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THE PENNSYLVANIA
STATE UNIVERSITY
LIBRARIES
STA
TE
E
TH
Nad
3

1866
 20-929

DICTIONARY OF
BANKING
A CONCISE ENCYCLOPAEDIA : OF BANKING
LAW AND PRACTICE

BY

WILLIAM THOMSON
BANK INSPECTOR

WITH A SECTION ON THE

IRISH LAND LAWS

IN THEIR RELATION TO BANKING
BY

LLOYD CHRISTIAN
SECRETARY TO THE INSTITUTE OF BANKERS IN IRELAND

FOURTH EDITION , REVISED AND ENLARGED

LONDON

SIR ISAAC PITMAN & SONS, LTD ., PARKER ST., KINGSWAY, W.C.2
BATH MELBOURNE TORONTO NEW YORK
1921
 FROM THE SAME PUBLISHERS
THE FUNCTIONS OF MONEY
By WILLIAM F. SPALDING ,
Certificated Associate of the Institute of Bankers.
The origin , and development of the many forms of credit instruments and
their special functions are clearly explainod, and the various functions and
services of money are fully dealt with in their practical, theoretical, and
' historical aspects. 7s. Bd. net.
: BANKERS ' CREDITS ,
AND ALL THAT APPERTAINS TO THEM IN THEIR PRACTICAL, LEGAL ,
AND EVERYDAY ASPECTS.
The Author'discusses the many and troublesome questions that frequently
Bankers
arise connection with those puzzling documents known as “ '
Credits, ” and deals concisely andsimply with the practical side of the ques .
tion. The various forms of bankers ' credits in existence are carefully
explained, and cases that have come before the Law Courts from time to
time considered . 10s. 6d . net.

BANKERS ' ADVANCES

By F. R. STEAD , Associate of the Institute of Bankers.
Edited by Sir JOAN Paget, K.C.
In this new book, Advances against Marketable Securities, Goods and Pro .
duce, Real Property, Ships, Debts, Debentures, etc., are explained in a com
prehensive manner ; and the considerations, necessary in Granting Advances
to Local Authorities, Building Societies, Partnerships, Joint Borrowers,
Trustees, Personal Representatives, etc., receive adequate treatment. 6s. net.

BANKERS' SECURITIES AGAINST ADVANCES

By LAWRENCE A. FOGG,
Certificated Associate of the Institute of Bankers.
This book, which explains the theory and practice relating to the various
classes of securities handled by bankers, will prove specially valuable to
Bank Managers and Chief Clerks, and it is also intended for the use of candi.
dates for the examinations of the Institute of Bankers, and other students
of banking theory. 6s. net.
THE BANKERS ' CLEARING HOUSE : WHAT IT IS
AND WHAT IT DOES
By P. W. MATTHEWS,
Formerly Chief Inspector, Bankers' Clearing House, London .
Edited by Sir John PageT, BART. , K.C. ;
With a Preface by RobT.HOLLANDMARTIN, C.B.,
Chairman and Hon . Sec ., Committee of London Clearing Bankers.
DESCRIBES fully the work of the Bankers' Clearing House in an interesting
manner . 7. Bd . net .

ENGLISH PUBLIC FINANCE

By HARVEY E. FISK .
PUBLISHED by arrangement with the Bankers' Trust Company of New York,
and written by a member of that staff, the book gives salient facts in regard
to the finances of the United Kingdom . Present-day financial methods are
traced back to the time of William the Conqueror. A special section has
been devoted to the history, functions, and operations of the Bank of Eng.
land, and the whole of the book makes most interesting reading. 7s.6d, net.
 PREFACE

THE Dictionary of Banking has been compiled in order to provide, in one volume,
the means of obtaining information , with the minimum of trouble, upon any
subject connected with the business of banking.
Hitherto it has been a matter of continual difficulty with many bank officials
to know exactly where to turn for information upon certain subjects ; but it is
hoped and believed that the present volume will meet this difficulty, and that
it will enable anyone to find in its pages a ready and reliable reference whenever
the occasion arises.
The following pages include, as far as possible, a reference to all the various
terms and matters which come within the scope of a banker's ordinary duties,
as well as to other matters which arise out of, or are associated with , the business
of banking, such as bankruptcy, company regulations, partnerships, stamp duties,
stock exchange, winding up, etc.
The book is furnished with many cross-references, and at the end of each
leading subject, e.g. ACCOUNTS, BANKRUPTCY, BILL OF EXCHANGE , CHEQUE,
COMPANIES, INSURANCE, MORTGAGE, STAMP DUTIES, STOCK EXCHANGE, TITLE
DEEDS, will be found a list of the principal articles connected with that subject,
which should facilitate the discovery of any particular point.
The whole of the Bills of Exchange Act, 1882, is given, the sections being
distributed under the appropriate headings. Under the title BILLS OF EXCHANGE
Act, 1882, references are supplied to the various articles in which the different
sections have been placed.
Many sections from other Acts, which are useful and interesting to bankers,
are also included under the proper headings. For example, if information is
required respecting the registration of a charge given by a company, the actual
words of the Companies (Consolidation) Act, 1908, on that subject are quoted
under REGISTRATION OF MORTGAGES AND CHARGES ; and respecting the registra
tion of a mortgage of a ship, the provisions of the Merchant Shipping Act, 1894,
are set forth under SHIP -MORTGAGE, etc. , and so in many other cases, an endeavour
having been made, wherever practicable and necessary, to quote the sections
St.

of the Acts relating to matters of importance.

6.3

There is probably no subject of greater interest to branch managers and

senior clerks than that of securities for advances, and consequently all matters
8380 6
 PREFACE

connected with the examination of title deeds and the investigation of titles
have been treated in the Dictionary in accordance with their importance.
In addition to the article on TITLE DEEDS, dealing with the matter in a
general way, there is an article on TITLE DEEDS - NOTES RE TITLE, wherein is
set out a number of the principal points which it is thought will prove useful
in indicating what a banker should attend to when examining a parcel of deeds
of freehold, leasehold, or copyhold property. If further information should
be required on any of the points raised, the subject can be referred to in its
alphabetical order in the book. A few questions relating to the value of a
property which is offered as security are added to that article, and additional hints
as to valuations, particularly for the benefit of younger managers, may be
found under ADVANCES, FARM STOCK, LICENSED PROPERTY, SHIP_VALUATION
OF, VALUATION .
With regard to securities other than title deeds, articles such as the following
may be referred to :-AMERICAN RAILROAD CERTIFICATES, BEARER BONDS,
BILL OF LADING, BILL OF SALE, BOND OF CREDIT, CERTIFICATE, DEBENTURE,
DEBTS-ASSIGNMENT OF, DOCK WARRANT, GUARANTEE, INSCRIBED STOCK ,
LIFE POLICY, NEGOTIABLE INSTRUMENTS, SHARES, etc.
A list of many of the abbreviations which are used in bank offices is supplied
under ABBREVIATIONS . The article BANKRUPT PERSON contains separate
headings relating to a bankrupt drawer, partner, payee, surety, etc. ; and under
STATUTE OF LIMITATIONS the various sub -headings show how the statute affects
the different matters with which a banker is concerned, such as a bank note ,
a bill of exchange, the drawer of a cheque, a guarantee, memorandum of deposit,
promissory note, etc. A series of articles is supplied dealing with the position
upon a death, e.g. DEATH OF ACCEPTOR, ADMINISTRATOR, DRAWER , GUARANTOR,
Joint CUSTOMER, PARTNER, SHAREHOLDER, TRUSTEE, etc.
Specimens of indorsements which are usually accepted, as well as examples
of those which are not, as a rule, passed by a banker, are given in tabular form
under INDORSEMENT.
The article dealing with FOREIGN MONEYS, has been prepared by Messrs.
Thomas Cook & Son, Bankers and Tourist Agents, to whom I desire to express my
warmest thanks for their courtesy and kindness in connection with this matter.
The results of law cases have been given , wherever necessary, and in many
instances the words of the judges are quoted. References are added to the
various cases, and the abbreviations in the quotation of reports are explained
on page vii.

iv
 PREFACE

To facilitate reference being made to law reports other than those that
are quoted in the text, the date of the decision has been given in every instance.
The following books amongst others have been consulted in the preparation
of the present volume :
GRANT'S LAW OF BANKING
CHALMERS' BILLS OF EXCHANGE ACT, 1882
THE LAW OF BANKING . . HEBER HART, LL.D. (LOND .)
THE LAW OF BANKING . SIR John R. PAGET, BART ., K.C.
THE PRACTICE OF BANKING (4 Vols.) . .
JOHN HUTCHISON
BANKING AND NEGOTIABLE INSTRUMENTS .
FRANK TILLYARD , M.A.
BILLS , CHEQUES, AND NOTES .
J. A. SLATER, B.A., LL.B. (LOND.)
ENGLISH PRACTICAL BANKING T. B. MOXON
THE COUNTRY BANKER GEORGE RAE
LOMBARD STREET . . WALTER BAGEHOT
BUSINESS MAN'S GUIDE J. A. SLATER, B.A., LL.B. (LOND .)
PRESENT -DAY BANKING F. E. STEELE
BANKING AND CURRENCY . ERNEST SYKES, B.A.
THE PRACTICE AND LAW OF BANKING H. P. SHELDON
BANKER'S ADVANCES FRANCIS R. STEAD
BANKERS' SECURITIES AGAINST ADVANCES LAWRENCE A. FOGG
BANKERS ' ADVANCES AGAINST PRODUCE ALFRED WILLIAMS
MY BANKER AND I J. G. KIDDY
THE COUNTRY BANKER'S HANDBOOK .

HISTORY, PRINCIPLES, AND PRACTICE OF BANKING J. W. GILBART

MONEY MARKET PRIMER . GEORGE CLARE
The ELEMENTS OF BANKING . H. D. MACLEOD, M.A.
HANDBOOK ON JOINT STOCK COMPANIES F. GORE - BROWNE , M.A. , K.C. ,
and W. JORDAN
BANKING LAW W. WALLACE, M.A. and A. McNeil
LAW OF STAMP DUTIES E. N. ALPE
QUESTIONS ON BANKING PRACTICE
JOURNAL OF THE INSTITUTE OF BANKERS
BANKERS' MAGAZINE
BANKING ALMANAC
LAW TIMES REPORTS
TIMES LAW REPORTS

I have to express my deep indebtedness to the many friends who have been
kind enough to supply most useful information and to read and correct the sheets
as they have passed through the press, and I desire especially to acknowledge
the valuable assistance which I received from Mr. J. A. Slater of the Middle
Temple, Barrister-at-Law , in checking the points referring to banking law.
W. THOMSON .
NEWCASTLE -ON - TYNE ,
March , 1921 .
 ABBREVIATIONS USED IN THIS BOOK WHEN
REFERRING TO LAW CASES

A.C. J. & H., Johnson & Hemming.

ΟΙ Appeal Cases, Law Reports.
App. Cas. App K.B., King's Bench , Law Reports.
L.J., C.P., Law Journal, Common Pleas.
A. & E., Adolphus & Ellis .
B. & Ad . , Barnewall & Adolphus. L.J , Chi, Chancery.
B. & C., Barnewall & Cresswell.
L.J., Q.B., Queen's Bench .
Burr ., Burrows.
L.R., Ex., Law Reports, Exchequer.
Be ., Beavan . L.R., Ch ., Chancery .
L.R., Q.B., Queen's Bench .
Bing ., Bingham .
L.T., Law Times Reports.
C.B. , Common Bench .
New Series.
M. & S., Maule & Selwyn .
C.B.N.S. ,
M. & W., Meeson & Welsby.
C.P.D., Common Pleas Division , Law
Reports. Macq . H.L.R., Macqueen's Appeal Cases
Ch ., Chancery , Law Reports.
7
(Scotch ).
.

Mer ., Merivale .
Ch.D., Chancery Division , Law Reports.
ci. & Fin ., Clark & Finelly . Q.B., Queen's Bench Cases.
Cox C.C., Cox's Criminal Cases. Q.B.D., Division .
S.C. , Sessions Cases, Scotland .
E. & B. , Ellis & Blackburne ,
E. & I. A., English and Irish Appeals, Sc . R., Scottish Law Reporter.
Law Reports. S.L.T. , Scots Law Times.
Eq., Equity Cases, Law Reports . Sol.J., Solicitors' Journal.
H.L.C., Clark's House of Lords' Reports. T.L.R., Times Law Reports.
I.C.L.R : T.R., Terms Reports.
II.R.C.L.} Irish Common Law Reports:
W.N. , Weekly Notes.
I.R. , Irish Reports. W.R., Weekly Reporter.

vii
 Dictionary of Banking
ABBREVIATIONS]
[ABBREVIATIONS
@, At. C. of B., Confirmation of Balance.
A / c ., Account. C.O.D., Cash on Delivery .
A / C ., Account Current. C.P. , Charter Party.
A / D ., After Date . Cf. ( Lat., Confer ), Compare.
A / 0 ., Account of. Chq., Cheque.
A/S., After Sight. Ck ., Cheque.
Acce ., Acceptance . Cp., Compare.
Ad . Val., Ad valorem . Com ., Commission .
Agt., Agreement. Agent. Contra , Against.
Assigt., Assignment. Cr., Creditor, Credit .
B.B. , Branch Bill. Cum D., With Dividend .
B / C ., Bills for Collection , Cur., Curt ., Current.
B.D., Bill Discounted . D., a penny. D is the first letter in Denarius
B/E., Bill of Exchange . (Latin ).
B.L., Bill Lodged . D. , Deeds.
B / L ., Bill of Lading. D.A., Deposit Account.
Bs / L ., Bills of Lading. D / A ., Days after Acceptance.
B.N. , Bank Note. D /A ., Documents on Acceptance.
B.O., Branch Office . D /B ., Day Book.
B /P ., Bills Payable. D/D., Days after Date .
B.P.B., Bank Post Bill.
B / R ., Bills Receivable . D/D., Demand Draft.
D/O., Delivery Order.
B /S ., Balance Sheet. D/P. , Documents on Payment.
B /S ., Bill of Sale . D.P.B., Deposit Pass Book.
C., Chapter D / R ., Deposit Receipt.
C. , Copper . Deb ., Debenture.
C., Country . Dft ., Draft.
C / -, Coupon. Dis ., Disct., Discount.
C.A. , Chartered Accountant. Div. , Dividend .
C.A., Credit Account. Dols ., Dollars.
C%. C/A., Current Account. Dr., Debtor.
C.B., Country Bill. D/S., Days after Sight.
C / B ., Cash Book .
C.C., Cash Credit . E.E. , Errors Excepted .
C.C., Country Cheque. e.g. (Lat., exempli gratia ), For example.
C.C., Country Clearing. E / I., Endorsement Irregular.
E. & O.E., Errors and Omissions Excepted .
C.C.O., Country Clearing Office. et seq . (Lat., et sequentia ), And the following.
C.D., Cum Dividend .
C.F.I., Cost, Freight, Insurance. Ex ., Excluding
C.H., Clearing House . Ex Cp. or x /cp ., Ex Coupon .
C.I.F. , Cost, Insurance, Freight. Ex D. or x / d ., Ex Dividend .
ExchInt.,
C.I.F. and C., Cost, Insurance, Freight and Ex Ex Interest.
., Exchange
.
.
Commission .
Exct ., .,Exec
C.I.F. and E. , Cost, Insurance, Freight and Execx ., Execut
Executrix . or.
Exchange.
Exor ., Executor.
C.N., Country Note.
C /N ., Contract Note. F., Franc .
C.O., Cash Order . F.A.S., Free Alongside Ship .
1
1- 1535)
ABB ) DICTIONARY OF BANKING (ABB

F.O.B., Free on Board . N / N ., Not to be Noted .

.

F.O.R. , Free on Rails. N / 0 ,, No Orders.

F/P., Fire Policy. No., Number.
F.P.A. , Free from Particular Average. N.P.,Notary Public.
F.p., Fully Paid . N.P.F., Not Provided For.
Fi. Fa ., Fieri Facias ( q.v.). N.S. , New Style.
Fo ., Fol., Folio . N/S., Not Sufficient.
G. , Gold . N.S.F. , Not Sufficient Funds.
G. , Guarantee . Degree.
G/A. , General Average. O.A., Old Account.
O/A., On Account.
H.M.C. , His Majesty's Customs.
H.M.S., His Majesty's Service . O/D., On Demand .
H.O., Head Office, O/D. , Overdraft.
O.K. , All correct.
Ib., Ibid . ( Lat., ibidem ), In the same place. O.N. , Own Notes.
Id. (Lat., idem ), The same. % (Lat., Per centum ), By the Hundred .
i.e. (Latin, id est) , That is . 0.0 ., Own Occupation .
I / I., Indorsement Irregular. 0/00 (Lat., Per mille ), By the Thousand .
Ins. , Insurance . O.R., Official Receiver.
Inst., Instant, Of the Present Month . O.R. , Owner's Risk .
)

Int. , Interest . O.S., Old Style.

Inv., Invoice. 0/s., 0 / sg ., Outstanding.
I.O.U. , I Owe You .
Irr ., Irredeemable. P / A ., P /Av., Particular Average.
.

P/A., Power of Attorney .

J / A ., Joint Account. P.A. ( Lat., Per annum ), Yearly.
Jour., Journal. P.B., Pass Book .
Jr., Junr., Junior. P/C. , Price Current.
L/A., Letter of Authority . P.C. (Lat ., Per centum ), By the Hundred .
L.C. , Legal Charge. Pd ., Paid .
L.C., London Cheque. P. & L. , Profit and Loss.
L / C ., Letter of Credit. P / N ., Pro. Note, Promissory Note.
.

£ E ., Pounds, Egyptian . P.O. , Postal Order.

L.O. , London Office. P.O.O. , Post Office Order.
L/P. , Life Policy . P.P. , Per Procuration .
L.S. (Lat ., Locus sigilli), Place of the Seal. P.S. (Lat., Post scriptum ), Postscript.
L.s.d. (Lat., Librae, solidi, denarii), Pounds, Payt., Payment.
Shillings, Pence. Per an. (Lat., Per annum) , Yearly .
£ T ., Pounds, Turkish . Per con . (Latin , Per contra ), On the other
Led ., Ledger. side.
Ltd., Limited . Per ct. (Lat., Per centum ), By the Hundred.
M. (Lat., Mille ), Thousand. Per pro. (Lat ., Per procurationem ), By
M., Metropolitan. procuration .
Pm ., Premium .
M / C ., Marginal Credit. Pro , For.
M/D., Months after Date,
M/D., Memorandum of Deposit. Pro tem. (Lat ., Pro tempore), For the time
M.O., Money Order. being.
M/P., Memorandum of Partnership . Prox. (Lat., Proximo), Next. Next month ,
MS. , Manuscript. Qr., Quarter.
M/S., Months after Sight. Q.v. (Lat., Quod vide), Which see .
MSS ., Manuscripts. Qy. , Query.
N.A. , New Account. R., Rupee.
N/A., No Advice, No Account. R / A ., Refer to Acceptor.
N/ A., Non -acceptance. R.A.P., Rupees, Annas, Pies.
N.B. (Lat., Nota bene), Take notice. R /C ., Re- credited.
N / E ., No Effects. R / D ., Refer to Drawer .
.

N / F ., No Funds. R / E ., Repayable to either,

 DICTIONARY OF BANKING [ ABS
ABO )

Recpt., Receipt. coin tendered which is below the least

Reg., Regd ., Registered. current weight may, by law , cut or deface
Rev. a / c ., Revenue Account. it. (See COINAGE, LIGHT GOLD .)
Rs., Rupees. ABSCONDING DEBTOR . (See ActS OF
Rx , Ten Rupees. BANKRUPTCY .)
ABSOLUTE TITLE . Land may be regis
S. , Silver, Shilling ( Lat., Solidus). tered under the Land Transfer Acts with
$, Dollars.
Absolute Title ; that is, the Registry ex
S.B. , Special Bargain .
S.B., Sub Branch . amines the proprietor's title and confers on
him an absolute right to the property,
S.B., Short Bill.
S.C. , Safe Custody.
guaranteed by the Government against all
the world . (See LAND REGISTRY .)
S.O., Sub Office .
ABSTRACT. An abridgement or epitome
S.P.A., Sundry Persons' Account. of a book or document.
S.P., Suprà Protest. ABSTRACT OF TITLE . The Abstract of
S.S., Special Settlement.
Title is not a part of the title, but is a
S.S., Steamship. document prepared by the vendor's solicitor
S / V ., Surrender Value.
St. , Stet ( Lat., Stet), Let it stand. to enable the purchaser of land to see how
his title is derived . The purchaser has the .
Ster., Stg ., Sterling. right to require an abstract tracing the title
Stk ., Stock .
Sy. Crs ., Sundry Creditors. for the last forty years, or longer if neces
Sy. Drs ., Sundry Debtors. sary, to obtain a satisfactory commencement.
(Vendor and Purchaser Act, 1874. ) The
T., Town . commencing deed is called the root of
T / 0 ., Turnover. title ” (q.v.). It may, however, be agreed
T.Q., Tel Quel ( q.v.). between the vendor and the purchaser to
T.T., Telegraphic Transfer. accept a shorter title than forty years, and
Tfr ., Transfer. twenty years are often taken as sufficient.
U.V., Uncollected Vouchers . Commencing with the root, " the
Ult. (Lat., Ultimo), Of the Last Month . abstract should give in strict order of
date a brief summary of the material
V. ( Lat., Versus), Against. parts of all deeds and documents which are
V / A ., Voucher Attached . necessary to show how the purchaser's title
Via, By the way of. is obtained . It should show by whom the
Viz. ( Lat., Videlicet), Namely. deeds are signed and witnessed, the amounts
W.W. , Warehouse Warrant. for which they are stamped, particulars of
Wt., Warrant. registration (if the property is situated in
X.C., Ex Coupon.
Yorkshire or Middlesex) , and information
X.D., Ex Dividend . regarding the probates of wills, etc.
X.In. , Ex Interest. An abstract of title usually accompanies
most parcels of deeds. When a banker
ABOVE PAR . ( Par, Latin , equal.) receives a bundle of deeds for security , he
When the market price of bonds, stocks, or can look at the abstract, when there is a
shares is above the nominal or face value, recent one, and see at once the various
they are said to be above par. links in the chain of title . The deeds
Equivalent phrases to " above par " which are noted in the abstract may all be
and " below par are respectively at held by the banker, but very often the
a premium and at a discount. ” (See abstract will be found to give particulars
PAR .) of many deeds and documents which are not
ABRASION OF COINS . The loss of in the banker's hands. In fact, the banker
weight which occurs in coins which are in may, perhaps, hold only one deed, say the
circulation through their constant use . After conveyance
a certain time many coins become so much from John toJones.
his customer, John Brown,
In that case there
worn as to be below the minimum weight should be an acknowledgment of the right
allowed by law ; but so long as the impres- to the production of the deeds necessary to
sions are discernible upon coins, the general show the title of John Jones.
public do not concern themselves very much If the property is leasehold, the abstract
with their weight. Anyone who has a gold should commence with the lease OS

3
ACC) DICTIONARY OF BANKING (ACC

under-lease , even if more than forty years it, the holder, in the absence of
old . (See LEASEHOLD .) any different agreement, is entitled
In the case of copyhold land which has to have the bill accepted as of the
been converted into freehold by enfranchise date of first presentment to the
ment, a purchaser “ shall not have the right drawee for acceptance."
to call for the title to make the enfranchise- There are two kinds of acceptances :
ment ” (Conveyancing Act, 1881, Section 3, ( 1 ) General acceptance. ( See ACCEPT
s.s. 2) , unless a contrary intention is ex ANCE, GENERAL.)
pressed in the contract of sale. But though, (2) Qualified acceptance. (See ACCEPT
in an open contract, the lord's title cannot be ANCE, QUALIFIED.)
inquired into the purchaser should still ' A general acceptance assents without
require the forty years' copyhold title . (See qualification to the order of the drawer. A
OPEN CONTRACT, TITLE Deeds .) qualified acceptance in express terms varies
1)
ACCEPTANCE . This word is commonly the effect of the bill as drawn . " (Section 19,
used as meaning a bill of exchange, that is, s.s. 2.)
the actual bill itself ; but an acceptance is An acceptance is usually upon the face of
really the writing across the face of a bill by the bill, but the drawee's signature placed
which the drawee agrees to the order of the upon the back of it is regarded as sufficient.
drawer. The drawee is the person to whom In such a case it is usual to make a reference
a bill is addressed by the drawer, and who on the front of the bill to the fact that the
is required to pay on demand, or at a fixed acceptance is on the back . A drawee may
or determinable future time, a sum certain accept a bill by merely writing his name
in money to or to the order of a specified across it, without any further words, but it
person, or to bearer. If the drawee agrees is customary for theword “ accepted " to be
to the drawer's order he signifies his assent used . When the bill is domiciled, the name
by accepting the bill. When the drawee has of the bank where it is payable follows the
3)
accepted a bill he is called the acceptor. word “ accepted ," and then the acceptor
An acceptance is defined by Section 17 of signs his name. The commonest form
the Bills of ExchangeAct, 1882, as follows :- of acceptance (a general acceptance) is :
“ ( 1) The acceptance of a bill is the signi- “ Accepted, payable at the X & Y Bank
fication by the drawee of his assent ing Coy., Ltd., London, John Brown .”
60
to the order of the drawer. If the bill is payable at so many days after
(2) An acceptance is invalid unless it sight, the draweemust add the date of sight
complies with the following con- ing to his acceptance . (See SIGHTING A BILL.)
ditions, namely : If there are several drawees named on a
“ (a) Itmust be written on the bill bill, each one of them must sign the accept
and be signed by the drawee. ance; but an order addressed to two drawees
The mere signature of the in the alternative, or to two or more drawees
drawee without additional in succession , is not a bill of exchange. (See
words is sufficient. DRAWEE .)
“ (6) It must not express that the Section 17 states that the acceptance must
drawee will perform his be signed by the drawee, but anyone who
promise by any other means holds a proper authority from the drawee
than the payment of money. to accept bills may accept on his behalf .
As a rule a drawee accepts a bill after it Where the drawee is a firm , the partner
has been fully completed and signed by the who accepts must do so in the name of the
drawer ; but by Section 18, “ A bill may firm . If the drawee is Mrs. John Brown,
be accepted : she should accept as Mary Brown , wife
“ ( 1 ) Before it has been signed by the (or widow) of John Brown." Where the
drawer, or while otherwise incom - drawee is aa limited company, the acceptance
plete : should contain the name of the company as
“ (2) When it is overdue, or after it has well as the signatures of the authorised
been dishonoured by a previous officials. If officials in signing do not show
refusal to accept, or by non- that they sign for and on behalf of the
payment : company they may render themselves
' (3) When a bill payable after sight is personally liable. (See AGENT, PER PRO
dishonoured by non -acceptance,and CURATION.)
the drawee subsequently accepts With regard to the rules as to presentment
ACC ) DICTIONARY OF BANKING ( ACC

of a bill for acceptance, see PRESENTMENT who has not signed it as such : Provided
FOR ACCEPTANCE . that ( 1 ) where a person signs a bill in aa trade
When a bill is duly presented for accept- or assumed name, he is liable thereon as if
ance and is not accepted within the cus- he had signed it in his own name ; (2) the
tomary time (that is by the close of business signature of the name of a firm is equivalent
on the day following presentation for to the signature by the person so signing of
acceptance), the person presenting it must the names of all persons liable as partners
treat it as dishonoured by non -acceptance. in that firm (Section 23). In the case of a
( See DISHONOUR OF BILL OF EXCHANGE.) non -trading partnership, an acceptance by
Until a drawee has accepted the bill he is a partner binds himself alone and not the
not liable thereon; but in Scotland where the firm .
drawee has funds available for its payment, If there are several acceptors on a bill they
the bill operates as an assignment of the are jointly liable, not jointly and severally .
amount of the bill in favour of the holder Where a bill is accepted payable at the
from the time when the bill is presented to acceptor's bankers, that is a sufficient
the drawee. (Section 53.) authority for the banker to debit it to his
An acceptor is at liberty to cancel his customer's account; but, in practice ,country
acceptance provided that the bill is still in bankers often require particulars of accept
his own hands, and that he has not led any ances falling due to be given , and a written
one to believe that he would accept it. order from the customer to pay them ,
The liability of an acceptor is defined by though London bankers pay without any
Section 54 : advice. Such an order does not require to
“ The acceptor of a bill,by accepting it , be stamped .
“ (1) Engages that he will pay it according The death or bankruptcy of an acceptor
to the tenor of his acceptance : revokes a banker's authority to pay an
“ (2) Is precluded from denying to a holder acceptance.
in due course : Ifa banker is a holder for value, he may
“ (a) The existence of the drawer, debit an acceptance to the acceptor's
the genuineness of his signa- account, even if the acceptor has sent in
ture, and his capacity and structions not to pay the bill.
c
authority to draw the bill ; Where a bill is accepted, say , by John
“ (6) In the case of a bill payable Brown payable at the British Bank , Leeds,
to drawer's order, the then although no drawee's name is mentioned in
capacity of the drawer to the bill, it may be debited to his account.
indorse, but not the genuine- A bill may also be charged to the acceptor's
ness or validity of his in- | account which is accepted simply John
60
dorsement ; Brown, if there is an indication elsewhere on
(c) In the case of a bill payable the bill that it is payable at the British
to the order of a third person , Bank, Leeds.
the existence of the payee Many country customers accept their bills
and his then capacity to payable either at the London office of their
indorse, but not the genuine- banker or at their banker's London agents.
ness or validity of his indorse- (See RETIRING A BILL .) Two or threedays
ment." before a bill falls due, the acceptor requests
As an acceptor is responsible for the his banker in writing (by filling up the
genuineness of the drawer's signature, a banker's printed form , and giving particulars
drawee consequently incurs an unnecessary of the bill and any documents that are
liability if he accepts a bill before ithas been attached) to instruct the London office to
signed by the drawer. If a bill is drawn pay his acceptance. The order should be
per procuration or on behalf of the drawer, signed in the same way as cheques are
the drawee ought to satisfy himself before drawn, or as may be arranged. A banker is
accepting the bill, that the drawer has not obliged to pay a bill accepted payable
authorised the bill to be drawn in that way. with him or to retire an acceptance payable
He is not liable for signatures, such as the in London, except by instructions or by
payee's or an indorser's, which do not, in the custom. In Bank of England v. Vagliano
ordinary course of things, appear upon a bill Brothers (1891, A.C. 107 ), it was held that
until after it has been accepted . “ if a banker undertakes the duty of paying
No person is liable as acceptor of a bill | his customer's acceptances, the arrangement
5
ACC] DICTIONARY OF BANKING (ACC

is the result of some special agreement, | it to the drawer, and forward the docu
expressed or implied . ” When a banker ments relating to it to the foreign city.”
receives an order to retire a bill, he has to The trader pledges his goods with the
consider whether or not the account of his banker , and undertakes to remit the pro
customer will admit of the payment of the ceeds of the consignment to London through
bill. If unable to accede to his customer's the foreign branch bank at or before the
request heinforms his customer accordingly, maturity of thebill.
but if all is well he charges the amount of ACCEPTANCE FOR HONOUR . The
the bill to his customer's account and credits drawer of a bill and any indorser may insert
it to his London agents ( or London office ), in the bill the name of a person to whom a
requesting them to pay the bill when pre- holdermay resort in case of need, that is in
sented . case the bill is dishonoured by non-accept
Where instructions are received to cancel ance or non -payment. Such a person is called
an order which has been given to retire an the referee in case of need . If the drawee
acceptance in London, it is necessary to refuses to accept the bill, the holder may,
make quite certain that the advice has not after the bill is protested for non -acceptance,
already been acted upon by the London present it to the referee in case of need.
agents and that they have cancelled the When the referee accepts it, he becomes an
advice, before re-crediting the amount to the acceptor for honour.
customer's account. After protest for non -acceptance, any
An order signed by a customer to retire person may, with the consent of the holder,
an acceptance(whether his own or another accept a bill suprà protest for thehonour of
person's) does not require a stamp to be any party thereon. Section 65 of the
affixed . Bills of Exchange Act, 1882, provides as
A drawer often indicates in the body of follows :
the bill, or below the drawee's name, “ ( 1 ) Where a bill of exchange has been
where it shall be payable, e.g. " payable in protested for dishonour by non
London ,” but if there is no such indication, acceptance, or protested for better
the drawee accepts it payable in the place security, and is not overdue, any
where he lives, unless he follows the recog person , not being a party already
nised custom and makes it payable in liable thereon , may, with the
London . consent of the holder, intervene
If a bill is accepted payable at, say, the and accept the bill suprà protest,
British Bank , Ltd. , and no town is men for the honour of any party liable
tioned , it should be presented at the British thereon, or for the honour of the
Bank in the town where the drawee is person for whose account the bill is
described as ving. drawn .
As to the practice of banks accepting " (2) A bill may be accepted for honour
bills on behalf of customers see CONFIRMED for part only of the sum for which
LETTER OF CREDIT, DOCUMENTARY BILL. it is drawn .
In Scotland, acceptors usually sign their “ (3) An acceptance for honour suprà
names under the drawer's signature, but protest in order to be valid must
when they accept the bill payable at their “ (a) be written on the bill, and
bankers, the acceptance is generally across indicate that it is an accept
the bill. (See BILL OF EXCHANGE .) ance for honour :
ACCEPTANCE CREDIT. This form of " ( 6) be signed by the acceptor for
credit is described in the Journal of the honour.
Institute of Bankers, Vol. 35, p. 131 , as “ ( 4) Where an acceptance for honour
follows : “ Where a British exporter is does not expressly state for whose
held in high esteem , the foreign branch honour it is made, it is deemed to
bank may open what is called an ' Accept be an acceptance for the honour of
ance Credit , which enables him to draw 40
the drawer.
bills on the London branch of the bank (5) Where a bill payable after sight is
up to a certain limit. When such a credit accepted for honour, its maturity
is opened , the shipper prepares his bill of is calculated from the date of the
exchange, attaches the requisite shipping noting for non -acceptance, and
documents, and presents the complete set not from the date of the acceptance
•
to the banker, who accepts the bill, returns for honour."
6
ACC ) DICTIONARY OF BANKING (ACC

An acceptance for honour is written across A holder of a general acceptance may pre
the bill as, “ Accepted for the honour of sent it to the acceptor himself, but, if there is
John Brown, Thomas Jones ,” or, “ Accepted a place of payment mentioned on the bill,
suprà protest, Thomas Jones," or " Accepted unless it is presented at that place, he will lose
for the honour of John Brown with £ for his recourse against all the other parties to the
notarial charges, Thomas Jones," or, Ac- bill. (See ACCEPTANCE, BILL OF EXCHANGE.)
cepted S.P. (i.e. suprà protest), Thomas ACCEPTANCE LEDGER . The ledger in
Jones .” which are entered , under the customer's
The liability of an acceptor for honour is name, particulars of bills accepted by the
dealt with in Section 66 as follows : bank on his behalf .
“ ( 1) The acceptor for honour of a bill by ACCEPTANCE OF CHEQUES. ( See
accepting it engages that he will, CERTIFICATION OF CHEQUES.)
on due presentment, pay the bill ACCEPTANCE, QUALIFIED. An accept
according to the tenor of his accept- ance is either general (see ACCEPTANCE,
ance, if itis not paid by the drawee, GENERAL) or qualified . Section 19 of the
provided it has been duly presented Bills of Exchange Act, 1882, defines a
for payment, and protested for qualified acceptance as follows :
non -payment, and that he receives “ (2) .... qualified acceptance in ex
notice of these facts . press terms varies the effect of the
" (2) The acceptor for honour is liable to bill as drawn .
the holder and to all parties to the “ In particular an acceptance
bill subsequent to the party for )
qualified which is
whose honour he has accepted .” " (a) conditional, that is to say.
As to presentment for payment to which makes payment by
an acceptor for honour see Section the acceptor dependent on
67 under PRESENTMENT FOR PAY the fulfilment of a condition
MENT. (See ACCEPTANCE, BILL OF therein stated :
EXCHANGE . ) “ (6) partial, that is to say, an
ACCEPTANCE, GENERAL. When a acceptance to pay part only
drawee writes his name across a bill agreeing of the amount for which the
to the order of the drawer, it is called an bill is drawn :
acceptance of the bill. The Bills of Ex " ( c) local, that is to say, an
change Act, 1882, Section 19, defines two acceptance to pay only at a
kinds of acceptances : particular specified place :
“ (1 ) An acceptance is either (a) general “ An acceptance to pay at a
or (b) qualified. (See ACCEPTANCE, particular place is a general accept
QUALIFIED .) ance, unless it expressly states that
" (2) A general acceptance assents with the bill is to be paid there only and
out qualification to the order of the not elsewhere :
drawer . " ( d) Qualified as to time :
"( c) ... An acceptance to pay
at a particular place is a or more of the drawees, but
one
general acceptance, unless it not of all. "
expressly states that the bill The following are specimens of qualified
is to be paid there only and acceptances :
not elsewhere." Conditional. " Accepted, payable on de
The following are specimens of general livery of bills of lading. J. Brown."
acceptances : Partial. Bill drawn for 100.
£ “ Accepted
))
John Brown . for £ 50 only . J. Brown ."
Accepted , John Brown. Local. " Accepted, payable at the X &
Accepted , John Brown, 2, King Street, Y Bank, Ltd., Leeds, and there only.
Leeds. J. Brown.” In order to charge the
Accepted , payable at X & Y Bank , acceptor and other parties, the bill
Ltd., Leeds, John Brown. ' must be presented for payment at the
Sighted , June 16, John Brown , Leeds. place named .
Accepted , payable at A & B Bank, As to time. Bill drawn at three months'
Ltd., London , per pro. John date . Accepted, payable at six
Brown, W. Robinson . months' date. J. Brown."
7
ACC ) DICTIONARY OF BANKING ( ACC

Not accepted by all the drawees. Bill | Promissory Notes, the maker of a note is to
drawn on W. Brown, J. Jones, and W. be deemed to correspond with the acceptor
Robinson . Accepted , payable at X of a bill. If there are several acceptors of a
& Y Bank , Ltd. W. Robinson ." In bill they can only be liable jointly, but in the
this case W. Robinson is liable to pay case of a promissory note the makers may
the bill. be liable jointly, or jointly and severally,
The duties of the holder, the drawer, or according to the wording of the note.
the indorser of a qualified acceptance are An acceptor is not discharged through any
set forth in Section 44 as follows : failure of a holder to present the bill to him
“ (1) The holder of a bill may refuse to at maturity for payment. He is liable there
take a qualified acceptance, and if on for six years. If an acceptor becomes
he does not obtain an unqualified bankrupt, his acceptances should be with
acceptance may treat the bill as drawn by any customer for whom they have
dishonoured by non -acceptance been discounted, though legally the with
“ (2) Where a qualified acceptance is drawal cannot be enforced before the bills
taken , and the drawer or an indorser mature. (See ACCEPTANCE, BILL OF Ex
has not expressly or impliedly CHANGE .)
authorised the holder to take a “ The position of the acceptor of a bill
qualified acceptance, or does not of exchange with reference to subsequent
subsequently assent thereto, such holders is very different from that of a
drawer or indorser is discharged customer with reference to his banker in
from his liability on the bill. the case of a cheque. In the latter case,
“ The provisions of this sub- there is a definite contractual relation
section do not apply to a partial involving the obligation to take reasonable
acceptance, whereof due notice has precautions.” “ There is no such connec
been given . Where a foreign bill tion between the drawer or acceptor and
has been accepted as to part, it possible future indorsees of a bill of ex
must be protested as to the change." ( London Joint Stock Bank, Ltd.
balance . v. Macmillan and Arthur, 1918, A.C. 777.
“( 3) When the drawer or indorser of a See under ALTERATIONS.)
bill receives notice of a qualified ACCEPTORS' LEDGER . A separate ac
acceptance, and does not within a count is opened in this ledger for each
reasonable time express his dissent acceptor of bills discounted by the bank, so
to the holder he shall be deemed
.
that the banker may see at a glance to what
to have assented thereto." extent the acceptances of anyperson or firm
A qualification of an acceptance must be have been discounted. In considering
in clear and unequivocal terms, so that any whether a bill should be discounted it is, of
person taking the bill could not, if he acted course, very important to know the amount
reasonably , fail to understand that it was for which the acceptor is already liable.
accepted subject to an express qualification . ACCOMMODATION BILL. A bill to
( Decroix v. Meyer, 1890, 25 Q.B.D. 343.) which a person , called an accommodation
ACCEPTANCE REGISTER . The book in party, puts his name to oblige or accommo
which are kept full particulars of all bills date another person without receiving any
accepted by the bank for customers. consideration for so doing. The position of
ACCEPTİLATION. A formal discharge or such a party is, in fact, that of a surety or
release from a debt, the discharge being guarantor. Bills of this type are commonly
granted gratuitously or for a trifling pay- called " kites, " or " windmills," or " wind
)
ment . bills.” A may accept a bill for the accom .
ACCEPTOR . When the drawee of a bill modation of B the drawer , who is in need
( that is, the person to whom the bill is ad- of money . A receives no consideration
dressed ) agrees to the order of the drawer, and does not expect tobe called upon to
he shows his assent by signing his name pay the bill when due. B raises the neces
across the bill, that is, he accepts it, and when sary funds by discounting the bill, expect
that is done he is called the acceptor. The ing that, at maturity , he will be in a posi
acceptor is the person who is expected to tion to meet the bill himself. If, how
payInthe bill at maturity: ever, he fails to do so, a holder for value,
applying the provisions of Part IV of even though he knew it was an accommoda
the Bills ofExchange Act, 1882, dealing with tion bill when he took it, can sue the acceptor
8
ACC ) DICTIONARY OF BANKING [ ACC

and prior indorsers. But until value has been an unreported case tried in 1818, and cited
given, no one is liable on such a bill. When in Chitty. “ Bills of Exchange, " 11th ed .,
a banker discounts an accommodation bill p. 290 ), that the banker was bound to have
he becomes a holder for value . applied the balance in payment of the bill
The Bills of Exchange Act, 1882, Section and that the acceptor was discharged . In
28, defines an accommodation bill and the his judgment, Mr. Justice Abbott said : “ The
liability
follows :
of an accommodation party as banking account of the drawer with the
plaintiffs having at one time, after the bill
“ (1) An accommodation party to a bill was due, been in his favour to a larger
is a person who has signed a bill amount than the bill, the plaintiffs (the
as drawer, acceptor, or indorser, bankers) were bound to apply the balance
without receiving value therefor, in discharge of that bill, and could not keep
and for the purpose of lending his it as a security for a fluctuating balance 1
name to some other person. which might ultimately become due tothem ."
“( 2) An accommodation party is liable (See BILL OF EXCHANGE .)
on the bill to a holder for value ; ACCOMMODATION PARTY. The person
and it is immaterial whether, when who sigas a bill as drawer, acceptor, or in
such holder took the bill, he knew dorser, without receiving any value therefor,
such party to be an accommodation
1
for the purpose of accommodating some
party or not." other person . An accommodation party is
By Section46, s.s. 2 , presentment for pay- liable toa holder for value. (See Accommo
ment is dispensed with : DATION BILL.)
“( ) As regards the drawer, where the ACCORD AND SATISFACTION . Whero
drawee or acceptor is not bound , a cheque for a certain amount is sent in
as between himself and the drawer, payment of a debt greater than that sum ,
to accept or pay the bill, and the and the recipient of the cheque agrees to
drawer has no reason to believe retain it, there is said to be an accord and
that the bill would be paid if satisfaction.” In his judgment (in Day v .
presented . McLea, 1889, 22 Q.B.D. 610) , Lord Justice
" ( d) As regards an indorser, where the Bowen said : “ Accord and satisfaction imply
bill was accepted or made for the an agreement to take the money in satisfac
accommodation of that indorser tionof the claim in respectof which it is sent.
and he has no reason to expect that If accord is a question of agreement, there
the bill would be paid it presented . " | must be either two minds agreeing or one of
Notice of dishonour is dispensed with , by the two persons acting in such a way as to
Section 50 , s.s. 2 : induce the other to think that the money
"( c) (4) Where the drawee or acceptor is taken in satisfaction of the claim , and to
is as between himself and the cause him to act upon that view . "
drawer under no obligation to ACCOUNT. (STOCK EXCHANGE .)
accept or pay the bill ; ACCOUNT DAY . Where securities are
( d) As regards the indorser, bought or sold on the Stock Exchange they .
(3) Where the bill was accepted or may be " for cash " or “ for the account,
made for his accommodation ." the term “ for the account meaning the
But to preserve the holder's rights against period between the last settlement and the
any prior parties the bill should be presented next, which period ends in the account
for payment at maturity . day," or "pay day," or " settling day."
06

By Section 59, s.s. 3 :- Where an accom . ( See STOCK EXCHANGE.)

modation bill is paid in due course by the “ ACCOUNT PAYEE ." Cheques are fre
party accommodated, the bill is discharged ." quently crossed :
Where a banker discounted a bill for the Account payee X & Y Bank Ltd., Leeds.
drawer, a customer, and was informed , after
the bill was dishonoured , that it was an British Bank Ltd., Leeds, for account
accommodation bill, and the banker agreed,
of John Brown .
at the drawer's request, not to apply to the
acceptor but to depend upon him (the or with some variation of those forms.
drawer ), and his account afterwards showed The words are an indication to the collect.
e
a credit balanc larger than the amoun t of ing banker as to what is to be done with the
the bill, it was held in Marsh v. Houlditch proceeds of the cheque, but the banker on
9
АСС ) DICTIONARY OF BANKING ( ACC

whom the cheque is drawn, so long as he | the counter for payment it should not be
pays it to the right banker, is not concerned cashed. It should go to credit of the
with the words account payee." In prac- payee's account. (See CrossED CHEQUE .)
tice, a banker who receives such a cheque ACCOUNTABLE RECEIPT. A receipt
for collection , requires that it be placed to given for moneys or goods which have to be
the credit of the account as indicated in the subsequently accounted for, such as a deposit
crossing. In Bevan v. National Bank, receipt, a safe custody receipt. A fraudu
Limited (1907, 23 T.L.R. 65) , Mr. Justice lent entry in a pass book has been held to be
Channell said : “ It was a direction to the a forgery of an accountable receipt.
receiving banker that the drawer desired to ACCOUNTS. Before a current account is
pay the particular cheque into the bank opened for a stranger or a cheque book is
which kept the account of the payee. To given to him , a banker requires an introduc
disregard a direction of that kind, if the tion to be given by some reliable customer
banker had information which might lead or person known to him . If an account is
him to think that the account into which he opened without a satisfactory introduction ,
was paying the cheque was not the payee's the banker runs the risk of opening an
account, would be negligence.” In the case account for a thief, See the case of
of Ladbroke & Co. v . Todd ( 1914, 111 | Ladbroke & Co. v. Todd under Account
L.T. 43) where a cheque crossed account PAYEE, or for an undischarged bankrupt.
payee only " had been stolen, an account (See BANKRUPT PERSON .)
opened with it by a person representing The most convenient time to arrange
himself to be the payee, and cash for it matters regarding the conduct of the account
subsequently obtained, it was held that a is at the very beginning , e.g. in the case of a
banker is guilty of negligence towards the joint account, where either party is to sign ,
drawer of a cheque crossed “ account payee it is much easier to obtain the necessary
only " if he opens an account for the person authority when the account is opened than
presenting the cheque and collects the it is at a later date ; and with regard to
money for it without making any inquiries. the accounts of companies, a copy of the
(See also House Property Co. v . London, resolution of the directors as to opening the
County and Westminster Bank, 1915, account and signing cheques is likewise more
31 T.L.R. 479.) readily given at the commencement.
In the case of a cheque payable to a Specimens of the signatures of all parties
specified payee or bearer, and crossed who are authorised to sign should be taken
account payee,” it has been held that, and preserved.
notwithstanding it was a bearer cheque, If the account is being transferred from
the account of the person named as payee another bank, it is useful to know the reason
was the account to be credited with the of the change.
cheque. When money is placed to the credit of
It is not necessary for the collecting an account, the banker becomes the debtor
banker to place any note or indorsement to the customer, and is under an obligation
upon the cheque that the amount has been to honour all cheques (if in order) drawn
placed to credit of the payee's account. upon the account by the customer to the
There is no provision in the Bills of extent of the funds in the account.
Exchange Act, 1882, regarding the words Where a customer has more than one
“ account payee in connection with a account at the same branch , see Set OFF ;
crossing. Section 78 says that it shall not and where he has accounts at different
be lawful for any person,except as authorised branches of the same bank, see BRANCHES.
by the Act, to add to the crossing. It is not As to accounts which contain money belong
understood, however, that such words are ing to clients or others, see TRUSTEE.
really an addition to the crossing. They As to accounts in the name of a club, or
may as a matter of convenience be placed society, or other impersonal name, see
close to a crossing, or even between the SOCIETIES.
lines, but they would have the same effect In opening an account with a company
wherever placed on the cheque, so long as the the banker should see the certificate of
collecting banker could see them , and they incorporation, and, where the company is
may be placed with effect upon a cheque not a private one, the registrar's certificate
that is not crossed. If an uncrossed cheque, that the company is entitled to commence
marked “ account payee,” is presented across business. He should also make himself
10
ACC] DICTIONARY OF BANKING (ACT

acquainted with its memorandum of associa- | any person , not being a party already liable
tion and articles of association. (See Ad- thereon, may accept the bill suprà protest,
VANCES, AGENT, APPROPRIATION OF PAY- for the honour of any person liable thereon.
MENTS, AUTHORITIES, BANKRUPT PERSON, Such an acceptance is usually attested by a
CHURCHWARDENS, CLAYTON'S CASE, CLOSING notarial act of honour recording the process,
AN ACCOUNT, COMPANIES, CURRENT ACCOUNT but this is not necessary. (See ACCEPTANCE
LEDGERS, CUSTOMER , DEAD ACCOUNT, DEATH FOR HONOUR.)
OP CUSTOMER, DEPOSIT ACCOUNTS, Execu- Where a bill has been protested for non
TOR, GARNISHEE ORDER, HUSBAND AND payment, any person may pay it suprà
WIFE ACCOUNT, IMPERSONAL ACCOUNTS, protest for the honour of any party liable
INFANTS, JOINT ACCOUNT, LOCAL AUTHORI- thereon . Such payment must be attested
TIES, MANDATE, NURSING AN ACCOUNT, by a notarial act of honour which may be
PARTNERSHIPS,PUBLICACCOUNT,SIGNATURE, appended to the protest. (See PAYMENT
SOCIETIES, SOLICITORS' ACCOUNTS, STOCK- FOR HONOUR.)
BROKERS' LOANS, etc.) ACTION . A civil proceeding in a court
ACCOUNTS OPENED AND CLOSED of law, commenced by writ, or in such other
BOOK . This book, as its name implies, manner as may be prescribed by rules of
contains a complete list of all accounts court. Where a creditor has obtained judg
which have been opened and of those which ment against a debtor, the court provides
have been closed , the date of opening or means of enforcing it. ( See JUDGMENT
closing, and the reason for closing, if known, CREDITOR.)
being given in each case . A glance at this ACTIVE BONDS. Bonds upon which a
book, if it has been properly kept, will fixed interest is payable from the date of
show whether accounts opened or accounts issue. (See DEFERRED BONDS.)
closed have been more numerous during ACTIVE CIRCULATION . The notes
any given period. which are in circulation, that is, notes which
ACCREDITEE. A person entitled to credit, have been issued from a bank of issue and
thus the holder of a circular letter of credit are in the hands of the public, as distin
(9.0.) is sometimes termed the accreditee. guished from those which, though printed
ACCRUED INTEREST. Interest to which and complete, are in the possession of the
a banker or a customer is entitled , but which issuing bank .
is not actually received till a later date. ACTIVE PARTNER . A member of a
At the end of a half-year, a banker, before partnership who takes an active part in the
ascertaining his profits, provides for the management of the business, as distinguished
interest which has accrued up to date, and from a dormant or sleeping partner, who
for which he is liable, on the outstanding simply supplies capital and is not actively
deposit receipts ; he also takes into account engaged in the actual work of the firm . A
the interest which has accrued upon invest. limited partner is somewhat similar to a
ments or loans, and to which he is entitled, sleeping partner. (See LIMITED PARTNER
though the actual receipt of the dividends SHIP .)
or interest will not take place till some ACTS OF BANKRUPTCY . When a debtor
date in the next half-year. (See ADJUST- commits an act of bankruptcy , the Court
MENT OF INTEREST ACCOUNT.) may, on a bankruptcy petition being pre
ACKNOWLEDGMENT FOR PRODUC- sented either by a creditor, or by the debtor,
TION OF DEEDS. (See TITLE DEEDS.) make a receiving order for the protection
A COMPTE . French, on account. of the estate . The act must have been
ACQUITTANCE . The document which committed within three months before the
releases a person from a debt or obligation . presentation of the petition.
ACT OF GOD . These words (used in a The various acts of bankruptcy are
Bill of Lading (q.v.), and a Charter Party detailed in Section 1 of the Bankruptcy Act,
(7.v.) mean a sudden or violent act of nature 1914 :
(such as a storm , lightning) which could not “ (1) A debtor commits an act of bank
reasonably be foreseen or provided against ruptcy in each of the following
by ordinary skill or diligence. A person is cases :
not liable for damage occasioned by an Act “ (a ) If in England or elsewhere
of God . he makes a conveyance or
ACT OF HONOUR . Where a bill has been assignment of his property
protested for dishonour by non -acceptance, to a trustee or trustees for
11
ACT) DICTIONARY OF BANKING ACT

the benefit of his creditors having been stayed , has

generally : served on him in England,
“ ( ) If in England or elsewhere or, by leave of the Court,
he makes a fraudulent con elsewhere, a bankruptcy
veyance, gift, delivery, or notice under this Act, and he
transfer of his property, or does not, within seven days
of any part thereof : after service of the notice, in
" (c) If in England or elsewhere case the service is effected in
he makes any conveyance or England, and in case the
transfer of his property or service is effected elsewhere,
any part thereof, or creates then within the time limited
any charge thereon, which in that behalf by the order
would under this or any giving leave to effect the
other Act be void as a service, either comply with
fraudulent preference if he the requirements of the
were adjudged bankrupt : notice, or satisfy the Court
“ ( d) If with intent to defeat or that he has a counter -claim
delay his creditors he does set off or cross demand
any of the following things, which equals or exceeds the
namely , departs out of Eng amount of the judgment
land, or being out of England debt or sum ordered to be
remains out of England, or paid, and which he could
departs from his dwelling not set up in the action in
house, or otherwise absents which the judgment was
himself, or begins to keep obtained, or the proceedings
house : in which the order was
*" (e) If execution against him obtained :
has been levied by seizure For the purposes of this
of his goods under process paragraph and of Section 2
in an action in any court, of this Act, any person who
or in any civil proceeding is , for the time being, en
in the High Court, and the titled to enforce a final
goods have been either sold judgment or final order, shall
or held by the sheriff for be deemed a creditor who
twenty -one days : has obtained a final judg
Provided that, where an ment or final order .
interpleader summons has “ (1 ) If the debtor gives notice
beentaken out in regard to to any of his creditors that
the goods seized , the time he has suspended , or that
elapsing between the date he is about to suspend,
at which such summons is payment of his debts."
taken out and the date at The phrase " begins to keep house " in
which the proceedings on sub -section (d) means to shut himself up
such summons are finally in the house, or to refuse to see his creditors
disposed of, settled , or with the intention of delaying them .
abandoned , shall not be An available act of bankruptcy means any
taken into account in act of bankruptcy available for a bankruptcy
calculating such period of petition at the date of the presentation of
twenty -one days : the petition on which the receiving order is
“ (0) If he files in the Court a made (Section 167 ).
declaration of his inability It is often difficult to decide whether a
to pay his debts or pre- certain state of things does or does not
sents a bankruptcy petition constitute an act of bankruptcy. A mere
60
against himself : statement by a debtor that, in certain
* (g) If a creditor has obtained a events, he will be obliged to suspend pay
final judgment or finalorder ment is not, of itself, an act of bankruptcy.
against him for any amount, where a doctor, through his solicitor,
and, execution thereon not sent a circular letter calling together a
12
ACT) DICTIONARY OF BANKING [ ACT

meeting of his creditors it was held that person subsequently adjudged bankrupt,
the position of a non -trader, such as a doctor, or to a personclaiming by assignment from
differed greatly from that of a trader, and him , is protected if the payment is made
that in the case of a non -trader a declar- before the date of the receiving order
ation of inability to pay his debts was not and without notice of the presentation of a
necessarily a notice to his creditors of an bankruptcy petition . A banker is thus
intention to suspend payment. ( In re a relieved from the difficulty of deciding
has not,
Debtor ; Ex parte the Petitioning Creditors, whether an act of bankruptcy has,orhowever,
1912, 106 L.T. 812.) been committed . It is to be noted ,
By an act of bankruptcy a bill which has that the payment must, apparently, be
been given in payment of a debt becomes made to the person himself or to a person
immediately payable, and where any person claiming by assignment from him . Payment
liable upon a bill commits an act of bank- of a cheque, drawn by a person who is
ruptcy a holder can present a petition upon subsequently adjudged bankrupt, in favour
his debt. ( Ex parle Raatz, 1897, 2 Q.B. 80.) of a third party does not come within the
In a bankruptcy, the whole of the bank- words of that Section. The payee of a
rupt's property devolves on the trustee bankrupt's cheque is not a person claiming
and the trustee's title to that property by assignment from the bankrupt. A
relates back to the act of bankruptcy on banker is protected by this Section in paying
which the receiving order is made, or if there over any balance on a customer's account
are more acts of bankruptcy than one, to the to the trustee under a deed of assignment.
time of the first of the acts of bankruptcy With regard to the payment of cheques
committed within three months next pre- to third parties, Sir John Paget holds that
ceding the date of the presentation of the it is outside the protection altogether. He
bankruptcy petition ; but no bankruptcy states (Gilbart Lectures , 1914, No. 1 ) : “ It
petition, receiving order or adjudication shall is no longer a question of whether you have
be rendered invalid by reason of any act of had notice of an act of bankruptcy, but
bankruptcy anterior to the debt of the whether there has been one . If there
petitioning creditor . (See Section 37, under has, and you pay cheques, and bankruptcy
ADJUDICATION OF BANKRUPTCY .) results, you are liable. If you hear rumours,
A payment by a bankrupt to any of his or get notice, you have got to face the
creditors or a payment to a bankrupt is alternative of dishonouring cheques with
not invalidated by bankruptcy provided the risk of an action, or honouring them and
that the payment takes place before the having to pay the money over again .'
date of the receiving order, and provided On the other hand , opinions have been
that the person (other than the debtor) to, given that Section 46 does protect a banker
by, or with whom the payment was made in the payment of cheques to third parties.
has not, at the time of the payment, notice In re Wigzell, ex parte the Trustee ( 1921 ,
of an available act of bankruptcy committed K.B.D. 37 T.L.R. 373) a debtor, against
by the bankrupt before that time. (See whom a receiving order was made, obtained
Section 45, under BANKRUPTCY .) an orderstaying the advertisement pending
By Section 46 : an appeal, which was subsequently dismissed.
The debtor was afterwards adjudicated
Validity of Certain Payments to Bankrupt bankrupt. After the receiving order, pay.
and Assignee. ments into his banking account were made
“ A payment of money, or delivery of by the debtor, and payments out were also
property, to a person subsequently adjudged made, the bankers not knowing of the
bankrupt, or to a person claiming by receiving order. Held that the effect of
assignment from him , shall, notwithstanding Sections 18, 37 (see under ADJUDICATION OF
anything in this Act, be a good discharge to BANKRUPTCY) and 38, was to make the
the person paying the money or delivering money paid into the account the property
the property, if the payment or delivery is of the trustee, and that these transactions
made before the actual date on which the were not protected by Sections 45 or 46
receiving order is made and without notice (see above). The bankers were not entitled
of the presentation of a bankruptcy peti- to credit themselves with anything paid out
tion , and is either pursuant to the ordinary to the bankrupt during the same period .
course of business or otherwise bona fide." By the Deeds of Arrangement Act, 1914:
By this Section a payment of money to a “ Section 24 ( 1) . If the trustee under a
13
 ACT ) DICTIONARY OF BANKING (ADH

deed of arrangement, which either is ex- “ Section 7. Any stamp duties of an

pressed to be or is in fact for the benefit of
the debtor's creditors generally, serves in the
prescribed manner on any creditor of the
debtor notice in writing of the execution of
the deed and of the filing of the statutory
declaration certifying the creditors' assents,
with an intimation that the creditor will
not, after the expiration of one month
from the service of the notice, be entitled
to present a bankruptcy petition against
the debtor founded on the execution of
the deed, or on any other act committed
amount not exceeding two shillings
and sixpence upon instruments
which are permitted by law to be
denoted by adhesive stamps not
appropriated by any word or words
on the face of them to any particular
description of instrument, and any
postage duties of the like amount,
may be denoted by the same ad
hesive stamps ."
“ Section 9. (1 ) If any person
“ (a) Fraudulently removes or

by him in the course or for the purpose causes to be removed from

of the proceedings preliminary to the any instrument any adhesive
execution of the deed , as an act of bank stamp, or affixes to any other
ruptcy, that creditor shall not, after the instrument or uses for any
expiration of that period, unless the deed postal purpose any adhesive
becomes void, be entitled to present a stamp which has been so
bankruptcy petition against the debtor removed, with intent that
founded on the execution of the deed , or the stamp may be used
any act so committed by him as an act again ; or
of bankruptcy." (See DEED OF ARRANGE “ (6 ) Sells or offers for sale,or utters,
MENT. ) any adhesive stamp which
See Section 210, Companies ( Consolidation) has been so removed, or
Act, 1908, under FRAUDULENT PREFERENCE. utters any instrument,
(See ASSIGNMENT FORBENEFIT OF having thereon any adhesive
CREDITORS, BANKRUPTCY, RECEIVING stamp which has to his
ORDER. ) knowledge been so removed
ACTUARY. An official in an insurance as aforesaid ;
office skilled in the calculation of the values he shall, in addition to any other fine
of life interests, and of the rates of premiums or penalty to which he may be liable,
for life insurance, annuities, and other incur a fine of fifty pounds."
matters connected with the expectancy of life. By the Revenue Act, 1898, Section 7,
The chief official in a savings bank. : The expression “ instrument " in
s.s. 4 -
ADDING MACHINE. This machine is Section 9 of the Stamp Act, 1891, includes
invaluable in offices where large quantities any postal packet within the meaning of
of cheques have to be listed and cast up. The Post Office Protection Act, 1884 .
It has a keyboard which is used practically The stamp duty may (or must) be denoted
in the same way as a typewriter, and when by adhesivestamps inthe following cases :
the list is complete the correct total is imme- Agreement, where the duty is sixpence
diately obtained by moving the lever at the only.
side of the machine. Bill of Exchange, Inland (on demand, at
ADDRESSING MACHINE . Where enve- sight, on presentation, or not exceeding
lopes require to be addressed to long lists of three days after date or sight) .
persons, as in the case of communications to Bill of Exchange, Foreign (on demand or
shareholders every six months, machines may at sight, or not exceeding three days after
be obtained by which the work can be done date or sight a postage stamp ; others
much more rapidly than is possible by writ- require " appropriated ” adhesive stamps) .
ing. Each address requires to be set up in On cheques drawn abroad, the ordinary
type or cut on a stencil, according tothe impressed stamp is sufficient.
kind of machine in use . Of course after an Bill of Lading.
interval of, say, six months, the plates of the Certified copy from register of births,
machine will require numerous alterations marriages, deaths, etc.
in the names and addresses of the share- Charter Party.
holders . Cheque.
ADHESIVE STAMPS . By the Stamp Contract Note (appropriated stamp ).
Act, 1891 : Dock Warrant.
14
ADJ ) DICTIONARY OF BANKING (ADJ
Lease of any dwelling -house, or part the order shall, for the purposes of
thereof, for aa term not exceeding a year at a this Act, be the date of the adjudica
rent not exceeding £10 per annum . tion ."
Lease of any furnished dwelling-house or The Court has power in certain cases
apartments for a term less than a year. to annul an adjudication . Section 29
Letter of renunciation . provides :
Memorandum of deposit of marketable “ (1) Where in the opinion of the Court a
securities. debtor ought not to have been
Notarial Acts. adjudged bankrupt, or where it is
National Insurance Cards. proved to the satisfaction of the
Policy of Insurance where the duty is one Court that the debts of the bankrupt
penny, other than sea or life insurance. are paid in full, the Court may, on the
Proof of Debt in Bankruptcy (an appro application of any person interested
priated stamp ). by order annul the adjudication.”
Protest of Bill of Exchange or Promissory " (3) Notice of the orde annulling an
Note . adjudication shall be forthwith
Proxy, where the duty is one penny. gazetted and published in a local
Receipts. paper .”
Voting paper, where the duty is one penny . The creditors may, if they think fit, at any
Warrant for goods. (See APPROPRIATED time after a debtor is adjudicated a bank
STAMPS, CANCELLATION OP STAMPS, STAMP rupt, entertain a proposal for a composition
DUTIES.) them or
in satisfaction of the debts due to
ADJUDICATION BANKRUPTCY. for a scheme of arrangement of the bank
OF
Where a receiving order has been made rupt's affairs (Section 21, s.s. 1) .
against a debtor (see RECEIVING ORDER ), Section 37, s.s. 1 , relates to the date when
though he is not at thatdate adjudged bank- a bankruptcy is deemed to commence :
rupt, it means that, unless a composition or “ The bankruptcy of a debtor, whether
scheme of arrangement is accepted by the it takes place on the debtor's own petition
creditors, the court will, shortly, make an or upon that of a creditor or creditors,
order adjudicating the debtor bankrupt. shall be deemed to have relation back
Section 18 of the Bankruptcy Act, 1914, to, and to commence at, the time of the
enacts act of bankruptcy being committed on
" (1) Whereareceivingorderismadeagainst which a receiving order is made against
a debtor, then , if the creditors at the him , or, if the bankrupt is proved to have
first meeting or any adjournment committed more acts of bankruptcy than
thereof by ordinary resolution re- one, to have relation back to, and to
solve that the debtor be adjudged commence at, the time of the first of the
bankrupt, or pass no resolution , or acts of bankruptcy proved to have been
if the creditors do not meet, or if committed by the bankrupt within three
a composition or scheme is not months next preceding the date of the
approved in pursuance of this presentation of the bankruptcy petition ;
Act within fourteen days after but no bankruptcy petition, receiving order,
the conclusion of the examination of or adjudication shall be rendered invalid by
the debtor or such further time as reason of any act of bankruptcy anterior to
the Court may allow , the Court the debt of the petitioning creditor."
shall adjudge the debtor bankrupt ; See Section 46 , Bankruptcy Act, 1914,
and thereupon the property of the under ACTS OF BANKRUPTCY as to validity of
bankrupt shall become divisible certain payments to the bankrupt or his
among his creditors and shall vest in assignee. (See also Section 45 under
a trustee . BANKRUPTCY . )
“ (2) Notice of every order adjudging a ADJUDICATION STAMPS. Where a
debtor bankrupt, stating the name, doubt exists as to the stamp duty with
address, and description ofthe bank- which any instrument is chargeable, the
rupt, the date of the adjudication, opinion of the Board of Inland Revenue
and the Court by which the adjudi- may be obtained as to the proper stamp.
cation is made, shall be gazetted The instrument itself, and also a sufficient
and advertised in aa local paper in the abstract thereof, must be lodged with the
prescribed manner, and the date of Controller of Stamps and Stores, Somerset
15
ADJ] DICTIONARY OP BANKING ( ADJ
House, and a separate abstract must be “ (6 ) Provided as follows :
lodged with each deed . No document can (a) An instrument upon which
be received for adjudication until it has the duty has been assessed
been executed by all necessary parties. A by the Commissioners shall
security for advances without limit cannot not, if it is unstamped or
be the subject of adjudication. Where it is insufficiently stamped, be
claimed that collateral, auxiliary, additional, stamped otherwise than in
or substituted security duty only is payable, accordance with the assess
the principal or primary security must be ment ;
produced before adjudication. In the case (6) Nothing in this Section shall
of a transfer of mortgage, the amount of extend to any instrument
interest in arrear ( if any) at the date of chargeable with ad valorem
transfer must be stated . duty, and made as a security
The regulations of the Stamp Act, 1891, for money or stock without
limit ; or shall authorise
with regard tothese stamps are as follows : the stamping after
" Section 12. ( 1 ) Subject to such regula the
tions as the Commissioners may execution thereof of any
think fit to make, the Commissioners instrument which by law
may be required by any person to cannot be stamped after
express their opinion with reference execution ;
to any executed instrument upon (c) A statutory declaration made
the following questions : for the purpose of this Sec
(a) Whetherit is chargeable with tion shall not be used against
any duty ; any person making the same
(6) With what amount of duty it in any proceedingwhatever,
is chargeable. except in an inquiry as to
" (2) The Commissioners may require to be the duty with which the
furnished with an abstract of the instrument to which it re
instrument, and also with such lates is chargeable ; and
evidence as they may deem neces every person by whom any
sary, in order to show to their satis such declaration is made
faction whether all the facts and shall, on payment of the
circumstances affecting the liability duty chargeable upon the
of the instrument to duty , or the instrument to which it
amount of the duty chargeable relates, be relieved from any
thereon , are fully and truly set forth fine or disability to which he
therein . may be liable by reason of
· (3) If the Commissioners are of opinion the omission to state truly
that the instrument is not chargeable in the instrument any fact
with any duty, it may be stamped or circumstance required
with a particularstampdenoting that by this Act to be stated
it is not chargeable with any duty. therein ."
" (4) If the Commissioners are of opinion By Section 13 any person who is dissatis
that the instrument is chargeable fied with the assessment of the Commissioners
with duty , they shall assess the duty may, within twenty -one days after the date
with which it is in their opinion of the assessment, and on payment of duty
chargeable, and when the instrument in conformity therewith, appeal to theHigh
is stamped in accordance with the Court. If the assessment is confirmed , the
assessment it may be stamped with court may make an order for payment to
a particular stamp denoting that it the Commissioners of the costs incurred by
is duly stamped. them in relation to the appeal.
“ (5) Every instrument stamped with the By Section 74 , s.s. 2 of the Finance ( 1909–
particular stamp denoting either ) 10) Act, 1910, notwithstanding anything in
that it is not chargeable with any Section 12 of the Stamp Act, 1891 (quoted
duty, or is duly stamped, shall be above), the Commissioners may be required
admissible in evidence, and available to express their opinion under that section
for all purposes notwithstanding any on any conveyance or transfer operating as
objection relating to duty. a voluntary disposition inter vivos, and no
16
ADJ) DICTIONARY OF BANKING (ADM

such conveyance or transfer shall be deemed " (3) Where, in the opinion of the county
to be duly stamped unless the Commissioners court in which the judgment is
have expressed their opinion thereon in obtained , it would be inconvenient
accordance with that Section . See, how that that court should administer
ever, the circular issued by the Board of the estate, it shall cause a certificate
Inland Revenue in February, 1911 , under of the judgment to beforwarded to
TRANSFER OF SHARES. (See INCREMENT the county court in the district of
VALUE DUTY.) which thedebtor or the majority of
ADJUSTMENT OF INTEREST ACCOUNT. the creditors resides or reside, and
An account which is made use of by bankers thereupon the latter county court
at each half-yearly balance to adjust certain shall have all the powers which it
items of interest . On the one side of the would have under this Section , had
account are placed all amounts of interest the judgment been obtained in it."
which are due to the banker up to date, but With regard to the administration of a
which have not been received, such as deceased insolvent's estate, see DEATH OF
interest due on investments ; and on the INSOLVENT DEBTOR. (See BANKRUPTCY .)
other side, those sums whichthe banker has ADMINISTRATOR . Where a deceased
received and are strictly not yet due to be person has left no will, the court appoints an
taken into profit, such as the amounts administrator or administrators, usually the
received from the discount of bills for the next of kin , to wind up his estate . If the
period from the last day of the half - year till deceased has left a will, but does not name
the dates of maturity of the bills. On the any one to act as executor, or the executor
same side the banker reserves the amount who was named died before the testator or
refused to act, the court appoints an ad
of interest which he is liable to pay upon his ministrator 60

deposit receipts up to date. granting him letters of ad .

ADMINISTRATION ORDER . An ad- | ministration with the will annexed ” ( called
ministration order is made by the county administrator cum testamento annexo ).
court against a debtor who is unable to pay A banker does not allow any dealings
an amount for which judgment has been with the account of a customer who has died
obtained in a county court. An adminis- intestate, or with any securities which may
tration order is made only when the debtor's have been left in his hands by the deceased ,
total indebtedness does not exceed £50. until letters of administration have been
Section 122 of the Bankruptcy Act, 1883, granted. When letters have been ex
provides : hibited , it is customary for the administra
“ ( 1) Where a judgment has been obtained tor to sign a cheque transferring any credit
in a county court and the debtor is balance on the deceased's account to an
unable to pay the amount forthwith, account in his own name as administrator.
and alleges that his whole indebted . If, however, the deceased's account is over
ness amounts to a sum not exceeding drawn, it will be paid off by the adminis
fifty pounds, inclusive of the debt trator, as may be arranged ; the banker
for which the judgment is obtained , cannot transfer, from any account which the
the county court may make an order administratormay haveopened, a sum to clear
providing for the administration of off the debt upon the deceased's account.
his estate, and for the payment of Upon the death of the sole or last surviving
his debts by instalments or other administrator, his executors, if any, do not
wise, and either in full or to such undertake the duties ; fresh letters of
extent as to the county court under administration must be taken out. ( See
the circumstances of the case appears ADMINISTRATOR DE BONIS NON.)
practicable, and subject to any An administrator winds up the deceased's
conditions as to his future earnings affairs according to law , whilst an executor
or income which the court may settles them according to the provisions of
think just. the will. In an administration cum testa
• (2 ) The order shall not be invalid by mento annexo the administrator has, like
reason only that the total amount an executor, to carry out the provisions of
of the debts is found at any time to the will. In other respects, the remarks
exceed fifty pounds, but in such case which apply to executors apply equally
the county court may , if it thinks to administrators. As to administrators
fit, set aside the order. appointed for limited periods, see the
17
( 1935 )
ADM ) DICTIONARY OF BANKING (ADV

succeeding headings. (See EXECUTOR, All that, etc.

LETTERS ADMINISTRATION, MARRIED
OF of the apportioned yearly Copyhold Rent of
WOMAN , SYNDIC .) To hold the same to him his
ADMINISTRATOR AD LITEM . An heirs and assigns for ever, according to the
administrator of a deceased person's estate Custom of the Manor aforesaid, Paying the
appointed for the purpose of litigation only . rents and performing the services of right
ADMINISTRATOR CUM TESTAMENTO due and accustomed and having paid the
ANNEXO . ( See ADMINISTRATOR.) Lord for his Fine as in the margin and done
ADMINISTRATOR DE BONIS NON. A his fealty is thereupon admitted tenant.
contraction for administrator de bonis non STEWARD .
administratis, which means administrator AD REFERENDUM . Latin, to be further
of effects not administered . Where an considered .
administrator dies, or an executor dies with- AD VALOREM . Latin , according to value.
out appointing an executor, and the duties An ad valorem stamp duty is a duty calcu
connected with the administration have not lated according to the value of the subject
been completed, the court will appoint matter contained in a document. On a
another person , called an administrator de cheque for any amount, a bill payable on
bonis non to complete the winding up of the demand, or at sight, or on presentation, or
estate . not exceeding three days after date or sight,
ADMINISTRATOR DURANTE AB- the stamp duty is two pence, but on bills
SENTIA . An administratorappointed to act of any other kind and on all promis
during the absence abroad of an administrator. sory notes the duty is an ad valorem one,
ADMINISTRATOR DURANTE MINORE calculated upon a certain scale according to
AETATE . An administrator appointed to the amount expressed in the document.
act during the minority of the executor or A promissory note must always be stamped
of the person legally entitled to a grant of according to its amount, even though drawn
letters of administration . on demand, at sight, etc.
ADMINISTRATOR PENDENTE LITE . The duty is also ad valorem upon many
An administrator appointed to administer an other documents - assignments of leases,
estate pending any suit respecting the validity conveyances, mortgages, transfers of stocks
of a will or any other matter in dispute. and shares, etc.
ADMITTANCE . The admittance of a
copyholder is signified by the entry upon By the Stamp Act, 1891 :
the court rolls when he is admitted by the lord “ Section 6. (1 ) Where an instrument is
of the manor as tenant of the copyhold land. chargeable with ad valorem duty in
A copy admittance, signed by the Steward respect of
of the Manor, is given to the copyholder, (a) any money in any foreign or
which is his evidence of title to the property. colonial currency , or
(See COPYHOLD.) (6) any stock or marketable secu
The following is an example of an admit rity ,
tance : the duty shall be calculated on the
Manor of The Court Leet and View of value, on the day of the date of the
}Frankpledge
Baron and
with the Court
Customary Court
instrument, of the money in British
currency according to the current
of Lord of the said rate of exchange, or of the stock or
Manor holden at security according to the average
within and for the said Manor price thereof.
on the day of " (2) Where an instrument contains a
. 19 statement of current rate of ex
Before Steward . change, or average price, as the case
Last To this Court came А в
admittance. may require, and is stamped in
eldest son and copyhold heir accordance with that statement, it is,
19 .devisee of the Will of C D so far as regards the subject matter
£ s . d . of C D deceased of the statement, to be deemed duly
Rent deceased
EF
} (by E F stamped , unless or until it is
Fine
his Attorney ) and took of the shown that the statement is untrue ,
Lord of the said Manor by the and that the instrument is in fact
hands of his Steward . insufficiently stamped .”
18
ADV DICTIONARY OF BANKING (ADV

By the Finance Act, 1899: account, or, in some districts, upon a

“ Section 12. (1 ) Where an instrument promissory note. The discounting of bills
other than a bill of exchange or is practically the same as making an
promissory note is charged with an advance upon the security of the bills . (See
ad valorem duty in respect of any DISCOUNTING A BILL, PROMISSORY NOTE.)
money in any foreign or colonial In considering an application for an ad
currency, a rate of exchange for vance, a branch manager is influenced by
which is specified in the schedule to his own personal knowledge ofthe borrower,
this Act, the stamp duty on that by the figures as shown by the certified
instrument shall, instead of being balance sheet of the customer, and by the
calculated as provided by Section six history of previous transactions and the
of the Stamp Act, 1891 , be calculated
. various conclusions to be drawn from a
according to the rate of exchange so careful study of the customer's account.
specified . Some of the questions which naturally arise
“ (2) The Commissioners may substitute, in a banker's mind are : For how long is the
as respects any foreign or colonial advance required ? If granted, is it likely to
currency mentioned in the Schedule be repaid according to promise ? For what
to this Act, any rate of exchange for purpose is the money required ? What
that specified in the Schedule, and security is offered ? (See BALANCE SHEET,
may add to the Schedule a rate of VALUATION .)
exchange for any foreign or colonial It may be impossible to entertain an
currency not mentioned therein, application in the form in which it is first
and this Act shall be construed as if | made by a customer. Francis E. Steele,
any rate of exchange for the time in “ Present-Day Banking , ” says : “ Any
being substituted or added were con- body can grant, or submit to his Head Office,
tained in the said Schedule, and in a perfectly good proposal. Anybody can
the case of the substitution of a rate
decline a transaction which is obviously
of exchange as if the rate for which impossible. Where the real skill of a bank
the new rate is substituted were manager proves itself is in getting a bor
omitted from that Schedule. rower so to modify an impracticable pro
“ (3) Any substitution or addition so made posal that it will assume a shape in which
by the Commissioners shall not take it will be acceptable to himself and to his
effect until it has been advertised in Head Office.”
the London Gazette for two successive Securities such as second mortgages,
weeks.” reversions, building land , brick fields, shares
EQUIVALENTS IN STERLING OF FOREIGN with a liability attached, etc., are, as a rule,
CURRENCIES . avoided by most bankers. “ The most
Gold dollar Five to one pound . dangerous of all loans," wrote the late
Silver dollar J. W. Gilbart, " are those which are made
Yen Ten to one pound. against unmarketable securities, such as
Rouble mills, ironworks, coal mines, landed pro
Florins perty, etc.” (See SECOND MORTGAGE.)
Guilders Twelve to one pound . The securities most commonly favoured
Gulden by bankers are first- class stocks and shares,
Rupee Fifteen to one pound. deeds of readily realisable properties, good
Mark . Twenty to one pound. bearer bonds, guarantees by reliable sureties,
Franc . and life policies to the extent of the surrender
Lira } Twenty-fiveto one pound ." value. (See Bearer Bonds, GUARANTEE,
ADVANCE NOTE . When a seaman signs LIFE Policy, SHARE CAPITAL, TITLE DEEDS.)
his articles of agreement, he may receive an The amount which a bank advances to
advance note for a month's wages. The its customers is regulated by the Head
note is drawn upon the owner of the vessel Office, so that a proper proportion may be
and is payable threedays after the ship has preserved between those advances and the
sailed . They are subject to the same duty amount of the deposits. The deposits are
as Bills of Exchange. repayable on demand and consequently the
ADVANCES. An advance is granted advances should be made in such a form that
either by way of overdraft upon a current repayment may be obtained when required.
account, or by a loan upon a separate When securities are taken , the banker's
19
ADV ) DICTIONARY OP BANKING (ADV

document of charge should provide for the depend upon what was arranged when the
repayment of the money on demand, or limit was granted ; but a limit cannot be
on very short notice . (See BANKER's withdrawn before the expiration of the
MORTGAGE, MEMORANDUM OF DEPOSIT, period for which it was sanctioned , unless
LEGAL MORTGAGE .) the customer's position, or his security, has
With regard to unsecured advances, greatly changed for the worse .
George Rae in “ The Country Banker " puts When an advance is granted in a lump
the position in a most practical way. He sum on a loan account and credited at once
supposes £ 1,000 to be advanced for three to a current account, see under Set OFF.
months without security and that the cus- Numerous small advances are, as a rule,
tomer fails and pays 5s. in the pound. The more satisfactory than two or three loans
profit on the transaction, taking all things for very large amounts.
into account, will not have much exceeded Temporary accommodation is also much
£5. “ To secure this modest recompense of to be preferred to permanent loans.
reward , you have risked £ 1,000 and actually It is not the business of a bank to provide
lost £ 750. You will have to make 150 fresh a company or private trader with permanent
advances of £ 1,000 each — that is to say, you capital.
will have to incur fresh uncovered risks to In lending upon securities such as land,
the amount of £ 150,000 to redeem your houses, shares, etc., it is customary to
loss.” A banker should give particular preserve a margin between the value of the
attention to an account which is overdrawn security and the amount of the loan or over
without security so as to detect any signs draft. A house, for example, may have been
of weakness in his customer. The nature of recently built at a cost of £500 , but a banker
the items in an account often supply valuable would not, as a rule, advance £ 500 upon it.
information. Where an account becomes in a few years the house, in all probability,
continuously overdrawn , which formerly may not be saleable at all at that figure,
showed a credit balance at certain times, or particularly at a forced sale. Shares, even
cheques are being provided for at the last though of first-class description, may easily,
moment, the banker should be on the alert. for various reasons, also fall in value. A
With regard to advances to solicitors and prudent banker, therefore, in considering
stockbrokers against securities by third parties what value of securities he should have for
to cover a general indebtedness, see SOLICI- an overdraft or loan, ever bears in mind the
TORS' ACCOUNTS, STOCKBROKERS' LOANS. uncertainty of values and endeavours to
In granting a limit a banker should reserve protect himself by lending an amount less
to himself the right to cancel the limit, at than the value of the security at the time
any time, if he should deem it necessary. the arrangement is made. The difference
In Rouse v. Bradford Banking Company, between the amount lent and the estimated
( 1894, A.C. 586 ), Lord Herschell said , at value of the security is the " margin .” The
p. 595 : “It is not necessary to consider extent of the margin will differ according to
what the rights of the bank were with the nature of thesecurities and the special
regard to their debtors when they had circumstances of each case, but if a loan
agreed to an overdraft. The transaction is. has been granted against shares with, say,
of course, of the commonest. It may be that a margin of 20 per cent., the banker will
an overdraft does not prevent the bank who watch his securities, and, when they begin to
have agreed to give it from at any time fall and the margin to disappear, will require
giving notice thatit is no longer to continue. | further securities to be given to restore the
and that they must be paid their money, margin as agreed upon. The margin may
This, I think , at least it does : if they have be calculated either upon the value of the
agreed to give an overdraft, they cannot securities or upon the amount of the loan.
refuse to honour cheques or drafts, within The usual practice is to calculate it upon the
the limit of that overdraft, which have been value of the securities. The difference of the
drawn and put in circulation before any two methods is shown as follows :
notice to the person to whom they have (1)
agreed to give the overdraft that the limit Value of securities £10,000
is to be withdrawn. That effect I think it Less 20 per cent. 2,000
has in point of law ; whether it has more
than that in point of law it is unnecessary £ 8,000 = Amount to
to consider." The length of notice will be advanced .
20
ADV ] DICTIONARY OF BANKING [ADV

( 2) If the margin is 10 per cent. :

Amount to be advanced £ 8,000 Security offered . £ 1,000
Less one- tenth . 100
Add 20 per cent. 1,600
£ 9,600 = Value of £ 900 = Amount to
securities be advanced .
required. Loan required £ 900
Add one-ninth 100
In each case the amount to be advanced is
the same, £ 8,000, but in the former case the £ 1,000 = Security
value of the securities will be £ 10,000 , required.
whereas in the latter case the value will be
When the amount of the loan required is
£ 9,600 .
In cases where margins of a certainper known, the say,a
to obtain, of 20 pernecessary
of the securities
value margin cent. is
cent. are required, the simple calculations arrived at by addingto the amount of the
are :
loan one - fourth of that loan , the reason being,
margin is 25 per cent. deduct one
If thefrom
fourth the value ofthesecurities of course, thatwhen 20 per cent.,or one-fifth,
offered , e.g. : is deducted from the value of the securities,
the difference (in this case supposed to be
£ 2,000 the loan ) is in eightieths, and if twenty of
Less one - fourth 500 those eightieths — that is, one- fourth - are
£ 1,500 = Amount to be added , the amount is restored to the orig
advanced .
inal figure (in this case the value of the
securities), e.g. :
If a loan of £ 1,500 is applied for, the £ 100 - Security .
value of the security required to provide
a 25 per cent. margin will be one-third - fifth Deduct 20 per cent,} – 20 –Margin.
of the £ 1,500 added to that amount,
c.g. : £80 Loan .
£ 1,500 Add 18ths or
Add one - third 500 .
fourth 20 Margin one-}
£ 2,000 Security £ 100 = Security .
required.
If the margin is 20 per cent., on the same Withthe
under respect totee
guaran advances
of to small Counci
County holders
a l,
principle as above : see LAND SETTLEMENT (FACILITIES) Act,
Security offered • £ 1,000
.

1919 .
Less one- fifth 200
ADVICE . When a banker issues a draft ,
£ 800 = Amount to he sends an advice, called a letter of advice ,
be advanced . to the banker upon whom the draft has been
Loan required £ 800 drawn, giving him particulars of the amount,
Add one- fourth 200 number, date, and payee, so that, when the
instrument is presented for payment, the
£ 1,000 Security drawee banker may be able to satisfy himself
that the draft is in order . In the absence
required . of an advice, a banker would hesitate to
If the margin is 15 per cent. : pay a draft .
Security offered • £ 1,000 The word “ advice " applies also to many
Less 15 per cent. 150 other forms of intimation which a banker in
the course of his business has to make to
£850 = Amount to customers, other banks, and his own head
be advanced . office or London agents, such as advices of
Loan required . £ 850 credits received, payments to be made, bills
Add ifths . 150 to be paid , etc. (See STANDING CREDITS.)
( or roughly one ADVICE BOOK . The book in which
sixth ) . • £ 1,000
•
Security particulars are entered of all drafts advised
required. as having been drawn upon the bank.
21
ADV ) DICTIONARY OF BANKING ( APF
“ ADVISE FATE.” Where early notice is By the Stamp Act, 1891 , the duty is :
required as to the payment, or non -payment, £ s. d .
of a cheque, the cheque is sent direct to the AFFIDAVI T and STATUTORY
banker on whom it is drawn with a request DECLARATION 0 2 6
to “ advise fate ." If a reply is required Exemptions..
before return of post, a stamped telegram (1 ) Affidavit made for the imme
form should be enclosed for a reply by wire diate purpose of being
as soon as possible after the cheque is
received . A banker is not under any obliga
filed , read, or used in any
court , or before any judge,
tion to wire the fate of a cheque, but it is master, or officer of any
constantly done asa matter of courtesy court.
between bankers. When a banker replies (2 ) Affidavit or declaration
by telegraph that a cheque is paid , the made upon a requisition of
drawer cannot stop payment of the cheque the commissioners of any
after the despatchof the telegram . public board of revenue , or
When a wire is received asking if a certain any of the officers acting
cheque will be paid when presented, a banker under them , or required by
should be careful to qualify an affirmative law. (By the Finance
reply, otherwise he may find that, by the Act, 1907, Section 6, the
time the cheque is actually presented , the limitation of this ex
customer's account has altered so as not to emption to affidavits or
admit of its payment, or that payment of declarations made before
the cheque has been stopped by the drawer, a Justice of the Peace
or that the balance of the account has been shall cease to have effect.]
attached by a legal order, and yet he will, ( 3) Affidavit or declaration
if he gave an unqualified reply, be liable to which may be required at
pay it. The reply frequently made by the Bank of England or
bankers, Yes, if in order ," is, for the above the Bank of Ireland to
reasons, not a safe one to make. The prove the death of any
Council of the Institute of Bankers recom proprietor of any stock
mend some such reply being made as , transferable there, or to
“ Would pay if in our hands and in identify the person of any
order. " such proprietor, or to re
A banker must not set aside or “ ear move any other impedi
mark " a sum out of the customer's balance ment to the transfer of any
to meet a cheque which another banker has such stock .
wired about. The cheque cannot be dealt (4) Affidavit or declaration
with till it arrives. (See APPROPRIATION OF relating to the loss, mutila
PAYMENTS .) tion , or defacement of any
AFFIDAVIT. A written declaration , bank note or bank post
given on oath , before some person who is bill.
entitled to administer an oath , as a solicitor (5) Declaration required to be
who has been appointed a Commissioner made pursuant to any
for Oaths, a magistrate, consul, or notary Act relating to marriages
public. The affidavit must give the person's in order to a marriage
name and address and be signed by him , and without licence .
be attested by the person before whom it is (6) Declaration forming part of
Sworn . an application for apatent
The fee of a Commissioner for Oaths for in conformity with the
administering the oath is 1s. 6d., with 1s. (now ] Patents and Designs
additional for each document attached to the Act, 1907 .
AFFREIGHTMENT. A contract
affidavit . Such additional document is affreightmen t is the agreement made by ofa
known as an exhibit. ”
The word " affidavit is Low Latin , and shipowner to carry goods
a certain payment, called in
theconsideration
freight. of
means has pledged his faith . " Itwas when the contract iswithrespectto the
at one time usual for the document to use of the whole ship for the cargo, the
commence thus : Affidavit N. M., etc.
1 terms are embodied in the CHARTER PARTY
22
AFT ] DICTIONARY OF BANKING (AGE

(q.v.), but if the contract is merely to convey | It is therefore necessary in dealing with an
certain goods, as part ofthe ship's cargo, the agent, in matters of any importance, to
agreement is contained in the BILL OF ascertain exactly what are his powers. If
LADING (q.v.). an agent is authorised to enter into a con
AFTER ACQUIRED PROPERTY . (See tract under seal,he must be appointed by
BANKRUPT PERSON .) deed . He may have authorityto act only
AFTER HOURS . A transaction which in casesome particular
of an or special duty,
agent empowered as in the
to purchase a
occurs after thebank doors have been closed house; or theauthority may be of a much
for business, is said to have taken place wider nature and constitute a person a
“ after hours."
In country districts money may frequently general agent, as in the case of a manager of
a branch bank,where he is authorised to take
be paid in after hours, and though it is not charge of the branch and conduct its busi
considered advisable to encourage the prac
ness . The manager's actions will bind his
tice, a banker usually accommodates his principals within the scope of that business,
customer by permitting it. If the books for and though there maybe, as between the
thedayhave been closed t, he customer dates principals andthemanager, a cleararrange
the credit slip for the following day, and ment as to the limitation of the latter's
where cheques form part of the credit heis authority, as regards a third party who has
warned that they will not be sent forward no knowledge of any such private arrange
for collection, or otherwise dealt with , until ment, the principals will be boundby the
the next day. In such cases it is important manager's actions, even if he has disregarded
that the paying-in slip be dated for the next that private arrangement.
day, otherwise the slip would be evidence When a banker employs a correspondent
that the money was paid in on the date
shown on the slip. Where a customer or agent in carrying out a transaction for a
requires the credit to be entered in his pass customer, the banker
customer forany is responsible
lossarising fromtheto con
his
book when he hands over the money to the duct of theagent. (Mackersy v. Ramsays,
bank after hours, it should, of course, be 1843, 9 C. & F. 818.) The banker, however,
entered as for the following day, so that the willhave a right of recourse against their
credit slip, the bank books and the pass correspondent, by whose default the banker
book will all show the same date. has incurred the loss . (Grant's Law of
A banker, however,does not,as a rule, give Banking.)
cash for a cheque (unless it is the customer's Where a person's authority is unlimited ,
own cheque) after hours. A drawer of a he is called an universal agent,and the prin
cheque has a righttostop payment of itand cipal is bound by whatever his agent does,
to give notice during business hours, and if so long as it is in accordance with the law
a cheque is cashed after hours, the bank of the land.
would be liable in the event of a notice to
An agent has no power to delegate his
stoppayment being received the following authority to another person.
morning.(See BANK HOURS.) Where an agent, in exercise of his author .
AGE ADMITTED . ( See LIFE Policy .) ity, affixes his name to a bill of exchange,
AGENCY . (See SUB -BRANCH .) as drawer, acceptor, or indorser, he must be
AGENDA . Literally, things to be done. careful to sign in such a manner
personal liability will attach to himthat no
. The
The agenda
are notes of various addition of such words as manager,"
matters which are to be brought before the agent,'
)
secretary ” would be suffi
not liability
directors of a company, or before a meeting, cient to clear him from personal .
for consideration . They are written upon a In Leadbitter v. Farrow ( 1816, 5 M. & S.,
sheet of paper, or in the agenda books, and at p . 349), Lord Ellenborough said : " Is it
areused by the chairman in conducting the notan universal rule that a man who puts
business of the meeting, a brief record being his name to a bill of exchange thereby
made opposite each entry as to how the makes himself personally liable ,unless he
matter is disposed of. states upon the face of the bill that he
AGENT. An agent is a person who acts subscribes it for another, or by procuration
under authority from his principal, and the of another , which are the words of exclu
extent of his powers to bind his principal sion ? Unless he says plainly , ' I am the
3)
is limited to the terms of that authority. mere scribe ,' he is liable ."
23
AGB ) DICTIONARY OF BANKING ( AGE

The Bills of Exchange Act, 1882, Section from

liable
the bill, representatio
a person so signing would be
26, provides as follows :– for false nof authority.
" (1 ) Where a person signs a bill as No person is liable as drawer, indorser, or
drawer, indorser, or acceptor, and acceptor of a bill who has not signed it as
adds words to his signature, indi- such, except where a person signs in a trade
cating that he signs for or on behalf or assumed name, or in the name of a firm .
of a principal, or in a representative An agent may have authority, instead of
character," he is not personally signing per pro ., to sign the actual name of
liable thereon ; but the mere his principal, or to impress the signature
addition to his signature of words with a rubber stamp. Section 91 enacts :
describing him as an agent, or as “ (1 ) Where, by this Act, any instrument
filling a representative character, or writing is required to be signed
does not exempt him from personal by any person , it is not necessary
liability. that he should sign it with his own
hand, but it is sufficient if his signa
" ( 2) In determining whether a signature ture is written thereon by some other
on a bill is that of the principal or person by or under his authority.
that of the agent by whose hand it “ (2) In the case of a corporation , where,
is written , the construction most
favourable to the validity of the by this Act, any instrument or
instrument shall be adopted ." writing is required to be signed , it
is sufficient if the instrument or
In signing for a company it is much better
if an agent states definitely the capacity in writing be sealed with the corporate
seal.
which he signs, and prefixes the words per “ But nothing in this Section shall be
pro. or For and on behalf of, e.g. construed as requiring the bill or
per pro . T. Brown & Sons, Ltd.,
R. Jones, Secretary . note of a corporation to be under
seal. "
per pro . British Banking Co., Ltd. An infant may act as an agent. An
T. Smith,
Manager. undischarged bankrupt may also act as
agent.
For and on behalf of the It has been held in Cookson v. Bank of
Coy ., Ltd. England (a case tried at the Guildhall in
R. Brown, Director.
1860, and approved by the Court of Com
R. Jones, Secretary . mon Pleas in Ireland in Hare v. Copeland,
But the form of signature, “ T. Brown & Sons, 1862, 13 I.C.L.R. 426) , that, where an agent
?

Ltd., R. Jones, Secretary,” without a indorsed a cheque " per procuration Jackson
a

prefix is very common . & Co., A. Holmes , Agent,” and he had

With regard to a procuration signature, no authority to indorse, the bank was
Section 25 enacts : protected .
" A signature by procuration operates An agent should not place to the credit
as notice that the agent has but a limited of his own private account, cheques payable
authority to sign, and the principal is only to his principal. Where the business re
bound by such signature if the agent in so quires this to be done, there should be a
signing was acting within the actual limits written authority from the principal. When
of his authority." When a bill so signed cheques are drawn, under authority , by an
in excess of authority has been honoured agent and he pays them into his own private
Section 25 does not confer a right to recover account, the banker is put on enquiry. See
the proceeds. (Morison v . London County the case of Morison v. London , County and
and Westminster Bank, 1914 , 30 T.L.R. 481. Westminster Bank, under PER PROCURATION.
see under PER PROCURATION .) Where cheques are to be signed by an
Where a signature is placed on a bill with- agent, an authority or mandate should be
out the authority of the person whose given by the principal requesting the banker
signature it purports to be, the unauthorised to honour such cheques, and if the agent is
signature is wholly inoperative. The sup- to have power to sign when the account is
posed principal is not bound because it is not overdrawn, the authority should include
his signature; and the supposed agent is not that power. (See MANDATE .) In the case
bound on the bill because the signature of a limited company, a resolution should be
pretends to be that of a principal. Apart passed by the directors as to the method in
.

24
AGE ] DICTIONARY OF BANKING (AGR

which cheques are to be signed, and a copy In Lloyd v. Grace, Smith, & Co. ( 1912,
of the resolution, signed by the chairman, | 107 L.T. 531), where a fraud was committed
should be furnished to the banker along with | by an agent for his own benefit, the House
specimens of the authorised signatures. of Lords held that the principal is liable
(See COMPANIES.) for the fraud of his agent acting within the
On the death of the principal, any author- scope of his authority. Lord Macnaghten,
ity he has given to an agent to sign cheques in the course of his judgment said : “ The
is cancelled . The death of an agent does only difference, in my opinion, between the
not prevent a banker paying a cheque signed case where the principal receives the benefit
by the agent on the account of his principal, of the fraud, and the case where he does
and presented for payment after the agent's not, is that in the latter case the principal
death . The authority is also determined by is liable for the wrong done to the person
the bankruptcy or insanity of the principal. defrauded by his agent acting within the
The following cases show how necessary scope of his agency ; in the former case he
it is that an agent should , in order to avoid is liable on that ground and also on the
all risk , sign in such a manner that there ground that by taking the benefit he has
may be no question that he does so merely adopted the act of his agent.” (See PER
as an agent : PROCURATION .)
In Chapman v. Smethurst (1909, 1 K.B. As to corrupt transactions with agents,
PREVENTION OF CORRUPTION Act.broker
73) , an action was brought on a promissory seeAGENT
note :-“ Six months after demand I pro- DE CHANGE .A licensed
mise to pay to Mrs. M. Chapman the sum on the Paris Exchange. (See COULISSE .)
of £ 300 for value received , together with 6 AGIO. The term used to express the
per cent. interest per annum. J. H. Smet- difference in value between paper money and
hurst's Laundry and Dye Works (Limited ), metallic money, or between one kind of
J. H. Smethurst, Managing Director.” The metallic money and another. If an English
words “ J. H. Smethurst's Laundry and sovereign is so much worn that it will not
Dye Works (Limited) " and Managing sell for its nominal value, the difference
Director were placed on the note by between its nominal value and what it sells
means of a rubber stamp. Mr. Justice for is called the agio.
Channell held that the defendant was per- AGREEMENT. By the Stamp Act, 1891,
sonally liable on the promissory note, the regulations respecting the stamp duty on
because he had not added any words to agreements are as follows :
show that he signed merely as the agent of AGREEMENT or CONTRACT, accompanied with
the company . On appeal, however, it was held a deposit.
that the company could be sued on the note. See MORTGAGE, etc. , and Section
In Landes v. Marcus & Davids ( 1909, 23 below , and Section 86 under
25 T.L.R. 478) , a cheque was signed by MORTGAGE .
the defendants (directors of Marcus & Co., | AGREEMENT for a lease or tack , or
Limited ), in favour of the plaintiff, in the for any letting.
following way : “ B. Marcus, Director." See LEASEHOLD, and Section
“ S. H. Davids, Director.” The space for 75 .
the secretary's signature was left blank. AGREEMENT for sale of property .
The name of the company was printed only See CONVEYANCE .
at the top of the cheque. Although the £ s. d.
directors added words to show their repre- | AGREEMENT or CONTRACT made or
sentative capacity, it was held that, in entered into pursuant to the
signing the cheques, they did not indicate Highway Acts for or relating to
that they did so on behalf of the company , the making, maintaining, or
and that they were personally liable on the repairing of highways . 0 0 6
cheque. AGREEMENT or any MEMORANDUM
An agent cannot borrow money on behalf of an AGREEMENT, made in Eng
of his principal unless authorised to do so ; land or Ireland under hand only,
and if a banker, with knowledge of the or made in Scotland without any
extent to which an agent may borrow , clause of registration, and not
permits him to exceed his authority, the otherwise specifically charged
principal will not be liable. (See further with any duty, whether the
under NEGOTIABLE INSTRUMENTS .) same be only evidence of a
25
AGR ] DICTIONARY OF BANKING
contract, or obligatory upon the
parties from its being a written
instrument
Exemptions.
( 1 ) Agreement or memoran
dum the matter whereof is
not of the value of £5 .
(2) Agreement or memoran
dum for the hire of
any labourer, artificer,
manufacturer, or menial
servant.
( 3) Agreement, letter, or
memorandum made for
or relating to the sale of
any goods, wares , or mer
chandise . (But by the
Finance Act, 1907, Sec
tion 7, any agreement for
or relating to the supply
of goods on hire, whereby
the goods in considera
tion of periodical pay
ments will or may be
come the property of the
person to whom they are
supplied, shall be charged
with stamp duty as an
agreement, or, if under
seal (or in Scotland with a
clause of registration ), as a
deed , as the case requires.)
(4) Agreement or memo
randum made between the
master and mariners of
any ship or vessel for
wages on any voyage
coastwise from port to
port in the United
Kingdom .
(5) Agreement entered into
between a landlord and
tenant pursuant to sub
section six of Section
eight or sub - section two of
Section twenty of the Land
Law (Ireland) Act, 1881.
And see Sections 22 and 23, which are as
follows :
property from one owner to another .
“ 22. The duty of sixpence upon an agree
ment may be denoted by an adhesive
stamp, which is to be cancelled by the A certificate of allowance of costs, given by
person by whom the agreement is first
executed .
“23. (1) Every instrument underhandonly costsin any proceedings,or when a judg
(not being a promissory note or biút ment has been given in favour of one of the
of exchange) given upon the occasion parties with costs, the allocatur must be
( ALL
£ s. d. of the deposit of any share warrant
or stock certificate to bearer, or
foreign or colonial share certificate,
0 0 6 or any security for money transfer
able by delivery, by way of security
for any loan , shall be deemed to be
an agreement, and shall be charged
with duty accordingly .
“ ( 2) Every instrument under hand only
(not being a promissory note or bill
of exchange) making redeemable or
qualifying a duly stamped transfer,
intendedas a security, of any regis -
tered stock or marketable security,
shall be deemed to be an agreement,
and shall be charged with duty
accordingly .
“ (3) A release or discharge of any such
instrument shall not be chargeable
with any ad valorem duty."
An agreement under hand, chargeable with
a duty of sixpence, if not stamped with an
adhesive postage stamp (or stamps) at the
time the document is signed , maybe stamped
with an impressed stamp within fourteen
days from its date.
If an agreement is under seal it is charge
able with ad valorem mortgage duty . (See
MORTGAGE and Section 86 , S.S. 1 (d ) .)
Instead of executing an agreement under
seal, a company may (see Section 76,
Companies (Consolidation) Act, 1908, under
CONTRACTS) appoint an official to sign an
agreement under hand (stamp 6d .) on its
behalf. When given to a bank, the bank
should be supplied with a copy of the minute
authorising the arrangement.
AGRICULTURAL BANK . (See Credit
BANKS.)
AGRICULTURAL CREDIT SOCIETY .
(See CREDIT BANKS.)
ALDGATE PUMP. A cheque with no
effects has been likened to a draught on
Aldgate Pump. The pun is on the word
draught, meaning either an order on a bank
or a draught of liquor. (Dr. Brewer's
“ Dictionary of Phrase and Fable.")
ALFONSO (See FOREIGN MONEYS
.)
ALIENATION. The transference of
ALLOCATUR . (Law Latin , it is allowed .)
the taxing master at the termination of an
action . When there is an order to tax
26
ALL ) DICTIONARY OF BANKING
obtained before the amount of the costs
can be added to the judgment debt and an
execution levied in respect of them .
ALLONGE . (Fr. , allongé, lengthened .)
An allonge is a slip of paper attached to a
bill of exchange for the purpose of receiving
indorsements, when the back of the bill itself
has become completely covered by the
indorsements of the various parties through
whose hands the bill has passed . In
order to prevent an allonge being re
moved from one bill and attached to
another, it is the practice to write the
first indorsement on the allonge over
the junction of the two documents, so
that it begins on the bill and ends on the
allonge. In some countries a copy of the
bill is used instead of an allonge. Section 32,
s.s. 1 of the Bills of Exchange Act, 1882,
provides that “an indorsement written on
an allonge, or on a ' copy ' of a bill issued
or negotiated in a country where ' copies '
are recognised , is deemed to be written
on the bill itself.”
An allonge does not require to be stamped ,
as it is merely a continuation of a bill which
is stamped . (See BILL OF EXCHANGE.)
ALLOTMENT. An applicant for shares
which are being issued by a company gener
ally fills up a printed form of application
supplied by the company, in which he re
quests that the shares he requires may be
allotted to him . At the same time he either
sends a cheque to the company for the
deposit which is payable on application, or
pays in the amount to the company's
bankers. If his application is successful he
will, in due course, receive a letter of allot
ment stating the number of shares which
have been allotted to him , and requesting
payment of the amount due per share upon
allotment. (See APPLICATION FOR SHARES . )
An allotment of stock or bearer bonds is
often payable by instalments. (See INSTAL
MENT ALLOTMENT .)
With regard to the allotment of share
capital of a company, the Companies (Con
solidation) Act, 1908, Section 85, provides
as follows :
" ( 1) No allotment shall be made of any
share capital of a company offered
to the public for subscription, unless
the following conditions have been
complied with , namely :
(a) the amount (if any) fixed by
the memorandum or articles
and named in the prospec
tus as the minimum
27
[ ALL
subscription upon which the
directors may proceed to
allotment ; or
(6) if no amount is so fixed and
named , then the whole
amount of the share capital
so offered for subscription ,
has been subscribed , and the sum
payable on application for the
amount so fixed and named , or
for the whole amount offered for
subscription, has been paid to and
received by the company.
" (2) The amount so fixed and named and
the whole amount aforesaid shall be
reckoned exclusively of any amount
payable otherwise than in cash, and
is in this Act referred to as the
00
minimum subscription.
" (3) The amount payable on application
on each share shall not be less than
five per cent. of the nominal amount
of the share.
“ (4) If the conditions aforesaid have not
been complied with on the expira
tion of forty days after the first issue
of the prospectus, all money re
ceived from applicants for shares
shall be forthwith repaid to them
without interest, and, if any such
money is not so repaid within
forty - eight days after the issue of the
prospectus, the directors of the com
pany shall be jointly and severally
liable to repay that money with
interest at the rate of five per
centum per annum from the expira
tion of the forty -eighth day :
Provided that a director shall not
be liable if he proves that the loss
of the money was not due to any
misconduct or negligence on his part.
" (5) Any condition requiring or binding
any applicant for shares to waive
compliance with any requirement of
this Section shall be void .
“ (6) This Section , except sub -section (3)
thereof, shall not apply to any
allotment of shares subsequent to
the first allotment of shares offered
to the public for subscription .
“ (7) In the case of the first allotment of
share capital payable in cash of a
company which does not issue any
invitation to the public to subscribe
for its shares, no allotment shall
be made unless the minimum
subscription (that is to say) :
ALL) DICTIONARY OF BANKING [ALT

( a) the amount (if any) fixed by Gold and silver in the pure state are too
the memorandum or articles soft to be used for coins, and therefore they
and named in the statement are mixed with another metal, copper,
in lieu of prospectus as the called the alloy, in order to impart the
minimum subscription upon requisite amount of hardness.
which the directors may The light yellow colour of certain Austra
proceed to allotment ; or lian sovereigns is due to the alloy being
(6) if no amount is so fixed and silver.
named , then the whole The standard fineness of gold coins is
amount of the share capital eleven -twelfths fine gold, one -twelfth alloy
other than that issued or ( copper), and of silver coins thirty -seven
agreed to be issued as fully fortieths fine silver and three- fortieths alloy
or partly paid up otherwise (copper) ; altered by the Coinage Act, 1920,
than in cash , to one-half fine silver, one-half alloy, the
has been subscribed and an amount composition being 500 parts silver, 400 parts
not less than five per cent. of the copper and 100 parts nickel. Bronze coins
nominal amount of each share pay- are a mixed metal composed of copper, tin ,
able in cash has been paid to and and zinc. (See COINAGE.)
received by the company . ALTERATIONS. Where alterations are
This subsection shall not apply necessary in any of the books of a bank,
to a private company or to a com- they should be made carefully, the wrong
pany which has allotted any shares entry being neatly ruled through, and the
or debentures before the first day correct one written above or below it.
of July nineteen hundred and Errors are not to be put rightmerely by the
eight." fresh figures being thicklywritten upon the
When a company limited by shares makes top of the old ones. Some banks require
any allotment, the company must, within that alterations in ledgers and other impor
one month thereafter, file with the registrar tant books be made in red ink. If a ledger
of companies a return of the allotments in entry has been posted into a wrong account,
accordance with Section 88 of the Act. it is customary, when rectifying the mistake,
(See COMPANIES, LETTER OP ALLOTMENT.) | to quote the folio of the correct account.
ALLOTMENT LETTER . (See LETTER OF Bankers do not, as a rule, issue a deposit
ALLOTMENT.) receipt, or draft, showing any alteration in
ALLOTMENT NOTE . A note in an an important part. Where a mistake has
approved form signed by a seaman author- been made in drawing such a document, it
ising the master of the ship to pay his wages is considered desirable to have a fresh one
to a near relative. Previously the amount written , rather than to issue one to the
was limited to one half of the wages, and public showing evidences of carelessness or
the payment did not commence till the inaccuracy.
expiration of one month from the date of All material alterations in a bill must be
the agreement with the crew , the payments initialled or signed by all the parties liable
thereafter being at intervals of one month ; on the bill, and all alterations in a cheque
but by the Merchant Shipping (Seamen's must be confirmed by each drawer. It is
Allotment) Act, 1911 , it is enacted that not sufficient, in the case of a limited com
" by agreement with the master an allot- pany's cheque, if a material alteration is
ment note may be granted to a seaman initialled only by the secretary, unless, of
providing for course, the banker has authority to accept
(a) payment of a greater sum than one the signature of the secretary alone.
half of the wages ; Owing to the facility with which many
(b) payment at a period earlier than one initials may be forged , it is recommended
month from the date of the agree that material alterations should be con
ment with the crew and at intervals firmed by full signatures and not merely by
more frequent than one month ." initials.
ALLOTTEE. The person to whom shares With regard to alterations in a bill of
in a company are allotted in response to an exchange Section 64 of the Bills of Exchange
application for shares. Act, 1882, enacts :
ALLOY. ( From the French a loi, Latin “ ( 1 ) Where a bill or acceptance is
ad legem , according to law .) materially altered without the
28
ALT) DICTIONARY OF BANKING ( ALT

assent of all parties liable on the Where crossed generally or specially, the
bill, the bill is avoided except as holder may add the words " not negotiable '
against a party who has himself ( Section 77) .
made, authorised , or assented to Where crossed specially, a banker to
the alteration , and subsequent whom it is crossed may cross it specially
indorsers : to another banker for collection (Section 77) .
“ Provided that, Where an uncrossed cheque, or a cheque
" Where aa bill has been materially altered, crossed generally, is sent to a banker for
but the alteration is not apparent, himself
collection, he may cross it specially to
and the bill is in the hands of a (Section 77) .
holder in due course, such holder Where a bill payable at a fixed period
may avail himself of the bill as if after date is issued undated, or an accept
it had not been altered, and may ance of a bill payable at a fixed period after
enforce payment of it according to sight is undated, any holder may insert the
its original tenor. true date (Section 12) .
" (2) In particular the following altera- As to cancellation of a crossing, see
tions are material, namely, any OPENING A CROSSING.
alteration of the date, the sum A cheque which is payable to “ bearer "
payable, the time of payment, the may be altered by the payee to “ order," but
place of payment, and, where a bill an alteration of a cheque from order " to
has been accepted generally, the " bearer " must be initialled by all the
addition of a place of payment drawers, and of a bill by all parties liable
without the acceptor's assent.” thereon . In Aldous v. Cornwell (1868,
By Section 78 :-" A crossing authorised L.R. 3 Q.B. 573), where no time of pay
by this Act is a material part of the cheque ; ment was stated on a bill, it was held that
it shall not be lawful for any person to the words “ on demand " could be inserted .
obliterate or, except as authorised by this Various protections have been devised in
Act, to add to or alter the crossing.". order to prevent, or to make difficult, the
The alterations authorised by the Bills of fraudulent alteration of a cheque. Words
Exchange Act, 1882, are : such as “ under one hundred pounds " or
Any holder may convert a blank indorse- "not exceeding one hundred pounds are
ment into a special indorsement (Section often written across, or stamped upon, a
34 , s.s. 4) . cheque ; or the cheque may be perforated
Where a cheque is uncrossed, the holder with those words. *
may cross it generally or specially The body of a cheque may also be tinted.
(Section 77) . or printed over with words or a design to
Where crossed generally , the holder may show more readily if an erasure takes place,a
cross it specially ( Section 77 ). and the paper may be made with
* The following ingenious device to prevent alterations in the amount of a cheque is
printed at the left-hand side of a certain form of cheque.
Not exceeding £10 No...... London ,
$ 30 To X & Y Bank , Ltd.
£ 130
.
£ 230 220
Pay ..... ...... or order
£ 330 the Sum of Two hundred and Twenty Pounds
£ 1,300
£ 2,300
£ 3,300 £220 J. Brown,
£ 10,000
(See LIMITED CHEQUE .)
29
ALTJ DICTIONARY OF BANKING [ALT

" fugitive " surface, that is, a paper which | T. Matthews, one of the directors who had
loses its surface if any attempt is made to signed it , without apparently the concur
rub out what is written thereon . Cheque rence of the other director. The defendant
paper is also specially prepared to prevent bank were negligent in cashing that cheque
the use of chemicals being used to effect an without making any inquiries to see whether
alteration . or not the other bank or company were
As to the various points to be observed willing that the cheque should be placed to
when drawing a cheque, see DRAWING A the credit of Mr. Matthews's account. Other
Cheque . points in this case are referred to under
The following case illustrates the import- COLLECTING BANKER, CONVERSION .)
ance of seeing that any material alteration In Young v. Grote ( 1827, 4 Bing. 253),
in a cheque is initialled by all the persons by the amount of a cheque drawn by the plain
whom the cheque is drawn . tiff had been fraudulently increased after
In the Kepitigalla Rubber Estates, Limited. the cheque had been signed. An arbitrator
v . The National Bank of India, Limited found that the plaintiff had been negligent
(1909, 2 K.B. 1010), the plaintiffs had given in causing his cheque to be handed to his
the defendants a written authority to honour clerk in such a state that he could , by the
cheques drawn by two directors and the mere insertion of words, make it appear to
secretary . A cheque for £150 was altered be a cheque for the larger sum . It was held
from " order " to " bearer ” and initialled by the Court of Common Pleas that the
by the secretary, and the initials of one of defendants, the plaintiff's bankers, were not
the directors were forged by means of a liable for the loss sustained by the plaintiff.
rubber stamp.. The other director signed In London Joint Stock Bank, Ltd. v.
the cheque, but did not initial the altera- Macmillan and Arthur ( 1918, A.C. 777) , the
tion . Mr. Justice Bray said : “With regard respondents had a confidential clerk to
to the payment of the cheque for £ 150, whom was entrusted the duty of filling in
where Mr. Lauder had not initialled the cheques for signature. The clerk presented
alteration from ' order ' to ' bearer,' the to Mr. Arthur for signature a bearer cheque
accountants stated that it was usual for for petty cash . There were no words at all
bankers to pay if two out of the three in the space left for words, and in the space
initialled the alteration . It seemed to me, for figures there appeared the figures 2-0-0.
however, that they would do this at their The clerk having obtained Mr. Arthur's
own risk ; if Mr. Lauder never initialled or signature to the cheque in this condition ,
authorised the alteration the payment of added the words “ One hundred and twenty
the cheque by the bank would not be pounds ” in the space left for words and
authorised ." the figures 1 and 0 on either side of the
In Souchette, Ltd. v. London County figure 2. ( This was an appeal by the Bank
Westminster & Parr's Bank, Ltd. ( 1920, to the House of Lords from an order of the
K.B.D. 36 T.L.R. 195) a cheque “ Pay self Court of Appeal ( 1917, 2 K.B. 439), which
or order was signed for the Souchette affirmed a judgment of Sankey, J. ( 1917,
Company by two directors, Frank Matthews 1 K.B. 363), who decided that Macmillan
and another. The cheque went through and Arthur were not guilty of any negligence
Mr. Matthews's account and was forwarded which misled the bank .)
by the defendant bank for collection . The The Lord Chancellor, in the course of his
cheque was returned and sent back to judgment, said : “ The relation between
Mr. Matthews to be put in order. When banker and customer is that of debtor and
it came back for collection it was altered creditor, with a superadded obligation on
to read " Pay self, T. Matthews, or the part of the banker to honour the cus
order. ” The ddition of the words “ T. tomer's cheques if the account is in credit .
Matthews” was in that person's writing and A cheque drawn by a customer is in point
was not authenticated by the initials of the of law a mandate to the banker to pay the
other signing director. Mr. Justice Greer in amount according to the tenor of the cheque.
his judgment said that when the cheque It is beyond dispute that the customer is
came to the defendant bank if they thought bound to exercisereasonable care in drawing
about it at all they would have seen that it the cheque to prevent the banker being
was an alteration of a cheque which was misled . If he draws the cheque in a manner
payable only to the order of the company which facilitates fraud, he is guilty of a
itself, into a cheque payable to the order of breach of duty as between himself and the
30
ALT] DICTIONARY OF BANKING (ALT

banker, and he will be responsible to the repeatedly laid down in the decided cases
banker for any loss sustained by the banker as essential, that the negligence should be
as a natural and direct consequence of this of such a kind that the loss has resulted
breach of duty . ” “ The question whether from it and not from some intervening
there was negligence as between banker and cause, which, although it was able to pro
customer is a question of fact in each par- duce its effect because of what the customer
ticular case, and can be decided only on a had previously done or omitted to do, was
view of the cheque as issued by the drawer, not itself brought into existence as the
with the help of any evidence available as immediate and naturaloutcome of his action .
to the course ofdealings between the parties Thus a man may be imprudent in leaving
or otherwise. " " If Young v. Grote is right, his cheque book and pass -book in the hands
the judgment now appealed from is wrong. of his clerk, who is thereby enabled to forge
In my opinion, the decision in Young v. a cheque. But he is not liable for this
Grote is sound in principle and supported reason, that the direct and real cause of the
by a great preponderance of authority, and loss is the intervention of an act of wicked
00
must be treated as good law ." ' In the ness on the part of the clerk which the law
present case , the customer neglected all does not call on him to anticipate in the
precautions. He signed the cheque, leaving absence of obvious ground for suspicion."
blank the space where the amount should Viscount Haldane held that it was immedi
have been stated in words, and, where it ately due to the action of the respondents,
should have been stated in figures, there and not to any other cause, that the clerk
was only the figure ' 2 ' with blank spaces was able to make additions to the cheque ;
on either side of it. In my judgment, there and “ I am of opinion that in putting as
was a clear breach of the duty which the much as they did within his power, they
co
No one took the risk of failure in the discharge of
customer owed to the banker . "
can be certain of preventing forgery, but it their duty to the bank of which they were
is a very simple thing in drawing a cheque customers. It follows that they cannot now
to take reasonable and ordinary precautions recover the amount of a loss which was due
against forgery . If, owing to the neglect of to their own negligence .”
such precautions, it is put into the power In Adelphi Bank v. Edwards (1882, 26
of any dishonest person to increase the Sol. J. 360), where the amount of à bill had
amount by forgery , the customer must bear been fraudulently altered by a holder ,
the loss as between himself and the banker. spaces having been left in drawing the bill.
But, furt , it is well sett
her law tha if a whi ena
led t ch bled this to be done, Lord Justice
customer signs a cheque in blank and leaves Baggallay said : “ It seems to me impossible
it to a clerk or otherperson to fill it up, he to say that there was any duty on the part
is bound by the instrument as filled up by of the acceptor of the bill towards the party
the agent." " For all practical purposes, the who might subsequently become the holder
cheque was in blank, as the figure 2 ' in its of the bill so to criticise, and so to examine
isolated position afforded no security what the bill before he signed , as to put it out of
ever against a fraudulent increase." “ For the possibility of any additional words being
these reasons I think that judgment should afterwards inserted in it .” This case was
be entered for the bank. " cited with approval in the case of Scholfield
Viscount Haldane, in the course of his v. Earl of Londesborough ( 1896, 75 L.T. 254 ;
judgment, said : “ The obligation of the A.C. 514) , where it was held that the
customer to avoid negligence was, I think, acceptor of a bill of exchange is not under
well expressed by Kennedy, J., in Lewes Sani- a duty to take precautions against fraudu
tary Steam Laundry Co. v. Barclay (1906 , lent alterations in the bill after acceptance.
95 L.T. 444 ), when thatvery accomplished In referring to this case in London Joint
judge defined it as including ' a duty to be Stock Bank , Ltd. v. Macmillan and Arthur ),
careful not to facilitate any fraud which , the Lord Chancellor said : “ The decision
when it has been perpetrated, is seen to of the House of Lords in the Scholfield case
have in fact flowed in natural and uninter - proceeded on the ground that the duty
rupted sequence from the negligent act.' which Young v. Grote affirmed to exist as
The limitation of the liability to that which between banker and customer had no rela
flows directly from the act established as tion to any supposed duty on the part of
negligent was obviously introduced by the acceptor of a bill of exchange to those
Kennedy, J., because of what has been into whose possession the bill might pass,
31
ALT] DICTIONARY OF BANKING [ AME

The decision of the House of Lords does private holder, or to the company requiring
not infringe upon the authority of Young verification of the transferor's signature
v. Grote. On the contrary, I think it on the form of transfer. It is also possible
recognises it." for a charge to be registered on the com
If a customer has not been negligent in pany's books against the shares. To avoid
drawing a cheque and the amount has been trouble, a purchaser should have the shares
fraudulently increased, the loss will fall upon registered in his own name . When the
the bankerwho has paid the cheque. certificates are in the name of a bank or
Material alterations in a deed should be well- known firm they are usually allowed ,
initialled by the parties signing the deed, by a purchaser, to remain in those
and they should be specifically referred to names .
in the attestation clause. When the certificates are lodged as
ALTERNATIVE DRAWEE . An order security the bank's usual memorandum of
addressed to two drawees in the alternative, deposit should be signed by the customer .
or to two or more drawees in succession , is When such certificates are purchased or
not a bill of exchange. (See DRAWEE .) taken as security, they should be indorsed
ALTERNATIVE PAYEE . A bill of ex- by the registered holder, otherwise, in the
change may be made payable in the alterna- event of his death , there would be consider
tive to one of two, or one or some of several able delay and expense in sending proof of
payees . ( See PAYEE .) death to America .
AMALGAMATIONS. (See BANK AMAL- If the indorsement on a certificate should
GAMATIONS .) prove to be a forgery, the banker holding
AMERICAN RAILROAD CERTIFICATES. it would not have any title to the shares.
These certificates partake of the nature of a It is therefore necessary, when taking
registered holding and also of a bearer such certificates, to inquire as to the genuine
security. On the face is given the name of ness of the indorsements, particularly when
the registered holder of the shares and on the name of the registered holder is not a well
the back is supplied a blank form of transfer, known one. Brokers often guarantee the
which , when signed by the registered holder, indorsements of private persons when the
.

makes the certificate transferable by delivery shares are sold .

like a bearer bond . The registered holder, The stamp duty on the certificates when
however, is theperson to whom the company negotiated in this country is threepence for
sends the dividends, and the owner of the each £25.
certificate (unless he gets registered himself)
The following is the wording on a certifi -
must apply to him for the dividend, pro- cate of this nature :
ducing the certificate to show that he is “ This certifies that John Brown is the
entitled to it. If, as is often the case, the owner of ten paid shares of the Capital Stock
registered holder is a well -known London of the Railway Company of one
firm , the application for the dividend may hundred dollars each , transferable only on
be easily made, but if the registered holder the books of the company in person or by
is not well known there may be consider- Attorney, and upon the surrender of this
able trouble in finding him . In some certificate .
cases a commission is charged by the “ This certificate shall not become valid
registered holder for receiving and paying until countersigned by the transfer agent
over the dividend to the owner of the and also by the registrar of transfers ."
certificate . A note of the payment of each On the back there appears the following :
dividend is stamped on the back of the “ For value received have bar
certificate. gained , sold , assigned , and transferred , and
These certificates differ from a bearer by these presents do bargain , ell, assign,
bond, in that a bearer bond is a " negotiable and transfer unto
instrument," which a certificate of this shares of the Capital Stock of the
description is not, and therefore they do not Railway Company mentioned in the within
give to the owner any better title than the certificate, and do hereby constitute
previous owner had. In practice , however, and appoint true and lawful Attor
they pass from one person to another by ney , irrevocable, for and in
mere delivery . name and stead , but to use to sell,
Trouble may arise to the unregistered assign , transfer, and set over all or any
owner owing to the death of the registered part of the said Stock , and for that purpose
32
AME ] DICTIONARY OF BANKING ( ANN

to make and execute all necessary acts of and eight pence, " and the amount in figures
assignment and transfer, and one or more clearly £ 10 6s. 8d ., it is not usual to return
persons to substitute with like full power. the cheque merely because the word
“ Dated 19 “ pounds has been omitted , if it is
“ JOHN BROWN . apparently only a clerical error.
" Signed and acknowledged With regard to the sum payable by a bill
in presence of of exchange, see Section 9, Bills of Exchange
“ The witness must state his address and Act, 1882 , and the case of Cohn v. Boulken
occupation. The Company reserves the (under BILL OF EXCHANGE) where the prac
right of requiring further identification of tice of bankers is referred to with respect to
the transferor's signature. cheques drawn in England on an English
“ Notice. The signature to this assign- bank in French currency .
ment must correspond with the name as Where a bill in foreign currency is drawn
written upon the face of the certificate, in out of but payable in the United Kingdom ,
every particular, without alteration or en- see Section 72, s.s. 4 , under FOREIGN BILL .
largement, or any change whatever ." 10
(See (See ALTERATIONS, AMOUNTS DIFFER ." )
CERTIFICATE OF SUBSCRIPTION , STOCK “ AMOUNTS DIFFER .” If the amount
TRUST CERTIFICATE .) in words on a cheque or bill differs from the
AMERICAN TRAVELLERS' CHEQUES. amountin figures, the cheque or bill is usually
(See TRAVELLERS' CHEQUES .) returned unpaid by the banker, with the
60
AMORTISATION OR AMORTISEMENT. answer amounts differ," or some similar
The redemption of loans or bonds by annual words. Some bankers, however, pay the
payments from a sinking fund . The sinking less amount.
fund is built up for the purpose of redeeming In practice a banker rarely pays the
annually such an amount of bonds as are amount in words if it is the larger amount,
due to be paid off, along with the interest on although by the Bills of Exchange Act, 1882,
outstanding bonds. Section 9, s.s. 2, “ where the sum payable
An amortisation table is printed on certain is expressed in words and also in figures,
bonds which are repayable in this manner, and there is aa discrepancy between the two,
showing what amount is redeemable each the sum denoted by the words is the amount
year. payable ." Most persons in dealing with
AMOUNT OF BILL OR CHEQUE . The cheques and bills look onļy at the figures
amount must be a sum certain in money." | and not at the words. Were a drawee
The amount is usually in words, in the body to accept a bill on which the amount in
of a cheque, and, at the bottom left-hand figures is stated as £ 50, and he took that
corner, in figures. In bills the figures are as the amount of the bill when accepting it,
usually at the left -hand corner . If the not noticing that the words stated the
amount include a halfpenny, the halfpenny amount as " Five hundred pounds ," no
is disregarded . banker would be inclined to pay the amount
The Bills of Exchange Act, 1882, does not in words, unless authorised by the acceptor
specifically say that the amount must be to do so.
stated in words, and it would therefore appear “ AND REDUCED. " Where the share
that a banker could not legally refuse capital of a company has been reduced,
6
payment of a cheque where the sum was the words " and reduced ” must be added
expressed in figures only , instead of in words to the name of the company , after the
and figures. It is the practice, however, to word limited ,” until such date as the
return a cheque for completion when the court may fix . The object of the words is
amount is not in words. If the amount is in to give notice to anyone who may be giving
words only,it is customary to pay the cheque. credit to the company on the strength of
In drawing cheques, drafts, etc.,the words the capital stated in the memorandum of
of the amount should be written closely association. (See REDUCTION OF SHARE
together , so as to prevent any possibility of CAPITAL .)
an alteration , and the figures should be ANGLO A. A Stock Exchange name for
commenced close to the £ . the space be- Anglo -American Telegraph Company De
tween the pounds and the shillings being filled ferred Ordinary Stock.
with a line. Plain , large, and heavy figures ANNA. (See FOREIGN MONEYS — INDIA .)
help to prevent fraudulent alterations. ANNUALGENERAL MEETING . A general
If a cheque is drawn as “ Ten six shillings meeting of every company shall be held once
33
441335 )
ANN ) DICTIONARY OF BANKING (ANN

at the least in every calendar year, and not and present members therein mentioned ,
more than fifteen months after the last and the number of shares held by each of
preceding general meeting . (See Section 64 the existing members at the date of the
of the Companies (Consolidation) Act, 1908, return, specifying shares transferred since
under heading MEETINGS .) the date of the last return and the dates of
Some companies have two general meetings registration of the transfers, and must contain
each year. The usual business at the annual a summary specifying various particulars
meeting of shareholders is, reading the regarding the shares. (For full details
notice convening the meeting, reading the see Section 26, Companies (Consolidation)
auditor's report, adopting the directors' | Act, 1908, also Section 1 , s.s. 3, Companies
report and balance sheet, sanctioning a Act, 1913, under REGISTER OF MEMBERS OF
dividend, electing directors in place of COMPANY.) A banking company must add
those retiring by rotation , and appointing to the list a statement of the several places
the auditors. where it carries on business . The list must
ANNUAL LIST OF MEMBERS OF COM- be completed within seven days after the
PANY . By Section 21 of the Bank Charter fourteenth day, above mentioned, and
Act, every banker in England and Wales forwarded forthwith to the registrar.
must on the 1st day of January in each year, The list for the registrar must be written
or within fifteen days thereafter, make a upon special forms for the purpose, and be
return to the Commissioners of Stamps and impressed with a five- shilling fee stamp.
Taxes (now Inland Revenue) of his name, (See COMPANIES.)
residence, and occupation , or in the case ANNUAL RETURN. (See ANNUAL List
of a company or partnership , of the name, OF MEMBERS OF COMPANY .)
residence, and occupation of every member ANNUITANT. A person who is in the
and also the name of the firm under which receipt of an annuity.
such banker or company carry on business. ' ANNUITY. (From Latin annus, a year.)
If a banker or company omits or refuses to A sum of money paid yearly, or it may be
make such return within the fifteen days by quarterly or half-yearly payments. A
mentioned, or shall wilfully make other life annuity is payable only during a per
than a true return, every one so offending son's life-time ; a perpetual annuity is pay
shall forfeit the sum of £50. able in perpetuity. A deferred annuity is
By the same Section the Commissioners one which does not take effect till after a
had to publish a copy of the return in certain certain period, whereas an immediate annuity
newspapers, but, by Section 57 of 43 & 44 | begins at once . A terminable annuity ceases
Vict. c . 20 , it shall not be obligatory on at a certain fixed time, or at death . (See
the Commissioners to publish in any news- TERMINABLE ANNUITY .)
paper any return made to them by any An annuity may be created by will, or
banking company, which is duly registered during the life-time of the donor. Annuities
under the provisions of 6 Geo. IV, c. 42, may be purchased from the Government or
7 Geo . IV , Č. 46 , 7 Geo . IV , c . 67 , and the an insurance office . A person who has no
Companies Acts or any of them . one dependent upon him sometimes sinks
The above return is not required from his capital in the purchase of an annuity,
banking companies registered under the which will produce a better income than if
Companies Acts, but in place of it an annual he lent or invested the money. An annual
return must be sent to the registrar of payment received from land is a rent, not an
companies. The provisions of the Companies annuity.
(Consolidation) Act, 1908, with regard to Consols are really perpetual annuities,
the annual return are : though it is customary to refer to Consols
Every company having a share capital as stock,, and to the half -yearly payments
shall once at least in every year send to the as dividends.
registrar of companies a list (called the Where annuities are paid direct to a bank
“ Annual Return ") of all persons, who, on for credit of the annuitant's account,
the fourteenth day after the first ordinary insurance companies often require a
general meeting in the year, are members certificate from the bank , or some
of the company, and of all persons who have responsible person , that the annuitant is
ceased to be members since the date of the still alive.
last return . The list must state the names , Table showing the value of an immediate
addresses, and occupations of all the past life annuity of £ 1 according to the age
34
ANS ) DICTIONARY OF BANKING (ANS

and sex of the person upon whose life actual fact. The answer is usually written
the annuity is to depend. upon the bill or cheque. A banker mightbe
held liablein damages if he returned a cheque
MALES. FEMALES. marked (" Refer to drawer " when the correct
6

Age of the Person at the timeof Moneyto be Moneyto be answer should have been “ Postdated ,” or
Purchase upon whose life the paid down paid down “ Figures and words differ," or some similar
Annuity is to depend.
NOOOOO

in One Sum in One Sum

at the time at the time answer.
of Purchase. of Purchase. It should be noted that a careless use of
£ s. d. £ s . d. an abbreviated answer may render a banker
If 15 and under 16 23 17 10 25 16 6 liable. In an action on a returned bill which
aaaaa

16 17 23 13 6
23 91
26 127
8 8
had been marked " N.A.,” it was suggested
17 18 25
that those lettersmeant0“ No assets ” or “ No
0

18 19 23 49 25 4 8
19 99 20 23 04 25 08 account, ” as well as " No advice," which
20 21 22 15 10 24 16 6 was the answer the banker intended to
21 22 22 11 4 24 12 4 give.
22 23 22 6 9 24 8 1
23 24 22 2 24 3 10
A banker is sometimes able to get a tech
24 25 21 17 7 23 19 6 nical mistake in a cheque corrected by the
25 26 21 12 11 23 15 0 drawer, and where thiscan be conveniently
26 27
28
21
21
8
3
3
6
23 10
23 6 11
6 done it is much better than returning the
27 cheque.
28 29 20 18 9 23 1 3
29 30 20 13 11 22 16 6 • Where there are not sufficient funds to
30 31 20
20
9
4 2
22 11
22 6
8 meet a cheque, and there is also a technical
31 32 9 irregularity in it, when returning the cheque,
32 9 33 19 19 2 22 19
33 34 19 14 2 21 16 7 the answer given often refers only to the
34 35 19 9 2 21 11 6 irregularity and not to the want of funds,
35 36 19 41 21 6 2 particularly if it is expected that by the time
36 37 18 18 11 210 9
37 38 18 13 9 20 16 3 the irregularity has been put right the banker
38 39 18 8 6 20 9 7 will be in a position to pay it.
39 40 18 3 2 20 3 11 The words “ Will pay on banker's con
40 41 17 17 10 19 18 0 firmation " are occasionally added to an
answer, when the sole reason for the return
The following is a form of an insurance of the cheque is a technical one, such as
company's annuity receipt : “ Indorsement irregular. ” If the drawer
INSURANCE COMPANY. dies before the cheque arrives back , or the
Annuity Receipt Deposit £ account changes so as not to admit of
No. Annuity £ the cheque being debited , the banker is not
Received from this day of liable, by reason of the words used, to pay
19 the sum of pounds, the cheque. The words have reference only
being the purchase money for an annuity to the technical irregularity and not to the
of on the life of himself. payment of the amount.
With regard to the answer to be given
} Directors. when a wire is received asking if a certain
(
Secretary cheque will be paid, see " ADVISE FATE."
By the Stamp Act, 1891 : The following are someof the " answers "
ANNUITY, conveyance in consideration of which are given on cheques and bills (the
(See CONVEYANCE ON SALE, and Section answer being generally written in ink on the
56 in the Act.) left -hand top corner) :
purchase of. (See CONVEYANCE ON “Acceptor bankrupt."
SALE , and Section 60 in the Act. ) “ Acceptor dead." (See DEATH OF AC
creation of, by way of security. (See CEPTOR .) ( 6

MORTGAGE, etc., and Section 87.) “ Account closed ” (more often “ No

Instruments relating to , upon any other account ” ).
occasion . ( See BOND , COVENANT, “ Alteration in ...."
etc.) “ Amounts differ ” (q.v.) . )
ANSWERS. When a bill or cheque, for “ Crossed to two bankers ” (q.v.) .
any reason , is returned unpaid, the answer “Date incomplete."
given by the banker, as the reason of its “ Drawer bankrupt .”
return , must not be at variance with the "“ Drawer dead.” (See DEATH OF DRAWER.
35
ANT) DICTIONARY OF BANKING (APP

“ Effects not cleared ” ( q.v.). company's bankers. If the application is

“ Incompletely signed (or “ Further successful, a letter of allotment (see LETTER
signature required "). OF ALLOTMENT) is sent to the applicant in
" Indorsement irregular." due course .
“ Indorsement required .” The following is the standard application
“ Indorsement requires confirmation." form as recommended by the Council of
Insufficient funds ." the Institute of Bankers :
“ Insufficiently stamped ." Application for shares with receipt form attached. Size 13 in
" Irregularly drawn ." by 84 in ., the receipt being exactly a quarter of the whole form
" Mutilated cheque " (q.v.) . IMPERIAL TRUST, LIMITED.
“ No account " (q.v.) .
“ No advice " (q.v.) . Share Capital £
No assets ." Divided into Shares of £ each.
“ No effects ."
“ No orders (9.v.) . Issue of Shares of .

“ Not provided for," “ n.p.f." ( q.v.). No.....

“ Not sufficient,” “" N.S." (q.u.) (also
FORM OF APPLICATION .
written “ Not sufficient funds "').
“ Out of date. ” (See STALE CHEQUE .) To the Directors of the
“ Payment stopped ” (q.v.). IMPERIAL TRUST, LIMITED.
“ Postdated " (g.v.). Gentlemen ,
“ Present again (q.v.) . An insufficient
answer in itself. Having paid to your Bankers the sum of
“ Refer to acceptor.". " R / A ." )
£ ........being a deposit of per Share on
“ Refer to drawer, " " R /D . " (9.0.) . Application for ... ... Shares of £ each in
' Re-present.“ (See PRESENT AGAIN .) the above -named Company, I /we hereby
Requires banker's
" Requires crossing " (9.0. ). request that you will allot to me/us that
stamp of banker to whom number of Shares, and I/we hereby agree to
crossed . accept the same or any less number that you
“ Returned in terms of Proclamation.” may allot to me/us upon the terms and con
(See MORATORIUM , ROYAL PROCLAMATION.) ditions of the Prospectus (dated )
“ Signature differs ” (i.e. differs from the and Memorandum and Articles of Association
customer's usualhand or method of signing ). of the Company, and I/we authorise you to
“ Stale ." ( See STALE CHEQUE .) place my /our name (s) on the Register of
" Words and figuresdiffer." (See " AMOUNTS Members in respect of the Shares allotted
DIFFER.” ). to me /us.
ANTE - DATED . Ante -dating is placing Name (in full) .
a date on a document prior to that on which todistinctly
be written Address (in full ) ..
it is actually signed . “ To ante -date a bill .

in order to defraud may amount to a ( A lady should state Profession or Business ..

whether she is a Spinster, Wife or Widow .)
forgery .” ( Chalmers .)
A bill of exchange is not invalid by reason ( Date) ...... 19 . (Signature)
only that it is ante-dated (Section 13 , s.s. 2, This Form , when duly filled up as directed
Bills of Exchange Act, 1882 ). The date of above, should be sent entire, with the
the stamp upon an ante-dated bill may there necessary remittance, to the Company's
fore be subsequent to the date of the bill, and Bankers, the Bank of London Limited , 83,
give the bill the appearance of not being in Lombard Street, London , E.C.
accordance with the Stamp Act, 1891 , Cheques should be made payable to
Section 37, s.s. 2 : - " No bill of exchange shall
be stamped with an impressed stamp after BEARER and crossed Not Negotiable.
the execution thereof." (See DATE .)
APPLICATION FOR SHARES. A form of If altered from
10
Order " to Bearer '
application for shares usually accompanies the alteration should be signed by the Drawer.
a prospectus offering to the public for sub The Applicant is particularly requested
scription or purchase
When the shares
form is filled up in company. to write clearly, within
by aanapplicant, the bordered space
it is despatched, alongwith the sum payable below , his or her name and the full address
on application, to the company or the to which the receipt should be sent. For
36
APP ) DICTIONARY OF BANKING ( APP

Joint Accounts the first name should be £ s. d.

written within , and the other or others APPOINTMENT of a new trustee,
below the bordered space . and APPOINTMENT in execution
IMPERIAL TRUST, LIMITED . of a power of any property, or of
any use, share, or interest in any
.

Application Receipt. property, by any instrument not

RECEIVED for account of being a will . . 0 10 0
the Imperial Trust Limited ,
from the person (s) whose And see Section 62, under
Dame(s) is/ are written in the heading CONVEYANCE .
margin , the undermen
tioned amount, being a APPRAISEMENT. The stamp duty
deposit of per share on
Application for Shares in upon an appraisement or valuation is given
Name of the above-mentioned com- in the schedule to the Stamp Act, 1891 , as
first or ot pany. follows :
Sole Ap For BANK OT LONDON
plicant. LIMITED APPRAISEMENT or VALUATION of £ s . d.
any property, or of any interest
therein , or of the annual value
Address
Cashier . thereof, or of any dilapidations,
or of any repairs wanted, or of
Joint £ 1911 ) the materials and labour used or
Appli This Receipt, when re- to be used in any building, or of
cants (if turned by the Bankers.
any) must be preserved by the any artificers' work whatsoever.
Narnes Applicant to be exchanged
in due
Where the amount of the appraise
only . course for the
relative Share Certificate. ment or valuation does not
(See STANDARD FORMs. ) exceed £5 0 0 3
APPLICATION FORMS. A general term Exceeds £ 5 and does not exceed £10 0 0 6
signifying any form which is filled up and £10 I. £20 0 1 0
£ 20 £ 300 1 6
signed by acustomer when making an appli £ 40 0 2 0
cation to a banker, e.g. an application form . £ 30
for a deposit receipt or for a banker's £ 40 £ 50 0 2 6
draft. 50 £ 100 0 5 0
APPLICATION MONEY. The sum sent £ 100 £ 200 0 10 0
to a company on application for shares. £ 200 . £ 500 0 15 0
(See APPLICATION FOR SHARES .) . £ 500 . 1 0 0
APPLICATION PAYMENTS. Payments Exemptions.
made by bankers, upon application, to whole- ( 1 ) Appraisement or valua
sale houses in London , on behalf of country tion made for, and for the
customers. information of, one party
The practice is as follows : A country only, and not being in any
customer (generally a retail draper) hands manner obligatory as be
to his banker a list of the payments which tween parties either by
he wishes to be made to wholesale houses agreement or operation of
in London ; the banker forwards to his law .
London office, or London Agents, forms of (2) Appraisement or valua
cheques filled up with the various amounts, tion made in pursuance of
and drawn upon the London bank, to be the order of any Court of
sent to the wholesale creditor, or handed Admiralty, or ofany Court
to him when applied for. Each cheque of Appeal, from a judg
requires to be signed by the respective ment of any Court of
creditor as the drawer . These cheques Admiralty.
must, like ordinary cheques, bear a two- (3) Appraisement or valua
penny stamp, and the Inland Revenue tion of property of a de
Authorities demand that the list supplied ceased person made for
to the country banker must bear a similar the information of an
stamp for each name on the list. Each executor or other person
separate payment, therefore, costs four pence required to deliver in
for stamp duty. England or Ireland an affi
APPOINTMENT. By the Stamp Act, davit, or to record in any
1891, the duty is : commissary court in
37
APP ) DICTIONARY OF BANKING [APP

Scotland an inventory of aforesaid is not to be deemed duly

the estate of such deceased stamped, unless it is stamped with
person . the stamp so appropriated. "
(4) Appraisement or valua Appropriated stamps are used for :
tion of any property made Bankruptcy, proof of debt. The stamp
is adhesive.
for the purpose of ascer .
taining the legacy or suc Brokers' contract notes. The stamp is
cession or account duty adhesive.
payable in respect thereof. Foreign bills — that is, bills and promissory
notes drawn or made out of the United
Section 24 of the same Act provides : Kingdom except such bills as are payable
" (1) Every appraiser,by whom an appraise on demand,at sight, or on presentation, or
ment or valuation chargeable with at not exceeding three days after date or
stamp duty is made, shall, within sight, for which a postage stamp is the
fourteen days after the making proper one to be used . On cheques drawn
thereof, write out the same, in words abroad, the ordinary impressed stamp is
and figures showing the full amount sufficient. See under BILL OF EXCHANGE .
thereof, upon duly stamped material, Foreign bill stamps are adhesive.
and if he neglects or omits so to do, Inland bills and promissory notes drawn
or in any other manner discloses or made in the United Kingdom (except such
the amount of the appraisement or bills as are payable on demand, at sight, or
valuation , he shall incur a fine of on presentation, or at not exceeding three
fifty pounds. days after date or sight, when a twopenny
" (2) Every person who receives from any postage or impressed stamp may be used),
appraiser, or pays for the making of, and the appropriated stamps must be
any such appraisement or valuation, impressed. It is the practice of the Inland
shall, unless the same be written out Revenue Departmentto regard the appro
and stamped as aforesaid, incur a priated bill or note stamps as applicable
fine of twenty pounds." only to bills or notes chargeable with ad
APPRAISER . A person who appraises or valorem duty .
values property, real or personal, for a fee. APPROPRIATION ACCOUNT . An ac
The licence of an appraiser costs £ 2 percount which shows how net profits are
annum , (See APPRAISEMENT.) appropriated . On the one side appears the
APPRENTICE . In somebanks all junior total sum available for division, and on the
clerks, on entering the bank's service, are other side the manner in which that sum is
apprenticed either for a certain number of appropriated, for payment of dividend,
years or until they reach the age of twenty- transfers to reserve fund, etc.
one. An indenture of apprenticeship ( stamp APPROPRIATION ACT. An Act passed
2s. 6d.) is entered into, and the father or annually, at the end of the session, to give
guardian is usually a party thereto . The statutory authority to the various payments
apprentice agrees to serve faithfully, pre- out of the public money — the Consolidation
serve secrets ,and conduct himself in a proper Fund - as authorised during the session.
manner ; the father agrees to provide the The Schedules to the Act show how the
apprentice with proper clothing, etc. ; and sums granted are appropriated .
the bank agrees to instruct the youth in the APPROPRIATION OF PAYMENTS . If a
business of a banker. customer pays in money for a particular
APPROPRIATED STAMPS. Section 10 purpose, the banker must apply it accord
of the Stamp Act, 1891, enacts : ingly. For example, if an amount is paid
“ ( 1) A stamp which by any word or in to meet a specified cheque or bill, it must
words on the face of it is appropri- be used for that purpose, but if the amount
ated to any particular description of is paid in without any particular instructions
instrument is not to be used, or, being given , the banker may appropriate the
if used , is not to be available, money in reduction of the customer's
for an instrument of any other indebtedness. Where there is no special
description. appropriation then, according to the rule in
“ (2) An instrument falling under the Clayton's case, an amount paid to credit is
particulardescription to which held to be a payment of the earliest unpaid
any stamp is so appropriated as debit in the account, and it is the sum first
38
APP ] DICTIONARY OF BANKING [ ARR

paid in that is first drawn out. (See different centres is taken into account, and
CLAYTON'S Case . ) if it is found that it is cheaper tosettle a debt
APPROVED ACCEPTANCE . A seller in , say, Paris, by means of a bill upon , say,
may agree to take an “approved accept Amsterdam or Berlin , than by a bill upon
approved accept-
ance ” from a purchaser — that is, the accept- Paris, the merchant takes advantage of that
ance must be one to which no reasonable fact and makes payment accordingly.
objection can be raised . Simple arbitration is where only one
APPROVED SOCIETY . As to exemp- intermediate place is included in the trans
tions from stamp duty, see under NATIONAL action ; where there are several places it is
INSURANCE . called compound arbitration.
APPURTENANCES . Things or rights ARRANGEMENT WITH CREDITORS.
which appertain or belong to a property and Where a person is unable to pay his debts he
which pass along with the property. may (apart altogether from the Bankruptcy
ARBITRAGE. The purchase of securities Acts) endeavour to make an arrangement
on one stock exchange, or centre , and the with his creditors with respectto themoney
immediate sale of the same securities on he owes to them . A debtor usually
another stock exchange, or centre, where a offers :
higher price is ruling, in order to obtain the ( 1 ) To pay the creditors so much in the
benefit of the difference in prices between the pound in fullsatisfaction of his debts to them
two markets. Arbitrage transactions take (see COMPOSITION WITH CREDITORS) ; or
place in stocks and shares, in bills, and also (2) To transfer his property to a trustee
in bullion . to be realised and the proceeds divided
ARBITRATION . A matter which is in amongst the creditors. (See ASSIGNMENT
dispute is often settled by means of arbitra- FOR BENEFIT OP CREDITORS.)
tion — that is, the case is referred by the dis- If such an arrangement is made by deed
puting parties to one or more persons, the or agreement, the deed of arrangement must
arbitrators, who act as arbiters or judges, be registered within seven days. (See DEED
and upon whose decision the disputants agree OF ARRANGEMENT.)
to abide. The written decision of an In the case of a proposed arrangement
arbitrator is called the award. (See AWARD.) between a company and its creditors, the
By Section 119 of the Companies (Con- Companies (Consolidation) Act, 1908,
.

solidation) Act, 1908 : Section 120 , enacts :

“ (1 ) A company may by writing under its
common seal agree to refer and may
refer to arbitration , in accordance
with the Railway Companies Arbitra
tion Act, 1859, any existing or future
difference between itself and any
.
other company or person .
" (2) Companies parties to the arbitration
may delegate to the arbitrator power
to settle any terms or to determine
any matter capable of being lawfully
settled or determined by the com
panies themselves, or by their
10
directors or other managing body.
( 3) All the provisions of the Railway
Companies Arbitration Act, 1859,
shall apply to arbitrations between
companies and persons in pursuance
of this Act ; and in the construction
6
of those provisions ' the com
panies ' shall include companies
under this Act.” (See COMPANIES.)
ARBITRATION OF EXCHANGE. The
operation by which a merchant pays a debt
in one country by means of a bill payable in
another. The price of bills payable in
39
" ( 1 ) Where a compromise or arrangement
is proposed between a company and
its creditors or any class of them ,
or between the company and its
members or any class of them , the
court may, on the application in a
summary way of the company or of
any creditor or member of the com
pany or, in the case of a company
being wound up, of the liquidator,
order a meeting of the creditors or
class of creditors, or of the members
of the company or class of members,
as the case may be, to be summoned
in such manner as the court
directs .
" (2) If a majority in number representing
three - fourths in value of the cre
ditors or class of creditors, or mem
bers or class of members, as the case
may be, present either in person or
by proxy at the meeting, agree to
any compromise or arrangement, the
compromise or arrangement shall,
if sanctioned by the court, be binding
on all the creditors or the class of
ARR ] DICTIONARY OF BANKING ( ART

creditors, or on the members or class deemed to have notice of the contents of the
of members, as the case may be, and memorandum and articles.
also on the company or, in the case The following are the provisions contained
of a company in the course of being in the Companies (Consolidation) Act,
wound up, on the liquidator and 1908 :
contributories of the company. Registration of Articles.
(3) In this Section the expression' com . " 10. ( 1 ) There may, in the case of a
pany ' means any company liable company limited by shares, and
to be wound up under this Act." there shall in the case of a company
See also Section 214 under WINDING UP, limited by guarantee or unlimited ,
and Section 191 under WINDING UP VOLUN be registered with the memorandum
TARILY. articles of association signed by the
ARREARS CERTIFICATE . Where the subscribers to the memorandum and
half-year's interest on a debenture is not prescribing regulations for the com
paid, or part only is paid, an arrears certifi pany .
cate may be issued for the unpaid interest, " (2) Articles of association may adopt all
stating that it will be payable out of the or any of the regulations contained
surplus profits for any subsequent half-year. in Table A , in the First Schedule to
(See DEFERRED INTEREST CERTIFICATE .) this Act.
ARRESTMENT. In Scotland , a legal " (3) In the case of an unlimited company
process by which аa banker is ordered notto or a company limited by guarantee
part with funds belonging to a certain cus the articles, if the company has a
tomer who is a debtor to the person on whose share capital, must state the amount
behalf the arrestment has taken place. The of share capital with which the
equivalent in England is attachment company proposes to be registered .
(9.v.). “ (4) In the case of an unlimited company
ARTICLES OFASSOCIATION . The or a company limited by guarantee,
articles of association are the regulations if the company has not a share
or bye-laws of a joint stock company by capital, the articles must state the
which its affairs are governed . number of members with which the
Subject to the provisions of the memo company proposes to be registered,
randum of association , a company can alter for the purpose of enabling the
or add to the articles. (See Section 13, registrar to determine the fees
below .) payable on registration .
The memorandum forms the boundary to
the directors' powers, but within that boun Application of Table A.
dary the company can make its own rules “ 11. In the case of a company limited by
and regulations, and these are contained in shares and registered after the commence
the articles of association . The articles ment of this Act, if articles are not registered,
accept the memorandum of association as or, if articles are registered, in so far as the
the charter of incorporation of the company, articles do not exclude or modify the regula
and so accepting it the articles proceed to tions in Table A. in the First Schedule to this
define the duties, the rights and the powers Act, those regulations shall, so far as appli
of the governing body as between themselves cable, be the regulations of the company in
and the company at large, and the mode and the same manner and to the same extent as
form in which the business of the company if they were contained in duly registered
is to be carried on, and the mode and form articles.
in which changes in the internal regulations
of the company may from time totime be Form , Stamp, and Signature of Articles.
made.” ( Ashbury Railway Carriage Co. 12. Articles must
v. Riche, 1875, L.R. 7 H.L. 653.) (a) be printed ;
Before dealing with a company a banker (6) be divided into paragraphs num
should be careful to make himself acquainted bered consecutively ;
with the memorandum and articles of (c) bear the same stamp as if they were
association of the company, and particularly contained in a deed ; and
as to the powers of the directors to borrow ( d) be signed by each subscriber of the
and to mortgage the company's property. memorandum of association in the
Every person dealing with a company is presence of at least one witness who
40
ART] DICTIONARY OF BANKING ( ART
must attest the signature, and that to the company under the memo
attestation shall be sufficient in randum or articles sball be a debt
Scotland as well as in England and due from him to the company, and
Ireland .
in England and Ireland be of the
Alteration of Articles by Special Resolution . nature of a specialty debt.
“ 13. ( 1 ) Subject to the provisions of this Registration of Memorandum and Articles.
Act and to the conditions contained “ 15. The memorandum and the articles (if
in its memorandum , a company may any) shall be delivered to the registrar of
by special resolution alter or add companies for that part of the United King
to its articles ; and any alteration dom in which the registered office of the com
or addition so made shall be as valid pany is stated by the memorandum to be
as if originally contained in the situate, and he shall retain and register them .
articles, and be subject in like
manner to alteration by special Effect of Registration .
resolution . “ 16. ( 1 ) On the registration of the
" (2) The power of altering articles under memorandum of a company, the
this section shall, in the case of an registrar shall certify under his
unlimited company formed and hand that the company is incor
registered under the Joint Stock porated, and in the case of a limited
Companies Acts, extend to altering company that the company is
any regulations relating to the limited .
amount of capital or its distribution " (2) From the date of incorporation men
into shares, notwithstanding that tioned in the certificate of incor
those regulations are contained in poration, the subscribers of the
the memorandum .” memorandum together with such
Table A. , referred to in the above sections, other persons as may from time to
contains regulations which may be adopted time become members of the com
for a company's articles of association , but pany, shall be a body corporate by
in manycompanies special articles are pre the name contained in the memoran
pared . The regulations in Table A. relate dum, capable forthwith of exercising
to :-business, shares, lien , calls on shares, all the functions of an incorporated
transfer and transmission of shares, for company, and having perpetual
feiture of shares, conversion of shares into succession and a common seal, with
stock , share warrants, alteration of capital, power to hold lands, but with such
general meetings, proceedings at general liability on the part of the members
meeting. votes of members, directors, to contribute to the assets of the
powers and duties of directors, the seal, company in the event of its being
disqualifications of directors, rotation of wound up as is mentioned in this
directors, proceedings of directors, divi Act.
dends and reserve, accounts, audit, notices . Conclusiveness of Certificate of Incorporation .
The following sections set forth the
general provisions of the Act with respect “ 17. ( 1 ) A certificate of incorporation
to the memorandum and articles : given by the registrar in respect of
Effect of Memorandum and Articles. any association shall be conclusive
evidence that all the requirements of
14. ( 1 ) The memorandum and articles this Act in respect of registration
shall, when registered , bind the and of matters precedent and inci
company and the members thereof dental thereto have been complied
to the same extent as if they re with , and that the association is a
spectively had been signed and company authorised to be registered
sealed by each member, and con and duly registered under this Act.
tained covenants on the part of each " (2) A statutory declaration by a solicitor
member, his heirs, executors, and of the High Court, and in Scotland
administrators, to observe all the by an enrolled law agent, engaged
provisions of the memorandum and in the formation of the company, or
of the articles, subject to the by aa person named in the articles as
provisions of this Act. a director or secretary of the com
“ (2) All money payable by any member pany , of compliance with all or any
 ASĖJO31 DICTIONARY OF BANKING [ASS

assign
of the said requirements shall be As to the difference between “
produced to the registrar, and the ability ” and “ negotiability,” see Nego
registrar may accept such a declara- | TIABLE INSTRUMENTS.
tion as sufficient evidence of As to the stamp duty on an assignment
compliance. by way of security, see MORTGAGE ; and
upon a sale or otherwise, see CONVEYANCE .
Copies of Memorandum and Articles to be As to an assignment of a life policy, see
given to Members. LIFE POLICY.
'18. (1 ) Every company shall send to (See DEBTS, ASSIGNMENT OF .)
every member, at his request, and ASSIGNMENT FOR BENEFIT OF
on payment of one shilling or CREDITORS. A person who is unable to
such less sum as the company pay his debts may legally call his creditors
may prescribe, a copy of the together and offer to transfer his property to
memorandum and of the articles a trustee, in order that it may be realised
(if any ). and the proceeds apportioned amongst the
“ (2) If a company makes default in com- creditors , according to the amount of their
plying with the requirements of this claims, in full discharge of what he is owing
Section, it shallbe liable for eacle to the deed assigning theproperty tothe
offence to a fine not exceeding one
pound.” trustee must be registered within seven days,
Where articles have been registered , a otherwise it is void. (See DEED OF ARRANGE
copy of every special resolution for the MENT.)
time being in force shall be embodied in or An assignment of the debtor's property
annexed to every copy of the articles issued for the benefit of his creditors, is an arrange
after the confirmation of the COM
resolution.
PAN
ment quite apart from proceedings under
( See RESOLUTIONS .) (See IES , the Bankruptcy Acts.
MEMORANDUM OF ASSOCIATION , TABLE A. ) Where a debtor assigns his property to a
“ AS PER ADVICE .” These words, when trustee for the benefit of his creditors it is
found upon a bill of exchange, imply that an act of bankruptcy (see ActS OF BANK
the drawer has drawn the bill in accordance RUPTCY) , and a debtor may be adjudged a
with a letter of advice. bankrupt upon a bankruptcy petition pre
ASSENT OF EXECUTOR . (See EXECUTOR.) sented within three months from the date
ASSESSMENT OF INCOME TAX . The of an act of bankruptcy (see RECEIVING
income of a person liable to pay income tax ORDER ). When such a petition is presented
is assessed by the Surveyor of Taxes who and the debtor is made bankrupt, the deed
determines the amount of tax which is pay- of assignment becomes void. (See BANK
able. (See INCOME Tax .) The word “ Assess- RUPTCY, COMPOSITION WITH CREDITORS. )
ment "is usedforthe official value of a isprotected by Section 46 of
A banker
property or income for taxation purposes, the Bankruptcy Act, 1914, in paying over to
and also for the amount of the tax an a trustee under a deed of assignment any
individual has to pay. balance there may be in the debtor's account.
ASSETS . The goods, property, and re- (See under ACTS OF BANKRUPTCY.)
sources of all kinds, of a company or an ASSIGNMENT OF DEBTS. (See DEBTS ,
individual, which are available for the ASSIGNMENT OF.)
payment of the debts or liabilities. A ASSIGNMENT OF LIFE POLICY . (See
banker's assets are his cash in hand or LIFE Policy .)
with his London agents or at the Bank of ASSIGNOR. The person by whom a
England, money at call and short notice, property or a right is assigned.
investments in Government and other ASSOCIATION OF ENGLISH COUNTRY
securities, bills, advances to customers, BANKERS. The Association was formed in
premises, etc. (See BALANCE SHEET .) 1874 to keep a watch over all matters
ASSIGNATION. In Scotland, an assign- arising in Parliament or elsewhere affecting
ment. directly or indirectly the interests of the Eng
ASSIGNEE . The person to whom a lish country banks, or any section thereof.
property or a right is assigned . It ceased to exist in December, 1919, on the
ASSIGNMENT. To assign a right or a formation of the British Bankers' Associ
property is to transfer it, or make it over, to ation . (See BRITISH BANKERS ' ASSOCIATION .)
another person . ASSOCIATIONS . ( See SOCIETIES . )
42
ASS) DICTIONARY OF BANKING [ ATT

ASSUMED NAME. Where a person trades which may be given to him to fulfil. Half
in an assumed name, and signs cheques and an hour in the morning is more valuable
bills in that name, it is customary for a than an hour at night, and he who turns up
banker to receive a written authority from readily in the morning, because he wants to
him to honour cheques or bills when signed get on with his work , is worth more than the
in the trade name. The authority is signed man who drags himself in at the last moment,
by the person in his real name and a specimen merely because he knows he cannot with
signature of the assumed name is given . impunity delay his arrival any longer.
The Bills of Exchange Act, 1882, permits ATTESTATION . A formal witnessing of
a bill to be signed in an assumed name. By a signature.
Section 23: In the case of a will, the testator's signa
“ ( 1 ) Where a person signs a bill in a ture must bemade, or acknowledged , by the
trade or assumed name, he is liable testator in the presence of two or more
thereon as if he had signed it in his witnesses present at the same time, each of
own name." whom must attest or witness the will.
A purchaser of a business often assumes , There is no special form of attestation
for a time at any rate, the name of the person necessary, but the following is a common
who built up the connection . attestation clause :
Every individual carrying on a business “ Signed by the said the testator,
under a business name which does not con- in the presence of us, both present at the
sist of his true surname must be registered same time, who in his presence and at his
under the Registration of Business Names request and in the presence of each other
Act, 1916. (See REGISTRATION OF BUSINESS have hereunto set our names as witnesses.
NAMES .) )
ASSURANCE .
9)
Originally the word
assurance appears to have been applied The witnesses give their names, addresses,
only to life assurance, and the word “ in- and descriptions. A legacy to a witness or
surance ” to fire insurance, but either word to the wife of a witness is void .
is now commonly used without regard to its Where a signature is witnessed, as in the
original meaning. ( See FIDELITY GUAR- case of a transfer of shares, the form is
ANTEE, FIRE INSURANCE, LIFE Policy, usually :
MARINE INSURANCE Policy, POLICY OF “ Signed , sealed, and delivered by the
INSURANCE , SINKING FUND ASSURANCE, above named in the presence of
SPECIE - TRANSMISSION OF .) “ Signature
00
ATTACHMENT. Where a person has Address
obtained a judgment for the recovery of " Occupation
money, he may, by application to the Court, When a document is executed by a person
obtain a garnishee order ,which, when served acting under a power of attorney, the form
upon a banker, will attach any money in the is :
banker's hands belonging to the person Signed , sealed , and delivered by the
against whom judgment was given . (See above named John Brown by his attorney
GARNISHEE ORDER.) John Jones in the presence of,” etc.
ATTENDANCE BOOK. Most banks re- A transferee should not witness a trans
quire every clerk to sign the attendance book feror's signature. A minor is not a suitable
on arrival at the office each morning, and to witness. There is no legal objection to a
do so before a certain specified time, after wife witnessing her husband's signature, or a
which a line is usually ruled across the page, husband that of his wife, but many railway
and all late arrivals must of necessity sign and other companies will not accept such
below it. witnesses.
It is the duty of the chief clerk, or some A transfer of shares to the nominees of a
otherresponsible official, to seethat the book bank shouldnot be witnessed by one of the
is duly signed day by day. In the case of nominees. It should , however, be witnessed
absence on leave, or on annual holiday, or by some other bank official. (See FORGED
on account of illness, a note is made in the TRANSFER.)
book to that effect. When a transfer is executed out of Great
The clerk who is always punctual is, as a Britain the signature should be attested by
rule, the one who may be depended upon to H.M. Consul or Vice- Consul, a clergyman ,
be up to time in the discharge of any duty magistrate, notary public, or other person
43
ATT) DICTIONARY OF BANKING ( AUD

holding a public appointment. When a to him when he appeared perfectly to

witness is a female, she must state whether | understand the same.'
she is a spinster, wife or widow ; and if a wife Several signatures on a document may be
she must give her husband's name, address, witnessed by the same person.
and occupation . In Scotland, when a person is unable to
As to the instructions of the Bank of write, a deed must be executed for him by
England for attesting the signatures on a a notary public or a justice of the peace
demand for registration of stock as stock in the presence of two witnesses, as a deed
transferable by deed, see under NATIONAL cannot be executed by a mark.
DEBT. ATTESTED COPY . A copy which is
Where any material alterations or inter- certified by a witness to be an exact copy of
lineations have been made in a deed, they the original document . (See CERTIFIED
should be referred to in the attestation clause Copy .)
as having been made before execution of the The following is a specimen of the form of
document . attestation at the foot of a copy of a docu
In a document under hand , a witness often ment of several pages :
signs simply as : - “ Witness, John Brown," “We have carefully examined this and the
and gives his address and description. two foregoing sheets with the original
In Scotland, as for example where a cus- document and attest it to be a true copy
tomer signs a banker's printed memorandum thereof. Dated this day of
of deposit , a clause , called the “ testing | 19 ...
clause,” in the following form is included | Clerks with Brown & Jones,
before he signs : } Solicitors , Carlisle."
“ In witness whereof these presents in so For Stampduty , see Copy .
far as not printed written by (name of person ATTORNEY, LETTER AND POWER OF .
who filled up the form ) and subscribed by me (See POWER OF ATTORNEY .)
the said at upon the ATTORNEY, WARRANT OF . (See
day of one thousand nine hundred WARRANT OF ATTORNEY .)
and before these witnesses of ATTORNMENT. An attornment clause
[description) and of in a mortgage deed is where the mortgagor
[ description ]. attorns or acknowledges himself the tenant
“ Witness. of the mortgagee, at a rent usually of the same
Witness." amount as the interest payable under the
mortgage. By such a clause the relationship
The testing clause in a Scotch deed also of landlord and tenant is created, and the
states is thereby empowered to distrain
the number of pages on which it is mortgageeand
written , and mentions any important for rent, in that way enforce payment
alterations which have been made in the of the interest due on the debt. The rent
document. must be a reasonable one, for if so excessive
Where a signature by “ mark ” is wit- that it could never have been intended to be
nessed , the form is : paid , it may be regarded by the Courts as
his an attempt to give the lender a preference
John X Brown . in case of the debtor's bankruptcy. (See
mark MORTGAGE .)
Witness, AUDIT . ' The examination , usually yearly
John Jones, or half-yearly, of books of account, by a
Warwick Road, person specially appointed, the auditor, for
Carlisle, Builder. thepurpose of ascertaining the correctness
In banks it is customary for two persons of the books. (See AUDITORS.)
to witness a “ mark . ” AUDITORS. The auditors of a company
In the case of a deed which is executed by are appointed by the shareholders, and their
a " mark ,” the words used are to the follow- particular function is to make an inde
ing effect : pendent investigation of the company's
Signed , sealed , and delivered by the affairs and to report to the shareholders.
above -named John Brown, he having signed The appointment, powers, and duties of
by a mark in consequence of being unable to auditors are set forth in the following sec
sign his name, in the presence of us, the deed tions of the Companies (Consolidation) Act,
having first been read over and explained 1908 :
44
AUD ) DICTIONARY OF BANKING
Appointment and Remuneration of Auditors.
112. ( 1 ) Every company shall at each
annual general meeting appoint an
auditor or auditors to hold office
until the next annual general
meeting.
" (2) If an appointment ofauditors is not
made at an annual general meeting,
the Board of Trade may, on the
application of any member of the
company, appoint an auditor of the
company for the current year, and
fix the remuneration to be paid to
him by the company for his services.
d .
(3) A director or officer of the company
shall not be capable of being ap
pointed auditor of the company.
" (4) A person ,other than a retiring auditor,
shall not be capable of being ap
pointed auditor at an annual general
meeting unless notice of an intention
to nominate that person to the office
of auditor has been given by a
shareholder to the company not less
than fourteen days before the annual
general meeting, and the company
shall send a copy of any such notice
to the retiring auditor, and shall give
notice thereof to the shareholders,
either by advertisement or in any
other mode allowed by the articles,
not less than seven days before the
annual general meeting :
Provided that if, after notice of
the intention to nominate an auditor
has been so given , an annual general
meeting is called for a date fourteen
days or less after the notice has been
given , the notice, though not given
within the time required by this
provision, shall be deemed to have
been properly given for the purposes
thereof, and the notice to be sent or
given by the company may, instead
of being sent or given within the
time required by this provision, be
sent or given at thesame time as the
notice of the annual general meeting.
“ (5) The first auditors of the company
may be appointed by the directors
before the statutory meeting, and if
so appointed shall hold office until
the first annual general meeting,
unless previously removed by a
resolution of the shareholders in
general meeting, in which case the
shareholders at that meeting may
appoint auditors.
45
( AUD
“ (6) The directors may fill any casual
vacancy in the office of auditor, but
while any such vacancy continues
the surviving or continuing auditor
or auditors, if any , may act.
“ (7) The remuneration of the auditors of
a company shall be fixed by the
company in general meeting, except
that the remuneration of any audi
tors appointed before the statutory
meeting, or to fill any casual vacancy,
may be fixed by the directors.
Powers and Duties of Auditors.
“ 113. ( 1 ) Every auditor of a company
shall have a right of access at all
times to the books and accounts and
vouchers of the company, and shall
be entitled to require from the
directors and officers of the company
such information and explanation as
may be necessary for the perform
ance of the duties of the auditors.
" (2) The auditors shall make a report to
the shareholders on the accounts
examined by them , and on every
balance sheet laid before the com
pany in general meeting during their
tenure of office, and the report shall
state
(a) whether or not they have
obtained all the information
and explanations they have
required ; and
(b) whether, in their opinion, the
balance sheet referred to in
the report is properly drawn
up so as to exhibit a true
and correct view of the state
of the company's affairs
according to the best of their
information and the ex
planations given to them ,
and as shown by the books
of the company:
· (3) The balance sheet shall be signed on
behalf of the board by two of the
directors of the company, or if there
is only one director, by that director,
and the auditors' report shall be
attached to the balance sheet, or
there shall be inserted at the foot of
the balance sheet a reference to the
report, and the report shall be read
before the company in general
meeting, and shall be open to
inspection by any shareholder.
Any shareholder shall be entitled
AUD ) DICTIONARY OF BANKING (AUT
to be furnished with a copy of the By Section 81 , the names and addresses
balance sheet and auditors' report of the auditors, if any, must appear on the
at a charge not exceeding sixpence prospectus of a company. (See BALANCE
for every hundred words. SHEET , COMPANIES .)
“ (4) If any copy of a balance sheetwhich AUTHORISED CAPITAL . The capital of
has not been signed as required by a company as authorised by its memorandum
this Section is issued , circulated , or of association . It is called also the " nomi
published , or if any copy of a balance nal” and “ registered " capital. (See
sheet is issued , circulated , or pub- CAPITAL .)
lished without either having a copy AUTHORITIES. The authorities which
of the auditors' report attached bankers may receive from customers are in
thereto or containing such reference connection with many different matters. In
to that report as is required by this all cases they should be in writing, and, in
Section, the company, and every many cases, bankers have their own printed
director,manager,secretary ,or other forms, which they prefer to be used.
officer of the company who is know Authorities are given for a banker to pay ,
ingly a party to the default, shall on on certain dates , subscriptions to societies
conviction be liable to a fine not and clubs, premiums on policies, etc., also for
exceeding fifty pounds . the periodical transfer of an amount from the
" (5) In the case of a banking company account of the customer giving the authority
registered after the fifteenth day of to the credit of an account with another bank
August eighteen hundred and or of another customer in the same bank .
seventy -nine Such transfers are made in accordance with
(a) if the company has branch the instructions in the authority, whether
banks beyond the limits of weekly , monthly, quarterly, half-yearly,
Europe, it shall be sufficient yearly, or on particular dates, or on par
if the auditor is allowed ticular occasions, as, for instance, where an
access to such copies of and authority is given to transfer a specified
extracts from the books and amount from a No. 1 account to a
accounts of any such branch No. 2 account when the balance on the
as have been transmitted latter account is almost exhausted .
to the head office of the Bankers receive instructions to pay calls,
company in the United to pay over certain sums in exchange for
Kingdom ; and specified documents, and also to hand over
(b) the balance sheet must be documents in exchange for certain sums, and
signed by the secretary or in each case the particular instructions
manager (if any ), and where contained in the authority must be carefully
there are more than three observed . A record is made in a diary of
directors of the company all special payments, and in some offices a
by at least three of those note may also with advantage be kept in
directors, and where there the bill case under the correct date. Where
are not more than three subscriptions and other periodical payments
directors by all the directors. are numerous, it is customary to keep a
special book for the purpose, and detail
Rights of Preference Shareholders, etc. , as to under each day everything which is due to
Receipt and Inspection of Reports, etc. be paid on that day. (See BANKER's Order.)
" 114. ( 1 ) Holders of preference shares Authorities are often given in connection
and debentures of a company shall with signing upon accounts. In each case
have the same right to receive and particulars of the authority, and , if only for
inspect the balance sheets of the a fixed period, the date of its expiry, should
company and the reports of the be noted in the ledger against the account.
auditors and other reports as is It is an advantage if these authorities are
possessed by the holders of ordinary signed in the presence of a bank official.
shares in the company . (See Joint ACCOUNT, MANDATE .)
" (2) This Section shall not apply to a There are also authorities to give up to a
private company, nor to a company third party articles left for safe custody (see
registered before the first day of SAFE CUSTODY) and to give up deeds, certi
July nineteen hundred and eight.” | ficates and other documents which are held
46
 DICTIONARY OF BANKING [ AWA
AVA )
as security for an overdraft or loan . When | like things, in order to prevent the loss of
such authorities are acted upon, the person the ship and the rest of the cargo . (See
receiving the securities should, of course , GENERAL AVERAGE .)
give a receipt for them . Where a customer AVERAGE ADJUSTER. A person who
authorises à banker to lend his securities to settles or adjusts the amount to be paid by
a solicitor, an undertaking should be taken the owner of the ship and the owners of the
from the solicitor to return the securities. cargo, in connection with any intentional
(See SOLICITOR'S UNDERTAKING.) losses which have been made for the safety
An authority in connection with one of the ship or the cargo . (See GENERAL
matter must not be taken to include another, | AVERAGE.)
e.g., an ordinary authority for signing upon AVERAGE BOND . Where a ship has
an account does not empower the person suffered an intentional loss of cargo in order
in whose favour it is given to withdraw to save the ship and the rest of the cargo, the
securities or arrange an overdraft limit . master of the ship obtains from the con
For convenience of reference, it is a good signees of the goods, before delivery is made,
plan to sort the authorities into alphabetical a bond under which they agree to pay their
cases, or to enter particulars of them in proportion of the general average as soon as
books, duly indexed , each entry and the amount is ascertained. (See GENERAL
authority being numbered. AVERAGE .)
AVAL. French. An indorsementupon a AVERAGE CLAUSE. The clause in a
foreign bill or promissory note by a person marine insurance policy which may provide
who signs as a surety . An Aval is a that certain articles are free from averag ,
e
form of guarantee unknown to English unless general, or the ship be stranded , and
law . The only equivalent is the provision that other articles are free from average
in Section 56 of the Bills of Exchange Act, under , say, three per cent. , unless general, or
1

1882, which provides that where a person the ship be stranded, sunk, burnt, or on fire.
signs a bill otherwise than as drawer or Under an average clause in a fire policy,
acceptor, he thereby incurs the liabilities in the event of a fire, the amount payable
by the insurance company will be, if the
of an indorser to a holder in due course .
AVERAGE. The average bank rate is property is only partially destroyed, and has
ascertained as follows : not been insured up to the full value of the
3 % for 20 days ; 3 x 20 = 60 property , a proportioned amount of the
4 % 60
. ; 4 x 60 = 240 damage, based upon the proportion which
21% 10 ; 21 x 10 = 25 the amount insured bears to the full value
2 % 12 ; 2 x12 24 of the property. Where a property, value
£ 1,000, is insured for £ 500, anddamage by
102 ) 349 fire occurs to the extent of £ 300, the amount
Average for that period = £3 8 5 which the company will pay will be £ 150–
that is, half the loss, because the property
The average balance of an account is was insured for only half its value. It is
ascertained in the same way : not usual, however, in the case of insurance
Balance £ 2,500 for 20 days = 50,000 of an ordinary dwelling -house to insert an
1,800 62 = 111,600 average clause in an English fire policy.
450 18 8,100 A perusal of the policy will show whether,
3,260 81 = 264,060 or not, the clause is included .
AVERAGING (STOCK EXCHANGE ). A
181 433,760 bull ” speculator on the Stock Exchange
buys more of a certain stock he holds, when
Average balance for half -year =£ 2,396
the price has fallen , so as to make the average
In this example it is supposed that the price of the whole purchase less than the
balance has varied only four times during price paid for the original purchase ; and a
the half-year. bear ” speculator, when the price rises
AVERAGE (IN SHIPPING ). The amount against him, sells more of the stock so as to
payable by the owner of a ship and by the average the price.
owners of the cargo , in proportion to their AWARD . The decision of an arbitrator
individual interests, to make good any loss upon any matter in dispute which has been
caused by throwing part of the cargo over- referred to him by the disputants.
board or cutting away the masts or such By the Revenue Act, 1906 , the stamp
47
BAC) DICTIONARY OF BANKING (BAL
duty upon an award in England or Ireland, An account for this purpose is usually called
and award or decreet arbitral in Scotland is Provision for bad and doubtful debts ."
ten shillings. BAGS. A Stock Exchange name for
Buenos Ayres Great Southern Railway
BACK BOND . BACK LETTER . In ordinary stock .
Scotland a back bond is a document which BAILEE. The person to whom goods are
renders another bond null and void. Where entrusted for a specific purpose by another
an absolute disposition, or conveyance, of a person ' called the bailor. ( See SAFE
property is taken by a banker as security, CUSTODY.)
the deed is qualified by a back bond, or back BAILOR . The person who entrusts goods
letter, given by the banker to the debtor to another person (the bailee) for a specific
stating the conditions under which the purpose. (See SAFE CUSTODY.)
debtor is entitled to request areconveyance BALANCE BOOK. A book in which
of the property from the banker. (See balances of accounts are entered in order
DISPOSITION ABSOLUTE .) to prove their accuracy with the balance as
As to the stamp duty upon a back bond shown in the general ledger. For example,
or back letter see MORTGAGE, and Section 86 the balance book for the current account
of the Stamp Act, 1891 , in that article. ledgers contains the names ofall the accounts,
See also Section 23 under AGREEMENT. and the balances, debit or credit, are entered
BACKING A CHEQUE. Before a banker therein weekly , or at such intervals as may
will give cash to a stranger for a cheque upon be required, the final difference between the
another bank, it must be indorsed by some debit and credit columns agreeing with the
reliable person known to the banker. This balance of the current account totals account
indorsing is called “ backing the cheque." in the general ledger. Small branches
If the cheque should be dishonoured , the prove the current accounts all together, but
banker looks for repayment to the person in large branches it is convenient, and saves
who has “ backed " it. much time, to balance each ledger separately.
)
BACKWARDATION , Where a " bear ” (See Day Book.)
speculator on the Stock Exchange wishes to Some banks prove the current account
continue his account, instead of delivering ledgers by taking out the totals of the debit
on the settlement day the securities which columns and the totals of the credit columns
he has sold, he arranges with his broker to and agreeing each summation with the
postpone delivery. In such a case the corresponding summation of totals in the
broker must borrow the stock and pay for general ledger.
it at the “ making up ” price . If the The process ofascertaining if the final totals
demand for money by the “ bulls " is greater are correct is called " striking aa balance."
than the demand for the stock in question BALANCE CERTIFICATE . When a por
by the “ bears," the “ bear ” may receive tion of the shares represented by a certificate
interest (called contango) from the “ bull is sold , the shareholder receives a balance
for the money lent to the " bull " on the certificate " for the shares remaining unsold.
borrowed stock, but if the demand for the BALANCE OF ERRORS. An expression
stock is so great that there is aa scarcity of it, commonly used in banks to describe a
the bear may have to pay a back- “ balance " which, at the time of obtaining
wardation rate for the loan of the stock it , was apparently correct, but which is
instead of the “ bull ” paying interest for the subsequently found to be wrong , owing to
loan of the money. (See CONTANGO, STOCK an error for a similar amount on both sides
EXCHANGE.) of an account.
BAD AND DOUBTFUL DEBTS. A bad BALANCE SHEET. A balance sheet is
debt is one which is irrecoverable, and a a statement prepared so as to exhibit on the
doubtful debt is one the recovery of which , one hand the liabilities of a company, or
in whole or in part, is uncertain . As soon person , and, on the other hand, theassets or
as a debt is ascertained to be altogether bad , property available to meet the liabilities.
a banker treats it as a loss and writes it The liabilities are shown on the left-hand
off accordingly. With regard to a doubtful | side, and the assets on the right-hand side.
debt a sum is at once set aside out of profits As a balance sheet is simply a statement,
as a provision to meet the whole of the it is not headed “ Dr.” and “ Cr.,” and the
co

debt or such portion of it as , in the banker's words “ To ” and By ” are not used ;
opinion, may ultimately prove to be bad . these terms being used only for an account.
48
BAL ] DICTIONARY OF BANKING ( BAL
A balance sheet must be so drawn up as way of dividend, and the amount, if any,
to exhibit a truthful statement of the which they propose to carry to a reserve
position. The position should not be repre- fund . 40
sented as being better than it actually is, 108. A copy of the balance sheet and
but the position may be better than is report shall, seven days previously to the
disclosed in the statement. Lord Justice meeting, be sent to the persons entitled to
Buckley has said : “ The purpose of the receive notices of general meetings in the
balance sheet is primarily to show that the manner in which notices are to be given
financial position of the company is at least hereunder."
as good as there stated, not to show that it Holders of preference shares and deben
is not and may not be better ." tures have the same right to receive and
The balance sheet of a company must be inspect the balance sheets of the company
signed on behalf of the board by two as is possessed by the holders of the ordinary
directors, or, if there is only one, by that shares. (See Section 114 of the above
director, and the auditors' report must be mentioned Act, under AUDITORS .)
attached to the balance sheet or there must In the case of a banking company regis
be a reference to it at the foot of the balance tered after August 15, 1879, thebalance sheet
sheet, and the report must be read before the must be signed by the secretary or manager,
company in general meeting and shall be and where there are more than three directors
open to inspection by any shareholder. of the company by at least three of those
(See Section 113 of the Companies (Con- directors, and where there are not more than
solidation ) Act, 1908, under AUDITORS .) three directors by all the directors ( Section
113, ).
theannualsummary to be filed with the
registrar of companies must (except where
Every limited banking company must,on
the first Monday in February and the first
the company is a private company) include Tuesday in August in every year, make a
a statement, in the form of a balance sheet, statement of its capital, liabilities and assets
audited by the company's auditors, contain in a prescribed form , and display a copy in its
ing a summary of its share capital, its registered office and in every branch or
liabilities, and its assets,and giving such place of business (Section 108) . (See
particulars as will disclose the general nature | BANKING COMPANY.)
of those liabilities and assets, and how the The auditors' certificate and report on a
values of the fixed assets have been arrived bank's balance sheet is usually in a form
at, but the balance sheet need not include similar to the following :
a statement of profit and loss. ( See “ We beg to report to the shareholders
REGISTER OF MEMBERS OF COMPANY.) that we have examined the books and
The articles of association of a company accounts of the X & Y Banking Company,
usually contain regulations regarding the Limited, at December 31 , 19.. , along with
balance sheet , but in companies which are the securities representing the investments
governed by Table A. (see Section 11 under of the bank or held against loans, the bills
ARTICLES of AssoCIATION ) the following regu- discounted, the cheques on other banks in
lations apply : transitu, the money at call and short
“ 106. Once at least in every year the notice, and the cash balances at the head
directors shall lay before the company in office and at several of the branch offices.
general meeting a profit and loss account We have obtained all the information and
for the period since the preceding account explanations which we have required, and,
or in the case of the first account) since the in our opinion, the foregoing balance sheet
incorporation of the company, made up to is properly drawn up so as to exhibit a
a date not more than six months before such true and correct view of the state of the
meeting. bank's affairs, according to the best of our
“ 107. A balance sheet shall be made out information and the explanations given to
in every year and laid before the company in us, and as shown by the books of the
general meeting made up to a date not more company.
than six months before such meeting. The In considering a customer's balance sheet,
balance sheet shall be accompanied by a a banker should scrutinise each individual
report of the directors as to the state of item , and not be satisfied merely by ascer
the company's affairs, and the amount taining the difference between the total of
which they recommend to be paid by the assets and the total of the liabilities.
49
4441535)
BAL ) DICTIONARY OF BANKING (BAL

As to the liabilities, it may be taken for to repay the mortgagee, it is not wise, as a
granted that the customer will have to meet rule, to rely upon an asset of that description .
all he has shown to the full extent, but there The value of the property and the amount
may be items on that side of the sheet which of the mortgage must be shown.
have been omitted or forgotten, and there If the value of any shares is included ,
may be also contingent liabilities, as , for the present price should be ascertained , and
example, in respect of any guarantees he may a note made of any liability on the shares.
have given, which will not appear on his If the statement shows the existence of
balance sheet. Such contingent liabilities private loans, particulars should be furnished
should be revealed to the banker, as it is of the security which is held .
necessary that they be taken into account Each balance sheet must be separately
in obtaining a correct estimate of a person's studied in connection with the peculiarities
position . If bills have been discounted for of each trade, but, as a rule, the amount of
the customer, his liability for any which book debts and stock as shown in a balance
may be dishonoured should not be over- sheet requires a considerable allowance to be
looked. The natural tendency is to minimise made in order to arrive at what may be
liabilities and to swell assets . regarded as the approximate sum which
It is important to note whether the assets would be obtained if thedebts were suddenly
which are shown on a balance sheet are of called in or the stock realised under the
such a nature as to be readily realisable, or hammer. After allowing a liberal margin
whether they are " tied up " and would be for that object, the banker should notice if
difficult to realise. the customer is in such a sound position that
In considering the assets, the item " book all his current liabilities could be cleared
debts ” calls for inquiry. Is the money off, without requiring any amount which may
owing by reliable parties ? Are the debtors be entered as the value of the premises in
few and the individual amounts large, or is which his business is conducted . The
the total spread over a large number of value of the premises is not an asset to be
persons ? If any portion is bad or doubtful relied upon in time of difficulties. Machinery
the banker will not regard it as an assct. and similar assets should be regularly written
Has any provision been made for bad and down to provide for depreciation. (See
doubtful debts ? As to the value of the DEPRECIATION .)
“ stock ," as shown in the balance sheet, If the assets include an amount for good
it should be ascertained if it is taken at will, or, in a company's balance sheet, for
cost price or at the present market price. 1 formation expenses, the banker will exclude
The nature of the stock must not be for- it in making his estimate. (See GoodwILL.)
gotten, because certain articles do not If a balance sheet shows a reserve fund ,
improve by keeping, or they may go out of
fashion and have practically no value. A
of ascertain
the customer's business .
farm stock should be put down in a balance It should be ascertained whether or not
sheet at what it will sell at present, not at interest upon capital has been deducted
what the farmer anticipates it will produce before arriving at the profits for the year.
two or three months ahead. It does not A banker may have , in many cases, to help
necessarily follow that all the sheep on a a customer in making out a balance sheet,
farm belong to the farmer who owns or and much may be done to assist in obtaining
rents the farm , nor that the stock in a shop a statement from which nothing material
always belongs to the shopkeeper. It is has been omitted, and in which none of the
necessary to bear in mind that the value assets are overstated . Such a balance sheet
of the stock of a going concern is, as a rule, should be signed by the customer. Balance
very different from that which prevails sheets should be preserved so that a new one
when the business comes to an end and the may be compared with the previous ones.
stock is sold by auction. The most satisfactory form of private
If the customer ownsproperty it is desir- balance sheet is one that is certified by an
able to ascertain the nature of the property auditor or accountant.
and also whether the value in the balance If the balance sheet of a company shows
sheet is a fair one. If there are any mort- that debentures have been issued , the
gages upon theproperty the amounts must, of banker should give particular attention
course, be deducted, but as margins frequent to the assets which are covered by the
ly disappear when the property is realised debentures.
50
BAL ) DICTIONARY OF BANKING [BAN

Where debentures have been issued by a To Bank Premises Redemption Fund.

company to a bank as security for a loan, Balance carried forward to next
the full amount of the debentures should , account.
properly, be shown in an inner column of CR .
thecompany's balance sheet with a note to By Balance from last account.
the effect that they are held by the bank as Net Profits for the year, after
security, and under the heading “ bank providing for bad and doubtful
overdraft ' on the balance sheet, there debts,
should be a note to the effect that it is In the usual form of a balance sheet the
secured by the issue of £.. debentures. liabilities appear on the left and the assets
A balance sheet which omits any mention on the right, that is the opposite sides from
of the fact that debentures have been issued those onwhich the balances appear in the
as security does not give a correct view of books. In America and on the Continent
the state of the company's affairs. (See the liabilities are usually placed on the
DEBENTURES.) right and the assets on the left, thus corre
A readiness on the part of a customer to sponding to the sides on which the balances
supply particulars of his position begets con appear in the books.
fidence in a banker's mind. George Rae in In England a bank's half-yearly balance
“The Country Banker says : The solid takes place at 30 June and 31 December,
man of business who, from pride or pre- but in Scotland most of the banks adopt
judice, hesitates to disclose the position of other dates .
his business affairs to the confidential ears of The clearing banks issue monthly state
his bankers, damnifies himself in two ways ; ments based on the average weekly position
on the one hand, he lessens the full measure during the month . (See WINDOW DRESSING.)
of credit which he might obtain from them A banker endeavours to keep the assets
should he ever desire to borrow ; on the in such a form that he may be able to provide
other, he fails to furnish them with data for all demands which may be made upon
whereon to speak of his position, with him . One bankermay consider it necessary,
knowledge and decision , in reply to inquiries from the fluctuating nature of his deposits,
from without." to preserve a larger stock of cash in hand
With respect to the balance sheet ofa bank and money at call than another whose
the usual items on the liabilities side are : deposits are more stable. Money at call
Paid -up capital. and short notice is called a banker's second
Reserve fund . line of defence. (See GOLD RESERVES .)
Dividend payable on BALANCE TICKET. Where a certain
Balanceof Profit and Loss Account. number of shares has been sold and the
Deposits, current accounts, certificate, which is sent by the seller's broker
etc , Liabilities to the company's office for certification , is
Acceptances, indorsements, to the for a larger number than has been sold, a
etc. public. balance ticket is given to the broker for the
Own notes in circulation remaining shares. When the new certificate
On the assets side the items are : for the unsold shares is ready , it can be
Cash in hand and at Bank of England. obtained on delivery of the balance ticket.
Cheques on other banks in transitu . (See CERTIFIED TRANSFER.)
Money at call and short notice. BANCO . A term applied to the standard
Investments . money in which a bank, in some countries,
Bills discounted . kept its accounts, in order to distinguish it
Current accounts and loans, and other from the worn or depreciated currency of
accounts. the country.
Acceptances and indorsements (as per The mark -banco (bank mark ) of Hamburg
contra ). served for a long period , in accounts, as a
Bank premises. common unit for the whole of the petty
The Profit and Loss Account for the year German states, each of which had its own
may be as follows : system of coinage. It enabled important
DR. transactions between these states and be
To Interim Dividend paid . . tween Germany and other countries to be
„ Dividend, payable. reduced to one common denomination . The
,, Reserve . mark -banco was done away with on the
51
BAN ) DICTIONARY OF BANKING (BAN
establishment of the uniform German coin- With reference to the use of the word
age in 1872 . “ All large payments in " bank ” Mr. Justice Eve expressed an
Hamburg were effected by transfers at the opinion in the case of Saunders v . Car
principal bank, the unit of which was the bonneau (1910 , unreported) that the " time
mark -banco , a coin which did not exist, has arrived when the legislature might
but which was supposed to be containing well impose some restriction on the indis
silver of a certain weight and fineness and criminate use of the term ' bank ' by indi
worth 1s. 62.” (Palgrave's " Dictionary of viduals and corporations whose business has
Political Economy." ) no relation to banking, properly so -called ."
BANIS. (See FOREIGN MONEYS — Rou- The Money-lenders Act, 1911 , Section 2
MANIA .) (see MONEY-LENDER ), prohibits the regis
BANK . The word " bank " is said to be tration of a money-lender under any name
derived from the Italian word banco, a including the word “ bank,” or implying
bench. The early bankers, the Jews in that he carries on banking business.
Lombardy, transacted their business at A bank is entitled to protect itself against
benches in the market-place. When a an employee obtaining a situation in another
banker failed his banco was broken up by bank in the same district. “ What an
the people , whence our word bankrupt . employer is entitled to protection against
One of the earliest Italian banks, the Bank is the use by the employee against him in
of Venice, was originated for the manage- his business of knowledge obtained by him
ment of a public loan, or monte, as it was of his employer's affairs and the influence
called . Macleod , in his “ Elements of Bank- / acquired by him over his customers in the
ing,” says : — “ At that period the Germans course of an ordinary trade, and, in the case
were masters of a great part of Italy ; and of a professional man, over what is more
the German word banck came to be used as commonly called his clients.' ( Dewes v.
well as its Italian equivalent monte, and was Fitch, 1920, A.C. 36 T.L.R. 585.) In Spence
Italianised into banco, and the loans were v. Mercantile Bank of India , Ltd. (1921,
called indifferently monti or banchi.” K.B.D. 37 T.L.R. 390) - “ The only way in
“ The relation between banker and cus- which the former employer can protect him
tomer is that of debtor and creditor, with self is by some reasonable restriction against
a superadded obligation on the part of the the employee entering an employment I!

banker to honour the customer's cheques where such knowledge could be used .” In
if the account is in credit.” (London Joint this case it was held that the restriction
Stock Bank , Ltd. v. Macmillan and Arthur, covered too wide an area, and was wider
1918, A.C. 777. See that case under ALTERA- than was necessary for the reasonable
TIONS . ) (See BANKER AND CUSTOMER.) protection of the defendants.
The principal business of a banker is to The word “ bank " is sometimes used in
receive money from customers either on the singular and sometimes in the plural.
current account or on deposit account, and It is customary to say, e.g. “ the bank has
in the former case to pay cheques drawn by a note issue,” “ the bank allows 2 per cent.
the customers. A banker also discounts interest," the bank have considered your
bills and promissory notes , and makes application," " the bank are willing to grant
advances either by way of a loan or of an the loan .” (See BANK OF DEPOSIT, BANK
overdraft. He undertakes the agency of OF ENGLAND, BANK OF ISSUE, BANKING
other British banks and of foreign banks, COMPANY, CHARTERED BANK, PRIVATE
effects purchases and sales of securities, BANK .)
collects cheques, dividends, coupons, and BANK ACCEPTANCE . A bill accepted
foreign bills, makes periodical and other by a bank. A merchant in this country,
payments, pays customers' acceptances, purchasing, say , cotton in America, may
issues drafts, circular notes and letters of arrange for his bankers to accept a bill
credit, accepts bills for customers, undertakes drawn on them by the shippers in America,
the office of executor and trustee, and takes the various shipping documents being at
charge of securities and other valuables for tached to the bill. The shipper may then
customers .' A banker often acts as treasurer sell the bill and thus receive immediate
for a local authority, and sometimes manages payment for the cotton . (See CONFIRMED
the issue of a loan for a foreign Government LETTER OF CREDIT.) Banks show the
or for a corporation. See further under total of these acceptances in their balance
CUSTODIAN TRUSTEE . sheet as a liability with a contra entry
52
BAN ) DICTIONARY OF BANKING [BAN

on the assets side of the customers' liability | Statutory Committee to advise them , the
to the bank. (See BALANCE SHEET.) members of which should be nominated by
BANK AMALGAMATIONS. A Treasury the departments from time to time, for such
Committee was appointed in 1918 to con- period as may seem desirable, and should
sider and report to what extent, if at all, consist of one commercial representative
amalgamations between banks may affect and one financial representative, with power
prejudicially the interests of the industrial to appoint an arbitrator, should they
and mercantile community, and whether it disagree ."
is desirable that legislation should be intro- (See NOVATION . )
duced to prohibit such amalgamations or to BANK BILL. A bill which is issued or
provide safeguards under which they might accepted by a bank . The discount rates
continue to be permitted. In the Report of for bank bills are less than the rates for
that Committee, the following recommenda- fine trade bills ; for example, whenquoted
the rates
tions were made : for three months' bank bills are at
We therefore recommend that legisla- | 614 to 64 per cent., trade bills may be quoted
tion be passed requiring that the prior at,say, 7to 77.
approval of the Government must be BANK BOOK . A name sometimes given
obtained before any amalgamations are to a pass book .
announced or carried into effect. And, in BANK BUILDINGS. ( See BANK
order that such legislation may not merely PREMISES.)
bave the effect of producing hidden amal- BANK CHARTER ACT, 1844 (7 & 8
gamations instead, we recommend that all Vict. c . 32) . An Act to regulate the
proposals for interlocking directorates, or issue of bank notes and for giving to the
for agreements which in effect would alter Governor and Company of the Bank of
the status of a bank as regards its separate England certain privileges for a limited
entity and control, or for purchase by one period. The Act was passed on July 19,
bank of the shares of another bank, be also 1844, and still regulates the note issues in
submitted for the prior approval of the England. The main provisions of the Act
Government before they are carried out. are :—The Bank of England was to be
“As general principles to be acted upon divided into two departments, the issue
at present by the Government at its dis- department and the banking department.
cretion , we would suggest that a scheme for the directors were to transfer to the issue
amalgamating or absorbing a small local department securities to the extent of
bank, or any scheme of amalgamation £ 14,000,000, of which the debt due by the
designed to secure important new facilities public was to be a part, and also so much
for the public or a really considerable and of the gold coin , gold and silver bullion as
material extension of area or sphere of should not be required for the banking
activity for the larger of the two banks department, in exchange for bank notes .
affected, should normally be considered The Act gave the Bank of England a
favourably, but that if an amalgamation monopoly of note issue within a radius of
scheme involves an appreciable overlap of three miles from the City of London .
area without securing such advantages, or After the passing of the Act there were to
would result in undue predominance on the be no new banks of issue in any part of the
part of the larger bank , it should be refused. United Kingdom , and, if aa banker ceased to
Consideration should also, in our opinion, issue his own notes, the Bank of England
be given to the undesirability of permitting was empowered to increase its note issue
an unusual aggregation of deposits without against public securities by two-thirds of the
fully adequatecapital and reserves. amount of such issue withdrawn from
" It only remains to make a suggestion circulation . A bank issuing notes on May
as to which Government department or 6, 1844, was allowed to continue to issue to
the last
departments should be charged with the an average amount as ascertained by the
responsibility of approving or disapproving average amount of the bank's notes in cir
amalgamation schemes, etc., under our pro- culationfor twelve weeks preceding April 27.
posal above. On the whole, we think that Issuing banks were to render accounts to
the approval both of the Treasury and of the commissioners of Inland Revenue.
the Board of Trade should be obtained and By Section 11 , “ it shall not be lawful
that legislation should be passed requiring for any banker to draw , accept, make, or
the two departments to set up a special issue, in England or Wales, any bill of
53
BAN ) DICTIONARY OF BANKING [BAN

exchange or promissory note or engage- | adequate supplies of currency notes were

ment for the payment of money payable to not for the moment available , certain notes
bearer on demand," except in the case of of the Bank of England were used, at the
those banks which were issuing own notes request of the Treasury, for the purpose of
in 1844. (See above .) advances to bankers under the Currency
Previous to the passing of this Act bankers and Bank Notes Act, the maximum excess
issued notes without restrictions, and it was involved being £3,043,000. By 10tlı August
anticipated that the restrictions imposed the position as regards the bank notes had
by the Act would have a beneficial effect in become normal in all respects.' Section 3
preventing the evils from which the country provided that “ the Governor and Company
had suffered through an unrestricted issue. of the Bank of England and any persons
The working of the Act was soon tested. concerned in the management of any Scot
In 1847 a severe crisis occurred, but the tish or Irish bank of issue may, so far as
Act did not fulfil what had been expected, temporarily authorised by the Treasury and
and in order to save the situation the Govern- subject to any conditions attached to that
ment had to intervene and authorise the authority, issue notes in excess of any limit
Bank to issue notes in excess of the amount fixed by law ; and those persons are hereby
as fixed by the Act. This is called the indemnified, freed, and discharged from any
“ Suspension of the Bank Act,” and it was liability, penal or civil, in respect of any
successful in restoring confidence. In issue of notes beyond the amount fixed by
November, 1857 , another crisis occurred , and law which has been made by them since
again the Government gavepermission to the 1st August, 1914 , in pursuance of any
Bank to exceed its authorised issue, with authority of the Treasury or of any letter
the same result as on the previous occasion. from the Chancellor of the Exchequer, and
In May, 1866 , the Act was suspended for the any proceedings taken to enforce any such
third time, and, as before, the trouble soon liability shall be void .”
passed away . H. D. Macleod says the The Act regulating the issue of notes in
expansive theory was the only means of Ireland is 8 & 9 Vict. c . 37, and the corre
saving the Bank itself as well as every other sponding Act for Scotland is 8 & 9 Vict.
bank fromstopping payment. Thus we see c . 38. ( See BANK NOTES, BANK OF
the entire failure of Peel's expectations ( that ENGLAND, BANK OF ISSUE .)
is, the restrictive theory in the Bank Charter BANK CLERKS' ORPHANAGE. Office,
Act) . He took away the power of unlimited | 34 Clements Lane, E.C.4 . Instituted , 1883,
issues from the Bank, and imposed a incorporated, 1884, under the Companies
rigorous numerical limit on its powers of Acts.
issue, under the hope that he had prevented The object of the Institution is the
the recurrence of panics. But the panics maintenance and education of children of
recurred with precisely the same regularity subscribing bank officials deprived of a
as before ; and therefore, in this sense, the father's care and protection . Such children
Act has failed ; and when monetary crises are ordinarily eligible for admission between
do occur, it is decisively proved that it is the ages of six and eleven. The Orphanage
wholly incompetent to deal with them." has no buildings and no uniform . The
On the outbreak of war with Germany in children are placed in suitable boarding
August, 1914, the Government issued an schools and the cost of their education ,
emergency paper currency of £1 and 10s. maintenance, clothing, medical attendance,
notes. ( See MORATORIUM .) On 1st August, etc., is undertaken until they are fifteen
1914, the Prime Minister and the Chancellor years of age. The management of the
of the Exchequer sent a letter to the Bank Orphanage is in the hands of representatives
of England authorising the suspension of of the leading banks. Since its foundation,
the Bank Act. In answer to a question in the total number of children admitted is over
the House of Commons (9th Nov., 1915) as 400. The minimum annualsubscription is 5s.
to whether the Bank Act was, in fact, BANK HOLIDAYS . The Act (34 Vict.
suspended in August, 1914, the Prime c. 17) making provision for bank holidays ,
Minister said : “ The authority of 1st August and respecting obligations to make payments
was never acted upon, and was succeeded and do other acts on such bank holidays, was
by Section 3 of the Currency and Bank Notes passed on May 25, 1871. The Act is as
Act, 1914, which received the Royal Assent follows :
on 6th August. On 7th and 8th August, as " Whereas it is expedient to make provision
54
BAN ) DICTIONARY OF BANKING (BAN

for rendering the day after Christmas Day, to payment of the money or performance
and also certain other days, bank holidays, of the act on the holiday.
and for enabling bank holidays to be
appointed by royal proclamation: Appointment of Special Bank Holidays by
Be it enacted by the Queen's most excel Royal Proclamation .
lent Majesty, by and with the advice and “ 4. It shall be lawful for Her Majesty.
consent of the Lords Spiritual and Temporal, from time to time, as to Her Majesty may
and Commons, in this present Parliament seem fit, by proclamation in the manner in
assembled, and by the authority of the same, which solemn fasts or days of public thanks
as follows : giving may be appointed , to appoint a
special dayto be observed as a bank holiday,
Bills due on Bank Holidays to be Payable on either throughout the United Kingdom or
the Following Day . in any part thereof, or in any county, city,
Section 1. After the passing of this Act borough, or district therein, and any day so
the several days in the Schedule to this Act appointed shall be kept as a close holiday in
mentioned (and which days are in this all banks within the locality mentioned in
Act hereinafter referredto as bank holidays) such proclamation, and shall, as regards bills
shall be kept as close holidays in all banks in of exchange and promissory notes payable
England and Ireland and Scotland respec in such locality, be deemed to be a bank
tively, and all bills of exchange and pro- holiday for all purposes of this Act.
missory notes which are due and payable on Day Appointed for Bank Holiday may be
any such bank holiday shall be payable, and altered by Order in Council.
in case of non -payment may be noted and
protested , onbank
not on such the next following
holiday ; and day, and like 5.manner,
any such
It shall be lawful for Her Majesty in
from time to time, when it is
noting or protest shall be as valid as if made made to appear to Her Majesty in Council
on the day on which the bill or note was in any special case that in any year it is
made due and payable ; and for all the pur- inexpedientthat a day by this Actappointed
poses of this Actthe day next following a for abank holiday shall be a bank holiday.
bank holiday shall mean the next following to declare that such day shall not in such
day on which a bill of exchange may be year be aa bank holiday, and to appoint such
lawfully noted or protested. other day as to Her Majesty in council may
seem fit to be a bank holiday instead of such
Provision as to Notice of Dishonour and day , and thereupon the day so appointed
Presentation for Honour.
shall in such year be substituted for the
day so appointed by this Act.
" 2. When the day on which any notice of
dishonour of an unpaid bill of exchange or Exercise of Powers conferred by Sections 4 and
promissory note should be given , or when 5 in Ireland by Lord -Lieutenant.
the day on which a bill of exchange or pro " 6. The powers conferred by Sections 4
missory note should be presented or received and 5 of this Act of Her Majesty may be
for acceptance, or accepted or forwarded to exercised inIreland, so far as relates to that
part ofthe United Kingdom , by the Lord
any referee or referees, is a bankholiday, Lieutenant
such notice of dishonour shall be given and Ireland in Council.
of
such bill of exchange or promissory note
shall be presented or forwarded on the day Short Title.
next following such bank holiday. “ 7. This Act may be cited for all pur
poses as ' The Bank Holidays Act, 1871. '
As to any Payments on Bank Holidays.
Schedule .
" 3. No person shall be compellable to
make any payment or to do any act upon Bank Holidays in England and Ireland.
such bank holidays which he would not be Easter Monday .
compellable to do or make on Christmas Day The Monday in Whitsun week .
or Good Friday ; and the obligation to make The first Monday in August.
such payment and do such act shall apply The 26th day of December, if a week day."
to the day following such bank holiday ; and (If the 26th December is a Sunday, Monday,
the making ofsuch payment and doing such 27th December, shall be a bank holiday. See
act on such following day shall be equivalent Section 2 of the Act of 1875 given on page 56.)
55
BAN ) DICTIONARY OF BANKING [ BAN

Bank Holidays in Scotland . or docks, or to some conspicuous place in the

“ New Year's Day. immediate neighbourhood, a notice to the
Christmas Day. same effect for at least a week immediately
If either of the above days falls on a preceding any day which it is intended to
Sunday the next following Monday shall be observe as a holiday under this Act ; and
a bank holiday . the anniversary of the coronation of Her
Good Friday. Majesty and her successors, and the birthday
The first Monday of May. of the Prince of Wales , shall no longer be
The first Monday of August." kept as holidays in any inland revenue office
By 3 Edw . 7, c . 1, Bank Holiday (Ireland) in England or Ireland.
Act, 1903, St. Patrick's Day, March 17, December 26 falling on Sunday.
when a week day shall be a bank holiday,
but if March 17 is a Sunday, March 18 shall “ 2. Whenever the 26th day of December
be a bank holiday. shall fall on a Sunday, the Monday immedi
Christmas Day and Good Friday, which ately next following, that is to say, the 27th
are common law holidays in England and day of December,shall be aholidayunder this
Act, and also under the Holidays Act of 1871 .
Ireland, are statutory holidays in Scotland.
The effect of bank holidays in connection Exercise of Powers by Lord -Lieutenant of
with Days of Grace is dealt with in Section Ireland .
14 of the Bills of Exchange Act, 1882 ( see " 3. The powers conferred on Her Majesty
DAYS OF GRACE)
reckoning of time, and in connection
under that Act itwith the by Sections4 and 5 of the Holidays Act of
is dealt
with in Section 92 (see BILLS OF EXCHANGE 1871 may be exercised in Ireland, as far as
Act, 1882). relates to that part of the United Kingdom ,
by the Lord-Lieutenant in Council, and
HOLIDAYS EXTENSION Act, 1875 (38 Vict, Section 6 of that Act is hereby repealed ;
c. 13) . and those powers of Her Majesty and of the
Whereas it is expedient to amend “ The Lord -Lieutenant in Council shall extend to
Bank Holidays Act, 1871 ' ( in this Act holidays under this Act.
referred to as the Holidays Act of 1871 ) , and Short Title .
to extend certain of the holidays named
therein to the customs, bonding warehouses , " 4. This Act may be cited for all purposes
and docks, and to amend the Acts relating as ' The Holidays Extension Act, 1875.'
to holidays in the inland revenue offices in Schedule .
England and Ireland :
“Be it therefore enacted , etc. " Easter Monday.
Monday in Whitsun week .
Days mentioned in Schedule be Holidays. The first Monday in August.
00
Section 1. From and after the passing of The 26th of December (if a week day).".
this Act, the several days and each and (See TIME OF PAYMENT OF BILL.)
every of them in the Schedule to this Act BANK HOLIDAYS ACT, 1871. (See BANK
mentioned, being holidays under the Holi- HOLIDAYS.)
days Act of 1871 , shall be kept as public BANK HOURS. The hours during which
holidays in the customs, inland revenue banks are open to do business with the public
offices, and bonding warehouses in England do not vary very much. The bankers in any
and Ireland respectively ; and it shall be one town generally agree to act together as
lawful for the directors or governing body to the hours when the doors will be opened
(by whatever name known) of any dock or and closed. From 9 or 10 a.m. till 3 or 4
docks in England and Ireland respectively p.m. are the hours which are usually con
to cause the said days or any of them to be sidered sufficient, though in some market
kept as holidays in such dock or docks, any towns the banks continue open for an extra
restraining clause in any Act of Parliament hour upon market days. In very small
notwithstanding : Provided that such towns or in villages, the hours may be much
directors or governing body shall give notice shorter, and are regulated according to the
thereof by inserting an advertisemen t to amount of business to be done. Sub
that effect in some newspaper circulating in branches are, in some cases , open only for
the locality of such dock or docks, and by two or three hours once a week, or as may
affixing to theprincipalgates of the said dock be found necessary .
56
BAN ] DICTIONARY OF BANKING [BAN

On the occasion of local holidays, bankers deemed to be bank notes of the banker by
may agree to be open for only, say, an hour, whom or by whose agent the same shall be
or they may agree to close altogether, and issued within the meaning of the 7 & 8 Vict.
in such cases due notice of the holiday must c. 32, and 8 & 9 Vict. cc. 37 & 38."
be exhibited in the bank for some time pre- Notes may not be issued in England for a
viously. When a banker closes upon a local less sum than five pounds, but in Scotland
holiday he must arrange for bills falling due and Ireland they may be issued for one
to be attended to and also see if there is pound and upwards._Notes for less than £ 5
anything urgent in the remittances and were prohibited in England after April 5 ,
correspondence. 1829 (7 Geo. IV, c. 6, Section 3) .
Most banks have one half-day holiday in . The Chinese are said to have been the
the week and close at either 12 or 1 o'clock . inventors of bank notes about the year 119
(See AFTER HOURS.) B.C.
BANK MARK . (See BANCO.) The origin of bank notes in England is to
BANK NOTE REGISTER. A book in be found in the receipts which goldsmiths
which some bankers keep particulars ofevery gave for money left with them for safe
Bank of England note which they receive, keeping. At first they were special promises
and of every one which is paid away. The with regard to some particular money in
name of the person from whom the note is their possession, but, afterwards, they
received is recorded, and also the number, became general promises to deliver a sum
date, place of issue, and amount. Each entry of money on demand.
is numbered consecutively and the number Bank notes have relieved bankers and the
is placed upon the corresponding note, public generally from many inconvenient
so that by merely quoting that number, the transfers of large quantities of coins, which
note may at any time be turned up in the would otherwise have been necessary. Pro
register and full particulars found. This fessor Jevons says : “ I find that a Bank
running number is useful as a ready means of England note weighs about 204 grains,
of keeping a record of notes paid out across whereas a single sovereign weighs about 123
the counter and sent away by post. The date grains, and the note may represent five,
when a note is paid away may be marked | ten, fifty, a thousand or ten thousand
against the entry madewhen it was received, such sovereigns with slight differences in
or a separate book may be used for the printing ."
purpose in which only the reference num- A country bank which is authorised to
bers need be copied , together with a note issue its own notes, must takeout a licence for
of the person to whom it was paid and the each place where its notes are issued, and
date . must not issue an own note from any
BANK NOTES. Bank notes are promissory branch not licensed. (See LICENCE.) Á
notes, issued by a bank and payable to bearer country banker usually issues his own
on demand , butunlikepromissory notes they notes again and again until they become
may be re-issued after payment. They are so soiled as to be unfit for further circulation.
practically money and in the ordinary On the outbreak of war with Germany in
course of business are treated as cash . 1914, the Government issued an emergency
The definition of a bank note by 17 & 18 paper currency of £ 1 and 10s. notes. (See
Vict. c. 83, Section 11 , is : - “ All bills, drafts, CURRENCY NOTES.)
or notes, other than notes of the Bank of The duty upon bank notes, as imposed by
England, which shall be issued by any the Stamp Act, 1891 , is :
banker, or the agent of any banker, for the BANK NOTE £ s . d.
payment ofmoney to the bearer on demand ; For money not exceeding £1 0 0 5 .

and all bills, drafts, or notes so issued which Exceeding £1 and not exceeding £2 0 0 10
shall entitle or be intended to entitle the . £2 . £5 0 1 3
bearer or holder thereof, without indorse . £5 £10 0 1 9
ment, or without any further or other £ 10 . £ 20 0 2 0
indorsement than may be thereon at the time . £ 20 . £ 30 0 3 0
of the issuing thereof, to the payment of any £ 30 £ 50 0 5 0
sum of money on demand , whether the same £ 50 £ 1000 8 6
shall be so expressed or not, in whatever And see Sections 29, 30, and 31 as
form and by whomsoever such bills, drafts, follows :
or notes shall be drawn or made, shall be “ 29. For the purposes of this Act the
57
BAN ) DICTIONARY OF BANKING [ BAN

expression banker ' means any person | BANK OF ISSUE, COMPOSITION, COUNTRY
carrying on the business of banking in the BANK Notes, FORGERY, HALF NOTES,
United Kingdom , and the expression ‘ Bank INDORSEMENT ON BANK NOTE, LEGAL
note ' includes TENDER, LICENCE, NOTE REGISTER, NOTE
(a) Any bill of exchange or promis- RETURN, PAYMENT STOPPED (Notes) , Post,
sory note issued by any STATUTE OF LIMITATIONS, STOLEN BANK
banker, other than the Bank NOTES.)
of England, for the pay- BANK OF CIRCULATION . The same as
ment of money not exceeding BANK OF ISSUE (q.v.) .
one hundred pounds to BANK OF DEPOSIT. A term applied to
the bearer on demand ; banks which receive deposits from their
and customers, but are not empowered to issue
(6) Any bill of exchange or pro- their own notes, to distinguish them from
missory note so issued which “ banks of issue " which are authorised to
entitles or is intended to issue their own notes.
entitle the bearer or holder BANK OF ENGLAND . In the year 1691 ,
thereof, without indorse- William Paterson , a native of Dumfriesshire,
ment or without any further submitted to the Government a plan for the
or other indorsement than establishment of a national bank, and in the
may be thereon at the time year 1694 the Bank of England, which has
of the issuing thereof, to since become the greatest banking institution
of money not in the world , was incorporated by Act 5 &
the paymentone
exceeding hundred 6 William & Mary. The Act is entitled
pounds on demand, whether “ An Act for granting to their Majesties
the same be so expressed or several duties upon tonnage of ships and
not and in whatever form , vessels, and upon beer,ale, and other liquors,
and by whomsoever the for securing certain recompenses and advan
bill or note is drawn or made. tages in the said Act mentioned, to such
“ 30. A bank note issued duly stamped, or persons as shall voluntarily advance the
issued unstamped by a banker duly licensed sum of fifteen hundred thousand pounds
or otherwise authorised to issue unstamped towards carrying on the war with France."
bank notes, may be from time to time re- The Act authorised the raising of £ 1,200,000
issued without being liable to any stamp duty by voluntary subscription, the subscribers
by reason of the re-issuing. to be incorporated under the style of “ The
“ 31. ( 1) If any banker, not being duly Governor and Company of the Bank of
licensed or otherwise authorised to England .” The sum of £ 300,000 was also
issue unstamped bank notes, issues, authorised to be raised by subscription and
or permits to be issued, any bank annuities granted to the subscribers. All
note not being duly stamped, he shall the money was quickly subscribed , and a
incur a fine of fifty pounds. charter was granted on July 27, 1694, for
" ( 2) If any person receives or takes eleven years, and it has since then been
in payment or as a security any bank renewed from time to time.
note issued unstamped contrary to Within three years the Bank was com
law, knowing the same to have been pelled to suspend payment.
so issued , he shall incur a fine of In 1708, when the Bank Charter was
twenty pounds." renewed , a clause was inserted constituting
By 9 Geo. IV, c. 23, Section 7, bankers the Bank of England the only joint stock
who are licensed to issue unstamped notes bank in England. In 1718 subscriptions
or bills shall pay : for Government loans were for the first
“ As a composition for the duties which time received at the Bank , and the Bank
would otherwise have been payable for such has been employed by the Government in
promissory notes and bills of exchange similar transactions up to the present
issued or in circulation during such half- time.
year, the sum of 3s. 6d. for every £100, and In 1720 the Bank found itself in danger
also for the fractional part of £ 100, of the of being involved in the South Sea Com
said average amount or value of such notes pany's ruin . In 1734 its business was trans
and bills in circulation .” (See BANK ferred from the Grocers' Hall to a newly
CHARTER ACT, BANK OF ENGLAND NOTES, erected building in Threadneedle Street.
58
BAN ) DICTIONARY OF BANKING [BAN

The Bank commenced to issue Bank Post | Department and the Banking Department.
Bills in 1738 (see BANK Post BILL ). A run The Bank's note issue was limited to
upon the Bank took place in 1745, and in £ 14,000,000 against securities, part of which
order to check it and to obtain time, it is was the debt due from the public ; for any
related that the Directors arranged that notes issued in excess of that amount gold
employees of the Bank should present notes coins or gold or silver bullion must be
for paymentand that the cashiers should pay deposited in the issue department. The
those notes in sixpences. The employees net profit on any issue of notes against
who received the sixpences went out of the securities exceeding £ 14,000,000 is paid to
Bank, but slipped in by another door and the State . The Bank Act has been sus
paid in the money again . The Bank began pended on three occasions — in 1847, 1857
to issue notes for £10 and £15 in 1759 ; pre- and 1866 . On the outbreak of war with
vious to that year it would appear that the Germany in 1914 , the Bank was authorised
lowest amount of note issued was £ 20. In to suspend the Bank Act, but the authority
1780 the Gordon Riots occurred , and for was not acted upon . (See BANK CHARTER
protection a company of Foot Guards did | Act.)
duty in the Bank, and ever since a company The Bank of England is the centre of the
of Grenadier or Coldstream Guards have London money market, and to a very large
remained in the Bank during each night. extent, indeed, the heart of the money
In 1793, or practically one hundred years market of the world. Its advertised rate
after the Bank was founded , notes for £ 5 of discount, so well known as the "Bank
were first issued. The capital of the Bank Rate,” is that upon which, in this country,
had by that time increased to £11,642,400. all other discount rates, and the deposit
In 1797, owing to the effects of the unusual rates allowed by banks, are more or less
demand for specie, an Order in Council was dependent.
issued " that it is indispensably necessary The Bank keeps the national reserve of
for the public service, that the Directors bullion, and as all other banks throughout
of the Bank of England should forbear the country keep an account with the Bank
issuing any cash in payment, until the of England, either directly or indirectly (by
sense of Parliament can be taken on the keeping an account with a London agent,
subject.” which agent keeps an account there ), the
Notes for £1 and £ 2 appeared for the first Bank of England occupies the unique posi -
time in 1797. In the same year Peel's tion of being the holder of the ultimate
“ Restriction Act ” was passed . It is banking reserve. In a time of panic all
entitled “ An Act for continuing for a limited banks fall back upon the Bank of England
time the restriction contained in the minute for supplies of gold.
of Council of the 26th of February, 1797, of The Bank carries onthe ordinary business
payment of cash by the Bank .” of banking, but in addition it has charge of
In 1810, the Bullion Committee reported the Government accounts and manages the
to the House of Commons upon the high National Debt, paying the dividends thereon .
price of bullion and the state of the circu . From the sums which are paid to the Bank
lating medium. In 1816, the Bank was for the management of the public debt, the
authorised to increase its capital to Bank, by the Act of 1844 , allows the State
£ 14,553,000, at which amount it still stands. £ 180,000 per annum for the privileges which
In 1819 the Bank Restriction Act was further it enjoys . The remuneration for the man
continued till 1820. On May 1 , 1821 , the agement of the National Debt is fixed at an
Bank began to pay their notes in gold . In annual sum of £ 325 per £1,000,000 up to
December, 1825, the Bank passed through £500,000,000 ; £ 100 per £1,000,000 above
a very severe time,and it appears that the 500,000,000, but the amount is not to be
credit of the Bank was saved by the finding less than £ 160,000 per annum . The re
of a box containing a quantity of one -pound muneration for the management of Ex
notes . In 1826 , notes under £ 5 were chequer Bonds and Bills is £100, and of
abolished ; and the monopoly which the Treasury Bills £ 200, for every £ 1,000,000 of
Bank had hitherto enjoyed was done away such Bonds or Bills outstanding on the last
with except in London and within a radius day of the previous financial year (55 & 56
of sixty - five miles thereof. In 1844 , the Bank Vict . c. 48).
Charter Act was passed , It separated the The Bank of England is, in the words of
Bank into two departments , the Issue George Clare, “ invested with a certain
59
 BAN ] DICTIONARY OF BANKING [BAN

stateliness and dignity of standing, which department of the Bank of England : and
place it hors de concours, and which restrain the whole amount of Bank of England notes
it from working, as other banks do, solely then in circulation, including those delivered
with a view to dividend-earning." to the banking department of the Bank of
.
The following sections in the Bank Charter England as aforesaid , shall be deemed to be
Act (7 & 8 Vict. c. 32) deal with the issue issued on the credit of such securities, coin ,
of notes by the Bank and with the privileges and bullion so appropriated and set apart to
which it enjoys : the said issue department ; and from
“ 1. The issue of promissory notes of thenceforth it shall not be lawful for the said
the Governor and Company of the Bank Governor and Company to increase the
of England payable on demand shall be amount of securities for the time being in the
separated and thenceforth kept wholly dis- said issue department, save as hereinafter
tinct from the general banking business of is mentioned , but it shall be lawful for the
the said Governor and Company ; and the said Governor and Company to diminish the
business of and relating to such issue shall amount of such securities, and again to
be thenceforth conducted and carried on by increase the same to any sum not exceeding
the said Governor and Company in a separate in the whole the sum of fourteen million
department to be called “ The Issue Depart - pounds, and so from time to time as they
ment of the Bank of England ,' subject to shall see occasion ;; and from and after such
the rules and regulations hereinafter con- transfer and appropriation to the said issue
tained ; and it shall be lawful for the court department as aforesaid it shall not be
of directors of the said Governor and Com- lawful for the said Governor and Company to
pany, if they shall think fit, to appoint a issue Bank of England notes, either into the
committee or committees of directors for banking department of the Bank of Eng
the conduct and management of such issue land, or to any persons or person whatsoever,
department of the Bank of England, and save in exchange for other Bank of England
from time to time to remove themembers , notes, or for gold coin or for gold or silver
and define, alter, and regulate the constitu- bullion received or purchased for the said
tion and powers of such committee, as they issue department under the provisions of
shall think fit, subject to any bye -laws, rules this Act, or in exchange for securities
or regulations which may be made for that acquired and taken in the said issue depart
purpose : Provided nevertheless, that the mentunder the provisions herein contained :
said issue department shall always be kept Provided always, that it shall be lawful for
separate and distinct from the banking the said Governor and Company in their
department of the said Governor and banking department to issue all such Bank
Company . of England notes as they shall at any time
" 2. There shall be transferred, appropri- receive from the said issue department or
ated, and set apart by the said Governor and otherwise, in the same manner in all respects
Company to the issue department of the as such issue would be lawful to any other
Bank of England securities to the value of person or persons.
fourteen million pounds, whereof the debt “ 3. It shall not be lawful for the Bank of
due by the public to the said Governor and England to retain in the issue department
Company shall be and be deemed a part ; of the said Bank at any one time an amount
and there shall also at the same time be of silver bullion exceeding one-fourth part of
transferred, appropriated , and set apart by the gold coin and bullion at such time held
the said Governor and Company to the said a by the Bank of England in the issue
issue department so much of the gold coin department.
and gold and silver bullion then held by the “ 4. All persons shall be entitled to demand
Bank of England as shall not be required from the issue department of the Bank of
by the banking department thereof ; and England , Bank of England notes in exchange
thereupon there shall be delivered out of the for gold bullion , at the rate of £ 3 17s. 9d.
said issue department into the said banking per ounce of standard gold : Provided
department of the Bank of England such always, that the said Governor and Company
an amount of Bank of England notes as, shall in all cases be entitled to require such
together with the Bank of England notes gold bullion to be melted and assayed by
then in circulation, shall be equal to the persons approved by the said Governor and
aggregate amount of the securities , coin , Company at the expense of the parties
and bullion so transferred to the said issue tendering such gold bullion .
60
BAN ] DICTIONARY OF BANKING [BAN

" 5. Provided, always, that if any banker | Authorised by the Act of 1844 . .
£ 14,000,000
who on the 6th day ofMay, 1844, was issuing Authorised by OrderinCouncil
1856. Dec. 1 .
: 475,000
his own bank notes shallcease to issue his own 1861, July 10 175,000
bank notes, it shall be lawful for Her Majesty 1866. Feb. 21 . 350,000
in Council at any time after the cessation of 1881. April 1 750,000
1887. Sept. 15 450,000
such issue, upon the application of the said 1890. Feb. 8 250,000
Governor and Company, to authorise and 1894. Jan. 29 350,000
empower the said Governor and Company to 1900. Mar. 3 .
975,000
1902. Aug. 11 400,000
increase the amount of securities in the said 1903. Aug. 10 275,000
issue department beyond the total sum or
value of fourteen million pounds, and there Total fixed issue. £ 18,450,000
upon to issue additional Bank of England On the outbreak of war with Germany in
notes to an amount not exceeding such 1914, the Government issued a supple
increased amount of securities specified in mentary paper currency of £1 and 10s. notes.
such Order in Council, and so from time to (See CURRENCY NOTES.)
time : Provided always, that such increased ( See BANK NOTES, BANK OF ISSUE, BANK
amount of securities specified in such Order Return, NATIONAL DEBT.)
in Council, shall in no case exceed the pro- BANK OF ENGLAND NOTES. The Bank
portion of two -thirds the amount of bank of England is a bank of issue, and may issue
notes which the banker so ceasing to issue notes in England and Wales. The Bank is
may have been authorised to issue under the separated into two departments, the Issue
provisions of this Act ; and every such Order Department and the Banking Department.
in Council shall be published in the next It has the right to issue bank notes up to
succeeding London Gazette. € 14,000,000 against securities to that amount
" 7. The said Governor and Company of transferred to the issue department, and that
the Bank of England shall be released and amount may be increased by His Majesty in
discharged from the payment of any stamp Council against further security to the
duty, or composition in respect of stamp extent of two-thirds of any banker's issue
duty, upon or in respect of their promissory which has ceased . (See above figures.)
notes payable to bearer on demand ; and Notes may also be issued by the issue
all such notes shall be and continue free and department against gold and silver bullion
wholly exempt from all liability to any stamp or gold coins, but the silver bullion must not
duty whatsoever. exceed one - fourth of the value of the gold
" 9. In case, under the provisions herein- coin and bullion. Bank of England notes
before contained , the securities held in the are as good as cash , and are legal tender in
said issue department of the Bank of England and Wales for any sum above £5 ,
England shall at any time be increased except by the Bank itself and its branches.
beyond the total amount of fourteen million All Bank of England notes are payable in
pounds, then and in each and every year in gold at the head office, but at a branch only
which the same shall happen , and so long as the notes are payable which were issued by
such increase shall continue, the said that branch . Before giving cash for a note
Governor and Company shall, in addition it is customary for the Bank to request the
to the said annual sum of £ 180,000, make a person presenting it, to write his name and
further payment or allowance to the public, address upon the back.
equal in amount to the net profit derived in Bank of England notes may be signed by
the said issue department during the current machinery instead of being written ( 16 &
year from such additional securities, after 17 Vict. c. 2, Section 1 ) . The Bank has the
deducting the amount of the expenses sole right to issue notes within the City of
occasioned by the additional issue during the London or within three miles thereof, and
same period ,which expenses shall include the they are not subject to any stamp duty .
amount of any and every composition or They are issued for £5 , £10, £20, £ 50, £ 100,
payment to be made by the said Governor £ 200, £ 500, and £ 1,000.
and Company to any banker in consideration On the outbreak of war with Germany in
of the discontinuance at any time here- 1914, the Government issued an emergency
after of the issue of bank notes by such paper currency of £ 1 and 10s. notes. (See
banker." CURRENCY NOTES .)
The position of the authorised issue of the Where notes of the Bank of England,
Bank of England is as follows : issued more than forty years ago, have not
61
BAN ) DICTIONARY OF BANKING (BAN

been presented for payment, the Bank of Act, 1844_ (see BANK OF ENGLAND and
England is empowered by the Bank Act, BANK OF ENGLAND Notes). It can issue
1892, to write off the amount, or any propor- bank notes throughout England and Wales,
tion of it, of such notes from the total and has the monopoly in London and within
amount issued by the issue department, and three miles thereof.
the Bank Charter Act, 1844, is to apply as The regulations regarding banks of issue
if the amount so written off had not been are contained in various acts of Parliament.
issued, provided that All banks beyond sixty -five miles from Lon
“ ( a) A return of the amount of notes so don which were lawfully issuing their own
written off shall be forthwith sent notes on May 6, 1844, may continue to issue
to the Treasury and laid by them them , except those banks where the partners
before Parliament ; and consisted at that date of not more than six
“ (6) This Section shall not affect the persons and where the number of partners
liability of the Bank to pay any has since increased in number. Beyond
note included in the amount so three miles from London and within sixty
written off, and if it is presented for five miles, banks consisting of not more than
payment the amount shall either six partners, who were lawfully issuing their
be paid out of the bank notes, gold own notes on May 6, 1844, may continue to
coin , or bullion in the banking issue them . There are thus three distinct
department ; or, if it is exchanged areas defined in the Acts, ( 1 ) the City of
for gold coin or bullion in the issue London and within three miles thereof
department, or for a note issued (counting from the Royal Exchange), where
from the issue department, a the Bank of England has the sole right to
corresponding amount of gold issue notes. (2) Beyond three and within
coin or bullion shall be trans- sixty -five miles of London, where the Bank
ferred from the banking depart- of England shares the right with banks of
ment and appropriated to the not more than six members, which were
.
issue department . lawfully issuing notes on May 6, 1844. (3)
Lord Mansfield (in Miller v. Race, 1758, Beyond sixty -five miles, where the Bank of
1 Burr. 452) said : “ Bank notes are not England shares the right with the other
goods, nor securities, nor documents for banks which were lawfully issuing notes on
debts, nor are they so esteemed, but are May 6, 1844.
treated as money , as cash , in the ordinary No person other than a banker who, on
course and transaction of business by the May 6, 1844 , was lawfully issuing his own
general consent of mankind ." bank notes shall make or issue bank notes in
A material part of a Bank of England note, any part of the United Kingdom .
and of all bank notes, is the number. If a If a country bank of issue opens an office
note is lost or stolen, the number often in London , or, there being more than six
enables the loser who has kept a record of partners, if it comes within sixty-five miles
it to trace the note. The fact of notes being of London, it loses its right of issue. A bank
numbered and therefore traceable, no doubt which consisted of not more than six partners
often tends to prevent them being stolen, on May 6, 1844, will lose its right to issue
particularly if they are for the larger notes after the number of partners therein
denominations. shall exceed six in the whole, but two banks
The numbers also are necessary to the each consisting of not more than six partners
Bank in order that a correct register may be may combine and unite their separate issues
kept of all notes issued, and the date of so long as the number of partners does not
issue, and that when withdrawn from exceed six . A bank ceases to have the right
circulation , each note may be written off in of issue by bankruptcy, or by giving up
the register as having been paid. (See BANK business or by discontinuing its issue either
NOTES, BANK OF ENGLAND .) by agreement with the Bank of England or
BANK OF FRANCE. The most important
It was
otherwise. Where a private issuing bank is
financial institution in France. absorbed by a joint stock bank, its issue
founded in 1800. lapses, and if an amalgamation between two
BANK OF ISSUE . A bank which issues joint stock banks of issue results in the
its own notes payable to bearer on demand . formation of a new bank ( both old banks
The Bank of England is aa bank of issue, and being liquidated ), the issue of both the
its issue is regulated by the Bank Charter banks will lapse. If one note-issuing bank
62
BAN DICTIONARY OF BANKING IBAN

takes over the business of another note- As to the coin against which notes may be
issuing bank, the issue of the latter bank issued , there shall be included only the gold
thereupon lapses, and if the former bank, and silver coin held by such banker at the
by special resolution , subsequently changes several head offices or principal places of
its name, it still retains its issue, as it is issue in Ireland, such head offices or principal
not a new company. The Bank of England places not to exceed four in number, ofwhich
has the right to increase its own issue against not more than two shall be situated in the
securities to the extent of two-thirds of all same province ; and notes shall not be
lapsed issues . The Bank of England has issued on any amount of silver coin exceeding
power under Sections 23 and 24 of the Bank the proportion of one- fourth part of the gold
Charter Act, 1844, to make payment of coin held by such banker. Bank notes
annual compositions to certain bankers on issued in Ireland are to be “for payment of
their giving up the privilege of issuing their a sum in pounds sterling, without any
own notes , but when such bankers cease to fractional parts of a pound.”
carry on business, it has been held that the The issue of bank notes in Scotland is
compositions cease. regulated by 8 & 9 Vict. c. 38, and the
.

The amount of notes which may be issued regulations are practically the same as for
by a bank of issue is fixed, and is the amount the banks in Ireland ( see above), except that
certified by the Commissioners of Stamps by Section 6 it shall not be lawful for any
and Taxes as being the average amount of banker in Scotland to issue a greater amount
the bank notes of such bank as were in of notes than the amount certified by the
circulation during a period of twelve weeks Commissioners and “ the monthly average
preceding April 27, 1844 . amount of gold and silver coin held by such
If the monthly average circulation of bank banker at the head office or principal place
notes of any banker shall at any time exceed of issue of such banker during the same
the amount which the banker is authorised period of four weeks." A Scotch bank
to issue, such banker shall in every such case does not lose its right of issuing notes by
forfeit a sum equal to the amount by which opening an office in London .
the average monthly circulation shall have By the Bank Notes ( Ireland) Act, 1920 :
exceeded the amount he was authorised to Section 1. ( 1 ) A bank of issue in
issue and to have in circulation . Ireland shall not be under any
Banks of issue, except the Bank of Eng obligation to pay on demand any
land , must have a licence to issue notes on of its notes bearing date before the
unstamped paper.. (See LICENCE .) In lieu commencement of this Act except
of stamp duties on the notes, a composition at the head office in Ireland of the
is payable. (See COMPOSITION .) bank , notwithstanding that the
A bank of issue registered as a limited notes were issued and are expressed
company is not entitled to limited liability in to be payable at some other place,
respect of its notes, and the members thereof or to pay on demand any of its
shall be liable in respect of its notes in the notes bearing date after the com
same manner as if ithad been registered as mencement of this Act, wherever
an unlimited company. (See Section 251 of issued , except at the place at
the Companies (Consolidation) Act, 1908, which those notes are expressed to
under BANKING COMPANY.) be payable.
The issue of bank notes in Ireland is (2) Bank Notes ( Ireland ) Act,
regulated by 8 & 9 Vict. c. 37. The tender 1828 (which makes bank notes issued
of a note or notes of the Bank of England is by banks of issue in Ireland payable
not a legal tender in Ireland , but nothing in at the place where they are issued ),
the Actis to be construed as probibiting the and Section 1 , Bank Notes (Ire
circulation in Ireland of the notes of the land) Act, 1830 , which authorises
Bank of England. A banker in Ireland is banks of issue in Ireland to pay
prohibited from issuing notes in excess of their notes in Dublin , are hereby
the amount certified by the Commissioners repealed ."
( that is, the average amount of notes in In Scotland and Ireland bank notes may
circulation for one year previous to May 1 , be for one pound and upwards, but in
1845), except against the monthly average England the lowest amount is five pounds.
amount of gold and silver coin held by such On the outbreak of war with Germany in
banker during the same period of four weeks. 1914, the Government issued an emergency
63
BAN ) DICTIONARY OF BANKING (BAN

paper currency of £ 1 and 10s. notes. (See | Savings Bank department. The printed
CURRENCY NOTES.) forms, of themselves, were simply an indica
There are no bank notes legal tender in tion that depositors had available funds in
Scotland or in Ireland, with the exception of the bank for not less than the amount
Bank of Ireland notes in payment of part printed on the face thereof.
of the public revenue of Ireland . This The following is a specimen of a Bank
exception is contained in 1 & 2 Geo. IV, c. 72. Order form printed for £ 2 :
By the Currency and Bank Notes Act, No. 1348
1914, Section 4 , notes of banks of issue in
Scotland or Ireland were made legal tender | This order must be presented for payment
until revoked by Royal Proclamation. This not later than December 31 , 1913.
Section was, by Proclamation, revoked as To the
from January 1st, 1920. (See LEGAL
TENDER . ) BANK,, LTD. Payable at
id .
Principally through amalgamations, banks Stamp. the Head Office, or any
of issue have disappeared in England, leaving Branch .
only the Bank of England. The authorised
SAVINGS BANK DEPARTMENT .
issues at present are as follows :
BANK OF ENGLAND . DEPOSITOR'S
Issue authorised against securities .
£ 18,450,000 £2 Bank Order. 42
ENGLAND .
Two POUNDS .
Joint Stock Banks :
Through amalgamations, the last issue On demand Pay Bearer the sum of
disappeared in 1919. Two Pounds.
Private Banks : Signature of
Through amalgamations, the last issue Account No. 99999.
disappeared in 1921 .
SCOTLAND :
Depositor }
Eight Joint Stock Banks .
The object of the Orders was to enable the
2,676,350
IRELAND :
depositors to withdraw money without pro
Six Joint Stock Banks 6,354,494 duction of the pass book . Theforms required
no filling up whatever, but they had to be
Total £27,480,844 signed by the depositor to whom they were
.

supplied before payment was made. A

To show how greatly the authorised issues date was not required to be inserted . The
of the English country banks have dimin- forms could be used by the depositors in
ished , " in March , 1858 , the fixed issues of making payments to tradesmen, and interest
the issuing private banks, 153 in number, was allowed by the bank on the amount re
amounted to £4,432,790, and those ofthe presented by the Orders up to the month of
63 issuing joint stock banks to £ 3,303,357.” their actual payment bythe bank. In order
(Hutchison's “ Practice of Banking," vol. ii, to prevent any abuse of the printed Order
p. 349) . The authorised issue of the banks forms, depositors were not supplied with
in Scotland in that year was £ 3,087,209, or them in excess of the amount of their de
only £410,000 more than at present, while posits. In the event of the account being
that of the banks in Ireland_remains the closed, all unused forms had to be delivered
same as it was in 1858. (See BANK Notes, Orders
up to the bank, and provision made for any
which were outstanding. The forms
LICENCE.)
BANK ORDER . The name given to bore an impressed penny stamp. In order
certain forms which have been used in the to prevent the Orders remaining out too
Savings Bank department of a bank. They long, a certain date wasprinted on the Orders,
were discontinued as the demand for them and they had to be presented for payment
was too small . before that date.
Books containing definite numbers of A pass book specially adapted for the
printed Bank Order forms, of various purposes of the system was provided ,and the
denominations (different combinations of number of the account was placed on the
all or some of the following :—25., 2s. 6d ., Order formsby the bank.
5s., 10s. , 15s., £1 , £2, £ 3, £4, and £5 maxi- BANK POST BILL. A Bank Post Bill
mum) were supplied by the bank , on request, may be described as a promissory note issued
to persons opening an account in the by the Bank of England (which is the only
64
BAN ) DICTIONARY OF BANKING (BAN

bank in this country that issues them ) / reduced annually from profits by such an
undertaking at, usually, seven days after amount as will clear off the amount by the
sight to pay “ this my sole bill ” to a specified expiration of the lease. For example, if
person or order. The following shows the the outlay upon the land and buildings has
form of one of these bills : been £ 2,000 and the term of the lease is fifty
No London , February 1 , 19 years, a sum of £ 40 should be set aside out of
At seven days' sight I promise to pay this profits each year so that by the end of the
my sole Bill of Exchange to or
term the balance at the debit of the premises
order, fifty pounds sterling value received account willbecleared off.
of BANK PREMISES REDEMPTION FUND .
Accepted February 1 , 19 The name of the account to which are
A. B. credited , yearly or half-yearly , any sums
For the Governor and Company of the which are set aside out of profits for the
Bank of England . C. D. purpose of reducing, when necessary, the
Although practically a promissory note, balance at the debitofbank premises account.
it may also be described as a bill of exchange BANK RATE . The Bank Rate is the
drawn and accepted by a bank . The advertised minimum rate at which the Bank
acceptance may be on the bill when it is of England will discount approved bills of
issued, but if itis to be sent into the country exchange (of not more thanthree months'
it may be unaccepted when issued . currency) or grant short loans, but the rate
When indorsed by the payee the bill is which is actually charged to customers who
payable to bearer . They are issued for any keep their accounts with the Bank is the
amounts from £10 to £ 1,000. current market rate, which is, as a rule , a
Bank Post Bills of the Bank of England little lower than the Bank Rate. The Bank
do not take days of grace . Rate is fixed by the Directors at their weekly
Bank Post Bills were first issued in the meeting each Thursday, though alterations
year 1738. At that time highway robberies are sometimes made, when necessary, upon
were very frequent, and it appears that other days. The Rate is regulated according
these bills were originated on thesuggestion to the supply of money, on the one hand,
of the Postmaster -General so that, being and the demand for it, on the other. When
payable at seven days after sight, in casethe Bank reserve gets too low, the Directors
raise the rate, but when the Directors find
of the mails being robbed , the losers might
that they are in a position to increase their
have time to give notice of their loss and have
payment of the bills stopped . loans or discounts, the Rate is lowered . The
The following is a specimen of an Irish reserve in the banking department is the
Bank Post Bill : most important cause of the rise or fall of
the Bank Rate. A small reserve indicates a
Bank Post Bill
high Rate, and a large reserve a low Rate.
(under compo
sition for X & Y Bank of Ireland, The proportion of notes and gold to the
stamp duty .) Dublin · 19 deposits is on an average aboutforty -three
Seven days after date pay to the order of per cent. A risein the Bank Rate tendsto
the sum of
attract gold to this country ; a fall in the
sterling. Rate encourages gold to go abroad . The
On account of the X & Y Bank of Ireland , Bank Rate is, therefore , of the utmost
Manager.
importance in protecting the national reserve
To A & B Bank , Ltd., London . of gold. The rates, whether for loans, dis
Bank Post Bills of Irish banks may be counts, or deposits, of all the other banks
drawn for £ 5 and upwards, payable at in the country are regulated, more or less,
days after date or after sight, and they take according to the Bank Rate.
the usual three days' grace. The following table shows the changes in
BANK PREMISES. The premises of a the Bank of England minimum rate of dis
banking company are frequently written count and the yearly average from 1821 :
Yearly
down much below what may be regarded as Date . Per cent. Average.
their market value. In the case of the Bank 1821 . 6 £6 0 0
9
of England its valuable property does not 1822. June 22 : 4 6

appear at all in the balance sheet. (Bills & Notes)

1823. 4 0
Where the property is leasehold , the 1824. 0
amount at which it stands in the books is 1825. Dec. is 4 0 8

65
5- (1533)
BAN ) DICTIONARY OF BANKING ( BAN
Date Per cent. Yearly Date Par cont. Yearly
Average . Average
£ s. d. £ s. d .

DSC00
1826. 5 5 0 0 1857. June 18 6
1827. July 6 4 10 2 July 16 61
1828 . . Oct. 8
1829 . 4 Oct. 12
1830. 19 8
1831 . Nov. 5

OOOOO
.

1832 . 4 9 10
1833. 4 ( Bank Charter
1834, 0 0 Act suspended
1835. 1 0 Nov. 12 )

KODO
Can
1836. July 21 Dec. 24 8 6 12 11

OSO
4 7 9 6
Sept. 1 1858. Jan. 7

camp
1837 . 5 5 0 14 5

mal
1838. Feb. 15 4 2 6 9
28

Ho
1839. May 16 Feb. 4
June 20 54 11
Aug. 1 6 5 2 0 Dec. 9 3 4 7
5 1859. April 28
1840. Jan. 23
1841 , 6 0 May 5 .

1842. April 7 6 4 June 2 .

1843 . 4 0 9
1844. Sept. 6 21 ( Bills) July 14 2 14 8
3 (Notes) 3 10 4 19
1860. Jan. 31
1845. Mar. 13 21
Oct. 16 Mar. 29
Nov. 6 31 2 13 7 April 12
1848. Aug. 27 3 6 6 May 10
1847. Jan. 14 24
21 Nov. 8
April 82 01
13
Aug. 97
15 .
5 6} 29
Sept. 30 . 6 Dec. 31 0 4 3 7
Oct. 6} 1861. Jan. 7 7
25 Feb. 14 8
( Bank Charter Mar. 21 7
Act suspended) April 4
Nov. 22 7 1
Dec. 2 . 6 May 16
23 5 6 4 2 Aug. 5
1848. Jan. 27 4 15
June 16 31 29
Nov. 22 3 14 11 Sept. 19 3}
1849. 22 21 2 19 0 Nov. 7 5 4 11
1850. Dec. 26 3 2 10 1 1862. Jan. 9 . 21
18.1 . 3 3 0 0 May 22
1852. Jan. 1 21 July 10 21
April 22 2 3 0 24
1853. Jan. 6 2} Oct. 30 2 10 6
20 1863. Jan. 15
June 2 31
4
28
Sept. 1 Feb. 19
15 April 23 .

29 3 13 11 30
1854. May 11 May 16 31
Aug. 3 Ő 2 3 99 21
1855. April 5 41 Nov. 2
May 3 5
June 15 31 Dec. 2 . 7
Sept. 6 3
13 24
,

41 7 4 8 2
27 1864. Jan. 20
Oct. 4 51 Feb. 11 7
18 4 17 9 28
22
1856. May 29 .

5
April 16
May 28 .

June 28 44 9
Oct. 11 19 8
6 26 7
Dec. 1 6} June 16
18
B 13 July 25
1857. April 2 6) Aug. 4

66
BAN ) DICTIONARY OF BANKING (BAN
Date . Per cent. Yearly Date , Per cent. Yearly
Average. Average.
£ s. d . £ s. d.
1864 . Sept. 8 9 1872. June 13 31
Nov, 10 8 20 .
24 7 July 18
Dec. 15 7 7 0 Sept. 18
1865. Jan. 12 51 26
26 oct.
Oct. 3
Mar. 2 10
30 Nov. 9 7
4
May 25 .)
Dec. 12
28 6
4 111
June 1 3} 1873, Jan. 9
16 23
July 27 3} 30 3}
Aug. 3 Mar. 26
Sept. 28 May 7

‫ܘ‬te
Oct. 2 10
6 17

‫ܗܙܗܗ‬
.

7 7 June 4
Nov, 23 6 12
Dec. 28 7 4 16 8 July 17
10
1856. Jan. 4 8
Feb. 22 7 1 24
Mar. 15 6 31 31
May 3 7 Aug. 21
8 8 Sept. 25
11 . 9 29
voimammo

12 10 Oct. 14 6
(Bank Charter 18 7
magamo

Act suspended ) Nov. 1 8

Aug. 16 . 7
23 7 20
9

30 . 27

nootmamanann
Sept. 6 Dec. 4
27 .
4} 11 4 16 10
obrymma

Nov. 8 1874 . Jan. 8

nmano

Dec. 20 31 6 18 11 16 3}
1867. Feb. 7 April 30
May 30 21 May 28 31
July 26 2 10 9 June 4
1868. Nov. 19 21 18 21
am
ei

Dec. 3 . 2 1 11 July 30
1869. April 1 Aug. 6
nano

May 6 . 91 20
27
5m#

June 10
24 . Oct. 15
July 15 Nov. 16
Aug. 19 2 30 3 13 10
Nov. 4 3 4 2 1876. Jan. 7
1870. July 21 14
28
P.

! 23
» 28 Feb. 18 3}
Aug. 4 July 8
11 29 .
2}
18 Aug. 12
2

9 25 Oct. 7
Sept. 1 14
"

3}
) 15 21 .

99 29 3 1 11 Nov. 18
1871. Mar. 2 Dec. 30
April 13 1876. Jan. 6 .

June 15 .
2 27 .

July 13 Mar. 23 3
Sept. 21 3 April 6
28 20 2 12 2
Oct. 7 1877. May 3 .

Nov. 16 . July 5 21
30 12 .

Dec. 14 2 17 8 Aug. 28
1872. April 4 Oct. 4
11 . 11
May 9 Nov. 29 2 18 0
9 30 1878. Jan. 10
67
BAN ) DICTIONARY OF BANKING (BAN
Date , Per cent. Yearly Date , Per cent. Yearly
Average, Average.
£ s. d . £ s. d .
1878. Jan. 31 2 1889. Jan. 24 31
Mar. 28 31
May 30 2 April 18
June 27 Aug. 8
July 4 29
Aug. 1 Sept. 28
12 Dec. 30 3 10 11
Oct. 14 1890. Feb. 20 .

Nov. 21 3 16 7 Mar. 6 .

1879. Jan. 16 13
30 April 10 .
31
Mar. 13 21 91 17
April 10 . June 26 .

Nov. 6 3 2 10 4 July 31 .

1880. June 17 21 Aug. 21

Dec. 9 2 16 4 Sept. 26
1881. Jan. 13 31 Nov. 7
Feb. 17 Dec. 4 10 8
April 28 1891. Jan. 8
Aug. 18 22 31
91 25 29
Oct. 6 3 100 April 16 31
1882. Jan. 30 May 7
Feb. 23 14
Mar. 9 June 4
23 18
Aug. 17 Jüly 2 . 21
Sept. 14 4 2 8 Sept. 24 .

1883. Oct. 29

na
Jan. 25

aaa
Feb. 15 Dec. 10 3} 3 0 2
Mar. 1 1892. Jan. 21 .

mmana
May 10 April 7
Sept. 13 31 28 . 2
3 11 4 Oct. 20 2 10 6

o
27
1884. Feb. 7 3} 1893. Jan. 26
Mar. 13 May
April 3 2} 11 31
ଶ
ତ
•
ଖ
ତ
ଷ
ବତଦରଶିଶ+)

18
aammmmm
June 19
Oct. 9 June 8 .

30 16
Nov. 6 2 19 1 Aug. 10
3
1888. Jan. 29
Mar. 19 31 ) 24
May 7 Sept. 14
14 21 21 . 31
28 Oct. 3 1 1
:

6
Nov. 12 1894. Feb. 1 21
Dec. 17 2 17 7 22 2 2 2 3
1886. Jan. 21 1896. 2 2 0 0
Feb. 18 1896. Sept. io 21
May 6 99 24
June 10 Oct. 22 2 9 8
Aug. 26 1897. Jan. 21 3
Oct. 21 Feb.
Dec. 16 3 1 0 April 8 21
1887. Feb. 3 May 13
Mar. 10 31 Sept. 23 2}
24 Oct. 14 2 12 8
14
April 28 1898. April 7
May 26
Aug. 4 June 2
Sept. 1 3 7 0 30 21
1888. Jan. 12 Sept. 22
19 Oct. 13 3 4 11
Feb. 16 21 1899. Jan. 19 3}
Mar. 16 Feb. 2
May 10 July 13
June 7 Oct. 3
Aug. 9 6
Sept. 13 Nov. 30 3 15 1
Oct. 4 3 5 11 1900. Jan. 11
1889. Jan. 10 18

68
BAN ) DICTIONARY OF BANKING (BAN

Date , Per cent. Yearly Date , Per cent. Yearly

Average. Average
£ s. d . £ s. d .
1900. Jan. 26 1914. Aug. 6 6
3} 8 5 409
May 24 01

‫ܗܗܗܗܗܗܗ‬
‫ܗܘ‬
June 14 1915. 5 0 0
July 19 3 19 3 1916. July 13 5 9 7
1901. Jan. 3 1917. Jan. 18 53
Feb. 7 April 5 5 3 1
21 1918. 5 0 0
June 8 1919. Nov. 6 5 3
13 1920. April 15 7 6 14 2
Oct. 31 3 14 4
1902. Jan. 23 BANK RATE BOOK . This book shows
Feb. 6 3
3 6 7
all the changes for a number of years past
Oct. 2
1903. May 21 which have taken place in the Bank of
June 18 England Rate, and whenever any alteration
Sept. 3 3 15 0 of the Rate occurs , a record of it, with the
1904 , April 14 31 date of the change, is immediately entered .
21 361
1905. Mar. 9 The average of the Bank Rate for the half- year
and for the year are also entered in the book.
M

Sept. 7
28 3 0 1 BANK RETURN . By the Bank Charter
1906. April 5 31 Act, 1844 ( 7 & 8 Vict. c. 32) , Section 6, .
May 3
June 21 31 it is provided that the Bank of England
Sept. 13 issue a weekly return as to its financial posi
Oct. 11 6
tion : “ An account of the amount of Bank
19 4 5 3
1907. Jan. 17 6 of England notes issued by the Issue De
April 11
25
partment of the Bank ofEngland and of gold
coin and of gold and silver bullion respec
ot

99

Aug. 16 tively, and of securities in the said Issue

Oct. 31
Nov. 4 Department, and also an account of the
7 7 4 18 6 capital stock, and the deposits, and of the
1908. Jän. 16
3 6
money and securities belonging to the said
23 Governor and Company in the Banking
Mar. 6 3 Department of the Bank of England, on
19 3
some day in every week to be fixed by the
May 28
1909 . Jan. 14
2} 304 Commissioners of Stamps and Taxes, shall
April 1 21 be transmitted by the said 'Governor and
Oct. 7 3 Company weekly to the said Commissioners
14
21
in the form prescribed in the schedule hereto
Dec. 9 3 2 0 annexed marked (A) and sha be published
1910. Jan. 6 by the said Commissioners in the next suc
19 20 3) ceeding London Gazette , in which the same .
Feb. 10 may be conveniently inserted ."
Mar. 17
June 2 31 The Return is published on Thursdays,
9 and is made up to the close of business on the
Sept. 29 previous day.
Oct. 20
Dec. 1 3 14 5 The weekly Return issued by the Bank of
1911 . Jan. 26 England on September 7, 1844 ( that is,
Feb. 16
Mar. 9
shortly after the Bank Charter Act was
Sept. 21 3 94 passed) is givenfor comparison with the
1912. Feb. 8 31 weekly return of Wednesday, June 23, 1909.
May 9 ISSUE DEPARTMENT .
Aug. 29 September 7, 1844. June 23,
Oct. 17 3 15 6 1909.
1913. Apr. 17 Notes issued £28,351,295 £ 67,706,246
Oct. 2 4 15 4
1914. Jan. 8 Government Debt . .
£ 11,016,100 £11,015,100
22
5

29
Other socurities 2,984,900 7,434,900
Gold coin and bullion . . 12,657,208 39,256,245
July 30 Silver bullion 1,694,087
31
aug. i 10 £ 28,351,296 £ 67,706,245
(Outbreak of war with Germany .)
69
BAN ) DICTIONARY OF BANKING (BAN

BAXKING DEPARTMENT. the moneys paid in to the Bank by the

September 7, 1844. June 23, Government Departments, “ including Ex
1909.
Proprietors' capital . .
£ 14,553,000 £ 14,663,000 chequer, Savings Bank, Commissioners of
Rest . 3,564,729 3,107,086 National Debt and Dividend Accounts .”
Public deposits 3,630,809 13,409,696 In the March quarter the figures in this item
Other deposits . very considerably owinghavebeen
to
Seven day and other Bills . 1,030,354 44,994,860 increasetaxeand other taxes which
£31,423,240 € 76,007,484 credited to the Government accounts .
Other deposits, £ 44,890,022, include the
Government securitics £14,554,834 | £15,368,812 accounts of the ordinary customers of the
Other securities 7,835,616 30,707,163 Bank in London and at the branches of the
Notes 0 Bank, and also the balances of the London
Gold and silver coin 8,176,025
857,765 28,328,68
1,602,809
clearing bankers and other London banks,
£ 31,423,240 | £ 76,007,464 and ofmany country banks. The Bank of
England is thus the Bank upon which all
The Bank of England is divided into two other banks would rely in a time ofpressure.
parts, the Issue Department and the Bank . In ordinary times when money is abundant
ing Department. In the return for June 23, and not in demand, the amount of other
1909, the Issue Department section shows deposits increases, owing to bankers
on the one side the total amount of notes keeping larger balances in the bank, but
issued from that department, £57,706,245 ; when the demand for money becomes
and on the other side the manner in which stronger the bankers' balances diminish
they are secured , that is by the Government and the amount of other deposits therefore
debt, £ 11,015,100 ( the amount of the debt decreases.
at the passing of the Bank Charter Act) ; Seven day and other bills, £ 47,660, include
other securities, £ 7,434,900 ; gold coin and Bank Post Bills (see BANK Post BILL ).
bullion, £ 39,256,245. When the Bank Charter The other side of the Banking Department
Act was passed the combined amount of the Return , the assets side, shows how the funds
debt owing by the Government to the Bank have been invested . The first item , Govern
and of other securities was £ 14,000,000, and ment securities, £ 15,368,812, are those (e.g.
as the amount is now £ 18,450,000, an in- Consols, Treasury Bills, Exchequer Bonds)
crease of £ 4,450,000 has taken place, due to which are guaranteed by the British Govern
the Bank having taken advantage of the ment. It also includes the amount of any
privilege granted to it under the Act of temporary advances to the Government
increasing its issue against securities to the in the form of Deficiency Advances . The
extent of two -thirds of the issues of country next item is “ other securities,” £ 30,707,163
bankers which have lapsed . The Issue -that is, other than British Government
Department does not hold any silver bullion, investments. It includes general invest
although the Bank has power under the Act ments, also bills which have been discounted
to issue notes against silver bullion to the for customers and bill brokers, and loans
extent of one- fourth of the gold . (See against securities.
BANK OF ENGLAND .) The “ Reserve " is formed of the next two
The first item in the Banking Department items on the Return, notes unemployed,
of the Return is the proprietors' capital, £ 28,328,680, and gold and silver coin,
£ 14,553,000. The original capital of the £ 1,602,809. The notes on hand are part of
Bank, when it was established in 1694 , was those shown by the Issue Department as
£ 1,200,000, and it was increased from time notes issued to the Banking Department.
the country
to time until it reached the amount of According as gold comes into Reserve
£ 14,553,000 in 1816, at which figure it has or leaves it, the amount of the
. will
continued ever since. The next item is the increase or decrease .
Rest or Reserve Fund, £ 3,107,086 , which has When the Bank Rate is raised it tends
been accumulated from profits and to which to prevent the outward flow of gold and
the profits are added from time to time. encourages an inward flow . On the other
The dividends to the Bank proprietors are hand, a reduction of the Bank Rate has an
paid out of this account, but the amount of exactly opposite tendency.
the Rest is never allowed to fall below BANK SHARES. The capital issued by
£ 3,000,000. banks consists of shares which are only
Public deposits, £ 13,409,696, represent partly -paid, and, in some banks, also of
70
BAN ] DICTIONARY OF BANKING (BAN

shareswhich are fully -paid. (See LEÉMAN'S or for reward . The difference between a
ACT, LIEN,.) QUOTATION ON LONDON STOCK
EXCHANGE banker as a debtor to his customer and as a
bailee may be illustrated as follows :-If
BANK STOCK OCK.. The stock or capital of John Brown pays in £ 20 to the credit of his
the Bank of England. account, the banker becomes Brown's
The Bank was established in 1694 with debtor and is liable to repay to Brown £ 20
a capital of £ 1,200,000, and by the year 1816 on demand , but until the demand is made
it had been increased to £ 14,553,000, at the banker can do what he likes with the
which figure it still stands . money, and the £ 20 which is ultimately
BANKER AND CUSTOMER . The ordi- repaid to Brown is not, of course, the same
nary relationship between a banker and a coins as were originally handed by Brown
customer is that of debtor and creditor. to the banker ; but if Brown gives to the
When a customer pays in money to the banker a sealed bag containing, say, coins
credit of his account, the banker becomes to the value of £20 and leaves it for safe
the debtor and the customer the creditor, custody , the banker becomes a bailee and
but when the banker makes a loan to a must take care of the bag, as entrusted to
customer the position is reversed, as the him , and return it, with the contents
customer is then the debtor and the banker untouched, to the customer when required .
the creditor. The money which a banker (See SAFE CUSTODY.)
receives from a customer is at the free dis- The position between banker and customer
posal of the banker ; he may preserve it in may also be that of mortgagee and mort
his till, invest it in some security, or lend it gagor, as where a customer grants a mort
out to another customer ; but the customer gage, for a fixed amount, to the banker.
retains the right to demand back a similar In such a case the banker can charge simple
amount, or to draw cheques upon the banker interest only upon the loan account. (See
up to that sum , the cheques being payable INTEREST .)
either to the customer himself or to some A banker and his staff are bound to
other person . The obligation of a banker secrecy regarding the business and accounts
to pay his customer's cheques is in addition of the customers, but a banker may, in
to the relationship of debtor and creditor. certain cases , be compelled to give evidence
The right to overdraw an account, how in a court of law , and he may also be re
ever, only arises from a special agreement. quired to give a copy of entries in the
The customer may also accept bills and books of the bank. (See BANKERS' Books
arrange with the banker that they be EVIDENCE Act, 1879.)
charged to his account at maturity, or he As to a banker's position when he is
may , in certain cases, make arrangements requested by another banker to supply an
for the banker to accept bills on his behalf. opinion as to the status or sufficiency of a
In order to constitute a person a customer, customer, see BANKER'S OPINION.
Lord Davey said , in Great Western Railway • A bank which is empowered by its memo
v. London and County Banking Co. ( 1901, randum of association may act in the capa
A.C. 414) : “ I think there must be some city of sole executor under a will, or as
sort of account, either a deposit or a current trustee under a will or settlement, or as
account or some similar relation ." See other custodian trustee. (See CUSTODIAN TRUSTEE.)
cases under CUSTOMER. (See BANK.) Further information respecting the various
When money has lain dormant with a matters and positions by which a banker is
banker for six years, the Statute of Limita- brought into more or less direct contact with
tions no doubt applies, as in an ordinary his customers will be found under the respec
case of debtor and creditor, but a banker tive headings, and in particular the follow
never takes advantage of the statute, and | ing articles may be referred to :-ACCOUNTS,
is always ready to repay the money upon ADVANCES, BANKRUPT PERSON, COLLECTING
the demand of the customer or of his legal BANKER, COMPANIES, DEATH OF CUSTOMER,
representatives. (See STATUTE OF LIMITA - DEPOSIT RECEIPT, PARTNERSHIPS, PAYING
TIONS, UNCLAIMED BALANCES.) BANKER, PROMISSORY NOTE, SECURITY,
If a customer leaves with his banker a STOCKBROKING TRANSACTIONS.
parcel of securities for safe custody, the BANKERS ' AGENTS . (See AGENTS.)
banker's position is that of a bailee, and his BANKERS' BOOKS EVIDENCE ACT,
liability depends, to a certain extent, upon 1879 (42 Vict. c. 11 ) . This Act was passed
whether he undertakes the duty gratuitously on May 23, 1879.
71
BAN ] DICTIONARY OF BANKING (BAN

In Rex v. Bono & another ( 1913, 29 | is to be obeyed , unless the Court or judge
T.L.R. 635 ) was held that this Act otherwise directs.
was for the benefit of bankers, and its " 8. The costs of any application to a
object was to relieve them of the necessity Court or judge under or for the purposes of
of actually attending in court with their this Act, and the costs of anything done or
books; it was not passed to increase facilities to be done under an order of a Court or
for discovery. It was clearly a matter of judge made under or for the purposes of
judicial discretion what were proper cases this Act, shall be in the discretion of the
in which to afford such facilities ; certainly Court or judge, who may order the same or
the case of a defendant seeking to justify any part thereof to be paid to any party by
a libel was not such a case . the bank, where the same have been occa
“ Section 3. Subject to the provisions of sioned by any default or delay on the part
this Act, a copy of any entry in a banker's of the bank. Any such order against a bank
book shall in all legalproceedings be received may be enforced as if the bank was a party
as prima facie evidence of such entry, and of to the proceeding.
the matters, transactions, and accounts " 9. In this Act the expressions ' bank '
therein recorded . and ‘ banker ' mean any person , persons,
* 4. A copy of an entry in a banker's book partnership , or company carrying on the
shall not be received in evidence under this business of bankers and having duly made
Act unless it be first proved that the book a return to the Commissioners of Inland
was at the time of the making of the entry Revenue, and also any savings bank certified
one of the ordinary books of the bank , and under the Acts relating to savings banks, and
that the entry was made in the usual and also any Post Office Savings Bank.
ordinary course of business, and that the “ ... Expressions in this Act relating to
book is in the custody or control ofthe bank. bankers' books include ledgers, day
' Such proof may be given by a partner books, cash books, account books, and all
or officer of the bank , and may be given other books used in the ordinary business
orally or by an affidavit sworn before any of the bank .
Commissioner or person authorised to take " 11. Sunday, Christmas Day. Good
affidavits . Friday, and any bank holiday shall be
“ 5. A copy of an entry in a banker's book excluded from the computation of time
shall not be received in evidence under this under this Act.”
Act unless it be further proved that the copy By the Revenue Act, 1882, Section 11 ,
has been examined with the original entry the expressions “ bank ” and “ bankers
and is correct. in the Bankers' Books Evidence Act, 1879,
“ Such proof shall be given by some person shall include any company carrying on the
who has examined the copy with the original business of bankers, to which the provisions
entry, and may be given either orally or by of the Companies Acts apply and who have
an affidavit sworn before any Commissioner duly furnished to the Registrar of Joint
or person authorised to take affidavits . Stock Companies the specified list and sum
“ 6. A banker or officer of a bank shall mary with a list of the places where their
not, in any legal proceeding to which the business is carried on.
bank is not a party , be compellable to pro- BANKERS' CLEARING HOUSE . (See
duce any banker's books, the contents of CLEARING House .)
which can be proved under this Act, or to BANKERS HEALTH INSURANCE
appear as a witness to prove the matters, SOCIETY . Address, 48 and 49 Palmerston
transactions, and accounts therein recorded , House, Bishopsgate, E.C.2. According to
unless by order of a judge made for special the rules, as approved by the Insurance
cause . Commissioners, the objects of the Society
“ 7. On the application of any party to a shall be :
legal proceeding, a Court or judge may order ( 1 ) To be an approved society within the
that such party be at liberty to inspect and meaning of the National Insurance Act
take copies of any entries in a banker's book and to transact business under the Act,
for any of the purposes of such proceedings. and to do all things required by the Act
An order under this Section may be made and by the Commission for the purpose of
either with or without summoning the bank so being an approved society and the
or any other party, and shall be served on transacting of such business.
the bank three clear days before the same (2) To provide for its members (other
72
BAN DICTIONARY OF BANKING
than honorary members) benefits under the
Act and such other medical, sickness,
disablement, superannuati on and other
superannuation
benefits as may, apart from the provisions
of the said Act, be provided by Friendly
Societies.
MEMBERS :
( 1 ) Insured members shall be all persons
contributing for or entitled to benefits
under the Act who are members of the
society for the purposes of the Act.
(2) Ordinary members shall be members
of the society contributing for benefits
under Part II of these rules.
(3) Honorary members shall be members
of the society not contributing for and not
entitled to benefits.
INSURED MEMBERS :
The applicant for membership must be a
clerk in the employ in England or Wales
of a Bank , discount house, merchant
banking firm or company, or kindred
institution or in some other institution
which , in the opinion of the committee of
management, is allied to or specially con
nected with banking or Bankers ; provided
that the Bank , discount house, merchant
banking firm or company or otber institution
(hereinafter called the employer "') in
which the applicant is employed shall have
first been approved for the purposes of this
clause by the committee of management ,
such approval not to be given except upon
the committee of management being satisfied
that the conditions of employment with the
employer are such that the salaries of the
male clerks there employed in the ordinary
course reach the value of £ 160 per annum
not later than the age of 34 ; provided
nevertheless that where the employer has
not been approved for the purposes of this
clause the applicant must, except in any
case where the committee consider
desirable to waive this condition , satisfy the
committee that the conditions of employ
ment of male clerks in the service of the
employer are such as to qualify the employer
forapproval under this clause.
BENEFITS :
( 1) Except as otherwise provided by these
rules everyinsured member shall be entitled
to the following benefits :
(a) Medical benefit.
(6) Sanatorium benefit.
(c) Sickness benefit.
( d ) Disablement benefit.
( e) Maternity benefit.
( BAN
Such additional benefits, if any, as
the society maygive under a scheme
made by it and sanctioned by the
Commission under these rules .
The Society is registered as a Friendly
Society, under the Friendly Societies Act,
1896 .
BANKERS ' LEDGER . The ledger in
which are kept the accounts with other
banks. The details of all transactions be
tween a bank , including the branches, and
its correspondent, are so entered that when
the other bank sends a copy of the account
in its ledger, the individual items may be
readily compared and ticked off.
There will generally be, in most of the
bank accounts, a number of items out
standing ; as, for instance, where a draft has
been drawn and credited in the account of
the bank on which it is drawn, the item will
not appear in the drawee bank's statement,
and will therefore not be ticked off, until
the drawee bank has actually paid the draft
and debited the amount in account, unless
that bank debits the amount at once and
places it to the credit of another account
to meet the draft when presented .
BANKER'S MORTGAGE . A mortgage
which is given to a banker as a continuing
security to cover any sum ( including interest
with half-yearly rests) which shall for the
time being constitute the balance due to the
banker from the borrower . In a banker's
mortgage there is usually a covenant
that his right to sell the property shall
arise immediately on default,after demand,
or after, say, one month following demand.
The following is a summary of the princi
pal features of a banker's mortgage :
This INDENTURE made 19 ....
BETWEEN .... ( the Mortgagor) of the
one part and .... Bank Limited of
the other part.
it
WITNESSETH that in consideration of the
Bank allowing the Mortgagor to keep
an account current and granting accom
modation upon the terms that the
Bank shall be secured as hereinafter
appears,
The Mortgagor as beneficial owner conveys
unto the Bank
ALL AND SINGULAR the lands and heredita
ments described in the schedule hereto ,
together with all fixtures,
TO HOLD the said premises unto the Bank
their successors and assigns for ever,
SUBJECT to the proviso for redemption, that
is to say ,
73
BAN ) DICTIONARY OF BANKING [BAN

PROVIDED ALWAYS that if the Mortgagor by any other security held by the Bank
shall on demand pay all money which for the moneys hereby secured . And
shall for the time being be owing to the it is hereby
Bank whether from the mortgagor ALSO DECLARED that the mortgagor shall
solely or jointly with any other person, not be entitled to redeem one mortgage
or from any firmin which he may be a without at the same time redeeming
partner, every other mortgage held by the Bank
or for which he may be liable as surety, on other property belonging to the
together with all interest and charges mortgagor.
(including legal charges connected with
any security for this indebtedness ), SCHEDULE (Deeds and documents). ( Seal.
Then the Bank shall, after such payment,
reconvey (at the cost of the mortgagor)
the said premises, and ( See COPYHOLD, LEASEHOLD , LEGAL MORT
IT IS HEREBY DECLARED that the security GAGE, MORTGAGE.)
shall be a continuing security so as to BANKER'S OPINION . When a banker
cover any sum which shall for the time gives an opinion, in answer to a confidential
being constitute the balance due from inquiry, regarding the financial position of a
the mortgagor . customer, he should exercise the greatest
The mortgagor doth COVENANT to pay on care, for if he says too little he may injure
demand all money at any time owing his customer in the mind of the person on
together with the charges , whose behalf the inquiry is made, and if he
AND that all such money shall with the says too much he may mislead the inquirer.
charges be capitalised and form a In order to create liability for a wilfully
principal sum as from the date of inaccurate or misleading opinion , the repre
demand and carry interest until date sentation must be in writing and be signed
of payment, by the person making it, and it is the actual
AND that such interest, together with person who signs it who is liable. If a bank
the principal sum shall stand secured manager gives a false opinion in writing,
on the premises hereby conveyed . he is personally responsible and not the
AND FURTHER that the mortgagor will banking company of which he is an official.
keep the premises in good repair By Section 6 of 9 Geo . IV, c. 14 (called
And insured against fire, and will pay Lord Tenterden's Act) :
all premiums and produce to the Bank “ No action shall be brought whereby to
the policy and premium receipts, and charge any person upon or by reason of any
will apply all moneys which may be representation or assurance made or given
received under the policy in making concerning or relating to the character, con
good any damage by fire or in reduction duct, credit, ability, trade or dealings of any
of the moneys hereby secured . other person, to the intent or purpose that
AND that ifthe mortgagor fail to keep such other person may obtain credit, money ,
such policy on foot the Bank may do or goods upon, unless such representation or
so and charge the premium to the assurance be made in writing, signed by the
mortgagor. party to be charged therewith ."
IT IS HEREBY DECLARED that the moneys In Banbury v. Bank of Montreal ( 1918,
owing shall be deemed to have become A.C. 626) the House of Lords held that this
due immediately on demand for pay- Section only applies to an action for fraudu
ment being made by the Bank, and it lent misrepresentation, and not to an action
is hereby for breach of duty where fraudulent intent
FURTHER DECLARED that after the money was not imputed . The Lord Chancellor, in
has become due the Bank shall be the course of his judgment, said that while
entitled to exercise the power of sale it was not part of the ordinary business of
conferred on mortgagees by statute if a banker to give advice to customers as to
the money is not paid within one investments generally, there might be occa
month, or if the mortgagor has had a sions when advice might be given by a
receiving order made against him . banker as such and in the course of his
PROVIDED ALWAYS and it is hereby further business. “ If he undertook to advise, he
declared that this security shall be in must exercise reasonable care and skill in
addition to and shall not be affected giving the advice. He was under no obligation
74
BAN ) DICTIONARY OP BANKING [BAN

to advise, but if he took on himself to hunt about and make inquiries. If in

do so , he would incur liability if he did so quiries are to be made, let the inquiring
negligently." bank make them . What he asks from the
Where a bank manager had given a bank from whom he makes the inquiry is,
banker's opinion and an action was brought knowledge to be found in their books as to
for damages for misrepresentation ( Parsons the state of the man or the account about
V.
Barclay & Co. and another, 1910) . whom he is inquiring :; and it is done,, not
Mr. Justice Ridley, in addressing the from any question of duty or any considera
jury , said : " I have to tell you that it will tion, except that mutual courtesy and hope of
not do for you to find it was an inaccurate a quid pro quo,to which Lord Bramwell refers.”
description of the state of things with regard It is to be noted that the remarks of the
to Messrs. G., it must be inaccurate to the Lords Justices, in the above case , are based
knowledge of the person who made it. on the assumption that the practice is
Though with some qualification that would solely between bankers. It is further
be a true statement, I think I will just give to be observed that the Master of the Rolls
the definition which is usually accepted as after recognising the custom as a useful
the one which is to guide a jury in such | habit by which one banker answers in
cases. ' In order that the statement should confidence and answers honestly to another
be fraudulent,' which is necessary to prove banker ” adds the words the answer
in this case if the plaintiff is to recover, being given at the request and with the
' it must be made knowing it not to be knowledge of the first banker's customer.”
true, or without belief that it is true, or it This important limitation to the practice
must have been made recklessly or care- should be borne in mind by bankers when
lessly as to whether it was true or false .' ” giving an answer to an inquiry regarding
Judgment was given for the plaintiff. one of his customers, as the above words
The defendant appealed , and the Court of might well be cited by a customer as show
Appeal reversed the judgment (103, L.T. ing that his authority and request are a
196.) The Master of the Rolls said : " I necessary condition for any legitimate
desire for myself to repudiate entirely the disclosure of his financial position by his
suggestion that when one banker is asked banker, even to another banker, save on
by another for a customer such a question legal compulsion or other reasonable
as was asked here, it is in any way the ground ." (See Gilbart Lecture No. 3,
duty of the banker to make inquiries other 1911.) It is clear, however, that unless
than what appears from the books of account this limitation is acted upon by all bankers,
before him , or, of course, to give information there are many cases in which, if a banker
other than what he is acquainted with refused to give an opinion because the
from his personal knowledge. ... I think request had not been made by his customer ,
that if we were to take the contrary view the withholding of the information might
which commended itself to Mr. Justice seriously prejudice the interests of his
Ridley, in his summing up to the jury , we customer by leading the inquirer to deduce
should necessarily be putting a stop to an unfavourable opinion.
that very wholesome and useful habit Some bankers do not recognise trade
by which one banker answers in confidence, protection societies as being entitled to
and answers honestly, to another banker, make such inquiries, and they adopt the
the answer being given at the request and rule of giving replies only to another banker.
with the knowledge of the first banker's As bankers' opinions are usually given
customer. And, if he answers honestly with care and caution, it follows that the
according to his own knowledge of what he bankers to whom they are addressed should
learns from the books before him , and from accept them in a similar spirit of caution.
any other actual knowledge he has, it Details of a customer's account should
would be most dangerous for us to do not, of course , be communicated to any one
anything which would prevent that whole- unless by the request of the customer.
some and businesslike practice being BANKER'S ORDER . A written order
pursued.” Lord Justice Farwell said : “ I given by a customer to a banker to make a
thought everyone knew that theseinquiries payment or seriesof payments onhis behalf.
between bankers were well understood, were it is commonlyused to give authority to a
familiar, and that nobody supposed that banker to pay subscriptions to clubs and
one bank could ask another to go and societies year by year, insurance premiums,
75
BAN ) DICTIONARY OF BANKING (BAN

weekly or monthly payments, etc. The within the definition in Section 32 (6) of
order requires a twopenny stamp. The the Stamp Act, and should in all cases bear
followingis a specimen form - stamps." (See under BILL OF EXCHANGE .)
BANKER'S ORDER . The various debits to a customer's account,
which arise out of the order, do not require
January 2, 19 . to be stamped .
To the British Banking Co., Ltd., Leeds. An order to aa banker to pay overa certain
Please to pay to the X & Y Bank , Ltd., sum of money against delivery of specified
London , the sum of £ 2 2s., my subscription securities is also chargeable with the stamp
to the A B Club for the year 19 ., and a duty of two pence.
like sum on January 1 in each succeeding An order to a banker to purchase stock
year until otherwise ordered . and “ debit the cost to my account ” does
Signed, JOHN Brown . not require to be stamped , as the order does
N.B. - This form to be signed by the mem- not contain any reference to a definite
ber and forwarded by him to his own sum of money. The office debits to the
banker. .
customer's account are also not liable to
A book, like a diary , should be kept and stamp duty. (Board of Inland Revenue.)
details given under each date of the subscrip- A letter of request from a customer to
tions or other periodical payments which are transfer the balance of his account from one
due to be paid upon such date. branch to another branch , or to transfer an
Orders may be given by shareholders to amount from, say, his No. 1 account to his
pay all dividends upon their shares in the No. 2 account, does not require a stamp.
bank to the credit of their account in the (See CHEQUE.)
bank, or to another bank . This order does BANKER'S PAYMENT. A payment
not require a stamp. The following is a made by one banker to another. In settle
specimen of a form used for such a purpose :-
ment of a local clearing, a draft may be
To the X & Y Bank , Ltd. , London . issued for the balance which is due, or the
The Bank is hereby authorised and re money may be paid over through the London
quested to pay to A & B Bank, Ltd., office of the one bank to the London office
Bristol (or tothe credit of myaccountat ofthe other. Where cheques are remitted
your Bristol Branch ), until this authority direct from bank A to bank B, for payment
requests
is revoked in writing, all dividends and over through London, bank B
bonuses now or hereafter payable onall itsLondonoffice or agents (bank C) to pay
shares in the Bank standing in the name the amount to bank D (the London office
of the undersigned, and the discharge of or agents of A) for the credit of bank A.
the said A & B Bank, Ltd. shall be a BANKERS' RECEIPTS . Receipts given
sufficient discharge of the warrant for any by bankers,
ments madeonon behalf of a company,
application for sharesfororpay
for
dividend or bonus so paid .
Dated this tenth day of June, 19 . payments of calls. (See APPLICATION FOR
(Usual signature) J. Brown. SHARES .) Receipts on account of applica
Name in full - John Brown, tions for shares must be preserved in order
Address — 2, Lorne Crescent, Bristol. tobe exchanged in due course forthe share
N.B. — This order must be signed by all for certificates.
an advanceThey
. do not form a security
the parties in whose names the shares are Receipts upon a duly stamped letter of
registered , and their addresses added . (See allotment are exempt from stamp duty.
DIVIDEND MANDATE .) (See RECEIPT, Exemption 11.)
STAMP DUTY.-By a minute of the Board Several other receipts given by bankers
of Inland Revenue, May, 1904, the Board are exemptfrom duty . (See under RECEIPT.)
desired “ to mention that they have some BANKING COMPANY. The Sections of
reason to think that orders to bankers for the the Companies (Consolidation ) Act, 1908,
payment of sums of money at stated periods which particularly refer to banking com
(e.g. club subscriptions, and instalments of panies are as follow :
the price of articles purchased on the hire Section 1 , s.s. 1 :
system) are frequently not stamped. The “No company, association, or partnership
omission of the stamp is doubtless due to a consisting of more than ten persons shall be
misapprehension as to the provisions of the formed for the purpose of carrying on the
law ; but it is clear that such orders fall business of banking, unless it is registered
78
BAN ) DICTIONARY OF BANKING
as a company under this Act, or is formed
in pursuance of some other Act of Parlia
ment, or of letters patent."
A statement is to be made by a limited
banking company in accordance with Sec
tion 108 , which is as follows :
" (1 ) Every company being a limited
banking company or an insurance
company or a deposit, provident, or
benefit society shall, before it com
mences business, and also on the first
Monday in February and the first
Tuesday in August in every year
during which it carries on business,
make a statement in the form
marked C in the first schedule to
this Act, or as near thereto as cir
cumstances will admit .
“ (2) A copy of the statement shall be put
up in a conspicuous place in the
registered office of the company,
and in every branch office or place
where the business of the company
is carried on.
“ ( 3) Every member and every creditor of
the company shall be entitled to a
copy of the statement, on payment
ofa sum not exceeding sixpence.
" (4) If defaultis made in compliance with
this Section , the company shall be
liable to a fine not exceeding five
pounds for every day during which
the default continues ; and every
director and manager of the com
pany who knowingly and wilfully
authorises or permits the default
shall be liable to the like penalty.
0
(5) For the purposes of this Act a com
pany that carries on the business of
insurance in common with any other
business or businesses shall be
deemed to be an insurance company .
" (6 ) This Section shall not apply to any
life assurance company nor any other
assurance company to which the
provisions of the Life Assurance
Companies Acts, 1870 to 1872, as to
the annual statements to be made
by such a company , apply with
or without modifications, if the
company complies with those
provisions.
FORM C.
" Form of Statement to be published by Bank
ing and Insurance Companies, and
Deposit, Provident, or Benefit Societies.
77
( BAN
“The share capital of the company is
, divided into shares of
each .
" The number of shares issued is
Calls to the amount of pounds
per share have been made, under which the
sum of pounds has been received .
“ The liabilities of the company on the
first day of January (or July ) were—
“ Debts owing to sundry persons by the
company .
" On judgment, £
00
On specialty, £
“ On notes or bills, £
"On simple contracts, £
" On estimated liabilities, &
“ The assets of the company on that day
were
“ Government securities (statingthem )
“ Bills of exchange and promissory
notes, £
“ Cash at the bankers, £
Other securities, &
By Section 109 it is provided that the
Board of Trade may appoint one or more
competent inspectors to investigate the
affairs of any company , and to report
thereon in such manner as the Board direct :
in the case of a banking company having a
share capital, on the application of members
holding not less than one - third of the shares
issued . (See INVESTIGATION OF COMPANY'S
AFFAIRS .)
See Section 26 under ANNUAL LIST OF
MEMBERS OF COMPANY , and REGISTER OF
MEMBERS OF COMPANY.
By Section 113, s.s. 5 :
“ In the case of a banking company
registered after August 15, 1879 :
(a) If the company has branch banks
beyond the limits of Europe, it shall
be sufficient if the auditor is allowed
access to such copies of and extracts
from the books and accounts of any
such branch as have been trans
mitted to the head office of the com.
pany in the United Kingdom ; and
“ (b) The balance sheet must be signed by
the secretary or manager ( if any),
and where there are more than three
directors of the company by at least
three of those directors, and where
there are not more than three
directors by all the directors .”
• If the company has no share capital the portion
of the statement relating to capital and shares must
be omitted .
BAN ) DICTIONARY OF BANKING (BAN

The following two sections are to be read the account in respect of which the
as part of Part VII of the Companies notice ought to have been given , and
(Consolidation ) Act. so far as respects the account down
" Liability of Bank of Issue Unlimited in to the time at which notice is given ,
Respect of Notes . but not further or otherwise, the cer
“ 251. ( 1) A bank of issue registered tificate of registration with limited
under this Act as a limited company liability shall have no operation . ”
shall not be entitled to limited lia . Section 286 , s.s. 1 , repealed various Acts,
bility in respect of its notes ; and provided that the repeal shall not affect :
the members thereof shall be liable “ ( d ) The continuance in force of the enact
in respect of its notes in the same ments set out in the second part of
manner as if it had been registered the sixth schedule to this Act, being
as unlimited ; but if, in the event the enactments continued in force
of the company being wound up, by Section two hundred and five of
the general assets are insufficient to the Companies Act, 1862."
satisfy the claims of both the note . The enactments referred to in that
holders and the general creditors, Section are :
then the members, after satisfying
the remaining demands of the note- “ AN ACT TO REGULATE JOINT STOCK BANKS
holders, shall be liable to contribute IN ENGLAND (7 & 8 Vict. c. 113) , SECTION
47 .
towards payment of the debts of the
general creditors a sum equal to the Existing Companies to have the Powers of
amount received by the note - holders Suing and being Sued .
out of the general assets.
" Every company of more than six persons
(2) For the purposes of this Section the established
expression the general assets on the sixth day of May one
meansofthe thousand eight hundred and forty -four, for
ment thefunds available
general creditorforas well
pay the purposeof carrying on the trade or busi
as the note -holder. ness of bankers within the distance of sixty
(3) Any bank of issue registered under fivemiles from London, and not within the
this Act as a limited company may provisions of the Act passed in the session
state on itsnotes that the limited of the seventh and eighth years ofQueen
liability does not extend to its notes, Victoria, chapter one hundred andthirteen,
and that the members of the com intituled ' An Act to regulate Joint Stock
pany are liable in respect of its notes Banks in England ,' shall have the same
in the same manner as if it had been powers and privileges of suing and being
registered as an unlimitedcompany.” sued in the name ofany one of the public
officers of such co -partnership as the nominal
On Registration of Banking Company with plaintiff, petitioner, or defendant on behalf
Limited Liability, Notice to be given to of such co -partnership ; and all judgments,
Customers. decrees, and orders made and obtained in
" 256. ( 1) Where a banking company any such suit may be enforced in like manner
which was in existence on the seventh as is provided with respect to such com
day of August eighteen hundred and panies carrying on the said trade or business
sixty - two proposes to register as a at any place in England exceeding the dis
limited company, it shali, at least tance of sixty -five miles from London under
thirty days before so registering, the provisions of the Country Bankers Act,
give notice of its intention so to 1826, provided that such first-mentioned
register to every person who has a company shall make out and deliver from
banking account with the company, time to time to the Commissioners of Inland
either by delivery of the notice to Revenue the several accounts or returns
him , or by posting it to him at, or required by the last-mentioned Act, and all
delivering it at, his last known the provisions of the last-recited Act as to
address . such accounts or returns shall be taken to
" (2) If the company omits to give the apply to the accounts or returnsso made out
notice required by this Section, then and delivered by such first-mentioned com
as between the company and the per- panies as if they had been originally included
son for the time being interested in in the provisions of the last - recited Act.
78
BAN ) DICTIONARY OF BANKING
THE JOINT STOCK BANKING COMPANIES
Act, 1857, PART OF SECTION 12.
Power to form Banking Partnerships of Ten
Persons.
.
“ Notwithstanding anything contained in
any Act passed in the session holden in the
seventh and eighth years of Queen Victoria,
chapter one hundred and thirteen , and
intituled ' An Act to regulate Joint Stock
Banks in England, ' or in any other Act,
it shall be lawful for any number of persons,
not exceeding ten, to carry on in partnership
the business of banking, in the same manner
and upon the same conditions in all respects
as any company of not more than six persons
could before the passing of the Joint Stock
Banking Companies Act, 1857, have carried
on such business .” (See COMPANIES.)
There are special provisions with regard
to the sale and transfer of bank shares.
(See LEEMAN'S Act. )
(See BANK.)
BANKRUPT PERSON . A person who
has been adjudicated a bankrupt by the
Court of Bankruptcy. In the early days of
banking, when abanker failed , his bench, or
banco , at which he did business, was broken
by the people, whence the word bankrupt.
(It. banco, a bench. Lat. ruptus, broken .)
As to the validity of certain payments
to a person subsequently adjudged bank
rupt or to his assignee, see under ACTS OF
BANKRUPTCY .
As soon as a person is adjudicated a
bankrupt he is an undischarged bankrupt
until he receives his discharge.
The Bankruptcy Act, 1914, provides :
Obtaining Credit by Undischarged Bankrupts.
“ Section 155. ( 1) Where an undischarged
bankrupt
“ (a) either alone or jointly with
any other person obtains
credit to the extent of ten
pounds or upwards from
any person without inform
ing that person that he is an
undischarged bankrupt ; or
“ (b) engages in any trade or
business under a name other
than that under which he
was adjudicated bankrupt
without disclosing to all
persons with whom he
enters into any business
transaction the name under
79
(BAN
which he was adjudicated
bankrupt ;
he shall be guilty of a misdemeanour.
Dealings with Undischarged Bankrupt.
“ 47. ( 1) AU transactions by a bankrupt
with any person dealing with him
bona fide and for value, in respect
of property, whether real or personal,
acquired by the bankrupt after the
adjudication, shall, if completed
>
before any intervention by the
trustee, be valid against the trustee,
and any estate or interest in such
property which by virtue of this Act
is vested in the trustee shall deter
mine and pass in such manner
and to such extent as may be
required for giving effect to any
such transaction .
This subsection shall apply to trans
actions with respect to real property
completed before the first day of
April, nineteen hundred and four
teen, in any case where there has not
been any intervention by the trustee
before that date.
" For the purposes of this subsection , the
receipt of any money, security, or
negotiable instrument from , or by
the order or direction of, a bankrupt
by his banker, and any payment
and any delivery of any security or
negotiable instrument made to , or
by the order or direction of, a bank
rupt by his banker, shall be deemed
tobe a transaction by the bankrupt
with such banker dealing with him
co
for value.
(2) Where a banker has ascertained
that a person having an account with
him is an undischarged bankrupt,
then , unless the banker is satisfied
that the account is on behalf of
some other person , it shall be his
duty forthwith to inform the
trustee inthe bankruptcy or the
Board of Trade of the existence of
the account, and thereafter he shall
not make any payments out of the
account, except under an order of
the court or in accordance with
instructions from the trustee in the
bankruptcy, unless by the expira
tion of one month from the date of
giving the information no instruc
tions have been received from the
.
trustee. "
BAN ) DICTIONARY OF BANKING (BAN
Provisions as to Second Bankruptcy. Subject to the provisions of the Act with
Section 39. ( 1) In the event of a respect to property acquired after the
receiving order adjudication,a banker mustpay anddeliver
secondor subsequent to the trustee all money and securities in
being made against a bankrupt,
any property acquired by him since his possession which he is not by law entitled
he was last adjudged " bankrupt, to retain as against the bankrupt or the
which at the date when the subse trustee (Section 48, S.s. 6. See under
TRUSTEE IN BANKRUPTCY .)
quent petition was presented had If the wife of an undischarged bankrupt
not been distributed amongst the wishes to open an account in order to carry
creditors in such last preceding on his business it would be advisable to
bankruptcy, shall ( subject to any obtain the consent of the trustee . (See
disposition thereof made by the ActS OF BANKRUPTCY .)
official receiver or trustee in that By Section 32 of the Bankruptcy Act,
bankruptcy, without knowledge of 1883 :
the presentation of the subsequent
petition, and subject to the provi- DISQUALIFICATIONS OF BANKRUPT,
sions of Section 47 of this Act) vest “ ( 1 ) Where a debtor is adjudged bank
in the trustee in the subsequent rupt he shall, subject to the pro
bankruptcy , but any unsatisfied visions of this Act, be disqualified
balance of the debts provable under for
the last preceding bankruptcy may (a) Sitting or voting in the House
be proved in the subsequent bank of Lords , or on any com
ruptcy by the trustee in the last mittee thereof, or being
preceding bankruptcy. elected as a peer of Scotland
(2) Where the trustee in any bank or Ireland to sit and vote
ruptcy receives notice of a subse in the House of Lords ;
quent petition in bankruptcy against (6) Being elected to, or sitting
the bankrupt, he shall hold any or voting in the House
property then in his possession of Commons, or on any
which has been acquired by the committee thereof ;
bankrupt since he was adjudged (c) Being appointed or acting as
bankrupt until the subsequent a justice of the peace ;
petition has been disposed of, and , ( d) Being elected to or holding
if on the subsequent petition an or exercising the office
order of adjudication is made, he of mayor, alderman , Or

shall transfer all such property councillor ;

or the proceeds thereof (after de (e) Being elected to or holding or
ducting his costs and expenses) to exercising the office of guar
the trustee in the subsequent bank dian of the poor, overseer
ruptcy ." of the poor, member of a
In commenting upon Section 47, Sir sanitary authority, or mem
John Paget (Gilbart Lectures, 1914, No. 1 ) ber of a school board ,
pointed out that a banker could not ignore highway board, burial board,
sub - section 2, and claim the benefit of or select vestry.
sub-section 1. If a banker does not tell the “ ( 2) The disqualifications to which a
trustee or the Board of Trade of the existence bankrupt is subject under this
of the account, he will have to pay over section shall be removed and cease
again to the trustee all monies paid out on if and when
cheques or otherwise. (a) the adjudication of bank
A banker must advise the trustee at once ruptcy against him is
of the existence of such an account and annulled ; or
endeavour to obtain his sanction for the (6) he obtains from the Court
working of the account. his discharge with a certifi
A banker cannot tell whether any money cate to the effect that his
paid in to an account is or is not property bankruptcy was caused by
acquired by the bankrupt after the ad misfortune without any
judication. misconduct on his part,
80
BAN ) DICTIONARY OF BANKING [BAN

The Court may grant or withhold BANKRUPT, JOINT ACCOUNT, JOINT DE

such certificate as it thinks fit, but POSITOR . - On the bankruptcy of one of
any refusal of such certificate shall joint customers, in an ordinary joint account,
be subject to appeal. cheques to withdraw any balance standing
" (3) The disqualifications imposed by this to credit should be signed by the solvent
Section shall extend to all parts creditor and the trustee in bankruptcy
of the United Kingdom . ” ( See of the bankrupt customer.
BANKRUPTCY .) If a mandate is held for one of the cus
BANKRUPT ACCEPTOR.--Where the ac- tomers to sign , the mandate is determined
ceptor of a bill which is not yet due becomes by an act of bankruptcy. Where aa loan has
bankrupt, the banker cannot compel the been made to two persons jointly, upon the
bankruptcy of one, the other becomes liable
person for whom he discounted the bill to for
take it up. the full debt.
BANKRUPT AGENT . - Bankruptcy does not Where the parties in a joint account are
prevent a person acting as agent, including known by the banker to be partners, see
thesigning of cheques,if so authorised . BANKRUPT -PARTNER (below ), or
to be
BANKRUPT DRAWEE .--- Presentment of the executors, see BANKRUPT EXECUTOR (above ),
bill may be made to him or to his trustee or to be trustees, see BANKRUPT TRUSTEE
( Section 41 , s.s. (d ), Bills of Exchange Act). (below .) (See SET OFF .)
BANKRUPT DRAWER. — No further cheques BANKRUPT, LIMITED PARTNERSHIP.— (See
should be paid upon his account, with the LIMITED PARTNERSHIP.)
exception of any cheque which the banker BANKRUPT, MARRIED WOMAN . — Every
may have previously marked for payment married woman who carries on a trade or
at the drawer's request, or for the banker's business, whether separately from her
own convenience in connection with the husband or not, shall be subject to the
local clearing. (See MARKED CHEQUE.) bankruptcy laws as if she were a feme-sole .
In the case of a bill, where both the drawer (See Section 125, Bankruptcy Act, 1914,
and theacceptorarebankrupt, the bankermay under MARRIED WOMAN .)
claim for the full amount of the bill against BANKRUPT PARTNERSHIP PARTNER .
both estates . But if a dividend has been -See Section 33 of the Bankruptcy Act,
declared on one of the estates before the 1914, under Proof OF DEBTS.
banker sends in his proofof debt on the other A partnership is dissolved by the bank
estate, he can only claim for the balance ruptcy of a partner. ( See Section 33 of
after crediting the dividend . If there is the Partnership Act, 1890, under PARTNER
any balance standing to credit of the SHIPS .) The remaining partners may with
customer it can be retained against the draw any balance standing at credit of
bill. the firm's account. If a cheque, drawn
Where notice of dishonour requires to be on the firm's account by a bankrupt
given , it may be given either to the drawer partner, is presented, it should not be paid
himself or to his trustee. without the confirmation of the other
BANKRUPT EXECUTOR . — The bankruptcy partners.
of an executor does not affect his right to If a partner deposits his own personal
deal with the executor account. securities for the firm's account, the banker
BANKRUPT FIRM .-- A petition may be may claim upon the bankrupt firm's estate
presented against a firm in the firm's name for the full amount of the debt. If the firm
and the receiving order will operate against gives security for a partner's private account,
each of the partners. (See below , BANKRUPT a claim may be made on the partner's
PARTNERSHIP .) estate for the full debt.
BANKRUPT INDORSER. A notice of dis- Where a partner has become bankrupt,
honour may be given to the indorser him he is no longer able by his acts to bind the
self or to his trustee . As to payments firm ; but if another partner has, since the
to a bankrupt indorser, see BANKRUPT bankruptcy, represented himself as being
PERSON . still a partner with the bankrupt, he will be
INFANT. - An infant cannot be made liable. (See PARTNERSHIPS.)
bankrupt. He is not liable to bankruptcy When a firm is bankrupt, the individual
proceedings in respect of a debt contracted partners are also bankrupt, and no further
by a firm of which he is a partner." (Williams' operations on any of the accounts may take
Bankruptcy Practice." place .
81
for (1535)
BAN ) DICTIONARY OF BANKING (BAN
In settling the affairs of a bankrupt firm , repay, the banker makes a claim upon the
the debts of the firm are paid out of the surety's estate. When a bankrupt surety
firm's assets, and the debts of each partner receives his discharge, he is freed from all
out of each partner's separate estate. liability with respect to the guarantee. In
If there is any surplus after paying all the the case of a joint guarantee, a bankrupt
firm's debts in full, it is apportioned to the surety's estate is not liable (thus differing
partners' separate estates, and if there is from a several, or joint and several guaran
any surplus from any separate estate, tee ). On the bankruptcy of one of several
after paying all the private debts of that guarantors, the account should be broken
partner in full, it forms a part of the firm's until fresh arrangements are made.
estate. If the partners have by agreement BANKRUPT TRUSTEE . — The bankruptcy of
with the bank made themselves jointly and a trustee does not cause him to vacate the
severally liable for any debt upon the firm's office, nor has the trustee in bankruptcy any
account, the bank will be entitled to control over the trust funds.
prove along with other joint creditors against VOLUNTARY CONVEYANCES AND TRANS
the firm's estate and along with other FERS. — If bankruptcy occurs within two
separate creditors against the separate years after the date of a voluntary transfer,
estates of the partners . (See Bankruptcy the transfer is void , and the trustee can
Act, 1914, Schedule II, Rule 19, under claim the property. If bankruptcy occurs
PROOF OF DEBTS .) within ten years, the transfer is also void ,
BANKRUPT Payee . - The drawer of a unless it can be proved that the bankrupt
cheque need not stop payment of it merely was solvent, at the time of making the
because the payee has become bankrupt. transfer, without the aid of the property
A cheque payable to a bankrupt should not comprised in the conveyance. (See SETTLE
be paid . (See BANKRUPT PERSON .) MENTS_SETTLOR BANKRUPT.)
BANKRUPT, SAFE CUSTODY.-Any articles BANKRUPTCY. When a person is unable
left for safe custody should not be given up to pay his debts, his property is, in certain
to a bankrupt. When a receiving order is circumstances, taken possession of by the
made the bankrupt's property vests in the official receiver or trustee in bankruptcy,
official receiver, or trustee in bankruptcy. who realises it and distributes the proceeds
BANKRUPT, SECURITIES . — See rules re- amongst the creditors. Such a proceeding
garding securities under PROOF OF Debts. is called bankruptcy, and the debtor is
Bankruptcy does not affect a banker's known as the bankrupt .
rights to any securities belonging to the The law of bankruptcy in England is
bankrupt, over which the banker has merely contained in the Bankruptcy Act, 1914, an
an equitable charge. Act to consolidate the law relating to bank
Where securities have been given for the ruptcy, and in several unrepealed Sections
bankrupt's account by some one other than in previous Acts.
the debtor himself, the proceeds of such By the 1914 Act, Section 1 , s.s. 2 :
00
securities should be placed to a separate • In this Act, the expression a debtor,
account until all the dividends have been unless the context otherwise implies, in
received from the debtor's estate , unless the cludes any person, whether a British subject
depositor thereof (or the guarantor, as the or not, who at the time when any act of
case may be) pays off the whole of the bankruptcy was done or suffered by
debt and claims himself upon the estate. him
The advantage of a collateral security, taken (a) was personally present in England ; or
in the usual form , is that , if it is not sufficient ( ) ordinarily resided or had aplace of
to clear off the whole debt, the banker may residence in England ; or
claim for the full debt upon the bankrupt's (c) was carrying on business in England,
estate , and then fall back upon the amount personally, or by means of an agent
realised from that security, and thus in or manager ; or
many cases obtain full repayment of the (d) was a member of a firm or partnership
debt. (See GUARANTEE. ) which carried on business in
BANKRUPT SURETY . — When a guarantor England .”
for an account becomes bankrupt the debtor's Where a debtor has committed an act of
account should be stopped until fresh ar- bankruptcy (see ActS OF BANKRUPTCY ), a
rangements are made. If new security is not creditor , or creditors, whose debt or debts
forthcoming and the debtor is unable to amount to not less than £50, may petition
82
BAN ) DICTIONARY OF BANKING [BAN

the Court which has bankruptcy jurisdiction BANKRUPTCY ), and thereupon his property
over the debtor, to make a receiving order shall vest in a trustee (see TRUSTEE IN
(see RECEIVING ORDER), with the object of BANKRUPTCY ), and be divisible amongst his
having the debtor's estate administered creditors. As to any money or securities
under the bankruptcy law for the benefit in a banker's hands at the time of the
of the creditors. A bankruptcy petition adjudication, or received afterwards, see
may also be presented by the debtor himself. under BANKRUPTS PERSON .
A debtor is not adjudged a bankrupt imme- With respect to the payment of cheques
diately upon the making of a receiving order, before the date on which a receiving order
but a general meeting of creditors (see is made and without notice of the presenta
MEETING OF CREDITORS) is held shortly tion of a bankruptcy petition, see under Acts
after the order is made, to consider whether OF BANKRUPTCY.
a composition or scheme of arrangement The bankruptcy of a debtor, whether it
shall be entertained or whether he shall be takes place on his own petition or that of a
adjudged bankrupt. creditor, dates back to the time of the act
After a receiving order is made, thedebtor of bankruptcy being committed on which
must make out and submit to the official the receiving order was made against him .
receiver ( that is, the official of the Court (Section 37 of the Bankruptcy Act, 1914.
who takes control of the debtor's estate) a See under ADJUDICATION OF BANKRUPTCY .)
statement of his affairs. (See Section 14, The creditors may appoint a committee
under RECEIVING ORDER . See of inspection to superintend the administra
OFFICIAL RECEIVER.) tion of the bankrupt's property by the
As soon as convenient after the expiration trustee . (See COMMITTEE OF INSPECTION .)
of the time for the submission of a debtor's A trustee may be authorised by the Board
statement of affairs, the Court shall hold of Trade to open a local banking account.
a public sitting for the examination of the (See Section 89 of the 1914 Act, under
debtor, but the Court shall not declare that TRUSTEE IN BANKRUPTCY.)
his examination is concluded until after the Where the committee of inspection ap
day appointed for the first meeting of credit- prove, the trustee of a bankrupt's estate may
ors. (See PUBLIC EXAMINATION OF DEBTOR.) pledge any deeds belonging to the estate, if
If a debtor intends to make a proposal to the money is required for payment of the
his creditors for a composition in satisfaction bankrupt's debts.
of his debts, or a proposal for a scheme of A creditor's claim against a bankrupt's
arrangement of his affairs, he must, within estate must be made on oath and upon the
four days of submitting his statement of prescribed form called the proof of debt.
affairs, or within such time as the official (See PROOF OF Debts.)
receiver may fix , lodge his proposal with the A bankrupt may, at any time after being
official receiver, embodying the terms of the adjudged bankrupt, apply to the Court for
composition or scheme and setting out an order of discharge, and the Court shall
particulars of any sureties or securities appoint a day for hearing the application .
proposed. ( See COMPOSITIONS. ) (See DISCHARGE OF BANKRUPT .)
If the debtor's proposal is accepted by If a debtor gives a creditor a preference
the creditors, the receiving order is dis- over other creditors, and he is adjudged a
charged . If a trustee is not appointed, the bankrupt on a petition presented within
official receiver acts as trustee for the purpose three months thereafter, the preference shall
of receiving and distributing the composition, be deemed fraudulent and void as against the
or for the purposeof carrying out the terms trustee. (See FRAUDULENT PREFERENCE.)
of the scheme. A creditor under a com- Any settlement of property shall, if the
position or scheme must lodge his proof of settlor becomes bankrupt within two years
debt with the trustee . after the date of the settlement, be void
If the composition or scheme is not against the trustee, or if he becomes bank
accepted within fourteen days after the rupt at any time within ten years after that
conclusion of the debtor's examination , or date, be also void against the trustee, unless
such time as is allowed by the Court, or if it is proved that the settlor was able to pay
the creditors resolve that the debtor be all his debts at the time he made the settle
adjudged bankrupt, or if they do not pass ment, without the aid of the property
any resolution, the Court shall adjudge the comprised therein. (See SETTLEMENTS
debtor bankrupt (see ADJUDICATION OF SETTLOR BANKRUPT .)
83
BAN ) DICTIONARY OF BANKING [ BAN

Section 45 of the Bankruptcy Act, 1914, Bankruptcy Acts. He may call his creditors
with respect to bona fide transactions with- together and offer a composition, that is, to
out notice, provides as follows : pay each creditor only so much in the pound
“ Subject to the foregoing provisions of (see COMPOSITION WITH CREDITORS), or he
this Act with respect to theeffect of bank- may offer to assign his property to a trustee,
ruptcy on an execution or attachment, and in order that it may be realised and the
with respect to the avoidance of certain proceeds divided amongst the creditors.
settlements, assignments and preferences, (See ASSIGNMENT FOR BENEFIT OF CREDI
nothing in this Act shall invalidate, in the TORS.) When an arrangement is made in
case of a bankruptcy either of those ways and is embodied in a
(a) Any payment by the bankrupt to any deed or agreement, the deed of arrangement
of his creditors ; or agreement must be registered within
( 6) Any payment or delivery to the seven days. (See DEED OF ARRANGEMENT .)
bankrupt ; As to dealings with an undischarged bank
(c) Any conveyance or assignment by the rupt see BANKRUPT PERSON ; and as to the
bankrupt for valuable consideration ; avoidance of general assignments of book
( d) Any contract, dealing, or transaction debts unless registered, see DEBTS, ASSIGN
by or with the bankrupt for valuable MENT OF.
consideration : The estate of a deceased debtor may be
Provided that both the following condi- administered by the Court, according to
tions are complied with , namely — the law of bankruptcy. (See DEATH OF
“ ( 1) that the payment, delivery, convey- INSOLVENT DEBTOR.)
ance, assignment, contract, dealing, An advertisement in the London Gazette
or transaction, as the case may be, of a receiving order or an adjudication order
takes place before the date of the is conclusive evidence of the order having
receiving order ; and been made. (See GAZETTED .)
' (2) that the person (other than the Stamp Duty .
debtor) to, by, or with whom the By Section 148 of the Bankruptcy Act,
payment, delivery, conveyance , 1914 :-"Every deed, conveyance, assign
assignment, contract, dealing, or ment, surrender, admission , or other assur
transaction was made, executed, or ance relating solely to freehold , leasehold ,
entered into, has not at the time of copyhold, or customary property , or to any
the payment, delivery, conveyance, mortgage, charge, or other incumbrance on ,
assignment, contract, dealing, or or any estate, right, or interest in any real
transaction , notice of any available or personal property which is part of the
act of bankruptcy committed by estate of any bankrupt, and which , after the
the bankrupt before that time." But execution of the deed, conveyance, assign
see Section 46, Bankruptcy Act, ment, surrender, admission , or other assur
1914, as to the validity of certain ance, either at law or in equity, is or remains
payments to a bankrupt or his as- the estate of the bankrupt or of the trustee
signee, under ACTS OF BANKRUPTCY. under the bankruptcy, and every power of
It is the duty of the trustee to declare and attorney, proxy paper, writ, order, certifi
distribute dividends amongst the creditors cate , affidavit, bond, or other instrument or
who have proved their debts. (See Divi- writing relating solely to the property of any
DENDS - IN BANKRUPTCY.) bankrupt, or to any proceeding under any
If a debtor's estate is not likely to exceed bankruptcy , shall be exempt from stamp
£ 300 in value, it may be administered in duty, except in respect of fees under this
a simpler manner than in the case of an Act."
ordinary bankruptcy. ( See SUMMARY By Section 16 of the Finance Act, 1895,
ADMINISTRATION .) the above Section (previously 144 of the
46
Where a judgment has been obtained in 1883 Act) shall apply to the estates of
a county court and the debtor is unable to companies wound up by order of the Court
pay, and his total indebtedness does not under the Companies Winding -up Act, 1890 ,
exceed £ 50, the county court may make an and to such winding up, in like manner as
administration order. (See ADMINISTRATION if the company were a bankrupt and the .)
ORDER .) winding up were a bankruptcy." (See Acts
A debtor who is unable to pay his creditors OF BANKRUPTCY , ADJUDICATION OF BANK
is not always dealt with under the RUPTCY , ADMINISTRATION ORDER, AFTER
84
BAN ) DICTIONARY OF BANKING (BAS

ACQUIRED PROPERTY (under heading BANK- Bank of England notes in exchange for gold
RUPT PERSON ), ASSIGNMENT FOR BENEFIT bullion at the rate of £ 3 17s. 9d. per oz. of
OF CREDITORS, BANKRUPT PERSON , Com- standard gold ; Provided always , that the
MITTEE OF INSPECTION , COMPOSITION WITH said Governor and Company shall in all
CREDITORS, COMPOSITIONS ( BANKRUPTCY cases be entitled to require such gold bullion
ACT), DEATH OF INSOLVENT DEBTOR, DEBTS to be melted and assayed by persons approved
(ASSIGNMENT OF ), DEED OF ARRANGEMENT, by the said Governor and Company at the
DISCHARGE OF BANKRUPT, DISQUALIFICA- expense ofthe parties tendering such gold
TIONS OF BANKRUPT (under heading BANK- bullion .” The notes can, of course, be at
RUPT PERSON ), DIVIDENDS (IN BANKRUPTCY ), once exchanged for sovereigns. The differ
FRAUDULENT PREFERENCE, INSOLVENCY, ence of 14d. per oz. between the buying
INTEREST, MARRIED WOMAN , MEETING OF and the selling prices forms the Bank's
CREDITORS, OFFICIAL RECEIVER, PREFER- profit, or rather its remuneration for the
ENTIAL PAYMENTS , PROOF OF DEBTS, PUBLIC trouble of getting the bullion minted if
EXAMINATION OF DEBTOR, RECEIVING required , and for the loss of interest upon
ORDER, REGISTRARS (IN BANKRUPTCY ), the bullion before it is turned into coins.
SETTLEMENTS_SETTLOR BANKRUPT, Sum- Bar gold is a kind of international cur
MARY ADMINISTRATION , TRUSTEE IN BANK- rency travelling about from one nation to
RUPTCY, UNDISCHARGED BANKRUPT (under another in settlement of exchange balances
heading BANKRUPT PERSON ). without ever being minted into any country's
BANKRUPTCY PETITION , (See coinage. (See MINT PRICE .)
RECEIVING ORDER .) BAR OF DOWER . That which bars or
BAR GOLD. Much of the Bank of Eng. prevents a widow from obtaining dower.
land's stock of gold is not in the form of (See DOWER.)
coins, but of bars, which , from an exporter's BARGAIN . A Stock Exchange transaction .
point of view , are often preferable, one reason BARGAIN AND SALE . This is a contract
being that the quantity lost by friction in
in English law , whereby property, either
transit is less in the case of bars than of coin .
real or personal, is transferred from one
The Bank is bound to pay in sovereigns anyperson to another for a valuable considera
amount of its notes that may be tendered, tion. The word " assignment " is, however,
but if a bullion merchant prefers to take usually used for the transfer of personal
bars, the Bank raises no objection and property ; consequently, bargain and sale
usually charges the mint price of gold, i.e. may be described as a contract whereby real
£ 3 175. 101d . per oz.; should, however, the estate, that is, lands or tenements, whether
demand become sufficiently keen , the Bank in possession or in remainder, are conveyed
may raise the price of bars (not raise the from one person to another for a considera
price of sovereigns, that it cannot do) to tion . (See CUSTOMARY PROPERTY .)
£ 3 17s. 11d. per oz., but it would not be BARRATRY. The word , as used in a bill
worth while to increase it above this figure, of lading (q.v.) or a charter party (9.v.), means
for then an exporter would find it cheaper any wilful wrong-doing by the master or
to get sovereigns to be sent abroad, to fill the crew of a ship by which the interests of the
place of which the Bank would be reduced shipowner areinjured.
to having some of its bars minted . BASE COINS . A banker is justified in
Any one has the right to take bar gold to breaking or destroying any basecoins which
the Mint, provided that the value is not less come into his hands. Section 26 of 24 & 25
66
than £ 20,000, and have it coined at the rate Vict. c. 99 enacts : Where any coin
of £ 3 17s. 101d. per oz. of standard gold, shall be tendered as the Queen's current gold
free of all expense of coining, but as a certain or silver coin to any person who shall suspect
period must elapse before the bullion is the same to be diminished otherwise than
turned into coins, during which time the by reasonable wearing, or to be counterfeit,
owner of the gold would lose interest upon it shall be lawful for such person to cut,
it, it is the practice to sell gold bullion to break, bend, or deface such coin, and if
the Bank of England . The price at which any coin so cut, broken, bent or defaced shall
the Bank of England must buy all gold that appear to be diminished otherwise than by
is offered to it is £ 3 17s. 9d. per oz. By the reasonable wearing, or to be counterfeit,
Bank Charter Act, 1844 , Section 4, all per the person tendering the same shall bear the
sons shall be entitled to demand from the loss thereof, but if the same shall be of due
issue department of the Bank of England, / weight, and shall appear to be lawful coin , the
85
BAS ) DICTIONARY OF BANKING [BEA

person cutting , breaking, bending, or defac- | hardness ; (6) strong nitric acid dissolves
ing the same is hereby required to receive the silver, and the solution turns black if
same at the rate it was coined for ; and if exposed to light ” (Jevons).
any dispute shall arise whether the coin so Occasionally a counterfeit coin is met with ,
cut, broken , bent or defaced be diminished which is actually made of silver and is of
in manner aforesaid, or counterfeit, it shall correct weight. Such a coin almost defies
be heard and finally determined in a sum- detection, but a close attention to the milling
mary manner by any justice of the peace , will usually reveal irregularities.
who is hereby empowered to examine upon “ We can usually ascertain whether a coin
oath as well the parties as any other person, consists of gold or not, by looking for three
in order to the decision of such dispute ; and characteristic marks : (1 ) the brilliant yellow
the Tellers at the Receipt of Her Majesty's colour ; (2) the high specific gravity ; (3)
Exchequer, and their deputies and clerks, the metallic ring of the coin when thrown
and the Receivers -General of every branch down , which will prove the absence of lead
of Her Majesty's Revenue , are hereby or platinum in the interior of the coin . Gold
required to cut, break, or deface, or cause to is insoluble in all the simple acids and does
be cut, broken , or defaced every piece of not corrode or become tarnished in any way.
counterfeit or unlawfully diminished gold or Strong nitric acid will rapidly attack any
silver coin which shall be tendered to them coloured counterfeit metal, but will not
in payment of any part of His Majesty's touch standard gold, or will, at the most,
Revenue." feebly dissolve the copper and silver alloyed
Base silver coins are very frequently met with it " (Jevons) .
with, and in some cases they are rather diffi- Where acustomer receives money in pay
cult at first sight to distinguish from genuine ment of a cheque and takes it away without
ones . Various tests are applied to a sus making any comment upon it, he cannot,
pected “ silver " coin . If it is a base one it legally, return to the banker and say that
will be easily cut, or bent, or broken , and its it contained a base coin. (See Coinage.)
general appearance to the eye of an expert BAWBEE . The name of a coin , equal in
will call attention to its real nature. On value to the present halfpenny, which was
close examination it will usually be found at one time current in Scotland . It was
that the raised letters or figures are not so issued in the reign of James V of Scotland .
sharply defined as on a real coin. An ex- The word is still frequently used in
amination of the milling will reveal a rough- Scotland when speaking of a halfpenny.
ness and irregularity , which is often particu . BEAR AND BULL . Names given to
larly noticeable at a spot on the edge repre- speculators on a stock exchange. A bear
senting the place where the metal was poured is one who anticipates a fall in a certain
into the mould . Its weight and size may be security, and who sells stock which he does
tested with a good coin, and also its sound not possess, hoping to buy back afterwards
when thrown upon the counter. The sound at a lower price, the difference constituting
by itself, however, is not sufficient, as a good his profit.
coin which is cracked will not give the true A bull, on the other hand , expects a stock
ring. If caustic marks the coin black it to rise in price, and so he buys in , not with
reveals its baseness, but that test may be the intention of paying for it but with the
defeated if the surface is aa thin coat of silver. object of selling out before the settling day
A pocket lens is useful in the examination of at an advanced figure. (See BACKWARD
a doubtful coin as it makes the roughness of ATION, CONTANGO, STOCK EXCHANGE.)
a counterfeit coin more noticeable. Those BEARER ( CHEQUE OR BILL) . " Bearer,"
officers who are much in contact with silver in the Bills of Exchange Act , 1882 , means
profess to be able to tell a false from a gen- the person in possession of a bill or note
uine coin by the touch, the false one having which is payable to bearer (Section 2) .
а greasy kind of feeling. “ A coin or " A bill is payable to bearer which is
other object made of silver may be known expressed to be so payable, or on which the
by the following marks : ( 1 ) A fine pure only or last indorsement is an indorsement
white lustre , where newly rubbed or scraped ; in blank " ( Section 8, s.s. 3) .
(2) a blackish tint where the surface has long “ Where the payee is a fictitious or non
been exposed to the air ; (3) a moderate existing person the bill may be treated as
specific gravity ; (4) a good metallic ring payable to bearer ” (Section 7 , s.s. 3) . A bill
when thrown down ; (5) considerable in these sections includes a cheque.
86
 BEA ] DICTIONARY OF BANKING [BEA

" Where the holder of a bill payable to shall only be made in conformity therewith,
bearer negotiates it by delivery without the payee is a fictitious person within the
indorsing it, he is called a transferor by meaning of the statute, whether the name
delivery .” (Section 58, s.s. 1.) be that of an existing person or of one who
A bill (or cheque) payable to bearer does has no existence ."
not require to be indorsed . A person, A banker incurs no liability in paying, to
other than the drawer, cannot be sued upon the person presenting, an uncrossed cheque
a cheque, so long as it is not indorsed by made payable to bearer by the drawer, even
him . If, however, he indorses it, he may be if the person who presents such cheque has
sued thereon by any subsequent holder. stolen it. But in an exceptional case, such
Although a transferor by delivery is not as where a cheque is payable to the “ British
liable on the instrument in the event of its Bank , Ltd. , or bearer,” a banker would
dishonour, he would be liable if there was a require to be exceedingly careful in making
forged signature at the time of transfer, inquiries before paying such a cheque to a
because by Section 58, s.s. 3, a transferor by stranger, for although it is payable to the
delivery warrants to his immediate trans- bearer the banker knows that it is not the
feree being a holder for value that the bill custom for a bank to send a cheque by a
is what it purports to be, that he has a stranger to be cashed . (See CROSSED
right to transfer it, and that at the time of CHEQUE.)
transfer he is not aware of any act that Where a person takes a cheque payable to
renders it valueless. bearer, it is advisable for him to get the
If a cheque drawn payable to bearer is transferor to indorse it and so make him a
indorsed “ Pay J. Brown or order,” it does party to the cheque, as without the indorse
not require John Brown's signature or any ment the transferor could not be sued upon
indorsement, as it is on the face of it aa bearer the cheque in the event of its dishonour.
cheque. Any indorsements on a bearer A cheque payable to “ Wages or order,"
cheque need not be examined . “ Cash or order ," House or order , " or to
In practice, a bearer cheque may be any such impers word , is now usually
altered by the payee from bearer to order, by treated as beingonal
payable to order and
simply striking out the printed word bearer, requiring the indorsement of the drawer.
or by striking it out and writing the word Such cheques should, when indorsed, be
order. Such an alteration does not require paid only to the drawer, or his representative
to be initialled . who is known to be authorised to cash
An order cheque, however, can be altered " wages,” etc., cheques. Some bankers
on the face intoa bearer cheque only by the consider that achequepayable in that man
drawer, who must sign the alteration ; ner is, by virtue of s.s. 3 of Section 7,
if there are more drawers than one, each quoted above, payable to “ bearer," but the
6

must sign. A drawer's signature is prefer- words " fictitious or non -existing person
able to mere initials, as initials are more can hardly betaken to include such words as
easily forged . “ wages," cash ," etc.
When an order cheque is indorsed in blank, A cheque payable to “ bearer or order ,"
that is, is not made payable to any one else the word “ bearer ” being written in the
by the payee or indorser, it becomes a cheque space for a payee's name, is payable to the
payable to bearer . Any holder may con- bearer.
vert the blank indorsement into a special In Scotland, it is customary to request the
indorsement, and the cheque (or bill) would person receiving cash for a bearer cheque to
again become payable to order. indorse it. ( See BILL OF EXCHANGE,
A cheque or bill payable to a fictitious or CHEQUE .)
non -existing person is payable to bearer. BEARER BONDS . A bearer bond, that
In the case of Bank of England v. Vagliano is a bond which is payable to the bearer, in
Brothers ( 1891, A.C. 107) , it was held that a contradistinction to a bond which is regis
fictitious or non
on -existing person included a tered in the name of the holder, passes by
real person who never had nor was intended mere delivery the full benefits conferred by
to have any right to the bills. Lord Herschell the bond, so long as the transferee takes it
said : “ I have arrived at the conclusion that in good faith and for value and without
whenever the name inserted as that of the notice of any defect in the transferor's title.
payee is so inserted by way of pretence If it should ultimately appear that the trans
merely, without any intention that payment feror had stolen the bond, or had otherwise
87
BEA ) DICTIONARY OF BANKING [BEA

a defective title, the transferee's right to the book or on a separate slip, setting forth
retain the bond would not be affected . A the actual numbers and descriptions of the
bearer bond belongs to the class of docu- bonds. Bearer securities being, like cash ,
ments called negotiable instruments. (See transferable by delivery, it is necessary that
NEGOTIABLE INSTRUMENTS .) Formerly, a banker should take the greatest care of
only bearer bonds which were issued in them , and in many banks all bearer securities
foreign countries and treated in this country are kept continuously under the control of
by merchants as negotiable, were regarded two persons. Coupons should be entered up
by the Courts as negotiable instruments, in a diary on the due dates, so that they may
but, within recent years, debentures to be cut off and sent for collection in good
bearer of an English company have been time and not be overlooked.
recognised by the Courts as negotiable It is the practice of several foreign govern
instruments. ments to continue the payment of coupons
In Edelstein v. Schuler (1902, 2 K.B. 144) , after a bond has been drawn for repayment,
Bigham, J., said : “ In my opinion the time such payments being treated as part repay
has passed when the negotiability of bearer ment of the principal. (See RUSSIAN
bonds, whether Government bonds or trading BONDS.)
bonds, foreign or English , can be called in Certain bonds are drawn as being payable
question in our Courts. " to the bearer, or “ when registered , to the
Bonds are issued for fixed amounts, e.g. registered holder. " In such cases the name
£ 20, £ 100, £ 200, £ 500. of the registered holder is entered in a place
Attached to the bond, or in a separate provided on the back of the bond.
sheet, is a series of coupons, each one being Where bearer bonds are given as security,
dated, if the interest is payable half -yearly, a banker usually takes a memorandum or
for a different half-year, and forming the agreement showing the purpose for which
warrant, upon production of which , the they are lodged. No deed of transfer is
holder will be paid the interest represented necessary, as they pass to the holder by
by that coupon. When the coupons are simple delivery, and even if the bonds form
exhausted a fresh supply may be obtained part of a trust and the banker had no notice
in exchange for the talon which is of the trust when he took them as security,
usually attached to the bond. (See Talon .) his title will not be affected . See the case
Some coupons are not dated, being payable of Lloyds Bank Ltd., and Union of London
accordingto advertisement. A couponsheet and Smiths Bank Ltd. v. Swiss Bankverein ,
should not be detached from the bond. 1912, under Floaters. An advance should
Securities to bearer, without the current not, of course, be made against coupons
coupon, are not a good delivery on the Stock without the bond.
Exchange. The possessor of bearer bonds When bonds are left for safe custody in
should never write his name upon them , as joint names, particularly when the parties
it might cause them to form a bad delivery. are trustees, the banker should be most
Bankers are frequently requested by cus- careful not to part with the bonds unless
tomers to take charge of their bearer bonds upon the signatures of all the parties. It
and to collect the coupons as they fall due, has been held that trustees may give autho
and , in the case of bonds payable by periodi- rity to one oftheir number to cut off coupons
cal drawings, to watch the published lists of from bonds deposited for safe custody as
numbers which are drawn. All bearer they fall due. In such a case it is the
bonds held by a banker, whether for safea banker's duty to see that nothing more is
custody or security, should be entered in a removed than the couponswhich are falling
register immediately upon receipt, and it is due. (See SAFE CUSTODY .)
preferable that all bearer securities held in As to Stamp Duties, see MARKETABLE
any office should be entered in a separate SECURITY . (See AMERICAN RAILROAD
book, or at any rate in a special section of CERTIFICATES , DRAWN BONDS, REGISTERED
the ordinary safe custody or securities regis- COUPON -BOND .)
ter, so that any one can ascertain at once BEARER BONDS REGISTER . A record
what bearer securities are held in that office. of all bearer securities, whether lodged for
The number of each bond or bearer security safe custody or for security, is, in some
should be entered in the register, and, when banks, kept in a separate • Bearer Bonds
any of them are given up to the customers , Register."
a proper receipt should be taken , either in The same information is shown as in the
88
BBAJ DICTIONARY OF BANKING (BIG

SECURITIES Book (2.0 .) and the SAFE Cus- pays the purchaser 10s. per share. Such aa
TODY REGISTER (q.v.), but in addition the position arises when a holder desires to get
number upon the face of each bond must be rid of his shares and is willing to pay so
carefully recorded . much per share to anyone who will purchase
BEARER SCRIP . This is a document the shares and assume liability for the
issued by a government or a company, upon uncalled capital.
a new issue of capital, until such time as all BENEFICIAL OWNER . In a conveyance
instalments have been paid and the definitive for valuable consideration , other than a
bond is ready. The bearer scrip, like the mortgage, where the vendor conveys as
bearer bond which is eventually received, beneficial owner " those words have the
is treated as a negotiable instrument, that meaning (Section 7 of the Conveyancing
is, a holder for value, without notice of any | Act, 1881) that he impliedly covenants that
defect in the transferor's title, obtains a he has full power to convey the property
good title thereto. In some cases, however, expressed to be conveyed , that the property
and enjoyed
bearer scrip is exchanged for registered shall be quietly entered uponconveyance
bonds or certificates. (See BEARER BONDS, by the person to whom the is
SCRIP CERTIFICATE .) made, that the property is freed and dis
BEDFORD LEVEL CORPORATION . Bed- charged from all incumbrances and claims
ford Level is the name given to a tract of other than those subject to which the con
low -lying country comprising some 95,000 veyance is expressly made, and that he will
acres within the countics of Northampton, execute any further deeds for further or
Norfolk , Suffolk , Lincoln , Cambridge and more perfectly assuring the property to the
Huntingdon . A registry of deeds was estab- person to whom the conveyance is made.
lished for the Bedford Level in 1663. By If the property is leasehold the “ bene
15 Car. II , c. 17, Section 8, it is provided that ficial owner " also impliedly covenants that
.

no lease, grant or conveyance of or charge it is a good, valid and effectual lease, and
out of or upon the said 95,000 acres or any that all rents and covenants have been paid
part thereof, except leases for seven years and observed .
or under in possession, shall be of force, but In the case of a conveyance of freehold
from the time it shall be entered upon the ficial
property by way of mortgage, the “ bene
register. owner implies that he has power to
By an Act passed in 1862 it was enacted convey, that, if default is made in payment
that the registration of documents shall only of themoney intended to be secured, it shall
apply to “ Adventurers Land situate be lawful for themortgagee to enter into and
within the limits of that part of the hold the property, that the property is freed
Bedford Level which is known as the South from all incumbrances other than those to
Level. which the mortgage is expressly made
Although priority is secured by the regis- subject, and that he will execute any further
tration of a conveyance or charge, it has necessary deed .
been held that the omission to register does In a mortgage of leasehold property, that
not invalidate the document as between he will pay all rents and observe all cove
the parties themselves so as to prevent an nants so long as any money remains unpaid .
action upon its covenants . ( See TITLE DEEDS.)
The registration office of the Bedford BENEFICIARY. A person who benefits
Level Corporation is at Ely. When a deed under a will is called a beneficiary. He
is registered, a record is placed thereon may receive either “ real ” property ( see
by the Registrar. (See LAND REGISTRY – REALTY ), in which case he is a devisee , or he
MIDDLESEX DEEDS, YORKSHIRE REGISTRY may receive “ personal" property ( see
OF DEEDS .) PERSONALTY ), when he is named a legatee.
BELOW PAR . When the market price BEQUEST. A gift or legacy of personal
of bonds, stocks, or shares is less than their property by a will.
nominal or face value they are said to be at a BERTHAS. A Stock Exchange name for
discount, or below par. (See Par .) London, Brighton, and South Coast Railway
BELOW ZERO . The meaning is best deferred ordinary stock.
shown by an examplc. When shares, BERWICKS . A Stock Exchange name
with a paid -up value of £ 12 10s., for North Eastern Railway consols.
fall to 13 discount, the price is said to be “ BIG FIVE .” The expression was first
10s. below zero , and the seller of such shares used in 1919, when referring to the five large
.

