of d 4 ^ (California lElaus Sprcckels KTund 3nsttttite of Bankers. QUESTIONS ON BANKING PRACTICE From Vols. I XVIII (inclusive) of the Journal. REVISED AND ISSUED UNDER THE SANCTION OF THE COUNCIL OF THE INSTITUTE, Classified and Indexed ly W. TALBOT AGAR, Barrister -at- Law > Secretary of the Institute of Bankers. FIFTH EDITION.-ENLARGED AND REVISED. PRICE SIX SHILLINGS. Conbon : BLADES, EAST AND BLADES, 23, ABCHURCH LANE, E>C. EFFINGHAM WILSON, ROYAL EXCHANGE. 1898. SPRECKELS BLADES, EAST & BLADES, PRINTERS, 23, ABCHURCH LANE, LONDON, E.G. PREFATORY NOTE TO THE FIRST EDITION. From the date of the establishment of the Institute of Bankers the Council have received various Questions on Points of Practical Interest, which, together with Answers thereto, have been published from time to time in the Journal. These Answers, ivithout claiming the authority of legal decisions or absolute infallibility in every detail of so much complicated or contentious matter, are such as the Council, after careful consideration, have felt themselves justified in giving as representing the generally accepted practice of Bankers at the time. This book has been prepared with a view of rendering these Questions as readily accessible for reference as possible. Since the commencement of the issue of the Journal, the passing of certain Acts of Parliament, such as the Bills of Exchange Act, the Married Woman's Property Act, and others has rendered necessary the altera- tion, and in some cases the entire omission, of certain Questions. The remainder have undergone careful revision by the Council, and are now issued with their approval. NOTE TO THE FIFTH EDITION. This Edition comprises the Questions contained in previous issues of the work, and in addition those which have since appeared in the Journal of the Institute to the end of 1897. The whole ivork has again undergone careful revision by the Council, and the alterations and amendments thought necessary have been so numerous that this Edition must be considered to entirely supersede all previous ones. 1.1364' QUESTIONS ON BANKING PRACTICE, BANKER 1. QUESTION: Banker A receives from his customer (or another bank through the post) a bill of .20 domiciled with bank C in the same town. The bill is duly presented at maturity, and C tenders 16 in part payment, and marks the bill, ''the balance 4 is " promised to-morrow." Ought A to refuse the amount tendered, or, in the interest of his customer, to receive it? ANSWER : A should refuse part payment. 2- QUESTION : Can a banker receive part payment of a cash order received for collection marking the amount received on order and return for balance unpaid ? Would he be safe, also, in adopting the same course with regard to a bill received in the same way ? ANSWER: A banker, in the absence of special circumstances, or of instructions from his correspondent, should not receive part payment. 3- QUESTION: Within what period must a banker present, for payment cheques handed to him by his customer for credit ; and, if unpaid, when is the banker bound to return them or give notice to the customer 1 ANSWER: A banker receiving cheques from his customer for credit has, with regard to cheques drawn on bankers and others in the same place, the whole of the day on which they are received and of the next day for presentation, and if unpaid, they should be returned to the customer either by post on the evening of the said next day or by hand on the following morning. 4. QUESTION : Give similar replies respecting cheques sent per post by another banker, both in the cases of cheques drawn on the sendee, and of cheques drawn on bankers other than the sendee. ANSWER: With regard to cheques drawn on other places which have to be forwarded by post to an agent for collection, the banker has in like manner up to the evening of the day after receipt to post them to his agent, and the agent has up to the day after his receipt of them to present them to the drawees. A banker receiving cheques by post for payment drawn upon himself has the same time for presentment, it being held that he is acting as agent of the sender. (See Counsel's opinion, Question 5.) 2 Questions on Banking Practice. BANKER continued. 5. QUESTION : A cheque drawn upon banker A (say at Oxford) is paid to banker B (say at Bristol) by a customer, for collection. B forwards it by the post of Monday to A (with whom he has no current account) with a request that the amount may be remitted in the usual course. A receives the cheque on Tuesday morning, retains it until Wednesday, and then returns it by post dishonoured to B. The usual, and it may be said almost invariable, course would have been to return it by the post of the day on which it was received, and B contends that A was under a legal obligation to do so. He argues upon the authority of the cases of Bailey v. Bodenham, 32 L. J. (C. P.), 254 ; Prideaux v. Griddle, 4 L. R. (Q.B.), 460 ; and Heywood v. Pickering, 9 L.R. (Q.B.), 432, that a presentment of the cheque through the medium of the post is a good presentment, and contends that it would be quite as reasonable for A to claim to retain a cheque presented over the counter as to do so in the case of one presented through the post. A, on the other hand, contends that under the circumstances he became the agent of B for the purpose of presenting the cheque, that it was in that character, and not in his character of drawee, that the duty of returning the cheque or giving notice of dishonour to A was imposed upon him, and that, if this be so, his duty must be the same as if the cheque had been sent to him for presentation to another banker in the same town. It is admitted on both sides that in the latter case the cheque need not have been returned until Wednesday. You are requested to advise what, under the circumstances stated, was A's legal obligation in reference to the return or otherwise giving notice of dishonour of the cheque. (OPINION.) We are of opinion that the Oxford bank (A) on dishonouring the cheque is under no legal obligation to return the dishonoured cheque or send off notice of dishonour to the Bristol bank (B) until Wednesday, the day after the cheque was received. We think that in returning the dishonoured cheque and sending notice of dishonour the Oxford bank is acting, not in its capacity of drawee of the cheque, but as agent for the Bristol bank, and that its legal obligation is certainly fulfilled by its acting with reasonable diligence. According to all analogy, the bank would be acting with reasonable diligence if it returned the cheque and gave notice of dishonour on the Wednesday. ARTHUR COHEN, Q.C. M. D. CHALMERS. Questions on Banking Practice. 3 BANKER continued. 6. QUESTION : Does a country banker, who receives a cheque for payment by post from another banker, become the " agent for col- " lection " within the meaning of the Bills of Exchange Act, sec. 77, sub-sec. 5, and sec. 79, sub-sec. 1, or, in other words, how far does one bank constitute itself the agent of another 1 ANSWER : It has been held that a country bank receiving a cheque by post from another bank for payment does become the " agent for " collection " of the sending bank. See the opinion of Mr. Arthur Cohen, Q.C., and Mr. M. D. Chalmers (Question 5). 7. QUESTION: A B pays a country cheque to his account on a Monday, and being anxious to ascertain its fate without delay, requests his banker to forward it direct. The bank on which the cheque is drawn duly receives it on Tuesday, but does not return it until the following day, so that it is not received back unpaid until Thursday. Not receiving it on Wednesday, the bankers informed their client that the cheque was cleared, and he acted accordingly. On representing the matter to the bank on which the cheque was drawn, they state that they are entitled to hold over the cheque until the second day, by the Bills of Exchange Act. Is this so ? ANSWER : The bank on which the cheque was drawn was entitled to hold it over until the day after receipt. (See Question 5.) The matter is not mentioned in the Bills of Exchange Act. 8- QUESTION : A bill of exchange is remitted for collection from bank A to bank B, at which office the bill has been accepted payable. Bank B, though the bill is dishonoured, retains it until the day following, then returning it by post, the bill not having been noted. Is bank B within its rights and free from all liability in thus retain- ing the bill and not getting it noted ? Would the answer be the same if it were a cheque drawn on bank B 1 Might the Bills of Exchange Act, 1882, sec. 49, sub-sees. 6, 12, 13, and sec. 51, be quoted as a defence by bank B 1 ANSWER: Bank B is quite in order in retaining the bill sent to him for collection until the day following receipt (See Question 5), and, if an inland bill, noting is not necessary. The retention of a cheque until the following day is equally permissible, unless it has passed through the country clearing, the rules of which require return of cheques by first post. 9- QUESTION: A cheque payable to XYZ and crossed < Co. is passed to his credit with his bankers. The payee wishing to know whether the cheque will be paid, asks for it to be presented at once, which is done. The paying bank, however, refuse to give an answer, stating, '" this cheque being crossed we reserve to the drawer the B 2 4 Questions on Banking Practice. BANKER continued. " right of stopping payment of it till closing time." Are the bankers justified in doing this? (1) Legally; (2) By force of any custom known among bankers. ANSWER : On the assumption that the question does not apply to clearing bankers, the answer in both cases is " No." 10. QUESTION : If a cheque on a bank be paid in to an account at the same bank, there being insufficient funds at the time to meet the cheque, should the cheque be returned unpaid at once? Or, if held, should the customer who pays it in be informed that the cheque is doubtful? ANSWER: The cheque may be held till the next day, and no information need be given to the customer paying it in. 11. QUESTION: A customer of a bank pays in to his credit a cheque drawn by one of the bank's own customers which is received without comment. Is it open to the bank to afterwards return the cheque, and if so, within what time? ANSWER : Within the day following. 12. QUESTION: A pays in a cheque to his account drawn by B on the same bank, asking no question as to the cheque being paid. Is A to consider B's cheque paid and that he may draw at once, whether, at the time of paying in, B's cheque were open or crossed ? ANSWER : If the cheque were open, A should enquire if he can at once draw against it, but if the cheque be crossed, A has no right to assume that amount to be at his disposition until the following day. 13. QUESTION : A customer of the St. Clement's bank pays in a cheque drawn on that bank at that same office and obtains the initialled receipt memorandum from the receiving cashier and is allowed to leave the bank without comment. In the event of any irregularity being afterwards discovered in the cheque is the bank justified in availing themselves of the power which the answers to questions 10 and 11 say they have, to return the cheque within the day following, in the face of their having given a memorandum of receipt ? ANSWER : Yes ; as the receipt does not necessarily mean more than that the cheque, if found in order, will be credited to the customer. 14- QUESTION : Bearing in mind sec. 49, sub-sec. 12&, and sec. 73 of the Bills of Exchange Act, 1882, it would seem that (inasmuch as Questions on Banking Practice. 5 BANKER continued. a cheque is a bill of exchange payable on. demand) it would be legal for a banker to retain until the day following a cheque received from another bank by post, or through the country clearing. But it would be contrary to custom to do so. If it is ruled that custom would override law, would the case be altered if notice of dishonour had been given by telegraph on the said day following? ANSWER : It would be legal for a banker to retain a cheque which he had received by post from another banker till the following day, but by the rules of the country clearing a cheque should be returned the same day, though notice by telegram the following morning would possibly save recourse. 15. QUESTION: A foreign bill, payable in London, due 21st November, drawn on a Middlesbro' Firm, is received by a Middlesbro' Bank from their London Agents on the morning of the 19th November, "for acceptance and return," with instructions to protest if dishonoured. The Middlesbro' Bank in the usual way present and leave the bill for acceptance on the 19th November. Next day the bill is returned to them partially accepted, and is therefore handed to the Notary, in the ordinary way at the end of the day, to be protested for the balance. The bill is returned by the Notary on the morning of the next day (the 21st November) as is customary, and is then returned, with protest attached, by the Middlesbro' Bank to their London Agents. The London Bank then write to say that if their customer is unable to obtain the balance from the drawees he will look to the Middlesbro' Bank for it, as owing to their not returning the bill on the 20th November it could not be duly presented on the 21st inst. 1. In the face of sees. 42 (1), 44 (2), and 49 (12), (6), Bills of Exchange Act, 1882, does any liability attach to the Middlesbro' Bank ? If so, on what grounds 1 2. In the face of sec. 39 (4), and assuming that the London Bank and previous parties have acted with reasonable diligence, would not a presentment on the 22nd November be a valid one? ANSWER : As regards the first question we consider that the Middlesbro' Bank were bound to have regard to the fact that the bill was due on November 21st, and to obtain the protest for non- acceptance from the Notary in time to have the bill back in London for presentation on November 21st. At the same time looking at sec. 39, sub-sec. 4, of the Bills of Exchange Act, 1882, the Middlesbro' Bank would seem to have some reason for the contention that they have used customary diligence, and that consequently the endorsers of the bill are not discharged. Whether a Court of Justice would sustain this plea is somewhat 6 Questions on Banking Practice. BANKER continued. doubtful, because it would have been practicable for the Middlesbro' Bank to have returned the bill in time. 16- QUESTION: An Irish bank receives for collection from a London banker, a local trader's acceptance. If not paid earlier, may it be held till the close of business (3 o'clock) on the day after the due date, or ought it to be returned by the English mail which leaves at 1 o'clock in the afternoon, and by which it would reach London a day sooner ? The former seems to be the course generally followed. ANSWER : If the English mail leaving at 1 p.m. is the only mail in the day to England, the dishonoured bill ought to be returned by that mail, but if there be a later mail to England the same day it will be sufficient to return the bill by such later mail. It would be desirable and consistent with practice to send notice of dishonour by the one o'clock mail of the day after the due date, if the bill were retained till a later post. 17. QUESTION: A cash order on demand, drawn in France in francs, is remitted by a London banker to a country town for collec- tion, reaching the banker there by first postal delivery. In the evening of that day he sends a post-card acknowledging receipt, and quoting a sterling amount. At the close of business on the following or second day he returns the article unpaid. Was the country banker justified in holding over the cash order until second day without advice to remitter to that effect ? And was not his acknow- ledgment under such circumstances (quoting sterling amount) misleading ? ANSWER : The country banker was quite justified in holding over the draft in question till the next day after receipt by him, but the acknowledgment of such receipt, with the sterling amount of the draft mentioned, might be misleading unless it were customary between the two banks to acknowledge immediately the receipt of all remittances without reference to their being encashed. 18. QUESTION : Can a banker return dishonoured a cheque which he has held till the evening of the day following that on which he received it, if he has acknowledged its receipt, but without stating whether paid or not? ANSWER : It is the invariable practice of bankers in London, and, it is presumed, in England generally, to acknowledge receipt of remittances for the credit of a banking account on the day of receipt ; but such acknowledgment does not and is not intended to convey any advice that the cheques included in the remittance have been either presented or paid. On the contrary, both law and Questions on Banking Practice. 7 BANKER continued. custom permit of such cheques being presented for payment either on the day of receipt or the day next following, and it is not cus- tomary to return them, if unpaid, until the evening of such following day. 19- QUESTION: A country banker sent a cheque for collection (and credit through his London Agents) to another country banker in England : as it was not received back unpaid the first thing on the morning of the second day after it was sent for collection, it was treated as paid. About middle-day a telegram was received, saying, the cheque was unpaid, and the cheque was returned the following morning, the drawer's banker having held it two days. They main- tain that they acted strictly within their legal rights in doing this. Is this correct ? They say the fact of their telegraphing was an act of courtesy on their part. If their contention is correct, what is gained in sending a cheque direct? It might, apparently, just as well be sent in the ordinary course through the clearing. ANSWER : The drawer's bankers are right in their contention, and sending the telegram was a matter of courtesy. (See Question 5.) 20. QUESTION : May a bill, remitted by a London banker to a country banker for collection, be held by the latter without liability one day after maturity 1 Case : A, of London, remits for collection and credit through London correspondent to B, of, say, Ipswich, bill due 24th inst. The acceptor requests B to hold the same until the 25th, when he will provide for it. B assents, but the bill is not met, and it is returned to A on the 25th inst., unpaid. Is B legally liable to A for the amount of the bill in this case ? ANSWER : A banker is legally entitled, and it is also the usual custom to hold over a bill remitted for collection until the day after maturity, if not honoured in due course ; but the notarial presenta- tion, if required, must be made on the day of maturity, although the bill be subsequently so held over. 21. QUESTION : May a banker in a country town, where there is no notary, retain bills sent for collection for one day after due date before returning them to his correspondents, as is done by London banks in the case of unpaid bills which are noted ? ANSWER : It is quite usual, and legally correct, for bankers to retain bills in their hands that have been remitted to them for collection until the day after maturity, whether noted or not. 22. QUESTION: (a) It is the custom in a provincial town to hold unpaid bills over for one day after their due date ; can this practice be followed without prejudice to the holding bank ? 8 Questions on Banking Practice. BANKER continued. Are not the holders likely to incur responsibility under section 49, sub-sec. 12 (a and 6), Bills of Exchange Act, 1882? (b) How is the London custom of holding bills for one day after their maturity for the purpose of noting, reconciled with the above section ? ANSWER : (a) The custom mentioned is both usual and permissible, and the holders would not incur responsibility under the section named of the Bills of Exchange Act, 1882. (b) It is quite in accordance with the section in question ; the act of noting, however, always takes place on the day of maturity. 23- QUESTION: Is a banker justified in holding over for a day bills sent to him for collection, if dishonoured at maturity, returning them unpaid by the last post on the day after maturity 1 ANSWER : A banker is legally entitled, and it is also the usual custom to hold over a bill remitted for collection until the day after maturity, if not honoured in due course ; but the notarial presenta- tion, if required, must be made on the day of maturity, although the bill be subsequently so held over. (See Questions 21, 22, 23.) 24. QUESTION : Can a country banker hold over with or without notice a cheque sent through the Clearing House, until the evening of the next day after receiving the same ? ANSWER: By the regulations of the Clearing House, country cheques must be paid, or returned if unpaid, on the day of receipt, and must not be held over until the following day. These regula- tions are necessary by reason of the loss of a day, in most cases, in sending the cheques up to London for clearing. 25. QUESTION: Country banker A forwards cheque through country clearing on country banker B. Cheque is unpaid by B and deducted from the amount paid through London the same day but by accident it is not posted to A until the following day. Is B liable for delay 1 Has B a right to hold it until the following day ? Can a country banker legally return unpaid clearing cheques through the London office? ANSWER : As B has made use of the Clearing House, he must abide by its rules and return the cheque the same day direct not through the London office. 26- QUESTION : It is the custom in some provincial towns for bankers to make a daily exchange, and give drafts in settlement of differences. Is a banker within his rights in returning a cheque on the follow- Questions on Banking Practice. 9 BANKER continued. ing day, and is the presenting banker justified in taking it and debiting his customer? ANSWER: No. 27. QUESTION: Banker A presents to banker B in the same town a cheque for 50 in the local exchange, which is paid, and the balance of the exchange is advised in usual course to the London Agents. Is B justified by law or practice in returning the cheque for 50 at mid-day on the following day, no notice of his intention to hold over the said cheque having been given? ANSWER : No ; unless there is any local rule governing the case. 28. QUESTION : A crossed cheque for 200, dated London, November 5th, 1884, was drawn by John Barstow, of London, upon the St. Michael's Bank, Viaduct Branch, to the order of Mr. Gurton, endorsed by him in blank to Mr. Jee, and by the latter endorsed to the Kotterdam Bank on November 6th, 1884. The Rotterdam Bank on November 6th endorsed and remitted the cheque to the Prussian Bank of Trade, London, for collection. It reached the Prussian Bank of Trade on November 7th, about 5 p.m. That bank paid the cheque into their account with Messrs. Milner & Co., Bankers, on November 8th, who presented it for payment to the Viaduct Branch of the St. Michael's Bank on November 9th, when it was refused payment on the ground that the drawer was dead. His death occurred on November 8th. Having regard to the nature of the cheque, the usage of the trade with regard to similar cheques, and the facts of this particular case, was the cheque presented for payment within a reasonable time after its receipt by the Prussian Bank of Trade? And has the Rotterdam Bank recourse against the other endorsers ? ANSWER : The cheque was presented within a reasonable time, and dealt with in accordance with the custom of London bankers, and the endorsers are, therefore, not relieved from liability. 29. QUESTION : A,' a merchant or banker, remits by post to B, a banker at another town, a cheque on the sendee for payment. It arrives on Tuesday morning. Such remittance is held to constitute B the remitter's agent for collection, and to entitle him to the whole of Wednesday for presentment. Within what time must he send off notice of dishonour? The transaction is, by supposition, an isolated one, and the parties are strangers. Agency is, in a manner, thrust upon B. He appears to be entitled in this case, if ever, to the full legal rights of his position. Is he bound to send off notice earlier than by post at a convenient hour on Thursday, the day following the dishonour of the 10 Questions on Banking Practice. BANKER continued. cheque ? Would it make any difference if the remittance were a bill due on the day of receipt 1 ANSWER : Notice should be sent off on Wednesday in both cases. 30. QUESTION: A has 25 to his credit at his bankers. A cheque is presented for 30 and is returned marked "Refer to Drawer." The next day a cheque for 20 is presented. Is the banker right in paying it, or does the holder of the previous cheque hold a lien on the 25? ANSWER : The banker is right in paying the cheque, as the holder of the previous cheque has no lien on the 25, though he would have had the transaction taken place in Scotland. 31. QUESTION : Is a banker justified in dishonouring a customer's cheque, who has sufficient funds in his hands to pay the same, on the ground merely that had he (the banker) paid the cheque there would not have been sufficient balance left on the account to pay the charges incurred to date? In other words, do a banker's charges, whether composed of interest and commission, or commission only, accrue from day to day, so that they become due and owing, and capable of being debited or set off without notice to the customer ? ANSWER: The banker would not be justified in dishonouring a customer's cheque under the circumstances mentioned. 32. QUESTION : Can a banker return his customer's cheques under the following circumstances ? The account has been overdrawn, but is now in credit, and there are charges accruing. No separate demand has been made for the charges. (1.) The banker knows directly from the customer or indirectly that the customer intends leaving the neighbourhood, and has no knowledge of his future address. (2.) The customer intends leaving the jurisdiction of the English Courts forthwith. (3.) Does it make any difference if the cheque is payable to self or to a third person ? ANSWER : In any of these cases the banker is justified in refusing the cheque if the charges are then due and payable. (See No. 31.) 33- QUESTION: A customer has two current accounts at his bankers. One is overdrawn 20, and the other is in credit 20. Would the banker be right in returning cheques drawn on the second account, in order to retain the balance on that account as a set-off to the overdraft on the other? ANSWER : He would be justified in so doing. Questions on Banking Practice. 11 B ANKE R continued. 34. QUESTION : A merchant, X, has an ordinary current account with a banker, Y. X has also other accounts opened with Y, entitled : (1) X account, mill; (2) X account, shop; (3) X account, farm. It is known that X, while acting as an agent in respect of these three latter accounts, has, with others, an interest in them. Under these circumstances would Y be justified in applying credit balances from the special accounts to cover a debit balance in the ordinary account, or vice versa? ANSWER: A banker, although he might agree to open separate accounts for a customer, with some distinctive name, for his con- venience, as mentioned in the question, could recognise no trust in the matter in the absence of specific instructions or information, and consequently would be justified in treating credit balances on the separate accounts as covering a debit balance on the ordinary account. (See Question No. 169.) 35. QUESTION: A widow, who is the administratrix of her late husband, opens two accounts in her own name as administratrix. One of these accounts is used for the purpose of carrying on the business of the deceased. Into the other account, which is dis- tinguished as the " E " account (to denote " Estate " account) are paid the proceeds of sale of properties forming part of the estate. The business account is overdrawn whilst the "E" account is in credit. Has the bank the right to set off one account against the other 1 ANSWER: Yes. 30. QUESTION : A banker's customer, X, has two accounts in the same bank, one in the name of a firm, B and Co., of which he is the sole partner, and the other in his own name X. Account B and Co. is in credit, and account X overdrawn. Can the banker retain B and Co.'s credit balance as cover for the overdraft on X ? Would your answer be the same if B and Co. were overdrawn and X in credit 1 ANSWER : Yes, in both cases. 37. QUESTION : Is a banker justified in refusing to pay an acceptance of his customer made payable to the order of the drawers, B and Co., when the signature of B and Co. on the bill as first endorsers differs entirely from the signature of B and Co. as drawers 1 ANSWER: As in most firms more than one partner signs the signature of the firm, it occasionally happens that bills are drawn in the name of the firm by one partner and endorsed by another. A banker would not in such cases refuse payment of a bill on account 12 Questions on Banking Practice. BANKER continued. of the difference in the signatures of the firm as drawers and as endorsers, unless he had reason to suspect the genuineness of either. 38. QUESTION: A, the drawer of a bill, is a customer at one branch, and B, the acceptor of the said bill, is a customer of another branch of the same bank by which the bill is discounted for A. The bill at maturity is dishonoured "orders not to pay." Could the bank, if unable to debit A, ignore these orders under the circum- stances, and debit B's account if the bank hold sufficient funds of the acceptor ? ANSWER: We think the bank could not, in the ordinary sense of the words, ignore B's orders and debit his account, but as holders of the bill they would have a right of action against B, and would there- fore be entitled to set off the amount of the bill against the balance of his account. If, however, this were done without reasonable notice to B, with the result that cheques of his were dishonoured, we think that the bank might expose themselves to an action for damages see the case of "Buckingham v. London and Midland Bank," reported in the Journal of the Institute of Bankers, January, 1896, p. 33. 39- QUESTION : A bill, dated Copenhagen, one month after date, upon a firm at Leeds, and drawn or marked payable in London, but not at any place of business or residence of some person other than the drawee. Also marked in need with Messrs. Blank Bros, and Co., London. The bill is presented at Leeds for acceptance ; acceptance being refused, it is protested, and then sent to London to be presented to the " case of need." They accept for honour, making it payable at their bankers in London. When the bill is due, where should it be on the day of maturity for presentation for payment, or protest for non-payment, if necessary? Does sec. 51, sub-sec. 6 b govern, or does it come under sec. 67, sub-sees. 1 and 2? What influence has sec. 45, sub-sec. 4 b, or sec. 97, sub-sec. 2, over the line of action to be taken in such cases? What is the proper course to take ? ANSWER : Assuming that the bill has been duly protested for non- acceptance in Leeds, it should be presented pro forma in London at maturity, and protested, after which application should be made to the " case of need " in London. 40- QUESTION : A merchant in London sends a crossed cheque to a Berlin firm, who pay it into their bank. The cheque is stamped by the Berlin bank, and endorsed by them specially to a private Questions on Banking Practice. 13 BANKER continued. person in London, by whom it is presented over the counter of the London bank. What is the duty of the London bank? Should they refuse payment of the cheque over the counter on the ground of its being crossed, or should the special endorsement of the Berlin bank be held to annul that duty ? ANSWER : The endorsements to a cheque in no way alter its nature as to the crossing, and the cheque referred to should be paid only to a banker, such being the indication given by the drawer when crossing the cheque. 41. QUESTION : "Harleston, 25th March, 1884. " Norfolk and Suffolk Joint Stock Bank, " Harleston Branch. " Pay to the order of Mr. William Smith, Five Pounds. " 5 " Charles Browne. " London Agents Jones and Co." (Crossed Norfolk and Suffolk Joint Stock Bank, Yarmouth.) The manager of the bank to whom this cheque is crossed has written to drawer intimating to him that if he wishes his cheques to be cashed over the counter, the drawer must discontinue to cross them. Drawer writes to Yarmouth manager for explanation as to the grounds for his refusing payment if he continued to cross them, and the Yarmouth manager refers drawer to Crossed Cheques Act, 39 and 40 Viet., chap. 81, sec. 7. The payee and the drawer's signature are both known to the bank to whom the cheque is crossed. Which i the right contention? ANSWER : The cheque set forth at the head of this question is not drawn on the bank at Yarmouth, and if the amount be obtained by the payee from that bank it is merely an exchange operation, and the cheque is subsequently transmitted from Yarmouth to Harleston for payment in account or otherwise. Hence the crossing is quite in order. The section quoted of the Crossed Cheques Act refers to the duty of the banker on whom the cheque is drawn, not to the one who merely exchanges a cheque. The Crossed Cheques Act, however, is repealed, but its provisions, including the section referred to, are re-enacted by the Bills of Exchange Act, 1882. 42- QUESTION : Is the cashing over the counter to a customer by the B bank of a crossed cheque drawn on the D bank contrary to the principles of the Bills of Exchange Act, 1882 ; in other words should a banker refuse to pay cash to anyone, customers or not, for all cheques crossed generally or only for those drawn on himself ? 14 Questions on Banking Practice. BANKER continued. ANSWER : There are no provisions in the Bills of Exchange Act, 1882, to prohibit a banker cashing or exchanging a crossed cheque upon another bank if he chooses to do so, but in the event of his cashing such a cheque for some one not a customer, he does so at his own risk. 43. QUESTION : One branch of a limited joint stock bank authorises another branch of the same bank to honour a certain cheque, the particulars of which are clearly defined. When the cheque is presented, payment is refused on the sole ground that the cheque is crossed. Is the branch which has been authorised to pay justified in its refusal 1 ANSWER : No. (See Answer to No. 41.) 44. QUESTION : Referring to Question 42, is it to be understood that there is now no duty laid upon a banker by law with regard to the exchanging of crossed cheques upon another bank ; or, in other words, can an exchanging banker treat them as if they are open and uncrossed cheques, and cash them across the counter? If the cheques are marked "not negotiable," can the exchanging banker safely cash them across the counter, or must he invariably pass them through a customer's account? ANSWER: If a banker gives cash across his counter for crossed cheques on another banker, he does so at his own risk, whether marked " not negotiable " or not. 45. QUESTION: Messrs. Harrison, manufacturers at Northtown, receive, in payment of a debt, a cheque for 20, payable to them or bearer. It is drawn on the St. Clement's Bank, London, and crossed " & Co." This cheque is stolen from Messrs. Harrison by Collins, a clerk in their employ. It is taken by him to the Old Bank at North- town, where the manager, in good faith, gives him the amount in cash over the counter. Is the manager of the Old Bank, who has thus cashed a crossed cheque, liable to refund the money to Messrs. Harrison 1 ? and would the fact that the manager of the Old Bank knew that Collins was in the employ of Messrs. Harrison make any difference ? ANSWER: The crossing of a cheque is merely a direction to the paying banker that the amount should be paid only to another banker, and does not in any way limit the negotiability of a cheque. The transaction has nothing to do with banker and customer, and the position of the manager is exactly the same as that of a tradesman or friend who cashes a cheque for the convenience of the holder. The manager of the Old Bank, therefore, who thus in good faith negoti- Questions on Banking Practice. 15 BANKER continued. ated or exchanged the cheque, is not liable to refund the money; nor, in the absence of very special circumstances, would the fact of his knowing or not knowing that Collins was, or was not, in the employ of Messrs. Harrison, make any difference. It was to meet precisely such a case as this that the use of the words " not negotiable " were authorised by the Bills of Exchange Act, 1882, and had this cheque been crossed " not negotiable," and had the drawer, at the request of Messrs. Harrison, stopped the cheque, the manager of the Old Bank would not, in the above cir- cumstances, have been able to obtain payment of it. It is very desirable in practice, however, that bankers should exercise great caution before cashing crossed cheques. 46. QUESTION : A cheque on a London bank, crossed generally, and payable to order, is endorsed by the payee, and paid away to a person who loses it or has it stolen from him. The endorsement of the rightful owner is forged on the cheque, which is then taken to a country bank, by whom it is exchanged to the bearer, and it is duly honoured by the bank drawn upon. The exchanging bank does not know, and can give no information for whom they cashed the cheque. Has the rightful owner good ground to bring an action against the exchanging bank to recover the amount of cheque ? ANSWER : The rightful owner can sue the exchanging bank. 47. QUESTION : Is a banker cashing a cheque crossed " & Co." drawn on another bank, or bank in another town, bound to identify the payee, and if through negligence the amount of such cheque were paid to a wrong person, would he, as the banker who paid the cash for such cheque, be liable to the bank on which the cheque was drawn, for the amount? ANSWER: The cashing bank would probably be liable for the amount to the true owner of the cheque, if it had passed into wrong hands, but he would incur no liability to the paying bank in the matter. 48- QUESTION: A cheque drawn on A in favour of J. Jones or bearer is lost. The finder obtains the amount from banker B who sends it to and receives payment from A. The cheque bears no endorsement. Does B incur any liability to Jones? ANSWER: No. 49. QUESTION: A banker, A, exchanges for B (who is not a customer), two cheques on banker C, one crossed " &TCo. ~~ " and the other " Not negotiable. Both are returned unpaid : (a) Can A recover the money from B ? (6) If B has not a good title to the cheques, how would that affect A's position ? 16 Questions on Banking Practice. BANKER continued. ANSWER: A, who merely exchanges the cheques, is entitled to recover the money from B, whose defect in title would not alter A's position in this respect. 50- QUESTION : A banker receives for collection from a customer or correspondent a cash order payable on demand, and takes in payment of it the drawee's cheque on his own banker, giving up the cash order in exchange. The cheque, on presentation for payment, is dishonoured. Is the collecting banker entitled to hand the dis- honoured cheque to his customer or correspondent in lieu of the order, or does he, in taking the cheque, take the whole risk and re- sponsibility on himself? ANSWER: The banker is quite justified in returning the dis- honoured cheque to his customer, who thereby obtains a document possibly of more value than the cash order, inasmuch as the cheque can be sued upon. At the same time the banker assumes a responsi- bility upon himself by giving up the cash order in exchange for a cheque. 51- QUESTION : Would a bank be justified in paying cash over the counter for a crossed cheque presented by a loan office styling itself a bank ? ANSWER : A bank paying cash over the counter for a crossed cheque presented by a loan office styling itself a bank would do so at its own risk, unless the loan office had made a return as a banker to the Inland Eevenue Office. 52- QUESTION : Is a banker liable if he pays a cheque after he has been instructed by the drawer (his client) to stop payment of the same? ANSWER: Yes. 53. QUESTION : A cheque is presented at one bank drawn on another and cancelled in error. On presentation at the bank on which it is drawn, the drawer having failed, it is returned dis- honoured. Is the bank cancelling the cheque in error liable to the payee ? ANSWER : No. (Bills of Exchange Act, 1882, sec. 63, sub-sec. 3.) 54- QUESTION: An Australian bank issued from a Colonial branch a letter of credit on account of a local customer, in favour of an East Indian firm. The credit authorised the Indian firm to draw upon the bank's office in London, against shipment of goods to the Colony, for the bank's customer. After the credit had been operated upon to a certain extent, the bank's customer suspended payment. The bank then telegraphed to the Indian firm, cancelling Questions on Banking Practice. 17 BANKER continued. the credit. The Indian firm had, meantime, bought a further quantity of goods under the orders of the Colonial firm, and was preparing to ship them. The question is whether the bank had any right to cancel the credit in respect of the cost of goods bought before notice of cancellation, but not then ready for shipment 1 There was no clause in the letter of credit specially authorising such cancella- tion, and there was an undertaking that drafts under the credit, in the hands of a holder for value, should have due honour. ANSWER : The bank has no right to cancel the credit as regards bond fide transactions entered into on the strength of it. 55. QUESTION: A is a banking firm in London having corres- pondents, B in Berlin and C in Constantinople. C opens a credit of 2,000 with A in favour of B authorising A to pay B's cheques for that amount, to debit of C's account. B draws a cheque for 800, which is presented to A before drawer's advice is received, B having no funds with A at the time. Is A justified in paying the said cheque to the debit of C against the credit of 2,000 no indication being on the cheque as having been drawn on account of C. What would be A's position in the event of B's failure after drawing the cheque of 800, but before utilising the credit of 2,000, the said credit being cancelled telegraphically before B's advice of draft for 800 has reached A? ANSWER : C, having opened with A a credit for B, must be bound under that open credit for any amounts which A may pay on the drafts of B prior to the receipt by A of C's cancellation. 56. QUESTION : A banker pays a crossed cheque in favour of John Smith to the John Smith intended by the drawer of the cheque. This cheque is a payment to Smith as an agent, although there is nothing on the cheque to that effect, and he misappropriates the money. Can his principal sue the bank as the true owner of the cheque, or was Smith the true owner? Of course the bank ought not to have paid a crossed cheque, but as the Bills of Exchange Act only gives the true owner a right of action, it is important to know what this term means as applied to the case quoted. ANSWER : In this case John Smith is the true owner of the cheque, and therefore the principal cannot sue the bank. 57. QUESTION : Banker A, by an oversight, took for credit of a customer a cheque upon banker B, but crossed specially to banker C. The cheque was forwarded to his agents by banker A, and was paid by B, although it bore the special crossing to C, and had not come through C's hands to him. The cheque had been intended by 18 Questions on Banking Practice. BANKER continued. the drawer to go to credit of an account with C, and the drawer has been called upon to pay the amount a second time. B, the paying banker, is of course liable to him for the loss, but does any legal responsibility attach to A, who was merely the collecting banker ? ANSWER : Under the circumstances, B is liable, but not A. 58 QUESTION: John Smith, in business in a provincial town, has a brother in the same line of business in India. He is accus- tomed to buy for him in London, and in order to pay for the pur- chases, opens an account with his bankers in his brother's name, and informs them that he will draw cheques on it signed, " For Richard Smith, "John Smith/' The bankers have no communication with Richard Smith. In the event of the account being overdrawn, is John Smith liable to the bankers and can they, if necessary, retain moneys standing to the credit of John Smith against Richard Smith's account in the event of the latter's bankruptcy 1 ANSWER : As the bankers were so unwise as to open the account without reference to Richard Smith, they can have no claim on him nor on his agent John Smith, nor can they retain the moneys standing to John Smith's own credit as a set-off against any deficiency on Richard Smith's account. 59- QUESTION : An open cheque is presented say at 9 a.m. subsequently (within a few minutes) an order is received from the drawer stopping its payment, i.e., before the money has passed from the banker to the presenter. The presenter is then informed that the drawer has stopped its payment, but the presenter insists on payment on the ground that presentation was prior to the receipt of the " stop." What is the banker's course, to pay or to refuse to pay { ANSWER : If the banker has actually received the " stop " before parting with the money, he should not pay the cheque. 60- QUESTION: The A Banking Co. wire to the B Banking Co., "May we pay J. Smith's cheque on yourselves, 50?" to which reply is wired, " Yes, if in order." Is the B Banking Co. bound after this to pay the cheque if J. Smith stops payment of it before it reaches his bankers, or withdraws his balance ? ANSWER : Yes, in either of the circumstances suggested. 61- QUESTION : Referring to Question 60, it is held that the B banking company is bound to pay the amount of the cheque to the A bank, but can the B banking company debit J. Smith's account with the cheque, if he has stopped payment of it, during the interval Questions on Banking Practice. BANKER continued. that elapsed between the reply to the telegram and the presentation of the cheque? ANSWER: The drawer of the cheque of course remained liable, after it was stopped, to pay the amount to its bond fide holder for value. If it had remained in the hands of A he might have claimed the amount against the drawer, and provided the latter were in no way prejudiced, we think B, after paying A the amount, was entitled to stand in his place as against the drawer. Although, therefore, B was not entitled in the strict sense of the word to debit his customer's account with the amount he had paid, we think he would have a right of action against him for the amount, subject to any defence which would have been open to the customer if the action had been brought by A. Or if an action were brought by the customer for the amount of his balance, we think B might get off in such action the amount he had paid to A. 62. QUESTION : A paid to B an open cheque for 20, drawn by A on the S Bank, which B losing, he at once telegraphed particulars to the S Bank, requesting that they would stop payment of the cheque. The bank in reply telegraphed to B, " Impossible to stop " cheque without direct orders from drawer of cheque, which please " forward." What liability, if any, would have been incurred by the bank, had they, in spite of the notice, paid the cheque to an unlawful owner over the counter? ANSWER : None, unless the cheque had been drawn to the order of B who informed S Bank that he had not endorsed it, and such notice reached S Bank before presentation of the cheque. 63- QUESTION : A banker receives the usual notice from the drawer to stop a certain cheque ; how long does the banker remain liable under such notice for wrongful payment? By law or by custom ? May a banker limit his own liability on stopped cheques, say to three months? ANSWER : By English banking practice a stop on a cheque is a stop in perpetuity. Cheques are generally considered stale after six or twelve months, according to the custom of different banks, so that after that period a cheque would be returned on that ground, apart from the stop. It is probable that by law the Statute of Limitations would limit a banker's liability to six years. 64- QUESTION : Can a banker evade the consequences incurred by his paying a " stopped " cheque, if he give the client notice when receiving the " stop " that he will not hold himself responsible for any loss that may be incurred if it be paid inadvertently? C 2 20 Questions on Banking Practice. BANKER continued. ANSWER : Such a provision introduces a new stipulation between a banker and his customer, and must be a matter for special arrange- ment. 65 QUESTION: A person wishing to stop payment of a cheque fills in and signs one of his banker's "stop" forms. This form contains a clause to the effect that, should the cheque be paid by mistake, the customer will not hold the banker liable. The cheque is eventually paid in error. Has the customer any remedy against the banker? ANSWER : No. 66- QUESTION : A branch bank gives attendance at a neighbour- ing village on fair days. One of the fair days falls on a bank holiday. Does the bank run any risk in giving attendance there and cashing cheques on the branch, although that office is closed on account of the bank holiday ; and in case of a cheque being stopped by the drawer, the notice of stop might not be received at the branch until the next business day? ANSWER : We think the bank would be quite justified in giving attendance and transacting business at a village on a bank holiday under the circumstances mentioned. With regard, however, to the supposed stopped cheque, the bank would probably run some risk in cashing it there, when the notice of stop, addressed to the branch upon which it was drawn, would not in the ordinary course be dealt with until the next business day. 67. QUESTION: Can a bank be legally closed on any day not authorised by Act of Parliament, as, for instance, Tuesday, December 27th, after giving 14 or 21 days' notice? Would the fact of giving such notice protect the banker? If the acceptor of a bill due that day wished to take it up and came to the bank for that purpose, would the bank lose recourse by reason of their doors being closed ? ANSWER : Any bank closing its doors on a day not authorised by Act of Parliament would do so at its own risk. 68- QUESTION: A, a banker, cashes for B, not a customer, an open cheque for 25, drawn by C, on banker D. A charges B the usual commission and sends the cheque for exchange to D, who returns it to him marked " Payment stopped." What is the proper course for A to pursue ? ANSWER : A's primary recourse is against B, but failing that, ho would, under the circumstances, apparently have a perfect right to sue the drawer. Questions on Banking Practice. 21 BANKER continued. 69- QUESTION: Is the following order a sufficient authority to debit the customer's account, notwithstanding the omission of the words " and charge the same to my account " : "London, 1896. " St. Michael's Bank, York. "Be pleased to pay the St. Clement's Bank, on account of the "trustees of the Northtown Club, the sum of twenty-five guineas, " being entrance 21 and annual subscription of 5 5s., and continue "to pay them the sum of 5 5s. annually on the 1st of January till " further order." " (Signed and Stamped.) " ANSWER : Yes. 70- QUESTION : A cheque drawn on the Coalfield Branch of the North Greenshire Bank is presented at Deepbrook Branch ; the cashier there, knowing the drawer to be perfectly safe, cashes it without hesitation. It is returned from Coalfield, with the state- ment, "Payment stopped." The payee turns out to be poor, and incapable of repaying the amount (practically insolvent, in fact). The drawer repudiates responsibility, having stopped the payment. Can the cashier, as innocent holder, having cashed the cheque on the faith of the drawer's signature, recover? Will his power to do so be affected by the fact that he is an officer in a branch of the bank on which the cheque is drawn? or, by the fact that the cheque was accidentally cancelled at Coalfield, and is marked " Cancelled in error " ? ANSWER : The cashier having cashed a cheque drawn on another branch, cannot recover from the drawer, nor will his liability be affected by any of the circumstances suggested. [Referring to Question 70, the attention of the Council has been called to the apparent inconsistency of the answer with that given to Question 68. The answer given to Question 70 was, however, based on the supposition that the cheque referred to was actually paid at a branch of the bank upon which it was drawn, and that having been so paid by the bank, it was not recoverable from the drawer, if he had given instructions to the bank to stop payment. If, on the other hand, the cheque had been merely exchanged at the branch at which it was presented, and then sent forward for payment to the office on which it was drawn, there would appear to be no reason why the branch who had exchanged the cheque and given value for it, should not have recourse on the drawer as bond fide holders for value.] 71. QUESTION: A stockbroker has a loan of 10,000 from a banker upon the security of bearer bonds. On settling day he hands to the banker his cheque for 10,000 and receives back the security, 22 Questions on Banking Practice. BANKER continued. the balance on his current account being 8,000 short of the amount of the cheque. In the event of his not paying in to meet the cheque, has the banker not lost all claim upon the securities, and could he only sue the stockbroker on the cheque ? Would the banker retain his hold on the security (assuming his previous title to be unassail- able) if instead of accepting his customer's cheque, he were to require him to sign a form borrowing the security, and requesting the banker to debit his account if the security be not returned by the end of the day? Would the banker be in a better position if, without requiring hia customer to sign anything more than a receipt, instead of taking a cheque he merely made a note to debit his account with the amount ^ ANSWER : It is to be presumed that the stockbroker to the know- ledge of the banker takes the bearer bonds with the object, not of retaining them in his own custody, but of handing them over to a third person. If this be so, it seems to us that the banker's security is for all practical purposes gone when he parts with the bonds. We know of no plan consistent with the ordinary course of business by which a banker could reserve the right to follow the bonds in the hands of a third person to whom they had been delivered for value without notice of the banker's charge. 72. QUESTION: The Clerk to the Highway Board, in the North- bridge district, A. Sharp, has sent to him from the Chalkshire County Council, a cheque for 155, for purposes connected with the Board. The cheque was crossed and made payable to Sharp's order. He, wishing to decamp with the money, takes the cheque to the Chalkshire Bank and demands payment. The bank at first demur, but upon someone satisfying them that he really is Sharp, the Clerk to the Highway Board, they pay him the money, which he goes off with. Are the bank liable ? ANSWER : Yes ; they should not have cashed a crossed cheque over the counter. 73- QUESTION: Referring to Question 72 and the Answer thereto, presumably the cheque in question was drawn upon the bankers cashing it. Would not the Chalkshire Bank still be liable had the cheque been drawn upon a bank other than themselves 1 ANSWER: Yes. 74- QUESTION : A firm pays to its credit a cheque drawn by a customer of the bank at the same office, handing its pass-book for entry therein to its credit, which is done without reference to the account at the time. A few minutes afterwards it is found that the drawer has not funds to his credit to cover it, when it is immediately Questions on Banking Practice. 23 BANKER continued. returned with the reply " Refer to drawer." Does the fact of the cheque having been entered in the pass-book to credit render the bank absolutely liable, leaving its only recourse against the drawer? ANSWER: No. 75. QUESTION : A customer's credit being entered in his pass- book as " cash " when it consists of country cheques, has he the right to draw asi against cash, and would the bank be culpable in dishonour- ing such cheques? ANSWER : A banker would probably be held liable to his customers for entries of " cash " made in the pass-book, and for dishonouring cheques drawn against such entries. 76. QUESTION: What is a banker's position with regard to his liability for payment to the holder for value, if the banker deals as follows with his customer's cheque, drawn upon his bank? The cheque is dated April 28th, and presented on the 30th, but refused payment, with answer marked thereon, " Re-present 7th," and after re-presentation on the 7th, again dishonoured, with the words " Re-present 7th " crossed out, and " Refer to drawer " substituted ? ANSWER: The answer, "Re-present 7th," is very irregular, but does not imply any promise to pay on that day, and the banker is under no liability to the holder for value. 77. QUESTION : In cases of doubtful or incomplete endorsements it is a frequent occurrence for bankers to give as an answer " Endorsement irregular (or incomplete, as the case may be) ; will " pay on banker's guarantee." Supposing the acceptor of the bill or drawer of the cheque stops payment, or fails before a re-presentation can be made, is the banker bound by his answer (" will pay," &c.) ? ANSWER : No ; the answer given merely applies to the question of the irregularity. A second presentation stands on its own merits. 78- QUESTION : Does any responsibility attach to a banker who, in returning a cheque unpaid, marked with one of the usual answers " Not provided for," " Refer to drawer," &c. at the same time requests the bank to whom it is returned to "please present " again," and expresses an opinion that the cheque will be paid on re-presentation ? Is the banker bound to honour the cheque when it is re-presented (within a reasonable time, say return of post), if no funds have in the meantime come into the account? or, secondly, if sufficient funds have been passed to credit, but afterwards paid away to meet other cheques, &c. ? ANSWER: The banker would not incur any responsibility in con- nection with such an answer to a cheque as that indicated, and would 24 Questions on Banking Practice. BANKER continued. not be bound to honour it on re-presentation unless in funds to do so when re-presented. 79- QUESTION : F. C., who has always kept a good credit balance, and has never asked his bankers for an overdraft writes to them as follows : " To the Provincial Bank. " Gentlemen, I shall feel obliged by your honouring the "cheques drawn on my behalf by Mr. John Smith, of whose " signature I append a specimen, charging the same to my account " with you. " Yours truly, " F. C. " Specimen of signature, "**.F.C., "John Smith." John Smith, without F. C/s knowledge, is allowed by the bankers to overdraw the account, and absconds with the money he has drawn out. The bankers apply to F. C. for payment of the overdraft, and he repudiates any liability, on the plea that his letter giving J. Smith power to sign cheques made no mention of any overdraft. Is F. C. liable for the overdraft? ANSWER : No. The bankers, under the circumstances, should not have allowed the account to be overdrawn. 80. QUESTION : (a) Customer A of the Chalkshire Bank authorises his agent B to draw upon his account, at that time in credit, by cheque, without specifying any limits or restrictions. (b) A arranges with the Bank to have an overdraft for a fixed sum. In both cases Agent B signs cheques overdrawing the account, in the second case up to the limit. Is the customer responsible for the overdraft, in the first case not having assigned any limits to the powers of his agent, and, in the second case, without having given a new authority to his agent when making arrangements for the advance 1 ANSWER: (a) The customer is not liable for the amount of the overdraft. (b) In the second case the customer is liable to the amount of the overdraft. 81. QUESTION : An authority to sign cheques on his account is given by the customer of a banker in favour of another person. If the account is already overdrawn, is it necessary to insert any special clause in the authority. If so, what ? Questions on Banking Practice. 25 BANKER continued. ANSWER^ : It is not necessary to insert any special clause, but it is advisable and very usual to insert " whether or not the same shall be overdrawn," or words to the like effect. 82. QUESTION : A Garnishee Order is served upon the bank at 1.10 p.m. by a judgment creditor for 30. At that moment the bank has on hand 5 2s. 6d., but at 2.30 on the same day a sum of 100 is paid in to the credit of the customer, he being in ignorance of the Garnishee Order. Would the order cover any monies paid in subsequently to the time it was served upon the bank 1 ANSWER : The Garnishee Order nisi attaches " All debts owing or " accruing due." For the attachment to be operative there must be a debt, though it may be not yet due. Lord Blackburn puts it (Tapp v. Jones Law Rep. 10, Q.B. 591), "The meaning of accruing " debt is debitum in presenti, solvendum in futuro, but it goes no " further, and it does not comprise anything which may be a debt, " however probable, or however soon it may be a debt." In the case of Webb v. Stenton (Law Rep. 11, Q.B. 518), Lindley, L.J., says, "An accruing debt is a debt not yet actually payable, but a debt " which is represented by an existing obligation." Money paid in by a customer for the credit of his account at any time after the service of a Garnishee Order nisi, was not at the time of such service a " debt owing or accruing due," and consequently is not attached thereby. Whether the Court in subsequently making the Garnishee Order absolute, would on a disclosure of the facts, so word it as to include such money as might, after the service of the Garnishee Order nisi, have come into the banker's hands, is, perhaps, open to question. For practical suggestions as to the best method of acting on service of Garnishee Orders, see Mr. Paget's first Gilbart Lecture, 1893, fully reported in the Journal for 1893, pp. 187-198. 83- QUESTION : Can a third party, by giving notice to a banker of a claim on money deposited with him, create any liability on the part of the banker if he parts with the money to his own client after such notice? Is it not necessary for the third party to obtain an order of court to restrain the banker from making the payment? ANSWER : A garnishee order must be obtained. 84. QUESTION : A garnishee order is served on a banker when his customer's account is overdrawn. (a) Does this order attach subsequent payments to the account in the ordinary way? 26 Questions on Banking Practice. BANKER continued. (b) If so, does it also attach payments to the account made expressly to reduce the overdraft 1 (c) Is a notice of abandonment of the garnishee proceedings by the plaintiff's solicitor a sufficient authority for not attending the Court? ANSWER : (a) and (b) Certainly not ; the garnishee order can only affect a debt due or accruing due from the banker to his customer at the time it is served. Balances being against the customer, the debt is due from him, and there is no debt attachable. Subsequent pay- ments, whether made generally or specifically to reduce the over- draft, could not be affected. Until they overtop the overdraft there is no debt due from the banker ; and when they do, that debt was not one due or accruing due at the date of the service of the order. A debt to be accruing due must be one the liability of which exists at the time of service, although the date of payment is future. (c) Theoretically, probably not. The order to attend, is an order of the Court, and the solicitor has no right to usurp the functions of the Court and dispense with the garnishee's attendance. 85. QUESTION : In the event of a garnishee order being served on a banker against an overdrawn account, would a banker be within his rights in receiving credits during the operation of the garnishee in reduction or payment of overdraft 1 ? ANSWER : The banker would unquestionably be entitled to receive and keep all moneys paid in, in reduction or payment of the over- draft, notwithstanding the garnishee order. The garnishee order only touches debts due from the banker to the customer : so long as there is any overdraft the state of affairs is reversed, there being a debt from the customer to the banker. 86- QUESTION : At the request of a customer a country banker draws a draft payable to a third party upon his bankers in London. Is the country banker entitled to stop payment of it upon the instructions of his customer without enquiry, or does he incur risk by so doing? ANSWER : It would be injudicious for a country banker to stop pay- ment of his draft on his London agents, save under very exceptional circumstances. Should he do so, at the request of his customer, and the draft came into the hands of a holder in due course, the country banker would be liable to be sued by the holder. 87- QUESTION : A branch bank issues a draft on its Head Office, and a few days after (at the request of the customer to whom it was issued) wishes the payment stopped. Questions on Banking Practice. 