Cancelled in

error

Uncommuni

CHAP. XV. and, if not paid, return it in good order; but if, before answer given, the bill is cancelled preparatory to payment, it may be marked "cancelled in error" and returned with any proper answer. The reason is, that uncomcated entry. municated entries within the bank do not bind it one way or the other; the answer given to the presenter, or conduct equivalent to an answer (such as settlement with another bank through the exchanges), is what settles the matter.

Stamp duty.

With regard to stamp duty, both banks are interested. The paying bank must not pay a bill not duly stamped, and the presenting bank is bound to see that the bills which it holds, either as its own, by way of discount, or on behalf of its customers for collection, are properly stamped. The duty is 6d. for every £25, and also for any fractional part of £25. In the case of bills drawn or made in N.S.W., impressed (N.S.W.) stamps are necessary. Bills drawn or made out of N.S.W., or so purporting, require to be stamped in this country, although by the law of the country of origin they may have had to be stamped there also; and, until properly stamped according to the law of this country, it is penal to indorse, negotiate, use, transfer, or present them for payment. You will notice it is not prohibited to present But secus if them for acceptance. Therefore it is not necessary for presentment a bank acting merely as agent to obtain acceptance, to for acceptance amounts stamp bills before acceptance; it would be a mistake to to user of the do so, for, if not accepted, the bill may be protested bill, but cf. for non-acceptance and returned without local stamps. Richard, 26 Stamps, however, would be necessary upon any dealing L.J., Exch.

Sharples v.

302.

Demand drafts.

in any such bill, either before or after acceptance or protest for non-acceptance. For foreign bills adhesive stamps are to be used. In the case of demand drafts, whether foreign or otherwise, the duty is one penny, and may be denoted by an adhesive stamp affixed by the maker or holder.

tance.

Bank's lia

bility.

Duty of Collecting Bank.-If a banker undertakes CHAP. XV. the duty of presenting a draft for acceptance, he may Presentation be justified by considerations of prudence and the interest for accepof his customer in not pressing for acceptance in such a way as to lead to a refusal, providing he takes the right steps at the right time to preserve his customer's rights; but if he is dilatory in endeavouring to procure acceptance (or payment) or in giving notice of dishonour, or is otherwise negligent in the matter, and his customer suffers damage in consequence, he will be liable to make it good.

drawee.

As for the drawee, the bank is under no obligation No duty to to him; and in a case where a draft was supported by documents in respect of the goods for which it was drawn, and the bank informed the drawee by memorandum that "the bank holds bill of lading and policy for 251 bales of cotton per William Cummings," and the drawee accepted the bill without asking to see the documents, and then retired it before it was due, and the bill of lading proved to be a forgery, it was held that this memorandum did not amount to a guarantee by the bank that the socalled bill of lading was genuine.

P.C. 526.

With regard to the question, What are the necessary 1871, L.R. 3, steps to preserve the rights of the holder whose agent the collecting bank is?-the case of Bank of Van Diemen's Land v. Bank of Victoria is an important one, where a decision of the highest Court depended upon the fulfilment of this duty. The facts were these: One Gunn, a merchant of Launceston, drew a bill for £3,000 upon R. Goldsbrough and Co., of Melbourne, at 15 days' sight; this he discounted with the Bank of Van Diemen's Land, who sent it by post in the usual course to their agents, the Bank of Victoria, for acceptance and collection. The Bank of Victoria received the bill at 1 p.m. on a Friday afternoon, and a clerk from the bank presented and left it for acceptance with Goldsbrough and

