S. 82. less, thirdly, the bank only receives such payment. The last paragraph of this section shows that this last condition is as important as the first and second. But the questions in any particular case, whether a bank has received payment for a customer in good faith and without negligence, and whether the bank has only received such payment, are questions of fact depending on the circumstances of each case."1

2

First. "Without negligence" means "without want of reasonable care in reference to the interests of the true owner." The secretary of a company being in possession as such of a crossed cheque, the property of the company, payable to them or order, indorsed it as follows:-"Hannan's Lake View Central, Limited, H. Montgomerie, Secretary. He then fraudulently paid it in to the credit of his account with certain bankers, whose customer he was, and drew out the amount as he required it. It was held that, though the bankers had acted in good faith, they were liable to the company in the amount of the cheque on the ground of negligence.3

Secondly. If a bank receives payment for a stranger it is not protected by this section. A cheque drawn on a London bank, crossed generally, and bearing a special indorsement, was stolen. The indorsement was obliterated and a false indorsement substituted. Thereafter the cheque was presented to a foreign bank by a person who was a stranger to them. The foreign bankers, having collected the amount through their agents in London and paid it to the stranger, were found liable therefor to the true owner on the ground (1) that they had wrongfully received the pursuer's money in London; and (2) that, having there received the money for a stranger, they were not protected by this section. A cheque drawn on the London branch of a foreign bank, crossed generally, and bearing a special indorsement,

1 Capital and Counties Bank v. Gordon; London City and Midland Bank v. Gordon [1903], A.C. 240, per Lord Lindley, 247.

2 Hannan's Lake View Central, Limited, v. Armstrong and Co., infra, per Kennedy, J., 191-2.

3 Hannan's Lake View Central,

Limited, v. Armstrong and Co., 1900, 5 Com. Cas. 188; see also Bavins v. London and South-Western Bank, 1899, 5 Com. Cas. 1.

4 Kleinwort, Sons, and Co. v. Comptoir National de'Escompte de Paris [1894], 2 Q.B. 157.

was stolen. The indorsement of the payee was forged, and S. 82. thereafter the cheque was presented to the office in Paris of the bank on which it was drawn, by a person who was a stranger to them. The foreign bankers paid the cheque, and the London office credited the Paris office with its amount. The bankers were held liable to the true owner, not as payers, but as receivers, of the sum in the cheque.1

"The word customer involves use and habit." 2 Further, though the person to whom payment is made is one with whom the bank has had dealings, he is not a customer under this section, unless, whether he has a regular account or not, the bank can be regarded as collecting the money for him. For example, a person was held not to be a customer of a bank, though the bank had for some years been in the habit of paying him cash for cheques and subsequently collecting the amounts.3

But

Thirdly. When payment of a cheque is in point of fact received on behalf of a customer, the banker is protected by this section, though his customer's account is overdrawn. in order to enjoy that protection bankers must confine themselves strictly to such acts as are necessary for the performance of the duty of collection. In particular, they must not give their customers credit in account for crossed cheques before collection, and apparently they should not have such cheques indorsed by their customers to them.5

A clerk stole certain crossed cheques payable to the pursuer, his employer, forged his employer's signature on them, and handed them to the defenders, with whom he kept an account. He occasionally, but not invariably, indorsed them. The defenders, immediately on his paying in the cheques, allowed him credit for them in his account. It was admitted or proved that he was the defenders' customer, that the

1 Lacave and Co. v. Crédit Lyonnais [1897], 1 Q.B. 148; cf. Capital and Counties Bank v. Gordon; London City and Midland Bank v. Gordon [1902], 1 K.B. 242, 274, 281acquiesced in.

2 Mathews v. Brown and Co., 1894, 10 T.L.R. 386; 63 L.J. Q.B. 494.

3 Great Western Railway Co. v. London and County Banking Co.,

Limited [1901], A.C. 414; see also
Lacave and Co. v. Crédit Lyonnais,
cit.

4 Clarke v. London and County
Banking Co. [1897], 1 Q.B. 552.

5 Capital and Counties Bank v. Gordon; London City and Midland Bank . Gordon, [1902], 1 K.B. 242; affd. [1903], A.C. 240.