27 BANKER continued. (a) Would the bank be justified in complying with such request if the draft be presented by the payee in order? (6) How would the matter stand if presented by a third party to whom it has been paid in good faith for value ? (c) How if the bank be advised that the draft has been lost unendorsed, and that if presented bearing an endorsement it must be a forgery 1 ANSWER : (a) (b) The bank should not stop payment of the draft. (c) Under these circumstances the bank should demand confirma- tion of the endorsement. gg QUESTION : The payee of a bill on and accepted by a London bank gives notice to the latter that he has lost the bill, and that if it should purport to bear his endorsement such endorsement would be a forgery. At due date the bill is presented by a bond fide holder for value, who is able to satisfy the bank as to his bond fides. Should the bank pay, and, if so, has the payee any recourse ? ANSWER : The banker having notice of the probable forgery of the payee's endorsement, should not pay without confirmation of the endorsement. 89 QUESTION : A branch bank cashes, under running advice to honour cheques, the cheques of a customer of the advising branch; or one banker does the like under similar advice from another banker. Would the branch or banker so cashing a cheque to order be liable in the event of forgery of the payee's endorsement, or be considered as merely acting for the party advising, and be free from any liability that would not also attach to the party advising 1 ? How would the decision in Ogden v. Senas* affect the case ? ANSWER : We think that a branch bank cashing a cheque would be subject to the same liability, and no more, as would attach to the advising branch upon which the cheque was drawn. We think one banker cashing a cheque under advice from another banker would, upon the principle laid down in Ogden v. Benas, be liable to the true owner in the vent of forgery of the payee's name. Whether he would be entitled to indemnity from the advising banker would depend upon the terms of the arrangement between them, and. assuming that the arrangement was such as to entitle him to indemnity, the right of the advising banker in his turn to be indemnified by his customer would also depend upon the terms of the arrangement between them. It would be advisable in all cases where a banker is asked to cash a cheque not drawn upon him, that a clear arrangement should be made with regard to the respective liabilities, otherwise questions of great nicety might arise. * 9 L. R. C. P., p. 513. Questions on Banking Practice. continued. 90- QUESTION: If a demand draft drawn on a bank by its own branch bears a forged endorsement, can an innocent holder for value compel the tank to pay, either as drawer or drawee 1 ANSWEE : A bank may always refuse to pay a draft bearing a forged endorsement. 91. QUESTION: What is the liability of a banker for forged endorsements on drafts drawn by a bank at a branch office on the head office, or on another branch ? (CASE AND OPINION.) By the Bills of Exchange Act, 1882, 45 and 46 Viet., cap. 61, sec. 2, a " bill " is denned to mean a " bill of exchange/' " note " to mean "promissory note," and "holder" to mean "the payee or " indorsee of a bill or note who is in possession of it." Sec. 3 defines a bill of exchange as an unconditional order in writing addressed by one person to another. Sec. 82, sub-sec. 1, defines a promissory note as an unconditional promise in writing made by one person to another. Sec. 73 defines a cheque as a bill of exchange drawn on a banker payable on demand. By sec. 5, sub-sec. 2, it is enacted that where in a bill drawer and drawee are the same person the holder may treat the instrument at his option, either as a bill of exchange or as a promissory note. By sec. 60 when a bill payable to order on demand is drawn on a banker, and the banker on whom it is drawn pays the bill in good faith and in the ordinary course of business, he is deemed to have paid the bill in due course, although the endorsement has been forged. Sec. 73 is as follows : A cheque is a bill of exchange drawn on a banker payable on demand. Except as otherwise provided in this part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque. Sec. 89, sub-sec. 1, is as follows: Subject to the provisions in this part, and " except as by this section provided, the provisions of "this Act relating to bills of exchange apply with the necessary " modifications to promissory notes." Sec. 60 is not excepted, and therefore applies to cheques and promissory notes drawn on or by bankers as well as to bills. Sub-sec. 2 is as follows : In applying those provisions the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first endorser of " a note shall be deemed to correspond with " the drawer of an accepted bill payable to drawer's order." Sub-sec. 3 states the provisions which do not apply to notes. They do not appear to be material to the present case. Questions on Banking Practice. 29 BANKER continued. An uncrossed draft A, payable on demand, was drawn by a Colonial bank on its head office in London. It was made payable to X, or order, and handed to him. Another uncrossed draft, B, payable on demand, was likewise drawn by the same bank on its head office in London. It was made payable to Z, or order, but handed to X, who purchased it from the bank. Both drafts were lost, the first one by X himself and the second in transmission by X to Z. They were both presented with the payee's endorsement forged and were paid by the head office in London in good faith and in the ordinary course of business. In Charles v. Blackwell, L.R. 2, C.P. Div., p. 151, it was held that where a cheque, payable to order, had reached the payee's hands and had been stolen from him and endorsed without his authority the drawer was not liable, but that the loss fell upon the payee. If the draft had been lost before it reached the payee the loss would have fallen upon the drawer. It is submitted that in the present case the instruments must be regarded either as cheques, bills of exchange, or promissory notes, and that in either case the banker, if considered as the paying banker, is protected by sec. 60 of the Act, while as regards draft A, if he is treated as the drawer or maker of the instrument, the case of Charles v. Blackwell is a direct authority showing that he is not liable. It is submitted that the banker is also not liable if he is treated as the drawer or maker of the instrument B, but that, following the reasoning in the case of Charles v. Blackwell, the answer to any action against him as drawer or maker would be that he cannot be called upon to pay over again an instrument which had already been paid to one to whom the banker was authorized to pay it by the operation of the statute. It has been argued that having regard to sec. 89, sub-sec. 2, the payee of the instrument is in the same position as the drawer of a cheque, and that as sec. 60 does not protect the paying banker where the signature of the drawer of a cheque is forged, so he is not protected here. It is submitted, however, that although the payee is, for certain purposes, put in the same position as the drawer of a bill of exchange, the instrument not the less is payable to his order and bears what purports to be his endorsement, and that, in the words of the 60th sec., the banker is deemed to have paid the bill in due course, although the endorsement has been forged or made without authority. He is placed by this sec. in the same position as if the endorsement had been authentic, in which case the endorser would have been precluded from denying the authenticity of the drawer's signature. 30 Questions on Banking Practice. BANKER continued. You are requested to advise : Whether under the circumstances stated above any liability attaches to the banker, either as drawer or paying banker. Whether the liability is the same in the case of an English bank drawing a similar instrument on one of its branches in England. lth January, 1888. We are of opinion that the bank is liable in all the cases mentioned, and as the question is one of considerable doubt and difficulty, we will state at length our reasons for arriving at this conclusion. It is clear that the draft, not being payable to bearer, was and remained the property of either X or Z ; and that if the instrument is one not falling within the provisions of the 60th sec. of the Bills of Exchange Act, one or other of them could maintain an action against the bank and recover the amount of the draft. On the other hand it is equally clear that if the instrument is within the scope of those provisions the payment by the bank was in due course, and it follows from Charles v. Blackwell, 2 C.P.D. 151, that the bank could not be made liable in any way on or in respect of the draft or the consideration received for it. The real question therefore is whether a bill drawn by a bank at a branch office on the bank at another branch or at the head office falls within sec. 60. We are of opinion that it does not, for the following reasons : The Bills of Exchange Act, although it altered the law in some few particulars, had for its main object, as its title imports, to codify the existing law, and to this fact due weight must be given in the inter- pretation of the statute (see the judgment of Lord Blackburn in McLean v. Clydesdale Banking Company, 9 App. Cas., at p. 106). Bearing this in mind it is not difficult to trace the object of the 60th sec. The statute 16 and 17 Viet., cap. 59, protected a banker who paid a draft with a forged endorsement on it, and enabled him to charge the drawer with the amount paid, and it was decided for the first time in Charles v. Blackwell that as a legal consequence of this enactment the bill was discharged, and that the debt for which the cheque was given must be deemed to have been paid. Now the 24th sec. of the Bills of Exchange Act, which relates to bills with forged or unauthorised signatures on them impliedly repealed sec. 19 of the 16 and 17 Viet., cap. 59, so far as it related to bills, and thereby deprived the bankers of their protection (see Chalmers on the Bills of Exchange Act, 3rd edit., p. 290). The object therefore of the 60th sec. of the Bills of Exchange Act was to restore the protection given by 16 and 17 Viet., cap. 59, and at the, same time to embody the decision in Charles v. Blackwell, and this Questions on Banking Practice. 31 BANKER continued. twofold object was effected by enacting in the first place that where a bill payable to order on demand is drawn on a banker and is paid by him, it is not incumbent on him to show that the endorsement on the bill was genuine or authorised, and in the second place that he is deemed to have paid the bill in due course, although the endorsement was forged or unauthorised. From this it seems to follow that the 60th sec. applies only to those cases in which, but for its provisions, it would be incumbent on the banker, for the purpose of discharging himself and charging the drawer, to show that he had paid a person who had a good title to the bill. We are therefore of opinion that the section does not apply to a case where the banker is himself the drawer, for then no such duty could ever be incumbent upon him in order to discharge himself or charge any other person. In short, the words used in the section prove that it must be read as if it contained a proviso that it should apply only to a bill on the banker by some person other than himself. This view is in some degree confirmed by the 3rd sec. of the Bills of Exchange Act, which defines a bill as an unconditional order in writing, addressed by one person to another, and provides that an instrument which does not comply with those conditions is not a bill of exchange. It is true that sec. 5 enacts that "where in a bill drawer and " drawee are the same person, the holder may treat the instrument at rt his option, either as a bill of exchange, or a promissory note," and that sec. 50 provides " that notice of dishonour need not be given " where the drawer and drawee of a bill are the same person." The proper way, however, of reconciling these somewhat inconsistent provisions is probably to hold that where the drawer and drawee are the same person, the instrument is not strictly a bill of exchange within the meaning of the Act, but that the holder may treat it as a bill of exchange, and even if he does so, need not give notice of dis- honour to the drawer. We think, however, that the opinion at which we have arrived is more strongly confirmed by the consideration that the present case differs essentially from those cases which, as Cockburn, C.J., pointed out in Charles v. Blackwell, the legislature had in view when pro- tecting the banker. In those cases the banker would have paid the bill, because he was bound to do so as banker ; in the present case he would be liable to pay the drafts, not because he was a banker, but because the drafts were drawn by him. We may add that it is not open to the bank, but only to the holder, to treat the instrument as a promissory note, and that there- fore, whatever effect sec. 89 might have, it cannot be prayed in aid by the bank. 32 Questions on Banking Practice. For these reasons we are of opinion that the drafts in question do mot fall within the provisions of sec. 60 of the Bills of Exchange Act, and that consequently the bank's liability is not discharged. 92. QUESTION: Is the position of a banker when asked by another banker to stop payment of a sight draft, which the latter has drawn upon him, similar to that in which he is placed when a customer instructs him to stop payment of a cheque? Would the banker drawn upon be covered by the instruction from the drawer to stop payment, or should the drawee require the drawer's indemnity 1 ANSWER: The banker's position would be similar, and he need not require any indemnity. 93. QUESTION : Bill drawn at three months by " Sheffield & Co., Ltd., " Jas. Bradford." Payable to themselves or order. It is properly accepted, and is endorsed " p.p Sheffield & Co., Ltd., "J. Leeds, Sec'y." This is remitted by the St. Michael's Bank to the St. Clement's Bank for collection. The St. Clement's Bank pays the bill debiting their customer, and paying the proceeds to the St. Michael's Bank. The endorsement proves to be a forgery : (1.) Is the St. Michael's Bank or the St. Clement's Bank liable? (2.) If it is endorsed by J. Leeds who absconds, never having had authority to endorse, who is liable? (3.) Is not a bank who pays a bill with forged endorsement (vide Bills of Exchange Act, section 24) liable in all cases ? ANSWER: (1), (2.) The St. Clement's Bank is liable. (3.) Yes. 94. QUESTION : A stranger tenders to a country banker a first of exchange on the Bank of British North Africa, Limited, London, payable to John Smith, and asks them to collect the amount, which they do, and on receiving the money, they pay the same to the stranger. Next day the second of exchange is presented to the Bank of British North Africa by the real payee, John Smith, and the en- dorsement on the first of exchange is found to be a forgery. Is the Bank of British North Africa liable for having paid the first of exchange ? ANSWER : If the draft were drawn on demand by one of the branches of the bank, it would be liable for having paid the first of exchange with a forged endorsement ; but not otherwise. If the bill Questions on Banking Practice. 33 BANKER continued. were drawn at a tenor longer than on demand, the bank would, however, be liable. 95. QUESTION : B gives A authority to sign cheques for him, the banker holding the said authority. A dies, but after his death a cheque is presented which had been drawn by him on B's account. Is the banker justified in returning the cheque marked "Drawer " deceased " 1 ANSWER : No. 96. QUESTION : Would a banker be justified in returning cheques presented for payment after the death of the person who has signed per pro of his customer 1 ? ANSWER : No ; unless he was ordered by the principal not to pay. 97- QUESTION : Two accounts are opened thus : (a) " St. John's Schools Building Fund. A. Smith, Treasurer." All cheques on the account are signed by the treasurer. (6) "John Brown, Treasurer, Westport Cricket Club." All cheques are signed by the treasurer. Both these accounts are overdrawn ; who is liable for the debt ? ANSWER : Such accounts should never be allowed to be overdrawn, unless an agreement has been entered into by which the treasurer or some responsible person has become personally liable. 98- QUESTION : What is the general custom of bankers as to opening accounts with voluntary unregistered associations such as clubs, societies, &c. 1 Is there any objection to opening an account with such a society and taking the instructions of the committee of management as to the drawing of cheques, so long as the account is kept in credit ] ANSWER : The usual custom is to open the account in the name of the club or association, the treasurer or other officer being authorised, by resolution of the committee of management, to sign cheques, but the account should always be kept in credit. 99- QUESTION: A bank credit is lost, and the rightful owner gives notice to the bank of the loss. A dishonest finder of the credit negotiates drafts thereunder in the name of the rightful owner. Can a purchaser for value compel the bank to pay the draft in spite of such notice? If, before receiving notice, the bank paid a draft under the credit with the drawer's signature forged, could it debit its customer with the amount or must it bear the loss ? 34 Questions on Banking Practice. BANKER continued. ANSWER : The bank could not be compelled to pay a draft bearing a forged signature. If it did so inadvertently it would be liable for the loss. 100. QUESTION: A banker at Leeds is agent for a banker at Wakefield, and has made arrangements to receive payments for the credit of the Wakefield Bank's customers. A cheque on London crossed " Not negotiable," is brought to the Leeds Bank by one of the Wakefield Bank's customers for the credit of his account at Wakefield. The Leeds Bank collects the cheque, which is duly paid, and advises the Wakefield Bank of the amount. It afterwards appears that the Wakefield customer is not the rightful owner of the cheque. Can either the Leeds Bank (collecting the cheque) or the London Bank (paying it) be held liable to the rightful owner for the amount of the cheque ? ANSWER : The paying banker (the London Bank) would be absolved from liability by sec. 80 of the Bills of Exchange Act, 1882. The liability of the collecting banker (the Leeds Bank) would depend upon whether he received payment for a customer. (See sec. 82 of the same Act.) In this case we think it must be considered that the Wakefield Bank is the customer of the Leeds Bank, and that consequently the latter would also be absolved from liability. 101. QUESTION : A B has an account with a bank at York, and has facilities for paying in money for his credit there at the bank's branch at Leeds (or any other branch). In the event of the Leeds branch omitting to advise the York bank of a payment, A B, assuming that the amount is placed to his account at York in due course, issues cheques against it, which are dishonoured. Would the bank be liable to A B for damages 1 ANSWER: Yes. 102- QUESTION : A opens an account at the B agency of a London bank, but cheques are drawn on and cleared through the C branch, from which the agency is worked. A pays in at the agency at 10 a.m. money sufficient to meet outstanding cheques, but at 3 p.m., before the agency clerk returns, cheques are returned unpaid through the local collection. Is the bank liable for damages for returning the cheques ? ANSWER: Yes. 103. QUESTION: Y has 80 to his credit with Z, a banker; cheques are presented as follows : (a) One for 70 by the morning mail and one for 60 through the local clearing (mid-day). Questions on Banking Practice. 35 BANKER continued. (b) One by mail or through clearing and the other subsequently presented at the counter. (c) Both cheques are received by same mail or through the same clearing. Is the banker liable for damages if he return both the cheques 1 ANSWER: In the cases (a) (b) the banker would be justified in paying the cheque first received. He would probably not be liable for returning both in case (c). 104- QUESTION : (a) Customer A has a balance to his credit of 15. On the morning of the 10th, cheques are presented by letter amounting to 10 and 5 respectively, which the banker keeps over, knowing other cheques are to be presented, but having no notice to the effect from his client. What is the position of the banker if he pays a cheque during the day for 15 and returns the other two? (6) Has a banker any more license as regards the cheques presented through the letters, than he has when presented over his counter? The cheque through the letters being presentments for payment, not for collection as agent. ANSWER : We think that a banker must treat cheques presented through the post in the same manner as those presented over the counter, and in the present instance the banker would, in our opinion, be liable for whatever damage might have been sustained by the customer through the two cheques for 10 and 5 being dis- honoured. 105- QUESTION: Occasionally notaries demand payment of a bill on the date of its maturity at a clearing bank, and the bills are returned with the answer " Present through the clearing." Is thia correct, or could payment be enforced 1 ANSWER : Payment could be enforced unless the bill is in the hands of a notary on behalf of a clearing banker. 106- QUESTION: A bill has already been presented at a bank where domiciled by a banker and returned unpaid. A second pre- sentation is made by the holder for value, not being a banker. Would the paying banker be justified in paying the holder for value sup- posing there were funds to meet it on the second presentation, not- withstanding the fact that the acceptance bears the stamp of the tanker making the first presentation? ANSWER : Yes, after satisfactory explanation. 107- QUESTION: A dishonoured bill having the ordinary stamp of the St. Michael's Bank on the back, is re-presented by the drawer D2 36 Questions on Banking Practice. BANKER continued. himself and payment refused, with the answer " must be presented through the St. Michael's Bank." Is this a correct answer? ANSWER : No ; but the banker should exercise some discretion with regard to a bill presented in such circumstances. 108- QUESTION: Can a customer, having withdrawn a dis- counted bill from his banker, present it for payment at maturity himself or by his clerk, although it bears on the back the stamp of the discounting bank (crossed out), or is the bill payable to the banker whose stamp it bears 1 Would the case be different if the bill was presented after maturity ? ANSWER: Whether the bill be presented for payment at or after maturity makes no difference, the bond fide holder has a right to demand and receive payment, but the acceptor or his banker, with whom the bill might be domiciled, would, in the interest of all parties concerned, be justified in exercising caution, and in ascertaining before paying the bill that it had been properly withdrawn from the banker who had placed his stamp upon it. 109- QUESTION: A. B. has an account with the St. Clement's Bank, and discounts a bill domiciled at the Southern Bank. The bill, when presented, is returned " Refer to acceptor," the customer's account is debited, and the bill returned to him. The following day A. B. presents the bill himself at the Southern Bank. Can that bank refuse payment, as the bill bears on its back the stamp of the St. Clement's Bank ; if not, are they justified in demanding that A. B. must be identified 1 ANSWER: The bank are not justified in refusing payment to the presenter if the bill on re-presentation is in order, but they should seek explanation as to its having passed out of the hands of the St. Clement's Bank. 110. QUESTION : The National Bank of Pantah, an English bank established in Egypt, has a client a native but who is recognised as a British subject and trades as Wilson & Co. The manager is desirous of closing the account, but Wilson & Co refuse to withdraw their balance. 1. Can the bank manager send them his cheque for the balance standing at their credit ? 2. Is he justified in dishonouring Wilson & Co.'s cheques on their account if presented after his cheque has been sent to them for the balance at their credit? 3. If both are illegal proceedings, what course is open to the bank Questions on Banking Practice. 37 BANKER continued. manager to enable him to rid himself of the account conformably with English law 1 ANSWER : A cheque should not be sent for the balance, but the usual course would be to give notice to the customer that no more credits would be received for Wilson & Co., and to honour their cheques only until the balance was exhausted. 111. QUESTION: A draws a cheque for 100 on B and Co., his bankers, which, at his request, and he having this amount to the credit of his current account, they mark thus : " Good for one " hundred pounds, B and Co." Before it is presented other cheques of A's are presented, which, if paid, would reduce A's balance to less than 100. Would B and Co. be justified in refusing payment of these latter cheques and holding the balance intact in favour of the marked cheque? ANSWER: This mode of marking cheques is not customary in London. B and Co., having undertaken a liability on behalf of their customer, would be justified in refusing payment of the latter cheques referred to. 112. QUESTION : The customers of country bankers are frequently in the habit, as a matter of business convenience simply, of sending some time in advance say a month advice notes of acceptances made payable at the London agents of the bank. Such advices are received in advance, on the understanding that unless duly provided for immediately before maturity they will be returned to the cus- tomer, and the acceptances to which they refer be consequently unpaid. Does the bank by the act of receiving such advice notes in advance, with the understanding before referred to, render itself liable to advise such acceptances at maturity in any case ? ANSWER : It does not. 113- QUESTION : Supposing a draft issued by a banker in favour of Robert Smith is afterwards re-purchased from applicant on some apparently satisfactory representation, and the payee subsequently finds the bank has issued such draft and re-purchased it, could he hold the bank liable for the re-purchase of the draft without his (the payee's) endorsement? Further, would the question be altered in any way as far as regards the bank's liability, were it shown that the draft in question had been handed over to the possession of the payee, and had afterwards got into the hands of the original applicant in some fraudulent manner 1 The case appears, on the face of it, to be very much the same as A, who pays in 30 to the credit of B's current account, and comes in the next day, or even later in the same 38 Questions on Banking Practice. BANKER continued. day, saying he had made a mistake, and asks to have the money handed back to him, which the ordinary practice would not allow the bank to do. ANSWER: The 21st sec. of the Bills of Exchange Act, 1882, enacts as follows : " Every contract on a bill, whether it be the drawer's, " the acceptor's, or an endorser's, is incomplete and revocable until "the delivery of the instrument, in order to give effect thereto." Until, therefore, the draft referred to in the question has been delivered to the payee, he will, we think, have no claim thereto, and the person obtaining the draft can, at any time, sell or return it to the issuing banker, without the payee having any claim against the banker. If, however, the draft had been delivered to the payee, and had afterwards found its way back (unendorsed by him) to the applicant in the manner suggested in the question, we think the banker would be liable to the payee if he re-purchased the draft. 114. QUESTION : A cheque is presented for payment by banker A to banker B, drawn in favour of T. G. Stevens, and endorsed " T. Stevens," with a guarantee signed by C as manager of a branch of bank A, but not "per procuration." Would the banker B be justified, before paying the cheque, in requiring the verification of guarantor's signature, and is banker A bound by the act of his branch manager ? ANSWER: The Banker B would hardly be justified in requiring such verification, and banker A would be bound by the act of his branch manager. 115- QUESTION : Suppose a cheque crossed " generally " payable to " order " without the words " not negotiable " be drawn by A on his banker B, payable to C, and C, or any party to whom C or any subsequent endorser has conveyed a title, presents it to any other banker, D. Does the law require D only to receive such a cheque for the purpose of being placed to the credit of an account, or may cash be paid to the party presenting it 1 ANSWER : The banker D would be quite justified, if he thought fit to do so, in cashing a crossed cheque drawn upon another banker, B, but by so doing he would incur responsibility to the true owner in case of any fraud having been perpetrated. 116. QUESTION : M, a customer of B, a banker, pays to his account with B a crossed cheque drawn on B and payable to J, who is known to keep an account with another banker. Is B justified in declining to credit M with a cheque, and in requiring it to be presented by J's or some other banker 1 Questions on Banking Practice. 39 BANKER continued. ANSWER : In the absence of special circumstances the banker would not be justified in declining to credit M with the cheque. 117. QUESTION : Is there now any objection to a London bank issuing drafts on its own country branches, or upon itself and payable to order on demand? By the Act of 3 and 4 Wm. IV., c. 98, sec. 2, this was forbidden, but by 7 and 8 Vic., c. 32, sec. 26, it was declared lawful for a bank "to "draw, accept, or endorse bills of exchange not being payable to " bearer on demand." ANSWER : We are of opinion that there is no objection to a London bank issuing drafts upon its own country branches, or upon itself, and payable to order on demand. The Act 7 and 8 Vic., c. 32, sec. 26, referred to in the question seems to give distinct authority to the bank for so doing. 118- QUESTION: Can London banks legally issue drafts on pro- vincial towns? They are, it is assumed, precluded from granting drafts on demand. Are they also precluded from issuing drafts of over seven days currency? ANSWER: See reply to the previous question (117). 119. QUESTION : If a customer of an English bank applies at the head office in London for a draft upon a distant town where the bank is not represented, is there any legal objection to the bank issuing a draft on demand payable to order upon itself ? ANSWER : We have never heard of any legal objection being made to this. (See No. 117.) 120- QUESTION : A draft is drawn by a branch bank upon its head office in London, and is paid on presentation at the counter, in the usual way. The payee subsequently causes the duplicate draft to be presented for payment, and upon it being returned with the answer " original paid," states that the endorsement on the original draft is a forgery. (1) Is the drawee protected under Section 60 of the Bills of Exchange Act, 1882 ? (2) Can it be contended that the draft is not a bill of exchange within the meaning of the Act ? ANSWER : See the answer to Question 94. 121. QUESTION : A B buys a letter of credit on London, in favour of C D, for 1,000. A B subsequently calls to say that he has tendered the draft to C D, who has refused to take or discharge it. 40 Questions on Banking Practice. BANKER continued. Is A B entitled to demand the refunding of 1,000 from the issuing bank in exchange for the unendorsed letter of credit 1 ANSWER: No; but the bank would be justified in repaying it under an indemnity. 122- QUESTION: A bank grants a travelling letter of credit, which stipulates the negotiation of drafts drawn under that credit by its agents and correspondents to the extent of the amount men- tioned therein. The grantee of the credit alters the amount of the said credit to a larger amount than that for which it was issued. What is the liability of a person who negotiates any draft, in good faith, drawn under that credit over and above the amount for which the said credit was issued 1 ? ANSWER : The person negotiating a draft in excess of the amount for which the letter of credit was issued, does so at his own risk. 123- QUESTION : In the case of unregistered stock, for instance, of Foreign Bonds " to bearer," with coupons attached, the dividends in respect of which are payable to the bearer of the proper coupons on their presentation at a London bank indicated thereon, is it now possible for the owner of the bonds, supposing them to have been lost or stolen, legally to restrain the London bank (who acts as agents for the Foreign Government by whom the bonds were issued) from paying the coupons of such bonds, if presented in the ordinary course of business? The bonds and coupons in question have a distinguishing number printed on them. Is it sufficient simply to give the bank notice by letter of the numbers, requesting them at the same time not to pay the coupons 1 Will such notice legally fix the bank, so as to render them liable should they, in spite of such notice, pay the coupons ? ANSWER : The only person whose instructions the banker is bound to obey is his customer. In the absence of these, he is bound to pay the coupons on presentation, and he incurs no liability in so doing, in spite of notice from persons other than his customers. 124. QUESTION : If a banker cash a cheque on another branch of his own bank, or on another banker, for a person who is not the drawer, and without charging a commission, and it is returned to the banker unpaid, can he sue the party for whom he cashed it ? ANSWER : As the banker changed the cheque on the faith of its being of value, he may sue the person to whom he gave the money in exchange. 125. QUESTION: The head office of a bank exchanges over the counter a cheque drawn upon one of its branches, such cheque being presented by the payee in person, and endorsed by him, he being Questions on Banking Practice. 41 BANKER continued. well known to the cashier as a man of sufficient position. The cheque is returned by the branch with the answer, " Refer to drawer." Application is made to the payee for repayment, but he declines to refund the amount. Has the bank any remedy against him? ANSWER : We think that under the circumstances, as stated in the question, the exchange of the cheque did not amount to payment by the head office as bankers of the drawer, or on his credit, but was made on the credit of the payee, and that consequently, the bank is entitled to recover from him the money paid. This was the effect of the judgment in the case of Woodland v. Fear (26 Law Journal, Q.B., 202), in which the circumstances were practically identical. 126- QUESTION : What is the duty of a banker when base coin is tendered to him? Should he return the coin as he receives it, or should he cut it 1 ANSWER: The coin should be defaced. (See reference to the " Coinage Offences Act " in the next Answer.) 127- QUESTION : A banker on discovering a spurious gold coin received from a customer cut it in two, returned it, and claimed a genuine coin in its stead. Customer refused to give this on the ground that the base coin was mutilated and not in the same con- dition in which it was paid in. Suspecting it, he put a mark on the coin which, however, were it the same, had been effaced by the clipping, and he could not identify it as one he had received from a particular person. Was the bank within its rights and could it recover at law ? ANSWER : Section 26 of the " Coinage Offences Act " (24 and 25 Viet., c. 99), enacts that coin suspected to be diminished or counter- feit may be cut by any person to whom it is tendered. The banker was within his rights, and if the identity of the coin were not dis- proved he would undoubtedly recover. 128. QUESTION : A customer, having a balance at his banker's, is arrested on charge of fraud, convicted and sentenced. Between the period of remand and trial, the prosecutors' solicitors warn the bankers at their risk not to part with the balance on the prisoner's account, as it is the proceeds of the fraud. Subsequently and before committal, the prisoner draws a cheque for the balance payable to " bearer." Would the banker be justified, under the circumstances, in refusing payment of the cheque until the result of the trial had been ascertained? ANSWER : Yes. 42 Questions on Banking Practice. BANKER continued. 129. QUESTION: A banker in London receives, from a country client for acceptance, a bill drawn abroad upon the London office of a foreign firm which is duly lodged at the office of the drawees and called for on the following day, when the presenting banker is informed that the bill has been forwarded to the drawees' chief office at Berlin for acceptance, on the ground that the representatives of the firm in London have no power to accept. Was the firm in London within its rights in so acting, and, if not, what course should the presenting banker adopt? ANSWER : The firm had no right to send the bill out of the country without the holder's consent. In strictness, the presenting banker should protest for non-delivery. 130- QUESTION : An Inland Bill is drawn on W. J. Mulhen & Co. and accepted " W. J. Mulhen." Is a banker justified in charging such a bill to the account of W. J. Mulhen, or should the discrepancy in the name of drawee and acceptor be rectified by the acceptor before the bill is debited to his account? ANSWER : The banker is quite justified in charging the bill to the account of his customer by whom it is accepted. The discrepancy between the tenor and the acceptance of the bill is a matter which affected the holder, not the banker with whom it is domiciled. 131. QUESTION : Bonds of a loan having a sinking fund operating by periodical drawings at par, are deposited for safe custody with a banker by his customer with instructions to cut off the coupons as they mature, and collect the proceeds to his credit. Is it incumbent upon the banker, without further instructions, to examine the published lists of the numbers of the bonds drawn, and to inform his client in the event of any of the bonds being drawn 1 ANSWER : As a matter of fact, this is frequently done, but there is no obligation on the banker's part to do so. 132. QUESTION : Warrants for half-pay and other pensions have usually to be signed in the presence of a Justice of the Peace or a bank manager. Is it necessary that the pensioner should be person- ally known to the witness, or would a bank manager be justified in attesting the signature of a stranger who states that he is the person described in the warrant? ANSWER : The pensioner should be personally known to the witness, and a bank manager would not be justified in attesting the signature of a stranger. 133. QUESTION : A has a current account, and is allowed to overdraw 200 on security of joint promissory note on demand by Questions on Banking Practice. 43 BANKER continued. self with B and C. A requires a further .50, making 250, and deposits, as additional security, a bill for 100, which is paid at maturity, and credited to A's account, reducing the overdraft to 150. Before the bill matures, A's banker understands that he (the customer) is likely to be in difficulties, and informs him when the bill is paid his overdraft must not exceed the amount then standing, 150, which he must now pay off. Would the banker be perfectly justified in stopping the account as stated, and returning any cheques which would exceed the 150? ANSWER : The banker would be perfectly justified unless there is some provision in the agreement between the banker and his customer inconsistent with the banker so doing. 134- QUESTION : A payee endorses a cheque making it payable to a third party. The third party loses the cheque and stops payment of the same. Is it necessary for the bankers also to obtain the instructions of the drawer? ANSWER : Yes. 135. QUESTION : Would a banker be justified in refusing to pay a cheque by order of the payee, but without the order of the drawer? ANSWER : The only person who can instruct the banker not to pay a cheque is the drawer, but in special cases the banker, having received notice from the payee, would exercise caution in the matter. (See previous answer.) 136. QUESTION : A opens an account in his own name and gives instructions that all cheques shall be signed by himself and counter- signed by B, secretary. Has A the power to give further instruc- tions without the signature of B for the bank to pay cheques by him- Belf only, after several cheques have been paid with the two signatures ? ANSWER : Yes. 137- QUESTION : A issues a cheque payable to self or order and endorsed by him, which he pays in satisfaction of a debt; after passing through two or three hands it is presented through the last holder's banker for payment and returned " payment stopped," the drawer in the meantime having arranged the debt with the original holder of the cheque ; can the bankers recover from the drawer, or only from their customer? The customer's a/c is always overdrawn by arrangement with the bank, and the cheque bears no other en- dorsement but the one mentioned. ANSWER : The bankers' remedy in the first instance is against the person from whom they received the cheque. Failing him, recourse 44 Questions on Banking Practice. BANKER continued. may be had against the drawer by the bankers, as bond fide holders for value. 138. QUESTION : What is the proper course for a banker to take when a bill is presented to him for payment drawn payable to the order of A B, but accepted by the drawee thus : " Accepted payable at Y L and Co. to A B." Does the restrictive acceptance affect the instrument and justify the banker in requiring to be satisfied that the proceeds of the bill shall reach A B 1 ANSWER : From the wording of the acceptance it is to be assumed that the bill was accepted without the drawer's signature, and the banker with whom the bill is domiciled has, therefore, to see that the bill is signed by A B, as drawer and endorser, before paying it. 139. QUESTION : Is it necessary for a banker to receive special instructions before charging his customer's account with acceptances, such account being an overdrawn one under an arranged limit 1 ? ANSWER : Assuming that after payment of the acceptances in question the customer's account would not be overdrawn beyond the arranged limit, any special instructions would be superfluous. 140- QUESTION : Is a banker justified in paying without advice a bill accepted payable at the bank by a client, everything else being in order? ANSWER : Yes, and this is the course usually pursued by the London bankers. Country bankers on the other hand usually require advice. 141. QUESTION : In the case of a new account current, where the signature was so irregular and illegible as to be practically no signature properly so called, would a bank be justified in agreeing to keep the account, but at the same time declining to take any respon- sibility in the event of any forgery thereof 1 ? ANSWER : The banker may make what agreement he pleases with his customer. 142. QUESTION : A customer, indebted on balance of current account to his banker who has issued a writ against him and obtained judgment, sends by letter a cheque upon another bank, requesting the amount to be sent to him by post. Would his banker, in such a case, be justified in placing the amount to his customer's credit in reduction, or must he send the cash, or return him the cheque 1 ANSWER: We do not think that, under the circumstances, the banker should place the amount to his customer's credit in reduction. 143- QUESTION : Is it the custom of bankers to give receipts for Questions on Banking Practice. 45 BANKER continued. articles deposited with them for safe custody only, and if so, does the fact of having given a receipt place the banker under any responsibility which he would have avoided if he had not done so 1 ANSWER : It is not the custom for bankers to give such receipts, but the banker would not incur any additional responsibility by doing so. 144. QUESTION : A customer deposits with his bankers a box, and subsequently writes, " Please allow the bearer access to my box, deposited with you for safe custody," the bearer being furnished with the key thereof by the customer. Is the bank bound, as the order does not express that anything may be removed from the box, to see that nothing is taken from it 1 ANSWER: No. It is the practice of bankers not to take cognizance of the contents of boxes deposited with them for safe custody. 145. QUESTION : Referring to Question No. 144, if an authority were given in the following form : " Please allow Mr. Jones to have " access to my box deposited with you, for safe custody, and to "remove therefrom the deeds relating to my Westfield estate/ 3 Would the banker be bound to see that only such deeds were taken away? ANSWER: Yes. 146- QUESTION: A customer leaves a box with his bankers accompanied by an order for the bank to allow access to his solicitors at any time. Should the solicitors wish to remove the box at any time would the bank be justified in giving it up to them upon their giving a receipt for it 1 ANSWER: No. 147. QUESTION: There are deposited with bankers (1) Boxes, packets, &c., " contents unknown," on which no charge for custody is made. (2) Securities, the periodical dividends, &c., are collected, on which a charge is made for collection, also a charge for custody, on surrender of securities. In the first case, is it to be assumed that no charge being made under no circumstances could the bank be held responsible in the event of loss of boxes, &c., &c., or their contents, however valuable? Would proof of negligence in custody affect the question ? In the second case, is it solely because a charge is made that a bank is held responsible for securities left for safe custody ; or would it be equally held liable for loss were no charge made? ANSWER : In the first case the banker would only incur liability in case of gross negligence. In the second case, if a charge were made for safe custody, he would probably be liable for the full value 46 testions on Banking Practice. BANKER continued. of the securities. But if no charge were made, he would incur no liability if he could prove that he had taken as much care of his customer's securities as of his own. 148- QUESTION : A client presents to a bank cheques, value, say 27 10s., of which he wishes to take in cash 7 10s., leaving 20 to the credit of his current account, the cashier fills up one of the bank forms as follows : Notes Gold 7 June, 1895. Silver Cheque 7 10 Cr. Current Account. ) 20 27 10 John Smith. out 7 10 20 Paid in by 20 requesting the client to initial the slip in confirmation. Does it make any difference if he initials against the amount deducted or in the " paid in by " space 1 ANSWER: No. 149- QUESTION: What is the usual custom of bankers when a loan is granted, " with a margin (say) of 20 per cent. ? " Should such margin be upon the amount of the loan, or upon the value of the security? In the former case 5,000 would be advanced against securities valued at 6,000, and in the latter case 4,800 only would be advanced against the same securities. ANSWER: It is usual, when a loan is granted on securities with a margin, to calculate the margin on the value of the securities. 150- QUESTION : Is it customary amongst London bankers to give a written answer when returning dishonoured cheques, &c., on the document itself? Can the presenting party banker or other demand a written answer on the cheque, and, if so, on what grounds ? Or would the banker on whom the cheque is drawn be justified in offering a verbal answer only, or in attaching a slip with a written answer to the cheque ? ANSWER: It is customary among London bankers to give a written answer on the document in accordance with the rules of the Clearing House, though probably it could not be legally demanded. Under certain circumstances, the banker would no doubt be justified in giving a verbal answer only, or in attaching a slip. Questions on Banking Practice. 47 BANKER continued. 151. QUESTION : A customer has authorised certain railway com- panies to pay over dividends on stock to his credit with his bankers as they become payable. He dies, and the railway companies, not having notice of his death, continue to pay over the dividends. Are the bankers right in receiving them, or should they at once have informed the railway companies of the death, and returned the dividends 1 ANSWER : It is usual in such cases, on the receipt of the dividends by bankers, to inform the companies of the decease of their customer, and to return the dividend warrants. 152. QUESTION : A and B, bankers, receive for collection from C and D, bankers, a bill accepted payable at their bank by E F. Must A and B accept the amount, if tendered by E F or any other person, or are they justified, if they prefer, in refusing it, and return- ing the bill unpaid to C and D ? ANSWER: London bankers invariably refuse to retire bills domi- ciled with them by parties who are not customers either of them- selves or of the country banks for whom they act as London agents, and they consequently decline to accept money from the acceptors of such bills for the purpose of meeting them when due, and would, in the case referred to, return the bill unpaid. 153- QUESTION : Is it a frequent occurrence for customers of a bank to detach the coupon portion of foreign bonds, and to lodge the bond proper with one bank and the coupons with a second bank for greater safety ; and so guard against improper dealing with the securities ? ANSWER: The practice referred to is undesirable and is not of frequent occurrence. 154- QUESTION : Is there any specific length of time required by law during which it is necessary to keep old letters, credit and debit slips, cheques, bank ledgers, &c., before destroying the same? ANSWER : So far as we are aware there is no specific length of time required by law, during which it is necessary to keep old letters, credit and debit slips, cheques, bank ledgers, &c., before destroying the same. The only ground upon which it is usually thought unnecessary to retain for more than six years receipts and vouchers for payments is that at the end of that time the debt is barred by the .Statute of Limitations, and consequently the voucher is no longer necessary as evidence of payment ; but there may be numerous reasons why it may be desirable to preserve evidence of business transactions for a period much longer than six years, and it seems to us impossible to lay down any general rule which will apply to very case. 48 Questions on Banking Practice. BANKER continued. 155. QUESTION : It is the custom of bankers to retain the vouchers of an overdrawn account when giving up the pass-book. What is the object of this 1 Is it sufficient to keep back the last few paid vouchers, equal in aggregate to the existing overdraft, or is it the custom to retain all the paid vouchers since the account was last in credit? ANSWER: No such custom exists in London, but in the country- bankers are in the habit of retaining the vouchers until the customer has made some satisfactory acknowledgment of the state of the account between them. 156- QUESTION : Is it usual, or desirable, for a customer paying money into, or drawing money from, a branch of a bank other than the branch at which his account is kept, to have the transaction entered in his Pass Book by the branch so receiving or paying the money ? ANSWER: No. 157. QUESTION: A crossed cheque is presented by a provincial bank in the usual daily exchange, to a bank in the same town. At the end of the day the cheque is returned for want of cover, but within bank hours it is provided for and immediately followed. Is the bank to whom the cheque has been returned justified in refusing to accept payment on the ground that they have returned the cheque to their clients? The contention is the paying bank is entitled until closing time to take up the cheque. It is by courtesy the custom to settle the clearing a quarter of an hour before closing hours. ANSWER : The bank presenting the cheque was under no obligation to retain it after it had been dishonoured, and having returned it to its customer it was justified in refusing to accept subsequent pay- ment. 158- QUESTION: If a banker holds a cheque over, instead of returning it, and the drawer pays in enough to cover, but without mentioning that the payment is specially to meet the cheque, is the banker bound to pay ? ANSWER: Yes. 159- QUESTION: A cheque payable to John Brown, or order, is endorsed thus : "His " John X Brown " mark. "Witness Jno. Jones." Questions on Banking Practice. 49 BANKER continued. Is the above a legal discharge? Would the bank upon which the cheque is drawn be justified in refusing payment, and whether the address of witness is given or not 1 ANSWER : An endorsement may be made by a mark. The banker is not precluded from enquiry, before payment, of the validity of any endorsement. It is the practice to require the address of the witness. 160- QUESTION : A customer of a provincial bank accepts a bill payable at the London agent of his bankers. He instructs his bankers to advise the bill and debit the amount to his account. Should his signature to the advice note be cancelled in the same manner as a cheque ? ANSWER: No. 161- QUESTION : Is a banker safe in treating as payable to bearer (1) a three months' bill or (2) a cheque drawn payable to X Y & Co. or order if endorsed thus? "Pay to the order of " Value received. "Nice, 5th March, 1894. " X Y & Co." ANSWER : Yes. 162. QUESTION : Are bankers obliged to give particulars of their charges at the end of the half-year if called upon to do so ? Would not " Interest and commission " be sufficient, and in suing for the payment of such charges can they be called upon to give further particulars in a court of law ? ANSWER : The banker should give particulars of charges if called upon by his customer, and no doubt if the matter were contested, would be obliged to do so. 163. QUESTION : In the Bills of Exchange Act, 1882, edited by M. D. Chalmers, is a note (p. 9) " Christmas Day and Good Friday " were bank holidays in Scotland, not common .law holidays : but " in this respect Scotch law has now been assimilated to the English, "and henceforth in Scotland, as in England, a bill falling due on "Christmas Day or Good Friday will be payable on the preceding "business day." In Moxon's "English Practical Banking" (1888) on p. 15, it is stated "that Christmas Day and Good Friday are " bank holidays in Scotland." Also on p. 1 of the Bills of Exchange Act, already cited, it is stated in a note that "This act applies to "the whole of the United Kingdom, i.e., England, Ireland and " Scotland." May it be inferred from these quotations that bank holidays are absolutely identical in the three countries? 50 Questions on Banking Practice. BANKER continued. ANSWER: Christmas Day and Good Friday continue to be Bank holidays in Scotland, as provided by the Bank Holidays Act, 34 Viet., c. 17 ; but for the purposes of the Bills of Exchange Act they are not now regarded as bank holidays, in regard to the payment of bills of exchange maturing on those days. The Bills of Exchange Act, as stated, relates to the whole of the United Kingdom, but it does not recite the bank holidays either in England, Scotland, or Ireland. 164. QUESTION : A bill at sight, payable abroad, drawn against a bill of lading and to the order of A and Co., bankers, London, was paid in to them in the ordinary course for collection. It was sent out by them through a bank which subsequently suspended payment, whose agents received the money and gave up the bill of lading. These agents, being creditors of the suspended bank, appropriated the amount as against their claim, and A and Co. repudiate their liability on the ground of the notice in their pass-books, which was as follows : '' All Cheques, Notes, or Bills sent into the country or abroad for " collection will be credited only upon advice of payment. " No charge is made for collection, and the bank will not "be responsible for any loss that may occur by delay or " otherwise in transmission or collection." Were A and Co. justified in so doing? ANSWER : They were. 165- QUESTION : An account is open with a bank as follows : "John Jones, treasurer of the Boys' Recreation Association." A year after the opening of such account, while 50 is standing to the credit, the authorities of the Boys' Recreation Association give the bank notice that John Jones has ceased to be treasurer and Thomas Smith has been appointed. After the receipt of such notice by the bank (1), has John Jones any power over the account? (2) If John Jones ignores the notice and issues cheques subse- quently, must the bank honour them ? (3) Is the discharge of John Jones by cheque necessary before Thomas Smith can withdraw? ANSWER: (1) No. (2) No. (3) No. 166. QUESTION : An account is opened under the title of " Parish " Room per H. D. Rogers." Rogers subsequently desires to give Smith an authority to draw cheques, but the bank objects that he has no power to delegate his authority. Rogers contends that no official status is appended to his name and that the effect is the same as if the account had been opened under Questions on Banking Practice. 51 BANKER continued. the style of H. D. Rogers a/c Parish Room, in which case he could undoubtedly operate as he pleased. Is the bank right or wrong 1 ANSWER : Having regard to the irregular form of the account, the contention of the bank is correct. 167- QUESTION : Cheques drawn on a school a/c which is over- drawn are signed by three members of the school committee. Does the fact of their so signing render such members individually or personally liable to the bank for the amount of the cheques to which their signatures may be appended? ANSWER: They would not be liable if they add words to their signature indicating that they sign in a representative character. (See Bills of Exchange Act, 1882, sec. 26.) 168. QUESTION : Brown opens an account with a country bank as under " Northborough Liberal Association, "Brown, Treasurer," but signs cheques on same, " Brown, " Treasurer, Northborough Liberal Association." Does he, by so doing, incur any personal liability, and would the bank have a legal claim on him in the event of the Association dissolving 1 ANSWER: No. 169- QUESTION : A has several current accounts with the same bank ; the first, standing simply in his own name, is maintained largely in credit. Other accounts are ear-marked as follows : a re Marks. b a/c S. George's Schools. c Exor. of Simkins. d Estate a/c. e ... Treasurer Hopetown Friendly Society. f Warden S. George's Church. ff Annual Fete a/c. All these seven accounts are permitted to be occasionally over- drawn. Can the customer be regarded as personally responsible for any overdrafts that may arise without giving his individual guarantee, and have the bank a lien on the credit balance standing in his own name and power to attach at any time such portion of it as may be required ? Eo Z 52 Questions on Banking Practice. BANKER continued. ANSWER : As regards a, d and g, the customer would probably be personally responsible and the bank's lien would hold good ; as regards the other four, however, the form calls the banker's notice to the customer's representative capacity in a manner too plain to be safely disregarded. 170. QUESTION : Jas. Colls opens a current account with tha Firdall Bank in the following manner: " Firdall British Schools, "Jas. Colls, Treasurer," which he solely conducts and which he overdraws 100 without giving the bank a guarantee. In event of his death, is his private estate chargeable with the overdraft ? ANSWER : No. (See Question 169.) 171. QUESTION : John Smith is managing owner or ship's husband of the barque " Adonis." He opens an account at a bank in the name " Barque Adonis, John Smith, managing owner." All cheques for disbursement are signed " a/c Barque Adonis, John Smith, " managing o\vner." In case the account became overdrawn, and John Smith should fail to pay the balance due, could the bank have recourse to any or all of the other shareholders in the vessel ? Sup- posing he held no shares in the vessel and signs " ship's husband," would this bind the shareholders, and would he be free from personal liability? Presuming the bank had a right of recourse against the shareholders, would it be bound to prove that the money drawn out had been applied to the purposes of the vessel? ANSWER : A managing owner or ship's husband is merely an agent for the owners of the ship, and has no authority, as such, to over- draw a banking account. The burden of proof would lie on the bankers to show that the agent had the author' ty he assumed to- exercise. The question in each case is one of fact, whether he has had such authority committed to him, or, if this is not in fact the case, whether he has been allowed by the owner to hold himself out as armed with such apparent authority. If he had no authority, express or implied, the owners will not be liable to the bank in respect of the overdraft. The ship's husband would, in the case put, be personally liable. 172- QUESTION: A cheque for 200 in favour of J. W., or order, and crossed generally, is presented at the bank on which it is drawn by a person not known but representing himself to be the payee, and who requests that 100 be lodged to the credit of A B's current account with the said bank, and 100 to the credit of C D's deposit account. Can the bank suffer loss by complying 1 with this request? ANSWER: No. Questions on Banking Practice. 53 BANKER continued. 173- QUESTION : A customer goes to his bank3r, A, and asks for a draft upon a foreign town. A has no agent abroad, but he gets B, another banker who has a foreign correspondent, to draw for the required amount. A hands the draft to his customer in exchange for a cheque A's name does not appear upon the draft. Is he liable in the event of the draft being dishonoured, or does the Bills of Exchange Act, 1882, sec. 58 (2) apply in this case so as to discharge A from all liability? Would the case be different if a commission were charged by A 1 ANSWER: The 23rd sec. of the Bills of Exchange Act, 1882, enacts that no person is liable as drawer, endorser or acceptor of a bill, who has not signed it as such. A therefore is clearly not liable on the draft, nor is he liable as having guaranteed its payment, or liable at all, unless it can be shown that he acted negligently. The customer's remedy is against B, and the acceptor of the draft if it was accepted. 174- QUESTION: A customer requests his banker on a printed form to make a purchase of stock or shares as under, which he signs, but the form is not stamped. " To the Manager. "May 1, 1895. " St. Clement's Bank, Limited. " At 34, Clement's Lane. " Sir, "Be good enough to purchase on my account the under- " mentioned stock or shares. "Yours respectfully, " F. Mitchell." Below, the stock or shares to be purchased are described, and initialled by the customer who signs the request. Can a banker debit his customer's account with such an authority, on the completion of the purchase, or is anything further necessary 1 ANSWER: Such authority is sufficient, but it Tvould be better if a request to debit the account were added to the printed form. 175- QUESTION : A dies, leaving with his bankers a balance in his favour. B, his brother, directs an auctioneer to sell deceased's effects, stating that it is the wish of the widow, and heads his letter " A, deceased." C, a friend of all parties, verbally instructs the auctioneer at the time of the sale to pay the proceeds to the widow's credit with her late husband's bankers, she having since his death opened an account with them in her own name. The auctioneer overlooks these 54 Questions on Banking Practice. BANKER continued. instructions, and pays the money to deceased's bankers for credit of his executors, and the bankers, having no account open with the executors, the will not having been proved, place the amount to the credit of deceased's account. Are they right? Subsequently the auctioneer informs the bankers that he has made a mistake, and asks that the amount may be transferred to the widow's credit. The bankers decline without authority from the legal representatives of the deceased. Are they right 1 ? ANSWER : The bankers acted rightly in both cases. 176- QUESTION: A foreign banker issued drafts on a London banker, and sent his customary advice sheet, with the particular details of each draft, but when one of these was presented for payment it vas discovered that the name and address of the London banker had been omitted (as a fact, the payee always received the remittances by draft on the above-mentioned bank). Has the said banker the right to refuse payment, or can he use discretionary power to pay on presentment, having proved the correctness of the draft, with the exception of the above-named omission 1 ANSWER: In the case mentioned, the banker would probably pay for the honour of the drawer. 177- QUESTION : As a banker is under liability for a forged en- dorsement on a Bill of Exchange, is it the custom of bankers, and are they strictly within their rights, to decline to cash across the counter a Bill of Exchange to a holder personally unknown to them ? ANSWER: In the absence of special circumstances a banker cannot so decline to pay a bill which is apparently in order. 