Till- 1 AW OK HANKING 
 
 ;> ,.' JOHN PAGET BART. K.C.
 
 YEARLY LEGAL PRACTICES. 
 
 on or before September 15th. 
 PREPAID SUBSCRIPTIONS FOR 1905. 
 
 i.lcte Series, L 2, 3 and 4 (At 2 12 6 
 No* 1,2 4 B 1 18 6 
 2,3 4 (C) 1 18 6: 
 1,3 4 (D) 1 18 6 
 1 4(E) 1 56; 
 
 2*. 6<1. -M 
 
 u-a. 'iites 
 
 2--. 3- 
 
 .. 
 
 (I) THE Y-- " -~ - "~"~ COURT). 
 
 
 MA< K i 
 
 of the 
 Ai: mi 
 
 li.Miuir, \\itli the 
 
 M. Mm; 
 
 !-, joint Kditor of 
 
 I tin- 
 
 ..f tl.- 
 
 B.A., 
 
 : 'num.) 
 
 (2) THE Y 
 
 under 
 
 (3) THE Y 
 
 < '.!- -. 
 
 UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY 
 
 ICE. 
 
 li rally . : 
 
 ins wi: i 
 ' 
 
 . 1 
 
 I Hill f I/ ID 
 
 37th Ed. 
 
 
 
 , 
 
 (4) THE 
 
 !>.. i.l. 
 
 THE YEARLY STATUTES. 
 
 Being the Public General S; 
 
 together with <rorapl<i'- iind 
 
 -i-d 1 1 n ring the 8 
 
 CASES. 
 
 I ,!< (ion fioin tin- 
 l () 
 
 ' 
 
 1 ill.- I,... i 
 
 BUTTERWORTH & CO, 12, BELL YARD, w.c.
 
 One of the Greatest Legal Works of the Day. 
 
 In about 12 vols., at 27/6 net per vol. 
 
 * * 
 
 FULL PROSPECTUS ON APPLICATION. 
 
 ENCYCLOPEDIA 
 
 OF 
 
 FORMS & PRECEDENTS 
 
 BY SOMK OF 
 
 The most Eminent Conveyancing and Commercial Counse 1 
 
 UNDER THE GENERAL EDITORSHIP OF 
 
 ARTHUR UNDERBILL, M.A., LL.D 
 
 Of Lincoln's Inn, Barrister-at-Law ; 
 
 Reader of the Law of Real and Personal Property in the Inns of Cowl and Author of " The 
 Law of Trusts," and "A Treatise on the Settled Lanf Acts," etc.; 
 
 " " 
 
 Editor of " Fisher on 
 ASSISTANT EDITORS. 
 
 C. 0. BLAGDEN, M.A., 
 
 Of Gray's Inn, Barrister-at-Law. 
 
 W. E. C. BAYNES, B.A., LL.B., 
 
 Of the Inner Temple, Barrister-at-Law. 
 
 With the Assistance of the following CONSULTING EDITORS, who have consented to give their 
 Advice on any Points of Difficulty that may arise. 
 
 W. D. RAWLINS, K.C., J. SAVILL VAIZEY, 
 
 Author of "The Specific Performance of Of the Middle Temple, Barrister-at-Law 
 
 Contracts, 1S99." Author of "The Law of Settlements." 
 
 A. MACMORRAN, K.C., S. P. BUTLER, 
 
 Editor of " Lurnley's Public Health." One of the Conveyancing Counsel to the Court 
 
 T. H. CARSON, E.G., W. M. FAWCETT, 
 
 Editor of " Tudor's Leading Cases on Of Lincoln's Inn, Barrister-at-Law 
 
 Conveyannnri, etc." A uthor of " The Lam of Landlord and Tenant. " 
 
 T. C. WRIGHT, J. B. DYNE, 
 
 Of Lincoln's Inn, Barrister-at-Law, One of the Conveyancing Counsel to the Court. 
 
 A Joint Editor of " Davidson's Precedents and W A POPTXTPTfR T T T> 
 
 Forms in Conveyancing." , ,T -,.f K ' LL - D '> 
 
 T "K" PFPK" ' Professor of Law in the Owens College ; 
 
 , T - i , T" . ' Author of "An Index to Precedents in 
 
 >f Lincoln's Inn, Bamster-at-Law. Conveyancing" etc. 
 
 P. S. GREGORY, 
 One of the Conveyancing Counsel to the Court. 
 
 THE purpose of this Work is to supply, in a convenient and easily 
 accessible arrangement, a complete collection of all the Forms 
 and Precedents which are necessary to the lawyer in the 
 practice of his ^ofossion. 
 
 Unlike existing Collections of Forms, which are mostly the work 
 of a single author, the Forms in this Work will be written by 
 Specialists in their respective branches, but harmony and consistency 
 will be secured by their passing under the eye of the General Editor. 
 
 In short, this Work will be a complete Library 
 of all Forms and Precedents other than litigious 
 Forms that a Lawyer can possibly require. 
 
 ( 2 )
 
 THE LAW OF BANKING.
 
 FIRST KniTtox. /'/// ///////. I'.HU. 
 
 Jlej-in(r<l . . .Sty^/H /*/-, 1904.
 
 THE 
 
 LAW OF BANKING 
 
 SIR JOHN K. PAGET, BART., K.C., 
 
 GILBAKT LECTURER ON BANKING. 
 
 LONDON : 
 
 BUTTERWORTH & CO., 12, BELL YARD, TEMPLE BAR, W.C. 
 Xaw ffwblisbers. 
 
 1904.
 
 T 
 
 URADBVRY, AOSEW, & CO. 1J)., PRINTKR.S, 
 LONDON AND TUNBRIDGE.
 
 TO 
 
 ARTHUE COHEN, ESQUIRE, K.C., 
 
 WITH GRATITUDE AND SINCERE REGARD.
 
 PEEFACE TO FIRST EDITION. 
 
 THE process of settlement by legislation or decision 
 seems slow with regard to banking law. The number of 
 points still open to question must be my excuse for the 
 argumentative character of portions of this book, and for 
 some prominence of personal views. 
 
 I desire to acknowledge the valuable help given me 
 by my friend, Mr. L. Horton- Smith, of Lincoln's Inn, in 
 preparing the Index and Tables of Statutes and Cases. 
 
 J. R. P. 
 
 4, PAPER BUILDINGS, TEMPLE, 
 February, 1904.
 
 INTBODUCTOBY NOTE TO 
 BEPBINTED EDITION. 
 
 THE Government have again withdrawn the Bills of 
 Exchange Act (1882) Amendment Bill, designed to 
 counteract the effect of the Gordon decision. There 
 has been a dearth of cases directly affecting banking 
 law since this book was published last March. In this 
 reprint the original text has been adhered to as far as 
 possible, necessary additions being interpolated or appended 
 as footnotes, without disturbing the paging. The case 
 most calling for notice is the judgment of Bigham, J., in 
 Akrokerri (Atlantic) Mines, L a - v. Economic Bank [1904] 
 2 K. B. 465. It goes to show that agreement between 
 banker and customer that cheques shall not be drawn 
 against till cleared may constitute a differentiation from 
 the facts of the Gordon Case, and that a collecting banker 
 may be a "holder" under sect. 77, with power to cross. 
 It contains some useful dicta on the question of " account 
 payee," and is, further, some authority for the extension 
 of sect. 82 to both banks when collection is delegated by 
 one to the other. The other new cases introduced are 
 Hambro v. Burnand [1904] 2 K. B. 10, as to ostensible 
 authority of agents ; Continental Caoutchouc, &c., Co, v. 
 Kleinu'ort, 20 Times L. R. 403, as to payment by mistake
 
 X INTRODUCTORY NOTE TO REPRINTED EDITION. 
 
 and the protection of agents; and Embiricos v. Anglo- 
 Ai(xtrian Jlttnh, The Times, August llth, 1904, as to 
 forged indorsements abroad passing title uuder.the le.r J>-i. 
 None of these cases has necessitated any modification of 
 the views previously expressed in these pages ; they will 
 be found referred to under the appropriate headings, and 
 also in the Table of Cases Cited. 
 
 J. R. P. 
 
 4. I'APKK P.riuuxGs, TEMPLE,
 
 TABLE- OF CONTENTS. 
 
 CHAPTER I. 
 
 PAGE 
 
 RELATION OF BANKER AND CUSTOMER THE CURRENT ACCOUNT 1 
 
 CHAPTER II. 
 CURRENT ACCOUNT WITH A 'MINOR.. 13 
 
 CHAPTER III. 
 DEPOSIT ACCOUNTS 17 
 
 CHAPTER IV. 
 CHEQUES GENERALLY 24 
 
 CHAPTER V. 
 CROSSED CHEQUES ... 44 
 
 CHAPTER VI. 
 CROSSING BY COLLECTING BANKER 52 
 
 CHAPTER VII. 
 MARKING CHEQUES 59 
 
 CHAPTER VIII. 
 
 THE PAYING BANKER 66 
 
 CHAPTER IX. 
 PAYING BEARER CHEQUES 81 
 
 CHAPTER X. 
 PAYING ORDER CHEQUES 85 
 
 CHAPTER XI. 
 PAYING CROSSED CHEQUES 101
 
 Xll TABLE OF CONTENTS. 
 
 CHAPTER XII. 
 
 PAGE 
 
 THE PASS BOOK ll.*> 
 
 CHAPTER XIII. 
 
 CONVERSION MONET HAD AND RECEIVED VOID AND VOIDABLE 
 INSTRUMENTS 13H 
 
 CHAPTER XIV. 
 FORGERIES 143 
 
 CHAPTER XV. 
 MONEY PAID BY MISTAKE 155 
 
 CHAPTER XVI. 
 VALUABLES FOR SAFE CUSTODY 178 
 
 CHAPTER XVII. 
 
 THE COLLECTING BANKER 188 
 
 CHAPTER XVIII. 
 
 SECURITIES FOR ADVANCES 23S 
 
 THE BANKER'S LIEN, 233. 
 
 COLLATERAL SECURITY, 241. 
 
 SO-CALLED QUASI-NEGOTIABLE SECURITIES, 250. 
 
 DOCUMENTS OF TITLE TO GOODS THE FACTORS ACT, 1889 
 
 THE SALE OF GOODS ACT, 1893. ..2.V.. 
 CHANGE IN CHARACTER OF PARTIES AFFECTING DEPOSIT 
 OF SECURITIES, 26V. 
 
 CHAPTER XIX. 
 
 Kl.AI.ISATION OP SECURITIES 272 
 
 CHArm: XX. 
 MORTGAGE.- 279 
 
 CHAI'IKK XXI. 
 GUARANTEES . 294
 
 TABLE OF CASES CITED. 
 
 PAGE 
 
 AGEA AND MASTEEMAN'S BANK, In re, ; Ex parte Waring (1866) 
 
 36 L. J. Ch. 151 1 
 
 v. Hoffman (1865) 34 L. J. Ch. 285 77 
 
 Agra Bank v. Barry (1874) L. B. 7 H. L. 135 284 
 
 Akrokerri (Atlantic) Mines, Ld. v. Economic Bank [1904] 2 K. B. 
 
 465 51, 54, n., 58, n., 103, n., 113, 199, n., 215, 222, n., 239, n. 
 
 Alsager v. Currie (1844) 12 M. & W. 751 ; 13 L. J. Ex. 203 79 
 
 Atkinson v. Bradford Third Equitable Building Society (1890) 25 
 
 Q. B. D. 377 1, 2, 18, 19, 20 
 
 Att.-Gen. v. London Edison Telephone Co. (1880) 6 Q. B. D. 244 99 
 
 BALFOUR v. Ernest (1859) 5 C. B. N. S. 601 ; 28 L. J. C. P. 170 ; 
 
 5 Jur. N. S. 439; 7 W. E. 207 194 
 
 Bank of Bengal v. McLeod (1852) 7 Moore P. C. 35 ; 5 Moo. Ind. 
 
 App. 1 ; 13 Jur. 945 195 
 
 Bank of Ireland v. Trustees of Evans' Charities (1855) 5 H. L. C. 
 
 389 145 
 
 Bank of New South Wales v. Goulburn Valley Butter Co. [1902] 
 
 App. Gas. 543 ; 71 L. J. P. C. 112 ; 87 L. T. 88 ; 51 W. B. 367 8 
 
 Bank of Scotland v. Christie (1840) 8 Cl. & Fin. 214 270 
 
 v. Watson (1813) 1 Dow's House of Lords Cases 
 
 40 23 
 
 Banner v. Johnston (1871) L. B. 5 H. L. 157 ; 40 L. J. Ch. 730 ; 
 
 24 L. T. 542 265 sqq., 274 
 
 Barnett v. Brandao (1846). See Brandao v. Barnett. 
 
 Bateman v. Mid-Wales Bailway Co. (1886) L. B. 1 C. P. 499 ; 35 
 
 L. J. C. P. 205 ; 12 Jur. N. S. 453 ; 14 W. B. 672 12 
 
 Battison v. Hobson [1896] 2 Ch. 403 284 
 
 Bavins, jun. , & Sims v. London & South- Western Bank [1900] 
 
 1 Q. B. 270 ; 69 L. J. Q. B. 164 ; 81 L. T. 655 ; 48 W. B. 211 ; 
 
 5 Com. Gas. 1 30 sqq., 133, 140 sq., 193, 209, 221 
 
 Bechervaise v. Lewis (1872) L. B. 7 C. P. 372 ; 41 L. J. C. P. 
 
 161 306 
 
 Bechuanaland Exploration Co. v. London Trading Bank [1898] 
 
 2 Q. B. 658; 67 L. J. Q. B. 986; 79 L. T. 270 249 
 
 Beckett v. Addyman (1882) 9 Q. B. D. 783 299 gy.
 
 xiv TABLE OF CASES CITED. 
 
 PACK 
 
 Bentinck v. London Joint Stock Bank [1893] 2 Ch. 120; 62 L. J. 
 Ch. 358 ; 68 L. T. 315 ; 42 W. R. 140 ; 3 R. 120 ; 9 T. L. R. 
 
 262 244 
 
 Bissell v. Fox (1885) 53 L. T. N. S. 193 ; 51 Id. 663 ; C. & E. 395 ... 55, 
 
 88, 89, 192 *q., 196, 221 
 Blackburn Building Society v. Cunliffe, Brooks & Co. (1882) 22 
 
 Ch. D. 61 117 
 
 Blakeley r. Muller ti Co. [1903] 2 K. B. 760, n. ; 88 L. T. 90 ; 67 
 
 J. P. 51 ." 186 
 
 Bobbett v. Pinkett (1876) 1 Ex. D. 368; 35 L. J. Ex. 355.. .105 *qq. t 159 
 
 Bolland v. Bygrave (1825) 1 Ry. & M. 271 76, 78 
 
 Boultbee v. Stubbs (1810-11) 18 Ves. 20 303 
 
 Bowen v. Foreign & Colonial Gas Co. (1874) 22 W. R. 740 77 "/ 
 
 Bowes, In re (1886) 33 Ch. D. 586 234, 238, 277 
 
 Bradbury v. Morgan (1862) 1 H. & C. 249 ; 10 W. R. 776 300 
 
 Bradford Banking Co. r. Henry Brigga & Co. (1886) 12 App. Cas. 
 
 29; 56 L. J. Ch. 364 290 
 
 Brandao v. Barnett (1846) 3 C. B. 519 ; 12 Cl. & Fin. 787 ; 1 M. & G. 
 
 909 ; 6 Id. 630 ; 2 Scott N. R. 96.. .76 *//., 179, 233, 235, 238 *</., 272 
 
 Brett, Expartc (1871) L. R. 6 Ch. 838 266, 269, 305 
 
 Bristol & West of England Bank v. Midland Railway Co. [1891] 
 2 Q. B. 653 ; 61 L. J. Q. B. 115 ; 65 L. T. 234 ; 40 W. R. 
 
 148 136, 185 
 
 Brocklebank, In re (1877) 6 Ch. D. 858 13 
 
 Brocklesby . Temperance Building Society [1895J App. Cas. 173... 254 
 Brown & Co. v. National Bank of India (1902) 18 Times L. R. 
 
 669 99 */. 
 
 Brown, Shipley & Co. v. Rough (1885) 29 Ch. D. 848 267 
 
 Bryant <t Co. t>. Quebec Bank [1893] App. Cas. 170'; 62 L. J. P. C. 
 
 68; 68 L. T. 546; 41 W. R. 600; 1 R. 336 195 
 
 Buckingham v. London & Midland Bank (1895) 12 Times L. R. 
 
 70 3, 4,76 
 
 Buckinghamshire, Earl of, r. Drury (1761) 2 Eden. 60 16 
 
 Bulkeley v. Butler (1824) 2 B. & C. 434 71 
 
 Burdick v. Sewell (1884) 10 App. Cas. 74 ; 10 Q. B. D. 363 ; 13 Id. 
 159 ; 5 Asp. M. C. 79, 298, 376 : 52 L. J. Q. B. 428 ; 53 Id. 399 ; 
 54 Id. 156 ; 48 L. T. 705 ; 51 Id. 453 ; 52 Id. 445 ; 31 W. R. 
 
 796: 32 Id. 740; 33 Id. 461 256,264, 273 
 
 Burkc's Estate. In re (1881) 9 L. R. Ir. 24 2&3 
 
 Burnaby r. Equitable Reversionary Interest Society (1885) 28 
 
 Ch. D. 416; 54 L. J. Ch. 537 13 
 
 CAHH v. Pockett's Bristol Channel Packet Co. [1899] 1 Q. B. 643 ; 
 68 L. J. Q. B. 601; 80 L. T. 269; 47 W. R. 422; 8 Asp. 
 
 M. ('. M' 137, 257, 259 *7y., 26G 
 
 Cairncross r. Lorimer (1860) 3 Macq. H. of L. R. 827 (now ed. 352) 128
 
 TABLE OF CASES CITED. XV 
 
 PAGE 
 
 Calcott & Elvin's Contract, In re [1898] 2 Ch. 460 28? 
 
 Capital & Counties Bank v. Bank of England (1889) 61 L. T. 
 
 N. S. 516 270, 308; 
 
 v. Gordon (19C3). See Gordon v. 
 
 Capital & Counties Bank. 
 Carew v. Duckworth (1869) L. E. 4 Ex. 313 ; 38 L. J. Ex. 149 ; 
 
 20 L. T. 882; 17 W. E. 927 72 
 
 Carter v. Wake (1877) 4 Ch. D. 605 ; 46 L. J. Ch. 841 274 
 
 Chamberlain v. Young [1893] 2 Q. B. 206 35, 41 
 
 Chambers v. Miller (1862) 32 L. J. C. P. 30 ; 13 C. B. N. S. 125 ; 
 
 3 F. & F. 202 ; 7 L. T. 856 ; 11 W. E. 236 155 
 
 Charles v. Blackwell (1877) 2 C. P. D. 151 ; 1 Id. 548 ; 46 L. J. 
 
 C. P. 368 24, 26 sqq. t 37, 82, 83, 92, 93, 95 *qq., 100, 108 
 
 Chatterton 'v. London & County Bank (1890-1), The Miller 
 
 Newspaper, 1890-1, and The Times, 1890-1 118, 
 
 120 *qq., 131 
 
 . v. Watney (1881) 16 Ch. D. 378 IB 
 
 Chichester v. Hill (1882) 52 X. J. Q'. B. 160 ; 48 L. T. 364 ; 31 
 
 W. E. 245; 47 J. P. 324-.; 15 Cox, C. C. 258 224 
 
 City Discount Co. v. M'Lean (1874) L. E. 9 G. P. 692 ; 45 L. J. 
 
 C. P. 344 311 
 
 Civil Service Co-operative Society v. General Steam Navigation 
 
 Co. [1903] 2 K. B. 756 ; 72 L. J. K. B. 933 ; 89 L. T. 429 186. 
 
 Clarke v. London & County Banking Co. [1897] 1 Q. B. 552 ; 
 
 66 L. J. Q. B. 354 ; 76 L. T. 293; 45 W. E. 383 14, 202, 207 
 
 Clayton's Case (1816) 1 Merivale 572 2 sq. 
 
 Clode v. Bayley (1843) 12 M. & W. 51 229 
 
 Glutton v. Attenborough [1897] App. Gas. 90 : 38, 137 *q., 225- 
 
 Cocks v. Masterman (1829) 9 B. & C: 902 ; 4 M. & Ey. 676 ; 33 
 
 E. E. 365 156, 158 sqq. 
 
 Coleman v. Bucks & Oxon Union Bank [1897] 2 Ch. 243 9 
 
 Colonial Bank v. Cady (1890) 15 App. Gas. 267 ; 36 Ch. D. 659 ; 38 
 
 Id. 388; 57 L. J. Ch. 826;. 60 Id. 131 ; 57 L. T. 188; 59 Id. 
 
 643; 63 Id. 27; 36 W. E. 625; 39 Id. 17 253 sq. 
 
 Commercial Bank of Scotland v. Ehind (1860) 3 Macq. H. of L. 
 
 643 116*?. 
 
 of Tasmania v. Jones [1893] App. Cas. 313 ... 301 sq. 
 Continental Caoutchouc, &c., Co. v. Kleinwort (1904) 20 Times 
 
 L. E. 403 140, n. 
 
 Corporation of Sheffield v. Barclay & Co. [1903] 2 K. B. 580; 
 
 Id. 1 K. B. 1 ; 72 L. J. K. B. 8, 777 ; 87 L. T. 479 ; 89 Id. 
 
 227 ; 52 W. E. 54 ; 9 Com. Cas. 53 ; 68 J. P. 17 293 
 
 Cory Brothers v. Owners of Steamship Mecca [1897] App. Cas. 
 
 286 ....2,311 
 
 Coulthart v. Clementson (1879) 5 Q. B. D. 42 ; 49 L. J. Q. B. 204... 300 
 Coutts & Co. v. Irish Exhibition in London (1891) 7 Times L. E. 
 
 313 11
 
 XVI TABLE OF CASES CITED. 
 
 PAGE 
 Grace, In re [1902] 1 Ch. 733; 71 L. J. Ch. 358 ; 86 L. T. 144... 299, 301 
 
 Credland r. Potter (1874) L. R. lOCh.8 282 
 
 Critten r. Chemical National Bank of New York (1902) 171 New 
 
 York Reports 219 ' 127, 128 /?., 150 
 
 Crook r. Morley [1891] App. Cas. 316 8 
 
 Crosskfflr. Bower (1863) 32 L. J. Ch. 540 5 
 
 Crouch r. Credit Foncier (1873) L. R. 8 Q. B. 374 ; 42 L. J. Q. B. 
 
 183; 29 L. T. 259; 21 W. R. 946 248 
 
 Croydon Commercial Gas Co. r. Dickinson (1876) 2 C. P. D. 46 ... 303 
 
 Cumming r. Shand (1860) 29 L. J. Ex. 129 ; 5 H. & N. 95 4 
 
 Candy r. Lindsay (1878) 3 App. Cas. 459 137 
 
 Cunliffe Brooks & Co. r. Blackburn &, District Benefit Building 
 
 Society (1884) 9 App. Cas. 857 4, 16 
 
 Currie r. Misa (1876) 1 App. Cas. 554; L. R. 10 Ex. 1G3 ; 45 
 
 L. J. Ex. 414 3, 4, 76, 233, 237, 239, . 
 
 Dxsrs & Valentin r. Sherwood (1895) 11 Times L. R. 211 35, 11 
 
 Davis v. Bowsher (1794) 5 Durnford & East's Term Reports 488 ... 233 
 
 9. Noble (1816) 1 Merivale 530 115 
 
 Dever, Exparte (1884) 13 Q. B. D. 766; 51 L. T. 437 ~2(>1 ./ 
 
 Dillon, In re (1890) 44 Ch. D. 76; 59 L. J. Ch. 420 17, 19, 20, 21 
 
 Duck r. Mayeu [1892] 2 Q. B. 511 302 
 
 Duff r. Budd (1822) 3 B. & B. 177; 6 Moore 469 183 
 
 Dulieu v. White [1901] 2 K. B. 669 ; 70 L. J. K. B. 837 ; 85 L. T. 
 
 126; 50 W. R. 76 162 
 
 Duncan, Fox & Co. v. North <t South Wales Bank (1880) 6 
 
 App. Cas. 1; 11 Ch. D. 88 ; 50 L. J. Ch. 355 304 sq., 309 
 
 Durham r. Robertson [1898] 1 Q. B. 765 2 
 
 EABL of Buckinghamshire v. Drury (1761) 2 Eden. 60 1C. 
 
 Eastern Union Railway Co. r. Cochrane (1853) 9 Ex. 197 309 
 
 East India Company v. Tritton (1824) 3 B. & C. 280 167 
 
 Easton v. London Joint Stock Bank (1886) 34 Ch. D. 95 251 v/y. 
 
 Eaton v. Bell (1821) 5 B. & Aid. 34 1 
 
 Edelstein v. Schuler & Co. [1902] 2 K. B. 144 ; 71 L. J. K. B. 572 ; 
 
 60 W. R. 493; 87 L. T. 204 ; 7 Com. Cas. 172 250 
 
 Kmbiricos r. Anglo-Austrian Bank, The Times, August 11, 1904... 143, n. 
 
 Kmmumu'l r. Kulmrts (1868) 9 B. & S. 1-J1 34, 68 *y. 
 
 European Bank, In re (1872) L. R. 8 Ch. 41 ; -21 L. T. 7 3 
 
 A. A., Inrc [1901] 2 K. B. 642 302 
 
 Ewart r. Fry, r [ 1'JOl ) 1 Ch. I'.W ; [1902] App. Cas. 187 ; 70 L. J. Ch. 
 
 138; 71 Id. 433; 83 L. T. 551; 86 Id. 21i>; 49 W. H. 
 
 145; 9 Mans. 281 281 
 
 - r. Latta (1865) 305 *q. 
 
 FAKQUHAKSOX v. King [1902] App. Cas. 325; 71 L. J. K. 1'. . < 
 
 86 L. T. 810; 1J7 ,//., 153, 254
 
 7 
 
 TABLE OF CASES CITED. XV11 
 
 PAOB 
 
 Fergusson v. Fyffe (1840-1) 8 01. & Fin. 121 5 
 
 Fielding v. Corry [1898] 1 Q. B. 268 ; 67 L. J. Q. B. 7 ; 77 L. T. 
 
 453; 46 W. B. 97 229 sq. 
 
 Fine Art Society v. Union Bank of London (1886) 17 Q. B. D. 705 ; 
 
 56 L. J. Q. B. 70; 55 L. T. 536; 35 W. R. 114; 51 
 
 J. P. 69 134 
 
 Foley v. Hill (1848) 2 H. L. C. 28 GG 
 
 Forster v. Clements (1809) 2 Camp. 17 4 
 
 Foster v. Essex Bank (1821) 17 Massachusetts Reports 478 181 
 
 - v. Mackinnon (1869) L. R. 4 C. P. 704 ; 38 L. J. C. P. 
 
 310 137 
 
 Foxton v. Manchester & Liverpool District Banking Co. (1881) 
 
 44 L. T. N. S. 406 8, 9 
 
 Frith v. Forbes (1862) 4 De G. F. & J. 409 ; 32 L. J. N. S. Ch. 10... 267 
 
 Fryer v. Ewart. See Ewart v. Fryer. 
 
 Fullarton v. Provincial Bank of Ireland [1903] App. Gas. 309 ; 72 
 
 L. J. P. C. 79; 89 L. T. 79 283 gq., 298 
 
 GADEN v. Newfoundland Savings Bank [1899] App. Gas. 281... 59, 204, 208 
 
 Garden v. Bruce (1868) L. R. 3 C. P. 300 ; 37 L. J. C. P. 112 20 
 
 Garnett v. M'Kewan (1872) L. R. 8 Ex. 10 ; 42 L. J. Ex. 1 3, 7G 
 
 Gentle v. Faulkner [1900] 2 Q. B. 267 ; 69 L. J. Q. B. 777 ; 82 
 
 L. T. 708 281 
 
 Giblin v. M'Mullen (1868-9) L. R. 2 P. C. 317 ; 38 L. J. P. C. 25 ; 
 
 21 L. T. 214 ; 17 W. R. 445 179 xqq. 
 
 Gibson v. Minet (1824) 2 Bing. 7 63- 
 
 Glasscock v. Balls (1889) 24 Q. B. D. 13 : 88, 243 
 
 Glyn & Co. v. East & West India Dock Co. (1882) 7 App. Gas. 
 
 591 ; 5 Q. B. D. 129 ; 6 Id. 475; 49 L. J. Q. B. 303 ; 50 Id. 62 ; 
 52 Id. 146 ; 42 L. T. 90 ; 43 Id. 584 ; 47 Id. 309 ; 28 W. R. 444 ; 
 
 29 Id. 316 ; 31 Id. 201 185, 269 
 
 Godwin v. Francis (1870) L. R. 5 C. P. 295 ; 39 L. J. C. P. 121 ; 
 
 22 L. T. 338 : 230 
 
 Goodwin v. Gray (1874) 22 W. R. 312 309 
 
 v. Robarts (1876) 1 App. Gas. 476 ; L. R. 10 Ex. 76, 337 ; 
 44 L. J. Ex. 57, 157 ; 45 Id. 748 ; 32 L. T. 199 ; 33 Id. 272 ; 
 
 35 Id. 179 ; 23 W. R. 342, 915 ; 24 Id. 987 62, 251 sq. 
 
 Gordon v. Capital & Counties Bank ) [1903] App. Gas. 240 ; 
 
 - v. London, City & Midland Bank l" [1902] 1 K. B. 242 ; 71 
 L. J. K. B. 215 ; 72 Id. 451 ; 86 L. T. 98 ; 88 Id. 574 ; 50 
 W. R. 276 ; 51 Id. 671 ; 7 Com. Cas. 37 ; 8 Id. 221. ..15, 24 gqq. t 30, 
 33, 49, 53, 55, 56, 79, 85 sqq., 89, 98 sq., 134, 
 188 sqq., 200 sqq., 204 sqq., 211 sqq. 
 
 Gorgier v. Mieville (1824) 3 B. & C. 45 246 
 
 Grant v. Vaughan (1764) 3 Burr. 1516; 1 W. Bl. 485 40 
 
 X>ray v. Johnston (1868) L. R. 3 H. L. 1 ; 16 W. R. 842 ... 6, 8, 9, 10, 75 
 B. b
 
 XV111 TABLE OF CASES CITED. 
 
 PACK 
 Great Western Railway Co. v. London A County Bank [1901] 
 
 App. Cas. 414; [1899] 2 Q. B. 172; [1900] 2 Q. B. 464 46 *q., 
 
 49, 108, 134, 137, 138, 197, 199, 202 nj., 
 216 qq. t 222, 224, 240 *y. 
 
 Green v. Wynn (1869) L. B. 4 Ch. 204 301 
 
 Gurney r. Behrend (1864) 3 E. & B. 622 ; 23 L. J. Q. B. 265 ; 18 
 
 Jur. 856; 2 W. B. 425 256 
 
 Gwynv. Godby (1812) 4 Taunt. 346 5 
 
 HALIFAX Union r. Wheelwright (1875) L. R. 10 Ex. 183; 44 L. J. 
 
 Ex. 121; 32 L. T. 802; 23 W. li. 704 25, 100 
 
 Hallett's Estate, In re (1879) 13 Ch. D. 696 ; 49 L. J. Ch. 415 ; 41 
 
 L. T. 186; 42 Id. 421; 28 W. R. 732 1,2 
 
 Halliday v. Holgate (1868) L. R. 3 Ex. 299 ; 37 L. J. Ex. 174 ; 
 
 18 L. T. 656 271 
 
 Hambro v. Burnand [1904] 2 K. B. 10 195 
 
 HamiHifs Lake View Central, Ltd. v. Armstrong & Co. (1900) 
 
 16 Times L. R. 236; 5 Comb. Cas. 188 195 
 
 Uarburg India Rubber Comb Co. r. Martin [1902] IK. B. 778; 
 
 71 L. J. K. B. 529; 86 L. T. 505 ; 50 W. R. 449 295 
 
 Hardman r. Wheeler [1902] 1 K. B. 361 4-2 
 
 Hardy v. Veasey (1868) L. R. 8 Ex. 107 ; 37 L. J. C. P. 76 4, 14 
 
 Hare v. Copland (1862) 13 Ir. C. L. R. 426 '.'7 
 
 Harriss r. Fawcett (1873) L. R. 8 Ch. 866; 42 L. J. Ch. 502 300 
 
 Hart v. Frontino, Ac. Co., Ltd. (1870) L. R. 5 Ex. Ill; 39 
 
 L. J. Ex. 93; 22 L. T. 30 167 
 
 Hartland v. Jukes (1863) 32 L. J. Ex. ir,:> .!!- 
 
 Head, In re [1893] 8 Ch. 426 ; 63 L. J. Ch. 35 ; 69 L. T. 753 ; 42 
 
 W. R. 55; 3R. 712 17 
 
 (No. 2) [1894] 2 Ch. -2.1C. 17 
 
 Healey r. Bank of New South Wales (1900) not reported 6, 75 
 
 Hedgley v. Holt (1829) 4 C. & P. 104 H, 
 
 Hi-ll>y r. Matthews [1895] App. Cas. 471 ; [1894] 2 Q. B. 262 ; 63 
 
 L. J. Q. B. 577 ; 70 L. T. 837 ; 4^ W. 11. 514 ; 58 J. P. 785 ; 
 
 9 R. 767 259 
 
 Hin<kr>oii r. Wallace <t Pennell (1902) 5 Court of Session 
 
 Cases 166 41 
 
 H. ugh v. London & North-Western Railway Co. (1870) L. R. 5 
 
 Kx. 51; 89 L. J. Ex.48; 21 L. T. 676 184 
 
 Hill v. East & West India Dock Co. (1884) 9 App. Cas. 448 ... 94, 202, 
 
 240 
 II; .rt v. Bott (1874) L. R. 9 Ex. 86; 43 L. J. Ex. 81; 80 L. T. 
 
 25; 22 W. R. 414 184 *y. 
 
 v. London Si North-West, rn Railway Co. (1879) 4 Ex. D. 
 
 188 ." 185 
 
 Hobta r. Cathie (1890) 6 Times L. R. 292 43 
 
 Holland v. Riuaell (1868) 4 B. & S. 14 140
 
 TABLE OF CASES CITED. XIX 
 
 PAGE 
 
 Hollins v. Fowler (1874-5) L. R. 7 H. L. 757; L. R. 7 Q. B. 
 616; 41 L. J. Q. B. 277 ; 44 Id. 169 ; 27 L. T. 168; 33 Id. 
 
 73; 20 W. R. 868 133, 187 
 
 Hollond v. Teed (1848) 7 Hare 50 299 
 
 Hopkins v. Abbott (1875) L. R. 19 Eq. 222 17, n. 
 
 Hopkinson v. Forster (1874) L. R. 19 Eq. 74 ; 23 W. R. 301 21, 71 
 
 v. Rolt (1861) 9 H. L. C. 514 ; 34 L. J. N. S. Ch. 468 289 
 Home v. Redfearn (1838) 4 Bing. N. C. 433 23 
 
 IMPERIAL Bank of Canada v. Bank of Hamilton [1903] App. Gas. 
 
 49; 87 L. T. 457; 72 L. J. P. C. 1 ; 51 W. R. 289 59, 93, 111, 
 
 139, 140, 144, 150, 156, 161 syy. 
 Imperial Land Company of Marseilles, In re (1870-1) L. R. 11 
 
 Eq. 478 ; 40 L. J. Ch. 93, 343 ; 23 L. T. 515 ; 24 Id. 255 ; 
 
 19 W. R. 223 254 
 
 Imray v. Oakshette [1897] 2 Q. B. 218; 66 L. J. Q. B. 544; 76 * 
 
 L. T. 632; 45 W. R. 681 282 
 
 Inglis v. Robertson [1898] App. Gas. 616 ; 67 L. J. P. C. 108 ; 79 
 
 L. T. 224 257 
 
 Inmanu. Clare (1858) Job.. 769 267, 277 gq. 
 
 Ireland v. Hart [1902] 1 Ch. 522 ; 71 L. J. Ch. 276 ; 86 L. T. 385 ; 
 
 50 W. R. 315 ; 9 Mans. 209 292 
 
 - v. Livingston (1872) L. R. 5 H. L. 395 ; L. R. 5 Q. B. 
 
 516 ; 2 Id. 99 ; 36 L. J. Q. B. 50 ; 39 Id. 282 ; 41 Id. 201 ; 15 
 
 L. T. 206; 27 Id. 79 68 
 
 JACOBS v. Morris [1902] 1 Ch. 816 ; 71 L. J. Ch. 363 ; 86 L. T. 275 ; 
 
 50 W. R. 371 155, 167 
 
 Jared v. Clements [1903] 1 Ch. 428 ; [1902] 2 Ch. 399 ; 71 L. J. Ch. 
 
 752 ; 72 Id. 291 ; 86 L. T. 887 ; 88 Id. 97 ; 50 W. R. 611 ; 51 
 
 Id. 401 : 282, 288*?. 
 
 Jeffryes v. Agra & Masterman's Bank (1866) L. R. 2 Eq. 674 ; 35 
 
 L. J. Ch. 686 77, 233 
 
 Jenkins v. Tongue (1860) 29 L. J. Ex. 147 242 
 
 Jones v. Peppercorne (1858) Job. 430; 28 L. J. N. S. Ch. 158 238, 
 
 248, 277 
 v. Thompson (1858) 27 L. J. Q. B. 234 19 
 
 KEANE v. Beard (1860) 8 C. B. N. S. 372 36, 59 
 
 Kelly v. Solari (1841) 9 M. & W. 54 ; 11 L. J. N. S. Ex. 10; 6 Jur. 
 
 107 156, 167 
 
 Kelner v. Baxter (1866) L. R. 2 C. P. 174; 36 L. J. C. P. 94 ; 15 
 
 L. T. 213; 15 W. R. 278 11 
 
 . Kendal v. Wood (1871) L. R. 6 Ex. 243 ; 39 L. J. Ex. 167 ; 23 
 
 L. T. 309 156 
 
 b 2
 
 XX TVBLE OF CASES CITED. 
 
 PAC.I: 
 
 Kendall i: Hamilton (1879) 4 App. Cas. 504; 8 C. P. I). 403; 47 
 L. J. C. P. 065 ; 48 Id. 705 ; 39 L. T. 250 ; 41 Id. 418 ; 27 
 
 W. H. 1-21 ; 28 Id. 97 295 
 
 Kennedy r. Thomas [1894] 2 Q. B. 759 109 
 
 Kensington, Kx jmite (1813) 2 V. & B. 7!) 2C9 
 
 Kleimvort r. Comptoir National D'Kscompte [1894] 2 Q. B. 157 ; 
 
 63 L. J. Cj. B. 074 ; 10 R. 259 134 
 
 Knights c. Wiffon (1870) L. R. 5 Q. B. GOO 150 
 
 LACAVI: \ Co. r. Cr.'-dit Lyonnnis [1897J 1 Q. B. 148; CO L. J. 
 
 Q. B. -2'Jfi: 75 L. T. 514 217 
 
 Lake, In re .- Kx partc Cavendish [1903] 1 K. B. 151 ; 72 L. J. K. B. 
 
 117; 87 L. T. 055; M \V. H. 319; 10 Mans. 17 288 
 
 Land Credit Co., He (1809) L. R. 4 Ch. 400 195 
 
 Langtry r. Union Bank of London (1890), Journal of Institute of 
 
 * Bankers. Vol. XVII. 33M 179, 182 *,/,/. 
 
 IAWS r. Rand (1857) 3 C. B. N. S. 442 ; 27 L. J. C. P. 70 74 
 
 Leask v. Scott (1877) 2 Q. B. D. 370 ; 40 L. J. Q. B. 329, 570 ; 35 
 
 L. T. 903; 30 Id. 784 ; 25 W. R. 054 2G4 
 
 leather Manufacturers' Bank r. Morgan (1883) 117 U.S.A. (10 
 
 Davis) 90 124 .////.. 12S .,-,,,,., 15O 
 
 Ledward r. Ha^sell* (1850) 2 K. & J. 370 ! 13 
 
 Lee r. Butler r !898] 2 Q. B. 818; 02 L. J. Q. B. 591 ; 09 L. T. 
 
 870: 42 W. R. 88; 4 H. 503 25'.' 
 
 Leeser. Martin (1873) L. R. 17 Eq. 224; 48 L. J. Ch. 193 17'. 
 
 . Clay (1897) 14 Times L. R. 149 ; 07 L. J. Q. B. 214 1-7 
 
 1 .ic kharrow r. Mason (1787) S. L. C. (ed. 1903), Vol. I., pp. 698 
 />/. ; 2 T. R. 03 ; 5 Id. 083 ; 1 H. Bl. 357 ; 4 Bro. P. C. 57 ; 
 
 6 East 20, H. ; 1 R. R. 425 
 
 Lindsay r. Cundy (1878). See Cundy r. Lindsay. 
 
 London & County Hank r. Ratcliffe (1881) App. Cas. 722 ; 51 
 
 1.. J. Ch. 28 
 
 & County Banking Co. r. Groome (1881) 8 Q. B. D. 288; 
 
 51 L. J. Q. B. 224 7! 
 
 A (iloln; Financial Corporation, In re [1902] 2 Ch. 410 ; 
 
 71 L. J. Ch. 898; 87 L. T. 49 238, 277 
 
 A Midland Hank r. Mitchell [1899] 2 Ch. 101 ; 68 L. J. Ch. 
 
 568; 81 L. T. 203; 47 W. H. <U)2 
 
 & Hiver Plate Bank r. Bank of Liverpool [1890] 1 Q. B. 
 
 ir,<;, 159 *////. 
 
 Brighton & South Coast Railway I. 1 ... / . Goodwin (1* ' 
 
 !2u '. :{08afl. 
 
 Chartered Hank of Australia r. M'Millan [1892] App. Cas. 
 
 ^'.12 1 
 
 P. Whito (1.S7D) 4 App. ( 

 
 TABLE OF CASES CITED. XXI 
 
 PAGE 
 
 London City & Midland Bank v. Gordon (1903). See Gordon v. 
 London City & Midland Bank. 
 
 Joint Stock Bank v. Simmons [1892] App. Cas. 201 ; [1891] 
 
 1 Ch. 270 ; 60 L. J. Ch. 313 ; 61 Id. 723 ; 62 Id. 427 ; 63 
 L. T. 789 ; 66 Id. 625 ; 39 W. B. 449 ; 41 Id. 108 ; 56 
 J. P. 644 188, 244 sqq., 248 sq. 
 
 Tramways Co. v. London County Council [1898] App. Cas. 
 
 375 188 
 
 Lutscher v. Comptoir d'Escompte (1876) 1 Q. B. D. 709 266 
 
 M'KEAN v. M'lvor (1870) L. B. 6 Ex. 36 ; 40 L. J. Ex. 30 ; 24 
 
 L. T. 559 '. 183 
 
 M'Kenzie v. British Linen Company (1881) 6 App. Cas. 82 ; 44 L. T. 
 
 131 ; 29 W. B. 477 127, 147, 149 sq. 
 
 Mackersy v. Bamsays (1843) 9 Cl. & Pin. 818 56 *y. 
 
 M'Lean v. Clydesdale Banking Company (1883) 9 App. Cas. 95 ... 203 
 
 Malcolm v. Scott (1850) 5 Ex. 601 60 
 
 Marcussen v. Birkbeck Bank (1889) 5 Times L. B. 179, 463, 643, 
 
 646 148 
 
 Marzetti v. Williams (1830) 1 B. & Ad. 415 68, 75, 79 
 
 Mather v. Maidstone (1856) 18 C. B. 273 ; 1 C. B. N. S. 273 ; 25 
 
 L. J. C. P. 311; 26 Id. 58 ; 3 Jur. N. S. 112 158, 170 
 
 Matthews v. Williams, Brown & Co. (1894) 10 Times L. B. 386 ; 
 
 63 L. J. Q. B. 494 216, 217, 219 
 
 Matthiessen v. London & County Bank (1879) 5 C. P. D. 7 ; 
 
 48 L. J. C. P. 529 ; 41 L. T. 35 ; 27 W. B. 838 44, 99, 200, 223 
 
 Mayi;. Chidley [1894] 1 Q. B. 451 43 
 
 Mead, In re (1880) 15 Ch. D. 651 ; 50 L. J. Ch. 30 21, 22 
 
 Meyer & Co. v. Decroix, Verley & Co. [1891] App. Cas. 520 ; 25 
 
 Q. B. D. 343 ; 59 L. J. Q. B. 538 ; 61 Id. 205 ; 65 L. T. 653; 40 
 
 W. B. 513 40, 48 
 
 Miles v. New Zealand, &c. Co. (1886) 32 Ch. D. 266 ; 54 L. J. Ch. 
 
 1035; 55 Id. 801; 54 L. T. 582; 34 W. B. 669 298 
 
 Miller v. Thomson (1841) 3 M. & G. 576 87 
 
 Misa v. Currie (1876). See Currie v. Misa. 
 
 Moore v. North- Western Bank [1891] 2 Ch. 599 292 
 
 Morel v. Westmoreland [1904] A. C. 11 ; [1903] 1 K. B. 64 ; 73 
 
 L. J. K. B. 93; 72 L. J. K. B. 66 295 
 
 Morris v. Bethell (1869) L. B. 5 C. P. 47 ; 38 L. J. C. P. 377 ; 21 
 
 L. T. 330 ; 18 W. B. 137 121, 149 
 
 Morritt, In re (1886) 18 Q. B. D. 222 ; 56 L. J. Q. B. 139 ; 56 L. T. 
 
 42; 35 W. B. 277 273 sq. 
 
 Mortgage Insurance Corporation v. Commissioners of Inland 
 
 Bevenue (1888) 21 Q. B. D. 352 ; 57 L. J. Q. B. 174 23 
 
 'Mutton v. Peat [1900] 2 Ch. 79 3, 234, 297, 311
 
 XXU TABLE OF CASES CITED. 
 
 PAGE 
 NATIONAL Bank r. Silke [1891] 1 Q. B. 435 ; CO L. J. Q. B. 199; 
 
 63 L. T. 787 ; 89 W. R. 361 40, 46, 48 qq., 51, 203 
 
 National Bank of Australasia r. United Hand in Hand, &c. Co. 
 
 (1879) 4 App. Cas. 391 5, 279, 299 
 
 Newbolt v. Bingham (1895) 14 The Reports 526 281 
 
 Northern Counties of England Fire Insurance Co. r. Whipp (1884) 
 
 26 Ch. D. 482 289 
 
 North-Western Bank r. Poynter [1895] App. Cas. 56 ; 64 L. J. P. C. 
 
 97; 72 L. T.93; 11 R. 125 271, 273 
 
 Nottingham Permanent Benefit Building Society r. Thurstan 
 
 [1903] App. Cas. 6 ; 72 L. J. Ch. 134 ; 87 L. T. 529 ; 51 W. R. 
 
 273; 67 J. P. 129 15, 16 
 
 GATES r. Hudson (1851) 6 Ex. 346 ; 20 L. J. Ex. 284 140 
 
 Ogden r. Benas (1874) L. R. 9 C. P. 513 ; 43 L. J. C. P. 259 ; 30 
 
 L. T. 683 ; 22 W. R. 805 37, 89, 196 
 
 Ogilvic r. West Australian Mortgage & Agency Corporation, Ltd. 
 
 [1896] App. Cas. 257; 65 L. J. P. C. 46; 74 L. T. 201 127, 147. 
 
 149 s$. 
 
 Oliver r. Hinton [1899] 2 Ch. 264 282 
 
 Orr r. Union Bank of Scotland (1854) 1 Macq. H. of L. 513 (new 
 
 ed. 887) 93, 144 
 
 Overend, Gurney & Co. r. Oriental Financial Corporation (1874) 
 
 L. R. 7 H. L. 348 302 *y<y. 
 
 PAIIII'B Bank r. Ashby (1898) 14 Times L. R. 563 70, 232 
 
 Parr's Banking Co. r. Yates [1898] 2 Q. B. 460 318 
 
 Peacock v. Pureell (1863) 14 C. B. N. S. 728 ; 82 L. J. C. P. 266... 48 
 
 Pearce v. Creswick (1848) 2 Hare 286 17, 19 
 
 Phelps r. Comber (1885) 29 Ch. D. 813; 26 Id. 755; 58 L. J. Ch. 
 
 1134 ; 54 Id. 1017 ; 51 L. T. 16; 52 Id. 872 ; 33 W. R. 829 ... 267 
 Picker r. London & County Rank (1887) 18 Q. B. D. 515 ; 56 
 
 L. J. Q. B. 299; 35 W. R. 469 250 
 
 Pollard, In re [1903] 2 K. B. 41 ; 72 L. J. K. B. 509 ; 88 L. T. 
 
 652 ; 51 W. R. 488 ; 10 Mans. 152 7 
 
 Pollock v. Oarle [1898] 1 Ch. 1 7 
 
 Pott r. Clegg (1847) 1C, M. A: \V. :wi 1. 2 
 
 P. .\M-II r. Ixmdon A Provincial Bank [1893] 2 Ch. 555 ; [1893] 
 
 1 Ch. 610 ; 62 L. J. Ch. 795 ; 69 L. T. 421 ; 68 Id. 886 298 
 
 Pwwott. Pimsdale & Co. r. Bank of England [1894] 1 Q. B. 
 
 861 270,308 
 
 Price t. Barker (1855) 4 K. A H. 7(JO 801 
 
 Prince r. Oriental Bank Corporation (1878) 3 App. Cas. 325; 47 
 
 L. J. P. C. 42; SB L. T. 41 : ar, \V. H. :,n :w, GO, 68, 
 
 229,307
 
 TABLE OF CASES CITED. XX111 
 
 PAGE 
 RAWLEY v. Rawley (3876) 1 Q. B. D. 460; 45 L. J. Q. B. 675 ; 35 
 
 L. T. 191; 24 W. R. 995 16 
 
 Bead v. Anderson (1884) 13 Q. B. D. 779; 10 Id. 100; 52 L. J. 
 
 Q. B. 214 ; 53 Id. 532 ; 48 L. T. 74 ; 51 Id. 55 ; 31 W. R. 453 ; 
 
 32 Id. 950; 47 J. P. 311; 49 Id. 4 63 
 
 Rees, In re .(1881) 17 Ch. D. 98 296 
 
 R. v. Randall (1811) Russ. & Ry. 195 41 
 
 Richdale, Ex parte (1882) 19 Ch. D. 409 ; 62 L. J. Ch. 462 206, 213 
 
 Rimmer v. Webster [1902] 2 Ch. 163 ; 71 L. J. Ch. 561 ; 86 L. T. 
 
 491; 50 W. R. 517 254 
 
 Robarts v. Tucker (1851) 16 Q. B. 560; 20 L. J. N. S. Q. B. 270; 
 
 15 Jur. 987 69, 151 
 
 Robey v. Oilier (1872) L. R. 7 Ch. 695 ; 27 L. T. 362 267 
 
 Robson v. Bennett (1810) 2 Taunt. 388 62 
 
 Rogers v. Whiteley [1892] App. Gas. 118 1, 5, 75 
 
 Rolin v. Steward (1854) 14 C. B. 595 ; 23 L. J. C. P. 148 68 
 
 Ross v. Hill (1846) 2 C. B. 877 178 
 
 - v. Johnson (1772) 5 Burr. 2825 183 
 
 Rouse v. Bradford Banking Co. [1894] App. Cas. 586 ; [1894] 2 Ch. 
 
 32 ; 63 L. J. Ch. 337 ; 69 L. T. 828 ; 70 Id. 427 ; 71 Id. 522 ; 
 
 43 W. R. 78 302, 313 
 
 Roxburghe v. Cox (1880-1) 17 Ch. D. 520; 50 L. J. Ch. 772 236 sq. 
 
 Royal Bank of Scotland v. Tottenham [1894] 2 Q. B. 715.. .34, 206, 213 
 
 SASS, Inre [1896] 2 Q. B. 12 296, 309 xq. 
 
 Schofield, Ex parte (1879) 12 Ch. D. 337 ; 48 L. J. Bky. 122 ...212, 242 
 Scholfield v. Londesborough [1896] App. Cas. 514 ; [1894] 2 Q. B. 
 
 660 ; [1895] 1 Q. B. 536; 63 L. J. Q. B. 649 ; 64 Id. 293 ; 65 Id. 
 
 593 ; 71 L. T. 86 ; 72 Id. 46 ; 75 Id. 254 ; 43 W. R. 331 ; 45 Id. 
 
 124 67, 144 gqq., 150, 192 
 
 Schroeder v. Central Bank (1876) 34 L. T. N. S. 735 5, 22 
 
 Serrell v. Derbyshire, &c. Railway Co. (1850) 9 C. B. 811 ; 19 L. J. 
 
 C. P. 371 12 
 
 Sewell v. Burdick (1884). See Burdick v. Sewell. 
 Sheffield v. London Joint Stock Bank (1888) 13 App. Cas. 333 ; 34 
 Ch. D. 95 ; 56 L. J. Ch. 569 ; 57 Id. 986 ; 55 L. T. 
 
 678 ; 58 Id. 735 ; 35 W. R. 220; 37 Id. 33 244 sqq. 
 
 Corporation of, v. Barclay & Co. (1903). See Corporation 
 
 of Sheffield r. Barclay & Co. 
 Shepherd v. Harrison (1871) L. R. 5 H. L. 116; L. R. 4 
 
 Q. B. 196, 493 ; 38 L. J. Q. B. 105, 177 ; 40 Id. 148 ; 20 L. T. 
 
 24; 24 Id. 857; 17 W. R. 609, 770 ; 20 Id. 1 265 
 
 Sherry, In re (1884) 25 Ch. D. 692 ; 53 L. J. Ch. 404 3, 300, 307, 311 
 
 Shillito v. Hobson (1885) 30 Ch. D. 396 ; 55 L. J. Ch. 741 ; 53 
 
 L. T. 746; 34 W. R. 286 274 
 
 Silvester, Inre [1895] 1 Ch. 573 301
 
 XXIV TABLE OF CASES CITED. 
 
 PAGE 
 Simmons r. London Joint Stock Bank (1892). See London Joint 
 
 Stock Bank r. Simmons, 
 skyring v. Greenwood (1826) 4 B. &, C. 281 ; G D. & R. 401 ; 1 C. & 
 
 " P. 517; 28 R. R. 264 115 
 
 Smith r. Betty [1903] 2 K. B. 317 ; 72 L. J. K. B. 853 ; 89 L. T. 
 
 258; 52 W. R. 137 2 
 
 - v. Mercer (1815) 6 Taunt. 76 157, 109 
 
 - v. Sheppard (1776) Chitty on Bills, llth ed. p. 278, n. (unre- 
 
 ported) 81 
 
 - r. Union Bank of London (1875) 1 Q. B. D. 31 ; L. R. 10 
 
 Q. B. 291 ; 44 L. J. Q. B. 117 ; 45 Id. 149 ; 32 L. T. 
 
 456; 33 Id. 557; 23 W. R. 652 ; 24 Id. 194 45, 83 ><)., 
 
 93, 97 *?., 104 *qq., 133, 135, 154 
 
 i tue (1860) 30 L. J. C. P. 56 
 
 Socie'te' Gi?ne*ralo de Paris v. Walker (1885) 11 App. Cas. 20; 14 
 Q. B. D. 424 ; 55 L. J. Q. B. 169 ; 54 L. T. 389 ; 34 W. R. 662... 
 South Staffordshire Tramway Co. r. Khbsmith [1895] 2 Q. B. 420... 6 
 
 Stenning, In re [1895] 2 Ch. D. 433 3 
 
 Stephenson v. Hart (1828) 4 Bing. 476 183 
 
 Stumore v. Campbell [1892] 1 Q. B. 314; 61 L. J. Q. B. 463 ; 66 
 
 L. T. 218; 40 W. R. 101 6,278 
 
 Sumpter r. Cooper (1831) 2 B. & Ad. 223 M 
 
 TAPP v. Jones (1875) L. R. 10 Q. B. 591 6 
 
 Tasmania, Commercial Bank of, r. Jones [1898] App. Cas. 313. ..301 sq. 
 Tate r. \Vilts & Dorset Bank (1899), Journal of the Institute of 
 
 Bankers, Vol. XX. p. 876 47, 137, 138, 140, 219 
 
 Taylor v. London <fe County Bank [1901] 2 Ch. 231 281, 288 *q. 
 
 . Russell [1892 1 App. Cas. 244 287 
 
 Thomson v. Bell (1894) 22 Court of Session Cases, 4th Series, 16... .'.? 
 
 Tidd, In re [1898] 3 Ch. 154 17, 18 
 
 Trustee of Property of Lord Hill v. Rowlands |"1896J 2 Q. B. 124... H 
 Tucker r. Robarts (1851). See Robarts v. Tucker. 
 
 UNION Bank of Australia r. Murray Aynsley [1898] App. Cas. 693... 8, 8 
 
 Manchester v. Beech (1865) 3 H. & C. 672 803 
 
 Scotland v. National Bank of Scotland (1886) 12 
 
 App. Cag. 58 289 *y. 
 
 United Sen-ice Company, In re (1870-1) L. R. 6 Ch. '2\-2; 40 
 
 L. J. Ch. 286; 24 L. T. 115 ; 19 W. R. 89, 457 179, 238, 236 /. 
 
 VAGMASO v. Bank of England [1891] App. Cas. 107 ; 22 Q. B. D. 
 103 ; 23 Id. 243 ; 58 L. J. Q. B. 27, 857 ; 60 Id. 145 ; 59 L. T. 
 864; 61 Id. 41'J : r,i I<1. 853; 87 W. R. 640; 89 Id. 657 ; 53 
 
 J. P. 504 ; 56 1 38, 88, 89, 50, 67, 69, 70 *q., 90, 92, 93, 
 
 118 *qq., 148, 151 *<i<i. 
 
 Valentin! r. Canali(1889) 24 Q. B. D. 166; 69 L. J. Q. B. 74 iti
 
 TABLE OF CASES CITED. XXV 
 
 PAGE 
 
 WADE v. Wilson (1882) 22 Ch. D. 235 280 
 
 Walker u. Bradford Old Bank (1884) 12 Q. B. D. 511 ; 53 L. J. 
 
 Q. B. 280 1, 2 
 
 Ward v. National Bank of New Zealand (1883) 8 App. Cas. 755 ; 
 
 52 L. J. P. C. 65 302 <//., 310 
 
 Waring, Ex parte (1814-15) 19 Ves. 344 ; 2 Rose 182 267 #//. 
 
 Warwick v. Rogers (1843) 5 M. & G. 340 ; 6 Scott N. R! 1 ; 12 
 
 L. J. C. P. 113 60,72 
 
 Waugh v. Wren (1862) 11 W. R. 244 310 
 
 Webb v. Stenton (1883) 11 Q. B. D. 518 19 
 
 West v. Williams [1899] 1 Ch. 132 290 q. 
 
 West London Commercial Bank v. Kitson (1884) 13 Q. B. D. 360; 
 
 12 Id. 157 ; 53 L. J. Q. B. 345 ; 50 L. T. 656 ; 32 W. R. 757 ; 
 
 47 J. P. 824 8 
 
 Whitaker v. Bank of England (1835) 1 C. M. & R. 744 75 
 
 White v. Garden (1851) 10 C. B. 919 139 
 
 v. Teal (1840) 12 A. & E. 106 136 
 
 Whitehouse, In re (1887) 37 Ch. D. 683 302 
 
 Whiting v. Burke (1871) L. R. 6 Ch. 342 ; L. R. 10 Eq. 539 302 
 
 Wilkinson v. Johnson (1824) 3 B. & C. 428; 5 D. & R. 403; 27 
 
 R. R. 393 157 
 
 v. London & County Bank (1884) 1 Times L. R. 63 ... 238 
 
 Williams v. Rawlinson (1825) 3 Bing. 71 311 
 
 Williamson v. Williamson (1869) L. R. 7 Eq. 542 5 
 
 Wilson v. Krause (1800) 2 Peake N. P. C. 196 15 
 
 Woodland v. Fear (1857) 26 L. J. Q. B. 202 ; 7 E. & B. 519 3 
 
 Wright, In re (1876) 3 Ch. D. 70 8 
 
 Wylde v. Radford (1863) 33 L. J. N. S. Ch. 51 234 
 
 YATES v. Terry [1901] 1 Q. B. 102 ; [1902] 1 K. B. 527 ; 71 L. J. 
 
 K. B. 282; 86 L. T. 133; 50 W. R. 293 5 
 
 York City & County Banking Co. v. Bainbridge (1880) 43 L. T. 
 
 N. S. 732 306 
 
 - Union Banking Co. u Artley (1879) 11 Ch. D. 205 280 
 
 You! v. Harbottle (1791) 1 Peake N. P. C. 68 183 
 
 Young v. Grote (1827) 4 Bing. 253; 12 Moore 484; 5 L. J. C. P. 
 
 165 67, 146, 148
 
 TABLE OF STATUTES CITED. 
 
 PAGE 
 
 21 Jac. I. c. 16 (Statute of Limitations, 1623) 20, 75, 226, 293, 312 
 
 29 Car. II. c. 3 (Statute of Frauds, 1676), s. 4 295 
 
 2 & 3 Anne, c. 4 (West Riding Registry Act, 1703), s. 1 282 
 
 6 Anne. c. 2 (Irish Registry Act, 1707) 282 
 
 7 Anne, c. 20 (Middlesex Registry Act, 1708) 282 
 
 55 Geo. III. c. 184 (Stamp Act, 1815) 23 
 
 7 & 8 Viet. c. 32 (Bank of England Charter Act, 1844) 21 
 
 (Bank Charter Acts, 1844, &c.) 71 
 
 8 Viet. c. 16 (Companies Clauses Consolidation Act, 1845) 292 
 
 16 & 17 Viet. c. 59 (Stamp Act, 1853), s. 19 ... 25, 27 sqq., 32 sq., 37 sq., 
 
 51, 84, 85 sqq., 151 
 
 18 & 19 Viet. c. Ill (Bills of Lading Act, 1855), s. 1 256, 264 
 
 19 & 20 Viet. c. 25 (Drafts on Bankers Act, 1856) 45 
 
 19 & 20 Viet. c. 97 (Mercantile Law Amendment Act, 1856) 
 
 s. 3 298 
 
 4 307 
 
 5 311 
 
 21 & 22 Viet. c. 79 (Drafts on Bankers Law Amendment Act, 1858) 45 
 24 & 25 Viet. c. 96 (Larceny Act, 1861), s. 100 224 
 
 24 & 25 Viet. c. 98 (Forgery Act, 1861), s. 25 102 sq. 
 
 25 & 26 Viet. c. 89 (Companies Act, 1862), s. 47 194 
 
 35 & 36 Viet. c. 44 (Court of Chancery (Funds) Act, 1872), s. 11 ... 100 
 
 36 & 37 Viet. c. 66 (Judicature Act, 1873), s. 25, sub-s. 6 2, 18, 21 
 
 38 & 39 Viet. c. 87 (Land Transfer Act, 1875), s. 53 286 
 
 54 ;... 286 
 
 55 286 
 
 95 287 
 
 127 284 sq. 
 
 39 & 40 Viet. c. 81 (Crossed Cheques Act, 1876) 
 
 s. 10 45, 98, 106, 107 
 
 12 189,217,223 
 
 42 Viet. c. 11 (Bankers' Books Evidence Act, 1879) 6 
 
 44 & 45 Viet. c. 41 (Conveyancing and Law of Property Act, 1881) 
 
 s. 25 280 
 
 '45 & 46 Viet. c. 39 (Conveyancing Act, 1882), s. 3 282
 
 XXVI 11 TABLE OF STATUTES CITED. 
 
 PAGE 
 45 & 46 Viet. c. 61 (Bills df Exchange Act, 1882) 
 
 8. 2 ... 27, 36, 39, 57, 81, 'J4, 
 101, 103, 172, 173 
 
 3 25,30 
 
 sub-s. 3 81. 87 
 
 ,, (a) 22 
 
 5, sub-8. 1 40 
 
 sub-s. 2 25,33,87 
 
 7, sub-8. 1 35 
 
 sub-s. 3. ..35, 38 sqq. , 
 151 
 
 8 31,87 
 
 .. sub-s. 1 
 
 8ub-s. 3 32,36 
 
 .. rab-C 1 31,40,48 
 
 sub-s. 5 40 
 
 10 U 
 
 13, sub-s. 2 34,88 
 
 20 42 
 
 21. sub-s. 3 36 
 
 J-J. sub-s. 1 14 
 
 sub-s. 2 14,16 
 
 -M ...82, 85 53., 94, 143, 194 
 
 25 193 sq. 
 
 27. snb-s. 3 ...201 sq., 239, 
 
 Mi 
 
 29 : 17:i 
 
 36, sub-s. 8 74 
 
 14 269 
 
 45 73 sq., 22G sq. 
 
 ib-s. 2 73 
 
 sub-s. 8 2:11 
 
 48 -J_'- 
 
 I'.), sub-s. 5 230 
 
 sub-s. 6 
 
 ub-s. 12 (a) 230 
 
 ub-s. 12 (b) 230 
 
 -ul)-s. 13 ...227. E 
 
 50, sub-s. 1 170 
 
 suli-s. -2 (.-) 38, 43 
 
 ,, sub-8. 2 (c) (4) ... 228 
 .. sub-s. 2 (c) (5) ... 22S 
 
 1 71 
 
 55, sub-s. 2 (a) 17! if. 
 
 sub-s. 2(b). 
 
 172. 171 
 ,, sul> 17
 
 TABLE OF STATUTES CITED. 
 
 XXIX 
 
 PAGE 
 
 45 & 46 Viet. c. 61 (Bills of Exchange Act, 1882) contd. 
 
 s. 58, sub-s. 2 ............ 174 
 
 sub-s. 3 ............ 174 
 
 59 ........................ 81,94 
 
 60...14, 25, 27,29, 36S22., 
 
 71, 84, 85 sqq., 108, 
 
 110 sq., 113, 143, 
 
 151, 177 
 
 63, sub-s. 3 ............ 9& 
 
 64 ..................... 150 sq. 
 
 73 .................. 14, 24,98 
 
 74 ............ 73 sq., 226 sq. 
 
 75 ............ 26,62,64,67 
 
 7682 ...... 30, 44: sqq., 98 
 
 76 ......... 48, 101 sqq., 223 
 
 sub-s. 2 ............ 52 
 
 77 ...... 31, 48, 58, 102 sq. 
 
 sub-s. 5 ... 52 sqq., 101 
 sub-s. 6 ... 28, 52 sqq. 
 
 78 ......... 49, 102, 109 sq. 
 
 79 ... 52 sq., 57, 101 sqq. , 
 
 105 sqq., 110, 112 
 sub-s. 2 ............ 106 
 
 80... 89, 95 sq., 101, 103, 
 
 110, 113 sq., 143 
 
 81... 46 s<?., 103, 106, 141, 
 
 222 sq. 
 
 82. ..27, 28, 49,53 sqq., 81, 
 
 89, 139, 141, 143, 
 
 189 sqq., 199 sqq., 
 
 222 sq., 225 
 
 86, sub-s. 1 ............ 243 
 
 90 ........................ 89 
 
 95 ............... 30,98,189 
 
 46 & 47 Viet. c. 52 (Bankruptcy Act, 1883), s. 38..... ................... 78 
 
 49 ........................ 7 
 
 50 ........................ 7 
 
 168 ..................... 7 
 
 Sched.L, rule 11 ... 78 
 
 46 & 47 Viet. c. 55 (Revenue Act, 1883), s. 17 ... 30 sqq., 87, 98, 113 sq., 
 
 189 sq. 
 
 47 & 48 Viet. c. 54 (Yorkshire Registry Act, 1884) 
 
 s. 7 ................................. 283 
 
 14 ................................. 284 
 
 52 & 53 Viet. e. 45 (Factors Act, 1889) 
 
 s. 1, sub-s. 1 ........................ 258 
 
 sub-s. 4 ............... 255*2., 258
 
 XXX TABLE OP STATUTES CITED. 
 
 
 
 PAGK 
 
 52 & 53 Viet. c. 45 (Factors Act, 1889) contd. 
 
 8. 2,8Ub-8. 1 
 
 sub-s. 2 259 
 
 sub-s. 3 - V.) 
 
 3 258, 21; l 
 
 4 260, 201 
 
 5 260 
 
 8 257, 2r,l 
 
 J -2:,!, 25'J. 201, 202 My. 
 
 10 257, 202. 201 
 
 58A54 Viet. c. 39 (Partnership Act, 1890), s. 18 307 
 
 54 & 55 Viet. c. 39 (Stamp Act, 1891), s. 5 34 
 
 33 
 
 34 43 
 
 38 43 
 
 103, exemption 1 22 
 
 55 & 56 Viet. c. 13 (Conveyancing and Law of Property Act, 1892) 
 
 s.4 281 
 
 56 & 67 Viet. c. 71 (Sale of Goods Act, 1898) 
 
 s. 19, sub-s. 3 255 sqq., 2GG 
 
 25 257 
 
 sub-s. 1 .' 
 
 sub-s. 2 259, 261, 262 
 
 47 257, 262, 263 *q. 
 
 61, sub-s. 2 201 
 
 62 225, 25H 
 
 5s Viet. c. 16 (Finance Act, 1895), s. 9 86 
 
 <t 61 Viet. c. 65 (Land Transfer Act, 1897), s. 8, sub-s. 1 286 
 
 sub-s. 3 287 
 
 sub-s. 4 287 
 
 ., Mili-s. 6 285 
 
 17 285 
 
 22, sub-s. 6 (f) ... 266 
 
 Srhed. 1 285 
 
 Rules under (1903) : 
 
 158 2K7 
 
 160 _'s7 
 
 243 
 
 ' 
 
 Schcd. I., forms 44, 46 2K7 
 
 HULKS OF THE SUPREME COl'HT (IT I- P. 
 
 Ordor XIII., r. 4 295 
 
 Older XIV. .
 
 THE 
 
 LAW OF BANKING. 
 
 CHAPTER I. 
 
 EELATION OF BANKER AND CUSTOMER. 
 THE CURRENT ACCOUNT. 
 
 THE relation of banker and customer is primarily that of CHAP. I. 
 debtor and creditor, the respective positions being deter- 
 mined by the existing state of the account. (Foley v. 
 Hill, 2 H. of L. Cases, 28.) 
 
 Expressions such as those of Jessel, M.R., in Re Hallett's 
 Estate, 13 Ch. D., at p. 727, which appear for some 
 purposes to recognise the continued identity of money paid 
 in, do not affect the general principle. The banker is in 
 no sense a trustee for the customer in respect of money 
 paid in, or responsible to him for the use he makes of it. 
 (Foley v. Hill, ubi sup.; In re Agra Bank, 36 L. J., 
 Ch. 151.) 
 
 The debt due from the banker on current account is 
 repayable on demand, and the drawing of a cheque is not 
 a condition precedent. (Foley v. Hill, 2 H. of L. Cases, 
 at pp. 36 and 43; Pott \. Clegg, 16 M. & W. 321; 
 Walker v. Bradford Old Bank, 12 Q. B. D. 511 ; Atkinson 
 v. Bradford Third Equitable Benefit Building Society, 25 
 Q. B. D. 377 ; In re Tidd [1893] 3 Ch. 154.) This is 
 further deducible from the cases in which a garnishee 
 order has been held to attach a customer's balance, such 
 as Rogers v. Whiteley [1892] A. C. 118. 
 
 The credit balance on current account can therefore be 
 
 B. B
 
 RELATION OF BANKER AND CUSTOMER. 
 
 CHAP. I. assigned as a debt under sect. 25, sub-sect. 6 of the 
 Judicature Act, 1873. (ll'alker \. Bradford Old ttanl; 
 12 Q. B. D. 511.) But apparently only in its entirety and 
 not piecemeal by assignments to different persons. (Durlnun 
 v. liol<-rt*on [1898] 1 Q. B. 765.) 
 
 So, again, tbe Statute of Limitations has the same etlert 
 between banker and customer as between any other debtor 
 and creditor. (Pott v. Clew, 16 M. \ W. 821; Atkinxim 
 v. Bradford Third Kqni table Knililiny Sodi-ty. 25 Q. B. h. 
 877.) The customer's claim to a credit balance on current 
 account left untouched for six years may be barred by the 
 statute. (Pott v. 0/c////, ithi sup.) And conversely the 
 banker's claim to payment of an overdraft would be burred 
 after six years if there had been no sufficient acknowledg- 
 ment or payment of interest in the interval. 
 
 Unless the account is absolutely dormant, the Statute of 
 Limitations is, however, generally excluded by the system 
 of appropriation of payments. In the absence of appro- 
 priation express or implied, the earlier drawings on an 
 unbroken current account are attributed to the earlier pay- 
 ments in, in order of date. (Clayton's Case, 1 Mei ival. , :<~-2. 
 at p. 608.) But the right of appropriation, even where there 
 is a current account, remains in the creditor till he has 
 finally exercised it; even accounts stated are only rebuttable 
 evidence of such exercise. (Corn l>r<>tJn-rx \. Oirm'rs <;/' 
 SteainKhijt Mecca [1897] A. C., at p. 295 ; Smith v. 7>Y//// 
 [1903] 2 K. B. 817.) There are exceptions to the rule in 
 Clayton's Case. Where a trustee or other person in a 
 fiduciary capacity has paid trust money into his own current 
 account, there is a presumption that monies drawn out for 
 his own use are drawn from his own rather than the trust 
 money, and any balance is available to answer the tru>t. 
 (lie Hnlh-tt'x Kxlate, 18 Ch. D. 696.) Where, however, the 
 monies of several persons have been so wrongfully mixed 
 with a current account, the rights of such persons with 
 regard to any balance will be adjusted in accordance with
 
 CURRENT ACCOUNT. 
 
 the rule in Clayton's Case, above referred to. (In re CHAP. I. 
 Stenning [1895] 2 Ch. 433.) 
 
 A bank is not entitled to split an account guaranteed to 
 a limited extent, during the continuance of the guarantee, 
 and attribute all payments in to the unguaranteed balance. 
 (In re Sherry, 25 Ch. D. 692.) 
 
 But payments in may be attributed to any other specific 
 account not covered by the guarantee, and, on determina- 
 tion of the guarantee, the guaranteed account may be 
 closed, another opened, and all payments in attributed to 
 the new account. (In re Sherry, ubi sup.) 
 
 In the absence of agreement express or implied, a bank 
 may combine two or more accounts of a customer either at 
 the same bank or at different branches thereof. Notice of 
 trust, course of business, or the fact that the accounts are 
 kept in different capacities, is sufficient to establish an 
 agreement not to combine but keep the accounts indepen- 
 dent of one another. (In re European Bank, L. R., 8 Ch., 
 at p. 44 ; Garnett v. M'Kewan, L. R., 8 Ex. 10 ; Buckingham 
 v. London and Midland Bank, 12 Times L. R. 70 (course of 
 business precluding blending) ; Union Bank of Australia 
 v. Murray Aynsley [1898] A. C. 693.) Where a bank have a 
 loan account and also a current account with a customer, 
 and hold security for his ultimate balance, they cannot 
 appropriate the proceeds of the security to the loan account, 
 independent of a credit balance on current account, but 
 must treat the two as one account. (Mutton v. Peat 
 [1900] 2 Ch. 79.) 
 
 The customer has not the corresponding right to combine 
 accounts kept at different branches so as to draw cheques 
 indiscriminately. (Woodland v. Fear, 26 L. J., Q. B. 202 ; 
 Gamett v. M'Kewan, L. R., 8 Ex. 10.) 
 
 Monies paid into a bank to current account are subject 
 to the banker's lien, unless paid in and received for a 
 specific purpose, as, for instance, to meet a particular bill. 
 (Misa v. Currie, 1 A. C., at p. 569.) 
 
 B2
 
 RELATION OF BANKER AND CUSTOMER. 
 
 The doctrine of lieu is not, as a rule, applicable to a 
 debt, though the same result is attainable by means of 
 set-oft' or counterclaim. But the House of Lords, in the 
 above case of Curr'n- v. Misa, distinctly speak of a banker's 
 lien over all monies paid in. 
 
 A banker cannot arbitrarily close a current account with- 
 out reasonable notice. He must provide for outstanding 
 cheques. The ordinary method of referring cheques to 
 another bank is not sufficient, as it involves technical 
 dishonour. (Buclunnliam v. London and Midland Hank, 
 12 Times L. R. 70.) 
 
 "Whether the customer's account be in credit or over- 
 drawn, the banker is morally, and probably legally, bound 
 to secrecy as to the state thereof, except on reasonable and 
 proper occasion, or under compulsion of law. (llardii v. 
 I',-.,*,-,!, L. R., 8 Ex. 107.) 
 
 A banker is not obliged to let his customer overdraw unless 
 lie 1ms agreed to do so or such agreement can be inferred 
 from course of business, (Ciuilifte linmks it- Co. \.HI<tcL- 
 linrn and Dixtrict llenefit Jinildiiin Society, 9 A. C., at 
 p. 864 ; Ciiinmiiiii v. Maud, 29 L. J., Ex. 129 (course of 
 business).) 
 
 The drawing a cheque or accepting a bill payable at the 
 bank, when there are not funds sufficient to meet it, is 
 presumably a request for an overdraft. (Eaton v. lie]!. 
 5 B. & Aid. 84 ; Forster v. < 'I mini tit, 2 Camp. 17 ; 
 H rooks d- Co. v. Jilackhnrn ami hixtriet Hem-fit 
 
 '//,9 A. C.,at p. 864.) But see London Chartered Haul, 
 ,,f Australia v. M'Millan [1892] A. C. 292, where the over- 
 draft arose through the unauthorised act of an agent and 
 tin if were facts which should have put the bank on enquiry. 
 
 There is no common law right to charge even simple 
 interest on an overdraft. The claim could, however, IT 
 supported on the ground <>t universal custom of bankers. 
 \Yhere ih cust<>nii r has acquiesced in the system under 
 which the interest is charged, that also would justify the
 
 CURRENT ACCOUNT. 
 
 claim. (Gwyu v. Godly, 4 Taunt. 346; Crosskill v. CHAP. I. 
 Bower, 32 L. J., Ch. 540.) Such acquiescence will justify 
 the charging compound interest or interest with periodical 
 rests, so long as the relation of banker and customer exists, 
 and is not, for instance, altered into that of mortgagee and 
 mortgagor. (Fergusson v. Fyffe, 8 Cl. & Fin. 121 ; 
 Williamson v. Williamson, L. R., 7 Eq. 542 ; London 
 Chartered Bank of Australia v. White, 4 A. C., at p. 424.) 
 The taking a mortgage to secure the fluctuating balance 
 of an account is not, however, inconsistent with the relation 
 of banker and customer so as to preclude compound interest. 
 (National Bank of Australasia v. United Hand in Hand 
 Co., 4 A. C. 409.) 
 
 The fact that the credit balance on a customer's current Effect of 
 account is really only a debt due from the banker to him, sub- 
 
 jects such balance to other legal incidents affecting debts, current 
 
 A garnishee order nisi in the usual form, based on a 
 judgment against a customer and served on his banker, 
 ties up the whole of that customer's credit balance on 
 current account at date of service, as being a debt due to 
 the customer, irrespective of the relative amounts of the 
 judgment debt and the balance ; and the account cannot 
 be operated on even by cheques issued before service of 
 the order. (Rogers v. Whiteley [1892] A. C. 118 ; Yates 
 v. Terry [1901] 1 Q. B. 102 (county court order).) 
 
 The dictum of Brett, L.J., in Schroeder v. Central 
 Bank, 34 L. T., N. S. 735, that in the case of a current 
 account there is no debt until demand, is not of sufficient 
 authority, in face of the other cases, to exempt the balance 
 on current account from the operation of a garnishee order. 
 
 The best course for a bank to pursue in such circum- Course to be 
 stances is to open a new account, to which cheques pre- pul 
 sented for payment should be debited and the monies paid 
 in credited. Such payments in are not affected by the 
 garnishee order, inasmuch as the debt they constitute 
 from -the banker to the customer was not due or accruing
 
 RELATION OF BANKER AND CUSTOMER. 
 
 due at the date of the service of the order. The bank 
 should communicate with the customer, stating what has 
 been done and asking for instructions, and should also 
 appear in accordance with the order. 
 
 If the banker has any lien on or set-off against the 
 monies attached, which existed at the date of service of the 
 order, this should be represented to the court, and would 
 probably prevail against the garnishee order. (See T<t}>]> 
 v. Jones, L. R., 10 Q. B. 591; Stumnn- v. (.'<iinp1n'll 
 [1892] 1 Q. B. 814.) 
 
 Attempts have been made to get hold by garnishee order 
 of monies alleged to be due to the judgment debtor, though 
 standing to an account in another name. This practice is 
 calculated to put the banjcer in considerable difficulties. 
 Although a banker has in one case been held not to be 
 estopped from alleging or admitting that monies paid in 
 by a customer do not really belong to that customer (see the 
 judgment of the Privy Council in //<<//// v. />'.////, of 
 \<'ir Soutli ll'ales, November 28th, 1900, not reported), 
 still it is a salutary rule of banking practice that the 
 banker should not question the title of the customer or be 
 bound to look beyond him ; and in (irmj v. Jolnmtun, L. R., 
 8 H. of L. 1, at p. 12, Lord "NVestlmry expressly denies 
 the right of a banker to set up a jus trrtii against the onler 
 of the customer or to refuse to honour his draft on any 
 other ground than some sufficient one resulting from an 
 act of the customer himself. On the other hand, it would 
 be altogether improper that a man should be able to put 
 money beyond the reach of his creditors by merely banking 
 it under an assumed name, with or without the concur- 
 rence of the banker. For the purposes of the Bankers' 
 Books K\ileiico Act, the courts have gone hehiml the 
 ostensible heading of an account where it was shown i be 
 in reality the account of another person. (H<>i<tlt St>( 
 ////r Trninn-tui (70. v. KU>K),ntli [1895] 2 Q. B. 420.) 
 
 In the case of a garnishee order, each case would
 
 CURRENT ACCOUNT. i 
 
 probably have to depend on its own facts, and the ostensible CHAP - ! 
 ownership of the account would not be gone behind in 
 the absence of cogent evidence that it really was only a 
 blind. Cf. Pollock v. Garle [1898] 1 Ch. 1. 
 
 The current account, as being a debt, is affected by the Bankruptcy 
 bankruptcy of the customer. The property of a bankrupt 
 divisible among his creditors includes " choses in action," 
 which term covers debts. (Bankruptcy Act, 1883, s. 168.) 
 On adjudication, the title of the trustee relates back to 
 the act of bankruptcy on which the receiving order was 
 made, or, if there are more acts of bankruptcy than one, 
 then to the earliest of those acts within three months pre- 
 ceding the petition. As from that date, therefore, the 
 customer's credit balance, if any, belongs to the trustee in 
 bankruptcy, and, under sect. 50 of the Bankruptcy Act, 
 1883, the banker can be summarily compelled to pay it 
 over to him. 
 
 Sect. 49 of the Bankruptcy Act, which protects bond 
 fide transactions without notice, contains no very apt 
 words to meet the. case of a banker paying away money on 
 the cheque of a customer who has committed an available 
 act of bankruptcy, of which the banker has no notice, but 
 on which a receiving order is subsequently made and ' 
 adjudication follows. 
 
 Presumably, however, the banker would be protected in 
 such case. Any such payment made after the date of the 
 receiving order, even if the banker was unaware of such 
 order having been made, or after notice of an available 
 act of bankruptcy, would, on adjudication, have to be 
 made good by the banker to the trustee. The receiving 
 order is in law deemed to have been made on the first 
 moment of the day of its date, so that it covers all pay- 
 ments made that day. (In re Pollard [1903] 2 K. B., 
 at p. 45.) 
 
 Possibly money paid on cheques in ignorance of the 
 fact that a receiving order has been made could be
 
 RELATION OF BANKER AND CUSTOMER. 
 
 recovered as money paid by mistake ; but this could hardly 
 apply to payments made the same day as, but prior to, the 
 actual making of the order. In such case ignorance of an 
 available act of bankruptcy would have to be relied on. 
 Notice of an intention to commit an act of bankruptcy 
 has no effect. (/;/ ;v Wr'ujht, 8 Ch. D. 70; Trust >' 
 7Y..;,,Tty of Lord Hill v. Rowlands [1896] 2 Q. B. 124 ; 
 cf. Crook v. Morlei/ [1891] A. C. 816.) 
 
 The banker would be entitled to satisfy his lien out 
 of any balance standing to the bankrupt's credit before 
 parting with it to the trustee. 
 
 A banker will not be allowed to exercise his lien over 
 any account which he knows to be a trust account, whetlu T 
 specifically so described or not. (Union Jiiinl: <>/ Australia 
 \. Miirnii/ Ainixley [1898] A. C. 698; Bank of New 
 South Wales v. Gonlburn Valley Butter Co. [1902] 
 A. C. 548.) 
 
 It is not the banker's business to enquire into or 
 obstruct any operations on an account which he holds as, or 
 knows to be, a trust account, even thougji he may suspect 
 that a breach of trust is contemplated. (Gray v. ,/ohnntou, 
 L. R, 8 H. of L. 1, at p. 14; Bank of New South in//,* 
 v. Goulburn Valley Butter Co., ubi sup.) 
 
 A banker will not be permitted to benefit by any 
 wrongful dealing with a trust fund where he is tech- 
 nically party or privy to the fraud. (Gray v. Johnston, 
 nbi sup.) 
 
 Decisions have somewhat differed as to what condition 
 of circumstances will constitute the banker technically 
 privy to the fraud, and so deprive him of the benefit of 
 a transfer of trust funds to a private account. In J' '(/.//"// 
 \. Maii'-hi'xtiT ami Lirfrjuiol l>istri<-( HanLmy Co., 44 
 L. T., N. S. 406, Fry, J., laid down that a bank could 
 not retain the hem-tit of a cheque drawn on a trust fund 
 known to be such and paid into an overdrawn private 
 account. He said : " It appears to be plain that the bank
 
 CURRENT ACCOUNT. 
 
 could not derive the benefit which they did from that CHAP. 
 payment, knowing it to be drawn from a trust fund, unless 
 they were prepared to show that the payment was a legiti- 
 mate and proper one, having reference to the terms of the 
 trust. It is said that they did not know what the trust 
 was at that time. That appears to me to be immaterial, 
 because those who know that a fund is a trust fund cannot 
 take possession of that fund for their private benefit, 
 except at the risk of being liable to refund it in the 
 event of the trust being broken by the payment of the 
 money." 
 
 In Coleman v. The Bucks and Oxon Union Bank [1897] 
 2 Ch. 243, Byrne, J., carefully reviews this case in the 
 light of Gray v. Johnston, L. li., 3 H. of L. 1. He 
 quotes (see pp. 248 249) significant passages from that 
 case, in which Lord Cairns and Lord Westbury distinctly 
 imply that the banker is not to be held privy to the fraud 
 merely because, in the ordinary course of business, the 
 cheque was carried to the private account and diminished 
 an overdraft, which, if a balance had been struck, 
 would have been found to exist ; but that to deprive the 
 banker of the benefit, it must be one " designed or stipu- 
 lated for," as. for instance, where a balance has been 
 struck and the customer pressed for payment or reduction 
 of the ascertained overdraft on the private account. With 
 regard to Foxton's Case, he says: "That was a case 
 depending on the evidence. I need not go into all the 
 circumstances, but there was a benefit designed for the 
 bank, who had been calling on the parties having private 
 accounts to reduce their overdrafts, and they did it with 
 the intention of reducing their indebtedness." He then 
 quotes the remarks of Fry, J., reproduced above, and con- 
 tinues (p. 253) : " I am asked to say that that amounts to a 
 decision to this effect : that wherever there is an account 
 which upon the face of it is a trust account, and the 
 customer draws a cheque upon that account and pays in
 
 10 RELATION OF BANKER AND CUSTOMER. 
 
 CHAP - * the cheque to the credit of his private account, the bankers 
 are bound to see and enquire (that is how I under- 
 stand the proposition is put) that the customer is in 
 point of fact entitled to the money which he so transfers 
 from one account to another. I do not think that that 
 was the meaning of the learned judge in that case. If 
 bankers have the slightest knowledge or reasonable sus- 
 picion that the money is being applied in breach of a 
 trust, and if they are going to derive a benefit from the 
 transfer and intend and design that they should derive a 
 benefit from it, then I think the bankers would not be 
 entitled to honour the cheque drawn upon the trust 
 account without some further enquiry into the matter." 
 But he held that the fact that in point of law the money 
 must, in the case before him, be regarded as having been 
 applied at the moment in reduction of an overdraft, did 
 not render the bankers liable to refund it, although they 
 knew the money was derived from some trust. 
 
 A comparison of the three cases will show that the view 
 of Byrne, J., is more consonant with the rules laid down in 
 Gray v. Johnston than is that of Fry, J., and the correct 
 conclusion would seem to be that the banker is only liable 
 to refund where the benefit has been designed or stipulated 
 for by him, not necessarily in express terms, or with any 
 suggestion on his part that the customer should utilise 
 the trust funds, but deducible from the striking a balance, 
 ascertaining the overdraft and pressing the customer to pay 
 or reduce it. 
 
 Impersonal Attempts have sometimes been made to foist oft' on 
 
 bankers a sort of impersonal customer to whom the banker 
 is supposed to look for payment of overdrafts. 
 
 The committee or board of management of a fund, raised 
 to meet some national or local emergency, of a charitable 
 or scientific institution or a proposed exhibition, open an 
 account, and cheques are drawn on it by authorised members 
 of the committee or board, usually countersigned by the
 
 CURRENT ACCOUNT. 11 
 
 secretary. In the case of a mere fuiid there can be, and CHAP. I. 
 in the other cases there may he, no corporate body or legal 
 entity ; the committee or board are only administering 
 certain monies coming to their hands. There is no par- 
 ticular danger so long as the account continues in credit. 
 But such accounts have a tendency to become overdrawn, 
 and it then behoves the banker to see that he obtains and 
 retains the personal liability of those who draw the cheques, 
 and that they are persons of financial responsibility. If 
 the account be opened and headed in the name of the fund 
 or undertaking, if the cheques bear its name, and if the 
 signatures purport to be on its behalf, or in a form indicat- 
 ing that the signatories act as mere scribes, it might be 
 alleged with some plausibility that the banker honoured 
 the cheques and advanced the money in reliance on and 
 looking to the monies accruing to the undertaking or insti- 
 tution, and not on the personal responsibility of the drawers. 
 The doctrine of Kelner v. Baxter, L. E., 2 C. P. 174, that a 
 person who contracts on behalf of a non-existent principal 
 is himself liable, or of West London Commercial Bank v. 
 Kitson, 13 Q. B. D. 360, that a procuration signature 
 imports a warranty of an existing principal and authority 
 from him to sign, would be of doubtful application in such 
 a case, and it is far better to avoid all questions by a 
 definite understanding at the outset. Institutions such as 
 those above referred to sometimes become incorporated, 
 either by royal charter, or else under the Companies Acts, 
 omitting the word "limited" by leave of the Board of Trade. 
 Opportunity may be taken of this to assert a transference 
 of liability from the individuals to the new corporation by 
 way of novation, as was attempted in Coutts <!; Co. v. The 
 Irish Exhibition in London, 7 Times L. R. 313. The 
 banker may, if he chooses, accept such a corporation as his 
 debtor for past or future advances, or as his customer in 
 the first instance; in any case he should bear in mind 
 that members of a corporation cannot be personally sued
 
 2 RELATION OF BANKER AND CUSTOMER. 
 
 'a A P. I. for its debts, that their liability arises only on a wiuding-up 
 and is then limited by the terms of the incorporating 
 instrument ; that a royal charter rarely imposes any 
 liability whatever on members, and that the Board of Trade 
 minimum for the liability of members of a non-trading 
 society is practically a nominal figure. 
 
 Mr. Chalmers has raised a question whether a non- 
 trading corporation can in the absence of authority 
 expressed in, or directly deducible from, its incorporating 
 instrument, issue valid cheques. (Bills of Exchange, 
 6th edit., p. 05.) It can hardly be suggested that a rail- 
 way or gas company, both of which are technically non- 
 trading, is constrained to pay all its outgoings in bank 
 notes or cash. Serrell v. Derbyshire, etc. Ry. Co., 9 C. B. 
 81*, and Batt-man v. 3/ifMHi/^ lly. Co., L. R., 1 C. P. 
 at p. 506, seem to recognise a distinction between bills 
 and cheques in this respect. 
 
 It is submitted that the power to issue cheques for 
 ordinary payments is impliedly inherent in all corporations. 
 
 Overdraft is borrowing, and so stands on a different 
 footing, being dependent on the borrowing powers of the 
 corporation.
 
 CHAPTER II. 
 CURRENT ACCOUNT WITH A MINOR. 
 
 THIS has been the subject of considerable discussion. CHAP. II. 
 Arguments against the possibility of opening or keeping a 
 current account with an infant have been based on : 
 
 1. The alleged incapacity of an infant to give an effective 
 discharge for a debt. 
 
 2. The alleged incapacity of an infant to draw a valid 
 cheque. 
 
 Such arguments are, it is conceived, based on fallacies. 
 
 " The disability of infancy goes no further than is neces- 
 sary for the protection of the infant." (Per Pearson, J., 
 in Burnaby v. Equitable Reversionary Interest Society, 28 
 Ch. D., at p. 424.) 
 
 No doubt an infant cannot give an effective discharge for 
 an unperformed obligation ; he cannot, even by deed, release 
 an unpaid debt. But where the discharge is merely the recog- 
 nition of the performance of the obligation, such as a receipt, 
 there is no rational ground for importing the disability. 
 
 The case usually quoted in support of the proposition 
 that an infant cannot give a valid discharge, Ledward v. 
 Hassells, 2 K. & J. 370, possessed exceptional features, 
 turning as it did on the express words of a will, which made 
 the payment of a legacy to an infant conditional on hi& 
 ability to give a valid discharge, so that, in a sense, such dis- 
 charge would have had to be given (if at all) for a legacy as 
 yet unpaid. 
 
 The capacity of an infant to give a discharge for fulfilled 
 obligations in ordinary cases appears to be recognised by 
 James, L.J., in In re Brocklebank, 6 Ch. D. 358, where he
 
 14 
 
 Cl'RRKXT ACCOUNT WITH A MINOU. 
 
 HAP. II. 
 
