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Crossing is a material part.

Dividend warrants.

Postal orders.

The Cheque

A person taking a crossed cheque marked "not negotiable" has not, nor can he give, a better title than his transferor had (r).

The crossing constitutes a material part of the cheque, and no one may obliterate it, or add to it or alter it, save as authorized by the Code (y).

Warrants for the payment of dividends may be crossed like cheques, and with the same results (z). They are frequently transferred by indorsement and delivery like bills, and any usage relating to them remains unaffected by the Code (a).

Orders for a small amount, not exceeding 20s., are now issued payable on demand at any time within three months (or later on payment of a commission) at any post office. No stamp is required, but a poundage duty is paid, together with the principal sum at the time of issue. The sender must fill in the payee's name, and one or other of these two the name of the office where it is to be payable. They may be crossed either generally or specially. Forgery or fraudulent alteration is felony; and if the order be cut, defaced, or mutilated, or any erasure or alteration be made, payment may be refused. A banker receiving payment for a principal on any such order or document purporting to be such order, is not thereby rendered liable to any one except his principal, but this protection does not extend to the latter (b).

As we have already seen, the holder of a cheque cannot enforce payment from the bank, and he practically takes it

1893, Ap. Ca. 282; Coleman v.
Bucks and Oxon. Bank, 1897, 2
Cha. 243; and s. 82 in no way
curtails this right. Clarke v.
London and County Bank, 1897,
1 Q. B. 552; 66 L. J. 354. As to
"customer" see Matthews v.
Brown, 10 T. L. R. 386.


(a) Sect. 81. It is believed that this is the only case in which a holder in due course does not get a new and independent title, and have every presumption as to the liability of antecedent parties irresistibly drawn in his favour.

(y) Sect. 78. An alteration, therefore, in the crossing may avoid the instrument (sect. 64),

and if made fraudulently subject the person so doing to the penalties on forgery. See 24 & 25 Vict. c. 98, s. 22. Though Code, s. 64, does not mention the crossing of a cheque in recapitulating the material parts of a bill.

(*) Sect. 95.

(a) Sect. 97 (3) (d).

(b) 43 & 44 Vict. c. 33; amended and extended to British foreign dominions by 46 & 47 Vict. c. 58. A banker receiving post office orders from a customer has no better title to the proceeds when cashed than the customer, and is liable to the true owner for them. Fine Art Society v. Union Bank,


on the faith of the drawer's solvency, or of other parties CHAPTER thereto (c). The object of the Cheque Bank Company was to make it morally certain that a cheque drawn on them would not be dishonoured for want of funds. To effect this the contract between them and their customers differs from the ordinary one, inasmuch as it is stipulated that cheques shall not be drawn upon them save upon their own blank forms issued for that purpose, each of which notifies the maximum amount for which it may be drawn. As these forms are not issued until funds to meet them have been deposited with the bank, and those funds can only be drawn out by using the forms, it follows that funds must be lying at the bank ready to meet each outstanding form. Accordingly, it is found that they pass readily even in places where the drawer is not known, and afford a great convenience to those away from home.

Cheques are not accepted, hence the holder cannot sue the bank. The drawer is not discharged by the holder's failure to present in due time, unless the bank fail. Notice of dishonour to the drawer is rarely legally necessary, as absence of effects in the drawee's hands, the almost universal cause of dishonour, excuses it, as does countermand of payment (d). They must be drawn on a banker, and payable on demand, and are generally, though not necessarily, inland. And finally the banker is protected against a forged or unauthorized indorsement of a draft on him to order on demand.

17 Q. B. D. 705. The banker may sign the receipt clause instead of the payee.

(c) To issue the cheques accepted, so that the holder could sue the bank, would probably be an infringement of the Bank Charter Acts. See post, Chapter V.

(d) It may be extremely advisable to give it, however, as it, or the facts that dispense with it, must be alleged in the special indorsement on the statement of claim. Fruhauf v. Grosvenor, 61 L. J. Q. B. 717.

Summary of chief points

of difference between

cheques and






What it is.

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A MERE acknowledgment of a debt does not amount to a promissory note.

Such an acknowledgment is frequently made in an abbreviated form, thus,

London, 1st January, 1866.

Mr. A. B.

IOU £100.

C. D.

Requires no stamp.

An acknowledgment of a debt in this form is called an IO U. It is evidence of an account stated, but not of money lent (a).

