Where a cheque is payable to " John Brown or order," and John Brown himself presents it at the counter for payment, it is the practice of bankers always to require it to be indorsed by Brown before payment can be made. It would appear, however, that, legally, a cheque when presented by the payee is payable to him without indorsement. Sir John R. Paget says : " The common practice of paying bankers to refuse payment unless the ostensible payee signs on the back of the cheque seems therefore without justification." The custom of always re quiring the payee's indorsement on an order cheque should, however, not be departed from except perhaps in some unusual case when the payee insists on payment without indorsement. In such a case a banker might be able to postpone payment until he had communicated with the drawer. It is some what difficult to see how a banker could be held liable for refusing payment of a cus tomer's cheque because the payee declined to indorse it in accordance with the custom of bankers. A banker's customer knows that it is the practice to require all cheques payable to order to be indorsed, and if, on receiving back his paid cheques, he found that a cheque which lie had drawn payable to " John Brown or order " was not indorsed by John Brown, he might reasonably main tain that the cheque showed no evidence of ever having been in the hands of John Brown, and that he was entitled to have that evidence.
If a cheque payable to, say, the British Baking Company, Ltd., is paid to credit of the manager's or secretary's private account, it should put the banker on inquiry at once, as he may be held liable if the cheque has been misappropriated. If it is necessary for agents, as, for instance, in the case of insurance companies, to place to the credit of their private accounts cheques which are payable to their principals, the banker should be duly authorised in writing by the principals to permit of cheques being dealt with in that way.
In the case of a dividend warrant where several payees are named, it is the custom to pay upon the indorsement of one of them ; but an interest warrant should, strictly, be indorsed by all the payees, though this is not always done in practice. (See BILL OF