 As to the 
 alleged 
 incapacity 
 of an infant 
 to draw a 
 valid cheque. 
 
 said : " Cannot an infant give a receipt for wages or any 
 salary due to him in respect of bis personal labour? " 
 
 Moreover, it is difficult to see how the question is of 
 practical importance. The only circumstances in which 
 the efficacy of a discharge could arise, would be if the 
 infant were trying to recover from the banker money 
 already paid to him or on his cheques, and such a claim, as 
 shown hereafter, is absolutely untenable. 
 
 The Bills of Exchange Act, 1882, s. 22, sub-s. 1, dis- 
 tinctly limits the infant's incapacity to the assumption of 
 liability. Sub-sect. 2 of the same section enacts that where 
 a bill is drawn or indorsed by an infant the drawing or 
 indorsement entitles the holder to receive payment of the 
 bill and enforce it against any party thereto; that is, any 
 party other than the infant. 
 
 A cheque is a bill of exchange drawn on a banker pay- 
 able on demand. (Bills of Exchange Act, 1882, s. 78.) 
 It is difficult, therefore, to see why a cheque drawn by an 
 infant does not possess all the characteristics of a cheque 
 drawn by a person of full age, save in so far as relates to 
 the liability thereon of the drawer. 
 
 An argument against keeping an account with a minor 
 has been formulated as follows : 
 
 To constitute a cheque or to entitle the banker to the 
 protection of sect. CO in respect of a bill drawn on him, tin- 
 relation of banker and customer must exist. That relation 
 has been held to subsist although the banker has, by reason 
 of overdraft, become the creditor instead of the debtor. 
 (llnrdii v. V easei/, L. 11., 8 Ex. 107; Clarke \. London 
 and C<,nnt,/ Bank [1897] 1 Q. B. 552.) 
 
 Therefore the complete relation cannot exist where the 
 customer could never be a debtor. 
 
 Therefore a banker paying n ch<'iju<- drawn on him by an 
 infant is not entitled to the same protection against forged 
 indorsements or under the crossed cheques sections as he- 
 would be in the case of an ordinary cheque.
 
 CURRENT ACCOUNT WITH A MINOR. 15 
 
 Such an argument would, however, infallibly be rejected CHAP. II. 
 by a court as fantastic and far-fetched. 
 
 The primary and natural relation of banker and cus- 
 tomer, as contemplated in all the earlier cases, is that the 
 banker is debtor, the customer creditor. Where these 
 conditions exist, as they perfectly well may in the case of 
 an infant customer, it is irrelevant to import non-existent 
 and supposititious circumstances as having any bearing on 
 the position. Cf. Nottingham Permanent Benefit Building 
 Society v. Thurstan [1903] A. C. 6, where it was said an 
 infant might perfectly well be a member of a building 
 society though incapacitated from borrowing like the adult 
 members. 
 
 Moreover, as will be hereafter pointed out (Cheques, 
 p. 24, post), the Act does not specifically require that a 
 cheque be drawn by a customer; and the inference that it 
 must be is considerably weakened by the judgment in 
 London, City andMidland Bank v. Gordon [1903] A. C. 240. 
 
 Another suggested danger is that the minor, after draw- Infant re- 
 ing out the whole of his current account, might, either money p a i<3. 
 before or on attaining majority, claim the money over 
 again from the banker, on the ground of his own inability 
 to give a valid discharge during infancy. Persons ad- 
 vancing this view have adduced in support the special pro- 
 visions of Savings Banks and other Acts constituting an 
 infant's receipt a discharge for his deposit. 
 
 This suggested danger is purely imaginary. Whatever 
 may be the law where it is sought to enforce a contract 
 against an infant or make him pay for goods purchased or 
 repay money lent, when the positions are reversed and the 
 infant is himself the moving party, the ordinary rules of 
 justice and equity prevail. 
 
 " If an infant was to buy a thing, not being necessaries, 
 he could not be compelled to pay for it, but having done so, 
 he could not recover back the money." (Per Lord Kenyon, 
 in Wilson v. Krause, 2 Peake, 196.) " If an infant
 
 16 
 
 CURRENT ACCOVNT WITH A MINOR. 
 
 CHAP. II. 
 
 OTerdraft 
 by infant. 
 
 receives rents, be cannot demand them again when of 
 age." (/Vr Lord Mansfield, in Karl of Bvckingkamtkirt 
 v. Dnirii, 2 Eden, at p. 72.) Valentin! \. < '.malt, 24Q. B.D. 
 166, is a late and strong authority to the same effect. 
 
 The cases of Hedalcy v. Holt, 4 C. & P. 104, and 
 lidirli-fi v. Itdirli'i/, 1. Q. B. D. 460, which at first sight 
 might seem to justify the opposite view, are, as shown by 
 the latter, explainable by the fact that they were cases of 
 set-off, that the obligation set up against the infant was 
 prior to and wholly independent of the obligation sought 
 to be enforced by him, and that the technical rule requiring 
 a set-oft' to be a recoverable debt precluded the court from 
 entertaining as such the claim set up against the infant. 
 
 AVith regard to money paid on the cheques of the infant 
 there are in addition the provisions of sect. 22, sub- sect. 2 of 
 the Bills of Exchange Act, before referred to: they expressly 
 affirm the right of the holder of a bill drawn by an in fan t 
 to receive the money for it. 
 
 This absolutely involves the discharge of the drawn- 
 from his obligation to the drawer in respect of an equiva- 
 lent amount of the funds in his hands against which the 
 bill is drawn. 
 
 The provisions in the Savings Banks and other Acts as 
 to discharges by minors must be regarded as inserted to 
 meet exceptional cases or ex majors t-nnti-ln. If the 
 account has been opened by a father or guardian paying in 
 money to be drawn on by the infant, the banker can hu-ur 
 no risk by applying the money according to directions, any 
 more than does a trustee in paying money to an infant by 
 \\ay of allowance under the terms of a trust. 
 
 Overdrafts are money lent (Cim I ((}' />'/ (*/.-x .1 ('.*. \. 
 Blackburn and l>ixtrict 7>Y//<7// linihliiiii ,W />///, 1> A. t . 
 857), and as such could never be recovered against an 
 infant customer. Any security given by an infant for such 
 overdraft would be void. (Xntt'mnhdin /'////</////// ll< n< ii( 
 riil,lhi'j .SWiY/// v. Tliiirxtan [1908] A. C. 6.)
 
 ( 17 ) 
 
 CHAPTER III. 
 DEPOSIT ACCOUNTS. 
 
 DEPOSIT accounts may be of three classes : CHAP. III. 
 
 1. Repayable at call or on demand. 2. "Withdrawable 
 on specified notice. 3. For a fixed period. 
 
 The customer has no right to draw cheques against a 
 deposit account of class 2 or 3, probably not against a 
 deposit account of class 1 (a). 
 
 Where the deposit is at call, notice should first be given 
 to transfer to current account. Where it is withdrawable on 
 notice, due notice should first be given, together with a request 
 to transfer to current account at the expiration thereof. 
 
 In practice, where a customer who has a deposit account 
 draws a cheque which his current account is not sufficient 
 to meet, it is not unusual for the banker to honour the 
 cheque, relying on his lien or set-off against the deposit 
 account, and the practice seems free from danger. 
 
 Where a form of cheque is indorsed on a deposit receipt, 
 as in In re Dillon, 44 Ch. D. 76, it must be taken that 
 the bank agree to honour that particular cheque against 
 the deposit account, or treat that account at once as 
 transferred to current account. 
 
 Money paid in on deposit account is a loan to the banker, 
 not a specific fund held by him in a fiduciary capacity. 
 (Pearce v. Cresivick, 2 Hare, 286 ; In re Head [1893] 
 3 Ch. 426 ; In re Head (No. 2) [1894] 2 Ch. 236.) 
 
 The remarks of North, J., in In re Tidd [1893] 3 Ch. 
 154, as reported, are somewhat ambiguous, but are clearly 
 insufficient to establish any fiduciary relation. 
 
 (a) In Hopkins v. Abbott, L. R., 19 Eq. 222, Malins, V.-C., seems to 
 have thought a banker was bound to honour cheques against a deposit 
 account of class 1. But apart from notice or tffluxion of time there are 
 distinctions between current and deposit account which render this 
 doubtful. Cf. In re Head (No. 2), ubl siqira. 
 
 B. C
 
 L8 DEPOSIT ACCOUNTS. 
 
 CHAP. III. The expressions of Lord Esher, M.R., in Atkinson v. 
 Bradford Third Equitable, etc., hereafter referred to, 
 cannot be interpreted as suggesting any such fiduciary 
 relation with regard to deposit account. 
 
 Money on deposit account, of whatever class, may there- 
 fore he assigned as a whole under sect. 25, sub-sect. 6, 
 of the Judicature Act, 1873. It is also subject to the 
 banker's lien. Being a debt, it is within the operation of 
 the process for attachment of debts and the Statute of 
 Limitations, subject to such modifications as arise from 
 the terms of the deposit. Whether a particular deposit 
 account is liable to garnishee process depends on whether 
 it is " a debt due or accruing due " at the time of service 
 of the order. 
 
 If return of the deposit receipt is a condition precedent 
 to withdrawal of the amount, the deposit account, even if 
 repayable on demand, would not be affected by service of 
 a garnishee order prior to return of the receipt. " The 
 debt so attached must be a debt owing by the garnishee, 
 a debt of which the judgment debtor could have compelled 
 payment if he desired to do so." (Chuttcrton v. l\'<ttn< i/, 
 16 Ch. D., at p. 383.) 
 
 In Atkinson v. Bradford Third Equitable B>-n<[rit 
 Building Society, 25 Q. B. D. 377, the question \\as 
 whether the return to the society of a loan pass book issued 
 by it was a condition precedent to repayment of the loan. 
 Lord Esher, M.R., said of and in that case : "It has no 
 analogy to the cases cited where money is deposited in a 
 bank to provide for a current account. The case of money 
 paid in on a deposit account would be very different, and 
 we shall know how to deal with it when it comes before us." 
 
 In the connection in which these words occur they 
 obviously infer a distinction between current Account and 
 deposit account based on the return of the receipt. 
 
 In In >; Tidd [1893] 3 Ch. 154, North, -I., seems to 
 understand Lord Kslu-r's remarks in this sense, namely, as
 
 DEPOSIT ACCOUNTS. 19 
 
 pointing to the necessity of the return of the receipt before CHAP. ill. 
 the deposit can be withdrawn. 
 
 It appears to be really a question of the contract between 
 the parties, as evidenced by the receipt. 
 
 If the receipt is merely an acknowledgment by the banker 
 of having received the money, it is probably only evidence 
 of that fact, and its return is not a condition precedent. 
 
 If its return is made a condition of repayment or with- 
 drawal, then no debt arises until its return. (See Atkinson 
 v. Bradford Third Equitable, d-c., ubi sup. ; In re Dillon, 
 44 Ch. D., per Cotton, L.J., at p. 81.) 
 
 The fact that a bank could not refuse to pay in the 
 event of the receipt being lost, alluded to in In re Dillon, 
 does not affect the question, being merely part of the 
 equitable jurisdiction with respect to lost instruments. 
 (See Pearce v. Cresivick, 2 Hare, 286.) 
 
 Apart from any question of the return of the receipt, 
 the position seems to be as follows : 
 
 I. A deposit account withdrawable on demand or at call 
 would probably be attached by a garnishee order, on the 
 analogy of other debts payable on demand, which are 
 recoverable without previous actual demand. 
 
 II. A deposit account repayable on specified notice, with 
 respect to which no such notice has been given at the time 
 of the service of the order, is not affected by the order. 
 
 It is not at that time a debt due, for which the depositor 
 could have immediately and effectually sued. 
 
 It is not at that time a debt accruing due. There is 
 no direct decision on this point. The accepted definition 
 of a " debt accruing due " is that given by the Court of 
 Appeal in Webb v. Stenton, 11 Q. B. D. 518, viz., " debitum 
 in pr&senti solvendum in futuro." 
 
 The examples given in Jones v. Thompson, 27 L. J., 
 Q. B. 234, and the fair interpretation of " accruing due " 
 and of the above definition, show that the debt must be one 
 payable at a definite fixed future date, which is not the 
 
 c 2
 
 DEPOSIT ACCOUNTS. 
 
 case with a deposit withdrawable only oil specified notice, 
 where no such notice has been given. 
 
 III. Where due notice of withdrawal has been given 
 prior to the service of the garnishee order nixi, then, 
 subject to any question of the return of the receipt, the 
 deposit account is attached, because it is then a debt due 
 or accruing due, according as the notice has expired or is 
 still running. 
 
 IV. A deposit account repayable at a fixed date is 
 attached by a garuishee order, subject to any question as to 
 return of the receipt, because it is a debt accruing due. 
 
 As in the case of current account, where a garnishee order 
 takes eifect on a deposit account, the whole is attached, 
 irrespective of the amount for which the judgment has 
 been entered. 
 
 The Statute of Limitations is not likely ever to have 
 effective operation on deposit accounts, as it would be 
 barred by payment of interest. 
 
 It was with immediate reference to this statute that Lord 
 Esher made the observations in At A inson \.Brculfonl Third 
 I\<{iiit(il>li . ,(r., above quoted. If the return of the deposit 
 receipt be a condition precedent to repayment or recovery of 
 the money, its return fixes the starting point of the statute. 
 
 The best test as to when the statute begins to run is that 
 laid down by Willes, J., in Garden v. Bruce,, L. R., 8 
 G. P., at p. 801 : " The six years must be six years on 
 every day of which the plaintiff could have sued out a writ 
 against the defendant." 
 
 The conditions before laid down concerning the applica- 
 tion of a garnishee order nisi to a deposit account are 
 therefore equally applicable for ascertaining the time at 
 \\hit-li the Statute of Limitations begins to run. 
 
 A deposit receipt is not a negotiable instrument, and the 
 transfer thereof confers no right to the deposit account. 
 (In re Dillon, 44 Ch. D. 76.) 
 
 A deposit receipt payable to bearer on demand would
 
 DEPOSIT ACCOUNTS. ^ J 
 
 probably constitute an infringement of the Bank Charter GHAP. III. 
 Act, 1844. 
 
 Some banks issue a form of deposit receipt with a 
 cheque form at the back. This cheque form being filled 
 up by the depositor, either for the whole or a part of the 
 money deposited, and notice given if required by the terms 
 of the deposit, the cheque is paid by the bank to the 
 holder as an ordinary cheque. (See a form set out in In re 
 Dillon, 44 Ch. D. 76, and In re Mead, 15 Ch. D. 651.) 
 
 The legal significance and effect of such documents 
 seems open to argument. 
 
 In In re Dillon the Court of Appeal regarded the cheque 
 part as not inconsistent with the general character of the 
 document as a deposit receipt, treating it more in the light 
 of a device of the bank to insure a receipt for the money 
 when withdrawn. 
 
 On the other hand, in In re Mead, a similar document, 
 emanating from the same bank, was, when filled up for part 
 only of the deposit, treated by Fry, J., purely as a cheque ; 
 and this case is not displaced, but recognised, "by In re Dillon. 
 
 No doubt the existence of the signed cheque would be 
 some evidence of payment, as an ordinary paid cheque 
 retained by the banker as a voucher is. 
 
 But the primary object of a cheque is as a means of 
 obtaining money, not of showing it has been paid, and when 
 one finds the cheque form adopted, the natural conclusion 
 is that the primary object is intended. 
 
 Whether the cheque form be used for the whole or part 
 of the deposit account cannot vitally affect its import ; if 
 its use be restricted to the withdrawal of the full amount 
 at one time, it may somewhat favour the receipt theory. 
 
 It has been further suggested that the document when 
 filled in and notice in writing given to the bank constitutes 
 a valid assignment of the debt within sect. 25, sub-sect. 6, 
 of the Judicature Act, 1873. 
 
 The cases of Hopkinson v. Forster, L. B., 19 Eq. 74, and
 
 DEPOSIT ACCOUNTS. 
 
 Schroedcr v. Central Bank, 84 L. T., N. S. 785, are, 
 however, fatal to any such contention. If not a cheque, it 
 is only instructions to the bankers. 
 
 On the whole, the form would seem designed as a 
 cheque, with a view to securing the trausferability of the 
 deposit account. 
 
 The hank must be regarded as undertaking, either at 
 any time or on expiration of the stipulated notice, to 
 transfer the whole or part of the deposit, or treat it as 
 transferred, to a drawing account and honour the cheque 
 against that. (See In re Mead, vbi sup.) 
 
 There is no legal objection to a cheque being drawn on 
 the back of another document, say a visiting or playing card. 
 
 The only difficulties in the way of treating this particular 
 form of cheque as a good negotiable cheque for all purposes 
 arise from two considerations: 
 
 (1) Is it for a sum certain? 
 
 (2) Is it payable only out of a particular fund ? 
 
 The answer of course depends on the wording of the 
 cheque form. 
 
 If no sum is inserted, the amount payable being defined by 
 reference to the deposit, the document errs in both respects. 
 
 If the cheque is simply completed by the insertion of a 
 specific sum, the mere existence of the deposit receipt, on 
 the reverse side, would not restrict the payment to that 
 particular fund ; at most it would indicate the particular 
 fund whence the drawees were to reimburse themselves. 
 which is no obstacle to the validity of a cheque. (Bills of 
 Exchange Act, s. 8, sub-s. 8 (a). 
 
 Deposit receipts are exempt from stamp duty. (Stamp 
 Act, 1891, s. 108, exemption 1.) 
 
 The Inland lit vdiuc have sought to tax as promissory 
 notes not payable on demand bankers' receipts for deposits 
 for fixed periods, which specified the date at which the 
 deposit would be repayable and the rate of interest allowed. 
 Alternatively tliry lia\v sought to charge- t lit in \\ith stamp 
 duty as agreements.
 
 DEPOSIT ACCOUNTS. 
 
 Neither claim can be supported : 
 
 (a) The provision as to repayment does not render such 
 documents promissory notes within sect. 33 of the Stomp 
 Act, 1891, as containing a promise to pay a sum of money. 
 The primary purpose of the document is something 
 different ; and the promise to pay, if any, is only the recog- 
 nition of a legal obligation resulting from the contract of 
 loan. (See per Lord M'Laren, in Thomson v. Bell, 22 
 Court of Sessions Cases, 4th series, p. 18.) 
 
 See also Home v. Eedfearn, 4 Bing. N. C. 433, where 
 it was held that the document would have been exempt 
 as a deposit receipt if given by a banker ; and Mortgage 
 Insurance Corporation v. Commissioners of Inland Revenue, 
 21 Q. B. D. 352. 
 
 Nor does the provision as to payment of interest take 
 the document out of the exemption. 
 
 In 1813, in Bank of Scotland v. Watson, 1 Dow's House 
 of Lords Cases, 40, the House of Lords declined to decide 
 whether, under the then existing stamp laws, a proviso for 
 payment of interest deprived the document of the character 
 of a receipt. Consequent on this case, the Stamp Act of 1815 
 (55 Geo. III. c. 184) expressly enacted that " all receipts for 
 money deposited in any bank, or in the hands of any banker 
 or bankers, which shall contain any agreement or memo- 
 randum importing that interest shall be paid for the money so 
 deposited, shall be deemed and taken to be promissory notes." 
 
 The repeal of that Act and the total omission of any 
 such provision in the Stamp Act of 1891 show the 
 intention of the Legislature that the inclusion of interest 
 should not for the future preclude such document from 
 exemption as a receipt. 
 
 (b) Such a document is not chargeable with stamp duty as 
 an agreement. See Home v. Eedfearn, 4 Bing. N. C. 433, 
 where the Court expressly stated that the document, which 
 they held to be an agreement, would, under the Stamp Act, 
 1815, have been exempt as a deposit receipt if given by a 
 banker.
 
 '24 ) 
 
 CHAPTER IV. 
 CHEQUES GENERALLY. 
 
 " A cheque is a bill of exchange drawn on a banker 
 payable on demand." (Bills of Exchange Act, 1882, s. 78.) 
 
 Mr. Chalmers says (Bills of Exchange, 6th ed., p. 248) : 
 "It is no part of the definition that a cheque should be 
 an inland bill, or that it should be drawn by a aixtnmcr 
 upon his banker." 
 
 It is somewhat difficult to contemplate a cheque not 
 drawn by a customer, aud there are expressions in the 
 other cheque sections which it is not easy to reconcile with 
 the existence of any other class of cheque. Moreover, 
 until the recent decision in London ( 'if;/ ami Midlum! Bank 
 v. Gordon, in the House of Lords [1903] A. C. 240, there 
 was a canon of construction that where an Act of Parlia- 
 ment speaks of a banker, it means a banker acting in his 
 capacity as such, in correlation with a customer. There 
 was also the canon of construction, expressly recognised by 
 the Court of Appeal in the Gordon Case [1902] 1 K. B. 
 242, and in Charles v. Blackm-ll, 2 C. P. D. 151, that all 
 statutory provisions for the protection of the banker are 
 designed to counteract some risk imposed on him directly 
 or indirectly by legislation in the interest of the com- 
 munity, and must not be extended beyond the limits 
 required for that purpose. These two eminently reason- 
 able rules overlap with regard to the matter in hand ; tin -y 
 are accordingly treated together here. 
 
 In the Gordon Case some of the documents involved 
 were bankers' drafts, drawn by the A. branch of a bank 
 upon its head office, payable to G. and M. or order.
 
 CHEQUES GENERALLY. 5* 
 
 These were issued by the A. branch to a customer who CHAP. IV. 
 forwarded them to Gr. and M. They were intercepted by 
 J., who forged the indorsement of G. and M. and paid them 
 uncrossed into his own account at the B. branch of the 
 same bank. 
 
 The House of Lords held that these documents were not 
 cheques or bills within sect. 3 of the Bills of Exchange Act, 
 there being no separate drawer and drawee, and that the 
 power given by sect. 5, sub-s. 2, to treat as a bill a docu- 
 ment in which drawer and drawee are the same person is 
 confined to the holder, as, indeed, it is in terms. 
 
 They therefore held that the bank were not protected by 
 sect. 60 of the Bills of Exchange Act. 
 
 But they did hold that the bank, as paying bank, was 
 protected by sect. 19 of the Stamp Act, 1853, which is 
 as follows : 
 
 " Any draft or order drawn upon a banker for a sum of 
 money paj^able to order on demand which shall, when 
 presented for payment, purport to be indorsed by the 
 person to whom the same shall be drawn payable stall be 
 a sufficient authority to such banker to pay the amount of 
 such draft or order to the bearer thereof, and it shall not 
 be incumbent on such banker to prove that such indorse- 
 ment, or any subsequent indorsement, was made by or 
 under the direction or authority of the person to whom 
 the said draft or order was, or is, made payable, either by 
 the drawer or any indorser thereof." 
 
 Now one would have said that the wording of this 
 section was expressly designed to confine its operation to 
 drafts or orders drawn on a banker qua banker, that is, by 
 a customer. 
 
 There is first the use of the word "banker," which, as 
 before suggested, seems to imply the relation to a customer. 
 (And see Halifax Union v. Wheelwright, L. K., 10 Ex., at 
 p. 193.) 
 
 " Shall be a sufficient authority." In their ordinary
 
 CHEQUES GENERALLY. 
 
 acceptation these words point to the relation of hanker 
 and customer. A man wants no authority to pay a bill 
 drawn on him as a principal ; a hanker does want 
 authority to pay away his customer's money. (Cf. sect. 75 
 of the Bills of Exchange Act.) But in Charles v. Black- 
 irtll, 2 C. P. D., at p. 159, the Court, in order to secure to 
 the hanker protection against the true owner, as well as 
 the customer, read these words as implying a statutory 
 authority derived from the section. This interpretation 
 seems somewhat forced, hut justified by the necessities of 
 the situation. 
 
 44 It shall not be incumbent on such banker to prove 
 that such indorsement," &c. These words are unintel- 
 ligible, except with relation to a customer's drafts. An 
 ordinary drawee or acceptor pays a bill oil his own account : 
 there is no one to whom he looks for reimbursement, no 
 one he can debit. If he pays on a forged indorsement, he 
 has to hear the loss himself unless he can recover the 
 money as paid under mistake of fact from the person he 
 paid it to. There is no conceivable state of circumstances 
 in which there is any duty from him to anybody, rendering 
 it incumbent on him to prove an indorsement to be 
 genuine. Even where he is sued by the true owner for 
 conversion of the bill, it is incumbent on the true owner 
 to prove that his signature was forged, not on the drawee 
 or acceptor to prove it genuine. The words can only there- 
 fore apply to a state of facts in which, but for this section, 
 it would be incumbent on the banker, as drawee, to justify 
 his conduct by proving an indorsement to be genuine. 
 That state of facts is where he has paid a customer's draft 
 tit of that customer's money. To entitle him to debit tin- 
 customer, it would be incumbent on him to show that he 
 had paid with the customer's authority, in accordance with 
 his mandate. If the customer said, "Pay A. or order," 
 ud the banker had paid someone purporting to hold under 
 A/s indontement, it would be incumbent on the banker
 
 CHEQUES GENERALLY. 2 
 
 to prove to his customer that that person fulfilled the CHAP. IV. 
 character of A.'s order ; in other words, to prove the 
 genuineness of A.'s indorsement. 
 
 No doubt, in the Gordon Case, these drafts were in a 
 sense drawn on a hanker as such, and were issued to a 
 customer ; but they were issued by the branch to its 
 customer and paid by the head office, where he was not 
 a customer and had no account which could be debited. 
 No point, moreover, was made of this in the judgment, 
 which would be equally applicable had the drafts been sold 
 to a perfect stranger. 
 
 There is nothing in the definition of " banker " in sect. 2 
 of the Bills of Exchange Act sufficient to differentiate its 
 meaning in that Act. It must therefore be recognised that 
 this decision affects that Act as well, and that it can no 
 longer be asserted that "banker" either in the Bills of 
 Exchange Act, or the Stamp Act, 1853, necessarily means 
 a banker qud banker in relation to a customer. 
 
 Again, this decision militates against the other canon 
 of construction referred to ; viz., that all statutory protection 
 to a banker is based on, and must be confined to, the 
 counteracting some additional risk directly or indirectly 
 thrust upon him by the Legislature in the interest of the 
 community at large. 
 
 The section in question, like sects. 60 and 82 of the 
 Bills of Exchange Act, has always been regarded as a 
 leading example of this principle and interpreted on those 
 lines. 
 
 Lord Lindley, in Gordon's Case, and the Court of Appeal 
 in Charles v. Blackwell, 2 C. P. D. 151, set forth the facts 
 relating to its introduction. It was inserted in the Stamp 
 Act, 1853, because that Act first authorised the issue of 
 " draft or order for the payment of any sum of money to 
 the bearer or to order," with a Id. stamp, that rate of stamp 
 duty having previously been confined to such documents 
 when payable to bearer, not to order. As the court say
 
 |s CHEQUES GENERALLY. 
 
 CHAP. iy. in Charles v. BUickicell, at p. 156, with reference to this 
 v-ry section : 
 
 " Now the purpose of the enactment we are dealing with 
 was, when cheques payable to order were expected to 
 become general, to protect bankers against the possibility 
 of forged indorsements. The only reason why cheques 
 had not been drawn payable to order before being the 
 expense of the stamp, when the Stamp Act of 16 & 17 
 Viet, included these cheques among those which should bo 
 subject to the Id. stamp, it was, of course, foreseen that 
 the great convenience arising from the use of such 
 cheques would make them of constant recurrence. It \\;is 
 equally certain that the use of cheques drawn to order 
 would expose bankers to serious danger from forged 
 indorsements, payment upon which, as the law then stood, 
 would have been to their own loss. It was against this 
 danger that the 19th section of the Act was intended to 
 protect them. It was not unreasonable that while the 
 customer obtained the advantage of being able to draw 
 Cheques payable to order, the possibility of forged indorse- 
 ments should be, as between him and the banker, at his 
 risk." 
 
 Here not only is the section treated as applying solely 
 to the case of cheques drawn by a customer on his banker, 
 but the protection is limited to such cases, and the reason 
 for such limitation assigned on the basis above stated. 
 And the main principle is recognised in the judgments in 
 Gordon'* Cage in the House of Lords with reference to 
 sect. 77, sub-sect. 6, and sect. 82. 
 
 Hut by extending the protection to drafts drawn by a 
 branch oflice of a bank on the head office, the House of 
 Lords would appear to have disregarded this correlation of 
 risk and protection. 
 
 It was not and could not be suggested that the Stain). 
 
 L of 1858 produced or was likely to produce a large 
 increase in the number of such drafts issued by banks.
 
 CHEQUES GENERALLY. 20 
 
 But there is a far stronger consideration. On the passing CHAP. IV. 
 of that Act, the payment of an order cheque drawn on a 
 banker by his customer, with a Id. stamp, became a legal 
 obligation on the banker, provided he had available and 
 sufficient funds in his hands. 
 
 He was responsible to the customer in substantial 
 damages if he did not pay it. This duty was the foundation 
 of the risk and the limit of the protection. But the issue 
 of a draft such as that in question, even to a customer,, 
 remained, and remains, a matter entirely at the option 
 of the banker. The customer cannot draw it himself, or 
 insist on the banker's giving it him. The superadded 
 obligation is confined to paying regular cheques. There- 
 fore such drafts, being purely voluntary and optional on 
 the part of the banker, are altogether outside the reason of 
 the protection against forged indorsement. 
 
 It is most unfortunate that, on facts involving only 
 32 15s. 9d., so salutary a canon of interpretation should 
 have been impugned by the House of Lords. 
 
 Their decision taken as a whole would seem to involve 
 the result that if a " draft or order payable to order 011 
 demand," as distinguished from a bill or cheque, were 
 drawn on a banker in his private capacity for the price of 
 a horse sold to him, and he paid it on a forged indorsement, 
 he must be taken to have paid for the horse. 
 
 The full effect of the decision cannot be directly im- 
 ported into sect. 60, if only for the reason that the latter 
 requires the payment by the banker to be " in the ordinary 
 course of business," words not to be found in sect. 19 
 of the Stamp Act, 1853. Indeed, the rule as to cor- 
 relation of risk and protection may probably be regarded 
 as still obtaining, except with regard to this particular 
 section of the Stamp Act, 1853, since, as above stated, it 
 was distinctly affirmed by the House of Lords with regard 
 to certain sections of the Bills of Exchange Act in the 
 same judgments.
 
 CHEQUES GENERALLY. 
 
 CHAP. IV. The position resulting is somewhat difficult to justify 
 on logical grounds. 
 
 A rheque must conform to the requisites laid down by 
 the Act to constitute a bill. Sect. 19 of the Stamp Act, 
 1858 (16 & 17 Viet. c. 59), affords the protection pre- 
 viously mentioned to a banker paying any draft or order 
 drawn upon him for a sum of money payable to order on 
 demand ; and the Revenue Act, 1888 (46 & 47 Viet. c. 55), 
 s. 17, applies the crossed cheques sections of the Bills of 
 Exchange Act to " any document issued by a customer 
 of any banker and intended to enable any person or body 
 corporate to obtain payment from such banker of the sum 
 mentioned in such document." As to these documents, see 
 Bavins, jtin., and Sims v. London and South- H't-xti TII Hunk 
 1900] 1 Q.B. 270; Capital and Counties Bank v. Gordon 
 [1908J A. C. 240. The crossed cheques sections are also 
 extended to dividend warrants by sect. 95 of the Bills of 
 Exchange Act. 
 
 Allowing for these exceptions, which will be dealt with 
 under the provisions applicable to them, a document to be 
 a cheque must possess the characteristics of a bill, defined 
 by sect. 8 as " an unconditional order in writing addressed 
 by one person to another, signed by the person giving it, 
 requiring the person to whom it is addressed to pay on 
 demand, or at a fixed or determinuble future time, a sum 
 certain in money to or to the order of a specified person or 
 to brurer." For the general interpretation of this section 
 see Chalmers* Bills of Exchange. 
 
 The following are the points which specially affect 
 bankers : 
 
 I. Unconditional. The documents which require us a 
 condition of payment the signing a particular form of 
 receipt are, then-lore, not cheques. (See JfnriiiK, ///>/., 
 ami .Si'wx v. London nnd Smith-U'cuti-rn Hunk [1900] 1 
 I). :!7<>; (\ij,itl tuid ('..nnli,-* ]{<i,tk v. (i,,i;l,,n [1903] 
 A. C. 240.)
 
 CHEQUES GENERALLY. 3 
 
 The crossed cheques sections apply to these documents CHAP. IV. 
 under the Revenue Act, 1883, s. 17, as before stated. 
 But it must be noted that that section expressly pro- 
 vides that " nothing in this Act shall be deemed to 
 render any such document a negotiable instrument." 
 Negotiable is clearly here used in the sense of "trans- 
 ferable " (as in sect. 8, sub-sect. 1, of the Bills of 
 Exchange Act), not in the artificial sense of the word 
 imported by the interpretation of the not-negotiable cross- 
 ing. This view is strengthened by the description of the 
 document in the section as one " issued by a customer 
 of any banker and intended to enable any persbn or 
 body corporate to obtain payment from such banker of 
 the sum mentioned in such document," the wording 
 clearly pointing to the limitation of payment to the named 
 payee. 
 
 Moreover, as the receipt has to be signed by the named 
 
 payee, if the document were payable to a third party, the 
 
 incongruous result would accrue that the bank would be 
 
 paying to B. money which A. had already stated to have 
 
 been paid to him in accordance with the order. It can 
 
 make no difference that the document on the face of it 
 
 professes to be payable to order. If it does not so profess, 
 
 sect. 8 of the Act, which treats as payable to order a bill 
 
 payable to a particular person, and not containing words 
 
 prohibiting transfer, is not one of the crossed cheques 
 
 sections. The inclusion of sect. 77, as to " not negotiable " 
 
 crossings, among the sections extended to these documents, 
 
 might afford some ground for asserting their inherent or 
 
 implied negotiability. It might be argued that, inasmuch 
 
 as power is conferred to restrain their negotiability by 
 
 crossing them " not negotiable," they either are or are 
 
 made negotiable, or at least transferable, when not so 
 
 crossed. It is, however, submitted that this implication 
 
 is not sufficient to override the express words of the 
 
 Revenue Act, 1883. The incorporation is by the Act, and
 
 82 CHKQIKS GENERALLY. 
 
 CHAP. IV. the proviso therefore rules the incorporated section as 
 much as if it had beeii set out therein. 
 
 This point of non-transferability appears to have escaped 
 the Court of Appeal in Raring, jnn., and Sims v. London 
 atul ,S'<m//<- JIV.s/<r/t Bunk, where the document was 
 collected for a person other than the payee. 
 
 It would further appear that these documents do not 
 come within the definition of a " draft or order drawn 
 upon a hanker for a sum of money payable to order on 
 demand" within sect. 19 of the Stamp Act, 1858 (16 & 17 
 Viet. c. 59), not being payable to order and not being 
 capable of indorsement, against forger} 7 of which that 
 section is a protection of the banker. 
 
 The only case in which a banker would seem to be 
 protected with regard to such documents is where he pays 
 one, being crossed, to another banker, the document 
 bearing no evidence of indorsement or of being collected 
 for any one but the specified payee, or where, being 
 crossed, he collects one for the specified payee. 
 
 Many of these documents contain a notice that they 
 will only be paid if presented within a specified time. The 
 point has not been before the courts, but this would 
 appear to constitute a condition. 
 
 It would also appear to preclude the document from 
 being treated as payable on demand. A bill is not, strictly 
 speaking, payable on demand where the demand is limited 
 to a period less than that prescribed by the Statute of 
 Limitations. It ought to be payable at any time, subject 
 to that limitation. 
 
 The Revenue Act, 1888, s. 17, does not confine its 
 operation to documents which enable the payee to obtain 
 payment on demand. The limitation of time for payment 
 would, therefore, not seem to be material under that 
 flection. 
 
 To be unconditional a cheque must not be made payable out 
 of a particular fund. (Sect. 8, sub-sect. 8.) As to the bearing
 
 CHEQUES GENERALLY. .8 
 
 of this provision on cheques indorsed on deposit receipts, CHAP. IV. 
 see "Deposit Receipt" (ante, p. 22). 
 
 II. A cheque must be an order. As Mr. Chalmers 
 puts it, it must be imperative in its terms, not precative, 
 though the insertion of mere terms of courtesy will not 
 make it precative. (Bills of Exchange, 6th ed., p. 11.) 
 
 III. A cheque must be addressed by one person to another. 
 There must be one person as drawer, another as drawee. 
 
 (Vagliano v. Bank of England, in the C. A., 23 Q. B. D., 
 at p. 248 ; London City and Midland Bank v. Gordon 
 [1903] A. C. 240.) 
 
 The head office and branches of a bank constitute for 
 general purposes only one concern or legal entity. (Prince 
 v. Oriental Bank Corporation, 3 A. C. 325.) It is for this 
 reason that drafts drawn by one branch of a bank on another 
 branch or the head office are not cheques or bills drawn on 
 a banker so far as the bank is concerned. (London City 
 and Midland Bank v. Gordon [1903] A. C..240.) 
 
 But they are " drafts or orders drawn on a banker " 
 within sect. 19 of the Stamp Act, 1853, if payable to order 
 on demand. (London City and Midland Bank v. Gordon, 
 ubi sup., though, as before stated, this decision seems 
 open to criticism.) 
 
 Sect. 5, sub-sect. 2, of the Bills of Exchange- Act, which 
 enacts that "where in a bill drawer and drawee are the 
 same person, the holder may treat the instrument at his 
 option as a bill of exchange or promissory note," and in 
 a minor degree sect. 50, sub-sect. 2 (c), certainly appear to 
 contemplate the possibility of a bill in which drawer and 
 drawee are the same person. The true interpretation of 
 those sections is, however, that though such a document 
 is not really a bill, the holder may treat it as such, but 
 even then need not give notice of dishonour to the drawer. 
 The right to do so is, in any event, confined to the holder, 
 and cannot help the bank. (London City and Midland 
 Bank v. Gordon [1903] A. C. 240.) 
 
 B. D
 
 )4. CHEQUES GENERALLY. 
 
 CHAP. IV. IV. A cheqne must be payable on demand. 
 
 As to documents payable on demand within a specified 
 period only, see p. 82, ante. 
 
 The omission of tbe words " on demand " in the ordinary 
 cheque form is justified by sect. 10 of the Bills of 
 Exchange Act, which provides that " a bill is payable on 
 demand (a) which is expressed to be payable on demand, or 
 at sight, or on presentation, or (b) in which no time for 
 payment is expressed." 
 
 Post-dated cheques are not strictly payable on demand. 
 They are delivered before the ostensible date, but if 
 presented before that date, will not be paid. 
 
 They are exceptional instruments, inasmuch as by their 
 use the effect of a bill at a future date is attained without 
 corresponding benefit to the revenue. 
 
 Whether designedly or not, they are beyond question 
 validated by sect. 18, sub-sect. 2, of the Bills of Exchange 
 Act, which enacts that a bill is not invalid by reason of 
 being post-dated. 
 
 A post-dated cheque is not open to objection on the 
 ground of insufficient stamp, since all stamp objections 
 must be determined by the conditions existing when the 
 question is raised, which would naturally not be until after 
 the ostensible date had arrived. (Royal Bank of Scotland 
 tt,-nham [1894] 2 Q. B. 715.) 
 
 \ rv possibly the drawer of such a cheque is liable 
 to a penalty under sect. 5 of the Stamp Act, 1891, for 
 executing an instrument not truly and fully setting forth 
 facts and circumstances affecting the liability thereof to 
 duty; but that cannot render the document illegal in face 
 of the express words of the Bills of Exchange Act. 
 
 In 1868, in Eimunni v. Itobarts, 9 B. & S. 121, a post- 
 dated cheque was presented for payment before the osten- 
 sible date ; payment was refused and the cheque marked 
 
 1'ost-datcd." It was presented again on the ostensible 
 date and payment again refused. In an action by the
 
 CHEQUES GENEKALLY. 35 
 
 customer for damage to his credit, the hank were held CHAP. 1 v. 
 justified by virtue of a custom of London bankers to refuse 
 payment in such circumstances, namely, where they knew 
 a cheque to have been post-dated. The custom was recog- 
 nised as reasonable on the ground of the then existing doubts 
 as to the legality of post-dated cheques. In face of their 
 distinct recognition by the Bills of Exchange Act and later 
 decisions, such custom could hardly be supported now, and 
 a banker is probably bound to pay a post-dated cheque pre- 
 sented on or after its ostensible date, even though he may 
 have refused payment of the same cheque and marked it 
 "Post-dated " when presented before that date. 
 
 V. A cheque must be payable to or to the order of a " To or to the 
 
 r> n . i order of a 
 
 specified person or to bearer. specified 
 
 Sect. 7, sub-sect. 1, "Where a bill is not payable to person or 
 bearer, the payee must be named or indicated therein with 
 reasonable certainty." 
 
 The normal cheque is one in which there is a drawer, a 
 drawee banker, and a payee, or no payee but bearer. Some 
 exceptions are introduced by the Act, notably the fictitious 
 payee under sect. 7, sub-sect. 3. Further latitude has been 
 allowed by decision. In Chamberlain v. Young [1893] 2 Q. B. 
 206, a bill, " Pay order," was held good as being 
 
 equivalent to " Pay to my order." In Dann and Valentin 
 v. Sherwood, 11 Times L. K. 211, Kennedy, J., held that 
 a promissory note in which no payee was named and which 
 contained neither the word "order" or "bearer" was 
 good and payable to bearer, but this decision seems very 
 doubtful. 
 
 A cheque payable to " A. B. or order " is, of course, 
 payable to A. B. personally, the " order " being secondary 
 and alternative. 
 
 The payee is, as the term imports, the person to whom 
 the drawer primarily intends and directs payment to be 
 made. It rests entirely with the payee whether he will 
 present or negotiate the cheque. If a man presents a 
 
 D2
 
 86 
 
 CHEQUES GENERALLY. 
 
 . IV. 
 
 Whether 
 
 ; ' ' Id 
 
 acquired 
 bj obtaining 
 sufiiatureof 
 
 i CM ._ 
 
 cheque payable to " A. B. or order " unindorsed, the legal 
 presumption is that he is A. B. The bank must pay or 
 refuse payment. They may tender a stamped receipt for 
 signature, but cannot otherwise demand any receipt, 
 certainly not one in any particular form. 
 
 The common practice of paying bankers to refuse pay- 
 ment unless the ostensible payee signs on the back of the 
 cheque seems therefore without justification. It is under- 
 stood that at least one object of demanding such signature 
 is to get the protection of sect. CO should the person pre- 
 senting the cheque not be the real payee. Whether this 
 result would be attained appears doubtful. The reasons 
 for such doubt are as follows : 
 
 In Krane v. Beard, 8 C. B., N. S., at p. 882, Bylos. .1., 
 held that the payee's signature so obtained was not an 
 indorsement, but a receipt. Cf. Finance Act, 1895, 
 s. 9, where such signature is treated as a receipt. 
 
 The Bills of Exchange Act, s. 2, defines indorsement 
 thus : " Indorsement means an indorsement completed 
 by delivery " ; and the important words in sect. 60 are that 
 it is not incumbent on the banker to show that the indorse- 
 ment was "made " by or under the authority of the person 
 whose indorsement it purports to be, the word "made" 
 being more apt to include delivery than " forged," which 
 occurs later in the section. 
 
 It is clear that in the case supposed there could, to the 
 knowledge of the banker, be nothing like delivery by tin- 
 payee. 
 
 It may be objected that where the payee first indorses 
 the cheque and then himself presents it for payment, there 
 is equally no delivery. This objection is met by the con- 
 sideration that in such case the banker is, under sect. 8, 
 sab-sect. 3, entitled to treat the cheque as payable to 
 bearer, the only or last ostensible indorsement being one 
 in 1'liink, and that he pays the holder as bearer, not as 
 payee, delivery being presumed under sect. 21, sub-sect. 8.
 
 CHEQUES GENERALLY. 
 
 Sect. 60 then relieves the banker from the defect of forged 
 or unauthorised indorsement. That section does not con- 
 template any casual knowledge he may have that the payee 
 is the person actually presenting the cheque, and such 
 knowledge could not be imported into the question. 
 
 The words of the section which refer to " the indorsement 
 of the payee or any subsequent indorsement " appear to point 
 to the indorsement being for negotiation or at least collection. 
 So also the form of the protection that it shall " not be 
 incumbent on the banker to show that the indorsement 
 was made by or under the authority of the person whose 
 indorsement it purports to be," seems inconsistent with a 
 case where the signature is affixed in the presence and at 
 the instance of the banker. 
 
 The reference in sect. 60 to the banker's being deemed 
 to have paid the bill in due course, notwithstanding the 
 indorsement was forged, points distinctly to the protected 
 payment being one made under the professed sanction of 
 the indorsement, that is, to a holder under it, not to a 
 payee as such. 
 
 Sect. 19 of the Stamp Act, 1853, specifically limits the 
 protection to drafts or orders which on presentment lor 
 payment purport to be indorsed by the payee, and it might 
 well be argued that the same effect was contemplated in 
 sect. 60, which replaces it with regard to cheques. 
 
 It would further be open to question, whether a banker 
 paid such cheque " in good faith and in the ordinary course 
 of business " when he exacted the indorsement merely for 
 his own supposed protection. 
 
 Ogden v. Benas, L. R., 9 C. P. 513, affords no authority, 
 since it was at the instance of the collecting, not the paying 
 bank, that the person claiming to be payee indorsed the 
 cheque. 
 
 In Charles v. Blackicell, 2 C. P. D. 151, the cheque 
 was already indorsed when presented; but Cockburn, C.J., 
 does say, on p. 157 : " By making a cheque payable
 
 CHEQUES GENERALLY. . 
 
 to order, the drawer obtained the advantage that if the 
 cheque be stolen or lost before it reaches the payee, it 
 cannot he paid without a forged indorsement, the risk of 
 which many persons who would not scruple to present a 
 cheque payable to bearer, in fraud of the true owner, and 
 pocket the proceeds, might yet be unwilling to run." 
 This might be cited as showing that, even when obtained 
 as suggested, the signature constituted a forged indorse- 
 ment, but apparently what was in the mind of Cockburn, 
 C.J., was an indorsement before presentation with the 
 view of making the cheque equivalent to one payable to 
 bearer, especially as the Stamp Act, 1853, s. 19, on which 
 that case was decided, contains the words, "which shall, 
 when presented for payment, purport to be indorsed, &c." 
 
 It would be interesting to see what view a competent 
 court took of this matter, should it ever arise. 
 
 One of the main exceptions to the necessity of an actual 
 payee is introduced by sect. 7, sub-sect. 3, which enacts 
 that " where the payee is a fictitious or non-existing 
 person, the bill may be treated as payable to bearer." 
 
 This sub-sect. 3 and the question of a fictitious or non- 
 existent person as payee are fully and authoritatively dealt 
 with in Vagliamf* Case [1891] A. C. 107, and Glutton v. 
 Attenboroiifih [1897] A. C. 90. 
 
 Amongst other things these cases decide the following 
 points : 
 
 (1) That the question of fictitious or non-existing 
 payee is independent of any knowledge on the part of the 
 person to be charged of the fictitious or non-existing 
 character of such payee. 
 
 (2) That a person having a real existence may be 
 tictit inns or non-existing so far as the bill or cheque is 
 concerned. 
 
 (8) That the power to treat the bill or cheque as pay- 
 able to bearer is not confined to a holder, but extends to 
 anyone who is interested in so treating it; for instau
 
 CHEQUES GENEEALLY. 39 
 
 a banker who has paid a domiciled bill on a forged indorse- CHAP. IV. 
 ment of the fictitious or non-existing payee. 
 
 (4) That a cheque is within the rule. 
 
 Cheques made payable to "wages or order," "petty "Wages or 
 cash or order," or in analogous forms, with an impersonal p|[t y cash 
 payee, are frequently presented for payment and are usually or order." 
 treated as payable to bearer. 
 
 The practice seems a doubtful one. Sect. 7, sub-sect. 3, 
 only authorises such a course where the payee is a fictitious 
 or non-existing " person." 
 
 Sect. 2, among other definitions, enacts, " Person in- 
 cludes a body of persons whether incorporated or not." 
 
 The natural meaning of "person" excludes inanimate 
 things. The inclusion, by the definition, of entities not 
 usually classed as persons excludes any further extension 
 of the term where used in the Act. The obvious reference 
 of sub-sect. 3 is to persons who, but for their being fictitious 
 or non-existing, would be in a position to indorse. 
 
 In Vaglianos Case ([1891] A. C., at p. 129), Lord 
 Selborne said : " The difficulty, to my mind, arises out of 
 the fact that the Legislature has here described " a person " 
 as fictitious or non-existing, instead of saying " where the 
 payee is fictitious or non-existing," clearly recognising the 
 distinction. 
 
 It should be stated, however, that Lord Herschell, at 
 p. 153, regarded the distinction as not involving any serious 
 difference ; but he seems to be referring rather to the argu- 
 ment (see p. 112), that Petridi & Co., being existing 
 persons, could not be " fictitious or non-existing persons." 
 For he says, at p. 145, " Turning now to the words of the 
 sub-section, I confess they appear to me to be free from 
 ambiguity. Where the payee is a fictitious or non- 
 existent person means surely, according to ordinary 
 canons of construction, in every case where this can, as a 
 matter of fact, be predicated of the payee." This could 
 hardly apply to an impersonal payee.
 
 CHEQUES GENERALLY. 
 
 Cheque* with 
 
 In the old case of Grant v. Vaughan, 8 Burr. 1516, 
 where a draft oil a banker was made payable to " Ship 
 Fortune or bearer," Lord Mansfield said "there was no 
 person originally named as the payee; it runs 'Pay to ship 
 Fortune or bearer.' Wilrnot, J., said : "No person at all 
 is named, it is 'Pay to ship Fortune or bearer.'" 
 
 A banker paying bearer on such a cheque might fairly 
 contend that the customer must have intended him to pay 
 bearer, as the cheque was obviously not capable of indorse- 
 ment ; but there seems no good reason why the banker's 
 position should be complicated or imperilled by the use of 
 documents in this ambiguous and unreasonable form (a). 
 
 A cheque payable to " Wages or bearer," " Petty cash 
 or bearer," or in any such form where " bearer " is used 
 instead of "order," is, of course, payable to bearer. 
 
 A cheque, " Pay A. B.," without the addition of the words 
 " or order " or " or bearer " is. of course, negotiable by 
 indorsement of A. B. under sect. 8, sub-sect. 4, of the Bills 
 of Exchange Act. 
 
 If it is desired to draw a cheque payable to a specified 
 person only, distinct words prohibiting transfer or indi- 
 cating an intention that it should not be transferable must 
 be used. (Sect. 8, sub-sect. 4; Meyer d- Co. v. Deer,, if. 
 Verify C- Co. [1891] A. C. 520; Xatinnal Bank v. Silk,- 
 [1891] 1 Q. B. 485.) The words "order" or "bearer" 
 should be erased and initialled by the drawer, and the cheque 
 made payable to " A. B. only," and the words " Not transfer- 
 able " should be prominently written horizontally on the 
 cheque, not transversely, so as to be confused with u 
 crossing, and initialled by drawer. 
 
 A cheque payable to the order of A. B. is payable to him 
 or his order at his option. (Sect. 8, sub-sect. 5.) 
 
 The common form of cheque "Pay self or order" is 
 justified by sect. 5, sub-sect. 1, "a bill may be drawn 
 payable to or to the order of the drawer." 
 
 A cheque drawn " Pay order," indorsed by the 
 
 () TIM Council of UM* lntilnt<- of lUnkrrn linvf now derided that mich cli.-|U.- 
 rmMt MMy l iwardnl a |yat>lr to bearer. 800 qniutiun mul answer N 
 Jourml of UM lntit<it, March, 1W4.
 
 CHEQUES GENERALLY. 4 
 
 drawer, would be a good cheque, the words being interpreted CHAP. IV. 
 as equivalent to " Pay to my order." (Chamberlain v. 
 Young [1893] 2 Q. B. 206.) 
 
 A cheque payable to " or order" is a far more 
 
 dubious instrument. 
 
 In 1811, in R. v. Randall, Russ. & Ry. 195, the whole of 
 the judges, except Lawrence, J., sitting as a court for 
 crown cases reserved, held that such a document was not a 
 bill of exchange, inasmuch as there was no payee. 
 
 The question as to the effect of such a document was 
 raised, but not decided, in Chamberlain v. Young, ubi sup. 
 
 Even if the decision of Kennedy, J., in Dann and Valentin 
 v. Sherwood, 11 Times L. R. 211 (ante, p. 35) be correct, 
 it does not cover this case, because the use of the words 
 " or order" negative the idea of the cheque being payable 
 to bearer. 
 
 In a case decided in the Scotch Court of Session 
 (December 2nd, 1902), Henderson v. Wallace and Pennell, 
 5 Court of Session Cases, 166, a document in the form of 
 a cheque, payable to " or order " was given by 
 
 three signatories to the bank on which it purported to be 
 drawn. None of them had any account at the bank. The 
 bank, by previous arrangement, gave two of them the 
 amount of the cheque, and opened an account in which 
 all three were debited with that sum. The court held 
 that all three signatories were severally liable to the 
 bank for the amount of the cheque. The Lord Justice- 
 Clerk said that the fact that the cheque was not filled in 
 with the name of a payee made no difference, as the bank 
 paying the money to the two signatories were, as holders of 
 the cheque, entitled to fill in their own name. Lord Trayner 
 said that the signatories were rather- in the position of 
 makers of a promissory note. Each undertook payment to 
 the payee or his order. The bank who advanced the money 
 were the payee, and to that payee, being also the holder, 
 payment must be made by each and all the makers of it.
 
 CHEQUES GENERALLY. 
 
 This decision is not very clear, but was probably justifiable 
 in the circumstances. Under sect. 20 the bank, being in 
 possession of the cheque which was wanting in a material 
 particular, had & primd facie authority, which on the facts 
 was a real one, to fill up the omission in any way they 
 thought fit. Under sect. 5 a bill may be drawn payable to, 
 or to the order of, the drawee, and the bank might within 
 reasonable time have inserted their own name as payee, 
 when the cheque would have become payable to themselves. 
 It does not appear, however, that they did so. 
 
 Anyway, the case does not cover that of a banker to whom 
 a document in this form is presented for payment. He 
 would probably act wisely in declining to pay it. Nor 
 could he better his position by requesting the holder to fill 
 in his own name in the blank. The authority to fill up a 
 blank bill given by sect. 20 is only a primd facie one ; 
 and to make the -instrument enforceable against any person 
 who became a party to it prior to its completion, it must 
 be filled up in strict conformity with the authority given. 
 It is only a holder in due course, who takes the bill osten- 
 sibly complete on the face of it, who is protected against 
 a filling up in excess of the authority. (Hardinan \. 
 ll'h.-cter [1902] 1 K. B. 861.) 
 
 The paying banker would not be entitled to that pro- 
 tection. If the blank were filled up at his suggestion, 
 and he then paid, he would be taking his chance of the 
 tilling up being by the right person, and in all other 
 respects as authorised by the drawer. If, however, the 
 blank were filled up before the cheque was presented, and 
 it was otherwise in order, the banker in paying would 
 probably be protected on the ground that he had been 
 misled by the customer, or that the customer was estopped 
 as against him from setting up any excess of authority in 
 filling up the cheque. 
 
 \ cheque being a bill, the drawer is entitled to notice 
 of dishonour, and if this is not given, or excused by
 
 CHEQUES GENERALLY. 43 
 
 circumstances, he is discharged from liability, both on CHAP, iv. 
 the cheque and on the consideration for which it was given. 
 (Bills of Exchange Act, s. 48 ; Peacock v. Pursell, 14 
 C. B., N. S. 728 ; May v. Chidley [1894] 1 Q. B. 451.) 
 
 It is anomalous that the drawer of a cheque should be 
 entitled to notice of dishonour, seeing he is the party 
 primarily liable, and has no remedy over against anyone. 
 
 In most cases, however, it would be excused. The 
 dishonour of a cheque is generally caused either by there 
 being insufficient funds to meet it, or by payment having 
 been stopped. In both of these cases sect. 50, sub- 
 sect. 2 (c) dispenses with notice of dishonour. 
 
 As to notice of dishonour by collecting banker, see 
 " Collecting Banker," p. 227, post. 
 
 It is a common fallacy that, if a cheque is issued un- Stamping 
 stamped, any holder may affix and cancel an adhesive 
 Id. stamp. Sect. 34 of the Stamp Act, 1891, provides 
 that the duty may be denoted by an adhesive stamp, 
 which, when the cheque is drawn in the United Kingdom, 
 is to be cancelled by the person by whom the cheque is 
 signed, before he delivers it out of his hands, custody, or 
 power. The proviso to sect. 38 entitles the banker to 
 whom an unstamped cheque is presented for payment to 
 affix and cancel a \d. adhesive stamp, as if he had been 
 the drawer, and either charge the duty against the drawer 
 or deduct it from the sum paid. 
 
 There is no power given anywhere to intermediate 
 holders, and the wording of these sections excludes the 
 implication of any such power. 
 
 In Hobbs v. Cathie, 6 Times L. R. 292, it was expressly 
 held that a cheque which was issued unstamped and 
 stamped by an intermediate holder was improperly 
 stamped, and could not be recovered on, even by an 
 innocent person who subsequently took it for value without 
 notice of the defect.
 
 CHAPTER V. 
 CROSSED CHEQUES. 
 
 i HAP. v. FOR forms of, and general law as to, crossed cheques, see 
 Hills of Kxclmnge Act, 1882, ss. 76 82, and Chalmers' 
 Hills of Exchange, 6th ed. 
 
 iffecc of Apart from the non-negotiable crossing, none of the 
 
 authorised forms of crossing has any effect whatever on 
 the negotiability of the cheque. There is a common super- 
 stition that the fact of a cheque being crossed generally or 
 specially, in some way puts a person taking it on notice of 
 possible defects of title in his transferor, that there is some 
 'lirtereuce in the position of a holder in due course where 
 the instrument is a crossed cheque. 
 
 Possibly the error is in part traceable to the language 
 attributed to Lindley, J., in Matthii-wit v. /,//</// ami 
 /// /;<////,-, :> C. P. D. 7. 
 
 The learned judge is there made to say, at p. 16 : " The 
 customer of the bank gets no better title than his transferor, 
 not only when the cheque is marked ' Not negotiable,' 
 but when it is not so marked, if it is not an open but a 
 crossed cheque, the bank in either case deals with tin- 
 proceeds. If the bank has the cheque, it may be stopped 
 in their hands. The customer has no better title than tin- 
 person from whom he took it." 
 
 Now what his lordship was dealing with was a cheque 
 marked " Not negotiable," which he had just described MS 
 a new-lashioiied cheque altogether, and the proceeds of 
 such a cheque. 
 
 Reference to the errata at the beginning of thj? volume 
 (5 C. P. D.; will show at once that the passage should read
 
 CROSSED CHEQUES. 4 
 
 thus: " The customer of the bank gets no better title than CHAP. V. 
 
 his transferor. Not only when the cheque is marked 
 
 " Not negotiable, " but when it is not so marked, if it is 
 
 not an open but a crossed cheque, the bank in either case 
 
 deals with the proceeds. If the bank has the cheque it 
 
 may be stopped in their hands. The customer has no 
 
 better title than the person from whom he took it." 
 
 His lordship's statement obviously, therefore, only applies 
 to the " Not negotiable " crossing. 
 
 In Smith v. Union Bank of London, 1 Q. B. D. 31, 
 the Court of Appeal (Lord Cairns, C., Lord Coleridge, C.J., 
 Bramwell and Brett, JJ.) say, with regard to a crossed 
 cheque under stat. 19 & 20 Viet. c. 25, and 21 & 22 
 Viet. c. 79: "The Legislature might have enacted that 
 anyone taking a crossed cheque should take it at his peril 
 and get no better title than his transferor had. It has 
 not done so. We cannot say that it has by implication 
 restrained the negotiability of the cheque." Again, they 
 say " Have the statutes restrained the negotiability of the 
 cheque ? It is impossible to hold they have. There is 
 not a word in them to that effect." 
 
 The Crossed Cheques Act, 1876, was passed the year 
 after this judgment, and introduced the "Not negotiable " 
 crossing. 
 
 The Bills of Exchange Act, 1882, repealed and re- 
 enacted all the above mentioned Acts ; and, as the Court 
 of Appeal said with regard to the earlier statutes, there is 
 not a word in it affecting the full negotiability of a cheque 
 crossed but not bearing the words " Not negotiable." 
 
 The introduction of the " Not negotiable " crossing is 
 the strongest possible evidence that the other crossings, 
 have not the same or any analogous effect. 
 
 Apart from the "Not negotiable" crossing, the whole 
 purview and scope of the crossed cheques sections are for 
 and against bankers and bankers only, affording through 
 them a safer method of drawing cheques for the public.
 
 6 CROSSED CHEQUES. 
 
 CHAP. V. T ne " not negotiable " crossing is often misunderstood, 
 many people believing that a cheque so crossed is not 
 transferable, but payable only to the payee through his 
 banker. Even Lindley, L.J., in National Jianh \. Sillcc 
 [1891] 1 Q. B. 485, uses words which might be so inter- 
 preted. " Not negotiable " usually does mean not trans- 
 ferable (see sect. 8, sub-sect. 1) ; and it is only by reference 
 to sect. 81 that the true effect of the crossing is arrived at. 
 That effect is that the cheque remains transferable, but 
 is deprived of the full character of negotiability. How- 
 ever honestly and for value a transferee may take it, he 
 cannot acquire any better title to the cheque or its proceeds, 
 or any better right against any prior party to it, than his 
 transferor had. So long as there is no defect of title, the 
 cheque may pass from hand to hand just as if it was an 
 open cheque, and each successive holder acquires full 
 rights and title thereon. A cheque crossed " Not nego- 
 tiable" is, in fact, as Mr. Chalmers says, "on much the 
 same footing as an overdue bill." Its status is defined on 
 the above lines by Vaughan Williams, L.J., in Grmt II >*/</;/ 
 llailicay Company v. London and County Bank [1900] 2 
 Q. B., at p. 474 ; and the House of Lords, though reversing 
 the decision of the Court of Appeal on other grounds, 
 take the same view on this point. ([1901] A. C. 414.) 
 
 The crossing operates equally whether a holder is suin^r 
 on the cheque, or whether the true owner is suing a 
 transferee for conversion and money had and received. 
 
 Prior to, and in, this case of Great MY*/, ni Unilway Co. 
 v. /xWoii and County Bank, it was sought to establish a 
 distinction between the cheque and its proceeds. It was 
 contended that sect. 81 in terms only affected the title to 
 the cheque, and that, therefore, if an innocent holder of 
 such a cheque obtained the proceeds he could hold them 
 AS against the true owner of the cheque. 
 
 The House of Lords, however, put the rational interpre- 
 tation on the section :
 
 CROSSED CHEQUES. 
 
 " The supposed distinction between the title to the CHAP. V. 
 cheque itself and the title to the money obtained or repre- 
 sented by it seems to me to be absolutely illusory. The 
 language of the statute seems to me to be clear enough. 
 It would be absolutely defeated by holding that a fraudulent 
 holder of the cheque could give a title either to the cheque 
 or to the money." (Lord Halsbury, 0., [1901] A. C., 
 at p. 418.) 
 
 "Everyone who takes a cheque marked "Not negotiable," 
 takes it at his own risk, and his title to the money got by 
 its means is as defective as his title to the cheque itself." 
 (Lord Lindley, Ib., at p. 424.) 
 
 Nor does it matter whether the defect of title be such as 
 to render the cheque void or merely voidable. 
 
 " Whether the cheque was void or only voidable appears 
 to me really immaterial. Be it void or be it voidable it 
 was not negotiable, and, by sect. 81 of the Bills of Exchange 
 Act, 1882, Huggins was not capable of giving a better 
 title to the cheque than he had himself." (Per Lord 
 Lindley, Ib., at p. 424.) When the holder is suing on the 
 cheque, this is clear. But Lord Lindley was dealing with 
 a case where the true owner was suing a virtual transferee 
 for value of the cheque for conversion of it and money had 
 and received, and the holding this crossing destructive in 
 such case of all distinction between void and voidable 
 settles a previously doubtful point. 
 
 Where a fully negotiable instrument, such as a bill, is, 
 by reason, say, of the circumstances under which it has 
 been obtained, voidable but not void, even the person who 
 has obtained it has a temporary revocable property in 
 it. If, prior to its revocation or repudiation, an innocent 
 third party takes the instrument as holder for value, or 
 even without value, subsequent revocation or repudiation 
 cannot affect his rights or fix any liability upon him. 
 (Tate v. Wilts and Dorset Bank, reported only in 
 Journal of the Institute of Bankers, vol. xx., p. 376.
 
 48 i ItOSSED CHEQUES. 
 
 CHAP, v. As to the respective states of circumstances which 
 render a negotiable instrument void or only voidable, 
 see ]<*t, i>. 187. 
 
 Voidable Bat where the voidable instrument is a cheque crossed 
 
 w-,1 Not " ^* ofc negotiable," this distinction between void and void- 
 negotiable." a ble is swept away. The revocation and repudiation 
 relate back, so to speak, to the date at which the true 
 owner temporarily parted with the property. 
 
 However many hands the cheque may have passed 
 through, the ultimate transferee, even if otherwise a holder 
 in due course, cannot, as against the true owner, assert 
 any right or title to it or the proceeds, or defend any 
 iu-tion for conversion or money had and received. The 
 true owner, on revocation, is put in precisely the same 
 position with regard to him as if he had never parted with 
 the property. Whether, and, if so, how far, this doctrine 
 extends to others than transferees ; whether it renders 
 liable for conversion or money had and received all 
 persons who have dealt with the cheque or its proceeds 
 in the interval prior to revocation in the case of a void- 
 able cheque, is a question which will be dealt with under 
 the head of " Conversion Money had and received " 
 (post, p. 141). 
 
 11 Not negfti- The words "Not negotiable" have no statutory effect 
 1 unless combined with one of the other specified crossings. 
 s,.. I Jills of Exchange Act, 1882, ss. 76 and 77.) 
 
 If written by themselves alone across a cheque it is 
 doubtful whether they would have any efficacy whatever. 
 
 Apart from these sections, " Not negotiable " usually 
 means not transferable, but if used so as to sugg -st 
 an attempted crossing, the words would probably be held 
 insufficient to indicate an intention that the cheque should 
 not be transferable, within sect. 8, sub-sect. 4, especially if 
 the words " order " or " bearer " remained on the cheque. 
 (See Meyer d Co. v. Dewir. !',,/,// ,< Co. [1891] A. C. 
 : .\atinual Bank v. Mike [1891] 1 Q. B. 435.)
 
 CROSSED CHEQUES. 49 
 
 It was suggested by Lord Brampton, in Great Western CHAP. V. 
 Railway Co. v. London and County Bank [1901] A. C. at Question of 
 p. 422, that the fact of a cheque being marked "Not af^Not* 1 ^ 1 
 negotiable " deprived a banker collecting it for a customer negotiable" 
 of the protection of sect. 82, or at least imposed some collecting 
 additional duty or precaution on him. There seems no banker ' 
 ground whatever for the suggestion, nor was it adopted in 
 Gordon v. Capital and Counties Bank [1902] 1 K. B., at 
 p. 275. 
 
 This question is more fully dealt with hereafter under 
 the head of " Collecting Banker," p. 222, post. 
 
 Words such as " account payee," " account of A. B.," Account 
 are frequently added to the crossing of a cheque. 
 
 They are in no way authorised or recognised by the particular 
 Bills of Exchange Act. Indeed, where, as is usual, they account. 
 are included within the transverse lines and incorporated 
 with the crossing, it has been suggested that they invali- 
 date the cheque, or the crossing, or are at least illegal 
 under sect. 78, which enacts " a crossing authorised by this 
 Act is a material part of the cheque ; it shall not be lawful 
 for any person to obliterate or, except as authorised by 
 this Act, to add to or alter the crossing." 
 
 This view is probably exaggerated ; certainly it has 
 never been accepted. 
 
 National Bank v. Silke [1891] 1 Q. B. 435. shows that 
 such a crossing does not prevent the cheque from being 
 transferable. In the judgments in that case the terms 
 transferable and negotiable are, unfortunately, used some- 
 what indiscriminately, and no direct authority can be 
 deduced as to the effect, if any, of such words on the 
 negotiability of the cheque. It may be noticed, however, 
 that the defence was based on the allegation that the 
 cheque had been obtained by false representations and 
 that the plaintiffs were not holders for value in due course. 
 The defendant who, it is to be assumed, proved the false 
 representations, would have been entitled thereon to 
 
 B. E
 
 CROSSED CHEQUES. 
 
 CHAP. V. judgment equally whether the cheque was not transferable 
 or only not fully negotiable ; and from the fact that the 
 Court of Appeal affirmed the judgment in favour of the 
 plaintiffs, it may be presumed that they did not consider 
 the full negotiability of the cheque to have been in any 
 way affected. 
 
 Another ground for holding this to be the correct view 
 is that, if such words had the effect of limiting the 
 negotiability of the cheque, the result attained by their 
 use would be precisely equivalent to that of the " Not 
 negotiable " crossing, and it is not permissible to attribute 
 to one set of words the effect attached by statute to 
 another set exclusively. Again, the principle that a 
 cheque must not be an embarrassing document, recognised 
 in Xatitmal Bank v. ,SV//.v, ulii *//;>., militates strongly 
 against giving effect to ambiguous words not prescribed 
 or elucidated by statute. 
 
 It has been suggested that, short of restraining the 
 negotiability of the cheque, an addition of this nature 
 puts the transferee on enquiry as to the title of his trans- 
 feror. It would be a deplorable innovation if this effect 
 had to be recognised. It would mean the introduction of 
 the doctrine of constructive notice uiih regard to negotiable 
 instruments, which Lord Herschell so strongly deprecated 
 in }'ti'jli<ino'8 Case. It would complicate and contravene 
 the simple tests of a holder in due course laid down by 
 the Hills of Exchange Act. The rule ought to be rigidly 
 upheld that if a man takes for value a bill or cheque which 
 is on the face of it complete in its recognised essentials, 
 before it is overdue, mid takes it honestly, without know- 
 ledge or suspicion of any extrinsic facts invalidating or 
 throwing doubt upon the title of the transferor, he obtains 
 an absolute and indefeasible title. 
 
 If judicial sanction were ever accorded to the conten- 
 tion that a memorandum of this sort had the effect 
 suggested, the bad habit would be extended and the
 
 CROSSED CHEQUES. 5 
 
 commercial world flooded with mongrel instruments, to the CHAP, v. 
 confusion of business and the serious detriment of the 
 cheque as part of the circulating medium. 
 
 As to the bearing of these unauthorised additions to the 
 crossing on the paying and collecting banker respectively, 
 see under the headings "Paying Crossed Cheques," post, 
 p. Ill, and " The Collecting Banker," post, p. 197. 
 
 It may, however, be briefly stated here that, subject to 
 the possible question of the duty of the paying banker 
 where these words are found together with obviously incon- 
 sistent indorsements, they probably only constitute memo- 
 randa, addressed to the collecting banker, warning him to 
 exercise caution if the cheque is paid in for collection 
 to an account other than that specified. The collecting 
 banker is the only person who is competent to deal with 
 or concerned with any particular account, and the words 
 are, therefore, presumably addressed to him only. 
 
 It is anomalous that this power should be in the hands 
 of a person such as the drawer, or a previous holder, who is 
 in no manner of relation to the collecting banker, and the 
 exercise of which is counterbalanced by no correlative safe- 
 guard to the collecting banker, as in the case of an ordinary 
 crossing. 
 
 It is curious that, though this crossing has now been 
 in use for a good many years, National Bank v. Silke 
 should be the only direct case on the point. Dicta in 
 the above sense will, however, be found in Akrokerri 
 (Atlantic) Mines, Ld. v. Economic Bank [1904] 2 K. B. 
 465. 
 
 For the question whether a crossing put on by a person 
 not authorised by the Act constitutes the instrument, for 
 any purpose, a crossed cheque, see " Paying Crossed 
 Cheques," post, p. 101. As to crossing drafts or orders 
 within the Stamp Act, 1853, s. 19, see post, p. 98. 
 
 E 2
 
 CHAPTER VI. 
 CROSSING BY COLLECTING BANKER. 
 
 CHAP. vi. THIS is dealt with by the Bills of Exchange Act, s. 77, 
 sub-as. 5, 6. 
 
 Sub-sect. 5. Where a cheque is crossed specially the 
 banker to whom it is crossed may again cross it 
 specially to another banker for collection. 
 
 Sub-sect. 6. Where an uncrossed cheque or a cinque 
 crossed generally is sent to a banker for collection, 
 he may cross it specially to himself. 
 
 The addition of the name of a banker across the face of 
 a cheque constitutes a special crossing; transverse lines 
 are not required. (Sect. 76, sub-sect. 2.) 
 
 Sect. 77, sub-sect. 5, is designed to facilitate collection of 
 cheques without infringing the, rule laid down in sect. 79, 
 that in ordinary cases a banker must not pay a cheque 
 which is crossed specially to more than one banker. 
 
 It is not uncommon for cheques to be presented for pay- 
 ment crossed to two branches, or a branch and the head 
 office, of the same bank, the cheque having been transmitted 
 from one to the other for convenience of collection. The 
 second crossing does not seem to fall exactly within either 
 sub-section. It is hardly a crossing " to another banker," 
 because for most purposes the head office and all brand K -s 
 constitute only one bank ; and it cannot be justified under 
 sub-sect. 6, inasmuch as the cheque was not, in the first 
 instance, " uncrossed or crossed generally," but specially. 
 
 But the objection seems to be met by the consideration 
 that if sub-sect. 5 does not apply, sect. 79 must be 
 read in the same sense, and the paying bank, in paying
 
 CKOSSING BY COLLECTING BANKER. 5f 
 
 such a cheque, would not be paying it crossed to two CHAP. VI. 
 bankers, but only one. 
 
 Conversely, if the bankers are to be treated as two under 
 sect. 79, the second crossing is to another banker for 
 collection within sub-sect. 5. 
 
 The system of one bank employing another for collecting One bank 
 purposes, recognised by this sub-sect. 5, suggests some a otherfor 
 curious questions : collection. 
 
 Suppose a cheque, crossed specially to bank A. is paid 
 into that bank for collection by a customer who has no 
 title to it, payee's indorsement having been forged. 
 
 Bank A. specially cross it again to bankB. for collection. 
 
 Bank B. collect it and transmit the proceeds to Bank A. 
 
 Bank A. is protected as against the true owner under 
 sect. 82. 
 
 The true owner gets hold of the paid cheque, and 
 discovers from the second crossing that it was presented 
 by bank B. 
 
 Bank B. are at least equally guilty with bank A. of con- 
 version of the cheque ; and it is difficult to see how they are 
 entitled to protection under sect. 82, inasmuch as they did 
 not receive payment for a customer, the customer being bank 
 A.'s, not theirs, and the quasi obligation to collect, which is 
 the foundation of protection, not applying in their case. 
 
 Sect. 82 only contemplates and provides for the simple 
 case of one bank receiving a crossed cheque for collection 
 from a customer and collecting the proceeds directly itself. 
 (See Gordon's Case [1902] 1 K. B., at p. 262 ; [1903] A. C., 
 at p. 246.) Sect. 77, sub-sect. 5, on the contrary, does 
 contemplate employing another bank as agent for collec- 
 tion. Bank B. would in all probability be entitled to 
 indemnity from bank A., either on the ground that it was 
 acting as agent of the latter, or on the ground that it 
 had done an act lawful in itself at the request of bank 
 A., whereby it had suffered loss, or that bank A. had 
 represented the title to the document as good or agreed to
 
 CROSSING BY COLLECTING BANKER. 
 
 indemnify bank B. if it were not. Sect. 82 only protects 
 bank A. against the true owner, not anybody else. 
 
 In the example supposed, a second special crossing has 
 been introduced, but this does not affect the main question; 
 and the same difficulty might arise in every case where the 
 collection of a crossed cheque is delegated by one bank to 
 another. 
 
 It may be presumed there is some answer to the sug- 
 gested danger, as it appears unreasonable that a bank, by 
 availing itself of a necessary and recognised course of 
 business, should indirectly incur liabilities equivalent to 
 those it was the object of sect. 82 to remove, or that the 
 bank, whose employment seems recognised by sect. 77, 
 sub-sect. 5, should not be directly protected against the true 
 owner ; but the answer is not at present obvious. Possibly 
 it lies in extending the term " customer " to bank A., by a 
 liberal interpretation of the term, assisted by the use of the 
 word " collection " in sect. 77, sub-sect. 5, and the account 
 which would necessarily exist between banks A. and B. (a). 
 
 The case of a bank transmitting a crossed cheque to 
 another branch or the head office is not open to the same 
 objections. There the whole system would be treated as 
 one bank, and the protection of sect. 82 would enure 
 through all stages of the operation of collection. 
 
 " Where an uncrossed cheque or a cheque crossed 
 generally is sent to a banker for collection, he may cross 
 it specially to himself." (Sect. 77, sub-sect. 6.) 
 
 It has been contended that this section enables a banker 
 by crossing a cheque sent to him uncrossed for collection 
 to obtain the protection of sect. 82. 
 
 It has been stated on good authority that the sub-section 
 was specially introduced into the Act for this purpose. 
 (Sec the Institute of Bankers' " Questions on Banking 
 Practice," 5th ed., question 469, and Journal of the 
 Institute of Bankers, vol. vi., p. 168.) 
 
 H .Atluiiti,-) M,,,r*. /.,/. v. Ai-,./i<i;// /' Itnuk [I'.M)4J 2 
 K. I; I'.:.. | rou-ctkm was acc-or.k-tl to the bank, notwithstanding it had 
 
 v-i :.
 
 CROSSING BY COLLECTING BANKER. 
 
 It has been suggested that the word " sent " pointed to 
 this being the true interpretation, as, in cases where the 
 cheque was " brought" by the customer, the banker could 
 get him to cross it, which he could not do when it was 
 sent, and he was therefore allowed to do it himself. 
 
 But this view of the sub-section cannot be maintained. 
 
 It was denied recognition in Bissell v. Fox, 51 L. T. N. S. 
 663, and conclusively rejected in Gordon v. London, 
 City and Midland Bank [1902], 1 K. B. 273 ; [1903] 
 A. C. 240. 
 
 Whatever may have been the intention of the Legis- 
 lature, it would seem impossible to construe the sub-section 
 as affording such protection. 
 
 Though, on another point, as stated in Chap. IV., the 
 House of Lords, in the Gordon Case, ignored the rule of 
 limiting statutory protection of bankers to risks imposed on 
 them directly or indirectly by legislation, they recognise that 
 the whole system of protection for bankers under the 
 crossed cheques sections must be regarded as confined to 
 the risks imposed upon them by the introduction of 
 crossed cheques. Such cheques necessitated recourse to a 
 banker for collection and the consequent obligation on a 
 banker to collect them. There is no such necessity in the 
 case of an uncrossed cheque, and the banker's intervention 
 for its collection is purely voluntary for the convenience of 
 the customer, stands exactly on the same footing as it did 
 prior to any of the Crossed Cheques Acts, and is entirely 
 outside the scope of either those enactments, or the crossed 
 cheques sections of the Bills of Exchange Act. (See per 
 Collins, M.E., in Gordon v. London, City and Midland 
 Bank [1902], 1 K. B., at p. 263; per Stirling, L.J., at 
 p. 280 ; per Lord Macnaghten [1903] A. C., at p. 246). 
 
 This view is strengthened by the sub-section embracing 
 not only uncrossed cheques but cheques crossed generally, 
 as to which the banker can need no additional protection. 
 
 In the Gordon Case [1902], 1 K. B., at p. 272, Collins,
 
 56 CROSSING BY COLLECTING BAXKER. 
 
 CHAP. VI. M.R., held there was no protection, on the farther ground 
 that, by taking the cheques from a wrongful holder, the 
 bank dealt with them in a manner amounting to con- 
 version before crossing them, and could not purge their 
 conversion by subsequently crossing them to themselves ; 
 but this view is somewhat inconsistent with the judg- 
 ment of the House of Lords, whose affirmance of the 
 broad proposition that sect. 82 only applies to cheques 
 already crossed when paid in, altogether deprives it of 
 importance. 
 
 What isjeffcct What the sub-section really means or does may be very 
 l. ul (t'ul. Mr. Chalmers suggests (Bills of Exchange, 
 6th ed., p. 259), in a note to it : " This is new. It may 
 protect the banker from possible frauds by his clerks 
 Collins, M.R., says, in Gordon's Case [1902] , 1 K. B., at 
 p. 272 : " This is a facility given for the purpose of 
 affording additional protection during the process of collec- 
 tion after the crossing of the cheque." In the same case, 
 Stirling, L.J., at p. 280, says: " Where a banker simply acts 
 as agent for the collection of a cheque, he may protirt 
 himself from dishonesty by crossing the cheque specially to 
 himself." In the same case, Lord Lindley says the sub- 
 section might be useful if an indorsement were forged after 
 a crossing ( > 1908J , A. C., at p. 250). 
 
 Taking first the view suggested by Stirling, L.J., and 
 Mr. Chalmers, that the object of the crossing is to protect 
 the banker himself against dishonesty, it is not very clear 
 what the danger is or how it is in any way met by the 
 crossing. 
 
 If the cheque itself were stolen by one of the banker's 
 Irrks, or by a stranger, the banker would presumably not 
 be liable, unless it were stolen by the clerk, and the banker 
 had previous reason to suspect him. (Cf. j><>*t, p. 181.) 
 
 If the money were received in the ordinary course of 
 business, and then embezzled by an employe of the 
 banker, the banker would probably be liable (.l/>/.-/.v/v*v v.
 
 CROSSING BY COLLECTING BANKER. O 
 
 Ramsays, 9 Cl. & Fin. per Lord Cottenham, at p. 848) ; HAP - VI - 
 but this liability would attach just the same, or even more 
 distinctly, if the cheque were paid in strict conformity 
 with the crossing. 
 
 Next, in no event whatever could the crossing banker have 
 any remedy against the paying banker for paying in con- 
 travention of the crossing. The crossing banker, as ex 
 Jiypothesi only collecting the cheque, is in no sense the true 
 owner, to whom alone the remedy is given by sect. 79. 
 
 Collins, M.R., does not in terms state that the sup- 
 posed protection is for the banker himself. It is 
 conceivable that he had in view protection of the true 
 owner. Probably the true owner would have a remedy 
 against the paying banker, if he paid in contravention of 
 such crossing, for any loss thereby sustained. 
 
 It seems somewhat far-fetched that the banker should 
 take the trouble thus to afford the true owner, even if he 
 be his customer, a protection the true owner has not 
 thought fit to take for himself. If the danger suggested 
 by Stirling, L.J., and Mr. Chalmers exists, it must emanate 
 from the true owner, and it would be entirely optional with 
 him which banker he went against. Combining the three 
 views, the curious result accrues that the collecting banker 
 gives the true owner an alternative remedy against the 
 paying banker if he pay contrary to the crossing, but gets 
 nothing at all himself by this operation, since, as shown 
 above, he acquires no claim or remedy over against the 
 paying banker. With respect to Lord Lindley's dictum, 
 it^is difficult to see what inducement there could be to 
 anyone to forge a further indorsement on a cheque 
 already in order for collection. 
 
 There would not even seem to be any particular need 
 for any special power authorising the banker to cross 
 specially to himself. He is a holder, being in possession 
 of a bill payable or become payable to bearer within 
 sect. 2, although he is only holder for collection ; and, as
 
 58 CROSSING BY COLLECTING BANKER. 
 
 ("HAP. VI. gnc h holder, has a right to cross it specially under 
 sect. 77 (a). It cannot make any difference that the 
 banker's name is that of his own bank. 
 
 So far as the collecting banker is concerned, the probable 
 sammary of the position seems to be as follows : The 
 sub-section declares his right to cross specially to himself, 
 which he apparently had independent of v it. If he do so 
 cross the cheque, he renders it very improbable that it 
 will be paid otherwise than in accordance with the crossing, 
 because (a) the paying banker would not know who crossed 
 it ; (b) the comity existing between bankers would prevent 
 a banker paying a cheque crossed specially to another 
 banker otherwise than to that banker ; (c) the paying 
 banker might possibly be liable to the true owner. But 
 in no event has the collecting banker any remedy against 
 the paying banker if he does pay in contravention of such 
 crossing. 
 
 "When once the idea of the collecting banker getting by 
 means of this sub-section any protection under sect. 82 
 is exploded, there can be no ground for suggesting any 
 distinction between cheques "sent" or "brought" for 
 collection ; and, by virtue of the sub-section or his right as 
 holder, the banker must be entitled to cross them specially 
 to himself, by whatever means they reach his hands. 
 
 (a) So hrlcl jtfr Durham, J., in Akrokerri (Atlantic) Mine*, Ld. v. 
 fe Hunk [11K)4] 2 K. I'.. If,:,.
 
 CHAPTER VII. 
 MARKING CHEQUES. 
 
 THE object and effect of a banker's marking cheques at CHAP. VII. 
 the instance of the customer has been stated by the ffr&Tkin at 
 
 Privy Council to be to further the ready acceptance of the instance of 
 instrument by affording evidence on the face of it that it 
 is drawn in good faith, and thg.t there are funds sufficient 
 and available to meet it, and as adding the credit of the 
 drawee bank to that of the drawer., (Gaden v. Neiv- 
 foundland Savings Bank [1899] A. C. 281 ; Imperial 
 Bank of Canada v. Bank of Hamilton [1903] A. C. 49.) 
 
 But it must be remembered that both of these cases 
 were appeals from colonies, where the law as to marking or 
 certification of cheques cannot be assumed to be the same 
 as in this country. (See an article, " Certification of 
 Cheques," in the Journal of the Canadian Bankers' 
 Association, vol. ix., p. 323.) 
 
 It may be taken that the marking of a cheque at the 
 instance of the customer does not, in this country, involve 
 any direct or immediate liability on the part of the banker 
 to the payee or any subsequent holder of the cheque. 
 The marking does not possess the requisite characteristics 
 of an acceptance, required by the Bills of Exchange Act. 
 In Keane v. Beard, 8 C. B., N. S. 372, it was suggested 
 that there was nothing to prevent a banker accepting a 
 cheque if so disposed, but it is never done; and in any 
 event marking is, neither in form nor effect, an accept- 
 ance of which the payee or a holder can avail himself. 
 
 Nor does such marking, at the instance of the customer,
 
 50 MARKING CHEQUES. 
 
 CHAP. VII. r ender the banker liable to the payee or bolder for money 
 received to bis use. 
 
 To constitute such liability several conditions must 
 concur. First, tbe money sougbt to be recovered must 
 bave been actually received by tbe defendant, or something 
 must bave occurred wbich is equivalent to tbe receipt of 
 money. (Prince v. Oriental Bank Corporation, 8 A. C., at 
 p. 828.) In view of tbe fact tbat a cbeque is not un 
 assignment of any specific funds (p. 71, post), and of tbe 
 limited interpretation put upon tbe process of marking in 
 tbe cases above quoted, it may be strongly doubted wbetber 
 tbe request to mark, and tbe banker's compliance \\ it h tbat 
 request, amount even to anytbing equivalent to tbe receipt 
 of money for the specific purpose of meeting tbe cbeque. 
 But, assuming it does, tbe second condition must be 
 fulfilled. There must be an acknowledgment to, if not a 
 contract with, the specific person who is plaintiff in the 
 action, tbat tbe money has been received for his use or is 
 held at bis disposal. " There are many cases which 
 establish that no action for money had and received will 
 lie against a banker or agent in respect of funds wbich bis 
 principal has ordered him to pay to any person, at tbe suit 
 of the person in whose favour the order is made, where the 
 banker or agent has not assented to the order and communi- 
 cated his assent to the plaintiff." (Per Tindal, C.J., in 
 Wancick v. lingers, 5 M. & G. 840, at p. 874 ; see also 
 Malcolm v. Scott, 5 Ex. 601.) 
 
 Tbe intimation, if any, conveyed by tbe marking of a 
 cheque is far too vague and indeterminate to operate as 
 such admission. 
 
 In so far as any representation is involved in tbe matter, 
 it might be a question whether it were not made by the 
 customer in banding over the cbeque rather than by tbe 
 banker in marking it. It might fairly be argued that the 
 banker only certifies, as between himself and his customer, 
 to an existing fact bearing on the state of accounts
 
 MARKING CHEQUES. 61 
 
 between them, viz. that the cheque is drawn in good faith, CHAP. VII 
 on funds at that time sufficient to meet it ; much in the 
 same way as a customer might get his bank book made up 
 to date in order to afford evidence of the balance at his 
 disposal. Following this, it might be contended that the 
 representation to the payee or subsequent holder lies in < 
 
 the use made by the customer of the intimation conveyed 
 by the marking, when he issues the cheque ; as if at the 
 same time he showed his pass book as evidence of the 
 balance to his credit. 
 
 The stronger argument, however, is that the admission 
 or acknowledgment, if any, is not made to any definite 
 ascertained person, so as to qualify him for plaintiff in the 
 action. The cheque may be negotiated by the payee ; even 
 if, at the time of marking, it purported to be payable to 
 him only, it would still be within the power of the drawer 
 to remove this restriction before issue. The case falls, 
 therefore, altogether outside the principles above laid 
 down. 
 
 Besides all this, there is the weighty consideration that 
 if such effect were accorded to the marking of a cheque, it 
 would make it tantamount to an acceptance by the Banker,, 
 a character from which, as above stated, it is debarred. 
 
 It is therefore conceived that the expression " adding 
 the credit of the bank to that of the drawer," used by the 
 Privy Council in the cases referred to, if applicable at all 
 in English law, must not be understood to import any 
 liability on the part of the banker to the holder of a marked 
 cheque. There certainly appears to be no instance of a 
 holder having recovered against a banker on a marked 
 cheque in this country. 
 
 If the marked cheque were brought to the bank by the 
 payee or a holder, and the bank were to undertake to pay 
 the specific person who brought it, or admit that they held 
 the money for his use, such admission or promise would 
 seem to be sufficient to bind the bank and obviate any
 
 : 
 
 1. I'.. 1 II 
 
 _ :,_- :- 
 
 : 
 
 -. - _ :: 
 
 ... .. . ..,- v_ _.. : 
 
 - .-._ -. 
 
 
 
 _
 
 
 - - 
 
 : _ _- _- _ - 
 
 _L: 
 
 j 
 
 ._ 
 
 ~- ; - .--:_--
 
 54 MAKKIXC, I'HKQfES. 
 
 CHAP. VII. court would infallibly decline to recognise as payment an 
 operation expressly designed to give currency to a cheque 
 and performed before its issue. 
 
 It would seem that in England the practice, common in 
 America, of the payee or holder bringing a cheque to the 
 drawee bank and getting it marked is practically unknown. 
 If in any case it were adopted, the results would seem to 
 be as follows : It would not amount to an acceptance, so 
 the banker could not be sued on the cheque. There has 
 been no payment in by the customer to meet the particular 
 cheque nor any appropriation equivalent thereto, but 
 possibly the marking might be held to amount to a repre- 
 sentation that monies had been lodged to meet the cheque. 
 There is no distinct admission to any determinate specific 
 person, unless it be the holder, that any money is held for 
 his use. But seeing that the action is the banker's own, with- 
 out any intervention of the customer, it might well be that 
 a court would interpret the transaction somewhat strongly 
 against the banker, and would hold that there was in effect 
 a sufficient representation and admission to the holder to 
 entitle him to sue the banker for money received to his use. 
 And it would seem clear that, as against another banker 
 who presented the cheque, the banker who marked it 
 would be bound by the implied undertaking or promise to 
 pay. The banker into whose hands it came could have no 
 means of telling at whose instance it WHS marked, nor 
 indeed does the question concern him in any way ; all he 
 looks to is the fact that it is marked by a banker. 
 
 But, unlike the case where the cheque is marked at the 
 instance of the customer, there could be no question but 
 that the customer could effectually countermand payment 
 of the cheque and refuse to be debited with it if paid con- 
 trary to his orders. The customer has done nothing to 
 curtail his right to countermand payment under sect. 75, 
 and any obligation undertaken by the banker is on his 
 own initiative, not that of the customer.
 
 MARKING CHEQUES. 65 
 
 The customer might even contend with considerable CHAP. VII. 
 show of plausibility that his liability on the cheque to the 
 holder was discharged by the latter's having accepted the 
 liability of the banker in lieu thereof by way of novation, 
 a view which has obtained a large measure of support in 
 America. 
 
 American decisions on the point would, however, have 
 little or no weight in an English case, owing to the laxer 
 rules as to acceptance obtaining in that country and the 
 consequently greater importance and efficacy attaching 
 there to the certification of a cheque. 
 
 B.
 
 ( 66 ) 
 
 CHAPTER VIII. 
 THE PAYING BANKER. 
 
 THE expression " the paying banker " is a convenient one 
 to denote the hanker in his relation to cheques drawn on 
 him by the customer, more especially when it is desired 
 to consider his position, as compared with that of the 
 " collecting banker," hereinafter dealt with. 
 
 The expression is also applicable to the banker with 
 regard to bills domiciled with him by the customer for pay- 
 ment, usually by their being accepted payable at the bank. 
 
 With regard to cheques, the paying banker's main 
 obligation is that he is bound to pay cheques drawn on him 
 by a customer in legal form, provided he has in his hands 
 at the time funds of the customer sufficient and available 
 for the purpose. 
 
 Such funds are in reality only represented by the unin- 
 cumbered debt from the banker to the customer, otherwise 
 the ascertainable credit balance on current account ; but it 
 would be hypercritical to vary the accepted formula for the 
 sake of snch technical accuracy. 
 
 The obligation to pay cheques is usually spoken of as 
 an obligation superadded in the case of a banker to the 
 relation of debtor and creditor. (Foley v. Hill, 2 H. of L. 
 Ca. 28.) 
 
 Whether as the foundation, the concomitant, or the 
 result of this obligation, the position of the banker with 
 regard to the customer, so far as the payment of cheques 
 is concerned, involves some at least of the incidents of 
 agent and princip*al. 
 
 With regard to domiciled bills, the relation is obviously
 
 THE PAYING BANKER. 6' 
 
 and purely that of principal and agent ; the banker is no CHAP. Vlll. 
 party whatever to the bills, he pays them simply as agent 
 of and under the instructions of the customer, either 
 receiving specific remittances for the purpose or charging 
 them in account. (See Vagliano's Case [1891] A. C. 107, 
 passim.) 
 