89
BIL ) DICTIONARY OF BANKING ( BIL

Joint Stock Banks :-Barclays ; Lloyds ; re -discount bills with bankers, instead of
London Joint City and Midland ; London indorsing each bill they usually give a
County Westminster and Parr's ; National guarantee to cover all the bills. An
Provincial and Union Bank of England . exchange broker is a dealer in foreign bills.
BILL AS SECURITY . Where a bill of Like all other merchants who deal in
exchange has been deposited or pledged as highly -priced commodities, bill brokers
security for an advance, the holder of the require a large amount of funds wherewith
bill is “ deemed to be a holder for value to to trade ; this is formed by their own capital
the extent of the sum for which he has a (often great), loans from bankers repayable
lien ” (Section 27 ,s.s. 3 , Bills of Exchange Act, at call or at short notice, and, in many cases,
1882). Where the holder, e.g., a banker, deposits received from the public. A
sues upon the bill at maturity and recovers number of the most important bill broking
the amount of it, if the sum recovered is concerns are limited companies. There are
greater than the debt owing by the person several methods in which bankers may lend
who deposited the bill, he must pay over the money to bill brokers (when a banker buys
difference to that person. If the depositor's i bills, that is, re -discounts the bills a broker
title to the bill was in order, the banker can has discounted , the transaction is not a loan
recover the whole amount of the bill, but , but a purchase) ; he may lend an amount for
if the depositor's title was defective the : a long fixed period, say thirty days, on the
banker can recover the amount of the bill to security of the deposit of a batch of bills,
the extent of his lien , provided he had no or for a short fixed period , say a week, or
notice of the depositor's defective title when “ from day to day,” or “ over night.” The
he took the bill. rate of interest charged is invariable during
When a bill is lodged as security, it should the period fixed, but , as a rule, the longer the
be indorsed by the person depositing it, and period the higher the rate. The rate on
a memorandum of deposit should be signed money over night,” however, depends
by the depositor to make it clear that the more than the others on the immediate
bill is pledged as security. When a banker | necessities of the brokers, who have to meet
holds a bill as security , he must present it requirements to-day but expect to be in
for payment at maturity, and if it is dis- funds to -morrow ; this “ money over night ”
honoured, he must give due notice of the rate is sometimes relatively high , because
dishonour. brokers are willing to pay a little more rather
A banker may, ifnecessary, sue for repay- than have to borrow from the Bank of Eng
ment of the overdraft at any time before the land , where their loan would have to be for
maturity of the bill which he holds as a a fixed period, say three to ten days, while
security . ( Peacock v. Purssell, 1863, 32 the brokers might not want the money for
L.J., C.P. 266.) so long . (See FLOATERS . )
BILL BROKER. Bill brokers are mer- BILL DIARY. In order that bills may
chants whose specialbusiness it is to buy and not be overlooked , they are entered under
to sell bills. They buy them from traders and their due dates in a diary. The entries in
sell many of them to bankers, their profit the diary are usually checked at intervals
being obtained from aa difference in the rates,with the bill register to make sure that all
the bankers buying from the brokers at one- bills have been included ; the diary is also
eighth or one-sixteenth per cent. per annum balanced periodically with the same book .
below the market rate. A country banker, The diary may be divided into columns
although he discounts bills for his customers, for different classes of bills, or, if numerous,
does not obtain such a supply of first-class | a separate diary may be kept for each class.
bills as he can procure from the brokers, and BILL IN A SÉT. Foreign bills are usually
it is to his advantage to buy bills in this way, drawn in several parts, and, for safety, the
because he can purchase justwhen he pleases parts may be transmitted by separate mails.
and what he pleases. If he anticipates requir- Where a bill is drawn in that way it is said
ing a certain sum of money at a certain date, to be drawn in a set, and the various parts
hemay purchase bills from the brokers which constitute one bill.
will mature at the time he requires the The rules regarding a bill drawn in a set
funds , and, in addition, in dealing with are dealt with in Section 71 of the Bills of
brokers and discount houses of high stand- Exchange Act, 1882, which is as follows :
ing, he obtains their guarantee that the bills “ ( 1) Where a bill is drawn in a set, each
will be met at maturity. When bill brokers part of the set being numbered ,
90
BIL ) DICTIONARY OF BANKING (BIL

and containing a reference to the But if the drawee of a bill of exchange

other parts, the whole of the parts accepts more parts than one, he is not dis
constitute one bill. charged by paying one of them , but is liable
“ (2) Where the holder of a set indorses on every such part. (See BILL OF
two or more parts to different per LADING .)
sons, he is liable on every such part, The following is a specimen of a bill drawn
and every indorser subsequent to in a set of three, though sets of three arenot
him is liable on the part he has him so often seen as formerly :
self indorsed as if the said parts (First part.) Leeds, February 10 , 19 .
were separate bills. £100.
" ( 3) Where two or more parts of a set are Sixty days after sight pay this first of
negotiated to different holders in exchange (second and thirdof the same tenor
due course, the holder whose title and date unpaid) to the order of John Brown,
first accrues is as between such the sum of one hundred pounds, value
holders deemed the true owner of received, which place to account as advised.
the bill ; but nothing in this sub JOHN JONES.
section shall affect the rights of a To Wm . Robinson, Esq.,
person who in due course accepts or New York.
pays the part first presented to
him .
The second part is exactly the same as the
“ (4) The acceptance may be written on first part, except that the words in the paren
any part, and it must be written on theses become ( first and third of the same
one part only. If the drawee tenor and date unpaid ).
accepts more than one part, and The third part is in all respects the same
such accepted parts get into the as the first and second parts , except that the
hands of different holders in due words in the parentheses are ( first and second
course, he is liable on every such of the same tenor and date unpaid) .
part as if it were a separate bill. Only one part of a set requires to be
( 5) When the acceptor of a bill drawn stamped. Upon proof ofthe loss or destruc
tion any
of a other
duly billof
stampedthe
billsetforming
which one
has ofnota
in aset pays itwithoutrequiring the set,
part bearing his acceptance to be manner negotiated
been issued or in any destroyed
delivered up to him, and that part apart from the lostor bill may,
at maturity is outstanding in the althoughunstamped, be admitted in evi
hands of a holder in due course, he dence to prove the contents of the lost or
is liable to the holder thereof. destroyed bill (Section 39 of the Stamp Act,
“ (6) Subject to the preceding rules, where 1891 ) . (See BILL OF EXCHANGE, FOREIGN
any one part of a bill drawn in a set Bill.)
is discharged by payment or other- In the case of bills of lading, each part
wise, the whole bill is discharged .” of a set requires to be stamped .
Where a bill is drawn in two parts, to BILL LEDGER . The same as Discount
save time one may be sent at once to the Ledger (q.v.).
drawee for acceptance. The other part may BILL OF CREDIT. A letter of credit
be negotiated and contain a reference that (q.v. ) .
the accepted part is in the possession of a BILL OF EXCHANGE . A bill of exchange
certain firm , as “ First and in need with is defined by the Bills of Exchange Act,
1
Messrs. Blank & Co., London .” If the bill 1882, Section 3, as follows :
is dishonoured , the agents named in the “ (1) A bill of exchange is an uncon
reference will, after it has been protested for ditional order in writing, addressed
non -payment, pay the bill for the honour by one person to another, signed
of their principal. by the person giving it, requiring
A bill of lading is usually issued in a set, the person to whom it is addressed
and each one is signed by some person to pay on demand or at a fixed or
authorised to sign the same on behalf of determinable future time a sum
the shipowner, but he is liable only for one certain in money to or to the order
of them . As soon as one has been presented of a specified person , or to
and the goods delivered, the others are void . bearer.
91
BIL] DICTIONARY OF BANKING [BIL

' (2) An instrument which does not by the practice of banking which had been
comply with these conditions, or proved . " It was stated that the settled
which orders any act to be done in practice of bankers with cheques drawn in
addition to the payment of money, England on an English bank for an amount
is not a bill of exchange. in French currency was to debit the drawer
(3) An order to pay out of a particular in sterling at the rate of exchange ruling
fund is not unconditional within the on the day and at the hour of presentation,
meaning of this Section ; but an and to give the payee the equivalent in
unqualified order to pay, coupled sterling. It was also held that the drawer
with (a ) an indication of a par- cannot as between himself and an indorsee
ticular fund out of which the of the cheque set up an oral agreement
drawee is to re-imburse himself or between himself and the original payee that
a particular account to be debited the rate of exchange should be that ruling
with the amount, or (b) a statement at the date of the cheque.
of the transaction which gives rise A bill may be written, printed, or
to the bill, is unconditional. type-written.
“ (4) A bill is not invalid by reason- There is no particular form prescribed by
(a) That it is not dated ; the Act, but bills are nearly always drawn
(6) That it does not specify the in the same way . The following are
value given, or that any specimens of the ordinary forms of bills of
value has been given there- exchange :
for ; Leeds, June 10, 19 .

(c) That it does not specify the £ 100

place where it is drawn or Three months after date pay
the place where it is pay- Stamp me or to my order
able ." ls . to John Brown or order the
With regard to the sum payable, Section 9 ( bearer
provides that : sum of one hundred pounds
" (1 ) The sum payable by a bill is a sum for value received .
certain within the meaning of this JOHN JONES.
Act, although it is required to be To Thomas Smith , Esq .,
paid 24 , River Street,
(a) With interest. London .
(6) By stated instalments . Leeds, June 10, 19
(c) By stated instalments, with a 100
provision that upon default On demand pay to John
in payment of any instal Stamp Brown or order the sum of
ment the whole shall become 2d . one hundred pounds for value
due. received .
( d) According to an indicated rate JOHN JONES.
of exchange or according to
To Wm . Robinson , Esq . ,
a rate of exchange to be London .
ascertained as directed by
the bill. The first record of the use of bills of
“ (2) Where the sum payable is expressed exchange in England is stated to be in a
in words and also in figures, and statute of 3 Rich. II, c. 3, in 1379.
2 The
there is a discrepancy between the original use of bills in this country appears
two, the sum denoted by the words to have been for the settlement of debts
is the amount payable .” between merchants in England and those in ,
In Cohn v. Boulken (1920, K.B.D. 36 another country. For example, where
T.L.R. 767) where a cheque had been drawn Brown in England owed money to Dumont
for “ 7680 francs (Paris ) ” it was held to be in, say, France, he would draw a bill upon
a bill of exchange, being for a sum of money Hugo in that country , who happened to
certain or which can be made certain within owe him money, requesting Hugo to pay the
Section 9, s.s. 1 (d) . (See above.) “ The money to Dumont. In this way Brown
rate of exchange was sufficiently indicated paid his debt to Dumont without the
on the face of the cheque. In any event the necessity of sending gold from England to
rate of exchange was sufficiently indicated France.
92
BIL ) DICTIONARY OF BANKING [BIL

It is said that bills were in common use in | with respect to bills of exchange. The hints
Venice as early as the thirteenth century, are principally for traders, though some of
and that they werefirst used by the Floren- them are specially applicable to bankers,
tines in the twelfth century. Inland bills but all of them should form part of a banker's
were made legal in England in 1697 . creed with regard to those instruments.
The persons whose names appear upon a They are given as practical hints which
bill of exchange are the drawer, the drawee may serve as warnings
(who by accepting the bill becomes the 1. Never draw or accept an accommo
acceptor), the payee (who may also be the dation bill, unless you are prepared
drawer), and the indorser. These persons to meet it whenever called upon .
are called the parties to the bill. In addition 2. When a bill has been drawn by you ,
there may also be the name of the banker endeavour to secure its acceptance
at whose office the acceptor makes the bill before negotiating it.
payable, but he is not one of “ the parties ” 3. Unless you are to be personally liable
to the bill. upon the bill, take care that any
The parties who are closely related, as the signature you place upon it, whether
drawer and the acceptor, an indorser and as drawer, acceptor, or indorser,
the indorser immediately preceding him , shows clearly that you are signing in
are the " immediate parties." The parties a representative capacity.
who are not closely related, as the drawer
. 4. Never indorse a bill without receiving
and an indorsee, are the “ remote parties.” value for it.
A bill may be an inland bill ( that is, one 5. Never discount a bill for a stranger.
both drawn and payable within the British Be sure that you know the person
Islands, or drawn within the British Islands from whom you receive a bill and take
upon some person resident therein ), or a care that he indorses it.
foreign bill ( that is, one drawn otherwise 6. Examine the bill carefully .
than as an inland bill). 7. If you are the holder, present the bill
The holder of aa bill of exchange may hold for acceptance, if it has not been
it till it is due and present it for payment accepted, and for payment at the
himself ; or he may negotiate the bill, that proper time. If either acceptance or
is, transfer it to another person ; or he may payment is refused , give notice at
leave it with his banker with a request that once to every indorser and to the
the bill be collected at maturity and the drawer, so as to hold each and all
proceeds credited to his account ; or he may liable for payment.
take it to his banker, or to a bill broker, and 8. Upon payment of a bill take care that
after indorsing it have it discounted . By you get the document into your own
discounting a bill he receives at once the possession .
amount of the bill (which may not be payable STAMP DUTIES
by the acceptor for some months to come) ,
less the amount charged for discounting it. By the Finance Act, 1918, Section 36,
The banker debits the amount of the bill to s.s. 1 , " Two pence shall be substituted for
his bills discounted account and credits it, one penny as the stamp duty on all bills of
less the discount, to his customer's current exchange and promissory notes chargeable
account (or the customer's account may be under the First Schedule to the Stamp Act,
credited with the full amount of the bill 1891, with duty at the rate of one penny
and debited with the discount), the discount and drawn on or after the first day of
passing to the credit of discount account, September, 1918, and two pence shall accord
the balance of which account is periodically ingly be substituted for one penny in Sec
transferred to profit and loss account. tions 34 and 38 of the Stamp Act, 1891."
A bill drawn payable on a contingency, This change affects : (a) all bills of exchange,
such as at a certain period after the arrival including cheques and dividend warrants,
of a ship , is not valid. payable on demand or at sight or on pre
It is very desirable that bills and cheques sentation, or not exceeding three days after
should be written in ink and not be date or sight ; (6) all bills of exchange of
type-written , as instruments which any other kind, and all promissory notes of
are
type-written are too easily altered . any kind whatever (drawn, or expressed to
In Pitman's “ Bills, Cheques and Notes,” | be payable, or actually paid , or indorsed ,
eight excellent pieces of advice are given or in any manner negotiated in the United
93
BIL] DICTIONARY OF BANKING ( BIL

Kingdom) , where the amount or value of Exemptions.

the money for which the bill or note is
drawn or made does not exceed £5. Under
the First Schedule to the Stamp Act, 1891 ,
as thus amended, the duty is :
BILL OF EXCHANGE
£ s. d.
Payable on demand or at sight
or on presentation . 0
And see Sections 32 , 34 , and 38,
Stamp Act, 1891 , given below.
This Schedule was extended by the
Finance Act, 1899, Section 10, s.s. 2, to
include bills payable at a period not exceed
ing three days after date or sight, the words
or within three days after date or sight
being added after the word " presentation . "
By Section 10 of the Revenue Act, 1909,
Sections 34 and 38 of the Stamp Act were
brought into agreement with the Schedule
as altered in 1899 :-“ The provisions in
Sections 34 and 38 of the Stamp Act, 1891 ,
which relate to bills of exchange payable
on demand, or at sight, or on presentation,
shall apply also to bills of exchange
expressed to be payable at a period not
exceeding three days after date or sight,
which are chargeable with the duty of one
penny under s.s. 2 of Section 10 of the
Finance Act, 1899."
BILL OF EXCHANGE of any other
kind whatsoever (except a Bank
Note) and PROMISSORY Note of
any kind whatsoever (except a
Bank Note )-drawn, or expressed
to be payable, or actually paid ,
or indorsed, or in any manner
negotiated in the United King
dom.
£ s. d .
Where the amount or value of the
money for which the bill or note
is drawn or made does not ex
ceed £5 (increased from id . to
2d . as from 1st Sept. , 1918. See
Finance Act, 1918, Section 36,
above) 0 0
Exceeds £5 and does not exceed £10 0
. fio £ 25 0
425 £50 0
$ 50 £75 0
£75 £ 1000 10
1 able by the Accountant
£ 100
for every £100, and also for any
fractional part of £ 100, of such
amount or value
[See Finance Act, 1899, below .)
010
(1 ) Bill or note issued by the
Bank of England or the
Bank of Ireland .
(2) Draft or order drawn by
any banker in the United
Kingdom upon any other
banker in the United King
dom , not payable to
0 2
bearer or to order, and
used solely for the purpose
of settling or clearing any
account between such
bankers .
3) Letter written by a ban
ker in the United Kingdom
to any other banker in the
United Kingdom , direct
ing the payment of any
sum of money, the same
not being payable to
bearer or to order, and
such letter not being sent
or delivered to the person
to whom payment is to be
made or to any person on
his behalf.
(4) Letter ofcredit granted in
the United Kingdom ,
authorising drafts to be
drawn out of the United
Kingdom payable in the
United Kingdom .
( 5) Draft or order drawn by
the Paymaster-General on
behalf of the Court of
Chancery in England or by
the Accountant - General
of the Supreme Court of
Judicature in Ireland.
( 6) Warrant or order for the
payment of any annuity
granted by the National
Debt Commissioners, or
for the payment of any
dividend or interest on
any share in the Govern
2 ment or Parliamentary
02 stocks or funds .
0 3 (7) Bill drawn by any person
0 6 under the authority of the
0 9 Admiralty , upon and pay
General of the Navy .
(8) Bill drawn (according to a
form prescribed by Her
Majesty's orders by any
person duly authorised to
94
BIL ] DICTIONARY OF BANKING (BIL

draw the same) upon and out of the United Kingdom, and a bill
payable out of any public drawn there and negotiated in the United
account for any pay or Kingdom is therefore a foreign bill, so far
allowance of the army or as stamp duty is concerned . But under the
auxiliary forc or for any Bills of Exchange Act, 1882 (Section 4) a
other expenditure con bill drawn and payable within the British
nected therewith . Islands (which include the Isle of Man and
(9) Draft or order drawn the Channel Islands) is an inland bill.
upon any banker in the On inland bills payable on demand, or
United Kingdom by an at sight, or on presentation, or not exceeding
officer of a public depart three days after sight or date , and on cheques ,
ment of the State for the the twopenny stamp may beeither impressed
payment of money out of a or adhesive. In the case of inland bills
public account. payable otherwise, the stamp must be
( 10) Bill drawn in the United impressed . An adhesive stamp must be
Kingdom for the sole pur properly cancelled by the person signing
pose of remitting money the bill. ( See Section 38 below .)
to be placed to any ac On foreign bills, the ad valorem duties are
count of public revenue . to be denoted by adhesive foreign bill stamps.
[ It has been held that this If a bill drawn abroad is impressed with an
applies only to money English stamp it is not sufficient; it must
which is already public have the correct adhesive stamp affixed .
money.) If the bill is payable on demand or at sight ,
( 11 ) Coupon or warrant for or not exceeding three days after date or
interest attached to and sight, a twopenny postage stamp is the
issued with any security , proper one to be used . The ordinary
or with an agreement or impressed stamp is also sufficient on
memorandum for the re cheques. Any person into whose hands any
newal or extension of time such bill comes before it is stamped must
for payment of a security . affix the proper stamp before dealing with
By the Finance Act, 1894, Section 40, a the bill in any way. (See Section 35, below .)
coupon for interest on a marketable security, A foreign debtor sometimes prepares a
being one of a set of coupons whether issued bill, accepts it, and forwards it to be com
with the security or subsequently issued pleted by the creditor in England as drawer.
in a sheet, is exempt . bill
If the abroad,
is dated from a place it
A coupon attached to a scrip certificate should be stamped by the drawer with an
is not exempt. See also the exemptions in adhesive foreign bill stamp (see Section 36,
the article CHEQUE. below) , but if it is dated from a place in the
By the Finance Act, 1899, Section 10 , the United Kingdom , it must be stamped with
duty on Bills of Exchange drawn and an impressed stamp before it is signed by the
expressed to be payable out of the United drawer. In the former case the bill must be
Kingdom , when actually paid or indorsed drawn in accordance with the laws of the
or in any manner negotiated in the United country in which it purports to have been
Kingdom , shall, where the amount of the drawn .
money for which the bill is drawn exceeds Where the bill is drawn in foreign money ,
fifty pounds, be reduced so as to be :- the amount, for the purposes of stamping, is
Where the amount exceeds £50 and does calculated according to the rate of exchange
not exceed £ 100, 6d. current on the date of the bill, unless the
Where the amount exceeds £100, 6d. rate is stated in the bill.
for every £ 100, and also for any fractional Interest upon a bill or note is not taken
part of £ 100 of that amount. into account in calculating the amount of
(Where the amount does not exceed £50, stamp
the duty is as in the Schedule above .)
duty. The duty is payable only upon
the amount of the bill or note .
For the purpose of stamp duty (see Section As to the duties upon promissory notes,
36 below ), a bill or promissory note which see PROMISSORY Note .
purports to be drawn or made out of the The following sections are from the Stamp
United Kingdom is treated as a foreign bill. Act, 1891 (54 & 55 Vict. c. 39) :
The Isle of Man and the Channel Islands are " 32. For the purposes of this Act the
95
BIL ) DICTIONARY OF BANKING
expression ' bill of exchange ' includes
draft, order, cheque, and letter ofcredit, and
any document or writing (except a bank
note) entitling or purporting to entitle any
person , whether named therein or not, to
payment by any other person of, or to draw
upon any other person for, any sum of
money ; and the expression ' bill of ex-
change payable on demand ' includes
( a) An order for the payment of any sum
of money by a bill of exchange or
promissory note, or for the delivery
of any bill of exchange or promissory
note in satisfaction of any sum of
money, or for the payment of any
sum of money out of any particular
fund which may or may not be
available, or upon any condition or
contingency which may or may not
be performed or happen ; and
(6) An order for the payment of any sum
of money weekly, monthly, or at
any other stated periods, and also
an order for the payment by any
person at any time after the date
thereof of any sum of money, and
sent or delivered by th person
making the same to the person by
whom the payment is to be made,
and not to the person to whom the
payment is to be made, or to any
person on his behalf.
“ 33. ( 1) For the purposes of this Act
the expression ' promissory note
includes any document or writing
( except a bank note) containing a
promise to pay any sum of money.
" ( 2) À note promising the payment of any
sum of money out of any particular
fund which may or may not be
available, or upon any condition or
contingency which may or may not
be performed or happen , is to be
deemed a promissory note for that
sum of money .
“ 34. ( 1 ) The fixed duty of two pence
[as amended by the Finance Act,
1918, see above) on a bill of exchange
payable on demand or at sight or
on presentation, or at a period not
exceeding three days after date or
sight (as amended by the Revenue
Act, 1909, see above] may be
denoted by an adhesive stamp, which purports to be drawn or made out of
which , where the bill is drawn in the the United Kingdom is, for the purpose of
United Kingdom , is to be cancelled determining the mode in which the stamp
by the person by whom the bill is duty thereon is to be denoted, to be deemed
( BIL
signed before he delivers it out of his
hands, custody, or power .
" (2) The ad valorein duties upon bills of
exchange and promissory notes
drawn or made out of the United
Kingdom are to be denoted by
adhesive stamps .
“ 35. ( 1 ) Every person into whose hands
any bill of exchange or promissory
note drawn or made out of the
United Kingdom , comes in the
United Kingdom before it is stamped
shall, before he presents for payment,
or indorses, transfers, or in any
manner negotiates, or pays the bill
or note, affix thereto a proper adhe
sive stamp or proper adhesive stamps
of sufficient amount, and cancel
.
every stamp so affixed thereto .
(2) Provided as follows :
(a) If at the time when any such
bill or note comes into the
hands of any bona fide
holder there is affixed thereto
an adhesive stamp efíectu
ally cancelled, the stamp
shall, so far as relates to the
holder, be deemed to be
duly cancelled , although it
may not appear to havebeen
aſfixed or cancelled by the
proper person ;
(6) Ifat the time when any such
bill or note comes into the
hands of any bona fide
holder there is affixed there
to an adhesive stamp not
duly cancelled, it shall be
competent for the holder to
cancel the stamp as if he
were the person by whom
it was affixed , and upon
his so doing the bill or
note shall be deemed duly
stamped, and as valid and
available as if the stamp
had been cancelled by the
person by whom it was
affixed .
" (3) But neither of the foregoing provisos
is to relieve any person from any
fine or penalty incurred by him for
not cancelling an adhesive stamp.
“ 36. A bill of exchange or promissory note
96
BIL ) DICTIONARY OF BANKING ( BIL
to have been so drawn or made, although it adhesive stamp and cancelled it,
may in fact have been drawn or made within was held by Huddleston, B. , to be
the United Kingdom .
0
invalid , in Hobbs v. Cathie ( 6 T.L.R.
“ 37. (1 ) Where a bill of exchange or 292) ." Alpe's Law of Stamp
promissory note has been written Duties. But as to a foreign bill
on material bearing an impressed payable on demand see Section 35.]
stamp of sufficient amount but of (By the Finance Act, 1918, Section
improper denomination, it may be 36 , s.s. 2 : “ The provisions of sub
stamped with the proper stamp on section 2 of Section 38 of the Stamp
payment of the duty , and a penalty Act, 1891, shall apply so as to
of forty shillings ifthe bill or note enable an adhesive penny stamp to
be not then payable according to its be fixed on any bills of exchange to
tenor, or of ten pounds if the same which that subsection applies being
be so payable. bills which are liable to a duty of
“ ( 2) Except as aforesaid , no bill of twopence under this Section and are
exchange or promissory note shall be stamped only with a penny stamp,
stamped with an impressed stamp as they apply with respect to the
after the execution thereof. fixing of a stamp on anunstamped
· 38. ( 1 ) Every person who issues, in bill ."')
dorses , transfers, negotiates, pre- “ (3) But the foregoing proviso is not to
sents for payment, or pays any bill relieve any person from any fine or
of exchange or promissory note penalty incurred by him in relation
liable to duty and not being duly to such bill.
stamped shall incur a fine of ten “ 39. When a bill of exchange is drawn in
pounds, and the person who takes a set according to the custom of merchants,
or receives from any other person and one of the set is duly stamped , the other
any such bill or note either in pay- or others of the set shall, unless issued or in
ment or as a security, or by purchase some manner negotiated apart from the
or otherwise, shall not be entitled to stamped bill, be exempt from duty ; and
recover thereon, or to make the uponproof of the loss or destruction of a duly
same available for any purpose stamped bill forming one of a set, any other
whatever. bill of the set which has not been issued or
• (2) Provided that if any bill of exchange in any manner negotiated apart from the
payable on demand or at sight or on lost or destroyed bill may, although
presentation, or at a period not unstamped, be admitted in evidence to prove
exceeding three days after date or the contents of the lost or destroyed bill."
sight (as amended by the Revenue If a receipt is placed upon a bill it requires
Act, 1909, see above ), is presented a twopenny stamp (as from 1st Sept., 1920 ),
for payment unstamped , the person but the name of a banker (whether accom
to whom it is presented may affix panied by words of receipt or not) written
thereto an adhesive stamp of two in the ordinary course of his business as a
pence (as amended by the Finance banker upon a bill of exchange or promissory
Act, 1918, see above), and cancel note duly stamped , is exempt. (See RECEIPT.)
the same, as if he had been the A foreign bill which is both drawn and
drawer of the bill, and may there- payable abroad, does not require to be
upon pay the sum in the bill stamped in this country if received by a
mentioned, and charge the duty in banker merely for acceptance and return ;
account against the person by whom but if indorsed or negotiated in this
the bill was drawn, or deduct the country it must be stamped . See the follow
duty from the said sum, and the bill ing circular which was issued by the Board
is, so far as respects the duty, to be of Inland Revenue in May, 1907 :
deemed valid and available . [" The “ The Board of Inland Revenue, having
banker is the only person who can reason to believe that some misapprehension
affix and cancel the stamp in the exists on the subject, desire to call attention
manner permitted by this sub- to the fact that bills of exchange, although
un
section . A cheque drawn on both drawn and expressed to be payable
stamped paper, to which an inter- out of the United Kingdom , are never
mediate holder had affixed an theless chargeable with stamp duty if
97
7–1535)
BIL ) DICTIONARY OF BANKING (BIL

' actually paid, or indorsed, or in any / goods have been shipped in good order, and
manner negotiated in the United Kingdom .' quotes the rate at which the freight is to be
( See BILL OF EXCHANGE, etc., in the first paid by the consignees. A note is usually
Schedule to the Stamp Act, 1891. See also made upon a bill of lading that the weight,
Finance Act, 1899, Section 10.) quantity and quality of thecargo is unknown.
The duty chargeable on a bill of this The shipowner undertakes to deliver the
nature, if payable at a period exceeding goods at their destination in the same con
three days after date or sight, is governed dition as they were when he received them .
by the following scale : Bills of Lading are usually drawn in sets
“ When the amount or value of the of three, each one stamped , and in addition
money for which the Bill is drawn does there are two copies, unstamped. Of these
not exceed £ 5 ( since 1st Sept., 1918] 2d .
.
copies " one is given to the master and
Exceeds £ 5 and does not exceed £10 2d. the other is retained by the loading brokers.
.

£10 £ 25 .
3d. The " copies " are of no value. One of the
£ 25 .. £ 100 6d. three stamped bills of lading is sent by the
and where the amount exceeds £ 100, 60. shipper to the consignee by one mail, and
for every £ 100, and also for any fractional another is sent to him by another route, if
part of £ 100 of that amount. possible, or by the following mail, and the
" The Board further desire to call attention third is retained by the shipper as evidence
to Section 38 ( 1 ) of the Act of 1891 which in support of a claim for insurance, in the
imposes a fine of £10 upon every person who event of the ship being lost, that the goods
issues, indorses, transfers, negotiates, pre- were in that ship . On the arrival of the
sents for payment, or pays any bill of ex- ship at its destination the consignee may,
change liable to duty and not duly stamped .” by handing the bill of lading to the master
(See BILLS OF EXCHANGE ACT, 1882 (where of the ship and paying all claims for freight
a reference is given to the articles which and other charges, obtain possession of the
goods. If the consignee wishes to transfer
include the various sections of the Act) ;
ACCEPTANCE ; ACCEPTANCE, GENERAL ; AC- the goods to some other person, he can , by
CEPTANCE, QUALIFIED ; ACCEPTANCE FOR simply indorsing the bill of lading and
HONOUR ; ACCEPTOR, ACCOMMODATION BILL, delivering it to that person , constitute him
AGENT, ALLONGE, ALTERATIONS, AMOUNT | the absolute owner of the goods. If such a
OF BILL OR CHEQUE, ANSWERS, ANTE -DATED , transfer is made by the consignee in good
BEARER, BILLS FOR COLLECTION , BILL IN A faith and for value, the consignor's right to
SET, CANCELLATION OF BILL OF EXCHANGE, stop the goods in transit is cancelled . As
CHEQUE, CONSIDERATION FOR BILL OF Ex- a bill of lading is not a negotiable instru
CHANGE, DATE, DAYS OFGRACE, DELIVERY ment, it follows that if the person who trans
OF BILL, DISHONOUR OF BILL OF EXCHANGE, fers it has no title or a defective title to the
DOCUMENTARY BI DRAFT AFTER DATE, goods, the person to whom it is transferred
DRAWEE, DRAWER , FOREIGN BILL, FORGERY, obtains no better title than the transferor
HOLDER FOR VALUE, HOLDER IN DUE COURSE, had. Lord Justice Scrutton, in his book on
HOLDER OF BILL OF EXCHANGE, INCHOATE Charterparties, says : Negotiable is a term
INSTRUMENT, INDORSEMENT, INDORSER, IN- which perhaps strictly should be reserved
LAND Bill, Lost BILL OF EXCHANGE, NEGO- for instruments which may give to a trans
TIATION OF BILL OF EXCHANGE , Noting, feree a better title than that possessed by
ORDER, OVERDUE BILL, PART PAYMENT, his transferor. A bill of lading is not negoti
PARTIES TO BILL OF EXCHANGE, PAYEE, able in this sense, the indorsee does not get
PAYING BANKER , PAYMENT BY, PAYMENT a better title than his assignor." The only
FOR HONOUR , PAYMENT OF Bill , Post- case in which the indorsee gets more than
DATED ,PRESENTMENT FOR ACCEPTANCE , the indorser has (whether it can be called
PRESENTMENT FOR PAYMENT , PROMISSORY a better title ' is a nice question ) is, in the
NOTE , PROTEST, REFEREE IN CASE OF NEED , case where a previous vendor's right of stop
RETIRING A BILL , SUPRÀ PROTEST , TIME OF page in transitu , valid against the indorser,
PAYMENT OF BILL , TRANSFEROR BY DE- is not available against the indorsee ."
LIVERY , UNIFORM LAW .) As to a vendor's right of stoppage in
BILL OF LADING . A receipt for goods, transitu, see under FACTORS' ACT, SALE OF
upon shipment, signed by some person GOODS Act. Those Acts include a bill of
authorised to sign the same on behalf of the lading under the expression “ document of
shipowner. The document states that the title.'
98
BILJ DICTIONARY OF BANKING (BIL

In the United States, the Bills of Lading advancing the money does not choose to do
Act, 1916, makes all bills of lading, issued that, another course which he may take is,
by any common carrier for the transporta- to be vigilant and on the alert, and to take
tion of goods in the United States to a place care that he is on the spot at the first
in a foreign country, if to order, fully arrival of the ship in the dock . If those
negotiable instruments. who advance money on bills of lading do
During the time a cargo is at sea, the bill not adopt one or other of those courses, it
of lading is the symbol of the cargo, and “ the appears to me that if they suffer, they suffer
indorsement and delivery of the bill of in consequence of their own act.”
lading operate as a symbolical delivery of A banker who advances against wool ( for
the cargo ." example) which has been imported from
If the consignee's name is not inserted in abroad, may adopt the following course :
the bill of lading, the ownership of the goods he may take up the bills of lading and
remains in the consignor. If a bill of lading instruct the shippers to send the wool by
is not drawn to " order or assigns " it is not rail to his order. He may then direct the
assignable. railway company to deliverit to the combers,
When the goods received on board are on his behalf, who will ascertain and advise
in good order and no adverse remarks, such the banker as to the various qualities and
1
as " boxes broken," etc., are made upon quantities ' tops, middles," " bottoms,"
the bill of lading, it is called a clean bill of etc., so that he may see what it will realise
lading. at present quotations. When the customer
As already stated, the master of the ship sells the wool, the banker then orders it to
delivers the goods to the person who presents be delivered in accordance with the cus
the bill oflading, but if it should happen that tomer's instructions against payment of the
two different purchasers have each received purchase price.
one of the bills of lading, the master is not By Section 19, s.s. 3, Sale of Goods Act,
liable if he delivers the goods to the pur- 1893 :- “ Where the seller of goods draws
chaser who comes first with a bill of lading, on the buyer for the price, and transmits
provided, of course, he acts in good faith and the bill of exchange and the bill of lading to
has no notice of the conflicting claims. It the buyer together to secure acceptance or
will be noticed in the specimen, given below , payment of the bill of exchange, the buyer
of a bill of lading, that the master or purser is bound to return the bill of lading if he
affirms to two or three, as the case may does not honour the bill of exchange , and if
be) bills of lading, one of which bills being he wrongfully retains the bill of lading, the
accomplished, the others to stand void." property in the goods does not pass to him ."
It is therefore necessary, in order to have Instead of sending bills of lading direct
complete security, that all the bills of lading to the consignee, the consignor may draw a
should be held . bill of exchange upon the consignee for the
In addition to holding all the bills of value of the goods despatched and attach
lading, a “stop order upon the goodsmay the bills of lading to the bill. Those docu
be lodged by the person about to make an ments may then be sent by the consignor's
advance upon them . bankers to their correspondents in the town
With regard to the three parts of a bill of where the consignee lives, with a request to
lading Earl Cairns said ( in Glyn & Co. v. present the bill to the consignee for accept
The East and West India Dock Co., 1882, ance ; and instructions are often given that
7 A.C. 591 ) : All that any person who the bills of lading may be handed to the
advances money upon a bill of lading will consignee upon his accepting the bill. The
have to do, if he sees, as he will see on the consignee can then obtain the goods, sell
face of the bill of lading, that it has been them and be in a position to meet his
signed in more parts than one, will be to acceptance at maturity.
require that all the parts are brought in- Frequently the consignor draws aa bill upon
that is to say, that all the title deeds are the consignee and discounts it at his bankers,
brought in . I know that that is the practice pledging the indorsed bills of lading as
with regard to other title deeds, and it security, and the banker has to send forward
strikes me with some surprise that any one the bill to his correspondents to obtain the
would advance money upon a bill of lading drawee's acceptance ( see DOCUMENTARY
without taking that course of requiring the BILL) ; or the consignor may, under in
delivery up of all the parts. If the person structions, draw upon the consignee's
99
BIL ) DICTIONARY OF BANKING (BIL
banker, the bills of lading being attached Bills of lading vary somewhat in form ,
to the bill of exchange. but the general effect is the same. The
When bills of lading are given as security , following is a specimen of a simple form ,
a memorandum of deposit , or letter of lien though some bills of lading are much more
(stamped 6d .) is taken , which provides that, elaborate :
in default of payment, the banker may sell SHIPPED, in good order and well conditioned ,
the goods represented by the bills. In some by
cases, where an advance has been made whose responsibility ceases on
upon bills of lading, the bills are handed the present being signed, in and upon the
to the borrower upon his signing a trust good ..... .SHIP OR Vessel, called the
receipt. (See TRUST RECEIPT.)
where à bill of lading is taken as security whereof .is master
containing such a clause as “ all conditions for this present Voyage, now lying in the
of every character as per Charter Party " Harbour of .....
(see below ), the lender should ascertain and bound for..
what are the conditions in the Charter
Party, as that document may reserve to the
owners of the vessel the right of lien upon
the cargo for payment of freight, demurrage being marked and numbered as in the Margin ,
and other charges. and to be delivered in like good order and
A bill of lading pledged as security should well conditioned at the aforesaid Port of
be indorsed either in blank or to the banker,
and be deposited , as stated above, under (The Act of God , Perils of the Sea, Fire, Barratry of
a letter of lien or hypothecation. To avoid the Master and Crew , Enemies, Pirates and Robbers,
any liabilities that may attach to an indorser Arrestsand Restraints ofPrinces, Rulers andPeople,
excepted . Strand
of the bill with respect to the goods, it is and other Accidents of Navigationand damages caused
preferable for the banker to take itindorsed ings and Collisions,and all losses
thereby, also excepted, even when occasioned by
in blank . If has, however, been held by negligence, default, or error in judgment of the Pilot,
the House of Lords that, where a bill of Master, Mariners, or other Servant of the Shipowners,
lading is indorsed and pledged by way but nothing herein contained shall exempt the Ship
owners from liability to pay for damage to cargo
of security , a banker indorsee is not occasioned by bad stowage, by improper or insuf
subject to the same liabilities in respect ficient dunnage or ventilation , or by improper
of the goods as a person to whom a Sluices and Ports, or by causes
opening of Valves,
bill of lading is indorsed upon a sale of the other than those above excepted, and all the above
exceptions are conditional on the Vessel being Sea
goods (Sewell v. Burdick, 1884, 10 A.C. 74) . worthy when she sails on the Voyage, but any latent
But if the banker claims the goods in order defects in the Hull and Machinery shall not be con
sidered unseaworthiness, provided the same do not
to realise his security , he is then liable for result
the freight, warehouse charges, and all any of from want of due diligence of the Owners or
them, or of the Ship's Husband or Manager)
charges payable in accordance with the unto .
terms of the bill of lading.
Where a transfer of a bill of lading takes
place, upon a sale of the goods, Section 1 or to .... Assigns. - Freight
of the Bills of Lading Act, 1855, enacts : to be paid by CONSIGNEES at the rate of
“ Every consignee of goods named in a .... Shillings and ...
bill of lading, and every indorsee of a bill of Pence Sterling, per Ton of 20 Cwt. delivered ,
lading to whom the property in the goods on the whole being delivered ..
therein mentioned shall pass, upon or by .....and all Conditions
reason of such consignment or indorsement, of every character, as per Charter Party
shall have transferred to and vested in him dated at .....
With average accustomed - IN WITNESS
all rights of suit, and be subject to the same
liabilities in respect of suchgoods as if the whereof, the Master or Purser of the said
contract contained in the bill of lading had Ship hath affirmed to ..... ..Bills
been made with himself. ” of Lading, all of this Tenor and date, one of
Where a banker, by instructions of a which bills being accomplished , the others
customer, accepts a billdrawn by a client of to stand void .
that customer against bills of lading, the Weight unknown.
banker will not be liable if the bills of lading Dated at ..... 19
should afterwards prove to be forgeries.
100
 BIL ) DICTIONARY OF BANKING (BIL

Along with the bill of lading there should " A bill of lading for goods imported into
be the insurance policy (see MARINE INSUR- the United Kingdom is not liable to duty.”
ANCE POLIcy ), and the detailed description (Alpe's Law of of Stamp Duties.) (See
of the goods inthe policy should agree with CHARTER Party.)
that in the bill of lading. BILL OF SALE . An assignment of per
«
A " Port Bill of Lading " is one which is sonal chattels as security for a debt. Der
signed by the authorised person after the sonal chattels include goods, furniture, and
goods have been received by that person at other articles capable of complete transfer
the port of shipment. by delivery. Trade machinery is deemed
A “ Through Bill of Lading " is one which to be personal chattels. (See definition ,
provides (or ought to provide) for the con- as given in Bills of Sale Act, 1878, of
tinuous responsibility of several railway " personalchattels " under CHATTELS .) Bills
companies and shipping companies from one of sale are very rarely taken by bankers as
place to another. There should be attached security.
to a Through Bill of Lading a certificate by A bill of sale may be absolute, or con
the railway company stating that the com- ditional by way of mortgage .
pany's agent who signs thebill of lading is The registration of a bill of sale by a
authorised to sign and verifying his signature. debtor should act as a danger signal to a
A “ Custody Bill of Lading " is a new banker .
form created by the Bill of Lading Confer- Section 4 of the Bills of Sale Act, 1878,
ence Committee in connection with the interprets the meaning of bill of sale as
cotton trade, as announced in a circular follows :
dated January 6, 1909. “ This Bill of The expression ‘ bill of sale ' shall
Lading may be issued after proper delivery include bills of sale, assignments, transfers,
of the cotton , but before arrival of the vessel declarations of trust without transfer,
in port.” Within three weeks from its date inventories of goods with receipt thereto
a master's (or agent's) receipt is to be fur- attached, or receipts for purchase moneyş
nished proving the actual shipment of the of goods, and other assurances of personal
cotton . A custody bill of lading is to be chattels, and also powers of attorney, autho
clearly marked as such , to distinguish it rities, or licences to take possession of
from a " Port Bill of Lading .” It can be personal chattels as security for any debt,
issued only by shipowners or loading agents and also any agreement, whether intended
who havesigned a letter of agreement with or not to be followed by the execution of
the Conference Committee. ( Journal of In- any other instrument, by which a right in
stitute of Bankers, February, 1909.) equity to any personal chattels, or to any
A “ Straight Bill of Lading " is an American charge or security thereon, shall be con
term for “ a bill in which it is stated that the ferred, but shall not include the following
goods are consigned or destined to a specified documents ; that is to say, assignments for
person .” “ A bill in which it is stated that the benefit of the creditors of the person
the goods are consigned or destined to the making or giving the same, marriage settle
order of any person named in such bill is ments, transfers, or assignments of any ship
an order bill.' The Journal of the Institute
9)
or vessel, or any share thereof, transfers of
of Bankers, May, 1920 , points out that a goods in the ordinary course of business of
straight bill of lading is not a document any trade or calling, bills of sale of goods in
which can afford proper security to a foreign parts or at sea, bills of lading, India
banker or other person advancing money warrants, warehouse-keepers' certificates,
against it . warrants or orders for thedelivery of goods,
The stamp duty (Stamp Act) , 1891, is :- or any other documents used in the ordinary
BILL OF LADING of or for any £ s. d. course of business as proof of the possession
goods, merchandise, or effects or control of goods, or authorising or pur
to be exported or carried coast porting to authorise, either by indorsement
wise 0 0 6 or by delivery , the possessor of such docu
And see Section 40, as follows 3: ment to transfer or receive goods thereby
“ (1) A bill of lading is not to be stamped represented .”
after the execution thereof. The Bills of Sale Act does not apply to
“ (2) Every person who makes or executes any debentures issued by any mortgage,
any bill of lading not duly stamped loan or other incorporated company, and
.

shall incur a fine of fifty pounds.” secured upon the capital stock or good s
101
BILJ DICTIONARY OF BANKING (BIL

chattels, and effects of such company In witness whereof the said A B hath
( Section 17 of Bills of Sale Act ( 1878) hereunto set his hand and seal the day and
Amendment Act, 1882). By the Com- year first above written .
panies ( Consolidation ) Act, 1908, Section A B
93, a mortgage or charge, by a company, L. S.
Signed and sealed by the said
created or evidenced by an instrument A B in the presence of me,
which if executed by an individual would EF
require registr ation as a bill of sale, must be
registered with the registrar of joint stock (Add witness's name, address, and de
companies. (See REGISTRATION OF MORT- scription .)”
GAGES AND CHARGES.) The schedule inust specifically describe
As to the avoidance of a general assign- the chattels which are assigned. It has
ment of book debts unless registered as been held , in the case of a bill of sale void
if it were a bill of sale, see Section 43, Bank- | because it was not drawn in accordance with
ruptcy Act, 1914, under DEBTS, ASSIGNMENT the legal form , that the covenant in the
OF. bill to pay principal and interest was also
A bill of sale given by way of security void .
for the payment of money by the grantor A bill of sale given in consideration of any
must be in accordance with the form given sum under £ 30 shall be void (Section 12 of
in the Schedule to the Bills of Sale Act the above Act) .
( 1878 ) Amendment Act, 1882. The follow- From the above form of bill of sale it will
ing is the form given in that Schedule :- be seen that the amount which it is to secure
FORM OF BILL OF SALE . must be a specified sum, and not, for
" This Indenture made the day of example, a fluctuating balance.
of the one
A bill of sale must be registered within
. between A B of seven clear days after its execution ; and
part and C D of of the other part, requires re -registration once at least every
witnesseth that in consideration of the sum five years.
of £ now paid to A B by CD, the . An assignment of a registered bill of sale
receipt of which the said A B hereby does not require registration. Any person
acknowledges (or whatever else the con- is entitled tosearchthe register on payment
sideration may be), he the said A B doth of a fee of one shilling.
hereby assign unto CD, his executors, The grantee of a bill of sale may seize the
administrators, and assigns, all and singular chattels thereby assigned if the grantor
the several chattels and things specifically makes default in payment of the sums
described in the Schedule hereto annexed secured by the instrument, or becomes
by way of security for the payment of the bankrupt, or suffers any of the goods to be
sum of £ and interest thereon at the distrained for rent, rates, or taxes,or fraudu
rate of per cent. per annum (or what- lently removes any of the goods, or fails,
ever else may be the rate) . And the said without reasonable excuse, to produce to
A B doth further agree and declare that the grantee his last receipts for rent, rates
he will duly pay to the said C D the prin- and taxes, or if execution has been levied
cipal sum aforesaid , together with the against the grantor's goods under any
interest then due, by equal payments judgment at law ( Section 7, Bills of Sale
of £ on the day of (or what- Amendment Act, 1882).
ever else may be the stipulated times or If two bills of sale are given upon
time of payment ). And the said A B doth the same property, priority is decided
also agree with the said C D that he will according to the order of the date of their
(here insert terms as to insurance, payment registration .
of rent, or otherwise, which the parties may A bill of sale by way of gift is void if the
agree to for the maintenance or defeasance grantor becomes bankrupt within two years
of the security ). after the date, or at any time within ten
Provided always, that the chattels hereby years unless the claimants can prove that
assigned shall not be liable to seizure or to the grantor was solvent at the time he made
be taken possession of by the said C D for the settlement. (See SETTLEMENTS_SETTLOR
any cause other than those specified in BANKRUPT.)
Section 7 of the Bills of Sale Act ( 1878) As to the stamp duty, the Stamp Act,
Amendment Act, 1882. 1891, says :
102
 BIL ) DICTIONARY OP BANKING [BIL

BILL OF SALE sometimes called , a term which originated in

Absolute. See CONVEYANCE ON SALE. the custom of entering the bills in the 9)

By way of security. See MORTGAGE, etc. customer's account in a column " short ” of the
And see Section 41 , as follows : cash column) are bills which a customer leaves
" A bill of sale is not to be registered with his banker to be collected at maturity
under any Act for the time being in force and of which the proceeds are to be credited
relating to the registration of bills of sale to his account. Such bills may be entered
unless the original, duly stamped , is produced to the credit of an account kept for bills
to the proper officer .” received for collection and to the debit of a
BILL OF SALE, SHIP . A registered ship, contra account, so that a proper record may
or a share therein, is transferred to a pur- be preserved. Bills for collection are also
chaser by a bill of sale in the prescribed form received from other bankers, frequently
as required by the Merchant Shipping Act, a day or two before maturity.
1894. (See SHIP_MORTGAGE, etc.) Where bills are paid to credit of an account
BILL REGISTER . The register contains and are neither discounted nor drawn against,
a complete list of all bills which have been the bills remain the property of the customer.
discounted. The following particulars are If the account becomes overdrawn, the
usually entered : Date when discounted and banker has a lien upon them to that extent.
for whom , the drawer's and acceptor's names If the bills are discounted , they become the
and place where domiciled, the date and absolute property of the banker.
amount of the bill, its currency and the date Bills left for collection, even if indorsed
on which it is due. A column is also pro- to the banker, do not form part of his assets,
vided to show when the bill was remitted , and if the banker becomes bankrupt the
and another to give the rate and amount of owner may, subject to any lien of the banker,
discount charged. Each entry in the register recover the bills.
is usually numbered consecutively and the When bills sent by correspondents for
number written upon thebill. From the total collection are accompanied by instructions,
of the bills so entered is deducted every night such as, “ Deliver documents against pay
the amount of the bills which have matured ment," " Incur no expense," " If unpaid do
during the day and the difference is the not protest," the instructions must be care
present amount under discount by the bank. fully attended to . Bankers usually keep a
BILLON . Debased coin, due to the large separate bill book in which particulars of bills
proportion of alloy . for collection are entered. (See BILLS FOR
BILLS DISCOUNTED ACCOUNT. Bills COLLECTION Book.)
of exchange which are discounted by a When a bill is sent out for collection ,
banker are debited to this account and many bankers place the word “ received ”
credited to the customer's account, less the upon the back of the bill as a safeguard
discount, the discount being passed into dis- against the loss of the bill. A receipt
count account. In some banks it is cus- by a banker upon a bill is exempt from
tomary for branches to remit all bills to the stamp duty, but a receipt upon a bill by any
head office, but if they are left at the branch other person is subject to theduty of twopence
they remain in bills discounted account (see RECEIPT). (See BILL OF EXCHANGE.)
until near maturity, when they are remitted BILLS FOR COLLECTION BOOK . Bills
for collection to the bank at which they are which are left with a banker for collection (as
accepted payable. distinguished from thosewhich arediscounted)
BILLS DISCOUNTED BOOK . A list of are entered in this book, and all essential
all bills discounted is kept in this book and full particulars of each bill should be given, e.g.,
particulars of each bill are given, e.g. , date date received and from whom ,thedrawer's and
when discounted and for whom , the drawer's acceptor's names,where payable, the currency,
and acceptor's names, where and when pay- the amount, when due, and when remitted .
able, the amount, the currency, and the BILLS OF EXCHANGE ACT, 1882 (45 & 46
amount of discount received. In some Vict. c. 61 ) . An Act to codify the law relat
banks the book is called the bill register. ing to bills of exchange, cheques, and promis
(See BILL REGISTER .) sory notes (August 18, 1882).
BILLS DISCOUNTED LEDGER . (See . Be it enacted by the Queen's most Ex
DISCOUNT LEDGER .) cellent Majesty, by and with the advice and
BILLS FOR COLLECTION . Bills left for consent of theLords Spiritual and Temporal,
collection (or “short bills," as they are and Commons, in this present Parliament
103
BIL ) DICTIONARY OF BANKING (BIL

assembled, and by the authority of the same, law merchant, save in so far as they
as follows : are inconsistent with the express
PART I provisions of this Act, shall con
PRELIMINARY tinue to apply to bills of exchange,
" 1. This Act may be cited as the Bills of promissory notes, and cheques.
Exchange Act, 1882. (3) Nothing in this Act or in any repeal
“ 2. In this Act, unless the context other effected thereby shall affect :
wise requires “ (a ) Any law or enactment for
d

* Acceptance ' means an acceptance com the time being in force relat
pleted by delivery or notification . ing to the revenue. (As
' Action ' includes counterclaim and set off. amended by the Statute
• Banker ' includes a body of persons Law Revision Act, 1898.)
whether incorporated or not who “ (6) The provisions of the Com
6
carry on the business of banking. panies Act, 1862, or Acts
' Bankrupt ' includes any person whose amending it, or any Act
estate is vested in a trustee or assignee relating to joint stockbanks
under the law for the time being in or companies ;
force relating to bankruptcy. " (c) The provisions of any Act
' Bearer ' means the person in possession of a relating to or confirming the
bill or note which is payable to bearer . privileges of the Bank of
• Bill ' means bill of exchange, and ' note ' England or the Bank of Ire
means promissory note. land respectively ;
Delivery' means transfer of possession, “ ( d) The validity of any usage re
actual or constructive, from one per lating to dividend warrants,
son to another. or the indorsements thereof.
• Holder ' means the payee or indorsee “ 98. Nothing in this Act or in any repeal
of a bill or note who is in possession effected thereby shall extend or restrict, or
of it, or the bearer thereof. in any wayalter or affect the law and practice
Indorsement ' means an indorsement in Scotland in regard to summary diligence.
6
completed by delivery . “99. Where any Act or document refers
Issue ' means the first delivery of a bill to any enactment repealed by this Act, the
or note , complete in form to a person Act or document shall be construed , and shall
who takes it as a holder. operate, as if it referred to the corresponding
' Person ' includes a body of persons provisions of this Act.
whether incorporated or not. “ 100. In any judicial proceeding in Scot
• Value ' means valuable consideration . 6
land, any fact relating to a bill of exchange,
Written ' includes printed , and writ- bank cheque, or promissory note, which is
ing ' includes print." relevant to any question of liability thereon,
The following sections have a special may be proved by parol evidence: Pro
reference to the Act itself : vided that this enactment shall not in any
" 92. Where, by this Act,the time limited way affect the existing law and practice
for doing any act or thing is less than three whereby the party who is, according to the
days, in reckoning time ,non -business days tenor ofany bill ofexchange, bankcheque, or
are excluded . promissory note, debtor to the holder in the
* Non -business days ' for the purposes of amount thereof, may be required , as a con
this Act mean dition of obtaining a sist of diligence, or
(a) Sunday,Good Friday, Christmas Day ; suspension of a charge, or threatened charge,
(6) A bank holiday under the Bank Holi- to make such consignation , or to find such
days Act, 1871, or Acts amending it ; caution as the Court or judge before whom
( c) A day appointed by Royal proclamation the cause is depending may require.
as a public fastor thanksgiving day. This Section shall not apply to any case
Any other day is a business day. where the bill of exchange, bank cheque, or
"97. ( 1 ) The rules in bankruptcy relat- promissory note has undergone the sexennial
ing to bills of exchange, promissory prescription ."
notes, and cheques, shall continue All the other Sections of the Act will be
to apply thereto notwithstanding found in the articles to which they refer.
anything in this Act contained . The following is a list of the sections and the
“ ( 2) Therules of common law , including the articles to which reference may be made :
104
BIL ) DICTIONARY OF BANKING (BIL

PART I
PRELIMINARY
Section
1. Short title . See above .
2. Interpretation of terms above .
.

PART II
BILLS OF EXCHANGE
Form and Interpretation
3. Bill of exchange defined . . . See BILL OF EXCHANGE.
4. Inland and foreign bills INLAND BILL..
5. Effect where different parties to bill are the same S. DRAWER .
person . les DRAWEE .
6. Address to drawee DRAWEE .
7. Certainty required as to payee PAYEE .
( s.s. 1 , 2 NEGOTIATION OF BILL OF Ex
CHANGE.
8. What bills are negotiable S.S. 3 . BEARER .
S.S. 4, 5 ORDER .
( s.s. 1 , 2 BILL OF EXCHANGE.
9. Sum payable . .

INTEREST ON BILL.
S.S. 3
10. Bill payable on demand . .
TIME OF PAYMENT OF BILL.
11. Bill payable at a future time do .
12. Omission of date in bill payable after date DATE .
13. Ante-dating and post-dating do.
14. Computation of time of payment TIME OF PAYMENT OF BILL.
15. Case of need REFEREE IN CASE OF NEED .
16. Optional stipulations by drawer or indorser DRAWER .
17. Definition and requisites of acceptance ACCEPTANCE .
18. Time for acceptance . do.
ACCEPTANCE , GENERAL .
19. General and qualified acceptances . QUALIFIED .
20. Inchoate Instruments . INCHOATE INSTRUMENT.
21. Delivery . DELIVERY OF BILL.

Capacity and Authority of Parties

22. Capacity of parties . Sec PARTIES TO BILL OF Ex
CHANGE.
23. Signature essential to liability do.
24. Forged or unauthorised signature . FORGERY.
25. Procuration signatures . AGENT.
26. Person signing as agent or in representative
capacity do .

The Consideration for a Bill

S.S. 1 . See CONSIDERATION FOR BILL OF
27. Value and holder for value EXCHANGE
s.s. 2, 3 HOLDER FOR VALUE.
28. Accommodation bill or party . ACCOMMODATION BILL.
29. Holder in due course . HOLDER IN DUE COURSE.
30. Presumption of value and good faith do.

Negotiation of Bills
31. Negotiation of bill See NEGOTIATION OF BILL OF

EXCHANGE .

105
BIL ) DICTIONARY OF BANKING (BIL

Section .
32. Requisites of a valid indorsement . See INDORSEMENT.
33. Conditional indorsement . I do.
34. Indorsement in blank and special indorsement do .
35. Restrictive indorsement . do .
36. Negotiation of overdue or dishonoured bill NEGOTIATION OF BILL OF

EXCHANGE.
37. Negotiation of bill to party already liable thereon do.
38. Rights of the holder . . HOLDER IN DUE COURSE .

General Duties of the Holder

39. When presentment for acceptance is necessary See PRESENTMENT FOR ACCEPT
ANCE .
40. Time for presenting bill payable after sight do.
41. Rules as to presentment for acceptance, and ex
cuses for non - presentment .
.. do .
42. Non -acceptance . . 9 DISHONOUR OF BILL OF Ex
CHANGE .
43. Dishonour by non -acceptance and its consequences do.
44. Duties as to qualified acceptances . ACCEPTANCE , QUALIFIED.
45. Rules as to presentment for payment . PRESENTMENT FOR PAYMENT.
46. Excuses for delay or non -presentment for payment do.
47. Dishonour by non -payment . . DISHONOUR OF BILL OF Ex
CHANGE.
48. Notice of dishonour and effect of non -notice . . do.
49. Rules as to notice of dishonour . . •
.. do.
50. Excuses for non -notice and delay do.
51. Noting or protest of bill . . PROTEST.
52. Duties of holder as regards drawee or acceptor PRESENTMENT FOR PAYMENT.

Liabilities of Parties
53. Funds in hands of drawee See DRAWEB .
54. Liability of acceptor . ACCEPTANCE .
( 3.9 . 1 DRAWER .
55. Liability of drawer or indorser . S.S. 2
.

INDORSER.
56. Stranger signing bill liable as indorser do.
57. Measure of damages against parties to dishonoured
bill .
. . DISHONOUR OF BILL OF Ex
CHANGE.
58. Transferor by delivery and transferee . .
TRANSFEROR BY DELIVERY .

Discharge of Bill
59. Payment in due course See PAYMENT OF BILL.
60. Banker paying demand draft whereon indorsement
is forged D. do .
61. Acceptor, the holder at maturity .
do.
62. Express waiver or renunciation . .
do.
63. Cancellation . CANCELLATION OF BILL OF
EXCHANGE
64. Alteration of bill . O ALTERATIONS.

Acceptance and Payment for Honour

65. Acceptance for honour suprà protest See ACCEPTANCE FOR HONOUR .
66. Liability of acceptor for honour do .
67. Presentment to acceptor for honour . PRESENTMENT FOR PAYMENT.
68. Payment for honoursuprà protest . .
PAYMENT FOR HONOUR .
106

1
BIL ) DICTIONARY OP BANKING ( BIL

Section .
Lost Instruments
69. Holder's right to duplicate of lost bill .
See Lost BILL OF EXCHANGE.
70. Action on lost bill do.

Bill in a Sot
71. Rules as to sets . See BILL IN A SET.

Conflict of Laws
72. Rules where laws conflict See FOREIGN BILL.

PART III
CHEQUES ON A BANKER
73. Cheque defined See CHEQUE .
74. Presentment of cheque for payment . . PRESENTMENT FOR PAYMENT.
75. Revocation of banker's authority PAYMENT OF CHEQUE .
Crossed Cheques
76. General and special crossings defined . . See CROSSED CHEQUE .
77. Crossing by drawer or after issue . do .
78. Crossing a material part of cheque. do .
79. Duties of banker as to crossed cheques do .
80. Protection to banker and drawer where cheque is
crossed . .
. do .
81. Effect of " not negotiable " crossing on holder . do.
82. Protection to collecting banker . . . do .

PART IV
PROMISSORY NOTES
83. Promissory note defined . See PROMISSORY NOTE .
84. Delivery necessary do .
85. Joint and several notes do .
86. Note payable on demand PRESENTMENT FOR PAYMENT.
87. Presentment of note for payment do.
88. Liability of maker PROMISSORY NOTE .
89. Application of Part II to notes do,

PART V
SUPPLEMENTARY
90. Good faith . . See Good FAITH .
91. Signature by agent . . AGENT.
92. Computation of time . TIME OF PAYMENT OF BILL .
93. When noting equivalent to protest. . PROTEST .
94. Protest when notary not accessible . do.
95. Dividend warrants may be crossed . .
CROSSED CHEQUE.
96. (Repealed by StatuteLaw Revision Act, 1898,
61 & 62 Vict. c. 22.)
97. Savings . above.
98. Saving ofsummary diligence inScotland : . above.
99. Construction with other Acts, etc. . above .
100. Parol evidence allowed in certain judicial proceed
ings in Scotland . 1 above .
Schedule I. Form of Protest . PROTEST.
107
BIL ) DICTIONARY OF BANKING (BLA

BILLS OF EXCHANGE (CROSSED | may be cited together as the Bills of

CHEQUES) ACT, 1906 (6 EDW VII, c. 17) . Exchange Acts, 1882 to 1917.”
An Act to amend Section 82 of the Bills of BILLS REMITTED BOOK . This book
Exchange Act, 1882 (August 4, 1906 ). contains particulars of all bills despatched
Be it enacted by the King's most Ex. to a banker's correspondents for collection ;
cellent Majesty, by and with the advice and where the bills are very numerous, separate
consent of the Lords Spiritual and Temporal, books may be kept, if necessary, for bills
and Commons, in this present Parliament remitted to London, to branches, to head
assembled , and by the authority of the office, or to country correspondents.
same , as follows : BIMETALLISM . A monetary system
“ 1. A banker receives payment of a where gold and silver are on the same footing
crossed cheque for a customer within the as regards mintage and legal tender. In
meaning of Section 82 of the Bills of Ex- Britain , the system has been monometallic
change Act, 1882, notwithstanding that he since 1816 ; that is, gold is the sole standard
credits his customer's account with the of value. In India , silver is the standard .
amount of the cheque before receiving pay- Much controversy has taken place with
ment thereof. regard to the respective merits of mono
“ 2. This Act may be cited as the Bills of metallism and bimetallism , and various
Exchange (crossed cheques) Act, 1906 , and fruitless conferences have been held with the
this Act and the Bills of Exchange Act , 1882, view of establishing silver as an international
may be cited together as the Bills of standard of value, as well as gold. If bi
Exchange Acts, 1882 and 1906.” metallism were established , it would mean
The effect of this Act is to place a banker that both gold and silver would be legal
who credits the account of his customer tender to any amount (silver at present
with a cheque before he has collected it, in being merely token money and legal tender
the same position as though he first of all only to the extent of £2) , that both these
collected the cheque and then placed the metals would require to be coined free of
proceeds thereof to his customer's account. cost by the Mint, and that they would circu
(See Section 82 of the Bills of Exchange Act, late at a ratio to each other as fixed by the
1882, under CROSSED CHEQUE.) Government.
BILLS OF EXCHANGE ( TIME OF BLACK FRIDAY. May 11 , 1866 , on
NOTING) ACT, 1917 (7 & 8 Geo. V, c. 48) . which day the firm of bill brokers, Overend
An Act to amend the Bills of Exchange Act, Gurney & Co., failed. There was a monetary
1882, with respect to the time for noting panic in London, and to a large extent
bills. (November 8, 1917.) throughout the country .
“ Be it enacted by the King's most BLACK MONEY. Base coin brought
Excellent Majesty, by and with the advice to Englandby foreigners and prohibited by
an consent of the Lords Spiritual and Edward III ” (Dr. Brewer). When copper
Temporal, and Commons, in this present money was first introduced into Scotland,
Parliament assembled , and by the authority it was commonly called “ black money."
of the same, as follows : BLANK CHEQUE. A cheque which is
Time of Noting. signed by the drawer without any amount
00
1. In subsection 4 of Section 51 of the being filled in . When such a cheque is
Bills of ExchangeAct, 1882(which relates issued, it is usually with the intention that
to the time of noting a dishonoured bill), the payee
should oransome
fill in otherasauthorised
amount sanctioned person
by the
the words ‘ it mustbe noted on the day of drawer. A blank cheque is an unsatisfac
its dishonour ' shall be repealed, and the
following words shall be substituted there- tory document to give to anyone, as it
for, namely,' it may be noted on the day might easily fall into the handsof some
make wrong use of it .
of its dishonour and must be noted not later person who would a
than the next succeeding business day .' See the case of London Joint Stock Bank , Ltd.
v. Macmillan and Arthur under ALTERATIONS .
Short Title and Construction . BLANK INDORSEMENT . Where an in
“ 2. This Act may be cited as the Bills dorsement on a bill of exchange specifies
of Exchange (Time of Noting) Act, 1917, no indorsee, it is an indorsement in blank.
and shall be construed as one with the Bills A bill so indorsed becomes payable to bearer.
of Exchange Act, ' 1882, and the Bills of The same term applies to the indorsement of
Exchange Acts, 1882 and 1905, and this Act cheques. (See INDORSEMENT.)
108
 BLA ) DICTIONARY OF BANKING [BOA

BLANK TRANSFER . A blank transfer the stock certificate proved to be part of a

of stock or shares is a transfer where the trust estate, and the bank, although it had
name of the transferee has not been filled in, no notice of the trust, had its title postponed
or which is undated . It is sometimes used to the prior equitable title of the persons
when shares are given as security for a debt, interested under the trust.
the intention being that if default is made in In France v. Clark (1884 , 50 L.T.R. 1 ,
payment, the lender may fill in his own 26 Ch . Div. 256 ), the Court of Appeal
name, as transferee, or insert the date, and held that a person who without inquiry
send theinstrument forward for registration . takes from another an instrument signed
If a blank transfer is to be held unstamped, in blank by a third party , and fills up the
it should not be dated, otherwise it cannot, blank, cannot, even in the case of a negotia
after thirty days from execution , be stamped ble instrument, claim the benefit of being a
except under a penalty. purchaser for value without notice, so as to
A blank transfer, however, in those com- acquire a greater right than the person
panies where the transfer must be under from whom he himself received the instru
seal, is not a satisfactory security . In ment. In Fry & Mason v. Smellie &
the case of Powell v . London and Provincial Taylor (1912, 106 L.T. 405) , where a princi
Bank ( 1893, 2 Ch. 555) , a stock certificate pal handed to his agent the documents of
and a blank transfer were given to the bank title to shares together with a transfer
as security . The bank subsequently inserted signed in blank,and gave theagent authority
its own name in the transfer and executed (though limited) to borrow thereon, and the
it, and was duly registered by the company . agent borrowed in excess of his authority,
Lord Justice Lindley said : : . in order the lender being ignorant of any limitation
to acquire the legal title to stock or shares of the authority, it was held by the Court
in companies governed by the Companies of Appeal that the principal could not take
Clauses Consolidation Act, 1845, you must advantage of any limitation in point of
have a deed executed by the transferor, amount which he placed upon the authority
and you must have that transfer registered . to raise money as against the lender who
Until you have got both you have not got had no notice of it. Kennedy L. J. , said :
the legal title in the transferee . Now what One of two innocent personshas to suffer
took place here was this : Mr. Edwards gave by the misconduct of the agent ; and the
to the bank a transfer sealed by him , and, burden of loss ought in equity to fall upon
so far as form goes, probably delivered by him who intended his agent to obtain money
him to the bank, but with blanks. It was from the other party, and clothed his agent
not in a complete form . It was never in that with an apparently unqualified authority
form in which such an instrument, however to obtain the documents for that purpose .
much wax there might be at the bottom , In the case of those companies where
could amountto a deed by the transferor. debentures and shares are transferable by
We all know that both at common law and an instrument under hand (a deed under seal
under these statutes if you execute a trans- not being required ), a blank transfer does
fer in blank , that instrumentwith the blanks form a satisfactory security, and the trans
is not a deed. Then what happened is this. feree's name can subsequently be filled in .
That document so executed by Edwards in In the event of the transferor's death , how
blank was filled up afterwards by the bank , ever, before the blanks are filled up, the
probably as was intended, and the bank banker's authority to do so is cancelled.
itself was put in as the transferee and the The reason why a blank transfer under seal
bank got itself registered . . What was cannot legally have any blanks subsequently
the effect of what had been done ? It was filled in by a banker is that a document under
not that the bank got a good title. The seal is a deed and takes effect from its de
registration of the stock in the bank, unless livery. To enable a blank transfer under
preceded by a valid deed transferring the seal to be effectually completed , the blanks
stockfrom the owner of it, does not give the should be filled in in the presence of the
transferee a good title at all. We have not transferor, or by his authority under seal,
to consider the effect of documents executed or the deed should be re -delivered by
in blank as agreements enforceable in equity. him . (See CertiFICATE, TRANSFER OF
We have nothing to do with that, but we are SHARES.)
bank had no legal title at all.”
he SHBOARD OF GUARDIANS. (See Guar
considering the legal title of the bank . The
In that case DIANS OF THE POOR .)
109
BOD ) DICTIONARY OP BANKING (BON

BODY CORPORATE . A number of per £ s. d.

sons which , by law , are formed into a corpora samead
For a definite and certain (Thevalor em
tion , and which continues as a distinct body period, so that the total duty as a
irrespective of any changes which may take amount to be ultimately bond or
place amongst the members. ( See COR payable can be ascer
covenant
for such
PORATION .) tained . total
BONA FIDE, Latin , in good faith . The ( The Inland Revenue do
amount.
opposite to bona fide is mala fide, in bad faith. not, in practice, charge
The Bills of Exchange Act, 1882, states duty on more than
that a thing is deemed to be done in good twenty times the annual
faith , within the meaning of the Act, where sum .)
it is in fact done honestly, whether it is done For the term of life or any
negligently or not. other indefinite period.
BOND . A bond is a document under seal For every £5, and also for
whereby a person binds himself to pay a any fractional part of £5,
certain sum or to fulfil a certain contract.
(See BEARER BONDS . ) of the annuity or sum
For example, if Brown owes Jones £ 100, periodically payable. . 0 2 6
Brown may sign a bond for £ 200 , that is, he (2) Being a collateral or auxil
binds himself for twice the actual amount iary or additional or sub
intended to be secured , so as to cover prin stituted security for any of
cipal, interest and all charges. The £ 200 is the above-mentioned pur
called the penalty, and the instrument poses where the principal
usually continues : " Now the condition of or primary instrument is
the above written bond is such that if the duly stamped.
The same ad
above bounden Brown, his heirs, executors, valorem
or administrators shall pay unto the said duty as a
Where the total amount to bond or
Jones the sum of £ 100 by the instalments covenant
following etc. Then the be ultimately payable can of the
be ascertained same kind
above written bond shall be void , otherwise for such
the same shall remain in full force ." total
amount.
The duties imposed by the Stamp Act,
1891, are as follows : In any other case :
Bond for securing the payment or For every £5, and also for
repayment of money or the any fractional part of £5,
transfer or retransfer of stock . of the annuity or sum
See MORTGAGE , ETC. , AND periodically payable. .
006
MARKETABLE SECURITY . ( 3) Being a grant or contract
BOND in relation to any annuity for payment of a super
upon the original creation and annuation annuity ,that is
sale thereof. to say, a deferred life an
See CONVEYANCE ON SALE. nuity granted or secured
BOND, COVENANT, or INSTRUMENT to any person in considera
of any kind whatsoever. tion of annual premiums
(1 ) Being the only or principal payable until he attains a
or primary security for specified age and so as to
any annuity (except upon commenceon
that ag
his attaining
the original creation thereof e.
by way of sale or security , For every £5 and also for
and except a superannua any fractional part of £ 5
tion annuity ), or for any of the annuity . .
0 0 6
sum or sums of money at BOND given pursuant to the direc
stated periods, not being tions of any Act, or of the Com
interest for any principal missioners or the Commissioners
sum secured by a duly of Customs, or any of their
stamped instrument, nor officers, for or in respect of any
rent reserved by a lease or ofthe duties of exciseor customs,
tack , or for preventing frauds or
110
BON ) DICTIONARY OF BANKING (BON

£ s. d . £ s. d .
evasions thereof, or for any other The same ad BOND of any kind whatsoever not
matter or thing relating thereto . valorem specifically charged with any 'Thesame
valorem ad
Where the penalty of the duty as a duty :
bond for duty as a
bond does not exceed the Where the amount limited to ) bond for
amount the
£ 150. of the
be recoverable does not ex amount
penalty . ceed £ 300 limnited .
In any other case . . 0 5 0 In any other case • 0 10 0
BOND, accompanied with a deposit
Exemption . of title deeds, for making amort
Bond given as aforesaid upon, gage, wadset, or other security
or in relation to , the receive on any estate or property therein
ing or obtaining, or for en comprised .
titling any person to receive See MORTGAGE , etc. , and
or obtain , any drawback of Section 86 .
any duty of excise or cus BOND, DECLARATION , or other
toms, for or in respect of any DEED or WRITING for making
goods, wares, or merchan redeemable any disposition, as
dise exported or shipped to signation , or tack, apparently
be exported from the absolute, but intended only as a
United Kingdom to any security .
parts beyond the seas, or See MORTGAGE, etc. , and
upon or in relation to the Sections 23 under AGREE
obtaining of any debenture MENT and 86 under Mort
or certificate for entitling GAGE ,
any person to receive any BOND TO BEARER . ( See MARKETABLE
such drawback as aforesaid . SECURITY .)
And see Section 42 as fol. BOND AND DISPOSITION IN SECURITY .
lows : In Scotland, the method of obtaining
“ If any person required by any Act a security over heritable (or real) property
for the time being in force or by the Com- is by way of a deed, called a bond and dis
missioners, or any of their officers, to give or position in security. The deed is a com
enter into any bond for or in respect of any bination of a personal bond by the debtor
duty of excise, or for preventing any fraud and a conveyance of property by the debtor
or evasion in relation to any such duty , or ( or by a third party) in favour of the banker
for any matter or thing relating thereto, lending the money. The advance, how
includes inone and the same bond any goods ever, must be made at once and in one
or things belonging to more persons than amount. The bond must be registered
one, not being partners or joint tenants, or in the Register of Sasines and priority
tenants in common, he shall for every offence is obtained according to the date of
incur a fine of fifty pounds." registration.
£ s. d. Though the personal obligation in the
BOND on obtaining letters of ad bond can be enforced for repayment of
ministration in England or Ire whatever debt is due by the debtor to the
land, or a confirmation of testa banker, any surplus there may be on realisa
ment in Scotland . 0 5 0 tion of the property, cannot be held for any
other debt than that specified in the deed .
Exemptions. ( See CONSIGNATION RECEIPT.)
( 1 ) Bond given by the widow , BOND CERTIFICATE . A provisional
child , father, mother, certificate issued to a subscriber for a
brother or sister, of any bearer bond . It is exchangeable for the
common seaman , marine bond when the bond is ready for delivery.
or soldier, dying in the ser The owner of the certificate is not entitlcd
vice of Her Majesty . to receive the bond so long as any instalment
( 2 ) Bond given by any person or subscription is unpaid . (See SCRIP
where the estate to be ad CERTIFICATE .)
ministered does not exceed A bond certificate is also the name of a
£ 100 in value. certificate given to the holder of registered
111
BON ) DICTIONARY OF BANKING [BOO

bonds, specifying that certain bonds have When a bonus is paid as a temporary
been registered in his name. addition to a salary , the bonus is, for
BOND OF CAUTION . In Scotland, an income tax purposes, regarded as part of
obligation by one person as surety for an the salary .
other. (See BOND OF CREDIT.) BONUS CERTIFICATE . On a division of
BOND OF CREDIT . In Scotlard, a bond profits by an insurance company a policy
of credit, or “ cash credit bond,” is a per- holder, who partakes in the profits, receives
sonal security for a " cash credit.” A " cash a bonus certificate from the company certify
credit ” is a term peculiar to Scotland, ing that the sum of £ .... has been added to
and is equivalent to a personally secured and will be payable with the sum assured
overdraft in England. The debtor signs under the policy. A policy holder may ,
the bond, as well as the sureties, and they instead of having the bonus added to the
all acknowledge to have obtained the policy, elect to have the bonus paid in cash
credit. To secure a cash credit to John or used to reduce the annual premium .
Brown the document would begin : • We , BONUS SHARES. In order to give the
John Brown and John Jones, having ob- staff of a bank a personal interest in the
tained a credit of one hundred pounds ster- business, a gift of new shares may be given
ling with the Scots Bank on cash account to each member, the number of shares pre
in name of me, the said John Brown, do sented varying according to the salary.
therefore hereby bind and oblige ourselves. Instead of a gift, new shares may also be
our heirs, executors, and successors what. allotted to members of the staff at a very
ever, all conjunctly and severally to pay," low price . (See SHARES FOR STAFF .)
etc. (See BOND OF CREDIT AND DISPOSITION The undivided profits of a company are
IN SECURITY .) sometimes capitalised and bonus shares
BOND OF CREDIT AND DISPOSITION issued to the shareholders.
IN SECURITY . In Scotland , a ' bond and In Commissioners of Inland Revenue v.
disposition in security ” creates a security Blott ( 1920, A.C. 36 T.L.R. 575) it was held
over heritable property for a loan which is that bonus shares issued by a company to
made at once and in one sum ; but a “bond shareholders are not to be treated as income,
of credit and disposition " is a deed which but as capital, and that the respondent was
enables heritable ( real) property to be made not subject to super-tax on the amount of
available for a cash credit ( that is, an over- the bonus shares.
draft on a working account, on which the full BOOK DEBTS. The item “ book debts,"
advance need not be taken in one amount). which appears upon the balance sheet of a
By law , however, the security is available trader or a trading concern , represents the
only to the amount specified in the bond and amount owing for goods, etc. , sold, as shown
three years' interest at 5 per cent. Thedeed by the books. In considering such an item ,
is a combination of a “bond of credit ” and it is necessary to ascertain whether the debts
a disposition or conveyance of property to are owing merely by two or three individuals
the creditor. The bond must be registered or firms, or are well spread over many
in the Register of Sasines . (See BOND debtors, and also to ascertain what pro
OF CREDIT, BOND AND DISPOSITION IN portion of the amount may be considered as
SECURITY .) good and likely to be paid , and what may be
BONS. A name given to documents, such regarded as bad and what as doubtful.
as French Treasury Bonds, upon which is (See DEBTS, ASSIGNMENT OF.)
printed the word “ bon ” in conjunction with BOOK ENTRY. An entry passed through
the amount ofthe bond, e.g. “Bon pour cent the books merely for purposes ofadjustment.
francs,” good for one hundred francs. BOOK VALUE . The value of a property
BONUS. The profits of an assurance com- as it appears in the books of a company.
pany, which are distributed periodically to According to circumstances, a book value
the policyholders , are called bonuses. Part may be either more or less than the actual
of these “ profits ” arises from the unused market value.
portion of the " loading ," as it is called ; that BOOKS. The books in use are not the
is, the amount included in the premium rates same in all banks. The rulings and method
specially to pay expenses. (See LIFE Policy.) of keeping them vary , and in some cases a
The word is also applied to an extra- book which is used for a certain purpose
ordinary division of the profits of a company, in one bank may, under the same name, be
in addition to the ordinary dividend . used for a different purpose in another bank .
112
BOO] DICTIONARY OF BANKING (BOR

All the books of a bank, however, from the property descends to the youngest son
humblest to the most important, are re- instead of to the eldest.
quired to be neatly and accurately kept, and BORROWED NOTE . А name some.
each member of the staff is expected to take times given to the agreement which is
a pride in so keeping any books for which signed by a borrower when bearer bonds
he is responsible that, in the event of the or registered securities are given by him
books being at any time produced in Court , as cover for a loan . The agreement gives
they will not afford an opportunity to any the banker authority to sell the securities in
one for adverse criticism . Figures in ledgers, the event of the loan not being repaid at the
etc, should be called over day by day and specified time, or of the stipulated margin
all calculations be duly checked . on the securities not being maintained .
The following is a list of anumber of the BORROWING ON CONSOLS. Thisrefers
principal books in use ( in some cases the same to a method adopted by the Bank of Eng
book appears under different names) though land for making an increase in its Bank
they will notall be found in any one bank :- Rate ” effective in preventing an undus
Acceptance Register. Journal. drain of gold from its reserve. A large con
Acceptance Ledger. Key Register. stituent of the item “ Other Deposits " in
Acceptors' Ledger. Letter Books. the Bank Return is formed by the balances
Accounts Opened and Letters Despatched
Closed Book . Register. of the other London banks. In ordinary
Advice Book . Letters of Credit. times, therefore, when the amount of “ Other
Attendance Book . Letters Received Regis. | Deposits " is high , it implies that the money
Balance Book . ter .
Bank Note Register. Loans Ledger. market (the London banks and bill brokers)
Bank Rate Book . Loans Register. has a considerable sum of floating money
Bankers' Ledger. London Agent's Ledger. at its disposal, which seeking for any
Bearer Bonds Register. Minute Book . profitable investment rather than lying idle
Bill Diary. Money Book .
Bill Ledger. Money Lent and Lodged in the hands of the Bank, competes for the
Bill Register. Book . bills that are offered for discount and so
Bills Discounted Book . Note Register ( for own prevents the market rate of discount from
Bills for Collection Book . issue) . closely following the Bank Rate . But the
Bills Remitted Book . Opinion Book.
Branches Ledger. Overdue Bills Book . only certain way to counteract the outflow
Cash Balance Book. Pass Book Register. of gold from the country is to increase the
Cash Book . Postage Book . value of money at home, which proceeding
Check Ledger . Private Ledger .
Cheque Book Register. Probate Register. acts in two ways ; it renders the export of
Circular Notes Book . Record
Book .
of Cheques gold unprofitable, because it is so dear to
Clearing Book . buy, and it turns the foreign exchanges in
Coin Balance Book . Remittance Book . favour of this country by encouraging
Common Seal Book . Returned Bills.
Counter Cash Book . Returned Cheques. bankers abroad to purchase London paper
Coupon Book . Safe Custody Register. for the sake of the high rate of discount
Current Account Ledger. Securities Book .
which they can get. The Bank of England,
Current Account Regis. Securities Journal. therefore, in order to get rid of this floating
ter. Securities Ledger.
Day Book. Shareholders' Ledger. capital, which interferes with the effect of
Deposit Ledger. Shareholders' Register. the Bank Rate, employ the somewhat drastic
Deposit Register. Short Bills Ledger. expedient of borrowing it themselves by
Diaries. Signature Book .
Discount Cash Book . Staff Register. selling consols for money " and buying
.
Discount Day Book . Stock Exchange Trans- them back for the “ account.” The pur
Discount Ledger. actions.
Discount Register. Teller's Cash Book .
chasers, whoever they may be, draw cheques
Dividend Register. Till Book on their accounts , soon absorbing the float
Draft Book . Title Deeds Book . ing fund referred to and having the imme
Exchange Book . Transfer Register. diate effect of lessening the bankers' bal
General Ledger. Walks Book .
Investment Ledger. Waste Book .
ances contained in the “ Other Deposits. "
Deprived of this means of competition
BOOM . A boom on the Stock Exchange with the Bank of England, the money market
is a time when there is unusual activity has no alternative but speedily to raise its
in stocks and shares and high prices are rate, and the desired result is obtained .
reached . ( See Bank RATE , BANK RETURN .)
BOROUGH ENGLISH . A peculiar cus- BORROWING POWERS. When a com
tom in connection with real property in cer- pany wishes to borrow , a banker should ,
tain old cities and boroughs, by which the by careful reference to the memorandum
113
& (1535 )
BOT) DICTIONARY OF BANKING (BRA
and articles of association of the company, to effect the repairs, and is unable to com
ascertain what powers to borrow , if any, are municate with the owners . The money
given therein, and what are the limitations borrowed upon a bottomry bond is repayable
of those powers. If a company has power only in the event of the ship reaching its
to borrow , there may be a limit beyond destination. A lender must exercise the
which the directors cannot go , and a banker greatest care, as a captain has no authority
must make certain that any proposed ad- to bind the ship -owner, except in case of
vance will not, with any loans already ob- necessity. (See RESPONDENTIA .)
tained by the company, exceed the specified BOUGHT NOTE . The contract note
limit. It may be that the directors are which is given by a stockbroker to his client,
unable to borrow except by resolution of the supplying particulars of a purchase which has
company , or they may be able to borrow been effected for him . (See CONTRACT NOTE .)
but not have any power to mortgage the BOURSE . The name of the principal
company's property . Directors must not place in each country (or large town doing
act ultra vires -- that is, beyond their powers. an active foreign trade) where the balance
In dealing with a company itis of the first of trade between thatcountry and othersis
importance to see, as Lord Halsbury said settled by the mutual interchange of bills,
(in County of Gloucester Bank v. Rudry and where merchants resort to buy and sell
Merthyr Steam and House Coal Colliery Co., merchandise ; they are international clear
1895 , 1 Ch . 629) , “ that the acts which the ing - houses.
company is purporting to do are acts within At a Bourse an exporter of goods to an
the general authority of the company , and other country sells his draft, so getting pay
if those public documents, which every one ment for the goods exported ; and it is there
has a right to refer to, disclose an infirmity also that an importer goes to buy a draft
in their action, they take the consequences (the same that the above exporter sells)
of dealing with a joint stock company which which he remits to the foreign seller, so
hasapparently exceeded its authority ." making payment for the goods imported.
Where a guarantee is given for a loan In this country foreign bill business was,
which is ultra vires, see under GUARANTEE. prior to 1921 , done at the Royal Exchange,
(SeeSUBROGATION, ULTRA VIRES .) London .
Where nothing is said in the memorandum On the Continent, stock exchange business
and articles as to borrowing, a right to is also conducted at the Bourses .
borrow is presumed in the case of a trading BRADBURY . A name sometimes given
company for the purposes of its ordinary in conversation to currency notes signed
business. The above remarks apply whether ( 1914-1919) by John Bradbury , Secretary to
the company desires to borrow by way of the Treasury .
overdraft (either unsecured or secured by a BRANCHES. For some purposes the
mortgage its property ) , or by debentures, branches of a bank are treated as though
or by discounting bills. Trade debts do not
.
they were separate banks, e.g. one branch
constitute " borrowings." (See COMPANIES, is not obliged to pay a cheque drawn upon
COMPANY LIMITED BY SHARES.) another branch, and one branch may, in
Public companies registered after 31 Dec., giving notice of dishonour, treat the other
1900, may not exercise any borrowing powers branch , in the matter of time, as a separate
until they are authorised to commence institution . On the other hand, branches
business. (See CERTIFICATE TO COMMENCE are regarded as parts of one body in certain
BUSINESS .) cases, e.g. a credit balance at one branch
With respect to the borrowing powers of may be used to reduce an overdrawn account
Local Authorities, see LOCAL AUTHORITIES. of the same customer at another branch ;
BOTTOMRY BOND . A document by and where a customer has two accounts, one
which the master or captain of a ship charges in credit at one branch and one overdrawn
or hypothecates the ship as security for the at another branch , and he presents a cheque
repayment of a loan . The circumstances at the branch with the credit balance, the
under which such an instrument could be banker is entitled , in considering whether
created are where the ship is in a foreign he should pay the cheque, to regard the two
port and certain repairs are absolutely accounts as one account, but if there has
necessary in order to enable the ship to con- been an agreement, or the practice in the
tinue its voyage, and the captain has no past has been to treat the two accounts as
other means of raising the money required quite distinct, the banker could not, without
114
BRA ) DICTIONARY OF BANKING ( BRI

due notice , suddenly change his method of consequent upon the neglect of another
dealing. A customer, however, has no right branch in despatching promptly an advice
to demand that any accounts he may have of such credit.
at different branches be treated as one A customer may also, as a rule arrange to
account with respect to cheques drawn . have his cheques cashed at other branches.
His cheque is in the absence of express In such a case the branch where his account is
agreement) payable only at the branch on kept advises the branch where they are to be
which drawn, and that branch may, if cashed to pay them up to a certain limited
necessary , dishonour the cheque, even though amount in any one day, or as may be desired ,
the customer may have sufficient funds at and furnishes at the same time a specimen
another branch . of the drawer's signature. ( See STANDING
It has been held that notice of the stopping CREDITS.)
of a cheque at one branch of a bank is not BRANCHES LEDGER . This book is kept
notice to the other branches. ( See PAYMENT at the head office and contains an account
STOPPED .) for each branch of the bank , into which
For most purposes the head office and accounts are posted all the transactions
branches are regarded as one body. It has between the branches and the head office.
been held that notice to the head office ofan The transactions may be entered up with a
act of bankruptcy is equivalent to notice to certain amount of detail, or daily totals only
the branches, allowing for reasonable timeto may be shown. Each branch keeps an
communicate the notice to the branches. account in the general ledger with the
(See ACTS OF BANKRUPTCY.) head office, posted either in detail or by
Service of a Garnishee Order nisi on the daily totals, and this account should agree
head office is service on the bank but with the account for the branch at head
reasonable time to communicate with the office in the branches ledger. If the head
branches must be allowed . (See GARNISHEE office balance at the branch is debit, the
ORDER .) balance shown in the ledger at head office
A draft drawn by onebranch upon another, will be credit. In order to ascertain accu
or upon the head office, is not a cheque so far rately the profit made by each branch it is
as the bank is concerned , and therefore necessary for the head office to allow
protection against a forged indorsement is interest on the balance standing to aa branch's
not obtained by Section 60 of the Bills of credit, or, on the other hand, to charge
Exchange Act. It has been held, however interest on the amount which head office
(Capitaland Counties' Bank v. Gordon , 1903, may have lent to a branch .
A.C. 240), that the bank is protected by Sec- When a balance sheet of the bank is pre
tion 19 of the Stamp Act, 1853. (See DRAFT .) pared, the branches ledger balance is set off
Where a crossed cheque drawn on one against the balances at the branches.
branch is paid to credit of a customer's BRASSAGE . A charge which was made
account at another branch of the same at one time by the Mint, to cover the ex
bank, the branches in such a case may be pense of coining, when any one took gold
regarded either as one bank ( in which case bullion to be coined . The charge was abol
protection against a forged indorsement is ished in 1666. Sovereigns can DOW be
obtained by Section 60 of the Bills of Ex- obtained for bullion of standard quality
change Act) or as practically two different free ofcost. (See MINTPRICE, SEIGNIORAGE .)
banks, payment being made by one to the BREACH OF TRUST. If a trustee acts
other (in which case the payment fulfils the contrary to the conditions in the deed or
requirements of Section 79). will under which he is appointed , or invests
À copy of the statement as prescribed by the trust funds in securities other than those
Section 108 of the Companies (Consolidation) authorised, or appointed by law , it is a
Act, 1908, must be exhibited in a conspicuous breach of trust and he is personally liable.
place in every branch . (See under BANKING (See TRUSTEE, TRUSTEE INVESTMENTS.)
COMPANY .) BREAKING UP VALUE . The value of a
A customer may pay in at any branch to property merely as old material.
his credit at the branch where he keeps his BRIGHTON A. A Stock Exchange name
account, but the amount is not available to for London , Brighton and South Coast
meet cheques until advice of the credit has Railway deferred ordinary stock .
been received . A bank may incur liability BRITISH BANKERS' ASSOCIATION .
if a cheque is dishonoured at one branch This Association was formed in December,
115
BRI) DICTIONARY OF BANKING (BUI

1919. Membership is confined to British | 1860. They are still commonly called copper
banks whose main business and head office coins.
are situated in the United Kingdom , and The composition of bronze is ninety - five
British banks whose main business is outside parts of copper, four parts of tin, and one
the United Kingdom and who are members part of zinc.
of the British Overseas Banks' Association . Bronze coins are legal tender only to the
The general committee of the Association extent of one shilling.
is composed of the members of the Committee Slot gas meters have had a remarkable
of London Clearing Bankers, ten members effect in withdrawing pennies from circula
elected by the other English banks, four by tion , and producing quite a famine of “cop
the Scottish banks, three by the Irish banks, per ” in some districts until the meters
and five by the British Overseas Banks' are collected , when a sudden superabundance
Association . of copper is obtained . (See COINAGE.)
BRITISH OVERSEAS BANKS ' ASSOCI- BRUM OR BRUMS. A Stock Exchange
ATION . This Association was formed in name for London and North -Western
1917, and has for its object the promotion Railway ordinary stock .
of the general interests of the banks com- BUCKET SHOP. A slang term which is
prising the Association . Every British applied to an outside stockbroker's
bank, approved by the general committee, office, where the business is of a gambling
carrying on business in the British Empire, nature. An " outside " broker is one who
and in other countries outside the British is not a member of the Stock Exchange.
Empire, having a London office, are eligible There are many honourable firms of stock
for membership . brokers who are not members of that
BROKEN ACCOUNT . An account is institution , and , of course, the term “ bucket
said to be “ broken ” when operations upon shops ” do not apply to them .
it are stopped, and all subsequent trans- BUDGET. Thename given to the annual
actions are passed through a new account. statement of the Chancellor of the Exchequer
This takes place, for example, upon the in which he estimates the revenue to be
death of a surety, when a banker wishes to received during the year from existing taxes
preserve his recourse against the estate of to meet the estimated expenditure. Hemay
the deceased . Unless the debtor's account propose increased taxation if additional
is broken , all payments to credit go to revenue is required , or if the estimated
release the surety, and all debits form arevenue is more than the estimated expendi
fresh unsecured advance. A banker cannot ture he may propose reduced taxation or
break an account arbitrarily ; the necessary indicate new schemes of the Government to
circumstances must first have arisen . When- | utilise the excess revenue.
ever possible the written consent of the BUILDING LAND . Building land is, as
customer should be obtained to the opening a rule, one of the most unsatisfactory
of the new account. See remarks under securities which can be offered to a banker.
NOTICE OF MORTGAGE . An account should At the time the security is taken there may,
also be broken on the bankruptcy or insanity perhaps, be a large demand for building land
of a guarantor. (See “ CLAYTON'S CASE , in the neighbourhood , but there is no
COLLATERAL SECURITY, NOTICE OF MORT- guarantee that the demand will continue.
GAGE, PARTNERSHIPS, WINDING UP.) In a very short time it may cease altogether,
BROKERAGE . The charge of so much and, for various reasons, some other district
per cent. or per share made by a broker for be favoured for street extensions. If the
carrying out theinstructions of a client to buy property comes into the banker's hands, he
or sell stocks or shares. (See STOCKBROKER .) may fail to find anyone to purchase it at
BROKERS. Persons who buy and sell anything like its original cost,and the longer
goods, bills, stocks and shares, etc., on behalf it is held the less its value may become.
of other persons. (See BILL BROKER, STOCK- The surrounding houses or works which have
BROKER .) appeared since the security was taken, may
BROKER'S CONTRACT NOTE . (See be objectionable,and no one will be inclined
CONTRACT NOTE - BROKER's .) to build upon the land , and it may become
BRONZE COINS. Bronze coinsare issued practically worthless.
by the Mint for a penny, half-penny and In considering the value of building land
farthing. Copper coins (which were first it should be noted whether any of the adjoin
issued in 1672) were replaced by bronze in ing property owners have established any
116
BUI] DICTIONARY OF BANKING (BUT

rights of light that would interfere with
any buildings which might be contemplated
for erection on the land .
BUILDING LEASE . The following ex-
hibits the general form of aa building lease :
presents contained , it shall be lawful
for the lessor to re -enter upon the said
ground and dwelling houses and the
lessee and sub - lessees to expel and
remove .

This Indenture made the day of And the lessor covenants with the lessee
19 Between hereinafter
called the lessor of the first part that the lessee paying the yearly rent
and hereinafter called the and observing the covenants and agree
lessee of the second part Witnesseth ments shall peaceably hold and enjoy
that in consideration of the rent here the said premises during the time
hereby limited .
inafter reserved and of the covenants
and agreements hereinafter contained A building lease is usually granted for
and by or on the part of the lessee to 99 years. In cases where the period is 999
be paid and performed He the said years, it is practically equal to a freehold .
lessor, etc. (See LEASEHOLD.)
BUILDING SOCIETY. All societies
Doth by this deed appoint and demise formed under the Building Societies Acts,
unto the lessee
1874 to 1894, must obtain a certificate of
All that piece or parcel of ground, etc. incorporation from the Registrar of Friendly
Together with easements and appur Societies.
tenances to the said piece of ground These incorporated societies are to be dis
belonging, tinguished from an unincorporated society
To have and to hold the said piece of formed under the Act of 1836 , and which
ground unto the lessee from the 1st day has not since obtained a certificate of in
.for the term of 99 years, corporation under the 1874 to 1894 Acts.
of March , 19 .

Yielding and paying therefor yearly and A terminating society means a society
every year during the term hereby which by its rules is to terminate at a fixed
limited the yearly rent of date , or when a result specified in its rules
pounds free from all taxes, save only is attained ; a permanent society means a
the landlord's income tax . society which has not by its rules any such
And the lessee covenants fixed date or specified result at which it
shall terminate .
That the lessee will duly pay the said
yearly rent, and all taxes , With respect to incorporated societies,the
And also that the lessee will within
Building Societies Act, 1874 (37 & 38 Vict.
months from the date hereof erect
c. 42), provides as follows :
dwelling houses upon the said ground " Section 15. With respect to the
to the reasonable satisfaction of the borrowing of money by societies under this
said lessor, Act, the following provisions shall have
effect :
And also keep in good and substantial
order and repair the said dwelling “ (1) Any society under this Act may
houses ,
receive deposits or loans, at interest,
And in such good and substantial order within the limits in this Section pro
and repair will on the expiration of the vided , from the members or other
determination of the term hereby persons, or from corporate bodies,
limited peaceably yield and deliver the joint stock companies, or from any
same premises to the lessor, terminating building society, to be
And the lessee will insure the said dwelling applied to the purposes of the
houses, society :
Provided always and it is hereby agreed “ ( 2) In a permanent society the total
and declared that in case the said yearly amount so received on deposit or
rent of or any half-yearly pay loan and not repaid by the society
ment shall be in arrear for the space of shall not at any time exceed two
days, or in case the lessee or his thirds of the amount for the time
sub - lessees shall not faithfully keep all being secured to the society by
the agreements and covenants in these mortgages from its members.
117
BUT) DICTIONARY OF BANKING (BUI

“ ( 3) In a terminating society the total of his judgment, said :- " Persons who deal
amount so received and not repaid with corporations and societies that owe
may either be a sum not exceeding their constitution to or have their powers
such two- thirds as aforesaid , or a defined or limited by Acts of Parliament, or
sum not exceeding twelve months ' are regulated by deeds of settlement or
subscriptions on the shares for the rules, deriving their effect more or less from
time being in force : Acts of Parliament, are bound to know or
“ (4) Any deposits with or loans to a to ascertain for themselves the nature of
society under this Act, made before the constitution, and the extent of the
the commencement of this Act in powers of the corporation or society with
accordance with its certified rules, which they deal. The plaintiffs and every
are hereby declared to be valid and one else who have dealings with a building
binding on the society, but no society are bound to know that such a
further deposits or loans shall be society has no power of borrowing, except
received by such society , except such as is conferred upon it by its rules and
within the limits provided bythis ifindealingwith suchasociety they neglect
section : or fail to ascertain whether it has the power
of borrowing, or whether any limited power
" (5) Every deposit book or acknowledg- it may have has been exceeded, they
ment or security of any kind given must take the consequences of their
for a deposit or loan by a society carelessness .”
shall have printed or written therein A society registered under the Act
of 1836
or thereon the whole of the four- and not incorporated under the Act of 1874
teenthand fifteenth Sections of the has no power of borrowing unless authorised
present Act.” by its rules. Section 1 of the 1894 Act
An overdraft to a building society is a provides that the rules of every society
loan within the meaning of the above under the Building Societies Acts established
Section . or substituting a new set of rules for the
By the 1894 Act, Section 14, the two- existing rules after the passing of this Act
thirds mentioned in the above Section must shall set forth whether the society intends
not include mortgages where, at the date of to borrow money, and, if so , within what
the last balance sheet, payments were limits, not exceeding those prescribed by the
twelve months in arrears, or
upwards ofwhere Building Societies Acts. The 1894 Act
mortgages the society had then been (Section 28) repealed a somewhat similar
in possession for twelve months. provision in the 1874 Act, Section 16, para
• By the 1874 Act, Section 14. “ The graph 2, which enacted that the rules should
liability of any member of any society set forth whether the society intends to
under this Act in respect of any share avail itself of the borrowing powers con
upon which no advance has been made tained in this Act, and, if so, within what
shall be limited to the amount actually limits, not exceeding the limits prescribed
paid or in arrear on such share, and in by this Act. Therefore, where an advance is
respect of any share upon which an advance required by a building society, its rules
has been made shall be limited to the amount should be carefully perused to ascertain ( 1 )
payable thereon under any mortgage or if the society has power to borrow , and to
other security or under the rules of the what extent ; (2) if it has power to mortgage
society ." or pledge. If the society has such powers,
Part of Section 43 is as follows : it is necessary to see that such powers are
10
not exceeded . The security for a loan
If any society under this Act receives is effected by deposit of the members'
loans or deposits in excess of the limits mortgages.
prescribed by this Act, the directors or An advance to a building society should,
committee of management of such society preferably, be made upon a separate loan
receiving such loans or deposits on its behalf account and not upon the ordinary current
shall be personally liable for the amount so account, so that the danger of making
received in excess. " advances in excess of the society's powers to
In Chapleo and Wife v. Brunswick Per- borrow may be avoided .
manent Building Society and Others ( 1881, All cheques should be signed in accordance
6 Q.B.D. 696 ), Bagallay, L. J. , in the course with the rules of the society. A copy of the
118
 BUT) DICTIONARY OF BANKING (BUL

resolution with regard to the opening of insufficiency of any security taken for the
the account, and specimens of the signatures repayment of any advance .
of the persons authorised to sign should be Receipts for any money deposited in the
supplied to the banker. funds of a society are exempt from stamp
By Section 41 of the Building Societies duty, and this is regarded as extending to
Act, 1874 : receipts given to members for sums paid in
“ No rules of any society under this Act, respect of advances made to them in the
nor any copy thereof, nor any power, war regular course of the business of the society.
rant, or letter of attorney, granted or to be This exemption does not apply to receipts
granted by any person as trustee for the given to persons who are not members of
society forthe transfer of any share in the the society. The liability of receipts onthe
public funds standing in his name, nor any backs of cheques is the same as that of other
receipts given for any dividend in anypublic receipts.
stock nor
or any
fund,receipt
or interest When a mortgage to a building society is
bills, , nor anyofentry
Exchequer
in any repaid, the society has power to indorse a
book of receipt, for money deposited in the receipt for the money upon the mortgage
funds of the society, nor for any money deed . The effect of such a receipt is to
received by any member, his executors or vacate the mortgage , " that is, it operates
administrators, assigns, or attorneys, from as a re-conveyance to the mortgagor. This
the funds of the society, nor any transfer of statutory receipt is exempt from stamp duty.
any share, nor any bond or other security (See STATUTORY RECEIPT.)
With respect to unincorporated societies,
or by given
to be to or thereof,
any officer norofany
on account theorder on,
society by Section 89 of the Stamp Act , 1891,the
any officer for payment of money to any exemption from stamp duty conferred by
member, nor any appointment of any agent, the Building Societies Act, 1836 , 6 & 7 Wili.
nor any certificate or other instrumentfor IV , c. 32 ,for the regulation of benefit
the revocation of any such appointment, building societies, shall not extend toany
nor any other instrumentor document what mortgage made after July 31 , 1868, except
ever required or authorised to be given , a mortgage by a member of a benefit build
issued, signed, made, or produced in pur ing society for securing the repayment to
suance of this Act, or of the rules of the the society of money not exceeding £ 500 .
society, shall be subject or liable to or (See SUBROGATION .)
BULL AND BEAR . Names given to the
charged with any stamp duty or duties
whatsoever, provided that the exemption two kinds ofspeculatorson a stock exchange.
shall not extend to any mortgage.' A Bull is one who anticipates a rise in a
With regard to cheques drawn by build certain stock ; he therefore buys in, not
ing societies, the exemption from stamp intending to pay for the purchase but hoping
duty contained in the above Section to sell out later at a profit.
applies > A Bear, on the other hand, expects a
certain security to fall in price, so he sells
( 1 ) When the bankers on whom the stock which he does not possess, with the
cheques are drawn are, by the rules object of buying in before settling day at
of the society , constituted " officers ”
a lower figure, in which case the difference
of the society, and would be his profit. (See BACKWARDATION ,
(2) When it is further directed by the CONTANGO , STOCK EXCHANGE .)
BULLION . Gold and silver in bars or in
rules that payments are to be made the mass . The word is also used when
by means of cheques, and
speaking of large quantities of gold and silver
(3) When the cheques are payable to coins, especially when regarded by weight.
members of the society . Bullion is said to have been originallythe
Cheques drawn by the society in favour name of the office or mint where the metal
of non -members are not exempt. was stamped into coins.
Bankers who are constituted officers By the Bank Charter Act, 1844, Section 4 ,
of a society should be indemnified by the " all persons shall be entitled to demand from
society from all losses, costs, expenses, etc., the IssueDepartment of the Bank of Eng
which they may incur in the execution of land, Bank of England notes in exchange for
the office, and not be answerable for any gold bullion, at the rate of £ 3 17s. 9d. per
act or default of any other officer, or for the ounce of standard gold : provided always
119
BUL ) DICTIONARY OF BANKING (CAL
that the said Governor and Company shall
in all cases be entitled to require such gold Jan. May | Aug. Feb. June Sept. April 1905 1933
bullion to be melted and assayed by persons Oct. Mar. Dec. July 1911 1939
Nov. 1922 1950
approved by the said Governor and Com
April Jan. May Aug. Feb. June Sept. 1900 1923
pany at the expense of the parties tendering July Oct. Mar, Dec , 1906 1934
such gold bullion . ” The bank notes can be Nov, 1917 1945
immediately exchanged for sovereigns at the Sept. April | Jan. May | Aug. Feb. June 1901 1929
rate of £ 3 17s. 10 d . per ounce. The differ- Dec. July Oct. Mar. 1907 1935
Nov. 1918 1946
ence of 14d. per ounce between gold bullion
and gold coins represents the expenses and June Sept. April Jan. May | Aug. Feb. 1902 1930
Dec. July | Oct.
loss of interest upon the bullion before it is Mar. 1913 1941
Nov. 1919 1917
turned into coins .
Under the Coinage Act of 1870, anyone Feb. June Sept. April Jan. May | Aug. 1903 1931
Mar. Dec. July | Oct. 1914 1942
has the right to take bar gold , if of sufficient Nov. 1225
fineness, to the Mint and have it coined , free Aug. Feb. June Sept. April | Jan. May 1909 1937
of expense, at the rate of £ 3 17s. 101d . per Mar.
Nov.
Dec. | July | Oct. 1915 1043
1926
ounce of standard gold , provided that the
value is notless than £ 20,000 . but the owner May | Aug. Feb. June Sept. April Jan. 1910 1938
of the gold bullion has to wait for payment Mar.
Nov.
Dec. July Oct. 1921 1949
1927
until it is coined . Anyone requiring coins
for gold bullion would take it to the Bank Sun. M. Tu. W. Th . F. Sat. 1 8 15 22 29
M. Tu . W. Th . F. Sat. Sun.2 9 16 23 30
of England , where , as stated above, notes Tu . W. Th . F. Sat. Sun. M. 310 17 24 31
W. Th , F. Sat.
at the rate of £ 3 17s. 9d. per ounce will be Th . F. Sat. Sun.
Sun.
M.
M.
Tu .
Tu .
W.
U18
5121.28
25
given at once . F. Sat. Sun. M. Tu . W. Th . 6132027
BULLION POINTS . The same as “ Specie Sat. Sun. M. Tu , W. Th . F 1421/28

Points ” (q.v.).
BUSINESS NAMES See REGISTRATION LAP YEARS
OF BUSINESS NAMES . Jan. Oct. May Feb. Mar. June Sept. 1928
BUYIN G IN. A Stock Exchange term . April Aug. Nov, Dec.
Wher e securities have not been delivered by July
a seller to a purchaser at the appointed time, Sept. Jan. Oct. May Feb. Mar. June 1912
> Dec. April Aug. Nov. 1940
they may be " bought in " by an official of July
the Stock Exchange. In the case of regis
tered securities if not delivered within ten June Sept. Jan. Oct. May Feb. Mar. 1924
Dec. April Aug. Nov.
days they may be bought in against the July
seller on the eleventh day after the Ticket Mar. June Sept. Jan. Oct. May Feb. 1908
day, or on any subsequent day, and the loss Nov. Dec. April Aug. 1936
occasioned by such buying in must be borne July
by the seller. (See SELLING OUT, STOCK Feb. Mar. June Sept. Jan. Oct. May 1920
EXCHANGE.) Aug. Nov, Dec. April 1948
July
CABLE TRANSFER . A payment of May Feb. Mar. June Sept. Jan. Oct. 1904
Aug. Nov. Dec. April 1932
money effected by a banker inone country July
upon instructions received by cable from Oct. May Feb. Mar. June Sept. Jan. 1916
a banker in another country. The instruc Aug. Nov. Dec. April 1944
tions are transmitted in code. July
CALENDAR . From the following tables Sun. M. Tu . W. Th . F. Sat. 1 8 15 22 29
the day of the week for any date from 1900 M. Tu . W Th . F. Sat. Sun. 2 9 16 23 30
Tu . W. Th , F. Sat. Sun. M. 3 10 17 24 31
till 1950 can easily be ascertained . The one w . Th . F. Sat. Sun. M. Tu . 411 18 25
Th . F. Sat. Sun. M. Tu . W. 5 12 19 26
table contains ordinary years, the other F. Sat. Sun. M. Tu . W. Th . 6 13 20 27
table leap years. Sat. Sun. M. Tu . W. Th , F. 1714 21 28
If, for instance, it is required to know what
day of the week March 13, 1900, was, find CALEYS. A Stock Exchange name for
the year 1900 in the year column, then look Caledonian Railway ordinary stock .
to the left to find the month of March , and CALL . A Stock Exchange term meaning
at the bottom of the column containing that the right to buy a specified security at a
month will be found the day of the week, certain price within an arranged period .
Tuesday, in a line with the 13th on the right. (See OPTIONS, STOCK EXCHANGE .)
120
CAL ) DICTIONARY OF BANKING (CAL

CALL LETTER . (See Calls.) upon any shares held by him ; and
CALL MONEY. (See MONEY AT CALL upon all or any of the moneys so
AND SHORT NOTICE .) advanced may ( until the same
CALLED BOND . When a bond has been would , but for such advance , become
" called in " for payment on a certain date, presently payable) pay interest at
it ceases to carry interest from that date . such rate (not exceeding, without the
CALLING OVER. “ Calling over ” is an sanction of the company in general
essential part of the work of a bank office . meeting, six per cent.) as may be
The day books should be called over daily agreed upon between the member
with the current account ledgers and other paying the sum in advance and the
books into which the items have passed , each directors."
entry, as it is called out, being ticked, with There is usually a clause in the articles,
ink, in both books. In order that the calling providing for the charging of interest on
over may be as effectual as possible, it is overdue calls, and giving the directors
usually carried out, when practicable, by power to forfeit the shares. (See under
clerksother than those concerned in writing | LIEN.)
up the day books or posting the ledgers. A company can sue a member for payment
CALLS. Shares may be either fully paid of a call (it being a specialty debt, see Section
or only partly paid . If the latter, the 14 under ARTICLES OF Association ) at any
holders are liable , when called upon by the time within twenty years. (See CAPITAL,
company, to pay up the amountsor calls ” | COMPANIES, SHARE CAPITAL.)
as they are made. Calls should be made in Even after a shareholder has sold his
accordance with the company's articles of partly paid up shares, he continues liable to
association or the agreement when the shares a certain extent, in the event of the company
were first issued . A limited company may, being wound -up within one year after the
by specialresolution , declare that any portion shares have been transferred . (See Con
of its uncalled capital shall not be called up TRIBUTORIES .)
except in the event of the company being The following is the standard call letter as
wound up. ( See RESERVE LIABILITY .) recommended by the Council of the Institute
Some of the clauses of Table A with respect of Bankers :
to calls ( see Section 11 of the Companies Call Letter. — Size 13 in. by 84 in. The docket one-quarter of
(Consolidation) Act , 1908, under ARTICLES the total length of the form .
OF ASSOCIATION) are as follows : CALL LETTER.
“ 12. The directors may from time to time No ......
make calls upon the members in re- Space for name and IMPERIAL TRUST, LIMITED.
spect of any moneys unpaid on their address of Share 983 CORNHILL,
holder, to be filled
shares, provided that no call shall in by the Company. LONDON , E.C. ,
exceed one -fourth of the nominal ..19
amount of the share, or be payable
at less than one month from the Call of per share on issue of shares.
last call ; and each member shall Making the shares paid .
(subject to receiving atleast fourteen Sir or Madam ,
days' notice specifying the time or I have to inform you that the Directors,
times of payment) pay to the com by a Resolution of the Board dated
pany at thetime or times so specified have made aa Call as set forth above.
the amount called on his shares. The amount due from you in respect of
“ 13. The joint holders of a share shall be the ...... Shares registered in your name
jointly and severallyliable to pay is to ....which must be sent on or before
all calls in respect thereof. together with this cntire Notice,
“ 16. The directors may make arrange to the Company's Bankers, the Bank of
ments on the issue of shares for a London Limited , 83, Lombard Street,
difference between the holders in London, E.C., who will return the Notice
the amount of calls to be paid and duly receipted.
in the times of payment. [Particulars should be given here if the Certificate requires
“ 17. The directors may, if they think fit, indorsement.)
receive from any member willing to By Order of the Board ,
advance the same all or any part of
the moneys uncalled and unpaid Secretary.
121
CAM ] DICTIONARY OF BANKING (CAN

Cheques should be made payable to be made near to the cancellation that it has
e
BEARER and crossed
Not Negotiabl . been cancelled in error," and the words
should be initialled, or signed, by the banker
1
who has made such cancellation . With
If altered from Order to Bearer " regard , however, to accidentally cancelled
the alteration should be signed by the Drawer. bills which bear foreign indorsements, by a
custom of the Clearing House “ they are
RECEIVED for account of the IMPERIAL only accepted as ' Returns ' under protest,
TRUST, LIMITED, the amount of the inasmuch as in certain foreign countries the
above -mentioned Call as stated . return of cancelled documents is illegal.”
For BANK OF LONDON LIMITED , Impressed
Slamp The holders or their bankers should give
24 . notice to the bankers who cancelled thebill
Cashier . that they hold them liable for any conse
Date ..... 19 quences that may arise by reason of the
cancellation . ( Questions on Banking Practice .)
No ...... Where a cheque is torn in two a banker
treats it as cancelled and will not pay it ,
IMPERIAL TRUST, LIMITED. unless the mutilation is confirmed by a
banker as accidental. (See MUTILATED
Call of per share on issue of shares .
CHEQUE OR Bill. )
t When a cheque is paid , it is usually
cancelled by the drawer's signature being
Date . .... 19 marked through with ink, and the date of
(See STANDARD FORMS. ) payment either written or stamped upon the
CAMBIST. A person who deals in foreign face of the cheque. A common method of
moneys, notes and bills of exchange. One cancellation is to use a rubber stamp bearing
who is skilled in the value of foreign moneys the word “ Paid ” in bold letters and the
and the operations of exchange. date . Some bankers cancel by punching a
CANADAS. A Stock Exchange name for few holes in the cheques, but this is objec
Canadian Pacific Railroad securities. tionable as the holes often obliterate a figure
CANCELLATION OF BILL OF or part of a signature.
EX-
CHANGE . A bill of exchange is discharged When a bill is paid , the acceptor's signature
when it is intentionally cancelled . The Bills of is cancelled . In the case of a dishonoured
Exchange Act, 1882, Section 63, provides :- bill, a banker usually cancels his own in
“ (1) Where a bill is intentionally can- dorsement.
celled by the holder or his agent, The cancellation of a signature should be
and the cancellation is apparent decisive, but should not make the signature
thereon, the bill is discharged. illegible.
“ (2) In like manner any party liable on The cancellation is effected , in the case of
a bill may be discharged by the the cheque, by the banker upon whom it is
intentional cancellation of his signa- drawn, and in thecase of a bill by the banker
ture by the holder or his agent. In with whom the bill is domiciled .
such case any indorser who would It is usual for the paying cashier to initial
have had a right of recourse against all the paid cheques and bills which pass
the party whose signature is can- | through his hands.
celled , is also discharged. Where cheques are paid by one bank ,
“ ( 3) A cancellation made unintentionally, under authority from another bank, the
or under a mistake, or without the former bank cancels the drawer's signature
authority of the holder , is in- and marks the cheque “ paid under order."
operative ; but where a bill or any The signature on a receipt should not be
signature thereon appears to have cancelled, e.g. on the back of a deposit
been cancelled , the burden of proof receipt, or on the form used when with
lies on the party who alleges that drawing money from a deposit book account.
the cancellation was made un The word cancellation " is from the
intentionally, or under a mistake, Latin cancello, to make trellis, so that to
or without authority." cancel a document is literally to make trellis
Where a bill, or cheque, has been acci- or lattice work upon it. (See CANCELLED
dentally cancelled by a banker, a note should CHEQUES AND BILLS .)
122
CAN ) DICTIONARY OF BANKING [САР

CANCELLATION OF STAMPS. The stamp, the date being that of the day of
Stamp Act, 1891 , provides as follows :- payment. The signatures should not be
“ Section 8. (1) An instrument, the duty obliterated, and the date stamp should be
upon which is required or permitted distinct.
by law to be denoted by an adhesive It is the practice of many London bankers
stamp, is not to be deemed duly to return cancelled cheques to a customer
stamped with an adhesive stamp, each time he gets his pass -book.
unless the person required by law In most country banks, however, the
to cancel the adhesive stamp cancels paid vouchers are not, as a rule, given
the same by writing on or across the up to customers, unless specially asked
stamp his name or initials, or the for. In cases where they are given up, an
name or initials of his firm , together acknowledgment is obtained from the
with the true date of his so writing, customer that the entries in the pass- book
or otherwise effectively cancels the are correct, or a confirmation of the balance
stamp and renders the same in- is taken .
capable of being used for any other The cancelled cheques of each customer
instrument, or for any postal pur- are usually kept in separate bundles,sorted
pose, or unless it is otherwise proved in order of date of payment, each bundle
that the stamp appearing on the containing the vouchers for three, six, or
instrument was affixed thereto at twelve months, as may bemost convenient.
the proper time. The paying-in slips are retained by the
“( 2) Where two or more adhesive stamps banker and are not given up with paid
are used to denote the stamp duty cheques. They are sorted either along with
upon an instrument, each or every the cheques, or in separate bundles.
stamp is to be cancelled in the If a cancelled cheque is required as evi
manner aforesaid . dence in a court of law, the drawer, as being
" (3) Every person who,being required by the owner of the paid cheque, although it
law to cancel an adhesive stamp, is in the custody of the banker, must take
neglects or refuses duly and effec- steps to obtain it from the banker. This,
tually to do so in the manner afore- in practice, would never be refused , if a
said , shall incur a fine of ten receipt is given to protect the banker. A
pounds." refusal to hand over a cheque would necessi
If any bill of exchange, payable on demand tate the service of a subpoena upon the
or at sight or on presentation ,or not exceed - banker to produce it. (See CANCELLATION
ing three days after date or sight, is presented OF BILL OF EXCHANGE.)
for payment unstamped, the person to whom
it is presented may affix thereto an adhesive
SCANPACS.EXistockExchange name for
Canadian-Pacific Railroad securities.
stamp of two pence, and cancel the same. CAPITAL . In the early stages of civilisa
The two pence may be deducted from the tion, sheep and cattle acted as a currency .
amount of the cheque or bill, or charged in “ Being counted by the head, the kine was
account. (Section 38.) called capitale, whence the economical term
CANCELLED CHEQUES AND BILLS. capital, the law term chattel, and our common
When a cheque is paid , it becomes the pro- name cattle (Jevons) .
perty of the drawer, but the banker is en- In a joint stock company the capital is
titled to keep it as a voucher till the account the sum subscribed by the members of the
is settled , or the customer agrees that the company — that is, the shareholders — for the
entries in the pass-book are correct. A purposes of the business. The amount
paid cheque is useful evidence for the drawer which is authorised by the memorandum of
(0
of the payment of the money. It is also association is the “ authorised ,” “ nominal,"
.
evidence for the banker that he has repaid or “ registered capital. Of the nominal
money belonging to the drawer, to the capital there is often only a part of it
amount of the cheque
. issued, called the “ issued " capital , the
00
The cancellation is usually effected by remainder being referred to as unissued ."
the drawer's signature on a cheque and the Further portions may be issued from time
acceptor's signature on a bill being marked to time, until the full nominal capital has
through with ink, often with the initials of been issued. Of the capital which has been
)
the officer responsible, and an impression “ issued (called also the " subscribed "
is made on each document of the paid date capital), only that part of it is paid up, or
123
CAP ) DICTIONARY OF BANKING (CAS

subscribed by the shareholders, which the CARAT. A measure by which goldsmiths

directors have “ called up." The part which and assayers denote the fineness of gold .
has been called up and paid is called the Any portion of gold is supposed to be
" paid up ." capital, the remaining part being divided into twenty -four parts, each part
termed the uncalled capital; and it being called a carat, and if it is all pure gold
remains unpaid until a " call " is made for it is said to be “ 24 carats " fine." English
it by the directors. If the whole has been gold coins contain eleven parts pure gold and
called up, the shares are said to be “fully one part of copper ; that is, standard gold
paid . ” A company may mortgage its is eleven -twelfths fine, and eleven -twelfths
uncalled capital . Of the uncalled capital, a of twenty -four carats equal twenty -two
certain portion may, if the company has carats fine.
so resolved, form a reserve liability, which The word is, by some, supposed to be de
is not to be called up except in the event rived from the native name of a tree, the
of the company being wound up. This seeds of which, owing to their uniformity in
reserved capital cannot be mortgaged. size, were used for weighing gold. A carat
(Section 59, Companies (Consolidation) Act, does not now represent any particular
1908 , see RESERVE LIABILITY.) For weight, but merely states the proportion of
example : gold there is in any given weight. The
Nominal ( or Authorised, or Registered) carata used
Capital, 20,000 shares, £ 5 each £ 100,000 has fixedforweight
weighing diamonds,
equal however,
to 3.17 grains
Subscribed ( or Issued ) Capital, 10,000 Troy.
shares £6 each £ 50,000
Unissued," 10,000 shares, £5 each £ 60,000 CARRY OVER ; CARRYING OVER .
Thesubscribed capital may bedivided into :- On the Stock Exchange to “ carry over
Paid - up Capital, 10,000 shares, £2 10s. means to continue a bargain until next
each £ 25,000 account, instead of paying for stock bought,
Uncalled
each :
capital, i0,000 shares, £ 210s. or delivering stock which has been sold , as
the case may be. In the former case the
Callable, £ 1 10s. per share £ 16,000
Reserve (callable only in a winding speculator may require to pay “ contango
up), El per share : £ 10,000 (q.v.) and in the latter, backwardation
H. D. Macleod defines capital as an (q.v.). (See STOCK EXCHANGE.)
economic quality used for the purpose of CARRYING OVER DAY . The first day
profit.” . Under the name of capital are of the settlement on the Stock Exchange.
included money, goods, land, personal skill. (See CONTANGO Day.)
energies, labour, credit, and anything that is CASE OF NEED . (See IN CASE OFNEED.)
used to produce a profit. But wealth, in CASH . Actual coins, Bank of England
whatever form ,if unemployed, is not capital. notes and the notes of other banks are
There are two species of capital, circulating treated as cash, but a banker's own notes
or floating capital and fixed capital. Circu- would not, in a balance sheet, form part of
lating capital, in the words of John Stuart
06
the cash on hand, as they would be deducted
Mill, does its work not by being kept but from the balance of the note account on the
by changing hands.” “ This portion of other side of the sheet, in order to show the
capital requires to be constantly renewed by actual amount in circulation.
the sale of the finished product and when Cash originally meant that which was
renewed is perpetually parted with in buying encaissé, that is, put into a chest or till.
materials and paying wages ." Fixed capital (See COINAGE. )
produces its effect not by being parted with CASH ACCOUNT . An account in the
but by being kept. Wealth expended in land, general ledger to which the totals (debits
buildings, docks, roads,machinery, railways, and credits) of each day's transactions are
etc., is fixed capital. (See BALANCE SHEET, passed. The balance of the account repre
SHARE CAPITAL .) sents the amount of cash on hand . Credits
CAPITAL ACCOUNT. The account to other accounts are debited to cash ac
which is concerned solely with the capital or count, and debits are credited .
funds subscribed by the shareholders in a In Scotland the term signifies a customer's
bank or other company, for the purpose of account on which a cash credit has been
carrying on the undertaking, or with the granted . It is practically the sameas an
funds or assets put into a private business account in England on which a limit of over
by its proprietor or the partners in the draft is allowed. (See BOND OF CREDIT,
business . CASH CREDIT.)
124
CAS] DICTIONARY OF BANKING (CAU

CASH BALANCE BOOK . This book , The order must be indorsed by the banker
which is written up by the first cashier at to whom it is payable, or, if payable to the
the close of business each day, contains par- drawer's order, by the drawer.
ticulars of all the cash on hand, obtained by The cash order is sent to a banker in the
combining the details of each cashier's town where John Brown lives for collection ,
till and the reserve of cash in the strong and the banker sends out a messenger
room . The total should agree with the to John Brown's address and presents the
balance as shown in the day book and the order for payment. It is expected that the
cash account in the general ledger. order will be paid in cash , though in some
CASH BONUS. A bonus upon a life cases payment is received by cheque, when
policy which is paid in cash , instead of it is known that the drawer is perfectly good
being used to reduce the amount of the pre- and the cheque can be collected the same
mium or to increase the sum ultimately day. When a cheque is taken the collecting
payable under the policy. (See BONUS, banker frequently attaches the cash order
LITE POLICY .) to the cheque ; and the banker on whom the
CASH BOOK . A book which , in some cheque is drawn hands over the cash order
banks, contains aa record of all cash transac- to the drawer of the cheque when it is
tions. In large offices there may be received paid . In some districts it is customary for
cash books and paid cash books. In other the drawee, when the order is presented,
banks thecash book is merely for the specifi- to accept it payable at his bankers in the
cation of the cash held in the bank each night. same town . When this is done, it should be
The day book is in some banks called passed through the local clearing on the same
the cash book. (See Day Book.) day. The remitter of the order often gives
CASH CREDIT. A term commonly used instructions that, if it is not paid on the day
in banks in Scotland, to describe an arrange- of receipt, it may be held over till the follow
ment under which a customer is allowed an ing day. In the absence of such instruc
advance up to a certain limit, against a tions the remitter should be advised if a cash
“ bond of credit (q.v.) by one or more order is held over . If the drawee is not at
sureties, or cautioners as they are called in home when the messenger calls a note is left
Scotland. The customer need not take the that the order is at the bank and requires
whole advance at once, but may draw the his attention .
amount as required . Cash orders are not, as a rule, accepted by
Thebond of credit is signed by the debtor | the drawee, and consequently he cannot be
as well as by the sureties, and the effect of it sued upon them , but if he gives his cheque
is, practically, to make all the parties debtors in exchange, and it is dishonoured, he can
to the bank, although the person in whose be sued upon the cheque.
name the account stands is the real debtor. Cash orders received for collection should
CASH CREDIT BOND . Same as “ Bond not be credited on the day of receipt
of Credit ” (q.v.) . to the bank sending them, in cases where
CASH ORDER . A cash order is a bill of the orders are being held over till the next
exchange on demand drawn by one person on day.
another. For example, a wholesale dealer, Where cash orders are numerous, they give
John Jones, who has supplied goods to, say, great trouble to a banker who has to collect
John Brown, a shopkeeper, draws a cash order them , and some bankers decline to undertake
upon him , usually in the following form :- the work .
English Street, The stamp duty upon a cash order is two
Carlisle, pence.
July, 19 CASH SHEETS . Loose sheets on which
£10. are recorded all the transactions in a bank
On demandpay to the British officesheets
the during the day. At stated intervals
arebound into book form . Cash
2d . Bank, Ltd., or order the sum sheets in some banks practically take the
of Ten pounds sterling for place of a day book orcash book .
value received . CASTING . The act of summing -up
Το JOHN JONES. figures. When a column has been cast -up,
Mr. John Brown, the total is often called “the casting .”
Coney Street, CAUTIONARY OBLIGATION . In Scot
York . land, an obligation or undertaking by a
125
CAU ) DICTIONARY OF BANKING (CBR

cautioner, or surety, that he will be respon CAPITAL

sible for a certain amount, if the debtor, who £ in Preference shares of £1 each , Nos.
is also a party to the bond, fails to repay the 1 to
debt. (See BOND OF CREDIT .) in Ordinary shares of £1 each , Nos.
CAUTIONER . In Scotland , a surety, or £ 1 to
guarantor, who signs a bond along with the Total, £
debtor for a cash credit, or overdraft, to
the debtor. ( See BOND OF CREDIT, CASH
SHARE CERTIFICATE
CREDIT .)
CAVEAT. (Latin, Let him beware .) A This is to certify that
notice or warning given to a public official of
by an interested party, as, for example,where is the Registered Holder of of the
a caveat is given to the Yorkshire Deeds above named Ordinary shares of £ l each ,
Registry by a person claiming to be entitled numbered to all inclusive,
to an interest in certain lands. The caveat in John Jones & Company, Limited , sub
is registered, and remains on the books as a ject to the Memorandum of Association and
warning to anyone who contemplates deal- Regulations of the Company, and that each
ing with theproperty. (See YORKSHIRE of the said shares is fullypaid up.
REGISTRYOP DEEDS
.) Dated this day of . 19
CENT. (See FOREIGN MONEYS - CANADA,
CEYLON, HOLLAND, MAURITIUS, UNITED
STATES .) Secretary
}Directors.
CENTAVO . (See FOREIGN MONEYS
PORTUGAL .) The certificate may have a foot-note to the
CENTESIMI. (See FOREIGN MONEYS— following effect :
ITALY .) “ The company will not transfer any shares
CENTIME . (See FOREIGN MONEYS— BEL- without the production ofthe certificate relat
GIUM, FRANCE, SWITZERLAND .) ing to such shares, which certificate must be
CENTIMOS. (See FOREIGN MONEYS— surrendered before any deed of transfer,
SPAIN .) whether for the whole or any portion thereof,
CENTRAL ASSOCIATION OF BANKERS. can be registered , or a new certificate issued
)
This Association was formed in 1895 to in exchange."
unite the committee of the London Clearing It is to be noted, however, that on some
Bankers, the West End London Banks and certificates the foot-note may take the
the Country Banks of the United Kingdom . following form :
The Association was merged in the British “ This certificate is not required to be
Bankers' Association in December, 1919. delivered up on transfer of the shares, and
(See BRITISH BANKERS' ASSOCIATION . ) does not therefore constitute document
CERTIFICATE . The document which is of title to the shares or any evidence that
issued by a company, to a member of the they remain in the above name. Shares are
company , specifying the shares or stock held only transferable on forms prepared and
.

by him. It is often signed by two direc - issued by the company at the request of the
tors, countersigned by the secretary or transferor ."
manager, and impressed with the company's In a few companies, a separate certificate
seal. Certificates are of many different was originally issued for each share . When
sizes and usually papers of different colours any of the shares are transferred , instead of
are used for the various classes or issues of fresh certificates being issued the old ones
shares and stocks. are simply indorsed with the transfer, and
The following is a specimen of a certifi- the old certificates given to the transferee, the
cate : transfer being registered in the company's
books. Occasionally certificates of this
ORDINARY SHARE CAPITAL description may be found which , though the
Certificate No.
shares have been transferred from the person
named in the body of the certificate, do not
give any indication, by indorsement or
JOHN JONES & COMPANY, Limited , otherwise, of the transfer. The only way
incorporated under the Companies Acts, to ascertain who is the registered holder is to
1908 to 1917 . write to the company. In other cases where
126
CER ) DICTIONARY OF BANKING ( CER
the same certificates pass from one holder to manager, secretary, and other officer
another, the company issues a transfer certi of the company who is knowingly a
ficate ( to accompany the old certificates) party to the default, shall be liable
certifying that a deed of transfer duly to a fine not exceeding five pounds
executed and attested and stamped as re for every day during which the
quired by law , dated from to default continues."
conveying shares numbered A certificate does not always show how
from to has been deposited much is paid up per share, and this is an
in the office of the company and registered in important point when the question of
their books on of 19 ." security is being considered .
Clause 6 of Table A (see Section 11 of the Where certificates are lodged as security, a
Companies (Consolidation) Act, 1908, under blank transfer (q.v.) and qualifying agree
ARTICLES OF ASSOCIATION ) provides :- ment (9.v.) are taken by some banks, but
“ Every person whose name is entered the most satisfactory way is to take a com
as a member in the register of mem- pletedtransfer andqualifying agreement and
bers shall, without payment, be have the shares registered in the names of the
entitled to a certificate under the nominees of the bank. (See TRANSFER OF
common seal of the company specify- SHARES.) If, however, a banker does not
ing the share or shares held by him wish to register at once, he often takes a
and the amount paid up thereon, fully completed transfer with qualifying
provided that in respect of a share agreement and gives notice of his charge to
or shares held jointly by several the company. When that is done and he
persons the company shall not be retains possession of the certificate, he has,
bound to issue more than one certifi- | as a rule, a good security. A simple deposit
cate, and delivery of a certificate for of certificates as security, even without a
a share to one ofseveral joint holders memorandum of deposit, constitutes an
shall be sufficient delivery to all." equitable mortgage, and the banker can ,
A certificate under the common seal of the when necessary, apply to the Court for
company is prima facie evidence ofthe title
power to sell. In nearly all cases , the certi
of the member to the shares or stock . (Section ficate must be surrendered before a transfer
23 of the above Act. See SHARE CAPITAL.) of the shares can be effected . There are ,
Before an official quotation, on the London
however, several exceptions, as certificates
Stock Exchange, for stocks and shares can need not be produced when transferring
be obtained, the committee require that National Bank shares , Provincial Bank of
the certificates must conform to certain Ireland shares, and Royal Exchange Assur
conditions. (See QUOTATION ON LONDON ance Corporation stock . It maybe men
STOCK EXCHANGE .) tioned that the Grand Junction Canal Co.
With regard to the delivery of certificates does not issue certificates at all.
and debentures by a company, Section 92 It is to be remembered that even a foot .
of the Companies (Consolidation) Act, 1908 , note upon a certificate that no transfer of
provides that : the shares will be registered without produc
“ (1) Every company shall, within two tion of the certificate is of novalueinacase
months after the allotment of any of fraud. In Rainford v. J. Keith and
of its shares, debentures, or deben- Blackman Co. , Ltd. ( 1905, 1 Ch. 296) , it
ture stock, and within two months was held that the foot-note did not consti
after the registration of the transfer tute a contract and was not binding on the
of any such shares, debentures, or company . This case was followed and its
debenture stock , complete and have principle approved by Mr. Justice Channell
ready for delivery the certificates of in Guy v. Waterloo Brothers and Layton
all shares, the debentures, and the (1909, 25 T.L.R. 515) .
certificates of all debenture stock A certificate does not require a stamp.
allotted or transferred , unless the In cases where a memorandum of deposit
conditions of issue of the shares, | under hand of certificates is taken the stamp
debentures , or debenture stock duty is sixpence ; if under seal, the duty is
otherwise provide. the same asfor a mortgage. (See EQUITABLE
" ( 2) If default is made in complying with MORTGAGE.) As to foreign and colonial share
the requirements of this Section, certificates, see MARKETABLE SECURITY.
the company, and every director, When a certificate has been lost and the
127
CER ) DICTIONARY OF BANKING . (CER

owner has obtained a duplicate, he should , CERTIFICATE OF DEDUCTION OF

in the event of the document being subse- INCOME TAX . (See INCOME Tax.)
quently found, surrender it to the company. CERTIFICATE OF INCORPORATION . On
If the original certificate should, afterwards, the registration of the memorandum of
be given to a banker as security, unless he association of a company, the registrar of
registers it in his own name or gives notice companies shall certify under his hand that
to the company , he may eventually discover the company is incorporated, and in the case
that the shares have been sold on surrender of a limited company that the company is
of the duplicate. limited . From the date of incorporation,
It is also possible for a certificate to be mentioned in the certificate, the subscribers
apparently in order and yet, on inquiry, of the memorandum , and others who may
to be found to be of no value, on account of become members, shall be a body corporate,
the shares having been sold by the company capable of exercising all the functions of an
to satisfy a lien ; and in some cases where incorporated company, and having per
shares have been converted, the old certi- petual succession and a common seal, with
ficate is sometimes, for one reason or another, power to hold lands, but with such liability
not handed over to the company . on the part of the members to contribute to
Where a certificate has been issued in the assets of the company, in the event of its
pursuance of a forged transfer, see FORGED being wound up, as is mentioned in the
TRANSFER . Companies (Consolidation) Act, 1908 .
Loss of Stock Certificate. The Bank of Such a certificateisconclusive evidence
England , before authorising the issue of a that all the requirements of the Act, in
duplicate in the event of the loss or destruc- respect of registration and of matters pre
tion of a stock certificate, may require :- cedent and incidental thereto , have been com
(a) Evidence to the satisfaction of the plied with , and that the association is a com
Bank of the loss or destruction and owner- pany authorised to be registered and is duly
ship of the certificate ; and (b) a delay of registered under the Act. ( See ARTICLES OF
not more than one year from the date of the 'ASSOCIATION,MEMORANDUM OFASSOCIATION .)
loss or destruction ; and (c) the advertise- The regulations regarding the commence
ment of the loss or destruction in two or ment of business by a public company and
more London or Dublin daily papers (as the the exercise of any borrowing powers are
case requires) ; and ( d) either the transfer of contained in Section 87 of the Companies
a sum of stock, of a description approved (Consolidation ) Act, 1908. See that Section
by the governor or deputy governor of the under COMPANIES. A private company is
Bank, equivalent to the market value on the entitled to commence business immediately
day of transfer of the lost or destroyed after incorporation. (See CERTIFICATE TO
certificate, and at least six and a half years' COMMENCE BUSINESS.)
dividends thereon, into the joint names of Any person may inspect the documents
the governor and deputy governor, by way kept by the registrar, on payment of a fee of
of security; or the execution of a bond of one shilling, and any person may require a
indemnity in which the owner shall be joined certificate of the incorporation of any
by one or more responsible persons. (The company, or a copy or extract of any docu
National Debt (Stockholders' Relief) Act, ment, to be certified by the registrar, on
1892, Section CERTIFICATES
7 , s.s. 1.) (See AMERICAN payment of five shillings for a certificate of
RAILROAD , COMPANIES, incorporation and sixpence for each folio of a
SHARE CAPITAL .) certified copy or extract. (See REGISTRAR
CERTIFICATE OF BONDS. A certificate OF COMPANIES.)
issued to the holder of registered bonds The form of the registrar's certificate is as
stating that certain bonds have been follows :
registered in his name. " I hereby certify that the
CERTIFICATE OF CHARGE . A certific Company, Limited , is this day incorporated
cate, under the seal of the Land Registry, under the Companies Acts, 1908 to 1917 ,
certifying the registration of a charge upon and that the Company is limited.
land . A deposit of such a certificate is “ Given under my hand this day
equivalent to a lien created by the deposit of of
a mortgage deed of unregistered land. .
Notice of the deposit must be given to the "Registrar of Joint Stock Companies.”
Registrar. ( See LAND REGISTRY .) (See COMPANIES .)
128
CER ) DICTIONARY OF BANKING (CER

CERTIFICATE OF INSCRIPTION . A Given under my hand at the Custom

certificate of inscribed stock . It is of value House,
as a memorandum only, the stockholder's Port of this day of
title being the entry in the books of the 19
bank where the stock is registered . (See
NATIONAL DEBT .) Chief Officer of Customs and Excise ,
CERTIFICATE OF MORTGAGE OF SHIP . Port of
A registered owner, if desirous of disposing A certificate of origin may also be issued
by way of mortgage or sale of the ship or by a Chamber of Commerce .
share in respect of which he is registered , at The object of the certificate is to satisfy
any place out of the country in which the an importer in certain foreign countries that
port of registry of the ship is situate, may the goods he is to receive are of British
apply to the registrar, and the registrar shall origin or manufacture .
thereupon enable him to do so by granting CERTIFICATE OF PROTEST . (See PRO
a certificate of mortgage or a certificate of TEST .)
sale . (Section 36 , Merchant Shipping Act, CERTIFICATE OF REGISTRATION . A
1894). certificate given by the registrar of com
The instrument gives particulars of the panies of any mortgage or charge registered
ship and an account of mortgages or certifi- in pursuance of Section 93 of the Companies
cates ofmortgages granted in respect of the (Consolidation) Act, 1908 (see REGISTRATION
ship . The owner of the shares in the ship OF MORTGAGES AND CHARGES) , and stating
appoints an attorney to mortgage the shares, the amount thereby secured . The certificate
and declares that the money to be raised is conclusive evidence that the requirements
under the power shall not exceed a specified of the Section as to registration have been
sum and that the rate of interest shall not complied with. A copy of every certificate
exceed a certain rate. He also declares that of registration is to be indorsed by the
the power of mortgaging may be exercised company on every debenture or certificate of
at and that the power shall not be debenture stock which is issued by the
exercised after months from the date company, and the payment of which is
hereof. secured by the mortgage or charge so
The instrument is signed and sealed by registered . (See COMPANIES.)
the owner, and then follows the registrar's CERTIFICATE OF SEARCH . A certifi
certificate : cate issued by the Registrar of a Deeds
“ I registrar of hereby Registry, in response to an application for
an official
certify that theabove written particulars search ofthesearch, certifying
Register hasbeenthat an, official
made within
relating totheshipand the title thereto are the periodnamed bythe applicant,forall
correct ; and I further certify thatthe said
owner has duly subscribed and affixed his documents registered in connection with the
specified lands, and giving a list of any such
signature and seal as appears above. documents. (See YORKSHIRE REGISTRY OF
Registrar.” DEEDS . )
A person who advances money under a In thecertificate
form on page 130 willasbeissued
found the
certificateof mortgage, when there is a official of search by
previous mortgage or certificate of mortgage
indorsed on the said certificate ,does so at his the West Riding of Yorkshire Registry of
Deeds.
own risk . His title is liable to be defeated
by the person claiming under the incum CERTIFICATE OF SUBSCRIPTION . A
certificate (in
brance so indorsed . (See SHIP_MORTGAGE , forshares America)
after issued
payment to afirst
of the subscriber
instal
ETC.) ment . Provision is made on the document
CERTIFICATE OF ORIGIN OR MANU .
FACTURE . A document issued at a Custom for receipts for the remaining instalments.
When all the instalments are paid it is
House as follows :
exchanged for an ordinary certificate. On
" I do hereby certify that the under the back of a certificate of subscription
mentioned goods have been entered for is printed a form of transfer. (See AMERICAN
shipment per Master RAILROAD CERTIFICATES.)
for and have been duly verified CERTIFICATE TO COMMENCE BUSI
by the exporter as being of British origin or NESS. When a public company is entitled
manufacture . to commence business, the registrar of

129
( 1935)
CER] DICTIONARY OF BANKING (CER

companies issues a certificate that the CERTIFICATION OF CHEQUES. In the

company is entitled to commence business, United States cheques are freely " certified "
and that certificate is conclusive evidence by bankers, the certification being equal to
thereon. Any advance made by a banker an acceptance by the banker . When an
to a company before the date of that American banker accepts or certifies a cheque,
certificate cannot be recovered from the he charges the amount atonce to the drawer's
company. A private company, however, account and holds it in a special account
is entitled to commence business immediately against his liability upon the cheque. By
after incorporation and the above certificate the law of that country " where the holder
is not required . The regulations regarding of a cheque procures it to be accepted or
the commencement of business and the certified , the drawer and all indorsers are
exercise of any borrowing powers are discharged from liability thereon ."
contained in Section 87 of the Companies In this country, cheques are often , for the
(Consolidation ) Act, 1908.See that Section convenience of bankers in connection with
under COMPANIES. the clearing of cheques, “marked ” as good,
CERTIFICATED BANKRUPT . A bank- and in special cases they are sometimes
rupt who holds a release from the Court of “ marked ” at the request of the drawer. .

Bankruptcy . (See BANKRUPTCY .) Instead of “ marking ” a cheque some

1. To be left Volume
blank for filling in Page No.
at the office.
WEST RIDING OF YORKSHIRE .
REGISTRY OF DEEDS .
2. Fill in the
name and descrip- I
tion of the person the Registrar of Deeds of the West Riding of the
on whose behalf County of York having received a Rcquisition on behalf of ? 2

the search was re

quired to be made .
3. Fill in the
name in which the
search was required for an official search in the Name of 3
to be made.

4. Fill in the
period for which for the period from 19 .. to 19 ..
the search was re
quired to be inade.

5. Fill in the affecting lands in the Townships of

Rame of
every
township, etc., in in the said Riding, Do HEREBY CERTIFY that I have caused an official search
which any of the to be made in the above specified name, for all instruments registered within
lands in respect of the period above -mentioned as affecting lands within the townships afore
wasrequired to be said , and that the following is a complete list of such instruments .
trade arc situate,
Township,
etc. , PLACE OF ENROLMENT.
Nature of Date of Parties to in which Date of
Instrument. Instrument. Instrument. lands Registration .
affected Volune , Page. Number.
are situate.

8. To be left
blank for the sig . (Signed)
nature and seal of
the registrar.
Registrar,
130
CER) DICTIONARY OF BANKING (CHA

bankers pay it, if in order, and give in order, and showing, prima facie, that the
exchange a clearing voucher to be passed transferor is entitled to the shares, but it is
through the next local clearing . (See no warranty of the transferor's title to the
MARKED CHEQUE.) Sir Mackenzie Chal- shares, or as to the validity of any of the
mers says : “ In England, under the documents, or that the company has received
Bank Charter Acts, the acceptance of a no notice in lieu of distringas, or any other
cheque by a bank would , in general, be an notice affecting the matter." In George
infringement of the privileges of the Bank Whitechurch, Limited v. Cavanagh (1902,
of England." (Page 74 , vol. 30 , Journal of A.C. 117) , Lord Macnaghten said : “ There
the Institute of Bankers .) is no obligation on a company to certify
CERTIFICATION OF TRANSFERS. (See transfers at all. The certification is not
CERTIFIED TRANSFER.) passed by the directors or brought before
CERTIFIED CHEQUE. A cheque which the board. A certification, in fact, is only
is marked or certified by a banker that it is required for a temporary purpose, to meet
good for the amount for which it is drawn. the exigencies of business on the Stock
(See CERTIFICATION OF CHEQUES, MARKED Exchange, which has stated days and fixed
CHEQUE .) periods for the different stages of a business
CERTIFIED COPY . A certified copy , or transaction intended to be carried out under
office copy, of a will is one that has been its rules.”
examined with the original and certified by Transfers are also certified by the secretary
the registrar as being a true copy . of the Share and Loan Department of the
For stamp duty see Copy. (See ATTESTED London Stock Exchange, and by the
COPY, OFFICE COPY .) secretaries of other Stock Exchanges.
CERTIFIED TRANSFER . Transfers are By the rules of the Stock Exchange, the
often certified upon the margin by the buyer of securities may refuse to pay for a
secretary or registrar of a company,thatthe transfer deed unaccompanied by the certi
certificates for the shares dealt with in the ficate, unless it be officially certified that
transfer are in the company's office. The the certificate is at the office of the com
words generally used are , Certificate for pany. (See BALANCE TICKET, TRANSFER OF
shares , paid , has been lodged SHARES.)
at the company's office. Date CESSIO BONORUM . In Scotland , an
“ The Company, Limited , assignment, by an insolvent debtor, of his
Secretary ." property for the benefit of the creditors.
Or sometimes the words are Coupon for (See ASSIGNMENT FOR BENEFIT OF CRE
£ received at the company's office by DITORS.)
CESTUI QUE TRUST. A person in
· The certification is for the purpose of whose favour a trust operates, that is, who
facilitating dealings in shares. The broker is beneficially interested in the estate.
for a transferor sends the certificate and If Brown holds land in trust for Jones,
transfer to the company to be certified, and Brown is the trustee and Jones is the
the transferee accepts the certification as an cestui que trust. Brown has the legal estate
in the land, and Jones has an equitable
assurance that the certificate is apparently estate
in order. in it.
In Bishop v. Balkis Consolidated Co. Plural, cestuis que trustent.
: Ee
( 1890 , 25 Q.B.D. 512) , Lindley, L. J., said :stui QUE USE . The person in
" In my opinio , it is proved that to give whose favour a use or trust in real proper
n ty
' certifications ' is incidental to the trans- has been declared .
action , in the ordinary business way, of part CESTUI QUE VIE . When property is
of the legitimate business of all companies held by one person during the life of another,
having capital divided into shares which the person whose life is the period of the
are transferable by deed or other instru- duration of the estate is called the cestui
ment." que vie. An estate thus held is commonly
Such a certification , however, does not estate pur autre vie ."
called an
appear to put much responsibility upon the CHANGE . A contraction for Exchange,
company. In Peat v . Clayton (1906, 1 Ch. a place where bankers, merchants, or
659). Joyce, J., said : “ It only amounts to brokers meet for the transaction of business.
a representation that a document has been CHARGES . As it is the practice of
lodged with the company, apparently in bankers to calculate the interest and

131
CHA ] DICTIONARY OF BANKING (CHA

commission upon customers' accounts half- | acquisition of gain by thecompanyor by its

yearly, the charges should not be added at individual members , shall not, without the
caprice at any time. licence of the Board of Trade, hold more
If a cheque is dishonoured by reason of than two acres of land ; but the Board may
charges having been added , without the by licence empower any such company to
customer's knowledge, at other than the hold lands in such quantity, and subject to )
usual date, the customer would have a claim such conditions, as the Board think fit. "
against the banker for wrongful dishonour. The Board of Trade may by licence direct
(See INTEREST . ) that such an association be registered as a
liability , without the
CHARGES. (See REGISTRATION OF MORT- company with limited“ Limited
GAGES AND CHARGES .) addition of the word ” to its name.
CHARGES (CLEARING HOUSE) . A It is exempt from sending lists of members
parcel of cheques which one member of the and directors and managers to the registrar
Clearing House delivers to another member of companies. (See COMPANY LIMITED BY
upon whom they are drawn , and against GUARANTEE . )
whom they are charged, or, in the case of CHARTER . The duty imposed by the
the country clearing, upon whose country Stamp Act, 1891 , is :
correspondents they are drawn . (See £ s. d.
CLEARING House .) CHARTER of resignation, or of con
CHARGING ORDER. Where a creditor firmation , or of novodamus or
has obtained judgment against a debtor for upon apprising, or upon a
the payment of a debt, he may obtain from decreet of adjudication, or sale
the Court an order charging, with the pay- of any lands, or other heritable
ment of the judgment debt, any shares or subjects in Scotland -. 0 5 0
stock standing in the name of the debtor, CHARTER -PARTY . An agreement by
or in the name of any person in trust for which the owners of a ship, or their agents,
him . The effect of the order is to prevent a agree to place the vessel at the disposal of
company from registering any transfer, or a merchant, the charterer, for the convey
paying any dividend to the shareholder, in ance of a full cargo of goods. A charter
respect of the shares or stock so charged. party may be for one or more voyages or for
At the expiration of six calendar months a definite period of time, or it may effect a
from the date of the order nisi, the judg- demise of the ship for any length of time
ment creditor may proceed to take the that may be agreed upon .
benefit of the charge after obtaining from The words “ charter party are said to be
the court an order for sale. (See derived from the Latin charta partita (divided
GARNISHEE ORDER .) parchment) . In former times the document
CHARITABLE COMPANIES. In the case was cut into two parts, one part being kept
of associations which exist for promoting by the owner of the ship and the other part
certain useful objects, the Companies (Con- by the charterer.
solidation Act) , 1908, Section 19, provides :- The wording of the agreement varies
“ A company formed for the purpose of somewhat according to the trade in connec
promoting art , science, religion, charity or tion with which it is used . The following
any other like object, not involving the is a specimen of a charter- party :
CHARTER -PARTY
HULL, 19
It is this day mutually agreed between Owners or
Agents, of the good Steam Ship or Vessel called the or substitute (at owners'
option ) of Tons Nett Register, or thereabouts,
and Charterers,
That the said Steamer or Vessel being tight, staunch, strong, and every way fitted for the
voyage, shall with all convenient speed proceed to
or so near thereto as she may safely get and there load from the Factors of the said Charterers
a full and complete Cargo of
which the said Charterers bind themselves to ship, not exceeding what she can reasonably
stow or carry over and above Coal for Bunkers and Ship's use, her tackle and apparel,
provisions and furniture. The said Cargo to be brought to and taken from alongside, free
132
CHA ] DICTIONARY OF BANKING (CHA

of expense and risk to the ship, and being so laden shall proceed with the said vessel, with
all convenient speed to
or so near thereunto as she may safely get, and (the Act of God, perils of the sea , fire on
board , in hulk, or craft, or on shore, barratry of the Master and Crew , enemies, pirates, and
thieves, arrests and restraints of princes, rulers, and people , collisions, stranding, and
other accidents of navigation of whatever nature and kind whatsoever, before and during
the said voyage always excepted, even when occasioned by negligence, default or error
in judgment of the Pilot, Master, Mariners, or other servants of the Shipowners, not
answerable for any loss or damage arising from explosion, bursting of boilers, breakage of
shafts, or any latent defect in themachinery or hull,not resulting from want of due diligence
by the Owners of the Ship or any of them , or by the Ship’s Husband or Manager), there
deliver the same, on being paid Freight in cash at the rate of
per ton of 20 cwt. delivered, being in full of all Port Charges, Pilotages, and Harbour Dues
on the Steamer, Charterers paying all dues and duties on the cargo
Cargo to be loaded
and discharged
(Sundays and holidays excepted ). Lay hours to commence from the time Steamer or
Vessel is ready to receive and deliver, and if longer detained Demurrage to be paid at the
rate of per hour.
It is also agreed that the Owners of the said Steamer or Vessel shall reserve to them
selves therightof lien upon the Cargo laden on Board , for the recovery and payment of all
Freight, Dead Freight, Demurrage, and all other charges whatsoever. The Master is to
signbills of Lading at such rates of Freight as may be required by the Charterers or their
Agents, without prejudice to this Charter-party, but atnot less than chartered rate.
General Average ( if any) as per York /Antwerp rules, 1890.
Cash for the disbursements of the Steamer or Vessel to be advanced to the extent of
€ (if required ), subject to insurance.
The Ship has liberty to call at any ports in any order, to sail without Pilots, to tow
and assist Vessels in distress, and to deviate for the purpose of saving life or property. All
salvage and /or towage for owners' sole benefit.
Penalty for non -performance of this Charter, estimated amount of Freight.
The Brokerage is payable by the Ship to at per cent. on
gross amount of Freight, and is due on signment of this Charter -party, Ship lost or not
lost, by whom also she is to be reported and /or cleared at Customs, Hull, or by their Agents
at any other Port.
Witness
Witness
“ Lay hours"
>
in the above document refer to the time for loading, or unloading .
" Demurrage " is the charge made for delay. As to “ GeneralAverage as per York /Antwerp
Rules," see GENERAL AVERAGE.
The stamp duty is sixpence. See the last executed , or by whose execution
following sections of the Stamp Act, 1891 : it is completed as a binding contract.
“ 49. ( 1) For the purposes of this Act “ 50. Wherea charter -party is firstexecuted
the expression charter -party ' in- out of the United Kingdom without being
cludes any agreement or contract duly stamped, any party thereto may,
for the charter of any ship or vessel within ten days after it has been first re
or any memorandum , letter, or other ceived in the United Kingdom, and before
writing between the captain , master, it has been executed by any person in the
or owner of any ship or vessel, and United Kingdom , affix thereto an adhesive
any other person for or relating to stamp denoting the duty chargeable thereon,
the freight or conveyance of any and at the same time cancel such adhesive
money, goods, or effects on board of stamp, and the instrument when so stamped
the ship or vessel. shall be deemed duly stamped.
" (2) The duty upon a charter-party may " 51. A charter-party may be stamped with
be denoted by an adhesive stamp, an impressed stamp after execution upon
which is to be cancelled by the the following terms; that is to say,
- person by whom the instrument is “ (1) Within seven days after the first
133
CHA ) DICTIONARY OF BANKING (CHE

execution
duty and athereof,onpayment ofthe defines
penalty of four shillings The personal
Bills of Sale Act,1878
chattels , Section
as follows 4,
: - “ The
and sixpence; expression personal chattels ' shall mean
.

· (2 ) After seven days, but within one goods, furniture, and other articles capable
month after the first execution of complete transfer by delivery, and (when
thereof, on payment of the duty separately assigned or charged) fixtures
and a penalty of ten pounds ; and growing crops, but shall not include
and shall not in any other case be stamped chattel interests in real estate, nor fixtures
with an impressed stamp." (except trade machinery as hereinafter
CHARTERED BANK . A banking com- defined ), when assigned together with a free
pany incorporated by special Charter from hold or leasehold interest in any land or
the Crown. The Charter regulates the building to which they are affixed, nor
working of the company in the same way growing crops when assigned together with
that the memorandum and articles of any interest in the land on which they
association regulate a company incorporated grow, nor shares or interests in the stock,
under the Companies Acts, and the liability funds, or securities of any government, or
of the stockholders in a chartered bank is in the capital or property of incorporated or
fixed by the Charter. joint stock companies, nor choses in action,
The Bank of England was incorporated nor any stock or produce upon any farm or
by Charter in 1694, under the authority of lands which by virtue of any covenant or
an Act of Parliament. agreement or of the custom of the country
The Bank of Scotland was founded by ought not to be removed from any farm
Scots Act of Parliament, 1695. The Royal where the same are at the time of making
Bank of Scotland and the British Linen or giving of such bill of sale."
Bank were incorporated by Royal Charter. By Section 5 : 4 " Trade machinery shall,
These three chartered banks were by their for the purposes of this Act, be deemed to
charters “ limited ” in respect of their note be personal chattels, and any mode of dis
issues and general liabilities, and the word position of trade machinery by the owner
“ limited ” does not form part of their title . thereof which would be a bill of sale as to
The other banks in Scotland ( including two any other personal chattels shall be deemed
chartered banks, formerly unlimited ), are to be a bill of sale within the meaning of this
registered under the Companies Acts with Act."
limited liability , but the stockholders remain CHEAP MONEY. Money is said to be
liable with respect to the note issues. (See “ cheap ” when it can be borrowed at a low
BANK OF ISSUE . ) rate of interest. Money is called “ dear "
In Ireland, the Bank of Ireland is the only when , owing to its scarcity, it can be
bank which has been established by Act of borrowed only at a high rate.
Parliament. CHECK - BOOK . The name sometimes
Various Colonialbanks, which have their given to the deposit book or pass-book
head offices in London , have also been which is supplied to depositors in savings
incorporated by Charter from the Crown . banks.
CHARTEREDS. А Stock Exchange Check - book is also the American method
name for British South Africa Company's of spelling cheque book.
shares. CHECK LEDGER . A book of the nature
CHATHAMS OR CHATS . Stock Exchange of a day book, and which is used in some
names for London , Chatham and Dover banks instead of a day book. In a large
Railway stock . office there may be a separate check ledger
CHATTELS. Chattel, a modern form of for each current account ledger.
th word cattle . Cattle at one time per- It contains details of all the items which
formed the function of money . are posted into the corresponding ledger,
Chattels include cattle, implements, money, the debits in one column and the credits
debts, rights of action to goods, etc. in another, and the entries in the check
Blackstone says, “ For it is to be under- ledger are called off daily with the entries in
stood that in our law , chattels (or goods the current account ledger. There may also
and chattels) is a term used to express any be a check ledger for the deposit ledger,
kind of property which, having regard either impersonal ledger, etc., the final totals of
to subject matter, or the quantity of interest each check ledger being carried into the
therein , is not freehold ." summary book at the end of the day.
134
CHE] DICTIONARY OF BANKING (CHE

The General Ledger is sometimes called he pays it bearing a forged indorsement ;

the Check Ledger. the drawer is the person liable to pay it, and
CHEQUE. (Formerly written " check .") the drawer, as a rule , is not discharged by
Gilbart says : “ The word is derived from delay in presenting it for payment. The
the French echecs, chess. The chequers intention of a cheque is that it be paid at an
placed at the doors of public-houses are early date . The drawee's authority to pay
intended to represent chess-boards, and is determined by the drawer's death , and the
originally denoted that the game of chess drawer may stop payment of the cheque.
was played in those houses. Similar tables Indelible pencils are not desirable articles
were employed in reckoning money, and with which to draw cheques. A cheque
hence came the expression to check an written in ordinary pencil should not be
account ' ; and the Government office paid without personal reference to the
where the public accounts were kept, was drawer, as the banker cannot possibly tell
called the Exchequer.” Another explanation whether, or not, it has been altered. It is
is that the word “ check ” arose from the much to be desired that all cheques should
consecutive numbers which were placed upon be written in ink . Typewritten cheques
the forms to act as a check or means of are too easily altered , and their use should
verification. In the United States the word be discouraged as far as possible.
" check " is used at the present day. Cheques A cheque written upon a sheet ofpaper,
first came into use about 1780. provided it is in proper form , is sufficient.
Sir John Paget in the Gilbart Lectures, It must be stamped with a twopenny
1916 (No. 1 ) , said that “ money on current adhesive stamp (or two penny stamps), and
account is just like any other debt, it is the stamp must be cancelled by the person
repayable on demand ; if a customer comes drawing the cheque before he delivers it.
and asks for his money, he is entitled to Cheques of this description should, how
have it without the formality of drawing a ever, never be drawn except in cases of
extreme necessity .
customer would have to give a receipt, exu“ A customer's cheque must be un
stamped twopence , if for £ 2 or over. But ambiguous and must be ex facie in such a
the regular and ordinary method of with condition as not to arouse any reasonable
drawing money from a current account is suspicion . But it follows from that that
by means of a cheque. A depositor may it is the duty of the customer, should his
withdraw money from his deposit account own businessor other requirements prevent
by signing a form of receipt. (See Deposit him from personally presenting it, to take
ACCOUNT.) care to frame and fill up his cheque in such
Part III of the Bills of Exchange Act, a manner that when it passes out of his
1882, is devoted to provisions regarding such ( the customer's) hands it will not be so left
features of cheques as are not found in that before presentation, alterations, inter
connection with a bill. polations, etc. , can be readily made upon it
Section 73 defines a cheque : without giving reasonable ground for sus
A cheque is a bill of exchange drawn on a picion to the banker that they did not form
banker, payable on demand . part of the original body of the cheque when
“ Except as otherwise provided in this signed . To neglect this duty of carefulness
Part, the provisions of this Act applicable to is a negligence cognisable by law . The con
a bill of exchange payable on demand apply sequences of such negligence fall alone upon
to a cheque .” the party guilty of it - namely , the cus
Section 3 defines a bill of exchange ( see tomer." (Lord Shaw in London Joint Stock
under BILL OF EXCHANGE) . These two Bank, Ltd. v. Macmillan and Arthur ( 1918,
Sections, taken together,show that a cheque A.C. 777.) See also under ALTERATIONS.
is anunconditional order in writing, drawn As to the points to be observed when
on a banker , signed by the drawer requiring drawing a cheque, see DRAWING A CHEQUE.
the banker to pay on demand a sum certain At one time a cheque could not be issued
in money to or to the order of a specified cheque
for less may
thanbetwenty shillings, but now a
for any amount, from one
person or to bearer.
A cheque differs from a bill in several penny upwards. If the amount of a cheque
points: it does not require acceptance and includes a half-penny, the half-penny is
is not entitled to days of grace ; it is drawn ignored by bankers.
upon a banker ; the banker is protected if The practice of bankers with cheques
135
CHB ) DICTIONARY OF BANKING [ CHE

drawn in England on an English bank in unconditional order in writing. ... And

French currency is referred to in Cohn I think it is none the less a cheque because
V. Boulken , see under BILL OF EXCHANGE. of that statement at the bottom of the
The size of cheque forms becomes of con- document. I do not consider that state
siderable importance when large quantities ment makes the order conditional."
have to be dealt with . A verylarge cheque There are also forms of cheques, or rather
and a very small one are equally incon- documents, which make the payment depen
venient in a bank office, and it is desirable, dent upon a certain receipt being signed.
from the point of view of those who have to Conditional documents of this kind are not
work all day with cheques, that some recog- cheques as defined by the Bills of Exchange
nised size of cheque should be adopted by all Act. They may, however, be crossed like
bankers. a cheque under Section 17, Revenue Act,
The practice of making a cheque more or 1883. See that Section under CROSSED
less of an advertisement is not a desirable CHEQUE. (See RECEIPT ON CHEQUE. )
one. The form of cheque (or , more correctly,
The usual form of a cheque is : order for payment) in use by Local Autho
No. 23 . March 1 , 19 rities is a peculiar one as , being drawn upon
To the British Banking Company, Limited , the Treasurer, it does not conform with the
Leeds. requirement of the Bills of Exchange Act
that it be drawn upon a banker. It is
Pay to John Jones or order considered , however, that, although drawn
the sum of one hundred
2d . upon an individual, the order is practically
pounds. drawn upon the bank where the Treasurer's
£ 100. account is kept , and that the banker paying
THOMAS BROWN. such order is entitled to the protection which
is afforded by Section 60 of the Bills of
London Agents : X & Y Bank, Ltd. Exchange Act, 1882, against forged indorse
The customary form of cheque should be ments . If such orders should be held not
adhered to as much as possible, though to come within the Bills of Exchange Act,
legally any form which fulfils the require then the benefit of Section 60 would not
ments of the Bills of Exchange Act would be apply, and they would also be incapable of
sufficient, as, for example, where the drawer being validly crossed.
instead of signing his name at the bottom Cheques paid to credit of a customer's
signs it at the top, “ I, John Brown, direct account should be carefully examined before
you to pay to John Jones the sum ,” etc. being paid or before being remitted for collec
The Bank of England declines to pay tion , and if not in order should be returned
cheques, unless drawn upon the forms they to the customer, or, if possible, sent out to
supply. him to be remedied, as, for instance, where
Some cheques have a notice upon them he has omitted to indorse or has indorsed
that they are payable only if presented them wrongly .
within a certain period . Such a condition It is desirable that when an account is to
may possibly exclude the document from be closed, the cheque withdrawing any bal
being considered a cheque under the Bills of ance should state being the balance of my
Exchange Act. In Thairlwall v. Great account ” or “ to close my account."
Northern Railway Company ( 1910, 2 K.B. With regard to alterations in cheques and
509) , where a dividend warrant had a con-
6
fraudulent alterations, see ALTERATIONS.
dition at the bottom of it that “ it will not If there is aa difference between the amount
be honoured after three months from date in writing and the figures on a cheque, the
of issue unless specially indorsed for pay- chequemay be paid according to the amount
ment by the secretary,” and it was argued in writing, but it is the usual custom, and
that the document was not a cheque because a prudent course, to return the cheque
of this condition, Mr. Justice Bray said : unpaid marked " amounts differ . " If the
“ I have felt a great deal of doubt on this figures have been omitted and the amount
point because of this statement. But, on only appears in writing, a banker is justified
the whole, I am inclined to think that this in paying the cheque according to the words ;
document is a cheque, and is within the though if the words have been omitted and
meaning of Sections 73 and 3 of the Bills the amount is given only in figures, the
of Exchange Act, 1882, a cheque and an cheque should not be paid .
136
CHE ) DICTIONARY OF BANKING ( CHE
A cheque payable to “ J. Brown only ” A banker could not refuse to pay a
should be indorsed by him and be paid to " marked " cheque when presented, and if it
him . It cannot be transferred to anyone was marked at the request of a payee or
else. If payable to “ J. Brown or order," it holder he could not debit it to the drawer's
should be indorsed, and may, of course, then account if, in the meantime, the drawer has
be transferred . died or has stopped payment of the cheque,
If the payee himself presents a cheque for or if a receiving order has been made or
payment and declines to indorse it, he has notice of the presentation of a bankruptcy
probably a legal right to do so , but see Payee. petition has been received . See ActS OF
If the balance of a customer's accountwill BANKRUPTCY. (See further information
not allow of the full payment of a cheque under MARKED CHEQUE. )
which is presented, the cheque should be A person is liable to be charged with false
dishonoured. A cheque cannot be paid in pretence if he gives a cheque in paymentof a
part. In England, a cheque presented sub- purchase when he has no account with the
sequently for a smaller amount, which the banker on whom the cheque is drawn.
account will stand, may be paid . In Scot- As to an overdue cheque, see Section 36,
land, however, when a cheque is presented Bills of Exchange Act (under NEGOTIATION
for payment and there is nota sufficient bal- OF BILL OF EXCHANGE) , and Sections 45 and
ance to meet it, the cheque attaches such 74 (under PRESENTMENT FOR PAYMENT).
funds as there may be in the banker's hands STAMP DUTY . — The duty is ( since Sept. 1,
belonging to the drawer, and subsequent | 1918) two pence , for any amount, and the
cheques, though for a less amount than the stamp may be either adhesive or impressed .
balance of the account, will be returned A cheque must be stamped even if the
unpaid . The amount attached is transferred amount is less than £2. Two penny stamps
by the banker to a separate account. (See may be used . The stamp duty on cheques
Section 53 under DRAWEE .) was increased from one penny to two pence
A cheque which can be presented for by the Finance Act, 1918, Section 36, see
payment across the counter of the Bank on under BILL OF EXCHANGE.
which it is drawn, is an “ open cheque.” A If an adhesive stamp is used , it must, if
cheque which has certain specified lines or the cheque is drawn within the United King
words across the face of it is a “ crossed dom, be cancelled by the drawer before he
cheque " (q.v.) . delivers the cheque out of his hands, custody
A cheque which has been cut, or torn , into or power (Section 34, s.s. 1 , Stamp Act, 1891).
two or more portions, or torn sufficiently to If it is drawn out of the United Kingdom
suggest cancellation, is not, as a rule, paid and is unstamped , every person into whose
by a banker. But if a mutilated cheque hands it comes in the United Kingdom
bears a note upon it signed by a collecting before it is stamped shall, before he presents
banker, such as " accidentally torn ," it is for payment, or indorses, transfers, or in any
torn,”
customary to pay it. manner negotiates or pays the cheque, affix
A cheque is sometimes marked or certified thereto a proper adhesive stamp and cancel
by a banker as being good for the amount the stamp so affixed . If at the time any
for which it is drawn. It may be marked by cheque comes into the hands of any bona
the banker on whom it is drawn for another fide holder, there is affixed an uncancelled
banker, as a matter of convenience for the adhesive stamp, it shall be competent for
purposes of clearing arrangements. Or, occa- the holder to cancel the stamp. (Section 35,
sionally, it may be marked at the request of Stamp Act, 1891, see under BILL OF
the drawer , or even at the request of the EXCHANGE.)
payee or holder. By Section 8, s.s. 3, of the same Act, every
English bankers do not encourage the person who is required by law to cancel an
marking of cheques as between themselves adhesive stamp, and who neglects to do so, is
and the public , it being much the preferable liable to a penalty of £10. (See CANCELLA
way to pay the cheque and, if necessary, give TION OF STAMPS.)
a draft in exchange. In America, the certifi- By Section 38 , s.s. 1 , every person who
cation or acceptance of cheques is very com- issues, negotiates or presents for payment or
mon. (See CERTIFICATION OF CHEQUES.) pays any cheque not being stamped, incurs
It is generally held by the best authorities a penalty of £ 10, and the person who takes
that bankers in England cannot legally such an unstamped cheque shall not be
accept cheques. entitled to recover thereon .
187
CHE] DICTIONARY OF BANKING (CHE

By Section 38, s.s. 2, if a cheque is pre- or branch in respect of money payable by

sented for payment unstamped, the banker virtue of its rules or of this Act.”
may affix the adhesive stamp of two pence Cheque drawn by the Registrar of a County
[since Sept. 1 , 1918] and cancel it, and Court upon his public account (45 & 46 Vict .
charge the duty in account against the per- c. 72 Section 9 ).
son by whom the cheque was drawn , or Cheque drawn by the Guardians upon a
deduct the duty from the amount of the Poor Law Account (4 & 5 Will . IV, C. 76,
cheque. Besides the drawer, no other person Section 86 ). (Cheques drawn by the
than the banker to whom an unstamped guardians acting as sanitary authorities
inland cheque is presented for payment, has under the Public Health Act, are not
power to stamp it, and it has been held exempt. Questions on Banking Practice.)
( Hobbs v. Cathie, 1890, 6 T.L.R. 292) that Cheque drawn by a Trustee in Bank
when stamped by an intermediate holder ruptcy (4 & 5 Geo . V , c . 59, Section 148.
it could not be recovered on. The provisions See that Section under BANKRUPTCY.)
of this subsection are, by the Finance Act, Cheque drawn on the accounts of estates of
1918, Section 36, s.s. 2 (see under BILL OF companies wound up by orderof the Court
Exchange) extended so that a banker may under the Companies (Consolidation ) Act,
affix an adhesive penny stamp on a cheque 1908 (8 Edw. 7, c . 69, Section 230).
.

which is stamped only with a penny stamp. Cheque drawn by any officer of the post
Where a formal receipt is given upon a office for the purpose of remittance to the
cheque, the receipt requires (under Section Postmaster -General (44 & 45 Vict. c. 20,
9 of Finance Act, 1895) an adhesive stamp of Section 5).
twopence (or two penny stamps), increased Cheque drawn by Government Depart.
from 1d., as from 1st Sept., 1920, if for an ments .
amount of £ 2 or upwards. This receipt Cheque required to be made in pursuance
stamp is in addition to the stamp of two of the Loan Societies Act (3 & 4 Vict. c. 110,
pence upon the cheque. Section 14) or of the rules of the society.
00
If a cheque is drawn in such , a form as Cheque required to be made in pursuance
' Pay John Brown on July 5 " it must be of the Trustee Savings Bank Act ( 26 & 27
treated as a bill and stamped with ad va- Vict. c. 87, Section 50) .
lorem duty. A post -dated cheque requires Cheque drawn by a banker upon another
only the usual twopenny stamp. banker in settlement of an account between
À cheque is not invalid solely by reason such bankers (see BilL OF EXCHANGE
that it is post-dated or ante-dated EXEMPTION 2) .
When a customer transfers his account As to cheques of an " approved society ,"
from one branch to another, or from , say, see under NATIONAL INSURANCE .
his No. 1 to his No. 2 account, it is usually Letter written by a banker to another
effected by means of a cheque or stamped banker (both in United Kingdom ) directing
letter, but a simple unstamped letter of the payment of any sum of money, the same
request is sufficient. A transfer of an not being payable to bearer or to order, and
amount from one customer's account to such letter not being sent or delivered to
another customer's account is not exempt the person to whom payment is to be made,
from duty . or to any person on his behalf (EXEMPTION
Cheques on Municipal Corporations ', Dis- 3) .
trict Councils', Overseers’, Masonic Lodges', See also the list of exemptions in the
“ Cantcen ” and “ Mess ” Accounts are not Stamp Act, 1891, given in the article BILL OF
exempt from duty. EXCHANGE. (See BANKER'S ORDER .)
As to cheques drawn by a building society As to cheques drawn out of the United
see under BUILDING SOCIETY. Kingdom and negotiated in the United
Cheques are exempt from stamp duty in Kingdom , see under BILL OF EXCHANGE.
the following cases : The following minute of the Board of
Cheque drawn by or on behalf of a regis- Inland Revenue was passed May, 1904 :
tered Friendly Society (circular from Inland “ The attention of the Board of Inland
Revenue, November 10 , 1894) . Section 33 Revenue has been drawn to the fact that
of the Friendly Societies Act, 1896 (59 & certain instruments chargeable ,as they are
60 Vict. c. 25), enacts that stamp duty shall advised , under the Stamp Act, 1891, with a
not be chargeable upon a " draft or order penny (since Sept. 1 , 1918, two pence) duty
or receipt given by or to a registered society as ' Bills of Exchange payable on demand,
138
CHE ) DICTIONARY OF BANKING (CHE

or at sight, or on presentation ,' are suffered the Treasurer of the Authority, or a certain
to pass without such stamp. The Board named Banker, has been authorised to pay
have reason to believe that this practice is him a sum of money, specified on the docu
now very prevalent. ment, and that payment will be made
Section 32 of the Act is as follows :- accordingly,, by the Treasurer, or by such
' For the purposes of this Act the expres- Banker, as the case may be, on presentation
sion " Bill ofExchange" includes draft, order, of the document. (2) Concurrently with or
cheque, and letter of credit, and any docu- antecedently to the issue of this document a
ment or writing (except a bank note) en- letter is written by the Authority or their
titling or purporting to entitle any person, Officer to the Banker or Treasurer giving a
whether named therein or not, to payment list of the various persons to whom pay
by any other person of, or to draw upon any ments are to be made upon presentation of a
other person for any sum of money ; and the document in the above form , and requesting
expression “ Bill of Exchange payable on the Banker or Treasurer to make such pay
demand " includes ment accordingly .
' (a) An order for the payment of any “ The Board are advised that the last men
sum of money by a Bill of Exchange tioned document, namely , the letter of
or promissory note, or for the request to the Banker or Treasurer , comes
delivery of any Bill of Exchange or within the paragraph marked (6) of Section
promissory note in satisfaction of 32 above set forth, as being an order for the
any sum of money, or for the pay- payment by a person in this case the Treas
ment of any sum of money out of urer or Banker) of a sum of money, and sent
any particular fund which may or or delivered by the person making the same
may not be available, or upon any in this case the sender of the letter) to the
condition or contingency which person by whom the payment is to be made
may or may not be performed , or (namely , the Banker or Treasurer) ; and the
happen ; and Board , moreover, are advised that a penny
(b) An order for the payment of any [ since Sept. 1 , 1918, twopenny) stamp is
sum of money weekly, monthly necessary in respect of each payee's name
or at any other stated periods, and appearing upon the letter ofrequest, because
also an order for the payment by the payment to be made to each of such
any person at any time after the persons is in respect of a separate and
date thereof of any sum of money, distinct transaction .
and sent or delivered by the person " The Board are also advised that each
making the same to the person by letter handed to the payee as above men
whom the payment is to be made, tioned, whether supplemented by a letter of
and not to the person to whom the request or not, comes within the words of the
payment is to be made, or to any first paragraph of Section 32, as being a
person on his behalf.' document purporting to entitle a person to
" Section 38, sub -section ( 1) , imposes a fine payment by any other person of a sum of
of ten pounds upon every person who issues, money.
indorses, transfers, negotiates , presents for “ As the question of the liability of either
payment, or pays any BillofExchange not of thesetwoclassesof documents has not,
being dulystamped, and itis provided that so far as the Boardknow,beendirectlythe
the shall not be entitled to recover
bill
subjectofany legal decision, it isof course
person who takes orreceives any such open
ther
to Bankers and others interested to
eo n.
test the question whether the Board's view
The instruments to which the Board refer is right, by obtaining a legal decision in the
appear to be especially made use of by manner pointed out by the Stamp Act.
Education Authorities and otherMunicipal Until, however, the parties see fit to take
bodies in connection with
they desiretobemade on paymentswhich stepstodothis the Board will act upon the
their behalf by view expressed above.
their Bankers or Treasurers . These instru- “ The Board are confident that they can
ments vary,to some extent, inform ,but rely upon theready assistance of Bankers,
theirgeneral nature isas follows:-(1) A LocalAuthorities and their Officers in seeing
document is handed by the Authoritytothe that documentsofthis characterarestamped
creditor or otherperson who is to receive the inaccordancewiththeprovisionsof the law .
money, whichdocument informs him that They feelitto be their duty,however,to
139
CHE ) DICTIONARY OF BANKING (CHE

point out that should occasion arise after should either obtain it personally or fill up
this notice they will have no alternative but and sign an application form for a new book.
to institute proceedings for recovery of the An application form is usually inserted in
penalties provided by Section 38 of the each cheque book, a few forms from the
Act. end of the book . Some banks have a rule
“ While dealing with the question of stamp that, when a cheque book is delivered upon
duty on Bills of Exchange, the Board desire a written order, the fact should be at once
to mention that they have some reason to communicated to the customer.
think that orders to Bankers for the payment It is an advantage if a customer's written
of sumsof money at stated periods (e.g. Club acknowledgment can be obtained when a
subscriptions, and instalments of the price cheque book is issued to him.
of articles purchased on the hire system ) When not in use, it is prudent to keep a
are frequently not stamped . The omission cheque book locked up.
of the stamp is doubtless due to a misappre- The various points which should be
hension as to the provisions of the law ; but observed when drawing a cheque are given
it is clear that such orders fall within the under DRAWING A CHEQUE.
definition in Section 32 (6) of the Stamp Act, In America it is called check -book. "
and should in all cases bear stamps. (See CHEQUE BOOK REGISTER .)
(See Agent, ALTERATIONS, AMOUNT OF CHEQUE BOOK , APPLICATION FOR . In
BILL OR CheguE, ANSWERS, ANTE -DATED, order to prevent a cheque book being
BEARER, BILL OF EXCHANGE, BILLS OF Ex- obtained by anyone who is not entitled to
CHANGE Act 1882, CANCELLATION OF BILL it, a new book should be delivered only
OF EXCHANGE, CANCELLED CHEQUES AND when the bank's application form is signed
Bills, COLLECTING BANKER, CONSIDERATION by the customer. The following is a
FOR BILL OF EXCHANGE, COUNTERMAND OF | specimen form :
PAYMENT, CROSSED CHEQUE, DATE, DE “ No. 19
LIVERY OF BILL, DISHONOUR OF BILL OF X AND Y BANK, LIMITED.
EXCHANGE, DRAWEE, DRAWER, FOREIGN Please supply a book containing
BILL, FORGERY ,HOLDER FOR VALUE,HOLDER crossed order
IN DUE COURSE, HOLDER OF BILL OF Stamped cheques, payable to
EXCHANGE, INCHOATE INSTRUMENT, INDORSE uncrossed bearer
MENT, INDORSER, INLAND BILL, Lost BILL and debit my account.
OF EXCHANGE, MARKED CHEQUE , NEGOTIA our
TION OF BILL OF EXCHANGE, NOT NEGOTI Signature
ABLE CHEQUE, ORDER , OVERDUE BILL, PART
PAYMENT, PARTIES TO BILL OF EXCHANGE, Address
PAYEE, PAYING BANKER , PAYMENT BY, Strike out the words not required .”
PAYMENT OF CHEQUE, POST -DATED , PRESENT- CHEQUE BOOK REGISTER . Each
MENT FOR PAYMENT, RECEIPT ON CHEQUE , denomination of cheque book (2s. , 45., 8s. ,
RETURNED CHEQUE, STALE CHEQUE , TIME | 16s. , and so on) is entered in a separate book ,
OF PAYMENT OF BILL, TRANSFEROR BY or in separate parts of the same register.
DELIVERY, TRAVELLERS' CHEQUES, UNIFORM When a fresh supply of cheque books is
LAW .) received by a branch, each book is entered
CHEQUE BOOK . A book of cheque in the register by its number, and when a
forms, with counterfoils attached . book is sold the name of the customer and
Cheque books are of various sizes, 2s., 4s. , the date are written opposite the entry of
8s., 16s., and so on,according to the number that cheque book in the register. In some
.

of forms in each. Specially large books are banks, the person who obtains a new cheque
usually prepared for customers who use book is required to sign the register opposite
many cheques. The cheques are numbered the number of the book he receives.
consecutively and the numbers continue As each cheque book is sold and marked
from book to book. Each book is entered off in the register, the price of it is credited
in the cheque book register, with a record of to cheque book account, and if, on a trial,
the name of the customer to whom it has the cheque books on hand do not agree with
been given . the balance of the cheque book account, it
When a cheque is used , the counterfoil will be necessary to tick off the books shown
should be filled up. as sold in the register with the credits to
When a new book is required , the customer cheque book account.
140
CHE ] DICTIONARY OF BANKING [ CIR

Of course the balance of cheque book cases there are four. They are appointed
account represents merely the amount of the at the Vestry Meeting at Eastertide, and
stamps and does not include the cost of hold office for twelve months. A banker
printing the books. should receive a copy of the minutes, signed
CHEQUE RATE . A term used in con- by the chairman of the meeting, recording
nection with the Foreign Exchanges, signify- the appointments. The churchwardens
ing the price in one country at which a have the control of all money raised for the
cheque, or sight draft, upon another country repair of the church buildings and for the
can be bought. due performance of divine service therein .
With most foreign countries the quotation Cheques upon a churchwardens' account
66
is that of the long ” rate, i.e. for three are usuallysigned by all the wardens, but if
months or ninety days bills, but there are a banker is desired to honour cheques when
cases where " short ” rates are quoted — that signed otherwise, a written authority, signed
is, for drafts having eight to ten days to run. by all of them , should be obtained .
Where the Paris Cheque Rate is quoted as CIRCULAR CHEQUES. The name of a
25-30, it means that a foreign banker in form of cheque issued by a bank for the
London is prepared to draw a demand draft use of travellers either abroad or in this
upon his agent in Paris at the rate of 25 country. The cheques, say, for £5, £ 10,
francs 30 centimes for every ti handed to £20, are payable in the countries specified
him here. at a fixed rate of exchange, and each pur
An alternative name for Cheque Rate is chaser of the cheques receives a list of the
Sight Rate. (See COURSE OF EXCHANGE, bank's correspondents who will cash the
FOREIGN EXCHANGES, LONG RATE , SHORTcheques. There is no “ Letter of Indica
RATE .) tion as in the case of circular notes . The
CHIEF RENT. The sameas Quit Rent (q.v.). banker who issues the cheques fills in as
CHIROGRAPH . Literally a handwrit- the payee the name of the person who is to
ing. A chirograph was an old form of deed use them, and the payee should at once sign
which was written in two parts on the same each cheque in the space provided for his
sheet of parchment. Between each part specimen signature. The banker should
was a blank space, and right along that preserve a specimen of the payee's signature.
blank space the word " chirographum ” was When the cheques are to be cashed, the
sometimes written . The two parts were payee must sign them , in the appointed
then separated, by the parchment being cut place, in the presence of the paying banker,
with an irregular line through that word, who will compare the signature with the
and each party received one of the parts. specimen written on the cheques when
Each part would , of course , contain only issued. The cheques must also be indorsed
portions of the letters of the word, and by the payee at the time of payment or of
when the two parts were brought together negotiation if transferred to another person .
again , the fitting in of the wavy line and Circular cheques are more convenient for
completion of the word “ chirographum travellers than circular notes.
proved that the one deed was the counter- CIRCULAR LETTER OF CREDIT . The
part of the other. ( See INDENTURE .) following is a specimen Circular Letter of
CHOPS . A Stock Exchange name for Credit :
Chartered Options.
CHOSE IN ACTION . Property which a Circular Letter of Credit
person has not got in his actual possession, Not available after 19 .
but which he has a right to demand by an No. .

action at law . Money due upon a bill of

exchange, book debts, insurance policies, €
Date 19 .
.
legacies, and stocks and shares in a company
are examples of a chose in action . When the
money or goods are in actual possession, GENTLEMEN ,
they are called choses in possession . (See We beg to introduce to you to
DEBTS - ASSIGNMENT OF. ) whom you will please furnish such funds as
CHOSE IN POSSESSION . (See CHOSE IN may require up to the aggregate
ACTION .) amount of Pounds sterling against
CHURCHWARDENS. The usual number sight drafts on our Head Office,
of churchwardens is two, though in some London, each draft to be plainly marked
141
CIR ) DICTIONARY OF BANKING ( CIR

as drawn under this Letter of Credit No. with a twopenny stamp. A letter of credit
and to be signed in accordance with granted in the United Kingdom authorising
specimen signature which you will find on drafts to be drawn out of the United King
our Letter of Indication of the same number dom payable in the United Kingdom is
to be produced herewith. exempt from stamp duty. (See Exemption
We engage that such drafts shall meet with 4 under BILL OF EXCHANGE.) A letter of
due honour if negotiated within credit for use in the United Kingdom must
months from this date, and request you to be stamped twopence.
buy them at the rate at which you purchase When a Letter of Credit is issued , the
demand drafts on London . amount is debited to the customer's account
The amount of each draft must be in- and credited to a separate account to meet
scribed on the back of this letter. The letter drafts drawn by the grantee. Any unused
itself must be cancelled, and attached to the part of the amount is repaid to the customer.
final draft drawn . (See LETTER OF CREDIT, LETTER OF

We are , Gentlemen , INDICATION.)

Your obedient servants , CIRCULAR NOTES . Notes issued for the
special use of travellers, and which can be
To Messieurs the Bankers cashed at any of the issuer's correspondents,
mentioned in the Letter of Indication a list of which accompanies the Letter of
which must be produced herewith. Indication . The Letter of Indication gives
N.B. - The bearer, for purposes of security, the numbers of the notes, the name of the
is requested to carry this Letter of Credit person to whom they have been issued, and
apartfrom the Letter of Indication . a specimen of his signature. The Letter of
A specimen form of a Letter of Indication Indication should be retained by the holder
is given under LETTER OF INDICATION. until all the notes have been cashed , when
On the back of the Letter of Credit it is to be surrendered to the banker cashing
arious payments must be the last note. For security, the Letter of
particulars of the various
noted , viz. : Indication and the notes should be carried
Date when paid ; By whom paid! ; Name apart. If a note is lost, repayment may
of town where paid ; Sterling amount usually be obtained against a satisfactory
expressed in words; Amount in figures. indemnity. If the Letter of Indication and
Circular Letters of Credit are issued for the notes are lost and the finder forges the
the use of persons who are travelling loser's name and succeeds in cashing the
abroad . See also CIRCULAR Notes. notes, the loser will not be able to recover
When a payment is to be made under a the amount from the issuing banker. (Rhodes
Letter of Credit, the signatures of the grantor v. London and County Bank, 1880, Journal
on the Letter of Indication and Letter of of the Institute of Bankers, Vol. I, p. 770.)
Credit should be verified , as well as the Circular notes may be for amounts of,
signature of the person requiring the money, say, £5, £ 10, £20, or £50, each denomination
with the specimen on the Letter of Indication. being usually printed in distinctive colours.
It is necessary, as a matter of precaution, The following is a specimen of a circular
that the signature of the bearer of the letter note :
should be written in the banker's presence. London 19 . .

The Letter of Credit should be read No.

carefully and the various points attended Circular Note for Ten Pounds. £10.
to. The total amount already paid should
be ascertained from the indorsements, and GENTLEMEN,
care must be taken , in making a payment, to This note will be presented to you by
see that the amount expressed in the letter is whose signature you will find in
not exceeded, also that the period within our Letter of Indication No. to be pro
which the credit is available has not expired . duced herewith. We request you to pay to
The banker who cashes the draft which order the value of Ten Pounds at
exhausts the amount mentioned in the the current rate of exchange against proper
Letter should cancel the Letter of Credit, | indorsement.
and attach it to the final draft. Your obedient servants,
A draft drawn under the credit should bear
the number and date of the credit, and on its | Messieurs the Bankers
arrival in this country must be stamped mentioned in our Letter of Indication .
142
CIR ) DICTIONARY OF BANKING (CLA

On the back of the note is printed : The word “ circulation " is very commonly
£10. At sight pay to the order of used by bankers instead of the words “ notes
Ten Pounds value received at this in circulation . " Where a banker has, say,
day of 19 £ 5,000 of his own notes in circulation , it
(Sign here .) represents the notes which are actually in
the hands of the public and does not include
A specimen form of a Letter of Indication any notes which remain in his till.
is given under LETTER OF INDICATION. CLARAS . A Stock Exchange name for
When circular notes are presented for Caledonian Railway deferred stock.
payment the notes and Letterof Indication CLARE CONSTAT. (See PRECEPT OF
must be carefully scrutinised to see that CLARE CONSTAT.)
everything is in order . The indorsement CLAYTON'S CASE . This is the name
on the notes of the person requiring the of a case decided in 1816, and reported in
money should, as a matter of precaution, be 1 Mer. 529 et seq . (sometimes quoted as
written in the presence of the banker, and Devaynes v. Noble), which is always referred
compared with the specimen signature on to as the leading authority upon what is
the Letter of Indication . known as the “ appropriation of payments."
The issuing banker will refund the amount If a debtor owes more than one debt to his
of any unused notes returned to him . creditor, and pays him a sum of money
A circular note is exempt from stamp insufficient to liquidate the whole of the
duty ( see under BILL OF EXCHANGE, debts, it is sometimes a matter of import
EXEMPTION 4), but the form on the back ance, in view of the Statutes of Limitations,
of the note, being the same as a foreign to know to which debts the payment is to
bill, requires a stamp of two pence if on be appropriated . From Clayton's case the
demand or at sight or not exceeding three following rules are derived, mainly taken
days after date or sight; if otherwise, the from the Roman Law :-(1) A debtor making
usual ad valorem foreign bill stamp is a payment has a right to appropriate it to
required. (See CIRCULAR CHEQUES, LETTER the discharge of any debt dueto the creditor ;
OF INDICATION .) (2) if at the time of payment there is no
CIRCULATING CAPITAL. Circulating express or implied appropriation thereof by
capital fulfils the whole of its office in the the debtor, then the creditor has a right to
production in which it is engaged , by a make the appropriation ; 3(3)) in the absence
single use . John Stuart Mill says : “The of any appropriation by either debtor or
term , which is not very appropriate, is creditor, an appropriation is made by pre
derived from the circumstance, that this sumption of law , according to the items of
portion of capital requires to be constantly account, the first item on the debit side
renewed by the sale of the finished product, being the item discharged or reduced by
and when renewed is perpetually parted with the first item on the credit side. The prin
in buying materials and paying wages ; so ciple of the case was thus explained (see
that it does its work, not by being kept, but p. 608 of the report)
by changing hands.” Fixed capital, on “ This is the case of a banking account,
the contrary, does its work by being kept. where all the sums paid in form one blended
( See CAPITAL.) fund, the parts of which have no longer any
CIRCULATING MEDIUM . The medium distinct existence. Neither banker nor cus
or means by which purchases and sales are tomer ever thinks of saying, ' This draft is
effected . The term is applied to gold , silver, to be placed to the account of the £ 500 paid
and copper coins, also to bank notes, cheques, in on Monday, and this other to the account
bills, and other paper instruments, which of the £ 500 paid in on Tuesday. There is
act as substitutes for coins. The various a fund of £ 1,800 to draw upon, and that is
articles, such as shells, salt, skins, etc., enough. In such a case, there is no room
used in former ages , and even at present in for any other appropriation than that which
certain countries, are also included under arises from the order in which the receipts
the term circulating medium . (See MONEY .) and payments take place, and are carried
CIRCULATION . When money or notes into the account. Presumably, it is the sum
pass from hand to hand, they are said to first paid in that is first drawn out. It is
circulate, or to be in circulation, butthe word the first item on the debit side of the account
is sometimes used , or rather misused , to that is discharged, or reduced, by the first
mean the money itself. item on the credit side. The appropriation
143
CLA ) DICTIONARY OF BANKING (CLE

is made by the very act of setting the two with approval : - “ According to the law of
items against each other. Upon that prin England, the person paying the money has
ciple all accounts current are settled , and the primary right to say to what account
particularly cash accounts. When there it shall be appropriated ; the creditor, if
has been a continuation of dealings, in what the debtor makes no appropriation, has the
way can it be ascertained whether the specific right to appropriate, and if neither of them
balance due on a given day has, or has not, exercises the right, then one can look on the
been discharged, but by examining whether matter as a matter of account and see how
payments to the amount of that balance the creditor has dealt with the payment,
appear by the account to have been made ? | in order to ascertain how he did in fact
You are not to take the account backwards, appropriate it; and if there is nothing
and strike the balance at the head, instead more than this, that there is a current
of the foot, of it. A man's banker breaks, account kept by the creditor, or a particular
owing him , on the whole account, a balance account, kept by the creditor, and he
of £ 1,000. It would surprise one to hear carries themoney to that particular account,
the customer say, ' I have been fortunate then the Court concludes that the appro
enough to draw out all that I paid in during priation has been made, and having been
the last four years ; but there is £ 1,000 made, it is made once for all, and it does not
which I paid in five years ago that I hold lie in the mouth of the creditor afterwards
myself never to have drawn out ; and, to seek to vary that appropriation.” (See
therefore, if I can find anybody who was NOTICE OF MORTGAGE .)
answerable for the debts of the banking In Bradford Old Bank v. Sutcliffe ( 1918,
house, such as they stood five years ago, I K.B.D. 34 T.L.R. 299), where there were
have a right to say that it is that specific two accounts, a loan account and a current
sum which is still due to me, and not the account, it was held that the two accounts
£ 1,000 that I paid in last week .' ' could not be considered as one, and that
The Earl of Selborne, L.C. , in In re payments to the credit of the current
Sherry, London and County Banking Com- account are appropriated to that account
pany v . Terry ( 1884, 25 Ch. D. 692), said : and cannot be taken in reduction of the
“ The principle of Clayton's case, and of the loan account.”
other cases which deal with the same sub- The principle of Clayton's case does not
ject, is this, that where a creditor having a apply where a person has mixed trust moneys
right to appropriate moneys paid to him with his own moneys in his account. The
generally, and not specifically appropriated money which he first withdraws from the
by the person paying them , carries them account is taken to be his own money.
into a particular account kept in his books, leaving the trust funds intact. ( In re
he prima facie appropriates them to that Hallet's Estate, 1879, 13 Ch.D. 696.) But
account, and the effect of that is, that the if the trust moneys of several persons have
payments are de facto appropriated accord been paid into a customer's account the
ing to the priority in order of the entries on position is different. Where a solicitor had
the one side and on the other of that account. paid into his account moneys belonging to
It is, of course,absolutely necessary for the various clients, it was heldasthat the rule in
application of those authorities that there Clayton's case applied between the
should be one unbroken account, and entries claimants to the trust moneys ; that is,
made in that account by the person having that the first trust money paid in is
a right to appropriate the payment to that the first money drawn out. ( In ve
account ; and the way to avoid the applica- Stenning, Wood v. Stenning, 1895, 2 Ch.
tion of Clayton's case , where there is no 433.) (See APPROPRIATION OF PAYMENTS,
other principle in question , is to break the PARTNERSHIPS.)
account and open a new and distinct account. " CLEAN " ACCEPTANCE . That is a
When that is done, and the payment is general acceptance ." (See ACCEPTANCE,
entered to that new and distinct account, GENERAL.)
whatever other rule may govern the case, “ CLEAN " BILL. A bill of exchange
is not
it certainly (See the rule of Clayton's which is unsupported by shipping documents
case.. BROKEN ACCOUNT.) or other security. (See DOCUMENTARY
In Deeley v. Lloyds Bank, Ltd. ( 1912, Bill.)
107 L.T. 465), Lord Shaw quoted (in con- “ CLEAN ” BILL OF LADING . (See Bill
nection with the above rule) the following OF LADING .)
144
CLE ) DICTIONARY OF BANKING [CLE

“ CLEAN ” CREDIT. A credit opened by a There are Clearing Houses at Birmingham ,

banker under which persons abroad may Bristol, Hull, Leeds, Leicester, Liverpool,
draw bills upon the banker, the banker Manchester, Newcastle, Nottingham and
undertaking to accept the bills if drawn in Sheffield.
accordance with the conditions in the credit. The cheques dealt with in the Provincial
It is called ." clean ” because the bills have Clearing Houses are only those which are
no documents attached. Such a credit is drawn upon the banks in the same town ,
granted only to firms of the highest standing, or within a short distance thereof. Cheques
or against securities. upon other banks in England and Wales are
CLEAR DAYS. Where it is necessary to sent to London to be collected through the
give, say, " seven days' notice " of a meeting, Bankers' Clearing House, in Post Office
à notice given on one Monday would be Court, Lombard Street.
sufficient for a meeting on the following The London Bankers' Clearing House is
Monday ; but if it is necessary to give worked practically on the same principle
“ seven clear days' notice " and the notice as the Provincial Clearing Houses. Each
is given on a Monday the meeting could not member of the Clearing House sends, by a
be held before Tuesday of the following week. clerk, to the ClearingHouse the cheques
CLEARING BANKS. The members of held upon other bankers who are members,
the London Bankers' Clearing House.
or upon the country correspondents of any
Representatives of each clearing bank meet of the members, or other bankers for which
at the Clearing House and exchange chegues they are agents. Each clerk hands over
drawn upon the members or upon the the cheques he has upon the other bankers
country correspondents of members, or other and receives the cheques upon the bank
London banks for which they are agents. which he represents. The cheques received
The members are : by a clerk of A bank from , say, B Bank is
Bank of England . his " in " clearing, and the cheques given
Bank of Liverpool and Martins, Ltd. by him to that bank is his " out " clearing.
Barclays Bank , Ltd. At the end of the day the difference between
Coutts & Company . the “ in ” and “ out ” clearing is the amount
due to be paid by A to B or B to A, as the
Glyn, Mills, Currie & Company . case may be. Each bank, however, does
Lloyds Bank, Ltd.
not a
London Joint City& Midland Bank, Ltd. but settle
formseparately withsummary
, called the each othersheet,
bank,is
London County, Westminster, and Parr's filled up, showing in two columns the
Bank, Ltd.
National Bank , Ltd. amounts due to or owing from all the other
members of the House .
National Provincial and Union Bank of
England , Ltd. The difference between the two columns
is the net balance either to be received or to
Williams Deacon's Bank , Ltd.
be paid. When the balance is due to be paid ,
CLEARING HOUSE . A country banker that is, is against a bank, the bank transfers
" clears ” the cheques which he holds upon the amount due from its account at the Bank
another banker in the same town in the of England to the Clearing Bankers' account.
daily exchange or daily clearing. That is, The transfer is effected by means of аa white
banker A, by his clerk , sends to banker B ticket similar to form No. 1. ( See page
all cheques drawn upon him, and banker B | 147.)
hands over to the clerk any cheques he holds If the balance is due to be received , the
drawn upon banker A. The difference bank obtains a transfer of the amount from
between the two sets of cheques is settled the Clearing Bankers ' account to its own
by cash, draft, or London Payment. account at the Bank of England, by a green
In large towns instead of each banker's transfer ticket signed by the bank and an
representative visiting theother bank offices, Inspector of the Clearing House. See form
they all meet at a centre, called the Clearing No. 2 ,
House and effect a mutual exchange. In Scotch and Irish cheques are not cleared
this way each bank, instead of settling through the London Clearing House. There
differences with , say, five or six other banks, is, however, a clearing house in Edinburgh,
merely pays over or receives the net differ- in Glasgow , and in Dublin .
ence through the bank which manages the For the names of the members of the
clearing London Clearing House, see CLEARING BANKS.
145
10- ( 1535)
CLE ) DICTIONARY OF BANKING [CLE
The following is a specimen of the summary sheet in use :
DEBTORS. BARCLAYS BANK , Limited . CREDITORS .

Bank
London County, Westr . & Parr's, Lomb. St.

Glyn
Lond. Coy ., Westr. & Parr's, H.O.
Lloyds
London Joint City & Midland
Ditto Princes Street
Bank of Liverpool & Martin
National
National Provincial
Parr's

Coutts
Williams
Country Clearing
Metropolitan Clearing
C.H.

Gilbart states that the Clearing House Drafts, etc., to be received not later than
was founded in 1775. 11 a.m.
Joint Stock Banks were admitted to the Afternoon clearing to open at 2.30 p.m.
Clearing House in 1855. Drafts, etc., to be received not later than 4.5
The total amount of cheques, bills, etc., p.m. Returns to be received not later than
which passed through the Clearing House 5 p.m., excepting on settling days and the
Daily Average. first six working days in January and July,
in 1839 was £ 954,401,600 £ 3,066,600 when the last delivery shall be 4.15 p.m.
1868 .
£ 3,425,185,000 £ 10,978,200 and returns 5.30 p.m.
„ , 1907 £ 12,730,393,000 £ 41,467,100 SATURDAYS.
1
1913 £ 16,436,404,000 453,538,800
„, 1918 Morning clearing to open at 9 a.m.
121,197,512,000 £ 69,728,600 Drafts, etc., to bereceived not later than
.)
1920 239,018,903,000 £ 127,512,700 10.15 a.m.
There are four clearings each day, viz. : Afternoon clearing to open at 12 noon.
Metropolitan , Town (morning ), Country Drafts , etc., to be received not later than
Cheque, and Town (afternoon ). 1.30 p.m. Returns to be received not later
Cheques with " T " printed on the left-hand than 2.30 p.m.
bottom corner are included in the Town Clear EXCEPTIONS. — With the exception of the
ing; those with “ M ” are included in the first two Saturdays in January and July,
Metropolitan Clearing; and thosewith " C " and the first Saturday in April and October,
are included in the Country Clearing. when the time shall be 1.45 p.m. for the
The fourth day of a month, when so many last delivery and 2.45 p.m. for returns.
bills are payable, and the Stock Exchange FURTHER
settlement days are very busy times in the Returns on EXCEPTIONS FOR RETURNS.
the first Saturday in Janual y
Clearing House. and July to be not later than 3 p.m.
“ RULES AND REGULATIONS APRIL 1 , JUNE 30 , OCTOBER 1 , DECEMBER
TO BE OBSERVED AT 31. THE DAY SUCCEEDING A BANK
THE CLEARING HOUSE. HOLIDAY . AND ON SUCH OTHER DAYS
ORDINARY DAYS, EXCEPTING SATURDAYS. AS THE HONORARY SECRETARY MAY
Morning clearing to open at 10.30 a.m. DETERMINE .
146
CLE ) DICTIONARY OF BANKING ( CLE

Form No. 1 .
SETTLEMENT AT THE CLEARING SETTLEMENT AT THE CLEARING
HOUSE . HOUSE.
London , 19 .

To the Cashiers of the BANK OF ENGLAND, BANK OF ENGLAND, 19 .

.

Be pleased to TRANSFER from our Ac- A TRANSFER for the sum of

count the sum of and has this evening been made at the
place it to the credit of the Account of the Bank, from the account of
Clearing Bankers, and allow it to be drawn to the Account of the Clearing Bankers.
for, by any of them (with the knowledge of For the Bank of England,
either of the inspectors, signified by his
countersigning the Drafts).
&
This Certificate has been seen by me,
Inspector.
.

FORM No. 2.
SETTLEMENT AT THE CLEARING SETTLEMENT AT THE CLEARING
HOUSE. HOUSE.
London , 19 BANK OF ENGLAND,
To the Cashiers of the BANK OF ENGLAND, 19 .
Be pleased to CREDIT our Account the The account of
Sum of out of
the money at the credit of the account of the has this evening been CREDITED with the sum
of out of
Clearing Bankers. the money at the credit of the account of the
Scen by me, Clearing Bankers.
€ For the Bank of England,
Inspector at the Clearing House.

On these days the time shall be 4.15 p.m. repayment through the Clearing House on
for the last delivery, and 5.15 p.m. for the the following day.
last returns, except when either of these Notice shall beentered upon a board at the
days is a Saturday, when the time shall be Clearing House, giving monthly statements
1.45 p.m. for last delivery and 2.45 p.m. for of those settling days at the Stock Exchange,
the last returns. upon which the time for receiving returns
is to be 5.30 p.m.
GENERAL RULES . With regard to all drafts not crossed , and
The total amount of the morning and all bills not receipted , sent to the Clearing
country delivery shall be agreed by each House as returns, the clearer holding them
clearer before leaving the Clearing House. must fully announce the particulars to the
All clerks that are in the Clearing House Clearing House, and if not claimed, the case
by the time appointed for final delivery, shall must be represented to the inspectors ;
be entitled todeliver their articles, though but on no account can the clearer be allowed
they may not have been able to pass them to debit the Clearing House with the amount
to the different desks before the clock until an owner can be found .
strikes . No return can be received without an
All returns in the Clearing House upon answer in writing on the return why
the stroke of the clock , at the time appointed payment is refused.
for final delivery, must be received by the It shall be sufficient in order that a return
clearers and credited the same day. The shall be received and credited, that it shall
inspectors are instructed to close the doors have on it an answer, why returned ; and
and not re -open them until such returns no clearer shall refuse to pass to credit any
have been delivered . return that shall be so marked .
Any bank which has accepted and paid All the differences arising from marked
an article returned to it in error, may require articles of £ 1,000 and upwards must be
147
CLE ) DICTIONARY OF BANKING (CLE

finally ascertained and placed to account, "COUNTRY CHEQUE CLEARING .

before the clearer makes up his balance ADDITIONAL RULES TO BE OBSERVED .
sheet.
No clearer shall be allowed to charge Country Clearing to open at 10.30. Drafts,
out drafts in the Clearing -out Book at the including returns,to be received not later
Clearing House . than 12.30, except on Saturdays, when the
All differences of more than £ 1,000 that time shall be 10 o'clock for the opening,
may have been accidentally passed over at and 11.30 for the last delivery, including
night, shall be settled by a transfer at the returns. The door to be closed on the
Bank of England , the first thing the next stroke of the clock , as in the Town
morning . Clearing.
The inspectors are charged with the (It is required that all banks shall make a
preservation of order and decorum in the delivery as near to 10.30 as possible, on
Clearing House, and are instructed to report ordinary days, and 10 o'clock on Saturdays.
to the Committee of Bankers disorderly In no case shall the first delivery be later than
conduct on the part of any persons, calcu- | 10.45 on ordinary days, and 10.30 on Satur
lated , in their opinion, to obstruct the days. The remaining deliveries at necessary
adjustment of the business of the House. intervals.)
July , 1905." All the in - clearing to be entered at the
Clearing House.
" RULES Castings of about 50 entries to be given
FOR THE CONDUCT OF A CLEARING with all the early deliveries of the out
clearing.
OF COUNTRY CHEQUES IN LONDON . (It is expected that the last castings will be
1. A clearing to be held in the middle of given to the in -clearers not later than five
each day bankers,
London
for the interchange, among the minutes after the last delivery of cheques.)
of cheques On their All charges to be agreed at the Clearing
correspondents in the country, placed in House on the day of the work, and the clerk
their hands for collection . responsible for the out-side shall make it
2. Each London banker to remit for his business to go to the desk of the clerk
collection to his country correspondents entering his charge on the in -side for this
the cheques drawn upon them , saying. purpose .
• Please say if we may debit you £ It shall be necessary for the in -clearer to
for cheques enclosed .' retain for the inspection of the out-clearer,
3. Country bankers wishing to avail the cheques of any casting, or any particular
themselves of this clearing to remit their cheque in which a difference occurs.
country cheques to their own London All wrongly delivered cheques discovered
agent, to stamp across them their own name before the out and in -clearers agreeing
and address, and that of their London Agent. any charge have left the Clearing House,
4. Any country bank not intending to shall be adjusted by the clearers, but any
pay a cheque sent to it for collection, to discovered after either clearer has left the
return it direct to the country or branch House shall not be deducted from the
bank, if any, whose name and address is already agreed amount, but shall be entered
across it. on the debit side of lists provided for the
5. Each country banker to write by purpose, the cheque or cheques to be sent
return of post to its London agent in reply, to the proper forwarding agent, who shall
• We credit you ! for cheques also enter them on the credit side of the list
forwarded to us for collection in yours of provided ; these sts to be handed to the
• Adding in case of non- payment Clearing House inspector on the morning
of any such cheques, ' having deducted following, and it shall be his duty to agree
£ for cheque returned to the same. The total of these lists to be
Messrs. at and brought on to the end of the balance
€ returned to Messrs. at sheet.
BANKERS' CLEARING HOUSE , The balance sheet, together with the
June 27, 1893. particulars of the out and in -sides, shall be
handed to the inspector on the morning
The Inspectors respectfully point out the following the day of the work, and it shali
necessity of exactadherence to theabove rules. " be his duty to check the balances, and to
148
CLE ) DICTIONARY OF BANKING (CLB
call attention toany charge that may differ, under protest, received by the head office
as soon as possible. or agent too late for delivery at the Clearing
BANKERS' CLEARING HOUSE, House or to the head office of the presenting
bank must be returned by post direct to the
July, 1905." crossing bank or branch and debited at the
Clearing House on the next business day
00
METROPOLITAN CLEARING . by slip as used in the Country Cheque
RULES. Clearing.
Wrongly delivered drafts are to be ad
The Metropolitan Clearing to open at justed as far as possible before agreeing the
9 a.m. on ordinary days and 8.45 a.m. on charges. No alteration is to be made in the
Saturdays. Drafts on the branches of the total after agreement.
clearingbanks included in the Metropolitan Drafts wrongly delivered in the Metro
Clearing areato be received not laterthan politan Clearing but payable through the
10.30 a.m. (Greenwich time) on ordinary Town Clearing at the bank to which they
days and 9.50 a.m. (Greenwich time) on have been presented, ifdiscovered too late
Saturdays. for adjustment at the Clearing House, may
It is requested that the first delivery be be transferred internally without reference
made immediately on the opening of busi- to the Clearing House.
ness , subsequent deliveries at frequent in- Drafts wrongly delivered payable through
tervals, and that every effort be made to the Metropolitan Clearing and discovered
avoid heavy deliveries at the last moment. too late for adjustmentin the Clearing House
All the ' in ' clearing to be entered at are to be debited on sheets providedfor the
the Clearing House. purpose , the cheques to be placed in en
The agreement of charges to take place velopes addressed to the paying bank and
as soon as possible after the ' in ' side has delivered to the inspectorsat the Clearing
been entered . House asquickly as possible, but not later
The drafts are to be sent to the head than 10.45 a.m. (Greenwich time) on ordinary
offices when entered and not to be detained days and 10 o'clock (Greenwich time) on
at the Clearing House until the charges are Saturdays.
agreed. The inspectors will use all diligence in
Marked articles and missing cheques are despatching these envelopes in the hope of
to be looked up on the ' out ' side . If a catching the collecting messengers before
difference is for £ 1,000 and upwards the they leave the head offices. It is not
particulars , if available, to be given to the intended that these messengers should be
paying bank the same day and every effort delayed on account of this delivery, and
is to be made to settle the difference forth- should they have left the head offices
with . If particulars are not available the with the charges the wrongly delivered
settling of the error may be held over to the articles shall be returned to the presenting
following day. banker .
All differences in the Metropolitan Clearing Drafts wrongly delivered in the Metro
to be adjusted as quickly as possible through politan Clearing payable in the Country
the Town Clearing. Cheque Clearing discovered too late for
Returns in the Metropolitan Clearing must adjustment in the Clearing House to be
be delivered at the Clearing House through debited to the crossing banker on the sheets
the afternoon Town Clearing at the earliest above referred to . These cheques to be
possible moment, but not later than 4.5 sent to the inspectors of the Clearing House
p.m. on ordinary days and 1.30 p.m. on in envelopes addressed to the presenting
Saturdays. banker not later than 10.45 a.m. on ordinary
It will be permissible for a bank to pay days and 10 o'clock on Saturdays.
any of its Metropolitan branches under All wrongly delivered drafts received in
protest on Saturdays, when necessary. the Clearing House envelopes to be entered
Bills, included in remittances to branches, by the banks accepting on the credit side
that avail themselves of the protest rule, if of the lists provided . These lists to be
dishonoured and received too late to return handed to the inspectors not later than 2.30
to the collecting banker must be protected o'clock on ordinary days and 1.30 o'clock
by the returning banker. on Saturdays. The totals of debit and
Dishonoured cheques, from a branch paid credit sides of these sheets to be entered on
149
CLE ) DICTIONARY OF BANKING (CLO

Town balance sheet in the place provided, in the current account ledger at the
and agreed with the inspectors before account itself.
closing Where a customer calls to withdraw
Machines will be allotted for use in the his balance, it is desirable that the cheque
Metropolitan Clearing under the following should contain , after the amount, such
condi ns : words as “ being the balance of my account
The ' in ' clearing to be entered as with interest to date ."
quickly as possible . A customer wishing to transfer his account
Agreement of charges is not to be at- to another town and not being aware of the
tempted at the expense of entering. amount of interest which is due to him ,
The machines are to be surrendered may send the banker a cheque filled up, e.g.
without delay after entering is finished, and “ Pay the X & Y Bank, Ltd., Leeds, the
adjournment to the Country Cheque Balance balance of my account Two hundred and
Room or Ground Floor for the purpose of fifty pounds with interest due upon the
agreeing is requested. account to date ."
The totals of each side, viz . : ' out ' and " € " , leaving the banker to supply
' in ' of the Metropolitan Clearing are to the figures .
be added to the amount of the Morning When an account has to be transferred from
Town Clearing in all cases, and it is the one branch to another of the same bank,
duty of the Town clearers to see this is it is advisable (though not strictly
done before calling their final totals at necessary) that a cheque should be
mid -day. signed .
As to payments under protest in con- Before paying the balance of an account
nection with the Country Clearing, see to a customer, the banker will, of course,
PROTEST PAYMENTS . ascertain the amount of any outstanding
CLEARING HOUSE CERTIFICATES. " To cheques there may be and reserve that
provide currency for their own use, banks sum in the account to meet them. If a
had recourse, in the crisis of 1914, to cheque is presented which has not been
Clearing House Certificates. They were provided for in this way, the banker
secured by the deposit of securities with the can return it unpaid , marked " account
Clearing House, and served as negotiable closed."
instruments to facilitate the clearing of When an account is closed , all unused
balances as between the banks themselves. cheque forms should be returned to the
(See MORATORIUM .) banker .
CLERGYMEN . Clergymen may be mem- Where a customer closes his account, the
bers, partners, or shareholders in an associa banker cannot compel him to take up any
tion or co -partnership, consisting of more bills which there may be under discount at
than six members or shareholders, carrying the time of closing.
on the business of banking and other trades . In the case of an unsatisfactory account
and dealings for gain and profit, but it is not the banker is entitled to request the customer
lawful for a clergyman " to act as a director to close it. If the account is in credit the
or managing partner or to carry on trade banker may decline to accept any further
or such dealing as aforesaid in person " (4 payments to credit. Reasonable notice must
Vict. c. 14) . be given .
CLIPPED MONEY. The name given to Closing an account " is sometimes used
coins from which small pieces had been with a meaning equivalent to " stopping
clipped by dishonest persons. The intro- an account." A company's account is
duction of milling served to prevent the stopped " when the company is to be
practice of clipping orfiling the edges of coins. wound up voluntarily or by order of the
CLOCK LOCK . A mechanical device on Court. (See WINDING UP.) An account
some safes by which it is made impossible to may be “ stopped for various reasons ,
open them between certain hours. see under BANKRUPT PERSON , DEATH OF
CLOCK STAMP. An invention by which CUSTOMER, DEATH OF MORTGAGOR, DEATH
the actual time of receipt or payment of OF PARTNER, DEBTS ASSIGNMENT OF,
money may be impressed upon a paying-in GARNISHEE ORDER, GUARANTEE, LUNATIC ,
slip or cheque . NOTICE OF MORTGAGE, RECEIVER.
CLOSING AN ACCOUNT. The voucher CLOSING ENTRIES. The entries by
closing an account is, in some banks, pasted which the balances of subsidiary accounts
150
CLO ) DICTIONARY OF BANKING (COI

are carried to their principal accounts at and value ; (2) portability : (3) indestructi
balance times, e.g. interest, discount, and bility ; (4) homogeneity (that is, all parts
commission to profit and loss account. of the same quality ); ( 5) divisibility (6)
CLOSING PRICES. The prices for stocks stability of value ; (7) cognisability (that is,
and shares which are quoted on a Stock easily recognised ) .
Exchange at the close of business. The early records of the use of metal as
CLUBS. (See SOCIETIES .) money show that the metal was weighed.
CODICIL . A supplement to a will, by The inconvenience, however, of having to
which a testator is able to add to what is use scales and weights on every occasion
contained in the will or to make any altera- when the metal was to be exchanged, led to
tion which he may desire. the invention of coins. The metal, or bul.
A codicil must be dated and signed by the lion , was divided into small pieces, each
testator and attested by two witnesses in the portion or coin being of a certain weight.
same manner as a will. (See WILL.) In the course of time a public stamp was
COGNOVIT ACTIONEM . (Latin , He has placed upon each coin , so that anyone
recognised the action .) A written acknow- might recognise ' it as having a definite
ledgmentby a debtor admitting his liability weight, and know that the metalso stamped
in an action, and giving authority to his was also of a certain quality. The coinage
creditor to take the necessary steps to obtain of Great Britain is of three metals, gold,
judgment against him . A cognovit is silver and copper, or rather bronze . Gold
usually given by a debtor in consideration is the standard measure of value. Anyone
of further time being given for payment. can take gold bullion , ofthe requisite degree
(See WARRANT OF ATTORNEY.) of fineness, to the Bank of England and
COINAGE , COINS. Many substances have it exchanged for bank notes at the
have been used in different countries as rate of £ 3 17s. 9d. per ounce of standard
money, but a metal of some kind has been gold. The coinage of silver and copper,
found to be the most suitable in all respects, however, remains inthe hands of theGovern.
and of all metals gold and silver have been ment, and the public cannot take silver and
selected as the best fitted to act as a coinage. copper to the Bank and demand coins for
The properties which should be possessed it. Gold coins issued from the Australian
bythematerial of which coins aremadeare mints at Sydney, Melbourne, and Perth are
enumerated by Professor W. S. Jevons in legal tender. The coins which may be issued
the order of their importance : (1) Utility from the mint in London are shown below ,
FIRST SCHEDULE TO THE COINAGE Act .

Standard Weight. Least Current Weight. Remedy Allowance.

Weight per piece. Mil
Denomination of Coin . Imperial Metric Imperial Metric Standard Fineness. lesimal
Weight Weight. Weight. Weight. Imperial Metric Fine
Grains. Grams. Grains. Grams, Grains. Grams. ness .

Gold Eleven-twelfths
Five Pound 616-37239 39.94028 312-50000 39-68935 fine gold , one ( 1.00 06479 )
Two Pound 246-54895 15697611 245.00000 15.87574 twelfth alloy ; 40 02592
123.27447 7.98805 122.50000 7.93787 .20 01296 2
Sovereign or millesimal
Half-sovereign 61.63723 3.99402 61 • 12500 3.96083) 15 *00972
fineness 916.6
Silver Thirty - seven
Crown . 436.36363 28.27590 fortieths fine , 2.000 .1296
Half-crown 218.18181 (14.13795 silver, three 1.264 -0788
Florin 174.54545 11.31036 fortieths alloy ; -997 0646
or millesimal * 0375
Alter
Shilling 87.27272 5665518 *578
fineness 925. -346 0224 ed by
Sixpence 43.63636 2.82759 1920
Groat or Fourpence 29.09090 1.88506 Altered by 1920 .262 0170
Act
Threepence 21.81818 1.41379 Act to one .212 • 0138
half fine silver, 144 0093 to :
Twopence 14.54545 • 94253 5
Penny . 7.27272 47126 one -halfalloy ; .087 0056
or millesimal
Bronze fineness 500
Penny . 145.83333 9.44984 Mixed metal ; 2.91666 .18899 none
Halfpenny 87.50000 5.66990 copper , tin, 1.75000 11339
Farthing 4375000 2.83496 and zinc. .87500 *05669 )

151
col] DICTIONARY OF BANKING [ COL

being the first Schedule to the Coinage aa rule, pay much attention to the weight
Act, 1870, allowing for the corrections of a coin so long as the government stamp
made by the Act of 1891, as to the remedy is not entirely worn off. The last columns in
allowance, and showing the alterations the Schedule show the “ remedy allowance,”
made by the Coinage Act, 1920, as to the that is a remedy ( or variation from the
fineness. standard weight and fineness specified in
As the double florin of the value of four the Schedule) which is allowed, not exceed
shillings is no longer coined , no reference ing the amount specified in that Schedule.
has been made to it in the table . The allowance is necessary because of
The weight and fineness of the coins the difficulty in making coins absolutely
mentioned in this Schedule are (subject to according to the standard weights and
the above -mentioned alterations) according fineness.
to what is provided by the Act fifty -six Silver coins continue legally current,
George the Third, chapter sixty -eight, that irrespective of their weights, until they are
the gold coin of the United Kingdom of Great called in by proclamation .
Britain and Ireland should hold such weight Pre -Victorian gold coins are not now
and fineness as were prescribed in the then current. Silver coins coined before 1817,
existing Mint indenture ; that is to say, that and copper coins before 1861, are not now
there should be nine hundred and thirty -four legal tender.
sovereigns and one ten -shilling piece con- The obverse side of a coin is that which
tained in twenty pounds weight troy of bears the head or more important device ;
standard gold, of the fineness at the trial of the reverse is the other side.
the same of twenty -two carats of fine gold The milling was introduced on the edges
and two carats of alloy in the pound weight of coins in order to make it more difficult
troy ; and further, as regards silver coin , for fraudulent persons to clip the coins.
that there should be sixty -six shillings in A process used by mints to decipher a
every pound troy of standard silver of the worn silver coin is to dip the coin in a solution
fineness of eleven ounces two pennyweights of nitric acid , 1.25 density, and to rinse it
of fine silver and eighteen pennyweights of in distilled water.
alloy in every pound weight troy. (See ALLOY, BASE COINS, BRONZE Coins,
Owing to the rise in the price of silver BULLION , FOREIGN MONEYS, GOLD Corns,
from its pre-war level of something under GRESHAM'S LAW , LEGAL TENDER , LIGHT
30d . per ounce to about 88d . per ounce, GOLD , MAUNDY MONEY , MILLING , MONEY,
so that it was not possible to mint British SILVER COINS, STERLING .)
silver coins except at a loss, the Coinage COLLATERAL SECURITY. Literally a
Act, 1920, was passed to reduce the security which runs parallel or side by side
fineness of the silver in the coins minted with another security.
after the commencement of the Act from The word “ collateral ” is sometimes used
.925 fine to 500 fine. (See SILVER COINS.) when speaking of a secondary security, to
Gold and silver in a pure state are too soft distinguish itfrom the principal or primary
to be used for the purpose of coins, and they
security. It is also used with the meaning,
are, therefore, mixed with another metal, as in the Stamp Act, 1891, of additional
called an alloy, in order to harden them .security. (See MORTGAGE.) It is com
Fine gold is the term used for gold which is
monly used when referring to a security
absolutely pure . Standard gold is pure gold
lodged by some person other than the
mingled with alloy according to the legal debtor, to distinguish it from the debtor's
standard . The column, in the above Sche- own security. It does not necessarily
dule , headed " standard fineness ” shows the mean that the banker must resort to the
proportion of alloy in the gold and silver one security before the other . In the
.

coins. The “ standard weight " is also shown event of a debtor's bankruptcy, anysecurity
and the “ least currentweight " of gold coins. deposited by him must be realised, or
When a gold coin has been in circulation for the value estimated, and the amount .
some time, it becomes worn and consequently deducted from the debt. A claim can then
reduced in weight. When the weight of a be made upon the debtor's estate for the
coin falls below the “ least current weight," difference. Before dealing with the bank
it ceases to be legal tender, but that fact rupt's security , the banker should communi
does not prevent light gold coins from pass. cate with the trustee. If, however, the
ing freelyin circulation , as people do not, as banker holds security from some person
152
COL ) DICTIONARY OF BANKING [ COL

other than the debtor, he can claim upon opened for all further transactions. This pre
the estate for the full amount owing by the vents payments to credit of the account going
debtor , and, after receiving his dividend in reduction of the liability of the person
from the estate, can fall back upon the who gave the security. The new account
collateral security for the deficiency . Where should, of course, be kept in credit pending
collateral security is realised before the a fresh arrangement. (See CLAYTON'S CASE ,
bankrupt's estate is settled , the amount TITLE DEEDS.)
should be kept in a separate account, dis- As to the stamp duty on additional
tinct from the debtor's account. security see under MORTGAGE.
Collateral security in the form of deeds COLLECTING BANKER . The position of
must be accompanied by a memorandum a collecting banker when he collects a cheque
of deposit or mortgage, signed by the party for a customer or for a stranger, either with
giving the security. If certificates of shares a forged indorsement or a defective title,
are given they must be accompanied by and when he cashes a cheque to a customer
transfers and a qualifying agreement. or a stranger under the same conditions, is
If a partner deposits his own private se- indicated below. (See FORGERY .)
curities as cover for the partnership account, A banker should not collect a crossed
they are collateral, and the banker can, in cheque for a stranger, as he will be liable to
the eventof the failure of the firm , prove the true owner if the stranger had no title
for the full amount owing, obtain the divi- to the cheque. In collecting a crossed
dend and then resort to the private partner's cheque for a customer, to gain theprotection
security. There is a danger, however, that of Section 82 of the Bills of Exchange Act,
the private security may prove to be 1882, the banker must act in good faith and
partnership property . without negligence, and the protection is
A guarantee is a collateral security. (See only as against the true owner. (See
GUARANTEE .) Where a surety , or a third CROSSED CHEQUE, where reference is also
party, who has given security, for an account, made to the Act of 1906 , which extends
pays off the whole debt he is entitled to any Section 82 of the Bills of Exchange Act.)
securities of the customer held for the As to what constitutes a person a customer,
account. Before giving up such securities, see CUSTOMER .
the consent of the customer and any other s A collecting banker should see that the
interested party should be obtained. (See indorsements of all order cheques received
SUBROGATION .) for collection are correct. In Bavins Junr.
Upon receipt of notice of the death of the and Sims v. London and South Western
person who has given security for another, Bank ( 1900, 1 Q.B. 270) the Court of
a banker should at once stop the debtor's Appeal held that the collecting bankers were
account and arrange for a fresh one to be guilty of negligence in failing to observe
COLLECTED, CASHED ,
For Customer. For Stranger, For Customer. For Stranger,

Stolen , Stolen , Stolen , Stolen ,

Indorsement Indorsement Indorsement Indorsement
Forged Right or Forged Right or
Forged Right or Forged Right or
Indorsement. Bearer Indorsement. Bearer Indorsement. Bearer Indorsement. Bearer
Cheque. Cheque. Cheque. Cheque.
Not liable to Not liable to
Uncrossed Liable to true owner , true owner ,
Liable to Liable to Liable to Liable to as banker is Liable to as banker is
anotheronbank. true owner.
cheque true owner. true owner . true owner . true owner . a holder in true owner . a holder in
due course. due course .

Crossed cheque Not liable to Not liable to

on another true owner . true owner. Ditto Ditto . Ditto.
Protected by Protected by Ditto . Ditto. Ditto .
bank:
Section 82. Section 82.

Crossed cheque
" not
e
negoti Ditto . Ditto . Ditto . Ditto . Ditto . Liable to Ditto.
Liable to
abl true owner .
on an true owner,
other bank .

153
COL ) DICTIONARY OF BANKING [COL

that an indorsement did not agree with the usually remits it direct to the banker on
name of the payee. whom it is drawn, in urgent cases enclosing
In a judgment of the Privy Council in a stamped telegraph form for immediate
Commissioners of Taxation v . English, advice as to fate.
Scottish, and Australian Bank , Ltd. ( 1920, Cheques are often crossed “ account
36 T.L.R. 305 ), Lord Dunedin said “the payee " or account John Jones.” Such
test of negligence is whether the transaction words are not provided for in the Bills of
of paying in any given cheque, coupled with Exchange Act, 1882, but a collecting banker
the circumstances antecedent and present, would, no doubt, be considered negligent if
was so out of the ordinary course that it he placed a cheque so crossed to any account
ought to have aroused doubts in the bankers' other than that indicated in the crossing.
minds and caused them to make inquiry ." (See ACCOUNT PAYEE.) It is desirable that
See further remarks in this case under all cheques paid to credit should be indorsed
CUSTOMER. by customers.
A banker should not collect for the credit In the case of a cheque payable on con
of an agent's private account cheques dition of a receipt being signed , it should be
payable to his principal, unless authorised collected only for the payee , as the docu
in writing by the principal. ment is not considered to be transferable.
In Souchette, Ltd. v. London County (See RECEIPT ON CHEQUE .)
Westminster & Pary's Bank, Ltd. ( 1920, See the case of Morison v. London County
K.B.D. 36 T.L.R. 195) , where cheques pay- & Westminster Bank under Not NEGOTIABLE
able to a third party “ or bearer ” were CHEQUE, PER PROCURATION . (See HOLDER
credited to the account of T. Matthews, one FOR VALUE .)
of the directors who had drawn the cheques COLONIAL REGISTER . A branch regis
on behalf of the company, it was held that ter of members of a company residentin a
the collecting banker was not negligent in colony. The Companies (Consolidation)
collecting those cheques as the banker was Act, 1908, provides as follows :
entitled to suppose that the directors who
drew these cheques drew them to “ bearer " “ Power for Company to keep Colonial Register.
for convenience in order that they might “ Section 34. (1) A company having a
be dealt with by the bearer for the benefit share capital, whose objects com
of the company. But where the cheques prise the transaction of business in
were payable to a third party “ or order," a colony, may, if so authorised by
and they were credited to the account of its articles, cause to be kept in any
T. Matthews, who had forged the indorse colony in which it transacts busi
ments, it was held that the bank was ness a branch register of members
negligent. (Other points in this case are resident in that colony (in this Act
referred to under ALTERATIONS, CONVERSION . ) called a colonial register).
Apart from the question of a forged in- " (2) The company shall give to the regis
dorsement or a defective title, the collecting trar of companies notice of the situa
banker has to remember that when he credits tion of the office where any colonial
a customer's account with a cheque on register is kept, and of any change
another bank, or gives cash for it, the cheque in its situation, and of the discon
may be returned to him dishonoured or tinuance of the office in the event of
because payment has been stopped by the its being discontinued .
drawer . " (3) For the purpose of the provisions of
When a country banker receives from his this Act relating to colonial registers
customer a cheque drawn upon a banker in the term ' colony ' includes British
another town, it is customary for the cheque India and the Commonwealth of
to be remitted to London for collection on Australia .
the same day that it is paid to credit. But
it has been held that a banker is not bound Regulations as to Colonial Register.
to send it forward for collection on the day - 35. ( 1 ) A colonial register shall be
of receipt, and that it may be held until the deemed to be part of the company's
following day. (See PRESENTMENT FOR register of members in this and the
PAYMENT.) next following Section called the
If the cheque is for a large amount or by a principal register ).
doubtful drawer, the collecting banker " (2) It shall be kept in the same manner
154
COL) DICTIONARY OF BANKING (COM

in which the principal register is by of a share registered in a

this Act required to be kept, except colonial register shall be
that the advertisement before clos deemed to be a transfer of
ing the register shall be inserted in property situate out of the
some newspaper circulating in the United Kingdom , and, unless
district wherein the colonial register executed in any part of the
is kept, and that any competent United Kingdom , shall be
court in the colony may exercise exempt from British stamp
the same jurisdiction of rectifying duty ;
the register as is under this Act (6) On the death of a member
exerciseable by the High Court, and registered in a colonial regis
that the offences of refusing inspec ter, the shares of the de
tion or copies of a colonial register, ceased member shall, if he
and of authorising or permitting the died domiciled in the United
refusal may be prosecuted sum Kingdom , but not otherwise,
marily before any tribunal in the be deemed , so far as relates
colony having summary criminal to British duties, to be part
jurisdiction. of his estate and effects
“ ( 3) The company shall transmit to its situate in the United King
registered office a copy of every dom for or in respect of
entry in its colonial register as soon which probate or letters of
as may be after the entry is made ; administration is or are to be
and shall cause to be kept at its granted , or whereof an in
registered office, duly entered up ventory is to be exhibited
from time to time, a duplicate of its and recorded, in like manner
colonial register, and the duplicate as if he were registered in the
shall, for all the purposes of this Act, principal register."
be deemed to bepart of the principal COMBINING ACCOUNTS. (See GARN
register. ISHEE ORDER , SET OFF. )
" (4) Subject to the provisions of this COMMANDITE PARTNERSHIP. COM .
Section with respect to the duplicate MANDITE, SOCIÉTÉ EN. In France, a form
register, the shares registered in a of partnership where some of the partners
colonial register shall be distin- merely supply part of the capital, and do not
guished from the shares registered take any part in the management of the
in the principal register, and no business. Such partners are called com
transaction with respect to any manditaires and are liable for losses only to
shares registered in a colonial register the extent of the sums which they have
shall, during the continuance of that contributed .
registration , be registered in any PARTNE
For the English equivalent, see LIMITED
other register . RSHIP .
“ (5) The company may discontinue to COMMISSION . Commisson is the charge
keep any colonial register, and made by a banker for services rendered to a
thereupon all entries in that register customer. The services rendered may be
shall be transferred to some other very considerable, for a current account
colonial register kept by the com- customer may pay in to his credit cheques
pany in the same colony, or to the drawn upon towns all over the British
principal register. Islands, which it is the duty of the banker to
" ( 6) Subject to the provisions of this Act, collect ; and the customer may also make
any company may, by its articles, payments in any part of the country by
make such provisons as it may means of cheques drawn upon his account.
think fit respecting the keeping of In order that a banker may carry out
colonial registers . effectively these two operations, arrange
00 ments must be made with other bankers,
Stamp Duties in case of Shares registered with agents in London or by a head office
in Colonial Registers. in London . To recoup himself for the ex
" 36 .
In relation to stamp duties the pense of such arrangements and to allow a
following provisions shall have effect :- recompense for the trouble and services, a
( a) An instrument of transfer commission is charged by many bankers.
155
COM ) DICTIONARY OP BANKING
In some banks, in lieu of commission, the
customer has to maintain a certain credit
balance upon which no interest is allowed .
The Courts have held that a banker is
entitled to charge commission for discounting
bills and for accepting bills .
As to Stockbrokers' commissions, see
STOCKBROKER .
As to a del credere commission , see DEL
CREDERE .
COMMISSION is the name applied to a
document in the nature of a power of
attorney in Scotland. As to the stamp duty,
see LETTER OR POWER OF ATTORNEY .
COMMISSIONS TO UNDERWRITERS.
( See UNDERWRITING .)
COMMITTEE, LUNACY . Where a per:
son is found by inquisition — that is, by a legal
inquiry - to be insane and incapable of man-
aging his affairs, the person whois appointed
to look after his interests is called a com
mittee ." Where the committee consists
of several persons, they should all join in
signing cheques. (See LUNATIC .)
COMMITTEE OF INSPECTION . The per-
sons appointed by the creditors to superin
tend the administration of a bankrupt's
property by the trustee . (See TRUSTEE IN
BANKRUPTCY .)
The provisions of the Bankruptcy Act,
1914, are as follow :
“ Section 20. (1 ) The creditors qualified
to vote may, at their first or any
subsequent meeting by resolution,
appoint a committee of inspection
for the purpose of superintending the
administration of the bankrupt's
property by the trustee ." The
committee of inspection shall con
sist of not more than five nor less
than three persons. He may be a
creditor or the holder of a general
proxy or general power of attorney
from a creditor, but he cannot act
until the creditor has proved his debt
and the proof has been admitted ;
or he may be a person to whom a
creditor intends to give a general
proxy or general power of attorney,
but he cannot act until he holds such
proxy or power, and until the
creditor has proved his debt and the by the committee of inspection, authorise
proof has been admitted (s.s. 2 ).
s.s.(3 ) The committee of inspection shall
meet at such times as they shall from
time to time appoint, and, failing
such appointment, at least once a
month ; and the trustee or any
(COM
member of the committee may also
call a meeting of the committee as
and when he thinks necessary .
“ (4) The committee may act by a
majority of their members present
at a meeting, but shall not act
unless a majority of the committee
are present at the meeting.
“( 5) Any member of the committee may
resign his office by notice in writing
signed by him , and delivered to the
trustee .
“ (6) If a member of the committee be
comes bankrupt, or compounds or
arranges with his creditors, or is
absent from five consecutive meet
ings of the committee, his office
shall thereupon become vacant.
“ ( 7) Any member of the committee may
be removed by an ordinary resolu
tion at any meeting of creditors of
which seven days' notice has been
given stating the object of the
meeting.
“ (8) On a vacancy occurring in the office
of a member of the committee, the
trustee shall forthwith summon a
meeting of creditors for the purpose
of filling the vacancy, and the meet
ing may by resolution appoint
another creditor or other person
eligible as above to fill the vacancy.
“ ( 9) The continuing membersof the com
mittee, provided there be not less
than two such continuing mem
bers, may act notwithstanding any
vacancy in their body ; and , where
the number of members of the com
mittee of inspection is for the time
being less than five, the creditors
may increase that number so that
it do not exceed five .
" ( 10) If there be no committee of inspec
tion, any act or thing or any direc
tion or permission by this Act
authorised or required to be done or
given by the committee may be
done or given by the Board of
Trade on the application of the
trustee. "
The Board of Trade may, on application
the trustee to have an account with a local
bank . (See under TRUSTEE IN BANK
RUPTCY .)
In connection with the winding up of a
company, a committee may be appointed to
supervise the liquidation . It shall consist
156
COM ) DICTIONARY OF BANKING [ COM

of creditors and contributories of the com- should be exhibited . A copy of the com
pany in such proportions as may be agreed pany's balance sheet should also be obtained.
on by the meetings of creditors and contri- | The directors of the company should pass
butories, or as, in case of difference, may be a resolution respecting the opening of the
determined by the Court (Section 160, s.s. 1 , account, and embody therein the regulations
of the Companies (Consolidation) Act, 1908 ). of the company with respect to the way
Sub -sections 3 to 10, see above, are practically in which cheques are to be drawn and
to the same effect as sub -sections 2 to 9 of indorsed, and bills drawn, accepted and
Section 160 of the Companies Act. (See indorsed . A copy of the resolution, signed
BANKRUPTCY, COMPANIES.) by the chairman or the secretary, and a
COMMITTEES. (See SOCIETIES.) specimen of the signature of each person
COMMON LAW . Customs and usages who has power to sign, should be furnished
which , by immemorial custom and usage, to the banker.
have become law , are called common law . The resolution should be communicated
The law which is created by Acts of to the bank in some such form as the
Parliament is called " statute law ” ( q.v.). following :
Common law is unwritten . Blackstone We hereby certify that the following
says that where the old custom of the king- resolution of the board of directors of
dom is fallen into disuse, or become dis- the ...... Company, Limited ,was passed
potable, Parliament has sometimes by a at a meeting of the board held on the ....
declaratory statute thought proper to declare and has been duly recorded in the minute
what the common law is and ever has book of the company :
been . " Resolved. That a banking account
COMMON SEAL . ( See SEAL.) for the company be opened with the
COMMON SEAL BOOK . A record of Bank, Limited , and
every document which sealed with the that the said bank be and is hereby
common seal of a bank is preserved in this authorised to honour cheques, bills, and
book. An exact description of each docu- promissory notes drawn , accepted , or
ment is given, with the date of sealing and made on behalf of the company by (here
the names of the persons in whose presence insert how many persons have to sign)
the seal was affixed, and each entry should and to act on any instructions so given
be initialled by one, at least, of such persons relating to the account or transactions of
when the relative document has been the company ."
sealed . Each entry may be numbered, and ..Chairman .
the number placed upon the relative
document. . Secretary
COMMON STOCK . An American term for
what, in this country, is called ordinary Where the secretary is also a director of
stock . the company and cheques are to be signed
COMPANIES. Before dealing with a by, say, one director and countersigned by
joint stock company, a banker should make the secretary, the resolution should state
himself acquainted with its memorandum whether ornot the secretary may sign
and articles of association . Every person cheques in both capacities, as , in such cases,
who does business with a company is bound it is often the intention that the director's
by the contents of those documents. When signature should be that of a director other
an account is opened by a company, it is than the secretary. It may be that the
advisable that the banker should be fur- company's articles of association do not
nished with a copy of the memorandum and allow one person to act in the double capacity.
articles, so that he may ascertain exactly In companies governed by Table A (see
what regulations there are in connection with TABLE A) Rule 77 provides that the office
keeping a banking account, and with draw- of director shall be vacated if the director
ing , accepting and indorsing bills, and what holds any other office of profit under the
powers of borrowing and of mortgaging the company except that of managing director
property of the company is given to the or manager .
directors. The certificate of incorporation, When an overdraft is required, a resolu
and, where the company is not a private tion should be passed by the directors of the
one, the registrar's certificate that the company authorising the overdraft and the
company is entitled to commence business, charge on the proposed security. A copy
157
COM ] DICTIONARY OF BANKING [ COM

of the resolution should be given to the company. Contracts entered into after
banker. incorporation are provisional only and will
Mortgages and charges as detailed in not bind the company until it is entitled
Section 93 of the Companies (Consolidation) to commence business. (See ARTICLES OF
Act, 1908, require to be registered with the Association .) A company cannot exercise
Registrar of Joint Stock Companies within its borrowing powers until it is entitled to
twenty -one days from the date of their commence business. Before lending money
creation . (See REGISTRATION OF MORTGAGES to a public company a banker should
AND CHARGES.) The Registrar's certificate therefore see the certificate of the registrar
of registration should be deposited with the of companies stating that the company is
security. The banker can ascertain , by a entitled to commence business. A private
search made at the office of the Registrar of company can commence business as soon as
Companies, what charges have already been incorporated and the above certificate is not
registered and , by an inspection of the com- required. The regulations respecting the
pany's register of mortgages, if any recent commencement of business by à public
charge has been created though not, so far, company and the exercise of its borrowing
registered with the Registrar. powers are set forth in Section 87 of the
In Mahonyv. East Holyford Mining Co., Companies ( Consolidation ) Act, which is as
Ltd. ( 1875, L.R. , 7 H.L., 869 ), Lord Hather follows :
ley said that those who deal with joint “ Section 87 . (1 ) A company shall not
stock companies must be affected with commence any business or exercise
notice of all that is contained in the memor any borrowing powers unless—
andum and articles of association ." " A “ (a ) shares held subject to the
banker dealing with a company must be payment of the whole
taken to be acquainted with the manner amount thereof in cash have
in which, under the articles of association , been allotted to an amount
the moneys of the company may be drawn not less in the whole than
out of his bank for the purposes of the the minimum subscription ;
company. ... The bankers must also be and
taken to have knowledge from the articles “ ( ) every director of the com
of the duties of the directors, and the mode pany has paid to the com
in which the directors were to be appointed . pany on each of the shares
But after that, where there are persons taken or contracted to be
conducting the affairs of a company in a taken by him , and for which
manner which appears to be perfectly he is liable to pay in cash , a
consonant with the articles of association , proportion equal to the pro
then those so dealing with them externally portion payable on applica
are not to be affected by any irregularities tion and allotment on the
which may take place in the internal shares offered for public
management of the company." subscription, or in the case
In case of need , the memorandum and of a company which does not
articles may be inspected by anyone at the issue a prospectus inviting
office of the Registrar of Companies, on the public to subscribe for
payment of a small fee. its shares, on the shares
If the company has issued debentures or payable in cash ; and
debenture stock , it will be necessary to “ (c) there has been filed with the
ascertain in what way they are secured, registrar of companies a
particularly if the title deeds of the com statutory declaration by the
pany's property are offered as security, as secretary or one of the
the company may be restrained from directors, in the prescribed
creating any charge in priority to the form , that the aforesaid
debentures. ( See REGISTRATION OF MORT conditions have been com
GAGES AND CHARGES.) plied with ; and
In the case of a new company, it should " ( d) in the case of a company
be noted that it is only from the date of which does not issue a pros
incorporation, as shown in the certificate of pectus inviting the public to
incorporation, that the company is capable subscribe for its shares there
of exercising the functions of an incorporated has been filed with the
158
COM ) DICTIONARY OF BANKING [ COM

registrar of companies a the contract with one another . A company

statement in lieu of pros- or association, which I take really to be
pectus. synonymous terms, is an arrangement by
" (2) The registrar of companies shall, on which parties intend to have a partnership,
the filing of this statutory declara- which would be constantly changing ; that
tion , certify that the company is is to say, to have what I may call a succes
entitled to commence business, and sion of partnerships, a partnership to -day
that certificate shall be conclusive consisting of certain members, but to
evidence that the company is so morrow consisting of some of those members
entitled : only and some others who have come in.
Provided that in the case of a com- Hence there will be a constant shifting of
pany which does not issue a pros- the partnership, a determination of the old,
pectus inviting the public to subscribe and the creation of a new partnership,
for itsshares the registrar shall not formed with a view and always formed
give such a certificate unless a state- with the intent, so far as the members can
ment in lieu of prospectus has been by. agreement between themselves, of bind
filed with him . ing the next partnership to take upon itself
" ( 3) Any contract made by a company the assets and debts of the old partner
before the date at which it is entitled ship. This object could not be effected in
to commence business shall be pro- point of law by any arrangement between
visional only, and shall not be the persons themselves, unless the persons
binding on the company until that contracting with them by a novatio author
date, and on that date it shall | ised the change ; or, unless it was by
become binding. special provisions in the Acts of Parliament
“ (4) Nothing in this Section shall prevent which have given sanction to such arrange
the simultaneous offer for subscrip- ments, and to a certain extent, and under
tion or allotment of any shares and certain circumstances, have allowed that to
debentures or the receipt of any be effected. . That is the sole distinction
money payable on application for between association and partnership .”
debentures. In a partnership , each partner is respon
“ (5) If any company commences business sible for the debts of the firm , and one
or exercises borrowing powers in partner cannot transfer his interest, or share,
contravention of this Section, every without the consent of the other partners.
person who is responsible for the As to a limited partnership , see LIMITED
contravention shall, without pre- PARTNERSHIP.
judice to any other liability , be liable In a company (that is an unincorporated
to a fine not exceeding fifty pounds, company) the members are liable, like part
for every day during which the ners, for the company's debts, but each
contravention continues. member can transfer his share or shares
“ (6) Nothing in this Section shall apply to without consulting the other members.
a private company, or to a company In an incorporated company, the members
registered before the first day of form one body and creditors can proceed
January nineteen hundred and one, only against the company itself. In the most
or to a company registered before important kind of joint stock company
the first day of July nineteen hundred that is, the company limited by shares - each
and eight which does not issue a member is liable only to the extent of the
prospectus inviting the public to nominal amount of the shares he holds.
subscribe for its shares. " If the company is unlimited , each member
The difference between a company and an is liable to the company or the liquidator
ordinary partnership was defined by James, for the debts.
L.J., in Smith v. Anderson (1880, 15 Ch. D. By Section 115 :
247). as follows: " An ordinary partnership is “ If at any time the number of members
a partnershipcomposed ofdefinite individuals, of a company is reduced , in the case of a
bound together by contract between them- private company, below two, or in the case
selves to continue for some joint object, of any other company, below seven, and it
either during pleasure or during a limited carries on business for more than six months
time, but the partnership is essentially com while the number is so reduced, every person
posed of the persons originally entering into who is a member of the company during
159
COM ] DICTIONARY OF BANKING COM

the time that it so carries on business after Committee of Inspection .

those six months, and is cognisant of the Company limited by Guarantee.
fact that it is carrying on business with Company limited by Shares.
fewer than two members, or seven members, Company outside the United Kingdom .
as the case may be, shall be severally liable Company unlimited .
for the payment of the whole debts of the Contracts .
company contracted during that time, Contributories.
and may be sued for the same, without Court, Powers of, in winding up .
joinder in the action of any other member .” Debenture.
By Section 77 : Defunct Company .
" A bill of exchange or promissory note Directors .
shall be deemed to have been made,accepted, Dividend .
or indorsed on behalf of a company if made, Fees payable to Registrar of Companies,
accepted , or indorsed in the name of, or by Floating Charge.
or on belialf or on account of, the company Forged Transfer.
by any person acting under its authority.” Founders' Shares .
In Dey v. Pullinger Engineering Co., Ltd. Guarantee.
( 1920, K.B.D. 37 T.L.R. 10) a bill was Investigation of Company's Affairs.
drawn on behalf of a company by the Letter of Allotment.
managing director, one director, and the Limited Partnership .
secretary , and was accepted by the secre Liquidator.
tary, who had, in fact, noauthority to draw Loan Capital
or accept bills. The bill came into the Meetings.
hands of a holder in due course, and was Memorandum of Association.
dishonoured . It was held that anyone Name of Company .
looking at the articles of association could Official Receiver.
see that the managing director might have Official Seal for use Abroad .
the power to draw and indorse this bill, Private Company .
and that the holder was entitled to assume Prospectus.
that he had authority and was not bound Proxy .
to inquire into the internal management of Public Company .
the company or to prove an actual authority. Public Utility Companies (Capital Issues)
The word authority ” in Section 77 (see Act, 1920.
above) includes express or implied authority. Quorum .
See Section 63 under NAME OF COMPANY. Receiver.
A company may seal a bill of exchange Reconstruction .
instead of signing it. See Section 91 , Bills Reduction of Share Capital.
of Exchange Act, 1882, under Agent. See Register of Members ofCompany.
also the cases Chapman v . Smethurst, and Register of Mortgages .
Landes v. Marcus and Davids in the same Registered Office .
article. Registrar of Companies.
The different matters relating to com . Registration of Business Names.
panies are referred to under the following Registration of Mortgages and Charges.
headings : Reserve Liability.
Allotment. Resolutions.
Annual List of Members of Company. Scrip.
Arrangement with Creditors. Seal.
Articles of Association . Share Capital
Auditors. Share Warrant.
Banking Company. Special Settlement.
Blank Transfer . Stannaries.
Borrowing Powers. Stock .
Certificate . Subrogation .
Certificate of Incorporation . Table A.
Certificate of Registration . Transfer of Shares.
Certificate to Commence Business. Transmission of Shares.
Charitable Companies. Underwriting.
Colonial Register. Votes .
160
COM ) DICTIONARY OF BANKING (COM
Winding up provision for a share capital, notwith
Winding up by the Court. standing that the nominal amount
Winding up Subject to Supervision of the or number of the shares or interests
Court. is not specified thereby."
Winding up Unregistered Companies. By Section 10, in the case of a company
Winding up Voluntarily. limited by guarantee, articles of association
COMPANIES (CONSOLIDATION ) ACT. must be registered with the memorandum .
1908. (8 Edw. 7 , c. 69.) An Act to (See ARTICLES OF AssociATION.) In the
consolidate the Companies Act, 1862, and third Schedule to the Act a form of articles
the Acts amending it. It came into force is given which may be adopted. (See
on April 1 , 1909. ARTICLES OF ASSOCIATION, COMPANIES,
References to the various subjects dealt MEMORANDUM OF AssociaTION, NAME OF
with in the Act will be found under the COMPANY.)
heading COMPANIES. COMPANY LIMITED BY SHARES . A
COMPANIES (PARTICULARS AS TO company where the liability of its members
DIRECTORS) ACT, 1917. (See REGISTRA- is limited by the memorandum of association
TION OF BUSINESS NAMES.) to the amount, if any , unpaid on the shares
COMPANY DEFUNCT. (See Deruxct respectively held by them .
COMPANY .) The word “ Limited ” must be the last
COMPANY LIMITED BY GUARANTEE . word in the name of the company . A
A company where the liability of its members contraction of the word should not be used
is limited, by the memorandum of associa- officially.
tion, to such amount as the members may In Stacey & Co. , Ltd. v. Wallis & Others
respectively thereby undertake to contribute ( 1912, 28 T.L.R.) where a bill was addressed
to the assets of the company, in the event to J. & T. H. Wallis (Ltd.) it was held that
of its being wound up. Such companies are the name was correctly stated , as Ltd.
now only registered where they exist was such a constant abbreviation that
otherwise than for profit. They are usually every commercial man of intelligence would
)

formed for the purpose of clubs and societies know that " limited ” was meant.
which are not intended to make a profit. A limited company formed for promoting
The word “ Limited ” must be the last commerce, art , science, religion, charity or
word in the name of the company. But other useful object, where any profits or
see CHARITABLE COMPANIES. income are to be used in promoting its
Section 21 of the Companies (Consoli- objects, may be licensed by the Board
dation) Act, 1908, provides : of Trade as a company with limited
" (1 ) In the case of a company limited liability, without the addition of the word
by guarantee and not having a share “ Limited ” to its name. ( See CHARITABLE
capital, and registered on or after COMPANIES.)
the first day of January, nineteen Every limited company must have its
hundred and onc, every provision name painted or affixed on the outside of
in the memorandum or articles or every place where its business is carried on,
in any resolution of the company and engraven on its seal, and mentioned in
purporting to give any person a legible characters in all notices and official
right to participate in the divisible publications of the company, and in all
profits of the company otherwise bills of exchange, promissory notes, indorse
than as a member shall be void. ments, cheques, invoices, receipts, etc. (See
" ( 2) For the purpose of the provisions of NAME OF COMPANY.)
this Act relating to the memo- By Section 282 of the Companies (Con
randum of a company limited by solidation) Act, 1908 :
guarantee and of this Section, every “ If any person or persons trade or
provision in the memorandum or carry on business under any name or title
articles, or in any resolution , of any of which ‘ Limited ' is the last word , that
company limited by guarantee and person or those persons shall, unless duly
registered on or after the first day incorporated with limited liability, be liable
of January , nineteen hundred and to a fine not exceeding five pounds for every
one, purporting to divide the under- day upon which that name or title has been
taking of the company into shares used .'
or interests shall be treated as a The number of members of a public limited
161
11-1575 )
COM ] DICTIONARY OF BANKING (COM

company should not fall below seven ; if | are to be observed by the directors when
it does , Section 115 enacts : mortgaging the company's property, the
“ If at any time the number of mem- banker may assume that all the regulations
bers of a company is reduced, in the case and formalities have been complied with ;
of a private company, below two, or, in the he is not expected, noris he able, to examine
case of any other company, below seven , into the “ indoor working ” of a company,
and it carries on business for more than six (See REGISTRATION OF MORTGAGES and
months while the number is so reduced , CHARGES.) . The directors, however, may
every person who is a member of the com- be expressly prohibited from mortgaging the
pany during the time that it so carries on property. ( See ARTICLES OF ASSOCIATION
business after those six months, and is COMPANIES,MEMORANDUM OF ASSOCIATION .)
cognisant of the fact that it is carrying on COMPANY , NOT FOR PROFIT. (See
business with fewer than two members, or CHARITABLE COMPANIES.)
seven members, as the case may be, shall be COMPANY OUTSIDE THE UNITED
severally liable for the payment of the whole KINGDOM . The Companies (Consolidation)
debts ofthe company contracted during that Act, 1908, makes special provisions with
time, and may be sued for the same, without respect to companies incorporated outside
joinder in the action of any other member." the United Kingdom , but with a place of
In a limited company the liability of business established within the United King
directors or managers may , if so provided dom. These provisions will apply to cases
by the memorandum , be unlimited ( Section of companies which previously have regis
60 ). Channel Islands in order to avoid
tered in the
A public company, registered after 31 the company laws in force in this country.
Dec., 1900, must not exercise any borrowing Section 274 is as follows :
powers until the Registrar has certified " ( 1) Every company incorporated
that the company is entitled to commence outside the United Kingdom which
business, ( see Section 87, under COM establishes a place of business within
PANIES) ; but a private company is entitled the United Kingdom shall within
to commence business immediately on one month from the establishment
incorporation . of the place of business file with the
As a rule , the memorandum of association registrar of companies
includes a power to borrow money and " ( a) a certifiedcopy of the charter,
mortgage the landed property, but before statutes , or memorandum
making an advance the banker should and articles of the company,
examine that document and the articles or other instrument con
of association , to ascertain exactly what stituting or defining the
the powers of the company are . If no constitution of the company,
express power is taken inthememorandum and, if the instrument is not
of association, in the case of an ordinary written in the English lan
trading company the power to borrow and guage, a certified translation
mortgage for ordinary business purposes is thereof ;
implied . If the memorandum includes a “ (6) a list of the directors of the
power to borrow up to a certainfixed amount, company ;
the banker must be careful not to exceed “ (c) the names and addresses of
that amount. For if a company borrows in some one or more persons
excess of its powers, the security will not resident in the United King
be binding on thecompany. The directors, dom authorised to accept
however, may be held personally liable, and on behalf of the company
the money may, probably, be recovered in service of process and any
so far as it was used by the company to pay notices required to be served
its debts. (See GUARANTEE , SUBROGATION .) on the company ;
If a company has power to borrow , and and , in the event of any alteration
the advance required will not exceed any being made in any such instrument
fixed limit of borrowing that there may be, or in the directors or in the names
the banker will be safe in accepting the or addresses of any such persons as
company's deeds with a memorandum aforesaid , the company shall within
signed by the directors. If the articles of the prescribed time file with the
association provide that certain regulations registrar a notice of the alteration .
162
COM ] DICTIONARY OF BANKING [COM

“ (2) Any process or notice required to be or both of the following things,

served on the company shall be namely :
sufficiently served if addressed to “ (a) Increase the nominal amount
any person whose name has been so of its share capital by
filed as aforesaid and left at or sent increasing the nominal
by post to the address which has amount of each of its shares,
been so filed . but subject to the condition
( 3) Every company to which this Section that no part of the increased
applies shall in every year file with capital shall be capable of
the registrar such a statement in the being called up except in the
form of a balance sheet as would , event and for the purposes
if it were a company formed and of the company being wound
registered under this Act and having up ;
“( 6) Provide that a specified por
a share capital, be required under tion of its uncalled share
this Act to be included in the annual
summary . capital shall not be capable
ofbeing called up except in
“( 4) Every company to which this Section the event and for the pur
applies, and which uses the word poses of the company being
Limited ' as part of its name, wound up."
shall Section 251 specially provides that aa bank
" ( a) in every prospectus inviting of issue registered as a limited company shall
subscriptions for its shares or not be entitled to limited liability in respect
debentures in the United of its notes, and the members shall be liable
Kingdom state the country as if it had been registered as unlimited .
in which the company is ( See ARTICLES OF ASSOCIATION, BANKING
incorporated ; and COMPANY, COMPANIES, MEMORANDUM OF
“( 6) conspicuously exhibit on ASSOCIATION .)
every place where it carries COMPENSATING ERRORS. (See BALANCE
on business in the United OF ERRORS.)
Kingdom the name of the COMPENSATING INTEREST . Where a
company and the country in customer has two accounts, one in credit and
which the company is in- one overdrawn, and the former is regarded
corporated ; and as a set off to the latter, interest is allowed
" (c) have the name of the com- in the credit account at the same rate as
pany and of the country in that charged on the overdraft , but only
which the company is incor- to the extent of the overdraft. Thus the
porated mentioned in legible interest allowed compensates for the interest
characters in all bill-heads charged.
and letter paper, and in all COMPOSITION . Where an English bank
notices, advertisements, and authorised to issue its own notes, issues them
other official publications under licence on unstamped paper, a com
of the company ." (See Com- position, in lieu of stamp duty , of 3s. 6d. for
PANIES, REGISTRATION OF each £ 100, or fraction thereof, of the notes
BUSINESS NAMES.) in circulation, is payable half-yearly. The
COMPANY, UNLIMITED . That is, a com- composition in Ireland is also 3s. 6d. per
pany not having any limit to the liability £ 100 ; but in Scotland it is at the rate of
of its members for the debts of the company. As. 2d. for each £100 . (See LICENCE .)
An unlimited company may register under As to the Bank of England, see under
the Companies (Consolidation) Act, 1908, BANK OF ENGLAND .
as limited , but such registration shall not By 9 Geo. IV, c. 23, Section 7, each half
affect any liabilities incurred before the year within fourteen days after the first day
registration . of January and the first day of July in every
year, an account verified upon oath (before
Section 58 of the above Act is as follows :-
“An unlimited company having a share a justice of the peace or a commissioner to
capital may, by its resolution for administer oaths in chancery) must be sent
registration as a limited company to the commissioners of the amount of all
in pursuance of this Act, do either unstamped promissory notes and bills of
163
COM ) DICTIONARY OF BANKING ( COM

exchange in circulation on each Saturday in made, of sixpence (increased

the preceding half- year, together with the to one shilling by the Finance
average amount of such notes and bills in Act, 1920 ), for every such ten
circulation . The affidavit may be by a pounds or fraction of ten
“ cashier, accountant, or chief clerk ," and pounds ;
the manager of a bank has been held to be a and in consideration of the payment
chief clerk within the meaning of the Act. transfers of the stock in respect of
The composition for stamp duty must be which the composition has been paid
paid on the average amountas shown by that shall be exempt from stamp duty.
return . Bankers licensed to issue unstamped “ (2) All sums certified by the Commis
notes or bills must give security by bond sioners to have been received by way
for the due performance of the various of composition for stamp duty on
conditions attaching to their issue. (See transfers of stock under this Section
Bank NOTES, LICENCE , NOTE RETURN .) shall be paid over to the National
COMPOSITION ( TRANSFERS, SHARES, Debt Commissioners, and shall be
ETC.). The Stamp Act, 1891, provides as applied by them towards the reduc
follows : tion of the National Debt in such
Composition for certain Stamp Duties. manner as the Treasury from time
“ Section 114. (1) By way of composition to time direct."
for stamp duty chargeable on trans- By the Finance Act, 1894 :
fers of any stock of the Government “ Section 39. The provisions contained in
of Canada which may be inscribed in Section 114 of the Stamp Act, 1891, in refer
books kept in the United Kingdom ence to the composition for stamp duty
or of any Colonial stock to which the chargeable on transfers of certain stocks,
Colonial Stock Act, 1877, applies, the shall extend to the stock of any foreign
Government of Canada or other state or government which is inscribed. in
colony, as the case may be, shall pay the books of the Bank of England .”
to the Commissioners a sum as stamp (See Section 14, Finance Act, 1895 , under
duty calculated at the rate of one MARKETABLE SECURITY.)
shilling and threepence ( increased to By the Finance Act, 1898 :
two shillings and sixpence by the Section 5. The provisions contained in
Finance Act, 1920) , for every ten Section 114 of the Stamp Act, 1891, in
pounds, and anyfractionoften pounds reference to the composition for stamp duty
of the nominal amount of such stock chargeable on transfers of certain colonial
inscribed in the name of each and stocks, shall extend to the stock of any
every stockholder at the date of the British protectorate or protected state to
composition which protectorate or state a Secretary of
With the addition State applies the Colonial Stock Acts, 1877
“ ( a) when the period within which and 1892, and he is hereby authorised so to
the stock is to be redeemed apply the said Acts with the necessary
or paid off, or during which modifications."
annual or other payments in By the Finance Act, 1920, the duty
respect of the redemption or chargeable under Section 114 of the Stamp
payment off of the same are Act, 1891 (as extended by the Finance Acts,
required to be made, exceeds 1894 and 1898 ), see above, shall be double
sixty years, but does not the amountcharged by the said Section 114.
exceed one hundred years The Stamp Act, 1891, further provides
from that date, of three- Composition for Stamp Duty by County
pence (increased to sixpence Councils, etc.
by the Finance Act, 1920 ), for “ Section 115. ( 1 ) Any county council or
every such ten pounds or corporation or company may enter
fraction of ten pounds ; or into an agreement with the Commis
“ ( ) when the said period exceeds sioners, if the Commissioners in their
one hundred years, or no discretion think proper for the de
period is fixed for such livery of an account showing the
redemption or payment off, nominal amount of all the stock and
or no such annual or other funded debt of such county council,
payments are required to be corporation , or company or the
164
COM ) DICTIONARY OF BANKING [COM

amount thereof in respect of which and one of the usual methods by which this
: payment has been made, if the is done is to offer to pay a composition; that is,
whole sums payable in respect to pay so much in the pound in full discharge
thereof have not been paid ; and of the debts due to the creditors. The com
after such agreement has been position is usually payable in a number of
entered into the account shall be instalments, upon specified dates, and is
immediately delivered to the Com- guaranteed by Sureties. In some cases
missioners, and a like account shall promissory notes are given for the various
be delivered half -yearly in each instalments,
various
and are made payable at the
on which the instalments are
year. dates
“( 3) There shall be charged by way of due.
composition upon the aggregate If the arrangement is agreed to by the
amount appearing on every half- creditors in a deed or instrument, called a
yearly account delivered to the deed of arrangement, it must be registered
Commissioners for every one hun- within seven days, otherwise it is void. (See
dred pounds and any fraction of one DEED OF ARRANGEMENT.)
hundred pounds of such amount the An arrangement of this kind between a
duty of sixpence as a stamp duty , debtor and his creditors is quite independent
[increased to one shilling by the of proceedings under the Bankruptcy Acts,
Finance Act, 1920) , and so soon as but, if he fails to pay the agreed instalments,
any account has been delivered, and the arrangementdoes not prevent proceed
payment of the duty hereby imposed ings in bankruptcy being subsequently taken .
has been made, transfers of any | In “ The Laws of England ," edited by the
stock or funded debt included in Right Hon. the Earl of Halsbury, the fol
such account, and also any share lowing is given as the effect of a debtor
warrants or stock certificates relating failing to pay an instalment : “ If the effect
to such stock or funded debt, shall of the arrangement is that the creditors
be exempt from duty. accept the payment of the composition in
"(6 ) Where an agreement for composition discharge of their debts, then usually a
under this Section has been entered failure by the debtor to comply with his
into by any county council or cor- obligation will entitle the creditors to sue
poration or company, such county him for the whole of the balance of their
council or corporation or company debts. But if the effect of the arrangement
shall have power, in addition to any is that the creditors accept the promise of
fee exigible upon registration of any the debtor with or without a surety in
transfer of stock, or funded debt, as satisfaction of their debts, on default by the
the case may be, or upon issue of any debtor the creditors can only sue for the
.

share warrant, or stock certificate balance of the amount of the composition."

relating thereto, to require payment (See ActS OF BANKRUPTCY, ASSIGNMENT
of an amount not exceeding the FOR BENEFIT OF CREDITORS, BANKRUPTCY .)
amount of duty which would have COMPOSITIONS ( BANKRUPTCY ACT).
been chargeable upon the transfer or When a receiving order has been made
share warrant or stock certificate if against a debtor, he must, within a certain
no such agreement had been entered time, submit a statement of his affairs to the
into ." official receiver. (See RECEIVING ORDER.)
By the Housing (Additional Powers ) Act, If the debtor wishes to submit to his cre
1919, the provisions of Section 115 of the ditors a proposal for a composition — that is,
Stamp Act, 1891, shall, with the necessary a payment of so much in the pound - or for a
adaptations, apply in the case of any local scheme of arrangement, the Bankruptcy
authority by whom local bonds are issued Act,Section
1914, provides as follows :
as if those bonds were stock or funded debt “ 16. ( 1 ) Where a debtor intends
of the authority within the meaning of that to make a proposalfor a composition
Section . (See POLICY OF INSURANCE .) in satisfaction of his debts , or a pro
COMPOSITION WITH CREDITORS. posal for a scheme of arrangement
Where a debtor is unable to pay his creditors, of his affairs, he shall, within four
he may, legally, call his creditors together days of submitting his statement of
and make an arrangement with them , by affairs , or within such time there
which he may obtain relief from his debts, after as the official receiver may fix ,
165
COM ] DICTIONARY OF BANKING (CON

lodge with the official receiver a Is forthwith charged or allowed as the case
proposal in writing, signed by him , may be.
embodying the terms of the com- When a banker takes as security a mort
position or scheme which he is gage for aa fixed amount, simple interest only
desirous of submitting for the con- can be charged, unless there is an agreement
sideration of his creditors, and otherwise, as the position in such a case is
setting out particulars ofany sureties that of mortgagor and mortgagee. The
or securities proposed. taking of a mortgage, or transfer of mort
" (2) In such case the official receiver shall gage, for a fixed amount terminates the
hold a meeting of creditors, before ordinary relation of banker and customer .
the public examination of the debtor ( See TRANSFER OF MORTGAGE.)
is concluded, and send to each A ready way of ascertaining approxi
creditor, before the meeting, a copy mately the number of years in which a sum
of the debtor's proposal with a will double itself at compound interest, is
report thereon ; and if at that meet- to divide seventy by the rate per cent. (See
ing a majority in number and three- INTEREST.)
fourths in value of all the creditors COMPOUNDING A FELONY . If an offi
who have proved resolve to ac- cial commits a felony , e.g. an embezzlement,
cept the proposal, it shall be and someone provides the bank with money
decmed to be duly accepted by the or securities to cover the defalcations, in
creditors, and when approved by the order to prevent the institution of a pro
court shall be binding on all the secution , this is called compounding a
creditors." felony.
The Court has power to approve or to In Whitmore v . Fairley (1880, 29 W.R.
refuse to approve the proposal (s.s. 11). 825) , Lush, L. J., in the course of his judg.
If the debtor's proposalis accepted by the ment, said : “ It is as old as the law itself
creditors, the receiving order is discharged that compounding a felony is not merely an
by the Court. If a trustee is appointed to illegal, but a criminal act. It follows that
carry out the scheme, the official receiver every agreement by a prosecutor to forego
hands the debtor's property to him , but if a prosecution, in consideration of a benefit
no trustee is appointed the official receiver to himself, is an illegal agreement which the
acts as trustee . law will not sanction . A person who is
If the proposal is not accepted within four- robbed cannot be compelled to prosecute.
teen days after the conclusion of the debtor's society
No doubt it is his duty to so ,
to do
examination , the Court shall adjudge the but it is an imperfect obligation. If, how
debtor bankrupt. (See ADJUDICATION OF
BANKRUPTCY .)
i enever, he does prosecute, he assumes the office
of a public prosecutor, and prosecutes on
A composition or scheme of arrangement behalf of the public. If he enters into a
may be accepted by the creditors, if they bargain not to prosecute, that is just as
think fit, at any time after the debtor is much void as if it was made after prosecu
adjudicated bankrupt, and the Court may tion commenced . This is not confined to
annul the bankruptcy. ( Section 21 , s.s. 1 , 2.)
. felony. The law is just the same with regard
If default is made in payment of an instal- to cases of misdemeanour."
ment, the Court may adjudge the debtor COMPOUNDING WITH CREDITORS.
bankrupt and annul the composition or (See COMPOSITION WITH CREDITORS .)
scheme, but without prejudice to the validity COMPULSORY LIQUIDATION. (See
of any sale, disposition , or payment duly WINDING UP BY THE COURt .)
made in pursuance of the composition or COMPUTING A BILL . Calculating the
scheme. (Section 16, s.s. 16.) date upon which the bill falls due to be
Debts are proved in the same way as in paid .
the case of bankruptcy. (See BANKRUPTCY, CONDITIONAL ACCEPTANCE . (See
PROOF OF Debts .) ACCEPTANCE , QUALIFIED .)
COMPOUND INTEREST. Compound in- CONDITIONAL INDORSEMENT. Where
terest is interest upon interest as it falls a condition is attached to an indorser's
due. Upon current accounts a banker signature on a bill of exchange, the condition
calculates the interest half-yearly and adds may be disregarded by the paying banker,
it to the principal, when it becomes part of and payment to the indorsee is valid whether
the principal. and upon that amount interest the condition has been fulfilled or not,
166
 com ) DICTIONARY OF BANKING (CON

12 “ As between indorser and indorsee the A s. d . administrators or assigns shall

condition presumably would be operative ; | Rent .. on the day of
Fine
M and if the indorsee received payment without next ensuing pay or cause to
hy the condition being fulfilled , he would hold. be paid unto the said CD, his
the money in trust for the indorser executors, administrators or
(Chalmers). An indorsement Pay John assigns the Sum of £
Brown or order, on the arrival of and interest for the same at
the ship Swallow at Calcutta would be the rate of per centum
be conditional. (See INDORSEMENT .) per annum And also all Cus
1. CONDITIONAL ORDERS . A bill of ex tomary outgoings whatsoever
change is an unconditional order. An order (whether for fines, fees of ad
upon a banker to pay a certain sum, mission, acknowledgment of
provided that a form of receipt is signed is satisfaction, licence to demise,
not unconditional, and therefore does not heriots, reliefs, suits and ser
He comply with the definition of a cheque in vices or the value thereof or
the Bills of Exchange Act, 1882. See otherwise howsoever) which
6. Section 3 under BILL OF EXCHANGE and the said CD, his executors ,
It, Section 73 under CHEQUE . administrators or assigns shall
” An unqualified order to pay, coupled with render or pay in respect of the
an indication of a particular account to said Copyhold hereditaments
0 be debited , is unconditional (Section 3, with interest for the same at
2 s.s. 3) . the rate aforesaid without de
(See RECEIPT ON CHEQUE for further duction then this Surrender to
information regarding conditionson cheques.) be void. And thereupon to
CONDITIONAL SURRENDER . A sur the same Court came CD
render of copyhold property into the hands and took of the Lord of the
1 of the lord of the manor for the benefit of a said Manor by the hands of
st mortgagee, the condition being that when his Steward the Cottages etc.
0 the mortgage money has been repaid , the aforesaid with the appurten
st surrender must be cancelled by satisfaction ances To hold the same to
22 being entered on the court rolls. him his heirs and assigns for
3 For the stamp duty see MORTGAGE and ever according to the Custom
Sections 86 and 87, of the Stamp Act, 1891, of the said Manor Upon the
quoted thereunder. Condition aforesaid Paying
The following is an example of a con. the Rents and performing the
ditional surrender and admittance, though services of Right due and
a mortgagee is usually satisfied by the accustomed and having paid
conditional surrender being entered on the the Lord for his Fine as in
court rolls, without seeking admittance : the margin and done his fealty
is thereupon admitted tenant
Manor of { The Special Court Baron and according to the statute .
Customary Court of Steward .
Lord of the said Manor holden at ( See COPYHOLD .)
for the said Manor on
day of 19 CONFIDENTIAL INQUIRIES ( See
Before . Steward . Banker's OPINION .)
CONFIRMATION CHEQUE . A cheque
To this Court came A B given by a customer to confirm a debit, which,
and did surrender into the for one reason or another, has been passed
hands of the Lord of the said to his account pending receipt of the
Manor, All that Cottage, etc., cheque .
of the Yearly Copyhold Rent CONFIRMATION OF BALANCE . Many
of To the use and behoof banks send out to each current account
of C D, his heirs and assigns customer (or to a selected number), either
for ever according to the Cus- yearly, or half-yearly, a form showing the
tom of the said Manor Upon balance of the customer's account, with a
the Condition that if the said request that the form , if correct, be signed
A B, his heirs, executors, by the customer and returned to the bank .
167
CON ) DICTIONARY OF BANKING (CON

The balance on that form should be the same of the Institute of Bankers ( see the Journal,
as the balance shown by the pass -book, and vol. 35, p . 74), say : " It is in our opinion
before a customer signs it, he ought to undesirable that a bank which has granted
scrutinise the entries in the pass-book to see a confirmed letter of credit should revoke it
that they are in agreement with his own without very strong reasons for such a step."
records, and then compare the balance of In the same volume, p . 135, Mr. Ernest Sykes
the pass-book with that stated on the form . says : “ It is generally recognised as one of
In some of the banks in Scotland, con- the leading principles upon which banks
firmations are signed in the ledgers. conduct their business that no bank should
CONFIRMED LETTER OF CREDIT. allow itself to be in the position of being
CONFIRMED BANKERS' CREDIT. A sued on a document on which it is liable as
credit opened by a banker under which a a principal.” From a consideration of
foreign merchant may draw bills upon the decided cases, Mr. Sykes expresses the opinion
banker against shipments, the banker agree that “ if a bank cables the revocation of a
ing to accept the bills if they are drawn confirmed letter of credit, it must neverthe
in accordance with the stipulations in the less accept any drafts which may be drawn
credit. The credit is usually for a period subsequent to and in defiance of the
.

not exceeding six months. revocation . " (See LETTER OF CREDIT.)

