§ 166 (1899); Merchants Bank v. State Bank, 10 Wall. (U.S.) 647 (1870); First Nat. Bank of Jersey City v. Leach, 52 N. Y. 350 (1873).

Authority

to pay.

Countermand. Death.

Duty to

pay.

167. The duty and authority of a bank to pay a cheque drawn on it by its customer are terminated by

(a) Countermand of payment;

(b) Notice of the customer's death. 53 V., c. 33, s. 74. Imp. Act, sec. 75.

A bank having sufficient funds of the drawer of a cheque in its hands is bound to pay it, and in case of refusal is liable to an action of damages: Marzetti v. Williams, 1 B. & Ad. 415 (1830); Whitaker v. Bank of England, 6 C. & P. 700 (1835); Foley v. Hill, 2 H. L. Cas. 28 (1848); Rolin v. Steward, 14 C. B. 595 (1854); Summers v. City Bank, L. R. 9 C. P. 580 (1874); Todd v. Union Bank, 4 Man. R. 204 (1887); Fleming v. Bank of New Zealand, 16 T. L. R. 469 (1900). The damages recoverable by a non-trader for the wrongful refusal of a bank to allow him to withdraw a special deposit, are nominal or limited to interest on the money: Henderson v. Bank of Hamilton, 25 O. R. 641 (1894); Bank of New South Wales v. Milvain, 10 Vict. R. (Law) 3 (1884).

A bank may, without special instructions, pay any bills or notes, of which the customer is acceptor or maker, and which are payable at the bank: Jones v. Bank of Montreal, 29 U. C. Q. B. 448 (1869); Kymer v. Laurie, 18 L. J. Q. B. 218 (1849); Roberts v. Tucker, 16 Q. B. 560 (1851); Vagliano v. Bank of England, [1891] A. C. 107.

A bank refusing to pay such instruments incurs the same liability as in refusing to pay a cheque: Hill v. Smith, 12 M. & W. 618 (1844); Bell v. Carey, 8 C. B. 887 (1849).

Cheques are payable in the order in which they are presented, irrespective of their dates, provided the date is not subsequent to the presentment: Kilsby v. Williams, 5 B. & Ald. 815 (1822).

Where a customer keeps his account at one branch of § 167 the bank, other branches are not bound to honour his Branches cheques: Woodland v. Fear, 7 E. & B. 519 (1857). But if of bank. he has accounts in two or more branches, the bank may combine them against him, provided they are all in the same right: Garnett v. McKeown, L. R. 8 Ex. 10 (1872); Prince v. Oriental Bank, 3 A. C. 325 (1878).

If, however, the course of dealing was such that the customer was allowed to draw upon one account irrespective of the state of the other, the bank cannot combine them against him without a reasonable notice that the former course of dealing would be discontinued: Cummings v. Shand, 5 H. & N. 95 (1860; Buckingham v. London & Midland Bank, 12 T. L. R. 70 (1895); Ireland v. North of Scotland Banking Co, 8 R. 215 (1880); Kirkwood v. Clydesdale Bank, 15 Sc. L. T. R. 413 (1907).

Entries made in a customer's pass book are prima facie evidence against the bank: Commercial Bank v. Rhind, 3 Macq. H. L. 643 (1860); Couper's Trustees v. National Bank of Scotland, 16 Sess. Cas. 412 (1889).

Partnership cheques were to be drawn by one partner and initialled by the other. The bank paid a cheque drawn by one without the initials of the other. The latter recovered half the amount as damages: Twibell v. London & Suburban Bank, W. N. (1869), p. 127.

Countermand. A customer may stop payment of a cheque before it is accepted, but not after: Cohen v. Hale, 3 Q. B. D. 371 (1878); McLean v. Clydesdale Bank, 9 App. Cas. 95 (1883).

When a cheque is handed to a person on a condition which the drawer finds is to be broken or eluded, he has the right to stop the payment of the cheque: Wienholt v. Spitta, 3 Camp. 376 (1813); Spincer v. Spincer, 2 M. & Gr. 295 (1841); Elliott v. Crutchley, [1904] 1 K. B. 565.

Where a debtor, who has given a cheque for his debt, receives notice that the debt has been assigned by the creditor he is under no obligation to stop payment of the cheque: Bence v. Shearman, [1898] 2 Ch. 582.

§ 167

Countermand of payment.

One partner has power to stop a cheque issued in the firm name; one executor has power to stop a cheque signed by another: Grant v. Taylor, 2 Hare, 143 (1843).

A bank is not bound to honour a customer's cheques after a garnishee order is served on it, even although the balance exceed the judgment: Rogers v. Whitely, [1892] A. C. 118; Yates v. Terry, [1901] 1 K. B. 102.

A vendor of goods, after being paid, fraudulently sold them to another purchaser, who bought in good faith and gave his cheque in payment. The cheque was cashed at another bank on being guaranteed by an indorser. The second purchaser, on being served with garnishee proceedings by the first, stopped payment of the cheque and paid the money into Court. The indorser meanwhile paid the purchasing bank and received the cheque. Held, that he was entitled to the money in Court: Wilder v. Wolf, 4 0. L. R. 451 (1902).

