This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 160.— A gives his cheque to B in payment of a debt, and B endorses to C. The cheque is dishonoured. A, later on, makes partial payments in respect of the debt represented by the cheque, the amounts so paid being noted by C at one end of the back of the cheque, but without any indication as to who made the payments, thus:
July 2nd—Received $5.00 on cheque. " 5th—Received $3.00 " "
The bank afterwards pays the cheque to the holder, at its face, ignoring or not observing the memoranda on the back.
Would the bank be liable to the drawer in respect of the amount of A's debt thus overpaid ?
Answer.—We think there was nothing in the circumstances to operate as a countermand of the express terms of the cheque. The bank would have been justified in withholding payment until the endorsement had been explained and it would have been wiser to have adopted such a course, but we think they are entitled to charge the whole amount to their customer's account.