supra protest, for "the honour* of" the drawee or any indorser by [*197] a stranger, who thereby undertakes to pay the bill if the drawee or indorser do not (r); the party for whose honour the acceptance was thus made, and all antecedent parties to the bill, being liable to the acceptor supra protest, for damages which he may incur by reason of his acceptance (8). The most serious difficulty arising upon a foreign bill is where a conflict occurs between the laws of the country in which it was drawn, accepted, or indorsed, and those which here obtain. The maxim lex loci regit actum needs here to be applied-sometimes under perplexing circumstances (†). 2. Cheque. 2. The relation of banker and customer is of this kind:-The banker is the depository of the customer's money, which he, in compliance with usage, undertakes to pay out from time to time to the customer's order evidenced by his cheque. A cheque is in fact an inland bill of exchange, drawn upon the banker, and payable to the bearer on demand (u). It differs however from a bill in some particulars, for instance, whereas a bill of exchange is drawn upon a person who is expected to, and in the ordinary course does, accept it, a common cheque, though drawn upon a banker, is not accepted by him; it is understood to be a request or order to pay money instanter when the order is presented, and accordingly does not need to be accepted (x). (536) A cheque passes from hand to hand upon the faith reposed in the maker of it, and a confidence that there are funds to his credit at the banker's sufficing for liquidation of the cheque. Further, as a cheque upon a banker is not usually accepted, so neither is it usually* indorsed. [* 198] It may, however, be so, and an action will then lie by the holder against an indorser of the instrument (y). The crossing of a cheque, which indicates that it must be passed through a banker's for presentment, is another characteristic of this instrument (z). Upon the implied undertaking of the banker his liability to a customer almost wholly depends, and any breach of duty by the banker causing direct damage to his customer would be actionable (a). A banker having in hand sufficient funds of a customer, is bound to honour his cheque, and liable in an action founded on contract or breach of duty for not doing so (b). The banker must decide as to the genuineness of a cheque drawn upon him, and should he (r) Hoare v. Cazenove, 16 East, 391, See 6 & 7 Will. 4, c. 58. (8) Byles on Bills, 9th ed. 259. (t) See, for instance, Bradlaugh v. De Rin, L. R. 3 C. P. 538; Lebel v. Tucker, L. R. 3 Q. B. 77. (u) The idea of negotiability as attaching to an instrument analogous to a banker's cheque was not made definite prior to the decision in Grant v. Vaughan, 3 Burr. 1516. (x) Days of grace are not allowed upon a cheque. (y) Keene v. Beard, 8 C. B. N. S. 372. (z) 19 & 20 Vict. c. 95; 21 & 22 Vict. c. 79, ss. 1, 3. (a) Hardy v. Veasey, L. R. 3 Ex. 107. (b) Marzetti v. Williams, 1 B. & Ad. 415; Gray v. Johnston, L. R. 3 App. Cas. 1. (536) That checks are not entitled to days of grace see Bowen v. Newell, 8 N. Y. (4 Seld.) 190; Minturn v. Fisher, 4 Cal. 35; Morrison v. Bailey, 5 Ohio St. 13; Andrew v. Blachly, 11 id. 89; Ivory v. Bank of State of Missouri, 36 Mo. 475; Henderson v. Pope, 39 Ga. 361. Post-dated checks are common, and are payable on the day of their date, although negotiated beforehand. Taylor v. Sip, 1 Vroom (N. J.), 284. Where the holder of a check presents the same to the drawee when due, and procures it to be certified instead of paid, it is as between him and the drawer a payment, and the latter is discharged from liability thereon. First National Bank of Jersey City v. Leuch, 52 N. Y. (7 Sick.) 350. pay a forged cheque, must, in the absence of gross negligence by his customer, bear the loss (c). If a bill be accepted by a customer, payable at his bankers, the making the acceptance payable there is tantamount to an order on the part of the acceptor that the banker shall pay the bill to the person who, according to the law merchant, may be capable of giving a good discharge for it. Supposing that the bill has in this case been originally made payable to order, the acceptance payable at a banker's operates as authorising him to pay the bill to any one who shall become holder of it by a genuine indorsement. Supposing, again, that the bill has been originally made payable to bearer, the acceptance payable at a banker's operates as authorising him to pay the bill to any one who seems to be the holder of it. The banker impliedly undertakes to pay the bill accordingly, i. e. in strict pursuance of, and in conformity with the authority