As checks are bills of exchange drawn on a bank, they are subject to the same general rules as demand bills. A bill of exchange must be presented for pay ment at the time fixed for payment—on demand, or at sight, or so many days after sight—or within a rea sonable delay thereafter, or the drawer and the in dorsers are wholly discharged. In determining what is a reasonable delay, the act holds that regard should be had to the nature of the bill, the usage of trade with regard to similar bills, and the facts of the particular case. But failure to present a check within a reason able time discharges the drawer only to the extent to which he actually suffers damage by the delay. A check should be presented for payment, where the holder acid the bank are in the same place, before the banks close on the next business day following the day of its issue. If they are in different places, the check should be deposited for collection by the day after its receipt.
The act is careful to explain what is meant by the discharge of the drawer to the extent of the actual damage suffered. If the drawer handed B a check for one hundred dollars on a bank where he had funds sufficient to pay, but B neglects to present the check for three months, and meanwhile the bank fails and pays ten cents on the dollar, the drawer would be dis charged to the extent of ninety dollars. Of course if B could show that he used diligence and that the delay was not unreasonable, he would not lose his recourse against the drawer. But it has been held that where it was understood that a bank was likely to suspend payment, a delay of one day in presenting a check was unreasonable. Delay in making presentment for payment of a bill of exchange is excused when the de lay is caused by circumstances beyond the control of the holder, and not imputable to his default, miscon duct or negligence. When the cause of delay ceases to operate, presentment must be made with reason able diligence. And this applies as well to checks.
If the holder presents the check for acceptance, and has it accepted or certified without taking payment, the maker and indorsers are discharged, and if the bank fails before the check is paid, the holder has no other recourse.
10. Acceptance or certifying of duty and authority of a bank to pay a check drawn on it by its customer are terminated by countermand of pay ment or by notice of the customer's death. Other wise, when a bank has funds of the drawer sufficient to pay a check, it is bound to pay it or be liable in damages since the holder may be caused damage and inconvenience or the drawer's business reputation be impaired. But after the holder of a check has had it certified or accepted, the drawer can no longer stop payment of it. By getting the check certified or marked, the holder provides against any possibility of the drawer stopping payment or withdrawing from his account enough money to make payment of the check impossible. Upon acceptance, the bank be comes liable to the holder: it virtually sets aside, in its books, the amount of the check out of the drawer's account, and the accepted check in the hands of the holder is the equivalent of a deposit receipt payable to the holder. The drawer and any indorser are dis
charged, because the holder has a new debtor, the bank. He accepts the promise of the bank to pay, instead of that of the drawer, and not in addition to it.
A distinction is made where the drawer before issuing a check has it certified. Maclaren says that in this case the bank is in the position of an ordinary ac ceptor, its credit being added to that of the drawer; whereas, if the holder has the check certified, the bank becomes the sole debtor. And where the drawer has had his check certified, but does not issue it, or where he later/becomes the holder, the certificate may be cancelled and the entry reversed, at his request, or by simply depositing the check to his account.
11. To whom instruments, from their nature, must be so payable that they are negotiable. They must, therefore, be either payable to bearer and thus pass by delivery from hand to hand, or be payable to the order of some one who by in dorsement and delivery negotiates them. Where the payee of a negotiable instrument is a fictitious or non existent person, it is payable to bearer. Fictitious names in frequent use are "cash," "expense account," "labor." A bill payable to "John Jones or bearer," is a bill payable to bearer. If the bill is payable to order, the payee must be a specified person, but it is not payable to order if it contains words prohibiting transfer, or indicating an intention that it should not be transferable. By "specified person" is meant that he should be so indicated as to be clearly identified. Thus the payee may be "John Smith," or "the execu tors of the Estate A.," or the "Secretary of the Prov ince of Quebec." The payee may be the same person as the maker or drawer, but the instrument is not is sued until such 'maker or drawer has indorsed and delivered it. If the name of the payee is wrongly spelled, or where he is described by his office, he may be identified by parol evidence; but where the payee is not named or is not even described, parol evidence is inadmissible to identify him. If the name of a payee or indorsee is wrongly spelled, he may indorse in the same way and add his proper signature, or may indorse by his own proper signature. Where a bill is payable to the order of two or more payees or en dorsees who are not partners, all must indorse, unless the one indorsing has authority to indorse for the others. If a payee indorses in blank, that is, merely signs his name without adding words indicating that he indorses to a particular indorsee, the instrument thereby becomes at once payable to bearer. If the. payee's name is left in blank, a legal holder of the bill may fill the blank with any name he chooses.