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Not Negotiable Cheque

banker, words, crossed, act, exchange and bills

" NOT NEGOTIABLE " CHEQUE. A cheque which is crossed generally or specially may have the " not negotiable " added thereto, and any holder may add those words.

The Bills of Exchange Act, 1882, does not state whether, or not, it is necessary that the words " not negotiable " be placed between the transverse lines. In practice they are found sometimes between, and at other times either above or below the lines.

" Where a person takes a crossed cheque which bears on it the words ' not negoti able ' he shall not have and shall not be capable of giving a better title to the cheque than that which the person from whom he took it had." (Section 81, Bills of Exchange Act, 1882.) This meaning of the words is peculiar to crossed cheques, as defined in the Bills of Exchange Act ; the ordinary meaning of " not negotiable " is not transferable. A cheque drawn payable to " John Bro n only " is an example of a cheque which cannot be transferred ; hut the words " not negotiable " do not mean that the cheque on which those words are written cannot be transferred from one person to another. A " not negotiable " cheque may be trans ferred just as freely as any other cheque, but if the transferor has no title to the cheque, a transferee cannot obtain, even if he gives value for it, a better title to it than the transferor had.

The words " not negotiable " really act as a warning to anyone to whom the cheque is offered, that, if he takes it, he must take it subject to any defect there may be in the title. 1 If such a cheque has been stolen, and finally comes into the possession of John Brown, who gives value for it and obtains payment through a banker, John Brown is liable for the amount to the rightful owner of the cheque, but the banker paying the cheque is protected by Section SO of the Bills of Exchange Act, provided it is paid in accordance with that Section. The banker collecting such a cheque for a customer is protected by Section 82. The true owner

cannot recover from the banker. (See COL LECTING BANKER, CROSSED CHEQUE.) But if a banker gives cash for a " not negotiable " cheque drawn upon another banker he is not protected by the Act, and will be liable to the true owner at any time within six years, if there should be a flaw in the title, e.g. if the cheque has been stolen or one of the indorsements is forged.

A " not negotiable " cheque may be pre sented for payment by, or may be paid in to the credit of, the payee or anyone else to whom it has been transferred.

Cheques are frequently crossed " not negotiable " without the addition of trans verse lines. In such cases the words by themselves do not constitute a crossing in accordance with the Bills of Exchange Act, and they may be ignored.

it is very desirable, and is in fact cus tomary, that a banker to whom a cheque is specially crossed should place his stamp upon the cheque as evidence to the paving hanker that the cheque has been through the hands of that hanker, but the paving banker is not justified in refusing payment of a cheque received through the clearing simply on the ground that the stamp of the banker to whom it is crossed is not upon the cheque.

Where a " cheque " contains, after the order to pay, the words " provided the form of receipt at the foot hereof is duly stamped, signed and dated," it is not a negotiable instrument. In Bavins, junr., & Sims v. London and South Western Bank (1900, 1 Q.B. 270), where such a " cheque " had been stolen and the receipt and indorsement forged, it was held that the order for pay ment, not being unconditional in its terms, was not a cheque, and therefore it was not a negotiable instrument. (See CHEQUE, CROSSED CHEQUE.)