The drawer of a cheque sent a telegram to the bank countermanding payment, which was placed in the letter box of the bank. It was left in the box when the rest of the letters, etc., were removed, and the cheque was presented and paid before the telegram came to the notice of the bank. Held, that there was no legal countermand, and the bank was not liable for the amount of the cheque even if the telegram was negligently overlooked. Quære-How far is a bank bound to act on an unauthenticated telegram? Curtice v. London City and Midland Bank, [1907] 1 K. B. 293.

Where the drawer of an accommodation cheque countermanded payment of it, a holder who gave value for it with knowledge of the countermand was not a holder in due course, and its accommodation character was a defect of title and he could not recover: Hornby v. McLaren, 24 T. L. R. 494 (1908).

Death of customer.-Payment after the death but before notice is valid: Rogerson v. Ladbroke, 1 Bing. 93 (1822). A bank cannot charge against a deceased customer's account notes maturing or cheques presented after it had notice of his death: Bailey v. Jellett, 9 Ont. A. R. 187 (1884). It has

been held in England that after the death of a partner, the § 167 surviving partner may draw cheques upon the partnership account: Backhouse v. Charlton, 8 Ch. D. 444 (1878). In Quebec the death of a partner terminates the partnership, and also the right of the survivors to act for the firm, in the absence of a special agreement to the contrary: C. C. Arts. 1892, 1897.

mortis

causa.

A cheque given as a donatio mortis causa must be pre- Donatio sented or negotiated before notice of the death of the donor in order to charge his estate: Hewitt v. Kaye, L. R. 6 Eq. 198 (1868); Bromley v. Brunton, L. R. 6 Eq. 275 (1868); Beak v. Beak, L. R. 13 Eq. 489 (1872); Rolls v. Pearce, 5 Ch. D. 730 (1877); In re Beaumont, [1902] 1 Ch. 889. But see Colvile v. Flanagan, 8 L. C. J. 225 (1864); and Clement v. Cheesman, 27 Ch. D. 631 (1884).

CROSSED CHEQUES.

Sections 168 to 175, inclusive, treat of crossed cheques. They are copied from the Imperial Act, with the substitution of "bank" for "banker," as private bankers are not recognized by the Canadian Act. The practice of crossing cheques did not obtain in Canada before the Act of 1890, and it has been adopted only to a very limited extent since, as the drawer can protect himself by making a cheque payable to order, since our Parliament refused to adopt section 60 of the Imperal Act, which relieves a bank from responsibility for the genuineness or authorization of the endorsement on cheques drawn upon it.

The practice is a comparatively modern one in England, and is another illustration of the elasticity of the law merchant by which a custom obtains for itself judicial sanction or legislative recognition. From the report of Stewart v. Lee, 1 M. & M. at p. 161 (1828), it would appear that the effect of crossing was not then fully settled. It is described in Boddington v. Schlenker, 4 B & Ad. 752 (1833); and in Bellamy v. Marjoribanks, 7 Ex. at p. 402 (1852). Baron Parke there gives a history of its origin and growth.

The practice originated at the London clearing house, the clerks of the different bankers who did business there

Crossed cheques.

§ 167 having been accustomed to write across the cheques the names of their employers, so as to enable the clearing house clerks to make up their accounts. It afterwards became a commor practice to cross cheques which were not intended to go through the clearing house at all. Baron Parke held that this had nothing to do with the restriction of negotiability, and formed no part of the cheque, and in no way altered its effect; but was a protection and safeguard to the owner, as, if the banker paid it otherwise than through another banker, the circumstance of his so paying would be strong evidence of negligence in an action against him. See also Carlon v. Ireland, 5 E. & B. 765 (1856).

Their origin.

In Canada.

The first Imperial Statute recognizing crossings was passed in 1856. In Simmons v. Taylor, 2 C. B. N. S. 528 (1857), it was held that the crossing was not a material part of the cheque and a holder might erase it. The Act of 1858 was passed to overcome the effect of this decision. In Smith v Union Bank of London, 1 Q. B. D. 31 (1875), a cheque crossed to a certain bank was stolen, and coming into the bands of a bona fide holder, he got it cashed through his own bank. The Court held that the Act of 1858 did not affect the negotiability of the cheque which had been indorsed by the payee. In Bobbett v. Pinkett, 1 Ex. D. 368 (1876), where the indorsement of the payee was forged, the banker was held liable for paying it otherwise than through the banker to whom it was specially indorsed. Then came the Act of 1876, which introduced the " not negotiable" crossing, which has been substantially reproduced in the Act of 1882 and the Canadian Act.

Although the crossing of cheques was not recognized in practice or in legislation in Canada, yet the Imperial Act, making the obliteration or alteration of the crossing a felony, was copied into our Forgery Act of 1869, and became section 31 of R. S. C. (1886) chap. 165. Even the words "and company" and "banker" were retained. In the Criminal Code, R. S. C. chap. 146, by section 468 (r), the forgery of a cheque renders the person found guilty liable to imprisonment for life, but obliterating or altering the crossing is not made a special offence.