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to obtain a writ, which warns the defendant to get leave to appear and defend the action within twelve days, and states that unless such leave is obtained the plaintiff will have judgment and execution. This Act is extended to the County Courts.
The only way to obtain such leave is by paying the money into Court or by swearing an affidavit disclosing a defence upon the merits. If the latter course is adopted it is better for the defendant to set out all his defences if they are more than one, lest he should be confined to what is set out.
The plaintiff has still the option of adhering to the more dilatory remedy afforded by the ordinary action.
3. An action may be brought either in the Superior or County Courts, on lost bills or notes, upon giving an indemnity to the satisfaction of the Court.
4. Where judgment is obtained against two or more persons, whether partners or not, (as to which see chap. xx, secs. 1 and 2,) execution may be levied on the property of either or both. But if only one of two or more partners is sued, all that can be taken under an execution will be his separate property, or his share of the partnership property.
5. Where either party to an action is a firm, the other party is entitled to be informed of whom the partnership is composed, and judgment in favor of a plaintiff against the firm is, generally speaking, judgment against each individual whom the plaintiff, at the time of suing, knew to belong to the firm at the time the obligation sued upon was incurred.
1. General resemblance between Cheques and Bills. 2. Under Twenty Shillings Void.
3. Extent of banker's obligation to pay.
4. To be presented within reasonable time, and why. 5. How far a cheque is payment.-Proof of payment thereby-Tender of cheque.
6. When evidence of an existing debt.
7. Paying Bill by Cheque. 8. Forged Cheque.
9. Forged Indorsement.
10. Cheque drawn by partners, and by several persons not partners.
11. Crossing cheques; why, and how to be done.
12. Of the words" not negotiable."
13. Quotation from B. of Exch. Act, 1882, on Crossed
1. A cheque on a banker, being simply an order to the banker to pay money on demand, is an inland Bill of Exchange, payable on demand, and, for this reason, requires no acceptance. The person signing the cheque is called the drawer, and is spoken of as the customer of the banker with whom he has an account. A cheque may be drawn payable to bearer or to a person named or bearer, which is the same thing, or to the drawer, or the drawer or his order, or to a third party, or, which is the same thing, a third party or his order. A cheque is, in general, subject to the rules which regulate the rights and liabilities of parties to Bills of Exchange.
2. A cheque for less than twenty shillings is no longer void or forbidden under a penalty; but such cheques are lawful, provided they are payable to bearer or to order on demand, and are drawn on a banker who shall bonâ fide hold money to the drawer's use.
3. A banker is under an obligation to his customer to honour the customer's cheques drawn on him as long as he has funds of the customer wherewith to meet them. But he would, probably, not be liable for refusing to pay a cheque, if his customer's money had only been paid in a few minutes before the cheque was presented.
If the banker dishonors a cheque which he ought to have paid, he is answerable in damages to his customer not only for the inconvenience and loss arising from the transaction in question, but for the general injury which will be assumed to result to the customer's credit. But the banker is in no way liable to the holder of the cheque, whose remedy is against the person from whom he took it, or an indorser (if any), or the drawer.
"The duty and authority of a banker to pay a cheque drawn on him by his customer are determined by
(1) "Countermand of payment:
(2) "Notice of the customer's death."-B. of Exch. Act, sec. 75.
4. A cheque, like a bill, must be presented within a reasonable time, which generally includes the day after it is issued.
All that is meant by this is, not that the drawer is always discharged, by failure to present within the time mentioned, but that if he be prejudiced by the delay (as if the banker fail) he will then be discharged to the extent of the sum which he loses by the delay. In fact, by keeping the cheque too long, the holder runs the risk of the bank failing.
The drawer is, in this sense, entitled to have the cheque presented within the time above mentioned, though the payee give it to his banker for presentment, or circulate it through several hands.
The law on this subject is given with accuracy, if not in the most readable form, in sec. 74 of the B. of Exch. Act, which is as follows:
Subject to the provisions of this Act
(1) Where a cheque is not presented for payment within a reasonable time of its issue, 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.
