§ 79.

has been obliterated, or to have been added to or altered otherwise than as authorised by this Act (c), the banker paying the cheque in good faith (d) and without 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 authorised 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.) The remedy of the holder of a cheque with two special crossings on it is to go to the drawer and get a new one for it, or after presentment and dishonour to sue the drawer. He will require to prove that he is the true owner.

(b.) The effect of this subsection is to render a banker liable to the true owner, whether the drawer or a subsequent transferee, if he pay to a party who has no title; but a crossed cheque may be negotiated in the same way as an uncrossed cheque, and a person taking a crossed cheque for value from a thief or a finder, becomes the true owner, and if the banker refuse to pay, the holder will be entitled to sue the drawer, or to sue the banker in Scotland using the cheque as an assignation in his favour. The Act in no way interferes with the negotiability of crossed cheques unless the crossing includes the words, “not negotiable." As was pointed out by Lord Cairns in Smith v. Union Bank, 1 Q. B., Div. 31, no action lies at the instance of a holder against a banker merely because he has infringed the statute. It is necessary to show that the holder has suffered loss by the payment of the cheque. Where the cheque has passed into the hands of a holder in due course, he becomes the true owner, and the former owner suffers no loss by a payment being made, contrary to the provisions of

this Act, to which he would have been obliged to consent if the cheque had been presented through a proper channel. In the case of an ordinary cheque payable to bearer, the banker paying is not liable to the true owner, if the person presenting it turns out not to be the true owner, and § 60 gives him a protection where he pays a cheque on a forged indorsement to a person who is not the true owner thereof, but if he pays a cheque with a forged indorsement, either to the forger or to an indorsee or transferee from him, in disregard of the crossing he cannot avail himself of that section. Thus in Bobbett v. Pinkett, 1 Ex. Div. 368, the plaintiff drew a cheque on M. & Co., payable to order, crossed it specially, and sent it to the payee from whom it was stolen, and his indorsement forged. It was ultimately passed to the defendant, an innkeeper, who took it bonâ fide in ignorance of the forgery. The defendant gave it to his country bankers, who presented it to M. & Co., the bankers on whom it was drawn, but not through the bankers to whom it was specially crossed. M. & Co. paid it, and the defendant then gave value for the cheque to his customer, who paid his bill out of it, and received the balance in cash. The plaintiff sued the defendant, who was found liable as having received the plaintiff's money, and in giving judgment it was pointed out by the learned judges that the plaintiff could have refused to allow M. & Co. to debit his account with the payment of the forged cheque, because payment was not made as directed by the crossing on the cheque, but that he also had his remedy against the defendant, who had no title to the cheque.

(c.) Vide § 77.

(d.) Vide § 90.

$ 79.

banker and

cheque is

80. Where the banker, on whom a crossed cheque Protection to is drawn, in good faith (a), and without negligence drawer where pays it, if crossed generally, to a banker, and if crossed crossed. specially, to the banker to whom it is crossed, or his agent for collection being a banker, the banker paying

$ 80.

Effect of crossing on holder.

Protection to collecting banker.

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 (b).

(a.) Vide § 90.

(b.) The banker will be entitled to debit his customer's account with the cheque so paid, and the drawer, in the case stated, will be entitled to treat the cheque as if it had been paid, and consequently will have a good answer against an action for payment of the debt for which the cheque is given. This section applies whether the payment is made to a holder in due course or to the thief or finder.

81. Where a person (a) 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 cheque than that which the person from whom he took it had (b).

(a.) Vide § 2.

(b.) No one can be a holder in due course of such a cheque, any holder is in the position of a person who has taken a cheque payable to order the indorsement on which is forged, and who has no better title than his transferor, vide § 24. The maxim assignatus utitur jure auctoris applies, and not the rules conferring the privileges of negotiability.

82. Where a banker in good faith (a) and without negligence receives payment for a customer of a cheque crossed generally or specially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any liability to the true

owner of the cheque by reason only of having received such payment (b).

$82.

(a.) Vide § 90.

(b.) The mere receiving of payment of a cheque for a customer is not a ground of liability, and this is in conformity with the rule of the law of Scotland, Clydesdale Bank v. Royal Bank, 11th March, 1876, 3 R. 586. The banker who is to obtain payment of a cheque is not in right of the cheque. He merely acts for his own customer, and whether the money is paid over to the customer in anticipation of the cheque being paid on presentation, or the proceeds are handed to the customer after collection, there is no ground in law for holding liable the banker who presents. But if the bank, instead of paying the proceeds to its own. customer, credits him with the amount received, the position of matters is changed, and the banker so receiving payment may be liable on the ground that he has received the money of the true owner of the cheque and applied it to his own purposes. It is quite true that he credits his own customer with the proceeds, and that customer may, sooner or later, draw the whole amount, but that cannot diminish his liability, for the actual money has come into his hands and been retained by him, while all that his customer receives is a mere credit in the books of the bank, Arnold v. Cheque Bank, 1 C. P., D. 578.

This clause was necessary to protect the banker who presented a cheque and handed over the proceeds where his customer was the thief, or finder, as where, though not the forger, he was the holder of a cheque with a forged indorsation, and where the cheque bore to be "not negotiable." In England apparently the banker would have been liable in each of these cases on the ground that the money paid to the presenting banker was money of the true owner of the cheque, which the banker had no right to receive, and that he could have no greater right than his principal had, Ogden v. Benas, L. R. 9, C. P. 513. A banker, however, will not have the protection of this clause where he presents a cheque for a stranger, partly because the relief for liability is conditional

§ 82.

on the party for whom payment is received, being a customer, and partly because the receiving of payments for a stranger without inquiry will probably be held to be evidence of negligence.

Promissory note defined.

PART IV.

PROMISSORY NOTES.

83. (1.) A promissory note (a) is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer (b).

(2.) An instrument in the form of a note payable to maker's order is not a note within the meaning of this section unless and until it is indorsed by the maker (c).

(3.) A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof (d).

(4.) A note which is, or on the face of it purports to be, both made and payable within the British Islands (e) is an inland note. Any other note is a foreign note.

(a.) The essential requisites of a promissory note are:-(1.) It must be in writing-which includes print. The Act 55 Geo. III. c. 184, § 19 prohibiting the issue of promissory notes payable to bearer with printed dates, was repealed by 23 & 24 Vict. c. 111, § 19. This repeal still holds, notwithstanding the repeal of the repealing statute, vide 13 & 14 Vict. c. 21, § 5. The date, therefore, as well as every other part of a promissory note except the signature may be printed, or