This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 337.— A, known to cashier, makes the acquaintance of B at an hotel, and introduces him (B) to the hank for the purpose of getting a cheque cashed on another town, but A does not endorse cheque. The cheque is returned protested for non-payment, and B turns out to be a sharper, and meantime has departed. Do you think the bank can recover the amount from A, although he has not endorsed the cheque ?
Answer.—So far as the question goes it indicates that what A told the bank was true, i.e., that B was really B. If this is all he is not liable.
If A made representations to the bank on the faith of which they cashed the cheque he might be liable, but even then fraud must be proved. We might again quote the following proposition bearing on the point, from the judgment of Lord Herschell in Derry v. Peck.
" First, in order to sustain an action in such a case ''there must be proof of fraud, and nothing short of that " will suffice. Second, fraud is proved when it is known that "a false representation has been made, (1) knowingly, or " (2) without belief in its truth, or (3) recklessly, careless " whether it be true or false."