given to him by his customer. He cannot, therefore, debit his customer's account with any payment not made in accordance with such authority (d). [* 199] The ordinary period of limitation, viz., six years, runs, of course, as against the recipient and holder of a cheque. A question, however, may arise of this kind. Is the holder entitled to retain the cheque thus long without a possibility of being in that interval prejudiced as regards his remedy against the maker of the cheque, by the delay in presenting it for payment. For resolving this question, a rule has been found needful, defining the period within which presentment of a cheque must be made in order that the holder of it may, in case of failure of the banker on whom it is drawn, have redress against the party who transferred the cheque. The holder of the cheque is bound to present it for payment on the day after that on which he received it, or if the cheque be on a banker in a distant town, the holder is bound to send it to his agent there for presentment by the post of the day after that on which he had it, the agent having the following day in which to present the instrument for payment (e). (537) This rule has been held to apply not merely as between the parties to the cheque, but as between the banker and his customer, unless, indeed, circumstances exist where a contract or duty on the part of the banker may be implied to present the cheque earlier for payment, or to defer presentment of it till a later period (ƒ). *3. A promissory note, or note of hand, is a plain and direct engagement in writing, to pay a sum specified (g) at the time therein limited (h) (c) Young v. Grote, 4 Bing. 253; Hall v. Fuller, 5 B. & C. 750. (d) Robarts v. Tucker, 16 Q. B. 560. By stat. 16 & 17 Vict. c. 59, s. 19, which applies to a draft on a banker, payable to order on demand, the banker is not responsible for the genuineness of an indorsement on such draft. (e) Rickford v. Ridge, 2 Camp. 537. (f) The application of the above rule may be thus shown:-A. is the customer of a country bank, into which he pays to the credit of his account there a cheque drawn upon a bank situate in some other town, X. If the payment by the customer is made on Friday, his bankers ought to forward the cheque on Saturday to their agent at X. for [* 200 ] presentment to the drawees, and the agent will have discharged his duty in presenting the cheque on Monday to these last named parties. See Hare v. Henty, 10 C. B. N. S. 65; Bailey v. Bodenham, 33 L. J. C. P. 252. (g) A promissory note under 51. payable to bearer on demand is illegal. See stats. 48 Geo. 3, c. 88, s. 2; 7 Geo. 4, c. 6, s. 3; 9 Geo. 4, c. 65, s. 1; 26 & 27 Vict. c. 105. (h) As in the case of a bill of exchange, ante, p. 185. The days of grace (ante, p. 187) are allowed on a promissory note (Brown v. Haradan, 4 T. R. 148), even when payable by instalments (Oridge v. Sherborne, 11 M. & W. 374). (537) See Smith v. Miller, 43 N. Y. (4 Hand) 171; S. C., 3 Am. Rep. 690; Bickford v. First National Bank of Chicago, 42 Ill. 238; Veazie Bank v. Winn, 40 Me. 60; Ritchie v. Brad shaw, 5 Cal. 228; Taylor v. Sip, 1 Vroom (N. J.), 284. note. 3. Promissory to a person therein named, or sufficiently indicated (i), or to his order, or to bearer. Promissory notes are, in virtue of the statute 3 & 4 Ann. c. 9 (k) (made perpetual by 7 Ann. c. 25, s. 3), assignable and indorsable in like manner as bills of exchange (1). What has been said of bills of exchange is in general applicable also to promissory notes, that are indorsed over, and negotiated from one hand to another; only that a promissory note is in form simpler (m) than a bill, inasmuch as at its inception there are but two parties to such instrument, the maker and the payee, the law considering a promissory note somewhat in the light of a bill drawn by a man upon himself, and accepted at the time of drawing. And, in case of non-payment by the maker, the several indorsees of a promissory note have the same remedy, as upon bills of exchange, against the prior indorsers. [* 201] *A promissory note, although made payable on demand, is not necessarily intended to be presented speedily, but is often rather meant to be a continuing security (n), and presentment of such a note, unless expressly required therein, is not needed as a condition precedent to charging the maker of the note (o). 