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CHEQUES ON A BANKER.
73. A cheque is a bill of exchange drawn on a Cheque banker payable on demand.
Except as otherwise provided in this part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque.
See “bill of exchange" defined by sect. 3, ante, p. 8. By sect. 10 a bill is payable on demand which is expressed to be payable on demand, or at sight, or on presentation, or in which no time for payment is expressed. See “ banker” defined by sect. 2, ante, p. 3.
The Act is declaratory in so far as it defines a cheque as a bill of exchange. It is no part of the definition that a cheque should be an inland bill, or that it should be drawn by a customer upon his banker. Formerly cheques were exempt from stamp duty, but they were required to be issued within fifteen miles of the bank on which they were drawn. The enactments requiring this to be done have long been repealed.
See cheques compared with and distinguished from ordinary bills of exchange by Parke, B., Erle, J., and Byles, J., Palles, C. B., and the Supreme Court of the United States. All cheques are bills of exchange, but all bills of exchange are not cheques; therefore an authority
M Lean v. Clydesdale Bank (1883), 9 App. Cas. 95, per Lord Blackburn.
? Ibid. at p. 106.
3 Ramchurn Mullick v. Luchmecchund Radakissen (1854), 9 Moore, P. C. at p. 69.
* Keane v. Beard (1860), 8 C. B. N. S. at pp. 380, 381, as modified by Hopkinson v. Forster (1874), L. R. 19 Eq. at p. 76, Jessel, M. R.
Ś Lynn v, Bell (1876), 10 Ir. R. C. L. at p. 490.
to draw cheques does not necessarily include an authority to draw bills. Apart from statute, the distinctions between cheques and ordinary bills of exchange arise from the relationship of banker and customer subsisting between the drawer and drawee of a cheque. A cheque is intended for prompt presentment, while à note payable on demand is deemed to be a continuing security.?
A cheque is not intended to be accepted, but at common law there is no objection to the acceptance of a cheque, if the holder likes to take it in lieu of payment, but the Bank Charter Acts would in most cases render this illegal. As to post-dated cheques, see note to sect. 13 (2), ante, p. 34. As to when a cheque becomes stale, so as to be on the footing of an overdue bill, see sect. 36 (3), ante, p. 119. As to excuses for omitting to give notice of dishonour, see sect. 50 (2), especially clause (c), ante, p. 167. An affidavit under Order XIY., verifying the cause of action, need not specifically allege that notice of the dishonour of a cheque has been given, or that it is excused. As to cheques for less than twenty shillings in Scotland, see note to sect. 3, ante, p. 10. As to forged indorsements on cheques, see sect. 60, ante, p. 209.
Marked cheques.—As between banker and banker, marking a cheque probably amounts to a binding representation that it will be paid, but it is clearly not an acceptance that the holder can take advantage of: see sect. 17 (2), ante, p. 43. As to certified cheques in the United States, see Daniell, SS 1601-1611.
In France, cheques are regulated by the “Loi du 23 Mai, 1865,” as modified by the “Loi du 19 Février, 1874.” See further Nouguier's treatise “ Des Cheques.” The French law defines a cheque, as “L'écrit qui sous la forme d'un mandat de paiement sert au tireur à effectuer le retrait à son profit ou au profit d'un tiers de tout ou partie des fonds portés au crédit de son compte et disponible. As to Italy, see Italian Com. Code, Arts. 339—344.
1 Forster v. Mackreth (1867), L. R. 2 Ex. 163.
9 Brooks v. Mitchell (1841), 9 M. & W. at p. 18, Parke, B. ; Chartered Bank v. Dickson (1871), L. R. 3 P. C. at p. 579, Lord Cairns.
3 May v. Chidley, (1894) 1 Q. B. 451.
4 Cf. Robson v. Bennett (1810), 2 Taunt. 388 ; and see Pollard v. Bank of England (1871), L. R. 6 Q. B. 623; Goodwin v. Robarts (1875), L. R. 10 Ex. at pp. 351, 352.
74. Subject to the provisions of this Act?
8 74. (1) Where a cheque is not presented for pay- Presentment ment within a reasonable time of its issue, payment.
of cheque for and the drawer or the person on whose account it is drawn had the right at the time of such presentment 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. This section is new law. It was introduced in the Lords by Lord Bramwell to mitigate the rigour of the common law rule. At common law the mere omission to present a cheque for payment did not discharge the drawer, until at any rate six years had elapsed, and in this respect the common law appears to be unaltered. But if a cheque was not presented within a reasonable time, as defined by the cases, and the drawer suffered actual damage by the delay, e.g., by the failure of the bank, the drawer was absolutely discharged, even though ultimately the bank might pay (say) fifteen shillings in the pound : 3 see further sub-sect. (3), post, p. 249, as to the holder's position.
