COUNTRY BANK NOTES. Notes which are issued by a country bank as distin guished from those issued by the Bank of England. Where they are tendered in payment and no objection is raised by the person receiving them, it is considered a legal tender.
A tender by a banker of his own notes also acts as a legal tender, if not objected to, even if they are afterwards dishonoured.
There is nothing to prevent the notes of a country banker being paid away by another banker, whether the latter has an issue or not, so long as the person to whom they are offered is willing to accept them.
If a country bank note is accepted in exchange for goods at the actual time of a sale, the transferee must bear the loss, if the banker by whom it was issued fails before he presents the note for payment, unless he can prove that the transferor knew that the banker had failed before delivering the note to him. But, on the other hand, if the note was accepted in payment of a pre-existing debt, and the banker fails before presenta tion of the note, the debt is not discharged, and the transferor is still liable to the transferee, provided that the transferee pre sented the note for payment without delay and gave due notice of its dishonour to the transferor.
The receiver of a country bank note in payment of a debt should therefore present the note for payment at once, or not later than the following day, otherwise he will have no recourse against the person who gave it to him, in the event of the note being dishonoured. A bank note is a promissory note by a banker, and the giving of notice of dishonour is regulated by the Bills of Exchange Act, 1882. If the person giving and the person to receive the notice are in the same town, the notice should be received on the day following the day of dishonour ; if in different towns, the notice should be despatched not later than the day following the day of dishonour. (See DISHONOUR OF BILL OF EXCHANGE.)
For the same reason, where a customer pays into his account the notes of another bank, the notes should be presented for payment by the banker without delay, so that, in the event of non-payment of the notes, the banker may be entitled to charge the amount to the account of his customer. If a banker is negligent in presenting the notes at once, any loss, upon dishonour, will fall upon the banker and not upon the customer, unless an arrangement was made with the customer, when taking the notes, that they would not be forwarded for collection for a few days. Bank notes, like cheques, are presented for payment in the daily clearing, when the issuing bank is in the same town. If the issuing bank is in another town, they may be collected through London or remitted direct.
Where a person receives change, by way of favour. for a bank note, he is liable, if the note is dishonoured, unless the person who took the note did not put it into circulation or present it for payment within a reasonable time.
A banker's own notes are not, for the purposes of his balance sheet, counted up as part of the cash, but are deducted from the balance of the note account, in order to show the amount of his notes which are in circulation.
Banks of issue re-issue their notes con stantly until they become unfit for circula tion, in this respect differing from the Bank of England, which never re-issues its notes when once they are returned to the Bank.
Where notes are received which prove to be forgeries, the amount can be recovered from the person from whom they were obtained.
Where a note-issuing banker failed, it was held that interest at 5 per cent. on its notes in circulation began to accrue from the date when a claim for payment of a note was made to the liquidator, and not from the actual date when the banker stopped payment. (See BANK NOTES, NOTE REGISTER, NOTE RETURN.)