4. An ordinary bank note is a promissory note, payable to bearer on demand, and passes from hand to hand by delivery, entitling the holder pro temp. to demand cash for his note from the bank by which it was issued, 4. Bank note. and at which it is made payable. The title of the bona fide holder of a bank note cannot be impugned upon proof that the note had, before coming for value into his hands, been stolen from its rightful owner. A bank note passes in currency like cash (p), so that its previous history need not be enquired into by a transferee thereof; confidence on the part of the public is thus encouraged in that paper which represents a metallic currency. They ought merely to satisfy themselves that the thing offered by way of payment is genuine; if forged or worthless, a person taking the note will, however, in general, have a remedy as against his immediate transferor in respect of the consideration given for it (q); though laches on the part of the holder of a country note in presenting it for payment may, in the event of the failure of the bank which issued it, preclude him altogether from recovering (r). (538) (i) Holmes v. Jaques, L. R. 1 Q. B. 376. (k) This enactment, which extends also to foreign notes (Milne v. Graham, 1 B. & Cr. 192; De la Chaumette v. Bank of England, 2 B. & Ad. 385), was made mainly in consequence of the refusal of the judges to recognise the practice of merchants in negotiating promissory notes in like manner as bills of exchange. (Clarke v. Martin, 2 Ld. Raym. 757.) As to the commencement of the recognition of inland bills by the English courts, see Buller v. Crips, 6 Mod. 29. () "A promissory note is not a personal chattel in possession, but a chose in action of a peculiar nature, which has indeed been made by statute assignable and transferable according to the custom of merchants, like a bill of exchange; yet still it is a chose in action, and nothing more." Gaters v. Madeley, 6 M. & W. 426. (m) A promissory note may, however, be joint or joint and several, and difficulties may hence occur in regard to its construction. (n) Brooks v. Mitchell, 9 M. & W. 18. (p) Miller v. Race, 1 Burr. 452. (538) If a bank receive payment in counterfeit notes, purporting to be its own issue, it will be bound thereby, because, by a rule of public policy, the officers of a bank are bound absolutely to know whether notes presented to them as their own are spurious or not. Bank of U. S. v. Bank of Georgia, 10 Wheat. 333; 1 Story on Cont., § 530; Gloucester Bank v. Salem Bank, 17 Mass. 33; Levy v. Bank of U. S., 4 Dall. 234. The issue of negotiable instruments by banking copartnerships and companies has, by reason of the exclusive privileges long since conceded to the bank of England (8), and on other considerations, from time to time been * regulated and restricted by the legislature. And, in pursuance of the policy thus adopted, various statutes. have been passed enacting generally as under: Issue of negotiable instru ments by banks. [* 202 ] Banking copartnerships in England consisting of not more than six persons, may (except within the city of London or three miles therefrom), under certain regulations, issue unstamped promissory notes and bills payable at or within seven days after sight, or within seventy-one days after date (t). It was formerly unlawful for banking companies of more than six persons, during the continuance of the privileges of the Bank, to borrow, owe, or take up any money on their bills or notes payable on demand, or at any time less than six months after date. This restriction was, however, relaxed by the 7 Geo. 4, c. 46, which permitted banking companies of more than six members to make and issue their bills and notes at any place beyond sixty-five miles from London (u), payable on demand, or otherwise, at some place or places specified therein and beyond sixty-five miles from London; such companies not having any place of business as bankers within that distance from London. Again, the stat. 3 & 4 Will. 4, c. 83, authorized any banking company of more than six members to make their bills or notes payable in London by their agent, or to draw any bill or note upon any such agent in London, payable on demand, or otherwise, in London; but by the * 3 & 4 Will. 4, c. [* 203 ] 98, s. 2, no such company can, during the continuance of the privileges of the Bank of England, make or issue in London, or within sixty-five miles thereof, any bill, or note, or engagement for the payment of money on demand, or upon which any person holding the same may obtain payment on demand; though it is lawful for any corporation or partnership transacting banking business at a greater distance than sixty-five miles from London, and not having any house of business or establishment as bankers in London, or within sixty-five miles thereof, to make and issue their bills and notes, payable on demand, or otherwise, at the place of issue, being more than sixty-five miles from London, and also in London, and to have an agent or agents in London, or at any other place at which such bills or notes shall be made payable, for the purpose of payment only. But no such bill or note shall be for any sum less than 57., or be re-issued in London, or within sixty-five miles thereof. The authority contained in the stat. 3 & 4 Will. 4, c. 83, extends only to companies of more than six members carrying on business beyond sixty-five miles from London. It was indeed at one time supposed that the statute referred to prohibited companies of more than six members from carrying on any banking business within the above-mentioned limits; but the doubts on (8) See, particularly, stats. 