This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 221.— A bill for collection is sent by a bank to a private banker, who is a customer of the bank, there being no chartered bank in the place where the bill is payable. The cheque received from the private banker in payment is dishonoured. On whom must the loss fall?
Answer.—Unless there was an understanding with the customer that the cheque should be sent to the collecting agent employed, of such a character as to make it clear that he had approved of the selection of the agent, the bank must bear the loss. This point was fully dealt with in our reply to Question 220.