to honour a cheque drawn upon him, when he has sufficient funds in his hands. If he does not fulfil his contract, he is liable to an action by the drawer, in which heavy damages may be recovered if the drawer's credit has been injured, Hopkinson v. Foster, L. R. 19, Eq. 76; Marzetti v. Williams, 1 B. and Ad. 415; Robins v. Stewart, 14 C. B. 595; but where there are indorsements he may take time to inquire into their genuineness, Roberts v. Tucker, 18 L. J., Q. B. 575. Where a bank holding on account-current £413, belonging to an executry estate, refused to cash a cheque for £100, on the ground that the estate was insolvent, and that the bank, which had a claim for £130, intended to apply for sequestration, it was held that the bank was bound to pay. "There is nothing more plain than this, that, while a customer has funds in a bank, his right to draw upon it is absolute, unless the bank has a right of retention, or some other equally good answer," per Lord President (Inglis) in Ireland v. North of Scotland Banking Co., 3rd December, 1880, 8 R. 215. But where a person gets a cash-credit on the security of his heritable estate, or other good security, for a certain sum, the bank is at any time entitled to withdraw the credit, and to refuse to cash his cheques; for the obligation on the part of the banker is only to honour his customer's cheques, while he has funds of the customer, not while he has good security, that the customer will provide funds to repay the amount of the cheques, Johnston v. Commercial Bank, 11th March, 1858, 20 D. 790. Where a forged cheque, with a forged indorsement, was presented by a clerk, and the proceeds applied by him in payment of debts for which his master was responsible, it was held that the bank was entitled to repayment from the master, although he had no knowledge of the forgery, Clydesdale Banking Co. v. Paul, 8th March 1877, 4 R. 626.

An indorsed cheque is not evidence of loan from the drawer to the payee, Haldane v. Speirs, 7th March, 1872, 10 M. 537. As in the case of other bills of exchange, the presumption is that value has been received by the drawer, vide § 30. And where the payee or bearer is a creditor of the drawer, the presumption is that the cheque was given in

§ 73.

§ 73.

Presentment of cheque for payment.

payment of the debt due, Nicoll v. Reid, 23rd November, 6 R. 216. Parole evidence is admissible to show for what purpose the cheques were sent, ibid. The drawer of a cheque upon a particular account at a banker's-e.g., a cheque drawn by directors upon the account of the company, without any words expressing that they sign the cheques only as directors -does not render them liable to the bank, if the cheques are honoured, after they have overdrawn the company's account, Beattie v. Lord Ebury, L. R. 7, H. L. 102. They are not liable individually under § 26, because the cheque having been paid by the drawee, the banker is discharged, vide § 59. And a balance at the debit of the account is a debt due by the company, and not by the directors.

In England, a cheque is not an assignment of the sum in the cheque in favour of the holder, if the banker have assets of the drawer, but it is in Scotland, vide § 53, and note thereon. Bankers paying a cheque payable to order with forged indorsements are specially protected, 16 & 17 Vict. c. 59, § 19, and § 60 of this Act. Though the opinion has been expressed that bank cheques cannot form a warrant for summary diligence, Menzies on Conveyancing, 3rd edition, p. 385, there seems no doubt that now, at least, when cheques are authoritatively declared to be bills of exchange, they fall within the definition in the Statute 1696, c. 36, vide Appendix.

74. Subject to the provisions of this Act-
(1.) Where a cheque is not presented for payment
(a) within a reasonable time of its issue (b), and
the drawer or the person on whose account it is
drawn had the right at the time of such present-
ment as between him and the banker to have the
cheque paid and suffers actual damage through the
delay, he is discharged to the extent of such
damage, that is to say, to the extent to which
such drawer or person is a creditor of such

banker to a larger amount than he would have been had such cheque been paid (c). (2.) In determining what is a reasonable time regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case (d).

(3.) The holder of such cheque as to which such drawer or person is discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge, and entitled to recover the amount from him (e).

(a.) Vide §§ 45 and 46.

(b.) Vide § 2.

