DICTIONARY OF
BANKING
A CONCISE ENCYCLOPEDIA OF
BANKING LAW AND PRACTICE
BY
WILLIAM THOMSON
BANK INSPECTOR
LONDON
THE WAVERLEY BOOK COMPANY, LIMITED
7 cV 8 OLD BAILEY, E.C.
H6
PREFACE
upon those knotty financial points which must inevitably occur in the course
of their work.
One other class must be noticed to which a work dealing with British
Banking must be especially helpful, namely, foreign merchants who have
large dealings with the United Kingdom. London has been for so long a
period the centre of the financial world, that a knowledge of British Banking
is essential, not only in Great Britain, but in every other commercial country.
It is for the benefit of these various classes, amongst others, that the present
Dictionary of Banking has been compiled, its main object being to provide, in a
single volume, the means of obtaining full information, with the minimum
of trouble, upon any subject connected with the business of Banking.
i
Up to the present time it has been a matter of continued difficulty with
all those seeking information upon banking matters toknow exactly where
to turn to obtain enlightenment upon certain subjects. It is claimed, with
confidence, that the present volume will put an end to that difficulty, and that
it will enable anyone to find in its pages a ready and reliable reference
PREFACE
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, memoran-
dum of deposit, promissory note, etc. A series of articles is supplied dealing
with the position upon Death of Acceptor, Administrator,
.1. death, e.g.,
Association at Budapest in 1908 and at London in 1910 are set forth for the
consideration of those who are interested.
The law cases have been given, wherever necessary, and in many
results of
instances the exact words of the judges are quoted. References are added to
the various cases, and the abbreviations used in the quotation of the reports
are explained on page vii. To facilitate reference being made to law reports,
other than those that are quoted in the text, the date of the decision has been
VI
ABBREVIATIONS USED IN THIS BOOK WHEN
REFERRING TO LAW CASES
VII
.
Dictionary of Banking
ABBREVIATIONS] [ABBREVIATIONS
i— (1535)
DICTIONARY OF BANKING [ABB
ABB]
P/A., Power of Attorney.
Inv., Invoice.
Irredeemable. P. A. (Lat., Per annum), Yearly.
Irr..
P.B., Pass Book.
J/A., Joint Account. P/C, Price Current.
Jour., Journal. P.C. (Lat., Per centum), By the Hundred.
Jr., Junr., Junior. P. & and Loss.
L., Profit
P/N, Pro. Note., Promissory Note.
L/A., Letter of Authority. P.O., Postal Order.
L.C.,London Cheque. P.O.O., Post Office Order.
L/C, Letter of Credit. P.P., Per Procuration.
£&., Pounds, Egyptian. P.S. (Lat., Post scriptum), Postscript.
L.O., London Office. Payt., Payment.
L/P., Life Policy. Per an. (Lat., Per annum), Y'early.
L.S. (Lat., Locks sigilli), Place of the Seal. Per ct. (Lat.. Per centum), By the Hundred.
L.s.d. (Lat. Librae, solidi, denarii), Pounds,
,
T.O., Tel Quel {q.v.). Commencing with the " root," the
T.T., Telegraphic Transfer. abstract should give in strict order of
Tfr., Transfer. date a brief summary of the material
parts of all deeds and documents which are
U.V., Uncollected Vouchers. necessary to show how the purchaser's title
Ult. (Lat., Ultimo), Of the Last .Month. is obtained. It should show by whom the
commencement. The commencing deed" is to the drawer's order he signifies his assent
called the "root of title" {q.v.). It may, by accepting the bill. When the drawee
however, be agreed between the vendor and 1 has accepted a hill he is called the
the purchaser to accept a shorter title than acceptor.
fortv years, and twenty years are often taken \n acceptance is denned by Section 17 of
as sufficient. the Bills of Exchange Act, 1882, as follows :
— — ' —
" (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."
to the order of the drawer. If the bill is payable at so many davs after
" (2) An acceptance is invalid unless it sight, the drawee must add the date of sight-
complies with the following con- ing to his acceptance. (See Sighting a
ditions, namely : Bill.)
" (a) It must be written
on the bill If there are several drawees named on a
and be signed by the drawee. bill, each one of them must sign the accept-
The mere signature of the ance, but an order addressed to two drawees
drawee without additional in the alternative, or to two or more drawees
words is sufficient. in succession, is not a bill of exchange. (See
" (6) It must not express that the Drawee.)
drawee will perform his Section 1 7 states that the acceptance must
promise by any other means be signed by the drawee, but anyone who
than the payment of money.
'
holds a proper authority from the drawee
As a rule a drawee accepts a bill after it to accept bills may accept on his behalf.
has been fully completed and signed by the "Where the drawee is a firm, the partner
drawer but by Section 18, "A bill may
;
who accepts must do so in the name of the
be accepted : firm. If the drawee is Mrs. John Brown,
" (1) Before it has been signed by the she should accept as " Mary Brown, wife
drawer, or while otherwise incom- (or widow) of John Brown." Where the
plete : drawee is a limited company, the acceptance
" (2) When it is overdue, or after it has should, to be correct, contain the name of the
been dishonoured by a previous company as well as the signatures of' the
refusal to accept, or by non- authorised officials.
payment : With regard to the rules as to presentment
" (3) When
a bill payable after sight is of a bill for acceptance, see Presentment
dishonoured by non-acceptance, and for Acceptance.
the drawee subsequently accepts When a duly presented for accept-
bill is
it, the holder, in the absence of ance and isnot accepted within the cus-
any different agreement, is entitled tomary time, the person presenting it must
to have the bill accepted as of the treat it as dishonoured by non-acceptance.
date of first presentment to the (See Dishonour of Bill of Exchange.)
drawee for acceptance." Until a drawee has accepted the bill he is
There are two kinds of acceptances : not liable thereon, but in Scotland where the
(1) General acceptance. (See Accept- drawee has funds available for its payment,
ance, General.) the bill operates as an assignment of the
(2) Qualified acceptance. (See Accept- amount of the bill in favour of the holder
ance, Qualified.) from the time when the bill is presented to
" A general acceptance assents without the drawee. (See Drawee.)
qualification to the order of the drawer. A An acceptor is at liberty to cancel his
qualified acceptance in express terms varies acceptance provided that the bill is still in
the effect of the bill as drawn." (Section 19, his own hands, and that he has not led any
s.s. 2.) one to believe that he would accept it.
An acceptance is usually upon the face of The liability of an acceptor is defined by
the but the drawee's signature placed
bill, Section 54 :
upon the back of it is regarded as sufficient. " The acceptor of a bill, by accepting it
In such a case it is usual to make a reference " Engages that he will pay it according
( 1 )
on the front of the bill to the fact that the to the tenor of his acceptance :
acceptance is on the back. A drawee may " (2) Is precluded from denying to a holder
accept a bill by merely writing his name in due course :
across it, without any further words, but it " (a) The existence of the drawer,
is customary for the word " accepted " to be the genuineness of his signa-
used. When the bill isdomiciled, .the name ture, and his capacity and
of the bank where pa3'able follows the
it is authority to draw the bill ;
word " accepted," and then the acceptor " (6) In the case of a bill payable
signs his name. The commonest form to drawer's order, the then
of acceptance (a general acceptance) is :
capacity of the drawer to
ACC] DICTIONARY OF HAN KIM, [ACC
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
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 Manvcountrj' 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 three days
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 it has 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 pav 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
pavee's or an indorser's, which do not, in the custom. In Bank of England v. Vagliano
ordinarv 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
who has not signed it as such Provided : is the result of some special agreement,
that (1) where a person signs a bill in a trade expressed or implied." When a banker
or assumed name, he is liable thereon as if receives an order to retire a bill, he has to
he had signed it in his own name ; (2) the consider whether or not the account of his
signature of the name of a firm is equivalent customer will admit of the payment of the
to the signature by the person so signing of bill. If unable to accede to his customer's
the names of all persons liable as partners request he informs his customer accordingly,
in that firm (Section 23). In the case of a but if all is well he charges the amount of
non-trading partnership, an acceptance by the bill to his customer's account and credits
a partner binds himself alone and not the it to his London agents (or London office
although no drawer'-, name i> mentioned in British Bank. Ltd., and n<> town is men-
the bill, it raav be debited to his account. tioned, it should be presented at the British
—
Bank in the town where the drawee is An acceptance for honour is written across
the bill as, " Accepted for the
honour of
described as living.
In Scotland, acceptors usually sign their John Brown, Thomas Jones," or, " Accepted
names under the drawer's signature, but supra protest, Thomas Jones," or " Accepted
when they accept the bill payable at their for the honour of John Brown with £ for
bankers, the acceptance is generally across notarial charges, Thomas Jones," or, " Ac-
the bill. (See Bill of Exchange.) cepted S.P. (i.e. supra protest), Thomas
ACCEPTANCE FOR HONOUR. The Jones."
drawer of a bill and any indorser may insert The liability of an acceptor for honouris
in the bill the name of a^ person to whom a dealt with in Section 66 as follows : —
holder may resort in case of need, that is in " (1) The acceptor for honour of a bill by
case the bill is dishonoured by non-accept- accepting it engages that he will,
ance or non-payment such a person is called
; on due presentment, pay the bill
the referee in case of need. If the drawee according to the tenor of his accept-
refuses to accept the bill, the holder may, ance, if it is not paid by the drawee,
after the bill is protested for non-acceptance, providedit has been duly presented
present it to the referee in case of need. for payment, and protested for
When the referee accepts it, he becomes an non-payment, and that he receives
acceptor for honour. notice of these facts.
After protest for non-acceptance, any " (2) The acceptor for honour is liable to
person may, with the consent of the holder, the holder and to all parties to the
accept a bill supra protest for the honour of bill subsequent to the party for
any party thereon. Section 65 of the whose honour he has accepted."
Bills of Exchange Act, 1882, provides as (See Acceptance, Bill of Ex-
follows : change.)
" (1) Where a bill of exchange has been ACCEPTANCE, GENERAL. When a
protested for dishonour by non- drawee writes his name across a bill agreeing
acceptance, or protested for better to the order of the drawer, it is called an
security, and is not overdue, any acceptance of the bill. The Bills of Ex-
person, not being a party already change Act, 1882, Section 19, defines two
liable thereon, may, with the kinds of acceptances :
"
consent of the holder, intervene (1) An acceptance is either (a) general
and accept the bill supra protest, or (b) qualified. (See Acceptance,
for the honour of any party liable Qualified.)
thereon, or for the honour of the " (2) A general acceptance assents with-
person for whose account the bill is out qualification to the order of the
drawn. drawer.
" (2) A bill may be accepted for honour "(c) An acceptance to pay
. . .
bank on his behalf. " (1) The holder of a bill may refuse to
ACCEPTANCE OF CHEQUES. (See take a qualified acceptance, and if
Certification of Cheques.) he does not obtain an unqualified
ACCEPTANCE, QUALIFIED. An accept- acceptance may treat the bill as
ance iseither general (see Acceptance. dishonoured by non-acceptance.
General) or qualified. Section 19 of the " (2) Where a qualified acceptance is
Bills of Exchange Act, 18S2, defines a taken, and the drawer or an indorser
qualified acceptance as follows : — has not expressly or impliedly
" (2) . A qualified acceptance in ex-
. .
authorised the holder to take a
press terms varies the effect of the qualified acceptance, or does not
bill as drawn. subsequently assent thereto, such
"In particular an acceptance is drawer or indorser is discharged
qualified which is — from his liability on the bill.
" (a) conditional, that is to say, " The provisions of this sub-
particular place is a general accept- which are kept full particulars of all bills
ance, unless it expressly states that accepted by the bank for customers.
the bill is to be paid there only and ACCEPTILATION. A formal discharge or
not elsewhere : release from a debt.
" (d) Qualified as to time : ACCEPTOR. When the drawee of a bill
" (e) The acceptance of some one (that is. the person to whom the bill is ad-
or more of the drawees, but dressed) agrees to the order of the drawer,
not of all." he shows his assent by signing his name
The following are specimens of qualified across the bill, that is he accepts it, and when
acceptances : that is done he is called the acceptor. The
Conditional. " Accepted, payable on de- acceptor is the person who is expected to
livery of bills of lading. J. Brown." pay the bill at maturity.
Partial. Bill drawn for /100. " Accepted In applying the provisions of Part IV of
for £50 only. J. Brown."
the Bills of Exchange Act. 1882, dealing with
Local. " Accepted, payable at the & X Promissory Notes, the maker of a note is to
Y Bank, Ltd., Leeds, and there only. be deemed to correspond with the acceptor
Brown." In order to charge tie of a bill. If there are several acceptors of a
J.
acceptor and other parties, the bill bill they can only be liable jointly, but in the
must be presented for payment at the )
case of a promissory note the makers may
place named. be liable jointly, or jointly and severally,
As to time. Bill drawn at three months' I according to the wording of the note.
date. " Accepted, payable at six An acceptor is not discharged through an
months' date. J. Brown." failure of a holder to present the bill to him
Not accepted by all the drawees. Bill at maturity for payment. lie is liable there-
drawn on W. Brown, J. Jones, and W. on for six years. If an acceptor becomes
— —
course, very important to know the amount is as between himself and the
for which the acceptor is already liable. drawer under no obligation to
ACCOMMODATION BILL. A bill to accept or pay the bill ;
bills." A may accept a bill for the accom- modation bill is paid in due course by the
modation of B the drawer, who is in need party accommodated, the bill is discharged."
of money. A receives no consideration Where a banker discounted a bill for the
and does not expect to be called upon to drawer, a customer, and was informed, after
pay the bill when due. B raises the neces- the bill was dishonoured, that it was an
sary funds by discounting the bill, expect- accommodation bill, and the banker agreed,
ing that, at maturity, he will be in a posi- at the drawer's request, not to apply to the
tion to meet the bill himself. If, how- acceptor but to depend upon him (the
ever, he fails to do so, a holder for value, drawer), and his account afterwards showed
even though he knew it was an accommoda- a credit balance larger than the amount of
tion bill when he took it, can sue the acceptor the bill, it was held in Marsh v. Houlditch
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 holdei 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 of an accommodation party as banking account of the drawer with the
follows : plaintiffs having at one time, after the bill
" (1) An accommodationparty to a bill was due, been in his favour to a larger
a person who has signed a bill
is 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
name to some other person. which might ultimately become duetothem."
" (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 signs 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 for the purpose of accommodating some
party or not." other person. An accommodation party is
By Section 46, s.s. 2, presentment for pay- liable to a holder for value. (See Accommo-
ment is dispensed with : dation Bill.)
" (c) As regards the drawer, where the ACCORD AND SATISFACTION. Where
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,
ACC DICTIONARY OF BANKING [ACC
and the recipient of the cheque agrees to It is not necessary for the collecting
retain it, there is said to be an " accord and banker to place any note or indorsement
satisfaction." In his judgment (in Day v. upon the cheque that the amount has been
McLea, 1889, 22 Q.B.D. 610 Lord Justice placed to credit of the payee's account.
Bowensaid: " Accord and satisfaction imply There is no provision in the Bills of
an agreement to take the money in satisfac- Exchange Act, 1882. regarding the words
tion of the claim in respect of which it is sent. " account payee " in connection with a
If accord is a question of agreement, there crossing. Section 78 says that it shall not
must be either two minds agreeing or one of be lawful for any person, except as authorised
the two persons acting in such a way as to by the Act, to add to the crossing. It is not
induce the other to think that the money understood, however, that such words are
is taken in satisfaction of the claim, and to really an addition to the crossing. They
cause him to act upon that view." may as a matter of convenience be placed
ACCOUNT. (Stock Exchange.) close to a crossing, or even between the
ACCOUNT DAY. Where securities are lines, but they would have the same effect
bought or sold on the Stock Exchange they wherever placed on the cheque, so long as
may be " for cash " or " for the account," the collecting banker could see them, and
the term " for the account " meaning the they may be placed with effect upon a
period between the last settlement and the cheque that is not crossed. (See Crossed
next, which period ends in the " account Cheque. |
the credit of the account as indicated in the another bank, it is useful to know the reason
crossing. In Bevan v. Sational Bank, of the change.
i 19U7, 23 T.L.R. 65 Mr. Justice .
When money is placed to the cred:
Channell said, " It was a direction to the an account, the banker becomes the debtor
receiving banker that the drawer desired to to the customer, and is under an obligation
pay the particular cheque into the bank to honour all cheques (if in order) drawn
which kept the account of the payee. To upon the account by the customer to the
disregard a direction of that kind, if the extent of the funds in the account.
banker had information which might lead Where a customer has more than one
him to think that the account into which he account at the same branch, see Set Off ;
was paying the cheque was not the payee's and where he has accounts at different
account, would be negligence." branches of the same bank, see Bran*
9
—
As to accounts which contain money belong- ACTIVE BONDS. Bonds upon which a
ing to clients or others, see Trustee. fixed interest is payable from the date of
In opening an account with a company issue. (See Deferred Bonds.)
the banker should make himself acquainted ACTIVE CIRCULATION. The notes
with its memorandum of association and which are in circulation, that is, notes which
articles of association. (See Advances, have been issued from a bank of issue and
Agent, Appropriation of Payments. are in the hands of the public, as distin-
Authorities, Bankrupt Person, Church- guished from those which, though printed
wardens, Clayton's Case, Closing an and complete, are in the possession of the
Account, Companies, Current Account issuing bank.
Ledgers, Customer, Dead Account, Death ACTIVE PARTNER. A member of a
of Customer, Deposit Accounts, Execu- who takes an active part
partnership in the
tor, Garnishee Order, Husband and management of the business, as distinguished
Wife Account, Impersonal Accounts, from a dormant or sleeping partner, who
Infants, Joint Account, Local Authori- simply supplies capital and is not actively
ties. Mandate, Nursing an Account. engaged in the actual work of the firm. A
Partnerships, Public Account, Signature. limited partner is somewhat similar to a
Societies, Stockbroker's Lo\ns, etc.) sleeping partner. (See Limited Partner-
ACCOUNTS OPENED AND CLOSED ship.)
BOOK. This book, as its name implies, ACTS OF BANKRUPTCY. When a debtor
contains a complete list of all accounts commits an act of bankruptcv. the Court
which have been opened and of those which may, on a bankruptcy petition being pre-
have been closed, the date of opening or sented either by a creditor, or bv the debtor,
closing being given in each case. A glance make a receiving order for the protection
at this book, if it has been properly kept, of the estate. The act must have been
will show whether accounts opened or committed within three months before the
accounts closed have been more numerous presentation of the petition.
during anv given period. The various acts of bankruptcy are
ACCRUED INTEREST. Interest to which detailed in Section 4 of the Bankruptcv Act,
a banker or a customer is entitled, but which 1SS3 :—
is not actually received till a later date. " (1) A debtor commits an act of bank-
At the end of a half-vear, a banker, before ruptcy in each of the following
ascertaining his profits, provides for the cases :
interest which has accrued up to date, and " (a) If in England or elsewhere
for which he is liable, on the outstanding he makes a conveyance or
deposit receipts; he also takes into account assignment of his property
the interest which has accrued upon invest- to a trustee or trustees for
ments or loans, and to which he is entitled, the benefit of his creditors
though the actual receipt of the dividends generally :
or interest will not take place till some " (6) If in England or elsewhere
date in the next half-year. (See Adjust- he makes a fraudulent con-
ment of Interest Account.) veyance, gift, delivery, or
A COMPTE. French, on account. transfer of his property, or
ACQUITTANCE. The document which of any part thereof :
10
: .
and the goods have been (h) If the debtor gives notice
either sold or held by the to any of his creditors that
sheriff for twenty-one days. he has suspended, or that
Provided that, where an he is about to suspend,
interpleader summons has payment
of his debts."
been taken out in regard to The phrase begins to keep house " in
'
the goods seized, the time sub-section (d) means to shut himself up
elapsing between the date in the house, or to refuse to see his creditors
at which such summons is with the intention of delaying them.
taken out and the date at An available act of bankruptcy means any
which the sheriff is ordered act of bankruptcy available for a bankruptcy
to withdraw, or any inter- petition at the date of the presentation of
pleader issue ordered thereon the petition on which the receiving order is
is finally disposed of, shall made (Section 168).
not be taken into account By an act of bankruptcy a bill which has
in calculating such period been given in payment of a debt becomes
of twenty-one days. (As immediately payable, and where any person
amended by Section 1 of the liable upon a bill commits an act of bank-
Bankruptcy Act, 1890.) ruptcy a holder can present a petition upon
" (/) If he in the Court a
files his debt. {Ex parte Raatz, 1897. 2 Q.B. 80.)
declaration of his inability When an act of bankruptcy has been
to pay his debts or pre- committed by a customer, a banker must
sents a bankruptcy petition not pay any further cheques drawn upon his
against himself : account.
" (g) If a creditor has obtained a A banker should exercise caution in
final judgment against him deciding whether or not a customer has
for any amount, and execu- committed an act of bankruptcy, for there
tion thereon not having are circumstances which, at first sight, might
been stayed, has served on lead him to conclude that such an act had
him in England, or, by been committed, but which may be found
leave of the Court, elsewhere, not to fulfil the legal requirements of an
a bankruptcy notice under act of bankruptcy. For example, where a
this Act, requiring him to debtor called a meeting of his creditors and
pay the judgment debt in offered a composition, it was held not to be a
accordance with the terms sufficient notice of suspension and a mere
;
in that behalf by the order Lord Justice Moulton said with reference to
11
ACT] DICTIONARY OF BANKING [ADH
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 " (2) The expression instrument in this
' '
12
—— — ;
Lease of any furnished dwelling-house or " (1) Where in the opinion of theCourt a
apartments for a term less than a vear. debtor ought not to have been
Letter of renunciation. adjudged bankrupt, or where it is
Notarial Acts. 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
Proof of Debt in Bankruptcy (an appro- the application of any person inter-
priated stamp). ested, by order, annul the adjudica-
Protest of Bill of Exchange or Promissory tion."
Note. The
creditors may, if they think fit, at any
Proxy, where the duty is one penny. time after a debtor is adjudicated a bank-
Receipts. rupt, entertain a proposal for a composition
Voting paper, where the duty is one penny. in satisfaction of the debts due to them or
Warrant for goods. (See Appropriated for a scheme of arrangement of the bank-
Stamps. Cancellation of Stamps. Stamp rupt's affairs (Section 23).
Duties.) Section 43 relates to the date when a
ADJUDICATION OF BANKRUPTCY. bankruptcy is deemed to commence :
Where a receiving order has been made The bankruptcy of a debtor, whether the
•
'
against a debtor (see Receiving Order), same takes place on the debtor's own
though he not at that date adjudged bank-
is petition or upon that of a creditor or
rupt, it means that, unless a composition or creditors, shall be deemed to have relation
scheme of arrangement is accepted by the back to, and to commence at, the time
creditors, the court will, shortly, make an of the act of bankruptcy being committed
order adjudicating the debtor bankrupt. on which a receiving order is made against
Section 20 of the Bankruptcy Act, 1S83. him, or, if the bankrupt is proved to have
enacts : committed more acts of bankruptcy than
" (1) Whereareceivingorderismadeagainst one, to have relation back to, and to
a debtor, then, if the creditors at the commence at, the time of the first of the
first meeting or any adjournment acts of bankruptcy proved to have been
thereof by ordinary resolution re- committed by the bankrupt within three
solve that the debtor be adjudged months next preceding the date of the
bankrupt, or pass no resolution, or presentation of the bankruptcy petition
if the creditors do not meet, or if a but no bankruptcy petition, receiving order,
composition or scheme is not ac- or adjudication shall be rendered invalid by
cepted or approved in pursuance of reason of any act of bankruptcy anterior to
this Act within fourteen days after the debt of the petitioning creditor." (See
the conclusion of the examination of Bankruptcy.)
the debtor or such further time as ADJUDICATION STAMPS. Where a
the Court may allow, the Court doubt exists as to the stamp duty with
shall adjudge the debtor bankrupt ;
which any instrument is chargeable, the
and thereupon the property of the opinion of the Board of Inland Revenue
bankrupt shall become divisible may be obtained as to the proper stamp.
among his creditors and shall vest in The instrument itself, and also a sufficient
a trustee. abstract thereof, must be lodged with the
" (2) Notice of every order adjudging a Controller of Stamps and Stores, Somerset
debtor bankrupt, stating the name, House, and a separate abstract must be
address, and description of the bank- lodged with each deed. No document can
rupt, the date of the adjudication, be received for adjudication until it has
and the Court by which the adjudi- been executed by all necessary parties. A
cation is made, shall be gazetted security for advances without limit cannot
and advertised in a local paper in the be the subject of adjudication. Where it is
prescribed manner, and the date of claimed that collateral, auxiliary, additional,
the order shall for the purposes of or substituted security duty only is payable,
this Act be the date of the adjudica- the principal or primary security must be
tion." produced before adjudication. In the case
The Court has power in certain cases of a transfer of mortgage, the amount of
to annul an adjudication. ji; Section 35 interest in arrear (if any) at the date of
provides : transfer must be stated.
13
— —
The regulations of the Stamp Act, 1891, duty, and made as a security
with regard to these stamps are as follows :
for money or stock without
" Section 12. (1) Subject to such regula- limit ; or shall authorise
tions as the Commissioners may the stamping after the
think fit to make, the Commissioners execution thereof of any
may be required by any person to instrument which by law
express their opinion with reference cannot be stamped after
to any executed instrument upon execution ;
ness amounts to a sum not exceeding cannot transfer, from any account which the
fifty pounds, inclusive of the debt administrator may have opened, a sum to
for which the judgment is obtained, clear off the debt upon the deceased's
the county court may make an order account.
providing for the administration of Upon the death of the sole or last surviving
his estate, and for the payment of administrator, his executors, if any, do not
his debts by instalments or other- undertake the duties fresh letters of
;
wise, and either in full or to such administration must be taken out. (See
extent as to the county court under Administrator de bonis non.)
the circumstances of the case appears An administrator winds up the deceased's
practicable, and subject to any affairs according to law, whilst an executor
conditions as to his future earnings settles them according to the provisions of
or income which the court may the will. In other respects, the remarks
think just. which apply to executors apply equally
" (2) The order shall not be invalid by to administrators. (See Executor, Letters
reason only that the total amount op Administration.)
of the debts is found at any time to ADMINISTRATOR DE BONIS NON. A
exceed fifty pounds, but in such case contraction for administrator de bonis non
the county court may, if it thinks administratis, which means administrator
fit, set aside the order. of effects not administered. Where an
" (3) Where, in the opinion of the county administrator dies, or an executor dies with-
court in which the judgment is out appointing an executor, and the duties
obtained, it would be inconvenient connected with the administration have not
that that court should administer been completed, the court will appoint
the estate, it shall cause a certificate another person, called an administrator dc
of the judgment to be forwarded to non to complete the winding up of the
the county court in the district of estate.
which the debtor or the majority of ADMITTANCE.— The admittance of a
the creditors resides or reside, and copyholder is by the entry upon
signified
thereupon the latter county court the court rolls when he is admitted by the
shall have all the powers which it lord of the manor as tenant of the copyhold
would have under this Section, land.
had the judgment been obtained in A copy admittance is given to the copy-
it." holder, which is his evidence of title to the
With regard to the administration of a property. (See Copyhold.)
15
— —
The following is an example of an admit- value, on the day of the date of the
tance : instrument, of the money in British
f.
, I
The Court Leet and View of currency according to the current
) Frankpledge with the Court rate of exchange, or of the stock or
Baron and Customary Court security according to the average
of Lord of the said
,
price thereof.
Manor holden at " (2) Where an instrument contains a
within and for the said Manor statement of current rate of ex-
on the day of change, or average price, as the case
, 19 may require, and is stamped in
Before Steward. ,
accordance with that statement, it is,
Last To this Court came A. B. so far as regards the subject matter
admittance. eldest son and copyhold heir
j of the statement, to be deemed duly
*9<> devisee of the Will of C. D.
.
| stamped, unless or until it is shown
£ s. d. of C. D. deceased that the statement is untrue, and
y £
,,
deceased v
p I
manager proves itself is in getting a bor- than that in point of law it is unnecessary
rower so to modify an impracticable pro- to consider." The length of notice wiil
posal that it will assume a shape in which depend upon what was arranged when tin
it will be acceptable to himself and to his limit was granted but a limit cannot be
;
17
j— (1535)
—— * — ——
value of the securities or upon the amount Less 15 per cent. 150 .
18
DICTIONARY OF BANKING [AFF
ADVj
public. The affidavit must give the person's
the loan) is in eightieths, and if twenty of
—
those eightieths that is, one-fourth are — name and address and be signed by him, and
added, the amount is restored to the orig- be attested by the person before whom it is
inal figure (in this case the value of the
sworn.
securities), e.g. — The fee of a Commissioner for Oaths for
administering the oath is Is. Qd., with Is.
£100= Security. additional for each document attached to the
Deduct 20 per cent l
_ 9Q = jyr
arKjn. affidavit. Such additional document is
or one-fifth known as an " exhibit."
The word " affidavit " is Low Latin, and
/80=I.oan. " It was
means has pledged his faith."
Add ISths or one- 1
= 2 0=Margin at one time usual for the document to
°
fourth i
ADVICE. When
a banker issues a draft, Affidavit and Statutory
he sends an advice, called a letter of advice, Declaration .... 026
to the banker upon whom the draft has been Exemptions.
drawn, giving him particulars of the amount, (1) Affidavit made for the imme-
number, date, and payee, so that, when the diate purpose of being
instrument is presented for payment, the filed, read, or used in any
drawee banker may be able to satisfy himself court, or before an}' judge,
that the draft is in order. In the absence master, or officer of any
of an advice, a banker would hesitate to I
court.
pay a draft. (2) Affidavit or declaration
The word " advice " applies also to many made upon a requisition of
other forms of intimation which a banker in the commissioners of any
the course of his business has to make to public board of revenue, or
customers, other banks, and his own head any of the officers acting
office or London agents, such as advices of under them, or required by
credits received, payments to be made, bills law.
to be paid, etc. (IS) Affidavit or declaration
ADVICE BOOK. The book in which which may be required at
particulars are entered of all drafts advised the Bank of England or
as having been drawn upon the bank. the Bank of Ireland to
'
ADVISE FATE." Where early notice is
' prove the death of any
required as to the payment, or non-payment, proprietor of any stock
of a cheque, the cheque is sent direct to the transferable there, or to
banker on whom it is drawn with a request identify the person of any
to " advise fate." If a reply is required such proprietor, or to re-
before return of post, a stamped telegram move any other impedi-
form should be enclosed for a reply by wire ment to the transfer of any
as soon as possible after the cheque is such stock.
received. (4) Affidavit or declaration
If a wire is received asking if a certain relating to the loss, mutila-
cheque will be paid when presented, a banker tion, or defacement of any
should be careful to qualify an affirmative bank note or bank post
reply, otherwise he may find that, by the bill.
19
—
stop payment being received the following not an universal rule that a man who puts
morning. (See Bank Hours.) his name to a bill of exchange thereby
AGE ADMITTED. (See Life Policy.) makes himself personally liable, unless he
AGENCY. (See Sub-Branch.) states upon the face of the bill that he
AGENDA. Literally, things to be done. subscribes it for another, or by procuration
The agenda are notes of various of another, which are the words of exclu-
matters which are to be brought before the sion ? Unless he says plainly, I am the'
are used by the chairman in conducting the " (1) Where a person signs a bill as
business of the meeting, a brief record being drawer, indorser, or acceptor, and
made opposite each entry as to how the adds words to his signature, indi-
matter is disposed of. cating that he signs for or on behalf
AGENT. An agent is a person who acts of a principal, or in a representative
20
— — —
Dye Works (Limited) " and " Managing Agreement or Contract made or
Director " were placed on the note by '
the regulations respecting the stamp duty on deed, as the case requires.]
agreements are as follows :
(4) Agreement or memo-
Agreement or Contract, accompanied with randum made between the
a deposit. master and mariners of
See Mortgage, etc.. and Section anv ship or vessel for
23 below, and Section 86 under wages on any voyage
Mortgage. coastwise from port to
Agreement for a lease or tack, or port in the United
for any letting. Kingdom.
See Leasehold, and Section (5) Agreement entered into
75. between a landlord and
Agreement for sale of property. tenant pursuant to sub-
See Conveyance on Sale. section six of Section
— — —
'
of exchange) given upon the occasion or negotiated in a country where copies '
23
ALL] DICTIONARY OF BANKING [ALT
(4) If
been complied with on the expira- When a company limited by shares makes
tion of forty days after the first issue any allotment, the company must, within
of the prospectus, all money re- one month thereafter, file with the registrar
ceived from applicants for shares of companies a return of the allotments in
shall be forthwith repaid to them accordance with Section 88 of the Act.
without interest, and, if any such (See Companies, Letter of Allotment.)
money is not so repaid within forty- ALLOTMENT LETTER. (See Letter of
eight days after the issue of the Allotment.)
prospectus, the directors of the com- ALLOTMENT NOTE. A note in an
pany shall be jointly and severally approved form signed by a seaman authoris-
liable to repay that money with sing the owner of the ship to pay his wages
interest at the rate of five per (limited to one half) to a near relative or to
centum per annum from the expira- a savings bank. The payment to a relative
tion of the forty-eighth day : would not be made until a month subsequent
Provided that a director shall not to the date when he signed his articles of
be liable if he proves that the loss agreement, and to a savings bank it would
of the money was not due to any not be made until three months subsequent
misconduct or negligence on his part. to the date of the agreement.
'
(5) Any condition requiring or binding ALLOTTEE. The person to whom shares
any applicant for shares to waive in a company are allotted in response to an
compliance with any requirement of application for shares.
this Section shall be void. ALLOY. (From the French a loi, Latin
'
24
—
top of the old ones. Some banks require Any holder may convert a blank indorse-
that alterations in ledgers and other impor- ment into a special indorsement (Section
tant books be made in red ink. If a ledger 34. s.s. 4).
entry has been posted into a wrong account, Where a cheque is uncrossed, the holder
it is customary, when rectifying the mistake, may cross it generally or specially.
to quote the folio of the correct account. Where crossed generally, the holder may
Bankers do not, as a rule, issue a deposit cross it specially.
receipt, or draft, showing any alteration in Where crossed generally or specially, the
an important part. Where a mistake has holder may add the words " not negotiable."
been made in drawing such a document, it Where crossed specially, a banker to
is considered desirable to have a fresh one whom it is crossed may cross it specially
written, rather than to issue one to the to another banker for collection.
public showing evidences of carelessness or Where an uncrossed cheque, or a cheque
inaccuracy. crossed generally, is sent to a banker for
All material alterations in a bill must be collection, he may cross it specially to
initialled or signed by all the parties liable himself (Section 77).
on the bill, and all alterations in a cheque Where a bill payable at a fixed period
must be confirmed by each drawer. It is after date is issued undated, or an accept-
not sufficient, in the case of a limited com- ance of a bill payable at a fixed period after
pany's cheque, if a material alteration is sight is undated, any holder may insert the
initialled only by the secretary, unless, of true date (Section 12).
course, the banker has authority to accept A cheque which is payable to " bearer "
the signature of the secretary alone. may be altered by the payee to " order," but
With regard to alterations in a bill of an alteration of a cheque from " order " to
exchange Section 64 of the Bills of Exchange " bearer " must be initialled by all the
Act. 1882. enacts :— drawers, and of a bill by all parties liable
" (1) Where a bill or acceptance is thereon. In Aldous v. Cornwett (1868.
materially altered without the L.R. 3 Q.B. 573), where no time of pay-
assent of all parties liable on the ment was stated on a bill, it was held that
bill, the bill is avoided except as the words " on demand " could be inserted.
against a party who has himself In Adelphi Bank v. Edwards (18S2, 26
made, authorised, or assented to Sol. J. 360), where the amount of a bill had
the alteration, and subsequent been fraudulently altered by a holder,
indorsers : spaces having been left in drawing the bill,
Provided that, which enabled this to be done, Lord Justice
" Where a bill has been materially altered, Baggallay said :"It seems to me impossible
but the alteration is not apparent, to say that there was any duty on the part
and the bill is in the hands of a of the acceptor of the bill towards the party
holder in due course, such holder who might subsequently become the holder
may avail himself of the bill as if of the bill so to criticise, and so to examine
it had not been altered, and may the bill before he signed, as to put it out of
enforce payment of it according to the possibility of any additional words being
its original tenor. afterwards inserted in it." This case was
" (2) In particular the following altera- cited with approval in the well-known case
tions are material, namely, any of Scliolfield v. Earl of Londesborough (1896,
alteration of the date, the sum A.C. 514), which may be said to have settled
payable, the time of payment, the the law as to alterations in bills of exchange.
place of payment, and, where a bill In Colonial Bank of Australasia v. Mar-
has been accepted generally, the 1906, A.C. 559), a cheque was altered
addition of a place of payment bv a holder to a larger amount, blank spaces
without the acceptor's assent." having been left. It was held that the mere
By Section 7S :
—
" A crossing authorised ;the drawer of a cheque leaving spaces
by this Act is a material part of the cheque ;
which may be used bv a fraudulent holder,
it shall not be lawful for any person to is not of itself sufficient evidence of negli-
obliterate or, except as authorised by this on the pan oi the drawer to relieve
Act, to add to or alter the crossing." tin banker from liability. Tins de< Lsion is a
The alterations authorised by the Bills of very unfortunate on.' tor bankers.
Exchange Act, 1S82, are : In hills and cheques where it is visible at
ALT] DICTIONARY OF BANKING [AME
The banker may also find that, although the to the payment of the cheque for £150,
'
drawer drew the cheque carelessly and the where Mr. Lauder had not initialled the
acceptor accepted a bill drawn carelessly, he alteration from '
order '
to bearer,' the
'
may not be able to prove in either case that accountants stated that it was usual for
the carelessness amounts to negligence in bankers to pay if two out of the three
the eye of the law. initialled the alteration. It seemed to me,
which is not genuine, he must suffer. To authorised the alteration the payment of
justify the payment he must show that the the cheque by the bank would not be
order is genuine, not in signature only, but authorised."
in every respect " {Hall v. Fuller, 1826. Material alterations in a deed should be
5 B. & C. 750). initialledby the parties signing the deed,
Various protections have been devised in and they should be specifically referred to
order to prevent, or to make difficult, the in the attestation clause.
fraudulent alteration of a cheque. Words
such as " under one hundred pounds " or AMERICAN RAILROAD CERTIFICATES.
" not exceeding one hundred pounds " are These certificates partake of the nature of a
often written across, or stamped upon, a registered holding and also of a bearer
cheque ;or the cheque may be perforated security. On the face is given the name of
with those words.* the registered holder of the shares and on
I The body of a cheque may also be tinted, the back is supplied a blank form of transfer,
or printed over with words or a design to which, when signed by the registered holder,
show more readily if an erasure takes place. makes the certificate transferable by delivery
Cheque paper is also specially prepared to like a bearer bond. The registered holder,
prevent the use of chemicals being used to however, is the person to whom the company
effect an alteration. sends the dividends, and the owner of the
The following case illustrates the import- certificate (unless he gets registered himself)
ance of seeing that any material alteration must apply to him for the dividend, produ-
in a cheque is initialled by all the persons by cing the certificate to show that he is
entitled to it. If, as is often the case, the
whom the cheque is drawn.
In the Kepitigalla Rubber Estates, Limited registered holder is a well-known London
v The National Bank of India. Limited firm, the application for the dividend may
-The following ingenious device to prevent alterations in the amount of a cheque is
p av or order
owner of ten paid shares of the Capital Stock The Bills of Exchange Act, 18S2, does not
of the Railway Company of one specifically say that the amount must be
hundred dollars each, transferable only on stated in words, and it would therefore appear
the books of the company in person or by that a banker could not legally refuse
Attorney, and upon the surrender of this payment of a cheque where the sum was
certificate. expressed in figures only, instead of in words
" This certificate shall not become valid and figures. It is the practice, however, to
until countersigned by the transfer agent return a cheque for completion when the
and also by the registrar of transfers." amount is not in words. If the amount is in
Onthe back there appears the following : words only, it is customary to pay the cheque.
"
For value received have bar- In drawing cheques, drafts, etc., the words
gained, sold, assigned, and transferred, and of the amount should be written closely
by these presents do bargain, sell, assign, together, so as to prevent any possibility of
and transfer unto an .ilteration, and the figures should be
shares of the Capital Stock of the commenced close to the £, the space be-
Railway Company mentioned in the within tween the pounds and the shillings being filled
certificate, and do hereby constitute with a line. Plain, large, and heavy figures
and appoint true and lawful Attor- help to prevent fraudulent alterations.
ney, irrevocable, for and in If a cheque is drawn as " Ten six shillings
name and stead, but to use to sell, and eight pence," and the amount in fi|
assign, transfer, and set over all or any clearly /10 6s. 8c/.,not usual to return
it is
part of the said Stock, and for that purpose the cheque merely because the word
to make and execute all necessary acts of "pounds" has been omitted, it it is
assignment and transfer, and one or more apparently only a clerical error.
persons to substitute with like full power. As to a bill expressed in foreign monej
•
see Foreign Bill. (See Alterations, Taxes (now Inland Revenue) of his name,
" Amounts differ.") residence, and occupation, or in the case
" AMOUNTS DIFFER." If the amount >
28
ANN] HUTIONARY OF BANKING ^ANS
particularly if it is expected that by the time "Words and figures differ." (See "Amounts
the irregularity has been put right the banker Differ.")
will be in a position to pay it. ANTE- DATED. Ante-dating is placing
The words " Will pay on banker's con- a date on a document prior to that on which
firmation " are occasionally added to an it is actually signed.
answer, when the sole reason for the return A bill of exchange is not invalid by reason
of the cheque is a technical one, such as onlv that it is ante-dated (Section 13, s.s. 2,
" Indorsement irregular." If the drawer Bills of Exchange Act, 1882). The date of
dies before the cheque arrives back, or the the stamp upon an ante-dated bill may there-
account changes so as not to admit of fore be subsequent to the date of the bill, and
the cheque being debited, the banker is not give the bill the appearance of not being in
liable, by reason of the words used, to pay accordance with the Stamp Act, 1891,
the cheque. The words have reference only Section 37. s.s. 2 :
—
"Xo bill of exchange shall
to the technical irregularity and not to the be stamped with an impressed stamp after
payment of the amount. the execution thereof."
The following are some of the " answers " APPLICATION FOR SHARES. A form of
which are given on cheques and bills (the application for shares usually accompanies
answer being generally written in ink on the a prospectus offering to the public for sub-
left-hand top corner) : — scription or purchase shares in a company.
" Acceptor bankrupt." When the form is filled up by an applicant,
" Acceptor dead." (See Death of Ac- it is despatched, along with the sum payable
ceptor.) on application, to the company or the com-
" Account closed " (more often " Xo pany's bankers. If the application is suc-
account "). cessful, a letter of allotment (see Allotment)
" Amounts differ " (q.v.). is sent to the applicant in due course.
" Crossed to two bankers " [q.v.). The following is a specimen of an appli-
" Date incomplete." cation form :
—
X.B. This half, when receipted, must be
preserved by the shareholder, to be exchanged
in due course for the share certificate.
APPLICATION FORMS. A general term
signifying any form which is filled up and
signed by a customer when making an appli-
cation to a banker, e.g., an application form
for a deposit receipt or for a banker's draft.
APPLICATION PAYMENTS. Payments
made by bankers, upon application, to whole-
sale houses in London, on behalf of country
customers.
The practice is as follows A country :
ment or valuation chargeable with exceeding three days after date or sight, for
stamp duty is made, shall, within which a postage or appropriated stamp may
fourteen days after the making be used. See under Bill of Exchange.
thereof, write out the same, in words Foreign bill stamps are adhesive.
and figures showing the full amount Inland bills and promissory notes drawn
thereof, upon duly stamped material, or made in the United Kingdom (except such
and if he neglects or omits so to do, as are payable on demand, at sight, or on
or in any other manner discloses presentation, or at not exceeding three
the amount of the appraisement or days after date or sight, when a pennv post-
valuation, he shall incur a fine of age or impressed stamp may be used), and
fifty pounds. the appropriated stamps must be impressed.
" (2) Every person who receives from any APPROPRIATION OF PAYMENTS. If a
appraiser, or pays for the making of, customer pays in money for a particular
any such appraisement or valuation, purpose, the banker must apply it accord-
shall, unless the same be written out ingly. For example, if an amount is paid
and stamped as aforesaid, incur a in to meet a specified cheque or bill, it must
fine of twenty pounds." be used for that purpose, but if the amount
APPRAISER. A person who appraises or is paid in without any particular instructions
values property. The licence of an ap- being given, the banker may appropriate the
praiser costs £2 per annum. (See Appraise- money in reduction of the customer's
ment.) indebtedness. According to the rule in
APPRENTICE. In some banks all junior Clayton's case, an amount paid to credit is
clerks, on entering the bank's service, are held to be a payment of the earliest unpaid
apprenticed either for a certain number of debit in the account, and it is the sum first
years or until they reach the age of twenty- paid in that is first drawn out. (See
one. An indenture of apprenticeship (stamp Clayton's Case.)
2s. 6d.) is entered into, and the father or APPROVED ACCEPTANCE. A seller
guardian is usually a party thereto. The may agree to take an " approved accept-
apprentice agrees to serve faithfully, pre- \
—
ance " f rom a purchaser that is. the accept-
serve secrets, and conduct himself in a proper ance must be one to which no reasonable
manner the father agrees to provide the
; objection can be raised.
apprentice with proper clothing, etc. and ; APPURTENANCES. Things or rights
the bank agrees to instruct the youth in the which appertain or belong to a property and
business of a banker. which pass along with the property.
APPROPRIATED STAMPS. Section 10 ARBITRAGE. The purchase of securities
of the Stamp Act, 1891, enacts : on one stock exchange, or centre, and the
" (1) A stamp which by anv word or immediate sale of the same securities on
words on the face of it is appropri- another stock exchange, or centre, where a
ated to any particular description of higher price is ruling, in order to obtain the
instrument is not to be used, or, if benefit of the difference in prices between the
used, is not to be available, for an two markets. Arbitrage transactions take
instrument of any other description. place in stocks and shares, in bills, and also
" (2) An instrument falling under the par- in bullion.
ticular description to which any ARBITRATION. A matter which is in
stamp is so appropriated as afore- dispute often settled by means of arbitra-
is
said is not to be deemed duly —
tion -that is, the case is referred by the dis-
stamped, unless it is stamped with puting parties to one or more persons, the
the stamp so appropriated." arbitrators, who act as arbiters or judges,
Appropriated stamps are used for : — and upon whose decision the disputants agree
Bankruptcy, proof of debt. The stamp to abide. The decision of an arbitrator is
is adhesive. called the award. (See Award.)
Brokers' contract notes. The stamp is By Section 119 of the Companies (Con-
adhesive. ',
32
— —
with the Railway Companies Arbitra- members or any class of them, the
tion Act, 1S59, any existing or future court may, on the application in a
difference between itself and any summary way of the company or oi
other company or person. any creditor or member of the com-
" (2) Companies parties to the arbitration pany or. in the case of a company
may delegate to the arbitrator power being wound up, of the liquidator,
to settle any terms or to determine uiiler a meeting of the creditors or
any matter capable of being lawfully class of creditors, or of the members
settled or determined by the com- of the company or class of members,
panies themselves, or bv their as the case may be, to be summoned
directors or other managing body. m such manner as the court directs.
:ii All the provisions of the Railway " (2) If a majority in number representing
Companies Arbitration Act, 1859, three-fourths in value of the cre-
shall apply to arbitrations between ditors or class of creditors, or mem-
companies and persons in pursuance bers or class of members, as the case
of this Act ; and in the construction may be. present either in person or
of those provisions the com-
' by proxy at the meeting, agree to
panies '
shall include companies any compromise or arrangement, the
under this Act." (See Companies.) compromise or arrangement shall,
ARBITRATION OF EXCHANGE. The if sanctioned by the court, be binding
operation by which a merchant pays a debt on all the creditors or the class of
in one country by means of a bill payable in creditors, or on the members or class
another. The price of bills payable in of members, as the case may be, and
different centres is taken into account, and also on the company or, in the case
if it is found that it is cheaper to settle a debt of a company in the course of being
in, say, Paris, by means of a bill upon, say, wound up. on the liquidator and
Amsterdam or Berlin, than bv a bill upon contributorics of the company.
Paris, the merchant takes advantage of that "
(3) In this Section the expression '
com-
fact and makes payment accordingly. pany '
means any company liable
Simple arbitration is where only one to be wound up under this Act."
intermediate place is included in the trans- ARRESTMENT. In Scotland, a legal
action where there are several places it is
; process by which a banker is ordered not to
called compound arbitration. part with funds belonging to a certain cus-
ARRANGEMENT WITH CREDITORS. tomer who is a debtor to the person on whose
Where a person is unable to pay his debts he behalf the arrestment has taken place. The
may (apart altogether from the Bankruptcy equivalent in England is attachment (g.v.).
Acts) endeavour to make an arrangement ARTICLES OF ASSOCIATION. The
with his creditors with respect to the money articles of association are the regulations
he owes to them. A debtor usually offers or bye-laws of a joint stock company by
(1) To pay the creditors so much in the which its affairs are governed.
pound in full satisfaction of his debts to them Subject to the provisions of the memo-
-
e Composition with Creditors) or ; randum of association, a company can alter
(2) To transfer his property to a trustee or add to the articles. (See Section 13.
to be realised and the proceeds divided below.)
amongst the creditors. (See Assignment The memorandum forms the boundary to
for Benefit of Creditors.) the directors' powers, but within that boun-
If such an arrangement is made by deed dary the company can make its own rules
or agreement, the deed of arrangement must and regulations, and these are contained in
be registered within seven days. (See Deed the articles of association.
of Arrangement.) Before dealing with a company a banker
In the case of a proposed arrangement should be careful to make himself acquainted
between a company' and its creditors, the with the memorandum and articles of
Companies (Consolidation) Act, 1908, association of the company, and particularly
Section 120. enacts: as to the powers of the directors to borrow
" (1) Where a compromise or arrangement and to mortgage the company's property.
is proposed between a company and Every person dealing with a company is
its creditors or any class of them, deemed to have notice of the contents of the
or between the company and its memorandum and articles.
33
|— (l (5)
— —
The following are the provisions contained Scotland as well as in England and
in the Companies (Consolidation) Act, Ireland.
1908 :— Alteration of Articles by Special Resolution.
Registration of Articles. "13. (1) Subject to the provisions of this
"10. (1) There may, in the case of a Act and to the conditions contained
company limited by shares, and in its memorandum, a company may
there shall in the case of a company by special resolution alter or add
limited by guarantee or unlimited, to its articles and any alteration
;
due from him to the company, and registrar may accept such a declara-
in England and Ireland be of the tion as sufficient evidence of
nature of a specialty debt. compliance.
Memorandum and Articles,
Regis/ration of Copies of Memorandum and Articles to be
n to Mrmbers.
"15. The memorandum and the articles (if
"18. (1) Every company shall send to
any) shall be delivered to the registrar of
every member, at his request, and
companies for that part of the United King-
on payment of one shilling or such
dom in which the registered office of the com-
pany is stated by the memorandum to be less sum as the company may
prescribe, a copy of the memoran-
situate, and he shall retain and register them.
dum and of the articles (if any).
Effect of Registration. 2) If a company makes default in com-
16. ili On the registration of the plying with the requirements of this
memorandum of a company, the Section, it shall be liable for each
registrar shall certify under his offence to a fine not exceeding one
hand that the company is incor- pound." (See Companies, Memor-
porated, and in the case of a limited andum of Association, Table A.)
company that the company is
" AS PER ADVICE." These words, when
limited. found upon a bill of exchange, imply that
" (2) From the date of incorporation men- the drawer has drawn the bill in accordance
tioned in the certificate of incor- with a letter of advice.
poration, the subscribers of the ASSETS. The goods, property, and re-
memorandum together with such sources of all kinds, of a company or an
other persons as may from time to individual, which are available for the
time become members of the com- payment of the debts or liabilities. A
pany, shall be a body corporate by banker's assets are his cash in hand or
the name contained in the memoran- with his London agents or at the Bank of
dum, capable forthwith of exercising England, money at call and short notice,
all the functions of an incorporated investments in Government and other
company, and haying perpetual securities, bills, advances to customers,
succession and a common seal, with premises, etc. (See Balance Sheet.)
power to hold lands, but with such ASSIGNMENT. To assign a right or a
liability on the part of the members property is to transfer it. or make it over, to
to contribute to the assets of the another person.
company in the event of its being As to the stamp duty on an assignment
wound up as is mentioned in this by way of security, see Mortgage and ;
35
ASS] DICTIONARY OF BANKING [ATT
the account of a customer who has made an power to co-opt for such purpose representa-
assignment. tives of any other banks having the same
Where a debtor assigns his property to a interests.
trustee for the benefit of his creditors it is The annual
general meeting of the
an act of bankruptcy (see Acts of Bank- Association held in the month of May.
is
Assignment of.) only to life assurance, and the word " in-
ASSIGNMENT OF LIFE POLICY. (See surance " to fire insurance, but either word
Life Policy.) is now commonly used without regard to its
36
—— — —
which may be given to him to fulfil. Half " In witness whereof these presents in so
an hour in the morning is more valuable far as not printed written by [name of person
than an hour at night, and he who turns up who filled up the form] and subscribed by me
readily in the morning, because he wants to the said at upon the
get on with his work, is worth more than the day of one thousand nine hundred
man who drags himself in at the last moment, and before these witnesses of
merely because he knows he cannot with [description'] and of
impunitv delav his arrival any longer. [description].
ATTESTATION. A formal witnessing of " Witness.
a signature. Witness."
In the case of a will, the testator's signa-
ture must be made, or acknowledged, by the The testing clause in a Scotch deed also
testator in the presence of two or more states the number of pages on which it is
witnesses present at the same time, each of writt n. and mentions anv important altera-
whom must attest or " witness " the will. tions which have been made in the document.
There is no special form of attestation Where a signature by " mark " is wit-
necessary, but the following is a common nessed, the form is : —
attestation clause :
his
Signed by the said
'
case of a transfer of shares, the form is " Signed, sealed, and delivered by the
usually : — above-named John Brown, he having signed
" Signed, sealed, and delivered by the by a mark in consequence of being unable to
above named in the presence of sign his name, in the presence of us, the deed
" Signature having first been read over and explained
- 1 ddress to him when he appeared perfectlv to
"
Occupation understand the same."
When a transfer is executed out of Great In Scotland, when a person is unable to
Britain the signature should be attested by write, a deed must be executed for him by
H.M. Consul or Vice-Consul, a clergvman, a notary public or a justice of the peace
magistrate, notary public, or other person in the presence of two witnesses, as a deed
holding a public appointment. When a cannot be executed bv a mark.
witness is a female, she must state whether ATTESTED COPY." A copy which is
she is a spinster, wife or widow and if a wife ; certified by a witness to be an exact copy of
she must give her husband's name, address the original document. (See Certified
and occupation. Copy.)
Where any material alterations or inter- The following is a specimen of the form <>f
lineations have been made in a deed, thev attestation at the foot of a copy of a docu-
should be referred to in the attestation clause ment of several pages :
as having been made before execution of the " We have carefully examined this and the
document. two foregoing sheets with the original
In a document under hand, a witness often document and attest it to be a true copv
signs simply as :
—
" Witness, John Brown," thereof. Dated this day of
and gives his address and description. 19 . . .
attorns or acknowledges himself the tenant Provided that if, after notice of
of the mortgagee, at a rent usually of the same the intention to nominate an auditor
amount as the interest payable under the has been so given, an annual general
mortgage. By such a clause the relationship meeting is called for a date fourteen
of landlord and tenant is created, and the days or less after the notice has been
mortgagee is thereby empowered to distrain given, the notice, though not given
for rent, and in that way enforce payment within the time required bv this
of the interest due on the debt. The rent provision, shall be deemed to have
must be a reasonable one, for if so excessive been properly given for the purposes
that could never have been intended to be
it thereof, and the notice to be sent or
paid, may be regarded by the Courts as
it given by the company may. instead
an attempt to give the lender a preference of being sent or given within the
in case of the debtor's bankruptcy. {See time required by this provision, be
Mortgage.) sent or given at the same time as
AUDITORS. The auditors of a company the notice of the annual general
are appointed by the shareholders, and their meeting.
particular function is to make an inde- (5) The first auditors of the company
pendent investigation of the company's may be appointed by the directors
affairs and to report to the shareholders. before the statutory meeting, and if
The appointment, powers, and duties of so appointed shall hold office until
auditors are set forth in the following sec- the first annual general meeting,
tions of the Companies (Consolidation) Act, unless previously removed by a
1908 :— resolution of the shareholders in
general meeting, in which case the
Appointment and Remuneration of Auditors. shareholders at that meeting may
" 112. (1) Every company each
shall at appoint auditors.
annual general meeting appoint an (6) The directors may fill any casual
auditor or auditors to hold office vacancy in the office of auditor, but
until the next annual general while any such vacancy continues
meeting. the surviving or continuing auditor
" (2) Ifan appointment of auditors is not or auditors, if any, may act.
made at an annual general meeting, (7) The remuneration of the auditors of
the Board of Trade may, on the a company shall be fixed by the
application of any member of the company in general meeting, except
company, appoint an auditor of the that the remuneration of any audi-
company for the current year, and tors appointed before the statutory
fix the remuneration to be paid to meeting, or to fill any casual vacancy,
him by the company for his may be fixed by the directors.
services.
Powers and Duties of Auditors.
'
(3) A director or officer of the company
shall not be capable of being ap- 113. Every auditor of a company
(1)
pointed auditor of the company. shall have a right of access at all
"
(4) A person, otherthanaretiringauditor, times to the books and accounts and
shall not be capable of being ap- vouchers of the company, and shall
pointed auditor at an annual general be entitled to require from the
meeting unless notice of an intention directors and officers of the' company
to nominate that person to the office such information and explanation as
of auditor has been given by a may be necessary for the perform-
shareholder to the company not less ance of the duties of the auditors.
than fourteen days before the annual '
balance sheet and auditors' report of the auditors, if any, must appear on the
at a charge not exceeding sixpence prospectus of a companv. (See Balance
for every hundred words. Sheet, Companii s
(4) If any copy of a balance sheet which AUTHORISED CAPITAL. The capital of
has not been signed as required by a companyas 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 copv 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 thev 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 authoritv is given to transfer a specified
39
— —
4 % „ 60 „ 4 x 60 =240
latter account is almost exhausted. 1\% ,. 10 „ 2£xl0 = 25
Bankers receive instructions to pay calls, 2 °/ 12 2 xl2= 24
to pay over certain sums in exchange for
specified documents, and also to hand over 102 ) 349
documents in exchange for certain sums, and Average for that period =/3 8 5
in each case the particular instructions The average balance of an account is
contained in the authority must be carefully ascertained in the same way :
the bill case under the correct date. Where 3,260 ,. 81 =264,060 ,,
40
AVEi DICTIONARY OF BANKING [BAL
damage, based upon the proportion which by the "bears." the "bear" may receive"
the amount insured bears to the full value interest (called contango) from the " bull
of the property. Where a property, value for the money lent to the " bull " on the
£'1,000. is insured for £500. and damage by borrowed stock, but if the demand for the
fire occurs to the extent of /300. the amount stock is so great that there is a scarcity of it.
which the company will pay will be £150 — the " bear " may have to pay a " back-
that is. half the loss, because the property wardation " rate for the loan of the stock
was insured for onlv half its value. instead of the " bull " paying interest for the
AVERAGING (STOCK EXCHANGE A
.
(See Contango, Stock
loan of the money.
"bull" speculator on the Stock Exchange Exchange.)
buys more of a certain stock he holds, when BAGS. A Stock Exchange name for
the price has fallen, so as to make the average Buenos Ayres Great Southern Railway
price of the whole purchase less than the ordinary stock.
price paid for the original purchase ; and a BAILEE. The person to whom goods are
" bear " speculator, when the price rises entrusted for a specific purpose by another
against him. sells more of the stock so as to person called the bailor. (See Safe
average the price. Custody.)
AWARD. The decision of an arbitrator BAILOR. The person who entrusts goods
upon any matter in dispute which has been to another person (the bailee) for a specific
referred to him by the disputants. purpose. (See Safe Custody.)
By the Revenue Act. 1906. the stamp BALANCE BOOK. A book in which
duty upon an award in England or Ireland, balances of accounts are entered in order
and award or decreet arbitral in Scotland is >
to prove their accuracy with the balance as
ten shillings. shown in the general ledger. For example,
the balance book for the current account
BACK BOND. BACK LETTER. In ledgers contains the namesof alltheaccounts.
Scotland a back bond is a document which and the balances, debit or credit, are entered
renders another bond null and void. Where therein weekly, or at such intervals as may
an absolute disposition, or conveyance, of a be required, the final difference between the
property is taken by a banker as security, debit and credit columns agreeing with the
the deed is qualified by a back bond, or back balance of the current account totals account
letter, given by the banker to the debtor in the general ledger. Small branches
stating the conditions under which the prove the current accounts all together, but
debtor is entitled to request a reconveyance in large branches it is convenient, and saves
of the property from the banker. (See much time, to balance each ledger separately.
Disposition Absolute.) (See Day Book.)
As to the stamp duty upon a back bond Some banks prove the current account
or back letter see Mortgage, and Section 86 ledgersby taking out the totals of the debit
of the Stamp Act, 1891, in that article. columns and the totals of the credit columns
See also Section 23 under Agrekmhnt. and agreeing each summation with the
BACKING A CHEQUE. Before a banker corresponding summation of totals in the
will give cash to a stranger for a cheque upon general ledger.
another bank, it must be indorsed by some The process of ascertaining if the final
reliable person known to the banker. This totals are correct is called striking a balance.
indorsing is called " backing the cheque." BALANCE OF ERRORS. An expression
If the cheque should be dishonoured, the commonly used in banks to describe i
banker looks for repayment t.. the person " balance " which, at the time of obtaining
who has " backed " it. it. was apparently correct, but which is
BACKWARDATION. Where a •' bear " subsequently found to be wrong, owing to
speculator on the Stock Exchange wishes to an error for a similar amount on both sides
continue his account, instead of delivering of an account.
on the settlement day the securities which BALANCE SHEET. A balance sheet is
he has sold, he arranges with his broker to nt prepared so as to exhibit on the
postpone delivery. In such a case the one hand the liabilities of a company, or
broker must borrow the stock and pay for m .mil, on the other hand the asset-, or
it at the " making up " price. If the property available to meet the liabilities.
demand for money by the " bulls " is greater A balance sheet must be so drawn up as
than the demand for the stock in question xhibit a truthful statement ol the
i
41
—
position. The position should not be repre- " 108. A copy of the balance sheet and
sented as being better than it actually is. report shall, seven days previously to the
but the position may be better than is meeting, be sent to the persons entitled to
disclosed in the statement. Lord Justice receive notices of general meetings in the
Buckley has said " The purpose of the
: manner in which notices are to be given
balance sheet is primarily to show that the hereunder."
financial position of the company is at least Holders of preference shares and deben-
as good as there stated, not to show that it tures have the same right to receive and
is not and may not be better." inspect the balance sheets of the company
The balance sheet of a company must be as is possessed by the holders of the ordinary
signed on behalf of the board by two shares. (See Section 114 of the above-
directors, or, if there is only one, by that mentioned Act, under Auditors.)
director, and the auditors' report must be In the case of a banking company regis-
attached to the balance sheet or there must tered after August 15. 1879. the balance sheet
be a reference to it at the foot of the balance must be signed by the secretary or manager,
sheet, and the report must be read before the and where there are more than three directors
company in general meeting and shall be of the company by at least three of those
open to inspection by any shareholder. directors, and where there are not more than
(See Section 113 of the Companies (Con- three directors by all the directors (Section
solidation) Act. 1908. under Auditoi 113. s.s. 5).
Section 26. s.s. 3 of that Act requires that Every limited banking company must, on
the annual summary to be filed with the the first Monday in February and the first
registrar of companies must (except where Tuesday in August in every year, make a
the company is a private company) include statement of its capital, liabilities and assets
a statement, in the form of a balance sheet, in a prescribed form, and display a copy in its
audited by the company's auditors, contain- registered office and in every branch or
ing a summary of its share capital, its place of business (Section 108). (See
liabilities, and its assets, and giving such Banking Company.)
particulars as will disclose the general nature The auditors' certificate and report on a
of those liabilities and assets, and how the bank's balance sheet is usually in a form
values of the fixed assets have been arrived similar to the following : —
at, but the balance sheet need not include " We beg to report to the shareholders
a statement of profit and loss. (See that we have examined the books and
Register of Members of Company.) accounts of the X. & Y. Banking Company,
The articles of association of a company Limited, at December 31, 19. ., along with
usually contain regulations regarding the !
the securities representing the investments
balance sheet, but in companies which are of the bank or held against loans, the bills
governed by Table A. (see Section 1 1 under discounted, and the cash balances at the
Articles of Association) the following regu- head office and at several of the branch
lations apply : offices. We have obtained all the informa-
" 106. Once at least in every year the tion and explanations which we have
directors shall lay before the company in required, and, in our opinion, the foregoing
general meeting a profit and loss account |
balance sheet is properly drawn up so as to
for the period since the preceding account exhibit a true and correct view of the state
or (in the case of the first account) since the of the bank's affairs, according to the best
incorporation of the company, made up to of our information and the explanations
a date not more than six months before such given to us, and as shown by the books of the
meeting. company."
" 107. A balance sheet shall be made out In considering a customer's balance sheet.
in every year and laid before the company in a banker should scrutinise each individual
general meeting made up to a date not more item, and not be satisfied merely by ascer-
than six months before such meeting. The taining the difference between the total of
balance sheet shall be accompanied by a the assets and the total of the liabilities.
report of the directors as to the state of the As to the' liabilities, it may be taken for
company's affairs, and the amount which granted that the customer will have to meet
thev recommend to be paid by way of all he has shown to the full extent, but there
dividend, and the amount, if any, which may be items on that side of the sheet which
they propose to carry to a reserve fund. have been omitted or forgotten, and there
42
BAL] iii, riONARY OF BANKING I
BAL
may be also contingent liabilities, as. for of each trade, but. as a rule, the amount of
example, in respect of any guarantees he may book debts and stock as shown in a balance
have given, which will not appear on his sheet requires a considerable allowance to be
balance sheet. Such contingent liabilities made in order to arrive at what may be
should be revealed to the banker, as it is regarded as the approximate sum which
necessary that they be taken into account would be obtained if the debts were suddenly
in obtaining a correct estimate of a person's called in or the stock realised under the
position. If bills have been discounted for hammer. After allowing a liberal margin
the customer, his liability for any which for that object, the banker should notice if
may be dishonoured should not be over- the customer is in such a sound position that
looked. The natural tendency is to minimise all his current liabilities could be cleared
In considering the assets, the item " book be entered as the value of the premises in
debts " calls for inquiry. Is the money which his business is conducted. Machinery
owing by reliable parties ? Are the debtors and similar assets should be regularly written
few and the individual amounts large, or is down to provide lor depreciation.
the total spread over a large number of If the assets include an amount for good-
persons ? If any portion is bad or doubtful will, the banker will exclude it in making his
the banker will not regard it as an asset. estimate.
