ment of the bill sent him, but both agents failed, and CHAP. XIX. failed to remit proceeds to Coutts. Ramsays, therefore, did not receive the money, and did not credit Mackersy. Mackersy sued Ramsays for the proceeds of the bills, and was successful, for the reasons in law already indicated.

It was held that Mackersy had taken the right step, Lack of priand would have had no claim to sue Coutts, who were vity of contract between responsible to Ramsays alone. The same point was dis- customer and the agent cussed, and might, under slightly altered circumstances, bank. have required decision in Prince v. Oriental Bank; for Ante. it was argued that the Oriental Bank, if liable at all, could be sued only by the Bank of New South Wales, with whom it had dealt; and that, whether it was right or wrong, Prince at any rate had no right to sue the defendant bank; and the decision in Mackersy v. Ramsays was approved; though the case was decided upon the wider ground that the Oriental Bank had not incurred obligation to anyone. In virtue of agency, therefore, a bank may be in certain cases as liable for another branch bank as for one of its own branches.

A recent case of some importance which illustrates 1898, 1 Q.B. our subject is Fielding v. Corry.

The Cardiff branch of the Gloucester Bank received a bill for collection, to which there were several indorsers, and forwarded the bill, for collection, to the London and Westminster Bank in London, by whom it was presented. The bill was dishonoured, and within the requisite time. the London and Westminster Bank sent by post a notice of dishonour to the Cirencester branch of the Gloucester Bank. Next day the mistake was discovered ; it was beyond the time, however, for sending a proper notice to the Gloucester Bank at Cardiff, but a telegram was sent, and, acting upon it, Cardiff sent, within time, notice to its customer, and subsequently correct notices,

268.

CHAP. XIX. within time, were received by the prior indorsers. One of these indorsers, having discovered the flaw in the original notice from London, sought to take advantage of it to repudiate liability.

Correction by telegram of mistake

within the bank.

This action was brought to enforce liability, and its success depended solely upon the validity of dishonour notice sent from London. Held, in the Court of Appeal, by a majority of two Judges to one, that good notice had been sent from London to Cardiff, and the liability of the indorsers was preserved. The grounds upon which this decision was given appear to be: That Cardiff and Cirencester branches were both parts of the same principal bank; that notice to Cirencester was therefore notice to the bank, though at the wrong address; that such notice was within time; that the address of a dishonour notice was not a material part of it; and that the correction by With this cf. telegram was effective to remedy such mistake as had City Bank v. been made, being within such a time as to injure no one, since Cardiff had been enabled to send a proper notice.

A.J.S. Bank,

ante.

Ante.

Limits of the decision.

The dissenting Judge, in a very careful and technical judgment, pointed out that since Clode v. Bayley different branches had been held as separate indorsers for the purpose of dishonour notices, and that such a course of business was the only reasonable one, and had existed for a long time, and consisted with the requirements of the Bills of Exchange Act in the case of notices of dishonour. He held the notice was bad.

The reasoning of the decision depends on a personal identity between the Cardiff and Cirencester branches, and would not apply in the case of offices connected simply by agency.

CHAPTER XX.

THE AGENCY OF OFFICERS OF A BANK.

In another chapter the case of Bremner v. the Union CHAP. XX. Bank is referred to by way of illustrating a point arising Post Chap. in connection with stock mortgages, and due to the zealous XXII. 17 N.S.W.L.R. efforts of a branch manager to save his bank from loss. 74. That case, however, is directly in point as a decision in agency law. It proceeded upon the ground that it could not be assumed that certain acts being done by the manager (seizure of sheep, &c.) on behalf of the bank were as a matter of course (express evidence on the point not having been given) within the manager's authority, for that was to be gathered from his ordinary and not his unusual duties.

Now, pretty well every officer in a bank has some duties to perform such as bring him into relation with the public or with some other banks or institutions; and one can never foretell whether the legal effect of any one of his acts may not become a matter of importance or even controversy.

Questions which involve such matters will usually Actions arise in one of two ways. (1) A customer of the bank against

banks.

Breaches of

contract

faults of staff.

may be aggrieved by some act or fault, of a clerk or manager in the bank's service, which makes a breach of the contractual duties owed him by the bank, or which caused by can be described as unwarrantable negligence in the fulfilment of the bank's duty, and which causes a loss to the customer, giving him a right of action against the bank: an action described by lawyers as arising "ex contractu."

CHAP. XX.

Wrongs to strangers caused by staff.

Contracts made by officers.

(2) Any member of the public, customer or stranger, may have a wrong done him by a bank, or by an employee of the bank in the course of his employment, independent of any contract, thus acquiring against the bank a right of action upon the wrong or trespass committed. This is classified by lawyers as an action arising from the wrong, or action "ex delicto." All the ordinary actions that are brought at common law fall into one or other of these two great classes: actions upon contracts: actions of tort.

Now, with regard to contracts by agents, and the right of enforcing them against the principal on whose behalf they are made, the general rule is that "every act done by an agent on behalf of the principal within the scope of his apparent authority and in the course of his employment binds the principal, unless his agent is in fact unauthorised to do the particular act and the person dealing with him has notice that he is exceeding his authority." Thus, when the proper officer of a bank receives a bill for collection from a customer, a contract is made between the bank and the customer, and the bank becomes bound to use all due diligence in and about the collection of that bill.

In the same way the bank becomes a party to a contract of bailment every time its proper officer receives valuables for safe custody, and the bank becomes bound to use the diligence expected in law of a gratuitous bailee, or of a bailee for hire, as the case may be.

Again, every time a proper officer allows an account to be opened a contract is made, between the party opening the account and the bank, that in consideration of the customer lending his money the bank will properly carry out its duties to that person arising out of the legal relationship of banker and customer.

The bank's employees may, therefore, in the proper course of their work, make contracts which bind it, and

which, if broken or neglected, commit it to certain legal CHAP. XX. consequences, one of which is an action at law.

I have felt it advisable to point this out at some length, for the reason that text-books in their chapter on contracts, and lectures to bankers, are very apt to mention that the contracts of a corporation require to be under the seal of the corporation, without saying more. That rule, of course, applies to the case of nearly all banks, for nearly all are corporations; but it applies to those comparatively unusual and formal contracts which can be made by (ie., which are within the powers of) the corporation, but are not within the powers delegated by the bank to its staff in order that it may carry out the everyday routine work of banking. Those contracts arising in the conduct of the ordinary business are often not written (though that may be done), often not even expressed in words, but are simply implied by law from the conduct of the parties.

breach.

The breach of any one of these simple contracts will Effect of lay the bank open to an action-e.g., failure to collect a bill on due date might lead to a subsequent dishonour of the bill (or other damage), and the bank would be liable for the negligence of anyone, or of the chain of clerks in the bill office, and on the exchanges, or branch correspondence, through whose hands the bill passed. A more usual class of action is that in which the bank is sued for the wrongful dishonour of a cheque. In this action it is necessary to allege due presentation of the cheque, and it therefore offers an opportunity for illustrating what is within the scope of apparent authority and course of employment of a bank clerk. It is easy to imagine a great variety of cases, some of which might be very near the line. If a man took his own cheque to a bank and allowed himself to be bluffed out of the banking room by a stupid and officious messenger, I suppose he would not be able to prove due presentation; and I think

R