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PROVISIONS AS TO CROSSING.

(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.

47.-It is provided by s. 78 of the Act that a crossing authorized by this Act is a material part of the cheque (a): it shall not be lawful for any person to obliterate or, except as authorized by this Act, to add to or alter the crossing.

A drawer may "open" a crossed cheque by writing "pay cash" and signing the alteration.

48. It is provided by s. 79 of the Act that—

(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 (a).

(2) Where the banker on whom a cheque is drawn which is so crossed nevertheless pays the same, or pays

(a) Carlon v. Ireland, 5 El. & Bl. 765, and Bellamy v. Marjoribanks, 7 Exch. 389, are now of no authority on the effect of double crossing, or striking out of crossing.

FORMER LAW-HOW ALTERED.

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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 for any loss he may sustain owing to the cheque having been so paid.

Smith v. Union Bank of London, 45 L. J. Q. B. 149, must not be now read as authority for the proposition that a banker, paying in contravention of the crossing, is liable to the drawer but not to the payee. In that case a payee specially crossed a cheque to his bank, having indorsed it. It was stolen, and a bonâ fide holder obtained payment of it, in contravention of the crossing, from the defendant bank. Held the defendant bank was not liable to the plaintiff. It was pointed out that the cheque, which was negotiable, had passed to the holder for value, and so the plaintiff had no property in it. On this ground the decision is still supportable, as the liability of the banker is only to the "true owner." See the case discussed in the Introduction.

(b) 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 authorized by this Act, the banker paying the cheque in good faith and without (b) Cf. Simmons v. Taylor, 4 C. B. N. S. 463, before the Act.

48 PAYMENT IN CONTRAVENTION OF CROSSING.

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 authorized 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 banker has no right to debit the drawer's account with a cheque paid by the banker to a person not entitled to receive payment, in contravention of the crossing. The person receiving such payment is not liable if the property in the cheque has passed to him. In Bobbett v. Pinkett, 1 Ex. Div. 368, a cheque payable to A. or order, and crossed to the X. Bank, was stolen by a thief, who forged A's indorsement and negotiated the cheque to B., who gave value, and paid the cheque into his account at the Y. Bank, who collected it, the bank on which it was drawn disregarding the special crossing. It was held that the drawer, who allowed his bank to debit him with the amount, could recover the amount from B. No property in the cheque passed to B. Had the cheque been a bearer cheque, or been stolen after being indorsed in blank, there would, says Chalmers, be no remedy apart from s. 79, but see the Introduction.

It is the practice of some banks, where a crossed

PROTECTION TO BANKER.

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cheque has been dishonoured at the clearing house, to pay cash on a subsequent presentment across the counter, if there are then funds to meet it. The legality of this could only be tested by an action between the drawer and the banker. holder could not enforce such payment.

The

49. It is provided by s. 80 of the Act that where a 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.

50. It is provided by s. 81 of the Act that where a person takes a crossed cheque which bears on it the words "not negotiable," he shall not have, and shall not be capable of giving, a better title to the cheques than that which the person from whom he took it had.

The effect of crossing a cheque "not negotiable" (c) is "to put it much on the same footing as an over-due bill" (Chalmers), or, as we would suggest, on the same footing as a bill restrictively

(c) A cheque crossed without these words is still negotiable. (Smith v. Union Bank, 45 L. J. Q. B. 149).

indorsed, but not so as to prohibit further transfer. (Cf. s. 35 (3).) The recent case of Great Western Railway Co. v. London and County Bank, 1901, A. C. p. 414, is considered in discussing the next section.

The advantage of adding the words "not negotiable,” which, the general reader should observe, a holder as well as a drawer may add, is that, while the cheque is still transferable, it is only transferable as is a postal order or any other transferable chose in action. A bonâ fide holder for value takes such a cheque subject to personal defences available to prior parties between themselves; e.g., a cheque so crossed was drawn in favour of a firm, and was fraudulently indorsed by one partner to A., who cashed it. Held the other partner could recover the amount from A. (Fisher v. Roberts, 6 T. L. R. 354.)

To cite the words of Halsbury, L.C., in the recent case of The Great Western Railway Co. v. London and County Banking Co., 1901, A. C. p. 414, 17 T. L. R. p. 700:

"It is very important that every one should know that people who take a cheque which is marked 'not negotiable,' and treat it as a negotiable security, must recognize the fact that, if they do so, they take the risk of the person for whom they negotiate it having no title to it."

In Pennington v. Crossley, 13 T. L. R. 575, the