39 & 40 Geo. 3, c. 28, s. 15; 3 & 4 Will. 4, c. 98; 7 & 8 Vict. c. 32, s. 27. (t) Stat. 9 Geo. 4, c. 23. This statute contains (s. 15) a saving of the privileges of the Bank of England. By the 7 & 8 Vict. c. 32, s. 10, no new bank of issue was allowed to be created subsequent to May 6, 1844; and by s. 11, further restrictions were, from the passing of that act (July 19, 1844), placed upon bankers. (u) The restriction as to distance did not extend to bills for the amount of 50%. or upwards, payable in London or elsewhere, at any period after date or after sight; and this limit of 50%. seems to have been removed by subsequent enactments. See 3 & 4 Will. 4, c. 83, s. 2; c. 98, s. 2; 7 & 8 Vict. c. 32, s. 26. this head were removed by the 3rd section of the stat. 3 & 4 Will. 4, c. 98, enacting that any company of more than six persons may carry on the business of banking in London, or within sixty-five miles thereof, provided such company do not borrow, owe, or take up in England any money on their bills or notes payable on demand, or at less than six months from the borrowing thereof. It has since been made lawful for any banking company, though exceeding six in number, carrying on business in London or within sixty-five miles thereof, to draw, accept, or indorse, bills of exchange not being * pay[* 204] able to bearer on demand, notwithstanding any previous statute to the contrary (x). Lastly, nothing contained in the recent statute 27 & 28 Vict. c. 32 (y), empowers any copartnership to carry on the trade of bankers in London or within sixty-five miles thereof who were not authorized to do so under the preexisting law. It remains but to add upon this part of our subject, that the courts have always shown a disposition to protect the privileges of the Bank of England, and to discountenance any attempts at evading the restrictions which have for the benefit of that establishment been placed upon other banking companies (z). 5. Before considering certain contracts of loan and insurance which seem properly to fall under our present head, a few introductory remarks may be needful respecting a simple loan of money, to the efficacy of which writing, of course, although often used to evidence it, is not essential. 5. Certain contracts of loan and insurance. Borrowing is a contract by which a qualified property in money may be transferred to the borrower; either gratuitously or for a price, a stipend, or Introductory remarks. additional recompense for its enjoyment. It is a contract whereby the possession of and a transient property in money is transferred for a time or particular purpose, on condition that the money borrowed be restored so soon as the time is expired or purpose has been accomplished; together with the price or stipend either expressly agreed on by the parties, or left to be implied by law. By this mutual contract, the borrower gains a temporary property in the money borrowed, accompanied with an express or implied condition to restore it, and the owner or lender retains a [*205] * reversionary interest in the same, and acquires a new property in the price or reward. There is one species of this price or reward, the most usual of any, concerning which good and learned men in former times perplexed themselves, by raising doubts about its legality in foro conscientiæ. That is, when money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for its use; which generally is called interest by those who think it Jawful, or, when excessive, usury. The enemies to interest in general have indeed made no distinction between that and usury, holding any increase of money to be indefensible. And this opinion they partly (x) 7 & 8 Vict. c. 32, s. 26. (y) Intituled, "An Act to enable certain banking copartnerships which shall discontinue the issue of their own bank notes to sue and be sued by their public officer." (2) Bank of England v. Anderson, 3 Bing. N. C. 589; 2 Keene, 328; Booth v. Bank of England, 7 Cl. & F. 509. 4 |