 With regard to cheques, the relation is not so obvious, 
 because, both in form and under the Act, the- banker is a 
 party to the bill as drawee. He is indebted to the drawer 
 and has undertaken to pay bills at sight drawn upon him. 
 All these conditions equally exist in the case of an 
 ordinary drawee not a banker, when no relation of principal 
 and agent or analogous thereto could be suggested. 
 
 Nevertheless, with regard to cheques as well as domiciled 
 bills, the relation of principal and agent, or an equivalent 
 relation, unquestionably does obtain. No other interpreta- 
 tion can be put on the expressions of the House of Lords, 
 with reference to the case" of Young y. Grote, 4 Bing. 253, 
 in Scholfield v. LondeslorougJi [1896] A. C. 514. In the 
 latter case, Lord Macnaghten, at p. 546, Lord Watson, at 
 p. 536, and Lord Davey, at p. 554, define the relation as 
 that of mandant and mandatory, that of one party who has 
 the right to command, the other who is bound to obey, only 
 differing in phraseology from that of principal and agent 
 and involving the same rights and liabilities. 
 
 The Bills of Exchange Act, s. 75, apparently recog- 
 nises the relation when it speaks of " the duty and autho- 
 rity of the banker to pay cheques drawn by a customer " 
 being revoked by death or countermand of payment. 
 
 The importance of this to bankers can hardly be over- 
 rated. 
 
 The recognition of the relationship lets in all the 
 immunities, reciprocal duties and indemnities to which 
 an agent is entitled as against his principal. 
 
 It constitutes the basis for the banker's right to require 
 that cheques be drawn with due care, so as not to expose 
 
 F2
 
 THE PAYING BANKER. 
 
 him to the risk of paying one which has been fraudulently 
 altered to a higher face value ; it justifies him in acting on 
 a reasonable interpretation of ambiguous instructions, such 
 as an irregular cheque. (Ireland v. Liringston, L. R., 5 
 H. of L. 895.) 
 
 "Whether as agent or from the superadded obligation, 
 the primary duty of the paying banker is to honour his 
 customer's cheques, provided the state of the account 
 warrants his doing so, and there is no legal reason or 
 excuse to the contrary. 
 
 Apart from mere contractual obligation, the paying 
 banker must remember that his customer's credit is 
 seriously injured by the return of one of his cheques dis- 
 honoured, and the smaller the cheque the greater tin- 
 damage to credit. (Marzctti v. W'illiainit, 1 B. & Ad. 415.) 
 Substantial damages may be given against the banker 
 without proof of actual loss to the customer. (lilin v. 
 Steward, 23 L. J., C. P. 148.) 
 
 The l>:iiikiT is bound, as before stated, to pay a cheque 
 drawn on him, provided certain conditions exist. 
 
 Tin- first of such conditions is that the cheque be a 
 legal one. 
 
 This condition is laid down by Kmaiim-l v. lloJMirts, J) 
 B. & S. 121. 
 
 One might fairly go somewhat further and say that a 
 banker is not compelled to pay a cheque unless it is 
 obviously a legal one in form ; that, whether he be regarded 
 as agent or drawee, it is no part of his duty to enter into 
 legal questions as to whether a certain document, couched 
 in abnormal terms, does or does not comply with tin- 
 definition of a cheque under the Act. 
 
 Doubtless he may be protected if he pays it on a reason- 
 able interpretation of its ambiguous meaning, and there is 
 always the presumption that the customer intended it for 
 H cheque ; but it seems part of the relation or implied 
 contract that the customer shall not impose and the banker
 
 THE PAYING BANKER. 69 
 
 not incur any extraordinary risks, but that business (; HAP. VIII. 
 between them shall be conducted on recognised ordinary 
 lines ; and a breach of this understanding on the part of 
 the customer would seem to justify the banker in refusing 
 payment of a particular cheque, provided the answer he 
 gives shows his refusal to be based on the irregular 
 character of the cheque and implies no aspersion on the 
 customer's credit. 
 
 Emanuel v. Robarts, 9 B. & S. 121, and Vagliano's 
 Case [1891] A. C. 107, appear to support the above 
 contention. 
 
 As a type of cheque which a customer is not entitled to ' Wages or 
 draw, that payable to " Wages or order " might be 
 adduced, for the reasons before stated. (See ante, p. 39.) 
 Only, with respect to this particular form of divergence, 
 the measure of recognition it has received would render it 
 unwise to object to it without previous notice to a 
 customer who had been in the habit of utilising it, 
 especially as he might set up course of business as 
 authorising it. 
 
 Payment must be made or refused at once. 
 
 The banker is not entitled to time to investigate matters Must pay or 
 as to which he may be in doubt. The dictum of Maule, J., r 
 in Holarts v. Tucker, 16 Q. B. 560, that a banker might 
 defer payment until he had satisfied himself that the 
 indorsements on a bill were genuine, was expressly dis- 
 approved by the House of Lords in Vagliano's Case 
 (ubi sup., at p. 157), Lord Macnaghten laying down that 
 a banker must pay offhand, and as a matter of course, 
 bills presented for payment, duly accepted and regular 
 and complete on the face of them; and this doctrine 
 applies with at least equal force to cheques presented for 
 payment. 
 
 When a cheque is refused payment with a request to 
 present again, it lies entirely with the holder whether he 
 will do so, or at once treat the cheque as dishonoured.
 
 THK PAYING BANKER. 
 
 on iy bearing of such modification of the refusal would 
 be on the question of the damages recoverable by the 
 customer if the refusal were not justifiable in the first 
 instance. 
 
 Nor, as before stated, can a banker discharge his 
 obligations to the customer by referring outstanding 
 cheques to another bank, except where the account has 
 been closed by the customer or by arrangement with him. 
 
 The rules of the Clearing House require that a country 
 bank dishonouring a cheque presented through it shall 
 return the cheque by first post to the bank into which it 
 was paid. (Parr'x Hank v. Ashby, 14 Times L. I{. 568.) 
 It must be returned direct, not through the London office. 
 
 Where these rules apply, a bank neglecting to adopt 
 this course will be taken to have undertaken to pay the 
 cheque. (Parr's linn]; v. Ashby, nhi anj>.} 
 
 Where a cheque is refused payment, the answer thereon 
 should, so far as consistent with truth, be framed in the 
 form least calculated to damage the customer's credit. 
 " Refer to drawer," where possible, seems preferable to 
 the naked abruptness of N/A or N/S. 
 
 Cheques should, as far as possible, be paid in the order 
 in which they are presented, if there be any question as 
 to the sufficiency of the balance to cover them all ; but, of 
 course, the fact that one cheque has been refused on the 
 ground that it overtops the available balance, would in 
 no wise justify the banker in refusing payment of a subse- 
 quently preM 'iited cheque for an amount within the balance. 
 
 The question of the banker's right to refuse payment of 
 an order cheque to a person who presents it unindorsed 
 in the character of payee, unless he consents to write his 
 name on the back, is dealt with before, at p. 86. 
 
 It has been suggested that the banker is at any rate 
 entitled to call for some evidence of identity in such cases. 
 It is somewhiit difficult to see how such a claim is con- 
 tent with the peremptory rule laid down in Vn<jlmnn$
 
 THE PAYING BANKER. / 
 
 Case, that a bill must be paid or dishonoured at once. CHAP. VII] 
 
 Possession of an unindorsed bill to order is primd facie 
 
 evidence that the person in possession of it is in fact the 
 
 payee. (Cf. per Bayley, J., in Bulkeley v. Butler, 2 
 
 B. & C., at p. 441.) At the same time, it is an obvious 
 
 hardship on the banker if he has to pay on this mere 
 
 rebuttable presumption, which may or may not represent 
 
 the true facts, and there would be nothing to protect 
 
 him should the payment prove wrong, since he did not 
 
 pay bearer or on a forged indorsement. If the holder 
 
 refused to sign, and the banker refused to pay, the 
 
 question might have to be fought out between the latter 
 
 and his customer in an action for damage to credit. The 
 
 customer has done absolutely nothing except draw a 
 
 cheque in the most ordinary form, so that no question of 
 
 estoppel, negligence, or breach of implied duty or contract 
 
 could be raised against him ; and the banker's only defence 
 
 would be that, by the custom of bankers, he was entitled to 
 
 refuse payment of an order cheque presented by the payee, 
 
 unless the latter furnished evidence of identity or signed 
 
 his name on the back, with a view to giving, and in fact 
 
 and in law giving, the banker the protection of sect. 60; 
 
 and that the refusal, being expressly based on this, and 
 
 involving no aspersion on the customer's credit, damages, 
 
 if any, should be nominal. 
 
 It is probably unnecessary to point out that neither in Holder no 
 this, nor in any other ordinary case of dishonour of a cheque, ^i I 
 has the holder any right of action against the banker. banker. 
 
 A cheque was not, before the Act, an assignment of 
 funds in the banker's hands (Hopkinson v. Forster, L. R., 
 19 Eq. 74) ; and the Bills of Exchange Act, s. 53, sub-s. 1, 
 expressly provides that in England it shall not be so. 
 
 There is no privity of contract between the banker and No privity 
 the holder. The banker is in the position of drawee, not betweerf 01 
 acceptor, inasmuch as he has not accepted the draft, banker and 
 Apart from the Bank Charter Acts, there appears no valid
 
 2 THK PAYING BANKER. 
 
 CHAP. viii. reason why a banker should not accept a cheque if the 
 holder presented it for that purpose and the hanker chose 
 to do so ; but of course, as a matter of fact, it is never 
 done, presentment for acceptance being unnecessary in 
 case of bills at sight, and such bills being usually only 
 presented once, viz., for payment. 
 
 As to marking a cheque, see " Marking Cheques," 
 ante, p. 59. 
 
 The holder's only remedy, when a cheque is dis- 
 honoured, is to give notice of dishonour to the drawer 
 and indorsers, if any, and sue them. 
 
 If money was paid in or specifically appropriated by the 
 customer to meet a particular cheque, and the banker 
 acknowledged to the holder that he held such money at his 
 disposal on presentation of the cheque, the banker would 
 then be liable to the holder ; but not on the cheque or in 
 his character as holder, but simply for money had and 
 received to his use. (War trick v. Rogers, 5 M. & G. 874.) 
 
 It is to this principle of a cheque not being an assign- 
 ment of funds that is generally attributed the undoubted 
 fact that in England a banker is not bound to pay part of 
 a cheque, when he has funds in hand, but not sufficient to 
 pay the whole amount. 
 
 It is somewhat difficult to see how, in any event, the 
 assignment of one specific sum or debt could operate as 
 an assignment of any lesser sum or debt which happens 
 to be due. It is probably more correct to base the banker's 
 right to altogether refuse payment on the fact that his 
 only contract with, or duty to, the customer is to pay a 
 cheque when he has the equivalent or a larger sum in hand, 
 and that part payment is not contemplated by or inclu<l< d 
 in such contract or duty. Part of the amount of a cheque 
 is obviously not " sufficient funds to meet it." (Carar \. 
 Inickirnrth. L. I;.. I I.\.:U8.) 
 
 It has sometimes been asked whether the holder of a 
 cheque larger in amount than the available funds is
 
 THE PAYING BANKER. 73 
 
 entitled to pay in the difference to the customer's account, CHAP. VIII. 
 and then withdraw the whole on the cheque. It is 
 difficult to see how the holder should be acquainted with the 
 state of the account, unless through the customer, in which 
 case the customer's drawing the cheque for the larger 
 amount seems unaccountable ; and though no absolute legal 
 principle appears opposed to it, the general opinion seems 
 to regard such a proceeding as suspicious and illegitimate. 
 
 It is the custom of bankers not to pay cheques which Refusing 
 are presented after a certain period has elapsed since their of^h^ques 
 ostensible date of issue. "With some banks the period is out f date - 
 six months, with others twelve. 
 
 The justification for this course rs not very obvious. 
 The difference, above alluded to, between the practice of 
 various banks makes it difficult to set up a custom of 
 bankers. Such a custom must be universal and uniform 
 among at least the bankers of a particular locality; there 
 cannot, for instance, be one custom of bankers in the City 
 and another in the West End. Nor does the custom of a 
 particular bank bind even a customer until it develops into 
 a course of business. 
 
 The practice may owe its origin to the impression that 
 the drawer of a cheque is discharged from liability if it is 
 not presented within a reasonable time after issue. 
 
 The Bills of Exchange Act is certainly not very explicit 
 on the point. Sect. 45 provides that, subject to the 
 provisions of the Act, a bill must be duly presented for 
 payment, otherwise the drawer and indorsers shall be dis- 
 charged. Sub-sect. 2 enacts : " Where a bill is payable on 
 demand, then, subject to the provisions of this Act, pre- 
 sentment must be made within a reasonable time after its 
 issue in order to render the drawer liable." . 
 
 It is only by inference from sect. 74 and by virtue of 
 the words " subject to the provisions of this Act " in 
 sect. 45, that cheques are, in ordinary cases, exempted 
 from the operation of the latter section.
 
 THE PAYING BANKER. 
 
 CUAP. VIII. 
 
 ! ..!..;-. 
 
 Aufticient and 
 available. 
 
 Sect. 74 in effect provides that where a cheque is not 
 presented within a reasonable time after issue, and the drawer 
 had, at the time it ought to have been presented, a right 
 us between him and his banker to have the cheque paid, and 
 is injured by the delay through his bankers having failed in 
 tin- interval, he is discharged to the extent of such damage. 
 
 This infers that, in the absence of such damage, the 
 drawer is not discharged by the cheque not being pre- 
 sented within a reasonable time ; and, as before stated, 
 takes cheques, so far as the drawer is concerned, out of 
 the operation of sect. 45. 
 
 Save under the conditions defined in sect. 74, the drawer 
 therefore remains liable on the cheque till the Statute of 
 Limitations has run, namely, for the period of six yeara 
 from its issue. (Laws v. Hand, 8 C. B., N. S. 442, where 
 this was laid down as the law, before the Act.) 
 
 The banker, who of course knows he has not failed in 
 the interval, would be justified in paying the cheque at any 
 period within such six years. 
 
 Bankers frequently call such cheques " stale," a term 
 more properly applied with relation to a cheque which is 
 negotiated after being, on the face of it, an unreasonable 
 time in circulation, and so is assimilated to an overdue 
 bill by sect. 86, sub-sect. 8. As to when a cheque so 
 becomes stale or overdue, see L<>n<l<n>. awl ('<*//;//// Hunk 
 v. Groomc, 8 Q. B. D. 288. In the absence of special 
 circumstances, ten days or so would probably be held the 
 limit. 
 
 Bankers might possibly assign the above-mentioned 
 practice to the principle, recognised in several cases, that 
 a cheque is intended for speedy presentation, not for pro- 
 longed negotiation. But in view of the continued liability 
 of the drawer, this principle has no legitimate application 
 nd that of limiting the period of negotiability. 
 
 The obligation of the banker to pay cheques drawn 
 on him by his customer is also subject to the condition
 
 THE PAYING BANKER. 75 
 
 that there are in his hands funds sufficient and available CHAP, vin. 
 for the purpose. (See per Parke, J., in Whitaker v. 
 Bank of England, 1 C. M. & R., at pp. 749, 750 ; 
 Marzetti v. Williams, 1 B. & Ad. 415.) 
 
 The funds must be sufficient. As before stated (ante, 
 p. 72), there is, in England, no obligation to pay part of 
 a cheque. 
 
 They must be available for the purpose. As before 
 suggested (ante, p. 6), it might be deducible from the 
 case of Healey v. Bank of New South Wales [J. C. of P. C., 
 November 28th, 1900, not reported], that a banker is 
 not absolutely estopped from disputing the right of his 
 customer to money paid in to his account. On the other 
 hand, in Gray v. Johnston, L. R., 3 H. of L. 1, at p. 12, 
 Lord Westbury protests against the idea of a banker being 
 entitled to set up the rights of a third person as against 
 those of the customer from whom he has received the 
 money. Healey v. Bank of Neiv South Wales was an 
 exceptional case, the money paid in being shown to be the 
 immediate proceeds of gross frauds committed by the 
 customer, for which he was convicted and punished; and 
 the reasonable and salutary rule is that a banker is neither 
 bound nor entitled to question the customer's right or title 
 to any money paid in. 
 
 To be available, the money must be unincumbered and 
 absolutely due to the customer. 
 
 Service of a garnishee order, founded on a judgment 
 against the customer, ties up the whole balance on current 
 account, irrespective of the relative amounts of the judg- 
 ment and the balance. (See ante, p. 5, and Rogers v. 
 Whiteley [1892] A. C. 118.) 
 
 Monies which, by virtue of the Statute of Limitations, 
 are not recoverable as a debt would not be available. 
 
 The banker's lien might entitle him to treat funds in 
 hand as not available. 
 
 He would be entitled to retain funds to meet a cheque
 
 THE PAYIXO BANKER. 
 
 CHAP. vin. which he had marked at the instance of the customer. 
 e "Marking Cheques," ante, p. 62.) 
 
 Unless precluded by agreement or course of business 
 from so doing, the banker would be entitled to combine 
 different accounts kept by the customer in his own right 
 or accounts kept at different branches, and treat only the 
 ultimate balance, if any, as available for drawing purp<> 
 (GariH-tt \. M'Ki'iran, L. R., 8 Ex. 10 ; lin<-kln<iluim v. 
 London nnil MiiUamt Hank, 12 Times L. R. 70.) 
 
 Save, possibly, in the event of the customer's bankruptcy. 
 the banker is not entitled to retain money standing to 
 current account, to meet contingent liabilities of tl it- 
 customer to him. 
 
 In J> <>ll(i ml v. />//////<?, Ryan & Moody, 271, Abbott, 
 L.C.J., sitting at A'J.SV /';/, appears to have thought the 
 banker's lien attached to securities of the customer when 
 the banker had discounted bills for, or accepted bills for the 
 accommodation of, the customer. He says: "It appears 
 that, at this time, the bankrupts had discounted bills tor T. 
 to a large amount, which were still unpaid; that tli. v h;i<l 
 also accepted a bill for his accommodation to a laiye 
 amount, not then due; and I think that a banker who 
 stands in this relation to a customer has a lien upon any 
 securities of that customer which may for any purpose 
 placed in 1m hands, and he has a right to retain them to 
 countervail the liabilities he has so incurred on his behalf 
 till those liabilities have ceased." As the banker's lit n 
 extends to money (Mi*a v. Currie, 1 A. C., at p. /ir.in, 
 this has been fited as an authority that bankers an- 
 < ntitled to retain monies to meet liabilities of this 
 sort, and treat sm-li monies as not available for drawing 
 against. 
 
 This f.-ist- was quoted to the Exchequer Chainher in 
 Burnitt v. Jirninlno. C. M. A (i., at p. Gr>4, when l...nl 
 Denman, i ..I., -,aid of it: " Some of the cases arising out 
 of Marsh's bankruptcy (of which it was one) are
 
 THE PAYING BANKER. 77 
 
 correctly reported" ; and Parke, B., said : " The whole of CHAP.VIII. 
 that case depends upon what is meant by depositing for 
 safe custody." It was again quoted in argument in the 
 same case in the House of Lords, 12 Cl. & Fin., at p. 798, 
 but no special remark made upon it. 
 
 In Agra and Masterman's Bank v. Hoffman, 34 L.J., Ch. 
 285, Stuart, V.-C., granted an injunction restraining a 
 customer from suing his bankers at law for damages for 
 dishonouring his cheques, the bank contending that they 
 had rightly retained the funds to answer the liability 
 which might fall on them in respect of bills discounted by 
 them for the customer, but not yet due. The injunction 
 was granted mainh" on the ground that there was a ques- 
 tion to be tried in equity, and is not conclusive of the 
 right ; moreover, as appears from a foot-note, the matter 
 was subsequently compromised on terms which included 
 the payment by the bank of the customer's costs of the 
 action at law and the suit in equity, as between solicitor' 
 and client, which is, at least, significant. 
 
 In Jeffryes v. Agra and Masterman's Bank, L. R., 2 
 Eq. 674, the last-mentioned case was cited to Sir W. Page 
 Wood, V.-C. In his judgment he said: "The bankers 
 say, further, that there were very heavy liabilities out- 
 standing, and that they would have retained when they 
 became due these balances as against those outstanding 
 bills. I apprehend they never could do that in any court 
 of law, and of course there is no equity of the kind ; you 
 cannot retain a sum of money which is actually due against 
 a sum of money which is only becoming due at a future 
 time." 
 
 The matter was, however, finally set at rest in 1874 by 
 the case of Boicen v. Foreign and Colonial Gas Company, 
 22 W. R. 740. 
 
 There the customer had a credit balance on current 
 account of 751. The bank had discounted bills for him,, 
 not yet due, for 500. A garnishee order having been
 
 78 THE PAYING BANKER. 
 
 CHAP. VI II. served 011 the baiik, based on a judgment against the 
 customer, the bank claimed to retain 500 of the current 
 account against the liability on the bills, alleging that they 
 had a lien to that extent. The court held they had not. 
 Lord Coleridge, C.J., said that here there was a cash 
 balance ; and the fact that the bankers had discounted bills 
 for their customer which were still running was no ground 
 for an implied agreement for a lien on the balance, indeed 
 it would be contrary to the object of such advances. 
 
 Brett, J., said that there was no evidence of custom or 
 anything from which the court could imply an agreement. 
 It would be quite contrary to the regular course of such 
 advances to adopt the view of the bank. A customer asks 
 for discount in order to increase his drawing account. It 
 was said the bank had a lien on the cash balance. If that 
 was the case, there would be no use in discounting the bills. 
 
 Grove, J., said there was a great difference between the 
 case of securities, as in the authorities cited (which included 
 Holland v. Bygrave), and a drawing account. 
 
 It may therefore be taken as conclusively settled that 
 the fact of a banker's having discounted for a customer 
 bills still maturing gives him no right to retain any of the 
 current account to answer the contingent liability on those 
 bills, and on that ground dishonour cheques drawn against 
 such current account. 
 
 It is possibly different where the customer becomes 
 bankrupt. 
 
 The liability of an indorser on a current bill is a 
 provable debt in his bankruptcy, and any provable debt 
 may be utilised for set-off as a mutual dealing or credit 
 under sect. 88 of the Bankruptcy Act, 1888. The holder 
 is not obliged to value his security, except for purposes of 
 voting under schedule 1, rule 11, of the same Act. The 
 liability appears just on the limit of what is suHirimt to 
 establish a mutual dealing or credit, but apparently falls 
 within the boundary; and the hankrr would, on bankruptcy
 
 THE PAYING BANKER. 79 
 
 of the customer, be entitled to retain the whole or a portion CHAP. vill. 
 of the current account equivalent to the amount of the 
 bill. But the result is by virtue of the Act, not of lien. 
 <Cf. Alsager v. Currie, 12 M. & W. 751.) 
 
 Money is not available immediately it is paid in. 
 
 Even in the case of notes or gold, a sufficient period When 
 must be allowed to elapse, before drawing against it, to 
 enable the bank to carry out the necessary book,-keeping 
 operations. (Marzetti v. Williams, 1 B. & Ad. 415.) But 
 as soon as it is definitely credited, it is available. (Seeder 
 Lord Lindley, as hereafter mentioned.) 
 
 With regard to cheques, the rule used, at any rate, to 
 be that they were not available until, in addition to the 
 interval reasonably required for book-keeping entries, the 
 necessary period had elapsed for the cheques to be cleared, 
 according to their respective nature, whether town or country. 
 
 Where the old practice of entering cheques as such, and 
 of distinguishing between town and country cheques, is 
 maintained, or where the customer is notified, by memo- 
 randum in his pass book or paying-in slip, that cheques 
 will not be available until cleared or until the expiration of 
 fixed periods, the old rule probably holds good ; and in the 
 absence of any course of business entitling a particular 
 customer to draw against uncleared cheques, cheques so 
 drawn might be returned with the answer " Effects not 
 cleared." 
 
 Where the cheques have at once been credited as cash, 
 and where there are no counteracting stipulations affecting 
 the customer, the right to return cheques on the ground 
 that the assets have not. been cleared is, in the light of 
 the judgment of the House of Lords in Gordon's Case 
 ([1903] A. C. 240), more than doubtful. 
 
 Lord Lindley says, at p. 249 : "It must never be 
 forgotten that the moment a bank places money to its 
 customer's credit, the customer is entitled to draw upon it, 
 unless something occurs to deprive him of that right."
 
 80 THE PAYING I'.ANKKK. 
 
 < MAI viu. n j g obvious from the context and the whole tenor of 
 the judgment that this dictum includes the crediting of 
 uncleared cheques as cash, to which indeed it was primarily 
 directed. 
 
 The right of the customer to draw against cheques 
 BO credited is, in fact, only the logical consequence 
 of the position of holders for value which the bank acquires 
 by such crediting. The value cannot consist in the mere 
 fiitry in the bank books ; it lies in the right thereby con- 
 ferred to immediately draw against the amount ; in the fact 
 that the credit is an actual, available one. The customer is 
 entitled to the full benefit of the consideration for which 
 he parted with the cheque.
 
 ( 81 ) 
 
 CHAPTER IX. 
 PAYING BEAKER CHEQUES. 
 
 " A BILL is payable to bearer which is expressed to be so 
 payable, or on which the only or last indorsement is an 
 indorsement in blank." (Bills of Exchange Act, s. 3, 
 sub-s. 3.) 
 
 By sect. 2, "Bearer" is denned as "the person in 
 possession of a bill or note which is payable to bearer," 
 and " Holder " includes the bearer of a bill or note. 
 
 Sect. 59 provides that a bill is discharged by payment 
 in due course by or on behalf of the drawee or acceptor, 
 and defines payment in due course as payment made at 
 or after the maturity of the bill to the holder thereof, in 
 good faith and without notice that his title to the bill is 
 defective. 
 
 It is somewhat curious that these last words do not 
 specifically include the case of no title as well as defective 
 title in the holder, as, for instance, is the case in sect. 82. 
 Possibly they are unnecessary ; notice that a man had 
 no title would include notice of a defective title, on the 
 principle of the greater including the less ; whereas 
 there is good reason for specifying both in sect. 82. 
 The case cited by Mr. Chalmers (Bills of Exchange, 6th 
 ed., p. 205), as authority that payment of a stolen bearer 
 bill to the thief is a good discharge ( Smith v. Sheppard, 
 cited Chitty on Bills, llth ed., p. 278, .), is not a satis- 
 factory one, the case being nowhere reported, the facts being 
 that the bill was lost not stolen, and the reason assigned 
 being that it was the owner's fault that he lost it. 
 
 As shown above, however, the definition of holder in 
 
 B. , G
 
 PAYING BEARER CHEQUES. 
 
 the Act merely requires " possession," without in any 
 way limiting it to lawful possession, or involving any 
 question of title, and therefore payment to the person in 
 possession, even though he he the actual thief, operates as a 
 discharge of the bill. Mr. Chalmers (6th ed., p. 124), says 
 that " a defective title must be distinguished from entire 
 absence of title. A person who claims under a forgery has 
 no title and can give none. He is not the ' holder ' of 
 the instrument." It is submitted that these words only 
 apply to the specific case of forged indorsement, which is 
 matter of special enactment under sect. 24. It would not 
 be true to say that a person who has no title cannot be the 
 " holder." Even where there is a forged indorsement, a 
 man may be, for some purposes, a holder in due course. 
 See sect. 55, sub-sect. 2 (b). 
 
 With regard to bearer cheques, the matter is made quite 
 clear by the judgment in Charles v. Blackwett, 2 C. P. D., 
 at p. 158. Speaking of lost or stolen bearer cheques, the 
 court say: " The matter is equally clear on principle, for 
 where the banker paid the bearer of such a cheque, he 
 obeyed the mandate of his customer, the drawer, and could 
 charge him accordingly ; while, on the other hand, the 
 customer was protected, and this even though the bearer 
 so paid had no property in the cheque, but was himself a 
 thief who had stolen it. The drawer was entitled to say 
 to the payee, ' I gave you an instrument which you were 
 willing to take in satisfaction of your debt if the drawee paid 
 the amount to the bearer, and this the drawee has done. ' ' 
 
 Thus payment in good faith by the banker of an uncrossed 
 bearer cheque to anyone presenting it discharges not only 
 the banker, but, if the cheque had reached the payee, dis- 
 charges the drawer, both as to cheque and consideration. 
 
 The question has sometimes been suggested whether. 
 notwithstanding the discharge of the cheque, the true 
 owner could not, in this mid similar cases, maintain an 
 action against the banker for trover or conversion. A
 
 PAYING BEARER CHEQUES. 
 
 thief cannot acquire property in the cheque by stealing it ; 
 no one can acquire a valid title under a forged indorse- 
 ment. The bank who pay a cheque to such a holder have 
 dealt with the property in a way inconsistent with the 
 rights of the true owner in whom the property and right of 
 possession remain vested. Further it is said that the bank 
 cannot set up, that, being discharged, the cheque is a 
 valueless article and the damages nominal, inasmuch as it 
 was their own act that made it so. 
 
 But in Charles v. Blackwell, 1 C. P. D. 548, the 
 Divisional Court (Lord Coleridge, C.J., Brett and Lindley, 
 JJ.) distinctly held that if the cheque was properly paid, 
 neither trover nor conversion would lie against the banker ; 
 and the Court of Appeal, 2 C. P. D. 151, adopted this 
 view (see p. 163), taking the additional ground that on 
 payment the property vested in the banker. 
 
 It may be taken, then, that wherever a banker pays 
 a cheque without contravening any statutory enact- 
 ment, and in such a manner that, either at common 
 law or by virtue of any statute, tbat payment, though made 
 to an unlawful holder, operates as a discharge of the 
 cheque, he is under no liability to the true' owner for 
 conversion or trover. 
 
 If he pays contrary to statutory enactment, if, for 
 instance, he pays a crossed cheque contrary to the cross- 
 ing, or a cheque with a forged indorsement contrary to the 
 ordinary course of business, then his liability to the true 
 owner remains, apart even from any express right given to 
 the true owner by statute ; and it would seem that the 
 liability would be the full face value of the cheque, notwith- 
 standing it might have been discharged, as by payment 
 to a wrongful holder of a bearer cheque. See per Black- 
 burn, J., in Smith v. Union Bank of London, L. R., 10 
 Q. B. 291, at which date [1875] there was no statutory 
 right given to the true owner of a crossed cheque against a 
 banker paying it in contravention of the crossing ; while
 
 4 PAYING BEARER CHEQUES. 
 
 I'M A !. ix. gect. 19 of the Stamp Act, 1858, contained no provision 
 limiting the protection for payment on forged indorsement 
 to payment in the ordinary course of business, as does 
 sect. 60 of the Bills of Exchange Act, 1882. 
 
 The remarks of Blackburn, J., are couched in wide terms, 
 but they must be confined to cases where the payment is 
 made in contravention of some statutory provision, or in 
 such a manner as to preclude it from being a statutory 
 discharge. (See Smith v. Union Bank of London, in 
 Court of Appeal, 1 Q. B. D., at p. 85.) 
 
 The protection referred to above only extends to the 
 paying banker, not to the collecting banker. As to 
 the liabilities of the latter, see " Collecting Banker," 
 post, pp. 188 sqq.
 
 CHAPTEK X. 
 PAYING ORDER CHEQUES. 
 
 THE principle to be borne in mind in dealing with this CHAP. X. 
 
 subject is that, in ordinary cases, the banker cannot charge 
 
 his customer with any money with which he has parted 
 
 without that customer's authority. If the customer says 
 
 " Pay bearer," and the banker pays the bearer, that is a 
 
 good payment as against the customer, though the bearer 
 
 was not himself entitled to receive the money. But when 
 
 the customer says " Pay A. B. or order," the mandate is 
 
 only fulfilled by paying eitner A. B. or some person to whom 
 
 A. B. has transferred his rights in manner authorised by 
 
 the drawer, namely by a genuine indorsement. The Bills 
 
 of Exchange Act, s. 24, precludes the possibility of 
 
 anyone acquiring title to the bill or its proceeds, or giving 
 
 a valid discharge, where a forged indorsement intervenes. 
 
 On both grounds, that of having paid contrary to 
 
 instructions, and having paid a person not entitled to give 
 
 a discharge, the banker, apart from statutory protection 
 
 or estoppel, is not in a position to debit his customer with 
 
 money paid on a cheque with a forged indorsement. 
 
 The statutory protection with regard to cheques is 
 under sect. 60 of the Bills of Exchange Act, 1882 ; with 
 regard to drafts and orders drawn on a banker, not strictly 
 falling within the definition of cheques, it is under sect. 
 19 of the Stamp Act, 1853 (16 & 17 Viet. c. 59). 
 
 As to the history of the latter enactment, and the 
 effect thereon of the decision of the House of Lords in 
 Gordon v. London, City and Midland Bank [1903] A. C. 
 240, see under " Cheques," ante, p. 24.
 
 PAYING ORDER CHEQUES. 
 
 Mr. Chalmers suggests (Bills of Exchange, 6th ed., 
 )>. 841) that so far as bills and cheques are concerned, 
 sect. 19 of the Stamp Act, 1858, is impliedly repealed by 
 sect. 24 of the Bills of Exchange Act. This view appears 
 correct, and has been followed in formulating the protec- 
 tion in the above terms, and in dealing generally with the 
 matter in question. 
 
 Reading the two enactments together, as far as possible, 
 the protection to the banker is subject to the- following 
 conditions: 
 
 The instrument must be a bill, draft or order drawn on 
 a banker, payable to order on demand. 
 
 The document must be a bill, draft or order. 
 
 The latitude of interpretation involved in the decision 
 in Gordon's Case renders it difficult to fix any definite 
 limitations on the documents which may fall within the 
 extended scope of this definition. 
 
 A document may not be a cheque or bill, for want of 
 some essential element, but the words "draft or order,'' of 
 which there is no authoritative definition, are there to 
 supply the deficiency. 
 
 The document must be drawn on a banker. By the 
 decision in <ior<1oti' Case this does not necessarily involve 
 it- bring drawn by a customer. It may be drawn by a 
 branch of a bank on another branch or the head office. 
 This condition, however, absolutely excludes bills accepted 
 payable at a banker's or domiciled with him. Such hills, 
 even if payable on demand and to order, are not drawn on 
 a banker. 
 
 The document must be payable to order. This serins 
 to involve the necessity of the document being negotiable. 
 A document cannot be payable to order unless any indorsee 
 bus a right to sue on it by virtue of his own independent 
 title, \\hich is the essence of negotiability. 
 
 This is further emphasi/ed by the ivfeivncc to the 
 indorsement ol the payee and subsequent iudorsers. it any,
 
 PAYING ORDER CHEQUES. 
 
 which occurs in both enactments, words only applicable to CHAP. X. 
 an instrument negotiable by indorsement. 
 
 The instrument in Gordon's Case, though not a bill, 
 because drawer and drawee were the same person, was yet 
 one which, both at common law (Miller v. Thomson, 
 3 M. & G. 576) and under the Bills of Exchange Act, 
 s. 5, sub-s. 2, must be treated as negotiable, either as a 
 bill of exchange or as a promissory note. 
 
 The Gordon decision, therefore, does not militate against 
 the restriction that the instrument must be negotiable. 
 
 Anything which would be fatal to the character of a 
 document as a bill in the hands of a holder in due course is 
 sufficient to exclude it from protection under either section. 
 
 The instrument must, therefore, be unconditional, in the 
 sense in which the term is used in the Bills of Exchange Act, 
 which, in this respect, merely reproduces pre-existing law. 
 
 This requirement would exclude all documents requiring Documents 
 the signature of a specific receipt as a condition of pay- 
 ment, the sort of documents covered by sect. 17 of the 
 Revenue Act, 1883 ; apart from the special provision in 
 that section that such documents are not negotiable 
 instruments. (See ante, p. 30.) 
 
 It would exclude all instruments ordering payment out 
 of a particular fund. (Bills of Exchange Act, s. 3, sub-s. 3. 
 
 The requirement that the document shall be payable to 
 order has another result. 
 
 If it is a bill within the Bills of Exchange Act, it is 
 sufficient if it be expressed to be payable to order of a 
 specified person, or to him or his order, or to him, without 
 words prohibiting transfer. (Sect. 8.) 
 
 But if protection has to be sought under sect. 19 of the 
 Stamp Act, 1853, it can only be obtained where the draft 
 or order is expressly made payable to the order of a 
 specified person^or to him or his order. 
 
 Sect. 8 of the Bills of Exchange Act only applies to 
 documents which are bills within its meaning, leaving
 
 PAYING ORDER CHEQUES. 
 
 other drafts and orders still regulated by the pre-existing 
 law, which required the express addition of the word 
 " order " to render the instrument transferable or payable 
 to order. 
 
 The document must be payable on demand. 
 
 This would, apart from any question of negotiability, 
 presumably exclude all documents which, though stated 
 to be payable on demand, contained a restriction that they 
 would only be paid if presented within a specified period, 
 as to which see ante, p. 32. 
 
 It would not exclude a post-dated cheque, though known 
 to be such, if presented on or after the ostensible date ; 
 the legality of such instruments being fully established by 
 the Bills of Exchange Act, s. 18, sub-s. 2, they must 
 clearly be treated as payable on demand. 
 
 In treating further of the protection of the paying 
 banker against forged indorsements, it becomes necessary 
 to deal separately with sect. 60 of the Bills of Exchange 
 Act and sect. 19 of the Stamp Act, 1858, by reason of the 
 divergence of their terms. 
 
 Take sect. 60, first, as of the more general application. 
 It must be borne in mind that this section only refers to 
 documents which are properly bills or cheques within 
 the meaning of the Bills of Exchange Act. It provides 
 that, to entitle him to its protection, the banker must pay 
 the cheque " in good faith and in the ordinary course of 
 business." 
 
 Payment need not be by the absolute transfer of mon. \ 
 or money's worth to the holder. The word " payment " in 
 the Act is largely interpreted. (See Glasscock v. Bull a, 
 24 Q. B. D., at p. 16.) 
 
 Where a cheque drawn on one branch of a bank \\.is 
 paid in at another and appeared as an item in balancing 
 the accounts between the two branches, the branch on 
 which it was drawn was held to have paid it within the 
 meaning of sect. 60. (lli**,-ll \. /'.,-, 58 L. T., N. s. 1
 
 PAYING ORDER CHEQUES. 89 
 
 Gordon v. London, City and Midland Bank [1902] 
 1 K. B. 242.) 
 
 But it may be safely asserted that the intimation that 
 the cheque would be paid, known as notifying its fate, in 
 answer to an inquiry by another banker, would not be 
 treated as payment, though ofte'h regarded as equivalent 
 thereto by bankers. If, after giving such answer, the 
 paying banker became cognisant of facts tending to throw 
 doubt on the genuineness of the indorsement, he would 
 subsequently pay the cheque at his peril. The only light 
 in which courts regard the question and answer as to the 
 fate of a cheque is that of a precaution taken by the 
 collecting banker exclusively in his own interest and for 
 his own benefit. (See, e.g., Bissellv. Fox, 51 L. T., N. S. 
 663 ; 53 L. T., N. S. 193 ; Ogden v. Benas, L. K., 9 
 C. P., at p. 516.) 
 
 The payment must be " in good faith and in the ordinary Must be in 
 course of business." (Bills of Exchange Act, s. 60.) ?o5taM 
 
 As to payment where the cheque is presented by a course of 
 person in the character of payee, who writes the payee's 
 name on the back at the request of the bank, see 
 ante, p. 37. 
 
 It is to be noticed that this sect. 60 does not, as does 
 sect. 80, with regard to a banker paying, and sect. 82 with 
 regard to the banker collecting, a crossed cheque, make 
 the absence of negligence a condition of the protection. 
 Negligence is not incompatible with good faith. Bills 
 of Exchange Act, s. 90 : "A thing is done in good faith 
 within the Act if it is done honestly, whether it be done 
 negligently or not." This sect. 90 was presumably 
 inserted to set at rest doubts which were at one time 
 entertained as to whether negligence on the part of the 
 transferee of a negotiable instrument was sufficient to affect- 
 him with equities^hereon ; but it is general in its terms, 
 and the banker is entitled to any benefit derivable from it, 
 save in so far as its effect is cut down by the other requisite
 
 PAYING ORDER CHEQUES. 
 
 x qualification, viz., that the payment must be in the ordinary 
 course of business. (Sect. 60.) 
 
 Negligence may of course be BO gross as to be evidence 
 of want of good faith, but that is not a principle likely to 
 be applicable in the case of a banker. 
 
 In many cases a negligent payment would also be one not 
 in the usual course of business, but iu "others the distinction 
 might be material. A banker might fairly contend that, 
 being compelled, under the rule laid down in I'agliano's 
 < </xc, to pay or dishonour at once, nut*-, p. 69, he is acting 
 in the ordinary course of business when he adopts the 
 former course, and that it is not open to the customer or 
 true owner to raise any question of negligence. Lord 
 Halsbury's remarks, quoted post, p. 92, cannot, in face of 
 that rule, to which he had practically assented, imply that 
 it is the ordinary course of business for a banker to with- 
 hold payment pending inquiry. As the context shows, 
 Lord Halsbury was dealing with the contention that the 
 luink, by paying large bills over the counter, had acted in 
 an unusual and therefore negligent manner, and his dictum 
 really refers to what bankers were likely to do, on their 
 own responsibility and at their own risk, in extreme cases. 
 
 The usual course of business is a matter on which 
 bankers are best qualified to judge, and courts would be 
 largely influenced by the evidence of persons experienced 
 in banking on such questions. Some, of course, a court 
 would decide on statutory grounds alone. Payment of a 
 crossed cheque in contravention of the crossing is not 
 a payment in the usual course of business as regulated by 
 the Act, and a banker so paying it could not claim the 
 protection of this section if tin- indorsement were forced, 
 apart altogether from the ground of the payment being 
 rontrary to the mandate of the customer. 
 
 " Ordinary course of business " must l>e the recognised or 
 customary course of business of the banking t -omnium: 
 1'irge, not of any particular bank or group of luniks; and
 
 PAYING ORDER CHEQUES. 91 
 
 a court while according weight to the evidence of bankers, CHAP. X. 
 might well reject anything which savoured of rashness or 
 indifference to the customer's interests. The court might 
 either decline to believe ic to be the usual course of 
 business or would import? into the section that the course 
 of business must be not only usual but reasonable. For 
 instance, a court might decline to hold that a payment 
 on special clearing, viz., to another bank direct, instead 
 of through the Clearing House, where the only reason was 
 the urgency of the person seeking payment, was a payment 
 in the usual course of business, though the question is 
 not likely to arise. If an order cheque was presented 
 unindorsed by a person posing as the payee, who at the 
 request of the bank wrote the payee's name on the 
 back, a court might hold that the subsequent payment 
 was not one in the usual course of business within the 
 section. (See further as to this, ante, p. 37.) 
 
 The cheque must purport to be indorsed by or under the 
 authority of the proper person. 
 
 Some banks seem to entertain very broad views as to Correctness of 
 the correspondence of the indorsement with the designation r 
 of the payee. Of some of the indorsements passed it 
 would be impossible to say that they "purport to 'be-">the 
 indorsement of the payee ; others may so purport, but in 
 such form that payment thereon is hardly in the ordinary 
 course of business. Other banks seem over- scrupulous 
 in returning cheques on account of utterly immaterial 
 variations or omissions. It would be futile to endeavour 
 to deal here with specific instances. A large collection 
 of examples will be found in " Questions on Banking 
 Practice," published by the Institute of Bankers, 5th ed., 
 with the opinion of the Council of the Institute on each. 
 
 There is one form of indorsement which must, however, 
 be referred to, because it is not uncommonly passed, and 
 can only be justified by the comity of bankers. A cheque 
 payable to A. B. or order is presented for payment without
 
 92 PAYING ORDER CHEQUES. 
 
 ( ' I1A|1 x any indorsement by A. 1!., tin- only indorsement being 
 "Placed to account of payee," or words to that effect, 
 signed by or on behalf of a banker. This does not even 
 purport to be the indorsement of the payee, and payment 
 thereon cannot be in the ordinary course of business. 
 
 The following quotation though, as before stated, it 
 cannot give the banker a legal right 4o postpone payment, 
 seems to indicate that, in extreme cases, ordinary course 
 of business might vary according to circumstances. In 
 Vagliano'it Case [1891] A. C., Lord Halsbury, at p. 117, 
 referring to the fact that domiciled bills of large amount 
 had been paid across the counter without inquiry, says : 
 " I do not know what is the usual course among bankers, 
 and I should doubt whether in such a matter it would 
 be possible to affirm that any particular course was 
 either usual or unusual in the sense that there is some 
 particular course to be pursued when circumstances 
 occur necessarily giving rise to suspicion. I can well 
 imagine that on a person presenting himself, whose 
 appearance and demeanour was calculated to raise a 
 suspicion that he was not likely to be entrusted with a 
 valuable document for which he was to receive payment 
 in cash, I should think it would be extremely probable 
 that, whether the document were a cheque payable to 
 bearer for a large amount, or a bill, the counter clerk 
 and banker alike would hesitate very much before making 
 payment." 
 
 procum- The protection of sect. 60 extends to an unauthorised 
 indorsement " per pro.," as well as to an ordinary forged 
 signature by way of indorsement. It was so decided with 
 reference to sect. 10 of the Stamp Act, 1858, in L'ltarli'x 
 v. lihi<-Ln;ll. -2 ('. P. D. 151 ; and the words of sect. <io 
 clearly embody this decision. 
 
 It is probably unnecessary to say that sect. ii() atlonls 
 no protection whatever to the banker where the customer's 
 signature as dm \\er is forged. A document purporting 
 
 j, , ,
 
 PAYING OKDER CHEQUES. 93 
 
 to be a cheque, but to which the drawer's signature is CHAP. X. 
 forged, is not a cheque at all, is not drawn on a banker 
 (Imperial Bank of Canada v. Bank of Hamilton [1903J 
 A. C. 49), and is outside the section altogether. (See 
 also Vagliano's Case [1891] A. C. 107 ; Orr v. Union 
 Bank of Scotland, 1 Macq., H. of L. Ca. 513.) 
 
 A banker is generally assumed to know his customer's 
 signature, while it is impossible for him to know that of 
 all persons who may indorse order cheques drawn by that 
 customer. The latter consideration has been cited as the 
 foundation of all the protection given to the banker against 
 forged indorsement, and has obviously no bearing on the 
 question of the customer's signature. (See Charles v. 
 Blackwell, 2 C. P. D. 151.) 
 
 In any case where a banker, in paying an order cheque Banker's 
 with a forged indorsement, so acts as to deprive himself double nsk - 
 of the protection of sect. 60, he would appear to stand 
 to lose the money twice. 
 
 He is not entitled to charge his customer with the 
 money paid on the forged indorsement, so he loses that. 
 
 Then he would seem to be liable to the true owner, if, 
 as he probably would be, he is a person other than the 
 customer, in trover or conversion for wrongfully, dealing 
 with the cheque, the damages for which would seem to be 
 its full face value. 
 
 Neither the property nor the right of possession is 
 divested out of the true owner by the forgery of his 
 indorsement. 
 
 The payment, therefore, was to an unlawful holder, and, 
 unless protected or operating as a discharge of the cheque, 
 constitutes a conversion. (See Smith v. Union Bank of 
 London, L. R., 10 Q. B., per Blackburn, J., at p. 296, 
 and 1 Q. B. D., at p. 35, per Lord Cairns.) 
 
 It is true that where a cheque is duly paid or discharged, 
 conversion will notTie against the banker. (Charles \. 
 Blacku-ell, 1 C. P. D. 553 555.) But to constitute payment
 
 PAYING ORDER CHEQUES. 
 
 'HAP. X. 
 
 \Vla-n pay- 
 ment on 
 
 loi _'.! 
 
 iml 'iscmcnt 
 
 on a forged indorsement payment or discharge under 
 sect. 60, it must be made strictly in accordance with the 
 terms of that section. 
 
 In any case the discharge is a purely technical and 
 exceptional one. 
 
 Sect. 59 provides that "a bill ie discharged by pay- 
 ment in due course by or on behalf of the drawee 
 or acceptor. Payment in due course means payment 
 made at or after the maturity of the bill to the holder 
 thereof, in good faith and without notice that his title 
 is defective." 
 
 By sect. 2 " holder " is defined as " the payee or 
 indorsee of a bill, or note, who is in possession of it, or the 
 bearer thereof." 
 
 Sect. 24 declares the total inefficiency of a forced 
 indorsement to convey any title or the right to give a 
 discharge. 
 
 The person in possession under a forged indorsement is, 
 therefore, neither payee, indorsee or bearer ; payment to 
 him can never be payment in due course, or operate as a 
 discharge or a valid payment, except where sect. 60 takes 
 effect, and the banker is deemed to have paid the checjiu 
 in due course. " Deemed " in this connection must be 
 read as importing the equivalent of the actual fact, and as 
 putting matters on precisely the same basis as if the pay- 
 ment had been made in the manner in which it is deemed 
 to have been made, such construction being necessary for 
 the efficacy of the section. (Cf. Hill v. East and Wctt 
 Iinlm Dock Co., 9 A. C. 448.) 
 
 The apparent possibility of an exception to the absolute 
 inefficiency of a forged indorsement to constitute a holder, 
 arising from the application of the words "holder in due 
 course," in sect. 55, sub-sect. 2 (b), to a person in posses- 
 sion of a bill in the course of negotiation <>f which 
 there is, ex litijtothrsi, at least one forced indorsement, is 
 explainable, and does not touch the general principle.
 
 PAYING ORDER CHEQUES. 95 
 
 The term is there only used to denote the character in CHAP. X. 
 which a person must have taken the bill, namely, in good 
 faith and for value, and before it was overdue, in order to 
 jnable him to maintain a right of recourse by estoppel 
 rainst an indorser subsequent to the forged indorsement. 
 Such subsequent indorser is precluded from denying to 
 such person in possession the status of holder, so far as 
 slaiming against himself on the dishonoured or unpaid 
 >ill is concerned ; but this does not touch the main question 
 or imply that payment to such a person by drawee or 
 acceptor would be a valid discharge of the bill. 
 
 Therefore, it remains that, save where strictly in accord- 
 ance with sect. 60, payment of a cheque with a forged 
 indorsement does not constitute payment or discharge of 
 the instrument, or relieve the banker from liability to 
 conversion at the suit of the true owner. 
 
 In the case of a crossed cheque bearing a forged indorse- Crossed 
 
 ment, the banker is protected, in proper cases, both by " 
 
 sect. 80 and by sect. 60, equally against his own customer indorsement. 
 
 and against the true owner ; but inasmuch as sect. 80 limits 
 
 the protection by the requirement of good faith and the 
 
 absence of negligence on the part of the banker, it is obvious 
 
 that conduct amounting to a violation of the ordinary course 
 
 of business, within sect. 60, would, as negligence, equally 
 
 debar the banker from the benefit of sect. 80. Nor could 
 
 the banker, who paid a cheque with a forged indorsement, 
 
 contrary to the ordinary course of business, set up against 
 
 the true owner the line of defence suggested by Charles v. 
 
 Blackwell, 2 C. P. D. 151, namely, that the document, if 
 
 recovered, would be valueless, inasmuch as its subsequent 
 
 non-payment on presentation would not be dishonour, 
 
 such non-payment being on the ground only of previous 
 
 payment, effective by statute, though to the wrong person, 
 
 and that, therefore,~there was no right of recourse against 
 
 the drawer or any previous indorser. 
 
 The cheque is not discharged, because the payment was
 
 O PAYING ORDER CHEQUES. 
 
 1 IAI-. X not ii: accordance \\ith thr >rrti<m. l>m tin- tnir ( . \VIUT 
 could not sue any party, either on it or on the considera- 
 tion, until the cheque has been presented and dishonoured. 
 The true owner cannot present it, because the bankers 
 have got it, or had and parted with it ; therefore he 
 is entitled to sue them in damages for ita conversion. 
 And if 'they had to pay its face value as such damages, 
 there seems no legal ground on which they could 
 charge the amount against the customer. It would not 
 be in law payment of the cheque, or payment on the 
 cheque ; but merely damages for a wrong of the banker's 
 own, in its nature as separated from any question of 
 the drawer's relation to the cheque as if it had been an 
 assault. 
 
 Charles v. SlacktceU, 2 C. P. D. 151, seems to contem- 
 plate the possibility of the banker's returning the cheque 
 to the true owner as a means of escaping liability for con- 
 version. If the banker still had it, he might do this ; 
 the cancellation of the drawer's signature might be shown 
 to have been made under mistake (sect. 63, sub-sect. 3), 
 and the cheque might be paid on re-presentation, unless 
 stopped meantime. If it had been stopped and payment 
 were refused, the true owner might recover against the 
 drawer. Possibly thus the banker might escape the 
 second loss, but the combination of circumstances is so 
 improbable that it hardly seems worth while to follow the 
 point into further stages. 
 
 "Where the payment, although on a forged indorse- 
 ment, is strictly in accordance with sect. 60, and, if 
 the cheque is crossed, with sect. 80, the payment, 
 though, as before stated, only technically a payment in 
 due course, not only discharges the banker, but if the 
 cheque had actually or constructively reached the payee, 
 discharges the drawer from liability not only on the 
 cheque, but also on the consideration given for it. This 
 is well illustrated in Charles \. lihn-lwll, 5 C. P. D. 161.
 
 PAYING ORDER CHEQUES. 97 
 
 The payee cannot sue, either on the cheque or the con- CHAP. X. 
 
 sideration, until the cheque is dishonoured. If he had it 
 
 and presented it, true it would not be paid ; but only, as 
 
 before stated, on the ground that it had been previously 
 
 paid, which is not dishonour. The payee says, " Yes, but to 
 
 the wrong person." The drawer says " You were content to 
 
 take for your debt a document which would be discharged 
 
 if the banker paid it in accordance with existing law, and 
 
 this he has done, and you cannot complain." The same 
 
 reasoning would lie in the mouth of any indorser. 
 
 Turning now to sect. 19 of the Stamp Act, 1853, which Documents 
 regulates the protection of the banker with regard to drafts stamp Act, 
 or orders, not being cheques or bills within the Bills of 1853 > s - 1!) - 
 Exchange Act, that section does not contain any words 
 requiring the payment to be made in good faith or in 
 the ordinary course of business. It simply provides that 
 if the draft or order shall, when presented for payment, 
 purport to be indorsed by the person to whom it is drawn 
 payable, it shall be a sufficient authority to the banker 
 to pay the amount to the bearer, and it shall not be 
 incumbent on the banker to prove that any indorsement 
 was made by, or with the authority of, the 'paye,e or 
 subsequent indorsers. 
 
 It is, at any rate, clear that the payment must be made 
 in good faith. The banker could never be allowed to take 
 advantage of his own wrong, and the necessity of good 
 faith is distinctly postulated in Hare v. Copland, 13 Ir. 
 C. L. R., at p. 433, and by Blackburn, J., in Smith v. Union 
 Bank of London, L. K, 10 Q. B., at p. 296. 
 
 As to ordinary course of business, the question is not so 
 clear. No condition to this effect is included by Mr. 
 Chalmers in his " Digest of the Law relating to Bills, Notes 
 and Cheques," published before the passing of the Bills of 
 Exchange Act, or insisted on by Blackburn, J., in the 
 passage above referred to. Nor is it referred to in Charles 
 v. Blackwell, 1 C. P. D. 548; 2 C. P. D. 151. The 
 
 B. ' H
 
 98 
 
 PAYING ORDER CHEQUES. 
 
 CHAP. X. 
 
 Are they 
 susceptible 
 of crossing ? 
 
 Does the 
 
 sect inn apply 
 
 r than 
 
 inland ilraft* .' 
 
 document in the Gordon Case [1903, A. C. 240] was a draft 
 drawn by a branch bank on the head office, not, as stated 
 in some of the judgments and the head note, on another 
 branch. The issue of such drafts is a recognised means of 
 transmitting funds from abroad, and is not uncommon in 
 England. The subsequent payment might, therefore, be 
 fairly regarded as being in the ordinary course of business, 
 but the point was not raised or discussed. 
 
 From 1856 to 1882, that is, before the Bills of Exchange 
 Act and while the Crossed Cheques Acts were successively 
 in force, payment of a draft or order contrary to the cross- 
 ing deprived the banker of the protection of sect. 19 of the 
 Stamp Act, 1858. (Smith v. Union Bank of Lomloii, 
 L. II., 10 Q. B., at p. 296 ; 1 Q. B. D., at p. 35.) Each 
 of the Crossed Cheques Acts was applicable to drafts and 
 orders ; in fact, " draft or order on a banker " is the 
 definition of " cheque " in the Crossed Cheques Act, 1876. 
 
 That Act, which repealed the earlier ones, is itself repealed 
 by the Bills of Exchange Act and re-enacted with reference 
 to cheques, with the definition (sect. 73) that " a cheque 
 is a bill of exchange drawn on a banker payable on demand." 
 
 The crossed cheques sections (76 82) are made applicable 
 to dividend warrants by sect. 95, and the Revenue Act of 
 1883, s. 17, extends them to certain classes of orders on 
 bankers issued by a customer. 
 
 The doubt suggested by Lord Lindley in Gordon's Case 
 (1903, A. C. at p. 250), whether any draft or order on a 
 banker being neither a cheque, a dividend warrant, or of the 
 class comprised in sect. 17 of the Revenue Act, 1883, can 
 be effectively crossed, accordingly appears to be well founded. 
 
 In the same case (at p. 251), Lord Lindley referred to 
 the doubt expressed in several of the text-books whether 
 'ct. 19 of the Stamp Act, 1853, applies to any except 
 inland drafts or orders. Foreign bills, it is said, were not 
 subjected to any stamp duty until the following year, 1854, 
 and the section, occurring as a proviso in a Stamp Act, can
 
 PAYING ORDER CHEQUES. 
 
 only be treated as applicable to documents chargeable with 
 stamps under the Act containing it. 
 
 It is conceived that this is not so, and that the protection 
 extends to all documents falling within its terms at the 
 present day. The point is somewhat important ; Gordon's 
 Case having established that inland drafts issued by one 
 branch of a bank on another, or the head office, fall within 
 those terms, it is desirable that the protection should 
 extend to the commoner case of such drafts drawn abroad 
 on the head office in England. 
 
 The reasons for holding it does so extend are as 
 follows : 
 
 (a) The fact that the section occurs in a Stamp Act is 
 immaterial, it being perfectly general and self-contained in 
 its terms. 
 
 (&) The fact that it is couched in the form of a proviso in 
 no way prevents its being a substantive enactment. (See 
 Mattliiessen v. London and County Bank, 5 C. P. D. 7.) 
 
 (c) The fact that on the passing of the Bills of Exchange 
 Act it was intentionally left unrepealed, of which judicial 
 notice was taken in the Gordon Case, implies that it is 
 applicable to drafts and orders in use at the present -time, 
 whether originally subject to stamp duty or not. 
 
 (d) If, as stated by Lord Lindley in Gordon's Case, the 
 object of the enactment was to protect bankers against 
 the increased use of order drafts on them occasioned by the 
 reduction of the stamp duty, and if these documents fall 
 within the definition, the protection would appear all the 
 more necessary in the case of foreign drafts, which required, 
 at the time, no stamp at all. 
 
 (e) Statutes are not to be confined to conditions existing 
 at the date of their passing, if the wording is wide enough 
 to include subsequent developments. (A.-G. v. London 
 Edison Telephone Co., 6 Q. B. D. 244.) 
 
 (/) In Brown & Co. v. National Bank of England, 18 
 Times L. R. 669, Bigham, J., in the case of a draft of this 
 
 H2
 
 100 
 
 PAYING ORDER CHEQUES. 
 
 CHAP. X. 
 
 Discharge 
 under thi- 
 section. 
 
 sort drawn iu Madras oil London, expressly stated that, 
 but for the then existing ruling of the Court of Appeal in 
 Gordon 1 s Case, sub.sequentl}' reversed, he should have held 
 the document to be within this sect. 19 of the Stamp Act, 
 1853. The House of Lords, in Gordon's Case, referring 
 to this decision, do not express dissent on the ground of 
 the draft being foreign, but the question was not relevant 
 to the drafts before them, which were inland. 
 
 (g) Stat. 85 & 86 Viet. c. 44, s. 11, refers to this section, 
 and states that it " relates to the indorsement of drafts or 
 orders drawn upon bankers for the payment of money " 
 without any limitation as to their being inland drafts only. 
 
 Sect. 19 of the Stamp Act, 1858, does not, as does 
 sect. 60 of the Bills of Exchange Act, specifically provide 
 that the banker who acts within its conditions shall be 
 deemed to have paid the bill in due course, notwithstanding 
 the forged or unauthorised indorsement. 
 
 In such cases, however, the section does operate as a 
 discharge of the draft or order (Halifax Union \. JI7/<r/- 
 n-ri<iht, L. R., 10 Ex., at p. 194), with the same results as 
 are enumerated under sect. 60, ante, p. 96. 
 
 The section has full effect though the indorsement is 
 "per pro." (Charles v. Bl<-kin-U t 1 C. P. D. 548; 2 
 C. P. D. 151.)
 
 CHAPTER XI. 
 PAYING CROSSED CHEQUES. 
 
 SECT. 79 of the Bills of Exchange Act prohibits a banker CHAP, x 
 from paying Statutory 
 
 (a) A cheque crossed specially to more than one banker, P rov181 
 
 except when crossed to an agent for collection being 
 a banker, under sect. 77, sub-sect. 5, as to which 
 see ante, p. 52. 
 
 (b) A cheque crossed generally otherwise than to a 
 
 banker, or if crossed specially otherwise than to the 
 banker to whom it is crossed, or his agent for 
 collection being a banker. 
 
 It is incumbent on the paying banker to satisfy himself 
 that the second banker is the accredited agent of the first. 
 
 This section gives a remedy to the true owner against 
 the banker for any loss he may have sustained owing to 
 the cheque having been paid contrary to the provisions 
 of the section. 
 
 Sect. 80 provides that, where the banker on whom a 
 crossed cheque is drawn, in good faith and without 
 negligence pays it in accordance with the terms of the 
 preceding section, he shall be entitled to the same rights 
 and placed in the same position as if payment of the 
 cheque had been made to the true owner thereof. 
 
 A question arises under these sections, probably, how- Who may 
 ever, not aifecting >he paying banker so much as the g^mue 
 collecting banker, as to what, quoad the banker, constitutes 
 a crossed cheque. 
 
 Sect. 76 provides that " where a cheque bears across 
 its face an addition of" certain things, "that addition
 
 PAYING CROSSED CHEQUES. 
 
 constitutes a crossing, and the cheque is crossed " specially 
 or generally, as the case may be. 
 
 Sect. 77 provides that a cheque may be crossed generally 
 or specially by the drawer, or crossed or the crossing added 
 to by the holder. 
 
 Sect. 78 provides that a crossing authorised by the 
 Act is a material part of the cheque, and that it shall 
 not be lawful for any person to obliterate, or, except as 
 authorised by the Act, to add to or alter the crossing. 
 
 A holder is defined by sect. 2 as the payee or indorsee of 
 a bill who is in possession thereof, or the bearer thereof. 
 
 The question is whether, so far as the banker is con- 
 cerned, a cheque is a crossed cheque where it ostensibly 
 licurs on its face a crossing when it reaches the banker, 
 but that crossing has been put on by someone who was 
 not drawer or holder. 
 
 For instance, the person innocently in possession of 
 an open order cheque under a forged indorsement might 
 in form cross it, but he would not be within the autho- 
 risation of the Act, being neither drawer nor holder, not 
 being, in fact, indorsee. 
 
 The arguments in favour of the broad construction, viz.. 
 that, so far as the banker is concerned, any cheque is a 
 crossed cheque which, when it comes to him, purports to 
 be crossed, seem to be as follows : 
 
 (a) The words in sect. 76, "bears across its face," are 
 consistent with, and designed to include, a merely ostensible 
 ing. 
 
 (6) It is obviously impossible for the banker to knou 
 l'\ whom a crossing is put on. 
 
 (c) On any other construction, the anomaly would riisur 
 that a thief in possession of a bearer cheque could effectively 
 cross it, while an innocent person in possession under a 
 forged indorsement could not. 
 
 (d) That the prohibitions of sect. 78, and the corre- 
 sponding criminal section, Forgery Act, 1861, 24 A- !'>
 
 PAYING CROSSED CHEQUES. I 1 
 
 Viet. c. 98, s. 25, are confined to alteration of or addition CHAP. X] 
 to an existing crossing. 
 
 The opposite argument, viz., that the crossing must be 
 by the drawer or a holder would be as follows : 
 
 (a) The contiguity of sects. 76 and 77 requires that they 
 be read together, and the whole scheme of the sections is 
 based on the crossing being authorised by the Act. 
 
 (b) On any other construction sect. 77 has no meaning. 
 
 (c) Any other construction enables a mandate to be 
 imposed on the paying banker by a person not having 
 authority as customer, or derived from the customer by 
 virtue of the statute. 
 
 (d) Any other construction legitimises a material altera- 
 tion by a stranger, which would otherwise invalidate the 
 cheque. This would be extraordinary in the case of the 
 not-negotiable crossing, as there the essential character of 
 the cheque is affected. The words in sect. 81, "bears on 
 it," are equivalent to those used in sect. 76 (a). 
 
 Though sect. 80 affects to protect the banker in paying position of 
 
 crossed cheques, he does not seem to need such protection, P a yj n g 
 . . , banker, 
 
 and so this question does not vitally concern the paying 
 
 banker. So long as he does not contravene an ostensible 
 crossing, he could claim protection either under sect. 60 or 
 as having properly paid a bearer cheque. The question could 
 only arise in case of his having paid, in contravention of the 
 ostensible crossing, a cheque crossed by an unauthorised 
 person, a most improbable combination of circumstances. 
 
 For the bearing of this question on the liability of the . 
 Collecting Banker, see under that heading, post, p. 221. 
 
 If we confine " holder " to the persons defined by sect. 2, 
 it makes no difference to the paying banker whether 
 the crossing has been put on in whole or in part by 
 the drawer, who is his customer, or by some subsequent 
 holder, under the powers of sect. 77. 
 
 The banker has no means of judging by whom the 
 
 (a) In Akrokerri (Atlantic) Mines, 7xZ. v. Economic Sank [1904] 2 K. B. 465, Bigham, J., 
 treated the bank as holders with power to cross. It does not appear to have been 
 suggested that the payees were fictitious, the case being dealt with on the basis of 
 forged indorsement. But the point above discussed was not raised or decided, the 
 judgment only declaring that the power to cross is not confined to a holder for value.
 
 04 PAYING CROSSED CHEQUES. 
 
 CHAP. XI. crossing was put on, except in the case of one bank 
 crossing to another for collection ; and the statutory 
 powers render the crossing by a subsequent holder as 
 effectual as if made by the drawer. 
 
 Apart from any question of true owner, the crossing, 
 whether put on by the drawer, the payee, or any sub- 
 sequent holder under the powers of the Act, becomes part 
 of the mandate of the customer to his banker. 
 
 Those statutory powers have the effect of a delegation 
 of power by the customer to each successive holder to 
 cross the cheque or supplement the crossing in any legiti- 
 mate way on his, the customer's, behalf, and thereby 
 affect the banker. 
 
 If, therefore, a banker pays in contravention of the 
 crossing, whether as put on by his customer or as put on 
 or supplemented by the payee or a subsequent holder, he 
 is not entitled to debit his customer with the amount, even 
 though the cheque was paid to the right person, the true 
 owner. This appears somewhat unreasonable, but the autho- 
 rities are conclusive. In Smith v. Union Bank of London, 
 I Q. 13. D. 81, the customer gave the plaintiff an open 
 cheque payable to his order, in payment of a debt. The 
 plaintiff indorsed it, and crossed it to the London and 
 County Bank. While his servant was taking it to thai 
 bank, it was stolen from him, and ultimately found its 
 way to a customer of the London and Westminster Bank, 
 who took it bond /idc and for value. He paid it into the 
 London and Westminster Bank, the}' presented it to the 
 defendant bank, who paid it to them in contravention of 
 the crossing. It was held by the Court of Appeal that 
 the plaintiff was not entitled to recover, as, there being 
 no question of forged indorsement, the customer of the 
 London and Westminster Bank, who took the clmjur in 
 good faith and for value, was the true owner, and not the 
 plaintiff, and that the cheque hail in effect been paid to th< 
 right person, though through the wrong channel. In the
 
 PAYING CROSSED CHEQUES. 
 
 judgment of the court (Lord Cairns, C., Lord Coleridge, 
 C.J., Bramwell, B., and Brett, J.), it is said, at p. 35 : 
 " What, then, is the effect of the statute in enabling the 
 payee to cross the cheque ? We think the answer is 
 easy ; it imposes caution at least on the bankers. But, 
 further, by its express words it alters the mandate, and 
 the customer, the drawer, is entitled to object to being 
 charged with it, if paid contrary to his altered direction." 
 And at p. 36 : " The drawers might refuse to be debited 
 with it as having been paid contrary to their mandate as 
 altered by the statute." 
 
 So again, in Bobbett v. Pinkett, 1 Ex. D., at p. 373, 
 Bramwell, B., says : " The other difficulty in the defendant's 
 way was that the cheque had across it the name of the 
 London and County Bank, so that the defendant could 
 only effectually present it through that bank. And if, as 
 was the case, it was presented through another, the drawees 
 might have refused to pay it ; and, if they did pay, the 
 plaintiff (the customer) might have refused to recognise 
 that payment." 
 
 Amphlett, B., on p. 374, says : " It cannot be denied that 
 the crossing operated as a mandate to the drawees to pay the 
 cheque to the bankers named, and to no one else, and that 
 consequently the plaintiff might, if he was so minded, have 
 declined to allow his account to be debited with the amount 
 so paid contrary to his orders." 
 
 In this latter case, there was a forged indorsement, but 
 the rule is enunciated in general terms, without reference 
 to that particular incident. It may be further noted that 
 the proviso to sect. 79, enacting, as it does, that in certain 
 cases a payment contrary to the crossing shall not be ques- 
 tioned, implies that, save in those specified cases, it may be. 
 Payment to the true owner is not included in those cases. 
 
 How far sect. 79 imposes any new burden on the Question as 
 banker or confers any fresh rights on the true owner may g c ef ^ ct f 
 be questioned.
 
 .06 PAYING CROSSED CHEQUES. 
 
 CHAP. XI. Mr. Chalmers (6th ed., p. 258) , after quoting the above case 
 of Sinitli v. 1'nion Bank of London, proceeds: " The court 
 held that the true owner had no remedy against the paying 
 bankers, because the negotiability of the cheque was not 
 affected by the crossing. To meet this difficulty, the Crossed 
 Cheques Act, 1876 (89 & 40 Viet. c. 81), was passed. 
 That enactment introduced the " Not negotiable " crossing, 
 and gave a remedy to the true owner of a crossed cheque, if 
 it was paid contrary to the crossing. (See now sects. 79 (2) 
 and 81)." Again, at p. 261, in the note to sect. 79, after 
 referring to the case of Bollx -ft \. 1'inkctt, 1 Ex. D. 868, 
 in which a cheque was stolen from the payee, his indor>i - 
 meut forged, and the cheque was paid to a person who took 
 it in good faith and for value, but paid contrary to the 
 crossing, he says : "If the cheque had been payable to bearer, 
 or had been indorsed in blank by the payee before it was 
 stolen, there would be no remedy apart from this section." 
 And, in a foot-note, he refers to Smith v. I'nion Hani- of 
 London, and adds "unless the cheque was crossed ' Not 
 negotiable.' " 
 
 Smith v. I'nion Hunk <>f London was decided in 1875, 
 and it was, no doubt, in view of that case that the Act 
 of 1876, repealed and reproduced by the Bills of Exchange 
 Act, was passed, lint the conclusion inferred by Mr. 
 Chalmers, that, given a case with the same facts as Smith 
 v. I'nion Ilnnl, oi London, viz., a bearer cheque, or an order 
 cheque with genuine indorsements, paid contrary to the 
 crossing but to a holder in due course, the statute gives some 
 person other than such holder, and whom he calls the true 
 owner, rights he did not before possess, seems erroneous. 
 
 The only person to \\hom any remedy is given \>\ 
 sect. 79 is "the true owner"; neither the 1876 Act ..r 
 the Bills of Exchange Act gives any definition of "true 
 owner " ; the marginal note to the section in the Is7<; 
 is : " Banker paving cheque contrary to provisions of A 
 to be liable to lawful owner." There cannot, at the same
 
 PAYING CROSSED CHEQUES. 107 
 
 time, be two true or lawful owners of the same cheque. CHAP. XI. 
 
 As shown by Smith v. Union Bank of London, the holder in 
 
 due course of the cheque, in that case, was the lawful owner, 
 
 the true owner. Lord Cairns, delivering the judgment of 
 
 the court, says, at p. 34 : " We must say that the holder 
 
 of the cheque, who presented it to the defendants, was the 
 
 lawful holder, entitled to retain it against the plaintiff and 
 
 all the world." The person from whom the cheque was 
 
 originally stolen ceased, therefore, to be the true owner 
 
 when the cheque was negotiated to the holder in due course, 
 
 and could have maintained no action against the banker 
 
 under the Act, any more than before it. 
 
 How the 1876 Act really obviated the difficulty raised by 
 Smith v. Union Bank of London was by the introduction of 
 the " Not negotiable " crossing. Of course, that crossing 
 did not exist at the date of Smith v. Union Bank of London, 
 though the contrary might be inferred from Mr. Chalmers' 
 foot-note ; its introduction, preventing any person from 
 acquiring a better title to the cheque than the person from 
 whom he took it, obviated the recurrence of the state of 
 affairs existent in Smith v. Union Bank of London, provided- 
 the cheque was so marked ; and secured to the person from 
 whom the cheque was stolen, or wrongfully obtained, the 
 position of sole true owner, notwithstanding it had been 
 negotiated to a bond fide holder for value. 
 
 In all probability this statutory effect of the "Not 
 negotiable" crossing, combined with the prohibition to the 
 banker to pay cheques contrary to the crossing, would 
 have been sufficient to entitle the true owner to sue the 
 banker paying contrary to the crossing, without the special 
 right conferred by sect. 79, reproducing sect. 10 of the 
 Crossed Cheques Act of 1876 ; on the principle, before laid 
 down, that a banker is only protected against conversion, 
 apart from statutory protection, when he pays in a legal 
 and proper manner, infringing no statutory prohibition or 
 injunction.
 
 PAYING CROSSED CHEQUES. 
 
 CHAP. XI. 
 
 1'rov 
 
 Nor does sect. 79 operate to give the true owner any 
 fresh remedy against the banker in other cases. If the 
 hanker pay, contrary to the crossing, a cheque with a forged 
 indorsement, he loses the protection of sect. 60, because 
 he pays, not in the ordinary course of business, and he is 
 liable to the true owner, apart from this section. If he pays 
 a bearer cheque to a wrongful holder, contrary to the 
 crossing, he is liable to the true owner, apart from tliis 
 section, because the cheque has not been duly or properly 
 paid. (See Charle v. Black well, 1 C. P. D. 548; 2 
 0. P. D., at p. 168.) 
 
 Section 79, being thus really only declaratory, cannot 
 be read so as to enlarge the rights of the true owner. 
 He must, therefore, have been the true owner, that is, 
 entitled to the property in and possession of the cheque, 
 at the date of its payment. If a cheque were issued or 
 negotiated in circumstances making it voidable, but not void, 
 and paid contrary to the crossing, prior to revocation, it is 
 conceived that the person entitled to revoke could not utilise 
 this section against the banker. (See, as to true owner, 
 p. 184, and as to void and voidable contracts, p. 186, post.) 
 
 It might be different if the cheque were marked " Not 
 negotiable." By the reference back of repudiation in such 
 cases, the payment might be regarded as having be. a 
 made to a person who had no title, and the person entitled 
 to revoke as having been, in law, true owner at the date of 
 payment. (Cf. (treat H'l-xti-rn llailicnji v. London ami 
 Count ;i haul: [1901] A. C. 414.) Mr. Chalmers' reference 
 to the non -negotiable crossing, in this connection (Bills 
 of Exchange, 6th ed., p. 261, n. 2), does not cover the c:i-< 
 of voidable title, the cheque in the instance quoted byliiin 
 having been stolen. 
 
 The proviso to sect. 79 is difficult of interpretation 
 owing to its involved and infelicitous language. 
 
 It runs, "Provided that where a cheque is present. d 
 for payment which does not at the time of presentment
 
 PAYING CROSSED CHEQUES. 109 
 
 appear to be crossed, or to have had a crossing which has CHAP. XI. 
 heen obliterated, or to have been added to, or altered 
 otherwise than as authorised by this Act," &c. 
 
 The intention of the proviso is, presumably, to protect 
 the banker who pays in conformity with the ostensible 
 crossing or absence of crossing, from liability under the 
 section to which it is the proviso. 
 
 Eeference to sect. 78, and the limitation of the pro- 
 tection in the proviso under the words, "by reason of," 
 &c., show beyond question that it is the crossing, not the 
 cheque, which is really the subject of the words, " have been 
 added to or altered." As the proviso stands, the words, 
 " or to have been added to or altered," apply primarily, if 
 not exclusively, to the cheque rather than the crossing. 
 
 The proviso ought to run thus : " Provided that where a 
 cheque is presented for payment which does not at the 
 time of presentment appear to be crossed, or to have had 
 a crossing which has been obliterated, or to bear any 
 addition to, or alteration of a crossing otherwise than as 
 authorised by this Act." 
 
 A shorter form, folloAving the terms of the protection^ 
 would be "to have had a crossing which has been obliterated, 
 or added to, or altered otherwise than as authorised by 
 this Act"; but this does not grammatically include the 
 case of a real crossing still existent, but unjustifiably 
 added to or altered, and it would have been better if both 
 the condition and the protection had been framed in more 
 accurate terms. 
 
 As the protection is limited to non-appearance, oblitera- 
 tion or alteration of or addition to a genuine crossing, it 
 would not cover the case of an entire crossing put on by 
 some person not authorised to do so by the Act ; but, as 
 shown before, this is not essential to the paying banker. 
 
 The proviso enacts that in the excepted cases the payment 
 shall not be questioned. This, as before stated, implies 
 that the customer may, save in these excepted cases,
 
 : 10 PAYING CROSSED CHEQUES. 
 
 oi AP. XI. question a payment on the ground of contravention of 
 crossing ; in other words, refuse to be debited with it. 
 
 The words in the proviso to sect. 79 "to have been 
 added to or altered otherwise than in accordance with the 
 Ait" are adapted from sect. 78. They must probably 
 be taken to refer only to what would be effective additions 
 or alterations if carried out under the authority of the Act. 
 They would not include an addition which was merely in 
 substance a memorandum, though locally incorporated 
 with the regular crossing. If the view be adopted that 
 such additions as " account payee," " account A. B.," &c., 
 are substantially only memoranda addressed to the collect- 
 ing banker (see ante, p. 51), it maybe taken that the paying 
 banker is not bound under this proviso to regard them as 
 additions within its terms. 
 
 icct. 80. Sect. 80 is in the main a declaratory section so far as 
 
 concerns the banker. It provides that where the bankt i 
 on whom a crossed cheque is drawn pays it, in good faith 
 and without negligence, in accordance with the crossing, 
 he shall be entitled to the same rights, and be placed in 
 the same position as if payment of the cheque had been 
 made to the true owner thereof. It is barely more than a 
 reversed statement of the effect of sect. 79. 
 
 The introduction of the words, " in good faith and 
 without negligence," precludes the utilisation of sect. 80 for 
 general protection where specific protection under other 
 sections fails. If, for instance, a banker paid a crossed 
 cheque in accordance with the crossing, but in some other 
 respect not in the ordinary course of business, so as to 
 lose the protection of sect. 60, the same fact would be 
 held negligence, disentitling him to the benefit of sect. 80. 
 
 Nor can this sect. 80 be stretched to cover every case in 
 uliirh a banker pays what purports to be a crossed cheque 
 in urrnrdiiiuv with its ostensible crossing. It would not 
 ntiilr a hanker to debit his customer with a cheque to 
 which that customer's signature as drawer was forged,
 
 PAYING CKOSSED CHEQUES. Ill 
 
 although such document purported to be crossed. It might CHAP. XI. 
 not be negligence in the banker not to detect the 
 forgery, if skilfully done, and the payment would be in 
 good faith, but the document would not be a cheque drawn 
 on him (see Imperial Bank of Canada v. Bank of 
 Hamilton [1903] A. C. 49), and so would not come within 
 these provisions. 
 
 So, again, if it be held that a cheque cannot be 
 & crossed cheque unless the crossing be put on by 
 someone authorised under the Act, this section would 
 not protect the paying banker in the case of an ostensibly 
 crossed cheque, on which the crossing had been put by 
 an unauthorised person. But the banker, if paying in 
 the usual course of business, would be protected either by 
 sect. 60 or as having duly paid a bearer cheque. 
 
 The usual phrase that, apart from statutory protection, 
 the paying banker is only justified in paying to a person 
 who can give a good discharge, is, as already shown under 
 " Paying Bearer Cheques," ante, p. 82, not strictly accurate in 
 point of law. Apart from any question of crossing, a 
 hanker would probably be protected in paying to a wrongful 
 holder an instrument drawn by his customer and 
 possessing the attributes of a cheque crossed " Not 
 negotiable." Inasmuch, however, as the words, "Not 
 negotiable," can only be used in conjunction with one of 
 the authorised crossings, this section removes all doubts ; 
 and the paying banker, paying in accordance with the 
 crossing, is in no wise affected by the addition of the 
 words, " Not negotiable." 
 
 With respect to cheques crossed "account payee," or "Account 
 "account A. B.," some little consideration is necessary. payee." 
 
 It may be assumed, for present purposes, that neither 
 the transferability or the negotiability of the cheque is 
 limited by the addition of any such words to the crossing. 
 (See ante, p. 49.) 
 
 It may further be assumed that disregard on the part
 
 1'AYING CROSSED CHEQUES. 
 
 of the paying banker of any intimation conveyed by the 
 words can give no direct remedy against him to the true 
 owner, under sect. 79. The cases in which such remedy 
 accrues are limited by that section, and include no refer- 
 ence to this unauthorised addition. There is no general term 
 such as " in accordance with the crossing," in the section. 
 
 It may further be assumed that the drawer's mandate 
 to his banker cannot be affected by the addition of such 
 words as "account payee " or "account A. B." by any holder. 
 
 The implied delegation of the drawer's authority, with 
 respect to crossings, derived from the statute, extends only 
 to crossings contemplated and authorised by the statute. 
 
 A bearer cheque, an order cheque crossed "account 
 payee," or equivalent words, and indorsed by the payee 
 alone, or a cheque crossed to an account other than that 
 of the payee, offers no difficulty whatever. 
 
 It is obviously impossible for the paying banker to see 
 to the disposition of the proceeds in the hands of the 
 collecting banker, and he fully discharges his duty \\ hen 
 he pays in accordance with the crossing, apart from the 
 unauthorised addition. 
 
 The only case which raises any question is that of an 
 order cheque, crossed " account payee," and bearing, when 
 presented, indorsements subsequent to that of the payee, 
 showing that it has been negotiated by him, and raising 
 the inference that the proceeds will not go into his account. 
 If it be assumed that the words " account payee " \\vreput 
 on by the drawer, it might be contended that they formed 
 part of his mandate to the banker ; equivalent to his 
 saying: "You are not to pay this cheque if, when it 
 reaches you, it shows signs of having passed out of the 
 possession of the payee." 
 
 I >ut, as against this, there is the argument that the 
 hunker has no means whatever of knowing whether the 
 words were put on by the drawer, by the payee himself, or 
 by some other person, and further that the drawer, even if he
 
 PAYING CROSSED CHEQUES. 113 
 
 himself put them on, has nevertheless issued an instrument CHAP. XI. 
 negotiable ad infinituni by indorsement, with nothing 
 which in law tends to limit that negotiability, or, at any 
 rate, the transferability of the cheque. So far, therefore, 
 as disregard of the mandate is concerned, it would seem 
 that the banker incurs no liability ; the mandate, in any 
 case, being contradictory and ambiguous, and the banker 
 therefore entitled to act upon a reasonable construction of 
 it. The only way the question could arise would be if 
 one of the indorsements were forged. The true owner 
 might then contend that the paying banker was not pro- 
 tected by sect. 60, as not having paid the cheque " in 
 good faith and in the ordinary course of business," nor 
 by sect. 80, as not having paid it ''without negligence " ; 
 and the drawer might object to be debited on the same 
 grounds. 
 
 The true owner is entitled to take advantage of the 
 "without negligence" exception, the duty to him being 
 statutory, and a counter-balance to the protection afforded 
 the banker by sect. 80. 
 
 The case and opinion, published in "Questions on Bank- 
 ing Practice," 5th ed., question 443, proceed entirely on 
 the facts submitted, which concerned only bearer cheques. 
 Should the matter ever come up for decision, a court would, 
 in all probability, not be disposed to give much effect to an 
 unauthorised addition of this sort, as against the paying 
 banker ; they would probably take the line that it con- 
 stituted only a memorandum addressed to the collecting 
 banker; and, if properly fortified by the evidence of bankers, 
 would hold that the payment was not out of the ordinary 
 course of business, and that the banker was therefore pro- 
 tected, both against his customer and the true owner, by 
 sect. 60, or by sect. 80, inasmuch as no negligence was 
 attributable to him. Cf. Akrokerri (Atlantic) Mines, Ld. 
 v. Economic Bank [1904] 2 K. B. 465. 
 
 The extension of the crossed cheques sections, by sect. 17 Revenue 'Act, 
 
 1883, s. 17. 
 B. I
 
 114 PAYING CROSSED CHEQUES. 
 
 CHAP. XI. o f the Revenue Act, 1888, to documents issued by a 
 customer of any banker, nud intended to enable any person 
 or body corporate to obtain payment from such banker of 
 the sum mentioned in such document (see as to these, ante, 
 p. 81), raises somewhat the same point. The same section 
 provides that it shall not be deemed to render any such 
 document a negotiable instrument. As previously pointed 
 out, this clearly means that such documents are not legally 
 transferable, and the paying banker must be taken to know 
 this. 
 
 If, therefore, he pays one of them which bears evidence 
 of having been transferred, such as indorsement other than 
 that of the payee by way of receipt or for collection, the 
 banker might, although paying in accordance with the 
 crossing, lose the protection of sect. 80, on the ground of 
 negligence.
 
 ( 115 ) 
 
 CHAPTER XII. 
 THE PASS BOOK. 
 
 THE present position of the pass book is perhaps the most CHAP. XII. 
 unsatisfactory thing in the whole region of English bank- 
 ing law. Its proper function is to constitute a conclusive, * 
 unquestionable, record of the transactions between banker 
 and customer, and it should be recognised as such. After 
 full opportunity of examination on the part of the customer, 
 all entries, at least to his debit, ought to be final and not 
 liable to be subsequently re-opened, at any rate not to 
 the detriment of the banker. 
 
 It would be dangerous, however, to assume that such is 
 the present effect of the pass book. 
 
 In Devaynes v. Noble, 1 Merivale, 530, 535, in 1816, Decisions as 
 the Court of Chancery directed an inquiry into the nature to pass book> 
 and effect of the pass book, and the report of the master 
 is set out at length in the case. 
 
 Therein it is stated that on delivery of the pass book to 
 the customer, he "examines it, and if there appears any 
 error or omission, brings or sends it back to be rectified ; 
 or, if not, his silence is regarded as an admission that the 
 entries are correct." 
 
 The case itself, however, affords little legal authority as 
 to the effect of the transaction. 
 
 In Skyriny v. Greenwood, 4 B. & C. 281, decided in 1825, 
 a firm of bankers credited a military customer with certain 
 sums of money to which they supposed him to be entitled, 
 but to which he was not really entitled, and which were 
 never received by the bankers, who had, moreover, been 
 officially informed of their mistake. They so credited him 
 
 i2
 
 THE PASS BOOK. 
 
 for five years, aud communicated the credit to him by 
 statements of account analogous to a pass book. On 
 discovery of their error, they sought to retain from sub- 
 sequent monies coming to their hands for his credit an 
 amount equivalent to that credited by mistake, which the 
 easterner had drawn out. It was held that they were not 
 entitled to do this, the entries to credit being a representa- 
 tion that the money had been received for the customer's 
 use, and the customer having, in reliance thereon, altered 
 his position by spending more than he would otherwise 
 have done. This case goes to show that a credit entry 
 may be regarded as a representation binding the bank, if 
 the customer can show he has altered his position in 
 reliance thereon. 
 
 In the absence of any change of position, the mistake 
 may, however, be rectified within reasonable time. In Com- 
 mercial Hunk of Scotland v. Rhind, 8 Macq. H. of L. 648, 
 Lord Campbell, L.C., said : " It would indeed be a reproach 
 to the law of Scotland, if, there being satisfactory evidence 
 that, by the mistake of a clerk, there had been in the pass 
 book a double entry of the same sum to the credit of the 
 respondent, the mistake could in no way be shown by the 
 bank, and if he were entitled fraudulently to extort from 
 them 80 beyond the amount of what is justly due to 
 him." And the reverse case must hold good. No amount 
 of acquiescence on the part of the customer could justify a 
 bank in withholding from him money really received for 
 his credit, but omitted in the credit items of the pass 
 book. The credit items are peculiarly within the know- 
 ledge and control of the banker, the debits within that of 
 the customer. In Commercial Bank of Scotland v. Itlthul, 
 Lord Campbell seems to imply that the bearing of the 
 pass book may almost be divided in this way, that the 
 items to the customer's credit bind the banker, those to 
 his debit the customer. He says: "On proof of the pass 
 book having been in the custody of the customer, and
 
 THE PASS BOOK. 
 
 returned by him to the bankers without objection being 
 made to any of the entries by which . the bankers are 
 credited, such entries may be primd facie evidence for the 
 bankers as those on the other side are primd facie evidence 
 against them." 
 
 In the same case the Chancellor said, at p. 651 : " These 
 entries in the pass book, whether on the debtor or creditor 
 side, are merely items in an account current afterwards 
 to be examined, adjusted and ' fitted.' According to the 
 mode of operating proposed, the customer might take a 
 pair of scissors, and, cutting off all the items in which > 
 the bankers take credit for payments, give in evidence the 
 other side of the account, and so make a, primd facie case 
 against the bankers to recover the full amount of all 
 his payments into their hands." 
 
 In that case it was the customer's own contention that 
 the whole pass book, or, at any rate, the items since* the 
 last making up, which items included the double entry 
 in question, constituted only a current account, and the 
 House appear to have utilised this contention for rejecting 
 his somewhat preposterous claim. They presumably did 
 not mean to imply that the pass book, however many 
 times it has been in the customer's hands in the interval 
 between periodical making up of accounts, remains through- 
 out that period a mere account current. 
 
 Anyway, later cases tend to establish it as a stated As a stated 
 or settled account, not only after a yearly or half-yearly 
 balance has been struck, but on each occasion when it is 
 had out with the balance, debtor or creditor, pencilled in, 
 and returned by the customer without comment or objec- 
 tion. Unless it can be elevated to that position, it 
 affords little protection to the banker. In Blackburn 
 Building Society v. Cunliffe Brooks & Co., 22 Ch. D., at 
 pp. 71, 72, in the Court of Appeal, Lord Selborne, 
 delivering the judgment of the court said: "Nor can 
 they (the bankers) have the benefit of the doctrine that a
 
 THE PASS BOOK. 
 
 . XII. p a88 book passing to and fro is evidence of a stated 
 and settled account ; because, if the directors of this society 
 could not borrow money, they could not ratify an illegal 
 borrowing simply by returning a pass book." The doctrine 
 of the pass book being a stated and settled account is here 
 treated as acknowledged and unquestionable. 
 
 ragliano's Case, 28 Q. B. D. 243 ; [1891] A. C. 107, is 
 probably the most favourable of the English cases to the 
 banker's side of the question, especially as it indicates the 
 means by which bankers may establish and fortify their 
 position, and neutralise the effect of the adverse decision 
 to be presently referred to, namely, Ckttttrton v. London 
 and County Bank. In Vagliano's Case, in the Court of 
 Appeal, 23 Q. B. D., at p. 245, it was contended as 
 follows: "The plaintiff received his pass book half- 
 yearly, containing entries debiting the payments made for 
 him, for which the paid bills were retained as vouchers. 
 These bills were retained by the plaintiff and the 
 pass books returned by him without objection. This 
 amounted to a settlement of account which cannot now 
 be re-opened, especially considering the negligence of the 
 plaintiff with regard to the examination of these vouchers." 
 In the judgment of the five concurring Lords Justices, they 
 say (at p. 263) with regard to this contention : " There is 
 another point to be considered. The plaintiff from time to 
 time received from the bank his pass book, with entries 
 debiting the payments made, for which the bank sent the 
 bills as vouchers, which were retained by the plaintiff 
 when he returned, without objection, the pass books. It 
 was contended that this was a settlement of account 
 between him and the bank, and that he had been guilty of 
 such negligence, with respect to the examination of the 
 vouchers, as would have prevented him from being relieved 
 from the settlement of account. But there is no evidence 
 to show what, as between a customer and his banker, is the 
 implied contract as to the settlement of account by such a
 
 THE PASS BOOK. 119 
 
 dealing with the pass book, or that, having regard to the ordi- CHAP. XII. 
 nary course of dealing between a banker and his customers, 
 the plaintiff had done anything which can be considered a 
 neglect of duty to the bank or negligence. on his part." 
 
 It is true that the decision of the Court of Appeal was 
 reversed by the House of Lords, [1891] A. C. 107, but it 
 was so on grounds not affecting this part of the judgment. 
 There are, indeed, passages in the judgments in the House 
 of Lords which seem to recognise, as a matter of law and 
 common sense, that the pass book must have some effect, 
 and the customer some duty and obligation with regard to - 
 it and returned cheques and bills. 
 
 Lord Halsbury, in enumerating the circumstances which 
 influenced the bank, says (p. 115) : " The false documents 
 were paid, duly debited to the customer, and duly entered 
 in his pass book, and, so far as the banker could know or 
 conjecture, brought to his knowledge on every occasion 
 upon which the payment was made and the bills returned." 
 Again, he says (p. 116) : " Was not the customer bound to 
 know the contents of his own pass book ? " Lord Selborne 
 (at p. 128) speaks of the dealings with the pass book as 
 calculated to disarm suspicion on the part of the bank. 
 