The following is a form of confirmed CONFLICT OF LAWS. Section 72 of the
letter of credit : Bills of Exchange Act, 1882, sets forth the
BRITISH BANK, LID . | rules to be observed where there is a conflict
of laws regarding bills of exchange. See
Confirmed Credit No.... that Section under FOREIGN BILL .
Dear Sir, CONSEQUENTIAL LOSS INSURANCE .
Kindly note that under instructions by (See Fire INSURANCE.)
telegram CONSIDERATION . Valuable considera
mail we have been requested by..... tion has been defined as “ some right,
to open a confirmed interest, profit, or benefit, accruing to one
credit in favour of.. party, orsome forbearance, detriment, loss,
on account of Messrs.. or responsibility given, suffered, or under
for £ ... .... say, : taken by the other.”
available by their draft on us at ... A simple contract, that is a contract not
against the following documents, viz. under seal , in order to be enforceable at
Plain Invoice . law , inust be supported by a valuable
Consular Invoice . consideration . In a contract under seal
a valuable consideration is not essential.
Bills of Lading (full set ).
Insurance (including War risk ). Natural love and affection " is called a
good consideration , but it is not sufficient
evidencing shipment of... to support a simple contract. A contract
per s.s.... .... from . .to .
based upon an illegal consideration , that is
This credit expires on . one which is contrary to the law or is against
All drafts drawn must bear the number public policy or morality, cannot be enforced.
mentioned above, and we undertake to (See CONTRACTS.)
honour such drafts on presentation provided Upon a sale of property, the purchase
they are drawn in conformity with the terms price is the consideration , and that amount
of this credit. Will you have the kindness is inserted in the deed of conveyance, and
to confirm this credit to the beneficiaries. the stamp duty, ad valorem , calculated
Yours faithfully , thereon .
In a deed of gift, as, for example, where a
Manager. property is the subject of a gift from , say , a
father
(0
to his son , the consideration may be
A form of documentary letter of credit “ natural love and affection .” With regard
(not confirmed ) is given under DOCUMENTARY to the stamp duty on giits inter vivos, the
LETTER OF CREDIT. Finance (1909-10 ) Act, Section 74, enacts
that any conveyance operatingas a voluntary
With regard to the question as to whether disposition inter vivos, shall be chargeable
a banker should revoke a confirmed letter of with the same duty as if it were a con
credit which he has granted, the Council veyance on a sale, with the substitution of
168
CON ) DICTIONARY OF BANKING (CON

the value of the property conveyed for the By Section 27 :

amount of the consideration . ( Sce Cox- " ( 1 ) Valuable consideration for a bill
VEYANCE.) may be constituted by—
The consideration named in a transfer, (a) Any consideration sufficient
upon a sale of stock or shares, may differ to support a simple con
from the amount received by the original tract ;
seller, owing to subsequent sales having “( 6) An antecedent debt or lia
taken place . The price paid by the last bility. Such а debt or
purchaser is the one inserted in the transfer, liability is deemed valuable
and on which stamp duty is paid . The consideration whether the
difference is explained ina printed foot-note bill is payable on demand or
on transfer forms, and this foot-note justifies at a future time."
a transferor in executing a transfer where Where a person signs a bill as drawer,
the consideration differs from the amount acceptor, or indorser, without receiving value
received by him . therefor, he is an accommodation party.
In a transfer of shares to a bank or its (See ACCOMMODATION BILL.)
nominees as security for a loan or advance, Where a cheque is given as a gift, the
the consideration is usually a nominal one, receiver cannot sue the giver thereon,
say five or ten shillings ; and the same because of the absence of consideration.
nominal consideration is inserted in a “ Natural love and affection , ” though a
transfer when theshares are being transferred good consideration in a contract under seal,
as a gift. (See TRANSFER OF SHARES.) is not sufficient to support asimple contract,
Where shares are specifically left in a will, as in a bill of exchange. The consideration
the consideration in a transfer from the must have some actual value, though the
executors to the legatee will be a nominal extent of that value may, in reality, be very
one ; but where a legatee agrees to accept small.
a transfer of certain shares, instead of re- Mr. Justice Lush said in Currie v. Misa ,
ceiving the cash to which he is entitled , the 1875, L.R. 10 Ex. 162) : A valuable con
consideration must be the price agreed upon sideration in the sense of the law , may
between the legatee and executors, and the consist either in some‘right, interest, profit,
stamp duty will be ad valorem . or benefit accruing to one party, or some
All deeds prior to the Conveyancing Act, forbearance, detriment, loss, or responsi
1881, should have indorsed thereon a bility given, suffered , or undertaken by the
receipt for the consideration stated in the other. "
body of the deed . Since that date it is The title of a person who negotiates a bill
sufficient if the receipt is in the body of the is defective if he obtained the bill for an
deed . It must, however, be an actual illegal consideration (Section 29, s.s. 2) .
receipt and not simply a statement that the Where a consideration is affected with
money has been paid. (See NOMINAL Con- fraud or illegality, that would
immedi
form a good
SIDERATION .) defence against an “ ate party
CONSIDERATION FOR BILL OF EX- | (see IMMEDIATE PARTIES), but not against a
CHANGE . There must be a valuable remote party who is a holder in due course ,
consideration for a contract not under seal, that is, one who took the bill for value, in
though it is not necessary in a bill of exchange good faith and without knowledge of any
that the consideration be stated in writing. defect in the title. (See HOLDER IN DUE
The Bills of Exchange Act, 1882, Section COURSE .)
3, s.s. 460, enacts that a bill is not invalid by A bill, or cheque, given for a wagering or
reason that it does not specify the value | gaming debt, cannot be sued upon by a holder
given, or that any value has been given who took it with knowledge of the illegal
.
therefor . " consideration , but a holder in due course ,
The words " for value received ” are very who took it without such knowledge, can
commonly used as the last words in the body sue upon it.
of a bill of exchange, but a bill is quite valid It has also been decided in Moulis v. Owen
without any such words. (1907, 1 K.B. 746) , that even when a cheque
The word " sterling ” was at one time is drawn in a foreign country on a banker
usually written after the amount, but it in this country, for a consideration which is
is now very rarely met with on inland legal in the country where it is drawn, but
bills. illegal in this country, the action on the
169
CON ) DICTIONARY OF BANKING ( CON

cheque fails. This was a decision of the Court expressed in the mortgage deeds or
of Appeal, and Lord Justice Fletcher Moulton one of them . ” (See MORTGAGE.)
disagreed with the finding of the two otherA banker's mortgage usually contains a
Lord Justices. (See BILL OF EXCHANGE.) clause that Section 17 shall not apply to the
CONSIGNATION RECEIPT. In Scotland, present mortgage, and that the mortgagor
when property is sold under powers con- shall not be entitled to redeem one mortgage
tained in a “bond and disposition in secu- without at the same time redeeming every
rity” ( q.v.), the creditor who has sold the other mortgage he has given to the bank .
property must, after satisfying his own CONSOLS. A contraction of “ consoli
claim , place any surplusthere may be in a dated funds " and " consolidated annuities.”
bank upon deposit receipt, called a consigna- The Government borrowed money at
tion receipt, in the joint names of the seller different times and set aside a portion of the
and purchaser, for the benefit of the person revenue to pay the interest or annuity upon
who is entitled to the surplus . each separate loan. The various loans were,
CONSOLIDATED FUND . The Consoli- in 1751, made uniform and consolidated into
dated Fund of the United Kingdom is the one fund, called the Three per cent. Con
fund into which is paid the whole of the solidated Annuities, or " r3 per cent.
revenue, and out of which payments are Consols.” In 1888 the rate became 27 per
made, as provided by Parliament. The cent., and in 1903, 21 per cent. Consols are
account at the Bank of England is called redeemable at par in, or after, 1923 at the
the Exchequer Account. option of the Government.
CONSOLIDATED FUND ACT . An Act When Consols are bought as inscribed
passed annually by Parliament to enable the stock the purchaser obtains a receipt.
Treasury to apply out of the Consolidated This receipt, however, is not of any value,
Fund a sum for the supply services of the the purchaser's title being the entry in the
ensuing financial year. This Act does not books of the Bank of England . A transfer
appropriate the sum to any particular ser- of inscribed consols is effected by the owner
vices, but the Appropriation Act ( q.v.) attending personally at the Bank of England
passed at the end of the session shows how or by his authorising an attorney to act for
all the grants made during the session are him . The interest is due on January 5,
appropriated . April 5, July 5, October 5. Consols are
CONSOLIDATION . The combination of marked ex dividend about four weeks
several issues of stocks and shares into one before the interest is due. The Bank does
uniform security. (See Consols.) See also not deduct income tax from interest on
CONSOLIDATION OF MORTGAGES. Consols inscribed at the Bank when the
CONSOLIDATION OF MORTGAGES . interest does not exceed £5 per annum .
Where a person holds several mortgages on (See POWER OF ATTORNEY - TRANSFER OF
different properties, belonging to the same GOVERNMENT STOCK.)
mortgagor, a right to consolidate the mort- Government stock may , in accordance
gages may be given to him by the mortgagor, with the Finance Act, 1911 , be registered
and he can then refuse to allow onemortgage as stock transferable by deed . See par
to be redeemed without the others being also ticulars under NATIONAL DEBT.
redeemed . If desired, stockholders can obtain cer .
The right to consolidate must be specially tificates to bearer, with coupons attached
granted in one of the mortgage deeds. That for the interest. When all the coupons
restriction was made by Section 17 of the on a bearer certificate have expired the
Conveyancing Act, 1881 : holder has to surrender the certificate
“ ( 1) A mortgagor seeking to redeem any and obtain a new onewith coupons attached.
one mortgage, shall, by virtue of this If the certificates have been impressed with
Act, be entitled to do so , without French or German stamps, so as to make
paying any money due under any them negotiable abroad, holders of such
separate mortgage made by him , certificates do not lose the benefit of the
or by any person through whom he stamps by exchanging the certificates, as
claims, on property other than that the Bank of England, by arrangement
comprised in the mortgage which with the French and German revenue
he seeks to redeem . authorities , issue the new certificates
" (2) This Section applies only if and as far similarly stamped without charge. (See
as a contrary intention is not INCOME Tax .) The word " Consols " is also
170
CON ) DICTIONARY OF BANKING (CON

applied to various consolidated stocks issued | day" or " contin uation day " or " carrying
by other Governments, or by companies over " day. (See CONTANGO, SETTLING DAYS.)
(e.g. North - Eastern Railway • Consols " ). CONTINGENT ACCOUNT. An account
CONSTAT. The name given to an ex- to which amounts may be placed to provide
emplification under the Great Seal of any for uncertain and unforeseen liabilities.
letters patent made by His Majesty. (See CONTINGENT LIABILITY . A liability
EXEMPLIFICATION .) which is uncertain . For example , if Brown
CONSTRUCTIVÉ NOTICE . (See Notice has given a guarantee on behalf of Jones, it
OF MORTGAGE .) forms a contingent liability ; if Jones fails,
CONTANGO . The contango is the charge the guarantee will become an actual liability
made by a stockbroker to a speculator for and must be met by Brown. It is necessary ,
" carrying over " the stock transaction he in the event of Brown furnishing his banker
has had with him until the next Stock with a copy of his balance sheet, that the
Exchange settlement. banker be advised of the existence of the
For example, a person buys a certain stock guarantee or of any other liability dependent
which he does not intend to pay for, hoping
. upon a contingency.
that it will rise before the following settle- With regard to the contingent liability on
ment, in which case he would sell out at bills discounted, see DISCOUNTING A BILL.
once, neither paying nor receiving the price, CONTINGENT REMAINDER . (See
but only the profit from his broker ; the REMAINDER.)
stock , however, contrary to his expectation, CONTINUATION DAY. The first of the
may fall instead of rising, and, as the three days of a Stock Exchange settlement.
speculator still hopes for improvement, Also called “ Contango Day ” (q.v.). (See
rather than sell out at a loss he arranges STOCK EXCHANGE.)
with his broker to carry over " or " con . CONTINUING SÉCURITY . A security for
tinue " the bargain until the next settle- a current account should be a continuing
ment after the present one ; for the loan of security, that is, it should continue to secure
the money to enable this to be done, the the amount for which it has been given ,
broker makes a charge which is known as although the balance of the account may
“ the contango ." In the above case the fluctuate from time to time. In a guarantee
speculator is called a “ bull," that is, it is expressly provided that it “ shall be a
one who anticipates a rise in the stock continuing security.” (See GUARANTEE .) A
dealt in. 1)
banker's mortgage and a memorandum of
The broker for the " bull " borrows the deposit are also drawn so as to form
money , at “ making up price, to pay for continuing securities . (See BANKER'S MORT
the stock, and gives the lender the stock, GAGE, LEGAL MORTGAGE, MEMORANDUM OF
agreeing at the same time to take it back Deposit.) When a company deposits any of
at the next settlement. The lender will its debentures to secure a current account, it
probably be a " bear,” who requires that is specially provided by the Companies
particular stock. If, however, there is a (Consolidation) Act, 1908, that the deben
scarcity of that stock, a “ bear " may be so tures shall not be deemed to have been
anxious to secure it that he will pay the redeemed by reason only of the accounthaving
“ bull ” a “ backwardation ” rate for the ceased to be in debit. (See DEBENTURES.)
loan of the stock instead of the “bull " When , however, a bank receives notice
paying interest for the loan of the money. of a second charge upon property mortgaged
(See BACKWARDATION , CONTANGO DAY, STOCK to the bank, the account must be stopped
EXCHANGE .) at the date of the notice, and a fresh account
CONTANGO DAY. The first of the three opened for future transactions. (See NOTICE
days of a Stock Exchange settlement, being oF MORTGAGE.) When a surety gives notice
the one on which a broker must know to withdraw his guarantee, the account
whether a speculator dealing with him should be broken . (See GUARANTEE .)
intends to complete on the next day but one A mortgage to secure a fixed amount is
(pay day) or whether he wishes to have the not a continuing security for a current
transaction “ carried over " until the follow- account. Against such a security the
ing settlement. For mining shares there is advance should be on a separate loan
an additional contango day, called “ mining account. (See MORTGAGE.)
contango day." CONTRA ENTRY. An entry made upon
Contango day is also called " making up one side of an account to correct an entry
171
CON ) DICTIONARY OF BANKING ( CON

which has been made in error upon the other “ (2) Where a contract note is a continua .
side. tion or carrying over note made for
CONTRACT. ( See CONTRACTS.) the purpose of continuing or carrying
CONTRACT NOTE (BROKER'S ). The over any transaction for the sale or
note or memorandum which is given by a purchase of stock or marketable
broker tothe person for whom an order to securities, the contract note , although
buy or sell certain stocks or shares has been it is made in respect of both a sale
carried out, and which gives particulars of and purchase, shall be charged
the transaction . with duty under this Section as if
The following is a specimen of a contract it related to one of those trans
note : actions only, and , if different rates
Exchange Buildings of duty are chargeable in respect of
York 19 those transactions, to that one of
Bought for those transactions which would
(Subject to the Rules and Regulations of render the contract note chargeable
the London Stock Exchange .) at the highest rate .
“ (3) For the purposes of this part of this
Transfer Stamp and Act, the expression “ contract note "
Registration . means the note sent by a broker or
Contract Stamp . agent to his principal, or by any
Brokerage person who by way of business
Postage . deals, or holds himselfout as dealing.
as a principal in any stock or market
£ able securities, advising the prin
For Settlement cipal, or the vendor or purchaser,
. Brokers. as the case may be, of the sale or
Where a purchase or sale is made by order purchase of anystock or marketable
of a banker on behalf of a customer , a note security, but does not include a note
is made on the contract note that the com sent by a broker or agent to his
mission is shared with the banker. The principal where the principal is
Stock Exchange Committee requires that, himself acting as brokeror agent for
in addition to a note on the contract note a principal, and is himself either a
that the commission has been divided with member of a stock exchange in the
an agent, the name of the agent must be United Kingdom , or a person who,
given . This is done in view of the “ Pre bona fide carries on the business of
vention of Corruption Act, 1906 ” (q.v.). a stockbroker in the United King .
As to the London Stock Exchange scale dom, and is registered as such in the
of commissions, see under STOCKBROKER. list of stockbrokers kept by the
The Finance (1909–10) Act, 1910, enacts Commissioners .
as follows : “ (4) Where a contract note advises the
“ Section 77. ( 1 ) There shall be charged sale or purchase of more than one
on every contract note as defined description of stock or marketable
by this Section for or relating to the security, the note shall be deemed
sale or purchase of any stock or to be as many contract notes as
marketable security the following there are descriptions of stocks or
stamp duties : securities sold or purchased.
Where the value of the stock or marketable security Obligation to execute Contract Note.
is £6 and does not exceed £ 100
£ s. d.
7 0 6
“ 78. ( 1 ) Any person who effects any sale
exceeds £ 100 1 £ 500 0 1 0
or purchase of any stock or market
£ 500 £ 1,000 0 2 0 able security of the value of five
£ 1,000 £ 1,500 0 3 pounds or upwards as a broker or
£ 1,500 £ 2,600 0 4 0 agent, and any person who by way
£ 2,500 £ 5,000 0 6 0 of business deals, or holds himself
£ 6,000 £ 27,500 0 8 0
£7,500 £ 10,000 0 100 out as dealing, as a principal in any
£ 10,000 £ 12,500 0 12 0 stock or marketable security, and
£ 12,500 O £ 15,000 0 14 0 buys or sells any such stock or
£ 15,000 £ 17,500 0 16 0
£ 17,500 £ 20,000 0 18 0 marketable security ofa value of five
» £ 20,000 1 0 0 pounds or upwards, shall forthwith
172
CON ] DICTIONARY OF BANKING [CON

make and .execute a contract note, “ (2) Any contract note made or executed
and transmit the note to his prin in pursuance and in consequence of
cipal, or to the vendor or purchaser the exercise of an option given or
ofthe stock or marketable security, taken under a contract duly stamped
as the case may be, and in default of in accordance with the provisions of
so doing shall incur a fine of twenty this Section shall be charged with
pounds : Provided that this Section one -half only of the duty which
shall not apply in the case of trans would otherwise have been charge
actions carried out in the course of able thereon under this part of this
their ordinary business relations Act, provided that it bears on its
between members of stock exchanges face a certificate by the broker,
in the United Kingdom . agent, or other person mentioned
“ ( 2) If any person makes or executes any in the last preceding Section to the
contract note chargeable with duty effect that it is made or executed in
and not being duly stamped , he shall the exercise of an option for which
00
incur a fine of twenty pounds. a duly stamped contract has been
* ( 3) No broker, agent, or other person rendered on the date mentioned in
shall have any legal claim to any the certificate. "
charge for brokerage, commission , or CONTRACTS . A contract is a formal
agency, with reference to the sale agreement between two parties, it being
or purchase of any stock or market- understood by both that if the contract is
able security of the value of five action
broken atit law
may. become the subject of an
pounds or upwards, if he fails to A contract has been more
comply with the provisions of this fully defined as "an agreement entered into
Section . between two or more persons sanctioned by
" (4) AU stamp duties on a contract note the law , by which agreement each under
are to be denoted by an adhesive takes to do, or to abstain from doing, a
stamp appropriated to a contract specified act or acts, in consideration of the
note, and the stamp is to be effec- other or others doing, or abstaining from
tively cancelled by the person by doing, some other act or acts .”
whom the note is executed by writing A contract may be made in a document
on or across the stamp his name or under seal, as in a conveyance of property
initials, or the name or initials of or transfer of shares ; or it may be a simple
his firm , together with the true date contract made either by word of mouth or
.
of his so writing. by a writing not under seal, as in a bill of
“ (5) Any stamp duty on a contract note exchange. In a contract under seal, there
may be added to the charge for is no necessity to prove consideration. In a
brokerage or agency, and shall be simple contract there must be a considera
recoverable as part of such charge. tion of value. A valuable consideration has
been defined as some right, interest, profit,
Extension of Provisions as to Contract Notes or benefit accruing to one party, or some
to Sale or purchase of options. forbearance, detriment, loss, or responsibility
• 79. (1) The provisions of this Part of given , suffered, or undertaken by the other.”
this Act as to contract notes shall A past benefit is not a consideration suffi
apply to any contract under which cient to support a simple contract. When
anoption is given or taken to pur- a guarantee is taken by a banker to secure
chase or sell any stock or marketable an existing overdraft, the consideration is
security at a future time at a certain the banker's forbearance not to press for
price, as it applies to the sale or repayment of the money and to grant
purchase of any stock or marketable further time to the debtor.
security , but the stamp duty on “ A bargain without a consideration
such a contract shall be one-half only (called a nudum pactum ) is not a contract.
of that chargeable on a contract By the Bills of Exchange Act, 1882, a
note : Provided that if under the bill of exchange (q.v.), a cheque (q.v.), and a
contract a double option is given or promissory note (q.v.), must be in writing.
taken the contract shall be deemed By the Statute of Frauds, a guarantee (q.v.)
to be a separate contract in respect must be in writing. There are also other
of each option. contracts which must be in writing.
173
CON ) DICTIONARY OF BANKING [ CON

In the case of a bill of exchange it is not and not reducedinto writing,

necessary to specify in writing the value may be made by parol on
given or that any value has been given. behalf of the company by
There must, however, be a valuable con any person acting under its
sideration, which may be any consideration authority, express or im
sufficient to support a simple contract. plied , and may in the same
An antecedent debt or liability is deemed manner be varied or dis
a valuable consideration in a bill of exchange, charged .
whether the bill is payable on demand or at " (2) All contracts made according to this
a future time. (See CONSIDERATION FOR Section shall be effectual in law, and
BILL OF EXCHANGE .) shall bind the company and its
A contract with a minor, with respect to successors and all other parties
any loan to him, is void. A contract is also thereto, their heirs, executors, or
void if it is forbidden by an Act of Parlia administrators as the case may be.
ment ; for example, when shares of a bank “ ( 3) Any deed to which a company is a
are sold , the contract note must specify the party shall be held to be validly
numbers of the shares, and if it does not do executed in Scotland on behalf of the
so , the contract is, legally, void. (See company if it is executed in terms
LEEMAN's Act.) of the provisions of this Act or is
A contract under seal is a specialty con sealed with the common seal of the
tract, and an action must be brought within company and subscribed on behalf
twenty years from the date when the cause of the company by two of the
of action first arose . In the case of recovery directors and the secretary of the
of land the period is twelve years. In a simple company, and such subscription on
contract, the action must be brought within behalf of the company shall be
six years . ( See STATUTE OF LIMITATIONS.) equally binding whetherattested by
Section 76 of the Companies (Consolida witnesses or not."
dation) Act, 1908 , enacts that : A contract of suretyship may, under
" ( 1 ) Contracts on behalf of a company certain circumstances, be unenforceable.
may be made as follows (that is to (See GUARANTEE .)
say) . As to stamp duty see AGREEMENT. (See
(i) Any contract which if made COMPANIES, OPEN CONTRACT.)
between private persons CONTRIBUTORIES. In the event of a
would be by law required to joint stock company being wound up, the
be in writing, and if made persons who are liable to contribute to the
according to English law to assets are called the contributories . Sec
be under seal, may be made tion 123 of the Companies (Consolidation)
on behalf of the company in Act, 1908, deals with the liability of present
writing under the common and past members and is as follows :
seal of the company, and " (1 ) In the event of a company being
may in the same manner be wound up, every present and past
varied or discharged : member shall, subject to the pro
" (ii) Any contract which if made visions of this Section, be liable to
between private persons contribute to the assets of the
would be by law required company to an amount sufficient
to be in writing, signed by for payment of its debts and lia
the parties to be charged bilities and the costs , charges, and
therewith , may be made on expenses of the winding up, and for
behalf of the company in the adjustment of the rights of the
writing signed by any person contributories among themselves,
acting under its authority, with the qualifications following
express or implied, and may (that is to say) :
(

in the same manner be “ (i) A past member shall not be

00
varied or discharged : liable to contribute if he has
(iii) Any contract which if made ceased to be a member for
between private persons one year or upwards before
would by law be valid al the commencement of the
though made by parol only, winding up :
174
 CON DICTIONARY OF BANKING (CON

$ " ( ii) A past member shall not be
20
liable to contribute in re
spect of any debt or liability
of the company contracted
1.
after he ceased to be a
member :
" (ili). A past member shall not be
liable to contribute unless
is it appears to the Court that
the existing members are
ts unable to satisfy the con
tributions required to be
1
made by them in pursuance
of this Act :
2 “ ( lv) In the case of a company
limited by shares no contri
e bution shall be required
from any member exceeding
the amount, if any, unpaid
e on the shares in respect of
1 which he is liable as a such
€ present or past member :
2 “ ( v ) In the case of a company
1 limited by guarantee, no
2 contribution shall be re
quired from any member
exceeding the amount under
ET taken to be contributed by
him to the assets of the
company in the event of its
2 being wound up :
“( vi) Nothing in this Act shall
invalidate any provision
contained in any policy of
insurance or other contract
whereby the liability of
individual members on the
policy or contract is re
stricted , or whereby the
funds of the company are
alone made liable in respect
of the policy or contract :
" (vii) A sum due to any member of
a company, in his character
of a member, by way of
dividends, profits , or other
wise, shall not be deemed to
be a debt of the company ,
payable to that member in members in one list called " A " List,
a case of competition be- and of past members who are liable (see
tween himself and any other Section 123, above), in another list, the “ B ”
" ( 2) In the winding up of a limited com
pany , any director or manager,
whether past or present, whose
liability is, in pursuance of this Act,
unlimited, shall, in addition to his
liability (if any) to contribute as an
ordinary member, be liable to make
a further contribution as if he were
at the commencement of the winding
up a member of an unlimited com
pany : Provided that
“ (i) A past director or manager
shall not be liable to make
such further contribution
if he has ceased to hold office
for a year or upwards before
the commencement of the
winding up :
" ( ii) A past director or manager
shall not be liable to make
further contribution
in respect of any debt or
liability of the company con
tracted after he ceased to
hold office :
“ (iii) Subject to the articles of the
company , a director or man
ager shall not be liable to
make such further contribu
tion unless the court deems
It necessary to require that
contribution in order to
satisfy the debts and liabili
ties of the company, and the
costs, charges, and expenses
of the winding up.
“ ( 3) In the winding up of a company
limited by guarantee which has a
share capital, every member of the
company shall be liable, in addition
to the amount undertaken to be
contributed by him to the assets
of the company in the event of its
being wound up, to contribute to
the extent of any sums unpaid on
any shares held by him ."
In making up the list of contributories,
the liquidator putsthe names of present
)
.

creditor not a member ofthe List.

company ; but any such CONVERSION . A security is said to be
sum may be taken into converted when it is changed in some
account for the purpose of manner, e.g. ( 1 ) where the interest is reduced
the final adjustment of the and , say, a 5 per cent. stock becomes a 4
rights of the contributories per cent. ; ( 2) where the nominal value of
among themselves. shares is changed, as when a £10 share is
175
CON DICTIONARY OF BANKING CON

changed into ten shares of £l each . As / CONVERTIBLE PAPER CURRENCY . A

to the power of a company limited by shares bank note which can be exchanged for gold
to convert its paid -up shares into stock, etc., on demand for its full value, at the bank
see Section 41 of the Companies (Consolida- which issued it, is convertible paper, but
tion ) Act, 1908, under SHARE CAPITAL. ifinconit cannot be so exchanged it is called
(See STOCK .) vertible paper .
The word is also used in connection with CONVERTIBLE SECURITIES . A general
the sale of a property when the property is term applied to all securities which may be
converted into cash . Where å testator readily converted , or turned , into cash.
leaves his property to trustees on trust for A security is sometimes described as
some purpose and he does not wish to make " convertible, " e.g. the Atchison , Topeka
a sale of the property compulsory immedi- and Santa Fé 4 per cent. Convertible bonds,
ately after his death ,there may be a clause redeemable in 1955, which means that the
in his will empowering the trustees at their bonds may be converted into the common
discretion “ to postpone the sale and stock of that railroad company at any
time that a holder of the bonds may
conversion of my real and personal estate ," desire.
etc.
Wrongful conversion is a legal term CONVEYANCE . In the Conveyancing
signifying the dealing with the goods of Act of 1881 the word conveyance " includes
another person, without authority, so as to assignment, appointment, lease, settlement,
deprive him of the possession . For example, and other assurance, and covenant to sur
a banker may be liable to an action by the render, made by deed, on a sale, mortgage,
rightful owner of a “ not negotiable " cheque demise, or settlement of any property,
for damages for wrongful conversion, where or on any other dealing with or for any
he has collected the cheque and paid the property .”
proceeds to a stranger who was not entitled The word " conveyance " is, however,
to it. A banker may be similarly liable for principally used to denote the deed by which
wrongful conversion if he deliver to the freehold property is conveyed to a purchaser
wrong person articles left with him by a in fee simple. The wording of a convey
customer for safe custody. ance varies according to circumstances.
In Souchette, Ltd. v. London County | An ordinary simple conveyance begins with
Westminster à Pari's Bank, Ltd. ( 1920, the date and the names of the parties (e.g.
K.B.D. 36 T.L.R. 195 ), an action by the vendor and purchaser) to the deed, after
plaintiff company to recover damages for which follow the recitals, each clause
the conversion of certain cheques or alterna- | beginning with the word " whereas (the
tively for money had and received against recitals explain the title and the object
the defendant bank, Mr. Justice Greer, in of the present deed) . After the words
the course of his judgment, said that “ it “ Now this Indenture Witnesseth " (the
has been frequently laid down as a general testatum clause) follow the consideration
rule that the measure of damages is the (i.e. the sum to be paid for the property)
value of the thing converted at the time of and an acknowledgment for that sum by the
its conversion . " There are many cases in vendor. After that (by the operative words)
which the circumstances have been taken the vendor conveys the property to the
into account in order to reduce the purchaser, the exact particulars of the pro
damages below what they would prima perty being detailed , and then follows the
facie be.” habendum clause stating how the property
In this case a director of the plaintiff com- is to be held (as, in fee simple , etc.) . The
pany paid into his own account cheques clauses which follow contain any covenants
drawn by the company in favour of a certain there may be respecting the property . The
payee, whose signature he forged . That conveyance is executed by the vendor, but,
director then paid a smaller amount by his | in ordinary cases, execution by the pur
own cheque to the payee. The bank was chaser is unnecessary. If, however, the
allowed the benefit of these sums which the conveyance contains restrictive or other
payee had received , and the damages for covenants on the part of the purchaser it
the conversion of the cheques referred to should be executed by him .
was held to be the ultimate loss which the A speciinen of a simple form of convey
plaintiffs suffered . (See this case also under ance is given under FREEHOLD. (See
ALTERATIONS, COLLECTING BANKER.) FEOFFMENT, LEASE AND RELEASE .)
176
 CON DICTIONARY OF BANKING (CON

The different estates are referred to ť s. d.

as : Exceeds £5 and does not exceed £10 / 10
To convey freehold property by a con £10 £15 0 1 6
veyance ; 215 £ 20 0 2 0
To demise property by a lease ; £ 20 £25 0 2 6
To assign leasehold property by an £ 25 £500 50
assignment ; £ 50 £ 75 0 7 6
To surrender copyhold property and be £ 75 £ 100 0 10 0
admitted . £ 100 £125 0 12 6
Stocks and shares are also spoken of as £ 125 £150 0 150
being conveyed or transferred . £ 150 £175 0 17 6
The stamp duties, as provided in the 2175 £ 200 1 0 0
Stamp Act, 1891, are as follows : -
£ 200 £ 225 1 2 6
£ s. d. £ 225 £250 1 5 0
CONVEYANCE or TRANSFER, . £ 250 £ 275 176
whether on sale or otherwise £ 275 £ 300 1 100
(1) Of any stock of the Bank £ 300 .
of England .0 7 9 For every £50, and also for any
(2) Of any stock of the Gov fractional part of £50, of such
ernment of Canada in amount or value . .. 0 5 0
scribed in books kept in (and see Sections 54, 55, 57, 58 and 61 of
the United Kingdom , or the Stamp Act, 1891, below ).
of any Colonial stock to On and after 29th April, 1910,
which the Colonial Stock (by the Finance (1909-10)
Act, 1877, applies Act, Section 73, see below ), a
For every £ 100, and also conveyance or transfer on sale
for any fractional part ( other than of stock or market.
of £ 100, of the nominal able security ) where the
amount of stock trans
consideration exceeds £ 500
ferred . . .. 0 2 6 For every £ 50, and also for
By the Finance Act, 1920, Section 36 , any fractional part of £50 of
s.s. 2, the above duties are doubled in the the consideration .. .. 0 10 0
case of conveyances or transfers on sale, On and after 1st September, 1920
or conveyances or transfers operating as (by the Finance Act, 1920,
voluntary dispositions inter vivos. Section 36 , s.s. 1 ) , the duties
By Section 62, Stamp Act, 1891 : in the above schedule are
doubled in the case of transfers
Conveyances on any Occasion except Sale or of any stocks or marketable
Mortgage. securities.
“ Every instrument, and every decree By Section 42, Finance Act, 1920, where
or order of any court or of any commis- stock is transferred on sale to a dealer or
sioners, whereby any property on any occa- his nominee, and the transfer bears, in
sion, except a sale or mortgage, is transferred | addition to the stamp denoting the duty, a
to or vested in any person, is to be charged supplementary impressed stamp denoting
with duty as a conveyance or transfer of that it has been stamped under the pro
property . visions of this Section, the maximum duty
Provided that a conveyance or transfer shall be ten shillings. If any part of the
made for effectuating the appointment of a stock has not, within two months, been
new trustee is not to be charged with any transferred by the dealer to a bonâ fide
higher duty than ten shillings." purchaser, the dealer shall pay to the
CONVEYANCE or TRANSFER on sale (as in Commissioners of Inland Revenue a sum
Schedule of Stamp Act, 1891), equal to the difference of the duty charged
Of any property (except such stock as afore- on the transfer and the amount of the ad
said ), valorem duty which would have been charge
Where the amountor value of the £ s. d. able thereon if the stock comprised therein
consideration for the sale does not had been the stock which was not so
exceed £ 5.. 0 0 6 | transferred as aforesaid .
177
19-1935)
CON DICTIONARY OF BANKING (CON

Section 73 of the Finance ( 1909-10) Act, 1910, voluntary disposition inter vivos shall be
is as follows : deemed to be duly stamped , unless the Com
“ The stamp duties chargeable under missioners have expressed their opinion
the heading CONVEYANCE OF TRANSFER thereon in accordance with Section 12 ofthe
on Sale of any Property ' in the First Stamp Act, 1891, but see the circular issued
Schedule to the Stamp Act, 1891 (in by the Board of Inland Revenue in February,
this part of this Act referred to as the 1911 , under TRANSFER OF SHARES. (See
principal Act) shall be double those speci. | ADJUDICATION STAMPS .)
fied in that Schedule : Provided that this Sub -sections 4, 5, and 6 of Section 74,
section shall not apply to the conveyance or Finance ( 1909–10) Act, enact as follows :
transfer of any stock or marketable security as “ ( 4) Where any instrument is chargeable
defined by Section one hundred and twenty -two with duty both as a conveyance or
of that Act, or to the words in italics were transfer under this Section and as
repealed by the Finance Act, 1920 ), a con a settlement under the heading
veyance or transfer where the amount or . SETTLEMENT ' in the First Sche
value of the consideration for the sale does dule to the principal Act, the
not exceed five hundred pounds and the instrument shall be charged with
instrument contains a statement certifying duty as a conveyance or transfer
that the transaction thereby effected does under this Section, but not as a
not form part of a larger transaction or of a settlement under the principal
series of transactions in respect of which the Act.
amount or value, or the aggregate amount “ (5) Any conveyance or transfer (not
or value, of the consideration exceeds five being aa disposition made in favour
hundred pounds." ( A " marketable security " of a purchaser or incumbrancer or
as defined by Section 122 of the Stamp Act, other person in good faith and for
1891, means a security of such a description valuable consideration ) shall, for the
as to be capable of being sold in any stock purposes of this Section, be decmed
market in the United Kingdom .) to be a conveyance or transfer oper
Since the passingof the above Act, con ating as a voluntary disposition inter
veyances, where the consideration does not vivos, and (except where marriage is
exceed £ 500, contain a clause at the end to the consideration) the consideration
the above effect. ( Sce FREEHOLD .) for any conveyance or transfer shall
Stamp Duty on Gifts inter vivos. not for this purpose be deemed to
be valuable consideration where the
By the Finance ( 1909-10) Act, 1910, Commissioners are of opinion that
Section 74 ; by reason of the inadequacy of the
“ (1) Any conveyance or transfer oper sum paid as consideration or other
ating as a voluntary disposition circumstances the conveyance or
inter vivos shall be chargeable with transfer confers a substantial benefit
the like stamp duty as if it were a on the person to whom the property
conveyance or transfer on sale, with is conveyed or transferred .
the substitution in each case of the " (6 ) A conveyance or transfer made for
value of the property conveyed or nominal consideration for the pur .
transferred for the amount or value pose of securing the repayment of
of the consideration for the sale : an advance or loan or made for
Provided that this Section shall effectuating the appointment of a
not apply to a conveyance or new trustee or the retirement of a
transfer operating as a voluntary trustee , whether the trust is ex
disposition of property to a body pressed or implied, or under which
of persons incorporated by a special no beneficial interest passes in the
Act if that body is by its Act pre property conveyed or transferred ,
cluded from dividing any profit or made to a beneficiary by a trustee
among its membersand the property or other person in a fiduciary capa
conveyed is to be held for the pur city under any trust, whether ex
poses of an open space or for the pressed or implied , or a disentailing
purposes of its preservation for the assurance not limiting any DCW
benefit of the nation ." estate other than an estate in fee
No conveyance or transfer operating as a simple in the person disentailing the
178
CON ) DICTIONARY OF BANKING
property, shall not be charged with
duty under this Section , and this
sub -section shall have effect not
withstanding that the circumstances
exempting the conveyance or trans
fer from charge under this Section
are not set forth in the conveyance
For transfer. "
The following are the Sections of the Stamp
Act, 1891, referred to above :
Meaning of “ Conveyance on Sale."
" 54. For the purposes of this Act the
expression ' conveyance on sale ' includes
every instrument, and every decrce or order
of any court or of any commissioners,
whereby any property, or any estate or
interest in any property, upon the sale
thereof is transferred to or vested in a pur
chaser, or any other person on his behalf or Principal Instrument, How to be Ascertained .
by his direction .
How ad valorem Duty to be calculated in
respect of Stock and Securities.
" 55. (1) Where the consideration, or any
part of the consideration , for a
conveyance on sale consists of any
stock or marketable security, the
conveyance is to be charged with ad
valorem duty in respect of the value
of the stock or security.
" ( 2) Where the consideration, or any part
of the consideration , for a convey
ance on sale consists of any security
not being a marketable security, the
conveyance is to be charged with
ad valorem duty in respect of the
amount due on the day of the date
thereof for principal and interest
upon the security .
How Conveyance in Consideration of a Debi,
etc., to be charged .
" 57. Where any property is conveyed to
any person in consideration , wholly or in
part, of any debt due to him , or subject
either certainly or contingently to the pay
ment or transfer of any money or stock ,
whether being or constituting a charge or
locumbrance upon the property or not, the
debt, money , or stock is to be deemed the
whole or part, as the case may be, of the
consideration in respect whereof the convey
ance is chargeable with ad valorem duty.
Direction as to Duty in Certain Cases. CONVEYANCE OF TRANSFER by way
“ 58. ( 3) Where there are several instru
ments of conveyance for completing
the purchaser's title to property
sold , the principal instrument of
conveyance only is to be charged
179
(CON
with ad valorem duty, and the other
instruments are to be respectively
charged with such other duty as they
may be liable to , but the last
mentioned duty shall not exceed the
ad valorem duty payable in respect
of the principal instrument.
“ (4) Where a person having contracted for
the purchase of any property, but
not having obtained a conveyance
thereof, contracts to sell the same
to any other person , and the pro
perty is in consequence conveyed
immediately to the sub -purchaser,
the conveyance is to be charged
with ad valorem duty in respect of
the consideration moving from the
sub -purchaser.
“ 61. (1) In the cases hereinafter specified
the principal instrument is to be
ascertained in the following manner :
"( a) Where any copyhold or cus
tomary estate is conveyed by
a deed , no surrender being
necessary, the deed is to be
deemed the principal instru
ment :
“ (0) In other cases of copyhold or
customary estates , the sur
render or grant, if made out
of court, or the memoran .
dum thereof, and the copy
of court roll of the surrender
or grant, if made in court,
is to be deemed the principal
instrument :
" (c) Where in Scotland there is a
disposition or assignation
executed by the seller, and
any other instrument is
executed for completing the
title, the disposition or
assignation is to be deemed
the principal instrument.
“ ( 2) In any other case the parties may
determine for themselves which of
several instruments is to be deemed
the principal instrument, and may
pay the ad valorem duty thereon
accordingly."
of Security of any property
(except such stock as aforesaid ),
or of any security.
See MORTGAGE , etc., and
MARKETABLE SECURITY .
CON ) DICTIONARY OF BANKING [COP

£ s. d. chargeable with ad valorem duty ." (Alpe's

CONVEYANCE or TRANSFER of any “ Law of Stamp Duties .'')
kind not hereinbefore described 0 10 0 As to stamping instruments after execu
And see Section 62, above. tion , see Section 15 of the Stamp Act, 1891,
By Section 6, Finance Act, 1898 : under heading STAMP DUTIES. ( See Com
" The definition Conveyance on Sale ' | POSITION — TRANSFERS_SHARES, COPYHOLD,
includes a decree or order for, or having the FREEHOLD, INCREMENT VALUE DUTY,
effect of an order for, foreclosure. Provided LEASEHOLD, TRANSFER OF SHARES, TRANS
that (a) the ad valorem stamp duty upon any MISSION OF SHARES.)
such decree or order shall not exceed the COPARCENERS. Where the owner of
duty on a sum equal to the value of the real property dies without having made a
property to which the decree or order relates, will it descends to his heir, that is, his eldest
and where the decree or order states that son ( see PRIMOGENITURE ), but if there is no
value that statement shall be conclusive for son , it descends to all the daughters (if any)
the purpose of determining the amountof the as coparceners, that is parceners (or heirs)
duty ; and (b) where ad valorem stamp duty is together, and the land may be partitioned
paid upon such decree or order, any convey , among them . Coparceners have a unity of
ance following upon such decree or order title in the property — that is, a common right
shall be exempt from the ad valorem stamp to the whole — butthe shares may be unequal,
duty ." as where a daughter is dead and her
By Section 10, Finance Act, 1900 :- daughters take her share . There is no right
" A Conveyance on Sale made for any of survivorship .
consideration in respect whereof it is charge- Coparcenary is a holding which is neither
00
able with ad valorem duty, and in further that of a joint tenant " nor of a “ tenant
consideration of a covenant by the purchaser in common," but a kind of intermediate
to make, or of his having previously made, state.
any substantial improvement of or addition One coparcener may transfer her share to
to the property conveyed to him , or of any another coparcener either by a conveyance,
covenant relating to the subject matter of as in the case of a tenant in common ,
the conveyance , is not chargeable, and shall or by a release, as in the case of a joint
be deemed not to have been chargeable with tenant.
any duty in respect of such further con- A surviving coparcener does not succeed
sideration . " to the share of a deceased coparcener. The
Where property is conveyed , subject to a share may be disposed of by will, or, if she
mortgage, conveyance duty is payable upon dies intestate, it passes to her heir.
the amount of the mortgage and interest In the ancient custom of gavelkind (q.v.)
up to the date of the conveyance ( see Section lands descend to all the sons together as
57 of the Stamp Act, 1891, quoted above ), coparceners.
in addition to the duty upon the amount of Where deeds of property held in copar
the consideration passing from the pur- cenary are deposited as security, the docu
chaser . Where the mortgagee joins with ment of charge should be signed by all the
themortgagor in a conveyance to a purchaser , owners, and it is advisable that a banker's
and the conveyance contains a covenant legal mortgage be taken. (See INTESTACY,
by the purchaser with the mortgagee for Joint TENANTS, TENANTS IN COMMON .)
payment of the mortgage debt and interest, COPPER COINS. Real copper coins were
collateral security duty limited to 10s. first issued in 1672, and were replaced by
( see MORTGAGE) is charged in addition with bronze in 1860, though bronze coins are still
respect to that covenant. commonly spoken of as " coppers." They
Where freehold and copyhold properties are made of a mixed metal, 95 parts of
are included in the same deed, conveyance copper, four parts of tin and one part of
duty is payable upon the price of the free- zinc. They are legal tender only to the
hold, and an additional duty of 10s. is amount of one shilling.
payable if the deed contains a covenant The figure of Britannia upon the coins is
to surrender the copyhold property (unless said to have been originally modelled from
there is a surrender stamped with ad valorem the beautiful Frances Stuart, afterwards
duty ). " If, however, the interest in the Duchess of Richmond (Hutchison, “ Prac
copyholds is equitable only , the covenant to tice of Banking , " vol. ii, p. 514) . (See
surrender transfers that interest, and is COINAGE.)
180
COP ) DICTIONARY OF BANKING (COP
COPY . The duties imposed by the Stamp person pursuant to and
Act, 1891, are as follows : for the purposes of any
Copy or EXTRACT (attested or in Act, or furnished to any
any manner authenticated) of or general or superintending
from registrar under any general
(1 ) An instrument chargeable regulation.
with any duty . ( 2) Copy or extract for which
( 2) An original will, testa theperson giving the same
ment, or codicil. is not entitled to any fee or
(3) The probate or probate reward .
copy of a will or codicil. And see Section 64 , as follows :
(4) Any letters of adminis “ The duty upon a certified copy or
tration or any confirma extract of or from any register of births,
tion of a testament. baptisms, marriages, deaths, or burials is
(5) Any public register (ex to be paid by the person requiring the copy
cept any register of births, or extract, and may be denoted by an
baptisms, marriages, deaths, adhesive stamp, which is to be cancelled by
or burials). the person by whom the copy or extract is
(6 ) The books, rolls, or re signed before he delivers the same out of
cords of any court. his hands, custody, or power. ” (See At
In the case of an instru The same TESTED COPY, OFFICE COPY.)
ment chargeable with duty as COPYHOLD . Under the feudal system
duty not amounting to such in
villeins were permitted by their lords to
strument.
one shilling . hold plots of land, and in return the villeins
In any other case .
0 1 0 had to perform certain services for the lords.
Exemptions. The land belonged absolutely to the lords,
(1 ) Copy or extract of or from who could remove the villeins from their
any law proceeding. holdings at will, but so long as the services
(2) Copy or extract in Scot. were duly rendered , the tenants were no
land of or from the com doubt permitted to remain upon the land in
mission of any person as a peace. When one died , his holding would
delegate or representative be taken by his successors , and so from
to the convention of royal generation to generation the land would pass
burghs or the general from one to another. Blackstone says (see
assembly or any presby Commentaries of the Laws of England ,"
tery or church court. vol. ii, p. 80 , Kerr's Fourth Edition ) : " From
And see Section 63, as follows : what has been premised , it appears that
· An attested or otherwise authenticated copyholders are in truth no other but
copy or extract of or from villeins, who, by a long series of immemorial
**(1) An instrument chargeable with any encroachments on the lord , have at last
duty ; established a customary right to those
“ ' (2) An original will, testament, or codicil ; estates, which beforewere held absolutely at
00
(3) The probate or probate copy of a the lord's will. Which affords a very sub
will or codicil ; stantial reason for the great variety of
«(4) Letters of administration or a con- customs that prevail in different manors,
firmation of a testament ; with regard both to the descent of the
may be stamped at any time within fourteen estates, and the privileges belonging to the
days after the date of the attestation or tenants. " And again : “The generality of
authentication on payment of the duty villeins in the kingdom have long ago
only ." sprouted up into copyholders ; their persons
COPY or EXTRACT ( certified ) of or £ s. d. being enfranchised by manumission or long
from any register of births, acquiescence ; but their estates, in strict
baptisms, marriages, deaths, or ness, remaining subject to the same servile
burials 0 0 1 conditions and forfeitures as before ; though ,
Exemptions. in general, the villein services are usually
(1) Copy or extract furnished commuted for a small pecuniary quit
by any clergyman , regis rent.”
trar , or other official In early times the name of the tenant was
181
COPY DICTIONARY OF BANKING ( COP

written upon the rolls of the manor, along an intestacy, there is no surrender, and the
with a note of the services he had to render or admittance merely sets out that A B has
the amount he had to pay. The parchment been admitted as devisee or copyhold heir
“ roll " is now substituted by a book, but the at-law of the deceased tenant on the rolls.
tenant of a copyhold is still said to be en- On a copy surrender and admittance, the
rolled or entered upon the rolls of the manor. steward certifies that the original surrender
A copy of the entry on the rolls was given to is duly stamped . The certificate is some
the tenant as evidence of his enrolment, such form as :- “ I certify that the surrender
whence he was called a copyholder ; that under which this admittance is granted bears
is, a holder of the land by copy of the the proper ad valorem stamp of ."
entry . As the customs of manors vary so very
In connection with the transfer of copy- much, a banker should always ascertain
holds, there is usually a covenant to sur. from the steward of any particular manor
render ; that is, a deed in which the vendor what deeds and documents are necessary .
covenants to surrender the land to the lord Even manors that are quite close together
of the manor to the use of the purchaser. may have different customs in the transfer
The actual transfer is effected by surrender of the property.
and admittance. By the surrender an Where avendor and purchaser personally
equitable interest only is vested in the attend the manor court to surrender and
surrenderee and admittance is required to take admittance, there may not be any deed
perfect his title . A surrender may be made of covenant to surrender. There must,
either in court or out of court. If made however, except in cases of a devise or
in court, it is entered on the rolls and a copy descent, always be a surrender, and the title
of the surrender is given to the purchaser. cannot be complete till admittance has taken
If the surrender is made out of court, a place. A person who has ceased to hold
memorandum in writing of it is prepared and any interest in the property may remain
signed by the parties and the steward , and tenant on the rolls, and though a covenant
it is then entered upon the rolls. to surrender is executed it may not be acted
The mode of surrender is for the person upon for some time afterwards, for so long
on the rolls, either himself or by duly as there is a living tenant on the court rolls
appointed attorney, to attend before the the lord cannot ( even though he knows such
steward and surrender, either directly ortenant has ceased to have any interest)
pursuant to a covenant to surrender , the compel anyone else to come in and be
copyhold tenement to the lord to the use admitted. In the case of the death of such
of the purchaser, and the steward then makes a tenant, his heir -at-law or devisee must
out the surrender, which is a copy of the be admitted before a purchaser can ; and
entry on the court rolls, and has it stamped. very often , instead of saving fines and fees,
The purchaser may attend at the same time the actual owner has more to pay.
and take admittance, or he may attend at If a covenant to surrender and a copy
some subsequent court or out of court to admittance of the copyholder, along with
take admittance. In the former case the the prior deeds, are lodged as security under
surrender and admittance usually appearon a memorandumof deposit, it is said that the
the copy of the court rolls delivered by the banker has aa reliable security ; but it would
steward to the purchaser . In the latter appear that the only really satisfactory way
case there are two copies ofthe court rolls, to obtain a security over copyhold property
namely a surrender and an admittance. The is by mortgage, and surrender to the lord
surrender is the instrument required to be to the use of the mortgagee. This surrender
stamped, but the admittance does not is entered on the court rolls as being subject
require a stamp. Sometimes, in practice, to a condition that, on payment of the
where there is a covenant to surrender in a mortgage debt, the surrender will become
deed which deals with both freehold and void . Such a surrender is called a condi
copyhold property, such deed is impressed tional surrender.
with the usual ad valorem stamp on the full It is not usual for a mortgagee to seek
purchase money, and in that case the admittance. This course is adopted in order
surrender bears only a ten shilling stamp, to avoid payment of the fines and fees which
otherwise it must be stamped according to the would be payable upon his admittance, and
purchase price of the copyholds. would again be payable upon the re -admit
In the case of a devisee under a will or in tance of the mortgagor upon payment of the
182
COP ) DICTIONARY OF BANKING [COP
debt. A mortgagee can at any time perfect subject to the ground landlord's claims, i.e.
his title by obtaining admittance as from the ground rent with right of recovering the
the date of the surrender, which safeguards same. The legal estate vests in the ground
him from the danger of any subsequent landlord or his trustee , and his name will
mortgagee obtaining admittance in front of appear on the court roll. Equitable
him . When the mortgage debt is repaid, copyholds are considered to be as good as
a memorandum of satisfaction is entered freeholds.
upon the court rolls, the mortgagee executes By the Stamp Act, 1891, the duty is as
a deed of release and the mortgagor there follows :
upon occupies the position he did before the COPYHOLD and CUSTOMARY Es
conditional surrender was made. TATES - Instruments relating
If a mortgagee does not get his covenant thereto . Upon asale there
to surrender completed by a conditional of. See CONVEYANCE .
surrender entered upon therolls, his charge Upon a mortgage thereof.
may be postponed to a subsequent mort See MORTGAGE .
gagee who does obtain such a conditional Upon a demise thereof. Sce
surrender upon the rolls. LEASEHOLD .
A simple deposit of the copies of the court Upon any other occasion .
roll creates an equitable mortgage, but Surrender or grant made
there is the risk , as above stated , of a mort out of court, or the
gagee obtaining a conditional surrender on memorandum thereof,
the rolls ; and it is quite possible, in certain and copy of court roll of any
cases, for the copyholder to dispose of the surrender or grant made £ s. d.
property withoutthe copy of the admittance, in court 0 10 0
which may be in the banker's hands, being Provisions as to Payment of Duty.
required at all.
In cases where the mortgagor has notbeen " Section 65. ( 1 ) No instrument is to be
entered on the court rolls, a mortgage charged more than once with duty
by him is equitable only, and upon repay . by reason of relating to several
ment of the debt a reconveyance is not distinct tenements, in respect where
required, a simple receipt being sufficient, of several fines or fees are due to
In the case of jointtenants, the admission the lord or steward of the manor .
of one is equal to the admission of all of “ (2) The copy of court roll of a surrender
them , but tenants in common must be or grant made out of court shall not
admitted severally, and a fine will be due be admissible or available as evi
from each of them . dence of the surrender or grant,
Fines are usually payable by a tenant unless the surrender or grant, or the
upon admittance . The amounts of the fines memorandum thereof, is duly
vary ; in some cases they are small, though stamped , of which fact the certificate
in other cases they are large. Some of them of the steward of the manor on the
are fixed and others arbitrary. An arbitrary face of the copy shall be sufficient
fine generally amounts totwo years' improved evidence.
value of the copyhold tenement. They “ (3) The entry upon the court rolls of a
may also be payable upon the death of the surrender or grant shall not be
lord or the death of thetenant, or upon both admissible or available as evidence
events . of the surrender or grant unless the
For an example of a “ conditional sur surrender or grant, if made out of
render," see CONDITIONAL SURRENDER . 1)
court, or the memorandum thereof,
For an example of an “ admittance , " see or the copy of court roll of the
ADMITTANCE . surrender or grant, if made in court,
For an example of a “ surrender," and a is duly stamped, of which fact the
" surrender and admittance , " see SUR certificate of the steward of the
RENDER , manor in the margin of the entry
When copyhold land is freed from all shall be sufficient evidence.
customary duties it is said to be enfranchised .
(See ENFRANCHISEMENT.) Facts Affecting Duty to be Stated in Note .
Where equitable copyholds are found, the " 66. (1 ) All the facts and circumstances
property is transferable by conveyance , affecting the liability to duty of the
183
COP ) DICTIONARY OF BANKING [COU

copy of court roll of any surrender | COVENANT TO SURRENDER ť s, d .

or grant made in court, or the Where the ad valorem duty
amount of duty with which any such on the surrender, in respect of
copy of court roll is chargeable, are the consideration or mortgage
tobe fully and truly stated in a note money, does not exceed 10s., a
to be delivered to the steward of the duty equal to the amount of
manor before the surrender or grant such ad valorem duty .
is made. In any other case .
. 0 10 0
“ (2) The steward of every manor shall If the copyhold deeds are deposited with
refuse a memorandum of deposit under hand , the
“ (a) To accept in court any sur. duty on the memorandum is the same as in
render, or to make in court the case of other deeds. (See EQUITABLE
any grant, until such a note MORTGAGE, TITLE DEEDS.)
as is required by this Section CORPORATION . A corporation is created
00
has been delivered to him ; or by an Act of Parliament or by a charter
• (6) To enter on the court rolls, or granted by the Crown . A corporation is
accept any presentment of, a legal “ person ” by itself and continues
or admit any person to be as a distinct body, irrespective of any changes
tenant under or by virtue which may take place amongst the members.
of, any surrender or grant Railway companies are incorporated under
made out of court, or any private Acts of Parliament, and most trading
deed which is not duly companies under one of the Companies Acts.
stamped : In considering an application for a loan , the
And in any case in which he does not so banker must ascertain if the corporation
refuse shall incura fine of fifty pounds. has power to borrow , and, if it has power,
whether the money to be borrowed will cause
Steward to make out duly Stamped Copies. the limit of such borrowing powers to be
" 67. The steward of every manor shall, exceeded .
within four months from the day on which In all dealings with a limited company,
any surrender or grant is made in court, make whether with regard to the borrowing of
out a duly stamped copy of court roll of such money , or the charging of the company's
surrender or grant, and have the same ready property, or the manner in which cheques
for delivery to the person entitled thereto, are drawn, a banker is taken to be
and in default of so doing shall incur a fine acquainted with the memorandum and
of fifty pounds, and the duty payable in articles of association of the company,
respect of the copy of court roll shall be a and is affected with notice of all that is
debt to Her Majesty from the steward , contained in those two documents. (See
whether he has received it or not, and if he COMPANIES .)
has not received the duty the same shall also CORPORATION PROFITS TAX . A duty,
be a debt to Her Majesty from the person imposed by the Finance Act, 1920, of
entitled to the copy . 5 per cent. of the profits of limited com
Steward may Refuse to Proceed except on panies.
months no In an shall be period
taxaccounting twelve
chargedof on the
Payment of his Fees and Duty . first £500 of profits. The tax does not apply
" 68. The steward of any manor may. to any company being a building society,
before he accepts in court any surrender or or to a company which carries on any gas,
makes in court any grant, demand the pay- water, electricity, tramway, hydraulic power,
ment of his lawful fees in relation to the dock, canal, or railway undertaking, and
surrender or grant, together with the duty which by any Act is precluded from charging
payableon the copy of court roll thereof, and any higher price , or from distributing any
may refuse to proceed in the matter or to higher rate of dividend than that authorised
deliver the copy of court roll to any person by such Act. The tax shall in no case
until the fees and duty are paid ." exceed the amount represented by 10 per
CONDITIONAL SURRENDER of any cent. of the surplus available after any fixed
copyhold or customary estate interest has been paid on debentures and
by way of mortgage. preference shares.
See MORTGAGE, and Sections COULISSE . The official brokers, agents
86 and 87 . de change, upon the Paris Exchange, form the
184
COU DICTIONARY OF BANKING [COU

Parquet ; the unofficial dealers form the the lessor receives a counterpart or copy of
Coulisse. it signed by the lessee .
COUNCIL DRAFTS . Drafts drawn by For the stamp duty, see DUPLICATE .
the India Council in this country upon the COUNTERSIGN . À frequent arrange
Indian Government and payable in India . ment made by a company w its bankers
COUNTERFEIT COINS . (See BASE Coins .) is that all cheques shall be signed by two
COUNTERMAND OF PAYMENT. A directors and countersigned by the secretary.
banker is obliged to honour the cheque of his The countersignature is as necessary as
customer, if there is a sufficient balance in the other signatures before payment of a
the account to meet it, and the cheque is in cheque. Where the secretary is also a
order. The drawer may , however, instruct director, the company's resolution as to the
the banker to stop payment of a cheque, signing of cheques should state whether or
and the banker will be liable if he neglects not the secretarymay sign in both capacities.
to attend to the instructions. In cases where cheques are to be signed by,
The Bills of Exchange Act, 1882, Section say, one director and countersigned by the
75, states that the duty and authority of a secretary, it is often the intention of the
banker to pay a cheque drawn on him by company that two persons are to sign and
his customer are determined by countermand not one person in two capacities. (See under
of payment. COMPANIES.)
A countermand of payment can be given COUNTRY BANK NOTES. Notes which
only by the drawer, but notice from a holder are issued by a country bank as distin
that a cheque has been lost by him would guished from those issued by the Bank of
put a banker on his guard, pending instruc- England . Where they are tendered in
tions from the drawer . payment and no objection is raised by the
Any cheque drawn upon a joint account person receiving them , it is considered a legal
may be stopped by any one of the joint tender.
parties, and one trustee or executor may A tender by a banker of his own
stop payment of a cheque drawn by all the notes also acts as a legal tender, if not
trustees or executors . objected to, even if they are afterwards
An order to stop payment of a cheque dishonoured.
should be in writing and be signed by the There is nothing to prevent the notes of
customer, and if the order is subsequently a country banker being paid away by
cancelled, the fresh instructions should also another banker, whether the latter has an
be in writing. The drawer cannot stop issue or not, so long as the person to whom
payment of a cheque which a banker has, they are offered is willing to accept them .
at the drawer's request, already certified , : If a country bank note is accepted in
or marked , for payment. exchange for goods at the actual time of a
The terms of a countermand of payment sale, the transferee must bear the loss, if the
by a customer should be very precise, so as banker by whom it was issued fails before
to admit of no question as to which cheque he presents the note for payment, unless he
is referred to . A good form is as follows : can prove that the transferor knew that the
To the X & Y Bank , Ltd., Leeds.
banker had failed before delivering the note
to him . But, on the other hand, if the note
July 10, 19
Please stop payment of cheque No. was accepted in payment of a pre -existing
46501,dated July 9 ,19 , for £100, signed debt,
tion ofand
thethe banker
note, failsisbefore
the debt presenta,
not discharged
by me payable to Thomas Brown ; which
has been lost. and the transferor is still liable to the
transferee , provided that the transferee pre
ALFRED SMITH .
sented the note for payment without delay
As to countermand of payment by wire, and gave due notice of its dishonour to the
and further information , see PAYMENT transferor.
STOPPED. (See BILL OF EXCHANGE, LOST The receiver of a country bank note in
BILL OF EXCHANGE, PAYMENT OF CHEQUE.) | payment of a debt should therefore present
COUNTERPART. A duplicate of an in- the note for payment at once , or not later
strument. The word is used chiefly in than the following day, otherwise he will
connection with leases, e.g. where a house have no recourse against the person who
is loased for a period of years, the lessee gave it to him , in the eventof the note being
receives the lease signed by the lessor and dishonoured . A bank note is a promissory
185
COU ) DICTIONARY OF BANKING (COU
note by a banker, and the giving of notice with by the House and not included in the
of dishonour is regulated by the Bills of Town Clearing or Metropolitan Clearing :
Exchange Act, 1882. If the person giving that is, cheques on the country correspon
and theperson to receive thenotice are in dents of theLondon bankers.
the same town, the notice should be received Country bankers who avail themselves
on the day following the day of dishonour ; of the clearing remit their country cheques
if in different towns, the notice should be to their own London agent, or London office,
despatched not later than the day following and stamp across them their own name and
the day of dishonour. (See DISHONOUR OF address and that of their London agent or
BILL OF EXCHANGE .) head office .
For the same reason , where a customer When a country banker does not intend
pays into his account the notes of another to pay a cheque received by him from his
bank, the notes should be presented for London agent for collection, he must, by
payment by the banker without delay, so the rules of the Clearing House, return it
that, in the event of non - payment of the direct to the country or branch bank whose
notes, the banker may be entitled to charge name and address is across it, and this must
the amount to the account of his customer. be done by return of post ; it cannot be
If a banker is negligent in presenting the held over till next day. (See CLEARING
notes at once, any loss, upon dishonour, will HOUSE .)
fall upon the banker and not upon the COUNTY COUNCIL . When a banker is
customer, unless an arrangement was made appointed to be treasurer to a county
with the customer, when taking the notes, council, he is required to furnish satis
that they would not be forwarded for factory security .
collection for a few days. Bank notes, like The cheques, or orders forpayment, are
cheques, are presented for payment in the drawn upon the treasurer. By Section 80,
daily clearing, when the issuing bank is in s.s. 1 , of the LocalGovernment Act, 1888, it
the same town . If the issuing bank is in is provided that “ all payments to and out
another town, they may be collected through of the county fund, shall be made to, and by
London or remitted direct. the county treasurer, and all payments out
Where a person receives change, by way of the fund shall, unless made in pursuance
of favour, for a bank note , he is liable , if the of the specific requirement of an Act of
note is dishonoured, unless the person who Parliament, or of an order of a competent
took the note did not put it into circulation court, be made in pursuance of an order of
or presentit for payment within a reasonable the council, signed by three members of the
time. finance committee present at the meeting
A banker's own notes are not, for the of the council, and countersigned by the
purposes of his balance sheet, counted up clerk of the council, and the same order may
as part ofthecash onhand, but are deducted include several payments. Moreover, all
from the balance of the note account, in cheques for payment of moneys issued in
order to show the amount of his notes pursuance of such order, shall be counter
which are in circulation . signed by the clerk of the council, or by a
Country banks of issue re-issue their notes deputy approved by the council."
constantly until they become unfit for The usual method is for a list of payments
circulation. to be furnished to the treasurer, the list
Where notes are received which prove to beingsigned by three members and counter
be forgeries, the amount can berecovered from signed by the clerk , and for the individual
theperson from whom they were obtained . cheques to be signed by officials of the
Where a note-issuing banker failed, it council. The cheques, when presented for
was held that interest at 5 per cent. on its payment, are compared with the official list.
notes in circulation began to accrue from Asto the stamp duty on this list, see minute
the date when a claim for payment of a note of the Board of Inland Revenue, in
was made to the liquidator, and not from article CHEQUE .
the actual date when the banker stopped With reference to the borrowing powers of
payment. (See BANK NOTES, NOTE REGISTER, a county council, they cannot, as a rule, be
NOTE RETURN .) 17. : exercised unless the sanction of the Local
COUNTRY CLEARING . The section of Government Board is first obtained . To
the business of the London Bankers' Clear- ascertain the extent of the powers and what
ing House which includes all cheques dealt sanction is necessary , reference should be
186
COUN DICTIONARY OF BANKING (COU

made to the statutes under which any loans or " in New York at the fixed exchange of
are to be raised. The powers and duties of $ 4.87 per one pound sterling." A holder
the Local Government Board were trans- of such coupons may present them for
ferred to the Minister of Health in 1919. paymentin London or, ifthere is an advan
If money is borrowed without power or tage to be secured from the exchange, he
sanction, the interest thereon will probably may instruct his bankers to collect them in
be disallowed . New York and have the proceeds remitted
The accounts are made up to March 31 , to this country , or if the holder looks for a
and are audited by a Government Auditor. fall in the sterling value of the dollar he
(See LOCAL AUTHORITIES.) may secure the exchange profit at once by
With respect to advances to Small Holders having the coupons sold in this country.
under the guarantee of a County Council, A banker should take his customer's instruc
see LAND SETTLEMENT (FACILITIES) Act, tions when such coupons are handed in for
1919. collection .
COUPON. (From Fr. couper, to cut.) A curious example of the datesof payment
Literally a piece cut off. is found in the case of certain Chinese bonds,
A coupon is a warrant for the payment the coupons ofwhich are advertised as being
of interest. It is usually attached to a bond payable "on the first day of the third and
or debenture, and requires to be cut off when ninth moon of the Chinese calendar. "
the time has arrivedfor its presentment for Where many bonds with coupons attached
payment. Where the interest on debentures are held, a banker keeps a coupon diary,
and bonds is paid by means of coupons, a in which are entered particulars of the cou
sheet of coupons is supplied . The sheet pons falling due upon the various dates.
contains a series of coupons, there being a Coupons are generally sent up to London, by
coupon with a differentdate for each pay- a country banker, for collection, say, three
ment of interest, quarterly or half-yearly. or four weeks before they are due. In order
as the case may be for several, and, incases to prevent them getting lost, they should be
of large coupon sheets, for many years to pinned to a ticket or slip. There should be a
come. Where no date of paymentappears separate ticket for each different security,
upon the coupons, they are payable on which should quote the number of coupons
advertised dates. If the date of payment attached, and give particulars of them . The
falls upon a Sunday or a bank holiday, coupons should be sorted in numerical order
they are payable on the succeeding business and according to amounts.
day. Where coupons are numerous, a coupon
As an example, the following is the cutter is the most expeditious way of cutting
wording on a coupon from a War Loan them off.
Bond : When the last coupon has been detached ,
the part of the sheet which remains is called
the talon ," and it is forwarded to the
25 % War Loan , 1929-1947
address given thereon to be exchanged for
(Per Act 6 and 7 Geo . V. c . 67.) a fresh sheet of coupons. A “ talon " is not,
COUPON FOR however, attached in all cases , and the
TWELVE PouxdS TEX SAILLINGS Div . 12. bond must then be sent to obtain the new
D:
(Less Income Tax ). 066185 coupons.
Being 6 months Dividend on Bond Coupons are not credited to a customer's
for Five Hundred Pounds.
Due 1st June, 19 ....
account until an advice of the amount
Payable at the Bank of England. $ 12-10-0 realised has been received . This custom
has been adopted because of the differences
which often arise in the deduction of the
The actual size of this particular coupon income tax .
is 27 in . by 17 in . In the event of any coupons being lost,
Some coupons are payable either in this notice should be given to the bank where
country or abroad, as, for example, in they are payable . The banker willno doubt
London in sterling, or in New York (or other exercise care before paying them , but he
places)
London
at the current rate of exchange in cannot really refuse to pay them , unless an
. order to do so is received from the customer
There are also coupons payable at a fixed who gave the instructions for the bank to
exchange, for example, in London in sterling, pay the coupons.
187
COU ) DICTIONARY OF BANKING ( COU

In addition to being attached to bearer In the aforesaid table “ Usance ” means

bonds, coupons are attached to Registered the currency of the bills or drafts ; that is,
Coupon- Bonds. (See REGISTERED COUPON- the time that must elapse before they are
BOND .) payable , " short ” signifying up to eight or
A coupon is exempt from stamp duty. ten days. The double price column refers
The exemption is contained in Section 40, to the rate at which different qualities of
Finance Act, 1894 : — “ A Coupon for paper are offered, the first quotation being
interest on a marketable security as defined for fine bank acceptances, the second for
by the Stamp Act, 1891, being one of a set good commercial bills. The prices are those
of coupons, whether issued with the security which the London brokers are charging at
or subsequently issued in a sheet shall not the time for bills of the currency and class
be chargeable with any stamp duty." A stated ; thus £ 100 would purchase a fine
coupon attached to a scrip certificate is not bank acceptance for 2,540 francs, payable
exempt. (See BEARER BONDS, DRAWN at Marseilles in three months' time.
Bonds, Russian Bonds.) It is to be noted that most of the rates
COUPON -BOND . (See REGISTERED quoted in the table represent the sum in
COUPON - BOND .) foreign currency that is purchasable with a
COUPON BOOK. In this book are kept sovereign, but a few of the rates quote the
particulars of all coupons sent away for English pence that must be paid against
collection. Columns are provided for - date the foreign unit.
sent, name of customer, name of issuers with Where the rates are quoted in foreign
designation, number, etc., of bond from currency to the sovereign, “ high rates are
which the coupons have been detached, and for us, and low rates are against us ” (Clare) ;
nominal amount of coupon. Two final that is, with a high rate more of the foreign
received .
currency
columns show the proceeds and when low is obtained for a sovereign, with a
rate less is obtained . But, where the
A record of all coupons held for collection rates are quoted in pence, high rates are
should be made in a diary under the various unfavourable to us, and low rates are
dates of payment. favourable ; that is, when high, a purchaser
In the case of coupons payable in London, has to pay more pence for a foreign unit,
it is customary for country banks to remit when low , he pays fewer pence .
them to their London agents about one In a “ Foreign Exchange " list the rates
month before they are due. are those quoted in foreign financial centres
COURSE OF EXCHANGE . This is the for drafts or bills on London .
technical name of the price list of bills, Merchants, foreign bankers, and exchange
drafts and cheques on foreign centres. brokers used to meet in the Royal Exchange
Below will be found a Course of Exchange every Tuesday and Thursday for dealings
which will serve as an example. in foreign bills and foreign exchange, but
COURSE OF EXCHANOB . PRICE , BXPLANATION .
Usance . From То
Amsterdam . short 12.24 12-31 Guilders and stivers for £ 1 .
. 3 months 12.5 12.81
Rotterdam 12.5 12-01 0 01

Antwerp and Brussels 25.814 26.561 Francs and centimes for £ 1 .

Paris short 25.18 % 25.23
. 3 months 25-40 25-45 01

Marseilles 91 26.40 25-45

Hamburg 20.70
20.70
20-74
20-74
Marks and pfennige for £1 .
Berlin
Leipsic .
11 20-70 20.74 D

Frankfort 20.70 20.74 5)

Petrograd 251'5 25 Pence for 1 rouble.

Copenhagen 18.46 18.50 Kroners and öre for £ 1 .
Stockholm . 18.47 18:51
Christiania . 18.47 18.61 11
Vienna 24.38 24.42 Kronen and hellers for £ 1 .
Trieste 24.38 24.42
Zurich - Basle . 25.62 25.571 Francs"and centimes for £1 .
Spain 3411 341 Pence for 1 peso .
Italy . 26.65 25.721 Lire and centesimi for £1 .
Lisbon 90 days 461 46 Pence for l escudo.
Oporto 461 46
New York demand 491 1911 Pencë for 1 dolar.
188
COU ) DICTIONARY OP BANKING (CRR

these meetings were 'discontinued , as from COVENANT in relation to any

the beginning of 1921 , in favour of modern
and more expeditious _methods. ( See
CHEQUE RATE , FOREIGN EXCHANGES, LONG
RATE, SHORT RATE, SPECIE Points.)
COURT BARON . The court of the lord
of thers manor, for freehdolders. The omar
copyy- COVENANT. Any separate deed of
holde ' court is calle the “ cust
court. "
COURT, POWERS OF (IN WINDING UP ).
When an order has been made for the wind .
ing up of a company, the Court shall settle
a list of contributories, and shall cause the
assets of the company to be collected and
applied in discharge of its liabilities. The
Court has power to require any banker,
officer of the company , or others, to deliver
to the liquidator anymoney or property in
his hands to which the company is prima
facie entitled ; and to make an order for the
payment of debts due by any contributory
to the company ; and to make calls on all or
any of the contributories ; and to order any
payments to be made to the account of the
annuity ( except upon the original
creation and sale thereof) or to
other periodical payments.
See BOND, COVENANT, etc.
£ s. d.
covenant (not being an instru
ment chargeable with ad valorem
duty as a conveyance on sale or
mortgage) made on the sale or
mortgage of any property, and
relatingsolely to the conveyance
or enjoyment of, or the title to,
the property sold or mortgaged,
or to the production of the
muniments of title relating
thereto, or to all or any of the
matters aforesaid .
Where the ad valorem duty
duty equal
in respect of the considera toA the amount
tion or mortgage money valore
of such ad
m duty .
does not exceed 10s..
In any other case . O 0 10 0
.

liquidator at the Bank of England. The As to covenants in a lease, see under

Court has also power to exclude creditors LEASEHOLD .
who have not proved their debts within the COVENANT TO SURRENDER . A deed
specified time; and to adjust the rights of in which the vendor of copyhold land cove
contributories and distribute any surplus. nants to surrender it to the use of the pur
When the affairs of a company have beon chaser. The actual surrender is to the
wound up , the Court shall make an order lord of the manor to the use and behoof of
that the company be dissolved . Most of the the purchaser . (See COPYHOLD .)
powers and duties of the Court may be per- COVER . The word is commonly used
formed by the liquidator, subject to the with the same meaning as security .
control of the Court. The Court has extra- An advance is said to be covered ,"
ordinary powers to summon persons sus- when sufficient security is held to protect
pected of having property of the company : the banker from loss. (See SECURITY .)
and, in England, to order the public exam- | COVER NOTE . A note issued by an
ination of promoters, directors, or officers insurance company when the first premium
in cases where it is reported that a fraud has has been paid declaring (e.g in a proposal
been committed. The Court has also power for insurance against fire) that the proposer
to arrest an absconding contributory. (See is "covered in the meantime until the
COMPANIES.) policy is issued .
COURT ROLLS. (See under COPYHOLD .) COVERING DEED. A name sometimes
COVENANT. A document setting forth given to a trust deed which covers or secures
the terms of a contract or agreement between the debentures of a company.
two or more persons. COVERTURE. The legal state of a

By the Stamp Act, 1891, the stamp duty married woman. (See FEME COVERT.)
is : CREDIT . When a customer pays in
COVENANT for securing the pay money and cheques for the benefit of his
ment or repayment of money, account, the banker places the amount to
or the transfer or retransfer of the credit of the customer's account. When
stock . the amounts credited are greater than the
See MORTGAGE, etc. amounts withdrawn, or debited , the result
COVENANT in relation to any an ing balance is a credit one (shown, thus, Cr.
nuity upon the original creation £ 100 ), and represents the sum due by the
and sale thereof. banker to the customer, the banker being
See CONVEYANCE ON SALE . the debtor and the customer the creditor ,
189
CRE DICTIONARY OF BANKİNG (CRE

When an individual's “ credit ” is referred A creditsociety must not invest on deposit

to , it means his reputation, as a man of with the Central Bank, or any joint stock
business, for trustworthiness and ability to bank, unless the same is secured, as it would
meet his engagements. If a cheque is constitute a breach of trust. This,however,
dishonoured , in error, by a banker, the does not prevent deposits on current account
drawer would have cause to complain that in the ordinary course of business.
his credit had thereby been injured . The policy of using a Central Bank in
CREDIT BANKS. CREDIT SOCIETIES. England and Wales has been discarded in
Credit banks, or agricultural co-operative favour of the Board of Agriculture's Joint
credit societies as they are usually called , Stock Bank scheme.
are to be found in various places in Eng- As announced on 14 January , 1913, ia
land and Wales and in more than 200 places the House of Commons :
in Ireland. The object of these societies The Board of Agriculture and Fisheries
is to enable small farmers to obtain advances have been in communication with the
of money for application to productive leading Joint Stock Banks which have
purposes in connection with their business. branches in the rural districts, with regard
The society borrows money , either from a to the assistance which the banks can offer,
local banker or from the Central Co -operative in accordance with ordinary banking prin
Bank, London , on the joint security of all ciples, to registered Co - operative Credit
the members, and lends it out to the mem- Societies, consisting mainly of small holders
bers, usually upon the joint and several and allotment holders.
promissory note of the borrower and two Most of the banks are willing that the
sureties. The liability of the members is manager of any of their country branches
unlimited, and it is on the strength of that should have permission to assist in the
liability that the society is enabled to formation of such a society ; with liberty to
borrow the money to lend out at slightly give advice to its officers on matters of book
higher rates. If need be, the promissory keeping ; and to take part, when requested ,
notes of the individual borrowers may be in the audit of the annual return without
assigned by the society as security to the remuneration. They will also favourably
local banker or the Central Bank from consider the acceptance by their managers
which it obtains a loan . The societies may of the post of unpaid treasurer, provided that
also obtain capital from local wealthy resi- it does not involve membership ofthesociety .
dents who are interested in the welfare of These banks are prepared to allow to such
the district in which the societies operate, a society as good rates as possible for money
and this was the main source of capital in their hands.
before the Central Bank was started . A credit They will also be prepared to give favour
society also encourages thrift by receiving able consideration to applications from such
money on deposit, which is used in lending societies for advances , but will require in
to members who require loans. The Central each case to be satisfied as to the security
Bank is worked on limited liability lines. for the loan, and although they will require
Each borrower must specify the purpose it to be made repayabie on demand, they
for which a loan is required, and bind him- will in general practice be ready to lend for
self to apply the money only to that purpose. twelve months, and the loan will then be
Fifty pounds is the maximum which may subject to repayment, renewal, or reduction.
be lent to any one member. The society. If satisfied that the joint liability of the
which is managed by a committee elected members of the society under its rules
by the members, pays no dividend, and all constitutes an adequate security for a
profits go to increase the capital formed proposed loan, the bank will require no
from the small entrance fees of the mem- further guarantee for its repayment. In
bers. The various societies are affiliated to considering the question of security it
the Agricultural Organisation Society . should be borne in mind that, under the
In the event of the failure of a credit model rules for a society registered under the
society, the rules provide that in no case Friendly Societies Act, every member of
shall a Reserve Fund be divided amongst the society is, equally with every other
the members, but must be devoted to some member, jointly and severally liable for all
local charity or useful purpose, such as a debts incurred by the society .
village hall, in the district in which the The rate of interest to be charged on ap
society operated. proved advances to such societies will be a
190
CRE ) DICTIONARY OF BANKING
favourable fixed rate, subject to a year's
notice of alteration .
It will thus be seen that the committee of
any registered Agricultural Co -operative
Credit Society may apply with some con-
fidence to the local branch manager of any
of these banks for advice and help in matters Lac.)
of book -keeping, accounts and audit, and
that if they wish to obtain an advance from
the bank , and are able to satisfy the manager
and directors that the security for repayment
is sufficient, they may expect that their
application for a loan will be granted on
these favourable terms.
CREDIT FORM . In America , a credit
form is a statement of assets and liabilities
to be signed by a prospective borrower.
In the report of the committee of the
American Bankers' Association appointed
to draw up standardised credit forms, it is
explained that " in compiling these forms,
it has been the aim of the committee to
elicit all the information necessary to obtain
an intelligent insight into the financial and
other conditions of the individual or busi
ness under consideration, and at the same
time to make its questions as brief and
simple as possible .”
CREDIT INSURANCE . A method of
insuring the payment of commercial debts.
By takingout a policy a seller of goods may
be relieved of the whole , or part, of any loss
he may sustain should the buyer become
insolvent and thereby be unable to pay the
seller the full amount of the debt. Policies
are granted to cover bills of exchange drawn
in respect of goods sold and delivered . All
duly accepted bills must be declared to the
insurance company. In the event of dis
honour of any duly accepted bill, the agreed
proportion of such bill as is covered by the
policy is paid to the assured on satisfactory
proof of such dishonour and assignment of
the debt to the company . Any amount
collected by the company from the estate
of the defaulter in excess of the amount
paid by the company (plus interest and
charges) is returned to the assured .
CREDIT SLIP . The form which is filled
up and signed by a customer when paying
in to the credit of a current account. It
should be dated by the customer for the day
on which the payment to credit is handed
across the counter , or, if sent by post, the
date of its despatch .
A credit slip should show how the amount | lawful for any person to obliterate or, except
is made up , in gold , silver, copper, cotes, as authorised by this Act, to add to or alter
cheques, or bills .
191
(CRO
Another name for a credit slip is “ paying
in slip." (See PAYING-IN SLIPS .)
CREDITS OPENED AT OTHER OFFICES.
(See STANDING CREDITS.)
CRISES, FINANCIAL . (See PANICS .)
CRORE . A hundred lacs of rupees. (See
CROSSED CHEQUE . A crossed cheque
is defined by the Bills of Exchange Act,
1882 , Section 76, as follows :
“ ( 1) Where a cheque bears across its face
an addition of
“ (a) The words ' and company '
or any abbreviation thereof
between two parallel trans
verse lines, either with or
without the words ' not
negotiable ' ; or
" (6) Two parallel transverse lines
simply, either with or with
out the words ' not nego
tiable ' ;
“ that addition constitutes a crossing,
and the cheque is crossed generally.
“ (2) Where a cheque bears across its face
an addition of the name of aa banker,
cither with or without the words
' not negotiable ,' that addition
constitutes a crossing, and the
cheque is crossed specially and to
that banker. "
By Section 77 :
" (1) A cheque may be crossed generally
or specially by the drawer .
" ( 2) Where a cheque is uncrossed, the
holder may cross it generally or
specially.
“ ( 3) Where a cheque is crossed generally,
the holder may cross it specially.
" (4) Where a cheque is crossed generally
or specially, the holder may add the
words ' not negotiable .'
" ( 5) Where a cheque is crossed specially,
the banker to whom it is crossed
may again cross it specially to
another banker for collection .
“( 6) Where an uncrossed cheque, or a
cheque crossed generally, is sent to
a banker for collection, he may
cross it specially to himself."
By Section 78 :
" A crossing authorised by this Act is a
material part of the cheque ; it shall not be
tue crossing."
 DICTIONARY OP BANKING (CRO
CRO)
The duties of a banker with regard to As to the effect of crossing upon the holder,
crossed cheques are set forth in Section Section 81 provides :
79 : " Where a person takes a crossed cheque
“ (1) Where a cheque is crossed specially which bears on it the words ' not negotiable.'
to more than one banker except he shall not have and shall not be capable of
when crossed to an agent for collec- giving a better title to the cheque than that
tion being a banker, the banker which the person from whom he took it had ."
on whom it is drawn shall refuse A collecting banker is afforded protection
00
payment thereof. by Section 82 :
(2) Where the banker on whom a cheque " Where a banker in good faith and with
is drawn which is so crossed never- out negligence receives payment for a cus
theless pays the same, or pays atomer of a cheque crossed generally or
cheque crossed generally otherwise specially to himself, and the customer has
than to a banker, or if crossed no title or a defective title thereto, the
specially otherwise than to the banker shall not incur any liability to the
banker to whom it is crossed , or his true owner of the cheque by reason only of
agent for collection being a banker, having received such payment." See cases
he is liable to the true owner of the under COLLECTING BANKER, as to negligence.
cheque for any loss he may sustain The Section refers only to cheques which
owing to the cheque having been are already crossed when they come into a
so paid. banker's hands. Some bankers have a
“ Provided that where a cheque notice on the paying - in slips requesting
is presented for paymentwhich does their customers to cross all cheques before
not at the time of presentment paying them in . A holder may cross a
appear to be crossed , or to have cheque generally or specially (Section 77,
had a crossing which has been s.s. 2, see above ).
obliterated , or to have been added The protection given by this Section ap
to or altered otherwise than as plies to crossed cheques only when they are
authorised by this Act, the banker collected on behalf of a customer . Section 82,
paying the cheque in good faith as it stands, does not protect a collecting
and without negligence shall not banker who allows his customer to draw
be responsible or incur any lia- against crossed cheques paid in to credit of
bility, nor shall the payment be his account, before the proceeds for them
questioned by reason of the cheque have been received from the banker on
having been crossed, or of the whom the cheques are drawn . Much litiga
crossing having been obliterated tion has taken place around this Section , but
or having been added to or altered it has now been amended by the Bills of
otherwise than as authorised by Exchange (Crossed Cheques) Act, 1906 ,
this Act, and of payment having passed August 4, 1906, being "an Act to
been made otherwise than to a amend Section 82 of the Bills of Exchange
banker or to the banker to whom Act, 1882." The amendment is :
the cheque is or was crossed , or to “ Section 1. A banker receives paymentof
his agent for collection being a a crossed cheque for a customer within the
banker, as the case may be.” meaning of Section 82 of the Bills of Ex
A banker paying a crossed cheque is change Act, 1882, notwithstanding that he
afforded protection by Section 80 : credits his customer's account with the
“ Where the banker, on whom a crossed amount of the cheque before receiving pay
cheque is drawn, in good faith and without ment thereof." See the case of Morison v.
negligence pays it, if crossed generally, to a London County & Westminster Bank, under
banker, or if crossed specially,to the banker Nor NEGOTIABLE CHEQUE ,PER PROCURATION.
to whom it is crossed , or his agent for collec- It has been held that to make a person
tion being a banker, the banker paying the a customer of a banker there must be some
cheque, and, if the cheque has come into sort of account, either a deposit or a current
the hands of the payee, the drawer, shall account or some similar relation . See cases
respectively be entitled to the same rights under CUSTOMER .
and be placed in the same position as if A dividend warrant may be crossed .
payment ofthe cheque had been made to the Section 95 says :
true owner thereof." “The provisions of this Act as to crossed
192
CRO ] DICTIONARY OF BANKING (CRO

cheques shall apply to a warrant for pay- only one transverse line, do not constitute
ment of dividend .' The provisions do not a crossing.
apply to bills, which cannot, therefore, be It is to be noted that where such words as
crossed like cheques. If a bill should be “ Under Fifty pounds are written across a
crossed, the crossing is of no effect. cheque, if a line is drawn above and below
Money orders and postal orders may be those words the lines constitute a general
crossed . crossing, although it may not have been the
The crossed cheque sections of the Bills Intention to cross it.
of Exchange Act, 1882, " shall extend to any If a cheque is crossed “ & Coy., Leeds,"
document issued by a customer of any the word Leeds may be ignored , as it is not
banker, and intended to enable any person part of the crossing.
or body corporate to obtain payment from At the foot of this page are specimens of
such banker of the sum mentioned in such crossings which are included in thedefinition
document, and shall so extend in like manner of a special crossing.
as if the said document were a cheque : There are many varieties of general and
Provided that nothing in this Act shall be special crossings. As a rule , the transverse
deemed to render any such document a lines go right across the cheque, but fre
negotiable instrument ” (Revenue Act, 1883, quently they are drawn only a half or a
Section 17) . See remarks under RECEIPT third way across, and in extreme cases the
. gotiable

n. eogtotiable

.undetiable

not tiable
. pany

ON CHEQUE. lines are so short as to be easily overlooked .

. counts

Payee's
. ly unt
pT.) owuennrdtsy
n'
2 3 5 6 7 8 9 10
Jroohwn

co
nneogo
anodm

. go
t
C&o.
o.

not

. ounyds

Co.
ne

Bac
&

&
ac
on

ne
C

Co.
C

rft

&
ud: er
pFi

thoeedrit
of
cr
F

Above are specimens of crossings which A cheque is occasionally met with which
come under the definition of a general | has a x placed upon it with the object of
crossing making it a crossed cheque. Such a mark
But any of these, or similar, words across does not, of course, constitute it a crossed
a cheque, without the transverse lines or with cheque.
1 6 7 8

193
13 -- (13350
CRO ) DICTIONARY OF BANKING (CRO

The position of the lines is usually about in a crossed condition. (See OPENING A
the middle of a cheque, but they are some- Crossing.)
times drawn across a corner of it. The transverse lines are an essential part
The place of any words added to the of a general crossing, but they are not neces
transverse lines is usuallybetween or imme- sary in a special crossing. The name of a
diately above or immediately below the banker by itself across the face of a cheque
lines, but in some cases they are found at a is a special crossing, or the name may be
considerable distance from the crossing, and placed between transverse lines, or it may
occasionally are found written even below be placed inside a square or other form of
the amount. It is questionable, however, margin .
whether words which are not written between The dishonour of a crossed cheque does not
or near to the transverse lines could be held cancel the crossing. The cheque continues
to be a part of the crossing. to be a crossed cheque, and, if re-presented ,
Crossings may be written , stamped,, requires to be re- presented in accordance
printed , or perforated. Many mistakes as to with the crossing. If a dishonoured crossed
the amount would be prevented if customers cheque bears the crossing of a country
avoided drawing the crossing lines through banker and the crossing of his London
the figures of a cheque. agents, on re- presentation the cheque may.
By the above sections it is seen that a if necessary, be presented direct by the
crossed cheque can be paid by the banker on country banker .
Where a crossed cheque is remitted to an
whom it is drawn, if crossed generally, only
to another banker_if crossed specially, agent for collection, it is customary for the
only to the banker whose name appears in banker to cross it thus : “ X & Y Bank, Ltd.,
the crossing. If the holder of a crossed to the British Bank, Ltd., for collection . "
cheque is a customer of the banker on whom By Section 79, quoted above, when a
it is drawn, the banker may place such cheque is crossed to two bankers, except
cheque, if it is so desired , to the credit of when crossed to an agent for collection
that customer's account, though he should being a banker, the banker on whom it is
not pay cash for it. The customer, how drawn shall refuse payment. If the present
ever, may forthwith draw a cheque upon ing banker guarantees the banker on whom
his account for the cash required . it is drawn , such a cheque would usually be
Where a cheque crossed generally and paid . But a cheque which is crossed to two
drawn upon one branch is presented for pay- branches of the same bank , or to a branch
ment at another branch of the same bank, and the head office, is not treated as being
the two branches are, for this purpose, con- crossed to two bankers. A cheque crossed
1)

sidered to be two banks, and the banker pay- | “ X & Y Bank " should not be placed to a
ing such a cheque fulfils the requirements customer's credit at the British Bank,
of the Act to pay it only to another banker. because the banker on whom it is drawn can
In Gordon v. London City and Midland Bank | pay it only to the X & Y Bank.
( 1902, 1 K.B. 242) , the Master of the Rolls, It is customary for a collecting banker to
referring to cheques of that description, whom a cheque is specially crossed, to place
said : “ The defendants, whose branchbank an impress of his stamp uponit, as an indica
receives payment from another branch, are tion to the paying banker that it has been
certainly a bank. It may be that the pay through the hands of that banker, but a
ment is to themselves ; still, it is a pay- cheque should not be dishonoured merely
ment made to a bank, and the payment is sta mp it.the collecting
because banker has omitted to
also made by a bank .'
Where a cheque is crossed , and a payee The words “ not negotiable ," added to a
wishes to obtain cash for it from the banker general or a special crossing, do not operate
on whom it is drawn , it is customary for the as a restriction upon the transfer of a cheque,
drawer to cancel the crossing and to write but merely give notice to anyone taking the
“ pay cash upon the cheque. : . The altera- cheque that he cannot obtain a better title
tion , called opening the crossing,” should than the person had from whom he received
be signed by the drawer. A banker, how- it. The words “ not negotiable ” do not by
ever, should be on his guard when requested themselves constitute a crossing. (See Not
to cash a cheque where the crossing has been NEGOTIABLE.)
cancelled, lest by doing so he renders himself Many cheques have such words as “ place
liable to a true owner who took the cheque to credit of John Brown's account,"
194
CRO) DICTIONARY OP BANKING (CRO

" account of payee," " account John Jones cheques at once to the credit of his customer,
added to the crossing. The Bills of Ex- it would appear to follow that the words
change Act does not make any particular “ Account A B ” are a direction to the
reference to an addition of that nature, receiving banker as to how he must deal with
though it does say at Section 78 that it shall the cheques when he receives them . (See
not be lawful for any person to obliterate or, Account PAYEE .)
except as authorised by this Act, to add to The object of crossing cheques is to insure
or alter the crossing. If the paying banker the safe transmission of the money from the
carries out his duty, as prescribed by the sender to the receiver. A general crossing
Act, and pays a cheque crossedgenerally to a would prevent a thief from obtaining value
banker, and a cheque crossed specially to from a banker for a cheque, unless he had a
the banker named , he is not concerned at all banking account. The usual special crossing
as to whether, or not, the collecting banker would prevent him from obtaining value
carried out the instructions to place the unless he had an account with the banker to
proceeds to any account indicated . If a whom the cheque was crossed . Thus the
cheque drawn on the British Banking Co., thief's chance of profiting by his plunder
Ltd., and crossed “ X & Y Bank, Ltd., for becomes still further remote.
the account of John Brown,” is paid in to the If a collecting banker gives cash over the
X & Y Bank , Ltd., by Tom Jones to his counter for a crossed cheque on another
own credit, it is difficult to believe that the banker , he does so at his own risk, because
X & Y Bank, Ltd., would be exonerated if an indorsement is forged he is liable to the
from blame if they ignored the clear indica- true owner. (See CHEQUE, COLLECTING
tion upon the cheque and passed it to the BANKER .)
credit of Jones. Accordingly, in practice, “ CROSSED TO TWO BANKERS.” An
a banker who receives such a cheque for answer which is sometimes marked upon a
collection , requires that it be placed to the cheque by the drawee banker, who is return
credit of the account as named in the cross- | ing It unpaid for this reason .
ing. In National Bank v. Silke (1891, 1 Q.B. Where a cheque is crossed to two bankers,
435), where a cheque was crossed “ account except when crossed to an agent for collection
of Moriarty, National Bank ,” Lord Justice being a banker, the banker on whom it is
Lindley said with reference to those words : drawn shall refuse payment thereof ( Section
" It cannot be contended that they prohibit 79, Bills of Exchange Act, 1882).
transfer, and I do not think that they indi- But a cheque crossed “ X & Y Bank,
cate an intention that the cheque should not Ltd., Leeds,” and also stamped X & Y
be transferable. They amount to nothing Bank, Ltd., York ,” is not crossed to two
more than a direction to the plaintiffs to bankers, as Leeds and York are branches of
carry the amount of the cheque to Moriarty's the samebanker.
account when they have received it." CROSS - FIRING . Cross -firing is where
In Akrokerri ( Atlantic) Mines, Limited v. one person draws a bill upon another, and the
The Economic Bank (1904, 2 K.B. 465), latter, at the same time, draws a bill upon
where certain cheques were crossed " account the former. When a banker detects signs
Economic Bank," Mr. Justice Bigham said : of such a practice, it should act as a danger
" In my opinion these words are not in any signal and put him at once on his guard.
sense an addition to the crossing. A crossing CROWN . A crown is of the value of five
is a direction to the paying bank to pay the shillings, and its standard weight is
money generally to a bank, or to a particular 436-36363 grains troy . Its standard fineness
bank, as the case may be, and when this has is thirty -seven - fortieths fine silver, three
been done the whole purpose of the crossing fortieths alloy ; altered by the Coinage Act,
has been served. The paying bank has 1920, to one -half fine silver, one-half alloy.
the
money after it has once been paid to the (See COINAGE.)
proper receiving banker. The words ' ac- CROWN PROPERTY . By the Stamp
count A B ' are a mere direction to the Act, 1891 :
receiving bank as to how the money is to be " Section 119. Except where express pro
dealt with after receipt." vision to the contrary is made by
With reference to the words “ how the this or any other Act, an instrument
money is to be dealt with after receipt," as relating to property belonging to
a collecting banker may now pass crossed the Crown, or being the private
185
CUM ) DICTIONARY OF BANKING ( CUR

property of the Sovereign , is to be payable after sight begins when the bill is
charged with the same duty as an accepted. (See Coinage, Money.)
instrument of the same kind relating CURRENCY AND BANK NOTE ACTS ,
to property belonging to a subject. 1914. For references to various Sections of
CUM DIV . Short for cum dividend, these Acts see under BANK CHARTER Act,
with dividend ." It means that the pur- CURRENCY NOTES, LEGAL TENDER.
chaser of shares bought on this understand . CURRENCY BONDS. Bonds which are
ing is entitled to the dividend due to be repayable in the currency of the country
paid, and if the dividend warrant is sent by where they are issued.
the company to the seller, the latter must CURRENCY CERTIFICATES. Certificates
hand over the amount
60
to the purchaser. which are issued to bankers and others
Most stocks are cum div." until the Pay by the Treasury of the United States
Day following the declaration of dividend. against deposits of quantities of Treasury
(See Pay Day.) Notes and Government Notes.
CUM DRAWING . With any benefit there CURRENCY NOTES. Currency Notes for
may be from a drawing of bonds for payment t1 and 10s. were issued by the Treasury on
which is due to be made. the outbreak of war with Germany in 1914 .
CUM RIGHTS. A purchaser of shares By the Currency and Bank Notes Act , 1914,
cum rights " acquires any rights attaching tender in the
currency notes shall be legal
to the shares, e.g. , to take up further issues, etc. United Kingdom for the payment of any
CUMULATIVE DIVIDEND. Preference amount ” (Section 1 , s.s. 1). “ The holder
shares have a preferential right to dividend of a currency note shall be entitled to obtain
before ordinary shares, and if the profits on demand , during office hours at the Bank
of the company in one year are not sufficient of England, payment for the note at its face
to pay the full dividend, the profits of suc- value in gold coin which is for the timebeing
ceeding years are used for that purpose, and, legal tender in the United Kingdom
until the preference shares receive a full (Section 1 , s.s. 3) . By the Currency and
dividend for each year, the ordinary shares Bank Notes (Amendment) Act, 1914, Sec
receive nothing. The dividend in such tion 2, The Treasury may, if they think
cases is called cumulative . fit, instead of issuing any notes to any per
If, however, the preferential right as to son, give to that person a certificate entitling
dividend is confined merely to the profits of him to the issue, on demand, from the
each year, the dividend is non-cumulative. Treasury, of the notes mentioned in the
CUMULATIVE PARTICIPATING PREF- certificate ; and the notes covered by the
ERENCE SHARES. (See PREFERENCE certificate shall for the purposes of Section 2
SHARES.) of the Currency and Bank Notes Act, 1914,
CURATOR BONIS. In Scotland, a person be deemed to be notes issued to that person .
who is appointed by the court to manage See Section 3 under BANK CHARTER ACT.
the estate of a minor or a lunatic. By a Treasury order, currency notes of
CURRENCY . The word was originally the first and second issues ceased to be legal
applied to the currency, or passing from tender as from 11th June, 1920. Currency
hand to hand , of money, but it has now come notes of the second issue were surcharged
to becopper
applied to the money itself, gold, silver in Arabic character for use in Turkish
and . Bills of Exchange, bank notes, territory under occupation .
cheques and any other documents which act CURRENCY OF BILL. The period during
as a substitute for coins are also included which a bill has to run before it is due. (See
under that term. (See CURRENCY Notes.) DAYS OFGRACE, TIME OF PAYMENT OP BILL.)
The currency , or circulating medium, CURRENT ACCOUNT. A customer's
by which sales and purchases were effected current account at the bank is the account
in olden times, was represented in different to which he pays in money daily, or at
countries by articles, such as sugar, furs, fish , intervals, and upon which he draws cheques
cloth , etc., and even at the present day in as required for his business or other purposes.
certain uncivilised nations, cowries , salt, and It may be either overdrawn or “ in credit ."
blocks of tea may be found in use . It is to be distinguished from a loan account,
The period for which a bill of exchange is on which a sum is borrowed in one amount
drawn, or the period which it has to run and which is not operated upon, and from
before maturity , is spoken of as the cur- a deposit account which is used principally
rency of the bill. The currency of a bill for the lodgment of money which is not
196
CURI DICTIONARY OF BANKING (CUR

likely to be required for some time. (See cashiers. The dockets give the date, the
INTEREST .) amount and the name of the account.
CURRENT ACCOUNT LEDGERS. Each Some ledgers are ruled with separate
account in the current account ledgers is columns for the debit or credit balance,
headed with the full christian names and whilst others have only one column, the
surname of the customer, his address and nature of the balance being indicated by
designation ; any particulars regarding sign- “ Dr.” or “ Cr." in front of it, or by credit
ing upon the account, or credits opened on and debit balances being written in different
behalf of the customer, or whether the coloured inks. This last is found in practice
customer is a shareholder of the bank, with to be a very convenient method .
the amount of his holding, are also recorded Cheques are sometimes posted by the
at the top of the page. If it is an over- numbers instead of by the names of the
drawn account, the amount of the sanctioned payees.
limit, the date when granted and the date The ledgers are called over daily (either
when it will expire, areentered,so that these the same day or first thing on the following
particulars may always be under the eye of morning) with the day books, or check
the ledger keeper when posting the account. ledgers, but a ledger keeper does not, as a
A note of all " stopped ” cheques should be rule, call over the ledger which he has
entered against the respective accounts. posted. In some banks the actual vouchers
Columns are provided in the ledgers for are also checked daily with the ledgers, and
the date of each entry ,particulars (payee's where this is done the ledger keeper, when
name for debit items, cash ," bills ” or posting an account, makes a note upon the
“ sundries " for credit items), debit amounts, vouchers (or the first one if a quantity ) of
credit amounts , Dr. or Cr. , and balance. the folio of the account, so that the checker
After these columns there are rulings in may readily find the place.
connection with the interest :-a column for In many banks the current account
the number of days to be allowed or charged ledgers are balanced once a week, so that
on each balance extended, a column for the any errors may be promptly, and without
“ decimals " on the debit balances and one great trouble, discovered.
9)
for the “ decimals " on the credit balances. The number of ledgers varies, of course ,
A column is sometimes provided also for with the number of accounts at a branch ,
“ decimals upon cheques or notes paid to and it is a common practice for a separate
credit which are not cash for two or three | ledger to be kept for all the principal
days after receipt. (See DECIMALS .) In some accounts .
banks the interest is calculated at the time When an account is finally closed, it is the
of posting and entered in interest columns. custom in some banks to paste the closing
A ledger keeper preserves a sharp look voucher into the ledger.
out upon the various items which come to “ Entries made by a man in books which
his hands to be posted , and reports at once he keeps for his own private purposes, are
when any cheques will overdraw an account not conclusive on him untilhe has made a
or cause it to exceed the sanctioned limit. , communication on the subject of those
The signatures upon cheques also come entries to the opposite party .” (Simson v.
under his observation, and any suspected Ingham , 1823, 2 B. & C. 65.)
signature is reported immediately to the CURRENT ACCOUNT REGISTER . А
manager or chief clerk . A reference to the name sometimes given to the book in
number of the signature in the signature which are entered , either alphabetically or
book should be made at the heading of the in columns corresponding to each current
account, so that the specimen signature may account ledger, all the cheques and current
be found readily . (See SIGNATURE Book .) account credit slips which are posted into
The entries in the ledgers are posted in the current account ledgers each day. In
many banks from the actual creditslips and some banks the book is called a check ledger,
cheques signed by the customers, and the whilst in other banks the particulars are
balance is extended, in a model ledger, after given in the day book. The entries are
all the items have been posted , so that called over daily with the ledgers, to act as
there is only one balance shown on any a check upon the postings.
one day. CURTESY. Curtesy is the right to which
In some banks the credits are posted in a husband is entitled, on the death of his
the ledgers from dockets prepared by the wife, to the rents and profits of any of her
197
CUS) DICTIONARY OF BANKING
freehold land which she has not disposed
of by will. This “ estate by the curtesy of
England,” as it is called , only arises if the
husband has had by his wife a child born
alive, and who does or might inherit the
estate . It is an estate for the life of the
husband, irrespective of the fact whether the
child who would eventually inherit dies
before him , or has died before the death of
the wife . This " estate by the curtesy
does exist in some cases of land of copyhold
tenure, but only by the special custom of
the manor. The word “ curtesy ” is derived
from the Latin curia, a Court, and signifies
that the right is created and recognised
by the Courts of England. (See INTESTACY.)
CUSTODIAN TRUSTEE . By the Public
Trustee Act, 1906, which came into operation
on the first day of January, 1908, the office
of Public Trustee was established .
The Public Trustee may, amongst other
duties, if he thinks fit, act as custodian
trustee, if appointed by order of the Court,
or by the testator, settlor or other creator of
a trust, or by the person having power to
appoint new trustees.
Section 4 of the Public Trustee Act is as
follows :
“ ( 1) Subject to rules under this Act
the public trustee may, if he consents
to act as such , and whether or not
the number of trustees has been
reduced below the original number,
be appointed to be custodian trustee
of any trust
“ (a) by order of the Court made
on the application of any
person on whose application
the Court may order the
appointment of a new trus
tee ; or
“ (6) by the testator, settlor, or
other creator of any trust ;
or
“ (c) by the person having power
to appoint new trustees.
" ( 2) Where the public trusteeis appointed
to be custodian trustee of any
trust
“ (a) The trust property shall be
transferred to the custodian
trustee as if he were sole
trustee, and for that purpose
vesting orders may. where
necessary , be made under
the Trustee Act, 1893 :
“ (6) The managementofthe trust
property and the exercise of
198
[ CUS
any power or discretion
exerciseable by the trustees
under the trust shall remain
vested in the trustees other
than the custodian trustee
(which trustees are herein
after referred to as the
managing trustees) :
" (c) As between the custodian
trustee and the managing
trustees , and subject and
without prejudice to the
rights of any other persons,
the custodian trustee shall
have the custody of all
securities and documents of
title relating to the trust
property, but the managing
trustees shall have free ac
cess thereto and be entitled
to take copies thereof or
extracts therefrom :
“ ( d) The custodian trustee shall
concur in and perform all
acts necessary to enable the
managing trustees to exer
cise their powers of manage
ment or any other power or
discretion vested in them
( including the power to pay
money or securities into
Court), unless the matter in
which he is requested to
concur is a breach of trust,
or involves a personal liabil
ity upon him in respect
of calls or otherwise, but,
unless he so concurs, the
custodian trustee shall not
be liable for any actor
default on the part of the
managing trustees or any
of them :
" (e) All sums payable to or out of
the income or capital of the
trust property shall be paid
to or by the custodian
trustee : Provided that the
custodian trustee may allow
the dividends and other
income derived from the
trust property to be paid to
the managing trustees or to
such person as they direct,
or into such bank to the
credit of such person as they
may direct, and in such
case shall be exonerated
CUS) DICTIONARY OF BANKING [ CUS

from seeing to the applica company or other body corporate

tion thereof and shall not be entitled by rules made under this
answerable for any loss or Act to act as custodian trustee, with
misapplication thereof : power for such company or body
" The power of appointing new corporate to charge and retain or pay
trustees, when exerciseable out of the trust property fees not
by the trustees, shall be exceeding the fees chargeable by the
exerciseable by the man public trustee as custodian trustee.”
aging trustees alone, but the With regard to corporate bodies acting as
custodian trustee shall have Custodian Trustees, Rule 30 of the Public
the same power of applying Trustee Rules, 1912, is :
to the Court for the appoint- Any incorporated Banking or Insurance
ment of a new trustee as any or Guarantee or Trust Company or other
other trustee : body corporate for the time being empowered
“ (8) In determining the number of (by the Act of Parliament Charter Memor
trustees for the purposes of andum of Association Deed of Settlement
the Trustee Act, 1893, the or other instrument constituting it or
custodian trustee shall not defining its powers) to undertake trusts
be reckoned as a trustee : shall be entitled to act as custodian trustee,
• ( h) The custodian trustee, if he but for so long a time only as such body
acts in good faith, shall not corporate shall not, by any prospectus,
be liable for accepting as circular, advertisement or other document
correct and acting upon the issued by it or on its behalf, state or hold
faith of any written state- out that any liability attaches to the
ment by the managing Public Trustee or to the Consolidated
trustees as to any birth, Fund of the United Kingdom in respect of
death, marriage, or other any act or omission of such body corporate
matter of pedigree or rela- when so acting."
tionship , or other matter of In a paper read before the Institute of
fact, upon which the title Bankers by the Public Trustee in 1908, he
to the trust property or any said with reference to the appointment of
part thereof may depend , custodian trustee as a custodian for the
nor for acting upon any property and securities, leaving the manage
legal advice obtained by ment of the trust to other trustees, “ His
the managing trustees inde- duties under this provision will, however,
pendently of the custodian in my opinion, be somewhat difficult to
trustee : define, as it appears to me that to be a proper
“ ( ) The Court may, on the custodian in a trust you must exercise your
application of either the cus- discretion, for example, as regards invest
todian trustee, or any of the ments and also supervise the administration
managing trustees, or of any of the trust generally, though not actually
beneficiary, and on proof taking part in the management, and the line
to their satisfaction that it will not be easily drawn between custodian
is the general wish of the and managing trustee."
beneficiaries, or that on other The fees charged by the Public Trustee
grounds it is expedient, to Office were revised in 1920. (See under
terminate the custodian PUBLIC TRUSTEE .) When the Public Trustee
trusteeship , make an order acts as custodian trustee, the capital fees on
for that purpose, and the acceptance and withdrawal are reduced by
Court may thereupon make one- half, but the ordinary rates of income
such vesting orders and give fees apply. The investment fees are also
such directions as under the reduced by one -half.
circumstances may seem to The Public Trustee, in his own capacity
the Court to be necessary or as custodian trustee or ordinary trustee, may
expedient. employ, for the purposes of any trust, such
• (3) The provisions of this Section shall bankers as he may consider necessary. He
applý in like manner as to the public will, however, whenever practicable, take
trustee to any banking or insurance into consideration the wishes of the creator
199
CUS] DICTIONARY OP BANKING ( CUS

of the trust and any other trustees there To perfect the title, the purchaser should
may be, and of the beneficiaries. In such be admitted tenant on the court rolls, and
a case the position of the banker is merely the document of admittance which is given
that of the usual one with a customer. In to him should accompany the deeds, when
the paper by the Public Trustee, above they are deposited with a banker as security.
referred to, he said : - “ In the case of bankers, If the property has been obtained by will,
it will be the practice of the department not the will should be registered on the rolls
to disturb the connection between the and an admittance obtained .
settlor or testator and his banker, and I In some manors, however, there is no
document of admittance, but a receipt for
propose to ask, in such cases, the bank to con-
tinue the account in the name of the Public the fines is given, and this is sufficient evi
9)

Trustee.” (See Public TRUSTEE, TRUSTEE.) dence of the enrolment. In such cases the
CUSTODY BILL OF LADING. (See Bill receipt should accompany the deeds.
OF LADING. ) In addition to a yearly customary rent,
CUSTOMARY COURT. The court of the there may be a fine payable on a change of
lord of the manor, for customary tenants, ownership or on the death of the lord or of
or copyholders. the tenant.
The court baron is the name of the The admittance is of no value unless the
freeholders' court. conveyance is held .
CUSTOMARY PROPERTY . Customary Previous to 1832, an owner could not
freeholds, or privileged copyholds , are some dispose of customary property by will. He
what similar to ordinary copyholds. The usually surrendered it to a friend, who
property, however, is not held at the will executed a deed declaring that he held it in
of the lord, and it can be conveyed by deed, trust for the person whom the owner by deed
or by bargain and sale, as well as by sur- or will might appoint . It is quite common ,
render, but like copyhold property a pur- in some places, for families to be on the roll
chaser's title requires to be completed by for generations, for property in which they
admittance . have no interest. It has no effect upon the
In a conveyance of customary property, title, though it might possibly be incon
J. Brown to J. Jones, Brown would (by and venient if a banker required admittance.
with the licence and consent of Lord Mortgagees usually take a mortgage of
of the Manor of or his steward or customary property in a form under which
commissioner thereunto lawfully autho- they can obtain admittance if necessary, but
rised) bargain , sell, surrender, release and they do not, as a rule, seek admittance until
convey unto the said J. Jones all that they wish to sell the property. Unless a
to hold the said premises unto mortgagee is admitted, there is the risk that
.

the said Jones, his heirs and assigns according a second mortgagee, without notice of the
to the custom of the Manor of first charge, may obtain admittance. When
yielding and paying therefor yearly unto the a mortgagee is admitted , the fines and fees
said Lord of the Manor the yearly must be paid. In some manors, the licence
customary rent of of the lord is necessary before a valid
and also paying and
performing all other rents, duties , customs mortgage can be given .
and services therefor due and of right For stamp duties, see COPYHOLD .
accustomed to be paid, kept, done and CUSTOMER . Where a banker collects a
performed cheque, crossed generally or specially to
Indorsed upon the deed would be a himself, for a customer, the banker is pro
licence, as follows : - " On behalf of tected , if he has acted in good faith and
Lord of the Manor of I authorise the without negligence, even if an indorsement
within deed, provided the same be in no ways should prove to be forged (Section 82, Bills
prejudicial to the said Lord or the future of Exchange Act) . The person for whom
Lords of the said manor in regard to the it is collected must,however, be a customer.
rents, fines, dues, duties and services to be It has been held that in order to make a
rendered for the customary premises within person a customer of a bank, within the
mentioned according to the custom of the meaning of Section 82, there must be either
.

said Manor . a deposit or a current account or some

Steward ." similar relation . (Great Western Railway
however, is not always
The licence, deed v. London and County Banking Co., 1901 ,
indorsed on the . A.C. 414.)
200
CUS) DICTIONARY OF BANKING [DAT

In Ladbroke & Co. v. Todd (1914, 111 | by the banker to transmit money from the
L.T. 43), Bailhache, J., said that he was of account to another public account, are
opinion that the relation of banker and exempt from stamp duty. (See Schedule
customer begins as soon as a cheque or to Stamp Act, 1891, under article BILL OF
money is paid in , and the bank accepts it EXCHANGE .)
and is prepared to open an account . CY PREŚ. As nearly as possible. When
In the case of Commissioners of Taxation the terms of a trust are incapable of being
v. English, Scottish, and Australian Bank, carried out absolutely, the Courts have power
Ltd. (1920, 36 T.L.R. 305) , which came to order that they be carried out “ cy près,"
before the Judicial Committee of the Privy as nearly as possible.
Council, T opened an account with the bank,
paying in cash £20 ; next day he paid in a DATE . The Bills of Exchange Act, 1882,
crossed cheque payable to 053 or bearer provides :
(the cheque was subsequently discovered to “ Section 3. (4) A bill is not invalid by
have been stolen by someone from a letter reason
box) and the following day cheques with (a) That it is not dated ."
drawing the money were paid. The point Section 12. Where a bill expressed to
was raised as to whether T was a customer be payable at a fixed period after date is
within the meaning of the Section . (See issued undated, or where the acceptance of a
Section 82, above.) It was held that “ the bill payable at a fixed period after sight is
6

word ' customer ' signifies a relationship in undated, any holder may insert therein the
which duration is not of the essence . A true date of issue or acceptance, and the
person whose money has been accepted by bill shall be payable accordingly .
the bank on the footing that they undertake “ Provided that ( 1 ) where the holder in
to honour cheques up to the amount standing good faith and by mistake inserts a wrong
to his credit is a customer of the bank in date, and (2) in every case where a wrong
the sense of the statute, irrespective of date is inserted , if the bill subsequently
whether his connection is of short or long comes into the hands of a holder in due
duration . T was therefore a customer, course the bill shall not be avoided thereby.
though one of short standing." It was but shall operate and be payable as if the
further held that the bank had acted without date so inserted had been the true date.”
negligence in collecting the cheque. See Where an undated bill has a date inserted
remarks on this point under COLLECTING after acceptance, notice of the date so
BANKER . inserted should be given to the acceptor,
Money paid in by a customer to his otherwise he will not know when the bill is
account is really lent to the banker, the due.
banker becoming, not the trustee for that The above Section applies only to bills,
money, but the debtor of the customer. In but with regard to cheques where the date
the event of the banker's failure, the cus- has been omitted it is generally considered
tomer claims upon the estate as an ordinary that a holder may insert what he takes to
creditor. The Lord Chancellor said , in be the true date. See Section 20 under
London Joint Stock Bank , Ltd. v .Macmillan INCHOATE INSTRUMENT.
60
and Arthur ( 1918, A.C. 777) , ' the relation “ Section 13. ( 1 ) Where a bill or an
between banker and customer is that of acceptance or any indorsement on
debtor and creditor, with a superadded a bill is dated , the date shall, unless
obligation on the part of the banker to the contrary be proved , be deemed
honour the customer's cheques if the account to be the true date of the drawing,
is in credit.” (See that case under ALTERA acceptance, or indorsement, as the
TIONS .) case may be.
CUSTOMS AND EXCISE ACCOUNT . The “ (2) A bill is not invalid by reason only
persons entitled to draw upon such account that it is ante -dated or post-dated,
are those who are notified to the banker by or that it bears date on a Sunday ."
the Commissioners of Customs and Excise. Ante -dating is placing a date prior to the
The account is subject to the conditions true date ; post -dating, placing a date
prescribed in Section 18 of the Exchequer subsequent to the true date . A cheque with
and Audit Departments Act (29 & 30 Vict. a Sunday date should not be paid till after
c. 39) . (See PUBLIC ACCOUNT.) the Sunday.
Cheques on the account, or drafts given The difference between the insertion of
201
DAT] DICTIONARY OF BANKING (DAY

an omitted date and the alteration of a dato A deed takes effect from the date of its
should be noted . The above Section permits delivery. " It isnot necessarily an essential
any holder to insert a date, but Section 64 part of a deed, that there should be a date
(see under ALTERATIONS) requires all parties upon it. The date of the execution can be
to agree to an alteration . proved. undated deed that has been
The date is a material part of a bill and executed and has been delivered to a person
any alteration in a date , unless with the in whose favour it is intended to operate is
assent of all the parties liable on the bill, perfectly complete,without there being any
avoids the bill except as against the party date .” (Sargant, J. , in Esberger & Son ,
who has made or assented to the alteration, Ltd. v. Capital & Counties Bank, Ltd.,
and subsequent indorsers ; but where a date 1913 , 109 L.T. 140.)
has been altered and the alteration is not A bill of exchange is incomplete and
apparent, a holder in due course may avail revocable until delivery of the instrument
himself of the bill as if it had not been altered . in order to give effect thereto. (See DELIVERY
A bill bearing a date prior to the date of BILL.)
upon the stampis not invalid, as the above DAY BOOK . It is called in some banks
Section (13) permits a bill to be ante-dated. the cash book, or state book. At a small
A bill, however, must be stamped before it branch one book suffices, and it contains a
is drawn . record of all the day's transactions. The
A cheque dated, say, 31st June, may be entries on the received side, plus the balance
paid on or after 30th June. brought forward from yesterday, balance
Where a post -dated bill is discounted , with the entries on the paid side and the
and the acceptor dies or becomes bankrupt balance of cash on hand at the close of
before the arrival of the date of the bill, the to -day.
bill is not invalid by reason only that it is In a large branch there may be subsidiary
post -dated . day books for current accounts, as may be
It is not permissible to give a bill or found necessary, for transfer items, etc.,
promissory note, undated, for say three and the totals of these books are brought
months,andafter payment of the bill or note, intoa daily summary book.
still undated , to issue it again for another Where the number of current accounts
three months, and so on. The only date is large, it is found very convenient to balance
which can be inserted in an undated bill is each current account ledger by itself (see
the true date of issue. A fresh debt requires BALANCE Book ), and it is in the day book
a new bill or note . that all the current account items are
Bills drawn in Russia are generally dated separated to the ledgers where they belong,
according to the old style (or Julian thus there may be a column for ledger A to
calendar), and thirteen days requireto be C, another for ledger D to G, and so on.
added to the date on the bill to bring the The day book is an important book and
date into accordance with the new style (or requires to be carefully kept, and, as with
Gregorian calendar) of this country. The other bank books, no erasures are permitted
date is often given on Russian bills as, e.g.to take place. Any alteration is effected by
March 5/18, the first date being that of the ruling out the wrong figures and inserting
old style (O.S.) and the second date that of the correct ones.
the new style (N.S.). The currency of such The entries in the day book are called
a bill would , in this country, be calculated over daily with the current account, and
from March 18. From 1800 to 1900 the other ledgers, and this is done, in most banks,
difference was twelve days ; from 1900 to by clerks other than those who write up the
2100 the difference is thirteen days, and so day books or post the ledgers. Some banks,
it will remain unless Russia comes into line in addition to calling over the day books,
with other countries as to the calendar. find it a useful plan also to check the actual
The dates on bills of exchange and cheques vouchers with the current account ledgers.
are usually in figures, but they would be in a small branch the calling over may easily
quite valid if written in words. In France be done by themanager himself, who thereby
the date on a cheque is written in words. gains information which he might not other
On transfers, powers of attorney, convey- wise obtain . In a large branch a manager
ances, and other important instruments,the might with advantage occasionally call over
date should be in words . (See ANTE -DATED, one of the ledgers himself.
BILL OF EXCHANGE, POST - DATED .) Check ledgers which are in use in some
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banks are practically of the same nature as The days of grace are added even if the
day books in other banks. (See Check bill is payable only at one, two or three days
LEDGER .) after date or sight.
DAY - TO - DAY MONEY . Another name If a bill is specially drawn as payable
for “ Call Money" ; surplus funds in the without days of grace, or as payable on a
London bankers' hands which they do not certain day fixed, e.g. “ on February 1
need to keep in their tills or in theiraccounts fixed ,” no days of grace are allowed . Abill
with the Bank of England, and which, while payable " at sight,"' " on presentation," or
.
not caring to lock it up even temporarily by on demand," does not take days of grace,
discounting bills or granting loans for fixed but aa bill payable " after sight or after
periods, they are willing to lend to bill date does take the three days.
brokers from “ day- to -day," that is, on the Bills drawn by the Bank of England upon
understanding that the money shall be forth- itself do not take days of grace, but that
coming at a moment's notice. ( See MONEY exception does not apply in the case of any
AT CALL AND SHORT NOTICE.) other bill drawn upon the Bank of England.
DAYS OF GRACE . Where a bill of ex- Days of grace are not allowed upon a
change is not payable on demand, three days, cheque. Days of grace on case a promissory
called
60
days of grace , " are allowed . Ori- note are the same as in the of a bill.
ginally they would be allowed to an accep- If a bill or promissory note is payable by
tor as a matter of grace ; they are now , how- instalments, the three days are allowed upon
ever, claimed by an acceptor as a matter of each instalment. In Schaverien v. Morris
right and are fixed by law . The Bils of ( 1921 , K.B.D. 37 T.L.R. 366) where a
Exchange Act, 1882, provides : promissory note, repayable by instalments,
"Section 14. Where a bill is not payable provided that if any instalment should not
on demand, the day on which it falls due is be paid " punctually ," the whole of the
determined as follows : balance was immediately to become payable,
“ (1) Three days, called days of grace, it was held that the use of the word
are, in every case where the bill punctually " does not deprive the maker
itself does not otherwise provide, of the note of the three days of grace
added to the time of payment as allowed by Section 14. (See above.)
fixed by the bill, and the bill is due A foreign bill domiciled in this country
and payable on the last day of takes the three days of grace, but a bill
grace : Provided that drawn in England and domiciled abroad is
“ (a) When the last day of grace payable according to the laws of the country
falls on Sunday, Christmas where it is payable.
Day, Good Friday, or a day Days of grace have been abolished all over
appointed by royal pro- the Continent and in almost all the States
clamation as a public fast of the United States. England and its
or thanksgiving day, the bill Colonies are practically the only countries
is, except in the case herein- where days of grace are allowed. (See
after provided for, due and UNIFORM LAW.)
payable on the preceding If a person risks taking a bill which has
business day ; been accepted contrary to the tenor of the
" (6) When the last day of grace bill, it should be presented on the day ap
is a bank holiday (other than pointed by the acceptance, without days of
Christmas Day or Good grace. Opinions appear to differ as to
Friday) under the Bank whether days of grace can be claimed. If,
Holidays Act, 1871 , and however, days of grace are claimed by the
Acts amending or extending acceptor, the bill should be formally noted ,
it, or when the last day of the usual notice given to all parties, and the
grace is a Sunday and the bill presented again in three days' time.
second day of grace is a bank An instrument which is drawn payable at
holiday, the bill is due and a certain period after the arrival of a ship
payable on the succeeding does not take days of grace, because the
business day." document is not a bill according to the
Thus a bill due February 1, when the three meaningа of the Bills of Exchange Act.
days are added , is actually payable on Where a bill is payable after a specified event
February 4. It must be an event which is certain to
203
DBA ) DICTIONARY OF BANKING [ DEA

happen. The death of a person is a certain | –and a royalty rent — that is, a certain The
per
event, but the arrival of a ship is not. (See centage of the profits from the mine.
BILL OF EXCHANGE, FIRE INSURANCE, LIFE dead rent is payable whether the mine is
Policy, PAYMENT OF BILL .) worked or not.
Examples of the dates upon which bills, DEAD SECURITY . An inconvertible
drawn at various currencies, are due, are security. Mines, mills, iron -works, and such
given under TIME OF PAYMENT OF BILL. like properties, whatever their values may
Insurance companies allow a number of be as going concerns, become, usually, of
days of grace within which premiums due very small value when they cease to work.
upon policies may be paid , usually fifteen They are well termed a dead security.
days for fire insurance, and thirty days DEAD WEIGHT. When the cargo of a
for life insurance . The due date of a vessel is of a heavy nature, the dead weight
premium is the date specified in the body of is the weight of such cargo which brings
the policy, and not the last day of grace ; the ship down to the Plimsoll mark, that is,
thus differing from a bill of exchange which a mark on each side of a ship which indicates
is, as stated above, due on the last day of the maximum load - line as approved by the
grace. (See LIFE Policy .) Board of Trade. A cargo of a light nature
DEAD ACCOUNT . Where operations might fill the ship but not bring it down to
upon an account have ceased , the account is the Plimsoll mark.
said to have become dead . An overdrawn DEALER (STOCK EXCHANGE ). The
account, which has hitherto been of an active stock jobber on the Stock Exchange who ))

nature, suddenly becoming inoperative will deals in stocks and shares is called a " dealer.”
warn a banker to give it his particular atten - By the Finance Act, 1920, Section 42, a
tion . A cessation of transactions may mean reduced stamp duty is allowed on transfers
that the customer has opened an account where stock is transferred on sale to a
a dealer.
with another bank . (See under CONVEYANCE . ) A " dealer " is
An account upon which there have been defined by the Act as a person who, being a
no transactions or acknowledgment for a member of a stock exchange in the United
period of six years, could not,by the Statute Kingdom , does not deal by way of business
of Limitations, be enforced against the otherwise than with or through other mem
debtor, whether he happened to be banker bers of that stock exchange or otherwise
or customer. But no banker would think of than as a principal, and does not carry on
withholding money from a customer who is the business of a broker or agent. ( See
able to establish his identity and title, how- STOCK JOBBER . )
ever long the account may have lain in- DEAR MONEY . Money is said to be
operative in his books. “ dear " when, owing to the supply being
DEAD LOAN. A permanent loan, as dis- scarce , it can be borrowed only at a high
tinguished from one which is only for aa short rate of interest.
period . A temporary advance may develop Money is “ cheap " when it can be bor
into a dead loan , if the borrower should prove rowed at a low rate.
to be unable to repay it at the specified DEATH DUTIES . The duties which are
time.
payable to the Government upon a person's
A prudent banker endeavours to avoid death :
having his money locked up in dead loans, 1. Estate duty — payable on the value of
as such loans are contrary to the principles of all the property passing on a death after
sound banking. Where interest is added 1894, except when specially exempted. (See
half-yearly, and not paid, it will, of course , ESTATE Duty .)
gradually diminish any margin between 2. Settlement estate duty . (Abolished by
the amount of the loan and the estimated Section 14, Finance Act, 1914.)
realisable value of the security , and a point 3. Legacy duty - payable upon legacies or
may be reached when a banker will not be other gifts of personalty made by will. ( See
justified in passing such interest to his LEGACY Duty .)
profit and loss account. The interest should 4. Succession duty - payable by the suc
be placed, pending developments, to a cessor of a deceased person upon real or
suspense or reserved interest account. leasehold property. (See INCREMENT VALUE
DEAD RENT. In a mining lease there Duty, SUCCESSION Duty.)
may often be found mention of two rents, DEATH OF ACCEPTOR . Where an
the dead rent — that is, a fixed minimum rent acceptor is dead and no place of payment is
204
DEA] DICTIONARY OF BANKING DEA

specified, presentment (of a bill) must be and, after exhibition thereof to the banker,
made to a personal representative, if such the administrators can act in the same way
there be, and with the exercise of reasonable as executors. If the estate is a very small
diligence he can be found . If he cannot be one, bankers sometimes pay the small
found, it should be presented at the house of balance in their hands, without letters of
the deceased . administration, on receiving a satisfactory
The death of the acceptor cancels a ban- indemnity. There is no duty payable on an
ker's authority to pay a bill accepted by him, estate which is under £ 100. An indemnity
and any bill falling due after his death must may take the following form :
be returned with answer acceptor dead.” In consideration ofyour paying, without
The payment of an acceptance after the production ofletters of administration ,
acceptor's death is good, provided the banker to us the undersigned at our request
was ignorant of the death . the sum of being the balance
DEATH OF ADMINISTRATOR . On the standing to the credit of the late
death of an administrator the surviving of we hereby undertake and
administrator, if any, acts, but, on the death agree to, at all times hereafter,
of the last one, fresh letters of administration indemnify you and your successors,
require to be taken out, and a new account estate and effects from and against
should be opened by the new administrator . all actions, costs, damages, claims and
(See ADMINISTRATOR DE BONIS NON.) demands whatsoever, and by whom
DEATH OF AGENT. Where a cheque is soever brought, claimed or made, for
signed by an agent or a person in an official or on account of your having paid the
capacity, payment should not be refused sum of as mentioned above,
merely because the agent or official has died or in anywise relating
since the cheque was issued. For example, thereto.
if Joneshas authority to draw chequesupon Witness 60 .
Brown's account, a cheque so drawn should Stamp
be paid , although Jones may have died before
its presentation . Cheques signed by a
secretary, treasurer, director , manager or Particulars of the probate, or thelettersof
other person signing in an official capacity administration , should be entered by the
must also be paid, irrespective of the death banker in the Probate Register (q.v.),
of the official before presentation. After exhibition of probate or letters of
DEATH OF CUSTOMER . A banker may administration, any credit balance of the
receive formal notice of a customer's death, deceased is usually transferred to a new
but it is sufficient notice of the death if he account, and it is advisable that the transfer
sees an announcement in the papers or hears of be made by cheque or by a letter of authority
it from a reliable source . A mere rumour signed by the representatives . The new
that his customer John Brown is supposed account is commonly entitled " Executors of
to be dead is not sufficient to warrant a John Jones,
banker returning a bill or cheque unpaid, John Brown { Robert Smith . "
though a bankerin thatcase would usually Any overdraft upon the deceased's account
take steps to confirm or disprove the rumour. forms the subject of arrangement between
After notice of death , no further cheques the banker and the representatives, and
should be paid , except where a banker has, until an arrangement is made the balance
prior to the death , made himself responsible, remains standing in the deceased's name.
e.g. by marking a cheque for payment at DEATH OF DRAWEE . Where the drawee
the request of the drawer, or another bank, of a bill is dead, the bill should be presented
or by making a purchase of stock or shares to a personal representative, if there is one
according to the customer's order . and he can be found. If he cannot be
If the deceased customer leaves a will found, it should be presented at the house of
appointing executors, the executors can, the deceased .
after probate has been obtained and ex- DEATH OF DRAWER . The authority of
hibited to the banker, deal with the account a banker to pay a cheque drawn on him by
and securities of the deceased, subject to his customer is determined by notice of the
any claims by the banker. customer's death (Section 75, Bills of Ex
Where a customer dies without a will, change Act, 1882). All cheques received
letters of administration must be obtained , after notice of his death must be returned
205
DEA] DICTIONARY OF BANKING (DEA

with answer " Drawer dead,” except in the the surviving executor, if there is one. If
case of a cheque which has been “ marked " the last executor is dead , his duties are
for payment by a banker at the request of the undertaken by his executors, unless there is
drawer, or for the banker's own convenience some special provision in the will. In the
in connection with the local clearing. Such event of the last executor dying intestate,
a cheque may be paid when presented, even letters of administration for the estate for
though the drawer has died since the cheque which the deceased was executor must be
00
was marked , as the marking " was, to all taken out, and when the letters have been
intents and purposes, a payment of the exhibited , the balance, if credit, should be
cheque. (See MARKED CHEQUE.) Where a transferred by cheque to a new account.
customer dies before settlement of a purchase (See ADMINISTRATOR DE BONIS NON.)
of stock or shares effected by the banker on If, when probate was granted, power was
the customer's instructions, the account may reserved to another person to prove, the
be debited with the cost . executors of the last surviving acting
The notice of death does not affect any executor should not act unless the person to
cheques which may have been debited to the whom power was reserved is dead or has
deceased's account after his death , but prior renounced probate.
to the time when the banker first heard of it. When a cheque is signed by two, or more,
If a cheque is received in the morning's exccutors, the death of one of them does not
letters and, before it is actually debited to affect the payment of the cheque when
the drawer's account, notice of his death is presented, unless the account is overdrawn
received , the cheque should be returned . and the executors arepersonallyliable.
A record of the death should be made in DEATH OF GUARANTOR . On receipt of
the current account ledger. notice of the death of a guarantor (whether
Before any transfer of the credit balance sole guarantor or one of several) the banker
of the deceased's account can take place, will, if he is relying upon that surety (unless
probate or letters of administration must the guarantee provides that it shall not be
be exhibited . determined by death ), at once stop the
Any cheques signed by the deceased in an account and open a fresh one for all further
official capacity,as treasurer, secretary, agent, transactions. This prevents the payments
director, etc., are not affected by his death. to credit from extinguishing the guarantor's
If he has signed a cheque along with others liability . If the account is not stopped ,
on a joint credit account, the cheque would all fresh debits will be unsecured . The new
be paid, but if he signed alone upon the account, in the absence of a fresh arrange
joint account it should not be paid . If the ment, should , of course, be kept in credit.
joint account is overdrawn , or the payment If a new arrangement is not made in a short
of the cheque would overdraw it, the banker time, the executors of the deceased guarantor
should not pay it (if signed by the deceased should be advised of the existence of the
with another of the joint holders ), unless guarantee and of the banker's claim . When
arrangements were made with the other the matter has been arranged, e.g. by the
drawer. On a joint account, only the sur- customer providing a fresh guarantor, the
vivors are responsible for any overdraft. old account should be paid off by a cheque
( on
Where the drawer ofabillisdead, and aa DEATH OF HOLDER. Upon the death
party requiring to give notice of dishonour of the holder of a billor cheque, all his rights
knows of it, the notice must be given to a are transmitted by law to his executor or
personal representative if such there be, and administrator, and the executor or adminis
with the exercise of reasonable diligence he trator can sue upon the bill, or cheque, and
can be found . negotiate it in the same way that the holder
A himself could .
amandate to sign on his account, cancels the " When an executor, or an administrator,
mandate, and the banker will, after receipt indorses a bill or cheque, he should state the
of notice of A B's death, return all cheques capacity in which he signs, otherwise he may
signed by C D under the mandate , with render himself personally liable.
) 00
answer A B deceased ” or An indorsement by an executor or admin
customer
deceased . " istrator should be confirmed by his banker.
DEATH OF EXECUTOR . Upon the If a cheque is payable to two persons and
death of one executor cheques are signed by one of them dies, the cheque is payable to the
206
DBAJ DICTIONARY OF BANKING DEA

surviving holder, after satisfactory evidence debtor resided or carried on business for the
has been produced of the death of the greater part of six months prior to his
other. decease (Section 130, s.s. 10) .
DEATH OF INDORSER . Where an in- Upon an order being made for the admin
dorser is dead and the party requiring to give istration of a deceased debtor's estate, the
notice of dishonour knows of it, the notice debtor's property shall vest in the official
must be given to a personal representative, receiver of the Court as trustee, unless the
if he can be found . creditors appoint a trustee in bankruptcy,
DEATH OF INFANT. (See DEATH OF and he shall forthwith proceed to realise and
MINOR.) distribute it (Section 130, s.s. 4) .
DEATH OF INSOLVENT DEBTOR . The Any claim by the legal representative of
Bankruptcy Act, 1914, provides as follows :- the deceased to payment of proper funeral
“ Section 130. ( 1 ) Any creditor of a de- and testamentary expenses incurred by him
ceased debtor whose debt would about the estate, is deemed a preferential
have been sufficient to support a debt, and is payable in full out of the debtor's
bankruptcy petition against the estate in priority to all other debts (Section
debtor, had he been alive, may pre- | 130 , s.s. 6 ).
sent to the Court a petition in the The provisions of the Bankruptcy Acts
prescribed form praying for an order relating to the administration of the pro
for the administration of the estate perty of a bankrupt, are generally applicable
of the deceased debtor, according to to the case of an administration of a deceased
the law of bankruptcy . debtor's estate (Section 130, S.S. 5) . A
“ (2) Upon the prescribed notice being petition for the administration of the
given to the legal personal repre- estate of a deceased debtor, under Section
sentative of the deceased debtor, the 130 of the Bankruptcy Act, 1914, may be
Court may, in the prescribed man- presented by the legal personal representa
ner, upon proof of the petitioner's tive of the debtor (Section 130, s.s. 9) .
debt, unless the Court is satisfied (See BANKRUPTCY.)
thatthere is a reasonable probability DEATH OF JOINT CUSTOMER . Where
that the estate will be sufficient for an account is opened in the names of John
the payment of the debts owing by Brown and John Jones, and cheques are to
the deceased, make an order for the be signed by both parties, and Brown dies,
administration in bankruptcy of the Jones may withdraw the balance, but
deceased debtor's estate, or may the banker, of course, would require
upon cause shown. dismiss the definite proof of Brown's death , e.g. death
petition with or without costs..... certificate.
“ ( 8) Notice to the legal personal repre- Where an account is in the joint names of
sentative of a deceased debtor a husband and wife, and both of them have
of the presentation by a creditor to sign each cheque, when the wife dies the
of a petition under this Section balance may be withdrawn by the husband .
shall, in the event of an order for If the husband dies first, the wife has power
administration being made thereon, to draw a cheque for the balance, if it was
be deemed to be equivalent to notice the husband's intention that the money
of an act of bankruptcy, and after should be hers at his death . But if that was
such notice no payment or transfer not the husband's intention, there appears
of property made by the legal to be some doubt as to whether the wife may
personal representative shall operate draw the balance. In a case (Marshal v.
as a discharge to him as between him- Crutwell, 1875, 20 Eq. 328) where the hus
self and the official receiver or band transferred account into the names
his
trustee ; save as aforesaid nothing of himself and wife, with authority for either
in this Section shall invalidate any to sign cheques thereon , Sir George Jessel
payment made or any act or thing said :- " I think the circumstances show
done in good faith by the legal per that this was a mere arrangement for con
sonal representative before the date venience, and that it was not intended to
of the order for administration .” be a provision for the wife in the event
(See ActS OF BANKRUPTCY .) which might happen, that at the husband's
The Court referred to in this Section is the death there might be a fund standing to
Court within the jurisdiction of which the the credit of the banking account. ... I
207
DEA ) DICTIONARY OF BANKING [DEA

come to the conclusion that it was not says that although , on the death of one
intended to be a provision for the wife, but joint debtor, “ the deceased's estate is
simply a mode of conveniently managing released at law, it may be reached by
the testator's affairs, and that it leaves the administration proceedings in equity .” In
money, therefore, still his property.” To practice, a guarantee by the parties to a
prevent any question arising at the death of joint overdrawn account is often taken , or
the husband, a banker should always have an agreement by them to be jointly and
a clear arrangement made with the cus- severally liable for the debt, so as to render
tomers when such accounts are opened, as the estates liable upon death.
to whether, or not, the balance is to belong With respect to articles which are left for
to the survivor. safe custody in joint names, upon the death
In joint accounts which may be operated of one of the depositors, the articles should
upon by either party, the form of authority not, as a rule, be given up except on the signa
which is signed usually authorises the banker ture of the survivor and of the executor, or
to accept the signature of either, or survivor, administrator of the deceased. (See JOINT
upon the account. ACCOUNT , SET OFF . )
The same remarks apply with regard to a DEATH OF JOINT DEPOSITOR. (See
deposit receipt in joint names. Receipts DEATH OP JOINT CUSTOMER.)
in joint names are often drawn as repayable DEATH OF JOINT SHAREHOLDER .
to either, or survivor.” Even if a deposit Upon the death of one, the survivor becomes
receipt in joint names is specifically men- sole owner. Proof of death is required.
tioned in a will, it is nevertheless payable DEATH OF MANDANT OR MANDATOR .
to the survivor, so far as the banker is A mandate is terminated by the death of the
concerned . mandant, or person who gave it.
If a banker receive notice from the exe- DEATH OF MANDATORY. A mandate
cutors of a joint account holder, or joint is terminated by the death of the mandatory ,
depositor, not to pay the balance to the or person in whose favour it was given ;
survivor, the banker would be justified in that is, the mandate does not apply to the
refusing payment. executors of the deceased .
Where both, or all, the joint holders are DEATH OF MINOR. Letters of admin
dead , the balance is repayable to the legal istration require to be taken out. But,
representatives of the one who died last. A occasionally, a banker may agree to pay a
cheque on a joint account drawn by one of small balance upon receiving a satisfactory
the parties, under authority , prior to his indemnity.
death, should not be paid , if notice of death An infant cannot make a will.
has been received . But if a cheque is signed DEATH OF MORTGAGOR . Where title
by all the joint parties, and one has died, the deeds, or certificates, or other securities,
cheque may be paid , as the money belongs are deposited with a banker by one person
to the survivors. to secure an overdraft to another person ,
A mandate is terminated by the death of upon the death of the party giving the
the person , or one of the persons, who gave security, the account of the debtor should be 1

it, and cheques drawn thereunder and stopped and arrangements made for a new
presented after notice of the death should account to be opened for future transactions.
not be paid . If this is not done, all credits to the account
In the case of a joint account which is will release the security to the extent of the
overdrawn, the estate of the deceased is not, amounts paid in, and all fresh debits will be
in an ordinary way, legally liable for the debt. unsecured . The new account should, of
It has been held that, where a cheque was course , be kept in credit till a fresh arrange
signed by the three parties to a joint account ment is made. If shares have been trans
and one of them died, the survivors only ferred to the banker and registered in his
were liable and not the estate of the deceased . name, the same remarks apply, because the
Heber Hart, in “The Law of Banking,” transfer was given merely as a security.
says that where there is no partner. If the transfer has not been registered, the
ship, but a joint liability is incurred by death of the transferor does not prevent
borrowers (as distinguished from a joint the banker subsequently registering the
and several liability ) upon the death of one, shares in his name, if necessary, provided the
his estate will not be liable. In Bankers' | transfer deed was fully completed by the
Advances by F. R. Stead , Sir John Paget transferor.
208
DEAJ DICTIONARY OF BANKING [DEA

DEATH OF OFFICIAL. Where a person of deposit, or other document of charge,

signs a cheque in an official capacity as given by the partners in the new firm ,
treasurer, secretary, director, etc., either provided that the surviving partners have
by himself or with others, his death does not power to charge the old partnership securities
preclude the banker from paying such a for the account of the new firm . It should
cheque when presented after his death. be remembered that the representatives of
Where cheques have been signed by a the deceased partner may have a claim on
treasurer or secretary alone, e.g. Warwick the partnership property in respect of his
Flower Show , John Brown, Treasurer, a share in the partnership .
fresh official must be duly appointed and On the death of a partner, it has been held
notice given to the bank, before any further (In re Bourne, Bourne v. Bourne, 1906, 1 Ch.
cheques can be drawn upon the account. 113) that the surviving partner may mort
Executors do not act for a deceased in his gage the landed property belonging to the
official appointments. partnership, and the mortgagee may sustain
DEATH OF PARTNER . Subject to any his claim against the personal representa
agreement between the partners, every tives of the deceased partner, unless he had
partnership is dissolved as regards all the notice that the money advanced was for an
partners by the death of any partner. (See improper purpose. It is the duty of a
Section 33, Partnership Act, 1890, under surviving partner to realise the assets for
PARTNERSHIPS.) The death of a limited the purpose of winding up the partnership
partner does not dissolve the partnership . affairs, and the banker was entitled, in the
The estate of a partner who dies is not absence of evidence showing the contrary ,
liable for partnership debts contracted after to treat the account as continued by the
the date of the death . (Section 36. ) surviving partner for this purpose. The
If the firm's account is overdrawn and the bank's security in this case was held to take
banker desires to retain his claim against the priority over the claim of the executor of
estate of the deceased partner, or if securities the deceased partner for his share in the
belonging to the deceased partner are held partnership. The banker could not have
for the firm's account, the account should be claimed that his charge was valid if it could
stopped and a new one opened for future have been shown that he knew that the
transactions, otherwise , according to the rule surviving partner was carrying on the
in Clayton's case (q.v.), all sums paid to business on his own behalf. (See Section 38,
credit will release the deceased's estate Partnership Act, 1890, under PARTNERSHIPS.)
to the amount of such credits, and all debits On the death of a partner, the account
will form a fresh debt against the new should also be broken where a guarantee is
partnership. This rule commences to apply held from a third party, until fresh arrange
from the actual date of death , even though | ments are made with the firm and with the
the banker is quite unaware that the death guarantor, unless the guarantee specially
has taken place. In such a case the banker provides that it shall not be affected by any
should, as soon as he knows of the death , change in the partnership. (See Section 18,
if transactions have taken place since that Partnership Act, 1890, under PARTNERSHIPS.)
date, alter the account as from the date of If the firm's account is in credit, the banker
death so as to avoid the operation of the rule need not break the account, though the
unless the pass book has already been surviving partners may, for their own con
written up and delivered to the customers. venience, desire to open a new account.
In Simson v. Ingham ( 1823, 2 B & C. 65) , When that is done and the balance has to be
Bayley , J., said , “ Entries made by a man transferred , it should be drawn by cheque.
in books which he keeps for his own private Usually, however , the old account is simply
purposes, are not conclusive on him until he continued with the name of the deceased
has made a communication on the subject partner dropped out of the ledger heading,
of those entries to the opposite party.” the date of his death being noted against
When a fresh arrangement is made by the his name. The surviving partners have
new firm with the banker, the debt on the power to deal with any balance on the
old account should be paid off by a cheque partnership account.
signed by all the partners in the new firm , Cheques signed by a partner on the firm's
and the partnership securities, if any, account, and not presented for payment till
for the old account should be deposited for after his death, should be paid ( except
the new account and a fresh memorandum in cases where he is the sole partner ), unless
209
14-41335)
DEA ] DICTIONARY OF BANKING [DEB

the account is overdrawn and his estate is to by the surviving trustee or trustees, with
be held liable , in which case the cheques out first ascertaining that the terms of the
should be returned “ partner dead .” The instrument creating the trust permit such
continuing partners may, however, give the payment. (See TRUSTEE .)
banker written authority to charge any Section 22 of the Trustee Act, 1893 ,
outstanding cheques to their new account. provides :
(See PARTNERSHIPS .) " ( 1 ) Where a power or trust is given to
DEATH OF PAYEE . (See DEATH OP or vested in two or more trustees
HOLDER.) jointly, then, unless the contrary is
DEATH OF PRINCIPAL . The death of a expressed in the instrument, if any,
principal cancels any authority or power he creating the power or trust, the same
may have given to an agent. For example, may be exercised or performed by
if Brown gave Jones power to draw cheques the survivor or survivors of them
upon his account, the death of Brown would for the time being.”
cancel that authority. Where a trustee is dead, then the person
DEATH OF SHAREHOLDER . An exe- or persons nominated for the purpose of
cutor is not personally liable upon the appointing new trustees by the instrument,
shares of the deceased, merely because he if any, creating the trust, or if there is no
receives the dividends thereon, or is noted such person, then the surviving trustees or
in the register as the executor of the trustee, or the personal representatives of
deceased . If, however, the shares are trans- the last surviving trustee, may, by writing,
ferred into the executor's name, he is liable appoint another person or other persons to
for any calls there may be, though if he has be a trustee or trustees in the place of the
become registered on behalf of the deceased's trustee dead ( Section 10, Trustee Act,
estate he may look to the estate to refund 1893). Until the appointment of new
any payment. An executor is entitled to trustees, see Section 8 of the Conveyancing
receive the dividends without the shares Act, 1911 , under TRUSTEE .
being transferred into his name. Many DEBENTURE . (Latin debeo, to owe.)
companies require administrators or execu- Where a company requires to borrow , it
tors to transfer the shares of the deceased frequently does so by an issue of debentures,
shareholder into their own names, unless that is by documents under the seal of the
they intend to sell the shares at an early company acknowledging the debt. A de
date. benture is usually secured by a mortgage or
By Section 29, Companies (Consolidation) charge, and represents a separate debt of a
Act, 1908, a transfer of the share or other definite round sum bearing a fixed rate of
interest of a deceased member of a company interest. In the case of debenture stock,
made by his personal representative shall, the certificates are for different amounts,
although the personal representative is not representing parts of a large loan or debt.
himself a member, be as valid as if he had Debentures are the instruments evidencing
been a member at the time of the execution a loan to the company .
of the instrument of transfer." Although debentures generally give secur
Upon production of probate or letters of ity over the property of a company, they
administration to a company, the certificate may be merely an acknowledgmentof a debt ,
isrepresentatives.
indorsed with the names personal
of the personal (called a " naked ” debenture), and give
When repre- the holders no advantage over other
creditors. It is therefore important, when
sentatives are registered as members, a new
certificate is issued . debentures are offered as security, to ascer
(See TRANSMISSION OF
SHARES .) tain if, and in what manner, they are secured .
DEATH OF TREASURER OF LOCAL It is also necessary to see that the company
AUTHORITY. Upon the death of a bank has power , by its memorandum and articles
manager, who is treasurer, the authority to of association, to issue debentures, and that
pay orders drawn upon him ceases, but, in any such power has not been exceeded ; in
practice, it is customary for the bank to pay other words, that the amount issued is
such orders. within its borrowing powers. It should also
DEATH OF TRUSTEE. Where there be noted whether the debentures are trans
are several trustees and one of them dies, it ferable only “ subject to equities " —that is,
would appear that it is not safe to honour are subject to any debt due by the trans
cheques upon the trust account when signed feror to the company - or whether the
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DEB ) DICTIONARY OF BANKING [DEB

debentures are payable without regard to | title deeds were deposited with a bank as a
any such debt, that is, “ without regard to security. The bank held some of the deben
any equities " between the company and the tures for another customer, but it was held
transferor. Unless the contrary is stated,
60
that that fact did not affect the bank with
registered debentures are subject to notice of the contents of those debentures
equities ." in its dealings with the company and that
Debentures, called “ income debentures," the bank was entitled to priority with
are sometimes issued with a provision that respect to its equitable charge. (See
the interest or principal, or both , shall be FLOATING CHARGE.)
payable only out of the profits of the com- It is usual for a debenture to be secured
pany. There are also debentures the pay- | by a “ fixed ” chargeupon the land of the
ment of which is guaranteed by another company and by a floating " charge upon
company . its stock, book debts and uncalled capital.
A " mortgage debenture ” is one which By thatmeans the company can continue
gives a charge on the property of the its business and use up and vary the assets
company. This charge may be contained included under the floating charge. If the
in the debenture itself or in a separate trust company defaults in payment of the prin
deed . cipal and interest secured by the debentures,
Debentures and debenture stock or goes into liquidation, the floating charge
are

usually secured by a trust deed , sometimes becomes fixed , and attaches the assets as
1

called a “ covering deed , ” by which the at that date. Although debentures may be
property of the company is vested in secured by a trust deed, a banker should
trustees upon trust for the debenture holders ascertain the nature of the property, as
or debenture stockholders. When the de- | the property may prove to be of little
bentures and debenture stock are secured value particularly if the company ceases to
by a " fixed ” charge, the holders are free be a going concern.
from the danger of anyone securing a prior Where a debenture (not being one of a
charge, and the trustees are given powers to series) is given by a company, creating a
enable them to deal with the mortgaged specific charge over its property, to secure
property in order, when necessary , to raise its account, the deeds of the property should
money to repay the debt to the holders. If, be deposited with the banker along with
however, the charge is a
60
floating ” one and the debenture, otherwise an equitable mort
not fixed,” the company can create prior gagee, without notice of the debenture, might
charges, or sell the property or deal with it obtain priority.
as they desire at any time before the charge A debenture given as security should be
becomes fixed . A debenture creating a registered in the names of the bank's
floating charge often , however, contains a nominees, and should contain a clause that
condition of this nature: - " The debentures the company is not to be at liberty to create
of the said series are all to rank pari passu any charge to rank equally with or in
as a first charge on the property hereby priority to the debenture. The debenture
charged , without any preference or priority must be registered with the Registrar
one over another , and such charge is to be a of Companies within twenty-one days
floating security, but so that the company of its execution . (See REGISTRATION OF
is not to be at liberty to create any mortgage MORTGAGES AND CHARGES .)
or charge on its undertaking pari passu with )
A debenture which is issued in the names of
or in priority to the said debentures.” If the bank's nominees, as security, is usually
a banker subsequently obtains a charge on a accompanied by a qualifying agreement,
specific asset, and has notice of such a (under hand, stamp 6d.), to show the purpose
condition, his charge will be postponed to for which it has been given, and that it is
the charge created by the debentures. A to be held as a continuing security notwith
banker, however, is not fixed with notice standing any intermediate payment of any
merely because he may have in his possession account, and that, in the event of the company
some of the debentures on behalf of another making default in payment of any moneys
customer . In re Valletort Sanitary Steam due, it shall be lawful for the bank or its
Laundry ( 1903, 19 T.L.R. 593) debentures nominees to sell the security . A qualifying
had been issued creating a floating charge agreement under seal is subject to ad valorem
with a provision that no prior charges were stamp duty like a mortgage. To avoid this
to be created. Subsequently the company's expense a company sometimes appoints one
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person to sign an agreement under hand on holder. In theformer case, by custom they
its behalf, and furnishes the bank with a may be treated as negotiable instruments.
copy of the minute authorising the arrange- When debentures to bearer are offered as
ment. By Section 104, s.s. 3, Companies security, a mere deposit of them may be taken
(Consolidation) Act, 1908 (see below ), deben (a form of transfer not being necessary),
tures deposited by a company to secure or they may be accompanied, as is preferable,
advances from time to time constitute a by a memorandum of deposit or an agreement
continuing security. If the bank receives showing for what purpose they have been
notice that a subsequent specific mortgage left with the banker. In Bechuanaland
has been created on the same property, the Exploration Co. v. London Trading Bank
account should be stopped and subsequent ( 1898, 2 Q.B. 658) , where bearer debentures
transactions passed through a new account. of an English company had been stolen
If an overdraft is required on the new and pledged with the bank, it was held that
account, fresh security should be given . (See the bank was entitled to the debentures
NOTICE OF MORTGAGE.) (See QUALIFYING because they were, by the general custom
AGREEMENT.) of merchants, negotiable instruments and
A debenture is not a bill of sale . The transferable by delivery.
Bills of Sale ( 1878) Amendment Act, 1882, The negotiability of debentures payable
Section 17, provides : — “ Nothing in this Act to bearer was considered again in the case
shall apply to any debentures issued by any of Edelstein v. Schuler & Co. ( 1902, 2 K.B.
mortgage, loan, or other incorporated com- 145) , when the decision in the Bechuanaland
pany, and secured upon the capital stock or case was followed . In the judgment of
goods, chattels, and effects of such com- Bigham , J. (afterwards Lord Mersey ), it is
pany.' But by Section 93 of the Companies said : It has been argued that the attri
(Consolidation) Act, 1908, a mortgage or bute of negotiability could not be attached
charge created by an instrument which , if to a contract except by the law merchant ;
executed by an individual, would require and that these bonds are of such recent
registration asa bill of sale, must be registered creation that their negotiability under that
with the registrar of companies. branch of the law cannot be justified. It is
Debentures are issued for amounts varying no doubt true that negotiability can only
from , say, £ 10 to £ 100, and are redeemable or be attached to a contract by the law mer.
repayable either upon notice or at the end chant or by a statute ; and it is also true
of a certain number of years, say five, ten, or that, in determining whether a usage has
fifteen years from the date of the instrument, become so well established as to be binding
or when drawn for repayment. They may in the courts of law, the length of time
also be perpetual or irredeemable, in which during which the usage has existed is an
case the holder is entitled to an annuity or important circumstance to take into con
interest upon the money yearly in perpetuity. sideration ; but it is to be remembered that
Although called irredeemable, they are re- in these days usage is established much
deemable upon the company going into more quickly than it was in days gone by ;
voluntary or compulsory liquidation . The more depends on the number of the trans
word “ redeemable " may mean that the actions which help to create it than on the
borrower is under an obligation to redeem time over which the transactions are spread ;
at a given date, or it may mean that the and it is probably no exaggeration to say
stock is capable of being redeemed at a given that nowadays there are more business
date but will not necessarily be redeemed . transactions in an hour than there were in
Where the word is used its precise meaning a week a century ago. Therefore the com
should be noted . paratively recent origin of this class of
Debentures are sometimes issued at a securities in my view creates no difficulty
discount, e.g. a £ 100 debenture issued at | in the way of holding that they are negoti
90 and redeemable at par. able by virtue of the law merchant ; they
Where there is a series of debentures, each are dealt in as negotiable instruments in
of them is expressed to rank equally with the every minute of a working day, and to the
others of the series . The interest upon the extent of many thousands of pounds. It is
debentures may be paid by warrant or by also to be remembered that the law merchant
coupons issued along with the debentures. is not fixed and stereotyped ; it has not
Debentures are sometimes payable to yet been arrested in its growth by being
bearer and sometimes to the registeredmoulded into a code ; it is , to use the words
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DEB ) DICTIONARY OF BANKING [DEB

of Cockburn , C.J., in Goodwin v. Robarts and sent in to the office of the company for
(1875, L.R. 10 Ex. 337 ), capable of being registration. A blank transfer, however, is
expanded and enlarged so as to meet the not a satisfactory document. (See BLANK
wants and requirements of trade in the TRANSFER.) If the debentures are about
varying circumstances of commerce, the due for payment, they should be indorsed
effect of which is that it approves and by the registered owner and authority given
adopts from time to time those usages of to the banker to write a receipt above the
merchants which are found necessary for signature.
the convenience of trade ; our common Where debentures are deposited by a
law, of which the law merchant is but a company as security for a loan, and the
branch , has in the hands of the judges the debentures are of a larger face value than
same facility for adapting itself to the the amount of the loan , the holders are
changing needs of the general public ; entitled to interest upon the full amount
principles do not alter, but old rules of of the debentures until the loan is repaid .
applying them change, and new rules spring A debenture creating a floating charge
into existence. Thus it has been found issued for a debt may be void if a liquidation
convenient to treat securities like those in take place within three months. See Section
question in this action as negotiable, and 212 of the Companies (Consolidation ) Act,
the courts of law, recognising the wisdom 1908, under WINDING UP. In Christy v.
of the usage, have incorporated it in what Hayman and others ( 1917, 1 Ch . 545) ,
is called the law merchant, and have made Astbury, J., said that the words in Sec
it part of the common law of the country . tion 212 “ except to the amount of any cash
In my opinion the time has passed when paid to the company mean - except to the
the negotiability of bearer bonds, whether amount of the cash actually and uncondi
Government bonds or trading bonds, foreign tionally paid to the company. Where a
or English, can be called in question in our debenture is issued partly for a past debt
Courts. The existence of the usage has been and partly for a fresh advance, so far as it
so often proved and its convenience is so is issued for a past debt, it is invalid ; and
obvious, that it must be taken now to be so far as it is issued for a current account,
part ofthe law ; the very expression ' bearer it is only valid for the amount due at the
bond ' connotes the idea of negotiability, so date of the winding up. QuotingParker, J.,
that the moment such bonds are issued to in the Orleans Motor Co., Ltd. ( 1911 ,
the public they rank themselves among the 2 Ch. 41), he said that the Section was
class of negotiable securities. It would be designed apparently to prevent companies
a great misfortune if it were otherwise, for on their last legs from creating floating
it is well known that such bonds are treated charges to secure past debts or for moneys
in all foreign markets as deliverable from which did not go to swell their assets and
hand to hand ; the attribute not only en- become available for creditors. In the above
hances their value by making them easy of case , second mortgage debentures were
transfer, but it qualifies them to serve as a issued to a bank in place of certain promis
kind of international currency ; and it sory notes of the directors held as security
would be very odd and a great injury to for advances to the company. The com
our trade if these advantages were not pany was insolvent when the debentures
accorded to them in this country.”. were issued and was wound up within
Where debentures or certificates of deben- | three months. The Court disallowed the
ture stock, payable to a registered holder, debentures issued to the bank .
are given as security, they should, to form A private firm sometimes registers as a
a complete security, be transferred into the limited company for the sole purpose of
names of the bank's nominees . When they obtaining powers to issue debentures as a
give a charge upon the company's land the floating charge upon its stock, and of avoid
transfer must be under seal. (See TRANSPER ing the necessity of having to give a bill of
OP SHARES.) The debentures or certificates sale upon the stock in order to borrow
may also be lodged with a blank transfer ; money thereon .
that is, a transfer in which the space for the Every company shall, within two months
transferee's name is left blank, or which is after allotment, and within two months after
undated . Notice of the charge should be registration of the transfer of any debentures
given to the company. When necessary, or debenture stock complete, and have ready
the blank transfer is completed by the banker for delivery, the debentures, and certificates
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DEB ) DICTIONARY OF BANKING (DEB

of debenture stock, unless the conditions of to being registered with the registrar of com
issue otherwise provide. (See Section 92 of panies, all debentures specifically affecting
the Companies (Consolidation) Act, 1908, property of the company must be entered
under heading CERTIFICATE .) in a register kept by the company, but a
Every mortgage or charge created after debenture containing merely a floating
July 1, 1908 , by a company, registered in charge does not require to be entered in this
England or Ireland, must be delivered to register, though it does require registration
the registrar of companies for registration with the registrar of companies.
within twenty -one days after the date of its Any creditor or member of a company
creation . The holding of debentures en- may inspect the register of mortgages which
titling the holder to a charge on land shall is kept by the company, without payment
not be deemed to be an interest in land. of a fee, and any other person may inspect
Where a series of debentures containing, or it on payment of one shilling. Any person
giving by reference to any other instrument, may inspect the documents kept by the
any charge to the benefit of the debenture registrar of companies on payment of one
holders, is created by a company, the shilling. (See REGISTRAR OF COMPANIES.)
required particulars must be delivered to A copy of any trust deed for securing an
the registrar within twenty -one days after issue of debentures shall be forwarded to
the execution of the deed containing the any debenture holder on payment, in the
charge, together with the deed containing case of a printed deed , of one shilling, or less,
the charge, or if there is no such deed, one or, where the deed is not printed, on pay
of the debentures. The registrar shall give ment of sixpence for every 100 words
a certificate of the registration of any mort- required to be copied (Section 102, s.s. 2,
gage or charge, and the company shall cause Companies (Consolidation) Act, 1908) .
a copy to be indorsed on every debenture or Where a company has redeemed any
certificate of debenture stock which is issued debentures, the company, unless the articles
by the company and the payment of which or conditions of issue expressly otherwise
is secured by the mortgage or charge so provide, or unless the debentures have been
registered . redeemed in pursuance of any obligation
In the case of debentures specifically so to do (not being an obligation enforceable
charging ships or any share therein, the only by the person to whom the redeemed
debentures do not require registration under debentures were issued or his assigns ), shall
the Companies (Consolidation) Act, 1908. have power to keep the debentures alive for
The mortgage of the ships securing the the purposes of re -issue, and upon re-issue
debentures, must be in the form prescribed the holder shall have the same rights and
by the Merchant Shipping Act, 1894, and priorities as if the debentures had not pre
must be registered under that Act. (See viously been issued (Section 104, s.s. 1), the
SHIP_MORTGAGE .) holder's rights not being postponed to any
In the “ Handbook on the Formation, second mortgage debentures issued in the
etc., of Joint Stock Companies," by F. Gore meantime. Sub -section 3 of the same Section
Brown, K.C., and William Jordan, the fol- says:
lowing information regarding the registra- “ Where a company has either before
tion of debentures is supplied (p. 234 , 31st or after the passing of this Act
edition) : Before the 1st July, 1908, the deposited any of its debentures to
more usual practice was to register the secure advances from time to time
individual instruments as separate charges on current account or otherwise, the
under sub-section 1 of Section 14 of the debentures shall not be deemed to
Act of 1900 , instead of the series under sub have been redeemed by reason only
section 4. In cases where debentures of a of the account of the company
series were registered separately and a having ceased to be in debit whilst the
further issue of the same series is now made , debentures remained so deposited.”
the series should be registered within twenty- The re - issue of a debenture shall be treated
one days after the issue of the first of the
as a new debenture for the purposes of stamp
further debentures. The Registrar considers
duty.
that registration of the series is also neces-
In the event of default in the payment of
sary when debentures registered separately
the principal and interest secured by a
are renewed by indorsement, even though mortgage debenture :
they may not have matured ." In addition The debenture holders may sue the
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DEB) DICTIONARY OF BANKING (DEB

company for repayment of principal DEBIT . (Latin debitum , what is owed .)

and interest ; or, When a banker pays a cheque drawn by a
Apply to the Court for an Order for sale customer, the amount is placed to the debit
of the property ; or, of the customer's account. When the
Apply for a receiver to be appointed to amounts debited are greater than the
wind up the company ; or, amounts paid to credit, the resulting balance
If there is a trust deed giving the necessary is a debit one, or a “ debtor balance as it
power, the trustees may sellthe property, is called (shown, thus, Dr. £100) and repre
or enter into possession ; or, sents the sum due by the customer to the
If all the debenture holders agree, they banker, the banker being the creditor and the
may apply to the Court for an order of customer the debtor .
foreclosure. (See FORECLOSURE.) DEBTS , ASSIGNMENT OF. A customer
The exact terms of the debenture or of may assign to a banker any money which is
any trust deed must be strictly observed . due, or will be due, to him . This may be
When a receiver of the company's property effected by a letter signed by the customer,
is appointed , see RECEIVER. addressed to the person who owes him
As to the stamp duty on a debenture for money, requesting that the debt be paid to
securing the payment or repayment of the banker. The letter will be retained
money, or the transfer or retransfer of stock , by the banker, who should give written
see MORTGAGE, ETC. , AND MARKETABLE notice at once to the debtor of the assign
SECURITY . ment, and ascertain from him if the debt is
When the debentures are stamped , the as stated , and if it is free from any prior
trust deed , if any, takes only a ten -shilling charge. It is desirable to obtain an acknow
stamp. (See COMPANIES, REGISTRATION OF ledgment from the debtor. The banker
MORTGAGES AND CHARGES.) should be able to prove that he sent the
DEBENTURE HOLDER . The person notice in case the debtor does not acknow
who holds a debenture. He may be either ledge it. In an equitable assignment of a
a registered holder, or a holder of a debenture debt “ all that is necessary is that the
payable to bearer. In the former case a debtor should be given to understand that
document of transfer is necessary to pass the the debt has been made over by the creditor
ownership to another person, but in the to some third person . If the debtor ignores
latter case the debenture is transferable by such a notice he does so at his peril.”
simple delivery . (William Brandt's, Sons & Co. v. Dunlop
A debenture holder is a creditor of the Rubber Co., 1905, A.C. 454.)
company, as the debenture represents a loan Although an assignment of a debt may
to the company, and the interest thereon take the form of an order or a letter, the
must be paid before any dividend is received more satisfactory method is to have executed
by the shareholders. (See DEBENTURE .) a mortgage assigning the debt absolutely,
DEBENTURE STOCK , Debenture stock subject to the right of redemption, and
is essentially the same as debentures, and notice should be given at once to the party
both are usually secured by a charge or owing the money . Until notice is given, the
mortgage. Debentures, however, are for debtor may pay the debt direct to the
definite round sums, as separate debts, assignor. The assignment must be absolute
whereas certificates ofdebenture stock are for (not by way of charge only ), must be in
different amounts, as parts of one large debt. writing, and signed by the assignor. In
The certificates do not require a stamp, order that the banker, as assignee, may not
but any deed creating a security for the stock be held liable to the assignor for any loss
is subject to the same duty as a mortgage which might arise from the banker's failure
(g.v.). to enforce the necessary remedies for pay
When a certificate of debenture stock is ment of the debt, there should be a clause
given as security , a transfer from the regis- in the deed to the effect that it shall not be
tered holder to the bank's nominees, accom- incumbent on the banker to sue for the
panied by a qualifying agreement should debt.
be taken, and, to make the security fully In the Court of Appeal ( Hughes v . Pump
satisfactory, the transfer should be registered . House Hotel Co. , Ltd., 1902 , 2 K.B. 190)
(See BLANK TRANSFER, DEBENTURE, LOAN Mathew L.J. said : “ if, on consideration of
CAPITAL, SHARE CAPITAL, TRANSFER OF the whole instrument, it is clear that the
SHARES .) intention was to give a charge only , then
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DEB ) DICTIONARY OF BANKING (DEB
the action must be in the name of the under and in conformity with the provisions
assignor ; while, on the other hand , if it is of the Acts for the relief of trustees . "
clear from the instrument as a whole that The notice required by the above sub
the intention was to pass all the rights of section must be in writing. A verbal notice
the assignor in the debt or chose in action to of the assignment is not sufficient. ( Hockley
the assignee, then the case will comewithin and Papworth v. Goldstein, 1921 , K.B.D.
Section 25 (see below ] and the action must | 124 L.T. 277. )
be brought in the name of the assignee ." If the debtor has a counter claim against
In this case an assignment of debts was the assignor, the assignee will be entitled
given “ by way of continuing security ." only to the balance of the debt after allowing
It was held that the assignment was absolute for the counter claim . The banker should,
and not by way of charge only. therefore, before taking an assignment, ask
The banker's right to the debt dates from the debtor if he has a counter claim and
the date of the notice (see Section below ), also, as mentioned above, ask what is the
and until the notice has been given a sub - actual amount of the debt and whether
sequent assignee might, by giving notice, there is any prior charge.
obtain priority to the banker ; but an A cheque is not an assignment of money
assignee cannot, by giving notice, obtain in favour ofthe payee, as the banker is liable
priority over a previous assignment if he only to the drawer ; but if a customer
knew of the former charge at the timewhen formally assigns his balance to a third party
he obtained his own assignment. When and the banker receives notice thereof, his
notice has been given, it will, in the event | liability is then to the assignee. In Scotland ,
of the bankruptcy of the assignor, prevent the presentment of a cheque attaches any
the debt passing to the Trustee in Bank- balance there may be in the drawer's
ruptcy under Section 38, Bankruptcy Act, account to the extent of the cheque. (See
1914. (See REPUTED OWNER .) under DRAWEE .)
By Section 25, sub -section 6, of the When a company assigns to a bank as
Supreme Court of Judicature Act, 1873, it security a book debt dueto the company, the
is enacted as follows : assignment must be registered under Section
"Any absolute assignment, by writing 93 of the Companies (Consolidation ) Act,
under the hand of the assignor (not purport- | 1908. (See REGISTRATION OF MORTGAGES
ing to be by way of charge only) , of any debt AND CHARGES.)
or other legal chose in action, of which As to a general assignment of book debts,
express notice in writing shall have been the Bankruptcy Act, 1914 , provides :
given to the debtor, trustee, or other person “ Section 43.- (1) Where a person en
from whom the assignor would have been gaged in any trade or business makes
entitled to receive or claim such debt or chose an assignment to any other person
in action , shall be, and be deemed to have of his existing or future book
been , effectual in law (subject to all equities debts or any class thereof, and is
which would have been entitled to priority subsequently adjudicated bankrupt,
over the right of the assignee if this Act had the assignment shall be void against
not passed ), to pass and transfer the legal the trustee as regards any book
right to such debt or chose in action from debts which have not been paid
the date of such notice, and all legal and at the commencement of the bank
other remedies for the same, and the power ruptcy, unless the assignment has
to give a good discharge for the same, with been registered as if the assignment
out the concurrenceof the assignor : were a bill of sale given otherwise
Provided always, that if the debtor, trustee, than by way of security for the pay
or other person liable in respect of such debt ment of a sum of money, and the
or chose in action shall have had notice that provisions of the Bills of Sale Act,
such assignment is disputed by the assignor 1878, with respect to the registration
or anyone claiming under him, or of any of bills of sale shall apply accordingly,
other opposing or conflicting claims to such subject to such necessary modifica
debt or chose in action, he shall be entitled , tions as may be made by rules under
if he think fit, to call upon the several persons that Act ;
making claim theretoto interplead concern- Provided that nothing in this Section
ing the same, or he may, if he think fit, pay shall have effect so as to render void
the same into the High Court of Justice any assignment of book debts due
216
DBC) DICTIONARY OF BANKING (DEC

at the date of the assignment from be fraught with risks which your Committee
specified debtors, or of debts growing consider it would be unwise to incur.
due under specified contracts, or “ Your Committee have therefore decided
any assignment of book debts to recommend a decimal system based on
included in a transfer of a business the pound sterling, to be divided into a
made bona fide and for value, or thousand parts called mils, the coinage to
in any assignment of assets for the be as follows :
benefit of creditors generally . £
Sovereign 1.000 1,000 mils
(2) For the purposes of this Section , Gold .
-500 = 500
assignment includes assignment by Double Florin ( or
200
way of security and other charges on four -shilling piece ) 200 -
Florin (or two -sbil.
book debts." ling piece) • 100 - 100 91
Silver .
Under the above quoted Section of the Half-forin (or shil
ling ) -050 - 50
Judicature Act a customer may assign to a Quarter-forin (or
.

third party any balance on his current sixpence) . ·025 = 25 »

account or deposit account , or the amount Nickel or
of a deposit receipt. On receipt of notice some other
of the assignment the account should be metal or
10 mils
To Ten -mil piece
·010 ,
" stopped.” See further as to an assignment alloy.
be scal.
of a debt to a banker under TRANSFER OF loped
MORTGAGE . An assignment is subject to ad Four -mil piece -004 - 4 .
Bronze Two -mil piece . · 002 - 2
valorem conveyance duty if on sale or in Mil ·001 1
consideration pro tanto of any debt under
Section 57 of the Stamp Act, 1891. ( Alpe's “ If the proposed system be adopted,
Law of Stamp Duties.) See that Section there will be nochange in the gold coinage.
under CONVEYANCE. The existing silver coins will continue (in
(See REGISTRATION OF MORTGAGES AND some cases under new names) with the
CHARGES .) exception of the crown, half- crown, and
DECIMAL COINAGE. The Report of the threepenny piece, which it is proposed to
Committee appointed to inquire into the discontinue."
adoption of a decimal coinage, and the The coinage of France, Belgium , Spain ,
metric system of weights and measures, was Italy, the United States and other countries,
adopted at a special meeting of the Council is arranged on the decimal system .
of the Institute of Bankers on May 2, 1917. DECIMALS. The interest calculations in
The following is from the Report : the current account ledgers are commonly
“ Your Committee are of opinion that the called “ decimals. " The correct term , how
existing system of weights and measures in ever , is “ products.” The working of the
this country is an obstacle in the way of the system is most easily explained by an
extension of our foreign trade, and more example : if a credit balance of £ 100 re
especially of our export trade. This is, mains unaltered for 10 days, at which date
indeed, one of the main considerations which another transaction on the account takes
has influenced your Committee in recom- place, the ledger keeper multiplies the £100
mending the adoption of a decimal coinage, by 10 days and puts the 1,000 product in
as they hope that it may be the first step the credit “ decimals " column. Each suc
towards the introduction of the metric ceeding balance is dealt with in the same
system of weights and measures into this way, being multiplied always by the number
country . of days between the date of the balance
“ Your Committee are convinced that no and the date of the next balance being
decimal system of coinage which is not based extended, consequent upon another entry
on the pound sterling can possibly be appearing in the account. The interest on
accepted by the bankers of this country, ioo for 10 days is the same as on £ 1,000
and that the present pound sterling, un- for 1 day, or on £l for 1,000 days, at the
changed in weight and fineness, must remain same rate, and so when the products (i.e.,
the unit of value. The pound sterling is the decimals ' so called ) are cast up at
universally recognised in the settlement of the half-year end, the total will represent
international transactions throughout the the number of pounds for one day on which
world, and any abandonment, even in name interest is to bo allowed , or charged, as the
only, of its use as our standard unit, would case may be, and the amount can then
217
DEC) DICTIONARY OF BANKING (DEE

readily be ascertained from the tables DEDUCING A TITLE . - When the deeds
prepared for the purpose. The last two of a property are deposited with a bank as
right-hand figures are, as a rule, ignored , and security, it is necessary to deduce the title,
the interest is reckoned upon the hundreds that is, to trace it from some previous owner
of products. (See INTEREST ON DEPOSIT
to the present owner. (See TITLE DEEDS.)
RECEIPT.) DEED . A deed is a document in writing,
DECLARANT. A person who makes a or printing, on paper or parchment , which
declaration . is signed, sealed and delivered by the parties
DECLARATION . A formal statement, or thereto . The fact of a document being
declaration, in writing. under seal does not necessarily constitute it
By the Stamp Act, 1891 , thestampduty is : a deed, e.g. a will under seal, and a certificate
of shares under the seal of a company are not
DecLARATION of any use or trust £ s. d. deeds. An instrument is a deed when it is
of or concerning any property sealed and delivered as a deed .
by any writing, not being a will, All deeds are now signed , though at one
or instrument chargeable
an
time it was sufficient if they were merely
with ad valorem duty as a sealed and delivered . In the olden times
settlement : 0 100 persons would often be unable to write,
DecLARATION (Statutory ). ( See AFFIDAVIT.) and the sealing of the document with their
DECLARATION OF ASSOCIATION . The own private seal would be of the first im
declaration of association is the last clause portance, but now that nearly all personscan
in a memorandum of association, which, write, the signature to a deed is the principal
in the case of a company limited by shares, matter, the seal being merely a formal affair.
is as follows (Form A, Third Schedule, The deed must be sealed , but it is no longer
Companies (Consolidation) Act, 1908) : necessary that it should be the seal of the
“ We, the severalpersons whose names and person who is sealing. It may be the seal
addresses are subscribed , are desirous of of anyone, or a drop of wax, or simply a red
being formed into a company, in pursuance wafer. The seals may be put on a deed
of this memorandum of association, and we before the parties sign, and touching a seal
respectively agree to take the number of with the finger at the time of signing
sharesin the capital of the company set has the effect of sealing. There must be a
opposite our respective names . separate seal for each person. If a deed is
read over to a person who cannot read, the
Number of Shares attestation clause should be “ signed , sealed
Names, Addresses, and Descriptions taken by each and delivered by the said John Brown, the
of Subscribers. Subscriber . document having first been read over to him
200
when he appeared fully to understand the
>)

2. 25 same."
30 In addition to being signed and sealed , a
og

40
15
deed must be delivered, and this is usually
5.
6. 6 accomplished by the party placing a finger
(0

7. 10 on the sealand saying, “ I deliver this as my

act and deed .” A deed takes effect from
Total shares taken 325 the date of its delivery. It is not necessarily
an essential part of a deed that there should
Witness be a date upon it. The date of the execution
can be proved . ( See Date .)
No subscriber of the memorandum may A special note in the attestation clause of
take less than one share . (See MEMORAN- any material alteration or erasure in thedeed
DUM ASSOCIATION .) Subscribers fre- should be made at the time the deed is
OP

quently sign for only one share each . signed and witnessed .
DECLARATION OF TRUST. The term It is customary for aa deed to be witnessed,
“ bill of sale " includes a declaration of but the absence of the attestation by a
trust without transfer.” (See BILL OF SALE, witness does not invalidate it.
TRUST RECEIPT . ) There is no prescribed size or shape for a
DECODE. To decode a telegram is to deed, and they are found in different forms
translate the code words into the words or and sizes . Many modern deeds are drawn
figures which they represent. on comparatively small sheets, fixed together
218
DREJ DICTIONARY OF BANKING (DEE

in book form , which are much more easily authorising the debtor or any other person
read and dealt with than the old full- sized to manage, carry on, realise , or dispose of a
sheets with the long lines . business, with a view to the payment of
There are two kinds of deeds, an Indenture debts ; and any agreement or instrument
(q.v.), which is made between two or more authorising the debtor or any other person
parties, and a Deed Poll (q.v.),which is made to manage, carry on, realise, or dispose of
by only one person, or by more than one if the debtor's business, with a view to the
their interests are the same. payment of his debts (Section 1 of the Deeds
Blackstone says it is called a deed " be of Arrangement Act, 1914).
cause it is the most solemn and authentic A deed of arrangement is void unless
act that a man can possibly perform with registered within seven clear days after the
relation to the disposal of his property ; and first execution thereof by the debtor or any
therefore a man shall always be estopped by creditor (Section 2 of the above Act). The
his own deed, or not permitted to aver or Registrar of Bills of Sale is the registrar for
prove anything in contradiction to what he deeds of arrangement.
has once so solemnly and deliberately By the Deeds of Arrangement Act, 1914,
avowed ." Section 3 :
By the Stamp Act, 1891 , the stamp duty A deed of arrangement shall be
is : void unless, before or within twenty
DEED whereby any real burden is £ s. d. one days after the registration
declared or created on lands or thereof, or within such extended
heritable subjects in Scotland. time as the High Court or the Court
See MORTGAGE , etc., and having jurisdiction in bankruptcy
Section 86 . in the district in which the debtor
DEED containing an obligation to resided or carried on business at the
infeft any person in heritable date of the execution of the deed
subjects in Scotland, under a may allow , it has received the
clause of reversion , as a security assent of a majority in number and
for money . value of the creditors of the debtor
See MORTGAGE , etc., and ( s.s. 1 ) .
Section 86 . The assent of a creditor shall be
DEED containing an obligation to established by his executing the
infeft or seize in an annuity to deed of arrangement or sending to
be uplifted out of heritable the trustee his assent in writing
subjects in Scotland. attested by a witness (s.s. 3) .
See BOND, COVENANT, etc. The trustee shall file with the
DEED of any kind whatsoever, not Registrar of Bills of Sale when the
described in this schedule . 0 10 0 deed is registered , or in the case of
(See Escrow, TITLE DEEDS.) a deed assented to after registration ,
DEED OF ARRANGEMENT. A deed of within twenty eight days after
twenty --eight
arrangement, whether under seal or not, registration or such extended time
made by a debtor for the benefit of his as the court may allow , a statutory
creditors, otherwise than under the Bank declaration by the trustee that the
ruptcy Acts, includes ( 1 ) an assignment of requisite majority of the creditors
his property to a trustee, in order that it have assented to the deed (s.s. 4) .
may be realised and the proceeds divided In calculating a majority of
amongst the creditors (see AssIGNMENT FOR creditors for the purposes of this
BENEFIT OF CREDITORS) ; and (2) a deed or Section a creditor holding security
agreement under which the creditors agree to upon the property of the debtor
accept a composition — that is, a payment of shall be reckoned as a creditor only
so much in the pound in full discharge of the in respect of the balance due to him
debts due by the debtor to them ( see Com after deducting the value of such
POSITION WITH CREDITORS) ; and, in cases security, and creditors whose debts
where creditors of a debtor obtain any con amount to sums not exceeding ten
trol over his property or business, it also pounds shall be reckoned in the
majority in value but not in the
includes a deed of inspectorship entered
for the
intothe purpos; e of carryi ng on or winding majority in numbers (s.8. 5) .
up business and a letter of licence By Section 11 s.s. 1 it is enacted that
219
DEE ) DICTIONARY OF BANKING [DEF

the trustee under a deed of arrangement or ten shillings. The stamp duty on gifts
shall give security to the Registrar of the inter vivos is the same as on a conveyance
bankruptcy court, in a sum equal to the or transfer on sale , with the substitution in
estimated assets available for distribution each case of the value of the property con
among the unsecured creditors, to administer veyed or transferred for the amount or
the deed properly, unless a majority in value of the consideration . See Section 74,
number and value of the creditors dispense s.s. 4, 5, and 6, Finance (1909-10) Act,1910,
with his giving such security. under heading CONVEYANCE . (See GIFTS
“ All moneys received by a trustee under INTER VIVOS . )
a deed of arrangement shall be banked by DEED OF INSPECTORSHIP . A deed by
him to an account to be opened in the name which an insolvent debtor places his affairs
of the debtor's estate." (Section 11 ,► S.S. 4.) in the hands of his creditors, who may
As to the effect of notice to creditors of a appoint inspectors or trustees, in order that
deed of arrangement, see Section 24, under the business may be wound up to the best
ACTS OF BANKRUPTCY. advantage or carried on for thebenefit of the
The trustee shall at the expiration of creditors, as may be thought desirable.
every six months send to each creditor (See DEED OP ARRANGEMENT.)
who assented to the deed of arrangement, DEED OF SETTLEMENT. The docu
a statement of the trustee's accounts and of ment which took the place of the memoran
the proceedings under the deed. (Section dum and articles of association in old joint
14.) stock companies formed prior to the Com
If an overdraft is required on the personal panies Act of 1862. If the company with a
liability of a trustee, a guarantee should be deed of settlement has subsequently become
taken . registered under the Companies Act, that
As to the validity of certain payments deed still continues, but by Section 264 of
to a person who has committed an act of the Companies (Consolidation) Act, 1908,
bankruptcy, or to his assignee, see Section a company registered in pursuance of this
46, Bankruptcy Act, 1914, under ACTS OF part of this Act may by special resolution
BANKRUPTCY . alter the form of its constitution by substi
The register may be searched on payment tuting a memorandum and articles for a deed
of 1s. Od . The registrar transmits a copy of settlement.” The expression “ deed of
of each deed to the registrar of the county settlement ” includes any contract of co
court in the district of which the place of partnery or other instrument constituting
business or residence of the debtor is situate, or regulating the company, not being an
and any person may search such registered Act of Parliament, a Royal Charter, or
copy on payment of a similar fee. (See Letters Patent. (See LIEN, SETTLEMENT.)
BANKRUPTCY .) DEED POLL . An indenture had ori
DEED OF GIFT. The conveyance of a ginally an indented or wavy margin , but a
property as a gift. deed poll was cut or polled straight at the
In the case of a voluntary deed of gift, edge.
the deed is void against the Trustee in Bank- There is usually only one party to a deed
ruptcy if the settlor becomes bankrupt within poll, but there may bemore than one if their
two years from the date thereof, and if he interests are similar.
becomes bankrupt within ten years, it is void, A deed poll commences : “ Know all
unless it can be proved that he was, at the men by these presents,” etc., and the date
time of making the gift, able to pay all his appears at the end. In an indenture the
debts without the property comprised in the date is atthe beginning. ( See INDENTURE .)
deed of gift. In taking a deed of gift as DEFACED COINS. Gold , silver, or copper
security, it is, therefore, necessary to consider coin which is defaced by being stamped
whether the donor was solvent at the with any name or words thereon , whether
date he executed the deed , and , if he was such coin is or is not thereby diminished
solvent then , whether his present position in weight, is not a legal tender ( 24 & 25
is above suspicion, particularly if the deed Vict. c . 99, Section 7) . (See LEGAL TENDER.)
is less than two years old. DEFAULTER . A person who defaults ;
The consideration in a deed of gift may be that is, who is unable to meet his obligations.
“ natural love and affection ." The word is principally used with respect
Where shares are transferred as a gift, to a defaulting member of the Stock Ex
the consideration is a nominal one, say five change. (See HAMMERED.)
220
DEF] DICTIONARY OP BANKING [DEF

DEFEASANCE . (French défaire, to (1919 , A.C. 36 T.L.R. 126 ) where the com
undo .) pany, instead of paying in cash the interest
A document containing a condition upon due on certain debenture stock , issued to
the fulfilment of which the contract in the the holders of such stock deferred warrants
deed to which it refers is defeated or rendered for the amount of the interest due, such
void . The condition itself is also called a warrants themselves carrying interest, it
defeasance . The document of this nature was held that the defendants had not by
with which a banker is most familiar is the the issue of deferred warrants issued loan
qualifying agreement which is signed by a capital within Section 8 of Finance Act,
customer at the same time as he executes a 1899, and were not liable to an ad valorem
transfer of stock or shares to the banker as duty under that Section . The issue of
00

security for an advance. The transfer is an deferred warrants was not capital at all,
absolute conveyance of the security into the but afforded a mode of postponing payment
banker's name, but the agreement, or de- of overdue interest in consideration of
feasance, operates to make the transfer paying interest on the overdue interest."
subject to the customer's right to have the (See above-named Section under LOAN
security re -transferred upon the repayment CAPITAL .)
of the advance. DEFERRED SHARES DEFERRED
As to an absolute disposition of property STOCK . Shares or stock which do not
in Scotland, qualified by a back -letter or receive a dividend until the shares or stock
back -bond, see DISPOSITION ABSOLUTE . which rank in front have been satisfied .
The Stamp Act, 1891, provides as fol- The capital of a company may be divided
lows : into preference, ordinary, and deferred
DETRASANCE. Instrument of defeasance of shares or stock , or the ordinary stock may
any conveyance, transfer, disposition, ((e.g. railway companies which have special
assignation, or tack, apparently absolute, powers by Act to do so) be split up into
bat intended only as a security for money preferred and deferred ordinary. The in
or stock . terest on founders' shares is deferred to the
See MORTGAGE, etc., and Section 86 .claims of prior shares.
In respect of marketable securities DEFICIENCY ADVANCES. When the
under hand only, see AGREEMENT, revenue balance in the Bank of England to
and Section 23. the credit of the Government is insufficient
DEFERRED ANNUITY . An annuity, or for payment of the quarterly dividends, the
annual payment of a certain sum , which deficiency is borrowed from the Bank, the
advances being known as deficiency ad.
does not commence till after a specified time.
For example, a person may at any time vances. " These advances must be paid off
purchase, either by a single premium or a before the end of the quarter, and the rate
yearly premium , a deferred annuity as a of interest charged is one -half of the Bank
provision for old age, the payments not to of England rate of discount, with a maxi
commence till he attains the age of, say, 55 mum of three per cent. Deficiency ad.
or 60 , or any age selected . vances are to meet permanent charges ;
At the age of 30, a single premium of “ ways and means advances ( q.v.) are to
£ 65 11s. 3d ., or a yearly premium of meet payments for the annual supply
£5 Os. 11d., may purchase an annuity of £ 10 services .
to commence twenty years hence. (See DEFICIENCY BILLS . A former method
ANNUITY .) of borrowing from the Bank of England by
DEFERRED BONDS. Bonds upon which the Treasury to meet permanent charges on
the rate of interest gradually increases until the Consolidated Fund . This is now effected
a certain specified rate is reached , when they by " Deficiency Advances (9.v.).
are changed into active bonds bearing a DEFINITIVE BOND . Where bonds are
fixed rate of interest . to be issued, for example, in connection with
DEFERRED INTEREST CERTIFICATE a Government loan, a scrip or provisional
or DEFERRED INTEREST WARRANT. certificate is issued on payment of the
The name of a document issued by a com- money due upon allotment. This certificate
pany for interest, payment of which has is held until all the instalments have been
been postponed or deferred . paid, when it is exchanged for the definitive
In ' Attorney -General v. South Wales Elec- bond ; that is, the final bond with coupons
trical Power Distribution Co. and another attached . (See ScRIP CERTIFICATE .)
221
DEF] DICTIONARY OF BANKING [DEL

DEFUNCT COMPANY. On the registra- Where there are several executors , one
tion of the memorandum of association of a may, in the absence of any instructions to
company, the registrar of companies issues a the contrary, draw cheques upon the execu
certificate certifying that the company is tors' account, but it is desirable that a form
incorporated, and in the case of alimited of mandate be signed. Executors cannot, as
company, that the company is limited. a rule, delegate their authority to someone
(See CERTIFICATE OF INCORPORATION .) who is not an executor. (See MANDATE .)
When the registrar ascertains that a com- DELEGATIONS. The name given by
pany has ceased to carry on business, or if bankers on the Continent to documents in
he fails to receive any reply to his letters of the form of a letter of credit, but which are
inquiry addressed to the company, he may intended to pass as bills of exchange. In
publish in the Gazette a notice that, at the this country they are, for the purpose of
expiration of three months from the date of stamp duty, treated as bills of exchange.
the notice, the company's name will, unless (See CIRCULAR Notes.)
cause is shown to the contrary, be struck off DELIVERY OF BILL. “ Delivery " means
the register, and the company will be dis - transfer of possession , actual or construc
solved (Section 242, Companies (Consolida- tive, from one person to another (Section 2,
tion ) Act, 1908). (See COMPANIES .) Bills of Exchange Act, 1882).
DEL CREDERE . A del credere commis Section 21 of the same Act provides :
sion is an extra commission paid by a
principal to an agent when the agent “ ( 1 ) Every contract on a bill, whether
guarantees the solvency of a customer to it be the drawer's, the acceptor's,
whom he has sold goods on credit. or an indorser's, is incomplete and
DELEGATION OF AUTHORITY . Where revocable , until delivery of the
a person is acting under authority , e.g. a instrument in order to give effect
trustee or an agent, he cannot (unless his thereto .
appointment expressly permits it) delegate “ Provided that where an accept
his authority ; that is, he cannot appoint ance is written on a bill, and the
someone else to act for him . drawee gives notice to or according
Where an account has been opened in the to the directions of the person
names of several trustees, the cheques must entitled to the bill that he has
be signed by all the trustees, as they cannot, accepted it, the acceptance then
unless the trust deed specially gives the becomes complete and irrevocable.
power, delegate their authority to one or “ (2) As between immediate parties, and
more of their number. (See TRUSTEE.) as regards a remote party other
Trustees may derive their authority under than a holder in due course, the
a will, or a trust deed, and when any question delivery ,
of delegation arises, the banker should see “ (a) in order to be effectual
that document and ascertain exactly what must be made either by
may or may not be done. If there is no
or under the authority ofthe
permission given to delegate, then all must party drawing, accepting,
join in drawing cheques. or indorsing, as the case may
It frequently happens that the trustees of be :
a church , or chapel, or association , desire ' (6) may be shown to have been
that cheques may be signed by only a few conditional or for a special
of their number, and in suchcases the trust purpose only, and not for the
deed should be consulted . Where trustees
are numerous , it seems reasonable that a few purpose of transferring the
property in the bill .
should act for the many, but a banker would,
nevertheless, be liable if the few , acting on a “ But if the bill be in the hands
of a holder in due course a valid
mandate from the whole body, drew cheques
and misappropriated the money, unless the delivery of the bill by all parties
trust deed sanctioned the delegation. prior to him so as to make them
An agent, or secretary, or treasurer, or liable to him is conclusively pre
manager, or other person deriving authority sumed .
from a principal cannotdelegate his authority “ ( 3) Where a bill is no longer in the
unless there is an agreement express or possession of a party who has
implied to allow it. signed it as drawer, acceptor, or
222
DEL ) DICTIONARY OF BANKING [DEL

on payment of the cash order, the delivery

indorser, a valid and unconditional
delivery by him is presumed until order is given to the person entitled to it.
the contrary is proved ." The following is a form of letter from a
Just as a deed is of no legal effect until bank sending a delivery order to another
it has been delivered , so, it is seen from the bank :
above Section , a bill of exchange is incom
plete and revocable until delivery of the Leeds . 19
instrument, in order to give effect thereto . THE BRITISH BANK, LIMITED ,
Where a cheque is stolen from, or lost by,
the drawer beforehe has issued it, the thiet beg to enclose herewith Delivery
or finder of the cheque would have no claim order for parcels marked
againstthe drawer ; but if the cheque gets which please hand to Mr.
into the hands of an innocent holder for
value, he would (according tothe judgment on payment of ££
in Ingham v. Primrose, 1859, 28 L.J. ,
Please
C.P. 294) have the rightto enforce payment credit retain the
uswith the order till. called for, and
proceeds
against the drawer . When this case was
reviewed by Brett L.J. in Baxendale v. To the X & Y Bank, Ltd.,
Carlisle .
Bennett ( 1878, 3 Q.B.D. 525 ) he said that he
did not agree with it. The following are copies of two delivery
As regards the position of a banker with orders :
respect to the payment of a cheque which King Street,
has not been legally " issued,” Heber Hart,
5) 00
Leeds .
19 .

in “ The Law of Banking,” says : If the To the GOODS AGENT,

customer's negligence has caused the pay Railway Coy.,
ment of the cheque, he will be chargeable Carlisle .
with its amount. In considering whether
Please
hehas been guilty of negligence , his sent to my Mr. marked
ordertheto parcels
deliver
relation to the banker must be borne
in mind .” See the remarks as to negligence JOHN BROWN.
No.
in the case London Joint Stock Bank ,
Bonded Warehouses .
Ltd. v. Macmillan and Arthur, under
ALTERATIONS . 19 .
In Baxendale v. Bennett ( 1878 , 3 Q.B.D. To the SUPERINTENDENT at H.M. Customs.
525) , where an acceptance in blank by the Warehouse No.
defendant had been stolen and a drawer's Please deliver the undernoted
name was filled in, an action was brought to the order of
on it by the plaintiff as indorsee for value. or assigns by indorsement hereon on payment
It was held that the defendant was not
liable on the bill, as he had not authorised of rent and charges from
Mark
any one to fill in a drawer's name and had No.
not issued the acceptance . (See STOLEN
Contents
BILL, STOLEN CHEQUE.)
Entd . J. JONES & Coy .
(See BILL OF EXCHANGE, NEGOTIATION OF
Unless the holder of a delivery order at
BILL OF EXCHANGE, ISSUE OF BILL, TRANS-
FEROR BY DELIVERY. ) once obtains delivery of the goods, or
DELIVERY OF CHEQUE. (See DELIVERY obtains in place of it a warrant or receipt
OF BILL.) from the warehouse -keeper, or gets his title
DELIVERY OF DEED. (See DEED.) to the goods registered in the books of the
DELIVERY ORDER . An order addressed warehouse -keeper, the holder runs the risk
to a railway company, shipping company, of a second delivery order being acted upon .
dock company, or superintendent of ware Te o Wherena delivery order wasindorsedover
houses, to deliver certain goods to the person to a bank as security, it was held ( Imperial
named therein . Such orders are sometimes Bank v. London and St.Katharine's Dock Coy .,
sent to a bank from a correspondent to be 1877, 5 Ch. D. 195) that the bank were not
handed over to the right party on payment the actual owners and had only a modified
of the sum named. In some cases a cash ownership in the goods. The bank could
order is attached to the delivery order, and have sent a representative with the delivery
223
DEL) DICTIONARY OF BANKING [DEP

order to the docks and obtained the goods, charged by the Stamp Act, 1891, shall cease
or a dock warrant in exchange for the order. to be chargeable . (See FACTORS ACT,
The bank, however, merely lodged it at the WARRANT FOR GOODS.)
company's London office with a request for DEMISE . A word used to express the
dock warrants to be made out as soon as granting of a lease.
possible. In the meantime a third party , The tenant of a copyhold cannot, as a rule,
without notice of the bank's claim , had demise the property for more than a year
obtained a second delivery order, and had unless by licence of the Lord of the
taken it direct to the dock's office and Manor.
obtained a dock warrant (that is, a receipt DEMONETISE . When a coin is officially
by the dock company stating that the goods withdrawn from circulation it is said to be
were entered in his name in their books). demonetised. Pre- Victorian gold coins were
It was held that “there is no delivery or demonetised when they were withdrawn
constructive possession until the delivery from circulation under the Coinage Act of
order gets down to the docks, and is 1889, and the Royal Proclamation of 1890.
recognised by an entry in the dock books." Such a demonetised coin is no longer legal
When delivery orders are taken as security, tender.
the banker's letter of lien (stamped 6d.) DENOMINATION . The denomination of a
should be signed by the customer, and the bearer bond is the amount of the bond, as £ 20,
bank should instruct the warehouse -keeper £100.
to store the goods in the bank's name. In DENOTED. A deed is said to have been
the event of the owner's bankruptcy before denoted when it is impressed with aa denoting
the goods are registered in the bank's name stamp. (See DENOTING STAMPS.)
the property will vest in the trustee in DENOTING STAMPS . The Stamp Act,
bankruptcy. 1891 Section 11 :
When a bankissuesdelivery orders toa
customer against goods warehoused in the
Where the duty with whichan instru
ment is chargeable depends in any manner
bank's name the customer should undertake upon the duty paid upon another instrument,
to pay the proceeds to the bank . The form the payment of the last-mentioned duty
to be used may be as follows : shall, upon application to the Commissioners
and production of both the instruments, be
TO THE BRITISH BANK , LTD . denoted upon the first -mentioned instrument
We have received delivery order upon in such manner as the Commissioners think
for fit." ( See MORTGAGE.)
The denoting stamp states the amount of
ex warehoused the stamp which appears on the original or
in your name, and held by you by way of primary deed.
pledge for No. A denoting stamp is not required on the
for £ and which delivery counterpart of a lease . See Section 72,
order has been handed to us for the purpose Stamp Act, 1891, under DUPLICATE .
the sale which See also Section 4, s.s. 3, of the Finance
of enabli
we ng us to comple
have contracted for onteyour behalf with (1909-10) Act, 1910, under INCREMENT VALUE
Duty. See Section 42 Finance Act, 1920,
under CONVEYANCE .
and in consideration thereof we hereby DEPONENT . A person who makes an
undertake to pay to you the proceeds of the affidavit to any statement of fact, or who
said Merchandise immediately and specific- givesevidence upon oath.
ally as received, in accordance with the ACCOUNTS . When money
directions which we have already received leftDEPOSIT
on deposit is
with a bank, the depositor
from you to that effect. may receive the bank's deposit receipt for
The said Merchandise is valued at £ it, but in some districts customers prefer
and payment is due to have a pass book, instead of a receipt,
Yours faithfully ,
as being less likely to get lost, it being under
stood that the rate of interest they are to
(See WAREHOUSE -KEEPER'S CERTIFICATE receive will be the same as is allowed upon
OR Receipt.) the ordinary deposit receipts. The pass
Section 5 of the Finance Act, 1905, enacts book would not necessarily be required to be
that the stamp duty on a delivery order produced each time any money is repaid,
224
DEP] DICTIONARY OF BANKING (DEP

unless that was the arrangement between tried in connection with small deposits ,
the bank and its customer . see BANK ORDER. (See Deposit RECEIPT,
On an account of this kind, cheques should Pass Book .)
be drawn only when the customer wishes DEPOSIT LEDGER . In addition to the
to withdraw part of the money. If the consecutive list of deposit receipts as given
account becomes an operating one, it would in the deposit register (q.v.) an account is
no longer be regarded as a deposit account opened for each depositor in the deposit
but as an ordinary current account, and be ledger. Under the depositor's name is
subject to the usual rates for current shown at a glance all the transactions which
accounts. When a customer wishes to issue he has had with deposit receipts, the receipts
cheques on a deposit account, he should issued being placed to his credit, while he is
transfer the balance to current account. A debited with all those which are paid or
banker does not, as a rule, raise objection renewed ; the distinctive numbers of the
to an occasional cheque being issued on a receipts are quoted. The balance of the
deposit account. account represents the total of all the re
In some banks when money is withdrawn ceipts which are still in his possession, which
from a deposit account, the customer simply receipts will be found also in the deposit
gives a receipt for it, the receipt being register as outstanding.
stamped twopence if for £2 and upwards. The total of all the balances shown in the
The following is a form of receipt : deposit ledger should agree with the total
19 .
ofthe outstanding receipts in the register,
which totals should be the same as the
RECEIVED OF BRITISH BANK, LTD ., balance of the deposit receipt account in
Branch . the general ledger.
the sum of pounds, shillings, Accounts may also be opened in a special
and pence, withdrawn from ledger or in a separate part of the deposit
Deposit Account No. ledger for customers with deposit books.
The correctness of the ledger should be
proved at regular intervals. (See DEPOSIT
RECEIPT.)
ť Stamp. DEPOSIT OF MORTGAGE . When a
mortgage deed to a customer is deposited ,
along with the deeds of the property, as
security for an advance, a banker usually
The signature on a receipt should not be takes a special form of charge under which
cancelled. the mortgage debt is absolutely assigned to
Some banks supply a special form of pass the banker . The banker should at once
book for deposit accounts where a deposit give notice to the mortgagor that the debt
receipt is not asked for, the book beir3 has been assigned to him and obtain from
practically the same as that issued by the the mortgagor an acknowledgment of the
Post Office Savings Bank . Each item in notice. Until notice is given the mortgagor
the book is initialled by the cashier receiving | may repay the debt to the customer, the
the money or making a payment, and the assignor, but after notice the mortgagor
book must be produced every time that a must repay to the banker, the assignee.
transaction takes place. A pass book of The banker should , when giving the notice,
this kind usually carries, in bold type, some ascertain from the mortgagor the actual
such heading as the following , “ Moneys in amount then owing under the mortgage.
this account bear interest and are subject If it is clear fromthe instrument assigning
to days' notice when withdrawn . the debt that the intention was to pass all
Interest to cease when notice is given. No the rights of the assignor in the debt to
payment will be made except on production the assignee, an action must be brought in
of this book.” ( The notice referred to is the name of the assignee, but if the intention
not always insisted upon .) was to give a charge only, then an action
Deposit pass books generally bear aa must be in the assignor's name ( Hughes
running number, of which a register is kept V. Pump House Hotel Co. , Ltd. , 1902,
giving the name of the depositor, the number 2 K.B. 190) . (See further under DEBTS,
of the book and the date when issued . As ASSIGNMENT OF ; MORTGAGE ; TRANSFER OF
to the Bank Order scheme which has been MORTGAGE.)
225
15441535)
 DEP ) DICTIONARY OF BANKING (DEP

authority from the others to obtain the A banker generally endeavours to avoid
money . issuing a deposit receipt which bears any
If á depositor is unable to write, his mark reference to a trust.
is required by most bankers to be witnessed Deposit receipts are often issued in the
by two persons, one of whom should, if names of minors, and it is understood that
possible, be an outside individual who is a minor may give a good discharge for the
well known to the banker, and the other may money .
be an official of the bank . It is very necessary that a deposit receipt
No part of the amount for which a deposit be indorsed by the depositor when it is being
receipt has been given should be paid unless renewed, for if it should be renowed in
the receipt is produced. another name by someone not entitled to
Where a deposit receipt is left as security transfer it, the banker may find himself
with the banker who issued it, the depositor's liable both for the new receipt and for the
indorsement should be obtained and a letter amount of the undischarged old receipt.
or memorandum taken , stating the purpose When a receipt is presented for paymnet
for which it has been lodged. In some cases it should, before being paid, be compared
a cheque signed by the depositor and made with the register of receipts to see that it
payable to the banker may be taken with agrees in all particulars with the entry
advantage. If it is the receipt of another therein, that the amount is still outstanding,
banker, notice should be given to that and that no note of a lien or charge of any
banker . kind is recorded against it. For better
If a customer has both a current account identification , if necessary , of the depositor,
and a deposit receipt, and his account his indorsement on the receipt may be com
becomes overdrawn, the banker is quite pared with the specimen signature which
justified in regarding the deposit receipt as would be taken when the depositor originally
a set off, and he can refuse to pay the receipt lodged the money. The depositor's indorse
so long as it is necessary for him to hold the ment, or receipt, must be across a twopenny
amount against the overdraft . If the adhesive stamp, or two penny stamps,
customer becomes bankrupt, the banker's unless the deposit is already impressed with
lien is not affected . A note ofany overdraft a stamp in readiness for the depositor's
should be made against the entry in the receipt. A receipt for withdrawal of
deposit register. principal or interest of less than £ 2 does not
In the case of a receipt which is subject require a stamp. Where a deposit receipt is
to a specified notice, interest ceases at the renewed for a larger amount, and is indorsed ,
expiration of the notice. e.g. amount increased , John Brown , " or
Receipts which are issued subject to a receipt is indorsed " transferred to current
several days' notice are commonly paid account, John Brown ," a stamp is not
without the notice being required . necessary . Whenever the printed form of
A fixed deposit is one where the money is receipt is signed , it must be stamped, if
left with the banker for aa certain fixed period, for £2 or over . The customer's signature
and for which a better rate of interest can should not be cancelled .
be allowed than if the money were repayable The deposit receipt itself, that is, the
on demand or at a few days' notice. When receipt given by the banker, is exempt from
fixed deposits are issued a record should be stamp duty. The exemption granted by the
kept of them in a diary under the date when Stamp Act, 1891 ( see under RECEIPT), is as
they are due to be repaid. Deposits of this follows :~ " Receipt given for money de
nature are most common in foreign and posited in any bank, or with any banker, to
colonial banks. The Indian banks in par- be accounted for and expressed to be received
ticular have always made a feature of taking of the person to whom the same is to be
long - term deposits. Income tax must be accounted for."
deducted from the interest payable by Deposit receipt forms are usually bound
colonial banks in London upon fixed deposits with counterfoils in books, and are numbered
for a year or more. consecutively, each counterfoil bearing the
A receipt issued at one branch should not, same number as the corresponding receipt.
as a rule, be paid at another branch, unless In some banks the counterfoil, filled up
advice has been received from the issuing with particulars of a receipt which is being
branch to pay it. It should be forwarded issued, is signed by the depositor.
for collection and credit of proceeds. The clerk who writes out a deposit receipt
228
DIP ] DICTIONARY OF BANKING (DEP

should do so from the application form , and deposit receipts which have been issued
particulars should also be entered upon the by a bank . The amounts should be entered
counterfoil which remains in the book of from the application forms signed by the
receipt forms ; indeed , it is a good plan to depositor, in the order in which they are
write up the counterfoil first. Before the issued, and the entries should be numbered
receipt is signed by the manager or other consecutively , the numbers being the same
authorised official, both the receipt and the as appear on the face of the receipts which
counterfoil should be compared by another have been issued . In addition to the date
clerk with the application form and initialled , and the number, the depositor's name and
if correct. It is better to make out a new address should be given and the amount of
receipt than to issue one with any material the receipt. A note should also be made of
alteration . A slovenly written receipt any particulars relative to the receipt, such
should not be issued from any bank office. as repayable to either party ” (if it is in
A receipt form spoiled in this way should two names and either may sign ), “ all must
not be destroyed, but kept for reference ; sign," current account is overdrawn,"
it may, conveniently , be pinned behind its “ receipt said to be lost," " refer to Manager
counterfoil. before paying ." If a receipt form has been
A deposit receipt payable on demand or spoiled when being filled up, the spoiled
at a fixed date may be attached by a form should not bedestroyed but should be
garnishee order. See GARNISHEE ORDER. clearly marked “ spoiled ” and preserved as
Where a receipt has been lost, an in- evidence of what has become of that number.
demnity should be required before the money A convenient way of preserving it is to attach
is paid or a fresh receipt issued. Paget it to the counterfoil. A record should be
says (page 31, “The Law of Banking " ). " A kept in the register against the number of
deposit receipt not being a negotiable instru- the form that it has been spoiled.
ment, the bank is not entitled to exact an When a receipt has been paid , the entry
indemnity from the depositor before paying in the register is written off with the date of
.
him , if he has lost the receipt." payment.
A banker is released by the Statute of There is usually an index to the register,
Limitations from liability on a deposit so that by turning up a depositor's name,
receipt more than six years old ,and in regard when the number of his receipt is not known,
to which he has not meanwhile acknowledged the entry may be quickly found. The
the depositor's claim by payment of interest index should show against each name the
or in any other way, but no banker ever numbers of all the receipts which have been
thinks of setting up this right. Deposit issued to that customer, and when any
receipts are always paid, however old they receipts are paid the numbers should be
maybe, on satisfactoryproof of the identity crossed out of the index. Where a deposit
of the depositor or his legal representatives. ledger is also kept, particulars can be more
At one time, deposit receipts in joint readily obtained from it than from the
names were sometimes cut in two, where register.
there were two depositors, and each person The total of all the receipts shown in the
took a half. If a receipt was drawn in the register as outstanding should agree with the
names of three persons, the document balance of the deposit receipt account in the
was cut into three pieces, and each party general ledger, and the register should be
received a plece . When repayment was proved at regular intervals . (See DEPOSIT
required, each party had to take the portion LEDGER, DEPOSIT RECEIPT .)
in his possession to the bank and indorse it. DEPRECIATED CURRENCY. If a
When the banker received the three pieces sovereign, or other coin, does not contain the
he fastened them together and then paid the weight of gold, or silver, as prescribed by
money . law , it is said to be “ depreciated .”
(See BANK ORDER, DEATH OF CUSTOMER, If a bank note passes current for less than
DEPOSIT ACCOUNTS, DEPOSIT LEDGER , DE- the amount of the note, the note is said to
POSIT REGISTER, DONATIO MORTIS Causâ, be " depreciated .” (See COINAGE.)
GARNISHEE ORDER, INCOME TAX, INTEREST DEPRECIATION . A term denoting the
ON DEPOSIT RECEIPT, Lost DEPOSIT RE- reduction in value which takes place in
CEIPT, STATUTE OF LIMITATIONS .) works, buildings, machinery, etc., as the
DEPOSIT REGISTER . The deposit result of being used or becoming old
register contains a complete list of all the fashioned or obsolete.
229
DES ) DICTIONARY OF BANKING (DIR 3

In examining the balance sheet of a busi- received by a speculator in stocks and shares
ness concern , it should be noted whether a when a transaction is carried , or continued ,
satisfactory amount has been provided from from one account to another. If a specu
the profits for depreciation . What that lator bought £ 1,000 worth of stock at £ 100
amount should be depends in a great and the price fell so that the making-up
measure upon the particular circumstances price was fixed at 99, he would, on the
of each case . The principal points to be transaction being continued, pay the differ
considered in determining the amount of ence of £10 to his broker, but if, on the
depreciation are :-The original cost, the other hand, the making -up price was fixed
probable life of the object, and the residual at £ 101 he would receive the difference
orbreak-up value. of £10 from the broker . (See STOCK
The amount of depreciation to be written EXCHANGE .)
off an asset should not vary according to the DIMINUTION IN VALUE . If a certain
profits available. quantity of gold will purchase so much
With regard to general machinery , it is silver, then if the supply of silver increases
said that a 71 per cent. rate should be so that the same gold will purchase more
sufficient to provide for ordinary wear and silver, the silver has suffered a “diminution
tear, or 10 per cent. if the conditions of in value," or in other words has depreciated .
working are unusually trying ; in the case (See Money.)
of freehold buildings, apart from the land, DINAR . (See FOREIGN MONEYS - SERBIA .)
from 1 to 2 per cent ., boilers 10 per cent. , DIRECTORS. The directors of a com
and shafting 5 per cent. pany are the members who are chosen by the
DESTROYED BANK NOTE . Where other shareholders to direct or conduct the
notes have been partly or wholly destroyed, | business of the company. The directors, in
their value can be recovered from the bank some cases, meet every day and are practi
which issued them , provided that full par- cally acting managers of the company ; but
ticulars, including the numbers, are supplied, in other cases they meet only at intervals,
and that the bank is otherwise satisfied . often just once a week, when all the impor
The bank would , naturally, require a suffi- tant business of the week is brought before
cient indemnity to be given before paying them . There is usually a chairman and a
notes which are stated to have been de- vice- chairman, and the whole body is called
stroyed . ( See Lost Bank Note .) the board of directors . The room in which
DEVELOPMENT BONDS. A name some- they meet is the board room , in allusion to
times given to bonds (registered or bearer) the board or table at which they sit.
which are issued by a company for the The powers of directors are limited to the
purpose of raising money for the develop- provisions of the memorandum and articles
ment of its business. (See BEARER Bonds, of association of the company.
REGISTERED BOND .) Directors have been called trustees for the
DEVISEE. The person to whom " real" company, but in Smith v. Anderson ( 1880,
property ( see REALTY) is left, or devised , in 15 Ch . D. 247) , Lord Justice James said :
a will, is called the devisee. The person who " A trustee is a man who is the owner of
takes all the real property remaining after the property, and deals with it as a principal,
the devisees have received their shares, as owner, and as master, subject only to an
is called the residuary devisee. (See equitable obligation to account to some per
LEGATEE .) sons to whom he stands in the relation of
DIARIES. Diaries are kept for various trustee, and who are his cestuis que trustent.
purposes. In addition to a diary for the The same individual may fill the office of
dates on which overdraft or loan limits expire director and also be a trustee having pro
and other specialmatters requiring attention, perty, but that is a rare, exceptional, and
there are bill diaries, showing the bills which casual circumstance. The office of director
mature on the various dates, a coupon is that of a paid servant of the company.
diary, a diary for recording the dates on A director never enters into a contract for
which premiums on fire policies and on life himself, but he enters into contracts for
policies are due, and a special form of diary his principal, that is, for the company of
for payments, such as subscriptions, which whom he is a director, and for whom he is
have to be made on the same day in each acting. He cannot sue on such contracts,
year. nor be sued on them , unless he exceeds his
DIFFERENCES. The sums paid or authority."
230
DIR ) DICTIONARY OF BANKING (DIR

Jessel, M.R., said ( in In re Forest of Dean | Table A ( see Section 11 under ARTICLES OP
Coal Company, 1879, 10 Ch. D. 450) : ASSOCIATION ), Rule 70 , says the qualification
.

“ Directors have sometimes been called of a director shall be the holding of at least
trustees or commercial trustees, and some- one share in the company.
times they have been called managing It shall be the duty of every director who
partners ; it does not matter much what is by the regulations of the company re
you call them , so long as you understand quired to hold a specified share qualification,
what their true position is, which is that and who is not already qualified, to obtain
they are really commercial men managing his qualification within two months after his
a trading concern for the benefit of them appointment or such shorter time as may
selves and of all the other shareholders in it. be fixed by the regulations of the company.
They are bound, no doubt, to use reasonable The officeof director shall be vacated if he
diligence having regard to their position, does not obtain his qualification within that
though probably an ordinary director, who time, or if after the expiration of such
only attends at theboard occasionally, can period he ceases at any time to hold his
not be expected to devote as much time and qualification. (Section 73.) The shares
attention to the business as the sole managing may be either his own property , or held by
partner of an ordinary partnership, but they him as a joint holder .
are bound to use fair and reasonable diligence Every company must keep a register of the
in the management of their company's names and addresses and occupations of its
affairs, and to act honestly . But where with directors and managers, and furnish a copy
out fraud and without dishonesty they have thereof to the registrar of companies and
omitted to get in a debt due to the company notify any changes (Section 75) . (See
by not suing within time, or because the REGISTER OF DIRECTORS.)
man was solvent at one moment and became In a limited company the liability of the
insolvent at another, I am of opinion that it directors may, if so provided by the memor
by no means follows as a matter of course , as andum , be unlimited (Section 60) .
it might in the case of ordinary trustees of A limited company, if so authorised by its
trust funds or of a trust debt, that they are articles, may, by special resolution , alter its
to be made liable ." memorandum so as to render unlimited the
In re Brazilian Rubber Plantations Co. , liability of its directors or managers ( Section
Ltd. (1910, 103 L.T. 697), it was held that 61).
A director's duty requires him to act with The balance sheet of a company must be
such care as is reasonably to be expected signed by two directors, or if there is only
from him , having regard to his knowledge one director, by that director. (Section
and experience. He is not bound to bring 113 s.s. 3.) In the case of a banking
any special qualification to his office, but company registered after August 15, 1879,
if he is acquainted with the particular the balance sheet must be signed byat least
business carried on by the company, he three directors. (Section 113, s.s. 5.) See
must give the company the advantage of that Section under AUDITORS.
his knowledge when transacting the com- The following are a few of the rules
pany's business. He is not bound to take where Table A applies :—The directors may
any definite part in the conduct of the appoint one of their number to be managing
company's business, but so far as he does director at such remuneration as they think
undertake it he must use reasonable care fit and he shall not, while holding that office,
in its despatch . Such reasonable care must be subject to retirement by rotation (Rule 72) .
be measured by the care an ordinary man Theamount borrowed by the directors for
might be expected to take in the same cir- the purposes of the company ( otherwise than
cumstances on his own behalf. He is not by the issue of share capital) shall not at any
.

responsible for errors of judgment. " time exceed the issued share capital without
See thecase of Dey v . Pullinger Engineer- the sanction of the company in general meet
ing Co., Ltd., under COMPANIES.
) ing (Rule 73) .
The number of shares which a director Every director present at a meeting or
must hold in the company to qualify him committee of directors shall sign his name
for the post of director, depends upon the in a book kept for that purpose (Rule 75).
terms of the articles of association . The The seal shall not be affixed except by the
Companies (Consolidation) Act, 1908, does authority of a resolution of the board and in
not provide for any special qualification, but the presence of two directors and the secretary
231
DIS) DICTIONARY OF BANKING
or other person appointed for the pur
pose, who shall sign every instrument to
which the seal is affixed in their presence
(Rule 76) .
The office of director shall be vacated if he
holds any other office of profit under the
company, or participates in the profits of any
contract with the company (Rule 77) .
Every year at the ordinary meeting one
third of the directors for the time being, or if
their number is not three or a multiple of
three, then the number nearest to one- third,
shall retire from office. The directors to
retire shall be those who have been longest in
office since their last election. A retiring
director shall be eligible for re -election
(Rules 78 to 80).
A minute book of all proceedings of direc
tors must be kept. (See MINUTES.)
Any casual vacancy may be filled up by
the directors. (See COMPANIES, Minutes.)
The annual list of members of a company
must include the names and addresses of the
directors. See Section 26, s.s. 2 (1) , under
REGISTER OF MEMBERS OF COMPANY.
Furtherparticulars of directors arerequired
by the Companies ( Particulars as to Direc
tors) Act, 1917, see under REGISTRATION
OF BUSINESS NAMES .
DISCHARGE OF BANKRUPT. The regu
lations regarding thedischarge of a bankrupt
are contained in Section 26 ofthe Bankruptcy
Act, 1914 :
“ (1) A bankrupt may, at any time after
being adjudged bankrupt, apply to
the court for an order of discharge,
and the court shall appoint a day for
hearing the application, but the
application shall not be heard
until the public examination of
the bankrupt is concluded. The
application shall, except when the
court in accordance with rules under
this Act otherwise directs, be heard
in open court.
" (2) On thehearing of the application the
court shall take into consideration a
report of the official receiver as to
the bankrupt's conduct and affairs
(including a report as to the bank
rupt's conduct during the proceed
ings under his bankruptcy ), and may
either grant or refuse an absolute
order of discharge, or suspend the
operation of the order for аa specified
time, or grant an order of discharge
subject to any conditions with
respect to any earnings or income
232
(DIS
which may afterwards become due
to the bankrupt, or with respect
to his after -acquired property :
Provided that the court shallrefuse
the discharge in all cases where the
bankrupt has committed any mis
demeanour under this Act or any
enactment repealed by this Act, or
any other misdemeanour connected
with his bankruptcy, or any felony
connected with his bankruptcy ,
unless for special reasons the court
otherwise determines, and shall, on
proof of any of the facts hereinafter
mentioned , either
“ (i) refuse the discharge ; or
(ii) suspend the discharge for a
period of not less than two
years : provided that the
period may be less than two
years, if the only fact proved
of those hereinafter men
tioned is that his assets are
not of a value equal to ten
shillings in the pound on the
amount of his unsecured
liabilities ; or
60
' (iii) suspend the discharge until
a dividend of not less than
ten shillings in the pound has
been paid to the creditors ;
or
" (iv) require the bankrupt as a
condition of his discharge to
consent to judgment being
entered against him by the
official receiver or trustee
for any balance or part of
any balance of the debts
provable under the bank
ruptcy which is not satisfied
at the date of the discharge,
such balance or part of any
balance of the debts to be
paid out of the future earn
ings or after acquired pro
perty of the bankrupt in such
manner and subject to such
conditions as the court may
direct ; but execution shall
not be issued on the judg
ment without leave of the
court, which leave may be
given on proof that the
bankrupt has since his dis
charge acquired property or
income available towards
payment of his debts :
DIS] DICTIONARY OF BANKING
“ Provided that, if at any time
after the expiration of two years
from the date of any order made
under this Section the bankrupt
satisfies the court that there is no
reasonable probability of his being
in a position to comply with the
terms of such order , the court may
modify the terms of the order, or of
any substituted order, in such man
ner and upon such conditions as it
may thinkfit.
" (3) The facts hereinbefore referred to
are :
" (a) That the bankrupt's assets are
not of a value equal to ten
shillings in the pound on the
amount of his unsecured
liabilities, unless he satisfies
the court that the fact that
the assets are not of a value
equal to ten shillings in the
pound on the amount of
his unsecured liabilities has
arisen from circumstances
for which he cannot justly be
held responsible :
“ (6) That the bankrupt has omit
ted to keep such books of
account as are usual and
proper in the business car
ried on by him and as suffi
ciently disclose his business
transactions and financial
position within the three
years immediately preceding
his bankruptcy :
" (c) That the bankrupt has
continued to trade after
knowing himself to be
insolvent :
“ ( d) That the bankrupt has con-
tracted any debt provable
in the bankruptcy without
having at the time of con
tracting it any reasonable
orprobable ground of expec .
tation (proof whereof shall
lie on him ) of being able to
pay it :
“ (e) That the bankrupt has failed
to account satisfactorily for
any loss of assets or for any
deficiency of assets to meet
his liabilities :
" U ) That the bankrupt has
A discharged bankrupt shall, notwith
brought on , or contributed standing his discharge , give such assistance
to , his bankruptcy by rash as the trustee may require in the realisation
233
(DIS
and hazardous speculations,
or by unjustifiable extrava
gance in living, or by gam
bling, or by culpable neglect
of his business affairs :
“ ( 8) That the bankrupt has put
any of his creditors to un
necessary expense by a frivo
lous or vexatious defence to
any action properly brought
against him :
" (h) That the bankrupt has,
within three months pre
ceding the date of the
receiving order, incurred un
justifiable expense by bring
ing a frivolous or vexatious
action :
" ( i) That the bankrupt has,within
three months preceding the
date of the receiving order,
when unable to pay his debts
as they become due, given
an undue preference to any
of his creditors :
“6 ) That the bankrupt has,within
three months preceding the
date of the receiving order,
incurred liabilities with a
view of making his assets
equal to ten shillings in the
pound on the amount of his
unsecured liabilities :
" ( k) That the bankrupt has, on
any previous occasion , been
adjudged bankrupt, or made
a composition or arrange
ment with his creditors :
" ( ) That the bankrupt has been
guilty of any fraud or frau
dulent breach of trust.
“ (5) For the purposes of this Section a
bankrupt's assets shall be deemed
of a value equal to ten shillingsin the
pound on the amount of his un
secured liabilities when the court is
satisfied that the property of the
bankrupt has realised , or is likely
to realise, or with due care in realisa
tion might have realised, an amount
equal to ten shillings in the pound on
his unsecured liabilities, and a report
by the official receiver or the trustee
shall be prima facie evidence of the
amount of such liabilities. "
 !

DISJ DICTIONARY OP BANKING DIS

of such of his property as is vested in the January 1at the same rate for twelve months
trustee, and if he fails to do so the court the banker only pays over £950, the £50
may, if it thinks fit, revoke his discharge. being credited at once to his discount ac
(s.s. 9.) count, so that the banker practically obtains
(See BANKRUPT PERSON, BANKRUPTCY .) the same amount of interest for a loan of
DISCHARGED BANKRUPT. A bankrupt £ 950, when granted by discounting a bill, as
who has been formally discharged by the he does upon an ordinary loan of £ 1,000 ;
Court of Bankruptcy. As to dealings with and his profit is therefore more than 5 per
an undischarged bankrupt, see BANKRUPT cent., in fact about 5 per cent., and besides
PERSON. (See also DISCHARGE OF BANKRUPT.) he has the use of his profit (650) for the
DISCHARGED BILL. A bill of exchange twelve months.
is discharged when payment is made in due The following table shows the difference
course by or on behalf of the drawee or in profit per cent. per annum between lend
acceptor . There is no right of action upon a ing money by way of interest and by way of

CovoaWN
discharged bill, but a holder may have the discount :
right to sue upon the transaction , apart from
the bill. Interest, Discount. loterest. Discount,
Where a bill is intentionally cancelled by
the holder or his agent, the bill is discharged. 1 *010101 20 25.000000
See Section 63, Bills of Exchange Act, 1882, 2.040816 30 42.857142
under CANCELLATION OF BILL OF EXCHANGE . 3.09 2783 40 66.666666
4.166666 50 100.000000
See other Sections under PAYMENT OF BILL.
6*263157 60 160.000000
When a banker has paid his customer's 6.382968 70 233.000000
acceptance he cancels the acceptor's signa 7.526881 80 400.000000
turein the same way as he would cancel the 8 8*695662 90 900.000000
9.890109 100 Infinite .
drawer's signature on a cheque. (See Pay 10 11 • 111111
MENT OF BILL.)
DISCLAIMER . A renunciation . An
example of a disclaimer is found in con- From this table it is seen that if a sum
nection with bankruptcy proceedings . By of £100 is lent at 20 per cent. the lender
Section 54 of the Bankruptcy Act, 1914 , a would receive £ 100 at the end of a year plus
trustee may disclaim any portion of the £ 20 for interest, that is a profit of 20
bankrupt's land of any tenure which is per cent. ; but if he discounted a bill for
burdened with onerous covenants, or any 2100 at the rate of 20 per cent. he would
shares or stock in companies, or unprofitable advance only £80 and at the year end he
contracts, etc. would receive payment of £100, that is he
The term may be applied to other matters would receive 20 for a loan of £80, or a
where a renunciation or repudiation is desired. profit of 25 per cent.
DISCOUNT. The amount of deduction The rate at which a bill is discounted is
which is allowed for immediate payment of a partly dependent upon the Bank of England
debt which is not yet due. A tradesman Rate, the length of time which will elapse
may allow discount if, instead of credit being before the bill matures, and the quality of the
taken, payment is made in cash ; and so bill. If there is any doubt as to payment of
in the case of a bill of exchange, if he receives the bill at maturity, the risk is taken into
payment at once instead of waiting until account by charging a higher rate than in the
the bill falls due, discount is allowed . But case of a bill which may be regarded as prac
from a banker's point of view , the usual way tically certain to be paid when due.
to regard discount is to look upon it prac A banker's discount is different from a
tically as interest charged for a loan of the true discount. A banker's discount is not
amount until the bill is due. The difference really interest upon the actual amount
between interest for a loan and discount on a advanced, but interest upon the amount
bill is that the interest is not payable , in an that is to be repaid . True discount is ascer
ordinary way, until the end of a half -year, tained, e.g. by finding what amount at 5
whereas the discount is paid at the time the per cent. will produce £ 100 in twelve months'
bill is discounted, e.g. if a loan of £ 1,000 is time. £l at 5 per cent. will be £ 1 1s. at the
granted on January 1 at 5 per cent. interest, end of a year, and if £1 Is. is the value of £1 ,
the interest due at December 31 will be £ 50 ; it is found by proportion that £ 100 is the
but if a bill for £1,000 is discounted on value at the end of the twelve months of
234
DIS] DICTIONARY OF BANKING [DIS

£ 95 4s. 93d. The true discount is therefore brought to be discounted, aa banker will con
4 15s. 21d. (that is, 5 per cent. on sider the position of the acceptor Brown. If
£ 95 4s. 91d .), whilst the banker's discount is Brown's account is at another bank , what
£ 5 (equal, as shown above, to a rate of, say, sort of a banker's opinion is held regarding
540 per cent.) . him , is the opinion a recent one, and how
DISCOUNT, AT A. When the market many other bills accepted by Brown are in
value of bonds, stocks, or shares is less than the bill case ? Have any of Brown's accept
the nominalvalue, they are said to be at a ances ever been dishonoured ? If Jones is
discount. Where the market value is the person who wants the bill discounted,
greater, they are at a premium . A share of the banker will note the total amount of bills
£i , fully paid, which is selling at 19s. 6d., already discounted for him and the quality
is an example of an investment which is at a of them . A certain number of the bills may
discount, or 6d. below par value. (See Par .) | be dishonoured at maturity, and the question
DISCOUNT LEDGER . In the discount arises, will Jones's account admit of the bills,
ledger an account is opened in the name of on which there is a risk , being debited to it,
each customer for whom bills are discounted, if they are returned unpaid ? It is also
and a note is made in the heading of the necessary for the banker to remember that
amount ' fixed as the discount limit. Each he may hold in his case bills accepted by
bill, as discounted , is entered in the correct Jones which he has discounted for other
account with the date when it is discounted . customers.
The acceptor's name is noted and the date If the parties to the bill are quite satisfac
when the bill is due ; also the number on the tory, other points will arise in the banker's
bill which refers to the entry in the bill mind. Is the bill a genuine trade bill, that
register is usually added . The amounts is a bill accepted by Brown because he has
are entered in a column headed “ accept- received value for it from Jones, or has
ances,” and when any bills mature the Brown accepted it merely for the accommo
amounts are entered in a column headed dation of Jones, on the understanding that
“ matured acceptances and the balance Jones himself must meet it at maturity ?
is shown in the balance column . The banker may be informed that it is an
When the balances of the discount ledger accommodation bill when it is offered to him,
are extracted , the total should agree with or he may be left to find out that fact for
the total of the bill register, also with the himself. A scrutiny of Jones's account may
total of undue bills as shown in the bill show , perhaps, that a bill for practically the
diary . same amount appears regularly every three
When a bill is dishonoured , a note of the or sixmonths, suggestingthat it is the same
fact is usually made in red ink against the bill which is being renewed time after time.
entry in the discount ledger. Is there any cross drawing between Brown
The discount ledger may also show the and Jones, thatis does Brown accept bills for
liability of each person as acceptor or indor- Jones, and Jones accept them for Brown ?
ser on billsdiscountedfor other customers . is the business between the two parties such
DISCOUNT REGISTER . The same as would justify Jones drawing on Brown ?
as
bill register (q.v.). If Jones is an iron merchant, for example,
DISCOUNTING A BILL . When a banker and Brown a grocer, it is not very likely that
discounts a bill, the customer's account is the bill would arise out of the ordinary course
credited with the amount of the bill less a of business between an iron merchant and a
deduction , called the discount. (See Dis- grocer, and the banker is put on inquiry.
COUNT.) The transaction is practically an In the words of George Rae in his “ Country
advance on the security of the bill, the Banker ” : “ It is not the province of banking
discount being, in effect, the interest charged to discount bills, the proceeds of which are to
for the loan untilthe maturity of the bill. provide the acceptors with fixed capital.
When trade bills are brought to a banker A man may properly be drawn upon against
to be discounted , there are many points goods, produce , or commodities which he is
which require to be carefully observed, in turning over in his business from day to day ;
order that a banker may avoid having his but not against his buildings or machinery.
case filled with bills which are unmarketable, These are not floating capital.” Again :
or bills which may eventually produce “ A shipowner, or ship's husband, may
endless trouble and probably disaster. properly be drawn upon for sails, or cor
If a bill drawn by Jones on Brown is dage, or stores supplied to ships, because
235
DIS) DICTIONARY OF BANKING [DIS

there is a tangible fund in his incoming financially strong, the bills are called second
freights to meet this class of marine paper ; or third class paper, as the case may be.
but when he accepts against the hull of a (See BILL REGISTER, DISCOUNT LEDGER,
ship, he passes the recognised limits of REBATE .)
negotiable value, and his paper becomes DISENTAIL . To disentail is to bar or
discredited in the estimation of the bill bring to an end an entail. Land is entailed
market. " when it is granted to a person and the heirs
A bill which is payable to John Brown of his body. The deed barring an entail is
only should not be discounted, as the bill is called a disentailing deed , and the land
not a negotiable instrument, and the banker thereafter may be dealt with at the will of the
could not, if necessary , sue upon it. owner .
A banker who discounts a bill is a “ holder Disentailing assurances and other deeds
for value ” (q.v.), and at maturity he obtains enrolled in Chancery are proved by certificates
the full proceeds . The banker has no lien of enrolment signed by the proper officer.
on the customer's credit balance for the ( See ESTATE TAIL.)
contingent liability on any maturing bills. DISHONOUR OF BILL OF EXCHANGE ,
(See LIEN . ) But where a customer is bank- | A bill is dishonoured either by non -accept
rupt, the banker may set -off a credit balance ance or by non -payment. That is, where
against the contingent liability , by virtue the person on whom a bill is drawn ( the
of Section 31 , Bankruptcy Act, 1914. ( See drawee) refuses to accept it, or where the
that Section under SET OFF. ) This right of person who by accepting the bill ( the
set -off against the contingent liability applies acceptor) agreed to pay it,fails to do so on
in the winding up of a company, but not in the day on which it is due, the bill is said to
the case of the appointment of a receiver . be dishonoured .
(See RECEIVER , WINDING UP. ) As to dishonour by non -acceptance, the
The person for whom a bill is discounted Bills of Exchange Act, 1882, provides as
must indorse it, as by indorsement he be- follows :
comes one of the parties to the bill and liable “ Section 42. When a bill is duly pre
thereon if the acceptor fails to pay it. If sented for acceptance and is not accepted
not indorsed , or drawn by him, he is not within the customary time, the person
liable on the bill, unless the bill proves to presenting it must treat it as dishonoured
be a forgery, though he may become liable by non -acceptance. If he do not, the holder
to the banker by custom or special agree- shall lose his right of recourse against the
ment. (See DISHONOUR OF BILL OF Ex- drawer and indorsers."
CHANGE, TRANSFEROR BY DELIVERY.) A drawee is by that Section entitled to
When an advance is made upon the the " customary time,” that is until the
deposit of aa bill as security, the banker is a close of business on the day following
“ holder for value ” only to the extent of the presentation for acceptance, within which to
sum he has lent upon it. accept the bill or to refuse acceptance.
The discounter of a bill may, if he wish , “ Section 43. A bill is dishonoured by
re -discount it. Bill brokers frequently re- non -acceptance
discount bills with bankers, and instead “ (a) When it is duly presented for accept
of indorsing each bill they usually give ance , and such an acceptance as is
a guarantee to cover all the bills re prescribed by this Act is refused
discounted, for example, “ In consideration or cannot be obtained : or
of your discounting for us any bills you “ (6) When presentment for acceptance
may approve and think fit from time to is excused and the bill is not
time, we hereby guarantee the due payment 00
accepted .
of them as they respectively fall due. An “( 2) Subject to the provisions of this Act,
agreement in this form was held (in ex parte when a bill is dishonoured by non
Bishop, 1880, 15 Ch.D. 400) to be equal acceptance, an immediate right of
to an indorsement of each bill by the recourse against the drawer and
brokers . indorsers accrues to the holder,
In the money market, Treasury Bills and no presentment for payment
(q.v.) and bills or drafts which bear the is necessary
names of houses of the highest standing, are “ Section 18. A bill may be accepted
classed as first - class bills, or first -class paper. (2) When it is overdue, or afterit has
Where the names are not so well known, or been dishonoured by a previous
236
 DIS) DICTIONARY OF BANKING
refusal to accept, or by non- and effectual must be given in accordance
payment :
“ ( 3) When a bill payable after sight is
dishonoured by non - acceptance,
and the drawee subsequently ac
cepts it, the holder, in the absence
of any different agreement, is
entitled to have the bill accepted
as of the date of first presentment
to the drawee for acceptance."
By Section 44 :
“ The holder of a bill may refuse to take
a qualified acceptance, and if he
does not obtain an unqualified
acceptance may treat the bill as
dishonoured by non -acceptance."
As to dishonour by non -payment, Section
47 provides
" ( 1) A bill is dishonoured by non -pay-
ment (a) when it is duly presented
for payment and payment is re
fused or cannot be obtained , or
(6 ) when presentment is excused
00
and the bill is overdue and unpaid .
" ( 2 ) Subject to the provisions of this Act,
when a bill is dishonoured by non
payment, an immediate right of
recourse against the drawer and
indorsers accrues to the holder."
Notice of dishonour must be given.
Section 48 provides as follows :
“ Subject to the provisions of this Act,
when a bill has been dishonoured by non
acceptance or by non -payment, notice of
dishonour must be given to the drawer and
each indorser, and any drawer or indorser
to whom such notice is not given is dis
charged ; Provided that
" ( 1) Where a bill is dishonoured by non
acceptance, and notice of dishonour
is not given, the rights of a holder
in due course subsequent to the
omission, shall not be prejudiced
by the omission .
“ (2) Where a bill is dishonoured by non
acceptance and due notice of
dishonour is given , it shall not be
necessary to give notice of a
subsequent dishonour by non -pay
ment unless the bill shall in the
meantime have been accepted ."
Notice to the various parties of the dis
honour of a bill must be given in strict
conformity with the regulations set forth in
Section 49, otherwise the drawer and
indorsers may be discharged. The Section is
as follows :
“ Notice of dishonour in order to be valid
237
[DIS
with the following rules : 1
“ ( 1) The notice must be given by or on
behalf of the holder, or by or on
behalf of an indorser who, at the
time of giving it, is himself liable
40
on the bill.
(2) Notice of dishonour may be given
by an agent either in his own name,
or in the name of any party entitled
to give notice whether that party
be his principal or not.
“ (3) Where the notice is given by or on
behalf of the holder, it enures for
the benefit of all subsequent holders
and all prior indorsers who have
a right of recourse against the
party to whom it is given .
“ (4) Where notice is given by or on behalf
of an indorser entitled to give notice
as hereinbefore provided, it enures
for the benefit of the holder and
all indorsers subsequent to the
party to whom notice is given .
“ (5) The notice may be given in writing
or by personal communication, and
may be given in any terms which
sufficiently identify the bill, and
intimate that the bill has been
dishonoured by non -acceptance or
non -payment.
“ (6) The return of a dishonoured bill to
the drawer or an indorser is, in
point of form , deemed a sufficient
notice of dishonour.
“ (7) A written notice need not be signed,
and an insufficient written notice
may be supplemented and validated
by verbal communication . A mis
description of the bill shall not
vitiate the notice unless the party
to whom the notice is given is in
fact misled thereby.
" (8) Where notice of dishonour is required
to be given to any person , it may
be given either to the party himself,
or to his agent in that behalf.
“ (9) Where the drawer or indorser is
dead, and the party giving notice
knows it, the notice must be given
to a personal representative if such
there be, and with the exercise of
reasonable diligence he can be
found .
“ ( 10) Where the drawer or indorser is
bankrupt, notice may be given
either to the party himself or to the
trustee .
DIS ] DICTIONARY OF BANKING (DIS

“ ( 11) Where there are two or more

Under certain circumstances the Act
drawers or indorsers who are not excuses non -notice of dishonour, or delay in
partners, notice must be given to giving notice. Section 50 provides :
each of them , unless one of them “ ( 1) Delay in giving notice of dishonour
has authority to receive such notice is excused where the delay is caused
for the others. by circumstances beyond the con
“ (12) The notice may be given as soon trol of the party giving notice, and
as the bill is dishonoured and must not imputable to his default, mis
be given within a reasonable time conduct, or negligence. When the
thereafter. cause of delay ceases to operate
“ In the absence of special circumstances the notice must be given with
notice is not deemed to have been given reasonable diligence.
within a reasonable time, unless “ (2) Notice of dishonour is dispensed
“ (a) where the person giving and with
the person to receive notice “ (a) When , after the exercise of
reside in the same place, the reasonable diligence, notice
notice is given or sent off in as required by this Act
time to reach the latter on cannot be given to or does
the day after the dishonour not reach the drawer or
of the bill ; indorser sought to be
“ (6) where the person giving and charged :
the person to receive notice “( 6) By waiver express or implied .
reside in different places, Notice of dishonour may be
the notice is sent off on the waived before the time of
day after the dishonour of giving notice has arrived ,
the bill, if there be a post at or after the omission to give
a convenient hour on that due notice :
day, and if there be no such " (c) As regards the drawer in the
post on that day then by following cases, namely, (1 )
the next post thereafter. where drawer and drawee
" (13) Where a bill when dishonoured is are the same person , (2)
in the hands of an agent, he may where the drawee is a ficti.
either himself give notice to the tious person or a person not
parties liable on the bill, or he may having capacity to contract,
give notice to his principal. If he (3) where the drawer is the
give notice to his principal, he must person to whom the bill is
do so within the same time as if he presented for payment, (4)
were the holder, and the principal where the drawee or ac

upon receipt of such notice has ceptor is as between himself

himself the same time for giving and the drawer under no
notice as if the agent had been an obligation to accept or pay
independent holder. the bill, (5) where the
“ ( 14) Where a party to a bill receives due drawer has countermanded
notice of dishonour, he has after payment :
the receipt of such notice the same ( d) As regards the indorser in
period of time for giving notice the following cases , namely ,
to antecedent parties that the ( 1 ) where the drawee is a
holder has after the dishonour . fictitious person or a person
“ ( 15) Where a notice of dishonour is not having capacity to con
duly addressed and posted, the tract and the indorser was
sender is deemed to have given due aware of the fact at the time
notice of dishonour, notwithstand he indorsed the bill, (2)
ing any miscarriage by the post where the indorser is the
office." person to whom the bill is
In order to render the acceptor of a bill presented for payment, (3)
liable it is not necessary that notice of where the bill was accepted
dishonour should be given to him . (Section 52, or made for his accommoda
8.5.3, see under PRESENTMENT FOR PAYMENT.) tion ."
238
DIS) DICTIONARY OF BANKING [DIS

As the result of several decisions, it has which may be used in giving notice of
been conceived that in all cases where, in dishonour :
consequence of the dishonour of bills or British Bank , Ltd.,
notes, made or become payable to bearer, a Leeds 19 .
remedy arises on the consideration, the
Please take notice that the bill for £ 100
transferor is entitled to notice of dishonour. çioo
The amount which a holder may recover upon John Brown, of King Street, Leeds,
drawn (or indorsed) by you, dated
in an actionon a dishonoured bill isprescribed at 19 and
months' date, due .
in Section 57 : payable at , upon which you are
Where a bill is dishonoured, the measure liable as drawer (or indorser ), has been
of damages, which shall be deemed to be dishonoured by non -acceptance (or non
liquidated damages, shall be as follows :- payment), and we request immediate pay
ment thereof, with expenses.
“ (1 ) The holder may recover from any To John Jones, Manager.
party liable on the bill, and the English Street, Leeds.
drawer who has been compelled to
pay the bill may recover from the Where an inland bill has been dishonoured
acceptor, and an indorser who has it may, if the holder think fit, be noted for
been compelled to pay the bill non -acceptance or non -payment, as the case
may recover from the acceptor or may be, but it is not necessary to note such
from the drawer, or from a prior a bill in order to preserve recourse against
indorser the drawer or indorsers ; neither is there any
need to protest an inland bill, and it is not
“ (a) The amount of the bill : usually done. (See NOTING .)
“( 6) Interest thereon from the Where a foreign bill, appearing on the face
time ofpresentment for of it to be such, has been dishonoured by
payment iſthe bill is payable | non -acceptance, it must be duly protested
on demand, and from the for non -acceptance, and where such a bill,
maturity of the bill in any which has not been previously dishonoured
other case : by non - acceptance, is dishonoured by non
" (C) The expenses of noting, or, payment, it must be duly protested for non
when protest is necessary, payment. (See PROTEST.) The bill may be
and the protest has been noted on the day of dishonour and must be
extended , the expenses of noted not later than the next succeeding
protest. business day. (See BILLS OF EXCHANGE
( TIME OF NOTING) Act, 1917.) The protest
“ (2) In the case of a bill which has been may be extended later.
dishonoured abroad , in lieu of the Protest is essential before presentment
above damages , the holder may of a bill for acceptance for honour, or pay
recover from the drawer or an ment for honour.
indorser , and the drawer or an Noting or protest does not do away with
indorser who has been compelled the necessity of giving the notices of dis
to pay the bill may recover honour to drawer and indorsers . As soon
from any party liable to him , the as payment is refused on the due date, a
amount of the re-exchange with holder may give notice of dishonour. He
interest thereon until the time of need not necessarily wait till the end of the
payment. day before doing so . The holder of a dis
( 3) Where by this Act interest may be honoured bill should givenoticeatonceto
red
recove as damages,such interest all parties liable on the bill, otherwise, if he
may, if justice require it, be with merely gives notice to the indorser' from
held wholly or in part, and where whomhereceived the bill and that indorser
fails to give due dnotice to the person from
a bill is expressed to be payable whom he receive it,that person and any
with interest at a given rate, persons prior to him would be discharged,
interest as damages may or may and the holderwould have only the indorser
not be given at the same rate as ( to whom notice was given ) and the acceptor
interest proper." (who does not require notice) from whom to
The following is a specimen of a form recover the amount of the bill.
239
DIS) DICTIONARY OF BANKING [DIS

Where a bill is to be noted, there is amount, or any other similar kind of cause ,
the banker should make the reason quite
nothing to prevent it being noted as soon
as dishonoured . An action cannot be com- clear so that no reflection may be cast upon
menced till after the end of the due date . the customer's credit. A cheque returned
In Kennedy v. Thomas ( 1894, 2 Q.B. 759) , for a technical irregularity should never be
where an action was brought by the holder referred to as a “ dishonoured ” cheque.
of a dishonoured bill upon the last day of A cheque marked " refer to drawer " means,
grace, it was dismissed as premature. as a rule, that the drawer has not sufficient
Where a bill, which a banker has dis- funds in his account to meet it . A cheque
counted for a customer, is dishonoured , the should not be marked “ R /D " if the correct
banker should debit it to the customer's answer should be “ Indorsement irregular,'
account and advise him at once, ( returning or something of that nature. (See ANSWERS.)
the bill to him ), so that he may be in time It is customary (except where a special
to give the required notices to prevent the arrangement exists) to debit charges half
release of other parties. But if the account yearly and until the usual time for debiting
does not justify the dishonoured bill being them has arrived a cheque should not be
charged to it, the banker should retain the dishonoured by anticipating the item for
bill and debit it to an account called “ Dis- charges, or debiting them at an unusual time.
honoured Bills," or “ Overdue Bills, " and A delay in payment of a cheque is justi
at once send notice of dishonour, and request fied when there is a reasonable ground for
for payment, to all the parties to the bill. suspicion that it has been tampered with ;
If the bill was not indorsed by the see the reference to London Joint Stock
customer for whom it was discounted , he Bank , Ltd. v. Macmillan and Arthur under
is not liable on the bill in the event of its PAYMENT OF CHEQUE.
dishonour, unless by special agreement. Wrongful dishonour may , as stated above,
A note of the dishonour should be recorded render aa banker liable to pay damages. Thus,
in the discount ledger and the banker's if a customer has a balance of £500 at his
opinion book . banker's, and the customer draws a cheque
Where a bill which has been paid in for for £ 300 , or accepts a bill for £ 300 , payable
collection is dishonoured , the banker should at his banker's, the banker is liable to be
at once give notice to his customer . In mulcted in substantial damages if the cheque
collecting a bill, the banker acts as agent for or the bill is dishonoured, and the customer
his customer ( the principal), and by Section is not bound to prove any actual loss by
49, s.s. 13, an agent may eitherhimself give reason of the dishonour. In the case of Rolin
notice to the parties liable on the bill or he v. Steward ( 1854, 23 L.J.C.P. 148), it was
may give notice to his principal. said by Mr. Justice Williams : “ Although
If a banker wrongfully dishonours a bill no evidence is given that the plaintiff has
or cheque he will be liable in an action by his sustained any special damage, the jury
customer for damages, and if he dishonours ought not to limit their verdict to nominal
it because certain cheques paid to the credit damages, but should give such temperate
of his customer. have not been cleared , he damages as they may judge to be a reason
may also be held liable in damages if it has able compensation for the injury the plain
been the banker's practice to allow the tiff must have sustained from the dishonour
customer to treat uncleared cheques as cash . of his cheque.”
A banker has no lien on a customer's In Marzetti v. Williams ( 1830, 1 B. and
credit balance for the contingent liability Ad. 415 ), where a sum of £ 40 had been paid
on any maturing bills. (See Lien .) to credit about one o'clock and a cheque was
As it is a serious matter to damage a dishonoured shortly after three (although
customer's credit by dishonouring a bill or the banker had, after including the amount
cheque which ought to be paid, a banker will paid in at one, sufficient funds of the drawer
naturally make quite sure of the position with which to pay the cheque) , Mr. Justice
before returning it. He should ascertain Taunton said : " The jury have found that
that everything has been credited to the when the cheque was presented for payment
account and that the balance has been a reasonable time had elapsed to have
correctly extended . When a cheque is enabled the bankers to enter the £ 40 to the
returned simply from some irregularity in credit of the plaintiff, and, therefore, that
the document itself, such as an incorrect they must or ought to have known that they
indorsement, an alteration, a difference in had funds belonging to him . That was
240
DIS ) DICTIONARY OF BANKING [DIS

sufficient to entitle the plaintiff to recover if there was some obstacle to its payment
nominal damages, for he had a right to have when received. If the customer pays in ,
his cheque paid at the time when it was or “ earmarks," a sum specifically to
presented, and the bankers were guilty of a meet the dishonoured cheque, the banker
wrong by refusing to pay it. Independently must retain that sum as instructed . (See
of other considerations, the credit of the APPROPRIATION OF PAYMENTS .)
plaintiff was likely to be injured by the When a banker dishonours a customer's
refusal of the defendants to pay the cheque. cheque, the balance on the drawer's account
The case put in the course of the is available to pay any cheque, which may
argument, of the holder of a cheque being be presented subsequently , up to the amount
refused payment, and called back within a of the balance or sum available, but in Scot
few minutes and paid , is an extreme case, land when a cheque is dishonoured , any
and a jury probably would consider that as funds that there may be in the drawer's
equivalent to instant payment." account are attached in favour of the person
When a cheque which has been credited presenting the cheque, the amount being
to a customer's account is returned unpaid, transferred by the banker to a suspense
a banker debits it to that account if the account.
balance permits of it, and advises his cus- A cheque paid to the credit of a customer
tomer that he has done so. Some bankers of the X & Y Bank, drawn by another
obtain a cheque (or an unstamped debit customer of the same bank, may be returned
slip ) from the customer when handing him on the following day. Even if the paying
a returned cheque. If the customer wishes in -slip counterfoil is initialled by the bank
it to be re -presented, a fresh paying-inslip cashier, as it often is, it would not affectthe
should be signed. When a cheque which banker's right to return the cheque. The
has been returned is recalled by ire, it is banker is not obliged inform the person
advisable for a banker to advise his cus- paying in to credit a cheque drawn on the
tomer of the circumstance, in order that he banker by another customer, thatthe cheque
may be on his guard . may not be paid . He may take the cheque
Cheques paid to credit are often (when without comment and, after he has looked
payable to bearer or indorsed in blank) not into the position of the drawer's account, may
indorsed by the customer, but the fact that return it dishonoured . The banker who
the cheque was not indorsed by the customer receives such a cheque for collection does so
when placed to his credit does not affect at merely as the agent of the customer paying
all the banker's right to debit his account it in and has the usual time of an agent in
with it when returned dishonoured . which to deal with it, as though it were
A cheque received in the Local Exchange a cheque on another banker. (Boydv.
must, if not to be paid, be returned on the
Emmerson , 1834, 2 A. & E. 184. ) (See
day of receipt. PRESENTMENT FOR PAYMENT .) In practice
Where a cheque received through the a country banker either pays or dishonours
London Clearing House for collectioncannot such a cheque on theday he receives it.
be paid, by Rule 4 of the Clearing House, If a cheque cashed for a person who is not
" Any country bank not intending to pay a a customer is returned unpaid, the banker
cheque sent to it for collection , to return it will, of course, at once endeavour to regain
direct to the country or branch bank,if any, the amount from the party to whom it was
whose name and address is across it."And paid, but if this is not immediately possible
by Rule 5, “ Each country banker to write he should debit it meanwhile to a returned
by return of post to its London agent in bill (or cheque) account.
reply, ' we credit you £ for cheques Where a customer has two accounts, one
forwarded to us for collection in yours of in credit and one overdrawn, and the credit
: Adding in case of non -payment of balance is regarded as a set off to the debit,
any such cheques, ' having deducted € cheques on the credit account may be
for cheque returned to Messrs. at dishonoured if their payment would reduce
the balance below the amount owing on the
When it is desired to recall a dishonoured overdrawn account, unless there is some
cheque by wire, the words should be, say, arrangement or custom to the contrary.
“ cheque would be paid if in our hands now
1 )
Where a customer has a deposit receipt
and in order." These words would not and a current account, and cheques are
render the banker liable to pay the cheque drawn upon the account in excess of the
241
16 (1535 )
DIS ) DICTIONARY OF BANKING [DIS

balance, a banker usually pays such cheques disposition qualified by a back -letter or
so long as they do not exceed the amount of back -bond . The disposition is in the form
the deposit receipt. Should such cheques of an absolute conveyance of the property
be inadvertently dishonoured, the banker by the debtor to the banker ; and the back
would , probably, not be liable, seeing that letter or back -bond is a document given to
deposit receipts are not intended to be the debtor by the banker, setting forth the
drawn against by cheque. nature of the transaction and the conditions
See further information under ACCEPTANCE under which the debtor is entitled to have
FOR HONOUR, PAYMENT OF BILL, PAYMENT a re -conveyance of the property from the
OF CHEQUE, PROTEST.) banker .
(See BILL OF EXCHANGE.) The disposition should be registered in
DISPOSITION . In Scots law , a document the Register of Sasines ; the back -letter
by which a person disposes of, or makes should not be registered.
over, heritable property to another person. The stamp duty on such a disposition is
By the Stamp Act, 1891, the stamp duty 10s. ( see DISPOSITION ), and on the back -bond
is : or back -letter the duty is the same as on a
DISPOSITION of heritable property £ s. d. mortgage.
in Scotland to singular succes DISTRICT COUNCILS. (See RURAL Dis
sors or purchasers. TRICT COUNCIL, URBAN DISTRICT COUNCIL .)
See CONVEYANCE ON SALE . DISTRICTS. A Stock Exchange name for
DISPOSITION of heritable property Metropolitan District Railway ordinary
in Scotland to a purchaser, con stock .
taining a clause declaring all or DISTRINGAS. (Latin, that you distrain .)
any part of the purchase money The writ of distringas was abolished in 1883.
a real burden upon, or affectin In place of such a writ, under the Rules of
the heritable property thereby the Supreme Court, 1883, any person claim
disponed, or any part thereof. ing an interest in any stock orsharesstanding
See CONVEYANCE ON SALE , in the books of a company may file at the
MORTGAGE, etc., and Sec Central Office an affidavit by himself or his
tion 86. solicitor, together with a notice in the
DISPOSITION in Scotland , contain specified form . On receiving an office copy
ing constitution of feu or ground of the affidavit and a duplicate of the
annual right. notice authenticated by the seal of the
See CONVEYANCE ON SALE . Central Office, the claimant may serve these
documents on the company . Receipt of
DISPOSITION in security in Scot the notice warns the company not to
land .
See MORTGAGE, etc. register a transfer of any shares belonging
to the shareholder or pay the dividends
DISPOSITION of any wadset, herit thereon without giving notice to the claim
able bond, etc. ant. The notice has only a temporary effect.
See MORTGAGE, etc. When a request is received by the company
DISPOSITION in Scotland of any from the shareholder to transfer the shares or
property, or of any right or in pay the dividends, the company cannot refuse
terest therein not described in to do so after eight days from the date of
this schedule .
0 10 0 the request, unless by express sanction of the
(See DISPOSITION ABSOLUTE .) Court. When the claimant receives notice
DISPOSITION ABSOLUTE . In Scotland , from the company of the shareholder's
an equitable mortgage over_real property request, he must, within the eight days,
cannot be obtained , as in England, by a obtain an order from the Court restrain
deposit of the title deeds with, or without, ing the company from transferring the shares
a memorandum of deposit. A security may or paying the dividends.
be obtained by a "bond and disposition in The claimant may withdraw the notice at
security ” (q.v.), or by a bond of credit and any time on a written request being signed
disposition in security ” (q.v.) or by an by him .
absolute disposition . A notice of this kind is often used to
The most convenient form in which the put a distringas " upon Government stock
property may be made available as security registered or inscribed at the Bank of
for a fluctuating overdraft is by an absolute England. (See CHARGING ORDER .)
242
DIV ) DICTIONARY OF BANKING [DIV

DIVIDEND . The interest which is paid Dividends must be paid only out of profits,
upon an investment, such as stock in the but a company has power, in certain special
public funds, and shares or stock in com- cases , to pay interest out of capital. Section
panies. The interest may be payable at a 91 of the Companies (Consolidation) Act,
fixed rate, or the rate may be, as in the case 1908, provides as follows : -

of a company, dependent upon the profits “ Where any shares of a company are
that are made, or it may be cumulative. | issued for the purpose of raising money to
(See CUMULATIVE DIVIDEND.) defray the expenses of the construction of
The clauses in Table A of the Companies any works or buildings or the provision of
(Consolidation) Act, 1908 (see Section 11 , any plant which cannot be made profitable
under ARTICLES OF Association ),with respect for a lengthened period, the company may
to dividends are as follow : pay interest on so much of that share capital
“ 95. The company in general meeting as is for the time being paid up for the period
may declare dividends, but no dividend and subject to the conditions and restrictions
shall exceed the amount recommended by in this Section mentioned, and may charge
the directors . the same to capital as part of the cost of
"96. The directors may from time to time construction of the work or building, or
pay to the members such interim dividends the provision of plant :
as appear to the directors to be justifiedby Provided that
the profits of the company. (See INTERIM “ (1) No such payment shall be made un
DIVIDEND .) less thesame is authorised by the
“ 97. No dividend shall be paid otherwise articles or by special resolution :
than out of profits. " ( 2) No such payment, whether author
“ 98. Subject to the rights of persons, if ised by the articles or by special
any, entitled to shares with special rights resolution, shall be made without
as to dividends, all dividends shall be the previous sanction of the Board
declared and paid according to the amounts of Trade :
paid on the shares, but if and so long as " ( 3) Before sanctioning any such pay .
nothing is paid up on any of the shares in ment the Board of Trade may , at
the company dividends may be declared and the expense of the company , apo
paid according to the amounts of the shares. point a person to inquire and re
No amount paid on a share in advance of calls port to them as to the circum
shall, while carrying interest, be treated for stances of the case, and may , before
thepurposes ofthis articleas paid on theshare. making the appointment, require
" 99. The directors may, before recom the company to give security for
mending any dividend, set aside out of the the payment of the costs of the
profits of the company such sums as they inquiry :
think proper as a reserve or reserves which “ (4) The payment shall be made only for
shall, at the discretion of the directors, be such period as may be determined
applicable for meeting contingencies, or for by the Board of Trade ; and such
equalising dividends, or for any other pur period shall in no case extend
pose to which the profits of the company beyond the close of the half -year
may be properly applied , and pending such next after the half- year during
application may, atthe like discretion, either which the works or buildings have
beemployed in the business of the company been actually completed or the
or be invested in such investments ( other plant provided :
than shares of the company) as the directors “( 5) The rate of interest shall in no case
may from time to time think fit. exceed four per cent. per annum or
" 100. If several persons are registered as such lower rate as may for the time
joint holders of any share any one of them being be prescribed by Order in
may give effectual receipts for any dividend Council :
payable on the share. " ( 6) The payment of the interest shall not
* 101. Notice of any dividend that may operate as a reduction of the amount
have been declared shall be given in manner paid up on the shares in respect of
hereinafter mentioned to thepersons entitled which it is paid :
to share therein . “ (7) The accounts of the company shall
“ 102. No dividend shall bear interest show the share capital on which ,
against the company . " and the rate at which, interest has
243
DIV ] DICTIONARY OF BANKING (DIV

been paid out of capital during the of a warrant may be sent by the company
period to which the accounts to the bank, with a detailed list and cheque
relate : for the total amount thereof for distribution
“ (8) Nothing in this Section shall affect to the customers as therein indicated. The
any company to which the Indian statement (which is in place of the top
Railways Act, 1894, as amended portion of an ordinary dividend warrant)
by any subsequent enactment, must be given by the banker to his customer.
applies.” The list and statement ( as given in the
Interest upon debentures is commonly Journal of the Institute of Bankers) may be
regarded as a dividend, but it is really in the following form :
interest upon a loan, and must be paid by Bankers' List
the company quite irrespective of any
question of profits. THE “ A ” COMPANY , LTD .
A dividend is also the name given to the No.
amount which is paid to creditors from No..... A /c . Half-year to
a bankrupt's estate. (See COMPANIES,
COUPON, DIVIDEND WARRANT , DIVIDENDS TO ....
(IN BANKRUPTCY ), INCOME TAX, SHARE
WARRANT.) I have the pleasure to hand you cheque
DIVIDEND MANDATE . A written order for £ : : being the amount
from ashareholder requesting thecompany payableto you on behalf of,and in accord
of which he is a member to send his dividends ance with instructions received from , the
direct to his banker to be placed to the credit following proprietors.
of his account. The advantages of having Secretary
dividends and interest paid direct to a bank Net
No. of
are : Reduced risk of the warrants being Warrant. For Account of. Branch . Amount of
lost or mislaid ; saving of trouble in signing Dividend.
and despatching warrants to a bank after
receipt ; and obtaining earlier credit in the
account .
The request for dividends to be dealt with
in this way may be in the following form :
Address ... Bankers ' Statement
)
THE “ A ” COMPANY, LTD .
19
To the Secretary of INTEREST ON 4 % DEBENTURE STOCK,
. Half-year to June 30, 19 .

THE “ A ” COMPANY, LTD.

Memorandum of particulars Interest
for half-year ended June 30, of
I
hereby request that you will
We 19 pay
transmit by post and pay the Dividends and able to the Bankers under authority lodged
Interest from time to time payable on the with the Company, in respect of the Pro
Stock and Shares standing registered , or prietors 'holding on the inst.
which may hereafter stand registered in No. A /c of
my . Branch .
our
name (s) in the books of your Company ,
to ......
whose receipt shall be your full and sufficient Debenture Stock £ ........
discharge. at 4 per cent. per annum . £
Less Income Tax .
ť
Signature of Proprietor ...
£ :
If the shares stand in several names the
mandate should be signed by each person . Exd ....
The order does not require a stamp.
When the number of warrants payable to I hereby certify that there has been
any one bank justifies their discharge by a deducted for Income Tax the amount
single cheque, a banker's statement in lieu stated above, and that the Tax so deducted
244
DIV DICTIONARY OF BANKING [DIV

will form part of the amount to be paid by dividend warrants, or the indorse
)
the Company to the Commissioners of Inland ments thereof."
Revenue. There is usually a space provided at the
Proprietors claiming Allowance of Income foot of dividend warrants for the proprie
Tax are informed that the Inland Revenue tor's signature.
Department will accept this Certificate as a A dividend warrant must be signed by
Voucher. the person to whom it is payable, and, unless
London Wall, E.C. authorised by the company, a per procura
30th June, 19 . Secretary . tion signature should not be accepted. If
payable to John Brown or bearer,it never
N.B. — Notwithstanding the transmission of Interest theless requires John Brown's discharge.
Warrants to the Bankers direct, it is very desirable
that Proprietors should , without delay, notify any Where a dividend warrant is payable to
change of residence, advisingthe Company from time several persons, it is the custom to pay it
to time of their full Postal Address in order that on being signed by one of them . But in the
communications, other than Dividend Warrants, may case of an interest warrant all the persons
not fail to reach them .
This statement to be forwarded to the named should sign.
Many Dividend Warrants are crossed
Proprietor by the Bankers.
DIVIDEND REGISTER . A register con
taining the names and addresses of all & Co. and the effect is the same
shareholders, and the number of shares held
by each. There is a column provided to as when a cheque is so crossed ( Section 95
show the amount of dividend which is due above ). The banker on whom a crossed
to each shareholder. The dividend warrants warrant is drawn should pay it only to
are prepared from this book, and as they are another banker. It would appear that, if
paid a record of the date of payment is credited as cash , they are outside the Bills
entered against the individual amounts. of Exchange (Crossed Cheques) Act, 1906
Unless the income tax on the dividends ( q.v.), and the collecting banker would there
is paid by the bank, a column in the register fore not have the protection of Section 82,
will be necessary to show the amount to Bills of Exchange Act, 1882. ( The Law of
be deducted in each case. The totals of Banking, Sir John Paget.)
the columns must, of course, agree with There is often a note on a warrant that it
the amount set apart for payment of must be presented within three months
dividend . from date. If not so presented , it should be
DIVIDEND TOP . The common returned by the shareholder to the company
name
given to the top portion of a dividend war. for verification . (See the case of Thairlwall
rant which shows the amount of income tax v. Great Northern Railway under RECEIPT
deducted . The dividend “ top ” is retained ON CHEQUE .)
by the shareholder and used as a voucher The top portion of a dividend warrant
when claiming, if so entitled, a repayment shows the amount of income tax deducted
of tax from the Inland Revenue Commis- and is retained by the shareholder as a
sioners. (See DIVIDEND MANDATE, DIVIDEND certificate of the deduction of income tax
WARRANT.) and used , by those who are entitled , when
DIVIDEND WARRANT. An order, or claiming a return of tax from the Inland
warrant, issued by a company, and drawn Revenue Commissioner s. (See INCOME Tax .)
upon its bankers, in All dividend warrants
favour of a member of , like cheques,
the company, for payment of theinterest or though for a less amount than £ 2, require a
dividend due to him upon his holding of twopenny stamp ( increased from 1d. to 2d.
shares or stock in the company . as from Sept. 1 , 1918. See Finance Act, 1918,
Section 95 of the Bills of Exchange Act, Section 36, under BILL OF EXCHANGE) .
1882, is : - “ The provisions of this Act as This does not apply to interest warrants on
to crossed cheques shall apply to a warrant Consols and other British Government stocks.
for payment of dividend . ( See CROSSED (See Stamp Act, 1891, Exemption 6, under
CHEQUE .) BILL OF EXCHANGE .)
Section 97, s.s. 3, provides : Customers frequently instruct the com
“ Nothing in this Act or in any repeal panies in which they have investments to
effected thereby shall affect : pay the dividends direct to their bankers,
“ ( d) The validity of any usage relating to who forthwith credit their accounts, thus
245
DIV ] DICTIONARY OF BANKING [DIV

saving the customers a good deal of trouble ; also send reasonable notice thereof
these orders continue in force until cancelled to each creditor mentioned in the
by the customer ; most banks have their bankrupt's statement who has not
own printed forms. The companies make the proved his debt.
warrants payable to the banker, generally “ (5) When the trustee has declared a
adding the name of the shareholder at the dividend, he shall send to each
foot ; the banker discharges the warrants in creditor who has proved a notice
the same way as a shareholder. When a showing the amount of the dividend
company has a number of dividends to be and when and how it is payable, and
paid to the same bank, a single cheque may a statement in the prescribed form
be sent for the total. (See under DIVIDEND as to the particulars of the estate .
MANDATE .) Joint and Separate Dividends.
An ordinary dividend warrant is practi
cally a cheque in a special form , but the “ 63. (1 ) Where one partner of a firm is
dividend warrant of a bank, being drawn by adjudged bankrupt, a creditor to
a bank on a bank, is of the nature of a bank whom the bankrupt is indebted
draft rather than a cheque. A dividend jointly with the other partners of the
warrant by a bank in payment of the bank's firm , or any of them , shall not receive
own dividend should not be payable to any dividend out of the separate
bearer on demand as that would constitute property of the bankrupt until all
an infringement of Section 11 of the Bank theseparate creditors have received
Charter Act, 1844. (See DRAFT ON the full amount of their respective
DEMAND.) debts.
Where a dividend warrant is not drawn " (2) Where joint and separate properties
upon any particular bank and simply are being administered , dividends of
specifies a number of banks at which it the joint and separate properties
may be presented for payment, it does shall, unless otherwise directed by
not conform to the requirements of a the Board of Trade, on the applica
cheque. (See INDORSEMENT, Lost DIVIDEND tion of any person interested, be
WARRANT.) declared together, and the ex
DIVIDENDS (IN BANKRUPTCY). With penses of and incidental to such
regard to the distribution of dividends dividends shall be fairly apportioned
amongst the creditors of a bankrupt's estate, by the trustee between thejoint and
the Bankruptcy Act, 1914, providcs :
06
separate properties, regard being had
Section 62. (1 ) Subject to the retention to the work done for and the benefit
of such sums as may be necessary for received by each property.
the costs of administration, or other .
wise, the trustee shall, with all con- Right of Creditor who has not Proved Debt
venient speed , declare and distribute before Declaration of a Dividend.
dividends amongst the creditors who " 65. Any creditor who has not proved
have proved their debts. his debt before the declaration of any divi.
“ (2) The first dividend, if any, shall be dend or dividendsshall be entitled to be paid
declared and distributed within four out of any money for the time being inthe
months after the conclusion of the hands of the trustee any dividend or divi.
first meeting of creditors, unless the dends he may have failed to receive before
trustee satisfies the committee of that money is applied to the payment of any
inspection that there is sufficient future dividend or dividends, but he shall
reason for postponing the declara- not be entitled to disturb the distribution of
tion to a later date. any dividend declared before his debt was
" (3) Subsequent dividends shall, in the proved by reason that hehas not participated
absence of sufficient reason to the therein . "
contrary, be declared and distributed Before declaring a final dividend , the
at intervals of not more than six trustee shall give notice to creditors whose
months. claims have not been established to his satis
· (4) Before declaring a dividend, the faction, that, if not established within a time
trustee shall cause notice of his limited by the notice, he will make the final
intention to do so to be gazetted in dividend without regard to their claims
the prescribed manner, and shall (Section 67). (See BANKRUPTCY .)
246
 DOC ) DICTIONARY OF BANKING [DOC

DOCK WARRANT. A dock warrant is a Act") . In reading the sections of that Act,
document issued by a dock company stating Sections 2 to 7 refer only to dispositions by
that the goods as described therein are mercantile agents, and 8 to 10 to dispositions
entered in their books, and are deliverable by sellers and buyers.
to the person mentioned or his assigns by Warrants which are not governed by that
indorsement. Act (or any Private Act) are not recognised
A dock warrant may be in the following legally as documents of title, but simply
form : as authorities to obtain possession of the
goods.
X & Y DOCKS Coy. Section 11 of the same Act prescribes that
No. 19 the transfer of a warrant maybe by indorse
Warrant for ment, or, where the document is by custom
Imported in the ship Master or by its express terms transferable by de
, from entered by livery, or makes the goods deliverable to the
on the bearer, then by delivery.
deliverable to or assigns by in The warrants when given as security
dorsement hereon . Rent commences on the should be indorsed by the person named,
and all other charges from the and be accompanied by a memorandum of
date hereof. Rate charged. deposit or letter of lien ( stamped 6d .).
The memorandum (which should create a
Weight.
continuing security) should give the bank
Mark . Numbers . authority , in the event of default of repay
Gross . Tare. ment, to sell the goods and out of the
proceeds to repay the loan with interest, and
all other moneys due. The memorandum
should also provide for insurance of the
goods against fire , and for aa sufficient margin
in value to be preserved.
Where there is any uncertainty as to the
Ledger No. Folio nature of the document, the goods should be
Clerk . transferred into the banker's name in the
Warrant Clerk. books of the dock company or warehouse
keeper.
The Factors Act, Section 1 , s.s. 4, states that For further information see under TRUST
the expression " document of title " includes RECEIPT, WAREHOUSE-KEEPER'S CERTIFI
a dock warrant, and any warrant or order CATE, WARRANT FOR Goods .
for the delivery of goods, and any document The stamp duty on a dock warrant is three
authorising, either by indorsement or by pence .(See WARRANT FOR Goods.).
delivery, the possessor of the document to DOCKET, OR DOCQUET. A slip. The
transfer or receive the goods. (See FACTORS name given in some banks to the form which
Аст.) is sentout yearly or half-yearly tocustomers
Where goods have been sold and the war. to sign, if correct, confirming the balance of
rants indorsed by the seller to the buyer, the their accountas stated thereon, and as shown
goods are , as a rule, subject to the seller's by their pass book.
lien for the purchase price. But if the In Scotland , in some of the banks, a
warrants have been lawfully transferred to docquet or confirmation of balance is signed
a purchaser and he sells or pledges them to in the ledger.
a third person , and that third person receives DOCUMENT OF TITLE . (See FACTORS
the same in good faith , without notice of any Act.)
lien, the lien ofthe original vendor is thereby DOCUMENTARY BILL. A documentary
defeated . In sucha case the third person ( e.g., bill is a bill of exchange which is accom
a banker) holds the warrants as “ documents panied by various documents, such as bill
of title " to the goods. If the warrants are of lading, dock warrant, delivery order,
pledged or sold by a mercantile agentacting policy of insurance, invoice .
in the ordinary course of business,the pledge A banker must see that policies of insur
or sale shall be as valid as if he were ex- ance attached to bills received by him from
pressly authorised by the owner to make the abroad are stamped within ten days of their
same (see Sections 2 to 10 of the “ Factors arrival in this country.
247
DOC ) DICTIONARY OF BANKING (DOC
When a banker receives a bill for accept. In such cases the banker really parts with
ance, with documents attached, and he his security and has to rely upon the honour
sends the bill to the drawee to be accepted , of his customer. In case of failure, trustees
and informs the drawee that the bill of lad generally recognise these undertakings.
ing and invoice are in his possession, the There is the danger, however, that there
bankeris not thereby held responsible if the may be a contra account due from the cus
bill of lading should prove to be a forgery. tomer to a purchaser of the goods, in which
And where a banker accepts a documentary case , as the latter has no notice of the hypo
bill at the request of a customer, and the bill thecation, he is entitled to deduct thecontra
of lading proves to be forged , the banker, account from the amount he is due to pay
having paid the bill, may recover the amount as the purchase price of the goods. (See
from the customer. TRUST RECEIPT.)
The holder of a bill, by presenting it When documentary bills are discounted ,
for acceptance or for payment, does not the banker takes a note of hypothecation
warrant the genuineness of the bill or of or memorandum of deposit (stamped 6d .),
any of the signatures thereon , or that any from the customer , by which the bill of
accompanying documents are genuine or lading and the goods are pledged to the
represent actual goods, and does not under- banker and under which he is given a right,
take to indemnify the acceptor in the event if necessary , to sell the goods.
of the documents proving to be forgeries. For further information see BILL OF
( Guaranty Trust Company of New York LADING, TRUST RECEIPT, WARRANT FOR
v . A. Hannay & Co., 1918 , A.C. 34 T.L.R. Goods .
427) . (See PRESENTMENT FOR PAYMENT.) See the case of Ladenburg & Co. v.
If documents are sent out along with the Goodwin , Ferreira & Co., Ltd. (in Liquida
bill to the drawee in order that he may tion) and Garnett (the Liquidator), under
inspect them , they should not be left with REGISTRATION OF MORTGAGES AND CHARGES .
him . A banker, however, may have re- If a banker sells a documentary bill he
ceived instructions, from the correspondent indorses it and thus becomes liable thereon ;
sending him the bill, to deliver up the the bills of lading, indorsed in blank by the
documents to the drawee upon his accept- shipper, and the insurance policy, accompany
ance of the bill ; or he may have instruc- the bill.
tions to give up the documents on payment A banker keeps a record of all his lia
of the bill under rebate . bilities on acceptances and indorsements.
When a banker advances against ship- Where documents are given up against
ments he sends the bill abroad, with the bills payment of a bill under rebate , the rate is
of lading attached , for payment. When the usually { per cent. above the deposit rate
documents are given up against acceptance, of the principal London banks, and is calcu
the banker has then to rely upon the lated from the date when the money (free of
acceptor, regarding whom he should have cost) will be in the hands of the person
satisfactory information . entitled to receive it, and at the place where
Where a credit is opened abroad at a it is payable. A receipt is indorsed upon the
customer's request, against bills of lading, bill that the amount has been paid under
policy, etc., the foreign banker draws on the rebate at per cent. (See BILL OF
banker in this country and sends the bill, EXCHANGE, BILL OF LADING , DOCUMENTARY
with the documents attached, to the English LETTER OF CREDIT, MARINE INSURANCE
banker. The documents may be taken by the Policy.)
customer and paid for at once ; or the DOCUMENTARY LETTER OF CREDIT .
amount may becharged to the customer and A documentary credit may be opened at the
thedocuments held as security until required . request of an importer, under which the
In some cases, the bills of lading may be bank agrees to negotiate the bills of an
handed to the customer and a letter taken exporter up to a specified amount, the
from him hypothecating the goods to the importer agreeing to accept and pay the
bank, and undertaking to hand over to the bills if drawn in accordance with the con
bank the proceeds from the sale of the goods, ditions of the credit. The bills are accom
and until that is done the customer agrees panied by the shipping documents, all
to hold the goods or the proceeds in trust hypothecated to the bank against payment
for the bank . When this is done a separate of the bills. With regard to the difference
account is usually opened for the operation. between this form of credit and a " confirmed
248
DOLJ DICTIONARY OF BANKING [DON

letter of credit "the notice of the opening of A great manyfirms inthecountry domicile
a documentary credit “ often contains a their bills at the head office or London
clause pointing out that it is not to be agents of their bankers. (See ACCEPTANCE .)
considered as a bank credit, and does not A drawer may , if he wish, name the
relieve the exporter from the liability domicile or place of payment in the body of
usually attaching to the drawer of a bill of the bill or below the drawee's name.
exchange " ( Journal of the Institute of DONATIO MORTIS CAUSA . (Latin .) A
Bankers, Vol. 35, p. 130.) If the drawer gift made in anticipation of, and con
and drawee are persons of good standing, the ditional on, the death of the donor, is called
bills may contain the words “ documents on a donatio mortis causa .
acceptance ” (a D / A bill) and the drawee If a person , in anticipation of death,
is then entitled to receive the documents draws a cheque and hands it to, say, his son,
of title to the goods immediately on accept- unless the cheque is actually or construc
ance, but if the bills contain the words tively paid before death takes place, the
" documents on payment ” (a D / P bill) the gift is ineffectual. It cannot be paid by the
documents are not parted with until the banker after he has had notice ofthe drawer's
bills are paid. (See LETTER OF CREDIT, death, and it does not form a charge upon
TRUST RECEIPT.) the deceased's estate. But if the donee
The following is a form of documentary transfers the cheque to another party, for
letter of credit (not confirmed ) : value, that party would have a claim upon
BRITISH BANK, LTD . the estate for the amount, though the
Dear Sir, banker would not pay it after notice of death .
There is, however, a difference between a
Advice of Documentary Credit No.... cheque drawn by the donor, and one payable 60
Not Carrying Our Confirmation. to the donor. In the former case his own
Kindly note that under instructions cheque is not property , it is only a revocable
telegram order," but in the latter case it is the
by mail we have been requested by " indicia of title to property, which be
longed to him " (Justice Buckley). When
to advise you thata credit has been opened it is payableto the donor, the person who
by them in your favour on account of receives it obtains a good donatio mortis
Messrs.. for causå , and is fully entitled to the amount.
£ .... say .
If not indorsed by the donor, it has
available by your drafts on us at .. been held that the recipient is entitled
against the following documents, viz : to require the indorsement of his legal
representatives.
evidencing shipment of A bill, a promissory note, and a bond and
mortgage deed have also been held to form
per S.s.... from .... good subjects of gifts made in anticipation
to ... of death. A dying man's own promissory
This credit expires on ... note is not a proper subject of a donatio
mortis causâ . ( Re Leaper ; Blythe v.
Kindly note that this advice is given for Atkinson , 1916, 1 Ch . 579. )
your guidance and without involving any Where a banker's deposit receipt was
responsibility on the part of this Bank. handed over by the donor immediately prior
Yours faithfully, to his death, it was held to be a good donatio
mortis causa . ( Re Dillon ; Dufin v. Duffin,
Manager. 1892, 62 L.T. 614.)
A specimen of a confirmed letter is given A Post Office Savings Bank deposit book
under CONFIRMED LETTER OF CREDIT . might constitute a good donatio mortis causâ
DOLLAR . ( See FOREIGN MONEYS of the balance standing to the credit of the
CANADA, CHINA, MEXICO, UNITED STATES.) depositor. ( Re Andrews ; Andrews V.
DOMICILED BILL. ( The word domicile Andrews, 1902, 2 Ch . 394.)
is from the Latin domicilium , a habitation .) Where the certificate of registration of an
Where a bill of exchange is accepted Exchequer Bond (which certificate entitled
payable at some place other than the accep- the owner to delivery of the Bond on
tor's private or business address it is said to demand) was handed over as a dying gift,
be domiciled at that place. it was held to be a good donatio mortis causa
249
DOR ) DICTIONARY OF BANKING (DRA

of the Bond . ( Re Lee ; Treasury Solicitor | the universal custom , and to enact expressly
v. Parrott, 1918, 2 Ch . 320.) that the owner's rights to money deposited
Victory Bonds have been held to form a by him in a bank are not subject to the
proper subject of a donatio mortis causâ . operation of the Statute of Limitations . "
(Re Richards ; Jones v. Rebbeck , 1921 , In the case of boxes and parcels entrusted
Ch.D. ) to banks for safe custody , the Committee
Although a cheque payable to the donor, recommended that a period of 70 years
or a deposit receipt, forms an effectual gift, should elapse before they become subject to
a banker, with notice of the payee's death , the provisions of the Bill.
would not pay such cheque or deposit receipt DORMANT PARTNER . (See SLEEPING
to the recipient of the gift (even if indorsed PARTNER . )
by the deceased donor), until indorsed by DOUBLE FLORINS. These inconvenient
the legal representatives of the deceased . coins were first issued in 1887 and the issue
A donatio mortis causâ is subject to pay- was discontinued in 1890.
ment of estate and legacy duty. DOVER A. A Stock Exchange name for
(See GIFTS INTER Vivos.) South -Eastern Railway deferred ordinary
DORAS. A Stock ExchangenameforSouth- stock .
Eastern Railway deferred ordinary stock . DOWER . The right of a widow , whose
DORMANT BALANCES. The balances husband has died intestate, to a life interest
of accounts which have not been operated in one- third of her deceased husband's real
upon for a long period. (See UNCLAIMED estate, unless there was a declaration against
BALANCES .) dower in the deed of conveyance to the
The Select Committee to whom the husband . The dower exists whether there
Dormant Bank Balances and Unclaimed has or has not been any issue of the
Securities Bill was referred , reported Decem- | marriage.
ber, 1919. It was estimated that the total Blackstone says : “ Tenancy in dower is
of balances dormant for six years prior to where a widow takes a third of such lands
1st January , 1920 , was : and tenements as her husband died entitled
to , for seisin is not here necessary , and in
On Current Accounts . £ 2,220,926 which her title to dower has not been pre
On Deposit Accounts 5,787,659 viously barred . This mode of providing for
a widow seems to have been unknown in the
£ 8,008,585 early part of our Saxon constitution ; for
in the laws of King Edmund, the wife is
Of this total the balances which were the directed to be supported wholly out of the
property of untraceable persons were esti- personal estate . "
mated to be £ 2,846,170. " Your Committee Dower is barred when the widow is pre
think that a very much longer period than vented from obtaining it. When the estate
six years should elapse before a state of is settled upon a woman in order that she
dormancy, having legal consequences involv- may enjoy it after the husband's death (i.e.
ing publicity , should be recognised ." The jointure), the dower is thereby barred. (Sce
majority of the Committee were of opinion FREEBENCH , INTESTACY .)
that if an account has not been operated DRACHMA . (See FOREIGN MONEYS—
upon for a period of 30 years, the account GREECE .)
should be deemed to be dormant. “ Bankers DRAFT. ( From the verb to draw ,
should be required to inform the Public Formerly spelled " draught" and " drawght." )
Trustee whenever a balance becomes a
.
Bills of exchange on demand , or after
dormant balance." Two years after this sight, or after date, are called drafts, because
notification , if the owner should not have they are drawn by one person on another.
been traced, the dormant balance should cheques also are sometimes called drafts.
be transferred to the Public Trustee . But the word “ draft " is used principally
With regard to the operation of the when referring to a banker's own draft, or
Statute of Limitations all the evidence instrument drawn upon another banker or
showed that no bank had ever availed itself upon one of his own branches, or to a draft
of the Statute of Limitations against the drawn upon his London agents or London
claim of an owner." The Committee were office, at seven , fourteen or twenty -one days
of opinion that it would be well " to make after date, or on demand, or to a foreign
the law conform to what appears to be draft drawn by a banker in one country
250
 DRAJ DICTIONARY OF BANKING [DRA

upon a banker in another. When a draft Bankers do not usually accept such drafts,
is issued by one branch bank upon another but pay them on presentation when due.
or by a country bank upon its London Some bankers' drafts have the words " with
agent, an advice describing the draft is sent out acceptance " printed in the body. The
by the drawer to the drawee by the same following specimen of a Bank of England
day's post. draft includes those words :
Where a customer applies for a draft and
desires the amount to be debited to his BANK OF ENGLAND .
account, a cheque must be taken for the No. £ 20 Without acceptance
amount or the application form be stamped seven days after date pay this Sola billof
tw pe
o nce. exchange to or order
A banker should not stop payment of a Twenty pounds,
draft issued by him upon his head office, or for value received .
another branch, orhis Londonagents, as he Branch .
is liable to pay it to a bond fide holder. (Date ).
But if he receives notice that it has been lost, Agent.
he will exercise great care before paying it, To the Cashiers of the
particularly if there is any suspicion thatthe Bank of England,
indorsement is forged . (See DRAFT AFTER London .
DATE , DRAFT ON DEMAND .) Entd .
DRAFT AFTER DATE . In addition to
drafts on demand, country bankers issue Drafts after date take the usual three days
drafts after date upon their London agents of grace, except in the case of bills drawn by
or London offices. They are drawn at seven , the Bank of England upon itself.
fourteen or twenty -one days after date, and By 9 George IV, c. 23, bankers in England ,
are issued free of charge, the banker obtain . except within the City of London, or within
ing his remuneration from the interest upon three miles thereof, having first obtained a
the money between the date he received it licence and given security by bond, may
and the date on which the draft is due. issue, on unstamped paper, promissory notes
The various inland revenue collections are for any sum of money amounting to five
sometimes remitted to London by means pounds or upwards, expressed to be payable
of bankers' after date drafts. Drafts for to the bearer on demand, or to order , at any
this purpose do not require to be stamped . period not exceeding seven days after sight ;
After date drafts are not much in request and bills of exchange payable to order, on
in many parts of the country, but in certain demand, or at any period, not exceeding
districts they are in common use for making seven days after sight or twenty -one days
payments which are usually made elsewhere after date, provided such bills be drawn upon
by means of cheques. Where this practice a banker in London , Westminster, or the
exists, a customer supplies his banker with a borough of Southwark ; or provided such
list of the amounts for which he requires bills be drawn by any banker or bankers at
drafts . The banker draws a draft for each any place where they are licensed to issue
amount on the list, at, say, twenty -one days bills and notes, upon themselves, payable at
date, and makes all the drafts payable to the any other place where they shall also be duly
customer . The customer then indorses licensed .
each draft, making it payable to the person That Section applies only to bankers who
to whom he intends to send it . are licensed to issue notes and drafts on
The following is a specimen of an ordinary unstamped paper. The stamp duty is
after date draft : compounded for at the rate of 3s. 68. for
Examined

No. X & Y Bank , Ltd., every £ 100 or part of £ 100 of the half-yearly
average amount of notes and drafts in cir .
£ Leeds 19 .
culation , based on the amount in circulation
Twenty -one days after date pay to onSaturday in every week.
the order of the sum of Where a banker is not licensed to issue
value received . notes and drafts on unstamped paper, all
For the X & Y Bank , Ltd., drafts payable after date, issued by him ,
, Manager. must be stamped in the same way as an
To the A & B Bank , Ltd., ordinary bill of exchange. See the stamp
London . duties under BILL OPEXCHANGE . (See DRAFT .)
251
DRA ] DICTIONARY OF BANKING (DRA

DRAFT BOOK . A book in which are kept | drawn upon a banker for a sum of money
particulars of drafts issued , e.g. the date, payable to order on demand which shall,
number of draft, name of payee, amount, when presented for payment, purport to be
and term (on demand or at so many days indorsed by the person to whom the same
date or sight). When a draft is finally paid, shall be drawn payable, shall be a sufficient
the date of payment is entered in the column authority to such banker to pay the amount
provided for the purpose. Separate books of such draft or order to the bearer thereof ;
may be kept for drafts on demand, and for and it shall not be incumbent on such
drafts after date ; also for drafts on London, banker to prove that such indorsement, or
on the head office, on branches, or on any subsequent indorsement, was made by
correspondents. or under the direction or authority of the
DRAFT ON DEMAND . A person who person to whom the said draft or order was
wishes to remit money to someone in an- or is made payable, either by the drawer or
I)
other place may, if he does not send his own any indorser thereof."
cheque, obtain from his banker a draft on It is considered by some authorities that
demand payable to the person who is to be this Section protects a banker in paying not
paid the money. A banker's draft is a only drafts drawn by one branch on another
document drawn by one banker upon an- or on the head office, but also drafts drawn
other. It may be drawn upon the banker's abroad on the head office in England.
London office or London agents , or upon one In the case of a draft after date, however,
of the banker's own branches , or upon some a forged or unauthorised signature is wholly
other bank where an arrangement exists inoperative, and no right can be acquired
for drafts to be drawn. Whenever a draft through or under that signature (Section 24,
is drawn , an advice is despatched the same Bills of Exchange Act, 1882) .
day, advising the London agents, bank or In the judgment of Lord Lindley in Capital
branch, as the case may be, of the particulars and Counties Bank v. Gordon ( 1903, A.C. 240) ,
of the draft, so that the banker on whom it speaking of drafts there are the following
is drawn may recognise the draft when it is words : “ The first question which has to
presented . be considered is whether these instruments
By the Bank Charter Act, 1844, " it shall are bills of exchange as defined in Section 3
not be lawful for any banker to draw , accept, of the Bills of Exchange Act. If they are,
make, or issue in England or Wales, any then, not being crossed, Section 82 will have
bill of exchange or promissory note, or no application to them, even if that Section
engagement for the payment of money pay- could have applied in this case to such docu
able to bearer on demand," except those ments if crossed . But if these drafts are
bankswhich were lawfully issuing own notes bills of exchange within the meaning of
on 6 May, 1844. Section 3, they will come within Section 60,
A draft on demand, like a cheque, requires and the bank will be protected by it, for
a twopenny stamp. A draft drawn by any these cheques are drawn on the bank sought
banker in the United Kingdom upon any to be made liable for paying them . But I
other banker in the United Kingdom , not agree with the Court of Appeal in thinking
payable to bearer or to order, and used that the bank, which is both drawer and
solely for the purpose of settling or clearing drawee of these instruments, is not entitled
any account between such bankers is exempt to treat them as bills of exchange as defined
from stamp duty. (See Exemption 2, under in Section 3 of the Bills of Exchange Act,
BILL OF EXCHANGE .) although a holder may sue the bank upon
A draft on demand drawn by one branch them and treat them either as bills of ex
upon another branch or upon the head office, change or as promissory notes (see Section 5,
is not a cheque within the meaning of the S.S. 2) . An instrument on which no action
Bills of Exchange Act, 1882, as it is not can be brought by the drawer can hardly
addressed by one person to a banker, which is be a bill of exchange within Section 3 of the
part of the definition of a cheque. It can- Act, whatever it may be called in ordinary
not, therefore,be crossed like a cheque. In talk." (See DRAFT AFTER DATE.)
paying a draft on demand the banker is DRAIN OF BULLION . A large outflow
protected against a forged indorsement by of gold from the Bank of England. When
Section 19 of the Stamp Act, 1853, which is the Bank Rate is raised , it tends to stop
as follows : the withdrawal and to turn the current
“ Provided always, that any draft or order homeward .
252
DRA ) DICTIONARY OF BANKING (DRA

DRAWEE . The drawee of a bill is the The drawee of a cheque is the banker on
person to whom it is addressed . whom it is drawn . The banker is respon
By Section 6 of the Bills of Exchange Act, sible only to the drawer and is under no
1882 : liability to the person presenting the cheque
“ ( 1) The drawee must be named or for payment, except in Scotland where the
otherwise indicated in a bill with presentment of a cheque attaches any
reasonable certainty. balance there may be in the drawer's account
to the extent of the cheque. In Scotland ,
· (2) A bill may be addressed to two or if the balance in an account does not admit
more drawees whether they are of the payment of a cheque, the cheque is
partners or not, but an order returned and the balance of the account is
addressed to two drawees in the transferred to a " Funds attached ” account.
alternative or to two or more
The drawee of a bank draft is the bank
drawees in succession is not a bill to which the order to pay is addressed . (See
of exchange." ACCEPTOR, BILL OF EXCHANGE, PRESENT
Where different parties to aa bill are the MENT FOR ACCEPTANCE .)
same person, Section 5 provides : DRAWER . The drawer is the person who
“ (1) A bill may be drawn payable to, or signs a bill of exchange giving an order to
to the order of, the drawer ; or it another person , the drawee, to pay the
may be drawn payable to, or to the amount mentioned therein .
order of, the drawee. In the usual course, a drawer makes out
“ (2) Where in a bill drawer and drawee the bill himself, signs it and sends it to the
are the same person , or where the drawee for acceptance. But a person may
drawee is a fictitious person or a sign a bill as drawer which has already been
person not having capacity to con made out and accepted , and even indorsed .
tract, the holder may treat the When a simple signature on a blank stamped
instrument, at his option, either paper is delivered by the signer in order that
as a bill of exchange or as a it may be converted into a bill, it operates
promissory note.” as a primâ facie authority to fill it up as a
The drawee is the person who is expected complete bill using the signature, if so
to accept the bill and, at maturity, to pay it. authorised, as that of the drawer. (See
INSTRUMENT .)
If the drawee, on receiving a bill, agrees to INCHOATE
pay the amount as indicated therein , he Section 55 of the Bills of Exchange Act,
signifies his assent to the drawer's order by 1882, provides :
signing his name across the face of the bill, “ (1 ) The drawer of a bill by drawing it ~
called accepting the bill. When the drawee “ ( a) Engages that on due pre
has accepted a bill he is then called the sentment it shall be accepted
acceptor (q.v.) and his written assent on the and paid according to its
bill is his acceptance (q.v.). tenor , and that if it be
With regard to funds in the hands of a dishonoured he will com
drawee , Section 53 enacts : pensate the holder or any
indorser who is compelled to
“ ( 1) A bill, of itself, does not operate as pay it, provided that the
an assignment of funds in the requisite proceedings on
hands of the drawee available for dishonour be duly taken ;
the payment thereof, and the " (6) Is precluded from denying
drawee of a bill who does not accept to a holder in due course the
as required by this Act is not liable existence of the payee and .
on the instrument. This sub -section his then capacity to indorse."
shall not extend to Scotland . A drawer may, if he wish , limit his
" ( 2) In Scotland, where the drawee of a liability on the bill by such words as Pay
John Brown or order without recourse,
bill has in his hands funds available 60
for the payment thereof, the bill or, sans recours. " Permission to do so is
operates as an assignment of the given in Section 16, as follows :
sum for which it is drawn in favour “The drawer of a bill, and any indorser,
of the holder, from the time when may insert therein an express stipulation
the bill is presented to the (1) Negativing or limiting his Own
drawee.” liability to the holder ;
253
 DRA ) DICTIONARY OP BANKING [DRA
" ( 2) Waiving as regards himself some or Where a drawer is unable to write, he may
all of the holder's duties." sign by making a X in the presence of a
Where different parties to a bill are the witness who is known to the bank officials .
The mark should be made at the bank ,
same person , Section 5 provides : otherwise the banker cannot be certain that
" (1) A bill may be drawn payable to , or it has been made by the customer . The
to the order of, the drawer ; or it
may be drawn payable to, or to the his
order of, the drawee . form is usually this :-THOMAS X SMITH,
mark
" (2) Where in a bill drawer and drawee Witness :-JAMES ROBINSON ,
are the same person , or where the Hope Street,
drawee is a fictitious person or a
person not having capacity to Manchester.
contract, the holder may treat the If the customerdoes not produce an outside
instrument, at his option, either as person two officials of the bank may witness
a bill of exchange or as a promissory his mark. Banks do not, as a rule, consider
note .” (See PARTIES TO BILL or one official sufficient.
EXCHANGE .) When mandates or authorities are held
Where a drawer is dead, notice of dis- regarding the signing of cheques, the in
honour must be given to a personal repre- structions must be carefully observed . A
sentative ; where he is bankrupt notice may difficulty sometimes arises where a banker is
be given either to the party himself or to authorised by a limited company to pay
the trustee. (See DISHONOUR OF BILL OF cheques when signed by two directors and
EXCHANGE.) the secretary, and the secretary is also a
In applying the provisions of Part IV of director, his name appearing on cheques in
the Bills of Exchange Act, 1882, the first both capacities. In such a case the banker
indorser of a promissory note is (by Section should ascertain if the articles of association
89) deemed to correspond with the drawer permit a director to act also as secretary.
of an accepted bill payable to the drawer's Even if they do so permit, it is better to have
order . a clear understanding with the company on
The drawer of a cheque is the person on the point.
whose account it is drawn and who must Where a person draws a cheque in a repre
provide the funds to meet it. sentative capacity, words should be added
A banker must know the signature of a to show clearly that he signs for and on
customer. If the drawer's signature is behalf of a principal. (See AGENT, PER
forged, the banker cannot charge it to his PROCURATION .)
customer's account. Even if the forgery is Notice of a customer's death cancels the
so perfectly done as to defy detection under banker's authority to pay his cheques, and
the closest scrutiny, it does not affect the any cheques presented after receipt of such
banker's liability. His customer cannot be notice are returned " Drawer dead,” except
debited with a cheque which he has not in the case of a cheque which the banker has
drawn . agreed to pay, by marking or certifying it,
The drawer of a cheque must take care at the drawer's request, for payment, or
to fill up the cheque in such a manner so which the banker has, for his own con
that, after it leaves his hands, it cannot venience, “ marked " in connection with the
readily be altered without giving reasonable local clearing.
ground for suspicion . To eglect this Where a person is too ill to sign his name,
duty of carefulness is a negligence cognisable his mark should be witnessed by two persons,
by law . (See London Joint Stock Bank, one of whom should be the doctor in attend
Lid . Macmillan and Arthur, under ance. It is usual for the doctor to certify
V.
ALTERATIONS and Cheque. that his patient clearly understood the
The various points to be observed when nature of the transaction.
drawing a cheque are given under DRAWING The drawer of a bill payable on demand
A CHEQUE.) is discharged if it is not presented for
If John Thomas Charles Brown wishes to payment within a reasonable time.
sign cheques merely as plain John Brown , The drawer of a cheque is, in anordinary
an authority should be obtained to honour case, liable thereon for six years from the
cheques so signed . date of the cheque. (See ALTERATIONS,
254
DRA ) DICTIONARY OF BANKING [DRA

AUTHORITIES, BILL OF EXCHANGE, CHEQUE, Cheques with printed crossings should be

JOINT ACCOUNT.) used when possible. (See CROSSED CHEQUE.)
DRAWING A CHEQUE . A customer's (7) For further protection, the words
.

cheque must be unambiguous, and must be " not exceeding ...... pounds may be
ex facie in such a condition as not to arouse written across the cheque.
any reasonable suspicion . ( 8) Do not sign a cheque in blank . (See
A customer is bound to exercise reasonable BLANK CHEQUE .)
care in drawing a cheque, to prevent the (9) If an alteration is necessary after a
banker being misled . cheque is filled up,the alteration , ifmaterial,
To neglect the duty of carefulness in should be verified by the drawer's signature.
drawing a cheque is a negligence cognisable If there are several drawers, each should
by law . sign the alteration . Initials are too easily
If a customer draws a cheque in a manner forged . (See ALTERATIONS .)
which facilitates fraud, he will be responsible ( 10) Do not “ open a crossed cheque by
to the banker for any loss sustained by the writing thereon pay cash .” It is better
banker as a direct consequence of the to issue a fresh cheque, if necessary , and
negligence . It is well settled law that if a destroy the other . (See OPENING A CROSSING .)
customer signs a cheque in blank and leaves ( 11) Always use the same form of signa
it to another person to fill up, he is bound ture on each cheque, in accordance with the
by the instrument as filled up by the agent. specimen signature supplied to the bank .
In drawing a cheque it is a very simple (See SIGNATURE.)
thing to take reasonable and ordinary ( 12) See that the amount in writing agrees
precautions against forgery. exactly with the figures. (See AMOUNT OF
The above remarks were made in the BILL OR CHEQUE .)
judgment in an appeal to the House of Lords ( 13) Take care to write the payee's name
in London Joint Stock Bank, Ltd. v . Mac- correctly. It the payee is a company, do
millan and Arthur ( 1918, A.C. 777), see not abbreviate the company's name . Incor
under ALTERATIONS and CHEQUE. rect spelling or an incomplete name gives
When drawing a cheque the following subsequent trouble with the indorsement.
points should be observed : (See INDORSEMENT.)
( 1) Use the form of cheque supplied by (14) If you have several accounts, mark
your banker . The cheque is usually speci- near the signature the name of the account
ally prepared so as to make any erasure to whichthe cheque has to be debited .
easily seen . (See ALTERATIONS.) ( 15) Where, say, John Brown has author
(2) Fill up the cheque in black ink, with ity to draw cheques on the account of John
clear writing and boldfigures. Do not use Jones, he should sign “ per pro . John Jones,
a pencil, or indelible " pencil, or typewriter John Brown." Cheques drawn by officials
for the purpose . of a company should be signed “ For and on
(3) Commence to write the amount close behalf of Co., Ltd., "
to the left margin and do not leave any and the officials should state the capacity in
space between the words. Join the amount which they sign . (See PER PROCURATION .)
of pounds to the word " pounds " as though ( 16) Keep the cheque book locked up.
they were one word . ( 17) When a new cheque book is required ,
(4) Commence the first figure of the sign the bank's printed request form .
amount close to the left margin and do not (18) Avoid borrowing cheques from
leave any vacant space so that another another person's cheque book.
figure may be inserted. The spaces between ( 19) Fill up the counterfoil fully before
pounds, shillings and pence should be filled detaching the cheque.
with a dash , thus £ 23-6-8. (20 ) Ifa cheque is lost, give full particulars
(5) Make the cheque payable to order, if of it to your banker and ask him to stop
not so printed . (See ORDER.) Do not payment. If subsequently found, advise
issue a bearer cheque if it can be avoided . your banker at once .
(6 ) If the cheque is to be sent by post, DRAWING ACCOUNT. A current account.
cross it with twoparallel strong black lines, DRAWN BILL . A bill drawn in this
from edge to edge, and mark it “ not country and payable abroad , if negotiated
negotiable." If the name of the payee's direct from the drawer to a foreign banker
banker is known, enter it between the two in London , is termed a drawn bill. (See
lines . Do not draw the lines through figures. MADE .BILL.)
255
DRA ) DICTIONARY OF BANKING EFF

DRAWN BONDS. Where a certain | into freely by the surety, and everything
amount of bonds is to be repaid periodically, like pressure used by the intending creditor
the method adopted, in order to determine will have a very serious effect upon the
which of the bonds should be paid, is to validity of the contract. (See GUARANTEE.)
draw " numbers, on the lottery principle, Where a bill of exchange is affected with
up to the amount required . The numbers duress, or force and fear, see Section 30 of
so drawn represent thebonds to be paid off, the Bills of Exchange Act, 1882, under
which are then called “ drawn bonds." HOLDER IN Due COURSE .
Holders of bonds subject to be drawn
require to watch the advertisements of the EAGLE . (See FOREIGN MONEYS — UNITED
drawings,” or to instruct their bankers to STATES.)
do so . EARMARKED. If a customer pays in to
After a bond is drawn interest ceases . the credit of his account an amount
In the case of Russian bonds, however, the expressly to meet a specified cheque or bill
coupons may continue to be paid after a when presented, the credit is said to be
the
amounts so paid are treated by the Russian used by the banker for any other purpose.
Government as repayments on account of (See APPROPRIATION OF PAYMENTS.)
the principal. (See RUSSIAN BONDS.) The EASEMENTS . The rights which the
same practice exists with regard to bonds owner of a property may have over the
of several foreign governments. property belonging to another person , such
DRUNKEN PERSON. If a bill or cheque as rights of way, rights of light, rights of
is given during a state of drunkenness, that air, rights of water, rights of support, etc.
condition may be set up as a defence against An absolute right of way may be acquired
an immediate party, if the drunken person by the uninterrupted use for forty years,
was taken advantage of in any way, but it unless the use was granted in writing by the
would be of no avail as against a holder in owner of the land . A right of light over
due course . another person's property (except when
Where a drunken person draws a cheque the privilege is granted in writing by the
at the bank counter in order to obtain cash owner of the property) is acquired after an
and he really insists upon payment, it is enjoyment of it for twenty years.
well to have thesignature witnessed. These easements or rights are called
DUE DATE OF BILL . (See TIME OT incorporeal hereditaments.
PAYMENT OF BILL.) EASTERNS. A Stock Exchange name
DUPLICATE OR COUNTERPART. By for Great Eastern Railway ordinary stock .
the Stamp Act, 1891 , the stamp duty is :- EDUCATION AUTHORITIES. When a
DUPLICATE or COUNTERPART of loan is required by an Education Authority,
any instrument chargeable with reference must be made to the Statute
any duty . under which the power to borrow is con
Where such duty does not / The same duty ferred , as any loan which does not conform
as the original
amount to 5s. instrument. with the provisions of the Act will be ultra
€ S. d. | vires.
In any other case 0 5 0 By the Education ( Provision of Working
And see Section 72, which is as follows :- Balances) Act, 1903, a local Education
“The duplicate or counterpart of an Authority may, with the sanction of the
instrument chargeable with duty(except the Local Government Board , borrow under
counterpart of an instrument chargeable as Section 19 of the Education Act, 1902, such
a lease, such counterpart not being executed sums as, in the opinion of that Board, are
by or on behalf of any lessor or grantor ), is required to provide a working balance for
not to be deemed duly stamped unless it is carrying that Act into effect, and the sanc
stamped as an original instrument, or tion so given shall be conclusive as to the
unless it appears by some stamp impressed power of the local Education Authority to
thereon that the full and proper duty has borrow . In 1919, the powers and duties of
been paid upon the original instrument of the Local Government Board were trans
which it is the duplicate or counterpart.” ferred to the Minister of Health . (See
(See DENOTING STAMPS .) LOCAL AUTHORITIES . )
DURESS. Compulsion. For example, a “ EFFECTS NOT CLEARED ." If a cus
contract of suretyship should be entered tomer pays in to the credit of his account a
256
ELE ) DICTIONARY OF BANKING [EQU

cheque drawn upon another banker, and the the lord makes a legal conveyance in fee
customer is given to understand that he simple to the copyholder, the copyhold is
must not draw against it until the cheque extinguished .
has been collected, in the event of the By the Conveyancing Act of 1881 :
customer issuing a cheque which is presented Section 3, s.s. 2. Where land of copyhold
before the proceeds are received, the banker or customary tenure has been converted into
is entitled to return the cheque marked freehold by enfranchisement, then, under
“ effects not cleared .” a contract to sell and convey the freehold,
If, however, there is no particular arrange- the purchaser shall not have the right to call
ment with the customer that cheques will for the title to make the enfranchisement."
not be paid against uncleared effects, the ENTAILED ESTATE . Where land is
banker is probably not entitled to return granted to a person and the heirs of his body,
a cheque so marked . In Capital and Coun- it is said to be entailed , and the estate is
ties Bank v. Gordon ( 1903, A.C. 240 ), Lord called “ estate tail.” When the land is
Lindley said : “ It must never be forgotten freed from the entail, it is said to be
that a places , DISENTAIL .)
customer'scredit, the customeris
ing
entitled to EQUIPMENT BONDS: Astername
ed
some
draw upon it, unless someth occurs to times giv en ds
to bon (regi or bearer)
deprive him of that right. " which are issued by a company for the
A banker could probably protect himself purpose of raising money in order to provide
by printing a notice in all his pass books or equipment for the business. (See BEARER
on all paying -in slips, that customers would BONDS, REGISTERED BOND .)
not be at liberty to draw against uncleared EQUITABLE ESTATE . The estate, or
cheques. Some banks have a notice on interest, which a person may have in land ,
paying -in slips to the following effect :- according to equity , as distinguished from
“ Cheques, etc., for collection, though an estate or Interest, according to law .
credited to the account when paid in, are There may be both estates, the legal and
not available for drawing against until the the equitable, in the same piece of land. A
proceeds have been received at the branch . " mortgagee has the legal and the mortgagor
But a banker could not take advantage of has the equitable estate. If the money lent
such a notice if he has been in the habit of, is not repaid according to the terms of the
even occasionally, paying his customer's mortgage deed, the mortgagee becomes, by
cheques against uncleared effects . law , the owner of the land, but the mort
ELEGIT. (See WRIT OF ELEGIT.) gagor, who is, by equity, the real owner , has
EMBEZZLEMENT. (See COMPOUNDING the equity of redemption or right to redeem
A FELONY.) his land on payment ofthe debt and interest.
ENDORSEMENT. Same as Indorsement A trustee holds the legal estate and the
(q.v.). person in whose favour the trust operates
ENDOWMENT POLICY . A policy of has an equitable estate.
assurance which is payable on the assured A second mortgagee hasonly an equitable
surviving to a certain age, or payable at estate in the property. Where two banks
death if it occurs before that age. (See LIFE amalgamate, the absorbing " bank has
POLICY .) only an equitable estate in property mort
ENFACED PAPER. A name given to the gaged to the bank " absorbed,” until the
promissory notes (Rupee Paper) of the Indian legal estate in such property is conveyed to
Government, which bear an announcement the first mentioned bank by a properly
on the face that the interest is payable by executed transfer of mortgage. (See EQUITY
drafts on Calcutta obtainable on presenta- OF REDEMPTION .)
tion of the notes at the Bank of England. EQUITABLE MORTGAGE. Where a
(See RUPEE PAPER .) borrower gives to a lender, as security, the
ENFRANCHISEMENT. Under the Copy- title deeds of his property, without any
hold Act of 1894 the lord of the manor or document of charge, or the deeds with a
the tenant of copyhold land may, under memorandum of deposit, or even a memo
certain provisions as to compensation , randum of charge without the deeds, it is
require it to be enfranchised . By enfran- an equitable mortgage. An equitable mort
chisement the land is freed from all duties gage does not convey the legal estate to the
to the lord of the manor, and the owner lender, as does a legal mortgage, but in the
henceforth holds it as freehold land. If memorandum which usually accompanies
257
174041535)
EQU ) DICTIONARY OF BANKING [EQU

the deposit of deeds,the borrower, as a rule, circumstances under which the deeds came
promises to grant a legal mortgage when into possession of the later incumbrancers.
requested to do so . (See MEMORANDUM OF | The conduct of the plaintiff was not such
DEPOSIT .) as to postpone his rights as prior incum
Where a legal mortgage has been granted brancer, and did not contribute to the
upon a property and the borrower raises defendants getting possession of the deeds.
further money by a second or a third mort- Instead of an order for foreclosure the
gage, those subsequent charges, whether by Court may, if it thinks fit,direct a sale of the
deed or otherwise, are merely equitable mortgaged property ; and in an action for
mortgages. If a legal mortgagee makes a redemption the mortgagor may have an
further advance after a second charge (an order for sale, or for sale or redemption in the
equitable mortgage) has been given on the alternative. ( See Section 25 of the Con
property, he may, if he has no notice of that veyancing and Law of Property Act, 1881 ,
second charge, tack or add the further under LEGAL MORTGAGE .)
advance to the original advance, and thus When deeds are deposited by a company
take priority with regard to both advances as security, the charge must be registered
over the second charge. To prevent this, within twenty -one days after the date of its
the holder of the second charge should always creation, that is, after the date of deposit
give notice to the legal mortgagee. (See of the deeds . (See REGISTRATION OF MORT
PRIORITIES, TACKING . ) GAGES AND CHARGES.)
Where a person has only an equitable For the purposes of the Stamp Act , 1891,
estate in land as, for example, where the legal equitable mortgage means an agreement
estate is vested in a trustee for his benefit, or memorandum , under hand only, relating
any charge that he gives upon that estate to the deposit of any title deeds or
will only be an equitable mortgage. An equit- instruments constituting or being evidence of
able charge may be created by a written the title to any property whatever (other
agreement to grant a mortgage, or by sending than stock or marketable security ), or creating
the deeds to a party for the purpose of having a charge on such property . (Section 86,
a legal mortgage prepared , or by a written s.s. 2. See MORTGAGE.) Mortgages subse
promise to lodge certain deeds as security. quent to the first legal mortgage, are, legally,
As to the deposit by a customer of a equitable mortgages, but it should be noted
mortgage to him , see under MORTGAGE. that these equitable mortgages are not
An equitable mortgagee by deposit of included in the definition of " equitable
title deeds, when he desires to realise his mortgage under the Stamp Act.
security, requires to go to the Courts for A second mortgage by deed. (The duty is the
power to sell, or to appoint a receiver or to A memorandum of deposit
same as for a
mortgage ( seo
foreclose, or to enter into possession . If, under seal . MORTGAGE).
however, he obtains a legal mortgage he has
power to sell or put in a receiver without A memorandum of deposit of Porandevery
any £frac
100,
applying to the Courts. deeds under hand (whether tional part of
a principal security or col- £ 100 of the
Where there are two equitable mortgages amount se

on the same property , priority will be given lateral security) . . cured, 1s.
to a second equitable mortgagee who holds The stamp on a memorandum of deposit,
the title deeds, and who has no notice of the under hand, of certificates is sixpence for
prior charge, if the first equitable mortgagee any amount , and an adhesive stamp may
was negligent in not retaining possession of be used .
the title deeds. But if there has not been If under seal, the duty is the same as for
negligence , priority in order of time prevails. a mortgage. (See Section 86, s.s. 1 (d) ( 8 ),
If a second equitable mortgagee made his Stamp Act, 1891, under Mortgage .)
advance, without knowledge of the prior If a power of sale is included in amemoran
equita ble charge, he may, in most cases, dum under hand it requires to be stamped
secure priorityesby obtaining a legal mortgage. the same as a mort gage.
randum
(See Prioriti .) In Jones v . Cooke- Hill's Where a memo of deposit under
Trustees ( 1917, W.N. 73) it was held that seal is held ( stamped 2s. 6d. per cent.) and
as between two equitable mortgagees the a legal mortgage is subsequently obtained
possession of the title deeds only raised a in fulfilment of the agreement in the memor
presumption and did not conclude the ques- andum to give a mortgage, the mortgage
tion , and that the Court must ascertain the comes under the heading of " substituted
258
EQU ) DICTIONARY OF BANKING (EQU
security ” (see Schedule (2) under MORT- a penalty of £10. Neglect to stampa
GAGE), and is liable to the duty of 6d. per memorandum does not affect the validity
cent ., but limited to 10s. in all. If, however, of it.
the memorandum of deposit is under hand, In Scotland, a deposit of title deeds, either
the subsequent legal mortgage is liable to the with, or without, a memorandum of deposit,
full mortgage duty of 2s. 6d. per cent. does not create an equitable mortgage, as
A letter or memorandum of deposit, in England. If, therefore, a banker in
chargeable with ad valorem duty, must be England advances against real property in
stamped within thirty days of its date, Scotland, the form of charge must conform
or, if received from abroad, within thirty to the law of Scotland. (See DISPOSITION
days of its receipt in this country . ABSOLUTE , MORTGAGE , TITLE DEEDS .)
By an Inland Revenue Circular : EQUITY . The administration of justice,
The instruments given to banks to secure not according to the strict letter of the law
overdrafts are almost invariably worded as but according to the circumstances of each
securities for all sums due or to become due. case so as to give an equitable decision. A
In the case of equitable mortgages, every Court of Equity is bound by rules and pre
security, whether primary or collateral, is cedents as completely as a Court of Law .
chargeable with the duty of 1s. per cent. on EQUITY OF REDEMPTION . The right
the highest amount at any one time due in which a mortgagor has to redeem his pro
respect of the indebtedness secured to the perty. For example, if John Brown is the
bank up to date (i.e. within thirty days) and absolute owner of a piece of land , and he
with additional duty from time to time, if mortgages theland toJohn Jones to secure
the indebtedness should subsequently reach, the repayment of a loan which Jones has
at any one time, a higher total. In no case granted to him, Jones obtains by that deed
can the value of the security deposited be the legal estate in the land, and if Brown
taken as the basis of assessment for mortgage fails to repay the money at the proper time,
duty. (See copy of the Circular under Jones becomes, according to law , the owner
MORTGAGE .) of the land . The Court of Equity, however,
For instance, if the deeds of several regards Jones's title to the land as being
different properties are lodged as security, subject to Brown's right to repay the money.
with a separate memorandum for each to Brown is the real owner of the land , and
cover the overdraft, each memorandum though Jones may, by law , become the full
requires to be (according to the above owner (through Brown's failure to pay at
Circular of the Inland Revenue) stamped to the appointed time), Brown has, by equity,
cover the full amount secured . the equity of redemption " in the land,)

A memorandum , unless a fixed amount that is, the rightto redeem it upon payment
has been inserted in it, may be further of the money due, with interest and certain
stamped to cover an additional overdraft, charges incurred by Jones in protecting his
but the Stamp Authorities may, before security. In the case of a legal mortgage,
stamping it with the extra stamp, require after the date of payment has gone past,
the banker to state what has been the highest unless Jones has demanded re-payment of
amount of overdraft and the date when it the money lent, Brown must give six months'
occurred . It must be stamped for the notice of his intention to exercise his equity
additional amount within thirty days of the of redemption . In the case of an equitable
extra overdraft being taken . mortgage Brown can repay at any time
If a fixed amount is inserted in the without notice .
memorandum of deposit, the security cannot So long as Brown holds the equity of
be made available for any greater amount redemption he may sell the land, or borrow
than that stated in the document. If the more money upon the land, if the value will
property is to form a security for more than admit of it, bymeans of a further mortgage.
that amount, a fresh memorandum must If he sells it, the purchaser obtains the land,
be taken . subject to the mortgage to Jones. If he
If a memorandum of deposit is unstamped raises an additional loan from Smith upon
or insufficiently stamped , it cannot be mortgage of the land, it is aa second mortgage
accepted as evidence in a Court of Law or and ranks after the one to Jones ; and if
Equity. An instrument which has not been there is sufficient margin of value he may
stamped within the prescribed time may borrow more money in other quarters and
be stamped at any time afterwards under grant still further mortgages. It should be
259
EQU ) DICTIONARY OF BANKING (EST

noted , however, that the legal estate in the expressed in the mortgage deeds or
land was conveyed to Jones in the first one of them .”
mortgage, and that any subsequent mort- The value of an equity of redemption as
gages convey only an equitable estate in the a security depends upon the value of the
property. All mortgages subsequent to the property and the amount of mortgages
first are called equitable mortgages. which are in existence. The margin in some
If Brown fails to pay the interest due cases between the value and the mortgages
under the mortgage to Jones, and Jones may be very considerable, but in many
enters into possession of the land and con- instances the equity is valueless as a security.
tinues in possession for twelve years, without (See MORTGAGE,TITLE DEEDS.)
giving any acknowledgment in writing that ESCHEAT . Where the owner of an
Brown is still entitled to the equity of estate in fee simple dies without leaving a
redemption, Jones obtains complete owner- will and without heirs, the estate reverts
ship of the land and Brown's right to redeem or escheats to the Crown . In the case of
the land is extinguished . copyhold land it reverts to the lord of the
Brown will also lose his equity of redemp- manor.
tion if the mortgagee forecloses. (See ESCROW . A deed handed to a person
FORECLOSURE .) who is not a party to it, to be held by that
If Jones is obliged to sell the land in order person until certain conditions have been
to obtain repayment of the debt, Brown fulfilled by the party in whose favour the
thereby loses his equity, though, if the land document is drawn. When the conditions
realises more than is required to satisfy have been complied with , the document
Jones, the balance must be handed to Brown. takes effect as a deed and is then delivered
By the Conveyancing and Law of Property to that party, the grantee.
Act, 1881 : ESCUDO . ( See FOREIGN MONEYS
" Section 15. ( 1 ) Where a mortgagor is PORTUGAL .)
entitled to redeem , he shall, by ESTATE DUTY . This duty is imposed
virtue of this Act, have power to upon the principal value, i.e. the grossprice
require the mortgagee, instead of itwould sell for in the openmarketat the date
re -conveying, and on the terms on of death of deceased , of all property, real or
which he would be bound to re- personal, which passes on the death of any
convey , to assign the mortgage debt person after August 1 , 1894, unless it be an
and convey the mortgaged property estate under £ 100 or some of the other
to any third person, as the mortgagor exemptions mentioned in the Finance Act,
directs ; and the mortgagee shall, 1894 .
by virtue of this Act, be bound to The executor or administrator is required
assign and convey accordingly. to furnish particulars of the property of the
deceased person .
“ (2) This Section does not apply in the
cas e of a mortgagee,beingor having delThe
been in possession .”
estate duty is due to be paid
ivery of theaccount by the repupon
resentthe
a,
A mortgagor isentitled,as long as his right tives ofthedeceased , orat the expirationof
to redeem subsists, at his own cost, to six months from the death. By the Finance
Inspect and make copies of, or extracts Act, 1919, Section 30, 4 percent. simple
from , the documents of title relating tothe interest ischarged uponthe duty from the
mortgaged property. (Section 16.) date of death of deceased , until it is paid .
By Section 17 :
In the case of duty upon lands it is a charge
upon the lands, and when deeds of a pro
“ ( 1) A mortgagor seeking to redeem any perty which has passed upon a death are
one mortgage, shall, by virtue of this given as security a certificate of payment,
Act, be entitled to do so, without granted by the Inland Revenue authorities,
paying any money due under any should accompany the deeds, though in
separate mortgage made by him, or practice it rarely does. The issue of such a
by any person through whom he certificate is provided for by the Finance
claims, on property other than that Act, 1894, Section 11 (1 ) , as follows :—" The
comprised in the mortgage which he Commissioners, on being satisfied that the
seeks to redeem . full estate duty has been , or will be paid in
“ (2) This Section applies only if and as respect of an estate or any part thereof shall,
far as a contrary intention is not if required by the person accounting for the
260
EST] DICTIONARY OF BANKING (EST

duty, give a certificate to that effect, which interest in expectancy within the meaning
shall discharge from any further claim for of Part I of the Finance Act, 1894, in any
estate duty the property shown by the property has, before the thirtieth day of
certificate to form the estate or part thereof April, 1919, been bona fide sold or mortgaged
as the case may be." for full consideration in money or money's
Estates of a less value than £100 are worth, then no other duty on that property
exempt from estate duty . shall be payable by the purchaser or mort
The estate duty payable upon real pro- gagee when the interest falls into possession
perty may be paid in eight equal yearly than would have been payable if this part
instalments or sixteen half-yearly instal- of this Act had not passed , and in the case of
ments, with interest at 4 per cent. from the a mortgage any higher duty payable by the
date at which the first instalment is due. mortgagor shall rank as a charge subsequent
The first instalment is due at the expiration to that of the mortgagee.”
of twelve months from the date of the Where estate duty has become payable
death . on any property consisting of land or a busi
Where a person has conveyed a property ness (not being a business carried on by a
by deed of gift and dies within three years company), certain reductions are allowed in
afterwards, estate duty is payable on the respect of quick successions. (See Section
value of the property so conveyed in the 15 , Finance Act, 1914.)
same manner as though he had died pos- Where the gross value of the property
sessed of it. (See GIFTS INTER Vivos .) upon which estate duty is payable does not
In the case of persons dying after July 31 , exceed £ 300, a fixed duty of 30s. may be
1919, the Finance Act, 1919, Section 29, paid, and where it does not exceed £ 500 a
imposes the rates of estate duty in the fixed duty of 50s. may be paid instead of the
following table : “ Provided that, where an ad valorem duty in the above scale.
As to the estate duty on property which
SCALE OF RATES OF ESTATE DUTY . passes to the executor as such, the executor,
Estate being the only person accountable for it,
duty sball must charge the duty on all such property
Where the principal value of the estate be the
at payabl
rate
e (which passes to him as executor ) against
per cent, the general residuary personal estate.
of Although, with few exceptions, real pro
VOA

perty now vests in the executor, it never

OOOO

Exceeds £ 100 and does not exceed £ 500 theless does not pass to him as such, and the
WN

500 1 1,000
» 1,000 9 5,000 3 estate duty thereon is payable out of the real
3 5,000 10,000 property itself and not out of the residuary
10,000 15,000 personal estate, but the estate duty on real
» 15,000 9 2 20,000 property is payable out of the residue where
20,000 25,000 7
25,000 30,000 a testator directs the payment of his debts
30,000 91 40,000 9 and duties.
40,000 50,000 10
Estate duty is not chargeable on real
50,000 ) 3 60,000 11
60,000 70,000 12 (immovable) property situated out of the
70,000 90,000 13 United Kingdom , or on personal (movable )
90,000 11 110,000 14 property out of the United Kingdom when
110,000 130,000 15 the deceased was domiciled out of the
130,000 150,000 16
150,000 175,000 17 United Kingdom at the time of his death ,
175,000 200,000 18 but, if he was domiciled in the United
200,000 225,000 19
>
225,000 250,000 20
Kingdom when he died , estate duty is
» 250,000 1) 300,000 21 payable on the personal property.
1 300,000 350,000 22 ESTATE TAIL . An estate tail (or fee tail)
350,000 400,000 23
is the opposite of fee simple. An estate
400,000 450,000 24
450,000 1 500,000 25 tail is where land is granted to a person and
500,000 12
600,000 26 the heirs of his body, so long as there are
600,000 99 800,000 27 such heirs, whereas a fee simple is granted
800,000 1,000,000 28
1,000,000 1,250,000 30
to his heirs, which need not necessarily be
1,250,000 1) 1,500,000 32 the heirs of his body .
1,500,000 2) 2,000,000 35 The word tail is from the French taille, a
» 2,000,000 40 cutting (tailler, to cut),. indicating that the
261
EST] DICTIONARY OF BANKING [EXC

land is cut or separated from any other estate EVEN DATE . Equal date. The same date .
and limited to the person and the actual EX ALL . Shares sold " ex all " exclude
descendants of the person to whom it is the buyer from accrued dividends, and all
conveyed . If the man has been married rights which the seller may have as
more than once, the descendants of each shareholder.
marriage are included ; but if the land is EX COUPON . Without the coupon for
granted, or limited, to the descendants of interest just due. Bonds are usually quoted
one wife it is called a special estate tail." as ex coupon on the evening of the date
When an estate tail is converted into a fee when the coupon is due.
simple it is said to be disentailed , the entail EX DIV . That is “ without dividend ,"
being barred, and the tenant may then and means that if a purchaser has bought
dispose of the estate at will. shares on the Stock Exchange quoted as ex
ESTOPPEL . A law term which means div . the dividend just being paid belongs to
the legal stopping of a person from setting the seller. Most stocks are marked in the
up a claim , on account of some previous act | London Stock Exchange official list as ex
or representation by him inconsistent with div. on the pay day next after the day when
the claim . A bar or stop arising from a the dividend has been officially declared
man's own act. by the company in question. Consols are
For example, where bonds (not strictly marked ex div. about four weeks before
negotiable bonds) were placed by the owner the interest is due to be paid . (See
in the hands and full control of an agent for Pay Day.)
disposal, the principal was precluded, or EX DRAWING . Without any benefit,
estopped, from saying that a person who took there may be from a drawing of bonds for
the bonds, in good faith and for value, from payment which is due to be made.
the agent, had not got a legal title to the EX INTEREST. Without interest.
bonds. In that case the title to the bonds EX NEW . Where new shares are being
was obtained by estoppel. issued to the present shareholders of a com
The acceptor of a bill of exchange is pre- pany, a shareholder sometimes sells his old
cluded , or estopped , from denying to a shares ex new " ; that is, he reserves
holder in due course, amongst other things, to himself the right to receive the new
the existence of the drawer and his capacity shares .
and authority to draw the bill. ( See EX RIGHTS . Shares sold ex rights '
Section 54 of the Bills of Exchange Act, are without any rights to a new issue of
1882, under ACCEPTANCE.) shares which the old shareholders are en
In a deed, or contract under seal, unless titled to, the seller reserving such rights to
duress or fraud, can be proved , the state- himself.
ments therein are conclusive against the EXCAMBION . (See EXCHANGE .)
maker and he cannot afterwards deny them . EXCESS PROFITS DUTY. A duty im
“ A man shall always be estopped by his posed by the Finance (No. 2) Act, 1915, on
own deed, or not permitted to aver or prove the amount by which the profits arising
anything in contradiction to what he has from any trade or business (except hus
once so solemnly and deliberately avowed ” bandry, offices or employments, and profes
( Blackstone). sions) exceeded by more than £200 the
There may be estoppel by negligence, as pre-war standard of profits. By the Finance
where a banker is led to make a mistake Act, 1920, the duty shall be 60 per cent. of
through the neglect of a customer in some that excess, and certain relief is granted with
duty which is owing by the customer to the respect to a business carried on by an
banker. A customer is bound to exercise individual, or by persons in partnership , or
reasonable care in drawing acheque to pre- | by a private company.
vent the banker being misled . If he draws Excess profits duty is an outgoing which
the cheque in a manner which facilitates has to be paid before it can beascertained
fraud, he is guilty of a breach of duty as what are the profits distributable.
between himself and the banker, and he EXCHANGE . A place where brokers,
will be responsible to the banker for any loss bankers, or merchants meet to transact
sustained by the banker as a direct con- business. Change is a contraction for
sequence of this breach of duty. (See London exchange.
Joint Stock Bank, Ltd. v. Macmillan and EXCHANGE . A mutual arrangement by
Arthur, under ALTERATIONS .) which one piece of property is exchanged for
262
EXC) DICTIONARY OF BANKING
another. By the Stamp Act, 1891, the
stamp duty is :
£ s.
EXCHANGE or EXCAMBION - Instru
ments effecting.
In the case specified in Sec
tion 73 see below .
In any other case 0 10
(Excambion, a term used in Scotland for cheques to Y. The clerk hands the
the contract of an exchange of property .) cheques to Y and at the same time
“ Section 73. Where upon the exchange of
any real or heritable property for any other
real or heritable property, or upon the parti-
tion or division of any real or heritable pro-
perty, any consideration exceeding in amount
or value one hundred pounds is paid or given ,
or agreed to be paid or given , for equality,
the principal or only instrument whereby the
exchange or partition or division is effected is
to be charged with the same ad valorem duty
as a conveyance on sale for the considera-
tion, and with that duty only ; and where
in any such case there are several instru-
ments for completing the title of either
party, the principal instrument is to be
ascertained , and the other instruments are
to be charged with duty in the manner herein-
before provided in the case of several instru-
ments of conveyance .” (See PARTITION .)
EXCHANGE AS PER INDORSEMENT.
(SeePAYABLE AS PER INDORSEMENT.)
EXCHANGE BROKER . A broker who
negotiates between the buyers and sellers
of foreign bills. (See BILL BROKER .)
EXCHANGE SLIP. A form which is
filled up and signed by the person requiring where there are several bankers it is the
notes, cash , or cheques on other branches or
banks, to be exchanged by a banker. It is
very desirable for a customer to pay in such
cheques to the credit of his account and
then draw his own cheque for the amount,
but if he prefers not to do this, the exchange
slip should be signed so as to provide a
record of the transaction in case the customer
should at any time be under the impression
that he had paid the cheques into his
account, and had not taken cash for them .
An exchange slip is not required when
cheques are cashed at the office on which
they are drawn. (See PAYMENT OF CHEQUE.)
Cheques on other branches or banks should
not be cashed to a stranger. On page 264
will be found a specimen .
EXCHANGES . The cheques which each
banker in a town holds drawn upon the other
bankers in the same town are collected each
day by means of the “ local clearing " or
“ exchanges."
[EXC
According to the size of the town and the
quantity of cheques, there mayinbeone
one,day
two
d. or even three exchanges ;
usually a settlement takes place only at the
final exchange of the day .
In its simplest form , if banker X holds
cheques drawn on banker Y , he sends a
0 clerk , “ the exchange clerk ,” with the
Y's exchange clerk hands to X's clerk
any cheques which he may have drawn
upon X. Each clerk makes a list, usually
in an “ exchange book," entering on the
one side all cheques handed over and on
the other side all cheques received . The
difference between the two sides is called the
1
“balance of exchange,” and is settled be
tween the two banks either in cash or by a
London draft or through their respective
London offices or London agents. If the
cheques received by X amount to more
than the cheques given to Y , the ex
change is against X and in Y's favour, as
X has to pay Y the difference. If, on
the other hand , X gives Y a greater
amount than he receives, the balance is in
favour of X, and he receives payment of
the difference from Y.
If there are other bankers in the town,
X's clerk may visit all of them in turn
and exchange cheques with each .
In some towns one banker undertakes the
visits during one week, and another banker
takes the duty next week and so on . But
custom for a representative from each to
meet at a certain bank, or in a particular
room , and mutually exchange cheques. A
settlement may be made separately by each
one with the others, or one banker may
adjust the various differences of the rest,
with the result that each has only to pay or
receive one amount.
Each cheque should bear upon its face the
stamp of the presenting banker.
Any unpaid cheques must be returned the
same day, and it forms a matter of local
arrangement as to the hour up to which they
may be returned . In some cases, in large
towns, where it is inconvenient to return an
unpaid cheque arising out of the last clearing
for the day, a local arrangement may exist
for holding it over till the following morning.
“ Returns ” which are too late to form
part of the day's settlement are sometimes
paid in cash orsettled specially, or, in some
banks, a signed voucher is given for the
263
EXC] DICTIONARY OF BANKING EXC

Exchanged
by
Paid in . The British Banking Co., Paid Out.
Bank of Eng. Notes Ltd., with Bank of Eng. Notes
Currency Notes Currency Notes .

