Where a cheque for, say, £20 is presented for payment and the drawer has only £19 to ' credit, and the banker refuses payment, the presenter should not be told how much is short in order to enable him to pay in the I pound and thus obtain payment. But if the presenter ascertains the amount from some other source, the banker cannot refuse to accept the sum for his customer's credit, even if paid in by the person who imme diately thereafter presents the cheque fore20.
When a banker learns that a customer is dead or has committed an act of bank ruptcy, or has had a receiving order made against him, or has become insane, he must not pay any further cheques on the account, but return them to the presenter with answer written upon them " Drawer de ceased," " Drawer bankrupt," etc.
if an uncrossed cheque is presented over the counter, at the branch upon which it is drawn, by the payee, and the cashier knows that the presenter is an undischarged bank rupt, the cheque should not be cashed to him. If a banker, with knowledge that the pre senter is an undischarged bankrupt, pays such a cheque, he may be called upon to pay the money over again to the trustee in bankruptcy.
In cases Nvhere a cheque has a bill attached, if the cheque specifically refers to the bill, the banker must see that the bill, as well as the cheque, is in order ; but if the cheque does not allude to the bill the cheque must be dealt with, without regard to the bill.
Cheques must be paid in the order in which they are presented. A cheque which arrives in the morning's letters must be paid, if the account will admit of it, and must not be dishonoured in order to admit of a cheque presented across the counter later in the day being paid.
Where several cheques arrive by letter and the account will not admit of payment of them all, a hanker usually pays as many of them as he can and returns the rest. Nevertheless, as all the cheques form one presentment, it is probable that the banker might not be wrong in considering merely the total of the amounts, and not the individual amounts, and returning all the cheques if the total amount was in excess of the balance.
Before returning a cheque a banker should make certain that everything has been credited to the account and that the balance is stated correctly, for if he wrongfully dishonours a cheque of his customer he will be liable in damages. (See DISHONOUR OF
BILL OF EXCHANGE.) With respect to cheques which a customer has paid in, but which the banker has not vet cleared. it forms a matter of arrange ment between the banker and the customer as to whether, or not, they are to be con sidered as definitely placed to the customer's credit and so available as funds in hand wherewith to meet any of the customer's own cheques which may be presented, and it is very advisable to have a definite under standing on the point. Subject to whatever arrangement has been made between him self and his customer, the banker will either pay such cheques or return them unpaid with answer marked thereon " Effects not cleared." A banker who, in good faith and in the ordinary course of business, pays a cheque drawn on himself, is protected by Section 60 of the Bills of Exchange Act, 1882 (the section is recited under PAYMENT OF BILL), even though an indorsement proves to have been forged or made without authority. A banker who pays a crossed cheque, in accordance with Section SO, is protected against a forged indorsement. (See that Section under CROS';ED CHEQUE.) A banker is not obliged to pay a cheque out of bank hours. In fact, if he does so, he runs the risk of paying a cheque, payment of which may be " stopped " by the drawer as soon as the bank doors are opened for business.
With respect to cheques drawn upon another banker or on a branch of the same bank in another town, which are presented by a person whom the banker does not know, see COLLECTING BANKER.
Cheques received through the Clearing must be paid or dishonoured on the day of receipt ; cheques paid to credit which are drawn upon the same bank may be returned unpaid on the following day, but in practice all cheques are either paid or dishonoured on the day they are received. (See DISHONOUR OF BILL OF EXCHANGE.) By Section 75 of Bills of Exchange Act, 1882;— The duty and authority of a banker to pay a cheque drawn on him by his customer are determined by " (I) Countermand of payment ; " (2) Notice of the customer's death." It is desirable that a countermand of payment of a cheque should be in writing and be signed by the drawer, and if the countermand is subsequently cancelled it also should he in writing.