 The main value of the judgment of the Court of Appeal As matter 
 is the intimation that the effect of the pass book, and the of evidence - 
 duty of the customer with regard to it and the returned 
 cheques and bills, are matters of evidence showing what is 
 the implied contract between banker and customer, based 
 on the custom of bankers. For their own protection, 
 bankers should co-operate to formulate such custom, 
 establishing the status of the pass book as a settled 
 account, and affirming the duty of the customer to examine 
 and compare it and the returned cheques and bills, and 
 notify the bank of any errors therein appearing. It really 
 seems little more than recognising and consolidating what 
 one would have said was the common understanding on 
 the subject; and it would be matter for sincere regret if the
 
 NIK PASS BOOK. 
 
 CHAP. XII. evidence suggested by the Court of Appeal were not forth- 
 coming on a future occasion. 
 
 The decision further recognises the principle that if the 
 pass book be regarded as a settled account, and there be a 
 duty on the part of the customer with regard to it and the 
 returned documents, the omission of that duty will con- 
 stitute negligence, sufficient to estop the customer from 
 re-opening the account to the detriment of the bank. 
 
 In the meantime, and until evidence of the nature 
 suggested by the Court of Appeal is forthcoming, but 
 little reliance can be placed on the pass book as precluding 
 a customer from disputing debits which have appeared in 
 the book both when delivered to him and returned by him 
 without objection, or from denying the genuineness of liis 
 signature to cheques which represent such debits, ami 
 have been returned paid with the book and retained by the 
 customer without comment. 
 
 Advene If the case of Chatturton v. London (iml County /'<////. 
 
 is to be accepted as laying down the law on the subject, 
 it is difficult to see what is the object of the pass book 
 from the banker's point of view, seeing that its effect is 
 therein reduced to a minimum, and any duty on the pivrt 
 of the customer expressly negatived. 
 
 That case, in all its stages, is fully reported in 77/. 
 Milli-r newspaper, and there only. 
 
 The plaintiff banked with the defendant bank. Bet\\- n 
 
 I'temhrr, 1887, and August, 1888, cheques were pre- 
 sented to the defendants, and paid, purporting to have 
 been drawn by the plaintiff's authority and signed by him. 
 The plaintiff called, or sent, for his pass book every week, 
 and it was given to him made up to date, with the cheques 
 paid in the interval in the pocket. He usually compared 
 the entries in the pass book with the bank account in his 
 ledger, and ticked off the items in the former he fore 
 returning it to the bank. 
 
 In or about August, 1888, the plaintiff discovered that
 
 THE PASS BOOK. 
 
 121 
 
 to twenty-five of these cheques his signature as drawer had CHAP. XII. 
 
 been forged, and he claimed to have the amount of them 
 
 replaced to his credit at the defendant bank. At the 
 
 first trial, the jury found (1) the cheques were not forged ; 
 
 (2) the plaintiff's conduct contributed to the loss. (The 
 
 Miller, May 5th, 1890, p. 100.) Judgment was therefore 
 
 entered for the bank. A Divisional Court granted a new 
 
 trial. (The Miller, July 7th, 1890, p. 177 ; The Times, 
 
 June 27th, 1890, p. 3.) 
 
 There is nothing of particular importance in the Divisional 
 Court proceedings, the new trial being granted mainly on 
 the ground that the trial below was unsatisfactory. The 
 bank appealed. The Court of Appeal dismissed the appeal. 
 (The Miller, November 3rd, 1890, p. 394, where the pro- 
 ceedings are reported verbatim.) Counsel for the bank said 
 that the plaintiff usually in person took the paid cheques and 
 the pass book away from the bank, and his ticking off the 
 items authorised the bank to go on paying, admitted to the 
 bank that the signatures were his. Lord^Esher, M.R., 
 expressed dissent and said: "It is a hundred to one that 
 they never looked at the pass book. Why should they look 
 to see whether or no he made ticks against the cheques ? " 
 
 It is to be noticed that the main contention on behalf of 
 the bank in this case was that, by recognising the payment 
 of past forged cheques, the plaintiff authorised or induced 
 the bank to pay the subsequent forged cheques. That 
 contention does not seem a strong one. The bank pay 
 each specific cheque because they believe the signature to 
 be genuine, and preceding transactions have little or 
 nothing to do with succeeding ones. Even the conscious 
 payment of a bill to which the payer's signature has been 
 forged does not estop him from setting up that a subsequent 
 bill is forged by the same hand, unless a course of business 
 is established amounting to authority to use the name. 
 (Morris v. Bethell, L. E., 5 C. P. 47.) The stronger 
 line, that of settled account, which the customer is, by his
 
 THE PASS BOOK. 
 
 negligence and the resultant damage to the hank, estopped 
 from re-opening, does not seem to have been put forward, 
 at any rate prominently. 
 
 But the subsequent remarks of Lord Esher militate 
 quite as much against this contention. If there is no 
 duty on the part of the customer to examine and compare 
 the pass book and paid documents, there can be no negli- 
 gence in his not doing so, and so no ground of estoppel could 
 ; iris,', even admitting the pass book to constitute a settled 
 uccouut. The following is the material part of the argu- 
 ment. Counsel for the bank said he relied on the plaintiff's 
 receipt of the cheques week by week, and his ticking t In- 
 pass book opposite the bank's payments, as indicating that 
 things were correct. Lord Esher : " Suppose he never 
 looked at the pass book ?" Lopes, L.J. : "What is the 
 object of the book ? " Counsel : " That he may examine 
 it and see the state of his account." Lord Esher : " That 
 may be. But supposing he does not do what he has a 
 right not to do, how can that be relied on ? " Counsel : 
 " The plaintiff might have been entitled to say, ' I decline 
 to give you any assistance ; if it is my signature, pay ; if 
 not, you will not be authorised in paying.' But if he does 
 not take up a merely negative position ; if he says to the 
 bank, either by language or conduct, ' That is my signa- 
 ture Lord Esher, interrupting: "Is everybody at 
 liberty to send for his bank book week by week?" 
 Counsel : " Yes; and, in the ordinary course of business, he 
 does this in order to see that it is right." Lord Esher: 
 " I do not know that he does." Counsel : " In any event, 
 the point is a matter for the jury." Lord Esher: "But 
 you must not put a burden on people the law never placed 
 on thrm ; you are putting on them the burden of saying, 
 ' Look through the pass book. ' ' Lopes, L.J. : " I cannot 
 help thinking the pass book is sent for the purpose of 
 examining it." Lord Kshor : " But he is not bound to 
 look at it." Counsel : " If he sends for it week by \\o k,
 
 THE PASS BOOK. 123 
 
 the bank are reasonably justified in coming to the con- CHAP, xii. 
 elusion that it is examined, and that they are checked in 
 their payments." Lord Esher : " I do not know that they 
 are. That is putting a burden on the bank [sic in The 
 Miller report, but clearly must be, as before, ' on people/ 
 or ' on the customer '] , which you have no right to do, and 
 which would interfere with business all over the country. 
 If the mere fact is to give the bank auy right at all, we are 
 putting a burden on the customer, which I feel very much 
 disinclined to do." Counsel : " He goes for it him- 
 self." Lord Esher : " But has the bank a right to 
 infer anything from it ? A hundred things may happen 
 to prevent him from looking into it when he has got it, 
 and what right has the bank to infer that he has looked 
 into if?" 
 
 No formal judgment was given, the appeal being simply 
 dismissed. 
 
 On the new trial (The Times, January 21st, 1891 ; 
 The Miller, February 2nd, 1891), Mr. Justice Mathew, 
 in summing up to the jury, told them that the questions 
 were, whether the cheques were forgeries and whether the 
 bank were misled by the plaintiff 's conduct, and had the 
 plaintiff, by his conduct, disentitled himself to recover from 
 the bank. He said there was no contract between the 
 bank and the customer with regard to the pass book. If 
 the bank had proved they were misled, and they had not 
 done so, could it be said that the plaintiff had done any- 
 thing wrong because he conducted his business in his own 
 way ? People in business were not always guarding against 
 fraud, but against mistakes. Supposing the plaintiff had 
 told the clerk, who, it was suggested, had forged the 
 cheques, to examine the pass book and compare the 
 returned cheques with it and the counterfoils, would the 
 bank have any right to complain ? And yet, in that case, 
 the frauds would not have been discovered any sooner in 
 the ordinary course of events.
 
 124 THF. PASS BOOK. 
 
 CHAP. XII. The jury found all the questions in favour of the 
 plaintiff, and judgment was given against the bank. 
 
 Here, again, the settled account aspect of the pass hook 
 does not seem to have been put forward, but the remarks 
 of Mathew, J., like those of Lord Esher, would be equally 
 fatal to any contention based on that ground. 
 
 The point introduced by Mathew, J., as to the right of 
 the customer to absolutely delegate all examination of the 
 book and returned documents to another, thereby escaping 
 all liability, is no doubt productive of some difficulty. A 
 certain amount of delegation is essential in business, and 
 in ordinary cases, a man is perhaps not expected to antici- 
 pate fraud and forgery on the part of those he has no reason 
 to suspect. Recognition of the right to delegate the 
 examination to a subordinate, free from any supervision, is, 
 however, so destructive of any protection to the banker 
 that the more reasonable view would seem to be that, as in 
 the case of filling up cheques, it is part of the customer's 
 duty to his banker not to leave this matter to the uncon- 
 trolled management even of a confidential clerk. In 
 formulating the custom and evidence hereinbefore referred 
 to, this matter should be borne in mind, and the customer's 
 obligation defined as, either to himself examine the pass 
 book and the returned articles, or, if he delegate the duty, 
 to exercise such supervision over the person performing it 
 as to render the combined operation equivalent to a personal 
 investigation. 
 
 American American decisions are far in advance of those of our 
 
 
 
 own courts on the subject of the pass book, and ought to 
 be helpful in putting matters on a proper basis. 
 
 Leather Manufacturers' Jiank v. Morgan, in 1885, is 
 a decision of the Supreme Court of the United Stn 
 reported 117 U. S. 96. In that case the amount of genuine 
 cheques was fraudulently raised by a confidential rl-i k. 
 The frauds covered about six mouths, during which the cus- 
 tomer had back his pass book and paid cheques three thin -s.
 
 THE PASS BOOK. 125 
 
 The customer made some examination of his cheque CHAP. XII. 
 hook and counterfoils, with a view to roughly checking his 
 bank balance, but he does not seem to have, in any real 
 sense, examined his pass book or the returned cheques ; 
 and the clerk, by manipulating the addition of the counter- 
 foils, a duty entrusted to him, evaded, for a time, discovery 
 of the fraud. The customer admitted that if, on any of 
 the three occasions, he had compared the pass book with 
 the counterfoils, he must have discovered that his account 
 had been charged with the raised cheques. The judge of 
 first instance decided against the bank on the ground that 
 the customer was under no duty whatever to the bank to 
 examine his pass book and the vouchers returned with it, 
 in order to ascertain whether his account was correctly 
 kept. 
 
 The Supreme Court held that this view of the customer's 
 obligation was not consistent with the relations of the 
 parties or with principles of justice. They said that the 
 sending of the pass book by the customer to be written up 
 and returned with the vouchers is a demand on his part to 
 know what the bank claims to be the state of his account ; 
 that the return of the book with the vouchers is the answer 
 to that demand, and imports a request by the bank that 
 the depositor will, in proper time, examine the account So 
 rendered, and either sanction or repudiate it. The court 
 then quote the report to the English Court of Chancery 
 in Dcvaynes v. Noble (ante, p. 115), and say that that 
 report, made in 1816, is equally applicable now, both in 
 England and America, and continue: " The depositor cannot, 
 therefore, without injustice to the bank, omit all examina- 
 tion of his account when thus rendered at his request. His 
 failure to make it or have it made, within a reasonable time 
 after opportunity given for that purpose, is inconsistent 
 with the object for which he obtains and uses a passbook." 
 Later on the court say: " Without impugning the general 
 rule that an account rendered, which has become an account
 
 126 THE PASS BOOK. 
 
 CHAP. XII. stated, is open to correction for mistake or fraud, other 
 principles couie into operation where a party to a stated 
 account, who is under a duty, from the usages of business 
 or otherwise, to examine it within a reasonable time after 
 having an opportunity to do so, and give timely notice of 
 his objections thereto, neglects altogether to make such 
 examination himself or to have it made in good faith by 
 another for him ; by reason of which negligence the other 
 party, relying upon the account as having been acquiesced 
 in or approved, has failed to take steps for his protection, 
 which he could and would have taken had such notice been 
 given. In other words, parties to a stated account may be 
 estopped by their conduct from questioning its conclusive- 
 iii-ss." The court further indicate another respect in 
 which the position of the bank might be regarded as altered 
 and prejudiced by the non-discovery and non-communica- 
 tion of the frauds. They say : " Still 'further, if the 
 depositor was guilty of negligence in not discovering and 
 giving notice of the fraud of his clerk, then the bank was 
 thereby prejudiced, because it was prevented from taking 
 steps by the arrest of the criminal or by an attachment of 
 his property or other form of proceeding to compel restitu- 
 tion. It is not necessary that it should be made to apjx -ur 
 by evidence that benefit would certainly have accrued to 
 the bank from an attempt to secure payment from tin 
 criminal. ... An inquiry as to the damages in money 
 actually sustained by the bank, by reason of the neglect of 
 the depositor to give notice of the forgeries, might be 
 proper if this was an action by it to recover damages for a 
 violation of his duty. But it is a suit by the depositor, in 
 effect, to falsify a stated account, to the injury of the bank. 
 whose defence it is that the depositor has, by his conduct, 
 ratified or adopted the payment of the cheques, and 
 thereby induced it to forbear taking steps for its protection 
 against the person committing the forgeries. As the ri^ht 
 to seek and compel restoration was, in itself, a valuable
 
 THE PASS BOOK. 127 
 
 one, it is sufficient if it appears that the bank, by reason of CHAP. XII. 
 the negligence of the depositor, was prevented from 
 promptly and, it may be, effectively exercising it." 
 
 This view is strengthened by the fact that much the 
 same consequences have affected English decisions as to 
 what alteration in the position of a bank would fix a 
 customer with adoption of a forged cheque or bill, when, 
 having knowledge thereof, he failed to communicate such 
 knowledge to the bank. (Ogilvie v. West Australian, &c., 
 Co. [1896] A. C., at p. 270; M'Kenzie v. British Linen 
 Company, 6 A. C. 82. (See post, p. 149, "Forgeries.") 
 
 The same standard of alteration of position seems at 
 least as applicable where it is sought to re-open a settled 
 account. 
 
 The main point to be noticed up to this stage is the Duty of 
 unqualified manner in which the Supreme Court of the recognised 
 United States affirm that duty of the customer with regard b J American 
 to the pass book which was denied by Lord Esher. 
 
 To the same effect is the judgment in Critten>\. Chemical 
 National Bank of New York, a decision of the Supreme 
 Court of New York in 1902, reported 171 New York 
 Reports, 219. The court there say : " If the depositor 
 has, by his negligence in failing to detect forgeries in his 
 cheques and give notice thereof, caused loss to his bank, either 
 by enabling the forger to repeat his fraud or by depriving 
 the bank of an opportunity to obtain restitution, he should 
 be responsible for the damage. caused by his default." 
 
 They particularly dwell upon the duty of the customer to 
 utilise his counterfoils, saying: "Considering that the 
 only certain test of the genuineness of the paid cheques 
 may be the record made by the depositor of the cheques he 
 has issued, it is not too much, in justice and fairness to 
 the bank, to require of him, when he has such a record, to 
 exercise reasonable care to verify the vouchers by that 
 record." 
 
 The duty of the customer with regard to the pass book
 
 128 THE PASS BOOK. 
 
 CBAP. XII. i 8 further emphasised by the Supreme Court of the United 
 
 States in the Leather Mann/act urers' Bank Case, 
 by the way in which they treat neglect on his part of the 
 means of knowledge afforded by the pass book and the 
 returned documents as equivalent to actual knowledge on hia 
 part, in order to fix him with adoption of the forged cheques. 
 
 After quoting Lord Campbell's decision in Cairncross v. 
 Ijorimer, 8 Macq., at p. 880, which enunciates the principle 
 of adoption, but predicates full notice of the act which is 
 adopted, they say : " This, however, could not be if, as 
 claimed, the depositor was under no obligation whatever 
 to the bank to examine the account rendered at his 
 instance and notify it of errors therein in order that it 
 might correct them, and, if necessary, take steps for its 
 protection by compelling restitution by the forger. But if 
 the evidence showed that the depositor intentionally 
 remained silent after discovering the forgeries in question, 
 would the law conclusively presume that he had acquiesced 
 in the account as rendered and infer previous authority 
 to make the cheques, and yet forbid the application of the 
 same principle where the depositor was guilty of neglect of 
 duty in failing to do that in reference to the account which 
 he admits would have readily discovered the same fraud? 
 It seems to the court that the simple statement of this 
 proposition suggests a negative answer." 
 
 It may be admitted that English courts do not seem to 
 have carried the doctrine of adoption further than cases 
 where actual knowledge existed, and in Critten v. 
 Chemical National Bank of New York (iibi sup.), the 
 Supreme Court of New York, referring to the passage 
 above quoted, say : " While we hold that this duty 'rests 
 upon the depositor, we are not disposed to accept the 
 doctrine asserted in some of the cases that by negligence 
 in its discharge, or by failure to discover and notify the 
 bank, the depositor either adopts the cheques as genuine 
 or estops himself from asserting that they are forgeries."
 
 THE PASS BOOK. 129 
 
 If, however, this imputed knowledge is not to -be CHAP. XTI. 
 deemed tantamount to actual knowledge in connection 
 with adoption, it does not seem unreasonable to put it 
 forward, as do both American courts, as ground, like 
 negligence, for refusing relief to the customer, when the 
 re-opening of the account would involve loss to the bank. 
 
 The somewhat difficult question of delegation is fully Delegation 
 dealt with by both American courts, though on somewhat customer, 
 differing lines. 
 
 The Supreme Court of the United States say: " Where 
 the agent committed the forgeries which misled the bank 
 and injured the depositor, and therefore has an interest in 
 concealing the facts, the principal occupies no better 
 position than he would have done had no one been 
 designated by him to make the required examination, 
 without, at least, showing that he exercised reasonable 
 diligence in supervising the conduct while the latter 
 was discharging the trust committed to him. In the 
 absence of such supervision, the mere designation of an 
 agent to discharge a duty resting primarily on the prin- 
 cipal cannot be deemed the equivalent of performance 
 by the latter." 
 
 This seems a fair and reasonable view. If a man has a 
 duty to perform, not absolutely necessitating its entire 
 fulfilment by himself personally, he may delegate it to 
 another, but subject to its being satisfactorily and properly 
 carried to a conclusion ; and for the accomplishment of 
 this he remains ultimately responsible. The mere 
 telling another to do a thing cannot be regarded as the 
 equivalent of doing it. If the duty is to make reasonable 
 examination of the pass book and returned docu- 
 ments, the labour may be divided by relegating the 
 mechanical part to a subordinate, subject to efficient super- 
 vision on the part of the principal ; their united work 
 being fairly considered as tantamount to the unaided 
 efforts of the principal. Without such supervision this 
 
 B. K
 
 130 THE PASS BOOK. 
 
 CHAP. XII. is obviously not the case. The dicta which seem to 
 imply that lack of supervision is not attributable as 
 negligence must bo referred to cases where there is no 
 imperative personal duty primarily resting on the 
 principal. 
 
 In Critten v. Chemical National Bank, ubi sup., the court 
 enunciated a very ingenious doctrine on this question 
 of delegation. 
 
 They say : " Of course the knowledge of the forgeries 
 which Davis (the fraudulent clerk to whom the duty of 
 examination had been entrusted by the customer) possessed, 
 from the fact that he was himself the forger, was in no 
 respect to be attributed to the plaintiffs. But we see no 
 reason why they were not chargeable with such informa- 
 tion as a comparison of the cheques with the cheque 
 book would have imparted to an innocent party previously 
 unaware of the forgeries. The plaintiffs' position may 
 be no worse because they entrusted the examination to 
 Davis instead of a third person, but they can be no 
 better off on that account. If they would have been 
 chargeable with the negligence or failure of another clerk 
 in the verification of the accounts, they must be equally 
 so for the default of Davis, so far as the examination itself 
 would have discovered the frauds." 
 
 It may be doubtful whether an English court would 
 adopt this idea of, so to speak, filtering the knowledge of 
 the fraudulent subordinate ; it has at present no counter- 
 part in English law. The simpler method seems to be to 
 adhere to the principle of the pass book being a settled 
 account, to insist on the duty of the customer to examine 
 and compare it with the returned cheques and counterfoils, 
 or to have that duty performed under effective supervision, 
 and treat the omission of such duty as constituting 
 negligence, estopping the customer from re-opening the 
 account if the bank were shown to have been prejudiced 
 thereby, such prejudice consisting in the deprivation of
 
 THE PASS BOOK. 131 
 
 opportunity of self-protection or the loss of any remedy, CHAP. XII. 
 civil or criminal, against the offender, it being immaterial 
 whether the civil remedy would have been likely to 
 produce satisfactory results or not. 
 
 The difficulty in the way of establishing this position 
 lies mainly in the dicta of Lord Esher and Mathew, J., 
 in Chatterton v. London and County Bank. To over- 
 come this, the banker must rely upon the expressions of 
 the five Lords Justices in Vagliano's Case, supplemented 
 by evidence of the nature specified in those expressions, 
 and utilising, at least by way of argument, the conclusions 
 of the American courts. 
 
 It must not be forgotten that if Lord Esher 's view is 
 correct, and there is no obligation whatever on the 
 customer to look at his pass book, this would be fatal to 
 the assumptions of acquiescence in course of business, 
 charges for interest and commission, and the like, which 
 have been hitherto deduced from the return, without 
 comment, of the pass book in which such items figure. 
 The judicial recognition of such deductions affords further 
 ground for questioning the soundness of Lord Esher's views. 
 (See, ante, " Relation of Banker and Customer," p. 4.) 
 
 As to the degree of care in examining the pass book and Degree of care 
 vouchers which may be reasonably expected from the ^0^ 
 customer, he clearly cannot be required to take such customer, 
 minute precautions as to exclude all possibility of forgery 
 or fraud. He is not bound to resort to microscopical 
 or chemical tests. In inspecting the pass book he would 
 probably at once recognise the majority of the debits as 
 representing cheques he recollected drawing, or periodical 
 payments he had directed the banker to make ; in case of 
 an item he could not at once identify he should refer 
 to the returned cheque, and if that failed to recall the 
 transaction, to the counterfoil ; if that, too, failed to 
 suggest the occasion, he should examine the checme 
 narrow!} 7 , and if any suspicion remains, which he cannot 
 
 K'2
 
 182 THE PASS BOOK. 
 
 CHAP, xii satisfy by inquiry, he should communicate the matter to 
 his hanker. 
 
 This seems a rough outline of what a reasonable man 
 would do if his own interests were involved, the test to be 
 applied when the performance of a duty to another to take 
 reasonable care is in question.
 
 ( 133 ) 
 
 CHAPTEE XIII. 
 
 CONVERSION MONEY HAD AND RECEIVED. 
 VOID AND VOIDABLE INSTRUMENTS. 
 
 A CONVERSION is a wrongful interference with goods, as by CHAP. xill. 
 taking, using or destroying them, inconsistent with the conversion 
 owner's right of possession. To constitute this injury, defined, 
 there must be some act of the defendant repudiating the 
 owner's right, or some exercise of dominion inconsistent 
 with it. (Bullen & Leake, 5th ed., p. 382.) 
 
 Intention is no element in conversion. "Any person 
 who, however innocently, obtains possession of goods 
 the property of another, who has been fraudulently 
 deprived of the possession of them, and disposes of 
 them, whether for his own benefit or that of another 
 person, is guilty of a conversion." (Bullen & Leake, 
 ubi sup. Hollins v. Fowler, L. R., 7 H. of L., at 
 p. 795.) 
 
 A bill, note or cheque, or the paper it is written on, is 
 " goods " within the above definition. Where it is a nego- 
 tiable instrument, the damages are its face value. Even 
 in the case of a non -negotiable instrument, it would seem 
 that the person who has obtained money by means of it is 
 estopped from alleging that its value is not the amount 
 he has obtained by its means. (See Bavins, jini., and Sims 
 v. London and South Western Bank [1900] 1 Q. B. 270.) 
 
 It is to this action that, subject to statutory protection, a 
 banker is liable who 
 
 (a) Pays a cheque on a forged indorsement. (Smith v. 
 Union Bank of London, L. R., 10 Q. B. 293, 295 ; 
 1 Q. B. D., at p. 35.)
 
 CONVERSION - MONEY HAD AND RECEIVED. 
 
 (b) Collects a bill, note or cheque with a forged indorse- 
 
 ment, or to which the customer has no title. (BisseU 
 v. Fox, 58 L. T., N. S. 198 ; Fine Art Society \. 
 Union Bank of London, 17 Q. B. D. 705; Klein icort 
 v.Comptoir Xationnl D'Escompte [1894] 2 Q. B. 157 ; 
 Great Western Railway Co. v. London and County 
 Ban* [1899] 2 Q.B. 172; [1901] A.C. 414; Capital 
 and Counties Bank v. Gordon [1908] A. C. 240.) 
 
 (c) Pays a bill accepted payable at his bank to a person 
 
 who holds it under a forged indorsement. In this 
 case there is, of course, no statutory protection, 
 even if the bill were one payable on demand, inas- 
 much as it is not drawn on the banker. 
 
 (d) Delivers goods entrusted to him for safe custody to 
 
 the wrong person. (See "Goods for Safe Custody," 
 post, p. 178.) 
 
 (e) Takes as holder for value a bill or cheque with a 
 
 forged indorsement, or a cheque marked " Not 
 
 negotiable," to which the title is void or defective. 
 
 (Grmt HV.s/.r// Hallway Co. v. London and County 
 
 Bank [1901] A. C. 414; Capital and Count i,* 
 
 Bank v. Gordon [1908] A. C. 240.) 
 
 In all cases involving payment of money, the liability 
 
 for conversion is quite independent of any question of the 
 
 right to debit the customer. The banker may be liable in 
 
 conversion, and disentitled to debit his customer at the 
 
 same time, and so stand to lose the money twice. 
 
 The person to whom this remedy is given, or against 
 whom the banker is protected, is frequently termed in the 
 Bills of Exchange Act, " the true owner," but no definition 
 is given in the Act. The term also constantly occurs in 
 judgments, but again without definition. The matter is 
 < uinplicated by this: Where a cheque or bill has I'mi 
 wrongfully taken or detained from a man, or dealt with in 
 a manner inconsistent with his rights, and prejudicinl to 
 him, his only remedy is, clumsily enough, by an action
 
 VOID AND VOIDABLE INSTRUMENTS. 
 
 for conversion, trover or detinue of the paper on which the CHAP. XIII. 
 
 cheque or bill is written. There is no other form of action 
 
 available but this, and this form of action is confined to 
 
 dealings with chattels. But the chattel part of a negotiable 
 
 instrument, while it brings it within the range of conversion, 
 
 is the subordinate element of its entity. The contractual 
 
 part, of which the chattel is merely evidence, involving as 
 
 it does negotiability, governs the passing of the property 
 
 in and right of possession to the piece of paper, and may 
 
 divert or suspend both of them to quarters or in ways 
 
 which would be impossible in the case of anything which ' 
 
 was a mere chattel without any contractual element, 
 
 such as a horse or a book. For instance, a bond fide 
 
 holder for value may acquire a title to the chattel part of 
 
 a cheque, which he could not sustain with regard to any 
 
 other chattel, even if purchased in market overt. In 
 
 Smith v. Union Bank of London, 1 Q. B. D. 31, a cheque 
 
 become payable to bearer was stolen and negotiated to a 
 
 holder in due course. It was held that he, and not the 
 
 person from whom it was stolen, was the "true owner." 
 
 So, on the other hand, a forged indorsement or the " Not 
 
 negotiable " crossing may preclude the passing of the 
 
 property in the paper in circumstances otherwise sufficient 
 
 to transfer it. 
 
 Possibly the addition of the otherwise superfluous word 
 "true" in the descriptive title "true owner" is designed 
 to point this. For the "true owner," in the sense of the 
 person who can support conversion for a bill, note or cheque, 
 is the person who, taking into consideration the provisions 
 of the Bills of Exchange Act, and recognising that the 
 negotiable character of the instrument overrides the mere 
 property in the chattel, is on that basis entitled to the 
 property in and possession of the piece of paper. 
 
 It is generally laid down, in stating the position requisite 
 for a plaintiff in conversion, that he must be entitled to the 
 property in and possession of the chattel at the date of
 
 OOXTEKSIOS MOXEY HAD AND RECEITED. 
 
 the conversion. (See ll'hitf v. Ttal, 12 A. i ., at 
 p. 115.) 
 
 It has been said that a man cannot sue for conversion 
 by virtue of a subsequently acquired title to the chattel 
 converted. In Bristol and Iff ft of England Bank v. Mid- 
 land Rtiiltray Co. [1891] 2 Q. B. 653, the question was 
 dealt with by the Court of Appeal, and the previous 
 authorities reviewed. The court held that when the 
 rightful owner demanded the goods, refusal, of itself, 
 constituted a conversion ; that it was no answer to the 
 demand to say that the goods had been parted with prior 
 to the accrual of that owner's title, if the parting with 
 them was a wrongful act against the person to whose title 
 the plaintiff had subsequently succeeded. 
 
 But the case must be distinguished from those where 
 the goods have in the interim been parted with, not 
 wrongfully, hot rightfully, as by delivery to a person 
 having a revocable title before revocation or notice thereof, 
 or have been dealt with on his behalf during the same 
 period. It is abundantly clear that no conversion will lie 
 for such acts either at the suit of the original owner or 
 anyone deriving title from him. 
 
 And this latter principle will probably be found to 
 exclude the former one in all eases connected with 
 bills, notes and cheques, by reason of their negotiable 
 character and the governing element of contract involved 
 in them. 
 
 If a bill, note or cheque, is delivered as a contract, the 
 property in the chattel passes, it may be only temporarily, 
 if the contract is revocable ; if there is no contract, the 
 property never passes. Whether there is a contract or not 
 depends on the existence or absence of a contracting mind. 
 Where there is a contract, then the result of that contract 
 and its negotiable incidents is, that third persons may 
 acquire rights which subsequent revocation will not be 
 permitted to prejudice or affect
 
 VOID AND VOIDABLE INSTRUMENTS. 137 
 
 The distinction is almost invariably brought forward by < " HAP - X.IIL 
 and in cases of fraud. 
 
 A man is induced by false representations as to the 
 nature of the document, or by the substitution of one 
 document for another, to put his hand to what is in form a 
 negotiable instrument. There is no contracting mind, the 
 document is null and void ; and the property in, and right to 
 possession of the chattel, the piece of paper, remain abso- 
 lutely vested in the person deceived, (faster v. M'Kintwn, 
 L. Pu, 4 C. P. 704 : Lewis v. Clay, 67 L. J., Q. B. 214.) 
 
 If a man is fraudulently deceived into issuing a 
 negotiable instrument in favour of one specific person in 
 the belief that he is another specific person an essential 
 element of contract is lacking, and the results are the 
 same. (Lindsay v. Cundy, 3 A. C. 459 : Tats y. Wilt* 
 and Dorset Bank, Journal of the Institute of Bankers, 
 voL xx., p. 376.) 
 
 A man is induced by fraud to execute and. issue a 
 negotiable instrument, knowing its character, and there 
 being no substitution of one specific person for another. 
 The contract is not void, but voidable. The property and 
 right of possession in and to the chattel are divested ; 
 but, on repudiation of the contract, revert to the defrauded 
 person, subject to any right acquired by third parties in 
 the interval (Clutton v. Attenborouah [1897] A. C. 90: 
 Tatf \. Wilts and Dorset Bank, Journal of the Institute of 
 Bankers, vol. xx., p. 376 ; cf. Cahn v. Pockett's Bristol, a 
 Co. [1899] 1 Q. B. 643.) 
 
 The distinction is, as suggested by Lord Penzance in 
 Lindsay v. Cundy, 3 A. C., at p. 461. between a man who, 
 being deceived, enters into no contract, and a man who, being 
 also deceived, does enter into a contract. The doctrine of 
 this case was held distinctly applicable to negotiable instru- 
 ments by Lord Davey, in Great Western Railirny Co. v. 
 London and County Bank [1901] A. C. 414, and by the 
 Court in Tatc v. Wilts and Dors ft Bank, vM sup.
 
 188 
 
 CONVERSION MONEY HAD AND RECEIVED. 
 
 CHAT. XIII. 
 
 Rights 
 of third 
 parties. 
 
 Voidable 
 
 contracts 
 and the " Not 
 negotiable" 
 croMJng. 
 
 The rights of third parties which hold good against 
 subsequent repudiation of a voidable contract, and preclude 
 the action of conversion, are of various kinds and degrees. 
 
 Of course, a holder in due course of a bill, cheque or 
 note, which he has taken in the interval, is fully protected. 
 (Clutton v. Attenborough [1897] A. C. 90.) 
 
 But a smaller right in the instrument than that of a 
 holder in due course would seem to be sufficient. In 
 Tate v. Wilts and Dorset Bank, Journal of the Institute of 
 Bankers, vol. xx., p. 876, Channell, J., says: "I take it 
 the bankers were the holders of the cheque (whether they 
 were holders for value does not matter), and that they got 
 payment of it in the regular way. It is admitted, if that 
 was so, there was a fresh disposition of the cheque, and 
 that thereupon the transaction could not be avoided so as 
 to make the bank liable." 
 
 " Fresh disposition " is a very wide term, and would 
 cover almost any legitimate dealing with a negotiable 
 instrument. As exemplified in this case of Tate v. 
 Wilts and Dorset Bank, the doctrine protects the banker 
 who has collected an uncrossed cheque for a customer, 
 where that customer holds it under a voidable title. 
 
 But no rights countervailing repudiation of a voidable 
 contract can be acquired through a cheque marked " Not 
 negotiable," except where statute affords protection. 
 
 The effect of such marking is to put each holder on 
 precisely the same footing. On repudiation or revocation 
 of a voidable contract affecting such cheque, the title of the 
 true owner relates back to the date of the fraud or other 
 circumstance which entitles him to repudiate. Every 
 person who has taken or dealt with the cheque does so on 
 the basin that his position is subject to possible revocation, 
 itiul can therefore set up no rights acquired during the 
 interval, either to the cheque or its proceeds. (Gr<t 
 Wftttrn Ky. Co. v. London and Count i/ 7>W. \ 1D01] A. C. 
 414.) Any one of the successive holders could be sued for
 
 VOID AND VOIDABLE INSTRUMENTS. ' 139 
 
 conversion, it being no defence that he has parted with the CHAP. XIII. 
 
 article converted. The document stands on a lower level 
 
 than an ordinary chattel, to which an innocent third party 
 
 can acquire a good title by purchase from one who holds it 
 
 under a voidable contract. (White v. Garden, 10 C. B. 
 
 919.) And, in questions of conversion, the liability of an 
 
 agent being dependent on the title of his principal, it 
 
 would follow that any person dealing with the cheque, 
 
 as a banker in collecting it, would on revocation be 
 
 liable in conversion to the true owner, unless protected 
 
 by sect. 82 of the Bills of Exchange Act. 
 
 Wherever conversion lies, and money has been received Money had 
 for the goods or negotiable instrument converted, the true a 
 owner is entitled to waive the wrong and sue for money 
 had and received to his use. The claims are usually joined 
 in the alternative, and this is the form in which the action 
 is couched against, for instance, a banker who has collected 
 a cheque with a forged indorsement. 
 
 The action for money had and received is not, however, Not merely 
 merely an alternative to the action for conversion. It is altematlve - 
 an independent form of claim ; and lies in many cases 
 where conversion would not. It is applicable wherever the 
 defendant has received money which, in justice and equity, 
 belongs to the plaintiff under circumstances which render 
 the receipt of it a receipt by the defendant to the use of 
 the plaintiff. Both conditions must be fulfilled to entitle 
 the plaintiff to recover, but in many cases the receipt to 
 the use of the plaintiff is deduced from purely legal con- 
 siderations, the actual receipt being in no ordinary sense 
 to his use. 
 
 Thus, money paid by mistake of fact to the innocent 
 holder of a bill or cheque with a forged signature or a 
 forged indorsement, is in his hands money had and received 
 to the use of the person paying it (Imperial Bank of 
 Canada v. Bank of Hamilton [1903] A. C. 49), though 
 other considerations may impede its recovery as such.
 
 140 
 
 CONVERSION MONKY HAD AND RECEIVED. 
 
 CHAP. XIII. 
 
 Protection 
 of a^cnt. 
 
 Then the money must, in justice and equity, belong to 
 the plaintiff. The proposition might, perhaps, he more 
 accurately stated hy saying that the action lies where it is 
 just and equitable that the defendant should pay the 
 money to the plaintiff. The plaintiff may be entitled to it 
 as against someone else, but not as against the defendant. 
 This is essentially the case where the defendant has only 
 dealt with the money as an agent. 
 
 If his agency has involved him in a conversion, or if he 
 has knowingly assisted in a wrongful receipt, it is consistent 
 with justice and equity that he should pay the money, 
 though he may have parted with it to his principal. 
 
 So, again, if the money is still in the hands of the 
 agent, and the principal has no claim to it, there is nothing 
 unjust or inequitable in making the agent pay it over to 
 the true owner. 
 
 But there is a well-settled series of cases which show 
 that where an agent has innocently received money paid 
 him for his principal, and has handed it over to that 
 principal, or irrevocably altered his position with n -rard to 
 it, the money cannot be recovered from him, either by the 
 person who paid it or by the person entitled to it. (O<//,x 
 v. Hudson, 6 Ex. 848 ; Holland v. Russell, 4 B. & S. 14 ; 
 Tate v. If 'iltx tind 1 torse t Hank, Journal of the Institute of 
 Bankers, vol. xx., p. 876; Barins,jun. and Sims v. London 
 and South Western Bank [1900] 1 Q. B. 270) (a). The case 
 of Imperial Bank of Canada v. Btink of Hamilton [1908] 
 A. C. 47, does not militate against the rule. There tin- 
 defendant bank had allowed the customer to draw out the 
 money before they had themselves received it. 
 
 Here again, the distinction between a void and voidable* 
 contract affecting a cheque or bill plays an important part. 
 There being no conversion by the dmliug with a voidable 
 instrument pending repudiation, the true owner run only 
 recover money received upon it and parted \\ith during 
 
 () A to the Mrict limitation of these oiwc tonp'M- y |.un-:ui<l .implr. 
 Me CvmliHfHtnl CaitHtfkituf, .Jr. Co. v. Xleinimrt, SOTUBM I.. I:
 
 VOID AND VOIDABLE INSTRUMENTS. 141 
 
 the interval, if it is just and fair that he should do so ; CHAP. XIII^ 
 if the position of the party from whom he claims would 
 not be prejudiced by his having to repay. 
 
 On this principle, a banker is protected if he has collected 
 a cheque or bill for one who has a voidable title to it, and 
 has paid the money over, without the means of recovering 
 it, before he has received notice of revocation. (See Bavins, 
 jun. and Sims v. London and South Western Bank, ubi sup.} 
 In this case the fact that the bank had credited the customer's 
 account with the proceeds of the cheque, and that amounts 
 had been drawn out which, on the ordinary system of 
 appropriation, exhausted those proceeds, was held not to 
 preclude the true owner from recovering as money had and 
 received, inasmuch as the state of the account was such as 
 admitted of the bank debiting the amount to the customer, 
 and therefore the bank were not, in fact, prejudiced, and 
 had not irrevocably altered their position. Presumably 
 the same rule would obtain, even in cases within Capital 
 and Counties Bank v. Gordon [1903] A. C. 240, inasmuch 
 as the right of a banker to debit the customer with a 
 returned cheque, or money credited thereon seems, in that 
 case, to have been held consistent with the banker's having 
 been holder for value of the cheque. 
 
 In some cases it seems to have been suggested that 
 negligence might deprive the agent of the protection above 
 referred to; but it will be noticed that in Bavins, jun. 
 and Sims v. London and South Western Bank, the Court 
 of Appeal found that the bank had acted negligently, and 
 yet were prepared to extend to them the protection, had the 
 facts warranted or necessitated it. 
 
 It is not material to consider whether the fact of the 
 money having been received by the banker on a cheque 
 marked " Not negotiable " would operate directly to deprive 
 the banker of the protection accorded to an agent. Sect. 81 
 only deals with " title " to the cheque, and inferentially 
 with that to the proceeds. But, as above shown, the
 
 142 CONVERSION MONEY HAD AND RECEIVED. 
 
 CHAP. XIII. banker would, unless protected by sect. 82, be liable for 
 conversion of a negotiable instrument, and so the ques- 
 tion would not arise. It might also be contended that 
 the reference back of the true owner's title rendered the 
 receipt of the money by the banker wrongful in the 
 first instance, in which case the protection as an agent 
 would not apply.
 
 ( 143 ) 
 
 CHAPTER XIV. 
 FORGERIES. 
 
 UNDER sect. 24 of the Bills of Exchange Act, where a CHAP. XIV. 
 signature on a bill is forged or placed thereon without the 
 authority of the person whose signature it purports to be, 
 the forged or unauthorised signature is wholly inoperative, 
 and no right to retain the bill or give a discharge therefor, 
 or enforce payment thereof against any party thereto, can be 
 acquired through or under that signature (a). 
 
 The section is subject to the provisions of the Act, and 
 also to exception in cases where the party against whom it 
 is sought to retain or enforce payment of the bill is 
 estopped from setting up the forgery or want of authority. 
 
 The provisions of the Act protecting bankers from the Protection 
 effects of this section are : Sect. 60, paying cheques on ~ bankers 
 forged indorsement ; sect. 80, paying crossed cheques in forgeries, 
 conformity with the crossing ; and sect. 82, collecting 
 crossed cheques for a customer ; which are herein dealt 
 with under the appropriate headings. 
 
 The main dangers to which the paying banker is left 
 exposed are the following : 
 
 1. Forgery of his customer's signature as drawer of 
 
 cheques. 
 
 2. Fraudulent alteration of the amount of cheques 
 
 presented for payment. 
 
 3. Forged indorsement on bills accepted payable at his 
 
 bank. 
 
 Apart from adoption or estoppel, there is no right in the Forgery of 
 
 banker to debit to the customer the amount of a cheque si>naire S 
 
 which he has paid, to which the drawer's signature is a as drawer. 
 
 () This section does not touch the case of negotiation abroad under a 
 forged signature if by the lex loci the transferee has acquired a good 
 title. Enibirlcos v. Anglo-Austrian Sank, The Times, August llth, 1904.
 
 144 
 
 FORGERIES. 
 
 CHAP. XIV. 
 
 Ktop|>el. 
 Duty of 
 
 ciii turner. 
 
 forgery. The money has been paid without authority. It 
 is not really a question of the banker's being bound to know 
 his customer's signature or of whether he was negligent 
 or not in not detecting the forgery, but simply a legal 
 obligation placed upon him. 
 
 A cheque to which the drawer's signature is forged is a 
 mere piece of paper, not a cheque at all, unless it be 
 adopted by the drawer or become valid by estoppel as 
 against an indorser. (See Imperial Bank of Canada v. 
 Bank of Hamilton [1903] A. C. 49.) 
 
 The banker's only chance of being able to cbarge the 
 customer with the amount of such cheque is where the 
 conduct of the customer establishes an estoppel or amounts 
 to adoption of the cheque. 
 
 The basis both of estoppel and adoption in such cases 
 is the duty owed by the customer to his banker arising 
 from the mutual relation. The definition of that rela- 
 tionship as that of debtor and creditor obviously does not 
 cover the whole of its incidents. The payment of cheques 
 is, in itself, a superadded obligation, with respect to which, 
 whether the cheques are crossed or uncrossed, the relation 
 of maudant and mandatory has been legally recognised. 
 (Cf. Scholfield v. Londesborongh [1896] A. C. 514.) 
 
 The collection of cheques, especially since Gordon's 
 Cafe, must be regarded as agency pure and simple. 
 
 And, outside these recognised relationships, there are 
 obligations on the customer referable to the established 
 course of business between him and his banker ; and even 
 beyond those there is the general understanding between 
 business men in a business relation, that matters shall be 
 conducted with a due regard to the interests of both parties. 
 
 Attributable, probably, to tlie relationship of mandant 
 and mandatory, but supported by the other obligations 
 vt.-rred to, there unquestionably appear to be duties 
 incumbent on the customer, constraining him not to 
 prejudice the banker's position by any wilful act or
 
 FOUGERIES. 145 
 
 omission or by neglecting any precaution which a CHAP. XIV. 
 reasonable man would take in his own interest. 
 
 The case ofScholftdd v. Londesborough [1896] A. C. 514, 
 has a more direct bearing on the second heading of the 
 forgeries likely to affect the paying banker, namely, 
 fraudulent alteration of cheques ; but the judgments, in 
 distinguishing that case from Young v. Grote, and doing 
 so mainly on the ground that Young v. Grote was a case 
 of banker and customer, distinctly affirm the existence of 
 a duty on the part of the customer of the nature above 
 described, particularly with reference to the filling-up and 
 issue of cheques. 
 
 Apart from Young v. Grote, the principle had been < 
 previously recognised, notably by Lord Cranworth, in Orr 
 v. Union Bank of Scotland, 1 Macq., H. of L. Cases, 513, 
 where he said : " The principle is a sound one, that where 
 a customer's neglect of due precaution has cauged his 
 bankers to make a payment on a forged order, he shall 
 not set up against them the invalidity of a document 
 which he has induced them to act on as genuine." (See, 
 also, per Lord Cranworth, in Bank of Ireland v. Trustees 
 of Evans' Charities, 5 H. L. C. 389.) 
 
 Referring to these dicta, in Scholfield v. Londesborough, 
 ubi sup., Lord Halsbury, C., at p. 523, says: "If, to use 
 Lord Cranworth's phraseology, the customer by any act of 
 his has induced the banker to act upon the document, by 
 his act or neglect of some act usual in the course of dealing 
 between them, it is quite intelligible that he should not be 
 permitted to set up his own act -or neglect to the prejudice 
 of the banker whom he has thus misled or by neglect 
 permitted to be misled." 
 
 And there are passages in the other judgments, 
 particularly those of Lord Shand, Lord Davey, and Lord 
 Macnaghten, which distinctly recognise the existence of 
 the duty of the customer not wantonly to imperil the 
 interests of the banker, arising out of the contractual 
 
 B. L
 
 1 46 FORGERIES. 
 
 cn.\r. XIV. re latiou between the parties, and also recognising the 
 responsibility of the customer for any loss accruing to the 
 banker from the breach of such duty, notwithstanding the 
 intervention of forgery or fraud. Per Lord Watson, at 
 p. 587 : " The duty of the customer arises directly out of 
 the contractual relation between him and the banker, 
 who is his mandatory." Lord Macnaghten, referring to 
 Young v. Grote, says at p. 545 : " It is obvious that the court 
 went very much on the authority of the doctrine laid down 
 by Pothier, that in cases of mandate generally, and par- 
 ticularly in the case of banker and customer, if the person 
 who receives the mandate is misled through the fault 
 of the person who gives it, the loss must fall exclusively 
 on the giver. That is not unreasonable." J'<r Lord 
 Shand, at p. 548 : " The case of Young v. Grate, between 
 a banker and his customer, was one in which there was the 
 relation of parties contracting with each other. It appears 
 to me that the ground of decision, as reported, was in 
 conformity with the limited doctrine of Pothier, that this 
 relation inferred, if not expressly, at least by implication, 
 the duty and obligation on the customer's part in issuing 
 cheques on his banker to third parties, to take care that 
 these cheques were not in such a form as to give the 
 means of enlarging their amount without this being 
 readily detected." Per Lord Davey, at p. 550 : " The 
 doctrine of Young v. Grote was one arising out of the 
 relation of mandant and mandatory." 
 
 Young v. Grote, 4 Bing. 258, was a case in which the 
 amount of a cheque was fraudulently raised. The above 
 expressions clearly indicate that, as between banker and 
 customer, the intervention of crime does not exonerate the 
 customer by whose default such crime was facilitated. 
 The reason appears that suggested by Lord Watson, in 
 Schiilfield v. Lomlexlinniiiiih, nl>i KH]>., at p. 587, nanu-ly. 
 that reasonable precaution against crime is part of the 
 customer's implied obligation to his banker. Crime,
 
 FORGERIES. 147 
 
 especially forgery, being the main source of danger to CHAP. XIV. 
 
 the banker in connection with cheques, it must be taken 
 
 to have been in the contemplation of the parties in the 
 
 formation of their implied contract. The usual rule about 
 
 its non-contemplation is thus excluded ; and loss thereby, 
 
 if facilitated by breach of duty on the part of the customer, 
 
 may be set up by the banker as an estoppel, or as a 
 
 ground for damages, which are not too remote, being 
 
 within the purview of the contract. The remarks of , 
 
 the House of Lords in Farquharson v. King [1902] A. C. 
 
 325, as to Scholfteld v. Londesborongh in this connection, 
 
 are directed only to the cases in which all contractual duty 
 
 is wanting. The duty further binds the customer not to 
 
 withhold from the banker information in his possession 
 
 which may put the banker on his guard against forged 
 
 instruments, enable him to protect himself against being 
 
 misled into paying them, or furnish him with the means 
 
 and opportunity of taking proceedings, criminal or civil, 
 
 against the forger. (See Ogilvie v. West Australian, d-c., 
 
 Co. [1896] A. C. 270; M'Kenzie v. British Linen 
 
 Company, 6 A. C. 82.) 
 
 It is this branch of the duty which constitutes the basis 
 of the doctrine of the adoption of forged cheques herein- 
 after referred to. As to duty to examine, see under 
 heading " Pass Book," ante, pp. 115, sqq. 
 
 Apart from adoption, it is not, perhaps, easy to define 
 where estoppel as to the absolute forgery of the customer's 
 signature comes in. 
 
 Mere carelessness in keeping the cheque book is, of 
 course, no use. In fact it is generally adduced as the reductio 
 ad absurdum of the contentions as to estoppel by negligence. 
 (See, for instance, per Lord Halsbury, in Scholfield v. 
 Londesborough [1896] A. C., at p. 531 ; Farquharson v. 
 King [1902] A. C., at p. 336.) 
 
 The entrusting the occasional drawing of cheques to an 
 agent, who subsequently draws others without authority, 
 
 L2
 
 FORGERIES. 
 
 would come rather under the head of holding out than 
 of estoppel by breach of duty. 
 
 The lack of supervision over an agent, who might have 
 access to the cheque book and facilities for concealing 
 forgeries committed by him, is probably too remote in this 
 connection. (See rayliano'x Case [1891] A. C., at p. 115 ; 
 Farquhai'goii v. King [1902] A. C. 825.) 
 
 With regard to the second form of forgery, the fraudu- 
 lent raising of the amount of a cheque, the question of 
 the customer's duty arose in the case of Young v. Grote, 4 
 Bing. 258. No case has probably been more discussed 
 and criticised ; but it is confidently submitted that the 
 quotations from Scliolfield v. Lond&bofOttgk, above givm, 
 with reference to it, rehabilitate its authority as bet\\. n 
 banker and customer, on the ground of duty owing from 
 the latter to the former. That duty is, in issuing cheques, 
 not to leave blank spaces or afford obvious facilities for 
 alteration. If, through neglect of this duty, an evil- 
 disposed person is enabled to raise the amount of the 
 cheque in such a manner as not to excite suspicion, and 
 the banker innocently pays the higher amount, he will 
 be entitled to debit his customer therewith. Mnr< 
 v. Birkbeck Bank, 5 Times L. R. 179, 468, 646, is in 
 point, but not very satisfactory ; as the Divisional Court and 
 Court of Appeal only ordered a new trial on the ground that 
 the banker's defence on this ground had not been properly 
 put to the jury, without expressing any definite opinion. 
 On the new trial (Journal of the Institute of Bankers, 
 vol. xi., p. 403), Mathcw, J., told the jury that the law on 
 the subject was that, if a cheque was so carelessly drawn as 
 to tKpoeo a banker, using reasonable care, to the risk 
 of paying what was not intended, then the banker was not 
 liable. The drawer must take reasonable care in drawing 
 the cheque. The jury found a verdict for the bank, and 
 judgment was entered for them. 
 
 With regard to both classes of forgery, the customer
 
 FOEGEEIES. 149 
 
 would be estopped if it could be shown that he had actively CHAP. XIV. 
 misled the bank into payment of the particular document, 
 in any of the ways exemplified in Vagliano's Case. But 
 the circumstances involving such estoppel, save in so far 
 as they relate to the pass book, would seem practically 
 confined to bills accepted payable at the banker's. 
 
 A man who consciously pays a bill to which his name 
 has been forged is not estopped from disputing a subsequent 
 forgery by the same hand, unless the repetition of such 
 payment establish a course of business authorising the 
 use of the name. (Morris v. Bethell, L. R., 5 C. P. 47.) 
 
 Although it is said that a forgery cannot be ratified, it is Adoption 
 
 . of forged 
 
 quite clear that a man may, by his conduct, be estopped cheques 
 
 from denying his signature, or held to have adopted the or 
 forged instrument. 
 
 If a man knows that his signature has been forged to a 
 c-lieque, and that it is about or likely to be presented 
 for payment to his bankers, he is bound to warn his 
 bankers of the fact. If he does not, and the bank's 
 position is thereby altered, he adopts the cheque. 
 (j\I'Kenzie v. British Linen Company, 6 A. C. 82, see 
 at pp. 91, 109 ; Ogilvie v. West Australian, d-c., Co. 
 [1896] A. C. 257, at p. 270.) 
 
 Mere silence, without resulting injury to the bank, 
 does not work an estoppel. (M'Kenzie v. British Linen 
 Company, nbi sup., at pp. 109, 111, 112.) 
 
 The prejudice or injury to the bank, resulting from the 
 customer's silence, and estopping him from disputing his 
 signature, is not confined to the payment of the cheque. 
 The bank may have paid such cheque before the discovery 
 of the forgery by the customer. 
 
 The customer will be equally estopped if, by his silence, 
 the bank are precluded from the opportunity of protecting 
 themselves against subsequent forgeries, if any, by the 
 same person, or lose the chance of taking proceedings, 
 civil or criminal, against the forger, as by his escaping out
 
 FORGERIES. 
 
 of the jurisdiction in the interval. And it is immaterial 
 whether civil proceedings against the forger would have 
 been likely to result in getting money hack or not. 
 (Ogilrie v. West Australian, d-c., Co. [1896] A. C., at 
 p. 270 ; cf. Knights v. in/Ten, L. E., 5 Q. B. 660 ; and 
 the Scotch cases quoted in M'Kenzie v. British Linen 
 Company, 6 A. C., at p. 110.) 
 
 An expression, apparently to the contrary, in Imperial. 
 Hank of Canada v. Bank of Hamilton [1908] A. C., at 
 p. 57, is not of sufficient weight to stand against these 
 authorities. 
 
 This principle is particularly valuable to the banker, 
 inasmuch as, where it can be put in force, it affects all 
 cheques previously forged by the same person, though the 
 customer may have only discovered the fraud in relation to 
 the last of the series. 
 
 This doctrine has been fully recognised by the Supreme 
 Court of the United States, in Leather Hfannfactn-r* 
 Bank v. Morgan, 117 U. S., 96. 
 
 In this latter case, the court held that actual knowledge 
 of the forgery on the part of the customer, was not 
 essential ; that he must be treated as having possessed 
 such knowledge, as, but for his own negligence, he would 
 have acquired, and on this basis they fixed the defendant 
 with adoption of the forged cheques. This view was, 
 however, disputed by the Supreme Court of New York, in 
 the later case of Critten v. Chemical National Jinn I.-. 
 171 N. Y. 219. As to the bearing of these cases on the 
 pass book, see " The Pass Book," ante, p. 128. 
 
 All the English cases, above referred to, seem to treat 
 actual knowledge of the forger}* as a necessary element of 
 adoption. The nearest thing is the ilii-tnin of Lord 
 Watson, in Scholficld v. Ismdesborongh [1896] A. C., at 
 p. 548. Speaking of sect. 64 of the Bills of Exchange Act, 
 he MYB : " That clause admits an action for the altered 
 amount of the bill, when the acceptor has authorised the
 
 FORGERIES. 151 
 
 alteration. Accordingly, on the supposition already made, CHAP. XIV. 
 if it had been shown that he had failed to discharge his 
 legal duty to the appellant, the respondent would have 
 been estopped from saying that he did not authorise the 
 frauds committed by Scott Sanders. That estoppel by 
 negligence would, in my opinion, have been sufficient to 
 establish that the respondent had ' authorised ' the 
 fraudulent alteration within the meaning of sect. 64." 
 
 It might be argued that authorising implies knowledge, 
 and that breach of duty is thus equivalent to imputed 
 knowledge ; but it is not easy to extract a general principle 
 from expressions directed to a particular enactment, and 
 sect. 64 is primarily, at any rate, designed for the benefit 
 of holders only. 
 
 The dictum might fairly, however, be utilised in the 
 case of a cheque with the amount altered, which the 
 customer ought to have discovered. 
 
 Another class of forgery productive of danger to the Forged 
 
 banker is that of forged indorsement on bills domiciled or md o rse ^ n n t 
 
 on domiciled 
 
 accepted payable at the bank. bills. 
 
 With regard to these, there is, of course, no statutory 
 protection whatever. Neither sect. 60 of the Bills of 
 Exchange Act nor sect. 19 of the Stamp Act of 1853 
 has any bearing on the question ; inasmuch as the bills, 
 even if payable on demand, are not drawn on the banker. 
 The payment is made to the wrong person, who cannot 
 give a discharge, and the banker is, therefore, not entitled 
 to debit his customer. (Robarts v. Tucker, 16 Q. B. 560 ; 
 Vacjliano's Case [1891] A. C. 107.) 
 
 The banker's line of defence against the customer in 
 such cases depends on other considerations. 
 
 If the payee is a fictitious or non-existent person, the 
 banker is discharged and can debit the customer as having 
 paid the bearer within sect. 7, sub-s. 3. 
 
 It is absolutely immaterial whether the acceptor knew or 
 did not know that the payee was a fictitious or non-existent
 
 FORGERIES. 
 
 CHAP. XIV. person. A real person may be a fictitious or non-t-xisu nt 
 payee, if be bas not, and never could bave, any relation 
 or connection with the bill, his name being used only 
 as part of the fraud and with a view to disarming 
 suspicion. (Fa///<im'* (' [1891] A. C. 107.) 
 
 If the customer has by his act accredited the bill with 
 the forged indorsement to the bank, or put upon the bank 
 a risk greater than that involved by the possibility of a 
 forged indorsement on a genuine bill, the customer must 
 bear the loss. 
 
 In VrtiiH<in<>'s Case, itlii sii]>., the drawer's name, as \\vll 
 as that of the supposed payee, was the work of tin- 
 forger, and the documents were not really bills at 
 all. The House of Lords held that Vagliano, by writing 
 an acceptance on such documents, represented to the bank 
 that, up to that stage at least, they were genuine bills, involv- 
 ing none but the ordinary risk ; and that this representation 
 being in fact untrue, the bank were entitled to be indem- 
 nified. (See, specially, per Lord Macuaghten, at pp. 158, 
 159 ; ]>! Lord Halsbury, at p. 114.) 
 
 So, again, the inclusion of these spurious documents in 
 letters of advice to the bank of bills coming forward for 
 payment was an act of the customer directly tending to 
 mislead the bank, though such letters could not be read as 
 guaranteeing any indorsement. 
 
 There are references to the customer's duty withresju . -t 
 to the pass book in this case which have been dealt with 
 under that heading. (See ante, pp. 118, 119.) 
 
 The salient feature in the case is the assertion of the 
 right of bankers, acting as agents for the payment of 
 domiciled bills, to all the protection, consideration and 
 indemnities to which an ordinary agent is entitled M 
 against his principal. " A principal who has misled his 
 agent into doing something on his behalf which the agent 
 has honestly done, would not hi entitled to claim against 
 the agent in respect of the act so done." (Lord Halsbury, at
 
 FORGERIES. ' 153 
 
 p. 114.) " It is not disputed that there might, as between CHAP. XIV. 
 banker and customer, be circumstances which would be an 
 answer to the primd facie case that the authority was only 
 to pay to the order of the person named as payee upon the 
 bill, and that the banker can only charge the customer with 
 payments made pursuant to that authority. Negligence 
 on the customer's part might be one of those circum- 
 stances ; the fact that there was no real payee might be 
 another ; and I think that a representation made directly to 
 the banker by the customer upon a material point, untrue in 
 fact (though believed by the person who made it to be 
 true), and on which the banker acted by paying money 
 which he would not otherwise have paid, ought also to be 
 an answer to that primd facie case. If the bank acted 
 upon such a representation in good faith and according to the 
 ordinary course of business, and a loss has in consequence 
 occurred which would not have happened if the representation 
 had been true, I think that is a loss which the customer 
 and not the bank ought to bear." (Lord Selborne, at p. 124.) 
 
 Of course, in Vagliano's Case there was the special 
 feature of drawer and payee both being really absent from 
 the bill, so that Yagliano vouched as a genuine bill what, 
 save for his signature, was mere waste paper ; a material 
 point, if not leading so directly to the payment as the 
 forged indorsement; and an element not existing in the 
 case of a forged indorsement to a genuine bill (see per 
 Lord Macnaghten, at p. 159) ; but the rules laid down 
 above are of general application, and form the test of the 
 customer's responsibility in all cases. 
 
 The negligence on the part of the customer spoken of 
 by Lord Selborne must, however, be understood as limited 
 to negligence directly leading to the loss, or " enabling " 
 it, in the legal sense of the phrase, to be committed. 
 (Farquharson v. King [1902] A. C. 325 ; Vagliano's Case 
 [1891] A. C., at p. 115.) 
 
 Apart from any question between himself and his Liability to 
 
 true owner.
 
 154 FORGERIES. 
 
 XIV. customer, the banker who pays a bill domiciled with him 
 on a forged indorsement is liable to the true owner for 
 conversion of it, the payment being to an unlawful possessor, 
 incapable of giving a discharge (Smith v. Union Bank 
 of London, L. R., 10 Q. B., at p. 295 ; 1 Q. B. D., at 
 p. 35) ; there being no protection to the banker answering 
 that of sect. 60 with regard to cheques. 
 
 The banker would, of course, have a theoretical remedy 
 against the person who received the money, if he were the 
 forger or a party to the fraud. 
 
 As to the banker's position where the money has been 
 paid to a person who took the bill bond fid f and for value 
 without notice of the forgery, see " Money Paid by 
 Mistake," post, pp. 156, sqq.
 
 ( 155 ) 
 
 CHAPTER XV. 
 MONEY PAID BY MISTAKE. 
 
 MONEY paid under a mistake of fact is recoverable as CHAP. XV. 
 
 money had and received, unless circumstances exist which 
 
 make it unfair and inequitable that it should be recovered 
 
 by the party who paid it against the party who received 
 
 it ; as, for instance, where it has been innocently received 
 
 by an agent and paid over to his principal before any 
 
 notice of the contending claim. (See " Conversion 
 
 Money Had and Received," ante, p. 140 ; and Jacobs v. 
 
 Morris [1902] 1 Ch., at p. 833.) 
 
 The mistake must be one of fact, not general law, and it What mistake 
 must be a mistake between the party paying and the party ^o n gy S 
 receiving. It is not sufficient that the party paying should recoverable, 
 be under a misapprehension as to some fact, and that, but 
 for that misapprehension, he would not have paid the 
 money ; the mistake must touch the actual transaction. 
 
 In Chambers v. Miller, 13 C. B., N. S. 125, a bank paid 
 a cheque on presentation, but immediately afterwards 
 discovered that their customer, the drawer, had no assets 
 to meet it. It was held that the payment was irrevocable, 
 and the money not recoverable ; on the ground that the 
 mistake was not between the bank and the person who 
 received the payment, but between the bank and their 
 customer. 
 
 The same case shows that the property in money given 
 in payment of a cheque passes as soon as the money is 
 placed on the bank counter. 
 
 But it has been held that a mistake of fact which is 
 between the parties may support an action for money had
 
 MONEY PAID BY MISTAKE. 
 
 K..:_. : 
 
 i gnat u ITS. 
 
 CHAP. XV. an <i received, although the party paying had means of 
 knowledge of the real facts, of which he did not avail 
 himself, provided he pay honestly. (KeJIu v. Solari, 9 
 M. & W. 58; Imperial Jtanl,- <>r' Canada \. Haul 
 Hamilton [1908] A. C., at p. 56.) 
 
 The existence of a forged signature, whether that of 
 drawer, acceptor, or indorser, on a hill or cheque, is a 
 mistake of fact hetween the person who pays and the 
 person who presents the instrument and receives payment 
 in ignorance of the defect. (Cocks v. Must, rman, 9 B. & C. 
 !MCi : London and liir> r Plate Banlc v. Bank of Lir> r]>".,l 
 [1896] 1 Q. B. 7; Imperial Hani; of Canada v. Hank of 
 Hamilton [1908] A. C. 49.) Both parties believe the 
 document to be authentic in all respects, whereas it may 
 in some cases not be a negotiable instrument at nil, while 
 in others a material element, supposed genuine, is only a 
 sham. 
 
 The judgment of Mathew, J., in the above London and 
 Hirer 1 'late Jiaitk ('axe, raised much controversy, by reason 
 of the doctrine there enunciated that the exigencies of 
 negotiability rendered money paid on a negotiable instru- 
 ment to an innocent, though wrongful, possessor practically 
 irrecoverable. 
 
 The Privy Council, in the Imperial Until, /' ( 'anada < 
 also mentioned above, considered the propositions laid 
 down by Mathew, J., too sweeping, and imposed certain 
 limitations inconsistent with that judge's views. 
 
 The question involves the rights of bankers who pay on 
 domiciled hills to which one or more signatures are forged, 
 or on a cheque to which the customer's signature is 
 1. and is, therefore, of considerable importance. 
 
 Where the person receiving the money receives it with 
 a knowledge of the facts or mala fide, it can, of course, be 
 reil from him. (Kmdal \. \\'ood, L. R., 6 Ex.248.) 
 
 The ilitViculty :iri - where the person presenting the 
 instrument has taken it in good faith and for value, in 
 
 Importation 
 of question oi 
 negotiability.
 
 MONEY PAID BY MISTAKE. 157 
 
 ignorance of any previous forgery ; and the banker pays CHAP. XV. 
 him and subsequently discovers the forgery. Can the 
 banker in any and what circumstances recover the money 
 from the person who has innocently received it ? 
 
 The following are the leading authorities on the point : 
 In Smith v. Mercer, 6 Taunt. 76, an innocent holder 
 took a bill to the bankers' where it purported to be accepted 
 payable by a customer. The bankers paid it. Seven days , 
 afterwards, they discovered that the acceptance was a 
 forgery, and claimed the money back. Held that they 
 could not recover, on the grounds ; first, that the bankers 
 were bound to know their customer's signature, and 
 negligent in not detecting the forgery ; second, that by the 
 lapse of seven days, the holder had lost the opportunity of 
 giving notice of dishonour to prior parties. 
 
 In Wilkinson v. Johnson, 3 B. & C. 428, bills, purporting 
 to bear the indorsement of H. & Co., having been refused 
 payment, were taken to the London agents of H. & Co., 
 who took them up for their honour, and paid the money to 
 the holder, who was an innocent party and had given 
 value. The same morning, the London agents discovered 
 that the indorsement of H. & Co. was a forgery, as were 
 also the names of the drawer and acceptor. The c y 
 immediately gave notice to the holder, to whom they had 
 paid the money ; such notice being in time for the post, so 
 that the holder could have given due notice of dishonour to 
 other indorsers. Held that the money could be recovered 
 back, on the grounds ; first, that the plaintiffs were not the 
 drawees or acceptors, nor the agents of the supposed 
 acceptor ; second, that they discovered the mistake, and 
 gave notice thereof to the holder, in time for him to give 
 due notice of dishonour to prior parties ; third, that the 
 fault was not wholly that of the plaintiffs, inasmuch as the 
 calling upon them to pay for the honour of an indorser 
 implied a representation that that indorser's name was 
 really on the bill.
 
 158 MONEY PAID BY MISTAKE. 
 
 <-HAI'. xv. Cocks v. Masterman, 9 B. & C. 902, was for long the 
 leading case on the'point. There, a bill purporting to have 
 been accepted payable at a bank by a customer was 
 presented to that bank by an innocent holder on the due 
 date and paid. The next day the bank discovered that the 
 supposed acceptance was a forgery. They at once gave 
 notice to the person they had paid, and reclaimed tin- 
 money. Held that they could not recover. The court 
 gave no opinion as to whether the bank might have 
 recovered the money if notice of the forgery had been given 
 on the very day the money was paid, and proceed : " We are 
 all of opinion that the holder of a bill is entitled to know, 
 on the day when it becomes due, whether it is an honoured 
 or dishonoured bill, and that, if he receive the money and is 
 suffered to retain it during the whole of that day, the 
 parties who paid it cannot recover it back. The holder, 
 indeed, is not bound by law (if the bill be dishonoured by 
 the acceptor) to take any steps against the other parties to 
 the bill till the day after it is dishonoured. But he is 
 entitled so to do, if he thinks fit ; and the parties who pay 
 the bill ought not, by their negligence, to deprive the holder 
 of any right or privilege. If we were to hold that tin- 
 plain tiffs were entitled to recover, it would be in effect 
 saying that the plaintiffs might deprive the holder of a bill 
 of his right to take steps against the parties to the bill >n 
 the day when it becomes due." 
 
 In Matin r v. Maulstonc, 18 C. B., at p. 294, it was 
 suggested that the person who had in effect been paid had 
 sustained no prejudice by the mistake; but Cresswell, J., 
 said : " The law does not permit any inquiry as to that in 
 the case of negotiable instruments ; and it is highly 
 expedient that that should be so." Jervis, C.J., said : 
 As a general rule, the holder of a bill of exchange has a 
 right to know whether or not it has been duly honoured by 
 the acceptor at maturity, and when the bill is presented, if 
 the acceptor pays it, the money cannot be recovered back,
 
 MONEY PAID BY MISTAKE. 
 
 159 
 
 if the acceptor has the means of satisfying himself of his CHAP. XV. 
 liability to pay it, though it should turn out that the 
 acceptance was a forgery." 
 
 In Bobbett v. Pinkett, 1 Ex. D. 368, a bank paid a 
 cheque drawn on them, contrary to the crossing, but to a 
 person who had taken it for value and in ignorance of the 
 fact that the payee's indorsement was forged. Bramwell, 
 B., at p. 372, said that the customer might have refused to 
 allow the bank to debit his account with the amount of the 
 cheque ; and, had he done so, and the bankers brought an 
 action against the holder to recover back the money they 
 had paid him, they could have maintained that action. 
 In this case the bank had no knowledge or notice of the 
 mistake until four days after payment. It should be 
 stated, however, that the point was not a material one in 
 this case, inasmuch as the drawer had sent the payee 
 another cheque, and was himself suing the person who had 
 received the money for the first. 
 
 Still, the dictum appears at variance with the other 
 cases. 
 
 As will be seen, the judgment in Cocks v. Masterman 
 may be read as laying down an absolute rule barring the 
 recovery of the money ; at any rate, unless reclaimed the 
 same day ; but there are subsequent references to negligence 
 or the obligation to know the drawer's or acceptor's signature 
 whicb might lead to the conclusion that the broad rule was 
 limited to such cases ; and if so, payment on a forged 
 indorsement of a signature which could not possibly be 
 known to the payor would not fall within its operation. 
 Mr. Chalmers seems to incline to this view. (Bills of 
 Exchange, 6th ed., p. 211.) ' 
 
 But in the much criticised case of London and River Plate 
 Bank v. Bank of Liverpool [1896] 1 Q. B. 7, Mathew, J., 
 lays down the law to be derived from Cocks v. Masterman in 
 terms even broader than the general proposition contained 
 in that judgment. He held that the ruling principle was,
 
 160 MONKY 1'Ain HV MISTAKE. 
 
 <HM xv. n O t uegligeiice or the banker's knowledge or means of 
 kno\\ Irdgi-. but the right of a bolder of a bill to an 
 immediate and conclusive answer as to its fate, on tbe 
 due date, winch was an element essential to the nego- 
 tiability of the instrument and imperatively demanded by 
 the exigencies of business. 
 
 In the London anil liirt-r I'latc liaitlc Caw a bill drawn 
 on the plaintiffs on which indorsements were forged was 
 presented to, and paid by, them to the defendants on August 
 19th, 1898, and some months later the forgeries were 
 discovered and the action brought to recover the money as 
 paid under a mistake of fact. 
 
 Mathew, J., held it was not recoverable, and gave 
 judgment for the defendants. It was agreed that there 
 was no evidence of negligence on the part of the plaint ill's 
 and that the defendants had acted throughout in perfect 
 good faith. 
 
 After reviewing the cases prior to Cm7.x v. Must, rnnui 
 and expressing his opinion that the question of negligence 
 \\as not, and could no.t be, the foundation of the judgment 
 io any of them, Mathew, J., proceeds : "In CWAs v. 
 Mnxti'niHiii the simple rule was laid down in clear language 
 for the first time that, when a bill becomes due and is 
 presented for payment, the holder ought to know at once 
 whether the bill is going to be paid or not. If the mistake 
 is discovered at once, it may be that the money can be 
 recovered back ; but if it be not, and the money is paid in 
 good faith and is received in good faith, and there is an 
 interval of time in which the position of the holder may be 
 altered, the principle seems to apply that money once paid 
 cnnuot be recovered back. That rule is obviously, as it 
 seems to me, indispensable for the coudnct of business. 
 A holder of a bill cannot possibly fail to have his position 
 affected if there be any interval of time during which he holds 
 the money as his own, or spends it as his own, and if he is 
 subsequently sought to be made responsible to hand it back.
 
 MONEY PAID BY MISTAKK. Ib 
 
 It may be that no legal right may he compromised hy CHAP. XV. 
 
 reason of the payment. For instance, the acceptor may 
 
 pay the bill and discover on the same day that the bill is a 
 
 forgery, and so inform the holder of it, so that the holder 
 
 would have time to give notice of dishonour to the other 
 
 parties to the bill ; but even in such a case it is manifest 
 
 that the position of a man of business may be most seriously 
 
 compromised, even by the delay of a day. Now that clear 
 
 rule is one that ought not to be tampered with. It is one of 
 
 the few rules of business which is perfectly clear and distinct 
 
 at present, and, as it seems to me, is unimpeachable." 
 
 The main point in this judgment is that it lays down 
 that, where the payment is on a negotiable instrument, 
 neither the loss of the opportunity of giving notice of dis- 
 honour nor any actual prejudice or damage to the innocent 
 holder is necessary to entitle him to hold the money. If 
 he has had the money for such interval that his position 
 may have, not necessarily has, been affected, he can keep 
 it. The judgment further strongly discountenances the 
 view that the banker's duty to know his customer's 
 signature or negligence on the banker's part was the true 
 principle of any of the earlier decisions. 
 
 In 1902, the case of Imperial Bank of Canada v. Bank 
 of Hamilton [1903] A. C. 49, came before the Privy Council. 
 In that case one Bauer drew a cheque for five dollars on the 
 Bank of Hamilton, leaving a considerable space after the 
 word " five." He got it marked by the Bank of Hamilton 
 and then wrote in the word " hundred " after the "five." 
 He took the altered cheque to the Imperial Bank of Canada, 
 opened an account with it, and forthwith drew out the 
 amount by cheques. The Bank of Hamilton paid the 
 altered amount to the Imperial Bank of Canada on the 
 morning of January 27th, 1897. 
 
 The Bank of Hamilton discovered the fraud the next 
 morning, and immediately gave notice to the Imperial 
 Bank of Canada, demanding repayment of 495 dollars. 
 
 B. M
 
 102 MONEY PAID BY MISTAKE. 
 
 * 
 
 CHAP. XV. Th e p r i v y Council held the money was recoverable, 
 affirming the decision of the Canadian courts. 
 
 After stating that the Imperial Bank was not in fact 
 prejudiced in any way by want of notice on the day of 
 payment, the Privy Council say that it appeared to them 
 that the stringent rule laid down in Cock* v. Masterman 
 did not really apply to the case, and proceed : " The cheque, 
 as drawn and certified, i.e., for five dollars, was never dis- 
 honoured, and no question arises as to that. The cheque 
 for the larger amount was a simple forgery; and Bauer, the 
 drawer and forger, was not entitled to any notice of 
 dishonour by non-payment. There were no indorsers to 
 whom notice of dishonour had to be given. The law as to 
 the necessity of giving notice of dishonour has therefore 
 no application. The rule laid down in Cocks v. Mtmt<-nii(in, 
 and recently re-asserted in even wider language by Mathew, 
 J., in London and Hirer Plate Bank v. Bank of Liri /y>/, 
 has reference to negotiable instruments on the dishonour 
 of which notice has to be given to someone who would be 
 discharged from liability unless such notice were given in 
 proper time. Their lordships are not aware of any 
 authority for applying so stringent a rule to any other 
 cases. Assuming it to be as stringent as is alleged in 
 such cases as those above described, their lordships are not 
 prepared to extend it to other cases where notice of the 
 mistake is given in reasonable time and no loss has been 
 occasioned by the delay in giving it." 
 
 Decisions of the Privy Council are not binding authorities 
 on the High Court of Justice (Dulieu v. White [1901] 
 2 K. B., at p. 677), but they are treated as entitled to 
 great weight. 
 
 Consider*- It is exceedingly difficult to extract from these authorities 
 
 l*t twocMes. general rules governing all cases where a banker has paid 
 money on a forged signature to an innocent person. 
 
 Two classes of cases at once present themselves for 
 possible differentiation : 

 
 MONEY PAID BY MISTAKE. 163 
 
 First, where the document is not really a negotiable CHAP. XV. 
 instrument at all. 
 
 Second, where the forged signature is that of the 
 banker's own customer. 
 
 Where the document is not really a negotiable instrument, 
 the following considerations apply. 
 
 Mathew, J.'s, judgment being founded partially on the 
 exigencies of negotiability, its effect must be limited to 
 negotiable instruments. The Privy Council do not dissent 
 from the principle of that judgment, subject to certain 
 limitations ; while their judgment clearly involves the 
 exclusion of documents other than negotiable instruments 
 from the operation of the principle. 
 
 So far, then, as the matter is governed by considerations The exigen- 
 based on the exigencies of negotiability or Mr. Justice negotiability. 
 Mathew's judgment, one must presumably exclude all 
 documents on which all the operative signatures are forged; 
 for instance, the principle would not affect a cheque on 
 which the drawer's ostensible signature was a forgery, 
 and which had not been negotiated by indorsement. If 
 the cheque in the Bank of Canada Case was not, quoad 
 the raised amount, a negotiable instrument, but a mere 
 sham, as the Privy Council held, a cheque, on which 
 the only professingly operative signature is forged, can- 
 not be a negotiable instrument, but must be a sham 
 in toto. 
 
 In the same way, Lord Halsbury, speaking of the 
 documents in Vagliano's Case, said: "I have designedly 
 avoided calling these documents bills of exchange. They 
 were nothing of the sort." 
 
 It cannot be suggested that the exigencies of nego- 
 tiability require that a bogus instrument should be treated 
 as a real one for any possible purpose. That would be as 
 much contrary to reason and public policy as to hold a 
 man entitled to retain the change he had, possibly 
 innocently, obtained for a counterfeit sovereign. 
 
 M2
 
 L64 MONEY PAID BY MISTAKE. 
 
 CHAP. .\v. The Privy Council lend no countenance to any such 
 suggestion. 
 
 But a document, sham in its inception, may, by the 
 addition of a genuine operative signature, become a 
 negotiable instrument, at any rate by estoppel. A 
 document is fairly termed a negotiable instrument when a 
 person, or a succession of persons, can acquire rights upon 
 it, independent of previous forgeries or equities. A 
 genuine acceptance of a forged drawing, a genuine 
 indorsement where either drawing, acceptance, or prior 
 indorsement was or all of them were forged, a genuine 
 indorsement of a cheque with a forged drawing : any of 
 these would give a person taking the document in good 
 faith and for value a remedy on the document against the 
 person who had so affixed his signature. True, the 
 remedy is by estoppel only, but, as will be shown hereafter, 
 it is none the less on the instrument ; it enures for the' 
 benefit of every subsequent person who takes the bill or 
 cheque l>on<\ fulc and for value, and this is the essence of 
 negotiability. 
 
 The above view is borne out by the reference, in the 
 Battl <>f ( 'anathi Case, to the absence of indorsers. That 
 implies that if the cheque, sham as it was, had once been 
 genuinely indorsed, it would have come within the rules 
 applicable to negotiable instruments, whatever those rules 
 might be. 
 
 Mere transfer by delivery of an instrument professedly 
 payable to bearer, but really only a sham, would not 
 impart a negotiable character to it. The obligations arising 
 from such a transaction, are merely those of warranty 
 attaching to the chattel character of the bill or whatever 
 it purports to be. 
 
 The second question for preliminary consideration is, 
 what is the peculiar effect, if any, of the fact that tin- 
 banker pays on the forgery of his customer's signature ? 
 This factor may enter alike into cases where the document
 
 MONEY PAID BY MISTAKE. 165 
 
 is altogether a sham, as a cheque with a forged drawing OHAP. XV. 
 
 and nothing else, or where the instrument is a negotiable 
 
 one, as where that cheque has been genuinely indorsed, or 
 
 where drawer and indorsers to a bill are genuine, but the 
 
 customer's acceptance has been forged. Take the simple 
 
 case of a bearer cheque with drawer's name forged. 
 
 Assume it is not a negotiable instrument ; that therefore 
 
 the exigencies of negotiability do not apply. Does the 
 
 fact that the banker has paid it on the forged signature of 
 
 his customer preclude him from recovering the money 
 
 from an innocent bearer ? 
 
 It would be idle to deny that in well nigh all the earlier Question of 
 
 U G ^11 2 CD CG 
 
 cases, judges do talk about the banker being bound to 
 know his customer's signature and about negligence on 
 the banker's part. 
 
 Mathew, J.'s, judgment has sometimes been read as 
 laying down that negligence had nothing whatever to do 
 with the question. That is hardly so. His lordship 
 declined to recognise it as the ruling principle of any 
 of the previous cases, as was contended on behalf of the 
 plaintiff bank. The case was one of forged indorsement, 
 as to which no duty of recognition could be alleged, and it 
 was admitted the plaintiff bank had not been negligent. 
 In all the previous cases, as in the one before him, the 
 document had possessed negotiability ; and Mathew, J., 
 held that the real ground of those earlier decisions was 
 the same as that of his own, namely, the maintenance of 
 negotiability. (See ante, p. 161.) . 
 
 That would reduce the expressions of the earlier judges, 
 as to duty and negligence on the banker's part, to obiter 
 dicta; but they are so strong and numerous that they 
 cannot be altogether ignored. 
 
 It is a common phrase that " a banker is bound to know 
 his customer's signature " ; but it is a misleading and an 
 inaccurate statement. There can be no such legal 
 obligation. The real position is that if the banker pays
 
 MONEY PAID BY MISTAKE. 
 
 uway his customer's money in reliance on a signature's 
 being bis customer's, which is not so, be cannot charge the 
 customer with that payment. 
 
 Even if it were a duty to know the customer's signature, 
 it could only he a duty to the customer ; it could not possibly 
 extend to third persons, such as the payee of a cheque. 
 So with the suggested negligence ; there is no duty to the 
 payee or holder to take care, and without such a duty there 
 can in law be no negligence. 
 
 There would not appear in any of the earlier cases to have 
 been any definite finding by a jury of negligence against 
 the banker. The term is invariably used, by those judges 
 who employ it, in close connection with the supposed duty of 
 the banker to know his customer's signature. 
 
 The supposed negligence really seems the outcome of 
 defective evolution. The duty of the banker to know the 
 customer's signature is assumed. There is no indication 
 of the stages by which that absolute duty is transformed 
 into a duty to take care, and the correlative right to have 
 care taken transferred from the customer to the payee or 
 holder. There is nothing to show the breach of that duty. 
 As Mathew, J., pointed out, if the forgery was cleverly 
 executed, the banker might not be able, by any amount of 
 care, to ascertain whether the signature was or was not a 
 forgery. So the breach is assumed or its necessity ignored ; 
 und the failure of the banker to fulfil his supposed absolute 
 duty to his customer to know that customer's signature 
 finally emerges in the form of a breach of duty to a third 
 person to take care, in other words, negligence of which that 
 third person is entitled to avail himself. 
 
 It is of course conceivable that there might be cas> 
 real carelessness on the part of the banker. The signal un 
 might present glaring dissimilarity to the customer' > 
 ordinary one. And in such a case it might be suggested 
 that though, by reason of the absence of duty, then \\as n. 
 negligence in the legal sense, there was a recklessness, u
 
 MONEY PAID BY MISTAKE. ID? 
 
 departure from ordinary business habits, which, in a contest CHAP. XV. 
 between two innocent parties, made it inequitable that the 
 money should be recovered from the man who was 
 absolutely powerless to prevent the loss by the one who 
 might have done so. The words of Bayley,J., in East India 
 Company v. Tritton, 3 B. & C., at p. 289, might be 
 quoted : " The most favourable view of this case for the 
 plaintiff's is to say that both parties are innocent and free 
 from blame : but even then the maxim, ' Potior est conditio 
 possidentis' applies." Reference might also be made to 
 remarks in Jacobs v. Morris [1902] 1 Ch. at p. 833, as to the 
 effect of a disregard of business habits in precluding a man 
 from recovering money he has paid by mistake ; and to the 
 unqualified statement by Bramwell, B., in Hart v. Frontino, 
 d-c., Company, L. B,., 5 Ex., at p. 115, as to a banker paying 
 on a forged cheque not being able to recover the monpy. 
 
 On the other hand, there is the authority of Kelly \.Solari, 
 9 M. & W. 58, that neglect of means of knowledge does not 
 prevent recovery if the payment was made honestly, and 
 that case was upheld in the Bank of Canada Case. A case 
 and opinion given in 1882, the latter entitled to very great 
 weight, are published in " Questions on Banking Practice," 
 5th ed., question 613. There the question was put 
 directly ; whether the banker who has paid a cheque with 
 his customer's signature as drawer forged, or a bill with his 
 customer's signature as acceptor forged, can recover the 
 money from the innocent holder ? And the opinion given 
 was that, though the law was in an unsatisfactory state on 
 the point, the true view apparently was that negligence 
 on the part of the payer was immaterial, and that in both 
 cases the banker could recover the money, if he gave notice 
 to the person he had paid before the latter's position had 
 been altered. 
 
 What view a court would take were the question directly 
 before them, must be doubtful. Unquestionably they 
 would reject the idea of a banker's supposed duty to know
 
 168 
 
 MONKY PAID BY MISTAKE. 
 
 CHAP. XV. 
 
 A* to notice 
 f dishonour. 
 
 his customer's signature affording any advantage to a third 
 party. 
 
 But it is conceivable that if they found that there had 
 been real carelessness or neglect of ordinary business 
 precautions on the part of the bank, not merely the omission 
 to avail itself of sources of information, they might hold 
 that this turned the scale, making it inequitable that tin- 
 money should be recovered. 
 
 And there is always present the idea, based, perhaps, on 
 no distinctly assignable ground, that in some way or 
 another, possibly on the basis of representation implied by 
 payment, a court would be astute to debar a banker from 
 recovering money he had paid an innocent person on a. 
 forgery of his own customer's signature. 
 
 Leaving this element of the forgery being that of the 
 customer's signature to be settled, as it only can be, by a 
 court, the points of coincidence and divergence of the two 
 latest cases have now to be considered. They concur in 
 attaching special incidents to payment by mistake on a 
 negotiable instrument. They diverge mainly on the qu -- 
 tion whether the loss of opportunity of giving notice of 
 dishonour is the test as to the money being recoverable or 
 not. Mathew, J., holds that where the money has once been 
 paid, it cannot be recovered if such an interval bus elapsed 
 that the position of the innocent receiver may conceivably 
 have been prejudiced, apart from any question of notice of 
 dishonour or the loss of remedy against prior parties. The 
 Privy Council decline to follow him in this, and confine the 
 prohibition of recovery to cases where the delay involves 
 the loss of the opportunity of giving notice of dishonour 
 and the consequent discharge of some prior party. 
 
 :i tribunals recognise Cocks \. Mnxti'i-nuin as the 
 leading authority, and it is noticeable that in that case, us 
 pointed out by Matin \\, J., the court, while recognising 
 that the holder of a dishonoured bill is not bound to give 
 notice of dishonour until the following day, uphold his
 
 MONEY PAID BY MISTAKE. 
 
 right to be in a position to give it on the day of dishonour, CHAP. XV. 
 as he would be if he got a definite and final answer. In 
 form the court refer to the holder's right to " take steps " 
 against the other parties to the bill the same day as it is 
 dishonoured. This must mean the right to give notice ; as 
 no action could or can be maintained until after the expiration 
 of the day for payment. The right of recourse arising on 
 dishonour is not the right of action. (Kennedy v. Thomas 
 [1894] 2 Q. B. 759.) The insistence on the holder's right 
 to be in a position to give notice on the actual day of dis- 
 honour is distinctly in favour of Mathew, J.'s, view that the 
 court in Cocks v. Masterman did not regard the loss of the 
 opportunity of giving notice as the only or true test. 
 
 The time for giving notice of dishonour is regulated by 
 sect. 49 of the Bills of Exchange Act. It may be given as 
 soon as the bill is dishonoured and must be given within a 
 reasonable time thereafter. 
 
 It has been assumed in all the cases, including the 
 River Plate and the Bank of Canada Cases, that if the 
 money paid were recovered from the holder later than the 
 day after he received it, his right of giving notice of 
 dishonour would be irrevocably lost, and with it his right 
 of recourse or action against prior parties. 
 
 Such a consensus of authority 'renders it almost certain 
 that such is the case. At the same time, there were rules 
 of law existing before the Bills of Exchange Act, and there 
 are now provisions in that Act, which one might otherwise 
 have thought applied to this situation, and reserved to the 
 holder the right to give. notice at a later date, even as late 
 as that when the money was reclaimed. 
 
 It is clear the holder could not give notice of dishonour 
 when the bill was paid. 
 
 Payment is not dishonour. As Gibbs, C.J., said in 
 Smith v. Mercer, 6 Taunt., at p. 86: " The defendants, 
 while the bill continued paid, could not have given notice 
 to the indorser, for the bill was not dishonoured."
 
 170 MONEY PAID BY MISTAKE. 
 
 CHAP. xv. if^ then, there is any dishonour of which notice has to be 
 given, it would seem as if it took place when the money 
 was reclaimed rather thata when it was paid, and that the 
 notice might effectively be given then. 
 
 Delar in But if, by some process of relation back, the dishonour be 
 
 'hf *T regarded as occurring on the date of presentation and pay- 
 ment, sect. 50 sub-sect. (1) of the Bills of Exchange Act 
 provides as follows : " Delay in giving notice of dishonour is 
 excused where the delay is caused by circumstances beyond 
 the control of the party giving it, and not imputable to 
 his default, misconduct or negligence. When the cause 
 of delay ceases to operate, the notice must be given with 
 reasonable diligence." 
 
 The sub-section appears distinctly calculated to cover 
 the case of a person who has received payment of a bill or 
 cheque on presentation, and remained in total ignorance of 
 anything to affect his rights until the money is reclaimed 
 on the ground of forgery or mistake. The delay is caused 
 by circumstances beyond his control, and there is no 
 default, misconduct or negligence on his part to which 
 the delay is referable. 
 
 If this view be accepted, the curious result follows that, 
 according to the test laid down by the Privy Council in 
 the Hani; i it 'Camilla Case, and their interpretation of the 
 ulier authorities, there could be no condition of circum- 
 stances precluding the bank or other payer from recovering 
 the money paid on a forgery; as the right to give notice 
 would never be lost unless it were by the fault of the 
 person paid, in not giving it within a reasonable time after 
 notice of the mistake and claim. 
 
 No dciuht the position of prior parties might have 
 alien <1 meanwhile, and the remedy against them prove not 
 M> effective, but they would not bo discharged for want of 
 notice, and that is the only test laid down by the I'rivy 
 > incil. Moreover, as Cresswell, J., said in Matin r \. 
 Maiibt- . L8 G !'-..; :it ). 'J'.M . w it h re-janl to t he alteration
 
 MONEY PAID BY MISTAKE. ' 171 
 
 of position of prior parties : " The law does not permit CHAP XV. 
 any inquiry as to that, in the case of negotiable instruments, 
 and it is highly expedient that that should be so." 
 
 No doubt that was said in answer to a contention that . 
 the holder was not injured by being deprived of the 
 opportunity of giving notice, but it would seem equally 
 applicable where the notice, though delayed, was given in 
 time according to law. 
 
 Again, if the above suggestion is accepted, it leaves 
 Mr. Justice Mathew's test, or some slightly modified form 
 thereof, the only alternative to recovery in every case. 
 The exigencies of negotiability, recognised and upheld by 
 him as deducible from Cocks v. Masterman, unquestionably 
 would require that money paid to any innocent person on 
 a negotiable instrument should not be taken from him in 
 every and any case, irrespective of the prejudice to him. 
 The burden of showing such prejudice should certainly not 
 be cast upon him. The earlier cases, such as Cocks v. 
 Masterman, seem to point to notice of the mistake if given 
 the same day being sufficient to justify recovery. Mr. 
 Justice Mathew points out, cogently enough, that prejudice 
 may easily occur within the space of a working day. In a 
 matter of this sort, involving the credit of negotiable instru- 
 ments, the stricter rule is probably the safer and wiser. 
 
 But it must be admitted that the difference of opinion 
 manifested in the two latest cases has not tended to make 
 the state of the law on the point more satisfactory than it 
 was when the opinion above referred to was given. 
 
 A very specious criticism has been passed on the Criticisms on 
 judgment of Mathew, J., which, if just, might have results of 
 beyond its immediate purview. answered. 
 
 It is contended that, admitting the exigencies of 
 negotiability may justify the stringent rule laid down by 
 the learned judge, with regard to persons who are legal 
 and commercial holders, there is no ground for applying 
 that rule, where, as in the River Plate Bank Case, the
 
 17'2 MONEY PAID BY MISTAKE. 
 
