten shilling impressed stamp. 778. — Question : Bankers are sometimes asked to guarantee their customers' acceptances. Does the letter guaranteeing such an acceptance require an impressed or adhesive stamp ; and if so, to what value, ad valorem or otherwise ? Answer : Such a letter requires a Qd. inland revenue stamp either impressed or adhesive. 779. — Question : A cheque drawn abroad with a foreign (say Indian) address substituted for " London," is presented. Is a banker here justified in paying this without a foreign stamp being affixed ? Or, may a banker at all times safely pay, without regard to the foreign stamping, provided the English stamps are correct ? Answer : A cheque drawn on an English bank requires simply a penny stamp, wherever drawn, and the banker paying such cheque has solely to satisfy himself that it is properly stamped according to English law, Avithout reference to stamp laws ruling in the country where it is drawn. 780. — Question : Does a cheque drawn on an Enghsh banker, on a duly embossed Id. stamp form, if endorsed abroad, require a Id. foreign bill stamp affixed on its arrival in this country ? Ansaver : No. 781. — Question : (a) Would a bill drawn at Mayence upon a merchant in England, upon the usual English form and impressed stamp, require an ad valorem stamp as well ? Answer : A bill drawn abroad on a merchant in England would require an English ad valorem stamp to be affixed. The English impressed stamp on such a bill is not required, and would be valueless. (b) If so, would the same principle apply to cheques drawn upon banks in this country, and sent or negotiated abroad ? Answer : Such cheques would only require the English draft stamp of 1^., either impressed or adhesive. 220 Questions on Banking Practice. STAMP J)\^lim^— continued. 782. — Question : Does a bill, at one month's date, on a foreign firm, drawn and payable abroad, but payable to, and endorsed by, a firm in England, require an English foreign bill stamp ? Answer : Yes, on endorsement or negotiation in the United Kingdom. See Stamp Act, 1870, 33 and 34 Vict., c. 97. 783. — Question : A bill is drawn as follows : — " £300. " Leicester, June 1st, 1891. " Three months after date pay this bill of exchange to our order, *' the sum of three hundred pounds for value received. Exchange as " per endorsement, " To H. Bergner and von Stall, " W. J. and Sons. " Hamburg." The bill bears a three shilling stamp, and across the face is written " Accepted H. Bergner and von Stall." Does the fact of the bill being accepted require that the German stamp should be affixed on acceptance, in order to make the bill negotiable, or is it for the first holder in Germany to affix the stamp ? Answer : The bill, if accepted in Germany and returned to this country, should be stamped on acceptance. Otherwise it should be stamped by the first holder or negotiator in Germany. 784. — Question : Does a customer's cheque upon his banker for a sum not exceeding £2 require the usual embossed stamp ? Answer : Such cheque requires a penny stamp, but it need not be embossed. An adhesive stamp is sufficient. 785. — Question : A customer of a bank pays to credit of account a cheque drawn upon an Isle of Man bank. Should this cheque, before being forwarded for collection, have a penny adhesive stamp affixed ? Answer : Yes, if endorsed or negotiated in the United Kingdom. 786. — Question : Does a request to a country banker to advise a customer's acceptance, payable at a London bank, require a penny stamp ? Answer : No. 787. — Question : Referring to Question 78G, does the advice of a customer to retire another person's acceptance — say a customer of his own — require a penny stamp ? Answer : No. Questions on Banking Practice. 221 STAMP DVTIE^— continued. 788. — Question : The form of receipt given below is issued by a limited company for payment of dividends. Amounts under £2 unstamped. Is the banker justified in paying ? " S. P. Company, Limited. " Received the 1885, of the Company " by payment of Messrs. , Bankers, the sum of " for dividend declared the 1885, on shares held by me " as under. Signature of Shareholder. " On Preference Shares of £5 each at " Signature of Secretary impressed by a stamp." Answer : The banker will be perfectly justified in paying docu- ments of this character if he has the instructions of the company to do so, 789. — Question : Can a deposit receipt be considered exempt from stamp duty, which sets forth on the face of it the terms upon which it is received, such as the rate of interest it bears and the notice of withdrawal it is subjected to ? Answer : Yes, under 33 and 34 Yict., c. 7. 790. — Question : It is the practice of some bankers to affix a penny receipt stamp to deposit receipts bearing a stipulation, as, for instance, to those repayable to "either or survivor." Is this necessary, and why ? Answer : This is not a general practice, and is not necessary. 