This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 508.— Brown & Co., of Montreal, draw a draft on Jones, of Hamilton, through the "A" Bank. The latter send it to their agents, the " B " Bank in Hamilton, for collection, and it is accepted in the usual course. Through an oversight on the part of the " B " Bank the draft is not presented for payment until fifteen days after the due date. Five days after its maturity Jones absconds. The "A" Bank now apply to the " B " Bank for payment on behalf of their customers, Brown & Co. " B " Bank refuse, claiming that "A" Bank should have asked for the draft. Who is responsible ?
Answer.—We do not think there is the slightest doubt that the collecting bank must bear the loss. If the item had been marked " no protest," the position would be otherwise. In the instance which is now submitted apparently the duty of the collecting bank was to give notice of dishonour in case of non-payment. As they failed to do so, the drawers of the draft are discharged, and the bank in Montreal has a right to look to the collecting bank for protection.