This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 204.— Do you consider it safe for a bank to hold funds which are at a customer's credit, on a telegraphic request from another bank which is about to cash the customer's cheque? What would be the result if another cheque would be dishonoured before the first cheque was presented? What if the cheque for which the funds were held proved to be forged, or if payment were countermanded by the drawer ?
Answer.—This is one of the practices which as a practice is found to work very well, but in theory is quite indefensible. A bank cannot accept or pay a cheque until it is actually presented, and notwithstanding such a telegraphic request or promise, the money is still at the customer's credit, and he has a right to say what shall be done with it. The refusal of another cheque under the circumstances mentioned might therefore expose the bank to a claim by the customer for damages, and this would be the result whether the cheque telegraphed about were forged or not, or if it were subsequently countermanded.