a crossing, and the cheque is crossed specially and to S. 76. that banker. a See s. 73. The provisions of sections 76-82 apply to dividend warrants,1 and to "any document issued by a customer of any banker, and intended to enable any person or body corporate to obtain payment from such banker of the sum mentioned in such document."2 They do not apply to drafts by one branch of a bank upon another.3 b Under this section these words are part of the crossing. As to their effect see section 81. 77. (1.) A cheque may be crossed generally or specially by the drawer.a b S. 77. Crossing by drawer cr (2.) Where a cheque is uncrossed, the holder after issue. may cross it generally or specially.a (3.) Where a cheque is crossed generally the holder may cross it specially.a (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. e a See s. 76. The Act 39 and 40 Vict. c. 81, section 5, expressly gave the right of crossing only to a lawful holder. b See s. 2. c See ss. 76 and 81. 1 S. 95. 2 46 and 47 Vict. c. 55, s. 17, p. 262, infra. 3 Capital and Counties Bank v. Gordon; London City and Midland S. 77. S. 78. Crossing a material part of cheque. S. 79. Duties of bankers as to crossed cheques. d The second banker need not be the agent for collection of the first, as was provided by 39 and 40 Vict. c. 81, s. 5. The purpose of this crossing is to afford additional protection during the process of collection. It does not bring the banker under the protection of section 82, if the person for whom he receives payment has no right to the cheque.1 78. A crossing a authorised by this Act is a material part of the cheque; it shall not be lawful for any person to obliterate or, except as authorised by this Act, to add to or alter the crossing. a Including the words "not negotiable." 2 b See s. 77. As to the effect of an unauthorised alteration on the rights of parties, see s. 64. The fraudulent alteration of a bill or cheque in a material part is a forgery. The provisions of s. 3 of 21 and 22 Vict. c. 79, by which the fraudulent vitiation of a crossing was declared to be a forgery, are not repeated in this Act, and section 25 of the Forgery Act, 1861, does not extend to Scotland.5 79. (1.) Where a cheque is crossed specially to more than one banker, except when crossed to an agent for collection being a banker, the banker on whom it is drawn shall refuse payment thereof. (2.) Where the banker on whom a cheque is drawn which is so crossed nevertheless pays the same, or pays a cheque crossed generally otherwise than to a banker, or if crossed specially otherwise than to the banker to whom it is crossed, or his agent for collection being a banker, he is liable to the true owner of the cheque а 1 Capital and Counties Bank v. Gordon; London City and Midland Bank v. Gordon [1902], 1 K.B. 242, 272; affd. [1903] A. C. 240, 249. 2 S. 76. 3 See s. 24 n.a 4 See p. 171, supra. 5 24 and 25 Vict. c. 98: certain provisions applied to Scotland, 33 and 34 Vict. c. 58, s. 7. for any loss he may sustain owing to the cheque S. 79 having been so paid." с Provided that where a cheque is presented for payment which does not at the time of presentment appear to be crossed, or to have had a crossing which has been obliterated, or to have been added to or altered otherwise than as authorised by this Act, the banker paying the cheque in good faith and without negligence shall not be responsible or incur any liability, nor shall the payment be questioned by reason of the cheque having been crossed, or of the crossing having been obliterated or having been added to or altered otherwise than as authorised by this Act, and of payment having been made otherwise than to a banker or to the banker to whom the cheque is or was crossed, or to his agent for collection being a banker, as the case may be. a Payment may be made by one branch of a bank to another.1 b This provision was first enacted by the Crossed Cheques Act of 1876 in consequence of the decision in Smith v. Union Bank of London.2 The effect of this provision is, that the banker loses the protection of section 80, and further becomes liable not only to his customer but also to the true owner of the cheque, if he pays it even in due course, but in contravention of the crossing, to a holder whose title is defective.3 The true owner has also his remedy against any person who has received his money without title thereto. Before the passing of the Crossed Cheques Act of 18762 a cheque, payable to order and crossed specially, was stolen from the payee and subsequently came under a forged indorsement into the hands of the defender, who took it in good faith. He S. 79. presented it for payment through his own bankers, who were not those to whom it was crossed, and on being informed that it had been paid gave value for it. The drawer, having then granted a new cheque to the payee and allowed his bankers to debit him with both cheques, sued the defender for the amount of the first cheque, and was found entitled thereto. It was observed on the Bench that the payee of the first cheque would have been entitled to sue the defender, and also that the pursuer might have refused to allow his bankers to debit his account with the first cheque, and that the bankers would then have been entitled to sue, but that the pursuer had also his remedy against the defender, who had no right to the cheque.1 S. 80. Protection to banker and drawer where cheque is crossed. c See s. 77. ₫ See s. 90. 80. Where the banker on whom a crossed cheque is drawn, in good faith and without negligence pays it, if crossed generally, to a banker, and if crossed specially, to the banker to whom it is crossed, or his agent for collection being a banker," the banker paying the cheque, and if the cheque has come into the hands of the payee, the drawer, shall respectively be entitled to the same rights and be placed in the same position as if payment of the cheque had been made to the true owner thereof." a See s. 90. It is sufficient implement of this provision for one branch of a bank to make payment to another; 2 but the bank, though discharged as regards the payment, may be liable in respect of the receipt.3 c This section is an exception to sections 24 and 59 (1) and 1 Bobbett v. Pinkett, 1876, 1 Ex. D. 368. 2 Capital and Counties Bank v. Gordon; London City and Midland Bank v. Gordon [1902], 1 K.B. 242, 274, 281-acquiesced in ; Lacave and Co. v. Crédit Lyonnais [1897], 1 Q.B. 148. 3 Lacave and Co. v. Crédit Lyonnais, cit. special case under section 60. It reproduces section 9 of the Act of 1876.1 81. Where a person a takes a crossed cheque which S. 81. bears on it the words "not negotiable," he shall not Effect of crosshave and shall not be capable of giving a better title ing on holder. to the cheque than that which the person from whom he took it had.c a See s. 2. b It has been questioned if a cheque payable to order or bearer can be made not negotiable except under the provisions of section 76 and this section.2 c No one can be a holder in due course of such a cheque. An indorsee takes it subject to the defects of his author's title.3 banker. 82. Where a banker in good faith and without S. 82. negligence receives payment for a customer of a Protection cheque crossed generally or specially to himself, and to collecting the customer has no title or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment.b a See s. 90. b This section provides an exception to the general rule as to the liability of persons receiving payment of bills on behalf of those who have no right to them. The cases up to Great Western Railway Co. v. London and County Bank,5 "only go to show that a bank is not protected by the section unless, first, the bank acts in good faith and without negligence; unless, secondly, it receives payment for a customer; and un 1 39 and 40 Vict. c. 81. 2 National Bank v. Silke [1891]. 1 Q.B. 435; cf. s. 8. 3 Great-Western Railway Company v. London and County Bank [1901], A.C. 414; Fisher v. Roberts, 1890, 4 See s. 59, n.d. M |