 CUM- xv. person against whom it was sought to recover the money 
 was not really a holder, there being a forged indorsement 
 in the course of the negotiations by which he ultimately 
 . became possessed of the bill. Before combating it, one 
 may as well state. the adverse case even more strongly. It 
 may be admitted that not only a forged indorsement, but 
 any other forgery of an essential signature would preclude 
 any subsequent possessor from being a complete holder of 
 the bill. The bill is, to use a well-known phrase, " the 
 whole bill and nothing but the bill ;" and a man who is 
 honestly in possession of a document purporting to be a 
 bill, but on which, nevertheless, he has no recourse 
 against, say the acceptor, is not, strictly speaking, the 
 holder of that bill. 
 
 But, so far, at any rate, as Mr. Justice Mathew's 
 judgment is concerned, the criticism is not justified. 
 
 In the Jiirfi- ]'l<tt<' Jhuik Case, and indeed in all the 
 cases which preceded it, the defect in the holder's title was 
 a forged indorsement succeeded by one or more genuine 
 ones. As previously stated, it may be admitted that such 
 a holder is not strictly entitled to the status of a holder of 
 the bill. He has in no event recourse against any party 
 prior to the forgery, and his rights, being limited to 
 subsequent indorsers and based only on the artificial 
 doctrine of estoppel, are insufficient to warrant his posing 
 as the ordinary holder of an ordinary bill, an iiistrunx nt 
 which requires a regulation number of actual parties. 
 
 At the same time, he is, both for practical purposes and 
 is recognised by the Act as, a holder, and not only 'a holder 
 but a holder in due course. 
 
 Under sect. 2, no doubt, he is not a holder, he is not 
 the indorsee of the whole bill, he has no recourse against 
 parties prior to the forged indorsement. 
 
 Hut sect. ";) provides that an indorser is precluded I'mm 
 denying certain things ; to whom? To a " holder in due 
 course." What is lie precluded from deny in- '.' " The
 
 MONEY PAID BY MISTAKE. 9 '173 
 
 genuineness of the drawer's signature and all previous CHAP. XV. 
 indorsements." 
 
 That embraces the case of one or more previous forged 
 indorsements. 
 
 It is true that the term is probably used, if intentionally 
 used at all, as merely designating the class of person who 
 is entitled to avail himself of the estoppel thereby created ; 
 as synonymous with " a person who has taken the bill 
 in good faith, before it was overdue, and for value," but 
 there is the technical word "holder," which imports the 
 definition of sect. 2, through sect. 29, and that in the 
 teeth of one or more presumed forged indorsements. And 
 the holder of such a bill or cheque, that is, the holder 
 under one or more genuine indorsements following one or 
 more forged indorsements, is just as much within the 
 reasoning of the judgment either of Mathew, J., or of 
 the Privy Council, as is the holder in due course of a bill 
 or cheque on which every signature is genuine. 
 
 Take it on the basis of the judgment of Mathew, J. 
 The man is perfectly innocent, he is the holder of a 
 negotiable instrument, recognised as such, and as a 
 holder in due course, by the Act ; he would be just as much 
 injured if the money were recovered against him as if the 
 bill had been perfectly regular throughout. 
 
 Take it on the basis of the Privy Council judgment. 
 Again he is innocent, again he is holder in due course of a 
 negotiable instrument, and he would be within their rule 
 if he lost his opportunity of giving notice of dishonour, and 
 a previous party were thereby discharged. And, assuming 
 the position adopted by the Privy Council, this would be 
 the inevitable consequence if the money were recoverable 
 against him. 
 
 This point has been misunderstood. It has been con- Kcmedy by 
 tended that the remedy against an indorser subsequent to a thebfn 
 forged indorsement is on the ground of warranty, and so 
 independent of notice of dishonour. This is not so. The
 
 174 MONEY PAID BY MISTAKE. 
 
 CHAP. XV. ,, n ly person who warrants anything with regard to a bill is 
 a transferor by delivery. Under sect. 58 he " warrants to 
 his immediate transferee, being a holder for value, that 
 the bill- is what it purports to be, that he has a right 
 to transfer it, and that at the time of transfer he is 
 not aware of any fact which renders it valueless." 
 
 The distinction between him and an iudorser is empha- 
 sised by the same section defining him as the holder of a 
 bill payable to bearer, who negotiates it by delivery without 
 indorsing it, and by enacting that " a transferor by delivery 
 is not liable on the instrument/' 
 
 An iudorser warrants nothing, and, whether he indorses 
 after a forged indorsement or otherwise, he is liable on the 
 instrument. In the case where he indorses after a forced 
 indorsement, the processes of his liability on the bill are as 
 follows : 
 
 I'nder sect. 55, sub-s. 2 (a), by his indorsement he 
 " engages that on due presentment it shall be accepted 
 and paid according to its tenour, and that, if it be dis- 
 honoured, he will compensate the holder, provided that the 
 requisite proceedings on dishonour be duly taken." 
 
 Where the person in whose hands the bill has been dis- 
 honoured applies to the indorser subsequent to the forced 
 indorsement for compensation, suppose that indorser says: 
 "I never undertook fo compensate you; you are not tin- 
 bolder, as there was a forged indorsement prior to mine." 
 Answer: "I took the bill for value, and in good faith. 
 
 't. 55, sub-s. 2 (b) says: 'The indorser of a bill is 
 precluded from denying to a holder in due course the 
 genuineness of the drawer's signature and all previous 
 indorsements/ That presupposes a previous forgery, but 
 as against me you cannot set it up. Although not really 
 a holder, I am, </"<></</ you, a holder, and in due course." 
 It tin imlorser could truly say: " Very \\vll; but I only 
 undertook to compensate the holder, provided the ivcjuisit- 
 proceedings on dishonour were duly taken, as stated in
 
 MONEY PAID BY MISTAKE. ' 175 
 
 sect. 55, sub-s. 2 (a), and you have given me no notice of CHAP. XV. 
 dishonour ; " that would be a good answer. 
 
 The operation is by preclusion of denial, in other words, 
 by estoppel, not by warranty ; the indorser is, as implied 
 in the statement of what the transferor by delivery is not, 
 liable on the instrument, and it is a condition of that 
 liability that notice of dishonour shall be given unless 
 waived or excused. 
 
 In the case, then, of a person innocently and for value Probable 
 holding a bill or cheque bearing a genuine indorsement, " the wo 
 after one or more forged indorsements or other signatures, decisions, 
 the judgment of the Privy Council would preclude recovery 
 of the money paid to him if he had lost the opportunity of 
 giving notice of dishonour to the genuine indorsers. The 
 judgment of Mathew,' J., would prevent such recovery if 
 the position of such person might have been altered in the 
 interval, as the instrument was negotiable. 
 
 The case of the man who has innocently obtained pay- 
 ment of a real cheque or bill which he has taken Itonafide 
 and for value, but on which the only or last indorsement is 
 a forgery, presents more difficulty. 
 
 It is a negotiable instrument. The person who has 
 been paid is not a holder, even by estoppel against 
 anybody. He has no right to give notice to anyone, and 
 he has no remedy against anyone. 
 
 Under the Privy Council judgment, the money could be 
 recovered from him ; not because it was not a negotiable 
 instrument, but because no remedy could be lost and no 
 opportunity of giving notice of dishonour taken away, 
 seeing no right to give it existed. 
 
 Under the judgment of Mathew, J., in the River Plate 
 Bank Case, presumably the money would not be recoverable. 
 Mathew, J., there seems to use the term " holder," not in 
 its technical sense, but as signifying any innocent person in 
 possession of a negotiable instrument, or at least as including 
 such person.
 
 176 MONF.Y PAID BY MISTAKE. 
 
 CHAP. XV. The persons who presented the bill in that case were 
 not technically holders, and Mathew, J. makes no 
 distinction on the ground of their being so, by estoppel, 
 with regard to some indorsers. Again, his not attaching 
 any importance to the question whether notice of dishonour 
 could or could not be given, tends to show that the element 
 of loss of remedy was, in his opinion, immaterial. The 
 words he uses (1896, 1 Q. B. at p. 11), " Payment made 
 on a forged indorsement to the holder of it in good faith," 
 would seem to include the case; "the holder under a forged 
 indorsement " being the common, if inaccurate, expression 
 to denote a person who is in possession of a bill on which 
 the only or last indorsement is forged. 
 
 The commercial necessity of the payment or dishonour 
 of a bill being final equally applies to this latter case. 
 
 It is true that the person who presented the bill could 
 never have given notice of dishonour or had recourse 
 against anybody on it, but he was perfectly innocent, the 
 commercial necessity is based on the exigencies of pre- 
 serving the credit of negotiable instruments, not on any 
 question of the rights of. action which may accrue under 
 them, and, in one sense, the necessity applies all the more 
 where there is no possibility of recourse against anyone. 
 
 It might be suggested that in both the cases supposed 
 it was the more imperative to apply Mr. Justice Mathew's 
 rule, because in the first case, if the power of giving notice 
 of dishonour was lost, and in the second, in any event, 
 the innocent person might lose the money more than once. 
 He would have paid it once, either in cash or in value, when 
 he took the bill ; then he would pay it to the bank ; and, 
 again, he might have to pay it to the true owner as 
 damages for conversion, or money had and received. There 
 is 110 obvious fallacy in this suggestion, but there must 
 be some method of avoiding the anomaly which would 
 leave the amount of the bill ultimately either with the 
 person really liable for it or with the bank. Probably,
 
 MONEY PAID BY MISTAKE. 177 
 
 repayment to the bank might be treated as in trust for the CHAP. XV. 
 true owner, payment to the true owner as on behalf of 
 the bank. 
 
 It should be added that payment of a cheque on a forged 
 indorsement would not, in ordinary cases, oblige the 
 banker to seek repayment of the money, as he could debit 
 his customer with the amount, by virtue of sect. 60. 
 
 B.
 
 ( 178 ) 
 
 No additional 
 liability by 
 rcamn of 
 word* " for 
 safe custody.'' 
 
 CHAPTER XVI. 
 VALUABLES FOR SAFE CUSTODY. 
 
 rn.\r. xvi. IT has become customary for bankers to assume the charge 
 of plate chests, securities, and other valuables belonging 
 to customers, for the convenience of the latter. No 
 charge is usually made for such accommodation. 
 
 In common phraseology, the goods are said to be 
 delivered to the banker for "safe custody," and in 
 acknowledgments and receipts these words, " for safe 
 custody," sometimes occur. 
 
 It appears clear that the use of these words does not 
 affect the measure of liability of the banker ; does not make 
 him an insurer. Some of the early cases on the point are 
 difficult to reconcile. They are all studiously reviewed in 
 Ross v. /////, 2 C. B. 877, where the court arrived at the 
 conclusion that an undertaking in such terms must be 
 interpreted in the light of the legal consequences arising 
 from the relation between the parties, and that the express 
 contract did not extend the liability. 
 
 The first question, therefore, is ; what is the relation 
 between banker and customer where the goods are 
 received by the former ; whether the banker is a bailee for 
 reward with the liabilities attaching to that position, or a 
 gratuitous bailee with only the liabilities of such ? 
 
 It has been contended that the custom of bankers 
 taking charge of their customers' valuables is so common 
 that it is an implied part of the contract when a in .111 
 opens an account, that the banker will, if required, rovivr 
 his valuables to a reasonable extent and for a reasonable 
 time ; that the opening the account affords consideration
 
 VALUABLES FOR SAFE CUSTODY. 179 
 
 for this undertaking, as well as for the ordinary duty to I'HAP. XVf. 
 
 repay the money and to honour cheques. It would, of 
 
 course, be open to the customer, when opening the account, 
 
 to make express stipulation as to such accommodation, in 
 
 which case there would be sufficient consideration to place 
 
 the banker in the position of a bailee for reward. 
 
 But in the ordinary state of affairs, where nothing is' Banker 
 said at the time of opening the account, and where there gratuitous 
 is no payment for the accommodation, the position of the bailee, 
 banker is that of a gratuitous bailee. It was so held in 
 Giblin v. M'Mullen, L. R., 2 P. C. 318; Re United 
 Service Company, L. R., 6 Ch. 212 ; and Leese v. Martin, 
 L. R., 17 Eq. 235. It is true that in Brandao v. Barnett, 
 12 Cl. & Fin., at p. 809, Lord Campbell, speaking of the 
 custom of bankers to receive the interest on exchequer 
 bills for their customers, says: "I think that the 
 transaction is very much like the deposit of plate in 
 locked chests at a banker's. A special verdict might 
 find that it is the custom of bankers, in the course 
 of their trade as such, to receive such deposits from 
 their customers, but I do not think that from that 
 finding a general lien could be claimed on the plate 
 chests. In both cases, a charge might be made by the 
 bankers, if they were not otherwise remunerated for their 
 trouble." 
 
 This dictum is, however, too vague and indirect to 
 stand against the authorities on the other side. 
 
 In consequence of the apprehension excited among 
 bankers by the case of Langtry v. Union Bank of London, 
 in 1896, the committee of the Central Association of 
 Bankers, after taking legal advice, issued a report on 
 the whole question, which is published in the Journal of 
 the Institute of Bankers, vol. xvii., p. 455, in which they 
 say : "The better opinion seems to be that when a banker 
 takes charge of a locked box, supposed to contain valuables 
 (the contents of which, however, are not known to the 
 
 N 2
 
 180 VALUABLES FOR SAFE CUSTODY. 
 
 CHAP. xvi. banker, aud to which he has no access), he would be held 
 
 to he a gratuitous bailee." 
 Degree of care The degree of care which a gratuitous bailee is 
 
 required from fo^ft to j^ke of property entrusted to him is defined 
 
 ^mtuitoiu- 
 
 bailee. ill Giblin v. M' Mullen thus : " He is bound to take the 
 
 same care of the property entrusted to him as a reasonably 
 prudent aud careful man may fairly be expected to 
 take of his own property of the like description " 
 (L. R., 2 P. C., at p. 339). 
 
 The employment of the facilities at the banker's 
 disposal, such as safes, strong-rooms, &c., must, it is sub- 
 mitted, be included in the care a banker must take of his 
 customers' valuables. The utilisation of available means 
 of securing safety is an ingredient in the reasonable care 
 a prudent man would take of his own valuables. 
 
 It has been contended that this is not fair on the banker ; 
 that it is raising him, who receives nothing, to the same 
 level as a bailee for hire, whose obligation is to put himself 
 in a position to take the highest degree of care possible, to 
 adopt all precautions and means of ensuring safety known to 
 contemporary science ; and that it is unreasonable that tin 
 strong-rooms and safes, which a banker happens to have 
 for his own purposes, should be gratuitously at the 
 service of the customer, who could nowhere else get the 
 same convenience without paying for it. But the rule as 
 above laid down holds good. The distinction is really 
 this : the gratuitous bailee must do his best with what he 
 has got, he must use all facilities of which he is possessed, 
 but he is not bound to do more. He is not bound to pro- 
 vide at his own expense the means of ensuring a higher 
 degree of security for the articles deposited with him ; 
 whereas the bailee for hire is bound, as before stated, t<> 
 adopt at his own expense all appliances and safeguards 
 procurable. 
 
 Hanks being generally provided with such appliances 
 and safeguards, the question as to whether the banker is
 
 VALUABLES FOR SAFE CUSTODY. 181 
 
 a gratuitous bailee or a bailee for reward becomes practi- ^^ XVI - 
 cally an academic one in estimating the degree of care to 
 which he is bound. 
 
 It does not seem that the banker's knowledge or Knowledge 
 
 of nature of 
 ignorance of the nature of the goods entrusted to him articles. 
 
 affects the question of his liability. 
 
 The rule was laid down in Giblin v. M l Mullen in the ! 
 form given, without any qualification as to knowledge or 
 ignorance; and the facts of that case go very strongly to show 
 that in that instance the bank had no knowledge or means 
 of knowledge of the nature of the goods. Damages for 
 negligence are such as are supposed to have been in the 
 contemplation of the parties at the date of the contract, and 
 if the goods are taken without inquiry, such contemplation 
 would seem to embrace the value of the goods, whatever 
 it might prove to be. If a customer brings a box for safe 
 custody, there is a presumption that it contains articles of 
 value. If however, he mislead the banker in any way as to 
 the value, he would infallibly be held bound by his representa- 
 tions, and could hold the banker to no greater liability, either 
 as to degree of care or amount of compensation, than was 
 commensurate with goods of the character represented 
 by him ; if indeed that. 
 
 Apart from negligence facilitating such an act, a bank 
 is not liable for the loss of a customer's goods by the 
 fraud or felony of members of its own staff. In Foster v. 
 Essex Bank, 17 Massachusetts Reports, 478 (approved 
 in Giblin v. M'Mullen], the cashier and chief clerk of 
 the bank fraudulently took, and absconded with, specie 
 deposited by a customer. The court held that the bank 
 was not responsible for their fraud or felony, as, when they 
 abstracted the customer's gold from the cask in which it was 
 contained, they were not acting within the scope of their 
 employment; and added : " The bank was no more answer- 
 able for their act than it would have been if they had 
 stolen the pocket-book of any person who might have laid
 
 VALUABLES FOR SAFE CUSTODY. 
 
 it upon the desk while he was transacting some business 
 at the bank." 
 
 The case of Lang try v. Union Bank of Ijondon (Journal 
 of the Institute of Bankers, vol. xvii., p. 888), which 
 was settled hy judgment for the plaintiff by consent for 
 t'10,000, arose out of the delivery of the goods to an 
 unauthorised person, on a forged order. 
 
 The bank's counsel, in announcing the settlement in 
 court, said that the bank would not have submitted to any 
 judgment implying negligence on the part of their officials, 
 without the fullest investigation of the law and the facts. 
 
 The question naturally arose as to what, if any, right of 
 action accrued to a customer in like circumstances, apart 
 from negligence ; and legal opinion was somewhat divided 
 on the point. 
 
 The Central Association of Bankers went fully into the 
 matter,, and in their memorandum, previously alluded to, 
 they say : " It is necessary to distinguish between cases in 
 which valuables are by mistake delivered to the wrong 
 person (as in Mrs. Laugtry's case) and cases in which 
 they are destroyed, lost, stolen, or fraudulently abstracted, 
 whether by an officer of the bank or by some other 
 person. The best legal opinion appears to be that, in 
 the former case, the question of the negligence of a 
 bailee does not arise ; that the case is one of wrong- 
 ful conversion of the goods, and that the bank is liable 
 for this wrongful conversion, apart from any question of 
 negligence." 
 
 Those who support this view do so on the basis of the 
 distinction between commission and omission, between the 
 active interference with the property, involved in the 
 voluntary handing over of the goods to a person not entitU ! 
 to receive them, and the more passive neglect of duty which 
 may result in their loss. The former, if induced by 
 specious fraud, may be in no wise blameworthy, but con- 
 n is independent of am siu-h consideration.
 
 ft 
 
 VALUABLES FOR SAFE CUSTODY. 
 
 Authority for this position is not wanting. The cases 
 have usually been those of carriers who have delivered 
 goods to the wrong person. The earlier authorities are 
 summarised mStephenson v. Hart, 4 Bing. 475, Parke, J., 
 saying : " From the cases which have been cited it is clear 
 that trover lies against a carrier for misfeasance in delivering 
 a parcel to a wrong person. In Ross v. Johnson a distinc- 
 tion was taken between misfeasance and nonfeasance, and 
 it was holden that trover would not lie where a carrier had 
 lost goods by a robbery or theft, Lord Mansfield and 
 Aston, J., considering that a case of mere omission. But 
 in Youl v. Harbottle, Lord Kenyon, referring to lioss 
 v. Johnson, said that where the carrier was actor 
 and delivered the goods to a wrong person he was liable 
 in trover." Gaselee, J., dissented, on the ground that the 
 goods had in fact been delivered to the person for whom 
 they were intended, although that person had procured 
 their consignment by fraud; but he says : " For delivery 
 to a wrong person a carrier is no doubt responsible in 
 trover." In M'Kean v. M'lvor, L. K., 6 Ex. 36, 
 Bramwell, B., in referring to this case said : " There were 
 circumstances there to excite suspicion ; but I think the 
 reasoning of Gaselee, J., who dissented from the judgment 
 of the court, is right. There was nothing to show that it 
 was not W. who received the box ; it may rather be 
 collected that it was." But he does not impugn the law 
 as there laid down ; in fact he says (p. 41), "I assume 
 that a misdelivery would have been a conversion." 
 
 Duff v. Budd, 3 B. & B. 177, was a case of misdelivery 
 under circumstances of gross negligence, and the judg- 
 ments are based on that negligence ; but it is submitted 
 that the importation of negligence is accounted for by 
 the fact that the defendant's position was that of in- 
 voluntary bailee, the contract of carriage having come 
 to an end (see at p. 181), with the consequent liabilities 
 hereafter appearing.
 
 184 VALUABLES FOR SAFE CUSTODY. 
 
 CHAP. XVI. l n He\uj\i v. London and North-Western 
 
 L. R., 5 Ex. 51, both Stcphenson v. Hart and Duff v. 
 Budd were quoted. In that case, the goods had been tendered 
 by the defendants at the place to which they were addressed, 
 but the person in charge of the premises refused to receive 
 them. The defendants deposited the goods in safety and sent 
 an advice note to the consignees, requesting instructions for 
 delivery, and further, that on sending for them the advice 
 note should be produced. The advice note was presented a 
 few days after by a person who demanded delivery on behalf 
 of the consignees, and the goods were delivered to him. 
 
 The court held that the defendants' character as carriers 
 was at an end when the goods were refused, through no 
 default of their own ; and that they thereupon became invo- 
 luntary bailees, with no obligation except to act reasonably 
 in the circumstances. 
 
 In his judgment, Kelly, C.B., refers to this position of 
 the defendants as involuntary bailees, and asks whether as 
 such they became subject to an absolute duty to deliver to 
 the proper person, so as to be liable for a misdelivery, 
 though without negligence, and says : " The only authorities 
 in the courts of this country cited in support of that 
 proposition are Stephenson v. Hart and Dujj v. Budd ; but in 
 neither case was it held or even contended that the mis- 
 delivery amounted as a matter of law to a conversion, but 
 in both cases it was admitted to be a question for the jury. 
 and the question was in fact left to them, whether, under 
 all the circumstances, the defendants had acted with reason- 
 able care. It is plain then, on the authority of those cases, 
 that misdelivery under such circumstances is not, as a matter 
 of law, a conversion, but that it is a question of fact for the 
 jury whether the defendants have exercised reasonable and 
 proper care and caution." 
 
 It is to be noticed that in both the cases quoted in this 
 judgment there had been a previous refusal to accept th 
 goods or a failure to discover the consignee ; so that in them,
 
 VALUABLES FOB SAFE CUSTODY. 185 
 
 as in this latter case, the defendants were really in the ( 'HAP. XVJ. 
 
 position of involuntary bailees. It would seem, therefore, 
 
 that these remarks of Kelly, C.B., must be confined to the 
 
 case of involuntary bailees, especially as he says at p. 56 : 
 
 "It is true that a misdelivery by a carrier has been held 
 
 to amount to a conversion." The case is so explained by 
 
 Bramwell, B., in Hiort v. Bott, L. R., 9 Ex., at p. 90, where % 
 
 he gives as the ground of its decision that an involuntary 
 
 bailee has the implied authority of the real owner to deal 
 
 with the goods in any reasonable manner. 
 
 In Hiort v. London and North-Western Railway, 4 Ex. 
 D., at p. 194, Bramwell, L.J., says : " It is held that if 
 a man disposes of property, and in law he did if he without 
 authority delivered it to somebody not entitled to receive 
 it, he might be charged with converting it to his own use. 
 A misdelivery by a carrier was a conversion ; I cannot see, 
 therefore, why a misdelivery by a warehouseman is not a 
 conversion." 
 
 Again, in Glyn v. The East and West India Dock 
 Company, 6 Q. B. D., at p. 493, Bramwell, L.J., says : 
 " If a carrier received goods to carry to A. and hold till 
 called for by X., and Y. came and represented himself to be 
 X., a delivery to Y. would be a misdelivery and a conversion 
 according to the authorities." In Bristol, dc., Bank v. 
 Midland Railway Company [1891] 2 Q. B., at p. 657, 
 Lopes, L.J., says : " Delivery to a wrong person would be 
 conversion." 
 
 There is nothing in the character of a carrier which 
 makes him specially obnoxious to conversion : his liability 
 as insurer is altogether irrelevant to this class of action, 
 and cannot affect it one way or the other. The banker 
 cannot assert the position of an involuntary bailee, and so 
 claim the peculiar privileges of the man who finds goods 
 left on his hands, and is only bound to do the best he can in 
 the circumstances. He does voluntarily, though innocently, 
 deliver the goods to a wrong person, thereby dealing with
 
 LSI; 
 
 VALUABLES FOR SAFE CUSTODY. 
 
 CHAP. XVI. 
 
 Suggested 
 
 implied 
 
 contract. 
 
 Question 
 of banker's 
 contracting 
 himself out 
 of liability. 
 
 ! .. i ' : , 
 | .,- :. -. 
 
 them iii a manner inconsistent with the rights of the true 
 owner, which is sufficient to found conversion. 
 
 Those who hold the view that the hanker is relieved 
 from liahility for commission as well as omission, for 
 misfeasance as well as nonfeasunce, unless he is chargeable 
 with negligence, rely mainly on an implied agreement 
 hetween hanker and customer to that effect. They 
 presume a stipulation on the part of the banker that his 
 obligation as to parting with the goods shall be as circum- 
 scribed as that with regard to keeping them ; namely, that 
 he shall exercise reasonable care and caution in so doing, 
 and they presume an acquiescence by the customer in such 
 stipulation. 
 
 But there seem no sufficient grounds for importing such 
 implied contract into the legal relations arising from the 
 deposit of the goods. The distinction between the legal 
 consequences of loss and of misdelivery can hardly be 
 supposed to have been in the contemplation of the parties ; 
 and "it is impossible to import a condition into u contract 
 which the parties could have imported and have not done 
 so," per Channell, J., in Blakeley v. Midler d Co. [1903] 2 
 K. B. 760, note, approved by Halsbury, C., in Civil Scrrit-<> 
 Co-itperatire Society v. General Steam Navigation Co. [1908] 
 2 K. B. at p. 764. The view adopted by the Central 
 Association of Bankers seems therefore the true one. 
 
 The question of the banker's expressly contracting 
 himself out of liability for misdelivery has been raised ; 
 but the Central Association of Bankers, in the memor- 
 andum above referred to, came to the conclusion that, 
 though in theory possible, such a course would be 
 " generally impossible in practice, and where not impos- 
 sible inadvisable." 
 
 If the banker has suspicions as to the authority of the 
 person who applies for the goods, or the genuineness of tin- 
 order produced by him, he is clearly entitled to retain tin- 
 goods for a reasonable time, in order to satisfy himself on
 
 ft 
 
 VALUABLES FOB SAFE CUSTODY. ' 187 
 
 these points. Such retention is not a conversion, as it CHAP. xvr. 
 involves no disregard of or interference with the owner's 
 title, and is excused, if not justified. (See per Blackburn, 
 J., in HoUins v. Fowler, L. R, 7 H. of L., at p. 766.) 
 
 It is also conceived that, on the same grounds, the 
 banker would be entitled to refuse to deliver the goods to 
 the applicant, stating his intention of himself sending ' 
 them to the owner, and doing so within reasonable time.
 
 ( 188 ) 
 
 CHAPTER XVII. 
 THE COLLECTING BANKER. 
 
 CHAP. xvil. THE failure of the Government to procure the passing of 
 " The Bills of Exchange Act Amendment Act, 1908," 
 designed to rectify the state of affairs resulting from the 
 decision of the House of Lords in Capital and Count i> s 
 Hank v. Gordon, London City and Midland Bank \. 
 Gordon [1908] A. C. 240, has left the collecting hanker, 
 at any rate for the present, in the position demonstrated 
 by that decision. Principles of law and construction are 
 enunciated in the judgments, independent of the particular 
 facts ; and the House of Lords itself has, on its own 
 showing in the London Tramways Case [1898] A. C. 875, 
 no power to review its own rulings on such matters. It 
 may well be that the facts of these particular cases, here- 
 after referred to as the Gordon Case, would have warranted 
 a decision against the banks without resort to the sweeping 
 view adopted by the House of Lords; but the propositions 
 referred to were general in terms and formed part of the 
 ratio decidendi, and must therefore be accepted as true and 
 conclusive statements of the law. Nor would it be 
 reasonable to anticipate that, in any future case, the 
 process of differentiation exemplified in London Joint 
 Stock Bank v. Simmons [1892] A. C. 201 would be 
 repeated. 
 
 It therefore behoves bankers to consider their posi- 
 tion as collecting bankers, in the light of the Gordon 
 Cae. 
 
 The danger continually threatening the collecting bank r 
 is that of being sued for conversion and money had and 
 
 ! :-:.. .
 
 THE COLLECTING BANKER. 189 
 
 received by the true owner of a cheque which the banker CHAP. XVII. 
 has presented, and for which he has received the money on 
 account of someone who has no title or a defective title 
 thereto. His complete ignorance of anything wrong about 
 the cheque is absolutely no defence. 
 
 Nor, save in cases where the true owner has to resort 
 
 i 
 
 to money had and received, independent of conversion, 
 can the banker set up his character of agent, supposing 
 him to have merely acted in that capacity. (See 
 " Conversion Money Had and Received," ante, p. 140.) 
 
 So long as any holder of a cheque could go and present Origin of 
 it himself and get the money for it, the intervention of ^crossed* a 
 another banker was theoretically unnecessary ; his under- cheques. 
 taking the duty of collection was a mere voluntary act for 
 the convenience of the customer, and the banker was, not 
 unreasonably, left to bear the risks he had of his own 
 accord assumed. 
 
 But when, for the protection and convenience of the 
 public, the Legislature prohibited the payment of crossed 
 cheques otherwise than to a banker, the intervention of 
 another banker became an absolute necessity ; and moral, 
 if not statutory, compulsion was put upon every banker to 
 undertake the office of collection for his customers. 
 
 It was only reasonable therefore that, in so far as 
 increased risk was the direct outcome of an enactment 
 designed for the public good and protection, the banker 
 should receive equivalent safeguards. Whether it was 
 that the Legislature considered it was granting adequate 
 protection for legitimate business, or whether, as suggested 
 by Lord Macnaghten in the Gordon Case, the bankers at 
 that date asked for nothing more, the fact remains that 
 the only protection afforded is that embodied in sect. 82 
 of the Bills of Exchange Act, reproducing the proviso to 
 sect. 12 of the Crossed Cheques Act of 1876. 
 
 Its scope has been extended to dividend warrants by 
 sect. 95 and to certain orders for payment by sect. 17 of the
 
 190 
 
 THE COLLECTING BANKER. 
 
 Sect. 82. 
 
 Modification 
 of section. 
 
 CHAP. XVII. Revenue Act, 1888; but in all cases the protection is 
 strictly limited by the wording of sect. 82. 
 
 The section is as follows : 
 
 " Where a banker in good faith and without negligence 
 receives payment for a customer of a cheque crossed 
 generally or specially to himself, and the customer has no 
 title or a defective title thereto, the banker shall not incur 
 any liability to the true owner of the cheque by reason only 
 of having received such payment." 
 
 Unless the banker can bring himself within the 
 conditions formulated by this section, he is left to his 
 common law liability for conversion or money had and 
 received, in the event of the person from whom he takes 
 the cheque having no title or a defective title thereto. 
 
 One modification, and one only, must be engrafted on the 
 section. If the receipt of the money is protected by the 
 section, the protection covers all prior dealings with the 
 cheque. True, the section specifically deals only with the 
 receipt of the money, and it has been contended, and even 
 held, that the taking of the cheque from a person who had 
 no right to it, or some formal, preliminary act such as the 
 banker stamping his name across it, was an independent 
 conversion, against which the banker was not protected, 
 though he ultimately brought himself strictly within the 
 section by receiving payment only for the customer. The 
 ineptitude of the wording must be supplemented by A 
 common-sense reading in order to avoid a patent absurdity. 
 As Lord Macnaghten says in the Gordon Case, ubi sup., 
 at p. 244 : " The only question is, did the banks receive 
 payment of these cheques for their customer ? If they did, 
 it is obvious that they are relieved from any liability which, 
 perhaps, might otherwise attach to some preliminary action 
 on their part, taken in view and anticipation of receiving 
 payment. The section would be nugatory, it would be 
 worse than nugatory, it would be a mere trap, if the 
 immunity conferred in respect of receipt of payment, and
 
 THE COLLECTING BANKER. 191 
 
 in terms confined to such receipt, did not extend to cover CHAP. XVII. 
 every step taken in the ordinary course of business and 
 intended to lead up to that result." 
 
 But with this modification every clause of the section 
 must be fulfilled in order to entitle the banker to the 
 protection it confers. 
 
 Taking the provisions of the section in the order in In good faith 
 which they stand, the receipt of payment must be " in good negligence, 
 faith and without negligence." 
 
 It is obviously necessary to apply to this provision the 
 extended construction above referred to. The obligation 
 and the protection are co-relative and co-extensive. 
 
 Moreover, negligence at any stage would naturally enure 
 till, and -affect the receipt of the money. 
 
 The whole transaction, then, from the taking of the 
 cheque to the receipt and disposition of the money, must 
 he in good faith and without negligence. 
 
 The question of good faith does not require consideration. 
 Its existence on the part of the banker is presumed 
 throughout these pages. 
 
 The transaction must be without negligence. The What 
 question of what constitutes legal negligence in matters 
 of this sort is one on which lawyers and bankers are 
 seldom agreed. 
 
 The banker maintains that the exigencies and pressure 
 of business make it physically impossible to adopt all the 
 precautionary measures which the law would seek to 
 impose upon him. 
 
 The attitude of the law is that typified by Lord 
 Bramwell, who used to say that he was constantly told that 
 banking could not go on if particular conditions and 
 obligations were imposed on bankers, but that he invariably 
 found that banking did nevertheless go on and flourish. 
 
 Where a jury have to deal with the question, the natural 
 tendency of each juryman is to view the matter as if he 
 were himself the plaintiff, and it was his own money that
 
 192 THE COLLECTING BANKER. 
 
 CHAI-. XVII. \vas at stake. So that in any case the banker must be 
 
 prepared to find tbe standard of care required of him put 
 
 somewhat higher than he might consider reasonable. 
 
 Negligence It should be noticed that the importation of negligence 
 
 u MtTfiS. 10 " at *N iuto tuis section is, in a sense, an anomaly. There 
 
 can be no negligence without a duty. (SchatfiM \. 
 
 Londesborough [1896] A. C. 514.) There is no contractual 
 
 relation between the collecting banker and the true owner, 
 
 giving rise to a duty on the part of the former to the latter. 
 
 The banker's only contractual obligation is to his own 
 
 customer ; and conduct beneficial to the customer at the 
 
 expense of the true owner is no breach of that duty. 
 
 Is breach of The true exposition of the matter is that given by 
 
 In Kwner Denrnan, J., and the Court of Appeal in Jiixx.-ll v. Fox, 51 
 
 Law Times, N. S. 668; 58 Law Times, N. S. 198. The 
 
 duty is a purely statutory one imposed on the banker in 
 
 favour of the true owner, and the negligence consists in the 
 
 disregard of his interests, apart from those of the customer. 
 
 The assumption of this duty and liability to a stranger 
 
 must be regarded as part of the price paid by bankers for 
 
 protection under section 82. 
 
 It is from the standpoint, then, of the true owner that 
 all questions of negligence under this section must be 
 viewed. 
 
 It would be futile to try and formulate particular condi- 
 tions of circumstances which might or might not establish 
 negligence in this connection. Broadly speaking, the 
 banker must exercise the same care and forethought in the 
 interest of the true owner, with regard to cheques paid 
 in by the customer, as a reasonable business man would 
 bring to bear on similar business of his own. 
 
 The peculiar difficulty lies in the divided duty of the 
 banker towards the true owner and his own customer, and 
 the possible clashing of their interests. 
 
 It might be an awkward matter for the banker to manifest 
 suspicion of his own customer ; but if he refrained from
 
 THE COLLECTING BANKER. 193 
 
 acting on such suspicion, he might easily render himself CHAP. XVII. 
 liable to the true owner, as having neglected his duty to him. 
 
 Some phases of duty to the true owner have been 
 established by decision. 
 
 It is a common superstition among bankers that the Duty of 
 collecting banker is not concerned with the indorsement 
 
 on an order cheque. verify 
 
 The omission, however, to see that such indorsement is 
 in order, at least ostensibly, has been distinctly recognised 
 as negligence on the part of the collecting banker. In 
 Bavins, jun., and Sims v. London and So nth- Western 
 Bank [1900] 1 Q. B. 270, the Court of Appeal held the 
 collecting bank guilty of negligence in not detecting that 
 an indorsement did not correspond with the name of the 
 payee, though the discrepancy had apparently escaped 
 notice even in the court below. In Bissell v. Fox, 51 
 L. T. N. S. 163 ; 53 Ib. 193, the court held that a " per 
 pro." indorsement put the collecting bank on inquiry, which 
 it could not do if they were not bound to look at the 
 indorsement. And, apart from authority, verification of 
 the indorsement of an order cheque paid in for collection 
 would seem a proper matter of ordinary business routine, 
 if only to avoid delay and the necessity of returning it if 
 the indorsement had been casually omitted or made in 
 irregular form. It is plainly a case where the plea of 
 pressure of business should not be admitted. 
 
 As incidentally stated above, tbe fact of an indorsement Indorsements 
 being "per pro." puts the collecting banker on inquiry 
 as to the authority of the person so indorsing, and dis- 
 regard of such intimation is accounted as negligence. 
 (Bissell v. Fox, ubi sup.) 
 
 Sect. 25 of the Bills of Exchange Act enacts that " a 
 signature by procuration operates as notice that the agent 
 has but a limited authority to sign " ; and this proposition 
 appears to be distinct from the rest of the section and 
 of general application, being indeed only declaratory of 
 
 B. o
 
 194 THE COLLECTING BANKER. 
 
 CHAP. XVII. pre-existing law. Any signature which purports to he put 
 on by delegated authority is in effect a signature by pro- 
 curation; the words "per pro." or their equivalent, "on 
 behalf of " are not an essential element. (See Balfonr \. 
 Krnest, 28 L. J. C. P., at p. 176.) 
 
 Bills executed It would seem that all executions of bills, notes, or 
 by companies, cheques in the name of a joint stock company, should be 
 regarded as signatures by procuration. Sect. 47 of the 
 Companies Act, 1862, treats all such documents as made, 
 accepted, or indorsed on behalf of the company, whether the 
 execution be in the name of the company or expressly 
 stated to be on its behalf or account. This view is some- 
 what supported by the legal fiction which affects all persons 
 dealing with a company with implied notice of its 
 constitution and powers. 
 
 A " per pro." signature puts the person taking it on inquiry 
 as to the purposes for which the signatory is entitled to 
 use the name of his principal. Sect. 24, which deals 
 with forged and unauthorised signatures, presents con- 
 siderable difficulty with regard to signatures authorised 
 for one purpose but employed for another. Apart from 
 actual forgery, the whole force of that section is concentrated 
 on the signature, not the indorsement or the signature and 
 delivery; and it is difficult to see how a signature \\hirh 
 is authorised at the time it is affixed can become 
 unauthorised afterwards by reason of being utilised for an 
 unauthorised purpose. 
 
 In the case of a "per pro." signature, however, the word- 
 ing of sect. 25 clearly casts upon anyone dealing with the 
 instrument the duty of satisfying himself not only that the 
 agent has authority to sign, but authority to utilise the 
 signature in the way proposed. 
 
 " Limited authority to sign " must be read as meaning 
 or including authority to sign for specified purposes only. 
 
 But a procuration signature does not oblige the collcc-t- 
 iug banker to inquire into matters collateral to the
 
 THE COLLECTING BANKER. 195 
 
 authority to sign, or to see to the disposition of the CHAP. XVII. 
 proceeds of the cheque. 
 
 If the indorsement, though made under due authority, 
 were subject to some condition which is unfulfilled, that 
 cannot affect the collecting banker (cf. Re Land Credit 
 Company, L. K, 4 Ch. 460) ; and so long as the signing 
 and application are within the authority, the agent's motive 
 or subsequent misappropriation of the proceeds is imma- 
 terial, in the absence of anything calculated to arouse 
 suspicion. (Bank of Bengal v. Macleod, 7 Moore P. C. 35 ; 
 Bryant d Co. v. Quebec Bank [1893] A. C. 170; Hambro 
 v. Burnand [1904] 2 K. B. 10.) 
 
 In Hannan's Lake View Central, Ltd. v. A rmstrong dCo., inHorsement 
 16 Times L. K. 236, Mr. Justice Kennedy held it negligence JjJ beh'a^ 
 in a bank to collect for their customer, one Montgomery, the of company, 
 secretary of the plaintiff company, a crossed cheque of which 
 the company were payees, and which was indorsed " Han- 
 nan's Lake View Central, Ltd., H. Montgomery secretary." 
 Montgomery had authority to indorse thus on behalf of the 
 company, but only for the purpose of paying such cheques 
 into the company's account, which, to the knowledge of 
 the defendant bank, was kept at another London bank. 
 
 The decision was not based, as it might have been, on 
 the indorsement being in effect a procuration one, but on 
 the ground that it was apparent, on the face of the trans- 
 action, that Montgomery was using for himself a valuable 
 document which bore evidence of having been created for 
 the benefit of his employers, and being their property ; 
 that the whole course of business was opposed to the idea 
 that the secretary of a company was likely to have been 
 paid money due to him, as salary or otherwise, by the 
 authorisation of the indorsement by himself to himself of 
 a cheque payable to the order of the company ; and that in 
 accepting such a cheque so indorsed, for his private 
 account, the defendants had failed in their statutory duty 
 to the true owner, and lost the protection of sect. 82. 
 
 o <2
 
 ItJb THE COLLECTING BANKER. 
 
 CHAT. XVII. This decision was never appealed against, and seems 
 
 unquestionably sound. 
 
 Due* state of The question has more than once been raised how far 
 account affect the existing condition of a customer's account ought to 
 the question influence the banker when that customer pays in a large 
 cheque for collection. If a man with a habitually small 
 account or an account on which the credit balance has 
 gradually dwindled, or which is slightly overdrawn, pays in 
 for collection a cheque for a large amount, is that a 
 suspicious circumstance calculated or sufficient to put the 
 bank on inquiry ? Juries seem to have regarded it as 
 such ; and the view taken by one jury is some criterion as 
 to the view likely to be taken by another on such a ques- 
 tion. So far as can be ascertained, the majority of bankers 
 and their legal advisers take the view that there is nothing 
 in such a state of circumstances to arouse suspicion, or 
 put the banker on inquiry. The customer may, they 
 say, have been keeping his account lo\v in anticipation 
 of this very payment, which he knew was coming in. He 
 may have drawn out all available funds to make an invest- 
 ment, of which this represents the realisation. The 
 question is hardly one of law : but extreme states of fact 
 might exist which would fairly warrant a judge or jury in 
 holding that, in the interest of the true owner, the banker 
 ought not to have taken in the cheque without some inquiry. 
 Banks have sometimes put forward as evidence that 
 they exercised due caution about the collection of a cheqm- 
 the fact that, before crediting it, they inquired from the 
 paying bank whether it would be paid on presentation. 
 It is obvious that such a proceeding affords no safeguard 
 to the true owner. The paying banker could have no means 
 of knowing in whose hands the cheque might be, and the 
 precaution, as pointed out in liixttell v. Fox, nl>i *//;>., 
 and Oydrn v. Bena*. L. li., J) C. P., at p. 516, is one 
 taken by the collecting banker exclusively in his <>\\n 
 interest and for his own l>enetit.
 
 THE COLLECTING BANKER. 
 
 As to the suggestion of Lord Brampton in Great ( - ; HAP. 
 Western Railway v. London and County Bank [1901] Not 
 A. C., at p. 422, that the fact of a cheque being crossed cl -ossing. 
 " Not negotiable " has a bearing on this question of 
 negligence on the part of the collecting banker, see 
 post, p. 222. 
 
 It is probabl}' in connection with -this question of Account 
 negligence on the part of the collecting banker that the liayet 
 " account payee " crossing becomes of practical importance. 
 As previously stated, the most rational effect to be 
 attributed to an addition of this sort is that it operates as 
 a memorandum or warning to the collecting banker that 
 he must exercise caution if he collect the cheque for any 
 account other than that indicated; much the same sortiof 
 intimation as was conveyed to the paying banker by 
 crossing a cheque before the first Act dealing with crossed 
 cheques gave legislative sanction and effect to crossings. 
 
 Whatever the effect may be, it attaches, in the case 
 of the collecting banker, equally whether the cheque be to 
 payee or bearer, to payee or order, or to bearer only with 
 the account specified. In each case the collecting banker 
 has the intimation, for what it is worth, that cheque and 
 proceeds are intended for one particular person's account. 
 
 As before pointed out, negligence under this section is 
 the disregard of the statutory duty imposed on the banker 
 to act with reasonable care in the interest of the true owner. 
 The matter, therefore, resolves itself into this : is it 
 carelessness for a banker to collect such a cheque for an 
 account other than that specified, without inquiry and 
 satisfactory explanation ? It cannot be denied that there 
 is a pretty plain intimation which the collecting banker 
 must take as addressed to him, and which must be pre- 
 sumed to have been put on the cheque by a person having 
 a right to do so, and an object and interest in so doing. 
 
 The banker's contention would have to be that the 
 addition was an unauthorised one, unknown to the law ;
 
 1J)8 THE COLLECTING BANKER. 
 
 CHAP. XVII. that neither the transferability nor the negotiability of the 
 cheque was affected thereby, and that negligence within 
 the section means disregard of some suspicious circn in- 
 stance extrinsic to the instrument itself. In the answer 
 to question 448 in " Questions on Banking Practice," 
 5th edit., it was said: "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." 
 
 That was written fifteen years ago, and the usage one way 
 or the other ought to be established by this time. Considering 
 the continued and increasing use of this addition, it is 
 difficult to suppose it has been habitually disregarded by 
 bankers ; and it would now probably be almost impossible 
 to get a consensus of banking opinion in favour of such 
 disregard which would convince a jury. It is annoying 
 and somewhat hazardous to have to arrive at any opinion 
 with regard to n custom which is devoid of legislative or 
 legal basis, and which never ought to have been allowed to 
 get to the stage it has done ; and the difficulty is enhanced 
 because the question might ultimately depend on the 
 view a jury might take. 
 
 On the whole, the probabilities seem to lie in t In- 
 direction that a jury would regard the intimation as one 
 that the collecting banker is not entitled to disregard ; 
 they would argue that the custom could not have gone on 
 so long and become so general if there was nothing in it ; 
 they would attach great weight to what they would c<n- 
 sider the bankers' tacit acquiescence in it; they would be 
 influenced by the legitimate consideration that negligence 
 may rest on slighter grounds than notice of defect of title : 
 and they might draw some analogy bet \\een the <-as.- of a 
 cheque bearing such an intimation and one which bore
 
 THE COLLECTING BANKER. 199 
 
 marks of having been altered or partially cancelled, and so CHAP. XVII. 
 put anyone dealing with it on inquiry (a). 
 
 The words in sect. 82 next to be dealt with are the most Receiving 
 
 A . i m i f payment for 
 
 important of all. Prior to the two final decisions hereafter a customer. 
 
 mentioned, they gave rise to much litigation. The words 
 are " receives payment for a customer." 
 
 These words must be read in connection with those 
 at the end of the section : " The banker shall not incur 
 any liability to the true owner of the cheque by reason 
 only of having received such payment." 
 
 As before pointed out, the protection, though in terms 
 confined to the receipt of payment, extends to all pre- 
 liminary steps leading up thereto ; but the word " only " is 
 important as emphasising the fact that such receipt 6f 
 payment must be strictly and exclusively for the customer, 
 as required by the earlier portion of the section. As Lord 
 Lindley said in the Gordon Case (ubi inf., at p. 247), a bank 
 is not protected unless, first, it acts in good faith and without 
 negligence ; unless, secondly, it receives payment for a cus- 
 tomer ; and unless, thirdly, it only receives such payment : 
 and he adds : " The last paragraph of the section shows that 
 this last condition is as important as the first and second." 
 
 The two questions which arise on this part of the section 
 are ; first, in what circumstances does a bank only receive 
 payment for a customer ; second, who is a customer ? 
 
 Both questions have been the subject of decisions in the 
 House of Lords, the first in the Gordon Case [1903] A. C. 
 240, the second in Great Western Railway Co. v. London 
 and County Bank [1901] A. C. 414. 
 
 Assuming, for the present, that the person from whom Receivin 
 the bank receives the cheque is a customer, the question 
 whether all that the bank does is to receive payment 
 for him naturally depends on the way in which the bank 
 
 (a) In ATtroherri (Atlantic) Jlincs, Lfl. \. Economic Bank [1904] 2 
 K. B. 465, Bigham, J., regarded the addition as merely a direction to 
 the receiving bank how the money is to le dealt with after receipt, but 
 the question was not directly befoiehim.
 
 200 THE COLLECTING BANKER. 
 
 CHAP, xvil. has dealt with such cheque up to the time of receiving 
 payment. That determines the character in which the 
 bank receives payment. And the Gordon Case has finally 
 laid down that to ensure protection the only character and 
 only way in which a hank must deal with the cheque and 
 receive the proceeds is as a mere agent for collection. 
 
 Lord Macnaghten says, at p. 245 : " The protection con- 
 ferred by sect. 82 is conferred only on a banker who receives 
 payment for a customer, that is who receives payment a-; 
 a mere agent for collection. It follows, I think, that if 
 bankers do more than act as such agents, they are not 
 within the protection of the section." And he subsequently 
 describes the functions of a bank acting within the 
 section as those of "a mere conduit pipe for conveying 
 the cheque to the bank on which it is drawn and receiving 
 the money from that bank for their customer." It cannot 
 be denied that the section, dispassionately read, indicates 
 agency pure and simple. The history of the legislation on 
 the point is in favour of the same view. (See Mnthii-xs< u 
 v. LOM.-/OH and County Bank, 5 C. P. D. 7, and the 
 judgment of Collins, M.R., in the Gordon ("</$/ in tin- 
 Court of Appeal [1902] 1 K. B. 242, expressly approved 
 by Lord Macuaghteu in the House of Lords.) There 
 is absolutely nothing in the whole of the legislation 
 affecting crossed cheques which in the remotest de, r r< 
 necessitates the intervention of the collecting banker in 
 any capacity other than that of an agent .pure and simple. 
 And the House applied here the canon of construction which 
 they ignored in the case of the draft issued by a branch nn 
 the head office, namely that the protection must be limited 
 to the enhanced risks imposed by cotemporary legislation. 
 Lord Macnaghten, at p. 24(>, quotes with approval tin- 
 words of Collin^. M.I;., in the Court of Appeal: "The 
 protection afforded hysect. K2 must he limited to that which 
 is necessary for the performance of the duty which, by the 
 legislation as to crossed vlu-ijucs, was imposed on bankers. 
 
 It must therefore be taken that the banker who de-
 
 THE COLLECTING BANKER. 201 
 
 the protection of sect. 82 must confine his dealings with CHAP. XV n. 
 the cheque to such as are strictly compatible with the 
 character of an agent, and must receive the money in that 
 capacity. 
 
 And the main point dwelt on in the Gordon Case is that Must not be 
 a man cannot hold a cheque and receive payment thereof 
 
 as an agent, if he be himself the holder for value of it. any rate as 
 
 Lord Macnaghten, at p. 245, says : "It is impossible, I 
 think, to say that a banker is merely receiving payment for 
 his customer and a mere agent for collection when he receives 
 payment of a cheque of which he is the holder for value." 
 
 If this proposition be accepted in its broadest significa- 
 tion, it apparently raises a difficulty with regard to the 
 banker's lien. 
 
 " Where the holder of a bill has a lieu on it, arising 
 either from contract or by implication of law, he is deemed 
 to be a holder for value to the extent of the sum for which 
 he has a lien," Bills of Exchange Act, s. 27, sub-s. 3. 
 
 A banker has, by implication of law, a lien on all bills 
 or cheques coming into his possession qua banker, to the 
 extent of all monies due from the customer. (See, post, 
 " Securities for Advances," p. 239.) 
 
 Cheques for collection unquestionably come into the 
 banker's possession in the course of his business as such. 
 
 If the customer is overdrawn at the time, the banker is, 
 in the words of the sub-section, deemed to be a holder for 
 value to the extent of such overdraft. But it is hardly to 
 be supposed that Lord Macnaghten contemplated this 
 state of circumstances as excluding the banker from the 
 protection of sect. 82. If the position of a mere conduit 
 pipe is insisted on, if the receipt must be only for the 
 customer, and if the admixture of the smallest element of 
 holder for value, even under this sub-section, is to destroy 
 the protection, it would follow that the banker who took a 
 thousand pound crossed cheque in the ordinary course for 
 collection would be debarred from protection if the customer
 
 2<V2 THE COLLECTING BANKER. 
 
 CHAP. XVII. were temporarily overdrawn a few pounds. The conclusion 
 appears impossible. Clarke v. London and Count;/ }><tnk 
 [1897] 1 Q. B. 552 inf., p. 207), has never been overruled, 
 and the observations of Romer, L.J., in Great Western Iiail- 
 inn/ < '. v. Lomlm and County Bank [1900] 2 Q. B. 464, on 
 the subject of the lien, seem perfectly justified if confined to 
 a real case of lien. Again, the banker is under a practical 
 obligation to the customer to receive and present the 
 crossed cheque, the relation of banker and customer 
 enuring notwithstanding the overdraft, and he is therefore 
 in the position which warrants his claim to protection. 
 
 One explanation may be derived from the words "he i 
 deemed." As shown by ///// v. 7v/.s/ and IfV.s/ India Dock 
 Co., 9 A. C. 448, these words do not necessarily entail all 
 the consequences which would ensue were the supposed state 
 of facts actually existent ; they must be interpreted according 
 to the object of the enactment. This sub-sect. 8 of sect. 27 
 is one of the group dealing with consideration ; its object is 
 merely to establish the validity of an existing lien as con- 
 sideration pro tanto. Its scope and purview relate only to 
 cases where the party holding the bill is suing on it ; and 
 the limited character of holder for value involved may fairly 
 be regarded as existing only for the purposes for which it 
 is conferred. Lien, being the right to hold another man's 
 property until a debt is paid, is not only no indication of 
 property, but is absolutely inconsistent therewith. The 
 ordinary holder for value is the person in whom the 
 absolute property in the bill is vested. The use of the \vor.l 
 " lien 1 ' in the sub-section points therefore to the artitici.-il 
 and restricted nature of the hoMership for value therein 
 referred to. 
 
 It may fairly be urged that it is optional with the banker 
 \\hctlier he will claim or exercise his lien, that tlieiv is 
 nothing to show when he takes the cheque or receives the 
 money that the action is not solely on behalf of the customer; 
 tiie hanker may be relying on setting <>1V the debt against
 
 THE COLLECTING BANKER. 208 
 
 the money received for the customer, an equally efficacious CHAP. xvu. 
 
 remedy and one which presupposes the separate existence 
 
 of the two amounts as debts. A far more definite and 
 
 specific decision is necessary to overrule Clarke v. London 
 
 and County Bank, and to sanction the startling proposition 
 
 that a banker taking a crossed cheque in the ordinary 
 
 course for collection is debarred from protection by the 
 
 mere fact of the customer chancing to be slightly overdrawn. 
 
 What Lord Macnaghten was probably referring to was 
 the case of a real holder for value in the ordinary sense of 
 the term ; that is to say, a transferee, who takes the entire 
 property in the instrument. That character is really 
 incompatible with agency ; and where a banker has become 
 holder for value as a transferee, where the absolute property* 
 has vested in him in his own right, apart from the question 
 of lien, it is certainly difficult to see how, in any sense, he 
 can only receive payment of the cheque for the customer, 
 or for anyone but himself. 
 
 Interpreted in this sense, Lord Macnaghten's remarks 
 are clearly well founded. The question, therefore, resolves 
 itself into this : was the banker who claims protection under 
 sect. 82 the transferee of the cheque, or did he hold it for 
 the customer subject to his lien for the customer's indebted- 
 ness, if any, and if he chose to exercise that lien ? 
 
 If he has given cash for it over the counter, he becomes When he is 
 the transferee. (Great Western Railway Company v. 
 London and County Bank [1901] A. C. 414.) If it is paid 
 in for the express purpose of reducing an ascertained over- 
 draft, the banker takes it as transferee, the consideration 
 being the pre-existing debt. If it is paid in on the express 
 understanding that it may be drawn against at once and is 
 so drawn against, the banker becomes the transferee. 
 Bowen, L.J., said in National Bank v. Silke [1891] 1 Q. B. 
 435, that it was plain from the discussion in the House of 
 Lords in McLean v. Clydesdale Banking Company, 
 9 A. C. 95, and, indeed, was plain enough to commercial
 
 201 THE COLLECTING BANKER. 
 
 CHAI-. xvii. men before, that when a cheque was sent to a bank to be 
 placed to the credit of a particular customer, and that bank 
 placed the amount to his credit and allowed him to draw 
 upon it, they were holders of the cheque for value and in 
 due course. So again where, by course of business, an 
 implied agreement is established to the effect that all 
 cheques may be drawn against as soon as paid in, the 
 banker presumably takes them as transferee, independent 
 of their being actually drawn against. Such transactions 
 really amount to the purchase of the cheque, analogous to 
 the discounting a bill at a future date. As a financial 
 operation it seems almost ridiculous to talk of purchasing 
 or discounting a cheque, which is payable on demand 
 and designed for speedy presentation, or to contempla 
 bank gratuitously guaranteeing the payment thereof, to 
 use the expression of the Privy Council in (iadfii v. 
 .\.-iri'i,,nll,iiul S<trin ; is Hani; [1899] A. C. 281. At the 
 same time a cheque is a bill, and if anyone gives a sum 
 of money down for it or takes it on a promise express or 
 implied to give some sum either in one payment or several 
 payments as drawn against, all conditions exist to consti- 
 tute him a transferee, whether he be a banker or not. 
 There may be reasons, such as the desire to oblige the 
 customer or the convenience of transmitting money, 
 which render such proceedings on the part of a banker 
 reasonable, or even expedient. 
 
 In the (tunlini ( '<i.sv, however, the House of Lords have 
 fixed the banker with the character of holder for value or 
 transferee, and excluded him from the protection of sect 82, 
 on the ground of transactions far less obviously leading to 
 that result. In unequivocal terms, they lay down that it 
 the banker credit the cii>tom< T'S account with cheques as 
 cash before they are cleared or the money iv.-riv.d i..r 
 them, the mere fact of his doing S() - altogether apart from 
 the -tate of the account, makes him holder tor value of 
 those cheques, and precludes him from only receiving
 
 THE COLLECTING BANKER. 205 
 
 payment of them for the customer, and consequently from CHAP, xvn, 
 the protection of the section. 
 
 Lord Macnaghten, at p. 246, says: "If bankers deal 
 with crossed cheques in the ordinary way in which bankers 
 dealt with cheques before the legislation as to crossed 
 cheques, and in which they deal with cheques other than 
 crossed cheques at the present time, namely, by treating 
 them as cash, and upon receipt of them at once crediting 
 the customer with the amount of them in the ordinary way, 
 instead of making themselves a mere conduit pipe for con- 
 veying the cheque to the bank on which it is drawn and 
 receiving the money from that bank for their customer, I 
 think they are collecting the money, not merely for their 
 customer, but chiefly for themselves, and therefore are not" 
 protected by sect. 82." 
 
 Lord Liudley treats the fact of placing the cheque to the 
 customer's credit as equivalent to an advance to him of the 
 amount of it; he points out that the amount, when received, 
 would not be again placed to the customer's credit, because 
 it was already there, and deduces the fact that the bank 
 received payment for itself, and sums up, at p. 249, by 
 saying: "Whether it is desirable to alter the wording of 
 sect. 82 is not for your lordships to consider on the present 
 appeal ; but so long as that section stands in its present 
 form bankers who desire its protection will have to be more 
 cautious, and not place crossed cheques, paid in for collec- 
 tion, to the credit of their customers before such cheques 
 are paid." 
 
 It would be futile and dangerous to attempt to minimise Result of 
 the effect of this decision. It has been universally and 
 rightly recognised as laying down the broad rule that 
 crediting cheques as cash before clearing or receiving 
 payment ipso facto deprives the banker of the protection 
 of sect. 82. If the banker credits as cash before clearing 
 (a) an order cheque crossed or open held by the customer, 
 even innocently, under a forged indorsement, or (&) a cheque
 
 "206 THE COLLECTING BANKER. 
 
 'HAP. XVII. payable or become payable to bearer crossed not negotiable, 
 to which the customer's title is, either by his own act or 
 thut of any previous holder, null or defective, the banker 
 oil receiving the money for such cheque is liable to the true 
 owner for conversion or money had and received. Some 
 misconception seems to exist with regard to bearer cheques 
 or order cheques become payable to bearer by virtue of 
 genuine indorsement. It has been supposed thut the 
 Gordon Case recognised the protection of the banker with 
 regard to all bearer cheques. But the cheques in that 
 case were not crossed "Not negotiable." In Great 
 Western Railway Company v. London and County Ban I, 
 [1901] A. C. 414, on the other hand, the cheques were 
 crossed " Not negotiable," and the bank being in the 
 position of holders for value, and the title to the cheques 
 being bad, the bank were held liable in conversion or 
 money had and received. Under the Gordon decision the 
 position of a bank which had credited such cheques as 
 cash would be identical. 
 
 Premonitions of the Gordon decision were not wanting. 
 In Ex parte Richdale, 19 Ch. D. 409, it was held that, a- 
 soon as the customer's account was credited with tin- 
 amount of a cheque, the banker became the holder for value 
 and proprietor of the cheque, whether the account was 
 overdrawn or in credit. The authority of that case as 
 involving a general principle was at one time doubted. (See 
 Chalmers on Hills, 5th ed., p. 82.) But in Royal Hunk <>/ 
 Scotland v. Tottenham [1894] 2 Q. B. 715, the doctrine \\a- 
 upheld by the Court of Appeal. In that case two cheques, 
 for 250 and 50, had been sent to a bank by a custom* i 
 with just the ordinary instructions to put them to her credit, 
 in these words : " I shall be much obliged if you will place 
 the enclosed cheques for '250 and 50 to my cndit. 
 The cheques were entered " By cash 800 " on the day 
 iln v reached the bank, making the total credit l-alano- 
 4806. Before receiving the amount of the 250 cheque
 
 THE COLLECTING BANKER. 207 
 
 the bank honoured a cheque drawn by the customer for CHAP. XV n. 
 194. The .250 cheque was returned dishonoured. The 
 bank debited the account with it and sued the drawer. 
 They recovered the full amount of 250, and the Court of 
 Appeal supported the judgment. Lord Esher said : "One 
 defence in this case is that the bank gave no consideration 
 for the cheque, but that point is determined against the 
 defendant by the decision of the Court of Appeal in Ex 
 parte liichdale. When the bank received the cheque from 
 Mrs. Mbnson (the customer) they did so on an under- 
 taking to give her credit to the amount of the cheque on 
 her- general account. This they did,, and giving such 
 credit is sufficient consideration as between a bank and a 
 customer. Consequently the bank were holders for value."' 
 
 Kay, L.J., said : "It was decided in Ex parte Richdale 
 in this court, that where a customer pays a cheque to his 
 bankers with the intention that the amount of it shall be 
 at once placed to his credit, and the bankers carry the 
 amount to his credit accordingly, they become immediately 
 holders of the cheque for value." 
 
 This decision, based as it was on what, to bankers, 
 appeared the mere ordinary procedure with regard to a 
 cheque sent for collection, raised misgivings in some 
 quarters as to the effect of such crediting on the banker's 
 position with regard to sect. 82, on the lines before sug- 
 gested, namely, the incompatibility of the character of holder 
 for value, apart from lien, with that of agent for collection. 
 
 Clarke v. London and County Bank [1897] 1 Q. 13. 552, 
 turned on sect. 82. In that case there was an existing 
 overdraft of 13 9s., and the customer was allowed to 
 draw another cheque for 5 8s. 6d. against one for 43 6s. 
 paid in, before it was cleared. 
 
 Cave, J., said: "If the banker is not to incur liability to 
 the true owner by reason only of having received such 
 payment, what have the defendants done more in this case 
 that is to make them liable ? It is said that they have
 
 208 THE COLLECTING BANKER. 
 
 CHAI\ XVII. applied a portion of the sum received in repayment of the 
 overdraft. I cannot see why that should create any 
 liability. The mere placing of the money to their cus- 
 tomer's account, with the result that a portion of it would, 
 if the balance were struck, go towards clearing off the 
 overdraft, cannot, in my judgment, render them liable. 
 It is a mere matter of account between them and the 
 customer. If putting it to the customer's account is not 
 to make the bankers liable when the customer is in funds, 
 it cannot make them liable when the customer happens 
 not to be in funds." Lawrence, J., agreed ; and the bank 
 were held protected by sect. 82. This case is not very con- 
 clusive one way or the other on the point. It will be noticed 
 that there is nothing to show that the cheque paid in was 
 credited before it was cleared. Indeed, the judgment would 
 seem to imply that such was not the case, inasmuch as 
 it speaks of the money being credited, presumably when 
 received. The case has been criticised, but never directly 
 overruled. The usual explanation of it is that the judge 
 who tried the case found, as a matter of fact, that it was a 
 case of collection only, and the Divisional Court, rightly or 
 wrongly, did not see their way to reversing that finding. 
 
 It might be objected to this view that the agreement as 
 to honouring the further cheque is very suggestive of 
 the bank taking as transferee the cheque paid in. 
 
 On the other hand, the relative amounts of the overdraft 
 plus the further cheques and of the cheque paid in must 
 be taken into consideration ; and it docs not seem unreason- 
 able to regard the case as one in which the bank really acted 
 as collecting agents, relying on their lieu for a remedy 
 against drawer and indorser if the cheque was not paid. 
 
 Gatlcn v. The NtwfottndUmd S<irin<i* Hank [181W] 
 A. C. 281, was calculated to reassure bankers, though it 
 Buffered under the disadvantage of being a Privy Council 
 case. There a cheque paid in by a customer was, pre- 
 sumably, entered as cash. At any rate, it was so entered in
 
 THE COLLECTING BANKER. 209 
 
 the customer's pass-hook which was delivered to her, a CHAP. XVII. 
 matter to which more importance might not unreasonably 
 be attached than to an uncommunicated entry in the 
 bank's own books. It was contended that the bank by so 
 treating the cheque had become proprietors of it, had 
 taken it for better or worse, and could not set up against 
 the customer the fact that it had been dishonoured. The 
 cheque in that instance was drawn on another bank by 
 the customer, but there is no reason why a bank should not 
 become transferee of such a cheque. It was dishonoured 
 through no fault of the customer's, and the Privy Council 
 decided in favour of the defendant bank on independent 
 grounds. That bank, they said, did not profess to be a, 
 discounting bank, so must not be assumed to have acted 
 outside its ordinary course of business ; and they com- 
 mented, almost sarcastically, on the improbability of a 
 bank's adopting a course which amounted to gratuitously 
 guaranteeing the payment of the cheque ; a comment at 
 least as applicable to the crediting as cash before clearing. 
 In Bavins, jun., and Sims v. London and South- 
 western Bank [1900] 1 Q. B. 270, the customer had been 
 credited with the amount of a document before the money 
 for it was received from the bank on which it was drawn. 
 The document was not a cheque, but one of the class to 
 which the Revenue Act, 1883, s. 17, extends the pro- 
 visions of the Crossed Cheques sections. It purported to 
 have been transferred by the payee to the customer, but 
 the court took no objection on this ground, and must 
 therefore be taken to have regarded the document as 
 negotiable ; especially as they decided the case mainly with 
 reference to the indorsement, a matter which would other- 
 wise have been immaterial. The court treated the bank as 
 agents for the customer, and held that the bank, having 
 done nothing but credit their customer with the amount, 
 that was merely a conditional credit, and there was no 
 reason why the bank, on having to pay the value of the 
 
 J3. - P
 
 210 
 
 THE COLLECTING BANKER. 
 
 CHAP. XVI r. document to the true owner, by reason of negligence in 
 collecting it depriving them of the protection of sect. 82, 
 should not debit the customer's account therewith, not- 
 withstanding that, following the ordinary rules of appropria- 
 tion, the money had been drawn out. The court distinctly 
 stated that such entries were conditional on the document 
 proving to be genuine and in all respects in order, this con- 
 ditional character, from the facts of the case, being held to 
 continue up to any date at which the customer's title is 
 successfully impugned, even long after the receipt of the 
 money. 
 
 These last two cases were not unreasonably regarded as 
 minimising the effect of the crediting as cash, so far 
 as concerned the banker's position with regard to sect. 82. 
 Bankers interpreted them as justifying the view they had 
 always entertained that such entries were merely pro- 
 visional for the convenience of book-keeping, and, being 
 uncommuuicated to the customer, could not alter the 
 character in which the bank received the cheque from him. 
 
 The position adopted at this date by bankers who 
 followed the system of crediting as cash certainly involved 
 some incongruities. They claimed (1) that the crediting 
 as cash constituted them holders for value, apart from the 
 condition of the account ; (2) that they were neverthe- 
 less within the protection of sect. 82 with regard to 
 crossed cheques so credited ; (8) that they had the right 
 to debit the customer's account with the amount of a 
 cheque so credited if dishonoured ; (4) that they had the 
 right, after so crediting a cheque, to return a cheque 
 drawn against it by the customer, with the answer, 
 " Effects not cleared." And, taken separately, there 
 was authority for each proposition. 
 
 The Gordon Case has shown propositions 2 and 4 to be 
 untenable. As already shown, the House of Lords hold 
 crediting as cash to be equivalent to taking the cheque 
 as a transferee, to purchasing or discounting it, and 
 
 Position 
 assumed bj 
 bankers prior 
 to decision.
 
 THE COLLECTING BANKER. 211 
 
 therefore inconsistent with the character of an agent for CHAP. XVII. 
 
 collection, or with only receiving payment for the customer. 
 
 And the fourth proposition really goes, along with the 
 
 second. If the crediting is to constitute full value for the 
 
 transfer of the cheque, it must, in reason, be an actual 
 
 available credit, not a mere entry in the bank books, and 
 
 the customer must be entitled to the immediate benefit of 
 
 the consideration for which he parts with his cheque, 
 
 just as much as a man is entitled to ride the horse for 
 
 which he has given a cheque. Lord Lindley says in 
 
 the Gordon Case [1903] A. C., at p. 249: "It must 
 
 never be forgotten that the moment a bank places money 
 
 to its customer's credit the customer is entitled to 
 
 draw upon it, unless something occurs to deprive him 
 
 of that right." And the whole tenour of the judgment 
 
 compels the construction that the placing of the cheque 
 
 to credit has the same effect. 
 
 The Gordon Case recognises the third right claimed, viz., Debiting 
 
 to debit the customer's account with a returned cheque, cus tomer with 
 
 * ' returned 
 notwithstanding it has been credited as cash. Lord cheque. 
 
 Lindley says, at p. 248 : "It is, no doubt, true that if the 
 cheque had been dishonoured, Jones (the customer) would 
 have become liable to reimburse the bank the amount 
 advanced by it to him when it placed the amount to his 
 credit. This he would have to do whether any cheque, 
 crossed or not, was placed to his credit and was afterwards 
 dishonoured." 
 
 Adopting the view of the House of Lords, and regarding 
 the banker who has credited a cheque as cash as the 
 transferee or holder for value thereof, it is not very easy to 
 see on what ground this right to debit the customer rests. 
 If the customer has indorsed the cheque, there would be a 
 remedy against him as indorser ; but only on giving notice 
 of dishonour, and by action at law in the usual manner. 
 There seems no justification for the banker's usurping all 
 legal functions and taking a summary remedy into his own 
 
 P2
 
 THE COLLECTING BANKER. 
 
 hands. If the customer lias not indorsed the cheque, the 
 right is still more exceptional. A transferor by delivery is 
 not liable on the instrument (sect. 58, sub-sect. 2), nor on the 
 consideration, unless such consideration was an antecedent 
 debt, or, possibly, if it be shown that the transfer was not 
 intended to operate in full discharge of the liability. The 
 proposition enunciated by Mr. Chalmers (Chalmers on 
 Bills, 6th ed., p. 198) that if a man cashes a cheque 
 payable to bearer, for the convenience of the holder, and it 
 is dishonoured, he can recover the money, rests on very 
 doubtful authority. Apart from Lord Lindley's ruling, 
 the claim to debit such cheques would seem to rest only 
 on the custom of bankers. That ruling, however, expressly 
 recognises the right, notwithstanding the crediting as 
 cash, and the words " any cheque " show that the 
 customer's indorsing or not does not affect the question. 
 The origin or justification of the right need not therefore 
 be further discussed. 
 
 It is not of much use to criticise a judgment of the House 
 of Lords, it being final and irrevocable. One may, however, 
 be pardoned for doubting whether there was any necessity 
 for the House resorting to so broad a rule as they did in 
 the Gordon Case. 
 
 There were a variety of circumstances in that case which 
 might well have justified their lordships in fixing the 
 banks with liability, apart from the mere crediting as cash. 
 There was the fact, more prominent perhaps in the case of 
 one bank than the other, that, though the forged indorse- 
 ment of the payee made the cheques ostensibly payable to 
 bearer, the indorsement of the customer was exacted, or 
 at any rate taken, in addition. An extra indorsement may 
 be added to strengthen security without involving trunsiVi- 
 (seo Ex parte S< -W/YA/, 12 Ch. D. 887), but strong t -vi.l. m-r 
 is necessary to rebut the presumption of transfer in such 
 cases; no such evidence seems to have been forthcoming in 
 the Gordon Cote. Identification in case of dishonour
 
 THE COLLECTING BANKER. 213 
 
 not suggested as the reason ; nor is indorsement a suitable OHAP. XVII. 
 method for that purpose, as it would be most unreasonable 
 to return bearer cheques, or cheques become payable to 
 bearer, to the customer to be indorsed ; and such a course 
 is unknown. 
 
 Again, there were very strong grounds for inferring 
 either an express agreement, or one deducible from course 
 'of business, to the effect that the customer should be at 
 liberty to draw against the cheques paid in, before they 
 were cleared. It is stated in the report (p. 241) with regard 
 to the Capital and Counties Bank: "The amounts were 
 placed to his credit when he paid the cheques in, and he 
 was allowed to draw upon his account increased by them', 
 HS above stated," and as to the London City and Midland, 
 Lord Lindley says (p. 249): "He frequently availed 
 himself of the credit given him for those cheques by 
 drawing against such credit." It might therefore have 
 baen fairly held that these were exceptional circumstances 
 bringing the case within previously recognised principles, 
 such as that enunciated by Bowen, L.J., in National 
 Bank v. Silke [1891] 1 Q. B. 435, that if a cheque 
 is paid to a bank on the footing that the amount may 
 at once be drawn upon, and it is drawn upon accordingly, 
 the bank are holders of the cheque for value and in due 
 course. 
 
 It would have probably been more beneficial to bankers 
 in the end if the House had adopted this line. It may be 
 some gain to have the authority of Ex yarte Richdale 
 and Royal Bank of Scotland v. Tottenham conclusively 
 affirmed ; but the position thus established is, for all 
 practical purposes, equally secured by the utilisation of 
 the banker's lien ; while the exclusion of the banker from 
 protection by the mere crediting as cash is a definite 
 danger and obstacle to business. 
 
 One cannot resist the suspicion that the House of Lords Treating 
 were influenced by the assumption that placing a cheque a
 
 214 
 
 THE COLLECTING BANKER. 
 
 Course to be 
 adopted in 
 
 vii-w f 
 -ion. 
 
 CHAP. xvn. to credit as cash was in all senses identical with what they 
 term "treating it as cash." Lord Macnaghten uses the 
 terms as interchangeable or synonymous ; Lord Lindley 
 implies the same when he speaks of such a credit being 
 available for immediate drawing. Bankers, however, by 
 no means admit that the mere book-keeping entry in any 
 way involves the transmutation of the cheque into notes 
 or gold ; and the cases of Bavins, jnn. and Sims v. London' 
 and South-Western Bank and Gad>n v. \ etc found In n<{ 
 Savings Bank, before referred to, certainly appear to 
 support their contention. 
 
 A more pertinent and profitable inquiry is as to the 
 course to be adopted by banks in view of this decision, 
 pending remedial legislation. 
 
 As before stated, as things stand, any bank which credits 
 as cash, before clearing, a crossed cheque with a forged 
 indorsement, or any cheque, order or bearer, crossed " Not 
 negotiable," to which the customer has no title or a 
 defective title, is liable to the true owner in conversion or 
 money had and received, just the same as if the cheque 
 had been uncrossed. 
 
 The suggestion which obviously first presents itself is 
 that the system of crediting as cash should be discontinued. 
 Some banks have never adopted it. They follow a system of 
 book-keeping which relegates cheques to a suspense 
 account or an inner column, and excludes them from the 
 regular credit account until they appear there in the form 
 of cash actually received. The followers of this practice 
 profess to see no difficulty or hardship in its universal 
 adoption. 
 
 On the other hand, bankers who have adopted the mry 
 as cash system uncompromisingly assert the utter im- 
 possibility of any alteration of or even any modification in 
 it. Lord Macuaghten said, [1908] A. C., at p. 245 : " It 
 was urged with some force that practically the only result 
 of upholding the <i cision under appeal will be to compel
 
 THE COLLECTING BANKER. 215 
 
 some bankers to keep a double set of books where now CHAP. XVII. 
 
 one set only is required, and thus to impose upon bankers 
 
 a good deal of extra and, perhaps, unnecessary trouble." 
 
 But the bankers concerned say that not only a double set 
 
 of books, but a double staff of clerks, would be required to 
 
 follow out the suggested method. The question is one of 
 
 the internal economy of a bank, with which bankers are 
 
 more competent to deal than the present writer, and it is 
 
 not therefore proposed to discuss it here. 
 
 An alternative course is to utilise paying-in slips, and, Paying-in 
 by notice on these and in the pass-books, to apprise the s 11>s> 
 customer that cheques, although, for convenience of book- 
 keeping, entered as cash, are only taken for collection, and 
 are not available for drawing purposes until cleared or 
 the proceeds have been actually received. It has been 
 suggested that agreement between the banker and customer 
 cannot affect the rights of the true owner ; that if in law 
 the crediting as cash makes the banker holder for value, the 
 undisclosed understanding between him and his customer 
 would be a mere ineffectual subterfuge. 
 
 This does not seem to be the case. Whether the bank 
 is agent or principal must depend on the basis of dealing 
 with the customer. A man cannot constitute himself a 
 holder for value against the will of the previous holder. 
 The recognition of such an agreement is the only tenable 
 ground for the judgment of Bigham, J., in Akrokerri 
 (Atlantic) Mines, Ld. v. Economic Bank [1904] 2 K. B. 
 465. Moreover, such an intimation cuts away what one 
 cannot help seeing weighed heavily in the scale with the 
 House of Lords in the Gordon Case, namely the impres- 
 sion that crediting as cash inevitably involves the right of 
 the customer to draw against such credit. This result, 
 at any rate, could not be attributed to the entry, in the 
 face of its distinct renunciation by the customer. 
 
 Some such method is, in any event, necessary if bankers 
 desire to retain the entering as cash plan, and at the same
 
 216 THE COLLECTING BANKER. 
 
 CHAP. XVII. time to reserve the right to return a customer's cheque 
 drawn against that nominal credit, with the answer, " Effects 
 not cleared." In view of Lord Lindley's statement that 
 " it must never be forgotten that the moment a bank places 
 money to its customer's credit the customer is entitled to 
 draw upon it, unless something occurs to deprive him of 
 that right," the customer to whom a cheque had been so 
 credited would, unless debarred by agreement or stipulation, 
 be entitled to treat such credit as funds available for 
 drawing purposes, and to claim damages if a cheque drawn 
 against them were returned unpaid. This is a matter 
 which, even if either of the Government Bills, or one which 
 was privately drafted in 1908, had become law, would still 
 have been left to arrangement between the parties. The 
 introduction of any provisions on the point, even if desirable, 
 would infallibly have raised comment and opposition, and 
 seriously imperilled any chance the measure had of getting 
 through both Houses within the session. It would always 
 be open to the banker to relax the stringency of such 
 restriction in approved or exceptional cases, just as he may 
 waive notice of withdrawal on a deposit account ; while the 
 existence of the stipulation would protect him in returning 
 the cheque on the ground of uncleared assets in ordinary 
 cases or when such a course appeared advisable. 
 
 Who u a Next, sect. 82 requires that the crossed cheque be 
 
 received from and payment thereof received for a person 
 who is properly describable as a customer. The section 
 gives no definition of customer. The term obviously 
 implies a certain amount of use and habit. (See Mtitt)i> /r.s 
 v. Williams Brmcn it Co., 10 Times L. K. 886 ; Gr,-nt 
 Western Railway Company v. London and C'niintii Hank 
 [1901] A. C. 414.) A single isolated transaction cannot 
 constitute a man a customer ; nor can a series of transac- 
 tions, even if continued for a considerable period, if those 
 transactions have no distinct relation to banking business, 
 and are such as could be just as well undertaken by anyono
 
 THE COLLECTING BANKEE. 21l 
 
 not a banker. In Great Western Railway Company v. CHAP. XVII 
 
 London and County Bank, ubi sup., a man had been for 
 
 some years in the habit of getting crossed cheques exchanged 
 
 for cash at a bank where he had no account, and which 
 
 charged him nothing for the accommodation. Held by 
 
 the House of Lords, reversing the judgment of the Court 
 
 of Appeal, that he was not a customer. 
 
 The existence of a bond fide account is the safest indica- 
 tion of a customer, and it might not unfairly be conjectured 
 that the original idea of the proviso to sect. 12 of the 
 Crossed Cheques Act, 1876, the precursor of sect. 82, was 
 that of a customer with a regular current account into which 
 the proceeds of crossed cheques paid in for collection would 
 naturally go. Indeed, the keeping of a current account 
 has been judicially indicated as the true test of a customer. 
 In Lacave v. Credit Lyonnais [1897] 1 Q. B. 148, Collins, J., 
 said : "I am clearly of opinion that Ponce was not a 
 customer of the bank. Sir Robert Reid contended that the 
 section (82) could not be taken to limit the protection to 
 the case of the cheque being collected for a customer in 
 the ordinary sense, that is, a person who kept an account 
 at the bank. He says ' the customer ' must be used in a 
 larger sense of the word, and practically, as far as I can 
 see, must be taken to mean anyone. I cannot see any 
 dividing line between a person who has no account and 
 anyone who chooses to come with a cheque and ask the 
 bank to collect it for him. Sir Robert Reid contended that 
 it must have that larger meaning. He admitted that, if it 
 had not that larger meaning, Ponce could not be brought 
 within the definition of ' customer.' He called the atten- 
 tion of the court to a decision which undoubtedly decided 
 that no one but a customer in the proper sense of the word, 
 a person having an account at the bank, would be entitled 
 to the benefit of the section. That is the case of Matthews 
 v. Brown & Co., decided in the year 1894. I do not 
 think it would have required the authority of that decision
 
 J18 THE COLLECTING BANKER. 
 
 :*HAP. xvn. to convince me that the Act means what it says, and that 
 protection is only given, for obvious reasons, to a bank 
 which does collect for a customer in the real sense, if he is 
 a person who has an account at the bank, at all events if 
 he is a person whose relations are much nearer and closer 
 than those of Ponce in this case." 
 
 The words in the report are, " I cannot see any dividing 
 line between a person who has an account and anyone 
 who chooses," &c. ; but the word " an " is obviously a 
 mistake, and it should be, as above quoted, " no account." 
 There are, however, dicta in the judgment of the House of 
 Lords in Great JIVx/c/// Jlailirai/ Company v. London and 
 County Bank [1901] A. C. 414, which seem to involve the 
 expansion of the test beyond the fact of keeping a current 
 account; and the concluding words of the above-quoted 
 judgment of Collins, J., point in the same direction. Lord 
 Brain j> ton, indeed, in the Great }l~<'*trni Case, seems dis- 
 posed to include as customers persons whose dealings 
 would appear quite insufficient to constitute them such. 
 The question is perhaps more one for the application of a 
 common-sense view than for legal definition ; but, broadly 
 speaking, a customer might fairly be defined as one 
 who, for an appreciable period, has had with the bank 
 transactions of the nature of legitimate banking business, 
 productive of profit or advantage to both parties. 
 
 A man who had for years been in the habit of bringing 
 bills to a bank for discount on a business footing might 
 \\tll be regarded as a customer, in the event of the 
 bank collecting a casual cheque for him, although he 
 had no current account. A deposit account might quality 
 a man as a customer, apart from any current account. 
 Very possibly both these cases are outside the original 
 purview of the section, but, in the absence of definition, 
 it would be hard to deny that such a person was, in 
 common parlance, a customer. A question might be 
 raised whether the protection extends to a first trans-
 
 THE COLLECTING BANKER. 
 
 action, a cheque paid in to open an account, per- CHAP. 
 fectly bond fide, with the real intention of continuing 
 the account afterwards. Probably protection would be 
 withheld. Use and habit are lacking, and intention 
 cannot supplement what is, for the time being, an isolated 
 transaction. As Darling, J., said in Tate v. Wilts and 
 Dorset Bank, "Journal of The Institute of Bankers," 
 vol. xx., p. 376, of the man paying the first cheque into 
 an account which continued for nearly two months after- 
 wards : "He was not a customer at the moment, but 
 he was going to become a customer if that cheque was 
 collected." 
 
 If a man is not otherwise a customer, such expedients as 
 making him draw a counter- cheque for the amount, or 
 entering the transaction under some such head as " Sundry 
 Customers " will be of no avail. (Cf. Matthews v. Williams 
 Brown d Co., 10 Times L. R. 386.) 
 
 Sect. 82, being confined to cheques, has no application 
 to a document which purports to be a cheque, but to which 
 the drawer's signature is a forgery. Still, whether 
 crossed or not, it would seem that a banker incurs 
 no liability by unwittingly collecting such a docu- 
 ment for a customer. Even if there could be a true 
 owner of such a document, other than the customer, the 
 double contingency of a forged drawer and a subsequent 
 forged indorsement in fraud of a true owner is too remote 
 to render the question worth consideration. As against 
 the payer or his banker the collecting banker would be 
 protected against loss, as an innocent agent receiving the 
 money for and handing it over to his principal. (See 
 " Money Had and Received," ante, p. 140.) 
 
 Inasmuch as sect. 95 of the Bills of Exchange Act extends Documents 
 the crossed cheques sections to dividend warrants, and 
 sect. 17 of the Revenue Act, 1883, does the same with 
 regard to the documents therein described (see, ante, p. 30), 
 section 82 must be read as if such instruments were
 
 820 THE COLLECTING BANKER. 
 
 ?HAP. XVII. specifically mentioned therein. The peculiar limitations 
 of each class of document must, however, be borne in mind 
 when seeking to apply to them any of the crossed cheques 
 sections. 
 
 Dividend As to dividend warrants, they are frequently nothing 
 
 more or less than cheques in a somewhat unusual form. 
 If a dividend warrant contains any condition or other feature 
 excluding it from the character of a cheque, it must stand 
 on its own footing. The negotiability or oven transt'i r- 
 ability of dividend warrants, apart from cheques, does not 
 appear ever to have been fully judicially recognised. 
 
 Mr. Chalmers suggests (Bills of Exchange, 6th ed. p. 827) 
 that they seem to be contemplated as falling within the Act ; 
 but that can only be if they conform to the requisites of a 
 bill. Sect. 8, for instance, to which he refers, could have 
 no application to a document other than a bill. Very 
 possibly a custom of merchants could at the present day 
 be proved showing dividend warrants to be negotiable, even 
 though they materially diverged from bill or cheque form ; 
 if not, a banker might be held guilty of negligence if he 
 collected such a warrant for a customer other than the 
 payee. Sect. 97 (8) (d) specially preserves the validity of 
 any usage relating to dividend warrants or the indorsement 
 thereof. This probably refers to the custom of bankers to 
 pay dividend warrants which are payable to several payees 
 on the indorsement of one ; but the object in view is 
 discharge or receipt, not negotiation. 
 
 So, again, with regard to documents brought within the 
 afOlicd cheques sections by sect. 17 of the Revenue Act, 
 1888. They are not cheques ; and, as shown before, are 
 not negotiable and not even transferable. In face of the 
 terms of the section, it would be practically impossible to 
 affix to them a negotiable character by custom, inasmuch 
 as the section debars them from that quality, and the t mis 
 in which it ilrsrrihcs them also preclude it. Consequently, 
 a document cannot fall both within the crossed chc|ii> s
 
 THE COLLECTING BANKER. 221 
 
 sections by virtue of sect. 17 of the Revenue Act, 1883, CHAP. XVII. 
 and at the same time be transferable. It would, there- 
 fore, be negligence in the banker to collect it for anyone 
 but the payee. It must be admitted that the Court of 
 Appeal appear to have disregarded this consideration in 
 Bavins, jun. and Sims v. London and South-Western 
 Bank [1900] 1 Q. B. 270, but it was not placed before 
 them, and it is apparently sound in principle. 
 
 The next condition which must be fulfilled in order to en- " Crossed 
 title the collecting banker to protection under sect. 82 is that fpeciaily'to' 
 the cheque be "crossed generally or specially to himself." himself." 
 
 It must now be taken as finally settled that this clause 
 is confined to cheques already crossed when coming to the' 
 banker's hands ; and that a crossing by the banker himself 
 of a previously uncrossed cheque, under sect. 77, sub-sect. 6, 
 does not render it a crossed cheque for the purposes of 
 this section. (Bissett v. Fox, 51 L. T. N. S. 663 ; the 
 Gordon Case in the Court of Appeal [1902] 1 K. B. 242, 
 and in the House of Lords [1903] A. C. 240, where Lord 
 Lindley says, at p. 249 : "It appears to me that sect. 82 
 would be deprived of all meaning if it were held to apply to 
 cheques not crossed when they came to the hands of the 
 bank seeking the protection of that section.") See further as 
 to this point " Crossing by Collecting Banker," ante, p. 54. 
 
 As to the effect, with regard to sect. 82, of one banker 
 crossing to another for collection under sect. 77, sub-sect. 5, 
 see, ante, p. 52. 
 
 As previously intimated, it is in this connection that By whom 
 importance attaches to the question whether, to constitute 
 a crossed cheque, the crossing must be put on by some 
 person authorised by the Act to do so. The typical 
 case would be that of a perfectly innocent, respectable 
 person who has taken an open, order cheque, bond 
 fide and for value, on which the payee's or a subsequent 
 indorsement has been forged. He crosses it, either 
 generally or to his own bankers, pays it in to them for
 
 THE COLLECTING BANKER. 
 
 -. xv IF. collection, and they collect it for him. As shown before 
 (ante, p. 102), such person is neither drawer nor holder, 
 and has, under the Act, no more right to cross the cheque 
 than any casual stranger who might find it lying about (a). 
 
 Is the instrument " a cheque crossed generally or 
 specially " to that banker within the section so as to entitle 
 the banker to protection ? Arguments on both sides will 
 be found under " Paying Crossed Cheques" (ante, p. 102). 
 In the case of the collecting banker, however, there is the 
 additional feature that he is under practical compulsion to 
 receive the cheque for collection from his customer, and in 
 that sense is within the purview of the section. The 
 contentions on either side seem fairly balanced, and it is 
 difficult to forecast what view a court might take if the 
 question ever arose, either construction involving some 
 straining of the crossed cheques sections. Very possibly 
 the contingency was not present to the minds of the 
 Legislature, and is therefore not provided for. 
 
 In (iri'dt ]}'i'xtcni Hatlicay Coinjxnii/ v. Loinlon and 
 County Bank [1901] A. C., at p. 422, Lord Brampton 
 said that though he recognised that the bank received 
 payment of the cheques which were marked " Not 
 negotiable " in good faith, he was by no means clear that 
 it did so " without negligence," inasmuch as the bank 
 must be taken to know the effect of the " Not negotiable " 
 crossing. This obviously indicates an impression on Lord 
 Brampton's part that a banker cannot accept a cheque 
 marked " Not negotiable " for collection without negligenoe, 
 or at least that the fact of its being so marked is, of itself, 
 sufficient to put the banker on inquiry. It is confidently 
 submitted that there is no foundation whatever for imy 
 such suggestion. Kv< rvthing in the Act points to the 
 diametrically opposite conclusion. 
 
 The provisions of sections 81 and 82 were formerly 
 
 the judfjn /ham. .1.. in .!/./<//.< //-, i.lf'n/itir) 
 
 '/ I'.'n) L' K |;. I-.,, c.-an fairly be* cited as 
 
 'ititrnvcrtiiig this proposition. Of. 'nut,, p. K :t. n.
 
 THE COLLECTING BANKER. 223 
 
 combined in one section, sect. 12 of the Crossed Cheques CHAP, xvn. 
 Act, 1876; the substance of that section being as sect. 81, and 
 the present sect. 82 appearing as a proviso thereto. The 
 whole controversy in Matthiessen v. London and County 
 Bank, 5 C. P. D. 7, decided in 1879, was whether the proviso 
 applied to cheques other than those crossed " Not nego- 
 tiable." The court held that it did ; the proviso, though 
 in that form, operating as a substantive enactment, and 
 not being in terms restricted to any particular form of 
 crossing. 
 
 It would indeed be extraordinary if the Bills of Exchange 
 Act, in emphasising this decision by reproducing the 
 proviso as an independent section, had excluded from its' 
 operation the very class of crossing to which alone it 
 had been contended it applied. 
 
 Next, the whole scheme of sect. 76 makes the words 
 "not negotiable," where they appear, part of the "addition " 
 which " constitutes a crossing," the existence of which 
 crossing renders the cheque a crossed cheque. The words 
 are as much a part of the crossing, and as much an element 
 of a cheque crossed generally or specially, as the two 
 parallel transverse lines or the name of a banker. The 
 words used in each case are " with or without the words 
 'not negotiable.''' When, therefore, sect. 82 uses the 
 phrase " without negligence " in reference to a crossed 
 cheque, it must mean negligence independent of anything 
 which simply goes to constitute a crossed cheque. 
 
 Again, sect. 81 specifically limits the effect of the not 
 negotiable crossing to title gained or conferred by the 
 person taking the cheque so crossed. The collecting 
 banker neither acquires nor confers any title to a cheque 
 coming to his hands for collection and being so dealt with. 
 
 Again, where there is prior absence or defect of title, the 
 effect of the crossing is to render the customer's title null 
 or defective, the precise contingency against which the 
 banker is protected by sect. 82.
 