178- QUESTION : Bankers A send to bankers B a bill accepted payable at bankers B. The acceptor meets the bill by payment to bankers B of two-thirds of the amount in cash and the remainder in cheque on a bank in a neighbouring town. Bankers B accept this form of payment (not giving up the document), and pay over the full amount of the bill to bankers A, through London, informing them by the evening's post that the cheque is sent on for collection at their (A's) risk. In the event of the cheque being dishonoured, can bankers B recover the amount from bankers A ? ANSWER: Yes. 179- QUESTION: A keeps an account with Messrs. Jones and Co., bankers. The Blenheim Trading Company, with which A is closely but not openly associated, has also an account with Messrs. Jones and Co.'s bank. The Trading Company's account, not being con- ducted to the satisfaction of the bankers, is closed by the latter. Questions on Banking Practice. 55 BANKER continued. After the Blenheim Trading Company's account is closed, a bill, accepted by them and payable at Jones and Co.'s bank, falls due, and A requests Jones and Co. to pay it and debit his account. Is there any practice between bankers which would make it incumbent on Jones and Co. to pay the bill or to decline payment, and if so, which? ANSWER : A banker would follow the instructions of his customer and pay to bis debit any acceptance he might advise. 180. QUESTION: A country banker having advised his London agents to pay A B's acceptance to C D, C D or the holder of the bill did not present it for payment. After it had been outstanding at the London agents for some time, the country banker, at the request of A B, cancelled the advice and repaid him the money. Has C D or the holder of the bill any claim against the London agents or the country banker, for parting with the money 1 ANSWER : The holder of the bill not having presented it at the due date at the place where provided for, could have no claim except against the acceptors. 181. QUESTION: A banker presents for payment a bill of exchange, drawn on demand, to the drawee, at his office in London. The drawee attaches his cheque to the bill in payment, but the banker declines to take it on the ground that it is drawn upon a non- clearing banker. Is it the custom of bankers in London to refuse such cheques in similar cases, and is a banker justified in such refusal 1 ANSWER : It is not the practice of London bankers to give up bills of exchange on presentation for payment except against cash only ; but it is customary to receive payment by cheque on a clearing banker, provided such cheque be attached to the bill and both documents be passed through the Clearing House. Other cheques are not received, as in most cases they would riot be encashed on the same day, and then, in event of dishonour, the banker would lose his recourse on the relative bill of exchange. 182. QUESTION : A, banker in Chester, sent a bill accepted pay- able at Liverpool to B, banker in that city, due (say) 12th May. B holds the bill to 14th May, and then returns it unpaid (the acceptors having failed in the meantime) by special messenger to A at Chester, who arrives at 2.30 p.m., and before the bank closes. B telegraphed to A first thing on the 14th stating that the bill would be returned unpaid. Did B incur any liability by not returning the bill by post on the 13th? 56 Questions on Banking Practice. BANKER continued. ANSWER : The bill should be returned by post on the 13th. (See Bills of Exchange Act, 1882, sec. 49, sub-sec. 6.) 183. QUESTION : A bill is presented by a country bank to another bank in the same town and paid, but the paying banker afterwards discovers that it should have been returned unpaid. The bill is sent back during business hours on the same day written on, " Cancelled " in error." Is this in order? And under what circumstances would it be impossible to return a bill after it had been cancelled? ANSWER : After the money ha3 once been paid, either in cash or by settlement of account in the clearing, a bill can only be received back at the option or by the courtesy of the presenting banker. 184- QUESTION : The acceptance of a provincial firm was domiciled at the London agents of their bankers, who in due course advised their London agents to pay the bill on presentation at maturity. It was duly presented to the London agents through the clearing, and after examination was cancelled by drawing lines across the signature of the acceptors without rendering the acceptance illegible. Later in the day the provincial bankers telegraph to their London agents not to pay the bill, as they had reason to suppose that the acceptors were insolvent, and in consequence the London agents returned the bill through the Clearing House before the settlement of the clearing, with the answer " Cancelled by mistake orders not " to pay." They subsequently wrote to their country correspondents as follows : " We refused payment of acceptance as requested by your " telegram of this morning, but the bill having foreign endorsements, " we returned the said bill at your risk." Would the London agents incur any liability to the holders of the bill, either directly or through their bankers, who presented the bill by reason of its return with the answer stated ? ANSWER: The holders or their bankers might possibly decline to take return of a cancelled bill having foreign endorsements ; at all events they would give notice, as is usually the case, to the bankers who cancelled the bill that they held them liable for any consequences that might arise by reason of the cancellation, owing to the inability in some foreign countries to claim reimbursement from the endorsers of a cancelled bill. 185. QUESTION. N is a bank at (say) Nottingham, with a branch at (say) Burton. In the midday exchange, along with its own cheques, N received for payment (subject to being honoured) cheques on its Burton branch. On a given day, after the exchange has taken place, X (another bank at Nottingham) receives a cheque Questions on Banking Practice. 57 BANKER continued. on the Burton branch of N. Instead of sending this cheque the same day to London agents, X holds it till the following day, and then hands it to N. Does X incur any liability by so doing? The cheque would reach Burton at exactly the same time by either way. The local clearing house rule her eon is " That the cheques on branches " of banks having their head office in Nottingham be passed at the " Clearing House provisionally, subject to return in the course of "post." ANSWER: The local custom of presenting the cheques referred to at the Clearing House in Nottingham would doubtless justify the bank, receiving a cheque after the close of the clearing, in holding over the same for presentation at the Clearing House on the following day. 186- QUESTION : A cheque payable for 1,889 10s. is presented across the counter, payable to " Documents attached per Angelina," the bearer erased with certain documents pinned to the cheque. After payment of the same they are enclosed and sent by messenger to the drawers, who, next day, inform the paying banker that one is missing. Is the paying cashier committing an act of irregularity in not examining the documents before paying the cheque, and what responsibility, if any, is attached to the banker on whom the cheque is drawn? ANSWER : The word " Documents " only being used, we think that so long as more than one document was attached, the banker is absolved from liability, there being nothing to show the documents actually intended. The cheque should have stated the precise docu- ments required. 187. QUESTION : A banker presents a bill or draft to a private firm for payment. The drawees do not pay cash or accept the draft payable at their bankers, but give a cheque on their bankers payable to the holder of the bill, or bearer ; no mention being made of the draft on the cheque. This cheque, however, is attached to the draft and sent through the Clearing House. When the cheque with draft attached reaches the banker on whom it is drawn, it is found that the draft is not properly stamped and the cheque with draft attached is returned, the answer written on the cheque being, " Bill attached "requires a stamp." Is the banker right in refusing to pay the cheque under the circumstances, seeing that it is drawn payable to bearei without any restriction as to the " Bill attached " 1 ANSWER : The cheque as drawn being complete in itself, the banker is not called upon to examine any document the drawer may choose to attach thereto with the view of deciding whether such document is in order. 58 Questions on Banking Practice. BANKER continued. 188. QUESTION : A country bank receives a draft for collection with instructions to give up the shipping documents attached on Dayment. The bill is worded : "400. "New York, 1 June, 1895. ' On demand pay to our order the sum of four hundred pounds " value received as advised. " To Leather Co., " Manchester, " John Brown." The bill is presented to the drawees on day of receipt, and they ask for time to consider. You are requested to state If the drawees are entitled either by law or custom to a reasonable time, say 2 4 'hours, to decide whether they will pay, or should the bill be protested on the day of presentation? ANSWER : The draft must be paid or refused on demand. 189- QUESTION: Referring to Question No. 188, if the drawees request the bill to be held over until the arrival of the ship, should the collecting bankers do so, having the bill protested on day of presentation for non-payment ? ANSWER: As the bill is drawn abroad, the collecting banker is bound to protest and advise the non-payment of it. In practice he would retain the bill and present again on the arrival of the ship. 190. QUESTION: Should a banker look at the endorsements on a bill that has a cheque attached payable to (bill attached) or bearer ? ANSWER : In the case mentioned the banker should see that the attached bill is in order. 191. QUESTION : A cheque uncrossed, drawn to " Bill attached or " bearer," is presented across the counter. No bill is in fact attached to the cheque. Is the banker right in paying such cheque without the bill being handed to him 1 ANSWER : The cheque being uncrossed, and to bearer, the banker is legally bound to pay it, but he would obviously make enquiries. 192- QUESTION: A bill is presented by country bank A to a neighbouring bank B at 10.30 a.m. across the counter, and payment is then declined, there being no funds for it. Is B obliged at A's request to mark it " n/o " so early, or at all ? Ought A to return it to their customer as dishonoured at 11.30 or an hour after? Is the acceptor right in maintaining that he was entitled to the hour of closing wherein to provide for it, and has he any just grounds of Questions on Banking Practice. 59 BANKER continued. complaint that the dishonour was unnecessarily or too quickly intimated by bank A ? ANSWER: Unless there is an understanding between the bankers similar to that between the clearing bankers in London, the bill in question should be returned at once, if dishonoured, and the present- ing bank would be at liberty to inform his customer thereof without delay : the acceptor could have no ground of complaint if he failed to provide for his acceptance in due course. 193. QUESTION : A bill accepted payable at Clearing Bank A is presented at maturity through the Clearing House and returned during the day with the answer " n/a," and a reference to Clearing Bank B attached. It is presented to B on the same day and returned at 5 o'clock with the answer " Differs from advice at B." Should this answer be written on the bill or on the attached reference 1 ANSWER : The answer of A is rightly placed upon the bill. The answer of B need not be. 194. QUESTION: A bill is presented for payment, and comes back marked " No advice," but with a reference attached. On pre- sentation, in accordance with the reference, the bank to which it is referred destroys the reference, and marks the bill, " Differs from advice." Should not the reference be left on the bill, and the second answer be on the reference r l If not, where is the evidence that the bill has been presented according to order 1 ANSWER: This Question refers to a custom prevalent among bankers in London, for the retirement of certain bills, usually advised by country banks, which are domiciled at other banks than that receiving the advice to pay. In such case the bank receiving the advice sends a slip with particulars of the bill, technically termed a " reference," to the bank where it is domiciled, requesting that the bill be referred to them for payment, and on presentation of the bill, the " reference " is attached to it and the operation mentioned in the Question takes place. If on presentation of the bill to the bank to which it is referred there is found to be some informality preventing its payment, the answer if given on the bill itself, should be stated to be that of the bank giving it, but it is not desirable that the reference should be detached and destroyed, as the evidence is thereby lost of the re-presentation of the bill. The whole question of the retirement of bills domiciled at other banks is unsatisfactory, and the custom of country banks advising their London agents to retire such bills should be in every way dis- couraged. As a matter of courtesy between London bankers the 60 Questions on Banking Practice. BANKER continued. " references " mentioned are permitted, but they are not infrequently mislaid or overlooked, and in such case neither the banks with whom the bills are improperly domiciled, nor the bankers who have advice to pay and who have failed from force of circumstances to reach the holders of the bills, can accept any responsibility in the matter. 195- QUESTION : A customer sends instructions to his banker in the country to honour his acceptance falling due next day. The bill is presented in ordinary course by another country bank for payment through London, but it bears an insufficient stamp. Should the bill be returned with the answer " Drawn on wrong stamp," or ought the banker to pay it in terms of his customer's advice 1 ANSWER : The bill should be returned with the answer " Insuffi- " ciently stamped." 196- QUESTION : Answers on dishonoured bills " no orders," " no " advice," these answers are very frequently given to dishonoured bills. What meaning is to be attached to them? It is the custom of some bankers not to honour bills accepted by customers without advice. Is the banker right in so doing, supposing the customer has sufficient money on his account on the day of maturity? When the customer has no funds, or not sufficient to meet his acceptances, would it not be better to adopt some fairer answers than the above ? ANSWER : The answers on dishonoured bills of " no orders " or "no advice" are as a rule only given by London bankers to the acceptances of provincial firms domiciled with them, and which if honoured would be retired under advice from provincial banks. The banker would not refuse the acceptance of his customer, if duly provided for, unless he had an understanding with the customer to pay only such acceptances as were advised. It is not the custom of London banks to give such answers to the acceptances of their own customers if dishonoured. 197. QUESTION : Can a banker withhold payment of deposits on the ground that he holds bills current, which may be dishonoured at maturity ? ANSWER: No. 198- QUESTION : Supposing a bill which has been discounted by a banker for a customer is returned unpaid, and the balance at the customer's account is not sufficient to pay the bill, the banker naturally does not debit his customer, and make his account over- drawn, otherwise he would lose his remedy against the acceptor of the bill. But may he, the banker, attach his customer's balance, Questions on Banking Practice. 61 BANKER continued. such as it is, so as to protect himself pro tanto against any loss on the bill? ANSWER: Yes. 199. QUESTION: As Bills of Exchange are considered absolute instruments without conditions, is a banker justified in debiting a deceased customer's account, in funds, with acceptances maturing and payable at the bank after his decease, without reference to the representatives of the deceased, and, secondly, in an overdrawn account to the extent of the sanctioned overdraft 1 ANSWER : By sec. 75 of the Bills of Exchange Act, 1882, the death of a customer determines the authority of his banker to pay cheques drawn on him, and by parity of reasoning, and in accordance with custom, a banker would not be justified in debiting a deceased cus- tomer's account in either of the above cases. 200- QUESTION : A country bank having drawn a draft on their London agents, the latter paid it without endorsement. Is it obli- gatory on the country bank to return the document for endorsement, and would the loss fall on the London Agents in case of the cheque being stolen? ANSWER: The London bank, on whom the draft was drawn, was not justified in paying it without endorsement, and would have to bear the consequences of so doing. 201. QUESTION : The Postmaster of Rocktown pays in to the credit of Her Majesty's Postmaster-General, at the St. Michael's Bank, 100 at 2 p.m. At 2.30 the Postmaster receives a telegram from the General Post Office in London, instructing him to keep a reserve of 100 on hand. Would the cashier be justified in return- ing the 100 just lodged, on production of the telegram by the Post- master? Or the cashier having returned the money, the telegram proving to be a fraud, could the Post Office claim the 100 from the St. Michael's Bank? ANSWER : The cashier would derive no authority from the telegram to pay out money. Should he do so, the bank would be liable. 202. QUESTION : A customer gives a banker an assignment of book debts as security for an advance. Is it necessary for the banker to give notice of the assignment to his customer's debtors? ANSWER: Yes. 203. QUESTION : The form of receipt given below is issued by a $'2 Questions on Banking Practice. BANKER continued. limited company for payment of dividends. Amounts under 2 unstamped. Is the banker justified in paying ? " S. P. Company, Limited. "Received the 1885, of the Company " by payment of Messrs. , Bankers, the sum of " for dividend declared the 1885, on shares held by me " as under. Signature of Shareholder. " On Preference Shares of 5 each at " Signature of Secretary impressed by a stamp." ANSWER: The banker will be perfectly justified in paying docu- ments of this character if he has the instructions of the company to do so. 204. QUESTION : What are bank post bills within the meaning of 27 & 28 Viet., c. 86, and 30 & 31 Viet., c. 89 ; and may they (in Ireland) be drawn either payable " days after date " or " " days after sight " ; and is there any limit as to the number of days that may be inserted 1 ANSWER : We are unable to find any legal definition of Bank Post Bills, within the meaning of the Acts quoted, but they appear to be instruments in the nature of Promissory Notes or Bills of Exchange drawn by duly licensed bankers in Ireland on themselves, payable to order a specified number of days after date or after sight, for any sum of money amounting to 5 and upwards. They may be drawn either payable " days after date" or "_ days after sight," and we can find no authority for imposing any limit as to the number of days that may be inserted. BANKRUPTCY 205. QUESTION: If a banker hears that a customer of his is bankrupt, but has not had official communication on the point, is he justified in not honouring that customer's cheques ? And what is a banker's liability if he pays a customer's cheques after he has heard, from the customer himself or otherwise, that he (the customer) is in a state of insolvency? ANSWER : A banker is bound to return cheques when his customer is adjudged bankrupt, or when the customer has given him instruc- tions that the cheques should be returned. Questions on Banking Practice. 63 BANKRUPTCY continued. 2O6. QUESTION : A customer writes to his banker : " I have called "a private meeting of my creditors for Wednesday next, and will see "you after that." Is this an act of bankruptcy, and would the banker have the right to retain the balance on the current account against bills under discount? ANSWER : No, as this is not an act of bankruptcy. 207- QUESTION: Shares of a company are deposited by a cus- tomer, on a memorandum of deposit for security for any overdraft he has from time to time. The customer eventually fails, and the bank are then thrown back to realize their security. Notice of charge was not given to the company, and the Official Receiver, on these grounds, claims that the bank cannot retain them from the estate. Can he stop the bank realising 1 ANSWER: The contention of the Official Receiver, in view of the decision of the House of Lords in Colonial Bank v. Whinney (L.R. App. Ca. 11, 426), cannot be sustained. 208- QUESTION : A bank receives a box from a customer for safe custody in the usual manner. The customer subsequently becomes bankrupt. Would the bank be justified in handing the box to him on his demanding it, or should they insist on having the authority of the official receiver to do so, before parting with it? Would receipt or non-receipt of official notice of the bankruptcy affect the question ? ANSWER : In any case the safer course for the banker would be to hold the box till he has the receiver's authority to give it up. 209- QUESTION: A, who has an overdraft with B, his bankers, gives an equitable mortgage on lands and cottages and gas shares as security to B. A makes an assignment to a trustee in favour of his creditors on January 12th, 1894. Up to what date can the trustee claim rents on lands and cottages, and dividends on gas shares, the bank offering to surrender all securities to the trustee on his paying them off, which the trustee refuses to do ? ANSWER : The trustee is entitled to claim the rents and dividends until the bankers obtain the appointment of a receiver, or exercise some other paramount right as mortgagees. 210- QUESTION: A customer pays into his account a sum of money which, he instructs his bankers, is specially to meet a certain cheque. Before the cheque is presented the customer (i.e., the drawer) commits an act of bankruptcy. Is the banker bound to pay the holder, the account being overdrawn ? ANSWER : An order by a customer to his bankers specially to apply 64 Questions on Banking Practice. BANKRUPTCY continued. the money paid in to meet a certain cheque is revocable until actual appropriation or payment of the money accordingly, or until a promise has been given by the banker to the holder of the cheque to make such payment. Such revocation may be either by the customer himself, or may be by operation of law, as by the customer's bankruptcy. If, after notice of an act of bankruptcy, the banker should honour the cheque and the customer should be adjudged bankrupt on a petition presented within three months from the act of bankruptcy, the banker would be liable to repay the money to the bankrupt's trustee. Whether the banker could apply the money in reduction of the overdrawn account, is, of course, a different question. 211. QUESTION : A places a cheque to his credit for 50 and his bankers allow him to draw upon it before the effects are cleared. B, the drawer, owing to a dispute with A, stops the payment of the cheque and in the meantime A becomes a bankrupt, and when debited with the return, his account becomes overdrawn. Has the bank recourse against B ? ANSWER : The banker should not debit the bankrupt's account but hold the cheque as a dishonoured bill and sue on it. The bank has full recourse against B. 212- QUESTION: Is it safe to continue the current account of a customer who has called his creditors together, and arranged with them to accept a composition of 12s. in the <, payable in 3, 6, and 9 months 1 The banking account being secured, the bank may or may not receive any official notice of the arrangement, but it must be assumed they have knowledge of it. No deed has been signed. If a customer may not continue his banking account, where is he sup- posed to place the several hundred pounds which he accumulates to pay the instalments? ANSWER: It has been decided by the court* that a debtor, by calling his creditors together and making them an offer of a com- position, does not give notice to his creditors that he has suspended payment of his debts within the meaning of sec. 4, sub-sec. 1 (h) of the Bankruptcy Act, 1883. Assuming that the debtor has done nothing more than call his creditors together and arrange for their accepting a composition, we consider that the bankers can come under no liability by continuing the banking account after notice of such meeting. * Re Walsh. 52 L. T. Rep., 1885. p. 694. Questions on Banking Practice. 65 BANKRUPTCY continued. 213. QUESTION : A customer writes as follows : " I am obliged to " pull up, so suspend payment from to-day." At the time of receipt of this letter there is a credit balance on the account of 200, and bills under discount 110. Before further instructions can be obtained from the customer a cheque and acceptance are presented. Can the banker legally refuse payment; if not, can he retain an amount equal to the liability for bills under discount 1 ? ANSWER : He can so refuse. 214. QUESTION: Does a bank incur any liability by allowing a person known to be a nominee of an undischarged bankrupt, to open and work a current account, and to draw against cheques payable to, and endorsed by, the bankrupt, and against bills of exchange dis- counted, drawn by the same person 1 ? What risk does a bank run by opening a current account for an undischarged bankrupt 1 ANSWER : In both these cases the banker would be liable to refund all payments. 215. QUESTION : Referring to Question No. 214, would a banker be justified in opening an account for the wife of an undischarged bankrupt, if she was apparently carrying on the business formerly worked by her husband ? ANSWER : No. 216. QUESTION : Two brothers, A & D, were in business at H, and, in June, 1880, became bankrupt. They are still undischarged. One brother, A, removed to 0, and now carries on a similar description of business there in his wife's name. Does the banker incur any responsibility in keeping the wife's account, it being always in credit, and if so, what is its nature and extent ? ANSWER : The banker might be held liable to refund all payments. 217. QUESTION : A practice prevails among some banks to open accounts for undischarged bankrupts through the medium of their wives. For instance, John Brown is an undischarged bankrupt. Annie Brown, his wife, opens an account in her own name and gives the bank an authority to honour the signature of her husband on her account. She never operates on the account herself, and the account is practically her husband's. Does the banker run any risk in allowing such an account ? ANSWER : The bank might be held liable to refund all payments. 218- QUESTION : A, a bankrupt, presents an open cheque on the bank drawn by B, in the bankrupt's favour. Has the bank any 66 Questions on Banking Practice. BANKRUPTCY continued. right to refuse payment on the grounds of knowing the payee to be a bankrupt the drawer at the time having funds to meet the cheque 1 If refused, marked "Payee bankrupt," would an action lie against the bank for so refusing 1 ANSWER : The banker is bound to obey his customer's instructions, and should honour the cheque. 219- QUESTION: A bankrupt receives an uncrossed cheque pay- able to his order on the International Bank, where his own account is kept, and after duly endorsing it presents it across that bank's counter for payment? What course should the bankers take ? Can they refuse payment, or are they compelled to treat the bankrupt as an ordinary person, and pay him without demur 1 ANSWER: It is now well settled that where an undischarged bankrupt enters into transactions in respect of personal property acquired after bankruptcy, then, until the trustee intervenes, all such transactions with any person dealing with the bankrupt bond fide and for value, and whether with or without knowledge of the bank- ruptcy, are valid against the trustee. We are accordingly of opinion that the bank would be justified in paying the cheque in question, if it arose out of a transaction in respect of property acquired after the bankruptcy. But if the cheque was part of the property of the bankrupt at the time of the receiving order, it became at once the property of the trustee, and the bank ought to refuse payment. 220- QUESTION: X assigns his property to a trustee for the benefit of his creditors under a duly registered deed, signed by all his creditors, with the exception of one who wishes to make X a bankrupt. During the negotiations X continues his business, transactions taking place with the bank as usual, where he has a large credit balance. What is the position of the banker with regard to the funds he has in hand, he having had no official notice of the execution of the deed? ANSWER: During the negotiations the position of the banker has not been altered from the ordinary relation of banker and customer. 221. QUESTION: A makes a composition with his creditors, which is secured by joint and several promissory notes of himself, B and C ; these when matured are paid by A's bankers (where payable) and are charged by them to an account opened by A's instructions in the joint names of A B and C, without the knowledge or authority of B or C, who, not hearing to the contrary, suppose the bills have been retired by A alone. Questions on Banking Practice. 67 BANKRUPTCY continued. Have the bankers any claim against B and C as endorsees of the bills or otherwise 1 ? ANSWER : The joint account of A, B and C should not have been opened without the written authority of the three principals. If the banker paid the promissory notes of A, B and C to the debit of their duly authorised account (funds not having been previously provided by A, B and C), he can sue them for the amount on the overdrawn account. If their account were not duly authorised, the bank could sue all parties to the promissory notes on the notes themselves. 222. QUESTION : X is a customer of the Holmshire Bank, and has a sum of money standing to the credit of his account with them. The bank has informal notice (by general hearsay) of an " act of bankruptcy " committed by X. Is the bank justified in paying any cheques drawn on them by X, either in his (X's) own favour, or in favour of other persons, after he had committed the aforesaid " act of bankruptcy " 1 ANSWER : It is stated in " Grant's Law of Bankers," (4th edit.) p. 61, that if a banker, after knowledge of an act of bankruptcy com- mitted by a customer, nevertheless honours his cheques, the banker will be liable to repay the money to the bankrupt's trustees. 223. QUESTION: The Holmshire Bank receives from a London bank a sum of money for credit of X, who is not a customer of the Holmshire Bank. The Holmshire Bank have informal notice (by general hearsay) of an " act of bankruptcy " committed by X ; but the London bank have no such knowledge. (1) Is the Holmshire Bank justified in paying X the money thus remitted 1 (2) Is the London bank affected by the knowledge of the Holm- shire Bank that an " act of bankruptcy" has been committed? ANSWER: Under the circumstances the Holmshire Bank should communicate with their London correspondents before paying the cheque. 224. QUESTION: An undischarged bankrupt opens and carries on in the usual manner a current account, the bank having full cognisance that he has not had his discharge, (a) Does the bank incur any liability by allowing this, and (b) could the trustee of the estate of the bankrupt demand at any time the payment to him of any money which might stand to the credit of the account? ANSWER : (a) Yes. (b) Yes. 225. QUESTION : A customer is insolvent and calls his creditors F 2 68 Questions on Banking Practice. BANKRUPTCY continued. together. At the meeting it is agreed for him to assign everything to a trustee on behalf of the creditors. Before the deed of assignment is agreed to and signed by all parties, the debtor commences trading again in another part of the town. Does the bank incur any liability in allowing him to work a new banking account under such circum- stances ? ANSWER : The bank should not open a new account under the cir- cumstances. 226. QUESTION : A banker cashes cheques across the counter for a customer who has been adjudicated a bankrupt. The bankrupt has misappropriated the proceeds of the cheques, which should have been accounted for to the official receiver or trustee. Is the banker liable to have to refund the money to the official receiver, when (a) The bankrupt's account is still open, (b) The account has been closed by banker appropriating the small balance outstanding as charges, or otherwise, so that the banker can no longer say the bankrupt is a customer within the meaning of Bills of Exchange Act, 1882, sec. 82. (c) The cheques are (1) drawn on paying banker ; (2) other than paying banker crossed generally or specially to the paying banker, with or without the addition of the words " not negotiable " 1 ANSWER: In all these cases the banker may be called upon to refund the money. 227. QUESTION : Suppose a man bankrupt two or three years ago but not discharged presents an open cheque across the counter drawn by a customer of the bank. What would be the proper course for the bank to pursue 1 ANSWER : To pay the cheque, if there are sufficient funds. 228. QUESTION: Can an undischarged bankrupt act as agent? Would a banker be justified in honouring his signature as drawer of a cheque ? "e.g., per pro A B, "C D." (undischarged bankrupt). ANSWER : An undischarged bankrupt may act as agent if he have proper authority. 229. QUESTION : A customer of a bank in Ireland was adjudicated bankrupt on Tuesday without the knowledge of the banker, who on Wednesday paid a cheque of 3 and another on Friday of 8. Notice of adjudication appeared in the Gazette on Friday, but this publication could not reach the banker at that date. The Assignee in Bankruptcy claimed the 11. Was the banker bound to hand Questions on Banking Practice. 69 13 A NKRUPTCY continued. over the amount 1 or could he put in the plea of being unaware of the fact of his customer having been adjudicated bankrupt 1 ? ANSWER : See opinion in reply to next Question. 230- QUESTION : (Case and Opinion of Mr. R. P. Carton, Q.C., as to the legal position in Ireland.) (CASE.) On October 18th, 1887, a customer of the St. Michael's Bank in Ireland was adjudicated a bankrupt, having at the time to his credit at the Galway branch of the bank a sum of 11 3s. Qd. October 19th. On this date a cheque for 3, on such customer's account, was paid by the bank to the person in whose favour the cheque was drawn. On October 21st another cheque for 8 was in like manner paid by the bank. Both payments were made in ignorance of the bankruptcy pro- ceedings. It was only after the payment of the 8 cheque that the bankruptcy proceedings were first discovered by the bank. Subsequently the official assignee claimed payment of 11, amount of the two cheques so paid, and contends he is entitled to have the amount refunded to him. If the assignee's contention be sustained, it is fraught with serious possible consequences to the bank, whose managers may at any of its branches at any time cash cheques in the interval between the drawers being adjudicated and knowledge of the bankruptcy reaching the bank. Of course, it would also be a serious matter for the bank to refuse payment of any cheque, the drawer of which had at the time cash to his credit to meet such cheque. It is to be noted that bankrupts may be adjudicated on both Tuesdays and Fridays, whilst the Gazette is issued on Fridays only. The question also arises whether the assignees should not, in the first instance, seek payment from the payees of such cheque paid in ignorance of bankruptcy. Querists seek to be advised as to their position with respect to cash balances held by them to the credit of customers who may become bankrupt during the interval between the bankruptcy and notice of such reaching the bank. Counsel will please advise 1. What is " notice " to a banker 1 2. What is the position of the bank with respect to the cash held by it to the credit of bankrupt customers, during the period between the adjudication and knowledge of that fact reaching the bank 1 70 Questions on Banking Practice. BANKRUPTCY continued. 3. Under the circumstances stated, to what notice, if any, is the bank entitled, or does publication in the Dublin Gazette act as such notice 1 4. If such publication is notice, from what time would it take effect as regards a country branch of the bank? from date of issue of Gazette in Dublin, or receipt of it by such branch in due course of post 1 ? 5. Is the bank in the present case liable to the bankrupt's assignees for the amount of the cheques so paid 1 and Counsel will please advise generally on the case. (OPINION.) The moment a man is adjudicated a bankrupt, all his property (including all monies to his credit with his bankers) ceases to be his, and becomes the property of his assignees. Under the old law of bankruptcy, the assignee's title had relation back to the first act of bankruptcy committed subsequent to the accrual of the petitioning creditor's debt, and avoided all transactions with the bankrupt from that time, with certain statutable exceptions. This state of the law was felt to be so severe that later statutes contained provisions for protecting bond fide transactions after the commission of an act of bankruptcy, but before the filing of the petition provided the persons claiming the protection had no notice of the act of bankruptcy. (20 and 21 Viet., cap. 60, sec. 328.) But there is no protection for any dealing, however bond fide, with the property of a bankrupt once he is adjudicated. It is not a question of notice at all. Notice is immaterial, and a person who pays away money after adjudication, which money belongs to the assignees, will, whether he knew of the adjudication or not, have to pay it to the assignees over again. I am, therefore, of opinion that the assignees are entitled to recover from the bank the amount of the two cheques paid by them after the adjudication (11). The payment could not be supported on the ground that the monies in the bank had been appropriated by the customer before bankruptcy to the holders of the cheques. A cheque does not amount to an equitable assignment of so much of the customer's balance as will be sufficient to meet the cheque (Hopkinson v. Porter, L.R. 19, eq : 74). The law, as stated by me, may seem hard on bankers ; but the hardship is more apparent than real. The instances are very few, indeed, where a bank does not know of the bankruptcy of a customer immediately on its taking place. Nor is a bank, under such circumstances, wholly without remedy ; I think the money so paid would be money paid under a mistake of Questions on Banking Practice. 71 BANKRUPTCY continued. fact, and not of law, and could be recovered by the bank from the person to whom it paid the money as " money received." (Signed) R. P. CARTON, 12th November, 1887. 231. QUESTION : A fails, owing his banker 600, of which sum 300 is fully secured. Can the banker claim for the full amount of 600 on the bankrupt's estate, without reference to the security for 300 held by him, or must he realise his security and claim only for the difference 1 ANSWER: With regard to specific securities held on the property of a bankrupt or any part thereof, the Bankruptcy Act, 1883, provides that a secured creditor may either (1) realise his security and prove for the balance due to him, after deducting the net amount realised, or (2) surrender his security to the official receiver or trustee for the general benefit of the creditors, and prove for his whole debt, or (3) assess the value of his security and receive a dividend only in respect of the balance due to him after deducting the value so assessed, a security so valued being subject to redemption or sale at the instance of the bankrupt's trustee, and the valuation being liable under certain circumstances to be amended or varied by realisation on the part of the creditor. 232- QUESTION : Bills are held as security against an overdraft. In the event of the customer, on whose account these bills are held, failing, is the banker justified in proving on the total amount of immatured bills as well as for the amount of overdraft 1 ANSWER : Yes ; the banker may prove on both, but he may not recover more than the amount of the overdraft. In the case of the bills proof would only be made against the parties thereto other than the customer. 233. QUESTION: An amount of 200 is paid over the counter of a bank for the credit of a firm's account; at the same time an advice to retire an acceptance of the same firm is handed over with the credit note for the same amount within 1, although the pay- ing-in clerk did not state to the receiving cashier that the payment was to cover the acceptance. The bank receive the credit and return the advice slip. The next day the firm for whom the credit was received call a meeting of their creditor. They have an overdraft at their bankers and the credit received went towards its reduction. Can the trustees of the estate recover the amount from the bank, or has the drawer of the bill any remedy against them 1 ANSWER : The bank were quite within their rights in placing the 72 Questions on Banking Practice. BANKRUPTCY continued. amount towards the reduction of the overdraft, and the trustees have no remedy against them. 234. QUESTION : F. Street, a customer of the St. Clement's Bank, makes an arrangement with his creditors on the basis of the payment of 10s. in the , his account at the time being overdrawn to the extent of 800. He is also liable on five bills of exchange on A, B, C, D, and E, for 100 each, and also for 400 on a guarantee on behalf of F, a debtor to the bank who has suspended payment, making a total liability to the bank of 1,700. From this the bank deduct securities held by them in value 1,000, leaving their claim at 700, which amount is admitted. On this 10s. in the is paid and the bank place 350 to a suspense account. Four of the above bills are paid by the acceptors. Must the bank hand back 10s. in the , i.e., 200 to F. Street when finally settling accounts ; are they entitled to recover the full 100 from E who has not paid his bill, or must they credit the bill with 10s. in the , or, having regard to the fact that their security 1,000 is deducted from F. Street's total liabilities, with how much must they credit the bill or the guarantee for F 1 ANSWER: Doubtless the bank in valuing the securities at 1,000 have taken care that they are fully worth that amount. This being the case, the net indebtedness of F. Street is reduced to 700, the amount for which the bank has proved and for which their claim is admitted. In giving the following opinion it is assumed that the acceptances of A, B, C, D, and E are not included in the "securities" valued at 1,000. The bank are only entitled to receive 20s. in the on their debt of 700, and they have received : Dividend 350 Payment of bills by A, B, C, and D 400 ~750 Consequently if 800 is the sole debt, the estate of F. Street is now entitled to receive from the bank (subject to any proper claim by charges) 50, being the balance of the 750, after deducting the 700 remaining due to the bank ; and also the acceptance of E. The debt of F to the bank which was guaranteed by F. Street is included in the amount for which the bank proved, and consequently the bank has received the amount, and the guarantee is satisfied. No payment or dividend would be handed back till the full 800 is paid. 235. QUESTION : The law used to be that, if the parties to a bill of exchange failed, the owner could prove for the full amount of the Questions on Banking Practice. 73 BANKRUPTCY continued. bill against the estate of each party, and take the dividends until he received the full amount of the bill he held. It is held now that the law has been changed, in such wise, that supposing there were four parties liable on a bill for 100, and that each in succession failed and paid 10s. in the , the holder of the bill would only receive 92 15s. in all, though the four estates showed nearly 40s. in the on the 100, e.g., when A failed the holder would prove for 100 and receive 50 ; when B failed he would only be allowed to prove on 50 (being the balance remaining due to him on the bill) and receive 25 ; when C failed he, in like manner, would prove on 25 only ; and when D failed on 12 10s. only. Is the old practice still in force, or is the latter practice now insisted upon 1 ANSWER : The first part of the question correctly states the law as it used to be in cases where, at the times the proofs were respectively made, all the parties to the bill had failed, but no dividend bad been paid or declared upon any of the estates. The latter part of the question states correctly the old law and practice in regard to proofs upon bills where, at the time of proving, a dividend had been paid or declared on. the bill from the estate of one or more of the other parties liable on it, or where the creditor had received part of the bill in pay- ment. The law and practice in both cases remain unaltered by the Bankruptcy Act, 1883. The alterations made by that Act affect only proofs made on current bills to entitle the creditors to vote. In such cases the creditor must value the liability of all solvent persons liable on the bill antecedently to the bankrupt. (See Schedule 1 to the Act. paragraphs 11 and 12.) 236. QUESTION: A bank holds a bill 100, the drawer and acceptor of which have failed. No dividend has been declared. The bank proves against both parties for the full amount. In due course a dividend is paid from the estate of one of the parties (20), and the bill is endorsed to that effect. Shortly after, a similar dividend is declared from the estate of the remaining party. Will the trustee (or official receiver) for the latter pay dividend on the full amount proved for, when he sees from the endorsement on the bill that the bank has already received a dividend of 20 1 ANSWER : He will, as proof against both parties was made in the first instance. 237. QUESTION: A bank is holder of a bill (100), the drawer and acceptor of which have failed. The bank has proved against the drawer and received a dividend, amount 50, and the bill has been endorsed to that effect. Must the bank when proving against the acceptor deduct the amount (50) of the dividend received from the drawer and claim only for the balance 1 74 Questions on Banking Practice. BANKRUPTCY continued. ANSWER : He must, if the proof against the estate of the acceptor is made after the receipt of the dividend from the drawer ; other- wise proof can be made against both estates for the full amount of the bill. 238. QUESTION : A banker has discounted bills, the acceptors of which fail two months before the bills mature. Can the banker compel the customer for whom the bills were discounted to withdraw them directly after the acceptor's petition is filed, or must he wait until they are due 1 ANSWER : In the absence of any special arrangement, the banker must wait until the maturity of the bills. 239- QUESTION: A B keeps a banking account, and pays in thereto certain bills of exchange drawn on C D, but before the bills mature C D fails, and the bills are returned dishonoured (notice of non-payment being given to all parties mentioned in the bills) and duly debited to the account of A B, making the same overdrawn. A dividend is declared on the estate of C D, which dividend A B obtains from the trustee without producing the above-mentioned bills. Had the trustee of the estate of C D any right to pay A B the dividend attaching to the bills accepted by C D, without the bills being produced, and if the trustee had not the right, would you kindly state the proper course for the bankers (the present holders of the bills) to pursue to obtain the dividend on the said bills 1 Shortly after A B obtained this dividend, he failed himself. The trustee had the number of bills that should have been produced marked in his books. ANSWER: Rule No. 233 of the Court of Bankruptcy provides that (with certain immaterial exceptions) " every bill of exchange, " promissory note, or other negotiable instrument or security, upon " which proof has been made, shall be exhibited to the trustee before " payment of dividend thereon." This being so, the trustee in C D's bankruptcy had no right to pay A B the dividend attaching to the bills accepted by C D without their being produced. The proper course for the bankers to pursue is to prove in C D's bankruptcy for the amount owing on the bills and to claim against the trustee for the dividend, producing the bills to him. 240. QUESTION: A bill dated April 30th, 1892, and drawn at three months' date, is presented for credit of current account on April 12th, 1892. Is the bank right in refusing to receive the bill because of its being post dated? Supposing the bank received the bill, and before the 30th April the acceptor of the bill failed, could the bank claim on his estate? Questions on Banking Practice. 75 BANKRUPTCY co ntinued. ANSWER : Section 13, sub-sec. 2, of the Bills of Exchange Act, 1882, enacts that a bill is not invalid by reason only that it is post dated. Supposing the bank to have received the bill and the acceptor to have failed before its date, we think the bill would nevertheless be valid and that the bank could claim on the estate of the acceptor. 241. QUESTION : D accepts a bill drawn upon him by C, which will mature on 1st May. C discounts the bill with his bankers, but before maturity D becomes bankrupt. Can the bankers legally compel C to take it up at once 1 ANSWER : They cannot. 242. QUESTION: Suppose in the case referred to in the last question, both parties become bankrupt before the maturity of the bill, but C has a sufficient balance at his credit, can the bankers debit his account with the acceptance before due, to the detriment of the other creditors ? ANSWER : They cannot, as the debt is not yet due, but they would not part with the funds until it becomes due. 243- QUESTION : A manufacturer is in the habit of shipping goods to a client in Australia, and in payment there is remitted to him a draft drawn by another firm on a London house payable to the manufacturer. In case of failure of one or either of the firms drawing and accepting the draft, has the manufacturer any recourse against his client (the draft not bearing the client's endorsement) or does he release him from all responsibility in consequence of having taken the draft in question? ANSWER : In the absence of clear evidence to show that the manu- facturer took the draft in question in satisfaction of the debt, the claim against the client would remain in suspense until the maturity of the draft, and on its dishonour the claim would revive. 244. QUESTION: A B, leaving for England, obtains a letter of credit at a foreign branch of an English bank ; four days before his arrival in England the bank stops payment. Has A B a prior claim against the assets of the bank, to the ordinary customer ? ANSWER : No. 245. QUESTION : A customer deposits a policy of assurance upon his life with a bank as security for advances. The instrument of deposit contains a covenant for payment of future premiums by the assured. The customer becomes bankrupt. Can the bank, after deducting surrender value, prove against his estate for the value of 76 Questions on Banking Practice. BANKRUPTCY continued. future premiums, such value to be ascertained by the trustee or the Court? ANSWER : No. 246- QUESTION: If a debtor or customer, who has deposited shares or other personal property with his banker as security, dies, as it eventually proves, insolvent, would the banker retain his lien upon such security (a) For the balance of the deceased customer's account if trans- ferred to an account opened by the executor or adminis trator as such? (b) For reasonable sums advanced on the executors or adminis- trator's representation that they were required for funeral expenses? (c) For sums advanced to the executor or administrator on the understanding that they were for the purposes of administering the estate, even though they be misapplied, but without negligence or ordinary chance of discovery on the banker's part? ANSWER : With regard to the first question we think that the banker would not prejudice his security by transferring the account to the executors, who are persons legally responsible for its payment, so far as tfce testator's assets extend. But as to questions (6) and (c) we do not think that the banker would, in the absence of an agree inent that the property should be charged with the repayment of the moneys advanced to the executor, have any lien on, or right to retain the securities as against such advances (whether the money advanced were misapplied or not). 247- QUESTION : In the event of the death or bankruptcy of the client would the banker referred to in Question 246 possess any legal claim upon those shares, either without having served notice of their deposit with him or by virtue of having given such notice, or by the powers under the " memo, of deposit"? ANSWER : In the event of the death of the client the banker would have the same claim upon the shares as against his executors or administrators as he had against the client himself, but in the event of bankruptcy the banker would only have a claim upon the shares if he had served the company with notice of his security Otherwise they would remain in the order and disposition of the client within the meaning of the Bankruptcy Act, and pass to the trustee in bankruptcy. Amended Answer : At the time the Answer to this Question was given, it was sup Questions on Banking Practice. 77 BANKRUPTCY continued. posed to be the law that shares were " goods " which, in the event of bankruptcy, would be in the order and disposition of the bankrupt, and would consequently belong to his trustee, but the House of Lords has since decided, in the case of the Colonial Bank v. Whinney (over-ruling the decision of the Court of Appeal), that shares are " things in action " to which the order and disposition clause of the Bankruptcy Act does not apply, and which consequently do not belong to the trustee. 248. QUESTION : In the event of such notice as in Question 247 having been registered in the books of the " A " company and of the company subsequently going into liquidation, would that registration involve any liability upon the banker for the payment of the uncalled portion of the capital of the company in liquidation ? ANSWER : The banker would not be liable unless he were registered as a shareholder. 249- QUESTION : A banker takes his usual equitable lien upon deeds deposited with him, granting his customer a limit of 400. Subsequently, when the account is overdrawn only 320, he receives notice of a second charge. The banker pays a further 80, and the customer fails. Upon realisation of the security, can the banker retain 400, or must he take 320 only, and rank in with the creditors generally for the balance of 80 ? ANSWER : The banker can only retain 320. (See Grant's " Law of Bankers," 3rd edit., p. 204.) 250. QUESTION : In the event of a customer's bankruptcy, or of his making an assignment for the benefit of his creditors, could the banker hold any balance standing to the credit of his current account, as security for bills under discount, against the trustee or the customer? ANSWER: Yes. 251. QUESTION : Harrison & Co. draw on Blake & Co., the latter accept and mark the bill "Not negotiable." Harrison & Co. fail before maturity of the bill. Can the official receiver claim amount of the bill against all comers, though it has been discounted or cash received for it from a friend. I understand that its being not negotiable, Harrison & Co. should have kept it themselves until due and not discounted it. Would Blake & Co. be justified in paying to any holder of the bill 1 ANSWER : We infer from the question that the bill is in the hands of an endorsee for value. This being so the drawer of the bill and the official receiver, who stands in his place, would be trustees for 78 Questions on Banking Practice. that endorsee of any money received from the acceptor. The acceptor would, we think, be justified on any claim by the endorsee, in objecting that the bill was not negotiable, but this is a condition which it would be open to him to waive, and on the whole therefore we think that he would be justified in paying to any holder for value. 252- QUESTION : Some years ago A resided in India, and before leaving, deposited with a bank in Madras, Government promissory notes, together with a power of attorney for them to receive the dividends and remit to England. The bank stops payment. How can A recover the notes, and what steps should he take 1 ANSWER : Provided the suspended bank has no set off against the promissory notes, A should request the liquidator to return to him the promissory notes and cancel the power of attorney. BILLS OF EXCHANGE- 253. QUESTION : A bill, say for 50, was sent by a London banker to another banker, through the post, for payment, drawn in the following form : <50. LONDON, August 18/A, 1879. Three months after date pay to my order the sum of Fifty Pounds for value received. To Mr. JOHN JONES, ^ | ^ 2 ~ Pro D. ROBINSON, DRAPER, |t ^ LONDON. ^ g Jf aEORGK ROBINSON. Endorsed j ^ DAVID ROBINSON. ( THOMAS SMITH. It will be seen that two distinct persons signed on behalf of the UNIVERSITY OF Questions on Banking Practice. BILLS OF EXCHANGE continued. drawer. The bill was returned by the acceptor's bankers with a letter as follows : " If you will guarantee the endorsement of enclosed bill, 50, I " will pay it ; and you will observe it is drawn ' p.p ' by one " person and endorsed ' p.p ' by another. Strictly, it ought to " be endorsed ' David Robinson ' only, if not guaranteed." As the drawer's bankers held an authority from D. Robinson for Thomas Smith to endorse bills, were they not bound to guarantee the endorsement rather than return the bill to their customer, acceptor's bankers having agreed to pay the bill if guaranteed ? ANSWER : The banker to whom the bill was presented for payment was entitled to evidence that the endorsement was made with due authority. As the bankers presenting the bill held, in the words of the question, " an authority from Robinson for Thomas Smith to " endorse bills," it appears to us that, although under no legal obliga- tion, they might well have guaranteed the endorsement ; at the same time the paying banker would refuse payment at his own risk. 254- QUESTION : A bill endorsed in blank passes into the hands of A, B and C, each of whom writes his name upon it. Can C then make it specially payable by writing above his own name "Pay D " or order"? ANSWER : He can (see Bills of Exchange Act, 1882, sec. 34, sub- sec. 4). 255. QUESTION : A bill of exchange is presented bearing several special endorsements, the last special endorsee having endorsed it in blank. Below this blank endorsement a special endorsement has been made by and to parties not otherwise mentioned in the bill. Does this last endorsement alter the character of a bill payable to bearer which has been acquired by the previous blank endorsement 1 ? ANSWER : The bill is now payable to order, as the last endorsement is not in blank. (See Bills of Exchange Act, sec. 8, sub-sec. 3.) 256- QUESTION : A presents a bill for payment across the counter at the bank where it is domiciled, drawn by B, accepted by C, and endorsed in blank by B. Would the banker be justified in paying it without the endorsement of A 1 ANSWER : Yes, but he should require A to discharge the bill. 257- QUESTION : If a bill is payable to bearer in body, can it be made payable to order by endorsement 1 ANSWER: It cannot be so altered by endorsement, but the word gO Questions on Banking Practice. BILLS OF EXCHANGE continued. " order " might be substituted for " bearer " on the face of the bill, by authority of the drawer. 258. QUESTION : A A and Co. accept a bill as follows : " Sighted 20th Dec. "Accepted 21st Dec. " A A and Co." Is the due date taken from the sighted date or the accepted date ? ANSWER : The due date is taken from the sighted date of the bill. 259. QUESTION: A bill of exchange payable to Jones Bros, is presented for payment, bearing on the back of it " To be placed to the account of Jones Bros, with the Blankshire " Bank." "Jones Bros." Is this a memorandum only, or is it a special endorsement in favour of the Blankshire Bank, which the paying banker should require to be discharged before paying the bill ? ANSWER: Under sec. 33 of the Bills of Exchange Act, 1882, the conditional endorsements may be disregarded by the payees. (See Questions Nos. 858, 861, and 862.) 260- QUESTION: When does a bill drawn under the following circumstances mature 1 Drawn on the first October at three months after date, accepted " payable 5th January" because the 4th will fall on Sunday. Can days of grace beyond the 5th be claimed 1 ANSWER: The bill described in the above question having been accepted contrary to its tenor, matures on the fixed date of the 5th January without grace. 261- QUESTION : In the case of a draft or promissory note drawn by a sea captain abroad, and payable three days after arrival at the port of discharge, can the usual three days of grace be legally demanded ? ANSWER: As the document in question is not a bill (see Bills of Exchange Act, sec. 11), it would not bear the three days of grace accorded to Bills of Exchange. 262. QUESTION : A bill is drawn on 16th July, " I promise to pay " John Smith, &c." Is this bill due on the 16th or 19th? ANSWER: On the 19th. It is to be distinguished from the bill referred to in Question 269, which mentioned a date "fixed." 263. QUESTION : A bill becomes due on Oct. 7th (Sunday) : are Questions on Banking Practice. 81 BILLS OF EXCHANGE continued. the paying bankers justified in holding it over until the Monday before returning it ? ANSWER: If the bill is presented to the paying bankers, either direct or through the clearing, it cannot be held over ; but if sent for collection to the paying banker, he may hold it over till the Monday, but the noting and protesting should be done on Saturday. 264. QUESTION: A bill is drawn in Germany upon an English town, payable " middle of November, 1894." Upon what day must payment be demanded? What is the custom both in England and on the Continent with regard to such terms ? How are the months with 31 days, and how is February treated? ANSWER: In the case put, payment must be demanded on November 18th, i.e., allowing three days of grace. Bills so dated are not now common, but it has generally been the custom in England to consider them as maturing on the 15th, whatever the month may be, or, with the three days' grace, on the 18th. 265. QUESTION : On what day is the following bill due? " Cadiz, the 10th May, 1888. 10 stg. " At Twelve Months' date Pay this first of Exchange (second and For S. & Sons, R. and Co. " third unpaid) to the order of Messrs. Robinson & Co., the sum of " 10 sterling for value received. " To Messrs. Wm. Brown and Co., Smith and Sons. " Blankhampton." Across the face of the bill is written "Accepted payable at the ''Mercantile Bank, Blankhampton, 10th May, 1889, Wm. Brown " and Co." On what day is this bill due? If on the 10th May, 1889, why are not the usual three days' grace allowed ? ANSWER: As some doubt exists as to whether days of grace can be claimed when a bill is accepted payable on a certain day, some banks make it a practice to present on the day, and if the answer, " Not yet due," is received, to present formally through a notary and, then to present again on the expiration of the days of grace. In this case such a course is the more necessary as the acceptance varies the' tenor of the bill. 266. QUESTION : When would a foreign domicile draft at three months, accepted in the following manner, be legally due ? " Accepted payable 20th July, 1884, at S. and Co., London." Paris, 20th April, 32 Questions on Banking Practice. BILLS OF EXCHANGE continued. 1884. " Exact and Co." Would S. and Co., London, be justified in refusing to consider the draft as due until July 23rd, and would the holder incur any responsibility by holding the draft over without "noting" until the expiration of the days of grace? Is it the usual custom to send drafts, accepted in such manner, back to the acceptor for alteration ? ANSWER : It is customary to present such bills for payment on the due date mentioned in the acceptance, and in the event of refusal as " not due," to note " pro forma " with advice to the endorsers, and then re-present for payment at the expiration of the grace. 267. QUESTION: When does a bill, drawn 16th July, at three months, become due, being accepted as follows : "Accepted, payable_ _Bank, Oct. 16th, 1889." ANSWER : The practice would be to present formally by a notary on October 16th; if the answer is " Not yet due," to present again in three days. 268- QUESTION: The Bills of Exchange Act, 1882, clause 14 (1), declares that " three days, called days of grace, are, in every case " where the bill itself does, not otherwise provide, added to the time of " payment as fixed by the bill, and the bill is due and payable on the " last day of grace." A bill is drawn dated 31st October, 1887, 2 m/d, due 3rd January, 1888. On it the acceptor writes, "Accepted payable on the fifth " day of January, 1888. Peter McTavish." In this case, is the date of payment fixed by the Act, to be the fifth day of January, without days of grace under the words, " where " the bill itself does not otherwise provide," as quoted above ? ANSWER: The holder would take an acceptance contrary to the tenor of the bill, at his risk but if so taken, the bill will become due on the fixed day stated in the acceptance, without grace. 