This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 252.— I am advised by a leading solicitor here that a bank can be compelled to pay the amount of a lost deposit receipt without a bond of indemnity, on the ground that the deposit receipt, not being transferable, but payable only to the depositor, his receipt for the money is sufficient. Also that no provision is made in the contract as expressed in the deposit receipt respecting a bond to be given in case of loss.
I should be glad to know what the counsel for the Association thinks on this point.
Answer.—A deposit receipt in the ordinary form is not negotiable and is a mere evidence of indebtedness by the bank to the depositor. The loss of the receipt may inconvenience the depositor in proving to the satisfaction of the bank that he is the person entitled to the payment of this indebtedness; but if he were able to establish his right to the deposit by other evidence, the bank would have to pay him. It would be no defence to an action by him against the bank to recover the amount of the deposit that he had been given a receipt not negotiable, which receipt was not forthcoming; and he could not be compelled to give a bond of indemnity before claiming payment. If there were any special terms in the deposit receipt which he would have to comply with before claiming payment of the deposit, he would of course have to comply with them as a matter of contract; but the legal position with respect to the effect of special terms would have to be considered in view of the exact terms and of the circumstances at the time.
If the receipt contained the usual phrase " fifteen days' notice of withdrawal to be given, and this receipt to be surrendered before payment is made," it would certainly be a condition of the contract that the receipt should be surrendered before payment can be demanded, and prima facie the bank would be justified in refusing payment until this condition had been performed; but we think that the condition is one which would be held to have been discharged if the circumstances rendered it impossible of performance as a matter of fact, e.g., if the receipt had been burnt or otherwise destroyed. The bank would in such a case be acting unreasonably if it refused to accept a bond of indemnity and pay over the money, and if in an action brought by the depositor he proved the destruction of the receipt, the court would in all probability order the bank to pay the costs of the suit.