This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 1.— Can a bank legally charge at maturity to the account of a depositer having funds, an acceptance, drawn on him and accepted and made payable at the bank, without a cheque or special authorization to do so ?
Could the depositor hold the bank responsible for any costs or damages arising from the bank omitting or refusing to charge the acceptance to his account without a cheque or authorization, and is the draft accepted, as aforesaid, his order on the bank the same as his cheque ?
Answer.— (1) In Ontario and other provinces which are under the same law, a bank may charge such an acceptance to the customer's account. In Quebec it has been usually held that, without special authority, a bank is not entitled to charge such an acceptance to the customer; but if it is a holder of same at maturity, as its own property, the right of compensation or set off entitles it to charge it against the customer's funds. We are not aware that the right of a bank to charge at maturity a note of which it is not the holder, has ever been settled in any case that has ever come up in the Province of Quebec, but we should think it possible that it would form a sufficient answer to any customer contesting the charging of a note to his account, that the bank had on the day of its maturity paid value for it, and thereby become a holder with right of set off or compensation. In practice, however, it would not be wise to take this risk.
(2) Whether or not a bank could be held responsible for damages for refusing to pay a customers acceptance would depend on the contract between the bank and the customer, which might either be express, or implied from a practice with regard to the customer's account of paying such acceptances. If such a contract existed, the bank would be liable but not otherwise.