269. QUESTION : A foreign merchant in England draws a bill on a foreign bank in London: "Pay to my Order on the 26th April " (fixed), the sum of &c., &c., &G.'? The bill is neither drawn accepted, nor negotiated, outside the United Kingdom. Query : Due date of bill 26th or 29th April. ANSWER : The bill being drawn on a date fixed, days of grace cannot he claimed, and the bill is therefore due on April 26th. 270. QUESTION: Printed on the back of a circular note, are Questions on Banking Practice. 83 BILLS OF EXCHANGE continued. these words, " A sept jours de vue prefix, payez, etc." What is the precise meaning of the word prefix, in this instance 1 ANSWER : " Prefix " means at a fixed date, without days of grace. 271- QUESTION : Can days of grace be claimed on bills drawn as follows : " Southtown, "40. "5th Jan., 1893. " On the 5th of March pay to my order the sum of Forty " Pounds for value received. " To C.D. " A.B." Across the face of this is written " Accepted payable at the Provincial " Joint Stock Bank, Southtown. C.D." ANSWER : Yes. The word " Fixed " should be used when it is not intended to allow days of grace. 272. QUESTION : A bill is drawn " Au dix Janvier prochain, "payez, e." When will the same be due, on the 10th or 13th January ? ANSWER : On January 13th, if payable in this country. 273. QUESTION : What is the correct maturity of the following bills of exchange ? 1. Bill dated 30th Nov. at 3 months, due March 3rd or 5th. 30th Oct. 4 3. 31st May 1 month, due July 3rd or 4th. 4. 29th Jan. 1 March ANSWER: The various bills quoted would be due respectively on the 3rd March and 3rd July. See "Byles on Bills," llth Edition, p. 204. " Chi tty on Bills," 10th p. 257. " Chalmers on Bills," 2nd p. 22. 274- QUESTION : When would the following bill be due 1 Northport, 1st April, 1892. Three months after date, pay to my order the sum of one hundred pounds for value received. J. Smith. To B. Brown, New York. Across the face of the bill is written "Accepted payable at the St. Michael's Bank, London. B. Brown. 15th March, 1892." ANSWER : The bill will fall due on July 4th, 1892. 84 Questions on Banking Practice. BILLS OF EXCHANGE continued. 275. QUESTION: When will a bill dated December 27th, 1887, drawn at four months and two weeks after date, mature? ANSWER : On the Hth May, 1888. 276. QUESTION : On what day will a bill of exchange be payable if drawn at St. Petersburg on September 10th, at three months' date? ANSWER : As twelve days' allowance must be made for the use of the old style, the bill falls due on December 25th, Christmas Day, and will be payable on the business day next preceding Christmas Day. (See Bills of Exchange Act, 1882, sec. 14, sub-sec, la.) 277. QUESTION: A bill is drawn at four months' date from 15th June to fall due 18th October, but the currency is altered to five months' date without being initialled by all the parties to the bill. Is the due date extended to 18th November, or does the extension of currency provide for the days of grace and mature the bill on 15th November 1 ANSWER: No alteration of the currency is valid unless it is initialled by all the parties to the bill ; but in the case mentioned, if the alteration were duly made, the bill would mature on the 18th of November. 278- QUESTION: A bank at Exeter receives an unaccepted bill drawn upon a firm in Exeter, for collection and credit from another bank. The bill is not drawn payable at any special place. The bill is sent out for acceptance, and is accepted payable in London. Is the drawee at liberty to domicile the bill elsewhere than at Exeter, and, if so, must the Exeter bank give notice to those from whom they have received the bill that it is so accepted 1 ANSWER: We think the- acceptance of the bill "payable in " London " is a variation of its tenor, and that notice should be o-iven to the remitter by the Exeter bank. It is, however, quite customary in England to make bills payable in London, whether so drawn or not. 279. QUESTION : A, living in Dublin, draws on B, in Edinburgh, without using the words " Payable in London." B accepts, without the privity of A, at St. Clement's Bank, London. B fails on the due date of the bill, which is dishonoured on presentation in London. Is the- holder of the bill in any way prejudiced (as by the release of the drawer or of the endorsers from their liability) by the non-presenta- tion of the bill on its due date in Edinburgh 1 ANSWER: If the holder of the bill obtained and permitted the acceptance in the above manner, we think that if the drawer or Questions on Banking Practice. 85 BILLS OF EXCHANGE continued. endorsers can show that they sustained damage by such a course, the holder might have recourse against drawer and endorsers. 280- QUESTION : A bill is drawn on C. Brown & Co., London, who accept payable at Messrs. White's Bank, Newcastle. Is such acceptance in order, or cannot the holder insist upon the drawee accepting payable in London 1 ANSWER : It has been held that such an acceptance is in order, and that the holder cannot insist on the drawee accepting payable in London. Notice of such acceptance should be given to the endorsers. 281- QUESTION: A bill is drawn payable in London, and is accepted payable at Bow, which is outside the City of London, but within the postal area. Is this acceptance in order? ANSWER : Such an acceptance would possibly be allowed to pass. 282. QUESTION : Is there a custom sufficiently strong to entitle the drawee of a bill to accept it "payable in London" when it is addressed to him in a provincial town, and payment in London is not made a condition nor otherwise indicated in the drawing of the bill? ANSWER : Such custom is now universally recognized in England. 283. QUESTION: The words "payable in London" are now commonly added at the bottom of a bill beneath the name and address of the drawee, instead of being written in the body of the bill as formerly. Are these words in such a case an integral portion of the bill, as they are often in such a position that they could be cut off without the bill appearing to be mutilated? It is no uncommon thing for the word "London" to be struck out and the name of another city or town inserted without the alteration being initialled or otherwise authorised by the various parties to the bill. ANSWER : The words " payable in London " are considered an integral portion of the bill. Should "London" be struck out, and the name of another town inserted, verification would be required. 284. QUESTION: A bill drawn on Jones and Co., Old Town, is accepted payable at the London Banking Co. Should the bill be presented at the head office, or at the Old Town branch of that bank, when no place is specified in the acceptance? ANSWER : It should be presented at the Old Town branch, unless stated in the body of the bill to be payable in London. 285. QUESTION : In the case of a draft drawn in the form below, 86 Questions on Banking Practice. BILLS OF EXCHANGE continued. can the drawee claim to accept payable in London, or has the holder a right to demand cash on presentation 1 "100. Syra, 1st January, 1890. " At sight, please pay to John Brown or order the sum of one "hundred pounds. T. Smithopulos. " To John Daw, Manchester, " (payable in London.) " ANSWER : The drawee can so claim. 286- QUESTION : A draft is drawn in the following form : Is it in order or does it come within the 17th sec. of the Bills; of Exchange Act, which provides in effect that a bill drawn on one person and accepted by another is invalid *\ " 100. " London, 8th May, 1889. " Three months after date pay to my order the sum of one " hundred pounds for value received. " Payable at " John Smith. " Bank of Blankshire, " London." Across the face of the bill is written " Accepted Thomas Brown, " 1, King Street." Would the Bank of Blankshire be justified in debiting Thomas Brown's account with this payment 1 ANSWER : The bill is not in order by reason of the drawee's name not being specified (see sec. 3, sub-sees. 1 and 2, Bills of Exchange Act) ; sec. 17 does not apply. The banker, however, would be quite justified in paying the bill to the debit of Thomas Brown, as he has accepted it. 2&7. QUESTION : A document is drawn as follows : "London, January 28th, 1895. "Pay to the order of A. Brown the sum of five pounds at the " British Bank, Penzance." "5. "T. Richardson." The bank returns it twice, and refuses to pay, saying it is an irregular document. The document is duly stamped, and correctly endorsed. The reason given is that it is not addressed to any person, as required by the Bills of Exchange Act. Do you consider it is in order, that is, duly addressed to the British Bank? Is the bank justified in returning the same unpaid 1 Questions on Banking Practice. 87 BILLS OF EXCHANGE continued. ANSWER : The document is not in order, and the banker is justified in strictness in returning the same. 288. QUESTION: Upon an acceptance in the form below being presented for payment at maturity at the banker's, E F, would the banker be justified in paying it, or should he require instructions from the acceptor to be embodied in his acceptance 1 "100. Glasgow, 10th April, 1890. "Three months after date pay to my order the sum of One " hundred pounds sterling for value received. A B. "^oCD, " at E F, Banker, " London." The bill is endorsed by A B, and across the face is written " Accepted, C D." ANSWER : The banker would be justified in paying without further instructions. 289. QUESTION : A bill, "at - - date pay this our first of " exchange (second unpaid)," is drawn in London on an unstamped form, and accepted payable abroad ; would this be a valid bill if the second is drawn duly stamped, but not accepted, and sent forward with the first? ANSWER: Yes. (See Stamp Act, 1891, sec. 39.) 290. QUESTION: The Bills of Exchange Act defines a Bill of Exchange as an " order in writing," and in the interpretation of terms states that " * writing ' includes printing, and ' written ' in- cludes printed." Is a cheque or a bill filled up with a type-writer an " order in ' writing,' " or is it considered as printed ? What is the usual practice in dealing with such cheques or bills 1 ANSWER : Such a bill would be considered as written, and dealt with accordingly. 291- QUESTION : Where a bill of exchange is payable at a bank, does the death of the acceptor operate as a revocation of the banker's order to pay 1 ANSWER: Yes. 292. QUESTION: A bill of exchange at three months' sight for 2,000 drawn by the Cape branch on the London office of a South African bank is made payable to " John Brown or order." After its arrival in London, and before the due date, the payee dies. Accept- 88 Questions on Banking Practice. BILLS OF EXCHANGE continued. ance is obtained in due course. The executors endorse the bill before the will is proved, adding the words "Executors of John " Brown deceased " to their signatures. Would the bank be justified in paying the amount without production of probate to them : (a) In the event of their being ignorant of the will not being proved '? (6) In the event of their knowing the will is not proved, but believing the executors are duly authorised by the last will of the deceased payee 1 ANSWER : (a) Yes. (&) No. 293. QUESTION : A has an account at a bank. B has also an account at the same bank. A gives B an acceptance for goods sup- plied. The bank on A's good name, discount the bill for B. A few days before maturity A instructs the bank not to pay the bill. Can the bank debit A's account with the amount of the acceptance in face of his instruction to the contrary 1 If they debit B's account with it, it will make him overdrawn ? ANSWER: Presuming the bill to have been made payable at the bank, A's account can be debited with the amount, notwithstanding any contrary instructions. The banker being a holder for value can claim a set off against the balance in his hands, and should so notify his customer A. 294. QUESTION: A bill drawn on Mrs. J. B. Smith is accepted " S. L. Smith." Is this a valid acceptance? ANSWER : The acceptance is good if the holder is satisfied that the signature is that of Mrs. J. B. Smith; otherwise he is justified in asking for an addition to the signature of " wife (or widow, as the case " may be) of J. B. Smith." 295. QUESTION: An acceptance drawn three months after date is dated September 20th, 1890. The word "September" has been struck out, and " October " substituted. Should this alteration be initialled or confirmed 1 ANSWER : Such alteration must be confirmed both by the drawer and acceptor. 296. QUESTION : Would the St. Clement's Bank run any risk in paying the following bill drawn on the Oldcastle Carriage Company, Limited, accepted T. Jones, ) n . A.Williams, [ Directors - J. Smith, Secretary. Questions on Banking Practice. 89 BILLS OF EXCHANGE continued. payable at the St. Clement's Bank? The acceptance does not state the fact, but the bank know that they are directors and secretary respectively of the Oldcastle Carriage Company, Limited. ANSWER: The form of acceptance probably would not involve any risk to the bank, but it would be more regular to insert the name of the Company in the acceptance. 297. QUESTION : (a) In the case of a bill accepted on the back, is the acceptor's signature sufficient without the word " accepted," or some other word or words to distinguish the acceptor's signature from an endorsement? (b) Also when a bill has been accepted on the back, should not the fact be notified prominently on the face of the document? ANSWER: (a) An acceptor's signature anywhere on the bill con- stitutes an acceptance. (See also Bills of Exchange Act, sec. 17, sub-sec. 2a.) (b) It is usual. 298- QUESTION : Is an acceptance on the back of a bill a valid acceptance ? ANSWER : It is. 299- QUESTION : A merchant in London transmits by post to a country bank a bill domiciled at that bank, and requests them to send him their draft in exchange. The bank return the bill, saying that the merchant must present it through a banker, as it is not their practice to send their draft in exchange for bills or cheques to persons they are not acquainted with. The merchant threatens to hold the bank responsible in case any loss arises from the delay. It seems unreasonable to suppose that a bank would be compelled to send a draft in exchange for a bill or cheque to any unknown person who may come into possession of such bill or cheque, but would he be obliged to consider it as a good presentation, and hold funds until duly presented by some banker, or until the holder called personally ? Could an action be maintained against the bank in case any loss arise to the holder of the bill? ANSWER : Bills of Exchange Act, sec. 45, sub-sec. 8 : " Where " authorised by agreement or usage, a presentment through the Post " Office is sufficient." As the presentment mentioned in this letter is neither authorised by agreement nor* usage, it is not sufficient, and the sender would not in consequence be enabled to hold the bank liable for any consequences arising from its refusal to admit of presentation through the post. 300- QUESTION: Would it be correct, without special instruc- 90 Questions on Banking Practice. BILLS OF EXCHANGE continued. tions, to debit an acceptance drawn in the following form, to the private account of A. W. Jones 1 " Due April 4th. 50 London, 1st March, 1890. "One month after date, pay to our order the sum of Fifty " pounds for value received. " Messrs. W. Brown and Co., F. Morton and Co. " St. Paul's, London." Across the bill the following acceptance is written : " Accepted payable at the St. Michael's Bank. "A. W. Jones. " W. Brown and Co." ANSWER: No. 301. QUESTION : The following bill "20. London, January 1st, 1890. "Two months after date, pay to my order the sum of Twenty " pounds for value received. " T. Williams. " To Messrs. Smith and Co., " North Street, " Brixham." was duly endorsed by T. Williams and " Accepted payable at the St. Michael's Bank, Lombard Junction. " E. Hume, " H. Smith and Co." Would it be correct to pay and debit this bill to the private account of E. Hume without instructions'? ANSWER: No. 302- QUESTION: Would the affix of "Esq." to the signature of the acceptor of a bill have the effect of invalidating the acceptance 1 ANSWER : The word " Esq." may be intended only as a description. If the acceptor wrote his name as described, with the intention of accepting the bill, we think it would hold good. 303. QUESTION: Across the faces of Letters of Hypothecation attached to foreign documentary bills, certain conditions are often prominently printed in red ink, such as (a) " Documents to be surrendered upon acceptance of the draft." Questions on Banking Practice, 91 BILLS OF EXCHANGE continued. (b) " Documents to be delivered against satisfactory brokers' " guarantee." Whilst sometimes it is specifically stated that (c) "It is incumbent that the documents be surrendered against " such and such a firm's engagement to pay the bill at maturity, or " under rebate upon the sale of the goods." With regard to (b) it is easy to see that a good deal is left to the discretion of the banker or holder, but in the case of (a) and (c) are the conditions binding or not upon all holders and their agents who may have become possessed of the bill and documents subsequent to the placing of such conditions upon the faces of the Letters of Hypothecation 1 ANSWER: The conditions would doubtless be binding on the holders, who take the bills and documents with the conditions mentioned. 304. QUESTION : Is a banker justified in applying to a mutilated bill of exchange the same rules as to a mutilated cheque, and refusing payment in consequence of its having been completely divided into two or more parts ; and would the question be affected by the fact of the bill being overdue ? After how long a period should an overdue bill be regarded as "out of date" for payment by a banker, upon presentation in the ordinary course 1 ANSWER: It is the custom to pay bills of exchange, which have been divided for safe transmission and re-united, without question : but in case of mutilation, such as might show an intention to cancel, a reference would be made to the acceptor. It is difficult to state definitely the time after which an overdue bill would be considered " out of date " in the circumstances mentioned. 305. QUESTION: A foreign bill on Hull, at sight, bears a memorandum at the foot " Payable in London." If cash is tendered, who should pay the banker at Hull for remitting the proceeds to London 1 ? The drawee 1 Or can it be deducted from the payment] If the charges for remitting should fall on the drawee, would the banker be justified in refusing cash and protesting if the drawee declined to pay such charges ? ANSWER : The document being negotiated as payable in London, the holder may claim payment in London free of deduction. Any charges for transmitting to London fall on the drawee. 306- QUESTION : A draws on B for money won on a betting transaction. The bill is drawn in the usual manner, purporting to be for value received, and is accepted by B and delivered to A who pays 92 Questions on Banking Practice. BILLS OF EXCHANGE continued. it to C, for goods received without notice of its being a tainted bill ; has C recourse on B 1 ANSWER: Yes (Lilley and Rankin, 56 L.I., 2 B., 248), and see Chalmer's "Digest of Bills of Exchange," 5th edit., p. 101. 307. QUESTION : An inland bill of exchange is cancelled in error, it is returned unpaid with the answer " No advice. Cancelled in error " (A B, Cashier)." Is the bank returning the bill running any risk by having cancelled it 1 ANSWER: Such a cancellation is inoperative. (See Bills of Exchange Act, 1882, sec. 63, sub-sec. 3.) 308- QUESTION : A bill for 50 is sent for collection to the A bank, and is accepted by a customer of this bank, who has no funds to meet it. A person, who says he is a third party, but has not endorsed the bill, on the due date offers gold for it, and wishes to have the bill in return, but declines to state that he has had the consent of the acceptor to take up the bill. The banker offers to place the money to the credit of the customer's account and pay the bill. The third party accordingly declines to part with the gold and the bill is dishonoured. Was the banker justified in his action 1 ANSWER : He was. 309- QUESTION : How long after maturity is it customary for bankers to pay overdue bills, and is a banker bound to pay an overdue bill, provided the acceptor has sufficient funds ? ANSWER: The acceptance by a customer of a bill payable at his bankers is authority to the banker to pay the bill out of money of the customer to the person who is holder of the bill and can give a discharge, but it seems doubtful whether a banker is bound to pay such a bill, unless an obligation so to do has been imposed upon him by special arrangement or by the course of business between the parties. An arrangement under which a banker would engage to pay all his customers' overdue bills on presentation would, we appre- hend, be exceptional, nor is it probable that the payment of overdue bills would be so common as that from the ordinary course of business such an engagement could be implied. Our conclusion, therefore, is that, under ordinary circumstances, a banker would not be bound to pay a customer's overdue bill, although he would be justified in doing so. It would, we think, be prudent, in all cases where from lapse of time or other circumstances any intention to revoke the authority can be inferred, that the banker before paying such a bill should obtain the customer's authority. 310- QUESTION : Most of the foreign colonial banks having offices Questions on Banking Practice. 93 BILLS OF EXCHANGE continued. in London have a notice at their offices stating that business hours on Saturday are from 10 to 1. Would they be justified in refusing to accept under Saturday's date, a draft left after 1 (but before 2 p.m.) and if they refused could they be compelled to accept as from Saturday's date? ANSWER : The hours of business, if publicly notified, and in accord- ance with custom, would doubtless be considered to come within the definition of a reasonable time on a business day set forth in the Bills of Exchange Act, 1882, sec. 41, sub-sec, la. 311. QUESTION : It is the custom of London bankers to keep bills left for acceptance until twelve o'clock on the following day. Do they do this simply as a matter of convenience, or would they be liable to the adviser if they returned a bill accepted on the same day it was left for acceptance, and the advice to accept was cancelled before twelve o'clock the following day? ANSWER : There may be a practice with some London banks, as a matter of convenience, not to give up bills accepted until twelve o'clock on the following day, but there is no custom in the matter, and the banker being at liberty to accept at once, if he pleases, can incur no liability by not holding over till twelve o'clock the next day. 312. QUESTION : A bill is received by a banker through the post two days after maturity. Has he the right to hold it over one day or should he return it, if unpaid, the same day it is received ? ANSWER : Though in practice bankers would not generally hold it over, they probably have the legal right to do so. 313. QUESTION : A Bill of Exchange is drawn on a Liverpool firm, payable in London at sight. Can the drawees demand that the draft be left for 24 hours in their hands for acceptance, or should the holder insist on its being accepted the same day that it may the sooner be presented in London for payment ? ANSWER: There is no legal obligation to leave the draft for 24 hours for acceptance, but in the circumstances stated it is the custom to do so. 314. QUESTION : Foreign bills after sight are sent to a bank for acceptance and return. How long may the bank hold them over before protesting for non-acceptance? ANSWER : Till the next day after receipt. 315. QUESTION: Is it the custom for bills domiciled at private houses to be left for acceptance in the ordinary course ? ANSWER : Yes. 94 Questions on Banking Practice. BILLS OF EXCHANGE continued. 316. QUESTION: A Dutch firm draw on a London house at ten days' date. The draft is remitted to London bankers who do not present it till the day it is due. Can the drawees require the bill to be left for acceptance till the following day ? ANSWER: No. 317. QUESTION : At maturity an acceptance is paid in part, a new bill is drawn, but the banker, at whose house it is domiciled, retains possession of the old bill. When the new bill is due, if the acceptor and other parties dispute payment owing to the bill being accepted per pro the original acceptor, without the necessary authority, can the banker sue for the balance outstanding on the old bill which he still has in his possession, or does the renewal which he inadvertently took cancel the old debt 1 ANSWER : It is stated in " Chitty on Bills of Exchange " (llth edit.), p. 134, that " Bills, in lieu of which other bills are given, may, if '' permitted to remain with the holder, be sued upon in case the latter " bills are not paid." 318- QUESTION : A bill is drawn on a firm in London from abroad at the usance of One day's sight fixed and arrives on a Saturday, when it is at once presented by the holders for acceptance. In the ordinary course of business this bill would be due on the following day Sunday but as Sunday's bills are payable on Saturday, can payment be claimed in this case on Saturday, in fact on presentation 1 In the event of the failure of the drawees, and the bill having been held over till Monday in consequence of their having declined to complete the acceptance by delivery within twenty-four hours, would the drawers be released 1 ANSWER : Payment cannot be claimed on Saturday, nor would the drawers be released by the delay. The bill, we think, would not be due on Sunday, but on the next business day, i.e., Monday. 319. QUESTION : A Bill of Exchange is offered for discount, the stamp upon which shows a later date than that upon which the bill purports to be drawn. Does this affect the legality of the bill in any way? ANSWER : As " a bill is not invalid by reason only that it is ante- " dated or post-dated," (Bills of Exchange Act, sec. 13) it would not be illegal should the stamp bear a later date than that of the drawing. (See answer to Question No. 332.) 320. QUESTION: I draw a bill at four months' date upon B. Roberts, who accepts as follows, across the face of the bill, "Accepted payable by B. Roberts, at B and Co., bankers, London." Questions on Banking Practice. 95 BILLS OF EXCHANGE continued. My bankers return same to me for correction, re-marking " Accept- " ance irregular, the word ' by ' must be taken out and initialled." Is this a necessary or reasonable objection? ANSWER : Yes. In its present form it is not clear that B. Roberts has signed the acceptance. 321. QUESTION : A bill is sent by banker A to banker^ B, for collection at a private residence. The acceptor C calls at B's office before the bill has been presented, asking him to return the bill as he has not sufficient funds to meet it. Is B still bound to present the bill at C's private residence, the usual notice having been given him at the time he called 1 ANSWER : We think B is bound to present the bill at the address specified on the bill. (See Bills of Exchange Act, 1882, sec. 45, sub- sec. 4 r is it necessary to add some restrictive words, such as only, to prevent transfer, as in the case of bills ? ANSWER: By the Bills of Exchange Act, 1882, sec. 8, sub-sec. 4, it is enacted that " A bill is payable to order which is expressed to be "so payable, or which is expressed to be payable to a particular " person, and does not contain words prohibiting transfer or indicat- " ing an intention that it should not be transferable." And by sec. 73 it is enacted that " A cheque is a bill of exchange drawn on a banker "^payable on demand. Except as otherwise provided in this part, the " provisions of this Act applicable to a bill of exchange payable on " demand apply to a cheque." 393. QUESTION : Is there any judicial decision giving a customer of a banker an actual right to demand back from the banker what cheques he may have drawn without giving any receipt for them ? ANSWER: The law with regard to the ownership of paid cheques is thus laid down by Chalmers in his "Digest of the Law of Bills of Exchange, 5th edit., p. 253, viz., "A cheque on payment becomes the property of the drawer (Regina v. Watts), but the banker who pays it is entitled to keep it as a voucher until his account with his customer is settled (Charles v. Blackwell) v Questions on Banking Practice. 115 CHEQUES continued. 394. QUESTION: Is the following crossing on a cheque general or special ? and would the drawee be justified in refusing to pay to any other than a Leeds banker ? ANSWER : Neither law nor custom recognise the name of a town as part of a crossing. The word "Leeds" would therefore be dis- regarded, and the crossing considered a general one. 395- QUESTION : Is it the custom among London bankers to consider a cheque crossed " Bank ;; as crossed specially to the Bank of England, or generally to a banker 1 ANSWER : A cheque crossed merely " Bank," is payable to any banker. 396- QUESTION : Some banks when sending cheques to a corres- pondent for collection, stamp their names with a reference number on the face of the cheque, but both within a margined stamp. Would this operate as a crossing by the remitting bank 1 ANSWER: This would depend very much on the actual form and position of the stamp in question ; it would probably not amount to a crossing. 397. QUESTION : Can the drawer of a cheque crossed " Not " negotiable " which has been paid to a person without a good title thereto, recover the amount from the payee either before or after the latter's position has been altered 1 ANSWER: No. 398. QUESTION : A cheque payable to J. F. Brown and Co., and crossed " Not negotiable," is paid away to a third person, who crosses it thus : " Blank Bank a/c F. Smith." Is the paying banker justified in returning the cheque marked as follows : " This cheque appears " to have been negotiated ; should have come through Brown and Co.'s "account"? I 2 116 Questions on Banking Practice. CHEQUES continued. ANSWER: The words "Not negotiable" must not be taken to imply any limitation of the negotiability of the cheque, but are merely an indication that the holder cannot give any better title to it than the person from whom he took it. Hence the paying banker was in error in returning the cheque with the answer given. 399. QUESTION : Does " not negotiable " only, without transverse lines or "& Co.," written across a cheque render it crossed, in accordance with the Act 1 Is a banker justified in paying such a cheque across the counter 1 ANSWER : The words " not negotiable " do not of themselves con- stitute a crossing in accordance with the Act. 400. QUESTION: A banker takes for his customer's credit a cheque payable to him and crossed " Not negotiable " and advances against it. The cheque is returned " Payment stopped by drawer." In case the drawer has a good defence for this action as against the payee, can the banker recover from the drawer the amount he has advanced against the cheque ? ANSWER : The banker can have no better title to the cheque than the customer from whom he received it. 401. QUESTION: A, wishing to purchase goods advertised by B, sent him his cheque crossed " not negotiable." B obtained cash for the cheque from C and absconded without forwarding the goods to A. Can C as a holder for value, sue the drawer A, payment of the cheque having been stopped 1 ANSWER: C having taken a crossed cheque marked "not negoti- able," took it subject to any defect of title in B, and whether A can legally stop payment of it against C depends upon whether he can prove that the cheque was obtained fraudulently or negotiated fraudulently by B. 402. QUESTION r In addition to giving value to the payee of a cheque crossed " not negotiable," is it necessary in order to establish a good title as against the drawer to be satisfied that the drawer received valuable consideration for it? ANSWER : Value to the drawer is immaterial in this case. 403. QUESTION : (1) Can a bond fide owner for value of a cheque (crossed " & Co., not negotiable "), or the payee, who has lost or been robbed of it, claim the amount from the last holder who has innocently cashed it and received payment of it through his bank 1 (2) If so, how long after it has been paid? Questions on Banking Practice. 117 CHEQUES continued. (3) And from whom can the last holder recover the money he has to refund 1 ANSWER : (1) Yes. (2) Within a reasonable time. (3) From the thief. 404. QUESTION : A B pays into his bankers a cheque, drawn on another banker payable to C D, and crossed, " Not negotiable." Is A B's banker safe in taking such a cheque in the face of such a crossing, or is it absolutely necessary that C D should negotiate it through his own backer ? ANSWER : A B's banker is quite safe in taking it. 405. QUESTION: A customer tenders for his credit a cheque " Crossed " and marked " Not negotiable," but of which he is not the payee. Does the banker incur any liability in receiving it for the credit of any other party than the payee 1 ANSWER: No. 406- QUESTION : The words " not negotiable " appear in the top left-hand corner of a crossed cheque. Do they, in that position, possess any significance 1 The Bills of Exchange Act appears to con- template the words only as part of the crossing. ANSWER : The words " not negotiable," when not part of a crossing do not appear to be in accordance with the Bills of Exchange Act, 1882, sec. 76. 407- QUESTION : A and B, two limited liability companies, under the control of a managing director, who has a seat on both direc- torates, have accounts at the same bank. A crossed cheque "not "negotiable" payable to B or order and endorsed in blank, is paid for the credit of A in reduction of an overdraft. Is the bank liable to B if A has no title to the cheque 1 The point is whether the bank in applying such a cheque in reduction of a debt does not place itself at once in the position of a holder for value, and as such is therefore liable to the true owner in the event of any fraud. A bank collecting for a customer is of course protected by sec. 82 of the Bills of Exchange Act. ANSWER : We think that under the circumstances stated, the case is not the simple one of a customer paying in a cheque to his banker for collection, but that a special arrangement must be taken to have been made, sufficient to make the banker the holder of the cheque ; and that he would not therefore have the protection of sec. 82 of the Bills of Exchange Act. 118 Questions on Banking Practice. CHEQUES continued. 408. QUESTION : A banker receives a crossed cheque through the clearing which bears no banker's stamp. Is the banker upon whom it is drawn justified in refusing payment of the same on the ground of its not being stamped 1 ANSWER: No, but it is very desirable that all crossed cheques should bear the name of the presenting banker. 409 . QUESTION : Is a paying banker, when dishonouring a cheque over the counter, obliged to give the holder of the cheque an answer, either in writing or verbally, why the cheque is dishonoured, or would he be justified in merely stating that he could not pay the cheque ? ANSWER : There is no legal obligation to give an answer on pre- sentation over the counter, but by the rules of the Clearing House, an answer should be given on the cheque when presented through the clearing. 410- QUESTION : Can the crossing or stamp of the negotiating banker be required by the paying banker on whom a cheque crossed generally is drawn? Would the paying banker be justified in refusing payment for the want of such stamp or crossing ? ANSWER: There is no obligation on the negotiating, i.e., the collecting, banker to insert his name in the crossing, neither is the absence of such name a valid reason for declining to pay. It is, however, in practice, manifestly very desirable that the name should be inserted. 411- QUESTION -. A cheque drawn on a country bank is specially crossed by the drawer to another country bank, say Blank Bank, Limited ; it was presented in due course through the London Country Clearing, but was unstamped by either the presenting country bank or their London agents, there being no evidence whatever on the cheque to enable the paying bank to know from what source the cheque was presented. The cheque was returned by the paying bank to their London agents with answer " Requires banker's crossing." The London agents of the presenting bank declined to accept the return, stating that the answer was irregular and not a valid reason for non-payment. Was the paying bank justified in refusing pay- ment? ANSWER : It was not. 412. QUESTION: A cheque to bearer, crossed " Richards and Co.," is presented on the country bank on which it is drawn, through their London agents in the usual manner, but has no stamp or endorse- ment to show that it is presented through Messrs. Richards and Co. Questions on Banking Practice. 119 CHEQUES continued. Is the bank right in returning the cheque with this answer : " Crossed " specially ; requires stamp of banker to whom it is crossed " 1 ANSWER: No. 413- QUESTION : A cheque on a provincial bank crossed " & Co.," passing through the London Clearing House, reached the bank on which it was drawn without being crossed by a banker. Would the bank drawn on be justified in returning the cheque unpaid with answer, " Requires the crossing of a banker"? Were such a cheque paid by the bank, without the crossing of the presenting bank, what liability would the paying bank incur should it turn out that this cheque had been fraudulently dealt with ? ANSWER: The bank would not be justified in returning such a cheque, nor would any liability be incurred, but the Clearing House rule would not have been complied with. 414. QUESTION : Sec. 10 of the Crossed Cheques Act, 1876, reads : 'Any banker paying a cheque crossed specially otherwise than to ' the banker to whom the same shall be crossed, or his agent for ' collection, being a, banker, shall be liable to the true owner of the ' cheque for any loss he may sustain owing to the cheque having been ' so paid." A cheque drawn on a country banker, specially crossed to a London banker, is presented for payment through the London Clearing House without the stamp or crossing of the London banker. Should the country banker, before paying the cheque, require it to be stamped by the London banker, as evidence of the cheque having passed through his hands ? If the stamping is not obligatory on the London banker, would the country banker, after having paid the cheque, be protected under sec. 9 in case it should afterwards be discovered that the cheque had been misappropriated and presented through another banker ? ANSWER : In the case given, the only channel through which the cheque can legally have passed is indicated by the crossing, and the paying banker pays it as to the banker named therein. Should he not have received the proceeds, the laches, if any, do not lie with the paying banker, who is, we think, protected under sec. 9. It is the custom of the London clearing bankers to stamp their crossing on all cheques presented by them through the clearing, without exception, but this is by mutual arrangement, and does not appear obligatory if the crossing is otherwise sufficient, i.e., already bears the name of the presenting bank. Bills of Exchange Act, 1882, sec. 79, sub-sec. 2. 415. QUESTION : (a) Would a bank's stamp on the back of a cheque answer the same purpose as on the face and constitute a 120 Questions on Banking Practice. CHEQUES continued. crossing? (b) In the case of one bank's stamp on the face and another bank's stamp on the back of a cheque, would it be crossed by two banks 1 ANSWER : (a) No. (b) No. . QUESTION: Can a country banker be compelled to stamp across the face, the cheques drawn on other banks before presentation in the daily exchange, or is it sufficient if they be stamped on the back? ANSWER : In accordance with the Bills of Exchange Act, 1882, the stamp should be on the face of the cheque. 417. QUESTION : A country banker receives a cheque, payable to order, through the London clearing; crossed specially "St. " Clement's Bank " in ink. The cheque does not bear any banker's stamp whatsoever, nor is there any indication on the cheque to show that it has passed through the St. Clement's Bank. Is the country banker justified in returning the cheque, and if so, what would be his risk in paying it without returning it ? ANSWER: The country banker is not justified in returning the cheque. 418- QUESTION: A country bank receives through the Clearing House a cheque crossed with the name and town of another country banker. The cheque is returned unpaid on the ground that it ought to have been sent direct, or, if presented through the Clearing House, to have been crossed to a London banker. Is the banker on whom the cheque is drawn justified in returning it for such a reason 1 ANSWER: No. 419. QUESTION : Is the crossing of a demand draft, drawn abroad, payable in the United Kingdom, valid ? And can it, for the purposes of crossing, be treated exactly as a cheque ? ANSWER : Yes, if drawn on a banker. Coy.Uank 420. QUESTION : Does a bank stamp branded thus on the face of a cheque constitute a crossing within the meaning of the Act? 421. QUESTION : Is it legally necessary that the signature of the drawer of the cheque or acceptor of a bill should be cancelled by Questions on Banking Practice. 121 CHEQUES continued. running a pen through when such, cheque or bill is paid by the bankers where payable, or would it be considered a sufficient can- celling if the bankers stamped their name with date anywhere on the face of such cheque or bill, or simply wrote the word " entered " and the date on the face ? ANSWER: There is no legal enactment compelling a banker to cancel a signature in the manner first suggested, but it is customary to do so. 422- QUESTION : Does the following constitute a crossing within the meaning of the Bills of Exchange Act, 1882 1 ANSWER: No. (See Bills of Exchange Act, 1882, sec. 76.) 423. QUESTION : A cheque is presented having lines X thus across it. Does this constitute a crossing, or does it cancel and annul the cheque ? ANSWER: Such a mark does not come within the definition of a crossing contained in the Bills of Exchange Act, 1882, sec. 76, and the banker would be justified in asking for information as to whether it was intended for a cancellation. 424- QUESTION : If a banker's draft is marked in the following manner (see below), does it constitute a general crossing under the Crossed Cheques Act? ANSWER : The Bills of Exchange Act, 1882, provides (sec. 766) that " two parallel transverse lines simply shall constitute a crossing," 122 Questions on Banking Practice. CHEQUES continued. hence the drafts referred to are crossed within the meaning of the Act, notwithstanding the words written between the transverse lines. 425. QUESTION : Is a perforated crossing a legal crossing within the meaning of the Act, or must it be written or printed on the face of the cheque ? ANSWER: Crossing a cheque by perforation apparently comes within the words of the 76th sec. of the Bills of Exchange Act, 1882. 426- QUESTION : A cheque has written across its face, " St. "Michael's Bank, Cornhill," without the parallel transverse lines. Does this constitute a crossing within the meaning of the Act 1 ANSWER: Yes. 427. QUESTION : A cheque is crossed to two branches of the same bank. Should payment be refused in consequence? ANSWER: This is a matter for discretion, a large number of cheques may be crossed with two offices of the same bank, viz., the branch where they are paid in, and the head office through whom they are collected. 428. QUESTION: A cheque is crossed specially by the drawer " Blankshire Banking Company, Oldtown Branch, a/c John Smith," and is paid in at the Blacktown Branch, and bears its impressed stamp only. Should the drawee pay without a guarantee or satis- factory evidence that the cheque was received at Blacktown on account of Oldtown Branch? ANSWER : The drawee would be justified in paying the cheque to the Blankshire Banking Co., without regard to the particular branch presenting it. 429- QUESTION : A cheque is crossed in writing St. Michael's Bank, Fleet Street, and bears the stamp "St. Michael's Bank, " Oxford Street," and dishonoured with the answer "Crossed two bankers." Is this a correct answer ? ANSWER : No ; as these are only branches of the same bank. 430. QUESTION : A cheque payable to " Tom Smith " or bearer, is crossed by the drawer with the usual lines, and, in writing, " Banker of Payee " over which there is stamped " St. Clement's Bank, Ltd. a/c Southern Army and Navy Stores, Ltd." Questions on Banking Practice. 123 CHEQUES continued. Would the banker on whom the cheque is drawn be right in returning it? ANSWER: The banker should disregard "Banker of Payee" and pay only to the St. Clement's Bank. 431. QUESTION: A cheque was presented to the St. Michael's Bank, crossed in the drawer's own handwriting specially, to a certain man's account at a certain bank, but also crossed with the private crossing stamp of another customer of the same bank specially to his own account. How should the St. Michael's Bank treat this cheque? ANSWER: The St. Michael's Bank, as the paying bank, would be quite justified in paying the cheque, without regard to the special crossings. 432. QUESTION : Is the crossing of a cheque (whether general or special) set aside by the fact of the cheque having been returned unpaid, and in the case of such cheque being subsequently paid over the counter to any other person than the bond fide holder, is the banker so paying free from any liability ? ANSWER : The crossing is not superseded, and the banker on whom the cheque is drawn would pay it over the counter at his own risk. 433. QUESTION: Suppose a cheque crossed generally or other- wise, payable either " to bearer " or " to order," is dishonoured, does the dishonour of the cheque annul the crossing, i.e., is a banker justified in paying the money to the payee (who is unknown to him) if the drawer has sufficient funds on re-presentation of the cheque by the payee himself, or does the crossing remain in force as hereto- fore, and require that the payee shall only receive the money through a banker? ANSWER: We think the crossing would remain in force on re-presentation of the cheque. 434. QUESTION: A cheque crossed by bank X is presented by them to the bank Y, on which it is drawn. The cheque is returned with the answer R/D, but is subsequently presented by the payee at the bank Y, who now have funds, but decline to cash the cheque unless presented by bank X. Are they within their legal rights in thus dishonouring the cheque a second time ? ANSWER : Yes. The cheque being crossed should only be paid to the banker to whom it is crossed. 435. QUESTION : A crossed cheque, drawn by A B, for 500, is presented through a banker and is returned marked n/s, there being 124 Questions on Banking Practice. CHEQUES continued. insufficient funds on the account to meet it. The following day the cheque is presented across the counter by C D (who states he is the payee) and who demands payment; this is refused by the banker (although there is then sufficient on the account) on the ground that the cheque is crossed. A B fails next day, but in the meantime a cheque is paid which absorbs all his balance. Would the banker be responsible to C D for non-payment of the cheque when presented by him across the counter? ANSWER: The banker was quite in order in refusing to pay over the counter a crossed cheque to C D, and would not be responsible to him for non-payment, except, perhaps, in Scotland, under the Bills of Exchange Act, 1882, sec. 53. See also Question 432. 436. QUESTION: A person pays in a cheque on C D and Co., bankers, to his account with A B and Co. The cheque is returned unpaid, and he at once goes to C D and Co. to present it himself, although it is crossed by the stamp of A B and Co. Are C D and Co. justified in returning the cheque with the answer that it must be presented by the crossing bank, A B and Co. ? ANSWER: Yes. 437. QUESTION: A cheque is received by a country banker through the clearing, and not being provided for is returned unpaid, but re-presented by the bankers of the payee. As the cheque was originally crossed by the latter to their London agents, are not the drawees justified in refusing payment under the 8th sec. of the Crossed Cheques Act, even though the amount of the same may then have been provided to meet it? ANSWER: Sec. 7 of the Crossed Cheques Act, 1876, provides that, " Where a cheque is crossed specially, the banker on whom it is " drawn shall not pay it otherwise than to the banker to whom it is "crossed, or to his agent for collection"; hence, in the case in question, the banker on whom the cheque is drawn would be justified in paying it on re-presentation direct by the banker to whom it is crossed, without the latter again passing it through his agent for collection. (See now Bills of Exchange Act, 1882, sec. 79, sub- sec. 2.) 438. QUESTION : An open cheque that is, one not crossed on a bank in a distant town, payable to the order of John Robinson, is presented by a stranger to a bank in the provinces, with a request for the amount to be collected and paid over after receipt. The stranger endorses the cheque in name of the payee. The bank presents the cheque through the clearing and it is duly met, and the Questions on Banking Practice. 125- CHEQUES continued. amount is paid to the stranger. It turns out afterwards that the cheque had been stolen; that the stranger who endorsed it "John Robinson " was not the rightful owner. What is the position of the collecting bank ? Is it in any way liable to the rightful owner or the drawer of the cheque, seeing the cheque was not crossed when handed to them ? ANSWER: We think the collecting banker is liable to the true owner, as the Bills of Exchange Act affords no protection to collect- ing bankers with regard to forged endorsements on bills of exchange or uncrossed cheques. 439. QUESTION: A cheque on the St. Michael's Bank is drawn : " Pay the Chalkshire Bank or bearer." This cheque is handed to another country bank for collection. On its being presented through the Clearing House by their London agents, it is refused by the St. Michael's Bank, on the ground that it, is " Crossed to two bankers." Is this correct ? ANSWER : Though the answer " Crossed to two bankers " is not correct, the St. Michael's Bank were quite right in refusing to pay the cheque until they had made inquiries. 440- QUESTION : A cheque payable to the " St. Clement's Bank " or bearer is presented across the counter. Can the drawees refuse to pay on the ground that it must be presented by the St. Clement's Bank or through them? Could the drawees refuse, supposing the cheque was presented through the Clearing House with the crossing of some other bank which was not the St. Clement's Bank's agent? Would the answer be different in the case of a dividend warrant 1 ANSWER: A banker would not pay a cheque or dividend warrant, other than to the St. Clement's Bank, under the circumstances mentioned, without due inquiry. 441. QUESTION: A cheque for 20 dated March 1st, 1888, is. presented on January 1st, 1888, crossed, "Commercial Bank, " Piccadilly," and returned to them marked " post dated." On March 1st, 1888, the cheque is again presented by another bank, the London Bank of Whitechapel. Ought the banker (on whom the cheque is drawn) to pay the same with the two crossings? ANSWER : No ; it should be refused on the second presentation, with the answer " Crossed to two bankers." 126 Questions on Banking Practice. CHEQUES continued. 442. QUESTION : The following cheque is presented for payment through the clearing : "15th Oct., 1888. "The Lyndhurst Banking Co. Pay Jones and Smith, or order, " One hundred pounds. "J. Robinson. "100." The cheque is crossed " To payee's credit," and is duly endorsed, " Jones and Smith." (1) Is the Lyndhurst Bank right in paying the cheque as it stands ; or (2) Are they bound to require evidence from the collecting bank (either by endorsement or otherwise) that the cheque has been placed to credit of the payees ? ANSWER: (1) Yes. (2) They are not bound to require the evidence suggested. 443- QUESTION : Is the practice of crossing cheques to particular accounts illegal, and do bankers incur any liability in paying cheques drawn upon them and so crossed, or for not seeing the amounts placed as indicated by the crossing? (CASE AND OPINION.) The practice has grown up recently of crossing cheques to a particular account with a view apparently of attempting to place on bankers the responsibility of seeing that such cheques are applied in making specific payments. For instance, A draws on his bankers and sends to Smith a cheque payable to Smith or bearer. Such cheque is paid into "B & Co.'s" bank by Brown, crossed either Questions on Banking Practice. 127 CHEQUES continued. The amount is collected by B & Co. in the usual way through the Clearing House and in the first two cases supposed placed to Brown's account and in the third case is advised to the country bank to the account of Brown. The crossings above indicated are not necessarily placed on the cheques by the drawer, but may have been written by any holder into whose hands they may have passed, and with whom neither paying nor receiving banker may have any privity. Further, as a matter of practical working, it is almost impossible for bankers to pay attention to such crossings on the thousands of cheques that daily pass through their hands in the course of business. Sec. 78 of the Bills of Exchange Act, 1882, provides that it shall not be lawful for any person to add to a crossing on a cheque except as authorized by the Act, which does not authorize the addition of any such words as those supposed. You are requested to advise : 1 . Whether such crossings are not illegal (a) As being unauthorized additions to the crossings legalized by the Bills of Exchange Act, 1882, sees. 76 to 82. (6) As destroying the negotiability of cheques so crossed, and thereby the essential character of a cheque. 2. As to the liability (if any) of the bankers who pay cheques drawn upon them and so crossed. 3. As to the liability of the bankers, to whom they are crossed, in the event of their failing to observe the crossing and placing the amount to the account of some other customers than those indicated. 4. As to the liability (in the case of a cheque crossed as supposed in the third specimen of crossing) either of the London bankers receiving and collecting the cheque but advising it to the account of Brown with the country bankers, or, of the country bankers who, it is to be observed, have never seen the cheque, and can only carry out the instructions of their London correspondents. (OPINION.) 1. We are of opinion that the crossings of which specimens are given in this case are not illegal in the sense of invalidating the cheque. The addition of the words "account Smith" or similar words may be regarded as not forming any part of, or bearing any relation to the "B & Co.," which is the substantive crossing, but as being in effect only a memorandum or direction to the collecting banker as to what he is to do with the proceeds of the cheque when 128 Questions on Banking Practice. CHEQUES continued. collected. And looked at in this view the addition of such words has no effect on the negotiability of the cheque which is payable to anyone, provided it be presented through B and Co. 2. In no case can the bankers on whom such cheques are drawn incur any liability by paying them to B and Co. The payee has no claim against them under sec. 79 of the Bills of Exchange Act, inas- much as they have not infringed any of the provisions of that section, and, as they cannot possibly see to the application of the proceeds or go into any question of title further than B and Co., there is no negligence on their part which could afford any ground of action to the true owner, deprive them of the protection of sec. 80, or prevent their debiting their customer, the drawer, with the amount paid. 3. The position of the collecting bankers, " B & Co.," is a far more complicated question, and depends mainly on the method in which the customer from whom they receive the cheque had himself come into possession of it. If such customer took the cheque bearing one of the specimen endorsements and gave value for it, it would be a question for a jury whether, looking at the surrounding circumstances, the existence of the additional words constituted such an intimation that the cheque was primarily intended for the benefit of the payee as to put the person receiving it upon enquiry as to how it came to be in hands other than the payee's. As pointed out by Lord Blackburn in Jones v. Gordon, L R. 2, App. Cas., 629, if the customer was only honestly blundering or careless in taking the cheque in the face of this intimation, he would have a good title to it, and so could give a good title to the bank, but if on the facts and circumstances the jury came to the conclusion that the customer was not honestly blunder- ing and careless, but must have had a suspicion that there was something wrong about the cheque and wilfully refrained from making enquiry for fear of injuring his own right to recover, then the customer's title would be bad, and the collecting bankers, in order to be safe, would have to make a title of their own. If the cus- tomer gave no value, or, giving value, was precluded, on the grounds above stated, from establishing a valid title, the bankers, in order to avoid liability to the true owner, would have to show that they gave value to the customer, either by paying the cheque over the counter or by definitely and immediately treating it as cash received, and further the validity of their title would have to depend on the application of the above-stated rule at the hands of a jury to the circumstances under which they took the cheque from the cus- tomer. As to what view a jury might take, much would turn on the usages of bankers with respect to such crossings, whether cheques so crossed are generally regarded as being limited to the use of the Questions on Banking Practice. 129 CHEQUES continued. payee or pass freely from hand to hand, and whether in ordinary practice they are collected as a matter of course for the customer presenting them without regard to the words superadded. But we are not prepared to say that a jury would not be justified in finding that the intimation conveyed was too direct to be dis- regarded, and that the bankers must be taken to have been put on enquiry thereof. If the bank merely take the cheque for collection, giving no value for it, of course their title and liability must stand or fall solely with that of the customer from whom they take it. Sec. 82 affords no protection inasmuch as any circumstances invalidating the bank's title by virtue of the above-mentioned rule would clearly constitute negligence depriving them of the protection of this section. Moreover, where the bank has given value for the cheque it does not afterwards collect it for a " customer " but for itself. We have no doubt that the bank to whom such a cheque is tendered for collection is entitled to refuse to take it, on the ground of the embarrassing and irregular nature of the crossing, at any rate, unless the person tendering the cheque satisfies the banker that he has the payee's authority to receive the amount of the cheque. 4. The country bankers incur no liability and the proceeds could not be followed into their hands. The liability of the collecting or receiving banker depends on exactly the same considerations as in the last question, and he is not relieved from liability by passing the proceeds to the country banker. (Signed) ARTHUK COHEN, Q.C. (Signed) J. R. PAGET. Temple, 2nd Feb., 1888. 444- QUESTION : A cheque to order is crossed within transverse lines "Account payee." It comes to the banker through the clearing, and bearing several other endorsements in addition to the payee's. Does such crossing limit the negotiability of the cheque? ANSWER: The Bills of Exchange Act, 1882, does not recognize or provide for any such words as part of a crossing, and the use of them should be, as far as possible, discouraged. 445. QUESTION : What course should a banker pursue when the following cheque is presented to him ? "London, May 10, 1895. " St. Clement's Bank, Ld. " Pay gratuities or bearer "Five pounds. "5 "John Smith." 130 Questions on Banking Practice. CHEQUES con*tnw*. The cheque is crossed with two parallel transverse lines, between which are written " Pay to the order of Mrs. M. E. Smith, London." ANSWER: Though such a crossing is quite irregular, it would be safer for the banker to procure the endorsement of Mrs. Smith, if the crossing is in the handwriting of the drawer. 446- QUESTION: May not the following cheque be regarded as crossed to two bankers : r2 "lLondonJ 10th Nov., 1891. o o " To the St.^fleitfentfs %ik ' ^' rt rH -~ Q o o 1 " Pay to Mes srs. SHunfe, Waraer i& *6o., or bearer " One hundre d arfti thirty^six^ou "o d n ^ g "136 : : 1 "o "^3* ) 1 w PQ o The crossing "Bank of London" in capitals, and the crossing to Henderson's a/c are impressions from stamps ? ANSWER : No. The paying banker can have no means of knowing to whose credit in the books of the collecting banker a cheque is passed. (See Question 443.) 447. QUESTION: Are bankers justified in paying to another bank, " order " cheques drawn upon them, endorsed " Placed to the "credit of payee, with (signed) Smith, Jones and Co.," the latter being the payee's bankers? Should not Smith, Jones and Co. endorse such cheques for their customer per pro? ANSWER: Such endorsements are occasionally passed by the paying bankers, but they have undoubtedly the right to refuse pay- ment, giving the answer "Payee's endorsement required." The banker has prima facie no authority to sign per pro for his cus- tomer. 448- QUESTION : A cheque is drawn payable to Mr. Rd. Rees, and is endorsed thus, " Payable to my credit at the Trading Bank, " St. Michael's Town, Rd. Rees." Should the Trading Bank endorse this cheque as having been passed to the credit of the payee ? ANSWER: Yes. 449. QUESTION : A crossed cheque is drawn payable to the order of self and endorsed by the drawer A B. He however writes in the body of the cheque, but not between the transverse lines, " Pay Questions on Banking Practice. 131 CHEQUES continued. " bearer silver. A B." Is the instrument thereby rendered an open cheque, or must it still be presented through a banker? ANSWER : Such a cheque would be treated as an open cheque. 450. QUESTION : Is a banker justified in paying a crossed cheque on himself over the counter to a stranger, such cheque bearing across the face of it the words "please pay cash to the bearer," accom- panied by the signature or the initials of the drawer 1 ANSWER: Such cheques signed with the full name of the drawer are generally cashed. 451. QUESTION : A draws a crossed cheque on his banker B, which on presentation is dishonoured. Would B run any risk by subsequently paying the cheque over the counter if the words " Pay " cash" were written thereon and signed by the drawer? ANSWER: No. 452. QUESTION: A, who is about to settle a purchase with B, draws a cheque payable to the order of B, crossed " not negotiable," which, before handing to B, he requests his banker to mark " good " for the amount," in order that the cheque may be accepted as cash. Has A subsequently the power to instruct his banker to stop pay- ment of such cheque? If so, does not the banker place himself in the position of being liable to be sued for payment of the cheque by either B, the payee, or B's bankers, who may, upon the strength of the cheque being marked " good," have allowed him to draw against it? ANSWER : The marking of the cheque by A's banker, at his request, amounts virtually to payment of the cheque, and A has no power subsequently to stop payment of it. 453- QUESTION: A draws a cheque for 600 on his bankers, B, who at his request mark it good for the amount. It is forwarded to the payee, who pays it to his bankers and receives it back unpaid marked by B, orders not to pay. Is B justified in returning cheque unpaid after having marked it as above? ANSWER: No. 454- QUESTION: Would a banker be justified in refusing to collect a cheque crossed otherwise than generally or to himself ? ANSWER : If a banker received from his customer a cheque crossed specially to any other banker, he would be justified in declining to collect it. K 2 132 Questions on Banking Practice. CHEQUES continued. 