An infant may indorse a bill or cheque and pass on to an indorsee a good title, but he is under no liability with regard to it.
Where the signature of any person is required, under the Bills of Exchange Act, it is not necessary that he should sign it with his own hand. It is sufficient if his signature is written thereon by some other person by or under his authority (Section 911. A banker, however, would require undoubted evidence of authority before accepting an indorsement written by some other person. If an indorsement is impressed by a stamp, a banker should confirm it, when he is satisfied that it has been made by a duly authorised person.
In the case of a corporation. an indorse ment sealed with the corporate seal is sufficient (Section 91, s.s. 21.
Where a banker on whom a cheque is drawn, pays it in good faith and in the ordinary course of business, the hanker is protected by Section 60 (see PAYMENT OF BILL), even though the indorsement of the payee or a subsequent indorser has been forged or made without authority. He must, however, exercise reas-inable care, and see that the cheque he is asked to pay is apparently properly indorsed. If he is negligent and pays a cheque which is clearly not indorsed by the proper party he will be liable. The banker need not know the payee, so long as the cheque purports to be indorsed by the person to whom it is payable.
If a banker pays a customer's acceptance to a person appearing to be the holder, but claiming through or under a forged indorse ment, he cannot charge such an acceptance to the customer's account (Section 24, Bills of Exchange Act. See FORGERY). If he has paid such an acceptance to a banker who sent it for collection, he cannot claim the amount back from that banker.
The paying banker thus incurs liability in paying a bill under a forged indorse ment, but in paying a cheque with a forged indorsement he is protected.
With regard to a banker's liability, as to the indorsements on a bill, Baron Parke (in Roberts v. Tucker, 1851, 16 Q.B. 560), said : " If bankers wish to avoid the responsibility of deciding on the genuineness of indorse ments. they may require their customers to
domicile their bills at their own offices, and to honour them by giving a cheque upon the banker." The banker who collects for a customer an open cheque, is responsible for the genuine ness of the indorsement, but in the case of a cheque crossed generally, or specially to himself, he is not liable for a forged indorse ment, provided he receives payment of the cheque for his customer in good faith and without negligence. (See CROSSED CHEQUE.) If he collects a bearer cheque he is in a much better position than with an order cheque as there is then no question of a forged indorsement.
The banker paying a draft or order drawn upon him, payable to order on demand, which purports to be indorsed by the person to whom the same shall be drawn payable, is not liable if the indorsement proves to have been forged. It shall not be incumbent on such hanker to prove that such indorse ment, or any subsequent indorsement, was made by or under the direction or authority of the person to whom the said draft or order was or is made payable. either by the drawer or any indorser thereof (Section 19, Stamp Act, 1S53, 16 & 17 Viet. c. 59, see DRAFT ON DEMAND). The same Section probably protects a banker in paying an order drawn upon him as treasurer of a local authority. Some writers consider that a banker is also protected, in paying such orders, by Section 60 of the Bills of Exchange Act (see above). This protection, however, depends upon whether the orders are held to be drawn upon a banker, or merely upon the treasurer in his personal capacity.
A bill or cheque payable to John Brown without the words " order " or " bearer," is payable to order and requires indorsement.
It is a well-recognised custom to pay a dividend warrant, payable to several persons, when discharged by one of those persons. (See DIVIDEND An interest warrant, however, should, strictly, be in dorsed by all the payees, though in practice this is not always insisted upon.