§ 75.

Donatio mortis causa.

When a firm of two partners has a banking account, and one dies, the authority of the surviving partner to draw cheques on the firm account is not determined. As to paying a draft contrary to instructions, see Twibell v. London Suburban Bank.2

A cheque given by the drawer in contemplation of death must be presented for payment by the donee before the drawer's death in order to entitle the donee to receive the amount out of the drawer's estate as a donatio mortis causâ. For example:

1. A. draws a cheque in favour of C., and in contemplation of death hands it to him as a gift. After A.'s death it is presented and payment refused. C. cannot claim for the amount against A.'s estate.3

2. A., in contemplation of death, draws a cheque and gives it to C. After A.'s death C. presents the cheque, and the bankers, in ignorance of A.'s death, pay it. C. can (probably) retain the money as against A.'s representatives.*

3. A., in contemplation of death, draws a cheque and gives it to C. Before A.'s death C. presents it for payment. The bankers refuse to pay it, because doubtful of A.'s signature. A. dies, and payment is subsequently refused on that ground. C., the donee, is entitled to receive the amount out of A.'s estate."

4. A., in contemplation of death, draws a cheque and gives it to C. Before A.'s death C. negotiates the cheque for value. The holder can claim for the amount against A.'s estate.

The position of the donee of a cheque is this: he cannot sue the drawer's executors on the instrument, because he is not a holder for value (ante, p. 95), and the banker's authority to pay is revoked by notice of the drawer's death. A cheque given for value, it is conceived, is on the same footing as an ordinary bill of exchange. But, assuming that, as between drawer and payee, it is a mere authority to receive the amount, still an authority coupled with an interest is not revoked by death. Of course, if the donor, instead of giving his own cheque, gives the cheque of a

1 Backhouse v. Charlton (1878), 8 Ch. D. 444; see, too, Usher v. Dauncey (1814), 4 Camp. 97.

2 Twibell v. London Suburban Bank, W. N. 1869, p. 127.

3 Hewitt v. Kaye (1868), L. R. 6 Eq. 198; Beak v. Beak (1872), L. R. 13

Eq. 489; cf. Jones v. Lock (1865), L. R. 1 Ch. 25.

4 Cf. Tate v. Hilbert (1793), 2 Ves. jun. at p. 118.

justified in paying.

5 Bromley v. Brunton (1868), L. R. 6 Eq. 275.

6 Rolls v. Pearce (1877), Ch. D. 730.

The bankers are

7 Cf. Hatch v. Searles (1854), 2 Sm. & G. at pp. 151, 155.

third person, which he holds, the gift is good, and the difficulty adverted to above does not arise.1

§ 75.

The banker's authority to pay his customer's cheque is Bankruptcy. further revoked by the fact that a receiving order in bankruptcy has been made against him, or by notice that he has committed an available act of bankruptcy.2

A banker is under no obligation to honour his customer's Garnishee cheques if he is served with a garnishee order, even though order. the balance to the customer's credit exceeds the amount of the judgment. If the banker honoured cheques subsequent to notice of the order, he would do so at his own risk, for it might turn out, for instance, that "a portion of the money in the banker's hands might be, without the banker's knowledge, money of which the judgment debtor was trustee. That portion could not be ordered to be paid to the judgment creditor." 3

The relations of banker and customer in respect of cheques Relations of may be summarized as follows:

(1.) In the absence of special contract, the relations between a banker and his customer are those of debtor and creditor; and in addition the customer is entitled to draw cheques on the banker to the extent of the sum for which he is a creditor.1

(2.) Subject to the exceptions noted above, where a cheque is presented for payment and dishonoured, and the banker has in his hands at the time funds to the credit of his customer sufficient to meet it, the banker is liable to his customer in damages, unless the requisite funds were

5

1 Clement v. Cheeseman (1884), 27 Ch. D. 631, and ante, p. 130.

2 Bankruptcy Act, 1883, ss. 9 and 49, and see available act of bankruptcy defined by sect. 168; cf. Vernon v. Hankey (1787), 2 T. R. 113; and Ex parte Sharp (1844), 3 M. D. & D. 490, under former Bankruptcy Acts.

Rogers v. Whiteley (1889), 23 Q. B. D. 236, C. A. (affirmed, (1892) A. C. 118 H. L.), see at p. 238, per Lindley, L.J. As to arrestment in Scotland, see Bell's Principles, 9th ed. § 308.

4 Cf. Pott v. Clegg (1847), 16 M. & W. 321; Foley v. Hill (1848), 2 H. L. Ca. 28. See, too, Re Hallett's Estate (1880), 13 Ch. D. at pp. 727, 728, C. A.; Re Agra Bank (1866), 36 L. J. Ch. 151, banker is debtor to, not trustee for, his customer.

5 Marzetti v. Williams (1830), 1 B. & Ad. 415; Whitaker v. Bank of England (1835), 1 C. M. & R. 744; Gray v. Johnston (1868), L. R. 3 H. L. 1, see at p. 14, per Lord Westbury; but see per Lord Cairns and Bodenham v. Hoskyns (1852), 2 De G. M. & G. 903; cf. Goodwin v. Robarts (1875), L. R. 10 Ex. at p. 351, Ex. Ch. As to the measure of damages, see ante, p. 182. As to banker claiming a lien, see Agra Bank v. Hoffmann (1865), 34 L. J. Ch. 285.

banker and customer.