Country Notes . .
Country Notes . .

Gold Gold .
Silver Silver •

Copper . .
..19 ... Copper .

Cheques .
Bills .

returned cheque, and the voucher is passed Bearer to receive the sum of TWO HUNDRED
through in the next day's exchange just like POUNDS on April 18, 1915, at the rate of
a cheque. £2 15s. per cent. per annum, payable as
Cheques paid to the credit of a customer's follows, on October 18, 1905, a firstdividend,
account, which are drawn upon another being interest accrued from April 18, 1905,
banker in the same town, may be presented upon the various instalments of the subscrip
for payment on the day of receipt or held | tion money as they severally become due,
until the next day, but in practice all and thereafter by quarterly dividends, pay
cheques received up to the time of the able on January 18, April 18, July 18 , and
exchange are passed through the same day. October 18, on presentation of the coupons
Cheques upon banks in other towns are hereunto attached, being interest upon the
collected through the London Clearing total capital sum hereby secured.
House, unless they are sent direct. (See This bond forms part of an issue amount
CLEARING HOUSE.) ing to a total of ten million pounds, which
EXCHEQUER ACCOUNT. The account amount will be paid off in ten years from the
of the Treasury at the Bank of England ; date hereof at the rate of one- tenth part of
also referred to as the Consolidation Fund . the total issue in each year. The bonds to
EXCHEQUER BILLS. Promissory notes be redeemed will be drawn in each year in
of the Government. They were first issued accordance with regulations made by the
in 1696 , and constituted the floating debt of Treasury, and the bonds so drawn will be
the country for 160 or 170 years. There are paid off at par as on April 18 in that year,
no Exchequer Bills now in existence,Treasury from which date interest thereon will cease.
Bills having superseded them . (See The principal and interest of this bond
TREASURY Bills .) are chargeable on the consolidated fund of
EXCHEQUER BONDS. Bonds which are the United Kingdom, pursuant to Act 5
issued under the authority of Acts of Parlia- Edw. VII, c. 4 , and are payable at the Bank
ment, by the Lords Commissioners of His of England .
Majesty's Treasury . They form part of the London, April 18, 1905.
unfunded debt of the country. They usually
run for periods of from three to five years, Secretary to His Majesty's Treasury .
and it is seldom that they are issued for a Note . — The numbers of the bonds drawn
longer term than ten years. for repayment in each year will be adver
The following is a specimen of an Ex- tised in the London Gazette not less than two
chequer Bond forming part of an issue to be months prior to the date of redemption.
all paid off in ten years : Drawn bonds when presented for payment
must be accompanied by all coupons bearing
EXCHEQUER BOND. date subsequent to that on which the
Per Acts 29 Vict . c . 25, 52 Vict. c. 6 and principal becomes repayable.
5 Edw. VII , c. 4 . See under WAR LOANS for a list of the
B00413 £ 200 B00413 Exchequer Bonds issued during the war.
EXCHEQUER TALLY. A notched piece
This BOND, unless previously drawn and of wood, 8 or 9 inches in length, which , at
redeemed as hereafterset forth , entitles the one time, was given as a form of receipt to
264
EXE ] DICTIONARY OF BANKING [EXE

a person who deposited money with the executors may have opened, an amount to
Government. A similar notched stick was clear off the overdraft on the account of
retained in the Exchequer Department, and the deceased . A specimen of the execu
when the depositor wanted his money he tors' signatures should be obtained in the
produced his portion of the stick, and if the signature book.
two sticks tallied , ” that is, the notches If executors open an account in their
on the one agreed with the notches on the private names it is treated as an ordinary
other, he was paid his money . joint account , and if one person is to sign
It is said that a notchof 14-inch repre . cheques the usual authority must be ob
sented £ 1,000, 1 -inch £ 100, t -inch £10, half tained. (See DEATH OF Joint CUSTOMER,
a notch of that size £ 1, -inch 1s., smallest | Joint Account.) But if the account is
notch 1d., a small hole d. opened as, for example, " Executors of John
The use of tallies was abolished in 1782, Brown, John Jones, R. Smith ,” either
but the old ones were preserved till 1834, of the executors may, in the absence of
when it was ordered that all the old tallies an arrangement to the contrary, draw
in the possession of the Government should be cheques upon the account without any
destroyed . They were burnt in stoves in the written authority from the other. It is,
House of Lords, and it is supposed that however, customary in some banks, and
they were the cause of the fire which is a desirable practice as it prevents any
destroyed both Houses of Parliament.
(See TALLY .)
misunderstanding, for a form of authority
to be signed by each executor, when the
EXECUTOR . An executor (or personal account is opened, stating exactly in what
representative) is the person appointed in manner and by which executor or executors
a will by the testator to pay his debts and cheques are to be signed . If an authority
distribute his assets, according to the states that two executors are to sign,
instructions in the will. His duties are any cheque which is signed only by one
practically the same as those of an adminis- of them would not, of course, be in order.
trator, except that an administrator settles It is not in order for an authority to be
the deceased's affairs according to law and given for someone who is not an executor
an executor settles them according to the to operate on the account, as executors
terms of the will. cannot legally delegate their powers.
A person named in a will as executor is at If a banker receives notice from one
liberty to decline to act. If he does not wish executor that cheques must be signed by
to accept the office there must be a clear all the executors, he must carry out the
renunciation before any executorial act instruction.
has been undertaken . But after he has When securities, or safe custody articles,
agreed to accept the office and has obtained belonging to the deceased are withdrawn , it
probate hecannot, by English law, withdraw . is desirable that all the executors should join
.

In Scotland, however, an executor may by a in the acknowledgment, or in the request to

.

deed of renunciation resign his office after deliver to one of their number. (See SAFE
appointment. CUSTODY.)
An executor may, with the sanction of An infant cannot undertake the duties of
the Court, transfer the estate to the Public an executor. Where an infant is named as
Trustee. (See PUBLIC TRUSTEE.) sole executor, an administrator with the
When a customer is deceased , a banker will annexed is appointed to act during the
should not allow the persons named in the minority.
will as executors to withdraw , or transfer, When a bank is appointed an executor,
the balance of the deceased's account, or to probate may be granted in its corporate
deal with any securities left in the hands of name . See under PROBATE.
the banker by the deceased , until Probate On the death of a sole or sole surviving
has been exhibited. When Probate has been executor (say, of the estate of John Brown),
seen , it is customary to transfer a credit his executors carry on the duties ofthe
balance to the executors' account by a executorship, but if there is no will then
cheque signed by the executors. If the letters of administration require to be taken
deceased's account is overdrawn, it must be out for John Brown's estate, and an adminis.
paid off by the executors in such manner as trator de bonis non (9.0 .) is appointed by the
may be arranged. The banker cannot him- Court. (See DEATH OF EXECUTOR.)
self transfer, from any account which the When an indorsement upon a bill is
265
EXE ] DICTIONARY OF BANKING (EXE

by an executor, it is usual for his banker to and trustees, acting under a will, had paid
confirm such indorsement. the debts and funeral and testamentary
With regard to shares which a deceased expenses of the testator, and passed the
person may have held, his executors are residuary account, and where one such
liable as executors for any calls which may executor and trustee pledged certain per
be made, but they are not liable personally sonalty, without the knowledge of the other,
unless the shares have been actually trans- for his own purposes, the House of Lords
ferred into their names . If the shares still decided that they no longer held the personal
continue in the deceased's name, the divi- estate as executors but as trustees, and that
dends may be paid to the executors, and the pledgee had no right to retain the pro
that may be done without rendering the perty as against the trustees notwithstanding
executors personally liable, but some com- that he had no knowledge that it was not
panies refuse to pay dividends after receipt the absolute property of the pledgor.
Money lent to an executrix who is a
of notice of death of a shareholder until the
shares have been dealt with in one way or married woman is a debt due by her, in her
another. (See TRANSMISSION OF SHARES .) private capacity ; the husband is not liablo
An overdraft is frequently required for for such a debt. (See MARRIED WOMEN .)
the purpose of paying estate duty before If an executor misapplies money belonging
probate has been granted. In such cases to the deceased's estate, and the banker is
a banker regards the loan as being made to aware of it, as, for instance ,where an amount
the parties in their private capacity. He is transferred by an executor from the trust
should, however, ascertain that the persons account to his own overdrawn personal
making the application are the executors account , which the banker has been pressing
nominated in the will and also satisfy him- him to reduce, the banker will be held liable ;
self generally as to the nature of the estate and if an executor pledges deeds, belonging
and the contents of the will. In order to to the estate, with a bank, in order to raise
avoid any misunderstanding as to liability, money to reduce his personal loan, and the
a guarantee by the executors , is often banker is aware of the circumstance, he will
Money cannot be lent to an executor so 2
taken . not be able to hold to the security .
as820If an executor has a beneficialinterest in
to bind the general estate of the deceased. property under the will, and he deposits the
An executor, however, has power (unless deeds as security for his own account, ho
forbidden in the will) to pledge specific cannot, of course, charge theproperty beyond
assets belonging to the estate. Unless a the extent of his own interest, and that
banker lends on the personal liability of the interest, moreover, is subject to any breach
executors, he should obtain a proper charge of trust which he may commit.
from the executors upon some of the de- Upon the death of the owner of freehold
ceased's securities. A banker should peruse (since January 1 , 1898) and leasehold pro
the will before accepting the security . perty, the title vests in the executors or
Where there are several executors, one of administrators, and before a deposit of deeds
them may give security over any part of the as security is taken from a devisee or heir -at
testator's personal estate, but it is desirable law the formal assent of the personal repre
that all the executors should join in giving sentatives should be obtained. The assent
such security. If shares belonging to the should be in writing, though there is no
estate are registered in the names of the prescribed form . The assent may be by
executors, the document of charge or transfer deed , but a simple memorandum or letter
must be signed by all the registered holders. signed by the personal representatives is
In the case of real estate, all the executors sufficient. In some cases, however, there
must sign the mortgage or memorandum of may be no assent in writing ; but if the
deposit. person entitled to the property holds the
The same persons are frequently appointed deeds and has been in possession of the
as “ executors and trustees.” When their property for a considerable period , the
duties as executors are completed they assent may often be inferred from these
become trustees, and the right for one of circumstances. The document of assent, if
them to pledge personal property no longer under hand, is not subject to stamp duty .
exists. (See TRUSTEE. ) Where property is held jointly, on the
In the case of Attenborough v. Solomon death of one it vests in the survivor. In
( 1913, 107 L.T. 833), where two executors the case of copyhold property where an
266
EXE ] DICTIONARY OF BANKING [EXE

admittance is necessary to complete the made after January 1 , 1912, the Conveyanc
title, the executor or some other person ing Act, 1911 , Section 12, s.s. 1 , enacts :
must obtain admittance before the deceased's Where probate is granted to one or some
interest can be transferred . of several persons named as executors, power
Section 3 of the Land Transfer Act, 1897, being reserved to the others or other to prove,
provides as follows : the sale, transfer or disposition of real estate
" (1 ) At any time after the death of the may, notwithstanding anything contained
owner of any land, the personal in sub-section (2) of Section 2 of the Land
representatives may assent to any Transfer Act, 1897, be made by the proving
devise contained in his will, or may executor or executors without effec
of the cour t, andshall be as the authority
tual asif
convey the land to any person
all the persons named as executors had
entitled thereto as heir, devisee, or
otherwise, and may make the assent concurred therein ."
or conveyance either subject to a Where, upon the granting of probate to
charge for the payment of any executors, power is reserved to another to
money which the personal repre- prove, upon the death of the last acting
sentatives are liable to pay, or with executor, his executors should not act unless
out any such charge ; and on such the one to whom power was reserved is
assent or conveyance, subject to a dead or has renounced probate.
charge for all moneys (if any) Executors are not obliged to pay the
which the personal representatives debts of the deceased, or general legacies
are liable to pay, all liabilities of the under the will,beforetheexpiration of twelve
personal representati in respect months from the death . Interest upon
of the land shall ceaseves
, except as to general legacies runs from the end of that
any acts done or contracts entered period , but upon specific legacies it runs
into by them before such assent or from the death of the testator.
conveyance. When executors intend to act, they must
" ( 2) At any time afterthe expiration of prove the will within six months from the
date of the testator's death , otherwise they
one year from the death of the owner are liable to a penalty of £ 50 . (See PROBATE .)
of any land, if his personal repre The bankruptcy of an executor does not
sentatives have failed on the request affect his rights to deal with the deceased's
of the person entitled to the land to estate .
convey the land to that person , the EXECUTOR DE SON TORT. A person
Court may, if it thinks fit, on the who intermeddles , without authority, with
application
notice of that
to the person,representa-
personal and after the estateofa deceased person,is called
an executor de son tort, that is, an executor
tives, order that the conveyancebe of his own wrong. He may render himself
made, or, in the case of registered liable to be sued by creditors and legatees,
land, that the person so entitled be or the real executor, to the amount of the
registered as proprietor of the land assets which may have come into his hands.
either solely or jointly with the EXECUTOR'S YEAR . The year immedi
personal representatives. ately succeeding the testator's death, during
“ (3) Where the personal representatives which the executor must realise the estate,
of a deceased person are registered pay death duties and debts, and provide
as proprietors of land on his death , for the legacies.
a fee shall not be chargeable on EXECUTORY ACCOUNT. The account
any transfer of the land by them of an executor .
unless the transfer is for valuable EXEMPLIFICATION . An attested or
consideration . certified copy of proceedings in a court of
" (4) The production of an assent in the record . By the Stamp Act, 1891, the stamp
prescribed form by the personal duty is :
representatives of a deceased pro- EXEMPLIFICATION or CONSTAT,
prietor of registered land shall under the Great Seal of the
authorise the registrar to register United Kingdom of Great
the person named in the assent as Britain and Ireland of any let
proprietor of the land.” ters patent or grant made or to
With respect to dispositions of real estate be made by Her Majesty, or by
267
EXH ) DICTIONARY OF BANKING [FAC
any of her royal predecessors of £ s. d.FACTORS ACT, 1889 (52 & 53 Vict. c.
any honour, dignity, promotion, 45) . This Act deals with dispositions of
franchise, liberty, or privilege, goods by factors, or mercantile agents, and
or of any lands, office, or other dispositions by sellers and buyers of goods.
thing whatsoever 5 00 (See BILL OF LADING , DELIVERY ORDER, DOCK
EXEMPLIFICATION under the seal WARRANT, WAREHOUSE KEEPER'S WARRANT.)
of any court in England or Ire The principal part of the Act is as follows :
land of any record or proceed Definitions.
ing therein . 3 0 0 “ 1. For the purposes of this Act
An exemplification of probate is the docu " ( 1 ) The expression ' mercantile agent '
ment issued by the Court in the event of the shall mean a mercantile agent having
original probate being lost. in the customary course of his
EXHIBIT. (See AFFIDAVIT .) business as such agent authority
EXPANSIVE THEORY. The theory that either to sell goods, or to consign
in a monetary crisis the Bank of England goods for the purpose of sale, or to
should expand , and not contract, its issues. buy goods, or to raise money on the
The Bank Charter Act of 1844 placed restric security of goods :
tions upon the issue of notes, but in the three “ (2) A person shall be deemed to be in
great crises of 1847, 1857 and 1866 that Act possession of goods or of the docu
had to be suspended , and, instead of the ments of title to goods, where the
Bank restricting its issues, it was permitted goods or documents are in his actual
by the Government to increase them beyond custody or are held by any other
the amount of its authorised issue ; on each person subject to his control or for
occasion the application of the expansive him or on his behalf :
theory saved the situation after the restrictive “ ( 3) The expression ‘ goods ' shall include
theory had proved to be ineffectual. On the wares and merchandise :
outbreak of war with Germany in 1914, the “ (4) The expression ' document of title '
Treasury was empowered to suspend the Act. shall include any bill of lading, dock
(See BANK CHARTER Act.) warrant, warehouse -keeper's certi
EXPORT SPECIE POINT. (See SPECIB ficate, and warrant or order for the
POINTS . )
delivery of goods, and any other
EXTERNAL LOAN . A public loan raised document used in the ordinary
wholly, or partly, abroad , the principal and
course of business as proof of the
interest being payable abroad as wellas in the possession or control of goods, or
country that issued it. (See INTERNAL LOAN .) authorising or purporting to autho
EXTRACT. For stamp duty , see Copy. rise, either by indorsement or by
EXTRAORDINARY GENERAL MEET delivery, the possessor of the docu
INGS. Meetings which are convened for the ment to transfer or receive goods
transaction of special business. The direc thereby represented :
tors of a company shall, on the requisition 00
• (5) The expression ' pledge ' shall include
of the holders of not less than one -tenth of any contract pledging, or giving a
the issued share capital upon which all calls lien or security on, goods, whether
have been paid, forthwith proceed to con in consideration of an original
vene an extraordinary general meeting of advance or of any further or con
the company. Directors may, whenever they tinuing advance, or of any pecuniary
think fit, convene an extraordinary general liability :
meeting. (Table A, clause 48.) For further " (6) The expression ' person'shall include
information see Section 66 of the Companies any body of persons, corporate or
( Consolidation) Act, 1908, under the heading
MEETINGS_COMPANIES . unincorporate.
EXTRAORDINARY RESOLUTION . (See DISPOSITION BY MERCANTILE AGENTS.
RESOLUTIONS . ) Powers of Mercantile Agent with Respect to
Disposition of Goods.
FACE VALUE . The nominal value of " 2. ( 1 ) Where a mercantile agent is,
stock or shares which appears upon the face with the consent of the owner, in
of a certificate . The market, or selling, possession of goods or of the docu .
value of the security may be either higher ments of title to goods, any sale,
or lower than the face value. pledge, or other disposition of the
268
FAC ) DICTIONARY OF BANKING [ FAC

goods, made by him when acting in transfer of other goods, or of a document of

the ordinary course of business of title to goods, or of a negotiable security, or
a mercantile agent, shall, subject to any other valuable consideration ; but
the provisions of this Act, be as where goods are pledged by a mercantile
valid as if he were expressly author- agent in consideration of he delivery or
ised by the owner of the goods to transfer of other goods, or of a document of
make the same ; provided that the title to goods, or of a negotiable security, the
person taking under the disposition pledgee shall acquire no right or interest in
acts in good faith, and has not at the goods so pledged in excess of the value
the time of the disposition notice that of the goods, documents, or security when
the person making the disposition so delivered or transferred in exchange.
has not authority to make the same. Agreements through Clerks, etc.
“ ( 2) Where a mercantile agent has, with “ 6. For the purposes of this Act an agree
the consent of the owner, been in ment made with a mercantile agent through
possession of goods or of the docu a clerk or other person authorised in the
ments of title to goods, any sale, ordinary course of business to make con
pledge, or other disposition , which tracts of sale or pledge on his behalf shall be
would have been valid if the consent deemed to be an agreement with the agent.
had continued , shall be valid not. Provisions as to Consignors and Consignees.
withstanding the determination of “ 7. ( 1 ) Where the owner of goods has
the consent : provided that the per given possession of the goods to
son taking under the dispositionhas another person for the purpose of
not at the time thereof notice that
the consent has been determined . consignment or sale, or has shipped
( 3) Where a mercantile agent has the goods in the name of another
person , and the consignee of the
obtained possession of any docu goods has not had notice that such
ments of title to goods by reason of person is not the owner of the goods,
his being or having been , with the the consignee shall, in respect of
consent of the owner, in possession advances made to or for the use of
of the goods represented thereby, or such person , have the same lien on
of any other documents of title to
the goods as if such person were the
the goods, his possession of the first owner of the goods, and may transfer
mentioned documents shall, for the any such lien to another person.
purposes of this Act, be deemed to
be with the consent of the owner . " (2) Nothing in this Section shall limit or
“( 4) For the purposes of this Act the affect the validity of any sale, pledge,
consent of the owner shall be or disposition , by a mercantile agent.
sumed in the absence of evidencepre
to DISPOSITIONS BY SELLERS AND BUYERS OP
GOODS.
the contrary .
Disposition by Seller Remaining in Possession .
Effect of Pledges of Documents of Title . “ 8. Where a person, having sold goods,
- 3. A pledge of the documents of title to continues, or is in possession of the goods or
goods shall be deemed to be a pledge of the of the documents of title to the goods, the
goods. delivery or transfer by that person , or by a
Pledge for Antecedent Debt. mercantile agent acting for him , of the goods
" 4. Where a mercantile agent pledges or documents of title under any sale, pledge,
goods as security for a debt or liability due or other disposition thereof, or under any
from the pledgor to the pledgee before the agreement for sale, pledge, or other dis
time of the pledge, the pledgee shall acquire position thereof, to any person receiving the
no further right to the goods than could have same in good faith and without notice of the
been enforced by the pledgor at the time of previous sale, shall have the same effect as
the pledge. if the person making the delivery or transfer
Rights acquired by Exchange of Goods or were expressly authorised by the owner of
Documents . the goods to make the same.
“ 5. The consideration necessary for the Disposition by Buyer Obtaining Possession .
validity of a sale, pledge, or other disposition, “ 9. Where a person, having bought or
of goods, in pursuance of this Act, may be agreed to buy goods, obtains with the
either a payment in cash, or the delivery or consent of the seller possession of the goods
269
FAC ] DICTIONARY OF BANKING (FAL

or the documents of title to the goods, the any of them , by way of lien as
delivery or transfer,by that person or by a against the owner, or from recovering
mercantile agent acting for him , of the goods from any person with whom the
or documents of title, under any sale, pledge, goods have been pledged any balance
or other disposition thereof, or under any of money remaining in his hands as
agreement for sale, pledge, or other dis the produce of the sale of the goods
position thereof, to any person receiving the after deducting the amount of his lien .
same in good faith and without notice of any (3) Nothing in this Act shall prevent the
lien or other right of the original seller in owner of goods sold by an agent
respect of the goods, shall have the same from recovering from the buyer the
effect as if the person making the delivery price agreed to be paid for the same,
or transfer were a mercantile agent in posses or any part of that price , subject to
sion of the goods or documents of title with any right of set off on the part of
the consent of the owner . the buyer against the agent.
Effect of Transfer of Documents on Vendor's Saving for Common Law Powers of Agent.
Lien or Right of Stoppage in transitu . “ 13. The provisions of this Act shall be
“ 10. Where a document of title to goods construed in amplification and not in deroga
has been lawfully transferred to a person as tion of the powers exercisable by an agent
a buyer or owner of the goods, and that independently of this Act.
person transfers the document to a person
who takes the document in good faith and Commencement.
for valuable consideration, the last-men- “ 15. This Act shall commence and come
tioned transfer shall have the same effect into operation on the first day of January
for defeating any vendor's lien or right of one thousand eight hundred and ninety.
stoppage in transitu as the transfer of a bill Extent of Act.
of lading has for defeating the right of " 16. This Act shall not extend to Scot
stoppage in transitu . land .
SUPPLEMENTAL . Short Title.
Mode of Transferring Documents. “ 17. This Act may be cited as the
" 11. For the purposes of this Act, the Factors Act, 1889.”
transfer of a document may be by indorse It should be noted that Section 25 of the
ment, or, where the document is by custom Sale of Goods Act, 1893, is practically the
or by its express terms transferable by same as Sections 9 and 10 of the Factors Act.
delivery, or makes the goods deliverable to FACTORY . In Scotland , Letters of
the bearer, then by delivery. Factory empower one person to act for
Saving for Rights of true Owner. another.
“ 12. ( 1) Nothing in this Act shall autho- In the Stamp Act, 1891, the reference to
rise an agent to exceed or depart the stamp duty is :
from his authority as between him- Factory, in the nature of a letter or power
self and his principal, or exempt of attorney in Scotland .
him from any liability, civil or (See POWER OF ATTORNEY .)
criminal, for so doing. FACULTY. An order or licence granted
" ( 2) Nothing in this Act shall prevent the by an ecclesiastical authority. For example,
owner of goods from recovering the a faculty is required before an alteration of
goods from an agent or his trustee any importance can be effected in the
in bankruptcy at any time before structure of a church .
the sale or pledge thereof, or shall FALSE PRETENCES. Where a person
prevent the owner of goods pledged obtains payment of a cheque by falsely
by an agent from having the right representing himself to be the payee, he is
to redeem the goods at any time liable to be prosecuted for obtaining money
before the sale thereof, on satisfying by false pretences. Also if a person obtains
the claim for which the goods were goods and gives in payment thereof a cheque
pledged, and paying to the agent, if drawn upon a bank where he has not got
by him required, any money in an account, or gives a cheque which he knows
respect of which the agent would by is worthless and will not be honoured, he is
law be entitled to retain the goods likewise liable to prosecution , for whosoever
or the documents of title thereto, or shall by any false pretence obtain from any
270
FAL ) DICTIONARY OF BANKING (FAR

other person any chattel, money, or valuable guilty of a misdemeanour and be liable to
security, with intent to defraud, shall be penal servitude for a term not exceeding
guilty of a misdemeanour. seven years, or to imprisonment for any
FALSIFICATION OF ACCOUNTS . The term not exceeding two years. (See
Falsification of Accounts Act, 1875, provides LARCENY.)
that if any clerk, officer, or person employed FARM STOCK. A country banker has
shall wilfully, and with intent to defraud, frequently to scrutinise a farmer's balance
destroy, alter, mutilate or falsify any book, sheet, or to form an idea as to the value of
writing, security or account which belongs the cattle and sheep upon a farm . Prices
to his employer, or shall wilfully , with intent are subject to fluctuations, according to the
to defraud, make or concur in making any times and seasons, and other circumstances ;
false entry in , or omit or alter any material but the tables below may serve to give
particular from any such book, document some idea of average values in the North of
or account, the person so offending shall be England in 1921 .
Value in Value in Fat.
Spring Autumn.
Shorthorn Cattle (not pedigree) :
Cow, in calf, or milk OLO £ 50- £ 70 £ 60- £ 75 £ 45
Heifer , in calf .. £ 40-455 £ 45– £60 £50
2 years old £ 35-440 £ 40-245 450
1 year old £ 25- £ 30 £ 35-240
Bullock , 2 years old £ 42-448 £ 45- £ 48 £ 56
1 year old £ 24- £ 30 £ 33-440
Galloway Cattle (not pedigree) :
Cow , in calf, or milk £ 40- £50 £ 40- £50 £ 45
Heifer, in calf .. £ 35-145 £ 40-50
2 years old £ 32- £ 38 £ 35-442
1 year old £ 16- £ 24 £ 22- £ 28
Bullock , 2 years old £ 24-£ 30 £ 32- £ 38
1 year old £ 16- £ 20 £ 22- £ 25
Cross -Bred Cattle - Blue Greys :
Cow , in calf, or milk £ 35- £45 £ 35-45 445
Heifer , in calf .. £ 38– £45 £ 38-£ 45
2 years old £ 26-232 £ 30-236
1 year old £ 20-25 [ 25-130
Bullock , 2 years old £ 28- £ 35 £ 30- £ 36
1 year old £ 22- £ 28 £ 25- £ 32
Average Market Fat.
Price.
Border Leicester Sheep :
Shearling Ram.. £ 5- £ 9 £6
Tup Lamb £ 4-£ 6 £6
Ewe 25-28
Gimmer £6-28
Half-Bred Sheep. (Border Leicester Tup
and Cheviot Ewe) :
Ewe £ 5-£ 7 £6
Lamb 44-45 £6
Shearling, for short keep £5-46 £ 6
Cross - Bred Sheep. (Border Leicester Tup
and Black -faced Ewe) :
Ewe £ 5- £ 6 £6
Lamb £ 3- £ 4 £5
Shearling, for short keep 24-25 £6
Pigs. Six weeks to two months £ 2-3 £ 10
Horses. For agricultural work .. £ 40-270
271
FAR ) DICTIONARY OF BANKING
PARTHING. (From Feorth , fourth.) The heirs, but a fee tail is limited to the heirs
fourth part of a penny, a penny at one time
being actually divided into four parts, called
feorthlings or fourthings.
Its standard weight is 43-75 grains troy.
The coin is a mixed metal of copper, tin and
zinc .
Copper farthings were first issued in 1672 .
FEE. The sum of money which is to be
paid for a service rendered .
The Anglo- Saxon word feoh (which is
practically our word fee) had the meaning
of moneyand cattle. Incertain of the early
stages of society, cattle performed the
functions of money, hence the use of one
word to express both cattle and money.
FEE FARM RENT . Where a person
conveys land which he holds in fee simple
( that is, he is the absolute owner) to another
person in fee simple subject to the payment
of a perpetual yearly rent to the vendor
and his heirs, the rent is called a fee
farm rent.
FEE SIMPLE . Where a person is the
absolute owner of an estate he is said to hold
it in “ fee simple," and he can practically
do with it what he likes . If he dies intestate
it goes to his heirs. A conveyance of a
freehold to a purchaser in fee simple contains
such words as “ To hold unto and to the use
of the purchaser in fee simple,” or, what has
the same effect, “ to the use of the purchaser
his heirs and assigns for ever .” Legally
all land is held directly or indirectly from
the King, but practically that does not affect
theabsolute ownership in a fee simple.
The greatest interest which can be had in
land is the fee simple, other interests, such
as a life interest, or a lease, being estates less
than the fee simple. The holder of a fee
simple can create other estates out of it, but
so long as he does not dispose of the fee
simple it remains vested in him . In the
case of a lease, no matter for how long a
period, the fee simple is with the person who
grants the lease, though the person who
holds the lease or the assignment thereof
has the legal estate in the land . At the
expiration of a lease the land reverts to the
grantor, or person entitled to the fee simple.
In copyhold land the fee simple remains
with the lord of the manor.
FEE TAIL . (“ Tail ” is from the French
tailler, to cut.) An estate which is granted
to a person and the heirs of his body is an
estate tail or fee tail, usually called an
entailed estate . It is the opposite to a fee
simple (q.v.). A fee simple is held to his
272
[FEE
of his body. (See ESTATE TAIL.)
FEES PAYABLE TO REGISTRAR OF
COMPANIES. The provisions of the Com
panies (Consolidation) Act, 1908, Section
244, with respect to the fees to be paid to
the registrar of companies are as follow :
“ ( 1 ) There shall be paid to the registrar
in respect of the several matters
mentioned in Table B in the First
Schedule to this Act the several fees
therein specified, or such smaller
fees as the Board of Trade may
.
from time to time direct.
" (2) All fees paid to the registrar in
pursuance of this Act shall be paid
into the Exchequer."
TABLE B.
TABLE OF Fees to be paid to the REGISTRAR
of COMPANIES.
1.-By a company having a share capital.
For registration of a company £ s. d.
whose nominal share capital
does not exceed £2,000 2 0 0
For registration of a company
whose nominal share capital
exceeds £ 2,000, the following
fees, regulated according to the
amountof nominal share capital
( that is to say) ; . € S. d.
For every £ 1,000 of
nominal share
capital, or part
of £ 1,000, up to
£5,000 100
For every £ 1,000 of
nominal share
capital, or part of
£ 1,000, after the
first £ 5,000 up to
£ 100,000 0 5 0
For every £ 1,000 of
nominal share
capital, or part of
£ 1,000, after the
first £ 100,000 . 0 1 0
For registration of any increase of
share capital made after the
first registration of the com
pany, the same fees per £ 1,000 ,
or part of a £1,000, as would
have been payable if the in
creased share capital had formed
part of the original share capital
at the time of registration :
Provided that no company shall be
liable to pay in respect of
FEE ] DICTIONARY OF BANKING
nominal share capital, on regis £ s. d.
tration or afterwards, any
greater amount of fees than £ 50,
taking into account in the case
of fees payable on an increase
of share capital after registra
tion the feespaid on registration .
For registration of any existing
company, except such com
panies as are by this Act ex
empted from payment of fees in
respect of registration under this
Act, the same fee as is charged
for registering a new company.
For registering any document by
this Act required or authorised
to be registered , other than the
memorandum or the abstract
required to be filed with the
registrar by a receiver or man
ager or the statement required
to be sent to the registrar by
the liquidator in a winding up in
England . . .
For making a record of any fact by
this Actrequired or authorised
to be recorded by the registrar . 0 5 0
As to the duty imposed by the Stamp
Act , 1891, and increased by the Finance For making a record of any fact by
Act, 1920, see SHARE CAPITAL.
II. - By a company not having a share
capital.
For registration of a company
whose number of members, as
stated in the articles, does not
exceed 20 .
For registration of a company
whose number of members, as
stated in the articles, exceeds 20,
but does not exceed 100 .
For registration of a company
whose number of members, as
stated in the articles, exceeds
100, but is not stated to be un
limited , the above fee of £ 5, with
an additional 5s. for every 50
members or less number than 50
members after the first 100.
For registration of a company in
which the number of members
is stated in the articles to be
unlimited . 08 20 o o being atenure wherethe
For registration of any increase on
the number of members made
after the registration of the
184 ( 1535 )
[ FEU
company in respect of every 50 £ s. d.
members, or less than 50 mem
bers, of that increase . 0 5 0
Provided that no company shall be
liable to pay on the whole a
greater fee than £ 20, in respect
of its number of members,
taking into account the fee paid
on the first registration of the
company.
For registration of any existing
company, except such com
panies as are by this Act
exempted from payment of fees
in respect of registration under
this Act, the same fee as is
charged for registering a new
company.
For registering any document by
this Act required or authorised
to be registered, other than the
memorandum or the abstract
required to be filed with the
050 registrar by a receiver or man
ager or the statement required
to be sent to the registrar by the
liquidator in a winding up in
England . . 0 5 0
a
this Act required or authorised
to be recorded by the registrar . 0 5 0
.
(See COMPANIES .)
£ s. d. FEME - COVERT. A married woman .
00
Covert means literally sheltered , " a wife
being in former days sheltered by her
husband from certain legal liabilities from
which she would not have been exempt if
2 0 0
unmarried .
FEME - SOLE . An unmarried woman .
FEOFFMENT. (Pronounced fet'-ment.)
An ancient method of conveyance of pro
5 0 0 perty. Feoffment was accompanied by
actually handing over the possession of the
land, as by the delivery of a piece of turf,
or by the grantor vacating the land and the
grantee taking possession . This delivery of
possession was called “ livery of seisin . "
The person delivering it was called the
feoffor and the person receiving it the
feoffee. (See LEASE AND RELEASE .)
FEU CONTRACT . In Scotland, a con
tract between a superior and his vassal
respecting ;
vassalholdslands
and , instead of performing
from the superior
military service, makes an annual return in
grain or money .
273
FIF ) DICTIONARY OF BANKING (FIR

In the Stamp Act, 1891, the reference to moneys deposited with him are of a fiduciary
the stamp duty is : nature, hemust not, knowingly, be a party
FEU CONTRACT in Scotland. See CONVEY- to any wrongful use of such moneys, other
ANCE ON SALE . wise he will be responsible to the person
FI. FA . A contraction of fieri facias entitled to the moneys. A banker cannot
(q.v.). be held liable when he is unaware that they
FICTITIOUS BILL . A name sometimes are trust moneys. (See TRUSTEE.)
given to an accommodation bill (9.0.). FIDUCIARY ISSUE . A term applied to
FICTITIOUS PAYEE . Where the payee that part of the note issue of the Bank of
is a fictitious or non -existing person, a bill England, which is authorised to be made
or cheque may be treated as payable to against the Government debt and securities,
bearer. In Bank of England v. Vagliano as distinguished from the note issue against
( 1891, A.C. 107 ), the meaning of a fictitious gold .
on
person was enlarged to include a real person
who never had nor was intended to have
FIERIFACIAS. A writ of fieri facias,
often abbreviated as fi. fa ., takes its name
any right to the bills. Lord Herschell said from the words appearing in the document
in the course of his judgment : “ I have “ quod fieri facias de bonis," etc. The writ
arrived at the conclusion that whenever the is issued on behalf of a creditor who has
name inserted as that of the payee is so obtained judgment for a debt, ordering the
inserted by way of pretence merely, without sheriff to levy the amount on the goods of
any intention that payment shall only be the debtor. Bank -notes, money, cheques,
made in conformity therewith , the payee is and bills are included amongst the things
a fictitious person within the meaning of the whichthe sheriff may seize.
statute, whether the name be that of an FILING PETITION . (See RECEIVING
existing person or of one who has no exist- ORDER .)
ence. " FINANCE ACT. A Finance Act is passed
A cheque payable to " wages " or " estate," annually by Parliament to give statutory
or some similar word is payable to an effect to the proposals of the Government
impersonal payee and should be treated as as to taxation, duties, etc.
being payable to the order of the drawer FINE PAPER . Bills which are drawn
and requiring his indorsement. An im- upon banks or first -class firms. .
personal payee is not the same as a fictitious FINENESS OF COINS. The “ fineness " is
person . (See Payee .) the amount of fine or pure metal in a coin.
FIDELITY GUARANTEE. A guarantee The standard fineness of gold and silver coins
by a person or a society to make good , up is specified in the first schedule to the Coinage
to a specified amount, any loss caused by the Act, 1870, as amended by the Acts of 1891
default of the individual guaranteed. and 1920 . (See COINAGE. )
The Bankers' Guarantee Trust for the FIRE INSURANCE . Fire insurance is a
mutual guarantee of bank officials employed contract of indemnity under which an insur
in the United Kingdom was absorbed by an ance company agrees, in consideration of
insurance company in 1919. the premium paid, to make good any loss or
Large banks usually have their own damage by fire during a specified time.
guarantee fund for the purpose of securing The insured person must have a pecuniary
the bank against losses arising through interest in the subject matter of the con
fraud or dishonesty on the part of any of tract. The legal instrument by which the
the persons employed. The officers of the contract is made and reduced to form is
bank subscribe to the fund according to the called the policy.
amount for which they are guaranteed. In order to prevent a security over
Where an employee is guaranteed by a buildings disappearing in smoke a banker
society the policy usually provides that the should be careful to see that the property is
defaulter must, if possible, be prosecuted insured , and that the premiums are duly
before the society will pay the amount of paid . The premiums should be paid before
the guarantee. the expiration of the days of grace, that
FIDUCIARY CAPACITY. (Latin, fiducia, is, usually fifteen days from the date when
confidence .) A person who holds anything the amount is due to be paid and the receipts
in trust for another is said to hold it in a should be exhibited, or handed over, to the
fiduciary capacity. banker .
When a banker has notice that certain A fire policy should , strictly, be in the
274
FIR ) DICTIONARY OP BANKING (FIR

names of the customer and the banker as amount insured bore to the full value of the
mortgagee . If the policy remains in the property. It is not the usual custom , how
name of the customer the banker may, if ever, in an English policy to insert such a
necessary, in the event of fire, give notice clause where the property insured is an
to the insurance company of his charge on ordinary dwelling-house . A perusal of the
the property. In some banks a special policy will show whether, or not, an average
memorandum ( stamped sixpence) is signed clause is included .
by the customer in which he deposits the A “ Cover " note is a note issued by an
policy and gives a charge upon it and the insurance company , when the first premium
sum thereby assured , and directs the banker has been paid, declaring, in the case of a
to hold the sameupon the terms and condi- proposal for insurance against fire, that the
tions as are set forth in the instrument proposer is covered in the meantime until
under which the property is charged to the the policy is issued .
banker. Consequential Loss Insurance is an
In a banker's mortgage of property the insurance against additional losses which
mortgagor should covenant : may occur in consequence of a fire such as
To insure the buildings against loss by fire the cost of obtaining temporary premises,
for their full value in such office as the loss through the dislocation of business,
banker may approve ; etc.
To pay all premiums when due ; The stamp duty on a policy is sixpence
To produce, on demand, the policy and (increased from 1d. to 6d. by the Finance
premium receipts ; Act, 1920) . See POLICY OF INSURANCE .
To apply all moneys received under the (See AVERAGE CLAUSE .) have entered into
policy in making good the damage, or in FIRM . Persons who
reducing the debt to the banker. partnership with one another are, collec
A provision should also be made that, if tively, called a firm , and the name under
the mortgagor fails to keep the premises which their business is carried on is called the
insured , the banker may insure them — the firm - name.
mortgagor paying all the premiums. Firms which carry on business under a
An authority in writing may be given to name which does not consist of the true
the banker to pay the premiums as they surnames of the partners must be registered
become due and to debit the amounts to the under the Registration of Business Names
customer's account. Act, 1916. (See REGISTRATION OF BUSINESS
An insurer cannot recover more than the Names.)
actual loss sustained from a fire, within In Scotland a firm is a legal person
the amount of the policy. If the same distinct from the partners. (See Section 4 of
property is insured in several offices, each the Partnership Act, 1890, under PARTNER
company will only pay its proportion of any SHIPS.)
loss . Unless registered under the Companies
As soon as a person has signed a contract | Acts, a firm must not consist of more than
to purchase a house he becomes liable for twenty partners, and in the case of a banking
the insurance, and he will be obliged to firm of more than ten partners.
complete the purchase, even if the house is FIRM OFFER . A definite offer, as where
destroyed by fire before the date fixed for a person states that he is prepared to pur
completing the purchase. A purchaser chase a certain property at a specified
should therefore insure the house as soon as price.
he has signed the contract. If the vendor FIRST AND IN NEED WITH . Where a
had the house insured that would not foreign bill is drawn in a set, say in two
(unless the policy had been transferred to parts, one part may be sent at once to the
the purchaser with the consent of the drawee for acceptance, and the other part
company) benefit the purchaser. A contract may be negotiated and bear aa reference upon
of insurance indemnifies the insured against theface of it that the accepted partis in the
loss, and as the insured had sold the house possession of certain agents, as First and
he would not suffer any loss by the fire . in need with the British Bank, Ltd.,
The loss would fall uponthe purchaser. London .” If the bill is dishonoured, the
If a fire policy includes an average clause, agents named will, after it has been pro
the insurance company is liable to pay only tested for non - payment,pay the bill for the
such proportion of the loss by fire as the honour of their principal.
275
FIR ) DICTIONARY OF BANKING (FIX

FIRST -CLASS PAPER . Treasury Bills deed , vested in trustees for the debenture
and bills which bear the names of banks and holders or debenture stockholders, so that
financial houses of the very highest standing. no other person may obtain a prior charge.
They are so called to distinguish them from The company cannot deal in any way with
second and third -class bills, where thesecurity the property so charged without the consent
is not so good. of the trustees. (See DEBENTURE, FLOATING
FIRST MORTGAGE. A charge upon pro- CHARGE.)
perty which takes priority to any other FIXED DEPOSIT . A deposit receipt
charges. (See LEGAL MORTGAGE, MORTGAGE.) which is repayable at a certain fixed date.
FIRST OF EXCHANGE . (See BILL IN Á The rate of interest allowed is usually a better
Set.) one than on an ordinary deposit repayable
FIVE -POUND PIECE . It was first coined on demand . (See DEPOSIT RECEIPT.)
for circulation in 1887, though it was pro- FIXED MORTGAGE. A mortgage for a
vided for in the first schedule to the Coinage fixed or definite amount. A banker's mort .
Act, 1870. (See COINAGE. ) gage is to secure a fluctuating balance.
FIXED ASSETS . Assets which are not (See BANKER'S MORTGAGE, MORTGAGE .)
turned into cash , but are used indirectly FIXTURES. As a general rule whatever
for the purpose of providing the income of á is affixed to a freehold by a lessee or tenant
business. Assets which are fixed assets in becomes part of the freehold and cannot be
connection with one business, may in another removed without the permission of the
business be floating assets, e.g. the plant landlord ; but in the caseof a lessee who has
and machinery which are used by a company fixed plant or machinery for the purposes of
to produce certain goods are fixed assets, but his business there is an exception as he is
where the machines themselves are made in entitled , as against the landlord , to remove
order to be sold they are floating assets. the same during his tenancy, provided that
FIXED CAPITAL . Capital which is sunk it is not contrary to the terms in his contract
In the purchase of land, or in buildings, the of tenancy and that the trade fixtures can
construction of railways, cutting of canals, be removed without causing material injury
etc., and which produces its effect by being to the building.
kept, and not parted with , as in the case A mortgagor, however, cannot remove
of circulating capital. " Capital,
Capital,"" says fixtures from a property as against a mort
John Stuart Mill, * which exists in any of gagee, even though they are of such a nature
these durable shapes and the return to whichas to be removable as between landlord and
is spread over a period of corresponding tenant.
duration, is called Fixed Capital.' Some A deposit of title deeds, as well as a legal
kinds of fixed capital require to be occa- mortgage, carries with it the right of the
sionally or periodically repaired or renewed, mortgagee to any fixtures there may be on
but these improvements “ by the very fact the property .
of their deserving that title, produce an The Bills of Sale Act, 1878, provides that
increase of return , which , after defraying all the expression personal chattels " shall
expenditure necessary for keeping themup, mean goods, furniture, and other articles
still leaves a surplus. This surplusforms the capable of complete transfer by delivery,
return to the capital sunk in the first in- and (when separately assigned or charged)
stance, and that return does not, as in the fixtures and growing crops, but shall not
case of machinery, terminate by the wearing include chattel interests in real estate, nor
out of the machine, but continues for ever. ' fixtures (except trade machinery as herein
Lord Justice Buckley defined fixed capital after defined ), when assigned together with
as “ property acquired and intended for a freehold or leasehold interest in any land
retention and employment with a view to or building to which they are affixed .
profit, as distinguished from circulating (Section 4.) By Section 5 “ From and
capital, meaning property acquired or pro- after the commencement of this Act trade
duced with a view to re- sale or sale at a machinery shall, for the purposes of this Act,
profit.” (See CAPITAL. ) be deemed to be personal chattels, and any
FIXED CHARGE . Debentures and de- mode of disposition of trade machinery by
benture stock may be secured on the pro- the owner thereof which would be a bill of
perty of the company by a “ fixed ” charge, sale as to any other personal chattels shall
or by a “ floating charge. In a fixed be deemed to be a bill of sale within the
charge the property is, usually, by a trust meaning of this Act.
276
FIX ] DICTIONARY OF BANKING (FLO

" For the purposes of this Act fixtures from the land . He could only do so
“ Trade machinery " means the if empowered by the terms of the power of
machinery used in or attached to any sale so to do. The mortgage is a mere
factory or workshop ; ordinary mortgage, referring, it is true, to
“ (1) Exclusive of the fixed motive powers, the land, the workshop, and the yard, but
such as the water-wheels and steam not in any waydealing eitherwith thehouse,
engines, and the steam boilers, or with the workshop , or the machinery,
donkey - engines, and other fixed as anything to be separated from , or severed,
appurtenances of the said motive or capable of being severed, from the free
powers ; and , hold to which it is affixed . .. In my
" (2) Exclusive of the fixed power opinion it would be wrong to say that such
machinery , such as the shafts, a mortgage as this was a bill of sale of the
wheels, drums, and their fixed trade machinery, even although the Act
appurtenances, which transmit the does declare that trade machinery is to be
action of the motive- powers to the
considered for the purpose of the Act
personal chattels . ”
other machinery, fixed and loose ; The above quoted case of Batcheldor v.
and ,
Yates does not apply when there is an
" ( 3) Exclusive of the pipes for steam , express assignment ofchattels, as chattels,
gas, and water in the factory or and not as incident to the land . Where
workshop. land was conveyed by a mortgage together
“ The machinery or effects ex- with fixed and movable plant, machinery,
cluded by this section from the fixtures, etc., the deed has been held to be
definition of trade machinery shall not a bill of sale as regards the trade machinery
be deemed to be personal chattels and to require registration as such . (Small
within the meaning of this Act." v. National Provincial Bank of England,
A deed , therefore, by which fixtures (other 1894, 1 Ch. 686.)
than trade fixtures) are separately assigned The question as to whether certain things
must be registered as a bill of sale, as must are or are not trade fixtures has frequently
also a deed which assigns fixed trade been the cause of litigation .
machinery, whether assigned separately or FLOATERS. A term used to signify the
not. If, however, the trade machinery is first-class bearer securities, e.g. Exchequer
assigned , not as chattels, but as part of the Bonds, Treasury Bills, India Bills, etc.,
freehold to which they are affixed, the deed which bill brokers deposit with banks
does not require registration under the Bills against money lent to them at call. When
of Sale Act. these securities are not available, Consols
In Batcheldor v. Yates (1888, 57 L.J. Ch . are frequently used , but the fluctuations to
697 ), there was a mortgage of freehold pro- which they are liable render them less
perty on which there happened to be some desirable than the short -dated securities.
trade machinery - Cotton , L.J.,in his judg. When the money is called in by one bank
ment said : “ The instrument is a convey the broker must' borrow from another, and
ance of land, and although that does give a thus his securities move or “ float ” about
right to all fixtures on the land, including from one bank to another.
this trade machinery, yet it does so, not as An important judgment was given (June,
an assurance of that trade machinery, or 1912), in Lloyds Bank, Ltd., and Union of
of those things which the Act says are to be London and Smiths Bank, Ltd. v. Swiss
considered as personal chattels, but merely Bankverein ( 1912, 107 L.T. 309), where
as conveying and assigning all the land, the plaintiffs contended for a custom whereby
and everything so fixed to the freehold as to " floaters " when released from pledge with
be passed by a conveyance of the land. It the bank on presentation of a cheque
does not enable the mortgagee, within the remained the property of the bank until
meaning of Section 3, to seize or take pos- the cheque was met.
session of these personal chattels. It enables Hamilton , J. , in the course of his judg
him to take possession of the land, and he ment said : “ On 15 Sept., 1911 , there fell
thereby has possession of the trademachinery due for payment by E. Hellings & Co. to
as part of the land , but in no other way. the plaintiff banks, two large loans of short
" In this mortgage there is no right at all money against security , and on the morning
on the part of the mortgagee to sever these of that day Hellings gave to the two banks
277
PLOJ DICTIONARY OF BANKING
cheques for the amount due, which were
subsequently dishonoured , and received
respectively from the two banks the securi-
ties which had been deposited to secure the
loans when they were first made. Later in
the same day the defendant bank received
from Hellings on two separate occasions, but
on each occasion , as a fact, with the assentof
the senior partner in the firm and another,
certain of these securities which they had
received in the morning from the plaintiffs.
The whole of the instruments in question in
this action are negotiable instruments, and
most of them are bearer bonds. " The
plaintiffs claimed to have been bond fide
holders for value whose effective retention
of the securities was never determined , and
the defendants disputed that the plaintiffs
were any longer entitled to the securities,
and alleged that in any case they themselves
were also bona fide holders of the securities
for value and without notice. · The plain-
tiffs say : There is a practice of bankers
which either has the efficacy of custom or to
which the law must attach the significance
of a trust, under which Hellings, still being
in possession of those securities, and his
cheques not yet having been met, held them
as custodian for us, intended , no doubt, with
an authority to negotiate them for value,
but he had not exercised that authority ."
Hamilton, J., came to the conclusion that
it is not the natural or the necessary con-
struction to put upon the transaction " that
these bonds are impressed with a trust, and
that there is a right to follow the proceeds
of the trust instrument. That being so , I
think it follows, that as soon as the plaintiffs
parted with their securities, they ceased to
be able to make any claim to them in this
action , and that their claim must fail.”
The above decision was affirmed by the
Court of Appeal ( 1913, 108 L.T. 143).
Farwell, L.J., said : “ The appellants en-
tirely fail to prove the existence of any trust
at all ." The evidence shows that this
was an ordinary business transaction on
credit ; the bankers gave up their securities
and took the broker's cheque, and the risk
was theirs on the broker's cheque.” “ The
very idea of impressing negotiable instru-
ments with a vendor's lien or implied trust
is utterly repugnant to their nature."
FLOATING ASSETS. ( See FIXED
ASSETS . )
FLOATING CAPITAL. (See CAPITAL.)
FLOATING CHARGE . A floating charge
has been defined by Lord Macnaghten as
278
(FLO
"an equitable charge on the assets for the
time being of a going concern . It attaches
to the subject charged in the varying con
dition in which it happens to be from time
to time. It is of the essence of such a charge
that it remains dormant until the under
taking charged ceases to be a going concern ,
or until the person in whose favour the
charge is created intervenes."
Debentures or debenture stock , in addi
tion to being secured by a "fixed ” charge
upon the company's property, may also be
secured by a floating ” charge, that is a
charge upon the stock , book debts, etc. , of
the company, which permits the company
to make use of those assets in any way in
connection with its ordinary business. A
charge of that description " floats " until
such time as default is made in payment of
interest, or the company goes into liquida
tion , or breaks some other condition of the
debenture. When such an event occurs, the
charge becomes " fixed , ” and the assets at
that date become a fixed security for the
debentures and may be realised for the
benefit of the debenture holders. ( See
DEBENTURE .)
If the debentures create a “ floating "
charge upon the land of the company, as
well as upon the stock, book debts , and
uncalled capital , the company is not pre
cluded by that floating charge from selling
66
or mortgaging the land. Some floating
charges, however, contain a clause to the
effect that the company will not mortgage
the property so as to create an equal or prior
charge, but even in that case if anyone
grants the company a loan against the title
deeds, without any notice of the charge, he
may obtain priority “ under the doctrine
that where the mortgagor has ostensible
authority to deal with the property all
dealings with a bonå fide mortgagee are
valid .” (Jordan's “ Handbook on Joint Stock
Companies .")
In National Provincial Bank of England
v. United Electric Theatres, Ltd. ( 1916,
1 Ch. 132), Astbury, J. , quoted with
approval the words of Romer, L.J. , in a
case in the Court of Appeal, in which he
stated that “ a mortgage or charge by a
company which contained the three follow
ing characteristics is a floating charge ;
( 1 ) If it is a charge on a class of assets of
a company present and future ; (2) if that
class is one which, in the ordinary course of
the business of the company, would be
changing from time to time ; and (3) if you
FLO ) DICTIONARY OF BANKING (FOR

find that by the charge it is contemplated | money . A low market rate is the natural
that, until some future step is taken by or result.
on behalf of those interested in the charge, FLOATING POLICY . (See MARINE
the company may carry on its business in INSURANCE Policy .)
the ordinary way as far as concerns the FLORIN . A two -shilling piece. (From
particular class of assets I am dealing with .” Latin flos, floris, a flower. Italian fiorino, a
The words of Lord Macnaghten in the House forin , so called because there was the figure
of Lords were also quoted with approval : of a lily upon it. It is also stated that the
“ A specific charge is one that without more coin is named from the city of Florence
fastens on ascertained and definite property, where florins were first coined .) It was
or property capable of being ascertained and introduced into the coinage in 1849.
defined ; a floating charge, on the other The standard weight of a florin is
hand, is ambulatory and shifting in its 174 :54545 grains troy and its standard fine
nature, hovering over and, so to speak, ness thirty -seven -fortieths fine silver, three
floating with the property which it is fortieths alloy ; altered by the Coinage Act,
intended to affect until some event occurs 20 , to one-half fine silver, one-half alloy.
or some act is done which causes it to settle (See COINAGE .)
and fasten on the subject of the charge FOR CASH . A transaction on the Stock
within its reach and grasp ." Exchange which is “ for cash " or for 64

Particulars of every floating charge on the money means that the security which has
undertaking and property of a company been sold must, as soon as delivered , be paid
must be delivered to the registrar of com- for in cash . (See FOR THE ACCOUNT.)
panies for registration. (SeeREGISTRATION FOR THE ACCOUNT. A transaction on
OF MORTGAGES AND CHARGES.) A debenture the Stock Exchange may be “ for the ac
containing merely a floating charge does not count,” that is for settlement on the next
require to be entered on the company's account day ” or “ settling day .” (See
register of mortgages . For Cash .)
Where a company is being wound up, a FORECLOSURE . Where a mortgagor
floating charge created within three months has failed, after due notice, to make repay
of the commencement of the winding up ment of the mortgage debt, the mortgagee
may be invalid (see DEBENTURE, and Sec- has the right to apply to the Court for an
tion 212 of the Companies (Consolidation) order for foreclosure . Where this is done, the
Act, 1908, under WINDING UP) . (See Court orders an account of what is due to
COMPANIES.) the mortgagee to be submitted , and if what
FLOATING DEBT. The floating or un- is found to be due is not paid within
funded debt of the country consists of six months, the mortgagor's equity of re
Treasury Bills (q.v.), Ways and Means demption, that is his right to redeem the
( , War
Advances, Exchequer Bonds (q.v.), property,is foreclosed or extinguished . By
Stock and Bonds, War Savings Certificates, foreclosure, therefore, the mortgagor loses his
War Expenditure Certificates. The words equity of redemption altogether and has no
" floating debt are sometimes used to further interest or right in the property
include only short-dated loans, as Treasury and the mortgagee becomes absolute
Bills, and Ways and Means Advances ; but owner .
as the other securities are repayable at fixed Neither a legal mortgagee nor an equitable
dates, they form a floating as distinct from mortgagee can foreclose without sanction of
a permanent debt. (See FUNDED DEBT. ) the Court .
FLOATING MONEY. Temporary surplus A legal mortgagee can , however, sell the
funds in the hands of bankers, for which property or put in a receiver under the
no profitable employment can be found power contained in his mortgage deed, with
owing to the money market being already outany application to the Court.
fully supplied. This floating money finds The expression “ redeem up, foreclose
its way to the bankers' accounts at the Bank down " applies when a mortgagee makes
of England, and goes to increase the item application to the Court for foreclosure, as
“ Other Deposits " in the Bank Return , until heforecloses any subsequent mortgagees, as
a suitable outlet offers. A glutted condition well as the mortgagor, and redeems any prior
of this kind arises on the periodical payment mortgagee.
of large Government and other dividends and Application for foreclosure must be made
during times when there is little demand for within twelve years from the last payment
279
FOR ] DICTIONARY OF BANKING
of interest by the mortgagor or written
acknowledgment of the debt.
Where a mortgagee remains in possession
of the property and receives the rents for
twelve years after default is made under the
mortgage, and does not during that time
acknowledge in writing the title of the
mortgagor or his right to redeem, foreclosure
takes place by the lapse of time and the
mortgagor's right to redeem is extinguished
at the end of the twelve years.
Where a mortgagee forecloses and thus
becomes absolute owner of the property, he
has no further claim upon the mortgagor.
But if a mortgagee sells the property, instead
of foreclosing, he may claim upon the mort
gagor if the proceeds of the sale are not
sufficient to repay the mortgage debt. (See
MORTGAGE .)
FOREIGN BANK NOTES. · They are sub
ject to the laws of the country in which they
are issued . Country bankers usually send
foreign bank notes to their London office or
London agents to be sold .
FOREIGN BILL. The Bills of Exchange
Act, 1882 ( Section 4) , defines an inland bill as
a bill which or on the face of it purports to
be ( a) both drawn and payable within the
British Islands, or (6) drawn within the
British Islands upon some person resident
therein . Any other bill is a foreign bill.
The British Islands mean any part of the
United Kingdom of Great Britain and Ire
land , the islands of Man, Guernsey , Jersey,
Alderney and Sark, and the islands adjacent
to any of them being part of the dominions
of His Majesty, and a bill drawn in any of
those places is an inland bill, but for the
purposes of stamp duty a hill or note pur
porting to be drawn out of the United
Kingdom (the Isle of Man and the Channel
Islands are out of the United Kingdom ) is
deemed, by the Stamp Act, 1891 , Section 36,
to be a foreign bill.
The regulations regarding bills are not the
same in all countries and the Bills of Ex
change Act in Section 72 sets forth the rules
to be observed where laws conflict :
“ Where a bill drawn in one country is
negotiated, accepted, or payable in another,
the rights, duties, and liabilities of the parties
thereto are determined as follows :
“ ( 1) The validity of a bill as regards
requisites in form is determined by
the law of the place of issue, and the
validity as regards requisites in
form of the superveningcontracts,
such as acceptance, or indorsement, try and be payable abroad, e.g. where goods
280
[FOR
or acceptance suprà protest, is
determined by the law of the place
where such contract was made :
“ Provided that
“ (a ) Where a bill is issued out of
the United Kingdom it is not
invalid by reason only that
it is not stamped in accord
ance with the law of the
place of issue :
“ (6) Where a bill, issued out of
the United Kingdom , con
forms, as regards requisites
in form , to the law of the
United Kingdom , it may , for
the purpose of enforcing
payment thereof, be treated
as valid as between all per
sons who negotiate, hold , or
become parties to it in the
United Kingdom .
" ( 2) Subject to the provisions of this Act,
the interpretation of the drawing,
indorsement, acceptance, or accept
ance suprà protest of a bill is deter
mined by the law of the place
where such contract is made .
Provided that where an inland
bill is indorsed in a foreign country
the indorsement shall as regards
the payer be interpreted according
to the law of the United Kingdom .
“ (3) The duties of the holder with respect
to presentment for acceptance or
payment and the necessity for or
sufficiency of a protest or notice
of dishonour, or otherwise, are
determined by the law of the place
where the act is done or the bill is
dishonoured .
" (4) Where a bill is drawn out of but
payable in the United Kingdom
and the sum payable is not ex
pressed in the currency of the
United Kingdom , the amount shall,
in the absence of some express
stipulation, be calculated according
to the rate of exchange for sight
drafts at the place of payment on
the day the bill is payable.
“ (5) Where a bill is drawn in one country
and is payable in another, the due
date thereof is determined accord
ing to the law of the place where it
is payable."
A foreign bill may be drawn in this coun
 POR ] DICTIONARY OF BANKING * [FOR

are exported from England to America the | In the same way, if a holder of a set indorses
exporter may draw a bill upon his correspon- two or more parts to different persons he is
dent in America for the value of the goods. liable on every such part. When an acceptor
A foreign bill is also one which is drawn pays a bill drawn in a set, he should see that
abroad and payable in this country, as, for the part bearing his acceptance is delivered
example, for the value of goods imported into up to him , otherwise a holder of it in due
England from America . Acredit may be course may require payment of it. In the
opened for the captain of a ship at a foreign ordinary course of things, where any one
port who may draw bills upon a London part is discharged , the whole bill is dis
banker up to a certain fixed sum . charged. The rules of the Bills of Exchange
The following extract from the Bankers' | Act, Section 71 , with regard to a bill drawn in
Magazine, December, 1909 , illustrates, in several parts are given under BILL IN A SET.
the case of cotton , the various forms of The following are specimens of foreign
bank paper which may be created between bills :
the seeding in Texas and the delivery of the No. Copenhagen . 19 .
.

cotton in Liverpool : - “ The planter is £ 5

carried on through the season by advances At ten days from date pay this first of
from a local bank or a commission agent exchange to the order of John Jones five
acting for a firm of Liverpool importers. pounds sterling value received , which place
When the cotton is ready to ship it may
to account as per advice.
be paid for by a cheque on a bank in New Το R. BROWN .
Orleans or Galveston . The local bank sees
J. Jackson,
it on board ship and draws on a New York London .
bank against it, at the same time forwarding
the bills of lading. The New York bank Payable in London . Due
draws on London and sends on the bills of No.
lading with the draft. The London acceptors, Las Palmas,
who may be a bank or a commercial firm , $ 200 . . 19 .
discount the bill, and the discounters may At thirty days after sight of this first of
re-discount it or borrow on it. If it be what exchange (second unpaid ) pay to theorder of
is technically called a ' fine bill,' that is, John Jones the sum of two hundred pounds
with the best kind of names on it, it may sterling, value received, which amount place
pass through many hands before it matures." with or without further advice to the account
Bills payable abroad are usually sent by of the steamer Britannia .
country bankers to their London office or J. BROWN.
London agents to be sold through a foreign
bill broker. As the bills are indorsed by the To X & Y Steam Ship Co., Ltd.,
bank before negotiation, an account such as Hull.
)

“ foreign bills negotiated ” should be credited London ...... 19

( cash being debited) with the proceeds of the Exchange for £500.
sale, in order to show the bank's liabilityupon Sixty days after sight of this first of
the bills until maturity. When sufficient exchange (second and third of the same
time has elapsed, after maturity , to allow tenor and date unpaid ), pay to the order of
of the bills being returned, if dishonoured, John Jones, five hundred pounds, exchange
“ foreign bills negotiated ” account should be as per indorsement, value received , which
debited, and foreign bills account credited . place to account as advised . The shipping
This latter account is credited because documents attached to be surrendered
when the customer received credit for the against acceptance.
bills, foreign bills account would be debited . JOHN BROWN.
A foreign bill is usually drawn in a set, To R. Robinson & Co.,
that is, instead of there being only one docu New York .
ment, as is generally the case with inland
bills, there are two, or three, documents. A foreign bill drawn in this country in
The several parts , however, constitute one sterling may include the words “ exchange
bill. Only one of the parts must be ac- as per indorsement.” The rate is indorsed
cepted, for if more than one part is accepted on the bill in London when first negotiated
the acceptor may find himself liable on every and constitutes the rate at which the bill
part so accepted, as if it were a separate bill. is payable.
281
FOR ] DICTIONARY OF BANKING (FOR

Where a foreign bill, appearing on the face sold depends upon the supply and demand,
of it to be such, has been dishonoured by non- and accordingly is subject to constant
acceptance, it must be duly protested for changes. As between France and England,
non -acceptance, and where such a bill, which French merchantshave claims to sovereigns
has not been previously dishonoured by non- in England, and English merchants claims
acceptance is dishonoured by non -payment to francs in France. If on any particular
it must be duly protested fornon -payment. day England has more claims to pay to
If it be not so protested, the drawer and in- France than that country has to pay to this,
dorsers are discharged (Section 51 , s.s. 2, Bills there will be competition on the exchange
of Exchange Act). (See PROTEST.) If a for bills to remit to France and the price
foreign bill is accepted as to a part only of will accordingly rise. For example, if one
the amount, it must be protested as to the hundred sovereigns are equivalent in value
balance (Section 44, s.s. 2) . to 2,522 francs, and if the demand for
A foreign bill may be payable at one or French bills is greater than the supply a
more usances ." A usance is the time buyer of a bill for 2,522 francs will require
which , by custom, is allowed between two to pay more than £ 100 for it, but if, on the
countries for the currency of a bill. (See other hand, the supply exceeds the demand
USANCE .) a buyer will pay something less than £ 100
Foreign bill transactions used to be settled for such a bill. Up to a certain point a
on the Royal Exchange on Tuesdays and buyer will be willing to pay more than £ 100
Thursdays . This old custom was dis- for his bill, for the simple reason that he
continued, as from the beginning of 1921 , finds it cheaper to do so than to settle
in favour of more expeditious methods. his debt by sending the gold itself in
As to the stamp duty upon foreign bills, payment.
see BILL OF EXCHANGE . To send gold from one country to another
Under the Uniform Law ( q.v.) the coun- involves expenses for freight, insurance,
tries which have signed the Convention etc., and these expenses limit the price that
undertake that no bill or promissory note a merchant is willing to pay for a bill.
drawn within their territories shall be The price for the bill cannot rise above this
invalidated for non-compliance with revenue point, called the “ export specie point," for
laws. Penalties may be imposed, and all it then pays better to send gold than to
remedies on the bill may be suspended till buy a bill ; and the price of the bill should
the stamp laws are complied with. (See not fall below a certain point, the “ import
BILL OF EXCHANGE, DOCUMENTARY BILL, specie point," for then it is cheaper to im
INLAND BILL, IN CASE OF NEED, UNIFORM port gold. In certain countries, however, the
Law .) rate of exchange may actually reach the
FOREIGN COMPANY . (See COMPANY point when it is cheaper to send gold to
OUTSIDE THE UNITED KINGDOM .) London without gold being sent because
FOREIGN EXCHANGES. Under the gold is not available for the purpose.
designation Foreign Exchanges are included " To transmit bullion from London to
all those transactions which have for their Paris costs about 10 centimes per £, and the
object the transmission of capital from one outgoing Specie Point lies between 25.10
country to another. In other words, the and 25.15. The incoming Specie Point, or
Foreign Exchanges are concerned with the the exchange at which we ought to draw
buying and selling of the money of other gold from France is nominally about 25.321,
countries, and the rates at which the money but as the rate sometimes stands above this
of one country may be exchanged into that figure for weeks together it would appear
of another country . that there exists some obstacle to the outfiow .
When a merchant in this country exports Such is in fact the case , and the obstacle
goods to another country he has a claim upon is a premium on gold imposed by the Bank
that country for so much money, and when of France." (George Clare .)
he imports goods the foreign country has The foreign exchange is said to be turning
a claim upon this country. The settlement In favour ofa country when gold may shortly
of these international transactions is usually have to be sent to it by the foreigner,
effected by means of bills of exchange, the and to be adverse when, before long, it
exporter having a bill to sell and the im- may be necessary to export gold to the
porter having a remittance to buy. The foreigner.
price at which bills may be purchased or Where the exchange rates are quoted in
282
FOR ] DICTIONARY OF BANKING (FOR
Nominal
foreign money ( e.g. with France and Ger equivalent
Present
value
many at so many francs or marks to the or value
Feb. 1 ,
on gold 1921.
pound ), the higher the quotation the more standard .
favourable the exchange is to England, ARGENTINE ( cont.) — S. d . s. d.
because the amount of francs or marks Cents gold 1 Peso paper
which are to be received for one pound is and quotations given in the
greater. On the other hand , where rates
Press are in terms of gold
are quoted in sterling money (e.g. with Pesos.
Russia and India, at so many pence to a Silver 50 Centavos 104 111
rouble or rupee) the lower the quotation the Nickel 20 »)
more favourable it is to England, because 10
1)
fewer pence are to be given for a rouble or 5
rupee .
The foreign bill business used to be copper 2i Centavo
,
wherebuyers and sellers met on Tuesda ys Gold 5 Peso Argentino
19s . 10d .
and Thursdays. These meetings were dis Notes are issued by the
continued in 1921 in favour of more Republic for 50 Centavos,
expeditious methods.
For further information see the lectures 1, 5, 10, 50, 100, 500 and
1,000 Pesos.
the Foreign Exchanges, by Hartley The letters M / L or M / N
Withers, Journal of the Institute of Bankers, after an amount indicate
1913 . (See CHEQUE RATE, COURSE OF that the amount is for
EXCHANGE FORWARD EXCHANGE, LONG
Pesos paper.
RATE , SHORT RATE , SPECIE POINTS , PAR
OF EXCHANGE .) AUSTRALIA
FOREIGN MONEYS. The values indi- English coins circulate
cated in the first column are the nominal throughout the country .
equivalents on the gold standard , or normal The Commonwealth issue
value, and the second column gives the gold , silverand bronze coins
approximate equivalent on 1st February, for the same denomination
1921 . as Great Britain excepting
Nominal Present
silver coins above one florin .
equivalent value The notes hitherto issued
or value
Feb. 1, by the six Federated States
on gold 1921.
standard . have been taken over by
Nominal

ABYSSINIA— s. d. s. d . the Commonwealth Govern

Monetary Unit = Menelik ment, and for a time re
Dollar . . 2 0 mained in circulation with
Silver 1 Dollar
.

a printed notice across them

to that effect. These have
now been replaced by notes
1/20 = 1 Piastre issued by the Common
Copper 1 Piastre wealth Government in
Notes are issued by the denominations of 10s ., £1 ,
Bank of Abyssinia for 5,
10, 50, 100
£ 5 , £ 10, £ 20, £50, £ 100
and 500 Dollars . and £ 1,000 .
The old Maria Theresia or English notes are gener
Trade Dollar of tria, da ally at a discount which
ting back to the eighteenth varies from 1 per cent. to
century , is still found in 21 per cent.
circulation amongst the AUSTRIA
native population. Monetary Unit = Krone of
ARGENTINE 100 Heller •
10 1
Monetary Unit = Peso Bronze 1 Heller
1 9 1 101 2
(paper)
The ratio between gold Nickel 10
20
and paper is fixed at 44 1

283
FORJ DICTIONARY OF BANKING FOR

Nominal Present Nominal Present

equivalent value equivalent value
or value or value
on gold
Feb. 1,
on gold
Feb. 1 ,
1921. 1921 .
standard. standard .
s. d. S. d . s. d. s. d .
AUSTRIA (cont.) BELGIUM (cont.)
Silver 1 Krone . 10 During the German Occu
2 Kronen 1 8 pation the Société Genérale
5 . 4 2 de Belgique issued notes for
Gold 10 . 8 4 1 , 2, 5, 20, 100 and 1,000
20 16 8 Francs which were taken
'Notesare issued by the over and legalised in Nov. ,
Austro -Hungarian Bank , 1918, but are gradually
and since 1919 all notes being withdrawn from
which formerly circulated circulation .
throughout the Austrian BERMUDA
Empire were called in for
stamping and only those English money is the
bearing the words “ Deuts legal tender, but United
chosterreich ” (block let States Dollars are freely
ters) in red letters now accepted.
have a legal tender value. BRAZIL
Notes are issued for 1 , 2, Monetary Unit Milreis
10, 20, 50, 100, 1,000, 5,000, . 1 4 94
10,000 Kronen . Gold and (paper)
silver ceased to circulate Although nominally on a
owing to the great depreci gold basis the circulating
ationof the paper currency medium is chiefly incon
vertible paper.
quoted recently from 1,200 Copper 20 Reis
to 2,700 Kronen to the £ 1 . 40 .
The notes and coin of the
former Florin or Gulden Nickel 100
200
issue have ceased to be 400 .
legal tender . Silver 500 8
BAHAMA ISLANDS 1 1,000 1 4
2,000 2 8
English notes and coinage Gold 22 5
circulate. 10,000 ,
20,000 . 44 10
BELGIUM Notes are issued by the
Republic for 500 Reis , 1 , 2, .

Monetary Unit = the Franc 5, 10, 20, 50, 100, 200, 500
.

of 100 Centimes 91 44 Milreis.

Bronze 1 Centime
2 Centimes
Old notes are gradually
Nickel 5
withdrawn by discounting
10 them on a percentage basis
20 >
over a given period.
25 BRITISH EAST AFRICA
Silver 50 Monetary Unit = Rupee of
1 Franc 91 44 100 Cents 1 4 2 0
2 Francs . 1 7 94 Silver 50 Cents 8 1 0
5 )) . 3 111 1 114 25 4 6
Gold 20 15 10 Nickel 10
> 10 7 11 5
Notes are issued by the 1 Cent
National Bank for 1 , 2, 5, Notes are issued by the
20, 50, 100, 500 and 1,000 Currency Board for Rs. 5,
Francs . 10, 20, 50, 100 and 500.
284
FOR ) DICTIONARY OF BANKING [FOR
Nominal Present Nominal
equivalent Present
value equivalent value
or value or value
Feb. 1 , Feb. 1,
on gold 1921 . on gold 1921,
standard . standard
BRITISH EAST AFRICA (cont.) s. d. S. d . CANADA S. d . S. d.
The name of the Rupee Monetary Unit = Dollar of
has recently been changed 100 Cents . . 4 2 4 8
to Florin , and notes are Bronze 1 Cent
issued for one Florin . Silver 5 Cents
It is announced that the 10
currency will shortly be 20
placed on a Sterling basis 25
of pounds, shillings and 50
cents. Gold 5 Dollars . 20 10
English notes are legal 10 41 8
tender at 10 Florins £1 . Notes are issued by the
BRITISH HONDURAS Government for 25 Cents,
Monetary Unit = 1 Dollar $ 1 and $2 : and by the
of 100 Cents 4 2 4 2 various banks of Canada
Copper 1 Cent for $5, $ 10, $20, $ 50, $ 100,
Nickel 5 Cents $ 500 .
Silver 10 5 5
25 . 1 01 1 07 CANARY ISLANDS ,
50 2 1 2 1 Spanish money is the
Notes are issued by the currency in use (see Spain ).
Government of British Hon
duras for 2, 5, 10 Dollars. CEYLON
BRITISH WEST AFRICA Monetary Unit = Rupee of
English Notes and coin 100 Cents 14 15
circulate in the Colonies Silver 50 Cents'
grouped under this heading, 25
although the West African 10
Currency Board have an Nickel 5
issue of their own as follows : Copper 1 Cent
Bronze tyd. 1
id. Currency notes are issued
id. for 1 , 2, 5, 10, 50, 100 and
Silver 3d ., 6d ., 1s. and 2s. 1,000 Rupees. See note
Notes Is., 25., 10s ., £1 , under India regarding alter
and 45 . ation in gold standard .
BULGARIA
CHILI
Monetary Unit = Leva of
100 Stotinkis 91 1 Monetary Unit = Peso of
Copper 1 Stotinka 100 Centavos (gold) . 1 6
2 Stotinkis Although on a nominal
Nickel 5 gold basis the currency is
10 principally inconvertible
20 paper 1 Peso paper . 10 84
Silver i Leva" 91 Coins
2 . 1 7 20 Peso gold (Condor) 30 0
5 . 3 114 10 . 15 0
Gold 7 11 5 . 7 6
10
20 .
15 10 1 Silver (new ) . 10
Notes are issued by the Silver 50 Centavos
Bulgarian National Bank 20
for 1, 2, 5, 20, 50 , 100 , 10
1,000 Leva . 5

285
POR ) DICTIONARY OF BANKING [ POR
Nominal Present Nominal Present
equivalent value equivalent value
or value or value
Feb. 1, Feb. 1 ,
on gold 1921. on gold 1921 .
standard . standard .

CHILI (cont.) S. d . S. d . CRETE S, d . S. d.

Copper 21 Centavos The currency is the same
2 as for Greece , but notes
1 Centavo are issued , also silver and
1 copper coins, of equal value
Notes are issued by the tothe Greek currency .
Government for 1 , 2, 5, 10, CUBA
20, 50, 100, 500 and 1,000
Pesos. Spanish money still cir
CHINA culates commercially, but
United States currency is
1 Tael
The monetary system of
28 3 34 legal tender.
China is most complex , and DENMARK- (See Norway).
although it is based on a
Tael of silver - i.e. a cer ECUADOR
tain weight of silver - this Monetary Unit Sucre of
has a varying value in dif 100 Centavos 2 0 1 2
Silver 1 Sucre 2 0
ferent parts of the Republic. 50 Centavos 1 0
In certain districts, par
ticularlyon the coast, Mexi 20
can Trade Dollars are used 10
for trading with foreign 5
countries, and these Dollars Copper 2
form the basis for dealings 1 Centavo
amongst the European 生
Commercial population . Gold 10 Sucres ( 1 Condor) 200
Coins English gold is legal ten
1 Dollar silver . . : 20 2 47 der at 10 Sucres £1.
50 Cents Notes are issued by the
20 local banks.
10 EGYPT—
Notes are issued by the Monetary Unit = Egyptian
European banks payable in
61053-88

pound of 100 Piastres .

20 6 20 6
Dollars and by certain Silver 20 Piastres 4 11 4 11
Chinese Banks in both 2 03 2 05
10 .

Dollars and Taels. 5 1 07 1 07

양

COSTA RICA 2 5
Monetary Unit = Colon of 1 Piastre 2 21
Nickel 10 Millièmes
100 Centavos
Silver 50 Centavos
.

2 0 16 5
2}
13
25 2 03
10 i Millième 07
양

5 Bronze 1
Bronze 10 1
5 Gold 100 Piastres or E£120 6
Nickel 2 50 Piastres or EŁt 10 3
Copper 1 Centavo The National Bank of
Gold 20 Colons Egypt issues notes of 25 and
10 91 19 0 50 Piastres, E 1, E45,
5 9 6 E£10, E450 and E £ 100 ;
2 3 10 5 and 10 Piastre currency
Notes are issued for 1 , 2, notes are issued by the
5, 10, 20, 50 and 100 Colons. Government.
286
FOR ] DICTIONARY OF BANKING (FOR
Nominal
Present Nominal Present
equivalent value equivalent value
or value or value
Feb. 1 , Feb. 1 ,
on gold 1921 . on gold 1921.
standard . standard .
EGYPT ( cont.)— s. d. s. d. FRANCE (cont.)— S, d. S. d.
English sovereigns are 2 Francs but only those of
current as 974 Piastres. Paris are accepted outside
French 20 -Fr. gold as the area for which they are
Pt. 77. issued .
German 20 -Mark gold as Silver Coins anterior to
Pt. 93. 1863 (excepting 5 -Franc
Turkish pounds gold as pieces and those of Napo
Pt. 87. leon III except 5 Franc)
English notes are some are uncurrent.
times accepted as 97} Pias Formerly gold and silver
coins France, Belgium
OONTO

tres, but are generally at

a small discount. and Switzerland were cur
rent in each of these
FINLAND
countries, but this is no
Monetary Unit = Markkaa longer entirely the case,
of 100 Penni 91 2 and in fact both in France
Silver 1 Markkaa . 9} and in Belgium gold and
2 1 7
silver coin has been driven
50 Penni 44 out of circulation by the
25 27
Gola 20 Markkaa . 15 10
application of Gresham's
Law that bad money (i.e.
10 7 11
depreciated paper money)
Notes are issued by the will drive out good money.
Finland Bank for 1 , 5, 10,
20, 50, 100 and 1,000 GERMANY
Markkaa . Monetary Unit = Mark of
FRANCE 100 Pfennige .
113 1
Monetary Unit = the Franc Copper 1 Pfennig
of 100 Centimes 91 41 2 Pfennige
Copper 10 Centimes 1 Nickel & Iron 5 Pfennige
5 01 10
2 91 . 25
1 Centime Silver i Mark
Nickel 25 Centimes 21 1
N

1) 10 1 2 Marks
5 0 3
ACOV

Silver 5 Francs .
3 114 5
2 1 7 Gold 10 9 11
AKAN

1 Franc 94 20 )
. 19 10
50 Centimes 41 Notes areissued by the
Gold 20 Francs (Louis or State for 1 , 2, 5, 10, 20 and
Napoleon ) 15 104
.
50 Marks, also by the
10 Francs 7 117 Reichsbank for 50, 100 and
5 , (no longer 1,000 Marks. Certain banks
minted ) 4 0 in Bavaria and Saxony issue
Notes are issued by the notes for 100 and 500
Bank of France for 5, 10, Marks .
20 , 50 , 100, 500 and 1,000 Gold and silver coin has
Francs. been driven out of circula
Chamber of Commerce tion .
notes are issued by all the The 50 -Mark Reichsbank
principal towns in France note dated October 20,
for 25-50 Centimes, 1 and 1918, known as the“Sepia” .
287
FOR ] 1 DICTIONARY OP BANKING (FOR
Nominal Present
Nominal
equivalent equivalent Present
or value
value value
Feb. 1 , or value Feb. 1,
on gold 1921 . on gold 1921.
standard . standard .
GERMANY (cont.) — s. d. S. d. GUATEMALA (cont.) — S. d. S. d.
note ceased to be redeem For trading purposes the
able after September, 1920 , silver Peso was generally
also the 50 -Mark Reichs used but this has been
bank note dated November driven out of circulation .
30, 1918 , known as the Gold 1 Peso (old ) . 3 10
. 3 10
" White 50, ” is withdrawn 5 (old) . 19 10
.
19 10
from circulation and can HAITI
only be redeemed in Berlin Monetary Unit Gourde
up to July 31 , 1921 . of 100 Centimes 10 2
GIBRALTAR American currency circu
Both English and Span lates freely and has a fixed
ish money circulate freely. basis of conversion of 5
Notes are issued by the Gourdes = one Dollar U.S.
Anglo - Egyptian Bank for Notes are issued by the
the Government of Gibral National Bank of the
tar for 25., 5s . , 10s ., £ 1 Republic.
and £5. HOLLAND
GREECE Monetary Unit = Gulden
Monetary Unit = Drachma of 100 Cents C. 18 19
en

of 100 Lepta 91 5 Bronze Cent

1
Copper 5 Lepta 21 Cents
10 ►

Nickel 5 Nickel 5 .

10 Silver 10
20 25
Silver 1 Drachma
50
91
2 1 7 1 Gulden
5 3 114 21 Guldens
Gold 20 15 101 Gold 5 8 4
Formerly both French 10 • 16 8
and English gold was freely Notes are issued by the
accepted but the present Netherlands Bank for 10,
currency is almost entirely 25, 40, 60, 100 , 200, 300
paper . and 1,000 Guldens, and
Notes are issued by the Zilverbons by the Govern
National Bank of Greece ment for 1 and 21 Gulden.
for 1 , 2 , 5 , 10, 25, 100, 500 HONDURAS (REPUBLIC ) —
Nominal

and 1,000 Drachma, also Monetary Unit Peso of

both the Ionian Bank and
Banque de Crete issue
100 Centavos : 40
Silver 1 Peso
.

a limited number of notes . 50 Centavos

GUATEMALA 25
Monetary Unit = Silver Notes are issued for 1 , 5,
Peso of 100 Centavos . 2 0 1 10, 20, 50 and 100 Pesos.
There is an imaginary HONG KONG
gold standard on the basis Silver 50
1Dollar
Cents
(Mexican) 2 0 2 6
of the U.S. gold $ 1 , but the
actual currency is a greatly 20
depreciated paper which 10
has practically no value 5
outside the country . Copper 1 Cent
288
 FOR ] DICTIONARY OF BANKING
[ FOR
Nominal Nominal
Present
equivalent valuo equivalent Present
or value or value
value
on gold
Feb. 1, Feb. 1 ,
standard . 1921 . on gold 1921 ,
standard .
HONG KONG (cont.) - S. d . S. d. ITALY (cont.) — S. d . s. d.
Notes are issued by the Silver 1 Lira
European Banks for 1, 5, 2 Lire
10, 25, 50 and 100 Dollars . 5
The value of the Hong Kong Gold 5 .
3 111
Dollar varies with the price 10 .
7 111
of silver . 20 15 101
HUNGARY Paper money forms the
(See New Republics .) general medium of cur
INDIA— rency and notes are issued
by the Government for 1 , 2,
Monetary Unit Rupee of 5 and 10 Lire, while notes
16 Annas
Bronze Anna
. .
2015 of 25, 50, 100, 500 and
1,000 are issued by the
following Banks :
COC
OOO

Nickel 1 11 Banca d'Italia .

2 Annas Banco di Sicilia.
8 1 0 Banco di Napoli.
Silver 2 3
Papal silver and all silver
4 . 6 coins anterior to 1863,
8 91 . 1 0 except 5 -Lire pieces are
1 Rupee 2 0 demonetised .
Notes are issued by the Old notes issued by banks
Government of India for 1 , other than those mentioned
21, 5, 10, 20, 50, 100, 500, above were withdrawn in
1,000 Rupees . 1907 and are no longer
Prior to 1920 the stand redeemable .
ard value of a Rupee was
ls. 4d . nominally based on JAMAICA
the gold Mohur of 15 English notes and silver
Rupees, and sovereigns are current, but in addition
were legal tender at 15 local notes for £ 1 , £5 and
Rupees to the pound, but £ 10 are issued by the
in 1920 the value rose to Colonial Bank , Bank of
2s. 10d ., and an effort was Nova Scotia and Royal
made to stabilise it on the Bank of Canada . Currency
basis of 2s. or 10 Rupees to notes for 5s. and 10s. are
the t, since when there has issued by the Island
been a steady depreciation Government.
with the fall in silver. Local Coin Nickel 1 Penny
A Lac or Lakh equals
100,000 Rupees.
100 Lacs = a Crore .
JAPAN
A Pie is the 12th part of
Monetary Unit Yen of
an Anna or 192nd part of a 100 Sen 2 03 2 6
Rupee .
ITALY
Bronze į Sen है
1
Monetary Unit Lira of Nickel 55 17
100 Centisimi 93 27 Silver 10 21
8 IN

Bronze 1 Centisimo 20 5
2 Centisimi 50 1 03
E

5 O Gold 5 Yen . 10 23
10 10 20 5
Nickel 20 40 111
289
19 ( 1533)
 DICTIONARY OF BANKING FOR
FOR ]
Nominal Nominal Present
Present equivalent
equivalent value or value
value
or value Feb. 1 ,
on gold Feb. 1 , on gold
1921 . 1921 .
standard . standard .

JAPAN ( cont.) - S. d . S. d. MEXICO (cont.)- s. d. s. d.

Notes are issued for 10, reduced the currency to a
20, 50 Sen ; 1 , 5, 10, 20 and chaotic condition , and the
100 Yen . notes which formerly had a
fairly stable value of 2s. Id .
JAVA to 2s. 1 } d . are now prac
The currency is the same tically worthless outside the
as in Holland , but local
country. This is especially
notes are issued by the Java true of the Government
Bank for 5, 10, 20 , 25, 40, notes issued during the
50, 60, 100, 200, 300, 500 revolution . Certain bank
and 1,000 Gulden. notes dated prior to 1914
Silver notes are issued by have a nominal value of
the Government for }, 1 , about 6d. per Peso .
21 Gulden .
There is also a local issue MONACO
of coinage identical in value French currency only is
with that of Holland . in circulation but gold coins
KOREA of Frs. 20 and Frs. 100 have
been issued .
Notes are issued by the
Bank of Chosen, but Japan MOROCCO
ese notes and coin circulate. Monetary Unit = 1 Real or
=

MALTA Dollar silver 4 0 1 93

French and Spanish
A special issue of local money circulate in certain
Treasury Notes was au parts and recently notes
thorised in 1914, but these
were withdrawn in 1915 have been issued by the
Moorish State Bank for 1
and only English notes and Real or Frs. 5 1
. 9
coin circulate . 4 Reals or Frs. 20 7
. 3

MAURITIUS— And 20 Reals or Frs . 100 . 36 4

Monetary Unit Rupee of NEWFOUNDLAND
100 Cents 1 4 1 4
Government notes are Canadian currency is
used .
issued for 5, 10, and 50
Rupees. NEW ZEALAND
MEXICO English coinage circu
Monetary Unit = Dollar or lates and notes are issued
生生老 士

Peso of 100 Centavos .

2 01 by the Bank of New Zea
Bronze 1 Centavo . land, also by certain Aus
>> 2 Centavos tralian banks for 10s . , £ 1 ,
5 it £5, £ 10, £20, £50 and £ 100.
Silver 10 21 English Bank Notes are
七

20 5 generally at a discount of 1
50 1 03 to 21 per cent.
2 03
o(

1 Peso
)

.
ld

Gold 1 ) . 4 0 NIGERIA— (See British West

5 Pesos 10 3 Africa .)
21 5 11
10 . 20 6 Norway, SWEDEN AND
20 41 0 DENMARK
Since 1914 the continued Monetary.. Unit = Kroner
of 100 Ore
disorder in the country has
290
 FOR ] DICTIONARY OF BANKING [FOR
Nominal Present Nominal
equivalent Present
value equivalent value
or value Feb , 1, or value Feb. 1
on gold 1921 . on gold 1921 .
standard . standard .
NORWAY, SWEDEN AND S. d. s. d. PERSIA (cont.) s. d. s. d.
DENMARK (cont.) —
payable in silver for 1 , 2, 3,
Bronze 1 Öre 5, 10, 20, 50, 100, 500 and
2
1)
1,000 Toman .
9 5
Silver 10 17 PERU
25 37 Monetary Unit = Sol silver 2 0 2 0
50 63 Gold 1 Libra = 10 Sols . 200
O

1 Kroner . 1 11 I Libra 5 Sols . 10 0

2 Kroners . 2 21 } Libra 4 0
Gold 5 . 5 63 Prior to 1914 there were
10 11 11 no notes in circulation, but
20 22 3 the Bank of Peru now issue
Bank notes are issued notes for 1 Sol (2s .), also 1 ,
by each of the respective 5, and 10 Libra .
countries for 1 , 2, 5, 10, 50,
100, 500 and 1,000 Kroners. PHILIPPINE ISLANDS
The coinage is inter Monetary Unit Peso of
changeable in all these 100 Centavos 2 1 2 31
countries and until 1914 Nickel 5 Centavos 14
this also applied to notes, Silver 10 21
but at the present time 25 67
there a difference be 50 01
.
1
tween the exchanges as 1 Peso C 2 1
shown below , which has Bank notes of Peso 1 , 2,
caused this custom to cease .
5, 10, 20, 50 and 100 ;
Exchange, Feb. 1 , 1921 : Treasury Notes are issued
Sweden 17/45 £1 for 2 Pesos and upwards.
Denmark 19/70 £1 U.S. gold and notes circu
Norway 20/55 = 21
£ late freely at 50 Cents U.S.
PARAGUAY = 1 Peso Philippine.
Monetary Unit = Peso of PORTUGAL
100 Centavos 4 0 1 Monetary Unit 1 Escudo
The currency is chiefly a of 100 Centavos which
depreciated paper one, notes replaces the old Milreis
being issued for 1 , 2, 5, 10, of 1,000 Reis .
20, 50, 100, 200 and 500 Bronze 5 Reis Centavo
Pesos . 10 1
20 2 Centavos
PERSIA Nickel 50 5
Monetary Unit Kran of 100 1) 10
20 Shahis 41 51 Silver 200 )) 20 19

10 Kran 1 Toman 500 50

The coins in common use 1000 1 Escudo
are the Kran , 1 Kran, 2 Gold is at a premium and
and 5 Kran silver pieces. not in general circulation .
Gold pieces of 1 and 2 The only gold coins are the
Toman exist but are not in old Mil Reis issue and their
general circulation . value is as follows.
i Toman gold 21 Kran Gold 1 Mil Reis 4 5
silver 7 0 2 8 10
Notes are issued by the 5 22 2
Imperial Bank of Persia, .) 10 44 4
291
FOR ] DICTIONARY OF BANKING (FOR
Nominal Present Nominal Present
equivalent value equivalent value
or value or value
Feb. I , Feb. 1 ,
on gold 1921 . on gold 1921 .
standard . standard .

PORTUGAL (cont.) – s. d . S. d . RUSSIA— . S. d. S. d .

Notes are issued by the Monetary Unit = Rouble of
Bank of Portugal for the 100 Kopek
following denominations : Bronze 1 Kopek
5, 10, 50 Centavos ; 1 , 21, 2 Kopeks
5, 10, 20, 50 and 100 3
Escudos. 5
1 Escudo Paper 6 Silver 5

co
. 10
PORTUGUESE COLONIES 15 11

The Banco Nacional Ul. 20

tramarino issue local notes 25
for each of the following 50
colonies 1 Rouble . . 2 103
Lorenco Gold 5 Roubles 10 8
Marques in Mil Reis as
71 ,, ( Imperial) 16 0
Angola 10 . 21 4
St. Thome formerly used 15 (Imperial) 320
Cape Verde in Portugal. Notes of 1 , 3, 5, 10, 25,
Guiana 50, 100 and 500 Roubles
The Bank of Portugal were issued by the Imperial
issues notes for use in the Government up to the
Azores and 100 Mil Reis Revolution in 1917. Notes
Azores paper = 80 Escudos, issued by the Kerensky
Portuguese. Government Republic = 250
Sterling notes for £ 1, £ 5 and 1,000 Rbls. In 1914 frac
and £ 10 are issued by the tional notes were issued for
Banco Nacional Ultra
1 , 2, 3, 5 and 50 Kopeks.
marino for use in Lorenco During the British Occu
Marques and district. pation of Archangela
Nova Goa. The Banco
Nacional Ultramarino special issue of notes was
put in circulation by the
issue notes payable in State Bank of Northern
Rupees for use in Portu . a time these
Russia and for a
guese India . were redeemable at the
ROUMANIA
Bank of England at 40
Roubles £1 ; but this
Monetary Unit Leu or privilege was withdrawn in
Ley of 100 Banis . . 91 1 1919 .
Coins are issued for de
nominations as for countries
Every conflicting author
who subscribed to the Latin ity which has temporarily
held sway in any part of
Monetary Union , although Russia seems to have issued
Roumania did not join the paper money, with the
Union ,
result that the currency
Notes are issued by the question is in a state of
National Bank of Roumania
hopeless confusion and most
for 1 , 2, 5, 20, 100, 500 and of this paper is worthless.
1,000 Lei.
During the German Occu Imperial Notes are quoted
nominally 800 20 0
pation the Banque Generale
de Roumanie issued notes Kerensky Notes
which have since been Notes of 1,000 about 3,000 . 200
repudiated and withdrawn . 250 about 3,700 . 200
292
 FOR ) DICTIONARY OF BANKING [ FOR
Nominal Present Nominal
equivalent value equivalent Present
or value value
Feb. 1, or value
on gold 1921. on gold Feb. 1,
standard. 1921.
standard .
SALVADOR s. d. s. d. SWEDEN— (See Norway .) S. d . S. d.
Monetary Unit = Peso of
100 Centavos 4 2 6 SWITZERLAND
Notes are issued by the Monetary Unit Franc of
Banco Occidental, Banco 100 Centimes 91 10
Agricola Commercial and Bronze 1 Centime
Banco Salvadorino in de 2 Centimes
nominations of 1 , 2, 5, 10, Nickel 5
25, 50, 100 and 500 Pesos. 10 .
The value of the Peso 20
varies with the price of Silver 50 I )
silver. Old notes issued by 1 Franc
the Banco Nacionale are 2 Francs
worthless . 5
SERVIA— (See New Repub Gold 10
lics and States arising 20 . 15 103
out of the War.) Notes are issued by the
SIAM Swiss National Bank for 5,
Monetary Unit = Tical of 20, 25, 50 , 100, 500 and
100 Satang 1 1,000 Francs.
6 2 1 Silver coins bearing the
Notes are issued by the
Government for 1,5, 10, 20, figure of Helvetia in а
100 and 1,000 Ticals. sitting position, with the
SPAIN
exception of the 5 Francs
piece, are demonetised .
Monetary Unit = Peseta of Since October, 1920,
100 Centimos 87 French and Belgian silver
Bronze 5 Centimos coins ceased to be legal
10 1 tender in Switzerland .
Silver 50
ON

1 Peseta . 94 TURKEY
ta

2 Pesetas . 1 7
5 3 111 Monetary Unit = Piastre
Gold of 40 Paras 21
20 0 15 104 Nickel 5 Paras
25 (Alphonso ) 19 10 10
Notes of 25, 50, 100, 500 20
and 1,000 Pesetas are issued Silver 1 Piastre
by the Bank of Spain . 2 Piastres
Gold is at a premium and 5
is not in general circulation . I) 10
All silver coins prior to
1869 are demonetised .
) 20 .. (1 Medjidie) 3 7
1

(See Canary Islands.)

Gold t £ T 25 Piastres 4 6
BAWA

* £ T 50 9 0
STRAITS SETTLEMENTS 1 £ T 100 18 0
Copper 1 Cent o
Notes are issued by the
Silver 5 Cents 14 Imperial Ottoman Bank
10 23 for £ T7. { T }. £ T1, T5,
20 51 £ T10, £ T50, £ T100 ; and
50 1 2 by the State for 1 , 2 ], 5,
1 Dollar 2 4 2 313 10, 25 and 50 Piastres, also
Notes are issued by the for £ T1, £T2, £ T5, £ T10,
Government for 1 , 5, 10, £ T25, £ T50, and £T100 .
50, 100 Dollars, also for 10 The value of the small
and 25 Cents . change varies in different
293
FOR ] DICTIONARY OF BANKING ( FOR
Nominal Present
equivalent value
NEW REPUBLICS OR STATES
or value Feb. 1 ,
on gold 1921.
ARISING OUT OF THE WAR .
standard . Nominal Present
S. d. equivalent value
TURKEY (cont.) S. d . or value
Feb. 1 ,
on gold 1921.
parts of the Empire. For standard .
merly English sovereigns s . d. s. d.
and French 20 -Franc gold CZECHO SLOVAKIA (Bohemia .)
pieces had a free currency Monetary Unit Krone of
as Pias. 110 and Pias. 87} 100 Heller 10 1
respectively, but since the .

currency has now depreci Austro - Hungarian Bank

ated , gold is at a consider notes were called in for
able premium and out of stamping in 1919 and in
circulation . addition to a charge of 1 per
£ T1, paper 3 2 cent. for stamping, 50 per
cent. of the value deposited
was retained by the State.
UNITED STATES These stamped notes
Monetary Unit Dollar of have now been replaced by
100 Cents 4 2 5 2 a new distinctive issue by
the Republic for the follow
Copper 1 Cent
Nickel 5 Cents ing denominations : 1 , 2,
Silver 10 5 , 10, 20, 50, 100, 500 ,
25 1,000, 5,000 and 10,000
50 Czecho Slovak Kronen .
1 Dollar ESTHONIA
Gold 1 . 4 2
10 5
Monetary Unit = Mark of
. 21 Dollars 100 Penni.
5 . 20 10
41
Notes are issued by the
10 ( Eagle) 41 8 State for 50 Penni, 1 , 3, 5,
20 83 4
10, 25, 100 and 1,000
Notes, gold and silver Mark .
certificates, National Bank
Notes and Federal Reserve HUNGARY
notes are issued in amounts Monetary Unit = Krone of
of 1 , 2, 5, 10, 20, 50, 100, 100 Filler .
500 and 1,000 Dollars. Notes of the Austro
Hungarian Bank were first
URUGUAY
usedand were stamped by
the State which retained
Monetary Unit Peso of 50 per cent. of the value,
100 Centesimos 4 2 4 0 giving war loan certificates
Nickel 1 Centisimo . against the retained portion.
2 Centesimos 1
These stamped notes are
5 21 being replaced by a Post
Silver 50 Centesimos 2 1
Office issue of 5, 10, 20
1 Peso . 4 2 Kronen , and a State issue
Bank Notes are issued in for larger denominations.
the following denomina The present exchange is
tions : 1 , 5, 10, 50, 100 and about 2,000 Kronen per £ 1 .
500 Pesos. LATVIA
Monetary Unit = 1 Lettish
VENEZUELA Rouble .
Monetary Unit Bolivar Notes are issued by the
of 100 Centimos 9 8} State for 1 , 5, 10, 25, 50,
Notes are issued for 5, 10, 100, 500 and 1,000 Lettish
20 and 100 Bolivars. Roubles.
294
FOR ]
LITHUANIA
Monetary Unit = Mark.
Old Imperial Roubles
and a German issue (Dar
lehnskasse Oest) were first
used but are being replaced
by Lithuanian Marks.
POLAND
Monetary Unit Polish
Mark
O
During 1918 and 1919 the
following notes were in cir
culation : German Reichs
bank notes, Polish Marks
issued during the German
Occupation , and Austro
Hungarian Kronen .
These have gradually
been replaced by Polish
Marks called Koscinko ,
guaranteed by the Polish
State, and are issued for 1 ,
5, 10, 20, 50, 100, 500,
1,000 and 5,000 Marks.
The exchange has suf
fered considerable depreci
ationduring the last twelve
months.
March 22, 1920, it was
590/690 per £ 1 .
Feb. 1 , 1921 , it was
2,800 / 3,000 per £ 1.
SYRIA
Notes were first issued by
the Banque de Syrie in
August, 1919, in denomina
tions of 5, 10, 25, 50 and
100 Piastres .
100 Piastres = one pound
Syrian ; 1 Piastre 20
Centimes, French .
YUGO SLAVIA - (Greater
Servia, Serbes Croates
and Slovenes.)
The currency is at present
a mixed one of Kronen and
Dinars owing to both these
units being in force in dif
ferent districts prior to the
formation of the new State,
but the Dinar is the Servian
unit and doubtless will
DICTIONARY OF BANKING (FOR
Nominal Present Nominal Present
equivalent value equivalent valuo
or value or value
on gold
Feb. 1 , on gold
Feb. 1,
standard . 1921 1921
standard .
s. d. s. d. YUGO SLAVIA ( cont.)— s. d. s. d.
eventually be established
throughout the country .
New notes have been
issued in Dinars but sur
charged with the Kronen
equivalent on a basis of 4
Kronen 1 Dinar.
Dinar of 100 Paras 97 2
The Latin Monetary Union consists of
113 th those countries which have adopted the same
standard coin, though called by different
names, equal in value to the franc.
The countries which have joined the
Union are : Belgium , France, Greece, Italy,
and Switzerland .
The countries which have adopted the
same system but which have not joined the
Union are : Finland , Roumania, Servia and
Spain .
FOREIGN SECURITY. (See MARKETABLE
SECURITY, and Section 82 of the Stamp Act,
1891, given thereunder .)
FORFEIT OF SHARES. (See LIEN , SHARE
CAPITAL .)
FORGED TRANSFER . Where a banker
takes as security a transfer of stock or shares
registered in the names of several holders, it
is advisable that the transfer should be
signed at the bank by each holder, because if
one of the holders forges the signature of
another holder to the transfer, the banker,
even after registration and ultimate sale of
the stock, may be compelled to make good
the value of the stock to the true owner.
This point was decided in the important case
of the Sheffield Corporation v. Barclay and
others (1905, A.C. 392) . The House of Lords
( 1905) reversed the decision of the Court of
Appeal ( 1903) and restored that of the Lord
Chief Justice ( 1902) , where judgment for the
plaintiffs was given for the amount claimed .
The Lord Chancellor (the Earl of Halsbury)
said : “ Two persons, Timbrell and Honny
will, were joint owners of corporation stock
created under a local Act of Parliament.
Timbrell, in fraud of Honnywill, forged a
transfer of the stock , and borrowed money
on the security of the stock which the
transfer was supposed to have transferred .
A bank which lent the money sent the
transfer to the proper officer of the corpora
tion, and demanded , as they were entitled
to do, if the transfer was a genuine one,
295
FOR ] DICTIONARY OF BANKING [FOR
that they should be registered as holders of or nominees. This was done, and the .
the stock. The corporation acted upon their corporation by acting on this ' demand '
demand ; they transferred the stock into have incurred a considerable loss. As I
the names of the bank, and the bank in have said, I think if it were res integra I
ordinary course transferred it to holders for should think the bank were liable ; but I
value. The corporation also , in ordinary do not think it is res integra, but is covered
course, issued certificates, and the holders by authority. In Dugdale v. Lovering ( 1875,
of these certificates were able to establish 10 C.P. , 196 ), Mr. Cave, arguing for the
their title against the corporation , who were plaintiff, put the proposition thus : It is a
estopped from denying that those whom general principle of law when an act is done
they had registered were the stockholders by one person at the request of another,
entitled . Honnywill, after the death of which act is not in itself manifestly tortious
Timbrell, discovered the forgery that had to the knowledge of the person doing it, and
been committed, and compelled the cor- such act turns out to be injurious to the
poration to restore the stock, and the rights of a third party, the person doing it
question in the case is whether the cor- is entitled to an indemnity from him who
poration has any remedy against the bank requested that it should be done.' . ..I
who caused them to act upon a forged think both upon principle and authority
transfer, and so render themselves liable the corporation are entitled to recover.
to the considerable loss which they have The Forged Transfers Acts, 1891 and 1892,
sustained. Now , apart from any decision were passed with the object of enabling
upon the question (it being taken for granted purchasers of stock to be protected from
that all the parties were honest), I should losses through forged transfers. Companies,
have thought that the bank were clearly however, are not obliged to adopt them ,
liable. They have a private bargain with a and those which have adopted them are
customer. Upon his assurance they take a chiefly railway companies. Section 1 of the
document from him as a security for a loan, 1891 Act is as follows :
which they assume to be genuine. I do not " 1. (1 ) Where a company or local
suggest there was any negligence - perhaps authority issue or have issued
business could not go on if people were sus
pecting forgery in every transaction - but shares, stock , or securities transfer
their position was obviously very different able by any instrument in writing
from that of the corporation. The corpora or by an entry in any books or
register kept by or on behalf of the
tion is simply ministerial in registering a company or local authority, they
valid transfer and issuing fresh certificates. shall have power to make compensa
They cannot refuse to register, and though
for their own sake they will not and ought tion by a cash payment out of their
not to register or to issue certificates to a funds for any loss arising from a
person who is not really the holder of the transfer of any such shares, stock,
stock, yet they have no machinery, and they or securities, in pursuance of a
cannot inquire into the transaction out of forged transfer or of a transfer
which the transfer arises. The bank , on the under a forged power of attorney
whether such loss arises, and
other hand, is at liberty to lend their money whether the transfer or power of
or not. They can make any amount of attorney was forged before or after
inquiries they like. If they find that an
intended borrower has a co -trustee, they may the passing of this Act, and whether
ask him or the co -trustee himself whether the person receiving such compen
the co - trustee is a party to the loan, and a sation, or any person through
simple question to the co - trustee would have whom he claims, has or has not
prevented the fraud. They take the risk of paid any fee or otherwise contri
the transaction and lend the money. The buted to any fund out of which the
security given happens to be in a form that compensation is paid ." ( The
words whether such loss, etc.,"
requires registration to make it available,
and the bank ' demand, ' as, if genuine trans were added by the 1892 Act.)
fers are bought, they are entitled to do, that (2) Any company or local authority
the stock shall be registered in their name or may, if they think fit, provide,
that of their nominees, and are also entitled either by fees not exceeding therate
to have fresh certificates issued to themselves of one shilling on every one hundred
296
POR ] DICTIONARY OF BANKING (FOR
pounds transferred , with a mini
the Some companies instead of adopting
mum charge equal to that for the Forged Transfers Acts, protect them
twenty -five pounds, to be paid by selves against liability arising from forgery by
the transferee upon the entry of the a policy of insurance. (See COMPANIES,
transfer in the books of the com- TRANSFER OF SHARES .)
pany or local authority, or by insur- FORGERY . Forgery has been defined
ance, reservation of capital, accu- as the making or alteration of any docu
mulation of income, or in any other ment with the intention of prejudicing
manner which they may resolve another person .
upon , a fund to meet claims for Where the numbers on certain Bank of
such compensation .” ( The words England notes had been altered, the inten
“ with a minimum charge equal to tion being to prevent the notes (payment
that for £ 25 ” were added by the of which had been stopped) being traced ,
.
1892 Act.) it was held in the case of Suffell v. Bank of
" (3) For the purpose of providing such England (1882, 9 Q.B.D. 555) that the plain
compensation any company may tiff, who was an innocent holder for value,
borrow on the security of their pro- could not recover from the Bank of Eng
perty, and any local authority may land because the notes had been altered in
borrow with the like consent and on a material part. The importance of the
the like security and subject to the numbers on notes was pointed out by Jessel,
like conditions as to repayment M.R., in the course of his judgment. (See
by means of instalments or the BANK OF ENGLAND Notes .)
provision of a sinking fund and If a banker, unknowingly, gives forged
otherwise as in the case of the bank notes in payment of a cheque, they do
securities in respect of which com- not operate as a payment.
pensation is to be provided, but any A transferor by delivery warrants to his
money so borrowed by a local immediate transferee, being a holder for
authority shall be repaid within a value, that the note is what it purports to
term not longer than five years. be, and therefore the person who receives a
Any expenses incurred by a local forged bank note can reclaim the money
authority in making compensation, from the person who gave him the note,
or in the repaymentof, or the pay- provided he makes the claim within a
ment of interest on , or otherwise reasonable time.
in connection with , any loan raised The Bills of Exchange Act, 1882, Section
as aforesaid, shall, except so far as 24, enacts as follows :
they may be met by such fees as "Subject to the provisions of this Act,
aforesaid, be paid out of the fund where a signature on a bill is forged or
or rate on which the security in placed thereon without the authority of the
respect ofwhich compensation is to person whose signature it purports to be,
be made is charged. the forged or unauthorised signature is
10

• (4) Any such company or local authority wholly inoperative, and no right to retain
may impose such reasonable re- the bill or to give a discharge therefor or to
strictions on the transfer of their enforce payment thereof against any party
shares, stock , or securities, or with thereto can be acquired through or under
respect to powers of attorney for that signature, unless the party against
the transfer thereof, as they may whom it is sought to retain or enforce pay
consider requisite for guarding ment of the bill is precluded from setting up
against losses arising from forgery . the forgery or want of authority.
(5) Where a company or local authority “ Provided that nothing in this Sec
compensate a person under this tion shall affect the ratification of an
Act for any loss arising from unauthorised signature not amounting to a
forgery, the company or local forgery.”
authority shall, without prejudice to The words “ through or under that
any other rights or remedies, have signature" in the Section just quoted requirea
the same rights and remedies particular attention . A holder, even
against the person liable for theloss holder in due course , cannot retain a bill,
as the person compensated would or give a discharge for it or sue upon it, where
have had ." a signature on the bill is forged . The forged
297
FOR ] DICTIONARY OF BANKING
signature which is referred to is the signature
which is necessary to transfer the bill to the
holder, that is, the one through or under
which he gets his title. If the signature of
the acceptor is forged , the bill is valueless ,
and if an indorsement which is necessary
to pass the title of the bill is forged, the
bill is valueless to the party acquiring
it through that signature . But where an
indorsement, which is not necessary for the
transfer of the title, is forged, that forged
indorsement may be ignored and the holder
in due course can sue all the other parties
to the bill. For example, where a bill is
specially indorsed, say to John Brown, the
real signature of John Brown is required in
order to make the bill valid and to pass the
title to a succeeding holder. If John Brown's
signature is forged, a subsequent holder
gets no title. If John Brown's signature is
genuine and the indorsement is in blank
(the bill then passing by simple delivery) it
does not matter to a subsequent holder
whether a signature following that of John in good faith, and there is an interval of
Brown is a genuine one or not, as that sub-
sequent holder derives his title through
John Brown and not through the person
from whom he received the bill.
If a holder obtains payment of a bill which
is affected with a forged signature he cannot
retain the money. The rightful owner of
the bill can demand to have the bill given
up to him and can sue the acceptor thereon.
The acceptor will have a right of action
against the holder for the return of the
money he paid to him . The holder will look
to the person from whom he obtained the
bill for repayment, and that person will then
look to his transferor, but the person who
actually took the bill through the forged
indorsement will have no one to proceed authority to pay it to the person who
against on the bill though he will have a
personal remedy against the forger if he
can be found . If the holder, in such
a case as that referred to , to whom the
acceptor paid the forged bill, cannot be
found, the acceptor will lose the money as
he is liable to the true owner .
If a banker pays a bill bearing a forged | Exchange Act, 1882.) But if a banker gives
acceptance or a forged indorsement (either
of the payee or any indorsee) he cannot debit banker, he is not protected by Section 60,
his customer with the amount. A banker
ought to know whether his own customer's
( the acceptor) signature is genuine, but the
banker is not particularly concerned with
the genuineness of the drawer's signature, as
the acceptor by accepting the bill is pre-
cluded (Section 54) from denying to a holder
298
(FOR
in due course the genuineness of the drawer's
signature.
If a banker has paid an acceptance and one
of the indorsements is subsequently found
to have been forged , the banker cannot
hold the acceptor liable for the amount.
The banker is liable to the true owner for
conversion . (See INDORSEMENT .)
If there is an indorsement subsequent to
the forged one the banker may be able to
recover from the person to whom he paid
the bill if it is not too late for that person to
give notice of dishonour to the indorser
subsequent to the forgery . That is the
effect of the judgment in Imperial Bank of
Canada v. Bank of Hamilton ( 1903, A.C.
49) . In London & River Plate Bank v.
Bank of Liverpool ( 1896, 1 Q.B. 7) , a case
concerning a bill with forged indorsements,
it was held that “ if the mistake is discovered
at once, it may be that the money can be
recovered back ; but if it be not, and the
money is paid in good faith and is received
time in which the position of the holder may
be altered, the principle seems to apply that
money once paid cannot be recovered back. "
(See PAYMENT OF Bill. )
A forged signature cannot be ratified, but
a person may be precluded from saying that
his signature is forged if he refrains, when
he knows that a banker is relying upon a
forged signature, from informing the banker
of the fact until his position is altered for
the worse.
When a bill is payable to bearer, either
originally or by a genuine indorsement in
blank, and the banker has paid it to a holder
who has no title, the bill may be charged
to the acceptor's account as “ it is an
appears to be the holder.” (Hart .)
Where a banker on whom a cheque is
drawn pays it in good faith and in the
ordinary course of business, he is not liable
for the indorsement of the payee or any
subsequent indorser, even though the in
dorsement is forged. (Section 60 , Bills of
cash for a cheque drawn upon another
and is liable like any other person .
Protection is afforded by Section 80, to
a banker on whom a crossed cheque is
drawn, if he pays it in accordance with the
crossing.
Where a drawer's signature is forged, the
banker paying such cheque cannot debit it
FOR ] DICTIONARY OP BANKING [FOR

to the drawer's account. A banker is the Bank is liable to replace the stock, unless
responsible if he pays a forged cheque, unless it can be proved that there was such negli
he can show that he was misled by his gence on the part of the stockholder as to
customer. See the case of Walker prevent him from disputing the transfer .
Another v. Manchester and Liverpool District ( See FORGED TRANSFER .))
Banking Co., Ltd., under Pass Book . The late J. W. Gilbart records that the
A banker must give notice of a drawer's first instance of the forgery of a bank note
forged signature on the day he receives such occurred in 1758 To minimise the risks of
a cheque. forgery , bank notes are made with the best
A banker collecting a crossed cheque for materials and the engraving and printing
a customer is protected by Section 82 of the are done by highly skilled workmen and with
above Act. If collected for a stranger he is costly plant. Some notes are printed in
liable to the true owner for conversion . A colours to make imitations more difficult.
banker who collects an uncrossed cheque The Bank of England relies principally upon
for a customer or a stranger is liable to the the quality of the paper used for its notes,
true owner . If he cashes, or credits as cash , and the water -mark in the paper. It is
an uncrossed cheque, he becomes a holder recorded that in certain imitations of Bank
for value with the rights of a holder in due of England notes the paper and printing
course against all prior parties, but if there were so good as to deceive all but experts,
is a forged indorsement he is liable to the who noted that the water -mark had not
true owner and has rights of recourse only been stamped into the paper with the
against any indorser there may be subsequent requisite degree of force.
to the forged indorsement. If he cashes a By the Forgery Act, 1913 (3 & 4 Geo. V,
" not negotiable ” cheque, he is liable to the cap. 27) , a document is false if the whole or
true owner . (See COLLECTING BANKER.) any material part thereof purports to be
Where a crossed cheque with a printed made by a person who did not make it nor
form of receipt thereon is payable only authorise its making ; or if, though made
when that receipt is duly signed, and the by the person by whom it purports to
signature on thereceipt is forged, the order have been made, the time or place ofmaking,
to pay not being unconditional and the where either is material, or, in the case of
document therefore not a cheque, as recog- a document identified by number or mark ,
nised by the Bills of Exchange Act, the the number or mark , is falsely stated
banker collecting the money for a customer therein. In particular a document is false
is not protected by that Act ; but protec- (a) if any material alteration has been
tion is given by the Revenue Act , 1883. made therein ; (b) if the whole or some
(See RECEIPT ON CHEQUE.) material part of it purports to be made by
As to fraudulent alterations in amounts or on behalf of a fictitious or deceased
of bills and cheques, see the cases under person ; (c) if, though made by an existing
ALTERATIONS. The effect of the cases is person it is made with the intention that
that where a cheque, on which the amount it should pass as having been made by
has been fraudulently increased , has been some other person. For the purposes of the
paid, the loss falls upon the drawer if he Act, the crossing on any cheque, draft on a
drew the cheque negligently so as to facilitate banker, post-office money order, postal
the fraud ; but if hewas not negligent and order, coupon , or other document the
exercised reasonable care in drawing the crossing of which is authorised by law ,
cheque, the loss falls upon the banker who shall be a material part of such documents.
paid the cheque. (Section 1.)
A banker is protected by Section 19 of the Forgery of the following documents,
Stamp Act, 1853, against paying one of his if committed with intent to defraud , shall
own drafts bearing a forged indorsement. be felony and punishable with penal ser
Of course , if the banker knows the indorse - vitude for life :-(a) any will, probate or
ment is forged , he must not pay the draft. letters of administration ; (b) any deed or
( See DRAFT ON DEMAND.) bond, or any attestation of the execution
Making a false entry in a pass book with of any deed or bond ; (c) any bank note, or
Intent to defraud is recognised by law as a any indorsement on or assignment of any
forgery of an accountable receipt. bank note. Forgery of the following docu
If atransfer of stock is madeby the Bank ments, if committed with intent to defraud,
of England under aforged power of attorney, shall be punishable with penal servitude
299
FOR ] DICTIONARY OF BANKING (FRA
arranging a price for delivery of currency
for any term not exceeding fourteen years :-
(a) Any valuable security or assignment at a future date.” In this case the banker
thereof or indorsement thereon, or, where covers himself by selling a similar amount of
the valuable security is a bill of exchange, exchange. (See Bankers'Magazine,Feb. , 1921.)
.

any acceptance thereof; (b) any document FORWARD PRICE. The “ forward
of title to lands, or assignment thereof, or price of silver is the quotation for delivery
indorsement thereon ; (c) any document of and payment at a future date . The “spot
title to goods, or assignment thereof, or or " cash " price is for immediate delivery
indorsement thereon ; ( d) any power of and payment.
attorney or other authority to transfer FOUNDERS' SHARES. So called because
any share or interest in any stock, etc. ; created for the purpose of remunerating the
(e) any entry in any share register. (Section founders or promoters of a company. A
2.) Every person who utters any forged vendor sometimes obtains founders' shares
document, knowing it to be forged , shall as part of the purchase money, and, occa
be liable to the same punishment as if he sionally, a founders’ share is offered to
himself had forged it. (Section 6.) subscribers for a certain number of ordinary
Every person shall be guilty of felony shares. Although the nominal amount of
who, without lawful authority or excuse, the a founders' share is small, in a successful
proof whereof shall lie on the accused, has company the value may be very considerable.
in his custody or possession a forged bank If founders’ shares receive, say, a half of the
note, knowing it to be forged (Section 8 ) ; or net profits after a certain fixed dividend has
special paper such as is used for making been paid on the ordinary shares, it follows,
bank notes. (Section 9. ) “ Valuable when the surplus profits are large, that the
Security ” in Section 2 includes any cer- founders' shares, which are few in number,
tificate, deposit receipt, scrip, debenture, will obtain a large share of the profits.
bill, note, warrant, or other security for the These surplus founders'
profits would, in a company
payment of money, etc. (Section 18.) which has no shares, be no doubt
FORWARD EXCHANGE. Traders with partly used to build up a reserve fund or to
foreign countries are liable to losses on their strengthen the company's position in some
contracts resulting from fluctuations in the other way.
rate of exchange, and to insure or protect They are not considered a satisfactory kind
themselves from such losses they may apply of security. Owing to thelarge part of the
to their bankers to fix the rate ofexchange profits which they absorb , there is the
when arranging contracts for the import or danger, in certain cases, of the ordinary
export of goods. For example, an importer shareholders making efforts to have the
who requires foreign currency at a future company reconstructed .
date may make an arrangement with his Every prospectus issued by a company
banker under which the banker (if he must state, amongst other things, the num
approves of the transaction ) agrees to deliver ber of founders' or management or deferred
the foreign currency at a future date at a shares, and the nature and extent of the
rate fixed at the time the arrangement is interest of the holders in the property and
made. The banker having agreed to deliver profits of the company. (See Section 81 of
exchange at once purchases exchange so the Companies (Consolidation) Act, 1908,
as to cover himself with respect to the under PROSPECTUS.) (See COMPANIES.)
transaction . The banker's profit is included FOUR PENCE. (See Groat .)
in the rate charged to the customer. The FOUR -SHILLING PIECES . (See DOUBLE
trader thus effects a forward purchase of FLORINS.)
exchange. The trader may also purchase FOURTHS OF MONTHS. The totals of
foreign currency and keep it with his banker the London Clearing House are greater upon
until it is required. Having done that, he the fourths of months than upon ordinary
is covered against any future fluctuations in days, because of the number of bills which,
the exchange and is thus enabled to fix by custom , are dated on the first of aa month
his selling prices of the goods in this country. and which, with the days of grace, mature
An exporter in this country may desire on the fourth .
to effect a forward sale of exchange. If he FRACTIONAL CERTIFICATE . A certifi
is to receive foreign currency at a future date cate for a fraction of a share. For example,
he may arrange with his banker" to fix in connection with the amalgamation of a
the sterling value at the present time by bank there may be an exchange of shares
300
FRA ) DICTIONARY OF BANKING (FRE

on the basis of, say, three shares of the old for the debt due to such creditor, " brings
bank for four shares of the new , and a in as fraudulent a preference to asurety for
shareholder with , say, five shares would the bankrupt's debt to a bank. If a debtor
receive in exchange six new shares and a pays off the debt and becomes bankrupt
fractional certificate for two - thirds of one within three months the trustee will require
share . He could then either sell the two- repayment of the money ; and if money
thirds, or purchase another one-third so as belonging to the debtor's estate is used to
to make one whole share. release a surety, the trustee will call for that
A fractional certificate is also the name money, and in the meantime the banker will
of a document sometimes issued by a have cancelled , or given up, the guarantee
company for the amount of interest which he held from the surety.
is not paid in cash when due. The certificate By Section 210, Companies (Consolidation)
may provide that the interest will be paid Act, 1908 :
within a certain period and that, in the
meantime, interest will be paid on the " (1) Any conveyance, mortgage, delivery
amount of the unpaid interest mentioned in of goods, payment, execution, or
the certificate . A document of this nature other act relating to property which
is sometimes called a deferred interest would if made or done by or against
certificate or warrant. See the case under an individual, be deemed in his
DEFERRED INTEREST CERTIFICATE. bankruptcy a fraudulent preference,
FRANC . ( See FOREIGN MONEYS--BEL shall, if made or done by or against
GIUM , FRANCE , SWITZERLAND .) a company , be deemed , in the
FRAUDULENT ALTERATIONS. (See event of its being wound up, a
ALTERATIONS.) fraudulent preference of its creditors,
FRAUDULENT PREFERENCE . Where and be invalid accordingly .
a debtor gives a preference to a creditor over (2) For the purposes of this Section the
other creditors it shall be void if he becomes presentation of a petition for wind
bankrupt within three months. Section ing up in the case of a winding up
44 of the Bankruptcy Act, 1914, enacts : by or subject to the supervision
" ( 1 ) Every conveyance or transfer of of the court, and a resolution for
property, or charge thereon made, winding up in the case of a voluntary
every payment made, every obliga winding up, shall be deemed to
tion incurred , and every judicial correspond with the act of bank
proceeding taken or sufferedby any ruptcy in the case of an individual.
person unable to pay his debts as ( 3) Any conveyance or assignment by
they become due from his own a company of all its property to
money in favour of any creditor, or trustees for the benefit of all its
any person in trust for any creditor, creditors shall be void to all in
witha view of giving such creditor tents.” (See BANKRUPTCY .)
or any surety or guarantor for the
debt due to such creditor, a prefer FRAUDULENT SETTLEMENT. A mar .
ence over the other creditors, shall, if riage settlement is fraudulent wherethe
the person making, taking, paying, settlor is adjudged bankrupt, and it appears
or suffering the same is adjudged to the court that the settlement was made
bankrupt on a bankruptcy petition in order to defeat creditors,or was unjustifi
presented within three months after able. (Section 27, Bankruptcy Act, 1914.)
the date of making, taking,paying. (See SETTLEMENTS SETTLOR BANKRUPT.)
or suffering the same, be deemed FREE MARKET. On the Stock Exchange
fraudulent and void as against the а
free market " for any particular shares
trustee in the bankruptcy. means that they may be readily bought or
10 sold . (See LIMITED MARKET.)
( 2) This Section shall not affect the FREEBENCH connection with copy
rights of any person making title holds, Williams,. in In“ Real Property ," says:
" A special custom is required to entitle the
consideration through or under a wife to any interest in the lands of her
creditor of the bankrupt.” husband after his decease. Where such
It is to be noted that the clause in the custom exists the wife's interest is termed
above Section , or any surety or guarantor her freebench , and it generally consists of
301
FRE] DICTIONARY OF BANKING (FRE

a life interest in one divided third part of All that piece or parcel of land
the lands, or sometimes of a life interest in situate in Warwick Road, Carlisle,
the entirety . ” It corresponds, therefore, in containing one thousand two hundred
many respects to dower, the life estate of a square yards or thereabouts, bounded
widow in the third part of the freehold 8 on the north by, etc., and more
lands of her deceased intestate husband. particularly described in the plan
(See DOWER, INTESTACY .) drawn on the margin of these presents
FREEHOLD . The owner of a freehold and coloured red , Together with the
estate in fee simple is the possessor of the three houses erected and built upon the
greatest interest that a person can have in (said piece or parcel of land
land . It belongs to him absolutely, and he To Hold the hereditaments hereby
can do with it what he pleases. If he dies conveyed unto and to the use of the
intestate it passes to the heir at law, sub
ject to a widow's rights to dower. (See 9 purchaser his heirs and assigns (or the
DOWER, FEE SIMPLE. ) words “ in fee simple," instead of “ his
heirs and assigns " ).
A freehold estate may also be held in fee
tail ( see Fee Tail), or as an estate for life In witness whereof the said parties
( see LIFE TENANT) . have hereunto set their hands and seals
Where freehold property is conveyedto a the day and year first above written .
purchaser in fee simple it is effected by Signed , sealed
means of a deed of grant called and delivered by
a conveyance. (See FEOFF- the within named JOHN Seal
Stamp , MENT, LEASE AND RELEASE . ) John Brown in the BROWN.
£ 10. The following is an example presence of
of the general form in which JOHN SMITH ,
an ordinary simple convey English Street,
ance may be drawn : Carlisle.
This Indenture, made the first day Signed , sealed and
1 of December one thousand nine hundred delivered by the JOHN Seal
and within named John JONES.
Jones in the
Between John Brown of Carlisle in presence of
the County of Cumberland , gentleman , GEORGE JACKSON ,
2 hereinafter called the vendor, of the one King Street,
part, and John Jones of Leeds, in the Leeds.
County of York, Engineer, hereinafter
called the purchaser of the other part, If the consideration does not exceed £500,
an additional clause is inserted in the
Whereas the vendor is seised of the conveyance (since the Finance ( 1909-10 ) Act,
3 hereditaments hereinafter conveyed for 1910, see CONVEYANCE) in such form as
an estate of inheritance in fee simple the following — " It is hereby certified
in possession free from incumbrances, and declared that the sale effected by these
and Whereas the vendor has agreed presents does not form part of a larger
with the purchaser for the absolute transaction or of a series of transactions in
4 sale to him of the hereditaments here- respect of which the amount or value or the
amount or value of the considera
inafter conveyed at the price of one aggregate
thousand pounds. tion exceeds five hundred pounds.”
The conveyance is not always signed by
Now this Indenture Witnesseth that the purchaser. In ordinary cases execution
in pursuance of the said agreement and by the purchaser is unnecessary , but if the
5 in consideration of the sum of one conveyance contains restrictive or other
thousand pounds now paid to the covenants on the part of the purchaser it
vendor by the purchaser should be executed by him.
(the receipt whereof the vendor freeholdThere may be a yearly rent-charge upon
6 property. The word freehold "
hereby acknowledges) does not necessarily mean that the land is
7 the vendor, as beneficial owner, doth free from all charges whatever, though the
hereby convey unto the purchaser word is frequently, though incorrectly, used
302
FRE ] DICTIONARY OF BANKING (FRI

when it is intended to express such a members and orphans, and for other
meaning. purposes.
The clauses in the above specimen convey- A friendly society which conforms to
ance are numbered and are referred to as certain requirements, may be registered
follows : with the Registrar of Friendly Societies,
1. In an indenture the date is at the under the Friendly Societies' Act, 1896 , an
beginning ; in a deed poll it is at the end. Act which consolidated the Acts relating to
(See INDENTURE.) such societies.
privileges society
to the in Antheunregistered are not
which does partake
secured by
2. The second clause relates
" parties ” to the deed . registration.
3. Is concerned with a recital of the A registered society has power under that
vendor's title. Act to mortgage its property , if the rules of
4. The agreement for sale. the Society so provide ; and a mortgagee
5. Consideration . shall not be bound to inquire as to the
6. Vendor's acknowledgment of the authority for any mortgage by the trustees.
consideration money . (Section 47.)
In dealing with a Friendly Society a
7. Vendor conveys . banker should make himself conversant
8. The parcels of land are detailed. with its rules relating to the borrowing of
9. The tenendum clause .
money and mortgaging property, and also
as to the manner in which cheques may be
Any declarations of uses or trusts, and drawn. A copy of the resolution with
any conditions
or provisoes, and any respect to the opening of the account, and
covenants, generally follow this clause. specimens of the signatures of the persoņs
By the Land Transfer Act, 1897, Section 3 authorised to sign , should be supplied to
(see under EXECUTOR ), since the first of the banker. The account should be opened
January , 1898 , upon the death of an owner in the name of the Society.
of freehold estate, the property vests in the A receipt indorsed upon a mortgage deed
personal representatives(executorsor admin- has the effect of a reconveyance.
istrators) of the deceased . When , therefore,By the Friendly Societies Act, 1896 ,
the deeds of a freehold property are offered Section 33 :
as security by a borrower, who has succeeded
to the propertyas heir -at -law or has obtained“ Stamp duty shall not be chargeable upon
it asdevisee under a will, it is important for any of the following documents :
the banker to remember that if the death “( a) Draft or order or receipt given by or
occurred on or after January 1 , 1898, the to a registered society in respect of
legal estate is vested in the personal repre money payable by virtue of its rules
sentatives, not in the heir or devisee, and or of this Act ;
that the formal assent of the personal repre- “ (6) Letter or power of attorney granted
sentatives to the devisee taking the property, by any person as trustee for the
or a conveyance from them tothe devisee or transfer of any money of a registered
heir , is necessary before the heir or devisee society or branch invested in his
can have the legal estate. In such cases the name in the public funds ;
assent or conveyance should be deposited “ ( c) Bond given to or on account of a
along with the other deeds and documents registered society or branch , or by
of title. (See LEASEHOLD , TITLE DEEDS.) the treasurer or other officer thereof ;
FREIGHT. The charge made for the “ ( d) Policy of insurance or appointment
carriage of goods in a ship. The cargo itself or revocation of appointment of
is often called the freight. When the word agent, or other document required
is used , it is therefore necessary to note
or authorised by this Act, or by the
whether it refers to the carriage or to the rules of a registered society or
cargo . branch . "
A shipowner has usually a lien upon the
cargo untilthe amount due for freightis paid . By a circular dated November 10, 1894, the (0

FRIENDLY SOCIETY . A society formed Board of Inland Revenue intimated " that
for the benefit of its members, during illness, they have agreed to regard cheques drawn
in old age, and for assisting widows of by , or on behalf of, a duly registered Friendly
303
FUN ] DICTIONARY OF BANKING [GAR

Society upon its banker as falling within For example, in the cotton trade when
the exemption from stamp duty granted a merchant" buys a quantity of cotton
by Section 15 of the Act 38 & 39 Vict. c. abroad he basis the purchase price on the
60. In future, therefore, all such cheques price that he expects to receive when he
may be paid by you, although unstamped .” comes to sell the cotton in this country.
FUNDED DEBT. A debt which is per- If, before that date arrives, a considerable
manent, like Consols ; that is, a debt upon fall takes place in the price, the merchant
which the Government pays regular interest may suffer serious loss. To protect or
without being under any obligation to repay insure himself against such a risk , the
the principal.. Palgrave's Dictionary of merchant sells "“ futures ”" to balance his
Political Economy defines the term purchases. Bankers who finance large
“ funded debt " as " debt raised for per- quantities of cotton insist upon these
manent purposes, and either repayable at a hedges," as they are called, being effected .
distant date or not repayable at any definite Under this system of hedging the importer
1)
date .” pays into the Cotton Clearing House weekly
When an unfunded debt which is subject the difference between the market price, if
to repayment is changed into a permanent it was rising, of the “ futures ” he has sold
debt, the operation is called " funding the and the previous week's price. His loss
unfunded debt." on the “ future sale, however, is gained
The unfunded debt or floating debt of this in the value of his cotton . If, on the other
country consists of Treasury Bills , Ways hand, the market price has declined since
and Means Advances, Exchequer Bonds, the previous week, the importer receives
War Stock and Bonds, War Savings Certi- the amount of the fall from the Clearing
House, which sum he pays to the banker
ficates, and War Expenditure Certificates.
FUNDING DEBENTURE INTEREST. who is financing the cotton, because the
When a company is unable to pay its value of his cotton has declined to the same
debenture interest in cash, the debenture extent. When the importer has to pay the
holders sometimes agree to accept it in Clearing House the banker finds the money,
debentures, thus increasing the debenture because the cotton has risen in value to the
indebtedness on which interest is payable. same extent .
FUNDING LOAN , 4 %, 1960-90. Issued Whilst an importer sells futures " to
by the Government in 1919, at £80 per cent., hedge his purchases against a fall in price,
9)
in stock and bonds to bearer . The stock may a manufacturer may buy futures to
be inscribed, or registered as transferable hedge the deliveries he has undertaken ,
by deed. Stock and bonds of various issues against a rise in the value of cotton .
were accepted at par as the equivalent of With regard to forward purchases and
cash in payment. The loan will be repaid sales of exchange, see FORWARD EXCHANGE.
at par on May 1 , 1990, and may be redeemed
at par at any time on or after May 1 , 1960. GARBLING . Where light gold coins and
The stock and bonds may be used in pay- coins of full legal weight are in circulation
ment of death duties on the basis of £80 together, the good coins are collected by
cash for each £ 100 surrendered, provided goldsmiths and others and exported to be
that they have been held for not less than sold by weight, or are melted down to be
six months preceding the date of death. used in the manufacture of jewellery. This
The stock forms a trustee investment and action of picking out the good and leaving
trustees may invest therein, notwithstanding the light coins is termed garbling the coinage.
that the price may at the time of investment (See GRESHAM's Law .)
exceed the redemption value of £ 100 per GARNISHEE ORDER. Where a creditor
cent . (See NKING FUND .) has obtained judgment against a debtor for
FUNDING THE UNFUNDED DEBT. (See the payment of a debt, he may obtain from
FUNDED DEBT.) the Court an order attaching all money owing
FUNDS. Consols and other Government to the debtor from a third person, called the
securities are referred to as the Funds. Garnishee. By the Rules of the Supreme
FUTURES. In the produce markets the Court, 1883, Order XLV, Rule 2, " service of
term “ futures ” implies contracts for pur- an order that debts, due or accruing to a
chases or sales of commodities for future debtor, under a judgment or order, shall be
receipt or delivery at a price fixed in the attached, or notice thereof to the garnishee,
present . in such manner as the Court or judge
304
GAR) DICTIONARY OF BANKING [GAR

shall direct, shall bind such debts in his matter to the notice of the Court and take
hands. ” A garnishee order nisi gives the its directions.
judgment creditor an equitable charge upon If the account is overdrawn at the date
the debt ; when the order is made absolute ' when the order is received, there are , of
the judgment creditor has power to realise course, no funds to attach , and the account,
that charge. not being affected by the order, may go on as
Nisi means unless ," and an order nisi usual, and future credits, as stated above,
is an order to take effect at a certain date will not be attached by the order.
unless in the meantime something occurs to In the case of a joint account, it has been
prevent it being made absolute. held that a garnishee order against one of
By Rule 3, “ If the garnishee does not the parties does not attach the balance on
forthwith payinto Court the amount due from such " joint account.
him to the debtor liable under a judgment, In Hancock v. Smith ( 1889, 41 Ch. D. 456 ),
or order, or an amount equal to the judgment where a garnishee order had been obtained
or order, and does not dispute the debt due upon the balance of a stockbroker's account,
or claimed to be due from him to such debtor, and it was proved that the balance belonged
or if he does not appear upon summons, entirely to the clients of the broker, it was
then the Court or judge may order execution held that the judgment creditor had no
to issue, and it may issue accordingly, right to the balance.
without any previous writ or process, to A garnishee order attaches a debt which
levy the amount due from such garnishee , is due or which is accruing due. An ordin
or so much thereof as may be sufficient to ary deposit receipt repayable on demand is
satisfy the judgment or order ." attachable by a garnishee order, but, if it is
Where a banker has funds belonging to a condition that the deposit receipt must
the judgment debtor he may be served with be returned before payment will be made,
a garnishee order nisi which order warns the the deposit would not be affected by an
banker not to part with any of the money order served before the return of the receipt.
belonging to that customer. A garnishee (The Law of Banking, Sir John Paget.)
order binds the whole of the balance stand- A receipt repayable at a certain fixed date,
ing to the credit of the customer's account, and a receipt repayable after certain notice
(including uncleared cheques paid to credit has been given , in the event of the notice
as cash, Jones V. Coventry, 1909, 2 K.B. having been given before the garnishee
1029) , at the time the order is served, even if order was served, are attachable by the
that balance is more than sufficient to satisfy order (subject to the above -mentioned
the garnishee order, and until the order is question as to the return of the receipt),
withdrawn no further cheques can be paid because in each case it is a debt which is
accruing
upon the account, not even cheques which v. due. In Swiss Bank Corporation
Joachimson (March , 1921 ) the Court of
were issued before the order was served on
the banker. The banker should advise his Appeal held that express demand by a
customer of the service of a garnishee order. customer for repayment of a currentaccount
Money which is paid to credit after receipt of balance is a condition precedent to the right
a garnishee order is not attached by the order to sue the banker for the amount. Bankes,
and is at the disposal of the customer. “ A L.J. , said “ the service of a garnishee order
garnishee order nisi can have no prospective is a sufficient demand by operation of law
operation ." ( Jones v. Coventry 1909, 2 to satisfy any right a banker may have as
K.B. 1029.) To prevent any complication between himself and his customer to a
between the funds in hand when the order demand before payment of moneys standing
is served , and money received subsequently, to the credit of a current account can be
it is better that the latter should be placed enforced .” From this it would seem to
in a separate account. Upon this new follow that a deposit account, repayable
account the banker may safely honour the only on a specified notice being given,
customer's cheques, and when the garnishee becomes a debt accruing due as soon as a
garnishee order is served , and is attached
proceedings are at an end the two accounts by
may then be combined . the order .
If a banker has reason to believe that The banker may either pay the money
any third party has a claim to the moneys into Court or appear as directed in the order.
attached by the order, or that the account To be on the safe side he should not pay over
contains trust money, he must bring the the money until the order is made absolute .
805
20-1935 )
GAR ) DICTIONARY OF BANKING (GEN

In the Gilbart Lectures, 1913, Sir John Garnishee attend the District Registrar in
Paget expressed his opinion that where chambers, at the County Court offices
there is a definite loan for a lump sum, at on day, the
an agreed rate of interest, with approved day of 19 at o'clock in the
security, and the amount is carried to noon , on an application by the said
current account, for the sake of getting Judgment Creditor that the said Garnishee
interest on the full sum, and not merely pay the debt due from to the said
on the overdraft for the time being, and a judgment Debtor or so much thereof as may
garnishee order is served on the banker, be sufficient to satisfy the Judgment.
based on a judgment against the customer, Dated this day of 19
the banker is not entitled to oppose the
garnishee order being made absolute against District Registrar.
any credit balance on the current account (See CHARGING ORDER .)
at the date of the garnishee order nisi.
In order that a garnishee may defeat the GAVELKIND . (From A.-S. Gafol, tribute.)
claim of a judgment creditor by means of An old custom surviving in the County of
à set off, or combination of accounts, such Kent, and also in Kentish Town, North
set off must be in respect of an actual, imme- London , by which the real property of a
diately recoverable debt, and Sir John person dying without a will descends, not
contended that such a loan as the above to the eldest son , but to all the sons together
does not therefore constitute a set off to the as coparceners, just as it descends equally
current account for such purpose . to the daughters if there are no sons; that
A garnishee order nisi served on the head is, a form of holding midway between
office is service on the bank, but, where tenants in common and joint tenants. (See
the customer keeps his account at a branch , COPARCENERS .) An interest in gavelkind,
it is considered that reasonable time must on the death of one of the sons, passes to
be allowed for the head office to com- his heir, or to his devisee if he leaves a will.
municate with the branch before the branch An infant of fifteen may alienate his
will be bound by the order. gavelkind property, though he has not
The following is a form ofgarnishee order :- power to mortgage it.
Garnishee Order (attaching Debt). GAZETTED . That is, published in the
No.
London Gazette. The production of a copy of
the London Gazette containing any notice of a
In the High Court of Justice, receiving order, or of an order adjudging a
King's Bench Division . debtor bankrupt, shall be conclusive evidence
District Registry. in all legal proceedings of the order having
Between been duly made, and of its date. (Section
Judgment Creditor. 137, s.s. 2, Bankruptcy Act, 1914.)
See also Partnership Act, 1890, Section
Judgment Debtor. 36, s.s. 2, under PARTNERSHIPS.
GENERAL ACCEPTANCE . (See ACCEPT
Garnishee. ANCE - GENERAL.)
Upon hearing Mr. GENERAL AVERAGE. A term used in
as Solicitor for the above-named Judgment connection with shipping. A clause usually
Creditor, and upon reading the affidavit of found in a Charter Party is “ General average
the said as per York -Antwerp rules." The rules
filed the day of 19 referred to are those which have been
It is ordered that all debts owing or accru- adopted at various times, by international
ing due from the above -named Garnishee to conferences, York in 1864, Antwerp in 1877,
the above-named Judgment Debtor be and Liverpool in 1890. Where extra
attached to answer a judgment recovered ordinary sacrifices have been made, such as
against the said Judgment Debtor by the throwing cargo overboard or cutting away
above -named Judgment Creditor in the High the masts or other parts of the ship, in order
Court of Justice, on the day of that the vessel and the rest of the cargo may
19 for the sum of £ debt and be saved from destruction , the loss does not
costs on which Judgment the said sum of fall upon the owner of the ship or of the
€ remains due and unpaid . property thrown overboard, but is appor
And it is further ordered that the said tioned among all the parties ; that is, the
306
GEN ) DICTIONARY OF BANKING [GIF

shipowner and the owners of the cargo (or Credit Accounts. London Agents.
Current Accounts . Miscellaneous.
the underwriters, if insured) according to Deposit Accounts. Money at Call and Short
their interest in the ship and cargo. The Deposit Receipts. Notice.
calculation of the amount payable by each Discount. Note Issue.
Dividend . Overdue Bills.
party is usually made by persons called Exchange. Pension Fund.
average adjusters. ( See BILL OF LADING , Foreign Credits . Postages .
CHARTER PARTY , PARTICULAR AVERAGE . ) Foreign Bills. Private Ledger.
GENERAL CROSSING . A cheque is Head Office . Profit and Loss.
Head Engagements . Property.
crossed generally which bears across its Head Acceptances. Provision for Bad and
face : Impersonal Ledger. Doubtful Debts.
1. The words “and Company ” or any Indorsements on Bills Rents.
Sold. Reserve Fund .
abbreviation thereof between two parallel Interest. Reserved Interest .
transverse lines, either with or without the Interest Adjustment . Returned Bills .
words “ not negotiable .” Investments. Stamps.
Investments Interest . Sundry Persons.
2. Two parallel transverse lines simply, Letters of Credit. Suspense.
either with or without the words " not Loans. Trade Charges.
)
negotiable ." (See CROSSED CHEQUE .)
GENERAL LEDGER. However many In some banks several of the above ac
books may be in use or on whatever system counts may be contained in a separate book,
they may be worked, they are all brought an impersonal ledger, and only the balance
together in the general ledger. For in- of that ledger posted to an account in the
stance the daily totals, debit and credit of general ledger.
current accounts, as shown in the day books GENERAL MEETING : (See MEETINGS .)
are posted each day into the general ledger GIFT OF A CHEQUE . Where a cheque
under the heading “ current accounts," is handed to another person as a gift, that
and the balance is extended weekly or daily , is, without any consideration , the receiver
as may be required . When the balances in cannot sue the giver thereon . (See Con
the current account ledgers are extracted , SIDERATION FOR BILL OF EXCHANGE . )
they should prove with the balance of the GIFTS INTER VIVOS. (Gifts between
" current accounts ” account in the general living persons.) An inter vivos gift is a gift
ledger, and if the totals of the debit and that takes effect in the lifetime of the donor.
credit sides in the current account ledgers As the gift takes effect at once, it differs
are taken out they should agree with the from a donatio mortis causa , which takes
corresponding totals in the general ledger. effect only in the event of the donor dying
In proving the ledgers by totals, it is , of from the illness he is suffering from at the
course, necessary that the general ledger time the gift is made. (See Donatio MORTIS
account, at the commencement of the half- CAUSÂ.) As to the stamp duty on a con
year, should begin with the total of the veyance operating as a voluntary disposition
debit balances and the total of the credit inter vivos, see Section 74 of the Finance
balances, and not merely with the difference ( 1909–10) Act, 1910, under heading Con
of the two sides . VEYANCE .
The accounts which are found in a general Section 59 of the same Act provides, as to
system and the amount of
her
ledger vary according to the bank, the gifts and dispositions inter vivos, that in the
sub-division case of a person dying on or after April 30,
which is considered necessary . The follow- 1909, the period preceding the death of the
ing is a list of a number of general ledger deceased before which a disposition pur
accounts which may be found in different porting to operate as an immediate gift inter
banks, though not, of course, all in any one vivos must have been made, in order that the
bank : property taken under the disposition may
Acceptances. Bills Protested. not be included as property passing on the
Agency . Branches. death of the deceased, and so liable to death
Bank of England. Capital. duties, shall be three years before the
Bank Premises . Cash .
death .
Bills Discounted . Cash Errors.
Bills for Collection . Charges . So much of this Section as makes gifts
Bills of Exchange. Cheque Books. inter vivos property which is deemed to
Bills Payable . Circular Notes. pass on the death shall not apply to gifts
Bills Remitted. Clearing,
Bills sold . Country Banks. made in consideration of marriage. (See
Bills in Suspense. Commission . DEED OF GIFT .)
307
GIL ) DICTIONARY OF BANKING (GOL

GILT- EDGED BILL . A gilt-edged bill payable in gold . The certificates are for
is a bill drawn and negotiated, ofwhich the amounts from $20 to $ 10,000.
drawer, acceptor and indorsers all enjoy the GOLD COINS. Gold was first coined in
highest credit. England about 1257 .
GILT -EDGED SECURITIES. Securities The denominations of English gold coins
of the highest order and which are con- | as set forth in the Coinage Act are : Five
sidered to be absolutely safe, particularlyas Pound, Two Pound, Sovereign, Half Sove
to the payment of the interest thereon . The reign. The coins contain pure gold eleven
marketable value of many gilt - edged twelfths, copper alloy one-twelfth.
securities (e.g. consols) , cannot, however, ! Gold coins are a legal tender to any amount
be always considered more stable than the so long as they do not fall below the least
marketable value of many other securities current weight as given in the Coinage
60
which are not classed as gilt-edged." Act .
Stocks in which trustees may invest The light yellow appearance of many
the trust moneys are gilt- edged.” (See Australian sovereigns is due to the alloy
TRUSTEE INVESTMENTS. ) being in part of silver.
GIVERS ON . In connection with the For checking sovereigns, scales and weights
Stock Exchange settlements , a “ giver on are invaluable as the amount can by their
is a broker who lends stock to a broker who use be ascertained quickly and exactly. In
requires it for delivery, and gives interest the case of half sovereigns, owing to the
for the money lent to him on the stock . lightness of many of the coins, the weights
(See TAKERS- IN . ) do not give such an accurate result as with
GOING CONCERN . A concern or under- i the sovereigns, but if a hundred pounds of
taking which is in full working order. The half sovereigns are counted these can then
value of, say, an ironworks as a going con- be used as a weight to balance another
cern is usually far removed from the value hundred of half-sovereigns and so on . When
of the same property when working opera- the gold has been counted, it is put into bags
tions have ceased . In the latter case the
and each bag labelled with the amount it
value is often not much more than that contains and initialled by the person who
for old material. When taking any such / counted it. The gold that is necessary for
security, a banker is therefore careful to immediate use across the counter is kept in
remember that its value as a going concern various ways. It is usually put up either in
may disappear entirely at the very time bags containing such amounts as may be
when it may be necessary to look to the ' necessary, or in piles of £20 each . In some
security for repayment . offices it is kept in paper rolls of £50 or
GOLD AND SILVER (EXPORT CONTROL, £100, or in tin tubes standing upright in a
ETC.) ACT, 1920. By Section 1, gold and box, each tube containing £ 20. ( See BASE
silver coin and bullion are added to the Coins , Coinage .)
articles mentioned in Section 8 of the GOLD POINTS . (See SPECIE POINTS.)
Customs, and Inland Revenue Act, 1879 GOLD RESERVES. In 1908 the Council
(which enables the exportation of certain of the London Chamber of Commerce ap
articles to be prohibited ). The Section is pointed a Gold Reserves Committee to
to continue in force till December 31 , 1925 , consider whether the Gold Reserves of the
unless Parliament otherwise determines. country are sufficient, and , if not, what
)
By Section 2 the melting of gold and remedies can be suggested ." The Committee
silver coin is prohibited (except under licence
consisted of leading bankers and men of
of the Treasury ). business, and in July, 1909, the Report
GOLD BONDS. In America, bonds of (which has been called an historic document)
Railroad Companies which are repayable of the Committee was issued. Out of twenty
" in gold coin of the United States of the five surviving members of the Committee,
1)

present standard of weight and fineness," five agreed to it subject to various material
or at a fixed rate of exchange in London. | reservations.
The principal clauses of the report are as
The interest on the bonds is payable in like follo
gold coin . ws :
GOLD CERTIFICATES . Certificates
which are issued by the Treasury of the “ 4. Your Committee has taken no evi
United States as part of the paper currency. dence , but having debated the many and
Gold is held against them and they are weighty proposals brought before it by its
308
GOL ) DICTIONARY OF BANKING (GOL

own members, has passed the following preceding months, respectively ,

resolutions : stating the following amounts

“ 1. That the Committee recognises the separately :

desirability of strengthening the ' (a) Liabilities on current, de
Gold Reserves of this country . (6
posit, and other accounts .
“ 2. That the issues of the Bank of Eng
' (6) Liabilities on notes in circu
lation .
land against Government debt and (c) Liabilities on bills accepted.
securities, commonly called the fidu ( d) Gold and other coin and
ciary issue, form an undue propor gold bullion held .
tion of the whole, and should be
reduced . " (e) Bank of England notes held ,
and balance due by the
" 3. That a reasonable reserve in gold Bank of England.
should be held against the deposits “ Balance due by clearing
in the Trustee and Post Office agents .
Savings Banks. ' And that a copy of the statement
“ 4. That the Bullion Department of the should be put up in a conspicuous
Bank of England affords a means place in every office or place where
by its enlargement for the aggrega the business of the persons or com
tion of gold reserves held by others pany is carried on .
than the Government of India, “ 6. That it is desirable that the Bank of
viz . : England should make an annual
“ (a) The banks of the United return showing the aggregate
Kingdom , including the bankers' balances for each week of
Bank of England, in respect the preceding year.
of such gold held against “ 5. In arriving at the conclusion that it
their liabilities in excess of is desirable to strengthen the Gold Reserves
till money as any of them of the country, your Committee was in
may elect to deposit in the fluenced by the fact that the growth of
Bullion Department. aggregate liabilities, external and internal,
“ (6) Scotch and Irish banks in has not been accompanied by a proportional
respect of all or any portion increase of gold held by banks in the United
of the extra gold held by | Kingdom .
them against excess issues “ 6. Your Committee is also of opinion
under the Act of 1845 . that, were larger reserves of gold in exist
“ (c) The National Debt Com ence , a modifying influence as regards
missioners and the Post- | fluctuations of the official rate of discount ,
master -General in respect which are more frequent in this country
of the gold which the Com- than elsewhere, would probably be the
mittee recommend should result .
be held against the liabili “ 7. The resolutions arrived at by your
ties of Trustee Savings Committee resolve themselves into two
Banks and Post Office
main classes, viz. , those directly, and those
Savings Banks respectively. indirectly, affectingthe Gold Reserves, the
“ 5. That all persons or companies carry . two not being altogether incompatible.
ing on the business of banking with . “ 8. The direct scheme for a central
in the United Kingdom should once
in every calendar month , in case reserve has in view a fund of gold lodged
their liabilities on current and de for safe custody at the Bank of England,
posit accounts exceed in all the sum each owner retaining absolute and inde
of ten million pounds sterling,and pendent possession and control ; the aggre
once in every three months in all gate amount only to be made public.
other cases, make a statement of “ 9. The indirect scheme has in view
their position showing theaverage publication of the cash assets ofevery bank,
amounts of liabilities and assets on divided into constituent parts. This would
the basis of weekly balance sheets disclose the individual holding of gold of
for the preceding month , or three each bank.
309
GOL ) DICTIONARY OP BANKING (GOO
(6
“ 10. The resolutions arrived at show GOODS. Where goods are in the custody
that your Committee consider that all con- of third parties a banker may advance upon
cerned should bear their part in the cost them on receiving the bill of lading (q.v.)
involved in an increase in Gold Reserves, or the warrants which are the symbols or
and specify : representatives of the goods. For further
(a) The Government, information see under DELIVERY ORDER,
“ (6) The Bank of England, TRUST RECEIPT , WAREHOUSE -KEEPER's
(c) The banks of the United Kingdom . CERTIFICATE OR RECEIPT , WARRANT FOR
“ 11. In conclusion , your Committee beg Goods. “ The all-important condition of
to report their unanimous conviction that successful financing of produce is to finance
the time has arrived when the bankers them- only for customers upon whom the bank
selves should come to an agreement on this can rely in regard to character, experience
important matter, and adopt measures to and means.” For full information on this
conserve and increase the gold held in the subject reference should be made to Bankers '
country , if it is wished to avoid legislative Advances Against Produce, by Alfred
measures. ” Williams .
GOLDSMITHS' NOTES. The prototypes If the goods are actually in the possession
of the modern bank notes. of the customer who desires an advance upon
Before banking became a separate business them, the security may be obtained by the
In this country, goldsmiths received money goods being placed in a warehouse or build
on deposit and the receipts given for the ing rented by the bank, the customer signing
money were called goldsmiths' notes. The a document or letter of hypothecation, to
notes were payable on demand, and show that the goods have been pledged for
circulated instead of coins. the advance and to give the banker a right
GOOD CONSIDERATION . (See Con- to sell the goods, if necessary. In this way
SIDERATION .) the goods are under the absolute control of
GOOD DELIVERY . On the Stock Ex- the banker and cannot be dealt with until
change a security is not a “ good delivery he releases them . Warrants for the goods
if it is affected with some irregularity such are also furnished by the owner to the
as absence of coupons, or necessary stamps ; banker, and when any of the goods are sold
or, in the case of a bearer security, if a the warrants require to be indorsed over
holder has written his name on it . by the banker to the purchaser. The goods
A certified transfer is accepted as а should be insured in the banker's name.
' good delivery.” Where the goods remain in the custody
GOOD FAITH . By the Bills of Exchange or control of the customer, some bankers
Act, 1882, Section 90 : grant a loan upon them on receiving a letter
" A thing is deemed to be done in good from the customer stating that certain speci
faith , within the meaning of this Act, wherefied goods are stored in his warehouse and
it is in fact done honestly, whether it done are held to the order of the banker as
negligently or not." security for the loan, and undertaking to
The same definition is given in the Sale repay the advance when the goods are sold .
of Goods Act, 1893 . In such a case the banker is entirely
In a case in 1892, Lord Herschell said : dependent upon thehonour of the customer .
“ If there is anything which excites the sus- GOODS AND CHATTELS. (See CHATTELS .)
picion that there is something wrong in the GOODWILL . When a business is sold,
transaction, the taker of the instrument is the expression " goodwill " is used to indi
not acting in good faith, if he shuts his eyes cate the benefitwhich the purchaser may be
to the facts presented to him and puts the expected to obtain from the business con
inquiry.”
suspicions aside without further IN nection formed in the premises, or from the
(See FACTORS Act, Due good name which the vendor has created for
HOLDER
COURSE . ) himself. The goodwill of certain businesses
GOOD LEASEHOLD TITLE. Land may is a valuable asset, and in selling a goodwill
be registered under the Land Transfer Acts its value will depend partly upon the vendor
with a good leasehold title, which amounts agreeing not to enter into competition with
to a guarantee by the Government of the the purchaser.
leaseholder's title to the lease, but does not When a banker examines a balance sheet
guarantee the original validity of the lease in which an item for goodwill appears, he
itself. (See LAND REGISTRY .) must remember that " goodwill has no
310
GOST DICTIONARY OF BANKING (GRO

meaning except in connection with a con- is 29.09090 grains troy, but it is not now
tinuing business (Lindley's “ Partner- issued except as Maundy money (9.v.).
ship "'). Groat is from the French word gros, indi.
See Section 81 , s.s. 1 , (8) , Companies cating the size of the coin, as, when first
(Consolidation) Act, 1908, under PROSPECTUS. coined by Edward III, it was the largest silver
GOSCHENS. A name sometimes given coin then known. (See COINAGE .)
on the Stock Exchange to 21 per cent. GROSS PROFIT. The total profit, or
Consols, because Mr. Goschen was respon- gain , before the deduction of expenses.
sible for the conversion of Consols from GROSS RENTAL . The rent of a property
3 per cent . to 21 per cent. before the deduction of rates, taxes, repairs
GOVERNMENT NOTES. On the outbreak or other outgoings. (See VALUATION .)
of war with Germany in 1914, the Treasury
3 GROUND RENTS. Rents which are
issued £1 and 10s. notes to act as legal reserved to the owner ofa freehold and which
tender for a payment of any amount. (See are payable by the person to whom the land
CURRENCY NOTES. ) has been leased for building purposes.
GOVERNMENT STOCK . (See NATIONAL For example, if the owner of freehold land
DEBT . ) leases a portion to a person , called the lessee
GRANT. A conveyance in writing. or leaseholder, he stipulates that he must
By the Stamp Act, 1891 , the stamp duty receive, during the continuance of the
is :
lease (usually a term of 99 years), a certain
GRANT of copyhold or customary £ s. d. yearly rent, that is a ground rent. In the
estates.
case of a building lease the lessee is obliged
See CONVEYANCE_COPYHOLD . to build upon the land, and as he erects
GRANT of the custody of the person houses he sub-leases them to other parties,
or estate of a lunatic .
2 0 0 who in their turn pay ground rents to him.
GREENBACKS . The popular name for If the lessee pays a ground rent to the
the notes first issued by the Government of freeholder or lessor, of, say, £ 100 a year,
the United States in 1862. The backs ofthe and the lessee builds houses, and sub
notes are printed in green ink, whence the
1 )
leases, say, twenty houses at a ground rent of
origin of the term , “ greenbacks." They are £ 10 each per annum , the lessee thus obtains
legal tender in that country. (See FOREIGN £ 200 a year and, after paying the freeholder
MONEYS – UNITED STATES .) the £ 100, he has a profit left of £100 a year ;
GRESHAM'S LAW . Where new coins this profit is termed the improved ground
and old worn coins are current at the same rent. At the termination of a lease the
time, the new coins gradually disappear and buildings become the property of the lessor.
leave the old worn ones in circulation . The When ground rents and the freehold are
first person who discovered and explained purchased , the purchaser acquires the rights
the cause of the disappearance of good coins of the freeholder, that is the right to receive
from circulation was Sir Thomas Gresham the ground rents during the continuance
in the sixteenth century. The principle or of the original lease and at the end of the
law (now called Gresham's Law ) which he lease to take possession of the land with the
stated is : “ If coins of the same metal,but buildings thereon. As the end of the
of varying weight and quality, circulate lease approaches his investment will
together at the same nominal value, the naturally increase much in value. An
worse coins will tend to drive the better from investment in such ground rents is therefore
circulation, but the better will never drive an improving one year by year, but in the
out the worse . " case of an investment in improved ground
The practice of picking out the gold coins rents it is just the opposite, for the pur
of full weight and leaving the light ones in chaser's rights to receive the rents continue
circulation (called garbling the coinage) is only during the unexpired period of the
carried on principally by goldsmiths or lease. The value of his investment will
other persons who melt the coins for jewel- accordingly depreciate in value year by
lery, or export them and sell them by weight. year, and at the same time he will be
In the ordinary course of business very little required to pay the full ground rent to the
attention is paid to a coin, so long as the owner of the freehold . The position of
stamp upon it is visible, whether it is a light
the owner of ground rents is a safe one,
one or not. (See COINAGE .) for the buildings onthe land are an assurance
GROAT. Fourpence. Its standard weight that the rent will be punctually paid,
311
GUA) DICTIONARY OF BANKING (GUA
and at the end of the lease he will, in an unless the agreement upon which such
ordinary case, be able to let the property action shall be brought, or some memoran
for more than the ground rent. If, during dum or note thereof shall be in writing and
the continuance of the lease, the lessee signed by the party to be charged therewith,
failed to pay the ground rent, the lessor or some other person thereunto by him
would have the right to re- enter into lawfully authorised .”
possession of the land with the buildings “ There can be no surety without a prin
attached. If, however, ground rents alone , cipal ” (Lord Justice Farwell in Wanthier
are purchased, that is without the rights to the v. Wilson , 1912, 28 T.L.R. 239 ).
freehold, then this investment will be a To be legally effective a guarantee must
depreciating one and will become extinct at be given for a debt which is enforceable.
the termination of the lease . If the debt is not enforceable, the guarantee
In cases where land is sold outright (not will not be enforceable. For example, a
leased ) for building purposes, but subject : guarantee to secure an account opened
to a perpetual yearly rent, a purchase of under an impersonal heading such as

this yearly rent is a good investment, but “ Blackwall Parish Hall ” is legally invalid,
the investment will not appreciate with the as a Parish Hall, cannot, of course, be sued
lapse of time as in the case where the land for a debt. (See SOCIETIES.)
was leased for a number of years and the “ In view of the necessity of a principal
freeholder's rights were purchased. In cases debtor a difficulty arises where a person
of this nature a purchase of improved purports to become surety for one who is
yearly rents would not be liable to depre- under a disability. That this circumstance,
where there is no fraud or misrepresentation ,
ciate , and would form a good investment ,
because there is no lease to expire. does not prevent the so - called surety from
Where ground rents are offered as a being liable to the creditor, seems clear,
security, the banker should ascertain what although there is no express decision upon
buildings there are upon the land, otherwise it in England. But it is a question whether
he might find himself in possession of security his liability should be explained as being
with insufficient or even without any really that ofa principal or that of a surety
buildings to secure the rents . by estoppel." (Mr. Justice Rowlatt , in
A perpetual yearly rent-charge on a “ Principal and Surety.” )
freehold property (called a fee farm rent) is A guarantee is a very convenient form of
practically a ground rent. When fee farm security, and because of the ease with which
rents, or ground rents on a leasehold property, it can be given , a banker should be careful
are offered to a banker as security, the to make clear to a proposed surety thenature
banker should consult his solicitor as to the of the document which he has to sign , so
title . that he may not afterwards plead that he
GUARANTEE . GUARANTY . (French did not understand its contents.
garantir, to warrant.) A guarantee is an A contract of suretyship should be
undertaking by one person (called the entered into freely and voluntarily by the
guarantor) given to a banker (the creditor), guarantor. ' Everything like pressure used
to be answerable for the debt of another by the intending creditor will have a very
person (the debtor) to the banker, upon serious effect on the validity of the contract"
default of the debtor.
>)
(Mr. Justice Fry in Davies v. London and
In Lord Halsbury's " Laws of England
00
a Provincial Marine Insurance Company, 1878,
guarantee is defined as an accessory 8 Ch . D. 469) .
contract whereby the promisor undertakes Where a guarantee is to be taken from a
to be answerable to the promisee for the wife to secure her husband's account
debt, default or miscarriages of another particular care is required, because the
person whose primary liability to the Courts will presume that she was unduly
promisee must exist or be contemplated ." ! influenced by her husband unless it can be
In order to be enforceable at law , a shown that in signing the guarantee she
guarantee must be in writing. By the exercised an entirely free and unfettered
Statute of Frauds (29 Car. II, c. 3 ), Section 4, judgment independent of her husband's
it is enacted that " no action shall be brought control. In Bank of Montreal v. Stuart
whereby to charge the defendant upon any and Another ( 1910, 103 L.T. 641 ) , a wife gave
special promise to answer for the debt, a guarantee to a bank in order to help her
default or miscarriages of another person, 1 husband and a company in which he was
312
GUA ) DICTIONARY OF BANKING [GUA

interested and which was in pecuniary inform him of the above fact which might
difficulties. She alleged that she acted have indicated to him that his agent was
of her own free will, without any pressure behaving improperly towards him . It was
having been put upon her, but it appeared held that there was no duty upon the plain
that she acted in passive obedience to her tiffs to communicate to the defendant their
husband's directions and would have signed suspicion that Coles was not acting properly
anything that he asked her to sign andhad towards him and consequently that the
no means of forming an independent judg- failure to make such communication did
ment even if she had desired to do so . It not discharge the defendant from liability
was held that the transaction could not under the guarantee.
stand. Lord Macnaghten said : “ In the If a guarantor inquires as to the extent
case of husband and wife the burden of of his liability upon the account for which
proving undue influence lies upon those who he is surety, he is entitled to the information ,
allege it. It is difficult to determine in any but a banker should not exhibit the debtor's
case the point at which the influence of account to a surety or give details regarding
one mind upon another amounts to undue it.
influence. It is especially so in the case of When a guarantor is proposed , it is a
husband and wife. . . It may well be banker's duty to consider whether he is
argued that when there is evidence of over- sufficient for the liability, and whether
powering influence and the transaction from his business and position he is likely to
broughtabout is immoderate and irrational, continue, in every way, asatisfactory surety.
as it was in the present case, proof of undue For instance, could he discharge the guar
1
influence is complete .” antee with ease, or would it render him
In an ordinary case a banker is not practically penniless to pay the amount ?
obliged to give information, voluntarily, to Is he under any other liabilities to the bank,
a proposed surety, regarding the debtor's and is he likely to have
affairs. “ Unless questions are particularly for a friend at any othersigned a guarantee
bank ? When a
put by the surety to gain this information, person signs a guarantee he does not expect
I hold that it is quite unnecessary for the that he will ever be called upon to pay it ;
creditor, to whom the suretyship is given, but a banker should look upon the trans
to make any such disclosure ” ( Lord action from quite the opposite point of view ,
Campbell, in Hamilton v. Watson, 1845, 12 and should try to realise what the position
Cl . & F. 109) . will be, assuming that the guarantor will
“ The only circumstance in which a be required to meet the liability.
duty to disclose would emerge, and a failure A man may be well able to meet all
to disclose would be fatal to the bank's demands which may be made upon him in
case, would be where a customer put a connection with his own business or his own
question, or made an observation in the private affairs, but it is quite another matter
hearing of the bank agent, which would when he has to provide a substantial sum
inevitably lead anyone to the conclusion to pay the debts of someone else . In
that the intending guarantor was labouring estimating the value of any one as a surety
under a misapprehension as to the state of the point is, as George Rae puts it in “The
the customer's indebtedness.” (Royal Country Banker " : Not what you might
Bank of Scotland v. Greenshields, 1914, S.C. be able to squeeze out of him by process of
259.) exhaustion, but what he could at any time
In National Provincial Bank of England pay, over and above his other engagements,
v . Glenusk ( 1913, 109 L.T. 103) , the defend- without serious inconvenience or detriment
ant guaranteed all moneys which might to himself. That is the true meaning of
be due to the plaintiffs on any accounts his fitness as a surety ; and if you take him
whatever from one Coles, who was defend- for more than this, you may do him a fatal
ant's agent. The plaintiff's manager disservice , and possibly lay the foundation
became aware that Coles was paying a of a bad debt for yourselves.”
debt due from him to another bank by an A lady is not, as a rule, regarded as a
overdraft on the plaintiffs. He did not suitable surety.
communicate this fact to the defendant, A guarantee may take the form of a bond
and it was contended that the latter was or a guarantee under seal, in which cases
discharged from liability under the guarantee an ad valorem stamp of 2s. 6d. per cent . is
by reason of the failure of the plaintiffs to required . The usual form , however, is a
313
GUA] DICTIONARY OF BANKING (GUA

guarantee under hand . The stamp duty on guarantee under seal, but in a guarantee
a guarantee under hand is sixpence ( see under hand, i.e. a simple contract, there
AGREEMENT) . The stamp may be either must be aa consideration . The consideration ,
impressed or adhesive ; if adhesive, it must as a general rule, is the granting of an
be cancelled by the first person signing the advance to a customer against the guarantee,
guarantee. If the document has been signed or it may be the granting of further time to
before being stamped, the stamp may be a debtor. A banker's guarantee usually
impressed within fourteen days from its states the consideration, but the document
date. If a guarantee is sealed by a company , i is not invalid merely by reason that the
the document is subject to ad valorem duty consideration is not expressed therein .
of 2s. 6d. per cent. (See Bond.) ( Mercantile Law Amendment Act, 1856 ,
It is essential that a guarantee form Section 3. )
should be most carefully drawn so as to An important point in connection with a
create an effective security, and most guarantee is that it should be a continuing
bankers have now their own printed forms guarantee , that is, a security which will
of guarantees drafted so as to meet, as far continue, although the balance of the debtor's
as possible, the various requirements of a account may fluctuate from time to time.
good and complete guarantee. A guarantee should therefore expressly state )

The surety's signature should, as a rule, that it “ shall be a continuing guarantee,"

be witnessed by a bank official, and some otherwise it might be held to cover merely
bankers require it to be witnessed by two the debt which existed at the time the
officials. Where the surety lives in another guarantee was given.
town , the document should be sent to a bank Upon receipt of notice from a surety to
in that town and the surety be requested to determine his guarantee, the debtor's account
call there to sign it . Where a wife signs a or accounts should be broken , and the banker
guarantee for her husband's account, her should communicate at once with his
signature should be witnessed by her own customer . Unless the account is broken
solicitor. all payments to credit will go to release
If there are any alterations in the docu- the surety, and all debits will form a fresh
ment, they should be initialled by the unsecured advance. The customer's written
guarantor ; and if the guarantee being given consent to the opening of the new account
is in addition to one already signed by him should , if possible, be obtained. See further
for the same account, a clause should be remarks under NOTICE OF MORTGAGE .
added at the end of the guarantee to the Where a guarantee for, say, £1,000 is to
effect that “ this guarantee is in addition continue in force until the expiration of three
to and not in substitution of my guarantee months' notice in writing, and when the
dated for £ ," and the clause account is overdrawn, say, £ 500, the surety
should be signed by the guarantor. gives notice, can the banker let the customer
Where there are more guarantors than go on drawing cheques pending the notice
one, the guarantee should be “ joint and and let him draw out the whole £ 1,000 ?
several.” The banker can then sue one , Sir John Paget, in his Gilbart Lecture
or all, of the guarantors as he may consider (No. 3), 1909, considers that "the banker
necessary. If he sues one surety and fails would run great risk if he adopted this course
to obtain all thatThis
sue the others.
is required,
could nothebemay thenif bills
done voluntarily : : .forall the
accepted outstanding cheques,
customer prior to
the guarantee was " joint ” only. In a revocation and maturing during pendency
joint ” guarantee, all the sureties must be of notice and things of that sort are covered
sued together, and if one of them died his by the clause. Possibly it might cover other
estate would not be liable. The banker in transactions in the ordinary course of
that case would have to look to the sur- business begun prior to revocation and
viving guarantors ; but if the guarantee is completed during currency of notice. ”
" joint and several,” the estate of a deceased With respect to a guarantee which con
( 6
surety would be liable. In a “ several tained the words “ to continue in force until
guarantee, each one of the guarantors may three months after notice,” it has been held
be sued separately for the full amount. The that notice to the bank of the death of the
most satisfactory guarantee for a banker to guarantor amounted to a determination of
take is, therefore, a “ joint and several ” one. the guarantee so far as future advances were
A consideration is not necessary in a concerned .
314
GUA) DICTIONARY OF BANKING (GUA

If there is no question of notice arising, require payment at once from a surety of the
when the surety informs the banker that he amount of his guarantee. When the guar
withdraws from any further liability under antor pays up, the amount should be placed
his guarantee, it will be at the banker's own to a separate account, and not go directly
risk if he pays any further cheques after in reduction of the debtor's account, if the
receiptof such notice ; but if he has promised banker intends to claim upon the debtor's
the debtor to pay certain specific cheques, estate. In such a case , the guarantee should
those cheques must be paid . The banker not be cancelled, nor an absolute discharge
should see his customer at once as to the given to the guarantor. If the sum tendered
withdrawal of the guarantee. Some guaran- by the guarantor is sufficient to clear off the
tees expressly state that the guarantee shall debt, the amount is usually placed at once
continue until you shall receive notice in to credit of the debtor's account. If a surety
writing from me withdrawing the same, pays to the bank the amount of his liability,
provided that the receipt of such notice before the bank has made its proof in bank
shall not affect my liability hereunder in ruptcy, even if the amount is placed to a
respect of any moneys that may then be suspense account, the payment may (as in
due to you from the debtor, or subsequent the Scottish case of Mackinnon's Trustees v.
interest thereon, nor in respect of any bills, Bank of Scotland, Scots Law Times, 1915)
notes, drafts, cheques or other instruments be held to be in reduction of the debt for
which may then be outstanding, or any which the bank may rank .
transaction which may then be pending." If after all dividends have been received
In order that a banker may be entitled from the bankrupt's estate, the guarantee
to claim upon a debtor's estate, and, if money in the banker's hands should be more
necessary, to require payment in full of the than sufficient to clear off the indebtedness,
guarantee, the guarantee should be drawn the balance remaining should be returned
so as to cover all moneys which now are or to the surety, or, if several sureties, to
shall at any time hereafter be due and owing each one in proportion to the amount he
and to apply to and secure any ultimate paid .
balance that shall remain after the banker When a banker has demanded payment
has obtained dividends or compositions from from a surety, no further cheques should
the debtor's estate . In the case of In re be debited to the debtor's account, unless
Sass, Ex parte National Provincial Bank of notice was given to the surety, when the
England (1896, 2 Q.B. 12) , a surety guar- demand was made ,of the existence of further
anteed the payment of all sums of money claims by the bank upon the debtor.
which were or might from time to time Upon receiving notice of the death of a
become due or owing to the bank on the surety, the debtor's account should be
account of S. and the guarantee was limited stopped pending fresh arrangements, unless
to the amount of £300. The guarantee gave the guarantee expressly provides that the
the bank the right to receive dividends estate of the deceased surety is to continue
from the debtor's estate. On the bank- liable .
ruptcy of S. the bank, after receiving the Where there are several sureties and one
£ 300 from the surety, claimed to prove on of them dies, the account should be broken,
the estate for the full amount due. It was until a fresh guarantee is signed or the
held by Vaughan Williams, J., that although surviving sureties have given a written
the surety's liability was limited, still " his request (stamped 6d.) that the existing
suretyship was in respect of the whole debt, guarantee be continued .
and he, having paid only a part of that debt, If a deceased surety's estate is to be held
has in my judgment no right of proof in liable, notice of the guarantee should be
preference or priority to the bank to whom given to the legal representatives.
he became guarantor.” The lunacy of a guarantor operates in the
Under an ordinary banker's guarantee same way as the death of a guarantor. In
form , the banker can prove upon his cus- Bradford Old Bank v. Sutcliffe ( 1918,
tomer's estate for the full amount of the debt K.B.D. , 34 T.L.R. 299) , where it was argued
(allowing for any securities held from the for the plaintiffs that, as this was a con
debtor himself) and require payment in full, tinuing guarantee with a clause giving the
if necessary , from the guarantor of the guarantors, their executors and adminis
amount of his guarantee. trators, power to terminate it by three
Upon default of a debtor, a banker should months' notice , it did not determine, but
315
GUA ) DICTIONARY OF BANKING (GUA

continued to be operative after the lunacy or other proceedings by him . ..” (See
of the guarantor, it was held that “ this is SUBROGATION.)
wrong ; the notice clause has nothing to do When a surety pays off an account and
with lunacy. So far as lunacy is concerned, requires any securities to be given up to
the guarantee makes no provision for that him, the banker should ,before parting with
event ; it was neither contemplated nor them , communicate with the debtor or any
provided for in the document. The bank , other parties concerned with the account.
when it had received notice of the lunacy, A surety is not entitled to any of the debtor's
could no longer make advances upon the securities held for the account unless the
faith of the guarantee. Lunacy operated whole debt is paid off, and this is provided
upon this guarantee, just as death operates for in the usual banker's guarantee form .
upon a continuing guarantee, and it con- If, under a joint and several guarantee, a
tains no provision requiring a notice to banker obtains payment of the full amount
terminate it. The creditor then knows that of the guarantee from one of the sureties,
the guarantor has no longer a contracting that surety can call upon his co -sureties to
mind, and consequently cannot be fixed pay him their proportion of the amount.
with a contractual liability by an act done Unless specially provided against in the
by the creditor alone.” In the Court of guarantee, if a banker releases one of several
Appeal ( 1918, 2 K.B. 833) the above deci- joint co - sureties that release may have the
sion, that the guarantee ceased to operate effect of releasing all the sureties. Before
as a continuing guarantee from the date releasing one of several sureties a banker
when the plaintiffs were informed of the should , unless the guarantee provides for
lunacy , was upheld . such a release, obtain the written assent
When a surety has paid off the full (stamped 6d.) of the other sureties, or take
amount of the debt on the account for which a fresh guarantee.
he is guarantor, he is entitled to the rights When a surety gives notice to terminate
of the banker, that is to sue the debtor and a guarantee, the banker should , if possible,
to receive the benefit of any securities held obtain the notice in writing. If the surety
by the banker for the debt, whether the subsequently withdraws his notice, a fresh
securities were held at the time the guarantee guarantee should be signed .
was given , or were subsequently received. A guarantee under hand is barred by the
By the Mercantile Law Amendment Act, Statute of Limitations in six years from the
1856 , Section 5 : date when the right of action first accrued
“ Every person who, being surety for the against the guarantor. In Bradford Old
debt or duty of another, or being liable with Bank v. Sutcliffe ( 1918, 2 K.B. 833 ), where
another for any debt or duty , shall pay such in a guarantee there was an undertaking to
debt or perform such duty, shall be entitled pay on demand," it was held that there
to have assigned to him, or to a trustee for was no cause of action till after demand .
him , every judgment, specialty, or other Pickford, L.J., in the course of his judg
security which shall be held by the creditor ment, said that in the case of what has been
in respect of such debt or duty, whether such called a direct liability, for example , a
judgment, specialty, or other security shall promissory note payable on demand, the
or shall not be deemed at law to have been liability exists as soon as the loan is made,
satisfied by the payment of the debt or and the words on demand ” may be
performance of the duty , and such person neglected. It has, however, been held
shall be entitled to stand in the place of the long ago that this doctrine does not apply
creditor, and to use all the remedies, and, if to what has been called a collateral promise
need be, and upon a proper indemnity, to or collateral debt, and I think that a pro
use the name of the creditor, in any action, mise by a surety to pay the original debt is
or other proceeding, at law or in equity, in such a collateral promise or creates a
order to obtain from the principal debtor, collateral debt."
or any co -surety, co -contractor, or co-debtor, If there is a clause in the guarantee that
as the case may be, indemnification for the payment is to be made "
>
days after
advances made and loss sustained by the demand," the statute in such a case will not
person who shall have so paid such debt or begin to run until the demand has been
performed such duty, and such payment or made. It is advisable to get all guarantees
performance so made by such surety shall under hand renewed before they are six
not be pleadable in bar of any such action years old, as it brings to the notice of the
316
GUA) DICTIONARY OP BANKING (GUA

surety the fact that his liability still con- debtor supplies other security, the banker
tinues, and avoids any danger there may be should call in his advance and, if repayment
of the operation of the Statute of Limitations. is not made, claim upon thesurety'sestate.
A guarantee under seal is not barred till The debtor's account should be broken on
twenty years from the date when the cause of receipt of the notice.
action arose. But if the guarantee is in re- Where there are several sureties and one
spect of adebt secured by a mortgage of land, of them dies, or becomes bankrupt, or gives
the period is twelve years by the Real Pro- notice to terminate his liability, the account
perty Limitation Act of 1874, whether the of the debtor should be broken until fresh
covenantof the surety is in the mortgage deed arrangements are made.
itself, or is contained in a collateral bond. Any material variation of the original
Payments to the credit of an account by a agreement between the debtor and creditor,
debtor keep the debt alive as against the unless provided for in the guarantee or made
debtor, but they do not prevent the statute with the assent of the guarantor, will have
from running in favour of a surety. (See the effect of releasing the guarantor from
STATUTE OF LIMITATIONS.) liability . In Samuel v . Howarth ( 1817, 3 Mer.
In the important case of Parr's Banking 272) , Lord Eldon said : “ The surety is held
Company v. Yates ( 1898, 2 Q.B. 460) , where to be discharged for this reason , because the
the bank held a continuing guarantee from creditor, by so giving time to the principal,
Yates for an account, Vaughan Williams, has put it out of the power of the surety to
L.J. , said : “ My view is that the cause of consider whether he will have recourse to
action on the guarantee arose as to each item his remedy against the principal or not, and
of the account, whether principal, interest, because he, in fact, cannot have the same
commission, or other banking charge, as soon remedy against the principal as he would
as that item became due and was not paid, have had under the original contract.”
and, consequently, the Statute of Limitations Where a guarantee has been given for a
began to run in favour of the defendant in fixed period and at the end of that period it
respect of each item from that date. I is arranged that it be continued for a
agree with what my brothers have said with further period , either a new guarantee should
regard to the claim for interest. I think be taken or the old guarantee should be
that the interest stands on the same footing indorsed accordingly and bear another six
as any other item to the debit of the party penny stamp. Any such indorsement
guaranteed in the account ; and that the should , of course, be signed by the guarantor,
defendant continues liable as guarantor in or, if more than one, by all of them . If a
respect of interest which has accrued within new guarantee has not been obtained , or the
six years before action, and does not get rid old one extended , before the fixed period
of that liability because his liability to be expires, the account should be stopped when
sued on the guarantee with regard to the the date arrives until a fresh arrangement is
principal has become barred by the Statute made.
of Limitations. I also agree that there is A guarantee by a married woman can be
no ground for saying that there is any rule enforced only against her separate estate.
which could apply the payments which have (See MARRIED WOMAN .)
been made to the interest on the advances In the case of guarantee by a firm , it
made to the party guaranteed as dis- should, in order to avoid the risk of any
tinguished from the principal. According future trouble, be signed by each partner,
to the ordinary practice of bankers, the Where a partnership account is overdrawn
Interest due is from time to time added to and a guarantee is taken from the partners
the principal, and becomes itself part of the in their private capacities to secure the
principal due.” firm's account, the banker will then have
The balance for which a surety is re- a claim upon the private estates of the
sponsible is the general balance of the partners, as well as upon the partnership
customer's account, and all accounts between estate .
the customer and the banker at the time Where a change of partnership takes place
the guarantee comes to an end must be taken and a guarantee is held for the account,
into account. (In re Sherry, London and unless the form provides for such change,
County Banking Co. v. Terry, 1884, 25 Ch. D. the account should be broken until fresh
692.) arrangements are made. Even if the guar
Upon the failure of a guarantor, unless the antee contains such provision , it is necessary
317
GUA] DICTIONARY OF BANKING (GUA

to break the account if the banker owing and opened a new account. A's
intends to claim on the estate of the executors requested the company to dis
partner who has died, or retired or become charge the liability, which was refused . It
1

bankrupt. was held that the guarantors were entitled

By : -Section
1890 18 of the
“ A continuing Partnership
guaranty Act, pany
or caution to beofdischarged by payment
the sum owing. by the com
Where there is an
ary obligation given either to a firm or to a actual accrued debt and the surety is liable
third person in respect of the transactions and admits liability for the amount
of a firm is, in the absence of agreement to guaranteed , he has a right to compel
the contrary, revoked as to future trans- the principal debtor to relieve him
actions by any change in the constitution of from his liability by paying off the
the firm to which, or of the firm in respect of debt."
the transactions of which, the guaranty or The above case , where the amount payable
obligation was given .” under the guarantee had been definitely
Before accepting a guarantee by a com- ascertained , is to be distinguished from the
pany , a banker should see that the memo- following case where the amount had not
randum of association gives power to the been ascertained. In Morrison v. Barking
company to give a guarantee . Chemicals Co. , Ltd. ( 1919, Ch.D. 122, L.T.
Before taking a guarantee to secure an 423) , M gave a guarantee to a bank to secure
advance to a company it should be ascer- an account current of the defendant com
tained if the company has power to borrow , pany, and M sought to compel the company
and, if so, to what extent, otherwise a surety to give him relief from his liability to the
might probably not be bound in law if the bank under the guarantee. Sargant, J. , in
debt is not enforceable against the company. his judgment said that the guarantee was
But in the case of Yorkshire Wagon Co. v. to continue until terminated on the initiative
Maclure ( 19 Ch. D. 478) , where the directors either of the bank or of the surety. The
.

had borrowed ultra vires and given their bank could close the account, ascertain the
personal guarantee, and it was contended amount due and make demand on the
that as the transaction was ultra vires surety . The surety could , by the terms of
there was no liability on the guarantee , for the guarantee, cause his liability to be
where there was no principal there could be definitely ascertained by giving the bank
no surety, the Court held that the directors three months notice to determine the
(
were liable on their guarantee . guarantee. “ If and when this is done there
Under the Bankruptcy Act, 1914, a pay- will be an immediate enforceable liability on
ment made to a creditor with the view of the part of the surety to the bank, and he
giving a surety or guarantor a preference will then be within the decision of Ascherson
over other creditors shall be void as against v . Tredegar Dry Dock and Wharf Co., Ltd."
the trustee. (See FRAUDULENT PREFERENCE.) (See above.) There is no accrued or
When a guarantee has been discharged, definite liability on the part of the surety
or is no longer required , it should be retained until there has been some such termination
by the banker after being cancelled by, or or ascertainment as stated .” It was held
in the presence of, the surety. A cancelled that as neither of those steps had been
guarantee may be given up to the surety taken M had no immediate right to compel
if he demands it. the defendant company to relieve him from
If an account which has been closed be his liability .
subsequently re-opened, any guarantee held GUARANTEE FUND . (See STAFF
for the old account would not be available GUARANTEE FUND . )
for the new account . GUARANTEED STOCK . Stock upon
As soon as a surety's obligation to pay is which the due payment of the interest is
become absolute, he has a right in equity guaranteed either by the company issuing
to be exonerated by his principal. In the stock or by another company or by a
Ascherson v . Tredegar Dry Dock and Wharf government. Sometimes payment of the
Co. , Ltd. ( 1909, 2 Ch. 401 ) , A and four principal also is guaranteed.
other directors of a company gave a bank GUARANTOR . A surety . A person who
a joint and several guarantee to secure gives a guarantee to a banker (or other
the overdraft on the company's current creditor), agreeing to be answerable for the
account. A died, and the bank then closed debt of another person Eif he should fail to
the account on which a certain sum was y repa . ANTE
(See GUAR .)
318
GUA) DICTIONARY OF BANKING GUI

GUARD BOOK . A book for guarding or carrying on the business of banking,

protecting loose documents. The docu or

ments are usually gummed or pasted on one ( b) a person in the service or employment
margin and fastened to the paper edges in of any other person or of any part
the book . nership firm or joint stock company
GUARDIANS OF THE POOR . The Trea carrying on the business of banking,
surer of a Board of Guardians must keep an the Poor Law Authority may accept as the
account in the prescribed form of all moneys security for the good conduct of the person
received and paid by him on account of the so appointed their Treasurer
Guardians. (a) in the case of a member of a partner
Orders drawn upon the Treasurer require ship firm , or of a director of a joint
to be signed by the presiding chairman, two stock company as aforesaid, any
guardians, and countersigned by the clerk such suitable and sufficient guar
to the Guardians (Article 84, General Order antee as the partnership firm or
of the Poor Law Commissioners, 1847). By company can lawfully give, or
Article 194 of the same Order, " the vice- (6) in the case of a person in the service
chairman, or some guardian appointed by or employment of any other person ,
the Guardians may perform any of the duties or of any partnership firm or joint
assigned to the clerk, until the vacancy is stock company as aforesaid, any
filled or a substitute appointed in case of such suitable and sufficient guar
sickness or absence .” In practice, when antee as the other person, partner
the clerk is absent, the vice -chairman usually ship firm , or company can lawfully
countersigns. give.
The orders are exempt from stamp duty ARTICLE III .- ( 1 ) Every Order issued by
(4 & 5 Wm. IV, c. 76, Section 86) . Per the Poor Law Commissioners, the Poor Law
procuration indorsements are not accepted, | Board, or by Us, prescribing a form of Order
except as provided in Article IV, see below . to be drawn by the Poor Law Authority
One of the duties of a Treasurer is, when- upon their Treasurer for the payment of
ever there are not funds belonging to the money shall, where the Poor Law Authority
Guardians in his hands as Treasurer of the by a resolution so determine, have effect as
Union, to report in writing the fact of such if any request that an Order drawn upon the
deficiency to the Local Government Board . Treasurer may be presented tothe Treasurer
In 1919, the powers and duties of the Local at his house, were omitted from the said
Government Board were transferred to the Form .
Minister of Health . ARTICLE IV.-( 1 ) Where the Treasurer
The Treasurer's book is required to be of the Poor Law Authority is a banker, or
balanced half-yearly, at the end of March a person in the service or employment of a
and end of September. As the last day of banker, and the Poor Law Authority con
each half-year must be a Friday, the exact sent, any person in the service or employ
date varies . ment of the Treasurer in his capacity of
With regard to borrowing powers, refer- banker, and any other person in the service
ence should be made to the Statute under or employment of the banker in whose
which a power to borrow is obtained, so as service or employment the Treasurer is,
to ascertain the extent of the power, and may, on behalf of the Treasurer, in any
whether the sanction of the Local Govern- establishment wherein the banking business
paid
ment Board (now Minister of Health) , or is carried on , give a receipt for money
other authority, is required . If money is to the Treasurer, or indorse any cheque or
borrowed without power, or sanction, the order payable to the order of the Treasurer.
interest thereon will probably be disallowed . (See LOCAL AUTHORITIES.)
The following regulations are from a GUILDER. Same as gulden . ( See FOREIGN
General Order of the Local Government MONEYS - HOLLAND .)
Board : GUINEA . A gold coin at one time current
ARTICLE II .-In any case in which the in Great Britain at the value of twenty -one
Poor Law Authority appoint or have shillings. It was first coined in 1663 from
appointed as their Treasurer a person who gold brought from the coast of Guinea,
is whence its name. It is still the custom with
(a) a member of a partnership firm or a many people to quote fees and subscriptions
director of a joint stock company in guineas, rather than in pounds.
319
GUI ) DICTIONARY OF BANKING (HEL

GUINEA PIG. A slang Stock Exchange Half notes are legally described as goods
expression to signify a person who acts as a and chattels, though notes are described as
director of various companies merely for money .
the sake of the fees to be obtained . HALFPENNY. It is made of bronze - that
GULDEN . (See FOREIGN MONEYS- is, a mixture of copper, tin and zinc. Its
HOLLAND .) standard weight is 87.50000 grains troy .
The diameter of a halfpenny is exactly
HABENDUM . That part of a dced one inch. (See COINAGE .)
which begins with the words “ To have and HALF -SOVEREIGN . Its standard weight
to hold (in Law Latin Habendum et is 61 :63723 grains troy and its standard fine
tenendum ) and which defines what estate or ness eleven -twelfths fine gold, one -twelfth
interest is thereby granted . alloy. When its weight, from wear and tear,
“ HALF -COMMISSION MAN .” A per- falls below 61 • 125 grains troy it ceases to be
son who introduces business to a stock- legal tender. (See COINAGE.)
broker, and who receives a share of the HAMMERED . When a member of the
broker's commission . When the commission Stock Exchange is unable to meet his lia
is shared with an agent, the contract note bilities, his failure is announced in the
must bear a note to that effect and the name “ House " after attention has been obtained
of the agent must be given. (See CONTRACT by one of the waiters giving three blows
NOTE, PREVENTION OF CORRUPTION ACT, on his stand with a wooden hammer . A
STOCKBROKING TRANSACTIONS.) defaulter is thus said to be “ hammered.”
HALF - CROWN. Half -crowns were first HAND AND SEAL . The phrase " as wit
coined in 1551 . ness our hands and seals ” which is found at
The standard weight of a half -crown is the end of a deed of transfer and other doeds,
218: 18181 grains troy, and its standard refers to the signatures and seals which
fineness thirty - seven -fortieths fine silver, follow . But the word “ hand ” originally
three -fortieths alloy ; altered by the Coinage meant an actual impression in ink upon the
Act, 1920, to one-half fine silver, one-half deed of the person's hand .
alloy. ( See Coinage .) HARD CASH . The term is applied to
HALF -HOLIDAYS. Nearly all banks coins, in contradistinction to bank notes
have one half-day holiday in the week, but which are sometimes called “ soft money ."
there is no general rule as to which day in the HEDGING. (See FUTURES . )
week it should be . The day is dependent HEIR . The heir or heir -at - law is the
entirely upon local circumstances, but the person who is entitled, by law , to the real
one in most favour is, naturally, Saturday. property of a deceased person who left no will.
On aa half-holiday the doors are closed to the In ascertaining whois heir, the eldest son
public at 12 or 1 o'clock . (See Bank Holi- and his descendants come first, then the other
DAYS .) sons in order and their descendants. If
HALF NOTES. A bank note which is to there are no sons, but only daughters, they
be remitted by post is sometimes cut in succeed to the property as co - parceners
halves, and one half sent by post. When an that is, they succeed to it equally. Failing
acknowledgment is received , the other half lineal descendants, the nearest lineal ancestor
is sent. The receiver of halves should fix is the heir. (See INTESTACY .)
the respective halves together with strips of HEIR -APPARENT. The person who is
gummed paper, and see that the numbers certain to succeed to an estate if he survives
correspond, otherwise much trouble will be present owner.
caused if a note gets into circulation (as
sometimes occurs) with a different number
the EIROPRESU
as would MPTIVE. The person who
succeed to an estate if the present
on each half. owner died at once, but whose right to suc
A person remitting notes in halves does ceed would be cancelled in the event of a
not part with the property in the notes until child being born having a prior right.
he has sent the second halves, and until then HELD OVER . When a cheque upon a
he may reclaim the first halves which he sent. local bank is received by a banker, after the
If one half of a note is lost, the issuing daily exchange has been made, it is usually
banker will usually pay the amount upon “ held over till the following day. But
production of the other half, provided that cheques received by a banker, drawn upon
a satisfactory indemnity is given for his so his own office, are not (except in certain
paying. cases in connection with a local clearing in
320
HEL ) DICTIONARY OF BANKING (HOL

large towns) “ held over ," as they should on a bill is primâ facie deemed
either be paid or dishonoured on the day of to have become a party thereto for
receipt. value .”
HELLER . ( See FOREIGN MONEYS --- A holder for value is not liable upon a bill
AUSTRIA AND HUNGARY.) unless he has indorsed it, but he may sue on
HEREDITAMENT. From the Latin the bill in his own name.
heredito, I inherit. The holder for value of a bill may be the
Heritable property is property , such as payee who is in possession of it, or an in
land , which descends to the heir. dorsee who is in possession of it, or the bearer
Corporeal hereditaments consist of land, of it.
and incorporeal hereditaments of rights A banker who merely collects a cheque is
issuing out of a thing corporate as rents of not a holder for value, but if he cashes a
land or houses. cheque drawn upon another banker he is a
HERIOT. In connection with copyhold holder for value. The banker is also a
land there is, in some cases, on the death of holder for value if he places the cheque at
the tenant a fine, or heriot, due to the lord of once to his customer's credit and allows
the Manor. The heriot may take the form the customer to draw against it ( National
of the best beast or best jewel or plate which Bank v . Silke, 1891, 1 Q.B. 435) , or if the
,

belonged to the deceased , or it may be a cheque is paid in for the express purpose
money payment. of reducing the customer's overdraft . A
HERITABLE BOND . In Scotland, a banker who discounts a bill is a holder for
bond by a debtor for a sum of money, which value.
includes a conveyance of land, to be held by Until value is given no party can sue upon
the creditor as security for the money. a bill. If, for example, no value is given on
( See BOND AND DISPOSITION IN SECURITY .) a bill till it reaches the hands of a third
For the stamp duty see MORTGAGE, etc., indorser, none of the parties before that third
and Section 86 . indorser can sue upon the bill, but the third
HOARDING . The hoarding of money indorser, because he has given value, can sue
takes place principally in times of com- all the prior parties. If that third indorser
mercial panic. Individuals endeavour to transfers to a fourth person , without any
retain in their own possession as much value being given, that person cannot sue the
money as they can obtain , moved by the third indorser, seeing he did not give value
fear that they may not afterwards be able to the third indorser for the bill, but he can
to get money when they require it. sue all the parties to the bill that the third
“HOLD UP " POLICY. The name given indorser had the right to sue.
to a policy which insures a bank official The holder of a bill payable to his order
against death caused by assault sustained must indorse it. When the holder of a bill
in the course of his duties. payable to bearer (see BEARER) negotiates it
HOLDER . (See HOLDER OF BILL OF by delivery, without indorsing it, he is called
EXCHANGE .) a transferor by delivery " and warrants to
HOLDER FOR VALUE. A holder for his immediate transferee that the bill is
value of a bill of exchange is defined by what it purports to be.
Section 27 of the Bills of Exchange Act, If the title of a holder for value is defective,
1882 : as where the bill was obtained by fraud ,
“ (2) Where value has at any time been duress, or force and fear, or for an illegal
given for a bill the holder is deemed
consideration, he cannot recover the amount
to be a holder for value as regards from the person defrauded or otherwise.1)
the acceptor and all parties to the But a “ holder in due course can sue any
bill who became parties prior to party to the bill. No title, however, can be
such time. obtained through a forged signature. (See
“ (3) Where the holder of aa bill has a lien BilL OP EXCHANGE, CHEQUE , CONSIDERA
on it, arising either from contract TION FOR BILL OF EXCHANGE, HOLDER IN
or by implication of law , he is Due COURSE .)
deemed to be a holder for value to HOLDER IN DUE COURSE. The Bills of
the extent of the sum for which he Exchange Act, 1882, Section 29, defines a
has a lien . " holder in due course as follows :
By Section 30 : “ (1) A holder in due course is a holder
“ (1) Every party whose signature appears who has taken a bill, complete and
321
214 (1985 )
HOL ] DICTIONARY OF BANKING (HOL

regular on the face of it, under the
following conditions, namely :
" (a) That he became the holder of
it before it was overdue, and
without notice that it had
been previously dishonoured ,
if such was the fact :
“ ( ) That he took the bill in good
faith and for value, and that
admitted or proved that the accep
tance, issue, or subsequent negotia
tion of the bill is affected with
fraud, duress, or force and fear, or
illegality, the burden of proof is
shifted , unless and until the holder
proves that, subsequent to the
alleged fraud or illegality, value has
in good faith been given for the bill."
)

at the time the bill was The meaning of " good faith " is given in
negotiated to him he had no Section 90 :
notice of any defect in the“ A thing is deemed to be done in good
title of the person who faith, within the meaning of this Act, where
negotiated it. it is in fact done honestly, whether it is done
“ ( 2) In particular the title of a person negligently or not."
who negotiates a bill is defective If, for example, Jones is a holder in due
within the meaning of this Act course, he has the right to sue any party to
when he obtained the bill, or the bill, but if in an action it is proved that
the acceptance thereof, by fraud, thebill is affected with some taint,as de
duress, or force and fear, or other scribed in the above sections, it will beneces
unlawful means,or for'an illegal sary for Jones, in order to preserve his rights,
negotiates
whenorheunder to show that he gave value for the bill sub
it in breach oforfaith,
consideration, such sequent to the alleged taint, and that he
circumstances as amountto a fraud. took it in good faith without knowledge of
anything being wrong with the bill.
“ (3) A holder (whether for value or not)
who derives his title to bill theIf Jones,
bill to the holderbut
Brown, in due courseany
without , transfers
value
through a holder in due course, being given therefor, Brown obtains the same
and who is not himself a party to rights that Jones had and can sue any party
any fraud or illegality affecting it, prior to Jones, but he cannot sue Jones
has all the rights of that holder because of the absence of consideration .
in due course as regards the accep- “ No consideration ” is a good defence
tor and all parties to the bill prior between parties closely related on a bill, but
to that holder.” a holder in due course is not affected by the
A
it's
bill does not require acceptance to make fact of their having been “ no consideration "
complete and regular on the face of it.” between any parties before it was transferred
( National Park Bank of New York v. to him for value.
Berggren & Co. , 1914, 110 L.T. 907.) Section 38 deals with the rights of a
A payee is said not to come within the holder :
“ The rights and powers of the holder of a
definition of aa holder in due course (see s.s. 1 ,
above ), as the bill is not complete until bill are as follows :
it is indorsed by the payee. There has been " ( 1 ) He may sue on the bill in his own
no definite decision on this point, but Sir name :
John Paget, in his Gilbart Lectures (No. 2,
6
1918) , says : “ I cannot help thinking that · (2) Where he is a holder in due course ,
if it ever came up directly for decision , a he holds the bill free from any
Court would find some way of holding the defect of title of prior parties, as
payee entitled to the position of holder in well as from mere personal de
due course .” fences available to prior parties
By Section 30 : among themselves, and may enforce
0
payment against all parties liable
“ ( 1) Every party whose signature ap on the bill :
pears on a bill is primâ facie deemed (3) Where his title is defective (a) if he
to have become a party thereto for negotiates the bill to a holder in due
value.
course, that holder obtains a good
“ (2) Every holder of a bill is primâ facie and complete title to the bill,and
deemed to be a holder in due course ; (6) if he obtains payment of the
but if in an action on a bill it is bill the person who pays him in due
322
 HOL ] DICTIONARY OF BANKING (HOL

course gets a valid discharge for the an indorser, the bill must be given up to that
bill." indorser, who will then have all the rights of
Where a signature on a bill isforged, no the holder from whom he received it. (See
one can obtain any right to the bill through PAYMENT FOR HONOUR.)
or under that signature. (See BILL OF A banker is under no liability on a cheque
EXCHANGE, FORGERY, HOLDER FOR VALUE .) or bill to a holder, unless he has in some way
HOLDER OF BILL OF EXCHANGE . given the holder to understand that the
The holder of a bill is the person who is in cheque or bill will be paid. (See BILL OF
possession of it and may be either the payee, EXCHANGE, HOLDER FOR VALUE, HOLDER
or an indorser, or the bearer. IN DUE COURSE .)
There are three kinds of holders, a simple HOLDING OUT. In the Partnership
holder of a bill, a holder for value, and a Act, 1890, Section 14, it is enacted that
holder in due course . everyone who by words spoken or written,
If the holder of a bill has not given value or by conduct represents himself, or who
for it, he cannot sue any party subsequent to knowingly suffers himself to be represented ,
the last indorsement when value was given . as a partner in a particular firm , is liable as
The holder of a bill, unless it is indorsed a partner to anyone who has on the faith
payable to him , need not indorse it, though, of any such representation given credit to
as a rule, any person taking a bill would the firm . (See PARTNERSHIPS.)
require the person from whom he takes it to In connection with a company, where a
indorse it. The person receiving a bill has person is aware that, by registration as a
the right to demand the indorsement of the shareholder, he is being held out to the
transferor if the bill was payable to his order.public as the holder of the shares, he cannot
If a bill is payable to the holder's order, he after the lapse of a reasonable time disclaim
must indorse it, whether the transferee the ownership .
demands his indorsement or not. HOLIDAYS. In addition to a weekly half
Where the holder of a bill payable to holiday and the legal bank holidays (see
bearer (see BEARER) negotiates it by de- BANK HOLIDAYS) there are occasional
livery, without indorsing it, he is called a local holidays in some districts, and the
“ transferor by delivery and warrants to bankers generally agree to close upon such
his immediate transferee that the bill is what occasions, either altogether or for the greater
it purports to be. part of the day. Where a special holiday
A transferor by delivery is not liable on of this nature is arranged, a notice to that
the bill — that is, he is not liable thereon if he effect is exhibited in the bank offices for
has not indorsed it, though if he is a holder some time prior to the date. On the day of
for value he may sue all, or any, of the the holiday it is necessary that anything
parties to the bill. That, however, does not urgent in the remittances or correspondence,
affect the transferee's right to sue the trans- and all bills maturing, be duly attended to.
feror for the debt. Judgment obtained But the principal holiday is the annual
against one party will not release the others. one, and the length of it varies according to
If the title of a holder for value is defective, the arrangements existing in different banks.
he is not in as good a position as a holder in Some banks allow twoweeks' holiday inthe
due course . year to managers and clerks alike, but in
Neither aa holder for value nor a holder in many banks the managers are granted a
due course can obtain a title to a bill through longer period than the clerks. In other
a forged signature. banks the number of weeks which is allowed
Any holder may convert а blank is dependent upon the length of service, as
indorsement into a special indorsement by for example after fifteen or twenty years'
writing above the indorser's signature a direc- service three weeks are allowed . Some
tion to pay the bill to the order of himself banks allow their managers a holiday of a
or some other person. clear month .
A holder may strike out any indorsement HOLIDAYS EXTENSION ACT, 1875. (See
on a bill, and the person whose signature BANK HOLIDAYS .)
is struck out is thereby released from HOLOGRAPH . A document which is
liability, and so are all subsequent indorsers. entirely, or almost entirely, written by the
A banker usually cancels his indorsement on person who signs it. A holograph cheque
a dishonoured bill. is less likely to be a forgery than if it is
If a holder receives payment of a bill from merely signed by the drawer.
323
HON ) DICTIONARY OF BANKING ( IMP

In Scotland, when a surety signs a printed
form of guarantee, he sometimeswrites above
his signature " adopted as holograph .” (See
ATTESTATION .)
HONOURED BILL OF EXCHANGE .
bill which has been paid or honoured. A
bill is dishonoured either by non -acceptance
or non -payment. (See DISHONOUR OF BILL
OF EXCHANGE .)
HOTCHPOT. In law , the gathering
together of property for the purpose of mak-
ing an equal division.
HOUSE. The word is used with reference
to the Bankers' Clearing House, the Stock
Exchange, or a large London Bank Office,
as the case may be.
HOUSE BILL. A bill drawn by a com-
pany or firm upon itself, as between different those in close relationship, as the drawer
branches .
HOUSE DUTY. ( See INHABITED HOUSE an indorser and the immediately preced
DUTY .)
HOUSING BONDS. The name given to
Local Bonds issued under powers contained
in the Housing (Additional Powers) Act,
1919. (See LOCAL Bonds. )
HUSBAND ( SHIP) . (See Ship's HUSBAND .)
HUSBAND AND WIFE ACCOUNT. When
an account is opened in the name of a hus-
band and wife it is generally with the inten-
tion that either may sign upon the account
and that the balance may pass to the sur-
vivor. As the account is the same as an
ordinary joint account, the bank's usual
form should be signed by both parties
authorising the banker to honour the
signature of either.
Where the husband dies first there is the
possibility that the money may be held (as
in the case of Marshal v . Crutwell, 1875,
20 Eq . 328, see under DEATH OF JOINT
CUSTOMER ) to pass to the deceased's
executors, unless it can be proved that it
was the intention of the deceased that the
hypothecated ; but the precise meaning of
the word is the charging of property to a
creditor while the property itself remains in
the possession of the debtor. (See Docu
A MENTARY BILL, TRUST RECEIPT .)
ILLEGAL CONSIDERATION . (See CON
SIDERATION . )
IMMEDIATE ANNUITY . An immediate
annuity is payable commencing with a pay
ment six months after the purchase is
completed and terminating at death .
For example, at the age of thirty - five
£100 may purchase an immediate annuity of
£ 4 18s. 6d. (SeeANNUITY .)
IMMEDIATE PARTIES. The “ imme
diate parties ” to a bill of exchange are
and acceptor, the drawer and payee , and
ing indorser. ( See PARTIES TO BILL OP
EXCHANGE .)
IMPEACHMENT OF WASTE . A law
term . A tenant for life of real estate is
liable, or impeachable for waste, if he
injures the estate as, for example, by
cutting down timber, ploughing meadow
land, opening mines, unless in the deed of
settlement it is declared that he may do
such things without impeachment of waste.
Under the Settled Land Act, 1882, there
are certain improvements which a tenant
for life may execute upon the settled land
without impeachment of waste by any
remainderman (9.0.) or reversioner (q.v.).
IMPERIAL . (See FOREIGN MONEYS
RUSSIA .)
IMPERSONAL ACCOUNTS . Accounts
which are not connected with persons, e.g.
expenses, interest, discount, Head Office
account, bills, shares, rent, premises.
Some banks keep all such accounts in a
separate book , called an " impersonal
))

balance should belong to his widow . To ledger.”

avoid any trouble, a definite arrangement As to accounts which are opened by
should be made when the account is opened . customers with headings such as “ Church
As to a wife signing a guarantee for her Fund ," " Cricket Club ," etc. , see the remarks
husband's account, see GUARANTEE. under SOCIETIES .
As to an assignment of a life policy IMPERSONAL LEDGER . A number of
effected by a husband for the benefit of his accounts such as interest, commission, dis
wife, see LIFE Policy. When a wife signscount, cheque books, etc., are sometimes
a guarantee, or gives security, for her included in one book called the impersonal
husband's account, her signature should be ledger, and the combined daily totals of
witnessed by her own solicitor. See the those various accounts posted into an account 6
remarks as to undue influence, under in the general ledger, called “ impersonal
GUARANTEE . ledger account.” This is generally done
HYPOTHECATION . Property which is to reduce the number of accounts in the
mortgaged or pledged is sometimes said to be general ledger.
324
IMP) DICTIONARY OF BANKING [ INC

IMPLEMENT. In Scotland, to imple- | bill form , signed by a person and handed to

ment a contract is to carry it into effect. another person to fill up and make into a
IMPORT SPECIE POINT. (See SPECIE complete bill.
POINTS .) By Section 20 of the Bills of Exchange Act,
IMPRESSED STAMPS. Impressed stamps | 1882 :
are required on : " (1) Where a simple signature on a blank
Assignments of Life Policies.
Conveyances. stamped paper is delivered by the
Inland Bills of Exchange (except when on signer in order that it may be
converted into a bill, it operates as
demand, at sight, on presentation, or a primâ facie authority to fill it
not exceeding three days after date or up as a complete bill for any
sight, when either an adhesive or amount the stamp will cover, using
impressed stamp may be used) . the signature for that of the drawer,
Inland Promissory Notes.
Letters of Allotment. or the acceptor, or an indorser ;
Memoranda of Deposit. and, in like manner , when a bill is
Mortgages. wanting in any material particular,
Scrip certificates. the person in possession of it has
a primâ facie authority to fill up the
Transfers.
Stamps may be impressed on all instru omission in any way he thinks fit.
ments except where an adhesive appro- “ (2) In order that any such instrument
priated stamp is necessary. ( See APPRO when completed may be enforceable
PRIATED STAMPS .) In certain cases (e.g. a against any person who became a
guarantee under hand) either an impressed party thereto prior to its com
or adhesive stamp may be used . (See pletion, it must be filled up within
ADHESIVE STAMPS .) a reasonable time, and strictly in
IMPREST . Money paid by way of an accordance with the authority given.
advance to a person who is charged with Reasonable time for this purpose is
some business by the State , to enable him to a question of fact.
proceed with it . (See Exemptions (4) and (5) Provided that if any such instru
of receipts from stamp duty, under RECEIPT. ) ment after completion is negotiated
IMPROVED GROUND RENTS. (See to a holder in due course it shall
GROUND RENTS .) be valid and effectual for all
IN CASE OF NEED . A referee " in case purposes in his hands, and he may
of need " is the person whose name a drawer enforce it as if it had been filled
or any indorser may insert in a bill, to whom up within a reasonable time and
a holder may resort in case the bill is dis strictly in accordance with the
honoured , by non -acceptance or by non authority given ."
payment. The words are usually placed It is important to note that an incomplete
in the left-hand bottom corner of the bill, as bill must be filled up strictly in accordance
" In case of need with the English Bank, with the authority given. If aa person signs
Ltd., London .” A holder may please him- a stamped form as an acceptor and hands
self whether, or not, he resorts to the referce . it to another person to fill up in a certain
Where a dishonoured bill contains a refer- specified manner and sign it as drawer, and
ence in case of need , it must be protested the drawer exceeds his authority, the
for non -payment before it is presented for acceptor will not be liable thereon to the
payment to the referee in case of need drawer, but if the bill is negotiated to a
(Section 67, Bills of Exchange Act, 1882). holder in due course , he will be liable to such
(See ACCEPTANCE FOR HONOUR , REFEREE IN a holder. By accepting a bill in blank an
CASE OP NEED .) acceptor may thus find himself in the
IN CLEARING . When a bank makes an awkward position of having to pay a very
exchange of cheques with another bank, the much larger sum than he intended to pay
cheques which are received constitute the when he placed his name on the paper.
“ In " clearing, and the cheques which are The Court of Appeal said in France v.
given out form the “ Out " clearing. (See Clark (1884, 26 Ch . D. 257) : “ The person
CLEARING House .) who has signed a negotiable instrument in
INCHOATE INSTRUMENT. An incom- | blank or with blank spaces is, on account of
plete document, as, for example, a stamped the negotiable character of that instrument,
325
INC] DICTIONARY OF BANKING (INC

estopped by the law merchant from dis- | allowed irrespective of the amount of the
puting any alteration made in the document total income but is not to exceed £ 200 for
after it has left his hands by filling up blanks any one individual.
(or otherwise in a way not ex facie fraudu- Exemption from tax may be claimed
lent) as against a bona fide holder for value where the total assessable income does not
without notice, but it has been repeatedly exceed £ 135, or, in the case of an individual
explained that this estoppel is in favour only whose wife is living with him , £225. Where
of such a bona fide holder, and a man who, the income is wholly earned, these limits
after taking it in blank, has himself filled up are equivalent to £ 150 and £250 respectively.
the blanks in his own favour without the In order to arrive at the taxable
consent or knowledge of the person to be income ” (i.e. that part of the income upon
bound, has never been treated in English which tax is actually charged), the following
.

Courts as entitled to the benefit of that
doctrine .” (See BILL OF EXCHANGE .)
If a customer draws a cheque with blank
spaces, so that it is put into the power of
a dishonest person to increase the amount
by forgery , the customer must bear the loss
as between himself and the banker. See
London Joint Stock Bank , Ltd. v. Macmillan
and Arthur, under ALTERATIONS.
INCOME DEBENTURE . A debenture
which provides that the principal or interest,
or both , shall be payable only out of the
profits of the company. (See DEBENTURE.)
INCOME TAX . A tax upon incomes. It
is payable upon incomes from sources within
the United Kingdom, and upon incomes
from sources outside the United Kingdom
but received within the United Kingdom .
The enactments relating to Income Tax
were consolidated by the Income Tax Act ,
1918 (8 & 9 Geo. V , c. 40) .
As a rule any profit arising from the sale
of a property or investment is not subject
to income tax ; but any person or any
company making a trade of purchasing and
selling investments will be liable to income
taxupon any profit which is made by that
trade .'( Assets Realisation Co. v. Forbes,
1897, 34 Sc.R. )
A return of income must be made yearly
upon the forms provided for the purpose.
The expression “ income tax year means
the year beginning 6th April, and ending on
the following 5th April.
Income tax is charged for any year at the
rate prescribed by Parliament for that year.
The Finance Act, 1920, brought into
operation a radical alteration of the method
of granting relief in income tax in favour of income are :
earned income as compared with investment
income, and of the method of graduating the
tax according to the size of a taxpayer's
income and his family responsibilities.
Assessable income is a taxpayer's total
income one-tenth
deductingThis
afterincome of the able at 3s. only, in respect of any dividends,
“ earned " . deduction is etc. , received subject to deduction of tax
326
deductions may be claimed from the total
“ assessable income ” :
A personal allowance of £ 135, or where
an individual's wife is living with him
£225 .
Where a taxpayer's total income includes
any earned income of his wife, the
personal allowance of £225 is increased
by a sum equal to nine-tenths of such
earned income, subject to a maximum
additional allowance of £45.
A deduction of £45 for a widower's (or
widow's ) housekeeper taking charge of
children .
A similar deduction by an unmarried
person who has living with him and
maintains at his own expense his
widowed mother or other female relative,
for the purpose of having charge of any
brother or sister of his in respect of
whom the deduction for children or
adopted children is given (see next
paragraph).
A deduction in respect of each child, step
child, or adopted child under the age
of 16 years , or who, if over that age, is
receiving full-time instruction at an
educational establishment, viz ., £36 in
respect of one child , and £27 in respect
of each additional child for whom the
relief is due. No deduction is allowed
if such child is entitled in his or her
own right to an income (excluding any
educational endowment) which exceeds
£40 a year.
A deduction of £25 in certain cases in
respect of dependent relatives .
The rates chargeable on the taxable
The first £225 at half the standard rate,
i.e. at 3s , in the £ .
The remainder at the standard rate of
tax, i.e. at 6s. in the £.
Where tax is not chargeable, or is charge
INC] DICTIONARY OF BANKING ( INC

at 6s . , the relief will be allowed as a set -off Where the total income exceeds £ 2,000 ,
against the tax chargeable on other income. income tax at the above rates is supple
Relief is allowed in respect of life assurance mented by super-tax, the rates of which
premiums, and is extended to apply also to become successively higher as the income
the following : increases.
(a) Premiums which are not annual Where individuals are not resident in the
premiums. United Kingdom, the above allowances and
(6) Premiums paid by a wife out of her deductions are not given , and the whole of
separate income in respect of an their income liable to United Kingdom
insurance on her own life or on the income tax is chargeable at 6s. in the £,
life of her husband. subject to the qualification that these allow
( c) Any sum which the taxpayer is liable ances and deductions are due, with certain
to pay or to have deducted from his modifications, where he :
salary for the purpose of securing a (a) is a British subject, or
deferred annuity to his widow or (6) is a person who is or has been employed
provision for his children after his in the service of the wn , or who
death . is employed in the service of any
The allowance will be deducted from the missionary society or of any native
amount of tax arrived at as above, and will state under the protection of His
be calculated at the following rates : Majesty, or
(c) is resident in the Isle of Man or
POLICIES OR CONTRACTS Channel Islands, or
EFFECTED .
(d) has previously resided in the United
On or before After June Kingdom , and is resident abroad for
June 22, 1916. 22, 1916. the sake of his health, or the health
Where the total income
does not exceed £ 1,000 3s . in the £ 3s. in the £
of a member of his family resident
exceeds £ 1,000 , but does not th him , or
exceed £ 2,000
exceeds £ 2,000 . :
4s. 60 .
6s.
3s.
3s.
(e) is a widow whose late husband was in
the service of the Crown .
The following is an example showing how With respect to Dominion income tax,
the tax is arrived at in the case of a person relief is granted, under certain conditions,
with a salary of £750 and £ 100 from War | in the case of a taxpayer who has paid , or is
Loan interest (from which tax is not deducted liable to pay, United Kingdom income tax
before receipt) , married , with two children on any part of his income, and who proves
under 16 years of age, and who maintains that he has paid Dominion income tax for
his widowed mother, and pays an assurance the same year in respect of the same part of
premium of £ 20. his income .
£ s. d. There are five schedules for the annual
Total income sſo
850 0
return of income, viz. :
Deduct Earned income allowance, i.e. 75 0 0 Schedule A. - For income from property
one- tenth of earned income, £75
in lands and buildings and sporting
Assessable income . 775 0 0
Deduci rights.
Personal allowance £225 ( The tax under this Schedule is
For one child 36 commonly called “ Property Tax ." )
‫ور‬ second child 27 Schedule B.-For income from the
widowed mother 25
97

313 0 0
occupation of land.
Schedule C.-For income from any public
Taxable income £462 0 0 revenue .

Tar thereon
Schedule D .-- For income from trade,
£ 225 @ 3s. in the £ 33 15 0 profession, employment, vocation, dis
£237 à 6s . in the £ 71 2 0 counts, interest of money not taxed by
deduction, colonial and foreign securi
£462 104 17 0
ties (where the duty is not deducted
Deduct by the agent entrusted with the pay
Allowance of tax on Assurance pre ment thereof), colonial & and foreign
mium , £20 at 3s . in the £ 3 0 0 possessions, letting furnished houses,
Net tax payable £ 101 17 0 and all other income not falling within
the other schedules.
327
INC] DICTIONARY OF BANKING (INC

Schedule E. - Salaries paid to Government, For any other disbursements or ex

corporation, and company officials. penses wholly and exclusively laid
( This schedule includes officials of out for the purposes of the trade, etc.
banking companies.) No DEDUCTIONS ARE ALLOWED
The rules and regulations for calculating For any interest on capital, for any
the profits of a business are given by the annual interest, annuity, or other
Income Tax Authorities as follow : annual payment, payable out of the
AVERAGE . — The amount of profits is to profits or gains, or for any royalty,
be computed on an average of the three or other sum paid in respect of the
preceding years, ending either on the 5th user of a patent. (The duty on such
day of April, or on the date prior thereto interest, patent royalty, or other
to which the annual accounts have been annual payment should be deducted
usually made up ; from the person to whom the payment
Or, if the trade, etc. , has been set up or is made .)
commenced within three years, on an For any sums paid as salaries to partners
average from the period of com or for drawings by partners.
mencing the same ; For any sums invested or employed as
Or, if commenced within the year of capital in the trade or business, or on ac
assessment, the profits are to be count of capital withdrawn therefrom .
estimated according to the best of For any sums expended in improvement
your knowledge and belief, and the of premises or written off for deprecia
grounds on which the amount shall tion of land , buildings, or leases.
have been estimated should be For any loss not connected with, or
stated for the information of the arising out of the trade, etc.
Commissioners . For any expenses of maintenance of the
In computing the profits upon which the persons assessable, their families, or
average is to be taken private establishments .
DEDUCTIONS ARE ALLOWED For any loss recoverable under an
For repairs of premises occupied for the insurance or contract of indemnity.
purpose of the trade, etc., and for the For any sum paid as United Kingdom
supply or repair of implements, income tax on profits or gains, or on
utensils, or articles employed, not the annual value of trade premises.
exceeding the sum usually expended (Colonial or foreign income tax paid
for such purposes according to the in respect of the profits in the place
average of the three years preceding. where they arise, may, however, be
For debts proved to be bad ; also for deducted.)
doubtful debts according to their For wear and tear of machinery or
estimated value . plant ; but an allowance may be
For the rent of premises used solely for claimed in respect of this item .
the purposes of business, and not as Every employer, when required to do so
a place of residence . by notice from an assessor, sball, within the
For a proportion, not exceeding two- time limited by the notice, prepare and
thirds, of the rent of any dwelling- deliver to the assessor a return of the names
house partly used for the purposes of and places of residence of all persons
business. employed by him , and of the payments
For the annual value of any premises made to those persons in respect of that
occupied by the owner solely for the employment. This provision does not apply
purposes of business, and not as a to employees whose yearly remuneration
place of residence, according to the does not exceed the sum fixed as the limit
amount on which duty has been paid for total exemption from income tax.
under Schedule A. Where the employer is a company, the
For a proportion, not exceeding two- secretary, or other officer performing the
thirds, of the annual value (according duties of secretary, shall be deemed to be
to the amount on which duty has the employer for the purposes of this Sec
been paid under Schedule A ), of tion, and any director, or person engaged
any dwelling -house occupied by in the management of the company, shall
the owner and partly used for the be deemed to be a person employed (Income
purposes of business. Tax Act, 1918, Section 105 ).
328
INC ] DICTIONARY OF BANKING (INC

Interest of money not taxed by deduction (iv) Dividends on 41 per cent. War Loan
(as mentioned in Schedule D) includes all Stock registered at the Post Office,
discounts and untaxed interest received or where the bolding does not exceed
credited - including interest on banking 200.
accounts or deposits, discount . o ofit on The accumulated interest on Post Office
maturity , sale or conversion of Treasury Bills, War Savings Certificates is exempted from
and any dividends or interest on Government income tax by special statutory provision ,
and corporation securities from which tax is and should not be included in any statement
not deducted at the time of payment. (See of income for income tax purposes .
case under TREASURY BILLS.) Bonus shares allotted to shareholders have
Among such dividends or interest on been held to be capital and not income. (See
Government and corporation securities from case under Bonus SHARES .)
which tax is not deducted are the following : In the annual return of the profits of a
(i) Dividends or interest on any of the banking company , in order to arrive at the
following securities , where registered amount on which income tax is to be paid ,
or inscribed at the Bank of England working expenses, rent, rates, taxes, salaries,
or the Bank of Ireland, or left in the bad debts, etc., are deducted from the gross
custody of the Post Office (i.e. in all profits, and also all amounts on which tax
cases except where the securities are has already been paid by the banker, e.g.
held in the form of bearer bonds rents received, dividends on investments,
or registered coupon bonds) : interest on fixed mortgages from which
5 per cent. War Loan Stock ; income tax was deducted before charging
5 per cent. National War Bonds ; the interest to the customer's account. A
5 per cent. Exchequer Bonds ; list of the fixed mortgages must be given to
6 per cent. Exchequer Bonds. the Surveyor of Taxes in order to enable him
Dividends or interest, of any amount, on to trace whether the persons have paid to
Funding Loan Stock of the Post Office issue, the Revenue the Sums deducted . The
and on registered Victory Bonds of the Post amount charged to profit and loss account
Office issue. in payment of income tax is not to be taken
(Where money has been borrowed from as a deduction from the profits, as profits
a bank and applied in the purchase are not arrived at after deducting tax , the
of these securities, the interest paid tax being merely that part of the profits
to the bank on the amount so bor- that the Revenue is entitled to take out of
rowed may be set off against the the profits. An amount used to write down
dividends or interest derived from the value of the bank's premises, or an
the holding, so that income tax amount transferred to a reserve account,
becomes payable on the net income or an expenditure in extending a building,
only. Where such set-off is claimed, are not allowed to be deducted.
the taxpayer must show specifically Subscriptions which have no connection
on page 2 of the Form the with the business cannot be deducted .
gross amount of the dividends or Fire insurance premiums, employers'
interest, and the amount of the bank liability insurance premiums and contribu
interest to be deducted therefrom . tions by employers under the National
A similar set- off may be claimed for any Insurance Act, are allowable as deductions
interest (other than yearly interest, from a bank's profits, but life insurance
from which the taxpayer is entitled premiums, if any, cannot be deducted .
to deduct income tax on payment) In arriving at a banker's profits assessable
on advances from a member of a under Schedule D, deduction of the net
stock exchange or from a discount Schedule A assessment on premises owned
house .] and occupied by the banker for business
(ii) Dividends not exceeding £5 per purposes (including any portion used as a
annum from any Governmentor manager's residence) is allowed, less any
corporation securities inscribed at ground rent payable thereon .
the Bank of England or the Bank of Where a bank official is required to reside
Ireland . on bank premises for the performance of
( iii) All dividends from stocks purchased his duties, the annual value of his
and held through the Post Office residence is not treated as an emolument,
Savings Bank. and is not to be included in a statement
329
INC) DICTIONARY OF BANKING ( INC

of income for the purpose of claiming Nothing in these rules shall impose on any
abatement. banker the obligation to disclose any par
It has been held that where a bank pur- ticulars relating to the affairs of any person
chased the business and premises of another on whose behalf he may be acting. ( First
bank , the profits of both banks shall be Schedule , In ome Tax Act, 1918.)
brought into the computation of the three Tax must be deducted from the interest
years' average. ( Bell v. National Provincial payable by Colonial banks in London upon
Bank of England, 1904 , 1 K.B. 149.) fixed deposits for a year or more . ( Board of
With regard to premiums paid by a banker Inland Revenue . )
upon a policy left in his hands by a defaulting With regard to any yearly interest of
borrower, if the final result (profit or loss) money, annuity, or any other annual pay
is to be credited or debited to the banker's ment " (whether payable either as a charge
profit and loss account, the premiums may on any property of the person paying the
be regarded as a current expense necessary same by virtue of any deed , or otherwise ),
to guard him against loss and therefore may the person liable to make such payment
be deducted when calculating the liability
(or income tax .
shallbe entitled , on making such payment,
to deduct a sum representing the amount
Every person who is entrusted with the of the tax thereon at the rates in force
payment of any dividends which are pay- during the period through which the said
able to anyone in the United Kingdom out payment was accruing due , and shall render
of any public revenue other than that of an account thereof to the Commissioners.
the United Kingdom shall out of the moneys ( First Schedule, Income Tax Act, 1918. )
in his hands pay the tax on the dividends Therefore where a banker has taken a mort.
on behalf of the persons entitled thereto, gage for a fixed amount, and the period of
and shall pay the tax into the general the loan is not less than a year, income tax
account of the Commissioners of Inland must be deducted by the banker before
Revenue. Remuneration, to -be fixed by the charging the customer with the interest.
Treasury, shall be allowed to such persons In such a case the relation of banker and
at a rate not less than 13s. 6d. for every customer is changed to that of mortgagor
thousand pounds of dividends paid. and mortgagee, and a mortgagor is entitled
Included as being persons entrusted with to have income tax deducted from the
the paymentof dividendswithin the meaning interest payable on his mortgage. In a case
of these rules are : of a fixed mortgage, simple interest only can
(a) Any person having the ordinary be charged. (See INTEREST.) Where a banker
custody of any book, or making any is required to deduct tax from the interest
list ordinarily kept in the United due upon a fixed mortgage, any such sum
Kingdom, wherein the right or title so deducted must be allowed for when the
of the person to whom the payment banker makes his incometax return ; that is
is to be made is shown by the regis- to say, before arriving at the amount of tax
tration or entry of his name ; which he must pay upon his year's profits,
(6) Any banker or person acting as a he must allow for the amount which he has
banker, who sells or otherwise realises in effect already paid by having allowed it,
coupons for any dividends (save such by way of a reduction of interest, to the
as are payable in the United Kingdom mortgagor .
only) , and pays over the proceeds In re Morris - Mayhew v . Halton ( 1920,
to any person or carries the same to Ch.D. 37 T.L.R. 46) it was held that a pro
his account ; vision in a mortgage for the payment of
(c) Any person who by means of coupons compound interest with yearly rests does not
received from any other person or operate to capitalise the interest at the end
otherwise on his behalf, obtains pay- of each year in such a manner as to make it
ment of any dividends, elsewhere cease to be interest of money " under the
than in the United Kingdom ; Income Tax Act, and therefore, on redemp
(d) Any dealer in coupons who purchases tion of the mortgage by payment of the
coupons for any dividends (save such principal and the compound interest, the
asare payable in the United Kingdom mortgagors are entitled to deduct out of the
only) otherwise than from a banker interest the amount of the income tax on
or person acting as a banker, or each instalmentof interest at the rate in force
another dealer in coupons . at the time when each instalment became due.
330
INC] DICTIONARY OF BANKING INC

In the House of Lords, in Farmer v. I, the undersigned, Manager of

Scottish North American Trust Ltd. ( 1911 , the
105 L.T. 833 ), Lord Atkinson in his judg
ment, quoted with approval the decision to
Amount
written
hereby certify that the sum of
in Goslings & Sharpe v . Blake ( 1889, in words.
61 L.T. 311 ), that interest upon a loan by a £ (say *
banker to a customer for a period of less than
a year does not fall within the words “any
yearly interest of money or any annuity has been or will be charged to
or other annual payment,” and that a Mr.
banker is not required to deduct tax, in
such a case, from the interest . of
In Garston Overseers v. Carlisle (Surveyor as Interest ( t ) for the twelve
( 1915, 3 K.B. 381) it was held
thatTaxes)
of interest allowed on the daily balance sive† ofExclu
com
• months ended 31st March (or
5th April), 19 This Interest
mission and
of a current account, even though the any other has been , or will be, accounted
interest is credited regularly for a period of charges. for by Mr.
years, is not “ yearly interest " under the in full, without deduction of
Income Tax Act. Mr. Justice Rowlatt said : Income Tax, and has been or will
“ It is no doubt contemplated that the be included by the Bank as part
balance will continue for a long time, but of their profits in respect of which
what is the daily balance ? It is not even an assessment has been or will
a short loan ; it is merely money at call, be made, and duty paid under
money payable on demand .” Schedule D of the Income Tax
A banker does not deduct income tax from Acts .
the interest charged on an overdrawn current
account or an ordinary loan . The customer Delete The advance, which is secured
must make his own claim for repayment of such words | formal legal mortgage ,
tax in respect of bank interest. The Income asmaybe
unnecessary
by ordinary Banker'scharge,
Tax Act, 1918, provides that where interest If not in ex 1 has
payable on an advance from a bank is paid month istencesforthe12 has not been in existence for
to the bank without deduction of tax , " the exact period
person by whom the interest is paid shall of thead. twelve consecutive months .
vance should
be entitled, on proof of the facts to the be stated .
satisfaction of the Special Commissioners,
to repayment of tax on the amount of the The Security held by the Bank,
interest. " (Section 36.) For that purpose a in respect of the advance amount
banker supplies, when requested by a cus ing to & is as
tomer, a certificate as shown in next column follows :
-it should be noted that the certificate must
include only interest, and not commission
or any other charges.
Some dividends are declared “ free of
income tax," which means that the tax is
paid by the company, not that the dividend
is actually free from tax, and the shareholder
receives the full rate of dividend, whilst
in other cases the tax is deducted on the
warrant from the amount payable to the
shareholder. The only practical difference
between dividends paid " less income tax
and " free of income tax " being that in the
former the amount of the gross dividend Dated this day of
and the tax deducted therefrom is shown
19
as the dividend warrants, and in the latter
only the net sum remaining after deducting
its proportion of tax, the result in either
case being the same. It has been the custom Manager.
331
INC ) DICTIONARY OF BANKING (INC

of many banks to pay their dividends " free
of income tax," but various banks now pay
dividends less income tax. When the tax
is deducted, the top half of the dividend
warrant certifies the deduction and is used
that we received payment or were credited
with the proceeds thereof ( less income tax
as stated on the other side) , amounting to
£ .....
#

as a voucher by any shareholder claiming Signature of banker

exemption or abatement. When a dividend
is paid " free of income tax," the tax may
or bank agent } .....
Address ...

be recovered by anyone entitled thereto .

In reclaiming tax on dividends paid " free Date ....
of income tax ," the gross amount of dividend
must be entered on the return, that is, the To be signed by claimant.
amount which the dividend would have I hereby declare that the coupons or
been if it had not been paid free of tax , e.g. dividends above mentioned relate to stocks
a dividend of £ 95, with the tax at 1s., should which are my own property, and that the
be treated as £ 100, and, if belonging to a bonds from which the coupons were taken
person entitled to exemption, £5 will be are in the possession of ..
repaid, i.e. the tax upon £ 100. In the same Signature
way, such a dividend belonging to a person Date .
liable to tax must be entered in his return
as £ 100 , not £95 . Specification .
The income tax certificate issued by a
bank to shareholders who require it may be Date Name and Description of Amount
when Address of Security and Amount of Tax
in the following form : Interest Agent Coupon of
Interest.
deduc
was through whom Numbers. ted .
due . cullected .
BRITISH BANK, LTD .
INCOME TAX CERTIFICATE ,
I hereby certify that Income Tax has
been assessed on and paid to the Revenue
by the British Bank, Ltd. , in respect of its
profits and gains, of which profits and gains
the undermentioned dividend a portion .
For the British Bank , Ltd.,
Carlisle, 19 Manager.
Shares in the Total £
Standing in Dividend . Dividend
British Bank , Name of
Ltd. Payable,
The bonds in support of any claim must
be produced when required . 1
July 19 INCOMPLETE BILL . (See INCHOATE
Feby. 19 INSTRUMENT . )
July 19
Feby. 19 INCONVERTIBLE PAPER CURRENCY .
July 19
Feby. 19
A bank note which cannot be exchanged for
gold on demand, at the bank whichissued
it, for the full value as shown upon the face
The Bank of England does not issue of the note, is called inconvertible paper.
certificates of deduction . When it can be exchanged for its full value,
The form of certificate, to be used only it is convertible paper .
by bankers in the United Kingdom , for INCORPORATED COMPANY. A com
repayment of income tax on foreign and pany is incorporated when it is registered
colonial securities, is as follows : in accordance with the requirements of the
We hereby certify that coupons or divi. Companies Acts, and has obtained a certi
dends of the various securities specified at ficate of incorporation from the Registrar
the back hereof, which became due between of Companies. The members of an incor
the 6th day of April, 19...... and the 5th day porated company no longer exist as indi
of April, 19...... (both inclusive) , were viduals liable to be sued by creditors ; the
collected by us on behalf of . ... and individuals have become one body (the
332
INC) DICTIONARY OF BANKING (INC

company ), and it is to the company alone On any sale of the fee simple of land, or
(or the liquidator) that the members are the grant of any lease exceeding fourteen
liable . Creditors must sue an incorporated years, the duty shall be assessed by the
company in the company's name. There Commissioners and paid by the transferor
are also companies incorporated by or lessor. The instrument of the transfer
Royal Charter, and companies incorpor- or lease, or reasonable particulars thereof,
ated by Special Acts of Parliament. (See must be presented to the Commissioners
COMPANIES .) for the purpose of assessment of the duty.
INCORPOREAL HEREDITAMENT. (See Section 4, s.s. 3, is as follows :
HEREDITAMENT .) “ (3) Any such instrument shall not, for
INCREMENT VALUE DUTY . A duty the purposes of Section fourteen of
imposed by the Finance (1909–10 ) Act, 1910, the Stamp Act, 1891 , and notwith
upon the increment value of any land, at the standing anything in Section twelve
rate of one pound for every complete five of that Act, be deemed to be duly
pounds of that value accruing after April stamped unless it is stamped
30, 1909 . “ ( a ) either with a stamp denoting
The increment value is the amount by that the increment value
which the site value of the land , at the time duty has been assessed by
the increment value duty is to be collected , the Commissioners and paid
exceeds the original site value. in accordance with the
The site value of land on the occasion of assessment ; or
66
a sale is the value of the consideration ; on ' (b) with a stamp denoting that all
the occasion of the grant of any lease of particulars have been de
land, the site value is the value of the fee livered to the Commis
simple of the land, calculated on the basis sioners, which, in their
of the value of the consideration for the opinion, are necessary for
grant of the lease. the purpose of enabling
The duty is payable upon any transfer on them to assess the duty, and
sale of the fee simple of land, or of any that security has been given
interest in the land, or the grant of any lease for the payment of duty in
exceeding fourteen years, and upon the any case where the Com
death of any person where land passes upon missioners have required
the death , and where land is held by any security ; or
body, corporate or unincorporate, in such " (c) with a stamp denoting that
a manner that it is not liable to death upon the occasion in ques
duties, upon such periodical occasions as tion no increment value
are provided by the Act ( viz ., April 5, 1914, duty was payable ;
and in every subsequent fifteenth year ). but where an instrument is SO

If the body corporate or unincorporate so stamped , it shall, notwithstanding

desire, the duty may be paid by fifteen equal
yearly instalments, and the first shall be due
immediately after the assessment.
On the first occasion of collection of the
duty the increment value shall be reduced
by an amount equal to 10 per cent. of the
original site value, and on any subsequent
occasion by an amount equal to 10 per cent.
of the site value at the previous collection
of the duty ; but no remission shall be given
which willmake the amount of the increment
value on which duty has been remitted
during the preceding period of five years
exceed 25 per cent. of the site value at the
previous collection of the duty prior to the
commencement of that period , or of the
original site value if no such occasion .
Increment value duty shall be a stamp
duty . L :
333
any objection relating to the incre
ment value duty, be deemed to be
duly stamped so far as respects that
duty." (See ADJUDICATION STAMPS,
STAMP DUTIES.)
Exemptions -
Agricultural land, while it has no higher
value than its market value at the
time for agricultural purposes only.
Land on which a dwelling -house is built
which has been used for twelve
months previously by the owner as
his residence and the annual value,
as adopted for the purpose of income
tax under Schedule A , does not
exceed
(a) in the case of a house in the
administrative county of London ,
£ 40 ;
INC) DICTIONARY OF BANKING (IND

(b) a house in a borough or urban lessee, for the payment by the transferee or
district with a population of lessee of increment value duty shall be void.
50,000 or upwards, £26 ; Increment Value Duty was repealed by
(c) a house elsewhere, £ 16 . the Finance Act , 1920.
Agricultural land occupied and culti- INCUMBRANCE . A liability, such as a
vated, for twelve months previously, mortgage, upon an estate or property.
by the owner, where the total amount (See MORTGAGE.) A property is unin
belonging to the same owner does cumbered when it is free from any charge.
not exceed 50 acres, and the average INDEMNITY . Where a deposit receipt,
total value does not exceed £ 75 per or a banker's own note or draft, or a dividend
acre (except land occupied together warrant, has been lost, the banker may agree
with a dwelling-house where the to pay the amount on receiving a suitable
annual value exceeds £ 30 ). indemnity or security to preserve him
Land held bonâ fide for games or other against any loss in so paying . In the case
recreation . of a deposit receipt, the letter of indemnity
Land held by, or for, His Majesty, or should accurately describe the lost docu
any department of Government. ment which the banker has agreed to pay
Land held for charitable purposes. without its production , and should state
Land whilst it is held by a statutory the consideration for which the indemnity is
company for the purposes of the given, thus “ in consideration of your so
undertaking and which cannot be paying the amount of the said receipt.”
appropriated except to those pur. The persons who give the indemnity should
poses. When sold , increment value undertake and agree, jointly and severally,
duty is payable. (Statutory com- to hold the banker harmless and indemnified
pany means any railway, canal, dock , against all loss, costs and damages which he
or water company .) may at any time or in any manner sustain
Where a mortgagee is liable to pay incre- in consequence of so paying the said receipt.
ment value duty, Section 39, provides :- It should also contain an undertaking to
“ (4) Where the fee simple of any land or return the receipt if it should be found.
any interest in land in respect of An indemnity is to be distinguished from
which increment value duty or a guarantee. An indemnity may be valid
reversion duty is charged is vested though not in writing, but a guarantee must
in a mortgagee who is liable to pay be in writing. The person who gives an
any sum on account of either of those indemnity makes himself primarily liable
duties, he shall be entitled to add for the debt, but the person who gives a
to his security the sum for which he guarantee is liable only on the failure of the
is so liable, including any costs or debtor to pay the debt.
expenses properly incurred by him An indemnity under hand is subject to a
in respect of the payment of the stamp duty of 6d . (impressed or adhesive) .
duty. If under seal and it contains a covenant to
(5) In Scotland, where any person having pay a definite sum, it is liable to duty of
a limited interest in the land or 2s. 6d. per cent. ; if it does not contain such
interest in land in respect of which a covenant, the duty is 10s. Indemnities
any duty under this part of this Act | in suitable forms are used in connection
is charged, is the person who is with other matters than lost documents.
liable to pay any sums on account Fire insurance (q.v. ) and marine insurance
of the duty, he shall be entitled to (q.v.)are contracts of indemnity.
charge such land or such interest in INDENTURE . (Latin In, and dens, a
land by means of a bond and dis- tooth .) An indenture is a deed under seal
position or bond and assignation in between two or more persons.
security in his own favour which he Its name dates from the time when a deed
is hereby authorised to grant.” was indented along one of the margins.
There are special provisions with regard It was the custom to write a deed in two
to increment value duty in the case of parts on the one parchment, and between
minerals worked or leased (Section 22). each part a blank space was left ; along the
By the Revenue Act, 1911 , Section 1 , blank space a word, often the word “ chiro
it is enacted that any contract between a graphum ,” was written and the parchment
transferor and transferee, or a lessor and was then cut into two by dividing it with an
334
IND ] DICTIONARY OF BANKING [IND

indented or wavy line through that word . 372) : “ It is true that a man's name may ,
Each of the two parties to the deed received and very often is, written on the back of a
a part, and when at any time the two parts cheque without any idea of rendering him
were brought together again it showed that self liable as an indorser. Indeed , one of the
they were the correct documents when the best receipts is the placing on the back of
indents agreed and the divided word was the instrument the name of the person who
completed. (See CHIROGRAPH .) has received payment of it. Such an entry
The writing of the word " chirographum " of the name on the instrument is not an
or other word or letters in the blank space indorsement."
was in later times omitted , and the parch- The requisites of a valid indorsement are
ment was merely divided with an indented given in Section 32 of the Bills of Exchange
line. Finally an Act was passed ( 8 & 9 Act, 1882 :
Vict. c. 106, Section 5) providing " that a An indorsement in order to operate as a
deed executed after the first day of October, negotiation must comply with the following
1845, purporting to be an indenture, shall conditions, namely :
have the effect of an indenture although not “ ( 1 ) It must be written on the bill itself
actually indented .” and be signed by the indorser. The
The date of an indenture is at the simple signature of the indorser on
commencement of the deed . the bill, without additional words,
An indenture begins as follows : is sufficient. An indorsement
“ This Indenture made the day of written on an allonge, or on a
19 , between John Brown of King copy ' of a bill issued or nego
Street in the City of York, grocer, of the. tiated in a country where ' copies '
first part and John Jones,” etc. (See are recognised, is deemed to be
DEED POLL .) written on the bill itself.
INDORSATION . The word often used
in Scotland for indorsement (q.v.) or
(2) It must be an indorsement of the
entire bill. A partial indorsement,
endorsement.
INDORSE . To indorse is to write one's
that is to say, an indorsement which
purports to transfer to the indorsee
signature upon the back of a document, a part only of the amount payable,
e.g. a bill, cheque, bill of lading, etc. (See or which purports to transfer the
INDORSEMENT.) bill to two or more indorsees
INDORSED BACK. As to a bill which is
severally, does not operate as a
negotiated back to a party already liable negotiation of the bill .
thereon, see Section 37 of the Bills of Ex
change Act, 1882, under NEGOTIATION OF “ (3) Where a bill is payable to the order
BILL OF EXCHANGE. of two or more payees or indorsees
INDORSEE. The person to whom a bill who are not partners all must
or cheque is assigned by way of indorsement. indorse, unless the one indorsing has
See INDORSEMENT.) authority to indorse for the others.
INDORSEMENT. (Latin In dorsum , “ (4) Where, in a bill payable to order,
on the back.) A writing upon the back of the payee or indorsee is wrongly
a document. Spelled also endorsement. designated, or his name is mis
In Scotland the word used is often spelt, he may indorse the bill as
“ indorsation ." therein described, adding, if he
The indorsement of a bill (or cheque) is the think fit, his proper signature.
writing, signed by the holder, upon the back , “ (5 ) Where there are two or more indorse
by which a bill (or cheque) payable to order ments on a bill , each indorsement
is transferred from one person to another. is deemed to have been made in the
The simple signature of an indorser is a valid order in which it appears on the
indorsement, and it is not invalid by reason bill, until the contrary is proved .
6

of its being written in pencil. “ (6 ) An indorsement may be made in

" Indorsement " means an indorsement blank or special. It may also
completed by delivery . contain terms making it restrictive."
It is possible for a signature to be placed There are four kinds of indorsements,
upon the back of a cheque and yet not conditional indorsement, an indorsement
operate as an indorsement. Mr. Justice in blank, a special indorsement, and a
Byles said in Keene v. Beard (1860, 8C.B.N.S. restrictive indorsement.
335
IND) DICTIONARY OF BANKING
A conditional indorsement is referred to
in Section 33 :
“ Where a bill purports to be indorsed con-
ditionally the condition may be disregarded
by the payer, and payment to the indorsee
is valid whether the condition has been
fulfilled or not." The condition would be
operative as between the indorser and the
indorsee. (See CONDITIONAL INDORSEMENT.)
An indorsement in blank and a special
indorsement are explained in Section 34 :-
“ ( 1 ) An indorsement in blank specifies no
indorsee, and a bill so indorsed
becomes payable to bearer.
66
' (2) A special indorsement specifies the
person to whom, or to whose order,
the bill is to be payable.
( .
* (3) Theprovisions of this Act relatingto itBy
a payee apply with the necessary
Section31,s.$. 3:-“ A bill payableto
order is negotiated by the indorsement of
niodifications to an indorsee under
a special indorsement.
“ (4) When a bill has been indorsed in
blank, any holder may convert the
blank indorsement into a special
indorsement by writing above the
indorser's signature a direction to
pay the bill to or to the order of
himself or some other person .”
A restrictive indorsement is defined in
Section 35 :
“ ( 1 ) An indorsement is restrictive which
prohibits the further negotiation of
the bill or which expresses that it is
a mere authority to deal with the
bill as thereby directed and not a
transfer of the ownership thereof,
as, for example, if a bill be indorsed
' Pay D only ,' or ' Pay D for the
account of X,' or pay Ꭰ
order for collection .'
6
buat
' (2) A restrictive indorsement gives the
indorsee the right to receive pay-
ment of the bill and to sue any
party thereto that his indorser
could have sued , but gives him
no power to transfer his rights
as indorsee unless it expressly
authorise him to do so.
(6
“ (3) Where a restrictive indorsement
authorises further transfer, all
subsequent indorsees take the bill
with the same rights and subject to
the same liabilities as the first
indorsee under the restrictive
indorsement. "
“ Für mich " (instead of me) in an
indorsement is not restrictive.
336
( IND
No person is liable as indorser who has
not signed it as such. (Section 23.)
The liability of an indorser is defined by
Section 55 , s.s. 2. (See under INDORSER.)
An indorser may insert an express stipula
tion ( 1) negativing or limiting his own
liability to the holder, (2) waiving as
regards himself some or all of the holder's
duties (Section 16) . An example of an
indorsement SO qualified is where an
indorser adds after his signature the words
(6
" without recourse " or the French equivalent
sans recours." This stipulation releases the
indorser from liability in the event of the
cheque being dishonoured , but does not
release him from liability with respect to
any forgery on the cheque before he indorsed
the holder completed by delivery."
A transferee, for value, acquires the right
to have the indorsement of the transferor,
where the bill was payable to the transferor's
order ( Section 31 , s.s. 4) .
A bill payable to “ John Brown or order ”
may be indorsed simply “ John Brown."
He may then transfer the bill by simple
delivery to another person . By John
Brown's indorsement in blank the bill
becomes payable to bearer, and may pass
from hand to hand without any further
indorsement, though, as a rule, anyone
taking a bill will require the transferor to
indorse it, so that he may thereby become
a party to the bill and be liable thereon . If,
however, John Brown indorsed the bill “ Pay
John Jones or order, John Brown " (or
John Brown , pay to the order of John
Jones " ), the bill is specially indorsed , and
requires the signature of John Jones before
he can transfer it to anyone else. Any
holder may convert an indorsement in blank
into a special one to himself, or to any other
person . If a bill with John Brown's indorse
ment in blank passes through the hands of
certain holders who do not indorse it, and
then comes into the possession of William
Robinson , he may write above John Brown's
signature the words “ Pay William Robin
son ." Before further negotiation, the bill
requires William Robinson's indorsement.
If John Brown indorses the bill “ Pay John
Jones only,” the indorsement of John Jones
is required, but John Jones cannot transfer
the bill to anyone else, as John Brown by
his restrictive word prohibits the further
negotiation of the bill . Payment must be
IND ) DICTIONARY OF BANKING [ IND

made only to John Jones himself. If | in which case the Council is advised
presented through another bank , the that no legal liability will be incurred by
indorsement should be confirmed . the bank giving the answer.
A cheque or bill payable " to order A suggested form of answer is .th
should (unless payable to a fictitious or non - indorsement requires notarially certified
existing person) be indorsed . But see under translation, or will pay on banker's con
PAYEE as to the case of a payee refusing to firmation .'
indorse a cheque when presented by himself. “ The Council think it would be most
A cheque payable to bearer does not require satisfactory for all concerned, and avoid
to be indorsed . A cheque indorsed in blank delay in payment of bills bearing such in
is payable without further indorsement.dorsements, if they were in all cases put in
But all cheques paid to credit, which do not order before being remitted to London for
legally require an indorsement, should either payment, as it is sometimes a matter of
be indorsed or stamped with the name of the difficulty in this country to obtain а

customer, so that the banker may know satisfactory translation."

at any time from whom the cheques were If a holder strikes out, intentionally, the
received . Some customers cross all their indorsement of any indorser, that indorser
cheques which are paid to credit, thus :- and all indorsers subsequent to him are
“ Account John Brown at X & Y Bank, discharged from liability on the bill. (Section
Ltd.” All bills paid to credit should be 63, s.s. 2 , see under CANCELLATION OF BILL
indorsed by the customer. OF EXCHANGE.)
An Indorsement, as its name implies, Where a bill is negotiated back to a prior
shouldbe upon the back of a bill or cheque, indorser, he is not entitled to enforce pay
but it has been held that an indorsement on ment of the bill against any intervening
the face is valid . party to whom he was previously liable.
An indorsement should be spelled exactly (See Section 37 under NEGOTIATION OF BILL
in the same way as the person's name appears OF EXCHANGE .)
on the face of the bill (or cheque) as payee, An infant may indorse a bill or cheque and
or in the special Indorsement as indorsee . If pass on to an indorsee a good title, but he is
the person's name has been misspelt by the under no liability with regard to it. Section
drawer or the prior indorser, his indorsement 22, s.s. 2, provides that where a bill is
should also be misspelt, but he may indorse indorsed by an infant or corporation having
it below with his name spelled correctly. no capacity or power to incur liability on a
All indorsements must be examined , even bill, the indorsement entitles the holder to
if they are in a foreign language. receive payment of the bill, and to enforce
In a memorandum dated June, 1910, it against any other party thereto.
circulated by the Council of the Institute of Where the signature of any person 1s
Bankers, with respect to indorsements in required, under the Bills of Exchange Act,
Oriental or other unusual characters, it is it is not necessary that he should sign it with
pointed out that bills bearing indorsements his own hand. It is sufficient if his signature
in Oriental characters are sometimes pre- is written thereon by some other person by
sented for payment with the name of the or under his authority (Section 91 ) . A
indorser written in Latin characters beneath banker, however, would require undoubted
the indorsement, and the memorandum con- evidence of authority before accepting an
tinues : Such ' translations ' may be, and indorsement written by some other person .
it is believed often are , written on the bill If an indorsement is impressed by a stamp,
by persons having no authority and incur- a banker should confirm it, when he is
ring no responsibility, and theCouncil is of satisfied that it has been made by a duly
opinion that before paying the bill, a banker authorised person .
would be justified in requiring that the In the case of a corporation, an indorse
translation be properly verified by a notary, ment sealed with the corporate seal is
or that, in default of this , the indorsement sufficient (Section 91 , s.s. 2 ).
be confirmed by a banker. Where a banker on whom a cheque is
" In the event of bills bearing Oriental drawn , pays it in good faith and in the
indorsements being returned, the answer ordinary course of business, the banker is
given should be such as to leave no room for protected by Section 60 (see PAYMENT OF
doubt that the reason for refusing payment BILL), even though the indorsement of the
is that such indorsement is unintelligible, payee or a subsequent indorser has been
337
22- ( 1535 )
IND ) DICTIONARY OF BANKING ( IND

forged or made without authority. He have been forged . It shall not be incumbent
must, however, exercise reasonable care, on such banker to prove that such indorse
and see that the cheque he is asked to pay ment, or any subsequent indorsement, was
is apparently properly indorsed. If he is made by or under the direction or authority
negligent and pays a cheque which is clearly of the person to whom the said draft or
not indorsed by the proper party he will be order was or is made payable, either by the
liable. The banker need not know the drawer or any indorser thereof (Section 19,
payee, so long as the cheque purports to be Stamp Act, 1853, 16 & 17 Vict. c. 59, see
indorsed by the person to whom it is DRAFT ON DEMAND) . The same Section
payable. probably protects a banker in paying an
If a banker pays a customer's acceptance order drawn upon him as treasurer of a
to a person appearing to be the holder, but local authority. Some writers consider that
claiming through or under a forged indorse- a banker is also protected , in paying such
ment, he cannot charge such an acceptance orders, by Section 60 of the Bills ofExchange
to the customer's account (Section 24. See Act (see above). This protection , however,
Forgery) . If he has paid such an accept- depends upon whether the orders are held
ance to a banker who sent it for collection, to be drawn upon a banker, or merely upon
he cannot claim the amount back from that the treasurer in his personal capacity.
banker . A bill or cheque payable to John Brown
The paying banker thus incurs liability without the words order " or " bearer,"
in paying a bill under a forged indorse is payable to order and requires indorsement.
ment, but in paying a cheque with a forged It is a well- recognised custom to pay a
indorsement he is protected . dividend warrant, payable to several persons,
With regard to a banker's liability, as to when discharged by one of those persons.
the indorsements on a bill , Baron Parke ( in (See DIVIDEND WARRANT.) An interest
Robarts v. Tucker, 1851 , 16 Q.B. 560) said : warrant, however, should , strictly, be in
“ If bankers wish to avoid the responsibility dorsed by all the payees, though in practice
of deciding on the genuineness of indorse- this is not always insisted upon.
ments, they may require their customers to Where a bill has been seized in execution,
domicile their bills at their own offices, and a sheriff can give a good discharge when
to honour them by giving a cheque upon the payment is made to him .
banker." if an indorser writes any words on the
The banker who collects for a customer an cheque or bill in the form of a receipt, such as
open cheque, is responsible for the genuine- “ Received Payment,” “ Received Cash ,"
ness of the indorsement, but in the case of a such receipt requires a twopenny stamp if the
cheque crossed generally, or specially to amount is £ 2 or over . A receipt by a
himself, he is not liable for a forged indorse- banker upon a bill of exchange is exempt.
ment, provided he receives payment of the (See RECEIPT.)
cheque for his customer in good faith and Where an indorsement is by mark , it must
without negligence. (See CROSSED CHEQUE .) be duly witnessed .
Where a bill drawn by a firm is payable to
If he collects a bearer cheque he is in aa much
better position than with an order cheque their order, one partner may draw the bill
as there is then no question of a forged and, probably, another partner may indorse
indorsement. A collecting banker should it. Thus, though the signatures of the firm
see that the indorsements of all order on the bill differ, it may be in accordance
cheques received for collection are correct. with the practice of the firm to treat bills in
If he fail to observe that an indorsement that way.
does not agree with the name of the payee, The signature of the name of a firm is
it is negligence which is sufficient to deprive equivalent to the signature by the person
him of the protection of Section 82 of the so signing of the names ofall persons liable
Bills of Exchange Act, when collecting a as partners in that firm . (Section 23, s.s. 2.)
crossed cheque for a customer. (See that Where a person indorses a bill in a trade
Section under CrOSSED CHEQUE.) or assumed name, he is liable thereon as if
The banker paying a draft or order drawn he had signed it in his own name. (Section
upon him, payable to order on demand , 23, s.s. 1.)
which purports to be indorsed by the person Where payable to a fictitious or non
to whom the same shall be drawn payable, existing person no indorsement is required,
is not liable if the indorsement proves to as the instrument may be treated as payable
338
IND ) DICTIONARY OF BANKING [ IND

to “ bearer " (Section 7, s.s. 3) . (See in the name of, or by or on behalf or on

FICTITIOUS PAYEE .) account of, the company by any person
Where payable to “ Wages or order," or acting under its authority." Although this
some such impersonal word, it is treated by Section makes an indorsement of simply the
many bankers as a cheque requiring the name of a joint stock company (if made by a
drawer's indorsement, and as a rule is paid person acting under authority) legally
is the practice of bankers always
only to the drawer orhis authorised repre- correct, it that
sentative. Some bankers, however, treat to require it be signed by some person
it as coming under Section 7,8.s. 3 — that is, as on behalf of the company , e.g. For and
payable to " bearer ” —but the word " wages on behalf of John Brown & Coy ., Ltd.,
can hardly be described as a “ fictitious or J. Jones, Secretary ,” or “ Per pro. John
non -existing person .” Brown & Coy ., Limited, J. Jones,” or “ John
Per procuration indorsements are usually Brown & Coy., Ltd., J. Jones, Secretary."
accepted by bankers, but some companies put Where a cheque payable to John Brown is
a note upon their cheques to the effect that a indorsed “ Place to credit of my account,
per procuration discharge will not be ac- J. Brown," it is not necessary that the
cepted , unless guaranteed by the payee's cheque should be indorsed by the bank in
banker. A banker is not obliged to accept any way. So long as the cheque is indorsed
a per pro. indorsement, ifthere are suspicious J. Brown, the paying banker is notconcerned
circumstances demanding inquiry as to the with the instruction to the collecting banker.
person's authority to indorse. A per pro. dis- A bearer cheque does not require indorse
charge is not accepted on a dividend warrant. ment and any indorsements which may have
An indorsement which is not strictly in been placed thereon need not be examined .
order is frequently confirmed by a banker as A bearer cheque cannot be turned into one
“ Indorsement confirmed . Per pro . X & Y payable to order by indorsement. If a
Bank, Ltd., T. Brown, Manager.” This is is bearer " cheque is specially indorsed to
better than Indorsement guaranteed ,” as John Brown or order and is not signed by
it precludes any chance of liability to stamp John Brown, the banker is not concerned
duty as a guarantee. Where a cheque pay- with the matter.
able to order has been omitted to be in- In the case of a cheque payable to order
dorsed by the payee, a banker occasionally which has been indorsed in blank, thus
indorses it “ Placed to credit of the payee's making it payable to bearer, and a subse
account. Per pro. X & Y Bank , Ltd., quent holder makes it again payable to
T. Brown, Manager ." Though there is no order, the fresh series of indorsements must
obligation on the banker on whom the cheque be examined by the banker.
is drawn to pay a cheque which is not If an indorsement has been altered , it
indorsed , he is usually satisfied with the should, if correct, be confirmed. An indorse
collecting banker's assurance that it has ment of a signature by meansof an impressed
gone to the payee's credit. Of course as it stamp should be confirmed by a collecting
is not indorsed , the banker cannot shelter banker.
himself under Section 60 . A banker is not obliged to take an irregular
A banker is sometimes authorised by a indorsement, and if a cheque is indorsed in
company to indorse cheques on behalf of the such a manner that he is unable to decide
company, and in such a case the indorsement whether it is right or wrong, it is safer to
may be, e.g. “ Indorsed by authority of the return it for confirmation .
X & Y Railway Company and placed tothe An indorsement in pencil is not a sufficient
credit of their account with us. Per pro. The reason for returning a cheque, as it is a valid
British Bank, Ltd., John Brown, Manager ."
. indorsement, but the use of a pencil for such
Where a person is under obligation to a purpose should always be discouraged.
indorse in a representative capacity as If the person presenting a cheque is unable
treasurer or executor, he may indorse in to write, he should indorse it by mark, his
such terms as to negative personal liability. mark being then witnessed, preferably by
(Section 31 , s.s. 5.) an independent party. The witness must
Section 77 ofthe Companies (Consolidation) know the person whose mark he witnesses,
Act, 1908 , enacts that “ a bill of exchange and, in addition to signing as witness, must
or promissory note shall be deemed to have give his own address .
been made, accepted, or indorsed on behalf Indorsements are occasionally met with
of a company if made, accepted, or indorsed having Mr. or Esq. added to the name. If
339
IND ) DICTIONARY OF BANKING (IND

the name has been written bythe right party | receives the benefit of a doubt and is passed
the indorsement is sufficient, but a collecting with an indorsement not absolutely in order.
banker should confirm it. An indorsement “ J. Brown & Coy., Ltd.,
In the case of cheques which are provided J. Jones, Secretary ," is usually accepted,
with a form of receipt there is frequently though “ For and on behalf of " or Per
an intimation printed thereon that the pro . J. Brown & Coy ., Ltd., J. Jones,
signature of the receipt is intended to be Secretary, " is preferable.
also an indorsement of the cheque. See If a payee presents an order ” cheque
Sir John Paget's opinion on this point himself,it is the custom to require him to
under RECEIPT ON CHEQUE. indorse it, but if he declines to indorse it
In Scotland, when the payee is a married see PAYEE.
woman , the cheque is frequently drawn as The payee's indorsement need not neces
“ Pay Mrs. Mary Young or Campbell,” sarily be the first signature on the back of the
Young being her maiden name and Campbell cheque, though, of course, itusually is.
the married name. The indorsement is a cheque indorsed in France may be
accepted whether signed “ Mary Young " signed with the surname only.
or Mary Campbell.” There is no authorised form of indorse
It is a saving of much time and trouble ment, and in consequence the variations in
if a collecting banker confirms all indorse- indorsements are very numerous and often
ments which he notices are not strictly in puzzling to decide upon. The following is
order, when he knows that they are all right, a list of specimens ; in one column are
before remitting the cheques for collection . included indorsements which, as a rule, would
A paying banker should not return a be passed, either because they are strictly
cheque “ indorsement irregular ” if the correct or sufficiently accurate to justify
objection is merely a frivolous one. A their acceptance ; in the other column are
slight variation in the name on a cheque shown indorsements which are not generally
for a trifling amount is not regarded as of so accepted, either because they are quite wrong
much importance as in the case of a cheque or so doubtful as to cause the cheques bearing
for a larger amount, and a small cheque often them to be returned “ indorsement irregular."

Payee . Correct or Usually Accepted . Wrong or Not Usually Accepted.

John Brown John Brown . J. Brown, P.p. J. Jones
J. Brown . John Brown , per J. Jones. ( Proof of
per pro. John Brown, J. Jones. authority required.)
p.p. John Brown, J. Jones. John Brown, pro. J. Jones.
per pro. Mr. John Brown , J. Jones. John Brown by J. Jones.
pro (or for) John Brown, J. Jones , For John Brown , J. Jones. (Proof of
Agent . authority required . )
J. Jones, Agent , for (or pro .) John For J. Brown & Co. , J. Brown .
Brown . J. Brown for Self and Co - Executors of
J. Jones, per pro. John Brown. W. Brown .
per pro . John Brown, J. Jones & Coy . | J. Jones, Solicitor to J. Brown .
John Brown by J. Jones, his Attorney. John Brown, J. J.
J. Jones, W. Brown , Executors of the John Browne .
late John Brown . John J. Brown .
J. Brown , per J. Jones, Agent . pro. John Brown, J. Jones. ( Proof of
J. Brown , without recourse . authority required .)
Mary Brown , widow of late John
Bro wn .
J. Jones , Agent to J. Brown .
For J. Brown , J. Jones, Trustee . ( Proof
of authority required .)
Received cash , J. Brown . (Receipt
stamp required if for £2 or over . )
J. Brown J. Brown . J. J. Brown .
John Brown .
James Brown .
Dr. John Brown . .
John Brown, M.D. Dr. J. Brown .
John Brown
Captain John Brown J. Brown , Captain . Capt. J. Brown .
J. Brown .
Mr. John Brown .
John Brown . Mr. John Brown .
Mr. Brown J. Brown . Brown .
J. Brown , Junior. Mr. Brown .
per pro . Mr. Brown , J. Jones.
340
IND ] DICTIONARY OF BANKING [ IND

Payee. Correct or Usually Accepted . Wrong or Not Usually Accepted.

Mrs. John Brown . Mary Brown, wife of John Brown. Mary Brown.
Mary Brown, widow of John Brown . John Brown .
Mary Brown (Mrs. John Brown ). Mrs. John Brown .
Mrs. Brown . Mary Brown. Mrs. Brown .
M. Brown . Mrs. Mary Brown .
(Mrs.) Mary Brown.
John Brown, Senr. John Brown , Senr.
John Brown
John Brown , Junr. John Brown, Junior. John Brown .
John Brown, Esq. John Brown . John Brown , Esq.
Revd. John Brown John Brown . Rev. John Brown .
John Brown , Vicar of All Saints ',
Oldtown .
(Rev.) John Brown .
Mr. & Mrs. Brown John Brown. Mary Brown . J. & M. Brown.
George Brown (a minor) George Brown. John Brown, father of George Brown .
Misses Brown Jane Brown . Mary Brown. J. & M. Brown .
For Self and Jane Brown, Mary Brown.
(Confirmation required .)
JohnBrown & another For Self & another, J. Brown. J. Brown .
John Brown(now deceased ) For Self & Co -Executors of late John John Brown. J. Jones.
Brown, J. Jones. Mary Brown, widow of John Brown .
For the Executors of J. Brown , Jones & Co.,Solicitors to the Estate of
deceased , J. J. Jones, an Executor. John Brown, decd .
John Jones, Executor to the late John
Brown .
J. Jones Administrators of the late
R. Smith John Brown .
Mrs. John Brown (now J. Jones, Executor of the late Mary
deceased ) Brown, wife of John Brown (or
widow of the late John Brown ).
his
John Brown (who cannot John X Brown. John Brown,
write ) mark J. Jones.
Witness, J. Jones, John Brown . x
13, King St., Leeds.
John Brown (Indorsed Indorsement by Bank not necessary.
“ Credit my Account,
John Brown " )
John Brown (Indorsed Do.
“ Credit a /c J. Jones,
John Brown " )
John Joseph Simpson J. J. S. Brown. J. J. Brown .
Brown
Mr. Fitz - Brown John Fitz - Brown. Fitz - Brown .
Brown Brothers Brown Brothers. J. Brown & Bros.
J. Brown . T. Brown .
J. & T. Brown .
W. Brown , J. Jones, R. W. Brown. J. Jones. R. Smith . Brown , Jones & Smith .
Smith For Self, Jones & Smith , W. Brown .
W. Brown & J. Jones W. Brown. J. Jones. Brown & Jones.
J. Jones. W. Brown.
W. Brown . per pro. J.Jones,
W. Brown.
(If one is dead, the cheque is payable to
the survivor on proof of death of the
other. )
William & Thomas Brown William Brown. Thomas Brown . For William Brown & Self,
Thomas Brown.
W. or T. Brown (Either may indorse .)
Messrs. Brown J. & T. Brown . Brown.
Brown & Son . Brown & Coy.
J. Brown & Sons. Messrs. Brown .
per pro . Messrs . Brown, J. Jones.
Brown Bros.
Brown & Brown .
Browns.
Messrs. J. & T. Brown · per
J. &proT.. Messrs.
Brown. J. & T. Brown, J. & T. Brown , per J. Jones.
J. & T. Brown, J. Jones.
J. Jones .
John & Thomas Brown.
John Brown. Thomas Brown .
341
IND ) DICTIONARY OF BANKING [IND

Payee. Correct or Usually Accepted . Wrong or Not Usually Accepted.