455- QUESTION: A draws a cheque on his bankers (who have several other branches) payable to B, and crossed " yourselves," and the cheque is stolen in transmission by C, who hands it to a country bank for collection. The latter stamp it in the usual course, and forward it direct by post to the bank on which it is drawn, who pay the amount over in good faith. Who would be liable to A for the money 1 ANSWER : The drawees would apparently be in error in paying the cheque mentioned, inasmuch as it is crossed to two bankers ; first to themselves, and secondly to the bankers who remitted it for pay- ment. 456- QUESTION : Is a banker justified in paying a cheque crossed to two bankers, with a request upon it, written by the drawer, to pay cash 1 ? ANSWER: We do not think that a banker would be justified in paying the cheque in question. The request of the drawer, if noted on the cheque at the time of issue, is subsequently nullified by the double crossing if, on the other hand, the drawer was asked to add the request after the cheque had been vitiated by a double crossing, it should have been destroyed and a fresh cheque issued. 457. QUESTION : No. C.445. The London and Sou Nort Pay Mr. Blank 6 them htown Northtown, Feb. 16, 1897. 1 | Bank, Ltd. Branch. Seven Pounds. 700 GO T. EATON. This cheque bears in addition on its face two stamps, viz., "W. " Oakby & Co., Northtown Bank," and " W. Oakby & Co., Eastwood " Bank," but this being the usual way of stamping cheques sent by the branches of Messrs. Oakby for collection from the London and Southern Bank at Northtown is not in question. The London and Southern Bank however maintain that the fact of its being drawn on their Northtown branch, and being crossed " Eastwood branch," locates it at their own branch at Eastwood, and they therefore refuse to pay the same, giving as a reason, " crossed Questions on Banking Practice. 133 CHEQUES continued. " two banks." Messrs. Oakby contend that the original crossing of the cheque was not sufficient to locate it with the London and Southern Bank, Eastwood, as " L. & Southern Bk., Ld. " or " your- " selves," should have been inserted between the lines, or at any rate the word " your " placed before the words " Eastwood branch," and that a cheque crossed in this way could be accepted by the Eastwood branch of any firm carrying on business as bankers in that town. Which bank is in the right? ANSWER : Messrs. Oakby & Co. 458- QUESTION: A and B are two country banks carrying on business in the same town, in the course of which they clear cheques upon one another in the usual manner. Among the cheques drawn upon B, and presented by A for payment, is one bearing the crossing of C, a bank carrying on business in another place, also the usual crossing of A. Although, presumably the cheque has been sent by C to A for collection, there is nothing upon any part of it to prove it ; is this a doubly crossed cheque within the meaning of the Act, and is it, therefore, the duty of B to refuse payment on that ground ? ANSWER: The crossing, as described, is apparently a double crossing within the meaning of the Act, and the paying banker B would be legally entitled to refuse payment to A. 459. QUESTION: Ought not the cheque mentioned in the last question to have been crossed " C bank to A bank for collection," or " C bank to A bank " simply 1 ? Is not this the meaning of sub-sec. 5, sec. 77, Bills of Exchange Act, 1882? ANSWER: It is the usual custom, and is very desirable, to cross cheques as stated, viz., " C bank to A bank for collection," but such crossing is not absolutely required by the Act. 460. QUESTION : Would A, as agent of C for collection, be right in amending the crossing accordingly, say, by putting the word " to " between C's crossing and their own ? ANSWER: The Bills of Exchange Act, 1882, clause 77, sec. 6 (introduced at the suggestion of the Institute of Bankers), provides for such amended crossing. 461- QUESTION: In the case of A having a number of corres- pondents and agents, a list of which is supplied to B, would the latter then be safe in paying the cheque crossed as described in Question 458 ? ANSWER : In such cases it is customary to pay. 134 Questions on Banking Practice. CHEQUES continued. 462. QUESTION : A Manchester bank receives a cheque from its London agents, specially crossed Messrs. Thomson and Co., London (not being the agents). Would the paying banker be right in returning the cheque because it did not bear Messrs. Thompson and Co.'s stamp? ANSWER : No ; a crossing need not necessarily be stamped. 463- QUESTION: Is it the practice of bankers to examine minutely the crossings of cheques handed for collection? . ANSWER : They should in strictness do so. 464. QUESTION: A walk clerk calls at the St. Clement's Bank and hands in his charge for payment, at the same time tendering another cheque uncrossed, asking them to receive it separately. Are they justified in declining to pay the same unless it is crossed? ANSWER: Such cheque should not be received separately, but included in the charge. 465. QUESTION: A cheque on a country bank, payable to John Smith, and properly endorsed, is presented by Thos. Owen to a bank in another town, whom he asks to collect the same for him. In due time the money is collected, and paid to Thos. Owen. John Smith afterwards informs the collecting bank that Owen has decamped with the money. Has Smith any claim upon the bank for paying the money to Owen? ANSWER : No. 466. QUESTION : Referring to Question 465, would the position of the collecting banker be altered (1) if the cheque were crossed, (2) if the words " Not negotiable " were added to the crossing, and would the forgery of the payee's endorsement in either case make any difference ? ANSWER: (1) The crossing makes no difference, (2) the words " Not negotiable " make no difference, (3) the forgery of the endorse- ment renders the collecting banker liable. 467- QUESTION : In view of the case of Matthews v. Brown & Co., reported in Journal, June, 1894, is it your opinion that a banker runs any risk in collecting an open cheque for a "casual" or " sundry " customer ? ANSWER : Yes, but the risk must vary as regards the circumstances of each case. Questions on Banking Practice. 135 CHEQUES continued. 468- QUESTION : Does a banker incur any liability in collecting for a stranger in the following case 1 : (a) An open cheque to bearer ; (6) A cheque to bearer crossed generally; (c) A cheque to bearer crossed " not negotiable." The method of dealing with them is the same in all cases. They are credited to a " Sundry Persons'" account in the name of the person presenting them, who signs a cheque on the banker and takes cash for them when cleared. ANSWER : Having regard to the method adopted the bank would not, in (a) or (b) but might in (c), incur liability. 469- QUESTION : In the case of Bissell and Co. v. Fox Bros, and Co., it was held that the fact of the bankers crossing three cheques to their London agents did not make them crossed cheques within the meaning of sec. 82 of the Bills of Exchange Act, 1882. Was not sec. 77, sub-sec. 6, introduced into this Act for the protection of bankers in cases similar to the above? How should a banker cross cheques received in order to benefit by the last-named sec. 1 ANSWER: Sec. 77, sub-sec. 6, was, as stated, specially introduced into the Bills of Exchange Act for the protection of bankers in cases such as that quoted, but it does not seem to have had the desired effect. 470- QUESTION : If a customer of the St. Michael's Bank draws a cheque on that bank in favour of B, who also is a customer of the bank, and crosses the cheque in the ordinary way is the bank justified in placing the amount to B's credit, or in paying him cash over the counter for it? ANSWER: The banker is quite justified in placing the amount to B's credit, but should not pay him cash over the counter. (See Question 471.) 471- QUESTION: A crossed cheque "can only be paid to a " banker." If, then, one customer of a bank draws a cheque (which he crosses generally) in favour of another customer of the same bank, who presents it for payment, how is it to be dealt with? Must the banker refuse payment, as it is a crossed cheque, and compel his customer to negotiate it through another bank ? 136 Questions on Banking Practice. CHEQUES continued. ANSWER: A banker would not be justified in paying cash to a customer, A, for a crossed cheque upon himself drawn by another customer B, but he could receive a cheque for A's credit and honour his drafts against it. 472. QUESTION: A current account holder presents cheques (other than his own, and crossed, or otherwise) to his bankers for encashment. Are they justified in refusing to comply with his request on the plea that such cheques should be first passed through the account before being drawn upon ] ANSWER: Yes. 473- QUESTION : Is a cashier correct in giving cash to a " customer " over the counter for a crossed cheque on his own bank without passing it through the customer's banking account ? ANSWER : No. The amount should be credited to his account, and he should draw a fresh cheque against it. 474. QUESTION : Is a banker forbidden to pay over the counter a crossed cheque drawn upon himself if he is perfectly sure that the person presenting the cheque is the payee, and does the fact of the payee being a customer or not in any way affect the case ? ANSWER: By the provisions of the Bills of Exchange Act, 1882, a crossed cheque should only be paid to a banker in the event of a cheque drawn on a bank by one customer in favour of another customer of the same bank, and crossed, the cheque could not be paid over the counter to the payee, but would be placed to his credit. 475. QUESTION : Is a cashier correct in giving a ten days' draft over the counter in exchange for a crossed cheque on his own bank 1 ANSWER: No. 476. QUESTION: By sec. 79 of the Bills of Exchange Act, 1882, a banker is directed to refuse payment of a crossed cheque except to another banker. Is a banker, therefore, evading the law by placing to an account cheques drawn by another customer and crossed generally ? Is the banker protected in this custom by sec. 82 1 ANSWER : The banker is quite justified in so placing the cheques. 477. QUESTION: John Smith opens an account in the name of John Smith, trading as Smith Brothers. He authorises the bank to honour the signature of his brother (who is not a partner), and who is also to sign as " Smith Brothers," instead of per procuration. Is this strictly in order? Questions on Banking Practice. 137 CHEQUES continued. ANSWER: It is in order as between John Smith and his banker, but it would involve the brother, so signing, in grave responsibility towards creditors of the firm. 478. QUESTION : A B and C D are the partners in a firm trading under the title of " The Scotch Yarn Co." and so sign cheques. Is there any objection to their bankers honouring cheques so signed under an authority signed by all the individual partners ? ANSWER : No ; but signature in this form would probably give rise to difficulty. 479- QUESTION : Is a cheque signed " Moon Foundry Co.," only without the name of the drawer, a cheque within the meaning of the Acts of Parliament regulating such document 1 If a bank agrees to open an account headed thus : " John Smith, " Moon Foundry Co." with a note in the ledger that cheques will be signed "Moon " Foundry Co.," would the bank be safe in charging the account with cheques so drawn? ANSWER : Such a document would be a cheque, and the bank would be safe in acting as suggested. 480- QUESTION: Is a cheque signed in the following manner perfectly in order? For the St. Clement's Co., Ltd., Peter Jones, John Smith, John Smith, Secretary. John Smith is both a director and secretary of the company, and the bankers are authorised to honour cheques signed by two directors and the secretary. ANSWER : The signature is sufficient. 481. QUESTION : Two merchants, A and B, who trade with each other, both keep their accounts at the same bank, H. A pays to B a cheque drawn by C, one of A's customers. A endorsing the same, B pays it in to his bankers, H. It is dishonoured by the drawees and returned to H, who, instead of returning it to B, debit the account of A, the payee and endorser, advising him thereof. Are the bankers H justified in doing this? ANSWER: No. The cheque should have been returned to B, but the banker H would probably, as a holder for value, have recourse against A, the endorser, in case of B's failure. 138 Questions on Banking Practice. CHEQUES continued. 482. QUESTION: An account is opened with a banker in the name of John Smith, the partners in which are Jane Smith, Thomas Smith, and John Jones. Should the account be opened in the ledger as " John Smith," or " Jane Smith, Thomas Smith and John " Jones, trading as ' John Smith 1 ' ' ANSWER : The account should be opened as " John Smith." 483. QUESTION: John Jones and Samuel Smith, trading as A. Brown & Co., wish to keep a banking account, and to sign all documents in the style of the firm "A. Brown & Co." Should the account be opened in the various ledgers as , ~ ( John Jones, ) ^ . , (a) A. Brown & Co. j Samuel Smitllj | Butchers, or (&) John Jones and Samuel Smith, trading as A. Brown & Co., butchers ? ANSWER : The first-named would be the more usual form of entry. 484. QUESTION : Is a banker justified in paying a cheque which has the amount only written in words, and not in figures ? Can he, or should he, refuse payment on the ground of the cheque being " incomplete " 1 Would a banker be liable to loss in the case of there being insufficient funds on the re-presentation of such a cheque after the figures had been filled in 1 ANSWER : A cheque is defined to be a written order addressed to a banker for the payment of a specified sum to a person named, or bearer or order, and we think an instrument such as that described in the question comes within this definition. The law is that a banker who has sufficient funds of his customer in his hands is bound to pay his customer's cheque on its being presented. Being, as we are, of opinion that the instrument in question is a cheque, although the usual figures are wanting, we think that while the banker would clearly be justified in cashing such a cheque, he would, to say the least, incur, by refusing payment, considerable risk of being held liable to his customer for any loss he might have sustained owing to such refusal. 485. QUESTION : What is the practice of bankers as to payment of cheques where the figures are inserted in the usual place, but the sum is not expressed in words in the body of the cheque? It is obvious that in the latter case a door is opened to fraud which does not exist in the former. ANSWER: It is customary for bankers to refuse payment of cheques, the amount of which is expressed in figures only. Questions on Banking Practice. 139 CHEQUES continued. 486. QUESTION: A cheque is presented to a banker with the amount in figures only. It is returned with the answer "requires " amount in writing." It is re-presented with the amount inserted in words, but not in the drawer's writing, and not initialled by him, all the rest of the cheque being in. the drawer's writing. Should the banker return the cheque again with the answer " amount in words "requires drawer's initials?" ANSWER : He would be justified in doing so. 487- QUESTION : A draws a cheque on a banker, payable to B, the amount in the body in words being " Five hundred and seventy- " five pounds," and at the foot in figures, " 570," which cheque the banker refuses to pay, and returns with the answer, "Amounts differ." Is the banker justified in returning the cheque on this ground, or could B the payee, by taking legal proceedings, compel the banker to pay the amount stated in the body in writing, and any loss or damages caused by the refusal to pay on the first pre- sentation ? ANSWER : Custom would justify the banker in returning such a cheque, and B's remedy would be only against the drawer. 488. QUESTION : A cheque is presented at a country bank through the local exchange, the body reading " Two pounds twelve "shillings," and the figures 2 12s. 6d. It is returned with the answer, " Will pay 2 12s." The cheque is again presented in the same manner, two days afterwards, with d. crossed out, and initialled by the drawer, when there is not sufficient to meet it. Is the bank bound to pay it? ANSWER : We consider it clear that the bank would not, under the circumstances stated in the question, be liable either to the drawer or the holder. The collecting banker is the only person to whom the bank could be responsible. As regards such collecting banker, the only representation made was that the bank was prepared to pay the cheque as it stood. The collecting banker did not avail himself of this offer, and the cheque was sent back to the drawer for alteration. When the altered cheque was presented, there were no assets to meet it, and the banker was consequently in our view justified in dishonouring it. 489- QUESTION: Is it the usual custom of bankers to pay cheques presented with the word " pounds " omitted from the body, the amount appearing complete in figures, for instance, " Sixteen " four shillings and threepence " 1 Would the banker be justified in refusing payment? 140 Questions on Banking Practice. CHEQUES continued. ANSWER : A banker would scarcely refuse payment of a cheque on account of the accidental omission of the word " pounds " as quoted in this question. 490- QUESTION : A customer at the Provincial Bank, Blacktown, who has 1,000 to his credit, gives his steward a cheque, signed in blank, and endorses on the back of it, "This cheque is good for "600, if presented at the Provincial Bank at Whitetown." The steward fills in the cheque for 670, the bank at Whitetown cashing it. Is the bank at Blacktown legally justified in returning the cheque unpaid, and, if so, what answer should they mark upon it? ANSWER : They were justified in so returning it, giving the answer, " exceeds authority." The bank at Whitetown should not have cashed it for a larger amount than 600. 491- QUESTION: A payee endorses a cheque on the front of which is written " balance of account to date." Does this endorse- ment estop the payee from recovering, if he can satisfactorily prove that the amount was not the whole amount owing? ANSWER: No. 492- QUESTION: Is custom so firmly in favour of bankers that they could successfully defend an action brought against them for refusing to pay the halfpenny at the end of the amount of a cheque ? ANSWER: Yes. 493- QUESTION : Is a banker justified in paying or in refusing to pay cheques filled up with the " copying-ink pencils " now so generally used in the commercial world ? ANSWER: Though it is very desirable that the use of the pencil should generally be discouraged, a banker would not probably be legally justified in refusing to pay cheques so filled up. 494. QUESTION : A limited company's cheque, which should bear the signatures of two directors, countersigned by the secretary, is signed by one director and the secretary in the usual way, the second director using an impressed stamp, purporting to be a fac- simile of his signature. Is such a facsimile valid? 1. As a co-director? 2. As sole drawer of a cheque? ANSWER: The facsimile signature is probably only valid if authenticated to the banker in each individual case. 495. QUESTION : It is the custom of bankers generally to return cheques endorsed in pencil, although it is stated in " Byles on Bills " Questions on Banking Practice. 141 CHEQUES continued. that writing in pencil is as legal as in ink. Would a banker be liable to the holder of a cheque if he had refused it owing to the endorsement in pencil, and the drawer failed before it could be re-presented endorsed in ink 1 ANSWER : We think that the pencil endorsement, assuming it to be legible, has precisely the same effect, and that the banker's liability is consequently precisely the same as if the endorsement had been written in ink. The endorsement to a cheque in pencil does not appear to be illegal ; but it is very undesirable to countenance such a practice ; and Chief Justice Abbott, in delivering judgment in the case of Geary v. Physic, which refers to this matter, says, " The im- " perfection of this mode of writing, its liability to obliteration, and " the impossibility of proving it when so obliterated, will prevent its " being generally adopted." 496. QUESTION : An order cheque is correctly endorsed in pencil and dishonoured with the answer " Must be endorsed in ink." Is this a correct answer'? ANSWER: No. 497. QUESTION : A customer informs his banker that he intends to perforate all his cheques with amounts for which they are drawn. Kindly say if the banker incurs risk in paying his customer's cheque without such perforation or in paying cheque, the written and perforated amounts differing. ANSWER: If a customer definitely instructs his bankers not to cash his cheques unless they are perforated, the banker would incur risk in cashing unperforated cheques ; as he also would if the written and perforated amounts differed. 498- QUESTION : If a man cannot sign his name at the back of a cheque, is it necessary for the cashier to know him to witness his cross 1 ANSWER: Yes. 499- QUESTION : Would a banker be justified in refusing a cheque because it is signed on the back, if on the front it bears the words " signed on the back," in the place where the signature would ordinarily be ? ANSWER : We think that a cheque drawn in the form given in the question is unusual and embarrassing, and that a banker would on that ground alone be justified (as between himself and his customer, to whom alone he is responsible), in refusing to pay it. 142 Questions on Banking Practice. CHEQUES continued. 500- QUESTION : On an ordinary cheque form a drawer signs " Mrs. Ann Jones " The writing is known to be that of " Ann Jones " a customer of the bank. Is the bank justified in returning the cheque as being im- properly signed 1 ANSWER : Yes ; but as the banker knows that the signature is that of his customer, it is difficult to see what risk he can run by honour- ing the cheque, though the form of signature is of course irregular. 501- QUESTION: If a cheque which has been cut into two or more parts, which are afterwards joined by slips pasted on the back, be presented to a banker, is he justified in refusing payment of it 1 ANSWER: It is the general practice, and bankers are justified in refusing payment, on the ground of mutilation, of cheques cut into two or more parts, and subsequently joined as indicated. 502- QUESTION : Is it obligatory on bankers to return all muti- lated cheques and dividend warrants ? ANSWER : It is not obligatory, but it is advisable to do so, unless the mutilation be satisfactorily accounted for. 503. QUESTION : A cheque is presented by bank A, through the daily exchange, to bank B, and is returned by the bank with the answer, " Mutilated cheque." The cheque in question was not torn in two, but in the two folds of the cheque was torn about two-thirds of the way through. Was the answer, " Cheque mutilated," correct, not having been in two ANSWER: A banker would be justified in making such an answer in the case described. 504- QUESTION : Cheques are usually cancelled by the bank defacing the drawer's signature. Have they any right to do so; ought not the bank to deface their own name and not interfere with that of the drawer 1 ANSWER: The practice of cancelling the signature either of the drawer of a cheque or of the acceptor of a bill when paid by the banker on whom the cheque is drawn or with whom the bill is domiciled is almost universal, and if not laid down as the law, is abundantly recognised as the custom in many decided cases. It is held that " the cancellation of a signature is primd facie evidence " that the liabilities of the party whose signature is cancelled have "been discharged." (See "Chalmers on Bills of Exchange," 2nd edit., page 211.) Questions on Banking Practice. 143 CHEQUES continued. 505. QUESTION : Is it the usual practice of bankers to cancel all cheques paid by them under an order from another bank? For instance, A, a banker in an inland town, requests B, a banker say at the seaside, to cash the cheques of his customer from time to time during the next few weeks. Would B be within his rights, if, after paying cash for such cheques, he cancelled them and sent them on direct to "A"? Would A be right in returning such cheques marked " cancelled " ? ANSWER : It is not the usual practice of bankers to cancel cheques paid by them under an order from another bank. But A would not be justified in returning such cheques on account of their being cancelled. 506. QUESTION: Can a banker legally refuse payment of a cheque, drawn in following form, for the reason stated? Messrs. J. Preston & Co. Pay__ or the sum of Forty pounds. 40. W. A. Patterson. The answer given was that the payee's name should be stated, and the cheque endorsed. ANSWER: Yes. 507. QUESTION : Is a cheque invalid when not dated, or can any holder fill in the date? ANSWER: By the Bills of Exchange Act, 1882, clause 3, sec. 4=a, " A bill (cheque) is not invalid by reason that it is not dated ; " but clause 12 of the same Act, which enacts that any holder may insert the date, does not appear to apply to cheques. It is possible that the date might be inserted in a cheque by any holder under the provisions of clause 20 of the Act. 508. QUESTION: Is it legal for a banker to refuse payment of an undated cheque? ANSWER: It is the general custom of bankers not to pay such cheques. 509. QUESTION: A cheque, the date of which is incomplete, thus 1st December, 18 , the year being omitted, is presented on the 2nd December, 1890. Is a banker legally entitled to refuse pay- ment? Is it the general custom to do so? If such is the general custom is it one which it is desirable to follow ? 144 Questions on Banking Practice. CHEQUES continued. ANSWER: The banker is entitled to return the cheque with the answer " Date incomplete," but there is no general custom to do so. Each particular case depends on the relations existing between the banker and his customer. 510- QUESTION: A cheque, the date of which has been altered from the fourth to the sixth of January, is presented for payment on the tenth day of the same month. Is the drawee justified in requiring the alteration to be confirmed by the drawer's initials, seeing that it is not a material one, and cannot affect his duty to pay the cheque? ANSWER: By sec. 64, sub-sec. 2, of the Bills of Exchange Act, 1882, any alteration of the date is a material one, and the banker should therefore in strictness require its verification by the drawer. 511. QUESTION : Can a banker legally refuse to honour a cheque, or bill dated or accepted on a Sunday? ANSWER: He cannot. 512. QUESTION: If a cheque is dated on Sunday, should it be paid on the preceding Saturday, on the same principle that a bill of exchange would be payable on the Saturday, if the last day of grace fell on a Sunday. ANSWER : No. The provisions relating to days of grace do not apply to cheques. 513- QUESTION : A cheque is dated January 25 (which is Sunday), and presented the previous day. Is a banker legally justified in returning it marked "Post-dated/' or does it come under sec. 14 of the Bills of Exchange Act, 1882? ANSWER : The answer of " Post-dated " is correct. The cheque as described does not come within sec. 14 of the Bills of Exchange Act, 1882, which relates to bills payable otherwise than on demand. 514. QUESTION : Some bankers have their cheques printed thus : " On demand, pay^ _or Order." Could not a bank be compelled to pay such a cheque at the present time, though post- dated ? ANSWER: No. 515- QUESTION : A cheque is drawn on the A B Banking Co.. for 5 ; after the amount in the body of the cheque is written " Foi " rent of house to 25th March next." This writing is ruled through. The A B Banking Co. return cheque, marking it " Alteration in body Questions on Banking Practice. 145 CHEQUES continued. " of cheque requires to be initialled." Are they justified in return- ing this cheque? ANSWER: A cheque being an unconditional order to pay money, no notice need be taken by the paying banker of the insertion or deletion of a memorandum in the body of the cheque as mentioned. 516- QUESTION : A cheque was drawn payable to order as follows: Pay to Thomas Smith, or order, one hundred pounds " in full settlement." Endorsed by payee, " Thomas Smith in part "settlement." Had the banker power to return the cheque so endorsed by the payee? The "in part settlement" had been added by the payee, and ought he not to have communicated with the drawer before paying the cheque in to his credit? ANSWER: The instrument referred to in the question is, in our opinion, a complete cheque. It is (apart from the words " in full " settlement ") drawn in the usual form, is made payable to the order of Thomas Smith, and purports (to use the words of the Bills of Exchange Act, 1882, sec. 60) to be endorsed by him. The bankers are, therefore, clearly bound to pay it unless the additions in the body of the cheque and in the endorsement justify them in returning it. In our view the words " in full settlement " may, as between the bankers and their customer, be considered as merely an addition to an instrument already complete, and as being addressed, not to the banker, but to the payee, in order to show upon what terms that complete instrument is to be received by him. It is no part of the ordinary duty of bankers to settle accounts between their customer and his creditors. While this is our view, we think the cheque is drawn in a form calculated to embarrass, and that the bankers would, for that reason, have been justified, as between themselves and their customer, to whom alone they are responsible, in returning it. 517. QUESTION : A draws a cheque on Carver's Bank, Limited, for 50, payable to John Jones or order. The endorsement runs thus : " Pay Arthur Bland or order, John Jones, sans recours." Carver's Bank returned the cheque marked " Unconditional endorse- " ment required." Are they justified in so doing ? ANSWER : No. There is no law preventing a payee so endorsing if he chooses, and the paying banker may disregard any conditions in the endorsement (Bills of Exchange Act, 1882, sec. 33). 518. QUESTION: A cheque is presented for payment payable to John Smith and Co., Limited, with the words " In full settlement of " account to date " written after the amount. After the endorsement is written, " We do not accept this in full settlement, as there is an 14:6 Questions on Banking Practice. CHEQUES continued. " account running (initialled by Secretary to John Smith and Co., " Limited)." Is the banker justified in paying the cheque, if so, does he incur any liability in doing so 1 ANSWER: See Answer to Question No. 516. 519. QUESTION: A post-dated cheque is given by A B to C D, who presents the same for payment. Can the bankers refuse payment on the ground that the cheque is post-dated, seeing that sec. 13 of the Bills of Exchange Act, 1882, expressly states that a bill is not invalid by reason only that it is post-dated, and by sec. 73 a cheque is payable on demand? Would it be held that, the cheque having been issued, the date of presentation at the banker's would be the true date thereof 1 Suppose a banker refuses payment of a post-dated cheque, would he be protected from an action for dishonouring his customer's cheque when it is open to the customer to allege either that the date was a mistake on his part, or that, although it was post-dated, it was, being a cheque, payable on demand 1 ANSWER : In practice, the date on the cheque, and not the date of presentation, would be considered the true date thereof. The banker would be justified in refusing to pay such a cheque. 520- QUESTION : A draws a cheque upon his bankers B and Co., post-dated " Oct. 25." It is presented for payment on October 23, and B and Co. return it marked "Not provided for." A in the meantime, on or before October 25th, pays in sufficient funds, and complains that the reply of the bankers has needlessly damaged his credit. Has he any remedy against his bankers ? ANSWER : We think it extremely doubtful whether, in the circum- stances, the drawer would have any remedy against the banker, but the answer given when the cheque was presented should have been " Post-dated." 521- QUESTION: A banker has debited his customer's account with a post-dated cheque, and subsequently refused payment of a cheque for want of funds. Is the banker protected from an action for dishonour, or has he a right to pay the post-dated cheque on demand if he chooses to do so 1 ? ANSWER: The banker is liable for dishonouring the subsequent cheque. He should not have paid the post-dated cheque. 522- QUESTION: A draws a post-dated cheque in favour of B, who at once presents it across the counter, and the bankers pay the same, not noticing until after doing so that it was post-dated. They Questions on Banking Practice. 147 CHEQUES continued. cannot debit A's account until the date on which the cheque is pay- able. In the meanwhile, can A stop its payment? and if so, what is the banker's position 1 ANSWER: A can certainly stop payment of the cheque, and the banker is probably liable for having already cashed it. 523- QUESTION: On September 29th, John Simpkin gave a cheque for 100, dated Oct. 30th, to William Wilson. On receiving the cheque the payee, by the addition of certain marks to the month, made it appear as Sep. 30th. The cheque on presentation was duly paid by the drawer's banker, but a few days afterwards the drawer informed his banker that he had paid a post-dated cheque. The cheque was referred to, and only on the most minute and close examination (the alteration being so cleverly done) it was discovered that the cheque was originally dated Oct. 30th. What is the respon- sibility of the banker under these circumstances, as the drawer did not wish the cheque to be paid until Oct. 30th, the original date of the cheque? ANSWER: The banker would probably be held responsible to the drawer for prepaying the cheque. 524- QUESTION: A cheque drawn by a customer who has an overdraft is returned with the answer " Exceeds arrangement." Does the answer convey any information respecting the account which it is not desirable to give? Is it a satisfactory or usual answer ? ANSWER : Such an answer is most unusual, it should be " Not pro- vided for." 525. QUESTION: A cheque was presented to a banker drawn thus: "Pay Cash or Bearer" (the word Bearer having been sub- stituted for Order, but the alteration not initialled). The banker returned the cheque with a request that the alteration should be initialled. The customer contended that in terms of clause 3, sec. 7, of the Bills of Exchange Act, " Where the payee is a fictitious "or non-existing person the bill may be treated as payable to " bearer." But the banker asserts his right to return the cheque, under clause 1 of the same section, " Where a bill is not payable to "bearer, the payee must be named or otherwise indicated therein " with sufficient certainty." Was the banker right in returning the cheque under the circumstances stated ? ANSWER : It is customary to treat cheques with an impersonal or non-existing payee as coming under clause 3 of sec. 7, Bills of Exchange Act, 1882, and, consequently, as payable to bearer. L 2 148 Questions on Banking Practice. CHEQUES continued. 526. QUESTION: A customer draws a cheque "Pay cash or "order." Is the bank justified in paying such a cheque, without endorsement, to the bearer 1 ANSWER: Yes. 527. QUESTION: Are cheques to order payable to "Wages," " Housekeeping," " Expenses," or to a number affected by section 7 of the Bills of Exchange Act, and considered payable to bearer, or is the expression "Fictitious or non-existing person," to be taken literally? ANSWER : Such cheques are treated as coming under the 7th clause, sub-sec. 3, of the Bills of Exchange Act, 1882, and, consequently, as payable to bearer. 528. QUESTION : ''St. Clement's Bank, Limited, "November 1st, 1892. " Pay cash or order " Twenty pounds. "20. "F. Jones." The word "cash" in the above cheque has been inserted by a person other than the drawer. Is the banker legally justified in refusing to pay the cheque for want of the drawer's endorsement 1 ANSWER: No. The cheque is in favour of an impersonal payee, and may, therefore, be treated as being to " bearer." 529- QUESTION : A cheque is drawn " Pay the bearer, my wife."" Should this be treated as payable to bearer or as having a definite payee, and requiring endorsement? ANSWER : The endorsement of the wife is desirable. 530. QUESTION: Cheques are drawn to (1) "wages; " (2) "petty " cash ; " (3) " stalls ; " (4) " 264," or order ? Are bankers entitled to treat them as bearer cheques and so not requiring endorsement? ANSWER: Yes. (Bills of Exchange Act, sec 7, sub-sec. 3.) 531. QUESTION : John Smith draws an order cheque in favour of his own initials and endorses it J. S. Is this a correct endorsement? ANSWER : The endorsement appears to be correct, and if not, the cheque might be considered a cheque to bearer by sec 7, sub-sec. 3, Bills of Exchange Act, 1882. 532. QUESTION : A cheque drawn on banker A is made payable to the account of B, with C and Co., the word "order" being ruled out and initialled by the drawer, but " bearer " not inserted. Would Questions on Banking Practice. 149 CHEQUES continued. A be justified before paying a cheque drawn thus in requiring C and Co. to state on the back that it has been placed to B's account, or would the endorsement of C and Co. without the memorandum be sufficient 1 ANSWER : The endorsement of C and Co. would be sufficient, but is not necessary. 533. QUESTION: If the cheque mentioned in the last question were payable to " a/c of B with A," and uncrossed, would A be justified in cashing it, and if so, is it necessary he should pay the money direct to B or through an equivalent channel? ANSWER: A should credit B's account with the amount, and B should draw a fresh cheque for the amount. 534. QUESTION : A cheque is drawn by John Smith (who banks at two places) on the A Banking Company, made payable "to my " credit at the B Banking Company ; " the words " or order " are struck out and initialled, but the words " or bearer " are not sub- stituted. Should the A Banking Company pay such cheque without any endorsement whatever, or should they require the B Banking Company to endorse it as having been placed to credit 1 ANSWER: Under the circumstances, the A Banking Company would be justified in asking for the endorsement of the B Banking Company. 535. QUESTION: Is it competent for the payee, or any sub- sequent holder of a cheque payable to bearer, to change its tenor and make it payable to the order of an endorsee, and if not discharged by him would the banker on whom it is drawn be justified in refusing payment? Is it the practice of London bankers to examine the endorsements of cheques payable to " bearer " ? ANSWER : The drawer is the only party to the cheque who can alter its tenor from " bearer " to " order." It is not usual in London to examine any endorsements on a cheque payable to " bearer." 536. QUESTION : The answer to the last question is that, " The " drawer is the only party to the cheque who can alter its tenor from ' ' bearer ' to * order.' " In the case of a cheque so altered on the face (it is doubtful by whom, there being no initials), and not endorsed, is it the duty of the banker, who is the drawee, to disregard the alteration, or to return the cheque for endorsement? ANSWER : He would return the cheque for endorsement. 537. QUESTION: Whether a cheque with the word "bearer" 150 Questions on Banking Practice. CHEQUES continued. struck out, but the word " order " omitted, ought not to be paid by the banker if endorsed by the payee ? ANSWER : The cheque would be treated as payable to order under the Bills of Exchange Act, 1882, sec. 8, sub-sec. 4. 538. QUESTION : The cheque of a bank is engraved " Pay _ or A customer fills up the first blank with the names of the payee, and does not fill up the other blank. 1. Has the banker drawn on, or the payee or other holder of the cheque the right to fill in the blank space with the word bearer 1 2. If not, must a banker treat the cheque as payable to order or bearer ? ANSWER: 1. None of the parties has right to fill up the blank space. 2. The bankers should treat the cheque as payable to "order." (See Bills of Exchange Act, 1882, sec. 8, sub-sec. 4, and Question No. 537.) 539- QUESTION : A cheque is presented made out in the follow- ing form : J.J. " Pay John Smith, or order," and signed by the drawer, John Jones. Would you consider this cheque payable to "bearer," thus requiring no endorsement? The word bearer is not written on the cheque. ANSWER: In practice this would generally be considered a "bearer" cheque, but it would probably be safer to return it with the answer " alteration requires completion," as in the form quoted it may be argued that it still requires the endorsement of John Smith. 540. QUESTION : A issues a cheque in favour of James Smith, or order, but before remitting it, erases the word " order," and initials it, but does not insert the word " bearer." Does the omission of the word " bearer " render it necessary for the cheque to bear the payee's endorsement 1 ANSWER : See previous Answer. 541. QUESTION : A crossed cheque, drawn " Pay bearer or order," is duly presented, but without any endorsement. Should it be paid or returned with the answer " Requires endorsement " ? ANSWER : The word " order " being printed in the form of the cheque, the drawer by inserting " bearer " evidently meant it to be so payable. The cheque may therefore be paid without endorse- ment. Questions on Banking Practice. 151 CHEQUES continued. 542. QUESTION: A cheque is made payable to "bearer" or "order." Does this require endorsement? ANSWER: No. _____ 543. QUESTION : A cheque is presented payable to " order " but not bearing the name of the payee. Should this be refused payment as irregularly drawn, or may it be taken as an instruction to pay on any person's endorsement? ANSWER : It is usual to treat cheques drawn " to order," without any payee's name being specified, as requiring the endorsement of the drawer. At the same time sec. 7, sub-sec. 3, of the Bills of Exchange Act, 1882, would seem to indicate that such a cheque may be treated as payable to bearer. 544. QUESTION : An " order " cheque form is filled in "Pay Bearer or Order," and is not endorsed by the drawer. (a) Can the paying banker treat the cheque as if it were drawn on a " bearer " form, or does it require either the endorsement of the drawer, or should the word "Bearer" be initialled? (b) Supposing the above cheque had had the place for the payee's name left entirely blank, would it be considered that the cheque was then payable to the order of the drawer, and therefore required his endorsement ? ANSWER: (a) The cheque may be treated as payable to bearer. (See No. 541.) (b) The endorsement of the drawer would usually be required. (See No. 543.) 545. QUESTION : A cheque is drawn payable to the order of the Northern Cement Company, Limited. It is not endorsed by the company, but on the back of it is written by the drawer the words " pay bearer cash," and signed by him. Does the fact of the drawer having written this on the back of the cheque only without having altered "order" to "bearer," and initialled the same, make the cheque a bearer cheque not needing endorsement? ANSWER : The cheque would appear to require the discharge of the payees, notwithstanding the endorsement of the drawer. 546. QUESTION: Cheques drawn to order by corporate bodies, trustees and others are not unfrequently altered "to bearer" by a secretary or town clerk, who has countersigned, or by one of the drawers placing his initials against the alteration. If a cheque so altered be misappropriated, do the bankers upon whom it is drawn 152 Questions on Banking Practice. CHEQUES continued. incur any liability by paying it without receiving from the several drawers their authority to do so under the altered condition of the instrument? ANSWER: Yes. 547. QUESTION : In a case of two trustees drawing a cheque, if one of them draws the cheque and signs it, and alters it from " Order " to " Bearer" and initials the alteration, is it sufficient for the second trustee to simply sign the cheque without initialling the alteration, or is his (the second trustee's) initial absolutely necessary for the payment of the money? In case the banker pays with only one initial, is he responsible to his customer ? ANSWER : Both trustees must verify any alteration. 548- QUESTION: A cheque drawn on the St. Michael's Bank by the St. Michael's Rural Sanitary Authority, " or Order," is altered by the clerk to the Board, to " Bearer," and initialled. Do the St. Michael's Bank incur any liability by cashing the cheque, i.e., should they allow a clerk of a body under the Local Government Board to alter cheques in this way? ANSWER: The alteration should be signed, or at least initialled, by all the parties signing the cheque. 549. QUESTION : How far, if at all, has the secretary of a public company, as the recognised acting officer of the company having full power to countersign all cheques, &c., authority to bind his company by altering (in writing, officially, as secretary) (a) A draft payable to " order," making it payable to " bearer " ? (6) Requesting the bankers of his company to give bearer cash for a " crossed " cheque? N.B. Cheques are duly signed by two directors and countersigned by the secretary. ANSWER: The secretary alone has no power to bind his company in the manner indicated. Such alteration or request should be signed by the two directors and the secretary. 550. QUESTION : Smith and Robinson open an account with the X Bank, with instructions to honour the signatures of both partners to cheques drawn upon them. A cheque is drawn as follows, and crossed generally : " To the X Bank. " Pay a/c Mr. Jones or Order " Two hundred pounds," Questions on Banking Practice. 153 CHEQUES continued. and signed by both partners, and is left to be delivered by a clerk to the X Bank, where Jones also has an account. In the meanwhile the cheque is taken by Smith, who crosses out " Order " and writes " Bearer " above, placing the initials " S. & Co." against it, paying the amount in to the credit of his private account with the X Bank. A dissolution of partnership takes place, and it is announced in the local paper that Robinson will pay all debts owing by the firm, and is called upon by Jones to pay the above amount. Is the X Bank liable for the re-funding of the money misappropriated by the partner Smith? ANSWER: The alteration from "order" to "bearer" should have been signed in the same manner as the cheque. The bank, there- fore, having acted on insufficient authority, is liable to refund the money. 551. QUESTION: An account with a school is opened, the com- mittee giving authority to one of their number to sign cheques. On the death of this one (no new arrangement being entered into) are the bankers justified in returning the cheques with the answer " Drawer deceased " ? ANSWER : If a cheque be signed in an official capacity it would not be refused by the banker, although the drawer had in the meantime died ; if, however, merely signed individually, it would be refused with the answer " Drawer deceased." 552. QUESTION : The Municipal Acts say " 1. The Council shall from time to time appoint a fit person, " not a member of the Council, to be the Treasurer of the " Borough." " 2. All payments to and out of the borough fund shall be made " to and by the Treasurer." In case the Council of the said Corporation desire to have a banking account, should it not be opened with the bank in the name of the Treasurer, as under : "A B, Treasurer for the Mayor, Aldermen, and Burgesses of " the Borough of ." ' Would it not be illegal for the said Treasurer to allow the account to be opened in the name of the " Mayor, Aldermen, and Burgesses of " the Borough of ," and to allow members of the Council to sign cheques drawn on the account without his signature, as if it were their own account? ANSWER : We think the form of account suggested is the correct one, and that it would be illegal for the Treasurer to allow members 154 Questions on Banking Practice. CHEQUES continued. of the Council to sign cheques drawn on the account without his signature. 553. QUESTION : Some banks print upon their " order " cheques : "This cheque must not be made payable to bearer." Can they legally do so, and would they be right in refusing to honour such "order" cheques, supposing the drawer altered the "order" to "bearer"? ANSWER : Acceptance by the customer of a cheque book so printed implies a contract between himself and his banker that would justify the latter in refusing payment of a cheque so altered. 554- QUESTION : A cheque to order when presented for payment purports to be endorsed by the payee, above whose signature appears the following incomplete specialty impressed by stamp : " Payez a Fordre de M Valeur recue comptant Paris 1st May, 1897." Is the paying banker safe in treating the cheque as being endorsed in blank? ANSWER: Yes, but if the amount were large the banker would probably feel that he was put on enquiry. 555. QUESTION : The Blankshire Bank has an account, " Treasurer of Batney Chapel, 'John Johnson, Treasurer." The present treasurer is well-to-do, and has been told that, in the absence of a guarantee to secure an overdraft, cheques which over- draw the account will only be paid on his responsibility. A small debit balance now exists, which the treasurer declines to pay out of his own money. Is he liable after being so warned or not? ANSWER: The treasurer would not be liable unless it could be proved that he accepted the conditions stated. 556. QUESTION: Is it contrary to law or banking practice for bankers to pay cheques drawn by one firm, per procuration, for another, the firm signing being duly authorized agents of the other? ANSWER: No. 557- QUESTION: A banking account is opened in the name " Overseers of A d," of whom there are four all are empowered to sign cheques. Can they give an authority to the banker which would justify him in honouring cheques on the account signed by only two or more of the overseers? Or are they considered as Questions on Banking Practice. 155 CHEQUES continued. trustees, which would compel the banker to require the signatures of all the four? ANSWER: It is the usual practice to obtain the signatures of all the overseers. 558- QUESTION : Can overseers give an authority to sign cheques on their account to another pers'on outside their own body say to a paid assistant? ANSWER: Such cheques should in strictness be signed by all the overseers. They should not give authority to persons outside their own body to sign. 559- QUESTION : Is it requisite in overseers' and churchwardens' accounts to have cheques signed by the out-going in favour of the incoming overseers or churchwardens for any balance standing to their credit at the bank on the date of change : and in case of an overdrawn account for the new overseers or churchwardens to sign a cheque in favour of the old ones in order to keep the bank safe ? ANSWER : The accounts of overseers and churchwardens are usually opened in the names of the individuals, and the practice above suggested is commonly adopted. 560. QUESTION: A customer presents his own cheque over the counter payable to " self or order," and objects to endorse it because he presents the cheque himself to the bank it was drawn upon. Would the bank be legally justified in paying such a cheque ? ANSWER: The bank is entitled, before paying such cheque, to demand a discharge from the payee. 561. QUESTION: A London banker receives from a customer a cheque on a bank in Ireland, and sends it for collection. The Irish banker remits, not a draft on demand, less commission, but a bill for the full amount at seven days' date. Is the Irish banker allowed by custom the option of remitting on demand, less commission, or in a bill at seven days without deduction 1 ? And does the English banker incur no responsibility towards his customer in accepting the re- mittance at seven days' date, supposing the Irish banker to fail before the maturity of the bill 1 ANSWER : We believe that the usual custom among Irish bankers is to remit a draft on demand, less commission, unless otherwise specially instructed. The London banker is entitled to a draft on demand, and unless specially instructed by his customer would accept any other at his own risk. 562- QUESTION : Can commission be legally claimed by a banker, 1 56 Questions on Banking Practice. CHEQUES continued. re-presenting a previously unpaid cheque, from the banker on whom the cheque is drawn? Case: A receives for customer's credit a cheque drawn on B. The cheque is returned by B, marked " N.S." Subsequently the drawer provides funds and requests that the cheque be re-presented. This is done, when A claims, in addition to the amount of the cheque, a commission for re-presentation; can such a claim be sustained, or should not such commission be a matter entirely between A and his customer 1 ? ANSWER : It is not the custom for a banker to pay commission on re-presentation of a dishonoured cheque, nor do we think such commission could be legally claimed by the presenting banker, as any charges would be a matter between him and his customer. 563. QUESTION : When a cheque has been presented for payment through the post by a bank and returned unpaid (" Refer to drawer"), is it legal or customary on re-presentation to attach expenses thereto, also what remedy (if any) has the presenting bank demanding such expenses against the drawer of the cheque in the event of his declining to pay? ANSWER: It is not unusual to attach a ticket of expenses to a cheque on re-presentation under the circumstances mentioned. The banker on whom the cheque is drawn would not pay the expenses unless instructed to do so by the drawer, but the latter is probably liable for such expenses as are authorised by sec. 57 of the Bills of Exchange Act. 564- QUESTION : Do country banks deduct commission from the amount of bills domiciled with them, when paying the amount through their London agents, to the banks for whom the bills have been collected, or do they charge the acceptor of the bills ? ANSWER: When commission is charged it is deducted from the amount of the bills collected and not debited to the acceptors. 565. QUESTION : When a customer keeps a current account with a large turnover, and an inadequate credit balance, and the banker, adopting the usual course, charges a commission, can the customer refuse to pay the commission, on the ground that he had received no notice that the banker intended to make a charge 1 ANSWER : The custom of charging commission on current accounts is so well established in the country, that possibly it would be legally enforceable against a customer. This is not so, however, in London, and in any case it is advisable that notice should be given to the customer beforehand. 566- QUESTION : Bank A sends to Bank B a bill payable at Bank Questions on Banking Practice. 157 CHEQUES continued. B's own banking house and accepted by one of B's customers for payment in the ordinary course. The bill is duly advised. Is the Bank B justified in deducting commission in paying over the amount, and is it the custom of banks to do so 1 ANSWER: Assuming that this question refers to bills sent to a country bank for payment in London through their agents, it is not unusual for the country bank to charge a commission on the transaction. 567- QUESTION : The acceptor of a bill domiciles it at a bank with which he has no connection, but with which the drawer keeps a current account. Can either party be legally charged a commission on the transaction ? ANSWER: The banker is not legally entitled to a commission, unless an agreement has been made to that effect. 568- QUESTION : A demand draft, drawn abroad on London and uncrossed, is presented for payment. Can the drawees, before paying, compel the person presenting it to identify himself 1 Would it make any difference if the drawees were or were not registered bankers 1 ANSWER: Assuming the demand draft (the form of which is not before us) to be in effect a cheque to order, we think the drawees before paying, cannot, in the absence of suspicious circumstances, compel the person presenting the draft to identify himself. They are already sufficiently protected by Bills of Exchange Act, 1882, sec. 60. " 569. QUESTION: A banker returns his client's cheque with the answer "Effects not cleared." Does he, by this answer, commit himself to pay when the effects are cleared, or, on re-presentation, does the cheque take its chance? ANSWER : No ; the banker does not commit himself. The cheque takes its chance if re-presented. 570. QUESTION : Is the answer " Present again " a legal and sufficient answer to mark on a cheque returned by a banker to another banker, when the customer by whom the cheque is drawn has not sufficient funds with the paying banker to meet it? Is not the banker who returns a cheque, bound to state thereon his reason for refusing payment thereof? ANSWER : The answer " Present again " is not a sufficient answer, the banker returning such cheque should state thereon a definite reason for refusing payment. 158 Questions on Banking Practice. CHEQUES continued. 571. QUESTION: Is the answer "Present again," or "Please " re-present," a proper or legal answer to affix to a cheque, payment of which has been refused? Cannot a presenting banker demand a proper answer, such as " Refer to drawer," " N/S," &c. 1 ANSWER : " Present again," or " Please re-present," are, as stated above, not sufficient answers, and are not in accordance with the Rules of the Clearing House. 572. QUESTION: Referring to Question 571, is the answer " Refer to drawer," affixed to a dishonoured cheque, in strict accord- ance with the rules of the Clearing House? In the case of a cheque dishonoured with such an answer as " Present again " (which you think not in accordance with these rules), should it on that ground be refused to be taken back by the presenting banker, who, you say, has no right to demand any special form of answer? Could such refusal be upheld? ANSWER : The answer " Refer to drawer " is perfectly legitimate, and the answer " Present again," although, as stated, not in accord- ance with the rules of the Clearing House, is not unusual, and the presenting banker might not be able to uphold his refusal to take back a cheque so answered, at all events from a non-clearing banker. 573. QUESTION: A B and Co. and C D and Co. are two banks in the same town. A B and Co. receive from another branch of their own bank a cheque on C D and Co. for collection. On presenting it, C D and Co. attach answer, " Please present to-morrow." Is such a proper answer, it being the custom to return cheques the day received if unpaid ? ANSWER : Such answer is irregular ; on its being received the cheque should be returned. 574. QUESTION: What is the correct course to pursue when a doubtful customer pays to his account uncleared cheques and draws against them? (1) Should his bankers put the cheques to the client's account or to a suspense account? (2) If to the client's account, do the bankers incur any liability if they return a cheque " effects not cleared " ? ANSWER : The practice in London is to place all London cheques to credit when paid in, and in the event of a doubtful customer drawing against such cheques before they are encashed to refuse his drafts with the answer, " Effects not cleared." Questions on Banking Practice. 159 COUPONS 575- QUESTION : A coupon is drawn as follows : " 9 August, 1889. " To the Banking Co. " Pay on Dec. 8th, 1889, the sum of 10." The 8th of December, 1889, was on a Sunday. Would it be correct to pay on the day previous, as with a bill? ANSWER : Coupons maturing on a Sunday are payable on the next business day. 576- QUESTION : A coupon payable to bearer, due 1st January, 1893, is lost. The paying bank has been advised, and has paid the amount to loser, under loser's guarantee. 1. Can payment of this coupon be refused on 2nd January, 1899, under the Statute of Limitations, supposing the coupon to be pre- sented by anyone not the rightful owner, who, however, is a bond fide holder for value 1 2. Can it be refused now to a similar claimant? The coupon was cut from a colonial bond to bearer, is payable in London, and the owner lives in London. ANSWER: The paying bank would not take advantage of the Statute of Limitations, but would refuse to pay the coupon provided it had been duly stopped. DEBENTURE 577- QUESTION: A Limited Liability Company have an over- drawn account with their banker, and finding their trading requires further capital, they propose to raise it by way of debentures, but without having any intention of clearing off their overdraft. How does this affect the banker's position? Would such debentures be a first charge on the assets of the company, and rank for payment before his claim in the event of bankruptcy ? ANSWER: There seems to be a very common impression that a company by merely giving a particular instrument the name of " Debenture," confers upon its holder the right, in case of the com- pany's insolvency, to rank upon its assets in priority to the ordinary creditors. This impression is an erroneous one. In order to give the holders of debentures issued by a company a claim prior to that 160 Questions on Banking Practice. DEBENTURE continued. of ordinary creditors, the assets of the company, or some part thereof, must be specifically charged as security for payment of those debentures, otherwise they are mere acknowledgments of indebted- ness on the part of the company, and the holders will, in the event of its insolvency, rank equally with the other ordinary creditors, including in this particular case the bankers. DEPOSIT ACCOUNT 578- QUESTION : A B has a deposit account with a banker, and is also a party to a bill lying overdue and unpaid in the same hands. Can the banker refuse payment of the deposit receipt to A B, and apply the deposit, or so much of it as is needed in payment of the overdue bill? ANSWER : He can. 579. QUESTION : In the event of the winding up of a bank, have creditors on deposit account a prior claim on the assets to creditors on current account? Has there been any legal decision bearing on the point? ANSWER : The creditors would all rank alike. 580- QUESTION : A deposit receipt is granted in the names of " John Jones, " John Brown, and "James Robinson, or the survivors or survivor " of them." (a) On proof of the death of Jones and Brown, is the bank justified in repaying the money to Robinson? (b) Jones, being dead, and a bankrupt, must the bank have an authority from the Bankruptcy Court, before repaying the money to Brown and Robinson ? (c) Is it sufficient that the deposit receipt states that the money is repayable to the survivors or survivor, or is it necessary that a letter be signed by all the persons in whose favour the receipt is granted, authorising the bank to pay on the joint receipt of the survivors or survivor? ANSWER: (a) Yes. (b) No, the money may be paid to the survivors, (c) It is sufficient that the deposit receipt states that the Questions on Banking Practice. 161 DEPOSIT ACCOUNT continued. money is repayable to the survivors, though the additional pre- caution of an authorising letter is sometimes taken. 581- QUESTION : A deposit receipt is issued by a banker in joint names as John Smith and Wm. Jones. On the death of John Smith, is the banker justified in paying the amount to the survivor, Wm. Jones, in spite of the fact that John Smith has attempted to deal with it by will. ANSWER : In the absence of any special circumstances he is so justified. 582. QUESTION : If two persons, A and B (not partners), deposit money with a banker : (a) Is the survivor B entitled to the amount, on production of the burial certificate of the deceased 1 (b) Is it customary with some bankers to write "payable to " survivor " on the receipt ? (c) Is this necessary, to enable the survivor to deal with the amount ? ANSWER : (a) Yes, on customary proof of the death of A. (b) It is not a general custom. (c) No. 583. QUESTION : A deposit account is opened in the joint names of A B and C B (his wife). The bank takes a mandate to pay to either or the survivor. A B dies leaving a will, and in a fortnight his wife (C B) also dies, not having claimed the money. Has the bank power to pay to the executors of A B ? ANSWER : No. As A B died first, the deposit became the property of his wife. 584. QUESTION : A sum of money is placed on deposit at a bank in the names of two persons, and the deposit book is marked " pay- " able to either." Would the bank be safe in paying cheques signed by either party? ANSWER: The money is repayable according to the terms of the original deposit. 585. QUESTION: Is a banker justified an opening a deposit account in the name of a firm thus, " Brown Brothers " or " Thomas " Brown & Co." Should not the account be taken in the individual names? Would it alter your answer, if the firm had a current account also with the bank? ANSWER: The bank is perfectly justified in opening the account M 162 Questions on Banking Practice. DEPOSIT ACCOUNT continued. in the name of the firm, nor would the fact that there was a current account already open make any difference. 