PAYMENT STOPPED (CHEQUE). A customer has the right to give notice to his banker to stop payment of a cheque which he has issued. The notice should be in writing, give accurate particulars of the cheque and be signed by the drawer.
If a banker pays a cheque after a " stop order " has been received, he will be liable for so doing. It is necessary, therefore, to warn each branch where the cheque may be presented of the notice which has been received. .1 notice should be placed in the customer's account in the ledger, so that anyone referring to the account may at once observe particulars of the " stop." A list of all orders to stop payment should be kept in some convenient form for ready reference by those officials who are concerned with the payment of cheques.
The drawer of a cheque is the only person who can " stop payment " of it, but bankers often receive notice from the holder of a cheque that it has been lost or stolen. Where notice is received from a holder, he should be requested to obtain at once written instructions from the drawer. If the cheque be presented before a communication is received from the drawer, the banker will be careful to postpone payment till he has heard from the drawer or is otherwise satisfied, particularly if the payee states that it was not indorsed by him before he lost it.
If the cheque which is lost is signed by several persons, a notice from one of them, e.g. one executor, one trustee, a secretary, etc., is usually acted upon by a banker. Where the account is in several names and the lost cheque is signed only by, say, one of the account holders, or by one partner, a notice from any of the other holders or partners is sufficient authority to a banker to justify him in stopping payment of the cheque.
When the drawer wishes to cancel his order to stop payment, it should be done in writing and be signed by him.
When a drawer wishes to stop payment of a cheque, he is entitled to do so during the usual business hours, and if a banker pays a cheque before the commencement of busi ness or after the doors are closed, he incurs the risk of paying a cheque which may be " stopped " as soon as the drawer has the opportunity.
With regard to stopping payment of a cheque by telegram, the Master of the Rolls (see Curlice v. London City and Midland Bank, under PAYNIENT OF CHEQUE), con sidered that a telegram might reasonably be acted upon to the extent of postponing payment of a cheque pending inquiry, but he was not satisfied that the hank is bound to accept an unauthenticated telegram as sufficient authority upon which to refuse to Fly a cheque.
If a banker agrees to pay a cheque, at the request of the holder, by marking or accept ing it for payment, or if, in answer to a tele gram or a telephone, he replies that the cheque will be paid, he must pay the cheque when presented. But if. in the meantime, the drawer has stopped payment of it, the banker cannot charge it to the drawer's account. (See further information under MARKED CHEQUE.) Although a drawer has the right to stop payment of a cheque drawn by him, yet if the payee has negotiated the cheque, any subsequent bond tide holder for value can sue the drawer, provided that the cheque was not crossed " not negotiable." (See COUNTERMAND OF PAYMENT, LOST BILL OF EXCHANGE.)