Has any provision been made for bad and It should be ascertained whether or not
doubtful debts ? As to the value of the interest upon capital has been deducted
" stock," as shown in the balance sheet, before arriving at the profits for the year.
it should be ascertained if it is taken at A banker may have, in many cases, to help
cost price or at the present market price. a customer in making out a balance sheet,
The nature of the stock must not be for- and much be done to assist in obtaining
mav
gotten, because certain articles do not a statement from which nothing material
improve by keeping, or they may go out of has been omitted, and in which none of the
fashion and have practically no value. A assets are overstated. Such a balance sheet
farm stock should be put down in a balance should be signed by the customer. Balance
sheet at what it will sell at present, not at sheets should be preserved so that a new one
what the farmer anticipates it will produce may be compared with the previous ones.
two or three months ahead. It does not The most satisfactory form of private
necessarily follow that all the sheep on a balance sheet is one that is certified by an
farm belong to the farmer who owns or auditor or accountant.
rents the farm, nor that the stock in a shop A readiness on the part of a customer to
always belongs to the shopkeeper. It is supply particulars of his position begets con-
necessary to bear in mind that the value fidence in a banker's mind. George Rae in
" The Country Banker " says " The solid
of the stock of a going concern is. as a rule, :
very different from that which prevails man of business who, from pride or pre-
when the business comes to an end and the judice, hesitates to disclose the position of
stock is sold by auction. his business affairs to the confidential ears of
If the customer owns property it is desir- his bankers, damnifies himself in two ways ;
able to ascertain the nature of the property on the one hand, he lessens the full measure
and also whether the value in the balance of credit which he might obtain from them
sheet is a fair one. If there are any mort- should he ever desire to borrow on the ;
gages upon the property the amounts must, of other, he fails to furnish them with data
course, be deducted, but as margins frequent- whereon to speak of his position, with
ly disappear when the property is realised knowledge and decision, in reply to inquiries
to repay the mortgagee, it is not wise, as a from without."
rule, to rely upon an asset of that description. With respect to the balance sheet of a bank
If the value of any shares is included, the usual items on the liabilities side are :—
the present price should be ascertained, and Paid-up capital.
a note made of any liability on the shares. Reserve fund.
If the statement shows the existence of Deposits, current accounts, \
43
—
On the assets side the items are : in the former case to pay cheques drawn by
Cash in hand and at Bank of England. the customers. A banker also discounts
Money at call and short notice. hill'; and promissory notes, and makes
Investments. advances either by way of a loan or of an
Bills discounted. overdraft. He undertakes the agency of
Current accounts and loans. other British banks and of foreign banks.
reptances and indorsements (as per effects purchases and sales of securities,
contra). issues circular notes and letters of credit,
Bank premises. accepts bills for customers, undertakes the
A banker endeavours to keep the assets office of executor and trustee, and takes
in such a form that he may be able to provide charge of securities and other valuables for
for all demands which may be made upon customers. A banker often acts as treasurer
him. One banker may consider it necessary, for a local authority, and sometimes manages
from the fluctuating nature of his deposits. the issue of a loan for a foreign Government
to preserve a larger stock of cash in hand or for a corporation.
and money at call than another whose th reference to the use of the word
deposits are more stable. Money at call " bank " Mr. Justice Eve has expressed an
and short notice is called a banker's second opinion in the recent case of Saunders v.
line See Gold Reserve Carbm :910, unreported) that the
BALANCE TICKET. Where a certain " time has arrived when the legislature
number of shares has been sold and the might well impose some restriction on the
certificate, which is sent by the seller's broker ^discriminate use of the term 'bank' by indi-
to the company's office for certification, is viduals and corporations whose business has
for a larger number than has been sold, a no relation to banking, properly so-called."
balance ticket is given to the broker for the The word " bank " is sometimes used in
remaining shares. When the new certificate the singular and sometimes in the plural.
for the unsold shares is ready, it can be It is customary to say, e.g., " the bank has
obtained on delivery of the balance ticket. a note issue," " the bank allows 2 per cent,
(See Certified Transf interest," " the bank have considered your
BANCO. A term applied to the standard application," " the bank are willing to grant
money in which a bank, in some countries, the loan." (See Bank of Deposit, Bank
kept its accounts, in order to distinguish it of England, Bank of Issue, Banking
from the worn or depreciated currency of Company, Chartered Bank, Private
the country. Prior to 1873, the word was Bank.
used in connection with the bank accounts BANK BILL. A bill which is issued or
at Hamburg. accepted by a bank. The discount rates
BAN IS. (See Foreign" Moneys— Ror- for bank bills are less than the rates for
man: fine trade bills for example, when the rates
;
BANK.The word " bank " is said to be for three months' bank bills are quoted at
derived from the Italian word banco, a 2^ to 2\ per cent., trade bills may be quoted
bench. The early bankers, the Jews in at. say. 2£ r. 2
the German word banck came to be used as are : The Bank of England was to be
wall as its Italian equivalent monte, and was divided into two departments, the issue
Italianised into banco, and the loans were department and the banking department.
called indifferently monti or banchi." The directors were to transfer to the issue
The principal business of a banker is to department securities to the extent of
receive money from customers either on £14 000 000, of which the debt due by the
current account or on deposit account, and public was to be a part, and also so much
44
3 --: = 'J»
-
-
-
I
- -
AftEr • -
• - - - sue i
-~ aad -
i
- -
i .
-
is it
-
.
- "
- -
=.s fix
- •
-
- iB
~
- ;
?ain 1 .
• i
-
-
-
-
--
l
—
such bank holidays which he would not be The Monday in Whitsun week.
compellable to do or make on Christmas Day The first Monday in August.
or Good Friday and the obligation to make
;
The 26th day of December, if a week day."
such payment and do such act shall apply (If the 26th December is a Sunday, Monday,
to the day following such bank holiday and ; 27th December, shall be a bank holiday. See
the making of such payment and doing such Section 2 of the Act of 1875 given below.)
act on such following day shall be equivalent
Bank Holidays in Scotland.
to payment of the money or performance
of the act on the holiday.
" New Year's Day.
Christmas Day.
Appointment of Special Bank Holidays by If either of the above days falls on a
Royal Proclamation. Sunday the next following Monday shall be
"4. It shall be lawful for Her Majesty, a bank holiday.
from time to time, as to Her Majesty may Good Friday.
seem fit, by proclamation in the manner in The first Monday of May.
which solemn fasts or days of public thanks- The first Monday of August."
giving may be appointed, to appoint a By 3 Edw. 7 c. 1, Bank Holiday (Ireland)
special day to be observed as a bank holiday, Act," 1903, St. Patrick's Day, March 17,
either throughout the United Kingdom or when a week day shall be a bank holiday,
in any part thereof, or in any county, city, but if March 17 is a Sunday, March 18 shall
borough, or district therein, and any day so be a bank holiday.
appointed shall be kept as a close holiday in Christmas Day and Good Frida}', which
all banks within the locality mentioned in are common law holidays in England and
such proclamation, and shall, as regards bills Ireland, are statutory holidays in Scotland.
of exchange and promissory notes payable The effect of bank holidays in connection
in such locality, be deemed to be a bank with Days of Grace is dealt with in Section
holiday for all purposes of this Act. 14 of the Bills of Exchange Act, 1882 (see
D.vvs of Grace), and in connection with the
Day Appointed for Bank Holiday may be
reckoning of time under that Act it is dealt
altered by Order in Council. with in Section 92 (see Bills of Exchange
" 5. be lawful for Her Majesty in
It shall Act, 1882).
like manner, from time to time, when it is
Holidays Extension Act, 1875 (38 Vict,
made to appear to Her Majesty in Council c. 13).
in any any year it is
special case that in
inexpedient that a day by this Act appointed
'
46
BAN; DICTIONARY OF BANKING [BAN
docks in England and Ireland respectively towns the banks continue open for an extra
to cause the said days or any of them to be hour upon market days. In very small
kept as holidays in such dock or docks, any towns or in villages, the hours may be much
restraining clause in any Act of Parliament shorter, and are regulated according to the
notwithstanding Provided : that such amount of business to be done. Sub-
dire< tors or governing body shall give notice branches are, in some cases, open only for
thereof by inserting an advertisement to two or three hours once a week, or as may
that effect in some newspaper circulating in be found necessarv.
the locality of such dock or docks, and by On the occasion of local holidays, bankers
affixing to the principal gates of the said dock may agree to be open for only, say, an hour,
or docks, or to some conspicuous place in the or they may agree to close altogether, and
immediate neighbourhood, a notice to the in such cases due notice of the holiday must
same effect for at least a week immediately be exhibited in the bank for some time pre-
preceding anv dav which it is intended to viously. When a banker closes upon a local
observe as a holiday under this Act and ; holiday he must arrange for bills fading due
the anniversary of the coronation of Her to be attended to and also see if there is
Majesty and her successors, and the birthday anything urgent in the remittances and
of the Prince of Wales, shall no longer be correspondence.
kept as holidays many inland revenue office Most banks have one half-day holiday in
in England or Ireland. the week and close at either 12 or 1 o'clock.
December 26 Sunday.
falling on
(See After Hours.)
Whenever the 26th day of December
'_'.
BANK NOTE REGISTER. A book in
shall fall on a Sunday, the Monday immedi-
which some bankers keep particulars of every
ately next following, that is to say, the 27th Bank of England note which they receive,
dav of December, shall be a holiday under this and of every one which is paid away. The
Act, and also under the Holidays Act of 1S71. name of the person from whom the note is
received is recorded, and also the number,
Exercise of Powers by Lord-Lieutenant of date, place of issue, and amount. Each entry
/; land. is numbered consecutively and the number
The powers conferred on Her Majesty
" 3. is placed upon the corresponding note,
by Sections 4 and 5 of the Holidays Act of so that by merely quoting that number, the
1871 may be exercised in Ireland, as far as note may at any time be turned up in the
relates to that part of the United Kingdom, register and full particulars found. This
by the Lord-Lieutenant in Council, and running number is useful as a ready means
Section 6 of that Act is hereby repealed ; of keeping a record of notes paid out across
and those powers of Her Majesty and of the the counter and sent away by post. The date
Lord-Lieutenant in Council shall extend to when a note is paid away may be marked
holidays under this Act. against the entrv made when it was received,
Short Title. or a separate book may be used for the
purpose in which only the reference numbers
4.This Act may be cited for all purposes
need be copied, together with a note of the
as '
The Holidays Extension Act, 1875.'
person to whom it was paid and the date.
Schedule, BANK NOTES. Bank notes are promissory
'
BANK HOURS. The hours during which or nous, other than notes of the Bank of
banks are open to do business with the public id, which shall be issued by any
do not vary very much. The bankers in any banker, or the agent of any banker, for the
one town generally agree to act together as payment of money to the bearer on dem
to the hours when the doors will be op and all bills, drafts or notes so issued which
and closed. From 9 or 10 a.m. till 3 or 4 shall entitle or be intended to entitle the
p.m. are the hours which are usually con- or holder thereof, without ind
sidered sufficient, though in some market or without anv further or other
M
BANJ DICTIONARY OF BANKING IBAN
customers, but are not empowered to issue vious to that year it would appear that the
their own notes, to distinguish them from lowest amount of note issued was £20. In
" banks of issue " which are authorised to 1780 the Gordon Riots occurred, and for
issue their own notes. protection a company of Foot Guards did
BANK OF ENGLAND. In the year 1691, duty in the Bank, and ever since a company
William Paterson, a native of Dumfriesshire, of Grenadier or Coldstream Guards have
submitted to the Government a plan for the remained in the Bank during each night.
establishment of a national bank, and in the In 1793. or practically one hundred years
Year 1694 the Bank of England, which has after the Bank was founded, notes for £5
since become the greatest banking institution were first issued. The capital of the Bank
in the world, was incorporated by Act 5 & had by that time increased to /l 1,642,400.
6 William & Mary. The Act is entitled In 1797, owing to the effects of the unusual
" An Act for granting to their Majesties demand for specie, an Order in Council was
several duties upon tonnage of ships and issued " that it is indispensably necessary
vessels, and upon and other liquors,
beer, ale, for the public service, that the Directors
for securing certainrecompenses and advan- of the Bank of England should forbear
tages in the said Act mentioned, to such issuing any cash in payment, until the
persons as shall voluntarily advance the sense of Parliament can be taken on the
sum of fifteen hundred thousand pounds subject." . . .
towards carrving on the war with France." Notes for £\ and £2 appeared for the first
The Act authorised the raising of /l, 200, 000 time in 1797. In the same year Peel's
by voluntary subscription, the subscribers " Restriction Act " was passed. It is
to be incorporated under the style of " The entitled " An Act for continuing for a limited
Governor and Company of the Bank of time the restriction contained in the minute
England." The sum of £300,000 was also of Council of the 26th of February. 1797, of
authorised to be raised by subscription and pavment of cash by the Bank."
annuities granted to the subscribers. All In 1810, the Bullion Committee reported
the money was quickly subscribed, and a to the House of Commons upon the high
charter was granted on July 27, 1694. for price of bullion and the state of the circu-
eleven vears, and it has since then been lating medium. In 1816, the Bank was
renewed from time to time. authorised to increase its capital to
Within three years the Bank was com- £14,553,000, at which amount it still stands.
pelled to suspend payment. In 1S19 the Bank Restriction Act was further
In 1708, when the Bank Charter was continued till 1S20. On May 1, 1821, the
renewed, a clause was inserted constituting Bank began to pay their notes in gold. In
the Bank of England the only joint stock December. 1825. the Bank passed through
bank in England. In 1718 subscriptions a very severe time, and it appears that the
for Government loans were for the first time credit of the Bank was saved by the finding
received at the Bank, and the Bank has been of a box containing a quantity of one-pound
employed by the Government in similar notes. In 1826. notes undei £5 were
transactions up to the present time. abolished ; and the monopoly which the
In 1720 the Bank found itself in danger Bank had hitherto enjoyed was done away
of being involved in the South Sea (urn with except in London and within a radius
pany's ruin. In 1734 its business was trans- of sixty-five miles thereof
.
In 1844, the I
ferred from the Grocers' Hall to a newly Charter Act was passed, It separated the
erected building in Threadneedle Street. Bank into two departments, the Issue
49
4— (1535)
BAN! DICTIONARY OF BANKING [BAN
Department and the Banking Department. The following sections in the Bank Charter
The Bank's note issue was limited to Act (7 & 8 Vict. c. 32) deal with the issue
£14, 000, 000 against securities, part of which of notes by the Bank and with the privileges
was the debt due from the public for any ; which it enjoys : —
notes issued in excess of that amount gold "1. The issue of promissory notes of the
coins or gold or silver bullion must be Governor and Company of the Bank of
deposited in the issue department. The England payable on demand shall be sepa-
net profit on any issue of notes against rated and thenceforth kept wholly distinct
securities exceeding £14.000,000 is paid to from the general banking business of the
the State. The Bank Act has been sus- said Governor and Company and the ;
—
pended on three occasions -in 1847, 1857 business of and relating to such issue shall
and 1866. be thenceforth conducted and carried on by
The Bank of England is the centre of the the said Governor and Company in a separate
London money market, and to a very large department to be called The Issue Depart-
'
extent, indeed, the heart of the money ment of the Bank of England,' subject to
market of the world. Its advertised rate the rules and regulations hereinafter con-
of discount, so well known as the " Bank tained and it shall be lawful for the court
;
Rate," is that upon which, in this country, of directors of the said Governor and Com-
all other discount rates, and the deposit pany, if they shall think fit, to appoint a
rates allowed by banks, are more or less committee or committees of directors for
dependent. the conduct and management of such issue
The Bank keeps the national reserve of department of the Bank of England, and
bullion,and as all other banks throughout from time to time to remove the members,
the country keep an account with the Bank and define, alter, and regulate the constitu-
of England, either directly or indirectly (by tion and powers of such committee, as they
keeping an account with a London agent, shall think fit, subject to any bye-laws, rules
which agent keeps an account there), the or regulations which may be made for that
Bank of England occupies the unique posi- purpose Provided nevertheless, that the
:
tion of being the holder of the ultimate said issue department shall always be kept
banking reserve. In a time of panic all separate and distinct from the banking
banks fall back upon the Bank of England department of the said Governor and
for supplies of gold. Company.
The Bank carries on the ordinary business " 2.There shall be transferred, appropri-
of banking, but in addition it has charge of and set apart by the said Governor and
ated,
the Government accounts and manages the Companv to the issue department of the
National Debt, paying the dividends thereon. Bank of England securities to the value of
From the sums which are paid to the Bank fourteen million pounds, whereof the debt
for the management of the public debt, the due by the public to the said Governor and
Bank, by the Act of 1844, allows the State Company shall be and be deemed a part ;
£180,000 per annum for the privileges which and there shall also at the same time be
it enjoys. The remuneration for the man- transferred, appropriated, and set apart by
agement of the National Debt is fixed at an the said Governor and Company to the said
annual sum of £325 per £1,000,000 up to issue department so much of the gold coin
£500,000,000; £100 per £1,000,000 above and gold and silver bullion then held by the
£500,000,000, but the amount is not to be Bank of England as shall not be required
less than £160,000 per annum. The re- by the banking department thereof and ;
muneration for the management of Ex- thereupon there shall be delivered out of the
chequer Bonds and Bills is £100, and of said issue department into the said banking
Treasury Bills £200, for every £1,000,000 of department of the Bank of England such
such Bonds or Bills outstanding on the last an amount of Bank of England notes as,
day of the previous financial year (55 & 56 together with the Bank of England notes
Vict. c. 48). then in circulation, shall be equal to the
The Bank of England is, in the words of aggregate amount of the securities, coin,
George Clare, " invested with a certain and bullion so transferred to the said issue
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
50
— —
England as aforesaid, shall be deemed to be in Council at any time after the cessation of
issued on the credit of such securities, coin, such issue, upon the application of the said
and bullion so appropriated and set apart to Governor and Company, to authorise and
the said issue department and from
; empower the said Governor and Company to
thenceforth it shall not be lawful for the said increase the amount
of securities in the said
Governor and Company to increase the issue total sum or
department beyond the
amount of securities for the time being in the value of fourteen million pounds, and there-
said issue department, save as hereinafter upon to issue additional Bank of England
is mentioned, but it shall be lawful for the notes to an amount not exceeding such
said Governor and Company to diminish the increased amount of securities specified in
amount of such securities, and again to such Order in Council, and so from time to
increase the same to any sum not exceeding time Provided always, that such increased
:
in the whole the sum of fourteen million amount of securities specified in such Order
pounds, and so from time to time as they in Council, shall in no case exceed the pro-
shall see occasion and from and after such
; portion of two-thirds the amount of bank
transfer and appropriation to the said issue notes which the banker so ceasing to issue
department as aforesaid it shall not be may have been authorised to issue under the
lawful for the said Governor and Company to provisions of this Act and every such Order
;
issue Bank of England notes, either into the in Council shall be published in the next
banking department of the Bank of Eng- succeeding London Gazette.
land, or to any persons or person whatsoever, "7. The said Governor and Company of
save in exchange for other Bank of England the Bank of England shall be released and
notes, or for gold coin or for gold or silver discharged from the payment of any stamp
bullion received or purchased for the said duty, or composition in respect of stamp
issue department under the provisions of duty, upon or in respect of their promissory
this or in exchange for securities
Act, notes payable to bearer on demand and ;
acquired and taken in the said issue depart- all such notes shall be and continue free and
ment under the provisions herein contained : wholly exempt from all liability to any stamp
Provided always, that it shall be lawful for duty whatsoever.
the said Governor and Company in their "ft. In case, under the provisions herein-
banking department to issue all such Bank before contained, the securities held in the
of England notes as they shall at any time said issue department of the Bank of
receive from the said issue department or England shall at any time be increased
otherwise, in the same manner in all respects beyond the total amount of fourteen million
as such issue would be lawful to any other pounds, then and in each and every year in
person or persons. which the same shall happen, and so long as
"3. It shall not be lawful for the Bank of such increase shall continue, the said
England to retain in the issue department Governor and Company shall, in addition
of the said Bank at any one time an amount to the said annual sum of ^180,000, make a
of silver bullion exceeding one-fourth part further payment or allowance to the public,
of the gold coin and bullion at such time held equal in amount to the net profit derived in
by the Bank of England in the issue depart- the said issue department during the current
ment. year from such additional securities, after
4 . All persons shall be entitled to demand deducting the amount of the expenses
from the issue department of the Bank of occasioned by the additional issue during
England, Bank of England notes in exchange the same period, which expenses shall
for gold bullion, at the rate of £3 17 s. 9d. include the amount of any and every com-
per ounce of standard gold : Provided position or payment to be made by the said
always, that the said Governor and Company Governor and Company to any banker in
shall in all cases be entitled to require such consideration of the discontinuance at any
gold bullion to be melted and assayed by i time hereafter of the issue of bank notes by
persons approved by the said Governor and such banker."
Company at the expense of the parties The position of the authorised issue of the
tendering such gold bullion. Bank of England is as follows :
" 5. Provided, always, that if any banker Authorised by the Art mi Is-u . .Jit, .mill
who on tin 6thdayofMay, 1S44, was issuing Authorised by Ordei in Council :
1855. Dec. 7
his own bank notes shallcease to issue his own 175,
L8B1. lulv in 175,000
banknotes, it shall be law ful for 1 [er Majesty 1866, Feb. 21 350,
51
BAN] DICTIONARY OF BANKING "BAN
Iss]
.
are contained in various acts of Parliament. own notes, but when such bankers cease to
All banks beyond sixty-five miles from Lon- carry on business, it has been held that the
don which were law fully issuing their own compositions cease.
notes on May 6, 1844, may continue to issue The amount of notes which may be issued
them, except those banks where the partners by a bank of issue is fixed, and is the amount
consisted at that date of not more than six certified by the Commissioners of Stamps
persons and where the number of partners and Taxes as being the average amount of
has since increased in number. Beyond the bank notes of such bank as were in
three miles from London and within sixtv- circulation during a period of twelve weeks
five miles, banks consisting of not more than preceding April 27, 1844.
six partners, who were lawfully issuing their If the monthly average circulation of bank
own notes on May 6, 1844, may continue to notes of any banker shall at any time exceed
issue them. There are thus three distinct the amount which the banker is authorised
areas denned in the Acts, (1) the City of to issue, such banker shall in every such case
London and within three miles thereof forfeit a sum equal to the amount by which
(counting from the Royal Exchange), where the average monthly circulation shall have
the Bank of England has the sole right to exceeded the amount he was authorised to
issue notes. (2) Beyond three and within issue and
to have in circulation.
sixty-five miles of London, where the Bank A bankof issue registered as a limited
of England shares the right with banks of company is not entitled to limited liability in
not more than six members, which were respect of its notes, and the members thereof
lawfully issuing notes on May 6, 1S44. (3) shall be liable in respect of its notes in the
Beyond sixty-five miles, where the Bank of same manner as if it had been registered as
England shares the right with the other an unlimited company. (See Section 251 of
banks which were lawfully issuing notes on the Companies (Consolidation) Act, 1908,
May 6. 1844. under Banking Company.)
No person other than a banker who, on The issue of bank notes in Ireland is
May 6. 1844. was lawfully issuing his own regulated by 8 & 9 Vict. c. 37. The tender
bank notes shall make or issue bank notes in of a note or notes of the Bank of England is
an} - part of the United Kingdom. not a legal tender in Ireland, but nothing in
If a country bank of issue opens an office the Act is to be construed as prohibiting the
in London, or, there being more than six circulation in Ireland of the notes of the
partners, if it comes within sixty-five miles Bank of England. A banker in Ireland is
ofLondon, it loses its right of issue. A bank prohibited from issuing notes in excess of
which consisted of not more than six partners the amount certified by the Commissioners
on May 6, 1S44, will lose its right to issue (that is. the average amount of notes in
notes after the number of partners therein circulation for one year previous to May 1
shall exceed six in the whole, but two banks 1845), except against the monthly average
each consisting of not more than six partners amount of gold and silver coin held by such
may combine and unite their separate issues banker during the same period of four weeks.
so long as the number of partners does not As to the coin against which notes may be
exceed six. A bank ceases to have the right issued, there shall be included only the gold
of issue by bankruptcy, or by giving up and silver coin held by such banker at the
business or by discontinuing its issue either several head offices or principal places of
by agreement with the Bank of England or issue in Ireland, such head offices or principal
otherwise. Where a private issuing bank is places not to exceed four in number, of which
absorbed by a joint stock bank, its issue not more than two shall be situated in the
lapses, and if an amalgamation between two same province ; and notes shall not be
joint stock banks of issue results in the issued on any amount of silver coin exceeding
formation of a new bank, the issue of both the proportion of one-fourth part of the gold
the banks will lapse. The Bank of England coin held by such hanker. Bank notes
has the right to increase its own issue against issued in Ireland are to be " for payment of
securities to the extent of two-thirds of all a sum in pounds sterling, without any
lapsed issues. The Bank of England has fractional parts of a pound."
power under Sections 23 and 24 of the Bank The issue of bank notes in Scotland is
Charter Act. 1844, to make payment of regulated by S A 9 Vict. c. 38. and the
annual compositions to certain bankers on regulations are practically the same as for
their giving up the privilege of issuing thru- tin- banks in Ireland (see above), except that
,s:<
——— —
Eight Joint Stock Banks 2.676,350 depositors to withdraw money without pro-
Ireland duction of the pass-book. The forms require
....
:
Six Joint Stock Banks 6.354,494 no filling up whatever, but they must be
55
—
Date.
most important cause of the rise or fall of
the Bank Rate. A small reserve indicates a
high Rate, and a large reserve a low Rate.
The proportion of notes and gold to the
deposits is on an average about forty-three
per cent. A rise in the Bank Rate tends to
attract gold to this country a fall in the ;
Yearly
Date. I ter cent.
1821.
1
24
Oct. 30 3 1870
1863 fan. IS 4
'
.. is 5
Feb l'i 4
April 23
::'
30
Mav In :;
May 21 4
Nov. 2
Dec. 2 1871.
:i
24 8 2
L864. Ian. 20
Feb. 11
.. 27,
April IK
May 2
5
„ 19
.. 26 1-72
June 16
July 25
tug. 4
Si it. 8
X iv. In s
24
Dec. IS 8
1865. [an. 12 5
26 5
Mar. 2 4 1
„ 30 4
Mav 4 4'.
4"
.. 25
Tune 1 3J 1873.
IB 3
July -'7
3i
Aug. 3 4
pt. 2s 44
Oct. 2
7
Nov 23
Dec 2s I 17
1866. Jan 4
Feb. 22
Mar. 15 li
Mav 3 7
8 8
11 9
12 In
(Bank Charter
Act suspended
Aug. 16 8
.. 23
10
Sept. 6
27 i
Nov. 8 4 1874.
Dec. 2ii I
i> is ||
1867 Feb. 7
3"
Ma] 'in 21
July 25 2 In '.i
I 368 Nov. 19 2
I
i
I 3 1 11
I 369 April 1 4
44
II 4
2 1 31
BAN] DICTIONARY OF BANKING [BAN
BAN] DICTIONARY OF BANKING ;ban
BAN] DICTIONARY OF BANKING [BAN
passed) is given for comparison with first item in the Banking Department
The
the weekly return of Wednesday, June 23, of the Return is the proprietors' capital.
1909 £14.553,000. The original capital of the
Bank, when it was established in 1694, was
£1,200,000, and it was increased from time
Issue Department.
to time until it reached the amount of
September 7, 1844. June 23,
1909.
£14,553.000 in 1816, at which figure it has
Notes issued .... £28,351,295 *"-.7.7i»i,245 continued ever since. The next item is the
Rest or Reserve Fund, £3,107,086, which has
Government Debt. £11,015,1111) £11,015,1(10
and to which
Other securities 2,984,! 7,434,900
been accumulated from profits
Gold coin and bullion . 12,657,208 39,256,245 the profits are added from time to time.
Silver bullion . 1,694,087 The dividends to the Bank proprietors are
paid out of this account, but the amount of
£28,351,295 £57,706,245
the Rest is never allowed to fall below
£3,000,000.
B VN'KIXG Department. Public deposits, £13,409,696, represent
September 7, 1844. June 23, the moneys paid in to the Bank by the
1909. Government Departments, " including Ex-
Proprietors' capital 14,553,000 553, chequer, Savings Bank, Commissioners of
i i i
and on the other side the manner in which bankers' balances diminish and the amount
they are secured, that is by the Government of other deposits therefore decreases.
debt, £11,015,100 (the amount of the debt Seven day and other bills, £47.660, include
at the passing of the Bank Charter Act) Bank Post Bills (see Bank Post Bill).
;
other securities, £7,434,900 gold coin and ; The other side of the Banking Department
bullion, £39.256.245. When the Bank Charter
Return, the assets side, shows how the funds
Act was passed the combined amount of the have been invested. The first item, Govern-
debt owing by the Government to the Bank ment securities, £15,368,812, are those (e.g..
and of other securities was £14,000,000, and Consols, Treasury Bills, Exchequer Bonds
as the amount is now £18,450,000, an in- which are guaranteed by the British Govern-
crease of £4,450,000 has taken place, due to ment. The next item is " other securities,"
the Bank having taken advantage of the
privilege granted to it under the Act of
—
£30,707,163 that is. other than Government
investments. It includes general invest-
increasing its issue against securities to the ments, also bills which have been discounted
extent of two -thirds of the issues of country for customers and bill brokers, and loans
bankers which have lapsed. The Issue against securities.
Department does not hold any silver bullion, The " Reserve " is formed of the next two
although the Bank has power under the Act items on the Return, notes unemployed,
to issue notes against silver bullion to the £28,328,680, and gold and silver coin.
extent of one-fourth of the gold. (See The notes on hand are part of
£1 .602.809.
Bank of England.) those shown bv the Issue Department as
60
—
BAN 1
DICTIONARY OF BANKING [BAN
notes issued to the Banking Department. or for reward. The difference between a
According as gold conies into the country banker as a debtor to his customer and as a
or leaves it, the amount of the Reserve will bailee may be illustrated as follows If :
—
increase or decrease. John Brown pays in £20 to the credit of his
When Bank Rate is raised it tends
the account, the banker becomes Brown's
to prevent the outward flow of gold and debtor and is liable to repay to Brown £20
encourages an inward flow. On the other on demand, but until the demand is made
hand, a reduction of the Bank Rate has an the banker can do what he likes with the
exactly opposite tendency. money, and the /20 which is ultimately
BANK STOCK. The stock or capital of repaid to Brown is not, of course, the same
the Bank of England. coins as were originally handed by Brown
The Bank was established in 1694 with to the banker but if Brown gives to the
;
a capital of £\ ,200.000, and by the year 1816 banker a sealed bag containing, say, coins
it had been increased to /14.553-.000, at to the value of /20 and leaves it for safe
which figure it still stands. custody, the banker becomes a bailee and
BANKER AND CUSTOMER. The ordi- must take care of the bag, as entrusted to
nary relationship between a banker and a him, and return it, with the contents un-
omer' is that of debtor and creditor. touched, to the customer when required.
When a customer pays in money to the (SeeSafe Custody.)
credit of his account, the banker becomes The position between banker and customer
the debtor and the customer the creditor, may also be that of mortgagee and mort-
but when the banker makes a loan to a where a customer grants a mort-
as
customer the position is reversed, as the gage, a fixed amount, to the banker.
for
customer is then the debtor and the banker In such a case the banker can charge simple
the creditor. The money which a banker interest only upon the loan account. See
receives from a customer is at the free dis- Interest.)
posal of the banker he may preserve it in
;
A banker and his staff are bound to
his till, invest it in some security, or lend it secrecy regarding the business and accounts
out to another customer but the customer
;
of the customers, but a banker may, in
retains the right to demand back a similar certain cases, be compelled to give evidence
amount, or to draw cheques upon the banker in a court of law, and he may also be re-
up to that sum, the cheques being payable quired to give a copy of entries in the
cither to the customer himself or to some books of the bank. (See Bankers' Books
other person. The customer may also accept Evidence Act, 1879.)
bills and arrange with the banker that they As to a banker's position when he is
be charged to his account at maturity, or requested by another banker to supply an
he may, in certain cases, make arrangements opinion as to the status or sufficiency of a
for the banker to accept bills on his behalf. customer, see Banker's Opinion.
In order to constitute a person a customer, A bank which is empowered by its memo-
Lord Davey said, in Great Western Railway randum of association may act in the capa-
v. London and County Banking Co. (1901, city of sole executor under a will, or as
A.C. 414) "I think there must be some
:
trustee under a will or settlement, or as
sort of account, either a deposit or a current custodian trustee. (See Custodian Trustee.)
account or some similar relation." 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 Transai tions.
parcel of securities for safe custody, the BANKERS' BOOKS EVIDENCE ACT.
banker's position is that of a bailee, and his 1879 (42 Vict. c. 11). This Act was passed
liability depends, to a certain extent, upon on May 23, 1879. Its principal object is
whether he undertakes the dub tously to enable bankers to be freed from the
61
BAN] DICTIONARY OF BANKING [BAN
inconvenience of having to produce books any part thereof to be paid to any party by
which are in use in their business. 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 legal proceedings be received may be enforced as if the bank was a party
as pri'md-facie evidence of such entry, and of to the proceeding.
the matters, transactions, and accounts "9. In this Act the expressions bank '
'
8.' The costs of any application to a and debited the amount in account.
Court or judge under or for the purposes of BANKER'S MORTGAGE. A mortgage
this Act, and the costs of anything done or which isgiven to a banker as a continuing
to be done under an order of a Court or security to cover any sum which shall for the
judge made under or for the purposes of time being constitute the balance due to the
this Act, shall be in the discretion of the banker from the borrower. In a banker's
Court or judge, who may order the same or mortgage there is usually a covenant
62
' — —
a banker liable to an action for damages. from an}' question of duty or any considera-
In order to create liability for a wilfully tion, except that mutual courtesy and hope
inaccurate or misleading opinion, the repre- of a quid pro quo, to which Lord Bramwell
sentation must be in writing and be signed
. '
refers
by the person making it, and it is the actual By Section 6 of 9 Geo. IV c. 14 (called
person who signs it who is liable. If a bank Lord Tenterden's Act) :
manager gives a false opinion in writing, " No action shall be brought whereby to
he is personally responsible and not the charge any person upon or by reason of any
banking company of which he is an official. representation or assurance made or given
Where a bank manager had given a concerning or relating to the character, con-
banker's opinion and an action was brought duct, credit, ability, trade or dealings of any
for damages for misrepresentation (Parsons other person, to the intent or purpose that
v. Barclay (S- Co. and another, 1910, 103 L.T. such other person may obtain credit, money,
196), Mr. Justice Ridley, in addressing the or goods upon, unless such representation or
jury, said : "I have to tell you that it will assurance be made in writing, signed by the
not do for you to find it was an inaccurate party to be charged therewith."
description of the state of things with regard As bankers' opinions are usually given
to Messrs. G., it must be inaccurate to the with care and caution, it follows that the
knowledge of the person who made it. bankers to whom they are addressed should
Though with some qualification that would accept them in a similar spirit of caution.
be a true statement, I think I will just give Details of a customer's account should
the definition which is usually accepted as not, of course, be communicated to any one
the one which is to guide a jury in such unless by the request of the customer.
cases. '
In order that the statement should BANKER'S ORDER. A written order
be fraudulent,' which is necessary to prove given by a customer to a banker to make a
in this case if the plaintiff is to recover, payment or series of payments on his behalf.
'
it must be made knowing it not to be It is commonly used to give authority to a
true, or without belief that it is true, or it banker to pay subscriptions to clubs and
must have been made recklessly or care- societies year by year, insurance premiums,
lessly as to whether it was true or false.' " etc. The following is a specimen form :
63
—— —
A book, like a diary, should be kept and over through London, bank B requests
details given under each date of the subscrip- itsLondon office or agents (bank C) to pay
tions or other periodical payments which are the amount to bank D (the London office
due to be paid upon such date. or agents of A) for the credit of bank A.
Orders may be given by shareholders to BANKERS' RECEIPTS. Receipts given
pay all dividends upon their shares in the by bankers, on behalf of a company, for pay-
bank to the credit of their account in the ments made on application for shares or for
bank, or to another bank. The following payments of calls. (See Application for
isa specimen of a form used for such a Shares.) Receipts on account of applica-
purpose : — tions for shares must be preserved in order
to be exchanged in due course for the share
To the X. & Y. Bank, Ltd., London. certificates. They do not form a security
The Bank is hereby authorised and re- for an advance.
quested to pay to A. & B. Bank, Ltd., Receipts upon a duly stamped letter of
Bristol [or to the credit of my
account at allotment are exempt from stamp duty.
your Bristol Branch], until this authority (See Receipt. Exemption 11.)
all dividends and
is revoked in writing, BANKING COMPANY. The Sections of
bonuses now or hereafter payable on all the Companies (Consolidation) Act, 1908,
shares in the Bank standing in the name which particularly refer to banking com-
of the undersigned. panies are as follow :
64
n _
O J!
.a
a =c
.c
bL
u
— — -
by such a company, apply with " (i) The balance sheet must be signed by
or without modifications, if the the secretary or manager (if any),
company complies with those and where there are more than three
provisions. directors of the company by at least
three of those directors, and where
Form C.
there are not more than three
" Form Statement to be published by Bank-
of directors by all the directors."
ing and Insurance Companies, mid The following two sections are to be read
Deposit. Provident, or Benefit Societies. as part of Part VI I of the Companies
' * The share capital of the company is (Consolidation) Act.
divided into shares of
Bank of Issu, Unlimited in
,
" Liability of
each.
Respect of Xotes.
'
The" liabilities of the company on the the members thereof shall be liable
first day of January (or July) were in respect of its notes in the same
Debts owing to sundry persons by the manner as if it had been registered
company. as unlimited but if, in the event
;
By Section 109 it is provided that the means the funds available for pay-
Board of Trade may appoint one or more ment of the general creditor as well
competent inspectors to investigate the as the note-holder.
affairs of any company, and to report (3) Any bank of issue registered under
thereon in such manner as the Board direct : this Act as a limited company ma]
in the case of a banking company having a ite on u> notes that the limited
liability does not extend to its notes,
* If the company has no share capital the port in i<
oi the statement relating to capital and shares must ,ind that the members of the com-
be omitted. pany are liable in respect of its not
<s.S
5— <I53i)
— . —
the sixth schedule to this Act, being Banks in England,' or in any other Act,
the enactments continued in force it shall be lawful for any number of persons,
by Section two hundred and five of not exceeding ten, to carry on in partnership
the Companies Act, 1862." the business of banking, in the same manner
and upon the same conditions in all respects
The enactments referred to in tha 1 as any company of not more than six persons
Section are :
by his trustee. In " The Laws of England." (d) Being elected to or holding
by the Earl of Halsbury, it is stated that or exercising the office
" until the trustee intervenes, all trans- of mayor, or alderman,
actions by a bankrupt after his adjudication councillor :
with any person dealing with him bond fide (e) Being elected to or holding or
and for value in respect of his after acquired exercising the office of guar-
property other than real estate, with or dian of the poor, overseer
without knowledge of the bankruptcv. are of the poor, member of a
valid ; the trustee, when he intervenes, is sanitary authority, or mem-
bound by such transactions, and by the ber of a school board,
rights of third persons so acquired." highway board, burial board,
A banker cannot, as a rule, recognise or select vestrv.
which is " after acquired property " and " (2) The disqualifications to which a
which is not, and therefore he should not bankrupt is subject under this
open an account with an undischarged bank- section shall be removed and cease
rupt, nor should he cash a cheque to a pavee if and when
or indorser who is known to be an undis- (a) adjudication of bank-
the
charged bankrupt, otherwise he mav come ruptcy against him is
intoconflict with the claims of the trustee and annulled or ;
be obliged to account to him for moneys paid (b) he obtains from the Court
to the bankrupt or by the bankrupt's order. his discharge with a certifi-
Caution is necessary if the wife of an cate to the effect that his
undischarged bankrupt wishes to open an bankruptcy was caused by
account in order to carry on the business, misfortune without any
unless the trustee has consented thereto. misconduct on his part.
With respect to a bankrupt obtaining The Court may grant or withhold
credit, Section 31 of the Bankruptcy V t, such certificate as it thinks fit, but
1883, provides : — anj- refusal of such certificate shall
Where an undischarged bankrupt who be subject to appeal.
has been adjudged bankrupt under this Act 3) The disqualifications imposed by this
obtains credit to the extent of twenty Section shall extend to all parts
pounds or upwards from any person without of the United Kingdom." (See
informing such person that he is an undis- Bankruptcy.)
charged bankrupt, he shall be guilty of a Bankrupt Acceptor. Where the ac- —
misdemeanor, and may be dealt with and ceptor of a bill which is not yet due be. .
punished as if he had been guilty of a mis- bankrupt, the ban tot compel the
l
fi7
BAN] DICTIONARY OF BANKING [BAN
prevent a person acting as agent, including firm but if another partner has, since the
;
local clearing. (See Marked Cheque.) but see Bankrupt Person (abovei with
In the case of a bill, where both the drawer respect to a cheque when presented for
and theacceptorarebankrupt.thebankermay payment by a bankrupt.
claim for the full amount of the bill against —
Bankrupt, Safe Custody. Any articles
both estates. But if a dividend has been left for safe custody should not be given up
declared on one of the estates before the to a bankrupt. When a receiving order is
banker sends in his proof of debt on the other made the bankrupt's property vests in the
estate, he can only claim for the balance official receiver.
after crediting the dividend. If there is Bankrupt, Securities. See rules re-—
any balance standing to credit of the garding securities under Proof of Debts.
customer it can be retained against the Bankruptcv does not affect a banker's
bill. rights to any securities belonging to the
Where notice of dishonour requires to be bankrupt, over which the banker has merely
given it may be given either to the drawer an equitable charge.
himself or to his trustee. Where securities have been given for the
Bankrupt Indorser. —-A notice of dis- bankrupt's account by some one other than
honour may begiven to the indorser himself the debtor himself, the proceeds of such
or to his trustee. As to payments to a securities should be placed to a separate
bankrupt indorser, see Bankrupt Person. account until all the dividends have been
—
Infant. An infant cannot be made received from the debtor's estate, unless the
bankrupt. depositor thereof (or the guarantor, as the
Bankrupt, Joint Account, Joint De- case may be) pays off the whole of the
—
positor. On the bankruptcy of one of debt and claims himself upon the estate.
joint customers, the other, or others, may The advantage of a collateral security, taken
draw any balance standing to credit". in the usual form, is that, if it is not sufficient
Where a loan has been made to two per- to clear off the whole debt, the banker may
sons jointlv, upon the bankruptcy of one, claim for the full debt upon the bankrupt's
the other becomes liable for the full debt. estate, and then fall back upon the amount
Bankrupt. Married Woman. -If she — realised from that security, and thus in
carries on a business entirely separate from many cases obtain full repayment of the
her husband, she is, as regards her own debt. (See Guarantee.)
property, subject to the bankruptcy laws. Bankrupt Surety. —-When a guarantor for
Bankrupt — Partnership — Partner. an account becomes bankrupt the debtor's
— See Section 40 of the Bankruptcy Act, account should be stopped until fresh ar-
1883, under Proof of Debts. rangements are made. If new security is not
A partnership is dissolved by the bank- forthcoming and the debtor is unable to
ruptcy of a partner. (See Section 33 of repay, the banker makes a claim upon the
the Partnership Act, 1890, under Partner- surety's estate.
ships.) The remaining partners may with- Voluntary Conveyances and Trans-
draw any balance standing at credit of the —
fers. -If bankruptcy occurs within two
firm's account. years after the date of a voluntary transfer,
If a partner deposits his own personal the transfer is void, and the trustee can
securities for the firm's account, the banker claim the property. If bankruptcy occurs
may claim upon the bankrupt firm's estate within ten years, the transfer is also void,
for the full amount of the debt. unless it can be proved that the bankrupt
Where a partner has become bankrupt, was solvent, at the time of making the
he is no longer able by his acts to bind the transfer, without the aid of the property
68
BAN! DICTIONARY OF BANKING I BAN
89
— —
Any settlement of property shall, if the a county court and the debtor is unable to
settlor becomes bankrupt within two years pay, and his total indebtedness does not
after the date of the settlement, be void exceed £50, the county court may make an
against the trustee, or if he becomes bank- administration order. (See Administration
rupt at any time within ten years after that Order.)
date, be also void against the trustee, unless A debtor who is unable to pay his creditors
proved that the settlor was able to pay
it is is not always dealt with under the Bank-
debts at the time he made the settle-
all his ruptcy Acts. He may call his creditors
ment, without the aid of the property together and offer a composition, that is, to
comprised therein. (See Settlements — pay each creditor only so much in the pound
Settlor Bankrupt.) (see Composition with Creditorsi. or he
Section 49 of the Bankruptcy Act. 1SS3, may offer to assign his property to a trustee,
with respect to bond fide transactions with- in order that it may be realised and the
out notice, provides as follows :
proceeds divided amongst the creditors.
" Subject to the foregoing provisions of (See Assignment for Benefit of Credi-
this Act with respect to the effect of bank- tors.) When an arrangement is made in
ruptcy on an execution or attachment, and either of those ways and is embodied in a
with respect to the avoidance of certain deed or agreement, the deed of arrangement
settlements and preferences, nothing in this or agreement must be registered within
Act shall invalidate, in the case of a bank- seven days. (See Deed of Arrangement.)
ruptcy — Property which is acquired by an undis-
(a) Any payment by the bankrupt to any charged bankrupt may be claimed by his
of his creditors, trustee. (See Bankrupt Person.)
(6) Any payment or delivery to the The may be
estate of a deceased debtor
bankrupt, administered by the Court, according to
(c) Any conveyance or assignment by the the law of bankruptcy. (See Death of
bankrupt for valuable consideration, Insolvent Debtor.)
(d) Anycontract, dealing, or transaction An advertisement in the London Gazette
by or with the bankrupt for valuable of a receiving order or an adjudication order
consideration, is conclusive evidence of the order having
Provided that both the following condi- been made. (See Gazetted.)
tions are complied with, namely
" (1) The payment, delivery, conveyance, Stamp Duty.
assignment, contract, dealing, or By Section 144 of the Bankruptcy Act,
transaction, as the case may be, 1883 :
—
" Every deed, conveyance, assign-
takes place before the date of the ment, surrender, admission, or other assur-
receiving order and; ance relating solely to freehold, leasehold,
" (2^ The person (other than the debtor) copyhold, or customary property, or to any
to, by, or with whom the payment, mortgage, charge, or other incumbrance on,
delivery, conveyance, assignment, or any estate, right, or interest in any real
contract, dealing, or transaction or personal property which is part of the
was made, executed, or entered into, estate of any bankrupt, and which, after the
has not at the time of the payment, execution of the deed, conveyance, assign-
delivery, conveyance, assignment, ment, surrender, admission, or other assur-
contract, dealing, or transaction, ance, either at law or in equity, is or remains
notice of any available act of bank- the estate of the bankrupt or of the trujtee
ruptcy committed by the bankrupt under the bankruptcy, and every power of
before that time." attorney, proxy paper, writ, order, certifi-
It is the duty of the trustee to declare and cate, affidavit, bond, or other instrument or
distribute dividends amongst the creditors writing relating solely to the property of any
who have proved their debts. (See Divi- bankrupt, or to any proceeding under any
—
dends In Bankruptcy.) bankruptcy, shall be exempt from stamp
If a debtor's estate is not likely to exceed duty, except in respect of fees under this
/300 in value, it may be administered in Act."
a simpler manner than in the case of an By Section 16 of the Finance Act, 1895,
ordinary bankruptcy. (See Summary the above Section "shall apply to the estates
Administration.! of companies wound up by order of the Court
Where a judgment has been obtained in under the Companies Winding-up Act. 1S90.
70
BAN] DIi I l< iNARY OF BANKING [BAS
and to such winding-up. in like manner as Bank Charter Act, 1844. Section 4, " all per-
if the company were bankrupt and the
a sons shall be entitled to demand from the
winding-up were a bankruptcy." (See Acts issue department of the Bank of England,
of Bankruptcy, Adjudication of Bank- Bank of England notes in exchange for gold
ruptcy, Administration Order. After bullion at the rate of £3 17s. 9d. per oz. of
Acquired Property (under heading Bank- standard gold Provided always, that the
;
rupt Person), Assignment for Benefit said Governor and Company shall in all
of Creditors, Bankrupt Person, Com- cases be entitled to require such gold bullion
mittee of Inspection, Composition with to be melted and assaved by persons approved
Creditors, Compositions (Bankruptcy by the said Governor and Company at the
Act Death of Insolvent Debtor. Deed expense of the parties tendering such gold
of Arrangement, Discharge of Bankrupt. bullion." The notes can. of course, be at
Disqualifications of Bankrupt (under once exchanged for sovereigns. The differ-
heading Bankrupt Person), Dividends ence of 1W. per oz. between the buying
(in Bankruptcy:. Fraudulent Prefer- and the selling prices forms the Bank's
ence. Insolvency, Meeting of Creditors. profit, or rather its remuneration for the
Official Receiver, Preferentl\l Pay- trouble of getting the bullion minted if
ments, Proof of Debts, Public Examina- required, and for the loss of interest upon
tion of Debtor, Receiving Order, the bullion before it is turned into coins.
Registrars (in Bankruptcy), Settle- Bar gold is a kind of international cur-
—
ments Settlor Bankrupt, Summary Ad- rency travelling about from one nation to
ministration, Trustee in Bankruptcy.) another in settlement of exchange balances
BANKRUPTCY PETITION. (See without ever being minted into any country's
Receiving Order.) coinage. (See Mint Price.)
BAR GOLD. Much of the Bank of Eng- BAR OF DOWER. That which bars or
land's stock of gold is not in the form of prevents a widow from obtaining dower.
coins, but of bars, which, from an exporter's (See Dower. )
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 propertv. either
transit is less in the case of bars than of coin. real or personal, is transferred from one
The Bank is bound to pav in sovereigns any person 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 des( ribed as a contract whereby real
{3 17s. lOJrf. per cz. ; 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.)
{3 175. \ld. per oz.. but it would not be BASE COINS. A banker is justified in
worth while to increase it above this figure, breaking or destroying any base coins which
for then an exporter would find it cheaper come into his hands. Section 26 of 24 & 25
for his purpose to get sovereigns to be senf Vict. c. 99 enacts " Where anv coin
:
abroad, to fill the place of which the Bank shall be tendered as the Queen's current gold
would be reduced to having some of its bars or silver coin to any person who shall suspect
minted. the same to be diminished otheru lse than
Any one has the right to take bar gold to by reasonable wearing, or to be counterfeit,
the Mint, provided that the value is not less it shall be lawful for such person to cut,
than /20.000, and have it coined at the rate break bend, or deface such coin, and if
of £3 17s. HUrf. per oz. of standard gold, any com so ut, broken, bent or defaced shall
i
free of all expense of coining, but as a certain appear to be diminished otherwise than bv
period must elapse before the bullion is reasonable wearing, or to be counterfeit,
turned into coins, during which tunc the the person tendering the same shall bear tin-
owner of the gold would lose interest upon loss thereof but if same
shall be of due
the
it. it is the practice to sell gold bullion to and shall appear
be lawful coin, tin-
to
the Bank of England. The price at which person cutting, breaking, bending, or defac-
the Bank of England must buy all gold that ing the same is herein- required to receive the
is offered to it is £3 17s. 9d. per oz. By tin- same at the rate it was coined for and if ;
71
BAS] DICTIONARY OF BANKING [BEA
be heard and finally determined in a sum- colour ; (2) the high specific gravity ; (3)
mary manner by any justice of the peace, the metallic ring of the coin when thrown
who is hereby empowered to examine upon down, which will prove the absence of lead
oath as well the parties as any other person, or platinum in the interior of the coin. Gold
in order to the decision of such dispute and ; is insoluble in all the simple acids and does
the Tellers at the Receipt of Her Majesty's not corrode or become tarnished in any way.
Exchequer, and their deputies and clerks. Strong nitric acid will rapidly attack any
and the Receivers-General of every branch coloured counterfeit metal, but will not
of Her Majesty's Revenue, are hereby re- touch standard gold, or will, at the most,
quired to cut, break, or deface, or cause to feebly dissolve the copper and silver alloyed
be cut, broken, or defaced every piece of with it " (Jevons).
counterfeit or unlawfully diminished gold Where a customer receives money in pay-
or silver coin which shall be tendered to ment of a cheque and takes it away without
them in payment of any part of HerMajesty's making any comment upon it, he cannot,
Revenue." legallv, return to the banker and say that
Base silver coins are very frequently met it contained a base coin. (See Coinage.)
with, and in some cases they are rather diffi- BAWBEE. The name of a coin, equal in
cult at first sight to distinguish from genuine value to the present halfpenny, which was
ones. Various tests are applied to a sus- at one time current in Scotland. It was
pected " silver " coin. If it is a base one it j
issued in the reign of James of Scotland. V
will be easily cut, or bent, or broken, and its The word is still frequently used in
general appearance to the eye of an expert I Scotland when speaking of a halfpenny.
will call attention to its real nature. On \
BEAR AND BULL. Names given to
close examination it be found
will usuallv I
speculators on a stock exchange. A bear
that the raised letters or figures are not so is one who anticipates a fall in a certain
sharply defined as on a real coin. An ex- securitv, and who sells stock which he does
amination of the milling will reveal a rough- not possess, hoping to buy back afterwards
ness and irregularity, which is often particu- at a lower price, the difference constituting
larly noticeable at a spot on the edge repre- his profit.
senting the place where the metal was poured A bull, on the other hand, expects a stock
into the mould. Its weight and size may be to rise in price, and so he buys in, not with
tested with a good coin, and also its sound the intention of paying for it but with the
when thrown upon the counter. The sound object of selling out before the settling day
by itself, however, is not sufficient, as a good at an advanced figure. (See Backward-
coin which is cracked will not give the true ation, Contango, Stock Exchange.)
ring. If caustic marks the coin black it BEARER (CHEQUE OR BILL). "Bearer,"
reveals its baseness, but that test may be in the Bills of Exchange Act, 1882, means
defeated if the surface is a thin coat of silver. the person in possession of a bill or note
A pocket lens is useful in the examination of which is payable to bearer (Section 2).
a doubtful coin as it makes the roughness of " A bill is payable to bearer which is
a counterfeit coin more noticeable. Those expressed to be so payable, or on which the
officers who are much in contact with silver onlv or last indorsement is an indorsement
profess to be able to tell a false from a gen- in blank " (Section 8, s.s. 3).
uine coin by the touch, the false one having "Where the payee is a fictitious or non-
a " greasy " kind of feeling. " A coin or existing person the bill may be treated as
other object made of silver may be known payable to bearer " (Section 7, s.s. 3). A bill
by the following marks (1) A fine pure
: in these sections includes a cheque.
white lustre, where newly rubbed or scraped ; A bill (or cheque) payable to bearer does
(2) a blackish tint where the surface has long not require to be indorsed and a person
;
72
BEAT DICTIONARY OF BANKING [BEA
not require John Brown's signature or any " Cash or order," " House or order " or to
indorsement, as it is on the face of it a bearer any such impersonal word, is now usually
cheque. Anv indorsements on a bearer treated as being payable to " order " and
cheque need not be examined. requiring the indorsement of the drawer.
In practice, a bearer cheque may be Such cheques should, when indorsed, be
altered by the payee from bearer to order, by paid only to the drawer, or his representative
simply striking out the printed word bearer, who is known to be authorised to cash
or by striking it out and writing the word " wages," etc., cheques. Some bankers
order. Such an alteration does not require consider that a cheque payable in that man-
to be initialled. ner is. by virtue of s.s. 3 of Section 7,
An order cheque, however, can be altered quoted above, payable to " bearer." but the
"
on the face into a bearer cheque only by the words " fictitious or non-existing person
drawer, who must initial the alteration ;
can hardly be taken to include such words as
if there are more drawers than one, each
" wages," " cash," etc.
must initial. In Scotland, it is customary to request the
When an order cheque is indorsed in blank, person receiving cash for a bearer cheque to
that is, is not made payable to any one else indorse it. (See Bill of Exchange,
by the payee or indorser, it becomes a cheque Cheove.)
payable to bearer. Any holder may con- BEARER BONDS. A bearer bond, that
vert the blank indorsement into a special is a bond which payable to the bearer, in
is
indorsement, and the cheque (or bill) would contradistinction to a bond which is regis-
again become payable to order. tered in the name of the holder, passes by
A cheque or bill payable to a fictitious or mere delivery the conferred by
full benefits
non-existing person is payable to bearer. the bond, so long as the transferee takes it
In the case of Bank of England v. Vagliano in good faith and for value and without
Brothers (1891, A.C. 107), it was held that a notice of any defect in the transferor's title.
fictitious or non-existing person included a If it should ultimately appear that the trans-
real person who never had nor was intended feror had stolen the bond, or had otherwise
to have anv right to the bills. Lord Herschell a defective title, the transferee's right to
said :"I have arrived at the conclusion that retain the bond would not be affected. A
whenever the name inserted as that of the bearer bond belongs to the class of docu-
payee is so inserted by way of pretence ments called negotiable instruments. (See
merely, without any intention that payment Negotiable Instruments.) Formerly,
shall only be made in conformity therewith, only bearer bonds which were issued in
the payee is a fictitious person within the foreign countries and treated in this country
meaning of the statute, whether the name by merchants as negotiable, were regarded
be that of an existing person or of one who by the Courts as negotiable instruments,
has no existence." but. within recent years, debentures to
A banker incurs no liability in paying, to bearer of an English company have been
the person presenting, an uncrossed cheque recognised by the Courts as negotiable
made payable to bearer by the drawer, even instruments.
if the person who presents such cheque has In Edelstein v. Schuler (1902, 2 K.B. 144.
stolen it. But in an exceptional case, such Bigham, J., said " In my opinion the tune
:
as where a cheque is payable to the " British has passed when the negotiability of bearer
Bank, Ltd.. or bearer." a banker would bonds, whether Government bonds or trading
require to be exceedingly careful in making bonds, foreign or English, can be called in
inquiries before paving such a cheque to a question in our Courts."
stranger, for although it is payable to the Attached to the bond, or in a separate
bearer the banker knows that it is not the sheet, is a series of coupons, each one being
custom for a bank to send a cheque by a dated, if the interest is payable half-yearly,
stranger to be cashed. for a different half-year, and forming the
'Where a person takes a cheque payable to warrant, upon production of which, the
bearer, it is advisable for him to get the holder will be paid the interest represented
transferor to indorse it and so make him a by that coupon. Some coupons are not
party to the cheque, as without the indorse- dated, being payable according to advertise-
ment the transferor could not be sued upon ment. A coupon sheet should not be de-
the cheque. tached from tin- bond. Securities t" 1» an i
A cheque payable to "Wages or order," without the current coupon, are not go .i i
I
73
BEA] DICTIONARY OF BANKING [BED
any office should be entered in a separate Securities Book and the Safe Cus-
[q.v.)
book, or at any rate in a special section of tody Register (q.v.), but in addition the
the ordinary safe custody or securities regis- number upon the face of each bond must be
ter, so that any one can ascertain at once carefully recorded.
what bearer securities are held in that office. BEARER SCRIP. This is a document
The number of each bond or bearer security issued by a government or a company, upon
should be entered in the register, and, when a new issue of capital, until such time as all
any of them are given up to the customers, instalments have been paid and the definitive
a proper receipt should be taken, either in bond is ready. The bearer scrip, like the
the book or on a separate slip, setting forth bearer bond which is eventually received,
the actual numbers and descriptions of the is treated as a negotiable instrument, that
bonds. Bearer securities being, like cash, is a holder for value, without notice of any
Middlesex Deeds. Yorkshire Registry security for an advance the holder of the
of Deeds.) bill is " deemed to be a holder for value to
BELOW PAR. When the market price the extent of the sum tor which he has a
of bonds, stocks, or shares is less than their lien" (Section 27, s.s. 3 Bills of Exchange Act,
nominal or face value thev are said to be at a 1882 , Where the holder, e.g. a banker,
discount, or below par. (See Par.) sues upon the bill at maturity and recovers
BENEFICIAL OWNER. In a conveyance the amount of it, if the sum recovered is
for valuable consideration, other than a greater than the debt owing by the person
mortgage, where the vendor conveys as who deposited the bill, he must pay over the
" beneficial owner " those words have the difference to that person. If the depositor's
meaning (Section 7 of the Conveyancing title to the bill was in order, the banker can
Act, 1881) that he impliedly covenants that recover the whole amount of the bill, but
he has full power to convey the property if the depositor's title was defective the
expressed to be conveyed, that the propertv banker can recover the amount of the bill to
shall be quietly entered upon and enjoyed the extent of his lien, provided he had no
by the person to whom the conveyance is notice of the depositor's defective title when
made, that the property is freed and dis- he took the bill.
charged from all incumbrances and claims When a bill is lodged as security, it should
other than those subject to which the con- be indorsed by the person depositing it, and
veyance is expressly made, and that he will a memorandum of deposit should be signed
execute any further deeds for further or bv the depositor to make it clear that the
more perfectly assuring the property to the bill is pledged as security. When a banker
person to whom the convevance is made. holds a bill as security, he must present it
If the property is leasehold the " bene- for pavment at maturity, and if it is dis-
ficial owner " also impliedly covenants that honoured, he must give due notice of the
it is a good, valid and effectual lease, and dishonour.
that all rents and covenants have been paid BILL BROKER. Bill brokers are mer-
and observed. chants whose special business it is to buy and
In the case of a convevance of freehold to sell bills They buy them from traders and
.
property by way of mortgage, the " bene- sell many of them to bankers, their profit
ficial owner " implies that he has power to being obtained from a difference in the rates,
convey, that, if default is made in pavment the bankers buying from the brokers at one-
of the money intended to be secured, it shall eighth or one-sixteenth per cent, per annum
be lawful for the mortgagee to enter into and below the market rate. A country banker,
hold the property, that the propertv is freed although he discounts bills for his customers,
from all incumbiances other than those to does not obtain such a supply of first-class
which the mortgage is expressly made sub- bills as he can procure from the brokers, and
ject, and that he will execute any further it is to his advantage to buy bills in this way.
necessary deed. because he can purchase just when he pleases
In a mortgage of leasehold property, that and what he pleases. If he anticipates requir-
he will pay all rents and observe all cove- ing a certain sum of money at a certain date,
nants so long as any money remains unpaid. he may purchase bills from the brokers which
(See Title Deeds.) will mature at the time he requires the
BENEFICIARY. A person who benefits funds, and, in addition, in dealing with
under a will called a beneficiary.
is He brokers and discount houses of high stand-
may receive either " real " propertv (see ing, he obtains their guarantee that the bills
Realty), in which case he is a devisee, or he will be met at maturity. When bill brokers
may receive " personal " property (see re-discount bills with bankers, instead of
Personalty) when he is named a legatee.
, indorsing each bill they usually give a
BEQUEST. A gift or legacy of personal guarantee to cover all the bills. An
property by a will. exchange broker is a dealer in foreign bills.
BERTHAS. A Stock Exchange name for Like all other merchants who deal in
London, Brighton, and South Coast Railway -priced commodities, bill brokers
deferred ordinary stock. require a large amount of funds wherewith
BERWICKS. "A Stock Exchange name to trade : this is formed by their own capita]
for North Eastern Railway stock. often great), loans from bankers repayable
BILL AS SECURITY. Where a bill of at call or at short notice, and. in many cases,
exchange has been deposited or pledged as deposits received from the public. A
75
—
'
(3) Where two or more parts of a set are New York.
76
— —— . —
theses become (first and third of the same " (1) The sum payable by a bill is a sum
tenor and date unpaid). certain within the meaning of this
The third part is in all respects the same Act, although it is required to be
as the first and second parts, except that the paid
words in the parentheses are (first and second a) With interest.
of the same tenor and date unpaid I. (b) By
stated instalments.
Only one part of a set requires to be (c) By
stated instalments, with a
stamped. Upon proof of the loss or destruc- provision that upon default
tion of a duly stamped bill forming one of a in payment of any instal-
set, any other bill of the set which has not ment the whole shall become
been issued or in any manner negotiated due.
apart from the lost or destroyed bill may, \ecording to an indicated rate
although unstamped, be admitted in evi- of exchange or according to
dence to prove the contents of the lost or a rate of exchange to be
destroyed bill (Section 39 of the Stamp Act, ascertained as directed by
1S91). (See Bill of Exchange, Foreign the bill.
Bill " (2) Where the sum payable is expressed
BILL LEDGER. The same as Discount in words and also in figures, and
Ledger [q.v.). there is a discrepancy between the
BILL OF EXCHANGE. A bill of exchange two, the sum denoted by the words
is defined by the Bills of Exchange Act, is the amount payable."
18S2. Section as follows :—
3, A bill ma)- be written, printed, or
" (1) A bill of exchange is an uncon- type- written.
ditional order in writing, addressed There is no particular form prescribed by
by one person to another, signed the Act, but bills are nearlv always drawn in
by the person giving it, requiring the same way. The following are specimens
the person to whom
addressed
it is of the ordinary forms of bills of exchange :
between merchants inEngland and those in such as at a certain period after the arrival
another country. For example, where of a ship, is not valid.
Brown England owed money to Dumont
in It is very desirable that bills and cheques
in, would draw a bill upon
say, France, he should be written in ink and not be
Hugo in that country, who happened to type-written, as instruments which are
owe him money, requesting Hugo to pay the type-written are too easily altered.
monev to Dumont. In this way Brown In Pitman's " Bills, Cheques and Notes,"
paid his debt to Dumont without the eight excellent pieces of advice are given
necessity of sending gold from England to with respect to bills of exchange. The hints
France. are principally for traders, though some of
It is said that bills were in common use in them are specially applicable to bankers,
Venice as early as the thirteenth century, but all of them should form part of a banker's
and that they were first used by the Floren- creed with regard to those instruments.
tines in the twelfth century. Inland bills They are given as " practical hints which
were made legal in England in 1697. may serve as warnings " :
The persons whose names appear upon a 1 Never draw or accept an accommo-
bill of exchange are the drawer, the drawee dation bill, unless you are prepared
(who bv accepting the bill becomes the to meet it whenever called upon.
acceptor), the payee (who may also be the 2. When a bill has been drawn by vou.
drawer), and the indorser. These persons endeavour to secure its acceptance
are called the parties to the bill. In addition before negotiating it.
there mav also be the name of the drawee 3. Unless you are to be personally liable
banker at whose office the acceptor makes upon the bill, take care that anv
the bill payable, but he is not one of " the signature you place upon it, whether
parties " to the bill. as drawer, acceptor, or indorser,
The parties who are closely related, as the shows clearl}- that you are signing in
drawer and the acceptor, an indorser and a representative capacity.
the indorser immediately preceding him, 4. Never indorse a bill without receiving
are the " immediate parties." The parties value for it.
who are not closely related, as the drawer 5. Never discount a bill for a stranger.
and an indorsee, are the " remote parties." Be sure that you know the person
A bill mav be an inland bill (that is, one from whom you receive a bill and take
both drawn and payable within the British care that he indorses it.
Islands, or drawn within the British Islands 6. Examine the bill carefully.
upon some person resident therein), or a 7. If you are the holder, present the bill
foreign bill (that is, one drawn otherwise for acceptance, if it has not been
than as an inland bill). accepted, and for payment at the
The holder of a bill of exchange may hold proper time. If either acceptance or
it till it is due and present it for payment payment is refused, give notice at
himself ; or he mav negotiate the bill, that once to every indorser and to the
is, transfer it to another person or he may
; drawer, so as to hold each and all
leave it with his banker with a request that liable for payment.
the bill be collected at maturity and the 8. Upon payment of a bill take care that
proceeds credited to his account or he may ; ,
vou get the document into your own
take it to his banker, or to a bill broker, and possession.
after indorsing it have it discounted. By With respect to the proposed rules regard-
discounting a bill he receives at once the ing the unification of the laws existing in
amount of the bill (which may not be payable different countries relating to bills of ex-
bv the acceptor for some months to come), change, see Unification of Laws of Bills
less the amount charged for discounting it. of Exchange.
