This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 309.— Jones and Brown trade and carry on business together, though no registered partnership exists, Jones attending to all the banking. Brown receives a cheque in payment of goods sold by him, the cheque being made payable to him personally. In the ordinary course of business, he hands the cheque over to Jones, but neglects to endorse it himself, which fact Jones fails to notice at the time. When bringing the cheque to the bank for deposit, the omision is discovered, and being short of funds, Jones endorses the bill " Brown, per Jones, Attorney," and then endorses the bill personally as usual. No written power of attorney from Brown to Jones exists, however.
I should like to know. (A) Whether a bill so endorsed should be received on deposit? (B) Whether such an endorsement can be defended? (C) Whether, if the manager of the bank, knowing all the facts of the case, decides to take the bill on deposit from the customer, endorsed as described, and authorized the teller to take it, the teller is thereby released from all responsibility as to the accuracy of the bill passing through his hands? (D) Whether in such a case, the teller should request the manager to initial the said bill, and if so, where the manager's initials should be placed: or whether the manager's verbal authorization would be sufficient? (E) Whether an endorsement of this kind, made in good faith, and without fraud, could be called a forgery or be contrary to the law ?
Answer.— (A) We think the cheque which you describe should not be received. (B) This would depend on all the circumstances. (C) The acceptance of the cheque would be entirely a matter of the manager's discretion. (D) We should suppose it to be unnecessary for the teller to request the manager to initial the cheque, for if there was any dispute afterwards as to which officer of the bank was responsible for accepting the cheque, the true facts would not fail to be brought out. If initialed at all we think the proper place would be on the back under the endorsement. (E) An endorsement of this kind is not forgery; it is merely invalid for want of authority.