The original of any power of attorney should be permanently lodged with the bank, unless it has been filed in a city or county registry office, in which case a certified copy under the hand and official seal of the registrar may be accepted. A notarial copy of a power of attorney which remains in the hands of an attorney cannot be acted upon. As a rule, however, the powers of attorney are executed on forms provided by the bank (Figures 42 and 43). A power of attorney must not be witnessed by the party in whose favor it is drawn and, as a general rule, should be delivered to the bank by the grantor and not by the attorney.

Where an instrument is executed before a notary public in the province of Quebec and the original left on record in his office, a copy certified by the same notary may be accepted. A notary in the province of Quebec is a public officer and authorized to act as a depositary for such documents.

Bear in mind always that the authority conferred by a power of attorney is closely circumscribed to the acts which it specifies by the most strict reading. Unless specially authorized an attorney for a customer cannot hypothecate collateral to the bank.

An overdraft created by check signed by an attorney is not binding upon the principal unless the power of attorney granted by him expressly specifies that

Power Of Attorney. Limited Form. With Power To Overdraw

Know all Men by these Presents that of.................................................

has been made, constituted and appointed, and is by these presents made, constituted and appointed the true and lawful Attorney of the undersigned........

of.................................................

for and in the name of the undersigned to indorse all or any Bills of Exchange, Orders, Drafts and Checks for deposit with the............Bank, to draw and sign all Checks, Orders and Drafts for payment of money on the said Bank, and to overdraw the account of the undersigned with the same if he shall think fit; to arrange, settle and balance all books and accounts, and to sign the Bank's form of settlement of balances and release; and generally for and in the name of the undersigned, to transact with the said Bank any business that may be necessary in the premises; and all that the said Attorney shall do by virtue hereof is hereby ratified and confirmed. The said Bank may continue to deal with the said Attorney under this power until notice of the revocation hereof has been given in writing to the Manager or Acting Manager of the Branch of the said Bank at which the account of the undersigned is kept, and until such notice in writing has been given, the acts of the said Attorney hereunder with the said Bank shall be binding on the undersigned.

In witness whereof these presents have been executed by the undersigned at..........the..........

day of............One Thousand Nine Hundred and ..............................................

Witness

Fill in here the name, business and ad-dress of the Attorney.

Fill in here the name, business and ad-dress of the Customer.

The words in italics may be ruled out if the Attorney is not to have power to overdraw.

Figure 42 250

Power Of Attorney Full Form

Know All Men by these Presents that of'................................................

has been made, constituted and appointed, and is by these presents made, constituted and appointed the true and lawful Attorney of the undersigned of.................................................

for and in the name of the undersigned to draw, accept, sign, make, indorse, negotiate and dispose of all or any Bills of Exchange, Promissory Notes, Checks, and Orders for the payment of money; to pay and receive all moneys and to give acquittances for the same; to discount or deposit with or transfer to the.................Bank any negotiable paper,

Stocks, Bonds and other securities; to draw and sign all Checks, Orders and Drafts for payment of money on the said Bank, and to overdraw the account of the undersigned with the same if he shall think fit; to arrange, settle and balance all books and accounts, and to sign the Bank's form of settlement of balances and release; and generally for and in the name of the undersigned to transact with the said Bank any business he may think fit; and all that the said Attorney shall do by virtue hereof is hereby ratified and confirmed.

The said Bank may continue to deal with the said Attorney under this power until notice of the revocation hereof has been given in writing to the Manager or Acting Manager of the Branch of the said Bank at which the account of the undersigned is kept, and until such notice in writing has been given, the acts of the said Attorney hereunder with the said Bank shall be binding on the undersigned. In witness whereof these presents have been executed by the undersigned at .......................

.................the..............day of..........

One Thousand Nine Hundred and..............

Witness

Fill in here the name, business and ad-dress of the Attorney.

Fill in here the name, business and ad-dress of the Customer.

Figure 43 251 it confers power to overdraw, for which the principal undertakes to be responsible.

When a power of attorney is revoked the revocation may be acknowledged, but under no circumstances should a power of attorney once lodged with a bank be surrendered.

A power of attorney is terminable by the following causes:

(a) Revocation by the principal

(b) Renunciation by the attorney

(c) Dissolution of a partnership

(d) Loss of civil rights or civil capacity (as interdiction )

(e) Death of the principal

(f) Bankruptcy of the principal.

Care should be taken to procure properly certified copies of the by-laws or resolutions authorizing officials to sign for incorporated companies, municipalities and other similar bodies. These should be entered in the register in the same manner as the powers of attorney.

The properly authorized signing officers of a municipal corporation whose checks are a correct charge against a credit balance may not create a debt, which an overdraft would be, unless authorized by by-law to do so. However temporary an advance to a corporation may be, a by-law or resolution authorizing it must be passed and a certified copy of it should invariably be lodged with the bank. Such resolution should state the source from which payment is to be made, such as taxes, for example, and should also provide for renewals, if necessary.

Review

What should be the basis of credit extension by a bank?

Why is a statement of affairs of the borrowing concern necessary in extending credit?

What principles and rules should govern the credit man ?

What are quick assets? Fixed assets? Current liabilities? To what extent may current liabilities indicate a man's worth as a credit risk ?

What is the value of a guarantee bond?

Why should a bank retain the original of any power of attorney ?