The banker debits the amount of the bill to By the Stamp Act, 1S91 the duty is :—
—
.
78
BILJ I>1( TIONARV OF BANKING BIL
money for which the bill is drawn exceeds draft, order, cheque, and letter of credit, and
fifty pounds, be reduced so as to be : — any document or writing (except a bank
Where the amount -exceeds /50 and does note) entitling or purporting to entitle any
not exceed £100, Qd. person, whether named therein or not, to
Where the amount exceeds £100. 6d. payment by anv other person of. or to draw
for every /100. and also for any fractional upon any other person for, any sum of
part of /100 of that amount. money and the expression
; bill of ex- '
(Where the amount does not exceed /50, change payable on demand includes '
the duty is as in the Schedule above.) (a) An order for the payment of any sum
For the purpose of stamp duty, a bill or of monej- by a bill of exchange or
promissory note which purports to be drawn promissory note, or for the delivery
or made out of the United Kingdom is of any bill of exchange or promissory
treated as a foreign bill. The Isle, of Man note in satisfaction of any sum of
and the Channel Islands are out of the money, or for the payment
of any
United Kingdom, and a bill drawn there and sum of money out
any particular
of
negotiated in the United Kingdom is there- fund which may or may not be
fore a foreign bill, so far as stamp duty is available, or upon any condition or
concerned. But under the Bills of Exchange contingency which may or may not
Act, 1882 (Section 4) a bill drawn and be performed or happen and ;
payable within the British Islands (which (6) An order for the payment of any sum
include the Isle of Man and the Channel of money weekly, monthly, or at
Islands) is an inland bill. any other stated periods, and also
On inland bills payable on demand, or an order for the payment by any
at sight, or on presentation, or not exceeding person at any time after the date
three days after sight or date, and on cheques, thereof of any sum of money, and
the penny stamp may be either impressed sent or delivered by the person
or adhesive. In the case of inland bills making the same to the person by
payable otherwise, the stamp must be whom the payment is to be made,
impressed. An adhesive stamp must be and not to the person to whom the
properly cancelled by the person signing payment is to be made, or to any
the bill. (See Section 38 below.) person on his behalf.
On foreign bills, the duties are to be " 33. (1) For the purposes of this Act
'
denoted by adhesive foreign bill stamps. the expression promissory note
'
80
BIL] DICTIONARY OF BANKING BIL
81
6— is
B1L]
DICTIONARY OF BANKING [BIL
thereupon pay the sum in the bill Exceeds /5 and does not exceed £1 2d.
£10 £25 3d.
mentioned, and charge the duty in „ „ .,
6d.
account against the person by whom „ £25 ,. „ £100
the bill was drawn, or deduct the and where the amount exceeds £100, 6d.
duty from the said sum, and the bill for every £100, and also for any fractional
is, so far as respects the duty,
to be part of £100 of that amount.
deemed valid and available. The Board further desire to call attention
•
'
" (3) But the foregoing proviso is not to to Section 3S (1) of the Act of 1891 which
relieve any person from any fine or imposes a fine of £10 upon every person who
penaltv incurred by him in relation |
issues, indorses, transfers, negotiates, pre-
to such bill. sents for payment, or pays any bill of ex-
39. When a bill of exchange is drawn in
change liable to dutv and not duly stamped."
merchants,
a set according to the custom of (See Bills of Exchange Act, 1882 (where
and one of the set is duly stamped, the other a reference is given to the articles which
or in
or others of the set shall, unless issued include the various sections of the Act) ;
some manner negotiated apart from the Acceptance Acceptance, General Ac-
; ;
upon proof of the loss or destruction of a duly Honour Acceptor. Accommodation Bill,
;
stamped bill forming one of a set, any other Agent, Allonge, Alteration's, Amount
bill of the set which has not
been issued or of Bill or Cheque, Answers, Ante Dated.
in any manner negotiated apart from
the Bearer, Bills for Collection, Bill in a
lost or destroyed bill may, although Set. Cancellation of Bill of Exchange,
unstamped, be admitted in evidence to prove Cheoue, Consideration for Bill of Ex-
the contents of the lost or destroyed bill." change, Date. Days of Grace, Delivery
If a receipt is placed upon a bill it
requires
of Bill, Dishonour of Bill of Exchange,
a penny stamp, but the name of a banker Documentary Bill, Draft after Date,
(whether accompanied by words of receipt Drawee. Drawer, Foreign Bill, Forgery.
or not) written in the ordinary course of his Holder for Value, Holder in due Course.
business as a banker upon a bill of exchange Holder of Bill of Exchange, Inchoate
or promissory note duly stamped, is exempt. Instrument, Indorsement, Indorser, In-
(See Receipt.) land Bill, Lost Bill of Exchange, Nego-
A foreign bill which is both drawn and tiation of Bill of Exchange, Noting,
payable abroad, does not require to be Order, Overdue Bill, Part Payment.
stamped in this country if received by a Parties to Bill of Exchange, Payee,
banker merely for acceptance and return ;
Paying Banker, Payment by, Payment
but if indorsed or negotiated in this for Honour, Payment of Bill, Post
country it must be stamped. See the follow- Dated, Presentment for Acceptance,
ing circular which was issued by the Board Presentment for Payment, Promissory
of Inland Revenue in May, 1907
:— Note, Protest, Referee in Case of Need,
" The Board of Inland Revenue, having Retiring a Bill, Supra Protest, Time of
reason to believe that some misapprehension Payment of Bill, Transferor by De-
exists on the subject, desire to call attention livery, Unification of Laws of Bills of
to the fact that bills of exchange, although Exchange.)
both drawn and expressed to be payable A receipt for goods,
out of the United Kingdom, are never-
BILL OF LADING.
stamp duty if upon shipment, signed by some person
theless chargeable with
authorised to sign the same on behalf of the
'
actually paid, or indorsed, or in any
shipowner. The document states that the
manner negotiated in the United Kingdom.'
(See Bill of Exchange, etc.. in the first
goods have been shipped in good order, and
quotes the rate at which the freight is to be
Schedule to the Stamp Act, 1891. See also
Finance Act, 1899, Section 10.) paid by the consignees. A note is usually
The duty chargeable on a bill of this
' made upon a bill of lading that the weight,
quantity and quality of the cargo is unknown.
'
82
—
there are two copies, unstamped. Of these complete security, that all the bills of lading
" copies " one is given to the master and should be held.
the other is retained by the loading brokers. In addition to holding all the bills of
The " copies " are of no value. One of the lading, a " stop order " upon the goods may
three stamped bills of lading is sent by the be lodged by the person about to make an
shipper to the consignee by one mail, and advance upon them.
another is sent to him by another route, if With regard to the three parts of a bill of
possible, or by the following mail, and the lading Earl Cairns said (in Glyn 6- Co. v.
third is retained by the shipper as evidence The East and West India Dock Co., 1882,
in support of a claim for insurance, in the 7 A.C. 591) " Ml that any person who
event of the ship being lost, that the goods advances money upon a bill of lading will
were in that ship. On the arrival of the have to do, if he sees, as he will see on the
ship at its destination the consignee may. face of the bill of lading, that it ha
by handing the bill of lading to the master signed in more parts than one, will be to
of the ship and paying all claims for freight require that all the parts are brought in
and other charges, obtain possession of the that is to sav, that all the title-deeds are
goods. If the consignee wishes to transfer brought in. I know that that is the practice
the goods to some other person, he can. by with regard to other title-deeds, and it
simply indorsing the bill of lading and strikes me with some surprise that any one
delivering it to that person, constitute him would advance money upon a bill of lading
the absolute owner of the goods. If such a without taking that course of requiring the
transfer is made by the consignee in good delivery up of all the parts. If the person
faith and for value, the consignor's right to advancing the money does not choose to do
stop the goods in transit is cancelled ; but that, another course which he may take is.
as a bill of lading is not a negotiable instru- to be vigilant and on the alert, and to take
ment, it follows that if the person who trans- care that he is on the spot at the first
fers it has no title or a defective title to the arrival of the ship in the dock. Ii those
goods, the person to whom it is transferred who advance monev on bills of lading do
obtains no better title than the transferor not adopt one or other of those courses, it
had. appears to me that if they suffer, they sutler
During the time a cargo is at sea, the bill in consequence of their own act."
is the symbol of the cargo, and
of lading the
'
the cargo." j
he may take up the bills of lading and
If the consignee's name is not inserted in instruct the shippers to send the wool by
the bill of lading, the ownership of the goods rail to his order. He may then direct the
remains in the consignor. railway company to deliver it to the combers,
When the goods received on board are j
on his behalf, who will ascertain and advise
in good order and no adverse remarks, such [
the banker as to the various qualities and
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 of lading, 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. .'(, Sale of Goods
liable if he delivers the goods to the pur- 1S93 :— " Where the seller of goods draws
chaser who comes first with a bill of lading, on tl 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 buver 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." him."
It is therefore necessary, in order to have a Instead of sending bills of lading direct
—
to the consignee, the consignor may draw a place, upon a sale of the goods, Section 1
bill of exchange upon the consignee for the of the Bills of Lading Act, 1855, enacts : —
" Every consignee of goods named in a
value of the goods despatched and attach
the bills of lading to the bill. Those docu- bill of lading, and every indorsee of a bill of
ments may then be sent by the consignor's lading to whom the property in the goods
bankers to their correspondents in the town therein mentioned shall pass, upon or by
where the consignee lives, with a request to reason of such consignment or indorsement,
present the bill to the consignee for accept- shall have transferred to and vested in him
ance ; and instructions are often given that all rights of suit, and be subject to the same
the bills of lading may be handed to the liabilities in respect of such goods as if the
consignee upon his accepting the bill. The contract contained in the bill of lading had
consignee can then obtain the goods, sell been made with himself."
them and be in a position to meet his Where a banker, by instructions of a
acceptance at maturity. customer, accepts a bill drawn by a client of
Frequently the consignor draws a bill upon that customer against bills of lading, the
the consignee and discounts it at his bankers, banker will not be liable if the bills of lading
pledging the indorsed bills of lading as should afterwards prove to be forgeries.
security, and the banker has to send forward Bills of lading vary somewhat in form,
the bill to his correspondents to obtain the but the general effect is the same. The
drawee's acceptance (see Documentary following is a specimen of a simple form,
Bill) or the consignor may, under in-
;
though some bills of lading are much more
structions, draw upon the consignee's elaborate :
banker, the bills of lading being attached Shipped, in good order and well conditioned,
to the bill of exchange.
by
When bills of lading are given as security. whose responsibility ceases on
a memorandum of deposit, or note of hypo-
the present being signed, in and upon the
thecation, is taken, which provides that, in
good Ship or Vessel, called the
default of payment, the banker may sell the
goods represented by the bills. The docu- whereof is master
ment is usually stamped with a fixed duty of for this present Voyage, now lying in the
sixpence. In some cases, where an advance
Harbour of
has been made upon bills of lading, the bills
and bound for
are handed to the borrower upon his signing
a trust receipt. (See Trust Receipt.)
Where a bill of lading is taken as security
containing such a clause as " all conditions
" being marked and numbered as in the Margin,
of every character as per Charter Party
and to be delivered in like good order and
(see below), the lender should ascertain
well conditioned at the aforesaid Port of
what are the conditions in the Charter
Party, as that document may reserve to the
owners of the vessel the right of hen upon (The Act of God, Perils of the Sea, Fire, Barratry of
the cargo for payment of freight, demurrage |
the Master and Crew, Enemies, Pirates and Robbers,
Arrests and Restraints of Princes, Rulers and People,
and other charges. and other Accidents of Navigation excepted. Stand-
A bill of lading pledged as security should ings and Collisions, and all losses and damages caused
be indorsed either in blank or to the banker. thereby, also excepted, even when occasioned by
It has been held by the House of Lords that negligence, default, or error in judgment of the Pilot,
Master, Mariners, or other Servant of the Shipowners,
where a bill of lading is indorsed and pledged but nothing herein contained shall exempt the Ship-
by way of security, that a banker indorsee owners from liability to pay for damage to cargo
is not subject to the same liabilities in occasioned by bad stowage, by improper or insuf-
ficient dunnage or ventilation, or by improper
respect of the goods as a person to whom a
opening of Valves, Sluices and Ports, or by causes
bill of lading is indorsed upon a sale of the other than those above excepted, and all the above
goods (Burduk v. Sewell, 1884, 10 A.C. 74). exceptions are conditional on the Vessel being Sea-
But if the banker claims the goods in order worthy when she sails on the Voyage, but any latent
defects in the Hull and Machinery shall not be con-
to realise his security, he is then liable for ,
sidered unseaworthiness, provided the same do not
the freight, warehouse charges, and all result from want of due diligence of the Owners or
charges payable in accordance with the any of them, or of the Ship's Husband or Manager!
terms of the bill of lading. unto
Where a transfer of a bill of lading takes
84
— — —
Lading may be issued after proper delivery include bills of sale, assignments, trail
of the cotton, but before arrival of the vessel declarations of trust without tran
in port." Within three weeks from its date inventories of goods with receipt thi
a master's (or agent's) receipt is to be fur- attached, or receipts for purchase mi i
nished proving the actual shipment of the of goods, and other assuran* < oi 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 oi
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 int< i
who have signed a letter of agreement with or not to be followed by the execution oi
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
In view of recent cotton frauds in America, charge or security thereon, shall be con-
the following resolution has been agreed to
(July, 1910) by certain bankers in London ins ; that rtments for
and Liverpool " That the banks comprised
: the benefit the oi >1 the p
in this committee agree that in the case of making or gi\ ing the
drafts drawn upon the banks against bills
of lading for cotton negotiated through or vessel, . i fers of
Exchange buyers in America, the ! i goods in the ordinal of busine
will decline, from I >< tober31 [since extended any trade or calling, b ale of goods in
S5
BIL] DICTIONARY OF BANKING [BIL
foreign parts or at sea, bills of lading, India In witness whereof the said A. B. hath
warrants, warehouse-keepers' certificates, hereunto set his hand and seal the day and
warrants or orders for the delivery of goods, year first above written.
or any other documents used in the ordinary
A. B.
course of business as proof of the possession
or control of goods, or authorising or pur- Signed and sealed by the said
porting to authorise, either by indorsement A. B. in the presence of me,
or by delivery, the possessor of such docu- E. F.
ment to transfer or receive goods thereby [Add witness's name, address, and de-
represented." scription.]"
The Bills of Sale Act does not apply to
any debentures issued bv any mortgage. The schedule must specifically describe
loan or other incorporated company, and the chattels which are assigned. It has
secured upon the capital stock or goods, been held, in the case of a bill of sale void
chattels, and effects of such company because it was not drawn in accordance with
(Section 17 of of Sale Act (1878)
Bills the legal form, that the covenant in the
Amendment Act.
1882). bill to pay principal and interest was also
A bill of sale must be in accordance with void.
the form given in the Schedule to the Bills A bill of sale given in consideration of any
of Sale Act (187S) Amendment Act, 1882 :— sum under /30 shall be void (Section 12 of
the above Act).
From the above form of bill of sale it will
Form of Bill of Sale. be seen that the amount which it is to secure
must be a specified sum, and not, for
'
This Indenture made the day of example, a fluctuating balance.
,between A. B. of of the one A bill of sale must be registered within
part and C. D. of of the other part, seven clear days after its execution ; and
witnesseth that in consideration of the sum requires re-registration once at least every
of £ now paid to A. B. by C. D., the five years.
receipt of which the said A. B. hereby An assignment of a registered bill of sale
acknowledges [or whatever else the con- does not require registration. Any person
sideration may be], he the said A. B. doth is entitled to search the register on payment
hereby assign unto C. D., his executors, of a fee of one shilling.
administrators, and assigns, all and singular The grantee of a bill of sale ma}' seize the
the several chattels and things specifically chattels thereby assigned if the grantor
described in the Schedule hereto annexed makes default in payment of the sums
by way of security for the payment of the secured by the instrument, or becomes
sum of £ and interest thereon at the
, bankrupt, or suffers any of the goods to be
rate of per cent, per annum [or what- distrained for rent, rates, or taxes, or fraudu-
ever else may be the rate]. And the said lently removes any of the goods, or fails,
A. B. doth further agree and declare that without reasonable excuse, to produce to
he will duly pay to the said C. D. the prin- th« grantee his last receipts for rent, rates
cipal sum aforesaid, together with the and taxes, or if execution has been levied
interest then due, by equal payments against the grantor's goods under any
of £ on the day of [or what- judgment at law (Section 7, Bills of Sale
ever else may be the stipulated times or Amendment Act, 1882).
time of payment]. And the said A. B. doth If 'two bills of sale are given upon
also agree with the said C. D. that he will the same property, priority is decided
[here insert terms as to insurance, payment according to the order of the date of their
of rent, or otherwise, which the parties may registration.
agree to for the maintenance or defeasance A bill of sale is void if the grantor becomes
of the security]. bankrupt within two years after the date, or
Provided always, that the chattels hereby at any time within ten years unless the
assigned shall not be liable to seizure or to claimants can prove that the grantor was
be taken possession of by the said CD.
for solvent at the time he gave the bill of sale.
anv cause other than those specified in (See —
Settlements Settlor Bankrupt.)
Section 7 of the Bills of Sale Act (1878) As to the stamp duty, the Stamp Act,
Amendment Act, 1882. 1891, savs :—
86
B1L] DICTIONARY OF BANKING (BIL
By way of security. See Mortgage, etc. with his banker to be collected at maturity
And see Section 41. as follows : — and of which the proceeds are to be credited
"A bill sale is not to be registered
of to his account. Such bills may be entered
under any Act for the time being in force to the credit of an account kept for bills
relating to the registration of bills of sale received for collection and to tin- debit of a
unless the original, duly stamped, is produced contra account, so that a proper record may
to the proper officer." be preserved.
BILL OF SALE, SHIP. A registered ship, Where bills are paid to credit of an a< <
or a share therein, is transferred to a pur- and are neither discounted nor drawn again
—
t
chaser by a bill of sale. (See Ship Mort- the bills remain the property of the ustomer.
(
for collection to the bank at which they are essential particulars of each bill should be
accepted pavable. given, e.g. date received and from whom,
BILLS DISCOUNTED BOOK. A list of the drawer's and acceptor's names where
all billsdiscounted is kept in this book and full pavable. the currency, the amount when
particulars of each bill are given, e.g. date due. and when remitted.
when discounted and for whom, the drawer's BILLS OF EXCHANGE ACT, 1882 (45 A: 46
and acceptor's names, where and when pay- Vict. c. 61). An Act to codify the law relat-
able, the amount, the currency, and the ing to bills of exchange, cheques, andpnmu
amount of discount received. In some sorv notes (August IS, 1882 .
banks the book is called the bill register. " Be it enacted bj Quei
(See Bill Register.) cellent Majesty, by and with the advici
BILLS FOR COLLECTION. Bills left for consent of the Lords Spiritual and Temporal,
collection (or " short bills," they are some-
.is and Commons, in this present Parliament
times called, a term which originated in the assembled, and by the. authority ol
custom of entering the bills in the customer's as follows : —
87
— —
'
Delivery means transfer of possession,
'
The validity of any usage
actual or constructive, from one per- relating to dividend war-
son to another. rants, or the indorsements
'
Holder means the payee or indorsee
'
thereof.
of a bill or note who is in possession " 98. Nothing in this Act or in any repeal
of it, or the bearer thereof. effected thereby shall extend or restrict, or
'
Indorsement means an '
indorsement in any way alter or affect the law and practice
completed by delivery. in Scotland in regard to summary diligence.
Issue
'
means the first delivery of a bill
' " 99. Where any Act or document refers
or note, complete in form to a person to any enactment repealed by this Act, the
who takes it as a holder. Act or document shall be construed, and shall
Person
'
includes a body of persons
'
operate, as if it referred to the corresponding
whether incorporated or not. provisions of this Act.
Value means valuable consideration.
' ' " 100. In any judicial proceeding in Scot-
Written
'
includes printed, and writ-
' '
land, any fact relating to a bill of exchange,
ing includes print." '
bank cheque, or promissory note, which is
The following sections have a special relevant to any question of liability thereon,
reference to the Act itself :
may be proved by parol evidence Pro- :
" 92. Where, by this Act the time limited vided that this enactment shall not in any-
for doing any act or thing is less than three way affect the existing law and practice
days, in reckoning time, non-business days wherebv the party who is, according to the
are excluded. tenor of any bill of exchange, bank cheque, or
Non-business days
'
for the purposes of '
promissory note, debtor to the holder in the
this Act mean — amount thereof, may be required, as a con-
(a) Sunday, Good Friday, Christmas Day ;
dition of obtaining a sist of diligence, or
(b) A bank holiday under the Bank Holi- suspension of a charge, or threatened charge,
days Act, 1871 or Acts amending it ,
;
to make such consignation, or to find such
(c) A day appointed by Royal proclamation caution as the Court or judge before whom
as a public fast or thanksgiving dav. the cause is depending may require.
Any other day is a business da}-. This Section shall not apply to any case
" 97. (1) The
rules in bankruptcy relat- where the bill of exchange, bank cheque, or
ing to of exchange, promissory
bills promissorv note has undergone the sexennial
notes, and cheques, shall continue prescription."
to apply thereto notwithstanding All the other Sections of the Act will be
anything in this Act contained. found under the articles to which the}- refer.
" (2) Therulesof common law, includingthe The following is a list of the sections and the
law merchant, save in so far as thev articles to which reference mav be made : —
88
. .
Part I
Preliminary
Section.
1 Short title .... See abo\ e
2. Interpretation of terms
Part II
Bills of Exchange
payable Interest.
s.s. 3
10 Bill payable on demand .... Time of Payment of Bill.
11 Bill payable at a future time .... Date.
do.
12 'mission of date in bill payable after date
....
<
capacity ,. !
The '
ition for a Bill
89
BIL] DICTIONARY OF BANKING [BIL
c ,. Negotiation
° of Bills
bection.
31. Negotiation of bill See Negotiation of Bill of
Exchange.
32. Requisites of a valid indorsement Indorsement.
33. Conditional indorsement ,
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 alreadv 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 ,, 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
46. Excuses for delay or non-presentment for payment
.... ,,
,,
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 Drawee.
54. Liability of acceptor Acceptance.
-- T . , .,.. , , • , s.s. 1 ,,Drawer.
33 Liability of drawer or indorser I
\ s 2
. . . .
^ „i NDO rser.
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 due course in Payment of Bill.
60. Banker paying demand draft whereon indorsement
is forged do.
61. Acceptor, the holder at maturity ,
do.
62. Express waiver or renunciation ,, do.
63. Cancellation ,
Cancellation of Bili
Exchange.
64. Alteration of bill Alterations.
Acceptance and Payment for Honour
65.
66.
Acceptance honour supra protest
for
Liability of acceptor for honour
.... See Acceptance for Honour.
do.
67. Presentment to acceptor for honour Presentment for Payment.
68. Payment for honour supra protest Payment for Honour.
90
BIL] DICTIONARY OF 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.
.
in a Set
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 denned 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
77. Crossing by drawer or after issue
.... See Crossed Cheque.
,, do.
78. Crossing a material part of cheque
79. Duties of banker as to crossed cheques ... ,, do.
80. Protection to banker and drawer where cheque is
crossed
SI. Effect of " not negotiable " crossing on holder . ,, do.
82. Protection to collecting banker ,, do.
Part IV
Promissory Notes
53. Promissory note defined See Promissory Note.
54. Delivery necessarv ,, do.
55. Joint and several notes do.
86. Note payable on demand Presentment for Payment.
87. Presentment of note for payment
88. Liability of maker ,, Promissory Note.
89. Application of Part II to notes
Part V
Supplementary
90. Good faith See d Faith.
91. Signature by agent ,, Agent.
92. Computation of time Time of Payment ok Bill.
93. When noting equivalent to protest Proti
94. Protest when notarv not accessible do.
95. Dividend warrants may be crossed Cross] UE.
96. (Repealed bv Statute Law Revision Act, 1898,
61 & 62 Vict. c. 22
97. Savings above.
98. Saving of summary diligence in Scotland ab
99. Construction with other Ai ts, etc
100. Parol evidence allowed in certain judicial procei
ings in Scotland ,, above.
Schedule I. Form of Protest Protest.
91
—
cost by the Mint, and that they would circu- to acquire the legal title to stock or shares
late at a ratio to each other as fixed by the in companies governed by the Companies
Government. Clauses Consolidation Act, 1S45, you must
92
.
itself was put in as the transferee and the binds himself for twice the actual amount
bank got itself registered. . . .What was intended to be secured, so as to cover prin-
the effect of what had been done ? It was cipal, interest and all charges. The /200 is
not that the bank got a good title. The called the penalty, and the instrument
registration of the stock in the bank, unless usually continues " Xow the condition of
:
preceded by a valid deed transferring the the above written bond is such that if the
stock from the owner of it, does not give the above bounden Brown, his heirs, executors,
transferee a good title at all. Wehave not or administrators shall pay unto the said
to consider the effect of documents executed Jones the sum of £\QQ by the instalments
in blank as agreements enforceable in equity. following etc. , Then the .
We have nothing to do with that, but we are above written bond shall be void, otherwise
considering the legal title of the bank. The the same shall remain in full force."
bank had no legal title at all." In that case The duties imposed by the Stamp \ '
93
, ) •
the
covenant amount
payable can be ascer- for such
/150. of the
tained.
The Inland Revenue do
total
amount.
In any other case . . .050 penalty.
charge Exemption.
not, in practice,
duty on more than Bond given as aforesaid upon,
twenty times the annual or in relation to, the receiv-
sum.) ing or obtaining, or for en-
titling any person to receive
For the term of life or any
other indefinite period. or obtain, any drawback of
For every /5, and also for anv duty of excise or cus-
any fractional part of £5, toms, for or in respect of any
of the annuity or sum goods, wares, or merchan-
periodically payable. 2 6 dise exported or shipped to
Being a collateral or auxi- be exported from the
(2)
United Kingdom to any
liary or additional or sub-
stituted security for any of parts beyond the seas, or
the above-mentioned pur-
upon or in relation to the
poses where the principal obtaining of any debenture
or primary instrument is or certificate for entitling
duly stamped. any person to receive any
The same ad such drawback as aforesaid.
valorem
And see Section 42 as fol-
Where the total amount to
duty as a
bond or lows : —
covenant " If any person required by any Act
be ultimately payable can of the
be ascertained same kind for the time being in force or by the Com-
for such
total
missioners, or any of their officers, to give or
amount. enter into any bond for or in respect of any
In anv other case : duty of excise, or for preventing any fraud
For every £5, and also for or evasion in relation to any such duty, ot
anv fractional part of £5, for any matter or thing relating thereto,
of the annuity or sum includes in one and the same bond any goods
periodically payable. 6 or things belonging to more persons than
(3) Being a grant or contract one, not being partners or joint tenants, or
for payment of a super- tenants in common, he shall for every offence
annuation annuity, that is incur a fine of fifty pounds."
to say, a deferred life an- £ s. d.
94
.
Deed or Writing for making of credit and disposition " is a deed which
redeemable any disposition, as- enables heritable (real) property to be made
signation, or tack, apparently available for a cash credit (that is an over-
absolute, but intended only as a draft on a working account, on which the full
security. advance need not be taken in one amount)
See Mortgage, and etc., By law, however, the security is available
Sections 23 under Agree- only to the amount specified in the bond and
ment and 86 under Mort- three years' interest at 5 per cent. The deed
gage. is a combination of a " bond of credit " and
Bond to Bearer. iSee Marketable a disposition or conveyance of property to
Security.) the creditor. The bond must be registered
BOND AND DISPOSITION IN SECURITY. in the Register of Sasines. (See Bond
In Scotland, the usual method of obtaining of Credit, Bond and Disposition in
a security over heritable (or real) propertv Security.)
is by way of a deed, called a bond and dis- BONS. A name given to documents, such
position in security. The deed is a com- as French Treasury Bonds, upon which is
bination of a personal bond by the debtor printed the word " bon " in conjunction with
and a conveyance of property bv the debtor the amount of the bond, e.g. " Bon pour cent
(or by a third party) in favour of the banker francs," good for one hundred fram>.
lending the money. The advance, how- BONUS. The profits of an assurance com-
ever, must be made at once and in one pany, which are distributed periodically to
amount. The bond must be registered in the policyholders, are called bonuses. Part
the Register of Sasines and priority is ob- of these " profits " arises from the unused
tained according to the date of registration. portion of the " loading," as it is called thai ;
Though the personal obligation in the is. the amount included in the premium i
bond can be enforced for repayment of specially to pay expenses. (See Life Policy.)
whatever debt is due by the debtor to the The word is also applied to an extra-
banker, any surplus there may be on realisa- ordinary division of the i" pany,
tion of the property, cannot be held for any in addition to the ordinary dividend.
other debt than that specified in the deed. BOOK DEBTS. The i; its,"
(See Consignation Receipt.) which appears upon the I
of credit, or " cash credit bond," is a per- merely by two li\ iduals
i i
95
BOO] DICTIONARY OF BANKING [BOR
as it appears in the books of a company. Stock Exchange Trans- Title Deeds Book.
actions. Transfer Register.
According to circumstances, a book value
Teller's Cash Book. Walks Book.
may be either more or less than the actual Till Book. Waste Book.
market value.
BOOKS.The books in use are not the BOROUGH ENGLISH. A peculiar cus-
same The rulings ana method
in all banks. tom in connection with real property in cer-
of keeping them vary, and in some cases a tain old citiesand boroughs, by which the
book which is used for a certain purpose property descends to the youngest son
in one bank may. under the samename.be instead of to the eldest.
used for a different purpose in another bank. BORROWED NOTE. A name some-
All the books of a bank, however, from the times given to the agreement which is
humblest to the most important, are re- signed by a borrower when bearer bonds
quired to be neatly and accurately kept, and or registered securities are given bv him
each member of the staff is expected to take as cover for a loan. The agreement gives
a pride in so keeping any books for which the banker authority to sell the securities in
he is responsible that, in the event of the the event of the loan not being repaid at the
books being at any time produced in Court, specified time, or of the stipulated margin
they will not afford an opportunity to any on the securities not being maintained.
one for adverse criticism. Figures in ledgers, BORROWING ON CONSOLS. This refers
etc., should be called over day by day and to a method adopted by the Bank of Eng-
all calculations be duly checked. land for making an increase in its " Bank
is a list of a number of the
The following Rate " effective in preventing an undue
principal books in use (in some cases the drain of gold from its reserve. A large con-
same book appears under different names) stituent of the item " Other Deposits " in
though they will not all be found in any one the Bank Return is formed by the balances
bank : — of the other London banks. In ordinary
times, therefore, when the amount of " Other
Acceptance Register. Dividend Register.
Acceptance Ledger. Draft Book. Deposits " is high, it implies that the money
Acceptors' Ledger. Exchange Book. market (the London banks and bill brokers)
Accounts Opened and General Ledger. has a considerable sum of floating money
Closed Book. Investment Ledger.
at its disposal, which, seeking for any
Advice Book. Journal.
Attendance Book. Key Register. profitable investment rather than lying idle
Balance Book. Letter Books. in the hands of the Bank, competes for the
Bank Note Register. 1. nters Despatched, bills that are offered for discount and so
Bank Rate Book. Register.
Bankers' Ledger. Letters of Credit. prevents the market rate of discount from
Bearer Bonds Register. Letters Received Regis- closely following the Bank Rate. But the
Bill Diary. ter. only certain way to counteract the outflow
Bill Ledger. Loans Ledger.
of gold from the country is to increase the
Bill Register. Loans Register.
Bills Discounted Book. London Agent's Ledger. value of money at home, which proceeding
Bills for Collection Book. Minute Book. acts in two ways it renders the export of
:
with the Bank of England, the money market destination. A lender must exercise the
has no alternative but speedily to raise its greatest care, as a captain has no authority
rate, and the desired result is obtained. to bind the ship-owner, except in case of
(See Bank Rate, Bank Return.) itv. (Sec Respondentia.)
BORROWING POWERS. When a com- BOUGHT NOTE.
The contract noti
pany wishes to borrow, a banker should, \\hi< given by a stockbroker to his client,
h is
company's property. Directors must not also that an importer goes to buy a draft
—
act ultra vires -that is. beyond their powers. (the same that the above exporter
In dealing with a company it is of the first which he remits to the foreign seller, so
importance to see, as Lord Halsbury said making payment for the goods imported
(in County of Gloucester Bank v. Rudry In this country the foreign bill business is
Merthyr Steam and House Coal Colliery Co., focussed at the Royal Exchange, London.
1895, 1 Ch. 629), "that the acts which the On the continent, stock exchange bus
company is purporting to do are acts within is also conducted at the Bourses.
the general authority of the company, and BRANCHES. For some purposes tin-
if those public documents, which every one branches of a bank are treated as though
has a right to refer to, disclose an infirmity they were separate banks, e.g. one branch
in their action, they take the consequences is not obliged to pay a cheque drawn upon
of dealing with a joint stock company which another branch, and one branch may. m
has apparently exceeded its authority." giving notice of dishonour, treat the other
Where nothing is said in the memorandum branch, in the matter of time, as a separate
and articles as to borrowing, a right to institution. On the other hand, branches
borrow is presumed in the case of a trading •
are regarded as parts of one body in certain
company for the purposes of its ordinary cases, e.g. a credit balance at one bi
business. The above remarks apply whether mav be used to reduce an overdrawn account
the company desires to borrow by way of of the same customer .it another branch :
overdraft (either unsecured or secured by a and where a customer has two account
mortgage of its property), or by debentures, in credit at one branch and one ovi rdrawn
or by discounting bills. (See Companies. at another branch, and he presents a . I
Company Limited by Shares.) at the branch with the credil balance, the
BOTTOMRY BOND. A document by banker is entitled, in considering whethei
which the master or captain of a ship charges he should pay the cheque, to regard the two
or hypothecates the ship as security- for the accounts as one account, but if there let-
repayment of a loan. The circumstances been an agreement, or the p un the
under which such an instrument could be past has been to treat the two accounts as
created are where the ship is in a foreign quite distinct, the banker ould not, without
i
port and certain repairs are absolutely due notice suddenly change his method of
necessary in order to enable the ship to con- dealii
tinue its voyage, and the captain has no For most purposes the head office and
other means of raising the money required branches are regarded as one
been helil that Dotii e to the head -
to effect the repairs, and is unable to com-
municate with the owners. The money act of bankrupt! \ is equi 1
7— (1555) 97
BRA] DICTIONARY OF BANKING [BUC
A draft drawn by one branch upon another, When a balance sheet of the bank is pre-
or upon the head office, is not a cheque so far pared, the branches ledger balance is set off
as the bank is concerned, and therefore pro- against the balances at the branches.
tection against a forged indorsement is notob- BRASSAGE. A charge which was made
tained by Section 60 of the Bills of Exchange at one time by the Mint, to cover the ex-
Act. It has been held, however (Capital and pense of coining, when any one took gold
Counties' Bank v. Gordon, 1903, A.C. 240), bullion to be coined. The charge was abol-
that the bank is protected by Section 19 ished
in 1666. Sovereigns can now be
of the Stamp Act, 1853. (See Draft.) obtained for bullion free of cost. (See
^Vhere a crossed cheque drawn on one Seigniorage.)
branch is paid to credit of a customer's BREAKING UP VALUE. The value of a
account at another branch of the same property merely as old material.
bank, the branches in such a case may be BRIGHTON A. A Stock Exchange name
regarded either as one bank (in which case for London, Brighton and South Coast
protection against a forged indorsement is Railway deferred ordinary stock.
obtained by Section 60 of the Bills of Ex- BROKEN ACCOUNT. An account is
change Act) or as practically two different said to be " broken " when operations upon
banks, payment being made by one to the it are stopped, and all subsequent trans-
other (in which case the payment fulfils the actions are passed through a new account.
requirements of Section 79). This takes place, for example, upon the
A copy of the statement as prescribed by death of a surety, when a banker wishes to
Section 10S of the Companies (Consolidation) preserve his recourse against the estate of
Act, 1908, must be exhibited in a conspicuous the deceased. Unless the debtor's account
place in every branch. (See under Banking is broken, all payments to credit go to
Company.) release the surety, and all debits form a
A customer may pay in at any branch to fresh unsecured advance. (See " Clayton's
his credit at the branch where he keeps his Case.")
account. He may also, as a rule, arrange to BROKERAGE. The charge of so much
have his cheques cashed at other branches. per cent, or per share made by a broker for
In such a case the branch where his account is carrying out the instructions of a client to
kept advises the branch where they are to be buy or sell stocks or shares. (See Stock-
cashed to pay them up to a certain limited broker.)
amount in any one day, or as may be desired, BROKERS. Persons who buy and sell
and furnishes at the same time a specimen goods, bills, stocks and shares, etc., on behalf
of the drawer's signature. (See Standing of other persons. (See Bill Broker, Stock
Credits.) broker.)
BRANCHES LEDGER. This book is kept BRONZE COINS. Bronze coins are issued
at the head office and contains an account by the Mint for a penny, half- penny and
for each branch of the bank, into which farthing. Copper coins (which were first
accounts are posted all the transactions issued in 1672) were replaced by bronze in
between the branches and the head office. 1 860 . They are still commonly called copper
The transactions may be entered up with a coins.
certain amount of detail, or daily totals only The composition of bronze is ninety-five
may be shown. Each branch keeps an parts of copper, four parts of tin, and one
account in the general ledger with the part of zinc.
head office, posted either in detail or by Bronze coins are legal tender only to the
daily totals, and this account should agree extent of one shilling.
with the account for the branch at head Slot gas meters have had a remarkable
office in the branches ledger. If the head effect in withdrawing pennies from circula-
office balance at the branch is debit, the tion, and producing quite a famine of " cop-
balance shown in the ledger at head office per " in some districts until the meters
will be credit. In order to ascertain accu- are collected, when a sudden superabundance
rate^ the profit made by each branch it is of copper is obtained. (See Coinage.)
necessary for the head office to allow BRUM OR BRUMS. A Stock Exchange
interest on the balance standing to a branch's name for London and North-Western
credit, or, on the other hand, to charge Railway Stock.
interest on the amount which head office BUCKET SHOP. A slang term which is
may have lent to a branch. applied to an " outside " stockbroker's
9S
—
office, where the business is of a gambling And also that the lessee will within
nature. An outside broker is one who is months from the date hereof erect
not a member of the Stock Exchange. dwelling houses upon the said ground
BUILDING LAND. Building land is, as to the reaso atisfaction of the
a rule, one of the most unsatisfactory said lessor,
securities which can be offered to a banker. And also keep in good and substantial
At the time the security is taken there may. order and repair the said dwelling
perhaps, be a large demand for building land houses.
in the neighbourhood, but there is no And in such good and substantial order
guarantee that the demand will continue. and repair will on tire expiration of the
In a very short time it may cease altogether, determination of the term hereby
and, for various reasons, some other district limited peaceably yield and deliver the
be favoured for street extensions. If the same premises to the lessor.
property comes into the banker's hands, he And the lessee will insure the said dwelling
may fail to find anyone to purchase it at houses.
anything like its original cost, and the longer Provided always and it is hereby .i
it is held the less its value may become. and declared that in case the said yearly
The surrounding houses or works which have rent of or any half-yearly pay-
appeared since the security was taken, may ment shall be in arrear for the space of
be objectionable, and no one will be inclined days, or in case the lessee or his
to build upon the land, and it may become sub-lessees shall not faithfully keep all
practically worthless. the agreements and covenants in these
In considering the value of building land presents contained, it shall be lawful
it should be noted whether any of the adjoin- for the lessor to re-enter upon the said
ing property owners have established any ground and dwelling houses and the
rights of light that would interfere with lessee and sub-lessees to expel and
any buildings which might be contemplated remove.
for erection on the land. And the lessor covenants with the lessee
BUILDING LEASE. The following ex- that the lessee paying the yearly rent
hibits the general form of a building lease : — and observing the covenants and agree-
This Indenture made the dav of ments shall peaceably hold and enjoy
1910 Between hereinafter the said premises during the time
called the said lessor of the first part hereby limited.
and hereinafter called the A
building lease is usually granted 6 it
lessee of the second part Witn< 99 years. In cases where the period i
every year during the term hereby society which has not by its rule
limited the yearly rent of fixed dati alt at which it
pounds free from all taxes, save only shall terminal
the landlord's income tax. \\ ith n sped to incorpi
And the lessee covenants Building Soci 17 & 38 Vict.
That the lessee will duly pay the said c. 42) provides as follows :
yearly rent, and all taxes. •Section 15. With respect to the
99
:
has been made shall be limited to the amount what extent (2) if it has power to mortgage
;
pavable thereon under any mortgage or or pledge. If the society has such powers,
other security or under the rules of the it is necessary to see that such powers are
100
BUI] DICTIONARY OF BANKING [BUY
stamp duty. The Friendly Societies Act, a mortgage by a member of a benefit build-
1906, Section 33, provides that stamp duty ing society for securing tin. repayment to
shall not be chargeable upon a " draft or the societv of moncv nut exceeding /500.
order or receipt given by or to a registered BULL AND BEAR. Nairn given to the
societv or branch in respect of money pay- two kinds of speculators on a stock exchange.
able bv virtue of its rules or of this Act." A Bull is one who anticipates a rise in a
Bv Section 41 of the Building Societies certain stock he therefore buys in, not
;
nor any other instrument or document what- that the said Governor and Company shall
ever required or authorised to be given, in all cases be entitled to require such gold
issued, signed, made, or produced in pur- bullion to be melted and assayed by persons
suance of this Act, or of the rules of the approved by the said Governor and Com-
society, shall be subject or liable to or pany at the expense of the parties tendering
charged with any stamp duty or duties such gold bullion." The bank notes can be
whatsoever, provided that the exemption immediately exchanged for sovereigns at the
shall not extend to anv mortgage." rate of £3 17s. U)ld. per ounce. The differ-
An advance to a building society should, ence of \\d. per ounce bi >ld bullion
preferably, be made upon a separate loan and gold coins represents the expenses and
account and not upon the ordinary current loss of interest upon the bulb' it is
With respect to unincorporated societies, at the r.ite of /:> 17 9d. pi r ounce will be
by Suction 89 of the Stamp Act, 1891, the given at on
exemption from stamp duty conferred bv BULLION POINTS. The same as " Specie
the Building Societies Act, 1836, 6 & 7 Will. Points
IV c. 32, for the regulation of benefit BUYING IN. A S nge term.
building societies, shall not extend to any Where securities have not been delivered by
mortgage made after July 31, 186S, except a seller to a pur' u ted time,
mi
.
seller on the eleventh day after the Ticket- Feb. Mar. June Jan. del. May -
1 <4-
day, or on any subsequent day, and the loss Aug. Nov. Dec. April
July
occasioned by" such buying-in must be borne
by the seller. (See Selling Out, Stock May Feb. Mar. June Sept.
Dec.
Jan. 1904
1932
Aug. Nov. April
Exchange.) July
luly
till 1950 can easily be ascertained. The one
Tu. W. Th. Sat. - 22 2
table contains ordinary years, the other M. >
Sun. F. 1 l:.
CAM] M l
[ONARY OF BANKING CAN
make calls upon the members in re- a bill may be discharged by the
spect of any moneys unpaid on their intentional can- ellation oi his signa-
shares, provided that no call shall ure by the holder or his agent.
1 In
exceed one-fourth of the nominal such case any indorser who would
amount of the share, or be payable have had a right of recourse against
at less than one month from the the party whose signature is can-
last call and each member shall
; celled, is also discharged.
(subject to receiving at least fourteen " (3) A cancellation made unintentionally,
days' notice specifying the time or or under a mistake, or without the
times of payment) pay to the com- authority ol the holder, is in-
pany at the time or times so specified operative but where a bill Or any
;
who is skilled in the value of foreign moneys all the paid cheques and bills which
and the operations of exchange. through his hands.
CANADAS. A Stock Exchange name for Where cheques are paid by one bank,
Canadian Pacific Railroad securities. under authority from another bank, the
CANCELLATION OF BILL OF EX- former bank sometimes ancels the drawer's
<
CHANGE. A bill of exchange is discharged signature, but the practice is not the same
when it is intentionally cancelled. The in all banks.
Bills of Exchange Act, 1882, Section 63, Tlie word " cam el from the
provides : — Latin cancello, to mak trellis, so that to :
103
CAN] DICTIONARY OF BANKING [CAP
" Section 8. (1) An instrument, the duty customer that the entries in the pass-book
upon which is required or permitted are correct, or a confirmation of the balance
by law to be denoted by an adhesive is taken.
that the stamp appearing on the steps to obtain it from the banker. This,
instrument was affixed thereto at in practice, would never be refused, if a
the proper time. receipt is given to protect the banker. A
"
(2) Where two or more adhesive stamps refusal to hand over a cheque would necessi-
are used to denote the stamp duty tate the service of a subpoena upon the
upon an instrument, each or every banker to produce it. (See Cancellation
stamp is to be cancelled in the of Bill of Exchange.)
manner aforesaid. CANPACS. A Stock Exchange name for
" (3) Every person who, being required by Canadian-Pacific Railroad securities.
law to cancel an adhesive stamp, CAPITAL. In the early stages of civilisa-
neglects or refuses duly and effec- tion, sheep and cattle acted as a currency.
tually to do so in the manner afore- " Being counted by the head, the kine was
said, shall incur a fine of ten called capitale, whence the economical term
pounds." capital, the law term chattel, and our common
If any bill of exchange, payable on demand name cattle " (Jevons).
or at sight or on presentation, or not exceed- In a joint stock company the capital is
ing three days after date or sight, is presented the sum subscribed by the members of the
for payment unstamped, the person to whom —
company that is, the shareholders for the—
it is presented may affix thereto an adhesive purposes of the business. The amount
stamp of one penny, and cancel the same. which is authorised by the memorandum of
The penny may be deducted from the association is the " nominal " capital. Of
amount of the cheque or bill, or charged in the nominal capital there is often only a part
account. (Section 38.) of it issued, called the " issued " capital, the
CANCELLED CHEQUES AND BILLS. remainder being referred to as " unissued."
When a cheque is paid, it becomes the pro- Further portions may be issued from time
perty of the drawer, but the banker is en- to time, until the full nominal capital has
titled to keep it as a voucher till the account been issued. Of the capital which has been
" issued " "
is settled, or the customer agrees that the (called also the " subscribed
entries in the pass-book are correct. A capital) only that part of it is paid up, or
,
paid cheque is useful evidence for the drawer subscribed by the shareholders, which the
of the payment of the money. It is also directors have " called up." The part which
evidence for the banker that he has repaid has been called up and paid is called the
money belonging to the drawer, to the " paid up " capital, the remaining part being
amount of the cheque. termed the " uncalled " capital ; and it
It is the practice of many London bankers remains unpaid until a " call " is made for
to return cancelled cheques to a customer it bv the directors. If the whole has been
each time he gets his pass-book. called up, the shares are said to be " fully
In most country banks, however, the paid." Of the uncalled capital, a certain
paid vouchers are not, as a rule, given portion may, if the company has so resolved,
up to customers, unless specially asked form a reserve liability, which is not to be
for. In cases where they are given up, an called up except in the event of the company
acknowledgment is obtained from the being wound up. (Section 59, Companies
104
— — —
(Consolidation) Act, 1908 see Reserve means to continui ;ain until next
Liability.) For example :
accou ought,
N"ominal (or Authorised, or Ri or deln ering stock whi ild, as I
it. il, 20, shan the case may be. In the former ca
Subscribed (or Issued) Capital, 1".
.
speculator ma;.
Unissued, 10,000 shari . . £i (q.v.) and in the latter, " bai K
on thi
. . .
CASH. Actual com-,, -land
erve (i allable only in a win
n
it
and the notes of other banl
ed as cash, but a bank notes
H. D. Macleod defia tal as " an i
profit." Under the name of capit. balance of the note ao mini on the
included money, goods, land, personal skill, other side of the shei iw the i
or floating capital and fixed capital. Circu- CASH ACCOUNT. An account it.
lating capital, in the words of John Stuart general ledger to whii h the totals
Mill, " does its work not by being kept but and cri lit of each da-.
by changing hands." " This portion of The balance
of the account i
capital requires to be constantly renewed by sents the amount of cash on hand. redits (
the sale of the finished product and when to other accounts are debited '
renewed is perpetually parted with in buying count, and debits arc credited.
materials and paying wages." Fixed ( he term signifies a custor
produces its effect not by being parted with int nil which a cash cri been
but by being kept. Wealth expended in land, granted. It is practically the same as an
buildings, docks, roads, machinery, railwavs, nit in England i
which is concerned solely with the capital or CASH BALANCE BOOK. Look,
funds subscribed by the shareholders in a which is written up
bank or other company, for the purpe tains par-
carrying on the undertaking. ticulars of all the cash on hand, obtain'
CARAT. A measure by whi miths i
nine; the d'-t ashier's ,
and assayers denote the fineni the 1 till and the reserve
twenty-fourth part of an ounce. Any portion otal should agree with
of gold is supposed to be divided into twenty-
four parts, and if it is all pure gold it i cash account in th
to be " 24 carat coins CASH BONUS. A bo in a life
contain eleven parts pure gold and one part paid in ash, instead 'if
105
—
CASH CREDIT. A term commonly used order is held over. If the drawee is not at
in banks in Scotland, to describe an arrange- home when the messenger calls a note is left
ment under which a customer is allowed an that the order is at the bank and requires
advance up to a certain limit, against a his attention.
" bond of credit " {q.v.) by one or more Cash orders are not, as a rule, accepted by
they are called in
sureties, or cautioners as the drawee, and consequently he cannot be
Scotland. The customer need not take the sued upon them, but if he gives his cheque
whole advance at once, but may draw the •
in exchange, and it is dishonoured, he can
amount as required. '
be sued upon the cheque.
The bond of credit is signed by the debtor Cash orders received for collection should
as well as by the sureties, and the effect of it not be credited on the day of receipt to the
is, practically, to make all the parties debtors bank sending them, in cases where the orders
to the bank, although the person in whose are being held over till the next day.
name the account stands is the real debtor. Where cash orders are numerous, the}' give
CASH CREDIT BOND. Same as " Bond great trouble to a banker who has to collect
of Credit " [q.v.). them, and some bankers decline to undertake
CASH ORDER. A cash order is a bill of the work.
exchange on demand drawn by one person on The stamp duty upon a cash order is one
another. For example, a wholesale dealer, penny.
John Jones, who has supplied goods to, say, CASH SHEETS. Loose sheets on which
John Brown, a shopkeeper, draws acash order are recorded all the transactions in a bank
upon him, usually in the following form : office during the day. At stated intervals
English Street, the sheets are bound into book form. Cash
Carlisle, sheets in some banks practically take the
July, 19 place of a day book or cash book.
/10. CASTING. The act of summing-up
On demand pay to the British
figures. When a column has been cast-up,
the total is often called " the casting."
Bank, Ltd., or order the sum
of Ten pounds sterling for
CAUTIONARY OBLIGATION. In Scot-
land, an obligation or undertaking by a
value received.
cautioner, or surety, that he will be respon-
John Jones. sible for a certain amount, if the debtor, who
To is also a party to the bond, fails to repay the
Mr. John Brown. debt. (See Bond of Credit.)
Conev Street,
CAUTIONER. In Scotland, a surety, or
York. guarantor, who signs a bond along with the
The order must be indorsed by the banker debtor for a cash credit, or overdraft, to
to whom it is payable, or, if payable to the the debtor. (See Bond of Credit, Cash
drawer's order, by the drawer. Credit.)
The cash order is sent to a banker in the CAVEAT. (Latin, Let him beware.) A
town where John Brown lives for collection, notice or warning given to a public official
and the banker sends out a messenger by an interested party, as, for example, where
to John Brown's address and presents the a caveat is given to the Yorkshire Deeds
order for payment. It is expected that the Registry by a person claiming to be entitled
order will be paid in cash, though in some to an interest in certain lands. The caveat
cases payment is received by cheque, when is registered, and remains on the books as a
it is known that the drawer is perfectly good warning to anyone who contemplates deal-
and the cheque can be collected the same ing with the property. (See Yorkshire
day. In some districts it is customary for Registry of Deeds.)
the drawee, when the order is presented, CENT. (See Foreign Moneys Canada. —
to accept it payable at his bankers in the Ceylon, Holland, Mauritius, United
same town. When this is done, it should be States.)
passed through the local clearing on the same CENTESIMI. (See Foreign Moneys —
day. The remitter of the order often gives Italy.)
instructions that, if it is not paid on the dav CENTIME. (See Foreign Moneys Bel-
of receipt, it may be held over till the follow- gium, France, Switzerland.)
ing dav. In the absence of such instruc- CENTIMOS. (See Foreign Moneys
tions the remitter should be advised if a cash Spain.)
106
— — —
the West End Banks and ten members in a few companies, a separate certii
appointed by the Association of English was originally issued for each share. When
Country Bankers. No representatives of any of the shares arc transferred, insti ad oi
Scotch and Irish Banks have yet been fresh certificates being issued the old ones
appointed. are simply indorsed with the transfer, and
The objects of the Association are the the old certificates given to tin an feree.the i i
maintenance and protection of the interests transfer being registered in the comp
of bankers. books. Occasionally certificates of this
CERTIFICATE. The document which is description may be found which, though the
issued by a company, to a member of the shares have been transferred from the person
company, specifying "the shares or stock held named in the body of the certificate, do not
by him. It is usually signed by two direc- give any indication, by indorsement or
tors, countersigned by the secretarv or otherwise, of the transfer. The only way
manager, and impressed with the company's to ascertain who is the registered holde
seal. of many different
Certificates are write to the company. In other cases \\ here
sizes and usually papers
of different colours the same certificate pa is from one holder to
are used for the various classes or issues of another, the companx issues a transfer certi
shares and stocks. ficate (to accompany the old certificates)
The following is a specimen of a certifi- certifying that " a deed of transfer duly
cate : executed and attested and stamped as re-
Ordinary Share Capital quired by law, dated from to
conveying shares numbered
Certificate No.
from to has been deposited
John Jones & Company, Limited, in the office of the company and registered in
incorporated under the Companies (Con- their books on of ,19
solidation) Act, 1908. Clause 6 of Table A (see Section 1 1 of the
Companies (Consolidation) Act. 1908, under
Capital Articles of Association) provides :
in John Jones & Company, Limited, sub- a share to one oi several joint
ject to the Memorandum of Association and
holders shall be suffii ient delivi i
all
Regulations of the Company, and that each
of the said shares is fully paid up.
i tin. ate is pn ma idena I the
oi thi embei to thi ha i oi stock.
Dated this day of ,19
\
i
Capital.)
on the London
I
The certificate may have a footnote to the be obtained, thi [uire that
following effect : the certificates must CO to certain
107
— —
agreement and gives notice of his charge to (a) Evidence to the satisfaction of the
the company. When that is done and he Bank of the loss or destruction and owner-
retains possession of the certificate, he has, ship of the certificate ; and (6) a delay of
as a rule, a good security. A simple deposit not more than one year from the date of the
of certificates as security, even with cut a loss or destruction ;and (c) the advertise-
memorandum of deposit, c< nstitutes an ment of the loss or destruction in two or
equitable mortgage, and the banker can, more London or Dublin daily papers (as the
when necessary, apply to the Court for case requires) and {d) either the transfer of
;
power to sell. In neariy all cases, the certi- a sum of stock, of a description approved
ficate must be surrendered before a transfer by the governor or deputy governor of the
of the shares can be effected. There are, Bank, equivalent to the market value on the
however, several exceptions, as certificates day of transfer of the lost or destroyed
need not be produced when transferring certificate, and at least six and a half years'
National Bank shares, Provincial Bank of dividends thereon, into the joint names of
Ireland shares, and Roval Exchange Assur- the governor and deputy governor, by way
MS
—
complied with, and that the association is a owner has duly subscribed ami affixed his
company authorised to be registered and is signature and seal as appears above.
duly registered under the Act. (See Articles Registrar."
of Association Memorandl-m of Associa-
-
, A person who advances money under a
tion.) certificate mortgage, when there is a
of
\ny person may inspect the documents previous mortgage or certificate of mortgage
kept by the registrar, on payment of a fee of indorsed on the said certificate, does so at his
one shilling, and any person may require a own risk. His title is liable to be defeated by
certificate of the incorporation of any the person claiming under the incumbrance
company, or a copy or extract of any docu- so indorsed. (See Ship M
tc.)
ment, to be certified by the registrar, on CERTIFICATE OF PROTEST. (See Pro-
payment of five shillings for a certificate of test.)
incorporation and sixpence for each folio of a j
CERTIFICATE OF REGISTRATION. A
certified copy or extract. (See Registrar certificate given by the registrar of com-
of Companies.) panies of any mortgage or charge registered
in pursuance of Section 93 of the Companies
The form of the registrar's certificate is as
:— (Consolidation) Act, 1908 (see Registration
follows
of Mortgages and ud stating
i
109
CER] DICTIONARY OF BANKING [CER
of registration is to be indorsed by the rupt who holds a release from the Court of
company on every debenture or certificate of Bankruptcy. (See Bankruptcy.)
debenture stock which is issued by the CERTIFICATION OF CHEQUES. In the
company, and the payment of which is United States cheques are freely " certified "
secured by the mortgage or charge so by bankers, the certification being equal to
registered. (See Companies.) an acceptance by the banker. When an
CERTIFICATE OF SEARCH. A certifi- American banker accepts or certifies a cheque,
cate issued by the Registrar of a Deeds he charges the amount at once to the drawer's
Registry, in response to an application for account and holds it in a special account
an official search, certifying that an official against his liability upon the cheque. By
search of the Register has been made, within the law of that country " where the holder
the period named by the applicant, for all of a cheque procures it to be accepted or
documents registered in connection with the certified, the drawer and all indorsers are
specified lands, and giving a list of any such discharged from liability thereon."
documents. In this country, cheques are often, for the
Belowbe found the form of official
will convenience of bankers in connection with
certificate of search as issuedby the West the clearing of cheques, " marked " as good,
Riding of Yorkshire Registry of Deeds. and in special cases they are sometimes
CERTIFICATED BANKRUPT. A bank- "marked" at the request of the drawer.
l. To be left
Volume Page No.
blank lor tilling in
at the office.
WEST RIDING OF YORKSHIRE.
REGISTRY OF DEEDS.
2. Fill the
in
hi and descrip- J the Registrar of Deeds of the West Riding of the
on" whos? "behalf County of York having received a Requisition on behalf of -
3. Fill in the
t" be made.
4. Fill in the
period for which for the period from' 19. . to 19.,
the search was re-
quired to be made.
Nature of
Instrument.
CER| hit 1 Ii i\ ARY OF BANKING ;cha
(See Marked Cheque.) Sir Mackenzie or as to
5, of the
I
( tab "In England, under the documents oi thai th :i ompany has received
I '..ml. ( hartei Ai ts, the ai i
epta no notice in lieu oi distringas, or any other
i
que by a bank would, in general, be an
in affecting the matter "
infringement of the privil the Bank Whitechurch, Limited, v. Cavanagh (1902,
<>! England." (Page 71. vol. 30, " Journal of A.C. 117), Lord Macnaghten said: "There
the Institute of Bankers.") is no obligation on lany to certify
CERTIFICATION OF TRANSFERS. transfers at all. the certi
( i:ki f i'l I I
i
I RANSFER. passed by the directors or broughl before
CERTIFIED CHEQUE. A cheque which the board. \ certification, in fact, is only
ismarked or certified by a b; t it is '
required for a temporary purpose, to meet
good for the amount for which it is di i" w e hi business on th.- Stock
(See Certification ok Cheques. Marked and fixed
Cheque.) periods for tie- differenl itages of a business
CERTIFIED COPY. A certified copy, or transaction intended to be carried ou1 under
officecopy, of a will is one that has been lies
examined with the original and certified by are also certified by the secretary
the registrar as being a true copy. of the Share and Loan I
'
ent of the
For stamp duty see Copy. (See Attested London Stock Exchange.
Copy, Office Copy.) By Rule 111 oi the Stock Exchange "The
CERTIFIED TRANSFER. Transfers are buyer of securities may >r a i fi
often certified upon the margin by the transfer deed unaccompanied by the certi
secretary or registrar of a companv. that the ficate, unless it be officially certified that
certificates for the shares dealt with in the the certificate is at the office of the company."
transfer are in the company's office. The (See Balance Ticket, Transfer of Shares.)
words generally used arc, "Certificate for CESSIO BONORUM. In Scotland, an
shares, paid, has been lodged assignment, by an insolvent debtor, oi his
at the company's office. Date property for the benefit of the credito:
"The Company, Limited, (See Assignment for Benefit of Cre-
Secretary." , ditors.)
Or sometimes the words are " Coupon for CESTUI QUE TRUST. A person in
£ received at the company's office by whose favour a trust operates, that is, who
I,
is beneficially interested in the estate.
The the purpose of
certification is for Brown holds land in trust for
If Jones,
facilitating dealings in shares. The broker Brown is the trustee and Jones is the
for a transferor sends the certificate and trust. Brown has the legal estate
transfer to the company to be certified, and in the land, and Jones has an equitable
the transferee accepts the certification as an estate in it.
assurance that the certificate is apparently Plural, cestuis que tritstent.
in ord r i
CESTUI QUE USE. The person in
In Bishop v. Balkis Consolidated Co. :.hose favour a use or b
(1890, 25 Q.B.D. 512), Lindley, L. J has been di lared. i
certifications
'
is incidental to the '
I
held by one person durinj i i
lodged with tl .
parently in i harges having been added, without the
order, and showing, prima that facie, the tier's knowled
transfi hares, but it is usual date, the customer woul claim
no warranty of the transferor's lit 1
.
Ill
—
shafts, orany latent defect in the machinery or hull, not resulting horn want of due dili
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 >ui I
-
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 a1 the
rate of per hour.
It is also agreed that the Owners of the said Steamer or Vessel shall reserve to them-
selves the right of 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
sign bills of Lading at such rates of Freight as may be required by the Charterers or their
Agents, without prejudice to this Charter Party, but at not 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 " General Average as per York Antwerp
Rules," see General Average.
The stamp duty is sixpence. See the stamp denoting the duty chargeable thereon,
following sections of the Stamp Act, 1S91 : — and at the same time cancel such adhesive
" 49. (1) For the purposes of this Act stamp, and the instrument when so stamped
the expression charter-party
' in-
'
shall be deemed duly stamped
cludes an}- agreement or contract "51. A charter-party may be stamped with
for the charter of any ship or vessel an impressed stamp after execution upon
or any memorandum, letter, or other the following terms that is to say,
;
"
writing between the captain, master, (1) Within seven days after the first
or owner of any ship or vessel, and execution thereof, on payment of the
any other person for or relating to duty and a penalty of four shillings
the freight or conveyance of any and sixpence ;
money, goods, or effects on board of " (2) After seven days, but within one
the ship or vessel. month after the first xei ution i
within ten days after it has been first re- association regulate a company incorpo
ceived in the United Kingdom, and before under the Companies Vets, and the liability
it has been executed by any person in the of the stockholders in a chartered bank is
United Kingdom, affix thereto an ad! fixed bv the Charter.
113
3—(1535)
—
The Bank of England was incorporated to be a bill of sale within the meaning of this
by Charter in 1694, under the authority of Act."
an Act of Parliament. CHEAP MONEY. Money is said to be
The Bank of Scotland, the Royal Bank of " cheap " when it can be borrowed at a low
Scotland, and the British Linen Company rate of interest. Money is called " dear "
were incorporated by Royal Charter. In when, owing to its scarcitv. it can be
Ireland, the Bank of Ireland is the only borrowed onlv at a high rate.
bank which has been established by Act of CHECK-BOOK. The name sometimes
Parliament. given to the deposit book or pass-book which
Various Colonial banks, which have their is supplied to depositors in savings banks.
head offices in London, have also been Check-book is also the American method
incorporated by Charter from the Crown. of spelling cheque book.
CHARTEREDS. A Stock Exchange name CHECK LEDGER. A book of the nature
for British South Africa Company's shares. of a day book, and which is used in some
CHATHAMS OR CHATS. Stock Exchange banks instead of a day book. In a large
names for London, Chatham and Dover office there may be a separate check ledger
Railway stock. for each current account ledger.
CHATTELS. Chattel, a modern form of It contains details of all the items which
the word cattle. Cattle at one time per- are posted into the corresponding ledger,
formed the function of money. i the debits in one column and the credits
Chattels include cattle, implements, money, in another, and the entries in the check
debts, rights of action to goods, etc. ledger are called off daily with the entries in
Blackstone says, " For it is to be under- the current account ledger. There may also
stood that in our law, chattels (or goods be a check ledger for the deposit ledger,
and chattels) is a term used to express any impersonal ledger, etc., the final totals of
kind of property which, having regard either each check ledger being carried into the
to subject matter, or the quantity of interest summary book at the end of the day.
therein, is not freehold." CHEQUE. (Formerly written " check.")
The Bills of Sale Act, 1878, Section 4, " The word is derived from
defines personal chattels as follows:
— "The
Gilbart says :
hold or leasehold interest in any land or called the Exchequer. Another explanation
'
building to which they are affixed, nor is that the word " check " arose from the
growing crops when assigned together with consecutive numbers which were placed upon
any interest in the land on which the3' the forms to act as a check or means of
grow, nor shares or interests in the stock, verification. In the United States the word
funds, or securities of any government, or " check " is used at the present day. Cheques
in the capital or property of incorporated or first came into use about 1780.
joint stock companies, nor choses in action, Part III of the Bills of Exchange Act,
nor any stock or produce upon any farm or 1882, is devoted to provisions regarding such
lands which by virtue of any covenant or features of cheques as are not found in
agreement or of the custom of the country connection with a bill.
ought not to be removed from any farm Section 73 defines a cheque :
where the same are at the time of making " A cheque is a bill of exchange drawn on a
114
—
early date. The drawee's authority to pay you to pay to John Jones the sum," etc.
is determined by the drawer's death, and the The Bank of England declines to pay
drawer may stop payment of the cheque. cheques, unless drawn upon the form!
Indelible pencils are not desirable articles supply.
with which to draw cheques. A cheque Some cheques have a notice upon them
written in ordinary pencil should not be that they are payable only if presented
paid without personal reference to the within a certain period. Such a condition
drawer, as the banker cannot possibly tell may possibly exclude the document from
whether, or not, it has been altered. It is being considered a cheque under the Bills of
much to be desired that all cheques should Exchange Act. In Thairlwall v. Great
be written in ink. Typewritten cheques Northern Railway Company (1910, - K.B.
are too easily altered, and their use should 509), where a dividend warrant had a con-
be discouraged as far as possible. dition at the bottom of it that " it will no;
A cheque written upon a sheet of paper, be honoured after three months from date
proyided it is in proper form, is sufficient. of issue unless specially indorsed for pay-
It must be stamped with a penny adhesive ment by the secretary," and it was argued
stamp (or two half-penny stamps), and the that the document was not a cheque because
stamp must be cancelled by the person of this condition, Mr. Justice Bray said :
drawing the cheque before he delivers it. " I have felt a great deal of doubt on this
Cheques of this description should, how- point because of this statement. But. on
ever, never be drawn except in cases of the whole, I am inclined to think that this
extreme necessity. document is a cheque, and is within tin-
At one time a cheque could not be issued meaning of Sections 73 and 3 of the Bill
for less than twenty shillings, but now a of Exchange Act, 1882, a cheque and an
cheque may be for any amount, from one unconditional order in writing. And . . .
penny upwards. If the amount of a cheque I think it is none the less a cheque bei
115
CHE] DICTIONARY OF BANKING fCHE
apply, and they would also be incapable of cheque which has certain specified lines or
being validly crossed. words across the face of it is a " crossed
Cheques paid to credit of a customer's cheque " (q.v.).
account should be carefully examined before A cheque which has been cut, or torn, into
being paid or before being remitted for collec- two or more portions, or torn sufficiently to
tion, and if not in order should be returned suggest cancellation, is not, as a rule, paid
to the customer, or, if possible, sent out to by a banker. But if a mutilated cheque
him to be remedied, as, for instance, where bears a note upon it signed by a collecting
he has omitted to indorse or has indorsed banker, such as " accidentally torn," it is
them wrongly. customary to pay it.