S. 82. defenders had acted in good faith, and that there were no circumstances to put them on their inquiry. They were found liable to the pursuer as true owner of the cheques, on the ground that they were not protected by this section, because, by taking their customer's signature, or even by giving him credit without first cashing the cheques, they had gone beyond what was necessary for the purpose of collection, and made themselves holders of the cheques. "At first sight there is not much difference between the case of a bank which at once credits a customer with the face value of a cheque paid in to his account and allows him to draw against his credit balance thus increased, and the case of a bank which, without crediting the customer with the value of a cheque before collection, allows him to overdraw his account in view of the anticipated credit. But the protection conferred by section 82 is conferred only on a banker who receives payment for a customer, that is, who receives payment as a mere agent for collection. follows, I think, that if bankers do more than act as such agents they are not within the protection of the section. It is well settled that if a banker before collection credits a customer with the face value of a cheque paid in to his account the banker becomes holder for value of the cheque." 1

It

In consequence of this decision a bill was introduced into Parliament and on 28th July 1903 was ordered to be printed, but it was not passed into law during the session of Parliament then current.2

S. 83.

PART IV.

PROMISSORY NOTES.

83. (1.) A promissory note a is an unconditional promise in writing made by one person to another, note defined. signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain

Promissory

in money, to, or to the order of, a specified person or S. 83.

to bearer.b

(2.) An instrument in the form of a note payable

to maker's order is not a note within the meaning of this section unless and until it is indorsed by the maker.c

(3.) A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof.a

(4.) A note which is, or on the face of it purports to be, both made and payable within the British Islands is an inland note. Any other note is a foreign note.

a See s. 3, n.a

b 1. A promise." It appears to me that the use of the verb agree' is of very little consequence; for, when a person agrees to pay a particular sum on a particular day, he grants a promissory note, for the distinction between a promise and an obligation of a different kind does not consist in the use of the word 'promise.' There is a philosophical and practical distinction between a promise and an obligation, which is nowhere better stated than by Lord Stair.1 A promise is a pure and simple expression of the will of the party undertaking the obligation, requiring no acceptance, and still less requiring mutual consent." 2 On the other hand, "if the primary purpose of the contract is something different, and the promise to pay is only the recognition of a legal obligation resulting from the contract, then the document falls outside the definition of a promissory note." 3

The following writings have been held to be promissory notes:-"We agree to pay you during February 1859, £100." 4 "We beg to acknowledge receipt of yours of date covering cheque for £100, which we hereby agree to repay

1 Inst. i. 10, 3.

2 Macfarlane v. Johnston, 1864, 2 M. 1210, per L. J.C. Inglis, 1213; cf. Lord Neaves, 1214.

3 Thomson v. Bell, 1894, 22 R. 16,

per Lord M'Laren.

4 Macfarlane v. Johnston, cit.

S. 83. you in, say, two years and six months from date, with interest at the rate of six per centum per annum.”1 "Received from A., in behoof of B. for the children of the late C., the sum of £100 sterling, for which we herewith agree to pay him four per centum per annum. This amount to be refunded twelve months after date."2 "At fourteen days after date I accept to pay to Messrs. A. B. or order the sum of £50, value received." 3 "Received from A. B. the sum of £30, payable on demand." 4 Of this document Lord Wood said, "In this writing A. B. is clearly the payee, and 'payable on demand' seems to me to be just an equivalent expression to I shall pay when required.'" 5 "I acknowledge to have this day received from you £80 sterling, which I shall pay when required." "I have this day received from you the sum of £25 sterling, which I shall repay you when demanded." "On demand I promise to pay to A. the sum of £15 for value received. Accepted, J. B." 8 "Borrowed . . . the sum of £14 . . . in promise of payment of which I am truly thankful for."9

7

A writing is a promissory note if in other respects it conforms with this definition, though it contains a provision waiving the rights of co-obligants as to relief, for example, the following clause :-"No time given to, or security taken from, or composition or arrangement entered into with, either party hereto shall prejudice the rights of the holder to proceed against any other party." 10

An instrument intended to be a bill or a note, but ambiguous in form, may, ut res magis valeat, be sustained as either, or simply as a document of debt against the granter.11

Executrix, 1833, 11 S. 473; see also Scott v. Scott, 1835, 13 S. 490stamp.

8 Block v. Bell, 1831, 1 Moo. & R. 149.

9 Ellis v. Mason, 1839, 7 Dowl. 598; as to debentures, see p. 234, infra.

io Kirkwood v. Carroll, [1903], 1 K.B. 531; Yates v. Evans, 1892, 61 L.J. Q.B. 446; overruling Kirkwood v. Smith, [1896], 1 Q.B. 582.

11 Edis v. Bury, 1827, 6 B. & C.