'that is to say, instruments which are freely negotiable, but to "which a bona fide holder for value does not acquire a new and independent title but can only have such as his transferor "had;" and another text writer1 says of it, "This is a new "form of cheque; in some respects its incidents are like those "of a forged or altered bill; that is, where there is a flaw in "the title, the right of the holder for value, is confined to a "right to recover the consideration for the bill as between him"self and the party from whom he received it." specially. 124. Where a cheque bears across its face an Cheque crossed addition of the name of a Banker, either with or without the words "not negotiable," that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed specially, and to be crossed to that Banker. This is a definition of a special crossing and is a part of Sec. 4 of the English Act. issue. 125. Where a cheque is uncrossed, the holder Crossing after may cross it generally or specially. Where a cheque is crossed generally, the holder may cross it specially. Where a cheque is crossed generally or specially, the holder may add the words " not negotiable.” Where a cheque is crossed specially, the Banker to whom it is crossed may again cross it specially to another Banker, his agent, for collection. The section apparently applies to cheques which have been negotiated, for it refers only to the holder, the English Act, Sec. 5, with which it corresponds uses the term lawful holder may, &c.; the holder referred to in the section is defined by Sec. 8. Payment of cheque crossed 126. Where a cheque is crossed generally, the Banker on whom it is drawn shall not pay it other- generally. wise than to a Banker. Walker on Banking Law, p. 102. Payment of cheque crossed specially. Payment of cheque crossed Where a cheque is crossed specially, the Banker on whom it is drawn shall not pay it otherwise than to the Banker to whom it is crossed, or his agent for collection. Sec. 7 of the English Act. 127. Where a cheque is crossed specially to specially more more than one Banker, except when crossed to an agent for the purpose of collection, the Banker on whom it is drawn shall refuse payment thereof. Sec. 8 of the English Act. than once, not to be paid. Payment in due course of 128. Where the Banker on whom a crossed crossed cheque. cheque is drawn has paid the same in due course, the Banker paying the cheque, and (in case such cheque has come to the hands of the payee) the drawer thereof, shall respectively be entitled to the same rights, and be placed in the same position in all respects, as they would respectively be entitled to and placed in if the amount of the cheque had been paid to, and received by, the true owner thereof. Sec. 9 of the English Act. Payment of crossed cheque out of due course. 129. Any Banker paying a cheque crossed generally, otherwise than to a Banker, or a cheque crossed specially otherwise than to the Banker to whom the same is crossed, or his agent for collection, being a Banker, shall be liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid. This section which declares that a Banker paying a crossed cheque in contravention of Secs. 126 and 127 shall be liable to the true owner for any loss he may sustain, by such payment, corresponds to Sec. 10 of the English Act, and was enacted in consequence of the decision by the Court of Appeal in the following case. The plaintiff having received a cheque on the defendants' bank, crossed it with the name of his own Bankers, and also indorsed it in blank and sent it by a clerk to his own Bankers for collection. The cheque was stolen from the clerk, and eventually got into the hands of C. for full value, who paid it, into his credit with his Bankers the L. & W. Bk. The L. & W. Bk. presented it for payment to the defendants who debited it to the drawer. The Court held that plaintiff having indorsed the cheque, and C. having become a bona fide holder for value, before the defendants paid it, the old Act 21 and 22 Vict. c. 79, did not give the plaintiff who had ceased to be the holder, any right of action against the defendants, who if liable at all could only be so to the drawer. 1 Under the definition given in Sec. 8, the holder would be the plaintiff, as he was the person entitled at the time of the loss, and therefore the true owner within the meaning of this section, and the defendants having paid the amount of the cheque to a Banker, other than the one specially named in the crossing, and not named as his agent for collection, liable to him. As to the liability of a Banker to any party to a cheque except the drawer, see ante Sec. 31. Though the Act provides that a Banker paying in contravention of the section, shall be liable to the true owner, it was held under the provisions of 19 and 20 Vict. c. 25, Sec. 1 and 21 and 22 Vict. c. 79, Secs. 1, 4, that the true owner may waive his right to hold the Banker liable, and recover the amount paid, from a person, who though a bona fide holder for value has obtained it through a forged indorsement.2 bear ing words, "not 130. A person taking a cheque crossed generally Cheque or specially, bearing in either case the words "not negotiable."" negotiable," 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. This section and Sec. 131 correspond with Sec. 12 of the English Act, except that in the latter, the second clause (here Sec. 131) is connected with the first, (here Sec. 130), by the word "but." The reason for the division here, is apparently on Smith v. Union Bk., L. R. 10 Q. B. 291; affd. 1 Q. B. D. 31; S. C. 45 L. J. (Q. B.) 149. 2 Bobbett v. Pinkett, 1 Ex. D. 368. account of a decision on the construction of the English Act in 1879, when it was held, that the first clause (here Sec. 130) in which the expression "a person taking" is used, was to be distinguished from the expression "A Banker who has, &c.," in the second clause; and that a Banker who in good faith, received not a cheque, but payment of a cheque for a customer, did not incur any liability to the true owner of the cheque, if the title of his customer to it proved defective, notwithstanding it was crossed generally or specially, or with or without the words on it "not negotiable." Grove, J., said, "The first part applies to a "cheque which has a limit to its negotiability, by the use of the "words on it, "not negotiable." The second part omits those "words and gives a protection to Bankers, with respect to "cheques crossed generally or specially, and without saying any "thing about the words "not negotiable." Had those two "C parts been different sections, and instead of the word 'but' the "figure 13 been there, marking the second branch of it as "section thirteen, it does not seem to me possible, that any one "could have mistaken, the meaning or application of the words "in that last part." The judgment of Lindley, J., in the same case, is as follows: "The act has done more things than one. "It had said that when a cheque is crossed, it is to be paid "through a Banker and through a Banker only; and nobody can "get the money except through a Banker. That practically 'means, that Bankers must receive those cheques and collect "them for their customers. Take the position of a collecting "bank. A collecting bank receives from its customers crossed cheques, they must collect them or leave them alone; they practically do collect them. Then it comes to this. What "is the consequence if they do collect, and the customer who "sends the cheque to them happens to have a bad title? It is "to my mind, a little hard that in any case a Banker who "collects the money for his customer should be liable for the money. I do not mean to say, that, as the law stood before, "the Banker was not liable; but it is a little hard; and it "appeared to me to be only reasonable, at all events, that the legislature should relieve Bankers from some of the consequences which no amount of foresight could possibly prevent, "and this by the terms of Sec. 12 is obviously what was meant." 66 1 Mathieson v. L. & C. Bk., 5 C. P. D. 7; S. C. 48 L. J. (C. P.) 529. of Banker receiving pay ment of cheque. 131. A Banker who has in good faith and with- Non-liability out negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such pay ment. Second clause of Sec. 12 of the English Act; see notes to Sec. 130. |