This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 24.— (a) A bank in Canada issues a demand draft on their agents in England, sending advice in due course. The purchaser forwards the draft to payee, but after doing so requests the bank to telegraph to the agents to stop payment of the draft. Would the agents be justified in refusing payment? If so, on what grounds?
(b) Can a bank under any circumstances stop payment of its own draft on its agents or another branch?
Answer.—Taking up the second enquiry first—a bank may stop payment of its own draft on its agents or another branch so long as the drawees have not come under acceptance or otherwise obliged themselves to pay the same. Before acceptance a drawee has no responsibilities whatever to the payee or subsequent holders, and would be bound to obey the instructions of the drawer if he had not already come under some obligation in the matter.
Question (a) is practically answered by the above, and the fact that the question refers to a demand draft on the bank makes the case all the clearer. Whether drawn on a bank in England or a hank in Canada, the provisions of the Bills of Exchange Act respecting countermand of payment would apply, see sec. 74 (a), (sub-sec. 1 of sec. 75 in the English Act). The agents would not only be justified in refusing payment on instructions, but if they disobeyed they would be unable to charge the draft to the drawer's account. In either case the holder could sue the bank as drawer, precisely as any party to any dishonoured bill might be sued.