586- QUESTION : Colonial and Indian banks take money on de- posit for fixed periods. It is the custom of these banks to send notices, shortly before the expiring of the period of the deposit, stating the rate of interest offered provided the money is re-deposited. Is a bank bound to pay if the deposit receipt is presented duly stamped and endorsed, or can they insist on having written notice of withdrawal as demanded in the accompanying form? Most of those deposits come to the banks through agents, and the depositors are resident in all parts of the United Kingdom, and the apparent object of the bank in question requiring written notice of withdrawal, is to guard against fraud. If a depositor endorsed his receipt and handed it to his broker to re-deposit for another period of years, upon whom would the loss fall if the broker or one of his clerks cashed the deposit receipt and appropriated the money ? (Copy OF NOTICE.) " I beg to remind you that your deposit of , will be payable on " the , and if you desire to renew it for a further period, you will "please forward the receipt to me, duly endorsed. If you require "repayment of the deposit, the receipt must be stamped and " endorsed, and advice* must be sent to this office that the receipt " will be presented for payment." " The rates of interest allowed at the present time are as follows : 1 year % per annum. 2 years % per annum. 3 years / per annum. 5 years o/ per annum. " Yours faithfully, "Manager." ANSWER : The deposit being for a fixed period, the bank is bound to pay the depositor on the expiration of that period, without notice. The deposit receipt not being transferable, it is desirable that the bank have authority from the depositor if repaid to a third party. In the event of any misappropriation on account of the receipt being handed to a third party, the loss would probably fall on the depositors. 587. QUESTION: Is it customary and legal for a transfer of * Signed by the depositor. Questions on Banking Practice. 163 DEPOSIT ACCOUNT continued. balance from a deposit account standing in the name of a deceased client to be made to a current account in the name of the executors or administrators, upon production of the probate of will or letters of acjministration only, without taking a cheque or authority from the executors or administrators to make such a transfer 1 ANSWER: It is not customary to do so without request, and surrender of the deposit receipt where necessary. 588. QUESTION : A B has a deposit account at a bank for which he holds a receipt (not transferable) for ,300. He writes to the bank, directing the transfer of 100 from the deposit to current account, but does not send the receipt. The banker writes three times for the receipt without result. Is the banker justified in refusing to honour the cheques of the depositor on the current account, supposing that they overdrew the current account pending the return of the deposit receipt? ANSWER: No. 589- QUESTION: If a deposit receipt be transferred to a third party, can a bank legally refuse payment of the deposit receipt against a debt due to it by the depositor not specifically stated to be covered by the said deposit? Is this a case in which a banker's lien would hold? ANSWER: A deposit receipt is not transferable, and the amount can be held by the banker against a debt due to him by the depositor. 590- QUESTION : In the answer to Question 589, it is stated that " a deposit receipt is not transferable, and the amount can be held by "the banker against a debt due to him by the depositor." Would this apply to a deposit receipt, which is as follows : "No. "London,_ 189 . "Received from " the sum of . as a Fixed Deposit for six " months, bearing interest at the rate of per cent, per annum. " "(Banker's signature.)" and which has printed on the back 189 " Messrs. (Banker's name and address.) " Pay or bearer, the amount of Deposit with interest thereon, as stated on the other side. " (Depositor's signature.)"? M 2 164 Questions on Banking Practice. DEPOSIT ACCOUNT continued. ANSWER: Although the deposit receipt is not transferable, the debt owing by the banker to his customer can be assigned by any sufficient instrument. We think that the form endorsed on the deposit receipt operates as an assignment of the debt to the persons named therein, but not to the bearer. The assignee's title would not be complete until notice has been given to the banker, who could hold the amount of the deposit against a debt due to him by the depositor, contracted before the receipt of the notice of the assign- ment. 591. QUESTION: A married woman opened a deposit account with the authority of her husband before the Married Women's Property Act of 1882. After the Act had been in force some years, the husband died : 1. What liability is the banker under with regard to honouring her signature? 2. Can she draw against the account? 3. Or do the executors take over the balance as part of his estate ? ANSWER: By the Act of 1882, sec. 6, the control of the account became vested in the wife without reference to the authority of the husband. 592. QUESTION : Does a deposit receipt, standing in the name of a maiden lady until after her marriage, require, when dealt with, the endorsement of her husband as well as of herself, and what would be the correct form of endorsement? ANSWER: The endorsement of the husband is unnecessary. As regards the form of endorsement we see no reason why it should not be in the lady's married name alone, provided that the bank are satisfied as to her identity. 593. QUESTION : Is there any law by which a banker is allowed to deduct income tax from interest paid on deposits 1 ANSWER: The Inland Revenue authorities have, under the authority of the Income Tax Acts, instructed bankers to deduct income tax from the interest on fixed deposits, and it is done by the Colonial Banks taking such deposits. No tax is deducted from the interest on ordinary deposit accounts of English banks repayable on demand or at short notice. 594. QUESTION : Is it a general custom for banks to stop the interest on deposits subject to notice of withdrawal at the date of such notice having been given, or at the date of the expiration of such notice? ANSWER : At the date of the expiration of such notice. Questions on Banking Practice. 165 DEPOSIT ACCOUNT continued. 595. QUESTION : If a depositor, whose deposit falls due on a Sunday, demands payment on the preceding Saturday, is the banker justified in refusing payment until Monday, the day after it becomes due ? What is the general rule as to deposits falling due on Sundays ? ANSWER: All deposits falling due on Sunday, are payable on the succeeding business day. 596- QUESTION : Can a banker set off a sum of money for which a deposit note has been given against a balance due on current account to the bank, the customer having failed, and the deposit note being held by the official liquidator, or would the latter claim the amount on deposit and make the bank rank with other creditors? Would the case be different if the bank held the deposit note for safe custody, endorsed or unendorsed? ANSWER: A banker can unquestionably regard a balance on deposit as a set-off against an overdrawn current account. 597- QUESTION : The reply to the previous Question is " A banker 41 can unquestionably regard a balance on deposit as a set-off against " an overdrawn current account/' but would that apply in a case where the overdraft and deposit had been running for some years, and the latter is ultimately proved to be trust money? Might it not be held that the fact of the customer receiving a lower rate of interest than he was charged on his overdraft was in itself a notice to the banker that the deposit was not his own money? ANSWER: The previous answer would hold good, nor would the different rates of interest alter the case. 598- QUESTION : It is the custom for Irish banks, when repaying the amount of a deposit receipt to another bank, to require the depositor's discharge to be guaranteed ; but some banks in England do not make this a rule. How, in the latter case, is the issuing bank protected, having regard to the non-negotiable character of the document, and seeing that, if lost or stolen, its possession would convey no title to the holder? ANSWER : The issuing bank is probably not protected in paying over the amount of a deposit receipt to another bank without the instructions of the depositor. 599- QUESTION : Is a banker justified in returning the cheque of a customer who has money on a deposit note on the ground that the current account against which the cheque was given is over- drawn ? ANSWER : A banker might possibly be justified in refusing cheques 166 Questions on Banking Practice. DEPOSIT ACCOUNT continued. drawn against the current account, more especially if the deposit were subject to notice of withdrawal, but it would not be customary for him to do so. 600. QUESTION : What course should a banker take in a case of stolen deposit receipt when payment is demanded by the true owner of the receipt? Would a person who advanced money on the above after it was stolen have any lien on it, supposing that the money advanced was given in good faith ? ANSWER : The amount of the deposit receipt would be paid to the depositor, under guarantee in respect of the non-production of the receipt. The receipt, not being a negotiable document, and being usually marked "Not transferable, would convey no title to the holder, who might have advanced money upon it. 601. QUESTION : Why are deposit receipts marked " not transfer- " able " or " not negotiable " 1 ANSWER : In order to call general attention to the conditions under which they are issued. 602. QUESTION: A customer of the bank who has a deposit account cashes a cheque over the counter drawn on a London banker the cheque is returned marked n/s, and the customer is duly notified of the fact. In case he does not pay the cash for the returned cheque, is the bank justified in debiting his deposit account with the amount, and could he dispute such a debit ? A.NSWER : The banker is justified in debiting the deposit account. DIVIDEND WARRANTS 603. QUESTION: Cheques in payment of interest or dividends are frequently drawn payable to a party named " and another." Is a banker safe in paying on the endorsement of either party without the other, or are both necessary ? ANSWER : One signature only is necessary to a dividend warrant. See Chalmers' edition (1882) of Bills of Exchange Act, 1882, sec. 97, sub-sec. 3 (d), and note thereon. When only one proprietor is named in the warrant, the banker should not pay on any other signature without instructions from the company issuing the dividend warrant. Questions on Banking Practice. 167 DIVIDEND WARRANTS con^m/ed. 604. QUESTION : A dividend warrant is signed at the bottom by the proprietor in the place marked for the purpose, but in addition to so signing he also endorses the warrant " pay to A. B. or order." Is the banker bound to get the endorsement of A. B. 1 ANSWER : It would be advisable for him to do so. 605. QUESTION: Is a banker justified in returning unpaid, on the ground that the endorsement is irregular, a dividend warrant payable to the order of Mary A. Brown and endorsed by her in the place marked for the purpose, "Signature of Proprietor. " Mary A. Evans, " Mary A. Brown," the presumption being that the payee was married subsequent to the date on which the warrant was issued 1 ANSWER: As this relates to the discharge of a dividend warrant, the banker would be justified in requiring the authority of the company to pay with the signature of the proprietor as stated. 606. QUESTION : Is a banker justified in refusing to pay a dividend warrant signed "per pro" the proprietor and guaranteed by a banker ? ANSWER: Dividend warrants require the discharge of the pro- prietors or stockholders, and bankers are not justified in paying them without such discharge unless specially authorised to do so by the company. If a paying banker pays under a guarantee, he does so at his own risk. 607. QUESTION : Railway and other companies have been in the habit of sending warrants for dividend and interest on stock and shares to be placed to the credit of a customer's account, the counter- parts of the warrants showing that the stocks and shares stood in other names than the customer's. (1) The customer having died and the companies continuing as before, what is the duty of the bank ? (2) And what is the usual practice in case of the death of a customer when the stock or shares stood in the customer's own name? ANSWER : (1 ) Dividend warrants sent for the credit of the account of a dead customer should be returned to the company. (2) The warrants are not necessarily returned to the company, but 168 Questions on Banking Practice. DIVIDEND WARRANTS continued. may be placed to the account of the deceased customer to be dealt with by his representatives. 60S- QUESTION: Would a Clearing House banker be justified in returning an interest warrant payable to order in favour of two payees, but only endorsed by one ? ANSWER : The custom of requiring only one signature in discharge of a dividend warrant would probably not apply to an interest warrant, and consequently the discharge of both payees would be required in the case quoted. 609- QUESTION : Referring to the note (d) on p. 65 of Chalmers' book on the Bills of Exchange Act, 1882, it is stated to be the custom of bankers to cash on the signature of one payee only, dividend warrants made out in favour of two persons. This ignores the consideration that the payees may not be the owners of the stock or shares represented, but simply trustees to receive and deal with the dividend in a specific way (1) In the event of a banker paying a dividend warrant dis- charged in this way, could he be held responsible, sup- posing that one of the payees received and misappropriated the money? (2) Would the banker be protected by the fact that the warrant contained no notice of trust 1 ? (3) Is there not a probability that a Court of Law would over- ride the custom (presuming such a custom to exist), and hold that the warrant to be validly discharged must bear +he signature of each payee 1 ANSWER: (1) We do not think the banker could be held respon- sible in the circumstances mentioned. (2) He is not affected by the fact that the money is trust money, nor (3) do we think it probable that a Court of Law would override this well-established custom. 610- QUESTION : A dividend warrant payable to two persons may be endorsed by one only. Is anything required further than one of the names without reference to the other, such as the phrase "for self and other"? ANSWER : One name only is sufficient. 611. QUESTION : The undernoted dividend warrant has been re- fused payment by the bank who give the reason " Requires signature " and address of John Malcolm." Questions on Banking Practice. 169 DIVIDEND WARRANTS continued. (1) Are they within their legal rights in doing this? (2) Would they be obliged to pay it to "the bearer" without the signature of either proprietor ? [COPY.] " 77th Dividend to December, 1887. " No. 7864. 10 Shares Brannox Branch. ' u To The Cowes Bank, Limited. " Pay John Malcolm and Mary Malcolm or Bearer. "Ten pounds "for dividend of 1 per share to 31st December, 1887. ** 10. James Noble, Director." ,, *r T i / Proprietor's Signature, \ 'Mary Malcolm ( P and Addre f s ) ANSWER : (1) It is the ordinary usage to pay dividend warrants on the signature of one of the proprietors. Special Acts of Parliament generally authorise the practice, and the general usage is preserved by sec. 97, sub-sec. 3 (d) of the Bills of Exchange Act, 1882. (2) The document is not complete without the signature of the pro- prietor and should not be paid to " bearer " without such signature. 612. QUESTION: The St. Clement's Co. issue their dividend warrants crossed " & Co." May the banker on whom they are drawn cash them across the counter ; if not what is his best way of dealing with them ? ANSWER: The banker should not cash them across the counter, but treat them as cheques. ENDORSEMENTS 613. QUESTION : " If a banker cannot charge his customer with a " bill paid by him on a forged endorsement, whether of the payee or " a subsequent endorsee, can he at any time after payment, on dis- " covery of the forgery, recover the money from the party to whom " he paid the bill 1 How does a banker protect himself against loss " in paying the bill to a stranger presenting it? " In view of the important issues to bankers involved in the fore- 170 Questions on Banking Practice. ENDORSEMENTS continued. going question, it was thought desirable by the Council to obtain the opinion of Mr. Arthur Cohen, Q.C., and Mr. Chalmers on the point. The following is a case submitted to them with their opinion thereon. (CASE.) It seems to be well settled that a banker who pays a cheque, the drawer's signature to which is forged, or a bill the acceptance to which, or any endorsement necessary to complete the title to which, is forged, cannot debit his customer's account with the amount of such cheque or bill ; and in Cocks v. Masterman (9 B and C 902) it was decided that bankers who had paid what proved to be a forged acceptance could not recover the money from the person to whom they had paid it, although on the next day, and immediately the forgery was discovered, they gave him notice and claimed repay- ment. The ground given for this decision was 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. It is presumed that the same principle would apply to the case of a cheque where the drawer's name is forged. In Bobbett v. Pinkett (L R, 1 Ex. D, p. 272) the judgment assumed as a matter of course that a banker who had paid a cheque with a forged endorsement could recover back from a bond fide holder the amount he had received, although in the particular case the latter had, after payment of the cheque by the banker, and upon the faith of that payment, paid away a portion of the amount received, and had thus altered his position. The question of the rights and liabilities of bankers in cases in which they have paid bills or cheques, where the signature of the drawer, acceptor, or endorser is forged, is one of great importance to them. You are requested to advise on the following points : 1. Whether a banker paying a bill can recover the amount from any of the parties thereto, or any other person, and after any and what lapse of time after the payment. (a) Where the acceptance (that of his own customer) is forged. (6) Where an endorsement necessary to complete the title to the bill is forged. 2. Your opinion is requested upon the same question with regard to a cheque where (c) The drawer's name (that of the banker's own customer) and (d) An endorsement necessary to complete the title to the cheque is forged. Questions on Banking Practice. 171 ENDORSEMENTS continued. 3. You are requested also to advise how a banker can protect himself, in the case of a bill or cheque presented by a stranger against loss if the bill or cheque should prove to have been tainted by forgery. (OPINION.) I fa 2. The law on the subject of money paid by mistake is in an unsatisfactory state. It is not possible to reconcile either the decisions themselves or the reasons on which they are founded. We think, however, that the true view now is, that negligence on the part of the payer is immaterial, and that in all the four cases put to us the banker could recover the money paid from the person who presented the bill, if he gave notice to the latter, before his position had been altered. Where, however, the position of the party who receives payment has been altered before he is notified of the pay- ment under mistake as, for instance, when it is too late for him to give a valid notice of dishonour or where he is an agent for collection, and has paid over the money to his principal we are of opinion that the money paid cannot be recovered back from him. 3. Except in the cases where a banker is protected by statute (see the Crossed Cheques Act, 1876, and the 16 at p. 534, Leese v. Martin, 17 L.R., Eq. 225.) M. D. CHALMERS. January, 1882. 1000. QUESTION: A customer deposits with his banker bonds for safe custody with instructions to cut off the attached coupons and collect them as they become due, placing the proceeds to the credit of his account. Is the effect of these instructions to give the banker a lien on the bonds? If such is the effect, is the lien rendered invalid or prejudiced by reason of the banker having given an acknowledgment in these terms, viz., " Received bonds for safe " custody and without responsibility " ? ANSWER : The banker has a lien on the bonds in the event of the customer being indebted to him, and the form of acknowledgment would not invalidate the lien. 1001- QUESTION : A banker receives direct for his customer, under proper authority, dividends on Consols, stock, &c., standing in 270 Questions on Banking Practice. LIEN continued. the names of trustees on his customer's behalf. In anticipation of the next dividend he allows his customer to overdraw his a/c. Before the dividends are received the customer dies. Has the banker any lien on the next dividends or can the trustees claim them? ANSWER : No. They belong to the trustees. 1002. QUESTION : An account is opened in the name of the " Patent Bottle Co., William Jones, sole partner," W. Jones alone to sign cheques. The proprietor's brother is assisting in the busi- ness and endorses cheques paid into the account as " partner." He has also a deposit account in his own name (Thomas Jones). He acts generally with regard to the firm's account, and at his request the banker allows the account to be overdrawn for a stated time, but before that time expires the Patent Bottle Co. is in liquidation. Has the banker any lien on the deposit account of Thomas Jones as security for this overdraft, and would the fact of his endorsing cheques payable to the firm as " partner " be sufficient evidence of such partnership to give the banker such a lien? ANSWER: As the account is opened in W. Jones's name as sole partner, the banker would have to produce strong evidence of actual partnership to give him a lien on Thomas Jones's deposit account. 1003. QUESTION : Has a bank a lien on its shares in the case of a proprietor, having an account at a branch, dying or becoming in- solvent while in the bank's debt 1 ANSWER : This depends on the bank's Articles of Association. 1004. QUESTION : Is a memorandum of deposit of deeds of real estate by A for the account of B & Co., of whomsoever that firm may consist, a good security for advances made after A's death. ANSWER: No. 1005- QUESTION : An official receiver claims that a memoran- dum of deposit of deeds or property, constituting an equitable charge, will not be good against him unless under seal. Is this correct? ANSWER : No. A seal is not required. 1006- QUESTION : When a current account has become over- drawn, and a sealed parcel of deeds or a locked plate chest, the key of which is in the customer's possession, is left with the banker for safe custody, would the bank have a lien thereon in case of need? Would it make any difference if either were left with the bank Questions on Banking Practice. 271 LIEN continued. whilst the current account was in credit, and which subsequently became overdrawn'? ANSWER : The deeds or plate-chest being deposited with the banker for safe custody only, he is regarded as an ordinary bailee, and has no lien; nor would the condition of the current account make any difference. 1007- QUESTION: In the event of a banker in the ordinary course of business making an advance to his customer upon bonds payable to bearer, and afterwards receiving notice that the bonds in question do not belong to the customer, but to trustees (say of a marriage settlement), would the banker's lien hold good as against the claim of the trustees? ANSWER : Recent decisions render this doubtful. 1008- QUESTION : A, B and C have a current account with their bankers in the name of B, D and F, the style of the firm. A and B having a business apart from C, have also a current account with the same bank, in the name of B and D. The bank has money on Deposit Account, the receipts for which are issued in the joint names of A B and C. Has the bank a lien on these moneys for any liability on the current accounts of B, D and F, or of B and D 1 If so, would the lien be affected if the bank had been verbally informed, when the account was first opened, that the money was placed on deposit, because it belonged to clients of the firm, though no notice was given in respect to the sum now held 1 ANSWER : The bank would have a lien on the deposit account, in respect of the current account of B, D and F, but no lien in respect of the current account of B and D. Any such notice given to the bank, as is suggested by the last paragraph, would, as a rule, be disregarded by them. 1009. QUESTION : John Jones, a country stockbroker, having an account with a provincial banking company, instructs them to pay over, through their London agents, a given sum of money on delivery of stock certificates in the name of Thomas Hartley. (a) Would the banking company be justified in debiting their customer's account with the advance before the delivery of the certificates and so exhausting his credit balance, and then dis- honouring a cheque subsequently presented? (6) Would the bank be held liable in an action at the suit of the customer by dishonouring the cheque? (c) Would the bank have a lien on the certificates pending the customer's account being put in order? 272 Questions on Banking Practice. LIEN continued. ANSWER : The provincial bank would be quite justified in debiting the account of John Jones, when instructing their London agents to pay against certain stock certificates, and if thereafter an in- sufficient balance remained at the credit of Jones' account, the provincial bank might dishonour cheques subsequently presented, and Jones would have no remedy at law against the bank. The provincial bank would have no proper lien over the stock certificates in question. (1) If Hartley had paid Jones for the stock, as the provincial bank could not retain the certificates as against Hartley. (2) If on the other hand the stock had not been paid for by Hartley, the bank might possibly be permitted to assume whatever rights Jones had to the certificates, but this is doubtful in the event of Jones' bankruptcy. MINOR 1010. QUESTION : A banker receives a sum of money on deposit at interest in the name of " John Jones for William Brown, a "minor" John Jones draws the amount and interest on the 6th May, and becomes a bankrupt on the 9th May, having applied the above trust money to his own uses. The minor, by his next friend, sues the bank. Is the bank liable 1 Can they be held to stand in a fiduciary capacity? ANSWER: We think the result of the cases is to establish that a banker is bound to honour an order of hi-j customer with respect to the money belonging to that customer, although the account is opened in the name of the customer as trustee, unless the banker is aware that the trustee intends to misapply the money. If there- fore Jones could be considered as beyond question the only customer of the banker in the case supposed, we think the banker would be held justified in honouring his cheques. The difficulty in answering the question arises from the mode in which the account is opened, which appears to us both unusual and irregular. It may be con- tended that John Jones merely acted as agent for Brown in opening the account, and that it is not the- case of a trustee opening an account in his own name, although as the trustee for another. If this view should prevail, the banker would be held liable, if, without the consent of Brown, he paid the money to John Jones, and it was misapplied. 1011- QUESTION: An open cheque was cashed by A, a banker, drawn upon another banker for B, a minor, to whom it was made payable " or bearer." The cheque was returned unpaid, with Questions on Banking Practice. 273 MINOR continued. answer " Payment stopped." No notice of the stopping had been given to the banker who cashed the cheque, or to the payee. The banker cannot sue B for the money, as he is under age. Has he not a good case against the drawer of the cheque? ANSWER: Yes. 1012. QUESTION : A deposit receipt is issued in these terms : " Received from John Smith, in trust for his son Alexander, a minor, " the sum of 100," which is placed to his credit on deposit account. The son comes of age and wants to draw the money. Is the bank safe to pay on his endorsement alone? ANSWER: It is most unusual for banks to issue deposit receipts recognising a trust. Should they do so, the question would depend entirely on the terms of the trust. 1013- QUESTION : Does a banker run any risk in opening and conducting an account in the name of a minor, (a) if it is kept in credit; (6) if it is overdrawn against a covering security? ANSWER : As a minor cannot sign or draw a valid cheque, except as agent, the banker Vould incur risk in either case. 1014. QUESTION: A young married lady, a minor, opens an account with a bank having a branch in th.3 town where she lives. Is not the bank acting contrary to banking law and usage in allowing a minor to keep a current account with them? If the lady's husband gave authority to the bank to allow her to keep the account, would not the bank be then justified in doing as he is requested ? ANSWER: It was thought necessary in the Savings Bank Acts Amendment Act of 1863, to provide specially that where the trustees of any savings bank shall have received a deposit of money from a person under the age of twenty-one years, the receipt of such person shall be a sufficient discharge, notwithstanding his incapacity or disability in law to act for himself. Whatever banking usage may be, we think that it is not com- petent for a minor so to contract with a banker, as to establish between them the ordinary relation of banker and customer. We think the authority of the lady's husband to the bank to allow her to keep the account would make no difference. Since the Married Women's Property Act, the money of a married woman no longer belongs to her husband. Her disability, in this case, arises, not from her being a married woman, but from being a minor. 1015. QUESTION : Can money, placed on deposit at a bank is the name of a minor, be legally withdrawn before he comes of age? 274 Questions on Banking Practice. MINOR continued. In the event of its being withdrawn, could the customer demand payment a second time on his becoming twenty-one years of age? ANSWER : If money is received in the name of a minor, it cannot, in the absence of special circumstances, be withdrawn without the risk of the banker being called upon to pay it over again after the minor comes of age. 1016- QUESTION': Jones and Son open an account, the junior partner being a minor, and they desire that either partner shall draw cheques and accept bills in the name of the firm. The account is to be sometimes overdrawn. There is no deed of partnership. Is it the case that, as the senior partner is liable for his partner's contracts, a bank might safely permit an account to be opened under the above conditions? ANSWER: No. It is very doubtful whether an infant can draw a valid cheque ; " a banker who cashes the cheque of an infant does so "at his own risk, for an infant cannot give a legal discharge." (See Grant's " Law of Bankers," 5th edit., p. 36.) 1017. QUESTION : Can a customer of a banker authorise a minor to sign cheques on his behalf, and is a banker justified in accepting the signature of an infant with the consent of the customer? ANSWER: There is nothing which incapacitates a minor from being an agent, and if a customer of a bank authorises a minor to sign cheques on his behalf, the banker is justified in honouring cheques so signed. MORTGAGE 1018. QUESTION : Are the equitable mortgagees of a lease liable for the due fulfilment of all the covenants in the event of the lessee failing to carry them out? Would the position of a legal mort- gagee be the same ? ANSWER: The equitable mortgagees of a lease are not liable for the due fulfilment of the covenants in the event of the lessee failing to carry' them out. Nor is a legal mortgagee liable if his mortgage is taken in the usual form, viz., by way of underlease and not by way of assignment of the whole term. Of course, in either case the non-performance of the covenants may entail forfeiture of the lease, and the consequent loss of the security. Questions on Banking Practice. 275 MORTGAGE continued. 1019- QUESTION : When a mortgage has been obtained on a ship to secure an account current, and has not been registered, can the mortgagee realise after the bankruptcy of the mortgagor? ANSWER : We think not. 1020. QUESTION : Building Societies which are registered under the Act of 1874 are empowered to borrow to the extent of two- thirds of the amount secured to the Society by mortgage from its members ; does the amount advanced upon preference shares form a part of the two-thirds they are empowered to borrow 1 ANSWER : Unless there is something special in the constitution of the Society, it would not be considered to form any such part. 1021. QUESTION : When the deeds belonging to a firm are deposited by way of equitable mortgage to secure a banking account, should the schedule be signed by the individual partners, or would the signature of one partner for the firm be sufficient? On the withdrawal or death of a partner, should the securities be re- deposited by the survivors? ANSWER: The schedule should be signed by all the parties who are stated in the deeds to be the owners of the property ; also by the firm borrowing. On any change in the firm the securities should be re-deposited. 1022. QUESTION: The London bank lends a customer on January 1st 1,000, taking as security a legal mortgage on freehold property. On March 1st following, the customer repays the whole of the loan, no endorsement to the effect being made on the deed. In the event of the customer again requiring to borrow on the same security, is it necessary to obtain another mortgage, or would the one signed on January 1st be sufficient? ANSWER : A new deed should be executed applying to the further loan the powers of the original mortgage, otherwise the bank would only have the powers of an equitable mortgagee by deposit. 1023- QUESTION: The London bank lends a customer on 1st January 1,000, taking as security a legal mortgage on Freehold Property. On the 1st March following the customer pays off 500 ; in the event of the customer afterwards requiring to again borrow on the same security 500 (making up the loan again to 1,000), is it necessary to obtain another mortgage from him, or would the one signed on 1st January be sufficient? Of course no endorsement was made on the deed on the 1st March, that 500 had been paid off. T 2 276 . Questions on Banking Practice. MORTGAGE continued. ANSWER: Another legal mortgage is not necessary, but such a memorandum as would amount to an equitable charge of the pro- perty should be obtained. In the absence of any such memorandum, the first mortgage (having been given for a specific advance) could only be held as security for so much as would then be owing. The bank would have no lien for the second advance, as when a banker takes a security for a special advance, no lien exists upon such security for any further sum than the particular amount specified, or so much as may remain owing. If no such memorandum be taken as that referred to, the second advance of 500 would not prevail against an intervening encumbrancer. 1024. QUESTION : Banker lends on mortgage of freehold or leasehold property. His customer claims rebate of income tax on interest charged. Is it obligatory on the banker to refund to borrower and would the case be the same if only an equitable charge were taken? ANSWER : In both cases the banker is entitled to his full interest without deduction. NOTES 1025. QUESTION : Can a party holding notes payable to bearer, on demand, of a bank in liquidation claim interest thereon from the date on which payment was stopped 1 ANSWER: This question will be best answered by the following quotation from Walker's "Treatise on Banking Law," p. 134: ' Where a company issuing notes has gone into liquidation or 1 become bankrupt, the holders of its notes will be allowed interest ' at the rate of 5 per cent, from the date on which they demand 'payment from the liquidator. (In re East of England Banking 'Company, L. R. 4, Ch., Ap. 14.)" See also Grant's "Law of 'Bankers," 5th edit., p. 351. 1026- QUESTION : A customer of a bank finds a 5 note on the floor outside the counter, and hands it over to the cashier. A few weeks afterwards the customer calls again, and learning that no application has been made in the meantime by the loser, claims the note. The bankers refuse to give it up, contending that it belongs to them because found on their premises. The cash balanced cor- rectly on the date the note was found. Who has the best claim to it? ANSWER : The finder. Questions on Banking Practice. 277 NOTES continued. 1027. QUESTION : A presents a cheque for 30 at B and Co., of Whitetown, note-issuing private bankers, who pay him in notes of another private note-issuing bank, having no branch at Whitetown, so as to save them the trouble and expense of remitting the notes for collection in the usual banking course. Is this legal? And can a private note-issuing banker reissue the notes of another private note-issuing banker, with whom he has no agency or other con- nection? ANSWER : Such notes are not in any case legal tender, but should no objection be made to them, there is nothing to prevent the banker paying away such notes. 1028- QUESTION: As silver is legal tender up to 40s., is the Bank of England, when a 5 note is presented for payment, justified in paying 3 in gold and the remainder in silver? ANSWER: No. They are bound to pay the whole amount in standard gold coin. 1029. QUESTION: The Bank Act of 1834 provides that no other company can issue notes in London or within sixty-five miles thereof. From what point should this measurement be taken? ANSWER : From the Royal Exchange. 1030. QUESTION: The rightful owner of a Bank of England note for 100 loses it, and, knowing the number, stops the payment at the Bank of England. The note is found by another person and presented at the Bank either personally or through a banker, and refused by the Bank of England on the ground of the payment being stopped. Are the Bank justified in refusing payment, and is their action good in point of law, the document being payable to bearer? ANSWER : The facts set out in the question are not in accordance with practice, as the note being payable to bearer, the Bank cannot refuse to pay it. It is understood, however, that the Bank do all they can to assist in tracing notes which have been acquired illegally. 1031. QUESTION: Are IrisL and Scotch notes legal tender in their respective countries? ANSWER: No. 1032. QUESTION : Is a bank which issues bank notes compelled to have a distinct and separate license, and pay a separate 30 for every town where these notes are issued, or are four licenses sufficient ? 278 Questions on Banking Practice. NOTES continued. ANSWER: By 7 and 8 Vic., c. 32, sec. 22, a banker must take out a separate license for every place where he issues notes, except that no banker who, on or before May 6th, 1844, had taken out four licenses for issuing notes at more than four places, can be required to take out more than four licenses to issue notes at the places named when the Act was passed. Should the banker issue notes at any other places, a separate license would be required at each of those places. 1033- QUESTION : Can a country bank, issuing its own notes, issue those notes in any town in which it may open a branch one day in the week or oftener, without paying an additional banker's license for each branch? ANSWER : The country bank cannot do so without paying the charge for a license (30). The bank would have to do this whether the branch were open one day or six days in the week. 1034. QUESTION : In the event of a private country bank being converted into a limited liability company (since the passing of the Bank Act) does not its note issue become cancelled on account of the alteration ? ANSWER: By the provisions of sees. 11 and 12 of the 7 and 8 Viet., cap. 32, the Bank Act of 1844, a private country bank would lose its issue on becoming a joint stock company. NOTING 1035. QUESTION: A bill for 140 is accepted and made pay- able at the A B bank. Before maturity the acceptor removes his banking account to the E F bank (nearer to his residence, and less than a mile from his former bankers) ; the bill is presented by the clerk of R. and Co., notaries (acting as collecting agents for the endorser's bankers), at the A B bank, and, pursuant to instructions left, the answer is written on the bill " Refer to E F bank." The bill is not referred by the notaries of the last-named bank for pay- ment until the following day, with 8s. Qd. notarial charges thereon. Ought the bill to have been noted ? Could payment of the charges be legally enforced against the acceptor? ANSWER: The holder of a bill of exchange is only bound to present it where domiciled ; and in the event of the acceptor not duly providing for the same at the domicile he must bear the con- sequences thereof, including the cost of noting. It is customary in London for the clearing bankers to refer bills to one another in Questions on Banking Practice. 279 NOTING continued. cases when they are domiciled at one bank and provided for at another, but it is not actually incumbent on the holder to re-present to the second bank, nor would he do so if it were situate at some distance. 1036- QUESTION : It is usual for many country banks to send to the notary all bills to be noted twenty or thirty minutes before the hour of closing, in order to give him time to present them at the different banks before closing hours. Is this the legal course? Can charges so incurred be recovered supposing that, in the interval, funds are tendered to retire the bill? ANSWER: The presentation of a bill of exchange by a notary at any time during the twenty-four hours of the day of maturity is legal. In London the practice of bankers is to leave a notice with the acceptors of bills that are not paid on presentation, intimating that they can be taken up at the office of the presenting banker until the close of business, and it is not till after such hour that the bills are handed to the notary for notarial presentation ; the notarial charges cannot be enforced if payment is then tendered by the acceptor. 1037- QUESTION : An acceptance is made payable at the St. Michael's Bank, Cornhill, by a customer living in Camden Road. It is presented in the usual way, and refused payment, with the answer " Refer to acceptor." Can the notary legally demand two notarial charges for presenting at the bank where it is made payable, and also at the customer's private residence? Is it necessary to have it presented at Camden Road at all? ANSWER : It is customary for notaries in the case of bills, which have foreign endorsements, to which such an answer is given, to present at the acceptor's private residence, and to charge for so doing. OVERDRAFT 1038- QUESTION: A customer has an overdraft on current account secured by a deposit of deeds of his house. The customer produces to the banker the receipt for Property Tax paid on the house, and claims as of right an allowance off the interest charged to his current account, in respect of the overdraft. Previously to the claim as above made, the banker has paid tax claimed under Schedule D, as trade profits. Is the customer entitled to be allowed 280 Questions on Banking Practice. OVERDRAFT continued. the Property Tax claimed, and, if so, can the banker in any way re-claim it from the Inland Revenue? ANSWER : It would be quite contrary to practice. 1039- QUESTION: Goods consigned to various houses abroad are hypothecated to a bank by a customer as security for an over- draft incurred. These consignments are subsequently found to be unsaleable and the expenses of duty, warehousing, &c., exceed, in course of time, the value of the goods. Is the banker liable for the deficiency? ANSWER: The banker would not be liable unless the goods had been absolutely assigned to, and taken o*ver by, him. 1040- QUESTION: A bank holds for security against an over- draft certain railway stocks registered in the names of the bank's nominees. Is it essential that the bank should hold an authority from the customer to realise their security in case of need, without reference to him? ANSWER : Yes ; but, as a matter of courtesy, notice is usually given to him. 1041. QUESTION : A firm, having an overdrawn account at their bankers, fail. The partners of the firm have, at the same time, credit balances on their private accounts at the same bankers. Are the assets of the partners liable for the firm's overdraft? ANSWER: Bankers have no lien on the deposit of a partner on his separate account for a balance due to the bank from a firm. Watts v . Christie, ex parte McKenna. Walker on " Banking Law," p. 143. 1042. QUESTION : In the event of a customer being allowed an overdraft to the extent, say, of 2,000, would a banker be within his rights in refusing at any time, for private reasons of his own, to pay cheques when the account was only Dr. say 1,000? If it is necessary to give an account holder notice of reduction of limit before returning his cheques, what notice would be held to be sufficient ? ANSWER: A banker, having agreed to allow his customer an overdraft, has certainly no right to refuse to cash his cheques, so long as the account is within its limits. The amount of notice required to terminate the overdraft must depend on the terms of the original agreement. Questions on Banking Practice. 281 OVERDRAFT continued. 1043- QUESTION: A bank has an account with A (timber merchant) which is overdrawn, and also an account with A and B (timber merchants) which has a credit balance ; A fails. Has the bank any lien on the balance of A and B's account? If not, does it incur any liability in allowing B to draw the balance? ANSWER: Presuming the two businesses to be entirely distinct, the bank would have no lien on the partnership account. Whether B should be allowed to draw out the balance, this must depend as to the conditions agreed to, as to drawing cheques. 1044. QUESTION: On the 1st of January a customer writes to ask permission from his bankers to overdraw his account up to 1,000 until March, and they reply that they will be pleased to allow this. (a) Can the customer sue his bankers for any loss he might sustain through their refusing his cheques within the limits of time and amount agreed upon ? (b) Have the bankers the option of cancelling the agreement to overpay before its expiration, if it should suit them to do so ? ANSWER : (a) Yes ; (b) No, unless justified in doing so by altera- tion of the circumstances. PARTNERS 1045. QUESTION: A father and son have an account in the name of " W. Sorley and Son," either to draw in the name of the firm. The father, W. Sorley, has an account in his own name alone. Would a bank incur any liability in allowing the son to pay in a cheque, payable to W. Sorley and endorsed by him, to the joint account 1 ANSWER: No. 1046. QUESTION: A, B and C, a firm of merchants, have an overdraft at their bankers of 15,000 which is partially secured by equitable mortgage to the bank of the property owned by the firm, and valued at 10,000. A retires from the firm. When, and in what manner, would the private estate of A be relieved from liability on contracts existing at the time of his withdrawal, e.g., upon the deposit of the title deeds of the property? Would A be liable, in the event of the firm's title to the property proving defective ? ANSWER : A is not relieved from liability until the whole of the overdraft is paid off. 282 Questions on Banking Practice. PARTNERS continued. 1047- QUESTION : An account is kept in the names of " Smith " and Jones " ; and both of them draw cheques and accept bills under the signature of " Smith and Jones." In the event of, say, Jones dying, can the banker continue to honour Smith's cheques, &c., on the account signed in the usual manner? ANSWER : In the event of the death of either Smith or Jones, the balance of the account would be available to the survivor, under his usual signature of " Smith and Jones." 1048- QUESTION : Would a banker incur any liability by acting upon the mandate, signed by one of two partners in the firm-name, authorising a third party to draw on the firm's banking account ? ANSWER : In the absence of any objecting stop by the other partner, the order would be sufficient. 1049- QUESTION: A and B, partners in trade, open a current account in their joint names, at the same time giving instructions to the banker to honour cheques signed by either of them. Sub- sequently a difference arises. A then writes to the banker request- ing him not to honour cheques unless signed by himself as well as B. Can one partner thus restrain the other 1 ? ANSWER : It is laid down in " Lindley on Partnership " that if one partner directs the bankers of the firm not to pay a cheque of the firm, the bankers incur no liability to the firm if they follow such directions. The general principle upon which each partner has power to draw cheques in the name of the firm is, that he is con- sidered the agent of the firm for so doing, but the agency, and consequently the authority to draw cheques, may be revoked by special notice by either partner. Our answer would have been the same if A and B had not been partners in trade. 1050- QUESTION: A and B, partners in trade, have a current account with a bank in their joint names as a firm ; B dies, and at the time there is a considerable balance in hand ; A carries on the business (having power to do so under the deed of partnership) until something definite is arranged with B's executors as to the disposal of B's share : would the bank be quite safe in allowing him to do his business through the old account, and so give him the power to withdraw the balance if he so wished 1 ANSWER: In the case put, the balance of the account would be available to the survivor without the banker incurring any liability. 1051- QUESTION : A banker has a creditor account in the name of a firm composed of three partners. In the event of one partner Questions on Banking Practice. 283 PARTNERS continued. retiring, should the banker (a) close the account, taking a cheque for the balance and transferring it to an account in the name of the new firm, which is the same as the old one, or (&) is he justified in continuing the account as before, simply striking out the name of the retiring partner from the ledger? ANSWER : It being a creditor account, the course suggested in (6) is the one usually adopted. 1052. QUESTION: A, B and C have an account with their bankers in the name of A and Co. When the account was opened it was arranged that cheques should be signed by all three partners. Upon the decease of C, intestate, would the bank be justified in paying the balance of the account upon the signature of the sur- vivors, or would the signature of the administrator be necessary 1 ANSWER : The bank would be justified in paying to the survivors in the case of a joint account on proof of death. 1053. QUESTION: A cheque is signed by a partner in a firm thus, " Jones, .Robinson and Co." The partner signing dies before presentation for payment, and the bankers have notice of his death. Can the bankers pay, or does the death of the partner act as a revocation of the power of the bank to pay upon the cheque, as in the case of an individual drawer? ANSWER : The death of a partner does not invalidate the firm's signature as signed by him previous to his decease. 1054. QUESTION : A surviving partner is able to give a good discharge for payments made to him. Is the case similar when one partner in a firm becomes bank- rupt? Would the bank be protected as against the trustee in bank- ruptcy, in allowing a remaining partner to draw any outstanding balance of account? ANSWER: Yes. 1055- QUESTION: Messrs. Smith & Co. keep an account at the St. Clement's Bank. One partner files a petition in bankruptcy ; what is the duty of the bank respecting the balance standing to the firm's credit? Should they pay the cheques drawn by the remaining partners of the firm ? ANSWER : In the absence of special circumstances, the bank may continue to honour the cheques drawn by the firm. 284 Questions on Banking Practice. PARTNERS continued. 1056. QUESTION : What effect has the bankruptcy of a partner on the banking account of the firm? ANSWER: None. 1057. QUESTION : An account is opened at a bank in the name of a firm A B and C, and authority is given to honour drafts signed by any of the partners on behalf of the firm. After some time A leaves the firm, and notice is given to the bank no longer to honour his signature. In the absence of special instructions, should such an order be held to include bills accepted by A on behalf of the firm prior to his retirement? ANSWER : Such order would not apply to signatures written before the date of the order to the bank, but it is usual for customers to give special instructions to banks on the subject. 1058. QUESTION : A current account is opened in the names of " Samuel and John Smith," both partners to sign " Samuel and John " Smith," and cheques are so signed and paid ; but, after a time, the banker has a cheque presented to him for payment, signed, " Pro Samuel and John Smith. " Samuel Smith." If the banker is satisfied that the signature is that of Samuel Smith, the partner, ought he to pay the cheque? ANSWER : It is difficult to see what risk a banker would incur by paying a cheque under the circumstances named. 1059. QUESTION : Messrs. Brown, Jones and Robinson keep their account at the St. Clement's Bank. Each of the partners also keep their private accounts there. The firm have been in the habit at the close of each year of instructing the bank to transfer from the partnership to the private accounts certain sums of money presum- ably out of the profits of the firm. On January 1st, 1896, orders were received by the bank to transfer to each of the private accounts of Messrs. Brown, Jones and Robinson, the sum of .1,500. On the preceding day Mr. Brown dies suddenly, and the bank have know- ledge of his death, but are unaware as to who are his executors. Should they nevertheless transfer the money to his account? If not, what course should they adopt? ANSWER : There is no objection to the money being placed to the account of the deceased and this is the practice usually followed. Questions on Banking Practice. 285 POLICY OF ASSURANCE 1060- QUESTION: Supposing a policy of life insurance in a mutual office to be accepted as collateral security for an advance, and either assigned by deed or deposited on a memorandum, the office being notified of the lien ; in the event of the liquidation of the life office, could the person accepting the assignment be put upon the list of contributories 1 ANSWER : We think that under no circumstances could the persons with whom a policy has been merely deposited as collateral security be liable to be placed on the list of contributories. With regard to the liability of persons to whom the policy has actually been assigned by deed, no positive answer can be given without seeing the constitution of the company in which the policy is effected. It is difficult however, to see how a mere mortgagee can have placed himself in the position of a proprietor, so as to render himself liable as a contributory. 1061. QUESTION : Is it safe for a banker to lend money on a life policy taken out by a husband, and expressed, on the face of it, to be for the benefit of his wife, or wife and children, under the Married Women's Property Act, if both execute the deeds of assign- ment? ANSWER : It is against the usual practice of bankers so to do, and in the latter case it would be decidedly unsafe, as it is not possible to bind the children. 1062. QUESTION: A deposits a policy of insurance on his own life to cover overdraft of bank to B. A second charge is given upon this policy to C, who duly notifies his claim to the bank. Sub- sequently B pays off his liability and demands, with the authority of A, the surrender of the policy. Can the bank so surrender the policy, or must it hold it in trust for C? ANSWER: The bank, having received notice of the charge, would not be justified in giving up the policy. 1063- QUESTION: In a case where a life policy for 500 is deposited with a bank, and " all right and title therein assigned to " the extent of 500," would this carry the whole policy and bonuses, although at the end of the deed it is specified that " if " there be any surplus, then to pay the same to the said "(depositor)"? ANSWER : This would not carry the whole policy and bonuses ; the surplus, after satisfying the claim of the bank, would be payable to the depositor. 286 Questions on Banking Practice. POLICY OF ASSURANCE continued. 1064- QUESTION: Is a written deposit and undertaking to assign a life policy, and notice given to the Insurance Co. (although the latter may decline to recognise it on the ground that it is not a legal assignment) a valid security for a banker 1 Is the notice binding in any case on the Insurance Co.? What is the best form in which to take such a security, having regard to the stamp duty on a legal assignment being an objectionable expense to a cus- tomer ? ANSWER: A written deposit and undertaking to assign a life policy, with notice to the office is a valid security, and the office could not safely disregard the notice. Such a security should be> under seal, in which case, by the 19th sec. of the Conveyancing and Law of Property Act, the mortgagee has, among other powers, a power of sale. The stamp duty on mortgages, whether legal or equitable, and whether or not under seal, is the same, viz. : '2s. 6d. per cent. 1065- QUESTION: In books on banking practice it is generally laid down as essential that Life Policies should be regularly assigned, and not deposited under a memorandum when taken as security. Why is this? Would not a memorandum of deposit be sufficient and answer every purpose as with a deposit of Deeds'? ANSWER: The bank would have no legal title unless the policy were regularly assigned and notice given to the company. 1066. QUESTION : When foreign-drawn bills (with documents), payable in London, already accepted, or for acceptance, are received in a provincial town, from bankers in London, to be held in order that the acceptors may take them up under rebate if they so desire ; when bills (with documents) are received from abroad on behalf of London bankers for acceptance to be obtained, and the bills are held in the provincial town as before stated, for the convenience of the acceptors, does the duty of seeing that the policies of insurance are properly stamped within the legal time devolve entirely upon the acceptors ; and, failing them, upon the true owners of the bill ; or, would the provincial bank be held liable, and if so, to what extent, supposing the policies remained unstamped, and the ship, with cargo, were lost at sea? ANSWER: As agents, it is incumbent on the bankers (whether London or provincial) who receive bills from abroad with documents attached, to see that the policies of insurance are duly stamped within ten days of their arrival, unless the documents are, during that period, handed over to the drawees of the bills. 1067- QUESTION: A customer who has an overdrawn account deposits with the bank a fire policy on his stock. In the case of Questions on Banking Practice. 287 POLICY OF ASSURANCE continued. the stock being burnt, and the customer proving to be insolvent, has the bank any lien on the money due from the insurance com- pany? Would it have been possible for the bank to have them- selves insured the stock, provided that the customer had not done so? ANSWER : The banker could have no security on a stock in trade without a bill of sale, which would give him an insurable interest. PROMISSORY NOTES 1068. QUESTION: In the case of payment of a composition of 5 os. 3d. by promissory note on a 2d. stamp, is it the practice of bankers to receive such promissory notes for collection or otherwise, when it is specified in the body of the promissory note that the sum is payable by three equal instalments respectively, at say three months', seven months', and eleven months' currency? ANSWER : Promissory notes in the form specified are, as a matter of practice, received by bankers for collection. 1069. QUESTION: Is a 2d. stamp sufficient in such a case as in Question 1068 (if the note is dealt with), or should not the stamp be such as to cover the ad valorem duty on each of the instalments ? ANSWER : The stamp should be of the denomination required by the whole amount of the promissory note, and not for the total of the stamps tha^ might have been required for the separate instal- ments. 1070. QUESTION : Is such a document as is mentioned in Question 1068 negotiable and recoverable at law? ANSWER : We think that, as in the case supposed, a specified sum is made payable at specified times, the document is a promissory note with all the incidents of a promissory note, including negoti- ability, if in terms made negotiable, and giving the right to the true owner to recover at law the amount made payable thereby. 1071. QUESTION: A and B require of C (a banker) an advance for twelve months. They offer as security certain stocks, and a joint and several promissory note payable on demand. Would C be undoubtedly safe in granting the loan on such security, if the promissory note bore only a penny stamp 1 And would the case be 288 Questions on Banking Practice. PROMISSORY NOTES continued. altered in any way by the substitution of B's acceptance of A's draft payable to C? ANSWER : A promissory note on a penny stamp would be invalid an ad valorem stamp being required. The acceptance mentioned would require a proper stamp, ad valorem or otherwise. 1072- QUESTION : Is a penny stamp sufficient for a promissory note payable on demand to a bank for any sum, the said promissory note being lodged as security for a banking account? ANSWER: No. Promissory notes of any kind whatsoever require ad valorem stamps. 1073. QUESTION: (1) Does the following promissory note require a Is. stamp, the usual ad valorem duty? (2) Does it bear interest from the date seeing it is payable on demand? (3) Is it domiciled at North Town, at house of payee? " 93 : : 0. " South Town, 20th March, 1894. " On demand I promise to pay Mr. Robert Abel, of North Town, " the sum of Ninety-three pounds for value received. " Witness : H. Wood, South Town. " Wm. Lockwood." ANSWER: 1. Yes. 2. No. 3. No. 1074. QUESTION : Is a promissory note to order, drawn at two months' notice, a regular document under the Bills of Exchange Act, 1882? If so, would a written notice through the post be sufficient, and would the promissory note mature from the date of postage ? ANSWER : It has been judicially decided (Coleham v. Cooke, Willes 393) that an instrument in the form described in this question is not payable " on a contingency." We think therefore, it is payable at a fixed period within the Bills of Exchange Act, 1882, and is a regular document under that Act. The note would mature from the date at which the notice was received by the maker, and not from the date of postage. 1075- QUESTION: Is a promissory note invalid by reason of the omission of any reference to the payee, the terms of the note being simply " I promise to pay the sum of"? ANSWER : Such a note does not come within the definition set forth in sec. 83 of the Bills of Exchange Act, 1882. on Banking Practice. 289 PROMISSORY NOTES continued. 1076. QUESTION : 14 10s. Od. Portland, 26th March, 1892. Three days after the arrival of my undernamed vessel at , I promise to pay to the order of Messrs. A B and Co. the sum of fourteen pounds ten shillings, value received in disbursements of the ship of " Flensburg," from Iquique to , under my command, for which the ship and her owners are liable, unless the vessel be totally lost. At the German Consulate. C D, Master. Is the above document a valid promissory note being payable on a contingency'? ANSWER: No. 1077- QUESTION: Referring to Question 1076 (a) Should the document be stamped ; if so, with what stamp 1 (b) Should days of grace be allowed? ANSWER : (a) Yes, with an ad valorem stamp. (b) It is customary to allow them, but they are of doubtful legality. 1078- QUESTION: John Smith kept a current account at the Gower Bank, Limited; the balance was oscillating, sometimes Cr. sometimes Dr. In (say) January, 1880, the balance being then Dr., and the bank having called his attention to it, he sent by letter to the manager a three months' joint and several pro. note for 450, signed by himself and Peter Smith, and payable to the order of the Gower Bank, without any condition being in any way attached to the note or liability. The bank had a right to discount this note, and place the proceeds to credit of John Smith ; but instead of doing this, they held it as equivalent to 450, so long as it was not withdrawn by the makers. It matured in April, 1880, notice of the same being posted the day after its maturity to Peter Smith, calling his attention to the matter. In the meantime John Smith's account was still oscillating Dr. and Cr. ; but at the end of the year 1880 he failed, his account being then Dr. 600. Had not the Gower Bank a claim against Peter Smith for the amount of the pro. note? If not, how comes it that his liability ceased? If the note were dis- counted, the liability would remain ; but as the bank held it in good faith as the equivalent to them of 450, does not the liability 290 Questions on Banking Practice. PROMISSORY NOTES continued. virtually remain the same? Does not the fact of the non-with- drawal by the makers establish a liability against them? Sup- posing John Smith had given the bank a lien upon all bills (not under discount) held by them, how would this affect the liability of both or either upon the pro. note for 450 ? ANSWER : Due notice of the non-payment being given, the liabilty of Peter Smith would remain. 