86

THE DIFFICULTY IGNORED BY TEXT-BOOKS.

bills if they were not so before. In some respects the Act, though an Act to codify the law, has modified it; for instance, it has by s. 74 modified the extent to which a drawer is discharged by the failure to present a cheque within a reasonable time. And so here it appears to have restored the law to what it was as established by Down v. Halling, and to have deprived the later cases of authority, except in so far as they may be of value on the question of what is in point of fact a reasonable time for a cheque to be in circulation.

Byles and Chalmers, though citing London and County Bank v. Groome, do not notice the difficulty of reconciling it with ss. 36 and 73, regarding it as an illustrative case of what has been held not to be an unreasonable time for a cheque to be in circulation; and "Leake on Contracts" cites it as showing that the rule applicable to overdue bills does not apply to cheques, thus overlooking the effect of the Act.

In Paget's "Decisions affecting Bankers" it is quoted as a leading case, with, however, a reference below to section 36 (3).

In the Introduction, the judgments in the various cases are more closely examined in order to show that the later cases were based on a misconception of what was really laid down in Down v. Halling. It suffices here to say that the effect of the Act

AN OVERDUE CHEQUE NOT NEGOTIABLE.

87

appears to be to establish that the question of what is an 66 unreasonable time" is one of fact for the jury. If they find against the holder then it is plain from s. 36 (2), set out below, that his rights are no better than his transferor's.

62.-Where an overdue cheque is negotiated, it can only be negotiated subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from whom he took it had. (S. 36 (2).)

The words "affecting it at its maturity," in the case of a cheque, mean affecting it on the day it is drawn or issued, or between then and the negotiation in question, since a cheque is payable on demand. In the case of bills not so payable, it is possible for a defect of title to be cured by negotiation to a holder in due course before the bill matures. (Cf. Chalmers v. Lanion, 1 Camp. 383.) We have considered the cases in the notes to § 61.

An overdue cheque ceases therefore to be 'negotiable," though it is still "transferable."

63.-Where a cheque or any indorsement on a cheque is dated, the date is, unless the contrary be proved, to be deemed to be the true date of the drawing or indorsement as the case may be. (S. 13 (1).)

88

POST-DATED CHEQUE VALID.

It is not the practice to date the indorsements on cheques. It might be material to show the order of the indorsements.

64.-A cheque is not invalid by reason only that it is ante-dated or (b) post-dated, or that it bears date on a Sunday. (S. 13 (2).)

It is now definitely decided that a post-dated cheque is a valid instrument under s. 13 (2), and it is not taken out of the general provisions of the Act and of this particular sub-section by being postdated, contrary to the tenor of the first part of 8. 73,

In Royal Bank of Scotland v. Tottenham, (1894) 2 Q. B. 715, the infant payee of a post-dated cheque indorsed it before the day of date to M., who paid it into her account, and drew against it.

It was dishonoured on presentment. Her bankers successfully sued the drawer, as holders in due course. Various contentions were raised by the drawer, which have been dealt with elsewhere.

Before Wills, J., at the trial it was unsuccessfully argued that (1) an indorsement of a post-dated cheque, before the cheque is due, is inoperative,

(b) If it is considered of any use to object to a cheque on the ground of its being post-dated, such a defence need not be pleaded. See Field v. Woods, 8 C. & P. 52, but we conceive that such an objection would now be useless.

THE STAMP ACT AND S. 13 (2).

89

as it is till then an inchoate instrument and in suspense; (2) such a cheque, not being payable on demand, is not an instrument within the Bills of Exchange Act, in view of s. 73, and an infant could not therefore validly indorse it under s. 22.

In the Court of Appeal several points were taken. The material one for our present purpose was on s. 38 of the Stamp Act (54 & 55 Vict. c. 39). It provides that "Every person who issues, indorses, transfers, negotiates, presents for payment, or pays any bill of exchange or promissory note liable to duty and not being duly stamped, shall incur a fine of ten pounds, and the person who takes or receives any such bill or note either in payment or as a security, or by purchase or otherwise, shall not be entitled to recover thereon, or to make the same available for any purpose whatever."

It was argued that a post-dated cheque was really a bill at as many days as intervened between the date of issue and the date of the cheque, and that it consequently required the same ad valorem stamp as a bill for a like amount not payable on demand, that the cheque in question was not so stamped and could not under the latter part of the first subsection of s. 38 be sued upon.

The Court of Appeal decided that such a construction would make a post-dated cheque practically invalid, contrary to s. 13 (2) of the Bills of Exchange

90 OTHER CASES ON POST-DATED CHEQUES

Act, and was untenable, and that all objections under the Stamp Act must be determined by the. conditions existing when the question is raised. The cheque being on the face of it sufficiently stamped at the date of trial was therefore properly admissible in evidence and could be recovered upon.

It is conceived, however, that to post-date a cheque may expose the drawer to a penalty under 8. 5 or s. 38 of the Stamp Act. (See Chalmers, p. 352.) It is virtually a fraud on the Revenue. Cheques might be made payable "on demand" at a date three or six months hence, and so avoid the higher duty. A cheque dated 7th June, running "Pay on the 10th June," requires a bill stamp, and matures on June 13th.

In Forster v. Mackreth, L. R. 2 C. P. 163, a partner in a firm of solicitors had authority to draw cheques in the firm's name. He drew a cheque post-dated seven days. An authority to draw bills on behalf of a firm is not an incident of an ordinary, nontrading partnership, such as a firm of solicitors. It was held that the post-dated cheque, given to secure a personal loan, was in reality a bill at seven days, and the firm was not liable thereon to a holder in due course, as the partner had no authority to draw bills in the firm's

name.