Money deposited with a Banker is not only money lent, but the Banker is bound to repay it, when called for by the draft of the customer.' The relation between Banker and customer is that of debtor and creditor, with a superadded obligation on the part of the Banker, to honor the customer's cheques so long as there are assets of his in the Banker's hands." The customer lends money to the Banker, and the Banker promises to repay that money, and whilst indebted to pay the whole or any part of the debt to any person, to whom his creditor, the customer, in the ordinary way requires him to pay it.3 Though an ordinary drawee, although in possession of funds of the drawer is not bound to accept, unless by his own agreement or consent, the Banker, if he has funds, is bound to pay on presentation of a cheque on demand. Admission of funds though not sufficient to bind an ordinary drawee, is sufficient to bind the Banker.⭑ Properly applicable.-Ordinarily the funds so applicable, are the customers current deposit account, but where a Banker had securities in his hands, though the cash balance was against the customer, and it was proved, that cheques drawn under similar circumstances had been honored, the Banker was held liable for not honoring the cheque. A Banker is however justified in refusing to honor a cheque drawn in breach of a trust; but it was held, in order to justify a Banker in refusing to pay a cheque of a customer, when he has funds of the customer in his hands, the customer being an executor, and drawing the cheque as executor, there must be a misapplication of the money intended by the executor, so as to constitute a breach of trust, and the banker must be cognizant of that intention. If it be shown that any personal benefit to the Bankers themselves is designed or stipulated for, that circumstance, above all others, will most readily establish the fact that the Bankers are in privity with the breach of trust which is about to be committed, and render them liable to refund to the estate. If there are branch banks 1 Pott v. Clegg, 16 M. & W. 321; S. C. 16 L. J. (Ex.) 210. • Garnett v. McKewan, L. R. 8 Ex. per Martin, B. at p. 13. 3 Robarts v. Tucker, 19 Q. B. per Alderson, B. at p. 575. Goodwin v. Robarts, L. R. 10 Ex. per Cockburn, C. J. at p. 6 of the same corporation or firm, the branch on which the cheque is drawn is the only one which is bound to pay.' Where a customer has accounts at two branches of a bank, and draws a cheque on one, where he has funds, while his other account is overdrawn to more than his balance in the other, the Bank is justified in refusing to pay such cheque.' When duly required.-As to presentment. A Banker is entited to a reasonable time to carry money paid in to a customer's credit to account, and would not be liable for refusing to pay a cheque even though he had funds in his hands until such a time had elapsed, and two hours was held in one case to be a reasonable time. * Must compensate the drawer, for any loss or damage caused by such default. This provision will, it is conceived, be construed in accordance with the English law, that the dishonor of a cheque while having funds in hand, is a damage in law (injuria sine damno). Lord Tenterden said, "The action is substantially founded on contract, and the plaintiff, though he may not have sustained damage in fact, is entitled to recover nominal damages. At 'the same time I cannot forbear to observe that it is a discredit "to a person, and therefore injurious in fact, to have a draft "refused for so small a sum, for it shows, that the Banker has "little confidence in the customer. It is an act particularly "calculated to be iujurious to a person in trade.”5 In a later case it was held, though no evidence was given, that plaintiff had sustained any special damage, he was entitled to a reasonable compensation for the injury, he must have sustained by the dishonor of his cheque, and again a Banker is bound by his contract with his customer to honor the cheque when he has sufficient assets in his hands; if he does not fulfil his contract, he is liable to an action by the drawer, in which heavy damages may be recovered if the drawer's credit has been injured." 6 Liability of maker of note and acceptor of bill. It will be noticed, that the section only refers to the drawer as the person entitled as against the drawee to compensation, and it has been held, that the drawing of a cheque in favor of a person is not an equitable assignment of the debt due by the Banker to his customer.1 There is no privity between the Banker on whom a cheque is drawn, and the payee or holder of a cheque, and therefore the lawful holder of a cheque cannot sue the Banker on the cheque, unless the latter have accepted it. 32. In the absence of a contract to the contrary, the maker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay the amount thereof at maturity according to the apparent tenor of the note or acceptance respectively, and the acceptor of a bill of exchange at or after maturity is bound to pay the amount thereof to the holder on demand. In default of such payment as aforesaid, such maker or acceptor is bound to compensate any party to the note or bill for any loss or damage sustained by him and caused by such default. This section lays down who are the parties primarily liable on promissory notes and bills of exchange, and that it is their duty to pay the bill at maturity3 with the exception of a bill accepted at or after maturity which is to be paid on demand. In the absence of a contract to the contrary.