This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 302.— (1) Bank A holds a cheque on Bank B payable to " The Bonshaw Creamery Co. (Buttermilk) or order." This company is non-existent and cheque is endorsed " The Bonshaw Creamery Co., being the Bonshaw Dairying Co., J. A. Robertson, Sec'y, John McManus, Treas.," and also by Bank A with their regular endorsing stamp. Bank B certifies the cheque but refuses to cash on the grounds
that endorsement is irregular and asks A to specially guarantee. A contends that the endorsement is regular and that B incurs no liability in cashing. Is A correct? (2) Supposing the officers endorsing were not duly authorized, would not B have recourse against A without a special guarantee? Answer.—We think that the endorsement mentioned is regular (see paragraph 2 of the Rules and Conventions respecting Endorsements), and that a guarantee would not give the paying bank any remedy against the presenting bank which it would not possess without a guarantee.