Messrs. J. & T. Brown For Self & Co -Executors of W.

Brown, sole partner in J. & T.
Brown, J. Jones.
Messrs. W. Brown W. Brown , W. Brown . Messrs . W. Brown .
W. & W. Brown. W. Brown .
W. Brown & Son . (Confirmation
required .)
J. & 'W. Brown.
Messrs . Browns Browns. Brown & Coy.
Brown & Co. Brown & Coy. For Brown & Co., J. Jones.
per pro. Brown & Co., J. Jones, Manr. Brown & Co., J. J.
per pro. Brown & Co., J. Jones. Brown, Smith & Jones.
Brown & Co., by J. Jones, Agent. Jas. Brown & Co.
per pro. Brown & Co., pro . J. Jones.
R. Smith .
Thomas Brown & Coy. . | T. Brown & Coy. Brown & Co.
T. Brown & Coy. . Thomas Brown & Coy. Brown & Co.
Messrs. Brown & Co. Brown & Coy . Messrs. Brown & Co.
per pro . Messrs. Brown & Co., J.Jones.
Brown & Co., John Brown , Partner .
Messrs. Brown & Jones . J. Brown. J. Jones. Jones & Brown .
Brown & Jones.
T. Brown & Coy ., Ld. .
per pro . T. Brown & Coy., Ltd., Sper pro. Thomas Brown & Co., Ltd.,
J. Jones, Secretary: J. Jones, Secretary:
An indorsement with the correct title (The correct title of the company .)
may be added : a limited com
pany's name is fixed .)
Brown & Jones, Ld. .
per pro . Brown & Jones, Ld ., Brown & Jones, Ld.
J. Smith, Secretary. per pro. Brown & Jones, Ld., J. Smith,
Clerk .
The British Coy ., Ld ., per per pro . The British Co., Ld ., John Brown .
John Brown John Brown , Secretary.
The British Coy ., Ld . Indorsed by order of the British Com- per pro . The British Coy ., Ld .,
pany , Ld. , and placed to the credit J. Brown , pro Manager.
of their account per pro , the X & Y J. Brown, Secy ., British Coy., Lå .
Bank , Ld ., J. Brown, Manager.
per pro . The British Coy., Ld ., per pro . The British Company,
J. Brown , Secretary . J. Brown, Secy.
per pro. The British Coy ., Ld ., The British Coy., Ld .
J. Brown. per pro. J. Brown, Secy.
pro, or For, The British Coy., Ld ., ( This form is not accepted by bankers .)
J. Brown, Manager.
For The British Coy., Ld ., per pro. The British Coy ., Ld .,
J. Brown, Director . per pro. John Brown , Secy.
The British Coy.,Ld ., J. Jones.
J. Brown , Secretary .
(Strictly the indorsementshould show For the British Co., Ltd., J. Brown,
that the Secretary signs For, or Representative.
On behalf of the Company .)
The British Coy ., Ld . , TheBritish Coy. , Ld. ( But see Section
per J. Brown , Secy. 77, Companies (Consolidation ) Act,
Received in payment of call & passed 1908, under COMPANIES.)
to credit of payees.
per pro . The X & Y Bank , Ld . ,
J. Brown , Manager.
For the British Coy ., Ld ., For The British Coy., Ld ., in
in Liquidation. Liquidation .
J. Brown | Liquidators.
J. Jones
For J. Brown, Liquidator,
J. Jones.
For or on behalf of The British Coy ., Ld .,
J. Brown , Secy.
per pro. The British Čoy ., Ld .,
Brown & Co.
The British Baking Coy. per pro. The British Baking Coy., The British Baking Coy.,
J. Brown , Secretary. P.P. J. Brown, Secy.
per pro. The British Baking Coy. ,
Brown & Jones.
For the British Baking Coy., John Brown, Manager, British Baking
J. Brown, Agent . Coy.

342
 IND ) DICTIONARY OF BANKING ( IND

Payee. Correct or Usually Accepted. Wrong or Not Usually Accepted .

The British Baking Coy. per pro . The British & Universal per pro. The Baking Coy ., J. Brown ,
Baking Coy. Secy .
( Formerly the British Baking Co.), The British Baking Coy.
J. Brown , Secy. per pro . The British Baking Co., Ld .,
J. Brown, Secy.
p.p. The British Baking Coy.,
J. Brown, Proprietor.
The British Baking Coy .,
J. Brown ,
cashier authorised to sign .
The British Baking Coy.,
J. Brown , Manager.
( It is better that Brown should sign
per pro ., For, or On behalf of.)
The British ShippingCoy., For The British ShippingCoy ., The British Shipping Coy .,
J. Brown & Co., J. Brown & Co., per pro. J. Brown & Co., Agents,
Agents Agents. J. Jones.
John Brown, Secretary , John Brown, Secretary, British Coy ., per pro. J. Brown, Secy., British Co., Ld .,
British Coy ., Ld . Ld . J. Jones.
John Brown .
The British Banking Co. , For the British Banking Co., Ltd. ,
Ltd. J. Brown, Manager.
per pro. The British Banking Co.,Ltd.,
J. Jones, Pro Manager.
(Not strictly correct but very com
mon in banks .)
John Brown, Executor John Brown , Executor. John Brown .
John Brown, Treasurer, John Brown , Treasurer, Redby Cricket John Brown .
Redby Cricket Club Club.
John Brown, Treasurer, John Brown, Treasurer, Redby Rural John Brown .
Redby Rural District District Council. John Brown , Treasurer.
Council
Redby Urban District For Redby Urban District Council, (If indorsed by a rate collector, con
Council J. Brown , Treasurer. firmation is desired .)
Official Receiver of J. J. Jones, Official Receiver of J. Brown per pro. J. Jones, Official Receiver of
Brown & Co. LT & Co. J. Brown & Co.
R. Smith.
The Collector of Customs / J. Brown , Collector of Customs and per pro . J. Brown, Collector of Customs
and Excise Excise . and Excise ,
J. Jones.
Earl of Redby per pro. Earl of Redby, J. Brown . J. Brown, agent to the Earl of Redby:
Lord Brown Brown .
Lady Brown Mary Brown . Brown .
The Mayor of Oldtown : John Jones,Mayor of Oldtown .
.
Mayor of Oldtown .
per pro . The Mayor of Oldtown ,
John Brown .
The Oldtown Corporation per pro . The Oldtown Corporation , per pro . The Oldtown Corporation ,
John Brown, Treasurer. J. Jones, Rate Collector.
Managers of Redby School J. Brown } Managers of Redby School. J. Jones, Manager .
J. Jones J. Brown . J. Jones.
For the Managers of Redby School,
J. Brown , Chairman .
Redby Vestry .
per pro. Redby Vesty:, Brown, Clerk. J. Brown , clerk to Redby Vestry .
Brown frères Brown Bros.
Brown frères.
Overseers of Redby, per For Overseers of Redby, John Brown .
J. Brown , Collector John Brown , Collector .
Overseers of Redby For the Overscers of Redby,
J. Brown, Asst. Overscer.
J. Jones Overseers J. Jones. R. Smith.
R. Smith of Redby.
Owners of Redby Estate For Owners of Redby Estate , W. W. Brown.
per W. Brown Brown .
Self or order (drawn by J. J. Brown .
Brown ) per pro. J. Brown , J. Jones. (But
evidence of authority required .)
Self or bearer No indorsement required.

343
IND )
Payee .
Administrators of Wm.
Brown (the same re
marks apply as in the
case of executors)
Executors ofWm . Brown
Executors of the late Wm .
Brown
J._Brown & J. Jones ,
Executors of the late
J. Smith
Representatives of the
late W. Brown .
Trustees of Wm . Brown .
John Brown & J. Jones ,
Trustees of R. Smith
Liquidators of the X & Y
Coy., Ld.
IRREGULAR , ETC. , PAYEES.
order
.or order
W. Brown or
Cash or Order
Wages or Order
Estate a/c or Order
Wages or Bearer
King Charles the First or
Order
Dick Swiveller or Order
(a fictitious person)
s.s. Britannia or Order .
Poor Rate or order
Corporation StockorOrder Requires City Treasurer's indorsement.
Bearer or Order
Income Tax or Order
My son the bearer
My son , the bearer or Order
Bearer ( J. Brown ) or order
J. Brown a/c J. Jones
W. B. . I
alc ofJohn Brown
Brown & Jones (names
transposed)
Ann Brown ' ( spelled
wrongly )
Robert MacIntyre (spelled { (Robert
Both inMacintyre,Robt.McIntyre.
DICTIONARY OF BANKING [ IND
Correct or Usually Accepted . Wrong or Not Usually Accepted .
J. Jones for self & Co -Exor. of Wm. per pro . Exors . of Wm . Brown ,
Brown . R. Smith, Solicitor to the Éstate.
For Exors. of Wm. Brown, per pro . Exors. of Wm . Brown,
J. Jones, Exor. R. Smith .
For J. Jones, Executor of Wm . Brown ,
R. Robinson .
J. Jones for self and Co -Executors.
J. Jones, Exor. of Wm . Brown.
J. Jones, Executors of late W. Brown .
J. Jones Exors. of the late Wm .
J. Brown Brown .
For Self and Co -Executor of the late J. Brown . J. Jones.
J. Smith , J. Brown .
For Self & Co -Executor of the late J. Smith .
W. Brown , J. Smith .
J. Brown Trustees of Wm. Brown . per pro. Trustees of Wm . Brown ,
J. Jones } J. Brown .
Trustees of Wm . Brown , For Self & Co-Trustee of Wm . Brown,
J. Brown . J. Brown .
J. Jones. o/a Wm . Brown's Trust, J. Jones.
J. Brown.
John Brown
J. Jones
} John Brown , J. Jones.
Trustees of R. Smith .
The X & Y Co., Ltd., in Liquidation , | The X & Y Coy ., Ld. ,
J. Brown Liquidators.
J. Jones
For Self & Co -Liquidator,
J. Brown .
J. Brown . (See LIQUIDATOR . )
J. Jones.
Requires drawer's indorsement.
Return cheque for payee's name.
Requires W. Brown's indorsement.
Requires drawer's indorsement .
Do.
Do.
No indorsement required.
Do.
Do.
Requires indorsement by an authorised
official.
J. Brown, collector of Poor Rate ( though
confirmation may be desirable ) .
Usually treated as payable to bearer.
Requires indorsement of Collector of
Inland Revenue .
Requires son's indorsement.
Do.
J. Brown .
J. Brown a/c J. Jones. J. Brown .
W. B. , W. Brown.
Placed to credit of Payee's account
per pro. British Banking Co., Ld .,
J. Jones, Manager.
{ per pro . Brown & Jones , T.Smith ,Manr.
per pro. Jones & Brown , T.Smith ,Manr.
Ann Brown , Anne Browne. Anne Browne.
( Both in same writing. )
Robert McIntyre.
same writing .)
344
IND ) DICTIONARY OF BANKING [ IND

Payee. Correct or Usually Accepted . Wrong or Not Usually Accepted .

W. Brown or ordei J. J. . Usually treated as being payable to

( alteration initialled by bearer, but , if not presented by
drawer) W. Brown , it would be safer to
return the cheque for completion of
the alteration .
W. Brown or bearer Requires payee's indorsement.
Brown J. Brown . Brown .
John Brown & Another For Self & another, J. Brown . John Brown.
Representatives of John For Self and Co - Executors of the late
Brown John Brown, J. Jones.
John Brown per J. Jones For John Brown , J. Jones. J. Brown ( confirmation should be
John Brown per J. Jones. obtained ).
John Brown for J. Jones John Brown for John Jones. per pro. J. Brown , R. Smith .
Miss Brown (now married ) | M. Jones née Brown.
Brown & Co. ( correct Sper pro . Brown & Co.
title J. R. Brown & Co., per pro. J. R. Brown & Co. , Ld .,
Ld .) J. Jones, Secy.
per pro . Brown & Co., J. Jones,
7

The Secretary (drawn by
a Company)
Roseworth Éstate per J.
Brown
J. Brown in full settle .
ment
DIVIDEND WARRANT.
John Brown, John Jones
and R. Smith
John Brown & Another
John Brown
John Brown , or Bearer .
John Brown per British
Banking Co., Ltd.
Secretary.
per pro. J. R. Brown & Co., Ltd. ,
J. Jones , Secretary.
J. Jones, Secretary.
For Roseworth Estate , J. Brown . J. Brown .
(If indorsed “ J Brown in part Settle
ment a banker would be justified,
in the interests of his customer, in
returning the cheque.)
John Brown (or John Jones or R.
Smith may sign alone).
John Brown . Jas. Smith (the other referred to) .
John Brown . per pro . John Brown , J. Jones.
John Brown should sign.
per pro . British Banking Co., Ltd. ,
J. Jones , Manager.

Where a cheque is intendedto bepayable, (See BILL OF EXCHANGE , DELIVERY OF

say, to George W. Jones & Coy ., Ltd., the BILL, INDORSER , NEGOTIATION OF BILL OF
following is a method of indorsement to EXCHANGE .)
cover any likely form in which the company INDORSEMENT CONFIRMED . There are
may have been named as the payee (with
the exception of the secretary's signature, cases of daily occurrence, in most bank
the indorsement is put on by a rubber offices, where an indorsement is not literally
stamp) : or strictly in order, but which the collecting
banker knows to be “ all right." Before
Per pro. remitting such cheques for collection it is
customary for the banker to confirm the
George W. Jones & Coy. , Ltd. irregular indorsement, as :
60
Indorsement
George W. Jones & Coy .
George W. Jones. confirmed . Per pro. The X and Y Bank ,
>
George Jones. Ltd., John Brown, Manager ."
W. Jones. The words “ Indorsement confirmed ” are
George W. Jones, Ltd.
George Jones & Coy., Ltd. preferable to “ Indorsement guaranteed .”
W. Jones & Coy ., Ltd. The latter expression might be held to be a
George Jones & Coy. guarantee requiring a sixpenny stamp.
George Jones, Ltd. An indorsement made by a stamp ought,
W. Jones , Ltd.
W. Jones & Coy. if the banker knows it to have been placed
Jones, Ltd. thereon by an authorised person, to be
Jones & Coy. confirmed .
Jones & Coy ., Ltd.
R. BROWN , INDORSEMENT GUARANTEED . (See
Secretary . INDORSEMENT CONFIRMED .)
345
IND ) DICTIONARY OF BANKING ( IND
60
INDORSEMENT ON BANK NOTE . Where The use of the words sans recours '
a person indorses a bank note with the intent releases the indorser from liability in the
that it should act as an indorsement, and event of the cheque being dishonoured, but
delivers it so indorsed to a third person , he does not release him from liability with
renders himself liable to be sued upon the respect to any forgery before his indorsement.
note by any subsequent holder. A person The liability of an indorser is defined by
receiving a bank note in payment of a debt the Bills of Exchange Act, Section 55 :
cannot compel the person offering it to in-
dorse it, but where a person is asked to give
" (2) The indorser ofa bill by indorsing
it ,
change for a bank note he can , if he so wishes, “ (a) Engages that on due pre
decline to give the change unless the note sentment it shall be accepted
is indorsed . and paid according to its
When a Bank of England note is presented tenor, and that if it be dis
for payment at the Bank , it is customary honoured he will compen
for the Bank to request the person pre sate the holder or a subse
senting it to write his name and address quent indorser who is com
upon the back . As all Bank of England pelled to pay it, provided
notes are payable in gold , on demand, at that the requisite proceed
the head office, that office cannot legally ings on dishonour be duly
insist upon such indorsement. taken ;
Referring to indorsements on cheques , " (b) Is precluded from denying to
bills, and also on a bank note, Mr. Justice a holder in due course the
Byles (in Keene v. Beard, 1860, 8 C.B.N.S. genuineness and regularity
372) said that “ the act of writing may or in all respects of the drawer's
may not be an indorsement according to signature and all previous
circumstances," and he held that “ where a indorsements ;
man indorses an instrument of this sort,
animo indorsandi, and delivers it so indorsed " (c) Is precluded from denying
to a third person, he renders himself liable to his immediate or a subse
quent indorsee that the bill
to be sued upon the instrument, as indorsee, was at the time of his in
by any subsequent holder."
INDORSEMENT ON DEPOSIT RECEIPT. dorsement a valid and sub
A deposit receipt is not a transferable docu sisting bill, and that he had
ment, and the indorsement upon it is really then a good title thereto."
a discharge to the banker upon repayment From the above Section it is seen that an
of the money . If over £2, and the usual indorser engages to compensate a subsequent
printed form of receipt on the back is signed ,
indorser if the bill is dishonoured. When a
the signature must be across a twopenny bank is the holder of a bill payable to its
adhesive stamp, unless the form is already own order and obtains an indorsement (after
impressed with a twopenny stamp. (See its own ) by a third party to strengthen its
Deposit RECEIPT .) security, the third party is not liable to the
INDORSER. When a payee writes his bank, as the bank is a prior indorser. If
name upon the back of a bill or cheque, he the third party's indorsement is obtained,
is called an “ indorser," and when the instru- before the bank has indorsed, the bank would
ment is negotiated to other persons, each not be a holder in due course .
a ( See HOLDER
person may indorse it in turn and become an IN DUE COURSE.) When a bank obtains an
indorser . Each indorser of a bill (or cheque) indorsement to strengthen its security the
is liable thereon . bank " should either get, at the same time,
Any indorser, however, may add after his a letter acknowledging the indorser's liability
signature such words as without recourse to the bank in case of the dishonour of the
to me, ” or “ sans recours.'." The sanction is bill, or should have a statement to this
.

given by Section 16 of the Bills of Exchange effect written on the bill and signed by the
Act, 1882, which provides that any indorser surety.” ( Journal of the Institute of Bankers,
may insert an express stipulation : Feb., 1921. )
(1) Negativing or limiting his own lia- Section 56 provides : “ Where a person
bility to the holder ;
60
signs a bill otherwise than as drawer or
(2) Waiving as regards himself some or acceptor, he thereby incurs the liabilities of
all of the holder's duties.” an indorser to a holder in due course . "
346
IND ] DICTIONARY OF BANKING [INF

Where a person is under obligation to industrial society does not require registra
:
indorse a billin a representative capacity as tion under the Companies (Consolidation)
treasurer or executor, he may indorse the Act, 1908, as the society does not come
bill in such terms as to negative personal within the scope of that Act.
liability. (Section 31 , s.s. 5.) A receipt (in the form specified in the
Where an indorser is dead and the party rules), signed by two members of the com
giving notice knows it, notice of dishonour mittee and countersigned by the secretary
or
must be given to his personal representative of a registered society, indorsed on
if such there be, and with the exercise of annexed to a mortgage, discharges the
reasonable diligence he can be found. (Section mortgage without any formal re-conveyance.
49, s.s. 9.) (Section 43.) The receipt must be stamped
Where an indorser is bankrupt, notice 22 .
may be given either to the party himself or A member may nominate any person to
to the trustee (Section 49, s.s. 10) . (See receive at his death any property he has in
BILL OF EXCHANGE, DISHONOUR OF BILL OF the society to the extent of £ 100. (See
EXCHANGE, INDORSEMENT, NEGOTIATION OF under Will. )
BILL OF EXCHANGE .) Cheques of such societies are not exempt
INDUSTRIAL AND PROVIDENT SOCIE- from stamp duty.
TIES . — A society which may be registered INDUSTRIAL LIFE POLICY. The policy
under the Industrial and Provident Societies is usually granted upon the express condition
Act, 1893, is a society for carrying on any that it shall become absolutely void, if it is
business or trade authorised by its rules, in any way assigned, sold , mortgaged or
whether wholesale or retail, and including otherwise parted with . In some cases, how
dealings of any description with land, pro- ever, an indorsement may be found on the
vided that no member other than a regis- policy to the effect that the company give
tered society shall have or claim any interest consent to an assignment and that the policy
in th shares of the society exceeding shall not be void by reason of such assign
£ 200. ment.
In regard to the business of banking, the Even if such policies may be assigned ,
society shall be subject to the provisions of there is very little value attaching to them
the Act. (Section 4.) on account of their surrender and paid -up
Section 19 provides : values being so small. Most companies
give no cash surrender value. (See LIFE
" ( 1) No registered society which has any POLICY.)
withdrawable share capital shall INFANTS. All persons below the age of
.
carry on the business of banking. twenty -one are, byEnglish law , called infants
“ (3) The taking deposits of not more or minors. The question as to whether a
than ten shillings in any one pay- | banker can with safety permit a minor to
ment, nor more
than twenty open an account and draw cheques thereon
pounds for any one depositor, pay- is one which has been much discussed and on
able on not less than two clear which diverse opinions prevail. The gener
days' notice, shall not be included ally accepted legal opinion appears now to be
in the business. of banking within that a banker may, without risk , allow an
the meaning of this Act ; but no infant to open an account and draw cheques
society which takes such deposits upon it, but that the account must not be
shall make any payment of with overdrawn, for money lent to an infant
drawable capital while any claim cannot be recovered, even if he gave
due on account of any such deposit security. All contracts entered into by
is unsatisfied .” infants for the repayment of money lent
1
The word “ limited ” shall be the last shall be absolutely void. (Infants' Relief
word in the name of every society registered Act, 1874, Section 1.)
under this Act . By the Infants' Relief Act, 1874, Section 2,
A registered society may (if its rules do no action shall be brought whereby to
not direct otherwise) mortgage land, and no charge any person upon any promise made
mortgagee shall be bound to inquire as to after full age to pay any debt contracted
the authority for any such mortgage. during infancy or upon any ratification made
(Section 36.) after full age, of any promise or contract
A mortgage or charge by a registered made during infancy whether there shall or
347
INT DICTIONARY OF BANKING (INH

shall not be any new consideration for such against the firm the nfant would be ex
promise or ratification after full age." cluded . An infant cannot undertake the
In savings banks, receipts are given by duties of an administrator or executor nor act
minors and accepted , but in those cases as a proxy in bankruptcy proceedings. He
special provision is made under the Savings cannot make a will, and in the event of his
Bank Acts that the receipt of a person death letters of administration require to be
of the age of seven years or upwards shall taken out by his father or mother or nearest
be a sufficient discharge. of kin . An infant cannot be made liable on
The holder of an infant's cheque, which a guarantee .
has been dishonoured, cannot suethe infant An account is sometimes opened with a
upon it ; and where a cheque has been banker in the joint names of a parent or
cashed to a minor and is subsequently dis- / guardian and an infant ; such an account
honoured, the money cannot be recovered should be treated by the banker like an
by law from the minor. ordinary joint account as to authority for
Section 22, s.s. 2, of the Bills of Exchange signing of cheques, etc. , but he will, of
Act, 1882, provides : “ Where a bill is drawn course, bear in mind the non - liability of the
or indorsed by an infant, minor, or corpora- minor for an overdraft, as before mentioned .
tion having no capacity or power to incur If the minor is a very young child , the
liability on a bill, the drawing or indorse- better plan is for the account to be opened
ment entitles the holder to receive payment in the parent's or guardian's name for
of the bill, and to enforce it against any other the child, thus, ' John Brown, In re
party thereto . ” The signature of an infant Timothy Brown," in which case no
upon a bill does not in any way affect its mandate is required, and the adult has
negotiability. He may pass on a good title full control.
to others, and though he cannot be sued The form in which deposit receipts are
himself he may by his next friend sue other sometimes issued, “ John Brown for Joseph
parties to the bill. Even if a minor accepts Brown (a minor )" is not a desirable one, and
a bill in payment of necessaries, he cannot be should be avoided.
sued upon it. A deposit receipt may be issued in the name
An infant cannot sue in his own name, of a minor. On withdrawal he is able to give
except in a county court for wages due to a good discharge for the money.
him. In an action by an infant he must Stock in Public Funds. By the National
sue by his next friend ,” and in an Debt Act, 1870, Section 19 : - “ Where stock
action against an infant a guardian is is standing in the name of an infant or per
appointed. son of unsound mind, jointly with any
But if a minor has made a false representa- person not under legal disability, a letter of
tion as to his age and thereby induced a attorney for the receipt of the dividends on
banker or anyone to enter into a contract the stock shall be sufficient authority in that
with him , he cannot afterwards obtain relief behalf, if given under the hand and seal of
by proving that he is below the age of the person not under disability, attested by
twenty -one. two or more credible witnesses. " By the
The Statute of Limitations does not begin National Debt (Stockholders Relief) Act,
to run until he has reached the age of twenty- | 1892, Section 3 : - “ (a) Where an infant is
one. the sole survivor in an account ; and (b)
Shares with a liability should not be where an infant holds stock jointly with a
registered in the name of a minor as he person under legal disability ; and (c) where
may repudiate any liability thereon, either stock has by mistake been bought in or
before he comes of age or within a reasonable transferred into the sole name of an infant,
time afterwards . the Bank may, at the request in writing of
An infant may sign as a witness ; he may the parent, guardian, or next friend of the
also act as an agent and sign cheques, and infant, receive the dividends and apply them
draw , accept, or indorse bills, and the lia- to the purchase of like stock , and the stock
bility rests with the person who gave him so purchased shall be added to the original
the authority to do so . He may sign investment."
cheques upon an overdrawn account if that INGOT. Bars of gold and silver are called
power is included in the authority . There ingots. The duty
is nothing to prevent an infant being a INHABITED HOUSE DUTY .
partner in any business, but in any action on inhabited houses occupied as a shop,
348
INL ) DICTIONARY OF BANKING [INL

warehouse, public -house, farm -house, coffee Britain and Ireland , the islands of
house, lodging-house : Man , Guernsey, Jersey , Alderney,
Annual Value. Rate .
and Sark , and the islands adjacent
£ 20 and not exceeding £ 40 2d . in the £ to any of them being part of the
Exceeding £ 40 and notexceeding£60 od
4d.. dominions of Her Majesty.
Exceeding £ 60 .
07
(2) Unless the contrary appear on the
Occupied as an ordinary dwelling -house : face of the bill the holder may
£20 and not exceeding £ 40 3d. in the £ treat it as an inland bill."
Ēxceeding £ 40 andnotexceeding £60 6d. 99

Exceeding £60 . By Section 36 of the Stamp Act, 1891 ,

9d .

Where a dwelling -house communicates madebilloutorofnote

a the purporting to be is,
United Kingdom drawn or
for the
with a bank office, the duty is payable upon purposes of stamp duty, to be deemed to
the annual value of the office as well as upon have been so drawn or made, although it
the house portion. In London and West may in fact have been drawn or made
minster Bank, Ltd. v. Surveyor of Taxes within the United Kingdom .” Thus, by
(1902, 18 T.L.R. 774) where the ground the Stamp Act, a bill drawn in the Isle
door was used for the business of the bank, of Man and the Channel Islands (which
and upper floors as the residence of the places are out of the United Kingdom ) is
manager, and there was internal communica- regarded as a foreign bill, whereas, by the
tion between one part and the other of the Bills of Exchange Act, it is an inland
building, it was held , in the House of Lords, bill.
that the whole of the premises were assessable Where an inland bill is dishonoured, it is
to Inhabited House Duty. not necessary that it should be noted or
An unoccupied house is exempt. Pre protested for non -acceptance or non
mises used solely for business purposes are payment in order to preserve recourse against
exempt from the duty, provided that no one the drawer or indorser, but this is sometimes
sleeps on the premises other than a person done in order to induce a friend to come
engaged to dwell there solely for their protec- forward to accept the bill for the honour
tion , and who is not otherwise employed by of a certain party to the bill. The
the occupier. By the Finance Act, 1911, sections of the Act with regard to noting
Section 15 , “ the fact that the husband or and protest are given in the article
wife of a caretaker, or other member of the PROTEST.
family of a caretaker, or the servant of a Where an inland bill is indorsed in a
caretaker, dwells in any house or tenement foreign country, the indorsement shall as
together with the caretaker, shall not be of regards the payer be interpreted according
itself sufficient to deprive the house or United Kingdom.
of thelaid
law rules As to
tenement of the benefit of any exemption thethe
to other down in the Bills of
under Schedule B, case 5, of theHouse Exchange Act with regard to bills drawn in
Tax Act, 1808, or s.s. 2 of Section 13
ofthe Customs and Inland Revenue Act, one country and negotiated, accepted or
payable in another, see Section 72, under
1878."
FOREIGN BILL.
A dwelling-house of a less annual value The following is the usual form in which
than £ 20is exempt . a bill of exchange is drawn :
INLAND BILL. The Bills of Exchange
Act, 1882, Section 4, defines an inland bill
. S

as follows : Birmingham ,
rechy 10, 19
E
ON

£ 150 Os. Od .
, nJ

“ (1 ) An inland bill is a bill which is or

a

Six montaBR.,
nd

on the face of it purports to be date pay to

(a) both drawn and payable within Stamp. me or myielded the sum of one
the British Islands, or (6) drawn 23 .
hundred and difty pounds for
eg

within the British Islands upon value

an n

some person resident therein. Any

t

other bill is a foreign bill. To Mr. Thorlacct, Johạ BROWN .

“ For the purposes of this Act, 15 Thanos Street,
• British Islands ' mean any part
of the United Kingdom of Great pre vndon .
349
INL ] DICTIONARY OF BANKING [INS

OBINSON

er
The indorsements appear upon the back of Referring to the indorsements on the bill,

Brown

Manag
obinson

dinal
the bill, e.g. : John Brown wishes to pay £150 to Smith ,

SMITH
g
JOHN
. er

.order

Green
Traeri
Robinson & Co.; he therefore, as shown,

, o.

James
Smith
ord

&

he al
indorses the bill over to them ; who in their

R
or

C
Pay
Pay

or

.
Imp
the
o.

Imperi
turn indorse it to the Imperial Trading Co.,
,C&
R

Trading
,
Ltd. ; this firm indorse it and then, perhaps,

.tPer
pro
discount it with their own bankers who will

, td.
LCo.
sort it away in their bill case until the time
comes for presentation for payment. For
stamp duties see BILL OF EXCHANGE. (See i
, td.

BILL OF EXCHANGE, FOREIGN BILL .)

Co.

INOPERATIVE ACCOUNT. An account

L

upon which there are no transactions.

INSANE PERSON. (See LUNATIC .)
INSCRIBED STOCK. No certificates are
issued to the holders of inscribed stock, but
This bill is drawn at Birmingham on July their names and the amount of the stock they
10, 19 being payable at six months after hold are inscribed in the registers kept for
date it falls due ( or matures) on January the purpose at the banks which have the
13, 19 ; the six months are called its management of the stocks. The Bank of
term and the following three days are the England, for instance, holds the registers
days of grace . The date is always expressed for the stocks in the Public Funds, and a
in figures, but to use words would be quite stockholder (of inscribed stock) wishing to
in order. The amount is quoted in both transfer his holding must attend personally
words and figures, but either alone would at the Bank to sign the transfer in the
be according to law, the repetition being to register, or, if unable to attend personally,
avoid mistakes or fraudulent alteration . the transfer may be effected by his duly
The currency of this bill on July 10, 19 authorised attorney. Transferors must in
the dayitisdrawn, is 187 days, on July 11 allcases be identified by a stockbroker or
it is 186 days, and so on, this being the time other person approved by the Bank. Hold
it has yet to run. .ers of Stocks inscribed in the Bank books
This is an after date ” bill, but it might may have their stock registered as stock
have been drawn “ after sight," in which transferable by deed. (See NATIONAL DEBT.)
case Mr. Thomas Jones, when he accepted In a case in 1907, Mr. Justice Lawrence
it, would have written the then present date said : “ It is the long -established practice of
in his acceptance and the due date would the Bank of England to permit stockholders
have been reckoned from that. to make transfers in the Bank books only
Or, instead of “ Six months after date," when they are identified as the persons
the bill might have beenordrawn “ At sight " owning the stock by persons of one of three
or On presentation classes (1) certain high officers of the Bank
On demand," in
all which three cases there would be no of England ; (2) the past and present
acceptance at all, for payment would have representatives of private banks ; (3) mem
to be made at once. bers of the London Stock Exchange and their
The drawer is John Brown, who in this clerks, whose names are upon a list kept at
case is also the payee, but the drawer could the Bank. The privilege of being upon this
have made the bill payable to anyone he list of brokers is obtained by the introduction
pleased or to bearer . of a member already upon the list. A
The drawee is Thomas Jones and by member upon the list can have his clerk's
writing his name across the bill he has name put upon it by signing a document
become the acceptor ; that is to say, he making himself responsible for the acts of
accepts John Brown's demand for money his clerk. There are some 3,000.members on
due, and, by the words he has added , in- the list, and it is clearly a privilege valuable
structs the Rivergate Branch of the British to brokers who dealin Government securities.”
Bank (where Thomas Jones keeps his account) Certain stocks domiciled at the Bank of
to pay £ 150 to John Brown or his order in Montreal, Glyn & Co., Standard Bank of
six months' time. South Africa and the Agent -General for South
This bill is said to be domiciled at the Australia are transferred by deed, although
British Bank, Ltd., Rivergate, London . they are called inscribed stocks.
350
INS) DICTIONARY OF BANKING [ INS

Stock certificates to bearer may be of one shilling, or such less sum as the
obtained by a holder for various stocks, company may prescribe (Section 30 of the
which are transferable at the Bank of Section
Companies (Consolidation) Act, 1908). See
31 under REGISTER OF MEMBERS OF
England.
The receipt for the purchase money, which COMPANY, as to closing the register at
is given by the vendor or his attorney certain times.
Refusal to allow the right of inspection
to a purchaser when a transfer of inscribed
stock is made, is of no value. It is not entails heavy penalties. (See COMPANIES,
required upon a subsequent sale. OF MEMBERS OF COMPANY.
obtaine a security“ uponsinscribed stock,Tit INSTALMENTMALLOTMENTPANAH)allot
must be transferred into the names of the ment of stock or bearer bonds where the
(See POWER OF price ofissue is allowed to be paid in several
nominees of_the bank . OF
ATTORNEY_TRANSFER INSCRIBED instalments. For example, the Funding
GOVERNMENT STOCK.) Loan , 1960-90, was issued so that an investor
INSOLVENCY . A person is insolvent who could pay up the full price at once, or he
is unable to pay his debts, and he is said to could pay for it by eight instalments spread
be in a state of insolvency. over a period from June, 1919, till January ,
An insolvent person may have a receiving 1920 . (See SCRIP CERTIFICATE .)
order made against him and suffer proceed INSTALMENTS. Part repayments of a
ings under the Bankruptcy Acts (see Bank- debt. They may be made at regular, or
RUPTCY, RECEIVING ORDER), or he may call irregular, periods. As to the effect of the
his creditors together and endeavour to Statute of Limitations upon a promissory
come to an arrangement with them (apart note being repaid by instalments, see
from the Bankruptcy Acts), usually either STATUTE OF LIMITATIONS — PROMISSORY
by offering to pay a composition — that is, to Note. For an example of payment by
pay so much in the pound in full discharge of instalments, see SCRIP .
what he is owing to them (see COMPOSITION INSTITUTE OF BANKERS . Address :
WITH CREDITORS)-or by offering to transfer 34, Clement's Lane, London, E.C.
his property to a trustee in order that it may The Institute of Bankers was founded in
be realised and the proceeds divided | 1879 and is an Association of men and women
amongst his creditors according to the connected with the various branches of
amounts of their respective claims. (See banking. Its objects are : first, to facilitate
ASSIGNMENT FOR BENEFIT OF CREDITORS.) | the consideration and discussion of matters
Where a judgment has been obtained in of interest to bankers ; secondly, to afford
a county court, and the debtor is unable to opportunities to its members for the
pay, if the whole indebtedness does not acquisition of a knowledge of the theory
exceed £50, an administration order and practice of banking ; thirdly , to take
may be made by the county court. (See any measures which may be desirable to
ADMINISTRATION ORDER.) further the interests of banking .
When a petition is presented against a The Institute affords facilities for the
debtor, and his estate is not likely to exceed reading, discussion and publication of papers
£ 300 the Court may make an order for by members and others ; it arranges for
summary administration . (See SUMMARY the delivery of lectures on banking, mer
ADMINISTRATION .) cantile law , political economy, foreign
When a receiving order has been made languages and other kindred subjects ;
against a debtor, it may subsequently be and it issues certificates to those who pass
discharged by the Court if a proposal by the the examinations approved of from time to
debtor for a composition in satisfaction of time by the Council of the Institute.
his debts, or a proposal for a scheme of The Institute encourages and assists in the
arrangement of his affairs is accepted by formation of Local centres.
the creditors. (See Acts OF BANK- The members of the Institute are fellows,
RUPTCY, BANKRUPTCY , COMPOSITIONS— associates, certificated associates and
BANKRUPTCY Act.) ordinary members.
INSPECTION OF REGISTER . The Fellows are elected by the Council.
register of members of a company shall, Subscription, two guineas.
during business hours, be open to the inspec Associates are elected from those who
tion of any member gratis, and to the have not been less than ten years in the
inspection of any other person on payment service of any bank ; or from those who
351
INS) DICTIONARY OF BANKING (INS

have passed the examinations recognised by and has thereby become an Associate of the
the Council ; or from those who, being on Institute.
the staff of a bank , are graduates of any President.
University. Subscription, one guinea. Chairman
Certificated associates are members who of the
have gained the certificate of the Institute. Council.
Subscription, 10s. 6d. Dated this day of 19 .

Ordinary members are elected from the

staff of any bank on the Council's list. INSTITUTE OF BANKERS IN IRELAND .
Subscription , 10s. 6d . The Institute was founded in 1898 .
The membership on January 1 , 1920, was The object of the Institute is to enable the
as follows : members to acquire a knowledge of the
Fellows . 430 theory and practice of Banking, and to
Associates and certificated 2,349 promote the consideration and discussion of
Ordinary members . 7,762 matters of interest to the profession.
Grand total . .
10,541
The Institute provides for the delivery of
lectures on banking and other professional
The Journal of the Institute is published subjects ; and maintains a suitable library
in consecutive months from October to the for the use of the members. Examinations
June following, with a further issue of one are held annually, and certificates awarded .
or two numbers when deemed necessary . The Journal of the Institute is issued
The date of publication is on or about the quarterly .
first day of the months named . INSTITUTE OF BANKERS IN SCOTLAND .
The Associate Examination of the This Institute was established in 1875.
Institute " is divided into two parts, known Its object is “to improve the qualifications
as Part I and Part II. The subjects of of those engaged in banking, and to raise
examination in each part are : their status and influence."
The object is promoted by classes, lectures
Obligatory subjects. and bursaries ; by the formation of libraries
The Practice and Law of Banking, of works on finance and kindred subjects ;
Economics . by examinations and the issuing of
English Composition . certificates to such as pass them .
Commercial Geography. The Institute consists of members and
Foreign Exchange. associates, who are connected with the banks
in Scotland.
Voluntary subjects. The Scottish Banker's Magazine is published
French . quarterly by the Institute.
Spanish . INSTRUMENT. A legal term applied to
German . a bill, a cheque, a deed, or any document in
writing by means of which some right or
The following is the form of the certificate contract is expressed. (See NEGOTIABLE
which is issued to members who pass the INSTRUMENTS.)
examination : INSURABLE INTEREST . Before a per
son can effect an insurance on the life of
CERTIFICATE OF THE INSTITUTE. another person , or can insure a ship or
cargo, or a house against fire, or any other
(Pursuant to Clause III of the Constitution thing, he must have an insurable, that is,
thereof.) a pecuniary, interest in the person or thing
We, the President of the Institute of to be insured . (See LIFE Policy.)
Bankers and the Chairman of the Council for INSURANCE . The word was originally
the time being, do hereby certify that applied only to fire insurance, but it is now
used either for life or fire, as well as for other
matters of insurance. ( See ASSURANCE,
has duly passed the Examination for the CREDIT INSURANCE , FIRE INSURANCE ,
Certificate of the Institute in the various Hold UP ” Policy , LICENSED PROPERTY,
subjects selected by the Council , namely : - Life Policy, MARINE INSURANCE Policy,
MUTUAL INSURANCE, POLICY OF INSURANCE ,
RE-INSURANCE, SPECIE — TRANSMISSION OF. )
352
INS) DICTIONARY OF BANKING (INT

INSURANCE CERTIFICATE . An insur- | amount on which interest is subsequently

ance certificate is sometimes attached to a allowed .
documentary bill, and is a declaration by an In a current account, interest is calculated
insurance company that the goods are from the actual date when a customer's
insured under a policy which also covers cheque is paid (not from the date of the
other goods. It may also be given if the cheque), and from the actual date when
actual policy is not ready . (See MARINE money is paid to credit, which, in the case
INSURANCE POLICY .) of a sub -branch, may in some cases be the
INTER ALIA . ( Among other things.) day before it is actually posted in the current
The words are often found in abstracts of account ledger at the parent branch. Where
title to indicate that an abstracted docu- a cheque ispaid at another bank or branch
ment refers to other properties besides the under advice,the banker is entitled to charge
particular one with which the abstract is interest from the date when so paid . The
concerned . calculations are in most banks now effected
INTER VIVOS. (See Gifts INTER by means of products, commonly , though
Vivos . ) erroneously, called “ decimals,” by which
INTERBOURSE SECURITIES . INTER- the balance of an account, on the occasion
NATIONAL SECURITIES. General terms of each change, is multiplied by the number
indicating securitieswhich can be bought and of days it has remained undisturbed , the
sold in different countries at practically the product, say, 2,650, being simply £ 2,650
same prices. for one day, or put in another form £ 1 for
INTEREST. Interest is the money which 2,650 days. The total of all the products
is paid for a loan or the use of money. In on an account by the end of a half -year is
the case of a banker interest is paid by him therefore that number of pounds for one
to customers for money deposited, and is day at the rate of interest to be allowed or
received by him for money he has lent to charged. With the aid of a product table the
customers. amount of interest is very quickly ascer
In the year 1546 the taking of interest for tained . (See DECIMALS.)
money wasmade legal in England , and the If the interest on an amount is to be
rate was fixed at 10 per cent. It was ascertained from a 5 per cent. table, then
reduced to 8 per cent . in 1624, and to 6 per to find the interest
cent. in 1651 , and in 1714 it was further at 51 % add It
reduced to 5 per cent. (Gilbart .) , 41 % deduct it
If the rate of interest is 3 per cent. , the add
deduct
interest upon the money lent (the principal) 3

619 add
is referred to as being at the rate of £3 per 31 % deduct
9)

cent. per annum ; that is, for each £ 100 , 3 9) deduct

three pounds is payable by way of interest 21 % deduct
12
0 /
at the end of a complete year, and for each 2 % deduct 3
1 % deduct
part of £100 or part of a year the interest
is in proportion thereto. As to discount on a bill, see DISCOUNT.
Simple interest is calculated upon the In the case of a deposit receipt where
principal only, whereas compound interest interest varies according to the Bank Rate,
is interest which is calculated upon the the interest is calculated by means of a table
principal plus interest which is due and has of decimals, each rate being taken as a
not been paid. A deposit receipt is an decimal part of 5 per cent. (See INTEREST
example where simple interest only is al- ON DEPOSIT RECEIPT.)
lowed . It is calculated and provided for London bankers do not, as a rule, allow
each half-year by a banker upon the original interest upon a current account but country
sum deposited, but it is not added to the bankers usually do so, the rate being regu
principal until the depositor brings in his lated according to thecustom of the district
deposit receipt and renews it for the amount and the nature of the account. Country
with the interest added . A deposit account, bankers usually reckon the interest upon
and current account where interest is added , the daily balance of an account.
are examples where compound interest is In some cases, if the balance falls below
allowed , as each half-year when the interesta specified figure no interest is given, though
is calculated it is added at once to the if that figure is maintained, interest is
balance or principal and becomes part of the allowed . It is sometimes agreed to allow
353
23- ( 1535 )
INT) DICTIONARY OF BANKING (INT

interest upon the minimum monthly balance. charges having been debited to an account,
The rate of interest upon a current account at other than the usual date, without the
is naturally dependent upon the character customer's knowledge, the banker may be
of the account, and upon the amount receive liable for wrongful dishonour.
able from commission . In some London Unless by agreement, a banker is under
banks the charge for commission is dependent no obligation to allow interest upon money
upon the balance which is kept. lent to him .
The interest upon a deposit receipt or Upon thedeath of a customer it has been
deposit account is allowed at a higher rate held that simple interest only may be
than on a current account, the balance of charged, and not compound interest, from
which is liable to be withdrawn at any the date of the customer's death till the date
moment. Some bankers allow a uniform of payment. ( Provincial Bank v. O'Reilly,
rate throughout the year, irrespective of 1890, 26 L.R.İr. 313. )
by an ordinary
or low , whilst other bankers regulate the banker's mortgage for aa fluctuating balance,
rate upon a scale which fluctuates according compound interest may be charged . But
to the Bank Rate . where a banker takes a mortgage for a
On deposits which are subject to notice, fixed sum, unless there is a special agreement
a higher rate is usually allowed , the rate to charge compound interest, he can charge
being increased (e.g. in colonial banks) up only simple interest, because the position
to a certain point, according to the length is no longer that of banker and customer
of notice which must be given . but that of mortgagor and mortgagee. For
No interest is, as a rule, allowed upon this reason , a loan account which is secured
money on deposit receipt unless it has by a mortgage for a fixed sum must be kept
remained in the banker's hands for a certain distinct from the working account. The
specified period. The period varies accord- usual method in such a case is to obtain a
ing to the bank, in some cases it is four- cheque from the debtor upon the working
teen days, in others one month or even account for the interest upon the loan
two months . (See INTEREST ON DEPOSIT account as it falls due. In the case of a fixed
RECEIPT.) mortgage the banker must deduct income
Where notice of repayment is given (i.e., | tax from the amount of the interest due
in cases where notice is required) and the upon the loan before charging it to the
money is not applied for at the date it is customer's account, but if the loan is for a
due to be paid , interest usually ceases until less period than a year the customer is not
the depositor renews the receipt. entitled to have tax deducted. A mortgagor
Unless a promissory note payable on is entitled by law to deduct income tax .
demand expressly states that interest is to See Income Tax Act, 1918, under INCOME
be paid, interest is not recoverable . Where Tax. When a banker deducts tax from the
a bill is dishonoured, interest on the amount interest due by a customer upon a fixed
of the bill may be recovered from the time mortgage, he takes credit, in his income tax
of presentment for payment if the bill is return , for the amount of tax allowed to the
payable on demand and from the maturity customer ; that is, the amount of tax due
of the bill in any other case . (See Section to be paid to the tax authorities upon the
57 of the Bills of Exchange Act, 1882, under profits of the bank is reduced by the amount
DISHONOUR OF BILL OF EXCHANGE.) which he has already paid by way of the
There is no general law to justify interest deduction from the customer's interest.
being charged upon a loan, but by custom Income tax is deducted from the interest on
a banker is entitled to charge interest, and, fixed deposits for a year or more by the
by making half -yearly rests and adding the colonial banks in London . (See INCOME
accrued interest to the balance, to charge | Tax . )
compound interest. In addition to the e As to the effect of the Statute of Limi OP
usual custom, there may be a special agree- tations upon interest, see STATUTE
ment as to interest between the banker and LIMITATIONS INTEREST.
a customer . A banker's right to charge In the case of a bank of issue which was
compound interest may also be justified by being wound up,it was held that interest at
a customer's acquiescence in the method of 5 per cent. was payable upon its notes from
charging his account in previous half-years. the date when demand for payment was
If a cheque is dishonoured by reason of made from the liquidator.
354
 INT] DICTIONARY OF BANKING [INT
When a judgment for mortgage money alleged to be due out of the debtor's
has been obtained , the interest (if more than estate (whether in the form of
4 per cent. in the mortgage deed ) is reduced renewal of a loan or capitalisation
to 4 per cent. of interest or ascertainment of
Upon the bankruptcy of a customer, loans or otherwise ), the account
interest can be charged only up to the date may be re-opened and the whole
of the order ; or in the case of a deed of transaction treated as one ;
assignment to the date of the deed .
If there is any surplus from a bankrupt's (6 ) Any payments made by the debtor
estate after all debts are paid in full it shall to the creditor before the receiving
be applied in payment of interest from the order, whether by way of bonus
date of the receiving order at the rate of or otherwise, and any sums received
four pounds per cent. per annum on all by the creditor before the receiving
debts proved in the bankruptcy (Section order from the realisation of any
33 , s.s. 8, of the Bankruptcy Act, 1914) . security for the debt, shall, not
On any debt or sum certain , payable at withstanding any agreement to the
a certain time or otherwise, whereon interest contrary , be appropriated to
is not agreed for, and which is overdue at the principal and interest in the propor
time of the receiving order and provable in tion that the principal bears to the
bankruptcy, the creditor may prove for sum payable as interest at the
interest at 4 per cent. per annum to the date agreed rate ;
of the order from the time the debt was “ (C) Where the debt due is secured and
payable, if payable by virtue of a written the security is realised after the
instrument at a certain time, and if payable
receiving order, or the value thereof
otherwise, then from the time when demand is assessed in the proof, the amount
in writing has been made giving the debtor
notice that interest will be claimed from
realised or assessed shall be appro
the date of the demand until the time of priated to the satisfaction of princi
payment. (See Rule 21 under PROOF OF
pal and interest in the proportion
that the principal bears to the sum
DEBTS.) From dividends on a debt pay payable as interest at the agreed
able at a future time, a rebate of interest at rate. "
five pounds per cent. per annum must be When , for any reason , it is necessary to
deducted from the date of the dividend to refund part of the interest charged to a
the time when the debt would have become customer's account, it is commonly called a
payable. (Rule 22.) rebate .
Section 66 of the Bankruptcy Act, 1914, In Scotland, all the banks, by agreement,
provides : make the same charges for interest and
" (1 ) Where a debt has been proved, commission, so that, as far as charges are
and the debt includes interest, or any concerned , there is no advantage to be
pecuniary consideration in lieu of interest, gained by a customer dealing with one bank
such interest or consideration shall, for the rather than another. No interest is allowed
purposes of dividend, be calculated at a rate on accounts having balances, creditor, but
not exceeding five per centum per annum , on the other hand commission is not
without prejudice to the right of a creditor charged .
to receive out of the estate any higher rate A ready way of telling approximately the
of interest to which he may be entitled after number of years in which an amount at
all the debts proved in the estate have been compound interest will double itself, is to
paid in full. divide 70 by the rate per cent.
( 2) In dealing with the proof of the At compound interest an amount doubles
itself :
debt, the following rules shall beobserved :
' (a) Any account settled between the At 7 per cent. in 10 years 89 days.
debtor and the creditor within three 6 11 327
5 14 75
years preceding the date of the 9 15 273
receiving order may be examined , 4 17 246
20
and, if it appears that the settlement 31
3
9
23
54
164
of the account forms substantially 99

21
99

9)
28 26
one transaction with any debt 27 35 9) 1 day.
355
INT ) DICTIONARY OF BANKING [INT

At simple interest an amount doubles a special table requires to be prepared in

itself : order to assist in making the calculation .
At 7 per cent. in 14 years 104 days. If the interest table which is used is a 5
6 16 239 . per cent . one and the rate to be allowed on a
99 20
22 81
deposit receipt is 2 per cent., the interest on
41 £1 for one day will be two- fifths or .4 of the
25 >

1 31 9) 92 28 19 208 interest shown in the 5 per cent. table. In

3 33 121 other words, the interest on £1 for one day
21 40
9

50
INTEREST BILLS. A name sometimes
given to the bills of exchange, payable in
India, which are issued in payment of the
interest upon Indian Government Rupee
Loans. The bills are for rupees, and may each day, when 21 per cent. •5 is added,
be sold in London . 60
INTEREST ON BILL . · Where a bill is
expressed to be payable with interest,
unless the instrument otherwise provides,
interest runs from the date of the bill, and if
at 2 per cent. is the same asinterest on £1
for • 4 of a day at 5 per cent. ; for two days
it will be 8 of a day, for three days 1.2
days at 5 per cent., and so on, 4 being
added each day .
When the rate is 3 per cent., :6 is added
when 4 per cent. 8 is added, : 1 being added
for each } per cent. increase in the rate.
The following is a short specimen table :
2 per cent.. 1 Jan., 19. , 4
2 .8

the bill is undated from the issue thereof " 1.2

1.6
(Section 9, s.s. 3, Bills of Exchange Act, 1882). 5 2.0
In an action on a dishonoured bill, interest 3 per cent. 6 9 2: 4
as damages can be claimed from the time of 3 3.0
8 3.6
presentment for payment, if the bill is 9 > 4.2
payable on demand, and from the maturity 10
11
4.8
5:4
of the bill in any other case ; but such 60
interest may, if justice require it, be with- 21 per cent.. 12
13 6.5
held, and where a bill is expressed on the 14 3 7.0
face to be payable with interest at a given 15 7.5
rate, interest as damages may or may not 2 per cent.. 16
17 >
8.0
8.4
be given at the same rate as the interest 18 8.8
proper (Section 57) . The usual rate of
interest allowed is 5 per cent. , but a higher If a deposit receipt which was issued on
rate would be allowable if it is expressed in January 3, 19 .., is presented for payment
the bill, but the Court has power to set aside on January 16, it will be seen from the above
an agreement as to the rate of interest if it table that interest must be allowed during
is considered excessive. those thirteen days at three different rates,
In practice a clause as to interest is very to January 6 at 2 per cent., 6 to 12 at
seldom inserted in a bill of exchange, 3 per cent., 12 to 16 at 2} per cent.
although this is frequently done in a pro- To ascertain the interest due, the decimals
missory note, the wording then being On on January 3 must be deducted from those
8.0
demand (or six months after date) I promise
to pay to C D or order one hundred pounds on 16, thus, 1.2
6.8
the difference, 6-8, being the
with interest at the rate of five per centum
per annum , for value received . A B.” If numbe r of days at 5 per cent. upon the
the note does not contain the interest clause , amount of the deposit receipt to give the
interest is not legally enforceable. interest required . In the case supposed ,
The stamp need only cover the amount if the amount of the deposit is £100, the
of principal, unlessa fixed sum is mentioned interest is quickly found by referring to a
as interest, e.g. " £ 100 with £5 interest.” 5 per cent. interest table and finding the
INTEREST ON DEPOSIT RECEIPT. The interest on the amount, £100, for 6-8 days.
interest on a deposit receipt is quickly All calculations of interest should be made
ascertained from the usual interest tables by one clerk and checked by another, and
when the rate is the same during all the when the receipt is to be paid , a note of the
period that the money has been with the amount of interest should be written on it
banker, but when , as is customary in certain and be initialled by both clerks.
districts, the rate varies from time to time, Simple interest only is allowed on deposit
356
INT ) DICTIONARY OF BANKING ( INT

receipts so long as they remain outstanding. INTERIM DIVIDEND . The dividend of

But when a receipt is renewed , the interest a joint stock company is declared by the
due to date is added and becomes part of company in general meeting ; but power
the principal on which future interest is is given, in most articles of association, to
allowed . the directors to pay to the members such
Each half -year, the interest due to date interim dividends as appear to them to be
upon all deposit receipts is calculated and justified by the profits which have been
set aside before the profits of a bank are earned . An interim dividend is therefore
ascertained, the amount being carried one which is paid in the meantime, and which
forward into the next half -year to meet the comes forward for confirmation when the
interest up to that date when the receipts general meeting is held . An interim divi
are presented for payment. dend which is paid in, say, July is often less
In the case of a receipt subject to notice than the amount which is paid in January ;
of withdrawal, after notice has been received e.g. if the dividend for the year is likely to
it is the practice of some banks, when the be 15 per cent., 5 per cent. may perhaps be
money is not withdrawn, to cease adding paid in July and 10 per cent. in January.
interest after the date when the receipt was INTERNAL LOAÑ. A public loan of
due to be repaid . Banks do not, however, which the principal and interest are payable
always insist upon notice being given, and within the country that raised the loan.
when the deposit receipts are paid without (See EXTERNAL LOAN .)
notice, some banks deduct from the interest INTERNATIONAL SECURITIES. ITIES
(See
due to date a sum equal to the interest which INTERBOURSE SECURITIES.)
would have accrued during the period INTERPLEAD . To interplead is to bring
between the date of payment and the date before the Court the claims of two persons
when it would have been due to be paid if to the same object and to obtain the decision
notice had been given ; in other words, of the Court. A banker might have occasion
interest is deducted for the days still to run to interplead, for example, if two persons
before the receipt is due. (See DEPOSIT each laid claim to a sum of money deposited
Receipt.) with him .
Interest is not, as a rule , allowed upon a INTESTACY . ' INTESTATE . Where'a
depositreceipt until the money has remained person has died without making a will, it is
in the bank for a certain period, say, four- known as an intestacy , and he is referred
teen days or a month , and in some banks to as having died intestate. In order that
for two months. the affairs of the deceased may be wound
When a bank allows interest on current up, letters of administration (q.v.) require
accounts it usually gives a slightly higher to be obtained from the Probate Registry,
rate for deposits, and in the case of deposits or Somerset House, by some person who
for a fixed period a slightly higher rate still. is entitled to act as administrator. The
Income tax is deducted from the interest estate is not distributed till one year from
payable by colonial banks in London upon the death of the intestate .
fixed deposits for a year or more. In an intestacy, real property descends
INTEREST WARRANT. An order or to the heir-at-law ; personal property to
warrant for the payment of interest upon the next of kin , or in the case of a married
debenture stocks and such-like securities. woman to the husband. (See Curtesy.)
A dividend warrant is an order for the pay-Upon the death of the owner of freehold or
ment of a shareholder's proportion of the leasehold property the title vests in his
profits of a company. executors or administrators. (See EXECUTOR.)
The Bills of Exchange Act, 1882, recog- The heir-at-law is the person who is
nises, any usage relating to dividend entitled to the real property of an intestate.
warrants or the indorsements thereof " The eldest son and his descendants come
(Section 97, s.s.3, d .),but no reference is made first, then the other sons in order and their
to interest warrants. It would appear, descendants. If there are no sons but only
therefore, that an interest warrant, if payable daughters, they succeed equally to the
to several parties, should, strictly, be signed property, and are called coparceners. (See
by each one, though they are frequently COPARCENERS .) If there are no lineal
treated in the same way as dividend descendants, the nearest lineal ancestor is
warrants . Per pro. indorsements are not the heir, that is, the intestate's father would
accepted . succeed to the real property, or, failing
357
INT) DICTIONARY OF BANKING (INV

him, the intestate's eldest brother and of the personalty is divided equally between
descendants, and so on. the children .
By the Intestate Estates Act, 1890, it is Failing a husband, wife, or descendants,
provided that the real and personal estate personal property is divided among the
of every man who shall die intestate after members of any one of the following classes
September 1, 1890, leaving a widow but no on the failure of the class that precedes it and
issue, shall , in all cases where the net value to the exclusion of the class that follows it :
of such real and personal estate shall not 1. Father ;
exceed £500, belong to the widow absolutely. 2. Mother, brothers, sisters, and the
Where the net value exceeds £500, the widow children of deceased brothers and
is entitled to a first charge of £500 upon the sisters (such children taking their
whole estate, real or personal, the amount deceased parent's share) ;
being paid out of the estate in proportion 3. Grandfathers and grandmothers ;
to the values of the real and personal estates 4. Uncles, aunts, nephews, nieces, and
respectively. This right is in addition to great grandparents ;
her share in the residue of the estate . Upon and so on .
an intestacy, a widow is entitled in the case Where title deeds are lodged as security
of real property (which does not include by a person who has succeeded to the pro
leaseholds) to " dower," that is, a life perty , the purchaser in the last conveyance
interest in one-third of the property, unless having died intestate, the banker should
there is a declaration against dower in the ascertain if the land is charged with dower ,
deed of conveyance to the husband. In the or freebench , in the case of a widow ; and
case of copyhold property , the widow's life in the case of a widower with curtesy,"
60
interest is called freebench ” and varies that is, a husband's right for life to the
with different manors . The following ex- rents of the whole of his deceased's wife's
ample is given in “ Wills " by J. A. Slater :- real estate, if she died intestate, provided
“ A man leaves real property worth £ 1,000 that the deceased wife had a child by the
and personal property worth £ 4,000. If he husband and such child was capable of
has died intestate, and has left a widow inheriting. (See GAVELKIND.)
and no issue , the widow is entitled first of (See DEATH OF CUSTOMER .)
all to £500, one-fifth of which, namely, £ 100, ÎNTRA VIRES. Within the powers. (See
comes out of the real estate, and four-fifths, ULTRA VIRES.)
namely , £ 400 , out of the personal estate. INTRINSIC VALUE . There is no such
She is then entitled to her dower, unless it thing as intrinsic value. As the value of
has been barred , out of the remaining £900 anything is what it can be exchanged for, if
of real estate , and to one-half of the remain- it cannot be exchanged for anything it has
ing £ 3,600 of the personal estate. She thus no value. Money is frequently said to have
receives £2,300 absolutely , and enjoys the an intrinsic value that is, a value within
interest arising out of £ 300 worth of the itself — but on an island where there are no
real property for her life. If there is issue, inhabitants, money could not be exchanged
she takes only one -third of the £4,000, and for anything, and in such a case it would be
dower, or a life interest, in one-third of the absolutely without value .
£ 1,000 .” INVESTIGATION OF COMPANY'S
Where an intestate leaves a widow but no AFFAIRS. The affairs of a company may
issue, the widow , as shown above, takes half be investigated by Board of Trade in
the personalty, and the other half goes to spectors . The Companies (Consolidation)
the next -of-kin of the intestate . Act, 1908, Section 109, provides as follows :
Where there are children , if the father dies " ( 1 ) The Board of Trade may appoint
intestate and the mother is already dead, one or more competent inspectors
the whole of the personalty is divided equally to investigate the affairs of any
among the children ; if the mother is living, company and to report thereon in
the mother takes one- third and the children such manner as the Board direct
two -thirds of the personalty equally among “ (i) In the case of a banking
them . company having a share
Where a wife dies intestate, the husband capital, on the application
takes the whole of the personal estate, of members holding not less
whether there are any children or not ; if than one - third of the shares
the husband was already dead, the whole issued :
358
INV) DICTIONARY OF BANKING
(ii) In the case of any other
company having a share
capital, on the application
of members holding not less
than one -tenth of the shares
issued :
( iii) In the case of a company within fourteen days.
not having a share capital
on the application of not
less than one - fifth in number
of the persons on the com-
pany's register of members.
" (2) The application shall be supported
by such evidence as the Board of
Trade may require for the purpose
of showing that the applicants have
good reason for, and arenot actuated
by malicious motives in requiring,
the investigation ; and the Board of
Trade may, before appointing an
inspector, require the applicants to
give security for payment of the
costs of the inquiry.”
" A company may by special resolution
appoint inspectors to investigate its affairs."
(Section 110, s.s. 1.)
(See COMPANIES .)
INVESTMENT LEDGER . A separate
account is opened in this ledger for each
different investment. An exact description of
the stock or shares is given , and there are
also recorded in columns provided for the
purpose, the dates when the dividends
are due and received , the date of purchase
and the price paid . The date andparticu-
lars of all sales are given and the amounts
are deducted from the balance. Any pay-
ments to credit in reduction of the price
paid , so as to bring it down to the market
value, are also deducted and the difference
is the figure at which the investment appears
in the balance sheet of the bank.
1.O.U. An I.O.U. ( that is “ I owe you " )
is a mere acknowledgment of a debt written
on a slip of paper. Its usual form is :
Leeds,
March 7, 1919.
To Mr. William Brown,
2, King Street, Leeds.
I.O.U. £ 10.
THOMAS JONES.
An I.O.U. does not require to be stamped ;
but if to the above simple form of I.O.U. are
added such words as “ I promise or “ I
agree," or a date is given when the money
will be paid , they may have the effect of
converting it into a promissory note or an
359
(IRI
agreement, and in either case such a docu
ment would require to be stamped in order
to be produced as evidence in a Court. A
promissory note, however, can only be
stamped before it is made ; an agreement,
except under a penalty, must be stamped
An I.O.U. is not a negotiable instrument.
It may, if necessary, be produced in Court as
evidence of a debt, though it is not a proof
of the amount owing.
IRISH LAND LAWS. The Law relating
to landed property in Ireland is highly
technical and intricate.
Prior to 1870 the land laws in Ireland were,
in substance, similar to those in England,
the practical difference being that in Ire
land the owner in fee simple had largely
subdemised to middle men upon long leases
or for ever, upon a tenure known as " fee
farm grant." " The occupiers were, in the
majority of cases, yearly tenants, and the
bulk of the improvements - building, drain
age, and the like - was done by the occupier
and not, as in England, by the owner of the
fee simple.
Under the Land Act of 1881 the rent,
hitherto a matter of arrangement between
landlord and tenant, was fixed by Govern
ment officials. So long as he paid his rent the
tenant could not be evicted . He could sell
his interest in his holding, and the landlord
was bound to accept the incoming tenant,
unless he was prepared to purchase the >)
latter's interest at its “ true value.” The
considerable reductions made in the rents
by the Government Commissioners gave a
substantial value to the tenancies which has
increased with each periodical revision.
Money is freely advanced by the Irish Banks
on the statutory tenancies thus created.
This Act paved the way for land purchase
which is rapidly converting the statutory
tenancies into estates in fee simple .
Advances upon property in Irish land are
secured by 1st, Legal Mortgage, 2nd, Deposit
of title deeds, and 3rd, instruments of
Charge (in the case of holdings purchased
under the Land Purchase Acts). Advances
by way of equitable mortgage, created by the
deposit of title deeds, is the most general
practice with Irish Bankers. By reason of
the operations of the Registry Acts the dis
tinction between the legal and equitable
estates is of much less importance than it
is in England , where the law assigns to the
holder of the legal estate a pre -eminent
position .
IRI ) DICTIONARY OF BANKING
There are two systems of Registry in
Ireland . The first was established in Dublin
by an Act of Queen Anne. It is known as
the Registry of Deeds. Its object is to
enable any person , about to purchase, or to
lend money on land, to ascertain what
dealings have taken place in regard to such
land. Deeds registered take priority over
deeds not registered, and also according to
the date of entry on the Register. It is
important to remember that registration is
no proof of ownership ; for under this sys-
tem no attempt is made to investigate title.
The second system was established by the
Local Registration of Titles Act which came
into operation on the 1st January, 1892.
All lands registered under it, as regards the
estate or interest so registered, are removed
from the operations of the statute for
registering deeds. Registration of title is
compulsory in the cases of State aided pur-
chases of land ; in all other cases it is vol-
untary . The title is investigated and a
certificate of ownership issued in the same
way and with the same effect as certificates
issued under the Land Transfer Acts
( England) of 1875 and 1897. ( See LAND
REGISTRY.)
We now return to the consideration of the
equitable deposit of deeds to secure an
advance. As to the validity of an equitable
mortgage effected in this manner there can
be no doubt. The law was finally settled in
1881 in Burke's Estate, when it was decided
that an equitable mortgagee by deposit of
title deeds, unaccompanied by any mem-
orandum in writing, takes priority over a
purchaser for value claiming under a
subsequent deed.
Considerable litigation and consequent
loss to Irish banks has been occasioned by
the interpretation put by the Courts on the
words " memorandum in writing .”
Bankers in Ireland have to exercise the
utmost caution that no correspondence or
other written matter is received from their
client with reference to the intended deposit,
which could be construed into a conveyance,
or undertaking to effect a conveyance,
capable of registration. It cannot be too
strongly insisted upon that if any such writ-
ing has been received by the bank, through
inadvertence or otherwise, and the charge
is not registered at the Registry of Deeds,
the bank's equitable mortgage cannot
escape postponement to a subsequent regis-
tered deed for value . It is not necessary
that all the deeds relating to a property
360
( IRI
should be deposited in order to constitute a
valid equitable mortgage but great danger is
incurred if all material deeds are not forth
coming. A deposit of deeds for the purpose
of gaining credit will not cover moneys
previously advanced unless an intention to
cover them appears from the circumstances .
A deposit of deeds made for some other
purpose cannot be applied by the Bank to
secure an advance .
The borrower should declare when deposit
ing the deeds that the deposit is made as a
security for all advances made, or to bemade,
for his accommodation together with inter
est thereon , and such declaration should be
recorded in the memorandum signed by the
bank's official when the deposit is made.
The memorandum , not being signed by the
depositor, need not be registered.
We now come to deal with the position
of owners of estates sold or about to be sold
under the Land Purchase Acts. As the
vast majority of contracts have been made
under the terms of the Act of 1903 it is
proposed to deal solely with it and the amend
ing Act of 1909. As the object of these
Acts was to facilitate the transfer of the
land from the landlord to the tenant, every
possible hindrance to the accomplishment
of this aim was removed, and every induce
ment held out to the landlord to sell and to
the tenant to purchase. Thesellinglandlord
is not compelled to prove his title. If he can
show thathe has been for the six preceding
years in receipt of the rents and profits of
the estate he has a prima facie title under the
Act which enables him to sell his estate to
the occupying tenant without regard to the
wishes of others interested ) in the estate.
Before, however, he can draw the purchase
money he has to prove his title to the satis
faction of the Court. All charges of every
kind upon the property attach to the pur
chase money and must be satisfied or
redeemed before he gets his share. A
limited owner, i.e. one having a life, or other
limited interest in the estate , does not re
ceive the purchase money, which is paid over
to the trustees or to other persons entitled
to receive it. In addition to the purchase
money the selling landlord, who is known as
the " Vendor," receives a free gift from the
Government, which under the Act of 1903
was 12 per cent. of the gross purchase
money in all cases, but under the Act of 1909
is regulated by the number of years' pur
chase paid for the estate. The smaller the
number of years the greater the percentage.
IRI) DICTIONARY OF BANKING ( IRI

This Government grant, which is known as the Registry of Deeds Office, in the latter
the “ bonus," is given in order to bridge over it is not. When the tenant signs an agree
the difference between the price the land- ment for the purchase of his farm he pays
lord is willing to sell at and the price the interest in lieu of rent until the land is
tenant is prepared to pay. The bonus vested in him by the Land Commission.
becomes the absolute property of the vendor The holding then becomes subject to a
free from the control or interference of other terminal annuity, which will in the course of
interests superior or otherwise. In the case some seventy years pay back principal and
of insolvent estates, the entire income of interest and leave the holder in the position
which has to be applied to the payment of of an absolute owner in fee simple. During
interest on mortgages and other charges, all these years the Commissioners hold a
the bonus is not paid to the vendor but is first charge on the land which takes priority
added to the purchase money. The bonus over all other charges whether effected
can be made a good security for an advance, before or after the date of the vesting order.
provided immediate notice is given to the The position of the lender who has advanced
Land Commission of the charge. When the money on the farm before that date is not
money is allocated, all charges of which thereby prejudiced . The charge held by the
notice has been given will be provided for. Commission is for the landlord's interest,
The price at which an estate is to be sold is which has been extinguished . During the
arrived at by multiplying the annual rental period which may elapse from the date of
as fixed by the Commissioners by a given the signing of the agreement to the issuing of
number of years. The limits of the Zones the vesting order the purchasing tenant can
established by the Act are a minimum of 181 charge his interest inthe land in the same
years and a maximum of 274 years accord- manner and to the same extent as he did
ing to whether the rents have been revised before. If through any cause the sale does
once or twice. These Zones will prove of not go through he reverts to his former
use to bankers in estimating the value of position . Any person in actual occupation
estates upon which they have advanced or of the farm may buy from his landlord .
are about to advance money . It must not When the vesting order is made , the pur
be forgotten that the value of landed estates chaser's title is registered with the Regis
in Ireland is what the tenant is prepared to trar of Titles, who issues a certificate that
pay and the Government to advance. Sales the purchaser is the ownerin fee of the land .
of landed estates by private treaty seldom Unlike certificates issued by this official in
take place. The Act of 1903 provided for the case of voluntary registration , the charges
all cash payments, that of 1909 for 3 per affecting the land are not entered on it. No
cent. stock or cash at the option of the investigation of title is made. The words
Treasury. It also gave vendors under the subject to equities ” is indorsed on it and
1903 Act the option of taking payment the land remains subject to charges affecting
partly in cash and partly in 24 per cent. the tenant's interest which were in existence
The effect is prior to the date of the vesting order. The
stock at 92, or all in stock .
that vendors who accept all stock are paid certificate remains in the possession of the
immediately , and vendors who accept half Land Commission until theentire advance is
cash and half stock are paid much sooner repaid. The purchaser is given a copy which
than those who stand out for all cash . As in itself is valueless as a security by way of
the stock stands at a figure considerably equitable deposit or otherwise. He may
below 92 there is a loss to the estate if the demand to have his title investigated and the
vendor accepts the whole or a portion of the words “ subject to equities ” removed from
purchase money in depreciated stock . All the certificate . All subsequent charges
the foregoing facts must be borne in mind must be registered under the Local Regis
by the banker when landed estates are tration of Titles Act. If not so registered
offered as security for an advance. within three months from the date of the
Of more importance, however, is the posi- execution thereof, or in the case of a charge
tion of statutory tenants, and that of ten- created by legacy within twelve months from
ant purchasers under the Land Purchase the date of probate or administration , the
Act. Statutory tenants can mortgage their charge will be null and void . A few of the
holdings for any amount either by legal earlier purchasers under the Land Purchase
mortgage or by deposit of title deeds. In Acts have paid off the advance and are in
the former case the charge is registered at possession of the certificate. In all cases
361
IRI) DICTIONARY OF BANKING (IRR

where the original is produced without the at a nominal price. It is incumbent on all
words “ subject to equities," a deposit persons having interests in the holding to be
of that document will have the same effect represented at the sale. Mortgagees' and
as a deposit of title deeds. If, as is generally others' holdings charges which are entered
the case, the original certificate is in the on the Register, and all valid chargescreated
hands of the Land Commission, the appli- after the date of the vesting order are so
cant for an advance must produce an attested entered, will be duly notified . But persons
copy of the certificate written up to date. with charges on holdings registered “ sub
.)
If the words “ subject to equities are on ject to equities," which were created prior
it, all deeds and leases relating to the tenancy to the land being vested , receive no notice
must be produced and the usual searches of the sale, and may be unaware that it has
made by the bank's solicitor. The regis- taken place. It therefore behoves every
tered owner, i.e. the tenant purchaser can banker who has made an advance upon the
execute an instrument of charge which security of statutory tenancies which are
should be placed on the record and a cer- afterwards purchased through the Land Com
tificate of the charge obtained . The mission to see that the annuity is punctually
instrument operates as a mortgage. paid. This can be done by getting his client
The proprietor of a holding purchased to pass through his bank the receivable order
under the Acts of 1903 and 1909 is which must accompany each instalment of
forbidden, save with the consent of the Land the annuity, and which may be lodged in any
Commission, from mortgaging his holding bank for payment to the Bank of Ireland.
or any part thereof for any sum or sums Wherever practicable it is desirable for
exceeding in the aggregate ten times the an incumbrancer having a charge on land
amount of the purchase annuity. Every registered “subject to equities to get his
instrument of mortgage or charge by which charge upon the Register . This can be done
the holding is charged with a larger sum is by putting pressure on the mortgagor
null and void as to the excess. This to have his title properly registered and the
restriction does not apply to judgment mort objectionable words removed .
gages which a creditor may obtain for any -LLOYD CHRISTIAN .
amount and place on the Register in the IRON WARRANTS . Warrants for iron
same manner and with the same effect differ from warrants for other goods in so
as a charge created by the owner of the far that, by the custom of the iron trade, an
holding. If application is made to the indorsee obtains the goods free from any
Commissioners for leave to borrow sums in vendor's claim for purchase money. Where
excess of the limit, permission will not be a bank had taken iron warrants as security,
unreasonably withheld . and the original purchaser had not paid for
A tenant purchaser , although nominally the iron, it was held (Merchant Banking
an owner in fee simple, is subject to a great Company of London v . Phænir Bessemer
many restrictions so long as the purchase Steel Co., 1877, 5 Ch. D. 205 ) that the bank
annuity runs ; the violation of some of these was entitled to delivery of the iron . ( See
gives the Land Commission drastic powers of Dock WARRANT.)
sale, a power seldom exercised save in the IRREDEEMABLE . A redeemable stock
event of the payment of the annuity falling is one which the issuer is under an obligation
into arrear. When this Occurs certain to redeem or pay back , but an irredeemable
notices are posted or published in the dis- stock is one where no such obligation exists.
trict in which the holding is situated , and the A redeemable stock, however, has some
holding sold by auction . times the meaning merely that it is capable
The land is sold subject to the annuity, of being redeemed but will not necessarily
but free from all other charges. Local be redeemed . (Sec DEBENTURE. )
feeling in Ireland is strongly opposed to IRREDEEMABLE DEBENTURE . А
bidding for farms sold in this manner. The debenture which does not contain any pro
Land Commission looks only after its own vision for repayment of the principal money.
interests and leaves other incumbrancers Even if irredeemable, it falls to be paid upon
to see after theirs . It puts no reserve the company going into liquidation. An
price beyond what will pay the arrears of irredeemable debenture practically provides
annuity . The consequence is that these an annuity in perpetuity in favour of the
farms are frequently knocked down to a holder. ( See DEBENTURE , PERPETUAL
relative or nominee of the defaulting owner DEBENTURE .)
362
ISS) DICTIONARY OF BANKING JOI

ISSUE OF BILL. The “ issue of a may sign on the account, an authority must
bill of exchange is defined by Section 2 of besigned by all the joint parties.
the Bills of Exchange Act, 1882, as "the If an account is opened in the names of
first delivery of a bill or note, complete in John Brown and Mary Brown (husband and
form , to a person who takes it as a holder." wife), and it is desired that either of them
This definition is required by reason of the may draw upon it, the bank's form of
wording of Section 9, s.s. 3, which provides : authority for either party to sign must be
“ Where a bill is expressed to be payable signed both by John and Mary , and if it is
with interest, unless the instrument other- the intention that the balance be “ repayable
wise provides, interest runs from the date to the survivor those words should be
of the bill, and if the bill is undated , from included in the authority. In the case of
the issue thereof," and Section 12, which is husband and wife it is particularly necessary
as follows :-“Where a bill expressed to be that a clear arrangement be made on that
payable at a fixed period after date is point. If the wife dies, the husband can
issued undated , or where the acceptance of draw the balance, but it would appear that,
a bill payable at a fixed period after sight | if the husband dies first, there is the possi
is undated, any holder may insert therein bility that the money might be held (as in
the true date of issue or acceptance, and the case of Marshal v . Crutwell, 1875, 20 Eq.
the bill shall be payable accordingly .” For 328) to pass to the deceased's executors,
stamp purposes no bill of exchange or pro- unless it can be proved that it was the
missory note may be stamped with an intention of the deceased that the money
impressed stamp after the execution thereof. | should, at his death, be withdrawn by his
See Stamp Act, 1891, Section 37 ; s.s. 2 . widow.
(See DELIVERY OF BILL.) In the case of an ordinary joint account, as
ISSUE OF CHEQUE . The Bills of Ex- | John Brown and John Jones, repayable to
change Act , 1882, specially provides
provides that, either, on the death of one the balance may
except as otherwise stated, the rules applic- be drawn by the other.
able to bills of exchange are also applicable If no authority is held from the parties on
to cheques. The definition of the “ issue a joint account, all cheques must be signed
of a cheque," therefore, is the same as by both parties, and on proof of death of one
that given for a bill in the preceding of them the balance may be withdrawn by
article . (See DELIVERY OF BILL.) the survivor. See further under DEATH OF
ISSUE PAR . The price at which the stock JOINT CUSTOMER.
or shares of a company is issued to the public. An authority may be cancelled by either
( See Par .) party at any time.
ISSUED CAPITAL. That part of the A mandate is determined by the death,
nominal or authorised capital of a company bankruptcy, or insanity of one of the persons
which has been issued by the directors and who signed it.
been taken up or subscribed by the share- Any claim that the executors of a deceased
holders. The issued capital may be fully joint holder may have upon the money is a
paid up , or it may be only partly paid up, the matter for arrangement with the survivor,
remainder being the uncalled capital. with which the bank is not concerned .
(See CAPITAL .) Even if the deceased mentions the joint
ITEM . A separate entry or amount in account in his will, the banker is not bound
an account. by the will, and, unless he receives notice
from the executors not to do so , he may pay
JOBBER . (See STOCK JOBBER.) the balance to the survivor. If the legal
JOINT ACCOUNT. The account referred representatives of the deceased give notice
to under this heading is one in which the tothe bankernot to pay the balance to the
parties are not known to be partners or survivor, the banker should not pay it, un
to hold a fiduciary position . When an less the cheque is signed both by the survivor
account is opened in two or more names, and the legal representatives. A banker has
unless all the parties are to sign cheques, nothing to do with any question of payment
an authority, signed by all, should be of probate duty when he parts with a balance
obtained stating distinctly who may sign to the survivor. (See PROBATE.)
upon the account. Where an account stands in several names
If it is desired that a person who is not and one of the persons dies, it is better that
one of the joint parties in the account, the balance should be transferred by cheque
363
JOI] DICTIONARY OF BANKING (JOI

In the case of a joint account (not a part

or written request to a new account in the
names of the survivors, than that the nership account) which is overdrawn, if one
deceased's name should be merely dropped of theparties dies, his estate will not be liable
out when the next heading is written in the for the debt, and the banker must look to the
ledger. A fresh authority should be taken survivor for payment. If, for example, John
from the survivors as to how cheques are Brown (who is a poor man ) applies for a loan,
to be signed on the new account, if it is and John Jones (who is a rich man ) agrees to
desired that one, or more, of them may sign. sign a cheque along with Brown for the
When the last survivor in a joint account amount required, in the event of the death
dies , the balance is payable to his legal of Jones, his estate cannot legally be held
representatives. liable for the debt, and if Jones's representa
Where one of the parties is authorised to tives repudiate the debt, the banker has only
sign, the method of signing should be, e.g. Brown to depend upon for repayment. That
“ For John and Thomas Brown and self, is the decision of the Court in Other v. Iveson
Wm. Brown .” The name of the account ( 1855, 24 L.J. Ch . 654 ) , where money was
should appear upon the cheque as well as lent to two brothers on the strength of the
the signature of the person drawing it. cheque being signed by a third brother. The
If a banker realises securities belonging to third brother died and his executors were
several persons, the proceeds should not be sued by the bank. It was held that the
paid to one of those persons, unless under liability was not joint and several but joint
an authority to do so signed by all of only, and therefore that the survivors only
them . were liable. Where a joint account is over
In the case of a deposit receipt in joint drawn and the banker is relying upon one of
names, if it is to be repayable to either the parties to the account for repayment,
party it should be so stated upon the he should protect himself against the risk
receipt, and if in the names of husband and of that party dying before the money is
wife it should also say “ or survivor " if that repaid, by a guarantee signed by the parties,
is the intention. In such cases an authority or by the parties agreeing to be jointly and
to that effect should be signed by all the severally liable for the debt. In Bankers'
depositors. (See DEPOSIT RECEIPT.) Advances, by F. R. Stead , Sir John Paget
Where there are several joint debtors, in says that although, on the death of one
order to keep the debt alive against every joint debtor “ the deceased's estate is
one of them (that is, to prevent the operation released at law, it may be reached by adminis
of the Statute of Limitations), there must tration proceedings in equity. ” (See JOINTLY
be an acknowledgment of the debt from each AND SEVERALLY, MANDATE, SET OFF.)
one of them , unless they are members of a If a joint account in the names of an
partnership firm or one of them is authorised adult and an infant is overdrawn, the infant
to sign for the rest. The fact that one of is not liable for the overdraft. ( See INFANTS .)
the joint debtors acknowledged a debt A mandate for a joint account may take
would not prevent the others from pleading the following form :
the statute. As to what constitutes an
acknowledgment of a debt, see Statute of “ To The British BANK, LIMITED .
LIMITATIONS . We, the undersigned ....
A loan by way of a promissory note is on having opened an account with you in our
the same footing as a joint account, and each joint names, and for which account we are
maker must acknowledge the debt, other to be jointly and severally liable, hereby
wise at the expiration of the six years each request and authorise you to honour cheques
party who has not acknowledged has the on such account signed by either of us and
right to consider himself freed from liability. to place the amountof all such cheques to the
(See PROMISSORY Note. ) debit of such account, whether the account
In the event of the failure of one of the should happen to be in credit or overdrawn
parties on a joint account which is over- at the time ofyour honouring such cheques.
drawn, the solvent party is liable for the This authority shall remain in force until
amount of the debt ; if the account is in we shall give you notice to the contrary, in
credit cheques to withdraw the balance writing, under our hands.
should be signed by the solvent customer Dated this .... ..day of .... 19 ...
and the trustee in bankruptcy of the
bankrupt customer.
364
Jon DICTIONARY OF BANKING JOI

Where a mandate includes an agreement to several persons without stating whether

to be jointly and severally liable, it should they are to be joint tenants or tenants in
be stamped sixpence. The effect of a joint common , they are regarded as joint tenants.
and several clause is referred to under The difference between joint tenants and
MANDATE . tenants in common should be noted . A
Where the parties in a joint account are tenant in common has a separate and dis
known to be partners, see PARTNERSHIPS, tinct share in the property which he can
where executors, see EXECUTOR, and where dispose of by will. The survivor in a
trustees, see TRUSTEE. tenancy in common does not become the
(See COUNTERMAND OF PAYMENT, PART- owner of the whole property. One tenant
NERSHIPS.) in common may transfer his share to another
JOINT STOCK BANK. A bank in which tenant by conveyance. Their shares may
the capital is subscribed by the share- be equal or unequal, and their shares need
holders. not, necessarily, be all created at the same
The London and Westminster Bank (now time or under the same instrument.
the London County, Westminster, and Where deeds of a joint tenancy are de
Parr's) was founded in 1834 . posited as security, the document of charge
The Birmingham and Midland Bank was should be signed by all the joint tenants, and
established in 1836 ; in 1891 the business it is advisable that a banker's legal mortgage
of the Central Bank of London , Ltd. (estab- be taken. (See COPARCENERS, TENANTS
lished 1863), was acquired (the name being in COMMON.)
changed to the London and Midland Bank, JOINTLY AND SEVERALLY. Where a
Ltd.) ; in 1898, the business of the City promissory note is drawn by several makers
Bank, Ltd. ( established 1855) , was acquired we jointly and severally promise to pay, "
( the name being changed to the London each maker is liable for the full amount of
City and Midland Bank, Ltd.) ; in 1918, the the note ; but if the note is worded we
business of the London Joint Stock Bank, promise or " we jointly promise " the
)

Ltd. (established 1836 ), was acquired ( the makers are liable as a whole and not indi
.

name being changed to London Joint City vidually for the full amount. Where a note
and Midland Bank, Ltd.). promise to
(See BANKING "“ I promise pay " is signed by several
to pay
COMPANY .) persons it is by Section 85 , s.s. 2, of the Bills
JOINT STOCK COMPANY. A company, of Exchange Act, 1882, deemed to be their
or association of individuals, having a joint and several promise.
joint or common stock or capital. It is obviously to the advantage of a
(See
COMPANIES.) banker that all parties liable to him jointly
JOINT TENANTS . Where property is should be liable severally as well ; he can then,
granted to two or more persons, as joint if necessary, sue all together for the whole
tenants, they have each an equal interest or amount of the debt, or sue each party
right in the whole of the property. The separately for the whole amount. If one is
important point about a joint' tenancy is sued and the banker fails to obtain payment
that when one of the joint tenants dies his in full, the remaining parties may then be
interest in the property passes to the sur- sued . If one of the makers of a joint and
viving joint tenants. A joint tenant cannot several note dies, his estate is liable, but if
dispose of his interest by will, but during his the note is joint only, the estate of a deceased
lifetime he may convey his share to anyone. maker is not liable.
The outsider who purchases the share of a Where a joint account is overdrawn the
joint tenant becomes a tenant in common. liability is joint only, and if one of the
If one of the tenants purchases the share of parties dies the survivor becomes liable for
another, the transfer is effected by a release, the full amount ; the estate of the deceased
not by a conveyance, because each joint is not responsible for the debt, but see Sir
tenant is already equally possessed of the John Paget's remarks under JOINT ACCOUNT.
whole property. The share of each tenant Where a joint advance has been made and
must be equal, and their interests all created one of the parties becomes bankrupt, the
at the same time and by the same instru- solvent party is liable for the whole amount.
ment . If there is only one surviving joint In cases of joint overdrawn accounts, it is
tenant he is the sole owner, and may dispose customary, when the account is not other
of the property by will. wise secured, to obtain a guarantee signed by
In the event of a property being devised all the parties ; when this is done a claim
365
JOI) DICTIONARY OP BANKING (JUD

can be made upon the deceased's or such writ or order, or in obedience

bankrupt's estate. " (See Joint ACCOUNT.) thereto , shall be void as against a
A payment, or acknowledgment, by one purchaser for value of land unless
does not prevent the other parties who have the writ or order is for the time
signed a promissory note from pleading the being registered in pursuance of this
Statute of Limitations, whether they have Act ."
signed " jointly " or "jointly and severally ." By the Land Charges Act, 1900 :
(See STATUTE OF LIMITATIONS.) “ Section 2. ( 1 ) A judgment or recognis
An ordinary cheque, signed by more than ance, whether obtained or entered
one individual, is a joint, not a joint and Into on behalf of the Crown or other.
several document. ( See PROMISSORY NOTE.) wise, and whether obtained or
A company's articles of association usually entered into before or after the
contain a clause that the joint holders of a commencement of this Act, shall not
share shall be jointly and severally liable to operate as a charge on land, or on
pay all calls in respect thereof. (See under any interest in land, or on the un
Calls .) paid purchase-money for any land,
JOINTURE . An estate in lands settled unlessor until a writ or orderfor the
upon a woman, which she is to possess after purpose of enforcing it is registered
the death of her husband . under Section 5 of the Land Charges
JUDGES' ORDERS. (See CHARGING Registration and Searches Act,1888."
ORDER, GARNISHEE ORDER .) For the protection of persons dealing with
JUDGMENT AFFECTING LAND . By land, it is necessary that any judgments or
the Land Charges Registration and Searches orders should be duly registered in some
Act, 1888 : convenient place, where an examination can
Section 5. ( 1 ) There shall be established be made of any documents which show how
and kept at the Office of Land the land is affected by judgments or orders
Registry a register of writs and which have been pronounced . The above
orders affecting land, and there may sections of the two Acts named are the
be registered therein, in the pre- most important provisions with respect to
scribed manner, any writ or order this matter, and the effect of them seems to
affecting land issued or made by any | be as follows : If a judgment is entered up
Court for the purpose of enforcing a affecting land after the 1st January, 1889,
judgment, statute, or recognisance, an intending mortgagee, for example, is
and any order appointing a receiver completely protected in dealing with the
or sequestrator of land . land, if a search is made at the Land Registry
" ( 2) Every entry made in pursu- Office for writs and executions for the pre
ance of this Section shall be made ceding five years. It isonly if the land has
in the name of the person whose | been actually executed upon, and if the
land is affected by the writ or order writ or execution has been registered or
registered . re -registered , so that the last registration
(3) The registration of a writ or or re-registration has been made within five
order in pursuance of this Act shall years preceding the date of the security that
cease to have effect at the expiration the mortgageewould be postponed as to his
of five years from the date of regis- own security to the judgment creditor whose
tration, but may be renewed from judgment or writ is registered. And as to a
time to time, and, if renewed, shall judgment entered up after the 1st July,
have effect from the date of renewal. | 1901, the intending mortgagee has only to
6

“ (4) Registration of a writ or order see that no writ or order for enforcing a
in pursuance of this Section shall judgmenthasbeen registered under Section 5
have the same effect as, and make of the Land Charges Registration and
unnecessary, registration thereof in Searches Act, 1888 , and this is so whether
the Central Office of the Supreme the judgment has been obtained before or
Court of Judicature in pursuance of after the 1st July , 1901.
any other Act. JUDGMENT CREDITOR. Where a

“ Section 6. Every such writ and order as creditor has obtained judgment against a
is mentioned in Section 5, and every debtor for the payment of a debt, he may
delivery in execution or other pro- enforce the judgment in various ways :
ceeding taken in pursuance of any 1. By writ of fieri facias (9.v.), by which
366
JUD) DICTIONARY OF BANKING (LAN

the sheriff can seize the debtor's LAC, OR LAKH . A lac, or lakh, of
goods. rupees equals 100,000 rupees. The figures
2. By writ of elegit (q.v.) , by which the are usually written as Rs.1,00,000 , Rs .
sheriff can take possession of the 24,00,000, to show the number of lacs, the
debtor's lands. lacs in those two examples being, of course,
3. By garnishee order (q.v.), by which one and twenty - four.
debts due to the debtor from a The value of a lac is about £6,667,taking
third person , e.g. a banker, can be the rupee at its legal tender rate in India of
attached . 15 rupees for one sovereign. The gold price
4. By a charging order (q.v.), by which of the rupee was, as from February 2, 1920,
shares or stocks belonging to the fixed at 2s. (See RUPEE. )
debtor can be charged with the LACHES. A legal term for neglect of such
payment of the judgment debt. a nature as to be prejudicial to the rights of
JUDGMENT DEBT. ( See JUDGMENT the person who has been negligent.
CREDITOR .) For example, a banker may pay an un
JUNGLE MARKET. A Stock Exchange crossed cheque drawn upon him and debit
name for the market for West African mining it to his customer's account even though the
shares. Indorsement should subsequently turn out
JURYMAN . In addition to being liable to to be a forgery, provided that the payment
serve as a common juryman, a banker is one is made in good faith , in the ordinary course
of those persons who may be called upon to of business and without negligence. Ifthe
act as a special juryman. (Juries Act, 1890, banker is guilty of negligence, or laches,
Section 6.) Sixty -five years is the age at his right todebit the cheque may be called in
which liability to serve upon a jury shall question. (See ALTERATIONS, NEGLIGENCE .)
cease. (Juries Act, 1918.) LAME DUCK. A name sometimes given
to a defaulter on the Stock Exchange.
KAFFIR CIRCUS. A Stock Exchange LAND CERTIFICATE . А certificate
name for the market for South African under the seal of the Land Registry, contain
shares. ing complete copies of the entries in the
KAFFIRS. A Stock Exchange name for register. It is issued to the owner of the
South African mining land and investment land ; and he may deposit it as a security.
company shares. If the certificate gives an absolute title to the
KANGAROOS. A Stock Exchange name land, that is all that a banker requires ;
for West Australian mining and land shares. but if the title is possessory only, the prior
KEEPING HOUSE. The Bankruptcy deeds should also be deposited .
Act, 1914, Section 1 , s.s. 1 , d, enacts that a The usual memorandum of deposit should
debtor commits an act of bankruptcy if, be taken . As to a charge, which is equiva
with intent to defeat or delay his creditors, lent to a mortgage, see LAND REGISTRY.
he begins to keep house. A debtor " keeps LAND REGISTRY . The system of land
house " when he confines himself to the house registration was established under the Land
and refuses to see a creditor who calls to see Transfer Acts , 1875 and 1897 .
him for payment of the debt. Registration is now compulsory in the city
KEY REGISTER . A book kept at the and county of London . It became compul
head office of a bank in which is preserved sory in the various parishes on different dates.
a complete list of all the keys of the strong It commenced on January 1 , 1899, in a few
rooms, safes, etc., at the head office and parishes and extended by degrees till on
branches, as well as a list of the holders of the July 1, 1902, the city of London and
keys. the whole of the county of London were
KITE - FLYING . Raising money by included .
accommodation bills. Land in other parts of England and Wales
KITES. A name given to accommodation may be registered at the Land Registry,
bills ( 9.0 .). but the registration is not compulsory.
KOPEK. (See FOREIGN MONEYS — Russia .) Provision is made in the Acts for the
KRAN . (See FOREIGN MONEYS - PERSIA .) establishment of local registries when
KRONE . (See FOREIGN MONEYS- necessary .
AUSTRIA AND HUNGARY.) The Land Transfer Acts apply to freeholds
KRONER . (See FOREIGN MONEYS and leasehold land having forty or more
NORWAY, SWEDEN AND DENMARK .) years still to run, or two or more lives still
367
LAN ] DICTIONARY OF BANKING (LAN

to fall in, but they do not apply to copyhold can be registered without production and
land or customary freeholds,where admission indorsement of the Land Certificate at the
by the lord of the manor is necessary to give registry. Deposit of the Land Certificate
the purchaser a good title . A lease created is good security for a temporary loan , and
for the purposes of mortgage, or containing can be protected bya notice on the register,
an absolute prohibition against alienation, for a fee of one shilling.
or leases with less than twenty - one years to 21. When registered land is transferred or
run cannot be registered. The registration charged , the proprietor executes an instru
of leases having less than forty years to run is ment of transfer, or charge, in a short simple
not compulsory . form which can be obtained at the registry
The registration of land in the Land ( see Schedule I) . The purchaser brings or
Registry supersedes the registration of deeds posts this to the registry (address Land
in the Middlesex Deeds Registry. Registry, Lincoln's Inn Fields, London ,
The following paragraphs are taken from W.C.) , with a fee of 1s. 6d. per £25 of value,
a statement issued by the Land Registry and in the case of a transfer the old pro
describing the objects and practical working prietor's name is cancelled, and that of the
of the system of registration of title :- new proprietor is entered in its place. In
1. A register of title is, essentially, a list the case of a charge, short particulars of the
of the owners of land, with particulars of the amount, rate of interest, etc. , are entered
properties they own, and of the mortgages in the charges register together with the
and other incumbrances which affect them . name of the creditor. Charges can be
Legal validity is given to this list by Act of transferred and otherwise dealt with on the
Parliament, it is kept constantly up to date register in the same manner as the land . If
by the entry of all changes of ownership as part of an estate is dealt with, a plan is
soon as they occur, and its correctness is attached to the transfer, and a new title
guaranteed by the Government. It is is opened for the transferee, with a fresh
strictly private -- no one is allowed to inspect plan ; the part thus separated being also
it but the registered owner and those marked off on the filed plan of the original
authorised by him. The consequence is estate by a special colour. Charges which
that an intending purchaser of registered have been paid off are cancelled altogether.
land has no need to make any inquiry Successions on death are registered in the
into the title ; he merely has to obtain the same way as transfers, by cancelling the
leave of the vendor to inspect the register deceased proprietor, and entering the legal
and to see that the person he is dealing representative, or the person named by him
with is the registered proprietor. as entitled.
2. On a mortgage or sale of registered land 22. The register is strictly private, and
there is no delay and no uncertainty, and can only be inspected by the registered
the expense is greatly reduced . The entries proprietor or with his written permission.
in the register are so simple, and the forms 23. There are three main ways in which
of transfer and charge are so short and clear land may be registered under the Land
that any intelligent person can understand | Transfer Acts--namely, with Absolute
them . Title, with Good Leasehold Title and with
5. The principal advantages of the system Possessory Title.
as compared with the present non-regis- 24. ABSOLUTE TITLE . —It is not difficult
tration system are security, cheapness, to explain what Absolute Title means. The
expedition, clearness, and simplicity. Land Registry first carefully examines the
18. When registration is completed a proprietor's title, and after that confers on
“ Land Certificate," containing complete him an absolute right to the property, guar
copies of the entriesin the register, is issued anteed by the Government, against all the
to the proprietor. This constitutes a port- world. He can then immediately dispose of
able counterpart of the register, enabling the his land without delay, without cost, and
proprietor to enter into negotiations, and to without trouble. The purchaser can acquire
complete transactions at a distance from the it likewise without delay, without risk,
registry, and even, under favourable con- with no more trouble than is involved in
ditions, without the necessity of actual reading a few plain entries in a book, and in
reference to the books. If thought neces- filling up a short printed form of transfer for
sary , a search can be made, and official reply the vendor to sign (see Schedule I) , and
given , by telegraph. No transfer or charge with no more cost than the scale of official
368
LAN ) DICTIONARY OF BANKING (LAN

fees, namely, 1s. 6d. per £ 25 of the value up | registration, the owner has practically the
to £ 50,000, after which the percentage is equivalent of an Absolute Title. Beside
lower. this, after land has been registered with
25. GOOD LEASEHOLD TITLE . - Leasehold Possessory Title for six years it can be
land can seldom be registered with an Abso- converted into Absolute (or Good Leasehold )
lute Title owing to the inability of lease- on very easy terms.
holders (as arule) to produce evidence of the
Freehold Titles, and so to prove the original
validity of the lease itself. A special form of SCHEDULE I.
registration, called Good Leasehold Title, has
been devised to meet this state of affairs,
which amounts to a guarantee (by the
Government) of the leaseholder's title to the
lease, but does not guarantee the original FORMS OF TRANSFER AND CHARGE
validity of the lease itself. At the same time OF REGISTERED LAND .
it may be remembered that on ordinary
sales of leasehold land the validity of the Note . — The portions printed in Roman
lease is always assumed — the purchaser hav- type represent the original forms ; MS.
ing neither the wish nor the right to inquire additions and signatures are shown by italics.
into the Freehold Title. Therefore, for all
ordinary practical purposes, registration with INSTRUMENT OF TRANSFER OF THE WHOLE
a Good Leasehold Title confers the same OF THE LAND COMPRISED IN A TITLE.
advantages as registration with Absolute ( Freehold .)
Title, and where the applicant is not the
original lessee , ' the method of application
and the cost are the same. Where the
applicant is the original lessee, he can obtain LAND REGISTRY.
a Good Leasehold Title by simply signing a
statement that he has not created any Land Transfer Acts, 1875 and 1897.
incumbrances, or, if he has done so , giving
particulars of them .
26. POSSESSORY TITLE.- Registration District London
with Possessory Title is effected on prima Lambeth
facie evidence merely, and is consequently Parish
easier to obtain than Absolute Title. So far No. of Title 020376
as regards security from fraud, simple forms 1st of January 19 In con
of conveyance, accurate plan, and other sideration
incidental matters, it has the same effect as of one thousand pounds +1,000)
Absolute Title, but it does not immediately I, William Smith
conſer on the proprietor and those who deal of 645, Regent Street, W., Jeweller
with him an indefeasible right to the land
against all the world . Its effect is not retro
spective ; it keeps the title clear for the
future,but isnobar to possible adverse claims hereby transfer to James Robinson
dating from a time prior to its first entry on of 1620, Oxford Street, W., Manufacturer
the Register books .
Consequently, if the land has to be sold
very soon after its registration with Posses
sory Title, the owner must be prepared to the land comprised in the title above referred
have almost the same investigation made to .
into the prior title as would have been made
if the land were unregistered : when a longer Signed, sealed, and
time has elapsed these labours are much delivered by the said
William Smith
lightened: finally
avoided probably
though- after not wholly
an interval vari- in the presence of W. Smith.
ously estimated by various authoritiesma Thomas Jones SEAL
time arrives when , there being no further of 645, Regent Street,
need to consider in any way the title prior to Jeweller's Assistant
369
24-11535)
LAN ] DICTIONARY OF BANKING (LAN

INSTRUMENT OF CHARGE OF THE WHOLE OF Value. Fee .

THE LAND COMPRISED IN A TITLE . Exceeding £50,000 , ( £ 150 for the first
and not exceed- £ 50,000 and £1 10s.
LAND REGISTRY. ing £ 100,000 for every £ 1,000 or
.

part of £ 1,000 over

Land Transfer Acts, 1875 and 1897 . 450,000 .
Exceeding £ 100,000 €225.
District London
Parish Lambeth The following examples show how this
No. of Title 020376 scale works out at various typical values :
1st of January 19. In con
Comparethe Costs
sideration of six hundred pounds ( £600 ) Value . Fee . of Vendor and
Purchaser of Ua
I, James Robinson registered Land.
of 1620, Oxford Street, W., Manufacturer

0000OON
s. d. S. d.
£25 , 6 6 0 0
£ 100 0 10 0
6300 0 18 0 10 0
hereby charge the land comprised in the title 6700 21 0
3 30 0
above referred to with the payment to £ 1,000
16 90 0
£ 6,000
John Brown £ 10,000 . 30 140 0
60 190 0
of 105, Lombard Street, E.C., Banker €20,000 . 150 340 0
£ 50,000 .
690 0
£ 100,000, or over 225

on the 1st of July 19 of the

principal sum of £600 • It is not suggested that these charges are in any
with interest at
way excessive considering the labour, skill, and
per cent. per responsibility involved. The object of the compari.
annum , payable quarterly on the 1st of son is purely to exhibit the superiority of the new
system --as a system - over the old one.
April the 1st of
July the 1st of October 2. FIRST REGISTRATION — whether with ABSO
and the 1st of January in every LUTE, GOOD LEASEHOLD , or PosseSSORY
year. TITLE .
Signed , sealed , and The fees for first registration with Absolute,
delivered by the said Good Leasehold, or Possessory Title are as
James Robinson follows :
in the presence of \J. Robinson .
Edward Walker
of 105, Lombard SEAL
Not exceeding £ 100 . 125.
Exceeding £ 100 and
Street, Banker's Clerk not exceeding £325 ) £1 .
Exceeding £ 325 and 1s. 6d. for every £ 25
SCHEDULE II. not exceeding
£ 1,000 or part of £ 25 .
COSTS. Exceeding £ 1,000 and £3 and
forthe first £ 1,000,
ls for every
not exceeding .
1. Sales .
£ 3,000 . £25 or part of £ 25
On a sale of land registered with Absolute over £ 1,000.
Title, the vendor, as a rule , need incur no for the first £ 3,000,
costs at all. Exceeding £ 3,000 and £ 7 and ls. for every
not exceeding
The purchaser's costs can often be con £ 10,000 . £ 50 or part of £ 50
fined to the Stamp Duty and to the Land over £ 3,000.
Registry Fees, which latter are as follows : £ 14 for the first
Value. Fee . £ 10,000, and 1s.
Exceeding £ 10,000 for every £ 100 or
Not exceeding s 1s. 6d . for every £25 part of £ 100 over
£ 50,000 { or part of £ 25. £ 10,000.
370
LAN ) DICTIONARY OF BANKING (LAN

The following examples show how this divisions of the Register,so as to leave room
scale works out at various typical values :- for the addition thereto of subsequent
entries in the Register. For this purpose
Value. Fee . fresh pages may be added to the certificate
from time to time as may be necessary ."
d.
£00 12 " FORM 66.- Land Certificate. ( Rule 258.)
2100 0 12 0
2300 10
LAND REGISTRY.
£ 700 00

21,000 . 30 * Land Transfer Acts, 1875 and 1897.

£ 6,000 . 9 0
( 10,000 14 0
LAND CERTIFICATE .
£ 20,000 19 0
£ 60,000 34 0 “ This is to certify that the freehold ( or
£ 100,000 89 leasehold) land in the Parish of
and County of (here fill in a
These charges include all incidental short description of the land, or reference to the
expenses. filed plan) is registered with absolute (quali
fied , good leasehold , or possessory) title
3. CONVERSION OF POSSESSORY TITLE INTO under No. Copies of the entries
ABSOLUTE OR GOOD LEASEHOLD . in the Register (and of the filed plan of the
After a full fee on a transfer for value has | land) are within.
been paid : Dated the of 19 (L.s.)
No fee “ Note :-- The description of the property to
Otherwise which the Certificate relates must be adapted
A like fee to that on first registration , to that by which it is described in the Regis
subject to a discretionary power for ter. When the registration is of a possessory
the registrar to reduce it when the title only, the Certificate is to contain the
full fee appears excessive. following notice : * The possessory title
4. MORTGAGES AND CHARGES. hereby certified does not affect or prejudice
the enforcement of any estate, right or
The fees for mortgages are the same as for interest adverse to or in derogation of the
sales. Where a sale and mortgage are regis- title hereby certified, which was subsisting
tered together, only half fees are charged for or capable of arising on the day of
the mortgage . , being the date of first registration .'
For registering notice of a deposit of land
certificate as equitable security the fee is 1s. “ The form may be modified under spe
cial circumstances in such manner as the
5. VOLUNTARY TRANSACTIONS. Registrar may deem necessary .
For successions on death , and for transfers • Where under Rule 271 a plan is not filed ,
by way of gift, the fees are ls. per £ 100, the form shall be altered accordingly.
with a maximum of £ 2. (Where the land is described by reference
to the General Map the form shall also be
6. Fees INCLUSIVE . altered as may be required .)
The fees include mapping, land certificate, · Cancelled entries need not be copied, but
and all other necessary incidental costs, may be referred to as ' cancelled ' only."
including, in most cases as above stated , When a charge is given over land , a certifi
costs incidental to applications for Absolute cate ofcharge is issued by the Registrar :
Title. “ Rule 259. A certificate of charge shall
There are no fees for searches, or for certify the registration of the charge and
discharge of incumbrances. shall contain (1) an office copy of the charge,
Fuller particulars will be found in the Fee (2) a description (if no description is con
Order itself. tained in the charge) of the land affected ,
(3) the name and address of the registered
By the Land Transfer Rules : proprietor of the charge, and (4) a list of the
“ 258. A land certificate shall be in Form prior incumbrances (if any) appearing on the
66 in the First Schedule hereto and the Land Register. There shall also be added such
Registry Seal shall be affixed to it. It shall further particulars, if any, as the Registrar
be made up in divisions, corresponding to the shall think fit and the Land Registry seal
371
LAN ) DICTIONARY OF BANKING (LAN

shall be affixed to it. Notes of subsequent | the Bank) may from time to time make
dealings affecting the charge shall from time to
to time be entered on the certificate ." I , John Brown of as
The charge is equivalent to a mortgage of beneficial owner hereby charge the land
unregistered land and may be given as comprised in the Title above referred to as
security to a banker ; and a deposit of a and by way of collateral security with the
certificate of charge is equal to the lien payment to the Bank of the balance which
created by the deposit of a mortgage deed . may for the time being and from time to
Section 8 of the Land Transfer Act, 1897, time be owing to the Bank in respect of
provides : such advances and interest thereon which
“ The registered proprietor of any freehold is to be made at the rate of etc.
or leasehold land, or of a charge may, subject And I the said John Brown hereby (if
to any registered estates, charges, or rights, freehold, grant the same land unto and to
create a lien on the land or charge by deposit the use of the Bank in fee simple) ( if lease
of the land certificate or office copy of hold, demise the said land unto the Bank
registered lease , or certificate of charge ; and for the residue of the term created by the
such lien shall, subject as aforesaid , be registered lease except the last day thereof]
equivalent to a lien created by the deposit of subject to redemption on payment to the
title deeds or of a mortgage deed of unregis- Bank of the said balance as aforesaid and
tered land by an owner entitled in fee simple interest thereon. The property comprised
or for the term or interest created by the in the Title above referred to is valued by
lease for his own benefit, or by a mortgagee me at £ This security is to extend
beneficially entitled to the mortgage." to any other sum or sums of money in
When a land certificate or certificate of which I may be indebted or liable to the
charge is deposited as security the usual Bank whether matured or not and either
memorandum of deposit should be taken, and on joint or separate account while the
notice of the deposit should be given to the securities or any of them or the proceeds
Registrar and an acknowledgment received. thereof remain in the Bank's hands.
The notice of deposit entitles the banker to
receive warning of any dealing proposed to John Brown . SEAL
be registered without his consent, but so
long as he retains possession of the land
certificate no dealing can be accepted for
registration without it. The charge is stamped 2s. 6d. per cent. of
When the security is done with, a form of the amount of loan or overdraft it is to
" withdrawal of notice of deposit " must be
cover , Notice of the charge should be
signed by the banker, which should ,together given to the Land Registry on the proper
with the land certificate, be sent to the form , and the Land Registry will return
registry, when the notice of deposit will be to the bank a duplicate of the form of
notice with the Land Registry's acknowledg
cancelled and the certificate be returned .
certificatethat ment thereon . When the security is done
it When
is not anecessary of charge is deposited,
the banker should with, an application form to withdraw the
also hold the land certificate . The land notice must be sent by the bank to the
Registry.
certificate would be indorsed by the Regis Land
trar when he issued the certificate of charge. Where the land certificate shows that the
Where registered land is to be charged to title is “ absolute " the land certificate is
a bank to secure the balance of a current alone sufficient, but if the title is posses
account (like a banker's mortgage of unregis - sory ” it is still necessary to have the prior
tered land) the instrument of charge is as title deeds.
follows) ; When a land certificate is granted , the
LAND REGISTRY. title deeds are marked by the Registrar, so
that anyone taking the deeds may see at
Land Transfer Acts, 1875 and 1897. once that the land is registered and therefore
District Parish that the land certificate is the document of
title .
No. of Title first of March 19 A banker should notice whether there are
In consideration of such advances as the any prior charges recorded upon the certifi
British Bank Limited (hereinafter called cate. The Register should be searched in
372
LAN ) DICTIONARY OF BANKING [LAN

case a restriction of some kind has been Any personmay search the Register kept
registered against the land since the certifi- in the Land Registry.
cate was issued . An official search will be Paragraph 14 of the above -named Act is as
made for a fee of 5s. follows :
Where a certificate has not yet been Any person deriving title under an in
issued, the proprietor of the land may (Rule strument (capable of registration under the
244) give notice to the Registrar that he Acts relating to the Middlesex Registry )
intends to deposit the certificate when which confers on him the right to apply for
issued with a certain person as security ; registration with a possessory title, of the
and the Registrar will enter the notice in land comprised in it under the Land Transfer
the Register and deliver the certificate, when Act, 1875, may, at his option , either register
ready, to the person named in the notice. a memorial of an instrument under the Acts
The Land Transfer Rules provide : relating to the Middlesex Registry, or apply
“ 250. The notice of deposit or notice of for registration with possessory title under
intended deposit may be withdrawn from the Land Transfer Act, 1875. Such regis
the Register on a written request or consent tration shall, when completed , bear the same
signed by the person entitled to the lien date as the application, and render unneces
created by the deposit, or notice of intended sary the registration of the instrument under
deposit, or his successor in title ; accom- the Acts relating to the Middlesex Registry.”
panied in either case by the land certificate, It should be noted that, with regard tothe
or certificate of charge. Middlesex Registry, registration does not
" 251. The lien created by the deposit of a give to a person who has registered his mort
certificate or by notice to the Registrar gage or deed, any claim to priority over an
under Rule 244 shall be subject to any unregistered prior deed or charge of which
unregistered estates,, rights, or interests he had notice before registering. This rule
protected by caution or other entry on the differs from that of the Yorkshire Registries.
Register at the time of the creation of the A mortgagee is not obliged to search the
lien , and in the case of good leasehold , quali- register, and a registered deed conveying
fied, or possessory title , to estates, rights the legal estate will take priority to a prior
and interests excepted from the effect of registered equitable charge, unless the
registration ." mortgagee had notice of the prior charge.
All the necessary forms may be obtained Registration in Middlesex does not prevent
from the Registry . tacking.
LAND REGISTRY (MIDDLESEX DEEDS). The following are some of the principal
By the Land Registry (Middlesex Deeds) rules under the Land Registry (Middlesex
Act, 1891 , it was enacted that the Middlesex Deeds) Act, 1891 :
Registry shall be transferred to the Land “ 2. Memorials, and certificates of satisfac
Registry established under the Land Trans- tion ofmortgages, shall be written or printed
fer Act, 1875, and shall form part of that on the best white loan paper, 16 inches long by
office. Deeds or memorials of deeds are regis- | 10 inches wide, with an inner margin 2 inches
tered at the Middlesex Deeds Registry . At wide and an outer margin three - quarters
the Land Registry ( 9.v.) the title is registered. of an inch wide, and shall be left at
The Middlesex Deeds Registry applies to the office by hand, and shall bear Land
all the county of Middlesex and also to the Registry stamps for the amount of the fees,
greater part of the county of London north and shall be accompanied by the original
of the Thames, but not to the city of London, instruments and mortgages respectively .
or to any part of the county south of the " 4. Where the original instrument con
Thames. Copyholds, leases at rack rent, tains a plan, a copy thereof (or of so much
occupation leases for twenty -one years or thereof as is referred to in the memorial)
less are not registered at the Middlesex shall be drawn on the memorial, unless owing
Registry. to its size this cannot be done ; in which case
When a title is registered under the Land a tracing on linen, signed by the person sign
Transfer Act, it supersedes the registration ing the memorial and by the witness, shall
of the deeds at the Middlesex Deeds Registry . be left with the memorial and filed in the
A certificate is indorsed by an officerof the office. No other copy shall be required .
Registry on every deed and conveyance “ 5. It shall no longer be necessary to seal
stating the date on which the memorial of any memorial, or to verify by oath the signing
such deed is registered. thereof or the execution of the instrument
373
LAN ) DICTIONARY OF BANKING
to which it refers ; but the signing of
the certificate of satisfaction of a mortgage
shall continue to be verified by oath as
heretofore.
“ 6. The witness to the memorial shall be
a witness or one of the witnesses (if any) to
the original instrument, unless at the date of
the memorial every such witness is dead or
absent from the United Kingdom or cannot
be found , or some other sufficient cause
exists to prevent it. In such cases a statu-
tory declaration shall be furnished , and left
with the memorial at the Registry, stating
the reason why the witness to the memorial purchase of live stock, seeds, implements,
is not one of the witnesses to the instrument.
“ 9. An ordinary search shall be a search
made against one name on one day by a
person not an officer of the Registry, in any
of the indexes, books, or documents open to
public inspection.
“ 10. An official search shall be a search
made by an officer of the Registry, in the
index only, for certain specified years, for all
entries therein, against one name, affecting approved of by the Council, the Clerk
lands in a specified parish .
“ 12. An official certificate of the result of
every official search shall be issued from the
Registry to the applicant, and a copy, or
other sufficient record of the same,shaủ be amount within the arranged period and to
kept in the office .
* 13. Applications for official searches shall
be subject to the following provisions :
(a) That the search shall not be such as
for any sufficient reason shall appear
to be impracticable to complete.
(6) That the Lord Chancellor may make
regulations limiting or extending the given to the banker by the Council may be
period to be covered by official
)
searches."
The form of memorial of a deed to be
registered is shown on page 375.
The fees are :
S. d.
Registration of a memorial, or vacat
ing an entry of a mortgage (except
under Section 42 of the Building
Societies Act, 1874) 5 0
Vacating an entry of a mortgage
under the said Section of the last
mentioned Act 2 6
The above charges include the
administration of the oath ,
when required .
Ordinary search , per name .
20
Official search :
For 10 years or less .
7 6
374
(LAN
S. d .
For every further 5 years or less 2 6
If more entries are found than at the
rate of 10 for every 5 years, then
for every 5, or part of 5, extra
entries . 10
LANDSETTLEMENT (FACILITIES) ACT,
1919. By Section 18 of this Act a County
Council may guarantee an advance by way
of loan to any tenant of a small holding
provided by the Council under the Small
Holdings and Allotments Act, 1908, of such
sums as the Council think necessary for the
etc., required for the purposes of the holding.
The Board of Agriculture and Fisheries may
guarantee similar advances to tenants of
small holdings provided by the Board.
These powers are exercisable only when
the facilities for obtaining advances from
a society on a co -operative basis are
inadequate.
When an application for a loan has been
advises the banker who is to make the loan
the name of the applicant and the amount
to be lent. On the applicant signing a
promissory note agreeing to repay the
pay interest thereon half-yearly, the banker
should place the sum to the credit of a
separate account in the applicant's name.
The banker advises the Council when the
advance has been made, and also when it
is repaid . If not repaid within the stipulated
period the attention of the Council must be
at once called to the fact. The guarantee
drawn so as to cover all advances to be
made by the banker (no amount being
mentioned ) to tenants of the Council, each
sum to be advanced under the guarantee
being notified to the banker by the Clerk
of the Council. A guarantee in this form
(stamped 10s., under seal) covers advances
made at different branches of the same
bank within the area of the Council.
LAND TAX . Where the tax has not been
redeemed , it is payable at a rate not exceed
ing one shilling in the pound upon the annual
value of the property.
By the Finance Act, 1898, where the
owner's income does not exceed £160 per
annum he is exempt from the tax, and where
his income does not exceed £ 400exemption
is granted to the extent of one-half.
The tenant of a house pays the tax in the
first instance, but (unless he has agreed
 DICTIONARY OF BANKING
MEMORIAL OF A DEED .
Land Registry. Middlesex Deeds Acts.
Particulars for the Index.
( It aamed in
the deed .] Grantor's Surname. Grantor's Christian Name. Parish .

Date of deed :
Parties :
• ( As in the
deed .)
Description of lands :-*
Witnesses to execution of deed :

Signature of grantor or grantee.

Signature of witness to signing of memorial.
Address and description .
N.B.- Instrument to be delivered to
Note.The memorial should bewritten on both sides of the paper,and otherwise according to the
provisions of Rule 2. Usually the “ Description of lands " should commence about the middle of
the front of the form , the “ Witnesses to execution of deed " and following matters being placed low
down on the back.
Note. — Where the description of land in an indorsed or annexed deed is made by reference
to that contained in the prior deed , or (in any case) to a recital, the description contained in
such prior deedor recital shall also be setout in the memorial.
Except thatin the case of an indorsed or annexed deed,where a memorial of the prior deed
bas been registered , a reference to the year, book, and number of its registration shall be suffi
cient, without setting out the full description contained in such deed.

When any person requires an official official certificate is given by the Registry
search to be made,a requisition form must be in the following form :
filled up. When the search is completed an

OFFICIAL CERTIFICATE OF SEARCH ,

Land Registry. Middlesex Deeds Acts.

This is to certify that the subjoined list contains all the entries in the index for the
to
years
of
inclusive, appearing therefrom to affect lands in the parish(es)
entered against the following name:

Surname. Christian Name.

To wait till called for by ( or, to be sent by post to]

of

375
LAP ] DICTIONARY OF BANKING
LIST OF ENTRIES.
Year . Book . No. Year .
with the landlord to pay all rent and taxes)
he is entitled to deduct the amount from
the next payment of rent.
By the Finance Act, 1898, the tax may be
redeemed on payment of thirty times the
amount of the tax which it is desired to
redeem. Persons who hold at a rack rent,
and tenants who hold under the Crown, are
not allowed to redeem the tax .
LAPSED POLICY . A policy of insurance
which has become useless through non-
payment of the premium . (See LIFE
POLICY .)
LARCENY. Theft. For the purposes of
00
the Larceny Act, 1916, A person steals
who , without the consent of the owner ,
fraudulently and without a claim of right
made in good faith , takes and carries away
anything capable of being stolen with intent,
at the timeof such taking, permanently to
deprive the owner thereof : Provided that
a person may be guilty of stealing any such
thing notwithstanding that he has lawful distinction, and to use as interchangeable,
possession thereof, if, being a bailee or part
owner thereof, he fraudulently converts the
same to his own use or the use of any person
other than the owner ." (Section 1, s.s. 1.)
Every person who, being employed in the
capacity of a clerk or servant, steals any
money or valuable security belonging to, or
in the possession of his employer, or fraudu-
lently embezzles any money or valuable
security received into his possession for his
employer, shall be guilty of felony and on
conviction thereof liable to penal servitude
for any term not exceeding 14 years.
(Section 17.)
Every person who, being a director,
member, or officer of any body corporate or
public company, fraudulently applies for his
373
(LAW
Book . No, Year . Book . No.
Seal of
Search
Department
with
date .
own use , or for any purposes other than
the purposes of such body or company, any
of the property of such body or company :
and every person who , being entrusted with
any property in order that he may retain it
in safe custody or apply it for any purpose,
fraudulently converts it to his own use or
the use of any other person ; shall be guilty
of a misdemeanour and on conviction liable
to penal servitude for any term not exceed .
ing seven years. (Section 20. ) This para
graph does not apply to any trustee under
any express trust created by a deed or will
or any mortgagee of any property, in respect
of any act done in relation to the property
comprised in the trust or mortgage. (See
FALSIFICATION OF ACCOUNTS. )
LATIN MONETARY UNION. The Union
was formed in 1865 by France, Italy,
Belgium , and Switzerland. Greece joined
it in 1868. These States are pledged by the
terms of their agreement to accept without
gold pieces conforming to certain conditions,
and five franc silver pieces of an agreed type
and bearing the imprint of the high con
tracting parties. The unit of value is the
same in each country, though called by
different names ; in France, Switzerland, and
Belgium it is the franc, in Italy the lira, and
in Greece the drachma. Austria , Finland ,
Roumania, Servia, and Spain have adopted
the system but without joining the Union .
( See SCANDINAVIAN MONETARY UNION .)
LAW . (See COMMON Law, EQUITY,
STATUTE LAW .)
LAW MERCHANT. ( Lex mercatoria .)
The rules of common law , including the
law merchant, save in so far as they are
inconsistent with the express provisions of
LEA ] DICTIONARY OF BANKING (LEA

the Bills of Exchange Act, 1882, apply to a sub -lease , or under -lease. Leasehold
bills of exchange, promissory notes, and property is in law regarded as personalty
cheques (Section 97, S.s. 2, of that Act ). (9.0 .).
The law merchant “ is neither more nor In Camberwell and South London Building
less than the usages of merchants and traders Society v . Holloway ( 1879, 13 Ch. D. 754 ),
in the different departments of trade, rati- Jessel, M.R., said : “ Theword ' lease ' in law
fied by the decisions of courts of law , which, is a well-known legal term of well-defined
upon such usages being proved before them , import. No lawyer has ever suggested
have adopted them as settled law that the title of the lessor makes any
(Goodwin v. Robarts, 1875, L.R.10 Exch.337.) difference in the description of the instru
( See STATUTE LAW.) ment, whether the lease is granted by a
LEASE AND RELEASE . Prior to the freeholder , or by a copyholder, with the
year 1841 the usual method of conveyance licence of the lord, or by a man who himself
of a freehold estate was by a lease and is a leaseholder. It being well granted for
release. On one day a lease was granted a term of years it is called a lease . It is
for one year to the person to whom the land quite true that where the grantor of the
was to be transferred, and on the following lease holds for a term , the second instrument
day a release was granted to him . In olden is called either an under-lease or a derivative
times a transfer of land was effected by lease, but it is still a lease."
means of actual delivery, “ livery of seisin In taking the deeds of leasehold property
( q.u.) ( i.e. delivery of possession), a method assecurity, it should be remembered that
of transfer called “ feoffment (q.v.). A failure to fulfil the covenants contained in
conveyance by lease and release had the the lease may result in the forfeiture ofthe
same effect. By the lease the lessee was lease, and re- entry of the lessor. If the last
placed in actual possession of the land, and receipt for the landlord's rent is produced ,
the next day the grantor released the free- it is a waiver of any breach of covenant of
hold or reversion to the lessee, thus making which the landlord was aware before giving
him the owner . From 1841 to 1845 a the receipt, but it is not a waiver with
release ” alone was sufficient to answer regard to any breach of which he was
the purpose, in accordance with 4 & 5 Vict. ignorant.
c. 21 , " An act for rendering a release as A perusal of the deeds will show the nature
effectual for the conveyance of freehold of the covenants, and some of them may be
estates as a lease and release by the same very burdensome. A banker taking an
parties.” In 1845 it was enacted that the assignment of a lease becomes liable for all
conveyance of freeholds shall be deemed to the covenants, but if a mere deposit of the
lie in grant as well as in livery . Since that deeds is taken, or a sub -demise, if allowable,
date freehold land has therefore been for a day or two short of the remainder of
transferred by a deed of grant called a the term of the lease, he does not incur any
conveyance . ( See CONVEYANCE , FREE- liability on the covenants ; there is, how
HOLD .) ever, the danger that the lease may be for
LEASEHOLD. (Saxon leasum , to enter feited through failure of the lessee to fulfil
lawfully .) Where the owner of freehold land the conditions contained therein .
grants it to a person for aa term of years it is In a banker's mortgage of leasehold
called a lease and the land is then leasehold. property the mortgagor demises unto the
The person leasing it is the lessor (who is bank all the hereditaments and premises as
possessed of the reversion ), and the party described in the schedule thereto to hold
in whose favour the lease is given is the the same unto the bank for all the residue
lessee. When a lease is granted for more unexpired of any term of years for which
than three years the land is demised ” the same are holden except, say, the last
by deed to the lessee. (But see Walsh v. day of such term . With respect to the day
Lonsdale, 1882, 21 Ch. D. 9.) When the which is reserved there should be a clause
to the effect that the " Mortgagor declares
lessee transfers the land to some one else
he " assigns the lease .” The consideration that he the mortgagor shall henceforth stand
in aa lease may be a payment of so much per possessed of the nominal reversion hereby
annum , or a lump sum, called the premium , reserved of the term of years for which the
in addition to the annual payment. When said premises herein before demised are
a lessee grants to another person a part holden in trust for the bank subject to such
only of his interest under a lease it is termed equity of redemption if any as may for the
377
LEAJ DICTIONARY OP BANKING (LEA

time being be subsisting by virtue of these contrary intention is not expressed in the
presents and to dispose thereof as the bank contract. “ It is a well -established rule of
shall direct and hereby irrevocably appoints law that a lessee has constructive notice
1
the bank the attorneys of him the mort- of his lessor's title.” Just as when a
gagor in his name and on his behalf at any person is purchasing land he investigates
time to assign the same nominal reversion his vendor's title, so when taking a lease
to the bank or as they shall think fit ." he should, in the eyes of the law, investigate
Power should also be given to the bank to his lessor's title ." ' " If the lessee does not
appoint a new trustee in the place of the do so, the law ... will attribute to him
mortgagor. notice of the lessor's title, or (as it may be)
Where any part of the property of a bank- of his want of title .” (L.T. Vol. 136, p .
rupt consists of land of any tenure burdened 223.) When a lease is offered as security,
with onerous covenants, the trustee may, unless the lessor is well known, the banker
with leave of the Court, disclaim the pro- should make inquiry as to the lessor's title.
perty. Where a trustee disclaims leasehold By Section 3, s.s. 4, of the Conveyancing
property the Court shall not make a Act, 1881 :
00
vesting order in favour of any person claim- ' Where land is held by lease (not in
ing under the bankrupt, whether as under cluding under-lease ), the purchaser
lessee or as mortgagee by demise, except shall assume, unless the contrary
upon the terms of making that person appears, that the lease was duly
subject to the same liabilities and obligations granted ; and, on production of the
as the bankrupt was subject to under the receipt for the lastpayment due for
lease in respect of the property at the date rent under the lease before the date
when the bankruptcy petition was filed, of actual completion of the pur
and any mortgagee orunder -lessee declining chase, he shall assume, unless the
to accept a vesting order upon such terms contrary appears, that all the cove
shall be excluded from all interest in and nants and provisions of the lease
security upon the property ( Section 54, have been duly performed and
Bankruptcy Act, 1914). observed up to the date of actual >)
A lessor cannot compel an equitable completion of the purchase."
mortgagee by deposit of a lease to take a Where land sold is held by under -lease,
legal assignment, but if the mortgagee the purchaser shall assume, unless the con
enters into possession of the property he is trary appears, that the under-lease and
liable on the covenants of the lease . every superior lease were duly granted, and
If there is a covenant in the lease that the on production of the last receipt for rent he
lessee cannot sub -demise or assign without shall assume that all covenants and pro
the consent of the lessor, the licence of the visions of the under -lease and of every
lessor should accompany the deeds where superior lease,as well as all rent due, have
there is an assignment or sub -lease, but if been duly performed and paid up to date
the deeds are held merely with a memoran- (s.s. 5) .
dum of deposit, the licence is not required . By Section 4 of the Conveyancing Act,
The lease should be perused to see whether 1882 :
the lessor's consent is required for a mortgage “ ( 1 ) Where a lease is made under a power
of the property , or whether he requires contained in a settlement, will, Act
notice of a mortgage. (See LICENCE TO of Parliament, or other instrument,
ASSIGN . ) any preliminary contract for or re
By Section 2, Vendor and Purchaser Act, lating to the lease shall not, for the
1874 , it is enacted that under a contract purpose of the deduction of title to
to grant a term of years to be derived out an intended assign,form part of the
of a freehold estate, the intended lessee shall title, or evidence of the title, to the
not be entitled to call for the title to the lease . ”
freehold ; and by Section 13, Conveyancing Upon the death of an owner of leasehold
Act, 1881, on a contract to grant a lease for property, the estate becomes vested in the
a term of years to be derived out of a personal representatives (executors or ad
leasehold interest with aa leasehold reversion, ministrators) of the deceased . When , there
the intended lessee shall not have the right fore, the deeds of leasehold property are
to call for the title to that reversion . These lodged by a borrower who has obtained the
sections, however, apply only where a property consequent upon the death of the
378
LEAJ DICTIONARY OF BANKING [LEA

previous owner, it should be remembered Of any dwelling -house or part £ s. d.

that the legal estate may still be held by the of a dwelling-house at a
personal representatives, and that the rent not exceeding the rate
borrower, if he inherited the property, re- of £10 per annum 0 0 1 . .

quires a conveyance from the representa- (2) For any definite term less
than a year
tives, and if he had the property left to him
by will, he requires a conveyance from , or ( a ) of anyfurnished dwelling
the formal assent of, the representatives. house or apartments where
Where the deeds of leasehold property the rent for such term
are deposited as security, they should as a exceeds £ 25 . 0 5 0
rule be accompanied by the original lease, (6) Of any lands, tene- | The same duty
as a lease for a
but it may occur that the original lease ments, or heritable sub year at the
included two properties, and is not along jects except or other- rent reserved
for the definite
with the deeds given as security. There wise than as aforesaid term .
should , however, be an attested copy of (3) For any other definite term
the lease, or it should be abstracted , and an or for any indefinite term :
acknowledgment given for its production. Of any lands, tenements, or
Subject to any stipulation to the contrary heritable subjects
in the contract for the sale of land , forty Where the consideration, or
years shall be the period of commencement any part of the considera
of title which a purchaser may require. tion, moving either to the
(Vendor and Purchaser Act, 1874, Section 1.) lessor or to any other
A purchaser of leasehold property is entitled person , consists of any
to an abstract of the lease even though more money, stock, or security :
than forty years old. In the case ofa lease, The same duty
as a convey
the lessee gets no covenants for title. In respect of such con anco on a sale
Where a sub -lease is deposited as security, sideration . for the same
it should be accompanied by an attested consideration .
copy of the original lease. Where the consideration or
If parts of a leasehold property have been any part of the con
sub -leased , the counter parts of the sub -leases sideration is any rent :
should accompany a deposit of the lease or In respect of such con
assignment thereof. sideration :
By the Finance (1909–10) Act, 1910, If the rent, whether re
Section 75, it is enacted that the stamp served as a yearly rent
duties chargeable under the heading “ Lease
.)
or otherwise, is at a
or Tack " in the Stamp Act, 1891, shall rate or average rate :
be double the duties which would have
been chargeable immediately before the If the
If the
term
passing of this Act under that heading, term does
exceeds
If the
not exceed term
but this Section shall not apply in the case 35 years ,
35 years,
but does
exceeds
of leases or tacks on which a fixed duty of or is
not exceed 100 years.
a penny is chargeable under that heading . indefinite .
100 years.
( The Finance Act was passed April 29, 1910.)
COOOOOO

OOOOOOO

£ s. d . £ s. d . £ s. d*
By the Revenue Act, 1911, Section 15 , Not exceeding £5 per
where the consideration (other than rent) annum 0 1 0 0 6 0 0 12 0
does not exceed £500, Section 75 of the Exceeding
OOO

Finance (1909-10) Act, 1910, shall not apply. £6 and not exceeding
OOO
OMA

£ 10 0 2 0 0 12 1
This provision does not apply where any £10 £ 150 3 010 18 0 1 16
part of the consideration consists of rent £ 15 £20 0 4 0 1 4 2
£ 250 6 0 1 10 3
and that rent exceeds the sum of £20 a 220
£25 £50 0 10 03 0 6
year. 2760 15 0 4 10 9
By the Stamp Act, 1891 , the duty is as £50
£ 76 » £ 1001 0 06 0 012
follows (as amended by Finance Act, 1910, £ 100
see above) : For every full sum of
LEASE or Tack £50, and also forany
fractional part of £50
( 1) For any definite term not
exceeding a year
thereof
o 10 0 3 0 0 0 0 0
379
LEA ) DICTIONARY OP BANKING
( 4) Of any other kind whatso- £ s. d.
ever not hereinbefore de
scribed 1 0
And see Sections 75, 76, 77 and 78 as
follows :
Agreements for not more than Thirty -five
Years to be Charged as Leases.
“ 75. (1 ) An agreement for a lease or
tack, or with respect to the letting
of any lands, tenements, or heritable
subjects for any term not exceeding
thirty -five years, or for any in
definite term , is to be charged with
the same duty as if it were an actual
lease or tack made for the term and
consideration mentioned in the agree
ment.
" (2) A lease or tack made subsequently
to, and in conformity with , such an
agreement duly stamped is to be
charged with the duty of sixpence
only .
Leases how to be charged in Respect of
Produce, etc.
“ 76. ( 1 ) Where the consideration, or any
part of the consideration , for which a lease
or tack is granted or agreed to be granted,
consists of any produce or other goods, the
value of the produce or goods is to be deemed
a consideration in respect of which the lease
or tack or agreement is chargeable with ad
valorem duty.
Directions as to Duty in Certain Cases.
“ 77. ( 1 ) A lease or tack, or agreement
for a lease or tack , or with respect to
any letting, is not to be charged
with any duty in respect of any penal
rent, or increased rent in the nature
of a penal rent, thereby reserved or
agreed to be reserved or made Duty in Certain Cases may be Denoted by
payable, or by reason of being made
in consideration of the surrender or
abandonment of any existing lease,
tack , or agreement, of or relating to
the same subject matter .
. (2) A lease made for any consideration
in respect whereof it is chargeable
with ad valorem duty , and in further
consideration either of a covenant
by the lessee to make, or of his
having previously made, any sub
stantial improvement of or addition
to the property demised to him , or
of any covenant relating to the
matter of the lease, is not to be
charged with any duty in respect of
such further consideration .
(LEA
[ The Revenue Act, 1909, Section 8,
enacts that the provisions of this
0 sub -section shall not apply as re
spects any further consideration
in the lease consisting of a covenant
which if it were contained in a
separate deed would be chargeable
with ad valorem stamp duty, and
accordingly the lease shall in any
such case be charged with duty in
respect of any such further con
sideration under Section 4 of the
Stamp Act, 1891.)
“ (3) No lease for a life or lives not exceed
ing three , or for a term of years de
terminable with a life or lives not
exceeding three, and no lease for
a term absolute not exceeding
twenty -one years, granted by an
ecclesiastical corporation aggregate
or sole, is to be charged with any
higher duty than thirty -five shillings.
“ (4) A lease for a definite term exceeding
thirty -five years granted under the
Trinity College ( Dublin ) Leasing
and Perpetuity Act, 1851, is not to
be charged with any higher duty
than would have been chargeable
thereon if it had been a lease for a
definite term not exceeding thirty
five years.
“ (5) An instrument whereby the rent
reserved by any other instrument
chargeable with duty and duly
stamped as a lease or tack is in
creased is not to be charged with
duty otherwise than as a lease or
tack in consideration of the addi
tional rent thereby made payable.
Adhesive Stamp.
“ 78. ( 1 ) The duty upon an instrument
chargeable with duty as a lease or
tack of
" (a ) any dwelling-house, or part
of a dwelling -house, for a
definite term not exceeding
a year at a rent not exceed
ing the rate of ten pounds
per annum ; or
" (b) any furnished dwelling -house
or apartments for any defi
nite term less than a year;
and upon the duplicate or counter
part of any such instrument, may
be denoted by an adhesive stamp,
which is to be cancelled by the
380
LEE ) DICTIONARY OF BANKING ILEG

person by whom the instrument is or names such shares, stock , or interest shall
first executed . at the time of making such contractstand
“ (2) Every person who executes, or pre- as the registered proprietor thereof in the
pares or is employed in preparing, books of such banking company : and every
any such instrument (except letters person, whether principal, broker, or agent,
or correspondence) which is not, at who shall wilfully insert in any such con
or before the execution thereof, duly tract, agreement, or other token any false
stamped , shall incur a fine of five entry of such numbers, or any name or
pounds.' names other than that of the person or
As tothe general form of a building lease, persons in whose name such shares, stock, or
see BUILDING LEASE . interest shall stand as aforesaid , shall be
In Scotland, an assignment of a lease for guilty of a misdemeanour, and be punished
thirty -one years and longer, when recorded accordingly, and, if in Scotland, shall be
in the Register of Sasines, forms a legal guilty of an offence punishable by fine or
>)
security ; but, when the term is for a less imprisonment.”
period , it is necessary that the assignee This Act is still in force, but its provisions
enter into possession , otherwise the assign- are disregarded on the London Stock
mentdoes not hold good as against creditors. Exchange,as it is not the practice to specify
(See TITLE DEEDS.) the numbers of bank shares on the contract
LEEDS. A Stock Exchange name for note. Where a person, in ignorance of that
Lancashire and Yorkshire Railway ordinary practice, instructed his brokers to purchase
stock . for him certain shares in a joint stock bank ,
LEEMAN'S ACT. (Sale and Purchase and, before the settling day, repudiated the
of Bank Shares Act, 1867, 30 Vict. c. 29.) contract, it was held ( Perry v. Barnett, 1885 ,
The name of an Act of Parliament (passed 15 Q.B.D. 388 ) that the contract, which was
with the intention of preventing speculation made contrary to this Act, was not binding
in bank shares) by which it is provided that upon him. But where a person purchases
all contracts for sale or purchase of bank bank shares and is aware of the practice of
shares or stock except sharesor stock of the the Stock Exchange he cannot repudiate the
Bank of England or Bank of Ireland must contract.
set forth the numbers of the shares or stock, Sections 2 and 3 of the Act are as follow :
or, if there are no distinguishing numbers, " 2. Joint stock banking companies shall be
the name of the registered proprietor. bound to show their list of shareholders to any
Section 1 is as follows : registered shareholder during business hours,
“ All contracts, agreements, and tokens of from ten of the clock to four of the clock .
sale
entered into for the sale or transfer, or
13.
stock in the Bank of England or the Bank
or
purporting to be for the sale or transfer, of of Ireland.”
any share or shares, or of any stock or other LEGACY DUTY. The duty which is
interest, in any joint stock banking company payable upon bequests of personalty by a
in the United Kingdom of Great Britain and testator who is domiciled in the United
Ireland constituted under or regulated by Kingdom at the time of his death .
the provisions of any Act of Parliament, The legacy duty rates payable upon the
Royal Charter, or letters patent, issuing amount of any legacy, as amended by the
shares or stock transferable by any deed or Finance (1909-10) Act, 1910, Section 58, are
written instrument, shall be null and void to as follows :
all intents and purposes whatsoever, unless Lineal ancestors or descend
such contract, agreement, or other token ants of the testator 1 per cent .
shall set forth and designate in writing such Brothers and sisters of the
shares, stock , or interest by the respective testator, or their descend
numbers by which the same are distinguished ants . .
5 per cent.
at the making of such contract, agreement, Uncles and aunts of the tes
or token on the register or books of such tator, or their descendants 10 per cent.
banking company as aforesaid, or where Great uncles and great aunts
there is no such register of shares or stock by of the testator, or their
distinguishing numbers, then unless such descendants, 10 per cent.
.

contract, agreement , or other token shall Any other person . 10 per cent .
.

set forth the person or persons in whose name Succession duty (and not legacy duty) is
381
LEG ] DICTIONARY OF BANKING (LEG

payable upon legacies which are charged redeem the property by discharging the
upon the proceeds of a sale of real estate, mortgage debt) he is the real owner of the
or where the personal estate is insufficient property . If the difference between the
and real estate has to be resorted to for pay- amount of the mortgage and the value of the
ment, the legacies are liable to a deduction property is considerable, he may, if he wish ,
for the rateable part of the duty which borrow further sums upon a second or a
results from the real estate.(See SUCCES- third mortgage, but each mortgage subse
SION DUTY .) When the deeds of any such quent to the first is merely an equitable
property are lodged as security the succession mortgage, because the legal estate is already
duty receipts should accompany the deeds.
vested in the first mortgagee, and the mort
gagor can only convey what he has left — that
Legacy duty is not levied where the total
value of the personalty does not exceed is, an equitable estate in the property. If
£ 100, nor where the net value of the estate the mortgagor sells the equity of redemption,
does not exceed £ 1,000, and estate duty his interest in theproperty is altogether ex
has been paid. Legacy duty is not payable tinguished . (See EQUITY OF REDEMPTION .)
on legacies to lineal descendants if estate The date for repayment of a mortgage is
duty has been paid . (See EXECUTOR .) usually three or six months, but the period
When a legacy is left “ free of duty,” the inserted in mortgages to bankers is often a
payment of the legacy duty falls on all the shorter time, and frequently the money is
property of the testator. made repayable on demand. If the borrower
LEGAL ESTATE . A person has the legal does not repay the money after he has
estate in land when his title to it is complete. received formal notice requiring repayment
For example, where land has been conveyed at the end of the prescribed time, or after
to John Brown in fee simple he has the legal demand , the mortgagee becomes, by law ,
estate in it. If John Brown conveys it to the full owner of the property . But,
Jones by way of mortgage to secure the re- although legally he has become the owner ,
payment of money lent by Jones to Brown, the mortgagor still retains his equity of
the legal estate then vests in Jones, but redemption and can demand a re -conveyance
Brown retains an equitable estate in the to himself or a transfer of the mortgage to
land. If the debt is not paid according to some other party, on payment of the amount
the terms of the mortgage deed , Jones owing with interest and certain charges
becomes, according to law , the owner of the
which may have been incurred by the
land, but, according to equity, Brown has mortgagee in keeping up the property.
still the right to redeem the land upon Unless a contrary intention is expressed
payment of the principal with all interest in the mortgage deed, a mortgagee , where
due and certain costs incurred by Jones in the mortgage is made by deed , shall, by
connection with the land . This right is virtue of the Conveyancing and Law of
called the equity of redemption. Property Act, 1881, Section 19, have the
If land is conveyed to Brown as trustee following powers, to the like extent as if
for Jones, the legal estate vests in Brown, they had been in terms conferred by the
but the equitable estate vests in Jones, mortgage deed, but not further , namely :
who is the real owner . In such a case (a) A power , when the mortgage money
Brown has no beneficial interest whatever has become due, to sell, or to concur
in the property . with any other person in selling, the
LEGAL MORTGAGE . Where a borrower mortgaged property, or any part
conveys, by deed, the legal estate in his pro thereof, either subject to prior
perty to a lender, subject to his right to have charges, or not, and either together
the property re-conveyed upon repayment or in lots, by public auction or by
of the principal and interest, it is a legal private contract, subject to such
mortgage. The borrower is called the conditions respecting title, or evi
mortgagor and the lender the mortgagee. dence of title, or other matter, as
A mortgage deed conveys to the mort he ( the mortgagee) thinks fit, with
gagee not only the land, but any houses or power to vary any contract for sale,
other buildings there may be upon the land, and to buy in at an auction, or to
and all fixtures thereon. (See FIXTURES.) rescind any contract for sale, and to
Although the borrower parts with the re -sell, without being answerable for
legal estate, yet so long as he retains the any loss occasioned thereby ;
equity of redemption (that is, the right to (6) A power, at any time after the date
382
LEG ) DICTIONARY OF BANKING
of the mortgage deed, to insure and
keep insured against loss or damage
by fire any building or property of an
insurable nature. (By Section 23,
unles an amount is fixed in the
mortgage deed the insurance shall
not exceed two -third parts of the
amount that would be required , in
case of total destruction , to restore
the property .)
(c) A power, when the mortgage money
has become due, to appoint a
receiver of the income of the mort-
gaged property or any part thereof;
(d ) A power while the mortgagee is in
possession to cut and sell timber.
( The Conveyancing Act, 1911 , Section 4,
details certain other powers which shall be
included in the power of sale conferred on
a mortgagee by Section 19 of the Act of
1881.)
By Section 20 of the same Act:
“ A mortgagee shall not exercise the
power of sale conferred by this Act unless
and until :
" (1) Notice requiring repayment of the
mortgage money has been served on
the mortgagor, or one of several
mortgagors, and default has been
made in payment of the mortgage
money, or of part thereof, for three
months after such service ; or
• (2) Some interest under the mortgageis
in arrear and unpaid for two months
after becoming due ; or
“ (3) There has been aabreach of some pro
vision contained in the mortgage
deed or in this Act, and on the part
of the mortgagor, or of some person
concurring in making the mortgage,
to be observed or performed, other
than and besides a covenant for
payment of the mortgage money or
interest thereon ."
In a banker's mortgage, however, it is
generally expressly stipulated that his right
to sell the property, or to appoint a receiver
of the income from it, shall arise immediately
default is made after demand, or on default
at the end of, say, a period of one month
after demand . Notice of the intention to
exercise a power of sale should be given to
second mortgagee, if there is one, as well as
to the mortgagor. (See BANKER'S MORT-
GAGE .)
A mortgagee by deed may either sell
the property or appoint a receiver ( see
383
(LEG
RECEIVER ); or enter into possession ( see MORT
GAGEE IN POSSESSION) , but he cannot fore
close without an order of the Court. He can
also sue the mortgagor on the covenant to
repay contained in the mortgage deed , within
twelve years from the last payment of
interest by the mortgagor or acknowledg
ment of the debt. A mortgagee cannot sell
the property to himself, or to his own
agent. (See FORECLOSURE.)
In the event of the mortgagor's bank
ruptcy , if the property is not sufficient to
cover the debt the mortgagee should value
the property and claim upon the bankrupt's
estate for the difference .(See PROOF OF
DEBTS .)
By Section 25 of the Conveyancing and
Law of Property Act, 1881 :
" ( 1 ) Any person entitled to redeem mort
gaged property may have a judg
ment or order for sale instead of for
redemption in an action brought by
him either for redemption alone, or
for sale alone, or for sale or redemp
tion in the alternative .
“ (2) In any action, whether for fore
closure, or for redemption , or for
sale, or for the raising and payment
in any manner of mortgage money ,
the Court, on the request of the
mortgagee, or of any person inter
ested either in the mortgage money
or in the right of redemption , and,
notwithstanding the dissent of any
other person, and notwithstanding
that the mortgagee, or any person
so interested does not appear in the
action, and without allowing any
time for redemption or for payment
of any mortgage money, may, if it
thinks fit, direct a sale of the mort
gaged property, on such terms as it
thinks fit, including, if it thinks fit,
the deposit in Court of a reasonable
sum fixed by the Court, to meet the
expenses of sale and to secure per
formance of the terms."
See other Sections ander STATUTORY
MORTGAGE.
Where a sale has been effected under a
mortgage, Section 21 , s.s. 3, provides that :
" Themoney which is received by the mort
gagee, arising from the sale, after discharge
of prior incumbrances to which the sale is not
made subject, if any, or after payment into
Court under this Act of a sum to meet any
prior incumbrance, shall be held by him in
LEG ] DICTIONARY OF BANKING (LRG

trust to be applied by him , first, in payment tax from the amount of interest payable on
of all costs, charges and expenses, properly his mortgage. (See INCOME Tax .)
incurred by him , as incident to the sale or John Brown can deposit as security for his
any attempted sale, or otherwise ; and working account a mortgage to himself from ,
secondly, in discharge of the mortgage say, John Jones, and the property , to the
money, interest, and costs, and other money, extent of the mortgage, will form a
if any, due under the mortgage ; and the continuous security. Where a deposit of a
residue of the money so received shall be mortgage deed is taken, the banker should
paid to the person entitled to the mortgaged give notice to the mortgagor, in the above
property, or authorised to give receipts for supposed case to John Jones, that the
the proceeds of the sale thereof." deed has been lodged with him as security .
If there are subsequent mortgages , any Unless such notice is given, the banker
surplus there may be from a sale of the might find ultimately that John Jones
property belongs to them , but if the had been gradually repaying the debt to
vendor has no notice of any subsequent John Brown, and that John Brown had
charges he is not liable if he pays the not given the bank the benefit of the
surplus to the mortgagor. (See NOTICE OF payments. A mere deposit, however,
MORTGAGE .) would not give the banker power to enforce
When a first mortgagee, with notice of a the mortgage. See further information
second mortgage, is paid off, he becomes under MORTGAGE .
trustee of the legal estate for the second In an ordinary mortgage, after the date of
mortgagee, see under RECONVEYANCE . repayment has gone past, the mortgagee is
If the proceeds of a sale by a mortgagee are entitled to six months' notice from the
insufficient to discharge the mortgage debt, mortgagor of his intention to repay.
the mortgagee may claim upon the mort- For stamp duties see MORTGAGE.
gagor for the deficiency. If, however, The following points, amongst others, are
instead of selling, the mortgagee forecloses, found in a good " banker's mortgage " of
he has no further claim upon the mortgagor. freehold property :
By the Conveyancing Act, 1911 , Section The mortgagor, in consideration of the
5, s.s. 1 , " upon any sale made in professed bank allowing him to keep an account, con
exercise of the power conferred on mort- veys unto the bank the lands and heredita
gagees by the Act of 1881, a purchaser ments, as described in the Schedule, subject
is not, and never has been , either before, or to the proviso for redemption that, if he
on conveyance, concerned to see or inquire pays on demand all sums owing by him to
whether a case has arisen to authorise the the bank on any account or for any amount
sale, or due notice has been given, or the for which he may be liable as surety, with
power is otherwise properly and regularly | interest and other charges, the bank shall
exercised . " re -convey the premises to him . It forms a
Where a banker takes a mortgage for a continuing security to cover any sum which
fixed amount, the loan should be upon a shall for the time being constitute the balance
separate account. A mortgage for a fixed due to the bank from the mortgagor. The
amount is not a security to cover a working mortgagor covenants therein to pay on de
account, as each payment to credit is in mand all sums owing, and to keep the pre
effect so much deducted from the amount mises insured against fire, and declares that,
of the mortgage, and any future advances after the money has become due and is not
would not be covered by it. Further, where paid , say, within a month , the bank shall be
the mortgage to the banker is for a fixed sum , entitled to exercise the power of sale
simple interest only, in the absence of any conferred on mortgagees by statute. It is also
agreement to the contrary, can be charged. stipulated in the mortgage that the security
The taking of a mortgage for a definite shall not be affected by any other security
amount terminates the relation of banker held or that may hereafter be held by the
and customer, and the position of the bank, and that the bank shall have power
banker becomes that of an ordinary mort- to give time for payment to any other person
gagee. In the case of the usual form of liable for the moneys secured by themortgage.
banker's mortgage, that is, a mortgage to When the security is no longer required
secure a fluctuating balance, the relation of the property is reconveyed by the bank, by
banker and customer continues. an indorsement upon the mortgage deed to
A mortgagor is entitled to deduct income the effect that the bank conveys unto the
384
LEG ] DICTIONARY OF BANKING (LEG

mortgagor all the premises which are vested money, or as purporting that the holder
in the bank, subject to redemption, by virtue thereof is entitled to demand any value
of the within written indenture, to hold the denoted thereon . "
same unto the mortgagor freed and dis- By 24 and 25 Vict. c. 99, Section 7, " no
charged from all moneys secured by the tender of payment in money made in gold,
within written indenture. (See LIFE POLICY,
silver, or copper coin , defaced by being
MORTGAGE, RECONVEYANCE, REGISTRATION stamped with any name or words thereon,
OF MORTGAGES AND CHARGES, TITLE whether such coin shall or shall not be
DEEDS.) thereby diminished or lightened , shall be
Legal mortgages and reconveyances form allowed to be a legal tender.”
part of the chain of title to the property The gold coinage made at the mints of
and should be preserved along with the other Sydney , Melbourne, and Perth (Western
deeds. Australia ) was declared legal tender in the
As to a mortgage of leasehold property United Kingdom by Royal Proclamation in
see LEASEHOLD , and of copyhold property. the years 1866, 1869,, and 1897 respectively.
see COPYHOLD . Pre -Victorian sovereigns and half-sove
As to the transfer of a legal mortgage, or reigns are not now legal tender. They were
the creation of a legal sub -mortgage, see called in by the Coinage Act of 1889.
under TRANSFER OF MORTGAGE. A creditor is not obliged to give change
LEGAL TENDER . A legal tender is a when notes are offered to a greater value
tender of money of such description that the than the amount of the debt.
person to whom it is tendered will put him- NOTES . — By 3 & 4 Will. IV, c. 98, Section
self in the wrong if he refuses to accept it. 6 : - “ A tender of a note or notes of the
A legal tender requires that the exact Bank of England, expressed to be payable
sum of the debt must be tendered , without to bearer on demand, shall be a legal tender,
necessitating any change. to the amount expressed in such note or
COINS . — The Coinage Act, 1870 (33 Vict. notes, and shall be taken to be valid as a
c. 10,) Section 4, enacts “ a tender of pay- tender to such amount for all sums above
ment of money, if made in coins which have five pounds on all occasions on which any
been issued by the Mint in accordance with tender of money may be legally made, so
the provisions of this Act, and have not been long as the Bank of England shall continue
called in by any proclamation made in to pay on demand their said notes in legal
pursuance of this Act, and have not become coin ; provided always, that no such note
diminished in weight, by wear or otherwise, or notes shall be deemed a legal tender of
so as to be of less weight than the current payment by the governor and company of
weight, that is to say, than the weight (if the Bank of England, or any branch bank
any) specified as the least current weight in ofthe said governor and company ; but the
the first schedule to this Act, or less thansaid governor and company are not to
such weight as may be declared by any become liable or be required to pay and
proclamation made in pursuance of this Act, satisfy , at any branch bank of the said
shall be a legal tender, governor and company, any note or notes
“ In the case of gold coins for a payment of the said governor and company not made
of any amount : specially payable at such branch bank ; but
" In the case of silver coins for a payment the governor and company shall be liable
of an amount not exceeding forty shil. to pay and satisfy at the Bank of England
in London all notes of the said governor and
lings, but for no greater amount : company or of any branch thereof."
“ In the case of bronze coins for a payment Notes of the Bank of England may
of an amount not exceeding one shilling, circulate in Scotland and in Ireland, but they
but for no greater amount. are not a legal tender in those countries, if
“ Nothing in this Act shall prevent any objected to by the person to whom they are
paper currency, which under any Act or being paid (8 & 9 Vict. c. 38, Section 15 and
otherwise is a legal tender, from being a c . 37 , Section 6) .
legal tender.” In the Isle of Man and the Channel Islands
By Section 5 :-“No piece of gold , silver, notes are not a legal tender.
copper or bronze, or of any metal or mixed It has been pointed out that, whereas a
metal, of any value, shall be made or issued , tender of a £ 5 note is,by the above Act, not a
except by the Mint as a coin or a token of legal tender for a debt of £ 5, a debt of
385
25-41533 )
LEG ) DICTIONARY OF BANKING (LET

£5 Os. 1d. can be legally discharged by a £ 5 were for a time made legal tender . (See
note and a penny . CURRENCY NOTES.)
Cheques and bills do not form a legal By the Currency and Bank Notes Act,
tender. (See PAYMENT BY . ) 1914, Section 4, notes issued by banks of
A tender of country bank notes, if not issue in Scotland or Ireland were made legal
objected to by the person to whom they are tender until revoked by Royal Proclamation .
offered , will act as a legal tender . This Section was, by Proclamation, revoked
In the case of country bank notes which as from January 1 , 1920, provided that
are accepted in payment at the time when nothing in the Proclamation operates so as
a sale is made, the person who takes such to prevent any such bank from paying its
notes takes them at his own risk and if he notes in currency notes issued under the
should find that the bank which issued the above-named Act.
notes has failed he must suffer the loss him . When a banker cashes a cheque he does so
self. Unless he can prove that the person in such notes or coins as may be desired by
from whom the notes were received knew the customer, and it is not often that he has
at the time of the sale that the bank had to consider in what form a payment should
failed , the holder of the notes will not, in an be made in order to constitute a legal tender.
ordinary case, have any remedy against Except in the case of the Bank of England,
that person. But the position is different a cheque for £ 50 may be cashed, in order to
when notes are received in settlement of a be a legal tender, as follows : It may all be
debt, as the debt will not be considered to in bank notes or in gold ( sovereigns or half
have been paid, if the person who takes the sovereigns): or forty shillings may be in silver
notes finds that the bank has failed and he (or thirty -nine in silver and one in bronze),
is unable to obtain payment of them . He three pounds in gold and the remaining £45
must, however, present the notes at the bank either in gold or Bank of England notes.
within a reasonable time and give due LEGATEE . The person to whom “ per
notice of their dishonour to the person from sonal” property (see PERSONALTY) is left,
whom he received them , otherwise that per- or bequeathed , in a will, is called a legatee.
son will be discharged from liability. The person who takes all the personal pro
Scotch notes are not legal tender in Scot - perty remaining after all legatees have
land, neither are Irish notes legal tender in received their shares, is called the residuary
Ireland, except Bank of Ireland notes when legatee .
used in payment of the Revenue of Ireland LEPTA . ( See FOREIGN MONEYS –
( 1 & 2 Geo . IV, c. 72) . GREECE .)
LESSEE . The person in whose favour a
Legal tender : lease is granted. (See LEASEHOLD .)
Io England and la IQ LESSOR . The person who grants a lease.
Wales . Scotland . Ireland . (See LEASEHOLD .)
LETTER BOOKS. A copy is always
Gold (sovereigns and Same. Same. preserved of all letters despatched from a
half - sovereigns) to bank . Letter books into which letters are
any amount . press copied are kept as may be found most
Silver up to 40s. Same. Same.
convenient. Various officials may have
Copper up to 1s. Same. Same.
their own letter books with a distinctive
CurrencyNotes. Same . Same.
Bank of England Notes No other No other notes reference on the letter paper, and the num
above £5 and up to notes are are legal ten- ber of the page on which the letter is copied
any amount, except legal ten- der, except may be written on the letter, so that, when a
by the Head Office der. Bank of Ire
and branches of the land Notes in reply is made and that reference is quoted ,
Bank of England payment of the copy may be found without trouble.
(3 & 4 Will. IV, Revenue of Letter books are kept in connection with
c. 98, s. 6 ). Ireland ( 1 &
special subjects or departments as the share
2 Geo . IV,
or the coupon department. Banks often
c. 72) .
keep a separate book at head office for each
On the outbreak of war with Germany in branch, and a branch keeps one exclusively
1914, the Government issued an emergency for letters to head office . There are also
currency of£ 1 and 10s. notes to act
tender in the United Kingdom for aslegal books for the correspondence with the
a pay- London agents, books
for private correspon
ment of any amount, and postal orders dence with the head officials, and books for
386
 LET) DICTIONARY OF BANKING (LET

general correspondence with customers, or This Form , with remittance, must be

with other banks ; also a book in which are forwarded entire to the Company's Bankers,
copied all replies given to bankers' inquiries. the Bank of London Limited , 83, Lombard
Loose sheets are superseding books in Street, London, E.C., who will return it duly
many offices, the sheets being filed according receipted. It should then be carefully
to various systems. preserved to be exchanged for the relative
The duty of press -copying letters usually Certificate ( or Scrip) in due course. Notice
devolves upon the youngestmembers of the of such exchange will be given by the
staff, but it is by no means unimportant Company (by advertisement).
work as a badly copied letter may be a cause Cheques should be made payable to
Not Negotiable.
of much subsequent inconvenience and
annoyance . BEARER and crossed
LETTER OF ALLOTMENT. The letter
which is sent by a company to an applicant If altered from “ Order ” to
00
Bearer
for shares, stocks or bonds which are being the alteration should be signed by the Drawer.
offered to the public, stating what has been
allotted to him and requesting payment Received for account of the Received for account of the
of the amount due to be paid thereon . (See IUPERIAL TRUST, LIMITED , IMPERIAL Trust, LIMITED ,
payment infull on the above the amount due on allotment.
APPLICATION FOR SHARES .) Sharas.
mentioned For BANK OF LONDON
The following is the standard form of Stock .
LIMITED ,
allotment letter as recommended by the For BANK OF LONDON
LIMITED ,
Council of the Institute of Bankers :
Cashier . Cashier .
Allotment Letter with receipts for amount duo on allotment Date .......... 19
and for payment in full, Size 13 in. by 8} in ., the dockets being Date .... 19
exactly a fourth of the total length. No...... No .....
PAYMENT IN FULL . ALLOTNENT
ALLOTMENT LETTER . 6d . PERIAL TRUST , DIPERIAL TRUST,
Siang . LDATED . LIITED

No...... f . £
Data 19 . Date ... 19
Space for Name
and Address of IMPERIAL TRUST, LIMITED, (See STANDARD FORMS .)
Allottee, to be filled 983, Cornhill,
in by the Company. London , E.C. Allotment letters do not form a security for
19 an advance, though they may in some cases
be held temporarily and exchanged for the
Issue of shares of
certificates when ready, when a transfer of
Sir or Madam , the shares can be taken in the usual way .
In response to your application , you have when an underwriter takes up shares which
been allotted Shares of £ each have not been subscribed for by the public
of the
£ Stock or Bonds he may receive allotment letters in blank.
IMPERIAL TRUST, LIMITED. These are sometimes lodged with a bank as
The amount payable on Applica a temporary security, and when the under
tion and Allotment ( viz ., writer obtains purchasers their names are
per Share) is filled in and the allotment letters released
per cent .) · £ against payment.
In the case of an issue of new shares, a
You have already paid shareholder may agree to accept the number
Making amount due from you of new shares provisionally allotted to him ,
on Allotment € by signing a form of acceptance, or he may
or
renounce his rights to the shares by signing
Making amount due to you, for a form of renunciation . He may renounce
which a cheque is enclosed . ! in favour of another person who shouldsign
Payment of the amount due from you the form of acceptance, or he may sell his
should be made on or before the as rights through a broker. (See LETTER OF
directed below . RENUNCIATION .) A stamp is not required
( Further particulars as to Payment in Full, Instalments and on the form of acceptance.
other matters can be inserted here as required .) An allotment of stock or bearer bonds
By Order of the Board , is often payable by instalments. (See
Secretary. INSTALMENT ALLOTMENT.)
387
LET) DICTIONARY OF BANKING (LET

Stamp duties : person who wishes to subscribe for some of

LETTER OP ALLOTMENT and LETTER of them sends in a letter of application stating
RENUNCIATION, or any other document | how many he requires and enclosing at the
having the effect of a letter of allotment :- same time a cheque for the amount payable
(1) Of any share of any company or pro on application. If his application is not
posed company . successful, the money is returned , but if
(2) In respect of any loan raised, orpro- successful he receives
ofallotment. in due course SHARES
(See APPLICATION FOR a letter,
posed to beraised, by any company LETTER OF ALLOTMENT.)
or proposed company, or by any LETTER OF ATTORNEY. (See POWER
municipal body or corporation. OF ATTORNEY.)
( 3) Issued or delivered in the United King LETTER OF CHARGE . Where bearer
dom, of any share of any foreign or securities are taken as cover for an advance,
colonial company or proposed com- it is usualto take a letter of charge or memor
pany, or in respect of any loan andum of deposit to show the purpose for
raised or proposed to be raised by or which they have been deposited .
on behalf of any foreign or colonial Registered certificates sometimes
are
state, government, municipal body, lodged , along with a simple letter or memor
corporation , or company.
Where the nominal amount which is andum
does notofgive
deposit, but such a document
the banker a good security .
allotted or to which the letter of renunciation (See TRANSFER OF SHARES.)
relates is not less than £5, the duty is six A letter of charge under hand for bearer
pence ; where the amount is less than £ 5, securities or certificates is subject to a stamp
the duty is one penny . A separate duty duty of sixpence, irrespective of the
is chargeable in respect of letters of allot amount. The stamp may be either adhesive
ment and letters ofrenunciation, although or impressed . (See MEMORANDUM OF
they may be contained in the same docu- Deposit.)
ment. The stamp duty of sixpence on a LETTER OF CREDIT . A letter of credit
letter of renunciation may be denoted by is a documentissued by aa banker authorising
an adhesive stamp, which is to be cancelled the banker to whom it is addressed to honour
by the person by whom the letter of the cheques of the person named to the ex
renunciation is executed ( Finance Act, 1899, tent of a certain amount and to charge the
Section 9) .
sums to the account of the grantor ; or it
The word " share " in the above schedule may be worded so as to authorise the person
includes a fractional part of a share (Revenue to whom it is addressed to draw on demand,
Act, 1909, Section 9) . or at a currency, upon the banker issuing the
By the Stamp Act, 1891, Section 79 : letter, and the grantor undertakes, in the
" (1 ) Every person who executes, grants, letter, to honour all drafts drawn in accord
issues, or delivers out any document ance with the terms of the credit. The
chargeable with duty as a letter of letter states the period for which the credit
allotment, letter of renunciation, or is to remain in force, and it should be in
scrip certificate, or as scrip , before dorsed with particulars of all drafts drawn
the same is duly stamped , shall incur | under the credit. When a letter of credit
a fine of twenty pounds. is issued , the amount is debited to the cus
“ (2) The stamp duty of one penny on a tomer's account and credited to a Letters
letter of renunciation may be denoted of Credit ” account. If not debited to his
by an adhesive stamp which is current account on issue, the amount may
to be cancelled by the person by be charged to a special account to show the
whom the letter of renunciation is customer's liability and credited to another
executed . " account to show the bank's liability, and,
The stamp upon a letter of allotment, to protect the bank against its undertaking
however, must be impressed. in the letter of credit to honour drafts
Receipts upon a duly stamped letter of drawn thereunder, the customer should
allotment are exempt from duty. (See provide security or a guarantee. In the
Exemption 11 under heading Receipt .) case of a documentary letter of credit the
(See ALLOTMENT, COMPANIES .) bank obtains the security of the documents
LETTER OF APPLICATION . When an of title to the goods, which are hypothecated
issue of shares is offered to the public, a to the bank .
388
LET) DICTIONARY OF BANKING
The following is a form of letter of
credit :
BRITISH BANK, LTD .
No ...... LONDON .... 19 ..
To
The Correspondents
of
Gentlemen ,
The Bearer of this letter ...
whose signature is to be found on List
of Correspondents No ........ is hereby
authorised to draw on this Bank at sight
or by short exchange for £ ..
say ....
to which extent we hereby engage to honour
his drafts .
All drafts negotiated under this credit are
to be indorsed on the back of this letter.
This Credit is in force for........months
from this date.
We are, Gentlemen ,
Your obedient Servants,
£ ............ Sterling.
This letter is to be returned with the last
draft .
All payments made under this letter must
be indorsed below :
Amount
Paid by in Letters Numerals
Bills drawn under an open ” or “ clean "
letter of credit have no documents attached ,
but under a “ documentary letter of credit
the shipping documents , usually invoice
or copy invoice, bill of lading and insurance
policy , are attached .
A form of documentary letter of credit
(not confirmed ) is given under DOCUMENTARY
LETTER OF CREDIT, and a form of confirmed
documentary letter of credit under Con-
FIRMED LETTER OF CREDIT.
When the authority to draw a bill is
printed upon the margin of the form which
is to be used for drawing the bill, the docu-
ment is called a marginal letter of credit.
The authority portion of the document refers
to the bill portion in such words as “ I
authorise you to draw the annexed bill.”
The two parts of the instrument must not
be separated .
Where a banker is authorised to pay
cheques under a letter of credit, he must see
that the signature of the drawer is correct
and that the terms of the letter are strictly
389
(LET
observed . He should be furnished with a
specimen of the signature of the person who
is entitled to draw the money, and will be
responsible for any loss if he pays on a
forged signature.
Where a letter of credit is shown to a
merchant abroad who is selling goods to the
holder of the letter, it has the effect of satisfy
ing the merchant that the bill will be duly
accepted by the banker issuing the letter.
The essence of a letter of credit is, as Lord
Justice Cairns said (in In re Agra & Master
man's Bank, 1867, 2 Ch. 391 ) , " that the
person taking bills on the faith of it is to
have the absolute benefit of the under
taking in the letter, and to have it in order
to obtain the acceptance of the bills which
are negotiable instruments payable accord
ing to their tenor , and without reference to
any collateral or cross claims."
A letter of credit is not a negotiable
instrument.
For the purpose of stamp duty a letter of
credit is treated as a bill of exchange (see
Section 32, Stamp Act, 1891 , under heading
BILL OF EXCHANGE ), but a letter of credit
granted in the United Kingdom , authorising
drafts to be drawn out of the United King
dom payable in the United Kingdom is
exempt from duty (see Exemption 4, under
BILL OF EXCHANGE). (See ACCEPTANCE
CREDIT, CIRCULAR LETTER OF CREDIT,
CIRCULAR NOTES, CLEAN CREDIT, CON
FIRMED LETTER OF CREDIT, DOCUMENTARY
LETTER OF CREDIT, REVOLVING CREDIT . )
LETTER OF HYPOTHECATION . A
document signed by a debtor giving a banker
or other creditor a charge upon goods
belonging to the debtor, the goods remaining
in the custody of a third party. For
example, where a customer has goods stored
with a warehousekeeper, the warrants or
receipts representing the goods may be
pledged as security, the customer usually
signing a letter of hypothecation or lien . The
letter of lien or charge should empower the
banker to sell, in default of payment of the
debt.
For further information see BILL OF
LADING, Dock WARRANT, WAREHOUSE
KEEPER's CERTIFICATE , WARRANT FOR
Goods .
LETTER OF INDICATION - LETTER OF
IDENTIFICATION . The letter which ac
companies circular notes or a circular letter
of credit. The letter is signed by the
banker issuing it, and the person to whom
it is given places his signature upon it,
LET) DICTIONARY OF BANKING (LET

as soon as received . When any of the A letter of indication may also accompany
circular notes are presented for payment, Travellers’ Cheques (q.v.).
or drafts are drawn under a letter of credit, (See CIRCULAR LETTER OF CREDIT, CIR
the banker should insist on the production of CULAR NOTES.)
the letter of indication , and assure himself that LETTER OF LICENCE ( ve Bank CHARTER
the indorsement on the notes or signature on Act ). This is the name given to the official
sent by the Government
the draftscorresponds with the signature of the letter of authority
legitimate holder on the letter of indication. to the Bank of England, on the latter's
The letter is addressed to the correspondents application, during the crises of 1847, 1857,
of the grantors and, when accompanying cir- and 1866, permitting the Bank to break the
cular notes, supplies the numbers of the notes Act of 1844 and increase their issue of notes
which have been issued to the holder. The upon securities. In 1857 the Bank took
notes should not be indorsed except in the advantage of this authorisation , but in the
presence of the banker from whom payment two other years mentioned they did not
is required, and the notes should be carried require to resort to it, public confidence
apart from the letter of indication, so that being restored without. On the outbreak
if they are lost the finder will not be able to of war with Germany in 1914, the Bank was
make any use of them in the absence of the empowered to suspend the Act, but the
letter. Letters of indication for use on the authority was not acted upon. (See par
Continent are usually in French . ticulars under Bank CHARTER ACT .)
The following is a specimen of a letter of LETTER OF LICENCE (DEBTOR AND
indication to accompany_circular notes :- CREDITOR). An agreement between а

No. Date 19 . debtor, who is in difficulties, and his credi

To Messieurs the Bankers tors, under which the creditors agree not to
mentioned in this Letter of Indication. enforce their claims for a certain time, and ,
GENTLEMEN , in the meantime, to allow him to continue
We beg to introduce to you his business. (See DEED OF ARRANGEMENT.)
who is furnished with our Circular Notes LETTER OF LIEN . A debtor frequently
numbered payable at our Head gives a banker, as security for an advance,
Office, London . a letter of lien or charge upon goods in the
We request that you will purchase any hands of a third party . In the case of In
of these notes presented to you for payment, re Hamilton , Young & Co. (1905, 2 K.B.
at your current rate for demand drafts on 772), where a letter of lien over goods in
London, on their being indorsed in your the hands of certain bleachers, accompanied
presence in accordance with the specimen by their receipt, was given, it was held that
signature below . the letter was a document used in the ordi
This Letter of Indication should be re- nary course of business as a proof of the
tained by the holder until all the Circular control of goods. The letter should em
Notes have been cashed, when it is to be power the banker to sell, in default of
surrendered to the Banker cashing the last payment of the debt. ( See TRUST
Note . RECEIPT.)
Your obedient servants, Where warehousekeeper's receipts and
Signature of Bearer. warrants, bills of lading and delivery orders
The following is a specimen of a letter are pledged with a bank as security the
bank's form of lien should be signed by the
of indication to accompany a letter of customer. For further information see BILL
credit :
No. Date 19 .
OF LADING, DOCK WARRANT, WAREHOUSE
To Messieurs the Bankers KEEPER'S RECEIPT, WARRANT FOR Goods .
LETTER OF REGRET. Upon a new
mentioned in this Letter of Indication . issue ofshares, the applicants who are not
GENTLEMEN , — successful in obtaining an allotment receive
This letter will be handed to you by a “ letter of regret " announcing the fact
in whose favour we have issued our Letter and returning their money.
of Credit No. Recommending LETTER OF RENUNCIATION . Where
to your kind attention, and referring you shares have been allotted to a person and
to specimen signature below . he does not wish to keep them , he may
Your obedient Servants, renounce them in favour of another person.
Specimen Signature. The document by which this is effected is
390
LET) DICTIONARY OF BANKING (LET

called the Letter of Renunciation . (See | and the amount of the postage on each. The
RENUNCIATION .) time at which the letters are posted is given ,
For Stamp duty see LETTER OF ALLOT- and the initials appended of the persons
MENT. who actually posted them . Many banks
The following is the standard form of insist upon the letters being taken to thepost
renunciation as recommended by the Council in a locked bag, by two persons. Prior to
of the Institute of Bankers : the letters being put into the bag, they are
usually examined by a senior clerk to see
IMPERIAL TRUST, LIMITED . that all are in order.
No .... The stock of postage stamps on hand is
Present holding.. balanced periodically by means of the money
Shares column in the letters despatched book .
Space for Name Entitled to a LETTERS OF ADMINISTRATION. Where
and Address of a person dies and leaves no will, the Probate
Shareholder , to be pro rata allotment
filled in by the
of .....Shares. Registry will, on application, appoint a
Company. person , the administrator, to wind up the
Joint Share
holders (if estate , and will grant to him “ Letters of
any) Names
only. Administration ," that is, a document em
powering him to administer the estate of
FORM OF RENUNCIATION AND NOMINATION , the deceased . If the deceased person left
to be signed by the Shareholder only if the a will but did not nominate any person to
Rights are renounced .
act as executor, or if the persons nominated
are incapable of acting, e.g. infants or
lunatics, or if the persons nominated re
To the Directors of the nounce Probate, that is, they decline to act
IMPERIAL TRUST, LIMITED . as executors, “ Letters of Administration
I /we hereby renounce my /our with the Will annexed " will be granted by
the Probate Registry. The administrator
right to the above-mentioned in
new Shares and nominate such a case (called an administrator cum
Name (in full),
testamento annexo) must carry out the terms
Address and of the will just like an executor.
Occupation of
Nominee . (If
If the balance of a deceased's account is
lady, state very small, some bankers pay it, on receiving
whether spin
ster, wife or
a satisfactory indemnity, without production
widow .) of Letters of Administration . There is no
to have all the benefits of the duty payable on an estate which is under
offer contained in your Circular £ 100. (See under DEATH OF CUSTOMER.)
dated Where Letters of Administration are

( Signature of Shareholder ) * revoked , the banker is protected in any

payments he may have made upon the
Letters. The sections of the Act relating to
Affix Stamp. this point are quoted under PROBATE (q.v.).
Under £5 In Hewson v. Shelley ( 1914, 110 L.T. 785) ,
Nominal,
where real property had been sold by an
administrator and a will was subsequently
Date ..... 19 . rd. ; £ s and • Instruc found, the Master of the Rolls said " the
tions as to
over, 6d .
Signatures of person for the time being clothed by the
Joint Holders Court of Probate with the character of
(See STANDARD FORMS. ) legal personal representative is the legal
personal representative and enjoys all the
LETTER OF REVERSION . In the Stamp powers of a legal personal representative
Act, 1891, the reference to the stamp duty unless and until the grant of administration
is : is revoked or has determined . If this view
LETTER OF REVERSION in Scotland . See is not right no person could safely deal with,
MORTGAGE, etc., and Section 86 thereunder. or accept a title from , an administrator,
LETTERS DESPATCHED BOOK . Under for it is impossible to prove that there may be
each day's dateis given a complete list, with no will." (See ADMINISTRATOR, ADMINIS
addresses, of all letters despatched by post, TRATOR DE BONIS NON.)
391
LET) DICTIONARY OF BANKING ( LIC

LETTERS RECEIVED BOOK. All letters Where a branch having a licence to issue
received are entered in this book. It is notes, opens a sub -office in another town or
ruled to show the date of receipt, person place, the banker's own notes cannot be
from whom received, and the subject matter. issued at that sub -office under the licence
A column is also usually provided to show held by the parent branch.
the date on which the reply (if any) was The following Sections of 9 Geo . IV , c. 23,
made. The entries are numbered consecu- relate to the powers given to bankers in
tively and the numbers are placed in England to issue, on licence, promissory
coloured pencil upon the corresponding notes and to draw bills not exceeding seven
letters. When replied to, the letters are days after sight, or twenty - one days after
filed away in numerical or alphabetical or date :
other order according to the system adopted . “ 1. It shall be lawful for any person or
LEVA . (See FOREIGN MONEYS - BUL- persons carrying on the business of a banker
GARIA .) or bankers in England (except within the
LEX MERCATORIA. (See Law Mer- city of London, or within three miles
CHANT . ) thereof), having first duly obtained a licence
LEY. (See FOREIGN MONEYS — Rou- for that purpose, and given security by bond,
MANIA .) in manner hereinafter mentioned, to issue,
LIABILITIES. The liabilities side of a on unstamped paper, promissory notes for
balance sheet shows the total indebtedness any sum of money amounting to £ 5 or
of the person or company. upwards, expressed to be payable to the
The liabilities of a bank are to the share- bearer on demand, or to order, at any period
holders, to depositors, on acceptances, and, not exceeding seven days after sight ; and
in the case of a bank of issue, on the notes in also to draw and issue, on unstamped paper,
the hands of the public . (See BALANCE bills of exchange, expressed to be payable
SHEET, BANKING COMPANY.) to order on demand, or at any period not
LIABILITY . A liability or obligation exceeding seven days after sight, or twenty
may be limited or unlimited. (See BANKING one days after the date thereof ; provided
COMPANY, COMPANY LIMITED BY SHARES, such bills of exchange be drawn upon a
COMPANY LIMITED BY GUARANTEE, COM- person or persons carrying on the business
PANY UNLIMITED , LIMITED PARTNERSHIP, of a banker or bankers in London, West
PRIVATE COMPANY.) minster, or the borough of Southwark, or
LICENCE. Except in the case of the provided such bills of exchange be drawn
Bank of England (see BANK OF ENGLAND ), by any banker or bankers, at a town or place
banks which are entitled to issue their own where he or they shall be duly licensed to
notes may issue them either on stamped or issue unstamped notesand bills under the
unstamped paper. If they are on un authority of this Act, upon himself or
stamped paper , a licence must be obtained themselves, or his or their copartner or
from the Commissioners of Inland Revenue copartners, payable at any other town or
authorising the issue of notes and bills of place where such banker or bankers shall
exchange on unstamped paper, and a bond also be duly licensed to issue such notes and
must be given to secure the payment of a bills as aforesaid .
composition for the stamp duties payable on “ 2. It shall be lawful for any two or more
the notes and bills issued . The duty on of the Commissioners of Stamps to grant
each licence is £ 30, and it must be taken out to all persons carrying on the business of
annually. A separate licence is required bankers in England (except as aforesaid ),
for every town or place where notes are who shall require the same, licences autho
issued (two or more offices in the same town rising such persons to issue such promissory
being covered by one licence), with the notes, and to draw and issue such bills of
exception that bankers, who, before May 6, exchange as aforesaid , on unstamped paper ;
1844, had taken out four licences, and which which said licences shall be and are hereby
licences were in force on that date for the respectively charged with a stamp duty of
issue of notes at more than four places, are £ 30 for every such licence.
not required to obtain more than four “ 3. A separate licence shall be taken out
licences for the issue of notes at the same in respect of every town or place where any
places. such unstamped promissory notes or bills
As to the composition for stamp duties, of exchange as aforesaid shall be issued or
see COMPOSITION . drawn : Provided always, that no person or
392
LIC] DICTIONARY OF BANKING (LIC

persons shall be obliged to take out more by the said name or style, as the Commis
than four licences in all for any number of sioners may think fit, and such licence is to
towns or places in England ; and in case be as good as if the names and places of
any person or persons shall issue or draw abode of all the members of the company
such unstamped notes or bills as aforesaid, or co -partnership had been specified therein
at more than four different towns orplaces, and thelicence granted to them . (See BANK
then, after taking out three distinct licences Notes, BANK OF ISSUE, COMPOSITION, NOTE
for three of such towns or places, such person RETURN .)
or persons shall be entitled to have all the LICENCE TO ASSIGN . Where a lessee is
rest of such towns or places included in a unable to assign , demise or sublet the lease
fourth licence ." hold land or premises without the licence or
Section 22 of 7 & 8 Vict. c. 32 enacts :- consent in writing of the lessor or his agent,
“Every banker who shall be liable by the necessaryfollowing
licence , when obtained, may
law to take out a licence from the Com- be in the form :- “ I hereby
missioners of Stamps and Taxes to authorise license and authorise to assign his
the issuing of notes or bills shall take out a estate and interest in the piece or parcel of
separate and distinct licence for every town ground, etc., unto for the
or place at which he shall, by himself or his residue of the term of years , etc."
agent, issue any notes or bills requiring such (See LEASEHOLD.)
licence to authorise the issuing thereof, any- LICENSED PROPERTY. In considering
thing in any former Act contained to the the value of licensed property, it should be
contrary thereof notwithstanding : Pro- remembered that the purchase money named
vided always, that no banker who on or in the last deed of conveyance may have
before the 6th day of May, 1844, had taken been an inflated price and therefore may not
out four such licences, which on the said be much of an indication as to the present
last -mentioned day were respectively in value. The rent of a public -house, when
force, for the issuing of any such notes or tied to a brewery company, cannot always
bills at more than four separate towns or be taken as a correct basis upon which to
places, shall at any time hereafter be estimate the value ; the rent may be a com
required to take out or to have in force at paratively small one , in view of all purchases
one and the same time more than four such having to be made from the brewery . But
licences to authorise the issuing of such where the house is owned privately and is
notes or bills at all or any of the same towns free, the rent may be taken as a fair basis,
or places specified in such licences in force because the owner does not get anything
on the said 6th day of May, 1844, and at from the trade of the house, and looks to
which towns or places respectively such the rent for a return on his capital invested
bankers had on or before the said last- in the purchase of the house.
mentioned day issued such notes or bills in A licence is liable to be taken away by the
pursuance of such licences or any of them licensing magistrates. An insurance policy
respectively. " should therefore be obtained to insure
Every licence which shall be granted against loss by depreciation in value of the
between October 10 and November 11 in interest of the insured in the premises by the
any year shall be dated on October 11 , and forfeiture of, or refusal to renew , the licence.
every licence granted at any other time shall The policy covers any such loss up to a
be dated on the day on which it is granted , specified amount, and usually contains a
and every such licence shall continuein force clause as follows :
until October 10 next. (9 Geo. IV, c. 23, Provided always that in the case of an
Section 4.) On -licence, if the insured shall be entitled
In the case of licences granted to joint to obtain the payment of compensation
stock banks, it is enacted by 24 & 25 Vict. under the provisions of any Act of Parlia
c. 91 , Section 35, that it shall be sufficient ment in respect to the refusal to renew the
to specify in the licence or certificate the said licence, or,in the case of an Off- licence,
names and places of abode of any six or if the renewal of the said licence shall be
more persons who may be presented to the refused on any ground other than the ground
Commissioners and to grant the licence to that the premises have been ill-conducted
them as and for the whole of the company or are structurally deficient or structurally
or co -partnership, and to grant the licence unsuitable, or grounds connected with the
to such company or co -partnership, in and character or fitness of the proposed holder
393
LIE ) DICTIONARY OF BANKING (LIB

of the said licence, no claim shall arise under The securities over which a banker has
this policy ." (See VALUATION .) a lien are understood to be principally
LIÊN. A lien is the right to hold a negotiable securities. “ What is intended
person's property until payment of a debt is such securities as promissory notes, bills
is received. Legal advice should be ob- of exchange, exchequer bills, coupons, bonds
tained before dealing with securities held by of foreign governments, etc .; and the Courts
way of lien . have held that if such securities are deposited
In Brandao v . Barnett ( 12 Cl . & Fin . 787) , by a customer with his banker, and there
Lord Campbell stated that “ bankers have is nothing to show the intention of such
a general lien on all securities deposited deposit one way or the other, the banker
with them as bankers by a customer, unless has, by custom, a lien thereon for the
there be an express contract, or circum- balance due from the customer ” (Kindersley,
stances that show an implied contract, V.-C., in Wylde v. Radford, 1863, 33 L.J. Ch.
inconsistent with lien ." 51 ) . In Davis v. Bowsher ( 1794 , 5 T.R. 488 ),
The lien is not affected by reason that Lord Kenyon said : “Whenever a banker
negotiable securities do not belong to the has advanced money to another, he has a
person depositing them , if the banker is lien on all the paper securities which come
unaware of the fact. into his hands for the amount of his general
A banker has no lien on securities which balance."
are deposited for some particular purpose. In re United Service Company ( 1870, 6 Ch.
For example, it has been held that where a Ap., 212) , where railway share certificates
conveyance of two separate properties was were deposited with a bank and a com
deposited, with a memorandum of charge mission was charged for collection of the
upon only one of the properties, the banker dividends, it was held that the certificates
had not a general lien upon the other came into the bank's custody in the ordinary
property . (Wylde v. Radford 33, L.] . course of their business as bankers, that they
Ch . 51.) were deposited with the bank by a customer
Bills and documents left for collection are of the bank, and that such deposit was made
part of a banker's ordinary business, and he under such circumstances as would have
has a lien upon them . entitled the bank to a lien upon them for
Section 27, s.s. 3, of the Bills of Exchange their general banking account. Several
Act, 1882, provides :-"Where the holder of authorities, however, express doubts as to
a bill has a lien on it, arising either from certificates being the subject of a banker's
contract or by implication of law , he is lien .
deemed to be a
a holder for value to the extent A banker has no lien upon articles left
of the sum for which he has a lien .” If a for safe custody, as the circumstances of
bill has been transferred absolutely to a the deposit are inconsistent with lien . A
banker he is entitled to the full amount of customer may , however, sign an agreement
it, but if he has merely a lien upon it his (stamp 6d.) giving the banker a lien on
interest is limited to the extent of that lien . securities left for safe custody.
When a banker has discounted bills for Sir John Paget (in The Law of Banking)
a customer, the banker has no lien on any expresses the view that a banker's lien
credit balance on the account with respect “ only attaches to such securities as a
to the contingent liability on the bills not banker ordinarily deals with for his cus
yet due. “ There would be no use in dis- tomer, otherwise than for safe custody, when
counting the bills ” if the banker had a lien there is no question or contemplation of
on the cash balance. ( Bower V. Foreign indebtedness on the part of the customer."
and Colonial Gas Co. , 1874, 22 W.R. 740) . A conveyance of land is not subject to a
But a contingent debt is provable in bank - banker's general lien, but where deeds are
ruptcy. (See PROOF OF DEBTS, SET OFF.) | deposited with the intention of creating a
Where bearer bonds are left with a banker security, without any memorandum of
in order that the coupons may be cut off charge, they form an equitable mortgage by
and collected by him, Sir John R. Paget deposit.
considers that a lien probably attaches to In In re Bowes, Earl of Strathmore v.
the bonds, but no lien would attach if left Vane ( 1886 , 33 Ch. D. 586) , where a customer
for safe custody, and the customer looked deposited a life policy for £5,000, with a
after the coupons himself. (See “ The Law memorandum stating that it was to form a
of Banking, " p . 301.) security to the extent of £4,000 with interest,
394
LIE ) DICTIONARY OF BANKING (LIE

commission and other charges, it was held | set off the credit balance of a partner's
that the banker could not claim more on the private account against a debt on the
policy than the £4,000 and charges, as partnership account, unless the partners
limited in the charge. Mr. Justice North have made themselves jointly and severally
said : “ It is said that the bankers have a liable, for the firm's account.
banker's lien ; that Bowes was their cus- The Deed of Settlement, or Articles of
tomer, and handed over to them the policy Association, of a banking company may
as security, that they had it in their hands provide that the partly -paid shares of the
and were entitled to hold it, not only for the members shall be subject to a lien in favour
£ 4,000, interest and commission, for which of the bank for all moneys due to the bank
they had a written agreement, but that in in respect of any call or debt due from the
addition they had a further right as bankers shareholder, whether alone or jointly with
to hold it in respect of the rest of his debt to any other person , to the bank. It has been
them ; or in other words they claim a right held that such a power gives the bank a lien
under the special contract in writing and upon the dividends, as well as upon the
also under an implied contract. It appears shares.
to me that that is inconsistent with the The clause with regard to a lien on partly
terms of the agreement, which is for a paid shares may take the following form :
security for a sum not exceeding £ 4,000 “ The company shall have a first and
principal and no more, with interest and permanent lien and charge available at
commission, and that when the contract law and equity on every share of every
says in so many words that thecharge is person who is the holder or one of the
for a sum not exceeding £ 4,000 , the charge joint-holders thereof, for all debts and
is limited to that amount. ... It has not liabilities on any banking or other account
been suggested that the sale was wrong in whatsoever, and for all other debts, liabilities,
any way ; and it may well be that bankers and sums of money due or to become
who have a power of selling securities de- due from him , either alone or jointly with
posited, when they have sold , and have any other person, whether a member or
clear money in their hands after satisfying not, to the company at any time whatso
the charge, may be entitled to say they will ever, whilst he is the registered holder, or
set off that money against further sums due one of the registered holders, of the share.
to them ; but that seems to me a totally " The directors may sell for the benefit of
different case from the present, where the the company, any shares on which the
security is of a wholly different nature, and company shall have such lien as aforesaid,
the bank had no power of sale. It is quite without any further authority on the part
true that, after a demand for payment had of the holder or holders thereof, in order to
been made, the bank might have insisted obtain satisfaction or payment of all or any
having a mortgage with a power of sale. No part of such debts, liabilities, or sums of
such demand was made or mortgage given , money : Provided that no such sale shall
the bank never had a power to sell and con- take place without one calendar month's
vert the policy into money. ... It seems notice to the holder or holders of the shares
O

to me that the express terms of this deposit in accordance with the articles relating to
were that sums not exceeding £4,000 were notice, and that when any shares shall be
to be paid out of the policy moneys, and it so sold, the company shall credit such
would be inconsistent with that, in the holder or holders in account with the price
absence of any additional agreement, to received by the company as the actual price
allow the bank to hold the policy for some- of the shares sold : Provided also that the
thing more." register of shares shall be conclusive evidence
Where a customer has a credit balance on of the title of a subsequent holder of any
one account and is owing money on another, share which the directors shall have sold as
the banker has a right to set off one balance aforesaid ; and the remedy of any share
against the other. This right is sometimes holder in respect of any irregularity in the
))
referred to as a banker's “ lien ,” but the enforcing of any lien, or alleged lien, shall
more exact term is “set off.” A credit be in damages against the company only ."
balance on an account which has been A bank has no lien upon its shares when
opened by him in a fiduciary capacity cannot they are fully - paid and have an official
be set off against an overdrawn private quotation on the Stock Exchange, because,
account ; neither has a banker the right to by the rules of the London Stock Exchange,
395
LIEJ DICTIONARY OF BANKING (LIE

one of the conditions precedent to an applica- | of this decision , articles of association should
tion for official quotation is “ that fully -paid prescribe a sale of the shares as the method
shares shall be free from all lien .” Another of enforcing such a lien . Although shares
condition is “ that none of the funds of the cannot be forfeited for failure to pay a
company shall be employed in the purchase debt due (otherwise than in respect of the
of, or in loans upon the security of its own shares themselves) by a shareholder to the
shares." company, a company's articles of association
A company's articles of association usually may give power to forfeit shares if a share
give a lien on a member's shares for any holder fail to pay any call or instalment due
debt due by him to the company, and a lien on the shares. A provision to this effect is
on shares held jointly for debts due by the included in Table A.
separate holders. In companies, however, A limited company cannot purchase its
which have adopted Table A of the Com- own shares without the sanction of the
panies (Consolidation) Act, 1908, the lien court.
is more restricted . Clause 9 of Table A is :- Where partly -paid shares in another bank
“ The company shall have a lien on every ing company are offered as security it should
share (not being a fully paid share) for all be remembered that that company will
moneys (whether presently payable or probably have a first lien upon its own
not) called or payable at a fixed time in shares. But in the case of the Bradford
respect of that share, and the company shall Banking Co. v. Briggs & Co. ( 1886 , 12
also have a lien on all shares (other than A.C. 29) , where the articles of association
fully paid shares) standing registered in the of a company registered under the Com
name of a single person, for all moneys panies Act, 1862, provided that the company
presently payable by him or his estate to should have " a first and permanent lien
the company : but the directors may at and charge, available at law and in equity,
any time declare any share to be wholly upon every share for all debts due from
or in part exempt from the provisions of the holder thereof ” it was held, reversing
this clause. The company's lien , if any, the decision of the Court of Appeal, that
on a share shall extend to all dividends notice to the company of the deposit of
payable thereon .” The effect of this Clause certificates with the bank was not a notice
is that the company has a lien on its partly- of a trust within the meaning of the Com
paid shares for calls or instalments payable panies Act, 1862, Section 30 , and that the
in respect of those shares (whether held bank by giving notice of the deposit did not
solely or jointly) and a lien on all partly -paid seek to affect the company with notice of a
shares in the name of a single person for trust, but only to affect the company (which
other debts due by him to the company. was a trading company) in their capacity as
Special articles may extend this latter lien traders with notice of the interest of the
to cover shares held jointly. Table A does bank. It was also held that the company
not provide for a lien on fully -paid shares, could not in respect of moneys which
as the Stock Exchange objects, as stated became due from the shareholder to the
above, to give an official quotation unless company after notice of the deposit with
they are free from all lien. If, however, the the bank claim priority over advances by
company does not require an official quota- the bank made after such notice.
tion, special articles may provide for a lien In Mackereth v. Wigan Coal and Iron
on fully -paid shares. Co., Ltd. ( 1916, 2 Ch . 293) , it was held that
In Hopkinson v . Mortimer, Harley & Co., where partly- paid shares of a company,
Ltd. ( 1917, 1 Ch. 646) , where the articles of whose articles of association contain a lien
association of the defendant company pro- clause, are held by trustees upon a trust of
vided that it should have a lien on its shares which the company has had notice, the
for debts due by the registered holders of company cannot exercise its lien by retain
such shares to the company, and that the ing dividends or selling the shares in order
Board might by resolution forfeit the shares, to recover a debt due to it by one of the
it was held that such power of forfeiture was trustees .
ultra vires and invalid on the grounds that When a bank's partly -paid shares have
its exercise would amount to a reduction of been transferred into the names of the
capital, which would be illegal unless sanc- personal representatives of a deceased share
tioned by the court, and would operate as a holder in such circumstances as to constitute
clog on the equity of redemption. In view notice to the bank that the shares are held
396
LIE ) DICTIONARY OF BANKING (LIP

in a fiduciary capacity, it follows, from the life is insured ." The legal instrument by
above case, that the bank could not exercise which the contract is made and reduced to
its lien on the shares in order to recover form is called the policy.
money advanced to the representatives for A life policy, duly assigned, forms a good
purposes not authorised by the trust . banking security to the extent of the
A vendor has a lien upon the land for any surrender value. The longer it exists the
unpaid part of the purchase money, as more valuable it becomes.
against a subsequent purchaser with notice ; If a debtor gives a security in which he
but “ a receipt for consideration money or has merely a life interest, it should be
other consideration in the body of a deed, or supported by a life policy.
indorsed thereon , shall, in favour of a sub- A policy may be either a ' whole life
sequent purchaser, not having notice that assurance " —that is, not payable till the
the money or other consideration thereby death of the assured ; or an endowment
acknowledged to be received was not in fact assurance " —that is, payable when the
paid or given, wholly or in part , be sufficient assured has arrived at a certain age, or pay
evidence of the payment or giving of the able at death if it occurs before that age is
whole amount thereof." (Conveyancing reached - or simply an endowment ” -that
Act, 1881, Section 55, s.s. 1.) (See LIEN is, payable on the insured surviving to a
LETTER , SET OFF , TITLE DEEDS .) certain age. An assurance may be effected
LIEN LETTER. When an arrangement merely for a temporary period - called a
is made by which a certain amount in a “ short term " policy - and is payable only in
customer's credit account is to be regarded the event of death occurring within the
as a security for an advance to him on period agreed upon.
another account, an agreement (stamped 6d.) A policy may be in favour of the assured ,
not to reduce the balance below the amount or in the case of a husband in favour of his
agreed upon , should be signed by the cus- wife or children , or two lives may be assured
tomer. The document should also authorise under the one policy the sum being payable
the banker to refuse payment of any cheques upon the first death, or in other policies on
which would reduce the balance on the the death of the survivor of the two lives.
credit account below the stipulated amount, The Married Women's Property Act, 1882,
and to combine the two accounts at any time provides that an assurance effected by a
without notice. A similar agreement should man on his own life for the benefit of his wife
be signed when a customer's credit balance, or children , or of his wife and children , or
or part of it, is to be held as a security for effected by a woman on her own life for the
an advance to another customer. benefit of her husband or children , or hus
LIFE ANNUITY. An annuity, or annual band and children , shall create a trust in
payment of a certain sum , which is payable favour of the objects named and the moneys
during the life of an individual. Instead of payable shall not form part of the estate of
an annual payment, it may be actually paid the insured or be subject to his or her debts ;
quarterly or half-yearly . (See ANNUITY .) provided that if it be proved that the policy
LIFE ASSURANCE. (See LIFE POLICY.) was effected with intent to defraud the
LIFE INTEREST . An interest creditors they shall be entitled to receive
in a

property for life only . Where the deeds of a out of the moneys payable under the policy
property are deposited as security by a a sum equal to the premiums so paid .
person who has only a life interest therein, By the Gambling Act, 1774 (14 Geo. III,
a policy upon that person's life should be c. 48) , no insurance shall be made by any
.

assigned to the bank, otherwise the bank person on the life of any person unless he
would have no security to fall back upon has an insurable interest in that person .
in the event of death . (See LIFE TENANT.) The interest must be a pecuniary one. For
LIFE POLICY. Life assurance has been example, a wife has an insurable interest in
defined as “ a contract by which the insurer, her husband's life, and a man in his own
in return for a lump sum or a periodical life. A son has not an insurable interest
payment, undertakes to pay to the person in his father's life (if the son is of age and
for whose benefit the insurance is effected , therefore not legally entitled to maintenance ),
or to his executors, administrators or and a father has no insurable interest in his
assigns, a certain sum of money or an child merely on account of the relationship.
indemnity on the happening of a given In Griffiths v. Fleming and others ( 1909,
event, or on the death of the person whose 1 K.B. 805) , the Court of Appeal held that
397
LIF ) DICTIONARY OF BANKING [LIF
a " husband has an insurable interest in the are issued with premiums arranged on an
life of his wife, which is to be presumed in ascending scale, the premium increasing
such a sense that it is unnecessary to give according to the length of time the policy
any evidence of his pecuniary interest in the has been in existence.
life of his wife. " A guarantor has a pecuniary Premiums are usually payable within
60
interest in the debtor for whose debt he is thirty days (called the days of grace '')
surety, and a policy by the surety upon the from the due date, and, if death occurs
debtor's.life is valid. The policy continues within that time, before payment of the
valid after the pecuniary interest has ceased. premium , the sums assured and bonuses are
Where a person insures the life of another, paid in full under deduction of the overdue
in whose life he has an insurable interest, premium .
he cannot recover more under the policy As a protection of policies against lapsing
than the amount of the interest he had in through non -payment of premiums a pro
the life assured at the time that the insurance vision is usually made by companies, as for
was effected . For example, if Brown owes example :
Jones £ 100, Jones can insure Brown's life If premiums are not paid within one year
for £ 100. If Brown repays the money from the expiry of the thirty days, and death
before his death Jones can still recover on occurs during that time, the sums assured
the policy, as that was the insurable interest and bonuses will be paid in full, under
he had in Brown's life at the time that the deduction of the overdue premium and a
insurance was effected . small fine for arrear, provided the policy
The question of " insurable interest ” does bears a clear surrender value of not less than
not apply to a person to whom a policy is the premium for one complete year ; but
assigned ; it applies only to the parties to when the policy does not bear such a clear
the original contract. surrender value, it can only be renewed,
The fact that a policy has been issued does within the year, on evidence satisfactory
not necessarily imply that the regulation to the directors as to the health of the life or
regarding the insurable interest has been lives assured and payment of arrears and fine.
observed by the company . “ A premium becomes due on the day
A life policy should be carefully perused specified in the body of the policy.” “The
to see if it contains any special conditions or condition allowing days of grace means that
restrictions. if the premium is paid during those days of
The premium is the amount payable in grace it shall be treated as if it had been
order to assure the payment of the sum paid on the due date.” (Mc Kenna v. City
named in the policy at death or at the end Life Assurance Company, 1919, K.B.D. 122
of a certain period. This premium may L.T. 30.) In the case of a bill of exchange,
take several forms. It may consist of a however, the bill is due and payable on the
single large payment, or of annual payments last day of grace. (See DAYS OF GRACE.)
for a certain number of years, or of a pay- Where a policy is assigned to a banker, the
ment every year, or half-year, until death .
)
notices of premiums falling due are sent by
A “ paid up or “ complete " policy is the company to the assured, unless there
one where there are no further premiums is a special arrangement to the contrary,
payable. The banker must be careful to see that the
There is a “ half-credit ” system with premiums are duly paid.
regard to premiums, by which only a half A deduction is allowed by the income
of the premium due is paid, the other part tax authorities from a person's income, up
remaining as a debt upon the policy and to one -sixth thereof, for any premiums on
being payable with interest out of the policy assurances effected by a man on his own
moneys at death . life or on that of his wife. For further
There is also the " half-premium "system, particulars, see under Income Tax .
where the premiums are arranged to exclude A bonus is the periodical division of
the debt and interest of the half- credit ' profits ” amongst the policyholders of an
system . In either case there is no surrender assurance company. In arriving at the
value during the time of the low premiums, amount of premium to be paid, a company
usually for the first five years, and conse- “ loads ” the premium — that is, adds to it a
quently such policies do not form a banking sum to meet expenses. Such part of that
security during that period . “ loading " as is not required " is returned
There is also a scheme under which policies to the holders by way of the bonus. Some
398
LIF ) DICTIONARY OF BANKING (LIF

policies are “ with profits," whilst others are right to sue for the amount of the policy
1)
is without profits.” A bonus may be sur- until a written notice of the date and pur
rendered for aa cash payment, or added to the port of the assignment have been given to
amount of the policy, or applied in reduction the company at their principal place of busi
of the future premiums, or used to provide ness. The date on which such notice is
a policy payable at a certain age. received regulates the priority of all claims
The surrender value is the amount which under any assignment. But a second assignee
the company will pay, at any time after, with notice of the prior charge , cannot, by
usually, three years' premiums have been giving notice to the company before the first
paid, to the policyholder on a surrender of assignee, obtain priority. By Section 6, the
the policy. The amount is calculated by the company must, when requested by the per
company upon the premiums paid and son giving the notice, and upon payment of
bonuses declared . The amount can be a fee of 5s. , give an acknowledgment of the
ascertained by application to the company. receipt of such notice.
A policy may often be sold at rather more In giving notice of an assignment, a banker
than the surrender value. should ask the company if there are any
Insurance companies grant loans upon prior charges upon the policy. If there
policies to the extent of 90 or 95 per cent. have been prior assignments or charges , the
of the surrender value. documents ,together with the re- assignments
A simple deposit of a life policy assecurity or discharges,should be obtained.
creates an equitable mortgage, but the posi- Where a policy is assigned absolutely
tion of an equitable mortgagee is unsatis- | that is, on a sale and not as amortgage — the
factory as he cannot, by giving notice to the Act provides a very simple form of assign
company, obtain priority over any previous ment, viz. : - “ I, A B of, etc., in considera
charge, even though the company has not tion of, etc., do hereby assign unto C D of,
received notice of the prior charge, pro- etc., his executors, administrators and
vided that the prior assignee or mortgagee assigns, the [within] policy of assurance
has acted without negligence. The usual granted, etc. (here describe the policy ). In
and proper way of taking a security upon a witness, etc."
life policy is to have it assigned to thebank When a policy is taken as security , it
by way of mortgage under seal. Each should show that the age of. the person in
person interested in the policy must join in sured has been “ admitted ” by the com
the assignment. pany . This is necessary to prevent any
If the policy is taken out by a husband question arising, when the policy becomes
for the benefit of his wife, both must sign a claim , as to the correct amount of the
the assignment. It is advisable that the premium which should have been paid. The
signature of the wife should be witnessed by age of the life assured is proved by production
her own solicitor. If the policy is for the to the insurance company of a registrar's
benefit of the children, or for the wife and certificate of birth, or of a certificate of
children , the policy is not available as a baptism containing date ofbirth . If neither
security if any of the children are under age, of these documents can be procured, a certi
as the children under age cannot assign . fied extract from a family Bible or register,
Bankers have their own forms of assign- or a statutory declaration on a form approved
ment which usually provide for the banker by the company may be accepted as evidence,
paying the premiums, if the customer fails but this last form of evidence is accepted
to doso, and debiting the amounts to the only in cases where no other kind of docu
customer's account, and which also give mentary evidence can be produced . The
power for the policy to be surrendered or policy should be forwarded to the company
sold by the banker. at the same time as the evidence, in order
Notice of an assignment must be given that the admission of age may be indorsed.
to the company and an acknowledgment In the case of a married woman, a certificate
received. It is usual to send the notice in of marriage must also be produced to
duplicate, so that the company may retain establish identity.
one copy and return the other with an All previous assignments and documents
acknowledgment thereon . relating to dealings with a policy must be
The Policies of Assurance Act, 1867 ( 30 & carefully preserved as they may be required
31 Vict. c. 144) , Section 3, states that no by the company when the policy becomes
assignment shall confer on the assignee any a claim .
399
LIN ) DICTIONARY OF BANKING [LIG

When a policy, assigned to a banker, of life policies are given “ for certain good
matures for payment, the banker should and onerous causes and considerations."
forward his assignment to the insurance Stamp duty, 10s. At the same time a letter
company and request the company to send of deposit is taken , on which the stamp is
him a form of discharge for signature. sixpence. Notice of the assignation must
When the discharge is signed in accordance be sent in writing to the insurance company.
with the company's requirements it is sent, Where the assignation is granted by a
along with the policy, to the company who third party on behalf of a customer, a
will then send the banker a cheque for the document is required to connect the trans
amount due under the policy. action with the customer's indebtedness.
An " industrial” policy, unless the com- Usually this is an explanatory letter, which
pany's consent in writing to an assignment requires to be stamped 2s. 6d. per cent. on
be obtained , does not form a banker's the amount intended to be secured . (See
security . (See INDUSTRIAL LIFE Policy.) TONTINE POLICY.)
For the stamp duties on policies, see LIFE TENANT. A life tenant is the per
POLICY OF INSURANCE . son who has a right or interest in landed
The stamp duty upon an assignment of a property for his life, or during the life
life policy by way of security is the same as of some other person (called an estate pur
in the case of a mortgage (q.v.) ; and upon autre vie). If on the death of a life tenant the
a sale the same as for a conveyance (q.v.). property returns to the grantor of the life
The assignment must be stamped within interest, or his heirs, the grantor is said to
thirty days of execution. hold the reversion, but if it does not revert
The duty upon a memorandum of deposit, to him but passes to another person, that
under hand , of a life policy is 1s. per cent. person holds the remainder, and is called the
When an assignment is no longer required remainderman .
as a security , it is re-assigned to the customer A life tenant may hold the deeds of the
(usually by an indorsement on the deed ), property, but he cannot give a charge thereon
the stamp duty being 6d. per cent. (payable to any greater extent than the life interest he
by the customer) of the highest amount at has in the property.
any time secured . (See under MortgaGE.) By the Settled Land Acts a tenant for life
Section 118 of the Stamp Act, 1891, has, under certain conditions, power to sell
enacts : the settled land , to exchange it for other
" (1) No assignment of a policy of life property, to grant certain leases and to
insurance shall confer on the as mortgage it where the money is required for
enfranchisement or for equality of exchange ;
signee therein named , his executors, butmoneyarising from the exercise of such
administrators, or assigns, any right
to sue for the moneys assured or
powers must not be used for the personal
benefit of the life tenant. The money
secured thereby, or to give a valid
discharge for the same, or any part called capital money in the Act of 1882,
“ shall be or
thereof, unless the assignment isduly settlement paidinto
either to the trustees of the
Court."
stamped, and no payment shall be Where a life tenant gives a banker a charge
made to any person claiming under upon the land in which he holds a life
any such assignment unless the same interest, it is customary, seeing that the
is duly stamped. security may disappear at any moment by
“ (2) If any payment is made in contra- the death of the tenant, to require a policy
vention of this Section, the stamp upon his life to be assigned to the bank, for
duty not paid upon the assignment, an amount sufficient to cover the amount
together with the penalty payable of the advance. Of course the banker must
on stamping the same, shall be a see that the rents from the property are
debt due to Her Majesty from the sufficient, in the event of the borrower's
person by whom the payment is failure, to pay both the interest upon the
made." debt and the premiums upon the life policy.
In practice, an assignment is usually The banker should see that the premiums
stamped to cover the amount of the policy are duly paid.
and also an amount to cover bonuses, when LIGHT GOLD . When gold coins fall
the security is required to that extent. below a certain weight they cease to be legal
In Scotland, assignments or assignations tender. The least current weight, troy, for
400
LIG ] DICTIONARY OF BANKING (LIM
a half-sovereign is 61 : 125 grains, for a sove- one direction and those which are light in
reign 122-5 grains, for a two-pound piece 245 another. (See COINAGE .)
grains, for a five -pound piece 612.5 grains. LIMIT. When a banker agrees to allow
It has been calculated that a sovereign a customer to overdraw his account up to a
is, by ordinary wear and tear, reduced certain specified amount, that amount is
below the lowest legal tender weight on called the limit. The balance of the account
an average in about fifteen to eighteen may vary from day to day, but the limit
years. marks the boundary within which the over
The seventh section of the Coinage Act, draft is to be confined . (See ADVANCES .)
1870, gives a person power to cut or deface LIMITED CHEQUE. A cheque limited
a light coin, but this is never done in the to a certain amount as, for example, where
ordinary course of business, as gold coins, the written amount must not exceed the
even though they are below the prescribed amount printed in the margin. A limited
least current weight, pass from hand to cheque drawn by a bank upon a foreign
hand without question . The words of the correspondent may have in the left-hand
Section are : margin columns for £ 5, £ 10, £20, £ 30, £ 40,
“Where any gold coin of the realm isbelow £50 , and underneatheach such amount the
the current weight as provided by this Act, or equivalents in foreign currencies. If a cheque
where any coin is called in by proclamation, for, say, £8 or its equivalent in foreign
every person shall, by himself or others, cut, money is drawn, the columns £20 and
break , or deface any such coin tendered to upwards are cut off so that the left-hand
him in payment, and the person tendering remaining column will then be for £ 10 and
the same shall bear the loss. If any coin its equivalents, thus indicating that the
cut, broken, or defaced in pursuance of this cheque is limited to an amount not exceeding
Section is not below the current weight, or £ 10 or its equivalents .
has not been called in by any proclamation, Cheques issued in foreign currencies are
the person cutting, breaking , or defacing the drawn in accordance with the rate of
same shall receive the same in payment exchange .
according to its denomination ." LIMITED COMPANY. (See COMPANY
There is no penalty attached for non- LIMITED BY SHARES, COMPANY LIMITED
compliance with the Act. BY GUARANTEE , COMPANY UNLIMITED ,
By the Coinage Act, 1891 , Section 1 , LIMITED PARTNERSHIP, PRIVATE COMPANY,
gold coins which have not been called in by PUBLIC COMPANY.)
proclamation and are below the least LIMITED MARKET. On the Stock Ex
current weight as provided by the Coinage change there is said to be a " limited
Act, 1870, shall, if they have not been market for any particular shares when
illegally dealt with, be paid for by the Mint there is difficulty in dealing in them . (See
at their nominal value (s.s. 1 ) . A gold coin FREE MARKET.)
shall be deemed to have been illegally LIMITED PARTNERSHIP . Limited
dealt with where it has been lightened partnerships were established by the Limited
otherwise than by fair wear and tear, or Partnerships Act, 1907 (7 Edw. VII , c . 24) , .

has been defaced , whether the coin has or which came into operation on January 1 , 1908.
has not been thereby diminished or The Act does not provide for the formation
lightened . (s.s. 2.) In å sovereign or half- of partnerships with limited liability, but
sovereign loss of weight exceeding three merely for the creation of one or more
grains from the standard weight shall, for partners with limited liability, the other
the purposes of this Act, be prima facie partner, or partners, being responsible to an
evidence that the coin has been impaired, unlimited extent for the debts of the firm .
diminished, or lightened otherwise than by The main provisions of the Act are as
fair wear and tear (s.s 3) . follows :
When gold coins which are more than Constitution of Limited Part
three grains below the standard weight are Definition and nership.
paid in to the Bank of England, a charge
of 2d. per grain is made on the full shortage. “ Section 4. ( 1 ) From and after the com
The Bank of England has special machines mencement of this Act limited part
for separating light coins from those of full nerships may be formed in the man
weight. The machines weigh the coins one ner and subject to the conditions by
by one and shoot off those of full weight in this Act provided .
401
264 (1535)
LIM ) DICTIONARY OF BANKING (LIM

“ (2) A limited partnership shall not con- “ (2) A limited partnership shall not be
sist, in the case of a partnership dissolved by the death or bankruptcy
carrying on the business of banking, of a limited partner, and the lunacy
of more than ten persons, and in the of a limited partner shall not be a
case of any other partnership, of ground for dissolution of the part
more than twenty persons, and must nership by the Court unless the
consist of one or more persons called lunatic's share cannot be otherwise
general partners, who shall be liable ascertained and realised .
for all debts and obligations of the “ (3) In the event of the dissolution of a
firm , and one or more persons to be limited partnership its affairs shall
called limited partners , who shall at be wound up by the general partners
the time of entering into such part unless the Court otherwise orders.
nership contribute thereto a sum or · (5) Subject to any agreement expressed
sums as capital or property valued or implied between the partners :
at a stated amount, and who shall
“ (a) Any difference arising as to
not be liable for the debts or obliga ordinary matters connected
tions of the firm beyond the amount with the partnership busi
so contributed . ness may be decided by a
.“ (3) A limited partner shall not during majority of the general
the continuance of the partnership, partners ;
either directly or indirectly, draw (6) A limited partner may, with
out or receive back any part of his the consent of the general
contribution , and if he does so draw partners, assign his share in
out or receive back any such part the partnership, and upon
shall be liable for the debts and obli such an assignment the
gations of the firm up to the amount assignee shall become a
so drawn out or received back .
' (4) A body corporate may be a limited limited partner with all the
rights of the assignor ;
partner. “ ( c) The other partners shall not
be entitled to dissolve the
Registration of Limited Partnership required. partnership by reasonof any
" 5. Every limited partnership must be limited partner suffering his
registered as such in accordance with the share to be charged for his
provisions of this Act, or in default thereof separate debt ;
it shall be deemed to be a general partner " ( d) A person may be introduced
ship, and every limited partner shall be as a partner without the con
deemed to be a general partner. sent of the existing limited
partners ;
Modifications of General Law. “ (e) # limited partner 'shall not
be entitled to dissolve the
" 6. (1 ) A limited partner shall not take partnership by notice .
part in the management of the part “ 7. Subject to the provisions of this Act,
nership business, and shall not have the Partnership Act, 1890, and the rules of
power to bind the firm :
equity and of common law applicable to
Provided
may by himself agentpartner
limited
thatora his at any partnerships, except so far as they areincon
time inspect the books of the firm sistent with the express provisions of the
and examine into the state and
last-mentioned Act, shall apply to limited
prospects of the partnership business , partnerships.
and may advise with the partners Manner and Particulars of Registration .
thereon .
If a limited partner takes part in " 8. The registration of a limited partner
the management of the partnership ship shall be effected by sending by post or
business he shall be liable for all delivering to the registrar at the register
debts and obligations of the firm office in that part of the United Kingdom
incurred while he so takes part in the in which the principal place of business of
management as though he were a the limited partnership is situated or
general partner. proposed to be situated a statement signed
402
LIM ) DICTIONARY OF BANKING (LIM

by the partners containing the following firm will be assigned to any person,
particulars : shall be forthwith advertised in the
(a ) The firm name ; Gazette, and until notice of the
(6) The general nature of the business ; arrangement or transaction is so
(c) The principal place of business ; advertised, the arrangement or trans
( d) The full name of each of the partners ; action shall, for the purposes ofthis
(e) The term , if any, for which the part Act, be deemed to be of no effect.
nership is entered into , and the date " (2) For the purposes of this Section, the
of its commencement ; expression the Gazette ' means :
U A statement that the partnership is In the case of a limited partnership
limited , and the description of every registered in England, the
limited partner as such ; London Gazette ;
(8) The sum contributed by each limited In the case of a limited partnership
partner, and whether paid in cash or registered in Scotland, the
how otherwise . Edinburgh Gazette ;
In the case of a limited partnership
Registration of Changes in Partnerships,. registered in Ireland, the
“ 9. ( 1 ) If during the continuance of a Dublin Gazette.
limited partnership any change is
made or occurs in Registration .
(a) The firm name ; “ 13. On receiving any statement made in
(b) The general nature of the pursuance of this Act the registrar shall cause
business ; the same to be filed, and he shall send by post
( c) The principal place of busi- to the firm from whom such statement
ness ; shall have been received a certificate of the
Id) The partners or the name of registration thereof.
any partner ; “ 14. At each of the register offices herein
(e) The term or character of the after referred to the registrar shall keep, in
partnership ; proper books to be provided for the purpose,
The sum contributed by any à register and an index of all the limited
limited partner ; partnerships registered as aforesaid, and of
( 8) The liability of any partner by all the statements registered in relation to
reason of his becoming a such partnerships.
limited instead of a general “ 15. The registrar of joint stock com
partner or a general instead panies shall be the registrar of limited part
of a limited partner ; nerships, and the several offices for the
a statement, signed by the firm , registration of joint stock companies in
specifying the nature of the change London, Edinburgh, and Dublin shall be
shall within seven days be sent by the offices for the registration of limited
post or delivered to the registrar at partnerships carrying on business within
the register office in that part of those parts of the United Kingdom in which
the United Kingdom in which the they are respectively situated .
partnership is registered. “ 16. (1) Any person may inspect the
" (2) If default is made in compliance with statements filed by the registrar in
the requirements of this Section each the register offices aforesaid , and
of the general partners shall on con there shall be paid for such inspec
viction under the Summary Juris tion such fees as may be appointed
diction Acts be liable to a fine not by the Board of Trade, not exceeding
exceeding one pound for each day one shilling for each inspection ; and
during which the default continues. any person may require a certificate
Advertisement in Gazette.
of the registration of any limited
partnership, or a copy of or extract
“ 10. (1 ) Notice of any arrangement or from any registered statement, to be
transaction under which any person certified by the registrar, and there
will cease to be a general partner in shall be paid for such certificate of
any firm , and will become a limited registration, certified copy, or ex
partner in that firm , or under which tract such fees as the Board of Trade
the share of a limited partner in a may appoint, not exceeding two
403
LIM) DICTIONARY OF BANKING (LIQ
shillings for the certificate of regis- There is no provision in the Act that a
tration, and not exceeding sixpence distinctive name should be used to indicate
for each folio of seventy -two words, when a firm is a limited partnership.
or in Scotland for each sheet of two It may be difficult, in some cases, for a
hundred words. banker to know whether a person is a limited
" (2) A certificate of registration, or a copy or general partner. If he cannot obtain
of or extract from any statement reliable information from the partners them
registered under this Act, if duly selves, he may inspect the register or obtain
certified to be a true copy under the extracts therefrom ( see Section 16 above) .
hand of the registrar or one of the The provisions of the Bankruptcy Act, 1914,
assistant registrars (whom it shall shall “ apply to limited partnerships in
not be necessary to prove to be the like manner as if limited partnerships were
registrar or assistant registrar) shall, ordinary partnerships, and, on all the
in all legal proceedings, civil or general partners of a limited partnership
criminal, and in all cases whatsoever being adjudged bankrupt, the assets of the
be received in evidence . ” limited partnership shall vest in the trustee."
It should be noted that Section 6 says that (Section 127, Bankruptcy Act, 1914.) (See
a limited partner shall not take part in the COMPANIES, PARTNERSHIPS .)
management of the partnership business, and When a firm carries on business under a
shall not have power to bind the firm . The business name which does not consist of the
Section does not definitely say that he must true surnames of the partners, it must be
not draw cheques upon the banking account registered under the Registration of Busi
of the firm , but it is probably safe to infer ness Names Act, 1916. (See REGISTRATION
that he has no power to operate upon the oF BUSINESS NAMES .)
account . At any rate bankers are not likely LIQUID ASSETS. The liquid assets of a
to regard a limited partner as having such banker's balance sheet include the cash in the
authority. In the case of a limited company tills and those assets which can be turned
the position is different, for all the members into gold almost immediately , such as the
can take part in the management of the Bank of England balance, and money at call
affairs of the company, subject to the and short notice. The proportion of liquid
provisions of the Articles of Association . assets to the liabilities to the public is an
The same Section says that a limited important point in a banker's balance sheet.
partner may at any time inspect the books of Assets, such as loans to customers, which are
the firm . In a paper read before the Insti- not readily available to meet liabilities, are
tute of Bankers by H. E. Gallaher, LL.B., in termed non -liquid . (See BALANCE SHEET.)
1908, he said, with reference to this subject :- LIQUIDATED SUM. A certain fixed and
“ Another interesting question is whether a ascertained amount.
limited partner is entitled to information LIQUIDATION . A winding up, or closing
from the firm's banker as to the condition of of business.
their account, the amount of the cash bal- A joint stock company which is being
ance, or the securities held by the bank for wound up is said to be " in liquidation ."
the firm . In view of the provision that a (See WINDING UP .)
limited partner may inspect the books of the LIQUIDATOR . The person who is ap
firm and examine into the state and prospects pointed to wind up a company. His busi
of the partnership business, I am inclined to ness is to realise the assets and property of
think a banker would be justified in giving the company, and to collect what may be
information of this character to a limited owing from the members, and from the funds
partner. I do not think, however, that a so obtained to pay the debts due by the
limited partner would be entitled to require company and to distribute any balance
the delivery to himself ofthe firm's pass book . which may remain amongst the members.
Of course, where the banker can obtain the Where there are two liquidators, cheques
concurrence of all the general and limited should be signed by both, unless otherwise
partners as to the course to be adopted when authorised by the Court.
a limited partner desires to borrow the pass A committee of inspection (q.v.) is often
book or to be informed of the position of the appointed to supervise a liquidation.
firm's accounts, this is by far the most As to the appointment of liquidators in a
satisfactory way of dealing with the voluntary winding up, see WINDING UP
matter. " VOLUNTARILY ; and in the case of a
404
LIQI DICTIONARY OF BANKING
voluntary liquidation under supervision of
the Court, see WINDING UP SUBJECT TO
SUPERVISION OF THE COURT.
The powers of liquidators in a winding up
by the Court, or compulsory liquidation, is
dealt with in the following Section of the
Companies (Consolidation ) Act, 1908 :
“" 151. (1 ) The liquidator in a winding up
by the Courtshall have power, in the
case of a winding up in England with
the sanction either of the Court or of
the committee of inspection , and in
the case of a winding up in Scotland
or Ireland with the sanction of the
Court :
“ (a) to bring or defend any action
or other legal proceeding in
the name and on behalf of
06
the company :
(6) to carry on the business of
the company, so far as may
be necessary for the bene
ficial winding up thereof :
" (c) in the case of a winding up
in England, to employ a
solicitor or other agent to
take any proceedings or
do any business which the
liquidator is unable to take
or do himself ; but the
sanction in this case must be
obtained before the employ
ment, except in cases of
urgency, and in those cases
it must be shown that no
undue delay took place in
obtaining the sancti 1 :
“ ( d) in the case of a winding up
in Scotland or Ireland, to
appoint a solicitor or law
agent to assist him in the
performance of his duties.
“ (2) The liquidator in a winding up bythe
Court shall have power, but (subject
to the provisionsof this Section) in
the case of a winding up in Scotland
or Ireland only with the sanction of
the Court :
“ (a) To sell the real and personal
property, and things in
action of the company by
public auction or private
contract with power
transfer the whole thereof to
any person or company, or
to sell the same in parcels :
“ (6) To do all acts and to execute,
[ LIQ
in the name and on behalf
of the company, all deeds,
receipts, and other docu
ments, and for that purpose
to use, when necessary , the
company's seal :
' ( c) To prove, rank, and claim in
the bankruptcy , insolvency,
orsequestration of any con
tributory, for any balance
against his estate, and to
receive dividends in the
bankruptcy, insolvency, or
sequestration in respect of
that balance, as a separate
debt due from the bankrupt
or insolvent, and rateably
with the other separate
creditors :
“ (d ) To draw , accept, make, and
indorse any bill of exchange
or promissory note in the
name and on behalf of the
company, with the same
effect with respect to the
liability of the company as
if the bill or note had been
drawn, accepted , made, or
indorsed by or on behalf of
the company in the course
of its business :
“ (e) To raise on the security of the
assets of the company any
money requisite :
“ To take out in his official
name, letters of administra
tion to any deceased contri
butory, and to do in his
official name any other act
necessary for obtaining pay
ment of any money due from
a contributory or his estate
which cannot be conveni
ently done in the name of
the company ; and in all
such cases the money due
shall, for the purpose of
enabling the liquidator to
take out the letters of ad
ministration or recover the
money, be deemed to be due
to the liquidator himself :
“ (8) To do all such other things
to as may be necessary for
winding up the affairs of the
company and distributing
its assets ."
The creditors and contributories shall
405
LIQI DICTIONARY OF BANKING [LLO

determine whether or not an application is appointed by the Court, the Court

to be made to the Court to appoint a liquida shall declare whether any act by this
tor in the place of the official receiver, and to Act required or authorised to be
appoint acommittee of inspection . done by the liquidator is to be done
by all or any one or more of the
Payments of Liquidator in English Winding persons appointed ."
up into Bank . Where a special account is opened ( Section
“ Section 154. ( 1 ) Every liquidator of a 154, S.s. 1, above) all payments out are
company which is being wound up to be made by cheque payable to order,
by the Court in England shall, in bearing on its face thename ofthe company,
such manner and at such times as to be signed by the liquidator and counter
the Board of Trade, with the consigned by at least one member of the com
currence of the Treasury, direct, pay mittee of inspection and by such other
the money received by him to the person, if any, as the committee may
Companies Liquidation Account at appoint. (Winding-up Rule 165.) If there
the Bank of England , and the Board is no committee of inspection the Official
shall furnish him with a certificate of Receiver may, subject to the directions
receipt of the money so paid : of the Board of Trade, exercise the functions
Provided that, if the committee of of a committee with regard to a special
inspection satisfy the Board of Trade bank account.
that for the purpose of carrying on As to the powers of a liquidator, in a
the business of the company or of winding up by the Court, to borrow money
obtaining advances, or for any other on the assets of the company, see Section
reason, it is for the advantage of the 151 above. In a voluntary winding up , he
creditors or contributories that the may, without the sanction of the Court,
liquidator should have an account exercise all powers by this Act given to the
with any other bank, the Board liquidator in a winding up by the Court.
shall, on the application of the com- See Section 186 , under WINDING UP VOLUN
mittee of inspection, authorise the TARILY. A liquidator is not personally
liquidator to make his payments liable for an overdraft. In a voluntary
into and out of such other bank as winding up, the Court may, on cause shown,
the committee may select, and there- remove a liquidator and appoint another.
upon those payments shall be made (Section 186, S.S. 8.) ( See COMPANIES,
in the prescribed manner. WINDING UP . )
“ (2) If any such liquidator at any time LIRA . (See FOREIGN MONEYS_ITALY .)
retains for more than ten days a sum LIVERY OF SEISIN. That is, delivery of
exceeding fifty pounds, or such other possession . In ancient times when a person
amount as the Board of Trade in any transferred property a livery of seisin took
particular case authorise him to place. The transferor actually handed over
retain , then, unless he explains the possession of the land by formally vacating
retention to the satisfaction of the it and permitting the transferee to enter into
Board, he shall pay interest on the possession, or by handing over a piece of
amount so retained in excess at the turf or a twig . Blackstone says : “ This
rate of twenty per cent. per annum , livery of seisin is no other than the pure
and shall be liable to disallowance feodal investiture, or delivery of corporeal
of all or such part of his remunera- | possession of the land or tenement, which
tion as the Board may think just, was held absolutely necessary to complete
and to be removed from his office by the donation ."
the Board, and shall be liable to pay LLOYD'S BONDS. Bonds, named after
any expenses occasioned by reason the counsel who invented them , which were
of his default. devised for the purpose of enabling a railway
(3) A liquidator of a company which is company to borrow money in evasion of its
being wound up by the Court in borrowing powers. Though the company
England shall not pay any sums could not borrow in excess of its borrowing
received by him as liquidator into powers, the bonds could be issued in respect
his private banking account . " of an existing debt, and were used in pay
By Section 149 : ment of contractors for work done and
" (4 ) If more than one liquidator is material supplied. The contractors thus
406
LOAJ DICTIONARY OF BANKING
obtained a security which they could realise
or on which they could raise money.
LOADING . A term used in assurance
companies to describe the amount which is
included in a premium in order to cover the
expenses of management of the company.
The “ loading ” which is not required forms
part of the “ profits " and is returned to the
members by way of bonus. (See LIFE
POLICY .)
LOAN CAPITAL . Money raised by a
company upon debentures is called loan
capital. It forms a debt due by the com
pany and is different from the actual capital,
which is money subscribed by the members
of the company .
By the Finance Act, 1899, Section 8 :
(1) Where any local authority , corpora
tion, company, or body of persons
formed or established in the United
Kingdom propose to issue any loan
capital, they shall, before the issue
thereof, deliver to the Commis
sioners a statement of the amount
proposed to be secured by the issue.
" (2) Subject to the provisions of this
Section every such statement shall
be charged with an ad valorem Reduction of Duty on Loan Capital issued for
stamp duty of two shillings and six the Purpose of the Conversion or Con
pence for every hundred pounds and solidation of Existing Capital.
any fraction of a hundred pounds “ (1 ) Where it is shown to the satis
over any multiple of a hundred
pounds of the amount proposed to
be secured by the issue, and the
amount of the duty shall be a debt
due to Her Majesty .
(3) The duty under this Section shall not
be charged to the extent to which it
is shown to the satisfaction of the
Commissioners that the stamp duty
payable in respect of a mortgage or
marketable security has been paid
on any trust deed or other document
securing the loan capital proposed to
be issued .
" ( 4) If any local authority, corporation,
company, or body of persons neglect
to deliver a statement, or fail to pay
the duty in compliance with this
Section , that local authority, cor
poration, company, or body of per
sons, shall beliable to pay to Her
Majesty, in addition to the duty, a
sum equal to ten per cent. upon the
amount of the duty, and a like sum
for every month after the first
month during which the neglect or
failure continues.
407
[ LOA
10
(5) In this Section the expression ‘ loan
capital ' means any debenture
stock , county stock , corporation
stock, municipal stock, or funded
debt, by whatever name known, or
any capital raised by any local
authority, corporation , company, or
body of persons formed or estab
lished in the United Kingdom , which
is borrowed, or has the character
of borrowed money, whether it is in
the form of stock or in any other
form , but does not include any county
council or municipal corporation
bills repayable not later than twelve
months from their date or any over
draft at the bank or other loan
raised for a merely temporary pur
pose for a period not exceeding
twelve months, and the expression
· local authority ' includes any
county council, municipal corpora
tion , district council, dock trustees,
harbour trustees, or other local body
by whatever name called . ”
By the Finance Act, 1907, Section 10 :
faction of the Commissioners that
the loan capital issued by any local
authority, corporation, company, or
body of persons, in respect of which
a statement has, after the com
mencement of this Act, been de
livered to the Commissioners under
Section eight of the FinanceAct, 1899,
has been wholly or partly applied for
the purpose of the conversion or
consolidation of then existing loan
capital, that authority, corporation ,
company , or body of persons, as the
case may be, shall be entitled to
repayment in respect of the duty
charged on the statement so de
livered at the rate of twoshillings for
every hundred pounds of the capital
to which the statement relates
which is so shown to have been
applied for the purpose of the con
version or consolidation of then
existing loan capital ; but this
Section shall not apply to any duty
payable in respect of a mortgage or
marketable security which has been
paid on any trust deed or other
LOA ] DICTIONARY OF BANKING [LOC

document securing the loan capital for payment should be drawn by the Local
which has been issued . Authority upon the treasurer, and not upon
“ (2) If it is represented to the Commis- the bank where he keeps the account.
sioners by any such local authority, The Bills of Exchange Act, 1882, Section
corporation, company, or body of 73, defines a cheque as a bill of exchange
persons that loan capital about to be drawn on a banker payable on demand,"
issued by them is to be applied , in but as these orders are drawn upon the
whole or in part, for the purpose of treasurer as an individual it would appear
the conversion or consolidation of that they are not cheques, and , therefore, that
existing loan capital, the Commis- the protection afforded by Section 60 of the
sioners may postpone the time for Bills of Exchange Act, 1882, to the paying
the delivery of the statement and the banker against forged indorsements does not
payment of duty under Section eight extend to them ; and further that, not being
of the Finance Act, 1899, until the cheques, they cannot be validly crossed .
capital has been issued or until such
Some authorities, however, consider that
other time as the Commissioners the orders though drawn, in form , upon the
think fit for the purpose of enabling treasurer, are practically drawn upon the
the payment and repayment of bank where he keeps his account. If this is
the duty to take place as one the correct view , then they come within the
transaction ." provisions of the Bills of Exchange Act. In
By the Housing (Additional Powers) Act, the case of Halifax Union v. Wheelwright
1919 : “ Local bonds shall be exempt from ( 1875 , L.R. 10 Ex. 183), where the treasurer
stamp duty under the Stamp Act, 1891 , had paid orders bearing forged indorsements,
and no duty shall be chargeable under it was held that, though the treasurer was
Section 8 of the Finance Act , 1899, as not entitled to protection as a banker, the
amended by Section 10 of the Finance Act, Local Authority, having had the benefit of
1907, in respect of the issue of any such the banking account, could not reasonably
bonds.” (See COMPANIES, SHARE CAPITAL.) recover against the treasurer what they could
The issue of deferred interest warrants , not recover against the bank . In this case
such warrants carrying interest, has been the bank had paid certain interest on the
held not to be loan capital within Section 8 account to the Local Authority , and moneys
of the Finance Act, 1899. See case under had been paid in direct to the account by
DEFERRED INTEREST WARRANT. officials of the Authority, thus showing that
LOANS . (See ADVANCES.) the account was really that of the Authority.
LOANS LEDGER. Where an advance is Before a treasurer can charge to the account
made by way of loan, it is entered in an order which has been paid with a forged
Country bankers lend
the loans ledger. indorsement, he must be able to show that
money most commonly by way of overdraft the account is actually the account of the
upon a current account, which overdraft Authority. In Gilbart Lectures, 1911 , Sir
may fluctuate from day to day, and the John Paget recommends that there should
customer draws only such part of the sanc- be a resolution of the Authority selecting
tioned overdraft as he may require, but in the the bank and requiring the treasurer to keep
case of a loan, as is customary in London an account there and to pay all orders
banks, the full amount is debited at once to drawn upon him.
the customer's account in the loans ledger. If a banker collects one of these orders
no
The loans ledger is kept in practically with a forged indorsement he has
the same way as the current account protection .
ledgers (q.v.) . These orders are frequently drawn as
LOANS REGISTER. A register, or list, payable on condition that a form of receipt
giving particulars of all loans granted . Each is signed. (See RECEIPT ON CHEQUE .)
loan is also posted to the debit of the The orders are, like cheques, subjectto the
respective customers in the loans ledger. stamp duty of two pence ( Section 32, Stamp
LOCAL AUTHORITIES. Bankers are Act, 1891), except in the case of orders
often appointed to be treasurers for Local drawn by the Guardians of the Poor.
Authorities. The banking account should In cases where the Finance Committee
be in the treasurer's name, e.g. , " John send to the banker or treasurer a list of the
Brown, Treasurer of the Guardians of the persons to whom orders have been issued, and
Poor of Kingmoor Union ,” and the orders to whom payments are to be made upon
408
LOC ] DICTIONARY OF BANKING
presentation of the orders, ordering the
treasurer to make such payments, the Board
of Inland Revenue state that a penny stamp
[ since September 1 , 1918, two pence] is re-
quired in respect of each payee's name
upon the list. (See the Minute of the Board ,
under article CHEQUE .) In E. J. Naldrett's
lecture on Local Government Author-
ities (see Journal of the Institute of
Bankers, vol. 26 , p . 177), it is stated that
a resolution in the following form is not
regarded by the Inland Revenue Authorities
as being subject to the above -mentioned
stamp duty :
“ That a statement of the following
accounts be signed by three members of the
Finance Committee present at this meeting
and countersigned by the town clerk, and be
transmitted to the treasurer with an order
to pay cheques for the amounts specified in
such statement, on such cheques being
presented to him ."
Upon the death of a manager, who is
treasurer, the authority to pay orders drawn
upon him naturally ceases, but, in practice, it
is customary for the bank to pay such orders .
With respect to the borrowing powers of a
Local Authority, it is necessary to ascertain
from the statute, under which the power in
any particular case is regulated, whether the
sanction of the Local Government Board
(since 1919, the Minister of Health) , or
other Government Department is necessary
before the power to borrow can be exercised ,
and , if the Authority has the necessary
statutory power, upon what particular fund,
or rate, security must be given . It is well
for a banker to obtain legal advice when
considering an application for a loan to a
Local Authority . When a loan is granted
against a mortgage, the date of the mortgage
should be that on which the loan is made .
On receipt of the mortgage the banker debits
to an account in the name of the Authority
the full amount of the loan and credits the
amount to an account of the treasurer to
the Authority. On this latter account the
Authority draws cheques as may be desired.
It is important that the banker should see
that the loan is entered in the register of
loans kept by the Authority. Along with
the mortgage there should be deposited the
sanction (or a copy of it) of the Minister of
Health . The sanction is given under the
official seal of the Minister of Health . It
may commence, for example, " Whereas the
Urban District Council of have
under the provisions of the Public Health
409
[LOC
Act, 1875, made application for sanction to
the borrowing of certain moneys for works
of sewerage,” and after other recitals may
continue : Now, therefore, the Minister
of Health hereby sanctions the borrowing
at interest by the said Council of the sum
of for the works aforesaid ,
such sum to be borrowed on the credit of
the fund or rates which the Council are
authorised to mortgage for the purpose of
securing the repayment of the said sum and
interest thereon and to be repaid with such
interest within a period not exceeding
years."
If an Authority, without power or sanction
to borrow , overdraws the bank account, the
interest upon such overdraft (if not regarded
by the banker as being covered by the
interest upon the credit balance at other
times) will not be a legal charge against the
Authority, and may bedisallowed by the
Government Auditor. The Local Govern
ment Board have power, however, to allow
a sum, properly disallowed by the Auditors ,
if in their opinion it is equitable, that such
allowance should be remitted . By the
Ministry of Health Act, 1919, all the powers
and duties of the Local Government Board
were transferred to the Minister of Health ,
It should be noted that money borrowed
under the provisions of any particular Act
must be secured in accordance with that Act.
In Rex v . Locke, ex parte Bridges (1910, 2 K.B.
201 ) where a Corporation (under the provi
sions of the Public Health Act, 1875) borrowed
money from a bank without giving proper
security and the interest was surcharged by
the Auditorbecause the security had not
been given, Lord Alverstone said : “ If the
transaction objected to was merely the pay
ment of interest upon some temporary loan
obtained for temporary purposes until other
money — as, for instance, rates or moneys
agreed to be advanced -- were in fact re
ceived , we agree that it might not be neces
sary under such circumstances for the local
authority to give security.” It was held,
however, that the case appeared to be “ an
exercise of borrowing powers for the purpose
of permanent loansto be repaid by instal
ments .” The consent of the Government
Department “ does not merely involve the
consent to the loan, but an approval of the
way in which the loan is to be secured
according to the Act of Parliament under
which the securities are issued.” The pay
ment of interest to the bank in respect of the
loans made by the bank, for which no
LOC ] DICTIONARY OF BANKING (LOC

security had been issued, was held not to be the bank for the purpose of the electricity
a legal payment. accounts, otherwise than in the exercise of
In Attorney-General v. Tottenham Urban borrowing powers with the sanction of the
Council ( 1910, 73 J. P. 437) , a sum of £18,350 Local Government Board , was ultra vires
had been advanced by the defendants' bank- and illegal.” (See COUNTY COUNCIL, EDU
ers, but the Local Government Board , uponan CATION AUTHORITIES, GUARDIANS OF THE
application in 1907 from the defendants for Poor, MUNICIPAL CORPORATION , PARISH
leave to borrow the £18,350, refused their COUNCIL, RURAL DISTRICT COUNCIL, URBAN
sanction in respect of £4,910 . The defendants DISTRICT COUNCIL .)
proposed to pay the £ 4,910 and interest on LOCAL BONDS. By the Housing
the overdraft out of a general district rate. (Additional Powers) Act, 1919, a local
It was held that the loan of £ 4,910 by way authority (including a County Council) may,
of overdraft without the sanction of the with the consent of the Minister of Health,
Local Government Board was illegal, and borrow any sums which they have power to
that the defendants must be restrained from borrow for the purposes of the Housing
applying any part of the general district rate Acts, 1890 to 1919, by the issue of bonds
or any other fund or rate under their control in this Act referred to as “ Local Bonds " ')
in repayment of the loan ; that the defen- in accordance with the provisions of this
dants were not entitled to make any pay- | Act. (Section 7. )
ment of interest upon money borrowed with- Local Bonds shall :
out the sanction of the Local Government (a) be secured upon all the rates,
Board ; that the payment of £855 as interest property and revenues of the local
was unlawful and ought to be disallowed on authority ;
audit, but this declaration was to be with- (6) bear interest at such rate of interest
out prejudice to the power of the Local as the Treasury may from time to
Government Board to remit such disallow time fix ;
ance ; and that the defendants be perpetu- (c) be issued in denominations of £5,
ally restrained from making any further pay £ 10 , £ 20, £50, and £ 100,, and
ments of interest upon money borrowed with multiples of £ 100 ;
out the sanction of the Local Government (d) be issued for periods of not less
Board, or other statutory sanction, whether than five years .
such borrowing was by way of overdraft or Local Bonds are exempt from stamp duty,
otherwise . and may be transferred free of expense from
Another instructive case is the Attorney- one person to another by execution of a
General v. Mayor, etc., of the County Borough transfer deed .
of West Ham and others ( 1910, 26 T. L. R. Trustees may invest in these Bonds unless
683). Mr. Justice Neville, in the course of expressly forbidden by the instrument, if
his judgment, said : “ The Corporation any, creating the trust.
appear to have considered and they cer No income tax is deducted from interest
tainly acted as though they were entitled on the Bonds when the total holding does
to use moneys borrowed under specific not exceed £ 100, but holders are assessable
powers not merely for the specific purposes to income tax in the ordinary way to the
for which the powers were bestowed , but extent of their liability.
for any purpose to which any funds of the LOCAL GOVERNMENT BOARD . By the
Corporation could lawfully be applied, so Ministry of Health Act, 1919, all the powers
long as they kept proper accounts of the and duties of the Local Government Board
expenditure. ... In my opinion, this view were transferred to the Minister of Health .
of the position of the Corporation was (See LOCAL AUTHORITIES. )
erroneous. "
J)
The judgment contained the LOCK UP . Money is said to be locked up
following declaration : when it has been lent and repayment cannot
“ 1. That the overdraft obtained from the be obtained when desired, or until the ex
bank for general purposes in respect of bor piration of some fixed period . A prudent
rowing powers granted for specific purposes banker avoids as far as possible having his
was ultra vires and illegal. funds locked up, becausehe not only desires
“ 2. That the application of money due to to have his assets in such a form as to be of
the Consolidated Loans Fund in repayment use in case of emergency, but he prefers to
of such overdraft was ultra vires and illegal. be able to lend the money to various cus
“ 3. That the borrowing of money from tomers at different times, for short periods,
410
LOC ] DICTIONARY OF BANKING [LOS

as may be required, rather than to one or other long currency as specially quoted)
two customersfor long periods. If a loan of drawn upon another country , can be bought.
£ 1,000 is granted to John Brown for, say, Most of the foreign exchanges are quoted
three years, the security may be excellent, in terms of the long rate, but a foreign
but the money is locked up for that period banker in London would , if desired, quote
and cannot be used for any other purpose. the “ short rate” ( for drafts up to eight or
On the other hand, a loan may be made to ten days' currency) or the cheque rate "
John Jones repayable on demand, and when (for sight drafts) on any of the principal
repayment is requested Jones may be unable | foreign centres.
to repay ; and when the banker turns to the The long rate is based upon the cheque
security he may find that it cannot be rate (or sight rate, as it is sometimes
realised and that his money is locked up called ), taking into consideration the rate of
until a purchaser can be found . interest current in the country on which the
LOCUS SIGILLI. Latin, the place for the bill is drawn, and the state of credit. (See
seal. The letters L.S., inside a circle, are CHEQUE RATE, COURSE OF EXCHANGE,
often found on a printed document, such as SHORT Rate.)
a form oftransfer , to indicate where the seal LOST BANK NOTE . Where a bank note
or wafer is to be placed. In making a copy has been lost, the person to whom it belongs
of a document under seal, the place of the must, before he can obtain payment of it
seal is marked in the same way. from the issuing banker, supply full parti
LOMBARD STREET. A term which is culars of the note, including its number, and
frequently used when referring to the Money provide a satisfactory indemnity, that is, an
Market (q.v.) . undertaking that the banker shall be
LONDON AGENTS' LEDGER . This refunded in case of the lost note being found
ledger is kept by the head office of a country by someone and the banker being compelled
bank and contains a record of all trans- to pay it a second time .
actions between that country bank, including Although a banker cannot refuse payment
the branches, and its London agents. All of his own notes to an innocent holder, he
remittances in and out, payments made, should, where notice to stop payment has
credits received, drafts drawn and every been received, make very careful inquiries
other description of items pass through this when a “ stopped " note is presented for
account. The ledger is posted from the payment.
daily statements received from the branches, The finder of a note has a right to it
and the items are checked off against the against every person except the individual
statements which are received from the who lost it. If he transfers it for value, the
London agents . transferee, without notice that the note was
In agreeing the ledger with the balance as lost, is absolutely entitled to it. The person
shown by the London statement, allowance who lost it cannot claim it from such a
must be made for entries in the ledger which transferee.
have not yet appeared on the statements, If a note is lost in its passage through the
and entries on the statements which are not post, the loss falls upon the person to whom
yet entered in the ledger. it was sent, provided that he requested itto
LONDON CLEARING HOUSE . ( See be sent to him by post, or that it was the
CLEARING House.) custom between the parties to use the post
LONDON COURSE OF EXCHANGE . (See for that purpose.
COURSE OF EXCHANGE.) There is a difference between notes found
LONDON PARITY . (See PARITY .) on private property and in a public building.
LONG -DATED PAPER . A term applied When found in a private building the note
to bills of exchange which have more than should remain in the possession of the owner
three months to run . of the place, and not be retained by a
LONG EXCHANGE. In connection with stranger who may have found it. Where
the foreign exchanges, the long exchange notes were found on a shop floor (a public
denotes bills with a currency of sixty or building) by a person entering the shop and
ninety days and upwards. (See LONG RATE .) the owner could not be found, it was held
LONG RATE . A term employed in con- (Bridges v. Hawkesworth, 1851 , 21 L.J.Q.B.
nection with the foreign exchanges, and 75) that the person finding them , and not
signifying the price in one country at which the owner of the shop , wasentitled to them ,
a two or three months' bill (or bill for any and that he had a right to them against
411
LOS) DICTIONARY OP BANKING (LOS

everyone but the true owner.A bank note stop payment, and the banker should notify
found on the customers' side of a bank any branches, where it might be presented,
counter would, in the event of no one of the loss. A record of the loss should be
claiming it, belong to the finder. made in the customer's account in the ledger.
The true legal position , according to the If a banker pays a bill or cheque when he
best authorities seems to be that, if the has received instructions from the drawer not
finder believes at the time of finding a bank to do so , he is liable to lose the money, for he
note that the owner cannot be found, he is cannot debit the amount to his customer's
not guilty of larceny, although he takes the account. The utmost care, therefore, is
note intending to deprive the owner of it, necessary in dealing with “stop orders," as
and although he afterwards has means of such notices from customers are called, and
finding the owner, and, nevertheless, retains copies of all stop orders should be supplied to
the property for his own use. each cashier, day book clerk, and ledger
LOST BEARER BONDS. By the Finance keeper, through whose hands the cheque
Act, 1916, Section 65, “ Where the Bank of may pass , so that all may keep a sharp
England are satisfied that any Exchequer look out in case the lost cheque should be
Bond, or any other bond to bearer, issued presented .
by them on behalf of the Treasury, or any Before giving a duplicate cheque, it is
coupon of any such bond has been lost or advisable for the drawer to obtain a satis
destroyed, they may, if they think fit, and factory indemnity, otherwise he may have
on such conditions as they think fit, but to pay the original cheque ( unless it was a
subject to any general directions of the crossed cheque marked " not negotiable " ) to
Treasury, issue a new bond or coupon on a bona fide holder for value, as well as the
receiving indemnity to their satisfaction duplicate. As to a banker collecting a lost
against the claims of all persons deriving cheque, see COLLECTING BANKER.
title under the bond or coupon lost or If a banker's draft is lost, a satisfactory
destroyed. In the application of this Sec- indemnity should be obtained before paying
tion to bonds issued through the Post Office, the amount to the loser, as the banker is
the Postmaster -General shall be substituted liable to pay the draft if presented by an
for the Bank of England .” innocent holder for value.
LOST BILL OF EXCHANGE . The Bills Where a cheque has been lost and a neces
of Exchange Act,1882, Section 69, provides : - sary indorsement has been forged, an inno
Where a bill has been lost before it is cent holder for value has no recourse against
overdue, the person who was the holder of it the drawer. The true owner can demand
may apply to the drawer to give him another payment from the drawer. If the holder has
bill of the same tenor, giving security to the obtained payment from the drawer, he is
drawer if required to indemnify him against liable to the true owner.
all persons whatever in case the bill alleged If the cheque was payable to bearer and
to have been lost shall be found again. crossed “ not negotiable," the position is the
“ If the drawer on request as aforesaid same, the holder cannot recover.
refuses to give such duplicate bill, he may be If the cheque was payable to bearer, either
compelled to do so ." uncrossed or crossed without the words “ not
By Section 70 : negotiable ," an innocent holder for value can
“ In any action or proceeding upon a bill, enforce payment ofit from the drawer. The
the Court or a judge may order that the loser of the cheque must suffer the loss.
loss of the instrument shall not be set up, Where the cheque was duly indorsed
provided an indemnity be given to the before being lost and was not “ not nego
satisfaction of the Court or judge against tiable," a subsequent holder for value with
the claims of any other person upon the out knowledge that it had been lost could
instrument in question .' sue the drawer and indorsers.
By Section 51 , s.s. 8 , “ where a bill is lost or As to a cheque lost or stolen before
destroyed, or is wrongly detained from the delivery, see DELIVERY OF Bill.
person entitled to hold it, protest may be Where a banker pays a cheque with a
made on a copy or written particulars i forged indorsement, see COLLECTING BANKER,
thereof." PAYING BANKER. (See PAYMENT STOPPED ,
Where a cheque has been lost, the loser of Post. )
it should at once request the drawer to give LOST COUPON . Fresh coupons may
notice to the banker on whom it is drawn to usually be obtained from a company against
412
LOS) DICTIONARY OF BANKING [LUN

a satisfactory indemnity. (See Lost BEARER cannot be found after a thorough search has
BONDS.) been made for it, a duplicate is usually
LOST DEED. An attested copy of a lost issued . A note of the circumstances and the
deed is sometimes accepted by a purchaser. date of its issue should be entered in the
The copy should be a copy of the original ledger at the top of the page containing the
deed . A copy of a copy is not accepted as customer's account. The new pass book
evidence. (See ATTESTED COPY.) should be plainly marked " duplicate."
LOST DIVIDEND WARRANT. In the If the book which is lost is a deposit
case of Thairwall v . GreatNorthern Railway account pass book which requires to be
Company ( 1910, 2 K.B. 509) , where certain produced each time money is withdrawn,
dividend warrants sent by the defendants the bank usually arranges with the customer
to the plaintiff were lost in the post, the that payments, in the meantime, will be
defendants, upon being informed of the made only to himself. On the issue of a new
loss, sent to the plaintiff a form of in- | book , an indemnity should be taken .
demnity, and stated that on its being If the original book, whether a current
signed by the plaintiff they would give him account or deposit one, is subsequently dis
a duplicate dividend warrant. The plaintiff covered, the banker should cancel one of
declined to sign the indemnity, and brought the two and retain possession of it .
an action to recover the amount of the LOST PROBATE . In the event of a
dividends. probate being lost, the court will issue a
The Divisional Court (reversing
a judgment of the County Court in favour document called an " exemplification of
of the plaintiff) held that the stockholders probate,” which has the same effect as the
of the company having by resolution deter- original document.
mined the method in which the dividends LOST SHARE CERTIFICATE . The
were to be paid, i.e. by the sending of articles of association of a company usually
dividend warrants, the only obligation of provide that a shareholder who has lost
the company was to pay by means of a his certificate may obtain a fresh one, on
dividend warrant, and that, having sent giving such an indemnity as the directors
such a document by post, they had dis- require. A company should exercise great
charged their duty even although the war- care in issuing a new certificate as the old
rantwas lost in the post and never reached certificate may have been deposited with a
the plaintiff. The plaintiff could only get banker as security for a loan.
payment bygiving
.
a proper indemnityto requirements
LOST STOCKof CERTIFICATE.Asto
the Bank of England, the
see
LOST DEPOSIT RECEIPT. In the event under CERTIFICATE.
of a deposit receipt being lost, the banker LOUIS. (See FOREIGN MONEYS -
cannot refuse to pay the money to the person FRANCE.)
entitled thereto, but he will require a suit- LUNATIC . When a banker learns that a
able indemnity to be given to protect him customer has become insane he should not
from any loss which might arise through his pay any further cheques upon his account,
making such payment, without production of but the banker must make quite certain
the receipt. that his information is correct. Cheques
Where a depositor represents that he has paid before knowledge of a customer's
lost his receipt, a note of the fact should, at insanity would appear to be in order.
once , be made in the deposit register, but A mandate is terminated by the insanity
it is advisable that the customer be requested of the person who gave it.
to make a further search for the document, Cheques upon a lunatic's account should
which , as a matter of experience, is then not be honoured only when signed by the “ Com
infrequently discovered . If, however, the mittee or legal authority appointed by the
receipt cannot be found, the banker may Commissioners in Lunacy to deal with the
agree to pay it, as mentioned, under an lunatic's estate. Exceptions are, however,
indemnity ; and he will write off the sometimes made in special cases, against a
outstanding amount in the deposit register satisfactory indemnity.
and pass the debit entry in the ledger in the When a Committee is appointed, the
same way as if the receipt itself had come in, Appointment should be produced to and
making a record in both books of the circum- carefully examined by the banker in order
stances under which the money has been paid . that the Committee's powers may be ascer
LOST PASS BOOK . Where a pass book tained , as he may have power to deal only
413
LUN) DICTIONARY OF BANKING (MAK

with revenue and not with capital or any Court to be of permanently unsound mind .
securities in the banker's possession. ( Section 35, Partnership Act, 1890.)
The following is a specimen of the appoint
ment, by the Master in Lunacy, of a Receiver MADE BILL . A bill drawn in this country
of a patient's income : and payable abroad, if negotiated and
IN THE MATTER OF A.B.
indorsed in England by a correspondent of
the drawer, is called a made bill. Such a
Upon the application of C.B. of .... bill thus bears the name of an indorser as
in the County of..... wife of the well as that of the drawer and drawee . (See
above -named patient, A.B. , and upon hear- DRAWN BILL.)
ing her solicitors and upon reading the MAKER OF PROMISSORY NOTE . The
evidence specified in the schedule, I do order person who signs a promissory note promis
as follows : ing to pay another person is called the
said erC.B.
1. TheReceiv ( hereina fter called
) is authorised without
the "“
By Section 88 of the Bills of Exchange Act,
security in the name and on behalf 1882 :
of the patient to receive and give a “ The maker of a promissory note by
discharge for all dividends interest making it :
and income to which the patient is " ( 1 ) Engages that he will pay it according
or may become entitled . to its tenor ;
2. The sum of ........ per annum is “ (2) Is precluded from denying to a
allowed for the maintenance of the holder in due course the existence of
patient . the payee and his then capacity to
1)

3. The Receiver is out of the surplus indorse."

income to pay the debts of the There may be two or more makers, and
patient and to retain any balance they may be liable jointly, or jointly and
for her own maintenance . severally, according to the tenor of the note .
1
( Section 85.)
Lunacy may be set up as a defence in an Where a promissory note is in the body of
action on a ' bill as between immediate it made payable at a particular place, it must
parties if the plaintiff knew of the insanity be presented for payment at that place in
when he took the bill, but it is of no avail order to render the maker liable . In any
against a holder in due course . It is not a other case, presentment for payment is not
defence if the bill was given during a lucid necessary in order to render the maker
interval, or, if given during the previous liable . (Section 87, s.s. 1.)
period, was confirmed in the same period. The maker of a note is deemed to
Where a person has been found insane by correspond with the acceptor of a bill. (See
inquisition he is unable legally to deal with PRESENTMENT FOR PAYMENT, PROMISSORY
his property even during a sane interval, Note.)
so long as the inquisition continues in - MAKING -UP DAY . The first day of the
force . settlement on the Stock Exchange. (See
If a guarantor becomes insane, and the CONTANGO DAY.)
banker has notice of the same, the position MAKING -UP PRICE. At each settlement
of the parties is similar to that when a (which occupies three days) on the Stock
guarantor dies , namely, the account of the Exchange, the first day is called contango
stopped
debtor should beBank . See the case of day or making -up day. On that day a
Bradford old V. Sutcliffe under making-up price is officially fixed to each
GUARANTEE . stock, according to certain rules. There is
In an action on a bill by or against an an additional day for mining securities
insane person, the Statute of Limitations called “ mining contango day." The making.
(q.v.) begins to run from the date of the up price is for the purpose of arranging with
insane person's recovery and not from the speculators (bears and bulls) who desire to
date on which the bill was due to be paid . continue their bargain till the next settle
On application by a partner, or next ment. If the making -up price is lower than
friend ” of an insane partner, the Court that at which a “ bull ” purchased, he pays
may decree a dissolution of the partnership the broker the difference ; if higher the
when a partner is found lunatic by inquisi- broker pays him. In the case of a “ bear
tion , or is shown to the satisfaction of the if the making-up price is lower than that at
414
 MAL ] DICTIONARY OF BANKING (MAR

which he sold the broker pays the “bear " by Brown may authorise Jones to sign
the difference ; if higher the “ bear ” pays Brown's name, but the preferable way is, as
the broker . (See BACKWARDATION, CON- givenabove, for Jones to sign per procuration.
TANGO .) It has been held that it is clearly the
MALA FIDE. Latin , in bad faith. The duty of a person giving a mandate to take
opposite to mala fide is bona fide, in good reasonable care that he does not mislead
faith . the person to whom the mandate is given ."
MANAGEMENT SHARES. Shares of the (Kepitigalla Rubber Estates, Ltd. v. The
same nature as founders’ shares, but instead National Bank of India, Ltd., 1909, 2 K.B.
of being held by the founders are intended 1010.
for themanagersof a company to cause them Amandate is determined by the death,
to take a greater interest in making the bankruptcy, or insanity of the person, or
business a successful one. ( See FOUNDERS' one of the persons in the case of a joint
SHARES.) account, who gave the authority. ( See
MANAGER, OR RECEIVER . (See JOINT ACCOUNT. )
RECEIVER .) A person who has authority to sign for
MANDANT, OR MANDATOR . The per- another, has not, as a rule, any power to
son who gives a mandate. The party in delegate that authority.
whose favour it is given is called the In a mandate for a joint account, the
mandatory . parties should agree to be jointly and
MANDATE. An authority in writing by severally liable, so that,in the event of the
which one person (the mandator) empowers death or bankruptcy of one of them , the
another person (the mandatory ) to act on banker may, if the account is overdrawn,
his behalf. If John Brown authorises claim upon his estate . Such an agreement
• T. Jones to sign cheques upon his account, also gives the banker the right, after reason
the usual form of signature is per pro . (or able notice to set -off a credit balance on
p.p.) John Brown, T. Jones. The mandate any of their private accounts against an
should state that Jones may sign whether overdraft on the joint account. A form of
the account is in credit or in debit (if that mandate for a joint account is given under
is the wish of Brown) and a specimen of the JOINT ACCOUNT.
signature of Jones should be given on the There is no stamp duty upon a mandate,
mandate in the form in which he will sign. but if it contains an agreement between the
Heber Hart in the " Law of Banking "states parties to be jointly and severally liable it
that an agent cannot bind his principal should be stamped sixpence. (See AGENT,
by borrowing money, either by overdrawing COMPANIES, DELEGATION OF AUTHORITY ,
an account or otherwise, without either an EXECUTOR, PARTNERSHIPS, PER PROCURA
express or implied previous authority, TION.)
or an authority to be inferred from the MANDATORY. The person in whose
subsequent recognition by the principal favour a mandate is given. The person who
of his conduct. " In cases where the gives the mandate is called the mandant or
principal has arranged for an overdraft on mandator.
the account, a mandate would cover the A mandatory cannot, unless expressly
cheques drawn by the agent within that empowered in the mandate, delegate his
arrangement, in the event of the mandate authority to another person .
not including such words as “ whether the MARGIN . In banks, the difference be
account is in credit or is overdrawn," but tween the amount of a loan and the value
it is a usual practice and it is advisable to of the security is generally referred to as the
include those words in the authority. In margin . The margin may be wide or narrow
the absence of such, or similar words in the according as the difference is great or small.
mandate, the principal would not be liable When the value of a security falls so that
for an overdraft created by the agent without it is no longer in excess of the loan, the
the principal's sanction or knowledge. margin is said to have run off.” (See
Particulars of the authority should be noted ADVANCES.)
in the ledger against the account to which MARGINAL LETTER OF CREDIT . A
it refers, and if it is only for a certain period letter of credit, printed upon the margin
or is limited to drawings up to a certain of a bill form , issued by a banker, authorising
specified amount, those important points the person to whom it is addressed " to
should be very clearly recorded. A mandate draw the annexed bill ” at a certain currency
415
MAR ] DICTIONARY OF BANKING [MAR

for a specified amount, and undertaking to Policy,” that is for a particular voyage,
honour the bill if drawn in accordance with a “ Floating Policy," which insures the
the terms of the letter. (See LETTER OF subject matter in whatever ship it may
CREDIT .) be ; and other varieties .
MARGINAL NOTES . MARGINAL RE . The underwriters are liable for the full
CEIPTS . Where a bill is discounted and the amount of the insurance in the event of the
banker, in crediting his customer with the ship being totally lost, but in the case of a
proceeds of the bill, reserves a certain part partial loss the underwriters are usually
of the amount until advised that the bill has liable only for two-thirds, the remaining
been paid , the banker gives his customer a one -third of the loss falling upon the owner
receipt ( called a marginalreceipt, or marginal of the ship.
note) for the margin, or reserved portion . An insurance certificate is sometimes
Interest is allowed upon the margin at a attached to a bill, and is a declaration by
specified rate. The money is really a debt an insurance company that the goods are
which becomes due from the banker upon insured under a policy which also covers
information being received that the bill is other goods.
paid ; and the banker may stipulate in the By the Stamp Act, 1891, as amended by
receipt that he will account for the money the Finance Act, 1920, the stamp duties
after providing for any deficiency on other are :

liabilities of the customer to him .

MARINE INSURANCE POLICY. Marine POLICY OF SEA INSURANCE £ s. d.
insurance is a contract whereby one party , ( 1 ) Where the premium or con
in consideration of a premium paid , under- sideration does not exceed
takes to indemnify the other party against the rate of 2s. 6d . per centum
loss from certain perils or sea risks to which of the sum insured . 0 0 1
his ship or cargo may be exposed . (2) In any other case
A policy of marine insurance is usually (a ) For or upon any voyage
effected with insurers , called “ underwriters."
The term “ underwriter ” is applied because Where the sum insured does
each person who acts as an insurer signs his not exceed £250 0 0 3
name at the foot of the policy and states the Exceeds £ 250 but does not
amount for which he is to be liable . The exceed £ 500 . 0 06
ship or the goods may be insured either for Exceeds £500 but does not
a certain voyage or during some period of exceed £750 0 0 9
time, and the underwriters by the contract Exceeds [750 but does not
agree to indemnify the insurer against loss exceed £ 1,000 0 1 0
in accordance with the terms of the policy. Exceeds £ 1,000, for every £ 500
A person wishing to insure, usuallyemploys and any fractional part of
an insurance broker to arrange the terms £500 · 0 0 6
of the policy with the underwriters. ( b) For time
The person insured must have an insurable Where the insurance is made
interest in the ship or its cargo , otherwise for any time not exceeding
the contract is not legally binding. six months, an amount
There are several kinds of marine policies, equal to three times the
the principal being - amount which would be
A " valued policy,” where the value of the payable if the insurance
ship or subject insured is stated in the were made upon a voyage .
policy. Ships and freights are usually Where the insurance is made
insured under a valued policy. for any time exceeding six
An “ open policy," where the value of the months and not exceeding
subject insured is not stated in the twelve months, six times
policy. When a loss occurs the value the amount which would
has to be proved . Goods are usually be payable if the insurance
included in an open policy. The de were made upon a voyage .
scription in the policy should agree with
that in the bill of lading . A policy of sea insurance is not valid unless
-A
There are also : Time Policy, " that it specifies the particular risk , the names of
is a policy for a fixed time, a Voyage thesubscribers or underwriters, and the sums
416
MAR ] DICTIONARY OF BANKING [MAR

insured, and is made for a period not ex. By the Revenue Act, 1903 :
ceeding twelve months. (Section 93, s.s. 3.) Section 8. A policy of insurance made
An insurance policy for a voyage and also or purporting to be made upon or to cover
for time, or to cover any time beyond thirty any ship or vessel, or the machinery or
days after the ship's arrival, is to be charged fittings belonging to the ship or vessel whilst
with duty as a policy for a voyage and also under construction, or repair, or on trial,
for time . (Section 94. ) shall be sufficiently stamped for the purposes
When a banker receives from abroad a of the Stamp Act, 1891, and the Acts
bill of exchange with a policy of insurance amending that Act, if stamped as a policy
or an insurance certificate attached , he must of sea insurance made for a voyage and
see that the policy or the certificate is though made for a time exceeding twelve
stamped within ten days of its arrival in months, shall not be deemed to be a policy
this country . The certificate does not of sea insurance made for time.” (See
require stamping if there is a note upon MUTUAL INSURANCE , SHIP-MORTGAGE.)
it that the original policy is stamped. MARITAL CONTROL. Where the
By the Finance Act, 1901 :— property of a married woman is subject to
the control of the husband it is said to be
Section 11. (1 ) Notwithstanding any . under marital control, but where the pro
thing contained in the Stamp Act, perty is for her own separate use it is
1891, a policy of sea insurance made
free from marital control. (See MARRIED
for time may contain a continuation WOMAN .)
clause as defined in this Section ,
MARK , (See FOREIGN MONEYS – GER
and such a policy shall not be
invalid on the ground only that by MANY ; ESTHONIA.)
reason of the continuation clause MARK -BANCO . (See BANCO .)
it may become available for a period MARKED CHEQUE. In connection with
exceeding twelve months. local exchanges in countrybranches, cheques
are frequently presented by one banker to
“ (2) There shall be charged on a policy of another in the same town to be “ marked '
sea insurance containing such a as being good . If the cheque is all right, the
continuation clause a stamp duty of banker on whom it is drawn initials it and
sixpence in addition to the stamp hands it back to the banker who has pre
duty which is otherwise chargeable sented it to be “ marked .” The banker
on the policy . holding the cheque can then rest satisfied
" (3) If the risk covered by the continua- | that it will be paid when presented through
tion clause attaches and a new policy the clearing later on in the day, or, if too
is not issued covering the risk, the late for that day's clearing, through the
continuation clause shall be deemed clearing on the following day. The arrange
to be a new and separate contract ment is one between the two bankers and
of sea insurance expressed in the has nothing to do either with the drawer,
policy in which it is contained, but payee or holder. If further cheques should be
not covered by the stamp thereon, presented for payment, before the“ marked "
and the policy shall be stamped in re- cheque arrives through the local clearing, and
spect of that contractaccordingly,but the balance of the customer's account, taking
may be so stamped without penalty the amount of the “ marked ” cheque into
at any time not exceeding thirty days consideration , will not permit of their pay
after the risk has so attached . ment, the banker is justified in refusing pay
“ (4) For the purpose of this Section, the ment of those subsequent cheques. When
expression continuation clause the banker marked * " the cheque he prac
means an agreement to the following tically paid it and is entitled to regard it as
or the like effect, namely, that in paid , although , for the personal convenience
the event of the ship being at sea of the two bankers, the cheque itself is per
or the voyage otherwise not com- mitted to be passed through the clearing with
pleted on the expiration of the the other cheques . The “ marked ” cheque
policy, the subject matter of the will, of course, be debited to the drawer's
insurance shall be held covered until
account when it comes in, even though the
the arrival of the ship, or for a drawer in the interval has died or become
reasonable time thereafter not | bankrupt. The cheque being to all intents ► )

exceeding thirty days .” and purposes paid when “ marked ,” the

417
27- (1535 )
MAR ) DICTIONARY OF BANKING (MAR

drawer cannot stop payment of it after it is acceptance of a cheque, if the holder likes
“ marked .” to take it in lieu of payment, but the Bank
Instead of marking ” a cheque some Charter Acts would in most cases render
bankers pay it, if in order, and give in this illegal."
exchange a clearing voucher to be passed The marking of cheques (except as
through the next local clearing. between bankers) is not a desirable practice
Bankers are occasionally requested by the to encourage. It is preferablethat, instead
drawer of a cheque to mark or certify it as of marking for a holder, the cheque should
good for the amount, as for example when be paid at once, or the cheque be debited
the customer desires to settle for the pur- and a banker's draft given for it, or the
chase of property or to pay customs duties. amount be credited to a sundry creditors
A cheque so marked is usually received by account and a banker's cheque issued .
the person to whom it is tendered as being
1
In the United States cheques are freely
as “ good as cash .” When a cheque is so certified by bankers, and such certification
marked at the request of the drawer, the is held by law to be equivalent to acceptance.
banker will, in considering whether subse- (See CERTIFICATION OF CHEQUES, CHEQUE.)
quent cheques should be paid which are MARKET. On the Stock Exchange the
(0
presented for payment before the marked business is divided into various markets "
cheque is presented, treat the balance of the according to the classes of securities dealt
customer's account as though the marked in. (See STOCK EXCHANGE .) As to the
cheque had been charged to the account. Money Market, see MONEY MARKET.
MARKET OVERT. An open or public
Whenever a cheque is marked at the drawer's
request, a note of the amount should be market. All shops in the City of London
made in the account, so that the banker, are market overt for the purposes of their
when other cheques are presented , may not own trades, and outside the limits of the
overlook his liability to pay the marked city the name is applied to particular
cheque. When the cheque is received it places which are set apart for a market by
must, of course, be paid, and can be charged grant or by prescription. When a person
to the drawer's account, even if he has died buys, in market overt, goods which have
or become bankrupt in the meantime. The been stolen he obtains a good title , unless
drawer cannot stop payment of a cheque the thief is afterwards prosecuted and con
marked at his request. victed , when the property in the goods
Where a cheque is " marked ” at the revests in the original owner . This is the
request of the payee or a holder, the position chief exception to the rule that a purchaser
would appear to be different. obtains no property in goods of which his
In an ordinary way there is no contract transferor was not the owner.
between a banker and the payee or holder of MARKET PARTNERSHIP . A term used
a cheque, but if a banker certifies or marks on the London Stock Exchange to describe
a cheque for payment at the request of the a partnership where two members, who each
payeeor holder, the payee or holder of such deal and settle bargains in their own name,
marked cheque could no doubt compel the notify to the secretary that they hold them
banker to pay it. And as the drawer's right selves jointly responsible to the Stock
to stop payment would appear not to be Exchange for all transactions entered into
affected by the marking, the banker might by either of them .
find himself “ between two stools , " i.e. MARKET PRICE. The market price of
compelled , at least morally, to pay the a given weight of bullion is the quantity of
.

cheque to the holder, and prevented legally current coins of the same metal which is
from debiting it to the drawer's account. equal to that weight of bullion. The Mint
If the drawer dies or a receiving order is price is the quantity of coins into which that
made, or notice of the presentation of a given weight of bullion is divided. As coins
bankruptcy petition is received before a in circulation are lighter than when newly
cheque, marked at the payee's or holder's coined , more of them will be required to
request, is presented , the banker cannot equal that weight, and the market price
debit it to the account of the deceased will therefore be higher than the Mint
or the bankrupt. (See ActS OF BANK- | price. (See Mint Price.)
RUPTCY. ) MARKET RATE . The rate of discount
Chalmers's “ Bills of Exchange " says : “ At charged by the London banks and bill
common law there is no objection to the brokers. It is always less than Bank Rate,
418
MAR ) DICTIONARY OF BANKING (MAR

but varies with it, though not by any means By the Finance (1909-10) Act (passed
always in the same ratio. Competition inBA April 29, 1910 ), Section 76, the stamp duties
the money market has the same effect as it chargeable on marketable securities (other
has in all other open markets ; that is, the than colonial government or colonial muni
competition between the sellers (in this case cipal securities) under paragraphs (1 ) (c) ,
the banks and brokers who have money to (3), and (4) of the heading MARKETABLE
lend) tends to keep the rate down, while the SECURITY in the first Schedule to the Stamp
competition amongst buyers (in this case Act, 1891, and the stamp duty chargeable
the discounters of bills and other borrowers on marketable securities, share warrants, or
of money) tends to raise the rate. There is stock certificates to bearer under sub - sec
another factor which influences the market tion (1 ) of Section 4 of the Finance Act,
rate, and that is that the lenders ( the banks 1899, shall be double those specified in the
and brokers) are themselves also borrowers said Schedule or charged by the said Section,
by way of deposits on which they have to as the case may be.
pay interest ; it is obvious then that the By the Finance Act, 1920, Section 38, the
higher the rate of interest they allow on duties on marketable securities transferable
deposits the more they must charge for by delivery under paragraphs (1) (a) and
discounts in order to recoup themselves and (c ), ( 3) and (4) of the heading “ Marketable
leave a fair margin of profit. And herein Security ” in Stamp Act, 1891, and the duty
lies one of the reasons why market rate on marketable securities transferable by
assimilates itself to Bank Rate , for the rate delivery, share warrants, stock certificates,
of interest which banks and brokers allow , and other instruments to bearer under s.s. 1
known as deposit rate, is dependent on Bank of Section 4, and Section 5 (see that Section
Rate . under SHARE WARRANT, STOCK CERTIFICATE
The more money there is in the market, TO BEARER) of the Finance Act, 1899, on
that is, the larger the funds thatare at any time stock certificates to bearer under Section 8
in the possession of the banks and brokers of the Colonial Stock Act, 1877,and on certain
available for short loans and discounts, the marketable securities under Section 13 of
greater is the discrepancy between market the Finance Act, 1911 , shall be double the
rate and Bank Rate, for it is then that theduties which were chargeable immediately
outside market is in a position to compete before the passing of this Act.
most successfully with the Bank ; and vice By the Stamp Act, 1891, the stamp duties
versâ when the market is “ short " its rate are ( as amended by the above Finance
approaches close to Bank Rate. In ordinary (1909-10 ) Act, 1910, and the Finance Act,
circumstances a well-known example of this 1920) :
occurs every year during the January to MARKETABLE SECURITY
March quarter ; for at this time a great (1 ) Marketable security (a)
amount of the floating money in the market being a colonial govern
has become locked up in the Bank of England ment security or (b) being a
owing to the large part of the assessed taxes, security not transferable by
which are paid into the Government accounts delivery or (c) being a
at that period of the year ; this brings up security transferable by
market rate close on the heels of Bank Rate ; delivery and bearing date
so soon , however, as the accumulated funds or signed before or on
begin to be released again , which happens the sixth day of August one
after the first few days of April, market thousand eight hundred
rate rapidly falls away from Bank Rate. and eighty -five
(See BANK RATE , DEPOSIT RATE, MONEY For or in respect of the
MARKET .) money thereby secured
MARKET VALUE . The market value
of stocks and shares is what they can be As to (b) :
sold for, and may be higher or lower than The same ad valorem duty
the nominal or face value on the certificates. according to the nature of
MARKETABLE SECURITY . A market the security as upon a
able security, as defined by Section 122 of the mortgage.
Stamp Act, 1891 , is a “ security of such a As to ( a) :
description as to be capable of being sold in Double the ad valorem duty
any stock market in the United Kingdom ." as above.
419
MAR ] DICTIONARY OF BANKING
As to (c)
Four times the ad valorem
duty as above.
(2 ) TRANSFER , ASSIGNMENT,
DISPOSITION , or ASSIGNA
TION of a marketable se
curity of any description
Upon aa sale thereof. See
CONVEYANCE or trans
fer on sale.
Upon a mortgage thereof.
See MORTGAGE .
In any other case than a
sale or mortgage .
(3) Marketable security (ex
cept a colonial government
security) being a security
transferable by delivery
and bearing date or signed
or offered for subscription
after the sixth day of
August one thousand eight
hundred and eighty-five
For every £ 10, and also
for any fractional part
of £10, of the money
thereby secured . • .
(See Finance Act, 1911 , Sect .
13, below .)
(4 ) Marketable security (ex
cept a colonial government
security) being such secu
rity as last aforesaid
given in substitution for a
like security duly stamped
in conformity with the law
in force at the time when it
became subject to duty
For every £ 20, and also
for any fractional part
of £ 20, of the money
thereby secured 0 2 0.
By the Finance Act, 1899 :
“ Section 4. ( 1 ) There shall be charged
on every marketable security made
or issued by or on behalf of any
foreign state or government, Or
foreign or colonial municipal body,
corporation, or company , being a
security transferable by delivery,
which
“ (a) is after the first day of
August one thousand eight
hundred and ninety -nine,
assigned , transferred , or in
[MAR
£ s. d . any manner negotiated in
the United Kingdom , and
“ (b) is not, under the law exist
ing at the passing of this Act,
chargeable with stamp duty
as a marketable security
transferable by delivery,
and on every share warrant or stock
certificate to bearer by means of
which any share or stock of any
company or body of persons formed
or established out of the United
Kingdom is, after the first day of
0 10 0 August one thousand eight hundred
and ninety -nine, assigned, trans
ferred , or in any manner negotiated
in the United Kingdom , a stamp
duty of one shilling (increased to
2s. by the Finance ( 1909-10) Act,
1910, Section 76, and to 4s. by the
Finance Act, 1920, Section 38) for
every ten pounds, and also for any
fractional part of ten pounds in the
case of a marketable security of the
money thereby secured, and in the
case of a share warrant or stock
certificate of the nominal value of
0 4 0 the share or stock to which the
warrant or certificate relates.
“ (2) There shall be charged on every in
strument to bearer, not being a
share warrant or stock certificate to
bearer charged under the foregoing
provision , by means of which any
share or stock of any company or
body of persons formed or estab
lished out of the United Kingdom is,
after the first day of August one
thousand eight hundred and ninety
nine, assigned, transferred , or in any
manner negotiated, in the United
Kingdom , a stamp duty of three
pence for every twenty -five pounds,
and also for every fractional part
of twenty -five pounds of the nominal
value of the share or stock .
" ( 3) Every person who, in the United
Kingdom , assigns, transfers, or in
any manner negotiates, or is con
cerned as broker or agent in assign
ing, transferring, or in any manner
negotiating, any instrument which
is chargeable with duty under this
Section , and is not duly stamped, or
any share or stock by means of such
an instrument, shall incur a fine of
twenty pounds, and the amount of
420
MAR ) DICTIONARY OF BANKING
the duty shall be a debt due
from any such person to Her
Majesty .
“ ( 4) For the purposes of this Section , paid ; if duty at the full rate is not paid,
“ (a) the expression ' share war a fine of £ 20 (s.s. 2).
rant to bearer ' includes any
instrument by whatever The substituted security rate does not
name called, having the like apply to marketable securities given in
effect as a share warrant
issued under the provisions
of the Companies Act, 1867 ;
and
"( 6) the expression ' stock certi
ficate to bearer ' includes any
instrument, by whatever
name called , having the like
effect as a stock certificate
to bearer ."
60
Section 6. For the purposes of this
part of this Act, an instrument used
for the purpose of assigning, trans
ferring, or in any manner negotiating
the right to any marketable security,
share or stock, shall, if delivery
thereof is by usage treated as suffi.
cient for the purpose of a sale on the
market, whether that delivery con
stitutes a legal assignment, transfer,
or negotiation, or not, be deemed a
marketable security transferable by
delivery or an instrument to bearer,
as the case may be, and the delivery
thereof an assignment, transfer or
negotiation ."
By Section 13 (1) ofthe Finance Act, 1911 ,
the duty on marketable securities trans
ferable by delivery - among which are
securities liable to duty by reason of and
at the date of their being made or issued
in the United Kingdom - is, when the
amount secured by them is to be paid off
within a term notexceeding three years after
the date on which the duty is payable and
the date by which the amount is to be paid
off is conspicuously stated on the face of
the security, reduced to3d. (increased to 6d .
by the Finance Act, 1920 ) for every £ 10, or
fractional part of£10, if the money secured
is to be paid off within a term not exceeding
one year from the date on which the duty is
payable, and to 6d. ( increased to 1s. by the
Finance Act, 1920) for every £ 10, or frac
tional part of £ 10, if payment off is to be
within a term exceeding one year but not
exceeding three years from the date on
which the duty is payable .
Transfer or negotiation of any such
421
(MAR
security after the date stated on its face
involves payment of the duty at the full
rate, with an allowance of duty already
the person negotiating the security incurs
substitution for securities stamped at either
of the above reduced rates (s.s. 3) .
By the Stamp Act, 1891 :--
“ Section 82. ( 1) Marketable securities
for the purpose of the charge of
duty thereon include
" (a ) A marketable security, made
or issued by or on behalf of
any company or body of
persons corporate or un
incorporate formed or estab
lished in the United King
dom ; and
“ (0) A marketable security by or
on behalf of any foreign state
or government, or foreign
or colonial municipal body,
corporation, or company
(hereinafter called a foreign
security ), bearing date or
signed after the third day of
June one thousand eight
hundred and sixty - two.
“ (i) Which is made or issued
in the United Kingdom ,
or
.6
( ii) Which , though originally
issued out of the United
Kingdom , has been , after
the sixth day of August
one thousand eight hun
dred and eighty - five, or
is offered for subscription,
and given or delivered to
a subscriber in the United
Kingdom , or
( iii) Which , the interest there
on being payable in the
United Kingdom , is
assigned , transferred , or
in any manner negotiated
in the United Kingdom ;
and
" (c) A marketable security by or
on behalf of any colonial
government which if the
borrower were a foreign
government would be a
MAR ] DICTIONARY OF BANKING (MAR

foreign security
(herein- A banker generally requires a mark to be
after called colonial witnessed by two persons, particularly if itis
a

government security ). in connection with either paying in or with

“ 83. Every person who in the United drawing money, and it is desirable that one
Kingdom makes , issues, assigns, transfers, of the witnesses should be an outside person
negotiates, or offers for subscription, any who is well known to the bank. If, how
foreign security or colonial government ever, such a witness is not available it is usual
security not being duly stamped, shall incur for two members of the staff to sign as wit
a fine of twenty pounds." nesses .In some banks the cashier who has
By the Finance Act, 1895 : the transaction in hand may act as one
“ Section 14. Where foreign securities witness, but in other banks both witnesses
within the meaning of Sections eighty -two haveto be independent altogether of the
transaction .
and eighty - three of the Stamp Act, 1891, are
issuedin the United Kingdom , and the in It is usual for a customer who cannot write,
terest thereon is not payable in the United if he is going to draw many cheques upon his
Kingdom , and such evidence of the amount account, to give authority to someone to
of the securities as the Commissioners of sign cheques per procuration, and the
Inland Revenue require is produced to matter is best arranged when the account is
them , then the Commissioners, if in their first opened.
discretion they payment
consider itofexpedient to do When a deed is executed by “ mark," a
so, may accept the amount of special form of attestation clause isnecessary .
stamp duty which would be payable if all (See ATTESTATION .)
In Scotland the execution of a deed
the said securities
on such may duly
payment were dispense with and
stamped, the by a mark is not valid . It must be
necessity of the securities being stamped. executed for the person by a Notary
The Commissioners shall give notice in the Public or a Justice of the Peace before
London Gazette of any such dispensation ." two witnesses.
(See COMPOSITION .) MARRIAGE SETTLEMENT. A settle
By the Stamp Act, 1891 : ment of property, provided by either or
84. The Commissioners may at both of the parties to the contract of mar
any Section
time, without reference to the date riage, and made either before or after the
thereof, allow any foreign security or marriage. In the former case it is called an
colonial government security to be stamped ante-nuptial settlement, and in the latter a
withoutthe payment ofany penalty ,upon post-nuptial.Exceptin the case offraud,
being satisfied , in any manner that they an ante -nuptial
valuable settlement
consideration , the ismarriage
one made for
being
may think proper, that it was not made or the consideration . But in the case of a post
issued , has not been transferred , nuptial settlement, there is only what is
assigned,and
or negotiated within the United
Kingdom .”
. known in law as “ good ” consideration , and
A memorandum of deposit of marketable the settlement may be avoided in certain
securities is chargeable with the fixed duty cases the settlor
within aif certain becomes
period after bankrupt
the settlement
of sixpence, and the stamp may be adhesive.
is made.
MARKKAA. (See · FOREIGN MONEYS BANKRUPT .) (See SETTLEMENTS_SETTLOR
5

FINLAND .)
MARKSMAN . A person who is unable It is possible ( through the probable
negligence ofa trustee) for thedeeds of a
towrite, from any reason,and whosignsby property , which is subject to a marriage
a mark , thus x , in the presence of one or settlement, to be offered to a banker as
more witnesses. The usual form in such a
case is : security without the banker being aware of
his the settlement.
For Stamp Duties see SETTLEMENT.
JOHN X BROWN. MARRIED WOMAN . A woman mar
mark .
Witness , Witness ,
ried since January 1 , 1883, is in the same
position as an unmarried woman (teme sole)
R. JACKSON , T. JONES, as regards her property, whether real or
King Street, British Bank , personal and whether acquired before or
Leeds, Leeds, after January 1 , 1883, and she can deal with
Grocer . Cashier . it in any way she likes.
422
 MAR ] DICTIONARY OF BANKING (MAR

A woman married before January 1 , " (2) Where a married woman carries on
1883 : a trade or business and a final
judgment or order for any amount
( a) as regards any property acquired by has been obtained against her,
her since that date she is in the same whether or not expressed to be pay
position as an unmarried woman able out of her separate property,
and can freely dispose of it. that judgment or order shall be
available for bankruptcy proceed
( 6) as regards any property acquired by ings against her by a bankruptcy
her before thatdate she is inthe same
notice as though she were personally
position as she was before the pass bound to pay the judgment debt
ing of the Married Women's Pro or sum ordered to be paid .
perty Act, 1882, and any conveyance
by her of her landed property is sub “ Section 52. Where a married woman
ject to the control of her husband. who has been adjudged bankrupt
A married woman may enter into and has separate property the income of
render herself liable to the extent of her which is subject to a restraint on
separate property on any contract. She anticipation , the court shall have
may sue and be sued, and any damages power, on the application of the
recovered against her in an action shall be trustee, to order that, during such
payable out of her separate property, and time as the court may order, the
not otherwise. (Married Women's Property whole or some part of such income be
Act, 1882.) paid to the trustee for distribution
The word " contract ” in that Section amongst the creditors, and in the
includes the acceptance of any trust, or of exercise of such power the court
the office of executrix or administratrix , shall have regard to the means of
Her husband is not liable unless he has subsistence available for the woman
acted or intermeddled in the trust or and her children .
administration . (Section 24.)
When the title deeds of a property are " Section 36. ( 1 ) Where aa married woman
has been adjudged bankrupt, her
deposited as security by a married woman, husband shall not be entitled to claim
there is the possibility that the property any dividend as a creditor in respect
may form part of a marriage settlement and of any money or other estate lent
be settled upon her subject to a restraint or entrusted by him to his wife for
against anticipation ; that is, that she cannot the purposes of her trade or business
either deposit the deeds or mortgage the until all claims of the other creditors
property or deal with the future income. of his wife for valuable consideration
This point is an important one to bear in in money or money's worth have
mind and more particularly so , as the deeds been satisfied ."
themselves may not show any evidence that Where the husband is bankrupt, the wife
such a restraint exists. (See SETTLEMENT.) cannot claim any dividend as a creditor , in
Where an overdraft is granted to a
married woman, onthe strength of the respect ofanymoney lent by her tohim ,for
husband's position , to bind the husband the purpose of any business carried on by
him , until the claims of the other creditors
his guarantee should be taken .
Where a wife signs a guarantee, or gives have been satisfied . ( Section 36 , s.s. 2.)
Prior to
security, for her husband's account, her married the Bankruptcy
woman Act,the1913,
was subject to a
bank-.
signature should be witnessed by her own
solicitor. See the remarks regarding undue ruptcy laws
from her only when
husband. The trading separately
provisions of the
influence , under GUARANTEE. 1913 Act are re -enacted in the 1914 Act.
The Bankruptcy Act, 1914, provides - (See above .)
If the wife of an undischarged bankrupt
“ Section 125. ( 1) Every married woman opens an account, the banker should satisfy
who carries on a trade or business, himself that she is dealing with her own
whether separately from her husband money. (See BANKRUPT PERSON .)
or not, shall be subject to the bank- Where an account is in the joint names
ruptcy laws as if she were a feme of husband and wife, see HUSBAND AND
sole. WIFE ACCOUNT.
423
MAT) DICTIONARY OF BANKING (MER

(See Joint ACCOUNT, LIFE Policy, Share arrangement shall be entertained or whether
CAPITAL .) he shall be adjudged bankrupt.
MATURITY. The maturity of a bill of The following are some of the rules in the
exchange or promissory note is the date upon first schedule of the Bankruptcy Act, 1914 ,
which it matures or falls due to be paid. with respect to meetings of creditors :
(See PRESENTMENT FOR PAYMENT.) " 1. The first meeting of creditors shall be
MAUNDY MONEY . The money which summoned for a day not later than fourteen
the King causes to be distributed on Maundy days after the date of the receiving order,
Thursday - that is, the Thursday in Holy unless the Court for any special reason deem
Week - to as many poor men and women as it expedient that the meeting be summoned
he is years old. The money, which is of for a later day.
the same number of pence as the King's " 2. The official receiver shall summon the
age, consists of four silver coins, a four- meeting by giving not less than six clear
penny piece, a threepenny piece, a twopenny days' notice of the time and place thereof
piece and a penny piece. The coins are not in the London Gazette and in a local paper.
of much use to the recipients, except to sell “ 3. The official receiver shall also, as soon
to anyone who is interested in coins. Bank- as practicable, send to each creditor men
ers were sometimes requested by customers tioned in the debtor's statement of affairs,
to obtain a set of Maundy money to add to a notice of the time and place of the first
a collection of coins, but the Mint has now meeting of creditors, accompanied by a
discontinued issuing any sets of Maundy summary of the debtor's statement of affairs,
money to banks. Originally the bestowal including the cause of his failure, and any
of the Royal Maundy gifts was preceded observations thereon which the official
by a service during which the King in person receiver may think fit to make ; but the
washed the feet of poor persons in token of proceedings at the first meeting shall not be
humility, but since the reign of James II invalidated by reason of any such notice or
this part of the ceremony has not been summary not having been sent or received
observed . On the occasion of the first before the meeting .
distribution of Maundy gifts from the “ 8. A person shall not be entitled to vote
almonry of King George V, the number as a creditor at the first or any other meeting
of recipients was forty -six of each sex, of creditors unless he has duly proved a debt
that being the Sovereign's age, and accord- provable in bankruptcy to be due to him
ingly forty - six old men and forty -six old from the debtor, and the proof has been duly
women each received forty-six pence of lodged before the time appointed for the
these specially minted coins. The origin meeting.
of the word Maundy is, by some persons, “ 9. A creditor shall not vote at any such
said to be derived from the Latin words meeting in respect of any unliquidated or
mandatum novum (a new commandment) contingent debt, or any debt the value of
as those were the first words of the anthem which is not ascertained .
which used to be sung in olden times when “ 10. For the purpose of voting, a secured
the King performed the ceremony of washing creditor shall, unless he surrenders his se
the feet of the poor people. Another curity, state in his proof the particulars of his
explanation of the origin of the word is security, the date when it was given, and the
that it is derived from the “ maunds," or value at which he assesses it , and shall be
baskets, which contained the bread for entitled to vote only in respect of the balance
distribution . (if any) due to him , after deducting the value
As to the standard weight of these coins, of his security . If he votes in respect of his
see under COINAGE. whole debt he shall be deemed to have
MEASURES . (See WEIGHTS AND MEA- surrendered his security unless the Court
SURES .) on application is satisfied that the omission
MEDJIDIE . (See FOREIGN MONEYS- to value the security has arisen from
TURKEY . ) inadvertence.
MEETING OF CREDITORS. After “ 11. A creditor shall not vote in respect of
a

receiving order has been made against a any debt on or secured by a current bill of
debtor he is not immediately adjudged a exchange or promissory note held by him ,
bankrupt, but a meeting of creditors is held unless he is willing to treat the liability to
shortly afterwards to consider whether a him thereon of every person who is liable
proposal for a composition or a scheme of thereon antecedently to the debtor, and
424
MEE ) DICTIONARY OF BANKING [MEE

against whom a receiving order has not been

that where any person holds special proxies
made, as a security in his hands, and to to vote for the appointment of himself as
estimate the value thereof, and for the pur- trustee he may use the said proxies and vote
poses of voting, but not for the purposes of accordingly ."
dividend, to deduct it from his proof. The official receiver, or some person
“ 12. It shall be competent to the trustee or nominated by him , shall be the chairman at
to the official receiver, within twenty -eight OF
the first meeting. ( Rule 7.) (See Acts
days after a proof estimating the value of a BANKRUPTCY, BANKRUPTCY, PUBLIC
security as aforesaid has been made use of in EXAMINATION OF DEBTOR, RECEIVING
voting at any meeting, to require the creditor ORDER.)
to give up the security for the benefit of the MEETINGS, COMPANIES . The Com
creditors generally on payment of the value panies (Consolidation) Act, 1908, provides as
so estimated , with an addition thereto of follows:
twenty per centum . Provided , that where
a creditor has put a value on such security, Annual General Meeting.
he may, at any time before he has been
required to give up such security as afore Section 64. ( 1 ) A general meeting of
said , correct such valuation by a new proof, every company shall be held once at
and deduct such new value from his debt, the least in every calendar year, and
but in that case such addition of twenty per not more than fifteen months after
centum shall not be made if the trustee the holding of the last preceding
requires the security to be given up. general meeting, and, if not so held ,
* 13. If a receiving order is made against the company and every director,
one partner of a firm , any creditor to whom manager, secretary , and other officer
that partner is indebted jointly with the other of the company, who is knowingly
a party to the default, shall be liable
partners of the firm , or any of them , may
prove his debt for the purpose of voting toa fine not exceeding fifty pounds.
at any meeting of creditors, and shall be
entitled to vote thereat. First Statutory Meeting of Company.
“ 14. The chairman of ameeting shall have "65. (1) Every company limited by shares
power to admit or reject a proof for the and registered on or after the first
purpose of voting, but his decision shall be day of January nineteen hundred
subject to appeal to the Court. If he is in and one shall, within a period of not
doubt whether the proof of a creditor should less than one month nor more than
be admitted or rejected he shall mark the three months from the date at which
proof as objected to and shall allow the the company is entitled to commence
creditor to vote, subject to the vote being business, hold a general meeting of
declared invalid in the event of the objection the members of the company which
being sustained .
shall be called the statutory meeting.
“ 15. A creditor may vote either in person
or by proxy . " (2) The directors shall, at least seven days
“ 18. A creditor may give a general proxy before the day on which the meeting
to his manager or clerk, or anyother person is held, forward a report (in this Act
6

in his regular employment. In such case called ' the statutory report ') to
the instrument of proxy shall state the every member of the company and
relation in which the person to act there to every other person entitled under
under stands to the creditor. this Act to receive it ."
“ 20. A proxy shall not be used unless it is The statutory report shall state, amongst
deposited with the official receiver or trustee other things, the total number of shares
before the meeting at which it is to be used. allotted, the total amount of cash received
“ 27. No person acting either under a by the company in respect of all shares
general or special proxy shall vote in favour allotted, an abstract of the receipts on
of any resolution which would directly or account of capital, whether from shares or
indirectly place himself, his partner or debentures and of the payments made there
employer, in a position to receive any re- out, and the names, addresses, and descrip
muneration out of the estate of the debtor tions of the directors, auditors (if any),
otherwise than as a creditor rateably with managers (if any), and secretary of the
the other creditors of the debtor. Provided company.
425
MEE ) DICTIONARY OF BANKING (MEM
Convening of Extraordinary General Meeting Representation of Companies at Meetings of
on Requisition. other Companies of which They are Members.
"66. ( 1 ) Notwithstanding anything in the " 68. A company which is a member of
articles of a company, the directors another company may, by resolution of the
of a company shall, on the requisition directors, authorise any of its officials or any
of the holders of not less than one- other person to act as its representative at
tenth of the issued share capital of any meeting of that other company, and the
the company upon which all calls or person so authorised shall be entitled to
other sumsthen due have been paid , exercise the same powers on behalf of the
forthwith proceed to convene an company which he represents as if he were
extraordinary general meeting of the an individual shareholder of that other
company. company.” ( See also Section 113, under
" (2) The requisition must state the | Auditors.) (See COMPANIES .)
objects of the meeting, and must MEMORANDUM OF ASSOCIATION . The
be signed by the requisitionists and Memorandum of Association is the charter of
deposited at the registered office of a company, and is, except in certain specific
the company, and may consist of cases, the company's unalterable law . A
several documents in like form , each company's Articles of Association are sub
signed by one or more requisitionists. sidiary to the Memorandum of Association .
• (3) If the directors do not proceed to cause (See ARTICLES OF Association. )
a meeting to be held within twenty- The following are the provisions contained
one days from the date of the re- in the Companies (Consolidation) Act,
quisition being so deposited, the 1908:
requisitionists, or a majority of them
in value, may themselves convene Mode of forming Incorporated Company .
the meeting, but any meeting so “ 2. Any seven or more persons (or, where
convened shall not be held after the company to be formed will be a private
three months from the date of the company within the meaning of this Act,
deposit. any two or more persons) associated for any
“ (4) If at any such meeting a resolution lawful purpose may, by subscribing their
requiring confirmation at another names to a memorandum of association and
meeting is passed , the directors shall otherwise complying with the requirements
forthwith convene a further extra- of this Act in respect of registration, form an
ordinary general meeting for the incorporated company, with or without
purpose of considering the resolution limited liability (that is to say) , either
and, if thought fit, of confirming it "( i) A company having the liability of its
as a special resolution ; and, if the members limited by the memoran
directors do not convene the meeting dum to the amount, if any, unpaid
within seven days from the date on the shares respectively held by
of the passing of the first resolution , them (in this Act termed a company
the requisitionists, or a majority of limited by shares ) ; or
them in value, may themselves "( ii) A company having the liability of its
convene the meeting. members limited by the memoran
dum to such amount as the members
Provisions as to Meetings and Votes. may respectively thereby undertake
" 67. In default of, and subject to, any to contribute to the assets of the
regulations in the articles— company in the event of its being
“ ( i) A meeting of a companymay be called wound up (in this Act termed a
by seven days' notice in writing, company limited by guarantee) ; or
served on every member in manner " (iii) A company not having any limit on
in which notices are required to be the liability of its members in this
served by Table A in the First Act termed an unlimited company) .
Schedule to this Act :
“ (ii) Five members may call a meeting : Memorandum of Company Limited by Shares.
(iii) Any person elected by the members " 3. In the case of a company limited by
present at a meeting may be shares
chairman thereof : “ ( 1) The memorandum must state
" (iv ) Every member shall have one vote. “ (i) The name of the company,
426
MEM ) DICTIONARY OF BANKING [MEM

with ‘ Limited ' as the last
word in its name ;
“ (ü ) The part of the United King
dom, whether England, Scot
land, or Ireland, in which
the registered office of the
company is to be situate ;
(iii) The objects of thecompany ;
(iv) That the liability of the mem
bers is limited ;
" (v) The amount of share capital
with which the company
proposes to be registered,
and the division thereof into
shares of a fixed amount :
" .(2) No subscriber of the memorandum
may take less than one share :
00
“ (3) Each subscriber must write opposite
to his name the number of shares he
takes .
Memorandum of Company Limited by
Guarantee.
“ 4. In the case of a company limited by
guarantee
“ ( 1) The memorandum must state
" (i) The name of the company,
with ' Limited ' as the last
word in its name ;
“ (ü ) The part of the United King
dom , whether England,
Scotland, or Ireland,
which the registered office of signed by each subscriber in the presence of
thecompany is to be situate ; at least one witness who must attest the
( iii) The objects of the company ; signature, and that attestation shall be
60
capital with which the com
pany proposes to be regis
tered and the division
thereof into shares of a fixed
amount ;
“ (ii) No subscriber of the memoran
dum may take less than one
share ;
" (iii) Each subscriber must write
opposite to his name the
number of shares he takes .
Memorandum of Unlimited Company.
“ 5. In the case of an unlimited company
" (1) The memorandum must state :
" (i) The name of the company ;
“ (ii) The part of the United King
dom , whether England,
Scotland, or Ireland, in
which the registered office of
the company is to be situate ;
“ (ii) The objects of the company.
" (2) If the company has a share capital
“ (i) No subscriber of the memoran
dum may take less than one
share ;
“ (ü ) Each subscriber must write
opposite to his name the
number of shares he takes .
Stamp and Signature of Memorandum .
“ 6. The memorandum must bear the same
in stamp as if it were a deed , and must be

“( iv) That the liability of the sufficient in Scotland as well as in England

and Ireland .
members is limited ;
" (v) That each member undertakes Restriction on Alteration of Memorandum .
to contribute to the assets of “ 7. A company may not alter the con
thecompany in the event of ditions contained in its memorandum except
its being wound up while he in the cases and in the mode and to the
is a member, or within one extent for which express provision is made
in this Act.
year afterwards, for pay
ment of the debts and lia- Alteration of Objects of Company.
bilities of the company con- " 9. (1) Subject to the provisions of this
tracted before he ceases to Section a company may, by special
be a member, and of the resolution, alter the provisions of its
costs, charges, and expenses memorandum with respect to the
of winding up,and for adjust objects of the company , so far as
ment of the rights of the may be required to enable it
contributories among them " (a) to carry on its business
selves, such amount as may more economically or more
be required, not exceeding a efficiently ; or
specified amount. “( b) to attain its main purpose by
“( 2) If the company has a share capital new or improved means ; or
" (i) The memorandum must also "( c) to enlarge or change the local
state the amount of share area of its operations ; or
427
MEM DICTIONARY OF BANKING
“( d) to carry on some business
which under existing cir
cumstances may conveni
ently or advantageously be
combined with the business
of the company ; or
" (e) to restrict or abandon any of
the objects specified in the
memorandum .
" ( 2) The alteration shall not take effect
until and except in so far as it is
confirmed on petition by the Court.
(3) Before confirming the alteration the
Court must be satisfied
“ (a) that sufficient notice has been
given to every holder of
debentures of the company,
and to any persons or class
of persons whose interests
will, in the opinion of the
Court, be affected by the
alteration ; and
“ ( b) that, with respect to every
creditor who in the opinion
of the Court is entitled to
object, and who signifies his
objection in manner directed
by the Court, either his
consent to the alteration has
been obtained or his debt or
claim has been discharged or
has determined , or has been
secured to the satisfaction of
the Court :
Provided that the Court may, in
the case of any person or class, for
special reasons, dispense with the
notice required by this Section .
" (4) The Court may make an order con
firming the alteration either wholly
or in part, and on such terms and
conditions as it thinks fit, and may
make such order as to costs as it
thinks proper .
“ (5) The Court shall, in exercising its
discretion under this Section, have
regard to the rights and interests of
the members of the company or of
any class of them, as well as to the
rights and interests of the creditors,
and may, if it thinks fit, adjourn
the proceedings in order that an
arrangement may be made to the
satisfaction of the Court for the
purchase of the interests of dissen-
tient members ; and may give such
directions and make such orders as
428
[MEM
it may think expedient for facilita
ting or carrying into effect any such
arrangement: Provided thatno part
of the capital of the company may
be expended in any such purchase .
“ (6 ) An office copy of the order confirming
the alteration, together with a
printed copy of the memorandum
as altered, shall, within fifteen days
from the date of the order, be
delivered by the company to the
registrar of companies, and he shall
register the same, and shall certify
the registration under his hand , and
the certificate shall be conclusive
evidence that all the requirements
of this Act with respect to the
alteration and the confirmation
thereof have been complied with ,
and thenceforth the memorandum
so altered shall be the memorandum
of the company.
The Court may by order at any
time extend the time for the delivery
of documents to the registrar under
this Section for such period as the
Court may think proper.
" ( 7) If a company makes default in de
livering to the registrar of com
panies any document required by
this Section to be delivered to him ,
the company shall be liable to a fine
not exceeding ten pounds for every
day during which it is in default."
See also Sections 14, 15, 16, 17 , and 18
under heading ARTICLES OF ASSOCIATION.
In a limited company the liability of the
directors or managers, may, if so provided by
the memorandum , be unlimited . (Section 60.)
Sanction is given by the Act to alter the
memorandum of association in certain
ways :
With respect to the objects of the
company see Section 9 above.
A company limited by shares, if authorised
by its articles, may alter its memoran
dum to increase its share capital, con
solidate its share capital into shares of
larger amount, convert paid -up shares
into stock and re - convert stock into
shares, sub -divide its shares, and cancel
certain shares. (For particulars see
Section 41 under heading SHARE
CAPITAL .) By Section 45 (see SHARE
CAPITAL) the conditions in the memor
andum may, under certain circum
stances, be modified so as to reorganise
the share capital.
MEM ] DICTIONARY OF BANKING [MEM

The amount of the share capital and of the
shares may be reduced . (See the pro-
visions in Section 46, under REDUCTION
OP SHARE CAPITAL .)
Any company may, by special resolution,
and with the approval of the Board of
4th . The liability of the members is
limited .
5th . The share capital of the company is
two hundred thousand pounds divided into
one thousand shares of two hundred pounds
each .

