This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 72.— A bank has authority to pay the acceptances of a customer, and through an error has marked and paid a draft on him which had never been accepted. Has it any recourse, or must it abide by its error ?
Would "Steele v. McKinley" apply?
Answer.—Where a bank has voluntarily made a payment on behalf of a customer we are of opinion that, unless there is some special reason to the contrary, they cannot get back the money from the party to whom it was paid, although we think they could in this case have corrected their error if the draft had been only marked good and not paid. The customer could ratify their act, but if he refused to treat the payment as properly made on his behalf the bank is left to any equitable rights it may have.
It seems to us, however, that the error should not necessarily involve a loss. Either the bill is drawn for an amount which the customer owes, in which case the paying bank might get an assignment of the drawer's claim on the drawee, or the latter might very properly ratify the payment; or it is a bill the payment of which by the drawee would entitle him to claim back on the drawer in whole or in part, in which event there should be some arrangement possible between the drawee and the bank which would protect the latter.
" Steele v. McKinley " does not help the matter.