CHAP. XVIII. Thus a bill is drawn payable to drawer's order and accepted. C afterwards backs it with his signature; it is not at that time indorsed by the drawer. C would be liable to subsequent parties as an indorser, for his quasiindorsement renders him so under the section above, which follows a decision of the House of Lords in Steele v. 1880, 5 App. Cas. 754. McKinlay; but he is not liable on the bill to the drawer, who, in the nature of things, knew when he took the bill, this was not an ordinary indorsement operating to create liability under the Law Merchant, but simply an extraneous signature, and therefore the drawer must prove a guarantee in writing to satisfy the Statute of Frauds. But if the drawer first indorsed the bill, and then Wilkinson v. C indorsed to the drawer, the drawer in such a case, in Unwin, 7 Q. B. D. 636. his subsequent capacity as indorsee, could make C liable as indorser. Steele v. McKinlay was decided before the Bills of Exchange Act; but it has been held since that Jenkins v. the statute did not alter the law in this respect, and there- Coomber, fore on similar facts a similar decision was given. The reasoning which applies to an acceptance applies equally to a promissory note, and if a stranger to a P.N. should back it, by writing his name upon it before the payee has indorsed, he would be liable as indorser to subsequent holders under section 56, but could not be made liable on the bill to the payee. A fortiori would this hold if the bill were backed while it was still a blank form. 1898, 2 Q.B. 168. This law was recently applied in Sydney in the Dis- S. M.H., 8 Dec., 1906. trict Court in the case of a P.N. Sometimes what appears to be an indorsement is Apparent indorsement. really in the nature of a receipt; thus, where the indorsee or payee of a bill, instead of negotiating it or indorsing it to his own bank for collection, presents it in person, it is customary for the bank to demand an indorsement which is really by way of receipt. This happens constantly in the case of order cheques CHAP. XVIII. Per pro. presented personally by the payee. Upon this point Sir John Paget says: "If a man presents a cheque payable to 'AB or order,' unindorsed, the legal presumption is that he is AB. The bank must pay or refuse payment. They may tender a stamped receipt for signature, but cannot otherwise demand any receipt certainly not one in any particular form. "The common practice of paying bankers to refuse payment unless the ostensible payee signs on the back of the cheque seems therefore without justification. It is understood that at least one object of demanding such signature is to get the protection of section 60, should the person presenting the cheque not be the real payee." He thinks it doubtful whether such protection would be obtained. A widespread impression prevails among bankers indorsement. and business men that there is a distinction in effect between indorsements in the following forms, viz.:— Charles v. Blackwell. 1877, 2 C.P.D. 151. W.T., Agent. And especially that the use of the words per proc. amount to an assertion of the possession of some written procuration or authority to sign. But this is not so. Either form purports to be the indorsement of John Brown by an authorised agent; and a banker paying a cheque or bill payable to order on demand on any such indorsement would be entitled to the protection of section 60, should any question of regularity of the indorsement be raised. Unauthorised or forged indorsements are, generally speaking, inoperative; this is recognised in the Act by section 24, set out, ante, p. 225. Section 60 is an exception to the general rule; inasmuch as under it a bank obtains an acquittance in certain circumstances when paying demand documents whereon the indorsement is forged, or unauthorised. CHAP. XVIII. CHAP. XIX. Unity of head office and branches. Branches regarded as distinct for purposes of dishonour notices. CHAPTER XIX. BRANCH BANKS AND AGENTS. It has already been pointed out that practically all Australian banks are corporations. All the banks doing business in Sydney are corporations; being incorporated either under the Companies Act or under special charters or statutes. The effect of incorporation is that the bank has an ideal existence as a person in law. You work for a bank which, in some respects an imaginary thing, is yet in law treated as a person or individual. This person for whom you work is not the office, in which your work is done, and where the public come and do business. Your employer is the bank, or company, at the back of that office and of all its other offices. And the fact is not different whether you work in the head office, or in the chief branch for a State, or in one of the minor branches. Behind all the network of branches is the bank itself, which is one person in point of law, and may be regarded as an individual carrying on business at so many different addresses. Nevertheless, for some purposes in law the different branches of a bank can be regarded as distinct banks. Thus in the case of Clode v. Bayley, which was decided sixty years ago, branches were regarded as distinct under the following circumstances. The Portmadoc branch of a bank in Wales discounted a bill and sent it 12 M. & W. to the Pwllhili branch; the Pwllhili branch indorsed the bill over to the London office, where the bill was sent and 51 eventually dishonoured; London office returned the bill CHAP. XIX. to Pwllhili, who returned it to Portmadoc, who sent notice of dishonour to the party who had discounted and indorsed to it, who sent notice to the prior indorsers; afterwards, in an action against one of the indorsers, it was claimed that the bank had not sent due notice of dishonour so as to render the indorsers liable on the note; but it was held that, for the purpose of giving notice of dishonour, each of the offices of the bank which handled the note must be regarded as a separate indorser (though in fact no indorsement had been made as between Portmadoc and Pwllhili), and, computing notice in this way, it was found all the notices were in time, and the indorser liable. tion. The decision proceeded upon the grounds of business Reason for necessity, and the lack of knowledge of a London office the excepas to where a bill, received through a chain of branches or agents, should ultimately be returned. The case establishes a very useful exception upon the principle, which depends upon incorporation, and which is laid down in the leading case of Prince v. Oriental Bank, to which I proceed to refer. Oriental Bank 325. The case of Prince v. Oriental Bank is one which General rule. though decided in England, originated in New South Prince v. Wales, finally reaching the Privy Council. It is not 1878, 3 A.C. surprising to find the most important case on this subject arising upon Australian business. The system of branch banks which pervades Australia is more like the Canadian than any other system, and appears to be derived from the Scotch rather than from English banking practice. English banking was formerly carried on by private banks and partnerships in very restricted areas, who did their business with neighbouring towns and counties by means of agents and correspondents. Now that joint stock companies are displacing private banks, the system |