Adopted by the Council of the Canadian Bankers' Association on the 36th February, 1898, under authority of a resolution passed at the annual meeting of the Association, 6th October, 1897.

Mode of Endorsement.

1.  An endorsement may be either written or stamped, in whole or in part.

Regular Endorsements.

2.  A regular endorsement within the meaning of these Conventions and Rules must be neither restrictive nor conditional, and must be so placed and worded as to show clearly that an endorsement is intended.

If purporting to be the endorsement of the person or firm to whom the item is payable (whether originally or by endorsement), the names must correspond, subject, however, to section 32, sub-sec. 2, of the Bills of Exchange Act, which is as follows:—

" Where, in a bill payable to order, the payee or " endorsee is wrongly designated, or his name is mis-" spelt, he may endorse the bill as therein described, " adding his proper signature; or he may endorse by his " own proper signature."

If purporting to be the endorsement of a corporation, the name of the corporation and the official position of the person or persons signing for it must be stated.

If purporting to be made by some one on behalf of the endorser, it must indicate by words that the person signing has been authorized to sign; ex. gr., " John Smith, by his attorney, Thomas Robinson," or "Brown, Jones & Co., by Thomas Robinson, their attorney," or " Per Pro. or P.P. the Smith Brown Company, limited, Thomas Robinson."

Irregular Endorsements.

3. An endorsement, other than a restrictive endorsement, which is not in accordance with the foregoing definition of a regular endorsement, or which is so placed or worded as to raise doubts whether it is intended as an endorsement, is an irregular endorsement within the meaning of these Conventions and Rules.

Restrictive Endorsements.

4. Section 35 of the Bills of Exchange Act defines a restrictive endorsement as follows:—

" An endorsement is restrictive which prohibits the further negotiation of the bill or which expresses that it is a mere authority to deal with the bill as thereby directed, and not a transfer of the ownership thereof, as for example, if a bill is endorsed ' pay D only,' or ' pay D for the account of X,' or ' pay D or order for collection.'"

The following further examples shall be treated as restrictive endorsements within the meaning of these Conventions and Rules, without prejudice, however, to their true character, should the question arise in court, viz.:—

" For deposit only to credit of..................."

" For deposit in..........bank to credit of........."

" Deposited in.........bank for account of........."

"Credit................bank."

Form and Effect of Guarantee.

5.  A guarantee of endorsements shall be in the following form or to the like effect:—

" Prior endorsements guaranteed by..........................(name of bank)."

It may be written or stamped, but shall be signed in writing by an authorized officer of the bank giving it.

By virtue of such guarantee and of these Conventions and Rules, the bank giving same shall return to the paying bank the amount of the item bearing the guarantee, if, owing to the nature of any endorsement, or its being forged or unauthorized, it should appear that such payment was improperly made.

Endorsement by Depositing Bank.

6.  "When one bank deposits with or presents for payment to another bank (whether through the Clearing House or otherwise) a bill note or cheque, the item so deposited or presented shall bear the stamped open endorsement of the depositing or presenting bank. Such stamp shall contain the name of the bank, its branch or agency, and the date, and shall for all purposes be the endorsement of the depositing or presenting bank, and, except as hereinafter specified, no further or other endorsement shall be required, whether the item be specially payable to the bank or otherwise, or be payable at the chief office or elsewhere.

Restrictively Endorsed Items.

7.  If a bill, note or cheque bearing a restrictive endorsement be so deposited or presented, the depositing or presenting bank shall ipso facto, and by virtue of these Conventions and Rules, be deemed to have guaranteed such endorsement in accordance with section 5 hereof, and shall be liable to the paying bank to the same extent as if such guarantee had been actually placed upon the item, but payment may, notwithstanding, be refused until the restriction be removed.

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Irregularly Endorsed Items.

8.  If a bill, note or cheque, bearing an irregular endorsement as above defined, be so deposited or presented, the depositing or presenting bank shall endorse thereon the guarantee referred to in section 5 hereof, but payment may, notwithstanding, be refused until the irregularity be removed.

Letters or Credit, Deposit Receipts, etc.

9.  When a letter of credit, deposit receipt, or other item not negotiable, and to which the provisions of the Bills of Exchange Act do not apply, is so deposited or presented, a receipt and indemnity in the following form, or to the like effect, shall be written or stamped thereon, signed in writing by an authorized officer of the presenting or depositing bank, viz.:—

" Received amount of within from the within named bank, which is hereby indemnified against all claims hereunder by any person."

Agreement as to Practice.

10.  While it is understood that in general, for convenience of the depositing or presenting bank, no objection will be made to a restrictive endorsement, or to an irregular endorsement if the guarantee above provided for be given, yet in view of the responsibility which a depositing or presenting bank incurs in connection therewith, each bank undertakes to make all reasonable efforts to have all endorsements on items deposited or presented by it made regular in order that its customers and the public generally may ultimately be led to adopt a regular and uniform system.

It is also understood that endorsements regularly made within the meaning of these Conventions and Rules shall not be objected to except for special reasons to be assigned with the objection.