Crossed cheques.—A cheque is crossed generally where it bears across its face an addition of (a) the words " and company," or any abbreviation thereof 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." It is crossed specially to the banker named, where it bears across its face an addition of the name of a banker, either with or without the words "not negotiable." The drawer may cross his cheque generally or specially.' The holder may cross a cheque generally or specially when he receives it uncrossed; specially, when he receives it crossed generally ; in either case he may add the words " not negotiable." The effect of marking a crossed cheque " not negotiable " is to make it of such a character that the holder cannot give a better title to the cheque than that which he himself has. Thus, if A. gives to B. a crossed cheque for £500, marked "not negotiable," and A. subsequebtly discovers that B. has obtained the cheque from him by fraud, A. should at once countermand itspayment. If, then, B. passes the cheque on to C., who gives B. the £500 for it, C. will have no claim against A., when subsequently C. finds that he cannot cash the cheque when presented at A.'s bank. C. should have been more careful before parting with his money, for the cheque being marked "not negotiable," he was bound to take it from B. tainted, as it was, with B.'s fraud on A. Though he may not have known of B.'s conduct, yet the words "not negotiable" operated as a notice from A. that all persons who took the cheque would do so subject to any disputes or otherwise between A. and B. in respect thereof. In like manner, any holder of a cheque may mark it "not negotiable" before parting with it, and so preserve any rights he may have. The crossing of a cheque may not be altered or added to otherwise than as above, except in certain cases by the banker.
The banker's duties and rights thereon.—Where a cheque is crossed specially to more than one banker (other than an agent for collection), the banker upon whom it is drawn must refuse payment thereof. Should he pay such a cheque, or pay one crossed generally otherwise than to a banker, or one crossed specially otherwise than to the banker named or his agent, he is liable to the true owner of the cheque for any loss caused by the payment of the cheque. But the banker incurs no liability where, in good faith and without negligence, he pays such a cheque which has, without his knowl2dge, been obliterated, altered, or added to. Where a banker on whom a crossed cheque is drawn, in good faith and without, negligence, duly pays it according to the crossing, the banker and drawer of the cheque have the same rights as if payment had 'Nen made to the true owner of the cheque personally ; it is immaterial whether the true owner has lost the cheque or it has been stolen from him.
the banker by some mistake, or otherwise, dishonour a cheque of his customer when it is in proper form, and he has sufficient assets of the customer wherewith to meet it, the customer is entitled to bring an action against the banker for damages ; and it is no answer by the banker to such an action that the customer has not, in fact, sustained any actual damage. Should a banker cash his customer's cheque, and then discover that he has no assets of the customer, the banker cannot demand the customer to hand it back, once the money has passed ; indeed, there is a case that the banker cannot even sue the customer therefor, but such case was decided only upon a technical question of form of claim—the only question for the banker to decide is the form of action, and if he is well advised he will be able to recover the money. All cheques should be drawn
upon the form provided by the banker ; this tends to prevent forgery, and at the same time is more convenient to the customer, as the counterfoils in the cheque-book may be made a useful means of record. But there is nothing to prevent a cheque being drawn upon an ordinary sheet of paper if the customer so desires, though in that case the signature should be written across a penny postage stamp. If the cheque is undated, the holder may insert what he believes to be the true date, and there is nothing to prevent a banker cashing a post-dated cheque upon its presentation before the date thereon. Where the words and figures on a cheque differ, the banker may refuse to cash it, and may return it with the answer, " Words and figures differ," but he should not do this if the difference is immaterial or the intention obvious ; thus, where Fifty-five three shillings and ninepence appears in writing, and the figures are £55, Ss. 9d., the banker should cash the cheque according to the figures. To guard against possible fraudulent alteration or forgery, the drawer of a cheque should either write across the top of cheque, or impress with a puncturing stamp, the words " under ten pounds," or other appropriate remark ; such a precaution would prevent a cheque for eight pounds being altered into one for eighty.
The following are some forms of indorsement of cheques :— In example (1) there is the form proper to be adopted in the case of an illiterate payee—he should mark the cross himself in the presence of the attesting witness. (2) is the signature of the Rev. Dr. Ford ; and (3) and (5) are the indorsement of a private firm and of a registered company respectively. In these two last instances the bank, if it thought advisable, could delay payment until it was satisfied that the party signing as agent had in fact the authority to do so. Number (4) is the indorsement of a lady who has received a cheque made payable to her in her maiden name ; if the cheque had been payable to her as Mrs. John Graham, she should indorse it as follows: Hilda Graham, wife of John Graham. One of several executors or administrators may sign to bind the others; a fact which explains example (6), but makes it necessary to remark that all of a body of trustees must sign as in example (7). In example (8) we have an indorsement which has restricted the further negotiation of the cheque, for the time being, in favour of a specified person ; if the payee, G. F. Hutchings, had only signed his name, the cheque would have been absolutely negotiable, and capable of transfer by mere delivery. The expressions R/D, NHS, and "effects not cleared" mean, when marked by a bank upon a cheque, as to the first two that the payee has not sufficient funds wherewith to meet the cheque, and as to the last that the payee has himself paid sonic cheques in to the credit of his account, but until they are cleared his bank does not know whether he will be in a position to meet the cheque marked. See BANKER AND CUSTOMER ; BILL OF EXCHANGE.