It is desirable that when an account isto A cheque is sometimes marked or certified
be closed, the cheque withdrawing any bal- by a banker as being good for the amount
ance should state " being the balance of my for which it is drawn. It may be marked by
account " or " to close my account." the banker on whom it is drawn for another
With regard to alterations in cheques and banker, as a matter of convenience for the
provisions to prevent fraudulent alterations, purposes of clearing arrangements. Or. occa-
see Alterations. sionallv, it may be marked at the request of
If there is a difference between the amount the drawer, or even at the request of the
in writing and the figures on a cheque, the payee or holder.
cheque may be paid according to the amount English bankers do not encourage the
in writing, but it is the usual custom, and marking of cheques as between themselves
a prudent course, to return the cheque and the public, it being much the preferable
unpaid marked " amounts differ." If the way to pay the cheque and, if necessary, give
figures have been omitted and the amount a draft in exchange. In America, the certifi-
only appears in writing, a banker is justified cation or acceptance of cheques is verv com-
in paying the cheque according to the words ; mon. (See Certification of Cheques.)
though if the words have been omitted and It is generally held by the best authorities
the amount is given only in figures, the that bankers in England cannot legally
cheque should not be paid. accept cheques.
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 had
be transferred. died or become bankrupt or had stopped
It the payee himself presents a cheque for payment of the cheque. (See further infor-
payment and declines to indorse it, he has mation under Marked Cheque.)
probably a legal right to do so, but see A person is liable to be charged with false
Payee. pretence if he gives a cheque in payment of a
If the balance of a customer's account will purchase when he has no account with the
not allow of the full payment of a cheque banker on whom the cheque is drawn.
which is presented, the cheque should be With respect to the proposed rules regard-
dishonoured. A cheque cannot be paid in ing the unification of the laws existing in
part. In England, a cheque presented sub- different countries relating to cheques, see
sequently for a smaller amount, which the Unification of Laws of Bills of Ex-
account will stand, may be paid. In Scot- change.
land, however, when a cheque is presented Stamp Duty.' —The duty is one penny,
forpayment and there is not a sufficient bal- for any amount, and the stamp may be
ance to meet it, the cheque attaches such either adhesive or impressed. A cheque
funds as there may be in the banker's hands must be stamped even if the amount is less
belonging to the drawer, and subsequent than £2. Two half-penny stamps may be
cheques, though for a less amount than the used.
balance of the account, will be returned If an adhesive stamp is used, it must, if
unpaid. The amount attached is transferred the cheque is drawn within the United King-
by the banker to a separate account. dom, be cancelled by the drawer before he
A cheque which can be presented for delivers the cheque out of his hands, custody
payment across the counter of the Bank on or power (Section 34, s.s. 1, Stamp Act, 1891).
which it is drawn, is an " open cheque." A If it is drawn out of the United Kingdom
116
—
and is unstamped, every person into whose another customer's account is not exempt
hands it conies in the United Kingdom from duty.
before it is stamped shall, before he presents Cheques are exempt from -tamp duty in
for payment, or indorses, transfers, or in anv the following cases :
manner negotiates or pays the cheque, affix Cheque drawn O] on behalf of a regis-
b]
thereto a proper adhesive stamp and cancel tered Friendly Society (circular from Inland
the stamp so affixed. If at the time any Revenue, November II), 1894). Section 33
cheque comes into the hands of any of the Friendly Societies Act, 1896 (59 &
fide holder, there is affixed an uncancelled 60 Vict. c. 25), enacts that stamp duty shall
adhesive stamp, it shall be competent for '
treated as a bill and stamped with a i- I See also the list of exemptions in the
lorem dutv. A post-dated cheque requires Stamp \ii 1891, given in the article Bill of
only the usual penny stamp. Exchange. (See Ban kei ;>i r.) i
from one branch to another, or from, say, Inland Revenue wa May, 1904
his No. 1 to his Xo. 2 account, it is usually The a1 tenl ton oi he Hoard of Inland
effected bv means of a cheque or stamped Revenue has been drawn to the fact that
letter, but a simple unstamped letter of .
ertain instrumei the;
request is sufficient. A transfer of an advised, under the Stamp V.ct 1891 « ith a
amount from one customer's accounl to penny duty as ' ]-Ui' hange paj
117
— —
date thereof of any sum of money, letter handed to the payee as above men-
and sent or delivered by the person tioned, whether supplemented by a letter of
making the same to the person by request or not, comes within the words of the
whom the pavment is to be made, first paragraph of Section 32, as being a
and not to the person to whom the document purporting to entitle a person to
payment is to be made, or to any payment by any other person of a sum of
person on his behalf.' money.
'
of ten pounds upon every person who issues, of these two classes of documents has not,
indorses, transfers, negotiates, presents for so far as the Board know, been directly the
payment, or pays any Bill of Exchange not subject of any legal decision, it is of course
being duly stamped, and it is provided that open to Bankers and others interested to
the person who takes or receives any such test the question whether the Board's view
bill shall not be entitled to recover thereon. is right, by obtaining a legal decision in the
" The instruments to which the Board refer manner pointed out by the Stamp Act.
appear to be especially made use of by Until, however, the parties see fit to take
Education Authorities and other Municipal steps to do this the Board will act upon the
bodies in connection with payments which view expressed above.
they desire to be made on their behalf by
•
theirBankers or Treasurers. These instru- rely upon the ready assistance of Bankers,
ments vary, to some extent, in form, but Local Authorities and their Officers in seeing
their general nature
document is
is as follows
handed by the Authority
:
—to theA
(1) that documents of this character are stamped
in accordance with the provisions of the law.
creditor or other person who is to receive the They feel it to be their duty, however, to
money, which document informs him that point out that should occasion arise after
the Treasurer of the Authority, or a ceitain this notice they will have no alternative but
118
CHE] DICTIONARY OF BANKING ICHI
to institute proceedings for recovery of the each cheque book u forms from the
penalties provided by Section 38 of the Act. end of the book. Some banks have a rule
" While dealing with the question of stamp that, when a cheque hook is delivered
duty on Bills of Exchange, the Board desire a written order, the fai should be at
I
of the stamp is doubtless due to a misappre- denomination of cheque book (Is.. 2s., 4s.,
hension as to the provisions of the law but; 8s., and so on) is entered in a separate I I
it is clear that such orders fall within the or in separate parts of the same registi
definition in Section 32 (6) of the Stamp Act, When a fresh supply of cheque hooks is
and should in all cases bear stamps " received by a branch, each book is entered
(See Agent, Alterations, Amount of in the register by its number, and when a
Bill or Cheque, Answers, Ante-dated, book is sold the name of the customer and
Bearer, Bill of Exchange Bills of Ex- the date are written opposite the entry oi
change Act 1SS2, Cancellation of Bill that cheque book in the register. In some
of Exchange, Cancelled Cheques and banks, the person who obtains a new cheque
Bills, Collecting Banker, Consideration book is required to sign the register opposite
for Bill of Exchange, Countermand of the number of the book he receives.
Payment. Crossed Cheque, Date. De- As each cheque book is sold and marked
livery of Bill, Dishonour of Bill of off in the register, the price of it is credited
Exchange, Drawee, Drawer, Foreign to cheque book account, and if, on a trial,
Bill, Forgery, Holder for Value, Holder the cheque books on hand do not agree wi1 h
in Due Course, Holder of Bill of the balance of the cheque book account it
Exchange, Inchoate Instrument, Indorse- will be necessary to tick off the books shown
ment, Indorser, Inland Bill, Lost Bill as sold in the register with the credit-, to
of Exchange, Marked Cheque, Negotia- cheque book account.
tion of Bill of Exchange. Not Negoti- Of course the balance of cheque book
able Cheque, Order, Overdue Bill, Part account represents merely the amount of the
Payment, Parties to Bill of Exchange, stamps and does not include the cosl oi
Payee, Paying Banker, Payment by, printing the books.
Payment of Cheque, Post-dated, Present- CHEQUE RATE. A term used in
ment for Payment. Receipt on Cheque, nection with the Foreign Exchanges, signify-
Returned Cheque, Stale Cheque, Time ing the price in one country at which a
of Payment of Bill. Transferor by cheque, or sight draft, upon another country
Delivery, Travellers' Cheques, Unifi- can be bought.
cation of Laws of Bills of Exchange. With most foreign countries the quotation
CHEQUE BOOK. A book of cheque is that of the " long " rate. i.e. for three
forms, with counterfoils attached. months or ninety days bills, but there are
Cheque books are of various sizes, Is., 2s., cases where " short " rates are quoted that
4s., 8s., and so on, according to the number of is, having eight to ten days to run.
for drafts
forms in each. Specially large books are Where
the Paris Cheque Kate is quoted as
usually prepared for customers who use 2530, it means that a foreign banker in
many cheques. The cheques are numbered London is prepared to draw a demand draft
consecutively and the numbers continue upon his agent in Paris at the rate of 25
from book to book. Each book is entered francs 30 centimes for every (\ handed to
in the cheque book register, with a record ol him here.
the name of the customer to whom it has An alternative name for
Cheque Rate is
been given. Sight Rate. of Excha
(See Course
When a cheque is used, the counterfoil Foreign Exchanges, Long Rati Short
should be filled up. Rate.)
When a new book is required, the customer CHIROGRAPH.
Literally a handwrit-
should either obtain it personally or fill up ing. A
hirograph was an old form of deed
i
and sign an application form for a new 1 which was written in two parts on the
An application form is usually inserted in sheet ot parchment. Between each part
119
— —
was a blank space, and right along that I London, each draft to be plainly marked
blank space the word " chirographum " was as drawn under this Letter of Credit No.
sometimes written. The two parts were and to be signed in accordance with
then separated, by the parchment being cut :
specimen signature which you will find on
with an irregular line through that word, our Letter of Indication of the same number
and each party received one of the parts. to be produced herewith.
Each part would, of course, contain only We engage that such drafts shall meet with
portions of the letters of the word, and due honour if negotiated within
when the two parts were brought together months from this date, and request you to
again, the fitting in of the wavy line and buy them at the rate at which you purchase
"
completion of the word " chirographum demand drafts on London.
proved that the one deed was the counter- The amount of each draft must be in-
part of the other. (See Indenture.) scribed on the back of this letter. The letter
CHOPS. A Stock Exchange name for . itself must be cancelled, and attached to the
Chartered Options. final draft drawn.
CHOSE IN ACTION. Property which a We are. Gentlemen,
person has not got in his actual possession, Your obedient servants,
but which he has a right to demand by an
action at law. Money due upon a bill of To Messieurs the Bankers
exchange, and goods bought and not de- mentioned in the Letter of Indication
livered, are examples of a chose in action. which must be produced herewith.
When the money or the goods are in actual
possession, they are called choses in posses- N.B.— The bearer,for purposes of security,
sion. is requested to carry this Letter of Credit
CHOSE IN POSSESSION. (See Chose in apart from the Letter of Indication.
Action.) On the back of the Letter of Credit
CHURCHWARDENS. The usual number particulars of the various payments must be
of churchwardens two, though in some
is j
noted, viz. :
cases there are four. They are appointed Date when paid By whom paid
; Name
;
at the Vestry Meeting at Eastertide, and of town where paid Sterling amount
;
hold office for twelve months. A banker expressed in words Amount in figures.
;
should receive a copy of the minutes, signed When a payment is to be made under a
by the chairman of the meeting, recording Letter of Credit, the signatures of the grantor
the appointments. The churchwardens on the Letter of Indication and Letter of
have the control of all money raised for the Credit should be verified, as well as the
repair of the church buildings and for the signature of the person requiring the money,
due performance of divine service therein. with the specimen on the Letter of Indica-
-
120
• I . .
a specimen of his signature, ["he 'iter of I term, which is not eery appropriate, is
Indication should be retained by the holder det ived from the cii istance thai this
until all the notes have been cashed, when portion ol capital requii to mi K i 1 i
it is to be surrendered to the banker cashing renewed by the sale oi the finished produi I
the last note. For security, the Letter ol and when renewed is perpetually parted with
Indication and the notes should be cai ied in buying materials and paying wages; so
apart. Circular notes may !" for amounts thai ii does its work, noi ii\ being kept, bu1
1
tion being usually printed in distinctive the out i. ii j does its work by being kept
i
note :
' Hi '
ted. I
he term is applied to gold, silver,
London 19 and copper coins, also to bank notes chequi
No. lulls, and oilier paper instruments, which
Circular Note for Ten Pounds £10. ai sub .in ut'
i .i
iins.
i
he \ arious . i I
whose signature you will find in the term circulating medium. (See Moni
our Letter of Indication No. to be pro- CIRCULATION. When money or notes
duced herewith. We requesl you to pay to pass from hand to hand the; mi lid to
order the value of Ten Pounds at circulate, or to be in circulation, but the word
the current rate of exchange against proper is sometimes used, or rather misused, to
indorsement. mean the money itself
Your obedient servants, he word " circulation " is very commonly
I
compared with the specimen signature on creditor, and pays him a sum oi mi
the Letter oi Indication. insulin ni to liquidate the whole oi i. he i
demand or at si«ln or no1 exceeding three from the Roman Law : -(1) V debtor making
days alter dale n sighl othei wise, the ii
meni ha a right to appro]
usual ad valorem foreign bill stamp i^ the disc li.ii Ieb1 due to the
required. (See Letter of [ndica ion i i
(2) if at the timi ment there i
121
—
the debtor, then the creditor has a right to other cases which deal with the same sub-
make the appropriation (3) in the absence
;
ject, is this, that where a creditor having a
of any appropriation by either debtor or right to appropriate moneys paid to him
creditor, an appropriation is made by pre- generally, and not specifically appropriated
sumption of law, according to the items of by the person paying them, carries them
account, the first item on the debit side into a particular account kept in his books,
being the item discharged or reduced by he prima facie appropriates them to that
the first item on the credit side. The prin- account, and the effect of that is, that the
ciple of the case was_ thus explained (see payments are de facto appropriated accord-
p. 608 of the report) :— ing to the priority in order of the entries on
" This is the case of a banking account, the one side and on the other of that account.
where all the sums paid in form one blended It is, of course, absolutely necessary for the
fund, the parts of which have no longer any application of those authorities that there
distinct existence. Neither banker nor cus- should be one unbroken account, and entries
tomer ever thinks of saying, This draft is
'
made in that account by the person having
to be placed to the account of the £500 paid a right to appropriate the payment to that
in on Monday, and this other to the account account and the way to avoid the applica-
;
of the £500 paid in on Tuesday.' There is tion of Clayton's case, where there is no
a fund of £1,800 to draw upon, and that is other principle in question, is to break the
enough. In such a case, there is no room account and open a new and distinct account.
for any other appropriation than that which When that is done, and the payment is
arises "from the order in which the receipts entered to that new and distinct account,
and payments take place, and are carried whatever other rule may govern the case,
into the account. Presumably, it is the sum it certainly is not the rule of Clayton's
."
first paid in that is first drawn out. It is case. . .
the first item on the debit side of the account Theprinciple of Clayton's case does not
that is discharged, or reduced, by the first apply where a person has mixed trust moneys
item on the credit side. The appropriation with his own moneys in his account. The
money which he first withdraws from the
is made by the very act of setting the two
items against each other. Upon that prin- account taken to be his own money,
is
ciple all accounts current are settled, and leaving the trust funds intact.
When there " CLEAN " ACCEPTANCE. That is a
particularly cash accounts.
has been a continuation of dealings, in what
" general acceptance." (See Acceptance,
way can it be ascertained whether the specific General.)
balance due on a given day has, or has not, CLEARING BANKS. The members of
been discharged, but by examining whether the London Bankers' Clearing House.
payments to the amount of that balance Representatives of each clearing bank meet
appear by the account to have been made ? at the Clearing House and exchange cheques
You are not to take the account backwards, drawn upon the members or upon the
and strike the balance at the head, instead country correspondents of members, or other
of the foot, of it. A man's banker breaks, London banks for which they are agents.
owing him. on the whole account, a balance The members are :
of £1,000. It would surprise one to hear
the customer say, I have been fortunate
' Bank of England.
enough to draw out all that I paid in during Barclay & Company, Ltd.
the last four years but there is £1 ,000
;
Capital & Counties Bank, Ltd.
which I paid in five years ago that I hold Glyn, Mills, Currie & Company.
myself never to have drawn out and,
;
Lloyds Bank, Ltd.
therefore, if I can find anybody who was London & South Western Bank, Ltd.
answerable for the debts of the banking London City & Midland Bank, Ltd.
house, such as they stood five years ago. I London County &: Westminster Bank, Ltd.
have a right to say that it is that specific London Joint Stock Bank, Ltd.
sum which is still due to me, and not the Martin's Bank, Ltd.
that I paid in last week.'
" Metropolitan Bank (of England and
£1 ,000
The in
Earl of Selborne, L.C., In re Wales), Ltd.
Sherry, London and County Banking Com- National Bank, Ltd.
pany v. Terry (1884, 25 Ch. D. 692), said :— National Provincial Bank of England. Ltd.
" The principle of Clayton's case, and of the Parr's Bank, Ltd.
122
CLE] DICTIONARY OF BANKING [CLE
CLEARING HOUSE. A
country banker Court. Lombard Street.
" clears " the cheques which he holds upon The London Bankers' Clearing House is
another banker in the same town in the worked practically on the same principle
daily exchange or daily clearing. That is, as the Country Clearing Houses, Each
banker A, by his clerk, sends to banker B member of the Clearing House scud-,, 1>\- a
all cheques drawn upon him, and banker B clerk, to the Clearing House the chequi
hands over to the clerk any cheques he holds held upon other bankers who are men
drawn upon banker A. The difference 01 upon the country correspondents oi any
between the two sets of cheques is settled of the members, or other bankers for whii ii
by cash, draft, or London Payment. they are agents. Each clerk hands over
In large towns instead of each banker's the cheques he has upon the other bankers
representative visiting the other bank offices, and receives the cheques upon the bank
they all meet at a centre, called the Clearing which he represents. The cheques receivi d
House and effect a mutual exchange. In by a clerk of A bank from, say, B Bank is
this way each bank, instead of settling Ins "in " clearing, and the cheques given
differences with, say, five or six other banks, by him to that bank is his " out " clea
merely pays over or receives the net differ- At the end of the day the difference between
ence through the bank which manages the the " in " and " out " clearing is the amount
clearing. due to be paid by A to B or B to A, as the
There are Clearing Houses at Birmingham, case may be. Each bank, however, does
Bristol, Leeds, Leicester, Liverpool, Man- not settle separately with each other bank,
chester, Newcastle and Sheffield. but a form, called the summary sheet, is
The cheques dealt with in the Country filledup. showing in two columns the
Clearing Houses are only those which are amounts due to or owing from all the other
drawn upon the banks in the same town, members of the House.
The following is a specimen of the summary ^heet in use :
Bank
Capital & Counties
London County A Westr.
Glyn
Joint
Lloyds
London City & Midland
London & S. Western
Martin
Metropolitan
National
National Provincial
Parr's
Robarts
Southwark
Union
Williams
Country Clearing
Metropolitan Clearing
C.H.
123
,
Thedifference between the two columns which passed through the Clearing House
is the net balance either to be received or to Daily Average.
Form No. 1.
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.
and the first Saturday in April and October, no clearer shall refuse to pass to credit any
when the time shall be 1.45 p m. for the return that shall be so marked.
last delivery and 2.45 p.m. for returns. All the differences arising from marked
Further Exceptions for Returns. — articles of £1,000 and upwards must be
Returns on the first Saturday in Januaiy finally ascertained and placed to account,
and July to be not later than 3 p.m. before the clearer makes up his balance
April 1, June 30, October 1, December sheet.
31, the day succeeding a bank No clearer shall be allowed to charge
Holiday, and on such other days out drafts in the Clearing-out Book at tin
as the Honorary Secretary may Clearing House.
Determine. All differences of more than £1,000 thai
On
these days the time shall be 4.15 p.m. may have been accidentally passed over at
for the last delivery, and 5.15 p.m. for the night, shall be settled by a transfer at the
last returns, except when either of these Bank of England, the first thing the next
days is a Saturday, when the time shall be morning.
1.45 p.m. for last "delivery and 2.45 p.m. for The inspectors are charged with the
the last returns. preservation of order and decorum in the
Clearing House, and are instructed to report
General Rules.
to the Committee of Bankers disorderly
The total amount of the morning and conduct on the part of any persons, call u
country delivery shall be agreed by each lated, in their opinion, to obstruct the
clearer before leaving the Clearing House. adjustment of the business of the House.
All clerks that are in the Clearing House July, 1905."
by the time appointed for final deliverv, shall
be entitled to deliver their articles, though RULES
they may not have been able to pass them FOR THE CONDUCT OF A CLEARING
to the different desks before the clock strikes.
All returns in the Clearing House upon
OFCOUNTRVCIII Ql ESIN LONDON.
the stroke of the clock, at the time appointed 1. A clearing to be held in the i
for final delivery, must be received by the each day for tin- interchange, among the
clearers and credited the same day. The London bankers, of cheques on
inspectors are instructed to close the doors correspondents in tin- country, placed in
and not re-open them until such returns their hands for collect!
have been delivered. 2. Each London banker to remit tor
Any bank which has accepted and paid collection to his country correspondents
an article leturned to it in error, mav require the cheques drawn upon them, saying.
repayment through the Clearing Hou- Please s.iv it we may b .it you £
'
< I
125
CLE] DICTIONARY OF BANKING [CLE
3. Country bankers wishing to avail retain for the inspection of the out-clearer,
themselves of this clearing to remit their the cheques of any casting, or any particular
country cheques to their own London cheque in which a difference occurs.
agent, to stamp across them their oivn name All wrongly delivered cheques discovered
and address, and that of their London Agent. before the out and m-clearers agreeing
4. Any country bank not intending to any charge have left the Clearing House,
pay a cheque sent to it for collection, to shall be adjusted by the clearers, but any
return it direct to the country or branch discovered after either clearer has left the
bank, if any, whose name and address is House shall not be deducted from the
across it. alreadv agreed amount, but shall be entered
5. Each country banker to write by on the debit side of lists provided for the
return of post to its London agent in reply, purpose, the cheque or cheques to be sent
'
We credit you / for cheques to the proper forwarding agent, who shall
forwarded to us for collection in yours of also enter them on the credit side of the list
Adding in case of non-payment
.' provided ; these lists to be handed to the
of any such cheques, having deducted
'
Clearing House inspector on the morning
for cheque returned to following, and it shall be his duty to agree
£
Messrs. at and ,
the same. The total of these lists to be
£ returned to Messrs. at brought on to the end of the balance sheet.
Bankers' Clearing House,
The balance sheet, together with the
particulars of the out and in-sides, shall be
June 27, 1893. handed to the inspector on the morning
respectfully point out the following the day of the work, and it shall
The Inspectors
necessity of exact adherence to the above rules."
be his duty to check the balances, and to
call attention to any charge that may differ,
as soon as possible.
COUNTRY CHEQUE CLEARING. Bankers' Clearing House,
Additional Rules to be Observed. July, 1905."
Country Clearing to open at 10.30. Drafts,
including returns, to be received not later " METROPOLITAN CLEARING.
than 12.30, except on Saturdays, when the Rules.
time shall be 10 o'clock for the opening,
and 11.30 for the last delivery, including The Metropolitan Clearing to open at
returns. The door to be closed on the 9 a.m. on ordinary days and 8.45 a.m. on
stroke of the clock, as in the Town Clearing. Saturdavs. Drafts on the branches of the
(It is required that all banks shall make a clearing banks and of the London and Pro-
delivery as near to 10.30 as possible, on vincial Bank included in the Metropolitan
ordinary days, and 10 o'clock on Saturdays. Clearing area to be received not later than
In no case sha I the first delivery be later than 10.30 a.m. (Greenwich time) on ordinary
10.45 on ordinary days, and 10.30 on Satur- days and 9.50 a.m. (Greenwich time) on
days. The remaining deliveries at necessary Saturdays.
intervals.) It is requested that the first delivery be
All the in-clearing to be entered at the made immediately on the opening of busi-
Clearing House. ness, subsequent deliveries at frequent in-
Castings of about 50 entries to be given tervals, and that every effort be made to
with all the early deliveries of the out- avoid heavy deliveries at the last moment.
clearing. All the in'
clearing to be entered at
'
(It is expected that the last castings will be the Clearing House.
given to the in-clearers not later than five The agreement of charges to take place
minutes after the last delivery of cheques.) as soon as possible after the in side has
' '
126
—
difference is for £1,000 and upwards the intended that these messengers should be
particulars, if available, to be given to the delayed on account of this delivery, and
paving bank the same day and every effort should they have left the head offices
is to be made to settle the difference forth- with the charges the wrongly delivered
with If particulars are not available the articles shall be returned to the presenting
settling of the error may be held over to the banker.
following day. Drafts wrongly delivered in the Metro-
All differences in the Metropolitan Clearing politan Clearing payable in the Country
to be adjusted as quickly as possible through Cheque Clearing discovered too late for
the Town Clearing. adjustment in the Clearing House to be
Returns in the Metropolitan Clearing must debited to the crossing banker on the sheets
be delivered at the Clearing House through above referred to. These cheques to be
the afternoon Town Clearing at the earliest sent to the inspectors of the Clearing House
possible moment, but not later than 4.5 p.m. in envelopes addressed to the presenting
on ordinary days and 1 .30 p.m. on 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.
anv 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
under protest, received by the head office Town balance sheet in the place provided
or agent too late for delivery at the Clearing and agreed with the inspectors before
House or to the head office of the presenting closing.
bank must be returned by post direct to the Machines will be allotted for use in the
crossing bank or branch and debited at the Metropolitan Clearing under the following
Clearing House on the next business day conditions :
are to be debited on sheets provided for the added to the amount of the Morning Town
purpose, the cheques to be placed in en- Clearing in all cases, and it is the duty of the
velopes addressed to the paying bank and Town clearers to see this is done before
delivered to the inspectors at the Clearing calling their final totals at mid-day.
House as quickly as possible, but not later The general rules of the Clearing House
than 10.45 a.m. (Greenwich time) on ordinary shall be observed in so far as the}' apply.
days and 10 o'clock (Greenwich time) on Bankers' Clearing House,
Saturdays.
January 3. 1907."
The inspectors will use all diligence in
despatching these envelopes in the hope of As to payments under protest in con-
catching the collecting messengers before >n with the Country Clearing, see
they leave the head offices. It is not Protest Payments.
127
.
CLERGYMEN. Clergymen may be mem- A codicil must be dated and signed by the
bers, partners, or shareholders in an associa- testator and attested by two witnesses in the
tion or co-partnership, consisting of more same manner as a will. (See Will.)
than six members or shareholders, carrying COGNOVIT ACTIONEM. (Latin, He has
on the business of banking and other trades recognised the action.) A written acknow-
and dealings for gain and profit, but it is not ledgment by a debtor admitting his liability
lawful for a clergyman " to act as a director in an action, and giving authority to his
or managing partner or to carry on trade creditor to take the necessary steps to obtain
or such dealing as aforesaid in person " (4 judgment against him. A cognovit is
Vict. c. 14). usually given by a debtor in consideration
CLOCK STAMP. An invention by which of further time being given for payment.
the actual time of receipt or payment of (See Warrant of Attorney.)
money may be impressed upon a paying-in COINAGE, COINS. Many substances
slip or cheque. have been used in different countries as
CLOSING AN ACCOUNT. The voucher money, but a metal of some kind has been
closing an account is, in some banks, pasted found to be the most suitable in all respects,
in the current account ledger at the :
and of all metals gold and silver have been
account itself. selected as the best fitted to act as a coinage.
Where a customer callswithdraw
to The properties which should be possessed
his balance, it is desirable that the cheque by the material of which coins are made are
should contain, after the amount, such enumerated by Professor W. S. Jevons in
words as " being the balance of account my the order of their importance (1) Utility
:
A
customer wishing to transfer his account bility; (4) homogeneity (that is, all parts
to another town and not being aware of the of the same quality) (5) divisibility
; (6) ;
may send the banker a cheque filled up, e.g. easily recognised)
" Pay the X. & Y. Bank, Ltd., Leeds, the The early records of the use of metal as
balance of my account Two hundred and money show that the metal was weighed.
fifty pounds with interest due upon the The inconvenience, however, of having to
account to date." use scales and weights on every occasion
"
£ ", leaving the banker to supply when the metal was to be exchanged, led to
the figures. the invention of coins. The metal, or bul-
When an account has to be transferred from lion, was divided into small pieces, each
one branch to another of the same bank, portion or coin being of a certain weight.
it is advisable (though not strictly In the course of time a public stamp was
necessary) that a cheque should be signed. placed upon each coin, so that anyone
Before paying the balance of an account might recognise it as having a definite
to a customer, the banker will, of course, weight, and know that the metal so stamped
ascertain the amount of any outstanding was also of a certain quality. The coinage
cheques there may be and reserve that of Great Britain is of three metals, gold,
sum in the account to meet them. If a silver and copper, or rather bronze. Gold
cheque is presented which has not been is the standard measure of value. Anyone
provided for in this way, the banker can take gold bullion, of the requisite degree
can return it unpaid, marked " account of fineness, to the Bank of England and
closed." have it exchanged for bank notes at the
Where a customer closes his account, the rate of £3 175. 9d. per ounce of standard
banker cannot compel him to take up any gold. The coinage of silver and copper,
bills which there may be under discount at however, remains in the hands of the Govern-
the time of closing. ment, and the public cannot take silver and
CLOSING PRICES. The prices for stocks copper to the Bank and demand coins for
and shares which are quoted on a Stock it. Gold coins issued from the Australian
Exchange at the close of business. mints at Sydney, Melbourne, and Perth are
CLUBS. (See Societies.) legal tender. The coins which may be issued
CODICIL. A
supplement to a will, by from the mint in London are shown in the
which a testator is able to add to what is following table, being the first Schedule to
contained in the will or to make any altera- the Coinage Act, allowing for the corrections
tion which he may desire. made by the Act of 1S91 :—
128
——
Standard Weight.
Remedy Allowance.
Least Current Weight.
Weight per piece. w-,
Gold— Eleven-twelfths
I ive Pound . 616 37239 :!'.i".i4dL's i\i-2-r 39-68935 )
fine gold, one-
•06479")
Two Pound . 246' 15-9761] 245-001
;,4s<.i;, 15-87574 .
twelfth alloy :
02592 |
fineness 9] 6"6
]
00972 )
Silver
Crown . <:: 28-27590 •1296
Half crown .'IS' 18181 14-13795 0788
Thirty-seven-
Florin . 174 :,4. '.4.-. I 1-3103 0646
fortieths fine
Shilling s7 27272 5-65518
three-
0376
silver,
Sixpence . 43' 63636 2-82759 •(1224
fortieths alloy
Groat or Fourpem e 29' 09090 1-88506 ;
•1(17(1
or millesimal
Threepence 21' 81818 1-41379 0138
fineness 925.
Twopence . 14- 54545 94253 •0093
Penny . 7' 2727- 4712H •0056
Bronze
Penny . 145- 83333 9-44984 Mixed metal, •Isyi'.n
Halfpenny s7' .-,(1(1(111 .V66990 copper, tin, -1 1339 ^
Farthing .
43- 7.' 2-83495 and zinc. 05669 '
129
O— (li =)
COL] DICTIONARY OF BANKING [COL
(See Alloy, Base Coins, Bronze Coins, If a partner deposits his own private se-
Bullion, Foreign Moneys, Gold Coins, curities as cover for the partnership account,
Gresham's Law, Legal Tender, Light they are collateral, and the banker can, in
Gold, Maundy Money, Milling, Money, the event of the failure of the firm, prove
Silver Coins, Sterling.) for the full amount owing, obtain the divi-
COLLATERAL SECURITY. Literally a dend and then resort to the private partner's
security which mns parallel or side by side security. There is a danger, however, that
with another security. the private security may prove to be
The word " collateral " is sometimes used partnership property.
when speaking of a secondary security, to A guarantee is a collateral security. (See
distinguish it from the principal or primary Guarantee.)
security. It is also used with the meaning, Upon receipt of notice of the death of the
as in the Stamp Act, 1891, of additional person who has given security for another,
security. It is commonly used when refer- a banker should at once stop the debtor's
ring to a security lodged by some person account and arrange for a fresh one to be
other than the debtor, to distinguish it from opened for all further transactions. This
the debtor's own security. It does hot prevents payments to credit of the account
necessarily mean that the banker must going in reduction of the liability of the
resort to the one security before the other. person who gave the security. The new
In the event of a debtor's bankruptcy, any account should, of course, be kept in credit
security deposited bv him must be realised, pending a fresh arrangement. (See Title
or the value estimated, and the amount Deeds.)
deducted from the debt. A claim can then COLLECTING BANKER. The position of
be made upon the debtor's estate for the a collecting banker when he collects a cheque
difference. Before dealing with the bank- for a customer or for a stranger, either with
rupt's security, the banker should communi- a forged indorsement or a defective title,
cate with the trustee. If, however, the and when he cashes a cheque to a customer
banker holds security from some person or a stranger under the same conditions, is
other than the debtor, he can claim upon indicated below.
the estate for the full amount owing by the To gain the protection of Section 82 of the
debtor, and, after receiving his dividend Bills of Exchange Act, 1882, the banker
from the estate, can fall back upon the must act in good faith and without negli-
collateral security for the deficiency. Where gence, and the protection is only as against
collateral security is realised before the the true owner. (See Crossed Cheque,
bankrupt's estate is settled, the amount where reference is also made to the Act of
should be kept in a separate account, dis- 1906, which extends Section 82 of the Bills
tinct from the debtor's account. of Exchange Act.)
—
Apart from the question of a forged in- tinuance of the office in the event of
dorsement or a defective title, the collecting its being discontinued.
banker has to remember that when he credits " (3) For the purpose of the provisions of
a customer's account with a cheque on this Act relating to colonial registers
another bank, or gives cash for it, the cheque the term colony '
includes British
'
Exchange Act, 1882, but a collecting banker exerciseable by the High Court, and
would, no doubt, be considered negligent if that the offences of refusing inspec-
he placed a cheque so crossed to any account tion or copies of a colonial register,
other than that indicated in the crossing. and of authorising or permitting the .
It is desirable that all cheques paid to credit refusal may be prosecuted sum-
should be indorsed by customers. marily before any tribunal in the
In the case of a cheque payable on con- colony having summary criminal
dition of a receipt being signed, it should be jurisdiction.
collected only for the payee, as the docu- " (3) The company shall transmit to its
ment is not considered to be transferable. registered office copy of every
a
(See Receipt on Cheque.) entry in its colonial register as soon
COLONIAL REGISTER. A branch regis- as maybe after the entry is made ;
'
(2) The company shall give to the regis- shall, during the continuance of that
trar of companies notice of the situa- registration, be i red in any
tion of the office where any colonial ister.
register is kept, and of any change " (5) The company may discontinue to
in its situation, and of the discon- 1 1 any colonial register, and
131
— —
and recorded, in like manner " Section 22. (1) The creditors, qualified
as if he were registered in the to vote, may at their first or any
principal register." subsequent meeting, by resolution,
COMMANDITE PARTNERSHIP. COM- appoint from among the creditors,
MANDITE, SOCIETE EN. In France, a form or the holders of general proxies or
of partnership where some of the partners general powers of attorney from
merely supply part of the capital, and do not such creditors, a committee of in-
take any part in the management of the spection for the purpose of super-
business. Such partners are called com- intending the administration of the
ma)! Jitaires and are liable for losses only to bankrupt's property by the trustee.
the extent of the sums which they have The committee of inspection shall
contributed. consist of not more than five nor
For the English equivalent, see Limited less than three persons.
Partnership. " (2) The committee of inspection shall
COMMISSION. Commisson is the charge meet at such times as they shall from
made by a banker for services rendered to a time to time appoint, and failing
customer. The services rendered ma}- be such appointment, at least once a
very considerable, for a current account month ; and the trustee or any
132
COM DICTIONARY OF BANKING [COM
member of the committee may also of creditors and contributories of the com-
calla meeting of the committee as pany in such proportions as may be agreed
and when he thinks necessary. on by the meetings of creditors and contri-
3 The committee may act bv a butories, or as, in case of difference, may be
majority of their members present determined by the Court (Section 160, s.s. 1,
at a meeting, but shall not act of the Companies (Consolidation) Act, 1908).
unless a majority of the committee Sub-sections 2 to 9, see above, are practically
are present at the meeting. to the same effect as sub-sections 2 to 9 of
" (4) Any member of the committee may !
Section 160 of the Companies Act. (See
resign his office bynotice in writing Bankruptcy. Companies.)
signed by him, and delivered to the COMMITTEES. (See Societies.)
trustee. COMMON LAW. Customs and usages
"
(5) If a member of the committee be- which, by immemorial custom and usage,
comes bankrupt, or compounds or have become law, are called common law.
arranges with his creditors, or is The law which is created by Acts of
absent from five consecutive meet- Parliament is called "statute law" (</;.'
ings of the committee, his office Common law is unwritten. Blackstone
shall thereupon become vacant. says that where the old custom of the king-
" (6) Any member of the committee may dom is fallen into disuse, or become dis-
be removed by an ordinary resolu- putable. Parliament has sometimes bv a
tion at any meeting of creditors of declarator}- statute thought proper to declare
which seven days' notice has been what the common law is and ever has been.
given, stating the object of the COMMON SEAL. (See Seal.)
meeting. COMMON SEAL BOOK. A record of
'
(7) On a vacancy occurring in the office every document which is sealed with the
of a member of the committee, the common seal of a bank is preserved in this
trustee shall forthwith summon a book. An exact description of each docu-
meeting of creditors for the purpose ment is given, with the date of sealing and
of filling the vacancy, and the meet- the names of the persons in whose presence
ing may, by resolution, appoint it was affixed. Each entry may be num-
another creditor or other person bered, and the number placed upon the
liLrible as above to fill the vacancy. relative document.
'
(S) The continuing members of the com- COMMON STOCK. An American term for
mittee, provided there be not less what, in this country, is called ordinary stock.
than two such continuing mem- COMPANIES. Before dealing with a
bers, may act notwithstanding any joint stock company, a banker should make
vacancy in their body and where the
; himself acquainted with its memorandum
number of members of the com- and articles of association. Every person
mittee of inspection is for the time who does business with a company is bound
being less than five, the creditors by the contents of those documents. When
may increase that number so that an account is opened by a company, it is
it do not exceed five. advisable that the banker should be fur-
" (9) Ii there be no committee of inspec- nished with a copy of the memorandum and
tion, any act or thing or anv direc- articles, so that he may ascertain exactly
tion or permission by this Act what regulaticns there are in connection with
authorised or required to be done or keeping a banking account, and with draw-
given bv the committee may be ing, accepting and indorsing bills and what
done or given by the Board of powers of borrowing and of mortgaging the
Trade on the application of the property of the company is given to the
trustee." directors. A copy of the company's balance-
The Board of Trade may, on application sheet should also be obtained. The com
by the committee of inspection, authorise pany should pass a resolution respecting
the trustee to have an account with a local the opening of the account, and embody
bank. (See under Trustee in Bank- therein the regulations of the company with
ruptcy.) respect to the way in which cheques are to
In connection with the winding up of a be drawn and indorsed, and bills drawn,
company, a committee may be appointed to accepted and indorsed. A copy of the
supervise the liquidation. It shall consist resolution, signed by the chairman or the
133
— —
secretary, and a specimen of the signature " (d) in the case of a company
of each person who has power to sign, should which does not issue a pro-
be furnished to the banker. pectus inviting the public to
If the company has issued debentures or subscribe for its shares there
debenture stock, it will be necessary to has been filed with the
ascertain in what way they are secured, registrar of companies a
particularly if the title deeds of the com- statement
in lieu of pros-
pany's property are offered as security, as pectus.
the company may be restrained from The registrar of companies shall, on
'
'
(2)
creating any charge in priority to the the filing of this statutory declara-
debentures. (See Registration of Mort- tion, certify that the company is
gages and Charges.) entitled to commence business, and
In the case of a new company, it should lhat certificate shall be conclusive
be noted that it is only from the date of evidence that the company is so
incorporation, as shown in the certificate of entitled :
incorporation, that the company is capable Provided that in the case of a com-
of exercising the functions of an incorporated pany which does not issue a pros-
company. A contract entered into before pectus inviting the public to subscribe
that date will not be binding. It may be for its shares the registrar shall not
necessary, in some cases, for the banker to e such a certificate unless a state-
,
see the certificate of incorporation. (See ment in lieu of prospectus has been
Articles of Association.) filed with him.
The Companies (Consolidation) Act, 1908, " (3) Any contract made by a company
enacts :• before the date at which it is entitled
" Section 87. (1) A company
shall not to commence business shall be pro-
commence any business or exercise visional only, and shall not be
any borrowing powers unless binding on the company until that
" (a) shares held subject to the date, and on that date it shall
payment of the whole become binding.
amount thereof in cash have ••
(4) Nothing in this Section shall prevent
been allotted to an amount the simultaneous offer for subscrip-
not less in the whole than tion or allotment of any shares and
the minimum subscription : debentures or the receipt of any
and money payable on application for
"'
(b) every director of the com- debentures.
pany has paid to the com- " (5) If any company commences business
pany on each of the shares or exercises borrowing powers in
taken or contracted to be contravention of this Section, every
taken by him, and for which person who is responsible for the
he is liable to pay in cash, a contravention shall, without pre-
proportion equal to the pro- judice to any other liability, be liable
portion payable on applica- to a fine not exceeding fifty pounds,
tion and allotment on the for every day during which the
shares offered for public contravention continues.
subscription, or in the case " (6) Nothing in this Section shall apply to
of a company which does not a private company, or to a company
issue a prospectus inviting registered before the first day of
the public to subscribe for January nineteen hundred and one,
its shares, on the shares or to a company registered before
payable in cash ; and the first dav of July nineteen hundred
" (c) there has been filed with the and eight which does not issue a
registrar of companies a prospectus inviting the public to
statutory declaration by the subscribe for its shares."
secretary or one of the The difference between a company and an
directors, in the prescribed ordinary partnership was defined by James,
Smith (1880, 15 Ch. D.
form, that the aforesaid
conditions have been com-
L. J.,
247), as follows:
iii
— "Anderson
v.
An ordinary partnership is
134
— —
bound together by contract between them- accepted, or indorsed in the name of, or by
selves to continue for some joint object, or on behalf or on account of, the company
either during pleasure or during a limited by any person acting under its authority.'
time, but the partnership is essentially com-
The different matters relating to com-
posed of the persons originally entering into
panies are referred to under the following
the contract with one another. A company
headings :
135
— —
the first day of January, nineteen person or those persons shall, unless duly
hundred and one, every provision incorporated with limited liability, be liable
in the memorandum or articles or to a fine not exceeding five pounds for every
in any resolution of the company day upon which that name or title has been
purporting to give any person a used."
right to participate in the divisible The number of members of a limited
profits of the company otherwise company should not fall below seven if ;
every person who is a member of the com- business established within the United King-
pany during the time that it so carries on dom. These provisions will apply to cases
business after those six months, and is of companies which previously have regis
cognisant of the fact that it is carrying on tered in the Channel Islands in order to
business with fewer than two members, or the company laws in force in this country.
seven members, as the case may be. shall be Section 274 is as follows :
severally liable for the payment of the whole "(1) Every company incorpoii!'
debts of the company contracted during that outside the United Kingdom which
time, and may be sued for the same, without establishes a place of business within
joinder in the action of any other member." the United Kingdom shall within
In a limited company the liability of one month from the establishment
directors or managers may. if so provided of the place of business file with the
bv the memorandum, be unlimited (Section registrar of companies
60). " (a) a certified copy of the charter,
As a memorandum of association
rule the statutes, or memorandum
includes a power to borrow money and and articles of the company,
mortgage the landed property, but before or other instrument con-
making an advance the banker should stituting or defining the
examine that document and the articles constitution of the company,
of association, to ascertain exactly what and. if the instrument is not
the powers of the company are. If no written in the English lan-
express power is taken in the memorandum guage, a certified translation
of association, in the case of an ordinary thereof
trading company the power to borrow and " (6) a list of the directors of the
mortgage for ordinary business purposes is company ;
so far as it was used by the company to and, in the event of any alteration
pay its debts. being made in any such instrument
If a company has power to borrow, and or in the directors or in the names
the advance required will not exceed any or addresses of any such person- as
fixed limit of borrowing that there may be, aforesaid, the company shall within
the banker will be safe in accepting the the prescribed time file with the
company's deeds with a memorandum registrar a notice of the alteration.
signed by the directors. If the articles of " (2) Any process or notice required to In-
association provide that certain regulations served on the company shall be
are to be observed by the directors when sufficiently served if addressed t
mortgaging the company's property, the any person whose name has bee:
banker may assume that all the regulations filed as aforesaid and left at or seal
and formalities have been complied with ; bv post to the address which has
he is not expected, nor is he able, to examine SO I ll''' I
into the " mdoor working " of a company. " (3) Every company to which this Section
(See Registration of Mortgages and applies shall in every year tile with
Charges.) The directors, however, may the registrar sin li a statement in the
be expressly prohibited from mortgaging the form of a balan as would i
the United Kingdom, but with a plai applies, and which uses the word
137
— — — —
'
Limited ' as part of its name, Section 251 specially provides that a bank
shall of issue registered as a limited company shall
" (a) in every prospectus inviting not be entitled to limited liability in respect
subscriptions for its shares or of its notes, and the members shall be liable
debentures in the United as ifit had been registered as unlimited.
Kingdom state the country (SeeArticles of Association, Banking
in which the company is Company, Companies, Memorandum of
incorporated ; and Association.)
" (b) conspicuously exhibit on COMPENSATING ERRORS. (See Balance
every place where it carries of Errors.)
on business in the United COMPENSATING INTEREST. Where a
Kingdom the name of the customer has two accounts, one in credit and
company and the country in one overdrawn, and the former is regarded
which the company is in- as a set off to the latter, interest is allowed
corporated and ; in the credit account to compensate for the
" (c) have the name of the com- interest charged on the overdraft, so long
pany and of the country in as the overdraft does not exceed the credit
which the company is incor- Ofl.l3.llCf1
the event and for the pur- for stamp duty chargeable on trans-
poses of the company being fers of any stock of the Government
wound up." of Canada which may be inscribed in
138
— — —
or paid off, or during which "Section 115. (1) Any county council or
annual or other payments in corporation or company may enter
respect of the redemption or into an agreement with the Commis-
payment off of the same are sioners, if Commissioners in their
tlie
required to be made, exceeds discretion think proper for the de-
sixty years, but does not livery of an account showing the
exceed one hundred years nominal amount of all the stock and
from that date, of three- funded debt of such county council,
pence for every such ten corporation, or company or the
pounds or fraction of ten amount thereof in respect of which
pounds or
; payment has been made, if the
" (&) when
the said period exceeds whole sums payable in respect
one hundred years, or no thereof have not been paid and ;
139
COM] DICTIONARY OF BANKING [COM
transfer of stock, or funded debt, as the account must be stopped at once. (See
the case may be, or upon issue of any Assignment for Benefit of Creditors,
share warrant, or stock certificate Bankruptcy.)
relating thereto, to require payment COMPOSITIONS (BANKRUPTCY ACT).
of an amount not exceeding the When a receiving order has been made
amount of duty which would have against a debtor, he must, within a certain
been chargeable upon the transfer or time, submit a statement of his affairs to the
share warrant or stock certificate if official receiver. (See Receiving Order.)
no such agreement had been entered If the debtor wishes to submit to his cre-
into." ditors a proposal for a composition —
that is,
COMPOSITION WITH CREDITORS. a payment of so much in the pound or for a —
Where a debtor is unable to pay his creditors, scheme of arrangement, the Bankruptcy
he may, legally, call his creditors together Act, 1890, provides as follows : —
and make an arrangement with them, by "Section 3. (1) Where a debtor intends
which he may obtain relief from his debts, to make a proposal for a composition
and one of the usual methods by which this in satisfaction of his debts, or a pro-
is done is to offer to pay a composition; that is. posal for a scheme of arrangement
to pay so much in the pound in full discharge of his affairs, he shall, within four
of the debts due to the creditors. The com- days of submitting his statement of
position is usually payable in a number of affairs, or within such time there-
instalments, upon specified dates, and is after as the official receiver may fix,
guaranteed by sureties. In some cases lodge with the official receiver a
promissory notes are given for the various proposal in writing, signed by him,
instalments, and are made payable at the embodying the terms of the com-
various dates on which the instalments are position or scheme which he is
due. desirous of submitting for the con-
If the arrangement is agreed to by the sideration of his creditors, and
creditors in a deed or instrument, called a setting out particulars of any sureties
deed of arrangement, it must be registered or securities proposed.
" In such case tne official receiver shall
within seven days, otherwise it is void. (See (2)
141
CON] DICTIONARY OF BANKING [CON
heriots, reliefs, suits and ser- Upon a sale of property, the purchase
vices or the value thereof or price is the consideration, and that amount
otherwise howsoever) which is inserted in the deed of conveyance, and
the said C. D., his executors, the stamp duty, ad valorem, calculated
administrators or assigns shall thereon.
render or pay in respect of the In a deed of gift, as, for example, where a
said Copyhold hereditaments property is the subject of a gift from, say, a
with interest for the same at father to his son, the consideration may be
the rate aforesaid without de- " natural love and affection." With regard
duction then this Surrender to to the stamp duty on gifts inter vivos, the
be void. And thereupon to Finance (1909-10) Act, Section 74, enacts
the same Court came C. D. that anv conveyance operating as a voluntary
and took of the Lord of the disposition inter vivos, shall be chargeable
said Manor by the hands of with the same duty as if it were a con-
his Steward the Cottages etc. vcvance on a sale, with the substitution of
aforesaid with the appurten- the value of the property conveyed for the
ances To hold the same to amount of the consideration. (See Con-
him his heirs and assigns for veyance.)
ever according to the Custom The consideration named in a transfer,
of the said Manor Upon the upon a sale of stock or shares, may differ
Condition aforesaid Paying from the amount received by the original
the Rents and performing the seller, owing to subsequent sales having
services of Right due and taken place. The price paid by the last
accustomed and having paid purchaser is the one inserted in the transfer,
the Lord for his Fine as in and on which stamp duty is paid. The
the margin and done his fealty difference is explained in a printed foot-note
is thereupon admitted tenant on transfer forms, and this foot-note justifies
according to the statute. a transferor in executing a transfer where
the consideration differs from the amount
, Steward.
received by him.
(See Copyhold.)
In a transfer of shares to a bank or its
CONFIDENTIAL INQUIRIES. (See nominees as security for a loan or advance,
Banker's Opinion.) the consideration is usually a nominal one,
CONFIRMATION CHEQUE. A cheque say five or ten shillings ; and the same
given by a customer to confirm a debit, which, nominal consideration is inserted in a
for one reason or another, has been passed transfer when the shares are being transferred
to his account pending receipt of the cheque. as a gift.
CONFIRMATION OF BALANCE. Many Where shares are specifically left in a will,
banks send out to each current account the consideration in a transfer from the
customer (or to a selected number), either executors to the legatee will be a nominal
yearly, or half-yearly, a form showing the one ; but where a legatee agrees to accept
balance of the customer's account, with a a transfer of certain shares, instead of re-
request that the form, if correct, be signed ceiving the cash to which he is entitled, the
by the customer and returned to the bank. consideration must be the price agreed upon
The balance on that form should be the same between the legatee and executors, and the
as the balance shown by the pass-b'ook, and stamp duty will be ad valorem.
before a customer signs it, he ought to All deeds prior to the Conveyancing Act,
scrutinise the entries in the pass-book to see 1881, should have indorsed thereon a
that they are in agreement with his own receipt for the consideration stated in the
records, and then compare the balance of the body of the deed. Since that date it is
pass-book with that stated on the form. sufficient if the receipt is in the body of the
In some of the banks in Scotland, con- deed. It must, however, be an actual
firmations are signed in the ledgers. receipt and not simply a statement that the
CONSIDERATION. Consideration has money has been paid. (See Nominal Con-
been defined as " some right, interest, profit, sideration.)
or benefit, accruing to one party, or some CONSIDERATION FOR BILL OF EX-
forbearance, detriment, loss, or responsibility CHANGE. There must be a valuable
consideration for a contract not under seal,
'
142
— —
or benefit accruing to one party, or some " (1) A mortgagor seeking to redeem any
forbearance, detriment, loss, or responsi- one mortgage, shall, by virtue of this
bility given, suffered, or undertaken by the Act, be entitled to do so, without
other." paying any money due under any
Thetitle of a person who negotiates a bill separate mortgage made by him,
is defective if he obtained the bill for an or by any person through whom he
illegal consideration (Section 29, s.s. 2). claims, on property other than that
Where a consideration is affected with comprised in the mortgage which
fraud or illegality, that would form a good he seeks to redeem.
defence against an "immediate party" t'2) This Section applies only if and as far
(see Immedl^te Parties), but not against a as a contrary intention is not
remote party who is a holder in due course, expressed in the mortgage deeds or
that is, one who took the bill fo: value, in one of them." (See Mortgage.)
143
—
CONSOLS. A contraction of " consoli- agreeing at the same time to take it back
dated funds " and " consolidated annuities." at the next settlement. The lender will
The Government borrowed money at probably be a " bear," who requires that
different times and set aside a portion of the particular stock. If, however, there is a
revenue to pay the interest or annuity upon scarcity of that stock, a " bear " may be so
each separate loan. The various loans were, anxious to secure it that he will pay the
in 1752, made uniform and consolidated into " bull " a " backwardation " rate for the
"
one fund, called the Three per cent. Con- loan of the stock instead of the " bull
solidated Annuities, or " 3 per cent. paying interest for the loan of the money.
Consols." (See Backwardation, Contango Day, Stock
When Consols are bought, the purchaser Exchange.)
obtains a receipt. This receipt, however, CONTANGO DAY. The first of the three
is not of any value, the purchaser's title days of a Stock Exchange settlement, being
being the entry in the books of the Bank of the one on which a broker must know
England. A transfer of consols is effected whether a speculator dealing with him
by the owner attending personally at the intends to complete on the next day but one
Bank of England or by his authorising an (pay day) or whether he wishes to have the
attorney to act for him. The interest is due transaction " carried over " until the follow-
on January 5, April 5, July 5, October 5. ing settlement. For mining shares there is
Consols are marked ex dividend about four an additional contango day, called " mining
weeks before the interest is due. (See Power contango day."
of Attorney —Transfer of Government Contango day is also called " making up
Stock.) day " or " continuation da}' " or " carrying
If can obtain cer-
desired, stockholders over" dav. (See Contango, Settling
tificates to bearer, with coupons attached Days.)
for the interest. (See National Debt.) 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 liabilities.
letters patent made by His Majesty. (See CONTINGENT LIABILITY. A liability
Exemplification.) which uncertain.
is For example, if Brown
CONSTRUCTIVE 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 contingencv.
that it will rise before the following settle- CONTINGENT REMAINDER.
' (See
ment, which case he would sell out at
in Remainder.)
once, neither paying nor receiving the price, CONTINUATION DAY. The first of the
but only the profit from his broker the ; three days of a Stock Exchange settlement.
stock, however, contrary to his expectation, Also called " Contango Day " [q.v.). (See
may fall instead of rising, and, as the Stock Exchange.)
speculator still hopes for improvement, CONTRA ENTRY. An entry made upon
rather than sell out at a loss he arranges one side of an account to correct an entry
with his broker to " carry over " or " con- which has been made in error upon the other
tinue " the bargain until the next settle- side.
ment after the present one for the loan of
; CONTRACT NOTE (BROKER'S). The
the money to enable this to be done, the note or memorandum which is given by a
broker makes a charge which is known as broker to the person for whom an order to
" the contango." In the above case the buy or sell certain stocks or shares has been
speculator is called a " bull," that is, one carried out, and which gives particulars of
who anticipates a rise in the stock dealt in. the transaction.
The broker for the " bull " borrows the
money, at " making up " price, to pay for The following is a specimen of a contract
the stock, and gives the lender the stock, note :
144
CONJ DK riON \RY OF BANKING fCON
Exchange Buildings
York ,19 .
Bought for
(Subject to the Rules and Regulations of
the London Stock Exchani
For Settlement
, Brokers.
—
contract note chargeable with duty effect that itis made or executed in
and not being duly stamped, he shall the exercise of an option for which
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 broken it may become the subject of an
pounds or upwards, if he fails to action at law.
comply with the provisions of this A contract may be made in a document
Section. under seal, as in a conveyance of property
" (4) All stamp duties on a contract note or transfer of shares or it may be a simple
;
of his so writing. are sold, the contract note must specify the
(5) Any stamp duty on a contract note numbers of the shares, and if it does not do
may be added to the charge for so, the contract is, legally, void. (See
brokerage or agency, and shall be Leeman's Act.)
recoverable as part of such charge A contract under seal is a specialty con-
tract, and an action must be brought within
Extension of Provisions as to Contract Notes twenty years from the date when the cause
to Sale or purchase of Options. of action first arose. In the case of recovery
"79. (1) The provisions of this Part of of land the period is twelve years. In a
this Act as to contract notes shall simple contract, the action must be brought
apply to any contract under which within six years.
an option is given or taken to pur- i
Section 76 of the Companies (Consolida-
chase or sell any stock or marketable dation) Act, 1908, enacts that :
14«
—
any person acting under its " (iii) A past member shall not be
authority, express or im- liable contribute unless
to
plied, and may in the same it appears to the Court that
manner be varied or dis- the existing members are
charged. unable to satisfy the con-
All contracts made according to this
'
'
(2) tributions required to be
Section shall be effectual in law, and made by them in pursuance
shall bind the company and its of this Act :
successors and all other parties " (iv) In the case of a companv
thereto, their heirs, executors, or limited by shares no contri-
administrators as the case may be. bution shall be required
" (3) Any deed to which a company is a from any member exceeding
party shall be held to be validly the amount, if any, unpaid
executed in Scotland on behalf of the on the shares in respect of
company if it is executed in terms which he is liable as a
of the provisions of this Act or is present or past member :
sealed with the common seal of the " (v) In the case of a company
company and subscribed on behalf limited by guarantee, no
of the company by two of the contribution shall be re-
directors and the secretary of the quired from any member
company, and such subscription on exceeding the amount under-
behalf of the company shall be taken to be contributed by
equally binding whether attested by him to the assets of the
witnesses or not." company in the event of its
As to stamp duty see Agreement. (See being wound up :
*
(vii) A sum du t<> any member of
contribute to the assets of the a company, in his character
company to an amount sufficient of a member, by way of
for payment of its debts and lia- dividends, profits, or other-
bilities and the costs, charges, and wise, shall not be deemed to
expenses of the winding up, and for be a debt of the companv.
the adjustment of the rights of the payable to that member in
contributories among themselves, a case of competition
with the qualifications following n himself and any
—
i
(that is to say) :
litor not a member of the
" (i) A past member shall not be ipany but any such
;
147
— ; —— —
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
" (2) In the winding up of a limited com- changed into ten shares of £1 each.
pany, any director or manager, Wrongful conversion is a legal term
whether past or present, whose signifying the dealing with the goods of
liability is, in pursuance of this Act, another person, without authority, so as to
unlimited, shall, in addition to his deprive him of the possession. For example,
liability (if any) to contribute as an a banker may be liable to an action by the
ordinary member, be liable to make rightful owner of a " not negotiable " cheque
a further contribution as if he were for damages for conversion, where he has
at the commencement of the winding collected the cheque and paid the proceeds
up a member of an unlimited com- to a stranger who was not entitled to it.
pany Provided that
: CONVERTIBLE PAPER CURRENCY. A
" (i) A past director or manager bank note which can be exchanged for gold
shall not be liable to make on demand for its full value, at the bank
such further contribution which issued it, is convertible paper, but
if he has ceased to hold office if it cannot be so exchanged it is called
for a year or upwards before inconvertible paper.
the commencement of the CONVERTIBLE SECURITIES. A general
winding up : term applied to all securities which may be
" (ii) A
past director or manager readily converted, or turned, into cash.
shall not be liable to make CONVEYANCE. In the Conveyancing
such further contribution Act of 1881 the word conveyance " includes
in respect of any debt or assignment, appointment, lease, settlement,
liability of the company con- and other assurance, and covenant to sur-
tracted after he ceased to render, made by deed, on a sale, mortgage,
hold office : demise, or settlement of any property, or on
" (iii) Subject to the articles of the any other dealing with or for any property."
company, a director or man- The word " conveyance " is, however,
ager shall not be liable to principally used to denote the deed by which
make such further contribu- freehold property is conveyed to a purchaser
tion unless the court deems in fee simple.
it necessary to require that The different estates are referred to as :
148
—
Stamp Act, 1891. (See Adjudication are not set forth in the conveyance
Stamps.) or transfer."
Sub-sections 4, 5, and 6 of Section 74, I With regard to the stamp which is
Finance (1909-10) Act, enact as follows : necessary upon conveyances since April,
" (4) Where any instrument is chargeable i
1910, to denote that increment value duty
with duty both as a conveyance or \
has been paid, or that no duty was payable,
transfer under this Section and as seeIncrement Value Duty.
a settlement under the heading The following are the sections of the Stamp
Settlement
'
in the First Sche-
'
Act, 1891, referred to above :
settlement under the principal every instrument, and every decree or order
Act. of any court or of any commissioners,
" (5) Any conveyance or transfer (not whereby any property, or any estate or
being a disposition made in favour interest in any property, upon the sale
of a purchaser or incumbrancer or thereof is transferred to or vested in a pur
other person in good faith and for chaser, or any other person on his behalf or
valuable consideration) shall, for the by his direction.
purposes of this Section, be deemed
to be a conveyance or transfer oper-
How ad valorem Duty to be calculated in
respect of Stock and Securities.
ating as a voluntary disposition inter
vivos, and (except where marriage is " 55. (1) Where the consideration, or any
the consideration) the consideration part of the consideration, for a
for any conveyance or transfer shall conveyance on sale consists of any
not for this purpose be deemed to stock or marketable security, the
be valuable consideration where the conveyance is to be charged with ad
Commissioners are of opinion that valorem duty in respect of the value
by reason of the inadequacy of the of the stock or security.
sum paid as consideration or other " (2) Where the consideration, or any part
circumstances the conveyance or of the consideration, for a convey-
transfer confers a substantial benefit ance on sale consists of any security
on the person to whom the property not being a marketable security, the
is conveyed or transferred. conveyance is to be charged with
" (6) A conveyance or transfer made for ad valorem duty in respect of the
nominal consideration for the pur- amount due on the day of the date
pose of securing the repayment of thereof for principal and interest
an advance or loan or made for upon the security.
effectuating the appointment of a
new trustee or the retirement of a
How Conveyance in Consideration of a Debt,
etc., to be Charged.
trustee, whether the trust is ex-
pressed or implied, or under which " 57. Where any property is conveyed to
no beneficial interest passes in the i
any person in consideration, wholly or in
property conveyed or transferred, part, of any debt due to him, or subject
either certainly or contingently to the pay-
]
150
——
"61. (
1 ) In the cases hereinafter specified By Section 10, Finance Act, 1900 :
151
— — —— ;
legal mortgage be taken. (See Joint " (2) An original will, testament, or codicil
Tenants, Tenants in Common.) (3) The probate or probate copy of a
COPPER COINS. Real copper coins were will or codicil ;
'
(5) Any public register (ex- extract of or from any register of births,
cept any register of births, baptisms, marriages, deaths, or burials is
baptisms, marriages, deaths, to be paid by the person requiring the copy
or burials). or extract, and may be denoted by an
(6) The books, rolls, or re- adhesive stamp, which is to be cancelled by
cords of any court. the person by whom the copy or extract is
In the case of an instru- r signed before he delivers the same out of
ame
ment chargeable with ™,a his hands, custody, or power." (See At-
|
y a|
duty not amounting to' such in- tested Copy, Office Copy.)
5tmment
one shilling . . . .{
-
COPYHOLD. Under the feudal system
152
at
-
-
-
Z
<
o
u
a!
/
<
PQ
—
-
COP] DICT ONARY OF BANKING [COP
holdings at will, but so long as the services The mode of surrender is for the person
were duly rendered, the tenants were no on the rolls, either himself or by duly
doubt permitted to remain upon the land in appointed attorney, to attend before the
peace. When one died, his holding would steward and surrender, either directly or
be taken by his successors, and so from pursuant to a covenant to surrender, the
generation to generation the land would pass copyhold tenement to the lord to the use
from one to another. Blackstone says (sev of the purchaser, and the steward then makes
"Commentaries of the Laws of England," out the surrender, which is a copy of the
vol. n, p. 80, Kerr's Fourth Edition) " From : entrv on the court rolls, and has it stamped.
what has been premised, it appears that The "purchaser may attend at the same time
copyholders are in truth no other but and take admittance, or he may attend at
villeins, who, by a long series of immemorial some subsequent court or out of court to
encroachments on the lord, have at last take admittance. In the former case tb
established a customary right to those surrender and admittance usually appear on
estates, which before were held absolutely at the copy of the court rolls delivered by the
the lord's will. Which affords a very sub- steward' to the purchaser. In the latter
stantial reason for the great variety of case there are two copies of the court roll-
customs that prevail in different manors, namely a surrender and an admittance. The
with regard both to the descent of the surrender is the instrument required to be
estates, and the privileges belonging to the stamped, but the admittance does not
tenants." And again :
" The generality of require a stamp. Sometimes, in pra< I i
villeins in the kingdom have long ago where there is a covenant to surrender in a
sprouted up into copyholders their persons
; deed which deals with both freehold and
being enfranchised by manumission or long copyhold property, such deed is impressed
acquiescence but their estates, in strict-
;
with the usual ad valorem stamp on the full
ness, remaining subject to the same servile \
purchase money, and in that case the
conditions and forfeitures as before though, ;
surrender bears only a ten shilling stamp,
in general, the villein services are usually otherwise it must be stamped according to the
commuted for a small pecuniary quit- purchase price of the copyholds.
rent." In the case of a devisee under a will or in
In early times the name of the tenant was an intestac}', there is no surrender, and the
written upon the rolls of the manor, along admittance merely sets out that A. B. has
with a note of the services he had to render or been admitted as devisee or copyhold heir-
the amount he had to pay. The parchment |
at-law of the deceased tenant on the rolls.