1079. QUESTION : A man named Thomas James Jones, and who ordinarily writes his name Thomas Jones only, signs a promissory note in the latter form. Is the document valid in a court of law ? ANSWER: Yes. 1080. QUESTION: A promissory note made payable at a bank, and drawn in favour of J. Smith " or order" is presented on the due date by the payee or by his attorney in person ; the payee has not in any way transferred or negotiated the document, nor has he written his endorsement thereon. The banker hands it back to the payee with answer "requires endorsement," but the payee states that he declines to put his name on the bill and demands payment in exchange for surrender of the document ; the banker refuses to give other answer, and the bill is dishonoured and noted. The payee is willing to give his separate receipt for the money if required to do so. Can the banker insist on endorsement as well as surrender in the above case? Would he be liable to the maker who had sufficient funds at his credit to pay the note? ANSWER : The payee's endorsement cannot be insisted upon. (See Chalmers Bills of Exchange Act, 1882, p. 6.) Hence the banker would be liable to the maker. 1081- QUESTION : Is a banker protected by the provisions of the Bills of Exchange Act, 1882, if he pay a promissory note, payable on demand, domiciled at the bank, which bears a forged endorsement? ANSWER: No. It is equivalent to an acceptance payable at a banker's, rather than to a cheque on him. 1082. QUESTION: The holder for value of a promissory note commits laches, in not presenting it for payment at the proper time, and his endorsers are thereby released. On subsequent pre- sentation of the promissory note it is declared to be a forgery. Is the holder's position as regards endorsers (whose bond fides is not in question) in anywise affected thereby? Questions on Banking Practice. 291 PROMISSORY NOTES continued. ANSWER : The holder by neglecting to present the promissory note at maturity, has released the endorsers from all liability. (As the note is stated to be a forgery his claim upon the supposed maker is invalid.) 1083. QUESTION : Is the maker of a note drawn in the following form legally responsible 1 "Dublin, May 1, 1886. ".100. Three months after date we jointly and severally "promise to pay John Jones, or order, the sum of one hundred " pounds sterling value received. " John Brown." ANSWER : It has been decided (see Owen v. Van Uster, 20 L. J., C. P., p. 83) that where a bill of exchange is drawn upon four, and accepted by one only, that one is liable on the bill. . In this case, we think the maker is liable on the note in the hands of a holder in due course. 1084- QUESTION : A obtains a loan from a banker D on a joint and several promissory note signed by himself, and B and C as sureties. When the note matures, A presents a renewal signed by himself and B, and states that C will call and sign the note in a few days ; and D, not wishing to have the bill overdue, passes the renewal, but retains the old bill. Now, supposing that C refuses to sign the renewal, can the banker D sue C on the old bill or does the fact of the renewal discharge the old bill, and leave the new one to stand on its own merits'? Or if C is discharged would that affect the banker's recourse against B (the other security) 1 ANSWER : We think the circumstances are sufficient to show that the agreement, on the part of the banker, to renew the promissory note was conditional on C signing the renewal, and that should he refuse to do so, the banker would be entitled to sue the sureties on the old note. 1085. QUESTION: Messrs. A (bankers) advance 200 to W on his joint promissory note with X on demand, and are at the same time fixed with notice that X is a surety only. W's current account is credited with the amount by order of X. Sums of money amounting to over -200 are paid in to the credit of W ; s account, and are, as well as the proceeds of the note, drawn out by him. Then Messrs. A demand payment of the note from X, who declines on the ground that the note being due without demand, 292 Questions on Banking Practice. PROMISSORY NOTES continued. all sums paid in to W's account were bound to be taken in payment of the note unless specially hypothecated to some other purpose, that 200 had been paid in, and consequently the surety was released. The Council are asked to advise : (1 .) If X's contention is correct 1 (2.) And if so, how can a joint promissory note on demand be treated so to allow the current account of the principal debtor to be a continuing one without release to the surety in the note ? ANSWER : We assume that a separate loan account was opened in which either W alone or W and X jointly were debited with 200, and that Ws current account was at X's request credited with that sum. If this is so, it seems to us impossible that payments made specifically to the credit of the current account can be taken to be in reduction of a debit which did not exist on that account. We think also that the note not being due until demand, it must be taken that the arrangement between the surety and the bankers was that the bankers were entitled to hold it until they saw fit to demand payment and that the note must be considered as a continuing security. 1086- QUESTION : A and B are joint signatories to a promissory note after date. Bankers credit a joint account in the names of A and C with it. Is B discharged from his liability, when the note falls due, to the extent of all sums received to the credit of A and C's account between the date of crediting the note and the date it falls due? ANSWER : No. It is assumed that B joined in a written request to pass the amount of the promissory note to the current account in the names of A and C. 1087. QUESTION: A, owing his bankers 80, compounds with his creditors. The bankers held as security a joint and several promissory note for 50, signed by A and B, with a memorandum attached, as follows : ^50 : : 0. " Chardstock, 2nd April, 1892. " Seven days after demand we jointly and severally promise to " pay Messrs. Yorke and Co. Fifty pounds, value received. "A. "B. Questions on Banking Practice. 293 PROMISSORY NOTES continued. "Memorandum: The joint and several note of hand for 50, "dated 2nd April, 1892, and signed by A and myself, is given for " the purpose of securing the repayment of advances made or to be " made to the above-named A by Messrs. Yorke and Co., bankers. "B. "2nd April, 1892." B was aware of A's composition but did nothing. A pays a dividend of 7s. Qd. in the , viz. ,30, and after the bankers had received this they called on B to pay the 50 due under the above joint and several note of hand. B says he is only liable for 31 5s., claiming that he is entitled to 18 15s., the proportion of dividend on 50, part of the total debt of 80. It is contended that B is liable for the full 50, seeing that the joint and several note of hand remains intact as a collateral security in the hands of the bankers. Can this contention be maintained ? ANSWER : In the circumstances B would be liable for the full 50. 1088- QUESTION : A and B pass a joint promissory note to C, a banker. It is signed on the back by D, whose name is, however, not mentioned in any way on the front of the note. A and B fail to pay it at maturity. Can C sue D for the amount as the security for the advance 1 ANSWER: No. The payee of a promissory note cannot sue a subsequent endorser. 1089. QUESTION : A promissory note runs thus : " 19th January, 1892. "1,000. " Three months after date, I promise to pay the A B Bank, "Limited, or order, at their North Town office, the sum of One " thousand pounds, for value received. " C D." This is endorsed by E F, who is intended to act as surety. In the event of the failure of C D, can the bank claim the amount from E F ? ANSWER : No. (See previous Question.) 1090- QUESTION : Referring to sec. 89 of the Bills of Exchange Act, 1882, A, for B's accommodation, puts his name as maker to a joint and several promissory note (which B also signs) in favour of C, who, at the time of its being negotiated to him, has notice of the relation in which A and B stand to each other. B does not meet 294: Questions on Banking Practice. PKOMISSORY NOTES continued. the note at maturity. Is it necessary, in order that C may preserve his rights against A, that A should have notice of dishonour ? ANSWER : Although desirable, it is not necessary. 1091- QUESTION : Is a promissory note drawn in the following form negotiable ? "100. "London, 1st January, 1883. " Three months after date I promise to pay John Smith " the sum of one hundred pounds : value received. " John Robinson." ANSWER : Yes, under the provisions of the Bills of Exchange Act, 1882, clause 8, sec. 4. 1092. QUESTION : "200 : : 0. "I promise to pay to C. L. Johnson the sum of two hundred " pounds after six months' notice, with interest at the rate of 5 per "cent, per annum, payable half-yearly. " Witness : " (s.) ABC. (s.) S. J. Fredrickson. "Lincoln's Inn, " Solicitor and Commissioner to Administer Oaths." (1) Is the above subject to the Bills of Exchange Act, 1882? (2) Is it transferable? (3) Is it negotiable? ANSWER: (1) Yes. (2) Yes. (3) Yes. 1093- QUESTION: John Williams endorses a promissory note payable to his order at six months date from April 13th, 1892, as follows : " Pay John Hughes or order, " John Williams, " Sans recours." Does this free him from all future liability? ANSWER: Yes. 1094. QUESTION : Will it be sufficient for the holding banker to Questions on Banking Practice. 295 PROMISSORY NOTES continued. send notice of dishonour, should such be necessary, to the payee of the following note ? 100. January Zlst, 1888. Three months after date we jointly and severally promise to pay A B or order One hundred pounds. Payable at St. Michael's Bank, Value received. London. C D E F G H I J The bill is endorsed " Pay the St. Michael's Bank or order. "A B." Or must he, to protect his lien against all the parties, send notice to all the signatories 1 Does the fact that the signatories are governors of a charity, on whose behalf the advance is made, affect the question, although the note is signed by the governors in their individual capacity? ANSWER : The makers of a promissory note are deemed to corre- spond with the acceptors of a bill, and consequently notice of dishonour to them would not be absolutely necessary. It would, however, be desirable to send notice to all the makers individually, notwithstanding the fact of their representing a charity. 1095- QUESTION: A obtains a loan from his banker B on the security of a joint and several promissory note signed by C and D in favour of A, payable six months after demand and duly endorsed. Is it absolutely necessary, in order that B may preserve his rights against C and D, to give them notice of its having been lodged with B as security by A? ANSWER: No. STAMP DUTIES 1096- QUESTION : A cheque is drawn by the treasurer of a local board payable to order. In addition to the usual stamp, a form of receipt appears at the foot of the cheque to which a receipt stamp is 296 Questions on Banking Practice. STAMP DUTIES continued. affixed. Is the signature to the receipt a sufficient discharge without an endorsement on the back of the cheque in the usual manner ? ANSWER: The receipt at the foot of the cheque would be con- sidered a sufficient discharge. 1097- QUESTION : May the sixpenny stamp required upon an agreement be affixed thereto at any time within thirty days after the agreement is signed, or must it be affixed, at the time of execu- tion 1 ? Should the stamp be cancelled when affixed, and in what manner 1 ANSWER : If an adhesive inland revenue stamp be used, it should be affixed at the time of signing the agreement, and cancelled by the person signing the document by writing on or across the stamp his name or initials with the date of his so writing. An agreement can be stamped with an impressed stamp within thirty days of its execution. 1098- QUESTION : Would a simple undertaking, given by a third party to a banker, to pay in a certain sum by a stated time to the credit of a client's account, and making mention of no condition or consideration whatever, be an agreement requiring a sixpenny stamp to make it binding ? ANSWER : It would be desirable to have the document stamped as an agreement. 1099- QUESTION : May two threepenny stamps be used for stamping an agreement instead of one sixpenny. ANSWER: Yes. 1100- QUESTION: Railway Companies and County Treasurers are adopting the idea of having a printed form of receipt on the back of cheques, which the payee has to sign. If the amount be above 2, is it necessary to affix a receipt stamp in addition to the impressed stamp on the cheque ? ANSWER: Yes, under the Finance Act, 1895, sec. 9. 1101- QUESTION : Cheque drawn by J. H. Smith to cash or bearer endorsed by drawer under the words " Received in Cash." Banker on whom it is drawn returns it with the following: answer : " Alteration ' order ' to ' bearer ' requires initials, or under Finance "Act, 1895, the endorsement should bear a stamp." Is this so? and does the fact of putting " Received in cash " necessitate the use of a penny stamp in any case? Questions on Banking Practice. 297 STAMP DUTIES continued. ANSWER : It does not appear from, the question that there had been any alteration from u order " to " bearer," but the receipt on the back of the cheque would require a stamp under the Finance Act, 1895. 1102. QUESTION : A cheque payable to the Leicester Public Boot Company or Order, duly endorsed, bears subsequently on the back of the cheque, impressed thereon by an indiarubber stamp, " Public "Boot Factory, Belgrave, Received October 28th, 1895." (1) Does this now require a receipt stamp? (2) If so, is a banker justified in returning the cheque for the stamp to be properly affixed and cancelled? (3) Does he incur any penalty for not so doing ? ANSWER : (1) Having regard to section 9 (1) of the Finance Act, 1895, a receipt given on the back of a cheque for 2 or upwards is now liable to stamp duty. (2) and (3) The penalties for giving a receipt not duly stamped are imposed on the person who gives the receipt. The banker, therefore, would incur no penalty and probably would not return a cheque not properly stamped. 1103- QUESTION: Referring to Question 1118 (1), is it incum- bent on a banker to see that a proper stamp is affixed and duly discharged? And (2) is he liable to any penalty for omission? (3) Does the omission of a receipt stamp in any way invalidate the discharge of the paying banker or of the collecting banker ? ANSWER: (1) No; (2) No; (3) No. The receipt of the collecting banker is exempted from stamp by the Finance Act, 1895. 1104. QUESTION : A cheque is endorsed " Received cash. Thos. " Jones." Does this require a \d. receipt stamp? A cheque so endorsed is returned with answer " Requires receipt stamp." Is this correct? ANSWER : This cheque requires a penny receipt stamp. 1105- QUESTION: In the case of a crossed cheque in which the payee puts "received cash" on the back, does this receipt require a penny stamp? ANSWER: Yes. (See sec. 9, Finance Act, 1895.) 1106- QUESTION : Where a form of cheque, as specified below, is used, is it requisite 298 Questions on Banking Practice. STAMP DUTIES continued. 1st. That the receipt should bear an adhesive stamp, in terms of the upper part of the cheque, viz., stamped, signed and dated, or would the impressed stamp be sufficient to protect the banker on whom the cheque is drawn? 2nd. That the payee should, in addition to the receipt signed on the face of the cheque, sign his name also at the back 1 Would not the receipt constitute a full discharge to the banker? There appears some superfluity about this form of cheque. [Copy.] " This cheque requires Endorsement. "No. M. April, 1886. " To Messrs. Bankers. M. "Pay to or order (Stamp. j " the sum named below on the receipt being duly stamped, " signed and dated. "J. J. & Co. " Received from J. J. & Co. the sum of as per " particulars furnished. Signatures, ! Stamp. " Date ANSWER: The form given above is not an ordinary cheque, and the banker, if he pay it, must follow the special order of his cus- tomer by requiring a stamped receipt, together with the endorse- ment on the back of the cheque. It is an objectionable form and should be discouraged. 1107- QUESTION : A crossed dividend warrant is received made payable to_ J. Jones, and his signature is desired to a receipt at the bottom of the cheque. It does not state that endorsement also is required. J. Jones signs and dates the cheque. Are the bankers entitled to return the cheque, stating " Endorsement necessary " ? ANSWER : The signature at foot of a dividend warrant is deemed a sufficient discharge. 1108- QUESTION: Some Trading Companies and Railway Com- panies draw on their bankers in the following forms : " The Central Railway Company, "Jan. 1, 18 . " I am instructed to forward you the accompanying cheque upon Questions on Banking Practice. 299 STAMP DUTIES continued. " the Eastern Bank, who will pay the same on presentation through " a banker, the receipt being duly signed and dated. " John Smith, Secretary." " The Eastern Bank, Limited. "'Pay to the order of William Jones the sum of Ten Pounds, " provided the receipt on the other side is duly signed and dated. "10. "John Gibbs, Director." If a banker paid on the above on a forged receipt or unauthorised discharge, would he be protected by clause 60 of the Bills of Exchange Act, 1882, seeing that sec. 3 defines a bill of exchange to be an unconditional order to pay? ANSWER : We think the banker would not be protected. 1109- QUESTION: Would such receipt as described in the last question require a stamp 1 ? ANSWER: Yes, under the Finance Act, 1895, sec. 9. 1110- QUESTION: A sum of money (1,000) is cabled by a branch of a colonial bank abroad to its London office, for credit of A B. The money is placed to the credit of A B's account in London. He is advised thereof by letter, and a receipt for the amount requested, to which he replies as follows : " Your favour of the 20th " inst. to hand, advising 1,000 to my credit per cablegram." Does this receipt require to be stamped? ANSWER : The answer in the above terms appears to be only an acknowledgment of advice, and does not require a receipt stamp. 1111. QUESTION : By 55 Geo. Ill, c. 184, and 33 and 34 Viet., c. 97, Schedule-Title, Receipts, "A receipt on a duly stamped cheque " does not require an additional stamp." Therefore is a banker justified in paying a cheque on himself, disregarding a notice on the back saying the cheque will not be paid unless the receipt on the back is stamped? ANSWER: Under the Finance Act, 1895, sec. 9, the receipt in question must be stamped. 1112- QUESTION: A customer of a bank adopts the following form of cheque and receipt : 300 Questions on Banking Practice. STAMP DUTIES continued. [COPY.] "No. "M. Feb. , 1886. " To Messrs. , Bankers. M. " Pay to the sum named below on presentation of " the receipt duly signed and dated. " " J. S. and Co." (Stamp/) " Received from the sum of *' in settlement of account rendered. " " Signature "Date , 1886." [This Form of Receipt does not require a stamp.] Please state on the above : 1. If, in your opinion, it is safe for a banker to allow such a form to be drawn on himself without an indemnity from the customer, looking at the conditions specified, "duly "signed and dated" 1 2. Is it not a draft "specially payable" to payee only, there- fore "not transferable" 1 ? 3. Would the banker be liable in case of (a) forgery of receipt ; (6) lost or stolen ; (c) and if paid by him to second or other holder in due course of business 1 ? 4. Would the Act as to crossed cheques apply to such a com- bination of cheque and receipt? 5. Is there not an evasion of the Stamp Act herein, as to the receipt not being stamped? ANSWER: The form given of cheque, with receipt at foot, which is occasionally adopted by railway companies and others, is a very objectionable one from a banker's point of view, and no banker should permit his customer to draw upon him in this form without requiring an idemnity from him in respect to the liability, which might and would attach to the banker, in case of the receipt at foot bearing a forged signature. The draft would be more regular if drawn to bearer or order, but if not so drawn, in the absence of words prohibiting transfer, it may be considered to be transferable, also to come under the provisions of the clauses of the Bills of Exchange Act, 1882, relating to crossed cheques. Under the Finance Act, 1895, sec. 9, the receipt at foot will now require a stamp. Questions on Banking Practice. 301 STAMP DUTIES continued. 1113. QUESTION : A B receives a cheque for 5s. Qd. in the follow- ing form : "London, 1st May, 1890. " The East and West Bank of London, Limited. Pay to A B or " order, the sum named below, on the receipt being presented within " ten days through a banker duly signed and dated. "(Signed) Y Z" Attached to the cheque is the following form of receipt : " Received from Y Z the sum of five shillings and sixpence, being " in settlement of account for contribution. "April, 1890. "Signature 5/6 " Date This receipt to be signed in lieu of endorsement. The cheque on the face of it bore an adhesive penny stamp, and was endorsed by A B, but the amount being under 40s. he did not place a stamp on the place indicated, where he merely signed his name. The bankers returned the cheque with this answer, " Must " be signed over stamp." Were they justified in so doing, as the amount was under 40s.? ANSWER : As the amount of the cheque was under 40s., we think the bankers were not justified in returning the cheque with the answer given. 1114. QUESTION : " To the " Pay day of Stamp. Bank, Limited. C D, or Order, " The amount specified below, on the receipt being duly signed " and dated. " : : "A B" " Received of A B the sum of " : "CD " Payee's Signature, _date." This receipt does not require a stamp, and must be signed before presentation. 302 Questions on Banking Practice. STAMP DUTIES continued. Does the condition on the above form of so-called cheque, exclude it from the Bills of Exchange Act, seeing that it is not an uncon- ditional order to pay, and in the event of the payee's signature being forged, would the banker be protected? If the receipt be on the back above the payee's signature, and unconditional, would the answer be different 'I ANSWER: The instrument in the form given imposes on the banker, as a condition of his paying it, the duty of seeing that the receipt is "duly" signed. This being so, the instrument does not come within the description of a cheque which, by the terms of the Bills of Exchange Act, must be an " unconditional order in writing." The banker would therefore be justified in refusing to pay the so- called cheque. If, however, he did pay it, he would not in our opinion be protected in the event of the payee's signature being forged. In such a case the receipt would not be " duly signed." If, however, the cheque on the face of it be in the usual form of a cheque to order and there is at the back a mere form of receipt, we think the bankers would be entitled to pay the cheque whether the signature were above or below the receipt. The instrument in that case would be an unconditional order, and the banker would, in our opinion, be protected even if the endorsement were a forgery. We think, however, that if the signature were above the form of receipt the banker would be justified in refusing to pay such a cheque on the ground that the payee had not signed the receipt the evident intention of the customer (to whom alone the banker is answerable) being that he should do so. The receipt under the recent Finance Act would require a stamp, notwithstanding the note at foot of the cheque. 1115- QUESTION: The Mayor, Aldermen and Burgesses of the Borough of Puddleton. Guildhall, 21st January, 1895. To Messrs, the St. Michael's Bank, Puddleton. Pay Mr. John Brown the sum of four pounds eighteen shillings and sixpence, if this cheque is presented within one month from the date hereof, with the receipt below duly signed and dated. 4 18 6 Signed A. B. ) Members C. D. V of the E. F. J Town Council. On account of the Treasurer of the Borough of Puddleton. Questions on Banking Practice. 303 STAMP DUTIES continued. Received from the Mayor, Aldermen and Burgesses of the Borough of Puddleton, the sum of four pounds eighteen shillings and sixpence, as per particulars furnished. Per pro John Brown. C. Green. Date, 24th January, 1895. Note. The following is the resolution of the Council of the Borough of Puddleton : a Resolved that an undertaking be given the bankers that they " will not be under any greater or lesser liability in honouring the " new cheques, than they were in regard to those heretofore in use." The form heretofore in use was an ordinary cheque to order. Does the banker run any risk in honouring the above form of cheque 1 ANSWER : It is doubtful whether this form of document is really a cheque, and whether the banker, therefore, would be protected in the event of the payee's signature being forged (see Question 1114). It consequently involves the banker in the additional duty of enquiry into the reality of C. Green's authority to sign for John Brown. 1116- QUESTION : A draft with a receipt form attached requires a stamp and signature. Would the receipt be valid and sufficient if the signature were written wholly upon the stamp and did not extend to the document? ANSWER: Yes, but it is not advisable to sign the receipt wholly on the stamp. 1117. QUESTION : Is it necessary to write the date as well as the signature or initials across an adhesive stamp (on receipt, contract note, &c.), if the date is on the document to which it is affixed ? ANSWER: Yes. (Stamp Act, 1891, sec. 8, sub-sec. 1.) 1118. QUESTION: Referring to sec. 9 of the Finance Act of 1895, does a bill of exchange or cheque duly stamped, require a receipt stamp, if the endorsement of the payee is " accompanied by " words of receipt." ANSWER: Yes. 1119. QUESTION: In the case of a cash order (i.e., a demand draft drawn by a wholesale firm on a shopkeeper on a penny stamp) being on presentation to the drawee accepted by him payable at his bankers without any additional stamp, and thereupon presented by 304 Questions on Banking Practice. STAMP DUTIES continued. the holder to the bank ; is this a valid instrument which the banker can pay and debit his customer with, or if not, can it be made so by the addition of a penny stamp ? ANSWER : A " cash order " when made payable at a bank is a valid instrument that such banker can debit to the drawee's account, and only requires a single penny stamp. As, however, the system of " cash orders " drawn upon tradesmen constitute bankers mere debt collectors, thus imposing considerable trouble on the collecting banker, it is the practice with both London and country bankers to discourage the drawing of such drafts, and in some cases to refuse their collection. 1120- QUESTION : A cheque is sent in payment of a demand cash order. The two documents are fastened together and passed through the clearing, should the cash order bear a penny stamp or not? ANSWER: Yes. 1121. QUESTION : Are not all dividend warrants drawn by a building society, if only for a few shillings, bound to bear a penny stamp ? ANSWER: The dividend warrants in question would require a penny stamp, whatever the amount. 1122. QUESTION: Is a banker bound by the Stamp Act to put stamps on all acknowledgments by letter of money received by post or otherwise for the credit of accounts other than that of the senders ? ANSWER: The banker is bound to stamp such acknowledgments, as they do not come within the exemption, which is in the following words : " Keceipt given for money deposited in any bank or with " any banker to be accounted for, and expressed to be received of " the person to whom the same is to be accounted for." 1123. QUESTION: If A gives a letter of authority or standing order to his banker for B to sign cheques on his account, should such letter of authority bear a Id. Inland Revenue, or what stamp? ANSWER : No stamp is necessary on such a letter. 1124- QUESTION : Does a direction by a customer, addressed to a banker to issue a bill of exchange or draft, require a Id. stamp 1 ANSWER: Yes. (See sec. 32a, Stamp Act, 1891.) 1125. QUESTION: (a) It is the practice of some banks to allow their own officials Avho have accounts to draw cash upon debit slips, instead of requiring properly stamped cheques. In the event of a Questions on Banking Practice. 305 STAMP DUTIES continued. dispute, could the bank produce these debit slips in proof of pay- ment, or would they be debarred from so doing in consequence of the slips being unstamped? (6) When a customer instructs a banker to make certain payments on his account as calls on shares or annual subscriptions, is an un- stamped debit note sufficient, or should the customer's cheque be taken ? ANSWER: (a) The practice here stated is incorrect and unusual. Such debit slips could not be produced as legal evidence, (b) An unstamped debit note is sufficient. 1126. QUESTION: Does a draft application form, to be used in debiting a customer's account, require to be stamped? ANSWER: This has been the subject of some correspondence between the Institute and the Commissioners of Inland Revenue, and having regard to the wording of sec. 32 of the Stamp Act, 1891, the Council are of opinion that the answer should be as follows, viz., that, upon the assumption that the form of application for the issue of a banker's draft is prepared for use by a person who brings cash to a bank and who asks as a matter of convenience for a cheque in lieu thereof, such form of application would not be " an " order " so as to fall within the words " an order for the payment " of any sum of money by a bill of exchange," and would not, there- fore, be chargeable with stamp duty. If, however, the form of application is used by a customer who has money lying to the credit of his account at the bank and who is entitled to direct the issue of a cheque against his account, the case would be different, and the form in such circumstances would be liable to duty. 1127. QUESTION : Is a stamp necessary on a form signed by a customer, authorising the bank to debit his account with an acceptance 1 ANSWER: No. 1128- QUESTION : Is it necessary that a penny stamp should be affixed to the following form, on its being passed through a banking account and cleared in the usual course 1 ? "London, October 12th, 1892. " Debit Blankshire Steam Tramways Co. " 5 per cent. Debentures. "The sum of 10 (Ten pounds). " for sundry Coupons deposited by Mr. Jones. "10. "For the St. Clement's Bank, The form is crossed "& Co." "J. Tomkins." 306 Questions on Banking Practice. STAMP DUTIES continued. ANSWER : It has been held by the Inland Revenue Authorities that the forms in question require a penny stamp. 1129. QUESTION: Is a customer holding a deposit interest receipt obliged to stamp such receipt when increasing and changing it for a larger one ? ANSWER : On lodging money for the credit of an account bearing interest, no stamp is required. On such accounts being withdrawn, a stamp should be fixed to the receipt. 1130- QUESTION : Must he stamp such receipt when transferring it to his current account 1 ? ANSWER: No. 1131- QUESTION: Does the simple transfer of a customer's money from one branch to another of the same bank involve the use of a stamp ? For instance, a customer brings a current account (dormant) receipt issued by a branch of the same bank, which is used as a debit voucher against that branch, the customer signing his name on the back requesting the transfer. ANSWER : A simple memorandum or order for the transfer of the account of a customer from one branch to another of the same bank would not require a stamp. 1132- QUESTION: A customer gives his banker a written authority to debit his account with a stated sum monthly to be transferred to another person's account. Does such an order require a stamp, or, should the monthly debits be stamped? ANSWER : Assuming that the transfer be in the books of the same banker, neither the original order nor the monthly debit requires a stamp. 1133. QUESTION: A customer gives his banker a stamped authority to pay two of his servants at the rate of 30s. and 425. fortnightly. Do the two vouchers with which the account is debited require stamps ? ANSWER : If these vouchers are used as the means by which money is transferred to the hands of the servants they both require Id. stamps. Questions on Banking Practice. 307 STAMP DUTIES continued. 1134. QUESTION : Does the following order require a stamp 1 The A. B. C. Bank, Ltd., London, _1897. To the St. Clement's Bank, Ltd. Please transfer from our account with your bank to our account with the St. Michael's Bank, the sum of pounds. For The A. B. C. Bank, Ltd., Manager. Secretary. ANSWER: Yes. 1135. QUESTION: Does the following order require a penny stamp ? " Kindly transfer seventy-five pounds from my current account to " deposit account." ANSWER: No. 1136. QUESTION : Does an order from one customer to transfer money to another customer's account at the same bank require a stamp ] ANSWER: No. 1137. QUESTION : A and Co., merchants, having an ordinary drawing account and a discount account with their bankers, desire to withdraw without presentation one of their customer's accept- ances before maturity, and write to the banker to debit their current account and send them the bill. Is a cheque necessary, or should such request be stamped, or is the signature of the firm on an unstamped memorandum a sufficient authority to debit their account 1 ANSWER : A written request to a banker, of the nature referred to, would not appear to require a stamp, being merely a transfer order operative in the books of the banker. 1138- QUESTION: A firm of manufacturers agreed to make an advance of 200 to a customer, taking as security a promissory note on demand for the amount. Instead of sending a promissory note, however, bearing a two-shilling stamp, the borrower forwards to the lenders a bill on demand, accepted by himself, and bearing a penny stamp, requesting lenders to sign and keep it as security. To this they object, on the score that the acceptance of a bill, payable on demand, was irregular, and never contemplated by the Stamp Act, and that the document, being intended to be held as x 2 308 Questions on Banking Practice. STAMP DUTIES continued. security for a loan, was insufficiently stamped, and should have borne a 2s. stamp. In the event of the manufacturer taking the bill, and having here- after to produce it as proof of debt, could the document be chal- lenged on the score of form or insufficiency of stamp ? ANSWER: There is no reason why a draft on demand should not be accepted, and, in fact, such drafts are constantly accepted pay- able at the bankers of the drawees. But an accepted draft on demand with a Id. stamp would not be an available document to hold for a period as security, as the question of non-presentation and over-holding might very possibly arise. The proper document to be taken as agreed would be a promissory note on demand with a 2s. stamp. If the draft on demand were taken it could not be challenged on the score of insufficiency of stamp. 1139. QUESTION: Referring to the Stamp Act, 1891, 1st Schedule, " A letter or power of attorney or commission, factory, " mandate, or other instrument in the nature thereof," for the receipt of interest or dividend on any stock other than for the receipt of one payment only, is subject to a duty of 5s. A general power of scope not defined in this Act is subject to a duty of 10s. What is the practice of bankers in regard to the stamping of documents taken by them as authority for the following : 1. The payment of dividends on their own shares to third parties at the request of the shareholders. 2. The honouring of cheques, bills, and similar documents drawn per procuration for a customer. In these cases, should the authorities not be stamped 5s. and 10*. respectively, in accordance with the provisions of the Act above quoted ? ANSWER: It is the practice of bankers generally to be satisfied with ordinary letters of instruction only without any stamp. 1140. QUESTION : The practice of honouring a wife's cheques against her husband's account, under an unstamped letter from him to the bankers, is pretty general. Is it in order and legal 1 ANSWER: Yes. 1141. QUESTION : A draft by a branch bank on its head office on demand. In face of the 5th sec., 2nd clause of the Bills of Exchange- Act, 1882, would such a draft be sufficiently stamped by having a Questions on Banking Practice. 309 STAMP DUTIES continued. penny draft stamp affixed, or must it be stamped as a promissory note with an ad valorem stamp ? ANSWER : A Id. stamp would be sufficient. 1142. QUESTION : Hitherto it has been the custom of some banks to take unstamped memoranda of deposit of title deeds, or other securities left with them to secure overdrafts. Under the new Stamp Act, what duty will be chargeable on such memoranda? Do these documents come under sec. 15 of the Customs and Inland Revenue Act, 1888? Will guarantees for overdrafts require the ad valorem duty stamp? ANSWER : Memoranda of deposit of title deeds will, under sec. 15 of this Act, be liable to Is. per cent, impressed stamp, but securities, other than title deeds, as well as guarantees for overdrafts, come under sec. 14, and require a 6d. agreement stamp. 1143- QUESTION: Referring to Question 1142: (a) Are the "unstamped memoranda of deposit" therein mentioned (executed before the Act of 1888) liable to penalties if produced in a court of law, and, if so, what penalties? (6) In case of borrower having a loan of, say, 500 (created before the Act of 1888), receiving a further advance, say, of 200 in 1889, on title deeds, should the stamp on the memorandum of charge cover 200 or 700? (c) Should all loans now existing (created before the 1888 Act) be secured by fresh memoranda of charge duly stamped? ANSWER : (a) 20. (6) 700. (c) It is advisable. 1144. QUESTION: Prior to the passing of the Customs and Inland Revenue Act, 1888, a banker agreed to advance in current account, a sum not exceeding 100, and took deeds of property worth 400, with a memorandum of deposit stating that the said deeds were held as security for " all advances made or to be made." He now agrees to extend the overdraft to 200. Will the exten- sion be deemed (under clause 15, sec. 2 of said Act) to be a new and separate agreement, and render it necessary to have the memorandum of deposit stamped? ANSWER : Yes. 1145. QUESTION: Under the New Stamp Duties Act, all deposits of deeds require to be stamped. Does the amount of the stamp absolutely limit the amount for which the security is available, or, in the event of the amounts originally advanced, say, 1,000, being exceeded by, say, 500, could the deeds be held against all comers for the full amount, 1,500, notwithstanding the fact of the form of deposit bearing only a 10s. stamp? 310 Questions on Banking Practice. STAMP DUTIES continued. ANSWER: In order to render the deeds a valid security for the further advance, an additional stamp must be placed on the memorandum. 1146. QUESTION: A memorandum of deposit of deeds for securing an advance is duly stamped in accordance with the Customs and Inland Revenue Act, 1888. A further advance is decided on, necessitating an additional stamp on the memorandum. May the memorandum be stamped additionally at any time, without penalty, or must it be done before the additional advance is made? Is it necessary to make any affidavit or declaration on the subject 1 ? ANSWER: The memorandum referred to should be presented for stamping with any further duty to which it may be liable before the expiration of thirty days after the day on which the advance or loan was made in excess of the amount covered by the duty previously impressed on the memorandum, and it would, in ordinary circum- stances, be stamped with the further duty without penalty, no affidavit or declaration being required. 1147. QUESTION: An equitable mortgage, stamped up to 200, is taken at the time of discounting a promissory note for 150 " as "collateral security for the due payment of the said promissory " note, and of any other promissory note or promissory notes which " may at any time be discounted by the said bank for me." At maturity the discounter desires the bank to renew the pro- missory note on the same security. Will the same equitable mort- gage act as a continuing security for all subsequent promissory notes discounted, not exceeding 200 each, or will the deed only cover such notes subsequently discounted as shall not in the aggregate exceed the amount covered by the stamp on the original deed i.e., will this deed only cover one more note for 50? ANSWER : Assuming that the equitable mortgage is properly stamped, we are of opinion that so long as the original debt is kept alive, the equitable mortgage will act as a continuing security for any number of renewed promissory notes up to, but not exceeding in the aggregate, 200 at any one time. 1148- QUESTION : A customer having deposited deeds of the value of 500 against an advance of 400, borrows 200 to improve the property by building. What declaration is required to get the equitable mortgage stamped to a higher sum ? ANSWER : None. 1149- QUESTION: Can a Limited Company give a mortgage without a power of sale under their hand only, and does the same if given under the seal of the Company require a 2s. Qd. stamp duty ? Questions on Banking Practice. 311 STAMP DUTIES continued. ANSWER : The power of a Limited Company to mortgage its property must depend on its Articles of Association. Mortgages are usually given under the seal of the Company and require an ad valorem deed stamp. 1150- QUESTION : An equitable mortgage or lien on deeds lodged to cover an overdraft is liable to a stamp duty of Is. per cent. This document usually takes the form of a printed letter to the bank, and, of course, is not under seal. Where a borrower is a limited liability company, and therefore can act only under its common seal, would a lien so signed require to be stamped at the rate of 2s. Qd. per cent, on the ground of its being under seal 1 ? ANSWER : A company may have power to effect an equitable mortgage without using its common seal, otherwise the rate of 2s. Qd. per cent, would be necessary. 1151. QUESTION : What stamp is necessary to cover an in- demnity on repayment of lost deposit receipts, drafts, &c. ? ANSWER: A sixpenny Inland Revenue Stamp (which must be cancelled by the person giving the indemnity) or by stamp im- pressed, within fourteen days of the date of the indemnity. 1152. QUESTION: A banker makes an advance of four hundred pounds to his customer which is partly secured by deeds of property worth two hundred pounds, the remainder of the advance being unsecured. Should the equitable mortgage be stamped up to the amount of the advance or only to the value of the security? ANSWER : The stamp need not be for a higher amount than the value of the security. 1153. QUESTION: F. Jones has an overdrawn account for 100, depositing deeds value 500, on which he gives a lien unlimited as to the amount, the bank stamping the equitable mortgage with a one shilling stamp. Subsequently the overdraft is increased to 200, but the bank does not increase the stamp on the equitable mortgage. In the event of Jones's bankruptcy, would the Official Receiver be entitled to the deeds on payment of 100 only to the bank on the ground that although the lien was unlimited as to amount to be secured, yet the bank by only stamping it to cover 100 had thereby limited their security to this extent ? ANSWER : It is open to the bank at any time to stamp the equit- able mortgage up to the required amount under penalty. If, when 312 Questions on Banking Practice. STAMP DUTIES continued. the Official Receiver claims the deeds, the bank elects to pay the further stamp duty, then the Official Receiver is not entitled to the deeds except on payment of the full amount. But if the bank should not adequately stamp the document, the claim of the Official Receiver to have the deeds on payment of 100 would prevail. 1154. QUESTION: A person, by stamped cheque, pays a bill for goods supplied, exceeding 2 in amount. The creditor receipts the bill, adding the words " Paid by stamped cheque," and omits to affix a receipt stamp thereto. Can the Commissioners of Inland Revenue recover the usual penalties for giving and receiving an unstamped receipt? ANSWER : Yes ; the stamp on the cheque would not cover the receipt. 1155. QUESTION : (a) A customer having an overdrawn account with a banker, remits through the post a sum of money for his credit and in reduction of his overdraft. Is the banker bound to stamp his letter acknowledging receipt of the money, or does the following exemption apply : " A receipt for money deposited in " any bank or with any banker to be accounted for, and expressed " to be received of the person to whom the same is to be accounted " for ? " (6) If such a letter requires a stamp, does an entry of the amount in the customer's pass-book also require a stamp? One of the rules printed in the pass-book is that no other receipt will be given for money paid in by a customer for his own credit than an entry in his pass-book, verified by the initials of the bank's officer who receives the money, (c) What is the practice of London bankers ? ANSWER : Such a letter as described does not require a stamp. 1156- QUESTION : In the exemption schedule of the Stamp Act, 1870, a clause runs as follows : "Exemptions. (1.) Receipt given for money deposited in any " bank, or with any banker, to be accounted for and ex- " pressed to be received of the person to whom the same is " to be accounted for/' You are requested to advise whether it is necessary to affix a receipt stamp on the issue of a banker's deposit receipt drawn in any of the following forms : (a) Received from Mr. John Jones and Mrs. Ann Jones to the credit of their deposit account (either to draw} the sum of, &c., &c. (6) Received from Mr. John Jones or Mrs. Ann Jones to the credit of their deposit account the sum of, &c., &c. Questions on Banking Practice. 313 STAMP DUTIES continued. (c) Received from Mr. John Jones and Mrs. Ann Jones to the credit of their deposit account (payable to either or survivor) the sum of, &c., &c. ANSWER : No. Not in any of these cases. 1157. QUESTION: What is considered to be correct form for the reverse side of a deposit receipt, and does the receipt require stamping on payment under any circumstances'? If so, when? ANSWER: A deposit receipt need have no specific form on the reverse. It is the practice of some banks to print a form of dis- charge at the back of their deposit receipts in the shape of a cheque, which necessarily requires a penny stamp.* (See No. 1166.) 1158. QUESTION: A bill of 120, dated at Leeds, is drawn upon a firm at Cadiz and accepted payable in London. The bill gets into the hands of a holder (the fourth endorser) who lodges it with his banker. The bank points out that it is drawn on a sixpenny impressed stamp. It is not drawn in a set of 1st, 2nd, 3rd, or as an original, but simply as an ordinary inland bill would be. Can the bill be made valid by the holder drawing out on a form sufficiently stamped a copy duplicate or 2nd or 3rd and affixing it to the accept- ance / And if so, has the wording of the acceptance to be altered or added to, so as to make it in accordance with such copy or duplicate ? In fact, can the holder in any way make the bill a valid one as against the acceptor and all previous parties, or must a new bill be obtained 1 ? ANSWER: In such cases as above, a copy is sometimes stamped for full stamp, then endorsed and negotiated. There is, however, con- siderable doubt as to whether an action against parties in this country could be sustained in our law courts on such a document. We think the only safe course is to obtain a fresh properly stamped bill and obtain acceptance thereto. 1159. QUESTION : In the case of a bill drawn six months after date " Please pay C. Smith or order, the sum of one thousand pounds "with 25 as interest," is a stamp covering 1,025 required, or would a IQs. stamp be sufficient? ANSWER: As the sum of 25 is named, the stamp should cover 1,025. 1160- QUESTION : In the case of a bill drawn at six months for 1,000, and interest at 5 per cent, per annum, is a stamp covering the interest required, or would a ten shiHing stamp be sufficient? * Vide Vol. 5, Journal of the Institute of Bankers, p. 156. 31-t Questions on Banking Practice. STAMP DUTIES continued. ANSWER: It is stated in " Chitty on Bills of Exchange," llth edit., p. 80, sec. 6, that " With respect to the amount on which " the stamp duty is payable it has been held (Preussing v. Ing, and " Wills v. Noot) that the addition of interest, although reserved from "a day prior to the date of the instrument, ought not to be taken "into account in determining the proper stamp." The bill in question would, therefore, only require a ten shilling stamp. 1161. QUESTION : Does a promissory note on demand to order, containing a provision for interest, require an ad valorem stamp? ANSWER: All promissory notes, whether payable on demand, or otherwise, require ad valorem stamps. 33 and 3-i Victoria, c. 97. The stamp duty is not chargeable on interest secured by a promissory note. 1162- QUESTION: Is it necessary that the form of protest, as well as the copy of the same, should bear a Is. stamp, or will it suffice if the original only be stamped 1 ANSWER : The original and copy must both be stamped. 1163. QUESTION: Does the following form of advice require a stamp as coming under sec. 120 of Stamp Act, 33 and 34 Viet., c. 97? "London, March 25th, 1886. " Dear Sir, " We beg to inform you that the sum of 100 has been " paid to your credit by Mr. John Brown. " We are, Sir, " Yours obediently, "A B. and Co. " Rev. W. Jones." ANSWER : No. 1164. QUESTION : Is it the practice of London bankers to issue cheques to their continental clients unstamped? If not, would it be an infringement of the Stamp Act, 1870, to do so, providing the same were stamped by the payees 1 ANSWER : Unstamped cheques are now issued by some London bankers to continental clients. This is no infringement of the Stamp Act. 1165. QUESTION : If a customer withdraw money personally from his bankers, does the cheque require a stamp? ANSWER : It is usual to affix a stamp in such cases. Questions on Banking Practice. 315 STAMP DUTIES continued. 1166- QUESTION : (Copy Letter.) " December 4th, 1884. " Gentlemen, '' I am instructed by the Council of the Institute of " Bankers to ascertain whether any stamp is required on bankers' " deposit receipts when the amount is repaid to the depositor on his " simple endorsement. The form of deposit receipt contemplated in "this inquiry is as follows : BANKING Co., LIMITED, 100 London, Dec. 4th, 1884. ' Received from Mr. John Jones the sum of One Hundred Pounds sterling, to the credit of his deposit account with the Cornhill Banking Co., Limited. Entd. CHAS. ROBINSON, Accountant.' 'JOHN SMITH, Manager. " When the depositor requires the return of his 100, he presents " the receipt at the bank simply endorsed ' John Jones/ and the "question at issue is whether lie must also affix a penny stamp, the " document itself being exempt from Stamp Duty under the 33 and " 34 Viet,, c. 97. " Requesting the favour of a reply, " I am, Gentlemen, " Your obedient Servant, "(Signed) W. TALBOT AGAR, ' Secretary. " The Commissioners of Inland Revenue " ANSWER : (Copy Letter.) " Inland Revenue, " Somerset House, "London, W.C., "17th December, 1884. " Sir, " The Board of Inland Revenue have had before them your " letter of the 4th instant. " They desire me to point out that the signature of the name of "the depositor endorsed on the deposit receipt delivered to the "bank imports an acknowledgment that his claim or demand for "the sum deposited has been settled by payment of the money to "him, and is therefore a 'receipt' within the terms of sec. 120 of " the Stamp Act, 1870. 316 Questions on Banking Practice. STAMP DUTIES continued. " The exemption of the deposit receipt from stamp duty has refer- " ence only to the transaction on the deposit of the money. The " receipt given by the depositor to the bank is liable to stamp duty. " I am, Sir, "Your obedient Servant, " W. Talbot Agar, Esq." " (Signed) W. W. Cousins. 1167- QUESTION : A Bill of Exchange, a copy of which is given below, is negotiated in London at such an exchange as would make the amount payable in Melbourne (say) 101. What is the amount of the foreign bill stamp to be affixed in London? Would it make any and what difference if the state of the exchanges was such that the amount payable became (say) 99 1 [COPY.] " 100. " New York, 1st November, 1890. " At sixty days after sight, pay to the order of the Bank of "America, one hundred pounds value received with exchange as "per endorsement. " To Mr. Brown, " Smith & Co. " Melbourne." The bill is endorsed in London "payable with exchange at " current rate." ANSWER: The Council having submitted this question to the Inland Revenue authorities, received the following reply : " The sum of money mentioned in the bill being 100, the stamp " duty payable is one shilling." 1168- QUESTION : A (drawer) gives B (payee) a cheque to bearer on C (as bankers), dated 10th July, but bearing in the body the words " on 15th August." B passes the cheque to D (holders). Was C justified in paying the cheque before that date, and what stamp is requisite? ANSWER : C would not be justified in so paying the cheque. The document is a bill of exchange, and must be stamped accordingly. 1169- QUESTION: A promissory note, payable on demand, requires an ad valorem stamp. Should a post-dated cheque have a similar stamp, or is a penny one sufficient? ANSWER : A penny stamp is sufficient. Questions on Banking Practice. 317 STAMP DUTIES continued. 1170. QUESTION!: Does a cheque, on Id. stamp, drawn in Shanghai upon a bank in London marked not to be paid until 1st April, 1895, require an ad valorem stamp. ANSWER: Yes. 1171. QUESTION : A London Joint Stock Bank returned a cheque to a private bank with answer "Insufficiently stamped." The cheque bore two halfpenny stamps. Was the bank justified in so doing 1 ? ANSWER: The 45 and 46 Viet., c. 72, sees. 13 and 14, enacts that postage stamps may be used for stamping cheques among other documents, and provision is also made for the use of more than one stamp to make up the requisite amount ; the use of two halfpenny stamps, therefore, appears to be perfectly sufficient and legal. 1172. QUESTION: Is it permissible to draw a cheque upon a banker on an inland bill stamp ? If the answer be in the affirmative should the stamp be an ad valorem one, or would a penny one be sufficient, no matter how large the amount drawn upon it? ANSWER : Cheques on bankers on demand for any amount should be stamped with a Postal or Inland Revenue Stamp of Id. either adhesive or impressed no other stamp is available. 1173. QUESTION : A local sub-post-office master keeps a banking account solely for post-office monies, and remits periodically by cheque on the account to his head office. Are these cheques exempt from stamp duty under 44 and 45 Viet., c. 20, sec. 25? ANSWER : They are exempt. (See 44 and 45 Viet., c. 20, sec. 5.) 1174. QUESTION : Does an order on the United States Treasury, payable in dollars at Washington, on demand, require a penny stamp when negotiated in this country? ANSWER : It does. 1175- QUESTION: With reference to sec. 4 of the Bills of Ex- change Act, 1882, do bills drawn in the islands of Man, Guernsey, Jersey, Alderney, and Sark, and negotiated here, require foreign bill stamps ? ANSWER : Yes. 1176- QUESTION : Is the law now in force for bills of exchange, drawn in the Channel Islands, to bear a foreign bill stamp ? ANSWER: The Mercantile Law Amendment Act, 19 and 20 Viet., cap. 97, sec. 7, enacts as follows: "Every bill of exchange or 318 Questions on Banking Practice. STAMP DUTIES continued. '' promissory note drawn or made in any part of the United " Kingdom of Great Britain and Ireland, the islands of Man, " Guernsey, Jersey, Alderney, and Sark, and the islands adjacent to " any of them, being part of the dominions of Her Majesty, and " made payable in or drawn upon any person resident in any part " of the said United Kingdom or Islands, shall be deemed to be an " inland bill ; but nothing herein contained shall alter or affect the " stamp duty, if any, which, but for this enactment, would be pay- " able in respect of any such bill or note." In accordance with this enactment bills drawn in the Channel Islands or any part of the United Kingdom are regarded as inland bills with the exception only of the stamp and as the fiscal arrangements of the islands are quite independent of this country, they are, for the purposes of the stamp duty, considered as foreign bills, subject to the adhesive ad valorem stamp being treated in this respect on the same footing as bills drawn in any of our colonies on the United Kingdom. 1177. QUESTION: Ought the adhesive stamp affixed to a draft on demand, drawn abroad, to be a penny foreign bill stamp, or a penny postage and inland revenue stamp ? ANSWER: The stamp to be affixed to a draft on demand or at sight, drawn abroad, is the penny postage and inland revenue stamp, the ordinary impressed stamp being also sufficient on cheques. The penny foreign bill stamp is available only for drafts drawn abroad, otherwise than on demand or at sight, for sums not exceeding 5. (See 33 and 34 Viet., c. 97 34 and 35 Viet., c. 74.) 1178- QUESTION: A foreign bill, unstamped, drawn at three months' date, is presented for acceptance. The drawee pays instead of accepting it. Having been paid at sight, is a penny stamp sufficient 1 ANSWER: No. 1179- QUESTION: A foreign bill, drawn ten days after sight, but accepted payable at the St. Clement's Bank, " on demand without "further advice," is presented for payment. What stamp should the paying bankers require to have affixed an ad valorem foreign bill stamp, or a penny stamp 1 There are several endorsements on the bill, but there is nothing to show whether it has been negotiated in this country before or after acceptance. ANSWER : An ad valorem foreign bill stamp should be affixed. 1180. QUESTION: A bill at 90 days' sight accompanied by securities, is remitted by a bank abroad to its London office, and is Questions on Banking Practice. 319 STAMP DUTIES continued. duly presented for acceptance. Drawee does not accept, but at once calls at the bank, pays the amount of the bill, takes the relative securities, and receives rebate on the transaction. Is it legal for the bank to cancel the bill and return it to the drawee without affixing a foreign bill stamp ? ANSWER: There is nothing to prevent the bank in London from cancelling the bill and returning it to the drawee, but if the bank discharges the bill, a foreign bill stamp must be affixed. 1181. QUESTION: Are Poor Law Unions exempt from stamp duty on cheques issued by them? and, if so, under what Act? ANSWER : It is believed that such cheques are exempt from stamp duty under the Poor Law Act, 4 .and 5 Wm. IV, cap. 76. In reference to this question, the following communication has been received from Mr. Thomas J. Smith, of the Manchester and Liver- pool District Banking Company, Limited, Cheadle, Staffordshire, treasurer to the Cheadle Union : " In amplification of the answer " given by the Council to the question, ' Are Poor Law Unions '' ' exempt from stamp duty on cheques issued by them, and, if so, "' under what Act?' I beg leave to say that cheques drawn upon " the Union treasurer by the Guardians upon Poor Law account are " exempt, but cheques drawn upon the Union treasurer by the " Guardians acting as a Rural Sanitary Authority are not exempt. " The exemption is in the 86th sec. of the Poor Law Act, 4 and 5 " Wm. IV, cap. 76, which reads as follows : *.*' Nor any ' ' contract or agreement or appointment of any officer made or ' l entered into in pursuance of such orders or regulations, and ' ' comfortable thereto, nor any other instrument made in pursuance " ' of this Act, nor the appointment of any paid officer engaged in " ' the administration of the laws for the relief of the poor or in the " ' management or collection of the poor-rate shall be charged or ' ' chargeable with any stamp-duty whatever.' It will also be seen " that, besides cheques, all receipts given by the treasurer for monies " paid to him for the credit of the Poor Law accounts are exempt ; " but I have the authority of the Board of Inland Revenue (dated "5th November, 1880) for saying 'that the exemption from stamp- " ' duty conferred by the Poor Law Act does not extend to receipts " ' for sums over two pounds given by the Guardians acting as " ' sanitary authorities under the Public Health Act.' " 1182. QUESTION: Are the cheques drawn by Guardians acting as the Rural Sanitary Authority liable to stamp duty? ANSWER : Yes. 320 Questions on Banking Practice. STAMP DUTIES continued. 1183. QUESTION : Are School Board cheques exempt from stamp duty? ANSWER: No. 1184- QUESTION : Are the cheques drawn by the treasurer of an Odd Fellows' Lodge liable to stamp duty 1 ANSWER: Such cheques are exempt from stamp duty. (See circular from the Inland Revenue Department, dated 10th November, 1894.) 1185. QUESTION: Are cheques drawn upon a banker by the treasurer of an Odd Fellows' Lodge exempt from stamp duty by virtue of the provisions of the Friendly Societies Act, 1875 and 1887? ANSWER : Yes. (See previous Answer.) 1186- QUESTION : Is a cheque drawn by a member of a Friendly Society, in payment of his subscription, exempt from stamp duty? If so, can such a cheque be negotiated and paid unstamped ? ANSWER: No. 1187- QUESTION: Are orders drawn upon the treasurer, by Guardians of the Poor, acting as a Rural Sanitary Authority, liable to stamp duty ? ANSWER: Orders drawn upon the Treasurer, by Guardians of the Poor, acting as a Rural Sanitary Authority under the Public Health Act, 1875, are chargeable with stamp duty. 1188- QUESTION: Are cheques on a Volunteer account exempt from stamp duty? ANSWER : If the account in question be a public account, opened entirely for the purpose of a Volunteer Corps, the cheques, which in that case would be used solely in connection with the regiment, would be considered exempt from stamp duty, as falling within the- exemption contained in the schedule of the Stamp Act, 1891, sub. tit. Bill of Exchange. No. 8. 1189. QUESTION : Are cheques drawn by the overseers and way wardens of a parish exempt from stamp duty when they are cashed over the counter or when they axe used as transfers from one- account to another? ANSWER : They are not exempt in any case. Questions on Banking Practice. 321 STAMP DUTIES continued. 1190- QUESTION : Is a cheque drawn by a trustee in bankruptcy exempt from stamp duty? ANSWER: Yes. 1191- QUESTION : Are cheques, drawn in the United Kingdom by customers for the sole purpose of paying various Government duties, to be placed to the public revenue exempt from stamp duty? ANSWER: No. The exemption, No. 10, under the head "Bill of "Exchange" in the schedule of the Stamp Act, 1891, only applies to bills drawn in cases in which the revenue money has been received by the remitter, and not to a draft or order for payment of money to the revenue. 1192. QUESTION: Are the cheques of local postmasters exempt from stamp duty (a) For remittance to H.M. Postmaster-General? (6) For local payments ? (c) For rates ? ANSWER : (a) Yes. (6) No. (c) No. The following is the 5th sec. of the Post Office Act, 1881, 44, 4:5 Viet., 20, which relates to this question. Section 5. " Every deed, instrument, receipt, or document " made or executed for the purpose of the post office, by, "to, or with Her Majesty or any officer of the post office, " shall be exempt from any stamp duty imposed by any "Act, past or future, except where such duty is declared " by the deed, instrument, receipt, or document, or by " some memorandum endorsed thereon, to be payable by " some person other than the Postmaster-General, and " except so far as any future Act specifically charges the 1193- QUESTION : Do cheques drawn by the manager of a local savings bank (established under the Savings' Bank Act of 1863, 26- 27 Viet., c. 87), upon their Treasurer as in the example given below, require a stamp? ."North Town, 27th Nov., 1893. "To E. Hume, Treasurer of the North Town Savings' Bank, " at the Northern Union Bank, Ltd., North Town. " Pay to George Cotterill the sum of 10 (ten pounds). " 10. " John Veitch, ) Managers of the U-D -D O J'l J f N Tth T Wn R. R. Sandilands, j Saving*' Bank." This document is countersigned by W. R. Moon, Actuary. 322 Questions on Banking Practice. STAMP DUTIES continued. ANSWER: The exemption granted by sec. 50 of the Act 26-27 Viet., c. 87, is confined to the drafts and orders mentioned in sec. 25 and 26 of that Act, and is not applicable to cheques drawn for other purposes. The liability of the above cheque therefore to stamp duty depends on whether or not it falls within the terms of that exemption. 