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26

PRESUMPTION OF VALIDITY.

If an agent draws a cheque "per pro." in excess of his authority, his principal is not liable thereon to a person who has cashed the cheque in good faith, but he is liable to him for any proceeds that have come into his possession or been expended on his behalf. (Reid v. Rigby, 1894, 2 Q. B. 40.)

See also National Bank of Scotland v. Dewhurst, 1 Com. Cas. 318.

27.-Where a person signs a cheque as drawer or indorser and adds words to his signature indicating that he signs for or on behalf of a principal, or in a representative character he is not personally liable thereon; but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not exempt him from personal liability. (S. 26 (1).)

It is further provided by s. 26 (2):

"In determining whether a signature on a bill is that of the principal or that of the agent by whose hand it is written, the construction most favourable to the validity of the instrument shall be adopted."

See Chalmers' notes for illustrative cases.

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28.-Issue means the first delivery of a cheque, complete in form, to a person who takes it as a holder. (S. 2.)

In Clutton v. Attenborough, 1897, A. C. 90, the plaintiff signed cheques payable to "G. B.," & fictitious person who was fraudulently represented by the plaintiff's clerk to be a real person, who had done work for the plaintiff. The clerk indorsed the cheques "G. B." and negotiated them for his own purposes. Held that the cheques were "issued" within s. 2. The case was treated as exactly covered by Vagliano's Case, 1891, A. C. 107.

The contention of Tindal Atkinson, Q.C., was that the cheques were never "issued" by Clutton, inasmuch as there was no "first delivery" of them to a "person who took them as holder," for the

28 WHEN VALID DELIVERY IS PRESUMED.

fraudulent clerk P. could not be said to take them as holder; the delivery to P. was "conditional and for a special purpose only" (s. 21 (2) (b)), namely, to pay the person G. B., supposed by Clutton to be his actual creditor; but this argument was unavailing against Attenborough, who was a holder in due course, and it appears to us that s. 21 (2) (b) in itself contains an answer to the argument, "But if the bill be in the hands of a holder in due course, a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed."

§ 28 must be construed with reference to s. 20 of the Act, set out as § 52 herein.

It seems from Ingham v. Primrose, 7 C. B. N. S. 82, that the drawer of a "bearer" cheque might be liable to a holder in due course, though the drawer had never issued it, it being stolen before issue. See Chalmers, p. 55.

29.-A cheque is negotiated when it is transferred from one person to another in such a way as to constitute the transferee the holder of the cheque. A cheque payable to bearer (a) is negotiated by delivery.

A cheque payable to order is negotiated by the indorsement of the holder (b), completed by delivery. (a) See § 13, Chapter II., for the explanation of "bearer" and "order."

(b) See Marston v. Allen, 8 M. & W. 494.

TRANSFER WITHOUT INDORSEMENT.

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Where the holder of a cheque payable to his order transfers it for value without indorsing it, the transfer gives the transferee such title as the transferor had in the cheque, and the transferee in addition acquires the right to have the indorsement of the transferor. (S. 31 (4).)

It was settled in Whistler v. Forster, 14 C. B. N. S. 248, that a bonâ fide transferee for value, who did not see that his transferor indorsed the cheque, was not entitled to recover against a party from whom the transferor had obtained the cheque by fraud.

A simple signature on a cheque is a sufficient indorsement. An indorsement must be of the entire cheque, i.e., of the whole sum payable, or else it does not operate as a negotiation of the cheque. (S. 32.)

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The distinction between special indorsement and indorsement in blank has been explained in § 18.

By s. 37 of the Act it is provided that “where a bill is negotiated back to the drawer, or to a prior indorser, or to the acceptor, such party may, subject to the provisions of this Act, reissue and further negotiate the bill, but he is not entitled to enforce payment of the bill against any intervening party to whom he was previously liable." Jenkins v. Comber, 1898, 2 Q. B. 168.)

(See

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NON-TRANSFERABLE CHEQUE.

This section, except where it mentions renegotiation to an acceptor, is applicable to cheques.

30.-Where a cheque contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid as between the parties thereto, but it is not negotiable. (S. 8 (1).)

It was assumed in National Bank v. Silke, 1891, 1 Q. B. 435, that a cheque might be made not transferable under this sub-section, read with s. 73.

That case decided that a crossing "Account of J. F. M., National Bank, Dublin," does not amount to "words prohibiting transfer"; consequently J. F. M's. banker, as holder in due course, could sue the drawer, although as between J. F. M. and the drawer the consideration had wholly failed. The cheque was an "order" one, and Lindley and Fry, L. JJ. doubted if "order" or "bearer " cheques could be made not transferable under s. 8 (1). The section and the case are discussed in the Introduction. Deleting the words "or order" and writing "Pay K. against cheque (i.e. K.'s cheque delivered by way of security) have no effect to restrict transfer or negotiation within s. 8, and do not amount to a "condition" within s. 3 (Glen v. Semple, 3 F. Sess. Cas. 1134).

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31. When a cheque is payable to the order of two or more payees or indorsees, who are not partners, all

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