" roll " is now substituted by a book, but the On a copy surrender and admittance, the
tenant of a copyhold is still said to be en- steward certifies that the original surrender
rolled or entered upon the rolls of the manor. is duly stamped. The certificate is some
A copv of the entry on the rolls was given to such form as :
—
" I certify that the surrender
the tenant as evidence of his enrolment, under which this admittance is granted bears
whence he was called a copyholder that is, ; the proper ad valorem stamp of
a holder of the land by copy of the 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 to
of the manor to the use of the purchaser. mav have different customs in the transfer
The actual transfer is effected by surrender of the property.
and admittance. By the surrender an Where a vendor and purchaser personally
equitable interest only is vested in the attend the manor court to surrender and
surrenderee and admittance is required to take nay not be any deed
perfect his title. A surrender may be made of covenant to surrender. There must.
either in court or out <>t court. If made however, except in cases of -i devi
in court, it is entered on the rolls and a copy descent, always be a surrender, and the title
153
—
cannot be complete till admittance has taken property without the copy of the admittance,
place. A person who has ceased to hold which may be in the banker's hands, being
any interest in the property may remain required at all.
tenant on the rolls, and though a covenant In the case of joint tenants, the admission
to surrender is executed it may not be acted of one is equal to the admission of all of
upon for some time afterwards, for so long them, but tenants in common must be
as there is a living tenant on the court rolls admitted severally, and a fine will be due
the lord cannot (even though he knows such from each of them.
tenant has ceased to have any interest) Fines are usually payable by a tenant
compel anyone else to come in and be upon admittance. The amounts of the fines
admitted. In the case of the death of such vary in some cases they are small, though
;
a tenant, his heir-at-law or devisee must in other cases they are large. Some of them
be admitted before a purchaser can and
; are fixed and others arbitrary. An arbitrary
very often, instead of saving fines and fees, fine generally amounts to two years' improved
the actual owner has more to pay. value of the copyhold tenement. They
If a covenant to surrender and a copy may also be payable upon the death of the
admittance of the copyholder, along with lord or the death of the tenant, or upon both
the prior deeds, are lodged as security under events.
a memorandum of deposit, it is said that the For an example of a " conditional sur-
banker has a reliable security but it would
; render," see Conditional Surrender.
appear that the only really satisfactorv way For an example of an " admittance," see
to obtain a security over copyhold property Admittance.
is by mortgage, and surrender to the lord For an example of a " surrender," and a
to the use of the mortgagee. This surrender "surrender and admittance," see Sur-
is entered on the court rolls as being subject render.
to a condition that, on payment of the When copyhold land is freed from all
mortgage debt, the surrender will become customary duties it is said to be enfranchised.
void. Such a surrender is called a condi- (See Enfranchisement.)
tional surrender. Where equitable copyholds are found, the
It is not usual for a mortgagee to seek property is transferable by conveyance,
admittance. This course is adopted in order subject to the ground landlord's claims, i.e.
to avoid payment of the fines and fees which the ground rent with right of recovering the
would be payable upon his admittance, and same. The legal estate vests in the ground
would again be payable upon the re-admit- landlord or his trustee, and his name will
tance of the mortgagor upon payment of the appear on the court roll. Equitable
debt. A mortgagee can at anv time perfect copyholds are considered to be as good as
his title by obtaining admittance as from freeholds.
the date of the surrender, which safeguards By the Stamp Act, 1891, the duty is as
him from the danger of anv subsequent follows :
154
—
' (2) The copy of court roll of a surrender out a duly stamped cop}- of court roll of such
or grant made out of court shall not
surrender or grant, and have the same ready
be admissible or available as evi- for delivery to the person entitled thereto,
dence of the surrender or grant, and in default of so doing shall incur a fine
unless the surrender or grant, or the
of fifty pounds, and the duty payable in
memorandum thereof, is duly respect of the copv of court roll shall be a
stamped, of which fact the certificate debt to Her Majesty from the steward,
of the steward of the manor on the
whether he has received it or not, and if he
face of the copy shall be sufficient
has not received the duty the same shall also
evidence.
be a debt to Her Majesty from the person
••
(3) The entry upon the court rolls of a entitled to the copy.
surrender or grant shall not be
admissible or available as evidence Steward may Refuse to Proceed except on
of the surrender or grant unless the Payment of his Fees and Duty.
surrender or grant, if made out of "68. The steward of any manor may,
court, or the memorandum thereof, before he accepts in court any surrender or
or the copy of court roll of the makes in court any grant, demand the pay-
surrender or grant, if made in court, ment of his lawful fees in relation to the
is duly stamped, of which fact the surrender or grant, together with the duty
certificate of the steward of the payable on the copy of court roll thereof, and
manor in the margin of the entry may refuse to proceed in the matter or to
shall be sufficient evidence. deliver the copv of court roll to any person
until the fees and duty are paid."
Facts Affecting Duty to be Stated in Note. £ s. d.
i
Conditional Surrender of any
" 66. (1) All the facts and circumstances copyhold or customary estate
affecting the liability to duty of the by way of mortgage.
copy of court roll of any surrender See Mortgage, and Sections
or grant made in court, or the 86 and 87.
amount of duty with which any such Covenant to Surrender —
copy of court roll is chargeable, are Where the ad veil rem duty
to be fully and truly stated in a note on the surrender, in respect of
to be delivered to the steward of the the consideration or mortgage
manor before the surrender or grant money, does not exceed 10s., a
is made. duty equal to the amount of
" (2) The steward of every manor shall such ad valon m duty.
refuse In any other case .10 . .
" (a) To accept in court anv sur- If the copyhold deeds are deposited with
render, or to make in court a memorandum of deposit under hand, the
any grant, until such a note duty on the memorandum is the same as in
as is required by this Section the case of other deeds. (See Equitable
has been delivered to him ;
Mortgage, Title Deeds.)
or CORPORATION. A corporation is create. 1
155
COU] DICTIONARY OF BANKING [COU
are drawn, a banker is taken to be acquainted receives the lease signed by the lessor and
with the memorandum and articles of the lessor receives a counterpart or copy of
association of the company, and is affected it signed by the lessee.
with notice of all that is contained in those For the stamp duty, see Duplicate.
two documents. (See Companies.) COUNTRY BANK NOTES. Notes which
COULISSE. The official brokers, agents are issued by a country bank as distin-
de change, upon the Paris Exchange, form the guished from those issued by the Bank of
Parquet ; the unofficial dealers form the England. Where they are tendered in
Coulisse. payment and no objection is raised by the
COUNCIL DRAFTS. Drafts drawn by person receiving them, it is considered a legal
the India Council in this country upon the tender.
Indian Government and payable in India. A tender by a banker of his own
COUNTERFEIT COINS. (See Base Coins.) notes also acts as a legal tender, if not
COUNTERMAND OF PAYMENT. A objected to, even if they are afterwards
banker obliged to honour the cheque of his
is dishonoured.
customer, if there is a sufficient balance in There is nothing to prevent the notes of
the account to meet it, and the cheque is in a country banker being paid away by
order. The drawer may, however, instruct another banker, whether the latter has an
the banker to stop payment of a cheque, issue or not, so long as the person to whom
and the banker will be liable if he neglects they are offered is willing to accept them.
to attend to the instructions. If a country bank note is accepted in
The Bills of Exchange Act, 1882, Section exchange for goods at the actual time of a
75, states that the duty and authority of a sale, the transferee must bear the loss, if the
banker to pay a cheque drawn on him by banker bv whom it was issued fails before
his customer are determined by countermand he presents the note for payment, unless he
of payment. can prove that the transferor knew that the
A
countermand of payment can be given banker had failed before delivering the note
only by the drawer, but notice from a holder to him. But, on the other hand, if the note
that a cheque has been lost by him would was accepted in payment of a pre-existing
put a banker on his guard, pending instruc- debt, and the banker fails before presenta-
tions from the drawer. tion of the note, the debt is not discharged,
An order to stop payment of a cheque and the transferor is still liable to the
should be in writing and be signed by the transferee, provided that the transferee pre-
customer, and if the order is subsequently sented the note, for payment without delay
cancelled, the fresh instructions should also and gave due notice of its dishonour to the
be in writing. The drawer cannot stop transferor.
payment of a cheque which a banker has, The receiver of a country bank note in
at the drawer's request, already certified, payment of a debt should therefore present
or marked, for payment. the note for payment at once, or not later
The terms of a countermand of payment than the following day, otherwise he will
by a customer should be very precise, so as have no recourse against the person who
to admit of no question as to which cheque gave it to him, in the event of the note being
is referred to. A good form is as follows : dishonoured. A bank note is a promissory
note by a banker, and the giving of notice
To the X &. Y. Bank, Ltd., Leeds. of dishonour is regulated by the Bills of
July 10, 1910. Exchange Act, 1882. If the person giving
Please stop payment of cheque No. and the person to receive the notice are in
46501, dated July 9, 1910, for /100, signed the same town, the notice should be received
by me payable to Thomas Brown ; which on the day following the day of dishonour ;
156
COU] DICTIONARY OF BANKING [COU
the day of dishonour. (See Dishonour of of the clearing remit their country cheques
Bill of Exchange.) to their own London agent, or London office,
For the same reason, where a customer and stamp across them their own name and
pays into his account the notes of another address and that of their London agent or
bank, the notes should be presented for head office.
payment bv the banker without delay, so When a countrv banker does not intend
that, in the event of non-payment of the to pay a cheque received by him from his
notes, the bankermay be entitled to charge London agent for collection, he must, bv
the amountto the account of his customer. the rules of the Clearing House, return it
If a banker is negligent in presenting the direct to the country or branch bank whose
notes at once, any loss, upon dishonour, will name and address is across it, and this must
fall upon the banker and not upon the be done by return of post it cannot be
:
customer, unless an arrangement was made held over till next day. (See Clearing
with the customer, when taking the notes, House.)
that thev would not be forwarded for COUNTY COUNCIL. When a banker is
collection for a few days. Bank notes, like appointed to be treasurer to a county
cheques, are presented for payment in the council, he is required to furnish satis-
daily clearing, when the issuing bank is in factory security.
the same town. If the issuing bank is in The cheques, or orders for payment, are
another town, they may be collected through drawn upon the treasurer. Bv Section 80,
London or remitted direct. s.s. 1, of the Local Government Act. 1888, it
Where a person receives change, by way is provided that " all payments to and out
of favour, for a bank note, he is liable, if the of the county fund, shall be made to, and by
note is dishonoured, unless the person who the county treasurer, and all payments out
took the note did not put it into circulation of the fund shall, unless made in pursuance
or present it for payment within a reasonable of the specific requirement of an Act of
time. Parliament, or of an order of a competent
A banker's own notes are not. for the court, be made in pursuance of an order of
purposes of his balance sheet, counted up the council, signed by three members of the
as part of the cash, but are deducted from finance committee present at the meeting
the balance of the note account, in order to of the council, and countersigned by the
show the amount of his notes which are in clerk of the council, and the same order may
circulation. include several payments. Moreover, all
Banks of issue re-issue their notes con- cheques for payment of moneys issued in
stantly until they become unfit for circula- pursuance of such order, shall be counter-
tion, in this respect differing from the Bank signed by the clerk of the council, or by a
of England, which never re-issues its notes deputy approved by the council."
when once they are returned to the Bank. The usual method is for a list of payments
Where notes are received which prove to be furnished to the treasurer, the list
to be forgeries, the amount can be recovered being signed by three members and counter-
from the person from whom they were signed by the clerk, and for the individual
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 As to the stamp duty on this list, see minute
the date when a claim for payment of a note of the Board of Inland Revenue, under
was made to the liquidator, and not from article Cheque.
the actual date when the banker stopped Withreference to the borrowing powers of
payment. (See Bank Notes, Note Register, a county council, they cannot, as a rule, be
Note Return.) 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
with by the House and not included in the made to the statutes under which any loans
Town Clearing or Metropolitan Clearing ; are to be raised.
that is, cheques on the country correspon- If money is borrowed without power or
dents of the London bankers. sanction, the interest thereon will probably
Countrv bankers who avail themselves be disallowed.
157
COU] DICTIONARY OF BANKING [COU
The accounts are made up to March 31, instructions should be taken as to whether
and are audited by a Government Auditor. he wishes them to be sold or collected.
(See Local Authorities.) In the event of any coupons being lost,
COUPON. (From Fr. couper, to cut.) notice should be given to the bank where
Literally a piece cut off. they are payable. The banker will no doubt
A coupon a warrant for the payment
is exercise care before paying them, but he
of interest. attached to a bond
It is usually cannot really refuse to pay them, unless an
or debenture, and requires to be cut off when order to do so is received from the customer
the time has arrived for its presentment for who gave the instructions for the bank to
payment. Where the interest on debentures pay the coupons.
and bonds is paid by means of coupons, a A coupon is exempt from stamp duty
sheet of coupons is supplied. The sheet The exemption is contained in Section 40,
contains a series of coupons, there being a Finance Act, 1894 :
—
" Coupon or warrant
coupon with a different date for each pay- for interest on a marketable security, being
ment of interest, quarterly or half-yearly, one of a set of coupons, whether issued with
as the case may be, for several, and, incases the security or subsequently issued in a
of large coupon sheets, for many years to sheet." A coupon attached to a scrip
come. Where no date of payment appears certificate is not exempt.
upon the coupons, they are payable on COUPON BOOK. In this book are kept
advertised dates. If the date of payment particulars of all coupons sent away for
falls upon a Sunday or a bank holiday, they collection. Columns are provided for —
date
are payable on the succeeding business day. sent, name of customer, name of issuers with
A curious example of the dates of payment designation, number, etc. of bond from
is found in the case of certain Chinese bonds, which the coupons have been detached, and
the coupons of which are advertised as being nominal amount of coupon. Two final
payable " on the first day of the third and columns show the proceeds and when
ninth moon of the Chinese calendar." received.
Where many bonds with coupons attached In the case of coupons payable in London,
are held, a banker keeps a coupon diary, it is customary for country banks to remit
in which are entered particulars of the cou- them to their London agents about one
pons falling due upon the various dates. month before they are due.
Coupons are generally sent up to London, by COURSE OF EXCHANGE. This is the
a country banker, for collection, say, three technical name of the price list of bills,
or four weeks before they are due. In order drafts and cheques, compiled on Tuesdays
to prevent them getting lost, they should be and Thursdays by the principal bill brokers,
pinned to a ticket or slip. There should be a who meet on those days at the Royal Ex-
separate ticket for each different security, change, London. It is issued as soon as
which should quote the number of coupons business is over for the day, say about three
attached, and give particulars of them. The o'clock.
coupons should be sorted in numerical order On the following page will be found the
and according to amounts. Course of Exchange for Tuesday, November
Where coupons are numerous, a coupon 23, 1909, which will serve as an example.
cutter is the most expeditious way of cutting In the aforesaid table " Usance " means
them off. the currencv of the bills or drafts that is,
;
When the last coupon has been detached, the time that must elapse before they are
the part of the sheet which remains is called payable. " short " signifying up to eight or
the " talon," and it is forwarded to the ten days. The double price column refers
address given thereon to be exchanged for to the rate at which different qualities of
a fresh sheet of coupons. A " talon " is not, paper are offered, the first quotation being
however, attached in all cases. for fine bank acceptances, the second for
Coupons are not credited to a customer's good commercial bills. The prices are those
account until an advice of the amount which the London brokers are charging at
realised has been received. This custom the time for bills of the currency and class
has been adopted because of the differences stated thus ^100 would purchase a fine
;
which often arise in the deduction of the bank acceptance for 2,540 francs, payable
income tax. at Marseilles in three months' time. (See
Where the coupons are payable either in Cheque Rate, Foreign Exchanges, Long
this country or abroad, the customer's Rate, Short Rate, Specie Points.)
158
COU] DICTIONARY OF BANKING [COV
Course of Exchange.
COV] DICTIONARY OF BANKING [CRI
are to be found in various places in Eng- sidering whether I could not devise a plan
land, and in more than 200 places in Ire- to lay before my colleagues to give legis-
land. The object of these banks or societies lative, administrative, and financial facili-
is to enable small farmers to obtain advances ties for the establishment on a sound basis
of money for application to reproductive of a satisfactory system of co-operative
purposes in connection with their business. credit banks, especially for the benefit of
The society borrows money, either from a agriculture."
local banker or from the Central Co-operative CREDIT SLIP. The form which is filled
Bank, London, on the joint security of all up and signed by a customer when paying
the members, and lends it out to the mem- in to the credit of a current account. It
bers, usually upon the joint and several should be dated by the customer for the day
promissory note of the borrower and two on which the payment to credit is handed
sureties. The liability of the members is across the counter, or, if sent by post, the
unlimited, and it is on the strength of that date of its despatch.
liability that the society is enabled to A credit slip should show how the amount
borrow the money to lend out at slightly is made up, in gold, silver, copper, notes,
higher rates. If need be, the promissory cheques, or bills.
notes of the individual borrowers may be Another name for a credit slip is " paying-
assigned by the society as security to the in slip." (See Paying-in Slips.)
local banker or the Central Bank from CREDITS OPENED AT OTHER OFFICES.
which it obtains a loan. The societies may (See Standing Credits.)
also obtain capital from local wealthy resi- CRISES, FINANCIAL. (See Panics.)
160
—— — . — —
may again cross it speciallv to " Where the banker, on whom a crossed
another banker for collection. cheque is drawn, in good faith and without
" (6) Where an uncrossed cheque, or a negligence pays it, if crossed generally, to a
cheque crossed generally, is sent to banker, or if crossed specially, to the banker
a banker for collection, he mav to whom it is crossed, or his agent for collec-
cross it specially to himself." tion being a banker, the banker paying the
By Section 7S :
cheque, and, if the cheque has come into
" A crossing authorised by this Act is a the hands of the payee, the drawer, shall
material part of the cheque it shall not be ; respectively be entitled to the same rights
lawful for any person to obliterate or, except and be placed in the same position as n
as authorised by this Act, to add to or alter payment of the cheque had been made to the
the crossing." true owner thereof."
The duties of a banker with regard to As to the efie< ing upon the holder,
crossed cheques are set forth in Section Section 81 provides :
"
79:— " Where a person takes a crossed ch
" (1) Where a cheque is crossed speciallv which bears on it the words not i: '
to more than one banker i he shall not have and shall not be i
when crossed to an agent for collec- giving a better title eque thai
I
tion being a banker, the banker which the person from whom he took it had."
161
::— :
—— — —
A collecting banker is afforded protection which come under the definition of a general
by Section 82 :
crossing :
'
Section
' A banker receives payment of
1 .
162
CRO DICTIONARY OF BANKING [CRO
a 5
1 ^
S S
8 e
S
03
03
CR01 DICTIONARY OF BANKING [CRO
agent for collection, it is customary for the & Y. Bank, Ltd., by Tom
Jones to his
banker to cross it thus " X. & Y. Bank, Ltd.,
: own credit, it is that the
difficult to believe
to the British Bank, Ltd., for collection." X. & Y. Bank, Ltd., would be exonerated
By Section 79, quoted above, when a from blame if they ignored the clear indica-
cheque is crossed to two bankers, except tion upon the cheque and passed it to the
when crossed to an agent for collection credit of Jones. Accordingly, in practice,
being a banker, the banker on whom it is a banker who receives such a cheque for
drawn shall refuse payment. If the present- collection, requires that it be placed to the
ing banker guarantees the banker on whom credit of the account as named in the cross-
it is drawn, such a cheque would usually be ing. In National Bank v. Silke (1891 1 Q.B. ,
paid. But a cheque which is crossed to two 435), where a cheque was crossed " account
branches of the same bank, or to a branch of Moriarty, National Bank," Lord Justice
and the head office, is not treated as being Lindley said with reference to those words :
crossed to two bankers. A cheque crossed " It cannot be contended that thev prohibit
"X. & Y. Bank " should not be placed to a transfer, and I do not think that they indi-
customer's credit at the British Bank, cate an intention that the cheque should not
because the banker on whom it is drawn can be transferable. They amount to nothing
pay it only to the X. & Y. Bank. more than a direction to the plaintiffs to
It is customary for a collecting banker to carry the amount of the cheque to Moriarty's
whom a cheque is specially crossed, to place account when they have received it."
an impress of his stamp upon it, as an indica- In Akrokerri (Atlantic) Mines, Limited v.
tion to the paying banker that it has been The Economic Bank (1904, 2 K.B. 465),
through the hands of that banker, but a where certain cheques were crossed " account
cheque should not be dishonoured merely Economic Bank." Mr. Justice Bigham said :
because the collecting banker has omitted to " In my opinion these words are not in any
stamp it. sense an addition to the crossing. A crossing
The words "not negotiable," added to a a direction to the paying bank to pay the
is
general or a special crossing, do not operate money generally to a bank, or to a particular
as a restriction upon the transfer of a cheque, bank, as the case may be, and when this has
but merely give notice to anyone taking the been done the whole purpose of the crossing
cheque that he cannot obtain a better title has been served. The paying bank has
than the person had from whom he received nothing to do with the application of the
it. The words " not negotiable " do not by money after it has once been paid to the
themselves constitute a crossing. proper receiving banker. The words ac- '
Many cheques have such words as " place count A. B.' are a mere direction to the
to credit of John Brown's account," " ac- receiving bank as to how the money is to be
"
count of payee," " account John Jones dealt with after receipt."
added to the crossing. The Bills of Ex- With reference to the words " how the
change Act does not make any particular money is to be dealt with after receipt," as
reference to an addition of that nature, a collecting banker may now pass crossed
though it does say at Section 78 that it shall cheques at once to the credit of his customer,
not be lawful for any person to obliterate or, it would appear to follow that the words
except as authorised by this Act, to add to " Account A. B.," are a direction to the
or alter the crossing. If the paying banker receiving banker as to how he must deal with
carries out his duty, as prescribed by the the cheques when he receives them.
Act, and pays a cheque crossed generally to a The object of crossing cheques is to insure
banker, and a cheque crossed specially to the safe transmission of the money from the
the banker named, he is not concerned at all sender to the receiver. A general crossing
as to whether, or not, the collecting banker would prevent a thief from obtaining value
carried out the instructions to place the from a banker for a cheque, unless he had a
proceeds to any account indicated. There banking account. The usual special crossing
does not appear to have been any definite would prevent him from obtaining value
decision in the Courts as to what is the duty unless he had an account with the banker to
of the collecting banker with respect to such whom the cheque was crossed. Thus the
instructions upon a cheque. If a cheque thief's chance of profiting by his plunder
drawn on the British Banking Co., Ltd., and becomes still further remote.
crossed "X. & Y. Bank, Ltd., for the ac- a collecting banker gives cash over the
If
count of John Brown." is paid in to the X. counter for a crossed cheque on another
164
cro; DICTIONARY OF BANKING [CUR
banker, he does so at his own risk, because and copper. Bills of Exchange, bank notes,
if an indorsement is forged he is liable to the cheques and any other documents which act
true owner. (See Cheque, Collecting as a substitute for coins are also included
Banker. I under that term.
" CROSSED TO TWO BANKERS." An The currency, or circulating medium
answer which is sometimes marked upon a by which and purchases were effecti d
sales
cheque by the drawee banker, who is return- in olden times, was represented in different
ing it unpaid for this reason. countries by articles, such as sugar, furs, fish,
Where a cheque is crossed to two bankers, cloth, etc.,and even at the present dav in
exi ept when crossed to an agent for collection certain uncivilised nations, cowries, salt, and
being a banker, the banker on whom it is blocks of tea may be found in use.
drawn shall refusepayment thereof (Section The period for which a bill of exchange is
79, Bills of Exchange V t, 1882). drawn, or the period which it has to run
But a cheque crossed "X. & Y. Bank, before maturity, is spoken of as the cur-
Ltd.. Leeds," and also stamped "X. tV- Y. rency of the bill. The currency of a lull
Bank, Ltd., York," is not crossed to two payable after sight begins when the bill is
bankers, as Leeds and York are branches of accepted. (See Coinage, Money.)
the same banker. CURRENCY BONDS. Bonds which are
CROSS-FIRING. where
Cross-firing is repayable in the currency of the country
one person draws a bill upon another, and the where thev are issued.
latter, at the same time, draws a bill upon CURRENCY CERTIFICATES. Certifi-
the former. When a banker detects signs cates which are issued to bankers and
of such a practice, it should act as a danger others by the Treasury of the United States
signal and put him at once on his guard. against deposits of quantities of Treasury
CROWN. A crown is of the value of five Notes and Government Notes.
shillings, and its standard w-eight is CURRENCY OF BILL. The period during
43636363 grains trov. Its standard fineness which a bill has to run before it is due. (See
is thirty-seven -fortieths fine silver, three- Days of Grace, Time of Payment of Bill.)
fortieths alloy. CURRENT ACCOUNT. A customer's
Silver crowns were first coined in 1551. current account at the bank is the account
(See Coinage.) to which he pays in money daily, or at
CUM DIV. Short for cum dividend, intervals, and upon which he draws cheques
" with dividend." It means that the pur- as required for his business or other purposes.
chaser of shares bought on this understand- It may be either overdrawn or " in credit."
ing is entitled to the dividend due to be It is to be distinguished from a loan account,
paid, and if the dividend warrant is sent by on which a sum is borrowed in one amount
the company to the seller, the latter must and which is not operated upon, and from
hand over the amount to the purchaser. a deposit account which is used principally
Most stocks are "cum div." until the Pay for tne lodgment of money which is not likely
Day following the declaration of dividend. to be required for some time. (See Interest.
(See Pay Day.) Pass Book.i
CUMULATIVE DIVIDEND. Preference CURRENT ACCOUNT LEDGERS. Eacl
shares have a preferential right to dividend account in the current account ledgers is
before ordinary shares, and if the profits headed with the full christian names and
of the company in one year are not sufficient surname of the customer, his address and
to pay the full dividend, the profits of suc- designation any particulars regarding sign-
;
ceeding years are used for that purpose, and, ing upon the account, or credits opened oi
until the preference shares receive a full beli. ilf of the customer, or whether tie
dividend for each year, the ordinary shares customer is a shareholder of the bank
receive nothing. The dividend in such the amount of his holding, are also recorded
cases is called cumulative. at the top of the page. If it is an ovi I
If. however, the preferential right as to drawn account, the amount oi the sanctioned
dividend is confined merely to the profits of limit, the date when granted and the
each vear, the dividend is non-cumulative. when it will expire, are entered, so that i
CURRENCY. The word was originally particulars may always !» under the eye of
applied to the currency, or passing from the ledger keeper when pi account. i
hand to hand, of money, but it has now come Columns are provided in the ledgers fot
to be applied to the money itself, gold, silver the date ea< h entry, partii ulai
i t
165
—
name for debit items, " cash," " bills "or The number of ledgers varies, of course,
" sundries " for credit items), debit amounts, with the number of accounts at a branch,
credit amounts, Dr. or Cr., and balance. and it is a common practice for a separate
After these columns there are rulings in ledger to be kept for all the principal
—
;
166
—
application of either the cus- ment of the trust to other trustees, " His
todian trustee, or any of the duties under this provision will, however,
managing trustees, or of any in my opinion, be somewhat difficult to
beneficiary, and on proof to define, as it appears to me that to be a proper
their satisfaction that it is custodian in a trust you must exercise vour
the general wish of the bene- discretion, for example, as regards invest-
ficiaries, or that on other ments and also supervise the administration
grounds it is expedient, to of the trust generally, though not actuallv
terminate the custodian taking part in the management, and the line
trusteeship, make an order will not be easily drawn between custodian
for that purpose, and the and managing trustee."
Court may thereupon make In a pamphlet issued by the Public Trustee,
such vesting orders and give the scale of capital fees ordinarily charge-
such directions as under the able in the case of a custodian trustee is as
circumstances may seem to follows (minimum fee 10s. 6d.) :
Bankers by the Public Trustee in 1908, he Any investment in stocks, funds, shares,
said with reference to the appointment of 10s. per cent, (which includes brokerage) on
custodian trustee as a custodian for the the sum invested.
property and securities, leaving the manage- Any purchase or sale of land, or any
16S
CUS] DICTIONARY OF BANKING [CUS
tment by way of mortgage or charge, customary rent oi and also paying and
&d.per cent, on the purchase money or performing other rents, duties, customs
all
money advanced. ; and services therefor due and of right
Where the trust consists of landed pro- accustomed to be paid. kept, done and
perty settled in strict settlement, the fee on performed.
acceptance is as above. No further fee is Indorsed upon the deed would be a
payable so long as the property, remains in 1
licence, as follows :
—
" On behalf of
strict settlement or is re-settled. Lord of the Manor of I authorise the
If the trust is put an end to. then a fee on within deed, provided the same be in no way-.
withdrawal of the property will be due. prejudicial to the said Lord or the future
(See under Public Trustee for further Lords of the said manor in regard to the
information regarding fees and the duties of rents, fines, dues, duties and services to be
a custodian trustee rendered for the customary premises within
The Public Trustee, in his own capacity mentioned according to the custom of the
as custodian trustee or ordinary trustee, may said Manor.
employ, for the purposes of any trust, such Steward."
bankers as he may consider necessary. He The licence, however, is not always
will, however, whenever practicable, take indorsed on the deed.
into consideration the wishes of the creator To perfect the title, the purchaser should
of the trust and any other trustees there be admitted tenant on the court rolls, and
may be, and of the beneficiaries. In such the document of admittance which is given
a case the position of the banker is merely to him should accompany the deeds, when
that of the usual one with a customer. In they are deposited with a banker as security.
the paper by the Public Trustee, above If the property has been obtained by will,
referred to, he said :
—
"Inthecase of bankers, the will should be registered on the rolls
it will be the practice of the department not and an admittance obtained.
to disturb the connection between the In some manors, however, there is no
settlor or testator and his banker, and I document of admittance, but a receipt for
propose to ask, in such cases, the bank to the fines is given, and this is sufficient evi-
continue the account in the name of the dence of the enrolment. In such cases the
Public Trustee." (See Public Trustee, receipt should accompany the deeds.
Trustee.) In addition to a yearly customary rent,
CUSTOMARY COURT. The court of the there may be a fine payable on a change oi
lord of the manor, for customary tenants, ownership or on the death of the lord or ol
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 to1S32. an owner could not
freeholds, or privileged copyholds, are some- dispose of customary property by will. He
what similar to ordinary opyholds. The
i 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 ami consent of Lord Mortgagei usually take a mortgage of
of the Manor of or his steward or customary property in a form under whi< h
commissioner thereunto lawfully autho- they can obtain admittani e if nei essary, 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 1'nlcss a
to hold the said premises unto ,i is admitted, there is (lie risk that
the said Jones, his heirs and assigns according a second morl ;agi e, v, ithout notice of tie-
to the custom of the Manor of first charge, may obi, mi admittance. When
yielding and paying therefor yearly unto the a mortgagee is admitted, the tines and fi i
said Lord of the Manor the ye must be paid. In some manors, the li<
169
——
of the lord is necessary before a valid good faith and by mistake inserts a wrong
mortgage can be given. date, and (2) every case where a wrong
in
For stamp duties, see Copyhold. date is inserted, if the bill subsequently
CUSTOMER. Where a banker collects a comes into the hands of a holder in due
cheque, crossed generally or specially to j
course the bill shall not be avoided thereby,
himself, for a customer, the banker is pro- but shall operate and be payable as if the
tected, if he has acted in good faith and date so inserted had been the true date."
without negligence, even if an indorsement Where an undated bill has a date inserted
should prove to be forged (Section 82, Bills after acceptance, notice of the date so
of Exchange Act). The person for whom inserted should be given to the acceptor,
it is collected must, however, be a customer. otherwise he will not know when the bill is
It has been held that in order to make a due.
person a customer of a bank, within the The above Section applies only to bills,
meaning of Section 82, there must be either but with regard to cheques where the date
a deposit or a current account or some has been omitted it is generally considered
similar relation. (Great Western Railway that a holder may insert what he takes to be
v. London and County Hanking Co., 1901, the true date.
A.C. 414.) " Section 13. (1) Where a bill or an
Money paid in by a customer to his acceptance or any indorsement on
account is really lent to the banker, the a bill is dated, the date shall, unless
banker becoming, not the trustee for that the contrary be proved, be deemed
money, but the debtor of the customer. In to be the true date of the drawing,
the event of the banker's failure, the cus- acceptance, or indorsement, as the
tomer claims upon the estate as an ordinary case may be.
creditor. " (2) A bill is not invalid by reason only
CUSTOMS AND EXCISE ACCOUNT. The that it is ante-dated or post-dated,
persons entitled to draw upon such account or that it bears date on a Sunday."
are those who are notified to the banker by Ante-dating is placing a date prior to the
the Commissioners of Customs and Excise. true date post-dating, placing a date
;
170
; — —— .
still undated, to issue it again for another over daily with the current account, and
three months, and so on. The only date other ledgers, and this is done, in most banks,
which can be inserted in an undated bill is by clerks other than those who write up the
the true date of issue. A fresh debt requires day books or post the ledgers. Some banks,
a new bill or note. in addition to calling over the dav books,
Bills drawn in Russia are generally dated find it a useful plan also to check the actual
according to the old style (or Julian vouchers with the current account ledgers.
calendar), and thirteen days require to be In a small branch the calling over mav a il <
added to the date on the bill to bring the be done by the manager himself, who thereby
date into accordance with the new style (or gains information which he might not other-
Gregorian calendar) of this country. The wise obtain. In a large branch a manager
date is often given on Russian bills as, e.g. might with advantage occasionally call over
March 5/18, the first date being that of the one of the ledgers himself.
old style (O.S.) and the second date that of Check ledgers which are in use in some
the new style (N.S.). The currency of such banks are practically of the same nature as
a bill would, in this country, be calculated dav books in other banks. (See Check
from March 18. From 1S00 to 1900 the Li- i"
difference was twelve days ; from 1900 to DAY-TO-DAY MONEY. Another name
2100 the difference is thirteen days, and so for " Call Money " : surplus funds in the
it will remain unless Russia comes into line London bankers' hands which they do not
with other countries as to the calendar. need to keep in their tills or in their accounts
The dates on bills of exchange and cheques with the Bank of England, and which, while
are usually in figures, but they would be not caring to lock it up even temporarily bv
quite valid if written in words. In France discounting bills or granting loans for fixed
the date on a cheque is written in words. periods, they are willing to lend to bill
On transfers, powers of attorney, convey- brokers from " day-to-day," that is, on the
ances, and other important instruments, the understanding that the money shall be forth-
date should be
in words. (See Ante-dated. coming at a moment's notice. (See Money
Bill of Exchange, Post-dated.) at Call and Short Notice.)
DAY BOOK. It is called in some banks DAYS OF GRACE. Where a bill of ex-
the cash book, or state book. At a small change not payable on demand, three days,
is
branch one book suffices, and it contains a called " days of grace," are allowed. iri- <
record of all the day's transactions. The ginally they would be allowed to an accep-
entries on the received side, plus the balance tor as a matter of grace they are now, how- ;
found necessary, for transfer items, etc., " (1) Three days, called days of grace,
and the totals of these books are brought are, in every case where the bill
into a daily summary book. itself does not otherwise provide,
Where the number of current accounts added to the time of payment as
is large, it is found very convenient to balance fixed by the bill, and the bill is due
each current account ledger bv itself (see and payable on the last day of
Balance Book), and it is in the day book u i Provided that
that all the current account items are " (a) When the last day of grace
separated to the ledgers where they belong, falls on Sunday, Christmas
thus there may be a column for ledger A to Day, Good Friday, or a day
C, another for ledger D to G, and so on. appointed by royal pro-
The day book is an important book and clamation as a public fast
requires to be carefully kept, and, as with or thanksgiving day, the bill
other bank book>, no erasures are permitted is. except in the case herein-
to take place. Any alteration is effected by after provided for. due and
ruling out the wrong figures and inserting payable on the pre< eding
the correct ones. business day ;
The entries in the day book are called " (b) When the last day of grace
171
.
is a bank holiday (other than Where a bill is payable after a specified event
Christmas Day or Good it must be an event which is certain to
Friday) under the Bank happen. The death of a person is a certain
Holidays Act, 1871, and event, but the arrival of a ship is not. (See
Acts amending or extending Bill of Exchange, Fire Insurance, Life
it, or when
the last day of j
Policy, Payment of Bill.)
grace Sunday and the
is a Examples of the dates upon which bills,
second day of grace is a bank drawn at various currencies, are due, are
holiday, the bill is due and given under Time of Payment of Bill.
DEAD ACCOUNT.
]
172
. —
+K „
acceptor's death is good, provided the banker i
Robert Smith.
was ignorant of the death. Any overdraft upon the deceased's account
DEATH OF ADMINISTRATOR. On the forms the subject of arrangement between
death of an administrator the surviving the banker and the representatives, and
administrator, if any, acts, but, on the death until an arrangement is made the balance
of the last one, fresh letters of administration remains standing in the deceased's name.
require to be taken out, and a new account DEATH OF DRAWEE. Where the drawer
should be opened by the new- administrator. of a bill is dead, the bill should be presented
(See Administrator de bonis non.) to a personal representative, if there is one
DEATH OF AGENT. Where a cheque is and he can be found. If he cannot be
signed by an agent or a person in an official found, it should be presented at the house of
capacity, payment should not be refused the deceased.
merely because the agent or official has died DEATH OF DRAWER. The authority of
since the cheque was issued. For example, a banker to pay a cheque drawn on him by
if Jones has authority to draw cheques upon his customer is determined by notice of the
Brown's account, a cheque so drawn should customer's death (Section 75, Bills of Ex-
be paid, although Jones may have died before change Act, 18S2i. All cheques received
its presentation. Cheques signed by a after notice of his death must be returned
secretary, treasurer, director, manager or with answer " Drawer dead," except in the
other person signing in an official capacity case of a cheque which has been " marked "
must also be paid, irrespective of the death for payment by a banker at the request of the
of the official before presentation. drawer, or for the banker's own convenience
DEATH OF CUSTOMER. A banker may in connection with the local clearing. Such
receive formal notice of a customer's death, a cheque may be paid when presented, even
but it is sufficient notice of the death if he though the drawer has dii d Miice the cheque
n announcement in the papers or hears of
i was marked, as the " marking " was, to all
it from a reliable source. mere rumourA its and purpo-. ent of the
that his customer John Brown is supposed cheque. (See Mark
173
—
The notice of death does not affect any affect the pavment of the cheque when
cheques which may have been debited to the presented, unless the account is overdrawn
deceased's account after his death, but prior and the executors are personally liable.
to the time when the banker first heard of it. DEATH OF GUARANTOR. On receipt of
If a cheque is received in the morning's notice of the death of a guarantor (whether
letters and, before itis actually debited to sole guarantor or one of several) the banker
the drawer's account, notice of his death is will, if he is relying upon that surety (unless
received, the cheque should be returned. the guarantee provides that it shall not be
A record of the death should be made in determined by death), at once stop the
the current account ledger. account and open a fresh one for all further
Before any transfer of the credit balance transactions. This prevents the payments
of the deceased's account can take place, to credit from extinguishing the guarantor's
probate or letters of administration must liability. If the account is not stopped,
be exhibited. all fresh debits will be unsecured. The new
Any cheques signed by the deceased in account, in the absence of a fresh arrange-
an official capacity, as treasurer, secretary, ment, should, of course, be kept in credit.
agent, director, etc. are not affected by his If a new arrangement is not made in a short
death. time, the executors of the deceased guarantor
If he has signed a cheque along with others should be advised of the existence of the
on a joint credit account, the cheque would guarantee and of the banker's claim. When
be paid, but if he signed alone upon the the matter has been arranged, e.g. by the
joint account it should not be paid. If the customer providing a fresh guarantor, the
joint account is overdrawn, or the payment ,
old account should be paid off by a cheque
of the cheque would overdraw it, the banker on the new account. (See Guarantee.)
should not pay it (if signed by the deceased DEATH OF HOLDER. Upon the death
with another of the joint holders), unless of the holder of a bill or cheque, all his rights
arrangements were made with the other are transmitted by law to his executor or
drawer. On a joint account, only the sur- administrator, and the executor or admini-
vivors are responsible for any overdraft. strator can sue upon the bill, or cheque, and
(See Death of Joint Customer.) I
negotiate it in the same way that the holder
Where the drawer of a bill is dead, and a himself could have done.
party requiring to give notice of dishonour When an executor, or an administrator,
knows of it, the notice must be given to a indorses a bill or cheque, he should state the
personal representative if such there be, and capacity in which he signs, otherwise he may
with the exercise of reasonable diligence he render himself personally liable.
can be found. An indorsement by an executor or admin-
The death of A. B., who has given CD. istrator should be confirmed by his banker.
a mandate to sign on his account, cancels the If a cheque is pavable to two persons and
mandate, and the banker will, after receipt one of them dies, the cheque is payable to the
of notice of A. B.'s death, return all cheques surviving holder, after satisfactory evidence
signed by C. D. under the mandate, with has been produced of the death of the other.
answer "A. B. deceased " or " customer DEATH OF INDORSER. Where an in-
dorser is dead and the party requiring to give
DEATH OF EXECUTOR. Upon the notice of dishonour knows of it, the notice
death of one executor cheques are signed by must be given to a personal representative,
the surviving executor, if there is one. If if he can be found.
the last executor is dead, his duties are DEATH OF INFANT. (See Death of
undertaken by his executors, unless there is Minor.)
some special provision in the will. In the DEATH OF INSOLVENT DEBTOR. The
event of the last executor dying intestate, Bankruptcy Act, 1S83, provides as follows :
letters of administration for the estate for Section 125. (1) Any creditor of a de-
which the deceased was executor must be ceased debtor whose debt would
taken out, and when the letters have been have been sufficient to support a
exhibited, the balance, if credit, should be bankruptcy petition against such
transferred by cheque to a new account. debtor, had he been alive, may pre-
(See Administrator de bonis non.) sent to the Court a petition in the
When a cheque is signed by two, or more, prescribed form praying for an order
executors, the death of one of them does not for the administration of the estate
174
dea; DICTIONARY OF BANKING ;dea
to draw a cheque for the balance, if it was ship, but a joint liability is incurred by
the husband's intention that the money distinguished from a joint
should be hers at his death. But if that was and several liability) upon the death of one,
not the husband's intention, there appears itate will not be liable." In pra< tice, a
to be some doubt as to whether the wife may guarantee >y he parties to a joint over
1 i
175
;
176
—
DEA DH l
li IN \ KN i
IF BANKING |
DEB
I in the death oi partner, it has been held
.1 the last surviving trustee, may, by u 1 it
(In re Bourne, Bournt v. Bourne, 1906, Ch. 1 appoint another person or other persons to
113) tli.it the surviving partner ma} mort- be a trustee or trustees in the place of the
the landed property belonging t" the trustee dead (Section In, Trustee Vet,
partnership, and the mortgagee may Mist, mi 1893).
his claim against the personal representa- DEBENTURE. (Latin debeo, to owi
tives of tl[>- deceased partner, unless he had Where a company requires to borrow, it
not n e that tire money advanced was for an frequently does so by an issue of debentures,
improper purpose. (See Partnerships.) thai is by documents under the seal 01 the
DEATH OF PAYEE. (See Death of company acknowledging the debt. A de-
Holder. 1 benture is usually secured by a mortgage or
DEATH OF PRINCIPAL. The death of a charge, and represents a separate debt of a
principal cancels any authority or power he definite round sum bearing a fixed rate of
may have given to an agent. For example, interest. In the case of debenture stock,
if Brown gave Jones power to draw cheques rtiiicates are for different amounts,
upon his account, the death of Brown would representing parts of a large loan or debt.
cancel that authority. Debentures are the instruments evidencing
DEATH OF SHAREHOLDER. An exe- a loan to the company.
cutor is not personally liable upon the Although debentures generally give secur-
shares of the deceased, merely because he ity over the property of a company, they
re< eives the dividends thereon, or is noted may be merely an acknowledgment of a debt,
in the register as the executor of the and give the holders no advantage over other
deceased. If, however, the shares are trans- creditors. It is therefore important, when
ferred into the executor's name, he is liable debentures are offered as security, to ascer-
for any calls there may be, though if he has tain if, and in what manner, they are secured.
become registered on behalf of the deceased's It is also necessary to see that the company
estate he may look to the estate to refund has power, by its memorandum and articles
any payment. An executor is entitled to of association, to issue debentures, and that
receive the dividends without the shares any such power has not been exceeded in :
being transferred into his name. Many other words, that the amount issued is
companies require administrators or execu- within its borrowing powers. It should also
tors to transfer the shares of the deceased be noted whether the debentures are trans-
shareholder into their own names, unless ferable only " subject to equities " —that is,
they intend to sell the shares at an earlv date. are subject to any debt due by the trans-
DEATH OF TRUSTEE. Where there feror to the company — or whether the
are several trustees and one of them dies, it debentures are payable without regard to
would appear that it is not safe to honour any such debt, that is, " without regard to
cheques upon the trust account when any equities " between the company and the
by the surviving trustee or trustees, with- transfer ir
out first ascertaining that the terms of the Debentures and debenture stock are
instrument creating the trust permit such usually secured by a trust deed, sometimes
payment. called a " covering deed," by which the
Section 22 of the Trustee Act, 1893. property of the company is vested in
provides : trustees upon trust for the debenture holders
" Where a power or trust is given to
(1) or debenture stockholders. When the de-
or vested in two or more trustees bentures and debenture stock are secured
jointly, then, unless the contrary is by a " fixed " charge, the holders are free
impressed in the instrument, if any, from the danger of anyone securing a prior
creating the power or trust, the same charge, and the trusl iven powers to
v be exercised or performed by enable them to deal with the mortgaged
ili" survivor or survivors of them property in order, when neo arj to
for the time beine money to repay the debt to the holders. Il,
When- .1 trustee is dead, then the person however, the charge is a " Boating " one and
or persons nominated for the purpose of not " lixed." the company can create prior
appointing new trustees by the instrument, s, or sell the property or deal with it
if any, creating the trust, or if there is no as they desire at any time before the charge
such person, then the surviving trustees or becomes fixed. A debentun creating a
trustee, or the personal representatives of floating charge often, however, contains a
177
IS— (15.15)
DEB) DICTIONARY OF BANKING DEB
condition of this nature:
—
"The debentures company going into voluntary or compulsory
nf the said series are all to rank pari passu liquidation.
as a first charge on the property hereby Where there is a series of debentures, each
charged, without any preference or priority of them is expressed to rank equally with the
one over another, and such charge is to be a others of the series. The interest upon the
floating security, but so that the company debentures may be paid by warrant or by
is not to be at liberty to create any mortgage coupons issued along with the debentures.
or charge on its undertaking pari passu with Debentures are sometimes payable to
or in priority to the said debentures." If bearer and sometimes to the registered
a banker obtains a charge, and has notice holder. And by custom they may be treated
of such a condition, his charge will be as negotiable instruments. When debentures
postponed to the charge created by the to bearer are offered as security, a mere
debentures. deposit of them may be taken (a form of
It is usual for a debenture to be secured transfer not being necessary), or they may
by a " fixed " charge upon the land of the be accompanied, as is preferable, by a
company and by a " floating " charge upon memorandum of deposit or an agreement
its stock, book debts and uncalled capital. showing for what purpose they have been
By that means the company can continue left with the banker. In Bechuanaland
its business and use up and vary the assets Exploration Co. v. London Trading Bank
included under the floating charge. If the (1898, 2 Q.B. 658), where bearer debentures
company defaults in payment of the prin- of an English company had been stolen
cipal and interest secured by the debentures, and pledged with the bank, it was held that
or goes into liquidation, the floating charge the bank was entitled to the debentures
becomes fixed, and attaches the assets as because thev were, by the general custom
at that date. Although debentures may be of merchants, negotiable instruments and
secured by a trust deed, a banker should transferable by delivery.
ascertain the nature of the property, as the The negotiability of debentures payable
property may prove to be of little value. to bearer was considered again in the case
Where a debenture (not being one of a oi Edelstein v. Schuler & Co. (1902, 2 K.B.
series) is given by a company to secure its 1-15). when the decision in the Bechuanaland
account, the deeds of the property should case was followed. In the judgment of
be deposited with the banker along with Bigham, J. (afterwards Lord Mersey), it is
the debenture, otherwise an equitable mort- said : "It has been argued that the attri-
gagee, without notice of the debenture, might bute of negotiability could not be attached
obtain priority. to a contract except by the law merchant ;
A debenture which is issued in the names and that these bonds are of such recent
of the bank's nominees, as security, should creation that their negotiability under that
be accompanied by a qualifying agreement, branch of the law cannot be justified. It is
to show the purpose for which it has been no doubt true that negotiability can only
given. (See Qualifying Agreement.) be attached to a contract by the law mer-
A debenture is not a bill of sale. The chant or by a statute and it is also true
;
from, say, £10 to /100, and are repayable more depends on the number of the trans-
either upon notice or at the end of a certain actions which help to create it than on the
number of years, say five, ten, or fifteen time over which the transactions are spread ;
years from the date of the instrument and it is probably no exaggeration to say
They may also be perpetual or irredeemable, that nowadays there are more business
in which case the holder is entitled to an transactions in an hour than there were in
annuity- or interest upon the money yearly a week a century ago. Therefore the com-
in perpetuity. Although called irredeem- paratively recent origin of this class of
able, thev are usually redeemable upon the securities in my view creates no difficulty
178
DEB DH I
li >\ \KV OF BANKING [DEB
in the way of holding that they are negoti- give a charge upon the company's land the
able by virtue of the law merchant they : transfermust be under seal. (See Transfer
are dealt in as negotiable instruments in of Shares.) The debentures or certificates
every minute of a working day, and to the may also be lodged with a blank transfer :
extent of many thousands of pounds. It is that a transfer in which the space for the
is.
also tobe remembered that the law merchant transferee's name is left blank, or which is
is not fixed and stereotyped, it has not undated. Notice of the charge should 1»
yet been arrested in its growth by being given to the company. When necessary,
moulded into a code it is, to use the words
: the blank transfer is completed by the banker
of Cockburn. C. J., in Goodwin v. R and sent in to the office of the com any foi
(1875, L.l\, 10 F.x. 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 dividends 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 Whena company, which is indebted to a
into existence. Thus it lias been found 1Milker, issues debentures forming a specific
convenient to treat securities like those in charge upon the property of the company,
question in this action as negotiable, and without applying the money so raised in
the courts of law, recognising the wisdom reduction of the loan or overdraft, the banker
of the usage, have incorporated it in what should review his position, because, in the
is called the law merchant, and have made event of a winding up, he will, unless other-
it part of the common law of the country. wise secured, rank merely as an unsecured
In my opinion the time has passed when creditor after the debenture holders.
the negotiability of bearer bonds, whether A private firm sometimes registers as a
Government bonds or trading bonds, foreign limited company for the sole purpose of
or English, can be called in question our m obtaining powers to issue debentures as a
Courts. The existence of the usage has bei u floating charge upon it> stock, and of avoid-
so often proved and its convenience is s<> ing the necessity of having to give a bill ot
obvious, that it must be taken now to be sale upon the stock m order to borrow
part of the law the very expression bearei
;
'
money thereon.
bond connotes the idea of negotiability, so
'
Every company shall, within two months
that the moment such bonds are issued to after allotment, and within two months after
the public they rank themselves among the registration of the transfer of any debentures
class of negotiable securities. It would be or debenture stock complete, and have ready
a great misfortune if it were otherwise, for for delivery, the debentures, and certificates
it is well known that such bonds are treated of debenture stock, unless the conditions of
in all foreign markets as deliverable from issue otherwise provide. (See Section 92 of
hand to hand ;the attribute not only en- the Companies (Consolidation) Act, 1908,
hances their value by making them easy of under heading Certificati:.i
transfer, but it qualifies them to serve as a Every mortgage or charge created aft< i
179
— —
any charge to the benefit of the debenture any debenture holder on payment, in the
holders, is created by a company, the case of a printed deed, of one shilling, or less,
required particulars must be delivered to or, where the deed is not printed, on pay-
the registrar within twenty-one days after ment of sixpence for every 100 words
the execution of the deed containing the required to be copied (Section 102, s.s. 2,
charge, together with the deed containing Companies (Consolidation) Act, 1908).
the charge, or if there is no such deed, one Where a company has redeemed any
of the debentures. The registrar shall give debentures, the company, unless the articles
a certificate of the registration of any mort- or conditions of issue expressly otherwise
gage or charge, and the company shall cause provide, or unless the debentures have been
a copy to be indorsed oi every debenture or redeemed in pursuance of any obligation
certificate of debenture stock which is issued so to do (not being an obligation enforceable
by the company and the payment of which only by the person to whom the redeemed
is secured by the mortgage or charge so debentures were issued or his assigns), shall
registered. have power to keep the debentures alive for
In the " Handbook on the Formation, the purposes of re-issue (Section 104, s.s.
etc., of Joint Stock Companies," by F. Gore 1 ) .Sub-section 3 of the same Section says :
are renewed bv indorsement, even though The debenture holders may sue the
they may not have matured." company for repayment of principal
In addition to being registered with the and interest or, :
registrar of companies, all debentures speci- Applv to the Court for an Order for sale
fically affecting property of the company of the property ; or,
must be entered in a register kept by the Apply for a receiver to be appointed to
company, but a debenture containing merely wind up the company or, ;
a floating charge does not require to be If there is a trust deed giving the necessary
entered in this register, though it does power, the trustees may sell the property,
require registration with the registrar of or enter into possession or, ;
180
—
is essentially the same as debentures, and under the hand of the assignor (not purport-
both are usually secured by a charge or ing to be by way of charge only), of any debt
mortgage. Debentures, however, arc for or other legal chose in action, of which
definite round sums, as separate debts, express notice in writing shall have been
whereas certificates of debenture stock are for given to the debtor, trustee, or other person
different amounts, as parts of one large debt. from whom the assignor would have been
The certificates do not require a stamp, entitled to receive or claim such debt or chose
but any deed creating a security for the stock in action, shall be, and be deemed to have
is subject to the same dutv as a mortgage been, effectual in law (subject to all equities
) which would have been entitled to priority
When a certificate of debenture stoc k is over the right of the assignee if this Act had
given as security, a transfer from the regis- not passed), to pass and transfer the legal
tered holder to the bank's nominees, ac& right to such debt or chose in action
panied by a qualifying agreement, should the date of such notice, and all legal and
be taken, and, to make the security fully other remedies for the same, and the power
satisfactory, the transfer should be registerei 1 to give a good discharge for the same, with-
(See Blank Transfer, Debenture, Loan out the concurrence of the assignor :
Capital, Share Capital, Transfer of Provided always, that if the debtor, trustee,
St \res
i or other person liable in respect of such debt-
DEBIT. (Latin debitum, what is owed.) or chose in action shall have had notice
When a banker pays a cheque drawn by a such assignment is disputed by the assignor
customer, the amount is placed to the debit or anyone claiming under him, or of any
of the customer's account. When the other opposing or conflicting claims to
amounts debited are greater than the debt or chose in action, he shall be entitled,
amounts paid to credit, the resulting balance if he think fit, to call upon the several persons
is a debit one, or a " debtor balance " as it making claim thereto to interplead concern-
is called (shown, thus, Dr. /100) and repre- ing the same, or he may, if he think fit, pa
sents the sum due by the customer to the the same into the High Court of Justii e
banker, the banker being the creditor and the under and in conformity with the provisions
customer the debtor. of the Acts for the relief of trustees."
DEBTS, ASSIGNMENT OF. A customer If the debtor has a counter claim againsl
ni<iv assign toa banker any money which is the assignor, the assignee will be entitled
due, or will be due, to him. This may be only to the balance of the debt after alii
effected by a letter signed by the customer, for the counter laim.
i
addressed to the person who owes him \ cheque is not an assignment of mom ;
money, requesting that the debt be paid to in favour of the payee, as the banker is liable
the banker. The letter will be retained only to the drawer but if a cust
;
by the banker, who should give written formally assigns his balani e to a third part;
notice at once to the debtor of the assign- and the banker receives notice thereof his ,
ment, and ascertain from him if the debt is liabilitv is then to the assign
as stated, and if it is free from any prior DECIMAL COINAGE. Instead of the
charge. It is desirable to obtain an acknow- oi reel ming mom
icnt from the debtor. The banker ested to
should be able to prove that he sent the system, where the divisions are tens
notice in case the debtor does not acknow- multip tens It the sovereign was
ledge it. adopted as the unity oi alue, it i ug
181
—
that a pound would be divided into 10 We tin- se\ era! persons whose names am
, 1
florins, each florin would be divided into in addresses are subscribed, are desirous of
cents and each cent into 10 mils. The florin being formed into a company, in pursuance
would thus equal a tenth of a pound, the of this memorandum of association, and we
cent a hundredth (or about 2id.),a.nd the mil respectively agree to take the number of
a thousandth of a pound (i.e. rather less than shares in the capital of the company set
a farthing). opposite our respective names.
The coinage of France, Belgium, Spain,
Italy, the United States and other countries
Names, Addresses, and Descripl Number of Shares
is arranged on the decimal system. ions
taken by each
of Subscribers
DECIMALS. The interest calculations in Subscriber.
I'.. s
mains unaltered for 10 days, at which date In
another transaction on the account takes
place, the ledger keeper multiplies the £100 Ti 'i al -lull - taken
by 10 days and puts the 1,000 product in
the credit " decimals " column. Each suc- Wil ness
ceeding balance is dealt with in the same
way, being multiplied always by the number No subscriber of the memorandum may
of days between the date of the balance take than one share. (See Memoran-
less
and the date of the next balance being dum of Association.) Subscribers fre-
extended, consequent upon another entry quently sign for only one share each.
appearing in the account. The interes! on DECLARATION OF TRUST. The term
iTOO for 10 days is the same as on £1,000 " bill of sale " includes a " declaration of
fur 1 day, or on /l for 1,000 days, at the trust without transfer." Where a debtor
same rate, and so when the products (i.e., gave to a banker a letter of hypothecation of
the " decimals " so called) are cast up at goods as security, agreeing to hold the goods
the half-year end, the total will represent in trust for the bank and pay over the pro-
the number of pounds for one day on which ceeds when received, it was held (Reg. v.
interest is to be allowed, or charged, as the Townshend, 1884, IS Cox, 466) to be a
case may be, and the amount can then " declaration of trust without transfer " and
readily be ascertained from the tables therefore a bill of sale. (See Bill of Sale,
prepared for the purpose. The last two Trust Receipt.)
right-hand figures are, as a rule, ignored, and DECODE. Tii decode a telegram is to
the interest is reckoned upon the hundreds translate the code words into the words or
of products. figures which they represent. It has only
DECLARATION. A formal statement, or recently come into use.
declaration, in writing. DEED. A deed is a document in writing,
By the Stamp Act, 1891, the stamp duty or printing, on paper or parchment, which
is : is signed, sealed and delivered by the parties
£ s- d. thereto.
Declaration of any use or trust All deeds are now signed, though at one
of or concerning an}' property time was sufficient if they were merely
it
by any writing, not being a will, sealed and delivered. In the olden times
an instrument chargeable
or persons would often be unable to write,
with ad valorem duty as a and the sealing of the document with their
settlement '.
. . .10 . . own private seal would be of the first im-
Declaration {Statutory). (See Affidavit,) portance, but now that nearly all persons can
DECLARATION OF ASSOCIATION. The write, the signature to a deed is the principal
declaration of association is the last clause matter, the seal being merely a formal affair.
in a memorandum of association, which, The deed must be sealed, but it is no longer
in the case of a company limited by shares, necessary that it should be the seal of the
is as follows (Form A, Third Schedule, person who is sealing. It may be the seal
Companies (Consolidation) Act, 1908) : — of anyone, or a drop of wax, or simply a red
182
—
DEE ! 'li I
[ON \k\ i
>l BANKINi ,
DEE
wafer. The seals may be pui on the deeds s. d.
before the parties sign it. and by touching Deed containing an obligation to
it with the linger at the time of signing, it infeft or seize in an annuity to
has the effect of sealing. There must be a be uplifted out of heritable
separate seal for each person. If a deed is subjects in Scotland.
read over to a person who cannot read, the See Bond, Covenant, etc.
attestation clause should be " signed, sealed Deed of any kind whatsoever, nut
and delivered by the said John Brown, the described in this schedule . . (( 10 n
document having first been read over to him (See Title Deeds.)
when he appeared fully to understand the DEED OF ARRANGEMENT. A deed oi
same." arrangement, whether under seal or not,
In addition to being signed and sealed, a made by a debtor for the benefit of his
deed must be delivered, and this is usually otherwise than under the Bank-
creditors,
accomplished by the party placing a finger ruptcy Acts, includes (1) an assignment of
on the seal and saying, " I deliver this his property to a trustee, in order that it
and deed."
I
may be realised and the proceeds divided
A special note in the attestation clause oi amongst the creditors (see Assignment for
any material alteration or erasure inthedei 1
Benefit of Creditors) ; and (2) a deed or
should be made at the time the deed is agreement under which the creditors agree to
Mailed and witnessed.
It is customary for a deed to be witnessed,
—
accept a composition that is, a payment of
so much in the pound in full discharge of the
but the absence of the attestation bv a debts due by the debtor to them (see Com-
witness does not invalidate it. position with Creditors) and, in cases
;
There is no prescribed size 01 -hape for a where creditors of a debtor obtain any con-
deed, and they are found in different forms trol over his property or business, it also
and sizes. Many modern deeds are drawn includes a deed of inspectorship entered
on comparatively small sheets, fixed together into for the purpose of carrying on or winding
in book form, which arc much more easily up the business and a letter of licence
;
read and dealt with than the old full-sized authorising the debtor or any other person
sheets with the long lines. to manage, carry on, realise, or dispose of a
There are two kinds of deeds, an Indenture business, with a view to the payment of
iq.v.), which is made between two or more debts ; and any agreement or instrument
and a Deed Poll (</.;•.) which is made
parties, authorising the debtor or any other person
by only one person, or by more than one if to manage, carry on, realise, or dispose ot
their interests .ire the same. the debtor's business, with a view to the
Blackstone says it is called a deed " be- payment of his debts (Section 2 of the Deeds
lt is the most solemn and authentic of Arrangement Act, 1887).
act that a man can possibly perform with A deed of arrangement is void unless
relation to the disposal of his property and ; registered within seven clear days after the
therefore a man shall always be estopped by first execution thereof by the debtor or ac-
his own deed, or not permitted to aver or creditor (Section 5 of the above Act). The
prove anything in contradiction to what he Registrar of Bills of Sale is the registrar for
has once so solemnly and deliberate]-. deeds of arrangement.
avowed." The register may be searched on payment
By the Stamp V i, 1891, the stamp duty of 2s. Gd. The registrar transmits a copy
is :-
of each deed to the registrar of the count v
Deed whereby any real burden i^ court in the district of which the place of
declared or created on lands or business or residence of the debtor is situate,
heritable subjects in Scotland. and any person may search such registered
See Mortgage, etc., and copy on payment of a similar fee. (See
Section S6. Bankruptcy.)
Deed containing an obligation to DEED OF GIFT. The conveyance ol
infeft any person in heritable property as a gift.
subjects in Scotland, under a In the case of a voluntary deed of gift,
clause of reversion, as a security the deed is void against the Trustee in Bank-
for money. ruptcy if the settlor >ecomes bankrupt within
1
See Mortgage, eti ., and two years from the date thereof, and if lie
Section 86. becomes bankrupt within tenvears.it is void,
183
—
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 at the beginning. (Sec Indenture.)
deed of gift. In taking "a deed of gift as DEFACED COINS. Gold, silver, or copper
security, it is. therefore, necessary to con- coin which is defaced by being stamped
sider whether the donor was solvent at the with anv 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
I
Vict. c. 99, Section 7). (See Legal Tenih R
184
i
balance in the Bank of England to the credit deed should be consulted. Where trustees
of the Government is insufficient for pay- are numerous, it seems reasonable that a few-
ment of the quarterly dividends, the de- should act for the many, but a banker would,
ficiency is borrowed from the Bank upon nevertheless, be liable if the few, acting on a
" Deficiency Bills." These bills must be mandate from the whole body, drew cheques
paid off before the end of each quarter, and and misappropriated the money, unless the
the rate of interest charged is one half of the trust deed sanctioned the delegation.
Bank of England rate of discount, with a An agent, or secretary, or treasurer, or
maximum of three per cent. manager, or other person deriving authority
DEFINITIVE BOND. Where bonds are from a principal cannot delegate his authori y. I
to be issued, as, for example, by a foreign Where there are several executors, one
state, a scrip or provisional certificate is may, in the absence of any instructions to
issued on payment of the money due upon the contrary, draw cheques upon the execu-
allotment. This certificate is held until all tors' account, but it is desirable that a form
the instalments have been paid, when it is of mandate be signed. Executors cai not, as
exchanged for the definitive bond that is, the
; a rule, delegate their authority to someom
final bond with coupons attached. who is not an executor. (See M \\i'\i
DEFUNCT COMPANY. On the registra- DELEGATIONS. The name given by
tion of the memorandum of association of a bankers on the Continent to circular not
company, the registrar of companies issues a drafts, mandates, or other similar ordei Eoi
certificate certifying that the company is the payment of monev. In this country
incorporated, and in the case of a limited they are, for the purpose of stamp duty,
company, that the company is limited. treated as Kills exi hangc .
Sec ,i Ri ui.ai; < I
expiration of three months from the date of "(1) Every contract on a bill, whether
the notice, the company's name will, unless it be the drawer's, il"' acceptor's,
cause is shown to the contrary, be struck off or .in null user's, is incomplete and
the register, and the company will be dis- - hi able, until delivery of I hi
185
— ——
purpose only, and not for the The British Bank, Limited,
purpose of transferring the Delivery
beg to enclose herewith
property in the bill.
order for parcels marked
"I Hit if the bill be in the hands
.it a holder in due course a. valid
which please hand to Mr.
delivery of the bill by all parties
on payment of £
prior to him so as to make them
liable to him is conclusively pre- £
Please retain the order till called for, and
sumed.
" credit us with the proceeds.
(3) Where a bill is no longer in the
To the X. & Y. Bank, Ltd.,
possession of a party who has
Carlisle.
signed it as drawer, acceptor, or
indorser, a valid and unconditional The following are copies of two delivery
delivery by him is presumed until orders :
186
'
the actual owners and had onlv a modified it, l>nt in some districts customers prefer
ownership in the goods. The bank could to have a pass-book, instead of a receipt,
have sent a representative with the delivery as being less likely to gel lost, it being under-
order to the docks and obtained the goods, stood that the rate of interest they are to
or a dock warrant in exchange for the order. rei eive will be the same as is allowed upon
The bank, however, merely lodged it at the the ordinary deposit receipts. The pas-,
company's London office with a request for book would not nei essarily be required to be
dock warrants to be made out as sunn as produced each time any money is repaid,
possible. In the meantime a third party, unless that was the arrangement be1
without notice oi the bank's claim, had the bank and its customer.
obtained a second delivery order, and had iin an account of this kind cheques arc-
taken it direct to the dock's office and drawn only when the customer wishes to
obtained a dock warrant (that is, a receipt withdraw part of the money, because if he- t
by the dock company stating that the goods account becomes an operating one, it would
were entered in his name in their books). no longer be regarded as a deposit account
It was held thai "there is no delivery or but as an ordinary urrent account, and be
<
constructive possession until the deliver) subject to the usual rates for current
order gets down to the docks, and is recog- accounts.
nised by an entry in the dock books." The Some banks supply a special form of pass-
memorandum of deposit which is given when book for deposit accounts where a deposil
delivery orders or warrants for goods are receipt is not asked for. the book being
deposited as security is usually stamped practically the same as that issued by tin-
with a duty of sixpence. Post >ffii e
i
Savings Bank. Each item in
Section 5 of the Finance Act, 1905, enacts the book is initialled by the cashier receiving
that the stamp duty on a delivery order the money or making a payment, and the
charged by the Stamp Act, 1891, shall cease- book must be produced every time that a
to be chargeable. (See Factors \it. transaction takes plai e. A pass book of
Warrant for Goods.) this kind usually carries, in bold type, some-
DEMISE. A word used to express the such heading as the following, " Moneys in
granting of a lease. this account bear interest and are subject
The tenant of a copyhold cannot, as a rule, to days' notice when withdrawn.
demise the property for more than a year, Interest to cease when notice is given. No
unless bv licence of the Lord of the Manor. payment will be made except on production
DEMONETISE. When a coin is reduced of this book." (The notice referred to is
from the dignity of a " legal tender " to the not always insisted upon.)
rank of a mere " token " it is said to be Deposit passbooks generally bear a
demonetised. running number, of which a register is kept
DENOMINATION. The denomination of a giving the name of the depositor, the numbei
bearer bond is the amount of the bond, as £21 of the book and the date when issued. As
^100. to the Bank Order scheme in connection
DENOTING STAMPS. The Stamp Act, with small deposits, see Bank Order. (See
1891, Section 11, provides that:— Deposit Receipt, Pass Book.)