 224 THE COLLECTING BANKER. 
 
 fHAi- \vii finally, fcbfl ttetofcorj authorisation of tin- not iir^ut ial>K- 
 crossing for the protection and benefit of the public, and 
 the consequent obligation on bankers to collect such 
 cheques for their customers as much as crossed cheques 
 not bearing those words, render applicable the canon of 
 construction which requires that the banker should receive 
 equivalent safeguards, which he would not do if any 
 distinction were made, as regards him, between the two 
 classes of cheques. 
 
 The addition of words such as " account payee " to the 
 authorised crossing forms no part thereof. They can only 
 affect the position under the clause requiring that the 
 collection shall be "without negligence," which see, anf,\ 
 p. 197. 
 
 "The The case in which the banker is protected under sect. 82 
 
 iioVm'eor'a is therein defined as being where "the customer has no 
 il.-fertive title title or a defective title " to the cheque. There are allusions 
 or hints in the judgments of the Lord Chancellor and Lord 
 Brampton in Great Western Railway v. London and Count 11 
 Jitink [1901] A. C. 414, which might be taken to imply 
 that the position of a bond fide holder for value of a cheque, 
 or even of the banker who collected it, might be affected by 
 the question whether the fraud by which the cheque was 
 obtained amounted to larceny by a trick, which is a felony ; 
 or was merely an obtaining by false pretences, which is a 
 misdemeanour. The suggestions are too vague to admit 
 of detailed criiicism, but there appears to be really no basis 
 for any such proposition. 
 
 A man who has stolen a cheque can give a perfectly 
 good title to another, who takes it as a holder in due 
 course. The Larceny Act, 1861, s. 100, exempts 
 negotiable instruments in the hands of a bond fide holder 
 for value from revesting in the original owner even after 
 conviction of the offender, an exemption which has been 
 judicially interpreted as affording complete protection to 
 such holder (see Chichester v. 7/itf, 52 L. J. Q. B. 160).
 
 THE COLLECTING BANKER. 225 
 
 Cheques are not "goods" within sect. 62 of the Sale of CHAP. XVII. 
 
 Goods Act, 1893, and so are exempt from sect. 24, sub- 
 
 sect. 1 of that Act. It would be strange if civil trials on a 
 
 bill or cheque were liable to be complicated by incidental 
 
 criminal proceedings to determine, in the absence of the 
 
 alleged criminal, whether his conduct amounted to felony 
 
 or misdemeanour. In Glutton v. Attcnborough [1897] A. C. 
 
 90, there was actual theft, coupled with fraud which might 
 
 well have been classed as larceny by a trick ; yet the 
 
 House of Lords unhesitatingly decided in favour of the 
 
 holder in due course. 
 
 If the cheque is crossed "Not negotiable," it can make 
 no difference whether the infirmity of title arises through 
 felony, misdemeanour, or some disabling circumstance not 
 amounting to crime. In other cases, the only question 
 which can be raised against the holder in due course is, 
 was the document knowingly issued as a negotiable instru- 
 ment ? (See " Void and Voidable Contracts," ante, p. 136). 
 
 The position is, if possible, stronger in the case of the 
 collecting banker. The customer cannot have less than 
 no title, even if he has obtained the cheque by larceny; 
 and against the total absence of title sect. 82 affords 
 protection. 
 
 As to cases in which a collecting banker may be 
 protected against the consequences of collecting a cheque 
 for a customer whose title is defective, apart altogether 
 from sect. 82, see, ante, p. 138. 
 
 The operative words of sect. 82 are " the banker shall - shall not 
 not incur any liability to the true owner by reason only of 
 
 having received such payment." As to who is " true the true 
 ,, 10 , owner." 
 
 owner, see ante, p. Id4. 
 
 As before stated, and as pointed out by Lord Macnaghten " By reason 
 in the Gordon Case, see ante, p. 190, the protection, when received sud 
 it can be claimed, extends not only to the receipt of pay- payment." 
 ment, but " to every step taken in the ordinary course of 
 business and intended to lead up to that result." 
 
 B. Q
 
 THE COLLECTING BANKER. 
 
 The duty of the collecting banker, with regard to bills 
 and cheques paid in, is to present them for acceptance 
 where necessary, and for payment at the proper period. 
 With regard to bills payable on demand, they must be 
 presented for payment within a reasonable time after issue 
 to charge the drawer, and within a reasonable time after 
 indorsement to charge the indorser (sect. 45). By the same 
 section, in determining what is a reasonable time regard 
 shall be had to the nature of the bill, the usage of trade witli 
 legard to similar bills, and the facts of the particular case. 
 
 Cheques stand on a somewhat different footing. It may 
 be taken that the indorser, if any, not being the drawer, 
 is discharged by the omission to present the cheque for 
 payment within a reasonable time after the indorsement. 
 But, as shown before (see, ante, p. 78), the provisions 
 of section 45 are, in the case of cheques, modified by 
 implication from sect. 74 ; and the drawer, except in the 
 case of, and to the extent of, damage sustained by failure 
 of the bank on which the cheque is drawn pending its 
 presentment, remains liable on the cheque unless and 
 until released by the Statute of Limitations. It is, 
 however, clearly the banker's duty not to subject his 
 customer, and incidentally himself, even to this risk, 
 and all cheques should be presented within a reasonable 
 period of the receipt. If the delay has occurred prior to 
 their reaching the banker's hands, he is, of course, not 
 responsible for that. The rule as to reasonable time for 
 presenting cheques, as formulated by Mr. Chalmers 
 (Chalmers on Bills, 6th ed., p. 251), requires that the 
 cheque be presented on the day after receipt, if the recipient 
 and the banker on whom it is drawn reside in the same 
 place, or that it be forwarded for presentment on the day 
 following receipt, if the recipient and the drawee banker m< 
 in different places. Where the intervention of an agent. 
 siidi as a collecting banker, occasions delay in presentment, 
 the question seems to be whether the employment of such
 
 THE COLLECTING BANKER. 227 
 
 agent was a reasonable thing to do. In the case of crossed CHAP. XVI I. 
 cheques the employment is not only reasonable, but a 
 necessity imposed by statute ; and any delay occasioned 
 by such a cheque being paid in to a banker for collection 
 would consequently and unquestionably be held justifiable. 
 
 And in the case of uncrossed cheques, there can be Uncrossed 
 little, if any, doubt that a man is entitled to avail himself 
 of the services of his banker for their collection. The 
 point does not seem ever to have been raised ; but the 
 obvious impossibility of a business concern, or even a 
 private individual, personally presenting or forwarding every 
 cheque for payment, and the frequent judicial recognition 
 of the Clearing House system, would render it almost 
 ludicrous to contend that it was an unreasonable thing for 
 a man to pay a cheque into his banker's instead of 
 presenting or forwarding it himself. If on no other 
 ground, such a course could be supported by reference to 
 sects. 45 and 74, both of which provide that usage of 
 trade shall be taken into account in reckoning what is 
 reasonable time ; while sect. 74 provides that not only 
 usage of trade, but that of bankers, shall constitute an 
 element of the calculation. These terms assuredly sanction 
 a practice so universal as that of the collection of cheques 
 through the medium of a banker. And, both with regard 
 to bills and cheques, the provisions of sect. 49, sub-sect. 13, 
 as to notice of dishonour, where a bill when dishonoured 
 is in the hands of an agent, appear to recognise the 
 intervention of the banker as collecting agent. 
 
 It would follow that the banker bas the day following the 
 receipt of the cheque within which to present or forward it. 
 
 Presentment through the Clearing House is equivalent to 
 actual presentment to the bank on which the cheque is 
 drawn. 
 
 The collecting banker must give notice of dishonour with Duty to give 
 regard to any bills or cheques dishonoured on presentation 
 by him. 
 
 Q2
 
 THE COLLECTING BANKER. 
 
 So far as cheques are concerned, the need for notice of 
 dishonour to the drawer is, as previously stated, ante, p. 42, 
 somewhat of an anomaly, the drawer being the principal 
 debtor on the instrument, and having no right of recourse 
 against any other party. Still he is drawer within sect. 48, 
 and as such entitled to notice, though in the majority of 
 cases omission to give it would be excused under either 
 (4) or (5) of sub-sect, (c) of sect. 50, the dishonour having 
 arisen either from insufficient funds, in which case the 
 banker is under no obligation to pay the cheque, or from 
 countermand of payment by the drawer. 
 
 Under sect. 49, sub-sect. 18, where a bill when dis- 
 honoured is in the hands of an agent, he may either 
 himself give notice to the parties liable on the bill, or he 
 may give notice to his principal. The latter would 
 far the preferable course for the collecting banker. It is 
 somewhat improbable that he should be acquainted with 
 the addresses of the parties to the bill or cheque other than 
 his own customer; there seems no reason why he should 
 take upon himself the additional labour of notifying them 
 of the dishonour ; and if he gives notice, say to the last 
 indoner only , he runs the risk of that indorser not passim. 1 
 it on, and of the other parties being consequently discharged. 
 In such case he would be liable to his customer ; as the 
 alternative course to giving notice to the customer, allowed 
 by the section, is that of giving notice to the parties liable 
 on the bill, a duty which is not fulfilled by giving notice to 
 some or one of them. 
 
 The time allowances for giving notice, where a bill or 
 cheque is in the hands of a bank for collection, are on a 
 fairly liberal scale. By sect. 49, sub-sect. 18, the banker has 
 the same time to give notice to his customer as if he (tin- 
 banker) were the holder, and the customer, upon receipt 
 of such notice, has himself the same time for giving notice 
 as if the banker liud been an independent holder. More- 
 over, where the instrument lias been forwarded by one
 
 THK COLLECTING BANKER. 22 
 
 branch to another, or a branch to the head office, or vice <'HAP. XVI 
 
 rersd, for collection, each such constituent of the entire 
 
 bank is, for the purpose of giving notice of dishonour, 
 
 regarded as a separate entity, and the same time allowed 
 
 as if they were independent holders. (Clode v. Bayley, 
 
 12 M. & W. 51 ; Prince v. Oriental Bank Corporation, 
 
 ;} A. C., at p. 332 ; Fielding v. Carry [1898] 1 Q. B. 268.) 
 
 As to the method of giving notice of dishonour, s. 49, 
 sub-s. 6, enacts that " the return of a dishonoured bill to 
 the drawer or an indorser is, in point of form, deemed a 
 sufficient notice of dishonour." Mr. Chalmers' note is, 
 " This sub-section approves a common practice of collecting 
 bankers which was previously of doubtful validity " (6th eel. 
 p. 161). 
 
 The usual and natural practice of collecting bankers Returning 
 would seem, however, to be to return the bill or cheque to customer. 
 their own customer ; and the sub-section does not appear 
 very aptly framed for a complete authorisation of this 
 practice. It does not cover the case of a bill or cheque 
 payable, or by means of blank indorsement become 
 payable, to bearer, of which the customer is the holder ; 
 and the return therefore of such a document to the 
 customer is not notice of dishonour within the sub-section, 
 which only applies where the customer is either drawer or 
 iudorser. Presumably indorsement for collection would 
 be sufficient to constitute the customer an indorser within 
 the provisions both of this sub- sect, and of sect. 49, 
 sub-sect. 13. 
 
 The words "return of a dishonoured bill" seem to point 
 to the sub-section being confined to the bill or cheque 
 being restored to the source whence it came ; in the banker's 
 case, to the customer. It might be doubted whether the 
 mere transmission of the bill to a prior party, not the 
 holder's immediate transferor, would be within these terms. 
 
 In any event such a course would be an undesirable one 
 for the banker to adopt. There seems no reason why he
 
 THE COLLECTING BANKER. 
 
 should pot the bill or cheque out of the possession of 
 himself or his customer, its production being necessary if 
 proceedings have to be taken on it. 
 
 Save in the exceptional case of the return of the bill to 
 a drawer or indorser, the notice must be given in writing or 
 by personal communication (sect. 49, sub-sect. 5). It may 
 be sent by post. Sect. 49, sub-sect. 12 (/>) clearly recognises 
 this. 
 
 Notice by telegram would seem to be good. Willes, J. 
 appears to have doubted as to this in Godiriii \. Fnnn-lx, 
 L. R., 5 C. P., at p. 803 ; but in FifUUinj \. Corn/ [LS'is] 
 1 Q. B. 268, A. L. Smith, M.R., expressed the opinion 
 ihut such notice was sufficient. 
 
 It is, however, to be noticed that, except in the case of 
 personal communication, the crucial time is the sending, 
 not the receipt, of the notice, sect. 49, sub-sect. 12. Thus, 
 where the parties reside in different places the notice mu-t 
 be sent off on the day after the dishonour of the bill, if 
 there be a post at a convenient hour on that day, and if 
 there be no such post on that day, then by the next post 
 thereafter. 
 
 In FifltHiiii v. Corn/, nhi *np., there being convenient 
 posts on the day following dishonour, a telegram sent the 
 next day, though it arrived about the same time as a let! ri- 
 posted the previous day would have done, was held to be too 
 late. Had a special messenger been despatched at any time 
 during the day after dishonour, though he might have loen 
 far later in arriving, that would presumably have sufficed. 
 
 In that particular case notice of dishonour was posted 
 liy mistake to the wrong branch, and the telegram \VHS sent 
 to the right branch. It was held that this was equivalent 
 to a redirection of the letter; and that the notice was good ; 
 but the decision seems open to criticism. 
 
 N" nis,- 1ms yet arisen as to the validity of noti.-e by 
 telephone. It might fairly be considered to come under 
 the head of a personal communication, the actual voice
 
 THE COLLECTING BANKER. 26. 
 
 being transmitted by the reciprocal vibrations of the discs CHAP. XVII 
 by means of the electric current in the same way as by 
 vibration of the air or intervening material in the case of 
 ordinary speaking, as shown by the phrase " to speak 
 through the telephone." 
 
 Where a bank, apart from agency, forwards a cheque by Cheque by 
 post direct to the bank on which it is drawn and requests a 
 remittance, the latter bank would appear to hold the cheque 
 in the capacity of agent for collection, not that of drawee 
 banker. It is true that a bill may be presented by post, 
 sect. 46, sub. -sect. 8, being merely confirmatory of the pre- 
 existing English practice, but the above view is that taken 
 by Mr. Cohen and Mr. Chalmers. (See "Questions on 
 Banking Practice," 5th ed., Question 5.) 
 
 The drawee bank has therefore the whole of the day 
 following receipt within which to return the cheque. 
 
 The same principle would seem to apply where a private 
 person adopts the same course of sending the cheque 
 direct to the drawee bank, if on the facts it appears that 
 such forwarding was in the nature of employing the drawee 
 bank in the dual capacity of agent and payee, and not by 
 way of presentment only. In no case, however, can the 
 drawee bank claim to hold the cheque two days, one for 
 presentment to itself, the other as an agent holding a 
 dishonoured bill. 
 
 The duty of a bank receiving a cheque drawn on it by Duty of 
 post, for payment only, is, if it is not going to pay the P a y in S bank 
 cheque, to post the cheque back the same day. Where 
 the rules of the country clearing apply, that is, where a 
 cheque is presented to a country bank through the London 
 Clearing House, the time allowed is still shorter. The 
 cheque must be returned by the first post after receipt, and 
 must be returned direct to the country or branch bank whose 
 name and address is across it. Rule 4 is as follows : " Any 
 country bank not intending to pay a cheque sent to it for 
 collection to return it direct to the country or branch
 
 :**2 THE CODLECTIXG BANKER. 
 
 bank, if any, whose uame and address is across it." The 
 words "for collection" as used here, though justified by 
 banking phraseology, are somewhat misleading, especially 
 as they occur elsewhere in the rules in the ordinary sense. 
 In this particular case they are equivalent to "for pay- 
 ment," the cheque necessarily reaching the country bank 
 through its own London agent. If the drawee country 
 bank does not return the cheque direct by the first post 
 after receipt, it is held liable to pay the amount (Parr's 
 Bank v. Ashby, 14 Times L. R. 568) if the presenting 
 bank have acted on the presumption that it would be 
 paid. 
 
 The rules of provincial clearing houses differ as to the 
 time within which unpaid cheques must be returned.
 
 ( 233 ) 
 
 CHAPTEK XVIII. 
 SECURITIES FOR ADVANCES. 
 
 The Banker's Lien. 
 
 APART [from any special security, the banker can look to CHAP, xvm, 
 his general lien as a protection against loss on loan or 
 overdraft. The general lien of bankers is part of the 
 law merchant and judicially recognised as such. (Brandao 
 v. Barnett, 12 Cl. & Fin. 787.) 
 
 As stated in that case (p. 806), "Bankers most 
 undoubtedly have a general lien on all securities deposited 
 with them as bankers by a customer, unless there be an 
 express contract, or circumstances that show an implied 
 c ontract, inconsistent with lien." 
 
 What class of securities may be the subject of lien is Securities 
 not very clearly denned. The words used in Brandao v. ij en- 
 Barnett are "all securities." In Davis v. Bowslier, 5 Term 
 Reports, 488, Lord Kenyon, C. J. uses first the words "all 
 the securities," but afterwards says : " Whenever a banker 
 has advanced money to another he has a lien on all the 
 paper securities which come into his hands for the amount 
 of his general balance." Grose, J. uses the term "paper 
 securities." 
 
 The class of securities covered by these definitions 
 cannot, on the one hand, be limited to fully negotiable 
 securities. In In re United Service Company, L. R., 6 
 Ch. 212, share certificates; in Currie v. Misa, 1 A. C. 
 564, an order to pay money to a particular person ; in 
 Jeffryes v. Agra and Master man's Bank, L. R., 2 Eq. 674, 
 a species of deposit receipt, were all held subject to the 
 banker's lien, though none of them was negotiable. On
 
 234 SECURITIES FOR ADVANCES. 
 
 CHAP xvin. the other hand, the general lien cannot he said to extend 
 to all classes of documents, even though they might 
 otherwise be utilised as security. 
 
 In Wjillf v. Radford, 38 L. J. Ch. 51, Kindersl.-y. 
 Y.-C., expressed the view that a conveyance of land was not 
 subject to the general lien. lie said: " The cases refer to 
 a deposit of documents which are in their nature securities, 
 but there is some ambiguity in the term * securities/ 
 Anything may of course be deposited, and deeds or plate, 
 after they have been deposited, may be said to be a 
 security; but what is intended is such securities as 
 promissory notes, bills of exchange, exchequer bills, 
 coupons, bonds of foreign Governments, &c., and the 
 courts have held that if such securities are deposited by a 
 customer with his banker, and there is nothing to show 
 the intention of such deposit one way or the other, the 
 banker has, by custom, a lien thereon for the balance 
 due from the customer." See, however, In re Bon-<-*, 
 83 Cb. D. 586, and Mutton v. Pent [1900] 2 Ch. 7 ( ., 
 where it would seem to have been assumed that the 
 lien would attach to a policy of insurance and a lease 
 respectively. 
 
 The nature of the " securities " subject to the lien is 
 further deducible from the condition that they must come 
 to the banker's hands in his capacity as banker ; in the 
 course of banking business. Very possibly it is part of a 
 banker's business to advance money, and any class of pro- 
 perty may by proper means be made the subject of security. 
 Hut save in the case of specific deposit as security, or by 
 way of equitable mortgage, in which cases lien becomes 
 immaterial, it is difficult to conceive how such things as 
 leases or conveyances should come to the banker's hands 
 in the course of his business as such. The better view 
 would seem to be that the lien only attaches to such 
 unties as a banker ordinarily deals with for his custom, r. 
 otherwise thim I'm- safe custody, when there is no quest ion
 
 THE BANKEK'S LIEN. 235 
 
 or contemplation of indebtedness on the part of the CHAP.XVIH. 
 customer. 
 
 But if not so circumscribed by the limitation of Character in 
 "securities," the same restrictions probably arise from the banker's 
 qualification that the goods must be in the possession of possession, 
 the banker in the course of his trade as banker, or for the 
 performance of some office which was his duty as banker. 
 It is not everything a banker does to oblige his customer 
 which falls within this category. The receiving of 
 valuables for safe custody, for instance, though a common 
 courtesy from bankers to their customers, could scarcely 
 be regarded as in the course of the banker's trade or duty. 
 Lord Campbell said in Brandao v. Barnett, itbi sup. : "A* 
 special verdict might find that it is the custom of bankers in 
 the course of their trade as such to receive such deposits from 
 their customers, but I do not think that from that finding 
 a general lien could be claimed on the plate chests." 
 
 No doubt the conditions of receipt would also exclude 
 the lien in such cases, the receipt being for a specific 
 purpose, but the illustration is adduced by Lord Campbell 
 as indicating the class of transaction which does not give 
 rise to the lien. 
 
 Immediately after the above remarks Lord Campbell 
 added: "In both cases a charge might be made by the 
 bankers if they were not otherwise remunerated for their 
 trouble." 
 
 It has been deduced from this that where a charge is Whether 
 made by the banker for the performance of any office it is j^ a 5 ^ nt 
 primd facie evidence that the performance of that office is difference, 
 not within the duty or business of bankers. (See Walker 
 on Banking, p. 186.) This does not seem to be the case. 
 It is not an uncommon practice with banks to charge a 
 small commission for keeping the account, especially if 
 the credit balance stand below a certain figure. The doing 
 so could hardly be said to destroy the relation of banker 
 and customer, or stand in the way of cheques paid in being
 
 236 SECURITIES FOR ADVANCES. 
 
 CHAP.XVIH. received by the bauker in the course of his business as 
 such, and so subject to the lien. In In re United Serri<;> 
 Company, L. R., 6 Ch. 212, certificates were deposited 
 with a bank, which charged a commission for receiving 
 the dividends. James, L. ).. nevertheless held that the 
 bank would have had a lien on the certificates for their 
 general balance. 
 
 It would not seem necessary that the security should 
 have been absolutely sent or deposited by the customer 
 himself. If it reach the banker's hands by direction of 
 the customer, that would be the same thing. In 7,'.u7<// /<///< 
 v. Cox, 17 Ch. D. 520, the money, with regard to which 
 the banker's lieu was recognised, had never been in the 
 customer's hands. 
 
 Whether a particular security is in the banker's 
 possession for the purpose of being dealt with by him in 
 his trade as bauker, or otherwise, is a question of fact, 
 depending partly on the general usage of bankers, and 
 partly on agreement or course of dealing between the 
 banker and the particular customer who owns the security. 
 
 It has been suggested that the classification is collec- 
 tion on the one hand, safe custody on the other. This is 
 probably too sweeping, though collection is no doubt the 
 primary idea of the banker's functions with regard to 
 securities subject to the lieu. The possession of anything 
 essential to collection, though not itself to be collected, 
 would clearly be covered by the collection to which it \\as 
 essential. A bond which had to be produced whenever 
 interest was paid would be subject to the lien if the 
 bankers were instructed to collect the interest. Bonds 
 being deposited with the banker in order that he mi^lit 
 cut off and collect the coupons, the lien would probably 
 attach to the bonds as well as the coupons ; but not if t la- 
 customer himself cut off the coupons as they became due, 
 and, as to these latter, only if they were then handed to the 
 banker for collection. If bonds redeemable at a fixed time
 
 THE BANKER'S LIEN. 237 
 
 or by drawings were deposited with the hanker to be CHAP. XVII L 
 presented for payment at the due date, or in the event of 
 their being drawn, the lien would attach. The case of 
 debenture or stock certificates deposited with a bank which 
 is to receive the interest for the customer seems doubtful. 
 The possession of them would not seem to be essential 
 or instrumental to the receipt of the interest, and would 
 seem more consistent with mere safe custody until they 
 should be required on a transfer. In In re United Service 
 Company, L. R., 6 Ch., at p. 217, James, L.J., appears to 
 have considered that certificates deposited in such circum- 
 stances would be subject to the lien. Mr. Chalmers 
 expresses doubt, but inclines to the view above expressed,* 
 as being the natural inference from the transaction. 
 (See " Questions on Banking Practice," 5th ed., question 
 999.) 
 
 Money paid in to the banker's has been expressly stated Lien on 
 by the House of Lords to be subject to the banker's lien. 
 (Currie v. Misa, 1 A. C. 564.) 
 
 It is somewhat difficult to see how in ordinary cases 
 money could be the subject of lien ; it would be usually 
 incapable of identification ; or if ear-marked, would be either 
 deposited for safe custody or as specific security, conditions 
 equally excluding the idea of lien. And the application of 
 the principle of lien to money paid in to the bank is com- 
 plicated by the consideration that such money, when paid 
 in, constitutes a mere debt of equivalent amount from the 
 banker to the customer, and a debt is not a suitable subject 
 for a lien. It seems a more logical view to attribute the 
 banker's unquestionable right to retain a credit balance 
 against a debt due from the customer to the doctrine and 
 rule of law which authorises the setting off of one debt 
 against another. In Roxburgh* v. Cox, 17 Ch. D. 520, the 
 Court of Appeal, while recognising that the banker's lien 
 applied to money paid into the account, preferred to base 
 their decision on this doctrine of set-off. If the lien
 
 *288 SECURITIES FOR ADVANCES. 
 
 CHAP. xvi ii. applies to money, it would apply to money received for a 
 cheque paid in for collection. In such case the money is 
 unquestionably received by the banker in the course of his 
 business as such. But here again the doctrine of set-off 
 would as efficiently meet the banker's needs. 
 
 As laid down in Rrandao v. Harm-It, 12 Cl. & F. 787, 
 the banker's general lieu is excluded by an express contract, 
 or circumstances that show an implied contract, incon- 
 sistent with lien. Outside the clear cases of goods for safe 
 custody, bills or money paid in to meet specific bills 
 accepted payable at the banker's, and distinct under- 
 standings to return securities on fulfilment of defined 
 conditions, no very exact rule can be laid down as to what 
 constitutes inconsistency with lien. 
 
 The question has generally arisen where securities have 
 been deposited to cover specific advances, on repayment of 
 which there has still been a balance due to the banker. 
 
 Apart from any special agreement, it was doubted in 
 Join-x v. PepfH-rcornt', Job. 480, whether the banker 
 might not in such case assert his general lien. In 
 Wilkinson v. London and Conntif Hank, 1 Times 
 L. R. 68, decided in the House of Lords November 14, 
 1884, it was assumed throughout that a customer depositing 
 securities as cover for specific advances was entitled to have 
 them back on repayment of those advances, independent of 
 the state of account between him and the banker. In In 
 r> l.nilon and Globe Financial Corporation [1902] 2 Ch. 
 416, Buckley, J., held that securities deposited as cover 
 for specific advances, but after discharge thereof left in tin- 
 banker's hands, became liable to the general lien. In In 
 iv lioiceii, 88 Ch. D. 586, a policy of life insurance was 
 deposited with a bank with a memorandum stating it to be 
 deposited as security for all monies then or thereafter due 
 on balance of current account or otherwise, not exceeding 
 in the whole at any one time the sum of 4,000. The 
 customer died indebted to the bank in more than 1*4,000.
 
 THE BANKER'S LIEN. 239 
 
 North, J.,held that the special agreement was inconsistent CHAP.XVIH. 
 with a general lien for the balance of .1,000. 
 
 The judgment of Buckley, J., seems distinguishable, on 
 the ground that the securities, being consciously left in the 
 banker's hands after satisfaction of the specific advances, 
 might be regarded as having come into his hands anew in 
 the way of business or as impliedly repledged or redeposited ; 
 and the better view seems to be that, even where not so 
 expressed, securities deposited for specific advances can be 
 claimed by the customer on discharge of those specific 
 advances, although he may still owe money to the banker. 
 
 But the same rule does not apply to the proceeds of 
 such securities when sold. (See, post, " Realisation of 
 Securities," p. 277.) 
 
 Securities lodged to cover acceptances of particular bills 
 are exempt from the general lien (a). 
 
 Lien being the right to retain another man's property Lien and 
 until a debt is paid, property and lien cannot co-exist in p ge ' 
 the same person with regard to the same article. The 
 lien peculiar to a banker, with regard to negotiable 
 securities, is defined in Brandao v. Barnett, 3 C. B., at 
 p. 531, as " an implied pledge," but assuming this to be the 
 case, absolute property is as inconsistent with tbe rights 
 of a pledgee as it is with those of a person having a lien. 
 
 If, therefore, the banker becomes holder in his own right Merger, 
 of negotiable securities coming into his possession as banker, 
 his right of lien or pledge is gone, or rather is merged in 
 the higher rights of an independent holder for value. 
 
 With regard to bills, notes, and cheques, the position is Lien on bills, 
 as follows. Under sect. 27, sub-sect. 3, " where the 
 holder of a bill has a lien upon it, arising either from 
 contract or by implication of law, he is deemed to be a 
 holder for value to the extent of the sum for which he has 
 a lien." There cannot be two holders for value of the 
 
 (ft) In ATtrolwrri (Atlantic) Mines, Ld. v. Eco'twrnic Sank [1904] 2 
 K. B. 465. Bigham. J., uses words which might be taken to imply that 
 collection is a special purpose inconsistent with lien. This is clearly not 
 the case. Cf. Currie v. Misa, 1 A. C., at pp. 565, 569, 573.
 
 240 SECURITIES FOR ADVANCES. 
 
 CHAI-. xvni. game bill, inasmuch as there cannot be partial negotiation 
 of a bill. The property in a bill is in ordinary cases 
 vested in the holder for value of it. The \\ords "he is 
 deemed " must therefore be interpreted according to the 
 exigencies of the section. (See Hill v. East and West 
 India Dock Co., 9 A. C. 448.) 
 
 The person who has a lien on a bill, though not to its 
 full amount, has not the property in it as against the 
 real owner, but he is placed by the sub-section in the 
 exceptional position of being holder for value to the extent 
 of his lien, with full beneficial interest to that extent against 
 all the world. (See the judgment of the Court of Appeal 
 in Great Western l\ailir<it/ Co. \. London and Count if 
 Bank [1900] 2 Q. B. 464.) To that extent he could sue 
 all parties to the bill, irrespective of any defect of title in 
 the person from whom he took it, if he have taken it in 
 good faith. To the same extent he could presumably sue 
 the person from whom he took it, if his name is on the 
 bill. If there be no defect of title, he recovers the whole 
 amount of the bill from any party to the bill other than 
 the one from whom he took it, holding the excess over the 
 amount of the lien as trustee for or to the use of his debtor. 
 
 As expressed in the sub- section, this is the banker's 
 position equally whether the lien arises from contract, as 
 where a bill or note is deposited as collateral security, or 
 from implication of law, as where a cheque comes into his 
 possession in the course of his business as banker, say for 
 collection. 
 
 But if the banker takes the cheque, bill, or note in the 
 first instance as holder for value, or if, having taken it in 
 the first instance in the course of his business, he subse- 
 quently so deals with it as to become holder for value, 
 there is no question of lien. If he give cash over the 
 counter, if he demand and receive it in reduction of an 
 ascertained overdraft, or if, according to the Gordon Case, 
 having received it generally, he credit it as cash, the
 
 THE BANKER'S LIEN. 241 
 
 banker becomes a mere transferee, the absolute property CHAP.XVIII. 
 
 vests in him and so excludes lien. But he acquires the 
 
 higher rights of a transferee for value. He can sue for 
 
 the full amount of the instrument, because, in the case 
 
 of a holder for value, the court will not go into the 
 
 quantum of the consideration. He would not sue in any 
 
 sense as trustee (per Vaughan Williams, L.J., in Great 
 
 Western Hallway Co. v. London and County Bank [1900] 
 
 2 Q. B. 464), and would not have to account to any one 
 
 for the balance recovered by him, so long as he duly 
 
 rendered the stipulated consideration. 
 
 Whether he holds under a lien or as holder for value in 
 his own right, forged indorsement or, in the case of a* 
 cheque, the not negotiable crossing, has precisely the same 
 effect on his rights against parties to the instrument. 
 
 Where bills, notes, or cheques are in the banker's hands 
 subject to the lien, it is his duty to present them at 
 maturity and give notice of dishonour if they are not paid*. 
 
 This obligation may be based either on his position as 
 agent or as holder for value. 
 
 As before stated, the banker is entitled to combine all 
 accounts kept with him by the customer in his own right, 
 and treat the balance as that for which he may claim his 
 lien, unless precluded from so doing by agreement or 
 course of business. 
 
 Collateral Security. 
 
 It is not unusual to find classed under the head of lien 
 cases where securities are definitely deposited as cover for 
 a running account or for specific advances. The recogni- 
 tion of the banker's lien may no doubt be adduced as 
 showing that it is part of a banker's business to lend money, 
 and, in that sense, it might be said that the securities come 
 into his possession in the course of his business. But the 
 true conception of lien seems to be rather of its attaching 
 
 B. a
 
 SECURITIES FOR ADVANCES. 
 
 to documents which come to the banker's hands by a 
 process not directly connected with any overdraft or advance. 
 
 Where the security is professedly handed over for the 
 purpose of securing an overdraft or an advance, the trans- 
 action is strictly of the nature of a pledge. 
 
 With regard to bills, notes, or cheques, the distinction 
 is immaterial. Probably the lien arising from contract 
 mentioned in sect. 27, sub-sect. 8, was intended to refer to 
 pledge. In any case the pledgee has the same rights. If 
 he takes in good faith, he acquires an independent title and 
 right to sue on the instrument to the extent of what is due to 
 him, and to hold the instrument against the true owner until 
 his claim is satisfied ; except, of course, in the case of forged 
 indorsement or " not negotiable " crossing. He must not 
 negotiate the instrument ; he is bound to present it at 
 maturity and give notice of dishonour if it is not paid. 
 
 The dividing line between the pledge of a bill or note 
 and its absolute transfer, equivalent to discount, is some- 
 times difficult to draw. The presumption in all cases of 
 negotiation is in favour of absolute transfer, and this 
 presumption is heightened when the transfer is by indorse- 
 ment. The question is, however, one of fact, and tin- 
 presumption is rebuttable. It may be shown, as laid down 
 in Kx parte Sch<\field, 12 Ch. D. 887, that the indorsement 
 was not by way of transfer, but merely by way of afford- 
 ing the additional security of the pledger's name in a 
 transaction which was really one of pledge only. 
 
 A bill or note deposited as security or pledged to cover 
 an advance or overdraft does not, as does a bill or note or 
 cheque given for a debt, suspend the remedy for the debt. 
 The two co-exist, run side by side, are in the true sense 
 collateral. There is nothing in law to prevent a banker 
 suing for an overdraft even during the currency of a note 
 or bill at a fixed date which he has taken as security. 
 
 And satisfaction of the debt is not necessarily payment 
 of the bill or note. In Jenkins v. Tn<i<i>-, 2t L. .1. Kx. 1 17,
 
 COLLATERAL SECURITY. 243 
 
 the secretary of an institution had given a promissory note CHAP.XVIII. 
 
 to secure an advance ; part of the advance was stopped, 
 
 with his consent, out of his salary. Held that this would 
 
 not support a plea of payment pro tanto of the promissory 
 
 note. In Glasscock v. Balls, 24 Q. B. D. 13, a promissory 
 
 note was given to secure an advance, and property was 
 
 mortgaged as further security. The mortgage was realised, 
 
 and the mortgagee paid himself the advance out of the 
 
 proceeds. The Court of Appeal were of opinion that this did 
 
 not constitute payment of the promissory note. It will be 
 
 noticed that in neither of these cases was there an actual 
 
 direct payment by the borrower, the debt being satisfied 
 
 from other sources ; but, assuming the basis' to be the 
 
 collateral, concurrent nature of the debt and the security, 
 
 there would seem to be no valid distinction. 
 
 In Glasscock v. Balls, Lord Esher expressed himself as Rights of 
 not being clear what were the rights of the pledgor in such such case. 
 a case. He suggested that he might be entitled to a 
 perpetual injunction restraining the pledgee from negotiat- 
 ing or parting with the instrument. 
 
 It is difficult to see why, on satisfaction of the debt, however 
 made, the pledgor is not entitled to claim the instrument, 
 like a redeemed pledge. It is only Lord Esher's silence as 
 to this obvious course that suggests a doubt. If the note or 
 bill is, after satisfaction of the debt, left in the pledgee's 
 hands, a bond fide holder for value, taking it before it is 
 overdue, can acquire a good title (Glasscock v. Balls, 24 Q. 
 B. D. 13 ), and the satisfaction of the debt would be no 
 defence against him when suing on the instrument. 
 
 A common form of security as cover is a promissory Promissory 
 note payable on demand, that being a continuing security, 
 But if such note be indorsed, it must be presented within a 
 reasonable time after indorsement to charge the indorser 
 (sect. 86, sub-sect. 1). In estimating such reasonable 
 time, the character of the instrument as a continuing 
 security must be taken into account ; but tbat would 
 
 R2
 
 SECURITIES FOR ADVANCES. 
 
 not justify its being held over for any period during which 
 the loan might be outstanding. Mr. Chalmers suggests ten 
 months as the limit, and this is probably the maximum. 
 
 Fully negotiable securities, other than bills or notes, 
 may be utilised as cover by deposit with or without an 
 accompanying memorandum. 
 
 The lender becomes at once pledgee ; if he takes the 
 instrument bond fide and for value, he acquires a title 
 against all the world to hold it until the obligation it was 
 given to cover is discharged. (London Joint Stock Bank 
 v. Simmons [1892] A. C. 201 ; Bentinck \. London Joint 
 Stock Bank [1893] 2 Ch. 121.) The test of good faith 
 is the same as is applied in the case of the transferee 
 of a bill. An antecedent debt forborne by express or 
 implied agreement on deposit of the security is sufficient 
 consideration. 
 
 Fully negotiable instruments of this class, such as bonds 
 payable to bearer, recognised as negotiable by the Stock 
 Exchange and the mercantile community, are the best 
 security a banker can get. No question of forged indorse- 
 ment can arise, and by their nature they give no scope for 
 the danger attaching to bills that they may have been 
 obtained by such fraud as excludes the contracting mind. 
 A negotiable security of this class may be stolen from 
 its true owner, and yet the pledgee, if he take it l>on<\ //We 
 and for value, can hold it against him, as if it had been a 
 bank note. 
 
 Absolute negotiability is a fixed quantity, admitting of 
 no qualifications or degrees. 
 
 For a short period a pernicious theory obtained that 
 some sort of constructive notice affected the banker if he 
 took by way of pledge instruments, however fully negoti- 
 able, from an agent, such as a stockbroker. 
 
 That, however, was finally dispelled by the case of 
 / ///.. .///// Stork Hank v. Simmons [1892] A. C. 201. 
 The previous decision of the House of Lords in 57/<;/'V. // \ .
 
 COLLATEKAL SECUKITY. 246 
 
 London Joint Stock Bank, 13 A. C. 333, was the foundation CHAP.XVIII 
 of the pre-existing error above referred to. This decision 
 was not unreasonably understood as laying down that if 
 negotiable securities were tendered as cover by a person 
 who, from the nature of his business, was likely to have 
 securities of other persons in his hands, it was the duty 
 of the bank to inquire into the nature and extent of his 
 authority to deal with the securities ; that the omission to 
 make such inquiry might preclude the banker from the 
 position of holder in good faith and for value ; and further 
 that, though the agent might have authority to pledge the. 
 securities of each principal separately, this would not avail 
 the bank if the securities of various principals were pledget! 
 en bloc to secure one advance. 
 
 In the London Joint Stock Bank v. Simmons [1892] London Joint 
 A. C. 201, the House of Lords declared that Sheffield v. 
 London Joint Stock Bank was decided purely on the 
 particular facts of the case, which in their opinion were 
 such as to affect the bank with either actual or legal notice 
 of the limited right of property of the person with whom 
 they were dealing and further that he was exceeding such 
 right of property or any authority reposed in him, in 
 pledging the securities as he did. They repudiated the 
 idea that any new principle of law was laid down by that 
 case, and emphatically affirmed the right of a bank or any 
 other person to take as security negotiable instruments 
 even from a person known to be an agent, without the. 
 necessity of inquiring into his authority so to deal with 
 them, provided always there were no extrinsic circum- 
 stances reasonably calculated to arouse suspicion. The 
 guiding principle for bankers in dealing with brokers or 
 other agents who, from the nature of their business, are 
 likely to have in their hands securities belonging to their 
 clients, must therefore be derived from Simmons' Case 
 irrespective of any supposed general propositions which may 
 have appeared deducible from Lord Sheffield's Case. Lord
 
 246 8ECUBIT1E8 FOR ADVANCES. 
 
 CHAP.XVIU. Halsbury in Simmons' Case expressly says that there is 
 nothing in the position of broker and customer which makes 
 it a reasonable inference that the broker is exceeding his 
 authority, or raises a doubt on the subject ; that the 
 inferences arrived at in Lord Sheffield's Case have no rela- 
 tion to the course of business which brokers habitually 
 pursue towards their own clients, and for their own clients, 
 when dealing with bankers with whom they deposit securi- 
 ties. " The deposit of securities," he proceeds, "as cover 
 in a broker's business, is as well known a course of dealing 
 . as anything can be, and the phrase that they are deposited 
 i n bloc seems to me to be somewhat fallacious. That they 
 are, in fact, deposited by the broker at one time, and to 
 raise one sum, may be true. It does not follow, and I 
 do not know that the banker could reasonably be expected 
 to presume, that they belonged to different customers, 
 and that the limit of the broker's authority was applied 
 to each individual security by his own client " [1892] 
 A. C., at p. 211. He then says that in Lord Sheffield's 
 Case no countenance was given to the notion that, because 
 the pledgor was assumed to be the agent for the owners 
 of the property, that circumstance alone put the bank upon 
 inquiry as to his title to the property with which he dealt, 
 and adds : " To lay down as a broad proposition that in 
 every case you must inquire whether a known agent has 
 the authority of his principal would undoubtedly be a 
 startling proposition, and certainly nothing said in Lord 
 Sheffield's Case would justify so novel an idea. The 
 broad proposition laid down by Chief Justice Abbott in 
 8 B. & C. 47, that whoever is the holder of a negotiable 
 iustrumeut ' has power to give title to any person honestly 
 acquiring it/ seems to me to be decisive of this case." 
 
 Lord Herschell dwelt strongly on the absurdity which 
 would result if negotiable securities could not be as readily 
 taken by way of pledge from an agent as documents of 
 title to goods are by virtue of the Factors Acts. He
 
 COLLATERAL SECURITY. 24 
 
 said it was admitted that a good title to negotiable CHAP.XVII 
 
 instruments could be acquired by purchase from an agent 
 
 entrusted with them, and could see no reason why the case 
 
 of pledge should stand on any different footing. " What 
 
 ground," he says, " is there for the position that in regard 
 
 to a pledge the case is different, that one may safely take 
 
 a negotiable instrument by way of sale from an agent, but 
 
 cannot so take it by way of pledge ? It is surely of the 
 
 very essence of a negotiable instrument that you may treat 
 
 the person in possession of it as having authority to deal 
 
 with it, be he agent or otherwise, unless you know to the 
 
 contrary, and are not compelled in order to secure a good 
 
 title to yourself to inquire into the nature of his title 6r 
 
 the extent of his authority," libi sup., at p. 217. 
 
 And at the conclusion of his judgment Lord Herschell 
 sums up the whole matter in words which concede all that 
 any banker could reasonably ask. He says : " I desire to 
 rest my judgment upon the broad and simple ground that 
 I find, as a matter of fact, that the bank took the bonds in 
 good faith and for value. It is easy enough to make an 
 elaborate presentation, after the event, of the speculations 
 with which the bank managers might have occupied them- 
 selves in reference to the capacity in which the broker 
 who offered the bonds as security for an advance held 
 them. I think, however, they were not bound to occupy 
 their minds with any such speculation. I apprehend that 
 when a person whose honesty there is no reason to doubt 
 offers negotiable securities to a banker or any other person 
 the only consideration likely to engage his attention is 
 whether the security is sufficient to justify the advance 
 required, and I do not think the law lays upon him the 
 obligation of making any inquiry into the title of the 
 person whom he finds in possession of them. Of course, if 
 there is anything to arouse suspicion, to lead to a doubt 
 whether the person purporting to transfer them is justified 
 in entering into the contemplated transaction, the case
 
 SECURITIES FOR ADVANCES. 
 
 would be different. The existence of such suspicion or doubt 
 would be inconsistent with good faith. And if no inquiry 
 were made, or if on inquiry the doubt were not removed, 
 and the suspicion dissipated, I should have no hesitation 
 in holding that good faith WHS wanting in a person thus 
 acting" [1892] A. C., at p. 228. 
 
 It would be superfluous to comment on the position so 
 clearly and satisfactorily stated, except to say that the 
 main principle involved is in no sense restricted to the 
 case of an agent, but applies just as much to that of a 
 person who professes to deal with the securities as an 
 independent owner. (Cf. Jones v. Pepprrrornr, Joh., 480.) 
 
 But it must be borne in mind that all the rights and 
 immunities accorded to the banker in the Simmon* 1 Case 
 were founded and dependent on the proved or assumed 
 full negotiability of the instruments pledged to him. It 
 is necessary, therefore, to consider what are the tests 
 of negotiability. 
 
 To be negotiable, an instrument must fulfil the follow- 
 ing conditions : It must purport to be, in its then condi- 
 tion, transferable by delivery ; it must, either by statute 
 or by the custom of the mercantile community of this 
 country, be recognised as so transferable and as conferring 
 upon a person who takes it honestly and for value, 
 independent and indefeasible property in and right of 
 action on it. (Cf. per Blackburn, J., in Crouch v. Crulit 
 Fourier, L. R, 8 Q. B., at p. 881 ; per Lord Herschell in 
 Loinlon Joint Stuck Hunk v. Simmons [1892] A. C., at 
 p. 215 ; and especially the lucid statement of the true rule 
 by Bowen, L.J., in Simmon* v. L<>n<l<t Joint Stork Hunk 
 [1891] 1 Ch., at p. 294.) The admission made in the latter 
 case was that the bonds in question passed from hand to bund 
 on the Stock Exchange ; and Boweu, L.J., points out the 
 difference between transferability and true negotiability, 
 and that the admission was consistent with the bonds ln-in^ 
 transferable, but not legally negotiable. The House of
 
 COLLATERAL SECURITY. /45 
 
 Lords [1892] A. C. 201, coupling this admission with a CHAP.XVIII 
 somewhat general statement made in evidence that the 
 bonds so passed as " negotiable securities," held their legal 
 negotiability proved. Lord Macnaghten, indeed, seemed 
 desirous of minimising, or even obliterating, the difference 
 between traasferability and negotiability by deprecating 
 the setting up of " refined distinctions habitually ignored 
 on the Stock Exchange " (p. 224). 
 
 The inevitable and desirable extension of the category 
 of negotiable instruments is probably better forwarded by 
 the growing custom of merchants, exercised on a proper 
 and intelligent basis, than by any such summary levelling 
 of carefully defined and logical boundaries. 
 
 It is sometimes said that the custom of the Stock HOW 
 Exchange is the only criterion of the negotiability of an "SiJlS* 7 
 instrument. No doubt the concentration in the Stock 
 Exchange of dealings in all classes of securities renders 
 that body a factor of ever increasing importance in the 
 determination of the question, and evidence from the 
 Stock Exchange is the most available and carries the 
 greatest weight in the courts; but there is no justification, 
 certainly not in any of the earlier cases, for confining the 
 recognition of negotiability to the Stock Exchange, to the 
 exclusion of bankers, merchants, and other classes of the 
 mercantile world. 
 
 The recent origin of a mercantile custom to treat a Eecent 
 particular class of instrument as negotiable is no bar to its suff-^nt n 
 validity. 
 
 This is disputed by those who advocate the view that the 
 negotiability of certain instruments was recognised by, and 
 incorporated in, the ancient law merchant, and that, save by 
 statute, no addition can therefore be made to the category. 
 
 The judgment of Kennedy, J., in Bechuanaland Ex- 
 ploration Company v. London Trading Bank [1898] 2 
 Q. B. 658, in which the earlier and somewhat conflicting 
 decisions are carefully reviewed, is very convincing in the
 
 250 SECURITIES FOR ADVANCES. 
 
 CHAP. XVII I. opposite direction; and it was followed by Bigham, J., in 
 ' Etlflstt'in v. Sch tiler cO Co. [1902] 2 K. B. 144. Apart 
 from authority, it hardly appears conducive to national 
 prosperity that an important part of the circulating medium 
 of the country should be once and for all limited to that 
 which sufficed for the comparatively small commerce of 
 earlier days, with no possibility of expansion to meet the 
 larger needs of modern times. 
 
 The negotiability of a foreign instrument in the country 
 of its origin is no evidence that it is negotiable here. As 
 Bowen, L.J., said in Picl.i r v. London and County Bank, 
 18 Q. B. D. 515 : " Is evidence that an instrument or a 
 piece of money forms part of the mercantile currency of 
 another country any evidence that it forms part of the 
 negotiable currency in this country? Such a proposition 
 is absurd ; for, if it were true, there could be no such 
 thing as a national currency. For the same reason, as it 
 appears to me, that a German dollar is not the same 
 thing as its equivalent in English money for this purpose, 
 and that the barbarous tokens of some savage tribe, such 
 as cowries, are not part of the English currency, evidence 
 that the instrument would pass in Prussia as a negotiable 
 instrument does not show that it is a negotiable instrument 
 here." 
 
 So-called Quasi-negotiable Securities. 
 
 Outside the region of really negotiable securities, one 
 comes across the dubious doctrine of securities which are 
 said to be or to have become negotiable by estoppel, or 
 quasi-negotiable. Either term is misleading, the latter 
 particularly so. 
 
 The true view is that expressed by Judge Willis 
 (Negotiable Securities, p. 14): " Title by estoppel is what 
 n ifii mean when they speak of negotiability by estoppel, 
 but title by estoppel is a different thing altogether from 
 'liability."
 
 SO-CALLED QUASI-NEGOTIABLE SECUEITIES. ^5 
 
 The phrase "negotiable by estoppel" is no doubt used CHAP. XVII 
 by Bowen, L.J., in Easton v. London Joint Stock Bank, "Negotiable 
 34 Ch. D., at pp. 113-114; but he is most careful to 
 explain that it is a mere convenient figure of speech ; 
 and that the real underlying principle is that of personal 
 estoppel by conduct, representation, or holding out an 
 agent as having certain authority ; of which the instrument 
 is an element or evidence ; not the attribution of partial or 
 fictitious negotiability to the instrument itself. 
 
 There is no case of this nature which is not either 
 actually explained on this basis or is not so explainable. 
 
 In Goodwin v. Robarts, 1 A. C., at p. 489, Lord Cairns 
 puts the position thus: "The plaintiff bought in the 
 market scrip which, from the form in which it is prepared, 
 virtually represented that the paper would pass from hand 
 to hand, and that anyone who became bond fide the holder 
 might claim for his own benefit the fulfilment of its terms 
 from the foreign Government. The appellant might have 
 kept this scrip in his own possession, and, if he had done 
 so, no question like the present would have arisen. He 
 preferred, however, to place it in the possession and under 
 the control of his broker or agent, and, although it is 
 stated that it remained in the agent's hands for disposal or 
 to be exchanged for the bonds when issued, as the 
 appellant should direct, those into whose hands the scrip 
 would come could know nothing of the title of the appellant, 
 or of any private instructions he might have given to his 
 agent. The scrip itself would be a representation to 
 anyone taking it, a representation which the appellant 
 must be taken to have made or to have been a party to, 
 that if the scrip were taken in good faith and for value the 
 person taking it would stand to all intents and purposes in 
 the place of the previous holder. Let it be assumed, for 
 the moment, that the instrument was not negotiable, that 
 no right of action was transferred by the delivery, and that 
 no legal claim could be made by the taker in his own name
 
 >5'2 SECURITIES FOR ADVANCES. 
 
 ?HAP.XVIIT. against the foreign Government; still the appellant is in 
 the position of a person who has made a representation, on 
 the face of his scrip, that it would pass with a good title 
 to anyone on his taking it in good faith and for valise, and 
 who has put it in the power of his agent to hand over the 
 scrip with this representation to those who are induced to 
 alter their position on the faith of the representation so 
 made. My Lords, I am of opinion that, on doctrines well 
 established, the appellant cannot be allowed to defeat the 
 title which the respondents have thus acquired." 
 
 Varied in form and expression, that is really the 
 substance of all the cases which have given rise to the 
 theory of quasi-negotiability or negotiability by estoppel. 
 
 Bowen, L.J., in Easton v. London Joint Stock liank, 
 ttbi sup., though for convenience, as before stated, lie 
 uses the ambiguous term, clearly shows that the ground 
 of his decision is the principle enunciated by Lord Cairns. 
 
 He says (p. 118) : "If these bonds are not strictly nego- 
 tiable and do not possess the incidents of negotiable 
 instruments which are recognised as such, nevertheless a 
 further question arises : whether Lord Sheffield by the way 
 he has treated these bonds has not estopped himself from 
 denying their negotiability, whether he has not, by placing 
 for disposal, and with the intention that they should be 
 transferred, in the hands of an agent of his own, bonds 
 which on their very face purport to create a liability quite 
 independent of anterior equities between the company and 
 the person who takes them, really chosen to treat these 
 bonds as negotiable and to authorise his agent to treat tin m 
 as such. If the negotiability of these bonds by estoppel, 
 BO to speak, arises, that disposes of all difficulty that would 
 arise owing to the seal being attached to these bonds, because 
 it is no longer a question whether they are, strictly speaking 
 negotiable, but whether Lord Sheffield has chosen to tr.-nt 
 them as such. This second way of looking at the matter 
 may be dealt with from two points of view, but practically
 
 BO-CALLED QUASI-NEGOTIABLE SECURITIES. 25 
 
 they run into one another. You may say that Lord CHAP.XVUI 
 
 Sheffield, having placed in the hands of his agents these 
 
 bonds with the intention that they should be transferred 
 
 beyond those agents and held his agents out to the world 
 
 as clothed with authority to transfer them as negotiable, 
 
 cannot afterwards, by any unknown dealing or limitation of 
 
 authority which he has conferred on his agents, prejudice 
 
 those who took the bonds which have been so floated. Or 
 
 you may say, which I think is a sound way of putting it, 
 
 that as regards Lord Sheffield and the bank these bonds 
 
 have become negotiable by estoppel, and therefore Lord 
 
 Sheffield is precluded from saying the legal title to these 
 
 bonds is not in the bank." 
 
 The same principle is briefly expressed by Lord Herschell 
 in Colonial Bank v. Cody, 15 A. C. 267, at p. 285 : "If 
 the owner of a chose in action clothes a third party with 
 the apparent ownership and right of disposition of it, he 
 is estopped from asserting his title as against a person to 
 whom such third party has disposed of it, and who has 
 received it in good faith and for value." 
 
 This same case of Colonial Bank v. Cady indicates Conditions 
 certain constituents which must be present to render the 
 representation effective or justify a person in acting on it 
 so as to acquire title by estoppel. The instrument must 
 be complete ; there must be no further formality required 
 on the face of it to entitle the taker to full rights and title. 
 If, for instance, it is a blank transfer, it must, on the face 
 of it, purport to pass ipso facto, in its then condition, 
 and without the necessity of any further step, all rights 
 and title to a person taking it bond fide and for value. 
 The possession of the agent must, taken in connection 
 with the nature and condition of the instrument, be only 
 consistent with intention on the part of the principal thnt 
 the agent shall have power to transfer it by way of sale or 
 pledge. Possession is not, as in the case of fully negotiable 
 instruments, indicative of right to dispose of the
 
 :/)4 SECURITIES FOR ADVANCES. 
 
 IHAP.XVHI. instrument. If the agent's possession is ambiguous, is 
 equally compatible with authority to transfer and another 
 purpose, the taker has no right to assume the former. As 
 Lord Halsbury points out in Colonial Bank v. Ctnlii, ul>i mi}>., 
 at p. 278, mere custody apart from what the instrument, 
 upon the face of it, represents to any person to whom it 
 might be exhibited, is not a representation of authority to 
 transfer. That only comes in when the document itself, in 
 the condition in which it was entrusted to the agent, repre- 
 sents, by its being in that condition, that the agent is 
 entitled to deal with it in the way he proposes to do. 
 The real test is whether the principal has represented 
 the agent as invested with disposing power. (Per Lord 
 Halsbury, in Farquharson v. King [1902] A. C., at p. 880.) 
 
 A somewhat analogous case is that of a person who 
 entrusts another with title-deeds for the purpose of raising 
 money on them for the principal's benefit. In such case 
 the owner is estopped from disputing the title of any 
 person who honestly lends money on the security, not- 
 withstanding the agent utilised the deeds to borrow money 
 on his own account and exceeded the limit imposed 
 by the principal. (Brockfaiby v. Tcmperan<< ]>nil(lin<i 
 Society [1895] A. C. 178; liimmer v. Webster [1902] 
 2 Ch. 163.) 
 
 Estoppel of this character may arise from representa- 
 tion of the character of the document conveyed by its 
 terms, as well as by representation of the authority >t 
 &n agent. 
 
 If a company, for instance, choose to issue instruments, 
 such as debentures, in a form whereby they bind them- 
 selves to pay the amount to bearer, they may be estopped 
 by such representation from asserting any equities of their 
 own affecting a previous holder, as against a person who 
 has taken the instrument boini iid<- and for value on the 
 faith of such representation. (See /// }> Iniju-ritil 
 Company of Marseilles, L. R., 11 Eq. 478.)
 
 DOCUMENTS OF TITLE TO GOODS. 255 
 
 CHAP.XVIU. 
 
 Documents of Title to Goods The Factors Act, 1889 
 The Sale of Goods Act, 1893. 
 
 Provided the banker is dealing with honest and respon- 
 sible persons, documents of title to goods, such as bills 
 of lading, dock warrants, warehousemen's certificates, 
 delivery orders, and the like, are convenient securities for 
 advances. By means of them goods can be effectively 
 pledged which obviously could not otherwise be so utilised 
 by reason of their bulk. By means of bills of lading, in 
 especial, goods on the high seas can be hypothecated before 
 arrival, and thus used as security for bills given for the, 
 price. The two above-mentioned Acts constitute a praise- 
 worthy effort to protect bankers and others who take such 
 documents as security. They do not profess to elevate 
 them to the position of the banker's ideal security, the 
 fully negotiable instrument to which he acquires an 
 indefeasible title, whatever the customer's position, whether 
 the customer is honest or not, whether the security is his 
 own or he has authority to deal with it, or not, and whether 
 the banker takes it for an existing debt or a fresh advance. 
 And, unfortunately, the provisions of tbe two Acts are so 
 tangled, so overlapping and complicated by cross-references 
 and the idea of reducing everything to the common 
 denominator of "the mercantile agent," that, for want of 
 certainty, the safeguards are not so reassuring as they were 
 doubtless intended to be. Yet it is to these Acts that the 
 banker has to look when confronted with questions of title 
 or authority in relation to documents of this sort pledged 
 as security for advances. For, with the possible exception 
 of bills of lading, no document of title to goods is a really 
 negotiable instrument. The documents are merely sym- 
 bols of the goods, and the idea of indirectly making goods 
 negotiable has no place in law. 
 
 As to bills of lading, opinions will always differ as to Bills of 
 whether they have any, and what, intrinsic negotiability
 
 a5b SECURITIES FOR ADVANCES. 
 
 CHAP.XVIH. of their own. The special verdict on the second trial of 
 Lickbarroic v. Mason, 5 Term R. 688, found that, by the 
 custom of merchants, they were "negotiable and transferable 
 by the shipper's indorsement," but the interpretation of a 
 legal term used in a verdict must always be somewhat 
 doubtful, and, as Bowen, L.J., said (13 Q. B. D., p. 178), 
 " the words of the special verdict in Lickbarrow \. Mason 
 admittedly overstate the law." The interesting criticisms 
 of Lord Blackburn on that case in Seirell v. Biirdick, 10 
 A. C., at p. 98, raise considerable doubt whether the judg- 
 ment delivered by Lord Loughborough in the Exchequer 
 Chamber was ever reversed on its merits, and that judg- 
 ment in the plainest terms denied the negotiability of 
 bills of lading. 
 
 Though subsequently criticised, the judgment delivered 
 by Lord Campbell in (jurney v. Behreiid, 8 E. & B., at 
 p. 688, is by many regarded as setting forth the true view. 
 In it he says: "A bill of lading is not, like a bill of exchange 
 or promissory note, a negotiable instrument, which passes 
 by mere delivery to a bond Jide transferee for valuable 
 consideration, without regard to the title of the parties 
 who make the transfer. Although the shipper may have 
 indorsed in blank a bill of lading deliverable to his assigns, 
 his right is not affected by an appropriation of it without 
 his authority. If it be stolen from him or transferred 
 without his authority, a subsequent bon a ti<l<- transferee for 
 value cannot make title under it as against the shipper of 
 the goods. The bill of lading only represents the goods ; 
 and in this instance the transfer of the symbol does not 
 operate more than a transfer of what is represented." 
 
 The Bills of Lading Act, 1855, gave a right of action 
 on the bill of lading to the " indorsee to whom the property 
 in the goods shall pass," but it is generally assumed that 
 it did not invest the instrument with any additional degree 
 of negotiability. It seems possible that the only exceptional 
 feature akin to negotiability ever possessed by bills of hiding
 
 DOCUMENTS OF TITLE TO GOODS. 25 j 
 
 was their acknowledged capacity to defeat the unpaid CHAP.XVIII 
 vendor's right of stoppage in transitu when transferred with 
 authority to a bond fide transferee for value. 
 
 If bills of lading were fully negotiable there would be no 
 need for their being included, as they are, with other 
 documents of title to goods, in the Factors Act, 1889, and 
 the Sale of Goods Act, 1893. 
 
 These two Acts are set out and interpreted, so far as Factors Act. 
 
 1889 
 interpretation is possible, by Mr. Chalmers in his "Sale g a le of Goods 
 
 of Goods Act, 1893," 5th ed. Act, 1893. 
 
 With regard to documents of title to goods, the two 
 Acts have to be read together ; a peculiar feature being 
 that sects. 8 and 9, of the Factors Act, 1889, are repro- 
 duced, in somewhat fuller form, by sect. 25 of the Sale 
 of Goods Act, 1893, without being repealed ; the reason 
 assigned by Mr. Chalmers being that the repeal was 
 omitted in the later Act in order that the draftsman of the 
 earlier one might be consulted and the matter dealt with 
 some day by a Statute Law Revision Act. The same 
 reduplication occurs in sect. 10 of the Factors Act, 1889, 
 and sect. 47 of the Sale of Goods Act, 1893. 
 
 Another clue to the labyrinth of these particular 
 provisions may be derived from the judgment of the Court 
 of Appeal in Cahn v. Pockett's Bristol Channel Packet 
 Company [1899] 1 Q. B. 643. 
 
 Fresh difficulties are, however, introduced if the rule laid 
 down by the House of Lords in Tnalis v. Robertson [1898] 
 A. C. 616, is to be strictly followed. 
 
 That rule inculcates that the provisions of the Factors 
 Act, 1889, shall be treated as limited by the headings 
 under which they occur ; that those, for instance, included 
 under the heading, " Dispositions by Mercantile Agents," 
 must be confined to dealings by persons answering that 
 description. 
 
 The construction of the Act, which only states the 
 effect of dealings by persons other than mercantile agents 
 
 B,. s
 
 158 SECURITIES FOR ADVANCES. 
 
 THAP.XVIII. by assimilating such dealings to those of a mercantile 
 agent, renders absolute adherence to this rule in all cases 
 impossible ; and it seems probable that it was originally only 
 directed to preventing isolated sections, such as sect. 8, 
 general in their terms, from being utilised by persons and 
 in circumstances altogether outside the purview of the Act. 
 
 The Acts make no distinction between the various 
 classes of documents of title to goods, which they define as 
 " including any bill of lading, dock warrant, warehouse 
 keeper's certificate, warrant or order for the delivery of 
 goods and any other document used in the ordinary course 
 of business as proof of the possession or control of goods, 
 or authorising or purporting to authorise, either by indorse- 
 ment or delivery, the possessor of the document to transfer 
 or receive goods thereby represented." (Factors Act, 1889, 
 8. 1 (4) ; Sale of Goods, 1898, s. 62.) 
 
 Oeaign of The general design of the Acts is to protect persons 
 
 dealing bond fide and for value with others of specified 
 classes, on the faith of their possession of documents of 
 title to goods, such possession being primarily indicative 
 of ownership of, or authority to deal with, the goods. The 
 classes specified do not comprise actual owners. Dealings 
 with them require no protection. The basis of inclusion in 
 the classes is a position which, occupied 1\ A. with the 
 consent of B., enables A. to obtain money or money's 
 worth from C. by utilising the documents wrongfully or in 
 excess of authority. 
 
 The type and standard is "A mercantile ag-i it having in 
 the customary course of his business as such agent 
 authority either to sell goods or to consign goods for the 
 purpose of sale, or to buy goods, or to raise money on the 
 security of goods." (Factors Act, 1889, s. 1.) 
 The other classes include : 
 
 (a) A person who has sold the goods (Factors Act, 
 1889, a. 8; Sale of Goods Act, 1898, B. 
 25 (1)).
 
 DOCUMENTS OF TITLE TO GOODS. 25 
 
 (6) A person who has bought or agreed to buy the OHAP.XVII 
 goods. (Factors Act, 1889, s. 9 ; Sale of 
 Goods Act, 1893, s. 25 (2)). 
 
 This latter class (6) does not include a person holding 
 goods under a hire-purchase agreement which gives him 
 an option to purchase or not, although, if he do not 
 purchase, he forfeits both goods and previous instalments 
 of payment. (Helby v. Matthews [1895] A. C. 471.) It 
 does include such person if the agreement- absolutely 
 binds him to buy. (Lee v. Butler [1893] 2 Q. B. 318.) 
 
 The possession of the goods or documents of title by Possession 
 the mercantile agent must either be with the consent of 
 the owner (Factors Act, 1889, s. 2 (1) ), or it must have 
 originally been with such consent, and the person dealing 
 with the mercantile agent must not have notice of with- 
 drawal of that consent (Ib., s. 2 (2)); or the documents of 
 title must have been obtained by reason of the mercantile 
 agent's being, or having been, with the consent of the 
 owner, in possession of the goods represented thereby, or 
 of other documents of title to the goods. (Ib., s. 2 (3)). 
 
 The possession of the vendee or person who has agreed Possession ol 
 to buy must have been obtained with the consent of the 
 seller. (Factors Act, 1899, s. 9 ; Sale of Goods Act, 
 1893, s. 25 (2).) 
 
 As Collins, L.J., says in Cahn v. Pockett's Bristol, <6c., 
 Company [1899] 1 Q. B., at p. 658 : " Possession of, not 
 property in, the thing disposed of is the cardinal fact." 
 
 The element of consent must, however, be present at 
 least in the original acquisition of possession. "The 
 Legislature has not carried the rights of a purchaser under 
 these Acts so far as to make the sale equivalent to a sale 
 in market overt. The purchaser must accept the risk of 
 his vendor having found or stolen the goods or documents, 
 or otherwise got possession of them without the consent 
 of the owner." (Collins, L.J., ubi sup., at p. 658.) 
 
 The consent will be good enough notwithstanding it may 
 
 s2
 
 J60 SECURITIES FOR ADVANCES. 
 
 HAP. x\ ii i. have been fraudulently obtained, provided the fraud did not 
 amount to larceny by a trick. 
 
 As Collins, L.J., says: " If a mercantile agent, or one 
 of the persons whose disposition is made as effectual as 
 that of a mercantile agent, has obtained possession by the 
 consent of the owner, even though it were under a contract 
 voidable as fraudulent, he is able to pass a good title to a 
 hand Jide purchaser. However fraudulent the person in 
 actual custody may have been in obtaining the possession, 
 provided it did not amount to larceny by a trick, and 
 however grossly he ma}' abuse confidence reposed in him, 
 or violate the mandate under which he got possession, he 
 can by his disposition give a good title to the purchaser." 
 (Calm v. Pockett's, <<., Company, tibi sup., at p. 699.) 
 
 The distinction drawn by Collins, L.J., is much the 
 same as that between void and voidable contracts as 
 affecting the property in a bill, referred to under the 
 heading " Void and Voidable Contracts," ante, p. 137. No 
 sale, pledge or other disposition made by a mercantile 
 agent is protected by the Act unless he was at the time 
 acting in the ordinary course of business of a mercantile 
 Hgent. Good faith and an absence of notice of want of 
 authority in the agent are essential in anyone dealing with 
 H mercantile agent. As to notice of lien or other right of 
 the vendor, see post, p. 262. 
 
 Consideration is necessary to support any transaction 
 under the Acts. Consideration is defined by sect. 5 of the 
 Factors Act, 1889; and the enumeration of what may 
 constitute it concludes with the general words "or any 
 other valuable consideration." 
 
 Primarily, and inferentially from the exception to be 
 presently referred to, this would include an existing debt, 
 forbearance to sue for which was expressly or tacitly 
 stipulated for on the deposit of security. 
 
 Beet. 4 of the Factors Act, 1889, however, precludes a 
 pre-existing debt as consideration, at any rate where tho
 
 DOCUMENTS OF TITLE TO GOODS. 4 2b 
 
 person dealt with is a mercantile agent. It provides: CHAP.XVII] 
 
 " Where a mercantile agent pledges goods as security for 
 
 a debt or liability due from the pledger to the pledgee 
 
 before the time of the pledge, the pledgee shall acquire no 
 
 further right to the goods than could have been enforced 
 
 by the pledgor at the time of the pledge." 
 
 In terms this section only applies to pledges of the 
 actual goods. 
 
 Sect. 3 says: " A pledge of the documents of title to 
 goods shall be deemed to be a pledge of the goods." 
 Both sections occur under the same heading, and 
 presumably, as Mr. Chalmers says, the pledge of documents 
 by a mercantile agent comes under sect. 4 as well as a 
 pledge of the goods themselves. 
 
 In the case, then, of pledge of documents or goods by a 
 mercantile agent for an antecedent debt, the banker's 
 remedy, if the agent was exceeding his authority, would be 
 limited to the equivalent of the agent's actual rights 
 against his principal, probably some trivial claim for 
 charges or expenses. 
 
 Mr. Chalmers is of opinion that this same restriction Case of 
 does not apply in the case of vendors. Certainly sect. 4 is 
 not comprised in those under the heading dealing witli those 
 persons. Vendors are dealt with under sect. 8 of the Factors 
 Act, 1889, and sect. 25 (1) of the Sale of Goods Act, 1893, 
 apart from reference to the mercantile agent, so his view 
 is probably correct. Vendees or persons who have agreed Case of 
 to purchase are, however, by sect. 9 of the former and 
 sect. 25 (2) of the latter Act, placed on the same footing as 
 mercantile agents in possession of the documents with the 
 consent of the owner. (See per A. L. Smith, M.K., in 
 Cahn v. Pockett's, dc. y Co., [1899] 1 Q. B. 643.) If such 
 a mercantile agent pledged the goods or documents 
 for an antecedent debt, sect. 4 would apply, and thus it seems 
 difficult to exclude its operation in the case of the vendee. 
 
 If it were the documents that were so pledged, not the
 
 62 SECURITIES FOR ADVANCK- 
 
 goods themselves, the pledgee might, however, defeat the 
 vendor's lien or right of retention unde,r the subsequent 
 wet. 10 of the Factors Act, 1889, or under sect. 47 of the 
 Sale of Goods Act, 1898. 
 
 Subject to the foregoing conditions, exceptions and 
 doubts, any sale, pledge or other disposition of the goods 
 or documents in their possession by the parties described, 
 is to have the same effect and validity as if made with the 
 authority of the owner, vendor or other person competent 
 to give such authority. 
 
 u>i>|Mgei Sect. 10 of the Factors Act, 1889, and sect. 47 of the 
 
 Jen. Stile of Goods Act, 1898, deal somewhat more specifically 
 
 with the question of the vendor's lien and right of stoppage 
 
 in tnnixitit, and the effect of a transfer of the documents of 
 
 title in defeating them. 
 
 Under sect. 47 of the Sale of Goods Act, 1898, re- 
 eiiuoting in somewhat fuller terms sect. 10 of the Factors 
 Act, 1889, "Where a document of title to goods has been 
 lawfully transferred to any person as buyer or owner of the 
 goods, and that person transfers the document to a person 
 who takes the document in good faith and for valuable 
 consideration, then, if such last-mentioned transfer was by 
 way of sale, the unpaid seller's right of lien or retention 
 or stoppage in transit n is defeated ; and if such last- 
 mentioned transfer was by way of pledge or other dis- 
 position for value, the unpaid seller's right of lien or 
 retention or stoppage in transits can only be exercised 
 subject to the rights of the transferee." 
 
 The distinction between this section and sect. 25 (2) of 
 the same Act and sect. 9 of the Factors Act, 1889, which 
 leal with t he vendee or person having agreed to buy, is stated 
 I >y Mr. Chalmers to be as follows: The latter sections cover 
 the case of a vendee who has obtained documents of title 
 under a contract voidable on the ground of his fraud. As 
 *hown before, such fraud does not exclude the consent 
 i ^uired by the sections. To establish title in such cases
 
 DOCUMENTS OF TITLE TO GOODS. 26 
 
 the sections require on the part of the person claiming it, CHAP XVII 
 not only good faith, but also absence of notice of any lien 
 or other right of the seller. The mere fact of the price 
 being unpaid does not make it fraud to transfer the 
 documents so as to defeat the vendor's lieu or right of 
 stoppage in transitu, so that notice that the price is 
 unpaid does not invalidate the transferee's title or affect 
 him with bad faith. 
 
 Sect. 47 of the Sale of Goods Act, 1893, therefore 
 eliminates the question of notice, requiring only good 
 faith with relation to matters other than knowledge that 
 the price remains unpaid. But, according to Mr. Chalmers, 
 this section, unlike those above mentioned, operates only 
 where the documents were, in the first instance, honestly 
 obtained. (See Chalmers, " Sale of Goods Act, 1893," 
 5th ed., p. 141.) 
 
 The distinction is apparently based on the variance in 
 language: "Where a person obtains with the consent of 
 the seller possession of the goods or the documents of title 
 to the goods," in the one case; " Where a document of 
 title to goods has been lawfully transferred to a person as 
 a br.yer or owner of the goods," in the other. 
 
 In view of the construction put on the words " lawfully Lawfully 
 transferred " in Cahn v. Pocketfs, cc., Co. [1899] 1 Q. B., 
 at p. 665, namely, as merely referring to the prescribed 
 methods of dealing with the document, as by indorsement 
 or delivery, the distinction does not appear very clear. 
 
 If, in pursuance of a contract voidable for fraud committed 
 by the vendee, the seller handed to the vendee a bill of 
 lading for the goods, indorsed in blank, the document of 
 title would have been " lawfully transferred " to him, and 
 at the same time he would be in possession of it with the 
 consent of the seller. 
 
 If the distinction between fraud and no fraud was intended, 
 " lawfully obtained by " would have been the apter words. 
 
 The matter seems somewhat important, because if resort
 
 MAlHITIES FOR ADVANCES. 
 
 has to be bad t<> sect. 25 (2) of the Sale of Goods Act. 
 1898, or sect. 9 oftbe Factors Act, 1889, questions of tbe 
 antecedent debt as consideration and notice of tbe vendor's 
 lien or otber right are imported. 
 
 Where, however, sect. 47 of the one Act or sect. 10 of 
 the other applies, an antecedent debt is good considera- 
 tion. Valuable consideration includes an antecedent debt 
 expressly or impliedly forborne, and the words in 
 sect. 10, "the last-mentioned transfer shall have the same 
 effect for defeating any vendor's lien or right of stoppage- 
 in tninsitn as the transfer of a bill of lading has for 
 defeating the right of stoppage in transit u" and the saving 
 of the rules of the common law, including the law merchant, 
 embodied in sect. 61 (2) of the Sale of Goods Act, 1898, 
 let in the rule laid down in Lcask v. Scott, 2 Q. B. D. 876, 
 that an antecedent debt is good consideration for the 
 transfer of a bill of lading. 
 
 It will be noticed that sect. 47 of the Sale of Goods Act, 
 1893, expressly recognises the utilisation of bills of lading 
 and other documents of title by way of pledge as well as 
 absolute transfer, and formulates the rights arising out of 
 such pledge, following the lines laid down in ,V/o// v. 
 Jin nl irk, 10 A. C. 74. 
 
 As shown by that case, the liability for freight and other 
 liabilities which, under the Bills of Lading Act, 1855, 
 s. 1, attach to " every indorsee of a bill of lading to whom 
 the property in the goods therein mentioned shall pass 
 upon or by reason of such indorsement," do not attach to 
 >ne who takes the bill by indorsement and delivery by \\ay 
 of pledge for a loan ; inasmuch as the absolute property 
 does not pass to him, but only a special property." 
 
 As to the risks attendant on bills of lading being signed 
 in several parts, and tin desirability of the lender on such 
 security getting all the parts into his own possession. MC 
 
 J). li','.l. 
 
 Documents of title to goods, particularly bills of lading,
 
 DOCUMENTS OF TITLE TO GOODS, 2n5 
 
 may be utilised as security for bills which the banker has OHAP.XVUI. 
 agreed to accept and accepted for the customer. The 
 usual method, as exemplified in Banner v. Johnston, L. R., 
 5 H. of L. 157, is for the banker to furnish the customer 
 with a letter of credit, authorising him to draw to a 
 specified amount against shipments or bills of lading, and 
 undertaking to accept bills so drawn, provided the documents 
 are transmitted with the bills. 
 
 The customer is enabled to show this letter of credit to 
 those from whom he desires to purchase, and so gets credit 
 for his drafts. But to ensure acceptance the shipping docu- 
 ments or other documents of title must accompany the bill, or 
 reach the bankers before or at the time when they are called 
 onto accept. The combination of these terms in a letter of 
 credit, shown to the person who parts with his goods on the 
 faith of it, does not constitute any right in him, or any other 
 holder of the bill, to the goods. As Lord Cairns says, in 
 Banner v. Johnston, ubi sup., at p. 174 : " The two arrange- 
 ments are perfectly separate in their nature, namely, the 
 arrangement or promise to accept the bills, which promise is 
 to be shown to the parties selling the cotton, and the order 
 from the bankers to those dealing with the cotton at Pernam- 
 buco to send home the shipping documents.. The order to 
 send home the shipping documents and the condition an- 
 nexed to the promise to accept, that the shipping documents 
 shall be sent to them, are for the protection of the bankers, 
 and not, as it seems to me, in any way for the protection of 
 the persons who negotiate the bills of exchange." 
 
 The degree of property which the banker acquires by Degree of 
 possession of the documents would probably depend on the acquired by 
 purpose for and arrangement under which he received banker, 
 them. Cases of sale like Shepherd v. Harrison, L. R., 5 
 H. of L. 116, where the absolute property necessarily vests 
 in the acceptor on his accepting the bill, do not stand on 
 the same footing as cases where the goods are only to 
 constitute security.
 
 ib6 SECURITIES FOR ADVANCES. 
 
 'HAP. xvii! i n Banner v. Johnston, the expression is that on accept- 
 ance "the cotton passes into the hands of the bankers 
 themselves." 
 
 In Ex parte Brett, L. R., 6 Ch. 841, it is implied that 
 where a person accepts bills, not being under actual liability 
 to do so, on having bills of lading transferred to him, those 
 bills become part of his estate, though he can only hold 
 them as security for the liability he incurs on behalf of the 
 drawer. Probably, as Mr. Chalmers says, "there is a 
 kind of mixed property in the goods, both drawer and 
 acceptor having a defeasible interest therein," the acceptor's 
 interest extending to justify anything necessary for his 
 protection or indemnity. 
 
 If the banker do not accept the bill of exchange he has 
 no right to keep the bill of lading or other document of 
 title, and no property in the goods passes to him. (Sale 
 of Goods Act, 1898, s. 19, sub-s. 8; cf. Calm v. IW.-.7/X 
 ,(V.. Company [1899] 1 Q. B. 648.) 
 
 As between the banker and the customer, an undertaking 
 to forward bills of lading against acceptance will give the 
 banker who has accepted the bill an equitable claim to the 
 bill of lading, equivalent to a valid hypothecation of it, 
 which would hold good against the customer's trustee in 
 bankruptcy. (Lutschcr v. Comptoir d'Escompte, 1 Q. B. D. 
 709.) 
 
 But as against third parties, it would seem that nothing 
 short of possession of the documents, or at least con- 
 structive possession of them, as by their having been 
 posted to the banker, will give him a good title to the 
 goods. 
 
 Bilk drawn It is not uncommon to find on the face of a draft mention 
 
 of a cargo or credit against which it is drawn, such :- 
 
 Against credit No. 20." " Pay to my order 100, which 
 1'lace to account cargo per 'Acacia.' " " Pay A. or order 
 1 1.000, and place the same to account cotton shipment > 
 
 a> ilchisril."
 
 DOCUMENTS OF TITLE TO GOODS. 267 
 
 It would appear that this does not create a charge even CHAP.XVIII, 
 in favour of the drawee who accepts. (See per Cotton, 
 L.J., in Phelps v. Comber, 29 Ch. D., at p. 819.) The 
 remark of Mellish, L.J., in Robey v. Oilier, L. R., 7 Ch., at 
 p. 699, that " A mercantile man who is intended to have a 
 lien on a cargo expects to have the bill of lading annexed," 
 though primarily directed to the case of an indorsee, seems 
 of general application. 
 
 Such a statement on the face of a bill clearly gives no 
 claim on the goods to holders of it, in case of dishonour of 
 the bill. (Inman v. Clare, Joh., at p. 776; Banner v. 
 Johnston, L. R., 5 H. of L. 157 ; Robey v. Oilier, 
 uU sup. ; Ex parte Dever, 13 Q. B. D., at p. 777.) The 
 authority of Frith v. Forbes, 4 D. F. & J. 409, so far 
 as it militates against this rule, was displaced by Brown v. 
 Rough, 29 Ch. D. 848. 
 
 A bank which has, under a letter of credit, accepted bills Position of 
 in this form is not therefore in any sense a trustee for the a 
 holders of those bills, with respect to the goods or securities 
 pledged as security, and the bill-holders have no right to 
 question the bank's dealings with such goods or securities. 
 (See per Lord Hatherley, in Banner v. Johnston, nbi sup., 
 at p. 168.) 
 
 The drawer of the bill may, however, by formal agree- Assignment 
 ment, apart from the bill, transfer his remaining rights in ^ra^r S ^ 
 the goods or securities to a specific person, who may be 
 the holder of the bill. Such assignment, however, cannot 
 affect the rights of the acceptor to raise the money for 
 payment of the bills if so provided, or, in any event, to 
 indemnify himself out of the goods or securities deposited 
 with him : it only gives the transferee the same right as 
 the drawer possesses, namely, to require that the goods 
 and securities should be applied to the payment of the 
 bills, independent, to that extent and no further, of the 
 general lien or right of set-off. 
 
 The rule in Ex parte Wariny, iibi inf., which is an
 
 '26H 
 
 SECCRITIE8 FOR ADVANCES. 
 
 CHAP. X VIII. apparent exception to the rule that a hill-holder, as such, 
 has no claim on the goods, though mentioned on the hill as 
 being drawn against, is in no way inconsistent therewith. 
 That rule is in no sense derived from contract, hut simply 
 from the necessities of adjusting in court the equities 
 between two insolvent estates, hoth of which are liable to 
 the hill-holder, and one of which holds goods or securities 
 of the other's as cover for the hills. (See the note by Mr. 
 Chalmers, "Bills of Exchange," 6th ed., p. 805.) In fact, in 
 the original case of Ex partc IF'tirim/, 19 Ves. 845, there was 
 no reference whatever on the bill to the goods against which 
 it was drawn, and the same was the state of facts in other 
 cases which were decided on the authority of that case. 
 
 Even where the holder of the bills of exchange has had 
 the hill of lading with it, he will not be entitled- to claim 
 specific appropriation of the goods to the acceptance, if he 
 took the bill of lading with notice of the acceptor's right to 
 have it on acceptance. In Ex parte Deccr, 18 Q. B. D. 
 766, the letter of credit provided that the bills of lading 
 were to accompany the bills of exchange, but were to be 
 surrendered to the acceptors against their acceptances. 
 This had been shown to the holders, and the bills ivti-nvd 
 to it. The bills of lading having accompanied the bills 
 and having been delivered up to the acceptors on acceptance, 
 it was held that the holder could not claim any specific 
 appropriation of the goods to meet the aei-quances, the 
 acceptors having failed. 
 
 A bill accepted conditionally, payable on delivery of the 
 bill of lading, has much the same effect as if the acceptor 
 held the bill of lading. The acceptor incurs no liability 
 unless the bill of lading is tendered to him before or at 
 the time of presentment for payment. The acceptor -j. 
 in a sense, a security for his acceptance on the goods, and at 
 the same tinu- tins <loes not interfere with the holder having 
 the bill of la. ling with the bill, and so obtaining a BOOH 
 on the goods in case the bill of exchange is dishonon 
 
 Hill* payable 
 o" documents
 
 DOCUMENTS OF TITLE TO GOODS. 2(59 
 
 (Ex pnrte Brett, L. K., 6 Ch., at p. 841.) Of course, such CHAP.XVIII. 
 an acceptance is a qualified one (Smith v. Vertue, 30 L. J., 
 C. P. 56), and the drawer and indorsers prior to accept- 
 ance would be discharged under sect. 44 of the Bills of 
 Exchange Act, unless they had expressly or impliedly 
 authorised the holder to take a qualified acceptance, or 
 subsequently assented to his having done so. 
 
 If the acceptor requires the bills of lading to be delivered Payable on 
 to him on the day the bill falls due, as he very possibly 
 might in order to carry out a sub-sale, he must clearly 
 specify this in his acceptance ; if the acceptance is in the 
 form " Payable on delivery up of bills of lading," &c., the 
 acceptor is not discharged by the bills of lading not being 
 tendered prior to or on that day. (Smith v. Vertue, 30 L. J. 
 C. P. 56.) 
 
 As to the inconveniences and risks involved by the Parts of bill* 
 
 P 1 A ' 
 
 custom of giving bills of lading in more parts than one, 
 see the remarks of Lord Cairns in Glyn v. East and 
 West India Dock Co., 7 A. C., at pp. 599, 600, and of 
 Lord Blackburn, at p. 605. Lord Cairns suggests that any 
 person advancing money upon a bill of lading, and seeing, 
 as he would, that it had been signed in more parts than 
 one, should insist on all the parts being brought in. Lord 
 Blackburn recognises the difficulty of a banker enforcing 
 such a demand without offending his customer. 
 
 Change in Character of Parties affecting Deposit of 
 Securities. 
 
 Strictly speaking, if any change occurs in the constitution 
 of the body holding securities for advances, further advances 
 would not be covered by those securities. Theoretically 
 they were deposited to cover debts due to a specific body of 
 persons, and are, therefore, not available for obligations 
 contracted with what in law would be a distinct entity. 
 (Per Lord Eldon, C., in Ex parte Kensington, 2 V. & B. 
 83 ; Lindley on Partnership, 6th ed., p. 12.)
 
 270 
 
 SECURITIES FOR ADVANCES. 
 
 CHM-.XVI1I. 
 
 Joint stock 
 companies. 
 
 Absorption. 
 Amalgama- 
 tion. 
 
 Change in 
 character of 
 borrower. 
 
 Provision 
 against in 
 memornmliim. 
 
 Dealing* in- 
 
 with lien or 
 
 , : -. 
 
 The mere alteration of the composition of a joint stock 
 company or corporation would of course have no such 
 effect, inasmuch as the body remains the same ; nor pre- 
 sumably would the absorption of smaller concerns into the 
 larger one, if their identity were completely sunk in it. 
 (Capital ami Counties Bankv. Hank <>j ' EinjLunl. C.l L. T., 
 N. S. 516; Prescott, Dimsdale it- Co. \. Bank <>j ' Kinjland, 
 [1894] 1 Q. B. 851.) If the case were one of amalgama- 
 tion as distinct from absorption, the deposit would- 
 presumably not cover further advances, unless the amalga- 
 mation were by statute reserving such rights, which is not 
 likely. (See post, "Guarantees," p. 807.) 
 
 Again, a security may cease to be effectual as cover for 
 further advances by reason of a change in the personality 
 of the borrower. A change in the firm depositing the 
 security might have this effect (Bank of Scotland v. 
 Cltrixtie, 8 Cl. & Fin. 214); and in a case cited in Liudley 
 on Partnership, 6th ed., p. 128, a person deposited deeds 
 as security for advances to be made to him, and it was 
 held that the security did not cover advances made to him 
 and his partners. 
 
 Both these contingencies should therefore be provi.lnl 
 for in any memorandum of deposit where future advances 
 are contemplated; or when such change takes place and is 
 not provided for in a memorandum, the matter should be 
 put on a proper footing. As pointed out by Lord Lindley, 
 nin. xii j>., tit p. 128, an equitable mortgage by deposit may 
 be readily extended, even by parol, to cover advances 
 made after a change in the firm or body with which the 
 securities are lodged, or may be turned into a continuing 
 security for the obligations of a firm in which a change 
 has taken place. 
 
 Whether he hold und< r li-n or pledge, the banker must 
 be careful not to imperil his charge by dealing \\itli tin 
 M .-unties or goods in a manner inconsistent with the right 
 be claims.
 
 CHANGE IN CHARACTER OF PARTIES. 2?1 
 
 He must not negotiate bills, notes or cheques : he must CHAP.XVIII. 
 present them at maturity, and do his hest to collect the 
 amount. 
 
 The parting with the possession of the securities to a 
 third part}', or even to the pledger for a temporary specific 
 purpose not involving or facilitating the creation of any 
 conflicting right or interest, and which purpose fulfilled, 
 the securities are to be immediately returned to the 
 pledgee, would not divest him of his rights. 
 
 The pledgee may even re-pledge so long as he does so 
 merely to the extent of his own interest, and does not 
 purport to pledge or charge the entire property. (Halliday 
 v. Holgate, L. K, 3 Ex. 299.) 
 
 And the pledge equally remains intact if the goods or 
 securities are entrusted to the pledger as agent for the 
 pledgee, as where they were confided to him for sale on the 
 pledgee's behalf, the proceeds to be remitted to the latter. 
 (North-Western Bank v. Poynter [1895] A. C. 56.) 
 
 The matter is one, however, \vhich should be treated 
 with circumspection, as the tests of what is or is not 
 inconsistent with the right of pledge or lien are somewhat 
 vague and general.
 
 ( 272 ) 
 
 'MAI' XIX. 
 
 Mortgaged 
 
 land. 
 
 BilN. i 
 
 and cheques. 
 
 CHA1TKK XIX. 
 REALISATION OF SECURITIES. 
 
 TIIK banker may find himself under the necessity of 
 resorting to his securities to recoup himself the monies 
 advanced. 
 
 The method to he adopted must depend on the nature of 
 the securities and the capacity in which the banker holds 
 them. 
 
 Mortgaged land can be dealt with either by sale, under a 
 power of sale if conferred by the mortgage, or by application 
 to the court for foreclosure or sale. (See " Mortgages," 
 post, p. 279.) 
 
 The remedy on bills, notes or cheques held either under 
 the banker's lien or iinder direct pledge as collateral security, 
 is easy and practically automatic, the person having the 
 lien or the pledgee being in the position of holder for value 
 and entitled to sue thereon in his own name. (Sec, <tnl<\ 
 pp. 289, 242.) 
 
 A mere lien gives no power of sale, and no ground for 
 applying to a court to grant such power. The only method 
 of realising securities held under such lien would seem to 
 be by recovering judgment for the debt and then taking the 
 securities in execution. 
 
 But in Jinnnhin v. Karnctt, 8 C. B., at p. 581, Lord 
 Campbell defines the banker's lien as an implied pledge. 
 
 It has been generally understood that the banker's lien 
 conferred rights more extensive than ordinary liens, and 
 adopting Lord Campbell's view that it is an implied pledge, 
 the ordinary remedies of a pledgee would appear to apply, 
 where appropriate to the character of such securities, to 
 securities held under the lien.
 
 REALISATION OF SECURITIES. 273 
 
 The rights of a pledgee are briefly as follows : 
 
 Where goods have been pledged, either actually, or con- Pledged goods 
 , -i i or documents 
 
 structively by means of the documents of title, or where p f title to 
 
 negotiable securities have been pledged, as by deposit, with 00fls : sale - 
 or without a memorandum, the pledgee has on default a 
 power of sale without the necessity of resorting to any court 
 of equity. 
 
 An expression of opinion which might be interpreted to 
 the contrary is found in the words of Lord Herschell in 
 North-Western Bank v. Poynter [1895] A. C., at p. 69, 
 where he says as follows: "In the paragraph from which I 
 have quoted those words it is pointed out that a pledge 
 gives only a right of detention of the goods, and gives no 
 right to sell. Where, as in the present case, the delivery 
 of the goods is accompanied by a grant of an absolute 
 right of sale to the pledgee, he is certainly something more 
 than an ordinary pledgee : he has a right which a mere 
 pledge does not convey." The paragraph quoted was from 
 a text-book on Scotch Law; the power of sale, as shown by 
 the terms of the memorandum from the bank, set out at 
 p. 57, accepted as the basis of the transaction by the 
 borrowers (see p. 58), was "an immediate and absolute 
 power of sale," independent of any default; and it must be 
 either to Scotch Law or to this exceptional right of sale 
 that Lord Herschell was really referring. He seems to 
 emphasize the word " absolute." 
 
 For the authorities for the power to sell on default Authorities 
 , . for power of 
 
 appear conclusive. sale. 
 
 In Burdick v. Sewell, 13 Q. B. D., at p. 174, Bowen, 
 L.J., says : " The pledgee of goods is entitled to sell them 
 upon default." 
 
 In In re Morritt, 18 Q. B. D., at p. 232, Cotton, Lindley, 
 and Bowen, L.JJ., say : " A contract of pledge carries 
 with it the implication that the security may be made 
 available to satisfy the obligation, and enables the pledgee 
 in possession (though he has not the general property in the 
 
 B. - T
 
 REALISATION OF SECURITIES. 
 
 thing pledged, but a special property only) to sell on default 
 in payment and after notice to the pledgor, although the 
 pledger may redeem at any moment up to sale." 
 
 Where the debt is repayable at a fixed date, the default 
 occurs on non-payment at that date, but notice to the 
 pledgor of intention to sell is apparently also necessary. 
 
 Where the advance is for an indefinite period, demand 
 of payment, with notice that if not complied with within a 
 certain reasonable time the securities will be sold, is suffi- 
 cient. This is generally accepted as law, and would seem 
 involved in the proposition in In re Mori'itt, iibi sup., which 
 is in no wise limited to pledges for advances repayable at a 
 fixed date. So also in Shillito v. Hobson, 80 Ch. D., at p. 403, 
 Fry, L.J., says: " The pawnee would have a right to sell 
 the chattel pawned either in default of payment at the time 
 fixed if there be a time fixed, or in default of payment 
 after reasonable notice if no time be fixed." 
 
