Wrongful dishonour may, as stated above, render a banker liable to pay damages. Thus, if a customer has a balance of L500 at his banker's, and the customer draws a cheque for f,300, or accepts a bill for Q300, payable at his banker's, the banker is liable to be mulcted in substantial damages if the cheque or the bill is dishonoured, and the customer is not bound to prove any actual loss by reason of the dishonour. In the case of Rolin v. Steward (1854, 23 L. J.C.P. 14S), it was said by Mr. Justice Williams : " Although no evidence is given that the plaintiff has sustained any special damage, the jury ought not to limit their verdict to nominal damages, but should give such temperate damages as they may judge to be a reason able compensation for the injury the plain tiff must have sustained from the dishonour of his cheque." In Marzetti v. Williams (1830, I B. and Ad. 415), where a sum of L'40 had been paid to credit about one o'clock and a cheque was dishonoured shortly after three (although the banker had, after including the amount paid in at one, sufficient funds of the drawer with which to pay the cheque), Mr. Justice Taunton said : " The jury have found that when the cheque was presented for payment a reasonable time had elapsed to have enabled the bankers to enter the /40 to the credit of the plaintiff, and, therefore, that they must or ought to have known that they had funds belonging to him. That was sufficient to entitle the plaintiff to recover nominal damages, for he had a right to have his cheque paid at the time when it was presented, and the bankers were guilty of a wrong by refusing to pay it. Independently of other considerations, the credit of the plaintiff was likely to be injured by the refusal of the defendants to pay the cheque. . . The case put in the course of the argument, of the holder of a cheque being refused payment, and called back within a few minutes and paid, is an extreme case, and a jury probably would consider that as 'equivalent to instant payment." When a cheque which has been credited to a customer's account is returned unpaid, a banker debits it to that account if the balance permits of it, and advises his cus tomer that he has done so. Some bankers -obtain a cheque from the customer when handing him a returned cheque. If the customer wishes it to be re-presented, a fresh paying-in slip should be signed. When a cheque which has been returned is recalled by wire, it is advisable for a banker to advise his customer of the circumstance in order that he may be on his guard.
Cheques paid to credit are often when payable to bearer or indorsed in blank) not indorsed by the customer, hut the fact that the cheque was not indorsed by the customer when placed to his credit does not affect at all the banker's right to debit his account with it when returned dishonoured.
A cheque received in the Local Exchange must, if not to be paid, he returned on the day of receipt.
Where a cheque received through the London Clearing House for collection cannot be paid, by Rule 4 of the Clearing House, " Any country bank not intending to pay a cheque sent to it for collection, to return it direct to the country or branch bank, if any, whose name and address is across it." And by Rule 5, " Each country hanker to write by return of post to its London agent in reply, ' we credit you I; for cheques forwarded to us for collection in yours of Adding in case of non-payment of any such cheques, ' having deducted f for cheque returned to Messrs. at When a banker dishonours a customer's cheque, the balance on the drawer's account is available to pay any cheque, which may be presented subsequently, up to the amount of the balance or sum available, but in Scot land when a cheque is dishonoured, any funds that there may be in the drawer's account are attached in favour of the person presenting the cheque, the amount being transferred by the banker to a suspense account.
A cheque paid to the credit of a customer of the X. & V. Bank, drawn by another customer of the same bank, may be returned on the following day. Even if the paying in-slip counterfoil is initialled by the bank cashier, as it often is, it would not affect the banker's right to return the cheque. The banker is not obliged to inform the person paying in to credit a cheque drawn on the banker by another customer, that the cheque may not be paid. He may take the cheque without comment and, after he has looked into the position of t he drawer's account, may return it dishonoured. In practice a country banker either pays or dishonours such a cheque on the day he receives it.
If a cheque presented across the counter is refused payment, the banker does not, as a rule, write anything upon the cheque. He may simply refer the presenter to the drawer.
H a cheque cashed for a person who is not a customer is returned unpaid, the banker will, of course, at once endeavour to regain the amount from the party to whom it was paid, but if this is not immediately possible he should debit it meanwhile to a returned bill (or cheque) account.
Where a customer has two accounts, one in credit and one overdrawn, and the credit balance is regarded as a set off to the debit, cheques on the credit account may be dishonoured if their payment would reduce the balance below the amount owing on the overdrawn account, unless there is some arrangement or custom to the contrary.
Where a customer has a deposit receipt and a current account, and cheques are drawn upon the account in excess of the balance, a banker usually pays such cheques so long as they do not exceed the amount of the deposit receipt. Should such cheques be inadvertently dishonoured, the banker would, probably, not be liable, seeing that deposit receipts are not intended to be drawn against by cheque. (See BILL OF EXCHANGE.)