"Where the duty with which an instru- DEPOSIT LEDGER. In addition to the
ment is chargeable depends in any manner consecutive list of deposit receipts .is given
upon the duty paid upon another instrument, in the deposit register (q.v.) an account is
the payment of the last-mentioned duty opened for each depositor in the deposit
shall, upon application to the Commissioners ledger. Under the depositor's nam. is
and production of both the instruments, be shown at a glance all the transactions which
denoted upon the first-mentioned instrument he has had with deposit receipts, the rei
in such manner as the Commissioners think issued being placed to his credit, while In- is
tit/' debited with all those which are paid or
See also Section 72 under Duplicate, renewed the distinctive numbers of the
:
and Section 4, s.s. 3, of the Finance (1909- receipts are quoted. The balance of the
10) Act, 1910. under Increment Value account represents the total of all the re-
Duty. ceipts which are still in his possession, which
DEPOSIT ACCOUNTS. When money is receipts will 1„. found also in the deposil
on deposit with a bank, the depositor
.left er as outstanding.
ma) receive thi bank's deposil receipt for The total ol all the balances shown in the
is:
—
at the option of the Bank in Gold or Notes 11 R.C.L. 512), said that "the holder
Jr.
of the Bank of England. by merely writing his name on the docu-
ment and delivering it to another, confers
/
Kegel. Xo. Manager. no legal right on the person to whom he
gives it."
The English Banking Co., Ltd., Where a depositor is unable to attend
Leeds 1910. personally at the bank to withdraw money
which he "has upon deposit receipt, he should,
Received from of when he desires another person to obtain the
the sum of sterling monev for him, send a letter authorising
1SS
DEP I'h l {> >\ \KV OF B \NKI\c, IDEP
the hanker to pav it to that person. Also, When a new deposit receipt is required by
where there are several depositors, and the a customer, or he desires a renewal of an old
receipt requires to be discharged by all, if one for a less or for a greater amount, or for
the money is to be paid to one of them, he the same amount, the bank's form of apjib a
should be furnished with a letter of authority tion for a deposit receipt should be filled
signed by the others and the receipt should up with the date, the amount, and the name
be indorsed by all of them. To be strictly and address of the depositor, and be signal
in order, the same precautions should be by the applicant.
observed if interest alone is to be paid to one If a deposit receipt is to be issued in the
oi several depositors, or to a person other names of more than one person, the applica-
than the depositor. Deposit receipts are tion form should state whether repayment
frequently received through another banker is to be made on the indorsement of onlv
with a request to pay over the amount. In one of the depositors, or whether all must
such cases, authority to do so should be sign. If it is to be repayable to one or more
obtained from the depositor, or the indorse- of a number, that fact should be written
ment should be confirmed by the presenting upon the receipt, and a note made in the
banker. deposit register.
Somedeposit receipts have a printed form When a deposit receipt is issued in joint
of cheque on the back such as :
" To the names, on the death of one of the depositors
X. & Y. Bank, Ltd. ; Pay to Self or Bearer the money may be withdrawn by the sur-
Ten pounds and interest." Such a form vivor. The executors of a deceased joint
3 somewhat at variance with the nature depositor may, however, give notice to a
of a deposit receipt. In In re Dillon (1890, banker not to repay a deposit receipt to
D. 76), Lord Justice Cotton said with the survivor, even if the receipt is drawn
p.ce to a form of this kind " I come
:
" repayable to either or survivor."
to the conclusion that, in order to preserve Where the joint depositors are husband
convenient evidence when the money is and wife, if the money is to be repaid to the
withdrawn, they put the form of cheque on wife after the husband's death the words
the note, so that when filled up and signed " repayable to either or survivor," should be
it may be preserved as a receipt, and not written on the receipt. (See Joint Ac-
that they make it a part of the bargain that count.)
thi y will not pay unless this cheque is signed Where a receipt in joint names is not
and produced." " repayable to either," all the parties must
Although a deposit receipt is not transfer- indorse it, and where payment is requested
able, the debt itself is capable of being l'v one of the joint depositors, he should, as
led by the depositor. The assignment stated above, be furnished with a written
must be in proper form, and, in order to be authority from the others to obtain the
effective, notice of it must be given to the money.
banker. If a depositor is unable to write, his mark
In some banks when only a portion of the is required by most bankers to be witnessed
sum deposited is withdrawn, an indorsement by two persons, one of whom should, if
is made upon the receipt stating the amount possible, be an outside individual who is
which has been paid, or, if interest alone has well known to the banker, and the other may
been paid, the date up to which it has been be an official of the bank.
given ; but the usual and more satisfactory No part of the amount for which a de]
way is that the deposit receipt should be receipt has been given should be paid unles .
renewed upon each transaction, the old one the receipt is produced.
being discharged and a fresh one drawn. Where a deposit receipt is left .is securitj
Many receipts have a form of discharge with the banker who issued it, the depositor's
printed upon the back, e.g. " Received the indorsement should be obtained and a letter
within mentioned sum and interest, this or memorandum taken, stating the purpose
1910." for which it has been lodged. In some cases
As simple interest only is allowed upon a cheque signed by the depositor and made
deposit receipts, depositors usually bring in payable to the banker may be taken with
the receipts half yearly or yearly to have the advantage.
interest added, which is done by discharging If a customer has both a current account
the old receipt and giving a new one for the and a deposit receipt, and his account
amount plus the accrued interest. becomes overdrawn the banker is quite
189
DEPj DICTIONARY OF BANKING [DEP
justified in regarding the deposit receipt as ment, or receipt, must be across a penny
a set off, and he can refuse to pay the receipt adhesive stamp, or two halfpenny stamps,
so long as it is necessary for him to hold the unless the deposit is already impressed with
amount against the overdraft. If the a stamp in readiness for the depositor's
customer becomes bankrupt, the banker's ; receipt.
lien is not affected. A note of any overdraft The deposit receipt itself, that is, the
should be made against the entry in the 1
transfer it, the banker may find himself it may, conveniently, be pinned behind its
liable both for the new receipt and for the counterfoil.
amount of the undischarged old receipt. Where a receipt has been lost, an in-
When a receipt is presented for payment demnity should be required before the money
it should, before being paid, be compared is paid or a fresh receipt issued. Paget
with the register of receipts to see that it says (page 31, " The Law of Banking"), " a
agrees in all particulars with the entry deposit receipt not being a negotiable instru-
therein, that the amount is still outstanding, ment, the bank is not entitled to exact an
and that no note of a lien or charge of any indemnity from the depositor before paying
kind is recorded against it. For better him, if he has lost the receipt."
identification, if necessary, of the depositor, A banker is released by the Statute of
his indorsement on the receipt ma) be com-
r
Limitations from liability on a deposit
pared with the specimen signature which receipt more than six years old. and in regard
would be taken when the depositor originally to which he has not meanwhile acknowledged
lodged the monev. The depositor's indorse- the depositor's claim by payment of interest
1911
DEP DIi TION \KV OF BANKING DIA
or in any other way, bu1 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 s h m
< be crossed
] 1 1
may be, on satisfactory proof of the identity out of the index. Where a deposit ledger
of the depositor or his legal representatives. is also kept, particulars can be more readily
About forty years ago deposit receipts in obtained from it than from the register.
joint names were sometimes cut in two, The total of all the receipts shown in the
where there were two depositors, and each register as outstanding should agree with the
person took a half. If a receipt was drawn balance of the deposit receipt account in the
in the names of three persons, the document general ledger, and the register should be
was cut into three pieces, and each party proved at regular intervals. (Sec Deposit
received a piece. When repayment was Ledger, Deposit Receipt.)
required, each party had to take the portion DEPRECIATED CURRENCY. If a
in his possession to the bank and indorse it. sovereign, or other coin, does not contain t he-
When the banker received the three pieces weight of gold, or silver, as prescribed In-
he fastened them together and then paid the law, it is said to be " depreciated."
money. If a bank note passes current for less than
(See Bank Order. Death of Customer the amount of the note, the note is said to
Deposit Accounts, Deposit Ledger, De- be " depreciated." (See Coinage.)
posit Register, Donatio Mortis Causa, DEPRECIATION. A term denoting the
Garnishee Order. Income Tax. Interest reduction in value which takes place in
on Deposit Receipt, Lost Deposit Re- works, buildings, machinery, etc., as the
ceipt, Statute of Limitations.) result of being used or becoming old-
DEPOSIT REGISTER. The deposit fashioned or obsolete.
register contains a complete list of all the In examining the balance sheet of a busi-
deposit receipts which have been issued ness concern, it should be noted whether a
by a bank. The amounts should be entered satisfactory amount has been provided from
from the application forms signed by the the profits for depreciation. What that
depositor, in the order in which they are amount should lie depends in a great
issued, and the entries should be numbered measure upon the particular circumstances
consecutively, the numbers being the same of each case.
as appear on the face of the receipts which DESTROYED BANK NOTE. Where
have been issued. In addition to the date notes have been partly or wholly destroyed,
and the number, the depositor's name and their value can be recovered from the bank
address should be given and the amount of which issued them, provided that full par-
the receipt. A note should also be made of ticulars, including the numbers, are supplied
any particulars relative to the receipt, such and that the bank is otherwise satisfied.
as " repayable to either party " (if it is in The bank would, naturally, require a suffi-
two names and either may sign), " all must cient indemnity to be given before paying
sign," " current account is overdrawn," notes which are stated to have been de-
" receipt said to be lost," " refer to Manager stroyed. (See Lost Bank Note.)
before paying." If a receipt form has been DEVISEE. The person to whom " real "
spoiled when being filled up, the spoiled property (see Realty) is left, or devised, in
form should not be destroyed but should be a will, is called the devisei
. The person who
clearly marked " spoiled " and preserved as takes all the real property remaining after
evidence of what has become of that number. the devisees have received their shares, is
A convenient way of preserving it is to attach called the residuary devisee. (See Lega-
it to the counterfoil. A record should be tee.)
kept in the register against the number of DIARIES. Diaries ari kept lor various
the form that it has been spoiled. purposes. In addition to a diary for the
When a receipt has been paid, the entry dates on which overdraft or loan limits expire
in the register is written off with the date of and other special matters requiring attention,
payment. there are bill diaries, showing tin- bills which
There is usually an index to the register, mature on the various dales, a coupon
so that by turning up a depositor's name, diary, a diary for recording the dates on
when the number of his receipt is not known, which premiums on fire policies and on life
the entry may be quickly found. The policies are due, and a special form of diary
index should show against each name the for payments, such as subscriptions, which
I9l
DIM] ]>I< TIMXARY OF BAXKIXG [DIR
have to be made on the same day in each what their true position is, which is that
year. they are really commercial men managing
DIME. (See Foreign Moneys — United a trading concern for the benefit of them-
States.) selves and of all the other shareholders in it.
DIMINUTION IN VALUE. If a certain They are bound, no doubt, to use reasonable
quantity gold will purchase so much
of diligence having regard to their position,
silver, and the supply of silver increases
if though probably an ordinary director, who
so that the same gold will purchase more only attends at the board occasionally, can-
silver, the silver has suffered a " diminution not be expected to devote as much time and
in value," or in other words has depreciated. attention to the business as the sole managing
(See Money.) partner of an ordinary partnership, but they
DINAR. (See Foreign Moneys — are bound to use fair and reasonable diligence
Servia.) in the management of their company's
DIRECTORS. The directors of a com- affairs, and to act honestly. But where with-
pany are the members who are chosen by the out fraud and without dishonesty they have
other shareholders to direct or conduct the omitted to get in a debt due to the company
business of the company. The directors, in by not suing within time, or because the
some cases, meet every day and are practi- man was solvent at one moment and became
cally acting managers of the company but ; insolvent at another, I am of opinion that it
in other cases they meet only at intervals, by no means follows as a matter of course, as
often just once a week, when all the impor- it might in the case of ordinary- trustees of
tant business of the week is brought before trust funds or of a trust debt, that they are
them. There is usually a chairman and a to be made liable."
vice-chairman, and the whole body is called The number of shares which a dirrect
the board of directors. The room in which must hold in the company to qualify him
the} meet is the board room, in allusion to for the post of director, depends upon the
the board or table at which they sit. terms of the articles of association. The
The powers of directors are limited to the Companies (Consolidation) Act, 1908, does
provisions of the memorandum and articles not provide for any special qualification, but
of association of the company. Table A (see Section 1 1 under Articles of
Directors have been called trustees for the Association), Rule 70, says the qualification
company, but in Smith v. Anderson (1880, of a director shall be the holding of at least
15 Ch. D. 247), Lord Justice James said : one share in the company.
" A trustee is a man who is the owner of It shall be the duty of every director who
the property, and deals with it as a principal, is by the regulations of the company re-
as owner, and as master, subject only to an quired to hold a specified share qualification,
equitable obligation to account to some per- and who is not already qualified, to obtain
sons to whom he stands in the relation of his qualification within two months after his
trustee, and who are his cestuis que truslent. appointment or such shorter time as may
The same individual may fill the office of be fixed by the regulations of the company
director and also be a trustee having pro- (Section 73).
perty, but that is a rare, exceptional, and Every company must keep a register of the
casual circumstance. The office of director names and addresses and occupations of its
is that of a paid servant of the company. directors and managers, and furnish a copy
A director never enters into a contract for thereof to the registrar of companies and
himself, but he enters into contracts for notify- any changes (Section 75).
his principal, that is, for the company of In a limited company the liability of the
whom a director, and for whom he is
he is directors may', if so provided by the memor-
acting. He
cannot sue on such contracts, andum, be unlimited (Section 60).
nor be sued on them, unless he exceeds his A limited company, if so authorised by its
authority." articles, may, by special resolution, alter its
Jessel, M.R., said (in In re Forest of Dean memorandum so as to render unlimited the
Coal Company, 1879, 10 Ch. D. 450) : liabilitv of its directors or managers (Section
" Directors have sometimes been called 61).
trustees or commercial trustees, and some- The following are a few of the rules
times they have been called managing where Table A applies : —
The directors may
partners ; it does not matter much what appoint one of their number to be managing
you call them, so long as you understand director at such remuneration as thev think
192
-
fit and he shall not, while holding that office, operation of the order for a specified
be subject to retirement by rotation (Rule time, or grant an order of discharge
72). subject to any conditions with
The amount borrowed by the directors for respect to any earnings or income
the purposes of the company (otherwise than which may afterwards become din
by the issue of share capital) shall not at any to the bankrupt, or with respect
time exceed the issued share capital without to his after-acquired property :
the sanction of the company in general meet- Provided that the court shall refuse
ing (Rule 73). the discharge in all cases where the
Every director present at a meeting or bankrupt has committed any mis-
committee of directors shall sign his name demeanour under the Debtors Act,
in a book kept for that purpose (Rule 1869, or the principal Act, or any
75). other misdemeanour connected with
The seal shall not be affixed except by the his bankruptcy, or any felony con-
authority of a resolution of the board and in nected with his bankruptcy, unless
the presence of two directors and the secre- for special reasons the court other-
tary or other person appointed for the pur- wise determines, and shall, on proof
pose, who shall sign every instrument to of any of the facts hereinafter men-
which the seal is affixed in their presence tioned, either —
(Rule 76). " (i) refuse the discharge ; or
The office of director shall be vacated if he " (ii) suspend the discharge for a
holds any other office of profit under the period of not less than two
company, or participates in the profits of any years ; or
contract with the company (Rule 77). " (in) suspend the discharge until
Every year at the ordinary meeting one- a dividend of not less than
third of the directors for the time being, or if ten shillings in the pound has
their number is not three or a multiple of been paid to the creditors ;
rupt's conduct during the proceed- " Provided, that if at any time
ings under his bankruptcy), and may .iltrr the expiration of two ye:
either grant or refuse an absolute from tlie date of any order in
order of discharge, or suspend the under this Section thebankrupl shall
193
> 3— (1535)
:
satisfy the court that there is no " (g) That the bankrupt has put
reasonable probability of his being any of his creditors to un-
in a position to comply with the necessary expense by a frivo-
terms of such order, the court may lous or vexatious defence to
modify the terms of the order, or of any action properly brought
any substituted order, in such man- against him :
ner and upon such conditions as it " (h) That the bankrupt has
may think fit. within three months pre-
(3) The facts hereinbefore referred to ceding the date of the
receiving order incurred un-
"(a) That the bankrupt's assets are justifiable expense by bring-
not of a value equal to ten ing a frivolous or vexatious
shillings in the pound on the action :
amount of unsecured
his " (?) That the bankrupt has within
liabilities, unless he satisfies three months preceding the
the court that the fact that date of the receiving order,
the assets are not of a value when unable to pay his debts
equal to ten shillings in the as they become due, given
pound on the amount of an undue preference to any
his unsecured liabilities has of his creditors :
arisen from circumstances " (;') That the bankrupt has within
for which he cannot justly be three months preceding the
held responsible : date of the receiving order
" (6) That the bankrupt has omit- incurred liabilities with a
ted to keep such books of view of making his assets
account as are usual and equal to ten shillings in the
proper in the business car- pound on the amount of his
ried on by him and as suffi- unsecured liabilities :
ciently disclose his business " (k) That the bankrupt has on
transactions and financial any previous occasion been
position within the three adjudged bankrupt, or made
years immediately preceding a composition or arrange-
his bankruptcy : ment with his creditors :
That the bankrupt has con- (/) That the bankrupt has been
'
'
' [e) That the bankrupt has failed equal to ten shillings in the pound on
to account satisfactorily for his unsecured liabilities, and a report
any loss of assets or for any by the official receiver or the trustee
deficiency of assets to meet shall be prima facie evidence of the
his liabilities :
amount of such liabilities."
"
(/) That the bankrupt has (See Bankruptcy.)
brought on, or contributed DISCHARGED BANKRUPT. A bankrupt
to, his bankruptcy by rash who has been formally discharged by the
and hazardous speculations, Court of Bankruptcy. As to dealings with
or by unjustifiable extrava- an undischarged bankrupt, see Bankrupt
gance in living, or by gam- Person. (See also Discharge of Bank-
bling, or by culpable neglect rupt.)
of his business affairs : DISCHARGED BILL. A bill of exchange
194
—
each customer for whom bills are discounted, mind. Is the bill a genuine trade bill, that
and a note is made in the heading of the is a bill accepted by Brown because he has
amount fixed as the discount limit. Each received value for it from Jones, or has
bill, as discounted, is entered in the correct Brown accepted it merely for the accommo-
account with the date when it is discounted. dation ot Jones, on the understanding that
The acceptor's name is noted and the date Jones himself must meet it at maturity ?
when the bill is due also the number on the
; The banker may be informed that it is an
bill which refers to the entry in the bill accommodation bill when it is offered to him,
register is usually added. The amounts or he may be left to find out that fact for
are entered in a column headed " accept- himself. A scrutiny of Jones' account may
ances," and when any bills mature the shi >w,perhaps, that a bill for practically the
amounts are entered in a column headed same amount appears regularly every three
" matured acceptances " and the balance or six months, suggesting that it is the same
is shown in the balance column. bill which is being renewed time after time.
When the balances of the discount ledger Is there any cross drawing between Brown
are extracted, the total should agree with and Jones, that is does Brown accept bills for
the total of the bill register, also with the Jones, and Jones accept them for Brown ?
total of undue bills as shown in the bill Is the business between the two parties such
diary. as would justify Jones drawing on Brown ?
When a dishonoured, a note of the
bill is If Jones an iron merchant, for example,
is
fact is usually made in red ink against the and Brown a grocer, it is not very likely that
entry in the discount ledger. the bill would arise out of the ordinary course
The discount ledger may also show the of business between an iron merchant and a
liability of each person as acceptor or indor- grocer, and the b~nker is put on inquiry.
ser on bills discounted for other customers. In the words of George Rae in his "Country
DISCOUNT REGISTER. The same as Banker " " It is not the province of banking
:
which may eventually produce endless " A ship-owner, or ship's husband, may
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
brought to be discounted, a banker will con- there is a tangible fund in his incoming
sider the position of the acceptor Brown. If fre ghts to meet this class of marine paper
Brown's account is at another bank, what but when he accepts against the hull of a
sort of a banker's opinion is held regarding ship, he passes the recogni ed limits of
him, isthe opinion a recent one, and how negotiable value, and his paper becomes
many other bills accepted by Brown are in discredited in the estimation of the bill
the bill case. Have any of Brown's accept- market."
ances ever been dishonoured ? If Jones is A bill which is payable to John Brown
the person who wants the bill discounted, only should not be discounted, as the bill is
the banker will note the total amount of bills not a negotiable instrument, and the banker
already discounted for him and the quality could not, if necessary, sue upon it.
of them. A certain number of the bills may A banker who discounts a bill is a " holder
be dishonoured at maturity, and the question for value " (q.v.), and at maturity he obtains
arises, will Jones' account admit of the bills, the full proceeds.
on which there is a risk, being debited to it, The person for whom a bill is discounted
if they are returned unpaid ? It is also must indorse it, as by indorsement he be-
necessary for the banker to remember that comes one of the parties to the bill and liable
he may hold in his case bills accepted by thereon if the acceptor fails to pay it. If
Jones which he has discounted for other not indorsed, he is not liable on the bill,
customers. unless the bill proves to be a forgery.
If the parties to the bill are quite satisfac- When an advance is made upon the
tory, other points will arise in the banker's deposit of a bill as security, the banker isa
196
— — —— — — —
" holder for value "- only to the extent of the indorsers accrues to the holder,
sum he has lent upon it. and no presentment for payment
The discounter of a bill may, if he wish, is necessary."
re-discount it. Bill brokers frequently re- " Section IS. A bill may be accepted
discount bills with bankers, and instead " (2) When it is overdue, or after it has
of indorsing each bill they usually give been dishonoured by a previous
a guarantee to cover all the bills re- refusal to accept, or by non-
discounted. payment :
of his body. The deed barring an entail is " (1) A bill is dishonoured by non-pay-
called a disentailing deed, and the land ment (a) when it is duly presented
thereafter may be dealt with at the will of the for payment and payment is re-
owner. fused or cannot be obtained, or
Disentailing assurances and other deeds (6) when presentment excused
is
enrolled in Chancery are proved by certificates and the bill is overdue and unpaid.
of enrolment signed by the proper officer. " (2) Subject to the provisions of this Act,
(See Estate Tail.) when a bill is dishonoured by non-
DISHONOUR OF BILL OF EXCHANGE. payment, an immediate right of
A bill is dishonoured either by non-accept- recourse against the drawer and
ance or by non-payment. That is, where indorsers accrues to the holder."
the person on whom a bill is drawn (the Notice of dishonour must be given.
drawee) refuses to accept it, or where the Section 48 provides as follows :
person who by accepting the bill (the " Subject to the provisions of this Act,
acceptor) agreed to pay it. fails to do so on when a bill has been dishonoured by non-
the day on which it is due, the bill is said to acceptance or by non-payment, notice of
be dishonoured. dishonour must be given to the drawer and
As to dishonour by non-acceptance, the each indorser, and any drawer or indorser
Bills of Exchange Act, 1882, provides as to whom such notice is not given is dis-
follows : charged Provided that
;
" Section 42. When a bill is duly pre- " (1) Where a bill is dishonoured by non-
sented for acceptance and is not accepted acceptance, and notice of dishonour
within the customary time, the person is not given, the rights of a holder
presenting it must treat it as dishonoured in due course subsequent to the
by non-acceptance. If he do not, the holder omission, shall not be prejudiced
shall lose his right of recourse against the by the omission.
drawer and indorsers. " (2) Where a bill is dishonoured by non-
" Section 43. A bill is dishonoured by acceptance and due notice of
non-acceptance dishonour is given, it shall not be
" (a) When it is duly presented for accept- necessary to give notice of a
ance, and such an acceptance as i-. subsequent dishonour by non-pay-
prescribed by this Act is refused ment unless the bill shall in the
or cannot be obtained or : meantime have been accepted."
" (6) When presentment for acceptance Notice to the various parties of the dis-
is excused and the bill is not honour of a bill must be given in strict
accepted. conformity with the regulations set forth in
" (2) Subject to the provisions of this A( i Section 49, otherwise the drawer and
when a bill is dishonoured by non- indorsers may be discharged. The Section is
acceptance, an immediate right of as follows :
recourse against the drawer and " Notice of dishonour in order to be valid
197
— ; —
and effectual must be given in accordance " (11) Where there are two or more
with the following rules : drawers or indorsers who are not
" (1) The notice must be given by or on partners, notice must be given to
behalf of the holder, or by or on each of them, unless one of them
behalf of an indorser who, at the has authority to receive such notice
time of giving it, is himself liable for the others.
on the bill. " (12) The notice may be given as soon
" (2) Notice of dishonour may be given as the bill is dishonoured and must
by an agent either in his own name, be given within a reasonable time
or in the name of any party entitled thereafter.
to give notice whether that party- "
In the absence of special circumstances
be his principal or not. notice is not deemed to have been given
" (3) Where the notice is given by or on within a reasonable time, unless —
behalf of the holder, it enures for " (a) where the person giving and
the benefit of all subsequent holders the person to receive notice
and all prior indorsers who have reside in the same place, the
a right of recourse against the notice is given or sent off in
party to whom it is given. time to reach the latter on
" (4) Where notice is given by or on behalf the day after the dishonour
of an indorser entitled to give notice of the bill
(b) where the person giving and
'
for the benefit of the holder and the person to receive notice
all indorsers subsequent to the reside in different places,
party to whom notice is given. the notice is sent off on the
" (5) The notice may be given in writing day after the dishonour of
or by personal communication, and the bill, if there be a post at
may be given in any terms which a convenient hour on that
sufficiently identify the bill, and day, and if there be no such
intimate that the bill has been post on that day then by
dishonoured by non-acceptance or the next post thereafter.
non-payment. " (13) Where a bill when dishonoured is
" (6) The return
of a dishonoured bill to in the hands of an agent, he may
the drawer or an indorser is, in either himself give notice to the
point of form, deemed a sufficient parties liable on the bill, or he may
notice of dishonour. give notice to his principal. If he
" (7) A written notice need not be signed, give notice to his principal, he must
and an insufficient written notice do so within the same time as if he
may be supplemented and validated were the holder, and the principal
by verbal communication. A mis- upon receipt of such notice has
description of the bill shall not himself the same time for giving
vitiate the notice unless the party notice as if the agent had been an
to whom the notice is given is in independent holder.
fact misled thereby. " (14) Where a party to a bill receives due
(8) Where notice of dishonour is required notice of dishonour, he has after
'
'
to be given to any person, it may the receipt of such notice the same
be given either to the party himself, period of time for giving notice
or to his agent in that behalf. to antecedent parties that the
" (9) Where the drawer or indorser is holder has after the dishonour.
dead, and the party giving notice " (15) Where a notice of dishonour is
knows it, the notice must be given duly addressed and posted, the
to a personal representative if such sender is deemed to have given due
there be, and with the exercise of notice of dishonour, notwithstand-
reasonable diligence he can be ing any miscarriage by the post
found. office."
" (10) Where the drawer or indorser is Under certain circumstances the Act
bankrupt, notice may be given excuses non-notice of dishonour, or delay in
either to the party himself or to the giving notice. Section 50 provides :
198
— ) — —— —:
is excused where the delay is caused remedy arises on the consideration, the
by circumstances beyond the con- transferor is entitled to notice of dishonour.
trol of the party giving notice, and The amount which a holder may recover
not imputable to his default, mis- in an action on a dishonoured bill is prescribed
conduct, or negligence. When the in Section 57 :
cause of delay ceases to operate " Where a bill is dishonoured, the measure
the notice must be given with of damages, which shall be deemed to be
reasonable diligence. liquidated damages, shall be as follows :
" (2) Notice of dishonour is dispensed " (1) The holder may recover from any
with party liable on the bill, and the
" (a) When, after the exercise of drawer who has been compelled to
reasonable diligence, notice pay the bill may recover from the
as required by this Act acceptor, and an indorser who has
cannot be given to or does been compelled to pay the bill
not reach the drawer or may recover from the acceptor or
indorser sought to be from the drawer, or from a prior
charged : indorser
" (6) By waiver express or implied. " (a) The amount of the bill
Notice of dishonour may be " (b) Interest thereon from the
waived before the time of time of presentment for
giving notice has arrived, payment if the bill is payable
or after the omission to give on demand, and from the
due notice : maturity of the bill in any
" (c) As regards the drawer in the other case :
199
DIS] DICTIONARY OF BANKING [DIS
ment thereof, with expenses. of his customer, have not been cleared, he
To John Jones, , Manager. may also be held liable in damages if it has
been the banker's practice to allow the
English Street, Leeds.
customer to treat uncleared cheques as cash.
Where aninland bill has been dishonoured As it is a serious matter to damage a
it may, the holder think fit, be noted for
if customer's credit by dishonouring a bill or
non-acceptance or non-payment, as the case cheque which ought to be paid, a banker will
may be, but it is not necessary to note such naturally make quite sure of the position
a bill in order to preserve recourse against before returning it. He should ascertain
the drawer or indorsers neither is there any
; that everything has been credited to the
need to protest an inland bill, and it is not account and that the balance has been
usually done. (See Noting.) correctly extended. When a cheque is
Where a foreign bill, appearing on the face returned simply from some irregularity in
of it to be such, has been dishonoured by the document itself, such as an incorrect
non-acceptance, it must be duly protested indorsement, an alteration, a difference in
for non-acceptance, and where such a bill, amount, or any other similar kind of cause,
which has not been previously dishonoured the banker should make the reason quite
by non-acceptance, is dishonoured by non- clear so that no reflection may be cast upon
payment, it must be duly protested for non- the customer's credit. A cheque marked
payment. (See Protest). The bill must be " refer to drawer " means, as a rule, that the
noted on the day of dishonour. The protest drawer has not sufficient funds in his account
may be extended later. to meet it, and it would be wrong to mark
Noting or protest does not do away with a cheque " R/D " if the correct answer
the necessity of giving the notices of dis- should be " Indorsement irregular," or
honour to drawer and indorsers. As soon something of that nature. (See Answers.)
as payment is refused on the due date, a It is customary (except where a special
holder may give notice of dishonour. He arrangement exists) to debit charges half- .
need not necessarily wait till the end of the yearly and until the usual time for debiting
day before doing so. Where a bill is to be them has arrived a cheque should not be
noted, it is customary to wait till after the dishonoured by anticipating the item for
close of business before noting it, though charges, or debiting them at an unusual time.
there is nothing to prevent the bill being Wrongful dishonour may, as stated above,
noted as soon as dishonoured. An action render a banker liable to pay damages. Thus,
cannot be commenced till after the end of the if a customer has a balance of £500 at his
due date. In Kennedy v. Thomas (1894, banker's, and the customer draws a cheque
'2 Q.B. 759), where an action was brought by for £300, or accepts a bill for £300, payable
the holder of a dishonoured bill upon the at his banker's, the banker is liable to be
last day of grace, it was dismissed as pre- mulcted in substantial damages if the cheque
mature. or the bill is dishonoured, and the customer
Where a bill, which a banker has dis- is not bound to prove any actual loss by
counted for a customer, is dishonoured, the reason of the dishonour. In the case of Rolin
banker should debit it to the customer's v. Steward (1854, 23 L.J.C.P. 148), it was
account and advise him at once, so that he said by Mr. Justice Williams " Although
:
may be in time to give the required notices no evidence is given that the plaintiff has
to prevent the release of other parties. But sustained any special damage, the jury
if the account does not justify the dis- ought not to limit their verdict to nominal
honoured bill being charged to it, the banker damages, but should give such temperate
should debit it to an account called " Dis- damages as they may judge to be a reason-
honoured Bills," or " Overdue Bills," and able compensation for the injury the plain-
at once send notice of dishonour, and request tiff must have sustained from the dishonour
for payment, to all the parties to the bill. of his cheque."
A note of the dishonour should be recorded In Marzetti v. Williams (1830, 1 B. and
in the discount ledger and the banker's Ad. 415), where a sum of £40 had been paid
opinion book. to credit about one o'clock and a cheque was
200
DISI UK I'll INARY OF I'.AXKING [DIS
with which to pay the cheque), Mr. Justice for cheque returned to Messrs. at
Taunton said " The jury have found that
:
when the cheque was presented for payment When a banker dishonours a customer's
a reasonable time had elapsed to have cheque, the balance on the drawer's account
enabled the bankers to enter the £40 to the is available to pay any cheque, which may
credit of the plaintiff, and, therefore, that be presented subsequently, up to the amount
they must or ought to have known that they of the balance or sum available, but in Scot-
had funds belonging to him. That was land when a cheque is dishonoured, any
sufficient to entitle the plaintiff to recover funds that there may be in the drawer's
nominal damages, for he had a right to have account are attached in favour of the person
his cheque paid at the time when it was presenting the cheque, the amount being
presented, and the bankers wen- guilty of a transferred by the banker to a suspense
wrong by refusing to pay it. Independently account.
of other considerations, the credit of the A cheque paid to the credit of a customer
plaintiff was likely to be injured by the nf the X. & Y. Bank, drawn by another
refusal of the defendants to pay the cheque. customer of the same bank, may be returned
. . The case put in the course of the
. on the following day. Even if the paying-
argument, of the holder of a. cheque being in-slip counterfoil is initialled by the bank
refused payment, and called back within a cashier, as it often is, it would not alfect the
few minutes and paid, is an extreme case, banker's right to return the cheque. The
and a jury probably would consider that as banker is not obliged to inform the person
equivalent to instant payment." paying in to credit a cheque drawn on the
When a cheque which has been credited banker by another customer, that the cheque
to a customer's account is returned unpaid, may not be paid. He may take the cheque
a banker debits it to that account if the without comment and. after he has looked
balance permits of it, and advises his cus- into the position of the drawer's account, may
tomer that he has done so. Some bankers return it dishonoured. In practice a country
obtain a cheque from the customer when banker either pays or dishonours such a
handing him a returned cheque. If the cheque on the day he receives it.
customer wishes it to be re-presented, a fresh If a cheque presented across the counter
paying-in slip should be signed. When a is refused payment, the banker does not, as
cheque which has been returned is recalled a rule, write anything upon the cheque. He
by wire, it is advisable for a banker to advise may simply refer the presenter to the drawer.
his customer of the circumstance in order If a cheque cashed for a person who is not
that he may be on his guard. a customer is returned unpaid, the banker
Cheques paid to credit are often (when will, of course, at once endeavour to regain
payable to bearer or indorsed in blank) not the amount from the party to whom it was
indorsed by the customer, but the fact that paid, but if this is not immediately possible
the cheque was not indorsed by the customer he should debit it meanwhile to a returned
when placed to his credit does not affect at bill (or cheque) account.
all the banker's right to debit his account Where a customer has two accounts, one
with it when returned dishonoured. in credit and one overdrawn, and the credit
A cheque received in the Local Exchange balance is regarded as a set off to the debit,
must, if not to be paid, be returned on the cheques on the credit account may be
day of receipt. dishonoured if their payment would reduce
Where a cheque received through the the balance below the amount owing on the
London Clearing House for collection cannot overdrawn account, unless there is some
be paid, by Rule 4 of the Clearing House, arrangement or custom to the contrary.
" Any country bank not intending to pay a Where a customer has a deposit receipt
cheque sent to it for collection, to return it and a current account, and cheques are
direct to the country or branch bank, if any, drawn upon the account in cm -^ of the <
whose name and address is across it." And balance, a banker usually pays such cheques
by Rule 5, " Each country banker to write so long as they do not exi eed the amount of
by return of post to its London agent in the deposit receipt. Should such lieques
i
'Jin
— —
would, probably, not be liable, seoing that under which the debtor is entitled to have
deposit receipts are not intended to be a re-conveyance of the property from the
drawn against by cheque. (See Bill of banker.
Exchange.) The disposition should be registered in
DISPOSITION. In Scots law, a document the Register of Sasines the back-letter
;
•>0?
— : — : .
nothing is paid up on any of the shares in " (3) Before sanctioning any such pay-
the company dividends may be declared and ment the Board of Trade may, at
paid according to the amounts of the shares. the expense of the company, ap-
No amount paid on a share in advance of calls point a person to inquire and re-
shall, while carrying interest, be treated port to them as to the circum-
for the purposes of this article as paid on the stances of the case, and may, before
share. 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 be made only for
shall
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, at the like discretion, either which the works or buildings have
be emploj^ed 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 the persons entitled which it is paid :
91 of the Companies (Consolidation) Act, " (8) Nothing in this Section shall affect
190S, provides as follows : any company to which the Indian
" Where any shares of a company are Railways Act, 1894, as amended
issued for the purpose of raising money to by any subsequent enactment,
defray the expenses of the construction of applies."
any works or buildings or the provision of Interest upon debentures is commonly
any plant which cannot be made profitable regarded as a dividend, but it is really
for a lengthened period, the company may interest upon a loan, and must be paid by
pay interest on so much of that share capital the company quite irrespective of any
as is for the time being paid up for the period question of profits.
and subject to the conditions and restrictions A dividend is also the name given to the
in this Section mentioned, and may charge amount which is paid to creditors from a
the same to capital as part of the cost of bankrupt's estate. (See Companies, Divi-
construction of the work or building, or dends — in Bankruptcy.)
the provision of plant DIVIDEND MANDATE. A written order
Provided that- from a shareholder requesting the company
" (1) No such payment shall be made un- of which he is a i
to send his dividends
less the same is authorised by the direct to his banker to be placed to the credit
articles or by special resolution : of his account.
" (2) No such payment, whether author- If the shares stand in several names the
ised by the articles or by special mandate should be each person.
203
—— —
Unless the income tax on the dividends these orders continue in force until cancelled
is paid by the bank, a column in the register by the customer most banks have their
;
will be necessary to show the amount to be own printed forms. The companies make the
deducted in each case. The totals of the warrants payable to the banker, generally
columns must, of course, agree with the adding the name of the shareholder at the
amount set apart for payment of dividend. foot ,the banker discharges the warrants in
DIVIDEND WARRANT. An order, or the same way as a shareholder.
warrant, issued by a company, and drawn An ordinary dividend warrant is practi-
upon its bankers, in favour of a member of cally a cheque in a special form, but the
the company, for payment of the interest or dividend warrant of a bank, being drawn by
dividend due to him upon his holding of a bank on a bank, is of the nature of a bank
shares or stock in the company. draft rather than a cheque. (See Indorse-
Section 95 of the Bills of Exchange Act ment, Lost Dividend Warrant.)
1SS2, is :
—
" The provisions of this Act as DIVIDENDS (IN BANKRUPTCY). With
to crossed cheques shall apply to a warrant regard to the
distribution of dividends
for payment of dividend." (Sec Crossed amongst the creditors of a bankrupt's estate,
Cheque.) the Bankruptcy Act, 1883, provides :
204
—
as authorities to obtain possession of the Ifdocuments are sent out along with the
goods. bill to the drawee in order that he may
Section 1 1 of the same Act prescribes that inspect them, they should not be left with
the transfer of a warrant may be by indorse- him. A banker, however, may have re-
ment, or, where the document is by custom ceived instructions, from the correspondent
or by its express terms transferable by de- sending him the bill, to deliver up the
livery, or makes the goods deliverable to the documents to the drawee upon his accept-
bearer, thenby delivery. ance of the bill ; or he may have instruc-
The warrants when given as security tions to give up the documents on payment
should be indorsed by the person named, of the bill under rebate.
and be accompanied by a memorandum of When a banker advances against ship-
deposit. The memorandum (which should ments he sends the bill abroad, with the bills
create a continuing security) should give the of lading attached, for payment. When the
bank authority, in the event of default of documents are given up against acceptance,
repayment, to sell the goods and out of the the banker has then to rely upon the
proceeds to repay the loan with interest, and acceptor, regarding whom he should have
all other moneys due. The memorandum satisfactory information.
should also provide for insurance of the Where a credit is opened abroad at a
goods against fire, and for a sufficient margin customer's request, against bills of lading,
in value to be preserved. The memorandum policy, etc., the foreign banker draws on the
requires to be stamped sixpence. Danker in this country and sends the bill,
Where there is any uncertainty as to the with the documents attached, to the English
nature of the document, the goods should be banker. The documents may be taken by the
transferred into the banker's name in the customer and paid for at once ; or the
books of the dock company or warehouse amount may be charged to the customer and
keeper. j
the documents held as security until required.
The stamp duty on a dock warrant is three- I
In some cases, the bills of lading may be
pence. (See Warrant for Goods.) handed to the customer and a letter taken
DOCKET, OR DOCQUET. The name from him hypothecating the goods to the
given in some banks to the form which is bank, and undertaking to hand over to the
sent out yearly or half-yearly to customers bank the proceeds from the sale of the goods,
to sign, if correct, confirming the balance of and until that is done the customer agrees
their account as stated thereon, and as shown |
to hold the goods or the proceeds in trust
by their pass book. j
for the bank. When this is done a separate
In Scotland, in some of the banks, a account is usually opened for the operation.
docquet or confirmation of balance is signed In such cases the banker really parts with
in the ledger. his security and has to rely upon the honour
DOCUMENTARY A documentary
BILL. of his customer. In case of failure, trustees
bill is a bill which is accom-
of exchange generally recognise these undertakings.
panied by various documents, such as bill There is the danger, however, that there
of lading, dock warrant, delivery order, may be a contra account due from the cus-
policy of insurance, invoice. tomer to a purchaser of the goods, in which
A banker must see that policies of insur- case, as the latter has no notice of the hypo-
ance attached to bills received by him from thecation, he is entitled to deduct the contra
abroad are stamped within ten days of their account from the amount he is due to pay
arrival in this country. as the purchase price of the goods. (See
When a banker receives a bill for accept- Trust Receipt.)
ance, with documents attached, and he When documentary bills are discounted,
sends the bill to the drawee to be accepted, the banker takes a note of hypothecation
and informs the drawee that the bill of lad- or memorandum of deposit, from the cus-
ing and invoice are in his possession, the tomer, by which the bill of lading and the
banker is not thereby held responsible if the goods are pledged to the banker and under
bill of lading should prove to be a forgery. which he is given a light, if necessary, to
And where a banker accepts a documentary sell the goods. The stamp duty upon the
bill at the request of a customer, and the bill note of hypothecation, or memorandum of
of lading proves to be forged, the banker, deposit,is sixpence.
having paid the bill, may recover the amount a banker sells a documentary bill he
If
from the customer. indorses it and thus becomes liable thereon ;
206
DOCJ DICTIONARY OF BANKING IDOW
the bills of lading, indorsed in blank by the cheque is not property, it is only a revocable
shipper, and the insurance policy, accompany order " (Justice Buckley), but in the latter
the bill. case it is the " indicia of title to property,
Abanker keeps a record of all his lia- which belonged to him " (Justice Buckley).
bilitieson acceptances and indorsements. When it is payable to the donor, the person
Where documents are given up against who receives it obtains a good donatio mortis
payment of a bill under rebate, the rate is causii and is fully entitled to the amount.
.
transfers the cheque to another party, for in the laws of King Edmund, the wife is
value, that party would have a claim upon I directed to be supported wholly out of the
the estate for the amount, though the personal e itate."
banker would not pay it after notice of death. Dower is barred when the widow is pre-
There is, however, a difference between a vented from obtaining it. When the estate
cheque drawn by the donor, and one payable i is settled upon a woman in order that she
to the donor. In the former case " his own may enjoy it after the husband's death (i.e.
207
" — —
' '
'
districts they are in common use for making and bills of exchange payable to order, on
payments which are usually made elsewhere demand, or at any period, not exceeding
by means of cheques. Where this practice seven days after sight or twenty-one days
exists, a customer supplies his banker with a after date, provided such bills be drawn upon
208
. —
a banker in London, Westminster, or the from stamp duty. (See Exemption 2, under
borough of Southwark ; or prov.ded such Bill of Exchange.)
bills be drawn by any banker or bankers at A draft on demand drawn by one branch
any place where they are licensed to issue upon another branch or upon the head office
bills and notes, upon themselves, payable at is not a cheque within the meaning of the
any other place where they shall also be duly Bills of Exchange Act, 1882, as it is not
licensed. addressed by one person to a banker, which is
That Section applies only to bankers who part of the definition of a cheque. It can-
are licensed to issue notes and drafts on not, therefore, be crossed like a cheque. In
unstamped paper. The stamp duty is paying a draft on demand the banker is
compounded for at the rate of 3s. 6d. for protected against a forged indorsement by
every /100 or part of /100 of the half-yearly Section 19 of the Stamp Act, 1853, which is
average amount of notes and drafts in cir- as follows :
culation, based on the amount in circulation " Provided always, that any draft or order
on Saturday in every week. drawn upon a banker for a sum of money
Where a banker is not licensed to issue payable to order on demand which shall
notes and drafts on unstamped paper, all when presented for payment, purport to be
drafts payable after date, issued by him, indorsed by the person to whom the same
must be stamped in the same way as an shall be drawn payable, shall be a sufficient
ordinary bill of exchange. See the stamp authority to such banker to pay the amount
duties under Bill op Exchange. (See of such draft or order to the bearer thereof ;
209
14— (iS'iS)
—
them and treat them either as bills of ex- on the instrument. This sub-section
change or as promissory notes (see Section 5, shall not extend to Scotland.
s.s. 2). An instrument on which no action " (2) In Scotland, where the drawee of a
can be brought by the drawer can hardly bill has in his hands funds available
be a bill of exchange within Section 3 of the for the payment thereof, the bill
Act, whatever it may be called in ordinary operates as an assignment of the
talk." (See Draft after Date.) sum for which it is drawn in favour
DRAIN OF BULLION. A large outflow of the holder, from the time when
of goldfrom the Bank of England. When the bill is presented to the
the Bank Rate is raised, it tends to stop drawee."
the withdrawal and to turn the current The drawee of a cheque is the banker on
homeward. whom it is drawn. The banker is respon-
DRAWEE. The drawee of a bill is the sible only to the drawer and is under no
person to whom it is addressed. liability to the person presenting the cheque
By Section 6 of the Bills of Exchange Act, for payment, except in Scotland where the
1882 :— presentment of a cheque attaches any
" (1) The drawee must be named or balance there may be in the drawer's account
otherwise indicated in a bill with to the extent of the cheque.
reasonable certainty. The drawee of a bank draft is the bank
" (2) A bill may be addressed to two or to which the order to pay is addressed. (See
more drawees whether they are Acceptor, Bill of Exchange, Present-
partners or not, but an order ment for Acceptance.
addressed to two drawees in the DRAWER. The drawer is the person who
alternative or to two or more signs a bill of exchange giving an order to
drawees in succession is not a bill another person, the drawee, to pay the
of exchange." amount mentioned therein.
Where different parties to a bill are the In the usual course, a drawer makes out
same person, Section 5 provides : the bill himself, signs it and sends it to the
" (1) A bill may be drawn payable to, or drawee for acceptance. But a person may
to the order of, the drawer or it ; sign a bill as drawer which has already been
may be drawn payable to, or to the made out and accepted, and even indorsed.
order of, the drawee. When a simple signature on a blank stamped
" (2) Where in a bill drawer and drawee paper is delivered by the signer in order that
are the same
person, or where the it may be converted into a bill, it operates
210
—— — — —
Where different parties to a bill are the person two officials of the bank may witness
same person, Section 5 provides : his mark. Banks do not, as a rule, consider
" (I) A bill may be drawn payable to, or one official sufficient.
to the order of, the drawer or it
;
When mandates or authorities are held
may be drawn payable to, or to the regarding the signing of cheques, the in-
order of, the drawee. structions must be carefully observed. A
" (2) Where in a bill drawer and drawee difficulty sometimes arises where a banker is
are the same person, or where the authorised by a limited company to pay
drawee is a fictitious person or a cheques when signed by two directors and
person not having capacity to the secretary, and the secretary is also a
contract, the holder may treat the director, his name appearing on cheques in
,
instrument, at his option, either as both capacities. In such a case the banker
a bill of exchange or as a promissory should ascertain if the articles of association
note." (See Parties to Bill of permit a director to act also as secretary.
Exchange.) Even if they do so permit, it is better tc have
Where a drawer is dead, notice of dis- a clear understanding with the company on
honour must be given to a personal repre- the point.
sentative where he is bankrupt notice may
; Notice of a customer's death cancels the
be given either to the party himself or to I
banker's authority to pay his cheques, and
the trustee. (See Dishonour of Bill of an}' cheques presented after receipt of such
Exchange.) notice are returned " Drawer dead," except
In applying the provisions of Part IV of in the case of a cheque which the banker has
the Bills of Exchange Act, 18S2, the first agreed to pay, by marking or certifying it,
indorser of a promissory note is (by Section at the drawer's request, for payment, or
89) deemed to correspond with the drawer which the banker has, for his own con-
of an accepted bill payable to the drawer's .
venience, " marked " in connection with the
order. local clearing.
The drawer of a cheque is the person on Where a person is too ill to sign his name,
whose account it drawn and who must
is his mark should be witnessed by two persons,
provide the funds to meet it. one of whom
should be the doctor in attend-
A banker must know the signature of a ance. usual for the doctor to certify
It is
customer. If the drawer's signature is that his patient clearly understood the
forged, the banker cannot charge it to his nature of the transaction.
customer's account. Even if the forgery is The drawerof a bill payable on demand
so perfectly done as to defy detection under is discharged if it is not presented foi
the closest scrutiny, it does not affect the payment within a le time.
banker's liability. His customer cannot be The drawer of a cheque is, in an ordinary
debited with a cheque which he has not case, liable thereon for six years from the
drawn. date of the cheque. (See Authorities,
If John Thomas Charles Brown wishes to Bill of Exchange, Cheque, Join'i
sign cheques merely as plain John Brown, Account.)
an authority should be obtained to honour DRAWN BILL. A bill drawn in this
cheques so signed. countrv and payable abroad, ii negotiated
Where a drawer is unable to write, he may direct from the drawer to a gn banker I
211
— —
the method adopted, in order to determine expressly to meet a specified cheque or bill
which of the bonds should be paid, is to when presented, the credit is said to be
" draw " numbers, on the lottery principle, " earmarked," and the money cannot be
up to the amount required. The numbers used by the banker for any other purpose.
so drawn represent the bonds to be paid off, EASEMENTS. The rights which the
which are then called " drawn bonds." owner of a property may have over the
Holders of bonds subject to be drawn property belonging to another person, such
require to watch the advertisements of the j
as rights of way, rights of light, rights of
" drawings," or to instruct their bankers to air, rights of water, rights of support, etc.
do so. An absolute right of way may be acquired
After a bond is drawn interest ceases. by the uninterrupted use for forty years,
Tn the case of Russian bonds, however, the unless the use was granted in writing by the
coupons may continue to be paid after a owner of the land. A right of light over
bond is drawn for repayment, but the another person's property (except when
amounts so paid are treated by the Russian the privilege is granted in writing by the
Government as repayments on account of owner of the property) is acquired after an
the principal. enjoyment of it for twenty years.
DRUNKEN PERSON. a bill or cheque
If These easements or rights are called
is given during a state of drunkenness, that I
incorporeal hereditaments.
condition may be set up as a defence against EASTERNS. A Stock Exchange name
an immediate party, if the drunken person for Great Eastern Railway ordinary stock.
was taken advantage of in any way, but it " EFFECTS NOT CLEARED." If a cus-
would be of no avail as against a holder in tomer pays in to the credit of his account a
due course. cheque drawn upon another banker, and the
Where a drunken person draws a cheque customer is given to understand that he
at the bank counter in order to obtain cash must not draw against it until the cheque
and he really insists upon payment, it is has been collected, in the event of the
well to have the signature witnessed. customer issuing a cheque which is presented
DUE DATE OF BILL. (See Time of before the proceeds are received, the banker
Payment of Bill.) is entitled to eturn the cheque marked
DUPLICATE OR COUNTERPART. By "effects not cleared."
the Stamp Act, 1S91, the stamp duty is : — If, however, there is no particular arrange-
unless it appears by some stamp impressed " Cheques, etc., for collection, though
thereon that the full and proper duty has credited to the account when paid in, are
been paid upon the original instrument of not available for drawing against until the
which it is the duplicate or counterpart." proceeds have been received at the branch."
(See Denoting Stamps.) EMBEZZLEMENT. (See Compounding
a Felony.)
EAGLE. (See Foreign Moneys — United ENDORSEMENT. Same as Indorsement
States.) {g.v.).
EARMARKED. If a customer pays in to ENDOWMENT POLICY. A policy of
the credit of his account an amount assurance which is payable on the assured
212
— .
called " estate tail." When the land is however, he obtains a legal mortgage he has
freed from the entail, it is said to be power to sell or put in a receiver without
disentailed. (See Estate Tail, Disentail.) applying to the Courts.
EQUITABLE ESTATE. The estate, or Where there are two equitable mortgages
interest, which a person may have in land, on the same property, priority will be given
according to equity, as distinguished from to a second equitable mortgagee who holds
an estate or interest, according to law. the title deeds, if the first equitable mort-
There may be both estates, the legal and gagee was negligent in not retaining posses-
the equitable, in the same piece of land. A sion of the title deeds. But if there has not
mortgagee has the legal and the mortgagor been negligence, priority in order of time
has the equitable estate. If the money lent prevails. If a second equitable mortgagee
is not repaid according to the terms of the made his advance, without knowledge of the
mortgage deed, the mortgagee becomes, bv prior equitable charge, he may, in most
law, the owner of the land, but the mort- cases, secure priority by obtaining a legal
gagor, who is, by equity, the real owner, has mortgage.
the equity of redemption or right to redeem Instead of an order for foreclosure the
his land on payment of the debt and interesl Court may. if it thinks fit. d rect a sale of tin
A trustee holds the legal estate and the mortgaged property : and in an action for
person in whose favour the trust operates re emption the mortgagor may have an
has an equitable estate. order for sale, or for sale or redemption in the
A second mortgagee has only an equitabli alternative. (See Section 25 of the (
estate in the property. (Sec Equity of veyancing and Law oi Pi >p rl Vet, 1881,
Redemption.) under Legal Mortgagi I
EQUITABLE MORTGAGE. Where a For the purposes of the St. imp Act. 1891.
borrower gives to a lender, as security, the " equitable mortgage " means an agreement
titledeeds of his property, without any or memorandum, under hand only, relating
document of charge, or the deeds with a to the deposit of any title deeds or
213
—
instruments constituting or being evidence of additional amount within thirty days of the
the title to any property whatever (other extra overdraft being taken.
than stock or marketable security) or creating
, If a fixed amount is inserted in the
a charge on such property. (Section 86, memorandum of deposit, the security cannot
s.s. 2. See Mortgage.) Mortgages subse- be made available for any greater amount
quent to the first legal mortgage, are, legally, than that stated in the document. If the
equitable mortgages, but it should be noted property is to form a security for more than
that these equitable mortgages are not that amount, a fresh memorandum must
included in the definition of " equitable be taken.
mortgage " under the Stamp Act. If a memorandum of deposit is unstamped
A second mortgage by deed. ("The duty is the or insufficiently stamped, it cannot be
A memorandum of deposit monsaje °(see
-! accepted as evidence in a Court of Law or
under seal V Mortgage). Equity. An instrument which has not been
A memorandum of deposit
r of t
For y "v '? 00
% any frac-
' stamped within the prescribed time may
and
deeds under hand (whether | nonai part of be stamped at any time afterwards under a
penalty of £\Q. Neglect to stamp a memor-
.,,... ....
a principal security or col-
lateral secunt}')
]
V.
£ 100 of
amount
the
curc d, is.
se-
andum does not affect the validity of it.
The stamp on a memorandum of deposit In Scotland, a deposit of title deeds, either
of certificates is sixpence for any amount. with, or without, a memorandum of deposit,
If a power of sale is included in a memoran- does not create an equitable mortgage, as
dum under hand it requires to be stamped in England. If, therefore, a banker in
the same as a mortgage. England advances against real property in
A letter or memorandum of deposit must Scotland, the form of charge must conform
be stamped within thirty days of its date, to the law of Scotland. (See Disposition
or, if received from abroad, within thirty Absolute, Mortgage, Title Deeds.)
days of its receipt in this country. EQUITY. The administration of justice,
By an Inland Revenue Circular : not according to the strict letter of the law
The instruments given to banks to secure but according to the circumstances of each
overdrafts are almost invariably worded as case so as to give an equitable decision.
securities for all sums due or to become due. EQUITY OF REDEMPTION. The right
In the case of equitable mortgages, every which a mortgagor has to redeem his pro-
security, whether primary or collateral, is perty. For example, if John Brown is the
chargeable with the duty of Is. per cent, on absolute owner of a piece of land, and he
the highest amount at any one time due in mortgages the land to John Jones to secure
respect of the indebtedness secured to the the repayment of a loan which Jones has
bank up to date (i.e., within thirty days) and granted to him, Jones obtains by that deed
with additional duty from time to time, if the legal estate in the land, and if Brown
the indebtedness should subsequently reach, fails to repay the money at the proper time,
at any one time, a higher total. In no case Jones becomes, according to law, the owner
can the value of the security deposited be of the land. The Court of Equity, however,
taken as the basis of assessment for mortgage regards Jones' title to the land as being
duty. (See copy of the Circular under subject to Brown's right to repay the money.
Mortgage.) Brown is the real owner of the land, and
For instance, if the deeds of several though Jones may, by law, become the full
different properties are lodged as security, owner (through Brown's failure to pay at
with a separate memorandum for each to the appointed time), Brown has, by equity,
1
cover the overdraft, each memorandum the " equity of redemption " in the land,
requires to be (according to the above
'
214
EQU] DICTIONARY OF RANKING [EST
215
EST] DICTIONARY OF BANKING [EX
and means that if a purchaser has bought the principal or only instrument whereby the
shares on the Stock Exchange quoted as ex exchange or partition or division is effected is
div. the dividend just being paid belongs to to be charged with the same ad valorem duty
the seller. Most stocks are marked in the as a conveyance on sale for the considera-
London Stock Exchange official list as ex tion, and with that duty only and where ;
real or heritable property, or upon the parti- one side all cheques handed over and on
tion or division of any real or heritable pro- the other side all cheques received. The
perty, any consideration exceeding in amount difference between the two sides is called the
or value one hundred pounds is paid or given " balance of exchange," and is settled be-
or agreed to be paid or given, for equality, tween the two banks either in cash or by a
Exchanged
by
Pa hi I he British Banking Co I', ad Out.
Bank Notes
of Eng. Ltd., with Bank of Eng. Notes
'Countrv Notes Countrv Notes
Gold Gold
Silver Silver
Copper .
Copper
Cheques. 19. . . Cheques
Bills. . Bills.
!17
—
London draft or through their respective Bills having superseded them. (See
London offices or London agents. If the Treasury Bills.)
cheques received by X
amount to more EXCHEQUER BONDS. Bonds which are
than the cheques given to Y, the ex- issued under the authority of Acts of Parlia-
change is against X and in Y's favour, as ment, by the Lords Commissioners of His
X has to pay Y the difference. If, on Majesty's Treasury. They usually run for
the other hand. X
gives Y
a greater periods of from three to five years, and it is
amount than he receives, the balance is in seldom that they are issued for a longer term
favour of X, and he receives payment of than ten years.
the difference from Y. The following is a specimen of an Ex-
If there are other bankers in the town. chequer Bond forming p.irt of an issue to be
X's clerk may visit all of them in turn all paid off in ten years :
the country for 160 or 170 years. There are date subsequent to that on which the
no Exchequer Bills now in existence, Treasurv principal becomes repayable.
?18
EXCJ DICTIONARY OF BANKING [EXE
EXCHEQUER TALLY. A notched piece in the absence of an arrangement to the
of wood which,at one time, was given as a contrary, draw cheques upon the account
form of receipt to a person
who deposited without any written authority from the
money with the Government. A similar other. It is, however, customary in some
notched stick was retained in the Exchequer banks, and is a desirable practice as it pre-
Department, and when the depositor wanted vents any misunderstanding, for a form of
his money he produced his portion of the authority to be signed by each executor,
stick, and if the two sticks " tallied," that when the account is opened, stating exactly
is, the notches on the one agreed with the in what manner and by which executor or
notches on the other, he was paid his money. executors cheques are to be signed. If an
It is said that a notch of H-inch repre- authority states that two executors are to
sented /1,000, 1-inch /100, f-inch £10, half sign, any cheque which is signed only by one
a notch of that size ;'l." -inch Is., smallest
,;. of them would not, of course, be in order.
notch \d., a small hole \d. It isnot usual for an authority to be given
The use of tallies was abolished in 1782, for someone who is not an executor to
but the old ones were preserved till 1834, operate on the account.
when was ordered that all the old tallies
it If a banker receives notice from one
in the possession of the Government should be executor that cheques must be signed by
destroyed. They were burnt in stoves in the all the executors, he must carry out the
House of Lords, and it is supposed that they instruction.
were the cause of the fire which destroyed When securities, 01 safe custody articles,
both Houses of Parliament. (See Tally.) belonging to the deceased are withdrawn, it
EXECUTOR. An executor is the person is desirable that all the executors should join
appointed in a will by the testator to pay his in the acknowledgment, or in the request to
debts and distribute his assets, according to deliver to one of their number.
the instructions in the will. His duties are An infant cannot undertake the duties of
practically the same as those of an adminis- 1
an executor.
trator, except that an administrator settles On the death of a sole or sole surviving
the deceased's affairs according to law and an ',
220
—
Exemplification or Constat,
Definitions.
under the Great Seal of the
United Kingdom of Great " 1 . For the purposes of this Act
Britain and Ireland of any let- '(1) The expression 'mercantile agent'
ters patent or grant made or to shall mean a mercantile agent having
be made by Her Majesty, or by in the customary course of his
any of her royal predecessors of business as such agent authority
any honour, dignity, promotion, either to sell goods, or to consign
franchise, liberty, or privilege, goods for the purpose of sale, or to
or of any lands, office, or other buy goods, or to raise money on the
thing whatsoever . . . . Sun security of goods :
The Eank Charter Act of 1844 placed restric- " (3) The expression goods shall include
' '
tions upon the issue of notes, but in the three wares and merchandise :
great crises of 1847, 1857 and 1S66 that Act The expression document of title '
'' '
(4)
had to be suspended, and, instead of the shall include any bill of lading, dock
Bank restricting its issues, it was permitted warrant, warehou e-kceper's certi-
by the Government to increase them beyond ficate, and warrant or order for the
the amount of its authorised issue on each ; deliver)' of goods, and any other
occasion the application of the expansive document used in the ordinary
theorv saved the situation after the restric- course of business as proof of the
tive theorv, as contained in the Act, had possession or control of goods, or
proved to be ineffectual. authorising or purporting to autho-
EXPORT SPECIE POINT. (See Specie rise, either by indorsement or by
Points.) delivery, the possessor of the docu-
EXTRACT. For stamp duty see Copy. ment to transfer or receive goods
EXTRAORDINARY GENERAL MEET- thereby represented :
INGS. Meetings which are convened for the " (5) The expression pledge shall include
' '
221
.
make the same ;provided that the where goods are pledged by a mercantile
person taking under the disposition agent in consideration of the delivery or
acts in good faith, and has not at transfer of other goods, or of a document of
the time of the disposition notice title to goods, or of a negotiable security, the
that the person making the disposi- pledgee shall acquire no right or interest in
tion has not authority to make the the goods so pledged in excess of the value
same. of the goods, documents, or security when
" (2) Where a mercantile agent has, with so delivered or transferred in exchange.
the consent of the owner, been in
possession of goods or of the docu- Agreements through Clerks, etc.
ments of title to goods, any sale, " 6. For the purposes of this Act an agree-
pledge, or other disposition, which ment made with a mercantile agent through
would have been valid if the consent a clerk or other person authorised in the
had continued, shall be valid not- ordinary course of business to make con-
withstanding the determination of tracts of sale or pledge on his behalf shall be
the consent : provided that the per- deemed to be an agreement with the agent.
son taking under the disposition has
Provisions as to Consignors and Consignees.
not at the time thereof notice that
the consent has been determined. "7. (1) Where the owner of goods has
" (3) Where a mercantile agent has given possession of the goods to
obtained possession of anv docu- another person for the purpose of
ments of title to goods by reason of consignment or sale, or has shipped
his being or having been, with the the goods in the name of another
consent of the owner, in possession person, and the consignee of the
of the goods represented thereby, or goods has not had notice that such
ofany other documents of title to person is not the owner of the goods,
the goods, his possession of the first- the consignee shall, in respect of
mentioned documents shall, for the advances made to or for the use of
purposes of this Act, be deemed to such person, have the same lien on
be with the consent of the owner. the goods as if such person were the
" (4 For the purposes of this Act the owner of the goods, and may transfer
consent of the owner shall be pre- any such lien to another person.
sumed in the absence of evidence to
'
agreed to buy goods, obtains with the con- by him required, any money in
sent of the seller possession of the goods or respect of which the agent would by
the documents of title to the goods, the law be entitled to retain the goods
delivery or transfer, by that person or by a or the documents of title thereto, or
mercantile agent acting for him, of the goods any of them, by way of lien as
or documents of title, under any sale, pledge, against the owner, or from recovering
or other disposition thereof, or under any from any person with whom the
agreement for sale, pledge, or other dis- goods have been pledged any balance
position thereof, to any person receiving the of money remaining in his hands as
same in good faith and without notice of any the produce of the sale of the goods
lien or other right of the original seller in after deducting the amount of his
respect of the goods, shall have the same lien.
effect as if the person making the delivery "
13) Nothing in this Act shall prevent tin
or transfer were a mercantile agent in posses- owner of goods sold by an agent
sion of the goods or documents of title with from recovering from the buyer the
the consent of the owner. price agreed to be paid for the same,
or any part of that price, subject to
Effect of Transfer of Documents on Vendor's
any right of set-off on the part of
Lien or Right of Stoppage in transitu.
the buyer against the agent.
"10. Where a document of title to goods
has been lawfully transferred to a person as Saving for Common Law Powers of Agent.
a buyer or owner of the goods, and that "13. The provisions of this Act shall be
person transfers the document to a person construed in amplification and not in deroga-
who takes the document in good faith and tion of the powers exercisable by an agent
for valuable consideration, the last-men- independently of this Act.
tioned transfer shall have the same effect
for defeating any vendor's lien or right of Commencement.
stoppage in transitu as the transfer of a bill "15. This Act shall commence and come
of lading has for defeating the right of into operation on the first day of January-
stoppage in transitu. one thousand eight hundred and ninety.
Supplemental. Extent of Act.