We, the several persons whose names and addresses are subscribed, are desirous of
being formed into a company, in pursuance of this memorandum of associa
tion, and we respectively agree to take the number of shares in the capital of
the company set opposite our respective names .
Number of Shares taken
Names, Addresses, and Descriptions of Subscribers. by each Subscriber .

" 1. John Jones of in the county of merchant 200

“ 2. John Smith of in the county of 25
3. Thomas Green of in the county of 30
“ 4. John Thompson of
66
in the county of 40
6. Caleb White of in the county of 15
“ 6. Andrew Brown of in the county of 5
7. Caesar White of in the county of 10

Total shares taken . . 325

Dated the day of 19 .

Witness to the above signatures,
AB, No. 13, Hute Street, Clerkenwell, London .
Trade, change its name. (See Section
8 under NAME OF COMPANY .)
A company may provide that a specified
portion of the uncalled capital shall not
be capable of being called up except
in the event and for the purposes of the
company being wound up. (See Section
58 under COMPANY, UNLIMITED, and 59
under RESERVE LIABILITY .)
A limited company, if so authorised by its
articles, may, by special resolution,
alter its memorandum so as to render
unlimited the liability of its directors ,
or managers. (Section 61.)
The specimen memorandum of associa-
tion given in the Third Schedule of the
Companies (Consolidation) Act, 1908, is-
MEMORANDUM of ASSOCIATION
company limited by shares.
1st. The name of the company is ' The
Eastern Steam Packet Company Limited ."
2nd. The registered office of the company
will be situate in England .
3rd . The objects for which the company
is established are, " the conveyance of pas-
sengers and goods in ships or boats between
such places as the company may from time
to time determine, and the doing
such other things as are incidental or
conducive to the attainment of the above
object.”
MEMORANDUM OF DEPOSIT. The
deposit of title deeds accompanied by a
memorandum of deposit, as security for a
loan or overdraft, is an equitable mortgage.
Deeds may be deposited as security
without any document of charge, and form a
good equitable mortgage. (See EQUITABLE
MORTGAGE .)
A memorandum of deposit, however, is
evidence of the purpose for which the deeds
were deposited . Without such a document,
a borrower might say that the deeds were
lodged for some purpose other than as
security, or that they were not deposited to
cover advances already made as well as
future advances, but with the memorandum
such contentions could not be maintained .
of a It has beenheld that where there isno
memorandum a deposit of deeds will prima
facie be considered only as a security for a
debt then due.
The memorandum would also be good
evidence of the depositor's intention to
charge a certain property,even if it should
turn out that all the deeds had not been
lodged with the banker.
If a customer holds deeds, as an equitable
all mortgagee, from a third party , and the cus
tomer deposits those deeds with his banker
( the operation being thus an equitable mort
gage of an equitable mortgage),it is advisable
429
MEM ) DICTIONARY OF BANKING (MEM

( though not strictly necessary ) that the docu- / which shall at any time hereafter bedue, in
ment of charge should be lodged along with any manner whatsoever, to the Banking
the deeds, so that the banker can ascertain Company,
the customer's right to deposit them . 4. from me, either alone or in conjunc
The banker should give notice to the equit- tion with any other person or persons
able mortgagor of his charge and ascertain whomsoever,
how much is still owing upon the security. 5. with interest and commission or other
The mortgagor should , after receipt of such lawful charges.
notice, make all payments, in reduction of 6. The agreement to be a continuing
his loan , direct to the banker, unless the security,
banker sanctions the payments being made 7. and I agree to execute a valid legal
direct to his customer. (See further informa- mortgage of the property wheneverrequested
tion under Mortgage.) by you, in such manner as you may lawfully
If the property belongs to several persons require, to secure the repayment on demand
the memorandum should be signed by all of all moneys,
of them . 8. and I declare that the documents de
A memorandum of deposit may be under posited are all that are in my possession or
hand , or under seal, and as a rule the control, and
banker's usual printed forms will be used , 9. that the property is not charged or
but any writing from the person depositing encumbered in any way whatever.
the deeds as security will be sufficient. Even 10. A Schedule of all, or at any rate of all
a letter simply stating that “ I enclose the the most important of the deeds which
deeds of my house 23, King Street, to be held convey the entirety of the property intended
as security for my account " should , in the to be mortgaged must be given.
absence of anything better, be preserved as 11. The depositor's signature to follow the
a memorandum of deposit. But evidence of Schedule.
deposit in any other way than by signing 12. Signature to be witnessed .
the banker's printed form should be dis- 13. Memorandum to be stamped .
couraged . If the form is signed by several persons
A memorandum does not form part of the clause No. 4 should be “ from us, or either
chain of title, and when the document has or any of us, whether alone or in conjunc
served its purpose it is cancelled . A legal tion," etc.
mortgage, however, forms a link in the chain , The words of the form are varied when ,
and is preserved with the other deeds of for example, John Brown deposits title deeds
title . to secure the account of John Jones. There
A memorandum under hand, or under should also be clauses to the effect that the
seal, of the deposit of title deeds is not banking company may grant time or other
statute barred until twelve years after the indulgence to or compound with the said
date when the right of action thereon first John Jones without affecting this security.
accrued (Real Property Limitation Act, The depositor, John Brown, should agree
1874) . that all dividends, compositions, and pay
The Statutes of Limitations do not ments shall be taken and applied as pay
apply to a deposit of share and stock ments in gross , and that the security shall
certificates. extend to any ultimate balance which shall
The printed form of memorandum of remain due.
deposit in use by different bankers varies a Sometimes a memorandum of deposit
little in the actual words used, but the includes the appointment of a bank official
general scope of it is practically the same as the depositor's attorney , with power to
in most cases . sell the property. In such a case the docu
A memorandum by a customer depositing ment must be under seal and be stamped the
his own deeds for his own account may same as a legal mortgage. The clause of
include the following points : appointment may be as follows: " I hereby
1. I have deposited the documents named irrevocably appoint John Brown the present
in the Schedule, with the British Banking General Manager of the said banking com
Co., Ltd. pany , or such other person as shall from time
2. and charge all my estate and interest in to time be appointed by deed by the said
the property banking company, to be my Attorney for me
3. with payment of all moneys now due, or and in my name and on my behalf and as my
430
MEM ) DICTIONARY OF BANKING [ MEM

act and deed or otherwise to sign, seal,and register pursuant to Section 97 of the Com
deliver, or otherwise perfect any deed or panies (Consolidation) Act, 1908 ( see REGIS
assurance, and to do every act which may be TRATION OF MORTGAGES AND CHARGES), that
required or may be deemed proper for exe- a mortgage or charge has been satisfied .
cuting and delivering to the said banking The document requires to be impressed with
company their successors and assigns such a 5s. Companies' Registration Fee Stamp.
legal mortgage of the premises herein men The form of the document is :
tioned , or for the purpose of selling the said
hereditaments and premises or any part The ........ Limited hereby gives notice
thereof under the power of sale conferred that the [insert here mortgage or
by these presents and the Statute in that charge ,' debentures or
00
debenture
behalf in order to vest in the purchaser or stock as the case may be] dated the
purchasers the legal estate andall other my .... day of... .....One thousand nine
estate and interest in the said premises.' hundred and ...., and created by the Com
If a banker finds it necessary to realise hispany for securing the sum of £ ......was
security, and his document of charge is satisfied to the extent of t... on the ....
merely a memorandum of deposit under of ........ , 19 ...
hand, he will be obliged to apply to the In witness whereof the common seal of
Courts for power to sell the property and the Company was hereunto affixed the
appoint a receiver, unless the debtor will, .... day of ..... One thousand nine
in accordance with his agreement in the hundred and ....in the presence of
memorandum , sign a legal mortgage giving
the banker a power of sale. If the document
of charge is a legal mortgage, or memoran
} Directors.
Secretary.
dum of deposit under seal including the
appointment of an official of the bank as the Accompanying the Memorandum of Satis
attorney of the mortgagor to sell the pro- faction is a statutory declaration (stamp 10
perty on default, the property can , after 25. 6d.) verifying the same : We ....
demand has been made, in accordance with of ... a director of the above -named
the terms of the deed , and the money is not Company, and .... of ...... the
repaid, be disposed of, or a receiver and Secretary of the above -named Company,
manager appointed to look after the solemnly and sincerely declare that the
estate until a sale can be effected , with particulars contained in the Memorandum
out recourse to the Courts. (See BANKER'S of Satisfaction dated ........now produced
MORTGAGE .) to us, are true to the best of our knowledge,
In addition to being used for the deposit of information and belief. And we make this
deeds, some bankers take a memorandum of solemn Declaration, conscientiously believing
.

deposit when certificates of stocks or shares the same to be true, and by virtue of the
are given as security. When this is done, provisions of the “ Statutory Declarations
the document should include a clause agree- Act, 1835."
ing to transfer the stocks or shares into the Declared by the said ,” etc.
name of the bank or its nominees when MEMORIAL. When a deed of land re
requested so to do. quires registration in the public registries
When bearer bonds are lodged as security (e.g., in Yorkshire and Middlesex) a memorial
a memorandum of deposit should be signed (or form giving full particulars of the deed)
by the customer. is sent to the registrar for that purpose.
When deeds are deposited as security by When registered the deed is marked :- " a
a company the charge must be registered memorial was registered at the
with the Registrar of Companies within Registry of Deeds at the day
twenty -one days after the date of its crea of 19 at in the forenoon in
tion, i.e., after the date of deposit of the volume page . number
deeds. (See REGISTRATION OF MORTGAGES and thememorandum is sealed and signed by
AND CHARGES.) the registrar Registration fee, 5s .
As to the stamp duties see EQUITABLE
MORTGAGE . (See TITLE DEEDS .) By the Stamp Act, 1891, the duty is
MEMORANDUM OF SATISFACTION. MEMORIAL to be registered pur
A notice addressed to the Registrar of Joint suant to any Act for the time
Stock Companies, to be entered on the being in force relating to the
431
MER ) DICTIONARY OF BANKING [MIN

public registering of deeds in £ s. d. of rent paid by a working lessee in the last

England or Ireland : working year ; and where the minerals are
Where the instrument The same worked by the proprietor the amount as
registered is chargeable duty as the determined by the Commissioners.
with any duty not amount- instrument.
registered MINORS . Persons who are below the age
ing to 2s . 60 . of twenty -one. (See INFANTS .)
In any other case . 0 2 6 MINT. Anglo -Saxon mynet, a coin .
(See YORKSHIRE REGISTRY OF DEEDS.) Latin, Moneta, a surname of Juno, whose
MERCANTILE AGENT. See under temple was used by the Romans as a
FACTORS ACT. mint.
MERGER . A merger takes place when The place where the money of this country
the owner of a distinct interest in a property is coined . It is situated on Tower Hill,
acquires the larger interest of his reversioner. London. Under the control of the Royal
For example, if a leaseholder purchases the | Mint, there are branch mints at Melbourne,
freehold , the leasehold interest merges in Sydney, and Perth in Australia, the gold
the freehold . coins of which are legal tender in this
MESSUAGE . A dwelling -house and any country . There is also a branch mint at
adjoining piece of land. Ottawa in Canada.
METROPOLITAN CLEARING . The At one time there were mints at Bristol,
section of the business of the London Chester, Exeter, Norwich, and York . (See
Bankers' Clearing House, including all the BANK OF ENGLAND, COINAGE, MINT PRICE.)
branches of the Clearing Banks in London MINT PAR OF EXCHANGE , The Mint
which are contained within the Metro- | Par between any two countries which use the
politan area . Cheques on offices in the same metal for their standard of coinage is
Metropolitan Clearing have M printed in found by comparing a standard coin ofeach,
the left-hand bottom corner. (See CLEARING making the calculation upon the weight and
House .) fineness of the precious metal only ; in other
MIDDLE PRICE . On the Stock Ex- words the Mint Par between countries A and
change a dealer buys at one price and sells B is the number of B coins which contain
at another. If he buys at ten and sells at the same quantity of pure gold (or whatever
twelve, the middle price is eleven ; that is the standard metal of both countries) as
is, the price between the highest and the one A coin contains.
lowest. The Mint Par between two countries never
MIDDLESEX REGISTRY OF DEEDS. varies unless one of them alters its coinage
(See LAND REGISTRY (MIDDLESEX DEEDS).) regulations, increasing or decreasing the
MILLIÈME. (See FOREIGN Moneys— quantity of the precious metal in its standard
EGYPT.) coin.
MILLING. The indented or ridged edge As an example, the Mint Par between
of a coin. In olden times the edges of coins England and France is 25:22 francs for £1 ;
were frequently clipped or filed by dishonest that is to say, there is the same quantity of
persons and the clippings or filings sold by pure gold in 25-22 francs as there is in t1 ;
weight. In order to prevent that practice, which is arrived at from knowing that by
milling was invented. The edge of a coin English law 480 oz.troy ofgold eleven -twelfth
is also turned up in order that the raised fine are coined into 1,869 sovereigns, and by
flanges may afford a certain amount of French law 1,000 grammes of gold nine- tenths
protection to the figures on both sides of the fine are coined into 155 Napoleons of 20 francs
coin. (See COINAGE .) each. (Nominally France is a dual standard
MILREIS. (See FOREIGN MONEYS – country, both gold and silver being legal
BRAZIL, PORTUGAL.) tender for any amount, but in practice the
MINERAL RIGHTS DUTY. A duty im- basis is a gold one.)
The following are the Mint Pars between
posed by the Finance (1909–10 ) Act, 1910,
for the year ending March 31, 1910, and England and the places named :
every subsequent year, on the rental value Paris . .
25.22 francs for £1 .
of all rights to work minerals and of all Berlin . 20:43 marks for £ 1 .
mineral wayleaves, at the rate in each case New York 4.86f dollars for £1 .
of one shilling for every twenty shillings of (also quoted 49 % pence for one dollar)
that rental value. Vienna 24.02 kronen for £1 .
The rental value is taken to be the amount Amsterdam . 12:10 florins for £ 1 ,
432
MIN ) DICTIONARY OF BANKING [MIS

MINT PRICE. The Mint price of a given “ (2) Any such minute if purporting to be
quantity of bullion is the quantity of coins signed by the chairmanof the meet
into which that weight of bullion is divided . ing at which the proceedings were
The quantity of coins in circulation which had, or by the chairman of the
is equal to that weight of bullion is its next succeeding meeting, shall be
market price, and as coins which are in evidence of the proceedings.
circulation lose a good deal of weight, more (3) Until the contrary is proved, every
of them will be required than if they were general meeting of the company or
new, and the market price will therefore be meeting of directors or managers
above the Mint price. The Mint price of in respect of the proceedings whereof
gold bullion is its value in gold coins, and the minutes have been so made shall be
Mint price of silver bullion is its value in deemed to have been duly held and
silver coins. An importer of gold may have convened, and all proceedings had
it coined into sovereigns at the Mint at the thereat to have been duly had, and
rate of 1,869 sovereigns for every 480 ounces all appointments of directors, man
of metal of standard fineness - eleven -twelfths agers, or liquidators, shall be deemed
fine gold , one-twelfth alloy - the Mint price to be valid .”
being thus £ 3 17s. 101d. per oz. At the BankThe minutes of a meeting of directors
of England notes are given in exchange for contain a note of the date and place of
bullion at the rate of £ 3 17s. 9d. per ounce meeting, the names of the directors present
of standard gold . (See Section 4 of Bank at such meeting, and a record of all resolu
Charter Act , under BANK OF ENGLAND.) | tions and proceedings, and of all appoint
in practice, bullion is taken to the Bank ments made by the directors. The minutes
because payment for it is made at once, are read over to the directors at their next
whereas if the bullion is left at the Mint meeting, and , if correct, they are signed
some time will elapse before the sovereigns usuallyby the chairman of that meeting, and
are ready. On receiving notes in exchange a fresh minute ade that the minutes of the
for bullion at the Bank, the recipient can last meeting were read and signed
immediately present his notes over the as correct. (See COMPANIES, DIRECTORS,
counter and obtain sovereigns, if he so desire. MEETINGS .)
MINUTE -BOOK . The book in which is MISTAKES IN PAYMENT. Where a

kept a brief record of the business transacted mistake is made in payment of a bill of ex
at the general meetings of the share- change, as by handing too much money
holders of a company, and at the ordinary across the counter, the banker is entitled to
meetings and committee meetings of the have the mistake rectified ; but where he
directors. pays the right amount of a cheque, and then
Loans granted, appointments made, sala- finds that he has been led to make the pay
ries increased , and all resolutions of various onsequent upon some mis
ment in error, cons
kinds, by the directors of a bank, as well take in ascertaining the balance of the
as reports submitted to them , are entered customer's account upon which the cheque
upon the minutes. The minutes of a meeting is drawn , or in deciding whether or not the
are signed by the chairman of that meeting, cheque should be honoured , the amount
or by the chairman of the next succeeding cannot be legally recovered from the person
meeting. All companies are required by law to whom it has been paid . “ Where a cheque
to keep minutes of the proceedings of is cashed over the counter, the money ceases
their meetings and the meetings of the to be the money of the banker, and he can
directors . (See MINUTES . ) not revoke or recall the payment, although
MINUTES. With regard to the minutes he should immediately discover that the
of proceedings of the general meetings of drawer's account is considerably overdrawn "
companies and of the meetings of directors, (Grant's “ Law of Banking " ).
Section 71 of the Companies (Consolidation) Where å forged bill of exchange has been
Act, 1908, enacts : paid, to quotethe words of Mathew , J., in
“ ( 1 ) Every company shall cause minutes the case London & River Plate Bank v.
of all proceedings of generalmeetings Bank of Liverpool (1896 , 1 Q.B. 7) : " If the
and (where there are directors or mistake is discovered at once, it may be
managers) of its directors or man- that the money can be recovered back ; but
agers to be entered in books kept if it be not, and the money is paid in good
for that purpose. faith and is received in good faith, and there
433
284 ( 1535)
MOI ) DICTIONARY OF BANKING MON

is an interval of time in which the position of life. Not only have all conceivable com
of the holder may be altered , the principle modities a monetary value attached to
seems to apply thatmoney once paid cannot them , but it is customary to ascribe a
be recovered back ." (See Forgery.) financial reason as the prime moving cause
In Kerrison v. Glyn Mills & Co. ( 1911, (either directly or indirectly) in almost every
105 L.T., 721 ) , where Kerrison , under a action in which a man is concerned . In the
mistake of fact, paid money into Glyn & primitive ages there was no money, and
Co.'s bank to the account of a customer when anyone wished to obtain food which
who owed them money on overdraft, the belonged to another person , possession had to
House of Lords held that the money had be obtained by barter ; that is, some article,
been paid under a mistake of fact and that considered of equal value, and of which the
the bank was not entitled to retain it. person who owned the food was in need,
Lord Mersey said : “ If the banker has had to be offered in exchange. If one man
paid over the money to his customer , or was rich in food possessions and another in
has altered his position in relation to his skins, there would be much inconvenience in
customer to his own detriment, on the always arranging a suitable exchange, as the
faith of the payment, the banker may food owner might not be in need of skins.
refuse to repay the amount, and may leave This difficulty led most nations at a very
the person who has paid him to enforce his early date, after experience with various
remedy against the customer. But the substitutes, to adopt metals, particularly
circumstances here are that Glyn & Co. gold and silver, as a circulating medium . In
had in no way altered their position when the case supposed, the owner of food was
they were asked to refund the money. then able toexchange his goods for a certain
They held money which they ought not quantity of metal, which metal he could use
to retain because it had been paid to them for the purpose of obtaining from other per
under a mistake of fact, and , in the words of sons articles which were more useful to him
the Lord Chancellor, it does not matter in than skins. In the “ Iliad , " Homer says that
what character it was received by them .” | the armour of Diomede was worth only nine
Lord Shaw said that it would not be correct oxen, and the armour of Glaucus was worth
“ either in law or in business, to permit the 100 oxen, which indicates that in those days
recipient, though a banker, to impound oxen were regarded as a standard of value.
money which his principal could not have Cattle were of great importance in the early
honestly or legally retained ." stages of civilisation , andin several languages
MOIETY. A half. An example of the the name for money is identical with that
use of the word is found in a conveyance of some kind of cattle or domesticated
of property (which is vested in Brown and animal. Professor Jevons points out that
Jones), when Brown conveys his moiety to pecunia , the Latin word for money, is
Jones . derived from pecus, cattle ; that our word fee
MONETARY UNION . (See Latin MONE- is nothing but the Anglo -Saxon feoh ,meaning
TARY UNION, SCANDINAVIAN MONETARY alike money and cattle ; and that the words
UNION .) capital, chattel and cattle are derived from
MONETARY UNIT . The coin in any the word capitale. Kine were called capitale
country which serves as a measure of the because they were counted by the caput, or
value of all the other coins. The unit in this head .
country is the sovereign , in the United At different periods and in various
States it is the dollar, in Germany the mark, countries many articles have been used to
and in France the franc. (See FOREIGN meet the necessity, which was felt by all,
MONEYS.) of having something to act as a measure of
MONEY. The standard by which the value. In India, certain parts of Southern
value of commodities is measured, and the Asia, and in Africa, shells called cowries are
medium by which they are bought and sold. still used as a currency. Money is repre
Money and credit, to which it gave birth , sented in Tibet and parts of China by small
form the basis on which the stupendous blocks of compressed tea ; in Abyssinia by
business of banking has been built up. blocks of rock salt, and in some districts of
There is probably nothing which is of greater Africa by dates. Sugar, tobacco, dried cod,
importance in the civilised world than money, dressed leather, furs, pieces of cloth , elephants'
and nothing which comes more closely in teeth , carved wood and many other objects
contact with mankind in every department have been used for the same purpose .
434
MON ) DICTIONARY OF BANKING [MON

Carved pebbles were used by the Ethiopians, | receive a certain value of any commodity
and Adam Smith relates that, even in his that he makes choice of.”
day ( 1776) , there was a village in Scotland The word money is derived from the
where it was not uncommon for a workman temple of Juno Moneta, which was used by
to carry nails instead of money to the baker's
the Romans as a mint. ( See COINAGE ,
shop or the ale-house. Although such Mint.)
articles, as a circulating medium , represent MONEY AT CALL AND SHORT NOTICE .
a great advance from the barter state of In addition to the money which aa banker has
society, most nations, as already stated, now on hand to meet the ordinary requirements
recognise that the metals, being practically of his business, he keeps a balance at the
indestructible and not much subject to Bank of England, or with his London agents,
fluctuations in value, are the most convenient of such an amount as may be deemed
and best fitted to act as money . Silver necessary , and any surplus funds he may
was used by the Hebrews, and the first have, and which he desires to keep in an
mention of money as a medium of exchange available form , may be lent to bill brokers
is found in Genesis, where Abraham pur- and stockbrokers against security. Money
chased the cave of Machpelah from Ephron lent in that way is repayable at call " or
the Hittite, and weighed to Ephron four at “ short notice," and is therefore almost
hundred shekels of silver, current money immediately obtainable in the event of any
with the merchant.” It would appear that sudden demand upon the banker . A
when first the metals, whether iron , copper, banker's first line of defence is the cash on
gold or silver , were used they were in rude hand and his balance at the Bank of
ingots or bars without any stamp or designa- England or with his London agents, which
tion upon them , and when being paid over is repayable on demand ; the second line
they had, as in the case of Abraham's famous of defence is the “ money at call and short
purchase, to be weighed in scales. The notice ."
inconvenience of always having to weigh MONEY - LENDER . The Money- lenders
the metals, and the difficulty also ofknowing Act of 1900 states that the exprper ession
whether the quality of the metal was really money -lender " shall include every son
what it was supposed to be, ultimately whose business is that of money -lending,
brought about the invention of coins. The but shall not include :
Chinese are reported to have made coins as 1. Any registered society within the mean
early as 2250 B.C. The ingots which had ing of the Friendly Societies Act, 1896 , or
hitherto been so troublesome were, by the any society registered or having rules cer
invention of coins, divided up into pieces of tified under Sections 2 to 4 of that Act, or
different values so that they could be avail- under the Benefit Building Societies Act,
able for the smallest of purchases and 1836 , or the Loan Societies Act, 1840, or
operate as the medium of commerce without under the Building Societies Acts, 1874 to
the process of weighing, an operation which , 1894 ; or
in the case of the precious metals , was 2. Any body corporate, incorporated or
unreliable and open to misuse . The trouble empowered by a special Act of Parliament
of assaying the metals was done away with , to lend money in accordance with such
for the coins at length came to bear upon special Act ; or
their faces the Government stamp, which , 3. Any person bona fide carrying on the
as a rule, assured the holder that they were business of banking or insurance, or bond
of a certain quality of metal . From this fide carrying on any business not having for
brief history of the evolution of money it is its primary object the lending of money, in
seen that each coin , to the extent of its the course of which and for the purposes
value, is like an order payable to bearer whereof he lends money ; or
drawn upon anyone to whom it is presented. 4. Any body corporate for the time being
The true nature or function of money is the exempted from registration under this Act
right or title to demand something from by order of the Board of Trade made and
others . John Stuart Mill says : “ The published pursuant to regulations of the
pounds or shillings which a person receives Board of Trade. (See Usury.)
weekly or yearly are not what constitute By the Money -lenders Act, 1911 , Section 2
his income; they are a sort of tickets or prohibits money -lenders being registered as
orders which he can present for payment at bankers :
any shop he pleases, and which entitle him to " 2.- (1) No person shall be registered as
435
MON ) DICTIONARY OF BANKING (MOR

a money-lender under any name in- DEPOSIT RATE, FLOATERS, FLOATING MONEY,
cluding the word ' bank,' or under FOREIGN EXCHANGES, MARKET RATE, MONEY
any name implying that he carries at CALL AND SHORT NOTICE, SHORT LOAN
on banking business ; and , where | FUND .)
any money-lender is registered under MONEY ORDER . (See Post OFFICE
any such name, the name shall be MONEY ORDER .)
removed from the register and a MONOMETALLISM . The system of cur
notification to that effect sent to the rency in which one metal is the standard of
money -lender. value. In England gold is the standard of
“ (2) If a money-lender, in the course of value and is legal tender for any amount,
carrying on the money -lending busi- silver being merely token money. In India,
ness, issues or publishes, or causes however, the standard of value is silver.
to be issued or published, any cir- (See BIMETALLISM .)
cular, notice, advertisement, letter, “ MORAL OBS. " A term used in the
account, or statement of any kind money market for the 3 per cent. Exchequer
containing expressions which might Bonds issued in 1918 in respect of Russian
reasonably be held to imply that he Treasury Bills, for which the British Govern
carries on banking business, he shall ment had decided to accept a certain
be liable on summary conviction to “ moral obligation ."
the like penalties as if he had failed MORATORIUM . (Latin , mora , delay.) An
to comply with section two of the extension of time which is sometimes
Money-lenders Act, 1900." granted by the Government of a country
MONEY LENT AND LODGED BOOK. during a financial emergency, postponing the
A book ruled with various columns so as to due date for the redemption of bills of
show what has been lent by the bank in the exchange or other debts. On the outbreak
way of loans, overdrafts, discounts, overdue of war with Germany in 1914, a Proclama
bills, etc. ; and also to show what has been tion was issued on August 2 postponing the
lodged with the bank on current accounts, payment of certain bills of exchange (see
deposit accounts, and deposit receipts. The ROYAL PROCLAMATION ) ; the Treasury was
book is useful for purposes of comparison empowered to suspend the Bank Charter
and to show how the totals are fluctuating. Act ; the Monday Bank Holiday (August 3)
MONEY MARKET. The money market was extended till Friday morning to enable
is not a particular place or building where the Government to arrange for an emergency
money is bought and sold, but is merely issue of £ 1 and 10s. notes to act as legal
a term embracing the Bank of England , tender for payments of any amount. On
London bankers and bill brokers, the Stock August 6 the moratorium was extended by
Exchange, and dealers in money and credit Royal Proclamation to certain other pay
who either have money to lend or want to ments. This moratorium enabled banks,
borrow money. The bankers collect money where necessary, to prevent the undue with
from all over the country and such surplus drawal of gold . To overcome certain diffi
as is not required for current purposes is lent culties the Government agreed to guarantee
on the market for various periods, and all the the Bank of England from any loss in dis
operations between the bankers, brokers counting bills accepted prior to August 4.
and discount houses constitute the business Where a bill falls due in a foreign country
of the money market. If there is a large during the period of a moratorium , the rights
supply of money and the demand for loans of a drawer or an indorser in England are
is small the rates charged will be low, but probably subject to the same law as the
if, on the other hand, the supply is small acceptor. (See the case of Roquette v.
and the demand large, the rates will be high. Overman , 1875, 10 Q.B. 525.)
When the Government is in need of of MORTGAGE
a temporary loan it sometimes becomes gage, a pledge .)
(From mort, dead, and
a borrower in the money market upon A mortgage is a charge which a borrower
Treasury Bills. gives to a lender upon a part or the whole of
Money is occasionally lent to the market his property
by the Indian Government for short periods. For example, if Brown borrows from
The money market is often referred to as Jones the sum of £ 100 and, as security for
“ Lombard Street." (See Bank RATE, BOR- the loan, conveys to him the fee simple of a
ROWING ON CONSOLS, DAY TO DAY MONEY, piece of land , it is called a mortgage, the
436
MOR ) DICTIONARY OF BANKING (MOR

conveyance being given on condition that of the mortgage debt. For example, if John
if Brown, the mortgagor, repays the £ 100 and Brown, who holds a mortgage deed from
interest to Jones, the mortgagee, he shall Jones for £500 upon property valued at
have the estate re -conveyed to him . £ 1,500, deposits the mortgage and the deeds
There are two kinds of mortgages :- relating to the property with his banker for
1. Legal Mortgage (q.v.). an advance, the security is not worth more
2. Equitable Mortgage (q.o.). than £500 to the banker because that is the
(As to a mortgage over copyhold and extent of Brown's interest in the property.
leasehold property, see COPYHOLD, LEASE- In such a case the banker should give notice
HOLD .) to the mortgagor that the mortgage deed
A legal mortgage forms part of the chain has been deposited with him as security.
of title and must be preserved along with When the mortgagor receives the notice, it
the other deeds. A memorandum ofdeposit, warns him not to repay the loan to the mort
however,when done with , is cancelled , as it gagee without the banker's consent. All
does not form a link in the title. reductions in the amount of the mortgage
With a legal mortgage a banker has control debt should be made direct to the banker
of the property if the borrower fails to repay by the mortgagor, and as reductions may
the advance made to him . But with an have been made before the deeds came into
equitable mortgage — that is, a deposit of the the banker's hands, an acknowledgment
title deeds with , as a rule, a memorandum should be obtained from the mortgagor as
of deposit — the banker will, unless the to the exact amount which is still due.
borrower gives a legal mortgage when re- A mere deposit, however, of a mortgage
quested , be at much trouble and expense would not give the banker power to enforce
before he obtains the sanction of the Court to it. In some cases it may be necessary to
dispose of the property. Any charge (whether take a transfer of the mortgage and give
under seal or not) after the first legal notice to the mortgagor . (See TRANSFER
mortgage is merely an equitable mortgage. OF MORTGAGE.) Some banks take a special
If a banker takes a mortgage for a fixed memorandum of deposit under which the
amount, it terminates the relation of banker sum owing on the security of the mortgage
and customer, and the banker's position is is absolutely assigned to the bank , and
that of an ordinary mortgagee. The advance give notice. The Stamp Office stamps a
must be made on a separate loan account, document of this nature at 2s. 60.
and not on a working account. The only per cent. (See DEBTS -- ASSIGNMENT OF,
ontries in the account must be credits in DEPOSIT OF MORTGAGE , TRANSFER OF

reduction of the loan . As each credit reduces MORTGAGE.)

the amount due under the mortgage, any When a property is conveyed subject to
fresh withdrawal would not be covered by a mortgage, see CONVEYANCE .
the mortgage . As to interest, see under Mortgages and charges created by
INTEREST. The form of mortgage usually companies must now be registered. (See
taken by a banker is by way of security for REGISTRATION OF MORTGAGES AND CHARGES .)
the floating balance of the account with a If a mortgagor fails to comply with the
covenant that his right to sellthe property conditions in a legal mortgage, the mortgagee
shall arise immediately on default, after has various remedies — he may sell the pro
demand , or after, say, one month following perty ( see LEGAL MORTGAGE ), or enter into
demand . In a mortgage to secure a floating possession (see MORTGAGEE IN POSSESSION ),
balance , the relation of banker and customer or have a receiver appointed to collect the
continues . See form of banker's mortgage rents (see RECEIVER ), or sue the mortgagor
.

under BANKER'S MORTGAGE . for the debt, or apply to the court for a
Where a banker takes a charge, which is Foreclosure Order (see FORECLOSURE ).
subject to a prior mortgage, he should give By the Stamp Act, 1891 , the stamp duties
notice of his charge to the prior mortgagee. are :
(See the cases under Notice OF MORTGAGE. ) £ s. d .
When a banker receives notice of a second MORTGAGE, BOND , DEBENTURE ,
charge upon the security he holds, see COVENANT (except a marketable
NOTICE OF MORTGAGE . security otherwise specially
If a mortgagee deposits his mortgage, and charged with duty) , and War
the relative deeds, with a banker as security RANT OF ATTORNEY to confess
for a loan, he can charge it only to the extent and enter up judgment.
437
MOR ) DICTIONARY OF BANKING (MOR

(1 ) Being the only or prin- £ s. d. For every £ 100, and also £ s. d.

cipal or primary security for any fractional part of
(other than an equitable £ 100, of the amount
mortgage) for the pay transferred , assigned , or
ment or repayment of disponed , exclusive of
money interest which is not in
Not exceeding £10 . 0 0 3 arrear . , 00 6
Exceeding The same

£ 10 and not exceeding £25 0 0 8 duty as a

And also where any further principal
£ 25 . £ 50 0 1 3 money is added to the security
£ 50 £ 1000 26 money already secured for such
further
£ 100 £ 150 0 3 9 money .
+150 £ 200 0 5 0
(5) RECONYEYANCE , RE
1200 . .) £250 0 6 3 LEASE , DISCHARGE,
£ 250 £ 300 0 7 6 SURRENDER , RESURREN
£ 300 DER , WARRANT TO VACATE,
For every £ 100 , and also for or RENUNCIATION of any
any fractional part of such security as aforesaid ,
£ 100, of the amount or of the benefit thereof,
secured CO 26. or of the money thereby
(2) Being a collateral, or aux secured :
iliary, or additional, or For every £100, and also
substituted security (other for any fractional part
than an equitable mort of £ 100, of the total
gage) , or by way of further amount or value of the
assurance for the above money at any time
mentioned purpose where secured . 0 0 6
the principal or primary Maximum in case of reconveyance of a
security is duly stamped : collateral security, provided that the re
For every £100, and also for conveyance of the primary security has been
any fractional part of duly stamped , 10s.
£ 100, of the amount A reconveyance by a building society ,
secured 0 0 6 indorsed upon a mortgage, is exempt from
By Section 7 of the Revenue stamp duty. (See BUILDING SOCIETY.)
Act, 1903, the total duty In the case of a conveyance ( consideration
payable under this head £1,000) from Brown and Jones as tenants in
is not to exceed 10s. common to Jones, subject to a mortgage of
[The collateral security £5,000 , the duty is chargeable upon the
should also bear a consideration and half the amount of the
duty paid stamp. (See mortgage debt :
DenoTING STAMPS .)] £ 1,000 = consideration
(3) Being an equitable mort 2,500 half of mortgage
gage :
For every £100, and any £ 3,500. (See CONVEYANCE .)
fractional part of £100,
of the amount secured . 0 1 0 The following are the Sections of the Stamp
(4) TRANSFER, ASSIGNMENT, Act, 1891 , relating to mortgages, etc.
DISPOSITION, or ASSIGNA
TION of any mortgage, Meaning of “ Mortgage."
bond, debenture, or "86. ( 1 ) For the purposes of this Act the
covenant (except a mar expression mortgage ' means a

ketable security ), or of any security by way of mortgage for the

money or stock secured by payment of any definite and certain
any such instrument, or sum of money advanced or lent at
by any warrant of attor the time, or previously due and
ney to enter up judgment, owing, or forborne to be paid , being
or by any judgment : payable, or for the repayment of
438
MOR ] DICTIONARY OF BANKING (MOR

money to be thereafter lent, ad . whatsoever, apparently abso

vanced, or paid, or which may be lute, but intended only as a
come due upon an account current, security : and
together with any sum already “ (6) Any agreement (other than an
advanced or due, or without, as the agreement chargeable with
case may be ; duty as an equitable mort
" And includes— gage ), contract, or bond
accompanied with a deposit
“ (a) Conditional surrender by way of title deeds for making a
of mortgage, further charge, mortgage, wadset, or any
wadset, and heritable bond, other security or conveyance
disposition , assignation , or as aforesaid of any lands,
tack in security, and eik to estate, or property com
a reversion of or affecting prised in the title deeds, or
any lands, estate, or pro for pledging or charging
perty, real or personal, the same as a security : and
heritable or movable, what
soever : and “ ) Any deed whereby a real
burden is declaredor created
“( 6) Any deed containing an obli on lands or heritable subjects
gation to infeft any person in Scotland : and
in an annual rent, or in lands " ( g) Any deed operating as a
or other heritable subjects mortgage of any stock or
in Scotland, under a clause marketable security.
of reversion , but without
any personal bond or obliga- For the purpose
“( 2) expression ofthis Act the
tion therein contained for equitable mortgage
payment of the money means an agreement or memoran
or stock intended to be dum , under hand only, relating to
secured : and the deposit of any title deeds or
instruments constituting or being
"( c) Any conveyance of any lands, evidence of the title to any property
estate, or property whatso whatever (other than stock or
ever in trust to be sold or marketable security ), or creating a
otherwise converted into charge on such property,
money, intended only as a With reference to the word property
security, and redeemable be- in this sub -section, “ in administration
fore the sale or other dis C
property ' is not considered to include
posal thereof, either by ex goods, and a memorandum of deposit of
press stipulation or other bills of lading or dock warrants is not
wise, except where the within the charge.” “ A power of sale
conveyance is made for the superadded to such a pledge does notmake
benefit of creditors gener- it a mortgage.” (Alpe's Law of Stamp
ally, or for the benefit of Duties .)
creditors specified who ac- (See EQUITABLE MORTGAGE.)
cept the provision made for
payment of their debts, in Direction as to Duty in Certain
full satisfaction thereof, or Cases.
who exceed five in number : "87. (1 ) A security for the transfer or
and
retransfer of any stock is to be
"( d) Any defeasance, letter of re charged with the same duty as a
version , back bond, declara similar security for a sum of money
tion, or other deed or writing equal in amount to the value of the
for defeating or making stock ; and a transfer, assignment,
redeemable or explaining disposition, or assignation of any
or qualifying any convey such security, and a reconveyance,
ance, transfer, disposition, release , discharge, surrender, re
assignation, or tack of any surrender, warrant to vacate, or
lands, estate, or property renunciation of any such security ,
439
MOR ] DICTIONARY OF BANKING [MOR

is to be charged with the same duty by reason of the equity of redemp

as an instrument of the same de tion in the mortgaged property being
scription relating to a sum of money thereby conveyed or limited in any
equal in amount to the value of the other manner than to a purchaser,
stock . or in trust for, or according to the
“ (2) A security for the payment of any direction of, a purchaser.
rent charge, annuity, or periodical Security for Future Advances, how to be
payments, by way of repayment, or Charged.
in satisfaction or discharge of any
loan, advance, or payment intended “88. (1 ) A security for the payment or
repayment of money to be lent,
to be so repaid, satisfied, or dis
charged , is to be charged with the advanced, or paid , or which may
same duty as a similar security for become due upon an account cur
the payment of the sum of money so rent, either with or without money
lent, advanced, or paid . previously due, is to be charged,
where the total amount secured or
“ (3) A transfer of a duly stamped security, to be ultimately recoverable is in any
and a security by way of further way limited, with the same duty
charge for money or stock, added to as a security for the amount so
money or stock previously secured limited .
by a duly stamped instrument, is not
to be charged with any duty by " ( 2) Where such total amount is unlimited,
reason of its containing any further the security is to be available for
or additional security for the money such an amount only as the ad
or stock transferred or previously valorem duty impressed thereon
secured, or the interest or dividends extends to cover, but where any
thereof, or any new covenant, advance or loan is made in excess of
proviso, power, stipulation, or agree the amount covered by that duty the
ment in relation thereto, or any security shall for the purpose of
further assurance of the property stamp duty be deemed to be a new
comprised in the transferred or and separate instrument, bearing
previous security. date on the day on which the
advance or loan is made.
“ (4) Where any copyhold or customary
lands or hereditaments are mort " (3) Provided that no money to be ad
gaged alone by means of a con vanced for the insurance of any
ditional surrender or grant, the ad property comprised in the security
against damage by fire, or for
valorem duty is to be charged on the
keeping up any policy of life insur
surrender or grant, if made out of
court, or the memorandum thereof, ance comprised in the security, or
and on the copy of court roll of the for effecting in lieu thereof any new
surrender or grant, if made in policy, or for the renewal of any
court . grant or lease of any property com
" (5) Where any copyhold or customary prised in the security upon the
lands or hereditaments are mort
dropping of any life whereon the
gaged , together with other property, property is held, shall be reckoned
for securing the same money or the as forming part of the amount in
respect whereof the security is
same stock, the ad valorem duty is chargeable with ad valorem duty.
to be charged on the instrument
relating to the other property, and Exemption from Stamp Duty in Favour of
the surrender or grant, or the Benefit Building Societies Restricted.
memorandum thereof, or the copy " 89. The exemption from stamp duty con
of court roll of the surrender or ferred by the Act of the Session held in the
grant, as the case may be, is not to sixth and seventh years of King William the
be charged with any higher duty Fourth , chapter thirty-two, for the regula
than ten shillings. tion of benefit building societies, shall not
" (6 ) An instrument chargeable with ad extend to any mortgage made after the
valoren duty as a mortgage is not thirty -first day of July one thousand eight
to be charged with any further duty hundred and sixty -eight, except a mortgage
440
MOR ] DICTIONARY OF BANKING MOR

by a member of a benefit building society for “ Equitable Mortgages. — In the case of

securing the repayment to the society of equitable mortgages,every security, whether
money not exceeding five hundred pounds.” primary or collateral, is chargeable with the
A mortgage must be stamped within duty of 1s. per cent. on the highest amount
thirty days ofthe date of the deed, or if from at any one time due in respect of the in
abroad within thirty days from its arrivalin debtedness secured to the bank up to date
this country. The same time is allowed for ( i.e. within thirty days) and with additional
further stamping a banker's mortgage, where duty from time to time, in accordance with
the amount is not limited, for an additional the provisions of Section 88 (2) of the Stamp
overdraft, dating from the time the extra Act, 1891, if the indebtedness should
advance is taken. subsequently reach , at any one time, a higher
The validity of a legal mortgage is not total.
affected merely by the fact that it is not “ In no case can the value of the security
stamped , but the deed cannot be produced assigned, deposited or charged, be taken as
in Court as evidence unless it is properly the basis of assessment for mortgage duty.
stamped . An unstamped mortgage may be " Reconveyances. - Reconveyance duty is
stamped, after the expiry of the thirty payable on the highest amount of the in
days, on payment of a penalty. debtedness at any one time secured ; this duty
MEMORANDUM BY THE INLAND REVENUE. is exigible on all reconveyances, where the
“ Primary Securities. - The instruments highest amount at any time due on the
given to banks by their customers to secure vacated security is £ 2,000 or under ; where
overdrafts on current account are, whether it is over £ 2,000 only on the final discharge ;
legal or equitable mortgages, almost invari- any partial release in that case attracting 10s.
ably worded as securities for all sums due * If it should be found that duty hasbeen
or to become due to the bank. In such previously paid on a wrong basis, all the
circumstances the earliest of the instruments instruments should be forwarded to this
is the primary security for all advances, and office with a statement of the highest amount
must in the first place be stamped 2s. 6d. or of the customer's indebtedness at any time
1s. per cent. mortgage or equitable mort- subsequent to the date of the first instru
gage duty on the highest amount at any one ment, in order that the case may be
time due in respect of the indebtedness submitted to the Board of Inland Revenue.”
secured to the bank up to date (i.e. , within “ The reconveyance of a collateral security
thirty days) and with additional duty from is liable to a maximum duty of ten shillings
time to time, in accordance with the pro- if the reconveyance of the primary security
visions of Section 88 (2) of the Stamp Act, is duly stamped . If the ad valorem duty is
1891, if the indebtedness should subsequently less than ten shillings, the reconveyance of
reach, at any one time, a higher total. the collateral security should be stamped
· Collateral Securities. - Each of the other with ad valorem duty [ i.e. 6d. per cent.].
instruments must be treated as a collateral Alpe's “ Law of Stamp Duties."
security for the highest amount of overdraft. When a legal mortgage is given in fulfil
In the case of legal mortgages, full ad ment of an agreement in a memorandum of
valorem duty of 6d. per cent. is chargeable deposit under seal (stamped 2s.6d. per cent.) ,
on the highest amount at any one time due the mortgage is liable to the duty of a sub
in respect of the indebtedness secured up to stituted security (see Schedule ( 2) above),
August 31 , 1903, and similar ad valorem i.e. 6d. per cent., with a limit of 10s. but
duty of 6d. for every £100, or fraction of £100, a legal mortgage in fulfilment of an agree.
increase of this indebtedness after that date ; ment in a memorandum under hand is
but as to such increased indebtedness liable to the full mortgage duty of 2s. 68.
arising after August 31 , 1903, with aa limit of per cent.
10s, in respect thereof, under the provisions (See ATTORNMENT ; CONSOLIDATION OF
of Section 7 of the Revenue Act, 1903. The MORTGAGES ; DEBTS, ASSIGNMENT OF ;
collateral security or securities should also EQUITABLE MORTGAGE ; EQUITY OF RE
bear a duty -paid stamp under Section 11 of DEMPTION ; FORECLOSURE ; LEGAL MORT.
the Stamp Act, 1891. - (See DENOTING GAGE ; MORTGAGEE IN POSSESSION ; NOTICE
STAMPS .) An additional duty-paid stamp OF MORTGAGE ; PRIORITIES ; RECEIVER ;
can be obtained from time to time, as and RECONVEYANCE : SECOND MORTGAGE ; SHIP
when additional duty is impressed on the MORTGAGE ; STATUTORY MORTGAGE ; Tack
primary security. ING ; TITLE DEEDS. )
441
MOR ] DICTIONARY OF BANKING
MORTGAGE DEBENTURE . A debenture
which not only promises to pay a certain
sum, but also charges the property of the
company with the payment of the money.
(See DEBENTURE. )
MORTGAGE, DEPOSIT OF . ( See
DEPOSIT OF MORTGAGE . )
MORTGAGE OF SHIP. (See Ship.
MORTGAGE . )
MORTGAGE OF STOCK. For stamp
duties on mortgage of stock or marketable
security under hand only, see AGREEMENT,
and Section 23 of Stamp Act, 1891. By deed,
see MORTGAGE, and Section 86 .
MORTGAGE REGISTER. (See REGISTER
OF MORTGAGES . )
MORTGAGE, SATISFACTION OF. (See
MEMORANDUM OF SATISFACTION .)
MORTGAGEE . The person in whose
favour a mortgage is given .
MORTGAGEE IN POSSESSION. Where
a mortgagor has failed to repay the money
due under his mortgage, and the mortgagee
has taken into his own hands the collection
of the rents and management of the property,
he is a mortgagee in possession . A mort- | in mortmain being almost obsolete.
gagee, however, usually puts in a receiver to MUNICIPAL CORPORATION . The Muni
manage the estate and collect rents , as the cipal Corporations Act, 1882, provides :
mortgagee thereby avoids the liabilities to
which he would be exposed by being a
mortgagee in possession . A mortgagee
in possession may be liable for any
damages that occur, if he gives up
possession without the consent of the
mortgagor.
An equitable mortgagee by deposit of title
deeds can take possession only after he has
received the sanction of the Court.
By the Conveyancing and Law of Pro
perty Act, 1881, Section 18, a mortgagee in
possession shall have, if and as far as a
contrary intention is not expressed in the
mortgage deed, or otherwise in writing,
power to make from time to time, an agri
cultural or occupation lease for any term not
exceeding twenty -one years ; a building lease
for any term not exceeding ninety -nine years ;
and every such lease shall be made to take
effect in possession not later than twelve
months after its date. Every such lease shall
reserve the best rent that can reasonably be
obtained , and shall contain a covenant by
the lessee for payment of the rent and a
condition of re-entry on the rent not being
paid within a time therein specified not
exceeding thirty days. Every such building
lease shall be made in consideration of the
lessee, or some person by whose direction
(MUN
the lease is granted, having erected, or agree
ing to erect within not more than five years
from the date of the lease, buildings, new or
additional, or having improved or repaired
buildings, or agreeing to improve or repair
buildings within that time, or having exe
cuted, or agreeing to execute within that
time, on the land leased , an improvement
for or in connection with building purposes.
A nominal rent may be made payable for the
first five years, or any less part of the term .
(See MORTGAGE .)
MORTGAGOR . The person who mort
gages or charges his property in favour of a
party who has lent him money .
MORTMAIN . (Literally "“ dead hand. ")
In olden times when real estate passed
into the possession of a corporation, it was
said to be held in mortmain ; that is, in dead
hand, because, the corporation having a
perpetual existence, any payments which
were due when the estate passed from one
person to another became non - existent. A
corporation may now hold land in practically
the same way as an individual, the holding
“ Section 142 . ( 1 ) All payments to and
out of the borough fund shall be
made to and by the treasurer.
" (2) All payments to the treasurer shall
go to the borough fund .
“ 141. ( 1 ) An order of the council for pay
ment of money out of the borough
fund shall be signed by three mem
bers of the council, and counter
signed by the town clerk.
“ (2) Any such order may be removed into
the Queen's Bench Division of the
High Court by writ of certiorari, and
may be wholly or partly disallowed
or confirmed on motion and hearing,
with or without costs, according to
the judgment and discretion of the
Court. "
Section 140, s.s. 2, enacts that the following
payments may be made without order of the
council :
" 1. The remuneration ( if any) of the
mayor, of the recorder (if any) in his
capacity either of recorder or of judge
of a borough civil court, of the stipen
diary magistrate (if any) , of the town
clerk, of the treasurer, of the clerk of
the peace when paid by salary, of
every other officer appointed by the
442
MUN ) DICTIONARY OF BANKING [MUT

council, and of the clerk to the Avacancy in the office of treasurer shall be
justices. filled within twenty -one days after its
" 2. The remuneration and allowances occurrence (Section 18, s.s. 3) . (See LOCAL
certified by the Treasury to be pay- AUTHORITIES.)
able to the Treasury in respect of MUNIMENTS . (From Latin munio, to
an election petition. fortify .) The documents by which rights or
" 3. The remuneration certified by the claims are fortified or maintained.
recorder to be due to any assistant MUTILATED CHEQUE OR BILL. If a
recorder, assistant clerk of the peace, cheque is presented for payment which has
or additional crier." been torn to such an extent as to suggest that
Sub -section 3 provides as follows : it has been so torn with the object of can
“ No other payment shall be made out celling it, the banker may beliable ifhe pays
of the borough fund, except it, and it is subsequently found that the
“ (a ) Under the authority of an drawer had torn up the cheque on purpose.
Act of Parliament ; or It is customary for the banker to return
(6) By order of the council ; or such a cheque (unless confirmed by the
10

(C) By order of the court of drawer) marked cheque mutilated or

quarter sessions for the cheque torn ,"but if a note is written upon
borough ; or the cheque by the collecting banker thatthe
" (d) By order of a justice in pur- cheque
that he was accidentally
guarantees it, thetornpaying
by him , or
banker
suance of this Act ; or
“ (e) In cases in which the court of usually acceptssuch an explanation, or
quarter sessions for a county, guarantee, as sufficient. An explanation by
or a justice acting in and for a payeeis not, as a rule, accepted. purpose
a bill has been cut in two for the
a county in the discharge of of If
transmission by the post, it would be paid
his judicial duty , might by a banker if he is satisfied that that was
make an order for the pay- the reason of the division, but if the bill has
ment of money on the
treasurer of the county . apparently been torn with the object of
“ (4) Saving, nevertheless, in relation tothe cancelling it the banker should , unlessit is
guaranteed by another banker, obtain the
application of the borough fund as confirmation of the acceptor.
authorised by this Section, or other MUTUAL DISPOSITION. In the Stamp
wise by this Act, all rights, interests, Act, 1891 , the reference to the stamp
and demands of all persons in or on duty is : MUTUAL DISPOSITION or Convey
the real or personal estate of the ance in Scotland . (See EXCHANGE OR
municipal corporation , by virtue EXCAMBION .)
of any legal proceeding, or of any MUTUAL INSURANCE . Where a banker
mortgage, or otherwise."
holds a mortgage upon a ship, the insurance
When a loan is required, reference should policy to be given to him should not be a
be made to the Statute under which the mutual insurance policy, if he has to be liable
power to borrow is obtained, so as to ascer- for calls. In an insurance of this nature,
tain the extent of thepower, and whether the the liabilities of the company incurred
sanction of the Local Government Board or through damages to the vessels of members,
other authority is required . In 1919, the contesting law cases on behalf of members,
powers and duties of the Local Government etc.) are totalled up periodically ( say every
Board were transferred to the Minister of three months), and equally divided among
Health . the subscribers according to the amount of
The treasurer's accounts are to be made up tonnage they have entered in the company.
half-yearly to such dates as the council, Before a mortgaged vessel is admitted into
with the approval of the Local Government a mutual society, the mortgagee may be
Board (now Minister of Health), shall appoint required to give a guarantee that he will be
(Section 26) . The treasurer shall within liable for all contributions and other sums
one month from the date to which he is which may become payable in respect of the
required to make up his accounts in each insurance, the guarantee to continue in force
half-year, submit them , with the necessary for all claims which shall arise so long as he
vouchers and papers, to the borough remains a mortgagee . (See MARINE INSUR
auditors (Section 27 ) . ANCE Policy, SHIP -MORTGAGE.)
443
NAK ] DICTIONARY OF BANKING
“ NAKED " DEBENTURE . A debenture
which is a mere acknowledgment of a debt
and which is not secured by a mortgage
or charge upon the company's property in
any way, is sometimes called a " naked "
debenture. (See DEBENTURE . )
NAME DAY. Also called Ticket Day.
The second day of a settlement on the Stock
Exchange. A settlement consists of three
days ; for mining securities, four days. (See
SETTLING DAYS. )
NAME OF COMPANY. The Companies
( Consolidation) Act, 1908, provides as
follows :
“ Section 8. ( 1 ) A company may not be
registered by a name identical with
that by which a company in exist
ence is already registered, or so
nearly resembling that name as to be
calculated to deceive, except where
the company in existence is in the
course of being dissolved and signifies
its consent in such manner as the
registrar requires.
" (2) If a company, through inadvertence or
otherwise, is, without such consent
as aforesaid , registered by a name
identical with that by which a com
pany in existence is previously
registered, or so nearly resembling it
as to be calculated to deceive, the
first -mentioned company may, with
the sanction of the registrar, change
its name .
" (3) Any company may, by special resolu
tion and with the approval of the
Board of Trade signified in writing,
change its name.
“ (4) Where a company changes its name,
the registrar shall enter the new
name on the register in place of the
former name, and shall issue a certifi
cate of incorporation altered to meet
the circumstances of the case .
" (5) The change of name shall not affect
any rights or obligations of the
company, or render defective any
legal proceedings by or against the
company, and any legal proceedings
that might have been continued or
commenced against it by its former
name may be continued or com
menced against it by its new name.
“ 63. ( 1 ) Every limited company S.
" (a) shall paint or affix, and keep
painted or affixed, its name
on the outside of every office
or place in which its business
444
NAM
is carried on , in a conspicuous
position , in letters easily
legible :
" (6) shall have its name engraven
in legible characters on its
seal :
"( c) shall have its name mentioned
in legible characters in all
notices, advertisements, and
other official publications of
the company, and in all
bills of exchange, promis
sory notes, indorsements,
cheques, and orders for
money or goods purporting
to be signed by or on behalf
of the company, and in all
bills of parcels, invoices,
receipts, and letters of credit
of the company.
" (2) If a limited company does not paint or
affix, and keep painted or affixed ,
its name in manner directed by this
Act, it shall be liable to a fine not
exceeding five pounds for not so
painting or affixing its name, and for
every day during which its name is
not so kept painted or affixed , and
every director and manager of the
company who knowingly and wilfully
authorises or permits the default
shall be liable to the like penalty .
" (3) If any director, manager, orofficer of a
limited company, or any person on
its behalf, uses or authorises the use
of any seal purporting to be a seal of
the company whereon its name is
not so engraven as aforesaid , or
issues or authorises the issue of any
notice, advertisement, or other
official publication of the company,
or signs or authorises to be signed on
behalf of the company any bill of
exchange, promissory note, indorse
ment, cheque, order for moncy or
goods, or issues or authorises to be
issued any bill of parcels, invoice,
receipt, or letter of credit of the
company, wherein its name is not
mentioned in manner aforesaid , he
shall be liable to aa fine not exceeding
fifty pounds, and shall further be
personally liable to the holder of any
such bill of exchange, promissory
note, cheque, or order for money or
goods, for the amount thereof,
unless the same is duly paid by the
company."
NAP ] DICTIONARY OF BANKING (NAT

“ Limited ” must be the last word in a is issued . A purchaser receives merely

limited company's name. Any persons a receipt signed by the seller or his attorney.
using the word " limited,” unless duly incor- Stockholders can accept by themselves,
porated with limited liability, are liable or their attorneys, all transfers made to
to a fine not exceeding £ 5 a day. (See them , and should it be inconvenient to
COMPANY LIMITED BY SHARES .) stockholders to attend at the Bank to
The omission of the word " limited ," as in accept stock , they can obtain a confirmation
an acceptance, may render the directors of the fact of the inscription of the stock by
personally liable. Contractions of the word forwarding the stock receipt, with a request
should not be used officially ; but in Stacey for confirmation to the Chief Accountant,
& Co., Ltd. v. Wallis and others ( 1912, Bank of England, E.C.
28 T.L.R. ) , where a bill was addressed to A stock receipt is of value only as a
J. & T. H. Wallis (Ltd.), it was held that memorandum , and its production is not
the name was correctly stated , as “ Ltd.” was required in the event of stock being sold
such a constant abbreviation that every or transferred . Duplicate certificates of
commercial man of intelligence would know inscription or duplicate stock receipts are
1
that “ limited ” was meant. not issued .
Companies or associations which do not The Finance Act, 1917, provides that the
exist for profit may be licensed by the Board Treasury may, in conjunction with the
of Trade as limited companies without the Bank of England and Bank of Ireland,
addition of " limited ” to the name. (See make regulations for enabling stockholders
CHARITABLE COMPANIES, COMPANIES .) to be described in the books of the Bank
If any person carry on business under any as trustees, and either as trustees of any
title of which " limited ” is the last word, particular trust or as trustees without
he shall, unless duly incorporated with qualification , and for authorising the Bank
limited liability, be liable to a fine not to act on powers of attorney granted by
exceeding £5 for every day upon which that stockholders as described . Neither the
title has been used . (Section 282.) Bank nor any person acquiring any interest
(See REGISTRATION OF BUSINESS NAMES.) in any Government stock shall by reason
NAPOLEON. (See FOREIGN MONEYS- only of any entry in the books of the Bank
FRANCE .) in relation to any Government stock, or
NATIONAL DEBT. The Bank of England any stockholder, or of anything in any
manages the National Debt as the agent of document relating to Government stock,
the Government, and the various stocks are be affected with notice of any trust , or of
transferable in the books of the Bank of the fiduciary character of any stockholder
England. Holdings of British Government or of any fiduciary obligation attaching to
securities may be in the form of : the holding of any Government stock.
(1 ) Inscribed Stock ; (Section 37.)
(2) Registered Stock ; The Bank will not register more than four
(3) Bonds to bearer. holders in any one account. A holder may
Stock is not bought or sold by the Bank of have more than one account provided that
England, except on behalf of persons bank- each one is distinguished either by a number
ing with them . A person wishing to buy or or by such other designation as may be
sell stock must apply to a stockbroker, or directed by the Bank, but more than four
to his banker. accounts in the same name are not permitted.
A stockholder on transferring inscribed Stock cannot be added to a joint account
stock must attend personally at the Bank where the death of one of the holders has
to sign the transfer in the books of the been notified to the Bank , but the surviving
Bank, and he must be identified by a holders may open a new account and have
recognised stockbroker, or, if unable to the old one transferred to it. Stock may be
attend, the transfer may be effected by registered in the name of a corporation or of
his attorney lawfully authorised in writing two or more bodies corporate and the holding
under his hand and seal, and attested by will be deemed by the Bank a joint tenancy.
two or more credible witnesses. A holder's A power of attorney for the sale, transfer,
title is the entry in the Bank books, and or acceptance of any of the Government or
a transferee may, if he wish, verify the Parliamentary stocks or funds is exempt
entry in the books and sign the books from stamp duty . (Finance Act, 1917 ,
as an acceptance thereof. No certificate Section 30.)
445
NAT) DICTIONARY OF BANKING (NAT

An application for a power of attorney Bonds (5-15 years), if registered as transfer

must be made personally or by an agent. able by deed, can be transferred by deed by
If a stockholder acts himself, after the the holder, or in a joint account by all the
issue of a power, the power is thereby holders (or, if the holder or surviving holder
revoked . Stock may be legally transferred is deceased, by his executors or adminis.
under a power of attorney after the death trators) ; or by a duly authorised attorney.
of the stockholder provided the Bank has no The deed of transfer duly completed must
notice of his death . be lodged at the Bank with the corresponding
On the death of a sole stockholder, or last certificate.
survivor in a joint account, the stock shall be Deeds of transfer must be executed by
transferable by his executors or administra- all the transferors and transferees, the
tors, notwithstanding any specific bequest execution by each party being attested by
thereof, but no stock can be transferred a credible witness. The common form of
until the probate of the will or letters of Transfer Deed may be used, and no stamp
administration has or have been left with duty is payable. On lodgment of the Deed
the Bank for registration. of transfer at the Bank, the register certi
No stamp duty is payable in respect of ficate must be surrendered.
any dividend warrant, transfer of inscribed On registration of the transfer a Register
stock, stock certificate orcoupon (National certificate in the name(s) of the transferee (s)
Debt Act, 1870, Section 71 ) . of Transfer
will be issued . When the Deed
Should it be desired that dividends be relates to part only of the stock held by the
paid in some way other than by post to transferor (s), a register certificate will be
the first, or sole, stockholder — which is done issued for the balance of the Stock .
without application — the necessary instruc- Holders of stock for the time being
tions must be lodged at the Bank. registered as stock transferable by deed
Dividends will be paid to any stock may demand that their stock , or part
holder, executor, or administrator, person thereof, shall cease to be transferable by
ally attending at the Bank, on his written deed and become transferable in the Stock
request, in the case of a sole account, or on Transfer Books (i.e. , by the stockholder or
the written request of all the stockholders, his attorney attending in person at the
executors, or administrators, in the case of Bank, being identified by a stockbroker and
a joint account. The request in either case executing a transfer in the books ). The
must be in the prescribed form . demand must be made in the prescribed
Postal dividend warrants will be crossed form and be lodged at the Bank with the
“ & Co." and must therefore be presented register certificate. A certificate of inscrip
for payment through a banker. The Bank tion of the stock will be issued in due
cannot undertake to cross a warrant payable course : this document is of value as a
to a banker with the account to which the memorandum only, the stockholder's title
dividend is to be placed . The stockholder being the entry in the Bank books. When
must himself instruct the banker. the demand relates to part only of the stock ,
Under the provisions of the National Debt a register certificate will be issued for the
Acts, stocks and dividends unclaimed for balance of the stock .
ten years are transferred to the Commis- Holdings of stock transferable in the
sioners for the Reduction of the National stock transfer books (not by deed ) may be
Debt, but may be reclaimed by the persons registered as transferable by deed, on
entitled thereto . demand being made in the prescribed
Under the Finance Act, 1911 , Government form .
stocks may , on and after 1st April, 1912, Stock certificates to bearer with coupons
be transferred by deed . attached for the payment of the dividends
War Stock (£3 10s. per cent. , £ 4 per cent., may be obtained in exchange for inscribed
£ 4 10s. per cent. , and £5 per cent.), Regis- stock . The certificates are issued to “ bearer, "
tered Exchequer Bonds (£ 5 per cent, and but a holder can insert a name and so make
£5% per cent.), Registered National War the certificate “ nominal,” in which case it
Bonds, Consols, £2 10s. per cent. Annuities, cannot be re-inscribed in any other name
£2 15s. per cent. Annuities, Local Loans, than that so inserted .
£3 per cent. and Guaranteed £2 15s. per Bonds to bearer, with coupons for divi
cent. and £3 per cent. Stocks (Irish Land dends attached , may be obtained in exchange
Stocks) , Funding Loan £4 per cent.,Treasury for stock of the War Loans and registered
446
NAT ] DICTIONARY OF BANKING (NEG

Exchequer Bonds on the execution of a behalf of his creditors.” Any society under
formal transfer. the Act may register as a Friendly Society,
War Bonds may be obtained in the form Section 75. (See FRIENDLY Society .)
of Registered Coupon - Bonds, transferable A draft, or order, or receipt given by or
by deed. The dividends are paid by to an approved society , or branch , or
means of coupons attacbed to the register insurance committee in respect of money
certificate. payable in pursuance of Part I of the 1911
INSTRUCTIONS FOR ATTESTING THE SIGNA- Act, or of the rules of the society or branch ,
TURES ON A DEMAND FOR REGISTRATION OF is exempt from stamp duty. (Schedule II,
STOCK AS STOCK TRANSFERABLE BY DEED.- National Insurance Act, 1913. )
A “ credible witness is required to each NATIONAL SAVINGS CERTIFICATES.
signature, who must state his quality, pro- Issued by the Treasury through the Post
fession , or occupation , and give a permanent Office after the war . The same provisions
address. He should be a person of known apply to the certificates under this name as
position, such as a magistrate, justice of the towar savings certificates (Savings Banks
peace, solicitor, clergyman, or registered Act, 1920. ) (See WAR SAVINGS CERTIFI
medical practitioner ; or, failing that, a CATES. )
householder. No stockholder named in this NATIONAL WAR BONDS. The issues of
demand, nor the husband or wife of such .)
these bonds were :
a stockholder, is a credible witness FIRST SERIES, issued October , 1917 .
thereto . When a Demand is executed
5 % bonds, issue price £ 100, repayable 1922 at £102
out of the United Kingdom , in addition to 5% 11 £ 100 , 1) 1924 £ 103
attestation by the credible witness, the signa- 70
5%
4 o %/
2100, 1927 £ 105
ture or signatures must be attested by a £ 100, 1927 £ 100
British Minister , consul, vice -consul, or other ( Income Tax compounded .)
British authority, or by a notary public. SECOND SERIES, issued April, 1918.
(
When a Demand is executed by mark, 55 %
%
bonds, issue price £ 100, repayable 1923 at £102
o £ 100 , 9) 1925 £ 103
instead ofby signature, the witness must be 5% £ 100 , 19 1928 £ 105
14 %
a person of known position, such as the
minister or churchwarden of the
.) 31 £ 101-10s. 1928 £ 100
k- stoc (Income Tax compounded .)
holder's parish , a magistrate, justice of the THIRD SERIES, issued October, 1918.
peace, solicitor, or registered medical practi- 5 % bonds , issue price £ 100 , repayable 1923 at £102
tioner ; and the witness must state in writing 5% £ 100 ,
11 1925 £ 103
5%
10 £ 100, 1928 £ 105
that the “ Demand ” was read over and 40 91 £ 101-10s. 1928 £ 100
fully explained to, and was understood by, (Income Tax compounded .'
the stockholder. Should the stockholder be FOURTH SERIES, issued February , 1919.
unable to understand the purport of the 5 % bonds, issue price £ 100 , repayable 1924 at £ 102
Demand there must be no execution . 5% £ 100, 1929 „ £ 105
1 2101-10s. 1929 » £100
Asto other points with respect tonational
finance, see APPROPRIATION Act, BUDGET,
{4 %
(Income Tax compounded .)
CONSOLIDATED FUND, CONSOLIDATED FUND (See WAR LOANS.)
Act, DEFICIENCY ADVANCES, EXCHEQUER NEGATIVE PRESCRIPTION . ION. (See PRE
BONDS, FINANCE Act, FLOATING DEBT, SCRIPTION . )
FUNDED DEBT, FUNDING LOAN, INCOME NEGLIGENCE . See the case of London
Tax, NATIONAL WAR BONDS, TERMINABLE Joint Stock Bank, Ltd. v. Macmillan á
ANNUITY, TREASURY BILLS, TREASURY Arthur and other cases under ALTERATIONS .
BONDS, VICTORY BONDS, War Loans, War (See COLLECTING BANKER, CROSSED CHEQUE,
SAVINGS CERTIFICATES, WAYS AND MEANS Good FAITH , INDORSEMENT, PAYMENT OF
ADVANCES . BILL, PAYMENT OF CHEQUE .)
NATIONAL INSURANCE . The benefits NEGOTIABLE INSTRUMENTS . A nego
under the National Insurance Act, 1911 , are tiable instrument is a document which , by
inalienable . Section 111 enacts that " every indorsement and delivery, or by mere
assignment of, or charge on , and every agree- delivery, passes the full title to the benefit
ment to assign or charge, any of the benefits of the instrument to the transferee, who
conferred by this Act shall be void, and, on takes it bona fide and for value, irrespective
the bankruptcy of any person entitled to of any defects that there may be in the
any such benefit, the benefit shall not pass transferor's title, and on which the holder
to any trustee or other person acting on is able to sue in his own name.
447
NEG ] DICTIONARY OF BANKING (NEG

A cheque, bill, and promissory note are obtain possession of the goods, but if the
negotiable instruments, and the Bills of transferor had no title, or an imperfecttitle, to
Exchange Act, 1882, provides that where a the bill, the transferee cannotobtain any better
person is a holder in due course he holds the title than the transferor had. If the trans
bill free from any defect of title of prior feror had no title, the transferee cannot
parties and may enforce payment against obtain a title . (See BILL OF LADING.)
all parties liable on the bill. A holder in In the United States, however, the Bills of
due course is a holder who takes a bill com- Lading Act, 1916, makes all bills of lading,
.

plete and regular on the face, before it is issued by any common carrier for the
overdue, in good faith and for value and transportation of goods in the United States
without notice of any defect in the title of to a place in any foreign country, if to
the person who negotiated it. The negoti- order, fully negotiable instruments. A
ability , however, may be destroyed by a certificate of shares is not a negotiable
restrictive indorsement such as “ Pay John instrument and the deposit of it gives the
Brown only ." A cheque crossed not nego banker merely an equitable title , but if,
tiable warns the holder that he obtains no without notice of any prior equitable title,
better title than the person had from whom he gets the shares registered in his own
he obtained it. (See “ Nor NEGOTIABLE " name he secures the legal estate. (See
CHEQUE .) TRANSFER OF SHARES. )
In addition to cheques, bills , and promis- Certain American railroad certificates
sory notes, the following are examples of which pass by delivery when the transfer on
negotiable instruments : bank notes, bearer the back has been signed are not negotiable
bonds, treasury bills, foreign bonds, share instruments . (See AMERICAN RAILROAD
warrants and share certificates to bearer. A CERTIFICATES.)
postal order is not a negotiable instrument. Where a negotiable instrument is given as
Debentures, payable to bearer, of an security, a banker usually takes a memoran
English company have in recent years dum or agreement stating the purpose for
been held by the Courts to be negotiable which it is pledged, though a memorandum
instruments . It does not follow that is not absolutely necessary . A deed of
because an instrument is a negotiable transfer is not required for bearer bonds, as
instrument in the country where it has been they pass by mere delivery and the banker
created, that it will be regarded as such in obtains a valid security, even if theperson
this country . To make it a negotiable from whom he received the bonds had
instrument in this country there must be stolen them or the bonds formed part of a
evidence that it is the custom of merchants trust . But it is essential to his security that
to treat it as negotiable. Bigham , J., said when he took the bonds he had no notice of
(in Edelstein v. Schuler, 1902, 2 K.B. 144) : the defective title of the transferor . It
"di The time has now passed when the negoti would appear that mere negligence in taking
ability of bearer bonds, whether Government a negotiable instrument does not fix a
or trading bonds, foreign or English , can be transferee with notice of a defective title ;
called in question in the English Courts ." but the transferee must be able to show
For further remarks made by Bigham , J. that he took the security in good faith and
in his judgment in this case, see under for value. The law is very clearly laid down
DEBENTURE . in the case of London Joint Stock Bank v.
The difference between a document which Simmons (1892, A.C. 201 ) , and in the course
is a negotiable instrument and one which is of his elaborate judgment Lord Herschell
made use of the following expressions : “ It
not may be illustrated by, say, a bearer bond
of the Japanese Government and a bill of is surely of the very essence ofa negotiable
lading. The person to whom the bearer instrument that you may treat the person
bond is delivered, if he takes it in good faith, in possession of it as having authority to
and for value and without notice of any deal with it, be he agent or otherwise ,
defect in the transferor's title, obtains an unless you know to the contrary , and are
absolute right to the bond even if it should not compelled, in order to secure a good
subsequently appear that the transferor had title to yourself, to inquire into the nature
stolen it and had therefore no title to it. In of his title, or the extent of his authority.
the case of a bill of lading, which is a symbol ... I should be very sorry to see the
of goods the person to whom an indorsed doctrine of constructive notice introduced
bill of lading is delivered obtains a right to into the law of negotiable instruments.
448
NEG ) DICTIONARY OF BANKING (NEG

But regard to the facts of which the taker | money -lender. Thus, in the case of Easton
of such instruments had notice is most v. London Joint Stock Bank ( 1887, 34 Ch . D.
material in considering whether he took in 95 ), in the Court of Appeal, Bowen, L.J.,
good faith. If there be anything wanting said : “ Even if these bonds are not strictly
which excites the suspicion that there is negotiable, and do not possess the incidents
something wrong in the transaction, the of negotiable instruments which are recog
taker of the instrument is not acting in nised as such, nevertheless a further question
good faith if he shuts his eyes to the facts arises, whether S, by the way he has treated
presented to him and puts the suspicions these bonds, has not estopped himself from
aside without further inquiry. . . . It is easy denying their negotiability, whether he has
.

enough to make an elaborate presentation not - by placing for disposal, and with the
after the event of the speculations with intention that they should be transferred, in
which the bank managers might have occu- the hands of an agent of his own, bonds
pied themselves in reference to the capacity which on their veryface purport to create a
in which the broker who offered the bonds liability quite independentofanterior equities
as security for an advance held them . I between the company and the person who
think , however, they were not bound to takes them - really chosen to treat these
occupy their minds with any such specula- bonds as negotiable and to authorise his
tions. I apprehend that when a person agent to treat them as such . If the negoti
whose honesty there is no reason to doubt ability of these bonds by estoppel, so to
offers negotiable securities to a banker or speak, arises, that disposes of all difficulty
any other person, the only consideration that would arise owing to the seal being
likely to engage his attention is, whether attached to these bonds, because it is no
the security is sufficient to justify the ad- longer a question whether they are strictly
vance required . And I do not think the law speaking negotiable, but whether S has
lays upon him the obligation of making any chosen to treat them as such. The second
inquiry into the title of the person whom he way of looking at the matter may be dealt
finds in possession of them ; of course, if with from two points of view, but practically
there is anything to arouse suspicion, to lead they run into one another. You may say
to a doubt whether the person purporting that S having placed in the hands of his
to transfer them is justified in entering into agents these bonds with the intention that
the contemplated transaction, the case they should be , transferred beyond those
would be different, the existence of such agents, and held his agents out to the world
suspicion or doubt would be inconsistent as clothed with authority to transfer them
with good faith . And if no inquiry were as negotiable - cannot afterwards, by any
made, or if on inquiry the doubt were not unknown dealing or limitation of authority
removed and the suspicion dissipated , I which he has conferred on his agents, pre
should have no hesitation in holding that good judice those who took the bonds which have
faith was wanting in a person thus acting." been so floated . Or you may say, which I
In the case of bonds not strictly negotiable | think is a sound way of putting it, that as
instruments, if they contain words purport- regards S and the bank these bonds have
ing to make them transferable by delivery, become negotiable by estoppel, and there
or by indorsement and delivery, a holder fore S is precluded from saying the legal
may be estopped from denying their nego- title to these bonds is not in the bank .”
tiability if he has so dealt with them as to (See the case of Lloyds Bank, Ltd., and the
.

lead the person taking them to treat them Union of London & Smith's Bank, Ltd. v. .

as such . Where certain bonds had been Swiss Bankverein ( 1912) under FLOATERS.)
handed to an agent for the purpose of raising NEGOTIATED BACK . (See Section 37,
money, and an advance was obtained from a Bills of Exchange Act, 1882, under NEGOTIA
money-lender, who afterwards deposited the TION OF Bill Of Exchange.)
securities with bankers as cover for advances NEGOTIATION OF BILL OF EXCHANGE .
by the bankers to the money-lender, the The Bills of Exchange Act, 1882, Section 8,
bankers (the defendants) claimed to hold the s.s. 2 , provides that ,
securities for what was due to them by the “ A negotiable bill may be payable either
money -lender, and the plaintiffs claimed to order or to bearer. ”
that the securities were a security to the The negotiation of a bill is defined in
defendants for such an amount only as was Section 31 :
due by the principal and his agent to the “ (1) A bill is negotiated when it is
449
29-441535)
NEG ] DICTIONARY OF BANKING (NOA

transferred from one person to With regard to the words " unreasonable
another in such a manner as to lelength of time " in the above Section , see
to
holder PRESENTMENT FOR PAYMENT.
constitute the transferee the
of the bill. A bill may, in the ordinary course of busi
“ (2) A bill payable to bearer is negotiated ness, be negotiated back to a party already
(0
by delivery. liable thereon . By Section 37 :
(3) A bill payable to order is negotiated “ Where a bill is negotiated back to the
by the indorsement of the holder drawer, or to a prior indorser or to the
completed by delivery. acceptor, such party may, subject to the
“ (4) Where the holder of a bill payable provisions of this Act, re-issue and further
to his order transfers it for value negotiate the bill, but he is not entitled to
without indorsing it, the transfer enforce payment of the bill against any
gives the transferee such title as the interveningparty to whom he was previously
transferor had in the bill, and the liable.”
transferee in addition acquires the Where a bill has been transferred by in
right to have the indorsement of dorsement to, say, four different persons and
the transferor. the fourth indorser indorses it back to the
“ (5) Where any person is under obligation first, indorser number one cannot enforce
to indorse a bill in a representative payment against the second, third or fourth
capacity, he may indorse the indorsers, because each of those three
bill in such terms as to negative indorsers has a claim against him as the first
personal liability .” indorser. But if the first indorser negatived
By Section 36: his liability when indorsing the bill, by the
" (1) Where a bill is negotiable in its addition of the words " without recourse
origin it continues to be negotiable to his signature, he can enforce payment,
until it has been (a) restrictively when the bill is indorsed back to him , against
indorsed or (b) discharged by pay. the said second, third or fourth indorsers
ment or otherwise . because they have, in that case, no claim
00

(2) Where an overdue bill is negotiated , against him.

it can only be negotiated subject to By Section 8, s.s. 1 : " When a bill contains
any defect of title affecting it at its words prohibiting transfer, or indicating an
maturity, and thenceforward no intention that it should not be transfer
person who takes it can acquire or able, it is valid as between the parties
give a better title than that which thereto, but is not negotiable.” (See
the person from whom he took it had. BILL OF EXCHANGE, DELIVERY OF BILL,
“ (3) A bill payable on demand is deemed INDORSEMENT, TRANSFEROR BY DELIVERY.)
to be overdue within the meaning, NET, OR NETT, PROFIT. The profit
and for thepurposes,of this Section, which remains after the deduction of all
when it appears on the face of it expenses, and any losses which may have
to have been in circulation for been incurred .
an unreasonable length of time. NET, OR NETT, RENTAL . The rent of
What is an unreasonable length of a property after deduction of all taxes ,
time for this purpose is a question repairs, etc. (See VALUATION .)
of fact. NEW STYLE . (See Date.)
“ (4) Except where an indorsement bears NEXT FRIEND. (See under INFANTS.)
date after the maturity of the bill, NEXT -OF -KIN . (See INTESTACY.)
every negotiation is primâ facie NISI . Unless . (See GARNISHEE ORDER . )
deemed to have been effected before “ NO ACCOUNT.” These words are
the bill was overdue. written upon a cheque which is returned
“ (5) Where a bill which is not overdue by the drawee banker, because the drawer
has been dishonoured any person has no account with the banker.
who takes it with notice of the A person is liable to be charged with
dishonour takes it subject to any false pretence if he issues a cheque
defect of title attaching thereto drawn upon a banker where he has no
at the time of dishonour, but account.
nothing in this sub -section shall “ NO ADVICE .” These words (or " no
affect the rights of a holder in due orders " ) are often written upon a bill by a
course . " London banker when he has not received an
450
NOF) DICTIONARY OF BANKING (NON

advice to pay the bill domiciled with him by For further information , see TRANSFER
a customer of a country bank. OF SHARES .
Instead of the words, the abbreviation NOMINAL PAR . The value stated upon
“ N.A. ” is sometimes used . The danger of the face of a bond or certificate. If the
using those two letters was exhibited in an market price is above the nominal or face
unreported case in 1909, where60 it was sug- value, it is said to be “ above par " or " at
gested that they might mean no assets, " a premium ” ; if below , it is stated to be
no account ΟΙ no advice.” The bank " below par ” or “ at a discount.” (See 1)

claimed that they meant no advice . ” | PAR .)

Where any doubt could arise as to the NOMINAL PARTNER . A person some
meaning of letters, when written on a bill times continues his name in connection with
or cheque giving the reason why it is being a business, without having any actual
returned unpaid, it is much the wiser plan interest therein ; but if he leads anyone to
to write the words in full and so save mis- believe that he has an interest in the business ,
takes and misrepresentations. he may be held to be liable for the debts
“ NO FUNDS." These words, which are of the firm . (See LIMITED PARTNERSHIP ,
sometimes placed upon a cheque by a banker, PARTNERSHIPS.)
mean that the drawer has no funds in his NOMINAL VALUE . The value which
account with which to pay the cheque . appears upon the face of a certificate or
“ NO ORDERS.” Where a customer of a bond. The market value is what the security
country bank accepts a bill payable at a will sell for, and may be higher or lower than
London bank, and when the London bank the nominal or face value .
does not receive an advice from the country NOMINATIONS. ( See WILL.)
bank to pay the bill, it is dishonoured and NOMINATIVE BOND. In connection
usually marked " no orders ” or " no with the Government issue of National War
advice .” Bonds there were issued in 1918 £5 Nom
NOMINAL ACCOUNTS. Another name inative Bonds, repayable in 1927. This
for impersonal accounts (9.v.) . form of bond was designed in order to
NOMINAL CAPITAL . The amountautho- provide a security which could be obtained
rised as the capital in the memorandum of without formalities in exchange for cash
association of a joint stock company, called over the counter. The bond was provided
also the authorised or “ registered " with a counterfoil containing a request for
capital. ( See CAPITAL .) registration , which had to be filled up and
NOMINAL CONSIDERATION . Where forwarded to the Controller of the Post
shares are transferred without any money Office Savings Bank. The purchaser's name
being paid for them , as where a holder had also to be inserted in the bond .
transfers them to a bank or to the nominees NON- BUSINESS DAYS. For the pur
of a bank as security for an overdraft or a poses of the Bills of Exchange Act, 1882,
loan, a nominal consideration, generally five non -business days are :-Sunday, Good
shillings or ten shillings, is inserted in the Friday, Christmas Day, a bank holiday
document of transfer . under the Bank Holidays Act, 1871 , or Acts
Such aa transfer is subject to a stamp duty amending it, a day appointed by Royal
of ten shillings. proclamation as a public fast or thanksgiving
A conveyance or transfer operating as a day. Any other day is aa business day. (See
voluntary disposition inter vivos is charge- Section 92 under Bills OF EXCHANGE ACT,
able with the same stamp duty as if it were a 1882.)
conveyance or transfer on sale, with the sub- NON -CUMULATIVE DIVIDEND . Where
stitution in each case of the value of the the dividend upon preference shares is
property conveyed or transferred for the payable only out of the profits of each
amount or value of the consideration for the separate year, it is a non -cumulative divi
sale. (See Section 74 of the Finance ( 1909– dend . On the other hand, if the profits of
10) Act, 1910, under heading CONVEYANCE .) succeeding years may be employed to pay
But a conveyance or transfer made for up all dividends which have accrued on the
nominal consideration for the purpose of preference shares, before the ordinary shares
securing the repayment of an advance or get anything the dividend is said to be
loan is not chargeable with the duty imposed cumulative. (See PREFERENCE SHARES.)
by that section (see s.s. 6 of Section 74 ) , the NON -NEGOTIABLE INSTRUMENTS . (See
duty remaining at 10s. NEGOTIABLE INSTRUMENTS.)
451
NON ) DICTIONARY OF BANKING (NOT

NON - TRADING PARTNERSHIP . A liable for the amount to the rightful owner
member of a non -trading partnership ( such of the cheque, but the banker paying the
as solicitors, farmers, medical men) has not cheque is protected by Section 80 of the
an implied authority to bind the firm by Bills of Exchange Act, provided it is paid
signing the firm's name on a bill of exchange. in accordance with that Section . The banker
In an ordinary trading partnership, however, collecting such a cheque for a customer is
one partner has such an implied authority. protected by Section 82. The true owner
NORA or NORAS. A Stock Exchange cannot recover from the banker. In Morison
name for Great Northern Railway deferred v. London County and Westminster Bank,
ordinary stock . (See YORK PREFERRED .) Lid . (Court of Appeal, April 8, 1914, Times,)
NOT NEGOTIABLE BILL. A bill is not the Lord Chief Justice said : “ The pro
negotiable when it contains words prohibit- tection of Section 82 was afforded to crossed
.

ing transfer, or indicating an intention that cheques marked ' not negotiable ' as well as
it should not be transferable, but it is valid to cheques not so marked. It was certainly
as between the parties thereto. (Section 8, not conclusive evidence of negligence against
s.s. 1 , Bills of Exchange Act, 1882.) a banker who collected crossed cheques so
“ NOT NEGOTIABLE " CHEQUE. A marked . " (See COLLECTING BANKER,
cheque which is crossed generally or specially CROSSED CHEQUE .)
may have the words “ not negotiable " added But if a banker gives cash for a “ not
thereto , and any holder may add those negotiable ” cheque drawn upon another
words . A cheque crossed " not negotiable banker he is not protected by the Act, and
is not a “ negotiable instrument " (9.v. ) . will be liable to the true owner at any time
The Bills of Exchange Act, 1882, does not within six years, if there should be a flaw
state whether, or not, it is necessary that the in the title, e.g. if the cheque has been
words not negotiable " be placed between stolen or one of the indorsements is forged .
the transverse lines. In practice they are Cheques are frequently crossed not
found sometimes between , and at other negotiable " without the addition of trans
times either above or below the lines . verse lines, or the name of a banker across
“ Where a person takes a crossed cheque the face. In such cases the words by
which bears on it the words ' not negoti- | themselves do not constitute a crossing in
able ' he shall not have and shall not be accordance with the Bills of Exchange Act,
capable of giving a better title to the cheque and they may be ignored.
than that which the person from whom he took It is very desirable, and is in fact cus
it had. "(Section 81, Bills of Exchange Act, tomary, that a banker to whom a cheque is
1882.) This meaning of the words is peculiar specially crossed should place his stamp
to crossed cheques, as defined in the Bills of upon the cheque as evidence to the paying
Exchange Act ; the ordinary meaning of banker that the cheque has been through
“ not negotiable ” is not transferable . A the hands of that banker, but the paying
cheque drawn payable to “ John Brown | banker is not justified in refusing paymentof
only ” is an example of a cheque which a cheque received through the clearing
cannot be transferred ; but the words " not simply on the ground that the stamp of the
negotiable " do not mean that the cheque on banker to whom it is crossed is not upon the
which those words are written cannot be cheque.
transferred from one person to another. A Where a “cheque ” contains, after the
“ not negotiable ” cheque may be trans- order to pay, the words “ provided the form
ferred just as freely as any other cheque, but of receipt at the foot hereof is duly stamped,
if the transferor has no title to the cheque, signed and dated ,” it is not a negotiable
a transferee cannot obtain , even if he gives instrument. In Bavins , junr ., & Sims v .
value for it, a better title to it than the London and South Western Bank (1900 , 1 Q.B.
transferor had. 270) , where such a " cheque had been
The words “ not negotiable really act stolen and the receipt and indorsement
as a warning to anyone to whom the cheque forged, it was held that the order for pay
is offered, that, if he takes it, he must take it ment, not being unconditional in its terms,
subject to any defect there may be in the was not a cheque, and therefore it was
title. If such a cheque has been stolen , and not a negotiable instrument. (See CHEQUE,
into
Brown,who
payment givesa value
through foritJohnandoBrown
banker, btainsis NOT PROVIDEDFOR.” An answer
sometimes written by a banker on a cheque
452
NOT] DICTIONARY OF BANKING (NOT

which is being returned unpaid for the similar to the Bank Charter Act, 1844 .
reason that the drawer has failed to pro- Notes in Scotland and Ireland may be for one
vide funds to meet it. The abbreviation pound and upwards, but in England the
occasionally used is “ N.P.” or “ N.P.F.” lowest legal amount is £ 5. In 1914, on the
“ NOT SUFFICIENT.” When the funds outbreak of war with Germany, the Govern
in a customer's account are insufficient to ment issued notes for £1 and 10s.
meet a cheque which has been presented to Scotch and Irish banks may have an office
the banker through the clearing or otherwise, in London without losing the right to issue
the cheque, on being returned unpaid, is own notes, though the right cannot be
sometimes marked with the words " not exercised by the London offices.
1)
sufficient," or “ not sufficient funds," or The note issue of a bank means the
the abbreviations “ N.S." or " N.S.F." total amount of own notes which the bank is
The answer Refer to drawer ” ( R /D ) is legally authorised to issue. The expression
preferable. note circulation is generally used to
The deficiency must, however, on no mean the total of the bank's own notes which
account be stated . are actually in the hands of the public.
NOTARIAL ACT. An act which is Through amalgamations, the last note
required by law to be done by a notary. issue of a joint stock bank in England
By the Stamp Act, 1891, the stamp duty disappeared in 1919, and of a private bank
is : in 1921. (See BANK OF ISSUE .)
NOTARIAL Act of any kind whatso- £ s. d. NOTE OF HAND. A name occasionally
ever ( except a protest of a bill of given to a promissory note (q.v.) .
exchange or promissory note or NOTE REGISTER . The note register is
any notarial instrument to be the book in which a bank , authorisedto issue
06

expeded and recorded in any its own notes, keeps a record of all own
notes ” which are issued . Particulars are
register of sasines).
0 1 0
.

kept therein of the dates which appear on

And see PROTEST, Seisin , and Section the face of the notes, the dates when they
90 , under PROTEST . were first put into circulation , the names
NOTARY PUBLIC. Originally a notary of the persons whose signatures are upon the
was a person who only took notes or minutes notes, and the individual numbers, the
and made drafts of writings. He was called numbers being set forth in columns in strict
by the Romans notarius. order. When notes are, for any reason ,
The duty of a notary, so far as a banker is withdrawn from circulation, each number is
concerned , is to present dishonoured bills compared with the register and the date
and note " them for non -acceptance or of its withdrawal entered therein opposite
non -payment, and, if necessary, afterwards the number. The notes are then , after the
to extend the noting into a protest. (See register has been checked to see that all
NOTING .) have been correctly marked off, ready to be
NOTE CIRCULATION. The total amount destroyed. The note account in the general
of notes of a bank which are actually in the ledger is debited with all notes withdrawn
hands of the public The “ note issue and credited with all notes put into circula
represents the amount of own notes which tion . The balance of the note account re
a bank is authorised to issue, presents the amount of notes on hand and
NOTE ISSUE . Certain banks have the in circulation ; the amount in circulation
privilege of issuing their own notes, but the being, of course, the difference between the
amount of the note issue of an English bank balance of the account and the notes on
is strictly limited to the amount certified by hand . The total of the outstanding entries in
the Commissioners of Inland Revenue as the register should , of course , agree with
being the average amount of the notes of the the balance of the note account. (See BANK
bank in circulation during a period of Notes.)
twelve weeks preceding April 27, 1844. The In some non - issuing banks, the note
Bank Charter Act of 1844 regulates the register means the book in which particulars
note issues in England. of Bank of England notes are entered .
The issue of bank notes in Scotland is The last note issue of a joint stock bank
regulated by 8 & 9 Vict. c. 38, and in Ireland in England disappeared in 1919, and of a
by 8 & 9 Vict. c. 37. Both Acts were passed private bank in 1921. (See BANK OF
in 1845, and the regulations are somewhat ISSUE.)
453
NOT) DICTIONARY OF BANKING (NOT

NOTE RETURN . Every banker who circulation during the week ending Saturday,
issues his own notes must render weekly the day of 19 .
to the Commissioners of Inland Revenue a Monday .
return showing the amount of his notes in Tuesday .
circulation on each day of the week and Wednesday
showing also the average for the week , and
at the end of each four weeks the banker Thursday
Friday
must show the average during the four Saturday .
weeks. The words of the Act (Section 18
of 7 & 8 Vict. c. 32) are : 6)
“ Every banker in England and Wales Average of the week .
who shall issue bank notes shall, on some
one day in every week (such day to befixed of (To
eachbe period
annexed
of tofourthisweeks
account
.) at the end
by theCommissioners of Stamps and Taxes).
(now Inland Revenue), transmit to the said Amount of notes authorised by law , £
Commissioners an account of the amount of Average amount in circulation during the
the bank notes of such banker in circulation four weeks ending as above, £
I, being ( the banker, chief cashier,
on every day during the week ending on the
next preceding Saturday, and also an managing director, or partner of the
account of the average amount of the bank bank, as the case may be), do hereby certify
notes of such banker in circulation during that theabove is a true account of the notes
the same week ; and on completing the first of the said bank in circulation during the
period of four weeks, and so on completing week above written . (Signed)
each successive period of four weeks, every Dated the day of 19
such banker shall annex to such account the
average amount of bank notes of such Section 19 of the same Act explains that
banker in circulation during the said four " for the purpose of ascertaining themonthly
weeks, and also the amount of bank notes average amount of bank notes of each banker
which such banker is authorised to issue in circulation the aggregate of the amount of
under the provisions of this Act ; and every bank notes of each such banker in circulation
such account shall be verified by the signa- on every day of business during the first
ture of such banker or his chief cashier, complete period of four weeks next after
or, in the case of a company or partnership , the 10th day of October, 1844, such period
by the signature of a managing director or ending on a Saturday, shall be divided by
partner or chief cashier of such company or the number of days of business in such four
partnership , and shall be made in the form weeks, and the average so ascertained shall
to this Act annexed marked ( B ) ; and so be deemed to be the average of bank notes
much of the said return as states the weekly of each such banker in circulation during
average amount of the notes of such bank | such period of four weeks, and so in each
shall be published by the said Commissioners successive period of four weeks, and such
in the next succeeding London Gazette in average is not to exceed the amount certi
which the same may be conveniently in- fied by the Commissioners of Stamps and
serted ; and if any such banker shall neglect Taxes as aforesaid ."
or refuse to render any such account in the The period during which notes and bills
form and at the time required by this Act, are deemed to be in circulation is dealt with
or shall at any time render a false account , in 9 Geo. IV, c. 23, Section 8 :
such banker shall forfeit the sum of £ 100 for " Every unstamped promissory note pay
every such offence." able to the bearer on demand, issued under
the provisions of this Act, shall, for the
SCHEDULE B. purpose of payment of duty, be deemed to
Name and title as set forth in the be in circulation from the day of the issuing
licence Bank . to the day of the cancelling thereof, both
Name of the firm Firm . days inclusive, excepting, nevertheless, the
Insert head office, or principal place of period during which such note shall be in
issue Place. the hands of the banker or bankers who
first issued the same, or by whom the same
An account pursuant to the Act 7 & 8 shall be expressed to be payable ; and every
Vict. c. 32, of the notes of the said bank in unstamped promissory note payable to order,
454
NOT) DICTIONARY OF BANKING [NOT

and every unstamped bill of exchange so account, to the best of the knowledge and
as aforesaid issued, shall, for the purpose belief of this deponent, of the amount or
aforesaid, be deemed to be in circulation value of all unstamped Promissory Notes
from the day of the issuing to the day of the and Bills of Exchange in circulation on
payment thereof, both days inclusive: | Saturday in every week, from the 1st of
Provided always, that every such promissory January , 19 , to the 25th of June, 19 , both
note payable to order, and bill of exchange days inclusive, together with the average
as aforesaid , which shall be paid in less than amountof such Notes and Bills of Exchange
seven days from the issuing thereof, shall, so in circulation according to such account.
for the purpose aforesaid , be included in the Sworn before me, this
account of notes and bills in circulation on Signature
the Saturday next after the day of the day of July, 19 of Deponent. 3

issuing thereof as if the same were then at in the

actually in circulation ." County of
Within fourteen days after the first day
of January and first day of July a half- Justice the Peace
yearly return of all unstamped promissory for theCounty of
notes and bills of exchange must be rendered .
The return is as follows : “ Any Note, payable to order, and Bill of
HALF -YEARLY RETURN
Exchange,
UNSTAMPED shown
OF for should be included
each Saturday in the
from the amount
date of
PROMISSORY NOTES AND BILLS OP issue to the date of payment, both days
EXCHANGE .
inclusive. For instance, a Bill either issued ,
Bank. remaining in circulation, or paid on a
An account of the amount or value of all particular Saturday, must be included in
the unstamped Promissory Notes and Bills the statement for that day.
of Exchange of Messrs. of Any Note, payable to order, and Bill of
Bankers, issued under the provisions of 9 Exchange, which shall be both issued and
Geo. IV, c. 23, and in circulation on Saturday paid between one Saturday and the succeed
in every week, for the half- year preceding ing one, should be included in the amount in
the 1st day of July, 19 .
together with the circulation on the Saturday next after the
average amount or value thereof, according day of issuing.
to the said account. “ This account, which should include the
issues at all the places of business, must be
Amount of Amount of Notes payable verified by the oath or affirmation of the
Date . Bank Notes to Order and Bills of Ex
in circulation . change in circulation . banker or one of the bankers , or of the
cashier, accountant, or chief clerk of the
bank ; and it should be sent by post,
19 £ £ s. d . addressed to the Controller of Stamps,
January 1
8 Somerset House, London , W.C., being
16 marked on the outside ' Bankers' Return .'
22 “ The duty, which is 3s. 6d. for every £ 100,
29
February 5 or fractional part of £100 of the half-yearly
( and so on up average, should be transferred to the credit
to) June 25 . of the Commissioners of Inland Revenue, at
the Bank of England, within fourteen days
after the 1st of July, 19 , and advice thereof
.

should be given in the accompanying form .

Notes “ NOTE . - The Return will not be accepted
if it be verified by any other officer of the
26 ) bank than those above named ."
Average £ Duty £ By Section 20 (7 & 8 Vict. c. 32) all books
or accounts in any way relating to a bank's
note issue must be open for the inspection
being the banker or bankers, and examination , at all seasonable times, of
or the cashier, accountant, or chief clerk any officer of stamp duties authorised in
of the above -named bank, maketh oath and writing and signed by the Commissioners of
saith, that the aforegoing is a just and true Stamps and Taxes or any two of them . And
455
NOT] DICTIONARY OF BANKING [NOT

any banker declining to permit such an a second mortgage, the mortgagor thereby
inspection or to produce any book or other releases the first mortgagee from his obliga
evidence as is required shall forfeit the sum tion to make further advances. Whatever
of £ 100 for every such offence. “ Provided prevents the mortgagor from giving to the
always that the said Commissioners shall first mortgagee the agreed security for his
not exercise the powers aforesaid without further advances releases the first mort
the consent of the Treasury." gagee from his obligation to make them . "
It is important for a banker to keep a In Hopkinson v. Rolt (1861, 9 H.L.C. 514) ,
strict watch upon the circulation because the bankers contended that they had a right
if the monthly average circulation shall at to make further advances after notice of a
any time exceed the authorised issue, the second charge, but it was held that their
banker shall in every such case forfeit a charge was limited to the amount of the
sum equal to the amount by which the debt at the time that they received the
average monthly circulation shall have notice of the second charge. Lord Campbell
sai
exceeded the amount which such banker was d :
authorised to issue. (Section 17, 7 & 8 Vict . “ Although the mortgagor has parted
c. 32.) (See Bank Notes, LICENCE . ) with the legal interest in the hereditaments
The last note issue of a joint stock bank mortgaged, he remains the equitable owner
in England disappeared in 1919 and of a of allhis interest not transferred beneficially
private bank in 1921. (See Bank Of Issue.) to the mortgagee, and he may still deal
NOTICE IN LIEU OF DISTRINGAS. (See with his property in any way consistent
DISTRINGAS .) with the rights of the mortgagee . The
NOTICE OF MEETING . (See CLEAR first mortgagee is secure as to past ad
DAYS .) vances, and he is not under any obligation
NOTICE OF MORTGAGE. If, when a to make any further advances . The
banker takes a charge upon a property as hardship upon bankers from this view of the
security for an advance, he receives notice subject atonce vanishes when we consider
of a charge already subsisting on the land, that the security of the first mortgage is not
the banker's charge, even if it is a legal impaired without notice of a second, and
mortgage, ranks after the charge of which that when this notice comes , the bankers
he has notice. When a second charge is have only to consider ( as they do as often
taken , the banker should give notice of his as they discount aa bill of exchange) what is
mortgage to the first mortgagee. the credit of their customer, and whether
If, after having taken a security, a the proposed transaction is likely to lead to
banker receives notice that a second charge profit or to loss."
has been granted upon the same land, any In Deeley v. Lloyds Bank, Ltd. ( 1912,
advance that the banker may make, after 107 L. T. 465) , Lord Shaw (in the decision
receipt of such notice, will not be recover- in the House of Lords), referring to the
able out of the security in priority to the rights arising between a bank which has
person holding the second charge. It obtained a first mortgage over the property
should be particularly noted that all pay- of a customer, and a second mortgagee who
ments to credit after the notice will go to has obtained a second mortgage over the
reduce the debt against that security, and same property and has given notice thereof
all withdrawals will constitute a fresh to the bank as first mortgagee, stated :
unsecured advance. The fact that the “ 1. In the case of a grant of a mortgage
banker's memorandum of deposit stated to a bank by a customer in security of
that the security was to cover future ad advances made and to be made, there still
vances, or that the fixed amount which the remains in the customer an estate capable
banker agreed to lend had not all been of being disposed of by sale or affected by
taken, would not make any difference. subsequent mortgage ; and if a second
In West v . Williams ( 1899, 1 Ch. 132), mortgage is granted and notice given to the
Lindley , M.R., said : “ Even if the first first mortgagee, it is contrary to good faith
mortgagee has agreed to make further ad- upon the part of the bank as first mortgagee
vances on the property mortgaged to him , to make in its own favour encroachments
the mortgagor is under no obligation to take upon that remanent estate which would in
further advances from him , and from no effect enlarge the scope of the first mortgage
one else ; and if the mortgagor chooses to and make itstand as cover for fresh advances .
borrow from someone else and to give him “ 2. It is also contrary to good faith upon
456
NOT) DICTIONARY OF BANKING
the part of the mortgagor himself, who has
granted two successive mortgages, to do as
anything which would facilitate the enlarge-
ment of the first mortgage to the detriment
of the second, or would minimise the value
of that remanent estate which as mortgagor
he had assigned by the second mortgage
subject to the first.
" 3. After notice to the bank of a second
mortgage by the customer, the debit is
struck at the date of the notice, and in the
ordinary case, that is to say where an
account is merely continued without any
alteration, or where no specific appropriation
of fresh payments is made, such payments
are credited to the earliest items onthe debit
side of the account, and continued so to be
credited until the balance secured under the
first mortgage is extinguished .
4. Upon the extinction of the first mort .
gage by the credit payments, the later mort.
gage, its predecessor being thus satisfied,
attains priority, and, subject to the priority
of the second mortgage, the mortgagor still
remains answerable as debtor, and his pro-
perty, or any remanent value thereof covered
by the mortgage, remains the security to the
bank. "
In the above case no change had been
made by the bank in the direction either of
stopping the account or of appropriating had notice of a change in the beneficial
fresh payments, until after the time when, ownership werenot a charge on that owner
on the principle
of Clayton's case (q.v.),
the debt due to the bank had been extin-
guished . The bank might, if they pleased,
have taken the payments on such terms as
to prevent the application of the rule of
Clayton's case " but, not having done so ,
the old balance was paid off.
On receipt of notice of a second charge,
the account should be broken and the
advance allowed to remain standing against
the security, until it is repaid or some
fresh arrangement is made, a new account
being opened for future transactions.
If there is a credit account affected as well
as the debit account, both should be broken .
Any overdraft on the new account would,
of course, be unsecured , unless fresh
security were given . The security in such
a
case should not be given up to the
debtor without the consent of the second
mortgagee .
The same rule applies, if a banker has
notice that the owner of the land, the deeds
of which are lodged with him as security.
has contracted to sell the land. After
the notice has been received , all sums paid
457
(NOT
to credit discharge that security to the
debits are unsecured so far as that particu
lar security is concerned . (See case London
and County Bank v. Ratcliffe, below .)
In reference to the decision of the above
case of Deeley v. Lloyds Bank, which went
against the bank, the Journal of the Insti
tute of Bankers (Dec., 1912, p. 531) states
that the Council of the Institute " is advised
that upon receipt of notice of a second
charge, or in other circumstances in which
further advances may result in the postpone
ment of the banker's charge to that of
another person , the account should not only
be broken , but, whenever possible, the
written consent of the customer should be
obtained to the opening of the new account,
and a declaration signed that any credit
balance which there may be on the new
account shall not be appropriated to the
old secured account.”
In London and County Banking Company,
Limited v. Ratcliffe ( 1881, 6 A.C. 722) , where
a person purchased land , with notice that
the title deeds were deposited with a banker
as a security , James, L.J. , in the course of
his judgment in the Court of Appeal (of
which there is no recognised report) said
that the advances made after the bankers
ship. It was true that there had always
been a large balance due to the bankers,
but according to the rule in “ Clayton's case ”
the credits must be attributed to the debits
in order of date, there being nothing special
in the case to exempt it from the operation
of that rule. If the bankers had been minded
to substitute for a security on the property,
a charge on the purchase money, it would
have been very easy for them to do so by
getting from the client a direction to the
purchaser to pay them the purchase money
and giving due notice of it to the purchaser ;
this they had not done and they had failed
to establish a charge on theproperty ( see
Hutchison , vol. iii, p . 178) . In the House
of Lords, Lord Blackburn said : “ This , in
effect, raises the question , whether anyone
purchasing land, with notice that the title
deeds have been deposited with a bank, is
bound to inquire whether the bank has,
after receiving notice of this purchase, made
fresh advances on the security of the unpaid
vendor's lien ; or whether the burden does
not lie on the bank, advancing on the
security of the unpaid vendor's lien, to give
NOT ] DICTIONARY OF BANKING ( NOT

notice to the purchaser, that it has so done, to his knowledge if such

or intends so to do. No case was cited in inquiries and inspections
which any such point had been discussed ; had been made as ought
but I think both convenience and principle reasonably to have been
strongly point to the burden of giving made by him ; or
notice lying on the bank, and not on the “ (b) In the same transaction with
purchaser, whose inquiries might often be respect to which a question
annoying and impertinent." of notice to the purchaser
Where property which was subject to two arises, it has come to the
mortgages, and the first mortgagees had knowledge of his counsel, as
received notice of the second mortgage,
.
such, or of his solicitor, or
was sold by the first mortgagees, who, after other agent, as such , or
satisfying their own charge, forgot about would have come to the
the notice they had received, and paid the knowledge of his solicitor, or
surplus of the proceeds of the sale to the other agent, as such , if such
mortgagor, it was held that they were liable inquiries and inspections
to the second mortgagee for the amount had been made as ought
of his mortgage to the extent of the surplus reasonably to have been
which remained after their own debt was made by the solicitor or
discharged . See West London Commercial other agent. "
Bank v. Reliance Permanent Building Society A second mortgagee should always give
( 1885, 29 Ch. D. 954 ) . When a first mort- notice of his charge to the first mortgagee.
gagee, with notice of a second mortgage , is Such notice will prevent the first mortgagee
paid off, he becomes trustee of the legal from making any further advances upon the
estate for the second mortgagee. See under property or buying up any mortgage subse
RECONVEYANCE . quent to the second and tacking it to his own
There are two kinds of notice - actual first mortgage. A second mortgagee is, how
notice, as in the cases above referred to, ever, not bound to give notice of his charge
where the banker is informed verbally or to a prior mortgagee. In Grierson v. National
receives notice in writing, and constructive Provincial Bank of England, Ltd. ( 1913,
notice. If by a perusal of the title deeds 108 L. T. 632) , Joyce, J., said : “ This is a
lodged as security, the banker can ascertain question of priority between two mortgages,
the existence of a prior charge upon the the earlier, that of August 20 , 1894 , being
land, either directly, or by reference to some a legal mortgage of various properties,
will or other deed, he has constructive including a leasehold or leaseholds, subject
notice of the contents of the charge recited charge in favour of
to a prior equitable
therein, or if he receives any information G. and M's bank, the legal mortgage being
which should reasonably give him a hint of made expressly subject to such charge, and
the existence of a charge and lead him to the equitable mortgagee holding, of course,
find out about it, it is also a constructive the lease and other title deeds, if any ."
notice. All clues should be carefully No notice of the legal mortgage was given
followed up . A tiny thread may lead the to the prior equitable mortgagees. In 1895
way to an important fact. A banker is the mortgagor paid off G. and M.'s equitable
not legally fixed with notice of a charge charge and received back the title deeds.
affecting the security of his customer, by The mortgagor subsequently deposited the
any information regarding that property title deeds with the N. P. B. of E. by way
which might be included in deeds deposited of equitable mortgage without disclosing
by other customers, but he would naturally the legal mortgage. In 1911 the N. P. B. of E.
give heed to any such information which declined to hand over the title deeds to the
might come to his notice . legal mortgagee's representatives on the
With regard to restriction on construc- ground that, through the negligence of the
tive notice, the Conveyancing Act, 1882, mortgagee in omitting to give notice to
Section 3 provides : G. and M.'s Bank of his security or to
“ ( 1 ) A purchaser shall not be prejudicially obtain the title deeds, they had forfeited
affected by notice of any instru- their priority. Joyce , J., said : “ It must
ment, fact, or thing unless : be taken as well settled , whether we like
“ (a ) It is within his own know- it or not, that a second mortgagee, however
ledge, or would have come expedient it may be for him to give notice
458
NOT ] DICTIONARY OF BANKING (NOT

of his security to any prior mortgagee when as the office of a solicitor, that is to say,
he is aware of his existence, is in no way that a man has a solicitor, not as a person
bound to do so, and that his position in whom he is employing to do some particular
law and equity will not be in any way business for him, either conveyancing,
prejudiced by the omission , if it can be so scrivening, or conducting an action, but as
called, to give such notice. The result is an official solicitor, and that because a
that nothing has happened to take away solicitor has been in the habit of acting for
or affect the original priority of the legal him , or been employed to do something for
mortgagee, although his security has been him , that solicitor is his agent to bind him
improved by the payment made by the by anything he says, or by receiving notices
mortgagor in 1895 to G. and M.'s Bank. or information . I am prepared, there
... Thus it appears that the legal mort- fore, to say that before a notice of this kind
gagee has, in truth, derived a considerable of a charge upon the property can be of the
advantage from not giving notice of his slightest validity it must be given, if given
incumbrance to the prior mortgagee. The to a solicitor, to a solicitor who is actually
result is, in my opinion, that the legal either expressly or plainly authorised as
mortgagee retains his priority . ” In face of agent to receive the notice of that incum
that can be safe , brance.".
but the Law Times (May, 1913, p. 116) DFAs to thedeposit by a customer of a
pointed out that such a combination of mortgage to him , see under MORTGAGE.
circumstances as occurred in the Grierson Where a reversionary interest is mort
case is very rare. It is seldom that a person gaged, notice should be given to the trustees
takes a legal mortgage without getting the under the will.
title deeds, and it is equally rare for a When an assignment of a life policy is
second mortgagee, even though legal, not to taken , notice must be given to the insurance
give notice of his mortgage to the prior company. (See LIFE Policy.)
mortgagee. (See TACKING .) With respect to the registration of charges,
Equitable charges rank according to the see LAND REGISTRY ; LAND REGISTRY
date of the charge, not according to the (MIDDLESEX Deeds) ; REGISTRATION OP
date of notice. If a banker receives a third MORTGAGES AND CHARGES ; YORKSHIRE
charge upon a property, he cannot, by REGISTRY OF Deeds.
giving notice to the first mortgagee, before Notice of the assignment of a debt passes
the second mortgagee gives notice, obtain the legal right to such debt from the date of
priority over the second mortgage. such notice. (See DEBTS, ASSIGNMENT OF.)
Where notice is required to be sent to (See LIEN , MORTGAGE, PRIORITIES,
mortgagees or trustees, a separate notice TACKING.)
should be sent to each one and an acceptance NOTING. Where a bill has been dis
of notice received from each. In the case of honoured by non-acceptance or by non
Saffron Walden Building Society v . Rayner payment it may be handed by the holder to
( 1880, 14 Ch. D. 406) , it was held that notice a notary public to be noted. The notary
to the solicitor of trustees or mortgagees did presents the bill again to the drawee for
not bind them . James, L.J., in the course of acceptance, or to the acceptor for payment,
his judgment, said : “ If the solicitors were
or to the bank where accepted payable , and
to receive notice in such a way as to affect
if acceptance or payment is still not obtained
the trustees with all the consequences of the notary makes an official note of the fact
that notice, it would be imposing a most upon the bill, or upon a slip which is
tremendous burthen upon trustees to say | attached to the bill. In the case of an inland
that merely because they have employed a bill, it is not necessary to note or protest
solicitor (the trustees having a trust fund) any such bill in order to preserve the re
in effecting an investment of the trust fund course against the drawer or indorsers .
upon mortgage, they were in some sense (Section 51, s.s. 1 , Bills of Exchange Act,
agents of the trustees to receive any notices 1882.) When an inland bill is noted, it is
of subsequent incumbrances or dealings by generally with the idea of getting someone
the cestuis que trustent of that trust fund. to accept the bill for the honour of one of the
I find it utterly impossible to arrive at such parties to it. A banker does not usually
a conclusion. We have all had occasion note a dishonoured inland bill which he has
several times to express our opinion of the received for collection, unless instructed to
prevailing fallacy that there is such a thing do so by his customer or correspondent.
459
NOT] DICTIONARY OF BANKING (NUR

When " N /N " is marked on a bill it signifies | assent agreeing to the transfer of their
“ not to be noted .” obligations from the one bank to the other.
In the case of a foreign bill, however, Until the form of assent is signed, the debt,
which has been dishonoured by non -accept- or security, should not be transferred from
ance or non -payment, it must, in order to the one bank to the other.
charge the drawer and indorsers, be duly Where a creditor of the old bank has
protested for non -acceptance or non -pay- received notice of the amalgamation, Mr.
ment (Section 51, s.s. 2 ), unless instructions Justice Buckley says (in his work on " Com
are received from the remitter of the bill pany Law") : “ Although he do not by an
that it is not to be noted or protested . express agreement assent to the novation,
Noting is a preparatory step to the protest. yet if he acts upon it, and takes the benefits
(See PROTEST.) Bills to be noted are, in which he couldonly be entitled to upon the
some country banks, sent to the notary assumption that he has assented to it, there
before the close of business, but in London will be evidence on which the Court may find,
it is the practice of bankers to send them after and, unless there is something to contradict
the close of business, thus giving the acceptor it , ought to find, that he has agreed to
up till that hour the opportunity to meet take the liability of the new company in
them. A bill may be noted on the day ofits substitution for that of the old one."
dishonour, and must be noted not later than In Bradford Old Bank v. Sutcliffe ( 1918,
the next succeeding business day (see Bills 2 K.B. 833) where it was argued that a
OF EXCHANGE, TIME OF NOTING , ACT, 1917) ; surety was discharged by a novation of the
the protest may be subsequently extended debt, by which theliability of the customer
as of the date of the noting. (Section 51 , to the plaintiffs was discharged and another
s.s. 4.) Delay in noting is excused when the bank (with whom the plaintiffs had amal
delay is caused by circumstances beyond the gamated) became the creditor, Pickford,
control of the holder and not imputable to L.J., in the Court of Appeal, in the course
his default, misconduct or negligence. (Sec- of his judgment, said there can be no doubt
tion 51 , s.s. 9. ) that a novation by which the original debtor
A holder of a dishonoured bill is entitled is released from his debt discharges the
to recover the expenses of noting from any surety , but a transfer of an existing and
party liable on thebill. (See Section 57, under ascertained debt to another creditor stands
DISHONOUR OF BILL OF EXCHANGE.) on a different footing. In order to discharge
If the services of a notary cannot be the surety, it must effect a material altera
obtained at the place where a bill is dis- tion in his position. Here the debt was
honoured , the Bills of Exchange Act, 1882, ascertained as long ago as 1899, and the
provides that any householder or substantial alleged novation did not take place until
resident of the place may, in the presence 1907, the original debtor still remaining
of two witnesses, give a certificate attesting liable for the debt. It has been clearly
the dishonour of the bill, which shall operate decided that an assignment of the debt
as if it were a formal protest of the bill. (See does not discharge the surety . For all pur
BILL OF EXCHANGE, PROTEST.) poses, so far as the interests of the surety
NOTOUR. In Scotland , a “ notour bank- are concerned , a novation by which the
rupt ” is an expression meaning a bankrupt original creditor releases the debtor has no
who is publicly acknowledged to beinsolvent. greater effect than an assignment of the
NOVATION. Novation is the substitution debt with notice to the surety. In either
of a new obligation for an old one, or of a case , the transferee of the debt, whether
new debtor for an old one. “ There being by novation or assignment, is the person
a contract in existence , some new contract with whom the surety has to deal ; and as
is substituted for it, either between the the liability is already ascertained , it is a
same parties ( for that might be) or between matter of no consequence as to whom he
different parties, the consideration mutually has to pay it.
being the discharge of the old contract. NUDUM PACTUM . (See under
( Lord Selborne in Scarfe v. Jardine, 1882, CONTRACTS.)
1 A.C. 345.) NURSING AN ACCOUNT. An operation
Where one bank amalgamates with which , on the one hand, may result in a
another, the debtors of the old bank, as banker extricating himself from making a
well as those who have given security in bad debt,but which, on the other hand, may
any form , are required to sign a form of result merely in throwing good money after
460
NUR ] DICTIONARY OF BANKING [OFF

bad. It is a common saying that the first are always very much against the success of
loss is the least, but as no banker relishes the the result.”
idea of a bad debt it requires a considerable OFFICE COPY . An office, or certified ,
amount of courage to face a debt which , to all
appearances, is lost money. Thetempta- copy of a will should bear a certificate in the
tion is very strong " to nurse " the account ; following form :
in
copy
various ways to bring it back again to with the original will deposited in this
healthy life,in the hopethat the money, or, Registry
this
andthat
of
it is a true copy. Dated
19
at any rate, some portion of it, may ulti District Registrar.
mately be recovered . A banker may try
to get a reduction of the debt by periodical Office copies of special resolutions of com
instalments, or to get the customer to dispose used(e.g.,liquidation resolutions)are often
panies
of some of the securities, which might not for .
be so advantageously got rid of in the event Forstamp duty see Copy.
OFFICIAL LIST. The name of the list of
of the customer's failure. He may also
endeavour to bring about a change in the prices of securities, published under the
nature of the bills which are offered for authority of the Committee of the London
discount by gradually getting rid of those Stock
Exchange.
of an unsatisfactory nature . A banker may The prices quoted are those ruling at
also look to his securities and see what 3.30 p.m., as well as the prices of part ofthe
improvement can be effected in them . bargains which took place duringtheday,
So long as a banker doesanyofthose things from 10.45 a.m.
the timeis 3.30 a.m.
from to 10.45 p.m. toOnSaturdays
1 p.m.
in his efforts to bring the account into a
better condition he is not, in an ordinary theirBargains at special
exceptional amounts prices, by reason
,are marked of
on the
way,, putting himselfintoany worseposition listwith distinguishing signs.
than he was in when he first discovered the
All the principal Stock Exchanges publish
unsatisfactory state into which the account official lists.
had drifted, but when he is tempted to lend OFFICIAL QUOTATION . (See QUOTA
more money under the promise of some large
reduction in the near future, he embarks upon TION ON LONDON STOCK EXCHANGE.)
OFFICIAL RECEIVER . An official re
a rather perilous voyage, The additional
loan may, ceiver is a person appointed by the Board
deposit ofin many security,
further cases, be but,
madeunless
againstthea of Tradetoadminister the estates ofbank
security is of such a nature as tobe easily rupts. He acts andis
Board ofTrade also directions
under the an officer of
of the
the
realised , the end of the matter may be worse
than at the beginning. The history of many Court to which he is attached . There may
banks which have had to close their doors be more than one official receiver attached
reveals the same story of some large over to a Court. (Section 70 of the Bankruptcy
Act, 1914.)
drafts which the banker had been nursing in The duties of an official receiver are
the fond hope that he might eventually set forth in the following Sections of the
bring matters right.
Whenever the question of nursing an Bankruptcy Act, 1914 -
account arises, it ishighly necessary that a Status of Official Receiver .
banker give it a most careful consideration , “ 72. ( 1 ) The duties of the official receiver
especially if further accommodation is re shall have relation both to the
quired under the promise of a large reduction conduct of the debtor and to the
or the bait of additional doubtful security. administration of his estate .
In the words of the late J. W. Gilbart “ (2) An official receiver may, for the pur
( " History , Principles and Practice of
00
pose of affidavits verifying proofs,
Banking ' ), we do not mean to imply petitions, or other proceedings under
that in every case it is inexpedient to this Act, administer oaths.
' nurse an account.' This is frequently done " (3) All provisions in this or any other
with the best results ; but the determina Act referring to the trustee in a
tion to attempt it must be governed by bankruptcy shall, unless the context
circumstances, and in view of the fact, as otherwise requires, or the Act other .
experience has proved, that it is always a wise provides, include the official
dangerous movement, and that the chances receiver when acting as trustee.
461
OFF ) DICTIONARY OF BANKING
“ (4 ) The trustee shall supply the official
receiver with such information, and
give him such access to and facilities
for inspecting the bankrupt's books
and documents, and generally shall
give him such aid, as may be requi
. "
site for enabling the official receiver
to perform his duties under this Act.
Duties of Official Receiver as regards the
Debtor's Conduct.
“ 73. As regards the debtor, it shall be the
duty of the official receiver
“ (a) To investigate the conduct of the
debtor and to report to the Court,
stating whether there is reason to
believe that the debtor has com
mitted any act which constitutes a
misdemeanour under this Act, or
any enactment repealed by this Act,
or which would justify the Court in
refusing, suspending or qualifying
an order for his discharge ;
“ (6) To make such other reports concerning
the conduct of the debtor as the
Board of Trade may direct ;
“( c) To take such part as may be directed
by the Board of Trade in the public
examination of the debtor ;
" ( d) To take such part and give such
assistance in relation to the prosecu
tion of any fraudulent debtor as the
Board of Trade may direct.
Duties of Official Receiver as to Debtor's
Estate .
“ 74. ( 1 ) As regards the estate of a debtor
it shall be the duty of the official
receiver
“*(aa)) Pending the appointmentof a wo
where it is to be used . (See Section 79 of
trustee, to act as interim the Companies (Consolidation) Act, 1908,
receiver of the debtor's
estate, and, where a special
manager is not appointed,
as manager thereof :
" (6) To authorise the special man-
ager to raise money or make
advances for the purposes of
the estate in any case where,
in the interests of the credi-
tors, it appears necessary so
to do :
" (c) To summon and preside at the
first meeting of creditors :
“ ( d) To issue forms of proxy for
use at the meetings of
creditors :
462
[OMN
“ (e) To report to the creditors as to
any proposal which the
debtor may have made with
respect to the mode of
liquidating his affairs :
To advertise the receiving
order, the date of the
creditors' first meeting and
of the debtor's public ex
amination, and such other
matters as it may be neces
sary to advertise :
"( g) To act as trustee during any
vacancy in the office of
trustee."
In the winding up of joint stock companies,
the Companies (Consolidation ) Act, 1908,
provides as follows :
" 147. ( 1 ) Where the Court in England has
made a winding -up order, there shall
be made out and submitted to the
official receiver a statement as to the
affairs of the company in the pre
scribed form , verified by affidavit,
and showing the particulars of its
assets, debts, and liabilities, the
names , residences, and occupations
of its creditors, the securities held
by them respectively, the dates
when the securities were respectively
given , and such further or other
information as may be prescribed or
as the official receiver may require.”
(See BANKRUPTCY, COMPANIES.)
OFFICIAL SEAL FOR USE ABROAD .
A company may, if authorised by its articles,
have for use in any place out of the United
Kingdom an official seal, which shall be a
facsimile of the common seal, with the addi
tion on its face of the name of the place
under SEAL .)
OLD LADY OF THREADNEEDLE
STREET. The term has been applied to the
Bank of England and the Directors of the
Bank . In Brewer's “ Dictionary of Phrase
and Fable " it is stated that the Directors
were so called by William Cobbett because,
like Mrs. Partington, they tried with their
broom to sweep back the Atlantic waves of
national progress .”
OLD STYLE. ( See DATE.)
OMNIBUS ACCOUNT. An account is of
an omnibus nature when it contains moneys
belonging to different estates or persons.
OMNIUM . (Latin, of all.) A Stock Ex
change term denoting the aggregate value
ONC) DICTIONARY OF BANKING (OPE

of theseparate stocks or funds which may , deed is specified with which the title
form the security for a loan . is to commence, but under an open
ON 'CHANGE. The expression is used contract there is no such provision , and
with reference to the Royal Exchange (not | as a purchaser is entitled, unless there is an
the London Stock Exchange ). Thebusiness agreement to the contrary, to require the
of foreign bills and foreign exchange is vendor to show a good title to the property
transacted in the Royal Exchange . for forty years, the vendor may find it
" ONE MAN " COMPANY . A term difficult and expensive to deduce a forty
applied to a public limited company where years' title. This is only one of the points
all the shares are held by one person, with which may cause trouble through not having
the exception, usually, of six shares, one of a properly drawn contract. (See CONTRACTS,
which is allotted to each of six other persons, Root OF TITLE.)
so as to make up the necessary number of OPEN CREDIT. The same as CLEAN
members, to enable the company to be CREDIT (9.v.).
registered with limited liability. (See OPEN POLICY . (See MARINE INSURANCE
PRIVATE COMPANY .) POLICY.)
ONEROUS COVENANTS . (Secunder OPENING A CROSSING . Where a cheque
LEASEHOLD .) is crossed and the drawer cancels the crossing
OPEN CHEQUE . A cheque is an open one by writing upon the cheque “ Pay Cash ”
when it can be presented by anyone across and adding his signature , the operation is
>

the counter of the bank upon which it is called " opening the crossing."
drawn , and cash obtained for it. A crossed The effect of “ opening " a crossed cheque .
cheque, on the contrary , can only be paid is that the banker is thereby requested to
through a banker, though it may be placed pay cash over the counter instead of paying
to the credit of a customer's account. the cheque in accordance with the crossing,
A holder for value has a title against all to another banker if it was crossed generally
the parties to the cheque, unless one of the or to the banker specified in the crossing if
indorsements necessary to transfer the pro- it was crossed specially . The Bills of
perty in the cheque is forged ; but the Exchange Act does not make any provision
banker on whom the cheque is drawn, even for the cancellation of a crossing, and the
if an indorsement is forged, is protected by words
use of the pay cash " has arisen
Section 60 of the Bills of Exchange Act, 1882, from custom .
so long as he pays it in good faith and in the Where the words pay cash " have been
ordinary course of business. (See PAYMENT actually written by the drawer upon a
OF BILL .) crossed cheque payable to order and have
A collecting banker, however, who collects been signed by him , and the banker pays the
an uncrossed cheque is liable to the true cheque to the payee, the banker does not,
owner thereof in the event of the cheque apparently, incur any liability . If, however,
having been stolen or an indorsement forged. the signature to an opening " is forged , the
If, instead of collecting, he gives cash for it, cheque remains a crossed cheque and the
he is a holder in due course and can sue all banker will incur liability if he cashes such
parties to the cheque ; but if there should a cheque over the counter to a person
prove to be a forged indorsement upon the not entitled to the money.
cheque, the banker will be liable to the When a drawer has issued a crossed cheque
true owner, as no title can be obtained he cannot subsequently cancel the crossing
under a forged indorsement. (See CHEQUE, to the injury of anyone who took it as a
crossed cheque
COLLECTING BANKER .) .
OPEN CONTRACT. Where a vendor signs Owing to the losses which banks have
a simple agreement to sell a particular suffered through the fraudulent “ opening
property at a certain price, and the pur- of crossed cheques, the clearing bankers
chaser agrees in writing to purchase , it is in November, 1912, passed the following
a binding contract, and either party may resolution :
compel the other to complete . A contract “ That no opening of cheques be recog
in this simple form is termed an open nised unless the full signature of
contract because it leaves open and the drawer be appended to the
unsettled the various points which should alteration , and then only when
be settled in a properly drawn formal presented for payment by the
contract. In a formal contract the particular drawer or by his known agent.”
463
OPE ) DICTIONARY OF BANKING [ORD

Adherence to this rule by bankers should to a particular person, and does

provide protection against the risks from not contain words prohibiting trans
frauds of this nature. In dealing with fer or indicating an intention that
crossed cheques “ opened ” by customers who it should not be transferable.
have been in the habit of " opening " them , “ (5) Where a bill, either originally or by
Sir John Paget points out that it is risky indorsement, is expressed to be
for a banker to take up a new attitude with payable to the order of a specified
regard to this matter without due notice person, and not to him or his order,
to the customers, or, at any rate, to such it is nevertheless payable to him
of them 1as have been in the habit of or his order at his option."
“ opening " their crossed cheques. The word bill in those sub -sections includes
Sir John Paget expressed his opinion (see a cheque.
the Gilbart Lectures, 1912 and 1913) that A cheque payable to order should be
the better policy is for bankers to co -operate indorsed by the person towhom it is payable.
and notify customers that they will not cash (Section 31 , s.5. 3.) With regard to the
over the counter any crossed cheque which question as to a payee's right to refuse to
purports to be opened , whether by initial indorse a cheque when presented by himself
or full signature. Sir John suggested that for payment,see PAYEE .
the opening of a crossed cheque after it has The drawer may strike out the word
been issued is an alteration which makes it " order " and insert the word " bearer, " thus
really a new document requiring a fresh making the cheque payable to “ bearer,"
stamp. which alteration must be signed by him .
Customers should be persuaded to dis- If there are more drawers than one, each
continue the practice of opening crossed drawer must sign the alteration.
cheques . (See CROSSED Cheque.) A bearer cheque may be converted into
OPERATIVE CLAUSE . an order cheque by the word " bearer ” being
(See CONVEY-
ANCE.) crossed out ; and this may be done by the
OPINION BOOK . All bankers' opinions payee as well as by the drawer . It is not
received are entered up in this book with the essential to write the word “ order."
name of the person reported on, the name of Where the payee of an order cheque
the correspondent supplying theinformation , indorses it merely with his signature, it is
the date of his letter and the reason why the an indorsement in blank, and the cheque
inquiry was made. A sufficient space is may be transferred as a cheque payable to
left after each opinion to admit of further bearer. Any subsequent holder , however,
information being added from time to time. may again make the cheque payable to order
A book is sometimes kept for opinions by indorsing it, e.g. “ Pay John Brown or
given to correspondents, though the method order, T. Jones," or by writing above the
of taking a press copy of the letter in a special last indorser's signature a direction to pay
letter book is frequently adopted . the bill or cheque to or to the order of him
The book is sometimes called the “ char- self or someother person . (Section 34, s.s. 4.)
acter book .” All such books are carefully A cheque payable to “ or order
indexed. (See BANKER'S OPINION .) is treated as being payable to the order of
OPTIONS. A method of speculation on the drawer, and requires his indorsement.
the Stock Exchange. The speculator pays If payable to “ W. Brown or " it
a certain sum for the right (or option) to buy should be indorsed by W. Brown. If
(or “ call," as it is termed) a certain amount payable to “ W. Brown," it is, by the above
of stock at a fixed price within a specified section, payable to W. Brown or order, but
time ; or the sum may be paid for the right if payable to “ W. Brown only," the word
to sell (or “ put " as it is termed) instead of to only ” prohibits any further transfer, and
buy. A right either, to buy or sell (called the cheque must be paid to W. Brown
a " put and call " ) is termed a “ double himself ; if collected by another bank the
)
option .” indorsement should be confirmed .
ORDER (CHEQUE OR BILL ). The Bills A cheque payable to " wages or order,"
of Exchange Act , 1882, Section 8, provides cash or order," is by most bankers regarded
as follows : as being payable to the drawer's order and
“ (4) A bill is payable to order which is requiring his indorsement. It is customary
expressed to be so payable, or to pay such cheques only to the drawer or
which is expressed to be payable his authorised repreşentative,
464
ORD ] DICTIONARY OF BANKING (OVE
A cheque payable to " Yourselves or negotiated , it can only be negotiated subject
order " should be indorsed by the bank . to any defect of title affecting it at its
(See BILL OF EXCHANGE, CHEQUE, INDORSE- maturity, and thenceforward no person who
MENT. ) takes it can acquire or give a better title
ORDERS. For the stamp duty on orders than that which the person from whom he
for payment of money, see BANKER'S ORDER, took it had . (Section 36 , s.s. 2.)
BILL OF EXCHANGE, CASH ORDER. Except where an indorsement is dated
ORDINARY SHARES. The shares into subsequent to the date of maturity of a
which the capital of a company is divided, bill, every negotiation is prima facie deemed
as distinguished from preference, which rank to have been effected before the bill was
in front of the ordinary, and deferred, which overdue. (Section 36, s.s. 4.)
rank after. They may be for different A bill which is twenty years old is by law
amounts, for example, Is., 5s., 10s., £1 , £ 5. presumed to have been paid.
£10, £ 100 each , and may be either fully If an overdue bill is presented to the bank
paid up or only partly paid. In some com- where it is domiciled, it is advisable, in such
panies the ordinary shares consist of two a case, to obtain a cheque from the acceptor
kinds, preferred ordinary and deferred or a written authority to pay it. (See Bill
ordinary. OF EXCHANGE .)
If a company limited by shares is autho- OVERDUE BILLS BOOK. Bills which
rised by its articles, it may convert its have been dishonoured and which are not
paid -up shares into stock. The company debited to the discounter's account, are
cannot issue original stock .It must first passed into overdue bills account, and full
issue shares and then, when fully paid, particulars of them are entered in the
convert them into stock . overdue bills book , along with a note of
The preference stocks of railway com- charges incurred, interest, payments on
panies form investments for trust moneys account, and other information .
provided that a dividend of not less than 3 OVERNIGHT MONEY. Money borrowed
per cent. has been paid on the ordinary from bankers by bill brokers, as its name
stock for ten years before the date of invest- implies , overnight ; that is, from the after
ment. (See Section 1 ( 8) Trustee Act, 1893, noon of one day till the following morning.
under TRUSTEE INVESTMENTS .) (See SHARE OVERSEERS. In rural districts overseers
CAPITAL .) are generally appointed by Parish Councils.
ORE. (See FOREIGN MONEYS — NORWAY, In such cases a banker should receive
SWEDEN , AND DENMARK.) a formal notice of their appointment, as
OUT CLEARING . When a bank makes follows :
an exchange of cheques with another bank PARISH OF IN THE COUNTY OF
the cheques which are given out constitute
the “ Out ” clearing, and the cheques which At the annual meeting of the Parish
are received form the " In " clearing. (See Council of the above-named parish, held
CLEARING House.) on the day of 19 · John
.

Brown and John Jones were appointed

OUT OF DATE
OUTSIDE BROKER . STALE
. (See A broker who.) is Overseers of the Poor for the ensuing
CHEQUE
not a member of the Stock Exchange. year.
OVER -CAPITALISED . When the capital Presiding Chairman.
of a company is too large for the earning Two Members of the
capacity, the company is said to be over Parish Council.
capitalised . Countersigned by
OVERDRAFT. (See ADVANCES.) Clerk to the Parish Council.
OVERDUE BILL. A bill of exchange is
overdue which has not been paid at maturity. If the account stands in the ledger as,
A bill payable on demand is deemed to be e.g. “ John Brown and John Jones, Over
overdue within the meaning, and for the seers of Stanton," upon a change of over
purposes of Section 36 of the Bills of Ex- seers, a cheque should be signed by the old
change Act, 1882, when it appears on the overseers transferring any credit balance
face of it to have been in circulation for an there may be to the new overseers, the old
unreasonable length of time. ( See NEGOTIA- account being closed and a new one opened .
TION OF BILL OF EXCHANGE, PRESENTMENT If the account stands as “ Overseers of
FOR PAYMENT .) Where an overdue bill is Stanton, John Brown and John Jones,"
465
30—41533 )
OWN) DICTIONARY OF BANKING [PAR

the change of names is usually merely | Act was once more suspended . During this
notified in the ledger heading and the panic the firm of Overend, Gurney & Co.
account continued. The former method is failed with liabilities of over £ 10,000,000.
the better one. The pass book should show on each occasion when the Bank Act was
the names of the overseers, as, unless it suspended the panic was at once allayed .
does so , there is no evidence to produce at A monetary crisis occurred in 1875. In 1878
the Government Audit that the money is the City of Glasgow Bank stopped payment,
under the control of the persons appointed when losses of over £6,000,000 werefound to
overseers . have been made. Baring's Bank suspended
Where there are several overseers, cheques in 1890. The failure of the City of Glasgow
should be signed by all of them, unless they Bank led to the adoption of limited liability
give the banker a written authority to by English joint stock banks.
honour cheques when signed by one or more ce by
In times of panic the Bank of England
of their number. They should not delegate recognises that the best way to restore
their authority to any other person. Over- confidence is to lend with freedom . Walter
seers' cheques are not exempt from stamp Bagehot, in his “ Lombard Street," says :
duty . It is ready lending which cures panics, and
Overseers have no power to borrow in non-lending or niggardly lending which
connection with their duties, and, therefore, aggravates them .”
if an overdraft is allowed , it is a debt against On the outbreak of war with Germany in
them as private individuals, the position 1914, a limited moratorium was declared,
being the same as in the case of a joint and the Government issued an emergency
account of ordinary customers. currency of £ 1 and 10s. notes. (See MORA
OWN NOTES. (See Bank of Issue.) TORIUM .) The Bank of England was em
powered to suspend the Bank Charter Act,
PAID CHEQUES . but the authority was not acted upon . See
(See CANCELLED
CHEQUES AND BILLS.) particulars under Bank CHARTER Act.
PAID - UP CAPITAL . That part of the PAPER CURRENCY. The paper instru
subscribed, or issued, capital of a company ments such as bank notes, cheques, bills and
which has been paid , the other part being other forms which take the place of money
termed the “ uncalled " capital. The capital and act as a currency or circulating medium .
is fully paid , if there are no further calls to PAR . (Latin , equal.) The market price
be made ; that is, no uncalled capital, of shares when it is equal to the nominal or
and no calls in arrears . (See CAPITAL. ) face value (called nominal par) or to the
PAID -UP POLICY. A life policy is said original or issue price (called issue par).
to be paid-up when there are no further Equivalent phrases to " above par " and
premiums payable. (See LIFE POLICY.) “ below par," are “ at a premium ” and “ at
PAID -UP SHARES. Shares are paid a discount.”
up ” when there is nothing further to be PAR INTERVENTION . The French form
paid thereon . If calls are still to be made, of our term “ suprà protest ” (q.v.).
the shares are only "partly paid .” Shares PAR OF EXCHANGE . This expression
with a liability do not form a satisfactory denotes a state of the foreign exchange be
security for a bank . tween one country and another when the
PANÍCS. In 1825 occurred what is known demand for and supply of bills exactly
as “ The Panic ," stated to be due to specula- balance. It is a theoretical phrase only,
tion in foreign mines ; in 1836 a panic took because no one knows, as between any two
place which has been ascribed to the exces- nations, when the claims they each have
sive issue of notes by country banks ; in 1839 | upon the other are equal.
another panic arrived, for which the country Distinguish from Mint Par of Exchange
note circulation was again considered to be ( q.v.).
responsible ; in 1847 a crisis occurred , the PARA . (See FOREIGN MONEYS - SERBIA ,
result mainly of excessive railway specula- TURKEY.)
tions . The Bank Charter Act of 1844 was PARCENERS . An abbreviation of co
suspended and the Bank was authorised | parceners (q.v.).
by the Government to issue notes at dis- PARI PASSU . (Latin, equal steps .)
cretion ; the next crisis was in 1857, and Where one matter is progressing pari passu
again the Bank Act was suspended ; in with another, it means that they are both
1866, when another crisis arrived , the Bank progressing with equal steps or equal energy .
466
PAR ] DICTIONARY OF BANKING (PAR

Similarly where new shares or debentures | Paris Exchange, form the Parquet ; the
are issued ranking pari passu with existing unofficial dealers form the Coulisse.
shares or debentures, it means that the PART PAYMENT. INLAND BILL . - A part
rights attaching to the new are exactly the payment may be made by the acceptor at the
same as those attaching to the old . maturity of a bill, in which case the bill
PARISH COUNCIL . Bankers are fre- should be indorsed “ Received in part
quently appointed to be Treasurers of Parish payment without prejudice to the rights of
Councils. the other parties." The holder can sue for
Every cheque or other order for the pay- the balance. Notice that full payment has
ment of money must be signed by two not been made should be given to the
members of the Council and countersigned drawer and indorsers. The bill itself is, of
by the clerk . A bank should be supplied course, retained by the holder. The bill
with specimen signatures of all members who should be noted for the unpaid balance.
are entitled to sign cheques. FOREIGN BILL . — Where a part payment is
When a loan is required, reference should made, a foreign bill must be protested as
be made to the Act under which the power to the balance.
to borrow is to be exercised, so as to ascer- CHEQUE.-- Cheques are either paid in full
tain the extent of the borrowing powers and or they are not paid at all. A part payment
the regulations with regard to the sanction is not made. În Scotland, however, when
of the Local Government Board or other a cheque is presented , if payment cannot be
authority. In 1919, the powers and duties made in full, any balance in the drawer's
of the Local Government Board were trans- account is attached in favour of the pre
ferred to the Minister of Health . senter. The banker transfers such amount
Any act of the Council may be signified to a special account.
by an instrument executed at a meeting of di to
CASH ORDER . – Part payment of a cash
the Council by the presiding chairman and order is not accepted , unless under instruc
two other members . tions to do so from the correspondent who
The accounts are made up yearly to March sent the document for collection.
31 , and are audited by a Government PARTIAL ACCEPTANCE. (See ACCEPT
auditor. (See LOCAL AUTHORITIES .) ANCE QUALIFIED .) EMENT
PARITY . The London Stock Exchange PARTIAL INDORSEMENT . An indorse
takes the American dollar as of the value of ment of a bill of exchange which purports to
4s., whereas the prices of American securities transfer a part only of the amount payable,
are cabled from New York to this country, or purports to transfer the bill to two or more
taking the dollar as representing slightly indorsees severally , does not operate as a
more than 4s. 13d. The term “ London negotiation of the bill. (See INDORSEMENT.)
Parity ” means the English equivalent PARTICIPATING PREFERENCE
at 4s. per dollar of the New York prices. SHARES . ( See PREFERENCE SHARES.)
To ascertain the English parity , multiply PARTICULAR AVERAGE . A term used
the closing price of a stock in New York in connection with shipping. In the case of
by five (i.e. five dollars to the A) and divide a general average, a loss incurred for the
by the cabled rate on the date of the quota- common safety of the ship and cargo is borne
74 X 5 by all the parties interested in the ship and
tion , e.g. = say 76. To find the cargo in proportion to their interests ; but
4.86.75 a particular average or loss is borne entirely
New York equivalent of the London price, by the owner (or his insurer) of the property
multiply the London price by the cabled which has been lost or damaged. His
rate and divide by five, e.g. property may have become damaged by
76 X 4.86.75 accident as by the sea, or may have got
= say 74. washed overboard , and in such cases , (the
5 loss or damage not having been incurred
If the price of a stock in New York is, intentionally to save the ship ), the owner
as in the first example, 74, and the opening alone is responsible. (See GENERAL
price in London on the following day is under AVERAGE.)
76, the price is said to be under parity, and if PARTIES TO BILL OF EXCHANGE .
the opening price is over 76 it is above parity. The parties to a bill of exchange are the
PARQUET, (French, an enclosure.) The drawer, the acceptor ( called the drawee
official brokers, agents de change, on the before he accepts it), the payee (who is often
.

467
PAR ) DICTIONARY OF BANKING (PAR

the same person as the drawer) and the PARTNER . Where several persons join
indorsers . The parties may be either to carry on a business, the combination is
“ immediate " or “ remote . They are called a firm or partnership , and the indi
“ immediate parties " when they are imme- vidual members are the partners. A partner
diately connected with each other as the who takes an active interest in the manage
drawer and acceptor, the drawer and payee, ment of the business is called an active
and an indorsee and the indorser immediately partner, as a distinction from a dormant
in front of him . They are “ remote parties or sleeping partner who merely supplies
when they are not closely related to each funds for the business . A nominal partner
other, as the acceptor and an indorsee. is one who simply lends his name and has no
With regard to the capacity and authority real interest in the partnership . A partner
of parties to a bill, the Bills of Exchange Act, (whether active or sleeping) is liable for all
1882, provides : the debts and obligations of the firm . A
“ Section 22. (1 ) Capacity to incur lia- limited partner, however,is not liable beyond
bility as a party to a bill is co- the amount contributed at the time of
extensive with capacity to contract entering into the partnership. (See LIMITED
“ Provided that nothing in this PARTNERSHIP.) A general partner is the
Section shall enable a corporation same as an ordinary partner. Everyone
to make itself liable as drawer, who has held himself out to be a partner in
acceptor or indorser of a bill unless a particular firm is liable as a partner to any
it is competent to it so to do under one who has, on the faith of any such repre
the law for the time being in force sentation , given credit to the firm . (See
relating to corporations. DEATH OF PARTNER, PARTNERSHIPS .)
“ (2) Where a bill is drawn or indorsed PARTNERSHIPS. When a partnership
by an infant, minor, or corporation account is being opened it is advisable, as far
having no capacity or power to as possible, to obtain information regarding
incur liability on a bill, the drawing the assets and liabilities of the firm and the
or indorsement entitles the holder amount of capital introduced into the firm
to receive payment of the bill, and by each partner. If the firm requires an
to enforce it against any other overdraft, it is particularly desirable to know
party thereto . to what extent the firm is already trading
“ Section 23. No person is liable as drawer, upon borrowed capital, and whether the
indorser, or acceptor of a bill who has not money has been lent to the firm or simply
signed it as such : Provided that,
66
to one of the partners in his private capacity.
( 1 ) Where a person signs a bill in a If themoney has been borrowed by a partner
trade or assumed name, he is liable himself, it will not, of course, be a debt due
thereon as if he had signed it in his by the firm , but by the partner.
Own name : When a firm's account is opened , thebank's
" (2) The signature of the name of a firm usual partnership form should be signed by
is equivalent to the signature by all the partners, and the partners should
the person so signing of the names make themselves jointly and severally
of all persons liable as partners in liable for any debt on the firm's account.
that firm ." (See BILL OF Ex- (See below .) Although each partner in a
CHANGE. ) trading partnership has implied power to
PARTITION . A deed of partition is for draw cheques in the name of the firm , it
the purpose of dividing an estate, which is is customary to have a clear arrangement
held in common by several persons, into an made as to the manner in which cheques are
estate in severalty so that each person has to be signed, and therefore the form should
then an absolute right to a distinct portion . state distinctly what is the arrangement.
By the Stamp Act, 1891, the stamp duty In many cases a partner merely signs the
is : firm's name, “ J. Brown & Coy.," but a not
£ s. d. uncommon form is, “ For J. Brown & Coy.,
PARTITION or DIVISION Instru J. Brown." In some cases the authority is
ments effecting . for the banker to honour cheques only
In the case specified in Sec when signed by all the partners, but most
tion 73, see that Section commonly authority is given for cheques to
under EXCHANGE . be paid when signed by any one partner, and
In any other case 0 10 0 occasionally the authority is limited to one
468
PAR ) DICTIONARY OF BANKING (PAR

particular partner. A specimen of the not an act for carrying on the business in the
firm's signature in the writing of each partner usual way. See Section 5, Partnership Act,
authorised to sign should be given at the below .
foot of the form . If a guarantee, signed by each partner
When a firm wishes a banker to honour personally, is taken as security for the firm's
cheques upon the partnership account when account the banker will thereby have a claim
signed by some person who is not a partner, upon the private estate of each partner as
the form of mandate should be signed by well as upon the partnership estate.
all the partners, and particular instructions If a partner deposits his own private
should be taken as to whether the authority property as securityfor the firm , and the firm
is to extend to the account if overdrawn . becomes bankrupt, the banker may claim
If there is only one partner in a firm a upon the firm's estate for the full amount
form should be signed by him to the effect of the debt. (See under BANKRUPT PERSON .)
that “ I, the undersigned John Brown , being “The signature of the name of a firm is
the sole rtner trading under the title of equivalent to the signature by the person so
Thomas Brown & Coy., will sign cheques as signing of the names of all persons liable
below .” A specimen of the way in which as partners in that firm ." (Section 23,
he will sign should be appended. s.s. 2, Bills of Exchange Act, 1882.)
An authority from all the partners in a A partner in a trading partnership is, as
firm for one of their number to sign should a general rule, able to bind all the other
specifically state that he has power to over- partners so long as what he does comes
draw the account, for although one partner within the range of their business, unless
in a trading firm has implied power toborrow the person with whom he is dealing has
for the purposes of the business, and bind knowledge that the partner is acting con
the firm , it is better to be on the safe side and trary to some particular condition, or
includ that power in the mandate. A limitation of powers in connection with the
partner has also implied power to pledge partnership. His position is like that of a
partnership property, but when securities general agent," and he is unable to bind
are deposited by a firm it is customary for his fellow -partners in matters which are not
the memorandum of deposit to be signed connected with their particular business.
by all the partners when the securities are (See Section 5, Partnership Act, below .)
in their names, or the firm's name. If a Bills of Exchange drawn, accepted or
legal mortgage is taken all the interested indorsed by a trading partnership must be
parties must sign it, as one partner cannot signed in the name of the firm , otherwise,
bind the other partners by deed. if signed without the firm's name, the
A notice from one partner to cancel the partners signing will be liable in their indi
authority as to signing cheques, or to stop vidual private capacity, but if the business
payment of a cheque signed by any partner is carried on in the name of one of the
in the firm's name, is sufficient for a banker partners, then the signing of his name is
to act upon . sufficient, because that is the only name the
A banker cannot set off any credit balance firm has. Where a partnership is a non
on the private account of a partner for aa debt trading one, as in the case of solicitors and
owing by the firm (unless the partners medical men, a partner cannot draw , or
havesigned an undertaking to be jointly accept, bills of exchange, or make promissory
and severally responsible for the debt due notes or sign guarantees in the firm's name
to the firm ), nor a credit balance on the firm's or borrow money, so as to bind the other
account for an overdraft on a partner's partner's partners, except with their express authority.
private account. See the remarks under One partner in a non -trading firm may by
Section 9, Partnership Act, 1890 . indorsement in the firm's name transfer a
A person signing a promissory note as bill from one party to another, but the
partner in aa firm binds his co -partners jointly transferee will not be able to sue any other
but not severally, but if he signs a joint and partner in the firm than the one who
several note he may bind himself severally indorsed . For a non -trading partnership
and the firm jointly. account there should be a guarantee, or a
Where a guarantee is to be signed by a clause in the mandate making the individ
firm , each partner should sign. If only one uals jointly and severally liable, (See
partner signs on behalf of the firm , it might JOINT ACCOUNT, JOINTLY AND SEVERALLY,
be held that the signing of a guarantee was MANDATE, SET OFF.)
469
 PAR ) DICTIONARY OF BANKING (PAR

It has been held (Wheatley v. Smithers, of deposit or mortgage being signed, and a
1906 , 2 K.B. 321 ) that a partner in a firm cheque to transfer an overdraft to a new
of auctioneers has no implied authority to account should be signed by all the
bind the firm by his acceptance of a bill in partners.
the name of the firm . A change in a partnership , such as death,
An " infant " may be a partner, but he retirement, or bankruptcy of a partner,
cannot be held liable for any overdraft. amounts in law to a dissolution of the firm ,
If the other partners want him to sign and if the banker desires to preserve a lien
cheques, they must give an authority to the on the estate of the partner who is dead,
banker to honour his signature on the firm's bankrupt, or has retired, the account should
account. be stopped and the surviving partners be
If cheques payable to a firm are placed requested to open a new account and pass
by one of the partners to his own private all subsequent transactions through it.
account, the banker must exercise the Otherwise if the account is continued as
greatest care, as, in the case of misappro- before — that is, without a break — the rule in
priation , the banker may be held to have Clayton's case (9.0.) will apply and
been guilty of negligence. If the money the retired or deceased partner's estate will
really belongs to the partner, the correct be released to the extent of each payment
way (in the absence of written authority by to credit. If there are any outstanding
the partners) would be for the cheque to be cheques, the continuing partners should
credited to the partnership account, because, give the banker written authority to debit
on the face of it, it is partnership property , them to the new account.
and a cheque payable to the partner drawn As to breaking an account see remarks
on the partnership account in the usual under NOTICE OF MORTGAGE.
way. Where a partner draws a cheque The personal representatives of a deceased
upon the firm's account and pays it in to partner may have a claim on the partnership
credit of his private account, so long as property for the amount of the deceased's
the cheque is drawn correctly the banker share in the partnership at the time of his
is not concerned with the transfer. But if a death. It is therefore necessary to ascertain
partner draws a cheque upon the firm's whether, or not, the surviving partners can
account in order to reduce an overdraft charge the property of the old firm for the
upon his private account, in consequence new account. After a dissolution of partner
of the banker having been pressing for a ship each partner can bind the firm so far
reduction of the overdraft, the banker is put as may be necessary for the purposes of
on inquiry and the firm's account cannot be winding up the partnership . (Section 38,
charged with the cheque if it has been Partnership Act, 1890, see below .) See the
drawn in abuse of the partner's authority. case of In re Bourne under DEATH OF
It has been held that in the absence of ex- PARTNER .
press authority, it cannot be affirmed as a Section 36 of Partnership Act, 1890 (see
proposition of law that a partner has below ) provides that the estate of a partner
authority, from the mere fact of partnership, who dies is not liable for partnership debts
to open an account on behalf of the partner contracted after the date of the death .
ship in his own name. It is to be noted that the Section does not
Where securities belonging to a partner- say after notice of death . (See DEATH OF
ship have been deposited to cover advances PARTNER.)
on the firm's account, and a change takes When a guarantee, or other security , of a
place in the partnership either by the death third party is held for an overdraft on a
or retirement of a partner, if the continuing partnership account, and any change takes
partners have power to charge the old place in the partnership, the account should
partnership securities for the account of be stopped so as to avoid the discharge of
the new firm , a fresh memorandum of the third party's liability with respect to
deposit or mortgage, signed by the con- future transactions.
tinuing partners should be taken, otherwise Every firm which carries on business under
it might be held that the securities pledged a business name which does not consist of
before the change in the partnership covered the true surnames of the partners must be
only the overdraft existing at the time registered under the Registration of Busi
of the change. The admission ofa new partner ness Names Act, 1916. (See REGISTRATION
may also necessitate a fresh memorandum OF Business NAMES .)
470
PAR ) DICTIONARY OF BANKING
By the Companies (Consolidation ) Act,
1908 :
Prohibition of Large Partnerships.
“ 1. (1 ) No company, association, or part
nership consisting of more than ten
persons shall be formed for the
purpose of carrying on the business
of banking, unless it is registered as does or does not exist, regard shall be had to
a company under this Act, or is the following rules :
formed in pursuance of some other “ ( 1 ) Joint tenancy, tenancy in common ,
Act of Parliament, or of letters
patent.
" ( 2) No company, association, or partner-
ship consisting of more thantwenty
s
person shall be formed for the
purpose of carrying on any other
business that has for its object the
acquisition of gain by the company,
association, or partnership, or by
the individual members thereof,
unless it is registered as a company
under this Act, or is formed in
pursuance of some other Act of
Parliament, or of letters patent, or
is a company engaged in working
mines within the stannaries and
subject to the jurisdiction of the
Court exercising the stannaries
jurisdiction .”
The following are the principal Sections of
the Partnership Act, 1890 (53 & 54 Vict. c.
39 ) from the point of view of persons
dealing with partnerships :
NATURE OF PARTNERSHIP .
Definition of Partnership .
“ 1. (1 ) Partnership is the relation which
subsists between persons carrying
on a business in common with a view
of profit.
“ (2) But the relation between members of
any company or association which
is
“( a) Registered as aa company
under the Companies Act,
1862, or any other Act of
Parliament for the time
being in force and relating
to the registration of joint
stock companies ; or
" (6) Formed or incorporated by or
in pursuance of any other
Act of Parliament or letters
patent, or Royal Charter ;
or
" (c) A company engaged in work
ing mines within and subject
471
[PAR
to the jurisdiction of the
Stannaries :
is not a partnership within the
meaning of this Act.
Rules for Determining Existence of
Partnership .
“ 2. In determining whether a partnership
joint property, common property,
or part ownership does not of itself
create a partnership as to anything
so held or owned , whether the
tenants or owners do or do not
share any profits made by the use
thereof.
60
(2) The sharing of gross returns does not
of itself create a partnership, whether
the persons sharing such returns
have or have not a joint or common
right or interest in any property
from which or from the use of which
the returns are derived .
" ( 3) The receipt by a person of a share of
the profits of a business is prima
facieevidence that he is a partner in
the business, but the receipt of such
a share, or of a payment contingent
on or varying with the profits of a
business, does not of itself make him
a partner in the business ; and in
particular
“ (a) The receipt by a person of a
debt or other liquidated
amount by instalments or
otherwise out of the accruing
profits of a
a business does not
of itself make him a partner
in the business or liable as
such :
“ (6) A contract for the remunera
tion of a servant or agent of
a person engaged in a busi
ness by a share of the profits
of the business does not of
itself make the servant or
agent a partner in the
business or liable as such :
" (c) A person being the widow or
child of a deceased partner,
and receiving by way of
annuity a portion of the
profits made in the business
in which the deceased person
was a partner, is not by
reason only of such receipt
PAR ] DICTIONARY OF BANKING (PAR

a partner in the business or “ (2) In Scotland a firm is a legal person

liable as such : distinct from the partners of whom
" (d) The advance of money by it is composed, but an individual
way of loan to a person en partner may be charged on a decree
gaged or about to engage in or diligence directed against the
any business on a contract firm , and on payment of the debts
with that person that the is entitled to relief pro rata from the
lender shall receive a rate of firm and its other members.
interest varying with the
profits, or shall receive a RELATIONS OP PARTNERS TO PERSONS
share of the profits arising DEALING WITH THEM .
from carrying on the busi Power of Partner to Bind the Firm .
ness, does not of itself make
the lender a partner with the “ 5. Every partner is an agent of the firm
person or persons carrying on and his other partners for the purposeacts
of the
of
thebusiness or liableassuch. business of the partnership ; and the
Provided that the contract every partner who does any act for carrying
is in writing, and signed by on inthe usual way business of the kind
or on behalf ofall the parties carried on by the firm ofwhich he is a
thereto : member bind the firm and his partners,
" (e) A person receiving by way of unless the partner so acting has in factno
authority to act for the firmin the particular
annuity or otherwise a por matter,
tion of the profits of a busi and the person with whom he is
ness in consideration ofthe dealing either knowsthat he has noauthority,
sale by him of the goodwill or does not know or believe him to be a
of the business is not by partner.
reason only of such receipt Partners Bound by Acts on Behalf of Firm .
a partner in the business or
liable as such. “ 6. An act or instrument relating to the
business of the firm and done or executed
Postponement of Rights of Person Lending in the firm -name, or in any other manner
for Selling in Consideration of Share of showing an intention to bind the firm , by
Profits in case of Insolvency. any person thereto authorised , whether a
" 3. In the event of any person to whom partner or not, is binding on the firm and
money has been advanced by way of loan all the partners.
upon such a contract as is mentioned in the “ Provided that this section shall not affect
last foregoing Section, or of any buyer of a any general rule of law relating to the
goodwill in consideration of a share of the execution of deeds or negotiable instruments.
profits of the business, being adjudged a Partner using Credit of Firm for Private
bankrupt, entering into an arrangement to Purposes.
pay his creditors less than twenty shillings " 7. Where one partner pledges the credit
in the pound, or dying in insolvent circum
stances, the lender of the loan shall not be of the firm for a purpose apparently not
entitled to recover anything in respect of connected with the firm's ordinarycourse
his loan, and the seller of the goodwill shall of business, the firm is not bound , unless
not be entitled to recover anything inrespect he is in fact specially authorised by the
of the share of profits contracted for, until other partners ; but this Section does not
the claims of the other creditors ofthe affect any personal liability incurred by an
borrower or buyer for valuable consideration individual partner.
in money or money's worth have been Effect of Notice that Firm will not be Bound
satisfied. by Acts of Partner.
Meaning of Firm . “ 8. If it has been agreed between the
“ 4. (1 ) Persons who have entered into partners that any restriction shall be placed
partnership with one another are on the power of any one or more of them to
for the purposes of this Act called bind the firm , no act done in contravention
collectively a firm , and the name of the agreement is binding on the firm with
under which their business is carried respect to persons having notice of the
on is called the firm -name. agreement.
472
PAR ] DICTIONARY OF BANKING PAR

Liability of Partners. the firm , or any penalty is incurred, the firm

" 9. Every partner in aa firm is liable jointly is liable therefor to the same extent as the
with the other partners, and in Scotland partner so acting or omitting to act.
severally also, for all debts and obligations Misapplication ofMoney or Property Received
of the firm incurred while he is a partner ; for or in Custody of the Firm .
and after his death his estate is also severally “ 11. In the following cases ; namely
liable in a due course of administration for
such debts and obligations, so far as they “ (a) Where one partner acting within the
remain unsatisfied , but subject in England scope of his apparent authority
or Ireland to the prior payment of his receives the money or property of a
separate debts." third person and misapplies it ; and
With respect to the joint liability referred " (b) Where a firm in the course of its
to in Section 9, a creditor bringing an action business receives money or property
should sue all the partners jointly, and of a third person , and the money or
having obtained judgment the creditoris property so received is misapplied
then at liberty to levy execution against the by one or more of the partnerswhile
partnership property or against all, or any, it is in the custody of the firm ;
of the separate estates of the partners, the firm is liable to make good the loss.
each partner being liable to the full extent Liability for Wrongs Joint and Several.
of his fortune for the debts of the firm .
“ 12. Every partner is liable jointly with
It is to be noted that this joint liability his co-partners and also severally for every
is also several in Scotland . The same
thing for which the firm while he is a partner
Section provides that the estate of a therein becomes liable under either of the
deceased partner is also severally liable two last preceding sections.
for the firm's debts, but, in England or
Ireland, subject to the prior payment of Improper Employment of Trust-Property for
the deceased's separate debts. When an Partnership Purposes.
advance is made to a firm , it is desirable for “ 13. If a partner, being a trustee, im
a banker to hold an undertaking signed properly employs trust-property in the
by all the partners agreeing to be jointly business or on the account of the partner
and severally liable for any debt on the ship, no other partner is liable for the trust
partnership account, because the partners property to the persons beneficially interested
may then be sued either jointly or severally, therein :
and the banker will have the right to set “ Provided as follows :
off any credit balances on the partners' “ (1) This Section shall not affect any
separate accounts against a debt on the firm's liability incurred by any partner by
account. In the absence of such an under reason of his having notice of a
taking this right of set off does not exist. breach of trust ; and
When the partners have made themselves " (2) Nothing in this Section shall prevent
jointly and severally liable, the banker has trust money from being followed and
further advantages, as upon the death recovered from the firm if still in its
of a partner his claim against the deceased's possession or under its control.
estate for a debt upon the firm's account Persons liable by “ Holding Out.”
would not be postponed to the payment of
the deceased's separate debts, and in the " 14. (1 ) Everyone who by words spoken
event of bankruptcy the banker would be or written or by conduct represents
entitled to prove against the estate of the himself, or who knowingly suffers
firm and at the same time against the himself to be represented, as a
separate estates of the partners. ( See partner in a particular firm , is liable
BANKRUPT PARTNERSHIP under BANKRUPT as a partner to anyone who has on
PERSON .) the faith of any such representation
given credit to the firm , whether
Liability of the Firm for Wrongs. the representation has or has not
“ 10. Where, by any wrongfulact or omis been made or communicated to the
sion of any partner acting in the ordinary person so giving credit by or with
course of the business of the firm , or with the the knowledge of the apparent
authority of his co - partners, loss or injury is partner making the representation
caused to any person not being a partner in or suffering it to be made.
473
PAR ) DICTIONARY OF BANKING [PAR

“( 2) Provided that where after a partner's Dissolution by Bankruptcy, Death , or Charge.

death the partnership business is “ 33. ( 1 ) Subject to any agreement be
continued in the old firm -name, the tween the partners, every partner
continued use of that name or of the ship is dissolved as regards all the
deceased partner's name as part partners by the death or bankruptcy
thereof shall not of itself make his
of any partner.
executors' or administrators' estate “ (2) A partnership may, at the option of
or effects liable for any partnership the other partners, be dissolved if
debts contracted after his death . any partner suffers his share of the
partnership property to be charged
Admissions and Representations of Partners. under this Act for his separate debt.
" 15. An admission or representation made Rights of Persons dealing with Firm against
by any partner concerning the partnership Apparent Members of Firm .
affairs, and in the ordinary course of its
business, is evidence against the firm . “ 36. ( 1 ) Where a person deals with a firm
after a change in its constitution he
Notice to Acting Partner to be Notice to the is entitled to treat all apparent
Firm . members of the old firm as still
“ 16. Notice to any partner who habitually being members of the firm until he
acts in the partnership business of any has notice of the change.
matter relating to partnership affairs operates " (2) An advertisement in the London
Gazette as to a firm whose principal
as notice to the firm , except in the case of a place of business is in England or
fraud on the firm committed by or with the
consent of that partner. Wales, in the Edinburgh Gazette as
to a firm whose principal place of
Liabilities of Incoining and Outgoing Partners. business is in Scotland , and in the
Dublin Gazette as to a firm whose
“ 17. (1 ) A person who is admitted as a principal place of business is in
partner into an existing firm does Ireland, shall be notice as to persons
not thereby become liable to the who had not dealings with the firm
creditors of the firm for anything before the date of the dissolution or
done before he became a partner. change so advertised .
“ (2) A partner who retires from aa firm does “ (3) The estate of a partner who dies, or
not thereby cease to be liable for who becomes bankrupt, or of a
partnership debts or obligations partner who, not having been known
incurred before his retirement. to the person dealing with the firm
" (3) A retiring partner may be discharged to be a partner, retires from the
from any existing liabilities, by an firm , is not liable for partnership
agreement to that effect between debts contracted after the date of
himself and the members of the firm the death, bankruptcy, or retirement
as newly constituted and the credi respectively.
tors, and this agreement may be
either express or inferred as a fact Continuing Authority of Partners for Purposes
from the course of dealing between of Winding Up
the creditors and the firm as newly “ 38. After the dissolution of a partnership
constituted . the authority of each partner to bind the
firm , and the other rights and obligations of
Revocation of continuing Guaranty by Change the partners, continue notwithstanding the
in Firm. dissolution so far as may be necessary to
“ 18. A continuing guaranty or cautionary wind up the affairs of the partnership , and
obligation given either to a firm or to a third
to complete transactions begun butun
person in respect of the transactions of a finished at the time of the dissolution, but
firm is, in the absence of agreement to the not otherwise.
contrary, revoked as to future transactions “ Provided that the firm is in no case bound
by any change in the constitution of the firm by the acts of a partner who has become
to which , or of the firm in respect of the bankrupt ; but this proviso does not affect
transactions of which, the guaranty or the liability of any person who has after
obligation was given . the bankruptcy represented himself or
474
PAS) DICTIONARY OF BANKING [PAS

knowingly suffered himself to be represented In whatever form the pass book is kept,
as
a partner of the bankrupt." (See it is of the utmost importance that it should
COMPANIES, DEATH OF PARTNER , LIMITED be carefully and correctly written up. All
PARTNERSHIP , LUNATIC .) payments to credit should appear therein in
PASS BOOK. The pass book, or passage the precise order in which they occur in the
book as it was formerly called , is given by a ledger, and the dates should always coincide.
banker to his customer, and is for the purpose The same points should be observed in the
of showing the exact state of the customer's entering of cheques which have been paid.
account with the banker. The method of It is the practice in some banks to write up
writing up the pass book varies in different the pass books from the actual credit slips
banks. Some banks reverse the entries in and cheques, and to compare them with the
the ledger by placing the items which are in ledgers before giving out the books, but
the credit column of the ledger on the debit many banks write up the pass books direct
side ofthe pass book, and the debit items in from the ledger accounts, and in some banks
the ledger on the credit sideof the pass book. they are afterwards compared with the
Where this is done the first page of the pass vouchers. The system where only the pay
book will be headed, “ Dr. British Banking ments to credit are entered by the banker in
Co., Ltd., in account with John Brown, Cr., " the pass book , the debit items being entered
the bank being debtor to John Brown for by the customer at the time he issues the
the amounts on the debit side of the pass cheques, is now out of date .
book and creditor for the amounts on the If an entry has been omitted , and it is
credit side. Other banks, however, make entered out of its proper order, a mark of
the pass book an exact copy of the ledger, some kind is usually made in the pass book
and the first page of the pass book in such calling attention to the fact. Where a
6

cases is headed “ Dr. John Brown in account customer brings in a payment to credit after
with British Banking Co. , Ltd., Cr.” John the books are closed for the day, the paying
Brown being debtor for the amounts on the in slip should be dated by the customer for
debit side and creditor for the amounts on the following day and an explanation made
the credit side . to him , if cheques form part of the credit,
The ruling of an ordinary current account that they will be dealt with next day. The
pass book shows a date column, a column for date of the entry for that credit in the pass
particulars, and a column for the amounts, all book should be that of the following day,
credit items being entered on one page and when it actually passes through the books
all debit items on the opposite page. When of the bank .
one page is filled, both pages are cast up at Where a mistake in writing up aa pass book
the same date and any blank lines in either has been made, it should be ruled out neatly
page ruled across with an oblique line. (not blotted out so that the original entry
The column for particulars on the cheques cannot be read ) and the correction made .
paid side shows the payees' names, unless No erasures of any kind are permitted in a
the customer desires the numbers of the pass book. Where a banker has debited or
cheques to be entered instead of the credited the customer with an amount in
names, and onchthe lodgments side the words error, and it is necessary to pass a correcting
cash or " eques or “ sundries,” as entry through the books, if the pass book
the case may be,appear,as well as any other has been in the customer's possession sub
particulars which are necessary . sequent to the date of the wrong entry and
Some customers prefer a pass book which before its correction , the customer's atten
shows their balance from day to day, and tion should be drawn to the correction when
therefore some banks provide a book ruled it is made. It has been held that where a
like a ledger with columns for the date, book has been formally balanced after such
particulars, debit amounts, credit amounts, a correction and the customer raises no
“ Dr. or Cr., ” and balance. In such books objection he has assented to it . See the
the various items are entered one after the judgments in the case of Shaw v. Dartnall
other as they appear in the ledger, and the ( 1826, 6 B. & C. 56) .
balance may be shown daily or at intervals als Some banks supplya form ofpassbook
as desired. A book of this description is use- specially made for the purpose of deposit
ful for deposit accounts where customers accounts where receipts are not given . The
prefer to have a book rather than a deposit book is ruled, practically, in the same way as
receipt. the book issued by the Post Office Savings
475
PAS) DICTIONARY OF BANKING (PAS

Bank. Each item must be initialled by the Some banks have a recognised rule not to
cashier and the book must be presented enter up a pass book while a customer waits,
every time that a transaction takes place. but to send it to him by post as soon as
In some banks, particularly in London , all possible or to retain it till he calls again.
paid vouchers are returned to the customer The practice in some banks of entering only
each time the pass book is written up and the credit itemswhen a book is brought in,
given to him . and is waited for, is not a desirable one, as
In many banks the pass books are num- it does not give a proper statement of the
bered consecutively and a register of them position of the customer's account. It is
is kept. Whenever a new pass book is com- much better to advise the customer to leave
menced, a note of it is made in the register, the pass book in order that it may be fully
against the number of the book , the date and written up to date. If the customer wishes
the name of the account being recorded, an acknowledgment for the money paid to
and the number is entered on the heading of credit, instead of enteringit in the pass book
the customer's account in the ledger. when received, some bankers give the
A pass book and a deposit receipt are the customer a duplicate credit slip initialled, or
two principal guides by which the outside they initial the counterfoil of the customer's
public can judge of the quality of the clerical paying-in slip book. Credits should not, as a
work of a bank office, and if either of them is rule, be entered in a pass book before they are
negligently written it reflects upon all the posted in the ledger.
staff of the office, and is apt to give the bank Where a customer lives abroad, it is some
an undesirable reputation for carelessness. times more convenient to send him, instead
The three essential characteristics of a good of a pass book, a copy of his account written
pass book clerk are accuracy, neatness , and upon sheets of paper ruled in the same way
rapidity . as a pass book ; these are known as pass
Pass books should be sorted in alpha- sheets ” or “ statements of account." In
betical order so that when any are asked for some banks the pass book has been super
they can be found at once, and they should seded by statements in the case of large
be kept well written up to date. In fact, business accounts . The customer retains
the transactions of one day ought to be the statements and periodically may bind
entered in all the pass books on hand not them up with string ; and the bank can
later than the following day. When a pass keep the statements written up daily with
book is asked for by a customer it should , out having to wait for the return of a
before being parted with , be examined with pass book .
the ledger, the two sides cast up in pencil and In some cases a list of the Bank
the balance compared . A note should be Holidays is shown at the front of the pass
made in ink in the ledger of the date when book , with the information that “ Bills of
the book is given out, together with the Exchange falling due on Good Friday and
initials of the clerk responsible for the Christmas Day are payable on the previous
accuracy of the book ; this note is usually day ; those due on the other holidays being
made on the line of the last ledger entry payable on the following day .”.
which has been put into the pass book. Most banks supply on the fly -leaf of their
It saves time, and is very convenient, if pass books a listof their branches, principal
the folio of the ledger on which the cus correspondents, and, in the case of country
tomer's account appears, is noted on the back banks, the name of their London agents.
of the pass book , or some place where it can A notice which is sometimes printed in
be quickly seen. pass books is to the effect that cheques paid
Some banks have a notice printed at the in to a customer's credit cannot be drawn
beginning of the book, or on the back, re- against until they are cleared. In some
questing the customer to send in the book at books notice is given that the bank forwards
certain intervals, say weekly or monthly, to bills, cheques, and notes through the post
be written up, and also to leave it with the in the usual way and that the bank cannot
bank at the end of each half -year to be be accountable for any losses in trans
balanced . mission attendant on this mode of procuring
Some banks send out, yearly or half- payment . It is doubtful , however, whether
yearly, along with the pass books forms of a notice in a pass book will bind a customer
confirmation of balance to be signed by unless he has definitely agreed to the terms
the customers . of it .

476
PAS] DICTIONARY OF BANKING (PAS

Where a pass book is alleged to be lost, it to his credit, the more difficult it will be to
is well to wait some time before granting a prove that the customer has not altered his
duplicate, as a further search by the cus- position on the strength of that credit. A
tomer will probably discover the book. banker is at liberty to show that a mistake
When the book really cannot be found, the has been made even if the entry in the pass
manager usually issues a new one ; it should book has been formally initialled by an
be plainly marked " duplicate," and a note official of the bank . But a banker is not,
should be made against the account in the of course, excused from liability if he has
ledger, stating the reason why a duplicate received money for a customer and has
has been given and the date of its issue, asomitted to give him credit for it.
well as a record made of the fact in the pass When a customer obtains his pass book
book register. Where a pass book is lost, | from the bank, keeps it in his possession for
some bankers require that an indemnity be a certain time and then returns it to the
given before a duplicate is issued . (See bank without any comment, the ordinary
Lost Pass Book . ) conclusion is that the customer has ex
In Scotland, the pass books, in some of amined the book and found it to be correct ;
the banks, are initialled on the payments -in but this view of the matter may not be the
side by both teller and ledger clerk, and in one which the Courts will take in such a
other banks by either the teller or a clerk . case . For instance, in Chatterton v. London
The amount paid in is entered in the pass and County Banking Co. ( 1890, unreported ),
book in writing as well as in figures. Lord Esher, M.R. , expressed the opinion
The entries made in a pass book by a bank that a customer is not bound to examine his
0
may be used in evidence against the bank. pass book. He said : “ A hundred things
Where an entry showing a payment to a may happen to prevent him from looking
customer's credit has been made in a pass into it when he has got it, and what right
book in error, and the customer, relying upon has the bank to infer that he has looked
that credit, has drawn cheques against it or into it ? "
in some other way altered his position, the In Vagliano Brothers v. Bank of England
banker will be bound by that entry. But (1889, 23 Q.B.D. 243) , where the plaintiff
if the customer's position has not been had received his pass book half-yearly along
altered by the entry, the banker is at liberty with the paid cheques, which cheques he
to show that the entry was made bymistake. retained , and returned the pass book to the
An entry in a pass book in favour of a bank without any remark , Bowen , L.J., in
60
customer is prima facie evidence against the his judgment said : There is another point
banker, and an entry against a customer is to be considered. The plaintiff from timeto
prima facie evidence against the customer time received from the bank his pass
after the pass book has been seen by the book , with entries debiting the payments
customer and returned to the bank without made, for which the bank sent the bills
any comment being made. as vouchers, which were retained by the
In Commercial Bank of Scotland v. Rhind plaintiff when he returned, without objec
( 1860, 3 Macq. H.L.R. 643), Lord Campbell tion, the pass book. It was contended that
said : Considering that the pass book (as this was a settlement of account between
its name indicates) is a book which passes him and the bank, and that he had been
between the bankers and their customer, guilty of such negligence with respect to the
being alternately in the custody of each examination of the vouchers as would have
party , on proof of its having been in the prevented him from being relieved from this
custody of the customer, and returned by settlement of account. But there was no
him to the bankers without objection being evidence to show what, as between a cus
made to any of the entries by which the tomer and his banker, is the implied contract
bankers are credited, I think such entries as to the settlement of account by such a
may be primâ facieevidence for the bankers dealing with the pass book, or that, having
as those on the other side are primâ facie regard to the ordinary course of dealing
evidence against them ." between a banker and his customers, the
Where a mistake has been made the sooner plaintiff had done anything which can be
it is rectified the better, as the length of time considered a neglect of his duty to the bank
during which an erroneous entry remains in a or negligence on his part."
pass book may be important. The longer With reference to the expression “ settle
a customer sees a certain amount standing ment of account ” in the above judgment, an
477
PAS] DICTIONARY OF BANKING (PAS
account is considered to be a stated or loss in this case . ... Even if Mr. Walker
settled accountwhere the customer has given had himself gone to the bank, got his pass
a definite confirmation of the correctness book, and examined it so carelessly that he
of the account, or where the account has did not discover the fraud , still he would not
been balanced and ruled off as is done in pass have been bound by the payments made by
1

books at the end of each half-year. Some the bank.”

authorities consider that where a pass book A customer, however, will not be able
is given out with the balance entered in the successfully to object to the bank charges in
book in pencil it should be considered a his pass book if they are similar to those of
settled account, but other authorities do not previous half-years to which he never raised
attach much importance to a pencilled bal- any objection when returning his pass book.
ance and hold that it does not constitute a By 24 & 25 Vict . c. 98, Section 23, a false
settled account. entry in a pass book with intent to defraud
In Kepitigalla Rubber Estates, Lid. v. is forgery of an accountable receipt. And if
The National Bank of India, Ltd. ( 1909, a banker allows any entry in a company's
2 K.B. 1010) , with reference to the point that pass book to be made by an official of the
when a pass book is taken out of the bank company, in order to mislead an auditor in
by a customer or some clerk of his, and is the examination of the company's account,
returned without objection there is a settled the banker may be held liable for any loss
account between the bank and the customer which the company may sustain.
by which both are bound, Mr. Justice Bray Although the pass book has continued
said : “ I know of no authority in this practically in its present form for aa century,
country for this proposition ." He further Sir John R. Paget states that “ the present
said, in commenting upon another case, that position of the pass book is perhaps the
it would be absurd to " hold that the taking most unsatisfactory thing in the whole region
out of the pass book and its return consti- of English banking law ."
tuted a settled account. It would mean this In view of the various unsatisfactory
-that a secretary of a company by going decisions from a banker's point of view and
to the bank for his own purposes in order to the uncertainty which, in so many ways,
prevent the discovery of a fraud, and with attaches to the entries in a pass book, the
out knowledge on the part of any of the importance of having the book carefully and
directors, and getting the pass book (with a correctly written up cannot be too strongly
pencil entry in it of the balance) can bind insisted upon . A manager should give
the company for all purposes ." particular attention to pass books which
In Walker & Another v. Manchester and have not been brought in to the bank for
Liverpool District Banking Company, Ltd. some time, and endeavour to obtain them
( 1913, 108 L.T. 728) , the plaintiffs sought for the purpose of being written up ; and
to recover moneys which had been debited where pass books are allowed by customers to
by the defendants to their account without remain in the bank for a long period , it is
warrant from them , the bank having paid advisable to hand them out as opportunity
three forged cheques. The defendantscon- offers. A manager should aim at having
tended that if the pass book had been as free a circulation of pass books as
examined by the plaintiffs at the time when possible. When a pass book is full it should
the first of the three cheques was drawn be retained by the customer.
the subsequent forgeries would not have It may be of historical interest to mention
taken place. Channel, J., in his judgment, that before pass books were introduced , it
said that in his opinion the case was to all was the practice for a customer to come to
intents and purposes identical with the the bank and personally examine his own
Kepitigalla case (see above) which he would account in the ledger, whereupon he signed
follow . “ The authorities are rather against his name under the withdrawal entries, while
the contention that there is a duty on the the banker certified the payments -in in a
part of the customer to examine his pass similar way.
book. ... It is therefore unnecessary in this PASS BOOK REGISTER . In many banks
case to consider whether in no case is there aa all pass books bear a distinctive number,
duty on the part of the customer to examine and in the register a complete list of all the
his pass book , because even assuming pass books supplied to a branch is entered,
there is such a duty the breach of it could the numbers being shown in consecutive
not be said to be the effective cause of the order. Whenever a new pass book is used ,
478
PAS ) DICTIONARY OF BANKING (PAS

the date when it is commenced and the
name of the account for which it is required
are entered in the register against the same
number as appears upon the pass book. In
this way the pass book register corresponds
to the book of counterfoils of deposit
receipts .
PASS SHEETS. ( See Pass Book. )
PASSING A DIVIDEND . The expression
means not paying a dividend, and is to be
distinguished from " passing a resolution to
)
pay a dividend.”
PASSPORT. A passport is an official
document issued by the Foreign Office
vouching for the respectability of the
person named therein , and which is used
by that person when travelling in foreign
countries.
The Foreign Office issues the following
regulations respecting passports :
1. Applications for Foreign Office pass
ports must be made in the form printed on
the back of these regulations,and inclosed
in a cover addressed to “ The Passport
Office, 1 Lake Buildings, St. James' Park ,
London , S.W., ” or to “ The Branch Passport
Office, 36 Dale Street, Liverpool."
2. The charge for a passport is 7s. 6d.
Passports are issued in London between the
hours of 10 and 4 (Saturdays, 10 to 1 ) , and
in Liverpool between the hours of 9.30 and
4 (Saturdays, 9.30 to 1) , except on Sundays
and public holidays, when the Passport
Offices are closed , ormay be obtained through
the post if a postal order for 7s, 6d. made
payable to the Passport Office is forwarded
with the application. Postage stamps will
not be received in payment. Applications
should, if possible, reach the Passport Office
not less than four days before that on which
the Passport is required.
3. Foreign Office passports are granted--
( 1 ) To natural-born British subjects ;
( 2) To the wives and widows of such
persons ; and
( 3) To persons naturalised in the United scribed as such in their passports, which will
Kingdom , in the British Dominions be issued subject to the necessary qualifica
or Colonies, or in India.
A married woman is deemedtobe a sub-
indorsed, are valid for travelling anywhere
ject of the State in which her husband is for within
the time being a subject.
4. Passports are granted —
(1) In the case of natural -born British
subjects and persons naturalised | Empire.
479
in the United Kingdom , upon the
production of a declaration by the
applicant in the form printed at
the back of these regulations,
verified by a declaration made by
a member or official of any
banking firm established in the
United Kingdom, or by any
mayor, magistrate, provost ,justice
of the peace, minister of religion,
barrister -at -law , physician, sur
geon, solicitor, or notary public,
resident in the United Kingdom .
The applicant's certificate of birth
and other evidence may also be
required. Applicants serving in
His Majesty's Forces may have
their declarations verified by their
commanding officer.
(2) In the case of children under the age
of 16 years requiring a separate
passport, upon production of a
declaration made by the child's
parent or guardian , in a Form (B) ,
to be obtained upon application
to the Passport Office.
(3) In the case of persons naturalised in
any of the British self-governing
Dominions, upon production of a
recommendation from the High
Commissioner or Agent -General in
London of the State concerned ;
and in the case of natives of
British India, and persons natural
ised therein , upon production of a
letter of recommendation from the
India Office . Persons naturalised
or ordinarily resident in any of
the Crown Colonies must obtain
a letter of recommendation from
the Colonial Office.
5. If the applicant for a passport be a
naturalised British subject, the certificate of
naturalisation must be forwarded to the
Passport Office with the declaration or letter
of recommendation .
Naturalised British subjects will be de
tions.
6. British Passports, unless otherwise
British
the Empire, but do
not exempt the holder from compliance
with the immigration regulations in
force in the various countries of the
 PAS) DICTIONARY OF BANKING [PAY

7. Foreign Office passports are not avail- A passport is in the following form :
able beyond two years from the date of issue. No.
They may be renewed for four further
periods of two years each , after which fresh
passports must be obtained . The fee for Stamp
each renewal is 2s. 6d .

8. A passport cannot be issued by the

Foreign Office on behalf of a person already
abroad ; such person should apply for one We
to the nearest British Mission or Consulate . a Baronet of the United Kingdom of Great
Passports must not be sent out of the Britain and Ireland, a member of His
United Kingdom by post. Britannic Majesty's Most Honourable Privy
A statement of the requirements of Council, a Member of Parliament, etc., etc.,
foreign countries with regard to passports His Majesty's Principal Secretary of State
may be obtained upon application to “ The for Foreign Affairs
Passport Office.” Request and require, in the Name of His
A specimen signature of the applicant is Majesty, all those whom it may concern to
affixed to the passport when issued . allow
Recommendations from banking firms to pass freely without let or hindrance and to
should bear the printed stamp of the bank. afford every assistance and protection
Applicants, and persons recommending of which may stand in need ,
them , are warned that should any of the Given at the Foreign Office, London, the
statements contained in their respective day of 19
declarations prove to be untrue, they will Age of Bearer
render themselves liable to prosecution. years. Lithographed
The declaration to be made by an appli- | Profession of Arms Signature
cant for a passport must be in the appli- Bearer of of
cant's own handwriting ; and duplicate Signature of Secretary. Secretary
unmounted photographs must be attached, Bearer
one of which must be certified on the back
by the recommender. PAST DUE BILLS. When a bill is dis
The application must be accompanied by honoured by non -payment, a banker debits
a full statement of the circumstances in it to the account of the customer for whom
which the applicant desires to leave the it was discounted , and returns the bill to the
country and must be supported by satis customer ; but if the account will not
factory evidence as to the object of the permit of its being so debited , the bill is
proposed journey . charged to an account called “ overdue bills "
Employees of firms, or persons acting on or “ dishonoured bills " or “ past due bills,"
behalf of firms, must produce certificates and notice is given to the customer and to
from their employers as to the nature of the every other party to the bill, with aa demand
business on which they are proceeding for immediate payment. Any balance in
abroad . the customer's account may be held against
The route, destination, and proposed EXCH
the bill in part payment. OF(See BILL OF
date of departure must be given . ANGE, DISHONOUR BILL OF
Persons who are asked to verify the EXCHANGE.)
application and vouch that the applicant PAY DAY. Also known as settling day.
is a fit and proper person to receive a pass- The third dayof the settlementon the London
port, must do so only from personal know- Stock Exchange, when the cash for a stock
ledge of the applicant and not from informa- transaction is handed over by the purchaser,
tion obtained from other persons. through his broker, to the seller and differ
The stamp duty upon a passport is six- ences are settled. In most stocks, pay days
pence. occur twice a month, but in Consols, once
British subjects travelling to foreign only. (See SETTLING DAYS, STOCK
countries must be in possession of valid EXCHANGE.)
Passports bearing the visa of the Consular PAYABLE AS PER INDORSEMENT.
representative of the countries to be visited. These words, or " exchange as per indorse
All visas should be obtained before departure ment,” are sometimes found on bills of ex
from the United Kingdom . change which are drawn, say, in this country
480
PAY) DICTIONARY OF BANKING [PAY

in English money and are payable in a foreign of Brown, the banker is entitled to ask for
country. The rate of exchange at which exhibition of the probate of Brown's will.
such a bill is first negotiated is indorsed on If a payee's name is misspelt, he should
the bill and constitutes the rate at which it is indorse the bill or cheque in precisely the
payable . same way, and add his proper signature
PAYEE. The payee in a bill, or cheque, below .
is the person named therein to whom , or to A cheque which is payable to “ John
whoseorder, payment is directed to be made. Brown only ” is not capable of being trans 60
If the bill is payable to “ John Brown or ferred to anyone else, as the word only "
order," John Brown is the payee, and he cancels the negotiability of the instrument.
should indorse it before the bill can be a bill payable to “ John Brown only ”
negotiated. When he has indorsed it — that should not be discounted as, in the event of
is, has written his name upon the back - he the bill being dishonoured , the banker
is called an indorser . could not sue upon it.
Bills are frequently drawn “Pay to me Where there are several payees and the
or my order.” In such bills the drawer and bill is payable in the alternative to one or
the payee are the same person , and the some, only those who actually indorse the
drawer must indorse the bill before negotia- bill are liable thereon .
tion. By Section 5, s.s. 1 , of the Bills of If the payee is an infant, or corporation
Exchange Act, 1882, “ A bill may be drawn having no power to contract, the payee can
payable to , or to the order of, the drawer ; indorse and effectually transfer the bill to
or it may be drawn payable to, or to the another party , but such a payee will not be
order of, the drawee ." liable on the bill.
Until a payee indorses a bill he is not liable A banker is under no liability to the payee
thereon, but when he indorses it he incurs of a cheque, unless he has marked the cheque
the liabilities of an indorser. (SeeINDORSER.) for payment, or in some other way giventhe
The Bills of Exchange Act, 1882, Section payee to understand that the cheque will be
7, provides as follows : paid. (See MARKED CHEQUE .)
“ ( 1 ) Where aa bill is not payable to bearer, In the case of a cheque drawn Pay
the payee must be named or other order ," it has been held as
wise indicated therein with reason being payable to the order of the drawer
able certainty . and, therefore, requiring his indorsement
“ (2) A bill may be made payable to two ( Chamberlain v. Young, 1893, 2 Q.B. 206).
It is not a banker's duty to advise a holder
or it may to insert his own name in the blank . If
or made
be payablejointly,
more payees in the alternative
to one of two, or one or some of not indorsed by the drawer, the best course
several payees. A bill may also is to get the incomplete cheque completed
(

be made payable to the holder of by the drawer. If payable to

an office for the time being.
or order ” the cheque should be returned
for the drawer to insert the payee's name.
" (3) Where the payee is a fictitious or Where a payee is dead, his executors, or
non -existing person the bill may be administrator, may indorse and negotiate
treated as payable to bearer. " the cheque, and the indorsement should
When a person accepts a bill, he is pre- show the capacity in which they sign.
cluded from denying to a holder in due As provided in Section 7, s.s. 3, a bill pay
course the existence of the payee and his able to a fictitious or non -existing payeemay
then capacity to indorse. The acceptor is be treated as being payable to “ bearer." In
not, however, responsible for the genuineness the Bank of England v. Vagliano Brothers
or validity of the payee's indorsement. it was held that a fictitious
(1891, A.C. 107)
Where a bill or cheque is payable to two or non - existing person included a real person
or more payees who are not partners, all must who never had nor was intended to have any
indorse, unless there is an authority for one right to the bills. (See FICTITIOUS PAYEE.)
of them to sign for the others. If one of In Scotland, when the payee is a married
them is dead, payment may be made to the woman, cheques are frequently made pay
survivor on satisfactory proof of death. able to, e.g. Mrs. Mary Burns or Scott,
Where a cheque payable to John Brown is Burns being the maiden name and Scott the
presented over the counter by a stranger married name. The cheque may be indorsed
00 )
who represents himself to be the executor either “ Mary Burns or Mary Scott.”
481
31- ( 1335 )
PAY] DICTIONARY OF BANKING [PAY

Where a cheque is payable to “ Wages or principals to permit of cheques being dealt

order ," Cash or order ," or “ House with in that way.
Account or order,” it should be treated as a Where a payee's name was altered and
cheque payable to the order of the drawer the alteration was not authenticated by the
and be indorsed by him , as such words as initials of both the directors who had
wages ,' cash," etc., cannot be regarded drawn the cheque, see the case of Souchette
as coming under Section 7, s.s. 3, which Ltd. v. London County Westminster & Parr's
refers only to a fictitious or non -existing Bank, Ltd., under ALTERATIONS .
person . In the case of a dividend warrant where
Where a cheque is payable to “ John several payees are named , it is the custom
Brown or order, " and John Brown himself to pay upon the indorsement of one of them ;
presents it at the counter for payment, it is but an interest warrant should , strictly , be
the practice of bankers always to require indorsed by all the payees, though this is not
it to be indorsed by Brown before payment always done in practice. (See BILL OF
can be made. It would appear, however, EXCHANGE, CHEQUE, INDORSEMENT.)
that, legally, a cheque when presented by the PAYING BANKER . The banker upon
payee is payable to him without indorsement. whom a cheque is drawn, or at whose office
Sir John R. Paget says : “ The common a bill is accepted, and who pays it, either
practice of paying bankers to refuse payment to the holder or to a collecting banker, is
unless the ostensible payee signs on the called the paying banker.
back of the cheque seems therefore without It is the duty of a paying banker to pay
justification . ” The custom of always re- the cheques of his customer so long as he has
quiring the payee's indorsement on an order sufficient funds belonging to his customer to
cheque should, however, not be departed enable him to do so. Before paying a cheque
from except perhaps in some unusual case a banker must, of course, examine it to see
when the payee insists on payment without that it is properly signed, that the indorse
indorsement. In such a case a banker might ments are correct and, generally , that the
be able to postpone payment until he had cheque is in order .
communicated with the drawer. It is some- In the case of bills domiciled with a banker
what difficult to see how a banker could be it is part of his duty either from custom or by
held liable for refusing payment of a cus- instructions of his customer, to pay them ,
tomer's cheque because the payee declined though he is otherwise not legally bound to
to indorse it in accordance with the custom do so as in the case of a cheque. The paying
of bankers . A banker's customer knows banker is the drawee of a cheque, and there
that it is the practice to require all cheques fore a party to it, but he is not a party to a
payable to order to be indorsed , and if, on bill which is merely domiciled with him .
receiving back his paid cheques , he found If a drawer's or an acceptor's signature
that a cheque which he had drawn payable is forged , a banker cannot debit his cus
to “ John Brown or order ” was not indorsed | tomer's account with the cheque or bill.
by John Brown, he might reasonably main- With regard to indorsements the position
tain that the cheque showed no evidence of the paying banker is :
of ever having been in the hands of John Bill. — He cannot debit his customer's
Brown, and that he was entitled to have that account with a bill bearing a forged indorse
evidence . In the case of a payee declining ment . The Bills of Exchange Act does not
to indorse , the banker should demand a give him any relief from a forged indorsement
receipt for the money ; and if £2 or over on a bill.
the receipt should be stamped . CHEQUE .-If a banker pays a cheque in
If a cheque payable to, say, the British good faith and in the ordinary course of
Baking Company, Ltd. , is paid to credit of business, he is protected against a forge
the manager's or secretary's private account, indorsement by Section 60 of the Bills of
it should put the banker on inquiry at once, Exchange Act, 1882. (See PAYMENT OF BILL.)
as he may be held liable if the cheque has Sir John R. Paget suggests in his Law
been misappropriated. If it is necessary of Banking " (page 60) , that a cheque which
for agents , as, for instance, in the case of contains a restriction that it is payable only
insurance companies, to place to the credit iſ presented within a specified period may
of their private accounts cheques which not be included under the term cheque, as
are payable to their principals, the banker defined by the Bills of Exchange Act.
should be duly authorised in writing by the Cheque payable on condition that a form of
482
PAY] DICTIONARY OF BANKING [PAY

receipt is signed . - The banker is protected slip for use at the British Banking Company,
by Section 17 of the Revenue Act, 1883, Ltd., Leeds.
if paid to the payee. It is not considered It is seen that a place is provided for the
a transferable document. (See RECEIPT ON folio of the customer's account in the ledger.
CHEQUE .) Gold , silver, copper, and notes are shown
Cheque crossed account payee.” — The separately . The cheques are separated into
words account payee " do not concern three divisions, Leeds, London , and Country,
the paying banker, so long as he pays to a Postal Orders being included with the local
banker in accordance with the crossing. He cheques on Leeds banks. If a separate slip
crossed cheque . (See ACCOUNT PAYEE .) is not used for undue bills, they could be
Cheque crossed " not negotiable.” — The detailed on the back of the credit slip and
words “ not negotiable " do not affect the entered in total below “ Country cheques .” )

paying banker. The cheque is treated as There is a space provided on which the
an ordinary crossed cheque, and the banker person paying in may sign, and a place for
is protected accordingly.
Crossed Cheque .-- The banker is protected
by Section 80 of the Bills of Exchange Act
( see CROSSED CHEQUE ), when he pays a
cheque, crossed generally, to a banker, or
crossed specially to the banker to whom it is
crossed or his agent for collection being a
banker.
DRAFTS (which are not cheques).--The
banker is protected against a forged indorse-
ment on a draft on demand by Section 19
of the Stamp Act, 1853. (See DRAFT ON
DEMAND .) ( See CHEQUE, COLLECTING
BANKER, PAYMENT OF CHEQUE .)
PAYING -IN SLIPS. Paying -in slips, or
credit vouchers, are the forms which are
filled up showing the amount of gold, silver,
copper, notes, bills, and cheques which are
paid in to the credit of a customer's account.
Each slip should be signed by the customer,
or the person who has prepared it on his
behalf. The name of the account should
be distinctly stated and the date should be
that of the actual date on which the money
is paid in. Any alteration in the date or
amount should be duly initialled by the
person signing the voucher. It is usual
for the cashier receiving the credit to initial
the voucher, and sometimes he also initials,
or stamps with a rubber stamp, a duplicate
slip, or, if a book of creditslips is used by the
customer, the counterfoil, as an acknow-
ledgment to the customer that the cash ,
etc., has been duly received. A cashier's
initials upon the counterfoil or duplicate
voucher does not in any way mean that
the cheques and bills included in it are in
order. Some banks enter undue bills on the
same slip as cash and cheques, but it is much
better to enter them on a separate form .
Credit slips vary somewhat in form . Some
are printed lengthwise, like cheques ; whilst
others are printed crosswise .
On page 484 is a specimen form of credit
483
the initials of the receiving cashier.
A slight variation in the printing is usually
adopted for slips to be used by a person
paying in at one branch for the credit of an
account at another branch , or at another
bank ; frequently such slips are further
distinguished by being of a particular colour.
There are also many different forms of slips
in use by different firms and companies,
which are used by their agents all over
the country in paying in for their credit
in London, or wherever the account is kept.
If Jones pays in at the British Bank,
Leeds, various cheques for the credit of the
Universal Bread Co. at the Hull branch of
that bank, and one of the cheques should
be dishonoured, the Leeds branch will debit
the Hull branch with the amount of the
unpaid cheque and send the cheque to Hull,
and Hull will pass it on to the Bread Co.
Some bankers print upon their paying -in
slips a notice that cheques, etc., for collec
tion , though credited to the account when
paid in, are not available for drawing
against until the proceeds have been received
at the branch . (See EFFECTS Not CLEARED. )
Paying-in slips may also contain a notice
requesting customers to cross all cheques
before paying them in. (See CROSSED
CHEQUE .)
If Jones pays -in to the credit of Brown,
and an acknowledgment of the sum is
given to Jones it requires a receipt stamp,
if for £2 and over . An advice of the credit
to Brown, or an acknowledgment of a credit
from Brown, is not subject to stamp duty.
(See RECEIPT, Exemption 1. )
Where Jones pays in country cheques to
the credit of another customer's account, it
is usual for the banker, when advising that
customer of the receipt of the credit, to
state that it consists of cheques which have
not yet been cleared .
Where an official of a company pays in to
PAY] DICTIONARY OF BANKING PAY

Gold .
Gold Silver
Silver
Copper Copper
Notes
Notes
Total Cash .
Total Cash .

Cheques. Leeds Cheques and P.O.'s. Country Cheques

London Cheques.
Ledger
Bank
Folio

For Credit of
Total- Leeds Cheques and Postal Orders
.

-London Cheques
-Country Cheques
at the British Banking
Company, Ltd., Lee .
To the British Banking Company, Ltd., Leeds.
Paid in by Credit the account of
Received by
Date 19 Paid in by
Received by . Date .... 19 .

the credit of the company's account, cheques prove upon the estate subject to a rebate
payable to the company, it is not permissible of interest at the rate of 5 per cent. per
for the official to receive part of the amount annum from the time when the dividend is
back in cash by simply making a deduction declared to the date when the bill would be
on the credit slip. A banker can pay out due. (Bankruptcy Act, 1914, Schedule 2,
only when a cheque is drawn upon the Rule 22.)
account in the authorised way. CHEQUE. — When a cheque is taken in
Credit slips should be retained by a settlement of a debt and the cheque is dis
banker and not be given up to a customer honoured, the debt is not discharged , unless
along with paid cheques. the person receiving the cheque did not
The paying-in slips used for deposit present it for payment within a reasonable
receipts are called " application forms. time. The drawer of the cheque, however,
PAYMENT BY. BILL. — Where an undue remains liable for six years from its date,
bill is taken in payment of a debt, the debtor
except to the extent of any actual damage
he has suffered due to delay in presentment
cannot be sued for the debt until the bill is
due and is dishonoured ; that is, the for payment. (See PRESENTMENT FOR
creditor's right to sue for the debt is, by PAYMENT .)
taking the bill, postponed till the maturity COUNTRY BANK NOTES (q.v.).
of the bill. A creditor is not obliged to accept any
Where a bill, indorsed by a debtor to his thing but legal tender in payment of a debt,
creditor, is dishonoured, the creditor must and if he agrees to accept a bill or a cheque
give the usual notices of dishonour to the (which do not form a legal tender) they
drawer and each indorser, otherwise the operate as a discharge of the debt only if
debtor will be discharged from the debt. they are duly honoured .
(See DisHONOUR OF BILL OF EXCHANGE . ) PAYMENT FOR HONOUR . When an
In the event of theacceptor's bankruptcy, acceptor fails to pay a bill at maturity, any
the holder of a bill which is not yet due may person may, after the bill has been protested,
484
PAY ) DICTIONARY OF BANKING [PAY
pay it suprà protest for the honour of some PAYMENT OF BILL. A bill of exchange
party to the bill. is, in the usual course of events, paid by the
The regulations regarding payment for acceptor, and when so paid it is discharged
honour suprà protest are contained in Section and the bill delivered up to him . The Bills
68 of the Bills of Exchange Act, 1882, which of Exchange Act, 1882, provides :
is as follows : Section 59. (1 ) A bill is discharged by
“ (1 ) Where a bill has been protested for payment in due course by or on
non - payment, any person may behalf of the drawee or acceptor.
intervene and pay it suprà protest “ Payment in due course' means
for the honour of any party liable payment made at or after the
thereon , or for the honour of the maturity of the bill to the holder
person for whose account the bill thereof in good faith and without
is drawn . notice that his title to the bill is
“ (2) Where two or more persons offer 60
defective.
to pay a bill for the honour of (2) Subject to the provisions hereinafter
different parties, the person whose contained , when a bill is paid by
payment will discharge most parties the drawer or an indorser it is not
to the bill shall have the preference. discharged ; but
“ (3) Payment for honour suprà protest, “ (a) Where a bill payable to, or
in order to operate as such and to the order of, a third
not as a mere voluntary payment, party is paid by the drawer,
must be attested by a notarial act the drawer may enforce
of honour, which may be appended payment thereof against the
to the protest or form an extension acceptor, but may not re
of it. issue the bill.
10
(4) The notarial act of honour must be “ ( ) Where a bill is paid by an
founded on a declaration made by indorser, or where a bill
the payer for honour, or his agent payable to drawer's order
in that behalf, declaring his inten is paid by the drawer, the
tion to pay the bill for honour, party paying it is remitted
and for whose honour he pays. to his former rights as
" (5) Where a bill has been paid for regards the acceptoror ante
honour, all parties subsequent to cedent parties , and he may ,
the party for whose honour it is if he thinks fit, strike out
paid are discharged, but the payer his own and subsequent
for honour is subrogated for, and indorsements , and again
succeeds to both the rights and negotiate the bill.
duties of, the holder as regards the “ ( 3) Where an accommodation bill is
party for whose honour he pays, paid in due course by the party
and all parties liable to that party. accommodated the bill is dis
" (6) The payer for honour on paying charged .”
to the holder the amount of the The following Section particularly con
bill and the notarial expenses cerns bankers with respect to " a bill on
incidental to its dishonour is en- demand drawn on a banker
“ 60. When a bill payable to order on
titled to receive both the bill itself
and the protest. If the holder do demand is drawn on a banker, and the
not on demand deliver them up banker on whom it is drawn pays the bill in
he shall be liable to the payer for good faith and in the ordinary course of
honour in damages. business, it is not incumbent on the banker
* (7) Where the holder of a bill refuses to show that the indorsement of the payee
to receive payment suprà protest or any subsequent indorsement was made
he shall lose his right of recourse by or under the authority of the person
against any party who would have whose indorsement it purports to be, and
been discharged by such payment ." the banker is deemed to have paid the bill
(See ACCEPTANCE FOR HONOUR, in due course, although such indorsement
BILL OF EXCHANGE.) has been forged or made without authority ."
60
PAYMENT, MISTAKES IN. (See Mis- Section 61. When the acceptor of a
TAKES IN PAYMENT.) bill is or becomes the holder of it at or after
485
PAY] DICTIONARY OF BANKING (PAY

its maturity, in his own right, the bill is received for the cheque, or the bill may be
discharged .” pinned to the cheque so that the drawer can
“ Section 62. (1 ) When the holder of a obtain it from his bankers when the cheque
bill at or after its maturity abso- has been paid ; but a cheque which can
lutely and unconditionally re not be cashed the same day should not be
nounces his rights against the taken. It is necessary to bear in mind that
acceptor the bill is discharged. if a cheque is taken in payment of a bill
“ The renunciation must be in and the cheque is subsequently returned
writing, unless the bill is delivered unpaid , the banker will have lost recourse
up to the acceptor. against the various parties to the bill and
“ (2) The liabilities of any party to a will have only the acceptor to look to for
bill may in like manner be re- the money. London bankers accept cheques
nounced by the holder before, at, upon clearing bankers in payment of bills,
or after its maturity ; but nothing the cheques being attached to the bills and
in this Section shall affect the passed at once through the Clearing House ,
rights of a holder in due course If a bill drawn on John Brown, Leeds,
without notice of the renunciation ." payable at sight, contains a note on the bill
If an acceptor pays the amount of a bill that it is “ payable in London ,” and John
before it arrives at maturity, he may, should Brown wishes to pay the bill in Leeds when
he wish to do so, re -issue the bill, because, presented to him , he must bear any cost
being paid before it is due, it is not dis- there may be in transmitting the money to
charged . If he does not wish to re-issue the London as the holder of the bill is entitled
bill, he should cancel or destroy it, for if, by to have the full amount paid in London .
any means, the bill should come into the Where a bill indorsed to the holder by the
hands of a holder in due course, before it bank at which the acceptor had made it
matures, that holder will have a right of payable, was paid by the bank at maturity
action against the acceptor and all other and dishonoured on the following day it was
parties to the bill. held (in Pollard v. Ogden, 1853, 2 E. & B.
When a bill payable on demand is paid , it 459) , that the bank had paid the bill in
is discharged and cannot be re -issued ; and their capacity as indorsers, and that they
when a bill payable after date is paid at reserved to themselves the right to examine
or after maturity it also is discharged and into the state of the acceptor's accounts and
cannot be re-issued . determine whether they would honour the
No right of action can be maintained on bill or not. Mr. Justice Erle said : “ I think
a discharged bill, though the right to sue it is clear law that the holder of a bill indorsed
upon the consideration may still continue. to him by a bank at which the acceptor has
If an acceptor pays only a part of the made it payable may, if the bank choose to
amount of a bill at maturity, the part pay- dishonour the bill, receive payment forth
ment is a discharge to that extent, and the with from the bankers in their capacity as
banker should place a receipt for the amount indorsers. ... The bank might have said
6

paid upon the back of the bill and qualify to the holder ' we require a reasonable
the receipt by adding that the part payment time to examine into the state oftheaccounts
is accepted by him without prejudice to the between us and the acceptor before we either
rights of any of the other parties to the bill. honour or dishonour this bill ; but in case
Notice of the part payment should be given we determine to dishonour it we shall be
to the other parties. The bill itself is not, liable to you as indorsers ; therefore, to save
of course, given up against a part payment. trouble , take your money ; if we honour
are
The bill should be noted for the unpaid the bill you are paid ; if not, we
balance. taking it up as indorsers of a dishonoured
In the case of part payment of a foreign bill.' ”
bill, the bill must be protested for the A banker may, as is the custom with
balance. London bankers, debit a bill to an acceptor's
A bill should not, as a rule, be given up account, when payable at that banker's,
to an acceptor when, on presenting the bil without requiring any advice from the
to him for payment, he offers anything acceptor, the acceptance being a sufficient
except cash or notes. If a cheque, which authority, but in practice, many country
can be collected the same day, is offered, the bankers usually require an advice. Country
bill should be retained until cash has been bankers often receive from an acceptor
486
PAY ] DICTIONARY OF BANKING
periodically a list of his bills falling due
and an order to pay them . The customer's
signature on an advice should not be
cancelled .
A banker is not obliged to pay a bill after
his usual hours of business.
If an acceptor in good faith pays a bill
indorsed in blank and without notice of
any defect there may be in the title, the bill
is discharged ; but if the acceptor pays a bill
which has been specially indorsed and the
indorsement should prove to have been
forged, the bill is not discharged by such
payment and the acceptor is liable to pay it
again to the true owner.
Before paying a bill the banker should see
that it is in order in all respects. He must
be satisfied that it bears the acceptor's
signature. He should verify the due date
and see that the stamp is correct . (See
remarks under PAYMENT OF CHEQUE .)
In Bank of England v. Vagliano Brothers
(1891, A.C. 107) , Lord Macnaghten said :
" In paying their customers' acceptances in
the usual way bankers incur a risk perfectly
understood, and in practice disregarded.
Bankers have no recourse against their
customers if they pay on a genuine bill to
a person appearing to be the holder, but
claiming through or under a forged indorse-
ment. The bill is not discharged ; the
acceptor remains liable ; the banker has
simply thrown his money away . " (See
FORGERY.)
When a promissory note is made payable
at a bank, the banker is liable if he pays it
in the event of a forged indorsement .
If the acceptor fails to pay a trade bill at
maturity and an indorser or the drawer
pays it, the bill is not discharged by such
payment, and the drawer can sue the
acceptor for the amount plus expenses and
interest, and the indorser can sue the
acceptor or any prior parties.
But if a bill is an accommodation bill and
is notmet by the acceptor when due, it is,
if paid by the drawer or indorser, discharged,
when the party paying it is the person for
whose accommodation the bill was drawn
or accepted .
If an acceptor or any other person pays
to a banker an amount for the special pur-
pose of providing for a bill falling due, that
amount is earmarked for that purpose and
cannot be used by the banker for any other
purpose, such as to reduce an overdraft
which the acceptor may have .
Where a person accepts a bill payable at
487
[PAY
a banker's where he has no account, the
banker is under no obligation to receive
money from the acceptor with which to pay
the bill.
Where a bill is intentionally cancelled
by the holder or his agent, and the can
cellation is apparent thereon, the bill is
discharged.
It is not necessary, on payment of a bill
.
by the acceptor, to give a receipt for the
money, as the delivering up of the bill to the
acceptor is sufficient to cancel his liability
upon it, but if, as is sometimes done, a
receipt is indorsed upon the bill by the
holder the receipt (except in the case of a
banker) requires to be stamped 2d. in the
same way as any ordinary receipt.
Where the holder of a bill is bankrupt,
payment of the bill requires to be made
to the trustee and not to the bankrupt.
Where the holder is dead payment must
be made to the executor or administrator.
If, instead of payment, a holder accepts
a fresh bill from the acceptor, the drawer
and indorsers of the old bill will be dis
charged, unless they are parties to the new
bill.
When a banker is employed to collect a
bill, he should not, unless under instructions
from his correspondent, accept payment
subject to any conditions, otherwise he may
render himself liable for the amount of the
bill.
With respect to a bill paid under rebate,
see DOCUMENTARY BILL .
If a banker wrongfully dishonours an
acceptance of his customer he will be liable
in damages. (See DISHONOUR OF BILL OF
EXCHANGE .) He should, therefore, be care
ful to see that everything has been credited
to the account and that the balance is
correctly stated, before returning a bill.
If a banker pays a bill across the counter,
and, as soon as he has done so, finds that
he should not have paid it, he cannot compel
the person to whom he paid the money to
return it, though if a mistake is made by
handing too much money to the customer
the mistake may be rectified. (See BILL OF
EXCHANGE, CANCELLATION OF BILL OF
EXCHANGE , OVERDUE BIL, PAYMENT FOR
HONOUR , PAYMENT OF CHEQUE , PRESENT
MENT FOR PAYMENT, TIME OF PAYMENT OF
BILL.)
PAYMENT OF CHEQUE. When an open
cheque is presented for payment it requires
tobe carefully scrutinised to see that every
thing is in order. If the account upon which
PAY ] DICTIONARY OF BANKING [PAY

the cheque is drawn will admit of its When a cheque is presented for payment,
payment, the banker, before paying it, must a banker is required either to pay it or
be satisfied that it bears the signature of his dishonour it. If everything is in order he is
customer, or of the person who may have obliged to pay it, or stand the consequences
been authorised by his customer to sign, and of wrongfully refusing to pay.
that payment of the cheque has not been It is possible for everything connected
stopped by the drawer. If it is a cheque with a cheque to be absolutely correct and
payable to order, all the indorsements must yet the cashier who has to pay it may have
be scanned to see that they are apparently a strong suspicion that the person presenting
correct. It should also be noticed whether it is not entitled to it. Lord Halsbury in
the cheque is post-dated or is stale dated, Vagliano Bros. v . Bank of England (1891,
whether the amount in writing agrees with A.Č. 107) , said : “ I can well imagine that
the amount in figures, and whether, if any on a person presenting himself, whose
alteration has been made in the cheque, appearance and demeanour was calculated
such alteration is duly initialled by the to raise a suspicion that he was not likely
drawer, or drawers . On being satisfied that to be entrusted with a valuable document
all these various points are in order, and that for which he was to receive payment in cash,
there is no other reason why the cheque I should think it would be extremely pro
should not be paid , the banker may, if the bable that, whether the document were a
person presenting the cheque appears, so cheque payable to bearer for a large amount
far as he can tell, to be entitled to it, pay the or a bill, the counter clerk and banker alike
cheque . would hesitate very much before making
If a cheque has been marked for paymentpayment."
it must be taken into account in ascertaining
When a cheque has a notice upon it that
the balance, as the banker must pay that it must be presented for payment within
cheque . a certain fixed time from the date of the
If a banker dishonours a cheque which cheque, the banker must see that the time
ought to be paid he will be liable indamages. i has not expired before paying the cheque.
In London Joint Stock Bank , Ltd. v. Where a customer has two accounts with
Macmillan and Arthur ( 1918, A.C. 777) , the samebank, one at Branch A and another
Lord Shaw said : “ If the cheque do not at Branch B, and both are credit accounts,
contain on its face any reasonable occasion the banker at Branch A, when a cheque
for suspicion as to the wording and figuring drawn upon his Branch is presented, is not
of its contents, the banker, under the con- | obliged to take into consideration a balance
tract of mandate which exists between him at any other Branch than his own . If,
and his customer, is bound to pay. He dare however, the account at Branch B is over
not, without liability at law , fail in this drawn and at Branch A is in credit, a
obligation, and the consequences to both banker may , if necessary , regard them as
parties of the dishonour of a duly signed one account. (See BRANCHES.)
and ex facie valid cheque are serious and A banker at Branch A is not obliged,
obvious. In the second place, if there be on before dishonouring a cheque, to ascertain ,
the face of the cheque any reasonable by wire or otherwise, if the customer has
ground for suspecting that it has been paid in at Branch B on that day for his credit
tampered with , then that, in the usual case, at A, even though the customer is in the
is met by the marking ' refer to drawer ,' habit of paying in at B.
and by a delay in payment, until that refer- It is very necessary, before paying a
ence clears away the doubt. Always granted cheque, that the banker should be fully
that the doubt was reasonable, the refusal satisfied that it ought to be paid, because,
to pay is warranted." In practice, however, as soon as he hands the money across the
a banker would return such a cheque marked counter, the ownership in that money
with some other form of answer than the passes from the banker to the person pre
words “ refer to drawer,” as those words senting the cheque, and, unless the presenter
are commonly used when returning a cheque is willing to repay, the banker cannot obtain
for lack of funds . it back, even if he discovers immediately
When paying a crossed cheque to another that the money should not have been
banker practically the same points require handed over. Chief Justice Erle in Cham
to be observed and in addition the nature bers v. Miller (1862, 13 C.B.N.S. 125) , said :
of the crossing. (See CROSSED CHEQUE .) “ The bankers' clerk chose to pay the
488
PAY ) DICTIONARY OF BANKING [ PAY

cheque ; and the moment the person pre- Nevertheless, as all the cheques form one
senting the cheque put his hand upon the presentment, it is probable that the banker
money it became irrevocably his ." might not be wrong in considering merely
Where a banker has given his agent the total of the amounts, and not the
orders to pay certain cheques, or cheques individual amounts, and returning all the
up to a fixed amount, on behalf of a cus - cheques if the total amount was in excess
tomer, the cheques, when paid , are debited of the balance.
to the customer's account on the day they A cheque does not operate as an assign
are received by the banker, but the interest ment of the drawer's funds in the hands of
on the account is reckoned as though the the drawee, but in Scotland it is otherwise .
cheques had been debited on the actual date See Section 53, Bills of Exchange Act, 1882,
when they were paid by the banker's agent. under DRAWEE .
(See STANDING CREDITS.) Before returning a cheque a banker should
Where a cheque for, say, f20 is presented make certain that everything has been
for payment and the drawer has only £19 to credited to the account and that the balance
credit, and the banker refuses payment, the is stated correctly, for if he wrongfully
presenter should not be told how much is dishonours a cheque of his customer he will
short in order to enable him to pay in the be liable in damages. Bank charges should
pound and thus obtain payment. But if not be debited to an account at an unusual
the presenter ascertains the amount from time, unless by agreement with the customer.
some other source, the banker cannot refuse (See DISHONOUR OF BILL OF EXCHANGE.)
to accept the sum for his customer's credit, With respect to cheques which a customer
even if paid in by the person who imme- has paid in, but which the banker has not
diately thereafter presents thecheque for£ 20. yet cleared, it forms a matter of arrange
When a banker learns that a customer is ment between the banker and the customer
dead , or has become insane, or he receives as to whether, or not, they are to be con
notice of the presentation of a bankruptcy sidered as definitelyplaced to the customer's
petition, or ascertains that a receiving order credit and so available as funds in hand
has been made, he must not pay any further wherewith to meet any of the customer's
cheques on the account, butreturn them to own cheques which may be presented, and
the presenter with answer written upon them it is very advisable to have a definite under
Drawer deceased ," Drawer bankrupt," standing on the point. Subject to whatever
etc. (See ActS OF BANKRUPTCY.) arrangement has been made between him
As to payments to undischarged bankrupts, self and his customer, the banker will either
see under BANKRUPT PERSON . pay such cheques or return them unpaid
Where a banker has been served with a with answer marked thereon “ Effects not
garnishee order, see GARNISHEE ORDER. cleared . " Some banks have aa notice printed
In cases where a cheque has aa bill attached, in the pass books that uncleared cheques
if the cheque specifically refers to the bill, cannot be drawn against. (See EFFECTS
the banker must see that the bill, as well as Not CLEARED. )
the cheque, is in order ; but if the cheque A banker who, in good faith and in the
does not allude to the bill the cheque must ordinary course of business, pays a cheque
be dealt with, without regard to the bill. drawn on himself, is protected by Section60
Cheques must be paid in the order in of the Bills of Exchange Act, 1882 (the
which they are presented. A cheque which section is recited under PAYMENT OF Bill) ,
arrives in the morning's letters must be paid, even though an indorsement proves to have
if the account will admit of it , and must not been forged or made without authority.
be dishonoured in order to admit of a cheque A banker who pays a crossed cheque, in
presented across the counter later in the day accordance with Section 80, is protected
being paid. against a forged indorsement. (See that
If aa cheque is dishonoured because of Section under Crossed CHEQUE.)
insufficient funds, a cheque presented subse- A banker is not obliged to pay a cheque
quently should be paid if the funds are out of bank hours. In fact, if he does so,
sufficient for it . he runs the risk of paying a cheque, payment
Where several cheques arrive by letter of which may be “ stopped ” by the drawer
and the account will not admit of payment as soon as the bank doors are opened for
of them all, a banker usually pays as many business.
of them as he can and returns the rest. As to a cheque presented through the post
489
PAY ] DICTIONARY OF BANKING (PAY

by a stranger, see under PRESENTMENT FOR | appealed to the Divisional Court, and
PAYMENT. It is, of course , in order for a Mr. Justice Darling said that a telegram
customer to send a cheque by post in order directing the bank not to pay a cheque,
that cash may be remitted to him. which in fact came from a customer of the
With respect to cheques drawn upon bank , was a sufficient countermand of pay
another banker or on a branch of the same ment, and that, on the other hand, if it did
bank in another town, which are presented not come from a customer it was not an
by a person whom the banker does not know , order at all. He therefore held that a tele
see COLLECTING BANKER. gram might be a sufficient countermand of
Cheques received through the Clearing payment, and he was strengthened in that
must be paid or dishonoured on the day of opinion because a witness from Hoare's
receipt ; cheques paid to credit which are bank said that a large proportion of the
drawn upon the same bank may be returned countermanding of payment of cheques was
unpaid on the following day, but in practice done by telegrams. Mr. Justice A. T. Law
all cheques are either paid or dishonoured on rence thought that merely sending or re
the day they are received. (See DISHONOUR ceiving a telegram , without the reading of
OF BILL OF EXCHANGE.) it, was not sufficient. Until the telegram
When a banker is requested by wire to was read it was not in fact a countermand of
state if a certain cheque will be paid when payment. Mr. Justice Lawrence withdrew
presented , a guarded reply such as that his opinion , and the appeal was dismissed .
recommended by the Institute of Bankers, The defendants appealed to the Court of
“ Would pay if in our hands and in order,"
0
Appeal, and the Master of the Rolls said :
should be given . A reply such as “ Yes, The question in this appeal is whether a
if in order," would render the banker liable cheque drawn by the plaintiff upon his
if, before the cheque is actually presented, bankers, the defendants, was countermanded
the customer's balance is altered so as not within the meaning of Section 75 of the
to admit of its payment, or if the cheque is Bills of Exchange Act, 1882, by reason of a
"stopped ” by the drawer, or if the balance telegram despatched by the plaintiff to the
is legally attached . (See ADVISE FATE. ) bank . ... Countermand is really a question
O

By Section 75 of Bills of Exchange Act, of fact. It means much more than a change
1882 : of purpose on the part of the customer. It
The duty and authority of a banker to means, in addition, the notification of that
pay a cheque drawn on him by his customer change of purpose to the bank . There is no
are determined by— such thingas a constructive countermand in
“ (1) Countermand of payment ; a commercial transaction of this kind . In
(2) Notice of the customer's death ." my opinion , on the admitted facts of this
It is desirable that a countermand of case, the cheque was not countermanded in
payment of a cheque should be in writing fact, although it may well be that it was due
and be signed by the drawer, and if the to the negligence of the bank that they did
countermand is subsequently cancelled it not receive notice of the customer's desire
also should be in writing. to stop the cheque. For such negligence the
In Curtice v. London City and Midland bank might be liable, but the measure of
Bank ( 1907 , reported as to the proceedings damage would be by no means the same as
in the Divisional Court at 23 T.L.R. 594 , in an action for money had and received .
and in the Court of Appeal at 1908, 1 K.B. I agree with the judgment of Mr. Justice
293) , the plaintiff sent a telegram to the Lawrence on this point, and that is sufficient
Bank requesting them not to pay a certain to dispose of the appeal. But as we have
cheque. The telegram was sent after hours had an argument addressed to us as to the
and was put in the bank letter box. The effect upon the duty of a bank of the mere
telegram was overlooked when clearing the receipt of a telegram , I wish to add a few
letter box next morning, and was not words. A telegram may reasonably and in
actually received till the following morning. the ordinary course of business be acted
In the meantime the cheque had been paid . upon by the bank, at least to the extent of
The County Court Judge held that a banker postponing the honouring of the cheque
receiving a telegram purporting to stop a until further inquiry can be made. But I
cheque disregarded it at his peril. He found am not satisfied that the bank is bound as
that the cheque was countermanded and a matter of law to accept an unauthenticated
gave judgment for plaintiff. The defendants telegram as sufficient authority for the
490
PAY) DICTIONARY OF BANKING [PAY

serious step of refusing to pay a cheque. | the lost cheque is signed only by, say, one of
The appeal must be allowed . the account holders, or by one partner, a
See further information under DISHONOUR notice from any of the other holders or
OF BILL OF EXCHANGE . (See BILL OF partners is sufficient authority to a banker
EXCHANGE, CHEQUE, COLLECTING BANKER, to justify him in stopping payment of the
PAYING BANKER, PAYMENT OF BILL.) cheque.
PAYMENT STOPPED (CHEQUE ). A When the drawer wishes to cancel his
customer has the right to give notice to his order to stop payment, it should be done in
banker to stop payment of a cheque which writing and be signed by him .
he has issued . The notice should be in When a drawer wishes to stop payment of
writing, give accurate particulars of the a cheque, he is entitled to do so during the
cheque and be signed by the drawer. usual business hours, and if a banker pays a
If a banker pays a cheque after a stop cheque before the commencement of busi
order " has been received , he will be liable ness or after the doors are closed, he incurs
for so doing. It is necessary , therefore, to the risk of paying a cheque which may be
warn each branch where the cheque may be “ stopped as soon as the drawer has the
presented of the notice which has been opportunity.
received. A notice should be placed in the When an order to stop payment is received
customer's account in the ledger, so that at the moment the cheque is presented and
anyone referring to the account may at oncebefore the banker has paid over the money,
observe particulars of the “ stop.” To pre-the cheque should not be paid.
vent the notice being overlooked , it is a In the case of a cheque received through
good plan to insert in the ledger a red- the Country Clearing, the drawer has the
coloured slip, with the word “ stop ” printed right to stop payment of it up till the close
in large letters, giving particulars of the of business as the banker has that time in
stopped cheque. A list of all orders to which to decide whether to pay or return
stop payment should be kept in some a cheque. If the cheque has been cancelled,
convenient form for ready reference by those before the countermand of payment, it may
officials who are concerned with the payment be marked “ cancelled in error." .
of cheques. When a stop order is received and the
In London Provincial and South -Western cheque has already been credited to another
Bank , Ltd. V. Frank Buszard (1918 , customer's account, the cheque cannot be
35 T.L.R. 142) , Lawrence, J., held that withdrawn from that account.
notice of the stopping of a cheque at one With regard to stopping payment of a
branch of a bank was not notice to the cheque by telegram , the Master of the Rolls
other branches. He said that it appeared (see Curtice v. London City and Midland
from Clode v. Bayley (1843, 12 M. and W. Bank, under PAYMENT OF CHEQUE) , con
231) that there was a right to a separate sidered that a telegram might reasonably
notice of dishonour as between the different be acted upon to the extent of postponing
branches of a bank . payment of a cheque pending inquiry, but
The drawer of a cheque is the only person he was not satisfied that the bank is bound
who can “ stop payment ” of it, but bankers to accept an unauthenticated telegram as
often receive notice from the holder of a sufficient authority upon which to refuse to
cheque that it has been lost or stolen . pay a cheque.
Where notice is received from a holder, he If a banker agrees to pay a cheque, at the
should be requested to obtain at once written request of the holder, by marking or accept
instructions from the drawer. If the cheque ing it for payment, or if, in answer to a tele
be presented before a communication is gram or a telephone, he replies that the
received from the drawer, the banker will be cheque will be paid, he must pay the cheque
careful to postpone payment till he has heard when presented . But if, in the meantime,
from the drawer or is otherwise satisfied, the drawer has stopped payment of it, the
particularly if the payee states that it was banker cannot charge it to the drawer's
not indorsed by him before he lost it. account. (See further information under
If the cheque which is lost is signed by MARKED CHEQUE .)
several persons, a notice from one of them , Although a drawer has the right to stop
e.g. one executor, one trustee, a secretary, payment of a cheque drawn by him , yet if
etc., is usually acted upon by a banker. the payee has negotiated the cheque, any
Where the account is in several names and subsequent bond fide holder for value can
491
PAY] DICTIONARY OF BANKING (PER

sue the drawer, provided that the cheque PERCENTAGE . The usual method of
was not crossed " not negotiable.” (See making comparisons of figures by reducing
COUNTERMAND OF PAYMENT, Lost BILL OF to a common base, showing the ratio to one
EXCHANGE . ) hundred . Interest, for example, is always
PAYMENT STOPPED (NOTES). A banker stated as so much per cent., 2 per cent.
cannot refuse payment of his own notes. being , of course , £ 2 for each £ 100 .
A holder for value without notice that PER PROCURATION . PER PRO . ( Latin,
the note has been lost or stolen may per procurationem .) Where an agent signs,
compel the banker to pay it, but where a per procuration of, per pro ., or p.p., it
note is presented , payment of which has means that he holdsan authority to sign
been stopped, a banker should exercise the on behalf of his principal. The Bills of
utmost care and make full inquiries before Exchange Act, 1882, Section 25 , provides
cashing it. as follows : — “ A signature by procuration
The Bank of England makes a charge operates as notice that the agent has but a
of 2s.6d. for registering a notice to stop limited authority to sign, and the principal
payment of a note. is only bound by such signature if the agent
PAYMENTS . Bankers receive instruc- in so signing was acting within the actual
tions from customers to make payments of limits of his authority.” An agent is not
various kinds, e.g. payments for calls, for personally liable if he signs for or on behalf
subscriptions, for credit of another customer, of his principal, but the mere addition to
or another bank, payments in exchange for his signature of words describing him as an
documents, etc. agent does not exempt him from personal
In each case a proper written and, where liability.
necessary, stamped authority is taken from The usual form of a per procuration
the customer and the instructions contained signature is :
therein should be carefully observed . А per pro. John Brown ,
record should be kept in the diary of all J. Jones.
future payments, so that they may not be or p.p. John Brown ,
overlooked . (See APPLICATION PAYMENTS, J. Jones.
AUTHORITIES , BANKER'S ORDER . )
PAYMENTS UNDER ADVICE . (See In Scotland, the agent's name often
STANDING CREDITS. ) comes first and the principal's last, as
PAYMENTS UNDER PROTEST . (See J. Jones per pro . John Brown.
PROTEST PAYMENTS.) A banker is protected by Section 60 in
PAYMENTS UPON APPLICATION . (See paying an uncrossed cheque with a per pro .
APPLICATION PAYMENTS .) indorsement in the event of its being un
PENNI. (See FOREIGN MONEYS - authorised . If the banker on whom the
FINLAND .) cheque is drawn pays it in good faith and
PENNY. A silver penny is now issued in the ordinary course of business, it is not
only as Maundy money (q.v.). Its standard incumbent on the banker to show that the
weight is 7.27272 grains troy. indorsement was made by or under the
At one timesilver pennies were frequently authority of the person whose indorsement
cut into halves and quarters to act as half- it purports to be, and the banker is deemed
pence and farthings. to have paid the bill in due course, although
A bronze penny is a mixed metal of copper, such indorsement is made without authority.
tin , and zinc. Its standard weight is It is the custom amongst bankers to accept
145.83333 grains troy. The bronze coinage per pro. indorsements, and they are justified
was first issued in 1860. in doing so both by that Section and the
Three new pennies weigh exactly one result of the case Charles v. Blackwell ( 1877 ,
ounce avoirdupois, and are useful as a sub- 2 C.P.D. 151 ) , where it was decided that a
stitute for a lost letter weight. (See COINAGE.) | banker is not liable if he pays a cheque pay
PEPPERCORN -RENT. A peppercorn- able to order which is indorsed per pro. ,
rent—that is, a purely nominal rent - is occa- even when the person signing had not the
sionally to be found mentioned in certain authority of the principal.
deeds . In some cases the peppercorn is But if a banker has reason to suspect the
actually handed over and duly recorded as authority of a person so signing, he is, no
having been paid . doubt, entitled to ask for evidence of his
PER CAPITA . (See Per STIRPES.) authority . For instance, if a collecting agent
492
PER ) DICTIONARY OF BANKING ( PER

for an insurance company were to present warrants. Cheques which require a form of
cheques payable to the insurance company, receipt to be signed by the payee have some
indorsed by him per pro. the company, and times a note upon them to the effect that a
demand cash for them , the banker would per procuration discharge will be accepted
render himself liable if he paid them with if guaranteed by the payee's bankers, and
out authority from the company, because it that in the case of a company the receipt
is not the custom for cheques payable to a must be signed on its behalf by an authorised
company to be cashed by an agent. officer whose position must be stated .
06
An agent may have authority to indorse An indorsement For J. Brown & Co.,
cheques per pro.and to place them to the Ltd., J. Jones, Secretary,” “For John
credit of his principal's account, but he Brown , J. Jones, Agent,” is often accepted
may not have power to take cash for cheques as sufficient. The person signing should
so indorsed, or credit them to his own ac- state in what capacity he signs. As to the
count. A person may have a general power stamp duty on a deed of procuration, see
to draw cheques per pro. , or to draw only PROCURATION .
to a limited extent, though he may not be In Morison v. London County and West
authorised to accept bills drawn upon his minster Bank, Ltd. ( 1913, 108 L.T. 379) ,
principal. It is, therefore, necessary, not where the plaintiff had given the National
only to be satisfied that an agent has Provincial Bank an authority to honour all
authority to draw cheques per pro ., but to cheques on his account drawn by H. Abbott,
know the precise extent and limitations of per procuration, and Abbott in fraud of the
his authority .: (See MANDATE .) plaintiff drew certain cheques payable to
Some bankers consider that a per pro- himself and paid them into his private
curation signature should include the words account with the defendants, the cheques,
per pro. or words having the same meaning, with the exception of two, being specially
(

but Sir John R. Paget states that “ whenever crossed " London County and Westminster
a signature shows by its form that it is put Bank,” Coleridge, J., decided that where a
on by someone as deputy for another that banker received a cheque signed per pro.
signature must be treated as a per pro. he was guilty of negligence unless he inquired
signature, and puts anyone dealing with the whether the person from whom he took it
bill on inquiry as to the authority of the was acting within the scope of his authority .
person who so utilises the signature .” This decision was reversed by the Court of
A company's signature in the following Appeal ( 1914, 3 K.B. 356 ). In the course of
his judgment , the Lord ChiefJustice said :
form , 00

The Universal Bread Co., Ltd., The defendants set up a defence based
upon the protection afforded by Section 82
J. Brown, Secretary, of the Bills of Exchange Act, 1882, to
Or

For and on behalf of the X and Y Co. , Ltd. , bankers who collect payment of cheques for
their customers if the bankers have acted in
J. Brown, Secretary , good faith and without negligence. The
is in effect a procuration signature, though defendants' good faith is not questioned ,
per pro . or p.p. are not used . (See the case but it is contended that they did not act
of Landes v. Marcus and Davids under without negligence. Mr. Justice Coleridge,
AGENT . ) being of opinion that Section 25 of the Bills
It is not impossible for aa marksman to have of Exchange Act, 1882, must be read with
power to sign per pro ., but it makes an Section 82, came to the conclusion that the
awkward arrangement, and such a signature defendants were put upon inquiry by the
should usually be confirmed . mere fact that the cheques bore a signature
A firm may have power to sign for a pri- per procuration, and that as the defendants
vate individual, as failed to make inquiry they cannot be held
per pro . John Brown to have acted without negligence . I do not
agree with this view of the effect of Section 25 .
J. Jones & Co. Section 82 only comes into operation when
( A person who has power to sign per pro- a banker receives payment of the proceeds
curation has not, as a rule , any power to for his customer , and therefore when the
delegate his authority to another. cheque has been honoured .
Per procuration signatures are not ac- The effect of Section 25 is that, not
cepted upon dividend warrants, or interest withstanding the negotiable character of the
493
PER ) DICTIONARY OF BANKING [PER

instrument and the obligations upon the of money to be equally divided amongst his,
signatory to such an instrument to holders, say, four sons, and if any son dies before the
and more particularly to a holder in due testator the share of that deceased son to be
course and notwithstanding the authority equally divided amongst the children of that
given by the principal to the agent to sign deceased son. The children divide, there
negotiable instruments per procuration so as fore, merely the share of their deceased
to bind the principal, the principal is not parent, or per stirpes, and do not take, each
liable upon the instrument, even to a holder of them, an equal share of the full sum of
in due course, if the agent in so signing the money left by John Brown — that is, not per
cheque has exceeded the actual limits of capita.
his authority. The principal in such circum- / PERMANENT BUILDING SOCIETY .
stances and before the instrumentishonoured A society which has not, by its rules , any
could refuse to pay the cheque or bill upon fixed date or specified result at which it
presentation, and would have a good defence shall terminate. (See BUILDING SOCIETY.)
to a claim, even when made by a holder in PERPETUAL ANNUITY. The right to an
due course, upon the cheque or bill. annual payment of a certain sum in per
“ I agree with Mr. Justice Coleridge thai petuity . The purchaser cannot obtain the
this Section is declaratory of the common principal back, but he can sell his right to
law ; but it does not, in my judgment, the annual payment to someone else. The
extend beyond it or alter it. When a bill so interest on Consols is practically a perpetual
signed in excess of authority has been annuity. (See ANNUITY.)
honoured, Section 25 does not confer a right PERPETUAL DEBENTURE . Section 4

to recover the proceeds.. If such a right 103 of the Companies (Consolidation) Act,
exists in the particular case, it must be 1908, states that a condition contained in
found elsewhere. Nevertheless, the fact that any debentures or in any deed for securing
the signature to the cheques is made per any debentures, shall not be invalid by
procuration and is not the signature of the reason only that the debentures are made
principal is not to be entirely disregarded. irredeemable, or redeemable only on the
In my opinion, when considering whether happening of a contingency, however remote,
the bank has acted without negligence, it is or on the expiration of a period, however
to be borne in mind with other facts and long, any rule of equity to the contrary
circumstances. It is also to be observed notwithstanding.
that Mr. Justice Coleridge did not rely Although the debentures may be called
exclusively upon his view of Section 25 as irredeemable or perpetual they are neverthe
bearing upon Section 82, for in a later part less redeemable when the company goes
of his judgment he refers to the payment in into liquidation. The effect of a debenture
of these cheques by the agent at his private of this nature is to grant an annuity in
account at another bank as another circum- perpetuity to the holder thereof. ( See
stance which should have caused the bank DEBENTURE.)
to make inquiries. Whether or not the PERSONAL ACCOUNTS . Accounts with
evidence establishes that the bank did not persons, as distinguished from Impersonal
act without negligence is a question of fact, Accounts ( q.v.).
and in strictness should be determined sepa- PERSONAL CHATTELS . (See CHATTELS.)
rately with regard to each of the fifty cheques PERSONAL SECURITY. An advance is
signed by Abbott." said to be made upon personal security when
(See Section 25 , above, and Section 82, another person becomes surety or guarantor
under CROSSED Cheque . ) for the amount. The term is used to distin
With regard to per procuration signatures, guish the security from a deposit of deeds, or
lawyers sometimes place the “ per pro .” certificates or any other form of impersonal
before the name of the agent, but this form security . (See GUARANTEE.)
is not recognised by bankers who require PERSONAL REPRESENTATIVES. Ex
that the " per pro .” should precede the ecutors or administrators.
(See ADMINIS
name of the principal. TRATOR, EXECUTOR.)
( See AGENT , AUTHORITIES , INDORSEMENT . ) PERSONAL ESTATE - PERSONALTY .
PER STIRPES. Short for per stirpes et Property such as money, goods, furniture,
non per capita, meaning by the roots and not stocks and shares is personal estate, or per
by the heads. An example of the use of the sonalty. Leasehold property, even a lease
phrase is where John Brown leaves a sum for 999 years, is included in personalty.
494
PES) DICTIONARY OF BANKING (POL

(Freehold and copyhold property is "real merely a right to detain the documents until
estate " or realty .) the customer's debt is paid . (See LIEN,
When real estate is directed by will to be | MORTGAGE.)
sold it is regarded as personalty. PLIMSOLL MARK . (See DEAD WEIGHT.)
The benefit of a mortgage is included in POCKET CHEQUE BOOK. A book of
personalty. small sized cheques suitable for carrying in
The words used in a will with respect to the a pocket.
disposal of personal property differ from POINTS . The price of stocks and shares
those used in connection with real property. moves by fractions, as 161-164, and by
Personalty is bequeathed and the beneficiary points, as from 16-17.
is called a legatee ; realty is devised and the POLICY OF INSURANCE . By the Stamp
beneficiary is termed a devisee. ( See Act, 1891 , the stamp duties are :
INTESTACY, REALTY .) $ S. d.
PESETA. (See FOREIGN MONEYS – SPAIN.) POLICY OF LIFE INSURANCE :
PESO . (See FOREIGN MONEYS - ARGEN
Where the sum insured does
TINE, CHILI, MEXICO, URUGUAY.) not exceed £10 0 0 1
PETITION ( BANKRUPTCY ). (See BANK
RUPTCY, RECEIVING ORDER.) Exceeds £10 but does not
PFENNIG . ( See FOREIGN MONEYS exceed £25 : . 0 0 3
GERMANY .) Exceeds 25 but does not
PIASTRE . (See FOREIGN MONEYS exceed £500 :
EGYPT, TURKEY.) For every full sum of £ 50 ,
PICTORIAL CHEQUES. Cheques with and also for any frac
tional part of £ 50, of
pictorial advertisements printed thereon . the amount insured .
0 0 6
Anything which tends to destroy the simplic
ity of a cheque should be discouraged . Exceeds £500 but does not
PIE . (See FOREIGN MONEYS— INDIA .) exceed £ 1,000 :
“ PIG UPON BACON .” In the case of For every full sum of
an accommodation bill, where e.g. Brown £100, and also for any
accepts merely to oblige the drawer, Jones, fractional part of £100,
Brown has no intention of meeting the bill ofthe amount insured . 010
Exceeds £ 1,000 3
at maturity. He expects that Jones will
himself provide the funds necessary to pay For every full sum of
the bill when it is due. As Jones in his own £ 1,000, and also for
mind considers himself practically the any fractional part of
acceptor as well as the drawer, Jones on £ 1,000, of the amount
insured . 0 10 0 .

Brown is therefore likened to a bill drawn by And see Sections 91 ,

“ Pig on Pork ” or “ Pig upon Bacon."
PLEDGE. When negotiable instruments, 98, and 100 .
.

and goods, or the symbol of goods, such as POLICY OF INSURANCE AGAINST

ACCIDENT and POLICY of insur
bills of lading and dock warrants, are
delivered to a banker as security for a ance for any payment agreed to
debt, the delivery is termed a pledge or a be made during the sickness of
pawn . any person , or his incapacity
If the debt is not paid according to agree from personal injury, or by
ment, the banker has the right, after reason way of indemnity against loss
able notice (if no time is fixed ), to sell the or damage of or to any pro
property in order to satisfy his claim , and perty 0 0 6
any surplus belongs to the pledgor. A letter (Increased from id. to 6d. by
or memorandum of deposit usually accom the Finance Act, 1920.)
And see Sections 91 , 98, 99,
panies the pledge of goods or negotiable and 100 .
instruments, and in such cases the terms
of the letter must be observed before " 91. For the purposes of this Act the
realisation of the property is effected . expression policy of insurance ' includes
A pledge is to bedistinguished from the every writingwhereby any contract of insur
lien which a banker has upon any negotiable ance is made or agreed to be made, or is
instruments that may be in his hands as evidenced, and the expression ' insurance '
a banker, as the lien gives the banker includes assurance."
495
POL] DICTIONARY OF BANKING [ POS

Policies of Insurance except Policies of Sea | injury to the holder or bearer of the news
Insurance . paper or publication from accident, and
" 98. (1 ) For the purposes of this Act the doubts have arisen as to the like notices or
expression policy of life insurance advertisements in other cases, it is hereby
means apolicy of insurance upon any for theremoval of doubts declared that's
life or lives or upon any event or policy of insurance for any payment agreed
contingency relating to or depending to be made during the sicknessof any person .

upon any life or lives except a policy within the meaning ofthe Stamp Act, 1891 ,
the expression policy of insurance includes a notice or advertisement in a news
against accident means a policy paper or other publication which purports to
of insurance for any payment agreed insure such payment."
to be made upon the death of any By the Stamp Act, 1891 :
person only from accident or vio “ 99. The duty of one penny (increased
lence or otherwise than from a
to sixpence by the Finance Act, 1920) ,
natural cause, or as compensation upon a policy of insurance other than a
for personal injury, and includes policy of sea insurance or life insurance may
any notice or advertisement in a be denoted by an adhesive stamp, which is
newspaper or other publication to be cancelled by the person by whom the
which purports to insure the pay- policy is first executed .
ment of money upon the death of or
injury to the holder or bearer of the “100. Every person whom
newspaper or publication containing “ (1) Receives, or takes credit for, any
the notice only from accident or premium or consideration for any
insurance other than a sea insurance,
violence or otherwise than from a
natural cause . and does not, within one month after
receiving, or taking credit for, the
“ (2) A policy of insurance against accident premium or consideration, make out
is not to be charged with any and execute a duly stamped policy
further duty than one penny (in of insurance ; or
creased to sixpence by the Finance “ ( 2) Makes, executes, or delivers out, or
Act, 1920 ), by reason of the same pays or allows in account, or agrees
extending to any payment to be to pay or allow in account, any
made during sickness or incapacity money upon or in respect of any
from personal injury." policy other than a policy of sea
By the Finance Act, 1899 : insurance which is not duly stamped ;
“ 11. The provisions contained in Section shall incur a fine of twenty pounds."
By Section 116 of the Stamp Act, 1891, the
98 of the Stamp Act of 1891 in reference to Commissione rs may,withany
the expression policy of insurance against into an agreement in certain cases issuing
person , enter
accident ' shall extend to and include
policies of insurance or indemnity against policiesofinsurance against accident for the
liability incurred by employers in conse delivery to them of quarterly accounts of all
sums received in respect
quenceofclaims made upon them by work. inlieu of duty on of premiums
such policies and by, way
and
men who have sustained personal injury
when the annual premium on such polícies of composition for that duty there shall be
does not exceed one pound.” By Section 8 charged a duty at the rate of £5 per cent. on
)

( 3) of the Finance Act, 1907, the above the aggregate amount of such sums received
Section shall be read as if two pounds were for premiums. This applies to insurances
substituted for one pound as the amount of effected in ewspapers. (See FIRE INSUR
the annual premium .' ANCE, LIFE Policy, MARINE INSURANCE
Policy.)
By the Finance Act, 1895 : PORT BILL OF LADING . (See BILL OF
“ 13. Whereas Section 98 of the Stamp Act,
LADING .)
1891 , provides that ' a policy of insurance
PORT OF REGISTRY. The port at
against accident' includes a notice or which a ship is registered. (See Ship
advertisement in a newspaper or other MORTGAGE.)
publication which purports to insure the POSITIVE PRESCRIPTION . (See PRE
payment of money upon the death of or SCRIPTION . )
496
POS ) DICTIONARY OF BANKING (POS
POSSESSORY TITLE . Where a person Car and General Insurance Corporation v.
has been in the undisturbed possession of The British Motor Cab Co. (a case decided
real property for twelve years and has not in the Commercial Court, 1912), where the
paid any rent or acknowledged any person's defendants sent an open cheque to the
right to the property, he acquires a posses- plaintiffs and the cheque was stolen in the
sory title and becomes the owner of the pro- post, it was decided that the defendants
perty . But if the rightful owner was under must bear the loss, because they had not
a disability, such as infancy or lunacy, an complied with their previous practice of
action may be brought against the person sending a crossed cheque to the plaintiffs.
claiming a possessory title within six years (See STOLEN CHEQUE .)
after the disability has ceased , but in no As to a notice in a pass book that cheques,
case can the land be recovered after thirty etc., are sent by the bank through the post
years from the time when the right of action for collection, see Pass Book.
first accrued, although the person under POST -DATED . A cheque which is dated
disability may have remained under dis- subsequent to the actual date on which it is
ability during the whole of the thirty drawn, and which is issued before the date
years. it bears, is called a post -dated cheque.
POSSESSORY TITLE (LAND REGISTRY). A bill is not invalid by reason only that
Land may be registered under the Land it is post-dated. (Section 13, s.s. 2, Bills
Transfer Acts with possessory title. Its of Exchange Act, 1882.) A cheque is
effect is not retrospective ; it keeps the title included under the word " bill ” in that
clear for the future, but is no bar to possible section. A post- dated cheque is therefore
adverse claims dating from a time priorto a legal instrument and can be negotiated
its first entry on the Register books. ( See as soon as drawn .
LAND REGISTRY .) In Royal Bank of Scotland v. Tottenham
POST. Where a letter is posted and is ( 1894,71 L.T. 168) , the plaintiffs had credited
not returned through the Dead Letter Office, a post-dated cheque, before the date appear
it is a presumption of law that it has been ing on the cheque, to a customer's account,
received by the person to whom it was ad- and had permitted the amount to be drawn
dressed . The sender, however, must be upon. The cheque was drawn by the
prepared to prove that he posted the letter. defendant upon another bank and he stopped
For this reason it is important that a book payment of it. The plaintiffs brought the
be kept containing particulars of all letters action as holders of the cheque to recover
despatched each day, showing the addresses, the amount thereof, but the defendant con
the time the letters were posted and the tended that the plaintiffs were not holders
initials of the person, or persons, who posted for value and therefore could not recover
them , and the office where they were posted. upon the cheque. Lord Esher, in the Court
Before sending notes by post full particu- of Appeal, held that “ as soon as the bankers
lars of the number, date, place of issue, and gave credit for the cheque to their customer,
denomination of each note should be taken . they gave value for it.” Judgment was given
Some persons cut notes in two and send the for the plaintiffs.
halvesby different mails, the second halves A post -dated cheque should not be paid
not being sent until an acknowledgment is before the date appearing thereon. If a
received for the first halves. banker pays it before that date he will be
When there is authority to send a cheque liable for any consequences that may ensue,
by post, the post is considered as the agentas, for instance, in the event of the dishonour
of the personto whom the cheque is sent. of a cheque, which would not have been dis
Where a cheque is lost in the post, the honoured if the post-dated cheque had not
legal liability for the loss falls upon the been paid, or in the event of the drawer
person who requested the cheque to be for giving notice to " stop payment ” before the
warded by post. If the creditor did not ask date of the cheque arrives. Where the
for the cheque to be sent by post, then the banker, on whom a post-dated cheque is
liability would fall upon the sender. When drawn, pays it by mistake, and the cheque
a creditor requests that a cheque be for- is " stopped payment before the date
warded by post and instructs his debtor arrives, Sir J. R. Paget expresses the
how the cheque should be crossed, the opinion that the banker could not debit
debtor must bear the consequences if he the cheque to the drawer's account, and
does not carry out those instructions. In that he is not entitled to the position of a
497
32--115as)
POS) DICTIONARY OF BANKING [ POS

holder in due course and could not sue his If there is anything of a fraudulent or over
customer . reaching nature in the bond , the Courts may
A cheque presented for payment before set it aside and order repayment merely of
the date has arrived should be returned the actual sum lent, plus reasonable interest.
marked " post-dated.” POST OFFICE MONEY ORDER. A Post
If a cheque is presented on a Saturday, Office money order is not a negotiable instru
and is dated for the next day, Sunday, it ment ( Fine Art Society v. Union Bank of
should not be paid on the Saturday. London , 1886 , 17 Q.B.D. 705), and therefore
When the date upon a cheque has arrived , a holder does not obtain any better title to
a banker is entitled to pay it, and incurs no it than the person had from whom he
liability in doing so . received it.
After the date any holder may sue upon
the cheque, though before the date he could & Co.
not do so . If a money order is crossed
A post-dated cheque is sometimes given
because the drawer does not expect to have payment by the Post Office will only be made
funds to meet it until that date arrives. A through a banker, and, if the name of a
purchaser often gives such a cheque, so banker is added, payment will only be made
that he may have a few days in which to through that banker. The Post Office pay
examine his purchase before the cheque can Post Office orders to a banker, without the
be paid. signature of the payee, provided the banker's
If a person draws and issues a cheque on name is stamped upon them , but the banker
February 1 and dates it March 1 , it is should see that his customer always writes
practically the same as if he accepted a bill or stamps his name on all orders, in case
payable one month after February 1. But they are returned from the Post Office.
if he accepted a bill, the stamp duty would A money order may be collected either at
be an ad valorem one, whereas on the post- the Office where it is made payable, or at the
dated cheque the duty is the usual duty upon General Post Office, London.
a cheque, two pence. It is thought by some In receiving money orders from customers,
authorities that a drawer may be liable to a bankers either give cash for them or place
penalty on the question of insufficient stamp them to credit of the customer's account.
duty, under the Stamp Act, 1891, but that If the orders should prove to have been
question could not arise in an action on the stolen , the Post Office have the right to
cheque after the date of the cheque has return them to the banker, even after he
arrived , because then the cheque would no has received the proceeds.
longer be post -dated . In Royal Bank of The Post Office (Money Orders) Act,
Scotland v . Tottenham ( 1894, 71 L.T. 168) ,
1880 (Section 3) , provides that a banker
in the Court of Appeal, it was held that a “ who, in collecting for any principal, shall
cheque was not invalid because it was post- have received payment or been allowed by
dated and bore only a penny stamp. ; In the Postmaster-General in account, in respect
Hitchcock v. Edwards (1889, 60 L.T. 636) of any money order issued under this Act,
it was held that " a post-dated cheque, bear- or of any document purporting to be such a
ing a penny stamp, is aa valid and negotiable money order, shall not incur liability to any
instrument, and is complete and regular one except such principal by reason of having
upon the face of it." received such payment or allowance, or
When a post-dated cheque is handed to a having held or presented such order or
>
banker for collection when the date arrives, document for payment.”
the customer should sign a paying -in slip In London and Provincial Bank V.

dated for the day on which the cheque is to Golding (see Journal of Institute of Bankers,
be credited . May, 1918) money orders had been nego
Bankers do not discount post-dated | tiated to a customer of the bank, who paid
cheques, but money -lenders advertise that them into his account at the bank. The
they cash them for clients at a certain bank collected them and advised the cus
discount. (See Bill OF EXCHANGE .) tomer that they were all right.” Subse
POST OBIT BOND. (Post obit, Latin , quently, through some irregularity, the
after he dies.) A bond in which a person orders were returned by the Post Office to
agrees to pay a certain sum of money after the bank, and the bank debited the amount
the death of another person , to their customer's account. The customer
498
POS) DICTIONARY OF BANKING (POW

objected to be debited , seeing that the ledger is entering therein to the credit of the
bank had said they were “all right.” The various customers' accounts all the amounts
Court of Appeal gave judgment in favour which have been paid in, and to the debit
of the bank. all the cheques which have been paid.
The same remarks apply to a Postal Order POTS . A Stock Exchange name for North
as to a P.O. Money Order. Staffordshire Railway stock .
POST OFFICE SAVINGS BANKS. The POUND . A sovereign (q.v.) . In the time
Post Office Savings Banks were established of William the Conqueror a pound of silver
by Act of Parliament in 1861, and every was coined into 240 silver pence, each equal
depositor has the direct security of the State to a pennyweight, whence the origin of the
for the repayment of his deposits. word pound.
No person may, for his own benefit, have A five- pound piece is of the standard
two accounts in the Post Office Savings weight of five sovereigns.
Bank at the same time, or have an account A two-pound piece is of the standard
in the Post Office and another in a Trustee weight of two sovereigns, 246.54895 grains
Savings Bank . troy, and its least current weight is 245
Money orders and cheques are received grains. (See COINAGE.)
provided they are not crossed to a particular POWER OF ATTORNEY. A formal docu
bank. ment by which one person is authorised ,
By the Savings Banks Act, 1920, there or empowered, to act for another .
shall be no limit on the amount which may be It is commonly used in cases where a
received from any person by way of deposit. person (the donor or grantor) is going abroad
Deposits may be made by children seven for a long time and wishes to give someone
years old and upwards ; and on behalf and (the attorney, donee, or grantee) power to
in the names of children under seven years act for him in his absence. The power given
old. In this case the money is not repayable in the document varies according to the wish
until the children attain the age of seven. of the donor, and when a power of attorney
Every deposit must be entered in the is exhibited to a banker for registration he
depositor's book by the postmaster or person should be careful to observe the exact word
receiving it, who must affix his initials and ing of the instrument, and in particular to
the stamp of his office to each entry . An see whether power is given by special
acknowledgment for every deposit of £20 and clause to draw cheques upon the donor's
upwards, should be received by post from account, to make, draw , accept and indorse
the Savings Bank Department in London. promissory notes and bills, to mortgage
Interest at the rate of £ 2 10s. per cent. securities or overdraw his account. A banker
per annum is allowed on every complete should require that a certified copy of the
pound, and commences on the first day of instrument be given to him .
themonth next following the deposit. An attorney may sign the name of the
When a depositor wishes to withdraw any donor without the addition of any further , 3

part of the sum due to him , he must make words, but the usual and better way is to
application for the same on a printed form , sign , e.g.
called a notice of withdrawal, but sums up J
" ohn Brown by his attorney Tom Brown .”
to £ 1 may be withdrawn on demand . He may also sign per pro.
Depositors may invest their deposits in The authority may relate only to one
various Government stocks. particular act, as, for example, the sale of
A deposit book is not a proper security for Consols, or it may give power to act in all
money lent, and no claim by any person matters connected with some particular
business, or it may give full power to act
holding a deposit book in respect of a loan will
be recognised by the Savings Bank Depart- in every matter in the same way as though
ment. Deposits in the Post Office Savings
)
the agent were the grantor himself.
Bank are not liable to " attachment,” or to If a " power " is expressed to be irrevo
its Scotch equivalent “ arrestment." cable for a fixed time not exceeding a year
POSTAL ORDER . The same remarks from the making thereof, it cannot be re
apply as under Post OFFICE MONEY ORDER voked during that time without the donee's
(q.v.). On the outbreak of war in 1914 , consent.
postal orders were made legal tender The length of time during which a power
temporarily. is to continue in ' force should be noted .
POSTING. Posting
Posting a current account In a power which was to continue “ during
499
POW ) DICTIONARY OF BANKING [POW

absence from England, ” it was held (Danby charges which shall be incurred by my
v. Coutts, 1885 , 29 S.J. 321 ) that certain said attorney in exercise of any of the
mortgages made by the attorney, after the powers herein contained ,
donor's return to England, were invalid . To pay all debts contracted by me or my
Аро rer of attorney is determined (that said attorney on my behalf,
is, is no longer effective) by the death, To invest any of the said moneys in any
insanity or bankruptcy of the donor. securities as he my said attorney shall
By the Conveyancing Act, 1881 , Section 47, think fit, and in the meantime to deposit
any person making any payment in good the said moneys with any banker.
faith in pursuance of a power of attorney, To appear for me in any Court,
shall not be liable therefor by reason that, To sign my name to, and make, execute,
before the payment, the donor of the power and do on my behalf any cheques,
had died or becomelunatic , of unsound mind , contracts, deeds or agreements, and for
or bankrupt, or had revoked the power , if all the purposes of these presents,
the fact was not, at the time of payment, To use the name of me the said John
known to the person making the same. Brown ,
Section 46 of the same Act says : “ The And generally to do, execute and perform
donee of a power of attorney may, if he any other act, deed or thing whatsoever
thinks fit, execute or do any assurance, in or about my concerns and business of
instrument, or thing in and with his own every kind whatsoever as fully and
name and signature and his own seal, where effectually as I myself could do if I were
sealing is required, by the authority of the present, it being my intent and desire
donor of the power ; and every assurance, that all matters shall be under the
instrument, and thing so executed and done full direction of my said attorney.
shall be as effectual in law, to all intents, And whatsoever my attorney shall do or
as if it had been executed or done by the suffer by virtue of these premises, I do
donee of the power in the name and hereby for myself, my heirs, executors and
with the signature and seal of the donor administrators covenant with the said Tom
thereof." Brown, his executors and administrators, to
The following are some of the points ratify and confirm .
which may be found in a power of And I declare that this power shall be
attorney : irrevocable for calendar months, com
Know all men by these Presents that I, puted from the date hereof.
John Brown, of in the county of In witness whereof I have hereunto set
gentleman, being about to my hand and seal this day of
leave England and to reside abroad for some 19
time, do hereby constitute and appoint my Signed , sealed and de
son , Tom Brown, of (hereinafter
called and referred to as my said attorney )
livered by the above
named John Brown in } John Brown .
my true and lawful attorney for the purposes , the presence of
hereinafter expressed , that is to say :
To demand , sue for and recover from all It is enacted by Sections 8 and 9 of the Con
persons and bodies liable to pay veyancing Act, 1882, that if a power of
the same all sums of money, interest, attorney given for valuable consideration is
debts , etc. , now owing to me, or which in the instrument creating the power ex
shall at any time hereafter be owing to pressed to be irrevocable, then , in favour of a
me, and purchaser, the power shall not be revoked at
To give, sign, and execute effectual re- any time either by anything done by the
ceipts, etc. , for the same, and on non- donor, without the concurrence of the donee ,
payment to prosecute any action or suit or by death , lunacy, or bankruptcy of the
for recovering the payment thereof ; also donor, and any act done by the donee shall
To state, settle, adjust, compound,submit be effectual and absolutely irrevocable. If
to arbitration , and compromise all a power, whether for valuable consideration
actions, accounts, claims and demands or not, is expressed to be irrevocable for a
whatsoever. fixed time, not exceeding one year from the
And I authorise my said attorney, date of the instrument, then in favour of a
To apply the moneys which shall come to purchaser the power shall not be revoked
his hands to pay and satisfy costs and during that fixed time by anything done by
500
POW ] DICTIONARY OF BANKING
the donor, without the concurrence of the
donee, or by the death , lunacy, or bankruptcy
of the donor, and any act done during that
time by the donee shall be irrevocable.
By Section 78, Companies (Consolidation )
Act, 1908, a company may, by writing under
its common seal empower any person as its
attorney to execute deeds on its behalf in
any place not situate in the United Kingdom
Stamp duties :
LETTER OR POWER OF ATTORNEY ,
and COMMISSION , FACTORY,
MANDATE , or other instrument
in the nature thereof :
( 1 ) For the sole purpose of ap
pointing or authorising a
proxy to vote at any one
meeting at which votes
may be given by proxy,
whether the number of
persons named in such
instrument be one or more
(2) By any petty officer , sea
man, marine, or soldier
serving as a marine, or his
representatives, for receive
ing prize money or wages . 0 10 that is, transferable in the books of the Bank
(3) For the receipt of the
dividends or interest of
any stock :
Where made for the re
ceipt of one payment
only
In any other case .
(4) For the receipt of any
sum of money, or any bill
of exchange or promis
sory note for any sum of
money, not exceeding £20,
or any periodical pay
ments not exceeding the
annual sum of £10 (not
being hereinbefore charged ) 0 5 0 behalf and in the name and on behalfof the
(5) (Repealed by the Finance
Act, 1917, Section 30,
and exemption (4) added .)
(6 ) Ofany kindwhatsoevernot
herein before described
Exemptions.
( 1 ) Letter or power of attor
ney for the receipt of divi
dends of any definite and
certain share of the Govern
ment or Parliamentary
stocks or funds producing a
yearlydividend less than£ 3.
[POW
(2) Letter or power of attor
ney or proxy filed in the
Probate Division of the
High Court of Justice in
England or Ireland, or in
any ecclesiastical court.
(3) Order, request, or direc
tion under hand only from
the proprietor of any stock
to any company or to any
£ s. d. officer of any company or
to any banker to pay the
dividends or interest aris
ing from the stock to any
person therein named .
(4) Letter or power of attorney
for the sale, transfer, or
acceptance of any of the
Government or Parlia
mentary stocks or funds.
( This exemption was added
by the Finance Act, 1917,
0 0 1 Section 30.)
See also Section 80 under Proxy.
POWER OF ATTORNEY — TRANSFER OF
INSCRIBED GOVERNMENT STOCK.
British Government stock may be inscribed ,
of England, or registered and transferable by
deed. If inscribed and a transfer is to be
made, the owner must either attend per
sonally at the Bank or appoint an attorney
to act for him .
0 1 0 The following is a specimen of a power of
0 5 0 attorney to transfer inscribed stock, for use
by the survivors in a joint account :
of
We and
of survivors in a joint account
with late of deceased ,
appoint and both of
jointly and severally our attor
neys and attorney in our names and on our
survivors of us as survivors aforesaid to
transfer pounds being all the
£2 10s. per cent. consolidated stock standing
in the books of the Governor and Company
0 10 0 of the Bank of England in the names of
deceased and unto
of . and also to do
whatever is necessary or proper to be done
for the purpose aforesaid . And we declare
that any act done under orin pursuance of
this letter of attorney shall, so far as the
Governor and Company are concerned, be
valid as against our estates, notwithstanding
that we may be dead at the time of such act
501
POW ] DICTIONARY OF BANKING [PRE
unless notice in writing of our deaths shall peace, solicitor, or registered medical prac
have been previously given to the said titioner, and the witnesses must state in
Governor and Company. In witness whereof writing that the letter of attorney was read
we have hereunto set our hands and seals over and fully explained to and was under
this day of in the year of our stood by the stockholder. Should the stock
Lord one thousand nine hundred and . holder be unable to understand the purport
Signed, sealed and delivered in the pre of the letter of attorney there must be no
sence of us by the above -named execution .
ALTERING . – Any addition , ruling out or
Signature of First Witness Seal. alteration of any kind must be initialled by
Address the stockholder and a statement that such
Occupation addition , ruling out or alteration , was made
prior to the execution, must be signed by each
Signature of Second Witness witness.
Seal. Powers of attorney, enabling persons to
Address
act for stockholders of British Government
Occupation securities may be obtained free of charge
I demand to act by this letter of attorney from the Bank of England.
(See NATIONAL DEBT, POWER OF
this day of 19 .
ATTORNEY.)
Witness
POWER OF SALE . (See LEGAL MORT
GAGE .)
The following are the instructions for PRÉCEPT. An order from responsible
executing powers or letters of attorney, persons directing payments to be made.
which are printed upon the back of the For example, where a bank manager is
document :
treasurer of, say, the guardians of the poor,
DATING . - Must be in words, not in figures. the guardians issue a precept directing the
(When a letter of attorney has to be exe- Overseers of the Parish of ...... to pay to
cuted by more than one person the date of the treasurer certain sums on certain dates
the first signature attached thereto should be as the contribution of the said Parish to the
inserted .) common fund of the Union, and to take
WITNESSING.—( 1 ) In the United King- the receipts of the treasurer upon the paper
dom. for the said sums .
Two credible witnesses are necessary to PRECEPT OF CLARE CONSTAT. By the
each execution , and they must state their Stamp Act, 1891, the stamp duty is :
qualities, professions or occupations, and PRECEPT OF CLARE CONSTAT to
respectively give aа permanent address give seisin of lands or other £ s. d.
which must be one at which the Post Office heritable subjects in Scotland . 0 5 0
.

would undertake to deliver a letter. PRE -EMPTION . The right which a ven
( 2) Out of the United Kingdom . dor has in certain cases to buy back again
In addition to the two witnesses the stock- the land which he has sold . For example,
holder's signature must be attested by a where the owner of land has been compelled
British Minister, Consul, Vice-Consul, or to sell land to a railway company (in accord
other British Authority, or by a Notary ance with statutory powers obtained by the
Public . company) the company cannot sell any of
N.B.Clerks or servants must give the that land (if not required) to anyone else
names and addresses of their employers. without first giving the vendor the oppor
A female witness must state whether she is tunity to exercise his right to re-purchase it.
a spinster,wife or widow , and if a wife must This right, however, may be released in the
give the full name of her husband. conveyance to the company by a clause
No stockholder, attorney or transferee to the effect that the vendor hereby releases
named in this letter of attorney, nor the all right of pre-emption now vested in him
husband or wife of any of them is a “ credible by statute or otherwise.
1
witness. " PREFERENCE SHARES. PREFER
EXECUTING BY MARK . - Each witness must ENCE STOCK. Preference shares receive
be a person of known position such as the a dividend before the ordinary shares, and
minister or churchwarden of the stock- they may be either cumulative or non
holder's parish, a magistrate, justice of the cumulative. If the former, and no dividend
502
PRET DICTIONARY OF BANKING PRE

is paid upon them in one year, the profits | winding -up order ; and (6) in any other case ,
of succeeding years will be used to pay the the date of the commencement of the
full dividends which have accrued , before winding up ( s.s. 5) . Unless a company is
any dividend is paid on the ordinary shares. being wound up voluntarily merely for the
If, however, they are non -cumulative, the purposes of reconstruction or of amalgama
dividend is payable only out of the profits tion with another company, all amounts (not
of each separate year. exceeding in any individual case , £ 100) due
Some preference shares give a preferential in respect of compensation under the Work
right only as regards dividend, but others men's Compensation Act, 1906 , the liability
give in addition a preferential right in the wherefor accrued before the said date, are
event of a return of the capital of the also preferential payments ( s.s. 1 (d ) ).
company. The foregoing debts shall, in the case of
Cumulative participating preference shares a company registered in England or Ireland,
confer the right to a fixed cumulative so far as the assets of the company avail
preferential dividend and, in addition , able for payment of general creditors are
participate in the profits of the company insufficient to meet them, have priority over
after the ordinary shares have received a the claims of holders of debentures under
dividend of per cent. in any one any floating charge created by the company,
year . and be paid accordingly out of any property
A company limited by shares may, if comprised in or subject to that charge.
authorised by its articles, convert its paid- (Section 209, s s. 2 (b ).) 14

up shares into stock . A stockholder may In the event of a landlord or other person
hold any amount of a stock, but a share- distraining or having distrained on any
holder obtains shares of a fixed amount. goods or effects of a bankrupt,or a company
(See SHARE CAPITAL .) being wound up, within three months next
PREFERENTIAL PAYMENTS (BANK- before the date of the receiving order, or
RUPTCY ). The Bankruptcy Act, 1914, winding-up order, the foregoing debts to
Section 33, provides that in the distribution which priority is given shall be aa first charge
of the property of abankrupt there shall be on the goods or effects so distrained on , or
paid in priority to all other debts the proceeds of the sale thereof ; provided
(a) Parochial and local rates which have that in respect of any money paid under any
become due and payable within twelve such charge the landlord or other person
months next before the date of the receiving shall havethe samerights of priority as the
order, and all assessed taxes, land tax, pro - person to whom the payment is made.
perty, or income tax assessed up to the ( Bankruptcy Act, 1914, Section 33, s.s. 4 ; .

5th April next before the date of the receiv-
ing order, and not exceeding in the whole
one year's assessment ;
(6) The wages or salary of any clerk or ment of the bankruptcy, it shall be available
servant in respect of services rendered
during four months before the date of the
receiving order, not exceeding £50 ;
(c) The wages of any labourer or work-
man, not exceeding £25, in respect of ser-
vices rendered during two months before the
date of the receiving order. There is aspecial
provision in the case of a labourer in hus-
and Companies (Consolidation) Act, 1908,
Section 209, s.s. 4.)
If a landlord distrains after the commence
only for the six months' rent accrued prior
to the order of adjudication, but he may
prove under the bankruptcy for the surplus
due for which the distress may not have
been available . ( Bankruptcy Act, 1914,
Section 35.)
By the Friendly Societies' Act, 1896 ,
Section 35, upon the bankruptcy of any
.

bandry whose wages are paid in a lump sum officer of a registered society having in his
at the end of the year ofhiring. possession by virtue of his office any money
In the case of a company being wound up, belonging to the society , the trustee shall
the Companies (Consolidation ) Act, 1908, pay the money to the society in preference
Section 209, provides that the above-named to any other debts against the estate of the
debts shall be paid in priority to all other officer.
debts, the date being (instead of the date of By the National Insurance Act, 1911 ,
the receiving order) (a) in the case of a com- Section 110, all contributions payable under
pany ordered to be wound up compulsorily the Act by the bankrupt in respect of
which had not previously commenced to be employed workmen in an insured trade
wound up voluntarily , the date of the during the four months before the date of
503
PRE ) DICTIONARY OF BANKING [PRE

the receiving order are to be treated as Premium bonds are not issued in this
preferential payments. country . They have been held to come
Preferential debts rank equally between within the Gaming Acts as lotteries.
themselves, and , if the assets are insufficient PRESCRIPTION . In Scotland, Positive
to meet them , they shall abate in equal pro- Prescription is a title to lands acquired by a
portions. Payment of these debts is subject certain period of uninterrupted possession ;
to the retention of such sums as may be Negative Prescription is the lossof a right by
necessary for the costs of the administration neglectto use it during the time limited by
or winding up. (See FRAUDULENT PRE- law . (See under STATUTE OF LIMITATIONS.)
FERENCE.) PRESCRIPTIVE RIGHT. A right ac
PRÉFIX. French, at a fixed date. A quired by lapse of time. (See EASEMENTS,
bill drawn payable at a date " fixed," or POSSESSORY TITLE, STATUTE OF LIMITA
“ préfix,” does not take days of grace. If TIONS.)
the word “ fixed ,” or “ préfix ," is not used, “ PRESENT AGAIN . ” These words are
days of grace are allowed . sometimes written by a banker upon a
PREJUDICE. (See WITHOUT PREJUDICE.) cheque which is returned unpaid because of
PREMISES . — The beginning of a deed or insufficient funds in the customer's account
conveyance which sets forth the parties and to meet it. It is not, however, by itself a
describes the subject -matter, and which is correct answer to give, as it does not afford
afterwards alluded to in the deed as “ the any explanation why the cheque has been
premises." returned . The best answer to write upon
PREMIUM . The amount which is pay- a dishonoured cheque is “ Refer to drawer."
able annually during life, or during a certain Sometimes the words are joined with
number of years, in order to assure the pay- another answer, as “Refer to drawer
00
ment, either at death or at a fixed date, as Present again , * Not sufficient — Present
>>
the case may be, of the sum named in an again .” No doubt the words “Present
assurance policy. (See LIFE Policy.) Also again ” are used with the idea of minimising
the amount payable to keep in force a fire the risk of injury to the drawer's credit by
policy. (See FIRE POLICY.) returning the cheque, but it is perhaps
When the consideration (or part of it) in questionable whether they are altogether
a lease consists of a lump sum, it is called prudent words to use.
the premium. (See LEASEHOLD.) The banker to whom a cheque is returned
PREMIUM , AT A. When the market with a request “ Present again " advises his
value of bonds, stocks or shares is above the customer of the dishonour of the cheque and
nominal or face value, they are said to be forwards it for representation.
at a premium . A share of £1 , fully paid , PRESENTATION . A word which is often
which is selling at £ 1 10s. is an example of used instead of the word presentment. (See
an investment which is at a premium , or 10s. PRESENTMENT FOR ACCEPTANCE, PRESENT
above par value. When the market value MENT FORPAYMENT.)
is less, they are at a discount. (See Par.) PRESENTMENT FOR ACCEPTANCE .
PREMIUM BOND . An acknowledgment of When a bill of exchange is actually
indebtedness by a foreign state, where in some presented to a drawee in order that it may
cases no interest is paid , and in others only a be accepted by him , it is a presentment
very small rate of interest is given, but, at for acceptance.
certain times, a drawing takes place and the By Section 39 of the Bills of Exchange Act,
holders of bonds bearing the numbers that 1882 :
are drawn may receive large money prizes. “ ( 1 ) Where a bill is payable after sight,
In the case of the French Government presentment for acceptance is
Premium Bond issue, 1919, 5 per cent. necessary in order to fix the
bonds of 500 francs each ( issued at the price maturity of the instrument.
of 495 francs) are redeemable, within 75 “ (2) Where a bill expressly stipulates
years , at 600 francs (that is at par plus a that it shall be presented for accept
premium of 100 francs). In addition, four ance, or wherea bill is drawn pay
drawings take place annually when there able elsewhere than at the residence
are prizes of large sums of money for the or place of business of the drawee
possessors of the bonds bearing the lucky it must be presented for acceptance
numbers. Bonds which have the chance of before it can be presented for
winning prizes are also called Prize Bonds. payment.
504
PREJ DICTIONARY OF BANKING [PRE
00

(3) In no other case is presentment for to his personal representa

acceptance necessary in order to tive :
render liable any party to the bill. “( d) Where the drawee is bank
“ ( 4) Where the holder of a bill, drawn pay rupt, presentment may be
able elsewhere than at the place made to him or to his
of business or residence of the trustee :
drawee, has not time, with the “ (e) Where authorised by agree
exercise of reasonable diligence, ment or usage, a present
to present the bill for acceptance ment through the post office
before presenting it for payment is sufficient.
on the day that it falls due, the “ (2) Presentment in accordance with
delay caused by presenting the bill these rules is excused , and a bill
for acceptance before presenting it may be treated as dishonoured by
for payment is excused, and does non -acceptance :
not discharge the drawer and “ (a) Where the drawee is dead or
indorsers.” bankrupt, or is a fictitious
With regard to the time for presenting a person or a person not
bill payable after sight, Section 40 provides having capacity to contract
as follows : by bill :
“ ( 1 ) Subject to the provisions of this Act, " (6) Where, after the exercise
when a bill payable after sight is of reasonable diligence,
negotiated , the holder must either such presentment cannot be
present it for acceptance or nego effected :
tiate it within a reasonable time. . " (C) Where, although the pre
' (2) If he do not do so, the drawer and sentment has been irregular,
all indorsers prior to that holder are acceptance has been refused
discharged . on some other ground.
“ (3) In determining what is a reasonable (3) The fact that the holder has reason
time within the meaning of this to believe that the bill, on present
Section , regard shall be had to the ment, will be dishonoured does
)
nature of the bill, the usage of not excuse presentment.”
trade with respect to similar bills, In practice a bill is presented for accept
and the facts of the particular ance as soon as possible after it has been
case." drawn, and until it has been accepted the
The rules as to presentment for acceptance drawee is under no liability whatever with
and the excuses for non - presentment are regard to it. An after date bill having more
given in Section 41 : than three days to run before maturity, is,
“ (1) A bill is duly presented for accept- in London , presented for acceptance. The
ance which is presented in accord- sooner the holder of an unaccepted bill
ance with the following rules :- procures the drawee's acceptance the better,
" (a) The presentment must be for he then obtains the further security in the
made by or on behalf of the liability of the acceptor. When bills are
holder to the drawee or to received by a banker in order that he may
some person authorised to get them accepted, they are presented to the
accept or refuse acceptance drawee on the day of receipt, and if the
on his behalf at a reasonable drawee does not accept when they are pre
hour on a business day and sented, it is customary to leave the bills
before the bill is overdue : with him for twenty - four hours (exclusive
(6) Where a bill is addressed to of Sundays and holidays), or until close of
two or more drawees, who business on a half-holiday if the twenty
are not partners, present- | four hours are not completed, in which to
ment must be made to them decide whether, or not, he will accept them .
all, unless one has authority When a bill is left for acceptance a banker
to accept for all, then pre- marks it so that he may know that he gets
sentment may be made to the same bill back again . If a banker is
him only : negligent in obtaining an acceptance he may
(c) Where the drawee is dead, render himself liable thereon, especially in
presentment may be made the case of a bill drawn payable at so many
505
PRE ) DICTIONARY OP BANKING (PRE

days “ after sight," as the drawer and in- | exchange be presented for payment on the
dorsers may thereby be discharged. The date it falls due. The following rules are laid
law does not lay down any absolute rule as down by the Bills of Exchange Act, 1882 :
to what time is reasonable or unreasonable in “ Section 45. Subject to the provisions
which to carry out an instruction to obtain of this Act a bill must be duly presented for
an acceptance, but in most cases a banker payment. If it be not so presented the
would present a bill for acceptance on the drawer and indorsers shall be discharged.
day that he receives it. Having left a bill “ A bill isduly presented for paymentwhich
with a drawee, it is part of the banker's duty is presented in accordance with the following
to call again for it and not to wait till the rules :
drawee returns it to him, though an arrange- " ( 1 ) Where the bill is not payable on
ment may be made with the drawee to return demand, presentment must be made
it. The holder of a bill may refuse to take on the day it falls due.
a qualified acceptance (see ACCEPTANCE “ (2) Where the bill is payable on demand,
QUALIFIED ) , and a banker should therefore then , subject to the provisions of
get instructions from his correspondent if aa this Act, presentment must be made
qualified acceptance is offered . within a reasonable time after its
A banker should not give up a bill, sent issue in order to render the drawer
to him to obtain acceptance , against the liable, and within a reasonable time
drawee's cheque as that would release the after its indorsement, in order to
drawer and indorsers of the bill . If a render the indorser liable .
cheque is offered , the banker should obtain “ In determining what is a
instructions from his correspondent. reasonable time, regard shall be
Where bills of lading and other documents had to the nature of the bill, the
are attached to a bill,they are exhibited to
.
usage of trade with regard to
the drawee at the same time as the bill is similar bills, and the facts of the
presented for acceptance, but if the bill is particular case.
left with the drawee until the next day the “ (3) Presentment must be made by
documents are retained by the banker and the holder or by some person
not left with the drawee . The banker, how authorised to receive payment on
ever, may have instructions to deliver up the his behalf at a reasonable hour on
documents to the drawee after he has ac a business day, at the proper place
In the case of a foreign bill
cepted the bill. as hereinafter defined , either to the
sent for acceptance, instructions usually person designated by the bill as
accompany the bill as to what has to be done payer, or to some person authorised
in the event of non -acceptance, as “ protest to pay or refuse payment on his
if not accepted ” or “ if not accepted do not behalf if with the exercise of reason
protest but send an advice by wire or “ no
)
able diligence such person can
expense to be incurred . " there be found .
The holder of a bill, by presenting it for “ (4) A bill is presented at the proper
acceptance, does not warrant the genuine place :
nessof the bill, or of any of the signatures “ (a) Where a place of payment is
thereon, or that any accompanying docu specified in the bill and the
ments are genuine or represent actual goods. bill is there presented.
( Guaranty Trust Company of New York v . “ (6 ) Where no place of payment
A. Hannay & Co. , 1918, A.C. 34 T.L.R. is specified, but the address
427.) of the drawee or acceptor is
Where a bill is received from a correspon given in the bill, and the bill
dent in order to obtain the acceptance of the is there presented.
drawee, and the drawee lives at such a dis “ (c) Where no place of payment
tance as to necessitate either sending the bill is specified and no address
to him or asking him to call at the bank to given , and the bill is pre
accept it, the correspondent should be sented at the drawee's or
advised of what is being done so that he acceptor's place of business
may understand the delay. (See BILL OF if known, and if not, at his
EXCHANGE .) ordinary residence if known.
PRESENTMENT FOR PAYMENT. It is “ ( d) In any other case if pre
of the utmost importance that a bill of sented to the drawee or

506
PRE ) DICTIONARY OF BANKING (PRE
acceptor wherever he can be the absence of an express stipula
found, or if presented at his tion to that effect, is not discharged
last known place of business by the omission to present the bill
or residence. for payment on the day that it
“( 5) Where a bill is presented at the matures.
proper place, andafter the exercise “ ( 3) In order to render the acceptor of a
of reasonable diligence no person bill liable it is not necessary to
authorised to pay or refuse payment protest it, or that notice of dis
can be found there, no further honour should be given to him .
presentment to the drawee or “ (4) Where the holder of a bill presents
acceptor is required . it for payment, he shall exhibit the
" ( 6 ) Where a bill is drawn upon, or bill to the person from whom he
accepted by two or more persons demands payment, and when a bill
whoare not partners, and no place is paid the holder shall forthwith
of payment is specified , presentment deliver it up to the party paying it .”
must be made to them all. With regard to Section 52, s.s. 1 , the
“( 7) Where the drawee or acceptor of a theory of English law is that the debtor
bill is dead, and no place of pay: should seek out
effect ofthis rulehis creditor.
is that The practical
the acceptor cannot
ment is specified, presentment must
be made to a personal representa- take advantage of any irregularity in the
tive, if such there be, and with the presentment." ( Chalmers.)
exercise of reasonable diligence he Though non -presentment, or delay in
can be found . presentment, of a bill releases the drawer
“ (8) Where authorised by agreement or and indorsers, there are certain cases where
the Bills of Exchange Act excuses delay, or
usage a presentment through the non -presentment. hey are given in Section
post office is sufficient.” 46 :
It should be noted that a presentment " (1) Delay in making presentment for
through the post office (s.s. 8) is in order only payment is excused when the delay
where authorised by agreement or usage. is caused by circumstances beyond
If, therefore, a bill accepted at the X &Y the control of the holder, and not
Bank , Leeds, is presented by post to that imputable to his default, mis
bank by a stranger, the bank would return conduct, or negligence. When the
it to the stranger with the answer that it cause of delay ceases to operate
must, according to custom , be presented presentment must be made with
through a banker. reasonable diligence.
Presentment to the acceptor of an accom
“ ( 2) Presentment for payment is dis
modation bill must be made just as in the pensed with :
case of an ordinary bill. (a) Where after the exercise of
It should be particularly noted that, if reasonable diligence, pre
these rules are not properly attended to, sentment, as required by
the drawer and indorsers shall be discharged, this Act, cannot be effected .
both with respect to the bill and to the con The fact that the holder has
sideration for which the bill was given . The
reason to believe that the
bill itself should be presented, and if the bill will, on presentment,
acceptor has left the address shown on the be dishonoured , does not
bill, reasonable diligence must be used to dispense with the necessity
find his new address and present it there. for presentment.
An acceptor is not discharged if the bill is 60
' (6) Where the drawee is a
not presented to him . fictitious person .
Section 52 provides : "( c) As regards the drawer, where
“ ( 1) When a bill is accepted generally the drawee or acceptor is
presentment for payment is not not bound, as between him
necessary in order to render the self and the drawer, to accept
acceptor liable. or pay the bill, and the
“ (2) When by the terms of a qualified drawer has no reason to
acceptance presentment for pay believe that the bill would
ment is required, the acceptor, in be paid if presented.
507
PRE ) DICTIONARY OF BANKING (PRE

“ (d) As regards an indorser,where and eight in the evening is not a presentment

the bill was accepted or at a reasonable time."
made for the accommoda- When a banker requires to send bills to
tion of that indorser, and he another banker for collection, they are
has no reason to expect that usually forwarded a day or two before
the bill would be paid if maturity, if domiciled at a bank ; but, if
presented . not payable at a bank, they should be sent
' (e) By waiver of presentment, earlier, in case the collecting banker requires
express or implied ." to write for instructions if he finds that
In the case of a bill after date, it is neces- expense will be incurred in presenting the
sary, in order to prevent the discharge of the bills at the place where made payable .
other parties, that the bill be presented to the As to payment of a bill, see PAYMENT OF
acceptor, at the place where payable, even | BILL.
if he said before the bill was due that he A bill of itself does not operate as an
would not payonit the
at the bai
at maturity, or if he called assignment of funds in the hands of the
due date and said he drawee, but in Scotland where the drawee
could not pay it. If it is accepted payable of a bill has in his hands funds available for
at a bank , and the acceptor says he the payment thereof, the bill operates as an
has nothing in his account to meet the assignment of the sum for which it is drawn
bill, it is still necessary formally to in favour of the holder, from the time when
present the bill at the bank indicated. It the bill is presented to the drawee. (Section
must be presented within the usual business 53. ) (See DRAWEE .)
hours. With respect to presentment to an
Presentment before the actual due date acceptor for honour, the Bills of Exchange
does not preserve recourse against the other Act provides :
parties. “ Section 67 . ( 1 ) Where a dishonoured
Where a separate guarantee has been bill has been accepted for honour
given by anyone on behalf of the drawer or suprà protest, or contains a refer
an indorser, the guarantor is discharged by ence in case of need , it must be
such delay or non -presentment as would protested for non -payment before
discharge the drawer or indorser, but the it is presented for payment to the
liability of a guarantor for an acceptor acceptor for honour, or referee in
continues in the same way as an acceptor's case of need .
liability .
It has been decided that where a bill is “ (2) Where the address of the acceptor
held by a banker which is accepted at that for honour is in the same place
banker's, he need not present it to the where the bill is protested for non
acceptor but merely refer to his own payment, the bill must be pre
books containing the acceptor's account to sented to him not later than the
ascertain whether, or not, it may be paid . day following its maturity ; and
If a bill is drawn payable in one place, where the address of the acceptor
and accepted payable in another, it should for honour is in some place other
be presented at the place where accepted than the place where it was pro
payable. tested for non - payment, the bill
If an acceptor does not pay a bill when it must be forwarded not later than
is presented to him a notice may be left at the day following its maturity for
his address informing him that the bill lies presentment to him .
at the bank, and that it requires bis attention
before closing time. “ (3) Delay in presentment or non -pre
Lord Tenterden, in Wilkins v. Jadis ( 1831, sentment is excused by any circum
2 B. & Ad. 188 ), said : “ A presentment to stances which would excuse delay
bankers out of the hours of their business is in presentment for payment or
not sufficient ; but in other cases the rule non -presentment for payment.
of law is that the bill must be presented at " (4) Whenlaa bill of exchange is dishonoured
a reasonable hour ; a presentment at twelve by the acceptor for honour it must
o'clock at night, when a person has retired be protested for non-payment by
to rest, would be unreasonable ; but I can him ."
not say that a presentment between seven A cheque must be presented for payment
508
PRE) DICTIONARY OF BANKING (PRE

within a reasonable time. Section 74 of the in paying a cheque within that period, but,
Bills of Exchange Act provides in practice, a banker does not pay a cheque,
" Subject to the provisions of this Act : - which is six (in some banks twelve) months'
“ (1) Where a cheque is not presented for old, unless it is confirmed by the drawer .
payment within a reasonable time (See STALE CHEQUE .)
of its issue, and the drawer or the Where a banker receiving a cheque and
person on whose account it is the banker on whom the cheque is drawn
drawn had the right at the timeof live in the same town, it is considered a pre
such presentment as between him sentment within a reasonable time if the
and the banker to have the cheque cheque is presented for payment on the busi
paid and suffers actual damage ness day following its receipt. If the banker
through the delay, he is discharged receiving the cheque and the banker on
to the extent of such damage, that whom it is drawn live in different places, it
is to say, to the extent to which is within a reasonable time if sent forward
such drawer or person is a creditor for payment on the business day following
of such banker to a larger amount | its receipt.
than he would have been had such If the banker sends it to an agent for
cheque been paid. collection, the agent has the day of receipt
“ (2) In determining what is a reasonable and the following day in which to present it.
time regard shall be had to the In practice, however, all cheques are remitted
nature of the instrument, the usage for collection on theday that they are received .
of trade and of bankers, and the When a cheque is paid to credit of an
10
facts of the particular case . account at the same office as it is drawn upon,
' (3) The holder of such cheque as to the banker may legally hold the cheque
which such drawer or person is until the following day before returning
discharged shall be a creditor, in it unpaid, and he need not inform the
lieu of such drawer or person , of customer at the time of receiving the cheque
such banker to the extent of such that there are insufficient funds to meet it.
discharge, and entitled to recover In practice, however, a banker pays or
the amount from him .” returns such a cheque on the day of receipt.
A person receiving a cheque should present Where it is important to know as soon as
it for payment as soon as possible ; unless possible whether a certain cheque will be
presented within a reasonable time after its paid or not, it is customary to send it direct,
indorsement, the indorsers will be dis- instead of through the Clearing House, and
charged . (See Section 45, above.) If a a stamped telegram form may be enclosed
drawer suffers actual loss, as where a with a request to the banker on whom it
)

banker fails, through a cheque of his not is drawn to “ advise fate ” of the cheque.
having been presented within a reasonable (See ADVISE FATE.)
time after its issue, the drawer, as stated It has been held that, where a foreign
in Section 74, is discharged to the amount cheque is drawn upon a place where the
of such loss . There has not been any banker has no agent, the custom in London
definite decision as to what is a " reason- of presenting the cheque by post is a due
able time” ; but Sir John R. Paget states presentment (Heywood v. Pickering, 1874,
that, in the absence of special circumstances, L.R. 9 Q.B. 428), but if payment is not re
ten days or so would probably be held the ceived by return of post, the customer from
limit . After the “ reasonable time ” has whom the bank received the cheque should
elapsed, no person who takes the cheque be advised of the fact.
can acquire or give a better title than that If a cheque is presented by post by a
which the person from whom he took it had. stranger, it should be returned with a request
(See Section 36, under NEGOTIATION OF that it be presented, according to custom,
BILL OF EXCHANGE.) It is to be noted that through a banker.
the effect of Section 74 is to exclude cheques, The presentment of a cheque in England
so far as the drawer is concerned , from the does not operate as an assignment of funds
operation of Section 45. in the drawer's account. Part payment of
The drawer of a cheque is liable (except a cheque is never made ; it is either paid
under the conditions defined in Section 74) fully or dishonoured . In Scotland , however ,
to the holder for six years from the date of where a cheque is returned unpaid for
.)

the cheque, and a banker would be justified “ insufficient funds , ” any money in the
509
PRE ] DICTIONARY OF BANKING ( PRE
drawer's account is transferred to a separate sufficient in other respects, shall
account, such as a suspense account, where also suffice ." 1

it remains until the banker has evidence that When a promissory note is made payable
the matter has been arranged. If the payee at a bank, the banker will be liable if he
desires, the cheque may be retained by the pays it in the event of the note bearing a
banker in exchange for the amount attaching forged indorsement. (See FORGERY, PAY
to it . ( See Section 53 under DRAWEE . ) MENT OF BILL.)
If there is a reasonable ground for sus- A country bank note should be pre
pecting that a cheque has been tampered sented for payment, or put into circulation ,
with, a delay in payment may be made until not later than the day following the date
a referenceto the drawer clears away
the on which it was received, otherwise, if the
doubt. (See London Joint Stock Bank, Ltd. note is dishonoured , the holder may lose his
v. Macmillan and Arthur, under PAYMENT right of action against the person from whom
OF Chegue.) he took the note in payment of a debt. (See
The presentment for payment of a pro- COUNTRY BANK Notes.)
missory note is dealt with by Sections 86 The presentment of a bill or cheque
and 87 as follows : through a Clearing House has the same
“86. ( 1 ) Where a note payable on de- effect as presenting it direct to the banker
mand has been indorsed, it must be on whom the cheque is drawn or where the
presented for payment within a bill is payable. (See BILL OF EXCHANGE.)
reasonable time of the indorsement. The holder of a bill, by presenting it for
If it be not so presented the payment, does not warrant the genuineness
indorser is discharged . of the bill or of any of the signatures thereon,
“ (2) In determining what is a reasonable or of any accompanying documents. In
time, regard shall be had to the Guaranty Trust Company of New York v.
nature of the instrument, the usage A. Hannay & Co. ( 1918, A.C. 34 T.L.R.
of trade, and the facts of the 427) , Pickford, L.J. said that the position
particular case . of the holder of a bill of exchange who
(3) Where a note payable on demand is presents it for payment is well expressed in
(0

negotiated, it is not deemed to be a lecture by Dean Ames, of Harvard, when

says :
overdue ,forthe purpose of affecting he The attitude
billwhopresents of the holder
it for payment of a
is altogether
the holder with defects of title of
different from that of a vendor. The holder
which he had no notice, by reason
that it appears that a reasonable is not a bargainer. By presentment for
time for presenting it for payment payment he does not assert, expressly or by
has elapsed since its issue. implication, that the bill is his or is genuine.”
He, in effect, says : Here is a bill which
“ 87. (1) Where a promissory note is in has come to me calling, by its tenor, for
the body of it made payable at a
particular place,itmustbe
, pre paymentby you. I accordingly presentit
to you for payment, that I may either get
sented for payment at that place the money or protest it for non -payment.”
in order to render the maker liable .
PRESENTS. The words “ these presents”
In any other case, presentment for are used in a deed, or other legal document,
payment is not necessary in order when referring tothe documentitself.
to render the maker liable . PRESSURE ON THE MONEY MARKET.
(2) Presentment for payment is neces- An expression which is used to describe the
sary in order to render the indorser position when from any cause, such as a high
of a note liable . Bank Rate, there is difficulty in obtaining
66
(3) Where a note is in the body of it loans or discounting bills.
made payable at a particular place, PREVENTION OF CORRUPTION ACT,
presentment at that place is neces. 1906 ( 6 Edw. VII, c. 34) . An Act for the
sary in order to render an indorser | better Prevention of Corruption.
liable ; but when a place of pay [ August 4, 1906.)
ment is indicated by way of
memorandum only, presentment Punishment of Corrupt Transactions with
at that place is sufficient to render Agents.
the indorser liable, but a present- “ 1. (1 ) If any agent corruptly accepts or
ment to the maker elsewhere, if obtains, or agrees to accept or
510
PRE ) DICTIONARY OF BANKING
attempts to obtain , from any person ,
for himself or for any other person ,
any gift or consideration as an
inducement or reward for doing or
forbearing to do, or for having after
the passing of this Act done or
forborne to do, any act in relation
to his principal's affairs or business,
or for showing or forbearing to show
favour or disfavour to any person
in relation to his principal's affairs
or business ; or
“ If any person corruptly gives or
agrees to give or offers any gift or
consideration to any agent as an
inducement or reward for doing or
forbearing to do, or for having after
the passing of this Act done or
forborne to do, any act in relation
to his principal's affairs or business
or for showing or forbearing to show
favour or disfavour to any person
in relation to his principal's affairs
or business ; or
"“
If any person knowingly gives to
any agent, or if any agent knowingly
uses with intent to deceive his
principal, any receipt, account, or
other document in respect of which
the principal is interested, and which
contains any statement which is
false or erroneous or defective in any
material particular, and which to his
knowledge is intended to mislead the
principal ;
he shallbe guilty of a misdemeanour,
and shall be liable on conviction on “ 3. This Act shall extend to Scotland,
indictment to imprisonment, with or subject to the following modifications :
without hard labour, for a term not " ( 1 ) Section 2 shall not extend to Scot
exceeding two years, or to a fine not
exceeding five hundred pounds, or to
both such imprisonment and such fine,
or on summary conviction to imprison
ment, with or without hard labour, for
a term not exceeding four months, or
to a fine not exceeding fifty pounds,
or to both such imprisonment and such
fine.
“ (2) For the purposes of this Act the
expression consideration ' includes
valuable consideration of any kind ;
6
the expression '' agent ' includes
any person employed by or acting
for another ; and the expression
OG
principal' includes an employer.
(3) A person serving under the Crown or
under any corporation or any muni-
cipal borough, county , or district
511
(PRE
council, or any board of guardians,
is an agent within the meaning of
this Act.
Prosecution of Offences.
“ 2. (1 ) A prosecution for an offenceunder
this Act shall not be instituted
without the consent, in England of
the Attorney -General or Solicitor
General, and in Ireland of the
Attorney -General or Solicitor-Gen
eral for Ireland .
22 23 Vict. c. 17.
" (2) The Vexatious Indictments Act, 1859,
as amended by any subsequent
enactment, shall apply to offences
under this Act as if they were
included among the offences men
tioned in Section 1 of that Act.
" (3) Every information for any offence
under this Act shall be upon oath .
“ (4) The expenses of any prosecution on
indictment under this Act shall be
defrayed as in cases of indictment
for felony .
“ (5) A court of quarter sessions shall not
have jurisdiction to inquire of, hear,
and determine prosecutions on in
dictments for offences under this
Act .
“ (6) Any person aggrieved by a summary
conviction under this Act may
appeal to a court ofquarter sessions.
Application to Scotland .
land :
" (2) In Scotland all offences which are
punishable under this Act on sum
mary conviction shall be prosecuted
before the sheriff in manner pro
vided by the Summary Jurisdiction
(Scotland) Acts.
Short Title and Commencement.
“ 4. (1 ) This Act may be cited as the
Prevention of Corruption Act, 1906.
“ (2) This Act shall come into operation
on the first day of January nineteen
)
hundred and seven . ”
One object of this Act is to endeavour to
stop the practice of taking and giving secret
commissions, in consideration for which an
agent does something contrary to the
interests of his principal.
PRE ] DICTIONARY OF BANKING (PRI

Where a broker shares with a banker, / banker's possession it is unlikely that a

through whom the order has been received , charge would be created in priority to his.
his commission upon any sale or purchase As a rule, the charges with which a banker
of stocks or shares, it is now customary to is most concerned are those which may
place a notice upon the contract note that exist at the time the security is taken ; but
the commission is divided with the banker. | if the banker holds the usual memorandum of
PRE - VICTORIAN GOLD COINS . Pre- deposit agreeing to execute a legal mortgage
Victorian sovereigns and half-sovereigns , when called upon, the possession of the deeds
that is, all gold coins coined before 1837 — are and such a document would probably give
not now legal tender. They were called in him the best right to call for the legal estate.
by the Coinage Act, 1889, and by Royal If, before the deeds were deposited with
Proclamation they were declared to be no the banker, as security, the property was
longer current coins after February 28, 1891. mortgaged, say, to Jones, or if Jones had an
PRIMÅ FACIE. On the first view . The equitable mortgage and subsequently, with or
appearance of a matter, at first sight, before without notice of the banker's charge,obtained
examining into it. a legal mortgage, Jones would then hold the
An example of the use of the words may legal estate and would rank before the
be seen in Section 30, Bills of Exchange banker's equitable charge. But if Jones was
Act, 1882, under HOLDER IN DUE COURSE. guilty of negligence in not retaining posses
PRIMAGE . A certain percentage of the sion of the deeds, or of not obtaining a satis
freight payable by a merchant to a ship- factory explanation of their absence, which
owner in addition to the freight, e.g. freight enabled the mortgagor to deposit them
20s . per ton with 5 per cent. primage. with the banker, the banker's equitable
PRIMARY SECURITY. (See MORTGAGE.) charge might in such a case, in equity, be
PRIMOGENITURE. (Latin Primogenitus, held to precede the legal mortgage held by
first -born .) Jones, provided, of course, that the banker
The law by which the real property of a had no knowledge, at the time he took the
father or mother passes to the eldest son, deeds, that there was a charge in existence
in the event of the parent leaving no will. in favour of Jones. would probably not,
PRINCIPAL. A word used when refer- A prior legal estate
ring to the amount of a loan, to distinguish however, be postponed to a subsequent
it from the interest payable thereon. When equitable estate, because of mere careless
interest has been added to the debt, it ness, as distinguished from gross negligence,
becomes part of the principal. on the part of the prior mortgagee.
The person who employs an agent to act The legal estate can be held only by one
for him is called the principal. (See AGENT.) person at a time.
PRIORITIES. In charges upon landed If a banker has made an advance upon an
property, a mortgage conveying the legal equitable charge, without notice of a prior
estate comes first, and, after that, all the equitable charge, the banker's charge will
other equitable charges which there may rank after the prior charge (unless the
be rank in order of the dates of the respective prior equitable mortgagee has been negligent
charges. If, for example, a trustee fraudu- in not retaining possession of the deeds) ;
lently deposits the deeds of trust property but if the banker subsequently obtains a
with a banker, the banker's equitable charge mortgage conveying the legal estate to
will rank after the equitable charge which himself, he will thereby secure priority to
already existed, before he took the deeds, in any previous equitable mortgagee. For
favour of the persons benefiting under the example, if Brown contracted with Jones
trust. But if, on the other hand, a banker for the sale to him of some land , and ,while
is negligent and allows, without a sufficient the deeds were still (without negligence) in
reason , the deeds of the property included Brown's hands, Brown deposited the deeds
in his equitable charge to remain in the with a banker without notice of the sale,
hands of the customer, and the customer there would then be two equitable interests
obtains a loan upon them from another in the land, and the interest of Jones, having
party, say, Jones, the banker's charge, been created before the interest of the banker,
although first in point of time, will, by would rank first ; but if the banker obtained
reason of his negligence, be postponed to a legal mortgage, he would thereby gain the
that of Jones. priority. If, however, the banker was
So long as the title deeds remain in the aware of the fact when he took the deeds
512
PRI] DICTIONARY OF BANKING [PRI

that Jones had an equitable interest in the " ( c) prohibits any invitation to
property, he could not, in that case , by the public to subscribe for
securing the legal estate, step in in front of any shares or debentures of
Jones. (See EQUITABLE MORTGAGE.) the company."
(See the cases Deeley v. Lloyds Bank, Ltd. , "( 2) A private company may, subject to
and Grierson v. National Provincial Bank of anything contained in the memo
England, Ltd. , under NOTICE OF MORTGAGE.) randum or articles , by passing a
In Yorkshire, charges upon property rank special resolution and by filing with
according to the date of registration . (See the registrar of companies such a
particulars under YORKSHIRE REGISTRY OF statement in lieu of prospectus as
DEEDS . ) the company, if a public company,
A mortgage upon a ship takes priority would have had to file before allot
from the date of production for registry, ting any of its shares or debentures,
not from the date of the instrument. (See together with such a statutory
under SHIP_MORTGAGE , etc.) declaration as the company, if a
The priority of claims under any assign public company, would have had to
ment of aa life policy is regulated by the date file before commencing business ,
on which notice is received by the insurance turn itself into a public company.
company. (See LIFE Policy. ) ( 3) Where two or more persons hold one
(See DEBTS - ASSIGNMENT OF, MORTGAGE, or more shares in a company jointly
NOTICE OF MORTGAGE, TACKING .) they shall, for the purposes of this
PRIVATE BANK . A banking partner Section, be treated as a single
ship, or firm , in which the number of partners member."
must not exceed ten. The liability of each ( See Section 114 under AUDITORS.)
partner is unlimited . If at any time the number of members is
A partnership of more than ten persons reduced below two and the private company
cannot be formed for the purpose of carrying carries on business for more than six months
on the business of banking, unless it is regis- while the number is so reduced , the person
tered as a company under the Companies carrying on the business shall be liable for
(Consolidation ) Act, 1908 ,or is formed in pur- the payment of the whole debts of the
suance of some other Act of Parliament, or company contracted during that time.
of letters patent. (See BANKING COMPANY .) | (Section 115 under COMPANIES.)
PRIVATE COMPANY . A private com- The regulations in Section 65 as to sending
pany may consist of any two or more a copy of the statutory report to the mem
persons, with limited or unlimited liability. bersof a company andfiling a copy with the
(See MEMORANDUM OF ASSOCIATION .) registrar do not apply to a private company .
The Companies (Consolidation) Act, 1908 , (See MEETINGS.)
Section 121, defines a private company as Regarding the annual list of members to
follows : be sent to the registrar, see Section 26,
“ ( 1) For the purposes of this Act the also Companies Act, 1913, Section 1 , s.s. 3,
expression private company ' means under REGISTER OF MEMBERS OF COMPANY.
a company which by its articles- Section 26, s.s. 3, excepts a private
" (a) restricts the right to transfer company from sending an annual balance
its shares ; and sheet to the registrar. (See REGISTER OF
(6) limits the number of its mem- MEMBERS OF COMPANY .)
bers (exclusive of persons A private company can commence business
who are in the employment as soon as it is incorporated and does not
of the company and of per require the registrar's certificate to commence
sons who having been formerly business. (Section 87. See COMPANIES.)
in the employment of the com- Section 82, which obliges companies to
pany, were while in such em. file a statement with the registrar where
ployment and have continued no prospectus is issued , does not apply
after the determination of such to a private company. (See PROSPECTUS .)
employment to be members of (See COMPANIES.)
the company) to fifty ; and If default is made in complying with any
[the words in italics were of the provisions of Section 121 , the com
added by the Companies pany shall cease to be entitled to the privi
Act, 1913) . leges and exemptions conferred on private
513
33-(1535 )
PRI) DICTIONARY OF BANKING [ PRO

companies, and thereupon the said provi.
sions shall apply to the company as if it
were not a private company. The court
may, however, in certain cases, order that
the company be relieved from such con .
sequences. (Section 1 , s.s. 1, Companies
Where probate or letters of administration
have been revoked, the banker is protected
in any payments he may have bona fide
made by reason of the probate or letters.
By 20 & 21 Vict. c. 77 it is enacted :
“ Section 77. Where any probate ΟΙ

Act, 1913.) administration is revoked under this Act,

PRIVATE LEDGER . A book kept at the all payments bona fide made to any executor
head office of a bank wherein may be kept or administrator under such probate or
accounts relating to capital, reserve funds, administration, before the revocation there
dividends, provisions for bad and doubtful of, shall be a legal discharge to the person
debts, and such like, the combined balances making the same; and the executor or
agreeing with an account in the General administrator who shall have acted under
Ledger under the heading of “ Private any such revoked probate or administration
Ledger." may retain and reimburse himself in respect
PRIZE BOND. (See PREMIUM BOND .) of any payments made by him which the
PRO RATA. Payment in proportion to person to whom probate or administration
the various interests concerned . shall be afterwards granted might have
PROBATE . The document which is lawfully made .
issued , with an official copy of a will, by the “ 78. All persons and corporations making
Probate Office to an executor. The principal or permitting to be made any payment or
registry of 'wills is at Somerset House, transfer bona fide, upon any probate or
where the copy of a will may be seen on letters of administration granted in respect
payment of one shilling. There are also of the estate of any deceased person
District Registries where probate can be under the authority of this Act, shall be
obtained of the wills of persons who were indemnified and protected in so doing,
living in those districts at the time of their
notwithstanding any defect or circumstance
death, and a copy of a will which was provedwhatsoever affecting the validity of such
in a District Registry may be seen in that probate or letters of administration .”
District Registry, as well as at Somerset When a bank is appointed an executor,
House, for a fee of one shilling. A foreign probate may be granted to the bank in its
or colonial probate does not govern the corporate name. The Administration of
deceased's estate in this country . Justice Act, 1920, Section 17, provides that
An official copy of the whole or any part where a corporation is named as the executor
of a will, or an official certificate of the grant of the will of a deceased person who at the
of any letters of administration may be time of his death was domiciled in England,
obtained from the Registry or District probate of the will may be granted by the
Registry where the will has been proved or High Court to that corporation by its
the administration granted on the payment corporate name. Prior to that Act a
of certain fees. syndic " had to be appointed . (See
Until probate is exhibited or, if no will, SYNDIC.)
letters of administration are exhibited , a ( See EXECUTOR, LETTERS OF ADMINIS
banker does not allow the balance of the TRATION, PROBATE REGISTER ,TRANSMISSION
deceased's account to be transferred , or any OF SHARES . )
securities which he may have left with the PROBATE REGISTER . A book kept for
banker to be removed. The will must be the purpose of recording particulars of all
proved under a penalty of £50, within six probates or letters of administration exhi
months from the date of the death . bited to a banker. It should contain such
When probate is exhibited a banker particulars as the date when the Probate
enters full particulars in the probate book was granted and the name of the Registry ,
for future reference, and he is expected to see the date when exhibited and by whom , the
that the gross value of the estate as stated names of the executors, the gross value of the
in the probate is not less than the money in estate, the date of the will, the powers of the
his hands belonging to the deceased . executors, the amount of legacies, and
In the event of a probate being lost, the generally a brief abstract of the contents of
court will issue a document called " exempli- the will, and the reason why exhibited, e.g. ,
fication of probate,” which has the same current account customer, shareholder,
effect as the original document. etc. As to the letters of administration,
514
PRO) DICTIONARY OF BANKING (PRO

where there is no copy will, the particulars section unless and until it is
to be recorded will be the date when the indorsed by the maker.
letters were granted , and the name of the “ (3) A note is not invalid by reason only
Registry, the date when exhibited and by that it contains also a pledge of
whom, the names of the administrators and collateral security with authority
the gross value of the estate. Brief par to sell or dispose thereof.
ticulars should also be entered in the ledger “ ( 4) A note which is, or on the face of it
against the customer's account and a refer purports to be, both made and
ence given to the folio in the probate book payable within the British Islands
for any further information required. The is an inland note . Any other note
probate itself is usually indorsed with a is a foreign note.”
note that it has been exhibited, and the “ Section 84. A promissory note is in
date.
choate and incomplete until delivery thereof
PROCEEDS. The amount received from to the payee or bearer.”
the sale of a security is commonly referred
to as the proceeds. The term is also applied The following are specimens of promissory
to the sum obtained from the collection of a notes signed by one person :
cheque.
PROCURATION . By the Stamp Act, £' 100 Leeds, June 1 , 19 .
1891, the stamp duty is : Three months after date I
£ s . d. promise to pay to John Brown
PROCURATION , deed , or other or order the sum of One
instrument of Stamp
0 10 0 1 /- hundred pounds for value re
(See Per PROCURATION .) ceived.
PRODUCTS . The interest calculations in JOHN JONES.
the current account ledger, where the
amount of the balance is multiplied by the
number of days during which it continues andJohn
JohnJones is the maker
Brown is the payee .of that note,
undisturbed . The resulting product is the
number of pounds for one day on which £ 100 Leeds, June 1 , 19 .
interest is to be allowed or charged. The On demand I promise to pay
products are commonly, though incorrectly, to the X & Y Banking Com
called “ decimals .” (See DECIMALS .)
PROFIT AND LOSS ACCOUNT. The Stamp pany , Limited , or order, at their
1/ Leeds office, the sum of One
account which, in a bank, is made up half hundred pounds with lawful in
yearly, showing on the one side the amounts terest for the same from the
received from interest, commission, dis day of the date hereof.
counts, investments, or other sources , and
on the other side the amounts paid for JOHN JONES.
interest on money lodged, bad debts, current Witness
expenses, and any other charges, the differ
ence between the two sides being the profit A note which is written by John Brown
or loss, as the case may be, for the half-year. | in the form , “ I, John Brown , promise to
PROMISSORY NOTE . Part IV of the pay,” etc., is valid, without his signature
Bills of Exchange Act, 1882, is devoted to appearing at the foot, but variations from
promissory notes. Section 83 defines a the usual forms should be discouraged .
promissory note as follows : If a note on demand does not include a
“ ( 1) A promissory note is an uncon- promise to pay interest, interest cannot
ditional promise in writing made legally be enforced.
by one person to another signed by " Section 85 . (1) A promissory note may
the maker, engaging to pay, on be made by two or more makers,
demand or at a fixed or determin and they may be liable thereon
able future time, a sum certain in jointly, or jointly and severally,
money, to, or to the order of, a according to its tenor.
specified person or to bearer. “ (2) Where a note runs, ' I promise to
" (2) An instrument in the form of a note pay, ' and is signed by two or more
payable to maker's order is not a persons, it is deemed to be their
note within the meaning of this joint and several note.”
515
PRO ) DICTIONARY OF BANKING ( PRO

The following is a specimen of a joint and correspond with the acceptor of a

several promissory note : bill, and the first indorser of a note
Leeds, June 1 , 19 . shall be deemed to correspond with
£ 100 the drawer of an accepted bill
Three months after date we payable to drawer's order.
“ (3) The following provisions as to bills
jointly and severally promise do not apply to notes ; namely,
Stamp to pay to the X & Y Banking provisions relating to
1 /- Company, Limited, or order, at
their Leeds office, the sum of One (6
(a) Presentment for acceptance ;
hundred pounds with lawful in (6) Acceptance ;
terest for the same from the date " (c) Acceptance suprà protest ;
hereof. ( d) Bills in a set.
JOHN BROWN .
“ (4) Where a foreign note is dishonoured ,
JOHN JONES. protest thereof is unnecessary ."
A promissory note made by a banker,
Witness to both signatures payable to bearer on demand, is called a
A note drawn at so many months' notice bank note, but bank notes for 20s., or more,
has been held to be in accordance with the and under £5, are prohibited in England.
Bills of Exchange Act. In Scotland and Ireland bank notes for £1
A promissory note may be payable by and upwards are issued. There is no limit
instalments. ( Kirkwood v . Carroll, 1903, as to the amount of other promissory notes.
A.C. 88 L.T. 52.) A promissory note ( except a bank note)
When several persons sign a promissory cannot be re -issued. Bank notes may be
note, the note is usually worded “ We jointly re -issued as often as desired.
and severally promise to pay," and each If a person is induced by fraud to sign a
person signing the note is liable for the full promissory note, he may, unless negligence
amount. If, however , the note is worded is shown, be held not to be liable thereon .
we jointly promise to pay, ” it is a promise | This was the decision in the case of Lewis
by the combined parties and each person is v. Clay ( 1897, 14 T.L.R. 149) , where a person
not individually liable for the whole amount. was induced to sign under the belief that he
In a joint note all the makers must be sued was witnessing a signature.
together ; but in a jointand several note each A banker is liable if he pays a promissory
may be sued separately or they may all be note, domiciled with him , bearing a forged
sued jointly. indorsement.
The regulations of the Bills of Exchange It frequently happens that where money
Act regarding the presentment for payment is borrowed by way of promissory note that
of a promissory note are given in Sections 86 another person also signs the note as surety
and 87. (See PRESENTMENT FOR PAYMENT.) for the borrower. If Brown borrows on a
To be valid, a promissory note must not be joint and several promissory note and Jones
payable upon a contingency, such as the signs as surety for Brown, either of them is
arrival of a ship. liable to pay the amount at maturity, or,
Sections 88 and 89 provide as follows :- if on demand, when the banker calls for
** 88. The maker of a promissory note by repayment. If Brown does not pay the
making it note at maturity Jones is not discharged
" (1 ) Engages that he will pay it according from lack of notice of dishonour, but it
to its tenor ; is advisable to give such notice. If the
“ (2) Is precluded from denying to a note continues for more than six years
holder in due course the existence and during that time the interest, as well as
of the payee and his then capacity any instalments in reduction of the amount,
to indorse. are paid by Brown, the payments so made
" 89. ( 1 ) Subject to the provisions in this by Brown will not operate to keep the note
Part and, except as by this Section alive as against Jones. If Jones has paid
provided , the provisions of this Act nothing and given no acknowledgment of
relating to bills of exchange apply, the debt for six years from the date of the
with the necessary modifications, note, he will be discharged. It is necessary ,
to promissory notes . therefore, before the six years are up, to
“ (2) In applying those provisions the obtain an acknowledgment from Jones (or
maker of a note shall be deemed to from the maker who has not paid anything
516
PRO ] DICTIONARY OF BANKING (PRO

or confirmed the debt in any way ). The behalf it is given, either alone or with any
best plan is to get a fresh note signed by both other person or persons either on the balance
makers before the six years expire. Each of his current account or otherwise, and that
time that a payment in reduction of a the moneys intended to be secured by the
promissory note on demand is made, a pay- promissory note shall be recoverable there
ing-in slip should be signed in order to afford upon, although the bank may have taken or
evidence of the payment. In the Mutual may hereafter take any further security, or
Loan Fund Association v. Sudlow (5 C.B., may have given time for the payment
N.S., p. 453) , Mr. Justice Byles said : “ As thereof.
between the makers and the payees of the A promissory note payable on demand,
note, at law both the makers are principals, which is held as security for an account,
and evidence would not be admissible to should , for safety, be renewed, if still re
show that one of them signed the instrument quired, before six years from the date of the
as surety. But in equity, if it be made to note have expired.
appear that the lender was cognisant of the A promissory note payable at a fixed
circumstances, you may show what the fact period after date is not regarded as a con
is. They become joint principals, or princi- tinuing security for an account and to
pal and surety according to the facts." establish the contrary, evidence is required.
(See STATUTE OF LIMITATIONS .) In the case of In re Boys, Eedes v. Boys
If a loan is made to a society or institution ( 1870, 10 Eq. 467 ), where a note payable
upon a promissory note signed, say, by the eightmonthsafter date was given as security,
(0
members of the committee, the members Lord Romilly said : “ I think that the
should sign as private individuals, without burden of proof should lie upon those who
any reference to the name of the society or seek to establish that it was intended to be
institution. a running security for the balance of the
Where an advance is obtained from a account from time to time.”
banker upon a promissory note payable on In the case of a promissory note payable
demand, signed by the borrower and one or on demand, the liability exists as soon as
more makers (as sureties), the amount is the loan is made, and the words on
usually debited to a separate loan account demand "” may be neglected . " Express
and the proceeds credited to the borrower's demand is not necessary in the case of a
current account ; if payable at so many promissory note payable on demand ; but
months after date it is discounted . It it is otherwise when the debt is not pre
frequently happens that when an after date sent but to accrue as in the case of a note1)

promissory note is about due, it is arranged payable three months after demand .” ( Brad
to renew it for a further period on the same ford Old Bank v . Sutcliffe, 1918, 2 K.B. 833.)
signatures , and sometimes , for various STAMP DUTY . - A promissory note of any
reasons, it is impossible to obtain all the kind whatsoever ( except a bank note)
signatures to the new note, before the old drawn, or expressed to be payable, or
one is due. In such a case the old note actually paid, or indorsed , or in any manner
should not be cancelled but should be pinned negotiated in the United Kingdom .
to the new note till all the makers have S. d.
signed , as in the event of any signature not When the amount or value of the
being obtained the old note may be sued upon. money for which the note is made
Where a promissory note signed, say, by does not exceed £5 . 0 2
Brown in favour of Jones is lodged as security (Increased from id. to 2d . as from Sept. 1 ,
for an overdraft to Jones, the note should | 1918. See Finance Act, 1918, Section 36 ,
be indorsed by Jones and a memorandum under Bill OF EXCHANGE .)
should be signed by him to show the purpose Exceeds £ 5 and does not exceed £10 02
for which the note is given ; and where a £ 10 425 0 3
£ 25 £50 0 6
note is signed, say, by J. Brown and J. Jones,
payable to the bank and is given as security £ 50 £ 75 0 9
for Brown's account, a memorandum should £ 75 £ 100 1 0
be signed by the two makers. The memo £ 100
randum of deposit should state that the note For every £ 100, and also for any
is given for securing the sum and sums of fractional part of £100, of such
money which shall from time to time be due amount or value 1 0
or owing from the customer on whose On promissory notes payable on demand
517
PRO ) DICTIONARY OF BANKING PRO

or at sight, or on presentation, or not exceed- sold to be paid for in , say, three months'
ing three days after date or sight, the duty time, the agreement is called a three months'
is according to the above table. ( Bills of prompt. If the period is four months, it is
exchange payable in the same way only a four months' prompt, and so on .
require 21.) PROOF OF DEATH . In the case of a
The Stamp Act, 1891, provides : joint account, before paying a chequeto one
“ Section 33. of the parties who represents himself to be
thisAct the)expression promissory fully aware ,of the fact)require satisfactory
(
note ' includes any document or evidence that the other party to the account
writing (except a bank note) is dead , such as production of the probate,
containing a promise to pay any
sum of money . or of the letters of administration , or the
death certificate or burial certificate. If
“ (2) A note promising the payment of any the death occurred abroad , the foreign
sum of money out of any particular death certificate should be confirmed by a
fund which may or may not be notary or British Consul.
available, or upon any condition PROOF OF DEBTS. A proof of debt is
or contingency which may or may the form which is filled up by a creditor
not be performed or happen , is to setting forth the amount of his claim against
be deemed a promissory note for the estate of a bankrupt.
that sum of money." When securities are held from a third
On all inland promissory notes the stamp party, proof may be made for the whole debt
must be impressed . without any deduction for these securities.
The ad valorem duties upon promissory | If third party securities are realised before
notes drawn or made out of the United the proof is made, the proceeds should be
Kingdom are to be denoted by adhesive placed to a suspense account and proof be
stamps. (Stamp Act, 1891, Section 34, s.s. 2.) made for the full debt ; but if the proceeds
The adhesive stamps are to be Foreign Bill are placed to the credit of the bankrupt's
stamps. Every person into whose hands such account, then proof can be made only for
a promissory note comes in the United King- | the balance of the account.
dom before it is stamped shall, before he The proof must be made upon the regula
transfers or negotiates or pays the note, tion form , which is shown on pages 519 and
affix thereto a proper adhesive stamp and 520 .
cancel every stamp so affixed . (Section 35, The Bankruptcy Act, 1914, provides as
s.s. 1.) An adhesive stamp is to be cancelled, follows :
by the person required by law to cancel it,
by writing on or across the stamp his name Description of Debts Provable in Bankruptcy .
or initials and the true date of his so writing. “ 30. ( 1 ) Demands in the nature of un
The duty is calculated upon the amount liquidated damages arising other
of the note . If the note is drawn payable wise than by reason of a contract ,
“ with interest," the interest does not affect promise, or breach of trust, shall not
the amount of the stamp. be provable in bankruptcy .
A bill or note issued by the Bank of “ (2) A person having notice of any act of
England or the Bank of Ireland is exempt bankruptcy available against the
from stamp duty . debtor shall not prove under the
Where the amount secured by a promis order for any debt or liability con
sory note is payable by instalments, the tracted by the debtor subsequently
duty is simply upon the one full amount, to the date of his so having notice.
and not upon each separate instalment. “ ( 3) Save as aforesaid , all debts and lia
The various sections of the Stamp Act bilities, present or future, certain or
relating to the stamp duties on bills and contingent, to which the debtor is
promissory notes are given in the article Bill subject at the date of the receiving
OF EXCHANGE. (See I.O.U. , PRESENTMENT order, or to which he may become
FOR PAYMENT, STATUTE OF LIMITATIONS.) subject before his discharge by
PROMPT. A commercial term signifying reason of any obligation incurred
the period of time within which a payment of before the date of the receiving
purchase money must be made. The period order, shall be deemed to be debts
varies in different trades, and if goods are provable in bankruptcy.
518
 PRO ] DICTIONARY OF BANKING
( PRO

must
Stamp
No. 72. - Proof of Debt. General Form .

