This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 193.— A cheque drawn on one of their country branches is received by one Toronto bank from another, through the clearing house. There are funds for the cheque when it reaches its destination, but on account of the endorsement being irregular, it is returned, and while it is in transit the drawer assigns (or withdraws the funds as the case may he). Is the endorsing hank released from liability because the cheque was not marked good ?
Answer.—We think it was the duty of the country branch to have marked the cheque when presented before returning it to be endorsed, but we do not think that it was legally bound to do so, or that it can be made responsible for the withdrawal of the funds afterwards. It would follow, therefore, that the endorsing bank is not released.