COLLECTING BANKER. The position of a collecting banker when he collects a cheque for a customer or for a stranger, either with a forged indorsement or a defective title, and when he cashes a cheque to a customer or a stranger under the same conditions, is indicated below.
To gain the protection of Section 82 of the Bills of Exchange Act, 1S82, the banker must act in good faith and without negli gence, and the protection is only as against the true owner. (See CROSSED CHEQUE, where reference is also made to the Act of 1906, which extends Section 82 of the Bills of Exchange Act.) Apart from the question of a forged in dorsement or a defective title, the collecting banker has to remember that when he credits a customer's account with a cheque on another bank, or gives cash for it, the cheque may be returned to him dishonoured or because payment has been stopped by the drawer.
When a country banker receives from his customer a cheque drawn upon a banker in another town, it is customary for the cheque to be remitted to London for collection on the same clay that it is paid to credit. But
it has been held that a banker is not bound to send it forward for collection on the day of receipt, and that it may be held until the following day.
If the cheque is for a large amount or by a doubtful drawer, the collecting banker usually remits it direct to the banker on whom it is drawn, in urgent cases enclosing a stamped telegraph form for immediate advice as to fate.
Cheques are often crossed " account payee " or " account John Jones." Such words are not provided for in the Bills of Exchange Act, 1SS2. but a collecting banker would, no doubt, be considered negligent if he placed a cheque so crossed to any account other than that indicated in the crossing. It is desirable that all cheques paid to credit should be indorsed by customers.
In the case of a cheque payable on con dition of a receipt being signed, it should be collected only for the payee, as the docu ment is not considered to be transferable. (See RECEIPT ON CHEQUE.)