Question 395. - Bank "A" deposits a cheque through the clearing house against Bank "B." The cheque bears several endorsements, one being by power of attorney. There are funds to meet the cheque. A month or so after the clearing Bank "B" finds ,(1) that the power of attorney is not legal, or (2) that one of the endorsements is a forgery. The cheque bore the endorsement of the clearing bank as follows: "The Bank of------, Montreal." Which bank loses?

Answer. - The point involved is simply this: "What is the position of a bank which, after the lapse of a month, discovers that one of the endorsements on a cheque, paid by it in ordinary course to another bank, is forged or unauthorized?

The answer to this is that, under section 50 of the Bills of Exchange Act, the bank which received the money under these circumstances is bound to repay it, providing notice is given in accordance with the terms of the Act.