Chap. XII. requisites in form is determined by the law of the place of issue; as regards requisites in form of the supervening contracts, as acceptance or indorsement, by the law of the place where such contract was made.1 Cheques. Presentment Cheques. The Bills of Exchange Act, 1882, also deals with cheques, and generally reproduces with slight additions the Crossed Cheques Act, 1876.2 A cheque is defined to be "a bill of exchange drawn on a banker payable on demand": and generally the provisions of the Act applicable to a bill of exchange payable on demand apply to a cheque.3 A bill of exchange is an "unconditional" order to pay, and therefore a cheque with a condition attached, for instance, that the payee shall sign a form of receipt attached to the cheque, is not a "cheque" within the meaning of the Act. The Revenue Act, 1883, however, extends the provisions of sects. 76-82 of the Act of 1882 to any document issued by a customer of a banker and intended to enable any person to obtain payment from the banker of the sum named therein as if it were a cheque, but not so as to make it a negotiable instrument.5 Subject to the permitted excuses for delay or non-presentment for payment. for payment, the Act provides :—3 (1.) Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or the person on whose account it is drawn had the right at the time of such presentment as between him and the banker to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of such banker to a larger amount than he would have been had such cheque been paid. (2.) In determining what is a reasonable time regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case. (3) The holder of such cheque as to which such drawer or person is discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge, and entitled to recover the amount from him. 1 S. 72. See Horne v. Rouquette, 3 Q. B. D. 514; Re Marseilles Co., 30 Ch. D. 598. See Chalmers, 4th edit., Intro., p. xl. 239 & 40 Vict. c. 81; repealed by s. 96 of the Act of 1882. 3 S. 73; M'Lean v. Clydesdale Banking Co., 9 App. Cas. 95. Ante, p. 172. 5 See Bavins v. Lond. & S. W. Bank [1900] 1 Q. B. 270, 272 n. 6 46 & 47 Vict. c. 55, s. 17. This section effected a change in the law : "It was introduced to mitigate the rigour of the common law rule. At common law the mere omission to present a cheque for payment did not discharge the drawer, until at any rate six years had elapsed, and in this respect the common law appears to be unaltered. But if a cheque was not presented within a reasonable time, as defined by the cases, and the drawer suffered actual damage by the delay, e.g., by the failure of the bank, the drawer was absolutely discharged, even though ultimately the bank might pay (say) fifteen shillings in the pound." Chap. XII. The relation of banker and customer is that of debtor and Banker's duty and creditor; the customer is the creditor, and has a right to draw authority; cheques on the banker to the extent of the amount for which he is creditor. If the banker, having sufficient funds of the customer in his hands, dishonours his customer's cheque, he is liable to him in an action.2 If the bank have several branches, a customer having an account at one branch is not generally entitled to draw on another branch.3 tion of. A banker's duty and authority to pay his customer's cheque are determinadetermined by countermand of payment, or by notice of his customer's death;5 also by the fact that a receiving order in bankruptcy has been made against his customer, or by notice that he has committed an available act of bankruptcy." A cheque taken in payment remains the property of the payee so long as it remains unpaid. When paid the banker is entitled to keep it as a voucher till his account is settled; after that the drawer is entitled to it as a voucher between him and the payee.7 General. A cheque is crossed generally by the addition across its face of Crossed the words "and company," or any abbreviation thereof, between cheques. two parallel transverse lines, either with or without the words "not negotiable"; or of such lines simply, either with or without the words "not negotiable."8 It is crossed specially by the addition across its face of the name Special. of a banker, either with or without the words "not negotiable." 1 Chalmers on Bills of Exchange, P. 247. * See Fleming v. Bank of New Zea land, [1900] A. C. 577. 3 Chalmers, p. 252. As to branch banks, see Prince v. Oriental Bank, 3 App. Cas. 325. 4 S. 75. Cohen v. Hale, 3 Q. B D. 371. S. 75. Rogerson v. Ladbroke, 1 6 See s. 97, which provides that the 7 Charles v. Blackwell, 2 C. P. D. 162. Chap. XII. Crossing by drawer, or after issue. Material part of cheque. Duties and liabilities of banker as to crossed cheque. Protection to banker and drawer. Cheque crossed "not negotiable." As to crossing, the Act of 1882 provides :-1 (1.) A cheque may be crossed generally or specially by the drawer. (2.) Where a cheque is uncrossed, the holder may cross it generally or specially.2 (3.) Where a cheque is crossed generally, the holder may cross it specially. (4.) Where a cheque is crossed generally or specially, the holder may add the words "not negotiable." (5.) Where a cheque is crossed specially, the banker to whom it is crossed may again cross it specially to another banker for collection. (6.) Where an uncrossed cheque, or a cheque crossed generally, is sent to a banker for collection, he may cross it specially to himself. The crossing is a material part of the cheque and may not lawfully be obliterated, or, except as authorized by the Act, be added to or altered. A banker on whom a cheque is drawn who pays it, if crossed generally, otherwise than to a banker, or, if crossed specially, otherwise than to the banker to whom it is crossed, is liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid. But if the cheque is apparently not crossed, or an obliteration or alteration of the crossing is not apparent, the banker who pays in good faith without negligence is protected.