Mode of Transferring Documents. " lti. This Act shall not extend to Scot-
"11. For the purposes of this Act, the land.
transfer of a document may be by indorse- Short Title.
ment, or, where the document is by custom
or by its express terms transferable by-
" 17. This may be cited as the
Act
delivery, or makes the goods deliverable to Factors Act, 1889."
the bearer, then by delivery. It should be noted that Section 25 of the
Sale of Goods Act, 1893, is practically the
Saving for Rights of true Owner. same as Sections 9 and 10 of the Factors
12. (1) Nothing in this Act shall autho Act
ri-e an agent to exceed or depart FACTORY. In Scotland, Letters of
from his authority as between him- Factory empower one person to act for
self and his principal, or exempt another.
him from any liability, civil or In the Stamp Act, 1891, the reference to
c iminal, for so doing. the stamp duty is :
" (2) Nothing in this Act shall prevent the Factory, in the nature of a letter or power
owner of goods from recovering the of attorney in Scotland.
goods from an agent or his trustee (See Power of Attorney.)
in bankruptcy at any time before FACULTY. An order or licence granted
the sale or pledge thereof, or shall by an ecclesiastical authority. For example,
prevent the owner of goods pledged a faculty is required before an alteration of
by an agent from having the right any importance can be effected in the
to redeem the goods at any time structure of a church.
before the sale thereof, on satisfying FALSE PRETENCES. Where a person
the claim for which the goods were obtains payment of a cheque by falsely
pledged, and paying to the agent, if representing himself to be the payee, he is
223
—
other person any chattel, money, or valuable but the following table may serve to give
security, with intent to defraud, shall be some idea of average values :
,, 2 years old
,, 1 year old
Bullock, 2 years old
1 year old
Galloway Cattle (not pedigree)
Cow, in calf, or milk
Heifer, in calf . .
,, 2 years old
1 year old
Bullock, 2 years old
year old
1
—
Cross-Bred Cattle Blue Greys
Cow, in calf, or milk
Heifer, in calf . .
2 years old
1 year old
The coin is a mixed metal of copper, tin and There shall be paid to the registrar
1
1 )
land is the fee simple, other interests, such For every £l,(ii
as a life interest, or a lease, being estates less nominal share
than the fee simple. The holder of a fee capital, or part of
simple can create other estates out of it, but £1,000, after the
so long as he does not dispose of the fee first £5,000 up to
simple it remains vested in him. In the
case of a lease, no matter for how long a
£100,000 . .05.0
For every £1,000 of
period, the fee simple is with the person who nominal share
grants the lease, though the person who capital, or part of
holds the lease or the assignment thereof £1,000, after the
has the legal estate in the land. At the first £100,000 . 1 ii
expiration of a lease the land reverts to the For registration of any increase of
grantor, or person entitled to the fee simple. share capital made after the
In copyhold land the fee simple remains first registration of the com-
with the lord of the manor. pany, the same fees per £1 ,000,
FEE TAIL. An estate which is granted or part of a £1,000, as would
to a person and the heirs of his body is an have been payable if the in-
estate tail or fee tail, usually called an creased share capital had formed
entailed estate. It is the opposite to a fee part of the original share capital
simple [q.v.). A fee simple is held to his at the time of registration :
heirs, but a fee tail is limited to the heirs Provided that no company shall be
of his body. (Sec Estate Tail.) liable to pay in respect of
225
15—(1535)
—
FEE I
DICTIONARY OF BANKING [FIC
/ s. d. / 5.
226
FIC] DICTIONARY OF BANKINC. [FIR
FICTITIOUS PAYEE. Where the payee and have known the applicant for some
is a fictitious or non-existing person, a bill length of time, one (if possible) resident in
or cheque may be treated as payable to London, and one to be the last employer (or
bearer. In Bank of England v. Vagliano late schoolmaster, if first situation).
(1891, A.C. 107), the meaning of a fictitious FIDUCIARY CAPACITY. (Latin, fiducia,
person was enlarged to include a real person confidence.) A
person who holds anything
who never had nor was intended to have in trust for another is said to hold it in a
any right to the bills. Lord Herschell said fiduciary capacity.
in the course of his judgment :
" I have When a banker has notice that certain
arrived at the conclusion that whenever the moneys deposited with him are of a fiduciary
name inserted as that of the payee is so nature, he must not, knowingly, be a party
inserted bv way of pretence merely, without to any wrongful use of such moneys, other-
any intention that payment shall only be wise he will be responsible to the person
made in conformity therewith, the payee is entitled to the moneys. A banker cannot
a fictitious person within the meaning of the be held liable when he is unaware that they
statute, whether the name be that of an are trust moneys.
existing person or of one who has no exist- FIDUCIARY ISSUE. A term applied to
ence." the note issue of the Bank of England,
A cheque payable to " wages " or " estate," which is authorised against the Government
or some similar word is payable to an debt and securities, as distinguished from
impersonal payee and should be treated as the note issue against gold.
being payable to the order of the drawer FIERI FACIAS. A writ of fieri facias,
and requiring his indorsement. An im- often abbreviated as fi. fa., takes its name
personal payee is not the same as a fictitious from the words appearing in the document
person. (Sse Payee.) " quod fieri facias de bonis," etc. The writ
FIDELITY GUARANTEE. A guarantee is issued on behalf of a creditor who has
by a person or a society to make good, up obtained judgment for a debt, ordering the
to a specified amount, any loss caused by the sheriff to levy the amount on the goods of
default of the individual guaranteed. the debtor. Bank-notes, money, cheques,
The Bankers' Guarantee and Trust Fund and bills are included amongst the things
is mutual guarantee of bank officials
for the which the sheriff may seize.
employed in the United Kingdom. FILING PETITION. (See Receiving
The subscription for membership is /l per Order.)
cent, on the amount of the guarantee. FINE PAPER. Bills which are drawn
Payment may be made either in one sum or upon banks or first-class firms.
by five equal annual instalments, but when FIRE INSURANCE. In order to prevent
payment is thus deferred, Is. per cent, on a security over buildings disappearing in
the amount of guarantee must be added to smoke a banker should be careful to see that
each instalment, until the whole is paid. the property is insured, and that the
If a member leaves the service of his em- premiums are duly paid. The policy should,
ployers, he will not be called upon to pay strictly, be transferred into the banker's
the instalments then outstanding. name. The premiums should be paid before
An entrance fee is also charged at the the expiration of the days of grace, that
rate of 4s. per cent, on the amount of the is, usually fifteen days from the date when
guarantee, whether given in one or more the amount is due to be paid.
policies. An insurer cannot recover more thai
Guarantees exceeding /3,000, and not actual loss sustained from a fire, within
above /5,000, are issued, as regards the the amount of the policy. If the same
excess of ^3,000, at special rates. property is insured in several offices, each
Policies are issued for bank messengers company will only pay its proportion of any
and porters, at an annual premium, without loss.
membership. The stamp duty on a policy is one penny.
When a policy of insurance is required, a See the provisions o Vet, 1891.
form of proposal must be filled up, various under Policy of Insurance. (Sec Average
questions being answered by the employer Clause.)
and oth rs by the applicant. The applicant FIRM. Persons who have entered into
is required to submit the names of three or partnership with one another are, collec-
four referees who must be householders, tively, called a firm, and the name under
227
—
which their business is carried on is called the holders or debenture stockholders, so that
firm-name. no other person may obtain a prior charge.
In Scotland a firm is a legal person (See Debenture, Floating Charge.)
distinct from the partners. (See Section 4 of FIXED DEPOSIT. A deposit receipt
the Partnership Act, 1890, under Partner- which is repayable at a certain fixed date.
ships.) The rate of interest allowed is usually a
Unless registered under the Companies' better one than on an ordinary deposit
Acts, a firm must not consist of more than repayable on demand. (See Deposit Re-
twenty partners, and in the case of a banking ceipt.)
firm of more than ten partners. FIXTURES. The deposit of title deeds, as
FIRM OFFER. A definite offer, as where well as a legal mortgage, carries with it the
a person states that he is prepared to pur- right of the mortgagee to any fixtures there
chase a certain property at a specified price. may be upon the land.
FIRST AND IN NEED WITH. Where a If the mortgage deed includes trade
foreign bill is drawn in a set, say in two machinery, by the Bills of Sale Act, 1878,
parts, one part may be sent at once to the Section 5 :
may be negotiated and bear a reference upon Act trade machinery shall, for the purposes
the face of it that the accepted part is in the of this Act, be deemed to be personal chat-
possession of certain agents, as " First and tels, and any mode of disposition of trade
in need with the British Bank, Ltd., machinery by the owner thereof which
London." would be a bill of sale as to any other per-
FIRST-CLASS PAPER. Treasury Bills sonal chattels shall be deemed to be a bill of
and bills which 'bear the names of banks and sale within the meaning of this Act."
financial houses of the very highest standing. In that Act " trade machinery " means
They are so called to distinguish them from the machinery used in, or attached to, any
second and third-class bills, where thesecurity factory or workshop, exclusive of fixed
is not so good. motive powers such as water wheels, steam
FIRST OF EXCHANGE. (See Bill in a engines, etc., exclusive of the fixed power
Set.) machinery such as shafts, wheels, etc., and
FIXED CAPITAL. Capital which is sunk exclusive of the pipes for steam, gas and
in the purchase of land, or in buildings, the water. With regard to " trade machinery "
construction of railways, cutting of canals, generally, reference should be made to the
etc., and which produces its effect by being case of Batchelor v. Yates (1888, 38 Ch. D.
kept, and not parted with, as in the case 112).
of circulating capital. " Capital," says A mortgagor cannot remove fixtures from
John Stuart Mill, " which exists in any of a property as against a mortgagee, even
these durable shapes and the return to which though they are of such a nature as to be
is spread over a period of corresponding removable as between landlord and tenant.
duration, is called Fixed Capital." Some FLOATERS. A term used to signify the
kinds of fixed capital require to be occa- first-class bearer securities, e.g. Exchequer
sionally or periodically repaired or renewed, Bonds, Treasury Bills, etc., which bill brokers
but these improvements " by the very fact deposit with banks against money lent to
of their deserving that title, produce an them at call. When the money is called in
increase of return, which, after defraying all by one bank the broker must borrow from
expenditure necessary for keeping them up, another, and thus his securities move or
still leaves a surplus. This surplus forms the " float " about from one bank to another.
return to the capital sunk in the first in- FLOATING CAPITAL. (See Capital.)
stance, and that return does not, as in the FLOATING CHARGE. Debentures or
case of machinery, terminate by the wearing debenture stock, in addition to being secured
out of the machine, but continues for ever." by a " fixed " charge upon the company's
(See Capital.) property, may also be secured by a " float-
FIXED CHARGE. Debentures and de- ing " charge, that is a charge upon the stock,
benture stock may be secured on the pro- book debts, etc., of the company, which
perty of the company by a " fixed " charge, permits the company to make use of those
or by a " floating " charge. In a fixed assets in any way in connection with its
charge the property is, usually, by a trust ordinary business. A charge of that descrip-
deed, vested in trustees for the debenture tion " floats " until such time as default is
228
FLO] DICTIONARY OF BANKING [FOR
made in payment of interest, or the company where florins were first coined.) It was
goes into liquidation. When such an event introduced into the coinage in 1849.
occurs, the charge becomes " fixed," and the The standard weight of a florin is
assets at that date become a fixed security 174 54545 grains troy and its standard fine-
for the debentures and may be realised for ness thirty-seven-fortieths fine silver, three-
the benefit of the debenture holders. fortieths alloy. (See Coinage.)
If the debentures create a " floating FOR CASH. A transaction on the Stock
charge upon the land of the company, as Exchange which is " for cash " or " for
well as upon the stock, book debts, and money " means that the security which has
uncalled capital, the company is not pre- been sold must, as soon as delivered, be paid
cluded by that floating charge from selling for in cash. (See For the Account.)
or mortgaging the land. Some " floating " FOR THE ACCOUNT. A transaction on
charges, however, contain a clause to the the Stock Exchange may be " for the ac-
effect that the company will not mortgage count," that is for settlement on the next
the property so as to create an equal or prior "account day" or "settling day." (See
charge, but even in that case if anyone For Cash.)
grants the company a loan against the title FORECLOSURE. Where a mortgagor
deeds, without any notice of the charge, he has due notice, to make repay-
failed, after
may obtain priority. ment of the mortgage debt, the mortgagee
Particulars of every floating charge on the has the right to apply to the Court for an
undertaking and property of a company order for foreclosure. Where this is done, the
must be delivered to the registrar of com- Court orders an account of what is due to
panies for registration. (See Registration the mortgagee to be submitted, and if what
of Mortgages and Charges.) A debenture is found to be due is not paid within
containing merely a floating charge does not six months, the mortgagor's equity of re-
require to be entered on the company's demption, that is his right to redeem the
register of mortgages. property, is foreclosed or extinguished. By
Where a company is being wound up, a foreclosure, therefore, the mortgagor loses his
floating charge created within three months equity of redemption altogether and has no
of the commencement of the winding up further interest or right in the property
may be invalid (see Section 212 of the Com- and the mortgagee becomes absolute owner.
panies (Consolidation) Act, 1908, under Neither a legal mortgagee nor an equitable
Winding up). (See Companies.) mortgagee can foreclose without sanction of
FLOATING DEBT. The floating debt the Court.
of the country consists of Treasury Bills A legal mortgagee can, however, sell the
{q.v.) and Exchequer Bonds (q.v.). (See property or put in a receiver under the
Funded Debt.) power contained in his mortga with-
FLOATING MONEY. Temporary surplus out any application to the Court.
funds in the hands of bankers, for which The expression " redeem up, foreclose
no profitable employment can be found down " applies when a mortgagee makes
owing to the money market being already application to the Court for foreclosure, as
fully supplied. This floating money finds he forecloses any subsequent mortgagees, as
its way to the bankers' accounts at the Bank well as the mortgagor, and redeems any prior
of England, and goes to increase the item mortgagee.
" Other Deposits " in the Bank Return, until Application for foreclosure must be made
a suitable outlet offers. A glutted condition within twelve years from the last payment
of this kind arises on the periodical payment of interest by the mortgagor or written
of large Government and other dividends and acknowledgment of the debt.
during times when there is little demand for Where a mortgagee forecloses and thus
money. A low market rate is the natural becomes absolute owner of the property, he
result. has no further claim upon the mortgagor.
FLOATING POLICY. (See Marine But if a mortgagee sells the property, instead
Insurance Policy.) of foreclosing, he may claim upon the mort-
FLORIN. A two-shilling piece. (From gagor if the proceeds of the sale are not
Latin a flower.
flos, floris, Italian fioriiw, a sufficient to repay the mortgage debt. (See
florin, so called because there was the figure Mortgage.)
of a lily upon it. It is also stated that the FOREIGN BANK NOTES. They are sub-
coin is named from the city of Florence ject to the laws of the country in which they
229
— —
the interpretation of the drawing, bank against it, at the same time forwarding
230
FOR I'I< I'll 'NARY OF BANKING [FOR
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. , 1910.
discount the bill, and the discounters mav
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 the order oi
is technically called a fine bill,' that is.
'
pays a bill drawn in a set, he should see that of Exchange Act. See Protest). If a
the part bearing his acceptance is delivered foreign bill is accepted as to a part only of
up to him, otherwise a holder of it in due the amount, it must be protested as to the
course may require payment of it. In the balance (Section 44, s.s. 2).
ordinary course of things, where any one A foreign bill may be payable at one or
part is discharged, the whole bill is dis- more " usances." A usance is the time
charged. The rules of the Bills of Exchange which, by custom, is allowed between two
Act, Section 7 1 with regard to a bill drawn in
, countries for the currency of a bill. (See
several parts are given under Bill in a Set. Usance.)
The following are specimens of foreign Foreign bill transactions arc settled on the
bills :— Royal Exchange on Tuesda\ sand Thursdays.
As to the stamp duty upon foreign bills,
Xo. Copenhagen 1910. see Bill of Exchange.
£5 The stamps placed upon a hill in a foreign
At ten days from date pay this first of country should be scrutinised in this con'
exchange to the order of John Jones five in case any action mav be necessary in a
pounds sterling value received, which place foreign country where tin absence or in-
to account as per advice.
ctness oi tin- required stamp would
To K. Brown. prove a bar to proceedings on the bill in
J. Jackson, that country. (Sec I'.ii of Exchange i.
231
—
FOREIGN COMPANY. (See Company rate of interest here, for this will tempt capi-
OUTSIDE THE UNITED KINGDOM.) talists in the foreign country to invest
FOREIGN EXCHANGES. The enormous money in bills on this country. "As the
trade carried on between this and other rate rises, the demand will increase, until
countries necessitates a very active business at last the price reaches the specie point,
in the settlement of the balances of indebted- and gold begins to flow in " (Macleod).
ness. These balances are constantly vary- The foreign exchange is said to be turning
ing not only in amount but also in direction ; in favour of a country when gold may shortly
that is to say, a certain country may at some have to be sent to it by the foreigner,
time be in debt to this country, and shortly and to be adverse when, before long, it
afterwards the position may be reversed. may be necessary to export gold to the
If England is owing a balance to another foreigner.
country, arising, say, through that country Where the exchange rates are quoted in
having sent here a greater value of goods foreign money (e.g. with France and Ger-
than this country has exported, there are many at so many francs or marks to the
three ways open in which the liability may pound), the higher the quotation the more
be discharged : favourable the exchange is to England,
1. Coin or gold bars may be sent. This because the amount of francs or marks
method is expensive owing to charges for which are to be received for one pound is
freight and insurance. greater. On the other hand, where rates
2. A batch of " international " securities are quoted in sterling money (e.g. with
could be sent, i.e. certain well-known govern- Russia and India, at so many pence to a
ment bonds, dealt in on all the principal rouble or rupee) the lower the quotation the
markets of the world. This method is not more favourable it is to England, because
much cheaper than No. 1, owing to charges fewer pence are to be given for a rouble or
for brokerage and loss of the margin between rupee. (See Cheque Rate, Course of
the buying and the selling price. Exchange, Long Rate, Short Rate,
3. A remittance of bills may be made. Specie Points, Par of Exchange.)
This is by far the easiest, cheapest and so
FOREIGN MONEYS.
most frequently adopted method. The Approximate
bills need not necessarily be drawn upon value in
English money.
the country to which they are remitted,
s. d.
provided they are the acceptances of another
country than this. The used are, of
bills Argentine. —Monetary Unit —Peso
course, any first-class ones that are offering (paper) 1
in the bill market and may be of various Argentinos (gold) per 5 Pesos . 19
currencies ; at three months' date, is a (See note under Brazil.)
frequent quotation in the bill brokers' bi- Austria and Hungary. Monetary —
weekly Course of Exchange, or list of bill Unit— Krone of 100 Heller.
prices. Bronze —
1 Heller .
5. d.
—
Australia. English coinage circu-
lates throughout the common-
wealth, and gold coins minted at
Sydney, Melbourne, and Perth
are legal tender. Since 1910.
special silver
coins florins, —
shillings, sixpences, and three-
pences —have been issued, and
these are now on the same foot-
ing in Australia as English coins.
Special bronze coins are expected
shortly.
By the Australian Notes Act, 191o.
the Commonwealth Government
is empowered to issue Bank
Notes for 10s., - 1, f5, £10, or
any multiple of £10. These are
legal tender, and will no doubt
quickly displace the Bank Notes
of the different States, owing to
the new taxation proposals with
respect to the latter.
English bank notes are at a dis-
count of from 1 to 2} per cent.
—
Belgium. Monetary Unit the —
Franc of 100 Centimes.
Bronze — 1 Centime
2 Centimes . o
...
. . .
Nickel— 5 ,,
10
20
Silver — 50
1 Franc
,, ....
,, 2 Francs 1
5 , 4
Gold— 20 16
Notes are issued by the National
Bank for 20, 50, 100, 500 and
1 ,000 Francs. Gold is difficult to
procure and is at a slight prem-
ium. (See notes under France.)
Bermuda. — English money is the
legal tender, but American
money is freely accepted, par-
ticularly at the hotels.
Brazil.— Monetarv Unit— Milreis
(paper)
Gold
Silver
—
—
10 Milreis
2,000 Rcis
22 .... 1
2
In the South American Republics
gold is invariably at a premium,
and in the Argentine Republic
and Brazil the circulating me-
dium is principally inconvertible
paper monev.
FOR] DICTIONARY OF BANKING [FOR
5
10
Nickel— 25
Silver— 50
1 Franc .
,,
2 Francs .
5 „ . .
Gold— 5
10
20
FORj DICTIONARY OF BANKINC, [FOR
Approxmimate Approximate
val le in
value in
Knglish money. English money.
s. d.
Hungary. — (See Austria.) although the 5 Francs French
d.
the
. 1
10 8 2 Kroners 2 2f
20 16
(
'.old- — 5 5 6f
The money in general use is a paper 10 ,, 11 l
1
,
Approximate
value in
English money.
s. d.
10 „
20 ,,
Nickel— 50 ,.
100 „
Silver— 200 „
500 ..
Cold— 1 Milreis .
2
',',
5 ',',
10 „
1
Approximate Approximate
value m value in
English money, English money.
2 Centimes
Nickel— 5
10
20
Silver— 50
1 Franc .
2 Francs .
5 „ .
Gold— 20 „
Notes of 50, and 1,000
100, 500,
Francs are issued by several
Swiss banks under arrange-
ments with the Government,
and are available throughout
Switzerland. Gold is generally
at a slight premium.
The silver coins bearing the figure
of Helvetia in a sitting position,
with the exception of the 5
Franc piece, are uncurrent, and
realise only their value as silver.
(See notes under France.)
Turkey.— Monetary Unit — the Piastre
of 40 Paras.
1 Piastre
20 Piastres = 1 silver Medjidie.
100 „ =1 gold Turkish £ .
Nickel — 5 Cents
Silver— 10 ,, (Dime)
25 „
50 „
1 Dollar . .
2\ Dollars .
5" „
10 „ (Eagle)
20 . .
Timbrell, in fraud of Honnywill, forged a the transaction and lend the money. The
transfer of the stock, and borrowed money security given happens to be in a form that
on the security of the stock which the requires registration to make it available,
'
transfer was supposed to have transferred. and the bank demand,' as, if genuine trans-
'
A bank which lent the money sent the fers are bought, they are entitled to do, that
j
transfer to the proper officer of the corpora- the stock shall be registered in their name or
tion, and demanded, as they were entitled that of their nominees, and are also entitled
to do, if the transfer was a genuine one, to have fresh certificates issued to them-
\
that they should be registered as holders of selves 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. hovering (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
I
been committed, and compelled the cor- such act turns out to be injurious to the
i
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,
i
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
i
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 "I. (1) Where a company or local
—
suggest there was any negligence perhaps
business could not go on if people were sus-
authority issue or have issued
:
238
—
239
— ,
forged bank note can reclaim the money retain the money. The rightful owner of
from the person who gave him the note, the bill can demand to have the bill given
provided he makes the claim within a up to him and can sue the acceptor thereon.
reasonable time. The acceptor will have a right of action
The Bills of Exchange Act, 1882, Section against the holder for the return of the
24, enacts as follows : money he paid to him. The holder will look
" Subject to the provisions of this Act, to the person from whom he obtained the
where a signature on a bill is forged or '
241
'6— (1535)
— —
bankrupt within three months. Section , This Indenture,made the first day
48 of the Bankruptcy Act, 1883, enacts :
1 . of December one thousand nine hundred
" (1) Every conveyance or transfer of I and ten
property, or charge thereon made,
I Between John Brown of Carlisle in
every payment made, every obliga-
the County of Cumberland, gentleman,
tion incurred, and every judicial
|
Bankruptcy.)
FREEBENCH. In connection with copy- I the vendor, as beneficial owner, doth
holds. Williams, in " Real Property," says : | hereby convey unto the purchaser
" A special custom is required to entitle the All that piece or parcel of land
wife to any interest in the lands of her situate in Warwick
Road, Carlisle,
husband after his decease. Where such containing one thousand two hundred
custom exists the wife's interest is termed square yards or thereabouts, bounded
her freebench, and it generally consists of on the north by, etc., and more
a life interest in one divided third part of particularly described in the plan
the lands, or sometimes of a life interest in drawn on the margin of these presents
the entirety." It corresponds, therefore, in and coloured red, Together with the
many respects to dower, the life estate of a three houses erected and built upon the
widow in the third part of the freehold .said piece or parcel of land
lands of her deceased intestate husband.
To Hold the hereditaments hereby
(See Dower, Intestacy.)
conveyed unto and to the use of the
FREEHOLD. The owner of a freehold '
purchaser his heirs and assigns (or the
estate in fee simple is the possessor of the
words " in fee simple," instead of " his
greatest interest that a person can have in
'heirs and assigns").
land. It belongs to him absolutely, and he
can do with it what he pleases. In witness whereof the said parties
A freehold estate may also be held in fee have hereunto set their hands and seals
tail (see Fee Tail), or "as an estate for life the day and year first above written.
(see Life Tenant). Signed, sealed
Where freehold property is conveyed to a and delivered by
purchaser in fee simple it is effected by the within named John
means of a deed called a con- John Brown in the Brown.
veyance. presence of
The following is an example
John Smith,
of the general form in which
English Street,
an ordinary simple convey-
ance may be drawn : Carlisle.
242
— — ; —
Signed sealed and along with the other deeds and documents
delivered by the John of title. (See Title Deeds.)
within named John Jones. FREIGHT. The charge made for the
Jones in the carriage of goods in a ship. The cargo itselJ
presence of is often called the freight. When the word
is used, it is therefore necessary to note
George Jackson,
w hether it refers to the carriage or to the
King Street,
cargo.
Leeds. A shipowner has usually a lien upon the
The conveyance is not always signed by cargo until the amount due for freight is paid.
the purchaser. FRIENDLY SOCIETY. A society formed
There may be a yearly rent-charge upon for the benefit of its members, during illness,
freehold property. The word " freehold " in old age, and for assisting widows of
does not necessarily mean that the land is members and orphans, and for other
free from all charges whatever, though the purposes.
word is frequently, though incorrectly, used A friendly society which conforms to
when it is intended to express such a certain requirements, may be registered
meaning. with the Registrar of Friendly Societies,
The clauses in the above specimen convey- under the Friendly Societies' Act, 1896, an
ance are numbered and are referred to as Act which consolidated the Acts relating to
follows : such societies.
1. In an indenture the date is at the Aregistered society has power under that
beginning in a deed poll it is at the end.
: Act to mortgage its property, provided
(See Indenture.) there is nothing to the contrary in the rules
2. The second clause relates to the of the Society.
" parties " to the deed. In dealing with a Friendly Society a
3. Is concerned with a recital of the banker should make himself conversant
vendor's title. with its rules relating to the borrowing of
4. The agreement for sale. money and mortgaging property, and also
5. Consideration. as to the manner in which cheques may be
6. Vendor's acknowledgment of the drawn.
consideration money. A receipt indorsed upon a mortgage deed
7. Vendor conveys. has the effect of a reconveyance.
8. The parcels of land are detailed. By the Friendly Societies Act, 1896,
9. The tenendum clause. Section 33 :
Any declarations of uses or trusts, and " Stamp duty shall not be chargeable upon
any conditions or provisoes, and any any of the following documents :
to the propertyas heir-at-law or has obtained " (c) Bond given to or on account of a
it as devisee under a will, it is important for registered society or branch, or by
the banker to remember that if the death the treasurer or other officer thereof ;
occurred on or after Januarv 1, 189S, the " (d) Policy of insurance or appointment
legal estate is vested in the personal repre- or revocation of appointment of
sentatives, not in the heir or devisee, and agent, or other document required
that the formal assent of the personal repre- or authorised by this Act, or by the
sentatives to the devisee taking the property, rules of a registered society or
or a conveyance from them to the devisee or branch."
heir, is necessary before the heir or devisee By a circular dated November 10, 1894, the
can have the legal estate. In such cases the Board of Inland Revenue intimated "that
assent or conveyance should be deposited they have agreed to regard cheques drawn
243
—
by, or on behalf of, a duly registered Friendly a garnishee order is not attached by the order
Society upon its banker as falling within and is at the disposal of the customer. To
the exemption from stamp duty granted prevent any complication between the funds
by Section 15 of the Act 38 & 39 Vict. c. in hand when the order is served, and money
60. In future, therefore, all such cheques received subsequently, it is better that the
may be paid by you, although unstamped." latter should be placed in a separate account.
FUNDED DEBT. A debt which is per- Payment into Court by the banker of the
manent, like Consols ;that is, a debt upon amount of the judgment, or to the extent of
which the Government pays regular interest the balance in his hands, will satisfy the
without being under any obligation to repay garnishee order.
the principal. In the case of a joint account, it has been
When an unfunded debt which is subject held that a garnishee order against one of
to repayment is changed into a permanent the parties does not attach the balance on
debt, the operation is called " funding the such joint account.
unfunded debt." As stated above, a garnishee order at-
The Unfunded Debt of this country consists \
taches a debt which is due or which is
of Treasury Bills and Exchequer Bonds. accruing due. An ordinary deposit receipt
FUNDING THE UNFUNDED DEBT. (See repayable on demand is therefore attachable
Funded Debt.) by a garnishee order. A receipt repayable
FUNDS. Consols and other Government at a certain fixed date, and a receipt repay-
securities are referred to as the Funds. able after certain notice has been given,
in the event of the notice having been given
GARBLING. Where light gold coins and before the garnishee order was served, are
coins of full legal weight are in circulation attachable by the order, because in each case
together, the good coins are collected by it is a debt which is accruing due.
goldsmiths and others and exported to be The following is a form of garnishee order :
a garnishee order, which order warns the It is ordered that all debts owing or accru-
banker not to part with any of the money ing due from the above-named Garnishee to
belonging to that customer. A garnishee the above-named Judgment Debtor be
order binds the whole of the balance stand- attached to answer a judgment recovered
ing to the credit of the customer's account, against the said Judgment Debtor by the
at the time the order is served, even if that above-named Judgment Creditor in the High
balance is more than sufficient to satisfy the Court of Justice, on the day of
19 for the sum of £ debt and
garnishee order, and until the order is with- ,
drawn no further cheques can be paid upon costs on which Judgment the said sum of
the account, not even cheques which were £ remains due and unpaid.
issued before the order was served on the And it is further ordered that the said
banker. The banker should advise his Garnishee attend the District Registrar in
customer of the service of a garnishee order. chambers, at the County Court offices
on day, the
Money which is paid to credit after receipt of
244
—
be sufficient to satisfy the Judgment. 1. The words " and Company " or any
Dated this day of 19 . abbreviation thereof between two parallel
transverse lines, either with or without the
District Registrar. words " not negotiable."
(See Charging Order.) 2. Two parallel transverse lines simply,
either with or without the words " not
GAVELKIND. (From A.-S. Gafol, tribute.) negotiable." (See Crossed Cheoue.)
An old custom surviving in the County of GENERAL LEDGER. However many
Kent, and also in Kentish Town, North books may be in use or on whatever system
London, by which the real property of a they may be worked, they are all brought
person dying without a will descends, not together in the general ledger. For in-
to the eldest son, but to all the sons together stance the daily totals, debit and credit of
as coparceners, just as it descends equally current accounts, as shown in the day books,
to the daughters if there are no sons that ;
are posted each day into the general ledger
is, a form of holding midway between under the heading " current accounts,"
tenants in common and joint tenants. (See and the balance is extended weekly or daily,
Coparceners.) An interest in gavelkind, as may be required. When the balances in
on the death of one of the sons, passes to the current account ledgers are extracted,
his heir, or to his devisee if he leaves a will. they should prove with the balance of the
An infant of fifteen may alienate his " current accounts " account in the general
gavelkind property, though he has not ledger, and if the totals of the debit and
power to mortgage it. credit sides in the current account ledgers
GAZETTED. That is, published in the are taken out they should agree with the
London Gazette. The production of a copy of corresponding totals in the general ledger.
the London Gazette containing any notice of a In proving the ledgers by totals, it is, of
receiving order, or of an order adjudging a course, necessary that the general ledger
debtor bankrupt, shall be conclusive evidence account, at the commencement of the half-
in all legal proceedings of the order having year, should begin with the total of the
been duly made, and of its date. (Section debit balances and the total of the credit
132. s.s. 2, Bankruptcy Act, 1883.) balances, and not merely with the difference
GENERAL ACCEPTANCE. (See Accept- of the two sides.
ance —General.) The accounts whichare found in a general
GENERAL AVERAGE. A term used in ledgervary according to the bank, the
connection with shipping. A
clause usually system and the amount of sub-division
found in a Charter Party is " General average which is considered necessary. The follow-
as per York- Antwerp" rules, 1890." The ing is a list of a number of general ledger
rules referred to are those which have been accounts which may be found in different
adopted at various times, by international banks, though not, of course, all in any one
conferences, York in 1864, Antwerp in 1877, bank :
245
GIFJ DICTIONARY OF BANKING [GOL
vivos must have been made, in order that the Pound, Two Pound, Sovereign, Half Sove-
property taken under the disposition may reign. The coins contain pure gold eleven-
not be included as property passing on the twelfths, copper alloy one-twelfth.
death of the deceased, and so liable to death Gold coins are a legal tender to any amount
duties, shall be three years before the so long as they do not fall below the least
death. current weight as given in the Coinage Act.
So much of this Section as makes gifts The light yellow appearance of many
inter vivos property which is deemed to Australian sovereigns is due to the alloy
pass on the death shall not apply to gifts being in part of silver.
made in consideration of marriage. (See For checking sovereigns, scales and weights
Deed of Gift.) are invaluable as the amount can by their
GILT-EDGED BILL. A definition of a use be ascertained quickly and exactly. In
gilt-edged bill has been given by an author- the case of half sovereigns, owing to the
ity as " a bill drawn and negotiated, of which lightness of many of the coins, the weights
the drawer, acceptor, and indorsers all do not give such an accurate result as with
enjoy the highest credit." (See Bill of the sovereigns, but if a hundred pounds of
Exchange.) half sovereigns are counted these can then
GILT-EDGED SECURITIES. Securities be used as a weight to balance another
of the highest order and which are con- hundred of half-sovereigns and so on. When
sidered to be absolutely safe. the gold has been counted, it is put into bags
Stocks in which trustees may invest and each bag labelled with the amount it
the trust moneys are " gilt-edged." (See contains and initialled by the person who
Trustee Investments.) counted it. The gold that is necessary for
GIVERS ON. In connection with the" immediate use across the counter is kept in
Stock Exchange settlements, a " giver on various ways. It is usually put up either in
is a broker who lends stock to a broker who bags containing such amounts as may be
requires it for delivery, and gives interest necessary, or in piles of £20 each. In some
for the money lent to him on the stock. offices it is kept in paper rolls of /50 or
(See Takers in.) £100, or in tin tubes standing upright in a
246
— —— —
box, each tube containing /20. (See Base which the Com-
of the gold
Coins. Coinage.) mittee recommend should
GOLD POINTS. (See Specie Points.) be held against the liabili-
GOLD RESERVES. In 1908 the Council ties of Trustee Savings
of the London Chamber of Commerce ap- Banks and Post Office
pointed a Gold Reserves Committee " to Savings Banks respectively.
consider whether the Gold Reserves of the "5. That all persons or companies carry-
country are sufficient, and, if not, what ing on the business of banking with-
remedies can be suggested." The Committee in the United Kingdom should once
consisted of leading bankers and men of in even* calendar month, in case
business, and in July. 1909, the Report their liabilities on current and de-
which has been called an historic document) posit accounts exceed in all the sum
of the Committee was issued. Out of twenty- of ten million pounds sterling, and
five surviving members of the Committee, once in every three months in all
five agreed to it subject to various material other cases, make a statement of
reservations. their position showing the average
The principal clauses of the report are as amounts of liabilities and assets on
follows : the basis of weekly balance sheets
" 4. Your Committee has taken no evi- for the preceding month, or three pre-
dence, but having debated the many and ceding months, respectively, stating
weighty proposals brought before it by its the following amounts separately :
own members, has passed the following " (a) Liabilities on current, de-
resolutions : posit, and other accounts.
" 1. That the Committee recognises the " (b) Liabilities on notes in circu-
desirability- of strengthening the lation.
Gold Reserves of this country. " {c) Liabilities on bills accepted.
"2. That the issues of the Bank of Eng- " (d) Gold and other coin and
land against Government debt and gold bullion held.
securities, commonly called the fidu- " (e) Bank of England notes held,
ciary issue, form an undue propor- and balance due by the
tion of the whole, and should be Bank of England.
reduced. " Balance due by clearing
(/)
"3. That a reasonable reserve in gold agents.
should be held against the deposits " And
that a copy of the statement
in the Trustee and Post Office should be put up in a conspicuous
Savings Banks. place in every office or place where
"4. That the Bullion Department of the the business of the persons or com-
Bank of England affords a means pany is carried on.
by its enlargement for the aggrega- " 6. That it is desirable that the Bank <>\
tion of gold reserves held by others England should make an annual
than the Government of India, return showing the aggregate
vi/. : bankers' balances for each week of
" (a) The banks of the United the preceding year.
Kingdom, including the " 5. In arriving at the conclusion that it
Bank of England, in respect is desirable to strengthen the Gold Reserves
of such gold held against of the country, your Committee was in-
their liabilities in excess of fluenced by the fact that the growth of
till money as any of them aggregate liabilities, external and internal.
may elect to deposit in the has not been accompanied by a proportional
Builion Department. increase of gold held by banks in the United
" (b) Scotch and Irish banks in Kingdom.
respect of all or any portion " 6. Your Committee is also of opinion
of the extra gold held by that, were larger reserves 'if gold in i
247
—
agreeing not to enter into competition with GROSS PROFIT. The total profit, or
the purchaser. gain, before the deduction of expenses.
When a banker examines a balance sheet GROSS RENTAL. The rent of a prop* 1
1
in which an item for goodwill appears, it is before the deduction of rates, taxes, repairs
necessary to remember that " goodwill has no or other outgoings. (See Valuation.)
meaning except in connection with a con- GROUND RENTS. Rents which are
tinuing business " (Lindley's " Partner- reserved to the owner of a freehold and which
ship " are payable by the person to whom the land
GRANT. A conveyance in writing. has been leased. For example, if the owner
By the Stamp Act, 1S91, the stamp duty of freehold land leases a portion to a person,
is :• called the lessee or leaseholder, he stipulates
d'
that he must receive, during the continu-
£ s -
on principally by goldsmiths or other persons whereby to charge the defendant upon any
who melt the coins for jewellery, or export special promise to answer for the debt,
them and sell them by weight. In the default or miscarriages of another person,
ordinary course of business very little atten- unless the agreement upon which such
tion is paid to a coin, so long as the stamp action shall be brought, or some memoran-
upon it is visible, whether it is a light one or dum or note thereof shall lie in writing
not. (See Cotn.v .i signed by the party to be charged therewith,
GROAT. Fourpence. Its standard wi or some other person thereunto by him
I 191 190
!
249
GUA] DICTIONARY OF BANKING [GUA
that he may not afterwards plead that he his fitness as a surety ; and if you take him
did not understand its contents. for more than this, you ma}- do him a fatal
A contract of suretyship should be disservice, and possibly lay the foundation
entered into freely and voluntarily by the of a bad debt for yourselves."
guarantor. " Everything like pressure used A lady is not, as a rule, regarded as a
by the intending creditor will have a very suitable surety.
"
serious effect on the validity of the contract A guarantee may take the form of a bond
iMr. Justice Fry in Davies v. London and or a guarantee under seal, in which cases
Provincial Marine Insurance Company, 1S7S, an ad valorem stamp of 2s. 6d. per cent, is
8 Ch. D. 469). required. The usual form, however, is a
In an ordinary case a banker is not guarantee under hand. The stamp duty on
obliged to give information, voluntarily, to a guarantee under hand is sixpence (see
a proposed surety, regarding the debtor's Agreement) . The stamp may be either
affairs. " Unless questions are particularly impressed or adhesive if adhesive, it must
;
put by the surety to gain this information, be cancelled by the first person signing the
I hold that it is quite unnecessary for the guarantee. If the document has been signed
creditor, to whom the suretyship is given, before being stamped, the stamp may be
to make any such disclosure " (Lord impressed within fourteen days from its
Campbell, in Hamilton v. Watson, 1845, 12 date. If a guarantee is sealed by a company,
CI. & F. 109). the document is subject to ad valorem duty
a guarantor inquires as to the extent
If of 2s. Gd. per cent. (See Bond.)
of his liabilitv upon the account for which It is essential that a guarantee form
he is surety, he is entitled to the information, should be most carefully drawn so as to
but a banker should not exhibit the debtor's create an effective security, and most
account to a surety or give details regarding bankers have now their own printed forms
it. of guarantees drafted so as to meet, as far
When a guarantor is proposed, it is a as possible, the various requirements of a
banker's duty to consider whether he is good and complete guarantee.
sufficient for the liability, and whether The surety's signature should, as a rule,
from his business and position he is likely to be witnessed by a bank official, and some
continue, in every way, a satisfactory surety. bankers require it to be witnessed by two
For instance, could lie discharge the guar- officials. Where the surety lives in another
antee with ease, or would it render him town, the document should be sent to a bank
practically penniless to pay the amount ? in that town and the surety be requested to
Is he under any other liabilities to the bank, call there to sign it.
and is he likelv to have signed a guarantee If there are any alterations in the docu-
for a friend at any other bank ? When a ment, they should be initialled by the
person signs a guarantee he does not expect guarantor and if the guarantee being given
;
that he will ever be called upon to pay it ; is in addition to one already signed by him
but a banker should look upon the trans- for the same account, a clause should be
action from quite the opposite point of view, added at the end of the guarantee to the
and should try to realise what the position effect that " this guarantee is in addition
will be, assuming that the guarantor will to and not in substitution of my guarantee
be required to meet the liability. dated for £ ," and the clause
A man may be well able to meet all should be signed by the guarantor.
demands which may be made upon him in Where there are more guarantors than
connection with his own business or his own one, the guarantee should be "joint and
private affairs, but it is quite another matter several." The banker can then sue one,
when he has to provide a substantial sum or all, of the guarantors as he may consider
to pay the debts of someone else. In necessary. If he sues one surety and fails
estimating the value of anjy one as a surety to obtain all that is required, he may then
the point is, as George Rae puts it in " The sue the others. This could not be done if
Countrv Banker " " Not what you might
: the guarantee was " joint " only. In a
be able to squeeze out of him by process of " joint " guarantee, all the sureties must be
exhaustion, but what he could at any time sued together, and if one of them died his
pay, over and above his other engagements, estate would not be liable. The banker in
without serious inconvenience or detriment that case would have to look to the sur-
to himself. That is the true meaning of viving guarantors ;but if the guarantee is
250
GUA] DH NONARY OF BANKING [GUA
" joint and several," the estate of a deceased transactions in the ordinary course of
"
surety would be liable. In a " several business begun prior to revocation and
guarantee, each one of the guarantors may completed during currency of notice."
be sued separatelv for the full amount. The With respect to a guarantee which con-
most satisfactorv guarantee for a banker to tained the words " to continue in force until
" joint and "
take is, therefore, a several three months after notice," it has been held
one. that notice to the bank of the death of the
A consideration is not necessary in a guarantor amounted to a determination of
guarantee under seal, but in a guarantee the guarantee so far as future advances were
under hand, i.e. a simple contract, there concerned.
must be a consideration. The consideration, If there is no question of notice arising,
as a general rule, is the granting of an when the surety informs the banker that he
advance to a customer against the guarantee, withdraws from any further liability under
or it may be the granting cf further time to his guarantee, it will be at the banker's own
a debtor. A banker's guarantee usually risk if he pays any further cheques after
states the consideration, but the document receipt of such notice; but if he has promised
is not invalid merely by reason that the the debtor to pay certain specific cheques,
consideration is not expressed therein. By those cheques must be paid.
the Mercantile Law Amendment Act. 1S56. In order that a banker may be entitled
1 e' V
t 'in Vict. c. 97, Section 3, " no special to claim upon a debtor's estate, and, if
promise to be made by any person after the necessary, to require payment in full of the
passing of this Act to answer for the debt, guarantee, the guarantee should be drawn
default, or miscarriage of another person, so as to cover all moneys which now are or
being in writing, and signed by the party shall at any time hereafter be due and owing
to be charged therewith, or some other and to apply to and secure any ultimate
person by him thereunto lawfully authorised, balance that shall remain after the banker
shall be deemed invalid to support an action, has obtained dividends or compositions from
suit, or other proceeding to charge the the debtor's estate. In the case of In re
person by whom such promise shall have Sass, Ex parte Natl I nik of
been made, by reason only that the con- md (1896, 2 O.B. 12), a surety guar-
sideration for such promise does not appear anteed the payment of all sums of money
in writing, or by necessary inference from which were or might from time to time
a written document." become due or owing to the bank on the
An important point in connection with a account of S. and the guarantee was limited
guarantee is that it should be a continuing to the amount of /300. The guarantee gave
guarantee, that is, a security which will the bank the right to receive dividends
continue, although the balance of the debtor's from the debtor's estate. On the bank-
account may fluctuate from time to time. ruptcy of S. the bank, after receiving the
A guarantee should therefore expressly state /300 from the surety, claimed to prove on
that it " shall be a continuing guarantee,'' the estate for the full amount due. It was
otherwise it might be held to cover merely held by Vaughan Williams, J., that although
the debt which existed at the time the the surety's liability was limited, still " his
guarantee was given. suretyship was in respect of the whole debt,
Where a guarantee for, say, /1,000 is to and he, having paid only a part of that debt,
continue in force until the expiration of three has in my judgment no right of proof in
months' notice in writing, and when the preference or priority to the bank to whom
account is overdrawn, say, £500, the surety he became guarantor."
gives notice, can the banker let the customer Under an ordinary banker's guarantee
go on drawing cheques pending the notice form, the banker can prove upon his cus-
and let him draw out the whole £1,000 ? tomer's estate for the full amount of the debl
Sir John Paget, in his Gilbart Lecture (allowing for anv securities held from the
(No. 3), 1909, considers that "the banker debtor himsell and require payment in full,
would run great risk if he adopted this course if necessary, from the guarantor oi the
voluntarily ... all outstanding cheques, amount of his guaranti
bills accepted for the customer prior to I
pon receiving notice o\ the death of a
revocation and maturing during pendency surety, the debtor's account should be
of notice and things of that sort are covered ed pending fresb arrangements, unless
by the clause. Possibly it might cover other the guarantee expn ides that the
251
—
amount of his guarantee. When the guar- banker obtains payment of the full amount
antor pays up, the amount should be placed of the guarantee from one of the sureties,
to a separate account, and not go directly that surety can call upon his co-sureties to
in reduction of the debtor's account, if the pay him their proportion of the amount.
banker intends to claim upon the debtor's Unless specially provided against in the
estate. If the sum tendered by the guar- guarantee, if a banker releases one of several
antor is sufficient to clear off the debt, the joint co-sureties that release may have the
amount is usually placed at once to credit effect of releasing all the sureties. Before
of the debtor's account. releasing one of several sureties a banker
When a surety has paid off the full should, unless the guarantee provides for
amount of the debt on the account for which such a release, obtain the written assent of
he is guarantor, he is entitled to the lights the other sureties, or take a fresh guarantee.
of the banker, that is to sue the debtor and When a surety gives notice to terminate
to receive the benefit of any securities held a guarantee, the banker should, if possible,
by the banker for the debt, whether the obtain the notice in writing.
securities were held at the time the guarantee If after all dividends have been received
was given, or were subsequently received. from the bankrupt's estate, the guarantee
By the .Mercantile Law Amendment Act, money in the banker's hands should be more
1856, Section 5 : than sufficient to clear off the indebtedness,
" Every person who, being surety for the the balance remaining should be returned
debt or duty of another, or being liable with to the surety, or, if several sureties, to each
another for an}' debt or duty, shall pay such one in proportion to the amount he paid.
debt or perform such duty, shall be entitled A guarantee under hand is barred by the
to have assigned to him, or to a trustee for Statute of Limitations in six years from the
him, every judgment, specialty, or other date when the right of action first accrued
securitv which shall be held by the creditor against the guarantor. If there is a clause
in respect of such debt or duty, whether such in the guarantee that payment is to be made
judgment, specialty, or other security shall days after demand," the statute in
or shall not be deemed at law to have been such a case will not begin to run until the
satisfied by the payment of the debt or demand has been made. It is advisable,
performance of the duty, and such person however, whether the guarantee includes
shall be entitled to stand in the place of the i
such a clause, or not, to get all guarantees
creditor, and to use all the remedies, and, if renewed before they are six years old.
need be, and upon a proper indemnity, to Not only does such a course prevent the
use the name of the creditor, in any action, guarantee from becoming statute barred,
or other proceeding, at law or in equity, in but it brings to the notice of the surety the
order to obtain from the principal debtor, fact that his liability still continues.
or any co-surety, co-contractor, or co-debtor, A guarantee under seal is not barred till
as the case may be, indemnification for the twenty years from the date when the cause of
advances made and loss sustained by the action arose. But if the guarantee is in re-
person who shall have so paid such debt or spect of a debt secured by a mortgage of land,
performed such duty, and such payment or the period is twelve years by the Real Pro-
performance so made by such surety shall perty Limitation Act of 1874, whether the
not be pleadable in bar of any such action covenant of the surety is in the mortgage deed
or other proceeding by him ;
provided itself, or is contained in a collateral bond.
252
gua; DICTIONARY OF HANKING [GUA
Payments to the credit ot an account bv a the effect of releasing the guarantor from
debtor keep the debt alive as against the liability. In Samuel v. Howarth 1817,3Mer.
debtor, but they do not prevent the statute 272), Lord Eldon said " The surety is held
:
from running in favour of a surety. (See to be discharged for this reason, because the
Statute of Limitations.. creditor, by so giving time to the principal,
In the important case of Pun', Banking has put it out of the power of the surety to
•any v. Yates (1898, 2 Q.B. 48m, where consider whether he will have recourse to
the bank held a continuing guarantee from his remedy against the principal or not, and
Yates for an account, Yaughan Williams. because he, in fact, cannot have the same
L.J., said:
" My view is that the cause of remedy against the principal as he would
action on the guarantee arose as to each item have had under the original contract."
of the account, whether principal, interest, Where a guarantee has been given for a
commission, or other banking charge, as soon fixed period and at the end of that period it
as that item became due and was not paid, is arranged that it be continued for a
and, consequently, the Statute of Limitations further period, either a new guarantee should
began to run in favour of the defendant in be taken or the old guarantee should be
respect of each item from that date. I indorsed accordingly and bear another six-
agree with what my brothers have said with penny stamp. Any such indorsement
regard to the claim for interest. I think should, of course, be signed by the guarantor,
that the interest stands on the same footing or. if more than one. by all of them. If a
as any other item to the debit of the party new guarantee has not been obtained, or the
guaranteed in the account ; and that the old one extended, before the fixed period
defendant continues liable as guarantor in expires, the account should be stopped when
respect of interest which has accrued within the date arrives until a fresh arrangement is
six years before action, and does not get rid made.
of that liability because his liability to be A guarantee by a married woman can be
sued on the guarantee with regard to the enforced only against her separate estate.
principal has become barred by the Statute In the case of a guarantee by a firm, it
of Limitations. I also agree that there is should, in order to avoid the risk of any-
no ground for saying that there is any rule future trouble, be signed by each partner.
which could apply the payments which have Where a partnership account is overdrawn
been made to the interest on the advances !
and a guarantee is taken from the partners
made to the party guaranteed as dis- in their private capacities to secure the
tinguished from the principal. According firm's account, the banker will then have
to the ordinary practice of bankers, the a claim upon the private estates of the
interest due is from time to time added to partners, as well as upon the partnership
the principal, and becomes itself part of the estate.
principal due." Where a change of partnership takes place
The balance for which a surety is re- and a guarantee is held for the account,
sponsible is the general balance of the unless the form provides for such change,
customer's account, and all accounts between the account should be broken until fresh
the customer and the banker at the time arrangements are made.
the guarantee comes to an end must be taken By Section 18 of the Partnership Act,
into account. [In re Sherry, London and 1890 :
—
" A continuing guaranty- or caution-
County Banking Co. v. Terry, 1884, 25 Ch. D. ary obligation given either to a firm or to a
692.) third person in respect of the transactions
<Jpon the failure of a guarantor, unless the of a firm is, in the absence of agreement to
debtor supplies other security, the banker the contrary, revoked as to future trans-
should call in his advance and, if repayment actions by any change in the constitution of
is not made, claim upon the surety's estate. the firm to which, or of the firm in respect i it
Where there are several sureties and one the transactions of which, the guaranty or
of them gives notice to terminate his lia- obligation was given."
bility, the account of the debtor should be Before accepting a guarantee by a com-
broken until fresh arrangements are made. pany, a banker should see that the memo-
Any material variation of the original randum of association gives power to the
agreement between the debtor and creditor, company to give a guarantee.
unless provided for in the guarantee or made Winn a guarantee has been discharged,
with the assent of the guarantor, will have or is no longer required, it is the practice of
253
— —
some bankers to give it up to the guarantor, sanction, the interest thereon will probably
whilst other bankers prefer to retain the be disallowed.
document, after being cancelled by, or in the The following regulations are from a
presence of, the surety. General Order of the Local Government
GUARANTEED STOCK. Stock upon Board : —•'
ever there are not funds belonging to the Treasurer may be presented to the Treasurer
Guardians in his hands as Treasurer of the at his house, were omitted from the said
Union, to report in writing the fact of such Form.
deficiency to the Local Government Board.
The Treasurer's book is required to be
—
Article IV. (1) Where the Treasurer
Poor Law Authority is a banker,«or
of the
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
ment Board or other authority is required. is carried on, give a receipt for money paid
If money is borrowed without power, or to the Treasurer, or indorse any cheque or
254
—
Heritable property is property, such as must indorse it. When the holder of a bill
land, which descends to the heir. payable to bearer (see Bearer) negotiates it
HERIOT. In connection with copyhold by delivery, without indorsing it, he is called
land there is, in some cases, on the death of a " transferor by delivery " and warrants to
the tenant a fine, or heriot, due to the lord of his immediate transferee that the bill is
the Manor. The heriot may take the form what itpurports to be.
of the best beast or best jewel or plate which If the title of a holder for value is defective,
belonged to the deceased, or it may be a as where the bill was obtained by fraud,
money payment. duress, or force and fear, or for an illegal
HERITABLE BOND. In Scotland, a consideration, he cannot recover the amount
bond by a debtor for a sum of money, which from the person defrauded or otherwise.
includes a conyeyance of land, to be held by But a " holder in due course " can sue any-
the creditor as security for the money. party to the bill. No title, however, can be
(See Bond and Disposition in Security.) obtained through a forged signature. (See
For the stamp duty see Mortgage, etc., Bill of Exchange, Cheque, Considera-
and Section 86. tion for Bill of Exchange, Holder in
HOLDER FOR VALUE. A holder for Due Course.)
value of a bill of exchange is defined by HOLDER IN DUE COURSE. The
Bills of
Section 27 of the Bills of Exchange Act, Exchange Act, 18S2, Section 29, defines a
1882 :— holder in due course as follows :
" (2) Where value has at any time been " (1) A
holder in due course is a holder
given for a bill the holder is deemed who has taken a bill, complete and
to be a holder for value as regards regular on the face of it, under the
the acceptor and all parties to the following conditions, namely :
bill who became parties prior to " (a) That he became the holder
such time. of it beforeit was overdue,
" (3) Where the holder of a bill has a lien and without notice that it
on it, arising either from contract had been previously dis-
or by implication of law, he is honoured, if such was the
deemed to be a holder for value to fact :
the extent of the sum for which he " (6) That he took the bill in good
has a lien." faith and for value, and that
BySection 30 :— at the time the bill was
" (1) Every party whose signature ap- negotiated to him he had no
pears on a bill is prima facie deemed notice of any defect in the
to have become a party thereto for title of the person who
value." negotiated it.
A holder for value is not liable upon a bill " (2) In particular the title of a person
unless he has indorsed it, but he may sue on who negotiates a bill is defective
the bill in his own name. within the meaning of this Act
The holder for value of a bill may be the when he obtained the bill, or
payee who is in possession of it, or an in- the acceptance thereof, by fraud,
dorsee who is in possession of it, or the bearer duress, or force and fear, or other
of it. unlawful means, or for an illegal
Until value given no party can sue upon
is consideration, or when he nego-
a bill. If, no value is given on
for example, tiates it in breach of faith, or under
a bill till it reaches the hands of a third such circumstances as amount to a
indorser, none of the parties before that third fraud.
indorser can sue upon the bill, but the third " (3) A
holder (whether for value or not)
indorser, because he has given value, can sue whoderives his title to a bill
all the prior parties. If that third indorser through a holder in due course,
transfers to a fourth person, without any and who is not himself a party to
value being given, that person cannot sue the any fraud or illegality affecting it,
third indorser, seeing he did not give value has all the rights of that holder
to the third indorser for the bill, but he can in due course as regards the accep-
sue all the parties to the bill that the third tor and all parties to the bill prior
indorser had the right to sue. to that holder."
The holder of a bill payable to his order A payee is said not to come within the
256
— — —
definition of a holder in due course (see s.s. 1, well as from mere personal de-
above) as the bill is not complete until fences available to prior parties
it is indorsed by the payee. among themselves, and may enforce
By Section 30 :— payment against all parties liable
" (1) Every party whose signature ap- on the bill :
but if in an action on a bill it is bill the person who pays him in due
admitted or proved that the accep- course gets a valid discharge for the
tance, issue, or subsequent negotia- bill."
tion of the bill is affected with Where a signature on a bill is forged, no
fraud, duress, or force and fear, or one can obtain any light to the bill through
illegality,the burden of proof is or under that signature. (See Bill of
shifted, unless and until the holder Exchange. Forgery. Holder for Value.)
proves that, subsequent to the HOLDER OF BILL OF EXCHANGE.
alleged fraud or illegality, value has The holder of a bill is the person who is in
in good faith been given for the possession of it and may be either the payee,
bill." or an indorser, or the bearer.
The meaning of " good faith " is given in There are three kinds of holders, a simple
Section 90 : holder of a bill, a holder for value, and a
" A thing is deemed to be done in good holder in due course.
faith, within the meaning of this Act, where If the holder of a bill has not given value
it is in fact done honestly, whether it is done for it, he cannot sue any party subsequent to
negligently or not." the last indorsement when value was given.
If, for example, Jones is a holder in due The holder of a bill, unless it is indorsed
course, he has the right to sue any party to payable to him, need not indorse it, though,
the bill, but if in an action it is proved that as a rule, any person taking a bill would
the bill is affected with some taint, as de- require the person from whom he takes it to
scribed in the above sections, it will be neces- indorse it. The person receiving a bill has
sary for Jones, in order to preserve his rights, the right to demand the indorsement of the
to show that he gave value for the bill sub- transferor if the bill was payable to his order.
sequent to the alleged taint, and that he took If a bill is payable to the holder's order, he
it in good faith without knowledge of any- must indorse it, whether the transferee
thing being wrong with the bill. demands his indorsement or not.
If Jones, the holder in due course, transfers Where the holder of a bill payable to
the bill to Brown, but without any value bearer (see Bearer) negotiates it by de-
being given therefor, Brown obtains the same livery, without indorsing it, he is ailed a
i
rights that Jones had and can sue any party " transferor by delivery " and warrants to
prior to Jones, but he cannot sue Jones His immediate transferee that the bill is what
because of the absence of consideration. it purports to be.
" Xo consideration " is a good defence A transferor by delivery is not liable on
between parties closely related on a bill, but —
the bill that is, he is not liable thereon if he
a holder in due course is not affected by the has not indorsed it, though if he is a ti<
"
fact of their having been " no consideration for value he may sue all, or any, of the
between an}- parties before it was transferred parties to the bill. Thai, however, does not
to him for value. affect the transferee's right to sue the trans-
Section 3S deals with the rights of a feror for the debt. Judgment obi.
holder :
against one party will not release the others.
" The rights and powers of the holder of a If the title of a holder for value is defei tive,
bill are as follows :
he is not in as good a position as a holder in
" (1) He may sue on the bill in his own due course.
name : Neither a holder for value nor a holder in
J Where he is a holder in due course, due course can obtain a title to a bill through
he holds the bill free from any a forged signature.
defect of title of prior parties, as Any holder may convert a blank
257
17— (1535)
HOL] DICTIONARY OF BANKING [IMP
writing above the indorser's signature a direc- entirely, or almost entirely, writteri by the
tion to pay the bill to the order of himself person who signs it. A holograph cheque
or some other person. is less likely to be a forgery than if it is
A holder may strike out any indorsement merelv signed by the drawer.
on a bill, and the person whose signature In Scotland, when a surety signs a printed
is struck out is thereby released from form of guarantee. he sometimeswrites above
liability, and so are all subsequent indorsers. his signature " adopted as holograph." (See
A banker usually cancels his indorsement on Attestation.)
a dishonoured bill. HOUSE. The word is used with reference
If a holder receives payment of a bill from to the Bankers' Clearing House, the Stock
an indorser, the bill must be given up to that Exchange, or a large London Bank Office,
indorser, who will then have all the rights of may be.
as the case
the holder from whom he received it. (See HOUSE DUTY. (See Inhabited House
Payment for Honour.) Duty.)
A banker is under no liability on a cheque HUSBAND AND WIFE ACCOUNT. When
or to a holder, unless he has in some way
bill an account is opened in the name of a hus-
given the holder to understand that the j
band and wife it is generally with the inten-
cheque or bill will be paid. (See Bill of tion that either may sign upon the account
Exchange, Holder for Value, Holder and that the balance may pass to the sur-
in Due Course.) vivor. As the account is the same as an
HOLDING OUT. In Partnership
the ordinary joint account, the bank's usual
Act, 1890, Section 14, enacted that
it is form should be signed by both parties
everyone who by words spoken or written, authorising the banker to honour the
or by conduct represents himself, or who signature of either.
knowingly suffers himself to be represented, Where the husband dies first there is the
as a partner in a particular firm, is liable as possibility that the money may be held to
a partner to anyone who has on the faith pass to the deceased's executors, unless it
of any such representation given credit to can be proved that it was the intention of the
the firm. (See Partnerships.) deceased that the balance should belong to
HOLIDAYS. In addition to a weekly half- his widow. To avoid any trouble, a definite
holiday and the legal bank holidays (see '
But the principal holiday is the annual ment six months after the purchase is
one, and the length of it varies according to completed and terminating at death.
the arrangements existing in different banks. For example, at the age of thirty-five
Some banks allow two weeks' holiday in the £100 may purchase an immediate annuity of
year to managers and clerks alike, but in £4 ISs. 6d. (See Annuity.)
IMMEDIATE PARTIES. The " imme-
many banks the managers are granted a
longer period than the clerks. In other diate parties " to a bill of exchange are
banks the number of weeks which is allowed those in close relationship, as the drawer
is dependent upon the length of service, as [
and acceptor, the drawer and payee, and
for example after fifteen or twenty years' I
an indorser and the immediately preced-
service three weeks are allowed. Some ing indorser. (See Parties to Bill of
banks allow their managers a holiday of a Exchange.)
clear month. IMPERIAL. (See Foreign Moneys-
HOLIDAYS EXTENSION ACT, 1S75. (See Russia.)
Bank Holidays.) IMPERSONAL ACCOUNTS. Accounts
258
—
which are not connected with persons, e.g. (See Acceptance for Honour. Referee in
expenses, interest, discount, Head Office Case of Need.)
account, bills, shares, rent, premises. IN CLEARING. When a bank makes an
Some banks keep all such accounts in a exchange of cheques with another bank, the
separate book, called an " impersonal cheques which are received constitute the
ledger." " In " clearing, and the cheques which are
IMPERSONAL LEDGER. A number of given out form the " Out " clearing. (See
accounts such as interest, commission, dis- Clearing House.)
count, cheque books, etc., are sometimes INCHOATE INSTRUMENT. An incom-
included in one book called the impersonal plete document, as, for example, a stamped
ledger, and the combined daily totals of bill form, signed by a person and handed to
those various accounts posted into an account another person to fill up and make into a
in the general ledger, called " impersonal complete bill.
ledger account." This is generally done By Section 20 of the Bills of Exchange \. t
to reduce the number of accounts in the 18S2 :—
general ledger. " (1) Where a simple signature on a blank
IMPLEMENT. In Scotland, to imple- stamped paper is delivered by the
ment a contract is to carry it into effect. signer in order that it may be
IMPORT SPECIE POINT. (See Specie converted into a bill, it operates as
Points.) a prima facie authority to fill it
IMPRESSED STAMPS. Impressed stamps up as a complete bill for anv
are required on :
amount the stamp will cover, using
Assignments of Life Policies. the signature for that of the drawer,
Conveyances. or the acceptor, or an indorser :
Inland Bills of Exchange (except when on and, in like manner, when a bill is
demand, at sight, on presentation, or wanting in any material particular,
not exceeding three days after date or the person in possession of it has
sight, when either an adhesive or a prima facie authority to fill up the
impressed stamp may be used). omission in any way he thinks fit.
Inland Promissory Notes. " (2) In order that any such instrument
Letters of Allotment. when completed may be enforceable
Memoranda of Deposit. against any person who became a
Mortgages. party thereto prior to its com-
Scrip certificates. pletion, it must be filled up within
Transfers. a reasonable time, and strictly in
Stamps may be impressed on all instru- accordance with the authority given.
ments except where an adhesive appro- Reasonable time for this purpose is
priated stamp is necessary. (See Appro- a question of fact.
priated Stamps.) In certain cases (e.g. a Provided that if any such instru-
guarantee under hand) either an impressed ment after completion is negotiated
or adhesive stamp may be used. (See to a holder in due course it shall
Adhesive Stamps.) 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 important to note that an incomplete
It is
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 a 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 it to another person to fill up in a certain
referee. specified manner and sign it as drawer, and
Where a dishonoured bill contains a refer- the drawer exceeds his authority, the
ence in case of need, it must be protested acceptor will not be liable thereon to the
for non-payment before it is presented for drawer, but if the bill is negotiated to a
payment to the referee in case of need holder in due course, he will be liable to such
(Section 67, Bills of Exchange Act, 18S2 . a holder. !
ill in blank an
259
—
acceptor may thus find himself in the on by means of her own personal labour,
awkward position of having to pay a very provided the husband is assessable under
much larger sum than he intended to pay Schedule D, and that his income is uncon-
when he placed his name on the paper. nected with the business of his wife.
The Court of Appeal said in France v. If an owner of land or houses, not exceed-
Clark (1884, 26 Ch. D. 257) " The person
: ing £8 annual value, proves to the satis-
who has signed a negotiable instrument in faction of the surveyor of taxes that the cost
blank or with blank spaces is, on account of to him of maintenance, repairs, insurance
the negotiable character of that instrument, and management, on the average of the five
estopped by the law merchant from dis- preceding years, has exceeded the allowances
puting any alteration made in the document of one-eighth and one-sixth respectively
after it has left his hands by filling up blanks allowed by Section 35, Finance Act, 1S94, he
(or otherwise in a way not ex facie fraudu- may claim repayment on so much of the
lent) as against a bond fide holder for value excess as does not exceed one-eighth of the
without notice, but it has been repeatedly annual value of the land and one-twelfth of
explained that this estoppel is in favour only the annual value of the house i.e., the total
;
of such a bond fide holder, and a man who, allowance under both statutes must not
after taking it in blank, has himself filled up exceed one-fourth of the value (Section 69.
the blanks in his own favour without the Finance (1909-10) Act, 1910).
consent or knowledge of the person to be With regard to persons residing abroad,
bound, has never been treated in English Section 71 of the above Act, enacts :
Courts as entitled to the benefit of that " (1) No exemption, abatement, or relief
doctrine." (See Bill of Exchange.) under the Income Tax Acts which
INCOME TAX. A tax upon incomes. It depends whollv or partially on the
is payable upon incomes from sources within total income of an individual from
the United Kingdom, and upon incomes all sources shall be given to any
from sources outside the United Kingdom person, unless the person claiming
but received within the United Kingdom. the exemption, abatement, or relief
A return of income must be made yearly is resident in the United Kingdom :
upon the forms provided for the purpose. Provided that any person who is
The rates for the year beginning April 6, or has been employed in the service
1909, (and for 1910,) are :— of the Crown or who is employed in
the service of any missionary society
s. d.
