This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 341.— A cheque drawn on the Bank of ,
Montreal, payable to John Smith or order, is presented by a party claiming to be John Smith, but who cannot procure identification. Is the bank in question justified in refusing to pay the cheque on these grounds?
Answer.—The point was fully discussed in the answer to Question 338. The bank is entitled to delay payment until it can satisfy itself of the payee's identity, but it is bound to do what is necessary, and within a reasonable time. If the payee is absolutely unknown to any person in the place, the bank should doubtless refer to the drawer for instructions.
The point is one which is not usually pressed to its ultimate logical conclusion, i.e., while it is the bank's duty to satisfy itself as to the payee's identity, the payee is equally interested in satisfying it and usually for his own convenience provides the necessary proof.