Issue Of Notes

The legislation which culminated in the Bank Charter Acts of 1844 and 1845 secured to the Bank of England the absolute monopoly of the note issue within the city of London and a 3-m. radius. Outside that radius, and within 65 m. of the city, there is a concurrent right in banks, consisting of six or less than six persons, established before 1844, and issuing notes at that date; beyond the 65-m. radius the privilege may be exercised by all banks established before 1844, and then issuing notes, who have not since lost their right to do so by bankruptcy, abandonment of business, or temporary suspension of issue. According to some authorities, the effect of 20 and 21 Vict. cap. 49, sec. 12 [re-enacted Companies Consolidation Act 1908, sec. 286 (d)] was to sanction the increase in the constitution of any bank issuing notes outside the 3-m. and within the 65-m. radius from six to ten persons without affecting the power to issue notes. The rule as formulated above is, however, that enunciated by Bowen J. in Capital and Counties Bank v.

Bank of England, 1889; 61 L.T. 516. The increase in the number of joint-stock banks and the gradual absorption of the smaller and older concerns have had the effect of minimizing the output of notes other than those issued by the Bank of England, and, as exemplified by the case of The Attorney-General v. Birkbeck, 12 Q.B.D. 57, it would seem impossible to devise any scheme by which the note-issuing power of an absorbed bank could be continued to the new or amalgamated body. But a bank having the right would not necessarily lose it by absorbing other banks (Capital and Counties Bank v. Bank of England). Foreign banks may establish branches in Great Britain on complying with the regulations imposed on them by the Companies Consolidation Act 1908, but cannot apparently issue notes, even though payable abroad.

Deposit Business

The term "bank of deposit" gives a mistaken Relation between banker and customer. idea of the real relation between banker and customer. So long ago as 1848 it was decided by the House of Lords in Foley v. Hill, 2 H. of L. 28, that the real relation between banker and customer was that of debtor and creditor, not in any sense that of trustee and cestui que trust, or depositee and depositor, as had been formerly supposed and contended. The ordinary process by which a man pays money in to his account at his banker's is in law simply lending the money to the banker; it fixes the banker with no fiduciary relation, and he is in no way responsible to the customer for the use he may make of the money so paid in. And as being a mere debt, a customer's right to recover money paid in is barred on the expiration of six years by the Statute of Limitations, if there has been no payment meantime on account of principal or interest, and no acknowledgment sufficient to bar the statute (Pott v. Clegg, 16 M. & W. 321). Such a state of affairs, however, is hardly likely to arise, inasmuch as, in the absence of specific appropriation, earlier drawings out are attributed to the earlier payments in, as in the ordinary case of current accounts, and so the items on the credit and debit side cancel each other.

An apparent exception to this system of appropriation exists in cases where a man wrongfully pays into his own account moneys held by him in a fiduciary capacity. In such circumstances he is presumed to have drawn out his own moneys rather than those affected by the trust, and so long as the account is in credit, any balance will be attributed to the trust money. As between contending claims to the money, based on different breaches of trust, the ordinary rule of appropriation will apply.

It has often been suggested that the only method of withdrawing Cheques. money from a banker is by cheque, that the presentation of a cheque is a condition precedent to the liability of the banker to repay. This is not so; such view being inconsistent with the cases establishing the effect of the Statute of Limitations on money left in a banker's hands, and with the numerous cases in which a balance at a bank has been attached as a simple and unconditional debt by a garnishee order, as, for instance, in Rogers v. Whiteley, 1892, A.C. 118. The banker's position with regard to cheques is that, superadded to the relation of debtor and creditor, there is an obligation to honour the customer's cheques provided the banker has a sufficient and available balance in his hands for the purpose (Foley v. Hill). If, having such funds in his hands, the banker dishonours a cheque, he is liable to the customer in substantial damages without proof of actual injury having accrued (Rolin v. Steward, 14 C.B. 595). Where several cheques are presented simultaneously and the available balance is insufficient to pay all, the banker should pay as many as the funds will cover, and is not bound to discriminate between particular cheques.

It would seem a legitimate condition that a cheque should be drawn in the ordinary recognized form, not in one raising any question or doubt as to its validity or effect. Cheques drawn to "wages or order," "petty cash or order," or the like, are common, and are sometimes regarded as payable to bearer. Such payees are not, however, "fictitious or non-existent persons," so as to render the cheques payable to the bearer under sec. 7, subs. 3 of the Bills of Exchange Act 1882, nor can such payees endorse. Some banks refuse to pay such cheques, and it is conceived they are justified in so doing. Money paid in so shortly before the presentation of the cheque that there would not have been time to pass it through the books of the bank would not be treated as available for drawing against. If a person have an account at one branch of a bank, he is not entitled to draw cheques on another branch where he has either no account or is overdrawn, but the bank has, as against the customer, the right to combine accounts at different branches and treat them as one account (Garnet v.