§ 75.

paid in so short a time before the dishonour of the cheque that the banker could not with the exercise of reasonable diligence have ascertained the state of accounts between them.1

(3.) In the absence of special directions from the customer, it seems to be the duty of the banker to pay the customer's cheques in the order in which they are presented.2

(4.) As regards banks having several branches, where a customer has an account at one branch, the other branches at which he has no account are not bound to honour his cheques; but where a customer has accounts at two or more branches the bank is entitled to combine such accounts against him.

The combined accounts must be kept in the same right; e.g., a personal and a trust account cannot be combined. See the whole status of branch banks in regard to bills discussed by the Privy Council.5

Duty as to Bills.-When a customer accepts a bill payable at his bankers, it is an authority to the banker to pay it; but the banker is not bound to do so in the absence of special arrangement? In the case of a cheque he is protected against the consequences of a forged indorsement (sect. 60); in the case of a bill he is not (sect. 24). In the absence of special agreement a banker is clearly under no obligation to accept his customers' bills (ante, p. 181), nor it seems is he bound to pay a bill, other than a cheque, drawn on him by a customer (ante, p. 181); and it may be noted that a post-dated cheque, known to be such, is for some purposes regarded as a bill of exchange payable after date.s

Overdraft. In the absence of special agreement, express

1 Whitaker v. Bank of England (1835), 1 C. M. & R. at pp. 749, 750, Parke, B. cf. Bransby v. East London Bank (1866), 14 L. T. N. S. 403.

2 Kilsby v. Williams (1822), 5 B. & Ald. 819; cf. Boyd v. Emmerson (1834), 2 A. & E. 184, at p. 202.

3 Woodland v. Fear (1857), 7 E. & B. 519.

4 Garnett v. M‘Kewan (1872), L. R. 8 Ex. 10.

Prince v. Oriental Bank (1878), 3 App. Cas. 325.

6 Kymer v. Laurie (1849), 18 L. J. Q. B. 218.

7 Cf. Robarts v. Tucker (1851), 16 Q. B. at p. 579; Bank of England v. Vagliano, (1891) A. C. at p. 157, H. L.

8 Forster v. Mackreth (1867), L. R. 2 Ex. 163; cf. Emmanuel v. Robarts (1868), 9 B. & S. 121. Qu. as to the banker's obligation since the objection to post-dated cheques was removed by the Stamp Act, 1870?

or implied, founded on consideration, a banker is of course under no obligation to let a customer overdraw.1

§ 75.

A cheque on payment becomes the property of the Property in drawer, but the banker who pays it is entitled to keep it paid cheque.

as a voucher until his account with his customer is settled.3

Entries made in customer's pass-book are primâ facie Pass-book. evidence against the bank.1

1 Cumming v. Shand (1860), 29 L. J. Ex. at p. 132. As to implied agreement, see Armfield v. London and Westminster Bank (1883), 1 C. & E. 170; as to presumption, see Ritchie v. Clydesdale Bank (1886), 13 Sess. Cas. 114. As to the general duty of a bank not to disclose the state of a customer's account, except for good reasons, see Hardy v. Veasey (1868), L. R. 3 Ex. 107.

2 R. v. Watts (1850), 2 Den. C. C. 15.

3 Cf. Charles v. Blackwell (1877), 2 C. P. D. at p. 162, C. A.

4 Commercial Bank v. Rhind (1848), 1 Macq. H. L. 643; Cowper's Trustees v. National Bank of Scotland (1889), 16 Sess. Cas. 412. As to appropriation of payment by entries in bank books not communicated to customer, see Simson v. Ingham (1823), 2 B. & C. 65; and as to such entries in pass-book, see at p. 73. See, too, Hooper v. Keay (1875), L. R. 1 Q. R 178.

§ 76.

General and special crossings defined.

Crossed Cheques.

76. (1) Where a cheque bears across its face an addition of—

(a) The words "and company" or any abbreviation thereof between two parallel transverse lines, either with or without the words "not negotiable;" or

(b) Two parallel transverse lines simply, either with or without the words "not negotiable;" that addition constitutes a crossing, and the cheque is crossed generally.

(2) Where a cheque bears across its face an addition of the name of a banker, either with or without the words "not negotiable," that addition constitutes a crossing, and the cheque is crossed specially and to that banker.

By sect. 2, "banker" includes a body of persons, whether incorporated or not, who carry on the business of banking.

See the origin of crossing cheques explained by Parke, B.,1 and the common law effect of a crossing commented on by Lord Cairns. The first statute recognizing crossings was the 19 & 20 Vict. c. 25. This enactment was supplemented by the 21 & 22 Vict. c. 79, in consequence of a decision to the effect that the crossing was not an integral part of the cheque, and that its fraudulent obliteration was not a forgery.3 Then came the case of Smith v. Union Bank. A cheque

The practice

1 Bellamy v. Majoribanks (1852), 7 Exch. 389, at p. 402. originated in the Clearing House, and was afterwards adopted outside.

2 Smith v. Union Bank (1875), 1 Q. B. D. at p. 33, C. A. It operated as

a mere caution to the banker.

3 Simmonds v. Taylor (1858), 27 L. J. C. P. 248.

4 Smith v. Union Bank (1875), 1 Q. B. D. 31, C. A.