This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 290.— Sub-section 3 of the amended section 24 of the Bills of Exchange Act says in effect that the drawer shall have no right of action against drawee for the recovery back of the amount so paid, or no defence to any claim made by the drawee for the amounts so paid, as the case may be, unless he gives notice in writing of such forgery to the drawee within one year after he has acquired notice of such forgery, etc.
(1) In the case of cheques on banks, who but the drawer himself is to give him notice of such forgery, or to determine the date on which he acquired such notice? Should not the fact of his signing to the bank a receipt of his cheques, and a statement that he finds his account correct to a certain date, oblige him to give notice within a year of that date to give him right of action against the bank to recover on a forged cheque paid before that date?
(2) If I send Robert Waugh a notice by registered letter that I hold his note, if the note is a forgery is he bound to notify me of this fact within a year from the date of my notice in order to escape liabilities on the note ? If the hill is drawn say at three months from date, it would be long overdue before he need repudiate it.
Answer.— (1) The notice of forged endorsements referred to in the proviso to sec. 24 of the Bills of Exchange Act is clearly the discovery by the drawer that it had been paid on a forged endorsement. As to when he acquires this knowledge is entirely a question of fact, which would have to be proved in the same way as any other question of fact, in the event of the bank on which he made the claim resisting the same on the ground that he had not given notice within the proper time.
(2) Section 24 does not apply to the case described, where a man receives notice that a note has been discounted bearing his name, which he knows to be a forgery.
We do not think it follows that the Act, in declaring that no claim shall exist after a year, is intended to give a party the right to sleep on that claim for a year, and thereby injure the bank's position, perhaps destroying its chance of getting back the money. All that the proviso means probably is that notice given a year after the discovery shall not avail. It leaves the question of whether the notice given within a year is good or not to be dealt with under the ordinary principles of law.