This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 182.— (a) A. Jones deposits with his bank a cheque, which he neglects to endorse, the cheque being made payable to his order. His banker endorses on the cheque: '' Deposited to the credit of A. Jones," and signs his name as manager of the bank. Would this constitute an endorsement?
(b) If the cheque was not paid when presented at the bank on which it was drawn, could the banker, who endorsed it as stated above, recover the amount of the cheque from A. Jones?
Answer.— (a) This is not an endorsement.
(b) The bank could, we think, recover the money from its customer, not because he was liable on the bill which he had neglected to endorse, but because the bank had given him value for it on the understanding that it would be endorsed over to the bank, and that the omission of the endorsement was a mistake which he must make good or return the money. The bank, however, has a right to demand the customer's endorsement under sub-section 4 of section 31 of the Bills of Exchange Act.