 If the pledge does not realise sufficient to cover the debt, 
 the balance of the debt is still recoverable. 
 
 The pledgee's only remedy is by sale ; he is not entitled 
 to apply for foreclosure with a view to acquiring the absolute 
 property in the pledge. (Carter v. Wake, 4 Ch. D. 605.) 
 
 The position of a banker who holds bills of lading, or 
 other documents of title to goods, as cover for his accept- 
 ances of a customer's bills is as follows : He is a pledgee 
 of the goods, the consideration for the pledge being the 
 liability he assumes on the bills at the customer's request, 
 and the object of the pledge being his indemnification 
 against that liability. 
 
 If the matter stand simply thus, there is no particular 
 event which constitutes a default entitling the banker to 
 realise. Either a default is inferred from the banker 
 having to pay, or a power of sale is implied after he has so 
 paid, as being essential to his indemnity. It is beyond 
 question that, having paid, he can realise his security. 
 (Cf. Banner v. Johnt.'tm, L. R., 5 H. of L. 157.) In that
 
 REALISATION OF SECURITIES. 27 
 
 case there are references to the banker's selling in order to CHAP. X1S 
 
 put himself in funds to pay the bills. These must be 
 
 read in the light of the particular facts of the case, namely, 
 
 that the drawers had agreed that the bankers should be 
 
 kept out of cash advances, which, as pointed out by Lord 
 
 Hatherley at p. 167, could only be by their realising before 
 
 the bills of exchange became due. 
 
 Probably the right to realise would also accrue if the 
 drawer had undertaken to put the banker in funds to meet 
 the bills a specified time before their maturity and had. 
 failed to do so, as this would constitute a default. 
 
 In the absence, however, of some such agreement or of 
 a definite power to sell at any time, the banker would not 
 be entitled to realise until he had, paid the bills. Even 
 then it would seem desirable that he should apply to the 
 customer to reimburse him, and give him notice that, 
 failing his doing so within a limited time, he will proceed 
 to realise the securities. 
 
 Inasmuch as pledge is an operation only applicable to What subjec 
 goods and chattels and negotiable securities, the inherent p e ge ' 
 power of sale does not extend to things or documents not 
 falling within that category. 
 
 The doctrine of so-called quasi-negotiability, or negoti- 
 ability by estoppel, would probably hardly suffice to give 
 a right of sale on the pledge of documents not otherwise 
 negotiable. The estoppel goes rather to the authority 
 of the agent to deal with the document than to its nature, 
 of which the pledgee is as competent to judge as the 
 pledgor. See ante, p. 250. 
 
 Where the documents deposited are not clearly nego- Whentreate 
 tiable instruments or documents of title to goods, it is mortgage & 
 therefore advisable to treat them as the subject of equitable 
 mortgage. Harrold v. Plenty [1901] 2 Ch. 314. 
 
 If the memorandum of deposit gives a power of sale, 
 this may be exercised, on default, by the banker on his own 
 initiative, without the sanction of any court ; if no power 
 
 T 2
 
 176 REALISATION OF SECURITIES. 
 
 CHAP. XIX. o f 8a i e i ias been acquired, the Chancery Division will order 
 foreclosure or sale practically at the option of the applicant. 
 This procedure appears equally applicable to pledges of 
 shares or stock completed by transfer, with respect to 
 which there is a further preferential claim to an order for 
 sale instead of the more dilatory process of foreclosure. A. 
 pledgee of stocks and shares to whom they have been 
 transferred, and who has got himself registered, is, in form 
 at least, in a position to deal with them as absolute owner, 
 but the equitable right of redemption still remains vested 
 in the pledgor until determined by the intervention of the 
 court. Were the pledgee to sell without the authority of 
 the pledgor or the court, he would presumably be liable 
 to the pledgor should the shares and stocks subsequently 
 rise in value. 
 
 ['it h-deeds Title-deeds, whether of freehold or leasehold land, 
 
 O 1'tiui 
 
 though of themselves in the nature of chattels, are too 
 intimately connected with the land itself to come within 
 the power of sale implied in a pledge. Another reason 
 assigned for this exemption is the hardship and incon- 
 venience that would accrue from allowing them to be 
 dealt with apart from the land on their small intrinsic 
 worth as compared with their relative importance to the 
 landowner. 
 
 >ttii;. Where securities, goods, stocks, or shares have hem 
 
 equitably mortgaged, as by deposit, the remedy by 
 foreclosure or sale is not barred by the expiration of the 
 period which, under the Statute of Limitations, would 
 preclude the recovery of the debt for which the security 
 was 
 
 The personal remedy and the remedy against the 
 property are independent, and there is no statutory 
 provision relating to personal property similar to that 
 relating to land, extinguishing the title to it after a certain 
 tini. . London n<l MhUuml Hunk v. Mit.-h.'ll [1H1MI] 
 J ( b. 161,
 
 REALISATION OF SECURITIES. 37 ; ] 
 
 Tn taking securities a margin of value in excess of the CHAP. XI x 
 liability they are to cover is always allowed. On reali- Disposition 
 sation, if the security brings in more than the debt, the ea^sation n 
 disposition of the balance may give rise to questions. 
 
 With regard to bills, notes, and cheques, the distinction of bills or 
 previously alluded to (ante, p. 240) between taking such notes - 
 documents by way of pledge and taking them as absolute 
 transferee and owner must be borne in mind. In the latter 
 case, the holder is entitled to the full amount irrespective of 
 the value he gave ; in the former, the surplus must be treated 
 as if it arose from the realisation of any other security. 
 
 Where the security has been given to cover all indebted- where all 
 ness, and its realisation brings in more than enough to (lebt paid " 
 satisfy that indebtedness, and the banker is not affected 
 with notice of any assignment of the depositor's remaining 
 rights or any further charge on the security, he must, of 
 course, pay over the surplus to the debtor or hold it at his 
 disposal. 
 
 If, however, the depositor is further indebted to the Can retaiu 
 banker, say on general account, the banker can retain the 
 surplus or a sufficient part thereof, to cover such further 
 indebtedness, by virtue either of his general lien or the 
 right of set-off. 
 
 It may at first sight -seem curious that immunities 
 attaching to the security itself should not extend to what 
 is only a converted part thereof, but the authorities are 
 clear. (Jones v. Peppercorne, Job. 430 ; Inman v. Clare, 
 Job. 769 ; In re London and Globe Financial Corporation 
 [1902] 2 Ch. 416, recognising Jones v. Peppercorne.} In 
 In re Bowes, 33 Ch. D. 586, North, J., while holding that 
 the bank had no general lien on the security itself, said 
 that if the memorandum had given a power of sale, or 
 if such power had been obtained from the court, the 
 surplus proceeds would have probably been retainable by 
 the bank by way of set-off for their further claim against 
 the customer's estate.
 
 REALISATION OF SECURITIES. 
 
 The explanation may be that the express or implied 
 power of sale is an incorporated or inherent incident 
 of the deposit, and its exercise terminates any fiduciary 
 relation that may have existed with regard to the security 
 itself. 
 
 Cases like Slumore v. Campbell [1892] 1 Q. B. 314, 
 are distinguishable. Where money is deposited for a 
 purpose which fails, there arises a resulting trust which 
 affects the whole sum and puts it outside lien or set-off. 
 In the case of securities lodged to cover a specific advance, 
 the purpose is cover, and, if necessary, realisation ; on a 
 legitimate sale there is, therefore, no failure, but fulfilment, 
 and no resulting trust even as to surplus proceeds. The 
 phrase so commonly met with in this class of cases, that 
 the creditor holds the surplus proceeds as trustee for the 
 debtor, would seem to be really only a figure of speech ; 
 there is no actual fiduciary relation. The money is, in 
 truth, held for the debtor's account, or as money had 
 and received to his use ; in other words, constitutes a 
 mere debt to him, and so is subject to lien or set-off. 
 
 The same holds good with regard to a surplus realised 
 by sale of goods or securities pledged to cover acceptances. 
 It was expressly declared in Inman v. Clare, Joh. 776, 
 that the surplus, if any, was subject to the general lien of 
 the banker or broker who paid the acceptances. The 
 drawer's only right is to have the goods or securitu s or 
 their proceeds applied to the bills, so that no liability, 
 either direct or by increased debit, shall accrue to him in 
 respect of those bills. This right does not affect surplus 
 tit'ter the amount of the bills has been so applied. 
 
 The drawer's right is assignable by agreement collateral to 
 a n. I independent of the bills, but the transferee can clearly 
 take no higher right tlwu his transferor, and has, therefore, 
 no claim whatever with regard to the surplus balance. 
 
 (Intinin v. Clan, . I,,],. TI,M . />;///, I h r,-r, \!\ (). \\ I >. 
 7. ill.
 
 ( 279 ) 
 
 CHAPTER XX. 
 MORTGAGES. 
 
 IT would be outside the scope of this work to endeavour to 
 treat generally of mortgages. The whole subject is com- 
 prised in exhaustive treatises of acknowledged authority. 
 Legal mortgages are matter of complicated conveyancing 
 with which no banker would venture to deal without legal 
 advice. The position of legal mortgagee and mortgagor is 
 not in any way naturally incidental to that of banker and 
 customer, indeed sometimes is inconsistent with and 
 rebuts that relation, as where a legal mortgage is given 
 to a banker for a fixed sum, in which case the banker 
 cannot include that sum in the banking account, so as to 
 charge compound interest thereon (London Chartered 
 Bank of Australia v. White, 4 A. C. 413, 424), though the 
 taking of a mortgage to secure the fluctuating balance of 
 an account is not held inconsistent with the relation of 
 banker and customer. (National Bank of Australasia v. 
 United Hand in Hand Company, 4 A. C. 409.) 
 
 A simpler form of mortgage is that known as equitable Equitable 
 mortgage, constituted by deposit of title-deeds, with or E 
 without a memorandum setting forth the object, terms, 
 and conditions of the deposit. The absence of formality 
 or delay commends this class of security to bankers ; and 
 if taken and subsequently dealt with with due precaution, 
 the protection is hardly inferior to that afforded by a 
 formal deed. 
 
 For it may now be taken as established that the Remedies or 
 remedies on an equitable mortgage, though they may 
 necessitate recourse to the court, are, through that
 
 MORTGAGES. 
 
 medium, practically identical with those on a formal 
 mortgage. 
 
 Even prior to the Conveyancing Act, 1881, the equitable 
 mortgagee hy deposit of title-deeds, either with or without 
 a memorandum, seems to have been entitled to apply to 
 the court, not only for foreclosure, but for sale. (See 
 Fisher on Mortgages, par. 1004.) 
 
 The remedy by sale has been questioned by some 
 authorities, but Fisher's view is probably correct. Sect. 25 
 of the Conveyancing Act, 1881, declares the power of tin- 
 court to order a sale in cases where foreclosure could be 
 ordered ; and in York Union Banking Co. \\Artley, 11 Ch. D. 
 205, and Wade v. Wilson, 22 Ch. D. 285, sale was ordered 
 on the application of the equitable mortgagees, though in 
 neither case was there any memorandum. 
 
 No doubt the power to order sale in lieu of foreclosure 
 is optional with the court, but there is no ground for 
 assuming that the discretion would not be so exercised in 
 fitting cases. 
 
 If it is desired to acquire a more formal security 
 without resorting to foreclosure or sale, an undertaking 
 to give a legal mortgage is implied in the deposit, 
 and the mortgagor can be called upon to fulfil this 
 undertaking. 
 
 Leasehold as well as freehold property may be the 
 subject of either formal mortgage by assignment or under- 
 lease, or equitable mortgage by deposit of the title-deeds 
 with or without a memorandum. 
 
 However treated, property of this sort is not regarded 
 favourably by bankers as security, except possibly in the 
 case of valuable leaseholds with a long term to run at a 
 low ground rent. 
 
 If the mortgage is a legal one, by way of assignment, the 
 mortgagee becomes liable for such of the covenants as run 
 with the laud ; if by underlease, the more usual form, he 
 does not become immediately liable on any of the covenants,
 
 MORTGAGES. 281 
 
 but he is somewhat dependent on his mortgagor for the CHAP. XX. 
 keeping up of the security. 
 
 Breach of covenant by the original lessee may lead to 
 proceedings in ejectment for forfeiture. 
 
 As underlessee, the mortgagee has a right to apply for 
 relief (Netvbolt v. Bingham, 14 The Reports, 526), and, 
 under sect. 4 of the Conveyancing Act, 1892, an under- 
 lessee may be relieved against some forfeitures against 
 which an immediate lessee canHot obtain relief, such as 
 underletting without consent, provided such underlessee 
 has not acted negligently (Imray v. Oakshette [1897] 2 
 Q. B. 218 ; En-art v. Fryer [1901] 1 Ch. 499) ; but in such 
 cases the underlessee will probably find himself put on 
 very stringent terms, involving in some cases the taking a 
 direct lease or its equivalent for the residue of the term. 
 
 Where the title-deeds of leasehold property are deposited, 
 with or without a memorandum, so as to constitute an equit- 
 able mortgage, the mortgagee incurs no liability whatever 
 under the covenants. The deposit of a lease as security 
 is no breach of the covenant not to assign. (Gentle v. 
 Faulkner [1900] 2 Q. B. 267.) But the equitable mort- 
 gagee runs the risk of the lessee's forfeiting the lease by 
 other breaches of covenant, and, not being an underlessee, 
 he has no locus standi for applying for relief against any 
 forfeiture, except possibly a forfeiture for non-payment of 
 rent. 
 
 The chief danger which is always adduced as attaching Eisks at- 
 to the position of an equitable mortgagee, whether of free- e q u jt a ble 
 
 holds or leaseholds, is the possibility of someone obtaining mortgage ; 
 
 ... priorities. 
 
 a subsequent legal mortgage, and so gaming priority. 
 
 As Stirling, L.J., says in Taylor v. London and County Legal over 
 Bank [1901] 2 Ch. 231, " a legal mortgagee who makes e( l uitable - 
 an advance without notice of a prior equitable title 
 is a purchaser for value without notice. From such a 
 purchaser a court of equity takes away nothing he 1ms 
 honestly acquired."
 
 MORTGAGES. 
 
 THAI*. XX. The possession of the deeds constitutes, however, a very 
 considerable safeguard. The doctrine of constructive 
 notice, within specified and reasonable limits, comes into 
 operation. A man does not acquire a thing honestly if he 
 takes no steps whatever to satisfy himself whether the 
 person he takes it from can honestly part with it, or 
 shuts his eyes to circumstances tending to show that 
 such is not the case. To use the words of sect. 8 of 
 the Conveyancing Act, *1882, he is to be prejudicially 
 affected by notice of any instrument, fact, or thing 
 \\hich is within his own knowledge or would have come 
 to his knowledge if such inquiries and inspections 
 had been made as ought reasonably to have been made 
 by him. 
 
 So, if a man takes a legal mortgage without asking to 
 see the deeds, or on doing so being put off by accepting 
 an unsatisfactory answer, he will, in ordinary cases, not be 
 allowed priority over a prior equitable mortgagee who has 
 got possession of the deeds. (Oliver v. Hinton [1899] 2 
 Ch. 264 ; Jared v. Clements [1903] 1 Ch. 428.) 
 
 Land Registry The various Acts relating to the registration of land and 
 dealings therewith have to be taken into consideration with 
 respect to equitable mortgages by deposit of title-deeds. 
 
 M Convey- The original Middlesex Registry Act, 1708, 7 Anne, c. 20, 
 
 within and ^e Irish Registry Act, 1707, Anne, c. 2, require the 
 meaning of 
 Acts. registration of any conveyance affecting land within their 
 
 respective jurisdictions, to prevent its being fraudulent and 
 void as against a subsequently registered conveyance to a 
 third party. In CrctUnml v. 1'nttcr, L. R., 10 Ch. 8, 
 the court held, on the words " every deed or conveyance " 
 in the West Riding Registry Act, 2 & 8 Anne, c. 4, s. 1, 
 that a im-moruudum accompanying a deposit of title-tl< 
 by way of equitable mortgage constituted a " conveyance " 
 <>f which a memorial must hi- registered to secure priority. 
 Lord Cairns said: "An instrument giving to a person a 
 charge upon laud gives him an interest in the land ; if he
 
 MORTGAGES. 283 
 
 has a mortgage before, it gives him a further interest ; and CHAP. XX. 
 so, whether made in favour of a person who has already a 
 charge or of another person, it is a conveyance of an 
 interest in laud. This memorandum was, then, in my 
 opinion, a conveyance affecting land within the meaning of 
 the Act." (Cf. In re Calcott and Elviris Contract [1898] 
 2 Ch. 460.) 
 
 And this rule has lately been extended, beyond memo- Letters lead- 
 randa, to letters directly tending or leading up to the a|^ t 
 deposit of the deeds. In Fullarton v. Provincial Bank 
 of Ireland [1903] A. C. 309, the House of Lords held 
 that certain letters from the proposing mortgagor, read 
 in a business light, amounted to an undertaking to deposit 
 the deeds as security, and so constituted a "conveyance," 
 requiring a memorial to be registered in order to secure 
 priority. It was objected that there was no consideration 
 shown for such undertaking, but the House supplied one 
 from the forbearance of the bank for a reasonable time to 
 press for an existing overdraft, in reliance on the proposed 
 security held out by the letters. No acceptance of the 
 proposal by the bank was proved other than tbe ultimate 
 deposit of the deeds, but Lord Liudley observed that when 
 something is offered which it is to a man's advantage to 
 receive he must be taken to accept it unless he can show 
 he declined it. 
 
 In the case of a proposed advance, original or further, 
 the consideration would be the promise to make the advance 
 on receiving the security. 
 
 The deposit of title-deeds without any memorandum is Equitable 
 not, however, a "conveyance" within the above-mentioned deedTwith- 
 Registry Acts. This was decided in Sumpter v. Cooper, 2 out memo- 
 B. & Ad. 223, followed in In re Burke' s Estate, 9 L. R. Ir. 
 24, while in Fullarton v. Provincial Bank of Ireland, ubi 
 sup., the House regarded these decisions as too firmly estab- 
 lished to be disturbed. (See per Lord Davey at p. 314.) 
 
 The Yorkshire Registry Act, 1884, 47 & 48 Viet. c. 54, Rule in 
 . Yorkshire.
 
 2H-1 
 
 MORTGAGES. 
 
 THAI- XX 
 
 Unregistered 
 
 equitable 
 
 mortgage. 
 
 The Laml 
 Transfer Acts. 
 
 Effect of 
 I Mail Trans- 
 
 however, contains an exceptional provision (sect. 7) by 
 which an equitable mortgage by bare deposit is inoperative 
 as against a subsequent registered assurance, unless a 
 memorandum in terms explicitly provided is signed by the 
 mortgagor and registered, though the registration may be 
 effected by the mortgagee. (Battison v. lll>x,i [1896] '2 
 C'h. 408, where it was further held that under sect. 14 of the 
 Act nothing short of actual, as distinguished from legal, fraud 
 would postpone the subsequent registered incumbrnncer.) 
 
 Where an equitable mortgage ought to be registered, ;ml 
 is not, a subsequent legal mortgagee is in a very strong 
 position. If he search the register and find nothing there, 
 he is absolved from making any inquiries with a view to 
 the discovery of unregistered interests. He is probably 
 absolved from the necessity of requiring production of the 
 title-deeds. Nothing but actual knowledge, or such extra- 
 ordinary negligence as is hardly consistent with anything 
 but fraud, would apparently suffice to postpone him to the 
 unregistered incumbrance. (Ayra Bank v. Barry, L. R., 
 7 H. of L. 185.) The position, therefore, of a mortgagee 
 by bare deposit in cases where he is not compelled to 
 register when he would have been, had he taken a memo- 
 randum, is, as pointed out by Lord Davey in l-'iiUnrtn 
 \. I'rnriin-idl Bank of Ireland [1908] A. C., at p. 814, an 
 anomalous one. His existence is not disclosed by the 
 register, yet he is presumably entitled to hold his priority 
 if the legal mortgagor, after searching the register, abstains 
 from inquiry. 
 
 The Land Transfer Act, 1875, 88 & 89 Viet. c. 87, sect. 
 127, excludes from the jurisdiction of the Middlesex and 
 Yorkshire Registry Acts laud otherwise subject to that 
 jurisdiction, if registered under its own provisions. 
 
 General nnticipatory legislation of this sort is unusual 
 and inconvenient. Its bearing <m subsequent legislation 
 must necessarily be open to question. For instance, il...^ 
 this Act, passed in 187;"), control the Yorkshire l;L r i-n\
 
 MORTGAGES. 285 
 
 Act, 1884, which contains no exception or reference as to CHAP. XX. 
 its provisions ? If title deeds of land in Yorkshire, regis- 
 tered under the Land Transfer Acts, were deposited and 
 a memorandum registered in Yorkshire, would this affect 
 a prior charge by deposit of the land certificate ? 
 
 The better view seems to be that the Land Transfer Act, 
 1875, overrides all previous or subsequent legislation so 
 far as land registered under it or the Land Transfer Act, 
 1897, is concerned. The provisions of sect. 127 of the Act 
 of 1875 are treated as existing for all purposes by sect. 17 
 of the Act of 1897 and by the first schedule to the same Act. 
 
 Bankers should therefore regard the Land Transfer Acts Are the ruling 
 
 as the ruling enactments in all cases to which they 'are e actments . 
 
 J where appli- 
 
 applicable. Registration under the Land Transfer Acts is cable, 
 only compulsory where adopted by the local authority, and 
 then only in cases of sale. There is no obligation on an 
 owner to register. Deeds relating to property registered 
 under the Land Transfer Acts carry their own danger 
 signal in the note made upon them by the Land Transfer 
 Office. On seeing this, the banker knows that such land is 
 outside the jurisdiction of ordinary registries, and also that, 
 in order to obtain priority, he must adopt the procedure 
 laid down by the Land Transfer Acts. 
 
 That procedure is apt and reasonable enough. By sect. Procedure 
 8, sub-sect. 6, of the Act of 1897, any registered proprietor 
 may, subject to registered charges or rights, create a lien 
 on his land by deposit of the land certificate, and the effect 
 is equivalent to a lien created by deposit of title-deeds by 
 an owner entitled in fee simple for his own benefit. The 
 word "lien" is inapposite in this connection. The only 
 recognised lien on land is that of an unpaid vendor ; 
 the deposit of title-deeds by an owner in fee simple con- 
 stitutes an equitable mortgage or charge, and this is what 
 the 'Act must be interpreted to mean. 
 
 It has been suggested that the words " for his own 
 benefit " afford an extra protection to anyone taking a
 
 28J MORTGAGES. 
 
 CHAP. XX. security on land under the section ; that, for instance, a 
 trustee raising money by this means for his own ends can 
 give a good title as against his ccstui qne trust. This view, 
 though startling, is certainly arguable. (See Brickdale and 
 Sheldon on the Land Transfer Acts, p. 296.) 
 
 The scheme of those Acts, like that of other Registry 
 Acts, is to give priority to registered over unregistered 
 charges. 
 
 But the Act of 1897, sect. 8 (1), imposes a salutary check 
 on illegitimate dealings, by providing that the land certifi- 
 cate must be produced on any proposed alteration in the 
 register. 
 
 This land certificate is thus made the effective symbol 
 of title to, and authority to deal with, the land. 
 
 It is the recognised instrument by deposit of which an 
 equitable mortgage is to be effected. As soon, therefore, 
 as the banker sees by the note on the deeds that he is 
 dealing, or about to deal, with land registered under this 
 Act, he should insist on having the land certificate, if that 
 is not the security tendered him in the first instance, 
 foticc of Having got the hind certificate, the banker's next' step 
 
 should be at once to fortify his position by sending a notice 
 to the Land Transfer Office. The method of so doin^ is 
 prescribed by the rules made in 1908. The Land Transfer 
 Act, 1897, sect. 22 (6) (/), gave power to make rules 
 for notice of deposits of land certificates. The Land 
 Transfer Rules, 1908, provide (rule 248) that such notice 
 may be sent by registered letter with a shilling fee enclosed. 
 The sending of such notice has the same effect as the 
 lodgment of a caution under sect. 58 of the Act of 1875. 
 By that section there cxn be no dealing with the laud 
 without due notice to the cautioner. Sects. 54 and 55 
 of that Act prescribe the length and method of this notice, 
 and provide that the registrar may delay dealing with the 
 land till nny question which may arise is set tit <1. Rule 249 
 enacts that, so long as such notice is on the r. ^i-t.-r, no
 
 MORTGAGES. 287 
 
 new certificate will be issued under sect. 8, sub-sect. 3 of CHAP. XX. 
 
 tbe Act of 1897, to any person representing that the 
 
 original has been lost or destroyed, or under sub-sect. 4 of 
 
 the same section, as on a sale under a charge subsequent 
 
 to the notice of deposit, without notice similar to that 
 
 under a caution. So that the system of protection is fairly 
 
 complete. The depositee's remedy is by application to the 
 
 court for foreclosure or sale ; but application would at the 
 
 same time have to be made to have the register corrected 
 
 under sect. 95 of the Act of 1875. 
 
 In all questions of priority, the abstaining from requiring 
 the land certificate would have the same effect as the not 
 calling for title-deeds of unregistered land. 
 
 The forms of charge prescribed under rules 158 and 160 
 of the Land Transfer Rules, 1903, forms 44 and 46 in the 
 first schedule, as also form xxxix. in Messrs. Brickdale 
 and Sheldon's book, are so simple and comprehensive that 
 in the case of land registered under the Land Transfer 
 Acts one of them might well be utilised as a memo- 
 randum accompanying the deposit of the land certificate. 
 It could then be registered as a mortgage or charge and the 
 extra security and facilities of realisation afforded by such 
 registration acquired. 
 
 Apart from any element of registration, questions of Priorities 
 priority may arise between two equitable mortgagees. equitable 
 
 An equitable mortgagee, who has made an advance with- mortgagees. 
 out notice of a prior equitable title, may gain priority by 
 getting in the legal title, unless there are circumstances 
 which make it inequitable for him to do so. (Taylor v. 
 Russett [1892J A. C., at p. 253.) 
 
 But so long as the first equitable mortgagee keeps 
 possession of the deeds this situation could not well arise, 
 inasmuch as their absence would amount to constructive 
 notice to any subsequent mortgagee, legal or equitable. 
 And an equitable mortgagee may be postponed to a subse- 
 fiequent equitable mortgagee where the prior one has 

 
 MORTGAGES. 
 
 CHAP. XX. allowed his mortgagor to retain or regain possession of 
 the title-deeds, and so enabled him to borrow from the 
 subsequent mortgagee, who has obtained possession of 
 them. (Ttii/lor \. London and County Hani; [1901] 
 2 Ch., at p. 261.) 
 
 There is, however, an exception to this rule. Where 
 the relation between the first equitable incuinbrancer and 
 the person in whose possession he leaves the deeds is not 
 merely that of mortgagor and mortgagee, but is of a fidu- 
 ciary nature, such as that of cestui qin- tnt*t and trustee 
 or client and solicitor, he is not acting negligently or 
 improperly, and he will not be postponed by reason of im- 
 proper acts of the person entrusted with the deeds, so long 
 as he had no reason to doubt his honesty. (Tat/lor \. 
 London and County !><tnk, uhi flip., at p. 261; In re L<i/-, 
 l.rparte Carendith [1908] 1 K. B. 151.) 
 
 So much does equity dominate the whole system of 
 mortgage that a prior legal mortgage may be, in certiiin 
 cases, postponed to a subsequent equitable one. (Jnrcd v. 
 (l.-nn'itt* [1903] 1 Ch. 428.) 
 
 The court will take this extreme step in any of the 
 following states of circumstances : (1) where the legal 
 mortgagee has assisted in, or connived at, the fraud which 
 led to the creation of the subsequent equitable estate, of 
 which assistance or connivance the omission to use ordinary 
 care in inquiring after or keeping the title-deeds may be 
 sufficient evidence, where such conduct cannot otherwise be 
 explained; (2) where the owner of the legal estate has 
 constituted the mortgagor his agent, with authority to raise 
 money, and the estate thus created has by the fraud or 
 misconduct of the agent been represented as being the 
 lirst estate. 
 
 But the court will not postpone the prior legal estate to 
 the subsequent equitable estate on the ground of any mere 
 carelessness, or want of prudence on the part of the 
 owner.
 
 MORTGAGES. 28 
 
 The foregoing summary is derived from the judgment of CHAP. XX. 
 the Court of Appeal in Northern Counties of England Fire 
 Insurance Co. v. Whipp, 26 Ch. D., at p. 494, recognised 
 in Taylor v. London and County Bank [1901] 2 Ch., 
 at pp. 259, 260, and in many other cases ; see also Jared 
 v. Clements [1903] 1 Ch. 428. 
 
 Another question of priorities, in which bankers have Advances 
 been before now involved, and affecting legal as well as equi- j^ticVof r 
 table mortgages, arises where a mortgage is given to secure furth er 
 past and future advances or future advances alone, and the 
 mortgagee receives notice that the mortgagor has parted 
 Avith his reversionary interest, or has created a further 
 charge thereon. 
 
 It was at one time an open question whether advances 
 made by the first mortgagee after such notice were charge- 
 able on the security in priority to the claims of the person 
 who had acquired the reversionary interest or the further 
 charge. The decision of the House of Lords in Uopkinson 
 v. Rolt, 9 H. of L. Cases, 514, established conclusively 
 that a first mortgagee cannot claim priority for voluntary 
 advances made on such a securit}' after notice of the 
 second mortgage. Lord Campbell's judgment in that case 
 clearly demonstrates that the rule as laid down does not 
 bear hardly on a banker who receives notice of such second 
 charge, inasmuch as his security is in no wise affected with 
 respect to advances prior to the date of notice, and it 
 is entirely within his option whether or no he will make 
 further advances after that date. " The hardship upon 
 bankers at once vanishes when we consider that the 
 security of the first mortgage is not impaired without 
 notice of a second, and that when this notice comes the 
 bankers have only to consider (as they do as often as they 
 discount a bill of exchange) what is the credit of their 
 customer, and whether the proposed transaction is likely to 
 lead to profit or to loss " (p. 535). 
 
 Union Bank of Scotland v. National Bank of Scotland, 
 
 B.- u
 
 MORTGAGES. 
 
 12 A. C. 58, is another decision of the House of Lords to 
 the same effect, aiid affords a particularly strong example 
 of the principle, because there the disposition of property 
 in the first instance was on the face of it absolute, and 
 it was only from collateral facts that it could be shown 
 to be in the nature of a security only. The doctrine of 
 Hopkinson v. Holt applies equally or, perhaps, a fortiori 
 where the second disposition of the property is an absolute 
 sale of the residuary interest, of which the mortgagee has 
 notice. (London and County Bank v. Ratcliffe, 6 A. C. 
 722.) The principle was also approved in Bradford Bank- 
 ing Co. v. Henry Brujgs it- Co., 12 A. C. 29. In this 
 latter case Lord Blackburn says of the decision in Hopkin- 
 son v. Holt : "It seems to me to depend entirely on what I 
 cannot but think a principle of justice, that a mortgagee 
 who is entitled, but not bound, to give credit on the security 
 of property belonging to the debtor, cannot give that credit 
 after he has notice that the property has so far been parted 
 with by the debtor " (p. 87). 
 
 In none of the cases up to this date had the first mort- 
 gagee bound himself to make advances on the security to 
 any specified amount ; and the principle, as stated by Lord 
 Campbell and Lord Blackburn, rested largely on the entirely 
 voluntary and optional character of the advances subse- 
 quent to notice of the dealing with the reversion. 
 
 The question naturally arose as to the position of a first 
 mortgagee who had bound himself to make advances on 
 the security up to a certain amount, which amount was not 
 reached at the date of the notice; whether he was still 
 bound to continue advancing up to the specified sum, and, 
 if so, entitled to priority in respect of such advances. 
 
 In Wett v. William* [1899] 1 Ch. 132, this question 
 waa settled by the Court of Appeal holding that the 
 mortgagor, by borrowing from other quarters on the same 
 security, released the first lender from the obligation to 
 make further advances, and that, if he did so after notice,
 
 MORTGAGES. 291 
 
 such advances must be treated as purely voluntaiy on CHAP. XX. 
 his part. 
 
 Lindley, M.R., says (p. 143): "Even if the first 
 mortgagee has agreed to make further advances on the 
 property mortgaged to him, the mortgagor is under no 
 obligation to take further advances from him, and from no 
 one else ; and if the mortgagor chooses to borrow from 
 someone else and to give him a second mortgage, the 
 mortgagor thereby releases the first mortgagee from his 
 obligation to make further advances. Whatever prevents 
 the mortgagor from giving to the first mortgagee the 
 agreed security for his further advances releases the first 
 mortgagee from his obligation to make them." 
 
 Chitty, L.J., says (p. 146) : " The covenant to make 
 further advances creates no difficulty, and for this reason : 
 the covenant is to make the further advance on the security 
 of the property, and inasmuch as the mortgagor has by 
 his own act deprived himself of the power to give the 
 stipulated security, no action for damages would lie on the 
 covenant. It is hardly necessary to add that no action lies 
 for specific performance of any agreement to make a loan." 
 
 Questions as to priorities have arisen with regard to Mortgages 
 shares in companies utilised as security for advances. A ^^ r 
 man may be a registered shareholder or stockholder, and Priorities, 
 so be in a position to deal with or transfer the shares or 
 stock, but by reason of his holding a fiduciary position, 
 such as that of trustee, or by reason of prior equitable 
 charges on the security, there may be persons entitled to 
 an equitable interest therein which does not appear. To 
 oust such equitable rights, a person subsequently taking 
 the shares or stock by way of sale or pledge must not only 
 do so honestly and for value, and without any notice of 
 the prior equitable rights, but he must complete his title 
 by acquiring the legal estate. What constitutes the 
 completion of the legal title must partly depend on the 
 constitution and regulations of the particular company. 
 
 u 2
 
 MORTGAGES. 
 
 If the transfer of shares or stock can only be made by 
 deed, as is the case where the Companies Clauses Con- 
 solidation Act applies, or as may be required by the 
 articles of association, the delivery of a blank transfer is 
 not sufficient to pass the legal estate. As Lindley, L.J., 
 says in Powell v. London and Prorincial Bank [1898] 
 2 Ch., at p. 560 : " We all know that both at common law 
 and under these statutes, if you execute a transfer in blank, 
 that instrument with the blanks is not a deed." 
 
 The person to whom it is delivered is not authorised or 
 able to make it a complete deed by filling up the blanks. 
 It may be redelivered by the transferor after being so 
 filled up, and so become effectual as from the date of 
 redelivery. 
 
 An agent cannot effect such redelivery unless himself 
 authorised by deed. (Powell v. London and Prorincinl 
 Bank [1898] 2 Ch. 555; Socirte General- <!< /'an* v. 
 Walker, 11 A. C. 20.) 
 
 Where, however, the transfer is not necessarily by deed, 
 a blank transfer authorises the transferee to fill up all 
 necessary blanks, and thereupon operates as a good transfer 
 without redelivery. (Ireland v. Hart [1902] 1 Ch., at 
 p. 527.) 
 
 In practically all companies, however, the regulations 
 prescribe more than the mere transfer for the completion 
 of a legal title. Registration is a usual requisite, and in 
 such case the transferee must obtain himself to be regis- 
 tered, or at any rate must acquire a present, absolute, and 
 unconditional right to be registered as a shareholder before 
 he is affected with notice of the prior equitable title. 
 (Societf Genf-rale dc Paris v. Walker, 11 A. C., at 
 pp. 29 41; Moore \. Xorth-U'.st.m Bank [1891] 2 Ch. 
 599 ; Ireland v. Hart [1902] 1 Ch., at p. 529.) 
 
 But registration is ineffectual to perfect a transfer 
 which is in itself inoperative and of no effect. (Pou < II \ . 
 /xififfon and Pruriiirial Bank [1898] 2 Ch., at p. 566.)
 
 MORTGAGES. 2t 
 
 The value of shares or stock as security received a CHAP. XX 
 temporary check from the judgment of Lord Alverstone, Sending in 
 C.J., in Corporation of Sheffield v. Barclay & Co. [1903] registration. 
 
 1 K. B. 1. He held that the sending in of a transfer for F rged 
 
 transfers. 
 
 registration amounted to a representation that the signa- 
 ture to that transfer was genuine, or involved an under- 
 taking to indemnify the company against any loss they 
 might sustain by having to replace the stock or shares, 
 should the transfer subsequently prove to have been forged. 
 
 The consequences of the decision, had it stood, would 
 have been most serious. In that case the bank who had 
 sent in the transfer, had, on repayment of the advances 
 made by them, transferred the stock to the nominees of 
 the borrowers more than six years before the date at 
 which the claim was made upon them. 
 
 The Lord Chief Justice held that the Statute of 
 Limitations did not begin to run until the company 
 suffered loss by having to reinstate the original holders ; 
 BO that the liability would have hung indefinitely over the 
 heads of all persons who had sent in transfers, in view of 
 the possible discovery of a forgery. And yet registration, 
 being, in most cases, necessary to complete title, could not 
 safely be pretermitted. 
 
 The Court of Appeal, however, reversed the judgment 
 of the Lord Chief Justice, holding that the sending in of 
 the transfer for registration involved neither representation 
 of the genuineness of the signature, nor indemnity of any 
 sort, but was merely the calling on the company to do a 
 ministerial act. [1903] 2 K. B. 580. The question is, 
 therefore, for the present, set at rest.
 
 ( 294 ) 
 
 CHAPTER XXI. 
 GUARANTEES. 
 
 ONE of the commonest methods by which bankers protect 
 themselves against loss on advances or overdrafts is by 
 taking a guarantee. There are advantages attaching to 
 this class of security. It is adaptable to most states of 
 circumstances, present and possible, it entails few positive 
 obligations on the banker, while it enures for him to fall 
 back upon in case of need. There are also disadvantages. 
 The efficacy of a guarantee is absolutely dependent on 
 two things : first, the completeness in form of the 
 guarantee itself; second, the continued solvency of the 
 guarantors. 
 
 With regard to the form of guarantee, the difficulty mainly 
 arises, first, from the necessity of defining very clearly the 
 extent to which the guarantors bind themselves, and pre- 
 cluding them from afterwards suggesting that the bank lias 
 gone beyond what they undertook to be answerable for ; and 
 next from the necessity of anticipating conceivable con- 
 tingencies, such as death, bankruptcy, change of firm, 
 amalgamation, taking collateral security, giving time to 
 the principal debtor, receipt of dividends, and the like, 
 and of reserving to the bank the power to act on every 
 occasion in the manner most conducive to its own interests, 
 without prejudicing its right to resort to the guarantors 
 for the ultimate balance due. 
 
 The htw is rightly solicitous for the interests of sureties, 
 and the main object of a guarantee should be to keep a 
 free hand for the bank and a tight one on the guarantor. 
 _ It is^largely a matter of drafting, \\hich is outside the
 
 GUARANTEES. 29i 
 
 scope of this work. Most banks keep their own stock of CHAP. XXI 
 guarantee forms ; these should be overhauled from time to 
 time, to make sure that they are in working order, up to 
 date, broad and strong enough for the purposes for which 
 they are intended. Prolixity is no criterion of efficiency. 
 
 The second necessary element in a reliable guarantee, 
 the financial position and stability of the guarantors, 
 is for the consideration and judgment of the banker 
 himself. 
 
 A guarantee is a promise to answer for the debt of Definition of 
 another, made to a person to whom that other already is, or uarantee - 
 is about to become, answerable. It must be in writing, or 
 there must be a memorandum of it in writing, signed by 
 the guarantor or his authorised agent, to satisfy sect. 4 of 
 the Statute of Frauds. In practice, as will be gathered 
 from the foregoing remarks, there must be a good deal 
 more in writing than could be fairly described as a 
 memorandum. 
 
 There are cases at first sight analogous to guarantees, Analogous 
 which are not within the Statute of Frauds, such as 
 contracts of indemnity and contracts for the acquirement 
 of property by payment of another man's debt. (Harburg 
 d- Co. v. Martin [1902] 1 K. B. 778.) The ordinary 
 transaction, however, by which a banker allows a man 
 credit on another's undertaking to see him paid, is a 
 guarantee pure and simple, for which reason, if for no 
 other, writing and signature are essential. 
 
 Without going into details, the following are the main Main points 
 ., i ,,..-,.',. of an effectiv 
 
 points to be kept in mind in taking a guarantee : guarantee. 
 
 If there is more than one guarantor, their obligation Several or 
 must be made several, or joint and several. If it be joint several. 
 only, an unsatisfied judgment against one, except under Judgment 
 Order XIV., or in default of appearance, under Order XIII., 
 rule 4, constitutes a bar to any action against the other or 
 others. (Kendall v. Hamilton, 4 A. C. 504.) The case 
 of Morel v. Westmoreland [1904] A. C. 11, must not be
 
 ><' GUARANTEES. 
 
 CHAP. XXI. understood as implying that a similar result would follow 
 when the obligation was joint and several. 
 
 The judgment against the wife in that case harred the 
 remedy against the husband, even on the supposition of 
 an original several liability, because the liability of 
 husband and wife could only be alternative, being that of 
 principal and agent, and the judgment against one operated 
 as a conclusive election. 
 
 The remedy against joint and several guarantors is not 
 alternative, but cumulative, until the whole debt is not only 
 recovered, but satisfied. 
 
 From the point of view of the guaranteed person a 
 guarantee by each of the co-guarantors severally would be 
 quite satisfactory; but, as above shown, the fact of its 
 being joint and several does not affect him, and it may have 
 advantages for the guarantors. 
 
 The guarantors should always bind themselves, their 
 executors and administrators ; and if under seal, their heirs 
 as well. The executors or administrators would in any 
 event be bound, but their specific inclusion may be useful 
 in the case of death of the surety and notice thereof, 
 hereinafter mentioned. 
 
 It may be intended that the guarantor's liability sliiill 
 be limited. If so, the limitations must be strictly definl. 
 Where a fixed sum is inserted as the limit of the surety's 
 liability, it must be carefully stipulated whether the 
 surety is surety for the whole debt, with the specified 
 limitation to his total liability, or whether he is sun tv 
 only for part of the debt. The former is the more advan- 
 tageous for the person guaranteed, inasmuch as it entitles 
 him, on the bankruptcy of the principal debtor, to divi- 
 dends on the whole debt from his estate, notwithstanding 
 the surety has paid the full sum he guaranteed ; whereas 
 in the latter form the surety, having paid his liability, is 
 entitled to the dividends on that amount. (See In >; 
 , 17 Ch. D. 98 ; In re Sass [1896] 2 Q. B. 12.)
 
 GUARANTEES. 
 
 '297 
 
 A slight variation in the wording is sufficient to assign CHAP. XX I. 
 the liability to one category or the other, and it is therefore 
 always desirable to supplement the statement of the liability, 
 and anticipate any question, by adding a clause or proviso, 
 such as proved so efficacious in both the above-mentioned 
 cases, under which the surety contracts himself out of any 
 such possible equity in plain and distinct terms. 
 
 Care must also be exercised that the limitation applies Amount 
 to the amount guaranteed, and not to the amount ' an( j amount 
 advanced. If such words as " In consideration that you guaranteed. 
 will advance to A. B. a sum not exceeding 250, 1 guarantee 
 you the payment of that amount," were used, the guarantee 
 might be invalidated in toto by the advance of a sum 
 exceeding 250. 
 
 Guarantees are further divided into specific and con- Specific and 
 tinuing. The first are where provision is made for the contmuin & 
 advance of a specified sum or for advances up to a fixed 
 limit, and the guarantee is applicable only to that particular 
 advance or series of advances, and ceases on repayment 
 thereof. The continuing guarantee is the commoner form, 
 and is designed to cover a fluctuating or running account, 
 securing the balance due at any time, irrespective of 
 payments which obliterate past advances. 
 
 Here again, the plainest terms should be used to express 
 the continuous character of the obligation. The words 
 " ultimate balance " are sometimes used in this connection. 
 They are useful as pointing to the continuing nature of 
 the guarantee ; but if there are more accounts than one, 
 and the guarantee is intended to apply exclusively to one, 
 without bringing in any credit balance there may be on 
 another, this must be clearly defined. " Ultimate balance " 
 primarily means the sum finally owing, combining all 
 accounts. (See Mutton v. Peat [1900] 2 Ch. 79.) 
 
 If, on the other hand, it is the real ultimate balance, com- 
 bining all accounts, which it is desired to secure, this 
 should be clearly expressed.
 
 298 
 
 GUARANTEES. 
 
 CHAP. XXI. 
 
 Kxi.-ting 
 overdraft or 
 
 tie-lit. 
 
 \|. i hod of 
 future :i<l- 
 vancet. 
 
 It must be stated whether the liability is to extend to 
 t \ idling overdraft or debt, if any, as well as to future 
 advances. This is sometimes involved in the statement of 
 the consideration. It is not necessary that the considera- 
 tion should be set out in the guarantee (Mercantile Law 
 Amendment Act, 1856, 19 & 20 Viet. c. 97, s. 8). But if it 
 is set out, it should be done correctly. Such forms as " in 
 consideration of your having advanced A. B. 500," or " in 
 consideration of your having allowed A. B. to overdraw his 
 account with you to the extent of 500," are obviously 
 wrong. The mere antecedent debt of a third person is no 
 consideration for a promise. 
 
 It is true that the statement of a consideration is not 
 conclusive, and another consideration may be supplied by 
 external evidence. The real consideration, where further 
 advances are not stipulated for, is the forbearance of the 
 creditor to sue or press the debtor. No doubt the existence 
 of this consideration may be implied from the nature of 
 the transaction as between business men. (See l-'nllarton 
 v. 1'rorim-itil Jinnk of Ireland [1908] A. C., at p. 81(>.) 
 But, in the absence of statement in writing, the matter 
 must always remain doubtful whether any claim was con- 
 templated, ^ud if so, whether it was forborne at the request 
 of the guarantor. (Miles v. Netr Zealand, <fr., Co., 82 Ch. 
 D. 266.) 
 
 Where, therefore, the only consideration is the forbear- 
 ance to press for an existing debt, this should be clearly 
 specified, and the time for which such forbraranee is to last 
 Mated. " Reasonable time " is too vague and incapable of 
 definition, while " so long as you may think fit," or words 
 leaving the respite entirely in tin- hands of the creditor, 
 would render the sufficiency of the consideration doubtful. 
 
 Tin- method by which future advances are to be made 
 should be formulated in accordance with the intention of 
 tin parties, or in such general terms as to inclu.i 
 methods likely to be adopted, as, for instance, the
 
 GUARANTEES. 299 
 
 acceptance and discounting of bills. Interest and bank- CHAP. XX 1. 
 ing charges should be provided for. With regard to the 
 former, it is sometimes desirable to stipulate for the method 
 in which it is to be, or may be, charged or reckoned, as by 
 yearly or half-yearly rests ; and some draftsmen insert a 
 provision that this method of charging shall continue, 
 notwithstanding that the relation of mortgagor and mort- 
 gagee has superseded that of customer and banker. This 
 would only come into operation where a mortgage was 
 taken for a specific sum, and not for a fluctuating balance 
 (see National Bank of Australasia v. United Hand in 
 Hand Co., 4 A. C., at p. 410), and it would introduce 
 much complication if the accounts had to be kept in one 
 way against the customer and in another against the 
 surety. 
 
 Where the guarantee is to be a continuing one the Conditions of 
 conditions of its determination should be clearly marked. t j on 
 
 A guarantor is, in ordinary cases, entitled to determine 
 the guarantee as to future advances at any time by notice, 
 and by paying what is then due. (Beckett v. Addyman, 9 
 Q. B. D., at p. 791.) Even if the guarantee is for a specified 
 period, or is under seal, this right probably exists in equity, 
 if not at law. (In re Grace [1902] 1 Ch., at p. 738.) It 
 is generally found advisable to impose restrictions on 
 this power. It may be provided that the liability of 
 each guarantor shall only be determinable on the 
 expiration of specified notice, to be given by him in writing, 
 and on payment of all sums due or accruing due at the 
 date of receipt of such notice, or subsequently becoming 
 due by virtue of any engagement entered into prior to 
 receipt of such notice, which, if such notice had not been 
 given, would have been covered by the guarantee. The sort 
 of case it is necessary to anticipate is that of a bill accepted 
 by the bank on the faith of the guarantee prior to receipt of 
 notice, but not falling due till after the expiration thereof. 
 (Cf. Hollond v. Teed, 1 Hare, 50, where the form of
 
 800 GUARANTEES. 
 
 CHAP. XXI. the guarantee, though not very clearly expressed, was hel<l 
 to cover such bills.) 
 
 Whether the liability of a joint and several guarantor for 
 future advances would he affected by the determination of 
 the liability of his co-guarantor might be doubtful. If the 
 analogy of the death of another joint and several surety is 
 to be accepted, determination by one such surety would 
 not release the other from liability for future advano B. 
 Where the sureties are joint only it is an open question 
 whether the death of one stops the liability of the other 
 for subsequent advances. (In re Sherry, 25 Ch. D., at pp. 
 708, 705.) Where the contract is joint and several, the 
 death of one guarantor does not affect the liability of the 
 other for subsequent advances. (Beckett \. Addyman, 9 
 Q. B. D. 788.) It is, however, wiser to make it quite 
 clear in the guarantee that neither determination by nor the 
 death of one co-surety is to have any effect on the continuing 
 liability of the other for past or future advances. 
 
 Formal notice Again, provision should be made for formal notice of the 
 death of a surety before the liability of his estate for sub- 
 
 Kffect of sequent advances terminates. 
 leatli 
 
 The mere fact of the death probably does not put an 
 
 end to the guarantee, which is a contract. Bradbury \. 
 Morgan, I H. & C. 249, is a direct authority to this 
 effect. But later cases are less positive on the point. In 
 Harri** v. Fatccett, L. R., 8 Ch., at p. 869, Mellish, L.-L. 
 says : " As mere matter of law, although it is not necessary, 
 perhaps, positively to decide it, I am of opinion that this 
 guarantee was not determined by the death. If one \\< i- 
 to suppose a case, which might very easily happen, win iv 
 a bank holding such a guarantee was not aware of the 
 death, I should think it very hard upon the bank to hold 
 that a guarantee worded like this was terminated by tin- 
 death of tlu- guarantor." In Cmdtlinrt v. (7< ///,///.- 
 < v >. !'. l>. 1-J. liowen, J., implies that constructive noti< 
 the death would prevent the bank claiming further mlvi
 
 GUARANTEES. 301 
 
 against the estate of the deceased. In In re Silvester CHAP. XXI. 
 [1895] 1 Ch. 573, Homer, J., dissented from this view, but 
 did not touch the question of the effect of the death. Joyce, J., 
 agreed with Homer, J.,in In re Grace [1902] 1 Ch., at p. 739. 
 
 It seems admitted that the usual provision for notice of 
 determination by the guarantor applies only to his life, and 
 that the legal representatives after his death can always 
 determine as to future advances by reasonable notice. It 
 is, in the present state of the question, essential that the 
 provision for notice of determination should stipulate for 
 formal notice, not only by the guarantor, if given in his 
 lifetime, but also by his legal representatives, under ]bhe 
 name of executors or administrators, in case of his death 
 without having given notice. This would exclude any 
 question as to constructive notice, or acting on the footing 
 of the guarantee being determined. (See In re Silvester 
 [1895] 1 Ch. 573.) 
 
 The danger of releasing a surety by dealings with the Release of a 
 principal debtor or a co-surety must always be borne in s 
 mind in framing a guarantee, and provided against so far 
 as is deemed necessary. 
 
 The release of the principal discharges the sureties in By release 
 any case, because the debt is extinguished. (Commercial pn 
 Bank of Tasmania v. Jones [1893] A. C., at p. 316.) 
 And where the release is absolute, no language purporting 
 to reserve remedies against the sureties can have any 
 effect. On the other hand, a covenant or agreement 
 entered into between the creditor and the debtor not to sue 
 the latter, with a reservation of rights against the sureties, 
 will not release the latter. (Price v. Barker, 4 E. & B. 
 760.) And even though the document purport to be a 
 release, but it appears therefrom, as by reservation of the 
 right against sureties, that the real intention of the parties 
 was merely an agreement not to sue the debtor, it will be 
 interpreted as such agreement, and the sureties will not be 
 released. (Green v. Wynn, L. K., 4 Ch., pp. 204, 206 ;
 
 302 
 
 GUARANTEES. 
 
 CHAP. XXI. 
 
 Wkera 
 
 liability joint 
 
 ami --vcral. 
 
 When- 
 several only. 
 
 By Riving 
 
 > the 
 principal 
 
 In re Whitehouse, 87 Ch. D., at p. 694 ; Duck v. .U.///< // 
 [1892] 2 Q. B., at p. 514.) The novation of a debt by 
 accepting a new debtor in place of the old is a complete 
 n-!rasr of the latter, which releases the sureties and 
 precludes any such interpretation as the above. (Commercial 
 Bank of Tasmania v. Jones [1898] A. C. 818.) 
 
 Where the liability of the sureties is joint and several, 
 the release of one surety releases the others (Ward v. 
 Tin- Xatiimal Bank of Neic Zxilund, 8 A. C., at p. 764 ; 
 In n> E. W. A. [1901] 2 K. B. 642), even though a joint 
 and several judgment has previously been recovered against 
 them. (In re E. If. A., ulii an p.) 
 
 But where the liability of the co-sureties is several only, 
 not joint and several, the release of one does not discharge 
 the other, unless that other had a right to contribution in 
 equity, and that right is taken away or injuriously affected 
 by the release of the co-surety. (Ward v. National Bank 
 of New Zealand, 8 A. C., at pp. 765, 766.) Theoretically 
 a several surety has the same right of contribution as a 
 joint surety (Ward v. National Bank of New /.calami, 
 nli *i<]>., at p. 765 ; Whiting v. Burke, L. R, 6 Ch. 342), 
 but, if alleging release, the burden is on him to show not 
 only tin- right but the loss of or injury to it. 
 
 It is not very obvious why a bank should ever 
 desire to release one of several co-guarantors, and the 
 contingency seems hardly one to be contemplated in a 
 guarantee. 
 
 Giving time to the principal debtor releases the surety if 
 the time is given by a binding agreement arrived at for 
 good consideration, and th<> rights against the surety are 
 not reserved. (Per Lord Herschell in Home v. Jirndtonl 
 Jiankinu Co. [1894] A. C., pp. 590, 594.) The agreement 
 to give time need not be in writing to be binding ; it may 
 oven be implied. It usually arises where the principal is 
 1 for further security, the giving of which con- 
 stitutes consideration for the giving of time. (See o/vr, //,/.
 
 GUARANTEES. . 303 
 
 Gurney <& Co. v. Oriental Financial Corporation, L. R., 7 CHAP, xxi. 
 H. of L., at p. 361.) 
 
 So also the taking a bill from the principal debtor Taking bill 
 would constitute a giving of time, unless possibly it were j^} prm " 
 clearly shown that it was taken merely as collateral security, 
 not suspending any remedy on the debt. (See Croydon 
 Commercial Gas Co. v. Dickinson, 2 C. P. D. 46.) 
 
 There is some authority for holding that the surety will Question as 
 not be discharged if his remedies are not diminished or n ot being 
 affected. But, in view of the judgment in Ward v. National injured. 
 Bank of Neiv Zealand, 8 A. C. 755, it would not be safe 
 to rely on this. The Judicial Committee say at p. 763 : 
 " In pursuance of this principle, it has been held that a 
 surety is discharged by giving time to the principal, even 
 though the surety may not be injured and may even be 
 benefited thereby." The surety is the only judge whether a 
 variation of the contract without his consent is for his benefit 
 or detriment, except possibly in absolutely self-evident cases, 
 as, for instance, the creditor agreeing to take a cheque for 
 500 in full discharge of a debt of 1,000. 
 
 Against reliance on reservation of rights, there is the 
 opinion of Lord Eldon, who held in Boidtbee v. Stubbs, 
 18 V. '26, that a reservation of rights against the surety is 
 of no avail, if the contract for reserve prevents the surety's 
 remedy against the principal. 
 
 In order to avoid any such questions, the guarantee Keserving 
 should, in the plainest terms, secure to the creditor the " ^^ 
 right to give time to the principal debtor in any way he 
 may deem advisable. (Cf. Union Bank of Manchester v. 
 Beech, 3 H. & C. 672.) 
 
 Save as touching the question of giving time, the risk of Taking other 
 releasing a surety by taking securities for the debt affects 
 cases where the suretyship takes the form of a note executed 
 by principal and sureties rather than those where a regular 
 guarantee is given. In so far as the doctrine is based on 
 merger, it is not easy to see what can merge the guarantee,
 
 OUARANTKKS. 
 
 unless it were another one by the same parties under seal. 
 But it might be contended that other securities, though 
 taken primarily for the debt, were in substitution for the 
 security afforded by the guarantee, or, by merging or 
 suspending the debt, affected the liability of the surety. 
 
 There should always be a proviso that the guarantee is 
 to be in addition to, and without prejudice to, any securities 
 of any kind then or thereafter held or to be held by the 
 creditor, and full power should be reserved to take, vary, 
 exchange, or release such securities, renew bills, and so 
 forth, without prejudice to the guarantee. 
 
 The taking of additional security does not, unless it 
 involves the giving of time, of itself discharge the surety. 
 (Oni-finl, (i nnn-if <(' Co. v. Oriental Fiimm-inl ('orjiortitinit , 
 L. R., 7 H. of L., at p. 861.) 
 
 It has been deduced from the case of ]>nncan F<>.r ,i ( '<. 
 v. North and Soutit If'*//'x Hank, 6 A. C. 1, that where a 
 creditor holds securities deposited by the principal for his 
 debt he is bound to resort to them first, before he can have 
 recourse against the surety. (Walker on Banking, p. 244.) 
 
 It is true that in that case Lord Watson says, at p. 22, 
 that, seeing the real conflict of interest was bet\\<n 
 the acceptor and the indorsers, he thought it would be 
 inequitable to compel payment from the indorsers (who 
 stood in the place of sureties) until the securities given 
 by the acceptor (treating him as principal) to the bank had 
 been exhausted ; and he further says that he is satisfied 
 that it is a settled rule of equity that, in circumstances 
 analogous to those of that case, the creditor is bound to 
 take payment from that one of his debtors who is in- 
 primarily liable for his debt. 
 
 But in that case the facts were peculiar. The bank had 
 discounted bills for and indorsed by Duncan Fox & Co. 
 accepted by Radford & Co. Before the bills became due 
 Radford & Co. stopped payment. The bills were dis- 
 honoured, and Duncan Fox & Co. became liable to the
 
 GUARANTEES. 
 
 bank. The bank held securities from Radford & Co. to 
 cover advances and other liabilities, but this was unknown 
 to the indorsers. There was nothing due from Bad- 
 fords to the bank except the liabilities on these bills. 
 Duncan Fox & Co. having got to know of these securities, 
 applied to the bank either to realise them and apply the 
 proceeds in payment of the amounts due on the bills, or to 
 render an account of what was due from Radford & Co., and 
 on payment of that amount by Duncan Fox & Co. to transfer 
 to them securities of equal value out of those in their hands. 
 The securities being also claimed on behalf of Radfords' 
 unsecured creditors, the bank declined to do anything with- 
 out the direction of the court, assuming a perfectly neutral 
 attitude, and offering to do whatever the court ordered. 
 (6 A. C., pp. 8, 10.) There were respondents other than 
 the bank, namely, Radfords, and representatives of the 
 unsecured creditors. 
 
 The order originally made, which was ultimately restored 
 by the House of Lords, was that the bank should hand 
 over the securities to Duncan Fox & Co. on payment by 
 them of the balance remaining due to the bank. (See 
 11 Ch. D., at p. 91.) The real question was whether 
 Duncan Fox & Co., as indorsers, were entitled to the 
 same rights as sureties on paying the bills ; and, save for 
 the words of Lord Watson quoted above, there is nothing 
 in the judgments to support the proposition that a surety 
 can decline to pay till the creditor has exhausted securities 
 placed in his hands by the principal debtor. 
 
 On the contrary, the right to sue the indorser without Contrary 
 resorting to the securities is clearly recognised by Lord Sel- ?* ganrecas 
 borne, ubi sup., at pp. 10, 14, and by Lord Blackburn at pp. 
 18, 20. (See also Ex parte Brett, L. R., 6 Ch. 841, where 
 Hellish, L.J., lays down the broad rule that a surety has 
 no right or interest in securities until he has paid the debt.) 
 In the Scotch case of Ewart v. Latta, 4 M'Queen's H. of L. 
 Cases, at p. 987 (new ed., p. 829), Lord Westbury, C., says: 
 
 B. x
 
 GUARANTEES. 
 
 " Until the debtor has discharged himself of his liability, until 
 he has fulfilled his own contract, he has no right to dictate 
 any terms, to prescribe any duty, or to make any demand 
 on his creditor. The creditor must be left in possession of 
 the whole of the remedies which the original contract gave 
 him, and he must be left unfettered and at liberty to 
 exhaust those remedies, and he cannot be required to put 
 any limitation upon the course of legal action given him 
 by his contract by any person who is still his debtor, except 
 upon the terms of that debt being completely satisfied." 
 At p. 989 (new ed., 880) he says : " The same principle 
 prevails also in the law of England, that if a debt be due 
 from A. and B., and B. be the surety, B. has no right in 
 respect of that debt as against the creditor unless he 
 undertakes to pay and actually does discharge it." 
 
 It may therefore fairly be assumed that Lord Watson's 
 remarks above quoted were intended to be, or must be, 
 confined to cases where no claim or objection is raised by 
 the holder of the securities, and that no general proposi- 
 tion is to be deduced from them. 
 
 There appears, therefore, no absolute necessity for the 
 creditor to secure by the guarantee the right to resort to 
 the surety without first realising securities held from the 
 principal. 
 
 The surety is entitled to a set-off of debts due from the 
 creditor to the principal debtor arising out of the trans- 
 action on which his own liability is founded. (Becherraisc 
 v. Lewi*, L. R., 7 C. P. 872.) 
 
 This principle is not likely to operate in the case of a 
 guarantee to a bank. There would be no credit balance 
 on the guaranteed account, and credits on another account 
 are outside the question. (York City and County linnlchi;/ 
 Co. y. Bainbridge, 48 L. T. N. 8. 782.) 
 
 The right to close the account on the determination of 
 the guarantee and open a fresh one, to which monies paid 
 in by the customer can be carried, instead of being applied
 
 
 GUARANTEES. 307 
 
 in reduction of the guaranteed account, is established by CHAP. XXI. 
 In re Sherry, 25 C. D. 692, but the right is usually 
 reserved in the guarantee. 
 
 Where the account or transactions guaranteed is or are Provision for 
 those of a partnership, the guarantee should provide that it parties. ^ 
 shall not be affected by any change in the constitution of 
 that partnership. This is the more necessary because under 
 the Partnership Act, 1890, s. 18, any change in the con- 
 stitution of the firm for or to which the guarantee is given 
 revokes the guarantee as to future advances " in the 
 absence of agreement to the contrary," and the same Act 
 repeals sect. 4 of the Mercantile Law Amendment Act, 
 1856, which admitted " necessary implication from the 
 nature of the firm or otherwise." 
 
 In the case of a guarantee given to a private bank 
 provision must be made for the contingency of any change 
 in the constitution of the bank partnership. 
 
 Where the bank is a joint stock one or otherwise incor- Where bank 
 porated, the matter is different. The Partnership Act, 
 1890, only deals specifically with " firms," without defining 
 them. From the nature of the Act the term must, how- 
 ever, be taken as equivalent to " partnerships." But the 
 principle involved is a general one ; that change in the 
 identity of the person to or for whom the guarantee is given 
 revokes it as to future advances. 
 
 A bank, joint stock, or otherwise incorporated is not a 
 firm ; it is a corporation, a legal entity, apart from the 
 members composing it. Any internal changes produced by 
 transfer of shares, election of directors, and so on, do not 
 work any change in the corporation. So far there could be 
 nothing to affect the liability of the surety. And, as before 
 suggested with reference to securities for advances, the 
 opening of new branches is no change in constitution. The 
 corporation remains the same. Branches and the head 
 office constitute but one undertaking. (Prince v. Oriental 
 Bank Corporation, 3 A. C. 325.) 
 
 x 2
 
 GUARANTEES. 
 
 The absorption of another bank, a small into a large 
 concern, whereby the identity of the small one is obliterated, 
 would, as regards guarantees given to the absorbing bank, 
 stand on the same footing as the opening of a new branch. 
 (Capital and Counties Bank v. Bank of England, 61 L. T. 
 (N.S.) 516 ; Prescott, Dimsdale < Co. v. The Hank of 
 Enaland [1894] 1 Q. B. 851.) No mere arrangement 
 between the banks could, however, keep alive guarantees 
 given to the absorbed one. 
 
 Amalgamation, as distinct from absorption, stands on a 
 different footing. " An amalgamation between two banks 
 need not necessarily cause ' the business thereafter carried 
 on to be the same as was theretofore carried on by either ; 
 it must depend upon the nature and character of the busi- 
 nesses amalgamated and how the amalgamated business 
 was subsequently carried on. In each case it must be a 
 question of fact." (Per A. L. Smith, L.J., in Prescott, 
 Dimtdale do Co. [1894] 1 Q. B., at p. 865.) 
 
 And it must be remembered that, with regard to 
 guarantees, it is not so much the identity of the business 
 that is the test, as the identity of the persons or the legal 
 entity carrying it on. If on amalgamation the names of 
 both banks are combined and preserved, and the board of 
 directors comprises former directors of each of the original 
 banks, the identity of the one to which the guarantee was 
 given becomes difficult to trace. 
 
 Lord Lindley appears to be of opinion that, in the 
 absence of special provisions, amalgamation of two com- 
 panies would release sureties on guarantees to either 
 separately. (See Lindley on Partnership, 6th ed., p. 127; 
 Lindley on Company Law, 6th ed., p. 369, note (<).) 
 
 There are two cases where a bond given by way of 
 guarantee to a railway company was only held not to be 
 discharged, as to the future, by the amalgamation of the 
 company with another, on the ground that the Act of 
 Parliament effecting such amalgamation contained special
 
 GUARANTEES. 
 
 clauses preserving such rights. (London, Brighton, and 
 South Coast Railway v. Goodwin, 3 Ex. 320 ; Eastern Union 
 Railway Co. v. Cochrane, 9 Ex. 197.) The security in Provision for 
 both cases was for the faithful service of an employe, but the 
 principle is equally applicable to a guarantee for advances. 
 
 The guarantee should, therefore, provide that it is not 
 to be affected by any change in the constitution of the 
 bank, or by its absorption of or by, or its amalgamation 
 with any other bank or banks. 
 
 If the account guaranteed is that of a company, possible 
 similar changes in its constitution should be borne in mind. 
 
 On payment, the surety, if his payment discharges all Surety's righl 
 obligations of the principal to the creditor, is entitled to O n payment, 
 all securities held by the creditor, whether they were held 
 at the time the surety became bound or have been subse- 
 quently acquired, and whether the surety knew of them or 
 not. (Duncan Fox d- Co. v. North and South Wales Bank, 
 6 A. C. 1.) 
 
 The banker, if absolutely recouped by the surety, would 
 have no further need of the securities. 
 
 But cases may exist where security is held for a debt, for Where part oi 
 part only of which the surety is liable. On discharging 
 that liability, the surety is entitled to a proportionate part 
 of the security. (Goodwin v. Gray, 22 W. R. 312.) 
 
 The apportionment of the security might be difficult in 
 some instances. The surety would claim something he 
 could realise in order to reimburse himself, and the security 
 might not be divisible. In Goodwin v. Gray, ubi sup., the 
 surety appears to have been satisfied with a proportionate 
 share of the dividends on the debtor's shares in the bank 
 represented by the defendant, which constituted the security, 
 but it is conceived that he was also entitled to a share in 
 or at least a charge on the shares themselves. 
 
 If the surety is surety for the whole debt, but his 
 liability is limited, it would appear from In re Sass [1896J 
 2 Q. B. 12, that he has no claim against the securities or
 
 10 GUARANTEES. 
 
 MAP. XXI. any part of them until the whole debt is satisfied in full. 
 As before stated, this is the form of liability which should 
 be exacted from the guarantor wherever possible, as being 
 the more advantageous for the bank. 
 
 The addition of a special clause to the etivct that all 
 securities held against the debtor's liability wore to stand 
 to secure full payment of the ultimate balance due to 1 1 it- 
 bank would remove any doubt in either case, ^'f. }l\m<ih 
 v. H'lvii, 11 W. R. 244.) The clause might well be worked 
 in with the proviso as to the bank being entitled to receive 
 dividends in bankruptcy and other payments without 
 prejudice to the liability of the surety for the ultimate balance 
 of the debt, which, as before stated, ante, p. 297, was found 
 efficacious in In re Sots [1896] 2 Q. B. 12. A proviso or 
 clause to that effect should never be omitted. 
 
 General words might no doubt be inserted in a guarantee 
 f which, if the guarantor signed it, would make him contract 
 himself out of all the rights of a surety, so far as the creditor 
 was concerned. But it would be doubtful policy to resort to 
 this. A careful guarantor would decline so to hind him- 
 
 t ; a careless one would afterwards contend he was not 
 cognisant of what he was committing himself to. 
 
 The acts or defaults which would release tit 
 outside those generally provided for in a well - drawn 
 guarantee, are such as a bank can readily avoid, if it bear 
 in mind the salutary rule that there must be no variation 
 of the contract, no dealing with the principal, or a co-surety, 
 or with the securities for the debt, behind the back of the 
 surety, or without his consent, either given by anticipation 
 in the guarantee, or prior to such dealing ; and that, save in 
 .tely self-evident cases, the Mirety is the only judge 
 whether such dealing or variation is or is not for his 
 t. (See ]\\ir<l v. \<iti,i<d Hank of Xeir /.xdund, 
 C., at pp. 763, 764.) 
 
 The surety who has paid his liability has a theoretical 
 to call on the creditor to sue the debtor. If the
 
 GUARANTEES. 31 
 
 creditor refuse, the surety may, on indemnifying the CHAP. XXI 
 creditor, sue in his name. (See Mercantile Law Amend- 
 ment Act, 1856, s. 5.) But the surety can just as well 
 himself sue the debtor on the basis of indemnity or money 
 paid for him, so that the other remedy is not usually 
 necessary. 
 
 The existence of a guarantee does not of itself constrain No necessity 
 the banker to any particular system of appropriation of 
 payments in, so long as he deals with the accounts in the tion. 
 ordinary course of business. In the absence of express 
 agreement, a surety has no right to control the right of 
 appropriation possessed by the person making the payments, 
 or, if he make none, that which is in the payee. (Williams v. 
 Rauiinson, 3 Bing. 76 ; In re Sherry, 25 C. D. 692.) 
 Payments in may be appropriated to a pre-existing debt of 
 which the surety has no knowledge (Williams v. Rawlin- 
 son, ubi sup.), or to a new account opened on the close 
 of the guaranteed one. (In re Sherry, ubi sup.) 
 
 Even where there is an unbroken account circumstances Where 
 may exist which rebut the presumption of the appropria- 
 tion of the earlier items on one side to the earlier on the 
 other. (See Cory Bros. v. Owners of the " Mecca " [1897] 
 A. C., at p. 295.) But such circumstances would have to 
 be exceptional and indicative of the surety's intention that 
 his guarantee, though not strictly a continuing one, should 
 extend for a specified period or to cover a particular class 
 of transactions, which object would be inconsistent with 
 the extinction of his liability by the ordinary system of 
 appropriation. (See City Discount Co. v. M'Lean, L. R., 9 
 C. P. 698.) 
 
 Where the guarantee is a continuing one to secure an 
 ultimate balance, the question of appropriation does not 
 arise, except in the sense suggested by Cotton, L.J., in 
 In re Sherry, ubi sup., at p. 706, namely, that credits 
 could not be carried to a new account during the cur- 
 rency of the guarantee so as to deprive the surety of
 
 GUARANTEES. 
 
 the benefit of them in estimating the ultimate balance 
 for which he was liable. (Cf. Mutton v. Peat [1900] 2 
 Q. B. 79.) 
 
 The remedies of the surety who has to pay against 
 the principal debtor or the co-sureties do not concern the 
 banker. 
 
 Questions have arisen as to the effect of the Statute of 
 Limitations on a continuing guarantee. 
 
 In Hartland v. Jukes, 82 L. J. Ex. 162, it was con- 
 tended that the six years began to run in favour of the 
 guarantor as soon as the principal debtor became indebted 
 to the bank, inasmuch as there was then a right oi action 
 against the guarantor ; but Pollock, C.B., said : " It was 
 contended before us that the statute began to run from 
 the 81st of December, 1855, by reason of the debt of 
 J6179 Is. lid. then due to the bank ; but no balance was 
 then struck, and certainly no claim was made by the bank 
 upon the defendant's testator (the guarantor) in respect of 
 that debt ; and we think the mere existence of the debt, 
 unaccompanied by any claim from the bank, would not 
 have the effect of making the statute run from that 
 date." 
 
 On the other hand, in Parr's ]innl;in<i ('OHIJHIIII/ \. ) "///* 
 [1898] 2 Q. B. 460, the Court of Appeal appear to have 
 taken the opposite view. It is true that in that case the 
 account, so far as drawing on it went, had been prartinillv 
 closed more than six years prior to the commencement of 
 the action, but the court treated the statute as commencing 
 to run in respect of each item on the debit side from the 
 date it came into the account. Vaughan-Williams, L..I., 
 in especial, said that the right of action on each itrin 
 of the account arose as soon as that item l><<:imt .in. 
 and was not paid, and the statute ran from that date in 
 each case, in favour of both principal and surety. 
 
 It is submitted that this latter view is altogether inooi 
 tent with the intention and effect of a continuing guarantee.
 
 GUAEANTEES. 313 
 
 The object of such guarantee is the extension of a real CHAP. XXI. 
 
 working credit to the principal debtor. There could be no 
 
 right of action against the guarantor unless there was also 
 
 one against the principal debtor, and the guarantee would 
 
 be meaningless if the creditor could demand and enforce 
 
 repayment of every overdraft within twenty-four hours or 
 
 less from the time it was granted. 
 
 Lord Herschell said in Rouse v. Bradford Banking 
 Co. [1894] A. C., at p. 596, " It is obvious that neither 
 party would have it in contemplation that when the bank 
 had granted an overdraft it would immediately, without 
 notice, proceed to sue for the money ; and the truth is that, 
 whether there were any legal obligation to abstain from so 
 doing or not, it is obvious that, having regard to the 
 course of business, if a bank which had agreed to give an 
 overdraft were to act in such a fashion, the results to its 
 business would be of the most serious nature." The case 
 is stronger where a continuing guarantee is taken. 
 
 Where money is payable at a fixed date, and the payment 
 is secured by guarantee, both principal and surety become 
 liable on failure by the former to pay at the specified time, 
 because it is the surety's business to see that his principal 
 performs his obligation ; but in the case of agreed advances 
 it is difficult to see what default is attributable to the 
 principal at the date of the advance, so as to render the 
 surety liable 'at once. 
 
 There is, no doubt, the difficulty of saying, in the absence 
 of express stipulation, how long the advance is to be out- 
 standing before it is deemed to be repayable ; and it must 
 be admitted that the measure above suggested, namely, 
 a practical working credit, is vague and unsuited for general 
 application. But the alternative view is open to equal, 
 if not greater, objections. 
 
 Practically few guarantees are outstanding for six years, 
 and the difficulty might be met by having a settling up 
 and taking a fresh guarantee before the expiration of that
 
 314 GUARANTEES. 
 
 CHAP. XXI. period. The statute would also be precluded from beginning 
 to run if the liability of the surety were specified to be to 
 pay, say, within two days after demand made. It must 
 be remembered that payments on account of principal or 
 interest by the principal debtor do not keep alive the 
 liability of the surety, not being made on his behalf.
 
 INDEX. 
 
 Note, 
 
 Except where otherwise mentioned, the sections referred to in tlvis 
 Index are those of the Bills of Exchange Act, 1882. 
 
 ABSORPTION, 
 
 amalgamation, as distinct from, 270. And see COMPANIES. 
 guarantee given to corporation, how affected by, 307. 
 small concerns by large, how affecting securities for advances, 
 270. And see SECUEITIES. 
 
 ACCEPTANCE, 
 
 bills of lading, undertaking to forward against, rights of banker 
 where, 266. 
 
 cargoes, position of acceptor where acceptance against, 266 sqq. 
 
 documents of title as cover for, 264 sq. 
 
 goods or securities pledged to cover, pledger's position as to 
 surplus on realisation, 278. 
 
 payable on delivery of documents, 268, is conditional accept- 
 ance, 269, must clearly specify condition, 269. 
 
 ACCEPTOR, 
 
 banker as. See BANKEB. 
 
 notice to holder of bill of lading that it must be delivered to, on 
 
 acceptance, effect of, 268 ; on failure of acceptor, 268. 
 pledgee of documents of title to goods, rights of, as, 274 sq. 
 
 ACCOUNT, 
 
 " account payee." See COLLECTING BANKEE, CEOSSED CHEQUES, 
 
 PAYING BANKEE. 
 closing and opening fresh one on determination of guarantee, 
 
 306. 
 
 combining accounts, 3, 76, 241. 
 stated. See STATED ACCOUNT. 
 
 "ACCOUNT PAYEE." See COLLECTING BANKEE, CEOSSED 
 CHEQUES, PAYING BANKEE. 
 
 ADMINISTRATOR, 
 
 notice by, on death of guarantor, 301. 
 of guarantor, bound, 296.
 
 316 INDEX. 
 
 ADOPTION, 
 
 of cheque, 144. 
 
 based on relation of banker and customer, 144. 
 of forged cheques and bills, 147, 149 sqq. 
 of forged documents by customer, 127 sqq., 149 sqq. 
 
 actual knowledge requisite in England, 127 sq. 
 
 doubtfully so in America, 126, 128, 150 sq. 
 
 ADVANCES, 
 
 change in character of parties holding securities f or, .1- fleet of 
 
 269. And see SECURITIES. 
 
 future, method of, to be formulated in guarantee, 298. 
 determination of guarantee as to, 299. 
 liability of joint and several guarantors for, whether affected 
 
 by determination of liability of co-guarantor, 300. 
 death of one surety when guarantee joint, effect of, 300. 
 when guarantee joint and several, 300 (and see 
 
 GUARANTORS). 
 whether mere fact of death of surety determines liability 
 
 of estate for, 300 sq. 
 securities for. See that Title. 
 
 subsequent, on mortgage, after notice of second charge, 289 sq. 
 after notice of conveyance of reversion, 290. 
 position of mortgagee who has undertaken to make 
 advances up to fixed amount, 290 sq. 
 
 AGENT, 
 
 authorised in indorsing crossed cheque and for purpose for 
 
 which indorsement used, and misappropriating proceeds, 
 
 position where, 195. 
 
 authority of, not necessary to inquire as to, 246. 
 banker's position as, 66, 152. 
 broad rule in dealing with known, 247 ; rule limited to fully 
 
 negotiable instruments, 248. 
 collecting banker must only act as, in receiving payment for 
 
 customer under sect. 82. .200, 203. 
 conversion, liable for, 133, 140. 
 
 delegation of duty by customer, 147 sq. And see PASS-BOOK. 
 mercantile, 255. And sec that Title. 
 mortgagor constituted as, by owner of legal estate, fraud or 
 
 misconduct of, 9861 
 principal and, liability of, alternative, 296. 
 
 judgment against one, conclusive election, 296. See also 
 
 J'ltlNCII'AL AND AOENT. 
 
 protection of, against action for money had and received, 140, 
 
 U9. 
 
 apparently not affected by negligence, 141. 
 re-delivery of blank transfer by, when effectual, 292.
 
 INDEX. 317 
 
 AGENT contd* 
 
 securities taken from as cover, 244 sq. 
 mistaken impression as to constructive notice, 244 ; corrected 
 
 by later case, 245, 246. 
 And see COLLATERAL SECURITY. 
 title deeds, dealing wrongfully with, 254. 
 
 AMALGAMATION, 
 
 absorption as distinct from, 270. And see Co MP ANTES. 
 contingency of, to be provided for in guarantees, 294, 308. 
 guarantee given to corporation, frow affected by, 308. 
 of two or more concerns, how affecting securities for advances, 
 270. And see SECURITIES. 
 
 APPOETIONMENT, 
 
 of security, where surety liable for part only of debt, 309, and 
 that part .paid, 309. And see GUARANTOR. . 
 
 APPROPRIATION OF PAYMENTS, 2. 
 
 rule as to, where trust money wrongfully paid in, 2. 
 where account guaranteed, 3, 311. 
 
 ASSIGNMENT, 
 
 covenant against, deposit of lease as security no breach of, 281. 
 legal mortgage by, position of mortgagee where, 280. 
 
 BAILEE, 
 
 banker receiving valuables for safe custody, whether gratuitous 
 
 or for reward, 178. 
 
 care, amount of, required of gratuitous, 180. 
 conversion by. See CONVERSION. 
 for reward, liability of, 180. 
 gratuitous, liability of, 180. 
 involuntary, 184. 
 valuables for safe custody. See that Title. 
 
 BANK, 
 
 corporate, guarantee given to, 307. 
 
 absorption of other body, effect of, 307. 
 amalgamation, effect of, 308. 
 draft drawn by branch on head office, 33. 
 head office and branches, one body, 25, 28, 33, 52, 54, 307. 
 
 not for purpose of giving notice of dishonour, 229. 
 joint stock or otherwise incorporated, not a firm, but a corpora- 
 tion, 307. 
 
 payment between head office and branch, 88. 
 private : provision for change in constitution of, where holding 
 guarantee, 307. 
 
 BANK CHARTER ACTS, 1844, &c., 21.
 
 818 INDEX. 
 
 BANKER, 
 
 bill of lading, undertaking to forward against acceptance, rights 
 acquired by and position of, where, 266. And see BILLS OF 
 LADING. 
 notice to holder that it must be delivered to acceptor on 
 
 acceptance, effect of, 968. 
 
 " bound to know his customer's signature," explained, 165 sq. 
 charges for interest and commission 5, 131 ; interest to be 
 
 provided for in guarantee, 299. 
 collateral security. See that Title. 
 combining accounts, 3, 76, 241. 
 
 contractual relation with customer : possibility of crime con- 
 templated, 147. 
 
 conversion, when liable for, 133 sq. And see CONVERSION. 
 credit balance, right to retain against debt due from customer, 
 
 237. 
 customer, relation to, 1, 144 sqq. 
 
 change in, where provided for in guarantee, 299. And see 
 
 RESTS. 
 
 delivery of documents, acceptance payable on, 268 ; is con- 
 ditional acceptance, 269 ; must clearly specify condition, 269. 
 dividends in bankruptcy, effect of receiving on surety's liability, 
 
 310. 
 
 documents of title to goods, degree of property acquired by 
 banker by possession of, 266. And see DOCUMENTS OF TITLE 
 TO GOODS. 
 
 draft or order drawn on, 25 sqq. 
 
 equitable mortgage to, 281 ; position of, where, 281. And 
 see EQUITABLE MORTGAGE, LAND REGISTRY ACTS, and LAND 
 TRANSFER ACTS. 
 further advances by : 
 
 after notice of second charge, 289 sq. 
 
 after notice of conveyance of reversion, 290. 
 
 position, where undertaking to make up to fixed amount, 
 
 290 sq. 
 guarantees, position as regards, 294 sqq. 
 
 what he should have inserted in, 294 sqq. And see that 
 
 TitU, and CREDITOR, and GUARANTORS. 
 
 land certificate should be required by, in case of equitable 
 mortgage where land registered under Land Transfer 
 Act, 1897.. 286. 
 
 notice of deposit of, rules as to, 286; and effect of, 286. 
 remedy of banker, 287. 
 
 letters of credit from, 265. And see BILLS OF LADING. 
 lien of, 201 aqq., 208, 213, 238 sq. And see that Title. 
 
 affected by dealings inconsistent therewith, 270. And 
 
 M SECURITIES. 
 marked cheque : binding as between hanker and, 62 sqq.
 
 INDEX. 319 
 
 BANKER contd. 
 
 marked cheque : binding as between banker and contd. 
 
 position where cheque marked at instance of customer, 
 59 sqq., 76 ; at instance of holder, 64 sqq. Sec also 
 MARKING CHEQUES. 
 meaning of term, in Bills of Exchange Act and in Stamp Act, 
 
 1853.. 27. 
 mercantile agent pledging for pre-existing debt, position of 
 
 banker where, 260 sq. And see MERCANTILE AGENT. 
 mortgage, taking of, when inconsistent with relation of banker 
 
 and customer, 5, 279. 
 
 to, of leaseholds, disadvantages of, 280 sq. And see 
 MORTGAGE. 
 negotiating bills or notes, lien or pledge affected by, 270. 
 
 And see SECURITIES. 
 
 no particular form of accounts required because of guarantee, 311 
 parting with possession of pledge, effect of, 271 ; need for 
 
 circumspection in, 271. 
 pledge. See that Title. 
 protection against forgeries, 143. And see FORGERY. 
 
 in paying bearer cheques, 81 sqq. See CHEQUES AND 
 
 PAYING BANKER. 
 crossed cheques, 101 sqq. And see that 
 
 Title and PAYING BANKER. 
 drafts or orders drawn on him, 25. 
 order cheques, 85 sqq. And see that Title 
 
 and PAYING BANKER. 
 under Bills of Exchange Act, s. 60. .36. 
 
 Bevenue Act, 1883, s. 17. .32. 
 where collecting. See COLLECTING BANKER. 
 realisation, rights of, as to, where holding documents of title to 
 goods as cover against acceptances, 274 sq. And see PLEDGEE. 
 statutory protection, limits of, extended by Gordon Case, 27 sqq. 
 and statutory risks, 24, 27, 55, 99, 200, 224. 
 securities for advances. See that Title. 
 
 taking bills, &c. (a) by way of pledge, (b) as absolute trans- 
 feree, distinction between as affecting surplus on realisation, 
 277. 
 
 valuables for safe custody, banker's position where goods so 
 entrusted, 178 sqq. And see VALUABLES FOR SAFE CUSTODY. 
 See also CURRENT ACCOUNT, DEPOSIT ACCOUNT, MINOR, 
 PASS-BOOK, TRUST ACCOUNT, &c. 
 
 BANKERS' BOOKS EVIDENCE ACT, 
 
 ostensible heading of account when disregarded, 6. 
 
 BANKRUPTCY, 
 
 contingency of, to be provided for in guarantee, 294. 
 dividends in, bank receiving, effect of on surety's liability, 310.
 
 320 INDEX. 
 
 BANKRU PTC Y <ontd. 
 
 of customer, effect of, 7, 78, 266. 
 title of trustee in customer's, 7. 
 
 undertaking of customer to forward bills of lading against 
 acceptance, position of customer's trustee in, where, 266. 
 
 BEAKER, 
 denned, 81. 
 instruments payable to, estoppel of company issuing, 254. 
 
 BILLS, 
 
 cheques. See that Title. 
 
 conversion of, 133. And see CONVERSION. 
 
 deposited as collateral security. See COLLATERAL SECURITY. 
 
 domiciled with banker, when customer estopped as to, 149 ; 
 
 adoption of forged, 149. 
 
 drawn against cargoes, 266 sqq. And see CARGOES. 
 forged indorsement on domiciled, 151 sqq. 
 holder. See that Title. 
 
 realisation of securities, 272. And see that Title. 
 test as to passing of property in, 136 sq. 
 " the whole bill and nothing but the bill," 172. 
 
 And passim. 
 
 BILLS OP EXCHANGE ACT, passim. 
 
 BILLS OF EXCHANGE ACT AMENDMENT BILL, 1903.. 188. 
 
 BILLS OF LADING, 
 
 acceptance payable on delivery of, 268. 
 conditional acceptance, 269. 
 must clearly specify condition, 269. 
 Act of 1855.. 256, 264. 
 as cover for acceptances, 264 sq. 
 
 when and how realisable by pledgee, 274 sq. 
 capacity of, to defeat unpaid vendor's right of stoppage in 
 
 transitu, 257, 264. 
 documents of title. See that Title. 
 
 included in Factors Act, 1889, and Sale of Goods Act, 1893. .258. 
 indorsee of, liability of, for freight, Ac., under Bills of Lading 
 
 Act, 1865.. 264. 
 notice to holder of, that they must be delivered to acceptors on 
 
 acceptance, effect of, 268. 
 negotiable, whether, 255 sq. 
 only represent the goods, 256. 
 parts, signed in several, 264, 269. 
 inconveniences of, 269. 
 judicial opinion on, 269. 
 pledge M well as transfer of, recognised by Sale of Goods Act, 
 
 1898.. 964. 
 pre-exiHting debt good consideration for transfer of, 264.
 
 INDEX. 821 
 
 BILLS OF LADING contd. 
 
 undertaking to forward against acceptance, rights acquired by 
 banker, where, 266. 
 
 BONDS, 
 
 payable to bearer, 244. 
 
 BORROWER, 
 
 change in character of, as affecting securities deposited for 
 advances, 270. And see SECURITIES. 
 
 BRANCH BANK. See BANK. 
 
 CARGOES, 
 
 bills drawn against, 266 sq. 
 
 create no charge in favour of acceptor, 267, or holder, 267. 
 acceptor not trustee for holder, 267. 
 drawer may assign rights, 267. 
 
 role in Ex parte Waring (268) no exception to the principle, 
 268. 
 
 CARRIERS, 
 
 goods entrusted to, liabilities of, compared with those of 
 
 bankers, 183 sqq. 
 insurer, his liability as, 185. 
 loss of goods by robbery or theft from, 183 sqq. 
 misdelivery by, 183 sqq. 
 position of, where involuntary bailees, 184. 
 
 CAUTION, 
 
 lodgment of, under Land Transfer Acb, 1875, effect of, 286. 
 
 CESTUI QUE TRUST, 
 
 position of, where title deeds left with and pledged by trustee, 
 288. 
 
 CHANGE IN CHARACTER OP PARTIES, 
 affecting deposit' of securities, 269 sqq. 
 
 contingency of, to be provided for in guarantees, 294, 307. 
 
 CHARGE, 
 
 banking charges to be provided for in guarantee, 299. 
 
 forms of, under Land Transfer Acts, 287. And see that Title. 
 
 CHEQUES, 
 a bill, 24. 
 
 banker's obligation to pay, if in legal form, 68 sqq. 
 contractual element in, effect of, 135 sq., and necessity of, 
 
 136 sq.. 
 
 conversion of, 133, 188. And see CONVERSION. 
 corporation, power of, to issue, 12. 
 B. Y
 
 822 INDEX. 
 
 CHEQUES cotitd. 
 
 crediting as cash, 204. And see COLLECTING BANKEH. 
 crossing. See CROSSED CHEQUES. 
 
 by unauthorised person, 101 sqq. 
 customer, duty of, with regard to, 67 sq., 145. 
 
 not necessarily drawn by a, 15, 24 sqq. 
 mandate of, affected by crossing, 104. 
 definition of, 24. 
 
 delegation of drawing, 147 sq. And see PASS-BOOK. 
 distinction between, and draft or order drawn on a banker, 
 
 Miff. 
 distinction between, and documents within Revenue Act, 1883, 
 
 s. 17.. 81. 
 drawer's signature forged, banker cannot debit customer, where, 
 
 9Sf. 
 
 drawn by minor, 18 sqq. 
 drawn on back of any document, 22. 
 duration of liability on, 72 sq. 
 
 fictitious or non-existent person as payee. See that Title. 
 forged, adoption of, 149 sqq. And see ADOPTION. 
 
 question of constructive knowledge, 126 *</</. 
 forged indorsement. See tliat Title. 
 form of not-transferable cheque, 40. 
 form " Pay order," 85, 40. 
 
 " Pay or order," 41 sq. 
 
 " Pay A. B.," 40. 
 
 " Petty cash or order," question as to, 89. 
 " Self or order," 40. 
 
 " Wages or order," question as to, 89, 69. 
 fraudulent raising of, 143 sq., 145 sqq., 148 sqq. 
 " fresh disposition " of, 18ft 
 generally, 24 sqq. 
 
 holder supplementing balance to meet. 72 sq. 
 indorsed on deposit receipt, effect of, 21 sqq. See also DEPOSIT 
 
 KKCEIPT. 
 
 indorsement of, defined, 36. 
 
 marking of, 59 sqq., 76. See MARKING CHEQUES. 
 must be an order, 33. 
 
 drawn with due care, 67 sq. 
 payable on demand, 82, 34. 
 unconditional, 30, 32. 
 not be payable out of particular fund, 32. 
 no payment by banker of part of, 72. 
 not an assignment of any specific funds, 60, 71. 
 not condition precedent to withdrawal of money, 1. 
 notice of dishonour of, 42, 43. 
 
 where excused, 48. 
 order in which to be paid, 70.
 
 INDEX. 323 
 
 CHEQUES contd. 
 
 paid on forged indorsement contrary o ordinary course of 
 
 business, 83. 
 
 particular fund, referring to, 22. 
 parties to, 33, 35. 
 
 pass-book as inducing payment of, 121. And see PASS-BOOK. 
 passing of property in, tests as to, 136 sq. 
 payee where impersonal, 39. 
 
 paying bearer cheques, 81 sqq. ; bearer cheque, discharge of, 81. 
 crossed cheques. See that Title. 
 order cheques. See that Title. 
 payment of bearer cheque to thief, 81 ; paid contrary to 
 
 crossing, 83. 
 
 post-dated cheques. See that Title. 
 principle of paying order cheques, 85. 
 realisation of securities, 272. And see that Title. 
 requisites in form of, 30. 
 
 returned, right of banker to debit customer with, though 
 credited as cash, 211 sq. ; on what ground, 211 sq. 
 with pass-book. See PASS-BOOK. 
 signature of payee presenting order cheque, question of right to 
 
 and effect of, 36, 70 sq., 91. 
 stale or out of date, 72 sq. 
 stamping of unstamped, fallacy as to, 43. 
 
 provisions of Stamp Act, 1891, as to, 43. 
 transfer, prohibition of, 40. 
 
 true owner suing for conversion of, 188 (and see CONVERSION) ; 
 for money had and received on, 188 sq. And see MONEY 
 HAD AND RECEIVED. 
 when available for drawing against, 79 sq. 
 
 credited as cash before cleared, 79. 
 