—These words must of course be taken to apply only to those parties to the bill, who are parties to the contract, and therefore if a negotiable instrument be made or accepted without consideration, for the accommodation of the payee or drawer, then as between these parties, there would be no obligation to pay the instrument at maturity, but as between the holder and the maker, drawer, or acceptor, 1 Hopkinson v. Forster, L. R. Eq. 74; but see Keene v. Beard, 8 C. B., (N. S.) 372; S. C. 29 L. J. (C. P.) 287. Bellamy v. Marjoribanks, 7 Ex. at p. 404, per Parke, B. ; S. C. 1 the obligation would arise. The following is from a judgment of Lord Watson on the liabilities of parties to a negotiable instrument:"In considering the question as to what liability the defendant incurred to the drawer of the bill, it is necessary to distinguish between the liabilities which the law merchant attaches to a person, who by signing has become a party to a bill, and those liabilities which may arise out of an understanding or agreement of parties extrinsic of the bill. In some cases the precise character and consequent liabilities of parties to a bill are conclusively fixed by the tenor of the document. The person who draws a bill of exchange, and his addressee who accepts it, can never according to the principles of the law merchant be liable otherwise, than in their respective characters of drawer and acceptor. In other cases, the character and liability of the parties to a bill, cannot be ascertained, without the aid of proof, as, for instance, when a dispute arises as to the order of time, in which indorsements were made upon the bill. But such proof, when it is admissible, must be strictly limited, to facts and circumstances, attendant upon the making, issue or indorsement of the bill. On the other hand, it is undoubtedly competent for parties to a bill, to contract inter se, expressly or impliedly, to alter and even invert the positions and liabilities assigned to them by the law merchant. The drawer and acceptor of a bill may agree, that, as between themselves, the acceptor shall have the rights of a drawer, and that the drawer shall be subject to the liabilities of an acceptor, and that agreement when proved will be binding upon them both, although it can have no effect upon the obligations to third parties interested in the bill, imposed upon them by the law merchant." This is what is known to English law as an accommodation Bill or Note. It stands on a peculiar footing, inasmuch, as there is an implied undertaking on the part of the drawer, to indemnify the acceptor, against claims which may be made upon him in respect of the bill; and upon this implied contract of indemnity an action will lie against the drawer by the acceptor, if obliged to take up the bill. But even in the case of an accommodation bill, the drawer See Sec. 132, Contract Act (App.); Jewell v. Parr, 13 C. B. 909; S. C. 16 C. B. 604; Agra Bank v. Leighton, L. R. 2 Ex. 56; S. C. 36 L. J. (Ex.) 33. 2 Steele v. M'Kinlay, 3 App. Cas. at p. 778. Only drawee can be acceptor except in need or for honor. Acceptance by several drawees not partners. is not prima facie the party to pay it; upon the face of such a bill, the party who is bound to pay is the accommodation acceptor. 1 33. No person except the drawee of a bill of exchange, or all or some of several drawees, or a person named therein as a drawee in case of need, or an acceptor for honor, can bind himself by an acceptance. This section is founded on a decision of Lord Ellenborough's, where he said, "The acceptance of the defendant is contrary to "the usage and custom of merchants. A bill must be accepted by the drawee, or failing him by some one for the honor of "the drawer.' 66 66 992 In a very recent case in the House of Lords, the law is thus laid down :-"To hold that a stranger to the bill who writes "his name across the back of it, before it has passed out of the "hands of the drawer, thereby becomes liable to the drawer, fail"ing payment by the drawees, appears to me to be as incon"sistent with the principles of the law merchant as to hold that "there may be a drawer other than the original drawer and payee, or that there may be an acceptor other than the drawee, or one who accepts as his agent or for his honor. It may be "convenient in some cases to describe the liability of a person "whose name is on a bill, and who is neither payee nor drawee, "as being the liability of a drawer or acceptor, but in these cases, liability cannot arise from such a person being either a "drawer or acceptor, in the sense of the law merchant, but from some agreement extrinsic of the bill itself.”3 4 But a drawee may accept by agent. As to acceptance for honor (see ante, Sec. 7 and post, Chap. XI.) 34. Where there are several drawees of a bill of 1 Broom's Comm., p. 449; see Fewell v. Parr, 13 C. B. at p. 914. 2 Jackson v. Hudson, 2 Camp. at p. 448. 3 Steele v. M'Kinlay, 5 App. Cas. per Lord Watson at p. 782; see Malcolmson v. Malcolmson, I Ir. L. R. Ch. D. 231; see also Lindus v. Bradwell, 5 C. B. 21. |