791. — Question : Referring to Question 781, a customer of an English bank draws a cheque thereon from some place abroad — say Paris. Does such a cheque require a French stamp in addition to the English one, on the principle of a bill drawn abroad and payable in England ? Answer : By the French law, 28rd August, 1871, art. 18, cheques drawn and payable in the same place are subject to a stamp duty of 10 centimes, and by the law 19th February, 1874, art. 8, cheques drawn from one place upon another (e.g., Paris on London) are subject to a duty of 20 centimes. The 10 centime stamp must be impressed, but the additional 10 centimes, when the cheque is drawn upon another place, may be denoted by an adhesive stamp. All cheques, however, drawn out of and payable out of France require a 20 centime adhesive stamp affixed if negotiated and endorsed in France. A purely English cheque, if endorsed in France, would therefore. 222 Questions on Banking Practice, STAMP J)VTm^— continued. under French law, require a 20 centime stamp. Cheques drawn on bankers in this country by residents in France will be bound to fulfil the requirements of the French law, otherwise they would not be negotiable in France, but it is no part of the duty of an English banker to see that cheques on him are duly stamped abroad, provided the requirements of the English law are fulfilled. 792. — Question : When life policies are taken as security, an as- signment of the policy is usually given setting forth its description and the deed is stamped with 2s. 6c?. per cent, on the amount insured, as though the security were worth that sum. In reality, the surrender value of the policy may be only £40 or £50, is it possible to assign all policies for a small consideration, say £50, using as a form of assignment the schedule to the Policies of Assurance Act^ 1867 ? Answer : The most usual, and unquestionably the safer practice is, where such security is accepted, to stamp the deed of assignment with 2s. %d. per cent, on the full amount insured. It would, however, appear that it is not unusual to stamp such deeds for the amount of the surrender value of the policy at the date of assignment ; but in all such cases the stamp must cover the surrender value at that date, or, in the event of a claim arising, the assignee would incur the full ad valorem duty and a fine of £10, in addition, before he could recover on the policy. The form of assignment referred to is beUeved to be an absolute assignment without power of redemption. 793. — Question : A hfe policy for £1,000 is mortgaged to a bank for securing repayment of say £200, the surrender value of the policy at the time, being £350. The mortgage deed gives power to the bank to receive the proceeds of the policy, if sold, or the amount due upon the death of the mortgagor, and to hand over the balance, after discharging the debt secured by the mortgage of the policy, to the representative of the mortgagor. What is the amount of stamp duty required upon the mortgage deed ? Should it be 5s., to cover the amount advanced, or 10s., to cover the amount of suiTender value ? Or 25s., to cover the amount of the policy ; if the latter, could that also cover any bonuses that may have accrued upon the policy after it was mortgaged ? Answer : The mortgage being an unlimited security should be stamped with duty at the rate of 2s. 6\ / stitute ; and, by donations of books and purcK ^^ '^^ ^ ' ation of a valuable Reference Library, cony* T' * -^ ng. Commerce, Finance, and Political W ' — ( The /cS-Zj^ institute are held monthly, from Nov^ A* n A ^^^^ ^®^^ ^^ ^^^^ occasions, together w'' I ()-46^^' ^^e published in the Institute's Journal, the head of " Questions on Points of . variety of carefully considered information recurring interest to the profession. It is entilation of these questions by means of the Journal w ill materially tend to promote that uniformity of practice among Bankers, which it is one of the main objects of this Institute to effect. The Institute consists of I'ellows, Associates, and Ordinary Members, forming together a body, at the present time, of upwards of •2,500 Members. The Annual Subscription to the Institute is Two Cuineas for Fellows, One Gruinea for Associates, and Ten Shillings and Sixpence for Ordinary Members, payable in advance on the 1st January in each year, unless the date of admission be later than the 30th June, when only a half-year's subscription is so payable All future Annual Subscriptions may be compounded for by a payment, at any one time, of Twenty Guineas for Fellows, and Ten Guineas for Associates. Forms of Application . for election, and any further information, will be supplied on appHcation to the Secretary. December, 1896. n -*<^>Nt- ^.»-«^^^?,t. v.^: u ^ ) ^; i ! j - 1 ^ J'\ '-<' s\.