the privileges of the Bank of England. This has been altered by the 7 and 8 Vict., c. 32, s. 26.

In ordinary cases there are four parties concerned in letters of credit.

1. The person who pays the money to the banker, with specific instructions as to its application.

2. The banker who receives the money, and undertakes to write the letter to his correspondent, and that his correspondent shall act on it pursuant to the specific instructions of the party paying the money.

3. The banker to whom the letter is written, and who is probably under some contract with the banker who writes the letter, to honour it.

4. The person to whom the credit is to be given, who may also be the same person who pays the money in.

The position and rights of each of these parties appear to be as follows:-The person paying the money enters into a legal contract with the banker to whom he pays it, that it shall be applied in a particular way, and if that banker should not so apply it or procure it to be so applied, he will be responsible to this party in action for the breach of the contract: Shillibeer v. Glyn (2 Mee. & W. 143). And the banker, in such an action, cannot insist upon having the letter of credit returned to him: Orr v. Union, &c., (1 Macq. 513). The banker who is to pay the letter of credit is probably under an express or implied contract with the other banker to do so, and would be responsible

to him for breaking it, but not to either of the other parties. The person who is to receive the letter of credit has no right to proceed against the banker who ought to pay it, and can probably only look to the party remitting, unless it should be considered that he can sue the first banker for money had and received. The rule is, that "where an agent receives money to pay over to a third person, he continues to be accountable to his principal until he has entered into some binding engagement with that third person to hold the money to his use, and not until then will he be liable to the third person in an action for money had and received." Baron v. Husband (4 B. and A., 812): see also Moore v. Bushell (27 L. J. (Ex.) 3).

The duties of each party, arising from this view of their position, is for the party paying the money to give explicit instructions as to its application, which instructions the banker is to transmit to his correspondent, who is to obey them; and the party having a right to obtain the money must apply in a reasonable time to receive it, otherwise any loss arising from the failure of either of the bankers would probably fall upon him. In the event of these duties being neglected, each party will be liable to the one with whom he contracts, but not to any other party. The remedy of the banker paying the letter of credit for the amount thereof, would be against the banker who instructed him, and would be an action for money paid at his request, in which the letter of credit would prove

the request, and the receipt of the party to whom it was paid, would prove the payment. In practice, a cheque is drawn by the party entitled to receive the letter of credit, and is retained by the banker paying it, as a voucher, or an indorsement is made by the payee on the back of the letter of credit; and the paying banker is liable if he should pay a forgery: Orr v. Union Bank of Scotland (1 Macq. 513).

CHAPTER XII.

BANKERS' DRAFTS.

BANKERS' DRAFTS are ordinary bills of exchange drawn by one banker upon another in favour of, and delivered to, some third person. They are subject to some statutable restrictions, and the stamp duty on them can be paid by a composition. They are commonly engraved on a sheet of paper, so that a letter can be written with them. The following are the clauses of the statutes now in force relating to them. By 9 Geo. 4, c. 23, it is enacted, "That all persons carrying on the business of bankers, except within the city of London, or three miles thereof, having first duly obtained a license for that purpose, and given security by bond, may issue, on unstamped paper, promissory notes for any sum of money amounting to £5, payable to bearer on demand, or to order at any period not exceeding seven days after sight; or bills of exchange payable on demand, or at any period not exceeding seven days after sight, or twenty-one days after date; provided such

bills be drawn upon any banker in London, Westminster, or the borough of Southwark, or bills drawn upon themselves at any place where they are licensed to issue such bills, payable at any other place where they shall also be duly licensed." Banks ceasing to carry on business, and banks established since the 6th of May, 1844, cannot issue bills or notes payable to bearer on demand: 7 & 8 Vict., c. 32, ss. 10, 11, & 12.

By 3 and 4 Wm. 4, c. 83, s. 2, it is enacted, “That it shall be lawful for any body politic or corporate whatsoever, erected or to be erected, and for any other persons united or to be united in covenants or partnership, exceeding the number of six persons carrying on business as bankers, to make any bill of exchange or promissory note of such corporation or co-partnership payable in London, by any agent of such corporation or copartnership in London; or to draw any bill of exchange or promissory note upon any such agent in London, payable on demand or otherwise in London, and for any less amount than £50."

By 7 and 8 Vict., c. 32, s. 26, it is enacted, "That it shall be lawful for any society or company, or any persons in partnership, though exceeding six in number, carrying on the business of banking in London, or within sixty-five miles thereof, to draw, accept, or endorse bills of exchange, not being payable to the bearer on demand."