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368 (1876), where the indorsement of the payee was forged, § 75. the banker was held liable for paying it otherwise than through the banker to whom it was specially indorsed. Then came the Act of 1876, which introduced the "not negotiable" crossing, which has been substantially reproduced in the Act of 1882 and the present Act.
Although the crossing of cheques was not recognized in practice or in legislation in Canada, yet the Imperial Act making the obliteration or alteration of the crossing a felony was copied into our Forgery Act of 1869, and is now section 31 of R. S. C. c. 165. Even the words "and company" and "banker," are retained.
The practice of crossing cheques has not been adopted in the United States.
75. Where a cheque bears across its face an General addition of
(a) The word "bank between two parallel transverse lines, either with or without the words. "not negotiable; " or
(b) Two parallel transverse lines simply, either with or without the words "not negotiable;"
That addition constitutes a crossing, and the cheque is crossed generally:
2. Where a cheque bears across its face an Special addition of the name of a bank, either with or without the words "not negotiable," that addition constitutes a crossing, and the cheque is crossed specially and to that bank: Imp. Act, s. 76.
As already stated, this part of the Act does not apply to cheques on private bankers, nor can a cheque on an
§ 75. incorporated bank be crossed in favor of a private banker, or if crossed generally, be presented through him. See ante, pp. 25, 26.
Crossing by drawer.
May be varied.
Words may be added.
General or 2. Where a cheque is uncrossed, the holder may cross it generally or specially :
3. Where a cheque is crossed generally, the holder may cross it specially:
Re-crossing for collection.
Crossing by bank.
Where the drawer of a cheque made it payable to the order of M., and crossed it "Account of M., National Bank" and gave it to M. who indorsed it to the National Bank, it was held that the bank could recover from the drawer, for these words, even assuming that section 8 applies to cheques, do not prohibit transfer or indicate an intention that it should not be transferred; and that probably the only way to make a cheque not transferable would be to comply with the provisions of this section: National Bank v. Silke, 1891] 1 Q. B. 435.
76. A cheque may be crossed generally or specially by the drawer:
4. Where a cheque is crossed generally or specially, the holder may add the words "not negotiable:"
5. Where a cheque is crossed specially the bank to which it is crossed may again cross it specially, to another bank for collection:
6. Where an uncrossed cheque, or a cheque crossed generally, is sent to a bank for collection, it may cross it specially to itself: Imp. Act, s. 77.
For a definition of "holder," see ante pp. 27-29: and of "bank," pp. 25, 26.
7. A crossed cheque may be reopened or un- § 76. crossed by the drawer writing between the trans- Uncrossing verse lines, and initialling the same, the words cheque. "pay cash."
This is not in the Imperial Act, but is in accordance with English custom : Chalmers, p. 256. It is the drawer alone who can obliterate the crossing. See the next section.
77. A crossing authorized by this Act is a Crossing material part of the cheque; it shall not be lawful for any person to obliterate or, except as authorized by this Act, to add to or alter the crossing. Imp. Act, s. 78.
A material alteration voids a cheque except as to a party who has made, authorized or assented to it, and except as to indorsers subsequent to the alteration sec
In England an unauthorized obliteration or alteration. is forgery: 24-25 Vict. c. 98, ss. 25, 39. This has been copied into our Canadian criminal law, and is now in R. S. C. c. 165, s. 31, but it is the English crossing that is there referred to, and declared to be a felony. That section is not applicable to the crossing authorized by the Canadian Act.
bank as to
78. Where a cheque is crossed specially to Duties of more than one bank, except when crossed to crossed another bank as agent for collection, the bank on which it is drawn shall refuse payment thereof:
for improper pay
2. Where the bank on which a cheque so crossed Liability is drawn, nevertheless pays the same, or pays a ment. cheque crossed generally otherwise than to a bank,
§ 78. or, if crossed specially, otherwise than to the bank to which it is crossed, or to the bank acting as its agent for collection, it is liable to the true owner of the cheque for any loss he sustains owing to the cheque having been so paid:
Provided, that where a cheque is presented for payment which does not at the time of presentAlteration ment appear to be crossed, or to have had a crossing which has been obliterated, or to have been added to or altered otherwise than as authorized by this Act, the bank paying the cheque in good faith and without negligence shall not be responsible or incur any liability, nor shall the payment be questioned by reason of the cheque having been crossed, or of the crossing having been obliterated or having been added to or altered otherwise than as authorized by this Act, and of payment having been made otherwise than to a bank or to the bank to which the cheque is or was crossed, or to the bank acting as its agent for collection, as the case may be. Imp. Act, s. 79.
The first clause would prevent the thief or finder of a specially crossed cheque, or any holder subsequent to him from crossing the cheque a second time and so getting paid through another bank..
Before acceptance there is no privity between the holder of a cheque and the bank upon which it is drawn; but subsection 2 gives a remedy to the true owner against a bank which improperly pays a crossed cheque.
to bank and 79. Where the bank, on which a crossed
cheque is cheque is drawn, in good faith and without negli
gence pays it, if crossed generally, to a bank, or, if § 79. crossed specially, to the bank to which it is crossed, or to a bank acting as its agent for collection, the bank paying the cheque, and if the cheque has come into the hands of the payee, the drawer, shall respectively be entitled to the same rights and be placed in the same position as if payment of the cheque had been made to the true owner thereof. Imp. Act, s. 80.
tage to loser of
This section gives to a bank on which a cheque is drawn Disadvan the protection, in the case of a crossed cheque, which our crossed Parliament refused to give it as to demand bills and cheque. ordinary cheques by striking out of the bill the clause corresponding to section 60 of the Imperial Act. On the other hand, it furnishes to the other parties to a cheque a strong reason for objecting to the crossing of a cheque. If a crossed cheque which has not been made. "not negotiable" is lost or stolen before it reaches the hands of the payee, and the bank pays it in good faith and without negligence even upon a forged indorsement, the drawer has no recourse against the bank which has paid or the bank which has collected, but can only look to the guilty party or some subsequent holder. See Ogden v. Benas, L. R. 9 C. P. 513 (1874); Patent Safety Gun Cotton Co. v. Wilson, 49 L. J. C. P. 713 (1880); section 81. If it is lost or stolen after reaching the hands of the payee, and is paid in like manner, the drawer is released but the payee, indorsee, or holder who has lost the bill, or from whom it has been stolen, is in the same position as the drawer in the case just mentioned.
80. Where a person takes a crossed cheque Effect of which bears on it the words "not negotiable," he