(c.) If the holder delay presenting the cheque till after a reasonable time has elapsed, and the banker have failed in the interval, the drawer suffers no loss if he has in the meantime withdrawn all his funds from the banker, or if he has withdrawn them to such an extent that the banker could not have paid the cheque in full, the loss which he suffers is the loss of the money in the banker's hands, but if he had sufficient funds to meet the cheque, he suffers loss to the amount of the bill. In the first case he is liable to the holder in the full amount of the bill; in the second, only to the difference between the sum in the banker's hands, and the amount in the bill; and in the third case, he is completely discharged.

(d.) Vide note (g) on § 20, note (¿) on § 36, note (d) on § 40,. note (g) on § 45, and note (e) on § 86. Where the parties reside in different towns, forwarding on the next day, or first convenient post thereafter, if none on that day, is reasonable time, Heywood v. Pickering, L. R. 9, Q. B. 428. In Alexander v. Burchfield, 7 M. and Gr. 1061, 11 L. J., C. P. 253, a cheque was handed to a payee on the afternoon of the 10th, who handed it to his bankers for presentment on the 11th. They presented it for payment on the morning of the 17th, early on which day the

§ 74.

$ 74.

Revocation

of banker's authority.

bankers upon whom it was drawn had stopped payment, it
was held not to have been presented within a reasonable time,
as all the parties resided in same town. Greater latitude
would be allowed in the case of a crossed cheque, even though
crossed by the holder, for by § 77 he is authorised to cross it,
and in the case of a cheque which the parties have agreed
to allow a longer period for presenting. If no loss is caused
by delay in presenting, it has been held that the drawer is
not discharged by delaying to present a cheque drawn on
11th March till 30th May of the following year, and it has
been said that presentment within six years is not unreasonable
in such a case, Law v. Rand, 27 L. J., C. P. 76.

(e.) The creditor cannot claim the sum in the cheque if he
has been discharged by want of due presentment, but is
entitled to sue the banker for the amount of the debt, if he
has assets of the drawer in his hands.

75. The duty and authority of a banker to pay a cheque drawn on him by his customer are determined by

.) Countermand of payment (a):

(2.) Notice of the customer's death (b).

(a.) The countermand of payment determines his duty and authority to pay, but the holder if he be a holder for value may raise a multiplepoinding in name of the bank, and claim in it on the cheque, see Waterston v. City of Glasgow Bank, 6th Feb. 1874, 1 R. 470, p. 481, the decision in which proceeded on the ground that value was not presumed in the case of a cheque. This is now altered, as a cheque stands in the same position as a bill, but the course to be taken in the case of a countermand, is still that pointed out by Lord Neaves. The countermand may be either verbal or written.

(b.) The banker's duty and authority is not determined by the death, but by notice of the death of his customer. He will accordingly be entitled to take credit for the payment of cheques after the death, but before the notice. In England the law seems to have been, that a cheque payable to bearer

was countermanded by the death of the drawer, but this section places a cheque payable to bearer in the same position as a draft payable to order, Rolls v. Pearce, 5 Chan. Div. 730.

Crossed Cheques (a).

(a.) Crossing of cheques was only introduced at the end of last century, and owed its origin to a practice of some of the private bankers in London who, in 1775, instituted the London Clearing-House as a means of economising their capital, as well as of saving much unnecessary trouble in the collection of cheques. Cheques paid into a bank were taken to the Clearing-House on the afternoon of the following day, and in order to facilitate business at the Clearing-House, and also to preserve a record of the channel through which the cheques came, the clerks of the several bankers were in the habit, at first, of writing and afterwards of stamping the names of their principals across the documents presented by them. The object of this crossing was to secure that, in the event of the cheque being dishonoured, it should at once be returned to the banker who presented it. The crossing, of course, also afforded a way of discovering the person by whom the cheque had been paid in, if a question afterwards arose as to the true ownership of it. The convenience of the system led to the other private bankers in London being admitted to the Clearing-House, and merchants then found that they did not require to provide for payment of such of their cheques as were presented through a bank until the afternoon of the day on which they were drawn; and in order to secure that all their cheques should be so presented, the practice grew up of writing the name of a banker across the cheque. Afterwards it became common, instead of writing the name of a banker, to cross the cheques with the words, "and Company," or "& Co.," generally between parallel lines, and sometimes merely to draw two parallel lines across the face of the document. In the first case the cheque was said to be specially crossed, and the other forms were termed general crossings. Bankers paid attention to these crossings, and generally refused payment of cheques so crossed unless presented to them through a banker. It was then seen that a great protection was by

$ 75.