(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.
(3) The holder of such cheque as to which such drawer or person is discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge, and entitled to recover the amount from him.
5. A cheque, unless dishonored, is payment; i. e. a man having taken a cheque for his debt, cannot sue for the debt till he has presented the cheque, and payment has been refused.
To prove that a debt has been paid by means of a cheque, the banker must be called to prove that he paid it, and it must be shown to have passed through the hands of the creditor. For this reason, when a debt is
paid by cheque, the person to whom it is paid should be requested to write his name on the back.
A person who has tendered a cheque in payment of a debt is in the same position as if he had tendered money, unless the tender was objected to on the ground of its being a cheque.
6. The mere possession by A of an unpresented cheque drawn by B is no evidence of a debt due from B to A. But if the cheque has been presented and payment refused, it would be otherwise.
7. When an offer is made to pay a bill by a cheque, if the holder gives up the bill before cashing the cheque, he may be considered to rely entirely on the cheque, and then he would lose his remedy on the bill, if the cheque were dishonored.
8. If a banker pays a forged cheque, the loss is his own, for he can only charge his customer with money paid upon his cheques, and the forged cheque is the cheque of a stranger.
If the cheque be in part forged, the rule is the same; unless the customer, by his carelessness in drawing the cheque have given opportunity for the forgery. (See chap. xvii, sec. 9.)
9. To this there is an exception in the case of forged indorsements. When a cheque payable to order is drawn on a banker and he pays the cheque in good faith and in the ordinary course of business, it is not incumbent on him to show that the indorsement of the payee is genuine or was authorized by him, or that any subsequent indorsement was genuine or authorized; and the banker is deemed to have paid the bill in due course although the indorsements be made without authority or forged. (See antè, chap. x, sec. 5.)
10. While a partnership is subsisting the banker, if he have funds enough, is bound to honor a cheque drawn by one partner in the name of the firm, unless the banker, at the beginning of the partnership or afterwards, have notice of an arrangement between the partners restricting the right to draw cheques.
Each partner may draw cheques in the name of the firm; and, until the firm is dissolved, the banker is bound to pay such cheques, unless he have notice of a contract between the partners restricting the right to draw cheques.
The holder, if bonâ fide and for value, will have a right of action against the firm on the cheque, if dishonored, although wrongfully drawn by one partner.
Where several persons, having a joint account, but not constituting a firm, draw a cheque, they must all sign, unless one has authority to sign for the others; and if one has absconded, an application must be made to the Court in its equitable jurisdiction. The same if the executor or administrator of one of them refuses to sign.
11. A cheque being liable to be stolen, either from the person or from the post, and its being payable to order being only a slender safeguard, owing to the rule above given as to forged indorsements, it is very desirable to prevent the cheque falling into the hands of a person for whom it is not intended but who may nevertheless present it and get cash for it.
The mode adopted to prevent this is by crossing the cheque with two transverse lines with or without the words "and Company" or "and Co" between them, which is called a general crossing, or by writing the name of a banker between the two transverse lines, which is called a special crossing.
The effect of crossing the cheque will be, that the banker on whom it is drawn will not be justified in paying it except to another banker; and if he does so, he not only cannot take credit for it, but is liable to an action by his customer, if the wrong person gets the money. If the cheque is crossed with the name of a particular banker, it can only be paid to or through that banker.
Thus the original holder of the cheque, and, if it be found or stolen, the finder or the thief, cannot obtain cash for it except through his banker or his friend's banker.
12. To this a further safeguard may be added_by adding to the crossing the words "not negotiable." But these words can only be used where the cheque is crossed. The effect of this addition is that no person who takes the cheque can have, or be capable of giving, a better title to the cheque than the person from whom he took it had. This gets rid of the effect of the rule (see chap. x. sec. 6) that a bill or cheque which is originally made, or has by indorsement become, payable to bearer, passes from hand to hand like money and that