CHAP. XV. Co. at 2 p.m. same day. Next morning (Saturday) Mr. Parker, a partner in the firm, wrote the firm's acceptance upon it, and handed the bill to his cashier to be delivered to the bank clerk; but when the bank clerk called about 11.30, he was told by Goldsbrough's cashier that the bill was mislaid, and was requested to call again on Monday. This he agreed to do. On Monday morning Parker read in a newspaper that Gunn, the drawer of the bill, had arrived in Melbourne. Fearing that something was wrong, he went to his counting-house at 9 o'clock and told his cashier not to part with the bill until further instructed. The bank clerk called about half-past 11, when some excuse was made about the person who had charge of the bill having gone out. Soon afterwards Parker saw Gunn, and learned that the goods against which the bill was supposed to have been drawn had not been shipped; he thereupon got the bill back from his cashier, and cancelled his acceptance by striking his pen through it. In that state it was finally handed back to the Bank of Victoria, who returned it to the Bank of Van Diemen's Land in the usual course. The Bank of Van Diemen's Land lost, for Gunn became insolvent, and the bank received nothing in respect of the bill. In this state of affairs the Bank of Van Diemen's Land sued the Bank of Victoria, claiming the amount of the bill. It was insisted that the defendant bank might by due care have got the bill back accepted on Saturday. In the Privy Council Lord Cairns said: "Now, the first question which their Lordships have to consider is, What is the meaning of the term 'unreasonable time' as between persons circumstanced as the plaintiffs and the defendants were? The defendants were the agents of the plaintiffs. The law does not lay down as an absolute rule any time which is reasonable or unreasonable as between persons standing in this relation for the execution by the agent of the duty which is imposed upon him. But inasmuch as the

Reasonable time.

object of the transmission of a bill of this kind from CHAP. XV. principal to agent is to obtain the acceptance and the payment of the bill, or, if it is not accepted, to guard the rights of the principal against the drawer, in case recourse is to be had to the drawer, their Lordships are of opinion that the duty of the agent must be measured by those considerations, and that the duty of the agent is to obtain acceptance of the bill, if possible, but not to press unduly for acceptance in such a way as to lead to a refusal, provided that the steps for obtaining acceptance or refusal are taken within that limit of time which will preserve the right of his principal against the drawer."

And, further, their Lordships expressed themselves 24 hours as "prepared to hold that, it being part of the ordinary customary. custom of merchants to leave a bill for acceptance twentyfour hours with the person upon whom it is drawn, and it not being proved that in this case there was any different usage in Melbourne, but, on the contrary, there being strong evidence that the same usage prevailed there which prevails in other places, and the business houses closing at Melbourne at 12 o'clock upon the Saturday, before the twenty-four hours had expired there had

been no breach of duty"; and that "it would have been a harsh and unnecessary proceeding to have insisted on a distinct answer on the part of the drawees or a redelivery of the bill at half-past 11 on the Saturday"; and that, even if the clerk made his first call to obtain the acceptance on Monday morning, there would not have been any failure of duty on the part of the Bank of Victoria.

After acceptance has been obtained, the bill will in Presentation due course mature, when it must be presented for payfor payment. ment. The collecting bank may hold the bill as owner by reason of having acquired it by discount from a customer, or it may be simply the collecting agent of one of its

CHAP. XV. customers, or of some other bank; in any case it must make due presentation, according to the Bills of Exchange Act; otherwise the drawer and indorsers will be discharged. This rule applies equally to promissory notes as to acceptances. If the bill is domiciled payable at a bank, there can be no difficulty as to the place of presentation. Due presentation involves presentment on Due presen- due date, and delay is only excused when caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct, or negligence. If a just cause of delay exist and then cease, presentment must be made with reasonable diligence.

tation.

Dishonour notice by banks.

Bills discounted.

With respect to bills which require presentment for acceptance or payment in another country, the law of that country must be consulted to ascertain what are the due steps.

If due presentment is made and the bill dishonoured, it is necessary for the bank to send out notices of dishonour promptly.

Two forms of dishonour notice are in general use amongst banks in respect of bills: the one applies to bills of which the bank is the holder in its own right, having acquired them by discount; the other is used for bills for collection which the bank has presented or caused to be presented, as collecting agent for one of its customers.

In the former case (bills discounted) the bank notifies its own customer, for whom the dishonoured bill was discounted (who in ordinary course is also the last indorser) of the dishonour, with full particulars of the bill for identification, and of the fact that the amount of the bill has been charged back to the customer's accountif such has been the case or a demand for a cheque to take up the bill, or for some other mode of settlement according to the practice of each bank. Notices, too, are often made out for the earlier indorsers and drawer of the bill, and, if the bank is not sure of the value of