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OF THE DRAWER OF A CHEQUE.
RIGHTS AND LIABILITIES OF THE DRAWER
A CHEQUE, WHICH ARISE FROM HIS FILLING
1. On the rights and liabilities of the principal when the cheque is drawn by an agent. 2. On the liability of a director of a railway or public company, or a bank officer, or any other description of agent, who is the drawer of a cheque.
3. When the drawer is an assignee in bankruptcy or a trustee.
7. Married woman.
8. Executors and administrators.
1. On the rights and liabilities of the principal when the cheque is drawn by an agent.
WHEN the drawer of a cheque is acting in pursuance of an authority, the principal will not be liable if the drawer has not followed strictly the terms the authority prescribes.
A question of this sort arose in Whitmore v. Wilks, before referred to, with respect to the sum
of £375, under the following circumstances. The paving and lighting accounts of the parish of St. Luke's were kept separate, and there were different bankers for the two; but this sum of £375 had been erroneously placed to the wrong account. By the provisions of the Act of Parliament, all orders for the payment of money ought to be signed by three trustees, at least, at a meeting. Milne, however, had prevailed on three trustees separately, at their respective houses, to sign an order on the bankers, to whom the £375 had been paid, to pay that money over to him, on the pretence of transferring it to the right account; and, having obtained the order, he received the money from one banker, but never paid it over to the other, or accounted for it. This was one of the sums the trustees of the parish sought to recover from Wilks. Lord Tenterden, in summing up, said—“I think the plaintiffs are not entitled to recover the £375; the trustees are prevailed upon by Milne irregularly to sign the order for that sum. They ought not, by the provisions of their act, to have done so, except at a meeting; but Milne prevails on them, and they do it. This was an act clearly out of the scope of Milne's duty to Wilks, or of Wilks to the trustees. I think, therefore, that Wilks is not answerable for it, for it was without the duties which Wilks had appointed Milne to perform, and for which he had constituted him his agent." If the provisions of the Act of Parliament had been attended to, and the three
trustees had drawn the order at a meeting, and then handed it to Milne, as acting clerk in the place of Wilks, probably the latter would have been held liable. The trustees, therefore, lost their remedy, because they did not draw the cheque in the manner prescribed by the Act of Parliament. This point may become extremely important to bankers. Thus it is well established, that if a bill or note import to be drawn, accepted, or indorsed by procuration, it will not bind the principal unless it be within the agent's power; and the rule seems clearly applicable to cheques. Suppose, then, a customer to a banker to give a party a power of attorney to draw cheques for him for any particular purpose, or at any particular time, the banker should satisfy himself that the attorney has strictly followed the power, or he may become liable to the principal. In a case relating to bills, although the East India Company saw the power under which the agent acted, and registered it in their books, yet they paid an indorsement which it did not warrant, and the principal enforced payment over again from the Company: East India Company v. Tritton (3 Barnewall and Cresswell's Reports, 280); see also Field v. Mackenzie (17 L. J. (C.P.) 98; Serrell v. Derbyshire, &c., Company (15∙L. T., 254). It is said, however, that signing "for A. B." is not equivalent to "per proc." The former words do not import special and limited authority, but the latter do: O'Reilly v. Richardson (17 Ir.
C. L. Rep. 74). An agent cannot overdraw his principal's account with his banker, without express or implied authority: Pott v. Bevan (1 C. and K., 335).
2. Liability of drawer of cheque who is a director of a railway, or public company, or a bank officer, or any other description of agent.
When the drawer of a cheque is merely an agent, he has, in some cases, been held to be personally liable. Thus, in Leadbitter v. Farrow (Bayley, 69), plaintiff wanted a bill upon London for £50, and sent to defendant, whom he knew to be agent to the Durham Bank at Hexham. Defendant drew a bill accordingly :
Pay to the order of Mr. Leadbitter, £50 value received, which place to the account of the Durham Bank, as advised. "C. FARROW.
"To Messrs. A. and B., London."
In an action thereon, the defendant urged that he was not personally liable, or at least that the plaintiff, who knew him to be only an agent, could not sue him, but on a case reserved; the Court held his signature pledged his own credit, and that only, and that he was therefore liable. Again, in the case of Eaton v. Bell (5 Barnewall and Alderson, 30), defendants were Inclosure Commissioners, and plaintiff the banker under the
Act. The Act authorized the commissioners to raise money by rate, and directed that persons advancing money for the purposes of the Act should be repaid with interest out of the moneys the commissioners should raise. Defendants drew on the plaintiffs in this form :
"Messrs. Eaton,-Pay A., or bearer, £40 on account of the public draining, and place the same to our account as Commissioners of the Frodsham Inclosure."
Plaintiff sued the defendants personally, and the judge left it to the jury whether credit was given by the plaintiff to the defendants personally, or to the fund they had to raise. The jury thought it given to defendants personally, and on case the court thought them right, and plaintiff had judgment. The practical conclusion to be drawn from these authorities is, that when the drawer of a cheque is an agent, and does not intend to become personally responsible, he must express his intentions upon the face of the instrument.
But these cases have frequently been doubted. In Story's Commentaries on the "Law of Agency," the author makes the following remarks on this point :-
"The case of Thomas v. Bishop (2 Strange's Reports, 955), would make one pause as to the extent to which the doctrine should be carried. There, a bill was drawn on the defendants as