tion of the legislature probably was that the payee should be Sec. 72. entitled to require payment in Dominion notes only up to $100 in any event. The payee is of course entitled to be paid in legal tender within the terms of the Currency Act (see Chapter XXIX., infra), and subject to this section the bank may pay in any form of legal tender it chooses.

73. The bonds, obligations and bills, obligatory or of credit, Bonds, of the bank under its corporate seal, signed by the president or etc. obligations, vice-president, and countersigned by a cashier or assistant cashier, which are made payable to any person, shall be assign- Assignable" able by endorsement thereon. by endorsement.

2. The bills or notes of the bank signed by the president, Bills or notes vice-president, cashier or other officer appointed by the directors binding. of the bank to sign the same, promising the payment of money

to any person, or to his order, or to the bearer, though not under Though not the corporate seal of the bank, shall be binding and obligatory sealed. on the bank, in like manner and with the like force and effect as they would be upon any private person, if issued by him in his private or natural capacity, and shall be assignable in like manner as if they were so issued by a private person in his natural capacity.

3. The directors of the bank may, from time to time, author- Directors ize or depute any cashier, assistant cashier or officer of the bank, officer to may depute or any director other than the president or vice-president, or sign. any cashier, manager or local director of any branch or office of discount and deposit of the bank, to sign the notes of the bank intended for circulation. 53 V., c. 31, s. 58.

The section was divided into sub-sections in 1906, but in other respects it dates from 1871. It makes the bonds, obligations and bills, obligatory or of credit, of the bank under its corporate seal, etc., assignable by endorsement. The other documents mentioned in the section, not under the corporate seal, have no special assignability under the Act. Their assignment depends upon the general provincial law governing simi

9-BANK ACT.

Sec. 73.

lar documents issued by a private person in his natural capacity. Cf. notes to sec. 95, in regard to the negotiability or assignability of deposit receipts.

Bills may 74. All bank notes and bills whereon the name of any be signed oy machinery. person entrusted or authorized to sign such notes or bills on behalf of the bank is impressed by machinery provided for that purpose, by or with the authority of the bank, shall be good and valid to all intents and purposes, as if such notes and bills had been subscribed in the proper handwriting of the person entrusted or authorized by the bank to sign the same respectively, and shall be bank notes and bills within the meaning of all laws and statutes whatever, and may be described as bank notes or bills in all indictments and civil or criminal proOne signa- ceedings whatever: Provided that at least one signature to each note or bill must be in the actual handwriting of a person authorized to sign such note or bill. 53 V., c. 31, s. 59.

ture to be

hand

written.

Counterfeit

or fraud

to be stamped.

75. Every officer charged with the receipt or disbursement ulent notes of public moneys, and every officer of any bank, and every person acting as or employed by any banker, shall stamp or write in plain letters, upon every counterfeit or fraudulent note issued in the form of a Dominion or bank note, and intended to circulate as money, which is presented to him at his place of business, the word Counterfeit, Altered or Worthless.

If wrong

fully stamped.

2. If such officer or person wrongfully stamps any genuine note he shall, upon presentation, redeem it at the face value thereof. 53 V., c. 31, s. 62.

CHAPTER XV.

BUSINESS AND POWERS OF A BANK.

A bank chartered under the Bank Act, in addition to being a corporation with certain specified powers and subject to certain specified restrictions, is by sec. 76 of that act authorized to "engage in and carry on such business generally as appertains to the business of banking."

Sec. 76. (P. 137.)

The nature of the business of banking is part of the law Business of merchant, and will be judicially noticed by the courts. (Per Banking. Lord Campbell in Bank of Australasia v. Breillat, 1847, 6 Moo. P.C. 152; see Chapter II., supra.) The specific provisions of the Bank Act must be considered as applied to a corporation which has general banking powers.

The heart of the law of banking is that a bank has such powers as are requisite for the safe and convenient attainment of the purposes of its incorporation, the chief of these being to provide a place of safety in which the public may keep money and other valuables, and to lend its own money, and that of others deposited with it (unless specially deposited), for a profit, and to act as agent in the remission and collection of money. If it is by its organic law, a bank of issue, it has one more fundamental purpose, namely, to provide the public with a convenient currency in the shape of promissory notes intended to circulate as money. (Morse on Banks & Banking, 4th ed., 1903, sec. 46 A.)

In regard to matters not clear upon statute or binding decisions, it is a proper method of ascertaining what is legitimately within the scope of the business of banking, and what are the powers of corporations formed for the purpose of carrying on that business, to refer to the history of banking and the definitions of lexicographers (Ibid.).

