12. Objections to Statements. Errors in Exchanges.

(a) In order that the clearing statements may not be unnecessarily interfered with, a member objecting to any item delivered to it through the Clearing House, or to any charge against it in the exchanges of the day, shall, before notifying the Clearing House Manager of the objection, apply to the Manager or Accountant of the member interested for payment of the amount of the item or charge objected to, and such amount shall thereupon be immediately paid to the objecting member. Should such payment not be made, the objecting member may notify the Clearing House Manager of such objection and non-payment, and the latter shall thereupon deduct the said amount from the settling sheets of the members concerned, and readjust the clearing statements and declare the correct balances in conformity with the changes so made, provided that such notice shall have been given at least half an hour before the earliest hour fixed by by-law, as provided in Rule 11, for payment of the balances due to the credit- r members. But if the objecting member has not so notified the Clearing House Manager it shall be the duty, under these rules, of the member interested to make such payment on demand therefor being made at any time up to 1 o'clock p.m. and before 12 o'clock noon on Saturdays, provided, however, that if the objection is based on the absence from the deposit of any cash parcel, or on errors or omissions in cash parcels, notice shall have been given by the member interested before 3 o'clock p.m. and before 12 o'clock noon on Saturdays.

(b) Members shall immediately on discovery notify the Clearing House Manager of all errors or omissions in cash parcels received through the clearings. Such notice shall be given at the latest before three o'clock p.m. on the day the deposit is made and before 12 o'clock noon on Saturdays. He shall in turn notify the Chairman of any case that requires special attention. The Manager of the Clearing House shall be required to forward a list of these errors to each Bank monthly.

(c) In any case in which a member has made a payment, or there has been deducted an amount from the settling sheets of a member, pursuant to paragraph (a) of this rule and regulation, such member may notify the Clearing House Manager in writing not later than three o'clock p.m. of the second banking day after such payment or deduction has been made, that demand is thereby made for an inquiry by a Committee, appointed as hereinafter provided, into all the facts and circumstances relating to such payment or deduction.

(d) The Chairman of the Clearing House, or if the Chairman represents a member that has an interest in the inquiry then the Vice-Chairman, and if the Chairman and Vice-Chairman each represent a member that has an interest in the inquiry then the Clearing House Manager shall thereupon appoint a Committee of three, chosen from the managers, acting managers and assistant managers of the main offices of the various members, to make inquiry into all the facts and circumstances relating to, or in any way connected with, such payment or deduction, and it shall be the duty of such Committee to make such inquiry without delay and to report thereon as hereinafter provided. No member of the Committee shall be an officer of a bank which has an interest in the matter referred.

(e) The Committee shall have the right to require the pro-duction of all books and documents of either member, deemed relevant by the Committee, and to require the attendance of all the officers and clerks of the members concerned who have had anything to do with the matter in dispute, and to examine them orally, either one at a time or in the presence of each other. as the Committee may determine. Each member concerned shall have the right to have a senior officer (a manager, assistant manager or accountant) present at the inquiry, and the representatives of the respective members, as well as the persons composing the Committee, shall have the privilege of questioning and cross-questioning the officers and clerks of the respective banks touching the subject matter of the inquiry.

(f) At the conclusion of the inquiry the Committee, or a majority of the Committee, shall as soon as may be convenient, make a written report and finding, to be signed by the persons concurring therein and to be filed with the Clearing House Manager, stating upon which of the members before the Committee the loss, in the opinion of the persons signing the report, should fall, and whether should or should not be a refund of the amount in dispute, or if unable to so report, then to make such other report and finding as may seem to them justified in the premises. A minority report may be made and filed. The Manager of the Clearing House shall send a copy of such report and minority report, if any, to each of the member banks interested.

(g) Members returning items received through the clearings shall attach a ticket to each item, stating the cause for such return and the name of the member so returning.

(h) Cash settlements of errors except for amounts under one dollar are absolutely prohibited. No member is to receive a Clearing House Error Slip unless signed by one or more duly authorized officers of the main office of the member issuing such voucher.

(i) It shall be the duty of each member unable to balance its clearings on the day deposits are made to report the amount of difference to the Manager before the hour set apart for making exchanges on the following business day.

(j) Any items returned mutilated are to be received at the risk of the member making such return, should the depositing member or one of its branches or correspondents object to the mutilation.

(k) Each member shall send to the other members specimen signatures of officers authorized to sign Clearing House Error Slips, and when changes take place as regards such officers a fresh authorization covering all signatures then effective for such member is to be forwarded the other members.

(As amended at Annual General Meeting, November 13th, 1919. Approved by the Treasury Board, 20th November, 1919.)