Not amounting to a promissory note (b), and being merely evidence of a debt due by virtue of some antecedent contract, it requires no stamp (c). Nor indeed is a stamp required for any instrument which is merely an acknowledgment of money deposited to be accounted for, and not a receipt for money antecedently due (d). Therefore

(a) Fesenmayer v. Adcock, 16 M. & W. 449.

(b) But if the consideration be stated, it has been held in America to be a promissory note. Fleming v. Burge, Alabama, 373.

(c) Fisher v. Leslie, 1 Esp. 425; Israel v. Israel, 1 Camp. 499; 10 R. R. 737; Childers v. Boulnois,

D. & R. N. P. C. 8; Beeching v.
Westbrook, 8 M. & W. 412.

(d) Tomkins v. Ashby, 6 B. & C. 541; 9 D. & R. 543; 1 M. & M. 32; Casborne v. Dutton, Selwyn's N. P., 12th ed., 426; Payne v. Jenkins, 4 C. & P. 324; 34 R. R. 809; Hopkins v. Abbott, L. R., 19 Eq. 222.

a paper stating that the party signing it had certain bills in his hands, which he held to get discounted or return on demand, requires no stamp (e).



note or agree


But if the IO U contain an agreement that it is to be Unless it paid on a given day or on demand, it will be a promissory amount to a note, and must be stamped as such. And if the contracting words be such as to make it not a promissory note, but an agreement, it must be stamped accordingly (ƒ), unless it be under 51. in amount (g).

The following instrument was held to be a mere I O U, not to be a promissory note, and to require no stamp: "1839, Nov. 11, IO U forty-five pounds thirteen shillings, which I borrowed of Mrs. Melanotte, and to pay her five per cent. till paid " (h). An instrument in this form, “I owe Mr. John Gould the sum of 2001. for value received," requires no stamp (i).

It is conceived that a mere I O U, given by a surety for the debt of another man, is void by the Statute of Frauds (k). But perhaps the Mercantile Law Amendment Act (19 & 20 Vict. c. 97, s. 3), which removes the necessity of the consideration appearing in writing, may obviate the objection (1).

An IOU ought regularly to be addressed to the Need not be creditor by name; but though not addressed to any one addressed to it will be evidence for the plaintiff if produced by the creditor. him (m). This rule was convenient and safe. For, before the alteration of the law making parties to the action competent witnesses, if the IO U were given (as it often is) when no one but the plaintiff and defendant were present, it would have been impossible for the plaintiff to prove

(e) Mullett v. Hutchison, 3 C. & P. 92; 7 B. & C. 639; Langdon v. Wilson, 2 Man. & R. 10; Williamson v. Bennett, 2 Camp. 417; Horne v. Redfearn, 4 Bing. N. C. 433; 6 Scott, 260.

(f) Brooks v. Elkins, 2 M. & W. 74.

(g) Evans v. Phillpotts, 9 C. & P. 270; 23 Vict. c. 15; 33 & 34 Vict. c. 97, Sched.

(h) Melanotte v. Teasdale, 13 M. & W. 216; Smith v. Smith, 1 F. & F. 539.

(i) Gould v. Coombs, 14 L. J., C. P. 175; 1 C. B. 543.

(k) So held by the Court of
Exchequer in 1845. Admitted
by counsel to be so.
And see
Gould v. Coombs, 14 L. J., C. P.
175; 1 C. B. 550.

(1) An I O U jointly signed by
debtor and surety was held evi-
dence of a joint account stated
with creditor. Buck v. Hurst,
L. R., 1 C. P. 297.

(m) Curtis v. Rickards, 1 M. & G. 46; 1 Scott, N. R. 155 Douglas v. Holme, 12 A. & E. 146 Fisher v. Leslie, 1 Esp. 427 Fesenmayer v. Adcock, 16 M. &

W. 449.


Bill to discover consideration.

To restrain an


how he became possessed of it; but if the IOU were given to a third party the defendant had ordinarily the means of proving it.

It has been held that a bill in equity would lie to discover whether an IO U were given for a gaming debt (n).

There are cases where the Court will restrain an action on an I O U (0).

(n) Wilkinson v. L'Eaugier, 2 Y. & Col. 366.

(0) Quarrier v. Colston, 12 L. J., Ch. 57; 6 Jur. 959.

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