SEC. 183. Except as herein otherwise provided, where any one part of a bill, drawn in a set, is discharged by payment or otherwise, the whole bill is discharged.

§ 6. CONTRACT BETWEEN BANK AND DEPOSITOR; CHECKS

I. How a check should be signed.

2. Who, acting as a representative, can sign them.

3. The law presumes a check is given in payment of a debt.

4. When the giving of a check does not transfer a deposit the holder cannot sue the drawee for the amount.

5. Cases in which a check does transfer a deposit. 6. A drawer may stop payment of his check.

7. Drawer's death works a revocation.

8. Check is designed for immediate presentation. 9. It is not due until payment is demanded.

10. Drawee may refuse to pay if deposit is insufficient. II. If drawer has no money the drawing of check is a fraud.

12. A bank cannot permit an agent to use his principal's money to discharge his own indebtedness.

13. A public deposit belongs to the proper official. 14. A bank is responsible to depositor for paying forged checks.

15. Nor can it recover the money from an innocent

holder.

16. Payment on a forged indorsement does not prevent recovery by rightful owner.

17. Protest of checks on non-payment.

18. Consequences of not presenting a check in proper

time for payment.

19. A check may be certified.

20. What this implies.

21. Cashier's authority to certify.

22. Certification of forged check.

23. Certification of check of insolvent drawer. 24. Effect of inquiry about certification.

25. Post-dated check.

26. Right to return checks by clearing-house banks

1. As checks are the most common of all instruments in commercial business, some principles will be added to those contained in the previous chapter. Like every other instrument, a check must be properly signed. A check signed by an individual with the word, "Agent," "Treas.," or other descriptive term has sometimes been regarded as his individual check. By the modern law the intention of the signer is the guiding star. If therefore this is his way of signing checks for his principal, the courts will give due effect to his intention. When the mode of signing is ambiguous it may be shown by oral evidence whether the signer intended to bind himself or his principal, or company.

2. Again, who, acting in a representative capacity, can give checks? The president of a company is not authorised by virtue of his office to draw corporation checks; but authority may be granted him by charter, statute or usage. Nor can a partnership deposit be drawn on the check of an individual partner. But if it should be thus drawn and applied to the use of the part

nership, such action would afford protection to the partnership. Either of two executors or administrators can sign a check, but all who act as trustees must sign. A court of equity, though, should one of them abscond, could order a bank to pay a check drawn by the other trustee.

3. The law presumes that a check is given in payment of a debt or for cash, and is evidence of the fact whenever the drawer had funds in the drawee's possession. The law presumes that checks taken by a creditor from his debtor, which he has received from another, are accepted as conditional payment, and not as a satisfaction of the debt. And this presumption can be overthrown only by clearly showing that they were accepted as cash, or that an agreement existed to receive them as unconditional payment.

4. In nearly every state a bank on which a check is drawn is under no legal obligation to the holder to pay or accept it, whether the maker's funds are sufficient for this purpose or not. In four or five states the effect of giving of a check to a person is to transfer to him the amount of the maker's deposit therein specified, and the check holder can sue the bank for the amount whenever payment is declined. In all other states the holder of a check cannot recover from the bank on which it is drawn, before acceptance. In like manner the Negotiable Instruments Law provides that a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies the check." A bank should not delay long

either to pay, or to accept, or to refuse payment. It is not right to keep a check for several days and then refuse to pay.

While this is the most general rule existing between banks and check holders, these institutions have welldefined duties to perform for their customers, the drawers. Their orders must be observed; and if a bank should decline to pay a check drawn on a sufficient fund belonging to one of its depositors, without a justifiable reason for so doing, the institution would be liable for whatever injury the depositor sustained. For example, should a bank decline to pay a check supposing that the maker's deposit was insufficient, when in truth it was ample, the institution would be liable for the consequences of dishonouring his order, even though its conduct was founded on the mistaken calculation of a bookkeeper.

5. Though a check drawn in the ordinary form transfers no title to a bank deposit, it does effect a transfer whenever it is drawn for the whole amount due to the depositor. Then, indeed, the legal title is completely transferred on the delivery of the check even against the drawer, but if only a part is included in an order it will not have that effect unless it is accepted by the drawee. The reason is technical for this distinction which, indeed, does not everywhere exist.

6. A drawer may stop the payment of his check. This is usually done by giving a notice to the bank on which the check is drawn. After receiving such a notice it can pay only at its peril.

7. The drawer's death works a revocation of his check, notwithstanding, should a bank pay his check afterward,

without knowing of his end, the payment would be legal. Of course, in the states where a check operates as an assignment of the maker's deposit, his death is without any significance.

8. A check is designed for immediate presentation. The holder, therefore, should present it for payment as soon as he reasonably can, and if he does not the retention is at his own risk. The Negotiable Instruments Law declares that "a check must be presented for payment within a reasonable time after its issue, or the drawer will be discharged from liability thereon to the extent of the loss caused by delay." Delay in presentation, however, does not discharge the drawer unless he has been injured. The rules established for making presentation should be observed; for where they are not the risk of solvency of the drawee is assumed by the payee.1

9. A check is not considered due until payment is demanded, and in this regard differs from a bill of exchange or note, which is payable on a particular day. Consequently, the receiving of a check a few days after its date from the payee does not, like the receiving of an overdue bill, subject the holder to the objections that might have been raised by the drawer against the payee. A delay of two or three days is not enough to put the receiver on inquiry concerning the consideration for which the check was given, nor subject him to defences that might exist between the drawer and payee. Yet a check may be retained so long after its date without presentation as to cast discredit thereon; and when a check is presented for payment in a discredited condition

1For more precise rules concerning presentation see Sec. 5, § 48.