1194. QUESTION: I, the undersigned, of __ do hereby declare that I have deposited with Messrs bankers, the deeds and writings relating to the premises mentioned in the schedule hereunder written, as security for all such moneys as I now owe them upon any note of hand or acceptance, or on any bills of exchange, or promissory notes endorsed by me, or dis- counted for me or placed to my credit by them, or upon my general banking account overdrawn, or any other moneys which may at any time hereafter be due by me to the said banking firm or any person or persons who shall or may for the time being be a partner or partners in the banking business, for the benefit of all of whom I intend that my deposit shall extend and be available. Dated this day of One thousand Eight hundred and Signature The schedule of premises, the deeds relating to which were in- cluded in the above-mentioned deposit. (a) The above form being used, title deeds are deposited to cover a fixed amount, and for a certain time ; when the repayment has been made (the memorandum and deeds still remaining in the custody of the bankers), does a new loan require a new stamp ? (b) When, with the same form, security is left to cover an over- drawn current account not exceeding a certain sum, must every payment in be taken as a repayment on account, and every cheque paid (when the receipts have amounted to the original sum) as a fresh loan requiring a renewal of the stamp ? (c) Whether, if the payments in and cheques drawn by the depositor show a credit in his favour at any time, and an overdraft subsequently takes place, such overdraft is to be deemed a fresh loan, so that a fresh stamp would be necessary on the deposit? ANSWER: (a) The memorandum seems inapplicable to the case supposed in this question. Assuming, as would appear from the question, that the only transactions which take place are a loan of a fixed amount and for a certain time, its repayment and a new loan, we think the new loan would require, not only a new stamp but a new memorandum. Questions on Banking Practice. 323 STAMP DUTIES continued. (b) and (c) The stamp will cover the amount owing for principal at the time the balance is struck between the parties, without regard to previous fluctuations in the account. 1195- QUESTION : A customer deposits a Stock Certificate (not to bearer), of Railway Stock as security for advances. Such deposit does not appear to come under sections 14 and 15 of the Customs and Inland Revenue Act, 1888. Is any, and what stamp necessary on the memorandum of deposit when no transfer is taken 1 ? ANSWER : The only stamp necessary would be a Qd. agreement stamp, but such deposit would not appear to give a valid security. 1196- QUESTION: A banker has charge of bonds payable to bearer on behalf of a customer, cutting off and collecting the coupons as they fall due, and placing the proceeds to his customer's credit in the usual way. If, after the 1st of July, the customer wants a loan on the security of these bonds, will the fact of his signing a memorandum of deposit, bearing a sixpenny agreement stamp (according to sec. 14, sub-sec. 2, of the Customs and Inland Revenue Act, 1888), constitute a transfer within the meaning of the Act, so that the bonds themselves will have to be stamped with the ad valorem duty of Qd. for every 50 (according to sec. 12, sub-sec. I) 1 ? It is presumed that the coupons will still be credited to the customer's account, so that the banker will not be absolute owner of the bonds unless a customer fails to fulfil the conditions of the loan. ANSWER: Sec. 12 of the Customs and Inland Revenue Act, 1888, having been repealed (see 3rd schedule to Stamp Act, 1891), the ad valorem stamp of Qd. for every 50 is not now required. 1197. QUESTION : A customer wishes to deposit foreign bonds payable to bearer as security for temporary overdraft. Should the usual memorandum of deposit be taken in this case, and what stamp should the memorandum bear ? ANSWER : The memorandum should bear a 6d. stamp. 1198- QUESTION : (a) Do bills drawn from abroad always require ad valorem adhesive foreign bill stamps? (b) Who can put them on? Must the presenting bank or party? (c) Do any other bills, besides those drawn abroad, require foreign bill stamps? ANSWER: (a) Yes. (b) Under the Stamp Act, the stamps should be affixed by the parties by whom the bill is first negotiated ; but practically it is often affixed by the presenting banker, (c) No ; Y 2 324 Questions on Banking Practice. STAMP DUTIES continued. but it should be noted that bills, other than on demand, drawn in the Isle of Man and the Channel Islands, although under the Bills of Exchange Act, 1882, sec. 4, they are deemed "Inland Bills," require foreign bill stamps by reason of there being no stamp duties in those islands. 1199. QUESTION : A foreign bill, payable on demand, bearing a penny foreign bill stamp, is presented to a London bank, and returned with the answer "Wrong stamp affixed." Is the bank justified in refusing payment in the case mentioned? ANSWER : The proper stamp to be affixed to a foreign bill payable on demand is the Id. postage and inland revenue stamp (it being a " Bill of exchange payable on demand/') and not the penny adhesive foreign bill or note stamp, which may be used for ad valorem duties only. See Crofton v. Crofton (56 L.J. ch. 135), and Marc v. Rony (31 L.T., Q.B. 372). 1200- QUESTION : Does a foreign bill of exchange require to be . stamped under the following conditions : A bill payable in the United Kingdom is negotiated by a branch of a colonial bank and remitted to its London office for collection. In due course it is presented to the drawer and refused acceptance. The London office then, without waiting until nominal due date, returns the bill to its branch. Should the bill have been stamped before being returned? ANSWER: No. 1201. QUESTION : A bank in the colonies forwards to its London office, for collection and remittance of proceeds, a draft on a con- tinental house, payable, say, in Paris. In such cases the bank is merely acting as an agent, they have not given any consideration for the draft. Must the London office affix bill stamps to the draft before sending it to Paris for collection ? If not, would handing the bill to the London house of some Paris bank alter the circum- stances ? ANSWER: Stamps should be affixed by the London office. (See sec. 54 the Stamp Act, 1870, and see also sec. 35 of the Stamp Act, 1891.) 1202. QUESTION : Does a bill drawn in England and payable in Canada, or vice versa, require the stamp ad valorem of both countries 1 ANSWER: A bill drawn in England otherwise than on demand requires an English impressed stamp, and one payable in England but drawn in Canada requires an English adhesive foreign bill stamp ; there are no bill stamps in use in Canada. Questions on Banking Practice. 325 STAMP DUTIES continued. 1203. QUESTION: Is a bill or cheque in the following form a negotiable instrument, and is it properly stamped when impressed with the ordinary penny stamp ? "1st Nov., 1885. " The St. Michael's Banking Company. " Pay A B, or order, one hundred pounds by draft at " twenty-one days after date. "100. "C. D." ANSWER : This would not appear to be a negotiable instrument in the ordinary sense of the term, but requires a penny stamp. 1204. QUESTION : Bills of foreign currency, drawn and dated in England, are sold direct by the drawers to a foreign banker. Not being negotiated in this country, are they liable to English stamp duties? ANSWER: Bills, otherwise than on demand, drawn in England, must be drawn on English impressed bill stamps. 1205. QUESTION : A lodges with his banker B, under the usual memorandum of deposit, two corporation bonds not transferable by delivery of 1,000 each, to secure his overdraft. Would the memorandum of deposit in this case come under sec. 13, sub-sec. 1, of the Customs and Inland Revenue Act, 1888, and require a 10s. impressed stamp? ANSWER: Bonds of the kind mentioned should be accompanied with a duly stamped transfer, and the memorandum of deposit would be liable to a $d. stamp under sec. 14, sub-sec. 3. 1206- QUESTION: A bill for 217 is drawn first and second in London on Paris at three months. The first bears a two-shilling stamp and the second a one-shilling stamp. Is the bill correctly stamped or not, and under what law is the matter fixed ? ANSWER : Such bill is not correctly stamped, as the full stamp of three shillings should be impressed on one bill of the set. (See sec. 39 of the Stamp Act, 1891.) 1207- QUESTION: Does a bill drawn by an English firm upon a French firm in English money, and accepted by them, payable in London, require to have a French bill stamp upon it in addition to the English bill stamp? ANSWER: The French law requires that bills drawn as described should be stamped in France on acceptance, and the stamp cancelled by the signature of the acceptor. 326 Questions on Banking Practice. STAMP DUTIES continued. 1208- QUESTION: Would the absence of the French bill stamp upon such a bill prevent the recovery of the amount of the bill from the acceptor in a French court of law, in case the bill was not met ? ANSWER: The acceptor can be sued in a French court on an unstamped bill, on payment of a fine of 6 per cent, on the amount of the bill from each of the following parties the drawer, the acceptor, and each endorser. 1209- QUESTION : Would the absence of the French stamp render the acceptor liable to penalties according to French law . ; ANSWER : Yes, of 6 per cent, on the amount of the bill. (See Answer to last Question.) 1210. QUESTION: Do either of the following forms require a receipt stamp? 1. "St. Michael's Bank, March 1st, 1885. " Dear Sir, " I beg to acknowledge the receipt of 100, which has " been placed to the credit of your account, per Mr. Jno. Smith. " I am, Dear Sir, Yours truly, "Jno. Brown, Esq." "Chas. Hunt, Manager." 2. " St. Michael's Bank, March 1st, 1885. "Dear Sir, " I beg to inform you that Mr. John Smith has paid in "100 to your account. "I am, Dear Sir, Yours truly, "Jno. Brown, Esq." "Chas. Hunt, Manager" 3. " St. Michael's Bank. "Credit John Brown, Esq., 100, per John Smith. "Jan. 2nd, 1885." ANSWER: No. 1211. QUESTION : Do the following banker's memoranda of money paid to credit require a stamp? 1. Received the sum of to the credit of 2. Received of _. the sum of ANSWER : Assuming that the blanks in these forms are to be filled in with the names of the customers to whom they will be handed, they would come under the exemption from stamp duty set forth in the Stamp Act, 1870, viz. : "Receipt given for money deposited in Questions on Banking Practice. 327 STAMP DUTIES continued. " any bank or with any banker, to be accounted for, and expressed to "be received of the person to whom the same is to be accounted "for." 1212- QUESTION: What is the sole and legitimate use of the document known as the banker's payment, which is understood and allowed to be exempt from the Government stamp duty imposed upon cheques and receipts for money? ANSWER : The document above-mentioned is defined in the Stamp Act as a draft or order drawn by any banker in the United Kingdom "upon any other banker in the United Kingdom, not payable to " bearer or to order, and used solely for the purpose of settling or "clearing any account between such bankers." (Stamp Act, 1891, sec. 31.) 1213- QUESTION: Is a draft drawn by a banker in the United Kingdom upon any other banker in the United Kingdom, payable to order so many days or months after date, exempt from stamp duty? ANSWER: Drafts or orders drawn by any banker in the United Kingdom upon any other banker in the United Kingdom, directing the payment of any sum of money, the same not being payable to bearer or to order, and used solely for the purpose of settling or clearing any account between such bankers are exempt from duty. It is assumed, however, that these drafts are on demand. , Stamp Act, 1870, 33 and 34 Viet., c. 97. Bankers in England (except within the City of London, or within three miles thereof), having taken out the necessary licence, can draw drafts on bankers in London, Westminster, or Southwark, at terms not exceeding seven days' sight or twenty-one days' date on unstamped paper, subject, however, to a composition duty. 9, Geo. IV, c. 23. Bankers in Scotland and Ireland can issue unstamped bills of exchange, subject to composition duty under certain regulations. All other drafts drawn by a banker in the United Kingdom on any other banker in the United Kingdom are subject to the customary stamp duties. 1214. QUESTION: It is becoming the custom among a few country bankers, when sending bills for collection, to request that the proceeds may be paid over to some London firm of bill-brokers and discount agents, who in many cases are not registered as bankers. In such cases may a banker's payment be delivered to the broker, and his discharge to the same be taken without a receipt stamp? 328 Questions on Banking Practice. STAMP DUTIES continued. ANSWER: Bill-brokers and discount houses not registered at Somerset House do not come within Exemption 2 of the Stamp Act, 1891, and the voucher used would be liable to the penny stamp. 1215. QUESTION : Do circular notes require foreign bill stamps 1 ANSWER: The form of the circular note is an instruction from a London bank to its correspondents abroad to pay the person named thereon the equivalent of a certain amount in sterling, against the payee's draft on the London bank, for the amount in question, on a form printed at the back of the circular note. This draft, which is dated from the place abroad at which the circular note is cashed, requires the ordinary ad valorem foreign bill stamp. 1216. QUESTION: What stamp should a guarantee of an over- draft signed and sealed by a third party, bear 1 ANSWER : A ten shilling impressed stamp. 1217. QUESTION : Bankers are sometimes asked to guarantee their customers' acceptances. Does the letter guaranteeing such an acceptance require an impressed or adhesive stamp ; and if so, to what value, ad valorem or otherwise? ANSWER : Such a letter requires a Qd. inland revenue stamp either impressed or adhesive. 1218. QUESTION: A cheque drawn abroad with a foreign (say Indian) address substituted for " London," is presented. Is a banker here justified in paying this without a foreign stamp being affixed? Or, may a banker at all times safely pay, without regard to the foreign stamping, provided the English stamps are correct? ANSWER : A cheque drawn on an English bank requires simply a penny stamp, wherever drawn, and the banker paying such cheque has solely to satisfy himself that it is properly stamped according to English law, without reference to stamp laws ruling in the country where it is drawn. 1219- QUESTION: Does a cheque drawn on an English banker, on a duly embossed Id. stamp form, if endorsed abroad, require a }d. foreign bill stamp affixed on its arrival in this country? ANSWER: No. 1220. QUESTION: (a) Would a bill drawn at Mayence upon a merchant in England, upon the usual English form and impressed stamp, require an ad valorem stamp as well? (6) If so, would the same principle apply to cheques drawn upon banks in this country, and sent or negotiated abroad? Questions on Banking Practice. 329 STAMP DUTIES continued. ANSWER : (a) A bill drawn abroad on a merchant in England would require an English ad valorem foreign bill stamp to be affixed. The English impressed stamp on such a bill is not required, and would be valueless. . (6) Such cheques would only require the English draft stamp of Id., either impressed or adhesive. 1221. QUESTION: Referring to Question 1220, a customer of an English bank draws a cheque thereon from some place abroad say Paris. Does such a cheque require a French stamp in addition to the English one, on the principle of a bill drawn abroad and payable in England? ANSWER: By the French law, 23rd August, 1871, art. 18, cheques drawn and payable in the same place are subject to a stamp duty of 10 centimes, and by the law 19th February, 1874, art. 8, cheques drawn from one place upon another (e.g., Paris on London) are subject to a duty of 20 centimes. The 10 centime stamp must be impressed, but the additional 10 centimes, when the cheque is drawn upon another place, may be denoted by an adhesive stamp. All cheques, however, drawn out of and payable out of France require a 20 centime adhesive stamp affixed if negotiated and endorsed in France. A purely English cheque, if endorsed in France, would therefore, under French law, require a 20 centime stamp. Cheques drawn on bankers in this country by residents in France will be bound to fulfil the requirements of the French law, otherwise they would not be negotiable in France, but it is no part of the duty of an English banker to see that cheques on him are duly stamped abroad, provided the requirements of the English law are fulfilled. 1222. QUESTION : "Constantinople, le 19 Septembre, 1891. B.O. 46 3s. au cours de change a vue. Au quatre " Mars, 1892, payez par cette Premiere de Change (la 2nd ne 1'etant) 77 > [ 1 i o, i /y, too Endorsement by 628,629,631 Overdraft of, banker's liability . . . . . . 79, 80, 81 Payment to, as private individual, banker's liability . . 58 Liability of , as private individual . . . . . .169.175 Undischarged bankrupt may be ' 228 ANSWERS On Bills of Exchange. " Acceptance irregular " 320 " Cancelled in error " 183,307 " Differs from advice " 194 AA 354 Index. Question ANSWERS continued. Number. " Drawer's endorsement differs " ...... 622 " Cancelled by mistake orders not to pay " . " Must be presented through bank ". ..... When they may be placed on bills or on references . " Insufficiently stamped " " Xo order "" no advice ". ....... 196,307 "Not yet due" 265 On Cheques. "Already negotiated" 398 " Alteration must be initialled " 515 "Amounts differ " (words and figures) ..... 487 " Cancelled in error " ........ " Crossed specially, requires stamp," &c. . . . " Crossed to two bankers " 439, 441 " Drawer deceased " 95, 367, 551 ' Effects not cleared " 569,574 1 Endorsement forged " . . . . . . . . 618 1 Endorsement irregular " 77,625,669,721,850,851 ' Endorsement required ". ....... 812 ' Exceeds authority " ........ 490 Exceeds arrangement "........ 524 Mutilated cheque " 503 Not provided for " 78,524,851 " N. S." 562. 850 " Orders not to pay " 640 "Out of date" 373,374,375 " Payment stopped "......... 68 " Please present to-morrow " ....... 573 "Post-dated" 513,520 " Present again " ......... 570 " Present again," not in accordance with C. H. Rules . . 571, 572 " Present through clearing "....... 105 " Refer to drawer J; 30,74,76,78,125,572 " Requires banker's crossing " 411.412,413 " Requires fourth endorsement "...... 650 " Requires special endorsement "...... 629 Will pay on banker's guarantee re-presentation ... 77 " Yes, if in order " 60,61 Should be on dishonoured cheque ...... 150,409 BANKEE Remedy, having cashed stopped cheque ..... 68 Form of authority to debit account with subscription . 69 Remedy on failure of customer whose bills are held for over- draft amount to be proved ....... 232 When he cannot decline crossed cheque . . . . . 116 May issue drafts on demand on its own branches . . . 117, 118 When special instructions necessary to charge overdrawn account with acceptances ....... 139 May make special agreement as to liability . . . . 141 Instructions not to pay coupons must come from customer . 123 Instructions not to pay cheques must come from customer . 134, 135 When he may stop overdraft at reduced amount ... 133 Index. 355 Question BANKER continued. Number. May recover cheque cashed but afterwards unpaid . . . 124 Should examine numbers of drawn bonds, though no obligation 131 Should know witness to pensioner's warrant .... 132 Should return cheques of bankrupt customer .... 205, 210 Should not receive cheque, defaulting customer, in reduction of overdraft .......... 142 May keep cheques till account settled ..... 393 Protection under Sec. 60, Bills of Exchange Act . . 627,628,643 Part payment of a bill of exchange, should refuse ... 1 Part payment of cash order, should refuse . .* . . 2 Part payment of a bill of exchange, may sue on old bill. . 317 Should deface bad coin 126,127 Should refuse payment of criminal's cheque .... 128 Acknowledging foreign order with sterling amount. . . 17 Within what period must he present cheques . . 3, 4, 18, 19, 28 Within what period return cheques 7, 8, 18, 19, 24 Within what period return cheques, counsel's opinion . . 5 Within what period give notice of dishonour .... 29 As to cancelling signature on letter of advice .... 160 As to treating bill as " to bearer" ...... 161 Should not allow one executor only to inspect and mark deeds 902 When he may allow operations on account of intestate customer 919 Duty as to examining endorsements ...... 626, 893 Need not retain dishonoured cheque, though funds afterwards provided .......... 157 Must pay cheque held over if funds subsequently provided . 158 Should not dishonour customer's cheque on account of his charges without notice ........ 31 May refuse cheques if charges due and customer intends absconding .......... 32 May set off balance of one current account against another 33,34,35,36,169 May charge customer with bill though discrepancy between tenor and acceptance ........ 130 Course where cheque exceeds amount sanctioned by endorse- ment 490 Course when on bill of exchange signature of first endorser differs from drawer ........ 37 Course when discounted bill is dishonoured debiting . 38 Course as to applying to acceptor in " case of need " . . 39 Course when two cheques exhausting balance are paid in simultaneously ......... 103, 104 Course when wishing to close customer's account ... 110 Course when returned bill is presented in person ... 109 Course where transactions between two accounts at one bank . 481 Course when bill sent abroad for acceptance without holder's consent 129 Course where draft by branch on head office is stopped . . 87 Course when asked to stop sight draft ..... 92 Course when bill accepted payable at Y L and Co. to A B . 138 When he should not pay over the counter . . 40, 470, 471, 473, 474 Exchanging crossed cheques ..... .41.42,43,44,45 Course when receiving money for special payment ... 210 Failure of, claim on letters of credit ..... 244 Failure of, claim on bills 351, 352 Failure of claim on Government Notes ..... 252 AA 2 356 Index. Question BANK HOLIDAYS Number. In England, Scotland and Ireland ...... 163 Opening on, banker's liability ....... 66 Closing on other days ......... 67 BANK POST BILLS Definition and duration ........ 204 BANKEUPTCY Act of. Calling together creditors, etc., is not . . . 206,212 Of acceptor to bill of exchange 238, 240 Of acceptor to bill of exchange, as to dividends . . . 239 Of acceptor before maturity ....... 241 Of acceptor and drawer before maturity ..... 242, 243 Of banker, claim of holder of letter of credit . . . 244 Of customer. Banker's right to prove for future insurance premiums .......... 245 Of customer. Banker's right on bills held as security . . 232 Intended. Banker may dishonour cheques, though funds . 213 Of customer. Claims of banker and trustee on rents . . 209 Of customer. Banker should hold box left for safe custody . 208 Of customer. Credited with stopped cheque .... 211 Of customer. When banker should return cheques. . . 205 Of customer. Banker's right to shares deposited without notice to company ........ 207 Of customer. When money paid in to meet specific cheque . 210 Of customer. When composition has been accepted, as to con- tinuing account . . . . . . . . . 212 Of firm payment in to reduce overdraft ..... 233 Of parties to bill of exchange proving for amount . . 235, 236, 237 Of partner, effect on firm's account ...... 1056 Customer compounding, banker's position . 212, 213, 220, 221, 225 Of person presenting cheque, as to paying .... 218, 227 Remedy as to joint notes ........ 221 Reputed. Banker's duty as to cheques . .216,217.219,222,223,226 Reputed. Agent's duty as to cheques . . . . 223 Partly secured creditor's right to prove for unsecured debt . 231 ( 214,216,217 Undischarged bankrupt's account. Banker's liability as to < 218,219,220 ( 224 Unknown to banker, his liability as to paying cheques . . 229 Unknown to banker (with counsel's opinion) .... 230 Undischarged may be agent . . . ... . . 228 Undischarged, cashing cheques for ...... 226, 227 BEARER OR ORDER Both omitted 537, 538, 539 "Order" for " bearer " substituted on bill of exchange . . 257 Cheque to DAYS OF GRACE Not allowed when word " fixed " is used .... 269, 270, 271 Cannot be claimed contrary to tenor ..... 260. 268 On draft drawn by sea captain abroad ..... 261 On draft accepted payable on fixed day ..... 265 On foreign draft 266- On document, like promissory note ...... 1077 366 Index. Question DEBENTURE Number. Holder has not prior claim, except by specific charge . . 577 Deposited with banker, lien ....... 999 DEPOSIT ACCOUNT When repaid to another bank, discharge guaranteed in Ireland but not in England 598 As to honouring cheques, when order to transfer to current account ........... 588 As to honouring cheques, when sufficient on, but not on current 599 Banker may debit unpaid cheque to . . . . . . 602 Interest on, runs to date of expiration of notice of withdrawal 594 Money on, may be set off against overdue bill .... 578 Money on, ranks equally with current if bank fail ... 579 Money on, may be set off against current account . . 596, 597, 599 With notice of trust, unusual . . . . . . . 1010 Of trust money, with a different rate of interest . . . 597 May be opened in name of firm ...... 585 Money on, may be set off against debt due .... 589 Money on, deduction of income tax authorised . . . 593 Not transferable, special form 590 Receipt, why marked " not transferable " .... 601 Payable to either 584 Payable to survivors or survivor. Effect of death or bankruptcy 580 In joint names survivorship ~ 581,582,583 Payable to either or survivor ....... 583 In trustees' names ......... 1293 Of husband and wife, both should sign discharge . . . 972 Liability for payment to third party ..... 586 Receipt stolen. Banker should pay under guarantee . . 600 Due on Sunday, payable on Monday ..... 595 Executors must give authority for transfer .... 587 In name of woman, since married ...... 592 In name of woman, married before 1882 ..... 591 Paid in by wife, claimed by husband ..... 971 DEPOSIT AS SECURITY FOR ADVANCES Of title deeds, stamp on memorandum ..... 1142-1146 Of title deeds, after death of partner 1004 Of certificates, completion of transfer . . 1281, 1282, 1283, 1284 Of allowance for property tax ....... 1038 Of warrants, form of insurance ...... 1297 Of shares in limited company . . 207, 247, 1254, 1255, 1256, 1280, 1281 Of bill on demand, stamp . . . . . . . . 1138 Of bonds with blank transfer stamp ..... 1256 Of bills of exchange, stamp on agreement .... 1250 Of fire policy, no security without bill of sale .... 1067 Of policy of assurance 1063 Of life policy, should be assigned 1065 Of life policy, liability as contributory ..... 1060 Banker's remedy after returning securities temporarily to borrower .......... 71 Of stock with uncalled liability, practice, and stamp . . 1252 As to completion of title ........ 1253, 1254 As to transferring by letter from one customer to another . 1255 As to authority to sell 1040 Index. 367 DEPOSIT AS SECURITY FOE ADVANCES continued. Number! Of equitable mortgage, as collateral to promissory notes stamp 1U7 Of dated and stamped transfer, but unregistered, how long valid 1277, 1287 Of promissory note 962,1269 Of promissory note on demand, stamp . . . . . 1138 Of book debts, notice should be given to creditors. . . . 202 DIVIDEND WARRANT Custom as to one endorsement does not extend to interest warrants ....'...... 608 Endorsed to order, wants second endorsement .... 604 Endorsement by woman married since date .... 605 Banker paying under guarantee does so at his own risk . . 606 Of deceased customer, practice 151, 607 " To bearer " one proprietor's signature required ... 611 To party named " and another " one endorsement sufficient . 603 To two persons, and without " for self and other " . . . 610 To parties named, though they were trustees .... 609 Mutilated, payment of 502 Should be treated as cheques, if crossed 612 ENDORSEMENT On bill of exchange, blank made special .... 254, 255, 554 When banker must verify that of payee or subsequent . . 626 When banker need not verify that of payee .... 627 Answer on cheque as to irregularity ..... 650 By agent for collection ........ 825 By agent, correct, but evidence of authority may be required . 763 By agent delegating his authority, invalid . | 7U ' ^' J^ J71, 778 By infant's father ' 869 By married woman on cheque to spinster 697 By branch for head office would generally be accepted . . 827 By banker, necessary when payable to him .... 826 By one firm may endorse p.p. for another .... 834 By per pro, without authority, banker's liability . 884, 885, 886, 887 By collector of overseers ........ 898 By overseers .......... 899 By clerk to vestry 900 By official of companies' cheques to private a/c . 888, 889, 890, 891 Below incomplete specialty, enquiry ..... 554 Of payee, is good wherever placed 677 Of building society should be "for and on behalf" by the Treasurer 758 Of building society, or may be by the secretary " per pro." . 802 By cashier, should use " for "....... 759 Of corporation, should be by treasurer 800, 801 By drawer, still requires that of payee 803 By executors, proof of appointment unnecessary . . . 863 By executrix, illegal before probate 692 Of Government loan account . . , . . . . 815 Of steamship, should be by manager or authorized person . 795 By trustees, must be by all 856 Guaranteed by banker, what it may cover .... 857 368 Index. Question ENDORSEMENT continued. Number. Restrictive, may be disregarded ...... 858 By representatives, names should be disclosed .... 864 On cheque to self or order, when necessary .... 804 On cash orders received for collection, necessary . . . 854 By impressed stamp, valid, but objectionable .... 852 General, may be converted into special by stamp By impressed stamp, alterations must be verified . . . 855 In pencil 495. 496 By marksman .......... 159 Witness to, by marksman, should give address .... 722 Banker, guaranteeing, liability ....... 951 Banker, paying without, liability ...... 200 Certifying amount placed to special account, cannot be required 861, 862 "In part settlement " on cheque drawn "in full settlement" should banker return . . . . . . . . 516 Sans recours .......... 669 Forged, banker's liability for : Counsel's opinion . . . 613 Forged, application for return of bill must be made at once . 614, 616 Forged, on cheques, with conditions .... 1108, 1112. 1114 Forged, on bill, banker's liability ...... 622, 624 Forged, on " lost bill," banker's liability ..... 88,635 Forged, banker's rights against subsequent endorsers . . 615 Forged, of drawee as payee, banker's liability .... 645 Forged, when banker should return with answer . . . 618 Forged, collecting banker's liability . . 636, 638, 640, 642, 646, 647 Forged, paying banker's liability 617. 639. 643 Post Office liability 641 Forged, bankers can claim on subsequent endorsers . . . 649 Forged, sub-sees. 24 & 38, Bills of Exchange Act . . . 648 " Pro. per " invalid 619 "Per pro." banker exempt from liability . 876,877,878,879,880,881,882 But confirmation may be required .... 253,821,822,878 " Per pro." are generally paid across the counter . . . 874, 880 "Per pro." "A B" "C D" valid 628 ' Per pro." on cheque " to self or order " ..... 675 'Per pro." of executors by solicitor ..... 871 ' Per pro." the Receiver-General, valid ..... 788 'Per pro." Collector of Inland Revenue ..... 790 ' Per pro." may be by firm ....... 873 ' Per pro." titles, form of ....... 843 ' Per pro." by one of two payees for other .... 821 ' Per pro." by marksman, not invalid ..... 822 'Per pro." on Poor Law Union cheque . . . . . 816 ' C D or order A B" on cheque to "A B or order," C D's endorsement necessary ........ 728 Forged, protection to bankers under Sec. 60 of Bills of Ex- change Acn 626, 627, 628, 643 Necessary on cheque endorsed " in favour of A. S." . . 797 " S. Thompson, described as S. Thomson " on cheque to S. Thomson 733 " H. Graj r , cashier " unusual, but not illegal .... 764 Practice in case of differing handwriting .... 625 Varying endorsements, authority of payee .... 644 " Pay to account," authority of payee ..... 706 " To payee " and another 796. 798 " For " is good as " per pro " . . . . . . . 707 Index. 369 Question ENDORSEMENT continued. Number. Special, on inland bill, if not in English, must be noticed . 554 On cheque " to bearer " need not be examined 383, 384. 385, 386, 849 On cheque " to bearer," to be signed by payee, is necessary . 724 On cheque "to bearer" cannot be demanded .... 896 Necessary on cheque to J. Jones, endorsed " Transferred to W. Robinson, J. Jones " ....... 694 On cheque to married woman, forms of . . . . 682, 688, 690 On cheque to widow, forms of ...... 686. 687 On cheque to widow before grant of probate .... 692 On cheque to ''payee's credit" .... 442,443,444,448 On cheque to order where endorsement is blank . . 892, 894, 895 On cheque to order, drawer's endorsement insufficient . . 897 On cheque to order without payee's name, requires drawer's endorsement .......... 543 On cheque to order, when banker must look beyond payee's endorsement .......... 893 On debit slip .......... 725 Correct " Per pro." " or p.p." A B, C D ...... 628 A B by C D attorney ........ 628 For A B, C D agent ......... 628 By agent of Insurance Co. ....... 710 Agent to, for and on behalf of ...... 631 ' For " instead of " per pro "....... 707 " F. J. and F. J. Hunt " on cheque to order of Messrs. F. J. Hunt would usually be passed ...... 652 " Brooke & Co." on cheque to Messrs. Brooke .... 745 " Sownbank & Co." on cheque to Messrs. Sownbank . . . 748 " C. L. fc Sons " on cheque to Messrs. L. . . . . . 653 B. Colliery Co.. Ld., per C. H., Secretary ..... 782 " I. Wait & F. Pope " on cheque to Messrs. Wait & Pope . . 655 With prefix "Mr." and "Mrs." or "Messrs." .... 661 " Barrens " on Messrs. Barrens . . . . . . 667 " D. B. Smith Alex. Smith " on cheque to D. B. & A. Smith . 657 "Rev. R. S. Brown, M.D.," on cheque to same . . . 665 " Received cash, Jane Jones," on cheque to Jane Jones . . 679 " Pay cash, Wm. Smith " ........ 680 Of payee, wherever placed ....... 677 ''Per pro. Rev. C. D. Smith, Henry Brown," on cheque to Rev. C. D. Smith ......... 664 " M. A. Smith, widow of R. Smith," on cheque to Mrs. R. Smith 686 " Mary Smith " on cheque to Mrs. Smith ..... 688 By executors of widow, signing as such ..... 693 " Emma Smith, executrix of the late J. Robinson," on cheque payable to Mr. J. Robinson or order ..... 696 " Coopers " on cheque to Messrs. Cooper, but unusual . . 670 " Jones and Draycott's successors," but unusual . . . 671 691 " Jones, C. Gr. Jones," on cheque to Messrs. Jones . . . 623 " For Smith & Co , Ld., A B, Branch Manager " on cheque to Smith & Co., Ld., or order ....... 757 " Jones Brothers " on cheque to Jones Freres .... 840 " Thos. Jones, Clerk to Vestry," on cheque to Vestry . . 900 " J. Smith, jun." on cheque to Mr. Smith ..... 698 " J. T. Smith, Major " on cheque to Major J. T. Smith . . 699 BB 370 Index. Question ENDORSEMENT continued. Number. " A. W. Howe," on cheque to Lieut. Howe, R.N. ... 700 " E. E. Smith," on cheque to Grenl. Smith .... 701 " Jas. Brown, Thos. Smith " on cheque to Messrs. Brown ; for " or p.p. ..... 832, 833 Officers should sign officially 817, 818, 820 Officers should sign officially, but this need not be insisted on . 742 Receipt not sufficient for endorsement ..... 806 Per pro. T. Smith, Ld., J. Smith director 783 By liquidator 772, 774 By change of title 776, 784 " Limited or reduced " for " limited," passes .... 773 EXECUTORS Accounts of, how they should be opened . . . 904, 906, 907, 920 And banker, as to account before probate .... 920 And banker, as to amount of probate letter from Somerset House 916, 917 Cannot demand boxes left with banker till production of probate 901 One only cannot inspect and mark deeds And administrators considered as one person .... 908 Default of, liability of banker for ...... 905, 990 Endorsement by ... 292, 705, 859, 860, 863, 865-868, 870, 872 Endorsement of representatives ...... 864 Endorsement by solicitor of ....... 871 Money at a/c of, cannot be set off against testator's deficiency without order ......... 903 One alone can sign cheques ...... 909, 911, 912 Except when notice to the contrary is given . . . . 913 Can appoint agent to sign cheques in special cases . . . 914 Cannot endorse before grant of probate ..... 692 One of two can give discharge for testator's balance . . 909 374 Index. Question EXECUTOES continued. Number. Payment by, of promissory note after death of maker . . 918 Payment to, after death of payee of bill ..... 292 Must give authority for transfer from deposit account . 587 Liability of, on guarantees Death of one does not invalidate cheque signed by two Alterations in cheque, when to be initialled by all . Should sign cheque for transfer of deceased's balance 945, 959 910 915 904 FORGERY Forged endorsement on bill of exchange, claim of holders for value . . ^ . . . 925, 926 Forged endorsement on cheque, liability of exchanging bank . 46 Of bill of exchange by altering figures, liability . . . 924 Of cheque, time for recovering money paid on . . . . 923 Of telegram ordering return of money, banker's liability . 201 See under Endorsement. FRIENDLY SOCIETY As to duty of banker to examine rules .... 921 Effect of word " Manager " in opening the account . . . 922 GARNISHEE ORDER Necessary to fix funds in banker's hands ..... 83 As to money subsequently paid in ...... 82 Banker may retain payments in reduction of overdraft, not- withstanding ......... 85 Generally 82.84 GUARANTEE Advantage in form of agreement or under seal . . . 929 Effect of withdrawal on outstanding cheque .... 942 Banker's, of irregular endorsement ..... 928, 936, 951 Banker's, want of endorsement 927 Discharge of, as to giving up instrument . . . 953, 954, 955. 956 Discharge of, and position generally 956 Failure of principal, claim to be first made on guarantee. . 937 Guarantor, no right of inspection of books .... 938 But should be informed as to the extent of liability . 939 Liability of executors of guarantor 945, 959, 960 Liability on, does not survive bankruptcy. .... 957 Overdrawn account, withdrawal of guarantor . . 934, 935, 950, 958 Overdrawn account, withdrawal of one joint guarantor . . 940, 941 Stamped, not a preference security in bankruptcy . . . 952 Under seal requires ad valorem stamp ..... 930 What constitutes notice of withdrawal 958 Effect of qualification by letter 961 Signature of witness not necessary to ..... 943 When does the right of action first accrue .... 932 When Statute of Limitations begins to run . . . . 929, 931 Effect of Statute of Limitations on continuing . . . 933 When surety relieved by Statute of Limitations . . . 944 As to stamp on 1216,1217 Death of guarantor, as to new account .... 946, 948, 949 Death of guarantor determines extent of liability . . . 947 Index. 375 HUSBAND AND WIFE Paid in by wife, must be paid out to her ..... 971 Current account, right of survivor ..... 963, 967, 968 Husband's power of attorney does not terminate wife's power to draw ........... 965 Husband's death terminates wife's authority to draw . . 964 Husband, if survivor, must take out letters of administration. 966 Joint account, effect of husband's bankruptcy . . . 970 Joint account, as to payment of balance to survivor . . 583, 990 Joint account, both must sign receipt ..... 972 Joint account, as to payment of account duty . . . 981 Sha,res in limited company, right of survivor .... 969 Account of wife who is minor, banker's liability . . . 1014 Deposit receipt in wife's maiden name ..... 592 Bankruptcy of husband, accounts in wife's name . . 215, 216, 217 INCOME TAX Should not be deducted from foreign dividends . . . 973 INSANITY Of customer, how should banker deal with account . . . 974, 975 INTEREST On overdrawn account of deceased customer, allowed . . 977 Legal and customary rate ........ 976 On bills of exchange, stamp ..... . 1159, 1160 On promissory note, stamp ....... 1 161 On overdue bill ..... ..... 978 JOINT ACCOUNT When banker may pay to survivor on proof of death 983, 984, 985, 986 Banker need not see to payment of probate duty before paying to survivor .......... 982, 987 Banker should not pay when executors of one forbid . . 988 Banker should open new account on death .... 989 Both to sign, banker may pay to survivor . . . . 979 Of executors .......... 991 Of husband and wife, both must endorse receipt . . . 972 Of husband and wife, bankruptcy ...... 970 Of husband and wife, as to payment of balance to survivor ( g Shares in limited company husband and wife . . . 969 Power of attorney, dividends received by survivor . . . 991 Money deposited in, when banker may not pay to one . . 980 Money to be paid " to either or survivor," proof of death un- necessary .......... 985 Of partners. (See Partners') ....... 990 Of partners, banker's lien on separate deposits . . . 1008, 1041 Of two persons, not partners ....... 990 LETTER OF CREDIT Practice of bankers as to paying unused . . . . . 121 Forged, negotiating draft in excess, liability .... 122 Of bank, limited or unlimited to depositors before registration 992 376 Index. Question LIABILITY Number. Of endorsers on bills of exchange 615, 993, 994 Of a surety of accommodation bill ...... 995 Of persons signing in official capacity . . 167, 168, 169, 170, 555 Of shareholders in American or foreign railways . . . 998 Of ship's husband for overdrawn account . . . . 171 Of drawer and endorser for stolen cheque .... 388 Of maker of joint promissory note 1086, 1087 LIABILITY OF BANKER For accepting life policy as security ...... 1060, 1061 For account of bankrupt's nominee ...... 214, 215 For account of compounding debtor ..... 220 For account of wife of undischarged bankrupt . . 215, 216, 217 For account of of executors 906, 919. 990 For account of married woman ...... 591 For account of minors 1010, 1013, 1014, 1016 For account of partners, receiving private cheque . . . 1045 For account of partners, survivor 1050 For account of trustees 1288, 1289, 1291, 1292 For advancing on stock certificates ; trust money . . . 1279 For agreeing to pay cheque " if in order " 60, 61 For allowing overdraft by agent 79, 80 For allowing overdraft by building fund ..... 97 For allowing overdraft by club 97 For allowing overdraft on joint promissory note . . . 133 For asking for re-presentation on a given day .... 76 For bill of exchange with altered figures ..... 924 For cashing cheque to bearer ....... 48 For closing on ordinary business day ...... 67 For crediting cheque in error ....... 57 For cancelling cheque in error ....... 53 For cancelling credit ........ 54, 55 For changing cash order for cheque ..... 50 For changing crossed cheque . > ,^^$$#$ For changing crossed cheque for 10 days' draf c . . . 475 For changing crossed cheque presented by loan office . 51 For cheque entered in pass book ...... 74, 75 For cheque of bankrupt customer .... 205,210,222-226 For collecting cheques .... 438, 465, 466, 467, 468, 637, 884 For collecting, as agent, cheque for wrongful owner . . 100 For refunding money paid through forged endorsement . . 616, 617 For contents of box, left for safe custody . . . 144-147,208 For dishonouring cheque of customer with balance at another branch 101, 102 For placing firm's cheques to manager's private account IQ*,' ( ooo, oyu For entries in pass-book as cash ...... 75 For expenses of warehousing goods security . . . 1039 For failure of agents for collection ...... 164 For honouring cheques of retired agent ..... 165 For honouring cheques of deceased agent. .... 96 For foreign draft, unsigned by him . . . . . . 173 ( 46, 88, 89, 90, 91 (CovnwVs opinion), For forged endorsements . . \ 93, 94, 120, 614, 622, 627, 635, 636, ( 638. 639, 640, 641, 642, 880, 925, 926 Index. 377 Question LIABILITY OF BANKEK continued. Number. For forged endorsements, collecting banker for six years . . 1262 For forged endorsements when advised by another banker . 89 For forged endorsements on draft by branch . . 90 For forged endorsements on promissory note . . 1081 For forged signature on bank credit. ... . 99 For forged telegram . 201 On guarantee of branch manager .... . 114 On guarantee after notice of withdrawal. . . . 950 On guarantee of endorsement ..... . 951 For having document properly stamped ... . 1103 For handing over bill to unknown third party . . 308 For holding over bill received after maturity . . . 312 For holding over cheques ..... . 3-29 For lost draft . 996,997 For marked cheque 111,452,453 For not examining documents attached to cheque . . 186 For opening on Bank Holiday .... . 66 For paying draft without endorsement ... . 200 For paying document in form of receipt ... . 203 For paying bill, form of acceptance .... . 286, 288 For not paying stopped cheque .... 63, 64, 65, 68, 70 For not paying cheques paid in simultaneously . . 103, 104 For parting with funds after notice ... . 83 For cashing cheque on another banker ... . 387 For paying cheque stopped by drawer . . 52, 59 60, 61, 64, 65, 66 For paying cheque drawn in bankrupt's favour . . 218, 219 For paying and debiting post-dated cheque . . . 521,522 For paying cheques after cancellation of authority . . 54, 55 For paying cheque not stopped by drawer . . . 62 For paying cheque of survivor without proof of death . 984, 985 For paying cheque crossed " not negotiable " . . . 100 For paying cheque to order altered " to bearer " . . 546-550 For paying cheque on pencil endorsement For unperforated cheques ..... . 497 For payment of uncalled capital .... . 248, 1278 For receiving advice notes of acceptances, to pay bills . 112, 180 For paying private cheques to partnership account . 1045 For cheques of customer's agent .... , 79, 80 For re-purchasing draft ...... . 113 For returning cheques exceeding overdraft . . 133 For saying it will be paid on re-presentation . . .77, 78 For paying stolen cheque . 200, 391 For paying cheque with altered date ... . 523 For paying cheque through clearing nob crossed by bank r . 413 For paying cheque signed by Company's name only. . 479 For seeing to payment of probate duty ... . 982, 987 For stopping draft on his London agents ... . 86 LIEN Of holder of presented cheque on insufficient funds ... 30 On the account of reputed partner ...... 1002 On bonds payable to bearer, but claimed by trustees . . 1007 On bonds deposited, with instructions to collect coupons . . 999, 1000 On bonds where customer cuts off coupons, but banker collects 999 On bonds where customer cuts off coupons, and collects . . 999 On bonds with special memorandum attached . . . 1000 378 Index. LIEN continued. Number. On debentures, with instructions to company to pay dividends to banker 999 On dividends of deceased life tenant 1001 On short bills deposited for collection 999 On title deeds and plate 999 On title deeds as regards second charge ..... 249 On title deeds as regards stamps ...... 1258 On warrants 1296 Memorandum of equitable charge (not under seal) good [ ,., against official receiver ) Does not hold on goods deposited for safe custody . . . 1006 On shares in joint stock company . . . . . .207, 1280 On certificates, when money advanced to pay for them . . 1009 On shares of deceased customer proved insolvent . . . 246, 247 On current account in case of customer's bankruptcy . . 250 On various current accounts of agents ..... 169.170 Deposit of share certificates with blank transfer not complete 1283, 1284 Joint deposit account in respect of joint current account . 1008 Not on private accounts of partners in firm . . . . 1041 Not on joint account for private . . . . . . 1043 Of bank on its own shares 1003 MINOR Account of, in credit or overdrawn, banker's liability . 1013 Account of, who is also married woman . . . . 1014 As agent, may sign cheques . . . . . . 1017 As partner, banker should not open account . . . 1016 Cheque paid to, remedy against drawer . . . . 1011 Deposit in trust for, banker's liability for trustee's default 1010 Deposit in trust for, banker's liability for withdrawal . 1015 Deposit receipt recognising trust (for minor), unusual . 1012 MORTGAGE Equitable, schedule should be signed by all parties . . . 1021 Liability of mortgagees for fulfilment of covenants in lease . 1018 Powers of building societies to, preference shares no part . 1020 Ship, mortgagee cannot realise after mortagor's bankruptcy . 1019 Partly paid off and again advanced, fresh deed necessary . . 1023 Wholly paid off, new deed necessary ..... 1022 Right of customer to deduct income tax ..... 1024 NOTES (BANK) Licenses for issuing, what banker must take out . . . 1032, 1033 Of bank in liquidation, interest on . . . . . . 1025 Found in bank ownership 1026 Irish and Scotch, not legal tender 1031 Of private banker, not legal tender ...... 1027 Of private banker, cease on conversion into joint stock company .......... 1034 Of Bank of England, must be paid in gold .... 1028 Of Bank of England, must be paid notwithstanding stop. . 1030 Of Bank of England, radius from Royal Exchange . . . 1029 Index. 379 Question NOTING Number. Necessity for .......... 354 Use of 354, 355 Use of on copy of bill 356 Reference on the bill cost, enforcement against acceptor . . 1035 Recovery of charges, custom in London ..... 1036 Recovery of, on bill with foreign endorsements . . . 1037 Omitting on bills stamped " sans frais " . . . . . 342 NOT NEGOTIABLE 388, 389, 397-406, 466, 468 On bill of exchange 251 OVEEDEAFT Banker's remedy on bills held as security bankruptcy . . 232, 234 Banker's right to interest on deceased customer's account . 977 By agent, banker's liability 79 Of firm, banker no lien on private accounts . . . . 1041 Bank usually give notice of intention to realise security . . 1040 Banker's right to cancel 1042, 1044 Of partners, liability of retiring 1046 Effect of garnishee order ........ 84 By limited liability company, effect of issuing debentures . 577 By members of school committee ...... 167 By treasurer of chapel, liability ...... 555 By ship's husband ......... 171 Secured on title deeds, allowance for property tax . . . 1038 Secured on goods, banker's liability for costs of warehousing, &c. 1039 Secured on joint promissory note ...*.'.. Debited with acceptances ....... 139 As to retaining vouchers 155 PAETNEES When all must sign alteration " order bearer " . . 550 Retiring, custom as to account . . . . . . . 1051 Liability of retiring, for overdraft ...... 1046 Acceptance when not included in order not to honour signature ] 057 As to payment of balance of account to survivor . . . 1050 Can give discharge though partner bankrupt .... 1054 Cheque of, either can instruct banker not to pay . . . 1049 Cheque of, is not invalidated by decease of signing partner . 1053 Overdrawn accounts of, banker no lien on private account . 1041 Signature of, altered form, as to paying ..... 1058 Bankruptcy of, effect on firm's account ..... 1055 Survivor can draw cheque with firm's signature . . 1047, 1052, 1056 Paying partner's cheque to private account of manager . 885, 886, 890 Paying private cheque to partner's account .... 1045 Effect of garnishee order ........ 84 One of two can authorise third party to sign .... 1048 One of two can sign " pro " both ...... 1058 Periodical transfer to private accounts effect of death . . 1059 Joint account effect of death ....... 990 POLICY OF ASSUEANCE Banker's right to prove in bankruptcy for premiums . . 245 Stamps on, bankers should see to ...... 1066 380 Index. Question POLICY OF ASSURANCE continued. Number. As security for banker, best form of taking .... 1064 As security, must be assigned ....... 1065 Can assignee of, as collateral security, be made contributory of insurance office wound up ....... 1060 Deposited with banker, as to satisfaction of claim . . . 1063 In hands of banker, second charge on, as to giving up . . 1062 By husband, in favour of wife, as security .... 1061 Fire, no security on stock without bill of sale .... 1067 PROMISSORY NOTES Effect of "sans recours" 1093 Joint and several, the one party signing is liable Joint and several, notice of dishonour, necessity for . . 1090, 1094 Joint and several, necessity of notice of deposit as security . 1095 As set off to surety for advances 962 Liability of joint signatory current account .... 1086,1087 On demand continuing security 1085 Of government, left with bank to receive dividends, creditor's remedy on failure of bank Payable by instalments, bankers receive such for collection . 1068 Payable by instalments, as to stamps thereon .... 1069 Payable by instalments, when negotiable . . . . 1070 Payable by instalments, liability 1270 Payable three months after date is negotiable .... Renewal of, effect of one party not signing .... 1084 Renewal of. Statute of Limitations Statute of Limitations, when it begins to run . 1264, 1265, 1266, 1267 Subsequent endorser cannot be sued by payee .... 1088, 1089 From man to pretended wife With payee's name omitted, irregular ..... 1075 Payable on condition, invalid 1076 Conditional, so-called Stamp and days of grace Payable to order at two months' notice is a regular document . 1074 When payee's endorsement cannot be insisted on ... 1080 With forged endorsement, banker's liability . . . . 1081 Effect of laches in presenting on forged ..... 1082 Non-withdrawal and liability of makers 1078 Validity of unusual signature ....... 1079 With provision for interest, stamp With provision for interest, negotiability (see Stamps) . . 1 092 Of any kind require ad valorem stamps 1071, 1072 Of bankrupt and partners Bankers' rights in paying . . 221 RECEIPT At foot, no need of endorsement .... . 1096,1107 Not given by bankers for articles left for safe custody Usually given on bills, but not on cheques As part of cheques now require a stamp 1101. 1102, 1103 May be wholly on the stamp 143 206 1104,1105,1106 1116 Date and signature must be written across stamp (adhesive) Banker not bound to see to ....... 1102 SHIPS Bill made payable three days after arrival .... 261 Endorsement by manager of 795 Index. 381 Question SHIPS continued. Number. Ship's husband, liability as to overdraft .... 171 Unregistered mortgage ........ 1019 Banker's duty as to stamp on policies ..... 1103 STAMP DUTIES On agreement, on deposit of bills of exchange .... 1250 On agreement, may be inspected within thirty days . . 1097 On agreement, two threepenny stamps correct . . . 1099 On assignment of life policy 1243, 1244, 1245 On banker's acknowledgments 1122,1210,1211 On banker's acknowledgment of advice . . . . . 1110 On banker's drafts, their definition and use .... 1212, 1213 On banker's payments to brokers . ... 1214 On bills of exchange, insufficient, as to stamping copy . . 1158 On bills of exchange, foreign, payable on demand . . . 1199 On bills of exchange, foreign, ten days after sight . . . 1179 On bills of exchange, foreign acceptance refused . . . 1200 On bills of exchange, should cover interest when specific sum named . ........... 1159 On bills of exchange, need not cover interest when specific sum not named . 1160 On bills of exchange, with exchange as per endorsement . 1167,1233 On bills of exchange, drawn in Channel Islands, negotiated here 1175 1176 On bills of exchange, drawn from abroad . . j On bills of exchange, drawn abroad, endorsed in England j , 2 oo' i OQQ On bills of exchange, accepted in Germany .... 1230 On bills of exchange, issued in France, drawn on Australia, and negotiated here 1232 On bills of exchange, drawn in New York on Melbourne, paid in London 1233 On bills of exchange, drawn in England, payable in Canada . 1202 On bills of exchange, sold direct to foreign bankers . . 1204 On bills of exchange, drawn by English firm on French . . 1207 On bills of exchange, of later date 319 On bills of exchange, unaccepted but paid .... 1178,1180 On bills of exchange, in a set . . . . . . 1206 On bills of exchange, bottomry bond, document resembling . 1247 On bills from Colonies, payable in Paris 1201 On bill of exchange, effect of absence of stamp on recovery in France . 1208 On bills of exchange, penalties of acceptor for no stamp . . 1209 On bills of exchange, drawn on foreign warship . . . 1246 On bonds, foreign, sold in England ...... 1249 On bond of treasurer . . . . . . . . 1251 On transfer of shares as security ...... 1256 On cash order, payable at bank 1119 On cash order, with cheque attached ..... 1120 On cheque " received cash " requires stamp . . .1101,1104,1105 On cheque ordering banker to pay, on receipt being stamped and signed, objectionable 1106,1112,1114 On similar cheque, banker would have no protection under the Bills of Exchange Act, sec. 60 . . . 1108,1112,1114,1115 382 Index. Question STAMP DUTIES continued. Number. On similar cheque, but not if under 2 1113 On similar cheque, the receipt does require a stamp . . . 1107, 1111 On cheque at back of deposit receipt On cheque issued to foreign customers . . . . . 1164 On cheque when customer withdraws money personally . . 1165 On cheque payable at future date ...... 1168,1170 On cheque two half -penny stamps sufficient . . . . 1171 On cheque may not be on Inland Bill stamp . . . . 1172 On cheque under 2 1234 On cheque drawn abroad 1218,1220,1221 On cheque and bill negotiated abroad 1220 On cheque post-dated . . . . . . . . 1169 On cheque endorsed abroad 1219 On cheque drawn on Isle of Man bank ..... 1228, 1235 On cheque of Poor Law Union 1181 On cheque of Volunteer Corps . . . . . . . 1188 On cheque of Guardians acting as Rural Sanitary Authorities. 1182, 1187 On cheque of Overseers . . 1189 On cheque of School Board 1183 On cheque of Odd Fellows Lodge 1184,1185 On cheque of Friendly Society 1186 On cheque of trustees in bankruptcy . . . . . 1190 On cheque for payment of Revenue. . . . . . 1191 On cheque of postmaster, for remittance of P.O. money . . 1173, 1192 On cheque of postmaster, when necessary . . . . 1192 On cheque of Savings Bank manager . . . . . 1193 On circular notes . 1215 On debit notes 1125, 1128 On deposit of bills of exchange ...... 1250 On deposit receipts 1156,1241 On deposit receipt. Cheque on back requires stamp . . 1157 On deposit receipts when changing for larger one . . . 1129 On deposit receipts when transferring to current account . 1130 On deposit receipts when repaid to depositor on endorsement . 1166 On deposit receipts payable to " either or survivor ". . . 1156, 1242 On deposit of money for reduction of overdraft . . . 1155 On dividend warrants of Building Society .... 1121 On draft on demand accepted 1138 On draft on demand or at sight . . . . . . 1177 On draft application form used for debit (Inland Revenue) . 1126 On draft on branch bank, on head office 1141 On equitable mortgage as collateral security .... 1147 On equitable mortgage exceeding security .... 1148,1152 On equitable mortgage. Insufficient claim of official receiver 1153 On guarantee of acceptance . . . . . . . 1217 On guarantee under seal 1216 On indemnity .......... 1151 On letter ordering payment of dividends 1139 On letter ordering payment of cheques drawn per pro . . 1139 On letter ordering payment of cheques drawn by wife on husband's account . . 1140 On letter ordering retirement of another's acceptance On letter requesting retirement at H.O. . . . . . 1237 On letter requesting joint security to be considered as sole . 1255 On letter from customer to banker to issue draft . . . 1124 On letter guaranteeing acceptance . . . . . . 1217 Index. 383 STAMP DUTIES continued. Number! On letter of authority to sign cheques . . . , . 1123 On letter of advice of payment of money . . . . 1163 On letter of request advising- customer's acceptance. . . 1236 On letter which is really bill of exchange .... 1239 On memoranda of deposit of title deeds 1142,1143 On memoranda of deposit of Corporation bonds . . . 1205 On memoranda with increased advances . . . 1144,1145,1146 On memoranda of deposit of bonds 1196,1197 On memorandum of deposit of stock 1194,1195 On mortgage of life policy 1243, 1244, 1245 On mortgage for increased amount, no declaration necessary . 1148 On mortgage by Limited Company by hand or seal . . 1149,1150 On order to pay by draft 21 days after date .... 1203 On order to banker to make payments . . . . . 1125 On order to debit acceptance . . . . . . . 1127 On order to banker to withdraw bill 1137 On order of transfer of account to another branch . . . 1131 On order to transfer periodically to another account . .1132,1133 On order to transfer to account at another bank . . . 1134 On order to transfer to another account at the same bank . 1136 On order to transfer from current to deposit account . . 1135 On order on U.S. Treasury negotiated here . . . . 1174 On overdraft signed by third party 1216 On policies of insurance, undertaking to assign . . . 1064 On promissory note, document similar to . . . . . 1247 On promissory note with provision for interest. . . . 1073, 1161 On promissory note with instalments 1069 On promissory note, must be ad valorem ..... 1071, 1072 On protest. Copy v. original . . . . . . . H62 On receipt of payment for dividends ..... 203 On receipt of bill for presentation . . . . . . 1240 On sealed guarantee for overdraft . .. . . . . 1216 On transfer of bonds as security . . . . . . 1196, 1197 On transfer of stock as security (see Transfer) 1248, 1252, 1253, 1254,' 1256 When stamp receipt at foot of cheque renders endorsement necessary 1096 Undertaking to pay money to banker ..... 1098 Receipt " paid by stamped cheque " requires stamp . . . 1100, 1154 Printed form at back of cheque does require stamp . . 1109 And at foot of cheque 1112,1114,1115 Or with words of receipt ........ 1118 Protest and copy must both be stamped 1162 STATUTE OF LIMITATIONS As regards keeping old ledgers, etc 154 As regards guarantees 929, 931, 932, 933, 944 How affected by payments to current account . . . 1260 How affected by payments of interest only . . . . 1272 How affected by signing account 1272 Against dormant loan account, one of three .... 1271 Against equitable deposit of title deeds 1259 On joint and several promissory note ..... 1267 On joint and several promissory note, as regards the surety . 1269 On notes "on demand" runs from date ..... 1264 On one day after demand ........ 1266 On three months after demand ..... 1265 384 Index. Question STATUTE OF LIMITATIONS continued. Number. On sureties, bonds to bankers ....... 1268 Promissory note, what constitutes a renewal .... Protects bank against unclaimed balance 1263 Xot affected by pretended marriage . . . . . . 1261 Against stopped cheques ........ 63 Against collecting banker, for six years . . . . . 1262 Promissory note must be renewed to avoid .... 1258 TRANSFER OF SHAKES Must be complete to form security 1283, 1281 What is necessary for completion .... 1252, 1253, 1251, 1256 No penalty for not stamping blank Transferee's name should be inserted ..... Stamped and dated, but not registered, how long valid . . 1277 With two dates 1282 As to using authorised form only A B, transferor and transferee usually signs twice . . . 1276 Undated and unstamped penalty "Ten days for delivery from date of settlement" denned As to notice of closing of transfer books ..... 1285 Power of public to inspect register ...... 1286 When Company must register transfer Trust property, banker's position 1279 TRUSTEES Must all verify alteration of cheque ..... ;~>47 Can three authorise cheque to be signed by two Can three authorise cheque to be signed by fourth . . . 1292 One cannot give a discharge for all . . . . . . 1290 One can stop cheque 1289 Accounts of, banker's liability 1291, 1293. 12U4 Deposit receipts of. Danger of ...... 1293, 1295 WARRANTS Deposited with banker, notice, security ..... Deposited with banker, form of insurance . . . . 1297 YC 23985 AN OUTLINE OF (Shirts of tip institute of IBankm. / I \ HE Institute is an Association of Gentlemen connected with the various branches of Banking. Its primary object is to facilitate the consideration and discussion of matters of in- terest to the profession, and where advisable, to take measures to further the decisions arrived at ; ancj, its secondary object is to give opportunities for the acquisition e r knowledge, of t the theory of Banking. The Institute have now an ' /'ing-room and a valuable Reference Library, consis*' n Banking, Commerce, Finance, and Political Er ^ At the Ordinary ^ 'titute, which are held monthly from November I. papers by .members and others are read, d these, . 'the discussions thereon, are published ; T nstit\> / ' tiich also contains under the head o' TYf Cfc /^>Q/ P RACTICAL INTEREST " a variety 0' n on subjects of daily recurr- ing, and usually bearing on tk winter in London and provinc, ^J, ft &j\ { iied in the Journal, which is distribv , The Examinations for the Certificate of the Institute, for which many of the leading banks now give prizes, are held early in April, in London and the provinces. Full particulars of these may be obtained of the Secretary. The Institute consists of Fellows, Associates, and Ordinary Members, forming together a body, at the present time, of nearly 4,000 Members. The Annual Subscription to the Institute is Two Guineas for Fellows, One Guinea for Associates, and Ten Shillings and Sixpence for Certificated Associates and Ordinary Members, payable in advance on the 1st January, in each year, unless the date of admission be later than 30th June, when only a half-year's subscription is so payable. All future Annual Subscriptions may be compounded for by a payment, at any one time, of Twenty Guineas for Fellows, and Ten Guineas for Associates. Forms of Application for election, and any further information, will be supplied on application to the Secretary. September, 1902.