* Where a banker on whom a cheque is drawn pays it, if crossed generally, to a banker, or, if crossed specially, to the banker to whom it is crossed, in good faith and without negligence, such banker, and, if the cheque has come to the hands of the payee, the drawer, have the same rights and are in the same position as if payment had been made to the true owner of the cheque.5 Where a person takes a crossed cheque "not negotiable," he neither has, nor can give, a better title to it than that which the person from whom he took it had. Therefore, if such a cheque be stolen and afterwards be cashed by (say) a tradesman in good faith, he does not get, and cannot give, a better title to it than the thief. 1 S. 77. 2 See Lond., City & Mid. Bank v. Gordon, [1903] A. C. 240. 3 S. 78. 4 S. 79. 5 S. 80. 6 S. 81. As to the conditions necessary to make a cheque not negotiable, see National Bank v. Silke, [1891] 1 Q B. 435. Protection to banker. Where a banker in good faith and without negligence receives Chap. XII. payment for a customer of a cheque crossed generally or specially to himself, and the customer has either no title or a collecting defective title to it, the banker is not liable to the true owner by reason only of having received such payment. A banker who takes a crossed cheque from a customer and at once credits him with the amount before it is paid by the bank upon which it is drawn, and then receives payment of the cheque, is not protected by the above provision, because he does not receive payment for the customer but for himself.* indorsement. A banker who in good faith pays his customer's genuine cheques Forged held under a forged or unauthorized indorsement, is deemed to have paid it in due course, and is entitled to debit his customer with the amount.5 Promissory Notes. Besides cheques, the Bills of Exchange Act, 1882, also deals Promissory with promissory notes. The following is a form of promissory note: £100. LONDON, 1st April, 1887. Two months after date I promise to pay to Mr. John Jones or order one hundred pounds for value received. 6 66 BENJAMIN BROWN. "At common law," says Mr. Justice Byles," no note of hand was transferable; and before the stat. 3 & 4 Anne, c. 9,7 it was the opinion of Lord Holt and nearly all the judges, that no action could be maintained, even by the payee, on a promissory note as an instrument, but that it was only evidence of a debt. That statute first made promissory notes assignable and indorsable, like bills of exchange, and enabled the holder to bring his action on the note itself." notes. By the Act of 1882, a promissory note is defined to be "an Definition. unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or 1 Hannan's Co. v. Armstrong, 5 Com. Cas. 188. G. W. R. Co. v. Lond. & County Bank, [1901] A. C. 414. 3 S. 82. See Kleinwort v. Comptoir National, [1894] 2 Q. B. 157; Lacave v. Crédit Lyonnais, [1897] 1 Q. B. 148; Clarke v. London Bank, Id. 552. 4 Lond., City & Mid. Bank v. Gordon, [1903] A. C. 240. 5 16 & 17 Vict. c. 59, s. 19, reproduced by s. 60 of the Act of 1882, ante p. 178; see Charles v. Blackwell, 2 C. P. D. 156; Lond., City & Mid. Bank v. Gordon, [1903] A. C. 240. 6 Byles on Bills, 7. 7 Repealed by 45 & 46 Vict. c. 61. Chap. XII. determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer." Inland or foreign. Delivery necessary. Joint and several. Presentment If drawn payable to the maker's order, it is not a note within this section until indorsed by him. It may contain also a pledge of collateral security with authority to sell or dispose thereof.3 An inland note is one which is, or on the face of it purports to be, both made and payable within the British Isles; any other note is a foreign note.* 5 Like a bill of exchange, which is incomplete and revocable until delivery, a note is inchoate only and incomplete until delivery, actual or constructive, to the payee or bearer. But, unlike a bill of exchange, it may be made by two or more makers liable jointly, or jointly and severally, according to its tenour. Where it runs "I promise to pay," but is signed by two or more, it is deemed their joint and several note. Conversely, where it runs "we promise to pay," it is a joint note only. 8 .10 Where a note payable on demand has been indorsed, it must for payment. be presented for payment within a reasonable time of indorsement, or the indorser will be discharged. For determining what is reasonable time, regard must be had to the nature of the instrument, the usage of trade, and the facts of the particular case ;1o but, unlike a bill of exchange, the note is not to be deemed overdue, so as to affect the holder with defects of title of which he had no notice, because a reasonable time for presenting it for payment has elapsed since its issue.11 Where a note is in the body of it made payable at a particular place, presentment of it at that place for payment must be made, to render the maker or indorser liable; but otherwise presentment for payment is not necessary to render the maker liable.12 But presentment for payment is always necessary to render an indorser liable.13 Where a place of payment is indicated by way of memorandum only, presentment to the maker elsewhere, if sufficient in other respects, will suffice to render the indorser liable.14 |