 See also BANKER, CONVERSION, HOLDER, MONEY HAD AND 
 RECEIVED, TITLE. 
 
 CLEARING HOUSE, 
 
 presentment through, effect of, 227. And see COLLECTING 
 
 BANKER. 
 rules of country clearing, 231. And see PAYING BANKER. 
 
 CLIENT, 
 
 position of, where equitable mortgagee, and title deeds left with 
 and pledged by solicitor, 288. 
 
 CO-GUARANTORS. See GUARANTORS. 
 
 COLLATERAL SECURITY, 241 sqq. 
 
 agent, when not necessary to inquire as to authority of, 246. 
 bill or note deposited as, does not suspend remedy for debt or 
 overdraft, 242. 
 
 Y 2
 
 824 INDEX. 
 
 COLLATERAL SECURITY contd. 
 
 broad rule in dealing with known agent, 247. 
 
 rule limited to fully negotiable instruments, 248. And see 
 
 NEGOTIABILITY. 
 
 documents of title as cover for acceptances, 264 sq. 
 fully negotiable securities otber than bills or notes as, 244. 
 lien distinguished from, 241 sq. 
 ostensible owner, pledge by, 248. 
 pledge, of the nature of, 242. And sec PLEDGE. 
 promissory note payable on demand as, 243. 
 
 when must be presented to charge indorser, 243. 
 satisfaction of debt not payment of bill or note deposited as, 242. 
 securities taken from agent as, 244 sq. 
 
 mistaken impression as to constructive notice, 244 sq. 
 
 corrected by later case, 245, 24G. 
 taking of, to be provided for in guarantees, 294, 304. 
 
 COLLECTING BANKER, 188 sqq. 
 
 absence or defect of title in customer, position of, where, 224 sq. 
 suggested effect on, where cheque obtained by larceny, 224. 
 probably no ground for suggestion, 224 sq. 
 " account payee," effect on, of the crossing, 197. 
 agent, protection of, as, 141. 
 theoretically an, 144. 
 as holder for value, 201 sqq., 203, 207. 
 
 cannot at same time hold as agent, 201, 207. 
 cheque crossed by one bank to another for collection, 52, 221. 
 crossed by unauthorised person, position of, where, 102, 
 
 111, 222. 
 
 must be crossed generally or specially to, for protection 
 of sect. 82..221 s</. 
 
 must be so crossed when reaches banker, 221. 
 crossing by banker himself ineffectual, 54, 221. 
 collecting and discounting, 209, 210. 
 collection where overdraft, 201, 207. 
 
 conversion, when liable for, 205 sq., 214. And see CONVERSION. 
 credit held conditional in Bavins, jun., and Sims Case, 209. 
 crediting as cash, 204. 
 
 of cheques, before clearing or receiving payment, destroys 
 
 protection of sect. 82. .204 sqq., 210, 213, 240. 
 divergence in practice of banks, 214. 
 proposed way out of difficulty, 215 sq. 
 crossing by, 52 sqq. 
 
 specially to himself, 54 sqq. 
 
 no protection under sect. 82, acquired by, 54 sqq. 
 effect, if any, of such crossing, 56 sqq. 
 his position in such case summarised, 58. 
 to another bank for collection, 53 sqq
 
 INDEX. 825 
 
 COLLECTING BANKER cotitd. 
 
 customer, account of, whether banker affected by state of, when 
 
 large cheque paid in, 196. 
 payment must be received for, under sect. 82.. 216. 
 
 And see CUSTOMER. 
 
 whether first transaction protected, 218 sq. 
 right of, to draw against cheque credited as cash, 79, 
 
 210, 211, 216. 
 
 divided duty of, towards true owner and customer, 192. 
 drawer, when discharged by non-presentment, 73, 226. 
 duty of, to examine indorsement of order cheque, 193. 
 duty of, to present bills and cheques, 225. 
 
 time for presenting bills on demand, 226 ; cheques, 226. 
 fate of cheque, inquiry as to, effect of, 196. 
 forgeries, protection against, 143. And see POBGEBY. 
 Gordon Case, 188 sqq. : 
 decisions prior to, 206 sqq. 
 
 " finality of judgment " in, 188. 
 remedial legislation, failure to pass in 1903. .188. 
 effect of, 205. 
 
 affects bearer cheques if crossed " not negotiable," 205. 
 misconception as to latter point, 206. 
 special facts of, 212, 213. 
 benefit and loss to bankers by decision, 213. 
 course to be adopted in view of, 214, 215. 
 identification by means of additional indorsement, considered, 
 
 212 sq. 
 lien, question of, where cheque for collection, 201 sqq., 208, 
 
 213. 
 money had and received, when liable for, 205 sq., 214. And see 
 
 that Title. 
 must act in good faith and without negligence under sect. 82. . 
 
 191. 
 
 must only act as agent or conduit-pipe, 200, 203. 
 must only receive payment for a customer, 199. 
 negligence of, under sect. 82 defined, 191, 197. 
 the creation of statute, 192 . 
 dealt with, 191 sqq. 
 
 notice of dishonour, duty to give, 227 sqq. ; of cheques, 43. 
 to whom must be given, 228. 
 
 drawer's right to, 42, 228 ; when notice to him excused, 228. 
 within what time must be given, 228 sq., 230 ; as between 
 branch banks or branch and head office, 229. And see 
 NOTICE OF DISHONOUR. 
 how to be given, 230 ; by 
 
 (a) post, 230. 
 
 (b) telegram, 230. 
 
 (c) telephone ; whether this good, 230.
 
 326 INDEX. 
 
 COLLECTING BANKER contd. 
 notice of dishonour, etc. contd. 
 
 returning dishonoured bill or cheque to customer, 229 ; 
 whether notice of dishonour unless customer has indorsed, 
 229. 
 " not negotiable " crossing, effect of, on, 49, 206, 214, 222 sqq. 
 
 no bearing on liability of, 223 sq. 
 obligation of, to true owner, 192. 
 
 paying-in slips and pass-book, suggested intimation thereby that 
 cheques taken for collection only, 215 ; effect of, considered, 
 
 " per pro.," indorsement put on inquiry by, as to authority, 193; 
 but not as to collateral matters, 194 sq. ; or as to disposition of 
 proceeds, 195 (and see AGENT). See also INDORSEMENT. 
 position assumed by, prior to Gordon Case, 210 ; how far now 
 
 maintainable, 210 sq. 
 
 position of, where drawer's signature forged, 140, 219. 
 presentment, delay in, where caused by intervention of agent, 
 in collection of : crossed cheques, 22G ; open cheques, 
 227. 
 
 through Clearing House, effect of, 227. 
 protection of, as to crossed cheques, limited by sect. 82. .190. 
 
 but covering all preliminary dealings, 190, ii'25. 
 receiving payment for a customer under sect. 82. .199 sqq. 
 right of, to debit customer with returned cheque though credited 
 
 as cash, 211 sq. ; on what ground, 211 sq. 
 secretary indorsing company's cheque for private account, 195. 
 superfluous indorsement, 212, 242. 
 
 presumption of transfer by. -21-2. -24-2. 
 presumption rebut table, 212, -24-2. 
 transferee, when, 203 sqq. ; cases in which he becomes such, 
 
 203 sq., 210 sq., 240. 
 treating as cash, whether or not identical with placing cheque 
 
 to credit as cash, 214 sq. 
 true owner, main source of danger, 188 sq. 
 
 no liability incurred to, by reason only of receiving 
 payment within sect. 82.. 225. And tee TRUE 
 
 OWNKH. 
 
 voidable cheque marked " not negotiable," collecting before 
 repudiation of, 138 sq., 141 sq. 
 
 COMKlNINd ACCOUNTS, 3, 76, 241. 
 
 COMMISSION, 
 
 banker's charges for, 131, 235. And see PASS-BOOK. 
 omittion, M opposed to, in dealings with property of others, 
 182, 186. 
 
 COM I 'A NIKS CLAUSES CONSOLIDATION ACTS, 
 
 took* or Hharea under, must be transferred by deed, 292.
 
 INDEX. 327 
 
 COMPANY, 
 
 absorption, 270, 307. 
 
 amalgamation, 270, 308 sq. 
 
 bills, notes, or cheques executed in name of, 194. 
 
 guarantee to, how affected by absorption, 307 ; by amalgamation, 
 
 308 sq. 
 
 indorsement by secretary on behalf of, 195. 
 mere alteration of composition of joint stock company : 
 
 no effect on deposit of securities for advances, 270 (and see 
 
 CORPORATION and SECURITIES). 
 or on guarantee given to, 307. 
 non-trading, power of, to issue cheques, 12. 
 persons dealing with, affected with notice of its constitution 
 
 and powers, 194. 
 stocks and shares, transfer of, 291 sqq. 
 
 forged transfer of, 293. And see STOCKS AND SHARES. 
 
 CONDITIONAL ACCEPTANCE, 268 sq. And see ACCEPTANCE. 
 CONDUIT PIPE. See AGENT and COLLECTING BANKER. 
 
 CONSENT, 
 
 owner's, under Factors Act, 1889, and Sale of Goods Act, 1893. 
 See those Titles. 
 
 CONSIDERATION, 
 
 bills of lading, pre-existing debt good for transfer of, 264. 
 defined by Factors Act, 1889.. 260; pre-existing debt, how far 
 
 good, 260, 264. 
 in guarantee, need not be set out, 298. 
 
 should be set out correctly if at all, 298. 
 
 necessary under Factors Act, 1889, and Sale of Goods Act, 1893. . 
 260. 
 
 CONSTRUCTIVE NOTICE. See NOTICE. 
 
 CONTRACTUAL ELEMENT, 
 in negotiable instruments, 136. 
 
 CONTRACTUAL RELATION, 
 
 between banker and customer. See BANKER and CUSTOMER. 
 
 CONTRIBUTION, 
 
 amongst sureties, 302. And see GUARANTORS. 
 
 CONVERSION, 133 sqq. 
 
 after-acquired title, suing in respect of, 136. 
 
 doctrine of, inapplicable to bills or cheques, 136. 
 agent liable for, 133, 140. 
 banker liable for, when, 133 sq., 205 sq., 214. 
 collecting banker, protection of. See COLLECTING BANKER and 
 CROSSED CHEQUES.
 
 328 INDEX. 
 
 CONVERSION contd. 
 
 contractual incidents, right of action subject to, 135 sq. 
 
 damages in, 133. 
 
 defined, 133. 
 
 forged indorsement, conversion for payment on, 134, 153 sq. 
 
 intention no element in, 133, 182, 189. 
 
 lies for bills or cheques, 133, 189. 
 
 misdelivery of goods or valuables, when, 183, 185. 
 
 repudiation, where maintainable on, 137 sqq. 
 
 effect of " not negotiable " crossing, 138 sq. 
 true owner defined, 134 sq. 
 void and voidable, distinction between, as affecting right of 
 
 action, 136 sq. And see VOID AND VOIDABLE. 
 waiver of, 139. And see MONEY HAD AND RECEIVED. 
 who can sue for, 134 sq. 
 
 CONVEYANCE, 
 
 within Land Registry Acts, what constitutes, 282 sqq. And see 
 LAND REGISTRY ACTS. 
 
 CONVEYANCING ACTS, 1881, 1892.. 280, 281. 
 
 CORPORATION, 
 
 as customer, 11 sq. 
 
 bank, joint stock or otherwise incorporated, not a firm, 307. 
 
 cheques, power to issue, 12. 
 
 guaranteed, change in constitution of, 309. 
 
 guarantee given to, 307. 
 
 effect of absorption of other body, 307. 
 of amalgamation, 308. 
 
 mere alteration of composition of, no effect on deposit of 
 securities for advances, 270 (and see COMPANY and SECURI- 
 TIES) : or on guarantee, 307. 
 
 COUNTERFOILS, 
 
 pass-book, comparison with, 127. And see PASS-BOOK. 
 
 COUNTRY BANK. See under CLEARING HOUSE. 
 COVER. See COLLATERAL SECURITY. 
 
 CREDIT, 
 
 letters, of. See tliat Title. 
 
 CREDITOR, 
 
 guarantee, what he should have inserted in, 294 sqq. 
 
 not bound to resort to securities deposited by debtor before 
 
 suing guarantor, 304 sqq. ; opposite contention criticised, 
 
 304 .3. 
 
 release of guarantor by, when, 294 sqq. And see GUARANTORS. 
 securities, position of, as to, when debt satisfied by guarantor, 
 
 800 ; or where latter liable only for part of debt and that part 
 
 paid, 809.
 
 INDEX. 329 
 
 CREDITOR contd. 
 
 surety's right to set off debts due from, to debtor, when, 306. 
 taking additional security, effect of on original guarantor, 
 
 294, 304. 
 
 theoretical right of surety, on payment of debt a to call on, to 
 sue, 310 sq. 
 
 See also DEBTOR and LENDER. 
 
 CROSSED CHEQUES, 44 sqq. 
 
 " account payee," addition of, does not affect negotiability 'or . 
 
 transferability of cheque, 49 sqq., Ill sqq. 
 position of paying banker with regard to, 110, 111 sqq. ; 
 where " account payee " followed by inconsistent indorse- 
 ments, 112 sqq. 
 
 position of collecting banker with regard to, 197. 
 banker paying. See PAYING CROSSED CHEQUES. 
 cheque crossed by one bank to another for collection, 52 sqq., 
 
 221. 
 collecting banker, 189 sqq. 
 
 crossing cheque to himself, 52, 54 sqq., 221 ; 
 
 effect of, if any, 54 sqq. 
 protection of, as to preliminary dealings, 190, 
 
 225. And see COLLECTING BANKER. 
 crossed by unauthorised person, 101 sqq., Ill, 221. 
 crossing from branch to branch or head office, 52. 
 customer's mandate affected by crossing, 104, 112. 
 documents within crossed cheques sections, 30 sq., 98, 113, 
 
 180 sq., 209, 219. 
 drawer's signature forged, collecting banker's position where, 
 
 140, 219. 
 
 erased or altered crossings, 108 sqq. 
 negotiability of, 44. 
 
 " not negotiable " crossing, 31, 44 sq., 46 sqq., 223. 
 when introduced, 45. 
 effect of, 46, 107. 
 
 proceeds as well as cheque affected by, 46 sq. 
 effect of, on voidable cheque, 47 sqq., 108, 138. 
 position of banker paying " not negotiable " cheques 
 
 contrary to crossing, 108. 
 position of collecting banker with regard to cheque so 
 
 crossed, 49, 206, 214, 222 sq. 
 
 effect of words "not negotiable " apart from crossing, 40, 111. 
 origin of legislation as to, 189, 200. 
 provisions as to : 
 
 applied to dividend warrants, 98. 
 
 to documents within Revenue Act, 1883, s. 17. 
 
 See REVENUE ACT. 
 
 not applied to drafts or orders within Stamp Act, 1853, 
 s. 19.. 98.
 
 330 INDEX. 
 
 CROSSED CHEQUES tontd. 
 
 statutory protection aud statutory risks. See that Title. 
 See also FORGED INDORSEMENT, VOID AND VOIDABLE 
 CHKQUES. 
 
 CROSSED CHEQUES ACT, 1876, 
 why passed, 106. See also 189. 
 
 CURRENT ACCOUNT, 
 
 assignable under Judicature Act, 1873. .2. 
 balance, a debt, 1, 5. 
 
 not retainable to meet bills discounted, 76 sqq. 
 banker questioning customer's title, 6. 
 bankruptcy of customer, effect on, 7. 
 closing, 4. 
 customer, not essential to constitute a, 217 sq. ' And see 
 
 CUSTOMER. 
 
 effect on, of Statute of Limitations, 2. 
 garnishee order on, 5. See also GARNISUEE ORDER. 
 interest on overdraft, 4 sq. 
 overdrawing, 4 ; by impersonal customer, 11. 
 secrecy of banker as to, 4. 
 subject to lien, 3 sq., 6, 8. 
 transfer to, from deposit account, 17. 
 trust account. See that Title. 
 with minor, 13 sqq. See MINOR. 
 
 l I > I ODY, 
 
 safe custody," use of words does not enhance banker's liability, 
 
 178. 
 valuables for safe, 178 sqq. And see VALUABLES FOR SAFB 
 
 CUSTODY. 
 
 i I -TOM, 
 
 of bankers to charge interest, 4. 
 
 to debit returned cheque, 211. 
 pass-book, as to. See PASS-BOOK. 
 recent origin of, no bar to its validity, 249. 
 usage. See that Title. 
 And tee NEGOTIABILITY. 
 
 adoption of forged cheques, 160 sq. And see ADOPTION. 
 
 bank employing another bank for collection, whether included 
 
 in, 54. 
 banker bound to know signature of, whether, 165 sqq. 
 
 disputing title of, 6, 75. 
 bankruptcy of, 7, 78, 266. 
 
 I 'ill- of lading, undertaking by, to forward against acceptance : 
 right acquired by banker, where, 266. 
 position of customer's trustee in bankruptcy, where, 266.
 
 INDEX. 331 
 
 CUSTOMER contd. 
 
 cheque not necessarily drawn by a, 24 sqq. 
 
 credited as cash, right of, to draw against, 79, 210, 
 
 211, 216. 
 cheques marked at instance of, 59 sqq,, 76. 
 
 no right to scop, 62 sq. And see PAYING BANKER. 
 collecting banker receiving payment for, under sect. 82. . 199 sqq. 
 
 contractual obligation of, only to, 192. 
 
 contractual relation with banker, possibility of crime contem- 
 plated, 147. 
 credit balance, banker's right to retain against debt due from, 
 
 237. 
 current account not essential, 217 sq. 
 
 whether first transaction sufficient to constitute a, 218 sq. 
 mere book entries insufficient, 219. See' also CURRENT 
 
 ACCOUNT. 
 current balance free from lien for undue bills discounted for, 
 
 76 sqq. 
 
 delegation of drawing cheques, 147 sq. And see PASS-BOOK. 
 deposit account. See that Title. 
 duty of, as to pass-book. See PASS-BOOK. 
 
 to minimise risk of forgery or of cheque being fraudu- 
 lently raised, 145, 146 sqq. 
 to banker, 67 sq., 144 sqq. 
 
 estoppel of, where bank misled by, 148 sq., 152 ; as to forged 
 signature, 147, 149 sqq. ; by negligence, 152. See also 
 ESTOPPEL. 
 
 forged signature of, as drawer, 92 sq., 143. 
 impersonal, 10. And see tliat Title. 
 minor, 13. And see tliat Title. 
 mortgage, when banker's taking of, inconsistent with relation 
 
 of banker and customer, 5, 279. 
 principal, how far banker's, 66. 
 relation to banker, 1, 144 sqq. 
 returned cheque credited as cash, right of collecting banker 
 
 to debit with, 211 sq. 
 what constitutes a, 216 sqq. ; term implies use and habit, 216. 
 
 DAMAGES, 
 
 for conversion, 133. And see CONVERSION. 
 
 DEATH, 
 
 contingency of, to be provided for in guarantees, 294, 300. 
 And see GUARANTORS. 
 
 DEBT, 
 
 antecedent debt of third person no consideration for promise, 
 
 298. 
 antecedent, forborne, sufficient consideration for deposit of 
 
 security, 244 ; for guarantee, 298.
 
 332 INDEX. 
 
 DEBT contd. 
 
 " debt due or accruing due," what is, 5, 19 sqq. 
 not suitable subject for banker's lien, 237. 
 pledger's right as to pledge, on satisfaction of, 243. 
 pre-existing, how far consideration within Factors Act, 1889. . 
 260 (and see 264) ; within Sale of Goods Act, 1893. .264. 
 the case of vendors, 2C1 ; vendees, 261. 
 good consideration for transfer of bill of lading, 264. 
 remedy for, suspended by giving bill, note, or cheque, 242. 
 satisfaction of, not payment of bill or note deposited as 
 collateral security, 242. 
 
 DEBTOR, 
 
 agreement not to sue, effect of on guarantor, 301 ; interpreted 
 
 according to intention. 301. 
 
 change in identity of guaranteed, effect of on guarantee, 307. 
 giving time to, effect of on guarantor, 302. 
 
 to be provided for in guarantee, 294. 
 guarantor and. See GUARANTORS. 
 
 liability of guarantor not kept alive by payments by, on account 
 of principal or interest, 313. 
 
 DELAY, 
 
 in giving notice of dishonour, when excused, 170. 
 
 DELIVERY ORDERS, 265. 
 
 DEPOSIT, 
 
 equitable mortgage by, 279. And see EQUITABLE MORTGAGE. 
 of land certificate under Land Transfer Act, 1897, notice of, 
 
 rules as to, 286 ; effect of, 286 sq. And see LAND TRANSFER 
 
 ACT. 
 
 DEPOSIT ACCOUNTS, pp. 17 sqq. 
 
 customer no right to draw against, 17. 
 
 money on, assignable under Judicature Act, 1873.. 18; though 
 
 not by transfer of deposit receipt, 20. 
 effect of Statute of Limitations or of garnishee order on, 
 
 governed by terms of deposit, 18 sqq. 
 when return of receipt condition precedent to withdrawal, 
 
 18. 
 
 money paid to, is loan, not trust, 17. 
 three classes of, 17. 
 transference to current account, 17. 
 See also DEPOSIT RECEIPT. 
 
 DEPOSIT RECEIPT, 20 sqq. 
 
 not negotiable instrument, 20. 
 
 return of, 18. 
 
 Htamp duty not liable to, either as promissory notes or as 
 
 agreements, 212 sq. 
 with cheque fonn indorsed, effec t of, 21 sqq. Srr al* CHEQUE.
 
 INDEX. 333 
 
 DISCHARGE, 
 
 bearer cheque, of, 81 sqq. 
 
 cheque paid on forged indorsement, where, 96. 
 
 draft or order paid on forged indorsement, where, 25 sqq., 85. 
 
 drawer of, by non-presentment, 73, 226. 
 
 fictitious or non-existent person payee, where, 151. 
 
 minor, by, 13 sqq. (and see MINOR) ; under Savings Banks Acts, 
 
 15. 
 See also DRAWER. 
 
 DISCOUNTING, 
 
 collecting banker, 209, 210. And see COLLECTING BANKER. 
 
 DISHONOUR, 
 
 banker must at once pay or, 69. 
 
 holder of cheque no right of action against banker for, 71. 
 
 none where payment, 162, 169. 
 
 notice of dishonour. See tliat Title. 
 
 payment by mistake, where, 162. 
 
 DIVIDEND, 
 
 receipt of, to be provided for in guarantee, 294. 
 warrants : crossed cheques sections applied to, 98, 189, 219 sq. ; 
 negotiability of, considered, 220. 
 
 DOCK WARRANTS, 255, 258. 
 
 DOCUMENTS OF TITLE TO GOODS, 255 sqq. 
 as cover for acceptances, 264 sq. 
 
 when and how realisable by pledgee, 274. 
 bills of lading. See that Title. 
 
 degree of property acquired by banker by possession of, 265. 
 letters of credit from banker, practice as to, 265. 
 pledge of, pledge of goods under Factors Act, 1889. .261. 
 no right to or to goods, where banker declines to accept bill, 266. 
 not negotiable instruments, 255. 
 
 undertaking to forward against acceptance, rights acquired by 
 banker, where, 266. 
 
 DRAFT OR ORDER, 
 
 drawn by branch on head office, 33. 
 
 drawn on a banker, distinction between, and cheque, 25 sqq. 
 
 payment of, under forged indorsement, must be in good 
 
 faith, 97. 
 protection to banker where indorsement forged, 25 sqq., 85 sqq. 
 
 See FORGED INDORSEMENT. 
 whether confined to inland, 98 sq. 
 rights of parties where drawer and drawee same, 33. 
 susceptible of crossing, whether, 98.
 
 884 INDKX. 
 
 * 
 
 DRAWER. 
 
 cargoes, bills drawn against, drawer may assign rights, 267. 
 
 And see CARGOES. 
 discharged both on cheque and on consideration by protected 
 
 payment on forged indorsement, 96 "/ 
 discharged by non-presentment, when, 73, 226. 
 documents of title to goods as cover for acceptances, when and 
 
 how realisable where failure of undertaking to find funds by, 
 
 275. 
 
 duration of liability on cheque, 78 sq. 
 mandate affected by crossing, 104. 
 qualified acceptance, position of where, 268 sq. 
 realisation of goods or securities pledged to cover acceptances, 
 
 rights of, on, 278. 
 right to notice of dishonour, 42, 228; when notice to him 
 
 excused, 228. And see COLLECTING BANKER. 
 
 EQUITABLE MORTGAGE, 
 
 anomalous position of equitable mortgagee by bare deposit of 
 
 title deeds, under Middlesex and Irish Registry Acts, 282 sq., 
 
 284. 
 
 liy deposit, 279; implies undertaking to execute legal mortgage, 
 "280. 
 cestui qtte trust, position of where deeds left with an'd pledged by 
 
 trustee, 288. 
 
 covenant not to assign, deposit of lease no breach of, 281. 
 how constituted, 279. 
 
 legal mortgage, when postponed to subsequent, 288. 
 of lease, mortgagee not liable on covenants, 281. 
 of personal property, remedy on, not barred by Statute of 
 
 Limitations, 276. 
 priority as between one and another, apart from registration, 
 
 287. And see PRIORITY. 
 quasi-negotiable documents best treated by pledgee as subject 
 
 of, 275. And see PLEDGEE. 
 realisation in cases of, 275. 
 relief against forfeiture, equitable mortgagee of lease no right 
 
 to, 281. 
 
 remedies on, 279 ; foreclosure or sale, 279. 
 risks attending, 281 sqq. And see PRIORITY. 
 
 B8TOFFKL, 
 
 agent wrongfully dealing with title deeds, position of principal 
 where, 254. 
 
 alteration of position requisite for, 126, 149 sqq. And see PASS- 
 BOOK. 
 
 baaed on relation of banker and customer, 144. 
 
 I'ills domiciled with banker, as to, 149. 
 
 company truing instruments payable to bearer, 254.
 
 INDEX. 835 
 
 ESTOPPEL contd. 
 
 conduct by, conditions of, 253. 
 customer, of, as to forged signature, 147, 149 sqq. 
 by misleading bank, 149, 152. 
 by negligence, 152. 
 
 from re-opening stated account. See PASS-BOOK. 
 holding out rather than, where delegation of drawing cheques, 
 
 147 sq. 
 indorser, of, subsequent to forged indorsement, 94 sq., 102, 144, 
 
 164. 
 
 negotiable instrument. See that Title. 
 payment of forged instruments not estoppel unless establishing 
 
 course of business, 149. 
 quasi-negotiability really title by, 250 sq. And see QUASI- 
 
 NEGOTIABILITY. 
 
 remedy by, 164, 172 ; on instrument itself, 164, 173. 
 title by, different from negotiability, 250. 
 warranty, distinguished from, 164, 173. 
 
 EXECUTORS, 
 
 of guarantor, bound, 296. And see LEGAL PERSONAL REPRE- 
 SENTATIVES. 
 notice by, on death of guarantor, 301. 
 
 FACTORS ACTS, 
 
 documents of title to goods by way of pledge, by virtue of, 246, 
 255 sqq. 
 
 FACTORS ACT, 1889.. 255 sqq. 
 
 complexity of, and of Sale of Goods Act, 1893. .255, 257. 
 
 consideration necessary under, 260. 
 
 general design of, 258. 
 
 interpretation of, 257. 
 
 " lawfully transferred " in sect. 10 of, construction of, 263. 
 
 mercantile agent. See that Title. 
 
 pledge of documents, pledge of goods under, 261. 
 
 price unpaid, vendee's title not invalidated by notice of, 263. 
 
 sale within, not equivalent to sale in market overt, 259. 
 
 scope of, 255. 
 
 vendor. See that Title. 
 
 vendee. See that Title. 
 
 FATE, 
 
 of cheque, intimation of, 89. 
 inquiry as to, 196. 
 
 FELONY, 
 
 misdemeanour, distinction between and, as affecting title to 
 
 cheque, 224. 
 of banker's staff, where valuables for safe custody, 181.
 
 886 INDKX. 
 
 FICTITIOUS OR NON-EXISTENT PERSON AS PAYEE, 36, 
 
 38 sqq., 151 sq. 
 
 decision in Vagliano's Case, 38. 
 impersonal payee, 39. 
 knowledge as to, immaterial, 151 sq. 
 real person as, 152. 
 
 FIRM. 
 
 bank, joint stock or otherwise incorporated, a corporation and 
 
 not a, 307. 
 meaning of term, in Partnership Act, 1890. .307. 
 
 FORECLOSURE, 
 
 equitable mortgage, in cases of, 276, 280. 
 pledgee no right to, 274. And sec PLEDGKK. 
 remedy by, where within Land Transfer Acts, 287. 
 
 FOREIGN INSTRUMENT, 
 
 negotiability of, in country of origin, no evidence of negotia- 
 bility here, 250. 
 
 FORGED INDORSEMENT, 
 
 cheque, protection of banker paying on, 85 sq. 
 discharge by payment of cheque on, 94. 
 by protected payment on, 100. 
 double risk of banker unless protected, 93 sqq. 
 draft or order, protection of banker paying on, 25, 85. 
 holder under. 82 ; position of, 94 sqq. 
 payment of drafts or orders on, must be in good faith, 97. 
 
 whether such payment must be in ordinary course of 
 
 business, 97. 
 protected payment on, discharges drawer both on cheque and 
 
 on consideration, 96 sq. 
 
 protection in case of foreign drafts or orders, 98 sq. 
 protection of paying banker, conditions of, 86 sqq. 
 
 cheque must be paid in good faith and in ordinary course 
 
 of business, 88 sq., 108. 
 document must be a bill, draft or order, 86. 
 must be drawn on a banker, 86. 
 must be payable to order and negotiable, 86. 
 must be unconditional, 87. 
 if draft or order, must be expressly payable to order, 
 
 87. 
 
 must be payable on demand, 88. 
 
 drawer's signature forged, no protection, where, 92 sq. 
 indorsement by collecting hunker " Placed to account of 
 
 payee" not in ordinary course of business, 91 s</. 
 indorsement must bo regular in form, '.M. 
 intimation of fatt- nut constituting payment, 89. 
 ordinary course <>f business compared with negligence, 89.
 
 INDEX. 337 
 
 FOEGED INDORSEMENT contd. 
 
 protection of paying banker, etc. contd. 
 
 ordinary course of business, interpretation of, 90. 
 payment defined, 88. 
 " per pro." within protection, 92. 
 post-dated cheque, banker protected, 88. 
 signature of professing payee at request of bank, whether 
 
 indorsement, 36 sqq., 89. 
 
 where cheque crossed, double protection, 95 ; how such protec- 
 tion lost, 95. 
 
 See also DRAFT OR ORDER, and FORGERY. 
 
 FORGERY, 143 sqq. 
 
 adoption of forged cheques and bills, 126 sqq., 147, 149 sqq. ; 
 
 question of actual knowledge, 126 sqq. 
 customer's signature, of, 92 sq., 143. 
 dangers to paying banker from, 143. 
 duty of customer to banker to minimise risk of, or ot fraudulent 
 
 alteration of cheque, 145 sqq. 
 effect of under Bills of Exchange Act, 143. 
 indorsement on domiciled bills, forged, 151 sqq. 
 mistake of fact, forged signature as, 156. 
 payment by mistake where customer's signature forged, 163,. 
 
 164 sqq. 
 
 whether negligence of banker material element, 165 sqq. 
 protection of bankers against, 143. 
 transfer of stocks and shares, effect of forwarding forged, for 
 
 registration, 293. And see STOCKS AND SHARES. 
 
 FRAUD, 
 
 distinction between void and voidable transactions induced bj\ 
 
 137. 
 
 mercantile agent, possession fraudulently obtained by, 260, 262. 
 of banker's staff, where valuables for safe custody, 181. 
 on trust account, 8 sqq. 
 
 FRAUDS, STATUTE OF, 
 
 provisions of as to guarantees, 295. 
 
 FRAUDULENT ALTERATION, 
 of cheque. See CHEQUE. 
 
 "FRESH DISPOSITION," 
 of bill or cheque, 138. 
 
 GARNISHES ORDER, 
 
 banker's course where served with, 5. 
 current account attached by, 1, 5, 75. 
 
 countervailing effect of lien, 6. 
 
 effect of on deposit account, 18. And see DEPOSIT ACCOUNT. 
 where account in other than judgment debtor's name, 6. 
 B. Z
 
 888 INDEX. 
 
 GOOD FAITH, 
 
 collecting banker must act without negligence and in, under 
 
 sect. 82. . 190, 191. And see COLLECTING BANKER. 
 negligence, compared with, 89. 
 paying banker must act in : 
 under sect. 60.. 89. 
 under Stamp Act, 1853, s. 19. .97. 
 test of, in case of pledgee, 244, 247. 
 
 GOODS, 
 
 bills drawn against cargoes, 266 sqq. And see CARGOES. 
 documents of title to, by way of pledge under Factors Acts, :M6, 
 
 255 sqq. 
 
 not negotiable instruments, 255. 
 no right to, or to documents of title to, where bill not accepted, 
 
 266. 
 
 orders for delivery of, 255, 258. 
 pledged by documents of title to, 255, 261. 
 pledge of documents, pledge of, under Factors Act, 1889. .261. 
 Sale of Goods Act, 1893. .255 sq. 
 surplus on realisation of, where pledged to cover acceptances, 
 
 disposition of, 278. 
 assignment of drawer's rights, how affecting, 278. 
 
 GUARANTEE, 294 sqq. 
 
 advantages and disadvantages of, 294. 
 
 amount advanced and amount guaranteed: need of careful 
 
 wording as to, 297. 
 appropriation in case of, 3. 
 change in constitution of parties, effect on future advances, 307 : 
 
 provision for in, 294, 307. See also GUARANTORS. 
 closing account and opening fresh one on determination of, 
 
 306 sq. 
 consideration need not be set out in, 298. 
 
 should be correctly set out if at all, 298. 
 
 forbearance to press for debt, 298. 
 continuing, 
 
 effect of Statute of Limitations on, 312. 
 
 inconsistent decisions on, 312. 
 
 extension of credit must be implied by, 312. 
 
 difficulty, how avoidable, 313. 
 contracts analogous to, 295. 
 corporation, given to a, 307. 
 
 given for a, 809. 
 
 effect of absorption, 307. 
 
 of amalgamation, 294, 308. 
 dangers of, where obligation joint only, 295. 
 defined, 295.
 
 r 
 
 INDEX. 339 
 
 GUARANTEE contd. 
 
 death of surety, 300 ; formal notice of, provision for in, 300 ; by 
 
 legal personal representatives, 301. 
 determination of, conditions of, 299. 
 
 ordinary rule as to, 299. 
 form of, essentials in, 294 sqq. 
 forms in use, necessity of revising, 295. 
 future advances, method of, to be formulated in, 298. 
 give time, reservation of right to, should be secured by, 303. 
 guarantor contracting himself out of all rights, provision for 
 
 inadvisable in, 310. 
 indemnity and, 295. 
 joint. See GUARANTORS. 
 joint and several. See GUARANTORS. 
 liability, whether to cover existing overdraft or debt, 298. 
 limitation of liability, how effected, 296. 
 limited or unlimited, 296. 
 main points of an effective, 295. 
 no particular form of accounts necessitated by, 311. 
 where unbroken account, 311. 
 where continuing guarantee, 311. 
 notice of determination of, 299 ; liabilities outstanding at time 
 
 of receipt of such notice, 299; both to be provided for in, 
 
 299. 
 obligation of guarantors should be several, or joint and several, 
 
 295. And see GUARANTORS. 
 partnership, for account of, 307. 
 payment of another's debt, acquirement of property by, and, 
 
 295. 
 
 release of guarantor to be provided against in, 301. 
 right to sue guarantor without first resorting to securities, 
 
 whether need be stipulated for in, 306. 
 securities, guarantor no claim to any until debtor's liability 
 
 extinguished, provision herefor in, 310. 
 specific and continuing, distinguished, 297. 
 
 definition of, 297. 
 surety's right of set-off, as to, 306 ; hardly likely to operate 
 
 where guarantee to bank, 306. 
 " ultimate balance," 297, 310. 
 
 vary, exchange, or release securities, right to, should be reserved 
 . to creditor in, 304. 
 
 GUARANTORS, 
 
 appropriation of payments, position of, as to, 311 sq. 
 bankruptcy, dividends in, when entitled to, 296 ; when not, 296. 
 contribution, rights as to, among, 302. 
 creditor not bound to resort to securities deposited by debtor 
 
 before suing, 304 sqq. 
 opposite contention criticised, 305 sq. 
 
 z 2
 
 840 INDEX. 
 
 GUARANTORS contd. 
 
 death : of one surety when guarantee joint, effect of, 300. 
 when guarantee joint and several, 300. 
 provision to be made as to in guarantee, 294, 300. 
 whether mere fact of death of surety determines liability of 
 
 .to for subsequent advances, 300 sq, 
 constructive notice of, 300. 
 heirs, executors, and administrators of, when should bo 
 
 mentioned, '296. 
 joint and several, whether liability of, for future advances affected 
 
 by determination of liability of co-guarantor, 300. 
 judgment against one joint-guarantor, how far bar to suin.u 
 
 others, 295. 
 
 liability of, whether to cover existing overdraft or debt, 298. 
 limited or unlimited, question of terms, 2%. 
 no right or interest in securities before paying debt, 305. 
 obligations of, should be several, or joint and several, 295. 
 payments on account of principal or interest by debtor do not 
 
 keep alive liability of, 31:?. .s,, ,/<\,. <,i 
 release of : 
 
 agreement of creditor not to sue debtor, effect of as to, 301 ; 
 
 interpreted according to intention, 301. 
 by dealings: 
 
 with principal, 301. 
 with co-surety, 301. 302. 
 by extinction of debt, 301. 
 by release : 
 
 of principal, 801. 
 of co-surety, 302. 
 
 creditor giving time to debtor, 294, 302; effect of, 302. 
 creditor taking other securities, effect of, 303. 
 
 whether merger, 303 sq. 
 novation operates as, 302. 
 
 reservation of rights against, 301 ; effect of, 301. 
 surety discharged though not prejudiced, whether, 303. 
 taking bill from principal, 303. 
 
 taking of additional security by creditor, effect of, 294, 304. 
 remedy against joint and several, cumulative till satisfied, J'.n 
 remedy of , against debtor or co-sureties, where paying d<l.i 
 
 312. 
 
 reservation of rights against, 301 ; effect of, 301 *//. 
 right of, to set-off, 806 ; unlikely to operate where guarai 
 
 bank, 306. 
 right to determine guarantee by notice and payment t 
 
 299; even if guarantee for specified time or under seal, - 
 securities, right of, to, on payment of debt, 309. 
 
 position of. win-re liable for part only of debt, 309. 
 apportionment of, 901).
 
 INDEX. 341 
 
 GUARANTORS contd. 
 
 securities, right of, to, etc. contd. 
 
 position of, where guarantor of whole debt but liability 
 
 limited, 309. 
 
 theoretical right of, on payment of debt, to call on creditor to 
 sue, 310 ; but can equally himself sue, 310 sq. 
 
 HIRE-PURCHASE AGREEMENT, 
 
 person holding goods under, when a vendee within Factors 
 Act, 1889, and Sale of Goods Act, 1893. .259 ; when not, 259. 
 
 HOLDER, 
 
 by estoppel, 172 sq. 
 
 cargoes, acceptance against, position of, whene, 266 sqq. 
 
 deemed holder for value to extent of lien on bill, 201, 239. 
 
 definition of, 81, 94, 102. 
 
 drawer and drawee same, where, 33. 
 
 marking cheque at instance of, 64 sqq. 
 
 no right of action against banker for dishonour of cheque, 71. 
 
 notice of dishonour : 
 
 opportunity for lost, effect of, on money paid to, by 
 
 mistake, 168. 
 
 when bill paid and money reclaimed, 169. 
 of bill of lading, with notice that it must be delivered to acceptor 
 
 on acceptance, 268. 
 position of, under forged indorsement, 94 sq., 102, 144, 156 sqq., 
 
 172. And sec also MONEY PAID BY MISTAKE. 
 requested to re-present, 69 sq. 
 supplementing balance to meet cheque, 72 sq. 
 time for giving notice of dishonour, 169 so. 
 
 HOLDER IN DUE COURSE, 
 
 where forged indorsement, 82 ; by estoppel, 172 sq. 
 
 IMPERSONAL CUSTOMER, 10. 
 cheque drawn on behalf of, 11 sq. 
 overdraft by, 11. 
 
 IMPERSONAL PAYEE, 39. 
 
 INDEMNITY, 
 
 forged transfer of stocks and shares, forwarding of for registra- 
 tion, no undertaking to indemnify company, 293. 
 guarantee and, 295. 
 
 INDORSEE, 
 
 of bill of lading under Bills of Lading Act, 1855. .256, 204. 
 of bill or cheque. See HOLDER and INDORSEMENT.
 
 842 INDEX. 
 
 INDORSEMENT, 
 
 additional, by customer, not suitable method for identification 
 
 in case of dishonour, 212 sq. 
 
 collecting banker's duty to verify on order cheque, 193. 
 forged. See FORGED INDORSEMENT. 
 payee's, demanded on order cheque, effect of, 36. 
 ' per pro.," what is, 194. 
 effect of, 193 sq. 
 necessitates inquiry as td authority, 194 ; not into collateral 
 
 matters, 194. 
 presumption of transfer by superfluous, 212, 242. 
 
 presumption rebuttable, 212, 242. 
 
 unauthorised signature " per pro." within protection to paying 
 banker, 92. 
 
 INDORSEB, 
 
 estoppel of, 95, 174. 
 
 qualified acceptance of^bill, position of, where indorsement prior 
 
 to acceptance, 268 sq. 
 rights of, as guarantor, to securities, 304 sqq. And tee 
 
 GUARANTORS. 
 
 INTERESJ, 
 
 guarantor's' liability not kept alive by debtor's payments on 
 
 account of, 313. 
 
 on overdraft, 4 *//. ; charging compound, 5, 131. 
 to be provided for in guarantee, 299. 
 
 IRISH REGISTRY ACT, 1707, 
 
 conveyance within, what constitutes, 282. 
 
 JOINT, 
 
 guarantee, inadvisable security, 295. 
 
 JOINT AND SEVERAL, 
 
 guarantors, obligation of, should bo several or, not joint, 295. 
 
 JUDGMENT, 
 
 against one joint-guarantor, how far bar to suing others, 295. 
 
 JUDICATURE ACT, 1873, s. 25, sub-s. 6.. 2, 18, 21. 
 
 LADING, 
 
 bill of, 255 sqq. And tee tliat Title. 
 
 Hi 11s of, Act, 1855.. 256. 
 
 indorsee of bill of, rights under Bills of Lading Act, 1855. .256. 
 
 LAND CERTIFICATE. See LAND TRANSFER ACTS.
 
 INDEX. 343 
 
 LAND REGISTRY ACTS, 
 
 as affecting priorities, 282 sqq. And see PBIOHITY. 
 "conveyance" within, what constitutes, 282. 
 
 requires registration of memorial to secure priority, 282. 
 
 memorandum accompanying deposit of title deeds held a, 282. 
 
 letters leading up to deposit, held a, 283. 
 
 consideration for and acceptance of, 283. 
 
 deposit without memorandum, not, 283 ; exception under 
 
 Yorkshire Act, 283. 
 Land Transfer Acts, relation of, to Middlesex and Yorkshire 
 
 Registry Acts, 284 ; how far overriding, 284, 285. 
 Middlesex Registry Act, 1708, and Irish Registry Act, 1707 : 
 equitable mortgage under, position of, 282 sq. 
 position different under Yorkshire Registry Act, 1884.. 
 
 283 sq. 
 scheme of, 286. 
 
 LAND TRANSFER ACTS, 
 
 are the ruling enactments where applicable, 285. 
 charge, forms of, under, 287. 
 
 might be utilised as memorandum, 287. 
 
 registration of, 287. 
 
 deeds relating to property registered under, 285. 
 effect of, 284. 
 land certificate : 
 
 production of, necessary in dealing with the land, 286. 
 
 banker should require, 286. 
 
 notice of deposit of, 286. 
 
 rules as to, 286. 
 
 effect of notice, 286, 287. 
 lien on land created by deposit of land certificate, 285. 
 
 meaning of such lien, 285. 
 
 priorities how decided under, 287. And see PBIOBITY. 
 procedure under, to obtain priority, 285. 
 registration, when compulsory under, 285. 
 relation to Middlesex and Yorkshire Registry Acts, 284 ; how 
 
 far overriding them, 284, 285. 
 remedy of depositee by foreclosure or sale, 287. 
 
 correction of register necessary, 287. 
 rules under, 286 sq. 
 scheme of, 286. 
 use of term " for his own benefit " in, effect of, 285, 286. 
 
 LARCENY, 
 
 by trick, as affecting owner's consent under Factors Act, 1889. . 
 
 260. 
 suggested effect on collecting banker where cheque originally 
 
 obtained by, 224. 
 probably no ground for suggestion, 224 sq.
 
 344 INDKX. 
 
 LEASEHOLDS, 
 
 mortgage of, to bank. Sec MORTGAGE. 
 
 LEGAL PERSONAL REPRESENTATIVES, 
 administrator. See that Title. 
 death of surety, formal notice of, by, provision for in guarantee, 
 
 301. 
 executor. See that Title. 
 
 LENDER, 
 
 change in character of, as affecting securities deposited for 
 advances, 270. And see SECURITIES. 
 
 LETTERS, 
 
 leading up to deposit of title deeds, held a conveyance within 
 Land Registry Acts, 283. And see LAND REGISTRY ACTS. 
 
 LETTERS OF CREDIT, 
 practice as to, 265. 
 no right to goods inferred from, 265. And see 267. 
 
 LIEN, 
 
 artificial use of word in sect. 27 (3). .201 aj. 
 banker's, 201 sqq., 208, 218, 233 sqq. 
 
 affected by inconsistent dealings, 270. 
 
 banker's duty to present bills, &c., held subject to, 241. 
 
 collection or safe custody not the test, 236. 
 
 definition of, as implied pledge, 239, 272. 
 
 documents essential to collection by banker, subject to, 
 
 236 sj. 
 
 gives ordinary remedies of pledgee, 273. And see PM 
 
 judicially recognised, 233. 
 
 merger of in higher right, 239, 240 q. 
 
 method whereby securities reach banker's hands immaterial, 
 
 236. 
 money, attaches to, 237 ; but this right referable to set-off, 
 
 237 sq. 
 
 not limited to fully negotiable securities, 233. 
 
 on bills, notes, or cheques, 239 sq. ; and rights of banker 
 
 having such lien, 240, 241. 
 remuneration of banker no test, 235. 
 right of banker to combine accounts for purpose of, 241. 
 securities, what subject to, 233. 
 
 must come into banker's hands in con 
 business as such, 234 89. ; whether so, a 
 question of fact, 236. And see SECURITI 
 lie advances, securities for, probably none on after 
 
 repayment, 238. 
 
 secus, as to proceeds realised, 239. 
 And see REALISATION OP SECURITI
 
 INDEX. 345 
 
 LIEN contd. 
 
 banker's contd. 
 
 surplus on realisation by pledgee and further indebtedness 
 
 of pledgor, 277. 
 true conception of, 2-11 sq. 
 bills discounted, none for, 76 sqq. 
 cargo, on, 267. And see CARGOES. 
 collateral security distinguished from, 241 sq. And sec 
 
 COLLATERAL SECURITY. 
 created on land by deposit of land certificate under Land 
 
 Transfer Acts, 285. 
 current account, on, 3 sq., 8, 75. 
 debt not a suitable subject for, 237. 
 definition of, 202, 239. 
 deposit account, on, 17 sq. 
 excluded by inconsistent contract, express or implied, 235, 
 
 237 sqq. 
 
 holder of bill deemed holder for value to extent of, 201, 207. 
 immaterial where specific deposit as security, 234. 
 inconsistent with property in subject thereof, 202, 239. 
 Land Transfer Act, 1897, s. 8, sub-s. 6, meaning of term in, 285. 
 pledge and banker's, 239, 242, 272. 
 sale, no power of, under ordinary, 272. 
 trust account, none on, 8 xqq. 
 vendor's, under Factors Act, 1889, and Sale of Goods Act, 
 
 1893.. 262. 
 
 how and to what extent to be defeated, 262. 
 And see SECURITIES. 
 
 LOAN, 
 
 deposit account, money paid to, not trust but, 17. 
 
 specific performance of agreement to make, no action for, 291. 
 
 MANDANT AND MANDATORY. See PRINCIPAL AND AGENT. 
 
 MARKET OVERT, 
 
 sale under Factors Act, 1889, and Sale of Goods Act, 1893, not 
 equivalent to sale in, 259. 
 
 MARKING CHEQUES, 59 sqq. 
 
 at instance of customer, 59 sqq., 76. 
 
 at instance of holder, 64 sqq. 
 
 binding as between banker and banker, 62 sqq. 
 
 customer, no right to stop cheque marked at his own instance, 
 
 62 sq. 
 
 liability of banker marking at instance of holder, 64. 
 no admission that money held to use, 60. 
 not an acceptance, 59.
 
 84t> INDEX. 
 
 MEMORANDUM, 
 
 accompanying deposit of title deeds, held a conveyance within 
 Laud Registry Acts, 282 sq. 
 
 MERCANTILE AGENT, 
 dispositions by, 257. 
 possession, owner's consent necessary to his, 259. And see 
 
 VEKDEE. 
 obtained by fraud, 2GO, 262. 
 
 by larceny by trick, 260. 
 
 pre-existing debt, where pledging for, position of banker, 260 sq. 
 the common denominator of the Factors Act, 1889, and Sale of 
 Goods Act, 1893.. 255. 
 
 MERGER, 
 
 creditor with a guarantee taking other securities, whether, 
 
 303 sq. And see GUARANTORS. 
 of pledge, in higher rights, 239 sq. 
 
 MIDDLESEX REGISTRY ACT, 1708, 
 
 conveyance within, what constitutes, 282. 
 
 MINOR, 
 
 capacity of, to give discharge, 13 qq. 
 
 to draw valid cheque, 13 /</. 
 current account with, 13 *</'/ 
 discharge under Savings Banks Acts, 15. 
 holder's position where cheque drawn by, 16. 
 overdraft by, 16. 
 security for overdraft by, 16. 
 
 MISDELIVERY, 
 
 of valuables for safe custody, 182 sqq. And sec VALUABLES FOR 
 SAFE CUSTODY. 
 
 MISFEASANCE, 
 
 nnnfeasance as opposed to, in dealing with property of others, 
 183, 186. 
 
 MISTAKE, 
 
 money paid by. Sec MONEY PAID BY MISTAKK. 
 
 MONEY, 
 
 paid by mistake, in ignorance of customer's bankruptcy, 7 *</ 
 suing for as money had and received, 139. 
 when available for drawing, 75, 71*. 
 
 MONEY HAD AND RK< I 1\ ID, 133 sqq. 
 
 agent, protection of, against action for, conditions of, 140 ; not 
 
 lost by negligence, 141. 
 
 collecting banker, when liable for, 205 sqq., 214. 
 independent of conversion, 139. 
 money paid by mistake. See that Title.
 
 INDEX. 347 
 
 MONEY HAD AND RECEIVED contd. 
 on void or voidable instrument, 140 sq. 
 true owner suing for, 188 sq. 
 when action lies, 139 sqq. 
 where conversion waived, 139. 
 
 MONEY PAID BY MISTAKE, 155 sqq. 
 
 alteration of position of party paid, 155, 160, 167 sqq. 
 
 customer's signature forged, where, 163, 164 sqq. 
 
 document not a negotiable instrument, where, 163 sq. 
 
 money had and received. See that Title. 
 
 must be between parties, 155. 
 
 must be mistake of general law, 155. 
 
 negotiable instrument, paid on, whether recoverable, 156 sqq.; 
 
 review of cases as to, 156 sqq. 
 
 notice of dishonour, opportunity for lost, effect of, 169 sq. 
 notwithstanding means of knowledge, 156. 
 on forged signature, 156. 
 
 paying banker's negligence, how far affecting, 165 sqq. 
 time for notice of dishonour, where, 162. 
 when and how recoverable, 155. 
 
 MONEY PAID IN, 
 
 a debt, not subject of trust, 1. 
 
 MORTGAGE, 279 sqq. 
 
 equitable. See tliat Title. 
 
 further advances on, after notice of second charge, 289 sq. 
 after notice of conveyance of reversion, 290. 
 position of mortgagee who has undertaken to make up to 
 
 fixed amount, 290 sq. 
 leaseholds of, 280. 
 
 disadvantages of, 280. 
 
 relief to under-lessee against forfeiture, 281 ; subject to 
 
 terms which may be imposed, 281. 
 
 legal mortgage, equitable mortgage by deposit, implied under- 
 taking to execute, 280. 
 
 legal when postponed to subsequent equitable, 288. 
 mortgaged land, how dealt with for purpose of realisation, 272. 
 priority : 
 
 of subsequent equitable mortgagee by getting in legal title, 
 
 287. 
 when gained over equitable by subsequent legal, 281. 
 
 And see PRIORITY. 
 relation of banker and customer, when taking of, inconsistent 
 
 with, 5, 279. 
 
 rests, charging interest by, when to continue after supersession 
 of relation of banker and customer by that of mortgagee and 
 mortgagor, 299. 
 stocks and shares of, 291 sqq. And see tJiat Title.
 
 348 INDEX. 
 
 NEGLIGENCE, 
 
 agent's protection against action for money had and received 
 
 not lost by, 141. 
 banker, of, as to customer's signature, 166. 
 
 no duty beyond customer, 166. 
 collecting banker's, under sect. 82, defined, 190, 197. 
 
 be must act without, under sect. 82. .190 sq. 
 consistent with good faith, 89. 
 creation of statute under sect. 82 .. 192. And sec COLLECTING 
 
 BANKER. 
 customer, of, how far equivalent to knowledge, 129. And sec 
 
 PASS-BOOK. 
 fraud or felony of staff as to valuables for safe custody, in case 
 
 of. banker's position where no, 181. 
 means of knowledge disregarded, whether, 155, 167. 
 none where no duty, 166, 192. 
 ordinary course of business compared with, 89. 
 payment must be without, to insure protection under sect. GO. . 
 
 113. 
 
 NEGOTIABILITY, 
 
 absolute, a fixed quantity, 244. 
 
 cheque, of, how far affected by crossing, 44. See also " Nor 
 
 NEGOTIABLE." 
 conditions of, 248 sqq. 
 
 dividend warrants, of, 220. Atid see tliat Title. 
 estoppel, by, only convenient figure of speech, 251. 
 exigencies of, 163 sqq., 171, 176. 
 in country of origin, not evidence of, here, 250. 
 not affected by words " account payee," 49 sqq. 
 quasi-, 250 sqq. And see QUASI-NEOOTIABILITY. 
 recent recognition of, sufficient, 249, 250. 
 transfcrability, distinguished from, 31, 248 sqq. 
 usage of Stock Exchange, whether con f enable by alone, 24'J. 
 
 NEGOTIABLE INSTRUMENTS, 
 bills of lading, whether, 255 sq. 
 
 by estoppel, 94 sq., 102, 144, 164. And sec ESTOPPI i.. 
 documents in Revenue Act, 1883, are not, 31, 114, 220, 221. 
 " estoppel, negotiable by," a mere convenient figure of speech, 
 
 251. 
 
 exigencies of negotiability. See NEGOTIABILITY. 
 goods, documents of title to, are not, 255. 
 how they pass, 256, Ac. 
 
 money paid on by mistake, whether recoverable, 156 sqq. 
 where document not a, 163 sq. 
 
 NON-KXisTKNT PERSON AS PAYEE. See under FICTITIOUS.
 
 INDEX. 
 
 NON-FEASANCE, 
 
 ;is opposed to misfeasance, in dealing with property of others,. 
 183, 186. 
 
 NOTE, 
 
 deposited as collateral security, 242. 
 
 realisation of securities, 272. And see that Title. 
 
 NOTICE, 
 
 constructive, of death of surety, 300. 
 
 of prior equitable mortgage to subsequent legal 
 
 mortgagee, effect of, 282. 
 of conveyance of reversion, further advances on mortgage after, 
 
 290. 
 of second charge, further advances on mortgage after, 289 sq. 
 
 NOTICE OF DISHONOUK, 
 
 banker's duty to give, where bills, &c., subject to lien dis- 
 honoured, 241. 
 cheque, of, 42 sq. , 228. 
 
 drawer entitled to, 42, 228. 
 when excused, 43, 228. 
 
 collecting banker, by, 43, 227. And sec COLLECTING BANKER.. 
 delay in giving, when excused, 170. 
 how to be given, 229 sqq. ; by 
 
 (a) post, 230. 
 
 (b) telegram, 230. 
 
 (c) telephone, whether this good, 230. 
 
 opportunity for, lost, effect of, on money paid by mistake, 168.. 
 
 And see MONEY PAID BY MISTAKE. 
 return of dishonoured bill or cheque to customer, whether, 
 
 unless customer has indorsed, 229. 
 time for giving, 169 sq., 228,230; where bill paid and money 
 
 reclaimed, 169. 
 where payment by mistake, 162. 
 
 " NOT-NEGOTIABLE " CROSSING. See CROSSED CHEQUES and 
 COLLECTING BANKER. 
 
 " NOT TRANSFERABLE," 
 
 written on cheque, effect of, 40. 
 
 NOVATION, 
 
 in case of corporation, 11. 
 
 operates as release of guarantor, 302. And sec GUARANTORS. 
 
 OMISSION, 
 
 commission, as opposed to, in dealings with property of others,. 
 182, 186.
 
 650 INDEX. 
 
 ORDER CHEQUES. See CHEQUES. 
 
 ORDERS. 
 
 drafts or. See DRAFTS OB ORDERS. 
 for delivery of goods, 255, 258. 
 
 within sect. 17 of Revenue Act, 1883, crossed cheques sections 
 extended to, 30, 189, 219. 
 
 ORDINARY COURSE OF BUSINESS, 
 interpretation of, 90. 
 negligence and, 89. 
 
 OVERDRAFT, 4. 
 
 bill or note deposited as collateral security does not suspend 
 
 remedy for, 242. 
 Corporation, by, 11 sq. 
 interest on, 4 sq. 
 minor, by, 16. 
 
 OWNER, 
 
 mercantile agent's possession, consent of, to, necessary, 259. 
 
 PARTICULAR FUND, 
 
 referred to in cheque, 22, 32. And see CHEQUE. 
 
 PARTIES, 
 
 change in character of, affecting deposit of securities, 269 s</-/. 
 
 And see SECURITIES. 
 
 contingency of, to be provided for in guarantees, 294, 307. 
 prior. See that Title. 
 third. See that Title. 
 
 PARTNERSHIP, 
 
 " firm," meaning of in Partnership Act, 1890. .307. 
 
 bank, joint stock or otherwise incorporated, not a, 307. 
 provision for change in constitution of, where account 
 guaranteed, 307. 
 
 PASS-BOOK, 115 sqq. 
 
 acquiescence based on, 131. 
 
 adoption of forgeries, bearing of, on, 126 sqq. 
 
 as inducing payment of cheques, 121. 
 
 as representation to customer, 115 sq. 
 
 counterfoils, comparison with, and with returned cheques, 127, 
 
 130. 
 
 custom as to, formulation of by bankers, 119. 
 customer's duty with regard to, 115, 118 sqq. 
 
 di-iiiud by Lord fisher, 121 qq., and by Mathew, J., 123. 
 assumed in America, 125 sqq. 
 degree of care roquirable from customer, 131 sq.
 
 INDEX. 351 
 
 PASS-BOOK contd. 
 
 delegation of duty as to, by customer, 124, 129 sqq. 
 
 American decisions as to, 124 sqq. 
 entry in, whether more important than uncommunicated entry 
 
 in bank's books, 209. 
 
 estoppel of customer from reopening, 120, 126. 
 injury to bank precluding reopening, 126 sq., 130 sq. 
 knowledge, how far negligence equivalent to, 129. 
 
 of subordinate, how far attributable to principal, 
 
 130. 
 
 of what, evidence, 116 sq. 
 
 position and effect of, matter for evidence, 118 sqq. 
 proper function of, 115. 
 proposed utilisation of, to apprise customer cheques taken only 
 
 for collection, 215 sq. And see COLLECTING BANKEB. 
 rectification of errors in, 116 sq. 
 report on in 1816. .115. 
 
 stated account, how far a, 117 sq., 121 sq., 125 sq. 
 supervision of subordinate, 129. 
 
 PAYABLE ON DEMAND, 34 sq. 
 
 where payable within specified period only, 34. 
 
 PAYING BANKER, 66 sqq. 
 
 abnormal cheques on, 68 sqq. 
 
 " account payee," effect on, 111 sqq. 
 
 agent for collection, when, 231. 
 
 agent, position as, 66, 152 ; advantages of, 67, 152. 
 
 alteration of his position, requisite for estoppel, 149. 
 
 bills domiciled with, when customer estopped as to payment of, 
 
 149, 151 sqq. 
 
 bound to know customer's signature, whether, 165 sqq. 
 cheques on, must be in legal form, 68 sqq. 
 cheques when available for drawing against, 79 sq. 
 crediting cheques as cash before cleared, 79, &c. And see 
 
 COLLECTING BANKER. 
 current balance not retainable to meet bills discounted (except 
 
 possibly on customer's bankruptcy), 76 sqq. 
 customer estopped by misleading, 149, 152 sq. ; or by negligence, 
 
 152. 
 
 discharge of bearer cheque, 81. 
 
 discharge where payee fictitious or non-existent person, 151. 
 disputing customer's title, 6, 75. 
 
 duty of, as to cheque sent by post, where declining to pay, 231. 
 of country bank dishonouring cheque presented through 
 
 Clearing House, 70, 231 sq. 
 
 effect on, of collecting banker crossing cheque, 57. 
 form of refusal to pay, 70. 
 holder supplementing balance to meet cheque, 72 sq.
 
 INDEX. 
 
 PAYING BANKER conM. 
 
 liability for conversion by paying on forged indorsement, 134, 
 
 153 sq. 
 
 lien. Sec that Title. 
 main dangers of, from forgeries, 143. 
 means of knowledge disregarded by, whether negligence, 155, 
 
 167. 
 money had and received, may make himself liable to holder for, 
 
 W. 
 
 must pay or refuse at once, 69, 90. 
 not to pay part of cheque, 72. 
 obligation to pay cheques, 66 sqq. ; where holding fund* 
 
 sufficient and available, 74 sq. 
 order of paying cheques, 70. 
 paying cheque on forged indorsement contrary to ordinary 
 
 course of business, 83. 
 
 pitying contrary to crossing. See tliat Title. 
 puying crossed cheques. Sec that Title. 
 paying domiciled bills on forged indorsement, 151 sqq. 
 payment of cheques out of date, 73 sq. 
 payment to innocent holder on instrument where forgery, when 
 
 recoverable, 156 sqq. 
 
 where customer's signature forged, 163, 161 sqq. 
 question of negligence as to, 165 sqq. 
 
 Sec also MONEY PAID BY MISTAKK. 
 principle as to paying order cheques, 85. 
 protection against forgeries, 143. And see FORGERY. 
 protection in paying order cheques. Sen PAYING ORDER 
 
 CHEQUES. 
 protection, where paying draft or order on forged indorsement, 
 
 25 sqq., 85. 
 
 requesting holder to re-present, 69 sq. 
 signature of payee presenting order cheque, question of right to, 
 
 and effect of, 36, 70 sq., 91. 
 Sec also BANKER. 
 
 PAYING BEARER CHEQUES, 81 sqq. 
 
 PAYING CROSSED CHEQUES, 101 833. 
 
 banker paying contrary to crossing cannot in any case debit 
 
 customer, 104. 
 
 erased or altered crossings, 108 sqq. 
 mandate conveyed by crossing, 104. 
 paying contrary to crossing, 83, 104 sqq. 
 
 where cheque voidable, 108. 
 
 position of banker paying in accordance with crossing, 110 sq. 
 IH.-ition of banker where cheque crossed " account payee," 110, 
 
 111 sqq. ; where "account payee" followed by 
 
 imli>rvn:ent, 112 sqq.
 
 INDEX. 
 
 353 
 
 PAYING CROSSED CHEQUES contd. 
 prohibitions as to, 101. 
 remedy of true owner where banker pays contrary to crossing, 
 
 101. 
 Revenue Act, 1883, s. 17, paying documents within, otherwise 
 
 than to payee, 113 sq. 
 
 sect. 79, whether position of banker affected by, 105 sqq. 
 where cheque crossed by unauthorised person, position of 
 
 banker, 101 sqq., 111. 
 
 PAYING-IN SLIPS, 
 
 proposed utilisation of, to apprise customer cheques taken only 
 for collection, 215 sq. And see COLLECTING BANKER. 
 
 PAYING ORDER CHEQUES. See FORGED INDORSEMENT and 
 PAYING BANKER. 
 
 PAYMENT IN DUE COURSE, 
 defined, 81. 
 
 PAYMENTS, 
 
 appropriation of, 2. See APPROPRIATION. 
 
 PERFORMANCE. See SPECIFIC PERFORMANCE. 
 
 "PER PRO.," 
 
 indorsement, of what notice, 193 ; effect under sect. 82. .193. 
 protection to banker paying on unauthorised signature, 92, 100. 
 See also COLLECTING BANKER and INDORSEMENT. 
 
 PERSONAL PROPERTY. See PROPERTY. 
 
 PLEDGE, 
 
 affected by dealings inconsistent therewith, 270. And see 
 
 SECURITIES. 
 
 banker's lien, an implied, 239, 242, 272. 
 bill of lading, utilisation of, as, recognised by Sale of Goods Act 
 
 1893.. 264. 
 indorsee of, by way of pledge under Bills of Lading Act, 
 
 1855, non-liability for freight, 264. 
 bill or note pledged to cover advance or overdraft does not 
 
 suspend remedy for debt, 246. 
 collateral security, of nature of, 242. And see COLLATERAL 
 
 SECURITY. 
 
 good faith, test of, in case of pledgee, 244. And see 247. 
 known agent as pledger, broad rule in dealing with, 247 ; rule 
 
 limited to fully negotiable instruments, 248. 
 mercantile agent. See that Title. 
 merger of, in higher right, 239, 240. 
 of bills, notes, and cheques, 242. 
 
 of documents, pledge of goods under Factors Act, 1889. .261. 
 parting with possession, when affected by, 271. 
 B. A A
 
 854 INDEX. 
 
 PLEDGE could. 
 
 pledger's rights as to, when debt satisfied, 243. 
 
 presumption in favour of transfer, 212, 242. 
 
 professedly independent owner, position where pledger dealing 
 
 as, 248. 
 quasi-negotiable documents, position of, 275 ; whether pledge or 
 
 equitable mortgage, 275. And see QUABI-NEGOTIABILITY. 
 sale and, different effect of, under Sale of Goods Act, 1893. .262. 
 satisfaction of debt not payment of bill or note deposited as, 
 
 242. 
 
 transfer distinguished from, 242. 
 what the subject of, 275. 
 
 PLEDGEE, 
 
 equitable mortgagee, rights of, as, 275 sq. And see EQUITABLE 
 
 MORTGAGE. 
 
 foreclosure, no right to, 274. 
 
 notice of intention to sell should be given, 274, 275. 
 quasi-negotiable documents, rights of, as to, 275. And see 
 
 QUABI-NEGOTIABILITY. 
 
 realising documents of title to goods held as cover for acceptances, 
 
 264, 274. 
 
 when default in case of, 274. 
 can realise when has paid acceptance, 274 ; or when drawer 
 
 undertakes to find funds and fails to do so, 275. 
 right of, to sell on default, 273; authorities for, 273 sqq. 
 date of default considered, 274 
 
 (a) where advance for fixed period, 274. 
 (6) where for indefinite period, 274. 
 rights of, as to realisation, 273 sqq. 
 stocks and shares, realisation of, by, -270. 
 title deeds to land, not saleable by, 276. 
 
 PLEDGOB, 
 
 right of, to surplus on realisation subject to pledgee's general 
 lien. And see PLEDGE and PLEDGEE, 277 sq. 
 
 POST-DATED CHEQUES, 
 
 banker, when protected in paying where indorsement forged, 88. 
 duty of banker as to, 35. 
 stamps on, 34. 
 valid, 34, 88. 
 
 POSTPONEMENT, 
 
 in mortgages. See MORTGAGE, EQUITABLE MORTGAGE, and 
 PRIORITY. 
 
 PRESENTMENT, 
 
 delay in, caused by intervention of agent, in collection of 
 (a) crossed cheques, 226. 
 (6) uncrossed cheques, 227.
 
 INDEX. 355 
 
 PRESENTMENT contd. 
 
 duty of banker to present bills, &c., subject to lien, 241271. 
 duty of collecting banker to present bills and cheques, 225. 
 promissory note payable on demand as collateral security, when 
 must be presented within reasonable time, to charge 
 indorser, 243. 
 
 reasonable time, what is, 243 sq. 
 through Clearing House, effect of, 227. 
 
 time for presenting bills on demand, 226 ; cheques, 226 sq. 
 And see COLLECTING BANKER. 
 
 PRINCIPAL AND AGENT, 
 agent. See that Title. 
 collecting banker simply an agent, 144. 
 estoppel of principal where agent wrongfully dealing with 
 
 title deeds, 254. 
 liability, alternative, 296. 
 
 judgment against one, conclusive election, 296. 
 mandant and mandatory, doctrine of, 97, 144. 
 relation of banker and customer, how far that of, 66 sq., 144 sqq., 
 152 ; advantages to banker of such relation, 67 sq. 
 See also BANKER, CUSTOMER, PAYING BANKER. 
 
 PRIOR PARTIES, 
 
 alteration of position of, in relation to notice of dishonour, 
 170 sq. 
 
 PRIORITY, 
 
 constructive notice to subsequent legal mortgagee, 282. 
 
 his duty to inquire for deeds, 282. 
 equitable mortgage, risks attending, 281. 
 
 equitable mortgagees, as between, apart from registration, 287. 
 Land Registry Acts, as affecting, 282 sqq. And see that Title. 
 Land Transfer Acts, how obtained under, 285. And see that Title. 
 
 how decided under, 287. 
 legal title, by acquisition of, 281, 287 ; possession of deeds, 
 
 protection against, 282, 287. 
 
 legal when postponed to subsequent equitable mortgage, 288. 
 second equitable mortgagee, gaining, by obtaining deeds, 287 sq. ; 
 
 exception to rule, 288. 
 stocks or shares, where mortgage of, 291 sq. And sec STOCKS 
 
 AND SHARES. 
 
 PRIVATE BANK, 
 
 provision for change in constitution of the bank partnership, 
 where account guaranteed, 307. 
 
 PRIVY COUNCIL, 
 
 decisions of, how far binding, 162, 208.
 
 856 INDEX. 
 
 PROCEEDS, 
 
 of cheque, affected by " not negotiable " crossing, 46 sq. 
 
 PROMISSORY NOTE, 
 
 payable on demand as collateral security, 243. And see COL- 
 LATERAL SECURITY. 
 where no payee, 35. 
 
 PROPERTY, 
 
 degree of, acquired by banker by possession of documents of 
 title to goods, 265 sq. 
 
 lien inconsistent with, 202, 239. 
 
 personal, equitable mortgage of, not barred by Statute of Limi- 
 tations, 276. 
 
 PROTECTION, 
 
 statutory. See STATUTORY PROTECTION. 
 
 PURCHASER, 
 
 for value without notice, position of, in court of equity, 281. 
 
 QUALIFIED ACCEPTANCE, 268 sq. And see ACCEPTANCE. 
 
 QUASI-NEGOTIABILITY, 250 sqq. 
 
 by conduct, representation, holding out agent as having 
 
 authority, 251, 253. 
 mi pleading term, 250 ; really is title by estoppel, 250 sq. And 
 
 see ESTOPPEL. 
 necessary character of agent's possession, what, 253. 
 
 as indicated by document intrusted to him, 251, 253. 
 Set also QUASI-NEGOTIABLE SECURITIES. 
 
 QUASI-NEGOTIABLE SECURITIES, 
 
 equitable mortgage, to be treated by pledgee as subject of, 275. 
 so-called, 250 sqq. And see QUASI-NEGOTIABILITY. 
 
 REALISATION OP SECURITIES, 272 sqq. And see SECURITIES. 
 bills, notes, and cheques, 239, 242, 272. 
 method of, on what depending, 272. 
 method where mere lien, 272. 
 mortgaged land, 272. And sec MORTGAGE. 
 pledgee's rights, 273 sqq. A nd see PLEDGEE. 
 surplus on, disposition of, 276 sq. And see SURPLUS. 
 
 RECEIPT. See DEPOSIT-RECEIPT. 
 
 REGISTER. See LAND REGISTRY ACTS and LAND TRANSFER ACTS. 
 correction of, when necessary under Land Transfer Acts, 287.
 
 INDEX. 357 
 
 EEGISTBATION, 
 
 forged transfer, effect of forwarding for, 293. 
 
 not a representation or undertaking to indemnify company. 
 
 293. 
 
 priorities between equitable mortgagees, apart from, 287. 
 stocks and shares, where mortgage of, 292 ; inoperative transfer 
 
 of, not perfected by, 292. And sec STOCKS AND SHAKES. 
 when compulsory under Land Transfer Acts, 285. And see that 
 Title. 
 
 RELATION OF BANKER AND CUSTOMER THE CURRENT 
 ACCOUNT, 1 sag- 
 
 RELEASE, 
 
 of surety. See GUABANTOBS. 
 
 RESTS, 
 
 interest, charging with yearly or half-yearly, where acquiescence 
 
 of customer, 5. 
 
 when stipulated for in guarantee, 299 ; notwithstanding 
 relation of banker and customer superseded, 299. 
 
 RESULTING TRUST, 
 phrase considered, 278. 
 surplus on pledgee's realisation of securities, not a, 278. 
 
 REVENUE ACT, 1883, s. 17, 
 
 crossed cheques sections applied to documents within, 30, 98, 
 
 113, 209, 219. 
 
 documents affected by, 30 sq., 189 sq., 219 sq. 
 documents within distinguished from cheques, 31 sq., 220. 
 
 not negotiable, 31, 114, 220 ; though regarded as such in 
 
 Bavins, jun., and Sims Case, 209, 221. 
 not transferable, 31, 114, 220. 
 protection to banker under, 32. 
 
 SAFE CUSTODY, 
 
 valuables for. See CUSTODY and VALUABLES FOB SAFE 
 CUSTODY. 
 
 SALE, 
 
 equitable mortgage, in cases of, 275 sq., 280. 
 of goods. See SALE OF GOODS ACT, 1893. 
 pledgee's rights as to, 272 sqq. And see PLEDGEE. 
 remedy by, where within Land Transfer Acts, 287. 
 
 SALE OF GOODS ACT. 1893. .255. And see GOODS. 
 complexity of, and of Factors Act, 1889. .255, 257. 
 consideration necessary under, 260. 
 general design of, 258. 
 interpretation of, 257. 
 
 AA*
 
 358 INDEX. 
 
 SALE OF GOODS ACT, 1893 contd. 
 
 ' lawfully transferred " in sect. 47 of, construction of, 263. 
 
 mercantile agent. See tJuit Title. 
 
 pledge, different effect of and of sale, under Sale of Goods Act, 
 
 1893.. 262. 
 
 price unpaid, vendee's title not invalidated by notice that, 263. 
 sale within not equivalent to sale in market overt, 259. 
 scope of, 255. 
 vendee. See that Title. 
 vendor. See that Title. 
 
 vendor's right of lien or stoppage in transit u, how and to what 
 extent defeated under, 262. 
 
 SCOPE OF EMPLOYMENT, 
 
 acts of bank's officers not coming within, effect of, 181. 
 
 SECURITIES, 
 
 change in character of parties, how affecting deposit of, for 
 
 advances, 269 sqq. 
 
 alteration of composition of : (1) the lending corporation 
 
 or joint stock company, 270 by (a) amalgamation, 270, 
 
 (6) absorption, 270; (2) the borrowing person or firm, 
 
 270 ; considered, 270. 
 
 contingencies thence arising, how to be provided against, 
 
 270. 
 
 collateral, 241 sq. And see COLLATERAL SECURITY. 
 documents of title to goods, 255 sqq. And see that Title. 
 for advances, 233 sqq. 
 
 fully negotiable, as collateral security, 244. 
 lien or pledge affected by dealings inconsistent therewith, 270. 
 parting with possession, when pledge affected by, 271 ; need for 
 
 circumspection in, 271. 
 quasi-negotiable, so-called, 250 sqq. And see QUASI-NEGO- 
 
 TIABILITY. 
 
 realisation of, 272 sqq. And see that Title. 
 
 surplus on realisation of, disposition of, 277. And see that Title. 
 
 of goods or securities pledged to cover acceptances, 278. 
 
 assignment of drawer's rights, effect on, 278. 
 what subject to banker's lien, 233. And see LIEN. 
 
 SECURITY 
 
 collateral. See COLLATERAL SECURITY. 
 given by minor, for overdraft, void, 16. 
 
 SET-OFF, 202, 237. 
 
 banker's lien attaching to money, referable to, 237 sq. And see 
 
 LIEN. 
 surety's right of, 306; unlikely to operate where guarantee to 
 
 bank, 306. And see GUARANTORS. 
 surplus on realisation, pledgee's right to, against, 277.
 
 INDEX. 359 
 
 SHARES. See STOCKS AND SHAKES. 
 
 SOLICITOR, 
 
 position of equitable mortgagee where title deeds left with and 
 pledged by, 288. 
 
 SPECIFIC PERFORMANCE, 
 
 of agreement to make loan, no action for, 291. 
 
 STAMP ACT, 1815, deposit receipts, bearing of repeal of, on, 23. 
 
 1853, whether sect, 19 of, applies to any except 
 inland drafts or orders, 98 sq. And sec 
 DBAFT OB OEDEB. 
 1891, deposit receipts exempted by, 22 sq. 
 
 unstamped cheques, provisions as to, 43. 
 See also TABLE OP STATUTES CITED. 
 STAMP DUTY, 
 
 deposit receipts exempt from, 22 sqq. ; post-dated cheques, 34 ; 
 where cheque issued unstamped, 43. 
 
 STATED ACCOUNT, 
 
 how far pass-book a, 117 sqq. And see PASS-BOOK. 
 
 STATUTE OF FRAUDS, 
 
 guarantees, provisions of, as to, 295. 
 
 STATUTE OF LIMITATIONS, 32. 
 
 continuing guarantee, effect of, on, 312 sq. 
 
 current account, effect of, on, 2, 75. 
 
 deposit account, effect of, on, 18, 20. 
 
 personal property, equitable mortgage of, remedy on, not barred 
 
 by, 276. 
 when begins to run, 20. 
 
 See also TABLE OF STATUTES CITED. 
 
 STATUTORY PROTECTION, 
 
 statutory risks, question of limitation to, 24, 27, 55, 99, 200, 224. 
 
 STOCKBROKER, 
 
 securities taken from an agent such as a, 244 sq. 
 
 mistaken impression as to banker being affected with con- 
 structive notice, 244 sq. ; corrected by later case, 245, 246. 
 And see COLLATEBAL SECUBITY. 
 
 STOCKS AND SHARES, 
 
 blank transfer not a deed, 292. 
 
 redelivery of, to make effectual, 292. 
 deed not required, position where, 292. 
 deed, where transfer must be by, 292. 
 equitable interests, ostensible owner subject to, 291. 
 forged transfer of, effect of forwarding for registration, 293 ; not 
 a representation or undertaking to indemnify company, 293.
 
 860 INDEX. 
 
 STOCKS AND SHARES tontd. 
 
 legal estate must be acquired to bar equitable rights, 291. 
 
 how acquired, 291. 
 mortgages of, 291 sqq. 
 priorities as to, 291. 
 realisation of, by pledgee, 276. 
 registration, 292. 
 
 absolute right to, acquired before notice of equitable 
 title, 292. 
 
 inoperative transfer not perfected by, 292. 
 
 STOPPAGE IN TRANSITS, 
 
 bills of lading, capacity of, to defeat unpaid vendor's right of, 
 
 257, 264. 
 vendor's right of, under Factors Act, 1889, and Sale of Goods 
 
 Act, 1893.. 262. 
 how and to what extent to be defeated, 2C2. 
 
 SURETIES, 
 
 the law solicitous for interests of, 294. See also GUARANTEE 
 and GUARANTORS. 
 
 SURPLUS ON REALISATION OP SECURITIES, 
 disposition of, 277 
 
 (a) when bills, &c., held by pledgee, 277. 
 (6) when by transferee, 277. 
 lien or set-off for further indebtedness, 277 sq. 
 not subject of trust, 278. 
 
 where goods or securities pledged to cover acceptances, 278 ; 
 assignment of drawer's right, how affects, 278. 
 
 THIRD PARTIES, 
 
 position of, where voidable instrument repudiated, 138, 140 sq. 
 rights of, not to be set up by banker against customer, 6. 
 undertaking of customer to forward bills of lading against 
 
 acceptance, position of, where, 266. And see DOCUMENTS OF 
 
 TITLE TO GOODS. 
 
 TIME, 
 
 giving of, to principal debtor, to be provided for in guarantc , . 
 294. Sec also GUARANTEE and GUARANTORS. 
 
 TITLE, 
 
 absence or defect of, in customer, 224 sq. And see COLLECTING 
 
 BANKER. 
 by estoppel, quasi-negotiability is really, 250 sq. See also 
 
 ESTOPPEL and QUASI-NEOOTIABILITY. 
 documents of, to goods, under Factors Act, 1889, and Sale of 
 
 Goods Act, 1893. .255 sqq. And sec tliosc Titles.
 
 INDEX. 361 
 
 TITLE contd. 
 
 documents of, to goods, not negotiable instruments, 255. 
 legal, priority of equitable mortgagee by getting in the, 287. 
 to 'proceeds of cheque affected by " not negotiable crossing," 
 46 sq. 
 
 TITLE DEEDS, 
 
 agent wrongfully dealing with, 254. 
 
 deposit of. See EQUITABLE MORTGAGE and LAND EEGISTRY 
 
 ACTS. 
 
 not subject of pledgee's right of sale, 276. 
 of unregistered land, effect of not calling for, 287. 
 possession of, in equitable mortgage, effect of, 287 sq. And see 
 
 PRIORITY. 
 
 TRANSFER, 
 
 distinguished from pledge, 242. 
 
 Land Transfer Acts. See that Title. 
 
 of bills of lading, antecedent debt good consideration for. 264. 
 
 And see BILLS OF LADING. 
 of stocks and shares, 292. And see that Title. 
 
 forged, effect of forwarding for registration, 293. 
 
 TRANSFERABILITY, 
 
 documents affected by Revenue Act, 1883, s. 17, not transferable, 
 
 31, 114, 220. 
 
 negotiability distinguished from, 31 sq., 248 sq. 
 not affected by " not negotiable " crossing, 46, 48. 
 not affected by words " account payee," 49 sqq., 111. 
 of cheque, how prohibited, 40. 
 
 TRANSFEREE, 
 
 when banker a, 203 sqq. And see COLLECTING BANKER. 
 
 TBANSITU, 
 
 stoppage in. See that Title. 
 
 TROVER. See CONVERSION. 
 
 TRUE OWNER, 
 
 cannot maintain conversion where cheque discharged, 82 sq. 
 
 collecting banker's obligation to, 192. 
 
 conversion, suing for, 134 sq., 154, 188. 
 
 denned, 134 sq., 225. 
 
 his rights under sect. 79..105S2. ; whether any fresh remedy 
 
 given by, 105 sqq. 
 inquiry as to fate of cheque by collecting banker, unaffected by, 
 
 196. 
 money had and received, suing for, 188. See also MONEY HAD 
 
 AND RECEIVED.
 
 862 INDEX. 
 
 TRUE OWNER -con td. 
 
 no liability of collecting banker to, by reason only of receiving 
 
 payment within sect. 82.. 225. And see COLLECTING 
 
 HANKER. 
 remedy of, against banker paying contrary to crossing, 101, 
 
 105 sqq. 
 
 rights of, where cheque marked " account payee," 111 sq. 
 whether remedy in respect of cheque crossed by collecting 
 
 banker, 57. 
 
 TRUST ACCOUNT, 
 
 banker's position where fraud on, 8 sqq. 
 no lien on, 8 sqq. 
 
 TRUSTEE, 
 
 ci'shti que trust's, position, where title deeds left with and 
 
 pledged by, 288. 
 in bankruptcy, title of customer's, 7. 
 
 " ULTIMATE BALANCE," 297, 310, 311. 
 
 guarantees, meaning of, in, 297. See also GUARANTEE. 
 
 UNDERLEASE, 
 
 legal mortgage by, position of mortgagee, 280. 
 
 UNSTAMPED CHEQUES, 
 fallacy as to, 43. 
 
 provision of Stamp Act, 1891, as to, 43. 
 
 USAGE, 
 
 negotiability, whether conferable by that of Stock Exchange 
 
 alone, 248 sq. 
 custom. Sec that Title. 
 
 VALUABLES FOR SAFE CUSTODY, 178 sqq. 
 banker generally gratuitous bailee, 179. 
 care, degree of, required from gratuitous bailee, 180. 
 from bailee for award, 180. 
 contracting himself out of liability, practicability of banker's, 
 
 186. 
 distinction between gratuitous bailee and bailee for reward 
 
 probably immaterial to banker, 180. 
 express agreement, position of banker where none, 179. 
 fraud or felony of staff, banker not liable for apart from 
 
 negligence, 181. 
 involuntary bailee, position of, 183 sqq. ; banker not, 1R5.
 
 INDEX. 363 
 
 VALUABLES FOR SAFE CUSTODY contd. 
 
 knowledge of nature of, by banker, immaterial, 181. 
 memorandum of Central Association of Bankers as to banker's 
 
 position, 179, 182. 
 misdelivery, banker liable for, as a conversion, apart from 
 
 negligence, 182 sqq. 
 
 grounds on whicb such liability supported, 182 sqq. 
 grounds on which denied, 186. 
 Mrs. Langtry's Case, 182. 
 receipt of, scarcely to be regarded as in course of banker's trade 
 
 or duty, 235. 
 " safe custody," banker's liability not enhanced by use of these 
 
 words, 178. 
 suspicion, course to be followed where, 186 sq. 
 
 VENDEE, 
 
 Factors Act, 1889, and Sale of Goods Act, 1893, under, 258. 
 assimilated to mercantile agent, 261. 
 person holding goods under hire-purchase agreement, 
 
 when included as, 259 ; when not, 259. 
 possession by, how must have been obtained, 259. 
 possession, not property, the cardinal fact, 259 ; but element 
 
 of consent essential, 259. 
 pre-existing debt in case of, 261. 
 
 transfer of documents by, though price unpaid, 263. 
 
 VENDOR, 
 
 Factors Act, 1889, and Sale of Goods Act, 1893, under, 258. 
 pre-existing debt in case of, 261. 
 lien of, 262. 
 
 right of stoppage in transitu, of, 262. 
 how and to what extent to be defeated, 262. 
 
 VOID AND VOIDABLE INSTRUMENTS, 133 sqq. 
 
 cheques, 47 sqq. 
 
 effect of " not negotiable" crossing on, 47 sqq. 
 voidable paid contrary to crossing, 108. 
 distinction between, with regard to passing of property in, 
 
 136 sq. And cf. 260. 
 
 voidable, repudiation of, 137 sqq. ; rights of third parties on, 
 138, 140 sq. 
 
 WAREHOUSEMAN, 
 
 certificates of, 255, 258. 
 
 misdelivery of goods by, 185. And see VALUABLES FOR SAFE 
 CUSTODY.
 
 364 INDKX. 
 
 WARRANT, 
 
 for delivery of goods, 258. And, sec ORDER. 
 
 WARRANTY, 
 
 estoppel distinguished from, 164, 173, 
 
 YORKSHIRE REGISTRY ACT, 1884, 
 
 mere deposit of title deeds postponed under, where no 
 . randum registered, 283 sq. 
 
 See also* LAND REGISTRY ACTS, LAND THASSFKI 
 and PRIORITY, 
 
 THE END. 
 
 BKADHI RT, A'iXKW, ft CO. LD., PRINTERS, UHCDOX AND TONHRllx.f
 
 BUTTERWORTH AND CO.'S STUDENTS' WORKS. 
 
 THE "HORNBOOK SERIES. 
 
 A SERIES OF TEXT-BOOKS FOR LAW STUDENTS. 
 
 I. Trusts. I'NiiKiuuu.'s i,.\\\ OF 
 
 iitinn. 11)01. I'ric-- 17>. Bd. : for Cash, 
 . . . to students, indispm 
 
 2. TOrtS. I'M'KUHU.I.'s I<A\V 
 
 !ith Edition. 1'Juo. I'n,-,. In,-. ;-/. ; I',,,- C/i-li, p, 
 " Invalualile to tin- stud.-' 
 
 3. Conveyancing. SIK \n\\s IMK. 
 
 Pure 10,. <j,/. : f..r Ca-li, p,,M fn-,-, S>. 1(V. 
 11 \V- cordially commend it in students." 
 
 4. Executors and Administrators. 
 
 Rni'.mN.v ^ MAW'S KM:, rums AND AI>MIM 
 Thirl Kditioii. I!)<>1. I'ri.-e |:,,. ; f,,r Cash, j.o.si live. 1-J-. 
 
 - 1 i-iuiiot do liettci- than uru<- industrious students ;liebook." 
 
 Mr. .Tolin Indi-rinaiir in /,'/' 
 
 5. Vendors and Purchasers. SBABORB -ERS. 
 
 Fifth Kditioii. l'.)ol. 1'rici- lux. ;,/.; f t ,r ( 'a-li, ]ot Free, 8. 1O./. 
 
 "CM -tudrnts : likfly to become popular with theoi." Law 
 
 ncU. 
 
 6. Evidence. i'"v 
 
 nth Edition. is<)!. 1'ricr tl : fm- < 'a>li, ]"-t I'n 
 
 .ai'ly and conci-i-ly si-ts out and illust r;iti-s l>otli tin- principles and the 
 8 of li-^al t.'vidi'iii-c.' 
 
 7. Conveyancing Precedents. KI uv> < <>N\I YANUN,, DUMLSMAN. 
 
 Fourtli Kditioii. l!t()o. I'ric,. If,,. : |f,r ( 'u-di. ],...-t t'i> . 
 
 Precisely tin- l...k \vt- would put into the hands of students."/ 
 
 8. Libel and Slander. FBASBE'S LAW OF LIBEI. AHD SLAB 
 
 I'rinripU-s iin- Third Edition. I'.X'I. Price 12& 6d ; for < 
 
 ].o-t Irrr, lOv. ")./. 
 
 A i.f \\ork." Law Journal. 
 
 9. Partnership. CTNDBBHILL'B L.\\v <>i- I'AKTNKKMui 1 . 
 
 :'./. 
 
 10. Wills. I'M>KKHILI. AMI STKAIIAN >N \Vn.i.s AM> SKITI.KM: 
 
 I'.MMI. I'ri.-i- i ! 
 
 An CM ll ( -iit I ">ok for Mudi-nts." -Ca ''I- 
 
 II. Mercantile Law. ni ' AU 
 
 nil Kdition. l!in:>,. Price 10*. <''. : for 'a~li. p.- 
 Lt an introdui-tion to Mcrrantil. lival."--./ 
 
 12. Contracts. i'i ' MI- 
 
 .,nd Kditioii. |s:7. I' 
 liivalual.lc t" tin- >tud. 
 
 13. Roman Law. WM 
 
 l^'.7. I'- 
 
 14. Equity. \>m 
 
 I'rinripl, 
 
 , tin- Conn, -il ol :ii(-ation. 1!)"; 
 
 15. Legal History. 
 
 
 
 BUTTERWORTH & CO., Law Publishers, 12, Bell Yard, W.C.
 
 UC SOUTHERN REGIONAL LIBRARY FACILITY 
 
 Published every Saturday. Price Qd., post f^ 000 695 448 1 
 
 ZTbe Justice of the peace, 
 
 AND 
 
 Justice of the peace IReports, 
 
 Containing Full Reports of every Reportable Local Government and Magisterial Case. 
 68TH YEAR OF PUBLICATION. 
 
 Editors: S. O. LUSHINGTON, Esq., M.A., B.C.L., W. W. MACKENZIE, 
 
 Esq., M.A., and C. E. ALLAN, Esq., M.A., LL.B., 
 
 Barristers-at-Law. 
 
 SUBSCRIPTION (Prepaid) l 8s. 6d. per annum, including Index. 
 Forwarded free to all parts within the Postal Union. 
 
 SPECIMEN COPY GRATIS ON APPLICATION. 
 
 The Pages of the "Justice of the Peace " are Principally devoted to .Matters relating 
 to Public Health, Poor Law, Magisterial and Parochial Business, Practical Treatises 
 on Acts of Parliament, Answers to Questions submitted to Editors by Subscribers, 
 Digests of Reports presented to Parliament, Periodical Business to be done at 
 
 Sessions, etc. 
 Subscriptions to be sent to 
 
 THE PUBLISHER of the "Justice of the Peace," 
 
 7 & 8, Fetter Lane, London, E.C. 
 Or can be had through 
 
 BUTTER WORTH & CO., 
 
 12, Bell Yard, Temple Bar, London, W.C. 
 
 BUTTEKWORTH & Co. will be glad to give Estimates for 
 supplying Sets, or portions of Sets, of any Reports that Members 
 of the Legal Profession may require. Being the Publishers of 
 some of the old and valuable Reports, B. & Co. solicit- Orders 
 direct, good and perfect Copies being guaranteed. 
 
 ALL LAW REPORTS SUPPLIED. 
 
 CATALOGUE AND LISTS GRATIS ON APPLICATION. 
 Licensed Valuers for Probate. Law Libraries Purchased. 
 
 SENT GRATIS on application, 
 
 Complete Catalogue of English Law Works, 
 
 With an Alphabetical Table of Abbreviations used in the various Reports 
 and Text Books. 
 
 BUTTERWORTH & CO., 
 
 3Law publishers, Booksellers, ant) importers, 
 
 12, BELL YARD, TEMPLE BAR, LONDON, W.C. 
 
 Telegraphic Address : BUTTERWORT LONDON. 
 
 ( 4 )
 
 n 
 
 ~- <^--,^o v>'v.-i - :; ''" :; - : 
 
 ^^'^J^^'v^E 
 
 : . -: 
 
 .;;" ..-. S*ffijL