Order."

Question 167.— A cheque payable to John Smith, and properly endorsed:

"Pay to bearer,

John Smith," is subsequently endorsed:

" Pay to the order of Peter Jones,

A. B. C." The bank on which it is drawn pay the cheque without the endorsement of Jones,—probably an oversight— but defend their action on the ground that the endorsement of Smith makes the cheque payable to bearer, and that no subsequent endorsement can change it. Were they right?

Answer.—"With regard to a cheque which has been made payable to bearer by endorsement, and then by subsequent endorsement made payable to order, before the Bills of

A. B. C." The bank on which it is drawn pay the cheque without the endorsement of Jones,—probably an oversight— but defend their action on the ground that the endorsement of Smith makes the cheque payable to bearer, and that no subsequent endorsement can change it. Were they right?

Answer.—With regard to a cheque which has been made payable to bearer by endorsement, and then by subsequent endorsement made payable to order, before the Bills of Exchange Act was passed in England the law there very clearly was that a bill so endorsed remained payable to bearer, notwithstanding subsequent endorsements; provision was, however, made in the Act (sec. 8, sub-sec. 3), which was intended to alter the law in this respect. Chalmers, who framed the bill, says that this section was intended to bring the law into accordance with the mercantile understanding, by making a special endorsement control a previous endorsement in blank.

This sub-section does not appear to have ever been judicially interpreted, and it does not seem to clearly negative the idea that a bill may be payable to bearer under such circumstances as you mention, for it does not necessarily follow that the converse of sub-section 3 is true. We have not been able to find a case bearing on the point, but in view of the explicit declaration of Chalmers we should think it very doubtful if the position taken by the bank you mention could be sustained.