By virtue of sect. 45 (2), ante, p. 142, the indorser of a cheque will be discharged, unless it is presented for payment within a reasonable time (after indorsement) as defined by the Act.*
1 See sect. 46, ante, p. 148, as to excuses for non-presentment and delay in presentment.
? Laws v. Rand (1857), 27 L. J. C. P. 76; Heywood v. Pickering (1874), L. R. 9 Q. B. at p. 432; Kinyon v. Stanton (1878), 28 Amer. R. 601. As a reason for the six year limit, see Pott v. Clegg (1847), 16 M. & W. 321.
3 Alexander v. Burchfield (1842), 7 M. & Gr. 1061; Robinson v. Hawksford (1846), 9 Q. B. 52 ; Bailey v. Bodenham (1864), 33 L. J. C. P. 252.
4 Cf. Smith v. Jones (1838), 20 Wend. 192, New York. No English decision.
(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. This sub-section, perhaps, introduces a new and less rigorous measure of reasonable time. The common law rule may be stated as follows:
A cheque is deemed to have been presented within a reasonable time when presented according to the following rules:(1.) If the person who receives a cheque and the banker
on whom it is drawn are in the same place the cheque must, in the absence of special circumstances, be presented for payment on the day
after it is received.? (2.) If the person who receives a cheque and the banker
on whom it is drawn are in different places, the cheque must, in the absence of special circumstances, be forwarded for presentment on the day after it is received, and the agent to whom it is forwarded must, in like manner, present it or
forward it on the day after he receives it.3 (3.) In computing time non-business days must be ex
cluded ; 4 and when a cheque is crossed, any delay caused by presenting the cheque pursuant to the
crossing is probably excused. The result of the cases seems to be this. A party who receives a cheque has a clear day for presenting or forwarding it. If, instead of presenting it himself, he forwards it to someone else to present, the question is, was he acting reasonably in so doing? A principal, of course, is responsible to third parties for the act of his agents; e.g., if person forwards a cheque to an agent, and the agent, instead of presenting it himself, unreasonably forwards it to
1 Firth v. Brooks (1861), 4 L. T. N. S. 467.
3 Hare v. Henty (1861), 30 L. J. C. P. 302; Prideaux v. Criddle (1869), L. R. 4 Q. B. 455 ; Heywood v. Pickering (1874), L. R. 9 Q. B. 428.
4 Cf. 34 & 35 Vict. c. 17; and see now sect. 92, post, p. 279.
5 Cf. Alexander v. Burchfield (1842), 7 M. & Gr. at p. 1067. Since this case the crossing of chegues has received legislative sanction.
another agent, the loss as regards third parties falls on the $ 74. principal, though he may have a remedy over against his agent. The question whether a cheque has been presented within a reasonable time may arise between drawer and holder, or between indorser and indorsee, or between transferor by delivery and transferee, or between customer and banker. In each case it must be determined as between the particular parties. See a different standard of reasonable time as between vendor and vendee where the vendor of goods was paid by the cheque of the vendee's agent.3 (3) The holder of such cheque as to which Rights of
such drawer or person is discharged shall be drawer is a creditor, in lieu of such drawer or person, of
discharged. such banker to the extent of such discharge,
and entitled to recover the amount from him. The effect of this sub-section, read with sub-section (1), appears to be this:
A person draws a cheque for 1001. on his banker, which is not presented for payment within a reasonable time of its issue as defined by the Act. The banker fails, the drawer having at the time of the failure sufficient money to his credit to meet the cheque. The drawer is discharged, but the holder can prove for 1001. against the banker's estate. If, however, the drawer had no funds to his credit, but was authorized to overdraw, the drawer would still be discharged; but the holder could not prove against the banker's estate.
75. The duty and authority of a banker to Revocation of pay a cheque drawn on him by his customer are authority. determined by
(1) Countermand of payment :*
| See, e.g., Moule v. Brown (1838), 4 Bing. N. C. 266.
* Cf. Cohen v. Hale (1878), 3 Q. B. D. 371 ; M.Lean v. Clydesdale Bank (1883), 9 App. Cas. 95.
5 Rogerson v. Ladbroke (1822), 1 Bing. 93.