NOTE
creditor
defaced
not
Where the debt

The
THE BANKRUPTCY ACT , 1914.

be-.
proved for exceeds

the
by,
(1) High Court of Justice, 22 , Shilling
or County Court of Bankruptcy Stamp
bolden at In the 1 Court of must be aired
IN BANKRUPTCY . No. ( a ) of 1 . here, or a postal
. order for Is. bo sen
( a) Here Insert the qumber to the Oncial
of matter and the name of RE ( a ) Receiver , o other
Debtor as given on the notice
of meeting. wise the prool can
( 6) Fill in full name , ad I (6) not be admitted .
dress, and occupation of de Postage Stamps
ponent. of cannot be accepted .

If proof made by Creditor in the County of make oath and say :

strike out clauses (c)and (d ).
If made by Clerk of Creditor
strike out ( d ) .
If by Clerk or Agent of
Company strike out (c).
(e) Insert " me and to C. D.
" and E. F., my co - partners
" in trade," if any, or if by
Clerk, insert name, address and
description of principal.
directions
(c) That I am in the employ of the undermentioned creditor
and that I am duly authorised by to make this affidavit,
and that it is within my own knowledge that the debt hereinafter
deponed to was incurred, and for the consideration stated , and
that such debt, to the best of my knowledge and belief, still remains
unpaid and unsatisfied.
(d) That I am duly authorisedunder the seal of the Company
hereinafter named , to make the Proof of Debt on its behalf .
That the said W at the date

.
carefully

NOTE.— In case of a firm , 1

of the Receiving Order, viz :—the day of
should
attend

the names of all the partners

these

and still justly and truly indebted to (e)

.You

must be set out in full.

Debt
to

Contra $ 1 ; in the sum of

$ pounds
NOTE THIS. shillings and pence for a
State consideration (as
Goods sold and delivered by as shown by the * fAccount indorsed hereon
3 me) (and my said partuer) to
him (or them ) at his (or their)
{Account hereto annexed marked " A " } for
request between the dates of which sum or any part thereof I say that I have not nor hath ( 8)
(ormonics advanced by me in
respect of the undermentioned or any person by (h)
Bill of Exchange) or as the use had or
case may be. order to my knowledge or belief for (h )
. Strike out the words not received any manner of satisfaction or security whatsoever, save
applicable.
said partners
My them
18) “ of or and except the following (*) :
any OT " the
" abovenamed Creditor , " as
the case may be.
00
( h ). " My " or PO our of
60
their " or " his as the case
may be.
(6) Here state the particu .
lars of all Securities held , and
where the Securities are on
the property of the Debtor,
assess the value of the same,
and if any Bills or other
Negotiable Securities be bold ,
specify them in the Schedule .
N.B. - Bills or other Negoti
able Securities must be pro
duced before the proof can be
admitted . Date . Drawer . Acceptor. Due date.
Amount.
Admitted to vote
for £ : :
this day of
19
Official Receiver.
Admitted to rank
for dividend for
€ :
this day of Sworn at
19
in the County of Deponent's Signature.
Trustee. this day of 19 .

Before me

519
PROJ DICTIONARY OF BANKING (PRO
The Proof cannot be admitted for voting at the First Meeting unless it is properly completed and lodged with
the Official Receiver before the time named in the Notice convening such Meeting.

(Credit should be given for contra accounts.)

If space is not sufficient let the particulars be annexed, but where the particulars are on
a separate sheet of paper the same must be marked by the person before whom the affidavit
is sworn , thus :-In Bankruptcy — This is the account marked with the letter “ A ” referred
to in the annexed proof of debt made by in re
sworn before
me this day of 19
(Signed)
Commissioner or Officer administering Oath .
REMARKS.
• The vouchers (if any) by
DATE . CONSIDERATION. AMOUNT. which the account can be sub
stantiated should be set out
here.

Signature of Deponent

“ (4) An estimate shall be made by the
trustee of the value of any debt or
liability provable as aforesaid, which
by reason of its being subject to any
contingency or contingencies, or for
any other reason, does not bear a
certain value. "
A sum due from oneparty shall be set off
against any sum due from the other party
and the balance only shall be claimed or paid
on either side respectively. (Section 31 .
See under Set OFF .)
In the case of partners the joint estate shall
be applicable in the first instance in pay-
ment of their joint debts, and the separate
estate of each partner shall be applicable in
the first instance in payment of his separate
debts. If there is asurplus of the separate
estates it shall be dealt with as part of the
joint estate. If there is a surplus of the
joint estate it shall be dealt with as part of
the respective separate estates in propor-
tion to the right and interest of each partner
in the joint estate. (Section 33, s.s. 6.)
" Exceptions :-Joint creditors may receive
dividends out of separate estates pari passu
with separate creditors if there is no joint
520
estate and if there is no solvent partner.
Where a joint creditor is the petitioning
creditor in a separate adjudication he may
receive dividends out of the separate estate."
( Ringwood's Principles of Bankruptcy .)
A proof ofdebt is limited to the amount of
principal and interest due at the date of the
receiving order. Interest subsequent to the
receiving order cannot be added. (See
INTEREST.)
If the proof is in respect of a bill of ex
change, promissory note, or other negotiable
instrument, on which the debtor is liable,
such instrument, subject to any special
order of the Court to the contrary, must be
produced before the proof can be admitted
either for voting or for dividend .
It should be noted (see Rule 13 below )
that the trustee in bankruptcy may at any
time redeem a security on payment to the
creditor of the assessed value, but the
secured creditor has the right to give the
trustee notice, in writing, to elect whether
he will, or will not, redeem the security at
the assessed value. If the trustee fail to
redeem it within six months, the security
vests in the creditor, and he can thereafter
PRO ] DICTIONARY OF BANKING [PRO

even ifitrealises more than theone

proceedsthat real:12.If asecured creditor does not either
realise or surrender his security, he shall,
If notice be not given, the trustee's right before ranking for dividend, state in his
to redeem continues. proof the particulars of his security, the date
The rules in the second Schedule of the when it was given, and the value at which he
Bankruptcy Act, 1914, with respect to proof assesses it, and shall be entitled to receive a
of debts are as follow : dividend only in respect of the balance due
Proof in Ordinary Cases. to him after deducting the value so assessed .
“ 1. Every creditor shall prove his debt “ 13. (a) Where a security is so valued the
of a trustee may at any time redeem it
as soon as may be after the making on payment to the creditor of the
receiving order .
assessed value.
" 2. A debt may be proved by delivering or “ (6) If the trustee is dissatisfied with the
sending through the post in a prepaid letter
to the official receiver, or, if a trustee has value at which a security is assessed ,
been appointed , to the trustee, an affidavit he may require that the property
verifying the debt. comprised in any security so valued
be offered for sale at such times and
“ 3. The affidavit may be made by the on such terms and conditions as may
creditor himself, or by some person author
ised by or on behalf ofthe creditor. If made be agreed on between the creditor
by a person so authorised it shall state his and the trustee, or as , in default of
authority and means of knowledge. such agreement, the Court may
direct. If the sale be by public
“ 4. The affidavit shall contain or refer to a auction the creditor, or the trustee
statement of account showing the particulars
of the debt, and shall specify the vouchers, on behalf of the estate, may bid or
if any, by which the same can be substan purchase.
tiated . The official receiver or trustee may “ (c) Provided that the creditor may at any
at any time call for the production of the time, by notice in writing, require
vouchers . the trustee to elect whether he will
“ 5. The affidavit shall state whether the or will not exercise his power of
creditor is or is not a secured creditor. redeeming the security or requiring
“ 6. A creditor shall bear the cost of prov it to be realised , and if the trustee
ing his debt, unless the Court otherwise speci does not, within six months after
ally orders . receiving the notice, signify in writ
“ 7. Every creditorwho has lodged a proof ing to the creditor his election to
shall be entitled to see and examine the exercise the power, he shall not be
proofs of other creditors before the first entitled to exercise it ; and the
meeting, and at all reasonable times . equity of redemption, or any other
“ 8. A creditor proving his debt shall deduct interest in the property comprised
therefrom all trade discounts, but he shall in the security which is vested in the
not be compelled to deduct any discount, not trustee, shall vest in the creditor,
and the amount of his debt shall be
exceeding five per centum on the net amount
of his claim , which he may have agreed to reduced by the amount at which the
security has been valued .
allow for payment in cash. “ 14. Where a creditor has so valued his
" 9. Formal proof of debts in respect of
contributions payable under the National security, he may at any time amend the
Insurance Act, 1911, to which priority is valuation and proof on showing to the satis
given by this Act, shall not be required faction ofthe trustee,or the Court, that the
except in cases where it may otherwise be valuation and proof were made bona fide on
provided by rules under this Act. amistaken estimate, or that the security has
diminished or increased in value since its
Proof by Secured Creditors. previous valuation ; but every such amend
“ 10. If a secured creditor realises his ment shall be made at the cost of the creditor,
security, he may prove for the balance due to and upon such terms as the Court shall order,
him , after deducting the net amount realised . unless the trustee shall allow the amend
“ 11. If a secured creditor surrenders his ment without application to the Court.
security to the official receiver or trustee for “ 15. Where a valuation has been amended
the general benefit of the creditors, he may in accordance with the foregoing rule, the
prove for his whole debt. creditor shall forthwith repay any surplus
521
PRO ) DICTIONARY OF BANKING (PRO

dividend which he may have received in exceeding four per centum per annum to the
excess of that to which he would have been date of the order from the time when the
entitled on the amended valuation, or, as the debt or sum was payable, if the debt or sum
case may be, shall be entitled to be paid out is payable by virtue of a written instrument
of any money, for the time being available at a certain time, and if payable otherwise,
for dividend , any dividend or share of divi- then from the time when a demand in writing
dend which he may have failed to receive by has been made giving the debtor notice that
reason of the inaccuracy of the original interest will be claimed from the date of the
valuation, before that money ismade applic- demand until the time of payment.
able to the payment of any future dividend,
but he shall not be entitled to disturb the Debt Payable at a Future Time.
distribution of any dividend declared before “ 22. A creditor may prove for a debt not
the date of the amendment.
“ 16. If a creditor after having valued his payable when the debtor committed an
security subsequently realises it, or if it is act of bankruptcy as if it were payable
realised nder the provisions of Rule 13,the presently, and may receivedividendsequally
with the other creditors, deducting only
net amount realised shall be substituted for thereout a rebate of interest at the rate of
the amount of any valuation previously five pounds per centum per annum com
made
in all byrespects
the creditor,
as an and shall be
amended treated puted from the declaration of a dividend to
valuation
the time when the debt would have become
made by the creditor.
1.17. If a secured creditor does not comply was
payable, according to the terms on which it
contracted .
with the foregoing rules he shall be excluded
from all share in any dividend . Admission or Rejection of Proofs.
" 18. Subject to the provisions of Rule 13, a
creditor shall in no case receive more than “ 23. The trustee shall examine every proof
twenty shillings in the pound, and interest and the grounds of the debt, and in writing
as provided by this Act. admit or reject it, in whole or in part, or
require further evidence in support of it. If
Proof in Respect of Distinct Contracts. he rejects a proof he shall state in writing to
“ 19. If a debtor was, at the date of the the creditor the grounds of the rejection.
receiving order, liable in respect of distinct “ 24. If the trustee thinks that a proof has
contracts as a member of two or more dis- been improperly admitted, the Court may, on
tinct firms, or as a sole contractor, and also the application of the trustee, after notice to
as member of a firm , the circumstances that the creditor who made the proof, expunge
the firms are in whole or in part composed the proof or reduce its amount.
of the same individuals, or that the sole “ 25. If a creditor is dissatisfied with the
contractor is also one of the joint contractors, decision of the trustee in respect of a proof,
shall not prevent proof in respect of the the Court may, on the application of the
contracts, against the properties respectively creditor, reverse or vary the decision.
liable on the contracts. “ 26. The Court may also expunge or reduce
Periodical Payments. a proof upon the application of a creditor if
the trustee declines to interfere in the
“ 20. When any rent or other payment falls matter, or, in the case of a composition or
due atstated periods, and the receiving order scheme, upon the application of thedebtor.
is made at any time other than one of those " 27. For the purpose of any of his duties in
periods, the person entitled to the rent or relation to proofs, the trustee may administer
payment may prove for a proportionate part oaths and take affidavits.
thereof up to the date of theorder as if the “ 28. The official receiver, before the ap
rent or payment grew due from day to day. pointment of a trustee , shall have all the
Interest.
powers of a trustee with respect to the
examination , admission , and rejection of
“ 21. On any debt or sum certain, payable proofs, and any act or decision of his in
at a certain time or otherwise, whereon relation thereto shall be subject to the like
interest is not reserved or agreed for, and appeal."
which is overdue at the date of the receiving Where a banker is a holder of a bill and
order and provable in bankruptcy. the the acceptor and drawer become bankrupt,
creditor may prove for interest at a rate not he may claim upon both estates for the full
522
PROJ DICTIONARY OF BANKING ( PRO

amount of the bill, but he must not retain | margin by the person taking it. (See
more than the amount of the bill. If a BANKRUPTCY .)
dividend has already been declared on one PROPERTY. (See COPYHOLD , FREE
of the estates before sending in a proof of debt HOLD, LEASEHOLD, PERSONAL ESTATE , REAL
on the other estate, the banker's claim on the ESTATE.)
second estate will be only for the balance PROPERTY TAX . The popular name for
after crediting the dividend declared. If income tax upon property in lands and
there is any balance standing to the cus- | buildings. (See INCOME TAX .)
tomer's credit it will be retained by the PROSPECTUS. A prospectus is any
banker against the bill. notice, circular, advertisement, or other
The fee, payable by means of stamps, invitation, offering to the public for sub
upon a proof of debt above £ 2 (other than scription or purchase any shares or deben
proof for workmen's wages), is one shilling, tures of a company.
and the stamp may be impressed or adhesive.
00
A form of application for shares is usually
The adhesive stamp must be a ' bank- / sent out along with the prospectus. (See
ruptcy " stamp. An adhesive stamp shall APPLICATION FOR SHARES.) This form is
be " cancelled by the various court or other filled up by anyone desiring shares and is
officials by perforation or in such manner forwarded, along with the amount payable
as the Commissioners of Inland Revenue on application , to the company or its
may from time to time direct. " (Stamp bankers. When the shares are allotted by
Order, 1890.) the company a letter of allotment is sent to
An affidavit of proof of debt may be sworn the applicant. (See LETTER OF ALLOTMENT.)
before an assistant official receiver or any The name of the company's bankers
clerk of an official receiver duly authorised usually appears upon a prospectus. Unless
in writing by the Court or the Board of Trade the banker actually joins in the invitation
in that behalf. (Bankruptcy Rules .) The to the public to subscribe, he is not liable for
trustee may administer oaths and take any statements contained in the prospectus.
affidavits. (See Rule 27, above .) Section 140 A company should always obtain a banker's
of the Bankruptcy Act, 1914 , provides :- permission before putting his name in a
“ Subject to general rules, any affidavit prospectus, for although the insertion of a
to be used in a bankruptcy court may be banker's name does not in any way act as a
sworn before any person authorised to ad- guarantee or a recommendation to the pub
minister oaths in the High Court, or in the lic, there is no doubt that it may have
Court of Chancery of the county palatine of a considerable influence in moving many
Lancaster, or before any registrar of a bank- persons to take up the investment.
ruptcy court, or before any officer of a bank- The Companies ( Consolidation ) Act, 1908,
ruptcy court authorised in writing in that provides :
behalf by the judge of the Court , or before a
justice of the peace for the county or place Specific Requirements as to Particulars of
where it is sworn , or, in the case of a person Prospectus.
residing in Scotland or in Ireland, before a
judge ordinary , magistrate, or justice of the “ 81. ( 1 ) Every prospectus issued by or on
peace, or, in the case of a person who is out behalf of a company, or by or on
of the United Kingdom , before a magistrate behalf of any person who is or has
or justice of the peace or other person been engaged or interested in the
qualified to administer oaths in the country formation of the company, must
state :
where he resides (he being certified to be a
magistrate or justice of the peace, or qualified “ (a ) the contents of the memor
as aforesaid , by a British minister or British andum , with the names,
consul, or by a notary public)." descriptions, and addresses
In dealing with the proof of a debt, when of the signatories, and the
the debt includes interest, see Section 66, number of shares subscribed
Bankruptcy Act, 1914, under INTEREST. for by them respectively ;
Any alteration or interlineation must be and the number of founders
authenticated by the initials of the person or management or deferred
taking the affidavit, and in the case of shares, if any, and the
erasure the words or figures must be re nature and extent of the
written and signed or initialled in the interest of the holders in the
523
PRO ) DICTIONARY OF BANKING
property and profits of the
company ; and
" (6) the number of shares, if any,
fixed by the articles as the
qualification of a director,
and any provision in the
articles as to the remunera
tion of the directors ; and
“ (c) the names, descriptions, and
addresses of the directors
or proposed directors ; and
" ( d) theminimum subscription on
which the directors may
proceed to allotment, and
the amount payable on ap
plication and allotment on
each share ; and in the case
of a second or subsequent
offer of shares, the amount
offered for subscription on
each previous allotment
made within the two preced
ing years, and the amount
actually allotted, and the
amount, if any, paid on the
shares so allotted ; and
" (e) the number and amount of
shares and debentures which
within the two preceding
years have been issued, or
agreed to be issued , as fully
or partly paid up otherwise
than in cash , and in the
latter case the extent to
which they are so paid up,
and in either case the con
sideration for which those
shares or debentures have
been issued or are proposed
or intended to be issued ;
and
“ the names 'and addresses of
the vendors of any property
purchased or acquired by
the company, or proposed
so to be purchased or ac
quired, which is to be paid
for wholly or partly out of
the proceeds of the issue
offered for subscription by
the prospectus, or the pur
chase or acquisition of
which has not been com
pleted at the date of issue
of the prospectus, and the
amount payable in cash ,
shares, or debentures, to the
vendor, and where there is
524
(PRO
more than one separate
vendor, or the company is a
sub -purchaser, the amount
so payable to each vendor :
Provided that where the
vendors or any of them are a
firm the members of the firm
shall not be treated as
separate vendors ; and
( g) the amount (if any) paid or
payable as purchase money
in cash , shares, or debentures,
for any such property as
aforesaid , specifying the
amount (if any) payable for
goodwill , and
“ (h) the amount (if any) paid
within the two preceding
years, or payable, as com
mission for subscribing or
agreeing to subscribe , or
procuring or agreeing to
procure subscriptions , for
any shares in, or debentures
of, the company, or the rate
of any such commission :
Provided that it shall not be
necessary to state the com
mission payable to sub
underwriters ; and
“( i) the amount or estimated
amount of preliminary
expenses ; and
“( ) the amount paid within the
two preceding years or in
tended to be paid to any
promoter, and the considera
tion for any such payment;
and
“ (k) the dates of and parties to
every material contract, and
a reasonable time and place
at which any material con
tract or a copy thereof
may be inspected : Provided
that this requirement shall
not apply to a contract
entered into in the ordinary
course of the business car
ried on or intended to be
carried on by the company,
or ļ to any contract entered
into more than two years
before the date of issue of
the prospectus ; and
“ ( 0 the names and addresses of
theauditors (if any) of the
company ; and
 PRO] DICTIONARY OF BANKING (PRO

" (m ) full particulars of thenature of a prospectus issued more than one

and extent of the interest year after the date at which the
*** company is entitled to commence
(if any) of every director in
the promotion of, or in the business.”
property proposed to A company which does not issue a pros
acquired by, the company, pectus with reference to its formation must
or, where the interest of such file with the registrar a statement, in lieu of a
a director consists in being prospectus. The statement must be in the
a partner in a firm , the form set out in the second Schedule to the
nature and extent of the above Act. This does not apply to a private
interest of the firm , with a company. (Section 82.)
statement of all sums paid All persons who have authorised the
or agreed to be paid to him issue of a prospectus are liable to pay com
or to the firm in cash or pensation to anyone who subscribes for any
shares or otherwise by any shares or debe res, on the faith of the
person either to induce him prospectus, for loss or damage they may
to become, or to qualify him have sustained by reason of any untrue
as, a director, or, otherwise statement therein , unless it can be proved
for services rendered by him that they acted honestly in making the
or by the firm in connection statements. (Section 84.) This Section does
income with the promotion or forma- not include bankers and brokers, whose names
‫ܐܢ‬ tion of the company ; and may appear upon a prospectus, as persons
who have authorised the issue of the pros
“ (n) pany
where having
thecompany is a com
shares of more pectus. The Section applies to people
than one class, the right of who have means of checking the statements
voting at meetings of the and a real interest in the company ich as

compan confer by the an issuing house. ( Howell v. Dering, Times,

if the several y classes red
of shares April 30, 1914.) (See COMPANIES.)
respectively . PROTEST. A protest is the official certi
ficate given by a notary public respecting
• (5) Where any such prospectus as is
mentioned in thissectionispub- the dishonourofa bill of exchange by non
lished as a newspaper advertisement, acceptance
is dishonoured ,aholder may When ita tobilla
or non -payment. hand
it shall not be necessary in the notary public to be protested. The notary
of thet memorandum
advertisemen
tents con presents it again to the drawee or to the
to specify theor the
signatories thereto,
thereto , and
and the
the number
number acceptor, and if acceptance
a note ofor the
signatories still not obtained, payment is
facts is
ofshares subscribed for by them . made upon the bill, or upon a slip attached
" (7) This Section shallnot apply to a circu- to the bill, which act constitutes a noting
lar or notice inviting existing mem- of the bill. (See NOTING. ) The official
pats bers or debenture holders of a com certificate, or protest, may be extended
pany to subscribe either for shares subsequently, as of the date of the noting.
or for debentures of the company, The bill may be noted on the day of its
whether with or without the right dishonour, and must be noted not later than
to renounce in favour of other the next succeeding business day.
persons, but subject as aforesaid , The following is a specimen (taken from
this Section shall apply to any Brooke's Notary) of a protest :
prospectus whether issued on or
PROTEST OF A BILL ON NON -PAYMENT.
company or subsequently. of On the day of one thousand
" (8) The requirements of this Section as to nine hundred and . I, R.B. Public
the memorandum and the qualifica- Notary duly authorised , admitted and
tion, remuneration, and interest of sworn, practising in in the County
directors, the names, descriptions, of L and United Kingdom of Great
and addresses of directors or pro- Britain and Ireland, at the request of C. D.
ard ར་ posed directors, and the amount or of - (or of “ the holder,” or “the
སྐུ estimated amount of preliminary bearer as the case may be ), did exhibit
expenses, shall not applyin the case the original bill of Exchange, whereof a
525
PROJ DICTIONARY OP BANKING
true copy is on the other side written (or
did cause due and customary presentment
to be made of the original bill of exchange
whereof a true copy is on the other side
written ), unto E. F. (or as the case may be,
unto a clerk in the counting-house of E. F.)
the person upon whom the said bill is drawn
(and by whom the same is accepted , if the
bill have been accepted ) and demanded
payment thereof (or payment being there
upon demanded), and he answered that it
would not be paid.
Wherefore, I, the said Notary , at the request
aforesaid , have protested , and by these
presents do protest against the drawer of
the said bill, and all other parties thereto,
and all others concerned , for all exchange,
re-exchange, and all costs, damages, and
interest present and to come, for want of
payment of the said bill.
Which I attest,
Sul. R.B.
Notary Public, L
It is not necessary to note or protest
inland bills in order to preserve the recourse
against the drawer or indorsers, though they
are sometimes noted, but, in the case of
foreign bills, it is necessary to have them
noted and protested , unless the remitter of
the bills sends instructions that they are not
to be noted or protested.
Bills must first be protested if they are
to be accepted for honour or paid for
honour. (See ACCEPTANCE FOR HONOUR,
PAYMENT FOR HONOUR.)
Where an acceptor has become bankrupt
or has disappeared, a bill is sometimes pro
tested “ for better security." In such a case
the bill would be presented at the address of
the acceptor (notat the bank where it may
have been accepted payable) and better
security asked for, and be protested
accordingly.
The rules regarding the noting or protest
of a bill are contained in Section 51 of the
Bills of Exchange Act, 1882 :
“ ( 1) Where an inland bill has been dis
honoured it may, if the holder
think fit, be noted for non -accept
ance or non -payment, as the case
may be ; but it shall not be neces
sary to note or protest any such bill
in order to preserve the recourse
against the drawer or indorser.
" ( 2) Where a foreign bill, appearing on
the face of it to be such, has been
626
(PRO
dishonoured by non -acceptance it
must be duly protested for non
acceptance , and where such a bill,
which has not been previously
dishonoured by non -acceptance, is
dishonoured by non -payment it
must be duly protested for non
payment. If itbe not so protested
the drawer and indorsers are
discharged . Where a bill does not
appear on the face of it to be a
foreign bill, protest thereof in case
of dishonour is unnec.'ssary .
" ( 3) A bill which has been protested for
non -acceptancemay besubsequently
protested for non-payment.
“ (4) Subject to the provisions of this Act,
when a bill is noted or protested ,
it may be noted on the day of its
dishonour, and must be noted not
later than the next succeeding busi
ness day. ( As amended by the
Bills of Exchange (Time of Noting)
Act, 1917.) When a bill has been
duly noted, the protest may be
subsequently extended as of the
date of the noting.
“ (5) Where the acceptor of a bill becomes
bankrupt or insolvent or suspends
payment before it matures, the
holder may cause the bill to be
protested for better security against
the drawer and indorsers.
(6) A bill must be protested at the place
where it is dishonoured : Provided
that
“ (a) When a bill is presented
through the post office, and
returned by post dishon
oured , it may be protested
at the place to which it is
returned and on the day of
its return if received during
business hours, and if not
received during business
hours, then not later than
the next business day :
“ (6) When a bill drawn payable
at the place of business or
residence of some person
other than the drawee, has
been dishonoured by non
acceptance, it must be
protested for non -payment
at the place where it is ex
pressed to be payable, and
no further presentment for
PROJ DICTIONARY OF BANKING [PRO

payment to , or demand on , certificate shall in all respects operate as if it

the drawee is necessary . were a formal protest of the bill.
“ (7) A protest must contain a copy of the “ The form given in Schedule I to this Act
bill, and must be signed by the may be used with necessary modifications,
and if used shall be sufficient."
)

notary making it, and must

specify SCHEDULE I.
(a) The person at whose request
the bill is protested : Form of protest which may be used when
(b) The place and date of pro- the services of a notary cannot be obtained .
test, the cause or reason Know all men that I, A B (householder ),
for protesting the bill, the of in the county of
demand made, and the in the United Kingdom , at the request of
answer given , if any , or CD, there being no notary public available ,
the fact that the drawee or did on the day of , 1 ..
acceptor could not be found . at demand payment (or accept
.

' (8) When a bill is lost or destroyed, or ance) of the bill of exchange hereunder
10

is wrongly detained from the person written, from E F , to which demand he

entitled to hold it, protest may made answer (state answer, if any),wherefore
be made on a copy or written I now , in the presence of G H and J K ,
particulars thereof. do protest the said bill of exchange.
(9) Protest is dispensed with by any Signed A B
circumstance which would dispense G H Witnesses .
with notice of dishonour. Delay
in noting or protesting is excused
J K }
when the delay is caused by cir- N.B .-— The bill itself should be annexed ,
cumstances beyond the control of or a copy of the bill and all that is written
the holder, and not imputable to thereon should be underwritten .”
his default, misconduct, or negli- It is to be observed that G H and J K
gence. When the cause of delay are merely witnesses to A B's signature, not
ceases to operate the bill must be witnesses to the presentment of the bill.
noted or protested with reasonable When this form of protest is used it is not
diligence. preceded by “ noting ." The Act does not
Section 93 of the Act defines when noting specifically refer to " noting,” but the above
is equivalent to protest : Section enacts that the certificate shall in all
“ For the purposes of this Act, where aa bill respects operate as if it were a formal protest
or note is required to be protested within a of the bill. The stamp duty is the same as
specified time or before some further pro- for an ordinary protest. (See next page.)
ceeding is taken , it is sufficient that thebill A bolder of a dishonoured bill may recover
has been noted for protest before the expira- from any party liable on the bill the expenses
tion of the specified time or the taking of the of noting, or, when protest is necessary, and
proceeding ; and the formal protest may be the protest has been extended, the expenses
extended at any time thereafter as of the
1
of protest. (Section 57, s.s. 1 (c.) .) Where
date of the noting.” payment is made to a notary when he pre
Where a notary public is not accessible, sents the bill, the acceptor should pay the
Section 94 of the Act makes provision for a notary's charges, though it has been decided
bill to be protested by a householder or that, in such a case, the notary's charges
substantial resident of the place, in the cannot be enforced by law against the
presence of two witnesses. The words of the acceptor.
Section are : Where a foreign bill has been accepted or
" Where a dishonoured bill or note is paid as to part, it must be protested as to the
authorised or required to be protested, and balance.
the services of a notary cannot be obtained Where a foreign promissory note is dis
at the place where the bill is dishonoured , honoured protest thereof is unnecessary .
any householder or substantial resident of ( Section 89, s.s. 4.)
the place may, in the presence of two wit- The date on which bills are to be protested
nesses, give a certificate, signed by them , in foreign countries depends uponthe laws
attesting the dishonour of the bill, and the of those countries .
527
PROJ DICTIONARY OF BANKING (PRO

STAMP DUTY.-By the Stamp Act, 1891 :- new shares until the share certificate is ready
Protest of any bill of exchange or for delivery .
promissory note PROXY. The person who acts for an
Where the duty on the bill or The same other, also sthe document appointing him .
duty as the The article of association of a company
note does not exceed 1s. . bill or note .
£ s. d. usually provide for votes being given by
In any other case 0 1 - 0 proxy.
The articles should be consulted on all
“ Section 90. The duty upon aa notarialact, questions regarding the votes of members.
and upon the protest by a notary public The instrument appointing a proxy may
of a bill of exchange or promissory note, may be in the following form or in any other form
be denoted by an adhesive stamp, which is which the directors shall approve :
to be cancelled by the notary .”
The duty is the same upon the copy of a COMPANY, LIMITED .
protest. I of in the
Postage stamps are used when the stamp county of being a member of the
is an adhesive one. The duty may also be Company, Limited , hereby
denoted by an impressed stamp. (See Bill appoint of as my
OF EXCHANGE, NOTING.) proxy to vote for me and on my behalf at the
PROTEST PAYMENTS . In connection (ordinary or extraordinary, as the case may
with theclearing of country cheques through be) general meeting of the company to be
the London Clearing House, there exists a held on the day of
system by which one or two days are added and at any adjournment thereof.
to the usual two days which are allowed for Signed this day of
clearing the cheques . Where, from any
cause, cheques have not reached the drawee Articles of association often contain a
bank from the London agent , or no acknow- clause that no person shall act as a proxy
ledgment has been received , the London unless he is entitled on his own behalf to be
Agent , when settling up the balance of present and vote at the meeting at which he
clearing two days afterthe cheques were acts as proxy.
received at the Clearing House, gives notice Articles of Association usually provide,
to the bank from which the cheques werewith regard to joint registered holders of
received that payment for them is made shares, that only the member whose name
under protest. The London bank which stands first on the register shall be entitled
receives the notice then , in turn ,com- to vote in person or by proxy in respect of
municates the information to the country such shares. (See Regulation 61 of Table
bank , or other channel, from which it A under Votes .) A proxy , in that case,
received the cheques. would be given by the first registered
In connection with the Metropolitan holder.
clearing, it is permissible for a bank to pay Section 68 of the Companies (Consolida
any of its Metropolitan branches under pro- tion) Act, 1908, gives power to a company
test on Saturdays , when necessary . (See which is a member of another company, by
the rules for the Metropolitan clearing resolution of the directors, to authorise any
under CLEARING HOUSE .) of its officials or any other person to act as
PROVABLE DEBTS. Those debts which its representative at any meeting of the other
a creditor is entitled to prove against a company, and to exercise the same powers on
bankrupt's estate. (See PROOF OF DEBTS .) behalf of the company which he represents,
PROVISION FOR BAD AND DOUBT . as if he were an individual shareholder of the
FUL DEBTS. (See BAD AND DOUBTFUL other company. (See MEETINGS . )
DEBTS . ) The instrument appointing a proxy must
PROVISIONAL CERTIFICATE . The cer- be deposited at the registered office of the
tificate which is issued to a person who has company within the time specified in the
agreed to take up some new bonds which articles .
are being issued . When the various instal- The stamp duty on a letter or power of
ments have been paid, the bonds are issued attorney, or other instrument for the sole
in exchange for the provisional or scrip purpose of appointing or authorising a proxy
certificate . (See SCRIP CERTIFICATE.) A to vote at any one meeting and any ad
provisional certificate may also be issued for journment thereof) at which votes may
528
PUB] DICTIONARY OF BANKING (PUB

be given by proxy, whether the number | keep the public moneys entrusted to them ;
of persons named in such instrument be one and they may also determine what accounts
or more, is one penny. (See under POWER so opened in the names of public officers or
OF ATTORNEY . ) If the instrument is for use accountants in the books of the Bank of
at more meetings than one, the duty is 10s. England, or the Bank of Ireland, or of any
Section 80 of the Stamp Act, 1891, pro- other bank, shall be deemed public accounts ;
vides as follows : and on the death, resignation, or removal
“ (1) Every letter or power of attorney of any such public officersor accountants the
for the purpose of appointing a balances remaining at the credit of such
proxy to vote at a meeting, and accounts shall, upon the appointment of
every voting paper, hereby respec- their successors, unless otherwise directed
tively charged with the duty of one by law, vest in and be transferred to the
penny, is to specify the day upon public accounts of such successors at the said
which the meeting at which it is banks, and shall not, in the event of the
intended to be used is to be held, death of any such public officers or account
and is to be available only at the ants, constitute assets of the deceased, or
meeting so specified, and any ad- be in any manner subject to the control of
journment thereof. their legal representatives."
" (2) The duty of one penny may be denoted By the Stamp Act, 1891, the following
by an adhesive stamp, which is to be are exempt from stampduty :
cancelled by the person by whom the Draft or order drawn upon any banker
instrument is executed, and a letter in the United Kingdom by an officer of a
or power of attorney or voting public department of the State for the pay
paper charged with the duty of one ment of money out of a public account.
penny is not to be stamped after the Bill drawn in the United Kingdom for the
execution thereof by any person . sole purpose of remitting money to beplaced
“ (3 ) Every person who makes or executes, to any account of public revenue. (See list
or votes, or attempts to vote, under of exemptions under BILL OF Exchange .)
or by means of any such letter or (See LOCAL AUTHORITIES . )
power of attorney or voting paper, PUBLIC COMPANY . Any seven or more
ng y
not bei dul sta mpe d l
, shal inc ur persons associated for any lawful purpose
a fine of fifty pounds, and every may by subscribing their names to a memor
vote given or tendered under the andum of association and complying with
authority or by means of the letter the law regarding registration, form an
or power of attorney or voting paper , incorporated company, with or without
shall be void .” limited liability. (See MEMORANDUM OF Asso
By the Finance Act, 1907, Section 9, so much | CIATION .) When the company advertises
of s.s. 2 of Section 80 of the Stamp Act, 1891 , itself by a prospectus and invites the public
as prevents the stamping after execution of to subscribe for its shares, it is a public
a letter or power of attorney or voting paper company. A private company may, under
charged with the duty of one penny, shall certain conditions, turn itself into a public
cease to apply as regards any such instru- company . (See PRIVATE COMPANY.) A
ment which has been first executed at any public company must file , with the registrar
place out of the United Kingdom , and, of companies, a prospectus or statement
accordingly , any such instrument so executed before allotting any shares or debentures.
after the commencementof this Act may be (See PROSPECTUS.) ( See COMPANIES . )
stamped after execution in accordance with PUBLIC EXAMINATION OF DEBTOR .
Section 15 of the said Act. (See STAMP When a receiving order has been made, the
DUTIES .) debtor must, within three days, if the order
A proxy in connection with bankruptcy is made on the debtor's petition , or within
proceedings is exempt from stamp duty. seven days, if made upon the petition of a
(Bankruptcy Act, 1914 , Section 148.)
(See creditor, submit a statement of his affairs to
COMPANIES, Votes . ) the official receiver. (See RecEIVING ORDER.)
PUBLIC ACCOUNT. By Section 18 of the Section 15 of the Bankruptcy Act, which
Exchequer and Audit Departments Act, deals with the public examination of a
1866 (29 & 30 Vict. c. 39) : debtor, is as follows :
“ The Treasury may, from time to time, “ (1) Where the Court makes a receiving
determine at what banks accountants shall order , it shall, save as in this Act
529
34-41535)
PUB] DICTIONARY OF BANKING (PUB

provided , hold a public sitting, on a the first day of January , 1908, the public
day to be appointed by the Court, may (instead of selecting a private individual)
for the examination of the debtor, secure the services of the Public Trustee.
and the debtor shall attend thereat, In the Public Trustee, the public will have
and shall be examined as to his an executor or trustee, who will never die,
conduct, dealings, and property . never leave the country, and never become
" (2) The examination shall be held as soon incapacitated, and whose responsibility is
as conveniently may be after the guaranteed by the Consolidated Fund of
expiration of the time for the sub- the United Kingdom .
mission of the debtor's statement of CAPACITIES IN WHICH THE PUBLIC TRUSTEE
affairs . MAY ACT.-The Public Trustee is authorised,
“ (3) The Court may adjourn the examina- if duly appointed, to act in any of the follow
tion from time to time. ing capacities :
“ (4) Any creditorwho has tendered a proof, I. As Executor or as Administrator of
or his representative authorised in Estates.
writing, may question the debtor ( 1 ) As Executor and /or Trustee (and
concerning his affairs and the causes guardian of infants ).
of his failure . (2) As Administrator in place of Exe
“ (5) The official receiver shall take part in cutors appointed by Will or where
the examination of the debtor ; and there is no Executor.
for the purpose thereof, if specially (3) As Administrator of intestate's Es
authorised by the Board of Trade, tates, i.e, where there is no Will.
may employ a solicitor with or II . As Trustee .
without counsel. ( 1 ) As Trustee of a new Settlement.
“ (6 ) If a trustee is appointed before the (2) As Trustee under a Declaration of
conclusion of the examination , he Trust .
may take part therein . (3) As Trustee of an old Settlement,
“ (7) The Court may put such questions to e.g. Marriage Settlement ; ΟΙ
the debtor as it may think expedient. Settlement made by Will.
" (8) The debtor shall be examined upon (4) As Custodian Trustee.
oath, and it shall be his duty to (5) As Trustee by appointment in a
answer all such questions as the Will.
Court may put or allow to be put to III. As Administrator of Estates of small
him . Such notes of the examination value.
as the Court thinks proper shall be IV. As investigator and auditor of the
taken down in writing, and shall be accounts of trusts not administered by the
read over either to or by the debtor Public Trustee .
and signed by him , and may there- The Public Trustee has, in addition to cer
after, save as in this Act provided , tain privileges conferred upon him by the
be used in evidence against him ; they Act, all the same powers, duties, and lia
shall also be opento the inspection of bilities, and is entitled tothe same rights and
any creditor at all reasonable times. immunities, and is subject to the control
' (9) When the Court is of opinion that the and orders of the Court, as a private trustee
affairs of the debtor have been suffi- acting in the same capacity. The Public
ciently investigated, it shall by Trustee may, however, decline either abso
order declare that his examination lutely, or except on conditions prescribed by
is concluded, but such order shall the rules, to accept any trust, but he cannot
not be made until after the day decline on the ground only of the small value
appointed for the first meeting of of the property. He may not accept any
creditors .” (See BANKRUPTCY .) trust under a deed of arrangement for the
PUBLIC FUNDS . (See NatioNAL Debt.) benefit of creditors, nor for the administra
PUBLIC TRUSTEE. The Public Trustee tion of any estate known or believed by him
Act, 1906, which came into operation on to be insolvent, nor made solely by way of
January 1 , 1908,was passed with the express security for money, nor exclusively for
object of enabling the public to guard religious or charitable purposes.
against the risks and inconveniences which Wills . — The Public Trustee may be
are incidental to the employment of private appointed even although the will was made
individuals in trust matters . On and after or came into operation prior to January 1 ,
530
PUB ] DICTIONARY OF BANKING (PUB

1908, either alone or jointly with any other | the estate, and thereupon, unless he sees
person or persons as executor, or as trustee, good reason to the contrary, if it appears to
or as executor and trustee of a will, and either him that the persons beneficially entitled
as ordinary trustee or as custodian trustee . are persons of small means, the Public
He may be appointed in the simplest form Trustee will undertake the administration.
possible , e.g. ' I appointthe Public Trustee Under the Public Trustee Act a trustee or
as the executor and trustee of this my will.” | beneficiary can obtain an audit of trust
The substitution of thenameof the Public accounts without applying to the Court.
Trustee in a will already in existence for the Formal application must be made to the
names of the executors and trustees named | Public Trustee for the audit.
therein, or the addition of his name, can be As a rule , the Public Trustee may not agree
effected by a simple codicil. to act as ordinary trustee where the trust
The Public Trustee's acceptance of the involves the carrying on of a business, ex
office need not be invited at the time the cept where the carrying on of the business
will or codicil is made, although it is desirable has for its ultimate object the sale or winding
that this course should be adopted when the up of the business. But if he is to act
trust is of an unusual nature. merely as custodian trustee the carrying on
On the death of a testator it is the duty of the businessis immaterial, but he must not
of the co -executor, if any, to inquire of act in the management of the business , or
the Public Trustee if he is prepared to act. hold any property which will expose the
On acceptance of office he executes an holder to any liability unless fully secured
instrument of consent . against loss.
Even after probate has been obtained an The Public Trustee may employ such
executormay, with the sanction of the Court, bankers and other persons as he may con
transfer the estate to the Public Trustee. sider necessary, and in determining who is to
The Public Trustee may be appointed be employed he is to have regard to the
either as an original trustee of a settlement, interests of the trust, and when practicable
or as a new trustee in an existing settlement to take into consideration the wishes of the
when a vacancy arises in the trusteeship by creator of the trust and of the other trustees,
death , or by one or more of the trustees if any, either expressed or as implied by the
desiring to retire. In the case of an existing practice of the creator of the trust or in the
settlement the persons entitled to appoint previous management of the trust.
the Public Trustee are the person or persons By Rule 22 of the Public Trustee Rules,
having power to do so under the settlement, 1912 :
or if there are no such persons, then the con- " All sums payable out of the income or
tinuing or surviving trustees or their execu capital of the trust property shall
tors or administrators . Inquiry should first be made by a cheque on a bank
be made if he will accept office, and notice signed by not less than two persons,
should be sent to all persons beneficially viz. : (a) by the Public Trustee and
interested to ascertain if they are agreeable a co -trustee, or (6) by the Public
to the appointment. Trustee and an officer of the Public
Private trustees may retire, either singly Trustee authorised in writing by
or together, in favour of the Public Trustee . him to act in that behalf either gener
The Public Trustee may be appointed ally or in any particular case, or (c)
custodian trustee. On appointment, all by a co -trustee and one such duly
securities and documents of title relating to authorised officer, or ( d ) by two such
the trust property, which would otherwise duly authorised officers. Provided
have remained in the custody of the ordinary that in any particular case the
trustees, are to be transferred to the Public Public Trustee may authorise the
Trustee ; but the management of the trust payment of income by the person
property, as distinct from the custody of the liable to pay the same direct to the
securities, is to remain in the hands of the person entitled to receive the same,
ordinary or managing trustees. or to his bank."
Any person or persons interested in an The fees charged by the Public Trustee
estate, the gross capital value whereof can be Office were revised in 1920. · The fees are
proved to the satisfaction of the Public divided into four classes :
Trustee to be under £1,000, may apply in 1. The Acceptance Fee - payable out of
writing to the Public Trustee to administer capital.
531
PUB ] DICTIONARY OF BANKING (PUB

2. The Withdrawal or Distribution Fee- | income tax or other outgoings. Where the
payable out of capital . income can be paid direct to the beneficiary
3. The Income Fee - payable out of or to his bank without previous collection
income . by the Public Trustee , the income fee is at
4. Management Fees—payable generally the rate of £ 1 per cent. on the income up to
out of capital . £2,000, and of 10s . per cent. on the excess .
1. THE ACCEPTANCE FEE . — The fee is Where the income has to be collected by the
calculated on a percentage basis, and at the Public Trustee before distribution to the
following rates : beneficiary, the fee is at the rate of £2 per
cent. on the first £500 of income, of £ 1 per
Rate per cent. upon gross capital cent. on the income between £500 and
value.
£ 2,000, and of 10s. per cent. on the excess
Existing Will over £2,000 .
Executor
Trusts or Where the Public Trustee is trustee of
Settlement
ships and Trusts New
trans Settlements
.
land settled in strict settlement, his income
Adminis ferred to
tratorships. the Public fee is adjusted according to the time and
Trustee . trouble involved in each particular case , but
£ s. d. £ s. d. { $. d .
is not to be higher than £ 1 per cent.
On the first £ 5,000
On the excess of £5,000
1 10 0 fo
1 0 0 0 15 0 The minimum annual income fee is 1s .
up to £ 25,000 1 0 0 0 15 0 0 10 0 No income fee is charged where the income
On the excess of £25,000 of the trust is less than £2 a year.
up to £ 50,000 0 15 0 0 10 0
0 5 0 4. MANAGEMENT FEES. – Upon any invest
On theexcess of £ 50,000
up to £ 75,000 0 5 0 02 6 0 1 3 ment by way of mortgage or charge, 10s.
On the excessof £75,000 ở 2 6 0 1 3 0 0 6
per cent . on the amount advanced .
There is a minimum acceptance fee of Upon the sale or purchase of trustee
£ 10 where the value of the estate or trust securities, 3s. per
securities 6s. per cent.,
cent.; onof the
non sale
- trustee
or
property does not exceed £500, and a purchase money .
minimum fee of £ 15 where such value exceeds Upon the sale or purchase of land , 10s.
£500 .
The following are examples of acceptance per cent. on thesale or purchase money.
When the Public Trustee acts as custodian
fees at the above scales :
trustee, the capital fees on acceptance and
withdrawal are reduced by one-half, but the
Amount of Acceptance Fee .
ordinary rates of income fees apply. The
Value of
Estate or Executorships
Existing
Settlements
investment fees are also reduced by one-half.
Trust Fund . and and Will Trusts New Further information regarding the duties
Administrator transferred to Settlements . of the Public Trustee as custodian trustee will
ships. the Public
Trustee . be found under the heading CUSTODIAN
good
isoo

Trustee.
£ £ s. d. £ s . d. £ s. d.
500 10 0 10 0 0 10 0 0 Particulars as to the peculiar practice of the
1,000
1,500
15
22 10
0
0
15
15
0
0
0
0
15
15
0
0
0
0
Department when transferring securities are
2,000 30 0 20 0 0 15 0 0 given in the article TRANSFER OF SECURITIES
2,500 37 10
45 0
0
0
25
30
0
0
0
0
18 15
22 10
0
0
(PUBLIC Trustee) .
3,000
4,000 60 0 0 40
0 0 30 00 For the convenience of testators and
5,000 75 0 0 50
0 0 37 10 0 beneficiaries whose connections are mainly
7,500 100 0 0 68 15 0 50 0 0
10,000 125 0 0 87 10 0 62 10 0 with the North of England , a branch office
15,000
20,000
175 0
225 0
0
0
125 0
162 10
0
0
87
112
10
10
0
0
was opened, in 1914 , in Manchester, and a
25,000 275 0 0 200 0 0 137 10 0 Deputy Public Trustee was appointed for
that district .
2. THE WITHDRAWAL FEE .--- The fee is PUBLIC UTILITY COMPANIES (CAP
levied at the rate of 10s . per cent . upon ITAL ISSUES) ACT, 1920. An Act to
the capital value of any property withdrawn provide for the variation of the provisions
from a trust, but the aggregate of withdrawal regulating the raising of capital by com
fees payable in respect of any one trust is panies carrying on statutory undertakings
not to exceed £ 1,000. for the supply of gas, water, hydraulic
3. THE INCOME FEE . — The income fee is power, and electricity, and tramway under
assessed upon the gross annual income of takings, including light railways constructed
the trust property without deduction of wholly or mainly on public roads.
532
PUR ) DICTIONARY OF BANKING [QUO

The Act shall continue in force for five | under hand on its behalf, and supplies the
years. bank with a copy of the minute authorising
PUR AUTRE VIE . French , for the life of the arrangement. A company has power to
another. (See CESTUI QUE VIE .) do this under Section 76, Companies (Con
PUT. A Stock Exchange term meaning solidation) Act, 1908. See under CONTRACTS.
the right to sell a specified security at a fixed (See TRANSFER OF SHARES.)
price within an arranged period. (See QUARTER DAYS. The English Quarter
OPTIONS.) Days are :
PUT AND CALL. A Stock Exchange Lady Day March 25.
term . A double option , that is, a right to Midsummer Day . June 24.
buy or to sell a certain amount of a specified Michaelmas September 29.
stock at a date and at a price as fixed when Christmas Day .December 25 .
the option was purchased. The Scottish Quarter Days are :
PYX . (See TRIAL OF THE Pyx .)
Candlemas February 2.
QUALIFICATION OF DIRECTOR . The Whitsunday May 15 .
number of shares which is required to be Lammas August 1 .
Martinmas November 11 .
held by a director of a company to qualify .

him for the office. The Companies (Con- QUIT RENT. In feudal times where land
solidation) Act, 1908, does not provide for was granted by the lord of the manor for
any special qualification, but in most com- certain services to be rendered to the lord ,
panies a qualification is fixed by the Articles those services could sometimes be got quit
of Association . ( Sce DIRECTORS .) of by the payment of a rent, called quit
QUALIFIED ACCEPTANCE . ( See AC- rent.
CEPTANCE, QUALIFIED.) Quit rents are also called chief rents.
QUALIFIED INDORSEMENT. (See In- By Section 45 of the Conveyancing Act,
DORSEMENT.) 1881, a quit rent may be redeemed. On the
QUALIFYING AGREEMENT. When a requisition of the owner, the Copyhold Com
customer transfers shares to a bank, or its missioners shall certify the amount in con
nominees, as security for an overdraft or a sideration whereof the rent may be redeemed .
loan, it is usual for the customer to sign an QUORUM . Literally, of whom, e.g. there
agreement at the same time qualifying the may be twenty directors, dd

of whom '
transfer. The transfer conveys the owner- | (quorum ) three may act.
ship in the shares out and out to the banker, A quorum is thenumber of persons which
but the agreement qualifies it by stating must be present at a meeting of the directors
that the transfer is given merely as a or members of a company before any busi
security. When the security is no longer ness can be done. In companies which are
required the shares are retransferred to the governed by Table A (see ARTICLES OF
customer. If the shares are realised by the AssociATION ), no business can be transacted
banker in order to obtain repayment of the at a general meeting unless three members are
debt, any surplus must be handed to the present. Regulation 52 of that Table is—
customer. A qualifying agreement is also “ If within half an hour from the time
taken when debentures are issued to a appointed for the meeting a quorum is not
bank, or its nominees, as security . The present, the meeting, if convened upon the
stamp duty on such an agreement under requisition of members, shall be dissolved .
hand is sixpence. (See Section 23, s.s. 2, In any other case it shall stand adjourned
Stamp Act, 1891, under AGREEMENT.) to the same day in the next week at the
The stamp may be either impressed or ad- same time and place, and, if at the adjourned
hesive . If under seal the duty is ad valorem meeting a quorum is not present within half
like a mortgage. See Section 86 , s.s. 1 (d ), an hour from the time appointed for the
of the Stamp Act, 1891 (under MORTGAGE) , meeting the members present shall be a
which says that the term mortgage quorum ."
includes any defeasance or other deed for Where a company has articles other than
qualifying any transfer of any property, those of Table , they should be perused to
apparently absolute, but intended only as a ascertain how many members constitute a
security. Instead of executing an agree- | quorum .
ment under seal a company sometimes QUOTATION ON LONDON STOCK EX
appoints one person to sign an agreement CHANGE. The Committee of the Stock
533
RAC ) DICTIONARY OF BANKING (REA

Exchange may order the quotation in the of another country . (See BILL OF Ex
Official List of any security of sufficientmag- CHANGE, COURSE OF EXCHANGE, FOREIGN
nitude and importance . Applications for ExcHANGES.)
quotation must be made to the Secretary RATES. A comparison of the Bank and
of the Share and Loan Department,and must money market rates and market discounts
comply with such conditions and require- may be made from the following list, which
ments as may be ordered from time to time gives the rates on Feb. 21 , 1921 : Per
by the committee. Three days' public notice cent,
must be given of every application. A Bank Rate . 7
broker, a member of the Stock Exchange, Bankers' deposit rate 5 .

must be authorised to give the Committee Brokers' deposit rate, call. 5

full information as to the security and to notice . 51

unutul
furnish them with all particulars they Day-to-day loans .51-6
may require. (Rule 151, London Stock Seven -day market loans 51
Exchange.) 3 months' bank bills .
64
The regulations with regard to share and 4 2 61
stock certificates are : All certificates should 6 61-63
state on their face the authority under which 3 months' fine trade bills 7-71
the company is constituted , and the amount 4 . .
7+7 )
of the authorised capital of the company . 6 . . 71
All certificates should bear a foot -note to
the effect that no transfer of any portion (See Bank RATE, CHEQUE RATE, DEPOSIT
of the holding can be registered without the Rate, DisCOUNT, FOREIGN EXCHANGES ,
production of the certificate. Where the INTEREST, INTEREST ON DEPOSIT Receipt ,
capital of a company consists of more than LONG RATE , MARKET RATE , SHORT Rate .)
one class of shares of the same denomination , RE -ACCEPTANCE UNDER PROCLAMA .
the distinctive numbers of the shares of each | TION . (See Royal PROCLAMATION .)
class must be printed on the face of the REAL BILL . A genuine trade bill. To
share certificates. All preference share be distinguished from an accommodation
certificates should bear on their face a bill (q.v.).
statement of the company's capital and the REAL ESTATE . REAL PROPERTY .
conditions , both as to capital and dividends, (See REALTY .)
under which the shares are issued . Deben- REALISE . To realise a security is to
tures and debenture stock certificates should , dispose of it for cash .
in addition to legal requirements, state on REALTY . (From Lat., res, a thing.)
their face the authority under which the com- Property is divisible into
(
real ” and
pany is constituted , the nominal capital of personal," or realty ” and “ personalty ."
the company , the dates when the interest on Realty includes freehold (whether in fee
the debentures or debenture stock is payable , simple, in fee tail or for life) , and copyhold
and the authority under which the issue is and customary freehold land, but not lease
made (i.e. articles of association and resolu- hold land (leasehold is included under
tions) ; and on their back the conditions of personalty ). Where real property is to be
issue, redemption and transfer . sold , according to the terms of a will, it is
In addition to other conditions precedent reckoned as personalty.
to an application for official quotation, the An “ equity of redemption ”is part of the
articles of association should provide that real estate.
none of the funds of the company shall be If Brown leaves his " real property to
employed in the purchase of, or in loans Jones, Jones is called the devisee, and the
upon the security of its own shares, and that property is said to be devised. If he leaves
)
fully-paid shares shall be free from all lien. personal” property, Jones is called the
( See LIEN . ) legatee and the property is said to be
bequeathed.
RACK RENT. A rent which , as its name The distinction in terms arose in olden
implies, has been stretched or raised to the times when a property wrongfully detained )

full annual value of the property, so that could be actually recovered as a “ real ”
60
no more can be obtained . property, a " realty " ; but if damages only
RATE OF EXCHANGE . The price of could be recovered against the person
money in one country stated in the currency wrongfully detaining, as in the case of
534
REB] DICTIONARY OF BANKING (REC

leasehold property, it was a personal ( 3) Receipt given for or upon

property or " personalty . " (See INTESTACY, the payment of any parlia
PERSONALTY . ) mentary taxes or duties,
REBATE . Literally a drawing back. At or of money to or for the
the end of a half-year a banker calculates the use of Her Majesty .
amount of rebate on bills discounted — that (4) Receipt given by an
is, he takes into his profit and loss account officer of a public depart
only the amount of discount up to the end ment of the State for
of the half-year, the discount from that date money paid by way of
till the maturity of the bills (the rebate imprest or advance, or in
amount) being carried forward into the adjustment of an account,
accounts for the next half. The rebate is where he derives no per
one of the items which passes through the sonal benefit therefrom .
adjustment of interest account (q.v.). ( 5) Receipt given by any
The word is also used with reference to agent for money im
an amount of interest credited to an account prested to him on account
to refund a sum previously charged . of the pay of the army.
If a documentary bill is paid before (6 ) Receipt given by any
maturity it is said to be paid under rebate, officer, seaman , marine or
an allowance of } per cent. above the deposit soldier, or his representa
rate of the principal London banks being tives, for or on account of
made. (See DocumentARY BILL.) any wages, pay or pen
As to the rebate to be deducted when a sion , due from the Ad
creditor proves upon a bankrupt's estate for miralty or Army Pay
a debt payable at a future time, see Rule 22, Office.
under PROOF OF Debts .
RECEIPT. A receipt is a written acknow
(7) Receipt given for any
principal money or in
ledgment of having received a sum of money. terest due on an exchequer
“ A receipt is not required to be given bill.
in a ready-money transaction ( Bussey v. (8) Repealed. (See below .)
Barnett, 9 M. & W. 312),” but “ if a written ( 9) Receipt given upon any
receipt is given , it must be stamped ." bill or note of the Bank of
( Alpe's " Law of Stamp Duties .") The pay England or the Bank of
ment of the stamp is thrown on the person Ireland .
to whom the payment is made.
By the Stamp Act 1891 , the duty is : ( 10) Receipt given for the
RECEIPT given for, or upon the £ s. d. consideration money for
payment of, money amounting the purchase of any share
to £2 or upwards .
0 0 2 in any of the Government
(Increased from id. to 2d. , as or Parliamentary stocks or
from Sept. 1 , 1920, by the Finance funds, or in the stocks and
Act, 1920.) funds of the Secretary of
Exemptions. State in Council of India,
( 1 ) Receipt given for money or of the Bank of England,
deposited in any bank, or or of the Bank of Ireland,
with any banker, to be or for any dividend paid
accounted for and ex on any share of the said
pressed to be received of stocks or funds respec
the person to whom the tively.
same is to be accounted (11 ) Receipt indorsed or
for. otherwise written upon or
(2) Acknowledgment by any contained in any instru
banker of the receipt of ment liable to stamp duty,
any bill of exchange or and duly stamped, ac
promissory note for the knowledging the receipt of
purpose of being presented the consideration money
for acceptance or pay therein expressed, or the
ment. receipt of any principal
535
RBC) DICTIONARY OF BANKING
money, interest, or an
nuity thereby secured or
therein mentioned .
(12) Receipt given for any
allowance by way of draw
back or otherwise upon
the exportation of any
goods or merchandise
from the United Kingdom .
(13) Receipt given for the
return of any duty of
customs upon a certificate
of over entry .
Exemptions added by the Revenue Act,
1998, Section 7, s.s. 8 :
Receipt given by an officer of a county
court for money received by him
from a party to any proceeding in
the court .
Receipt given by or on behalf of a clerk
to justices or magistrates for money
received in respect of a fine."
Receipts given by the treasurer for
monies paid to him for the credit of the
Poor Law accounts are exempt (4 and 5
Wm . IV, c . 76) . This exemption does not
extend to receipts given by the guardians
acting as sanitary authorities under the
Public Health Act. ( Questions on Banking
Practice .)
As to receipts given by or to an
approved society ," see under National
INSURANCE
. of ten pounds ;
Receipts upon a duly stamped letter of
allotment or scrip certificate are exempt.
The exemption is included in No. 11 (above ).
The Finance Act, 1895, Section 9, repealed
exemption number 8 in the Stamp Act, 1891,
“ Receipt written upon a bill of exchange or
promissory note duly stamped," and enacted
that the duty shall be charged as if the
exemption had not been contained in that
Act, provided that neither the name of a
banker (whether accompanied by words of
receipt or not) written in the ordinary course
of his business as a banker upon a bill of
exchange or promissory note duly stamped,
nor the name of the payee written upon a
draft or order, if payable to order, shall
constitute a receipt chargeable with stamp
duty .
By the Friendly Societies Act, 1896,
Section 33, a receipt given by or to a regis-
tered society in respect of money payable
by virtue of its rules or of this Act, is
exempt.
The Stamp Act, 1891 , provides :
“ 101. (1 ) For the purposes of this Act
536
( REC
the expression ' receipt ' includes
any note, memorandum , or writing
whereby any money amounting to
two pounds or upwards, or any bill
of exchange or promissory note for
money amounting to two pounds or
upwards, is acknowledged or ex
pressed to have been received or
deposited or paid, or whereby any
debt or demand, or any part of a
debt or demand, of the amount of
two pounds or upwards, is acknow
ledged to have been settled , satisfied ,
or discharged , or which signifies or
imports any such acknowledgment,
and whether the same is or is not
signed with the name of any person.
" (2) The duty upon a receipt may be
denoted by an adhesive stamp,
which is to be cancelled by the
person by whom the receipt is given
before he delivers it out of his hands.
“ 102. A receipt given without being
stamped may be stampedwith an impressed
stamp upon the terms following ; that is to
say,
“ ( 1) Within fourteen days after it has been
given , on payment of the duty and
a penalty of five pounds ;
“ (2) After fourteen days, but within one
month, after it has been given, on
payment of the duty and a penalty
and shall not in any other case be stamped
with an impressed stamp.
“ 103. If any person
“ ( 1) Gives a receipt liable to duty and not
duly stamped ; or
" (2) In any case where areceipt would be
liable to duty refuses to give a
receipt duly stamped ; or
“ (3) Upon a payment to the amount of two
pounds or upwards gives a receipt
for a sum not amounting to two
pounds, or separates or divides the
amount paid with intent to evade
the duty ;
he shall incur a fine of ten pounds ."
Where a form of receipt, either on the face
or on the back of a cheque, is signed, it must
be stamped . The signature of the payee
alone is exempt. (See above.)
If a receipt is placed upon a bill or pro
missory note (except by a banker), it
requires to be stamped. (See above.)
When a deposit receipt is issued , it does
not require a stamp (exemption No. 1 , see .
above), but when it is discharged by the
REC ] DICTIONARY OF BANKING
depositor signing a form of receipt on the
back , a stamp is required. To save the
trouble of affixing an adhesive stamp on
payment of a deposit receipt, the receipts
of some banks are impressed with a stamp
when issued .
Where a banker acknowledges the receipt
of money from , say, Jones for the credit of
Brown, a stamp is required. Where a letter
acknowledges a payment and encloses a
stamped receipt, it is considered that one
stamp is sufficient ( Attorney -General v. Ross,
1909, 2 I.R. 246) .
A receipt stamp may be either impressed
or adhesive.
Two penny stamps may be used instead
of one for twopence ,
Where a debt is paid by cheque, it is not
necessary to state on the receipt that pay-
ment was made by cheque, as the person
taking the cheque can, in the event of the
cheque being dishonoured, sue the debtor
for the amount.
Receipts for wages, and for subscriptions
to charities are chargeable with duty ; but
with regard to the latter, Alpe's Law of
Stamp Duties ” states that the Commis-
sioners do not enforce a penalty if “ a
receipt for a donation or subscription to an
institution totally devoted to charitable
purposes is given unstamped. (See
RECEIPT ON CHEQUE .)
The receipt by a building society upon a
mortgage which has been repaid is exempt
from stamp duty. (See STATUTORY Receipt.)
A receipt by an industrial and provident
society on a mortgage is not exempt from
stamp duty. (See INDUSTRIAL AND PROVI-
DENT SOCIETIES . )
RECEIPT ON CHEQUE . Many com-
panies use cheques with a form of receipt
upon the face or upon the back, such receipt
being, in most cases, the only one which the
drawer of the cheque requires from the
person to whom the cheque is payable.
A document of this description is some-
times worded : - “ Pay or order the sum
of when the receipt on the back hereof
has been duly stamped, signed and dated.”
The printed form on the back may be :
“ Received from the amount named
on the face hercof.
2d.
Date 19.
" so uncertain and unsatisfactory , it is neces
Stamp,
537
(REC
Below the receipt the following words
are sometimes printed :- " The receipt
as above is also the indorsement of the
cheque and is the only acknowledgment
required."
The receipt, instead of being on the back,
is, as mentioned, sometimes on the face ,
below the drawer's signature, and in addition
to the receipt being signed the document
may require to be indorsed.
Such a document does not agree with the
definition of a cheque in the Bills of Ex
change Act, 1882. To comply with that
Act a cheque must be an unconditional
order in writing. In the form above given ,
the order to pay is conditional upon the
receipt being duly completed.
As an instrument of this nature is not a
cheque, the protection afforded by the Bills
of Exchange Act to a banker paying a cheque
drawn upon him , will not extend to it.
But it is considered that protection is
afforded to the banker collecting such a
document when crossed by Section 17 of
the Revenue Act, 1883, which provides as
follows:
“ Sections 76 to 82, both inclusive, of the
Bills of Exchange Act, 1882, and Section 25
of the Forgery Act, 1861 , shall extend to
any document issued by a customer of any
banker, and intended to enable any person
or body corporate to obtain payment from
such banker of the sum mentioned in such
document, and shall so extend in like manner
as if the said document were a cheque :
Provided that nothing in this Act shall be
deemed to render any such document a
negotiable instrument. For the purpose of
this Section , Her Majesty's Paymaster
General and the Queen's and Lord Trea
surer's Remembrancer in Scotland shall be
deemed to be bankers, and the public
officers drawing on them shall be deemed
customers.” Sir John R. Paget points out in
his “ Law of Banking " that the Revenue
Act treats these documents as not negoti
able instruments, “not negotiable ” having
apparently the meaning of not transferable,
and adds that it would seem " that the
banker's safer course is in all cases to regard
documents of this sort as available only in
the hands of the payee ."
The use of documents of this nature is
becoming very common, and as the banker's
position with regard to them appears to be
sary , for the banker's protection, that he
should obtain , from the customer using this
RECI DICTIONARY OF BANKING (REC

special form , an indemnity to the following that the instrument was a cheque, and that
effect : the words at the foot were not addressed
“ In consideration of your allowing me, or to the banker and did not affect him .
persons duly authorised by me, to draw Sir John R. Paget (in the Gilbart Lectures,
drafts on you with receipts attached in the 1911) , expressed the opinion that a note
(
form annexed, I undertake that you shall on a cheque to the above effect “ comes very
have as againstme in respect thereof the pro- near making the order conditional, although
tection afforded by Section 60 of the Bills of not actually incorporated with that order.
Exchange Act, 1882, and that the signature If it is not addressed to the drawee it still
of the receipt at the foot of such drafts shall affects him .” In practice, bankers do
have the effect of and operate as an indorse- regard such anote on a cheque as a condition
ment within the meaning of the same which must be fulfilled before payment of
Section .” It is to be noted that the indemnity the cheque .
would protect only the paying banker, and Some cheques with receipt forms bear an
that with regard to various statutory bodies announcement, as mentioned above, that
who use this form of cheque an indemnity the signature of the receipt is intended to
may be ultra vires . be an indorsement as well as a receipt.
Orders issued by Local Authorities are Sir John R. Paget has expressed the opinion
frequently payable upon condition that a that such a signature is not an indorsement
form of receipt is signed, and in addition within the meaning of the term as used in
they are drawn upon the treasurer, and not the Bills of Exchange Acts, and that a
upon a bank, and are therefore not cheques. banker paying an order cheque on which
If the treasurer pays such orders to a wrong such is the only indorsement loses the
person he is liable to the true owner . If a protection of Section 60 and, if crossed,
banker collects one of these orders bearing Section 80. A banker collecting such
a forged indorsement he also is liable to the cheque, crossed , cannot set up Section 82.
true owner . (See further under LOCAL Independent indorsement is requisite in
AUTHORITIES . ) every case .” (See article by Ernest Sykes
In addition to the form of document given in Journal of the Institute of Bankers,
above, some cheques have a note at the foot December, 1919.) For the Sections referred
that the receipt on the back hereof must to, see under PAYMENT OF BILL, CROSSED
be stamped, signed and dated.” In other CHEQUE.
cases no reference at all to a receipt appears Another form of condition is referred to
on the face of the cheque, but on the back in Thairlwall v. Great Northern Railway
may be found a receipt such as Received ( 1910, 103 L.T. 187) where a dividend
from the amount named on the warrant of the Company had a noteupon the
face hereof face of it that “ the warrant will not be
honoured after three months from date of
>>
issue unless specifically indorsed for payment
2d.
by the Secretary." Bray, J., said , " I have a
Stamp. good deal of doubt as to whether this is a
cheque and a bill of exchange because of
this condition, but on the whole I am
inclined to think that this is within Section 3
In the cases where there is no condition of the Bills of Exchange Act, 1883, an uncon
attached to the order to pay, the cheque ditional order, etc."
is not excluded from the definition given Certain cheques provide for the receipt
in the Act . A mere note at the foot, or being signed per procuration. The following
on the back, of a cheque with respect to a is an example :
receipt, and the presence of a form of receipt “Pay John Brown the sum named below
on the cheque, so long as the order to pay if presented within six months from the date
is unconditional does not, apparently, hereof duly stamped, signed and dated
affect the nature of the instrument. In “ Received the sum of as per
Nathan v. Ogden ( 1905, 21 T.L. R. 775) particulars furnished .
where a cheque had printed at the foot “ Note . — This receipt should be signed by
the words the receipt at back hereof must the payee, but a per procuration discharge
be signed, which signature will be taken as will be accepted if guaranteed by the payee's
an indorsement of the cheque," it was held bankers. In the case of a corporate body,
538
2 REC] DICTIONARY OF BANKING
the receipt must be signed on their behalf by
an authorised officer whose position must
be stated .”
11
*$*
A receipt on a cheque, whether upon the
face or upon the back, requires a twopenny
stamp, if the amount is £2 and over, unless
the signer of the receipt is exempted by law ,
and the signature should not be written
wholly on the stamp.
A receipt executed abroad on a cheque
drawn on a bank in the United Kingdom is
liable to British stamp duty (Section 14,
s.s. 4, Stamp Act, 1891). When a cheque
of this kind is to be sent abroad the receipt
should be stamped before despatch , as the
necessary British stamp would not be
obtainable in the foreign country.
A receipt by a banker upon a bill or cheque
is exempt, provided it is given “in the
ordinary course of his business as a banker."
(See RECEIPT .)
RECEIVER . When a mortgagee, through
default of the mortgagor, is in a position to
exercise his power of sale, he may, if he
choose, appoint a receiver to collect the rents
and manage the estate or business. By so
doing, the mortgagee avoids the risks to
which he would be liable if he entered into
possession himself, as a receiver is deemed
to be the agent of the mortgagor.
The Conveyancing and Law of Property
Act, 1881, defines the appointment, powers,
remuneration and duties of a receiver as
follows :
“ Section 24. ( 1 ) A mortgagee entitled to
appoint a receiver under the power
in that behalf conferred by this Act
shall not appoint a receiver until
he has become entitled to exercise
the power of sale conferred by this
Act, but may then, by writing under
his hand, appoint such person as he
thinks fit to be receiver.
(2) The receiver shall be deemed to be
the agent of the mortgagor ; and
the mortgagor shall be solely re
sponsible for the receiver's acts or
defaults, unless the mortgage deed
otherwise provides.
" (3) The receiver shall have power to
demand and recover all the income
of the property of which he is
appointed receiver, by action, dis
tress , or otherwise, in the name either
of the mortgagor or of the mort
gagee, to the full extent of the estate
or interest which the mortgagor
539
[REC
could dispose of, and to give effectual
receipts, accordingly, for the same.
“ (4) A person paying money to the receiver
shall not be concerned to inquire
whether any case has happened to
authorise the receiver to act.
“ (5) The receiver may be removed , and a
new receiver may be appointed, from
time to time by the mortgagee by
writing under his hand.
“ (6 ) The receiver shall be entitled to retain
out of any money received by him ,
for his remuneration, and in satis
faction of all costs, charges, and
expenses incurred by him as receiver,
a commission at such rate, not
exceeding five per centum on the
gross amount of all money received,
as is specified in his appointment,
and if no rate is so specified , then
at the rate of five per centum on that
gross amount, or at such higher rate
as the Court thinks fit to allow, on
application made by him for that
purpose.
" (7) The receiver shall, if so directed in
.
writing by the mortgagee, insure
and keep insured against loss or
damage by fire, out of the money
received by him , any building,
effects, or property comprised in the
mortgage, whether affixed to the
freehold or not, being of an insurable
nature .
• (8) The receiver shall apply all money
received by him as follows (namely) :
“ (a) In discharge of all rents,
taxes, rates, and outgoings
whatever affecting the
mortgaged property ; and
“( b) In keeping down all annual
sums or other payments,
and the interest on all prin
cipal sums, having priority
to the mortgage in right
whereof he is receiver ; and
" (c) In payment of his commis
sion, and of the premiums
on fire, life, or other insur
ances, if any, properly pay
able under the mortgage
deed or under this Act, and
the cost of executing neces
sary or proper repairs
directed in writing by the
mortgagee ; and
REC ) DICTIONARY OF BANKING (REC

"( d) In payment of the interest discounted, as Section 31 , Bankruptcy Act,

accruing due in respect of 1914 (see under SET-OFF) , does not apply to
any principal money due the appointment of a receiver. (See
under the mortgage : DisCOUNTING A BILL.)
and shall pay the residue of the When an advance is made to a receiver
money received by him to the person who has authority to borrow for the purpose
who, but for the possession of the of carrying on the business of the company,
receiver, would have been entitled the banker will require a charge upon the
to receive the income of the mort- assets of the company. If, in addition, the
gaged property, or who is otherwise personal liability of the receiver is required,
entitled to that property.” (See a guarantee should be taken, as it would
also the Sections under LEGAL appear from Re A. Boynton, Ltd. ( 1910,
MORTGAGE . ) Ch.D. 102 L.T. 273) that unless a receiver
In connection with a company, the pledges his personal credit he will not be
appointment of aa receiver is usually brought liable.
about by default of the company in payment The appointment of a receiver or manager
of interest upon the debentures or in repay of the property of a company is to be notified
ment of principal. When a receiver is to the registrar of companies. By the
appointed a floating charge upon the com- Companies (Consolidation ) Act, 1908
pany's property becomes fixed or crystallised, “Section 94. ( 1 ) If any person obtains
and the debenture holders are thereby an order for the appointment of a
enabled to secure the protection of the receiver or manager of the property
property in order that it may be realised of a company, or appoints such a
for the discharge of their claims. receiver or manager under any
A receiver may be appointed (when powers contained in any instrument,
principal or interest is not paid) under a he shall within seven days from
specific power contained in a debenture or the date of the order or of the
debenture trust deed ; or he may be ap appointment under the powers con
pointed by the court in cases where, though tained in the instrument give notice
neither principal nor interest is due to be of the fact to the registrar of com
paid, it is necessary to protect the security panies, and the registrar shall, on
for the debenture holders . A receiver payment of the prescribed fee,
may also be appointed under the provisions, enter the fact in the register of
where applicable, of the Conveyancing and mortgages and charges.
Law of Property Act, 1881 (see above), “ (2) If any person makes default in com
but it is usual for a debenture which is plying with the requirements of this
secured by a fixed charge over the company's Section he shall be liable to a fine
property to include a specific power to not exceeding five pounds for
appoint a receiver, and the terms of the every day during whichthe default
debenture or trust deed securing a series of continues .
debentures should be consulted to ascertain " 95. ( 1 ) Every receiver or manager of
the exact circumstances under which a the property of a company who has
receiver may be appointed . been appointed under the powers
Where a receiver has been appointed and contained in any instrument, and
a banker has not received notice, Sir John who has taken possession, shall, once
Paget ( in Questions on Banking Practice) in every half-year while he remains
says : Whether the receiver be appointed in possession , and also on ceasing
under power expressed or imported in the to act as receiver or manager, file
debentures or be appointed by the Court with the registrar of companies an
at the instance of the debenture holders, I abstract in the prescribed form of
do not think he could question the banker's his receipts and payments during
dealings with the existing balance prior to the period to which the abstract
notice of his appointment.” On notice of relates, and shall also on ceasing to
the appointment no further cheques should act as receiver or manager file with
be paid on the account. the registrar notice to that effect,
A credit balance on the account cannot and the registrar shall enter the
be held by the banker as a set -off against notice in the register of mortgages
the contingent liability on any bills and charges.
540
REC ] DICTIONARY OF BANKING [REC

“ (2) Every receiver or manager who makes estate . The debtor is not immediately
default in complying with the adjudged a bankrupt, but as soon as may
provisions of this Section shall be be after making a receiving order, a general
liable to a fine not exceeding fifty meeting of creditors is held to consider
pounds." whether a proposal for a composition or
scheme of arrangement shall be entertained ,
Power in England to Appoint Special Manager. or whether he shall be adjudged bankrupt .
“ 161. ( 1 ) Where the official receiver be- (See MEETING OF CREDITORS . ) After a
comes the liquidator of a company, receiving order has been made, a creditor
whether provisionally or otherwise, cannot bring any action against the debtor
he may, if satisfied that the nature unless under sanction of the Court, but a
of the estate or business of the com- creditor's power to deal with any securities
pany, or the interests of the creditors he may have is not affected by the receiving
or contributories generally, require order. A receiving order may be made even
the appointment of a special man- if there is only one creditor. As soon as con
ager of the estate or business of the venient after the expiration of the time for
company other than himself, apply the submission of a debtor's statement of
to the Court to, and the Court may affairs ( see Section 14 below) , the Court shall
on such application, appoint a special hold a public sitting for the examination of
manager thereof to act during such the debtor. (See Public EXAMINATION OF
time as the Court may direct, with DEBTOR.) As to the validity of certain pay
such powers, including any of the ments made before a receiving order is made
powers of a receiver or manager, as or notice of the presentation of a bankruptcy
may be entrusted to him by the petition is received, see under ACTS OF
Court . BANKRUPTCY.
(2) The special manager shall give such The following Sections of the Bankruptcy
security and account in such manner Act, 1914, deal with a bankruptcy petition
as the Board of Trade direct. and the making of a receiving order :
' (3) The special manager shall receive Jurisdiction to make Receiving Order.
such remuneration as may be fixed " 3. Subject to the conditions hereinafter
by the Court.
specified , if a debtor commits an act of
Power in England to Appoint Official Re bankruptcy the Court may , on a bankruptcy
ceiver as Receiver for Debenture Holders petition being presented either by a creditor
or Creditors. or by the debtor, make an order, in this Act
“ 162. Where an application is made to called a receiving order, for the protection
the Court to appoint a receiver on behalf of of the estate.
the debenture holders or other creditors of
a company which is being wound up by the Conditions on which Creditor may Petition .
Court in England, the official receivermay “ 4. ( 1 ) A creditor shall not be entitled
be so appointed.” (See COMPANIES, MORT to present a bankruptcy petition
GAGE, OFFICIAL RECEIVER, WINDING UP.) against a debtor unless
RECEIVER'S NOTES. When the affairs “ (a) The debt owing by the debtor
of an American railroad have passed into to the petitioning creditor,
the hands of a receiver, he sometimes raises or, if two or more creditors
further capital by the issue of what are join in the petition, the
called “ Receiver's Notes. " aggregate amount of debts
RECEIVING ORDER . Where a debtor owing to the several peti
has committed an“ act of bankruptcy tioning creditors, amounts
(see ActS OF BANKRUPTCY ), a creditor, to fifty pounds, and
wishing to have the estate realised under the " (6) The debtis a liquidated sum,
bankruptcy law for the benefit of the payable either immediately
creditors, may petition the Court to make or at some certain future
a receiving order. The petition may be time, and
presented either by a creditor or by the " (c) The act of bankruptcy on
debtor himself. When a receiving order is which the petition is
made, it means that the Court appoints the grounded has occurred with
official receiver to take charge of the debtor's in three months before the
541
REC ] DICTIONARY OF BANKING
presentation of the petition ,
and
“( d) The debtor is domiciled in
England, or, within a year
before the date of the pre
sentation of the petition
has ordinarily resided ,or had
a dwelling-house or place of
business in England , or
(except in the case of a
person domiciled in Scot
land or Ireland or a firm or
partnership having its
principal place of business in
Scotland or Ireland) has
carried on business in Eng
land, personally or by means
of an agent or manager,
or (except as aforesaid ) is or
within the said period has
been a member of a firm
or partnership of persons
which has carried on business
in England by means of a
partner or partners, or an
agent or manager ,
nor, where a deed of arrangement has been
executed , shall a creditor be entitled to pre
sent a bankruptcy petition founded on the
execution of the deed, or on any other act
committed by the debtor in the course or for
the purpose of the proceedings preliminary
to the execution of the deed, in cases where
he is prohibited from so doing by the law
for the time being in force relating to deeds
of arrangement."
“ (2) If the petitioning creditor is a secured
creditor, he must in his petition
either state that he is willing to give
up his security for the benefit of the
creditors in the event of the debtor
being adjudged bankrupt, or give
an estimate of the value of his
security. In the latter case, he may
be admitted as a petitioning creditor
to the extent of the balance of the
debt due to him , after deducting the
value o estimated in the same
manner as if he were an unsecured
creditor.
Proceedings and Order on Creditor's Petition.
“ 5. ( 1 ) A creditor's petition shall be veri
fied by affidavit of the creditor, or
of some person on his behalf having
knowledge of the facts, and served
in the prescribed manner.
542
(REC
" (2) At the hearing the Court shall require
proof of the debt of the petitioning
creditor,of the service of the petition,
and of the act of bankruptcy, or, if
more than one act of bankruptcy is
alleged in the petition, of some one
of the alleged acts of bankruptcy,
and, if satisfied with the proof, may
make a receiving order in pursuance
of the petition.
“ (3) If the Court is not satisfied with the
proof of the petitioning creditor's
debt, or of the act of bankruptcy,
or of the service of the petition, or
is satisfied by the debtor that he is
able to pay his debts, or that for
other sufficient cause no order ought
to be made, the Court may dismiss
the petition .
Debtor's Petition and Order Thereon.
0
" 6. ( 1 ) A debtor's petitiou shall allege
that the debtor is unable to pay his
debts, and the presentation thereof
shall be deemed an act of bank
ruptcy without the previous filing
by the debtor of any declaration
of inability to pay his debts, and
the Court shall thereupon make a
receiving order.
“ (2) A debtor's petition shall not, after
presentment, be withdrawn without
the leave of the Court .
Effect of Receiving Order.
“ 7. ( 1 ) On the making of a receiving order
an official receiver shall be thereby
constituted receiver of the property
of the debtor , and thereafter, except
as directed by this Act, no creditor
to whom the debtor is indebted in
respect of any debt provable in bank
ruptcy shall have any remedy
against the property or person of
the debtor in respect of the debt, or
shall commence any action or other
legal proceedings, unless with the
leave of the Court and on such terms
as the Court may impose.
· (2) But this Section shall not affect the
power of any secured creditor to
realise or otherwise deal with his
security in the same manner as he
would have been entitled to realise
or deal with it if this Section had
not been passed.
REC] DICTIONARY OF BANKING (REC

Power to appoint Interim Receiver. extract therefrom , but any person

“ 8. The Court may, if it is shown to untruthfully so stating himself to
be necessary for the protection of be a creditor shall be guilty of a
the estate, at any time after the contempt of Court, and shall be
presentation of a bankruptcy peti punishable accordingly on the appli
tion , and before a receiving order is cation of the trustee or official
made, appoint the official receiver to receiver .” (See BANKRUPTCY .)
be interim receiver of the property RECONSTRUCTION . There are various
of the debtor, or of any part thereof, reasons which necessitate the reconstruction
and direct him to take immediateof a company, but the commonest is the
possession thereof or of any part necessity to raise fresh capital. In the case
thereof." of a company where the capital is all paid
The official receiver may, if necessary, up and further capital is required, the object
appoint a special manager of a debtor's is frequently attained by the undertaking
estate to act until a trustee is appointed. being purchased by a new company. The
( Section 10.) Every receiving order must shares in the new company, which are given
be gazetted , and advertised in a local paper. in exchange for the fully paid shares in the
(Section 11.) old company, are partly paid -up shares, and
it is from the uncalled capital in the
Debtor's Statement of Affairs. new company that the necessary funds are
“ 14. ( 1 ) Where a receiving order is made obtained to continue the business of the
against a debtor, he shall make out undertaking.
and submit to the official receiver A reconstruction may take place conse
a statement of and in relation to his quent upon an arrangement with the cre
affairs in the prescribed form , veri- ditors of the company, whereby they may
fied by affidavit, and showing the receive, in lieu of their claims, debentures
particulars of the debtor's assets, in the company payable at different dates.
debts, and liabilities, the names, (See COMPANIES, WINDING UP.)
residences and occupations of his RECONVEYANCE . A legal mortgage
creditors, the securities held by them conveys the legal estate in the land from the
respectively, the dates when the mortgagor to the mortgagee. When the
securities were respectively given , mortgage debt has been repaid the legal
and such further or other informa- estate is conveyed back, that is, is re
tion as may be prescribed or as the conveyed to the mortgagor. For example,
official receiver may require. in the case of a banker's mortgage, when
“ (2) The statement shall be so submitted the security is no longer required, thebanker
within the following times, namely : conveys (usually by indorsement on the
“ (i) If the order is made on the mortgage deed) unto the mortgagor all the
petition of the debtor, within hereditaments and premises mentioned in
three days from the date the within written Indenture to hold the
of the order : same unto and to the use of the mortgagor
“ ( ii) If the order is made on the in fee simple discharged from all moneys
petition of a creditor, within and interest secured by and all claims and
seven days from the date of demands under the within written Indenture .
the order : Every mortgagor has a right to have a
but the Court may, in either case reconveyance of the mortgaged property
for special reasons, extend the time. upon payment of the money due upon the
" (3) If the debtor fails withoutreasonable mortgage, and every mortgagee is charged
excuse to comply with the require with the duty of making such reconveyance
ments of this Section, the Court may, upon such payment being made. (Walker
on the application of the official v. Jones 14 L.T.R. N.S. 686.) The cost of
receiver, or of any creditor, adjudge the reconveyance falls upon the mortgagor.
him bankrupt. Where a mortgagor is entitled to redeem,
( 0
“ (4) Any person stating himself in writing he has, by virtue of the Conveyancing and
to be aa creditor of the bankrupt may , Law of Property Act, 1881 (Section 15) ,
personally or by agent, inspect the power to require the mortgagee, instead of
statement at all reasonable times, reconveying, to assign the mortgage debt
and take any copy thereof or and convey the mortgaged property to any
543
REC ] DICTIONARY OF BANKING [RED

third person , By the Conveyancing Act, RECOURSE . Literally, a running back.

1882 , the right of the mortgagor, under In the event of a bill of exchange being dis
Section 15 of the 1881 Act , shall belong honoured at maturity, the holder has a right
to and be capable of being enforced by each of recourse against, that is a right to fall back
incumbrancer, or by the mortgagor, not- upon, the other parties to the bill. The
withstandingany intermediate incumbrance ; holder, however, has no recourse against
but a requisition of an incumbrancer shall any party who qualified his indorsement by
prevail over a requisition of the mortgagor, adding after his signature the words “ with
and, as between incumbrancers, a requisi- out recourse ” or the French equivalent
tion of a prior incumbrancer shall prevail sans recours.
(See WITHOUT RECOURSE . )
over a requisition of a subsequent incum- REDDENDUM. The clause in a lease
brancer . " In Teevan v. Smith (1882, which specifies the rent to be reserved to the
20 Ch . D. 724) , Jessel, M.R. , in the Court lessor. Reddendum was the first word of
of Appeal, said : Where there are first the clause in the Latin form of the deed .
and second mortgagees, and the first mort- REDEEMABLE . When this word is used
gagee has notice of the second when he is its precise meaning should be ascertained,
paid off, he becomes a trustee of the legal as a redeemable stock may mean either a
estate for him ." If the first mortgagee is stock which may be redeemed at the option
paid off by the mortgagor, he is not bound of the borrower( that is, without any obliga
to reconvey to him ; but if he is paid off by tion to redeem) , or it may mean a stock
the second mmortgagee, he is bound to which must be redeemed at a certain
reconvey it to him .” date.
Where a mortgage has been repaid and REDEEMABLE DEBENTURE . (See
no reconveyance has been made, the legal | DEBENTURE. )
estate, at the end of twelve years from the REDEMPTION OF MORTGAGE . The re
discharge of the debt, becomes re-vested payment of the loan secured by the mortgage
in the mortgagor by reason of that and the consequent freedom of the property
lapse of time. (See under STATUTE OF from the charge. (See RECONVEYANCE . )
LIMITATIONS .) RE -DISCOUNT. A person who has dis
The receipt of a building society upon a counted a bill may, if he wish , discount it
mortgage deed for the amount of the debt afresh with another person . (See Dis
has the effect of a reconveyance of the COUNTING A BILL. )
property and is exempt from stamp duty. RE -DRAFT. Where a foreign bill is
(See BUILDING SOCIETY. ) The same applies dishonoured and protested, a re- draft is a
in the case of a Friendly Society (q.v. ) . fresh bill drawn by the holder upon the
A stamped receipt by an industrial and drawer or indorser for the amount of the
provident society discharges a mortgage bill plus expenses of protest, stamp, etc.
(See (See Re-EXCHANGE .)
without a formal reconveyance.
INDUSTRIAL AND PROVIDENT SOCIETIES . ) REDUCTION OF SHARE CAPITAL . The
In the case of an equitable mortgage, principal provisions regarding a reduction of
when the debt is repaid, no reconveyance is share capital in a company limited by shares
necessary . As a second mortgage is an are contained in the following Sections of the
equitable mortgage the same remark applies, Companies (Consolidation ) Act, 1908 -
but there should be an ordinary stamped
receipt showing that the money has been Special Resolution for Reduction of Share
repaid. Capital.
In the case of copyhold property where
the mortgagor has not been entered on the " 46. ( 1 ) Subject to confirmation by the
court rolls, the mortgage is equitable only Court, a company limited by shares,
and upon repayment of the debt a stamped if so authorised by its articles, may
receipt only is required . by special resolution reduce its share
The form of statutory re-conveyance is capital in any way, and in particular
given under STATUTORY MORTGAGE. (without prejudice to the generality
The stamp duty upon a reconveyance is of the foregoing power) may
sixpence for every £ 100, and fractional “ (a) Extinguish or reduce the lia
part of £ 100, of the total amount of bility on any of its shares in
the money at any time secured . (See respect of share capital not
MORTGAGE .) paid up ; or
544
 RED ) DICTIONARY OF BANKING [RE - E

“ (6) Either with or without extin- | discharged or has determined , or has been
share guishing or reducing liability secured, may make an order confirming the
on any of its shares, cancel reduction on such terms and conditions as it
any paid -up share capital thinks fit ."
which is lost or unrepre- The resolution for reduction and the order
sented by available assets ; must be registered, and the resolution takes
or effect from the date of the registration.
the present " (c) Either with orwithout extin- (Section 51. )
guishing or reducing liability The resolution for reduction, when regis
TE on any of its shares, pay off tered, must be embodied in every copy of
ase di
any paid -up share capital the memorandum issued after its regis
which is in excess of the tration . (Section 52. )
he is wants of the company, The Court may require the company to
and may, if and so far as is necessary, publish the reasons for reduction with a view
alter its memorandum by reducing to give proper information to the public.
the amount of its share capital and (Section 55. )
of its shares accordingly. “ When a company has accumulated a
" (2) A special resolution underthis Section sum of undivided profits, which with the
is in this Act called a resolution for sanction of the shareholders may be dis
reducing share capital. tributed among the shareholders in the
form of a dividend or bonus, it may by
Application to Court for Confirming Order. special resolution, return the same, or any
ITURE " 47. Where a company has passed and part thereof, to the shareholders in reduction
confirmed a resolution for reducing share of the paid -up capital of the company,
GAGE capital it may apply by petition to the Court the unpaid capital being thereby increased
for an order confirming the reduction . by a similar amount.” The resolution
must be registered by the registrar of
192 Addition to Name of Company of and companies, but the other provisions of this
Reduced .” Act with respect to reduction of share
“ 48. On and from the confirmation
capital shall not apply to reduction of
companyof a resolution by a
for reducing share paid-up share capital under thisSection.
(Section 40.) (See COMPANIES, SHARE
capital, or where the reduction does not CAPITAL.)
involve either the diminution of any liability
in respect of unpaid share capital or the theRElessee
-ENTRY. In leasehold property, if ,
fail to fulfil the covenants con
payment to any shareholder of any paid -up tained in the lease , it may result in the
share capital, then on and from the presen forfeiture of the lease and the re-entry of
$ tation of the petition for confirming the the lessor into possession of the land . (See
reduction, the company shall add to its name, LEASEHOLD .)
23 until such date as the Court may fix , the
. RE -EXCHANGE . In the case of a bill
words ' and reduced ,' as the last words in which has been dishonoured abroad, the
its name, and those words shall, until that
Bills of Exchange Act, 1882, Section 57 (2)
date, be deemed to be part of the name of provides that the holder may recover from
the company : the drawer or an indorser, and the drawer
“ Provided that, where the reduction does
or an indorser who has been compelled to
not involve either the diminution of any pay the bill may recover from any party
liability in respect of unpaid share capital liable to him the amount of the re -exchange
or the payment to any shareholder of any with interest thereon until the time of pay
paid -up share capital, the Court may, if it ment. Where a bill drawn or indorsed in
thinks expedient, dispense altogether with one country is dishonoured in another, the
the addition of the words ' and reduced .'
re-exchange is calculated by ascertaining
the sum for which a bill at sight, at the
Order Confirming Reduction. existing rate of exchange, drawn at the time
" 50. The Court, if satisfied, with respect and place of dishonour on the place where
to every creditor of the company who under the drawer or indorser resides, can be
this Act is entitled to object to the reduction, obtained, so as to produce at the place of
that either his consent to the reduction has dishonour the amount of the dishonoured
been obtained or his debt or claim has been bill plus cost of protest, commission ,
545
35–1935)
REF] DICTIONARY OF BANKING
postage and other expenses in connection
with the dishonour.
" REFER TO DRAWER ." The usual
answer (or its abbreviation R/D) which is
placed by a banker upon a cheque presented
to him for payment, when the account of
the drawer does not warrant payment of
the cheque.
The answer “ R / D " should never be panies (Consolidation) Act, 1908 (Section
marked on a cheque when the reason for its 75), requires that every company shall keep
being returned is merely some irregularity
in the cheque itself, such as “ Indorsement
irregular," Amounts differ " or " Post -dated
cheque. (See PAYMENT OF CHEQUE.)
REFEREE IN CASE OF NEED . The
person to whom a holder of a bill of ex-
change may apply, in case of the bill being
dishonoured by non-acceptance or non
payment. The name of a referee may be
inserted in a bill by the drawer or any
indorser, and is usually put in the left- hand
bottom corner of the bill, as In case of need
apply to A & B Bank , London ,” or “ In
case of need with the English Bank, Ltd.,
London , ” or “ In need with X & Y
Bank ."
By Section 15 of the Bills of Exchange
Act, 1882 : — “ The drawer of a bill and any
indorser may insert therein the name of a
person to whom the holder may resort in
case of need , that is to say, in case the bill
is dishonoured by non-acceptance or non-
payment. Such person is called the referee
in case of need . It is in the option of the
holder to resort to the referee in case of need
or not as he may think fit."
No liability attaches to the referee in case
of need until he has accepted for honour.
(See ACCEPTANCE FOR HONOUR, BILL OF
EXCHANGE .)
REFERENCE SLIP. Where a bill is
accepted payable at London bank A, and
London bank B has been requested by a
country bank to retire the bill, bank B sends
a " reference " slip describing the bill to
bank A. The slip requests A to refer the
bill to bank B for payment. In sending
the bill to B the reference slip must be
attached .
REGISTER CERTIFICATE . The certifi
cate which is issued to the holder of stock
transferable by deed .
As to stock which is transferable in the
stock transfer books (not by deed) of the
Bank of England , see INSCRIBED STOCK.
(See CERTIFICATE . )
REGISTER OF COMPANIES . (See
REGISTRAR OF COMPANIES . )
546
[REG #
REGISTER OF DEBENTURE HOLDERS.
Every register of holders of debentures of a
company is to be open to the inspection of
the registered holder of any such debentures
and of any holder of shares in the company.
(Section 102 of the Companies (Consolida
tion) Act, 1908.) ( See DEBENTURE.)
REGISTER OF DIRECTORS. The Com
a register containing the names, addresses,
and occupations of its directors or managers,
and send a copy thereof to the registrar of
companies, and from time to time notify to
the registrar any change therein . If this
Section is not complie with , the company
shall be liable to a fine not exceeding £ 5 a
day. (See DIRECTORS.)
As to the further particulars of directors
as required by the Companies ( Particulars
as to Directors) Act, 1917, see under
REGISTRATION OF BUSINESS NAMES ,
REGISTER OF MEMBERS OF COMPANY .
The regulations regarding the register of the
members of a company and the annual
list of members which must be forwarded to
the registrar of companies are set forth
the following sections of the Companies
(Consolidation) Act, 1908
Register of Members.
“ 25. ( 1 ) Every company shall keep in
one or more books a register of its
members, and enter therein the
following particulars -
“ (i) The names and addresses, and
the occupations, if any, of
the members, and in the
case of a company having
a share capital a statement
of the shares held by each
member, distinguishing each
share by its number, and of
the amount paid or agreed
to be considered as paid on
the shares of each member ;
" (ii) The date at which each person
was entered in the register
as a member ;
co
(iii) The date at which any person
ceased to be a member.
“ (2) If a company fails to comply with this
Section it shall be liable to a fine not
exceeding five pounds for every day
during which the default continues ;
and every director and manager of
the company who knowingly and
wilfully authorises or permits the
REG ) DICTIONARY OF BANKING
default shall be liable to the like
penalty .
Annual List of Members and Summary.
“ 26. ( 1 ) Every company having a share
capital shall once at least in every
year make a list of all persons who,
on the fourteenth day after the first
or only ordinary general meeting in
the year, are members of the com
pany, and of all persons who have
ceased to be members since the date
of the last return or (in the case of
the first return ) of the incorporation
of the company .
" (2) The list must state the names, ad
dresses, and occupations of all the
past and present members therein
mentioned , and the number of shares
held by each of the existing members
at the date of the return , specifying
shares transferred since the date of
the last return or (in the case of the
first return ) of the incorporation of
the company by persons who are
still members and have ceased to be
members respectively and the dates
of registration of the transfers, and
mustcontain a summary distinguish
ing between shares issued for cash
and shares issued as fully or partly
paid up otherwise than in cash , and
specifying the following particu
lars :
“ (a) The amount of the share
capital of the company, and
the number of the shares
into which it is divided ;
“ ( ) The number of shares taken
from the commencement of
the company up to the date
of the return ;
' (c) The amount called up on each
share ;
“ ( d) The total amount of calls
received ;
“ (e) The total amount of calls
unpaid ;
"W ) The total amount ofthe sums
( if any) paid by way of
commission in respect of
any shares or debentures,
or allowed by way of dis
count in respect of any
debentures, since the date
of the last return ;
“ (8) The total number of shares
forfeited ;
547
( REG
“ (h ) The totalamount of shares or
stock for which share war
rants are outstanding at the
date of the return ;
“ (i) The total amount of share
warrants issued and sur
rendered respectively since
the date of the last return ;
• (k) The number of shares or
amount of stock comprised
in each share warrant ;
“ ( ) The names and addresses of
the persons who at the date
of the return are the directors
of the company , or occupy
the position of directors, by
whatever name called ; and
" (m) The total amount of debt due
from the company in respect
of all mortgages and charges
which are required (or, in the
caseof a company registered
in Scotland, which , if the
company_had been regis
tered in England, would be
required) to be registered with
the registrar of companies
under this Act, or which
would have been required
so to be registered if created
after the first day of July
nineteen hundred and eight .
“ (3) The summary must also (except where
the company is a private company)
include a statement, made up to
such date as may be specified in the
statement, in the form of a balance
sheet, audited by the company's
auditors, and containing a summary
of its share capital, its liabilities, and
its assets, giving such particulars as
will disclose the general nature of
those liabilities and assets, and how
the values of the fixed assets have
been arrived at, but the balance
sheet need not include a statement
of profit and loss.
“ (4) The above list and summary must be
contained in a separate part of the
register of members, and must be
completed within seven days after
the fourteenth day aforesaid, and
the company must forthwith for
ward to the registrar of companies
a copy signed by the manager or by
the secretary of the company.
“ (5) If a company makes default in com
plying with the requirements of this
 REG ) DICTIONARY OF BANKING (REG

FORM E (as altered by Order No. 855 of the Board of Trade, 1917) as required by
Part II of the Companies (Consolidation ) Act, 1908 (Section 26 ), and the Companies
(Particulars as to Directors) Act, 1917.
SUMMARY of SHARE Capital and SHARES of the COMPANY,
LIMITED , made up to the day of 19 (being
the fourteenth day after the date of the first ordinary general meeting in 19 ).

Nominal share capital £ divided into? { shares of £ eachi.

shares of £ each ,
Total number of shares taken up to the
day of 19 (which number
must agree with the total shown in the list as held
by existing members).
Number of shares issued subject to payment wholly in cash
Number of shares issued as fully paid up otherwise than in cash
Number of shares issued as partly paid up to the extent of per
share otherwise than in cash
? There has been called up on each of shares, £
There has been called up on each of shares, £
There has been called up on each of shares, £
l amountof calls received, including payments on application and ;£
* Totaallotment
Total amount ( if any) agreed to be considered as paid on
shares which have been issued as fully paid up otherwise than in €
cash
Total amount (if any) agreed to be considered as paid on shares
which have been issued as partly paid up to the extent of per £
share otherwise than in cash
Total amount of calls unpaid €
Total amount (if any) of sums paid by way of commission in respect
of shares or debentures or allowed by way of discount since date £
of last summary
Total amount (if any) paid on shares forfeited :
Total amount of shares and stock for which share warrants / Shares £
to bearer are outstanding .
. .
Stock £
Total amount of share warrants to bearer issued and ( Issued
surrendered respectively since date of last summary Surrendered
Number of shares or amount of stock comprised Number of Shares
in each share warrant to bearer Amount of Stock !
Total amount of debt due from the company in respect of all mortgages
and charges which are required (or, in the case of a company
registered in Scotland, which, if the company had been registered £
in England, would be required) to be registered with the registrar
of companies, or which would require registration if created after
the first day of July nineteen hundred and eight .
Note. - Banking Companies must add a list of all their places of business.
The return must be signed, at the end , by the Manager or Secretary of the Company.
Presented for filing by ......
STATEMENT in the form of a balance sheet made up to the day of 19
containing the particulars of the capital , liabilities, and assets of the company .
This statement is not required from a private company within the meaning of Section 121 (1) of the
Companies ( Consolidation) Act, 1908, as amended by the Companies Act, 1913, which complies with
the provisions contained in its Articles by which it is constituted a private company.
· When there are shares of different kinds or amounts (e.g. Preference and Ordinary, or £ 10 or £5) state
the numbers and nominal values separately.
: Where various amounts have been called or there are shares of different kinds state them separately.
3 Include what has been received on forfeited as well as on existing shares.
* State the aggregate number of shares forfeited (if any) .
548
REG ] DICTIONARY OF BANKING (REG

NAMES , ETC. , of the Directors of the Company

on the day of 19 .

Nationality
Thepresent Christian Any former Christian of Origin Usual
Name or Names Name or Names Nationality . ( if other than Residence. Occupations.
and Surname, or Surname. the present
Nationality.)

LIST OF PERSONS holding shares in the Company, Limited , on

the day of and of persons who have held shares
19
therein at any time since the date of the last return , or (in the case of the first return )
of the incorporation of the company, showing their names and addresses and an
account of the shares so held .
NAMES, ADDRESSES, AND ACCOUNT OF SHARES.
OCCUPATIONS.

$ Particulars of § Particulars of
Shares transferred
Folio in Shares transferred since the Date of
Register # Number since the Date of
of Shares the last Return by
the last Return by
Ledger Persons who have Remarks.
Chris beld by Persons who are
containing Ad . Occu ceased to be
Particulars.
Surname. tian
dress. pation . existing stil Members .
Namne, Members Members.
at Date of
Return . Date of Date of
Num Num
ber . Registration Registration
of Transfer. ber. of Transfer .

(Signature) ..
(State whether manager or secretary )....
† The aggregate number of shares held, and not the distinctive numbers, must be stated, and the column
must be added up throughout so as to make one total to agree with that stated in the summary to have been
taken up:
# When the shares are of different classes these columns may be subdivided so that the number of each
class held or transferred may be shown separately.
$ The date of registration of each transfer should be given as well as the number of shares transferred
on each date. The particulars should be placed opposite the name of the transferor and not opposite that of 9 )
the transferee, but the name of the transferee may be inserted in the Remarks column immediately
opposite the particulars of each transfer .

(See COLONIAL REGister, COMPANIES, HOLDING OUT.)

Section it shall be liable to a fine not
exceeding five pounds for every day
during which the default continues,
and every director and manager of
the company who knowingly and
wilfully authorises or permits the
default shall be liable to the like
penalty . "
As to the further particulars of directors
as required by the Companies ( Particulars
549
as
to Directors) Act, 1917, see under
REGISTRATION OF Business NAMES .
By the Companies Act, 1913, Sectiou 1 ,
S.S. 3 :
0
" Every private company shall send with
the annual list of members and
summary required to be sent under
Section 26 of the Companies (Con
solidation) Act, 1908, a certificate
signed by a director or the secretary
REG ) DICTIONARY OF BANKING (REG

that the company has not,

since the
, or
“ 31. A com pantoy may,o
Power n giving noticeby
close Register.
case of a first return since the date advertisement in somenewspaper circulating
of the incorporation of the company, in the district in which the registered office
issued any invitation to the public of the company is situate, close the register
to subscribe for any shares or of members for any time or times not exceed
debentures of the company ; and , ing in the whole thirty days in each year.”
where the list of members discloses (See Form E on page 548.)
the fact that the number of members REGISTER OF MORTGAGES. The regis
of the company exceeds fifty, also a trar of companies keeps, with respect to
certificate so signed that such excess each company, a register of all mortgages and
consists wholly of persons, who charges created after July 1 , 1908, requiring
under Section 121 of that Act, as registration under Section 93 of the Com
amended by this Section, are to be panies (Consolidation) Act, 1908. The
excluded in reckoning the number register is open to inspection by any person
(See that Section under on payment of the prescribed fee , not ex
of fifty."
PRIVATE COMPANY.) ceeding one shilling. The register is kept at
By the Companies (Consolidation ) Act, Somerset House.
1908 : Every limited company must keep a
register of mortgages and charges specifi
Trusts not to be Entered on Register. cally affecting property of the company ,
“ 27. No notice of any trust, expressed, and a copy must be kept of all docu
implied, or constructive, shall be entered ments therein registered . The register
on the register, or be receivable by the is open to the inspection of any creditor
registrar, in the case of companies registered or member of the company without fee,
in England or Ireland . and to any other person on payment of
a fee not exceeding one shilling. A deben
Registration of Transfer at Request of ture containing merely a floating charge
Transferor. does not require entering on this register.
“ 28. On the application of the transferor For further information see the Sections
of any share or interest in a company, the of the Companies (Consolidation) Act, 1908,
company shall enter in its register of mem- underheading REGISTRATION OF MORTGAGES
bers the name of the transferee in the same AND CHARGES.
manner and subject to the same conditions REGISTER OF SASINES. This register
as if the application for the entry were made is kept in Edinburgh, and there is a separate
by the transferee . division of it for each shire or county of
Scotland . Sasine is a legal term for de
Transfer by Personal Representative. livery.” In Scotland, prior to 1845, when
“ 29. A transfer of the share; or other land was conveyed, a symbolical delivery
interest of aa deceased member of a company of it took place, the seller actually handing
made by his personal representative shall, over to the purchaser a handful of the soil
although the personal representative is not to represent the land being purchased . This
himself a member, be asvalid as if he had was done in the presence of a notary and two
been a member at the time of the execution witnesses. The delivery, or sasine, was
of the instrument of transfer ." recorded in a deed, and the deed was entered
The register must be open, for not less on the Register of Sasines. Although this
than two hours each day, to the inspection ancient method of land transfer no longer
of any member gratis, and of any other exists, the register is still in use, and
person on payment of one shilling. (Section a purchaser's title must be completed
30, s.s. 1.) by the conveyance being recorded in the
Any person may obtain a copy of the register.
register, or any part, or of the list and Mortgages must also be registered . (See
summary, on payment of sixpence for every BOND AND DISPOSITION IN SECURITY .)
100 words. If an inspection or copy is Priority of right is conferred by priority
refused , the Act imposes a penalty not of registration. A purchaser in good faith
entitled to rely upon the register and is
exceeding £ 2 and a further fine of £ 2 for isprotected
every day the refusal continues . (Section against any mortgage or convey
30, s.s. 2 and 3. ) ance which is not registered .
550
 REG ) DICTIONARY OF BANKING
REGISTER OF SECURITIES. ( See
SECURITIES BOOK . )
REGISTER OF SHIPS. (See SHIP -MORT-
GAGE, ETC. )
REGISTER OF TRANSFERS. (See
TRANSFER REGISTER .)
REGISTERED BOND . A bond which is
payable to the person named therein and
whose name is registered in the books of the
Government or company issuing it . It is
transferable by deed . A bearer bond, on the
other hand, is payable to the bearer thereof
and passes from one person to another by
simple delivery. A bearer bond is a nego-
tiable instrument, but a registered bond is
not . ( See REGISTERED COUPON-BOND . )
REGISTERED CAPITAL . The capital of
a company as authorised by its memoran- 66
dum of association . Called also the nom-
inal ” and " authorised ” capital. (See
CAPITAL .)
REGISTERED COUPON - BOND . National
War Bonds may be held in this form . The
Bond is registered in the name of the owner,
and is transferable by deed only. The
dividends are paid by means of coupons
attached to the register certificate, and
income tax is deducted on payment of the
coupons. In the case of an ordinary regis
tered war bond, the dividends are payable
in full and have subsequently to be included
in the owner's return for income tax assess-
ment . (See BEARER BONDS, NATIONAL DEBT.
REGISTERED OFFICE. The Companies
(Consolidation ) Act, 1908, provides :
“ Section 62 . ( 1 ) Every company shall
have a registered office to which all
communications and notices may
be addressed .
" (2) Notice of the situation of the regis-
tered office, and of any change
therein , shall be given to the regis
trar of companies, who shall record
the same .
“ (3) If a company carries on business with
out complying with the require
ments of this Section it shall be liable
to a fine not exceeding five pounds
for every day during which it so
carries on business."
The name of the company must be
painted or affixed in “ letters easily legible"
on the outside of its registered office and
every office or place where it carries on
business. (See Section 63, under NAME
OF COMPANY.)
" 116. A document may be served on a
company by leaving it at or sending
551
(REG
it by post to the registered office of the
company ."
REGISTERED STOCK . That is, stock
which is registered in the owner's name in the
company's register of members. It can be
transferred to another person only upon a
document of transfer being duly executed by
the registered holder. The dividends upon
the stock are paid by means of warrants
sent out from the company's office. In the
case of bonds which are payable to bearer,
there is no registered owner, and the bonds
pass from one person to another by simple
delivery. The interest upon the bonds is
paid by means of the coupons attached to
the bonds.
Several corporation stocks are transferred
by book entry under the “ inscribed stock "
regulations, though their titles do not
indicate that they are inscribed stocks.
(See INSCRIBED STOCK.)
REGISTRAR , COUNTY COURT. An
account opened in this form is a public
account. (See Public Account.)
REGISTRAR OF COMPANIES. The Com
panies (Consolidation) Act,1908, enacts :
Section 243. ( 1 ) For the purposes of the
registration of companies under this
Act, there shall be offices in England,
Scotland, and Ireland , at such places
as the Board of Trade think fit .
• (2) The Board of Trade may appoint
00
such registrars, assistant registrars,
clerks, and servants as the Board
think necessary for the registration
of companies under this Act, and
may make regulations with respect
to their duties ; and may remove
any persons so appointed .
“ (6) Any person may inspect the docu
ments kept by the registrar on pay
ment of such fees as may be appointed
by the Board of Trade, not exceeding
one shilling for each inspection ;
and any person may require a certifi
cate of the incorporation of any
company, or a copy or extract of any
other document or any part of any
other document, to be certified by
the registrar, on payment for the
certificate, certified copy, or extract,
of such fees as the Board of Trade
may appoint, not exceeding five
shillings for a certificate of incorpora
tion , and not exceeding sixpence for
each folio of a certified copy or
extract, or in Scotland for each sheet
of two hundred words.
REG DICTIONARY OF BANKING
“ (7) A copy of or extract from any docu
ment kept and registered at any of
the offices for the registration of
companies in England, Scotland, or
Ireland, certified to be a true copy
under the hand of the registrar or an
assistant registrar (whose official
position it shall not be necessary to
prove) shall in all legal proceedings
be admissible in evidence as of equal
validity with the original document.”
When a certificate of incorporation is given
by the registrar in respect of any association,
it is conclusive evidence that all the require
ments in respect of the registration of the
company have been complied with .
When a certificate of the registration of
any mortgage or charge is given by the
registrar, it is conclusive evidence that all
the requirements of the Companies Act have
been complied with .
A register of mortgages is kept by the
registrar. The register is open toinspection
by any person on payment of one shilling.
( See COMPANIES, REGISTRATION OF MORT
GAGES AND CHARGES .)
REGISTRARS (IN BANKRUPTCY ) .
Section 102 of the Bankruptcy Act, 1914,
provides as follows :
" 102. ( 1 ) The registrars in bankruptcy of
the High Court, and the registrars The Registration of Business Names Act,
of county courts having jurisdiction
in bankruptcy, shall have the powers and persons carrying on business under
and jurisdiction in this Section
mentioned, and any order made or
act done by such registrars in the
exercise of the said powers and
jurisdiction shall be deemed the
order or act of the Court.
“ (2) Subject to general rules limiting the
powers conferred by this Section, a
registrar shall have power :
“ (a) To hear bankruptcy petitions,
and to make receiving
orders and adjudications
thereon :
“( 6) To hold the public examina
tion of debtors :
" (c) To grant orders of discharge
where the application is not
opposed :
" (d) To approve compositions
or schemes of arrangement
where they are not opposed :
“ (e) To make interim orders in any
cases of urgency :
' ) To make any order or exercise
any jurisdiction which by
552
(REG
anyrule in that behalf is pre
scribed as proper to be made
or exercised in chambers :
“ ( 8) To hear and determine any
unopposed or ex parte
application :
** (h) To summon and examine any
person known or suspected
to have in his possession
effects of the debtor or to be
indebted to him, or capable
of giving information respect
ing the debtor, his dealings
or property.
“ (3) The registrars in bankruptcy of the
High Court shall also have powerto
grant orders of discharge and certifi
cates of removal of disqualifications,
and to approve compositions and
schemes of arrangement.
" (4) A registrar shall not have power to
commit for contempt of court.
“ (5) The Lord Chancellor may by order
direct that any specified registrar of
a county court shall have and
exercise all the powers of a registrar
in bankruptcy of the High Court."
(See BANKRUPTCY .)
REGISTRATION OF BUSINESS NAMES.
1916, provides for the registration of firms
business names. (
By Section 1 : — “ Subject to the provi
sions of this Act
" (a) Every firm having a place of busi
ness in the United Kingdom and
carrying on business under a busi
ness name which does not consist
of the true surnames of all partners
who are individuals and the cor
porate names of all partners who
are corporations without any addi
tion other than the true Christian
names of individual partners or
initials of such Christian names ;
(b) Every individual having a place
of business in the UnitedKingdom
and carrying on business under a
business name which does not con
sist of his true surname without
any addition other than his true
Christian names or the initials
thereof ;
" (c) Every individual or firm having a
place of business in the United
REG ] DICTIONARY OF BANKING [REG

Kingdom , who, or a member of catalogues, trade circulars, showcards, and ,

which , has either before or after business letters, on or in which the business
the passing of this Act changed name appears, have mentioned in legible
his name, except in the case of a characters, in the case of an individual, his
woman in consequence of mar- present Christian name or the initials thereof
riage ; and present surname, any former Christian
shall be registered in the manner directed name or Surname, his nationality if not
by this Act.” British , and if his nationality is not his
Every firm or person required under this nationality of origin , his nationality of origin .
Act to be registered shall deliver to the In the case of a firm , the same particulars
registrar at the register office in that part must be given of all the partners. (Section
of the United Kingdom in which the prin- | 18.)
cipal place of business is situated , a state- The Companies ( Particulars as to Direc
ment in writing in the prescribed form . tors) Act, 1917, provides that in addition
(Section 3.) to the particulars with respect to directors
The particulars required shall be furnished which, by Section 26 of the Companies
within fourteen days after the firm or person (Consolidation) Act, 1908, (see that Section
commences business. ( Section 5.) under REGISTER OF MEMBERS OF COMPANY ),
Whenever a change occurs in any of the are required to be included in the Annual
particulars registered in respect of any firm Summary, or in the case of a company
or person , a statement of the change must incorporated outside the United Kingdom
be sent to the registrar within fourteen days which establishes a place of business in the
after such change. (Section 6.) United Kingdom are by Section 274 of that
Where any firm or person by this Act Act required to be amongst the particulars
required to furnish a statement of particulars to be filed with the Registrar of Companies,
or of any change in particulars shall have there shall be included such particulars with
made default in so doing, then the rights of respect to those persons as would be required
that defaulter under or arising out of any to be furnished with respect to them under
contract made or entered into by or on the Registration of Business Names Act,
behalf of such defaulter in relation to the 1916, if they were partners in a firm required
business in respect to the carrying on of to be registered under that Act, and the
which particulars were required to be register required to be kept by a company
furnished at any time while he is in default, under Section 75 of the 1908 Act (see that
shall not be enforceable by action or other Section under REGISTER OF DIRECTORS)
legal proceeding either in the business name shall include such particulars as aforesaid .
or otherwise." The defaulter may apply to ( Section 1.)
the court for relief against the disability. Every company registered after the pass
“ Nothing herein contained shall prejudice ing of this Act shall, within one month of
the rights of any other parties as against the registration of the company, send to
the defaulter in respect of such contract as the Registrar, the above particulars respect
aforesaid .” (Section 8.) ing thedirectors and respecting any persons
The registrar's certificate of the registra- who, since the registration of the company,
tion , or a certified copy thereof, shall be have been directors. (Section 2.)
kept exhibited in a conspicuous position at Section 18 of the Registration of Business
the principal place of business of the firm Names Act, 1916 (see above ), shall apply
or individual. ( Section 11.) to every company which since the 22nd
The registrar of companies in London , | November, 1916, has been registered , or,
Edinburgh , and Dublin shall be the registrar in the case of a company incorporated out
for the purposes of this Act. (Section 15.) side the United Kingdom which has since
Any person may inspect the documents that date established a place of business in
filed by the registrar, or require a certificate the United Kingdom , as if the directors of
of the registration of any firm or person, the company were partners in a firm to be
or a copy of or extract from any registered registered under that Act. (Section 2.)
statement to be certified by the registrar REGISTRATION OF DEEDS. Deeds are
or assistant registrar, on payment of a small registered in Yorkshire, Middlesex and the
fee. (Section 16. ) Bedford Level. (See BEDFORD LEVEL COR
Every individual and firm required by this PORATION , LAND REGISTRY (MIDDLESEX
Act to be registered shall, in all trade DEEDS). YORKSHIRE REGISTRY OF DEEDS.)
553
REG ] DICTIONARY OF BANKING
The registration of deeds is to be dis
tinguished from the registration of land .
(See LAND REGISTRY .)
REGISTRATION OF MORTGAGES AND
CHARGES. The Companies (Consolidation )
Act, 1908, with regard to the registration
of mortgages and charges created by a
company, provides as follows :
Registration of Mortgages and Charges in
England and Ireland.
“ 93. ( 1 ) Every mortgage or charge
created after the first day of July
nineteen hundred and eight by a
company registered in England or
Ireland and being either :
“ (a) a mortgageor charge for the
purpose of securing any
issue of debentures ; or
(0
' (b) a mortgage or charge on un
called share capital of the
company ; or
" (c) a mortgage or charge created
or evidenced by an instru
ment which , if executed by
an individual, would require
registration as a bill of sale ;
or
“ (d) a mortgage or charge on any
land, wherever situate, or
.
any interest therein ; or
“ (e) a mortgage or charge on any
book debts of the company ;
or
" ( t) a floating charge on the under
taking or property of the
company,
shall, so far as any security on the
company's property or undertaking
is thereby conferred , be void against
the liquidator and any creditor of
the company, unless the prescribed
particulars of the mortgage or
charge, together with the instru
ment (if any) by which the mortgage
or charge is created or evidenced, are
delivered to or received by the
registrar of companies for registra
tion in manner required by this Act
within twenty-one days after the
date of its creation , but without
prejudice to any contract or obliga
tion for repayment of the money
thereby secured, and when a mort
gage or charge becomes void under
this Section the money secured
thereby shall immediately become
payable :
554
(REG
" Provided that :
* (i) in the case of a mortgage or
charge created out of the
United Kingdom comprising
solely property situate out
side the United Kingdom ,
the delivery to and the
receipt by the registrar of
a copy of the instrument
by which the mortgage or
charge is created or evi
denced , verified in the pre
scribed manner, shall have
the same effect for the pur
poses of this Section as
the delivery and receipt of
the instrument itself, and
twenty -one days after the
date on which the instru
ment or copy could, in due
course of post, and if
despatched with due dili
gence, have been received
in the United Kingdom ,
shall be substituted for
twenty-one days after the
date of the creation of the
mortgage or charge, as the
time within which the parti
culars and instrument or
copy are to be delivered to
the registrar ; and
" (ii) where the mortgage or charge
is created the United
in
Kingdom but
comprises
property outside the United
Kingdom , the instrument
creating or purporting to
create the mortgage or
charge may be sent for
registration notwithstanding
that further proceedings
may be necessary to make
the mortgage or charge valid
or effectual according to the
law of the country in which
the property is situate ; and
* (iii ) where a negotiable instru
ment has been given to
secure the payment of any
book debts of a company ,
the deposit of the instrument
for the purpose of securing
an advance to the company
shall not for the purposes of
this Section be treated as a
mortgage or charge on those
book debts ; and
REG] DICTIONARY OF BANKING
" (iv) the holding of debentures
entitling the holder to a
charge on land shall not be
deemed to be an interest in
land .
" (2) The registrar shall keep, with respect
to each company, a register in the
prescribed form of all the mortgages
and charges created by the company
after the first day of July nineteen
hundred and eight and requiring
registration under this Section, and
shall, on payment of the prescribed
fee, enter in the register, with res
pect to every such mortgage or
charge, the date of creation , the
amount secured by it, short particu
lars of the property mortgaged or
charged , and the names of the mort
gagees or persons entitled to the
charge.
' (3) Where a series of debentures contain
ing, or giving by reference to any
other instrument, any charge to the
benefit of which the debenture
holders of that series are entitled
pari passu is created by a company,
it shall be sufficient if there are
delivered to or received by the
registrar within twenty - one days
after the execution of the deed con
taining the charge or, if there is no
such deed, after the execution of any
debentures of the series, the follow
ing particulars :
“ (a) the total amount secured by
the whole series ; and
" (b) the dates of the resolutions
authorising the issue of the
series and the date of the
covering deed, if any, by
which the security is created
or defined ; and
" (c) a general description of the
property charged ; and
" ( d) the names of the trustees,
if any, for the debenture
holders ;
together with the deed containing
the charge , or, if there is no such
deed, one of the debentures of the
. series, and the registrar shall, on
payment of the prescribed fee, enter
those particulars in the register :
“ Provided that, where more than
one issue is made of debentures in
the series, there shall be sent to the
registrar for entry in the register
555
(REG
particulars of the date and amount
of each issue, but an omission to do
this shall not affect the validity of
the debentures issued .
“ (4) Where any commission, allowance, or
discount has been paid or made
either directly or indirectly by the
company to any person in considera
tionof his subscribing or agreeing to
subscribe, whether absolutely or
conditionally, for any debentures of
the company, or procuring or agree
ing to procure subscriptions, whether
absolute or conditional, for any such
debentures, the particulars required
to be sent for registration under this
Section shall include particulars as
to the amount or rate per cent. of
the commission , discount, or allow
ance so paid or made, but an
omission to do this shall not affect
the validity of the debentures
issued :
“ Provided that the deposit of any
debentures as security for any debt
of the company shall not for the
purposes of this provision be treated
as the issue of the debentures at a
discount.
“ (5) The registrar shall give a certificate
under his hand of the registration of
any mortgage or charge registered
in pursuance of this Section, stating
the amount thereby secured , and the
certificate shall be conclusive evi
dence that the requirements of this
Section as to registration have been
complied with .
“ (6) The company shall cause a copy of
every certificate of registration given
under this Section to be indorsed on
every debenture or certificate of
debenture stock which is issued by
the company, and the payment of
which is secured by the mortgage or
charge so registered :
" Provided that nothing in this
sub-section shall be construed as
requiring a company to cause a
certificate of registration of any
mortgage or charge so given to be
indorsed on any debenture or certifi
cate of debenture stock which has
been issued by the company before
the mortgage or charge was created .
“ (7) It shall be the duty of the company to
send to the registrar for registration
the particulars of every mortgage or
REG] DICTIONARY OF BANKING
charge created by the company and
of the issues of debentures of a series,
requiring registration under this
Section, but registration of any such
mortgage or charge may be effected
on the application of any person
interested therein .
“ Where theregistration is effected
on the application of some person
other thanthe company, that person
shall be entitled to recover from the
company the amount of any fees
properly paid by him to the registrar
on the registration.
“ (8) The register kept in pursuance of this
Section shall be open to inspection
by any person on payment of the
prescribed fee, not exceeding one
shilling for each inspection .
“ (9) Every company shall cause a copy of
every instrument creating any mort
gage or charge requiring registration
under this Section to be kept at the
registered office of the company :
Provided that, in the case of aseries
of uniform debentures, a copy of one
such debenture shall be sufficient. "
In Ladenburg & Co. v. Goodwin, Ferreira
& Co., Ltd. (in Liquidation ', and Garnett
(the Liquidator ), (1912, 3 K.B. 275) , the
plaintiffs made advances to the defendant
company on the company's drafts. The
company gave the plaintiffs copies of the
bills of lading and invoices of goods shipped
by them and a letter stating that the com-
pany hypothecated the goods or the proceeds
thereof to the plaintiffs. The goods were
sold by the defendant company to their
customers on the terms that all charges on
the goods after they left the warehouse
were paid by the customers, to whom a six
months' credit was given . The bills of
lading were made out to the customers'
orders. The company having gone into
liquidation the plaintiffs claimed the pro-
ceeds of the shipments received by the
defendant company or the liquidator. Pick-
ford, J., in the course of his judgment said :
“ It is difficult to see how any valid charge
or mortgage on the goods could have been
given to the plaintiffs, for there was no
interest in the goods remaining in the
defendant company (except in the possible
case of stoppage in transitu ). Therefore the
only thing remaining which could be the
subject of the hypothecation was the pro-
ceeds of the goods. ... That constitutes a
book debt owing by the customer to the
556
[REG
3
defendant company.... Was it a charge
on the book debts of the defendant company
within the meaning of Section 93, s.s. 1 (e)
of the Companies (Consolidation) Act, 1908 ?
... I come to the conclusion that there
were in this case charges on the book debts
of the defendant company, and as they were
not registered they are void against the
liquidator, and there must be judgment
for the defendants.”
Entry of Satisfaction .
Section 97. The registrar of companies
may , on evidence being given to his satis
faction that the debt for which any registered
mortgage or charge was given has been paid
or satisfied , order that a memorandum of
satisfaction be entered on the register, and
shall if required furnish the company with
a copy thereof." (See MEMORANDUM OF
SATISFACTION .)
The Act imposes heavy penalties on the
company and officials for neglect to register
mortgages and charges . (Section 99.)
The registrar's certificate of registration
should be deposited when a charge is given
on the company's property.
Every company must keep a register of
mortgages and charges, and enter therein
"all mortgages and charges specifically
affecting property of the company, giving
in eachcase a short description of the pro
perty mortgaged or charged , the amount of
the mortgage or charge, and (except in the
case of securities to bearer) the names of
the mortgagees or persons entitled thereto ."
(Section 100.) The register shall be open to
the inspection of any creditor or member,
without fee, and to any other person on
payment of one shilling . (Section 101.) A
debenture containing merely a floating
charge does not require entering in this
register, but if it contains a specific charge
it must be entered. A floatingcharge, how
ever, requires registration with the registrar
of companies. ( See Section 93, above.)
By Section 243 (see under REGISTRAR OF
COMPANIES) any person may inspect the
documents kept by the registrar on payment
of a fee not exceeding one shilling.
When the title deeds of a company are
given as security, either with or without a
memorandum of deposit, it is a charge, and
must be registered at the date of the deposit
or within twenty -one days therefrom . “ In
the case of a charge made by deposit, equity
presumes an agreement to give a charge
from the fact of deposit, and treats the
REG ] DICTIONARY OF BANKING
agreement as the creation of an equitable
charge. The existence or non - existence of
a memorandum of deposit does not affect
the necessity for registration ." (F. Tillyard,
on Registration of Charges, Journal of
Institute of Bankers, April, 1909.)
An agreement by a company to give
security must, in order to confer a present
equitable right, be registered.
It is to be noted that, by Section 93, a
charge must be registered within twenty -one
days after the date of its creation . In
Esberger & Son, Ltd. v. Capital and Counties
Bank, Ltd. ( 1913, 109, L.T. 140) , the company
deposited deeds with the bank, with a
formal document of charge, on September 17,
1910, duly executed but without a date.
On June 14, 1911 , the date was filled in by
the bank manager as June 14, 1911. It
was contended that the security was void
by reason of non -registration within twenty-
one days from September 17, 1910. For
the bank it was argued that if a document
is dated on a certain day and is to secure
future advances and future advances are
not made until a later date the creation of
the charge is the date when the future
advances are made, and when , therefore,
the document becomes an effective docu-
ment to secure actual money, and is not the
date when the actual charge was executed .
Sargant , J. , in the course of his judgment said
that where there is an instrument creating
or evidencing a mortgage or charge I feel
clear that, on the true meaning of Section 93
of the Companies (Consolidation) Act, the
date of the creation of the mortgage or
charge is the date when that instrument
was executed, and is not the date when any
money is subsequently advanced so as to
make an effective charge for the amount of
that money .
The benefit of the registration of charges
is that a banker, or other person , can
now by an inspection of the register of mort-
gages ascertainat once what charges have
been created . Before making an advance to
a company, it is well for the banker, by
having a search made at the office of the
Registrar of Companies, to ascertain what
mortgages or charges have been registered
by the company, and, by inspecting the
company's register of mortgages, to see if any
recent charges have been created that have
not, so far, been registered with the registrar.
It should be particularly noted that if a
mortgage or charge, as above specified, is not
registered within twenty -one days it is void
557
[ REG
against a liquidator and any creditor, so far
as security on the company's property is con
cerned , and the money payable under the
charge will then rank only as an unsecured
debt.
The fact that the holder of a mortgage
debenture, issued by a company and regis
tered in accordance with Section 93, had
express notice of the prior creation and non
registration within the required period by
that Section of a first mortgage, does not
prevent the unregistered firstmortgage from
being declared void as against the subsequent
registered mortgage debenture, havingregard
to the provisionsof the Section , notice not
being material in the case of a creditor, it
not being fraud to take advantage of legal
rights the existence of which might be
assumed to be known to the parties inter
ested . ( In re Monolithic Building Co. Ld.;
Tacon v . the Company, 1915, 112 L.T.R. 619.)
Where a company gives, as security,
debentures which it holds of another com
pany charged upon land , such security
does not require registration. (See Section
93, s.s. 1 , iv, above .)
When certificates or negotiable instru
ments belonging to a company are given as
security. the charge does not require
registration,
A debenture specifically charging ships
does not require to be registered, but a
mortgage on ships to secure an issue of
debentures must be registered under the
Merchant Shipping Act, 1894. (See SHIP
MORTGAGE .)
Section 93, (a) to (see above) ,
details the various kinds of charges , created
since July 1 , 1908, which must be registered.
Prior to July 1 , 1908, the charges which had
to be registered in order to form a valid
security, were those created after December
31 , 1900, and before July 1 , 1908, but that
regulation did not include the charges ( d)
and (e) (see Section 93, above ) specified
.
in the Consolidation Act, 1908. The
mortgages which must be registered are
therefore :
Prior to December 31 , 1900, no legislation
compelling registration.
From December 31 , 1900, to July 1 , 1908,
(a) , (b) , (c) , ( ). (See above .)
Since July 1, 1908, (a) , (b), (c), (d ), ( e), ( ).
(See above .)
The prescribed fee for registration of a
mortgage or charge is :
Where the amount does not exceed £ 200,
10s.
REG ] DICTIONARY OF BANKING [REN

Where the amount exceeds £200, £1. to a child after attaining a certain age.
The fee for registration of a series of When the child has attained that age it
debentures is : becomes a vested remainder. (See REVER
Where the total amount of the series does SION.)
not exceed £200, 10s. REMAINDERMAN . The person entitled
Where the total amount of the series to a " remainder " (q.v.) .
exceeds £ 200, £ 1 . REMEDY ALLOWANCE . This is the
In Middlesex and Yorkshire, charges by a name given to an allowance made in connec
company are also registrable at the Deeds tion with the making of coins. The Coinage
Registry. (See LAND REGISTRY (MIDDLE- | Act defines the standard weight and fineness
SEX DEEDS) , YORKSHIRE REGISTRY OF of each coin, but as in the making of coins
DEEDS.) (See COMPANIES, RECEIVER .) it is impossible to produce them absolutely
A mortgage by a society registered under in accordance with the prescribed figures,
the Industrial and Provident Societies Act , the Act allows certain variations , the
1893, does not require registration as the “ remedy allowance," from that standard
society does not come within the scope of weight and fineness. In gold coins the
the Companies (Consolidation) Act, 1908. remedy for fineness is two parts in 1,000,
REGISTRATION OF TRANSFERS. (See and in silver coins it is four, altered by the
TRANSFER OF SHARES .) Coinage Act, 1920, to five, parts in 1,000.
REICHSBANK . The Imperial Bank . The For the “ remedy " allowed in weight per
most important and powerful financial piece, see the first Schedule to the Coinage
institution in Germany. Act , under COINAGE .
RE - INSURANCE . One of the first princi- REMISIER . (French .) A “ half-com
ples of insurance is to limit the liability of mission man .” A person who introduces
the company, under any particular contin- | business to a stockbroker and receives
gency, to a fixed sum. When insurance a share of the broker's commission. (See
offices cover very large gross amounts, it STOCKBROKING TRANSACTIONS.)
may be necessary, in order to restrict their REMITTANCE . The word is commonly
liability to the prescribed limits, to re-insure used in banks to describe an amount of coin
with another company for amounts in excess or notes , or a parcel of cheques or bills sent
of their own retentions. The sole or from one office or person to another. A
principal business of re-insurance companies remittance is inward or outward according
is to provide facilities for re -insurance. as it is received by or despatched from the
REIS. (See FOREIGN MONEYS - BRAZIL, bank.
PORTUGAL . ) REMOTE PARTIES. The “ remote
RE - ISSUE OF BILL OF EXCHANGE. parties ” to a bill of exchange are those who
(See NEGOTIATION OF BILL OF EXCHANGE.) are not in immediate relationship, e.g. the
RE-ISSUE OF DEBENTURE . (See acceptor and an indorsee. (See PARTIES
DEBENTURE .) To BILL OF EXCHANGE . )
" RELATION BACK . " See Section 37, RENEWAL OF BILL. By arrangement
Bankruptcy Act, 1914, under ADJUDICATION amongst the parties to a bill of exchange the
OF BANKRUPTCY. bill may be renewed, that is, a new bill
RELEASE . From 1841 to 1845 freehold may be accepted in place of the old one, to
land was conveyed by means of aa deed called run for a further period of time. If the
a release.” ( See LEASE AND RELEASE .) second bill is dishonoured the rights of the
REMAINDER . After the death of a parties on the first bill (if the bill was left
person who has a life interest in a property, with the holder) are revived, but those
if the land does not revert to the grantor parties who did not assent to the renewal
of the life interest, or his heirs, but passes
are discharged .
to some other person , the interest of that RENT CHARGE . An annual payment
person in the land is called a " remainder." arising out of real estate.
A remainder is sometimes erroneously RENTES. The name given to the annual
referred to as a reversion, or reversionary interest payable upon the Government debts
interest . of France, Austria, Italy, Greece and some
It is a contingent remainder if the vesting other countries. The word is also applied
of the remainder is dependent upon an un- to the debts themselves, e.g. the Rentes in
certainty, as for example where the interest France has the same meaning as Consols
has to pass, after the death of the life tenant, in this country .
558
REN ) DICTIONARY OF BANKING [RES
RENUNCIATION . The giving up of a banker if uncrossed or crossed generally, be
right. In the Stamp Act, 1891 , the reference placed upon the cheque, and it is customary
to the stamp duty is ::-RENUNCIATION . for it to be done, but not absolutely
See RECONVEYANCE and RELEASE. (See necessary .
under MORTGAGE .) REQUISITIONS ON TITLE.. The requisi
In the case of an issue of new shares, a tions are the inquiries submitted by the
shareholder may accept the number of shares solicitor for an intending purchaser to the
provisionally allotted to him , or he may solicitor for the vendor, as to points and
renounce his rights by signing a form of questions in connection with the deeds
renunciation. In Re Pool Shipping Co. , and the title to the property. The requisi
Ltd. ( 1919, 122 L.T. 338) , where directors tions are written on one half of a sheet of
had power, under the articles of association, paper and the replies are placed opposite.
to refuse any transfer of shares of which If the replies are not complete or satisfactory,
they might not approve, and a shareholder further observations may be made.
renounced his rights to certain new shares RESCISSION BOND. A bond issued for
in favour of C, the directors refusing to guarantees rescinded . The Argentine Gov
register C, it was held that the renunciation ernment rescinded certain contracts in
of rights to shares was not a transfer of connection with the railways and issued
shares within the meaning of the articles instead 4 per cent. Rescission Bonds.
of association and that the directors were RESERVE . The cash in hand — that is ,
not entitled to refuse to register C, as notes and gold and silver coin - on the assets
holder of the shares. side of the Bank of England Return (Banking
As to the stamp duty, see under LETTER Department) is called the “ Reserve.” The
OF ALLOTMENT. (See LETTER OF RENUNCI- “ Reserve ” is the money which the Bank
ATION .) keeps to meet any demand which may be
When the holder of a bill at or after its made upon it by the depositors, both private
maturity renounces his rights against the depositors and other banks which keep
acceptor, the bill is discharged, but the balances at the Bank of England . In addi
renunciation must be in writing, unless the tion to that, the bank's stock of gold is liable
bill is delivered up to the acceptor. (See to be drawn upon by foreign nations requir
PAYMENT OF BILL. ) ing gold . “ The quickest and least trouble
RE-PRESENT. (See PRESENT AGAIN .) some way of obtaining it is to buy bills on
REPUTED OWNER . The person who is, London , remit them here for discount, turn
from the situation in which goods are found, the proceeds into Bank of England notes
reputed to be the owner thereof. The Bank- and cash the notes at the Issue Department
ruptcy Act, 1914, includes amongst the (George Clare, “ Money Market Primer " ') .
property which is divisible amongst the (See BANK RETURN.)
0
creditors of a bankrupt, “ all goods being, RESERVE FUND . The directors of a
at the commencement of the bankruptcy, joint stock company, before recommending
in the possession , order, or disposition of the a dividend, may (under most Articles of
bankrupt, in his trade or business, by the Association ) set aside out of the profits of
consent and permission of the true owner, the company such sums as they think proper
under such circumstances that he is the re- as a reserve, which shall, at the discretion
puted owner thereof ; provided that things of the directors, be applicable for meeting
in action other than debts due or growing contingencies, or for equalising dividends,
due to the bankrupt in the course of his or for any other purpose to which the profits
trade or business shall not be deemed goods of the company may be properly applied.
within the meaning of this Section ." Pending such application, the fund may be
(Section 38, s.s. 2 (c) . ) employed in the business of the company
REQUIRES BANKER'S CROSSING .” or be invested (other than in shares of the
An answer in these (or similar) words is company) as the directors may think fit.
sometimes marked upon cheques by the | (See Clause 99 of Table A, under heading
drawee banker. DIVIDEND .)
The reason given , however, is not con- If the reserve intended to provide for
sidered sufficient to justify a cheque being a sudden emergency , it should be invested
returned through the clearing. It is desir- in readily realisable securities.
able that the stamp of the banker to whom In addition to the reserve fund which is
a cheque is crossed, or of the collecting shown on a balance sheet, a prudent banker
559
 RES] DICTIONARY OF BANKING
builds up from his profits a secret or inner | extraordinary and special resolutions are
reserve fund, which is not disclosed on the
balance sheet. This secret reserve system is
recognised by shareholders as a necessity in
a well-managed bank.
RESERVE LIABILITY . That part of a
banking company's share capital which ,
when so resolved by the shareholders, can
not be called up except in the event of the
company being wound up. Section 59 of the
Companies (Consolidation) Act, 1908 , pro
vides :
“ 59. A limited company may by special
resolution determine that any portion of its
share capital which has not been already
called upshall not be capable of being called
up, except in the event and for the purposes
of the company being wound up, and there
upon that portion of its share capital shall
not be capable of being called up except in
the event and for the purposes aforesaid .”
See also Section 58 under COMPANY ,
UNLIMITED. The reserve liability cannot be
mortgaged . (See COMPANIES, SHARE
CAPITAL .)
RESERVED INTEREST. Interest upon a
debt which is doubtful and is not fully
secured by realisable security should not be
credited to profit and loss account, but
should , in the meantime, be placed aside
in a suspense interest or reserved interest
account .
RESIDUARY DEVISEE . Under a will,
the person who takes all the real property
which remains after the devisees have
received their shares.
RESIDUARY LEGATEE . Under a will,
the person who takes all the personal pro
perty which remains after the legatees have
received their shares.
RESIDUE. That which remains of a
deceased person's estate after all the debts
and legacies have been paid .
RESIGNATION . A Scotch law term ,
almost obsolete, for a document which
surrendered an inferior estate to the imme
diate superior.
RESOLUTIONS. The resolutions passed
at the meetings of companies are the various
matters which the members present have
decided upon . An ordinary resolution may
be passed by a bare majority. There are
also extraordinary and special resolutions.
A company's articles of association often
provide that certain acts shall only be done
by extraordinary resolution .
The provisions of the Companies (Con
solidation ) Act, 1908, with regard
(RES
as follow :
“ Section 69. ( 1 ) A resolution shall be an
extraordinary resolution when it has
been passed by a majority of not
less than three -fourths of such
members entitled to vote as are
present in person or by proxy (where
proxies are allowed) at a general
meeting of which notice specifying
the intention to propose the resolu
tion as an extraordinary resolution
has been duly given .
' (2) A resolution shall be a special resolu
tion when it has been
“ (a ) passed in manner required
for the passing of an extra
ordinary resolution ; and
>
" (6) confirmed by a majority of
such members entitled to
vote as are present in person
or by proxy (where proxies
are allowed ) at a subsequent
general meeting, of which
notice has been duly given ,
and held after an interval of
not less than fourteen days,
nor more than one month ,
from the date of the first
meeting .
“ (3) At any meeting at which an extra
ordinary resolution is submitted to
be passed or a special resolution is
submitted to be passed or confirmed ,
a declaration of the chairman that
the resolution is carried shall, unless
a poll is demanded, be conclusive
evidence of the fact without proof
of the number or proportion of the
votes recorded in favour of or
against the resolution .
“ (4) At any meeting at which an extra
ordinary resolution is submitted to
be passed or a special resolution is
submitted to be passed or confirmed
a poll may be demanded , if de
manded by three persons for the
time being entitled according to the
articles to vote, unless the articles
of the company require a demand
by such number of such persons, not
in any case exceeding five, as may
be specified in the articles.
“ (5) When a poll is demanded in accord
ance with this Section, in computing
to the majority on the poll reference
560
RES) DICTIONARY OF BANKING (RET

shall be had to the number of votes The word “ rest ” is also applied to the
to which each member is entitled by break which a banker makes in the accounts
the articles of the company." of his customers on June 30 and December 31
By Section 70, s.s. 2, Where articles for the purpose of entering the amount of
have been registered, a copy ofevery special interest and charges due to date . When this
resolution for the time being in force shall has been done, the account is balanced and
be embodied in or annexed to every copy ruled off, the balance being carried forward
of the articles issued after the confirmation to the next half-year's account.
of the resolution ." RESTRAINT ON ANTICIPATION . Where
The cases in which special resolutions property is settled upon a married woman
are necessary, as provided by the above in order that she may receive the income as
Act, are referred to in the following it becomes due, it is usual for the deed to
Sections : include a restraint on anticipation, by which
Section 8. (See NAME OF COMPANY.) she is prevented from mortgaging or giving
Section 9. (See MEMORANDUM OF a chargeof any kind upon the future income.
ASSOCIATION .) (See MARRIED WOMAN, SETTLEMENT.)
Section 61 . (See MEMORANDUM OF RESTRICTIVE INDORSEMENT. An in
AssociATION .) dorsement is restrictive which prohibits the
Section 13. (See ARTICLES OF Associ- further negotiation of a bill or cheque, or
ATION .) which expresses thatit is a mere authority
Section 40. (See REDUCTION OF SHARE to deal with the bill as thereby directed,
CAPITAL .) as “Pay John Brown only .” (See INDORSE
Section 46. (See REDUCTION OF SHARE MENT.)
CAPITAL.) RESTRICTIVE THEORY . The theory
Section 41. (See SHARE CAPITAL .) that in a commercial crisis the Bank of
Section 59. (See RESERVE LIABILITY .) England should restrict its issues of notes,
Section 110. (See INVESTIGATION OF but in the great crises of 1847, 1857 and 1866
COMPANY'S AFFAIRS . ) the Bank Charter Act which embodied the
Section 121. (See PRIVATE COMPANY.) restrictive theory had to be suspended,
Section 129. (See WINDING UP BY THE and the situation was saved by the Govern
COURT .) ment granting permission to the Bank to
Section 182. (See WINDING UP VOLUN- expand its issue beyond the limit fixed by
TARILY.) (See COMPANIES .) the Act. H. D. Macleod, in “ The Elements
RESPONDENTIA . An instrument by of Banking," wrote :
which the master of a ship hypothecates the " It is therefore irrefragably proved by
cargo as security for the repayment of money the unanimous opinion of the most eminent
borrowed at a foreign port in order to effect commercial authorities, and the clear experi
repairs which are absolutely necessary to ence of 100 years that the restrictive theory
enable the ship to resume its voyage. Such in a commercial crisis is a fatal delusion ;
a loan is repayable only if the ship arrives and that when a commercial panic is im
in safety at its destination. The captain pending, the only way to avert and allay it
has no authority to create such a charge is to give prompt, immediate, and liberal
except in case of necessity, and where he has assistance to all houses who can prove them
no other means of raising the money and is selves to be solvent.” On the outbreak of
unable to communicate with the owners . war with Germany in 1914, the Bank was
These instruments have now fallen into authorised to suspend the Act, but the
disuse. (See BOTTOMRY BOND.) authority was not acted upon. (See BANK
REST. The item called “ Rest " which CHARTER ACT, EXPANSIVE THEORY.)
appears on the liabilities side of the weekly RETENTION MONEY. Money which is
Return of the Bank of England corre- retained for a certain time after completion
sponds with the item " Reserve Fund ” in of a contract ; e.g. if a contract has been
the balance sheets of other banks, with this made for £5,000 it may be agreed that 10
difference that the profits are added to the per cent. of the money due to the contractor
“ Rest from time to time, and the divi. shall be retained till, say, six or twelve
dends to the bank proprietors are paid out months after the completion of the contract.
of this account. The amount is not allowed If an assignment of retention money is
to fall below £ 3,000,000. (See BANK given as security, notice of the assignment
RETURN .) must be given to, and an acknowledgment
561
36-41533 )
RET ) DICTIONARY OF BANKING (RET

received from , the person who is liable to The circumstances connected with the
pay the money to the contractor. (See retirement or withdrawal of a bill, by
Debts - ASSIGNMENT OF .) persons other than the acceptor, should
RETIRING A BILL . Many customers of always be carefully considered, as history
country branches accept bills payable at the shows how the operation may lend itself
head office in London of their banker, or, very readily to the purposes of fraudulent
in the case of a purely country bank, at the persons.
latter's London agents. Shortly before Sir James Bacon in a case in 1872 said
maturity of the bill, the acceptor gives his " retiring a bill of exchange means, as I
banker a written order to pay or retire the understand it, so to deal with it as that the
bill falling due in London. Immediately man who is personally liable shall not be
before the due date the banker debits the sued upon it, which he might be unless it is
customer and credits London with the retired before the time at which it could be
amount, advising his London agents or noted . "
London office to pay the bill. In some RETOUR SANS PROTÊT. (French ,
cases , at the beginning of each month, the return without protest.)
acceptor gives one order, on which are These words placed upon a foreign bill by
specified all such bills falling due during the an indorser, near to his signature, mean that
month. If any of the bills have docu- the bill, in the event of its dishonour, is to be
ments attached , the order should supply an returned without protest ; thatis, no expense
accurate description of them . To “ retire They apply only to the
is to be incurred .
a bill is, strictly, to withdraw it before indorser who uses them, and do not indicate
maturity, but the word is often used with the the wish of a subsequent indorser who has
above meaning . not used the words.
An order to retire a customer's own RETROCESSION . In Scotland, a recon
acceptance, payable either at the branch veyance. A conveyance back by an as
where his account is kept, or at the head signee to the assignor. In a retrocession of
office, or at a London bank, does not require a policy of life assurance the following words
a stamp. Nor is a stamp required where may be used : “We do hereby retrocess,
a customer gives an order to retire the repone and restore John Brown, his heirs,
acceptance of another person. executors and assignees in and to his own
It is very undesirablethat a bill should be right and place in the policy of assurance
domiciled at a bank where the acceptor does on his life," etc.
not keep an account, and the banker is under RETURNED CHEQUE (OR BILL ). A
no obligation to accept funds to meet it. cheque may be returned unpaid for many
He is justified in returning any such bill sent reasons . The drawer may not have sufficient
for collection . This, of course, does not funds to meet it ; he may be dead or bank
refer to bills accepted by a country customer rupt ; he may haveinstructed his banker not
and domiciled with a London banker, as in to pay it ; the banker may have received some
this case the London banker is the agent of legal notice preventing him from paying any
the country banker where the customer keeps further cheques upon the drawer's account;
his account. or the cheque itself may not be in order, the
A bill may be retired by the drawer or date or the amount or other material part
an indorser, whereupon that person holds may have been altered , and not have been
the instrument with remedy against all prior initialled by the drawer ; the amount in
parties. In such a case a written order words and figures may differ; the drawer's
should be given by the person retiring the signature may not be recognised ; an indorse
bill . ment may be wrong ; it may be post -dated ;
When an acceptance is withdrawn on the or crossed to two bankers ; or it may be
order of a person who is not the acceptor, stale through having been issued so long.
the bill should not be cancelled . These are some of the principal reasons
The customer for whom a bill is discounted necessitating the return of a cheque.
sometimes requests the banker, before the If there be on the face of a cheque any
bill is due, to withdraw it, giving as a reason reasonable ground for suspecting that it has
that the acceptor has sent him a cheque for been tampered with , a refusal to pay is
the amount or that part payment has warranted . (See London Joint Stock Bank,
been made and a new bill accepted for the Lid . v. Macmillan and Arthur, under
balance . PAYMENT OF CHEQUE .)
562
RET ] DICTIONARY OF BANKING (REV
When the cheque is returned an answer The notices of dishonour to indorsers will
is marked upon it by the drawee banker, be given by the customer. Although not
usually in the left-hand top corner. A strictly necessary, some bankers require a
co
number of the different answers which cheque to be given by the customer to
are in use are given in the article ANSWERS. confirm the debit to his account for the
Where a cheque has been received for returned bill or cheque, whilst other bankers
collection through the London Clearing take an acknowledgment from the customer,
House and isreturned for any reason i, t or a written authority to debit the account,
must, according to the rules of the Clearing on giving him the dishonoured instrument.
House, be sent back direct, by return of post, If the customer's account will not admit of
to the country bank whose name and address the dishonoured bill or cheque being charged
appear upon it. i to it, the amount should be debited to an
After settlement of a local exchange a account for returned articles and the banker
cheque cannot strictly be returned later in should give notice to all parties . Any
the day, unless by agreement between the balance there may be in the customer's
bankers. account may be held as a part payment.
Cheques received otherwise than through A returned cheque may be debited to the
the Clearing House may be returned on the account of the customer for whom it was
day following the receipt, but in practice sent for collection, even if not indorsed by
they are usually returned on the same day. ! him . The customer for whom a bill was
When a bill is to be noted , it may be discounted is not liable, in the event of its
noted on the day of its dishonour and must dishonour, unless by special agreement, if
be noted not later than the next succeeding the bill was not indorsed by him .
cheque orday.billcash ea Toncom Pelo
(See NOTING, tesonteA
PROTEST.) A banker usually canc(Seeels hisindo
on a .
rsement
DisHONOUR OF
by the paying banker cannot subsequently BILL OF EXCHANGE .)
beretur ned Wheduen adate,
morning of. its presentedbanker
billisa country in the RETURNS. Cheques orbills which are
returned either through lack of funds or
is under no obligation to retain it till the some irregularity in the instruments them
close of business before returning it, but selves are commonly called “ returns.”
there may be a local custom to retain it . Returns are also the various statements,
The banker to whom a cheque is returned daily, weekly, monthly, half- yearly, or at
for any reason , except
e a technical flaw in an other times, which are sent by branches to
indorsement, obtains his money again from the head office,
the party from whom he received the cheque REVERSION. REVERSIONARY INTER
in the first place, delivering up the cheque EST. Where a lease of land is granted for
itself in exchange. In the case of a faulty a number of years, the lessor remains
possessed of the reversion, that is the interest
indorsement ( e.g.' a cheque payable to in
" Thomas Cluff indorsed “ Thomas the estate remaining to the lessor after
Clough ") which the collecting banker knows the lease has been granted . For example,
to be bona fide, it is customary for him to if John Brown grants a lease to John Jones
write on the back of the cheque " Indorse- for a certain number of years, at the end
ment confirmed ' or “ Payee's (or John of that period, that is at the expiration of
Smith's) indorsement confirmed,” and his the lease, the property reverts to John
own signature. When the cheque is re- Brown , or to his representatives. The
presented, the drawee banker usually pays person to whom the property reverts is
it ; he is not, however, in law bound to do so . called the reversioner. Where a limited
Bankers usually keep a list of all the estate is granted in a property, as, for
cheques and bills they return unpaid, as example, in fee tail (where it is given to a
well as a list of cheques and bills which have person and the heirs of his body), if the
been returned to them, and in each case the succession fails, the property reverts to the
))

reason of the " return " is noted in a column grantor. The grantor is therefore said
provided for the purpose. to hold the reversion in the property.
When a cheque or bill is received back If the property is not to revert to the
grantor, but to go to some other person,
" dishonoured ," unless it is delivered to the
customer against cash , the banker charges it " remains " to that person, and his interest
his customer's account with the amount in it is called a " remainder ” (q.v.) .
and sends the unpaid article to the customer. The terms reversion ," or " reversionary
563
RBV ) DICTIONARY OF BANKING
interest," are often loosely used , in a general
way , to mean either a true reversion or a
remainder.
REVERSION DUTY . A duty imposed
by the Finance (1909–10) Act, 1910 (Section
13) , and payable , on the determination of
any lease of land, upon the value of the
benefit accruing to the lessor by reason of
the determination of the lease, at the rate
of one pound for every complete £10 of that
value.
Every lessor is required, on the determina
tion of a lease where reversion duty is pay
able, to deliver an account to the Commis
sioners setting forth particulars and the
estimated value of the benefit accruing to
him .
When a mortgagee is liable to pay any
sum on account of reversion duty, see Section
39, s.s. 4 and 5, under heading INCREMENT
VALUE DUTY .
There are special provisions with regard
to reversion duty in the case of a mining
lease . ( Section 22.)
Exemptions -
Where, in the case of aa reversion to a lease
purchased before April 30 , 1909, the lease
determines within forty years from the date
of the purchase. (This exemption does not
apply where the lease is determined within
forty years by agreement between the lessor
and the lessee, not contained in the lease
itself, unless the lease would, apart from any
such agreement, have determined within
that period.)
The determination of a lease on land
which is, at the time of the determination ,
agricultural land .
A lease the original term of which did not
exceed twenty-one years, nor where the
interest of the lessor expectant on the deter-
mination of a lease is a leasehold interest
which does not exceed that number of
years.
Where increment value duty is due and
reversion duty has been paid, or reversion
duty is due and increment value duty has
been paid , and it is proved to the satisfaction
of the Commissioners that the increment
value and the benefit accruing to the lessor
are identical, such sums as the Commissioners
determine to have been paid in respect of the
one shall be treated as a payment on account
of the other.
Land held for charitable purposes.
Land whilst it is held by a statutory
company for the purposes of the undertaking
564
(RIG
and which cannot be appropriated except to
those purposes. (Statutory company means
any railway, canal, dock or water company .)
Section 14, s.s. 5, provides as follows :
" Where a reversion has been mortgaged
before the thirtieth day of April
nineteen hundred and nine, and the
mortgagee has foreclosed before the
lease on which the reversion is
expectant determines, the mort
gagee shall not be liable to pay
reversion duty in excess of the
amount by which the total value of
the land at the time of the deter
mination of the lease exceeds the
amount payable under the mortgage
at the date of the foreclosure . "
By the Revenue Act, 1911 , Section 3 ,
s.s. 3. “ No reversion duty shall be charged
on the determination of any lease of land
where the lease is determined in pursuance
of an agreement between the lessor and the
lessee for the acquisition by the lessee of
the lessor's interest, if at the time of the
determination of the lease
" (a) the lease has at least fifty years of
its term to run ; and
" (b) the total value of the land does not
exceed five hundred pounds."
Reversion Duty was repealed by the
Finance Act, 1920 .
REVERSIONER . (See REVERSION .)
REVOCATION . By the Stamp Act, 1891 ,
the stamp duty is :
RevoCATION of any use or trust of
any property by any writing, £ s. d.
not being a will . 0 10 0
REVOLVING CREDIT. A credit opened
with a bank by an importer in order to
enable an exporter to obtain payment for
goods when ready for shipment. The
credit authorises the banker to buy the bills
up to a certain specified amount, the bills
to be accompanied by shipping documents
up to that amount. A common form of
this credit permits an exporter to draw
bills up to , say , £ 500. When the full
amount has been drawn, and one of the bills
has been paid, the credit is again available
so as to allow bills to the extent of £ 500
to be again outstanding. Another form of
Revolving Credit may permit of one bill
being drawn for a certain fixed amount,
and when that bill has been paid , another
bill for the same amount may be drawn .
RIGGING THE MARKET . A Stock Ex .
change term to signify the artificial forcing
ROO ] DICTIONARY OF BANKING [RUP

up of prices by speculators with the object it is expedient that the payment of certain bills of
of inducing the public to become purchasers exchange should
:
be postponed as appears in this
at the false prices. Now, THEREFORE , We have thought fit, by and
ROOT OF TITLE . A purchaser of land with the advice of Our Privy Council, to issue this
can , unless there is an agreement to the Our Royal Proclamation,and We do hereby proclaim ,
contrary, require the title to be deduced for direct, and ordain as follows :
Il on the presentation for payment of a bill of
forty years, or longer if it is necessary to exchange, other than a cheque or bill on demand,
go further backto secure a satisfactory com- which has been accepted before thebeginning of
mencement. The deed which is taken as the the fourth day of August, nineteen hundred and
fourteen, the acceptor re-accepts the bill by a
beginning of the title is called the root of title. declaration on the face of the bill in the form
A twenty years' title is often accepted set out hereunder , that bill shall, for all purposes,
as sufficient. including the liability of any drawer or indorser or
any other party thereto , be deemed to be due
If it is stipulated in a contract for sale and be payable on a date one calendar month
of a property, or in the printed "conditions after the date of its original maturity instead
of sale,” that the title shall commence with ofon the date of its original maturity , and to be
a certain deed or will, th that deed or a bill for the original amount thereof increased
will becomes the root of title . by the amount of interest thereon calculated from
the date of re-acceptance to the new date of
A conveyance on sale of freeholds, or a payment at the Bank of England rate current
mortgage, constitutes a good root of title. on the date of the re- acceptance of the Bill.
A will is not a good root of title, because Form of Re- Acceptance.
a will does not prove that the testator was Re-accepted under Proclamation for £
the owner of the property ; and a voluntary ( insert increased sum ).
settlement, or a deed of gift, is not a good Signature
Date
root of title , because there is no valuable Given at Our Court at Buckingham Palace, this
consideration . second day of August, in the year of our Lord
Section 2 of the Vendor and Purchaser one thousand nine hundred and fourteen , and
Act, 1874, provides as follows: in the Fifth year of Our Reign .
" Recitals, statements, and descriptions GOD SAVE THE KING.
of facts, matters and parties contained in ( See MORATORIUM .)
deeds, instruments, acts of Parliament or ROYALTY . A rent, payable to the land
statutory declarations, twenty years old at lord, of a certain percentage of the profits
the date of the contract, shall, unless and derived from the working of a mine upon
except so far as they shall be proved to be his estate, or from the minerals reserved to
inaccurate, be taken to be sufficient evidence him , or so much per ton from the minerals
of the truth of such facts , matters and raised .
descriptions." RUN ON A BANK . When, for any reason ,
By the Conveyancing Act, 1881, Section the depositors of a bank fear that the bank
3, s.s. 3 : “ A purchaser of any property is unable to meet all its liabilities, each
shall not require the production , or any depositor becomes anxious to secure his own
abstract or copy, of any deed, will or money before anyone else, and each person
other document, dated or made before the who holds notes of the bank (if it is a bank
time prescribed by law, or stipulated, forof issue) becomes desirous to obtain payment
commencement of the title . .. of the notes at once. If the anxiety to
In the case of leaseholds, the abstract obtain gold from the bank becomes general
should commence with the lease , even if it is and the depositors and note holders flock
more than forty years old. (See TITLE DEEDS .) to the bank for that purpose, there is said
ROUBLE . (See FOREIGN MONEYS- to be a run upon the bank.
RUSSIA .) RUPEE. Consequent upon the recom
ROYAL PROCLAMATION. The following mendations of the Committee on Indian
is a copy of the Royal Proclamation made Exchange and Currency, the gold price of
on Sunday, August 2, 1914, for postponing the rupee was, as from February 2, 1920 ,
the payment of certain bills of exchange :- fixed at 2s. In other words, the acquisition
BY THE KING. rate for gold imported under licence into
A PROCLAMATION India, hitherto varied by notification from
FOR POSTPONING THE PAYMENT OF CERTAIN time to time, is fixed at the rate of Rs. 10 for
BILLS OF EXCHANGE . each sovereign tendered for import, or one
GEORGE R.I.
WHEREAS in view of the critical situation in rupee for 11.30016 grains of fine gold . This
Europe and the financial difficulties caused thereby ratio is for external exchange. For internal
565
RUP ) DICTIONARY OF BANKING ( SAF

circulation , as a provisional measure, the of such a bond observes the announcement,

sovereign remains a legal tender in India he may continue to receive payment of the
at the old rate of Rs . 15 . coupons, but all such payments made after
(See FOREIGN MONEYS - CEYLON , INDIA, the bond is drawn are treated by the Russian
MAURITIUS . ) Government as repayments on account of
RUPEE PAPER . The name given to the the principal. Thus a holder who discovers
" enfaced ” promissory notes of the Indian that his bond was drawn for payment years
Government. ago, will find that the interest payments
The dividend, or interest, on the Rupee which have been made since the bond was
Paper is paid by drafts payable in India, drawn will be deducted from the principal
which are obtained either by the holder of sum. Holders of Russian bonds may, if
the promissory notes presenting them at the they desire, apply to the Anglo -Russian
India office, Bank of England , or by having Bank, Ltd., London, to have their names
thedrafts posted to him by the Bank. entered in a register (kept by that Bank)
The accrued dividend upon most stocks of Russian bondholders, in order that they
and shares is included in the price and may be advised by the Bank when any of
belongs to the purchaser, but in the case of the bonds they hold are drawn for payment.
Rupee Paper it is not taken into the price
and therefore requires to be paid over by the SAFE CUSTODY. It is the custom of
purchaser to the seller in addition to the bankers to receive and take charge of boxes
purchase price. of plate, securities and all manner of articles
The notes are called " enfaced paper of value belonging to their customers.
because they bear an announcement on the When articles are deposited for safe custody,
face that the interest is payable by drafts some banks give a form of receipt, and before
the articles can be delivered back to the
to be obtained at the Bank of England .
The notes can be converted into stock at the customer the receipt, duly indorsed , must
India Office, Bank of England . (See RUPEE. ) be returned to the bank . The following is
RURAL DISTRICT COUNCIL. The Trea- an example of a receipt :
surer of a Rural District Council must keep No.
an account in the prescribed form of all The British Banking Co., Ltd. ,
moneys received and paid by him on behalf Carlisle Branch 19
of the Council. The accounts must be made Received from of
up to September 30 and March 31 in each one sealed parcel for safe custody.
year, and they are to be audited by a per pro . The British Banking Co., Ltd.,
Government auditor. J. Jones, Manager.
Orders drawn upon the Treasurer are N.B.—This receipt should be kept in a
usually signed by three members of the place of safety. The security referred to
Council an countersigned by the clerk . therein can only be returned on the following
A banker should be furnished with a copy receipt being signed by the Depositor and
of a resolution by the Council as to the surrendered to the Bank. The personal
manner in which orders are to be signed, and application of the Depositor is particularly
with specimens of all necessary signatures. requested, but if he is unable to attend, the
Per procuration indorsements are not order on the back hereof should also be
accepted . signed
With regard to borrowing powers, refer- Received from the British Banking Co. ,
ence should be made to the statute under Ltd., the above -mentioned securities .
>

which a power to borrow is obtained, so as (Signature)

to ascertain the extent of the power and Date
whether the sanction of the Local Govern
ment Board or other authority is required . (Printed on the back .)
In 1919, the powers and duties of the Local To the Manager,
Government Board were transferred to the The British Banking Co., Ltd.,
Minister of Health . If money is borrowed Carlisle Branch .
without power, or sanction, the interest Please deliver to the bearer the securities
thereon will probably be disallowed . (See mentioned on the other side.
LOCAL AUTHORITIES . ) Signature
RUSSIAN BONDS. When a Russian bond Address
is drawn for repayment, unless the holder Date
566
SAF) DICTIONARY OF BANKING [ SAF

The receipt given is, in some banks, signed | banker must see that only the specified
by the manager and the accountant. The article is taken out.
customer depositing the articles for safe In the case of In re De Pothonier, Dent
custody may be required to sign the counter- v. De Pothonier ( 1900 , 2 Ch. 529) , the follow
foil bearing the same number as the receipt | ing statement was given as to the practice
which he obtains. This not only gives the in London with regard to the safe custody
40
bank a specimen of the depositor's signature of bearer bonds :- It is a common practice
which can be compared with the customer's of investors to deposit such bonds with their
receipt when a withdrawal takes place, but it bankers upon a simple acknowledgment by
acts as a confirmation from the customer of the bankers of the receipt thereof. In such
the articles which he has left to be taken care cases the bankers accept the deposit subject
of. to such responsibility as is imposed upon
Some bankers, however, do not give any them by law for their safe custody , and they
receipts for articles left with them for safe collect the coupons for their customers, and
keeping, unless specially requested so to do. credit them to the account of the customers,
They merely keep particulars of them in as and when received . From my own know
the safe custody register, and when the ledge of the course of business in the City,
customer receives the articles back again he I say that it is a very common practice
signs an acknowledgment for them in the amongst men of business, and joint stock
register. Some bankers, who give no companies who hold large quantities of
acknowledgments, permit the customer to bonds, to deposit them with their bankers
see the entry of the deposit in the safe upon the above terms, and I believe that
custody register. such practice offers to the owner of the
When articles have been deposited in bonds as good a security for the safe and
joint names they should not be given up proper custody of such bonds as can be
except on the written authority of all the obtained, and is at the same time the most
parties. If one of the depositors has died, convenient course the bond holder can adopt
the authority of his legal representatives as regards the collection of interest on the
should be obtained before delivery to the bonds. If bonds to bearer are deposited
survivor or survivors. “ The property may with bankers in a locked box or other closed
not be joint but common, in which case receptacle, the bankers do not give any
there is no right of survivorship." (Sir John receipt for the bonds,, but only a general
Paget, Law of Banking.) acknowledgment of receipt of the box , and
All the executors of a deceased person decline to accept any responsibility for its
should join in an authority to give up safe contents. ” In the same case it was held that
custody articles which were deposited in the the trustees were “ justified in depositing the
name of the deceased. bonds with the bankers upon those terms,
Where articles are deposited in the names which will not justify the bankers in parting
of executors, the signatures of all, or the with the bonds except under the authority
survivors, should be required before delivery. of all the trustees, but will justify the
Where the lodgment is in the names of bankers in cutting off the coupons and col
trustees, it is particularly necessary to obtain lecting them as and when they are due, in
all their signatures before delivery. In the ordinary course.”
Mendes v. Guedalla ( 1862, 2 J. & H. 259) , In taking charge of valuables for a
where a box containing bearer bonds was customer, a banker acts in the capacity of
lodged for safe custody by three trustees a bailee, and the responsibility of a banker
and one of them held the key in order to with regard to articles left for safe custody
cut off the coupons half-yearly, it was held depends in some measure as to whether he
that the bankers “ ought not to have parted is a gratuitous bailee -- that is, undertakes
with the box , or allowed more than the the work without any special charge for
coupons to be taken out, without the doing so — or whether he is a baileefor reward .
authority of all the three trustees." Bankers do not, as a rule, receive any direct
If the customer becomes bankrupt, the reward, and merely take charge of the
directions of the Official Receiver should be articles to oblige customers, but it is con
obtained . tended by some writers that the fact of a
If a banker receives an authority from a banker making a profit out of a customer's
depositor to allow another person to remove account shows that he is indirectly a bailee
a certain article from a box or parcel, the for reward. When a customer opens an
567
SAF) DICTIONARY OF BANKING ( SAL

account he knows, if he looks at the adver- separate book or in a special part of the
tisements of the bank, that he obtains, by ordinary register, and each entry is num .
becoming a customer, a right to leave his bered consecutively, a printed number label
valuables at the bank to be taken care of ; | being affixed to each box. When an article
is given up to the customer, he either signs
the banker, on his side, agrees to act as a
bailee for a customer's valuables because the register or gives a separate receipt for it ,
of the account which the customer keeps which receipt is kept in some available place
with him and from which he expects to and a reference made to it in the register.
derive some benefit. When an article is given up to a third party,
The question as to whether a banker is the third party signs the register and a refer
a gratuitous bailee or not, does not affect ence is entered to the customer's letter of
the practical point that a banker must take authority which should be carefully preserved.
all possible care of articles left with him for If a parcel is sealed with the customer's
safe custody, for if he is negligent and they own seal, it is registered as a sealed parcel,
are stolen, or if he parts with them to a but if it is an open parcel it is customary to
wrong person , he will be liable for the loss to detail the contents, giving particulars of
his customer. A banker's liability for loss all certificates, principal deeds, etc. When
might probably be less if it were proved that bearer bonds are lodged for safe custody,
he was a gratuitous bailee, and not a bailee the numbers of the bonds are quoted in the
for reward . register in all cases . Some bankers keep
If a banker has doubt as to the genuine- a separate book for the record of all bearer
ness of a signature upon an order for delivery bonds in their possession .
of a safe custody article, or any suspicion When a safe custody receipt is issued by
as to the authority of the person who pre- the banker, the receipt must be returned
sents the order, he is justified in making a duly indorsed before the articles can be given
delay in fulfilling the order until he has had up . (See SAFE CUSTODY.)
the signature confirmed by the customer. In SALE AND PURCHASE OF BANK
the case of Mrs. Langtry v. The Union Bank SHARES ACT, 1867. Usually called LEE
of London (which was settled by judgment man's Act (q.v.).
for the plaintiff by consent for £10,000 ), SALE OF GOODS ACT, 1893. (56 & 57
the plaintiff's property was obtained from Vict. C. 71.) Section 25 provides that
the bank by a person presenting a forged where a person has sold goods and continues
order purporting to be signed by Mrs. in possession of them or of the documents of
Langtry , requesting the bank to hand her title to the goods and sells or pledges them
box to the bearer. to any person receiving the same without
A banker has no lien or charge upon notice of the previous sale the delivery shall
securities or articles left with him for safe have the same effect as if it were authorised
custody. (See LIEN . ) If a safe custody by the owner of the goods ; and that where
article is to be taken as a security at any a purchaser obtains possession of the goods
time, the customer should sign the necessary or documents and sells or pledges them to
document of charge. any person receiving them without notice of
The Bank of France makes a specific any lien of the original seller, such delivery
charge for taking care of securities and shall have the same effect as if the person
valuables for customers . making the delivery were a mercantile agent
In America, bankers decline to take charge in possession of the goods or documents with
of articles for safe custody, but they have a the consent of the owner. This Section is
system of letting lockers, in the safe deposit practically the same as Sections 8 and 9 of
department, to customers, at a rent, thus the Factors Act, 1889. (See FACTORS Act.)
throwing the responsibility and labour of Section 44 enacts as follows :
cutting off coupons,etc., upon the customers. Subject to the provisions of this Act,
SAFE CUSTODY REGISTER . The securi- when the buyer of goods becomes insolvent,
ties , boxes, or other articles which may be the unpaid seller who has parted with the
left by customers with a banker for safe possession of the goods has the right of
custody are, in some banks, entered in a stopping them in transitu , that is to say, he
register with the date when they are left, may resumepossession of the goods as long as
the name of the owner, and a description they are in course of transit, and may retain
them until payment or tender of the price."
of the security or article . If the boxes are
numerous they are usually registered in a By Section 46 the unpaid seller may
568
SAN ) DICTIONARY OF BANKING (SCR
exercise his ' right of stoppage in transitu The various Acts relating to Savings
either by taking actual possession of the Banks were consolidated by the Trustee
goods or by giving notice of his claim to the Savings Bank Act, 1863 (26 & 27 Vict. c.
carrier or other bailee or custodier in whose 87) . (See Post OFFICE SAVINGS BANKS,
possession the goods are . TRUSTEE SAVINGS BANKS.)
Section 47 provides as follows : SAVINGS CERTIFICATES. The same as
16
Subject to the provisions of this Act, the War Savings Certificates (q.v.) , and National
unpaid seller's right of lien or retention or Savings Certificates (q.v.).
stoppage in transitu is not affected by any SCANDINAVIAN MONETARY UNION ,
sale , or other disposition of the goods which The Union was formed in 1873 and includes
the buyer may have made, unless the seller Norway, Sweden and Denmark. Its object
has assented thereto . is the regulation of the coinage of those
Provided that where a document of title countries. (See LATIN MONETARY UNION .)
to goods has been lawfully transferred to SCRIP. SCRIP CERTIFICATE . ( Scrip
any person as buyer or owner of the goods, is a contraction of “ subscription .")
and that person transfers the document to Ordinary certificates are very commonly
a person who takes the document in good referred to as “ scrip ” ; but scrip or a scrip
faith and for valuable consideration , then, certificate is really the document or pro
if such last-mentioned transfer was by way visional certificate which is given to a person
of sale, the unpaid seller's right of lien or who has, for example, agreed to take up
retention or stoppage in transitu is defeated, bonds in connection with a Government
and if such last-mentioned transfer was by loan and has paid the first instalment.
way of pledge orother disposition for value, Scrip is principally associated with the issue
the unpaid seller's right of lien or retention of debentures , or bonds.
orstoppage in transitu can only be exercised A person desirous of obtaining some bonds
subject to the rights of the transferee.” in a new issue pays to the bank which has
SANS COMPTE DE RETOUR. A term the management of the issue a deposit of
meaning that in the event of non-payment per cent. upon the amount of the bonds
of a bill the holder may draw on the previous required, and requests that he be allotted
holder for the full amount of the unpaid that amount of bonds at the price of per
bill, including commission, protest charges, cent. He agrees to accept the same or any
brokers' and other charges. The term is smaller amount that may be allotted to
rarely met with now. him , and to pay the further sums due on
SANS FRAIS. (French . without expense ;in such allotment according to the terms of the
English usually written " Incur no expense .”) prospectus. If his application is successful
Where the indorser of a bill adds these he receives a letter of allotment stating the
words to his signature, they mean that no amount of bonds which have been allotted
expense is to be incurred over the bill. The to him. At a certain date the letter of
words express the wish only of the indorser allotment is exchanged for a scrip certificate,
who uses them and do not apply to any a document which states the amount that
subsequent indorser who has not used them . has been paid towards the price of the bond
SANS RECOURS. These words, the and sets forth the dates when the remaining
French term for “ Without recourse,” may instalments are due and the amount of each .
be added by the drawer of a bill or an A form ofreceipt is appended for each instal
indorser to his signature to negative his own ment, which is filled up by the bank when
liability to the holder in the event of the ever an instalment is paid. When all the
bill being dishonoured , but the words would instalments have been paid the holder is
not free an indorser from liability for any entitled to a duly stamped bond in exchange
forged signature prior to his indorsement. (See for the scrip certificate. If an instalment is
DRAWER, INDORSER, WITHOUT RECOURSE.) not paid, it renders all previous payments
SASINES. (See REGISTER OF SASINES.) liable to forfeiture . Where interest will be
SAVINGS BANKS. A Savings Bank is for payable before the bonds are readyatto the
be
the deposit ofmoney, the depositor receiving issued, a coupon is appended at
interest thereon . The money and interest foot of the scrip certificate. The receipts
may be drawn out by the depositor as and must not be detached from the scrip
when required . A Savings Bank is not like certificate , and when remitting the instal
an ordinary bank, as the depositors cannot ments the certificate must accompany the
issue cheques. remittance.
569
SCR ] DICTIONARY OF BANKING [ SCR

The following is a specimen of a scrip Receipt for Instalment of 25 per cent.

certificate ; Due 1st November, 19 .
£ 100 No. 4623 . Received 19 the sum of Twenty
FOREIGN GOVERNMENT 5 PER CENT. STER- five pounds, being the instalment due
LING LOAN OF 19 FOR £ 2,000,000 , 1st November, 19
.
AT 90 PER CENT. For The British Banking Co., Ltd.,
£25 . Cashier.
Scrip certificate for £ 100.
FOREIGN GOVERNMENT 5 PER CENT .
The Bearer of this scrip certificate has
paid in respect of One hundred pounds of the STERLING LOAN, 19
above loan, the sum of £10, leaving a balance Coupon for Two pounds ten shillings due
of £ 80, payable as follows : 1st December, 19
£ 10 per cent. on 1st July, 19 Payable at The British Banking Co., Ltd
£ 10 per cent. on 1st August, 19 London .
£ 10 per cent. on 1st September, 19 £2 10s. Od.
£25 per cent. on 1st October, 19 Stamp Duty (Stamp Act, 1891)
£25 per cent. on 1st November, 19 SCRIP CertiFICATE , SCRIP, or
After payment of the above instalments other document : £ s. d.
the Bearer will be entitled to a duly stamped (1 ) Entitling any person to
bond in exchange for this scrip certificate . become the proprietor of
Due notice will be given by advertisement any share of any com
in The Times when the bonds are ready for pany or proposed com
delivery . pany
Default in payment of any instalment (2) Issued or delivered in
will render all previous payments liable to the United Kingdom ,
forfeiture. and entitling any person
For The British Banking Co. , Ltd. to become the proprietor
Registered JOHN BROWN, of any share of any for
London 19. General Manager . eign or colonial company
Receipt for Instalment of 10 per cent. or proposed company
( 3) Denoting, or intended to
Due 1st July, 19 denote, the right of any
Received 19 , the sum of Ten person as a subscriber in
pounds,
19
being the instalment due 1st July, respect of any loan raised
For The British Banking Co. , Ltd. , or proposed to be raised 0 0 2
£ 10 Cashier. by any company or pro
posed company, or by
Receipt for Instalment of 10 per cent. any municipal body or
Due 1st August, 19 corporation
Received 19 the sum of Ten (4) Issued or delivered in the
pounds, being the instalment due 1st August, United Kingdom , and
19
denoting, or intended to
For The British Banking Co., Ltd., denote, the right of any
£ 10 . Cashier. person as a subscriber in
Receipt for Instalment of 10 per cent. respect of any loan raised
Due 1st September, 19 or proposed to be raised
Received 19 , the sum of Ten by or on behalf of any
pounds, being the instalment due 1st foreign or colonial state,
September, 19 government, municipal
For The British Banking Co., Ltd. , body, corporation, or
£ 10. Cashier. company .
Receipt for Instalment of 25 per cent. ( Increased from ld. to 2d. , as from Sept.
9

Received
thesum of Twenty. - "., The
Due 1st October, 19
19
1920word
,by the Finance Act,1920.5
“ share ” in the above Schedule
five pounds, being the instalment due includes a fractional part of a share. (Sec
1st October, 19 .
tion 9, Revenue Act, 1909. )
For the British Banking Co., Ltd., Every person who issues any scrip certifi
£ 25 . Cashier. cate, or scrip, before the same is duly
570
SEA ) DICTIONARY OF BANKING (SEA

stamped, shall incur aa fine of twenty pounds. Sections 78 and 79 of the Companies
(Section 79, Stamp Act. See LETTER OF (Consolidation) Act, 1908, give powers to a
ALLOTMENT .) company to empower any person, as its
The separate receipts upon a scrip certifi- attorney , to execute deeds abroad and to
cate are exempt from stamp duty. The have an official seal for use abroad :
exemption is given by the Stamp Act, 1891, " 78. A company may, by writing under its
under Receipt (see RECEIPT) as follows :- common seal, empower any person , either
" Receipt indorsed or otherwise written upon generally or in respect of any specified
or contained in any instrument liable to matters, as its attorney, to execute deeds
stamp duty, and duly stamped, acknow- on its behalf in any place not situate in the
ledging the receipt of the consideration United Kingdom ; and every deed signed
money therein expressed , or the receipt of by such attorney, on behalf of the company,
any principal money; interest, or annuity and under his seal, shall bind the company,
thereby secured or therein mentioned ." and have the same effect as if it were under
A coupon attached to a scrip certificate its common seal.
requires to be stamped . (See COMPANIES,
INSTALMENT ALLOTMENT, LETTER OF
“ 79. ( 1 ) A company whose objects require
ALLOTMENT, SHARE CAPITAL. ) or comprise the transaction of busi
SEA INSURANCE . (See MARINE INSUR ness in foreign countries may, if
ANCE Policy.) authorised by its articles, have for
SEAL . An impression in wax, or other use in any territory, district, or place
soft substance, made by an engraved stamp. not situate in the United Kingdom ,
Also the engraved stamp itself . At one time an official seal, which shall be a
facsimile of the common seal of the
the seal was usually attached to the docu company, with the addition on its
ment by a strip of parchment or a cord. As face of the name of every territory,
deeds now require to be signed by the parties district, or place where it is to be
thereto, the use of the seal has become a used .
mere formality and a simple wafer is fre
quently used, as in transfers of shares and " (2) A company having such an official
stocks, instead of an impression in wax. seal may, by writing under its
The letters L.S. inside a circle , thus common seal, authorise any person
appointed for the purpose in any
( L.S. which are seen on transfer forms, stand territory, district, or place not situate
for locus sigilli, and mean the place of
the seal. They do not, however, act instead in the United Kingdom , to affix
of a seal, or wafer. the same to any deed or other docu
The seal of a company is called its common ment to which the company is party
seal. Every limited company “ shall have in that territory, district, or place.
its name engraven in legible characters on " (3) The authority of any such agent shall,
its seal.” If any director, manager, or as between the company and any
officer of a limited company, or any person person dealing with the agent,
on its behalf, uses or authorises the use of continue during the period, if any,
any seal purporting to be a seal of the mentioned in the instrument confer
company, whereon its name is not engraven ring the authority, or if no period is
as aforesaid, he shall be liable to a fine not there mentioned, then until notice
exceeding fifty pounds. (See Section 63 of of the revocation or determination
the Companies (Consolidation ) Act, 1908, of the agent's authority has been
under heading NAME OF COMPANY.) The given to the person dealing with him.
seal of a company is usually affixed in the
presence of two directors, who sign the docu “ (4) The person affixing any such official
ment, which is also countersigned by the seal shall, by writing under his hand,
on the deed or other document to
secretary or such other person as the
directors may appoint for the purpose. A which the seal is affixed, certify the
record is kept of each document which is date and place of affixing the same.
sealed , the entry being initialled by the “ (5) A deed or other document to which an
persons who witnessed the affixing of the official seal is duly affixed shall bind
seal. The seal is usually kept in a box or the company as if it had been
case secured by two locks, the keys of which sealed with the common seal of the
are held by different persons. company .”
571
SEA ] DICTIONARY OF BANKING (SBC

Section 117 provides for the authentication an operation, however, may result in the
of documents : banker finding that his last state is worse
“ A document or proceeding requiring than the first . (See MORTGAGE.)
authentication by a company may besigned When a banker receives notice that a
by a director, secretary, or other authorised second mortgage has been given upon
officer of the company, and need not be security which he holds, see NOTICE OF
under its common seal." (See COMPANIES.) MORTGAGE, RECONVEYANCE .
SEAL BOOK . ( See COMMON SEAL Book . ) SECOND OF EXCHANGE . (See BILL IN
SEAMAN'S NOTE. (See ADVANCE NOTE. ) | A SET.)
SECOND - CLASS PAPER . First - class SECRECY DECLARATION . AU banks
paper includes bank bills and bills bearing require every person joining the staff to
names of the highest standing. Where sign a form agreeing to preserve absolute
the position is not so good , the bills fall secrecy with regard to the affairs of the
into a second or a third - class position , or customers and all other matters connected
even into a still lower class, according to with the business of the bank. (See BANKER'S
circumstances. OPINION .)
SECOND MORTGAGE . A charge upon SECRET COMMISSION . Where an agent
property which ranks after a first mortgage. corruptly accepts any consideration as an
For example, if Brown gives Jones a legal inducement to act contrary to the interests
mortgage upon his property, and afterwards or business of his principal, or any per
gives his banker a second mortgage , the son corruptly gives such consideration to
banker's charge is available only after Jones the agent, it is a misdemeanour. ( See
is fully satisfied either by having received PREVENTION OF CORRUPTION Act, 1906.)
repayment of the debt, with interest from SECRET RESERVES. Reserve Funds
Brown, or by having enforced his mortgage which are not shown in a balance sheet.
and obtained repayment out of the security. The financial position of a company may
All mortgages after the first legal mort- be better than is disclosed in a balance
gage are called equitable mortgages (q.v.) . sheet, but a balance sheet should not
A prudent banker avoids, as far as pos represent the position to be better than it
sible, taking a second mortgage as security. actually is. (See BALANCE SHEET.)
It is, as a rule, a most unsatisfactory form SECURED CREDITOR . “ A person
of security, and the less a banker has to do holding a mortgage charge or lien on the
with second mortgages the better. property of the debtor, or any part thereof,
Where a second mortgage is taken, notice as a security for a debt due to him from the
must be given to the first mortgagee,
a
other debtor.” (Bankruptcy Act, 1914.) (See
wise he might, without notice, make a further PROOF OF DEBTS.)
advance to the mortgagor, or he might buy SECURED NOTE . The Grand Trunk
up a subsequent mortgage and tack it on to Railway Company of Canada, ree years
his own, and in either case the second 6 per cent. secured note , may be quoted as
mortgagee would be squeezed outof any value an example. The note provides that on
there was in his charge. If the mortgagor October 1 , 19 ... without days of grace,
fails to pay his interest regularly to the first for value received, the undersigned company
mortgagee, the amount of interest in arrears promises to pay to the order of itself £ 200
will increase the amount of the first charge, at ..... ... with interest thereon from
and , when it comes to a question of selling at the rate of 6 per cent. per
the property, the first mortgagec will be annum, payable half-yearly, on presentation
quite satisfied if he can obtain from the sale of the coupons attached as they severally
repayment of the money he has lent upon the mature. As security for the due fulfilment
property, without concerning himself with of the company's obligations to the note
theinterests of any subsequent mortgagee. holders, certain debenture stock of the
Instead of allowing the first mortgagee to company is issued to a bank which acts as
sell, a banker holding a second mortgage trustee for the holders. The notes may be
might, perhaps, be tempted to pay off the registered in the holder's name.
first mortgage, in the hope that he may, SECURITIES BOOK. Securities, of what
ultimately, be able to find a purchaser for ever nature, which are left to cover an

the property at a price sufficient to cover advance, are entered in the securities book .
both the amount of the first mortgage, A page is headed with the name of the
taken over by him, and his own debt. Such customer, his address and designation , and
572
sec] DICTIONARY OF BANKING [ SEC

underneath are detailed the deeds, certi- similar way so as to give full information
ficates, bonds, life policies, guarantees and as to the nature of the security and its
all other securities . Sufficient information probable value.
is given regarding each different item to When securities are deposited, it is the
enable anyone to judge, without a reference practice in some banks for the depositor to
to the securities themselves, of what the sign the book in which they are entered, or
security actually consists. In the case of where a receipt is given by the banker from
deeds, it is customary to quote the date of a counterfoil book, to sign the counterfoil.
the last principal document and the name of When a security is given up, the receipt of
the person to whom the property belongs, the person who lodged it is obtained against
and to state whether the property is freehold, the entry in the book, or a separate receipt
leasehold or copyhold . Where the property is taken and a reference made to it in the
has come by will to the person lodging the securities book .
security, particulars of that fact are given. SECURITIES JOURNAL . The book in
The quantity of land, with the number and which securities are entered as received .
nature of any buildings thereon, and the They are afterwards posted in the securities
amount of the consideration money, with ledger, which is kept in a manner somewhat
the date, are set forth , and information is similar to an ordinary ledger.
given as to the nature of the charge (mort- SECURITIES LEDGER. A book in use
gage, or memorandum of deposit) which the in some banks and kept after the manner of
bank has upon the property. Any prior an ordinary ledger, full particulars of all
mortgage, or charge, or any flaw in the title, securities received being entered on the one
or anything with regard to the property side of an account and those given up being
which may in any way affect the value of written off on the other side. When secu
the security to the bank, are duly noted . rities are received they are first entered in
The probable present market value of the the securities journal and then posted into
property is given, and also the rentals or the correct account in the securities ledger.
other information which may help to prove SECURITY . That which is given to
the estimated value. In leasehold property secure the repayment ofmoney lent. Where
the number of years of the lease, and the a person borrows money from his banker, he
ground rents are stated , in addition to the supplies security, most commonly certifi
above information, and in copyhold property cates of shares with a transfer into the
the amount of the fines and fees. Where names of the banker's nominees, or the title
there is insurable property particulars of deeds of a property with either a memoran
the fire policies held are entered. dum of deposit or a legal mortgage, or bearer
Full particulars of all certificates lodged bonds or other negotiable instruments, or a
are given, including the number of shares, life policy assigned to the banker, or a guar
the name of the company, the designation antee by some reliable person. The value
of the shares (or stock), the nominal amount of the security should always be greater
and the amount paid up, the name of the than the amount of money lent. (See
person which appears on the certificate , theAdvances .)
present market value, the rate of dividend , The security given may belong either to
and the nature of the charge which the bank the debtor himself or to some other person .
holds . When it belongs to another person it is usually
With regard to life policies, the particulars called “ collateral security (q.v.) . Where
which are usually entered in the securities the securities of third parties are offered
book are, the name of the company, the as cover for the general indebtedness on
number of the policy, the amount and when the account of aa solicitor or of a stockbroker,
payable, the amount of the premium and see SOLICITORS' ACCOUNTS, STOCKBROKERS '
the date on which it is payable, the name LOANS.
of the person in whose favour the policy is Where several securities, deposited by
granted, the amount of accrued bonuses, different persons, are held for one account,
the present surrender value, a note of any and one of the depositors dies, the account
charge upon the policy, and particulars of should be broken and an arrangement made
the assignment of the policy to the bank, with the debtor to pass all future trans
and the acceptance by the company of notice actions through a new account until fresh
of the assignment. arrangements are made.
Other forms of securities are entered in a If security is taken from a customer to
573
SEC ) DICTIONARY OF BANKING ( SET

cover an advance already granted , and SHARES, SHIP-MORTGAGE , SUBROGATION ,

the customer shortly afterwards fails, the TITLE DEEDS .)
security may be objected to on the ground SEIGNIORAGE . SEIGNEURAGE. Origin
of fraudulent preference. By Section 44 of ally, the word was applied to that part of
the Bankruptcy Act, 1914 : the income of the King or seigneur which
“ (1) Every conveyance or transfer of was derived from the coinage of metal by
property, or charge thereon made, theMint. Since the year 1666 the coinage
every payment made, every obliga of gold has been free of charge. The word
tion incurred, and every judicial which common
is now the ly used to apply to the profit
Government makes on the manu
proceeding taken or suffered by any facture of silver and bronze coins. These
person unable to pay his debts as
they become due from his own coins are token money, and the value which
money in favour of any creditor, or is affixed to them by law is greater than the
of the metal of which they are com
of any person in trust for any credi value
tor, with a view of giving such posed, and it is from that difference that
creditor, or any surety or guarantor the profit is obtained. Although in the
for the debt due to such creditor, a actual coining of silver there is a consider
preference over the other creditors, able profit, that profit is utilised partly in
shall, if the person making, taking. maintaining the silver coinageof the country
paying or suffering the same is in a fit condition. (See BRASSAGE.)
adj udged bankrupt on a manis inSeft SEIZIN. Possession . (See
ruptcy petition presented within Livery or Seisin.)
three months after the date of mak By the Stamp Act, 1891 , the stamp duties
are :
ing, taking, paying or suffering the SEISIN. Instrument of seisin £ s . d.
same, be deemed fraudulent and
void as against the trustee in the given upon any charter, precept
bankruptcy. of clareconstat, or precept from
10 chancery, or upon any wadset,
(2) This Section shall not affect the rights heritable bond , disposition , ap
of any person making title in good prising, adjudication, or other
faith and for valuable consideration wise of any lands or heritable
through or under a creditor of the subjects in Scotland O 50
bankrupt.” And any NOTARIAL INSTRU
Another ground on which a security may
66
MENT to be expeded and
be objected to is where undue influence recorded in any register of
may have been exercised, as might occur in sasines . .
0 5 0
the case of a father, or mother, unduly SEIZED OF. In possession of.
pressing a son, or daughter, who has just SELLING OUT. If a purchaser on the
come of age and succeeded to an estate, to Stock Exchange fails to take up at the
give security to a banker for the father's, or appointed timethe securities which he agreed
mother's, overdraft. to buy, the seller can “sell out ” against
Share certificates and documents in him ; that is, he can instruct the Stock Ex
general representing money's worth are change official broker to sell the securities,
often referred to as securities,” e.g. and any loss which arises must be paid by
Securities for safe custody.” the purchaser. (See BUYING IN.)
A banker may have a lien on certain SEN. (See FOREIGN MONEYS- JAPAN .)
securities in his hands belonging to a SEQUESTRATION. In Scotland a decree
customer. (See LIEN . ) of sequestration is equivalent to an adjudica
Information regarding the various forms tion of bankruptcy in England.
of securities, and the charges, etc. , will be The word is also applied to the placing
found under the respective headings . (See of a property , about which there is a dispute,
ADVANCES, AMERICAN RAILROAD CERTIFI- in the hands of a third party until the dispute
CATES , BEARER BONDS , BILL OF LADING, is settled .
BILL OF SALE, BOND OF CREDIT , CERTIFI- SET, BILL IN A. (See BILL IN A SET.)
cate , COLLATERAL SECURITY, DEBENTURE , SET OFF. In the absence of any arrange
DEBTS - ASSIGNMENT OF, Dock WARRANT , ment, or understanding, to the contrary , a
GUARANTEE , INSCRIBED Stock , banker has the right to set off a debt owing
Goods ,
LIPB Policy, NEGOTIABLE INSTRUMENTS, by him to a customer against a debt owing
574
SET ] DICTIONARY OF BANKING
by the customer to the banker. For ex-
ample, if a customer has two accounts in his
own name, one entitled No. 1 account, which
is in credit, and the other No. 2 account,
which is in debit, the banker may hold the
credit balance (or so much of it as is neces-
sary ) against the debit balance. But where
a customer has several accounts, the banker
cannot treat as a set off any balance which
he knows is held in a fiduciary capacity. appropriated in reduction of a debt due
An account in the name of “ John Brown ac to the bank on another account without
Trustee of J. Jones ” or “ John Brown a% the customer's knowledge and consent,
Churchwardens," or in any other similar form ,
is clear evidence that the money does not
belong to John Brown and therefore cannot
be used by a banker to liquidate a debt due
from Brown, but accounts which are named
John Brown % House ” or “ ac Farm ,”
or such like terms, to distinguish Brown's
own affairs, may be consolidated .
Where a customer has a private account
and an account earmarked as a trust
account, a credit balance on the latter
cannot, as already stated , be taken as a
set -off to a debit balance on the former.
But if the trust account is overdrawn , the
customer is personally liable, and his private
account balance may be used as a set- off
to the overdraft ; the banker, however,
would have to give reasonable notice before
combining such accounts . ( Questions on
Banking Practice ; opinion of Sir John
Paget . )
It is to be noted that a debt which is not
yet due cannot be the subject of a set-off.
A set -off must be in respect of an actual,
immediately recoverable debt. See under
GARNISHEE ORDER .
Where a loan of a lump sum is granted
on a loan account, against security, and
that sum is placed at once to the credit of
the customer's current account in order that
it may be drawn against at his convenience,
the customer is entitled to draw out the
whole of that amount . The banker cannot,
without giving notice, combine such accounts .
There are grave doubts whether event notice
would entitle a banker to combine them .
“ Unless the customer does something to
change the position, such as, for instance,
giving a second mortgage over the same
security, no notice can touch the current
account or stop the customer drawing on
it, your remedy is on the loan or by realising
the securities . ' ( Gilbart Lectures , 1913, Sir
John Paget . )
A credit account at one branch may
if not contrary to custom or agreement, be
[ SET
taken as a set off against a debt owing by the
same customer at another branch .
Where accounts have been running with
out any right to set off being exercised ,
reasonable notice should, as a rule, be given
before acting upon the right.
Where an agreement existed between a
bank and its customer that moneys standing
to the credit of one account should not be
it was held that the agreement is terminated
by the liquidation of the customer. ( British
Guiana Bank v. Official Receiver, 1911 ,
104 L.T. 754.)
1
In the case of a solicitor having a private
account and an office account, it has been
held (T. & H. Greenwood Teale v. William
Williams , Brown & Co. , 1894, 11 T.L.R. 56)
that the one may be set off against the
other, even though the money in the office
account may really belong to his clients .
(See SolicitORS ' ACCOUNTS . ) The accounts
of stock brokers and auctioneers may also be
combined .
The credit balance on a partner's private
account cannot be taken as a set off to aa debt
on the firm's account (Watts v . Christie ,
1849, 11 Be. 546) ; but if the customer is
the sole partner then his private account
balance may be held against a debt on the
account in the firm's name, and, conversely,
a credit on the firm's account against the
private account. If, however, the banker
holds an undertaking from the partners
agreeing to be jointly and severally liable
for any debt on the firm's account, he
would then have the right to set off any
credit balance on a partner's separate
account against a debt on the firm's account.
(See PARTNERSHIPS .)
A customer's deposit receipt may be held
against a debt due from him .
A balance on an executor's account cannot
be transferred by a banker to clear off an
overdraft on the deceased's account , nor a
credit on the latter account to clear off a
debit on the former. A cheque or order
from the executor is necessary in order to
effect such a transfer .
Apart from an agreement to the contrary ,
no right of set off exists between a cus
tomer's private account and any joint
account in which his name appears. If the
parties to the joint account have agreed to
be jointly and severally liable for a debt
on that account, a credit balance on the
575
SET) DICTIONARY OF BANKING (SET

separate accounts would form a set off. In the may be vested in trustees, but it is not
case of the accounts of a Local Authority, legally necessary, as limited estates in land
a credit on one account cannot be held as are recognised by the law .
a set off to a debit on another account. The Married Women's Property Act, 1882,
(See LOCAL AUTHORITIES.) Section 19, provides that nothing in this
Where the balance, or part of it, on a Act shall interfere with any settlement
customer's credit account is to be regarded respecting the property of any married
as a security for an advance to the customer woman, or interfere with or render inopera
on another account, or for an advance to tive any restriction against anticipation
another customer, an agreement not to attached to the enjoyment of any property
reduce the balance below the amount agreed or income by a woman under a settlement.
upon should be signed. (See LIEN LETTER .) But by the Act of 1907, Section 2, a settle
It has been held (Hawkins v. Whitten , ment made after the commencement of this
1829, 10 B. & C. 217) that a customer, who Act respecting the woman's property shall
is indebted to a bank, has, in the event of not be valid unless it is executed by her if
the bank stopping payment, a rightto set off she is of full age, or confirmed by her after
against his debt any of the notes of the bank she attains full age.
which may be in his possession when he (See MARRIED WOMAN, RESTRAINT ON
received notice of an act of bankruptcy. ANTICIPATION .)
Section 31 of the Bankruptcy Act, 1914, When property which forms part of a
provides as follows : settlement is offered to a banker as security,
“ Where there have been mutual credits, reference should be made to a solicitor.
mutual debts or other mutual dealings, (See SETTLEMENTS_SETTLOR BANKRUPT.)
between a debtor against whom a receiving By the Stamp Act, 1891 , the stamp duty
order shall be made under this Act and any is
other person proving or claiming to prove SETTLEMENT. Any instrument, £ s. d.
a debtunder the receiving order, an account whether voluntary or upon any
shall be taken of what is due from the one good or valuable consideration,
party to the other in respect of such mutual other than a bonå fide pecuni
dealings, and the sum due from the one party ary consideration, whereby any
shall be set off against any sum due from definite and certain principal
the other party, and the balance of the sum of money (whether charged
account, and no more, shall be claimed or or chargeable on lands or other
paid on either side respectively ; but a person hereditaments or heritable sub
shall not be entitled under this Section to jects, or not, or to be laid out in
claim the benefit of any set -off against the the purchase of lands or other
property of a debtor in any casewhere he hereditaments or heritable sub
had , at the time of giving credit to the debtor, jects or not) , or any definite and
notice of an act of bankruptcy committed by certain amount of stock , or any
the debtor and available against him ." security, is settled or agreed to
Under the above Section a banker may, be settled in any manner what
in the event of his customer's bankruptcy, soever :
set -off a credit balance on the account For every £100, and also for
against the contingent liability on any bills any fractional part of £100,
he has discounted for the customer. The of the amount or value of
banker has the same right when a company the property settled or
is being wound up. agreed tobe settled 0 5 0
(See GARNISHEE ORDER: JOINT ACCOUNT , (Where any instrument is
LIEN .) chargeable both as a convey
SETTLEMENT. A settlement is an instru ance operating as a voluntary
ment which limits real or personal property, disposition inter vivos
or the enjoyment thereof, to several persons under Section 74 of the
in succession. It may be made by deed or Finance ( 1909-10 ) Act, 1910,
by will. A common example is the deed of and as a settlement, it shall be
settlement made by parties who are about charged with duty as a con
to marry veyance in accordance with
Personal property under a settlement that Section . See Convey
must be vested in trustees. Real property ANCE .)
576
SET) DICTIONARY OF BANKING
Exemption .
Instrument of appointment
relating to any propertyin
favour of persons specially
named or described as the
objects of a power of ap
pointment, where duty has
been duly paid in respect
of the same property upon
the settlement creating the
power or the grant of repre
sentation of any will or
testamentary instrument
creating the power.
And see Sections 104, 105,
and 106.
As to Settlement of Policy or Security.
“ 104. ( 1 ) Where any money which may
become due or payable upon any
policy of life insurance, or upon any
security not being a marketable
security , is settled or agreed to be
settled , the instrument whereby
the settlement is made or agreed to
be made is to be charged with ad
valorem duty in respect of that
money .
“ (2) Provided as follows :
“ (a ) Where, in the case of a policy,
no provision is made for
keeping up the policy, the
ad valorem duty is to be
charged only on the value
of the policy at the date of
the instrument :
“ (6) If in any such case the instru- | RUPT. Voluntary settlements by a person
ment contains a statement who subsequently becomes bankrupt are
of the said value, and is dealt with by Section 42 of the Bankruptcy
stamped in accordance with
the statement, it is, so far
as regards the policy , to
be deemed duly stamped ,
unless or until it is shown
that the statement is untrue,
and that the instrument is
in fact insufficiently stamped.
Settlements when not to be Charged as
Securities.
“ 105. An instrument chargeable with ad
valorein duty as a settlement in respect of
any money , stock, or security is not to be
charged with any further duty by reason of
containing provision for the payment or
transfer of the money, stock, or security , or
by reason of containing, where the money,
stock, or security is in reversion or is not
577
37- (1535)
( SET
paid or transferred upon the execution of
the instrument, provision for the payment,
by the person entitled in possession to the
interest or dividends of the money , stock , or
security, during the continuance of such
possession, of any annuity or yearly sum
not exceeding interest at the rate of four
pounds per centum per annum upon the
amount or value of the money, stock , or
security .
Where several Instruments one only to be
Charged with Ad Valorem Duty.
“ 106. ( 1 ) Where several instruments are
executed for effecting the settlement
of the same property, and the ad
valorem duty chargeable in respect
of the settlement of the property
exceeds ten shillings, one only of the
instruments is to be charged with
the ad valorem duty.
“ ( 2) Where a settlement is made in pur
suance of a previous agreement upon
which ad valorem settlement duty
exceeding ten shillings has been paid
in respect of any property, the
settlement is not to be charged with
ad valorem duty in respect of the
same property.
“ (3) In each of the aforesaid cases the
instruments not chargeable with ad
valorem duty are to be charged with
the duty of ten shillings.”
SETTLEMENT OF ACCOUNT. (See Pass
Book.)
SETTLEMENTS - SETTLOR BANK
Act, 1914 ::
Avoidance of certain Settlements .
“ ( 1 ) Any settlement of property, not
being a settlement made before and
in consideration of marriage, or
made in favour of a purchaser or
incumbrancer in good faith and for
valuable consideration, or a settle
ment made on or for the wife or
children of the settlor of property
which has accrued to the settlor
after marriage in right of his wife,
shall, if the settlor becomes bank
rupt within two years after the date
of the settlement, be void against
the trustee in the bankruptcy, and
shall, if the settlor becomes bank
rupt at any subsequent time within
SET] DICTIONARY OF BANKING (SET

ten years after the date of the settle · (b) that at the date of the pay
ment, be void against the trustee in ment or transfer the settlor
the bankruptcy, unless the parties was able to pay all his debts
claiming under the settlement can without the aid of the money
prove that the settlor was, at the so paid or the property so
time of making the settlement, able transferred ; or
to pay all his debts without the aid (c) that the payment or transfer
of the property comprised in the was made in pursuance of a
settlement, and that the interest of covenant or contract to pay
the settlor in such property passed or transfer money or pro
to the trustee of such settlement perty expected to come to
on the execution thereof. the settlor from or on the
death of a particular person
(2) Any covenant or contract made by named in the covenant or
any person (hereinafter called the contract and was made
settlor) in consideration of his or within three months after
her marriage, either for the future the money or property came
payment of money for the benefit
into the possession or under
of the settlor's wife or husband, or the control of the settlor :
children , or for the future settlement but, in the event of any such pay
on or for the settlor's wife or husband ment or transfer being declared void,
or children , of property, wherein the persons to whom it was made
the settlor had not atthe date of the shall be entitled to claim for divi
marriage any estate or interest, dend under or in respect of the
whether vested or contingent, in
covenant or contract in like manner
possession or remainder, and not as if it had not been executed at the
being money or property in right of commencement of the bankruptcy.
the settlor's wife or husband, shall, “ (4 ) ' Settlement'shall, for the purposes
if the settlor is adjudged bankrupt of this Section , include any convey
and the covenant or contract has
not been executed at the date of the ance or transfer of property." (See
BANKRUPTCY .)
commencement of his bankruptcy, In ve Hart ; ex parte Green v . Hart &
be void against the trustee in the Lomas
bankruptcy, except so far as it en made a (voluntary
1912, 107 L.T. 368) , a bankrupt
transfer of shares to his
ables the orcontract
covenant persons entitled
to under
claim the
for daughter within two years before his bank
ruptcy. After he had committed an avail
dividend in the settlor's bankruptcy able act of bankruptcy the daughter trans
under or in respect of the covenant ferred the shares toa bona fide purchaser for
or contract, but any such claim to value who had no notice of the act of bank
dividend shall be postponed until
all claims of the other creditorsfor ruptcy. Cozens-Hardy, M.R. , in the course of
his judgment ,said: “It has beendecided that
valuable consideration in money or the word ' void'in Section 42 must be con
money's worth have been satisfied .
strued as meaning ' voidable, ' and not
( 3) Any payment of money (not being ' absolutely void ,' and that a bona fide
payment of premiums on a policy purchaser for value from the voluntary
of life assurance) or any transfer of donee who has derived title to the property
property made by the settlor in before the date of the commencement of the
pursuance of such a covenant or bankruptcy has a good title against the
contract as aforesaid shall be void trustee in bankruptcy."
against the trustee in the settlor's SETTLING DAYS. The days upon which ,
bankruptcy, unless the persons to according to the rules of the Stock Exchange,
whom the payment or transfer was the transactions for the accounts are
made prove either arranged and settled .
" (a) that the payment or transfer In the case of most securities dealt in on
was made more than two the London Stock Exchange there are two
years before the date of the settlements in each month, one about the
commencement of the bank- middle and the other near the end, but for
ruptcy ; or Consols and other British Government and
578
 SEV] DICTIONARY OP BANKING (SHA

Colonial Government stocks there is only amount of share capital with which the
one, near the beginning of the month. company proposes to be registered , and the
When stock transactions are done “ for division thereof into shares of a fixed amount.
the account ” it means that payment must (See MEMORANDUM OF ASSOCIATION .)
be made on the next settling day ; dealings
. )
There are special provisions with regard
“ for cash ," however, or “ for money have to the sale and transfer of bank shares. (See
to be completed by payment at once, LEEMAN's Act.)
irrespective of any regular settling day. Shares are known by various names, such
Each Stock Exchange settlement requires as preference, guaranteed, ordinary, de
three days ; the first is known as Contango ferred , founders' shares and other varieties.
day (or Continuation, or Carrying -over day. The rights of each class of share depend upon
or Making -up day) (see CONTANGO ); the the provisions in the memorandum and
second is Name or Ticket day (see TICKET articles of association, or in special resolu
DAY) ; the third Pay day, i.e. settling day tions of the company. The rights attaching
proper (see Pay Day) . For mining securities to a certain class of shares in one company
there is an additional day, called “ mining are not necessarily the same as those in
Contango ” day. another company. (See Section 39, Com
The settling (pay) day on which securities panies (Consolidation) Act, 1908, given
bought or sold are due to be settled for, is below .)
usually shown on the broker's contract note . If authorised by its articles, a company
Securities payable to bearer are handed limited by shares may convert its paid -up
over on the settling day. Ten days are shares into stock . (See Section 41 , below .)
allowed in which to complete the delivery This is the only way in which it can create
of registered securities ; but if not delivered stock. Shares are,practically, divisions of
within that time the stock or shares may be stock in fixed amounts, and a shareholder
" bought in " through the official buying-in obtains so many of those divisions, but a
department, and the loss must be borne by stockholder may obtain any ually ev £ s)
the seller . (See SPECIAL SETTLEMENT, STOCK amount of the stock ; for example, a share
EXCHANGE . ) may be for £1 , £ 5, £ 10, £ 20, £100 and such
SEVERALTY. Where a person holds an like amounts, each share bearing a distinct
estate in severalty he holds it entirely in his number ; whereas a holding of stock may
own right, without being joined in interest be for £70 or for any amount, and without
with any other person. (See COPARCENERS, any distinguishing number. In an ordinary
. Joint Tenants, TENANTS IN COMMON .) limited company, transfers of stock are
SHAHIS. (See FOREIGN MONEYS – PERSIA .) | generally. for convenience, restricted to
SHAREBROKER . (See STOCKBROKER.) certain round sums. In Consols, a transfer
SHARE CAPITAL . SHARES. A share is may be for any odd amount, e.g.
the right which a member of a company has £ 33 16s. 11d.
to a certain proportion of the capital, the Before an official quotation on the London
capital being the total fund contributed by Stock Exchange can be obtained for stocks
the members. On the other hand, he is and shares, the certificates must conform to
liable for any unpaid balance there may be certain regulations of the committee. (See
on the shares he holds . Directors usually QUOTATION ON LONDON STOCK EXCHANGE.)
have power to decline to register any transfer In the case of a new company, before a
of shares, not being fully -paid shares, to a special settlement for the bargains for sales
person of whom they do not approve, and and purchases of shares can be fixed, various
also to decline to register any transfer of documents and particulars must be sent
shares on which the company has a lien. to the Secretary of the Share and Loan
(See TRANSFER OF SHARES.) In the case of Department. (See SPECIAL SETTLEMENT.)
a married woman, it is necessary to ascer- If certificates of shares are deposited as
tain whether she has a free separate estate security without any document of charge,
or not, because if she has no separate estate it constitutes an equitable mortgage, and the
there is no remedy against her personally. banker has the right to apply to the Court
An infant should not be registered as a for power to sell. In some cases a memo
shareholder, because he can at any time randum of deposit is taken with certificates,
during his minority repudiate the shares. and notice given to the company, but
The memorandum of association of a com- without a transfer of the shares the banker
pany limited by shares must state the cannot sell, though he can apply to
579
SHA ) DICTIONARY OP BANKING ( SHA

the Court for power to do so if the interest of any member in a com

customer refuses to give a transfer when pany shall be personal estate, trans
requested. ferable in manner provided by the
Some bankers take a blank transfer ; that articles of the company, and shall
is, a transfer with the space for the trans not be of the nature of real estate.
feree's name left blank, or it may be un- “ (2) Each share in a company having a
dated. If default is made in payment, the share capital shall be distinguished
banker fills up the blanks and registers the by its appropriate number.
shares in his own name or the names of “ 23. A certificate, under the common seal
nominees. The most satisfactory way, of the company, specifying any shares or
however, is to take a completed transfer of stock held by any member, shall be primå
the shares and have them registered at once. facie evidence of the title of the member to
When a transfer is taken it is usually accom- the shares or stock.
panied by an agreement qualifying the “ 24. ( 1 ) The subscribers of the memo
transfer, and declaring that the transfer has randum of a company shall be
been given merely by way of security. deemed to have agreed to become
In taking shares as a security, a banker members of the company, and on
will note whether they are fully paid up, or its registration shall be entered as
only partly paid, though certificates do not members in its register of members.
always show how much is paid up per share. " (2) Every other person who agrees to
If there is a large liability it would be unwise become a member of a company,
to register in the bank's name, or the names and whose name is entered in its
of its nominees. If the completed transfer register of members, shall be a
is held, without registration , the owner will member of the company."
remain liable for any calls that may be made,
and so long as the banker holds the certifi “ 27. No notice of any trust, expressed,
cate and transfer he has a security which implied, or constructive, shall be
he can complete by registration when entered on the register, or be receiv
required, and if notice has been given to the able by the registrar, in the case of
company it would be difficult for anyone to companies registered in England or
get registered in front of him . The com Ireland."
pany, however, may have a lien upon its Power of Company to Arrange for Different
shares for any debt due from the shareholder amounts being paid on Shares.
to the company. (See LIEN . ) If the regis “ 39. A company, if so authorised by its
tered holder of shares should prove to be
merely a trustee, or a nominee of the true articles, may do any one or more of the
owner, the banker, who takes the certificate following things ; namely :
as security for an advance to the registered “ (1) Make arrangements on the issue of
holder, may have to surrender the certificate shares for a difference between the
if the true owner intervenes before the shareholders in the amounts and
banker has had the shares registered in his times of payment of calls on their
own name . But when the banker, without shares :
notice of any prior equitable charge, has “( 2) Accept from any member who assents
been registered he obtains the legal title to thereto the whole or a part of the
the shares. (See TRANSFER OF SHARES.) amount remaining unpaid on any
In most cases a certificate must be sur shares held by him , although no
rendered before a transfer of the shares can part of that amount has been called
be effected, but this is not an absolute up ;
protection to a banker, as it has been held “ ( 3) Pay dividend in proportion to the
that a foot-note upon a certificate to the amount paid up on each share where
effect that no transfer of the shares will be a larger amount is paid up on some
effected without production of the certifi shares than on others .
cate does not constitute a contract and
is not binding on the company . (See Power to Return Accumulated Profits in
CERTIFICATE .) Reduction of paid-up Share Capital.
The Companies (Consolidation) Act, 1908, “ 40. ( 1 ) When a company has accumu
provides as follows : lated a sum of undivided profits,
" Section 22 . ( 1 ) The shares or other which with the sanction of the
580
SHA) DICTIONARY OF BANKING ( SHA

shareholders may be distributed be given of any consolidation of share

among the shareholders in the form capital, conversion of shares into stock, etc.
of a dividend or bonus, it may, by (Section 42. )
special resolution , return the same,
or any part thereof, to the share- Re- organisation of Share Capital.
holders in reduction of the paid-up " 45. ( 1 ) A company limited by shares
capital of the company , the unpaid may, by special resolution confirmed
capital being thereby increased by by an order of the Court, modify the
a similar amount. conditions contained in its memor
andum so as to re -organise its share
Power of Company limited by Shares to Alter capital, whether by the consolida
its Share Capital. tion of shares of different classes or
" 41. ( 1 ) A company limited by shares, if by the division of its shares into
so authorised by its articles, may shares of different classes :
alter the conditions of its memor “ Provided that no preference or
andum as follows (that is to say), it special privilege attached to or
may : belonging to any class of shares
“ (a) increase its share capital by shall be interfered with except by a
the issue of new shares of resolution passed by a majority in
such amount as it thinks number of shareholders of that class
holding three -fourths of the share
expedient ; capital of that class and confirmed
“ (5) consolidate and divide all or at a meeting of shareholders of that
any of its share capital into class in the same manner as a
shares of larger amount than special resolution of the company is
its existing shares ; required to be confirmed, and every
" (c) convert all or any of its resolution so passed shall bind all
paid -up shares into stock , shareholders of the class ."
and reconvert that stock A limited company may , by special
into paid -up shares of any resolution , determine that any part of its
denomination ;
share capital which has not already been
“ (d) subdivide its shares, or any of called up shall not be capable of being
them , into shares of smaller called up, except for the purposes of the
amount than is fixed by the company being wound up. (Section 59, see
memorandum, so, however, RESERVE LIABILITY.)
that in the subdivision the A limited company cannot purchase its
proportion between the own shares without the sanction of the
amount paid and the amount court.
if any, unpaid on each There is usually a provision in a com
reduced share shall be the pany's articles of association that if a share
same as it was in the case of holder fails to pay any call, the company
the share from which the shall have power to forfeit and sell the
reduced share is derived ; shares in such manner as they think fit.
" (e ) cancel shares which, at the (See LIEN.)
date of the passing of the A provision to forfeit shares for failure
resolution in that behalf, to pay a debt due (otherwise than in respect
have not been taken or of the shares themselves) by the shareholder
agreed to be taken by any to the company, has been declared invalid
person , and diminish the on the grounds that its exercise would
amount of its share capital amount to a reduction of capital, which
by the amount of the shares would be illegal unless sanctioned by the
so cancelled . court. (See LIEN . )
Where shares are held by trustees upon
“ (2) The powers conferred by this Section a trust of which the company had notice,
with respect to subdivision of the company cannot exercise its lien by
shares must be exercised by special selling the shares in order to recover a debt
resolution .” due to it by one of the trustees . See under
Notice to the registrar of companies must LIEN .
581
SHAJ DICTIONARY OF BANKING (SHA

In addition to the fees to be paid, by a be taken back at the price at which they
company having a share capital, to the were acquired.
registrar of companies, as provided by the An arrangement of this kind enables the
Companies (Consolidation) Act, 1908 (see members of the staff to build up capital for
FEES PAYABLE TO REGISTRAR OF COMPANIES), themselves and to add to their incomes,
there is a duty of one pound (increased from and at the same time gives them a stake
5s. to £ 1 by the Finance Act, 1920) , on in the business.
every £ 100 of the nominal share capital. SHARE WARRANT. A share warrant
(See BLANK TRANSFER, CALLS, COMPANIES, to bearer entitles the holder of it to the fully
HOLDING OUT, LEEMAN'S Act, REDUCTION paid -up shares or stock named therein, and
OF SHARE CAPITAL, STOCK, TRANSFER OF the ownership is transferred by simply
SHARES .) handing the warrant to the purchaser .
SHARE CERTIFICATE . (See CERTIFI- A company limited by shares may issue
CATE .) share warrants to bearer, in accordance
SHAREHOLDERS' LEDGER. This book, with the regulations contained in Section 37
commonly called the share ledger," con- of the Companies (Consolidation) Act,
tains practically the same information as is 1908 :
contained in the register. (See REGISTER “ (1 ) A company limited by shares, if
OF MEMBERS OF COMPANY.) An account is so authorised by its articles, may,
opened in the ledger for each shareholder, with respect to any fully paid -up
two accounts often appearing on one page, shares, or to stock, issue under
showing on the one side thenumber of shares, its common seal a warrant stating
date when acquired, the distinctive numbers, that the bearer of the warrant is
the amount per share and total amount of entitled to the shares or stock
capital paid, and a reference to the account therein specified, and may provide,
of the shareholder from whom they were by coupons or otherwise, for the
acquired, and on the other side the date of payment of the future dividends on
any transfer, a reference to the transferee's the shares or stock included in the
account, the numbers of the shares and warrant, in this Act termed a share
total amount of capital transferred . Col warrant.
umns are sometimes added to show the “ (2) A share warrant shall entitle the bearer
balance of shares and capital. Particulars thereof to the shares or stock therein
of any lien , or instructions regarding the specified , and the shares or stock
payment of dividends, or other matters may be transferred by delivery of
affecting any shareholder are entered at the the warrant.
heading of his account. " (3) The bearer of a share warrant shall,
SHAREHOLDERS' REGISTER . A book subject to the articles of the com
ruled to show the names of shareholders, pany, be entitled , on surrendering
their addresses and occupations, quantity of it for cancellation , to have his name
shares held, date when acquired , amount entered as a member in the register
paid up, distinctive numbers of the shares, of members; and the company shall
dates of transfers and the numbers of the be responsible for any loss incurred
shares transferred . by any person by reason of the
For further information and the Sections of company entering in its register the
the Companies (Consolidation ) Act, 1908, name of a bearer of a share warrant
regarding the register, see REGISTER of in respect of the shares or stock
MEMBERS OF COMPANY. therein specified without the warrant
SHARES . (See SHARE CAPITAL.) being surrendered and cancelled .
SHARES FOR STAFF. A special class " (4) The bearer of a share warrant may,
of shares may be issued by a bank to if the articles of the company so
permanent members of the staff who have provide, be deemed to be a member
been more than a certain number of years of the company within the meaning
in the service . The shares may be issued of this Act, either to the full extent
at par on the understanding that the mem or for any purposes defined in the
bers will be allowed to hold them while in articles ; except that he shall not
the bank's service (during which time they be qualified inrespect of the shares
will receive full dividends) and at the or stock specified in the warrant for
termination of their service the shares will being a director or manager of the
582
SHA ] DICTIONARY OF BANKING (SHI

company, in cases where such a Given under the Common Seal of the
qualification is required by the Company in London this day of
articles. 19 .
• (5) On the issue of a share warrant the Secretary. Chairman .
company shall strike out of its A sheet of coupons for the payment of
register of members the name of the the interest is attached to the warrant.
member then entered therein as If there are no coupons, the share warrant
holding the shares or stock specified requires to be presented in order to claim
in the warrant as if he had ceased the dividend .
to be a member, and shall enter in By the Stamp Act, 1891 :
the register the following particulars SHARE WARRANT and STOCK CERTIFICATE
namely : to bearer. A duty of an amount equal
(i) The fact of the issue of the to three times the amount of the ad
warrant ; valorem stamp duty which would be
“ ( ii) A statement of the shares or chargeable on a deed transferring the
stock included in the war- share or shares or stock specified in the
rant, distinguishing each warrant or certificate if the consideration
share by its number ; and for the transfer were the nominal value
(iii) The date of the issue of the of such share or shares or stock (that is,
warrant. by Finance Act, 1920, £ 3 per cent. on the
“ (6) Until the warrant is surrendered, the nominal value of the shares ).
above particulars shall be deemed The penalty for issuing unstamped share
to be the particulars required by warrants or stock certificates to bearer is £50.
this Act to be entered in the register Where the holder of a certificate to bearer
of members ; and, on the surrender, is entered on the register as the owner of
the date of the surrender must be the share or stock the certificate must be
entered as if it were the date at cancelled so as to be incapable of being re
which a person ceased to be a issued . (Section 109, Stamp Act, 1891.)
member." By Section 5 of the Finance Act, 1899, the
A share warrant to bearer has been held stamp duty shall extend to any instrument
by mercantile usage to be a negotiable instru- to bearer issued by or on behalf of any
ment. As it is transferable by mere delivery, company or body of persons in the United
the simple pledge of a share warrant, without Kingdom and having a like effect as a share
any transfer form , is all that is required to warrant or stock certificate to bearer.
give a banker a security, buta memorandum See Section 6 of the same Act, and Section
or agreement under hand ( stamp, 60.) | 38, Finance Act, 1920, under MARKETABLE
should be signed by the person depositing SECURITY,. (See COMPANIES, MARKETABLE
such a warrant as security, to show quite SECURITY, SHARE CAPITAL, STOCK CERTIFI
clearly the reason why it has been deposited. CATE TO BEARER .)
Where a share warrant to bearer is pur- SHILLING. This coin has varied con
chased in good faith and without notice that siderably in value at different times. А
it has been stolen, the purchaser obtains a coin of that name was first issued in 1504 .
title to it, even
complete stolen though the warrant In 1560 a pound troy of silver was coined
had been by the person who sold it. into sixty shillings. In 1600 it was coined
The following is a specimen of a share into sixty -two shillings, and by Act 56
warrant to bearer : George III it was ordered to be coined into
COMPANY, LIMITED . sixty -six shillings out of a pound troy of
Share Capital silver of the fineness of eleven ounces two
£ in shares of £10 each. pennyweights of fine silver and eighteen
pennyweights of alloy in every pound weight
SHARE WARRANT TO BEARER troy. The standard weight of a shilling is
for ten shares, of £ 10 each. 87.27272 grains troy , and its standard
This is to certify that the bearer of this fineness thirty -seven -fortieths fine silver,
three-fortiethsalloy ; altered by the Coinage
warrant is the proprietor of ten fully paid -up
shares No. to of Ten pounds
Act, 1920, to one-half fine silver, one-half
sterling each in the Company, alloy . (See COINAGE.)
Limited , subject to the Articles of Associa- SHIP -MORTGAGE , ETC. Every British
tion of the Company. ship shall, unless exempted from registry,
583
SHI) DICTIONARY OF BANKING ( SHI

be registered under the Merchant Shipping A purchaser of a registered British vessel

Act, 1894 . Ships not exceeding 15 tons does not obtain a complete title until the
burden employed solely in navigation on bill of sale has been recorded at the port
the rivers or coasts of the United Kingdom , of registry of the ship ; and neglect of this
are exempt from registry under the Act. precaution may entail serious consequences.
The chief officer of customs shall be the A registrar shall indorse on the bill of sale
registrar of British ships at any port in the the fact of the registration with the day and
United Kingdom , or Isle of Man, approved hour thereof.
by the Commissioners of Customs for the In addition to the above provisions of the
registry of ships. Merchant Shipping Act, 1894, the following
When registered, the registrar shall grant Sections regulate mortgages of a ship or
a certificate of registry. The certificate of shares therein :
registry shall be used only for the lawful
navigation of the ship, and shall not be Mortgage of Ship or Share.
subject to detention by reason of any title, " 31. ( 1 ) A registered ship or a share
lien , charge or interest by any owner, therein may be made a security for
mortgagee or other person . a loan or other valuable considera
The property in a ship is divided into tion, and the instrument creating
sixty - four shares. the security (in this Act called a
A person is not entitled to be registered as mortgage) shall be in the form
owner of a fractional part of a share, but any marked B in the first part of the first
number of persons not exceeding five may schedule to this Act, or as near
be registered as joint owners of a ship or of thereto as circumstances permit,
any share therein . and on the production of such instru
A corporation may be registered as owner ment the registrar of the ship's port
by its corporate name. of registry shall record it in the
A registered ship or a share therein (when register book.
disposed of to a person qualified to own a " (2) Mortgages shall be recorded by the
British ship) shall be transferred by bill of registrar in the order in time in
sale . which they are produced to him for
The bill of sale must be in the form as that purpose, and the registrar
specified by the Merchant Shipping Act, shall by memorandum under his
1894. The form provides for a full descrip hand notify on each mortgage that
tion of the ship, particulars of tonnage, etc., it has been recorded by him , stating
and continues : the day and hour of that record .
(“ I ” or “ we ” ] in consideration of the
sum of paid to (" me ” or us " ] Entry of Discharge of Mortgage.
by the receipt whereof is hereby " 32. Where a registered mortgage is dis
acknowledged, transfer shares in the charged, the registrar shall, on the produc
ship above particularly described, and in her tion of the mortgage deed, with a receipt
boats, guns, ammunition , small arms, and for the mortgage money indorsed thereon,
appurtenances, to the said duly signed and attested, make an entry in
Further [“ I ” or we ” ] the said the register book to the effect that the mort
for [“ myself and my or ourselves and gage has been discharged, and on that entry
our " ] heirs covenant with the said being made the estate (if any) which passed
and [ “ his," " her, " or their " ] assigns to the mortgagee shall vest in the person in
that (“ I ” or we " ] have power to transfer whom (having regard to intervening acts
in manner aforesaid the premises herein and circumstances, if any) , it would have
before expressed to be transferred, and that vested if the mortgage had not been made.
the same are free from incumbrances ( if
there be any mortgage add “ save as appears Priority of Mortgages.
by the registry of the said ship " ). “ 33. If there are more mortgages than one
In witness whereof ha hereunto registered in respect of the same ship or
subscribed name and affixed share, the mortgagees shall, notwithstanding
seal this day of one thousand any express, implied, or constructive notice,
be entitled in priority, one over the other,
Executed by the above-named according to the date at which each mortgage
in the presence of is recorded in the register book , and not
584
SHI) DICTIONARY OF BANKING ( SHI

according to the date of each mortgage accompanied by the like evidence as is by

itself. this Act required in case of a corresponding
Mortgagee not Treated as Owner. transmission of the ownership of a ship or
share. On receipt of the declaration and the
“ 34. Except as far as may be necessary for production of the evidence the registrar shall
making a mortgaged ship or share available register the person entitled as mortgagee.
as
a security for the mortgage debt, the The prescribed form of mortgage (see
mortgagee shall not by reason of the mort Section 31, above) to secure an account
gage be deemed the owner of the ship or current is as follows :
share, nor shall the mortgagor be deemed [ Insert description of ship and particulars
to have ceased to be owner thereof. as in Bill of Sale .]
Mortgagee to have Power of Sale . Whereas (here state by way of recital
" 35. Every registered mortgagee shall have that there is an account current between
power absolutely to dispose of the ship or the mortgagor (describing him ) and the
share in respect of which he is registered, and mortgagee (describing him) ; and describe
to give effectual receipts for the purchase the nature of the transaction so as to show
money ; but where there are more persons how the amount of principal and interest due
than one registered as mortgagees of the at any given time is to be ascertained, and
same ship or share, a subsequent mortgagee theNow
manner and time of payment).
shall not, except under the order of a court (“ I ” or “ we " ] the undersigned
of competent jurisdiction, sell the ship or in consideration of the premises
share without the concurrence of every prior for (“ myself ” or “ ourselves "') and (“ my ”
mortgagee.
or our " ] heirs, covenant with the said
and ( “ his or their "') assigns,
Mortgage not Affected by Bankruptcy. to pay to him or them the sums for the time
"36. A registered mortgage of a ship or being due on this security, whether by way
share shall not be affected by any act of of principal or interest, at the times and
bankruptcy committed by the mortgagor manner aforesaid . And for the purpose of
after the date of the record of the mortgage, better securing to the said the
notwithstanding that the mortgagor at the payment of such sumsas last aforesaid (“ I ”
commencement of his bankruptcy had the or we "'] do hereby mortgage to the said
ship or share in his possession, order or shares, of which [ " I am "
disposition, or was reputed owner thereof, Or we are " '] the owner in the ship
and the mortgage shall be preferred to any above particularly described , and in her
right, claim or interest therein of the other boats, guns, ammunitions, small arms, and
creditors of the bankrupt or any trustee or appurtenances .
assignee on their behalf.” Lastly, ("“ I " or " we " ) for (" myself
or ourselves " ] and (“ my ” or our " ]
Transfer of Mortgages. heirs, covenant with the said and
The main provisions of Sections 37 and 38 (“ his ” or “ their "') assigns that (" I " or
are : we”] ha r gage
powe to mort in manner
A registered mortgage of a ship or share aforesaid the above-mentioned shares , and
may be transferred to any person, and the that the same are free from incumbrances
instrument effecting the transfer shall be in (if any prior incumbrance add , “ save as
the prescribed form, or as near thereto as appears by the registry of the said ship ” ).
circumstances permit . On production of In witness whereof ha hereto
such instrument the registrar shall record it subscribed name and affixed
in the register and notify the fact on the seal this day of one
instrument of transfer . thousand nine hundred and
Where the interest of a mortgagee is Executed by the above -named
transmitted on marriage, death, or bank- in the presence of
ruptcy, or by any lawful means, other than The prompt registration of a mortgage
by a transfer under this Act, the transmis- deed at the port of registry of the ship is
sion shall be authenticated by a declaration essential to the security of the mortgagee,
of the person to whom the interest is trans- as a mortgage takes its priority from the date
mitted , containing a statement of the manner of registration, not from the date of the
in which and the person to whom the instrument. A record of the registration is
property has been transmitted , and shall be notified on the mortgage, e.g. Registered
585
SHI] DICTIONARY OF BANKING
4th day of April, 19 ... , at 10 a.m., J. Brown,
Registrar of Shipping, Before
taking a mortgage, a banker should inspect
the register (fee 1s.) to see whether any
prior charge has been registered.
A transfer of mortgage, to be indorsed on
the original mortgage, is as follows :
[ “ I ” or “ we ' ] the within -mentioned
in consideration of this day
paid to [“ me ” or “ us ” ) by hereby
transfer to (“ him ” or them " ] the benefit
of the within -written security . In witness
whereof ( etc., as above).
When aa mortgage is paid off, the following
memorandum of its discharge may be
indorsed on the mortgage :
Received the sum of in dis-
charge of the within -written security. Dated
at this day of 19
Witness
of
A banker may insert, as the sum received
in discharge of the mortgage, a nominal
amount of, say, five shillings. When the
discharge is registered, the mortgage is
marked: " Discharge registered 10th day of
May, 19 ..., at 3 p.m., J. Brown, Registrar
of Shipping,
The Commissioners of Customs may ,
with the consent of the Board of Trade,
make such alterations in the prescribed
forms as they may deem requisite. (Section
65.) The forms can be obtained from the
registrar at any port of registry.
No notice of any trust, express, implied,
or constructive shall be entered in the
register book. (Section 56.)
Any register book may be inspected on
payment of a fee not exceeding one shilling .
(Section 64. )
Any instruments used with regard to the
registry, ownership and mortgage of a
British ship are exempt from stamp duty.
(Section 721.) (See STAMP DUTIES, General
Exemption , No. 2.)
When a banker takes a mortgage upon a
ship the policy of insurance shouldbe left in
his possession, and it is better that it should
be in the bank's name . In some cases , how-
ever , it is sufficient if a letter is given by
the customer stating that he holds the policy
on behalf of the bank .
A banker should make quite certain that
the premiums are duly paid. When the
premiums are payable quarterly, the brokers
of the underwriters will require to hold the
policy, and in that case a letter should be
taken from the brokers stating that they
586
(SHI
hold the policy ( subject to their claim for
the amount of any quarterly premiums
remaining unpaid ), on behalf of the bank ,
and undertaking to advise the bank of any
premiums which fall due and are not paid .
The policy should not be in a mutual society
if the banker has to accept liability for calls.
(See MutuAL INSURANCE .) In taking policies,
the banker should inquireas to liabilities and,
generally , as to the nature of the policies .
It is very essential that a steamer should
be entered by the owner in a Protection ,
Club for the risks of protection , indemnity
and defence, and be insured up to £ 8 per
ton on her gross registered tonnage against
liability for damage that may be done by
the boat to other vessels. A banker should
satisfy himself that this important matter
has been attended to by the owner.
The mortgage should, as stated above, be
registered at once. If there is a bill of sale
in the customer's possession, it is usual to
have it lodged , as it is useful to supply the
particulars required for the mortgage, but
the banker's security is obtained by regis
tration of the mortgage. There is no value
in the bill of sale itself, as, upon a sale or
mortgage, it is not required bythe registrar.
A mortgage, by a company, of a ship does
not require registration under the Companies
(Consolidation) Act, 1908. Registration
under the Merchant Shipping Act, 1894, is
all that is required .
Debentures charged on ships do not
require registration under the Companies
(Consolidation ) Act, 1908, but the mortgage
of the ships securing the debentures requires
registration , as already stated , under the
Merchant Shipping Act.
When a banker receives notice of a
second registered mortgage upon the ship
over which he already holds a registered
mortgage to secure a current account, the
account should be broken . (See NOTICE OF
MORTGAGE.)
If a banker has a mortgage on less than
thirty -three shares, the management of the
ship is in the hands of those who hold the
majority of the shares, a position which may
not prove satisfactory to the banker,
The register exists only for British ships,
and if a vessel should be sold to a foreign
flag, the registrar will give notice to any
mortgagee whose charge is entered on the
register that the transfer is taking place.
If a reply of satisfaction is received the entry
is expunged from the register ; if the reply
is otherwise, the entry remains, but the
SHIJ DICTIONARY OF BANKING ( SHI

transfer of the vessel still takes place. The " know ” the ship, because there may be
effect is that the registrar gives a mortgagee circumstances which will affect its value
notice, and the mortgagee must then look quite apart from the original cost or any
out for himself. It is all important that recognised system of depreciation.
the mortgagors should be men of honour, or A ship may be built of iron or of steel.
the security may, in the above way, suddenly An iron vessel does not wear out so rapidly
disappear. (See CERTIFICATE OF MORTGAGE as one of steel ( the corrosion being less), and ,
OF SHIP .) therefore, its life is usually a longer one .
A British ship is liable to be attached in Most ships, however, are now built of steel ,
a foreign port for a debt incurred in that and the following figures refer more particu
country, and whenever that happens it is larly to them .
clear that the value of a banker'smortgage The different classes of steamers are
in this country may be seriously affected . passenger boats, cargo and passenger boats,
A lien on the ship, in priority to a mortgage, cargo boats or tramp steamers, as they are
may arise from a collision at sea, and from commonly called , trawlers, and tugs. In
services with regard to salvage of the ship. making a valuation , each class requires
a salvor having a maritime lien on the different treatment, but the boats which are
property salved. It is also well for a most frequently submitted to the judgment of
banker to bear in mind that, in case abranch manager are trawlersandcargo boats.
of loss, the merchant who supplies a The cost of building a boat depends
ship with stores for its last voyage has principally upon two things :
a first claim upon the boat, even in front 1. The state of the shipbuilding trade.
of a banker's duly registered mortgage. 2. The size of the vessel.
The claim of the crew for wages also ranks With regard to the former, if trade is boom
in front of a mortgage. See also BOTTOMRY ing, a boat might cost £ 8 per ton, dead weight
BOND, GENERAL AVERAGE, PARTICULAR (the dead weight is its carrying capacity ), to
AVERAGE, RESPONDENTIA. (See VALUATION build , whereas in normal times the cost
OF SHIP, next article .) might only be £ 5 per ton. With respect to
SHIP, VALUATION OF . When a ship , the second point, a smaller boat costs more
or part of a ship , is offered to a banker as a per ton to build than a larger one, because
security, the questions immediately arise, the cost of the most expensive parts ( the
What is the approximate present market machinery , etc.) does not increase in pro
value, and what change is likely to take portion to the size of the boat ; that is, in
place in the value in subsequent years ? a large boat the average cost per ton is
Upon the correct answers to those questions reduced because the cost of providing merely
depends the amount which may with safety additional bulk is much less than the cost
be lent upon the security . Where the value of building the expensive portion.
of a security diminishes year by year, any A ship depreciates in value, and, there
arrangement as to a loan against such a fore, a sufficient deduction for depreciation
security must necessarily provide for that must be made. After each four years a boat
diminution , and, therefore , when the value must undergo a survey to the satisfaction of
of a ship is written down yearly in the books Lloyds' Registry Surveyors. The survey
of the bank, the amount of the limit should which takes place at the end of the first
also be written down. four years is called No. 1 Survey ; at the
The valuation of a ship is dependent upon end of thesecond period of four years, No. 2
so many points requiring special knowledge Survey takes place ; and at the end of the
that a banker who has not this knowledge third four years, No. 3 Survey is made.
may easily go far astray in making a valua- The survey which takes place after another
tion, if he applies the same rule in the case four years is called the Special No. 1 arvey ,
of every ship that floats. In the absence of and then follows Special No. 2 Survey , and
an opinion by an expert, the following afterwards Special No. 3 Survey . It is
remarks may serve to indicate some of the worthy of note that in the best lines the
points which should be observed when con- owners usually try to take the first four or
sidering the value of a ship . eight years out of a boat, and then to sell
The figures given in this article are to be it immediately after the No. 1 or No. 2
taken as for 1914 . Survey is passed.
It is very important that the person who In normal times the cost of building a
attempts to place a value upon a ship should cargo boat of 8,000 tons, dead weight , is,
587
SHI] DICTIONARY OF BANKING ( SHI

say, £5 per ton, which would make the total
cost £ 40,000 . At the end of the first year
10 per cent. depreciation should be written
off ; at the end of the second year nothing
need be deducted , but at the end of the
third and fourth years, 5 per cent. of the
reduced value should be deducted . At the
end of the fifth year , the deduction may be
omitted , because in that year the boat must
be put into thorough repair and any appre-
ciable wear and tear made good , in order to
pass No. 1 Survey to the satisfaction of the
surveyors. At the end of the sixth , seventh ,
and eighth years the 5 per cent. deductions
should be continued , but at the end of the
ninth year the deduction may be omitted ,
because in that year the boat must again
be put in order so as to pass No. 2 Survey.
The deductions should go on in the same
way for the next three years, and again be
omitted in the year (the thirteenth) when
No. 3 Survey is passed. The 5 per cent.
deductions may be continued for the fol-
lowing four years, including the seventeenth
year , when the Special No. 1 Survey must be explained, would work out as follows :
Cargo boat, 8,000 tons, at £5 per ton
At end of 1st year, deduct 10 per cent.
passed . From this point the deductions
should be considerably larger, say 71 per
cent. each year, so as to bring down the
value, by the time the Special No. 3 Survey
is due (that is in the twenty -fifth year),
within £ 12,000, as by that time the vessel
is worth not more than 30s. per ton, dead
weight. The scrap or breaking -up value of
an 8,000 tons cargo boat may be taken to
be from about £ 7,000 to £ 8,000.
No. 1 Survey does not, as a rule, neces
sitate much outlay, but a banker should
always bear in mind the importance of the
succeeding surveys, and should consider
carefully, as each one approaches, whether
the owner of the boat will, or will not be
in a position to carry it through the survey.
The most important is No. 3 Survey, and a
sum of at least £ 2,500 may be required to
be spent upon the boat before it will satisfy
the surveyors.
The example of the 8,000 tons cargo boat,
built at a cost of £ 5 per ton, dead weight,
with the deductions for depreciation as above
= £ 40,000
4,000

36,000
3 2nd no deduction .
3rd . deduct 5 per cent. 1,800
34,200
4th 1,710

32,490
5th 1 no deduction (because the boat must be put
into thorough repair to pass No. 1 Survey in
this year ).
6th )) deduct 5 per cent. 1,624

30,866
7th . . 1,543
29,323
8th • 1,466

27,857
1 . 9th no deduction (after No. 2 Survey has been passed ).
10th deduct 5 per cent . = 1,392
26,465
11th 1,323

25,142
12th 1,257

Carry forward £ 23,885

588
SHI) DICTIONARY OF BANKING ( SHI

Brought forward £ 23,885

At end of 13th year, no deduction (after No. 3 Survey has been passed ).
» 14th deduct 5 per cent. 1,194
22,691
15th 1,134
21,557
16th 1,077
20,480
17th > (Special No. 1 Survey must = 1,024
be passed ).
19,456
18th 74 per cent. 1,459

17,997
19th 1,349
16,648
20th 1,248

15,400
21st (Special No. 2 Survey due) 1,155
14,245
22nd 1,068

13,177
2 23rd 2 988

12,189
> 24th .) 914

11,275
25th (Special No. 3 Survey due) 845

As stated, the above figures relate to a
cargo boat built in normal times, but if it
is built at a time when trade is booming at
a cost of, say, £7 to £8 per ton, the amount
to be written off must be greater. For
example, if at the end of three years from
the building of a boat which cost £8 per ton
a similar boat can be built for £ 5 per ton ,
the original cost must be taken by a banker
as though it had been £ 5 and not £ 8 per
ton, and then the deductions may be made
as set forth above. Although the cost of
building varies, it always reverts to about
£5 per ton, and it would, therefore, be
imprudent for a banker to advance two-
thirds of the value of a boat based on an
original cost of more than £ 5 per ton. If
he advanced two - thirds of the cost of a
boat built at the rate of £ 8 , the value of the
£10,430
boat would suffer a severe fall as soon as
the cost of building again declined to the
normal £ 5 . A banker would usually be safe
in advancing two -thirds of the value of a
boat, based on a cost of £5 per ton, dead
weight, with deductions for depreciation as
shown above .
In the case of a boat of, say, 2,000 tons .
the cost of building is, as already explained ,
more per ton than for one of 8,000 tons,
When the cost of a boat of 8,000 tons is
£ 5 , the cost to build one of 2,000 tons
would probably be, say. £ 8. The same
system of writing down the value would be
adopted as in the example given , and the
breaking-up value might be considered to
be £ 2,000.
beof deduction for depreciation should be
With respect to steam trawlers, the rate

589
SHI) DICTIONARY OF BANKING (SIG

greater, because the life of a trawler is SHORT -DATED PAPER Bills of ex

shorter than that of a cargo boat, and the change drawn for a short term , not exceeding
market for trawlers is not so extensive. three months after date.
Sixteen years at the outside may be regarded SHORT EXCHANGE . In connection with
as the useful life of a trawler, and a banker the foreign exchanges the short exchange
should not look upon it as worth more than denotes bills at sight and up to eight or ten
its breaking -up value after that time. In days after sight. (See SHORT RATE .)
the case of a trawler which cost, in normal SHORT LOAN FUND . By this is meant
times, say, £6,500 to build, it might be well the money in the hands of the Bank of
to deduct 21,500 in the first year, as a England and the other London banks avail
trawler even after only six months would able for granting loans to bill brokers, stock
not, in ordinary times, sell for anything like brokers and others for short periods of a few
its original cost, and to deduct 71 per cent. days. In ordinary times this floating
of the reduced value in each subsequent capital does not vary much in totalamount,
year. When the original cost has been but it is constantly varying in position , the
reduced by yearly deductionsto £2,000, the rate of interest charged being lowest when
boat might probably retain that value for almost the whole sum is in the hands of the
two or three years, if kept up in the ordinary competing banksand highest when the Bank
way, but abanker would not, as arule, consider of England controls a large part of it. The
it prudent, when the value is approaching loans made by the Bank to bill brokers, out
that sum, to regard the boat as worth more of this so -called fund, are for fixed periods
than the breaking -up value. The breaking- of from three to ten days and atabout one
up value of a boat of this description would half per cent. above Bank Rate. It will
be very small, probably about £ 250. (See easily be understood that the brokers endea
SHIP - MORTGAGE, etc. ) vour to get themoney they require from the
SHIP'S HUSBAND . The person to whom outside banks first, partly on account of the
the management of a ship isentrusted by or more moderate rate of interest and partly
on behalf of the owner. Any person whose because they will be able to arrange loans
name is so registered at the custom house which are not fixed but can be paid off in a
of the port of registry of the ship shall, for day or two, if it suits the convenience of the
the purposes of the Merchant Shipping Act, borrower.
1894, be under the same obligations and SHORT RATE . A term used in connec
subject to the same liabilities as if he were tion with the Foreign Exchanges ; it means
the managing owner. (Section 59 of the the price in one country at which a short
above named Act.) dated draft (up to eight or ten days' currency ),
A ship's husband, unless authorised by the drawn upon another country, can be bought.
owners of the ship, has no power to borrow (See CHEQUE RATE, COURSE OF EXCHANGE,
SO
as to bind the owners. (See SHIP- LONG RATE .)
MORTGAGE , ETC.) SIGHT BILL. A bill of exchange payable
SHORT BILLS . Short Bills " are bills " at sight ” is payable on presentation,
of exchange which are left for collection , without days of grace. The due date of a
but not for discount. bill payable at a period after sight ” is
The expression appears to have originated calculated from the date of sighting. (See
from the custom of entering bills left for SIGHTING A BILL .)
collection in an inner column of the cus- SIGHT RATE . A term used in connection
tomer's account, or pass -book, that is in a with the Foreign Exchanges ; it is equivalent
)
column short of the one in which the to Cheque Rate (q.v.).
amounts were entered when actually credited SIGHTING A BILL. When a bill is
to the customer. drawn at a fixed period after sight, it is
The word short does not refer to the sent to the drawee to be “ sighted " ; that is,
currency of the bills ; a bill, for example, that he may accept the drawer's order for
which has twelve months to run before payment by signing his name across the
maturity, face .of the bill with the date of his accept
would, if left for collection, be ance
called ashort bill. ” The date when the bill will be due
Short bills remain the property of the cus- can then be calculated from the date of the
tomer, subject to any lien the banker may have acceptance. If he omits to insert a date,
upon them for any liability of the customer the holder may put in what he considers
to him . (See Bills FOR COLLECTION .) the true date. (See Date .) If the acceptor
590
SIG ) DICTIONARY OF BANKING [ SIG

writes across the bill “ Sighted 1st June, ac- should not be paid without verification ,
cepted 2nd June," the currency is calculated unless a written authority is held from the
from June 1, as the holder is entitled to have customer that such signatures are to be
the bill accepted with the date when first accepted .
presented for acceptance. It is very imprudent for anyone to put
A bill payable at sight is equivalent to his signature on a blank cheque, or indeed
one payable on demand. (See BILL OF to any document to be subsequently filled
EXCHANGE .) up, and a person so signing will be liable,
SIGNATURE . A banker must know the not for what he expected would be filled in
signatures of all his customers and if he above his signature, but for what actually
should pay a cheque, drawn upon the is filled in. See case under ALTERATIONS.
account of one of his customers, where the If a signature is obtained to a document,
drawer's signature has been forged, he cannot and the person signing it is under the impres
debit it to the account of his customer. It sion that he is signing a document other
is very necessary, therefore, that each office than it really is, the Courts would probably
should possess a complete set of specimens free him from liability. In Lewis v . Clay
of signatures of all customers, whether (1898, 67 L.J. , Q.B. 224) Lord Russell said :
current account or deposit, and to have them " A promissorynote is a contract by the
in such form that they may be readily maker to pay the payee. Can it be said
referred to . If a drawer's signature differs that in this case the defendant ever con
from his usual one and a banker is in doubt tracted to pay the plaintiff ? His mind
as to whether or not it is genuine, unless he never went with the transaction ; for all
can readily see the customer about it, it is that appears, he had never heard of the
customary to return the cheque with the plaintiff, and his mind was fraudulently
explanation " signature differs." channel by the
directed into a different
As to a bill of exchange made, accepted, statement that he was merely witnessing a
or indorsed by a company, see Section 77, deed or other document. He had no con
Companies (Consolidation ) Act, 1908 , under tracting mind, and his signature obtained
INDORSEMENT . by untrue statements fraudulently made to
Section 91 of the Bills of Exchange Act a document of the existence of which he
says : Where, by this Act, any instrument had no knowledge, cannot bind him .” It is
or writing is required to be signed by any stated that, in a certain foreign bank which
person, it is not necessary that he should has customers of many nationalities, it is
sign it with his own hand , but it is required that, in addition to their written
sufficient if his signature is written thereon signatures, an imprint of their right thumb
by some other person by or under his must be given, the bank keeping a record
authority.” of the thumb prints. (See SIGNATURE BOOK.)
A banker, however, would require a proper SIGNATURE BOOK. Each bank office
authority from a customer before paying should keep this book up to date. It should
a cheque on which the drawer's signature contain a specimen signature of each cus
was written by someone other than the tomer, whether current account or deposit,
drawer himself . In cases where a customer at the office. The customer should sign his
desires to give authority to another to draw full name, and also his usual signature and
cheques upon his account, it is much better his initials, and enter his address and
that the usual method should be adopted occupation . The book should be carefully
and cheques be signed per procuration. (See indexed, so that any specimen may be
MANDATE, PER PROCURATION.) found without delay. If the book is not
The practice of signing with an ordinary actually signed by the customer, the speci
pencil is not a desirable one, and it is advis- men may be obtained on a slip of paper
able to discourage it as much as possible. which can be pasted into the book . The
A signature may be lithographed, as in the signatures may be numbered consecutively,
case of dividend warrants, or it may be and the numbers placed against the cor
placed on a cheque by means of a rubber responding names in the ledger, which will
stamp by the person whose signature enable a ledger keeper to turn up a specimen ,
it is, or by anyone duly authorised by with very little delay, whenever he requires
him . A rubber stamp signature, however, to verify a signature.
is full of danger, and its use should be Specimen signatures may be kept on the
avoided. A cheque with a stamped signature card index system , a separate card being
591
 SIL ] DICTIONARY OF BANKING (SIN

used for each signature and the cards sorted Where a bank has an accumulation of
in strict alphabetical order. On this system silver which it cannot get rid of to its own
any specimen can be rapidly found, and customers or to another bank, it may take
specimens which are no longer required can it to the Bank of England. The Bank ,
be removed . however, usually makes a charge of 5s. per
In many cases it may be found that a cent. for taking quantities of silver.
signature has altered from the specimen The silver checker is a necessity where
obtained, probably years ago, and a fresh large quantities of silver are dealt with .
specimen should be got whenever any After silver has been counted into bags it
variation occurs, either from an improve- is desirable to weigh the bags before paying
ment or other change in the customer's it away or taking it into stock. Where
writing silver requires sorting into the various
When a customer is signing the book or denominations, as for the payment of wages,
card it is advisable to point out to him the the sorting box may be used . This box
desirability of always signing his cheques contains a number of trays, and each tray
or other bank documents in accordance with is made so that all coins may slip through
the specimen given . except the particular coins which it is
A separate signature book in scrap -book intended to retain. When a quantity of
form is kept by some banks, in which the silver is poured in at the top of the box, the
specimen signatures received from other openings in the top tray allow all coins to
banks of their authorised officials are pasted. pass through, except crowns; the next tray
(See SIGNATURE . ) has the openings rather less and retains
SILVER CATES
CERTIFICATES. Certificates four-shilling pieces ; the tray lower down in
which are issued by the Treasury of the the box has still smaller openings and holds
United States as part of the paper currency . all half -crowns, and the succeeding trays in
They are payable in silver, but are not legal turn have each smaller openings, so that
tender, except in payment of taxes and Aorins are retained in one, shillings in one,
duties. The smallest denomination is $ 1 . sixpencesin one, and finally all threepenny
SILVER COINS. The British silver coins pieces will be found on the last tray at the
are :-Crown , Double Florin , Half-crown, bottom of the box .
Florin , Shilling, Sixpence, Groat, Three- Silver is generally stored in paper bags
pence, Twopence, Penny. The Groat, Two- with the name of the bank and the branch
pence, and silver Penny are now only coined in where they are used printed thereon . Each
very small quantities as Maundy money (q.v.). bag is also clearly printed £ 5, £10, or £ 20,
They are a legal tender only to the amount as the case may be, and the bags may be
of forty shillings. Silver coins are tokens ; obtained with perforations so that the
that is, the value of the silver in them is contents may be visible without the necessity
less than the legal value which is attached to of opening them . For sums of £50 paper
the coins. There is no weight fixed belowbags are sometimes used, but canvas bags
which silver coins cease to be legally are more suitable. Stocks of sixpences
current. and threepenny pieces are often kept in
Owing to the rise in the price of silver small envelopes or packets containing £1
from its pre -war level, it was not possible or 10s. in each respectively. Paper bags
to mint silver coins except at a loss, and the containing silver are usually of a different
Coinage Act, 1920, was passed to reduce the colour from the bags containing copper, to
fineness of the silver in the coins minted prevent mistakes in paying away . When
after that date. (See COINAGE.) The issue bags of silver are not checked at the time of
of the new silver coinage commenced on receipt they should bear the name of the
13th December, 1920. The new coins are customer who paid them in, so that, when
similar to the old in design, size and weight, subsequently checked, any errors may be
and are somewhat harder, but do not rectified . When a cashier has checked a
possess quite such a white appearance and bag he should initial it. (See COINAGE.)
have not such a pronounced ring. Banks SIMPLE CONTRACT. (See CONTRACTS.)
were not to re-issue old coinage (i.e. pre- 1920 SINKING FUND. A fund which is created
coinage) if they had sufficient of the new for the purpose of redeeming debentures as
coinage for current needs. The composition they become due for payment, or of ex
of the new coins is 500 parts silver, 400 parts tinguishing a debt, or providing for the
copper, and 100 parts nickel. expiry of a lease . A certain annual sum is
592
SIN) DICTIONARY OF BANKING [ SOC
set aside out of profits, which , when in- SMASHER . A slang term for a person
vested, will produce at compound interest who puts bad money into circulation .
an amount equal to the sum which is SOCIETIES. Where an advance is
required at a particular date. granted to the committee of an association ,
The Funding Loan , 4 per cent. , 1960-90, or to a club, a society, or any similar body
for example, is redeemable within 71 years by (e.g. literary association, cricket club, flower
means of a sinking fund . The Government show) , an arrangement should bemade where
sets aside each half-year a sum equal to by someone is rendered liable to repay the
27 per cent . on the nominal amount of the money, otherwise the banker will be with
loan originally created. After payment of out any means of recovering the debt, as
interest on t,the loan for a half-year out of such bodies, not being incorporated, cannot
that amoun the balance of the sum so set be sued for the money . If an account is
aside is carried to a sinking fund to be opened as “ Carleton Flower Show, John
applied during the succeeding half -year to Smith , Treasurer," John Smith is not per
the purchase of the loan for cancellation if the sonally liable for any overdraft thereon,
price is at or under par. (See FUNDING Loan .) but if the account is opened as “ John
When a banker wishes to provide, say, Smith % Carleton Flower Show ," he is
£ 1,000 on account of the premises of a personally responsible.
branch, the lease of which expires in twenty Such accounts are opened in various forms,
years, he debits his profit and loss account but the distinction should be observed
with £ 25 each half-year and credits the between accounts which are opened by a
amount to his premises account, so that at person in his private name, ear -marked in
the end of the period the balance at the some way , and accounts which are in the
debit of premises account will have been name of an association on which the trea
extinguished . surer is to operate. In the latter case the
SINKING FUND ASSURANCE . Where banker should be supplied with a copy of the
property is held upon a lease, the lessee resolution appointing the treasurer and
sometimes takes out a Sinking Fund Policy setting forth the manner in which cheques
by means of which a specified capital sum are to be signed .
becomes payable at the time the lease When an advance is to be granted on an
expires. Such a policy has, in some com- account opened in the name of a club, or
panies, as soon as two years' premiums | society, or in some other impersonal form ,
have been paid, a surrender value equal the bank should require a document (stamped
to the whole of the premiums paid after 6d.) to be signed by a reliable person agree
the first year, accumulated at 3 per cent. ing to be personally responsible to the bank
compound interest, less 74 per cent. (in addition to any claim which the bank
SIXPENCE . Its standard weight is may have upon the society or the persons
43.63636 grains troy, and its standard fine- by whom the cheques may be signed ) for
ness thirty -seven - fortieths fine silver, three- all moneys which may from time to time
fortieths alloy ; altered by the Coinage Act, be owing on the account. The agreement
1920, to one- half fine silver, one-half alloy. should include the name of the account and
(See COINAGE .) a reference to the manner in which cheques
Sixpences were first coined in 1551 . are to be signed thereon .
SLEEPING PARTNER . Sometimes called It is to be borne in mind that a guarantee
a dormant partner. is not enforceable where the debt (as in the
A partner in a firm who does not take any case of an account in an impersonal name)
active part in the management of the busi- is not enforceable at law , there being no
ness, but who is entitled to a share in the debtor capable of being sued. Where there
profits and is liable for a share of any is no principal debtor, there can be no
losses that may be incurred . suretyship . Though there is no express
In a limited partnership, a limited part decision on the point, a surety might, how
ner is a sleeping partner. (See LIMITED ever, be held liable either as a principal or
PARTNERSHIP .) as a surety by estoppel . (See Mr. Justice
SLUMP. On the Stock Exchange, a Rowlatt's opinion under GUARANTEE.)
sudden and violent fall in the price of With respect to the accounts of societies
stocks and shares . registered under Building or Provident or
SMALL HOLDERS ' ADVANCES . (See Friendly Societies Acts, they must be
LAND SETTLEMENT (FACILITIES) Act, 1919.) opened and conducted in accordance with
593
38-41535)
SOF ) DICTIONARY OF BANKING [SOV

the rules of the societies. (See BUILDING better position than they would have been
Society .) if they had made inquiries. In that case ,
As to the death of a treasurer or official, it is, of course, clear that Mrs. Jameson
see DEATH OF OFFICIAL. would have told them that there was no
SOFT MONEY. The expression is some general authority to borrow against the
times applied to bank notes, in contradis- security to the unlimited extent that might
tinction to coins or “ hard cash ." be afforded to C, and that the sum of £ 1,900
SOL . (See FOREIGN MONEYS — PERU .) only would have been charged against her
SOLA BILL . (Lat. solus, alone, solitary .) securities.” Held that Mrs. Jameson is
A bill which consists simply of one entitled to redeem the shares upon payment
document, as distinguished from foreign bills of the sum of £ 1,900 and interest thereon, and
drawn in a set — that is, issued in duplicate or that the documents, so far as they purport to
triplicate. The words “ sola bill ” are some- create a charge on the securities for any greater
times used in the body of the bill, e.g. in a amount, are not binding on the plaintiff.
bill drawn by a branch of the Bank of Mr. Justice Avory ( in the Crown Court,
England on London, the words may be Manchester, 1911) said : “ The practice has
“ seven days after date pay this Sola bill of been condemned formany years of a solicitor
exchange, etc. ( See BILL IN A Ser . ) mixing up his clients' money with his own
SOLD NOTE. The contract note which is and treating it either as part of his floating
given by a stockbroker to his client, giving capital or as part of his current account at
.
particulars of a sale which has been effected the bank ."
for him. (See CONTRACT Note.) Where a solicitor has a private account
SOLICITORS' ACCOUNTS. The danger and an office account, see Set OFF.
of accepting the securities of a solicitor's (See STOCKBROKERS' Loans.)
client to cover the general indebtedness on SOLICITOR'S UNDERTAKING . When a
a solicitor's account is clearly shown in the customer desires any of his securities which
case of Jameson v. Union Bank of Scotland are held by a banker to be lent to his solicitor
( 1913, 109 L.T. 850) . The plaintiff, Mrs. for inspection, written instructions should
Jameson got C, a solicitor, to effect a loan be taken from the customer. When the
of £ 1,900 from the defendants, and she securities are handed to the solicitor, the
signed the bank's printed document that solicitor should sign an undertaking to re
“ I have transferred or caused to be trans- turn them in the same condition as he
ferred ..." (certain shares to the manager receives them and not to charge them or affect
and sub-manager of the defendant bank) the banker's security in any way. Bankers
“ or their nominees as trustees for you to have their own forms for use in these cases.
be held as collateral security for your If the securities are to be given up to a
advance to R. I. Son & C." C carried on solicitor, or anyone, against payment of a
business as a solicitor under the style of certain sum , the letter of authority should
R. I. Son & C. He kept one account only, specifically state the amount. The under
taking will then be to pay the amount or
not a separate account for clients' money.
The general nature of the transactions return the securities. When there is an
between C and the defendant bank were agreement or undertaking to pay a sum of
that advances were made by the bank to C money the document is, probably , chargeable
upon securities which belonged to third with a stamp duty of sixpence.
parties who were clients of C, and this was SOUTHS. A Stock Exchange name for
known to the bank. Sargant, J., in the London and South Western Railway ordinary
course of his judgment, said : Clearly, if it stock .
could be shown that the bank knew that in SOVEREIGN. The standard of the
the transaction C was acting as the solicitor British coinage. Its standard weight is
of Mrs. Jameson, they would be unable to 123.27447 grains troy and its standard fine
hold her securities to the extent of the loans ness eleven -twelfths fine gold (113:0016
which were in terms secured by that grains), one-twelfth alloy, chiefly copper
document. My view is that there was ( 10.2728 grains) . When a sovereign has
sufficient here to have put the bank upon been in circulation for some time it becomes
their inquiry - sufficient notice of the rela- reduced in weight. When the weight falls
tionship existing or that probably existed below 122.5 grains troy it is no longer a legal
between the plaintiff and C and that tender. Gold bullion weighing 40 lb. troy
accordingly the bank cannot claim to be in a is coined into 1,869 sovereigns. Professor
594
SPE] DICTIONARY OF BANKING ( SPE

W. S. Jevons says that from experiments he | to the issue of shares credited as fully or
estimated the average wear of a sovereign partly paid. A letter from the secretary
for each year of circulation at 0·043 grain. of the company, stating : ( 1 ) That the
" It would follow that a sovereign cannot in share certificates are ready to be issued.
general circulate more than about eighteen (2) The distinctive numbers of the shares
years without becoming illegitimately light. allotted, (a) to the public, (b) to the vendors .
This length of time, then, would constitute (3) The particulars of the company's capital.
what may be called the legal life of a sove-
)
(4) The nominal amount of each share, and
reign.” Other persons have estimated its the amount paid in cash or credited as paid
legal life to be fifteen or twenty years. on each share. (5) In cases where the
(See Light GOLD . ) whole of the capital has not been issued at
By 56 Geo. III (1816 ) it was provided the time the application is made, whether
that sovereigns coined weighing 2aiT parts of the unissued shares are vendors' shares or
a guinea were to pass for 20s. They were are held in reserve for future issue.
issued in 1817. Coins of the same name By Rule 150, “ The secretary of the share
but of different value were coined about and loan department shall give three days'
1489. (See COINAGE, POUND, Pre-VicTORIAN public notice of any application for a special
Gold Coins. ) settling -day in the shares or other securities
SPECIAL CROSSING. Where the name of a new company previously to such appli
of a banker is written , or stamped, across cation being submitted to the committee,
the face of a cheque, either with or without who will appoint a special settling -day,
the words “ not negotiable," that addition provided that sufficient certificates or scrip
constitutes a crossing and the cheque is are ready for delivery. The committee
crossed specially and to that banker. will not fix a special settling -day for bargains
The parallel lines which are necessary to in shares or securities issued to the vendors,
constitute a general crossing are not neces- credited as fully or partly paid , until six
sary in a special crossing. The name of the months after the date fixed for the special
banker may be between parallel lines, or settlement in the shares or securities of the
it may stand alone without any lines, or it same class subscribed for by the public, but
may be inside a square, or any other sort of this does not necessarily apply to reorganisa
margin. (See CROSSED Cheque.) tions or amalgamations of existing com
SPECIAL INDORSEMENT. A special panies, or to cases where no public shares
indorsement specifies the person to whom are issued , or to cases where the vendors
or to whose order, a bill or cheque is to be take the whole of the shares issued for cash. "
payable, as “ Pay John Brown or order, (See SETTLING DAYS, Stock ExchANGE.)
J. Jones.” The converse term is an " indorse- SPECIALTY DEBT. A debt which is
ment in blank ,” where the indorser merely acknowledged in a document under seal.
signs his name. ( See INDORSEMENT .) (See STATUTE OF LIMITATIONS — DEBT.)
SPECIAL RESOLUTIONS. (See Reso- SPECIE. (From Latin , specio, to look,
LUTIONS . ) to see.) Visible money. Gold and silver
SPECIAL SETTLEMENT. SPECIAL coins, as distinguished from paper money .
SETTLING DAY. The day fixed by the SPECIE POINTS. They are also called
London Stock Exchange committee for the “ Bullion Points ” and “ Gold Points.”
settlement of sales and purchases of shares The term is used in connection with the
in a new company, or a new issue of shares. Foreign Exchanges and denotes the limits
When an application is made to the of the rate of exchange when it becomes
committee for a special settlement, various cheaper to transmit bullion from one
documents and particulars must be sent to country to another than to buy bills. When
the secretary of the share and loan depart- the limits are reached, gold flows in, or out,
ment. For example, for shares of new of this country as the case may be. If a
companies there must be sent : merchant desires to remit to Paris he will
The certificate of incorporation. A speci- purchase a bill upon Paris, unless he finds
men of the share certificate . A copy of the that the price asked for the bill is greater
prospectus, the statement in lieu of pros- than the cost of sending coin to Paris. In a
pectus as filed with the registrar of joint country, however, where gold is not to be
stock companies, circular or advertisement obtained, or restrictions are placed upon the
relating to the issue. A specimen call letter. export of gold, it is in practice quite possible
Certified printed copies of contracts relating for the exchange on London to rise to a
595
SPE ) DICTIONARY OF BANKING [ SPO

point at which it would be cheaper to send | general contract, called a general risk note
gold than to buy bills, without any gold (stamped 6d .), is given notifying that they
coming to London . refuse to pay the increased charge for insur
If between two countries A and B the Mint ance which the railway company are entitled
Par of exchange is reckoned in the number to demand under the Carriers ' Act.
of B coins equivalent to one A coin, then the Specie may be insured , under a floating
incoming or import specie point from B to policy, with underwriters, at a rate of, say,
A is the Mint Par plus charges for packing, threepence per cent.
shipment, and insurance ; whilst the out- SPECIFIC CHARGE . A legal mortgage
going or export specie point from A to B of an ascertained and definite property, or
is the Mint Par minus similar charges. a deposit of the title deeds, creates a specific
For example, the Mint Par between charge on such property. (See LEGAL
London and Paris is 25:22 ; the export MORTGAGE.) A floating charge on a com
specie point may be, say, 25:12, when it pays pany's property is not a specific charge.
to send gold to France ; and the import (See FLOATING CHARGE .)
specie point say, 25.32, when it pays to send SPECIFICATION . When an amount is
gold from France to England . paid in to a customer's credit, it is customary
Specie points are liable to variation , to specify on the paying -in slip how much
approaching closer to the Mint Par, if the of it consists of notes and how much of gold,
price of carriage becomes less, but at any silver, copper, cheques, bills and post office
time, unless operations are disturbed by money orders. (See PAYING-IN SLIPS.)
war or other exceptional circumstance, the A cashier keeps a specification of his cash
Cheque Rate cannot go beyond the specie on .
points, for if it did a merchant having a SPECULATION. A speculationis where
remittance to make from the country against a person buys a security , not with the inten
which the exchange stood, would choose to tion of paying for it at the settling day, but
do it in gold rather than pay such a large of selling it again during the present, or a
price for the paper. (SeeFOREIGN EXCHANGES, continued , account, in order to secure a
Mint PAR OF EXCHANGE . ) profit, if possible. If a security is bought in
SPECIE, TRANSMISSION OF. The risk order to be retained , it is called an invest
of loss of specie in transit by train may be ment. When a speculative security is bought
insured against from the time of leaving the and paid for with the intention to sell as
bank office until it arrives at its destination . soon as a favourable opportunity offers, it
Whether it is cheaper to insure or to send is probably more accurately described as an
a clerk with the specie, depends upon the investment in a speculative security than a
quantity sent and the price of the railway pure speculation where the purchaser has no
ticket. The clerk's time also requires to be
taken into account.
intention,and perhapsno means,to pay for it.
SPOILED STAMPS. In making a claim
Where specie is sent by train as a parcel for allowance of spoiled or useless stamps
the railway companies will insure it at the the following statutory declarationmust be
rate of one shilling for each £ 100, the com filled up and signed by the applicant :
pany reserving to itself the right of inspect- I of do

ing, before effecting any insurance, all solemnly and sincerely declare that the
goods delivered to it for insurance, to ascer- specified and
several stamps hereinafter
tain that the consignment is in accordance described, that is to say,
with the declaration . A railway company
usually sends an official along with cash Number of Value of Description of Total
when it exceeds £ 500. In addition to the Stamps. each . Instrument. Value,
insurance rate, the usual rate for carriage
is payable. Insured parcels, boxes , etc. ,
must be properly sealed by the senders.
Bullion and specie, the value of which is
declared to the railway company, but on
which no insurance is paid , is not conveyed
by the company unless a consignment note
is first signed by the consignor declining to
pay the increased charge for insurance , or
unless, in the case of regular senders, a £
596
SPOJ DICTIONARY OF BANKING (SPO

are the property of and were would have been given or offered in evidence
purchased by or for and that the same were so signed within two
use, and that paid the full years from the date hereof.
amount or value thereof ; And with regard to any bill of exchange or
And with regard to the stamps impressed promissory note which from any omission or
on material not written upon, and the error has been spoiled or rendered useless,
adhesive revenue and fee stamps unattached although the same, being a bill of exchange
to material, I declare that the same have may have been accepted or indorsed, or
been inadvertently and undesignedly spoiled being a promissory note may have been
or rendered unfit for use in consequence delivered to the payee, I declare that
of another completed and duly stamped bill of
And with regard to such other of the exchange or promissory note (which I now
material on which the said stamps are im- produce) identical in every particular except
pressed or to which adhesive stamps are in the correction of the error or omission in
attached as is written upon , I say that the the spoilt bill or note has been executed in
same has been inadvertently and unde- lieu thereof.
signedly spoiled, or is become useless ; and And with regard to the bills of exchange
that the writing thereon has not been signed and promissory notes, other than those
by any party or otherwise completed as mentioned above, I declare that the answers
a legal instrument, and has not had any to the following questions are true :
operation or effect whatsoever.
And with regard to the adhesive fee Have the bills or notes
stamps which have been removed from been out of the signer's
material, I declare that they have been so hands ?
removed by the Court or other official whose
certificate is annexed .
And with regard to the postage stamps on If so , for what purpose ?
material, I declare that the same have not
passed through the post, or been used in any Have the bills or notes
way whatever, but have been inadvertently been sold, or have ad
and undesignedly spoiled , rendered unfit for vances or credit been
use , or are not required , in consequence i obtained on them ?
of
What has become of
And with regard to the adhesive postage the unstamped parts of
stamps, I declare that thesame have not any of the bills above
mentioned which have
passed through the post, or been used in any been drawn in sets ?
way whatever, but have been inadvertently
and undesignedly spoiled, or rendered unfit What use has been
for use in consequence of made of any such un
And with regard to the instruments which stamped parts ?
have been signed, I say that the same
became void in consequence of
And I further say that
have not been reimbursed or paid the value
And with regard to the instruments which of thesaid stamps or any part thereof, by
have been signed, the duplicates or instru: any other person or persons ; and that if the
ments in lieu of which are now produced and value thereof shall be allowed by the Com
exhibited duly stamped, I say that the same missioners of Inland Revenue, I will not ask
were spoiled in consequence of or receive any compensation for the same,
or any part thereof, from any other person
and that the same were bona fide prepared or persons, or charge the same, or any part
and signed for the purpose of carrying into thereof, in account or otherwise, to any
effect the transaction appearing upon the other person or persons either generally or
face thereof, between the parties and upon particularly , so as to be again paid or
the terms and conditions therein set forth, compensated for the same, or any part
that no legal proceeding has been com- thereof, directly or indirectly in any manner
menced in which the instruments could or whatsoever.
597
SPO] DICTIONARY OF BANKING (STA

And I further say that all the said stamps STAFF REGISTER . The book kept at the
have been spoiled or become useless within the head office of aa bank which contains a com
period of two years preceding the date hereof : plete list of the staff, with all particulars
and that the application made by me for regarding each member, such as the date of
an allowance for the value of the said appointment, the age, salary, and position .
stamps is without any fraudulent intention STAFF SHARES. (See SHARES FOR
or collusion whatsoever. STAFF. )
And I make this solemn declaration con- STAG . The name given to a person who
scientiously believing the same to be true, applies for shares in a new company, not in
and by virtue of the Statutory Declarations order to subscribe for them but with the
Act, 1835 . sole intention of selling them as soon as
possible at a profit.
DECLARED at the STALE CHEQUE. A cheque is con
Stamp Office sidered by bankers to be stale dated six (by
some bankers twelve) months after the date
at
of the cheque, and such a cheque is usually
this day of 19 returned marked " out of date.” When the
Before me, stale date is confirmcd by the drawer the
cheque is paid . The practice of not paying
cheques which are out of date " is not
Distributor of stamps.
sanctioned by law and is simply a custom
(though a desirable one) of bankers. By
* The applicant must sign on this line. law the drawer of a cheque is not, under
N.B.-In cases where the declaration is ordinary circumstances, released from lia
made by an agent of the principal or firm , bility on the cheque until six years from the
the person authorised should be in a position date of it, and abanker would , apparently,
to give full information as to the facts of the be justified in paying a cheque at any time
transaction. Any neglect of this regulation during that period , but, in practice, as
will probably lead to delay in the settlement stated , a cheque which is “ out of date "
of the claim . is paid only when confirmed by the
The claim for allowance must be lodged at drawer.
the Spoiled Stamp Office, Somerset House, By Section 36, s.s. 3, Bills of Exchange
and in the case of country bankers (more Act, 1882, a bill payable on demand is
than ten miles from London) the claim must deemed to be overdue when it appears on
be made through an agent in London . the face of it to have been in circulation for
When an allowanceis granted , stamps of an unreasonable length of time,
equal amount may be obtained , or cash , less By Section 45, Bills of Exchange Act, 1882,
a discount, may be accepted . ))
presentment of a bill payable on demand
SPOT PRICE. The spot price of must be made within a reasonable time
silver is another name for cash " price for
06
after its issue in order to render the drawer
delivery at once . The forward " price is liable, and within a reasonable time after
the quotation for delivery and payment at its indorsement, in order to render the
some future time. indorser liable.' Cheques, so far as the
SQUATTER'S TITLE . The title which a drawer is concerned , are not included in this
person may obtain to land after being in Section. The drawer remains liable, as
undisturbed possession of it for twelve above stated, for six years from the date
years. (See PosSESSORY TITLE .) of the cheque, unless he suffers actual loss,
STAFF GUARANTEE FUND . A fund as where a banker fails, through his cheque
formed in a bank for the purpose of not having been presented for payment
guaranteeing the bank against losses arising within a reasonable time when he is dis
through fraud or dishonesty on the part of charged to the extent of such loss. ( See
any of the persons employed by the bank. Section 74 , under PRESENTMENT FOR Pay
Every officer subscribes to the fund at a MENT.) There is no time fixed by law as
certain rate per cent. per annum on the to what is a reasonable time.” Six days
amount which the bank requires to be from the date of a cheque have been held
guarani , ir respect of such officer. to be not an unreasonable length of time.
Inas , wanni urs are guaranteed Sir John R. Paget says : In the absence
through an external society or company. of special circumstances, ten days or so
595
STA ] DICTIONARY OF BANKING [ STA

would probably be held the limit." (See as if it were a separate instrument,

CHEQUE .)
STAMP DUTIES. By the Stamp Act,
1891 :
REGULATIONS APPLICABLE TO
INSTRUMENTS GENERALLY.
CHARGE OF DUTY UPON INSTRUMENTS.
Charge of Duties in Schedule .
“ 1. From and after the commencement of
this Act the stamp duties to be charged for
the use of Her Majesty upon the several
instruments specified in the first Schedule to Facts and Circumstances affecting Duty to be
this Act shall be the several duties in the
said schedule specified, which duties shall
be in substitution for the duties theretofore ing the liability of any instrument to duty,
chargeable under the enactments repealed
by this Act, and shall be subject to the instrument is chargeable, are to be fully and
exemptions contained in this Act and in any truly set forth in the instrument; and every
person who, with intent to defraud Her
other Act for the time being in force.
All Duties to be paid according to Regulations
of Act.
“ 2. All stamp duties for the time being
chargeable by law upon any instruments are
to be paid and denoted according to the
regulations in this Act contained , and except
where express provision is made to the
contrary are to be denoted by impressed
stamps only.
How Instruments are to be written and PRODUCTION OF INSTRUMENTS IN EVIDENCE .
Stamped .
“ 3. ( 1 ) Every instrument written upon
stamped material is to be written
in such manner, and every instru
ment partly or wholly written
before being stamped is to be so
stamped , that the stamp may
appear on the face of the instru
ment, and cannot be used for or
applied to any other instrument
written upon the same piece of
material.
“ (2) If more than one instrument be
written upon the same piece of
material, every one of the instru
ments is to be separately and dis
tinctly stamped with the duty with
which it is chargeable.
Instruments to be Separately Charged with
Duty in Certain Cases.
“ 4. Except where express provision to the
contrary is made by this or any other Act :-
“ (a) An instrument containing or relating
to several distinct matters is to be
separately and distinctly charged ,
with duty in respect of each of the
matters ;
“ (5) Aninstrument made for any considera
tionin respect whereof itis chargeable
with ad valorem duty, and also
for any further or other valuable
consideration or considerations, is
to be separately and distinctly
charged , as if it were a separate
instrument, with duty in respect of
each of the considerations.
set forth in Instruments.
“ 5. All the facts and circumstances affect
or the amount of the duty with which any
Majesty,
“ (a ) executes any instrument in which all
the said facts and circumstances are
not fully and truly set forth ; or
“ (b) being employed or concerned in or
about the preparation of any instru
ment, neglects or omits fully and
truly to set forth therein all the said
facts and circumstances ;
shall incur a fine of ten pounds.
Terms upon which Instruments not Duly
Stamped may be Received in Evidence .
“ 14. ( 1) Upon the production of an
instrument chargeable with any
duty as evidence in any court of civil
judicature in any part of the United
Kingdom , or before any arbitrator
or referee, notice shall be taken by
the judge, arbitrator, or referee of
any omission or insufficiency of the
stamp thereon, and if the instrument
is one which may legally be stamped
after the execution thereof, it may,
on payment to the officer of the
Court whose duty it is to read the
instrument, or to the arbitrator or
referee, of the amount of the unpaid
duty, and the penalty payable on
stamping the same, and of a further
sum of one pound, be received in
evidence, saving all just exceptions
on other grounds .
“ (4) Save as aforesaid , an instrument
executed in any parties ar?. United
Kingdom , ang -oever
executed, to any property situate,
599
 1

STAJ DICTIONARY OF BANKING (STA

or to any matter or thing done or to in case it is first executed

be done, in any part ofthe United at any place out of the
Kingdom , shall not, except in United Kingdom , unless the
criminal proceedings, be given in opinion of the Commis
evidence, or be available for any sioners with respect to the
purpose whatever, unless it is duly amount of duty with which
stamped in accordance with the law the instrumentis chargeable,
in force at the time when it was first has, before such expiration,
executed . been required under the
STAMPING OF INSTRUMENTS AFTER provisions of this Act :
EXECUTION . “ (6) If the opinion of the Com
missioners with respect to
Penalty upon Stamping Instruments after any such instrument has
Execution . been required , the instru
" 15. ( 1 ) Save where other express ment shall be stamped
provision is in this Act made, an un in accordance with the
stamped or insufficiently stamped assessment of the Com
instrument may be stamped after missioners within fourteen
the execution thereof, on payment days after notice of the
of the unpaid duty and a penalty assessment :
of ten pounds, and also by way " (c) If any such instrument exe
of further penalty, where the un cuted after the sixteenth day
paid duty exceeds ten pounds, of of May one thousand eight
interest on such duty, at the rate of hundred and eighty - eight
five pounds per centum per annum , has not been or is not duly
from the day upon which the stamped in conformity with
instrument was first executed up the foregoing provisions of
to the time when the amount of this sub -section, the person
interest is equal to the unpaid in that behalf hereinafter
duty . specified shall incur a fine
“ (2) In the case of such instruments herein of ten pounds, and in ad
after mentioned as are chargeable dition to the penalty payable
with ad valorem duty, the following on stamping the instrument
provisions shall have effect : there shall be paid a further
“ (a) The instrument, unless it is penalty equivalent to the
written upon duly stamped stamp duty thereon , unless
material, shall be duly a reasonable excuse for the
stamped with the proper delay in stamping, or the
ad valorem duty before the omission to stamp, or the
expiration of thirty days insufficiency of stamp, be
after it is first executed , or afforded to the satisfaction
after it has been first re of the Commissioners , or of
ceived in the United Kingdom the Court, judge, arbitrator,

Title of Instrument as described in the First Schedule to this Act. Person liable to Penalty .