A "banker" is defined in Hart on Banking (2nd ed., 1906), Banker and as "one who in the ordinary course of his business receives customer defined. money, which he repays by honouring the cheques of the persons from or on whose account he receives it," and a "customer" as "one who has an account with a banker" (see Great Western v. London & County Bank, [1901] A.C. 414, where the term

Sec. 76. (P. 137.)

Bank as drawee of cheques.

Bank may

pay customer's acceptance

"customer" is discussed). See also Morse on Banks and Banking, Chapter I., where the definition of a bank is elaborately discussed. The following analysis of the business and powers of a bank is based in the main upon that of Hart.

1. It follows from the definition of a banker given above that normally a bank is the debtor of its customer and bound to discharge its indebtedness by honouring its customer's cheques.

A bank may be considered as primarily and naturally the depositary of money and the drawee of cheques. The balance standing to the credit of a customer represents money he has lent to the bank. The property in cash deposited, and in the proceeds of drafts and cheques collected for the customer, passes to the bank and forms part of its trading capital. Its liability to the customer is purely a personal obligation to honour cheques drawn upon it by him.

A bank under the Bank Act is a Bank of Deposit. Sec. 95 expressly recognizes the power of the bank to receive and repay deposits, and permits the bank to a certain extent to deal in this respect with persons incapable by law to enter into ordinary contracts. The rights and liabilities of the bank in regard to deposits made with it and cheques drawn upon it will be considered in the notes to that section and in Part III. of the Bills of Exchange Act entitled "Cheques on a Bank.”

2. A bank usually undertakes expressly or impliedly to honour bills of exchange accepted by its customer, and made payable at the bank, to the extent of its customer's balance, or to an agreed amount.

The bank is not bound to pay bills accepted by the customer and made payable at the bank (Robarts v. Tucker, 1851, 16 Q. B. 560), but may do so (Kymar v. Laurie, 1849, 18 L.J.Q.B. 218); except in the province of Quebec, where, it is said, special authority from the customer is required. A bank is not obliged to accept bills drawn upon it, in the absence of special agreement to do so, but such agreement may be inferred from the bank's having accepted previous bills and having funds to meet the bill in question (see Cumming v. Shand, 1860, 29 L.J. Ex. 129). If money is paid to the bank with its assent to meet a bill it may be sued by the holder (see De Bernales v. Fuller, as stated in 3 App. Cas. at p. 334).

mer.

3. A bank invariably acts as the collecting agent of its custo- Sec. 76. (P. 137.)

The current account involves the collection of cheques and The orders delivered to the bank by its customer in order that their collecting proceeds may be credited to him.

Incidentally the discounting of bills, etc., involves the collection thereof. Secs. 93 and 94 contain specific provisions for certain collection and agency charges in addition to the discount where such bills, etc., are payable at an office other than the office of discount.

A bank undertaking the duty of collecting mercantile paper is bound as agent to use due diligence in performing the duties of collection (Bank of Van Diemen's Land v. Bank of Victoria, 1871, L.R. 3 P.C. 526), and is liable to its principal for negligence in the performance of its duty, as for instance for failure to use due diligence in presenting a bill for acceptance, where acceptance is necessary (Bank of Van Diemen's Land v. Bank of Victoria, supra; Bills of Exchange Act, secs. 75, 76 and 77), and for payment (Ibid., secs. 85 et seq.; Browne v. Commercial Bank, 1853, 10 U.C.R. 129; as to presentment of cheque for payment, see notes to sec. 166 of the Bills of Exchange Act).

A bank which engages to collect an unaccepted bill may leave it for two days with the drawee, in order that he may decide during that time whether he will accept. The duty of the bank is to obtain acceptance if possible, but not to press unduly for acceptance in such a way as to lead to refusal, provided the steps for obtaining acceptance or refusal are taken within that limit of time which will preserve the principal's right against the drawer. (Bank of Van Diemen's Land v. Bank of Victoria, supra; Bills of Exchange Act, sec. 80.)

A bank undertaking to collect an accepted bill must not part with the bill or permit it to be tampered with until it is paid, or if a conditional payment is made, until the condition has been accepted by the principal. (Bank of Scotland v. Dominion Bank, [1891] A.C. 592.)

As to notice of dishonour when a bill is dishonoured in the hands of an agent, see Bills of Exchange Act, sec. 100; cf. Steinhoff v. Merchants Bank, 1881, 46 U.C.R. 25.

When a bank receives a note for collection and in the regular course of business places the same in the hands of a responsible and solvent agent, it is not responsible for the loss of the note

banker.