Bond, covenant, or instrument of any kind whatsoever. The obligee, covenantee , or other person taking the
security.
Conveyance on sale The vendee or transferee .
Lease or tack The lessee.
Mortgage, bond, debenture, covenant, and warrant of The mortgagee or obligee ; in the case of a transfer or
attorney to confess and enter up judgment. reconveyance, the transferee, assignee, or disponee,
or the person redeeming the security.
Settlement. The settlor.
Added1910by:Section . ï oj. the Finance (1909-10) 'Aci,
-S
no transfers operating as voluntary Grantor or transferor.

600
 TER

STAJ DICTIONARY OF BANKING ( STA

or referee before whom it is or insufficiency of stamp upon any such

produced : instrument or indemnifying against such
"( d) The instruments and persons liability, absence, or insufficiency, shall be
to which the provisions of void."
this sub - section are to apply GENERAL EXEMPTIONS FROM ALL STAMP
are as shown in table on
DUTIES.
P. 600 .
“ ( 3) Provided that save where other (1 ) Transfers of shares in the Government
express provision is made by this or Parliamentary stocks or funds.
Act in relation to any particular (2) Instruments for the sale, transfer, or
instrument : other disposition either absolutely or by way
“ (a) Any unstamped or insuffi- of mortgage, or otherwise, of any ship or
ciently stamped instrument vessel, or any part, interest, share, or pro
which has been first exe- perty of or in any ship or vessel.
cuted at any place out of the (3) Instruments of apprenticeship, bonds,
United Kingdom , may be contracts, and agreements entered into in the
stamped , at any time within United Kingdom for or relating to the service
thirty days after it has been in any of Her Majesty's colonies or posses
first received in the United sions abroad of any person as an artificer,
Kingdom , on payment of the clerk, domestic servant, handicraftsman,
unpaid duty only : and mechanic, gardener, servant in husbandry,
" (b) The Commissioners may, if or labourer .
they think fit, at any time (4) Testaments, testamentary instruments,
within three months after and dispositions mortis causâ in Scotland.
the first execution of any (5) Bonds given to sheriffs or other persons
instrument, mitigate or re in Ireland upon the replevy of any goods or
mit any penalty payable on chattels, and assignments of such bonds.
stamping . (6) Instruments made by, to , or with the
“ (4) The payment of any penalty pay- Commissioners of Works for any of the
able on stamping is to be denoted purposes of the Act 15 & 16 Vict. c. 28.
on the instrument by a particular (7) Deeds or instruments made or exe
stamp." cuted for the purpose of the Post Office, by,
By the Finance Act, 1895 : to, or with Her Majesty, or any officer of the
“ 15. So much of Section 15 of the Stamp Post Office (44 & 45 Vict. c. 20, Section 5).
Act, 1891 , as limits the time within which ( See Section 148, Bankruptcy Act, 1914,
the Commissioners of Inland Revenue may under BANKRUPTCY .).
mitigate or remit any penalty payable on The following regulations were issued by
stamping shall be repealed.” the Board of Inland Revenue, Somerset
ENTRIES UPON ROLLS, BOOKS, ETC. House, December, 1902 :
REGULATIONS under which PLAIN PAPER ,
Penalty for Enrolling, etc., Instrument not duly BANKERS' CHEQUES, and other PRINTED FORMS
Stamped.
“ 17. If any person whose office it is to are impressed
Revenue . the id. (or 2d.) Inland
Stampwith
enrol, register, or enter in or upon any rolls,
books, or records any instrument chargeable 1. The paper must be of such quality,
with duty, enrols, registers, or enters any thickness and impression
receiving the colour, as to be suitable
of the dies. for
such instrument not being duly stamped, he
shall incur a fine of ten pounds. 2. The paper must be flat and uncreased ,
and should neither be gummed nor per
Conditions and Agreements as to Stamp forated before it is sent to be stamped .
Duty Void . 3. Each sheet of paper or single form for
" 117. Every condition of sale framed with which a separate stamp is required must not
the view of precluding objection or requisition be narrower than five inches nor less than
upon the ground of absence or insufficiency one and a half inches in depth. A form five
of stamp upon any instrument executed after inches in length can only be stamped close
the sixteenth day ofMay one thousand eight to the edge.
hundred and eighty -eight, and every con- 4. When more forms ( cheques or receipts)
tract, arrangement, or or undertaking for
undertaking for than one are printed on a sheet, the stamping
assuming the liability on account of absence will be expedited if the sheets be presented
601
STA ) DICTIONARY OF BANKING [ STA

entire, i.e. before they are cut up. In cases Agreements under hand , duty sixpence,
where the forms are in two rows on a sheet e.g. guarantee, memorandum of deposit of
the forms should be printed back to back . marketable securities, qualifying agreement,
If bound or stitched the books must not be may be stamped within fourteen days after
unwieldy in size nor heavier in weight than execution.
ten pounds. Stamps cannot be placed near Documents which have not been stamped
the counterfoils of forms. within the time allowed , may be subse
5. The top sheet of the parcel or book quently stamped on payment of a penalty of
should be marked to indicate the position £ 10. (See Section 15, above.)
be
placed , which , however, must be within one different headings.
under the
inch and a half of the edge of the sheet. The Where a document of charge requires
stamp will be placed as near to the position further stamp duty to be impressed, a
indicated as the circumstances of the case certificate in the following form must be
will permit. furnished to the Stamp Office :
6. When a special position of the stamp is I hereby certify that the amount at any
required in the case of printed forms it is
desirable that before the work is printed a time owing by ( a) ( did not exceed £
to

proof should be submitted to the Inspector (a) It the until the day of 19 ) ,
of Stamping. amount has not (6) (or has not at any time ex
7. All fly -leaves and inserted orders for yet
cancel ceeded the sum of £
ceeded
new booksmust be completely folded back . these words. ) and
8. The Commissioners of Inland Revenue (6 ) If the ad . I request that further stamp
will not accept any responsibility for injury vance
been has already dutymay be impressed on the
exceeded
to material in the process of stamping, nor cancel these instrument of day of
19 to cover a total
for loss of stamps or material, which may words .
arise in transmission to or from this office. advance of £
9. When the paper is brought to Somerset Signature.
House for stamping, a person must attend Address
at the depart ment of the Accoun tant and 19. Date
Comptroller General (Room No. 26) to fill up • To be signed by the mortgagee or by the
the necessary “ warrant," and to pay the manager of the bank making the advance.
duty.
10. Penny (or two pence] Inland Revenue (See ADHESIVE STAMPS, ADJUDICATION
stamps are also impressed under similar STAMPS, AD VALOREM , APPROPRIATED
conditions at the Inland Revenue offices at STAMPS, BILL OF EXCHANGE, CANCELLATION
Edinburgh, Dublin , and Manchester. OF STAMPS, COMPOSITION , CONVEYANCE ,
The following documents must be stamped DENOTING STAMPS, IMPRESSED STAMPS,
before execution : INCREMENT VALUE DUTY, RECEIPT, SPOILED
Bills of Exchange. STAMPS .)
Bills of Lading . STANDARD FORMS. The Council of
Contract Notes. the Institute of Bankers adopted (January ,
Letters of Allotment. 1912) the report of the Committee appointed
Letters of Renunciation . to draw up Standard Application, Allotment,
Policies of Insurance . and Call Forms in connection with capital
Promissory Notes. and loan issues by joint stock companies and
Proxies. other bodies .
Receipts . Forms for standard use are recommended
Scrip Certificates. in the following circumstances :
Share Warrants . A. Application for bonds or stock with
Voting Papers . out receipt for application money .
Documents, other than the above, requir- B. Application for shares where no receipt
ing an ad valorem stamp, e.g. conveyances , for the application money is issued .
mortgages, memoranda of deposit, transfers, C. Application for shares with receipt
must be stamped within thirty days after form attached .
execution, or if executed abroad within D. Allotment Letter with receipt form
thirty days from the date on which they for amount due on allotment only .
arrive in the United Kingdom . E. Allotment Letter with receipt forms
602
STA ) DICTIONARY OF BANKING (STA

for amount due on allotment or payment The Committee strongly recommend that
in full. instructions as to the form of remittance
F. Call Letter. should be in the exact words they have
G. Offer ofnew shares, to accompany the
company
formulated and be given equal prominence
circular issued by the . to that afforded by the standard forms.
Specimens of these forms may be obtained They would point out that the best protec
from the Institute . tion to the remitter is afforded by the use
In the report the Committee disclaim any of a “bearer ” cheque crossed “ not negoti
intention to stereotype such portions of the able ,” and that the labour of indorsing
forms as are governed by the requirements thousands of cheques is thereby saved.
of the Companies Acts or other legal obliga- They further recommend that with each
tions of companies and other bodies appeal- request for a remittance a printed envelope
ing for capital. The Committee believe the addressed to the bankers should be sent to
forms to be such as are sanctioned by use the shareholder by the company, Where
and experience, but they realise that in several allotments or calls are due about
matters involving legal liability, directors the same time, a distinguishing mark or the
and agents may preferto be guided by their name of the company on the envelopes
own legal advisers. They further recognise would enable the bankers to separate these
that no form can be drawn up so as to cover remittances from the rest of the correspond
every eventuality, and they have,therefore, ence and also to sort the different com
in several particulars, confined themselves panies' letters before they are opened .
to outlines. In many points, however, the In Form G the Committee have adopted
Committee think that complete uniformity the plan of an offer of new shares in pre
is feasible, and would result in saving of ference to that of an allotment. Companies
time and expense both to bankers and the preferring the latter method may, however,
issuers . adopt Form G without sacrificing its
Particular attention is drawn by the essential characteristics .
Committee to the following points : The report concludes by the Committee
The size of 13 in. by 87 in. is regarded as reminding directors and secretaries of com
the most convenient, except in the case of panies that, owing to the very heavy work
the Application Forms without receipt, already thrown upon bankers, it would be
which are 8 } in . by 87 in . a great convenience if as few calls as possible
The type and " display ” of the forms are were made payable on the first and last days
designed to give special prominence to those of each month, on Saturdays and Stock
points in regard to which erroris most frequent. Exchange settlement days, or during the
The size, type, and " display " should be first or last week of each half-year.
exactly, and not approximately, as in the STANDARD OF VALUE . In the prin
recommended forms. cipal countries of the world, gold (repre
The standard forms have been adapted sented in the United Kingdom by the
to the use of “ window ” envelopes, but the sovereign) is the sole standard or measure
adoption of the forms does not necessitate of value.
the use of these envelopes. STANDING CREDITS. A customer may,
The Committee think there is no necessity as a rule, arrange to have his cheques cashed
for sending a receipt in return for applica- at another bank or at some other branch.
tions for shares (especially where the use of the request should be in writing and be signed
application forms cut from newspaper by the customer. The letter advising the
advertisements is allowed) , provided the bank or branch to honour his cheques should
company goes to allotment within a reason- be signed by the manager and state precisely
able period after the issue of the prospectus. what chequesare to be paid, to what extent
In the case of Government and other public and for how long the credit is to continue,
loans, such receipts are very seldom sent. and a specimen signature should accompany
The saving in time to bankers and in receipt the advice . Such cheques should not be
stamps and postages to companies, if this crossed .
suggestion were adopted, would be consider- A common form of advice is to honour
able. cheques drawn by John Brown to the extent
The standard forms of receipts have been of £10 in any one day. An advice to honour
designed so as to involve the smallest amount cheques to the extent of £60 in any one week
of labour in completion . is not a good form , if the customer giving the
603
STAJ DICTIONARY OF BANKING ( STA

order intends the money to be drawn at the given to each branch or bank which has
rate of so much a day, as it is clear that the authority to cash his cheques.
full amount may be drawn on one day and STANDING ORDERS. ( See BANKER's
still comply with the letter of advice . ORDER . )
When a bank receives from another bank STANNARIES . (Latin , stannum , tin .)
or branch a request to pay certain cheques, A term which is applied to the tin mines
the greatest care should be taken to ascertain in Cornwall or Devon and to the peculiar
that the letter of advice is genuine. If customs and laws in connection with the
there is any doubt, a confirmation could be mines. A company of more than twenty
asked for by wire. persons formed for the purpose of gain must
Credits opened between different banks be registered under the Companies (Con
are, as a rule, arranged through the head solidation ) Act, 1908 , unless formed under
offices of the respective banks. some other Act of Parliament, or of letters
Particulars of all credits opened should be patent, “ or is a company engaged in working
recorded at the heading of the customer's mines within the stannaries, and subject to
account. The amount of such credits should the jurisdiction of the Court exercising the
)
of course be justified by the nature of the stannaries jurisdiction .” (See PARTNERSHIPS.)
account. The banker having opened a The above -mentioned Act makes certain
credit cannot refuse to pay a cheque cashed special provisions in connection with the
thereunder, in the event of there being winding up of companies in the stannaries.
no funds to meet it in the customer's
account . Attachment of Debt due to Contributory on
The customer is sometimes given a special Winding Up in Stannaries Court .
form of cheque book, the cheques being “ Section 239. When several companies are
drawn upon the banker who is to pay the in course of liquidation by or under the
cheques and an indication is given upon the superintendence of the Court exercising the
cheques of the name of the bank where the stannaries jurisdiction and acting under that
drawer's account is kept. jurisdiction, if it appears to the judge that
The mere fact that a banker pays a cheque a person who is a contributory of one of the
under a standing order does not release him companies is also a creditor claiming a debt
againstone of the other companies, the judge
from liability if he pays one bearing a forged
indorsement. He should make certain that may (if after inquiry he thinks fit) direct
that the debt, when allowed , shall be at
the party presenting a cheque is the person
entitled to receive payment. If payment istached , and payment thereof to the creditor
made to the wrong person the banker who suspended for aa time certain as a security for
cashes the cheque is liable for any loss. payment of any calls that are or may in
It is reasonable, however, to expect that course of liquidation become due from him
a customer wishing his cheques so paid to the company of which he is a contribu
should state in writing that the banker tory ; and the amount thereof shall be
shall not incur any greater liability than applied to such payment in due course :
if the cheques were paid by the branch on “ Provided that such an order of attach
which they are drawn. The banker who ment shall not prejudice any claim which
pays a cheque under authority cancels it the company so indebted to the creditor
before remitting to the drawee banker, and may have against him by way of set off,
»

marks it “ paid under order." counterclaim , or otherwise, or any lawful

A register should be kept of all standing claim of lien or specific charge on the debt
orders given by a branch and also of all in favour of any third person ."
received by a branch, and entries made The Act also provides for various modifi
therein of each cheque drawn under the cations with respect to preferential payments
credits, so that the banker may see at a of salaries and wages. (See COMPANIES,
glance that the instructions respecting the WINDING UP.)
various credits are not being exceeded . basSTATE .
If a Contraction of
06
statement."
credit, without any time limit, has not been The name given in some offices to a weekly
operated upon for a considerable time, it is statement or return sent to head office
desirable to inquire if it is still to continue, exhibiting all the transactions at a branch
or if it should be cancelled . for the week.
When a customer gives an order to stop STATUS OPINION . ( See BANKER'S
payment of a cheque, notice should be OPINION.)
604
STA ) DICTIONARY OF BANKING [STA
STATUTE - BARRED . A debt is said to six years, at the end of that time Brown may
be statute -barred when it cannot be re- plead the Statute of Limitations and be
covered in a court of law , because the time entirely released from his liability on the
within which the creditor had the right to note to Jones. But if Brown in, say, the
sue the debtor has expired . (See STATUTE | year 1912 repays part of the money owing,
OF LIMITATIONS .) the six years will begin again to run from
STATUTE LAW . The written law of the the year 1912, and so on, the six years com
land, as distinguished from the unwritten mencing afresh at each payment or acknow
or “ common law " (q.v.) . ledgment. But a payment by a debtor
“ The written laws of the Kingdom are does not keep the debt alive as against a
statutes, acts or edicts, made by the sove- surety,
reign, by and with the advice and consent By Lord Tenterden's Act ( 9 Geo. IV, c. 14,
.

of the lords spiritual and temporal, and com- s. 1 ), in actions of simple contract debts,
mons, in Parliament assembled " (Blackstone ). no acknowledgment or promise by words
Originally, bills of exchange were regu. only shall be sufficient evidence to take the
lated by the customs of merchants ( called case out of the statute, unless such acknow
lex mercatoria ). When these customs were ledgment or promise be made in writing and
recognised by the courts they became part signed by the party chargeable, or (by 19
of the common law of England ; and when & 20 Vict. c. 97, s. 13) by his agent duly
these recognised customs were incorporated authorised .
in the Bills of Exchange Act, 1882, they In the case of an infant or an insane
became, by Act of Parliament, statute law . person, no action can be brought personally
Statute law may merely declare what is either by or against either of them until the
already the common law of the land, or it | infant attains his majority or the insane
may create entirely new law. person recovers . By the Real Property
STATUTE OF LIMITATIONS. In the Limitation Act, 1874 (s. 3) , an infant or
case of a simple contract debt an action must person of unsound mind may recover any
be commenced within six years from the land or rent within six years from the
time when the cause of action arose. In ceasing of the disability. The utmost allow
actions for debt, the statute bars the remedy ance for disability is thirty years from the
only , not the debt. In the case of a con- right accruing. If a defendant is beyond
tract under seal, the period is twenty years. the seas or out of the jurisdiction , when the
But since the passing of the Real Property cause of action arises, an action may be
Limitation Act, 1874 (37 & 38 Vict. c. 57), brought within six years from his return
which came into force on the 1st January , | (3 & 4 Will. IV, c. 42, s. 4 ) ; but where the
1879, the remedy of a mortgagee upon the defendant goes out of the jurisdiction after
covenant contained in the mortgage, as well the cause of action arises the running of the
as the remedy against the land, is barred statute is not affected . If a plaintiff is
after twelve years. beyond the seas when a cause of action
The principal Acts which fix these limits arises, no additional time is allowed — the
were passed in 1623, 1833, and 1874. The statute runs against him (Mercantile Law
first two deal with contracts, simple and Amendment Act, 1856, S. 10, and Real
specialty, and the last with land only. The Property Limitation Act, 1874, s. 4) .
except
includes several sections relating to the in the case of a mortgage of land) , the debt
limitation of actions. must be acknowledged by each one in order
When part payment of a debt is made, to keep it alive against each , and anyone
or interest is paid thereon, or an acknow who has not acknowledged it may plead the
ledgment of the debt is given in writing by statute. By 9 Geo. IV , c. 14, where there
the debtor, the debt is thereby kept alive are two or more joint-contractors, no such
and the six years or twenty years then begin joint contractor shall be chargeable in
to run from the date of the last payment or respect only of the written acknowledgment
acknowledgment. For example, if Brown of the other. By 19 & 20 Vict. c. 97 , s. 14,
signed in 1909 a promissory note payable on where there are two or more co -contractors
demand in favour of Jones, and neither or co-debtors, none of them shall lose the
pays interest nor repays any part of the benefit of the limitation , by reason only of
principal nor gives any further written payment of any principal or interest by any
acknowledgment of the debt for a period of of the others.
605
STA ] DICTIONARY OF BANKING [ STA

A debt of a deceased person which is that is, if a loan accounthas been absolutely
statute -barred may legally be paid by his dormant for six years the customer cannot 1

executor, as in an ordinary contract the plead that the loan is statute-barred if he

statute does not bar the right but only the has also other accounts which have been
remedy. operated upon.
Where a loan is granted against security In an ordinary loan account the statute
and the debt has becomestatute-barred, the runs from the date when the money was
banker is unable to sue the customer for the paid and not necessarily from the date of the
debt, but the fact of the banker's claim cheque.
against the debtor personally having been If a loan is statute -barred it does not
discharged does not affect his claim upon the follow that the interest on the loan is also
security , nor does it affect his claim upon any barred . (See INTEREST below .)
securities or money belonging to the debtor ADMINISTRATOR .— (See TRUSTEE, below .)
which may come into his possession as a BANK Notes.The
- Statute of Limitations
banker after his right to sue the debtor is does not apply to bank notes, either those
statute barred . of the Bank of England or of a country
A defendant must, if he intends to plead banker. No matter how long it may be after
the statute, set up a special plea before the their issue before they are presented for
hearing of the action or he will not be payment, the banker is still liable to pay
allowed to advance it against the plaintiff's them . In the Acts regulating the issue of
claim . notes in Ireland and in Scotland it is specially
(0
ACCEPTOR OF Bill . – An acceptor liable mentioned that “ all bank notes shall be
to pay it at any time within six years , unless deemed to be in circulation from the time
he has suffered damage through delay in the same shall have been issued by any
presentation for payment. banker, or any servant or agent of such
ACCOUNT. - In Swiss Bank Corporation v. banker, until the same shall have been
Joachimson (March , 1921 ) the Court of actually returned to such banker or some
Appeal held that express demand by a servant or agent of such banker.”
customer for repayment of a current account BILL OF EXCHANGE . - An action on a bill
balance is a condition precedent to the right of exchange must be commenced within six
to sue the banker for the amount. Atkin , L.J. , years from the time when the cause of action
said : “ The result of this decision will be that arose ; that is, from the date when the bill
for the future bankers may have to face was due to be paid as regards the acceptor,
legal claims for balances of accounts which and from the date when notice of dishonour
have remained dormant for more than six is received as against the drawer or an
years . But seeing that bankers have not indorser.
been in the habit as a matter of business of BOND . — A bond continues for twenty
setting up the Statute ofLimitations against years from the date on which the right to
their customers or their legal representatives , bring an action first accrues. (See Debt.)
I do not suppose that such a change in what BREACH OF TRUST.—The Statute of
was supposed to be the law will have Limitations cannot be pleaded to a breach
much practical effect.” (See UNCLAIMED of trust. (See TRUSTEE, below .)
BALANCES . ) Calls. - A call is a specialty debt, and
Where aa debit balance has remained stand- may be sued for in England and Ireland
ing without any payment, either of principal at any time within twenty years. (See
or interest, or without any written acknow- Section 14, s.s. 2, Companies (Consolida
ledgment, the debtor may plead the statute tion) Act, 1908, under ARTICLES OF ASSOCIA
at the end of six years and the banker will TION.)
be unable to recover the money . A mere COMPOSITION WITH CREDITORS. — If a -

debit to the account by the banker for debtor fails to pay a composition as provided
interest does not keep the debt alive. in the deed of arrangement, the statute
If the account is in severalnames the debt begins to run from the date of the failure to
is kept alive only against those who have keep his promise.
acknowledged it ; a payment by one does Debt . - A person cannot be sued for a
not prevent the others from pleading the debt after six years from the date when it
statute . was incurred. If part payment has been
If a customer has several accounts they made or formal acknowledgment given , the
must all be considered as really one account ; six years begin to run from the date of the
606
STAJ DICTIONARY OF BANKING (STA

payment or acknowledgment. The acknow- at the end of a fixed period, the years
ledgment must be in writing, and be signed commence from that date.
by the party chargeable (or his duly author- DIVIDEND . - A dividend being a payment
ised agent). (Lord Tenterden's Act, 9 Geo.IV, under a company's articles of association is
c. 14, s. 1 , and 19 & 20 Vict. c. 97 , s. 13.) a specialty debt, and is not barred until after
In the case of a debt which is more than twenty years.
six years old, in respect of which no payment
DRAWER OF CHEQUE . — The drawer of a
or acknowledgment has been made, if the cheque is liable to pay it any time within six
debtor then makes a payment on account of years , except where he suffers damage by
the debt, that payment does not bring the the banker's failure through delay in
debt to life again , unless a promise; express presentation .
or implied, is made to pay the debt. In Where a loan has been made on an

order to take a statute-barred debt out of account, the six years run from the date the
the statute, there may be an acknowledg- money was paid, not necessarily from the
ment of the debt from which a promise to date of the cheque, though in most cases the
pay it must be implied ; or an unconditional dates will actually be the same.
promise to pay it ; or a conditional promise EXECUTOR.(See TRUSTEE, below .)
to pay the debt in writing and evidence that GUARANTEE UNDER HAND . — The banker's
that condition has been performed. “ The right against a guarantor is barred in six
new promise and not the old debt is the years from the date when the right to bring
measure of the creditor's right. If the debtor an action against the guarantor first accrued.
simply acknowledges an old debt, the law It has been held that the right of action on
implies from that simple acknowledgment a each item of the account arose as soon as
promise to pay it, for which promise the old that item became due and was not paid.
debt is a sufficient consideration. But if the Acknowledgments by a debtor do not keep
the debt a .
he is able, orbyinstalments, orintwo years, "A good plan, in connection with guar
or out of a particular fund, the creditor can antees is to have them renewed before the
claim nothing more than the promise gives expiration of six years from their date,
him ” (per Wigram , V.C. , Philips v. Philips, as this avoids any danger of the operation
13 L.J. Ch . 445) . Where a debt is statute- of the Statute of Limitations. Instead of a
barred and the debtor makes any promise fresh guarantee being taken, a written
or acknowledgment, he has always the right acknowledgment (stamped 6d .) upon the old
to couple any terms with his promise or guarantee by the surety, or sureties, that
acknowledgment, and unless these are satis- the guarantee is still in force is sometimes
fied , the creditor cannot sue with success . taken .
(See Leake on Contracts. ) The acknowledg- If the guarantee is drawn as payable
ment or promise to pay a statute-barred several days after demand , the six years
debt must be in writing . would not begin to run until demand had
In the case of a specialty debt — that is, been made. In Bradford Old Bank v.
where the debt is acknowledged in a docu- Sutcliffe ( 1918, 2 K.B. 833), where in a
ment under seal — the period is twenty years guarantee there was an undertaking to pay
from the date on which the right to bring on demand,” it was held that there was
an action first accrues. By 3 & 4 Will. IV , no cause of action till after demand . (See
c. 42, s. 3, the period of limitation for bring- GUARANTEE. )
ing an action of debt for rent on an indenture When repayment is demanded from the
of demise , or of covenant or debt on any guarantor the statute begins to run in his
bond , specialty , or recognizance, is twenty favour.
years. By the Mercantile Law Amendment GUARANTEE UNDER SEAL.---The period is
Act, 1856, s. 14, part payment by one twenty years , otherwise the same remarks
co-debtor is not to bind another. apply as in a guarantee under hand.
DEPOSIT RECEIPTS . — The six years begin But if it is in respect of a debt secured by
to run when demand for payment has been a mortgage of land the limitation is twelve
made . years both as to the remedy on the covenant
If the deposit receipt is repayable after and the remedy against the land, whether the
expiration of a specified notice, then the covenant of the surety is in the mortgage
years commence from the date on which deed itself or in a collateral bond ( Sutton v.
the receipt is due to be paid . If repayable Sutton , 1882, 22 Ch . D. 511 ) .
607
 STA] DICTIONARY OF BANKING (STA

INFANT . — The statute does not begin to six years are up, so as to avoid any question
run until he has reached the age of twenty- of release being raised . Where a promissory
one . ( See above . ) note on demand is given as collateral
INTEREST. - It has been held (Parr's Bank- security, with a memorandum of deposit, it
ing Co. v. Yates, 1898, 2 Q.B. 460) that is also advisable to have it renewed before
where certain advances were barred by the the six years expire , though in such a case
Statute of Limitations the interest did not it is possible that the statute might be held
fall to the ground at the same time. In this to run from the date of demand for payment
case principal and interest were guaranteed , and not from the date of the note.
and, though the banker's right against the If the note is payable at a specified period
surety was barred, it was held that the pay- after demand, or after date, the six years do
ment of interest, commission and other not commence to run till the day on which
banking charges which had accrued against the note is due to be paid .
the guaranteed party within six years before In Fettes v . Robertson ( 1920, K.B.D. 37
the commencement of the action were as T.L.R. 80) , an action in which the defendant
much guaranteed as the payment of the pleaded the Statute of Limitations with
advances, and that the Statute of Limita- respect to a promissory note indorsed by
tions did not affect those items. him and dishonoured, Bailhache, J. , said :
JUDGMENT. - A judgment is statute-barred “ If there was an unqualified admission of a
after twelve years. debt without anything further, the law
LOAN.—(See ACCOUNT, above ; PROMIS- implied a promise to pay, but if the admis
SORY NOTE, below .) sion was accompanied by words of hope or
MEMORANDUM OF DEPOSIT.-- If under expectancy that the defendant would be
hand , an action of debt must be brought able to pay, those words might render the
within six years, and an action of fore- admission not unqualified ."
closure within twelve years, from the day REAL PROPERTY . - Section 1 of the Real
on which the right to bring an action for the Property Limitation Act, 1874, provides :
debt first accrued . “ After the commencement of this Act no
If under seal, an action of debt and of person shall make an entry or distress, or
foreclosure must be brought within twelve bring an action or suit, to recover any land
years . or rent, but within twelve years next after
MORTGAGE OF LAND . - A mortgagee may the time at which the right to make such
enforce his security at any time within entry or distress, or to bring such action or
twelve years after the time at which the suit, shall have first accrued to some person
right to make entry or distress or bring an through whom he claims ; or if such right
action or suit first accrues . (See section , shall not have accrued to any person through
REAL PROPERTY, below .) A mortgagor is whom he claims, then within twelve years
barred at the end of twelve years from the next after the time at which the right to
time when the mortgagee took possession, make such entry or distress, or to bring such
or from the last written acknowledgment. action or suit, shall have first accrued to the
The twelve years applies to the personal person making or bringing the same." (See
remedy on the covenant in a mortgage deed , MORTGAGE OF LAND, above.)
as well as to the remedy against the land . Rent. —No arrears of rent can be re
(Sutton v . Sutton , 52 L.J. Ch . 333.) covered by distress, action , or suit, but
An acknowledgment from one mortgagor within six years next after the same shall
of land is sufficient to keep the debt alive. have become due, or after an acknowledg
OVERDRAFT.— (See ACCOUNT, above .) ment in writing. Actions of debt for rent
PROMISSORY NOTE .-If on demand, the on an indenture of demise and all actions of
six years begin to run in favour of the maker covenant shall be brought within twenty
from the date of the note or from the last years after the cause of action (3 & 4 Will. IV,
instalment paid or acknowledgment given . Ć. 27, Section 42, and c. 42, Section 3) .
If there are several makers of the note there SAFE CUSTODY . — Where articles have been
must be an acknowledgment from each one, left for safe custody the six years do not
otherwise the debt will be kept alive only begin to run until demand to deliver up has
against the maker who has acknowledged been made and a refusal given (see In re
the debt or made the payment, and the Tidd, 1893, 3 Ch. 154).
others will be released . It is advisable ble ? SCOTLAND . -. In Scotland the law is very
always to have a note renewed before the different from that in England. By the
608
STA ) DICTIONARY OF BANKING [ STA

Long Negative Prescription, a person having By Section 25 : Register of Members.

an interest in an obligation or heritable bond By Section 26 : Annual List of Members
or other heritable rights, must follow the and Summary. (See REGISTER OF MEMBERS
same within forty years and take document OF COMPANY .)
thereupon, otherwise his right will be By Section 71 : Minute Book . (See
prescribed or lost. Negative prescription MINUTES.)
means the loss of a right by neglecting to By Section 75 : Register of Directors, or
use it during the time limited by law. Managers . (See DIRECTORS.)
Obligations founded upon holograph writings By Section 100 : Register of Mortgages .
prescribe in twenty years (called the Vicen- | (See RegistRATION OF MORTGAGES AND
nial Prescription ). Cautionary obligations CHARGES.)
prescribe in seven years (Septennial Pre estSTATUTORY DECLARATION . A decla
scription). Bills of exchange prescribe in ration in writing (without oath) , made in
six years (Sexennial Prescription). Actions accordance with the Statutory Declarations
for most debts, that are not founded upon Act, 1835, by which a person solemnly
written obligations, must be pursued within declares that he verifies some circumstance
three years ( Triennial Prescription ). or fact. For example, if it should be neces
SPECIALTY DEBT. (See Debt, above.) sary for Smith to have proof that Brown
STOCKS AND SHARES. —There is no statute has been (as he maintains) in possession of
of limitations with regard to an equitable a certain property for a specified period,
mortgage of stocks and shares. If the debt Smith may besatisfied to accept a statutory
is statute -barred , that does not affect the declaration from , say, Jones, formally stating
banker's claim upon the security. that he is able, from his own knowledge,
In London and Midland Bank, Ltd. v. to vouch for the accuracy of Brown's
Mitchell ( 1899 , 2 Ch. 161 ) , where shares had assertion .
been given as security , with a blank transfer, All declarations must be made before a
it was held that, although the personal action | justice of the peace, notary public, or com
on the debt was barred , the bank's right of missioner to administer oaths in the Supreme
property in the shares was not destroyed. Court of Judicature.
Mr. Justice Stirling said : “ Though the debt The form of statutory declaration to be
is barred in the sense that a personal action given when verifying a memorandum of
can no longer be brought to recover it, the satisfaction of a mortgage or charge is given
debt is not gone ; nor is the right of property under MEMORANDUM OF SATISFACTION.
As to the stamp duty, see under
destroyed, for there is no provision in any
statute of limitations with reference to AFFIDAVIT.
personal property similar to that contained STATUTORY MEETING OF COMPANY .
in 3 & 4 William IV, c. 27, Section 34, Every company limited by shares and
whereby the title to land is extinguished registered on or after January 1 , 1901 , shall,
after the lapse of a certain period .” within a period of not less than one month
TRUSTEE. — By the Trustee Act, 1888, nor more than three months from the date
8. 8, trustees are placed on the same at which the company is entitled to com
footing as other persons, provided that, in mence business, hold a general meeting of
any proceeding against a trustee in which the members, which shall be called the
the statute is pleaded, the claim is not statutory meeting. (See Section 65, Com
founded upon any fraud or fraudulent panies (Consolidation) Act, 1908, under
breach of trust to which the trustee was a MEETINGS.)
A general meeting of every company shall
party or privy , or to recover trust property ,
or the proceeds thereof, which is still re- be held once at the least in every calendar
tained by the trustee or which has been year, and not more than fifteen months
previously received by him and converted after the last preceding general meeting.
to his own use . (Section 64. )
For the purposes of that Act, the expres- STATUTORY MORTGAGE . By the Con
sion “ trustee ” shall be deemed to include an veyancing and Law of Property Act, 1881,
executor or administrator. (Section 1 , s.s. 3.) a mortgage of freehold or leasehold land may
STATUTORY BOOKS. — The books which be made by a deed expressed to be made by
are required to be kept by companies regis- way of statutory mortgage in the following
tered under the Companies (Consolidation) form , with such variations and additions,
Act, 1908, viz . : if any, as circumstances may require, and
609

39-41535)
STA ] DICTIONARY OF BANKING (STA

the provisions of Section 26 of the Act shall | transfer of mortgage the day of
apply thereto : 1883, between A of ( etc.) of the first part
DEED OF STATUTORY MORTGAGE. B of ( etc) of the second part and C of [etc.]
of the third part supplemental to an inden
This Indenture made by way of statutory | ture made by way of statutory mortgage
mortgage the day of 1882, be - dated the day of 1882, and made
tween A of (etc.) of the one part and M between [etc.] Witnesseth that in considera
of (etc.) of the other part Witnesseth that tion of the sum of £ now paid to A by
in consideration of the sum of £ now
C being the mortgage money due in respect
paid to A by M of which sum A hereby of the said mortgage no interest being now
acknowledges the receipt A as mortgagor due and payable thereon of which sum A
and as beneficial owner hereby conveys to hereby acknowledges the receipt A as mort
M all that [etc.] To hold to and to the use gagee with the concurrence of B who joins
of M in feesimple for securing payment on herein as covenantor hereby conveys and
the day of 1883, of the prin- transfers to C the benefit of the said mortgage.
cipal sum of £ as the mortgage money In witness, etc.
with interest thereon at the rate of ( four) By Section 27, the deed shall have effect as
per centum per annum. follows :
In witness, etc. “ 2. (a) There shall become vested in the
By Section 26 : person to whom the benefit of the
' (2) There shall be deemed to be in mortgage is expressed to be trans
cluded, and there shall by virtue of ferred , who, with his executors, ad
this Act be implied, in the mortgage ministrators, and assigns, is here
deed after in this Section designated the
“ First, a covenant with the transferee, the right to demand, sue
mortgagee by the person expressed for, recover, and give receipts for
therein to convey as mortgagor to the mortgage money, or the unpaid
the effect following (namely) : part thereof, and the interest then
" That the mortgagor will, on the due, if any, and thenceforth to
stated day, pay to the mortgagee the become due thereon, and the benefit
stated mortgage money, with in of all securities for the same, and
terest thereon in the meantime, at the benefit of and the right to sue
the stated rate, and will thereafter, on all covenants with the mortgagee ,
if and as long as the mortgage and the right to exercise all powers
money, or any part thereof, remains of the mortgagee :
unpaid, pay to the mortgagee in- “ (6) All the estate and interest, subject to
terest thereon, or on the unpaid redemption, of the mortgagee in the
part thereof, at the stated rate, by mortgaged land shall rest in the
equal half -yearly payments,' the transferee, subject to redemption.”
first thereof to be made at the end In the above form , the same Section (s.s.
of six calendar months from the day 3) provides that there shall also be deemed
stated for payment of the mortgage to be included a covenant with the trans
money : feree by the person expressed to join therein
“ Secondly, a proviso to the effect as covenantor to the effect following :
following (namely) : “ That the covenantor will, on the next
" That if the mortgagor, on the of the days by the mortgage deed fixed for
stated day, pays to the mortgagee payment of interest, pay to the transferee
the stated mortgage money, with the stated mortgage money, or so much
interest thereon in the meantime, at thereofas then remains unpaid, with interest
the stated rate, the mortgagee atany thereon , or on the unpaid part thereof, in
time thereafter, at the request and the meantime, at the rate stated in the
cost of the mortgagor, shall re- mortgage deed ; and will thereafter, as long
convey the mortgaged property to as the mortgage money, or any part thereof,
)

the mortgagor, or as he shall direct.” remains unpaid, pay to the transferee

The following is the form given in the interest on that sum , or the unpaid part
Act of a statutory transfer of mortgage, a thereof, at the same rate, on the successive
covenantor joining : days by the mortgage deed fixed for payment
This Indenture made by way of statutory of interest."
610
STA ) DICTIONARY OF BANKING [ STO

The following is the form of deed of report, called the statutory report, to every
statutory reconveyance of mortgage, given member of the company and to every other
Companies
in the Act : person entitled under the
This Indenture made by way of statutory (Consolidation) Act, 1908, to receive it. For
reconveyance of mortgage the day of the requirements of the Act regarding this
1884, between C of (etc.) of the one report see under heading MEETINGS .
part and B of (etc.) of the other part supple- STERLING . When gold and silver are
mental to an indenture made by way of of the standard fineness they are called
statutory transfer of mortgage dated the sterling metals. Various explanations are
day of 1883, and made between given as to the original meaning of the word
(etc.) Witnesseth that in consideration of sterling. A coin called an Easterling "
all principal money and interest due under was introduced into the coinage in the
that indenture having been paid of which reign of King Richard I and as that coin was
principal and interest C hereby acknow- considered superior to other coins in circula
ledges the receipt C as mortgagee hereby tion at that time it is probable that the word
conveys to B all the lands and heredita- sterling took its rise from the Easterling.
ments now vested in C under the said in- Another suggestion ( given in Hutchison's
denture To hold to and to the use of B in “ Practice of Banking ” ) is that the word was
fee simple discharged from all principalmoney derived, “ from Easterling, a name given to
and interest secured by and from all claims persons who periodically examined the mint
and demands under the said indenture. and regulated the coinage, possibly at Easter,
In Witness, etc. so that the term means true money accord
The statutory form of mortgage is not ing to the last examination, as 100 pennies,
commonly used or pounds, Easterling, or sterling." (See
(See Mortgage .) Coinage .)
STATUTORY RECEIPT. When the STERLING BONDS. Bonds of a foreign
moneys intended to be secured by a mort- country which are payable in British
gage to a building society have been fully currency.
paid , the society may indorse upon or annex STET. (Latin , let it stand . ) When
to the mortgage a reconveyance of the entries in a book have been ruled out in
mortgaged property to the then owner of mistake, instead of erasing the line, it is
the equity of redemption, or a receipt under sometimes a convenient way of correcting
the seal of the society, countersigned by the the error to write the word “ stet ” in a
secretary or manager in the following form :- different coloured ink, thus indicating that
The building society hereby the entries stand as they were before the line
acknowledge to have received all moneys was passed through them.
intended to be secured by the within ( or STOCK. The capital of a company is the
above ) written deed . money contributed by the members and
In witness whereof, the seal of the society forms what is called the stock . A member
is hereto affixed this .... day of may hold so much stock or so many shares
by order of the board of directors ( or com- in the company . Stock may be held and
mittee of management) in presence of transferred in any amounts (without dis
tinguishing numbers), whereas shares are
Secretary ( or Manager). (LS for fixed amounts and all numbered, e.g. a
person may hold £ 150 of stock if the capital
This statutory receipt vacates the mort- is dealt with in that way ; but if the capital
gage and vests the estate of and in the pro- is divided into shares of, say, £5 each , fully
perty therein comprised in the person for the paid, then the person with the same holding
time being entitled to the equity of redemp- would have thirty shares 45 each. Stock,
tion , without any reconveyance or re-sur- | by its nature, is fully paid up, but upon
render whatever (Building Societies' Act, shares there is often a liability. In Consols ,
1874, Section 42) . The receipt is exempt any odd amount (e.g. £33 6s. 8d.) may be
from stamp duty . (See BUILDING Society, transferred ; but in the case of an ordinary
INDUSTRIAL AND PROVIDENT SOCIETIES . ) limited company, transfers of stock are
STATUTORY REPORT. The directors usually, for convenience ,restricted to certain
of a company limited by shares shall, at least round sums.
seven days before the date on which the There may be varieties of stock as guaran
statutory meeting (q.v.) is held, forward a teed, preference, ordinary, deferred and other
11
 STO ] DICTIONARY OF BANKING [ STO

kinds, which entitle the hoiders to different he effects on their behalf ; the rate varies
rights in the matter of dividends and in a in different classes of stocks. The London
division upon a winding up of the company . Stock Exchange Official Scale of (minimum )
A company cannot make an original issue Commissions ( 1st September, 1920) is :
of stock . It can only be done by a conver- Securities of or guaranteed
sion of fully -paid shares into stock. As to by the British or Indian
Government having a cur.
the power of a company limited by shares rency of not more than 12
to convert shares into stock, see Section 41 , years, in bargains of not
Companies (Consolidation ) Act, 1908, under less than £ 20,000 stock I per .
cent. on Stock .
SHARE CAPITAL. Consols 24 per cent. and 21 !
In companies where Table A applies (see per cent. Annuities. } ro per cent. on Stock .
Section 11 under ARTICLES OF ASSOCIATION ) Other British Government
Securities .

the regulations are : Indian Government Stocks

Metropolitan Consolidated 1 per cent. on Stock
Conversion of Shares into Stock . Stocks .

LondonCountyConsolidated
“ 31. The directors may, with the sanction Stocks
of the company previously given in general Foreign GovernmentBonds.
meeting, convert any paid -up shares into Price 20 or under
stock, and may with the like sanction Foreign Railway and other t per cent. on Stock .
Bonds to bearer . Price
reconvert any stock into paid -up shares of 20 or under
any denomination . Foreign Government Bonds.
“ 32. The holders ofstock may transfer the Price over 20
same, or any part thereof, in the same man Foreign Railway and other
Bonds to bearer. Price
ner, and subject to the same regulations, as, over 20
and subject to which , the shares from which Colonial Government Securi- \ t per cent. on Stock .
the stock arose might previously to con ties.
County , Corporation and
version have been transferred, or as near Provincial Securities
thereto as circumstances admit ; but the (British, Indian , Colonial
directors may from time to time fix the or Foreign )
minimum amount of stock transferable, and Bank of England and Bank} t per cent. on Money.
of Ireland Stock .
0000000000
restrict or forbid the transfer of fractions of Registered Stocks i per cent. on Money.
that minimum , but the minimum shall not
exceed the nominal amount of the shares SHARES, REGISTERED OR BEARER (OTHER THAN
SHARES OF $ 50 OR $ 100 DENOMINATION DEALT
from which the stock arose . IN IN THE AMERICAN MARKET) .
“ 33. The holders of stock shall, according Price 0 1 0 or under At discretion .
to the amount of the stock held by them , S. d .
have the same rights, privileges, and advan- Over 0 1 0 to 0 2 0 . 001 per Share .
0 2 0 to 0 3 0 01
tages as regards dividends, voting at meet 0 3 6 to 0 5 0 1
1

ings of the company, and other matters as if . 0 5 0 to 0 15

0 3
they held the shares from which the stock 0 15 0 to £ 1 10 .

arose, but no such privilege or advantage £ 1 10 0 to £ 2 0 .

0 41
# 2 0 0 to 3 0 0 0 6
(except participation in the dividends and £ 3 0 0 to £ 4 0 . 0 7
profits of the company) shall be conferred by £ 4 0 0 to £ 5 0 0 9
0
any such aliquot part of stock as would not, 9) £ 5 0 0 to £ 7 10
1 3
if existing in shares, have conferred that 1 7 10 0 to 710 0 .

£ 10 0 0 to 115 00 1 6
privilege or advantage. 11 £ 15 0 0 to 220 00 .
2 0
“ 34. Such of the regulations of the com £ 2000to 225 0 0 .
2 6
pany (other than those relating to share £25 0 0 . per cent. on Money.
warrants) as are applicable to paid -up SHARES OF $ 50 OR $ 100 DENOMINATION DEALT IN
shares shall apply to stock, and the words IN THE AMERICAN MARKET.
' share ' and
shareholder ' therein shall Price $ 5 or under At discretion .
.
6
include ' stock ' and ' stock -holder .' (See s. d .
COMPANIES, INSCRIBED STOCK, SHARE Over $ 5 to $ 25 6 per Share.
$ 25 to $ 50 0 9
CAPITAL .) $ 50 to $ 100 1 0
STOCKBROKER . One who purchases or $100 to $ 150 1-6
sells stocks and shares for clients . His $ 150 to $ 200 : 220
remuneration is the commission he receives With 6d. rise for every $50, or portion thereof, in
from his clients on the purchases and sales price.
612
 STO ] DICTIONARY OF BANKING [STO
Powers of Attorney for lascribed to suppose that the securities are not the
Stock
Probate and other Valuations broker's own property, the client will not be
Transfers of Stocks and Shares
Small Bargains .
•
} At discretion .
No lower commission than 20s.
entitled to redeem them (if they have been
registered in the banker's name) except by
to be charged except in the payment of the debt due from the broker to
case of transactions amount- the banker. In Bentinck v. London Joint
ing to less than £ 100 in value Stock Bank (1893, 2 Ch . 120) a firm of stock
on which a commission of
not less than 10s. must be brokers deposited with their bankers, as
charged; if less than £ 20 security for a loan, various stocks, shares,
the minimum must be 5s.
and bonds belonging to a client, the securi
By the rules of the Stock Exchange, when ties having been pledged with the brokers
a stock is sold and the proceeds are at once by the client. The stocks and shares were
invested in another stock , brokers
are registered in the names of the bank's
allowed to charge full commission on the nominees. The client asserted that he had
one transaction and half-commission on the authorised the brokers to repledge his
other. When the same security is bought securities only for an amount not exceeding
and sold for the same principal within the what he owed to the brokers, and that on
same account brokers may charge only one paying such amount to the bank he was
commission . entitled to redeem his securities. In the
With regard to a stockbroker's account, course of his judgment, Mr. Justice North
in Thomson v . Clydesdale Bank, Ltd. (1893, said that when money is borrowed by a
A.C. 282) , Lord Herschell said : " It seems client from a stockbroker on contango
to me that, if because an account is opened or " continuation,” whether the money is
with bankers by a stockbroker they are obtained from the dealer, or from other
bound to inquire into the source from which stockbrokers, or from bankers, the result
he receives any money which he pays in, is the same; the arrangement is one by
it would be wholly impossible that business which the broker becomes, as between him
could be carried on, and I know of no self and his client, the owner of the shares
principle or authority which establishes such | in question , although he is under a contract
a proposition .” (See CONTRACT NOTE to provide an equal amount of similar shares
(BROKER's) , STOCK EXCHANGE , STOCK at a future date. It was held that there was
JOBBER . ) nothing to lead the bank to suppose that
STOCKBROKERS' LOANS. When a the stocks and shares which were trans
stockbroker lends money to a client who ferred to their trustees were not the broker's
desires to purchase stocks and shares, the own property, and that the bank must
securities are usually deposited with the therefore be treated as bona fide holders for
broker as cover for the advance, and the value without notice. It was also held that,
broker is often authorised to transfer them as to the stocks and shares of which the
to a banker as security when it is necessary client had himself executed transfers, he
for the broker to obtain an advance from was estopped from denying that the brokers
him . In such cases the broker's interest had authority to pledge them to the bank
in the securities is limited to the money for their full value.
he has lent to his client, and if they are When negotiable securities are pledged by
given to a banker as security for the general a broker, there is no obligation upon a
indebtedness of the broker various ques- banker to inquire whether they are the
tions arise . The results of several important property of the broker or not. If there is
cases which have come before the Courts anything to arouse suspicion the banker
show (1 ) that if a banker has definite know . would be put upon inquiry, but, apart from
ledge when he takes certain securities from that, any " person taking a negotiable instru
a broker that the broker is dealing with ment in good faith and for value obtains a
them beyond his authority — that is, that title valid against all the world .”
they are being given to the banker to cover When a banker has notice that a broker
a greater sum than the amount lent by has power to pledge a client's securities only
the broker to the client — the client will be to a limited extent, the banker's advance to
entitled to redeem them from the banker, the broker upon any such securities should
even if transferred into the banker's name, not, of course, exceed that limit. The
on paying the amount due by him to the banker should receive a letter or memoran
broker ; ( 2) that if the banker has no reason dum from the broker's client agreeing to the
613
STO ] DICTIONARY OF BANKING (STO

broker charging the securities to the extent stamp duty, as the document does not
of the client's indebtedness to the broker. contain any reference to a definite sum of
(See BLANK TRANSFER, NEGOTIABLE INSTRU - money. Office vouchers used to debit the
MENTS , SOLICITORS ' ACCOUNTS .) customer's account with the cost of the
STOCKBROKING TRANSACTIONS. When purchase are also not liable to stamp duty.
a banker is requested by a customer to (Board of Inland Revenue.)
instruct his brokers to purchase or sell certain A prudent banker is careful not to advise
stocks or shares, the request should be made customers as to the sale or purchase of
in writing so that no mistake or misunder- stocks and shares; when advice is required,
standing may arise . In the case of a sale , he obtains it from the bank's broker, and
it should be signed by the person in whose transmits it to the customer as “ the broker's
name the stocks or shares are registered ; advice.” (See case under BANKER'S OPINION .)
if registered in several names, the signature If the purchaser dies before the settlement,
of each person should be appended. The his account may be debited with the purchase
order should contain a precise description price . (See STOCKBROKER.)
of the security, a note of the amount of stock STOCK CERTIFICATE TO BEARER .
or number of shares to be sold, and the price A certificate which entitles the bearer to the
at which the sale is to be effected. The stock mentioned therein and which is trans
order is usually to sell at “ not less than ferable by simple delivery of the certificate .
€ per cent.," or per share ; or it may be As to stamp duty, see under SHARE
to sell at best price." WARRANT.
In the case of a purchase, it should be By Section 109 of the Stamp Act, 1891 :
particularly noted whether the customer “ ( 1) Where the holder of a stock
wishes to invest a sum of, say, £ 500 in a given certificate to bearer has been entered
stock or to purchase £ 500 of the stock. on the register of the local authority
Equal care is necessary in transmitting the as the owner of the share of stock
order to the brokers, otherwise an unlooked described in the certificate, the
for result may be produced . The order may certificate shall be forthwith can
be to purchase at “ the lowest price ," or at
“ not more than £
)
per cent., or per celled so as to be incapable of being
re - issued to any person .
share. The “ lowest price ” is not a satis
factory form of order, as the price might fall “ (2) Every person by whom a stock certifi
after the broker has fulfilled the order, and cate to bearer is issued without being
complications might arise with the customer. duly stamped shall incur a fine of
When the cost is known, a cheque is obtained fifty pounds."
from the customer for the amount, unless theBy Section 5 of the Finance Act, 1899, the
order includes an authority to charge the duty on stock certificates to bearer shall
amount to the account of the person signing extend to any instrument to bearer issued
the order. The latter plan is the better one by or on behalf of any company orbody of
The amount is either credited to the banker's persons in the United Kingdom and having
London agents or London office to meet the a like effect as a stock certificate to bearer .
purchase, or is placed to a separate account (See Section 6 of the same Act, and Section
until the brokers draw for the money. 38, Finance Act, 1920, under MARKETABLE
A purchase or sale may be effected either SECURITY.)
“ for cash or “ for the account ” and the Stock certificates to bearer for various
customer should instruct as desired . Government and corporation stocks trans
Where a broker shares his commission ferable at the Bank of England can be
with the bank, a note to that effect should obtained from the Bank. The stockholder
appear upon the face of the contract note. must either attend at the Bank in person to
By the rules of the Stock Exchange, an transfer inscribed stock, or grant a power
agent's share of the commission must not of attorney to some person , or firm , for this
be divided with or allowed to his principal. purpose.
(See CONTRACT NOTE (BROKER's), PRE- By Section 7 of the Trustee Act, 1893, ( 1 )
VENTION OF CORRUPTION Act.) a trustee, unless authorised by the terms of
An order to buy or sell is not subject to his trust, shall not apply for or hold any cer
stamp duty ; if an order to buy includes an tificate to bearer issued under the authority
authority to charge the purchase price to of any of the following acts :
the customer's account it does not attract (a) The India Stock Certificate Act, 1863.
614
 STO ) DICTIONARY OF BANKING [ STO

(6) The National Debt Act, 1870. (c) The Local In most stocks there are two settlements

Act, 1877.
del pe
Loans Act, 1875. (d) The Colonial Stock per month , one near the middle and the
(See MARKETABLE SECURITY.) other near the end ; for Consols there is one
STOCK EXCHANGE . The place ap- day, near the beginning of the month . A
pointed for the purchase and sale of stocks transaction that is to be completed on the
and shares. It is situate in Capel Court settling day next following is known as one
between Threadneedle Street and Throg- “ for the account " ; there is also much
morton Street. The London Stock Ex- business done “ for money or “ for cash ,"
change is the most important in the world that is, for immediate payment. (See
and the number and amount of the SETTLING DAYS.)
transactions that take place here in the If, on settling day, the client does not
course of a single day are very great. As wish to complete a purchase, the broker will
other stock exchanges are managed on by arrangement carry over the bargain
somewhat similar lines, it will suffice to give until the following settlementagain, charging
a few particulars of this one. I)
a contango for the service. (See CONTANGO .)
The bu ness of the “ House , " as the In order to find the money to pay for stocks
Stock Exchange is termed , is split up into bought in this way for clients who do not
the different markets ,” or classes of pay on settling day, the brokers frequently
securities dealt in, as those of Consols, borrow from their bankers, lodging as
colonial stocks, corporations, foreign govern- security the stocks in question. The margin
ments, home railways, foreign railways, in the value of the security beyond the
banks, industrials, mines and others. amount of the advance varies with the class
The dealers engaged are of two kinds, of stock ; the period for which bankers
)
stockbrokers and stock jobbers, who must arrange such “ stockbrokers' loans is till
all be members of the Exchange. The the next account ” -i.e . the next Stock
former dealwith the outside public, taking Exchange settling day, at which time the
their clients' instructions as to buying and amount of the loan, margin , rate of interest,
selling, and themselves doing the actual etc., must be re-arranged.
business with the jobbers, selling to them For the sake of brevity some stocks quoted
the securities their clients sell and obtaining on the Stock Exchange are occasionally
from them the stocks and shares their clients referred to by brokers and in the press by
buy. Thus the jobbers are merchants and abbreviated names ; some are readily dis
act as middlemen between those brokers tinguishable, but it may be well to mention
who have stock for sale and those who wish a few of the more important : Anglo A =
to purchase ; and the method in which they Anglo -American Telegraph Co. Deferred
make their profit is different from that of the ordinary stock ; Bags Buenos Ayres
brokers, for the latter are paid by the com- Great Southern Railway ordinary stock .
mission , at so much per cent. or per share, Berthas · London, Brighton and South
which they receive from their clients, Coast Railway Deferred ordinary stock.
whilst the jobbers take the “ turn” between (See BERWICKS,BRIGHTON A , BRUMS,CALEYS,
the price they give for a stock and the rate CanPACS, CHARTEREDS, CHATHAMS, CHOPS,
at which they sell it again. CLARAS, DISTRICTS, DORAS, DOVER A,
On receiving instructions from his client a EASTERNS, KAFFIRS, KANGAROOS, LEEDS,
broker buys so much stock from a jobber or Noras, Pots, SOUTHS, TRUNKS, WESTERNS,
sells so much to him, as the case may be, | YORK PREFERRED, YORKS.)
at the price which he offers, subject to the The principal foreign stock exchanges are
client's “ limit ” ; he then sends his client New York, Paris, Berlin , Vienna, Frankfort
a contract note which, amongst other par- on -Maine, Brussels , and Amsterdam . In
ticulars, quotes the settling day when the many places stock exchange business
price is due to be paid. A large proportion of is conducted at the Bourses . (See
the Stock Exchange business is speculative, BOURSE. )
however, and the price is not paid ; instead, (See ACCOUNT, BACKWARDATION , BEAR
if the transaction has been a purchase and AND BULL, CARRYING OVER, CONTANGO ,
the stock has risen in price by the time CONTRACT Note, DIFFERENCES, MAKING -UP
settling day arrives, the client may request Price, OFFICIAL LIST, OPTIONS, QUOTATION
his broker to sell again and the broker will ON LONDON STOCK EXCHANGE , SETTLING
then merely send him a cheque for the profit Days, SPECIAL SETTLEMENT, STOCKBROKER,
on the “ deal.” ( See BULL AND BEAR.) STOCK JOBBER .)
615
STO ] DICTIONARY OF BANKING (STO

STOCK EXCHANGE HOLIDAYS . The all interest in the stock trust certificate on
Stock Exchange is closed on the following the books of the voting trustees. (See
days : January 1, Easter Monday, May 1, AMERICAN RAILROAD CERTIFICATES.)
Whit Monday, first Monday in August, STOCK WARRANT. A stock warrant to
November 1, December 26, unless specially bearer entitles the bearer of the warrant to
ordered otherwise by the Committee for the stock therein specified .
General Purposes. When January 1, May 1 , A stock warrant is included in the expres
November 1 or December 26 falls on a sion “ share warrant ” in the Companies
Sunday the “ House ” is closed on the day (Consolidation ) Act, 1908. (See SHARE
following WARRANT.)
STOCK EXCHANGE SETTLEMENT. A stock warrant is a negotiable instru
The adjustment of differences between ment.
brokers and clients, when payment is made STOLEN BANK NOTES. Where bank
to clients for stocks sold on their behalf and notes have been stolen, a holder for value,
payment received from clients for stocks without notice that they have been stolen,
bought. In most “ markets," as the various is entitled to payment and the person who
departments are called into which the stocks lost them cannot recover from him . But
dealt in on the London Stock Exchange are where it is proved that bank notes have been
divided, the settlement takes place twice a stolen , the burden of proof that they were
month, near the middle and near the end ; taken in good faith and for value rests upon
but there is only one settlement for the the holder.
Consols “ market," that is about the A banker cannot refuse to pay his own
beginning of the month . (See SETTLING notes, but where he has information that
DAYS.) certain notes have been stolen he would
STOCK JOBBER. A dealer in stocks and naturally make full inquiry before paying
shares who conducts his business with the such notes.
stockbrokers, acting as intermediary be- The numbers, when known, of notes which
tween those brokers who have securities for have been stolen are usually notified to
sale and those who wish to purchase. By bankers and money changers, but it has
the rules of the Stock Exchange a jobber been held that the mere fact that a person
may not deal with the public direct. The has possession of a list of the numbers of
jobber's profit (called the jobber's turn ) is stolen notes will not, if he has, in good faith,
the difference between his buying and selling given value for one of them , prevent him
prices. He is also called a dealer. (See from recovering upon any such note (Raphael
Stock EXCHANGE .) v. Bank of England, 1855, 25 L.J.C.P. 33 ).
STOCK RECEIPT. The receipt which is It is quite clear, therefore, that the notice
given by the seller or his attorney, to the which is sometimes found in newspapers
purchaser, when inscribed stocks are trans- that “ payment has been stopped ” of stolen
ferred. It is of no value as a security. A or lost bank notes is legally of no value
holder's title is the entry in the stock books whatever .
at the bank where the stocks are domiciled. STOLEN BILL. A bill of exchange
Certain stocks may be converted bya holder can be the subject of larceny like any other
into certificates to bearer . (See NATIONAL valuable document of title, but it is un
DEBT, STOCK CERTIFICATE TO BEARER.) necessary to inquire into anything beyond
In order that inscribed stock may be taken thecivil position as to liability in connection
as a security for an advance, it must be with the matter.
registered inthe name of the bank or in the By Section 20 of the Bills of Exchange
names of the bank's nominees. Act, 1882, very full authority is given to fill
STOCK TRUST CERTIFICATE . The up an inchoate instrument (q.v.) and turn it
name of a certificate issued by certain into a complete bill. But this does not
American railroad companies. It certifies
3)
permit of the filling up and the conversion
that, on surrender, “ John Brown ” will be being effected by any other than the duly
entitled , out of certificates delivered to authorised person. If, therefore, an in
undersigned voting trustees, to receive a choate instrument is stolen before comple
certificate for shares of tion , no action can be brought upon it, for
dollars, etc. it would have to be signed by some person
On the back is a form of transfer and or other, and the signature would be either
an appointment of an attorney to transfer forged or unauthorised, having been made
616
STO] DICTIONARY OF BANKING (STO
>
by some person other than the one entitled by Chitty in his “ Bills of Exchange, " 10th
to complete the bill. The forged or un- ed . , p. 180 , n .) .
authorised signature is wholly inoperative. When a bill is in the hands of a holder in
(Section 24.) This is well established by the due course a valid delivery of the bill by all
case of Baxendale v. Bennett ( 1878, 3 Q.B.D. parties prior to him so as to make them
525) . put acceptance in a to him is conclusively
desk . Itwas stolen, filleduppastabilbý (through
C with his own name as drawer, and nego-
Section or21),"Butºnotitlecanbe obtained
under a forged or unauthorised
tiated . It was held that even a holder in signature. (See Section 24 under FORGERY.)
due course could not recover from B, as he With regard to bills of exchange in
had never delivered the inchoate instrument general, that is, those bills which do not
for the purpose of being converted into a fall within the definition of a cheque (see
bill by C. Whatever remedies there may Section 60 ), a banker is in no better position
be for those persons who have dealt in and than a private individual, unless special
with the instrument, they are independent of arrangements are made by the banker when
the document, whichnever became a bill at all. a billis made payable at his bank .
But if a person accepts a bill in blank and STOLEN CHEQUE . For most pur
authorises the person to whom he issues it poses a cheque is legally regarded as a bill
to fill it up, and it is filled up by him for of exchange ; but the law is not quite the
any amount that the stamp will cover, the same with regard to the two instruments, at
acceptor is liable even if filled up for a least as far as the larceny of them is con
greater amount than he intended. Where cerned . The civil liability when a bill is
a man has signed a blank acceptance, and stolen has been referred to in the last article,
has issued it, and has authorised the holder but it would appear that when a cheque is
to fill it up, he is liable on the bill, whatever stolen, the position of the banker is peculiar.
the amount may be, though he has given The crossing of cheques, and the marking of
secret instructions to the holder to the them as “ not negotiable, " have safeguarded
amount for which he shall fill it up ; he the public to a remarkable extent by making
has enabled his agent to deceive an innocent it more difficult for a thief to obtain cash for
party, and he is liable." (Brett, L.J. , in the cheques, though the mere crossing of
Baxendale v . Bennett.) a cheque does not affect its negotiability
Again , if aa bill complete in form is stolen , if it is regular in every respect. If a cheque
the liability of the parties will dependupon is stolen whilst in course of transmission,
the particular circumstances. Thus, C, the a holder in due course is entitled to the
holder of a bill, specially indorsed it to D, amount of it, and may sue the drawer
and forwarded it in a letter to D. In the or any other party to the cheque upon
course of transmission the bill was stolen and it if payment has been stopped. But, of
D's indorsement forged. The bill was after- course, if the cheque is specially indorsed
wards negotiated. Since the indorsement of and the indorsee's signature has not been
D was necessary for negotiation, and this had added , an unauthorised or a forged signature
not been obtained , the signature was, under would be appended, and through this
Section 24, wholly inoperative, and C still signature (by Section 24) no title could be
retained the property in the bill. No liability made to it. The property would remain in
rested on any person who was a party to the the last indorser.
bill prior to the time of D's forged indorse- In the case of a cheque which has been
ment (Arnold v. Cheque Bank, 1876, 1 C.P.D. crossed with the addition of the words "not
578, at p. 584) . If, on the contrary, the bill negotiable any person taking such a
is indorsed in blank and stolen, a holder in cheque shall not have, and shall not be
good faith and without notice that his title capable of giving a better title tothe cheque
to the bill is defective is entitled to demand than that which the person had from whom
payment of the same. And if a bill indorsed he took it. (Section 81.)
in blank is stolen whilst in the course of If the banker on whom an open cheque
negotiation for any person who was the is drawn pays it in good faith and in the
holder of it, the payment at maturity by ordinary course of business, then (by Section
the acceptor, provided he acts in good faith , 60) the banker is entitled to charge his
is a good discharge of the bill, even though
2 customer, and there is no responsibility
the payment is made to the actual thief resting upon him if the indorsement has been
( see Smith v. Sheppard, 1776, a case cited forged and the cheque stolen. If the cheque
617
STO] DICTIONARY OF BANKING ( SUB

is payable to bearer, or if, after having been often works one or more sub -branches, or
made payable to order it bears the true agencies. They may be open daily and have
signature of the indorsee, it gets into circu- a resident clerk in charge, or be worked by a
lation, it becomes the property of any holder clerk from the parent office. In many cases,
who has taken it in good faith and has had sub -branches are open only on one, two, or
no reason to doubt that it was regular in three days a week. When the sub is open
every respect. daily it may, so far as book -keeping is con
In the case of a crossed cheque which cerned, be worked as though it were a
has been stolen, the banker on whom it is separate branch, but when it is not open
drawn is protected if he pays it in accordance daily all the transactions are passed through
with Section 80, and a collecting banker in the parent branch . Cheque books are often
accordance with Section 82. (See Crossed supplied for the use of sub-branch customers,
CHEQUE . ) when the office is open daily, bearing the
At a first view it seems that the position name of the sub. Such cheques are strictly
taken up by a banker as to paying a cheque payable at the sub -office on which they are
drawn upon him without his knowing that drawn, in the sameway that cheques drawn
it had been delivered or issued is not quite on the parent office are payable there and
in accordance with the law. But as far as not at the sub - branch . As a rule, a branch
practice is concerned , it seems that the and its sub are in close communication so as
position is correctly stated in Morse's “ Law to avoid refusing payment of a cheque at
of Banking " (4th ed . , p. 687) : “ If a the branch when the drawer of the cheque
cheque is stolen, or if after being lost by has paid in to credit at the sub -office. A
the drawer it is found by some other person, banker, however, is not liable if he should dis
it is not, in the hands of the thief or of the honour a cheque at the one office when
finder ' issued ' as against the drawer. But sufficient money is paid in to meet it at the
so far as concerns the bank, it would be other office on the same day, as he cannot be
considered as issued, and the bank would be expected to know of the credit till advice
protected in paying it, provided it did so is received in due course . But if a clerk at
bona fide, and with no knowledge of the
9)
the sub pays a cheque drawn on the parent
precedent circumstances.” (See Section 21 of branch and the cheque is dishonoured, he
ofExchange Act, 1882.) (See Post.)
the Bills | may not be able to recover the money from
STOLEN POST OFFICE MONEY ORDER. the person to whom he paid it. In cases of
Postal orders and Money orders are not doubt, the cheque on the parentoffice should
negotiable instruments, and the Post Office be received merely for collection, and, in any
has the right, if any irregularity should be case , there is always the possibility that
found, of returning them, at any subse- payment of it may have been stopped.
quent date, to the banker who presented SUB -LEASE . Where a sub -lease is de
them and received payment.
PAYMENT. | posited as security, it should
of thebeoriginal
accompanied
STOP ORDER . STOP by an attested copy lease.
STOPPED CHEQUE . (See Payment (See LEASEHOLD.)
STOPPED .) SUB -MORTGAGE. (See under TRANSFER
STOPPAGE IN TRANSITU . (See SALE OF MORTGAGE . )
OF Goods Act . ) SUBPOENA. (Latin, sub under, poena,pun .
STOPPING AN ACCOUNT. (See CLOSING ishment.) A writ by which the attendance
AN ACCOUNT.) of a person in Court is commanded, under a
STOTINKIS. (See FOREIGN MONEYS- penalty.
BULGARIA .) SUBROGATION . If a banker lends
STRAIGHT BILL OF LADING . (See Bill money to a company, which has no power to
OF LADING .) borrow , he cannot recover from the com
STREET PRICES. After the London pany, but the banker has the right of sub
Stock Exchange is closed for the day, the rogation ; that is, he is entitled to occupy the
dealers in American or other securities may position of such creditors of the company as
continue their business in the street, whence were paid out of the money he advanced
the terms “ street market " and “ street to the company and to recover from the
prices." company the debts of the creditors so paid,
STUBS. An American term for the but he is not subrogated to any securities of
counterfoils of cheques. the creditors. The debts so paid include
SUB-BRANCH . A successful branch very those actually payable at the time of the
618
SUB ) DICTIONARY OF BANKING ( SUM

advance or which became payable afterwards. the succession duty receipts should be pro
.
The same remarks apply with reference to property .
money lent to a company in excess of its By the Customs Act, 1889, special pro
borrowing powers. vision has been made in favour of pur
Where a guarantor repays the full debt chasers with regard to succession duty,
due to the banker on the account for which freeing the land therefrom after twelve
he is surety, he is subrogated to the rights years in some cases and six years in others .
of the banker — that is, he is thereby entitled (Section 12.)
to the banker's right to sue the debtor, or to If property is conveyed to two or more per
claim upon his estate, and to the benefit of sons as joint tenants and one joint tenant dies,
any securities which the banker held. (See the surviving joint tenant or tenants must
GUARANTEE . ) The same remarks apply pay duty on the beneficial interest accruing
where securities have been given by a third to him , her, or them by the survivorship .
party and he pays off the whole debt. Succession duty is not payable where the
Before giving up any such security the principal value of the estate does not exceed
banker should obtain the consent of the £100 ; nor by lineal descendants or lineal
customer and of any other parties interested ancestors where estate duty has been paid
in the account . on the full value of the property. (See
SUBSCRIBED CAPITAL . That part of ESTATE Duty.)
the nominal or authorised capital which has SUMMARY ADMINISTRATION . In the
been issued by the directors of a company case of a small bankruptcy, where the
and subscribed or taken up by the share- debtor's estate is not likely to exceed £ 300 ,
holders. It may be fully paid up, or only the estate may be administered in a simpler
partly paid, in which latter case the remain- manner than in an ordinary bankruptcy.
der is termed the “ uncalled " capital. (See Section 129 of the Bankruptcy Act, 1914,
CAPITAL, UNCALLED CAPITAL .) provides
SUBSTITUTED SECURITY . (See MORT- “ Where a petition is presented by or
GAGE . ) against a debtor, if the Court is satisfied by
SUCCESSION DUTY . A duty which is affidavit or otherwise, or the official receiver
payable by the person who succeeds to real reports to the Court, that the property of the
or leasehold property in the United King- debtor is not likelyto exceedin value three
dom , upon the death of another person. | hundred pounds, the Court may make an
The duty is also payable upon legacies which order that the debtor's estate be adminis
are charged upon the proceeds of a sale oftered in a summary manner, and thereupon
real estate, or on so much of the proceeds the provisions of this Act shall be subject
of a sale of real estate as may be required to to the following modifications :
discharge legacies where the personal estate “ ( 1 ) If the debtor is adjudged bankrupt
has proved insufficient, and upon personal the official receiver shall be the
property included in a settlement. trustee in the bankruptcy :
The succession duty rates, payable upon “ (2) There shall be no committee of inspec
the value of the succession as amended by tion , but the official receiver may
the Finance (1909–10 ) Act, 1910, Section do with the permission of the Board
58, are as follows : of Trade all things which may be done
per cent.
On the succession of lineal ancestors
by the trustee with the permission
of the committee of inspection :
or descendants of the deceased . . 1 “ (3) Such other modifications may be
Brothers and sisters of the deceased madein the provisions of this Act as
and their descendants, or their may be prescribed by general rules
husbands or wives . 5 with the view of saving expense
Uncles and aunts of the deceased and
their descendants, or their husbands and simplifying procedure ; but
or wives . 10
nothing in this Section shall permit
the modification of the provisions of
Great uncles and great aunts of the this Act relating to the examination
deceased, and their descendants 10 or discharge of the debtor.
On the succession of other persons 10
“ Provided that the creditors may at any
When a person who has succeeded to a time, by special resolution , resolve that
property lodges the deeds thereof assecurity, some person other than the official receiver
619
 SUN ) DICTIONARY OF BANKING [ SUR

be appointed trustee in the bankruptcy, and The following are examples of (1 ) a simple
thereupon the bankruptcy shall proceed as surrender ; (2) a surrender combined with
if an order for summary administration had admittance :
not been made." (See BANKRUPTCY .) SURRENDER .
SUNDRY CREDITORS ACCOUNT, or, Manor of Be it remembered that on
SUNDRY PERSONS ACCOUNT. An account the day of 19
through which may be passed isolated trans A B one of the Copyhold
actions with parties who are not actual Tenants of the said Manor
customers, or have not a current account. came before
It may also be used for various other items Steward thereof and in con
which do not belong to any particular sideration of the sum of
account.
SUPERANNUATION ANNUITY . As to £ to the said A B paid
stamp duty see BOND. by the said C D on or before
SUPER -TAX . (See INCOME Tax. ) the passing of this surren
• In open Court der * Surrendered
SUPPLEMENTAL DEED. By the Con- or out of Court .
into the hands of the Lord
veyancing Act, 1881, Section 53, s.s. 1 , " a of the said Manor by the
deed expressed to be supplemental to a hands and acceptance of the
previous deed , or directed to be read as an † Rod , glove, or said Steward by the ť
annex thereto, shall, as far as may be, other emblem . according to the Custom
be read and have effect as if the deed so of the said Manor Al etc.
expressed or directed were made by way with the appurtenances To
of indorsement on the previous deed , or the use of the said C D his
contained a full recital thereof."
SUPRA PROTEST. Where a bill of heirs and assigns at the will
exchange has been protested for dishonour by of the Lord according to the
Custom of the said Manor
non -acceptance, any person may, with the at and under the rents suits
consent of the holder, accept the bill suprà and services therefor due
protest for the honour of any party liable and of right accustomed .
thereon. (See ACCEPTANCE FOR HONOUR.) This Surrender was taken
Also, where a bill has been protested for and accepted by me this
non -payment, any person may intervene day of 19
and pay it suprà protest for the honour of Steward .
any party liable thereon. (See BILL OF
EXCHANGE, PAYMENT FOR HONOUR.) SURRENDER AND ADMITTANCE .
SURETY . A guarantor. A person who Manor of The Customary Court etc. of
agrees to be answerable for the debt of Lord of the said Manor holden
another person if he should fail to pay it. at within the said
( See GUARANTEE.) manor on the day
SURRENDER . Copyhold property is Stamp. of 19
transferred from one person to another by
surrender and admittance . The property
big £
Before Steward .
To this Court came A Band
is surrendered into the hands of the lord of Last admittance did surrender into the hands
the manor to the use and behoof of the pur 19 of the Lord of the said
chaser. A surrender may be made either in Manor All that Cottage
court, or out of court. The actual sur £ s . de etc.
Rent
render is usually preceded by a covenant Fine of the Yearly Copyhold
to surrender. For further information , see Rent of To the
COPYHOLD . use and behoof of C D his
By the Stamp Act, 1891, the stamp duty heirs and assigns for ever
is : according to the Custom of
SURRENDER the said manor ( in con
Of copyholds . See COPY sideration of the sum of
HOLD . £ to the said A B paid
Of any other kind whatsoever by the said CD) (or as the
not chargeable with duty as case may be)
a conveyance on sale or a £ s. d. And thereupon to the same
mortgage 0 10 0 Court came the said C.D
620
SUR ) DICTIONARY OF BANKING [ TAC

and took of the Lord of the SWEATING COINS. Rubbing coins to

said Manor by the hands of gether or shaking them in a box or bag in
his Steward the said Coto order to obtain gold or silver dust as a
tage aforesaid with the result of the friction, is termed “ sweating."
appurtenances To hold the The process would naturally do the coins
same to him his heirs and great injury . (See Coinage .)
assigns for ever according SWEATING ROOM . The bank room in
to the Custom of the said which customers are interviewed is some
Manor Paying the Rents and times facetiously called the sweating room ,
performing the Services of in allusion, no doubt, to the supposed effect
Right due and accustomed of certain interviews.
and having paid the Lord SYNDIC . When a bank is appointed an
for his Fine as in the margin executor , probate may (since the passing of
and done his fealty is there the Administration of Justice Act , 1920, see
upon admitted tenant by under PROBATE ) be granted to the bank by
pledges of E F and G H. its corporate name. Previously a nominee
J. K. , Steward . or official (called a syndic " ) of the bank
SURRENDER VALUE . The amount had to be appointed , to whom administration
which an assurance company will pay, after, with the will annexed was granted.
say, two or three years premiums have been
paid , to the holder of a life policy, upon a TABLE A. Table A, which is so frequently
surrender of the policy. An advance should referred to in connection with companies,
not, as a rule, be made upon a life policy is contained in the first Schedule of the
beyond the amount of the surrender value. Companies (Consolidation) Act, 1908, and
A banker can ascertain the surrender value supplies model regulations for the manage
by applying to the assurance company . ment of a company limited by shares. It
A life policy may often be sold at rather contains 114 clauses.
more than the surrender value. (See LIFE In the case of a company limited by shares
Policy.) and registered after April 1 , 1909 (that is,
SUSPENSE ACCOUNT. Items which, for the commencement of the above named
one reason or another, cannot be passed at Act) , if articles are not registered, or, if
once into the account to which they ought articles are registered, in so far as the
to go , are, in the meantime, debited or articles do not exclude or modify the regula
credited , as the case may be, to a suspense tions in Table A, those regulations are to
account. A cheque which is sent direct by be the regulations of the company in the
one bank to another for collection and pay- same manner and to the same extent as if
ment over, is, in some banks, debited to such they were contained in duly registered
an account until advice of the payment is articles. (Section 11.)
received . Companies registered between 1862 and
SUSPENSION OF PAYMENT. A debtor 30th September , 1906, are governed by
commits an act of bankruptcy if he gives Table A of the Companies Act, 1862, and
notice to any of his creditors that he has those registered between 1st October, 1906,
suspended, or that he is about to suspend, and 31st March, 1909, by the revised Table
payment of his debts. (Bankruptcy Act, A of 1906.
1914, Section 1, s.5 . 1 (h) .) · (See ActS OF Various clauses of Table A will be found
BANKRUPTCY .) the following headings :-Calls,
under
SUSPENSION OF THE BANK ACT. The CERTIFICATE, DIRECTORS, DIVIDEND, LIEN,
Bank Charter Act, which imposed certain Stock, TRANSFER OF SHARES, VOTES. (See
restrictions upon the issue of Bank of ARTICLES OF ASSOCIATION .)
England notes, has on three occasions been TACK OF LANDS. In Scotland, a lease.
suspended by the Government authorising As to stamp duty, see under LEASEHOLD.
the Bank to issue notes in excess of its TACKING . Where there are several mort
authorised issue. The occasions were the gages, and one of them a legal mortgage,
monetary crises of 1847, 1857 and 1866. On the upon the same piece of land, the legal mort
outbreak of war with Germany in 1914, the gage may in certain cases be tacked to one
Bank was empowered to suspend the Act, of the equitable charges. For example, if
but the authority was not acted upon . See subsequently
Brown grants a legal mortgage to Jones, and
particulars under Bank CHARTER Act. borrows more money upon
621
TAC ) DICTIONARY OF BANKING [TAL

the same property from Smith and gives him attach the written notice to the bundle of
a second charge (i.e. an equitable mortgage) deeds. Any subsequent holder of the legal
upon the land, and then obtains from estate would thus be fixed with notice of the
Robinson a still further advance upon a second charge. A second mortgagee, how
third charge, Robinson may, if he did not ever, is not bound to give notice of his
know about the charge to Smith at the time charge to a prior mortgagee, see the case of
he lent Brown the money, purchase the legal Grierson v. National Provincial Bank of
estate from Jones and tack his third charge England, Ltd., under NotICE OF MORTGAGE.
to the legal mortgage of Jones and thus Where a mortgage is given to secure
squeeze out Smith . The amount that present and future advances, the mort
Robinson had lent, added to what Jones had gagee can tack future advances as they are
lent, would thus rank as a charge upon the made, but if he receives notice that the
land in front of Smith's charge. If Robinson mortgagor has borrowed from another
learned after he had lent the money, about source on the same security, he should not,
Smith's equitable mortgage, it would not after such notice, make any further advance
affect his right to tack . If Robinson knew , as his right to tack is thereby extinguished .
at the time he lent the money, that Smith Tacking was abolished in Yorkshire, as
held a charge, that knowledge would from January 1 , 1885. Charges on land in
prevent him tacking." If Smith gave that county take priority according to the
notice to Jones that he held a second charge, date of the registration, and a legal mortgage,
that would not prevent Robinson from unregistered, may be postponed to an
tacking his third to the first. equitable charge which is registered . (See
Another example of tacking is where the MORTGAGE, YORKSHIRE REGISTRY OF DEEDS .)
legal mortgagee makes a further advance, TAEL. (See FOREIGN MONEYS — CHINA .)
TAKERS - IN . In connection with the
subsequent to an equitable charge and
without any notice of that charge, and adds Stock Exchange settlements, a “ taker -in
the amount of the further advance to the is a broker who lends moneyaagainst
>
stock
original advance. If, however, the legal (i.e. takes in broker who
stock ) to
mortgagee had notice of the equitable charge, requires to pay for a purchase. (See
at the time he lent the second amount, he GIVERS ON. )
could not tack . Where Jones holds a legal TAKING UP A BILL . (See RETIRING A
mortgage and there are also , on the same Bill .)
property, charges to Smith and Robinson, TALLY . An account is said to tally when
Jones may, if he likes , purchase the equitable it agrees or corresponds with another
charge of Robinson and tack or add it to his account. The origin of the word is found
own legal mortgage, provided that he, in the name of a notched stick which, at one
Jones, had no knowledge of the charge to time, was used for the purpose of keeping a
Smith at the time of purchasing Robinson's record of business transactions. When a
charge. sale took place a stick was marked (by small
It is clear, therefore, that a second | notches for pence, larger ones for shillings
mortgagee should not neglect to give notice and larger again for pounds) with the quan
of his charge to the first mortgagee. Such tity of the goods sold or the amount of the
notice will prevent the first mortgagee from price, and the stick was then split in two.
lending further upon the property , or from One of the halves remained in the custody
purchasing a third mortgagee's charge, and of the seller and the other was taken by the
tacking the amount to his first charge. purchaser. When a settlement of the trans
But the notice would be of no avail in the action took place, the purchaser produced
event of the first mortgage being trans- the stick andthe seller compared it with the
ferred to a party without any notice of the one in his possession to see that the notches
second mortgage. B. Campion, in his tallied ; that is, that they were the same on
CO
lecture Bankers' Advances upon Title- both sticks. When the amount was paid
Deeds," said that the second mortgagee the two sticks were tied together and
should notonlygive the first mortgagee written stored away as a paid account .
notice of his charge, but should further try The Government at one time gave tallies
and persuade him to allow the legal mort- called “ Exchequer Tallies ” as a form of
gage and the chief title deeds to be indorsed receipt for money deposited with them .
with a note of the second charge. Failing When the money was to be repaid, the
that, he should ask the first mortgagee to depositor produced the Exchequer Tally,
622
TAL ) DICTIONARY OF BANKING ( TEN

that is, the half of the stick which was given receiving tellers and paying tellers ; the
to him when he left the money, and if it former receive credits and the latter pay
tallied with the half in the Exchequer Office cash: for cheques and bills. Where necessary
he was paid the money. The use of Ex- the work may be further subdivided , one
chequer Tallies was abolished in 1782. (See teller, or cashier as they are usually called,
EXCHEQUER TALLY .) receiving credits only for customers whose
TALON . In connection with bearer bonds names commence with one of the letters
there is sometimes issued , along with the from , say, A to F , the other cashiers being
sheet of coupons, a slip, called a talon, in similarly concerned only with customers
order that the holder of the bonds may, whose names begin with certain other letters.
when all the coupons have been used, TENANT FOR LIFE. (See LIFE TENANT.)
exchange it for a new sheet of coupons. TENANTS IN COMMON. A property
The following is an example of a may be conveyed to several persons as
talon : tenants in common . Tenants in common
“ The X & Y Bank of Egypt — Guaranteed have a unity of possession in the property,
Bonds - Talon to be exchanged for a new but each has separate and distinct share
coupon sheet when all the coupons below which can be disposed of by will, or in
have been exhausted . herited by the deceased's representatives.
“ No. 16,589 ." There is no right of survivorship ; that is,
In the case of stock certificates to bearer, when one dies his share does not pass to the
issued in respect of consols, there is no survivor.
talon . ( See CONSOLS . ) Tenants in common may have either equal
TAPE PRICES. The Stock Exchange or unequal shares, and one tenant may
prices which are collected by the Exchange convey his share to another tenant. It is
Telegraph Company, and which on being not necessary that their interests should all
telegraphed are recorded by the instru- be created at the same time or under the
ments on long paper tape. same instrument.
TAXATION OF BILLS OF COSTS. The If a property is devised to several persons
examination by the Taxing Master (an without saying whether they are to be
officer of the High Court) of bills of costs | tenants in common or joint tenants, they are
rendered by solicitors to their clients, or regarded as joint tenants.
their opponents, in litigation, unfair or The difference between tenants in com
incorrect charges being disallowed by the mon and joint tenants should be noted.
Taxing Master When a joint tenant dies, his interest in the
TEL QUEL RATE . In connection with property goes to the surviving joint tenant.
the Foreign Exchanges the tel quel is a rate They cannot dispose of their interests by
charged for a bill of a currency (e.g. will. Their shares in the property are equal ;
thirty days) to which neither the long rate and if one wishes to transfer his share or
for three months' bills nor the short rate interest to the other, it has to be done by
for drafts up to ten days, applies. way of release, not by conveyance. The
TELEGRAPHIC TRANSFERS. (Often interests of a joint tenant must all be
called T.Ts.) The payment of money in created at the same time and under the
a foreign country may, when necessary, same instrument.
be effected by telegraph, the banker in Where deeds are deposited as security
London sending a cable, with the necessary by tenants in common, the document of
particulars, to his foreign correspondent. charge should be signed by all the owners
The cost of the cable is charged to the of the property, and it is advisable that a
customer at whose request the transfer is banker's legal mortgage be taken. (See
made. An exporter of goods from this COPARCENERS, Joint TENANTS.)
country can, as soon as he has shipped the TENDER . When a new stock is to be
goods, communicate with his agent abroad issued (as in the case of Corporation stock
by wire to sell the goods at once , and send or Colonial issues) instead of being offered
payment immediately by telegraph through to the public at a certain price, the public is
a London banker. sometimes invited to tender for it ; that is,
TELLER . The official behind the bank any person desirous of becoming a holder
counter who receives and pays money. The of a part of the stock must state how much
word was originally tallier, one who tallies. per cent. he is prepared to give for it. The
(See Tally .) In large offices there are stock is then allotted , commencing with
623
TEN ) DICTIONARY OF BANKING ( TIM

those who have offered the highest price. THREEPENCE . A silver coin with a
A corporation inviting tenders usually standard weight of 21 81818 grains troy.
fixes a minimum price, below which no (See COINAGE .)
tender will be accepted . THROUGH BILL OF LADING . (See BILL
Treasury Bills are issued by the Govern- OF LADING.)
ment upon the tender system , and the TICKET DAY. Also called Name Day.
tenders are received at the Bank of England. The title of the second day in a settlement
From April, 1915 (except between April and on the London Stock Exchange when
June, 1917) Treasury bills were, until April, brokers pass the names of the purchasers of
1921 , issued at fixed rates of discount. stocks since the last settlement, certain
India Bills and London County Council Bills “ tickets ” being exchanged preparatory
and others are also issued by way of tender. for the following day, whichis pay day. (See
(See LEGAL TENDER.) SETTLING DAYS, STOCK EXCHANGE .)
TENENDUM. ( See HABENDUM.) TIGHT. The word is sometimes used in
TENURE . The manner in which land is connection with the money market, when
held, e.g. copyhold tenure is by copy of money is dear and not easily obtained . It
the court roll, leasehold for a term of years, is also applied to a person or firm when
freehold in fee simple or fee tail. (See short of capital.
COPYHOLD, FREEHOLD, LEASEHOLD.) TILL . The drawer in which a cashier
TERM OF A BILL. The period for which keeps the money that is in use . The
a bill of exchange is drawn . word is also commonly used to mean all
TERMINABLE ANNUITY . An annuity, the cash and notes which are in the charge
or annual payment of a certain sum , which of a cashier for use at the counter, as dis
ceases at the expiration of a specified time, tinguished strong
from the stock of cash left in the
or upon the death of an individual. (See safe or room . Each cashier is
ANNUITY .) responsible for the accuracy of his own till,
A terminable annuity is a form of bor- and he generally checks the amount of it
rowing by the Government when it is desired before starting operations each morning to
to repay the loan gradually out of revenue. make certain that the amount agrees with
The lender receives annually interest for what it was when the cash was balanced on
the money and an instalment of the prin- | the previous day.
cipal. At the end of the period for which TILL BOOK . The till book , or teller's
the loan was arranged, the yearly instal- or cashier's book , contains a record of the
ments will have repaid the debt and the cash transactions passing through his till
annuity will be terminated. The National in the course of a day, and by it he is able to
Debt Commissioners (on behalf of the Post prove the accuracy of his cash at the close
Office, etc.) are the principal investors in of business.
these annuities. They are not offered to the TIME BARGAIN . A bargain to buy or
public as investments. sell certain stocks or shares at a certain price
TERMINATING BUILDING SOCIETY . on a specified date. A purchaser hopes that
A society which , by its rules, is to terminate the security will rise before the appointed
at a fixed date, or when a result specified time so that he may sell at a profit. ( See
in its rules is attained . (See BUILDING OPTIONS.)
Society.) TIME OF PAYMENT OF BILL . BILL
TESTING CLAUSE . (See ATTESTATION .) PAYABLE ON DEMAND . - By Section 10 of the
THIRD ACCOUNT. The person for whose Bills of Exchange Act, 1882 :
account a bill is drawn is commonly spoken “ ( 1 ) A bill is payable on demand :
of as the “ third account." “ (a) Which is expressed to be
THIRD PARTY. For example, where payable on demand, or at
security is given to a banker for a customer's sight, or on presentation ; or
account by another person, that person is (6) In which no time for pay
called the " third party ” ; the security ment is expressed.
being termed a "“ third party security" or “ (2) Where a bill is accepted or indorsed
collateral security. A guarantor is a third when it is overdue, it shall, as
party." (See COLLATERAL SECURITY, regards the acceptor who so accepts,
GUARANTEE .) or any indorser who so indorses it,
THIRD OF EXCHANGE . (See BILL IN A be deemed a bill payable on
SET.) demand ."
624
TIM ) DICTIONARY OF BANKING [ TIM

No days of grace are allowed on a bill pay- “ (2) Where a bill is payable at a fixed
able on demand, at sight, or on presentation . period after date , after sight, or
BILL PAYABLE AT A FUTURE DATE . - By after the happening of a specified
Section 11 :
40
event, the time of payment is deter
A bill is payable at a determinable future mined by excluding the day from
time within the meaning of this Act which is which the time is to begin to run and
expressed to be payable by including the day of payment.
' ( 1 ) At a fixed period after date or sight. “ (3) Where a bill is payable at a fixed
(2) On or at a fixed period after the period after sight, the time begins
occurrence of a specified event to run from the date of the accept
which is certain to happen, though ance if the bill be accepted, and
the time of happening may be from the date of noting or protest
uncertain . if the bill be noted or protested for
“ An instrument expressed to be payable non -acceptance, or for non -delivery.
on a contingency is not a bill, and the “ (4) The term 'month'in a bill means
happening of the event does not cure the a calendar month .”
defect. " " 92. Where, by this Act, the time
As to the computation of time of payment limited for doing any act or thing is less
of a bill payable after date, the Act provides than three days, in reckoning time, non
as follows : business days are excluded .
“ 14. Where a bill is not payable on ' Non -business days ' for the purposes of
demand the day on which it falls due is this Act mean :
determined as follows : “ (a) Sunday, Good Friday, Christmas
“ ( 1) Three days, called days of grace, are, Day :
in every case where the bill itself “ (8) A bank holiday under the Bank
does not otherwise provide, added Holidays Act, 1871 , or Acts amend
to the time of payment as fixed by ing it :
the bill, and the bill is due and pay- " (c) A day appointed by Royalproclama
able on the last day of grace ; Pro tion as a public fast or thanksgiving
vided that day.
“ (a) When the last day of grace " Any other day is a business day . "
falls on Sunday, Christmas The due date of a bill — that is, the date
Day, Good Friday, or a day when it becomes payable — is calculated , in
appointed by Royal Pro- the case of a bill drawn payable three months
clamation as a public fast or after date, by counting three calendar
thanksgiving day, the bill is, months, plus three days of grace, from the
except in the case herein- date of the bill . When drawn payable at so
after provided for, due and many days or months after sight, the date is
payable on the preceding calculated in the same way, but from the
business day ; date when the bill was sighted. If the
66

(6) When the last day of grace acceptorwrites on thebill “ sighted 1st Febru
is a bank holiday (other ary , accepted 2nd February,” the currency
than Christmas Day or Good is calculated from the date when it was
Friday) under the Bank sighted , February 1 .
Holidays Act, 1871 , The following are a few examples of the
and
Acts amending or extending calculation of the timeof payment. In each
it, or when the last day of case if the last day of grace is a Sunday
grace is a Sunday and the or holiday, the bill will be due and payable
second day of grace is aa bank either on the preceding business day or suc
holiday, the bill is due and ceeding business day in accordance with the
payable on the succeeding provisions of Section 14 , s.s. 1 (a) and (6)
business day. (see above) .
A Bill dated ( or sighted) January 1, payable one month after date ( or sight), is due and payable on
February 4 .
>>

91 February 1 , payable one month after date (or sight), is due and payable on March 4
(if leap year it is still due March 4).
February 1, payable thirty days after date (or sight), is due and payable on March 6
(if leap year on March 5 ).
91 March 1 , payable thirty days after date (or sight ), is due and payable on April 3.
625
40–41535 )
TIM ) DICTIONARY OF BANKING ( TIM

A Bill dated (or sighted ) April 1 , payable thirty days after date (or sight), is due and payable on May 4.
99 » January 28, payable one month after date (or sight ), is due and payable on March 3
99

(if leap year on March 2) .

January 29, payable one month after date ( or sight ) , is due and payable on

.
March 3 .
09 11 January 30, payable one month after date (or sight), is due and payable on
March 3 .
» January 31, payable one month after date (or sight) , is due and payable on
March 3 .
9 99 January 1, payable three weeks ( = 21 days) after date (or sight), is due and
payable on January 25.
November 28, payable three months after date (or sight), is due and payable on
March 3 (if leap year on March 2).
November 30, payable three months after date (or sight), is due and payable on
March 3.
1 30 1 May 31, payable one month after date (or sight) , is due and payable on July 3.
February 28 ( following year being leap year), payable twelve months after date
(or sight ), is due and payable on March 2.
February 29 ( leap year ), payable twelve months after date (or sight) , is due and
payable on March 3 .
1 March 1, payable " one month after date, without days of grace," is due and payable
on April 1 .
March 1, payable at sight is due and payable on demand and no days of
on presentation grace are allowed .
on demand
A bill dated March 1, payable one month after date, is due and payable April 4 ; if accepted "payable on
1st April, " present on April 1 ; if days of grace are then claimed , have the bill noted and
give notice to the indorsers, and present again on April 4.
March 1, payable one month after date (if accepted " Payable at X & Y Bank, Leeds. J. Brown
25th February " ) is due and payable on April 4.
02 March 1, payable one month after sight, and is “ accepted 2nd March, payable, etc.," is due and
payable on April 6.
March 1, payable one month after sight, and is “ sighted 2nd March, accepted 3rd March,
66 payable, etc.,” is due April 6.
A bill drawn 06 on 1stMarch pay, etc.," is due and payable on March 4.
on 1st March ( fixed ) pay, etc. , " is due and payable on March 1 .
The ordinary
time of payment of apromissory note, drawn payable " after date, ” is calculated in the same way as an
after date bill.
A Bank Post Bill of the Bank ofEngland does not take days of grace (any other bill upon the Bank of England
requires the three days to be added ).
A foreign bill, payable in this country, is reckoned in the same way as an inland bill.
drawn in Russia on March 1 (old style) requires, when payablehere, thirteen days to be added
to that date, making it March 14, before reckoning the due date.
A foreign bill drawn in Russia on March 1/14, when payable here, has the due date computed from March 14.
. .
drawn in this country on January 14 and payable in Russia requires thirteen days to be
deducted before ascertaining the due date. If payable at three months, it will be due
on April 1 , without days of grace.
When the last day of grace falls on Sunday a bill is payable on the preceding business day.
Christmas Day
Good Friday
a day appointed by Royal proclamation as a public fast or thanksgiving
day a bill is payable on the preceding business day.
(Christmas Day and Good Friday are common Law holidays in England, but they became
Bank Holidays in Scotland by the Bank Holidays Act of 1871. After that date, a bill falling due
onthose dayswas payable on the preceding business day in England, andon the succeedingbusiness
day in Scotland. This difference, however, was remedied by the Bills of Exchange Act, 1882, which
England

makes a bill, where the last day of grace falls on those days, whether in England or 'in Scotland,
payable on the preceding business day.)
Ireland
and

When thelast day of grace falls on Easter Monday, a bill is payable on the succeeding business day.
9) Monday in Whitsun week 91 97
First Monday in August
.

1) > 91

» December 26 ( if a week day) 2)

1) . December 27 (if 26th is a Sunday)

December 26 (if a Sunday) a bill'is payable on 24th.
91 New Year's Day (if a week day) a bill is payable on the succeeding
Scotland

business day.
2

Monday after New Year's Day ( if New Year's Day is a Sunday) a bill
is payable on the succeeding business day.
Monday after Christmas Day (if Christmas Day is a Sunday) a bill
.

91

is payable on the succeeding business day.

01
Firstday.
Monday in May a bill is payable on the succeeding business
:

First Monday in August a bill is payable on the succeeding business

day.
626
TIM ) DICTIONARY OP BANKING ( TIT

When the last day of grace falls on Monday Bank Holiday, a bill is payable on the Tuesday.
1 11
Monday Bank Holiday, Tuesday a public fast or thanksgiving day
by Royal proclamation , a bill is payable on the Wednesday.
Tuesday a public fast or thanksgiving day by Royal proclamation,
Monday Bank Holiday, a bill is payable on the Saturday,
21 Sunday, and Saturday is a Bank Holiday, a bill is payable on theMonday.
19 Saturday, a Bank Holiday, a bill is payable on the Monday.
The time of payment of bills payable in If John Brown lodges a parcel of deeds of a
foreign countries is regulated by the laws freehold estate as security, the deeds and
and customs of those countries. documents should, if they are complete, show
In France, for example, a bill which is due that the fee simple is vested in John Brown.
on a Sunday is payable on the Monday, and The estate may in past years have been sold
does not take any days of grace, and the many times, and been mortgaged and re
same custom is observed in most of the other conveyed , owners may have died and be
continental countries . (See BANK HOLIDAYS, queathed it by will, or they may have died
BILL OF EXCHANGE, DAYS OF GRACE .) and left no will, but whatever has been
TIME POLICY . (See MARINE INSURANCE done with the property the fee simple has
Policy .) always been vested in someone. The deeds
TITHES. Originally the tenth part of the and documents which Brown has deposited
annual crop or produce of stock which was as showing his title to the fee simpleshould
paid voluntarily in support of the church. therefore, as far as they go, reveal an un
Tithes are now commuted into tithe rent broken line of steps by which the fee simple
charges varying according to the average has come to him . If, after the fee simple
price of the crops, and are payable by the was conveyed to Brown, he mortgaged the
owner of the land, not by the tenant. land to Jones, the legal estate would then be
TITLE DEEDS. A person's right or title vested in Jones subject to Brown's right to
to a piece of land is proved by the docu- pay off the loan and have the land recon
ments called " title deeds.” They show in veyed to him . Brown's right to repay the
whom the legal estate is vested, and how , money, or to redeem the land, after the
through a long course of years, the land has time fixed in the mortgage, usually three or
been transferred from one person to another six months, is called the equity of redemp
by deed or by will, till finally it is transferred tion . Brown, in that case, has an equitable
to the present owner. The present owner estate in the land, and Jones has the legal
may have acquired his title to the land in one estate .
of several ways, he may have bought the Where deeds are left as security, whether
property, or inherited it, or have had it left of freehold, leasehold, or copyhold land, the
to him by will, or have had a present made bankermust ascertain if the legal estate in the
of it, or obtained it through foreclosure of land is held by the party pledging the deeds.
a mortgage. Along with the deeds there is usually,
The greatest interest that a person can though not always, an abstract of title.
have in land is the fee simple, that is he is the The abstract is prepared by the vendor's
absolute owner, and a conveyance to a solicitor and gives, in order of date, a sum
purchaser of freehold land will include the mary of all the deeds, wills or other docu
clause “ to have and to hold all the said ments,and also all other particulars which are
hereditaments . . . unto and to the use necessary to show the purchaser how his
of the said John Brown in fee simple," or title is derived . The abstract begins with
0 )

“ unto and to the use of the said John Brown, what is called the “ root of title," and follows
his heirs and assigns for ever. In such a the title step by step till it reaches the vendor.
case the fee simple is vested in John Brown . When a sale is arranged it may be agreed in
In the case of an assignment of leasehold the contract to commence with a certain
property to John Brown, John Brown has the deed as the root of title, but if no special
legal estate, but the fee simple remains with agreement is made, the purchaser has the
the lessor ; and in copyhold land the fee right to require evidence of the title for the
simple is with the lord of the manor. last forty years, or longer, if necessary, to
The possessor of an estate in fee simple find a satisfactory beginning. A title of
may create lesser estates out of it. He may, twenty years is often accepted as sufficient.
for example, grant a life interest, or lease it. By the Vendor and Purchaser Act, 1874 ,
but so long as he does not transfer the fee recitals, statements and descriptions of facts,
simple the reversion remains with him . matters and parties contained in deeds
627
TIT] DICTIONARY OF BANKING ( TIT

instruments, acts of Parliament or statutory and to delivery of copies thereof, that

declarations, twenty years old at the date of acknowledgment (by Section 9 of the
ihe contract, shall, unless and except so far Conveyancing Act, 1881 ) shall bind the
as they shall be proved to be inaccurate, documents to which it relates in the posses
be taken to be sufficient evidence of the sion or under the control of the person who
truth of such facts, matters and descriptions. retains them, and in the possession or under
All the deeds and documents which are the control of every other person having
referred to in the abstract of title may be possession or control thereof from time to
found in the parcel handed to the banker, time, but shall bind each individual possessor
but very frequently the deeds which are or person as long only as he has possession
abstracted will not all be obtainable . The or control thereof ; and every person so
abstract shows how the purchaser's title is having possession or control from time to
derived, but not, necessarily, the deeds time shall be bound specifically to perform
which are to be given to the purchaser. the obligations imposed under this Section
The purchaser may receive several deeds, for by an acknowledgment, unless prevented
example, the conveyance to himself, the from so doing by fire or other inevitable
conveyance to the vendor and some deeds accident. The obligations imposed under
prior to the date when the vendor acquired this Section by an acknowledgment are :
the land ; or the purchaser may perhaps ( 1 ) To produce the documents at all
receive only one deed , the conveyance from reasonable times for the purpose of inspec
the vendor, and an abstract of title. The tion, etc. (2) To produce them at any trial,
purchaser may look at the abstract and see hearing or examination in any Court, etc.,
how the land has been dealt with for forty for proving or supporting the title of the
years past, or for as longas has been agreed person entitled to request production. (3)
upon, but all the deeds and documents To deliver to the person entitled true copies
relating to the past transactions may for one or extracts of the documents or any of
reason or another be in the possession of them .
other persons. The expenses of the performance of those
There are various reasons why the owner obligations are payable by the person request
of a property may not have possession of ing performance. The acknowledgment
certain prior deeds, e.g. the seller may have does not confer any right to damages for
retained part of the property to which the loss or destruction of the documents.
deeds relate ; or they may be in the hands of If the person retaining possession of the
a mortgagee ; or the property may have documents gives an undertaking in writing
been purchased from one of several joint for the safe custody thereof, unless prevented
tenants, or tenants in common, or from a from so doing by fire or other inevitable
remainderman ; or the property may, accident, and the documents are lost or
originally, have been part of a larger estate, destroyed , the Court may, if it thinks fit,
and no prior deeds have been handed over direct an inquiry respecting the amount of
on a sale. Where there is a defective title damages and order payment thereof by the
or document, the contract or special con person liable .
ditions of sale often state the defect and Mortgage deeds and reconveyances form
preclude a purchaser from raising any part of the chain of title and should be
objection to it, and this may, in some cases, preserved with the other documents relating
be the explanation why a defective title has to the property.
been taken . When a banker receives part only of the
If the purchaser, through his solicitor, is deeds which are recited in the abstract of
satisfied with the title, after investigation or title, he will look to see if an acknowledge
inspection of any of the abstracted document is given for the production of the deeds
ments, he usually receives an acknowledg- necessary to complete the title. If the only
ment, either in the conveyance or by a deed held by the banker is a conveyance
separate document (stamped as an agree- from Brown to Jones, there should be an
ment, 6d. if under hand, 10s. if under seal) abstract of Brown's title and an acknow
ofhis right to production of the documents. ledgment from him to produce the convey
Where a person retains possession of docu- ance or other documents under which he
ments, and gives to another an acknow- obtained his title to the land . The con
ledgment in writing of the right of that veyance to Jones should be duly signed and
other to production of those documents sealed by Brown (unless there are covenants
628
TIT ] DICTIONARY OF BANKING ( TIT

it is not always signed by the purchaser) and close together, and conveyed (before any
the stamp should be examined to see that houses were built) under separate deeds, care
it is correct. If there are any restrictive or should be taken that a mistake is not made
other covenants on the part of the purchaser by accepting the deeds of the vacant build
the conveyance should be executed by the ing land when it is the deeds of the houses
purchaser. (See CONVEYANCE .) A con- which are to form the security .
veyance must bear the Particulars It is well also to be careful in taking a
Delivered stamp of the Increment Value conveyance, say to John Brown (where there
Duty department with regard to that duty is a father and a son with the same name),
accruing after April 30, 1909. (See INCRE- lest the John Brown offering the security is
MENT VALUE Duty .) If the land is in not the actual person to whom the property
Yorkshire or Middlesex see that the deed is conveyed.
bears the registrar's certificate of registra- A sealshould be opposite each signature to
tion, or if in the city or county of London a deed . It is usual, though not absolutely
note if it should be registered under the necessary , that the execution of the deed
Land Transfer Act. (See LAND REGISTRY.) should be witnessed .
Compare the description and quantity of The banker should see that the legal
the land in the conveyance to Jones with the estate is conveyed to Jones free from all
description and quantity in theprior deeds, or charges or mortgages. If the land has been
as shown in the abstract or plan if there is one. mortgaged it should have been reconveyed.
It may, of course , be that Jones has pur- If it previously belonged to Smith and he
chased the land with only one house thereon, died, charging it in his will with the pay
whereas an examination of the abstract may ment of various legacies, evidence that the
show that originally there was much more legacies have been satisfied and all death
land and were many more houses. Or duties paid should be produced.
again the conveyance to Jones may show Some bankers require that the title of all
that he purchased land with, say, six houses, deeds offered as security should be investi
but since he bought it he may have sold gated by their solicitors, but there are many
several of the houses. The banker should cases in which a banker is dependent upon
therefore be at trouble to ascertain how his own examination of the title. Where a
many houses still remain unsold . There banker knows his customer and is already
may be indorsements on the conveyance well acquainted with the property repre
setting forth the facts of each sale, but it sented by the deeds , and has (as often is the
case in country towns) a good knowledge
should not be forgotten that the houses may
have been sold and yet no indorsement of of the history of the property, knowing from
sale appear upon the conveyance. It would whom it was acquired and practically all
appear that there is no obligation upon a about it, he will, as a rule, feel satisfied, in
solicitor to indorse a sale by Jones, upon taking such a security, that he is quite safe.
the conveyance to Jones, though it is very But in the absence of such knowledge and
desirable that it should be indorsed . A in the presence of aa title which is not entirely
conveyance to Jones may, therefore, be for ' plain sailing," he would not, as a rule, be
land on which has been built whole streets of justified in advancing money upon the
houses, and, looking at the consideration, security until he had received a report upon
which may be for thousands of pounds, the the title from his solicitor.
banker may easily think at first sight that No doubt a banker may frequently scruti
it is a most valuable security, but, after nise an ordinary simple title with quite satis
investigation and an actual inspection of the factory results, bụt if there is any difficulty
property, he may find that all that remains, at all. arising from mortgages, life interests,
to take an extreme case, is one poor house settlements or anything which requires
of practically no value at all. special knowledge to investigate, a banker
The consideration in the last conveyance would be acting imprudently if he did not
may be much smaller than in previous deeds. go to his solicitor for a report. It is quite
This may be because the last deed represents possible for the property to be subject to a
mortgage,
only a part of the property contained in the out
earlier deeds ; or it may indicate that the
life interest or some trust, with
the bundle of documents handed to the
property has suffered a serious fall in value. banker showing any evidence thereof. A
Where a person is the owner of land which solicitor's opinion in every case would be
is built upon and land which is vacant, both desirable, but, in practice, this cannot always
629
TIT) DICTIONARY OF BANKING [ TIT

be obtained. It is well to remember that, . mortgage to him , and on behalf of the

though a deed may appear on the face of it banker for the portion upon which he has a
to be all right, it is quite possible that it may charge.
not be what it appears to be, and so a lay- Some bankers accept deeds as security and
man is wise if he does not depend too much do not take any document of charge, but, as
upon his own investigation of the title. The a rule, a banker takes either a legal mortgage
more a banker knows aboutthe nature of the (q.v.) or a memorandum of deposit ( 9.0 .).
documents he is dealing with the better, but Where the security consists of houses there
a little knowledge should not lead him to should be a fire insurance policy and the
too much self -confidence . banker should see, by obtaining the receipts,
Subject to these remarks a banker must, that the premiums are duly paid.
when he has to examine a title, do the best It has been held that a deposit of title
he can .
The points to be attended to will deeds for the purpose of securing a debt,
vary according to the nature of the estate, without any document of charge whatever,
whether freehold, leasehold , or copyhold. is an equitable mortgage. Thedeeds, how
Whenever possible, a banker should ever, must have been deposited expressly
actually see the property which is offered as a security in order to give the banker
to him as security, for what looks very valu- a charge upon the property represented by
able on parchment may be quite the opposite the deeds." If a borrower should contend
in reality . that the deeds were left with the banker for
If a bundle of old deeds is handed to thesome other reason than for security, he may
banker along with the more modern ones the have much trouble to defend his claim ,
old ones should not be refused, for what whereas if a memorandum of deposit is taken
happened in the following case might happen no such contention could be maintained .
again . In Dixon v. Muckleston ( 1872, L.R. If the principal deeds of a property are
8 Ch. 155) certain earlier deeds of a farm deposited it may suffice to create an equi
were pledged with a private party for a table mortgage on the property, but a
loan, he being informed in writing that they banker should not rely upon an imperfect
were the title deeds of the farm , and some security, and should , as a rule, obtain
later deeds of the farm were lodged with possession of all the deeds in the customer's
bankers as security . It was held that the possession . An equitable lien may also be
first deposit created an equitable charge, created by a written agreement to grant a
and that the owner of the prior charge had mortgage.
not been guilty of negligence. It should be borne in mind that if, say,
It is possible that deeds may be handed to Brown deposits title deeds and has already
a banker as security, which are already contracted with Jones for the sale of the
mortgaged to some other person . If the property to him , Jones has thereby an equit
banker accepts them without any knowledge able charge in the property which may rank
of the mortgage, he may find that his charge before the bank's equitable charge, even if
is postponed to the party holding the legal the bank had no notice of the sale to Jones.
estate . But under such circumstances the See further under EQUITABLE MORTGAGE
banker would have a good right to maintain with respect to deeds deposited with a
his claim and to say that the person holding memorandum of deposit or without any
the mortgage had been negligent, that he document of charge.
should have got the title deeds into his owni dodyvendor has a lien upon the property for
possession and not left them in the mort- any part of the purchase money which
gagor's hands . See further under NOTICE remains unpaid, even if the conveyance
OF MORTGAGE, PRIORITIES . says it has been paid, but if the purchaser has
There may be exceptional cases in which lodged the deeds with his banker for an
a borrower desires to give a charge upon a advance the banker's charge will not be
property which is included in a conveyance disturbed by the vendor's lien .
containing other properties in mortgage, Deeds may be lodged as security by a
say to Brown. If the property to be charged person who has only a life interest in the
to the bank is not included in Brown's property, and in such a case he can charge
mortgage, the difficulty may be overcome, if the property only to the extent of his life
thought desirable, by the deeds being placed interest" (see LIFE TENANT) , or they may
in the hands of a trusted party to hold on be lodged by an executor for his own private
behalf of Brown as regards the property in account when he has a beneficial interest
630
TITU DICTIONARY OF BANKING [ TIT

in the property, but the charge is limited to some interest thereon , shall have been paid ,
the extentof that interest. (See ExecutOR .) or some acknowledgment of the right thereto
As to the deposit by a customer of a shall have been given in writing, signed by
mortgage to him , see under MORTGAGE. the person by whom the same shall be pay
Upon the death of an owner of leasehold able, or his agent, to the person entitled
property the legal estate vests in his personal thereto or his agent ; and in such case no
representatives (executors or administrators). such action or suit or proceeding shall be
Upon the death of an owner of freehold brought but within twelve years after such
property, since January 1 , 1898 (by the Land payment or acknowledgment, or the last of
Transfer Act, 1897) , the legal estate vests such payments or acknowledgments, if more
also in the personal representatives. If, than one, was given . A mortgagee must,
therefore, title deeds are offered as security therefore, take action with regard to his
by the person to whom the property has been security within the twelve years, as ex
devised by the deceased's will , or, if no will, plained in that Section, or he may lose his
by the heir -at-law, until the formal assent right of action altogether. It has been held
of the personal representatives has been that an action on the covenant to repay the
received, the devisee or heir has only an mortgage debt contained in the mortgage
equitable title. The assent may be given as deed must also be brought within the twelve
soon as the representatives are satisfied years.
that the property is not required in con- Where deeds are to be lent to a solicitor,
nection with the administration of the the customer's written authority to lend
estate . But at the expiration of one year them should be obtained, and the solicitor
from the death, the heir or devisee may should give his undertaking to return them
apply to the Court to compel a conveyance in the same condition.
of the property to be made to him . (See If the customer desires that the deeds be
EXECUTOR .) given up to a solicitor against payment to
In the case of copyhold property, where his credit of a certain sum, or repayment of
admission is necessary, the title does not the overdraft, the authority and undertaking
vest in the personal representatives. should be worded accordingly.
Where an agent is authorised to deposit When the title deeds of a company's
title deeds as security, and he exceeds his property are given as security, whether
authority and borrows more than he was mortgaged or lodged under a memorandum
empowered to borrow, the principal will be of deposit, or without any document of
liable for the full amount borrowed , pro- charge, the charge so created must be regis
vided that the banker was not aware of the tered . (See COMPANIES REGISTRATION OF
extent of the agent's power to borrow . As MORTGAGES AND CHARGES .)
a rule, however, a banker would require clear In Scotland a deposit of title deeds, either
evidence of an agent's authority to borrow with or without a memorandum of deposit,
and of the limits of that authority . does not create an equitable mortgage, as in
Where aa deed is executed under a power of England . If, therefore, an advance is
attorney, the power, or an attested copy granted by a banker in England upon
thereof, should accompany the deed. The heritable ( real) property in Scotland, the
death of the donor of a power of attorney form of charge must conform to the law of
revokes it, therefore there should be evidence Scotland . (See DISPOSITION ABSOLUTE .)
that the donor was alive when the deed was (See VALUATION .)
signed . TITLE DEEDS. NOTES RE TITLE .
By Section 8 of the Real Property Limita- It is impracticable to detail all the points
tion Act, 1874, it is provided that no action which may require attention when examining
or suit or other proceeding shall be brought title deeds, but the following are some of the
to recover any sum of money secured by any more important of them :
mortgage, judgment, or lien, or otherwise There should be an ABSTRACT OF TITLE .
charged upon or payable out of any land or the purchaser has the right to one unless
rent, at law or in equity, or any legacy, but there was a special condition in the contract
within twelve years next after a present to the contrary. The abstract ought to
right to receive the same shall have accrued accompany the deeds, but very often it is
to some person capable of giving a discharge retained by the solicitor. (See ABSTRACT
for or release of the same, unless in the mean- OF TITLE , Root OF TITLE . )
time some part of the principal money, or The Abstract should commence with the
TIT ) DICTIONARY OF BANKING
root of title. A purchaser of a freehold
is entitled to a forty years' title, but
he may agree to accept a shorter, or the
conditions of sale may stipulate for a
shorter . (See FREEHOLD .)
In leaseholds the lease should be abstracted
even if more than forty years old. (See
LEASEHOLD .)
In enfranchised lands the abstract should
commence with the deed of enfranchise
ment. (See ENFRANCHISEMENT.)
Sort the deeds in order of date .
Compare with the abstract to see that all
are there .
If there are deeds on the abstract which
are not deposited, there should be an
acknowledgment for production and
safe custody from the person who
retains possession of them , either in
the purchase deed , or by a separate
document.
If the abstract, showing the title of the
person who deposits the deeds, is a
recent one, a banker may consider that,
as the title has just been overhauled by
a solicitor, it will be sufficient if he sees
that he holds the deeds, as per the
abstract, or an acknowledgment for
production , and examines the last
deed .
CONVEYANCE :
Is it signed and sealed by the vendor ?
and does the signature appear to be
genuine ? (If there are no covenants by
the purchaser, it does not appear to
be necessary for a purchaser to sign
it .)
If the property is conveyed to more than
one person, they may hold it as joint
tenants or tenants in common. (See
Joint TENANTS, TENANTS IN COMMON.)
Is it witnessed ? If in Yorkshire or
Middlesex is it registered ? (See LAND
REGISTRY - MIDDLESEX DEEDS, YORK
SHIRE REGISTRY OF DEEDS. )
Is it correctly stamped ? ( See CONVEYANCE,
INCREMENT VALUE DUTY .)
Is the land conveyed to the depositor
in fee simple, or to him and his heirs
for ever, free from all charges and
incumbrances ? (See FEE SIMPLE.)
Observe carefully what follows the clause
“ To have and to hold ...” It may
go on to say “ Subject to a certain
mortgage . (See MORTGAGE .)
If it does, has the mortgage been dis
charged and is it with the deeds ? If
not with the deeds, it should be asked
632
( TIT
for. It may still be a charge on the
property. Or the mortgage may be
with the deeds and not have been
reconveyed. This should be seen to ,
as until a reconveyance is obtained the
legal estate is outstanding. Is the
reconveyance stamped ? (See RECON
VEYANCE . )
If there have been any mortgages since
the last conveyance, have they all been
discharged ? (See NOTICE OF MORTGAGE,
PRIORITIES . )
What is the consideration ?
How does the amount compare with
the consideration , say, forty years
ago ?
If more, what has caused the increase ?
Have houses been built ?
If less, is that due to portions having
been sold , or to a depreciation in the
value of the property?
Are there any memoranda of sales indorsed
upon the deed ?
Have any sales taken place which are
not indorsed upon the deed ? This is
a very frequent occurrence and most
misleading
Are the particulars of the property in the
last deed the same as in the first ab
stracted deed ? If not, what has caused
the difference ?
The last deed may show five houses,
whereas the prior deeds only refer to
two. Have three more been built, or
the two converted into five, or have
three more been purchased from another
source ?
If the land contained in the last deed has
been obtained from several sources
trace each portion separately. It is
a good plan to make notes of names,
dates, and quantities when trying to
follow a confused title.
How is the purchaser affected by any
covenants in the deed ? For example,
is he responsible for the making or
maintenance of any roads ?
Where property has passed by will and
is subject to legacies, receipts for the
legacies should be produced .
If the last deed is in favour, say, of the
depositor's father, see copy of the
testator's will. His widow may have
a life interest in the property , and
should in that case join in any charge.
If the deceased died intestate, the
widow has a life interest in one - third of
the real estate. A widower has a right
TIT) DICTIONARY OF BANKING ( TIT

for life to the rents of the real estate of have been observed up to date, except
his deceased wife , if she died intestate where it is a peppercorn rent.
and had a child by the husband and If the lessor's licence or consent in writing
such child was capable of inheriting. to assign or mortgage is necessary , has
(See INTESTACY. ) it been obtained ? (See LEASEHOLD .)
The legal estate of freeholds, on a death COPYHOLDS :
since January 1 , 1898, vests in the legal As the customs of manors vary so much,
representatives (executors or adminis- inquiry should be made with regard to
trators) and the formal assent of those each manor.
representatives to the devisee , or a Has the customer been admitted , and is
conveyance from them to the devisee there a copy admittance, signed by the
or to the heir at law, is necessary before steward or deputy steward of the
the devisee or heir deals with the manor ? (See ADMITTANCE . )
property. (See EXECUTOR . ) If there is merely a chain of covenants to
Has succession duty been paid ? surrender, inquiry should be made as to
Is probate, or an office copy of the will, the admittance.
with the deeds ? In somecases the person who is admitted
In the case of annuities upon the property, is not the actual owner and merely
if an annuitant is still living he should holds in trust for the owner.
join in any charge. If copy admittances only are held, ascer
Does the property form part of a settle- tain if the property could be dealt with
ment ? For example, if Mrs. Mary without production of those documents
Brown deposits deeds, and the last con- to the steward .
• veyance is to Mary Jones (her maiden What fines are payable ? and are they
name) , it is quite possible that at her payable upon the death of the copy
marriage the property may have been holder, or upon the death of the lord
settled so that she cannot deal with it of the manor, or upon both events ?
in any way. The trustees of the settle- A conditional surrender entered on the
ment ought strictly to keep the deeds rolls in favour of a nominee of the bank
in their possession , but this is not is the most satisfactory form in which
always done, and the mere fact that to obtain a security over copyholds.
Mary Brown has the deeds does not of A mortgagee can at any subsequent
itself prove that she has power to date perfect his title by being admitted
deposit them as security . as from the date of the surrender. (See
If a mortgage from Jones to Brown is COPYHOLD .)
deposited to secure Brown's account, CUSTOMARY :
notice of the fact should be given to There is usually a conveyance, with the
Jones, and the banker should ascertain consent of the lord , and an admittance.
from Jones what amount is still owing, See if the conveyance bears a memorandum
but see further information under that the deed has been licensed by, or
MORTGAGE . on behalf of, the lord .
If a second mortgage from Jones to Brown Is the consent of the lord necessary
is deposited to secure Brown's account, before a valid mortgage can be effected
notice of the fact should be given to the over the property ? ( See CUSTOMARY
first mortgagee as well as to Jones, the PROPERTY.)
mortgagor, and the banker should ascer- VALUE :
tain from Joneswhat amount is still owing. See the property and identify it with the
In each case an acknowledgment of the description in the deeds.
notice should be obtained , if possible . What is its saleable value ?
(See SECOND MORTGAGE.) By whom is it occupied ?
LEASEHOLDS : At what rent ? If in own occupation
In addition to the above points so far as inspect poor rate assessment and
they apply : obtain gross estimated rental and rate
What is the length of the lease, and the able value. This can be obtained ,
amount of the ground rent ? without charge, by a ratepayer at the
Is the rent paid up to date ? The receipt office of the clerk to the assessment
should be produced. A receipt for the committee.
rent means, as a rule, that all covenants What are the rates ?
633
TIT) DICTIONARY OF BANKING
Is there any ground or other rent ?
Are all houses let, and in what sort of
repair ?
Is the district an improving one, or the
contrary ?
Are there many houses vacant in the
neighbourhood ?
Are the houses dependent for tenants
mainly upon one works ?
Is there anynuisance in the neighbourhood
which may affect the value of the
property ?
How far is the property from a railway
station ?
Is the street made and taken over by the
town ?
An outlying property is often difficult to
realise, and this should be considered
in estimating the value.
If the security consists of mines, or works,
the report of a specialist is necessary.
It should always be remembered that, in
the case of a security representing a
large amount, there will, as a rule, be
great difficulty when the security is to
be realised , in finding anyone to take
it up, if indeed anyone ever is found.
(See VALUATION .)
INSURANCE :
Is all the insurable property insured in a
good office ? (See FIRE INSURANCE . )
In the case of licensed premises, is the
value of the licence insured ? (See
LICENSED PROPERTY .)
Is the last premium receipt with the
deeds ?
It is better that the bank's name should
appear in the policy.
In the case of leasehold property, does the
lease stipulate that the premises must
be insured in a particular company, and
in the joint names of the lessor and
lessee ?
CHARGE :
Detail all, or at least the principal, deeds
upon the memorandum of deposit, or
the banker's legal mortgage . (See
BANKER'S MORTGAGE, MEMORANDUM OF
DEPOSIT, LEGAL MORTGAGE, MORTGAGE .)
If the document is signed in front of the
schedule, it should also be signed after
the schedule .
In the case of leasehold property which assured, or on such policy maturing .
is to be assigned or demised to the bank
as security , it should be ascertained if
the licence, or consent in writing, of the century, who invented a Tontine annuity, an
lessor is necessary upon the occasion of annuity shared by subscribers to a loan , with
an assignment or demise. If the licence
634
( TON
is required , it should be obtained when
a legal mortgage is taken , but such a
stipulation may not apply if the
deeds are deposited merely with a
memorandum of deposit.
It must be stamped within thirty days.
(See EQUITABLE MORTGAGE.)
If the charge to the bank is a second
mortgage, notice should be given to the
first mortgagee. (See SECOND MORT
GAGE . )
If the charge is given by a company, has
it been registered ? Is the registrar's
certificate of registration deposited with
the security ? (See REGISTRATION OF
MORTGAGES AND CHARGES.) And has
the company power to borrow and to
give the charge ? (See COMPANIES.)
(See ABSTRACT OF TITLE, BENEFICIAL
OWNER , BUILDING SOCIETY, COLLATERAL
SECURITY, COPYHOLD, CUSTOMARY Pro
PERTY, DEED , DEED OF GIFT, EQUITABLE
MORTGAGE, EQUITY OF REDEMPTION , FEE
SIMPLE, FORECLOSURE,FREEHOLD , FRIENDLY
SOCIETY , INDENTURE , Joint TENANTS ,
LAND CERTIFICATE , LAND REGISTRY , LAND
REGISTRY (MIDDLESEX DEEDS) , LEASEHOLD ,
LEGAL MORTGAGE, LIEN, MEMORANDUM OF
DEPOSIT, MORTGAGE , Root OF TITLE ,
TENANTS IN COMMON, YORKSHIRE REGISTRY
OF DEEDS.)
TOKEN MONEY . English silver and
bronze coins are token money ; that is, the
value of the metal in them is less than the
value attached to the coins by law. The
Government
>>
makes a profit called “ Seignior
age upon the coining of silver and bronze.
Silver is legal tender only to the extent of
forty shillings, and bronze to the extent of
one shilling. (See COINAGE .)
TOMAN . (See FOREIGN MONEYS
PERSIA .)
TONTINE POLICY. A life policy on
which no bonus is payable in the event of the
death of a policy holder, such bonus only
vesting on the policy maturing at the end
of a given period , usually fifteen or twenty
years. During that term of years ( the
Tontine period) the policy will not have a
surrender value. In the case of an ordinary
endowment assurance, the bonus additions
are payable in the event of the death of the
The word Tontine is derived from
Tonti , an Italian banker of the seventeenth
the benefit of survivorship, the annuity being
TOR ) DICTIONARY OF BANKING ( TRA

increased as the subscribers died. (Palgrave's TRANSFER IN BLANK . (See BLANK

" Dictionary of Political Economy.") TRANSFER .)
TORT. A civil wrong which arises in- TRANSFER OF MORTGAGE . Where a
dependently of any contract. mortgagor is entitled to redeem, he has
TOT UP . To sum up figures so as to power to require a mortgagee, instead of
ascertain the total, or tot as it is called , for reconveying the property to him , to assign
short. the mortgage debt and convey the mortgaged
TOWN CLEARING . The Town Clearing property to some other person.
is a section of the business of the London A mortgagee is entitled to transfer the
Bankers' Clearing House, and includes the mortgage either with or without the con
head offices of the clearing banks and most currence of the mortgagor, and he may
of their branches in the City. Cheques on do this in two ways : ( 1) by way of
offices included in the Town Clearing have absolute transfer ; or, (2) by way of
I printed on the left-hand bottom corner. sub -mortgage.
There are two Town Clearings each day ,in A transfer of mortgage is effected by deed
the morning and in the afternoon. ( See and includes an assignment of the mortgage
CLEARING House .) debt and a conveyance of the property,
TRADE BILL . A bill drawn in connection subject, in the case of freehold or leasehold
with actual trade operations. The term is property, to the existing equity of redemp
used to distinguish the paper from a bank tion . In the case of copyholds, where there
bill or from a “ kite " or accommodation has been a surrender to the mortgagee,
bill ” (q.v. ) . perfected by admittance, a transfer is
TRANSFER CERTIFICATE . In the effected by the mortgagee's surrender, or
few companies which do not issue a fresh covenant to surrender, to the use of the
certificate upon a transfer of the shares, a transferee, which may be perfected by the
transfer certificate is issued to be preserved admittance of the transferee.
along with the original certificate. For A transferee can hold the property as a
example, where John Brown holds ten security only for the amount that was due
certificates for one share each in the King- from the mortgagor to the mortgagee at the
moor Water Company, Ltd., and he sells time of the transfer. It is always desirable
the shares to John Jones, the company that the mortgagor should be a party to a
gives Jones a transfer certificate in the transfer of the mortgage, “ because in his
following form :-I do hereby certify that a absence the transferee is bound by the state
deed of transfer of ten ordinary shares, etc. , of the accounts between the mortgagor and
in the Kingmoor Water Company, Ltd. , the transferor, whatever may have been the
bearing date the day of representations of the latter to the trans
19 , from John Brown , of tó feree, andthough hehas no noticeofthe
John Jones , of has been discharge of any part of the debt." (Fisher's
deposited at the office of the said Company “ Law of Mortgage.") If the mortgagor
in Carlisle, and duly registered in their does not join in the transfer, the transferee
books on the day of should ascertain from the mortgagor, in
19 .
. writing, what is actually due under the
Secretary mortgage. Until the mortgagor has received
The ten old certificates and the transfer notice of the transfer, he is entitled to
certificate are, of course, kept by Jones. make payments to the mortgagee, either of
TRANSFER DAYS. The Transfer Days principal or interest, and to have credit for
at the Bank of England are Monday, Tues- them as against the transferee ; but when
day, Wednesday, Thursday and Friday. the mortgagor is a party to the transfer, he
Those are the days on which transfers may enters into a covenant with the transferee
be made of those stocks which are inscribed for payment of the mortgage debt and
in the books of the bank. If a transfer is interest.
made on a Saturday a fee of 2s. 6d. is charged . A banker does not , as a rule, take a transfer
(See NATIONAL DEBT.) of a mortgage. The taking of a mortgage for
TRANSFER FEE . The fee which is a fixed amount terminates the relation of
generally payable to a company upon the banker and customer, and the banker's posi
registration of a transfer of shares or stock. tion is that of an ordinary mortgagee. If a
The fee is usually 2s. 6d. ( See TRANSFER banker takes a mortgage for a definite
OF SHARES .) amount, or a transfer thereof, the advance
635
TRA ] DICTIONARY OF BANKING [ TRA

must be made on a separate loan account, at the date of the sub -mortgage, and is
and not on a working account, the only affected by dealings between the mortgagor
transactions being credits in reduction of and the mortgagee until the mortgagor has
the loan . Each credit reduces the amount had notice of the sub -mortgage. If a banker
due under the mortgage, and any fresh with takes a legal sub -mortgage, his advance
drawal (if allowed) would not be covered by must, of course, be made on a separate loan
the mortgage . As to the interest on such account. " A sub -mortgagee can , subject
an account, see under INTEREST. to any stipulations in the sub -mortgage,
If a mortgagee deposits his mortgage deed call in the original mortgage and can exer
and the title deeds with a banker, it forms a cise the mortgagee's right to sue for and
security only for the amount due under the receive the mortgage money, and to realise
mortgage. Notice should be given to the the security. If he receives the mortgage
mortgagor that the mortgage deed has been money , he will reconvey to the mortgagor,
deposited as security, and the amount due and, after satisfying his own debt, will
should be ascertained from the mortgagor. account for the surplus to the mortgagee.
A simple deposit of the deeds creates merely If he realises the mortgage security by
an equitable charge. (See EQUITABLE MORT- exercising the power of sale arising under
GAGE.) A special form of charge may, how the mortgage, he will set aside the amount
ever, be used by which the mortgage debt is due under that mortgage and pay the sur
assigned absolutely to the banker and the plus to the mortgagor ; and out of the
deeds are deposited. The Stamp Office amount so set aside he will retain the sub
stamps a charge of this nature 2s. 6d. per mortgage debt and pay the remainder
cent . The Court of Appeal has held that to the mortgagee.” (“ The Laws of Eng
when it is clear from the instrument that the land,” by the Earl of Halsbury .) ( See
whole of the assignor's rights in the debt are MORTGAGE.)
assigned to the assignee, an action must be The form of statutory transfer of mortgage
brought in the name of the assignee, as the is given under STATUTORY MORTGAGE .
case comes within Section 25 of the Supreme TRANSFER OF SECURITIES PUBLIC
Court of Judicature Act, 1873. See Hughes TRUSTEE ). In addition to the information
v. Pump House Hotel Co., Ltd. , under given under PUBLIC TRUSTEE (q.v.) regard .
DEBTS - ASSIGNMENT OF, DEPOSIT OF Mort- ing the powers and duties of the Public
(
GAGE . An assignment of the debt only , Trustee, bankers should note the somewhat
leaves the assignor as the person who is the peculiar practice of the Department in
proper party in foreclosure or redemption, connection with the transfer of securities .
though he is a trustee of any money thereby By Rule 21 of the Statutory Rules and
obtained for the assignee of the debt. Orders, 1912 :
A transfer of the security without an assign- “ (1) No transfer by the Public Trustee
ment of the debt carries the benefit of the of any securities or assurance by
debt so far as it is charged on the property, him of any land forming part of
since the mortgagor cannot redeem with the trust property shall be made
out paying the debt to the transferee." except under the hand and official
(" The Laws of England,” by the Earl of seal of the Public Trustee, or under
Halsbury .) the hand and seal of an officer of
As stated above, a mortgagee has the the Public Trustee authorised in writ
right to create a legal sub -mortgage. For ing by him to act in that behalf
example, if his mortgage is for £500 and he either generally or in any particular
wishes to use the security to obtain an case .
advance of, say , £ 200, he can transfer the “( 2) Any such transfer or assurance
mortgage for that purpose. The person to by an officer so authorised shall
whom the mortgage is transferred must give have the same effect as if the
notice of the sub -mortgage to the mortgagor same were made by the Public
and ascertain from him, in writing, what is Trustee under his hand and official
actually due under the mortgage. A sub seal. "
mortgage by transfer places the sub -mort- Sales and purchases of investments are
gagee in the position of a transferee of the made only upon the written order of the
original mortgage, and, therefore, is subject, Public Trustee.
as already mentioned, to the accounts Where registered stocks are to be trans
between the mortgagor and the mortgagee ferred to the Public Trustee, the deed of
636
TRA) DICTIONARY OF BANKING [ TRA

transfer is signed by the Public Trustee . account of the Public Trustee re ...
If there are several accounts in his name, of the securities hereunder specified :
each account is earmarked by a name, a
letter, a figure, or a combination thereof.
Description of Securities. Amount,
The earmarking is added to the deed of
transfer in the Department of the Public
Trustee . The object of the earınark is to £
enable the Public Trustee to identify each
holding with the particular trust to which
it belongs, and in order that dividends may
be paid direct to the beneficiaries or their
banking accounts . In the case of a joint (Signature ).......
account in the names of the Public Trustee
and another person , no earmarking is Public Trustee .
necessary as the additional name is sufficient
identification , but if there are two or more BANK CERTIFICATE OF LODGMENT ON
joint accounts in the same names it is TRANSFER .
requisite to earmark them .
Banks and other companies recognise this To the Public Trustee,
practice, and make out separate dividend 3 and 4 Clement's Inn , Strand , W.C.
warrants for each account . 19 ..
When a sale or transfer of registered
stock takes place, the deed of transfer is From (name of the Company or other
executed by the Public Trustee . Upon a authority ). The securities above specified
purchase, payment is made by the Public have been this day lodged or transferred to
Trustee only when a duly certified transfer, the account of the Public Trustee re........
or an executed transfer with the relative
For the......
certificate attached , is delivered at the
Securities Department of the Public Trustee (Signature )......
Office or at a bank, as may be arranged.
In connection with the purchase or sale The object of this form of lodgment is
of bearer securities the Public Trustee may , that the Public Trustee may know definitely
upon a sale , request a banker to surrender when the stock has been transferred. The
such securities against payment of the form is sent to the Public Trustee from
proceeds, and, upon a purchase, may request the bank signed and certified as soon as
him to make payment therefor upon the transfer is made.
delivery of the securities. In the case of transfers -out of inscribed
In the case of inscribed stocks, no regis- stocks from the Public Trustee they are
tering authority will accept stock on behalf | always effected by power of attorney, but
of the Public Trustee unless the sanction a registering authority will not issue a
of the Public Trustee is first obtained . This form of power of attorney unless the ap
sanction is given in a form of lodgment, plication is accompanied by a form of
signed by the Public Trustee or one of the transfer -out, signed by the Public Trustee
principal clerks. The form is as follows :- or one of the principal clerks. The official
form of transfer -outis as follows :
To the GOVERNOR AND COMPANY OF THE
BANK OF ENGLAND (or other body as I. DIRECTION FOR TRANSFER .
the case may be ). Regr. No .....
Public Trustee Office, To the GOVERNOR AND COMPANY OF THE
BANK OF ENGLAND (or other body as the
3 and 4 Clement's Inn , case may be ).
Strand, W.C. Public Trustee Office,
19 ..
3 and 4 Clement's Inn ,
Authority is hereby given for the lodg Strand, W.C.
ment or transfer by ..... to the . 19 ..
637
TRA ) DICTIONARY OF BANKING ( TRA

You are hereby authorised to transfer The following is the usual form of transfer

,Ltd. ny
from the account of THE PUBLIC TRUSTEE | under seal :

Compa
re ........ as hereunder specified the sum

atate y's
in consideration of

stock
I

been
of .

has
the sum of paid by

compan
lodged
hereinafter called the said trans

.office
feree, do hereby bargain, sell,

Dthe
Amount of Stock
Names of Transferees . to be transferred . assign and transfer to the said
S.
transferee of and in
€ d.
the undertaking called
To hold unto the said transferee
executors, adminis
trators, and assigns, subject to

Certificate
the several conditions on which

For
the
held the same immediately
before the execution hereof ; and
the said transferee do hereby

for
II . BANK CERTIFICATE OF TRANSFER .

£
agree to accept and take the
To the Public Trustee, 3 and 4 Clement's said subject to the
Inn, Strand , W.C. conditions aforesaid . As wit
Bank of England .. ... 19 .. ness our hands and seals this
day of in the year
The Inscribed Stocks above specified of our Lord one thousand nine
have been this day transferred as herein hundred and .
Witness's

authorised . Signed, sealed, and delivered by the above

named in the presence of
For the Bank of England .
. Signature
(or other authority ).
Address L.S.
(Signature) .
Occupation
The forms of lodgment and transfer -out
Witness's

are not required in connection with the Signed, sealed , and delivered by the above
transfers of registered stock except in the named in the presence of
case of the Bank of England, Lloyds, and
the National Provincial and Union Bank of Signature
England as to certain stocks of which they Address L.S.
are registrars.
(For further information see the “ Stock Occupation
Exchange Official Intelligence.")
TRANSFER OF SHARES. The instrument The following is the form of transfer not
of transfer of shares should be in accordance under seal, as given in regulation 19 of Table
with the company's regulations. In com- A, Companies (Consolidation) Act, 1908,
panies formed under the Companies Clauses which a company may adopt, unless the
Consolidation Act, 1845, the transfer must directors approve of some other form :
be by deed ; in other companies the transfer I, A B of in consideration of the
may be under hand or under seal, according sum of £ paid to me by CD of
to the articles of the company. In practice, (hereinafter called “ the said
however, the tendency is for the common transferee "') do hereby transfer to the
form of transfer deed to be used , irrespec- said transferee the share [or shares )
tive of the company's articles,, except numbered in the undertaking called
in those cases where a special form of the Company Limited , to hold
transfer is necessary . In order to obtain unto the said transferee, his executors,
an official quotation on the London administrators, and assigns, subject to the
Stock Exchange, one of the conditions is several conditions on which I held the
that the articles must stipulate that same at the time of the execution thereof :
the common form of transfer shall be and I, the said transferee, do hereby agree
used. to take the said share (or shares] subject
638
TRAJ DICTIONARY OF BANKING
to the conditions aforesaid . As witness
our hands the day of
Witness to the signatures of, etc.
In companies where Table A applies ( see
Section 11 under ARTICLES OF ASSOCIATION)
the regulations are :
“ 20. The directors may decline to register
any transfer of shares, not being fully -paid
shares, to a person of whom they do not
approve, and may also decline to register
any transfer of shares on which the company
has a lien . The directors may also suspend
the registration of transfers during the
fourteen days immediately preceding the
ordinary general meeting in each year. The
directors may decline to recognise any
instrument of transfer unless
“ (a) a fee not exceeding two shillings and
sixpence is paid to the company in
respect thereof, and
“ (6) The instrument of transfer is accom-
panied by the certificate of the
shares to which it relates, and such
other evidence as the directors may
reasonably require to show the right
of the transferor to make the
transfer. "
Shares should not be registered in the
name of a minor, as he may subsequently
repudiate the contract.
Certain banks and insurance companies
require a specialform of transfer to be used ;
in some cases the forms must be filled up
only by the officials of the companies, and
in other cases the forms are supplied by the
companies for use by those who require
them. There are special provisions with
regard to the sale and transfer of bank
shares . ( See LEEMAN'S Act . )
The consideration money set forth in a
transfer may differ from that which the first
seller will receive, owing to sub -sales by the
original buyer. The amount which
entered in the transfer is the price given by
the last purchaser.
When a transfer is executed out of Great
Britain the signature should be attested by
H.M. Consul or Vice -Consul, a Clergyman,
Magistrate, Notary Public, or by some other
person holding a public position, as most
companies refuse to recognise signatures not
so attested . When a witness is a female,
she must state whether she is a spinster,
wife, or widow ; and if a wife she must give
her husband's name, address and quality ,
profession or occupation . The date must be
inserted in words and not in figures.
Contractions should not be made in a
( TRA
transfer, and the full names, addresses and
occupations of all the parties should be given .
Country bankers are often requested to
send certificates to their London office or
London agents to be handed over to a broker
against cash for a specified amount. They
are also often requested to instruct their
agents or London office to pay cash to
brokers in exchange for certain securities.
in either case the country banker should
obtain the instructions in writing from the
customer, so that there may be no mis
understanding on any point. Where the
request is to take up securities, the customer
should state whether payment to the broker
may be made by instalments according to
the value of the securities he delivers.
Where a transfer and certificates are to be
received , the customer should state whether
a certified transfer ( that is, a transfer
bearing a note by the company that the
certificate is in the company's office) may be
accepted .
The instrument of transfer must be
executed both by the transferor and trans
feree. When the document has been signed
by the transferor he hands it, with the certifi
cate, against payment of the purchase
money, to the transferee, who also signs it
and then sends the transfer and the certifi
cate to the company's office along with the
company's fee for registration in order that
the shares may be registered in his name.
The process is usually carried through by a
broker. When a transfer is received for
registration it must be carefully scrutinised
and the particulars of the shares be com
pared with the share register. If the instru
ment is correctly stamped and properly
filled up and executed , the company will,
before issuing a new certificate, send a notice
to the transferor advising him that a docu
is ment of transfer purporting to be signed by
him has been received and that the shares
will, unless he replies by return (or within ,
say, three days) to the contrary , be regis
tered in the name of the transferee. If
there are two or more joint holders of the
shares it is advisable to send a notification
to each one . Such a notice helps to prevent
a company registering a transferee upon a
forged transfer . A company must, within
two months after the registration of a
transfer , have the new certificate ready
for delivery . (See Section 92 of the Com
panies ( Consolidation ) Act, 1908, under
CERTIFICATE .)
When transfers have been passed by the
639
 TRA ] DICTIONARY OF BANKING ( TRA
directors and new certificates issued , they if he holds the certificate and a duly
should be filed away in such a manner that executed transfer, and gives notice to the
any one may be found at a moment's notice company.
if required . A good plan is to number each It is necessary to give notice to the com
one and to place the same number in the pany, otherwise the banker may find his
register of members opposite the name of the security postponed to a subsequent charge .
transferor. In a case of fraud it is possible for another
In the case of shares which are not fully party to get registered in front of the banker
paid, the directors of a company should holding the certificate. It has been held that
consider whether a proposed transferee is a foot-note upon a certificate to the effect
good for the liability upon the shares ; that that it must be surrendered before a transfer
is, if the articles give the directors power to of the shares can be registered is not binding
refuse to register an unsatisfactory person . upon the company. (See CERTIFICATE .)
If the articles do not give such power the When giving notice, the banker should ask
directors cannot refuse to register a transfer. the company to state whether notice of any
In Re Pool Shipping Co., Ltd. ( 1919, prior charge has been received . The com
122 L.T. 338) , where the articles of association pany may probably not accept notice,
gave the directors power to refuse any or even acknowledge receipt of the letter
transfer of shares of which they might not sending it, and it is, therefore, advisable for
approve, it was held that a renunciation of a banker to be able to prove that the notice
rights to new shares was not a transfer of was sent to the company. The company
shares within the meaning of the articles should be advised when the banker ceases
and that the directors were not entitled to to have a lien on the shares .
refuse to register the person in whose favour With regard to a “ notice in lieu of
the rights to certain shares had been distringas served upon a company , see
renounced . DISTRINGAS.
In the case of a married woman it is A trading company very often has a lien
necessary to ascertain whether, or not, upon its shares for any money owing by the
she is possessed of separate estate (not shareholders to the company , a fact which,
subject to restraint ) . If she has no separate in some cases, may greatly affect the value of
estate, there is no remedy against her the banker's security, unless the shares are
personally for any calls that may be registered in his name. (See LIEN . )
made . Before registering shares in the bank's
Shares are very frequently transferred name, or the names of its nominees, a banker
into a banker's name, or the names of his naturally ascertains if there is any liability
nominees , as security for a loan or overdraft. upon the shares. The certificate, however,
It is to be noted that the person in whose does not always show how much has been
name shares are registered may be merely paid up per share, and the information
a trustee, or a nominee of the true owner ; must be obtained from other sources . If
and that, if the registered holder obtains a shares are only partly paid up, they should
loan against a deposit of the certificate, the not be registered in the bank's name ; the
true owner may intervene at any time certificates should merely be held with a
before the banker has registered the shares blank or a completed transfer. (See BLANK
in his own name and compel the banker to TRANSFER.) The registered holder of partly
surrender the certificate. When a banker, paid up shares is, as stated above, liable for
however, without notice of any prior any calls that are made. (See Calls. )
equitable charge, obtains a transfer duly The transfer can be sent in to the company
executed in his own favour and gets it at any subsequent date for registration , and
registered , he has a legal title to the shares it is considered that it will hold good even
or stock transferred by the instrument. though the transferor dies or becomes
When the banker is registered as the owner bankrupt before registration is effected .
of shares which are not fully paid he becomes | It should be noted that, though a surrender
liable for any calls that may be made, which of the share certificate is necessary in nearly
is not the case if he merely holds the certifi- all cases, there are a few instances where a
cate with a blank transfer, or does not surrender is not necessary before a transfer
register a completed transfer. Though can be effected . Certificates need not be
registration is necessary to give a banker a produced when transferring National Bank
legal title, he will, as a rule , be quite safe shares, Provincial Bank of Ireland shares,
640
TRA ) DICTIONARY OF BANKING [TRA
and Royal Exchange Assurance Corporation bank may, when necessary , realise the
stock . The Grand Junction Canal Company shares for the purpose of repaying any
does not issue certificates at all. advance . (See QUALIFYING AGREEMENT.)
Although a banker can, when the shares All dividends received by the bank on such
are registered in his name and he holds an shares belong, of course, to the customer
authority to sell them, dispose of them , and will be credited to his account. A
when necessary, without further reference record should be kept of all stocks and
to the transferor, it is customary to give shares registered in the names of the bank's
the transferor notice of an intention to nominees, so that, when the dividends are
sell . If the banker does not hold (and received, the banker may know to whom
cannot obtain) a transfer of the shares, to they belong. When the security is no
enforce the security, application must be longer required the shares are retransferred
made to the Court for an order for to the persons entitled to them .
foreclosure or sale . Where shares are transferred to a bank
The various ways in which shares can be or the nominees of a bank as security for
made available as security are : a loan or overdraft, the consideration which
1. A simple deposit of the certificate, is inserted in the document of transfer is
with or without notice to the company. agenerally five shillings or ten shillings. Such
consideration is called a “ nominal con.
2. A deposit of the certificate, accom
panied by a memorandum of deposit, sideration ,” and the transfer requires to be
with or without notice to the company impressed with a ten -shilling stamp. See
signature CONSIDERATI
3. A deposit ofthe certificate with ablank NOMINAL transferor's
ON .) The by
shouldbe witnessed a bank
transfer and qualifying agreement, with
or without notice to the company . official, but not by one of the nominees.
(See FORGED TRANSFER.)
4. A deposit of the certificate with a It isbyimportant
completed transfer and qualifying taken a banker to note thatshould
as security if a transfer
eventu
agreement, with or without notice to ally be proved to be forged, the banker may,
the company . even though the shares were transferred
5. Registration of the shares in the name into his name and sold , be compelled to
of the bank . A qualifying agreement make good the value of the shares to the true
should be held . Owner. Transfers should , therefore, when
Nos. 1 , 2, and 3 are merely equitable possible, be signed in the presence of an
charges, and may be postponed to a prior official of the bank, and particularly if the
equitable charge. shares are in the names of several persons.
No. 4 is a good security, as the legal estate (See FORGED TRANSFER .) Where a banker's
can be obtained at any moment by sending name is inserted in a transfer as the trans
in the transfer for registration . feree , the banker should not sign as witness
No. 5 is, of course , the best form in to the transferor's signature.
which to take the security . It frequently happens that part of the
Although shares may be registered in shares included in a transfer which is held
the names of a bank's nominees , and those by a banker is sold by the customer. In
nominees be regarded by the company as such cases a fresh transfer should be taken
the actual owners of the shares and the for the shares which still remain as security.
persons to whom dividends will be paid It is not sufficient to alter and initial the
and who will be held liable for any calls old transfer. A fresh transfer should also
which are made, it is , of course , understood be taken, e.g. where shares are split into
between the customer and the bank that the smaller denominations than quoted in the
transfer has been effected merely for the transfer ; and where a further instalment
purposes of security and that, as soon as is paid on partly paid shares if the amount
the necessity for the security ceases, the paid up is quoted in the transfer.
shares will be retransferred to the customer: Where a company is being wound up
To make the position clear a memorandum voluntarily, every transfer of shares, made
or agreement is signed by the customer on after the commencement of the winding up,
the same date as the transfer is signed, except transfers made with the sanction
qualifying the deed of transfer and stating of the liquidator, shall be void ; and in
that the shares are transferred to the bank the case of a winding up by the Court,
as security for all moneys owing and that the every such transfer shall, unless the Court
641
41-( 1535 )
TRA) DICTIONARY OF BANKING [ TRA

otherwise orders, be void . (Section 205, “ (2) Every person who writes or executes
Companies (Consolidation ) Act, 1908.) any such request, authority, or
A stockbroker often gives a banker notice, not being duly stamped,
security over shares which have been and every purser or other officer of
given to him by a client as security. (See any such company who in any
BLANK TRANSFER, STOCKBROKER'S LOANS .) manner obeys, complies with , or
STAMP DUTY. gives effect to any such request,
The stamps upon transfers must be authority, or notice, not being duly
impressed. stamped, shall incur a fine of twenty
As to the duty upon a transfer of shares pounds."
upon a sale see CONVEYANCE . With regard to the duty upon instruments
Where the transfer is effected merely as of transfer of shares, stock and debentures,
security , with a nominal consideration of, the following circulars were issued by the
say, ten shillings, the deed of transfer takes a Inland Revenue. On 29th April, 1910 :
stamp of ten shillings (see NOMINAL CON- " It has been brought to the notice of the
SIDERATION ), and the agreementunder hand, Board of Inland Revenue on several occa
which usually accompanies it, takes a stamp sions that instruments of transfer of shares,
of sixpence . (See Section 23, s.s. 2, Stamp stock, and debentures, have been presented
Act, 1891, under AGREEMENT.) This latter to be stamped with the fixed duty of 10s.,
stamp may be either impressed or adhesive. although upon inquiry they were found to
If the agreement is under seal it is liable to be properly liable to the ad valorem
ad valorem duty like a mortgage. (See duty .
Section 86, s.s. 1 (d) , under MORTGAGE.) “The Board believe that, in the majority
A transfer must be stamped within thirty of these cases, the mistake has been due to
days after its execution, or within thirty a misapprehensionof the requirements of the
days from the date of its arrival in the law . They accordingly desire to make the
United Kingdom . provisions of the law which affect this matter
Transfers of shares relating to property more generally known, in order to protect
in foreign countries are, if executed in the those who are responsible for seeing that the
United Kingdom , liable to stamp duty. transfers are properly stamped, more especi
As to composition for stamp duty see ally the registering officers of public com
COMPOSITION ( TRANSFERS, SHARES) . panies and municipal corporations, from
, the stamp duty, penalti es which may be inadvertently
By the Stamp Act, 1891
with respect to transfers of shares in cost incurred .
book mines is : “ Instruments of transfer are properly
TRANSFER . Any request or au £ s. d .
stamped with the fixed duty of 10s. when
the transaction falls within one of the
thority to the purser or other following descriptions :
officer of any mining company,
conducted on the cost book (a) Vesting the property in trustees on the
system , to enter or register any appointment of a new trustee, or
the retirement of a trustee .
transfer of any share, or part of
a share, in any mine, or any
(b) A transfer, as for a nominal con
notice to such purser or officer sideration, to a mere nominee of the
transferor where no beneficial interest
of any such transfer .
006 in the property passes.
And see Section 110, as follows : (c) A transfer by way of security for a
" (1 ) The duty upon aa request or authority loan ; or a retransfer to the original
to the purser or other officer of a transferor on repayment of a loan .
mining company conducted on the ( d) A transfer to a residuary legatee of
cost book system to enter or register stock , etc., which forms part of the
the transfer of any share or part of residue divisible under a will.
a share of the mine, and the duty (e) A transfer to a beneficiary under a will
upon a notice to such purser or of a specificlegacy of stock, etc.
officer of any such transfer, may be A transfer of stock , etc., being the
denoted by an adhesive stamp, property of a person dying intestate,
which is to be cancelled by the per- to the party or parties entitled
son by whom the request, authority, to it.
or notice is written or executed . " In cases (6) and (c) a certificate setting
642
TRAJ DICTIONARY OF BANKING [ TRA

forth the facts of the transaction , signed by reasonable doubt whether an instrument
both the transferor and the transferee, is duly stamped , and the parties decline to
should be required . give the information necessary to enable him
“ As errors are believed to occur, especially to satisfy himself on this point, and in all
in cases of transfers made in distributing the cases of transfers by way of gift inter vivos,
estate of a deceased person , the Board wish he should refuse to register the transfer,
to point out that the fixed duty does not unless the instrument bears the Board's
apply to transfers made for this purpose Adjudication Stamp. In order to obtain
except when they fall within one of the that stamp the parties interested must
descriptions ( d), (e) and (/), mentioned above. present the instrument at the office of the
It follows, therefore, that any transfer of stock , Solicitor, London, Edinburgh , or Dublin, as
etc. , which is made by the executors of a the case may be, where all needful informa
will in discharge, or partial discharge, of a tion can be obtained .”
pecuniary legacy, is chargeable with ad · On 17th June , 1910, a further circular was
valorem duty at the rate of 10s. per cent issued by the Inland Revenue, as follows :
on the amount of the legacy, or of such part “ With reference to the circular to secre
of it as is discharged by the transfer, and taries of Public Companies dated 29 April
this amount should be set forth in the last, the attention of the Board of Inland
instrument as the consideration for the Revenue has been called to the fact that
transfer . difficulty is sometimes experienced in obtain
" Similarly if a transfer is made on a sale , ing, in the cases (6) and (c) mentioned in the
or in liquidation of a debt, or in exchange circular, a certificate of the facts of the
for other securities, ad valorem duty is pay- transaction signed by the transferor and
able on the value or agreed value of the transferee. The Board , therefore, desire to
consideration . intimate to secretaries and other registering
“ Under the provisions of the Finance officers that while they consider that, as a
(1909–10) Act, 1910, a transfer of any shares, general rule, the best form of evidence of
stock or marketable security by way of gift the correctness of the fixed duty of 10s.
inter vivosis chargeable with ad valorem stamp borne by a transfer in such cases will be
duty at the same rate as if it were a transfer found to be a certificate signed by both the
on sale, with the substitution of the value transferor and transferee, they have no
of the stock or security for the considera- | objection to the receipt of other evidence,
tion . The transfer must be adjudicated. provided it shows, clearly and satisfactorily,
“ Transfers to or from trustees otherwise the nature of the transaction . Where, for
than for effectuating the appointment of a instance , the transferee is a well- known
new trustee or the retirement of a trustee bank and the required certificate is given
should be required to be adjudicated. by an accredited representative of the bank,
“ Section 17 of the Stamp Act, 1891 , im- the Board would accept such a certificate
poses on all registering officers the duty of without requiring the instrument to be
satisfying themselves that all instruments aadjudicated . A similar case is one in which
of transfer are adequately stamped before a satisfactory certificate is given by a
they admit them to registration . The member of a stock exchange acting for one
Board are well aware that it is not always or other of the parties to the transfer.
easy for a registering officer to determine the “ In any case h, owever, in which the regis
particular circumstances under which any tration officer is not satisfied that the
such instrument which may come before transfer is duly stamped with the fixed duty
him has been made, but their experience of 10s. , he should not hesitate to refer the
goes to show that it is generally possible to parties to the Board ."
the
ascertain by inquiry the actual facts of the
case, and they desire to urge upon all regis-
On 5th September, 1910, another circular
was issued by the authorities at Somerset
tering officers, who may have to deal with House as follows :
instruments purporting to be properly “ With reference to the circulars to secre
stamped with the fixed duty of 10s., the taries of public companies, dated the 29th
necessity of satisfying themselves that the April, and the 17th June last, I am directed
provisions of the law have been complied by the Board of Inland Revenue to inform
with in each case, before they admit the you that it has been represented to them
instrument to registration. that, with very few exceptions, transfers for
“ In any case where a registering officer has nominal consideration to or from banks or
643
TRA ] DICTIONARY OF BANKING ( TRA

their nominees clearly fall within classes transfer for stamping with 10s., he shall
excepted from the provisions of Section 74 mark the explanation with the words
of the Finance (1909-10) Act, 1910, imposing “ Transfer passed for 10s., ” his initials, and
ad valorem duty, and that it is not necessary his Office stamp, and return it to the person
or desirable that representatives of banks, presenting the transfer in order that it
in furnishing certificates in regard to the may be available for production to the
stamp duty, should specify the facts of each Registering Officer. The explanation will
particular transaction . be required to contain sufficient particulars
“ In all the circumstances the Board are to identify it with the transfer to which it
of opinion that, in the case of transfers of relates. An official form (No. 19) will be
this nature executed by a well - known bank provided for use in such cases if desired.
or its official nominees, the interests of the “ Where a transfer for nominal con
Revenue would , as a general rule, be ade- sideration stamped with 10s. is produced
quately protected if registering officers were to a Registering Officer accompanied by a
furnished with a certificate by an accredited written explanation thus certified by a
representative of the bank to the effect that Marking Officer, the Board will not hold the
the transfer is excepted from Section 74 of Registering Officer liable to any penalty
the Finance ( 1909-10) Act, 1910, and is duly under Section 17 of the Stamp Act, 1891 ,
stamped . if he accepts the transfer for registration
“ It is to be understood that this modifi- without questioning the sufficiency of the
cation of the Board's previous circulars stamp. The explanation should be retained
applies only to the case of banks, and that by the Registering Officer.
in other cases the requirements of those “ It should be understood that this
circulars should continue to be observed .” certification by a Marking Officer is not
A further modification of the above equivalent to adjudication, and that it is
circulars was issued by the Board of Inland possible that cases may arise in which the
Revenue in February, 1911 : Registering Officer, in consequence of special
“ I am directed by the Board of Inland information in his possession or for some
Revenue to inform you that they will offer other good reason, may feel it incumbent
no objection if Registering Officers think upon him to require that the transfer be
fit to register transfers of stock or marketable formally presented for adjudication in
securities which admittedly operate as accordance with the provisions of Section
voluntary dispositions inter vivos, and which 12 of the Stamp Act, 1891."
are stamped with ad valorem duty upon (See BLANK TRANSFER , CERTIFICATE ,
the market value of the stock or securities COMPANIES, LEEMAN's Act, SHARES, TRANS
at the date of the instrument, without MISSION OF SHARES.)
insisting upon adjudication. AstheRegis- TRANSFER ORDER. When a bank
tering Officer will bein a position to supply holds a warehousekeeper's certificate or
authoritative information as to the value of receipt (q.v. ) in its own name, the bank
the stock or securities, it will be open signs, when necessary , an order addressed
to him to obtain the adjudication stamp at to the warehousekeeper to transfer the
any time if necessity should arise in any goods into the customer's name . If delivery
particular case of this description , e.g. if of the goods is required , a delivery order
the transfer should be required for pro- must be signed. (See DELIVERY ORDER . )
duction in evidence in a Court of Law . TRANSFER RECEIPT. The receipt
“ The Board have received representations which is usually given by the Secretary of
to the effect that Registering Officers a company when a document of transfer
should not be under any obligation to is presented for registration.
inquire into the sufficiency of the stamp TRANSFER REGISTER . A transfer
on a transfer for nominal consideration register contains particulars of all the trans
which has been passed by an Official Deed fers of the bank's shares which are agreed to
Marking Officer for stamping with the fixed by the directors. The register is usually
duty of 10s . after execution. With a view ruled so as to show the date of registration,
to meeting this suggestion as far as prac- the transferor's name and address, the num
ticable , the Board have issued instructions ber of shares transferred and the distinctive
that if a written explanation of the facts numbers, the number of the old certificate
is produced to a Marking Officer and accepted and the folio of the register of members
as justifying him in passing an executed where the transferor's name appears, the
644
TRAJ DICTIONARY OF BANKING ( TRA

name, address and description of the trans- administrators of the deceased, the estate
feree, the number of the new certificate, and remains liable for calls. Some companies,
the folio of the share register where the however, do not permit shares to stand in
transferee's account is to be found . the names of executors or administrators.
It is customary to close the transfer booksWhen shares are specifically left by will it is
for a number of days prior to the general nevertheless necessary for a transfer to be
meeting. On the printed report and balance executed from the executors to the legatee.
sheet of a bank there is usually, along with When shares in a bank are transferred
the announcement of the date of the general into the names of the personal representa
meeting, a notice to the effect that the tives of a deceased under such circum
transfer books will be closed for days, stances as to constitute notice to the bank
beginning on and ending with the that the shares are held in a fiduciary
day of the meeting. capacity, the bank could not exercise its
TRANSFEREE . The person to whom lien on the shares in order to recover money
shares, cheques, bills, etc. , are transferred lent to the representatives for purposes not
from another person (the transferor). authorised by the trust. See under LIEN.
TRANSFEROR . The person who trans- When shares are transferred by the repre
fers anything, e.g. shares, cheques, bills, sentatives to a person to whom the shares
to another person (the transferee ). (See have been left, the consideration in the
INDORSER .) transfer is merely a nominal one, say, ten
TRANSFEROR BY DELIVERY. shillings. The stamp duty on such a transfer
A trans-
feror by delivery is defined by the Bills of is ten shillings. But if they are transferred
Exchange Act, Section 58, as follows :- to a legatee, who agrees to accept them
“ ( 1) Where the holder of a bill payable insteadof his cash legacy, the stamp duty
to bearer negotiates it by delivery is ad valorem and the consideration will
without indorsing it, he is called a be the price agreed upon between the
60
' transferor by delivery .' representatives and the legatee.
(2) A transferor by delivery is not liable Where a company has power to refuse to
on the instrument. register an unsuitable person as a share
" (3) A transferor by delivery who nego- holder, it cannot avoid registering a legatee
tiates a bill thereby warrants to his to whom shares may have been specifically
immediate transferee being a holder bequeathed by a deceased shareholder, even
for value that the bill is what it if that legatee is considered quite unreliable
purports to be, that he has a right for the liability upon the shares, unless the
to transfer it, and that at the time company's articles of association give the
of transfer he is not aware of directors express power to decline to register
any act which renders it value any such person becoming entitled to
less ." (See BEARER, BILL of shares in consequence of the death of a
EXCHANGE , NEGOTIATION OF BILL member.
OF EXCHANGE . ) By Clause 20 of Table A , directors may
TRANSMISSION OF SHARES. When a decline to register any transfer of shares, not
shareholder dies, the right to deal with the being fully -paid shares, to a person of whom
shares passes to the executors or adminis- | they do not approve . This Clause does
trators, who produce to the company for not apply to a person claiming shares
registration the probate of the will or the by transmission , but Clause 22 (see below )
letters of administration . The date of the extends the directors' right to decline
shareholder's death should be entered in the registration to a person entitled to shares
register with a note of the executors ' or by transmission .
administrators' names and addresses. The In companies where Table A applies (see
probate or letters of administration should Section 11 under ARTICLES OF Association)
be indorsed with a note that they have the regulations are :
been exhibited to the company “ 21. The executors or administrators of a
Unless the executors or administrators deceased sole holder of a share shall be the
request to be registered as the actual holders only persons recognised by the company as
of the shares, they will not be liable person- having any title to the share. In the case
ally for any calls which may be made. If of a share registered in the names of two or
their names are entered in the register of more holders, the survivors or survivor,
shareholders merely as the executors or or the executors or administrators of the
645
TRAJ DICTIONARY OF BANKING
deceased survivor, shall be the only persons
recognised by the company as having any
title to the share .
* 22. Anyperson becoming entitled toa
of the death or bank-
share in consequence
ruptcy of a member shall, upon such evi-
dence being produced as may from time to
time be required by the directors, have the
right, either to be registered as a member
in respect of the share or, instead of being
registered himself, to make such transfer of
the share as the deceased or bankrupt person
could have made ; but the directors shall,
in either case , have the same right to decline
or suspend registration as they would have
had in the case of a transfer of the share by
the deceased or bankrupt person before the
death or bankruptcy.
“ 23. A person becoming entitled to a share
by reason of the death or bankruptcy of the
holder shall be entitled to the same dividends
and other advantages to which he would be
entitled if he were the registered holder of
the share, except that he shall not, before
being registered as a member in respect of
the share, be entitled in respect of it to
exercise any right conferred by membership
in relation to meetings of the company .
Where a shareholder is domiciled abroad ,
probate or letters of administration should
be obtained in England . But where a
Court of Probate in a British possession ,
to which the Colonial Probates Act, 1892,
applies, has granted probate or letters of
administration, they may, as provided by
Section 2 of that Act, be produced to a
Court of Probate in the United Kingdom
to be sealed with the seal of the Court,
and thereupon they shall have the like
force and effect as if granted by the Court.
(See COMPANIES , EXECUTOR, SHARES ,
TRANSFER OF SHARES .)
TRAVELLERS' CHEQUES. The system
of travellers' cheques was originated in 1891
by the American Express Company with the
object of creating a form of travel currency
which would give the holder the security of
a letter of credit and at the same time the
convenience of local currency . The com
pany registered the cheques under the trade
name of American Express Travelers '
Cheques,” the word Travelers' being
spelled with one “ 1." The advantage of
the cheques was so apparent that other
banking institutions adopted the system.
A system of travellers' cheques was intro
duced by the American Bankers' Association
for the use of its members, that Association
646
[ TRA
having contracted with the Bankers' Trust
Company of New York for their issuance and
for their protection.
The cheques are issued in denominations
of $ 10, $20, $50 and $ 100, tinted respectively
in blue, green , straw and orange.
The idea is that, if the cheques are in
proper order, they will be cashed by bankers,
hotels and others.
According to the instructions issued by the
Association :
The holder may identify himself by sign
ing his name in ink in your presence in the
space left for that purpose upon the face of
the cheque. The signature must correspond
with the holder's signature which was placed
upon the cheque at the time of its purchase
in the place designated for that purpose.
Ordinarily the line following the words
pay to the order of” on the cheque will be
left blank. In such cases the name of the
bank or hotel company or other party cashing
the cheque should be filled in, thus making
the cheque payable directly to the party
who cashes same ; in which case the holder
need not indorse the cheque, his counter
signature being all that is necessary. Should
the name of the holder have been written on
the face of the cheque following the words
pay to the order of " it will then be neces
sary for him to indorse the cheque as well
as to countersign it.
Parties presenting cheques for encash
ment should receive the face amount in
dollars, or their equivalent outside the
United States at the current buying rate
for bankers' cheques on New York .
In the case of doubt as to the authenticity
of the cheque, if it is held up to the light cer
tain planchettes will be seen, and no cheque
is genuine without them . Planchettes, it is
explained, are small discs in three colours
embedded in the pulp of the paper at the
time of its manufacture.
The form of the cheque is as follows :
$20 American Bankers ' Association $ 20
Travellers ' Cheque.
Bankers' Trust Company,
New York City .
No.
Current in all parts
When countersigned below
with this signature, at any
time within two years
( )
of the world ,
from date , to wit
19
TRA ] DICTIONARY OF BANKING [ TRE

Pay to the order of $ 2000 TREASURE TROVE . Where money,

Countersignature plate, or bullion is found hidden in the earth
or other private place and the owner is
unknown, it is termed " treasure trove '
We hereby accept and passes into the possession of the Crown .
the foregoing order If similar property is found on the surface
and will pay the (Name of issuing of the ground, it is not treasure trove, and
same, when properly bank to be printed the finder has a title to it against the whole
negotiated through here.) worldexcept the true owner .
any of our corre TREASURY BILLS . These bills are issued
spondents named on By Cashier. by the Treasury under 40 Vict. c. 2 for money
the back hereof. borrowed by the Government and form part
Bankers' Trust of the unfunded debt of the country . They
Company . may be payable at three, or six, or nine, but
By Treasurer . not more than twelve, months from the date
.

of the bill. By Section 5 the principal money

The order is to be payable without deduc- of any Treasury bill shall be charged on and
tion of charges, except stamp tax, out of payable out of the Consolidated Fund of the
funds to credit of drawer. United Kingdom . Section 8 says with
When cashed the cheque is to be for- respect to the issue of Treasury bills the
warded for reimbursement to one of the following provisions shall have effect : ( 1 )
various bankers mentioned on the back of Treasury bills shall be issued by the Bank of
the cheque, according to the country in England under the authority of a warrant
which it is cashed . from the Treasury, countersigned by the
In order to make it simple for banks and Comptroller and Auditor-General of the re
others to pay travellers' cheques without ceipt and issue of Her Majesty's Exchequer ;
being obliged to consider any question as (2) each Treasury bill shall be for the amount
to exchange, a special series of these cheques directed by the Treasury.
was issued in 1920. This special series is By Section 13 the Bank of England may
only issued over the name of the Bankers' lend to Her Majesty upon the credit of
Trust Co., New York, as issuing bank. The Treasury bills, any sum or sums not exceeding
cheques bear a fixed amount in the currencies in the whole the principal sums named in
of Great Britain, Belgium , France, Switzer- such bills. The first issue of Treasury bills
land , and Italy, and are payable in the was in 1877 , the date of the above Act.
respective countries at the paymasters Treasury bills are also issued under various
mentioned on the back of the cheques.
If subsequent Acts.
presented to the Company's bankers in any
In a letter to the Economist, Novem
other country than that for which the ber, 1909, Lord Welby explained that
European currency is imprinted , they will Treasury bills were invented by Mr. Walter
be paid at the current rate for cheques on Bagehot in 1877. The Chancellor of the
the European country whose currency they Exchequer wished to provide certain funds
by an increase of the floating debt. Mr.
bear.
Other forms than the above are also Bagehot's advice was asked, and he replied :
issued by American banks, and in some “The English Treasury has the finest credit
cases the signature of the holder has to agree in the world, and it must learn to use it to
with that on a Letter of Indication (9.v.). the best advantage. A security resembling
Travellers' cheques are also issued in this as nearly as possible a commercial bill of
country in precisely the same way as in exchange that is, a bill issued under dis
America, but, of course, they are not count, and falling due at certain intervals
guaranteed by any Trust Company. The would probably be received with favour by
cheques are for £ 5 , £10, and £20, and are the money market, and would command
payable in various countries at the rates good terms." His advice was acted upon ,
specified upon them, and in other countries and the bills have continued in favour ever
at the current rates. A list of agents through-
since.
out the world is issued with each cheque or When the Government requires to borrow
batch of cheques. (See CIRCULAR CHEQUES.) upon Treasury bills an announcement for
TRAVELLERS' LETTER OF CREDIT. tenders appears in the Gazette and forms
(See CIRCULAR LETTER OF CREDIT.) . of tender may be obtained from the Bank of
647
TRE ) DICTIONARY OF BANKING ( TRU

England. As the bills do not carry interest, if and when during any half-year ended 1st
they are tendered for at a discount. From May or 1st November the Treasury Bills
April, 1915 (except between April and June, issued to the public were sold to them at an
1917) , Treasury bills were, until further average rate of discount exceeding 5 } per
notice, issued at fixed rates of discount. cent. and under 64 per cent. Additional
The system of issuing by tender was interest at the rate of 2 per cent. is payable,
re -introduced April, 1921 . when such average rate of discount was
In National Provident Institution V. 6} per cent . or over .
Brown ( 1920, A.C. 36 T.L.R. 618) it was The bonds may be registered as transfer
held that the difference between the price able in the Bank transfer books, or as
originally paid for a Treasury bill and the transferable by deed. Registered bonds
amount received back at maturity was a may be converted at any time into bonds to
profit on discount taxable in the year the bearer with coupons attached.
bill matured . “ In the case of a sale before TREASURY NOTES. On the outbreak of
maturity, the only amount that could be war with Germany in 1914, the Treasury
taxed was the amount by which the bill issued t1 and 10s . notes to act as legal tender
had increased in value by reason of its for any amount. (See CURRENCY Notes.)
advance towards maturity and the conse- Notes issued by the Treasury of the United
quent accrual of interest upon it . Any States, where they are a legal tender.
increased price attributable to the state of TRIAL BALANCE . A banker usually
the money market and the rise or fall in the makes a trial balance a day or so before a
value of money could not be taxed as a half -yearly balance, in order to test the
profit on a discount.” “ For instance, a accuracy of all accounts and thus help to
twelve months' bill for £ 100, bought at £95 expedite the actual balance at the close of
and sold after six months represented £2 10s. business on the last day.
interest. Thedifference in price below or TRIAL OF THE PYX . ThePyx (mužis,a
above £97 10s, represented loss of or accretion box) is aa box in which are preserved samples
to capital.” of the coins made at the Mint. A jury of the
The following is a specimen of a Treasury Goldsmiths' Company, who are summoned
bill : by the Lord Chancellor, test the coins
Due 18th March, 19 . annually ( called the Trial of the Pyx) to
see that the legal weight and fineness of
Treasury Bill. the coins are maintained .
TRUNKS. A
Per Acts 40 Vict. c. 2 & 52 Vict. c. 6. GrandTrunk Stock of
Railway Exchange name. for
Canada stock
A
001706
TRUST DEED FOR DEBENTURES. The
debentures themselves may create a charge
£ 1,000. London, 18th Dec., 19 . upon the property of the company, or there
This TREASURY BILL entitles * may be a separate trust deed . When there
or order to payment of ONE THOUSAND is a trust deed the company's property, free
POUNDS at the Bank of England out of the bold and leasehold, is by it vested in the
Consolidated Fund of the United Kingdom trustees on behalf of the debenture holders,
on the 18th day of March , 19 .
. and power is given therein to the trustees,
Secretary to His Majesty's Treasury . upon the occurrence of certain events, to
enter into possession and realise the pro
• If this blank be not filled in, the Bill will be perty for their benefit. It is much more
paid to Bearer. convenient for the debenture holders to
have two or three trustees to protect their
TREASURY BONDS. Treasury Bonds interests, than for the debenture holders
were issued in 1920, at par, repayable at themselves to do so.
par on 1st May, 1935, or on 1st May in Every debenture holder has the right (on
any one of the years 1925 to 1934 at the certain payments) to a copy of any trust
option of the Treasury or of the holders of deed. (See Section 102, s.s. 2 , of the Com
the bonds, on notice having been given in panies (Consolidation) Act, 1908, under
April of the preceding year. The interest is DEBENTURE .)
at a minimum rate of 5 per cent . During A trust deed must be registered in the
the period ending 1st May, 1925, additional company's register of mortgages and particu
interest at the rate of 1 per cent. is payable, lars delivered to the registrar of companies.
648
TRU ) DICTIONARY OF BANKING [ TRU

(See REGISTRATION OF MORTGAGES AND received by us instead of you, we engage to

CHARGES .) (See DEBENTURE . ) hold same as trustees for you and to pay
TRUST RECEIPT. When an advance over same to you or your order as and when
is made against bills of lading, banks may, and so soon as received by us, and should
in certain cases, permit the customer to payment not be forthcoming from buyers
have possession of the bills on his signing a before we hereby engage to
.

trust receipt, in which he acknowledges to hand you cheque for full amount without
have received the bills of lading and agrees noticefrom you.”
, to
keep them warehoused in the name of the of a letter from the bank, and an acknowledg
bank, and , when the goods are sold , to pay ment from the customer agreeing to carry
the proceeds to the bank . The effect of the out the instructions contained in the letter.
document is to make the customer, so far The bank's printed letter may be as
as the goods represented by the bills of follows :
lading are concerned , the trustee for the “ In consideration of your undertaking
bank . to deal with the undermentioned Merchan
In such cases, a bank has to rely to a dise in the manner hereinafter specified, we
great extent upon the honour of his cus- transfer to you, as trustees for us, the Bills
tomer . If it should happen that there of Lading for the same with Marine Policies
should be a contra account due from the or Certificates of Insurance attached , which
customer to the purchaser of his goods, the we now hold as security for repayment of
purchaser would beentitled (not having any the undermentioned advance to you and
notice of the hypothecation to the bank) to any other monies which we may have
deduct the contra account from the purchase advanced or may hereafter advance against
price. the said Merchandise, and we request you
A separate account is usually opened for to obtain delivery on our account of the
each operation. said Merchandise, and to warehouse the
In some cases the document takes the same in our name, you paying the freight
following form :-“We acknowledge receipt and expenses of discharge.
of the advance made by you to us (upon the “ We further authorise and empower you
security and conditions hereinafter stated) to enter into contracts for the sale of the
of the sum of £ value against said Merchandise on our behalf, in the
by your paying to ordinary course of business, and we expressly
the above amount against documents for direct you to pay to us, from time to time,
said goods ; and we have to request you to the proceeds of all such sales immediately
pass said amount with £ commission and specifically as received by you, to be
% to our debit. ... These goods, applied towards repayment of such advance
besides being subject to your usual bankers ' and other monies.
lien, are, in consideration of the said advance , “ We reserve to ourselves the right at any
hereby specially hypothecated to you, and time, without further authority from you,
a specific lien is hereby given to you thereon to collect all sums due or to become due,
and on the proceeds thereof (the samebeing from any person or persons in respect of
from this date out of our order and disposi- any sales of the said Merchandise so made
tion) till the amount which you have paid by you on our behalf.
as an advance to us against and upon You are to insure the said Merchandise
security of same, with all interest, commis- against all fire risks on our behalf, to keep
it fully covered, to hold the policy in trust
sion and charges, be paid or discharged, we on
hereby admitting that such advance is made our account, and in case of loss to collect
on security of the hypothecation charge and and pay the insurance money to us in the
lien which we hereby create on the said same manner as proceeds of sale."
goods in your favour and on the express At the foot of the letter is a schedule
condition that all rights, property and in- giving particulars of the merchandise and
terest to and in the said goods or proceeds of the advance . At theend of a duplicate
are vested in you as beneficial owners. We of the bank's letter the customer signs the
further request you to send the bill of lading following :
in trust to upon conditions “ We have received your letter, of which
that buyers are to make payment direct to the above is a copy, accompanied by the
you, and, in the event of payment being Bills of Lading, etc., referred to, and we
649
TRU ] DICTIONARY OF BANKING [TRU
hereby undertake to carry out the directions opened as trust accounts. When this is
given in said letter. so the banker must be careful to see that
every cheque is signed by all the parties
This undertaking requires a 61. stamp. who held themselves out to be trustees
Other documents of title to goods, e.g. when the account was opened . It is
warrants, warehousekeeper's receipts, may not customary to inquire if the names in
also be handed back to a customer against which the account is opened are all the
his undertaking to hold the goods or the trustees who were appointed in the will or
proceeds in trust for the bank. (See DELIVERY trust deed . Trustees cannot delegate their
ORDER . ) authority and appoint one or more of their
Where a documentary bill is drawn so number to sign cheques, unless the trust deed
that the attached documents are to be given gives them power to do so , and before
up only against payment, the acceptor in accepting such an authority a banker should
a foreign port sometimes obtains delivery see the deed of appointment. In re Flower
of the goods, before payment of the bill, (1884, 27 Ch. D. 592 ), Mr. Justice Kay said :
upon signing a trust receipt. (See Docu- The very reason why more than one
MENTARY LETTER OF CREDIT . ) trustee is appointed is that they shall take
See the case of Ladenburg & Co. v. care that the trust property or moneys shall
Goodwin , Ferreira & Co. , Ltd. (in Liquida- not get into the hands of one of them alone,
tion) and Garnett ( the Liquidator), under and that they shall take care that the trust
REGISTRATION OF MORTGAGES AND CHARGES. property or moneys are always under the
(See DOCUMENTARY Bill.) power or control of every one of them ."
Property held by a bankrupt on trust for Trustees, however, are not bound personally
any other person is not divisible amongst to transact such business as is usually con
his creditors. (Section 38, Bankruptcy Act, ducted through agents such as a stock
1914. ) broker or a solicitor. In Andrews v. Weall
TRUSTEE . A tr ee is the person to ( 1889, 42 Ch. D. 674) , Mr. Justice Kekewich
whom property is intrusted in order that he said that a trustee certainly has a right to
may deal with it in accordance with the appoint sub -agents if and so far as the work
directions given by the creator of the trust. of the trust reasonably requires. “ For
The person for whose benefit a trust is instance, he may appoint a broker to make
created is called the cestui que trust (plural, investments, or a solicitor to do legal busi
cestuis que trustent). ness. The limit of the power is reasonable
A trustee must take as much care of the ness. A trustee is bound to exercise discre
trust property as a reasonable business man tion in the choice of agents, but so long as
would ofhis own property, and he must not he selects persons properly qualified , he
make a profit out of the trust. cannot be made responsible for their
Bankers sometimes try to avoid opening intelligence or their honesty ."
accounts which give specific notice of a trust. Trustees are justified in depositing bearer
If customers (who are, in fact, trustees) bonds with their bankers in order that the
open an account in their joint names and coupons may be cut off when due and
the banker has no notice or knowledge collected . The bankers must not part with
that they are trustees, the account may be the bonds except under the authority of all
treated as an ordinary joint account. the trustees. (In re De Pothonier, 1900,
But if John Brown and John Jones come to 2 Ch. 529.)
a banker with a request to open an account There appears to be no very satisfactory
as “ Trustees of R. Smith, J. Brown, J. Jones," recent authority as to the extent of the
and the banker recommends, with theidea of power or right of trustees, executors, or
avoiding notice of trust , that the account administrators, to place trust funds on
66

should be called, e.g. John Brown and deposit at a responsible bank. No doubt,
John Jones, S. account," the banker could if the subject of the trust is money, not
not maintain, in the event of any subsequent liable immediately to be invested , it may
trouble, that he was unaware that it was a be deposited for temporary purposes at a
trust account. His position would be bank. If a trustee pays money to his own
exactly the same as if the account had been account, and not to a separate account, he
opened with a direct reference to the trust. will be liable for any loss ārising to the fund.
As a matter of fact, accounts frequently | The circumstances under which trustees
are, by the express wish of customers, may place money on deposit at a bank are
650
TRU DICTIONARY OF BANKING ( TRU

rare, but the objections to that course do accounts do not fix a banker with notice
not apply with the same force during what of a trust. Heber Hart says (“ Law of
is commonly called “ the executor's year." Banking " ) : "Where a solicitor keeps two
( Law Times, vol. cxliv, p. 289.) accounts with a banker, one under the head
.
Trustees frequently give authorities to the .
office account,' and another under the head
various companies in which stocks and private account, ' this does not amount to
shares are held to pay the dividends thereon notice to the banker that moneys standing
direct to their bankers for credit of the to the former are trust moneys, or even
trustees' account. This avoids the difficulty put the banker upon inquiry ." (See
which would otherwise arise of one trustee SOLICITORS' ACCOUNTS, STOCKBROKER .)
receiving the dividends on behalf of himself Where a trustee has mixed trust moneys
and his co - trustees. with moneys in his private account, see
The credit balance of an account in the under CLAYTON'S CASE.
name of “ John Brown in trust for J. Jones," With regard to securities deposited by
(or any similar wording giving notice of a trustees for safe custody it has been held that
trust), could not be held by a banker as a set trustees are perfectly justified in depositing
off for an overdrafton John Brown's bonds payable to bearer with bankers in
private account ; neither could a banker order that the coupons may be cut off when
successfully hold to an amount transferred due and collected . Securities deposited by
wrongfully by John Brown from the trust trustees must not be given up except under
account to satisfy any pressing demands of the authority of all the trustees. (See Safe
the banker for a reduction of John Brown's CUSTODY.)
overdraft. A transaction of that nature If bearer bonds are lodged by a customer
would give such a plain indication of irregu- as security for an overdraft, and it ultimately
larity that no banker would be justified in transpires that the bonds do not belong to
accepting money from that source. But a the customer but to a trust, the banker's
banker could hold a balance on , say, a No. right to the security will not be affected , pro
2 account as a set off to the customer's over- vided that when he took the bonds he was in
drawn No. 1 account, even if the moneys complete ignorance that they belonged to a
in the No. 2 account should ultimately trust. If instead of a negotiable security, as
be proved to be trust moneys, so long bearer bonds, the customer deposited a certi
as the banker had no knowledge of the ficate of shares registered in his own name,
fact. along with a memorandum of deposit or a
If a trustee transfers an amount from the blank transfer, and the shares are eventually
trust account to his own private account, proved to belong to a trust, the banker will
and there is no benefit designed for the bank, not be able to retain the security. To avoid
the bank is not under any liability to ascer- such an unfortunate position and to have a
tain that the trustee is entitled to make complete security a banker should , when
such transfer. But a banker must not be taking certificates, have the stock or shares
a party to a breach of trust. It has been registered in his own name or the names of
held that if it is shown that a personal his nominees.
benefit to the banker is stipulated for, it will Where trustees offer as security the deeds
most readily establish the fact that the of property held by them in trust, the banker
banker is in privity with the breach of trust. should ascertain from the trust deed or the
(Gray v. Johnston, 1868, L.R. 3, H. of L. 1.) will exactly what powers the trustees possess
In Ex parte Kingston ( 1871, 6 Ch. 632), with regard to charging the property.
Lord Justice Mellish said : “ We are not Trustees haye no implied powers of borrow
really doing any prejudice to bankers by ing. Where a customer has an overdrawn
establishing a rulethat if an account is in trust account he is personally liable, and
plain terms headed in such a way that a any credit balance on his private account
banker cannot fail to know it to be a trust may, after reasonable notice, be set-off
account, the balance standing to the credit against the overdraft . (See Ser Orf .)
of that account will, on the bankruptcy of If deeds of a trust estate are lodged as
the person who kept it, belong to the trust.” security, with a memorandum of deposit,
Thebankruptcy of a trustee does not affect and the banker has no notice of the trust, the
his rights to deal with the trust funds. equitable interest of the beneficiaries will
Moneys belonging to clients and paid in rank in front of the equitable interest of the
to the credit of sharebrokers' or solicitors ' banker. But if the banker holds a legal
651
TRUT DICTIONARY OF BANKING ( TRU

mortgage his claim may take priority to that
of the beneficiaries.
If a trustee himself has aa beneficial interest
in a trust property, his interest is subject
to any claim that may arise through a
breach of trust.
A bank may act as sole executor under a
will, or as trustee under a will or settlement,
provided that it has power to do so by its
memorandum of association .
By Section 10 of the Trustee Act, 1893 :
“ ( 1) Where a trustee, either original or
substituted, and whether appointed
by a Court or otherwise, is dead, or
remains out of the United Kingdom
for more than twelve months, or
desires to be discharged from all or
any of the trusts or powers reposed
in or conferred on him, or refuses or
is unfit to act therein , or is incapable
of acting therein , then the person or
persons nominated for the purpose
of appointing new trustees by the impracticable to appoint them without the
instrument, if any, creating the assistance of the Court. (Section 25.)
trust, or if there is no such person ,
or no such person able and willing
to act, then the surviving or continu-
ing trustees or trustee for the time
being, or the personal representatives
of the last surviving or continuing
trustee, may, by writing, appoint
another person or other persons
to be a trustee or trustees in the
place of the trustee dead, remaining
out of the United Kingdom , desiring
permitting the banker or solicitor
to have the custody of and to pro
duce the policy of assurance with a
receipt signed by the trustee, and a
trustee shall not be chargeable with
a breach of trust by reason only of
his having made or concurred in
making any such appointment.
“ (3) Nothing in this Section shall exempt
a trustee from any liability which
he would have incurred if this Act
had not been passed , in case he
permits any such money, valuable
consideration, or property to remain
in the hands or under the control of
the banker or solicitor for a period
longer than is reasonably necessary
to enable the banker or solicitor (as
the case may be) to pay or transfer
the same to the trustee ."
The High Court has power to appoint new
trustees whenever it is found inexpedient or
By the Conveyancing Act, 1911 :
“ Section 8. ( 1) Until the appointment
of new trustees, the personal repre
sentatives or representative for the
time being of a sole trustee, or,
where there were two Or more
trustees, then, of the last surviving
or continuing trustee, shall be
capable of exercising or performing
any power or trust which was

to be discharged , refusing , or being given to , or capable of being exer

unfit or being incapable, as aforesaid . cised by, the sole or last surviving or
“ (4) The provisionsof this Section relative continuing trustee.
to a trustee who is dead include the " (2) This Section shall take effect subject
case of a person nominated trustee to any direction to the contrary
in a will but dying before the testa expressed in the instrument, if any,
tor, and those relative to a continuing creating the power or trust.
trustee include a refusing or retiring " (5) This Section does not apply to
trustee, if willing to act in the execu land of copyhold or customary
tion of the provisions of this Section .” tenure vested in the tenant on the
On the appointment of a new trustee, the court rolls on trust. "
number of trustees may be increased . (Sec- This Section applies only to trusts coming
tion 10, s.s. 2.) In the case of a debit into operation after the commencement of
account, when a new trustee is appointed, a the Conveyancing Act of 1881 (s.s. 3) .
fresh account should be opened and the Personal representative ” means an
securities re-deposited . executor or administrator (s.s. 4) .
Section 17, s.s. 2 and 3, enacts : Where any moneys or securities are de
posited with a banker, and the majority of
" (2) A trustee may appoint a banker or the trustees are desirous of paying or deliver
solicitor to be his agent to receive ing the same into Court, but the concurrence
and give a discharge for any money of the others cannot be obtained, the Court
payable to the trustee under or by may order payment or delivery to the
virtue of a policy of assurance, by majority of the trustees, for the purpose of
652
TRU ) DICTIONARY OF BANKING
payment into Court, and the payment and
delivery shall take effect as if the same had
been made on the authority of all the trus
tees. (Section 42, s.s. 3.) ( See CUSTODIAN
TRUSTEE, DEATH OF TRUSTEE, PUBLIC
TRUSTEE, TRUSTEE INVESTMENTS.)
TRUSTEE IN BANKRUPTCY . When a
debtor is adjudicated bankrupt, hisproperty
shall become divisible amongst his creditors,
and shall vest in a trustee. (See ADJUDICA-
TION OF BANKRUPTCY .) Until a trustee is
appointed the official receiver acts as trustee.
The trustee may be appointed by the credi-
tors, or they may leave his appointment to
the committee of inspection. The trustee
must give security to the satisfaction of the
Board of Trade, and the Board, when satis
fied, certifies that his appointment has been
duly made.
The trustee's title to the bankrupt's
property relates back to the time of the act
of bankruptcy on which the receiving order
was made. ( See Section 37 under ADJUDICA
TION OF BANKRUPTCY . ) See also Section 45
under BANKRUPTCY, and Section 46 under
Acts of BANKRUPTCY ,
The Bankruptcy Act, 1914, provides :
Powers of Trustee to Deal with Property.
" 55. Subject to the provisions of this Act,
the trustee may do all or any of the following
things :
“ ( 1) Sell all or any part of theproperty of
the bankrupt (including the goodwill
of the business, if any, and the book
debts due or growing due to the
bankrupt), by public auction or
private contract, with power to
transfer the whole thereof to any
person or company, or to sell the
same in parcels :
“ (2) Give receipts for anymoney received
by him , which receipts shall effectu
ally discharge the person paying the
money from all responsibility in
respect of the application thereof :
' (3) Prove, rank, claim , and draw a divi
dend in respect of any debt due to
the bankrupt :
“ (4) Exercise any powers, the capacity to
exercise which is vested in the trustee
under this Act, and execute any
powers of attorney, deeds and other
instruments, for the purpose of carry
ing into effect the provisions of this
Act :
“ (5 ) Deal with any property to which the
bankrupt is beneficially entitled as
tenant in tail in the same manner as
653
(TRU
the bankrupt might have dealt
with it.
Powers Exercisable by Trustee with Permission
of Committee of Inspection .
“ 56. The trustee may, with the permission
of the commit
of the of inspection, do all or any
tee things:
following
" ( 1 ) Carry on the business of the bankrupt,
so far as may be necessary for the
beneficial winding up of the same :
“ (2) Bring, institute, or defend any action
or other legal proceeding relating to
the property of the bankrupt :
“ ( 3) Employ a solicitor or other agent to
take any proceedings or do any
business which may be sanctioned
by the committee of inspection :
“ (4) Accept as the consideration for the
sale of any property of the bankrupt
a sum of money payable at a future
time subject to such stipulations
as to security and otherwise as the
committee think fit :
" (5) Mortgage or pledge any part of the
property of the bankrupt for the
purpose of raising money for the
payment of his debts :
" (6) Refer any dispute to arbitration , com
promise any debts, claims, and lia
bilities, whether present or future,
certain or contingent, liquidated or
unliquidated, subsisting or supposed
to subsist between the bankrupt and
any person who may have incurred
any liability to the bankrupt, on the
receipt of such sums, payable at such
times, and generally on such terms
as may be agreed on :
“ (7) Make such compromise or other
arrangement as may be thought
expedient with creditors, or persons
claiming to be creditors, in respect
of any debts provable under the
bankruptcy :
“ (8) Make such compromise or other ar
rangement as may be thought expe
dient with respect to any claim
arising out of or incidental to the
property of the bankrupt, made or
capable of being made on the trustee
by any person or by the trustee on
any person :
“ (9) Divide in its existing form amongst
the creditors, according to its esti
mated value, any property which
from its peculiar nature or other
TRU ) DICTIONARY OF BANKING
special circumstances cannot be
readily or advantageously sold.
The permission given for the purposes of this
Section shall not be a general permission to
do all or any of the above -mentioned things,
but shall only be a permission to do the
particular thing or things for which permis
sion is sought in the specified case or cases .
Power to Allow Bankrupt to Manage Property.
“ 57. The trustee , with the permission of
the committee of inspection, may
appoint the bankrupt himself to
superintend the management of the
property of the bankrupt or of any
part thereof, or to carry on the trade
(if any) of the bankrupt for the
benefit of his creditors, and in any
other respect to aid in administering
the property, in such manner and on
such terms as the trustee
direct.
Allowance to Bankrupt for Maintenance or
Service.
“( 58) The trustee may from time to time,
with the permission of the committee
of inspection, make such allowance
as he may think just to the bankrupt
out of his property for the support
of the bankrupt and his family , or in
consideration of his services if he is
engaged in winding up his estate, but
any such allowance may be reduced
by the Court.
Right of Bankrupt to Surplus.
" 69. The bankrupt shall be entitled to any
surplus remaining after payment in full of his
creditors, with interest, as by this Act
provided, and of the costs, charges, and
expenses of the proceedings under the
bankruptcy petition ."
Subject to the retention of such sums
as may be necessary for the costs of adminis
tration , the trustee shall declare and distri
bute dividends amongst all creditors who
have proved their debts . (See DIVIDENDS
IN BANKRUPTCY .)
Payment of Money into Bank of England.
“ 89. ( 1 ) The Bankruptcy Estates Ac
count shall continue to be kept by
the Board of Trade with the Bank
of England , and all moneys received
by the Board of Trade in respect of
proceedings under this Act shall be
paid to that account.
“ (2) Every trustee in bankruptcy shall, in
( TRU
such manner and at such times as
the Board of Trade with the con
currence of the Treasury direct, pay
the money received by him to the
Bankruptcy Estates Account at the
Bank of England, and the Board of
Trade shall furnish him with a
certificate of receipt of the money so
paid .
Provided that- (a ) if it appears to the
committee of inspection that, for the
purpose of carrying on the debtor's
business, or ofobtaining advances,
or because of the probable amount
of the cash balance, or if the com
mittee shall satisfy the Board of
Trade that for any other reason it is
for the advantage of the creditors
that the trustee should have an
account with a local bank, the Board
may of Trade shall, on the application of
the committee of inspection, autho
rise the trustee to make his
payments into and out of such local
bank as the committee may select;
“ (6) in any bankruptcy composition or
scheme of arrangement in which the
Official Receiver is acting as trustee,
or in which a trustee is acting with
out a committee of inspection, the
Board of Trade may, if for special
reasons they think fit to do so, upon
the application of the Official
Receiver or other trustee, authorise
the trustee to make his payments
into and out of such local bank as
the Board may direct.
“ (3) Where the trustee opens an account
in a local bank, he shall open and
keep it in the name of the debtor's
estate, and any interest receivable
in respect of the account shall be
part of the assets of the estate, and
the trustee shall make his payments
into and out of the local bank in the
prescribed manner.
“ (4) Subject to any general rules relating
to small bankruptcies under Section
129 of this Act, where the debtor at
the date of the receiving order has
an account at a bank , such account
shall not be withdrawn until the
expiration of seven days from the
day appointed for the first meeting
of creditors, unless the Board of
Trade, for the safety of the account,
or other sufficient cause, order the
withdrawal of the account.
654
TRU DICTIONARY OF BANKING ( TRU

“ (5) If a trustee at any time retains for part of the said securities as may be
more than ten days a sum exceeding necessary .
fifty pounds, or such other amount “ (5) The dividends on the investments
as the Board of Trade in any particu under this Section shall be paid to
lar case authorise him to retain, then , such account as the Treasury may
unless he explains the retention to direct, and regard shall be had to the
the satisfaction of the Board of amount thus derived in fixing the
Trade, he shall pay interest on the fees payable in respect of bank
amount so retained in excess at ruptcy proceedings.
the rate of twenty per centum By the Bankruptcy Rules, 1915 :
per annum, and shall have no claim " No. 342. Where the trustee is authorised
for remuneration , and may be to have an account at a local bank, he shall
removed from his office by the Board forthwith pay all moneys received by him
of Trade, and shall be liable to pay in to the credit of the estate. All payments
any expenses occasioned by reason out shall be made by cheque payable to
of his default . order, and every cheque shall have marked
“ ( 6) All payments out of money standing or written on the face of it the name of
to the credit of the Board of Trade the estate , and shall be signed by the
in the Bankruptcy Estates Account trustee. Every cheque shall be counter
shall be made by the Bank of signed in cases where there is a committee of
England in the prescribed manner. inspection by at least one member of the
committee, and by such other person, if any,
Trustee not to Pay into Private Account. as the creditors or committee of inspection
" 88. No trustee in a bankruptcy or under may appoint, and where there is no com
any composition or scheme of arrangement mittee , by such person, if any, as the Board
shall pay any sums received by him as of Trademay direct .”
trustee into his private banking account. The trustee shall, as soon as may be, take
possession of the bankrupt's property. By
Investment of Surplus Funds. Section 48, s.s. 6 :
" 90. (1 ) Whenever the cash balance “( 6) Subject to the provisions of this Act
standing to the credit of the Bank with respect to property acquired by
ruptcy Estates Account is in excess a bankrupt after adjudication , any
of the amount which in the opinion treasurer or other officer, or any
of the Board of Trade is required for banker, attorney, or agent of a bank
the time being to answer demands rupt, shall pay and deliver to the
in respectof bankrupts' estates, the trustee all money and securities in
Board of Trade shall notify the same his possession or power, as such
to the Treasury, and shall pay over officer, banker, attorney , or agent,
the same or any part thereof as the which he is not by law entitled to
Treasury may require to the Trea retain as against the bankrupt or the
sury, to such account as the Treasury trustee. If he does not, he shall be
may direct, and the Treasury may guilty of a contempt of Court, and
invest the said sums or any part may be punished accordingly on the
thereof in Government securities to application of the trustee.'
be placed to the credit of the said The trustee's title dates back to the time
account. of the act of bankruptcy upon which the
" .(2) Whenever any part of the money so receiving order was made. (See ActS OF
invested is, in the opinion of the BANKRUPTCY, ADJUDICATION OF BANK
Board of Trade, required to answer RUPTCY.) The property of a bankrupt shall
any demands in respect of bank- vest in the trustee for thetime being without
rupts' estates, the Board of Trade any conveyance , assignment or transfer
shall notify to the Treasury the whatever. (Section 53, s.s. 3.)
amount so required , and the Trea- The remuneration of a trustee shall be fixed
sury shall thereupon repay to the by an ordinary resolution of the creditors,
Board of Trade such sum as may be or if the creditors SO resolve by the
required to the credit of the Bank- committee of inspection , and shall be in the
ruptcy Estates Account , and for that nature of a commission or percentage.
purpose may direct the sale of such (Section 82, s.s. 1.)
655
TRUJ DICTIONARY OF BANKING
When the trustee has realised all the pro
perty of a bankrupt, or as much as he can,
and distributed a final dividend he obtains
his release by an order of the Board of Trade.
(Section 93.)
The creditors may, if they think fit, ap
point more trustees than one . When more
than one are appointed the creditors shall
declare whether any act to be done by the
trustees is to be done by all or any one or
more of such persons. (Section 77, s.s. 1.)
. ing during each of the ten years last
The creditors may also appoint persons to
act as trustees in succession in the event of
one or more of the persons first named
declining to accept the office of trustee, or
failing to give security, or of the appointment
of any such person not being certified by the
Board of Trade. ( Section 77, s.s. 2.)
Cheques drawn by a trustee in bank
ruptcy are exempt from stamp duty . (See
Section 148, under BANKRUPTCY.)
See Section 56, above, as to a trustee's
power to borrow on the property of the
bankrupt. If the trustee's personal liability
for an overdraft is required, a guarantee
should be obtained .
(See BANKRUPTCY, COMMITTEE OF IN
SPECTION .)
TRUSTEE INVESTMENTS . A trustee
must invest the trust funds in accordance
with the terms of the trust deed . In the
absence of such directions the Trustee Act,
1893 , provides ( inter alia ) as follows :
“ Section 1. A trustee may, unless ex
pressly forbidden by the instrument (if any)
creating the trust, invest any trust funds in
his hands, whether at the time in a state of
investment or not, in manner following, that
is to say :
“ ( a) In any of the parliamentary stocks
or public · funds or Government
securities of the United Kingdom :
“ (6) On real or heritable securities in Great
Britain or Ireland :
"( c) In the stock of the Bank of England
or the Bank of Ireland :
"( d) In India Three and a half per cent.
stock and India Three per cent. stock ,
or in any other capital stock which
may at any time hereafter be issued
by the Secretary of State in Council
of India under the authority of Act
of Parliament, and charged on the
revenues of India :
" (e) In any securities the interest of which
is for the time being guaranteed by
Parliament :
“ In consolidated stock created by the
656
[TRU
Metropolitan Board of Works, or by
the London County Council, or in
debenture stock created by the
receiver for the Metropolitan Police
District :
"( 8) ID he debenture or rent charge, or
guaranteed or preference stock of
any railway company in Great
Britain or Ireland incorporated by
special Act of Parliament, and hav
past before the date of investment
paid a dividend at the rate of not
less than three per centum per
annum on its ordinary stock :
“ (h) In the stock of any railway or canal
company in Great Britain or Ireland
whose undertaking is leased in per
petuity or for a term of not less than
two hundred years at a fixed rental
to any such railway company as is
mentioned in sub -section (g) , either
alone or jointly with any other
railway company :
“( ) In the debenture stock of any railway
company in India the interest on
which is paid or guaranteed by the
Secretary of State in Council of
India :
“ (1) In the " B " annuities of the Eastern
Bengal, the East Indian, and the
Scinde Punjaub and Delhi Railways,
and any like annuities which may
at any time hereafter be created on
the purchase of any other railway
by the Secretary of State in Council
of India, and charged on the re
venues of India, and which may be
authorised by Act of Parliament to
be accepted by trustees in lieu of
any stock held by them in the pur
chased railway ; also in deferred
annuities comprised in the register
of holders of annuity Class D and
annuities comprised in the register
of annuitants Class C. of the East
Indian Railway Company :
(k) In the stock of any railway company
in India upon which a fixed or
minimum dividend in sterling is paid
or guaranteed by the Secretary of
State in Council of India, or upon the
capital of which the interest is so
guaranteed :
" (1) In the debenture or guaranteed or
preference stock of any company in
Great Britain or Ireland, established
for the supply of water for profit, and
TRU ) DICTIONARY OF BANKING
incorporated by special Act of
Parliament or by Royal Charter,
and having during each of the ten
years last past before the date of
investment paid a dividend of not
less than five pounds per centum on
its ordinary stock :
" (m) In nominal or inscribed stock issued ,
or to be issued , by the corporation
of any municipal borough having,
according to the returns of the last
census prior to the date of invest.
ment, a population exceeding fifty
thousand, or by any county council,
under the authority of any Act of
Parliament or Provisional Order :
“ ( 12) In nominal or inscribed stock issued
or to be issued by any commissioners
incorporated by Act of Parliament
for the purpose of supplying water,
and having a compulsory power of
levying rates over an area having,
according to the returns of the last
census prior to the date of invest
ment, a population exceeding fifty
thousand , provided that during each
of the ten years last past before the
date of investment the rates levied
by such commissioners shall not have
exceeded eighty per centum of the
amount authorised by law to be
levied :
“ (0) In any of the stocks, funds, or se
curities for the time being author
ised for the investment of cash
under the control or subject to the
order of the High Court,
and may also from time to time vary any
such investment.
“ 2. ( 1 ) A trustee may under the powers
of this Act invest in any of the
securities mentioned or referred to
in Section one of this Act, notwith
standing that the same may be
redeemable, and that the price
exceeds the redemption value.
" ( 2) Provided that a trustee may not under
the powers of this Act purchase at a
price exceeding its redemption value
any stock mentioned or referred to
in sub - sections (8) , (:), (k) , ( ), and (m)
of Section one, which is liable to be
redeemed within fifteen years of the
date of purchase at par or at some
other fixed rate , or purchase any
such stock as is mentioned or referred
to in the sub - sections aforesaid,
657
424 ( 1535)
( TRU
which is liable to be redeemed at par
or at some other fixed rate, at a price
exceeding fifteen per centum above
par or such other fixed rate.
“ (3) A trustee may retain until redemption
any redeemable stock , fund , or
security which may have been
purchased in accordance with the
powers of this Act.
“ 3. Every power conferred by the
preceding Sections shall be exercised
according to the discretion of the
trustee, but subject to any consent
required by the instrument, if any,
creating the trust with respect to
the investment of the trust funds.
“ 4. The preceding Sections shall apply
as well to trusts created before
as to trusts created after the passing
of this Act, and the powers thereby
conferred shall be in addition to the
powers conferred by the instrument,
if any, creating the trust.
“ 5. (1 ) A trustee having power to invest
in real securities, unless expressly
forbidden by the instrument creating
the trust, may invest and shall be
deemed to have always had power to
invest
" (a) on mortgage of property held
for an unexpired term of not
less than two hundred years,
and not subject to a reserva
tion of rent greater than a
shilling a year, or to any
right of redemption or to any
condition for re -entry except
for non -payment of rent.
“ 7. ( 1 ) A trustee, unless authorised by the
terms of his trust, shall not apply for
or hold any certificate to bearer
issued under the authority of any of
the following Acts, that is to say :
“ ( a) The India Stock Certificate
Act, 1863 ;
“( 6) The National Debt Act, 1870 ;
· (c) The Local Loans Act, 1875 ;
60
• ( d) The Colonial Stock Act,
1877 .
“ 8. ( 1 ) A trustee lending money on the
security of any property on which
he can lawfully lend shall not be
chargeable with breach of trust by
reason only of the proportion borne
by the amount of the loan to the
value of the property at the time
when the loan was made, provided
that it appears to the Court that
TRU ) DICTIONARY OF BANKING
in making the loan the trustee was
acting upon a report as to the value
of the property made by a person
whom he reasonably believed to be
an able practical surveyor or valuer
instructed and employed indepen-
dently of any owner of the property,
whether such surveyor or valuer
carried on business in the locality
where the property is situate or else-
where, and that the amount of the
loan does not exceed two equal third
parts of the value of the property as
stated in the report, and that the
loan was made under the advice of
the surveyor or valuer expressed in
the report. ”
By Section 2 of the Colonial Stock Act,
1900, a trustee is empowered toinvest inany
colonial stock registered in the United King-
dom in accordance with the provisions of
the Colonial Stock Acts, 1877 and 1892,
as amended by this Act,provided such stocks
have been notified in the London Gazette as
having been approved by the Treasury,
subject to the restrictions contained in
Section 2 , s.s. 2, of the Trustee Act, 1893.
By the Housing (Additional Powers) Act,
1919, local bonds issued under that Act
shall be added to the securities (as specified
in Section 1 , Trustee Act, 1893) , in which
trust funds may be invested.
The Law Times of October 25, 1913,
points out that the powers of trustees
under an investment clause which authorises
them to invest the trust funds in such
securities, or in such manner, as they
think fit, are not very clear, and that, having
regard to the state of the authorities, it
behoves trustees having such powers to be
careful when they travel outside the
securities authorised by law for the invest-
ment of trust funds. (See TRUSTEE . )
See FUNDING LOAN , 4 per cent . , 1960-90.
See VICTORY BONDS , 4 per cent .
TRUSTEE SAVINGS BANKS. The
various acts relating to savings banks were
consolidated by the Trustee Savings Bank
Act, 1863 (26 & 27 Vict. c. 87) . Before a
trustee savings bank can be formed, the
sanction of the Commissioners for the Reduc-
tion of the National Debt must be obtained .
A savings bank , although established prior
to 1863, must be certified under the Act of
1863, so that its title would be, for example,
" Carlisle Savings Bank, established in 1818.
Certified under the Act of 1863.” Certain
savings banks in Scotland are still regulated
658
( TRU
by an Act of 1819 (59 Geo. III, c . 62) with
power to become certified under the Act of
1863, if and when they so desire.
All lands, moneys, goods, chattels, and
effects whatever are vested in the trustees,
(Act 1863, Section 10.)
By Section 6 of the above Act :
In the rules of a savings bank it shall be
expressly provided
* 1. That no person or persons being
treasurer, trustee, or manager of such
savings bank, or having any control
in the management thereof, shall
derive any benefit from any deposit
made in such savings bank, save only
and except such salaries and allow
ances, or other necessary expenses as
shall according to such rules and
regulations be provided for the
charges of managing such savings
bank, and for remuneration to officers
employed in the management thereof,
exclusive of the treasurer or treasurers,
trustee or trustees, manager or man
agers, or other persons having direc
tion in the management of such
savings bank, who shall not directly
or indirectly have any salary, allow
ance, profit, or benefit whatsoever
therefrom beyond their actual ex
penses for the purpose of such
savings bank ."
Not less than two persons , and where two
only, except in the case of savings banks
which are open for more than six hours a
week, one such person to be a trustee or
manager , shall be parties to every deposit
and repayment, so as to form at least a
double check on all transactions with
depositors. (Section 6, s.s. 2.)
Each depositor receives a deposit book
or pass-book which must be produced every
time a transaction takes place .
“ The depositor's pass book shall be
compared with the ledger on every trans
action of repayment, and on its first pro
duction at the bank after each 20th day
of November .” (Section 6, s.s. 3. )
The savings banks' year ends on Nov. 20.
Deposits may be made by, or for the
benefit of minors. Money deposited may
be withdrawn by a minor, if of the age of
seven years or upwards, and his or her
receipt shall be a good discharge to the
trustees. The deposits of minors under the
age of seven may be repaid to any person
who satisfies the trustees that he will apply
the money for the benefit of such minor.
TRU ] DICTIONARY OF BANKING (ULT

By the Savings Banks Act, 1920 : whether as next-of-kin, or as creditors or

Section 1. ( 1 ) “ There shall, subject as otherwise . (Savings Bank Act, 1887 , Section 3,
hereinafter provided , be no limit on as amended by the Savings Banks Act, 1920.)
the amount which may be received “ Every trustee savings bank which carries
by a savings bank authority from on the business of making special invest
any person by way of deposit, or ments shall so far as respects that business
on the amount of Government stock be subject to the control of the National
which may be credited by a savings Debt Commissioners and shall comply with
bank authority to the account of any directions which may from time to
any depositor, and all enactments time be given by the Commissioners with
imposing, or relating whether respect to that business."
directly or indirectly to, any such For the purpose of providing for any
limit shall cease to have effect :- deficiency which may arise in respect of
“ Provided that it shall be lawful for the special investments made by trustee savings
Treasury at any time by order under banks, there shall be established a guarantee
this Section to limit the amount fund under the control of the Commissioners. ”
which may be so received from any ( Trustee Savings Bank Act, 1918. )
person whatsoever either in any oneon?
Trustee savings banks are particularly
year or in the aggregate, or the suited for the conduct of savings bank
amount of Government stock which business in large towns, but in some purely
may be so credited to any person agricultural districts the business has become
whatsoever either in one year or in merged in the Post Office Savings Bank .
the aggregate." TURN OF THE MARKET. On the
A depositor must not have a deposit in any Stock Exchange, a jobber is prepared to buy
other savings bank in Great Britain or Ire- at one price and to sell at a higher, the
land, whether a trustee savings bank or the difference between the two prices being
Post Office savings bank. termed the “ turn of the market or the
The trustees must pay all money belong. " jobber's turn ,” and constituting the source
ing to the bank into the Bank of England or of his profits .
Ireland in the names of the Commissioners TURN -OVER . The amount of money
for the Reduction of the National Debt, and turned over in a business within a specified
no sums whatever shall be deposited with period. The turn -over in a customer's
any banker except such sums as shall neces- current account for a half-year is the amount
sarily remain in the treasurer's hands to which passes through the account. A
answer the exigencies of the business. banker usually takes, as the turn -over, the
( Act, 1863, Section 15.) total of the debit column, less the balance
Weekly returns must be sent to the Com- brought forward, if a debit one, or the balance
missioners for the Reduction of the National to be carried forward , if a credit one ; that
Debt, showing the amounts of the week's is, the total of the actual amount drawn out
transactions and the balance remaining in of the account.
the treasurer's hands. (Section 7. ) TWOPENCE . A silver coin of that
A bank manager is frequently the trea- denomination is now only issued as Maundy
surer of a savings bank . The treasurer Money (q.v.) . Its standard weight is
has to give a bond for his faithful services. 14:54545 grains troy. (See COINAGE.)
Where he is aa bank manager his bank usually
joins in it. UBERRIMAE FIDEI. (Latin , of the
A depositor not being under sixteen years utmost good faith .) In the case of certain
of age may nominate any person or persons contracts, especially those of insurance, it is
to whom any sum not exceeding in the essential that there should be the most com
aggregate £ 100 is to be paid at his decease. plete disclosure of all material facts. Such
When the sum in a savings bank, which contracts are classified as those of uberrimae
forms part of the personal estate of a person fidei.
appearing to be deceased, does not exceed ULTRA VIRES. That is, beyond the
£100, probate, or other proof of title of the powers . The expression is often used in
personal representative of the deceased, may connection with the borrowing powers of a
be dispensed with , and such sum may be company. If the directors have power,
paid to or among the persons appearing to under the memorandum and articles of
be beneficially entitled to the personalestate, association , to borrow up to a certain fixed
659
 UNC] DICTIONARY OF BANKING (UND

amount, it is of vital importance that a must be paid only to the person to whom it
banker, who contemplates a loan to the has been assigned . (See CAPITAL.)
company, should see that, before granting UNCLAIMED BALANCES. The credit
the loan, the directors are not acting ultra balances of accounts which have not been
vires, that is, that they are not exceeding operated upon for a long time, by the persons
or going beyond their powers. The directors in whose names the accounts stand in the
are hedged in by the memorandum of books of the bank. With regard to the pro
association and beyond that hedge they posals recently made that an Act should be
cannot go. Intra vires means within the passed making it compulsory upon bankers to
powers given in the memorandum and hand over to the Public Trustee all credit
articles. balances which have not been operated upon
Acts of the directors beyond the authority for six years or upwards, as well as securities
of thearticles can be ratified by thecompany, and safe custodyarticles left by persons with
provided they do not go beyond the powers whom they have had no transactions for
given in the memorandum . Acts outside six years, the “ Bankers' Magazine " pointed
the powers given in the memorandum are out in August, 1908, that “ so long as the
void . Statute of Limitations is part of the law of
As to a guarantee given for a loan which the land, all legal right to insist on payment
is ultra vires see under GUARANTEE, (See of a balance unclaimed for six years is gone,
SUBROGATION .) and there can be no justification for calling
UNCALLED CAPITAL. The subscribed on a banker to hand over to a third party
capital of a company may be either fully, or the amount of a debt which he is under no
only partly, called up. The part which legal obligation to pay to the interested
has not been called up is the uncalled capital. party himself. ” If the statute does not
The uncalled capitalmay consist of a portion begin to run until a cheque is presented and
which may be called up by the directors of dishonoured , " the banker's liability to the
the company, as required, and also, as in the customer is still existent. It has now been
case of a banking company which has adopted held by the Court of Appeal, in Swiss Bank
certain provisions of the Companies Acts, of Corporation v. Joachimson (March , 1921 ) ,
a portion which constitutes a reserve liability that express demand by a customer for
and is not capable of being called up except repayment of a current account is a condition
in the event and for the purposes of the precedent to the right to sue the banker for
company the amount. “ The result of this decision
being wound up. (See Reserve will
LIABILITY .) be that for the future bankers may have
A wide distribution of share capital is to face legal claims for balances of accounts
advantageous, particularly in the case of which have remained dormant for more than
banks, in order that payment of the uncalled six years.”
capital may be more readily obtained , if See the report of the Select Committee
and when required. The uncalled capital to whom the Dormant Bank Balances and
forms an additional security for the bank's Unclaimed Securities Bill was referred, under
depositors. Fully paid shares are , however, DORMANT BALANCES.
also issued by some banks. UNDER-LEASE. When a lessee grants
When debentures are issued by a com- to another person a part only of his interest
pany they usually include a charge upon the in a lease it is called an under-lease. When
uncalled capital. Such a charge does not he parts with the whole of his interest it
prevent the directors ofthecompany making is an assignment of the lease. (See LEASE
calls upon the shareholders as may be HOLD .)
required for the purposes of the business. UNDERWRITING . An underwriter is a
Although the uncalled capital may have person who, when an issue of shares is being
been a considerable item when first the made by a company, agrees , in consideration
debentures were issued, it may have shrunk of aa certain commission, to apply for, or find
to a very small figure, or vanished alto- someone else to apply for, a certain number
gether, by the time the debentures are or all of the shares which are not applied
required to be paid . for by the public. An underwriter should,
In certain cases uncalled capital may be of course, be financially able to fulfil his
specially assigned or hypothecated. When agreement if necessary. If the shares are
this is done each shareholder should be not favoured by the public, the underwriters
served with notice that the unpaid capital may be saddled with a heavy weight of them ,
660
UND ) DICTIONARY OF BANKING
whereas if the issue is eagerly taken up they
may receive the commission without having
to apply for any shares at all.
An agreement, under hand, to underwrite
requires a sixpenny stamp. If under seal
the duty is ten shillings.
The provisions of the Companies (Con-
solidation ) Act, 1908, are as follow :
“89. (1 ) It shall be lawful for a company
to pay a commission to any person
in consideration of his subscribing or
agreeing to subscribe, whether abso
lutely or conditionally, for any
shares in the company, or procuring
or agreeing to procure subscriptions,
whether absolute or conditional,
for any shares in the company , if
the payment of the commission is
authorised by the articles, and the
commission paid or agreed to be
paid does not exceed the amount or
rate so authorised , and if the
amount or rate per cent. of the com- by way of commission in respect of any
mission paid or agreed to be paid is-
“ (a) In the case of shares offered
to the public for subscrip-
tion, disclosed in the pros-
pectus ; or
" (6) In the case of shares not
offered to the public for
subscription, disclosed in the
statement in lieu of pros-
pectus, or in a statement in
the prescribed form signed
in like manner as a state-
ment in lieu of prospectus
and filed with the registrar
of companies, and, where
a circular or notice, not
being a prospectus, inviting
subscription for the shares
is issued , also disclosed in
that circular or notice .
“ (2) Save as aforesaid, no company shall
apply any of its shares or capital
money either directly or indirectly
in payment of any commission ,
discount, or allowance, to any person
in consideration of his subscribing or
agreeing to subscribe, whether abso-
lutely or conditionally, for any
shares of the company, or procuring
or agreeing to procure subscriptions,
whether absolute or conditional, for
any shares in the company, whether
the shares or money be so applied
by being added to the purchase
money of any property acquired by
661
(UND
the company or to the contract
price of any work to be executed
for the company, or the money be
paid out of the nominal purchase
money or contract price, or
otherwise.
" (3) Nothing in this Section shall affect the
power of any company to pay such
brokerage as it has heretofore been
lawful for a company to pay, and a
vendor to, promoter of, or other
person who receives payment in
money or shares from , a company
shall have and shall be deemed
always to have had power to apply
any part of the money or shares so
received in payment of any com
mission, the payment of which , if
made directly by the company,
would have been legal under this
Section .
“90. Where a company has paid any sums
shares or debentures, or allowed any sums
by way of discount in respect of any deben
tures, the total amount so paid or allowed,
or so much thereof as has not been written
off, shall be stated in every balance sheet of
the company until the whole amount thereof
has been written off .”
The total amount of sums, if any, paid by
way of commission in respect of any shares
or debentures must be included in the
summary to be sent to the registrar. (See
Section 26 under REGISTER OF MEMBERS OF
COMPANY . See also Section 81 , s.s. 1 (h) ,
under PROSPECTUS.) (See COMPANIES.)
In connection with marine and fire insur
ance, underwriters are the insurers and are
so called because their names are written
under the contract of insurance . (See
MARINE INSURANCE POLICY.)
UNDEVELOPED LAND DUTY . A duty
imposed by the Finance (1909-10) Act, 1910
(Section 16) , and payable for the year ending
March 31 , 1910, and every subsequent year,
in respect of the site value of undeveloped
land, of one halfpenny for every twenty
shillings of that site value.
Land is deemed to be undeveloped if it
has not been developed by the erection of
dwelling -houses or of buildings for the pur
poses of any business, trade, or industry
other than agriculture, or is not otherwise
used bona fide for any business, trade, or
industry other than agriculture.
Where land has been so developed or used
and the buildings become derelict or the land
UND ) DICTIONARY OF BANKING
not used for those purposes, it shall, on the
expiration of one year from the time the
buildings became derelict or the land not so
used, be treated as undeveloped land .
Where, with a view to land being deve-
loped, an expenditure on roads or sewers
has been incurred , the land shall, to the
extent of one acre for every £100 of that
expenditure, be treated as developed land
( unless ten years have elapsed since the
date of the expenditure) . [By the Revenue
Act, 1911 , Section 4, twenty years are
substituted for the ten years .]
Where increment value duty has been paid
in respect of any undeveloped land, the site
value shall, for the purposes of assessment
for the undeveloped land duty, be reduced
by a sum equal to five times the amount
paid as increment value duty.
Undeveloped land does not include
minerals .
Section 28 enacts, that the Commissioners
shall, for the purpose of obtaining a periodi-
cal valuation , cause a valuation to be made
of undeveloped land , in 1914 and in every
subsequent fifth year.
Exemptions.
Land where the site value does not
exceed £50 per acre.
Where the site value of agricultural
land exceeds £50 per acre , the duty
shall only be charged on the amount
by which the site value exceeds the
value for agricultural purposes.
Parks, etc., which are open to the public
as of right.
Parks, etc. , where reasonable access is
enjoyed by the public.
Land which is kept free of buildings in
pursuance of any definite scheme and ing the unfunded debt,” the principal
which it is reasonably necessary in the
interests of the public that it should
be kept free.
Land bond fide used for games, etc.,
where it is so used under an agreement
with the owner which, as originally
made, could not be determined for a
period of at least five years.
Land not exceeding an acre occupied
together with a dwelling-house, or
land being gardens so occupied when
the site value of the gardens and the
house does not exceed twenty times
the annual value of the gardens and
house as adopted for the purpose of
income tax under Schedule A. ( This with small local variations, throughout the
exemption shall not apply so as to English-speaking world . It is called the
662
[UNI
exempt more than 5 acres. Where
there are more than 5 acres the
Commissioners shall determine which
five are to be exempted .)
Where agricultural land is held under
a tenancy created by a lease or agree
ment made before April 30, 1909, no
duty is to be charged on the site value
during the original term of the lease
or agreement while the tenancy
continues thereunder.
Agricultural land, occupied and culti
vated by the owner, where the total
value of all land belonging to the
same owner does not exceed £ 500 .
( “ Owner " includes a person who
holds land under a lease originally
granted for fifty years or more.)
Land held for charitable purposes.
Land whilst it is held by a statutory
company for the purposes of the
undertaking and which cannot be
appropriated except to those pur
poses. (Statutory company means
any railway, canal, dock, or water
company.)
Undeveloped Land Duty was repealed by
the Finance Act, 1920 .
UNDISCHARGED BANKRUPT. ( See
BANKRUPT PERSON . )
UNDUE INFLUENCE . (See under
GUARANTEE.)
UNFUNDED DEBT. The unfunded debt
of this country consists principally of
Treasury Bills (q.v.), Ways and Means
Advances, Exchequer Bonds (q.v.), War
Stock and Bonds, War Savings Certificates,
and War Expenditure Certificates. In each
case the principal is repayable by the
Government, but in the operation of “ fund
becomes no longer repayable, and, instead ,
there is created the right to receive interest
in perpetuity on the amount. The right to
this interest, or annuity, may be sold, and
has practically the same effect as selling so
much stock . (See FUNDED DEBT.)
UNIFICATION OF LAWS OF BILLS
OF EXCHANGE . ( See UNIFORM LAW. )
UNIFIED STOCK . Where several stocks,
bearing different rates, are joined together
to form one stock at one rate of interest, the
result is termed a unified stock .
UNIFORM LAW OF BILLS OF EX.
CHANGE . A uniform law of bills of
exchange and promissory notes prevails,
UNI) DICTIONARY OF BANKING (USE

Anglo -American system. There is also the amount, to distinguish it from a " limited ”
system of the Uniform Law or Uniform cheque which can be drawn only for an
Regulation , which was adopted at the amount within the limit printed in the
Hague Conferences of 1910 and 1912, and margin. (See LIMITED CHEQUE .)
brought into effect by a Convention . The UNLIMITED COMPANY . (See COMPANY
Convention has been signed by the repre- UNLIMITED.)
sentatives of over thirty countries, including UNUSED STAMPS . USELESS STAMPS .
all the great powers except Great Britain (See SPOILED STAMPS.)
and the United States. Instead of more URBAN DISTRICT COUNCIL The
than thirty different laws there are now Public Health Act, 1875, provides that the
only the two systems, the Anglo -American Treasurer is to keep a separate account
and the Uniform Law. called the “ District Fund Account ” of all
By the Convention the contracting States moneys carried to the account of the Dis
undertake to bring the Uniform Law into trict Fund, and such moneys are to be
force within their respective territories applied by the Urban Authority in defraying
within six months of adoption. Although such of the expenses chargeable thereon
the Uniform Law must be enacted textually, under the Act as they may think proper.
the Convention allows that certain of its Orders drawn upon the Treasurer are
provisions may be supplemented or varied . usually signed by three members of the
For example , Article 37 of the Uniform Council and countersigned by the clerk . A
Law provides that the holder of a bill may banker should be furnished with a copy of a
present it for payment either on the day resolution by the Council as to the manner
that it falls due, or on either of the two in which orders are to be signed and with
following business days. This, in effect, specimens of all necessary signatures. Per
allows two days of grace to the holder, procuration indorsements are not accepted .
though no time of grace is allowed to the The Treasurer must keep an account in
payer. Article 7 of the Convention provides the prescribed form of all moneys received
that any contracting State may require bills and paid by him on behalf of the Council,
payable within its own territory to be and must balance and sign the account
presented for payment on the day that they quarterly, or at such other times as may be
fall due ; but non -compliance with this rule directed by the Council.
is only to give rise to right to damages With regard to the borrowing powers of
and is not to affect the right of recourse . the Council, reference should be made to the
Articles 72 and 73 expressly prohibit Statute under which a power to borrow is
days of grace. obtained, so as to ascertain the extent of the
Under the Convention the contracting power, and whether the sanction of the
States undertake that no bill or promissory Local Government Board or other authority
note drawn within their territories shall be is uired . In 1919, the powers and duties
invalidated for non-compliance with stamp of the Local Government Board were trans
laws, and that stamp laws shall only be ferred to the Minister of Health. If money
enforced by money penalties, with (if is borrowed without power or sanction, the
necessary) a suspension of remedies until interest thereon will probably be disallowed
the penalty is paid . by the government auditor. (See ( the
The Hague Conference also prepared a case Attorney -General v. Tottenham Urban
preliminary draft of a proposed Uniform Council under LOCAL AUTHORITIES .)
Law of Cheques, which is to form the subject USANCE . Usance is the period, recog
of a future conference . nised by custom, for the currency of bills
UNINCUMBERED . A property is unin- drawn in one country upon another country.
cumbered when it is free from any charge. For example, bills on Paris are drawn at
UNIT OF VALUE . The coin in any three months' date, Lisbon ninety days'
country by which the value of all the other date, Bombay thirty days' sight. (See
coins is measured . The monetary unit, or COURSE OF EXCHANGE .) 92
unit of value, in this country is the sovereign , USES. The term uses is employed
in France it is the franc, in India the rupee, when it is intended to vest the legal estate
and in the United States the dollar. (See in a person . When the word “ trust ” is
FOREIGN MONEYS .) used the person takes a beneficial interest.
UNLIMITED CHEQUE. The name given For example, in a conveyance to John
to a cheque which may be drawn for any | Brown, “ to the use of John Brown in trust
663
USU) DICTIONARY OF BANKING (VAL
))
for John Jones,” Brown has the legal estate amount which he will obtain from a forced
and Jones the beneficial interest ; if, how- sale may probably be much less than its
ever, the conveyance is “to John Brown supposed value when the advance was
to the use of John Jones,” Jones takes the granted, that there will most likely be
legal estate . considerable expenses in connection with
USUFRUCT. (From Latin usus, use, and the sale, that the property may have
In law , the right to enjoy
fructus, fruit.) deteriorated , and that there may be arrears
the fruits and profits of something which of interest to be provided for. A good
belongs to another, without having the security ought to produce an income atleast
right to alienate, or change, or injure the sufficient to cover the interest upon the loan.
property. A banker may meet the word in Any restrictions regarding the use to
the expression “ usufruct of investments.” which a property may be put should be
USURY . An exorbitant rate of interest carefully considered , as they may have
charged by money lenders. Where proceed- an effect upon the value.
ings are taken by a money lender for the In considering how much a banker should
recovery of money lent the Court may, upon advance upon any given property he will not
evidence, decide that the interest charged go very far astray if he asks himself (1 )
in respect of the sum actually lent is exces- “ Would I lend the amount applied for on
sive, and may relieve the person sued from this property out of my own pocket ? " (2)
payment of any sum in excess of the sum “ Could I, if necessary, obtain repayment
adjudged by the Court to be fairly due in of the loan out of this property either next
respect of principal, interest and charges. month or in several years time ? ”
(See MONEY LENDER .) Seeing that the object of taking security
is to enable the banker to obtain repayment
VALUABLE CONSIDERATION . (See of the money lent if the debtor fails to
CONSIDERATION . ) repay, it is most important that a security
VALUATION . In endeavouring to arrive should not be overvalued when making an
at the value of a property for the purpose of advance upon it, otherwise that object may
granting a loan thereon, it is necessary to be defeated .
ascertain as nearly as possible what it would To arrive at the value of a property
be likely to sell for at the present moment. it is necessary to ascertain the gross income,
It may be expected that the land will, from and to deduct therefrom the amount of the
various causes, probably increase in value outgoings in order to find the net income.
within a few years, but a banker does not Having ascertained the net income, that
lend money upon a prospective value but amount must, to arrive at the capital value,
upon its present value. Having ascer- be multiplied by the number of years pur
tained what may safely be regarded as its chase which is customary in the district
present sale value, a banker then considers on a sale of a similar property. If, for
to what extent of that value he should example, cottage property sells, as a rule, in
advance. Mortgagees do not, as a rule, a certain district at ten years' purchase it is
advance more than two -thirds of the value, clear that if a banker, after having ascer
and in some cases, owing to the particular tained the net income, assessed its value on
nature of the property or the position of the a twenty years' purchase, and lent two
borrower, not more than one-half its value. thirds thereon, he would, when he required
Though bankers may wisely, and for safety, to realise, find himself in an uncomfortable
be guided by the practice of ordinary mort. position, e.g. a prudent banker would say ,
gagees when advancing upon properties, Income £ 30
there are frequently, with bankers , other 10 years' purchase.
considerations to be taken into account. It
may not be possible for a banker always to 300
make a hard and fast line and require a Advance two - thirds = 200
margin of a half or a third to be absolutely
preserved, but a prudent banker considers Margin = £ 100
each case on its merits and preserves a
margin which he considers sufficient. A
banker should bear in mind that, if he But if a banker ( forgetting local circum
should eventually have to fall back upon stances) estimated the value on a twenty
the security for repayment of the loan, the years' purchase, which he knows to be the
664
 VAL ) DICTIONARY OF BANKING
custom in some other district, his figures
would be
Income £ 30
20 years' purchase.
600
Advance two - thirds = 400
Margin = £ 200
The property on a salc would, of course
(other things being equal), realise only what
is usual in the district, namely ten years' condition
yearly to. preserve the property in good
purchase on the net income, £300. The
banker therefore who advanced the £200
would easily get his money back, but the
banker who lent £ 400 would have to look
elsewhere for £ 100.
Even where house property is usually the expiry approaches. There may be
saleable at about twenty years' purchase, a
banker should for safety base his valuation
on, say, a fifteen years' purchase. There is
usually a considerable difference between
the price paid for a property and what is
obtainable on a forced sale.
If the rent of a house is, say, £ 30 per
annum, a deduction of, say, 10 to 15 per
cent. for repairs and 5 per cent. for collection
of rents, etc. , should be made in order to
obtain the net rental .
In the case of tenement property where
the rents are collected weekly , the charge
for rent collection, etc., should be put at
71 per cent. or 10 per cent. of the rent.
15 per cent. will probably be sufficient for
repairs.
In an agricultural estate the rent of
farms, fields, cottages, woods, etc., should
be ascertained to find the gross rental, and
all outgoings such as repairs, taxes, insur-
ance, tithe rent-charges, etc., should be
deducted therefrom to arrive at the net
income. Questions which may arise are :
Is the rent a reasonable one, and can the
tenant by cultivating the land pay the rent
and live upon the profit which remains ?
How does the rent compare with adjacent
properties ? What sort of land is it, is it
poor, clayey soil, or bog -land , or steep
difficult land to cultivate, or good loam soil
capable of good results ? What buildings
are there on the land , and are they suitable
for a farmer ? In what state of repair are
they ? Is there a good and satisfactory
water supply ? Is the supply from a river
or from wells ? How is the property situ-
ated with regard to a railway ? How far
off is the station ? What is the distance
665
(VAL
from the nearest market town ? (Land
near a town is much more valuable than
when far removed . ) Is there any timber
upon the land ? Are the buildings, hedges
and fences in a good state of repair ?
These, and other questions which would be
sure to arise, should be considered when
examiningthe figures representing the gross
income. With regard to repairs, if the
property is not in good order a sum suffi
cient to put it into repair must be deducted,
as well as a sum estimated as being necessary
If the property is leasehold the ground
rent, length of term , and covenants must be
taken into account. If the term is a short
one the value will diminish as the date of
covenants which involve heavy expenditure
in making improvements or extensions
to the property, or which compel the lessee
to work the property (e.g. a coal mine)
even if the working results in a heavy loss
to the lessee year by year. A covenant to
repair may also fall heavily upon a lessee.
If the property is copyhold what fines and
fees are payable ? Are fines payable upon
the death of the lord or upon the death of
the tenant ? or are they payable upon the
death both of the lord and tenant ? Is
there a heriot (i.e. a tribute of the best
beast or other chattel) payable to the lord ?
The expression "so many years' purchase "
means the value of a property in terms of the
annual net income derived therefrom . The
number of years is found by dividing 100 by
the rate per cent. of interest which is
required. For example, if an investment
is required to yield 5 per cent., divide 100
by 5, and 20 is found to be the number
of years' purchase which should be paid . If
the net income from a property is, say, £ 100,
then multiply that by the twenty years—
£ 100
20
£ 2,000
If the property is purchased for £ 2,000,
it is clear that the purchaser, obtaining from
it a net income of £100, receives 5 per cent.
upon his outlay . And so with other rates
4 per cent . 25 years' purchase
6 per cent. 16}
3 per cent . 33} and so on .
Where a property is in the owner's own
occupation , the value may be fairly judged
by ascertaining from the rate books at the
VAL) DICTIONARY OF BANKING (VAL

rate collector's or assistant overseer's office | 40s. an acre, and in exceptional cases the
(as the case may be) the amount at which rent is as high as £ 3 an acre. A fair average
the property is assessed for rating purposes. rent of agricultural land may be taken as
On house property if the assessinent for 20s. an acre.
rates is arrived at by deducting 10 per cent. Under a building lease the lessee or lease
from the gross rent, and in the case of land holder is under an obligation to build upon
by a deduction of 5 per cent., when the the land, and the owner of the freehold
assessment figures are obtained , one -ninth reserves to himself a rent, called the ground
of the amount must be added to the assess- rent. The value, in the country , of well
ment, in the case of house property, and one- secured ground rents, as an investment, is,
nineteenth added in the case of land in say, from eighteen to twenty years' pur
order to obtain the amount which may be chase. In such cases the lease is for a
considered the gross rental of a place which long period, and the only point to consider
is in the owner's occupation. is the amount of interest required from the
For example, a valuation of an agri- investment as represented by giving twenty
cultural freehold estate of, say, 50 acres years' ( = 5 per cent. ) or eighteen years'
might be as follows : ( = say, 6 per cent .) purchase. But if the
term to run is short then the reversion must
wo

s. d.
Rent . 70 0 0 be taken into account ; for example, if the
Deduct outgoings £ s. d. ground rent is £10 and a house worth £1,000
Tithe 2 5 0 has been built on the land, the land, with
Land Tax 0 5 0 the house thereon , reverts to the lessor at
Insurance 0 10 0 the expiration of the lease, and if the lease
Repairs 10 per cent.. 7 0 0 has only a few years to run it is clear that
Management 5 per that fact is a very important one in con
sidering the value .
cent. (Collection of
rents, etc.) 3 10 0 Leasehold property is more precarious
13 10 0 than either freehold or copyhold and should
be valued to pay a higher rate of interest
£ 56 100 so that, over and above the interest on the
purchase money, it shall include such an
In the above example repairs and man- amount of interest as will accumulate to
agement expenses are put at 15 per cent. of the purchase price at the end of the term .
the rent. If, however, the property con- The rule for calculating the value is :
sisted only of buildings the repairs would First find the net annual value of the
usually be put at 10 to 15 per cent. , and premises and the number of years the lease
management at 5 per cent., but where, as has to run , then the value of the said number
in the case supposed, the estate consists of of years at the proper rate of interest,
both land and buildings the deduction is, multiplied by the annual value gives the
say, 7 } to 10 per cent. for repairs and 5 per value of the leasehold interest in the
cent. for management. If the buildings, premises.
fences, etc., are in a bad state of repair, 15 For example, premises let at £450 a year
per cent. might be deducted for repairs. with a ground rent of £50, and with 62 years
The rates are paid by the tenant. to run , at 6 per cent. interest, would work
If the estate is near a town its value is out as under :
often taken at thirty years' purchase, or
more, but if it is in a remote district twenty Rent
Deduct. ground rent .
£450
50
years' purchase may probably be taken as its
value. A valuation for estate duty must £400
in no case exceed twenty -five years' purchase; Year's purchase at 6 % with
For safety a banker might reckon a well 62 years to run 16 : 217 .

situated estate at, say, twenty years' pur

chase, and one not so well situated at, say,
fifteen years. In the above example the The present value of the
premises is £6486 16 0
£56 10s. net rental must be multiplied by 20
or 15 as the case may be, in order to arrive
at the value. The rent of agricultural land Life leaseholds are valued on the same
varies considerably, say from 18s. to 30s. or principle as leaseholds for years certain,
666
 VAL) DICTIONARY OF BANKING
taking into account the ages of the lives in
the lease.
Where money is borrowed on leaseholds
the continuous depreciation can be met by
insurance. For example, in the case of a
private house in London, purchased as an
investment for letting, held on lease, 62
years unexpired, rental £ 200, ground rent
£38, purchase money £2,250 :
£ s . d. £ S. d.
Rental value . 200 0 0
Deduct
Ground rent 38 0 0
Premium on Policy
to secure £ 2,250
at expiration of
lease , say 13 19 5 of interest required .
51 195
£ 148 0 7
This represents, say, 6 per cent. per
annum interest on purchase money and
repayment of the whole £2,250 at expiration
of lease .
Provision must, of course , be made to
charge the leasehold with the payment of
the premium .
By so insuring, a leasehold , coupled with
the policy, becomes a permanent investment, £100 by the number of years' purchase to be
and the result is to render this class of paid, to find the rate per cent. which the
property much more marketable .
Valuations of coal mines, iron mines,
works, factories, etc., require to be made
by experts.
It is well to remember that a valuation
of works as a going concern is quite a dif
ferent matter from the value when the works
are closed . In such a case the works may
realise at a sale little more than the price
of old material. Buildings which have
been specially designed for some particular
industry may be of very little value for
any other purpose.
When a valuation of a property is placed
before a banker it is important to know
when , and by whom , it was made . It is
also useful to know at whose request it
was prepared , for a valuation made on
behalf of a borrower is likely to be more
favourable than when made at the request and the quotient is the number of years'
of the banker. As valuations for certain
purposes are often quite different from
valuations prepared in connection with the
negotiations for a loan, it is necessary to
ascertain what gave rise to any valuation
which is submitted .
Further information regarding values is changed for.
667
(VAL
given under Farm Stock and LICENSED
PROPERTY. (See also FIXTURES, TITLE
Deeds — NOTES RE TITLE, WASTING Assets . )
The following are a few simple calculations
in connection with investments :
1. To find the price at which £100 stock
bearing 5 per cent. interest must be bought
to yield , say, 4 per cent. :
£ 100
5
4 ) 500
125
That is, multiply the amountby the rate
of interest it bears, and divide by the rate
2. To find what interest £100 stock, bearing
interest at 5 per cent., will yield when
bought at a certain price, say, £150 :
£ 100
5
150) 500
£ 3 6s. 8d .
That is, multiply the nominal amount of
stock by the interest it bears and divide by
the price to be paid for it.
3. In the purchase of property, divide
investment will yield . The " years' pur
chase ” equals the rent multiplied by the
number of years required to make the
purchase price.
4. To find the number of years' purchase to
give in order to obtain a certain rate per
cent. , divide 100 by the rate per cent. To
pay 5 per cent. the number of years would
be twenty - thus :
Rent £10
20
Price £200
5. Where a property has been purchased
for, say, £ 1,000 , and the rent is £50 per
annum , divide the rent into the price
50)1,00020
purchase which has been paid. Twenty
years' purchase equals 5 per cent. (see No.
3, above). (See ADVANCES, APPRAISEMENT,
TITLE DEEDS .)
VALUE. The value of money, or of any
other commodity, is what it can be ex
It has no value if it cannot
VAL ) DICTIONARY OF BANKING
be exchanged for something. A Bank of
England note has value when it can be
exchanged for five sovereigns or for some
other amount or commodity, but in a country
where bank notes are unknown it would have
no value . Intrinsic value is an erroneous
expression .
VALUE IN ACCOUNT. A foreign bill
often terminates with such words as value
in account,” “ which place to account as
advised ," or which place to account with
or without advice.” The words are merely
a communication between the drawer and
the acceptor, and do not affect a banker.
VALUE RECEIVED . The last words in
the body ofa bill are very frequently “ value voluntary conveyance ; but a marriage
received , " but they are not necessary to the settlement is not , because the marriage is a
validity of a bill, as it is always implied in a valuable consideration . (See CONVEYANCE,
bill of exchange that value has been received .
By Section 30 of the Bills of Exchange
Act, 1882, “Every party whose signature
appears on a bill is primå facie deemed to )
have become a party thereto for value.”
VALUED POLICY . (See MARINE IN.
SURANCE POLICY.)
VALUER . (See APPRAISER .)
VENDOR'S SHARES. Where a private
business is converted into a limited com-
pany, the vendor may receive shares instead
of cash, in payment of the purchase price.
The vendor's shares may rank along with the
ordinary shares, or they may form the
subject of special agreement as to dividend.
VERIFICATION OF STOCK RECEIPTS.
(See under NATIONAL DEBT.)
VESTED REMAINDER . (See REMAINDER .)
VICTORY BONDS , 4 % . Issued by the
Government in 1919. Price of issue £85
per cent . The bonds are redeemable at par
by a cumulative sinking fund operating by
means of annual drawings. The numbers of
the bonds drawn for redemption on each
occasion will be advertised in the London
Gazette . Interest on bonds drawn for repay-
ment will cease from the date on which the
bonds become repayable. The bonds will
be accepted at their face value in payment
of death duties, provided that they have
been held not less than six months preceding
the date of death . The bonds may be
registered in the holder's name and thus other person in the nature of a committee
made transferable by deed ; and the regis-
tered bonds may be re-converted into bonds
to bearer by means of transfer. The divi-
dends are paid by means of coupons
attached to the bonds, whether registered or
to bearer.
The bonds form a trustee investment,
668
(VOT
and trustees may invest therein notwith
standing that the price may at the time of
investment exceed the redemption value of
£ 100 per cent.
VISÉ. ( French , seen .) When a passport
is to be used in, say, Russia or Turkey, it is
necessary that the intending traveller to
those countries should get the document
officially indorsed at the Russian or Turkish
Consulate in London .
To visé a passport is therefore to examine
and indorse it. ( See PASSPORT.)
VOLUNTARY CONVEYANCE . A con
veyance of property when there is no valu
able consideration . A deed of gift is a
ESTATE DUTY, GIFTS INTER Vivos, SETTLE
MENTS_SETTLOR BANKRUPT.)
VOLUNTARY LIQUIDATION . VOLUN
TARY WINDING UP. (See WINDING UP
VOLUNTARILY .)
VOLUNTARY SETTLEMENTS . (Sce
GIFTS INTER Vivos, SETTLEMENTS_SETTLOR
BANKRUPT.)
VOTES. The articles of association of a
company should be perused when informa
tion is required respecting the voting power
of members. In the case of a company to
which the regulations in Table A apply ( see
Section 11 of the Companies (Consolidation )
Act, 1908, under ARTICLES OF ASSOCIATION )
the rules are as follow :
“ 60. On a show of hands every member
present in person shall have one vote. On
a poll every member shall have one vote for
each share of which he is the holder.
“ 61. In the case of joint holders the vote
of the senior who tenders a vote, whether in
person or by proxy, shall be accepted to the
exclusion of the votes of the other joint
holders ; and for this purpose seniority shall
be determined by the order in which the
names stand in the register of members.
62. A member of unsound mind, or in
respect of whom an order has been made by
any court having jurisdiction in lunacy, may
vote, whether on a show of hands or on a
poll, by his committee, curator bonis, or
or curator bonis appointed by that court,
and any such committee, curator bonis,
or other person may, on a poll, vote by
proxy.
. 63. No member shall be entitled to vote
at any general meeting unless all calls or
other sums presently payable by him in
 VOT] DICTIONARY OF BANKING (WAR

respect of shares in the company have been WAIVER . To waive a right is to

paid . relinquish or renounce all claim to it ; the
" 64. On a poll votes may be given either renunciation is termed a waiver.
personally or by proxy . WALKS. In London , cheques which are
“ 65. The instrument appointing a proxy drawn upon non - clearing banks are col
shall be in writing under the hand of the lected by clerks called “ walks clerks,” and
appointor or of his attorney duly authorised the cheques are said to be included in the
in writing, or, if the appointor is a corpora- walks is collection . (CLEARING HOUSE.)
tion , either under the common seal, or under WALL STREET. The New York Stock
the hand of an officer or attorney so author- | Exchange.
ised. No person shall act as a proxy unless WAR LOANS. The issues were :
either he is entitled on his own behalf to be
present and vote at the meeting at which he Price
of Issued .
acts as proxy ,'or he has been appointed to act Issue .
at that meeting as proxy for a corporation .
“ 66. The instrument appointing a proxy 31 % War Loan , 1925–28 95 % Nov. , 1914 .
and the power of attorney or other authority, 41 % 19 1925-45 Par June, 1915.
50 1929–47 95 % Jan., 1917.
if any, under which it is signed or a notarially 4% 1929_42 Par Jan. , 1917.
certified copy of that power or authority ( Income Tax compounded )
shall be deposited at the registered office of
the company not less than forty -eight hours
before the time for holding the meeting at The loans will be redeemed at par.
which the person named in the instrument The War Loans issued January, 1917, will
proposes to vote, and in default the instru- be accepted at their respective issue prices
>

ment of proxy shall not betreated as valid .” | in payment of death duties, provided such
(SeeCOMPANIES, Proxy, RESOLUTIONS.) stock or bonds formed part of the estate
VOTING PAPER . By the Stamp Act, of the deceased for a period of not less than
1891 , the stamp duty is : six months prior to the date of death. The
VOTING PAPER . An instrument loans were issued as bonds to bearer, also
for the purpose of voting by in the form of inscribed stock and registered
any person entitled to vote at stock transferable by deed. The stocks
any meeting of any body exer form trustee investments .
cising a public trust, or of the There were also issued during the war :
shareholders, or members, or
contributors to the funds of £ s. d. Price
of Issued .
any company, society, or insti Issue .
tution 0 0 1
And see Section 80, under 3 % Exchequer Bonds, 1920 tender March , 1915.
PROXY . (average
VOUCHERS. Paying-in slips, cheques, £ 95-18-1)
and office debit and credit slips are included 5% 1920 Par Dec., 1915 .
59 99 1 1919 June , 1916.
under the term vouchers. They are docu 1921 June , 1916.
ments which vouch for the correctness of 1920 Oct. , 1916 .
book entries . 1922 April , 1917.
1925 Jan., 1920 .
There is no legal period beyond which old 51 % 9) 19 3

vouchers may be destroyed. A debt is

barred by the Statute of Limitations at the and four series of National War Bonds.
end of six years , but vouchers are , for various (See NATIONAL WAR BONDS .)
reasons, frequently required for a longer See also NOMINATIVE BONDS, WAR
period than six years. (See CANCELLED SAVINGS CERTIFICATES. After the war there
CHEQUES AND BILLS, WINDING UP.) were issued :
VOYAGE POLICY. (See MARINE INSUR- Funding Loan , 4 per cent. , 1960-90. (See
ANCE POLICY.) FUNDING LOAN .)
Victory Bonds, 4 per cent. (See VICTORY
WADSET. An old Scots law term for a BONDS .)
mortgage or bond and disposition in security . WAR SAVINGS CERTIFICATES . Issued
The word occurs in the Stamp Act, 1891. | by the Government. Each certificate costs
(See under BOND .) 15s. 6d., and the purchaser is entitled to
669
 WAR ) DICTIONARY OF BANKING (WAR

receive £ 1 for it at the end of five years named therein or his assigns to the goods.
or £ 1 6s. at the end of ten years, from (See Dock WARRANT.)
the date of purchase. No more than The stamp duty on a warehousekeeper's
500 of these certificates, or their equivalent, certificate or receipt is 3d. See under
can be held by any one person. They do WARRANT FOR Goods .
not form a security for an advance, as “ a WAREHOUSE -KEEPER'S WARRANT.
deposit of a war savings certificate with a WAREHOUSE WARRANT. A document
banker as security for a loan will not be issued by the keeper of a warehouse stating
recognised by the Postmaster General.” No that the goods named therein are entered
income tax is payable in respect of the in the books and are deliverable to the
accumulated interest . person mentioned or to his assigns by
The statutory provisions relating to War indorsement. (See WARRANT FOR Goods. )
Savings Certificates apply also to National A warehouse warrant may be in the follow
Savings Certificates. (Savings Banks Act, ing form :
1920. )
WAREHOUSE -KEEPER'S CERTIFICATE , SUGAR WAREHOUSE .
OR RECEIPT. A document issued by a No.
warehouse -keeper stating that certain goods Warrant.
are held in his warehouse at the disposal of For
the person named. Such a certificate or
receipt is not transferable and the goodsare Imported in the ship from
not deliverable upon its production. It Captain entered by
is simply an acknowledgment of having on the
received certain goods . Rent payable from the
When the owner wishes to obtain the goods Examined and entered by
he signs a delivery order (q.v.) ; or, if desired , Ledger Folio
he may obtain a warehouse warrant
stating that the goods are deliverable to the Liverpool 19
person named therein or to his assigns by Deliver the above -mentioned goods to
indorsement. (See WAREHOUSE- KEEPER'S or assigns, by indorsement
WARRANT. ) hereon .
When warehousekeepers' receipts are Warehouse -Keeper.
pledged with a bank, the customer should
sign the bank's letter of lien . The receipts This warrant must be presented at the
should be in the bank's name, and when office, regularly assigned by indorsement,and
delivery of the goods is required the bank all chargespaid, before delivery of the goods
will sign a delivery or transfer order. (See can take place.
DELIVERY ORDER, TRANSFER ORDER.) On the back : Deliver the within -men
A banker should be careful to see that a tioned goods to or order.
warehousekeeper's receipt states that the
goods mentioned in the receipt are subject The expression " warehouse-keeper's cer
to rent only in respect of those goods, tificate ” in the Factors Act (q.v.) refers
otherwise he may find that they are subject, to such a document as is here described as a
in addition to that rent, to a general lien warrant .
for rent and charges due in respect of other The remarks made regarding a dock war
goods from the party to whom the receipt rant (see Dock WARRANT) apply equally to
was originally issued . (See Bankers ' Advances a warehouse -keeper's warrant.
Against Produce, by A. Williams .) ( See WAREHOUSEKEEPER'S CERTIFICATE
In the event of the customer's bankruptcy, OR RECEIPT.)
unless the goods have been registered in the WARRANT ( HIS MAJESTY ). By the
banker's name, the property will vest in the Stamp Act, 1891 , the stamp duty is :
trustee in bankruptcy. WARRANT under the sign manual £ s. d.
Although a receipt or certificate is usually of His Majesty 0 10 0
regarded as a mere acknowledgment of the WARRANT FOR GOODS. ' A document
goods,) the term “ warehouse -keeper's certific issued by a dock company, a warehouse
cate ” is sometimes used (see Factors Act, keeper, or wharfinger, stating that the goods
Section 1 , s.s. 4) to indicate a document named therein are deliverable to the person
which is evidence of the title of the person mentioned, or his assigns by indorsement.
670
WAR ] DICTIONARY OF BANKING [WAR

(See Dock WARRANT, WAREHOUSE -KEEPER's of pledges of documents of title by mercantile

WARRANT, WHARFINGER'S WARRANT.) agents, etc.
The expression warehouse -keeper's cer- By the Stamp Act, 1891, the stamp duty
tificate " (as in the Factors Act, q.v.) is is : £ s. d.
sometimes used instead of the expression WARRANT FOR GOODS . . . 0 0 3
warehouse -keeper's warrant."
Various warehousekeepers have acquired Exemptions.
statutory powers (by private Act of Par (1 ) Any document or writing
liament) to issue warrants transferable by given by an inland carrier
indorsement. Such warrants, duly indorsed, acknowledging the receipt
transfer a good title to the goods (subject of goods conveyed by such
to the payment of rent and charges due to carrier.
the warehousekeeper in respect of the goods (2) A weight note issued to
specified in the warrant ). But where war gether with a duly stamped
rants are issued by warehousekeepers who warrant, and relating
have not obtained statutory powers to issue solely to the same goods,
warrants transferable by indorsement, a wares, or merchandise.
bank should , when taking such warrants, And see Section 111 as follows :
have them issued in its own name. The
Courts have held that a warehousekeeper " ( 1 ) For the purposes of this Act the
expression warrant for goods '
cannot be compelled, without his consent, means any document or writing,
to hold goods deposited with him for any being evidence of the title of any
person other than the original depositor. person therein named, or his assigns,
When , however , the above mentioned or the holder thereof, to the pro
statutory powers have been acquired, such perty in any goods, wares, or mer
consent is not necessary , and the holders chandise lying in any warehouse or
of warrants can transfer the property in dock , or upon any wharf, and signed
the goods without reference to the ware or certified by or on behalf of the
housekeeper. (See WAREHOUSEKEEPER's person having the custody of the
CERTIFICATE OR RECEIPT .) goods, wares, or merchandise .
When taking warehousekeepers' warrants " (2) The duty upon a warrant for goods
and receipts a banker should satisfy himself may be denoted by an adhesive
as to the reliability of the issuer, if a private stamp, which is to be cancelled by
firm or individual . the person by whom the instrument
When these documents of title are pledged is made, executed, or issued .
with a bank as security for an advance, the “ (3) Every person who makes, executes,
customer should sign the bank's letter of or issues, or receives or takes by way
en (stamped 6d.) in which he agrees, of security or indemnity , any warrant
.

amongst other things, that all bills of lading, for goods not being duly stamped ,
dock or warehouse warrants or other docu shall incur a fine of twenty pounds."
ments, now or at any time deposited by WARRANT OF ATTORNEY. A written
me with you and all property represented authoritygiven by a debtor to a solicitor
thereby are hereby pledged and hypothe- empowering the solicitor to appear in an
cated to you , and shall be held by you as
security for payment on demand of all action against the debtor and to suffer judg
ment for the debt to be entered up against
amounts which I may now owe you , or him .
which I may from time to time become The stamp duty , by the Stamp Act, 1891,
indebted to you ; and that the bank shall is :
have full liberty to dispose of the property WARRANT OF ATTORNEY to confess
at its discretion. He also undertakes to and enter up a judgment given
keep the property covered by insurance as a security forthepayment or
against fire . repayment of money, or for the
Documents of title to goods pledged with transfer or retransfer of stock .
a bank may be handed back to a customer See MORTGAGE, etc.
on his signing an undertaking to pay the £ s. d.
proceeds from sales of the goods direct to WARRANT OF ATTORNEY of any
the bank . (See Trust RECEIPT .) other kind 0 10 0
EM))
See under Factor's Actasto the effect (See COGNOVIT Actionem.
671
WAS] DICTIONARY OF BANKING [WEI

WASTE . (SeeIMPEACHMENT OF WASTE.) / producing income, and dividing that income

WASTE BOOK . WASTE SHEETS. In without making provision for keeping up the
the waste book the various transactions value of the capital, and that fixed capital
which occur in a bank office during the day may be sunk and lost and yet the excess of
are entered and split up under different current receipts over current expenses may
headings. For example, if a customer pays be applied in payment of a dividend, though
in to his credit an amount consisting of cash where the income of a company arises from
and cheques, the full sum is entered in the the turning over of circulating capital, no
" credit current accounts ” column on the dividend can be paid unless the circulating
" cash out ” side, and on the opposite side capital is kept up to its original value, as
of the book, the “ cash in ” side, the credit otherwise there would be a payment out of
is analysed, gold, silver and notes being capital. ” (Verner v. Generaland Commercial
placed in separate columns, and the cheques Investment Trust, 1894, 2 Ch . 239.)
being separated , e.g. in a country bank, into A patent worked by a company is a wasting
columns for London , local, head office, asset, and as it can only , as a rule, be kept
country , own cheques, or such divisions as alive by payment of certain fees for fourteen
are considered necessary . years , that period is called the life of the
Similarly, if a cheque is cashed over the patent.
counter, the cheque is entered in the correct WATERED CAPITAL . WATERED
column on the " cash in " side and particulars STOCK. The stock, or capital, of a company
of the kind of cash paid
si
away are extended is said to be “ watered " when it is added to ,or
on the " cash out " de. increased, by way of paper entries only, or
At the end of the day the combined totals when further shares are issued without any
of the one side will agree with the combined provision being made to provide interest
totals of the other side. thereon. For example, if a company with
The waste book may be planned so as 1,000 shares on which it pays 10 per cent.
to balance with , and act as a check upon, | increases the number to 2,000, the interest
the day book and the various outward on the 2,000 will only be 5 per cent., unless
remittances, etc. The columns and method arrangements are made to provide more
of keeping the book vary somewhat in interest.
different banks . WAYS AND MEANS ADVANCES . The
Instead of a book some banks, for con- name given to advances made by the Bank
venience, use loose sheets, called waste of England to the Treasury to meet pay
sheets, the sheets being bound up into book ments for the annual supply services . These
form at intervals . advances are borrowed on the credit of
WASTING ASSETS. sums authorised by Parliament for Ways
Assets, such as

mines or quarries, which become used up and Means, and are to be distinguished
in course of time by working them . A from “ Deficiency Advances ( q.v.), which
mine, for example, which is being steadily are obtained to meet permanent charges.
worked will become less valuable year by WEIGHT -NOTE . A document issued by
year as the mineral is extracted . To meet some dock companies giving the weight of
this depreciation in the value of the pro- certain goods in their possession, and stating
perty, a certain sum should be provided out the amount of the purchase money which is
of each year's profits. Although it is a owing. The possessor of the weight-note is
prudent and usual course for a company to entitled to the warrant for the goods upon
adopt, there is, however, no obligation upon complying with the conditions of sale and
the company to provide such a fund. The paying the balance of the purchase money as
Court of Appeal have held " that there is no expressed on the weight-note on or before the
law to prevent a company from sinking its expiration of the time for payment of the
capital in the purchase of aa property purchase money.
WEIGHTS AND MEASURES .
12 Inches = 1 Foot
LENGTH .-- Land Measure.
36 3 Feet = 1 Yard .
198 16+ 5 Yards 1 Rod, Pole, or Perch .
792 66 22 4 Rods = 1 Chain .
7,920 660 220 40 = 10 Chains = 1 Furlong
63,360 = 5,280 -1,760 = 320 = 80 = 8 Furlongs = 1 Mile . *
672
WES) DICTIONARY OF BANKING (WIL

SURFACE .
Square Measure.
144 Sq. Inches 1 Square Foot.
1,296 9 Sq. Feet- 1 Sq. Yard
39,204 2727 304 Sq. Yards = 1 Sq.Rod, Pole or Perch .
627,264 ES
4,356 .
484 . 16 Sq. Rods = 1 Sq. Chain .
1,568,160 = 10,890 O = 1,210 40 . = 21 Sq. Chains = 1 Rood .
6,272,640 = 43,560 = 4,840 - 160 = 10 = 4 Roods
1 Acre .
A Square Mile = 640 Acres, 2,560 Roods, 6,400 Sq. Chains, 102,400 Sq. Rods, or 3,097,600
Square Yards.
CUBIC MEASURE .
1,728 cubic inches = 1 cubic foot. PAPER MEASURE .
27 cubic feet -1 cubic yard .
24 Sheets = 1 Quire.
Troy WEIGHT. 25 = 1 Printer's Quire.
3.17 grains = 1 carat (for diamonds) . 20 Quires = 1 Ream .
24 211 = 1 Printer's Ream .
= 1 pennyweight (dwt.). 2 Reams = 1 Bundle.
20 pennyweights 1 ounce.
10 = 1 Bale.
12 ounces or 5,760 grains 1 pound.
100 pounds = 1 hundredweight.
By the Weights and Measures Act, 1878, gold and silver may be sold by the ounce troy
or by any decimal parts of such ounce.
WESTERNS. A Stock Exchange name formed for the purpose of obtaining money
for Great Western Railway ordinary stock . from subscribers for a wild or dishonest
WHARFINGER'S RECEIPT, OR CERTI- scheme .
FICATE . A document issued by a whar- WILL . A writing by which an owner of
finger (that is, the owner of a wharf) acknow- property declares what is to be done with
ledging receipt of goods committed to his it after his death . The person making a will
charge, or certifying that certain goods are is called the testator. A minor cannot make
ready for shipment. Such a receipt or a valid will, except in the case of a soldier
certificate is not a document of title and the
and sailor on active service (Wills (Soldiers
goods named therein do not pass by indorse-
and Sailors) Act, 1918. ]
ment of the receipt. To effect a delivery of
A testator's signature should be witnessed
the goods, a delivery order must be signed .
by two persons. The following is a common
When these receipts are pledged with a attestation clause : Signed by the said
bank as security they should be in the name the testator in the presence of us,
of the bank . The same remarks apply as both present at the same time, who in his
in the case of a WAREHOUSEKEEPER's presence and at his request and in the pres
CERTIFICATE OR RECEIPT (q.v.) . ence of each other have hereunto set our
A wharfinger's warrant stating that the names as witnesses."
goods are deliverable to the person named A legatee, or his wife (or husband as the
therein or to his assigns by indorsement, case may be ), should not be a witness to the
does form a document of title . (See WARE- | testator's signature, otherwise the legacy
HOUSE WARRANT, Dock WARRANT, FACTORS will be forfeited .
Аст.) An executor (who takes no benefit under
WHARFINGER'S WARRANT. A docu- the will) is a competent witness.
ment issued by a wharfinger which states A will is revoked by the marriage of the
that the goods named therein are deliver- | testator.
able to the person mentioned or his assigns A codicil is an addition to a will by which
by indorsement. some change in the terms of the will is
The remarks which apply to a dock war- effected , and it must be dated and signed
rant apply equally to a wharfinger's warrant. by the testator and attested by two witnesses
(See Dock WARRANT, WARRANT FOR Goods.) in the same way as the former part of the
WILD CAT COMPANY . A company document.
673
43–1535) 12 Pp.
WIL ) DICTIONARY OF BANKING (WIN
The testator and each witness must sign | nomination may be revoked by a subsequent
his name or initials against any alteration or nomination , but shall not be revocable or
interlineation that may be made in a will ; variable by the will of the nominator. The
but no alteration must be made after marriage of a member shall operate as a
execution . The alterations should also be revocation of any nomination made by him
referred to in the attestation clause. before such marriage.
The persons who are appointed by the It is recorded that the shortest, properly
testator to carry out the provisions of his executed, will known to have been proved
will are called the executors, and it is their was “ all to LM ," the name being that of
duty, after seven days from the testator's the testator's wife . Probably one of the
death, to obtain probate ofthe will ; that is, an longest, is a will in Somerset House said to
official copy of the will issued by the regis- contain, say, 45,000 words.
trar of the registry where the will is proved . WINDBILLS . WINDMILLS. Names
If any trusts are created by the will the sometimes given to accommodation bills
persons whom the testator names to carry ( q.v.). Another similar name is “ kites."
out the provisions of such trusts are called WINDING UP . Where a company, for
the trustees. A copy of a will may be seen, any reason , has to be brought to an end, it
on payment of a fee of one shilling, at the is accomplished by “ winding up,” and the
registry where it was proved ; and a copy company is said to be " in liquidation.” It
of any will maybeseenatSomersetHouse may be wound up because of itsinability,
on payment of a like fee. A copy of a will financially, to continue, or because of a
may be obtained on payment of a fee ano
reconst ruction, or of an amalgamation with
regulated by the length of the document. ther company.
The following is a form of a simple will A company may be wound up in three
where a husband leaves everything what ways. The Companies (Consolidation ) Act,
soever to his wife : 1908, Section 122 provides :
This is the last will and testament of me “ ( 1) The winding up of a company
John Brown of Carlisle in the County of may be either
00
Cumberland, Grocer, as follows, that is to (i) by the Court ; or
say, I devise and bequeath all my real and (ii) voluntary ; or
personal estate whatsoever and wheresoever " (iii) subject to the supervision
and of every description unto my wife Mary, of the Court.
her heirs, executors, administrators and “ (2) The provisions of this Act with
assigns absolutely for ever. I appoint my respect to winding up apply, unless
said wife Mary sole executrix hereof. I the contrary appears, to the winding
revoke all prior wills by me made. In up of a company in any of those
witness whereof I have hereunto set my modes."
hand this second day of July one thousand A banker must not pay any further
nine hundred and cheques on the company's account after
JOHN BROWN. notice of the commencement of a winding up .
Signed by the testator as Any credit balance on the account may be
and for his last will in the held by the banker as a set-off against the
presence of us who, at his re contingent liability on any bills discounted
quest in his presence and in the for the company. This right of set -off is
presence of each other have obtained by virtue of Section 31, Bankruptcy
hereunto set our names as Act, 1914. (See that Section under SET OFF.)
witnesses (See COMMITTEE OF INSPECTION , Com
JOHN JONES, English Street, Carlisle, Draper. PANIES, COURT - POWERS OF, LIQUIDATOR,
JAMES SMITH ,2, North Street, Carlisle , Clerk. OFFICIAL RECEIVER, RECEIVER, STANNARIES,
(See Executor.) WINDING UP BY THE COURT, WINDING UP
By the Industrial and Provident Societies SUBJECT TO SUPERVISION OF THE COURT,
(Amendment) Act, 1913, a member ofa regis- WINDING UP UNREGISTERED COMPANIES,
tered society may nominate any person to WINDING UP VOLUNTARILY.)
receive at his death such property in the The following are some of the supple
society as may be his at the time of his mental provisions with respect to winding
decease (whether in shares, loans, or deposits ). | up :
Such nomination shall be valid to theextent " 207. In the winding up of an insolvent
of one hundred pounds, but not further. A company registered in England or Ireland
674
WIN ) DICTIONARY OF BANKING
the same rules shall prevail and be observed
with regard to the respective rights of
secured and unsecured creditors and to
debts provable and to the valuation of annui
ties and future and contingent liabilities as
are in force for the time being under the law
of bankruptcy in England or Ireland , as the
case may be, with respect to the estates of
persons adjudged bankrupt ; and all persons
who in any such case would be entitled to
prove for and receive dividends out of the
assets of the company may come in under
the winding up, and make such claims
against the company as they respectively
are entitled to by virtue of this Section.
[See Section 210 under FRAUDULENT
PREFERENCE .]
Effect of Floating Charge.
" 212. Where a companyis being wound up .
a floating charge on the undertaking or
property of the company created within
three months of the commencement of the
winding up shall, unless it is proved that the
company immediately after the creation of
the charge was solvent , be invalid , except
to the amount of any cash paid to the com
pany at the time of or subsequently to the
creation of, and in consideration for, the
charge, together with interest on that
amount at the rate of five per cent. per
annum . (See DEBENTURE , FLOATING
CHARGE .)
General Scheme of Liquidation may be
Sanctioned .
“ 214. ( 1 ) The liquidator may, with the
sanction following (that is to say) -
“ (a) in the case of a winding up
by the Court in England
with the sanction either of
the Court or of the com
mittee of inspection ;
(6) in thecase of a winding up by
the Court in Scotland or
Ireland, and in the case of
any winding up subject to
supervision, with the sanc
tion of the Court ; and
“ (c) in the case of a voluntary
winding up, with the sanc
tion of an extraordinary
resolution of the company ,
do the following things or any of
them :
“( i) Pay any classes of creditors in
full ;
" (ii) Make any compromise or
675
(WIN
arrangement with creditors
or persons claiming to be
creditors, or having or al
leging themselves to have
any claim , present or future,
certain or contingent, ascer
tained or sounding only in
damages against the com
pany, or whereby the com
pany may be rendered liable ;
( iii) Compromise all calls and
liabilities to calls, debts, and
liabilities capable of result
ing in debts , and all claims,
present or future, certain or
contingent, ascertained or
sounding only in damages,
subsisting or supposed to
subsist between the com.
pany and a contributory ,
or alleged contributory, or
other debtor or person ap
prehending liability to the
company, and all questions
in any way relating to or
affecting the assets or the
winding up of the company,
on such terms as may be
agreed, and take any se
curity for the discharge of
any such call, debt, liability
or claim , and give a com
plete discharge in respect
thereof.
" (2) In the case of a winding up by the
Court in England the exercise by the
liquidator of the powers of this Sec
tion shall be subject to the control
of the Court, and any creditor or
contributory may apply to the
Court with respect to any exercise
or proposed exercise of any of those
powers.”
With respect to the disposal of the books
and papers of a company which has been
dissolved, Section 222, s.s. 2, enacts :
“ (2) After five years from the dissolution
of the company no responsibility
shall rest on the company, or the
liquidators, or any person to whom
the custody of the books and papers
has been committed , by reason of
the same not being forthcoming to
any person claiming to be interested
therein .”
If a liquidator has any moneys repre
senting unclaimed or undistributed assets
of the company which have remained in his
WIN ) DICTIONARY OF BANKING (WIN

hands for six months after the date of their
receipt, he shall pay the same to the Com
panies Liquidation Account at the Bank of
England . Any person claiming to be
entitled to any of such moneys may apply
to the Board of Trade for payment of the
same .
Companies Liquidation Account Defined .
“ 229. ( 1 ) An account, called the com
panies Liquidation Account, shall
be kept by the Board of Trade with
the Bank of England , and all moneys
received by the Board in respect of
proceedings under this Act in con
nection with the winding up of
companies in England shall be paid
to that account.
“ (2) All payments out of money standing
to the credit of the Board of Trade
in the Companies Liquidation Ac
count shall be made by the Bank of
England in the prescribed manner.
Investment of Surplus Funds on General
Account.
" . 230. ( 1 ) Whenever the cash balance
standing to the credit of the Com
panies Liquidation Account is in
excess of the amount which in the
opinion of the Board of Trade is
required for the time being to answer
demands in respect of companies'
estates, the Board shall notify the
excess to the Treasury, and shall pay
over the whole or any part of that
excess as the Treasury may require,
to the Treasury, to such account as
the Treasury may direct, and the
Treasury may invest the sums paid
over, or any part thereof, in Govern
ment securities, to be placed to the
credit of the said account.
(2) When any part of the money so in
vested is, in the opinion of the Board
of Trade, required to answer any
demands in respect of companies'
estates, the Board shall notify to the
Treasury the amount so required,
and the Treasury shall thereupon winding up by the Court is often called a
repay to the Board such sum as may compulsory liquidation.
be required to the credit of the
Companies Liquidation Account, and
for that purpose may direct the sale be taken in the County Court, unless the
of such part of the said securities
as may be necessary .
“ (3) The dividends oninvestments under Courts are not included, as they have no
this Section shall be paid to such jurisdiction in winding up! · Where the
676
account as the Treasury may direct .
and regard shall be had to the
amount thus derived in fixing the
fees payable in respect of proceedings
in the winding up of companies in
England.
Separate Accounts of Particular Estates.
“ 231. ( 1 ) An account shall be kept by the
Board of Trade of the receipts and
payments in the winding up of each
company in England, and, when the
cash balance standing to the credit
of the account of any company is in
excess of the amount which, in the
opinion of the committee of inspec
tion, is required for the time being
to answer demands in respect of that
company's estate, the Board shall,
on the request of the committee,
invest the amount not so required
in Government securities, to be
placed to the credit of the said
account for the benefit of the
company.
" (2) When any part of the money so in
vested is, in the opinion of the com
mittee of inspection, required to
answer any demands in respect of
the estate of the company , the Board
of Trade shall, on the request of the
committee, raise such sum as may
be required by the sale of such part
of the said securities as may be
necessary .
" (3) The dividends on investments under
this Section shall be paid to thecredit
of the company.
“ (4) When the balance at the credit of any
company's account in the hands of
the Board of Trade exceeds two
thousand pounds, and the liquidator
gives notice to the Board that the
excess is not required for the pur
poses of the liquidation , the com
pany shall be entitled to interest
on the excess at the rate of two per
cent. per annum ." (See COMPANIES.)
WINDING UP BY THE COURT. A
Where the paid -up capital does not exceed
£10,000 proceedings for a winding up may
Lord Chancellor has excluded it from having
jurisdiction . The Metropolitan County
WIN ) DICTIONARY OF BANKING [WIN

capital exceeds £ 10,000, proceedings must in favour of a creditor of the com

be taken in the High Court, or, if the regis pany is returned unsatisfied in
tered office of the company is situated within whole or in part ; or
the jurisdiction of the Chancery Courts of “ (iii) if, in Scotland, the induciae of a
the Counties Palatine of Lancaster and Dur charge for payment on an extract
ham, in the Palatine Court or Higu Court .
Section 129 of the Companies (Con decree, or an extract registered bond,
or an extract registered protest
solidation ) Act, 1908, details the circum
stances in which a company may be wound have expired without payment being
made ; or
up by the Court :
• 129. A company may be wound up by
40
“ (iv) if it is proved to the satisfaction of
the Court the Court that the company is
“ (i) if the company has by special resolu unable to pay its debts, and , in
tion resolved that the company be determining whether a company is
wound up by the Court : unable to pay its debts, the Court
shall take into account the contin
“ (ü) if default is made in filing the statu gent and prospective liabilities of
tory report or in holding the the company .
statutory meeting : On a winding up order being made, the
" (iii) if the company does not commence official receiver shall become the provisional
its business within a year from its liquidator. (Section 149, s.s. 3 (b).)
incorporation, or suspends its busi The liquidator shall take under his control
ness for a whole year : all the property and things in action to
" (iv) if the number of members is reduced , which the company is entitled. (Section
in the case of a private company, 150, s.s. 1. ) (See COMPANIES, LIQUIDATOR,
below two, or, in the case of any OFFICIAL RECEIVER , WINDING UP. )
other company, below seven : WINDING UP SUBJECT TO SUPER
“ (v) if the company is unable to pay its VISION OF THE COURT. In the case of a
debts : voluntary liquidation the Court may make
" ( vi) if the Court is of opinion that it is an order that it shall continue but subject
the supervision of the Court.
just and equitable that the company to The
should be wound up . Companies (Consolidation) Act, 1908 ,
An application to the Court for a winding provides :
up may be made by the company, or by any “ Section 199. When a company has by
creditor, or by any contributory. (Section special or extraordinary resolution resolved
137, s.s. 1.) to wind up voluntarily,the Court may make
an order that the voluntary winding up shall
Company when Deemed Unable to Pay its continue but subject to such supervision
Debts .
of the Court, and with such liberty for
" 130. A company shall be deemed to be creditors, contributories, or others to
unable to pay its debts apply to the Court, and generally on such
“ (i) if a creditor, by assignment or other terms and conditions as the Court thinks
(

wise, to whom the company is just.

indebted in a sum exceeding fifty “ 201. The Court may, in deciding between
pounds then due, has served on the a winding up by the Court and a winding
company, by leaving the same at its up subject to supervision, in the appoint
registered office, a demand under ment of liquidators, and in all other matters
his hand requiring the company to relating to the winding up subject to super
pay the sum so due, and the com vision, have regard to the wishes of the
pany has for three weeks there- creditors or contributories as proved to it by
after neglected to pay the sum, or any sufficient evidence.” (See COMPANIES .)
to secure or compound for it to WINDING UP UNREGISTERED COM
the reasonable satisfaction of the PANIES. The Companies (Consolidation)
creditor ; or Act, 1908, makes provisions regarding the
" ( ii) if, in England or Ireland, execution winding up of unregistered companies. do
The
or other process issued on a judg- expression unregistered company es
ment decree or order of any Court not include a company registered under the
677
43A- (1535)
WIN ) DICTIONARY OF BANKING (WIN

Joint Stock Companies Acts, or the Com occurs, on the occurrence of which
panies Act, 1862, or the Companies (Con. the articles provide that the
solidation) Act, but includes any partner company is to be dissolved , and
ship , association, or company consisting of the company in general meeting
more than seven members, and any trustee has passed a resolution requiring
savings bank certified under the Trustee the company to be wound up
Savings Bank Act, 1863, and any limited voluntarily :
partnership. “ (2) If the company resolves by special
All the provisions of the Companies (Con resolution that the company be
solidation ) Act, 1908, with respect to winding wound up voluntarily :
up shall apply to an unregistered company, “ (3) If the company resolves by extra
with the following exceptions and additions: ordinary resolution to the effect that
( 1 ) An unregistered company shall, for it cannot by reason of its liabilities
the purpose of determining the Court having continue its business, and that it is
jurisdiction in the matter of winding up, advisable to wind up.
be deemed to be registered where its 183. A voluntary winding up shall be
principal place of business is situate. deemed to commence at the time of the
(2) No unregistered company shall be passing of the resolution authorising the
wound up under this Act voluntarily or winding up .
subject to supervision. " 184. When a company is wound up
(3) The circumstances in which an un- voluntarily the company shall, from the
registered company may be wound up are as commencement of the winding up, cease to
follows (that is to say) : carry on its business, except so far as may
(a) If the company is dissolved , or has be required for the beneficial winding up
to on or :
carrying on business onlyforthe theprovided that the corporate state and
purpose of winding up its affairs ; corporate powers of the company shall, not.
(6) If the company is unable to pay its withstanding anything to the contrary in
debts ; its articles, continue until it is dissolved .
( c) If the Court is of opinion that it is “ 185. When a company has resolved by
just and equitable that the company special or extraordinary resolution to wind
should be wound up. up voluntarily, it shall give notice of the
Section 268, s.s. 6, provides that :- resolution by advertisement in the Gazette.
“ A petition for winding up a trustee (See RESOLUTIONS.)
savings bank may be presented by the
National Debt Commissioners, or by a Consequences of Voluntary Winding Up .
commissioner appointed under the Trustee “ 186. The following consequences shall
Savings Banks Act, 1887, as well as by any ensue on the voluntary winding up of a
person authorised under the other pro- company :
visions of this Act to present a petition for (0

winding up a company. ” (See COMPANIES.)
WINDING UP VOLUNTARILY. A volun
tary winding up, or liquidation , is one which
is brought about by the resolution of the
company
company itself. Where a solvent
desires to reconstruct, or to amalgamate
with another company, it may decide to
wind up and appoint a liquidator to carry
such resolution into effect ; but a volun
tary liquidation is not confined merely to
companies which are solvent.
The Companies (Consolidation ) Act, 1908,
provides :
“ 182. A company may be wound up
voluntarily
" ( 1 ) When the period (if any) fixed for the
duration of the company by the
articles expires, or the event (if any)
“ (i) The property of the company shall be
applied in satisfaction ofits liabilities
pari passu, and , subject thereto ,
shall, unless the articles otherwise
provide, be distributed among the
members according to their rights
and interests in the company :
" (ii) The company in general meeting shall
appoint one or more liquidators for
the purpose of winding up the
affairs and distributing the assets of
the company, and may fix the remu
neration to be paid to him or them :
"( iii) On the appointment of a liquidator
all the powers of the directors shall
cease, except so far as the company
in general meeting, or the liquidator,
sanctions the continuance thereof :
67
WIN ) DICTIONARY OF BANKING (WIT

“ (iv) The liquidator may, without the of the winding up before a general meeting
sanction of the Court, exercise all of the company. Within one week after the
powers 'by this Act given to the meeting the liquidator shall make a return
liquidator in a winding up by the to the registrar of companies of the holding
Court : of the meeting, and on the expiration of
“ (v) The liquidator may exercise the three months from the registration of the
powers of the Court under this Act return the company shall be deemed to be
of settling a list of contributories, dissolved, unless otherwise determined by
and of making calls, and shall pay the Court. (Section 195.)
the debts of the company, and ad
just the rights of the contributories Saving for Rights of Creditors and Contri
among themselves : butories.
“ (vi) The list of contributories shall be “ 197. The voluntary winding up of a com
primâ facie evidence of the liability pany shall not bar the right of any creditor
of the persons named therein to be or contributory to have it wound ap by the
contributories : Court, if the Court is of opinion, in the case
“ (vii) When several liquidators are ap- of an application by a creditor, that the
pointed, every power hereby given rights of the creditor or, in the case of an
may be exercised by such one or application by a contributory, that the
more of them as may be determined rights of the contributories will be pre
at the time of their appointment, judiced by a voluntary winding up . " (See
or in default of such determination COMPANIES, WINDING UP.)
by any number not less than WINDOW DRESSING. When a bank or
two : a company arranges matters so as to make
“ (viii) If from any cause whatever there a good show in its annual balance sheet it is
called window dressing.”. For example, a
is no liquidator acting, the Court
may, on the application of a con bank may effect its “ window dressing ” by
turning certain of its assets into cash in
tributory, appoint a liquidator : order to increase the ratio of cash to its
" (ix ) The Court may, on cause shown, liabilities to depositors and others, as on
remove a liquidator, and appoint the
))
date to which the balance sheet is made
another liquidator." up. The publication of monthly statements,
" 191. ( 1 ) Any arrangement entered into based on the average weekly position,
between a company about to be, or removes the temptation to make a special
in the course of being, wound up show of strength on a particular date.
voluntarily, and its creditors, shall, “ WIRE FATE." (See “ Advise FATE ." )
subject to any right of appeal under WITHOUT DAYS OF GRACE . ( See
this Section , be binding on the DAYS OF GRACE . )
company if sanctioned by an ex WITHOUT PREJUDICE. Where an offer
traordinary resolution, and on the is made “ without prejudice ” by one of the
creditors if acceded to by three parties in a dispute, it means that if the
fourths in number and value of the offer is not accepted no advantage can be
creditors. taken of it by either side. The phrase occurs
00

(2) Any creditor or contributory may, most frequently in the communications

within three weeks from the com-
pletion of the arrangement, appeal | when efforts are being made to settle differ
to the court against it, and the
court may thereupon, as it thinks
just, amend, vary, or confirm the
.
arrangement.”
The creditors have the right to apply to
the Court for the appointment of a liquidator
in the place of, or jointly with, the liquidator
appointed by the company, or for the ap-
pointment of a committee of inspection .
(Section 188. )
As soon as the company's affairs are fully
wound up, the liquidator shall lay an account
679
which passbetween the solicitors of litigants,
ences without going into court. No letter
that is written and headed or stated to be
“ without prejudice," can be used at any
time so as to prejudice either party , and the
same rule applies to the reply sent to a
letter so marked.
WITHOUT RECOURSE . If the drawer,
or an indorser, of a bill adds these words
(or the equivalent “ Sans recours " ) toOwn
his
signature, he thereby cancels his
liability to any subsequent holder, in the
event of non -payment of the bill. But an
WIT ] DICTIONARY OF BANKING [YOR

indorser who has adopted the words “ with- YEARLY TENANCY . A tenancy from
out recourse does not clear himself from year to year and which , by a six months'
liability if any signature prior to his own prior notice to quit from the landlord or
should prove to be a forgery. the tenant, terminates at the end of the first
The Bills of Exchange Act, 1882,provides year or end of any succeeding year. For
that the drawer of a bill, and any indorser, example, if the tenancy commenced on
may insert therein an express stipulation, July 1 , the six months'notice must be given
( 1 ) negativing or limiting his own liability so that the tenancy may terminate on a Julyl.
to the holder, (2) waiving as regards himself YEARS' PURCHASE . The value of pro
some or all of the holder's duties. (Section perty is frequently indicated as being equal
16.) (See DRAWER, INDORSER.) to the rent for a certain number of years.
WITNESS. (See ATTESTATION .) For example, a house with a rental of £50
WORKING ACCOUNT. An operative at 20 years' purchase = £ 1,000. If £ 1,000
current account . is paid for the house, the investment (with
WRIT . By the Stamp Act, 1891 , the a rental of £50) thus yields 5 per cent. The
stamp duty is : percentage is ascertained by dividing one
WRIT hundred by the number of years ' purchase
( 1 ) Of Acknowledgment which is given. (See VALUATION.)
under the Registration of YEN .. ( See Foreign MONEYS- JAPAN .)
Leases (Scotland) Act, YORK -ANTWERP RULES. (See GENERAL
1857 .
AVERAGE . )
(2) Of Acknowledgment YORK PREFERRED . A Stock Exchange
by any person infeft s. d. name for Great Northern Railway preferred
in lands in Scotland in 0 5 0 ordinary stock. (See Nora .)
favour of the heir or dis YORKS. A Stock Exchange name for
ponee of a creditor fully Great Northern Railway ordinary stock .
vested in right of an YORKSHIRE REGISTRY OF DEEDS.
heritable security consti There are three places in Yorkshire for the
tuted by infeftment . registration of deeds and memorials :
(3) Of Resignation and Northallerton for the North Riding
Clare Constat . (established 1734 ) .
WRIT OF DISTRINGAS. (See Dis- Beverley for the East Riding (established
TRINGAS . ) 1707) . The East Riding includes Kingston
WRIT OF ELEGIT. (Elegit, Latin, he upon- Hull.
has chosen — so called because the plaintiff Wakefield for the West Riding ( estab
has the choice of this writ in preference to lished 1703) .
other writs.) A writ issued by the Court There is no registration for the City of
directing the sheriff to take possession of a York.
judgment debtor's lands, and to receive When deeds of land, registrable under the
the rents until the debt is satisfied . (See Yorkshire Registries Act, are received, the
WRIT OF FIERI FACIAS . ) banker should look to see that they bear the
WRIT OF EXTENT. Where moneys are registrar's memorandum . When a deed is
paid into the account of a customer, which registered, a note is placed upon it by the
moneys the banker knows to belong to the registrar as follows : (6
Crown, a writ of extent may be issued by the or “ A
‘ A copy of this Indenture ”
Crown for the recovery of those moneys. memorial was registered at the Riding
WRIT OF FIERI FACIAS. Commonly Registry of Deeds at the sixteenth
called a writ of fi. fa . of August, 19 , at 10.0 in the forenoon in
A writ issued by the Court directing the volun page number
sheriff to take possession of a judgment 00
Registrar. "
debtor's goods, in order to satisfy a debt. Where land is registered under the Land
The sheriff is empowered to seize, in addition Transfer Acts (see LAND REGISTRY ), it
to " goods,” money, bank notes, cheques, supersedes the registration of the deeds under
bills, promissory notes, and other securities the Yorkshire Registries Act.
for money belonging to the debtor. ( See A banker's mortgage or memoranuum of
WRIT OF ELEGIT . ) deposit may be registered .
WRONGFUL CONVERSION . (See Registration does not add any fresh docu
CONVERSION .) ment to the title or affect the title , but with
680
YOR ] DICTIONARY OF BANKING ( YOR

regard to priorities (see sections below ), it registration, be fraudulent and void in

is of great importance to bankers, for, like manner."
although a banker may hold the title deeds, If, for example, Brown has a first charge
if his charge is not registered it may be post- upon a property, and Jones has a second
poned to a second charge which is registered . charge, and Jones, although quite aware
By Section 7 of the Yorkshire Registries that Brown has a first charge unregistered,
Act, 1884, it is seen that a mere deposit of registers his second charge, Jones thereby
deeds, without a memorandum of deposit, secures priority, except in case of actual
may be registered : fraud. (In the Middlesex Deeds Registry
Where any lien or charge on any lands it is different, as priority cannot be obtained
within any of the three Ridings is claimed by anyone registering who is aware of the
in respect of any unpaid purchase money, existence of a prior unregistered charge.)
or by reason of any deposit of title deeds, By Section 16 tacking is abolished in
a memorandum of such lien or charge, signed connection with land in Yorkshire :
by the person against whom such lien or " In any case in which priority or protection
charge is claimed, may be registered by any might but for this Act have been given or
person claiming to be interested therein .” allowed to any estate or interest in lands
Charges rank according to the date of by reason or on the ground of such estate or
registration. Section 14 (as amended by Sec- interest being protected by or tacked to any
tion 4 of the Amending Act, 1885) provides legal or other estate or interest in such lands,
as follows : no such priority or protection shall after the
“ Subject to the provisions of this Act,all commencement of this Act be so given or
assurances entitled to be registered under allowed to any estate or interest in lands
this Act shall have priority according to the within the three Ridings, except as against
date of registration thereof, and not according any estate or interest which shall have
to the date of such assurances or of the execu- existed prior to such commencement, and
tion thereof, and every will entitled to be full effect shall be given in every Court to
registered under this Act shall have priority this present provision, although the party
according to the date of the death of the claiming such priority or protection as afore
testator if the date of registration thereof said shall claim as a purchaser for valuable
be within , or under this Act to be deemed consideration without notice.”
to be within , a period of six months after Where a banker receives deeds of property
the death of the testator, or according to in Yorkshire he can ascertain from a search
the date of registration thereof, if such date of the Register whether there are any
of registration be not within , or under this charges upon the property. If a charge
Act to be deemed to be within, such period exists but has not been registered, it will
of six months : provided that nothing in not affect the banker's charge which is
this Act shall interfere with the priorities registered.
as between themselves of any assurances or As a rule it is sufficient if the Register is
wills the dates of registration of which may searched since the person bought it who
be identical. conveyed to the present owner, or since the
All priorities given by this Act shall have last mortgage. When a banker takes the
full effect in all Courts, except in cases of deeds he is usually satisfied if the Register
actual fraud, and all persons claiming there- reveals no other charge at the date when he
under any legal or equitable interests shall takes the security, and if he retains the deeds
be entitled to corresponding priorities, and it is not likely, in an ordinary case, that a
no such person shall lose any such priority charge will subsequently be registered while
merely in consequence of his having been they are in his possession.
affected with actual or constructive notice, From the foregoing it is seen how necessary
except in cases of actual fraud ; but nothing it is that a banker's mortgage , or memo
in this Section contained shall operate to randum of deposit, should be registered
confer upon any person claiming without whenever the security is to be relied upon .
valuable consideration under any person In theory the Register should be searched by
any further priority or protection than would a bankerbefore making each further advance,
belong to a person under whom he claims : in case another charge has been registered in
and any disposition of land, or charge the meantime, but in practice this is im
on land, which if unregistered would be possible . This difficulty would be avoided
fraudulent and void, shall, notwithstanding if, instead of granting a limit of overdraft
681
YOR ] DICTIONARY OF BANKING [YOR

on a working current account, the full Where any map or plan is indorsed upon
advance required were taken at once on a any instrument to be registered, an exact
separate loan account. copy shall be drawn upon the copy or
By Section 3 of the Yorkshire Registries memorial, or upon linen cloth and attached
Amendment Act of 1885 : thereto .
“ Subject to any rules made under the Where any instrument is required to be
principal Act, a caveat may at any time be enrolled in the Register at full length, a true
given with respect to any lands within any copy of such instrument shall be presented
of the three Ridings by any person claiming for the purpose of being actually enrolled
to be entitled to any interest in such lands in and bound up in the Register, and (except
favour of any person named therein , and where such instrument is a caveat or affi
may be registered under the principal Act ; davit), there shall be prefixed to such copy
and every caveat so registered shall, unless a statement,to be enrolled therewith, setting
removed or cancelled in accordance with forth the following particulars :
any rules to be made for that purpose under (a) The name and description of the
the principal Act, remain in force for such residence and occupation of the
time as may be specified therein in that
.
person on whose behalf the instru
behalf. " ment is to be registered.
The Registries Act does not include copy- (6) The date of the instrument.
hold property, nor any lease not exceeding (c) ( 1 ) In the case of a deed , the names
twenty -one years where possession goes with of the parties .
the lease , nor any lands belonging to the (2) In the case of a will, the name of
Crown. Leaseholds for a less term than . the
twenty - one years without actual possession , ( d) (1) In thecase ofan instrument other
are registrable. A deed of enfranchisement than a will the names of all the
requires registration, parishes wherein any lands known
Letters of administration and wills, to be affected by such instrument
which include freeholds or registrable lease are situate, in such manner as the
holds, should be registered . same are expressed or mentioned
Where a company issues a series of in such instrument or to the same
debentures containing a direct charge (there effect .
being no covering trust deed) each debenture (2) In the case of a will the names of
should be registered ; but where there is a all the parishes wherein any lands
deed conveying land to trustees to secure known to be affected by such will
an issue of debentures, it is sufficient if are situate, so far and in such
the trust deed be registered . All charges on manner as the same are expressed
land in Yorkshire by Companies are regis. or mentioned in such will or to
trable, and all charges must be registered the same effect.
with the Registrar of Companies. (See And such statement shall be signed by the
REGISTRATION OF MORTGAGES AND CHARGES .) person on whose behalf such instrument is
A judgment does not form a charge upon to be registered.
land until it has been registered. Where an official search for any instru
Under the rules of the Registry any person ment registered or enrolled is required, the
may search the Register and may take registrar gives a certificate of the result of
copies or extracts (with lead pencil) there- the search signed by him and sealed with
from upon payment of the prescribed fees. theRegistry seal.
Where any instrument is required to be Where a mortgage or charge affecting
enrolled , a corporation may act by any of its lands within the Riding has been registered
officers authorised in that behalf under the and is afterwards satisfied , any person
seal of the corporation , and a firm may act entitled to any interest in such lands may
by any of its members. present an affidavit of discharge with refer
All documents for enrolment must be ence thereto, for enrolment in the Register.
written or printed upon strong, wide -ruled Such affidavit of discharge shall be in the
demy paper of a size of 16 inches in length prescribed form . It must be made by the
by 10 inches in breadth, or thereabouts, debtor or some person claiming under him
with an inner margin about 2 inches wide, an interest in the property affected and the
and an outer margin about three -quarters of consent must be given by the creditor or
an inch wide . some person claiming under him . Every
682
YOR ) DICTIONARY OF BANKING ( YOR
FORM No. 7 .
FORM OF MEMORIAL OF DEED .

1. To be left blank Volume 1 No.

for filling in at the office .
Page
WEST RIDING OF YORKSHIRE,
REGISTRY OF DEEDS.

3. Describe the kind Memorial of a

of deed . It will be
sufficient to describe an
indenture as an indent
ure , but a fuller descrip
tion may be given if
desired ;as,for instance, for registration
Indenture of Lease .

3. Fill in the date of Date :

the deed .

4. Fill in the name

and description of the
Parties of of first part,
residence and occupa
tion of all the parties of of second part,
to the deed so far as and etc., etc.
set out therein , begin . of
ning a new line with
the name of each party .

5. Fillin a description Description of Lands :

of all the lands affected
5

by the deed within the

Riding, and the names
of all the townships, etc. ,
wherein the same are
situate in such manner
as the same are expressed
or mentioned in such
deed or to the same
effect.

6. Fill in the names

and description of the Witnesses of witness
residences and occupa
tions of all the witnesses to the execution by
to the execution of the
deed so far as appears of
therein , beginning a new witness
line with the name of
each witness . to the execution by etc.

7. Here the memorial

must be signed and sealed (Signed ) ?7
by somne or one of the
parties to the deed , or
some or one of their or
his heirs, executors, ad
ministrators, guardians,
or trustees . And it a
description of the resi
dence and occupation of
the person executing the
memorial does not other .
wise appear therein such
a description must be
added after his signa
ture .

8. Here the memorial Witness $

must be attested by one
or more witnesses one o!
whom at least shali bave
been a witness to the
executioa of the deed.
683
YOR ) DICTIONARY OF BANKING (ZER

signature must be verified by the oath of If certified, an addi

some credible witness Where such mort . tional fee per folio
gage or charge was originally created by of Twopence .
deed or writing, the original shall be pro- Map or Plan . From Two shillings
duced to the registrar with an entry thereon to Two guineas,
showing that it is cancelled . Copy : according to labour
When an advance has been repaid and the involved .
security is no longer required, the banker's If certified , an addi
mortgage (even if not registered ) should , tional fee of . . Two shillings.
with the reconveyance, remain with the Search, Ordinary.
deeds of the property as part of the chain In any one name, for
of title. (See MORTGAGE, RECONVEYANCE.) any period not ex
The cost of registration must be prepaid . ceeding ten years . One shilling.
The memorial must be impressed with a For every additional
2s. 6d. stamp before being sent to the period of five years Sixpence.
Registry . (See MEMORIAL.) Search , Official (includ
Where the memorial is for registration ing Certificate of
by copy of a deed or document, the memorial result).
is exempt from stamp duty . The Registrar In any one name, for
must be satisfied that the deed submitted Seven shillings
any period not ex and sixpence.
for registration is duly stamped , and this ceeding ten years
extends to the increment value duty stamp For every additional Two shillings and
where applicable . period of five years sixpence.
On the previous page is shown a specimen Typewritten Memorials may be received
form of Memorial of Deed.
at the Registry under the following con
SCHEDULE – Fees. ditions :
N.B. - A Folio contains 72 words. The Memorials must be typed with a pure
Registration or Enrol black carbon record ink from ribbons
ment of any Docu or pads which are not exhausted , but
ment ( including give a distinct black impression and
indorsement of any contain no aniline dye ;
Certificate required The machine used in typing the Memo
by Section 9 of the rials must not be defective, particularly
Act) except a Caveat Five shillings. with regard to its alignment ;
Registration or Enrol The spacing of the linesmust be of suffi
ment of any Caveat . Two shillings. cient width to render the Memorial
Copy or Extract. clearly legible.
To satisfy the last condition the lines
Where Copy or Ex should be at least three - eighths of an inch
tract does not ex
ceed two folios One shilling . apart.
For each additional
folio Fourpence . ZERO. (See Below ZERO.)

Prinsed by Sir Isaac Pitman & Sons, Ltd., Bash, England

W ( 1535)
C ' ☺
31601.14 1921
THOMSON , WILLIAM .
DICTIONARY OF BANKING .

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