On unearned incomes (dividends, abroad or in the service of any of the
etc.) 1 2 in the £. native states under the protectorate
On earned incomes, where the total of the British Crown, and any person
income does not exceed £2,000 .09 ,,
resident in the Isle of Man or
On earned incomes, where the total
income exceeds £2,000 but does Channel Islands and any person
not exceed £3,000
On incomes over £3,000
....
...
1
1 2 „
resident abroad who satisfies the
Commissioners that he is so resident
An additional duty (called super
tax) on incomes exceeding £6,000, for the sake of health, shall be
on so much as exceeds £3,000 (e.g. entitled to any relief, exemption, or
a man with £8,000 will pav abatement to which he would be
super tax on £3,000) .... 6
entitled if he were resident in the
Where an individual, whose total income United Kingdom, and if his total
exceeds £160 but does not exceed £500, has income from all sources were calcu-
a child or children living under the age of lated as including any income in
sixteen at the commencement of the year for respect of which income tax may not
which the tax is charged, he is entitled, in be chargeable as well as income in
respect of every such child, to relief from respect of which income tax is
income tax to the amount of the income tax chargeable.
upon £10 (Section 68, Finance (1909-10) " (2) Income tax shall not be payable in
Act, 1910). respect of the interest or dividends
Where the total joint income of a husband of any securities of a foreign state
and wife does not exceed £500, a wife can or a British possession which are
separate her claim for exemption or abate- payable in the United Kingdom,
ment from that of her husband on account where it is proved to the satisfaction
of profits derived from any business carried of the Commissioners that the person
260
—
owning the securities and entitled Exceeding £600 but not exceeding £700,
to the interest or dividends is not £70 abatement is allowed.
resident in the United Kingdom ; In the annual return of the profits of a
but, save as provided by this or any banking company, in order to arrive at the
other Act, no allowance shall be amount on which income tax is to be paid,
given or repayment made in respect working expenses, rent, rates, taxes, salaries,
of the income tax on the interest or bad debts, etc., are deducted from the gross
dividends on the securities of any profits, and also all amounts on which tax
foreign state or any British posses- has already been paid by the banker, e.g.
sion which are payable in the rents received, dividends on investments,
United Kingdom. interest on fixed mortgages from which
Relief from income tax under this income tax was deducted before charging
sub-section may be given by the the interest to the customer's account. A
Commissioners either by way of list of the fixed mortgages must be given to
allowance or repayment on a claim the Surveyor of Taxes in order to enable him
being made to them for the purpose to trace whether the persons have paid to
within six months of the end of the the Revenue the sums deducted. The
vear for which the income tax is amount charged to profit and loss account
charged." in payment of income tax is not to be taken
There are five schedules for the annual as a deduction from the profits. An amount
return of income, viz. : used to write down the value of the bank's
—
Schedule A. For income from property premises, or an amount transferred to a
in lands and buildings and sporting reserve account, or an expenditure in extend-
rights. ing a building, are not allowed to be deducted.
(The tax under Schedule is
this Subscriptions which have no connection
commonly called " Property Tax.") with the business cannot be deducted.
Schedule B. For — income from the Fire insurance premiums and also em-
occupation of land. ployers' liability insurance premiums are
—
Schedule C. For income from the public allowable as deductions from a bank's
funds. profits, but life insurance premiums, if any,
Schedule D. — For
income from trade, cannot be deducted.
profession, employment, vocation, dis- In arriving at a banker's profits assessable
ounts, interest of money not taxed by under Schedule D, deduction of the net
deduction, colonial and foreign securi- Schedule A assessment on premises owned
ties(where the duty is not deducted and occupied by the banker for business
by the agent entrusted with the pay- purposes (including any portion used as a
ment thereof), colonial and foreign manager's residence) is allowed, less any
letting furnished houses,
possessions, ground rent payable thereon.
and other income not falling within
all Where a bank official is required to reside
the other schedules. on bank premises for the performance of
—
Schedule E. Salaries paid toGovernment. his duties, the annual value of his residence
corporation, and company officials. is not treated as an emolument, and is not to
(This schedule includes officials of be included in a statement of income for the
banking companies.) purpose of claiming abatement.
For the purposes of income tax, income is It has been held that where a bank pur-
divided into earned income and unearned chased the business and premises of another
income. Schedules A and C are unearned bank, the profits of both banks shall be
income-. Schedules B and E are earned brought into the computation of the three
incomes. Schedule D is part earned and :
borrower, if the final result (profit or loss) any dwelling house occupied by
is to be credited or debited to the banker's the owner and partly used for the
profit and loss account, the premiums may purposes of business.
be regarded as a current expense necessary For any other disbursements or ex-
to guard him against loss and therefore may penses wholly and exclusively laid
be deducted when calculating the liability out for the purposes of the trade, etc.
for income tax. 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
< the trade, etc., has been set up or
>r, if 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
Or, if commenced within the year of as capital in the trade or business,
assessment, the profits are to be or on account of capital withdrawn
estimated according to the best of therefrom.
your knowledge and belief, and the For any sums expended in improvement
grounds on which the amount shall of premises or written off for deprecia-
have been estimated should be tion of land, buildings, or leases.
stated for the information of the For anj' loss not connected with, or
Commissioners. arising out of the trade, etc.
In computing the profits upon which the For any expenses of maintenance of the
average is to be taken persons assessable, their families, or
Deductions are Allowed- — private establishments.
For repairs of premises occupied for the For an} loss recoverable under an
-
purpose of the trade, etc., and for the insurance or contract of indemnity.
supply or repair of implements, For any sum paid as income tax on
utensils, or articles employed, not profits or gains, or on the annual
exceeding the sum usually expended value of trade premises.
for such purposes according to the For any premium for life insurance, or
average of the three years preceding. for wear and tear of machinery or
For debts proved to be bad also for
; plant ; but allowances may be
doubtful debts according to their claimed in respect of these items.
estimated value. By the Finance Act, 1907, Section 21,
For the rent of premises used solely for s.s. 1,
" Every employer, when required to do
the purposes of business, and not as so by notice from an assessor, shall, within
a place of residence. the time limited by the notice, prepare and
For a proportion, not exceeding two- deliver to the assessor a return of the names
thirds, of the rent of any dwelling and places of residence of any persons
house partly used for the purposes of employed by him, to whom this provision
business. applies, and of the payments made to those
For the annual value of any premises persons in respect of that employment. ."
. .
occupied by the owner solely for the This provision does not apply to employees
purposes of business, and not as a whose yearly remuneration does not exceed
place of residence, according to the the sum fixed as the limit (at present i'160)
amount on which duty has been paid for total exemption from income tax (Section
under Schedule A. 21, s.s. 1). Where the employer is a corn-
For a proportion, not exceeding two- pan}-, the secretary, or other officer perform-
thirds, of the annual value (according ing the duties of secretary, shall be deemed
to the amount on which duty has to be the employer for the purposes of this
been paid under Schedule A), of provision, and any director, or person
262
— —
engaged in the management of the company, " Provided that this Section shall not
shall be deemed to be a person employed impose on any banker or other person the
si tion 21, s.s. 2). obligation to disclose any particulai
With regard to the deduction of income lating to the affairs of any person on whose
tax from foreign and colonial dividends, and behalf he may be acting."
from the interest on fixed deposits in colonial Where a banker has taken a mortgage for
banks in London, the following enactments a fixed amount, and the period of the loan is
applv :• not less than a year, income tax must be
The 36 of 24 & 25 Vict,
effect of Section deducted by the banker before charging the
c. 91 that income tax must be deducted
is customer with the interest. In such a case
from interest, dividends or other annual the relation of banker and customer is
payments payable in respect of stocks or changed to that of mortgagor and mortgagee,
shares of any foreign or colonial company or and a mortgagor is entitled under Section 40
concern, which said interest, dividends or of the Property Tax Act, 1853, to have
annual payments have been intrusted to any income tax deducted from the interest pay-
person in the United Kingdom for payment able on his mortgage. In a case of a fixed
to any persons or companies in the United mortgage, simple interest only can be
Kingdom. charged. (See Interest.) Where a banker
(The Board of Inland Revenue include is required to deduct tax from the interest
under this Section the deduction of tax from due upon a fixed mortgage, any such sum
the interest payable by colonial banks in so deducted must be allowed for when the
London upon fixed deposits.) banker makes his income tax return that is ;
The Customs and Inland Revenue Act, to say, before arriving at the amount of tax
1885, includes amongst the persons intrusted which he must pay upon his year's profits,
with the payment of such dividends, as is he must allow for the amount which he has
referred to in the above Section, the persons in effect already paid by having allowed it,
hereinafter described that is to say, ; by way of a reduction of interest, to the
" Section 26. (a) Any banker or person mortgagor.
acting as a banker who shall sell or A banker does not deduct income tax from
otherwise realise coupons or war- the interest charged on a current account
rants for or bills of exchange pur- or an ordinary loan. The customer must
porting to be drawn or made in make his own claim for repayment of tax
payment of any divid nds (save such in respect of bank interest. For that
as are payable in the L'nited King- purpose a banker supplies, when requested
dom only), and pay over the pro- by a customer, a certificate, which may be
ceeds to any person or carry the given in the following prescribed form :
nv.*,
—
it, for the full value as shown upon the face value on which duty has been remitted
of the note, is called inconvertible paper. during the preceding period of five years
When it can be exchanged for its full value, exceed 25 per cent, of the site value at the
it is convertible paper. previous collection of the duty prior to the
INCORPORATED COMPANY. A com- commencement of that period, or of the
pany incorporated when it is registered
is original site value if no such occasion.
in accordance with the requirements of the Increment value duty shall be a stamp
Companies Acts, and has obtained a certi- dut\-.
ficate of incorporation from the Registrar On any sale of the fee simple of land, or
of Companies. The members of an incor- the grant of any lease exceeding fourteen
porated company no longer exist as indi- years, the duty shall be assessed by the
viduals liable to be sued by creditors the
; Commissioners and paid by the transferor
individuals have become one body (the or lessor. The instrument of the transfer
company), and it is to the company alone or lease, or reasonable particulars thereof,
(or the liquidator) that the members are must be presented to the Commissioners
liable. Creditors must sue an incorporated for the purpose of assessment of the duty.
company in the company's name. (See Section 4, s.s. 3, is as follows :
original site value, and on any subsequent Agricultural land, while it has no higher
occasion by an amount equal to 10 per cent, value than its market value at the
of the site value at the previous collection time for agricultural purposes only.
of the duty but no remission shall be given
; Land on which a dwelling-house is built
which will make the amount of the increment which has been used for twelve
265
— —
' (5)
a limited interest in the land or or other word or letters in the blank space
interest in land in respect of which was in later times omitted, and the parch-
any duty under this Part of this Act meet was merely divided with an indented
is charged, is the person who is line. Finally an Act was passed (8 & 9
liable to pay any sums on account Vict. c. 106, Section 5), providing " that a
of the duty, he shall be entitled to deed executed after the first day of October,
charge such land or such interest in 1845, purporting to be an indenture, shall
land by means of a bond and dis- have the effect of an indenture although not
position or bond and assignation in actually indented."
266
— — S —
and very often is, written on the back of a " Where a bill purports to be indorsed con-
cheque without any idea of rendering him- ditionally the condition may be disregarded
self liable as an indorser. Indeed, one of the by the payer, and payment to the indorsee
best receipts is the placing on the back of is valid whether the condition has been
the instrument the name of the person who fulfilled or not."
has received payment of it. Such an entrv An indorsement in blank and a special
of the name on the instrument is not an indorsement are explained in Section 34 :-
indorsement." " (1) An indorsement in blank specifies no
The requisites of a valid indorsement are indorsee, and a bill so indorsed
given in Section 32 of the Bills of Exchange becomes payable to bearer.
Act. 1882 :— 2 A special indorsement specifies the
An indorsement in order to operate as a person to whom, or to whose order,
negotiation must comply with the following the bill is to be payable.
conditions, namely : 3 The provisions of this Act relating to
" (1) It must be written on the bill itself a payee apply with the necessary
and be signed by the indorser. The modifications to an indorsee under
simple signature of r on a special indorsement.
the bill, without additional words, I When a bill has been indorsed in
is sufficient. An indorsement blank, any holder may convert the
written on an allonge, >r on a
< blank indorsement into a special
'copy' of a bill issued or nego- indorsement by writing above the
tiated in a country where '
copii indorser's signature a direction
267
— — —
pay the bill to or to the order of John Jones or order, John Brown " (or
himself or some other person." " John Brown, pay to the order of John
A restrictive indorsement is denned in Jones "), the bill is specially indorsed, and
Section 35 : requires the signature of John Jones before
" (1) An indorsement is restrictive which he can transfer it to anyone else. Any
prohibits the further negotiation of holder may convert an indorsement in blank
the bill or which expresses that it is into a special one to himself, or to any other
a mere authority to deal with the person. If a bill with John Brown's indorse-
bill as thereby directed and not a ment in blank passes through the hands of
transfer of the ownership thereof, certain holders who do not indorse it, and
as, for example, if a bill be indorsed then comes into the possession of William
'
Pay D. only,' or Pay D. for the
'
Robinson, he may write above John Brown's
account of X.,' or pay D. or
' signature the words " Pay William Robin-
order for collection.' son." Before further negotiation, the bill
" (2) A restrictive indorsement gives the requires William Robinson's indorsement.
indorsee the right to receive pay- If John Brown indorses the bill " Pay John
ment of the bill and to sue any Jones only," the indorsement of John Jones
party thereto that his indorser is required, but John Jones cannot transfer
could have sued, but gives him the bill to anyone else, as John Brown by
no power to transfer his rights his restrictive word prohibits the further
as indorsee unless it expressly negotiation of the bill.
authorise him to do so. A cheque or bill payable " to order "
" (3) Where a restrictive indorsement should (unless payable to a fictitious or non-
authorises further transfer, all existing person be indorsed.
| But see under
subsequent indorsees take the bill Payee as to the case of a payee refusing to
with the same rights and subject to indorse a cheque when presented by himself.
the same liabilities as the first A cheque payable to bearer does not require
indorsee under the restrictive to be indorsed. A cheque indorsed in blank
indorsement." is pavable without further indorsement.
An indorser may insert an express stipula- But all cheques paid to credit, which do not
tion (1) negativing or limiting his own legallv require an indorsement, should either
liability to the holder, (2) waiving as be indorsed or stamped with the name of the
regards himself some or all of the holder's customer, so that the banker may know
duties (Section 16). An example of an at any time from whom the cheques were
indorsement so qualified is where an received. Some customers cross all their
indorser adds after his signature the words cheques which are paid to credit, thus :
" without recourse " or the French equivalent " Account John Brown at X. & Y. Bank,
" sans recours." Ltd." All bills paid to credit should be
By Section 31, s.s. 3 : indorsed by the customer.
" A bill payable to order is negotiated by An indorsement, as its name implies,
the indorsement of the holder completed by should be upon the back of a bill or cheque,
delivery." but it has been held that an indorsement on
A transferee, for value, acquires the right the face is valid.
to have the indorsement of the transferor, An indorsement should be spelled exactly
where the bill was payable to the transferor's in the same way as the person's name appears
order (Section 31, s.s. 4). on the face of the bill (or cheque) as payee,
A bill payable to " John Brown or order " or in the special indorsement as indorsee. If
may be indorsed simply " John Brown." the person's name has been misspelt by the
He may then transfer the bill by simple drawer or the prior indorser, his indorsement
delivery to another person. By John should also be misspelt, but he may indorse
Brown's indorsement in blank the bill it below with his name spelled correctly.
becomes payable to bearer, and may pass All indorsements must be examined, even
from hand to hand without any further if they are in a foreign language.
288
IND] DICTIONARY OF BANKING |
IND
in Oriental characters are sometimes pre- ordinary course of business, the banker is
sented for payment with the name of the protected by Section 60 (see Payment of
indorser written in Latin characters beneath Bill), even though the indorsement of the
the indorsement, and the memorandum con- payee or a subsequent indorser has been
tinues " Such translations may be, and forged or made without authority.
:
' '
He
it believed often are, written on the bill
is must, however, exercise reasonable care,
by persons having no authority and incur- and see that the cheque he is asked to pay
ring no responsibility, and the Council is of is apparently properly indorsed. If he is
opinion that before paying the bill, a banker negligent and pays a cheque which is clearly
would be justified in requiring that the not indorsed by the proper party he will be
translation be properlv verified bv a notarv, liable. The banker need not know the
or that, in default of this, the indorsement payee, so long as the cheque purports to be
be confirmed by a banker. indorsed by the person to whom it is payable.
" In the event of bills bearing Oriental If a banker pays a customer's acceptance
indorsements being returned, the answer to a person appearing to be the holder, but
given should be such as to leave no room claiming through or under a forged indorse-
for doubt that the reason for refusing pay- ment, he cannot charge such an acceptance
ment is that such indorsement is unintelli- to the customer's account (Section 24, Bills of
gible, in which case the Council is advised Exchange Act. See Forgery). If he has
that no legal liability will be incurred by paid such an acceptance to a banker who
the bank giving the answer. sent it for collection, he cannot claim the
" A suggested form of answer is .th '
. . amount back from that banker.
indorsement requires notariallv certified The paying banker thus incurs liability
translation, or will pay on banker's con- in paying a bill under a forged indorse-
firmation.' ment, but in paying a cheque with a forged
" The Council think it would be most indorsement he is protected.
satisfactory forconcerned, and avoid
all With regard to a banker's liability, as to
delay in payment of bills bearing such in- the indorsements on a bill, Baron Parke (in
dorsements, if they were in all cases put in Robarts v. Tucker, 1851, 16 Q.B. 560), said :
order before being remitted to London for " If bankers wish to avoid the responsibility
payment, as it is sometimes a matter of of deciding on the genuineness of indorse-
difficulty in this country to obtain a satis- ments, they may require their customers to
factory translation." domicile their bills at their own offices, and
If a holder strikes out, intentionally, the to honour them by giving a cheque upon the
indorsement of any indorser, that indorser banker."
and all indorsers subsequent to him are The banker who collects for a customer an
discharged from liability on the bill. open cheque, is responsible for the genuine-
An infant may indorse a bill or cheque and ness of the indorsement, but in the case of a
pass on to an indorsee a good title, but he is cheque crossed generally, or specially to
under no liability with regard to it. himself, he not liable for a forged indorse-
is
Where the signature of any person is ment, provided he receives payment of the
required, under the Bills of Exchange Act, cheque for his customer in good faith and
it is not necessary that he should sign it with without negligence. (See Crossed Cheque.)
his own hand. It is sufficient if his signature If he collects a bearer cheque he is in a much
is written thereon by some other person by better p< isition than with an order cheque
or under his authority (Section 91 \ as there is then no question of a forged
banker, however, would require undoubted indorsement.
evidence of authority before accepting an The banker paying a draft or order drawn
indorsement written by some other person. upon him, payable to order on demand,
If an indorsement is impressed by a stamp, which purports to be indorsed by the person
a banker should confirm it, when he is to whom the same shall be drawn payable,
satisfied that it has been made by a duly isnot liable if the indorsement proves to
authorised person. have been forged. It shall not be incumbent
In the case of a corporation, an indorse- on such banker to prove that such indorse-
ment sealed with the corporate seal is ment, or any subsequent indorsement, was
sufficient {Section 91, s.s. 2). made by or under the direction or authoril y
Where a banker on whom a cheque is of the person to whom the said draft in-
drawn, pays it in good faith and in the order was or is made payable, either by the
269
IND] DICTIONARY OF BANKING [IND
drawer or any indorser thereof (Section 19, per procuration discharge will not be ac-
Stamp Act, 1853, 16 & 17 Vict. c. 59, see cepted, unless guaranteed by the payee's
Draft on Demand). The same Section banker. A banker is not obliged to accept
probably protects a banker in paying an a per pro. indorsement, if there are suspicious
order drawn upon him as treasurer of a circumstances demanding inquiry as to the
local authority. Some writers consider that person's authority to indorse.
a banker is also protected, in paying such An indorsement which is not strictlv in
orders, by Section 60 of the Bills of Exchange order isfrequently confirmed by a banker as
Act (see above). This protection, however, " Indorsement confirmed. Per pro. X & Y.
depends upon whether the orders are held Bank, Ltd., T. Brown, Manager." This is
to be drawn upon a banker, or merely upon better than " Indorsement guaranteed," as
the treasurer in his personal capacity. it precludes any chance of liability to stamp
A bill or cheque payable to John Brown duty as a guarantee. Where a cheque pay-
without the words " order " or " bearer,'' able to order has been omitted to be in-
is payable to order and requires indorsement. dorsed by the payee, a banker occasionally
It is a well-recognised custom to pay a indorses it " Placed to credit of the payee's
dividend warrant, payable to several persons, account. Per pro. X. & Y. Bank, Ltd.,
when discharged by one of those persons. T. Brown, Manager." Though there is no
(See Dividend Warrant.) An interest obligation on the banker on whom the cheque
warrant, however, should, strictly, be in- is drawn to pay a cheque which is not
dorsed by all the payees, though in practice indorsed, he is usually satisfied with the
this is not always insisted upon. collecting banker's assurance that it has
Where a bill has been seized in execution, gone to the payee's credit. Of course as it
a sheriff can give a good discharge when is not indorsed, the banker cannot shelter
payment is made to him. himself under Section 60.
If an indorser writes any words on the A banker is sometimes authorised by a
cheque or bill in the form of a receipt, such as company to indorse cheques on behalf of the
" Received Payment," " Received Cash," company, and in such a case the indorsement
such receipt requires a penny stamp if the may be, e.g. " Indorsed by authority of the
amount is £2 or over. A receipt by a X. & Y. Railway Company and placed to the
banker upon a bill of exchange is exempt. credit of their account with us. Per pro. The
(See Receipt.) British Bank, Ltd., John Brown, Manager."
Where an indorsement is by mark, it must Section 77 of the Companies (Consolidation)
be duly witnessed. Act, 1908, enacts that " a bill of exchange
Where a bill drawn by a firm is payable to :
been placed thereon need not be examined. the married name. The indorsement is
A bearer cheque cannot be turned into one accepted whether signed " Mary Young
payable to order by indorsement. If a or " Mary Campbell."
" bearer " cheque is specially indorsed to It isa saving of much time and trouble
John Brown or order and is not signed by if a collecting banker confirms all indorse-
John Brown, the banker is not concerned i ments which he notices are not strictly in
with the matter. order, when he knows that they are all right,
In the case of a cheque payable to order before remitting the cheques for collection.
which has been indorsed in blank, thus A paying banker should not return a
making it payable to bearer, and a subse- cheque " indorsement irregular " if the
quent holder makes it again payable to objection is merely a frivolous one. A
order, the fresh series of indorsements must slight variation in the name on a cheque
be examined by the banker. for a trifling amount is not regarded as of so
If an indorsement has been altered, it much importance as in the case of a cheque
should, if correct, be confirmed. An indorse- fur a larger amount, and a small cheque often
ment of a signature by means of an impressed receives the benefit of a doubt and is passed
stamp should be confirmed by a collecting with an indorsement not absolutely in order.
banker. An indorsement " J. Brown & Coy., Ltd.,
A banker is not obliged to take an irregular J. Jones, Secretary," is usually accepted,
indorsement, and if a cheque is indorsed in though " Per pro. J. Brown & Co}'., Ltd.,
such a manner that he is unable to decide J. Jones, Secretary, " is preferable.
whether it is right or wrong, it is safer to If a payee presents an " order " cheque
return it for confirmation. himself, it is the custom to require him to
An indorsement in pencil is not a sufficient indorse it, but see Payee.
reason for returning a cheque, as it is a valid The payee's indorsement need not neces-
indorsement, but the use of a pencil for such sarily be the first signature on the back of the
a purpose should always be discouraged. cheque, though, of course, it usually is.
If the person presenting a cheque is unable A cheque indorsed in France may be
to write, he should indorse it by mark, his signed with the surname only.
mark being then witnessed, preferably by There is no authorised form of indorse-
an independent party. The witness must ment, and in consequence the variations in
know the person whose mark he witnesses, indorsements are very numerous and often
and, in addition to signing as witness, must puzzling to decide upon. The following is
give his own address. a list of specimens in one column are
;
Indorsements are occasionally met with included indorsements which, as a rule, would
having Mr. or Esq. added to the name If be passed, either because they are strictly
the name has been written by the right party correct or sufficiently accurate to justifj
the indorsement is sufficient, but a collecting I
their acceptance ; in the other column are
banker should confirm it. shown indorsements which are not generally
In Scotland, when the payee is a married accepted, either because the} are quite-
woman, the cheque is frequently drawn as wrong or so doubtful as to ca isethe heques i
" Pay Mrs. Mary Young or Campbell," bearing them to be returned " indorsement
Young being her maiden name and Campbeil irregular."
Payee.
INDJ DICTIONARY OF BANKIXi; IND
|ohn Brown (now di n ed < For Self & Co-Executors of late John John Brown. J. Jones.
Brown, J. Jones.
John Jones, Executor of the late John Mary Brown, widow of John Brown.
Brown.
J. Jones \ Administrator- the late >t Jones & Co., Solicitors to the Estate ot
R Smith/ John Brown. I ohn Brown, deed.
Mrs. John Brown (now de- J. Jones, Executor of the late Mai v
ceased) Brown, wife of John Brown (or
widow of the late John Brown),
his
John Brown vho cannot John X Brown. John Brown
write) mark J. Jones.
Witness, I Jones,
Kins St., Leeds I'!.
VV. Brown, J. Jones, R. W.Brown. J Jones. R. Smith Brown, Jones & Smith.
Smith For Self, lones ,v Smith.
W Brown.
VV. Brown & J. Jones . W. Brown. J Jones.
1- Jones. W Brown. Brown 6c J cues.
W. Brown, per pro. J. Jones.
VV. Brown
William & Thomas Brown William Brown. Thomas Brown For William Brown & Self,
Thomas Brown.
Messrs. Brown J & T. Brown.
. Brown.
Brown & Son. Brown & Coy.
Brown & Sons.
I . Messrs. Brown.
per pro. Messrs. Brown, J. Jones
Brown Bros.
Brown & Brown.
Messrs. J. & T. Brown J. &T Brown. 1 & T. Brown, per J. Jones.
per pro. Messrs. I & T. Brown, J. JT. Brown. I. lones.
|. Jones.
John & Thomas Brown.
John Brown. Thomas Brown
272
IND] DICTIONARY OF BANKING [IND
p.p. The
British Baking Coy.,
Mr' iwn, Proprietor.
I
273
'8—{1535)
. l
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., Ld.,
Ld. J. Brown, Manager,
per pro. The Banking Co., Ld.,
British
Jones, Pro Manager.
J.
(Not strictly correct but very common
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.
Coi ncil.
Official Receiver of J. J. Jones, Official Receiver of J. Brown per pro. J. Jones, Official Receiver of
Brown & Co. & 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.
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 R e dby School. J. Jones, Manager.
"
J. Jones I
J. Brown. J. Jones.
For the Managers of Redby School,
J. Brown, Chairman.
Brown freres .... Brown
Brown
Bros.
freres.
Overseers of Redby, per Overseers of Redby, John Brown.
T . Brown, Collector |"hu Brown, Collector.
Overseers of Redbv . For the Overseers of Redby, J. Jones. R. Smith.
J. Brown, Asst. Overseer.
Overseers of Redby.
K. Smith (
Administrators
....
Wm.'of
\" indorsement required.
274
TND] DICTIONAKY OF BANKING [IND
Payee.
— —
that it should act as an indorsement, and " (2) The indorser of a bill by indorsing
delivers it so indorsed to a third person, he it—
renders himself liable to be sued upon the " (a) Engages that on due pre-
note by any subsequent holder. A person sentment it shall be accepted
receiving a bank note in payment of a debt and paid according to its
cannot compel the person offering it to in- tenor, and that if it be dis-
dorse it, but where a person is asked to give honoured he will compen-
change for a bank note he can, if he so wishes, sate the holder of a subse-
decline to give the change unless the note quent indorser who is com-
is indorsed. pelled to pay it, provided
When a Bank of England note is presented that the requisite proceed-
for payment at the Bank, it is customary ings on dishonour be duly
for the Bank to request the person pre- taken ;
senting it to write his name and address " (6) Is precluded from denying to
upon the back. As all Bank of England a holder in due course the
notes are payable in gold, on demand, at genuineness and regularity
the head office, that office cannot legally in all respects of the drawer's
insist upon such indorsement. signature and all previous
Referring to indorsements on cheques, indorsements ;
to be sued upon the instrument, as indorsee, signs a bill otherwise than as drawer or
by any subsequent holder." acceptor, he thereby incurs the liabilities of
INDORSEMENT ON DEPOSIT RECEIPT. an indorser to a holder in due course."
A deposit receipt is not a transferable docu- Where a person is under obligation to
ment, and the indorsement upon it is really indorse a bill in a representative capacity as
a discharge to the banker upon repayment treasurer or executor, he may indorse the
of the money. If over £2, and the usual '
bill in such terms as to negative personal
printed form of receipt on the back is liability(Section 31, s.s. 5).
signed, the signature must be across a penny Where anindorser is dead and the party
adhesive stamp, unless the form is already giving notice knows it, notice of dishonour
impressed with a penny stamp. (See must be given to his personal representative
Deposit Receipt.) if such there be, and with the exercise of
INDORSER. When a payee writes his reasonable diligence he can be found (Section
name upon the back of a bill or cheque, he 49, s.s. 9).
is called an
" indorser," and when the instru- Where an indorser is bankrupt, notice
ment negotiated to other persons, each
is may be given either to the party himself or
person may indorse it in turn and become an to the trustee (Section 49, s.s. 10). (See
indorser. Each indorser of a bill (or cheque) Bill of Exchange, Dishonour of Bill of
is liable thereon. Exchange, Indorsement, Negotiation of
Any indorser, however, may add after his Bill of Exchange.)
signature such words as " without recourse INDUSTRIAL LIFE POLICY. The policy
to me," or " sans recours." The sanction is is usually granted upon the express condition
given by Section 16 of the Bills of Exchange that it shall become absolute!}' void, if it is
Act, 18S2, which provides that any indorser in any way assigned, sold, mortgaged or
may insert an express stipulation : otherwise parted with.
276
INF] DICTIONARY OF BANKING |
INF
overdrawn, for money lent to an infant also act as an agent and sign cheques, and
cannot be recovered, even if he gave draw, accept, or indorse bills, and the lia-
security. bility rests with the person who gave him
By the Infants' Relief Act, 1874, Section 2, the authority to do so. He may sign
"no action shall be brought wherebj to cheques upon an overdrawn account if that
charge any person upon any promise made power is included in the authority. There
after full age to pay anv debt contracted is nothing to prevent an infant being a
during infancy or upon any ratification made partner in any business, but in any action
after full age, of any promise or contract against the firm the infant would be ex-
made during infancy whether there shall or cluded. An infant cannot undertake the
shall not be any new consideration for such duties of an administrator or executor nor act
promise or ratification after full age." as a proxy in bankruptcy proceedings. He
In savings banks, receipts are given by cannot make a will, and in the event of his
minors and accepted, but in those cases j
death letters of administration require to be
special provision is made under the Savings taken out by his father or mother or nearest
Bank Acts that the receipt of a person of kin.
under the age of twenty-one years shall be a '
has been dishonoured, cannot sue the infant should be treated by the banker like an
upon it ; and where a cheque has been ordinary joint account as to authority for
cashed to a minor and is subsequently dis- signing of cheques, etc.. but he will, of
honoured, the money cannot be recovered course, bear in mind the non-liability of the
by law from the minor. minor for an overdraft, as before mentioned.
Section 22, s.s. 2, of the Bills of Exchange If the minor is a very young child, the
Act, 18S2, provides " Where a bill is drawn
: better plan is for the account to be opened
or indorsed by an infant, minor, or corpora- in the parent's or guardian's name lor the
tion having no capacity or power to incur child, thus. " John Brown. In re Timothy
liability on a bill, the drawing or indorse- Brown." in which case no mandate is
ment entitles the holder to receive payment required, and the adult has full control.
of the bill, and to enforce it against any other The form in which deposit receipts are
party thereto." The signature of an infant sometimes issued, "John Brown lor Joseph
upon a bill does not in any way affect its Brown minor) " is not a desirable one, and
(a
negotiability. He may pass on a good title should be avoided.
to others, and though he cannot be sued A deposit receipt may be issued in the name
himself he may by his next friend sue other of a minor. On withdrawal hi :- able to give
parties to the bill. Even if a minor accepts a good discharge for the money.
a bill in payment of necessaries, he cannot be Stock in Public Funds Bj tru National
sued upon it. Debt Act, 1870, Section 19 :— " Where stock
An infant cannot sue in his own name, is standing in the name of an infant or per-
except in a count}' court for wages due to son of unsound mind, jointly with any
277
— — — —
the stock shall be sufficient authority in that of the United Kingdom of Great
behalf, if given under the hand and seal of
Britain and Ireland, the islands of
the person not under disability, attested by Man, Guernsey, Jersey, Alderney,
two or more credible witnesses." By the and Sark, and the islands adjacent
National Debt (Stockholders Relief) Act, to any of them being part of the
1892, Section 3 :— " {a) Where an infant is
dominions of Her Majesty.
the sole survivor in an account and (b) ;
" Unless the contrary appear on the
(2)
where an infant holds stock jointly with a face of the bill the holder may
person under legal disability and (c) where ;
treat it as an inland bill."
stock has by mistake been bought in or By Section 36 of the Stamp Act, 1891,
" a bill or note purporting to be drawn or
transferred into the sole name of an infant,
the Bank may, at the request in writing of made out of the United Kingdom is, for the
the parent, guardian, or next friend of the purposes of stamp duty, to be deemed to
infant, receive the dividends and apply them have been so drawn or made, although it
to the purchase of like stock, and the stock may in fact hav? been drawn or made
so purchased shall be added to the original within the United Kingdom." Thus, by
investment." the Stamp Act, a bill drawn in the Isle
INGOT. Bars of gold and silver are called of Man and the Channel Islands (which
ingots. places are out of the United Kingdom) is
INHABITED HOUSE DUTY. The duty regarded as a foreign bill, whereas, by
on inhabited houses occupied as a shop, the Bills of Exchange Act, it is an inland
warehouse, public -house, farm-house, coffee- bill.
the occupier.
r
A dwelling-house of a less annual value Birmingham, J^uiy 10, 19)
than £20
INLAND
is
©me
£150 0s. Od. \V
J A
Six montffetfftefc date pay to
or my^e^^ne
my^eWrthe sum oi
of one
:
me
"
(1) An inland bill is a bill which is or hundred^d orifty pounds for
on the face of it purports to be value^jeJ^VM
(a) both drawn and payable within
the British Islands, or (b) drawn John Brown.
To Mr. ThoO&as^J&ies
within the British Islands upon
15 Th3$ij£§ Street
some person resident therein. Any
r^Jfbndon.
other bill is a foreign bill.
278
— 1 '
The indorsements appear upon the back of structs the Rivergate Branch of the British
the bill, e.g. : Bank (where John Jones keeps his account)
to pay /150 to John Brown or his order in
2 o six months' time.
u %
o O J 2*
S>
This bill is said to be domiciled at the
V « ;<* British Bank, Ltd., Rivergate, London, who
SE j are also called the " drawee bank."
1
2
b 2 o O to Referring to the indorsements on the bill,
.-
o O C
o !
or " On presentation " or " On demand," in bers of the London Stock Exchange and their
all which three cases there would be no clerks, whose names are upon a list kept at
acceptance at all, for payment would have the Bank. The privilege of being upon this
to be made at once. list of brokers is obtained by the introduction
The drawer John Brown, who in this
is of a member already upon the list. A
case is but the drawer could
also the payee, member upon the list can have his clerk's
have made the bill payable to anyone he name put upon it by signing a document
pleased or to bearer. making himself responsible for the acts of
The drawee is Thomas Jones and by his clerk. There are some 3,000 members on
writing his name across the bill he has the list, and it is clearly a privilege valuable
become the acceptor that is to say, he ; to brokers who deal in Government securities.'
accepts John Brown's demand for money Certain stocks domiciled at the Ban
due, and, by the words he has added, in- Montreal, Glyn & Co., Standard Bank of
279
—
South Africa and the Agent General for South registerof members of a company shall,
Australia are transferred by deed, although during business hours, be open to the inspec-
they are called inscribed stocks. tion of any member gratis, and to the
Stock certificates to bearer may be inspection of any other person on payment
obtained by a holder for various inscribed of one shilling, or such less sum as the
stocks, which are transferable at the Bank company may prescribe (Section 30 of the
of England. Companies (Consolidation) Act, 1908). (See
The receipt for the purchase money, which Companies, Register of Members of
is given to a purchaser when a transfer of Company.)
inscribed stock is made, is of no value. It INSTALMENTS. Part repayments of a
is not required upon a subsequent sale. To debt. They may be made at regular, or
obtain a security upon inscribed stock, it irregular, periods. As to the effect of the
must be transferred into the names of the Statute of Limitations upon a promissory
nominees of the bank but if the inscribed note being repaid by instalments, see
;
his creditors together and endeavour to object is to afford opportunities for the
come to an arrangement with them (apart acquisition of a knowledge of the theory of
from the Bankruptcy Acts), usually either banking.
—
by offering to pay a composition that is, to The Institute affords facilities for the
pay so much in the pound in full discharge of reading, discussion and publication of papers
what he is owing to them (see Composition by members and others it arranges for
;
—
with Creditors) or by offering to transfer the delivery of lectures on banking, mer-
his property to a trustee in order that it may- cantile law, political economy and other
be realised and the proceeds divided kindred subjects and it issues certificates
;
amongst his creditors according to the to those who may pass examinations
amounts of their respective claims. (See approved of from time to time by the Council
Assignment for Benefit of Creditors.) of the Institute.
Where a judgment has been obtained in The members of the Institute are fellows,
a county court, and the debtor is unable to associates, certificated associates and
pay, if the whole indebtedness does not ordinary members.
exceed £50, an administration order Fellows are elected by the Council.
may be made by the county court. (See Subscription, two guineas.
Administration Order.) Associates are elected from those who
When a petition is presented against a have not been less than ten years in the
debtor, and his estate is not likely to exceed service of any bank or from those who
;
£300 the Court may make an order for have passed the examination recognised by
summary administration. (See Summary the Council or from those who, being on
;
L'sn
— 1
are held annually, and certificates awarded. rate was at 10 pel cent.
fixed It was
The Journal of the Institute is issued reduced to 8 per cent, in 1624, and to 6 per
quarterly. cent, in 1651, and in 1714 it was further
INSTITUTE OF BANKERS IN SCOTLAND. reduced to 5 ]i trt). i
This Institute was established in 1875. If the rate of interest is 3 per cent., the
Its object is " to improve the qualifications interest upon the money lent (the principal)
28
INTJ DICTIONARY OF BANKING [INT
is referred to as being at the rate of £3 per London bankers do not, as a rule, allow
cent, per annum; that is, for each /100, interest upon a current account but country
three pounds is payable by way of interest bankers usually do so, the rate being regu-
at the end of a complete year, and for each lated according to the custom of the district
part of £100 or part of a year the interest and the nature of the account. Country
is in proportion thereto. bankers usually reckon the interest upon
Simple interest is calculated upon the the daily balance of an account.
principal only, whereas compound interest In some cases, if the balance falls below
is interest which is calculated upon the a specified figure no interest is given, though
principal plus interest which is due and has if that figure is maintained, interest is
not been paid. A deposit receipt is an allowed. It is sometimes agreed to allow
example where simple interest only is al- interest upon the minimum monthly balance.
lowed. It is calculated and provided for The rate of interest upon a current account
each half-year by a banker upon the original is naturally dependent upon the character
sum deposited, but it is not added to the of the account, and upon the amount receiv-
principal until the depositor brings in his able from commission. In some London
deposit receipt and renews it for the amount banks the charge for commission is dependent
with the interest added. A deposit account, upon the balance which is kept.
and current account where interest is added, The interest upon a deposit receipt or
are examples where compound interest is deposit account is allowed at a higher rate
allowed, as each half-year when the interest than on a current account, the balance of
is calculated it is added at once to the which is liable to be withdrawn at any
balance or principal and becomes part of the moment. Some bankers allow a uniform
amount on which interest is subsequently rate throughout the year, irrespective of
allowed. whether the Bank of England Rate is high
In a current account, interest is calculated or low, whiht other bankers regulate the
from the actual date when a customer's rate upon a scale which fluctuates according
cheque is paid (not from the date of the to the Bank Rate.
cheque), and from the actual date when On deposits which are subject to notice,
money is paid to credit, which, in the case a higher rate is usually allowed, the rate
of a sub-branch, may in some cases be the being increased (e.g. in colonial banks) up
day before it is actually posted in the current to a certain point, according to the length
account ledger at the parent branch. Where of notice which must be given.
a cheque is paid at another bank or branch No interest is, as a rule, allowed upon
under advice, the banker is entitled to charge money on deposit receipt unless it has
interest from the date when so paid. The remained in the banker's hands for a certain
calculations are in most banks now effected specified period. The period varies accord-
by means of products, commonly, though ing to the bank, in some cases it is fourteen
erroneously, called " decimals," by which days, in others one month or even two
the balance of an account, on the occasion months.
of each change, is multiplied by the number Where notice of repayment is given (i.e.
of days has remained undisturbed, the
it in cases where notice is required) and the
product, say, 2,650, being simply £2,650 money is not applied for at the date it is
for one day, or put in another form £\ for due to be paid, interest usually ceases until
2,650 days. The total of all the .products the depositor renews the receipt.
on an account by the end of a half-year is Unless a promissory note payable on
therefore that number of pounds for one demand expressly states that interest is to
day at the rate of interest to be allowed or be paid, interest is not recoverable. Where
charged. With the aid of a product table the a bill is dishonoured, interest on the amount
amount of interest is very quickly ascer- of the bill may be recovered from the time
tained. (See Decimals.) of presentment for payment if the bill is
As to discount on a bill, see Discount. pavable on demand and from the maturity
In the case of a deposit receipt where of the bill in any other case. (See Section
interest varies according to the Bank Rate, 57 of the Bills of Exchange Act, 1882, under
the interest is calculated by means of a table Dishonour of Bill of Exchange.)
of decimals, each rate being taken as a There is no general law to justify interest
decimal part of 5 per cent. (See Interest being charged upon a loan, but by custom
on Deposit Receipt.) a banker is entitled to charge interest, and,
282
—
by making half-yearly rests and adding the When a judgment for mortgage money
accrued interest to the balance, to charge has been obtained, the interest (if more than
compound interest. In addition to the 4 per cent, in the mortgage deed) is reduced
usual custom, there may be a special agree- to 4 per cent.
ment as to interest between the banker and Upon the bankruptcy of a customer,
a customer. A banker's right to charge interest can be charged only up to the date
compound interest may also be justified by of the order or in the case of a deed of
;
upon the loan before charging it to the " Where a debt has been proved upon
customer's account, but if the loan is for a a debtor's estate under the principal Act,
less period than a year the customer is not and such debt includes interest, or any
entitled to have tax deducted. A mort- pecuniary consideration in lieu of interest,
gagor is entitled to deduct income tax by such interest or consideration shall, for the
Section 40 of the Property Tax Act, 1853. purposes of dividend, be calculated at a rate
When a banker deducts tax from the interest not exceeding five per centum per annum,
due by a customer upon a fixed mortgage, without prejudice to the right of a creditor
he takes credit, in his income tax return, to receive out of the estate any higher rate
for the amount of tax allowed to the custo- of interest to which he may be entitled after
mer ; that is, the amount of tax due to be all the debts proved in the estate have been
paid to the tax authorities upon the profits paid in full."
of the bank is reduced bv the amount whii h A ready way of telling approximately the
he has already paid by way of the deduction number of years in which an amount at
from the customer's interest. Income tax compound interest will double itself, is to
is deducted from fixed deposits by the divide 70 bv the rate per cent.
colonial banks in London. (See Income When, for am- reason, it i^ necessary to
Tax. i
refund part of the interest charged to a
As to the effect of the Statute of Limi- customer's account, it is commonly called a
tations upon interest, see Statute of rebate.
Limitations — Interest. In Scotland, all the banks, by agreement,
bank of issue which was
In the case of a make the same charges for interest and
being woundup, it was held that interest at commission, so that, as far as charge
5 per cent, was payable upon its notes from rned, there is no advantage to be
the date when demand for payment was gained by a customer dealing with one bank
made from the liquidator. rather than another. No interest is allowed
283
—
on credit current accounts, but on the other days at 5 per cent., and so on, -4 being
hand commission is not charged. added each day.
INTEREST BILLS. A name sometimes When the rate is 3 per cent., 6 is added-
given to the of exchange, payable in
bills each day, when 1\ per cent. '5 is added,
India, which are issued in payment of the when 4 per cent. -8 is^ added, T being added
interest upon Indian Government Rupee for each \ per cent, increase in the rate.
Loans. The bills are for rupees, and may The following is a short specimen table :
be sold in London.
2 per cent. Jan., 1910 •4
INTEREST ON BILL. Where a bill is
'
1
•8
expressed to be payable with interest, 1-2
unless the instrument otherwise provides, 4 1-6
interest runs from the date of the bill, and if 2-0
3 per cent. 2-4
the bill is undated from the issue thereof"
3
(Section 9, s.s. 3, Bills of Exchange Act, 1882). 8 3-ii
In an action on a dishonoured bill, interest 9 4-2-
interest after the date when the receipt was to the same object and to obtain the decision
due to be repaid. Banks do not, however, of the Court. A banker might have occasion
always insist upon notice being given, and to interplead, for example, if two persons
when the deposit receipts are paid without each laid claim to a sum of money deposited
notice, some banks deduct from the interest with him.
due to date a sum equal to the interest which INTESTACY. INTESTATE. Where a
would have accrued during the period person has died without making a will, it is
between the date of payment and the date known as an intestacv. and he is referred
when it would have been due to be paid if to as having died intestate. In order that
notice had been given :in other words, the affairs of the deceased may be wound
interest is deducted for the days still to run up. letters of administration require to be
before the receipt is due. (See Deposit obtained from the Probate Registry, or
Receipt.) Somerset House, bv some person who is
Interest is not, as a rule, allowed upon a entitled to act as administrator.
deposit receipt until the money has remained By the Intestate Estates Act, 1891), it is
in the bank for a certain period, say, four- provided that the real and personal estate
teen days or a month, and in some banks of every man who shall die intestate after
for two months. September 1, 1890, leaving a widow but no
When a bank allows interest on current issue, shall, in all cases where the net value
accounts it usually gives a slightly higher of such real and personal estate shall not
rate for deposits, and in the case of deposits exceed £500, belong to the widow absolutely.
for a fixed period a slightlv higher rate still. Where the net value exceeds £500, the widow
INTEREST WARRANT. An order or is entitled to a first charge of £500 upon the
warrant for the payment of interest upon whole estate, real or personal, the amount
debenture stocks and such-like securities. being paid out of the estate in proportion
A dividend warrant is an order for the pay- to the values of the real and personal estates
ment of a shareholder's proportion of the respectively. This right is in addition to
profits of a company. her share in the residue of the estate. Upon
The Bills of Exchange Act, 1SS2, recog- an intestacy, a widow is entitled in the case
nises, " any usage relating to dividend of real property (which does not include
"
warrants or the indorsements thereof leaseholds) to "dower," that is, a life
Section 97, s.s.3, d.), but no reference is made interest in one-third of the property, unless
to interest warrants. It would appear, there is a declaration against dower in the
therefore, that an interest warrant, if payable deed of conveyance to the husband. In the
to several parties, should, strictly, be signed case of copyhold property, the widow's life
bv each one, though they are frequently interest is called " freebench " and varies
treated in the same way as dividend with different manors. The following ex-
warrants. ample is given in " Wills " by J. A. Slater :
INTERIM DIVIDEND. The dividend of "A man leaves real property worth £1,000
a joint stock company is declared by the and personal property worth £4,000. If he
company in general meeting but power
; has died intestate, and has left a widow
is given, in most articles of association, to and no issue, the widow is entitled first of
the directors to pay to the members such all to £500, one-fifth of which, namely, £100,
interim dividends as appear to them to be comes out of the real estate, and four-fifths,
justified by the profits which have been namely, £400, out of the personal estate.
earned. An interim dividend is therefore She is then entitled to her dower, unless it
one which is paid in the meantime, and which has been barred, out of the remaining £900
comes forward for confirmation when the of real estate, and to one-half of the remain-
general meeting is held. An interim divi- ing £3,600 of the person, il estate. She thus
dend which is paid in, say, July is often less receives £2,300 absolutely, and enjoys the
than the amount which is paid in January ;
interest arising out o) £300 worth of the
e.g. ifthe dividend for the year is likely to real property for her lite. It then is issue,
be 15 per cent., 5 per cent, may perhaps be she lakes only one-third <>i tl and
i
! I
paid in July and 10 per cent, in januarv. . or .i hi'- interest, in one-third of the
"
INTERNATIONAL SECURITIES. (See £1,000
INTF.RP.OURSE SECURITIES.) Where title deeds are lodged .issecurity
INTERPLEAD. To interplead is to bring bv a person who has succeeded to the pro-
before the Court the claims of two persons perty, the purchaser in the last conveyance
285
— —
having died intestate, the banker should Trade may, before appointing an
ascertain if the land is charged with dower, inspector, require the applicants to
or freebench, in the case of a widow and ;
give security for payment of the
in the case of a widower with " curtesy," costs of the inquiry.'' (See Com-
that is, a husband's right for life to the panies.)
rents of the whole of his deceased's wife's INVESTMENT LEDGER. A separate
real estate, if she died intestate, provided account is opened ledger for each
in this
that the deceased wife had a child by the different investment. An exact description of
husband and such child was capable of the stock or shares is given, and there are
inheriting. also recorded the dates when the dividends
INTRINSIC VALUE. is no such There are due, the date of purchase and the price
thing as intrinsic value. As the value of paid. The date and particulars of all sales
anything is what it can be exchanged for, if are given and the amounts are deducted
it cannot be exchanged for anything it has from the balance. Any payments to credit
no value. Money is frequently said to have in reduction of the price paid, so as to bring
—
an intrinsic value that is, a value within it down to the market value, are also de-
itself —
but on an island where there are no ducted and the difference is the figure at
inhabitants, money could not be exchanged which the investment appears in the balance
for anything, and in such a case it would be sheet of the bank.
absolutely without value. I.O.U. An I.O.U. (that is " I owe you ")
286
IRR] DICTIONARY OF BANKING [JOI
was entitled to delivery of the iron. (See JOINT ACCOUNT. When an account is
form, to a person who takes it as a holder." bility that the money might be held to pass
This definition is required by reason of the to the deceased's executors, unless it can be
wording of Section 9, s.s. 3, which provides : proved that it was the intention of the
" Where a bill is expressed to be payable deceased that the money should, at his death,
with interest, unless the instrument other- be withdrawn by his widow.
wise provides, interest runs from the date In the case of an ordinary joint account, as
of the bill, and if the bill is undated, from John Brown and John Jones, repayable to
the issue thereof," and Section 12, which is either, on the death of one the balance may
as follows :
—
" Where a bill expressed to be be drawn by the other.
payable at a fixed period after date is If no authority is held from the parties on
issued undated, or where the acceptance of a joint account, all cheques must be signed
a bill payable at a fixed period after sight by both parties, and on proof of death of one
is undated, any holder may insert therein of them the balance may be withdrawn by
the true date of issue or acceptance, and the survivor.
the bill shall be payable accordingly." For An authority may be cancelled by either
stamp purposes no bill of exchange or pro- party at any time.
missory note may be stamped with an Any claim that the executors of a deceased
impressed stamp after the execution thereof. joint holder ma}- have upon the money is a
See Stamp Act, 1891, Section 37 s.s. 2. ; matter for arrangement with the survivor,
ISSUE OF CHEQUE. TheEx-Bills of with which the bank is not concerned.
change Act, 1SS2, specially provides that, Even if the deceased mentions the joint
except as otherwise stated, the rules applic- account in his will, the banker is not bound
able to bills of exchange are also applicable by the will, and, unless he receives notice
to cheques. The definition of the " issue of from the executors not to do so, he may pay
a cheque," therefore, is the same as that the balance to the survivor. If the legal
given for a bill in the preceding article. representatives of the deceased give notice
ISSUE PAR. The price at which the stock to the banker not to pay the balance to the
or shares of a company is issued to the public. survivor, the banker should not pay it, un-
(See Par.) less the cheque is signed both by the survivor
ISSUED CAPITAL. That part of the and the legal representatives. A banker has
nominal or authorised capital of a company nothing to do with any question of payment
which has been issued by the directors and of probate duty when he parts with a balance
been taken up or subscribed by the share- to the survivor. (See Probate.)
holders. The issued capital may be fully Where an account stands in several names
paid up, or it may be only partly paid up, the and one of the persons dies, it is better that
remainder being the " uncalled " capital. the balance should be transferred by cheque
(See Capital.) to a new account in the names of the sur-
vivors, than that the deceased's name should
JOBBER. (See Stock Jobber.) be merely dropped out when the next
287
JOI] DICTIONARY OF BANKING [JOI
heading is written in the ledger. The cheque sign a cheque along with Brown for the
transferring the balance to the new account amount required, in the event of the death
should be signed by all the survivors, unless a of Jones, his estate cannot legally be held
mandate is held for one, or more, of the liable for the debt, and if Jones' representa-
number to sign. tives repudiate the debt, the banker has only
Where one of the parties is authorised to Brown to depend upon for repayment. That
sign, the method of signing should be, e.g. is the decision of the Court in Other v. Iveson
"For John and Thomas Brown and self, (1855, 24 L.J. Ch. 654), where money was
Wm. Brown." The name of the account lent to two brothers on the strength of the
should appear upon the cheque as well as cheque being signed by a third brother. The
the signature of the person drawing it. third brother died and his executors were
If a banker realises securities belonging to sued by the bank. It was held that the
several persons, the proceeds should not be liability was not joint and several but joint
paid to one of those persons, unless under only, and therefore that the survivors onlv
an authority to do so signed by all of 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 in some way
receipt, and if in the names of husband and against the risk of that party dying before
wife it should also say " or survivor " if that J
the money is repaid. Probably the best plan
is the intention. |
is for the parties to sign a guarantee for the
Where there are several joint debtors, in account. (See Jointly and Severally.)
order to keep the debt alive against every- JOINT STOCK BANK. A bank in which
one of them (that is, to prevent the 'operation the capital is subscribed by the shareholders.
of the Statute of Limitations), there must The London and Westminster Bank (now
be an acknowledgment of the debt from each theLondon County and Westminster) was
one of them, unless they are members of a founded in 1834 and the London Joint Stock
partnership firm or one of them is authorised Bank in 1836. (See Banking Company.)
to sign for the rest. The fact that one of JOINT STOCK COMPANY. A company,
the joint debtors acknowledged a debt would or association of individuals, having a
not prevent the others from pleading the joint or common stock or capital. (See
statute. As to what constitutes an acknow- Companies.)
ledgment of a debt, see Statute of Limita- JOINT TENANTS. Where property is
tions. granted to two or more persons, as joint
A loan by way of a promissory note is on tenants, they have each an equal interest or
the same footing as a joint account, and each right in the whole of the property. The
maker must acknowledge the debt, other- important point about a joint tenancy is
wise at the expiration of the six years each that when one of the joint tenants dies his
party who has not acknowledged has the interest in the property passes to the sur-
right to consider himself freed from liability. viving joint tenants. A joint tenant cannot
(See Promissory Note.) dispose of his interest by will, but during his
In the event of the failure of one of the lifetime he may convey his share to anyone.
parties on a joint account which is over- The outsider who purchases the share of a
drawn, the solvent party is liable for the joint tenant becomes a tenant in common.
amount of the debt ; if the account is in If one of the tenants purchases the share of
credit the solvent party may, in an ordinary another, the transfer is effected by a release,
case,withdraw the balance. If there is any not by a conveyance, because each joint
doubt, the trustee in bankruptcy should tenant is already equally possessed of the
be consulted. (See Section 47, Bankruptcy whole property. The share of each tenant
Act, 1883, under Settlements Settlor — must be equal, and their interests all created
Bankrupt.) at the same time and by the same instru-
In the case of a joint account (not a part- ment. If there is only one surviving joint
nership account) which is overdrawn, if one tenant he is the sole owner, and may dispose
of the parties dies, his estate will not be liable of the property by will.
for the debt, and the banker must look to the In the event of a property being devised
survivor for payment. If, for example, John to several persons without stating whether
Brown (who is a poor man) applies for a loan, they are to be joint tenants or tenants in
and John Jones (who is a rich man) agrees to common, they are regarded as joint tenants.
288
.
The difference between joint tenants and signed a promissory note from pleading the
tenants in common should be noted. A Statute of Limitations, whether they have
tenant in common has a separate and dis- signed " jointly " or " jointly and severally."
tinct share in the property which he can (See Statute of Limitations.)
dispose of by will. The survivor in a An ordinary cheque, signed by more than
tenancy in common does not become the one individual, is not a joint and several
owner of the whole property. One tenant document. (See Promissory Note.)
in common ma_v transfer his share to another JOINTURE. An estate in lands settled
tenant by conveyance. Their shares may upon a woman, which she is to possess after
be equal or unequal, and their shares need the death of her husband.
not, necessarily, be all created at the same JUDGES' ORDERS. (See Charging
time or under the same instrument. Order, Garnishee Order.)
Where deeds of a joint tenancy are de- JUDGMENT AFFECTING LAND. By
posited as security, the document of charge the Land Charges Registration and Searches
should be signed by all the joint tenants, and Act, 1888 :—
it is advisable that a banker's legal mortgage " Section 5. (1) There shall be established
be taken. (See Coparceners, Tenants and kept at the Office of Land
in Common.) Registry a register of writs and
JOINTLY AND SEVERALLY. Where a orders affecting land, and there may
promissory note is drawn by several makers be registered therein, in the pre-
" we jointly and severally promise to pay," scribed manner, any writ or order
each maker is liable for the full amount of affecting land issued or made by any
the note but if the note is worded " we
; Court for the purpose of enforcing a
promise " or " we jointly promise " the judgment, statute, or recognisance,
makers are liable as a whole and not indi- and any order appointing a receiver
vidually for the full amount. Where a note or sequestrator of land.
" I promise to pay " is signed by several " (2) Every entry made in pursu-
persons it is by Section 85, s.s.2, of the Bills ance of this Section shall be made
of Exchange Act, 1882, deemed to be their in the name of the person whose
joint and several promise. land is affected by the writ or order
It is obviously to the advantage of a registered.
banker that parties liable to him jointly
all " (3) The registration of a writ or
should be liable severally as well he can then, ; order in pursuance of this Act shall
if necessary, sue all together for the whole cease to have effect at the expiration
amount of the debt, or sue each party of five years from the date of regis-
separately for the whole amount. If one is tration, but may be renewed from
sued and the banker fails to obtain payment time to time, and, if renewed, shall
in full, the remaining parties may then be have effect from the date of renewal.
sued. If one of the makers of a joint and " (4 Registration of aw-rit or order
1
several note dies, his estate is liable, but if in pursuance of this Section shall
the note is joint only, the estate of a deceased have the same effect as, and make
maker is not liable. unnecessary, registration thereof in
Where a joint account is overdrawn the the Central Office of the Supreme
liability is and if one of the
joint only, Court of Judicature in pursuance of
parties dies the survivor becomes liable for any other Ai t
2SM
«9— C535)
— '
For the protection of persons dealing with act as a special juryman. (Juries Act, 1890,
land, necessary that any judgments or
it is Section 6.)
orders should be duly registered in some
convenient place, where an examination can 1
KAFFIR CIRCUS. A Stock Exchange
be made of any documents which show how name for the market for South African
the land is affected by judgments or orders shares.
which have been pronounced. The above KAFFIRS. A Stock Exchange name for
sections of the two Acts named are the South African mining shares.
most important provisions with respect to KANGAROOS. A Stock Exchange name
this matter, and the effect of them seems to for West Australian mining and land shares.
be as follows : If a judgment is entered up KEEPING HOUSE. The Bankruptcy
affecting land after the 1st January, 1889, Act, 1883, Section 4, s.s. 1, d, enacts that a
an intending mortgagee, for example, is debtor commits an act of bankruptcy if,
completely protected in dealing with the with intent to defeat or delay his creditors,
land, if a search is made at the Land Registry he begins to keep house. A debtor " keeps
Office for writs and executions for the pre- house " when he confines himself to the house
ceding five years. It is only if the land has and refuses to see a creditor who calls to see
been actually executed upon, and if the him for payment of the debt.
writ or execution has been registered or KEY REGISTER. A book kept at the
re-registered, so that the last registration head office of a bank in which is preserved
or re-registration has been made within five a complete list of all the keys of the strong
years preceding the date of the security that rooms, safes, etc., at the head office and
the mortgagee would be postponed as to his branches, as well as a list of the holders of the
own security to the judgment creditor whose keys.
judgment or writ is registered. And as to a KITE-FLYING. Raising money by
judgment entered up after the 1st July, accommodation bills.
1901, the intending mortgagee has only to KITES. A name given to accommodation
see that no writ or order for enforcing a bills (q.v.).
judgment has been registered under Section 5 KOPEK. (See Foreign Moneys— Russia.)
of the Land Charges Registration and KRAN. (See Foreign Moneys Persia.) —
Searches Act, 1888, and this is so whether KRONE. (See Foreign Moneys-
the judgment has been obtained before or Austria and Hungary.)
after the 1st July, 1901. KRONER. (See Foreign Moneys —
JUDGMENT CREDITOR. Where a Norway, Sweden and Denmark.)
creditor has obtained judgment against a
debtor for the payment of a debt, he may LAC, OR LAKH. A lac, or lakh, of
enforce the judgment in various ways : rupees equals 100,000 rupees. The figures
1. By writ of fieri facias [q.v.), by which are usually written as Rs. 1,00,000, Rs.
the sheriff can seize the debtor's 24,00,000, to show the number of lacs, the
goods. lacs in those two examples being, of course,
2. By writ of elegit [q.v.), by which the one and twenty-four.
sheriff can take possession of the The value of a lac is about ^6,667, a rupee
debtor's lands. being, say, Is. \d. 100 lacs is a crore.
; (See
3. By garnishee order {q.v.), by which Foreign Moneys-— India.)
debts due to the debtor from a third LACHES. A legal term for neglect of such
person, e.g. a banker, can be attached. a nature as to be prejudicial to the rights of
4. By a charging order [q.v.), by which the person who has been negligent.
290
. —
For example, a banker may pay an un- describing the objects and practical working
crossed cheque drawn upon him and debit of the system of registration of title :
it to his customer's account even though the 1 A register of title is, essentially, a list
indorsement should subsequently turn out of the owners of land, with particulars of the
to be a forgery, provided that the payment properties they own, and of the mortgages
is made in good faith, in the ordinary course and other incumbrances which affect them.
of business and without negligence. If the Legal validity is given to this list by Act of
banker is guilty of negligence, or laches, Parliament, it is kept constantly up to date
his right to debit the cheque may be called by the entry of all changes of ownership as
in question. soon as they occur, and its correctness is
LAME DUCK. A name sometimes given guaranteed by the Government. The con-
to a defaulter on the Stock Exchange. sequence is that an intending purchaser of
LAND CERTIFICATE. A certificate registered land has no need to make any
under the seal of the Land Registry, contain- private inquiry into the title ; he merely
ing complete copies of the entries in the has to see that the person he is dealing with
register. It is issued to the owner of the is the registered proprietor.
by the lord of the manor is necessary to give can be protected by a notice on the register,
the purchaser a good title. A lease created fur a fee of one shilling.
for the purposes of mortgage, or containing 21. When registered land is transferred or
an absolute prohibition against alienation, charged, the proprietor executes an instru-
or leases with less than twenty-one years to ment of transfer, or charge, in a short simple
run cannot be registered. The registration form which can be obtained at the registry
of leases having less than forty years to run is (see Schedule I). The purchaser brings or
not compulsory. posts this to the registry (address Land
The registration of land in the Land Registry, Lincoln's Inn Fields, London,
Registry supersedes the registration of deeds W.C.), with a fee of Is. 6d. per £25 of value,
in the Middlesex Deeds Registry. and in the case of a transfer the "Id pro-
The following paragraphs are taken from prietor's name is cancelled, and that of the
a statement issued by the Land Registry new proprietor is entered in its place. In
291
a
292
—
William Smith
in the presence of ,11". Smith. Value. Fee.
Thomas Jones
Not exceeding 6d. for every £25 Is.
645, Regent Street,
I
of
£50,000 or part of £25.
. . . I
Jeweller's Assistant
Exceeding £50,000, ,£150 for the first
and not exceed- £50,000 and £1 10s.
Instrument of Charge of the Whole of ing £100,000 for everv £1,000 or
the Land comprised in a Title. part of £1,000 over
1
/50.000.
Exceeding £100,000 £225.
Land Registry.
Land Transfer Acts, 1875 and 1S97.
The following examples show how this
scale works out at various typical values :
District London
Parish Lambeth
No. of Title 020376
1st of January 190 5. In con-
sideration of six hundred pounds iiiiiii
r2o .
I, James Robinson £
of 1620, Oxford Street, II"., Manufacturer £300
£700
£1,000
£5,
hereby charge the land comprised in the title i In,
above referred to with the payment to £20,000
John Brown £50,
£ 0, or ov
of 105, Lombard Street, E.C., Banker
Value. tee.
Fee.
£50 .
£100 .
£300 .
£700 .
£1,000 .
£5,000 .
£10,000
£20,000
£50,000
£100,000
— —
dealings affecting the charge shall from time and the Registrar will enter the notice in
to time be entered on the certificate." the Register and deliver the certificate, when
The charge is equivalent to a mortgage of ready, to the person named in the notice.
unregistered land and may be given as The Land Transfer Rules provide :
security to a banker ; and a deposit of a " 250. The notice of deposit or notice of
certificate of charge is equal to the lien intended deposit may be withdrawn from
created by the deposit of a mortgage deed. the Register on a written request or consent
Section 8 of the Land Transfer Act, 1S97, signed by the person entitled to the lien
provides : — created by the deposit, or notice of intended
" Theregistered proprietor of any freehold deposit, or his successor in title accom- ;
or leasehold land, or of a charge may, subject panied in either case by the land certificate,
to any registered estates, charges, or rights, or certificate of charge.
create a lien on the land or charge by deposit "251. The lien created by the deposit of a
of the land certificate or office copy of certificate or by notice to the Registrar
registered lease, or certificate of charge ; and under Rule 244 shall be subject to any
such lien shall, subject as aforesaid, be unregistered estates, rights, or interests
equivalent to a lien created by the deposit of protected by caution or other entry on the
title deeds or of a mortgage deed of unregis- Register at the time of the creation of the
tered land by an owner entitled in fee simple lien, and in the case of good leasehold, quali-
or for the term or interest created by the fied, or possessory title, to estates, rights
lease for his own benefit, or bv a mortgagee and interests excepted from the effect of
beneficially entitled to the mortgage." registration."
When a land certificate or certificate of All the necessary forms may be obtained
charge is deposited as security the usual from the Registry.
memorandum of deposit should be taken, and LAND REGISTRY (MIDDLESEX DEEDS).
notice of the deposit should be given to the By the Land Registry (Middlesex Deeds)
Registrar and an acknowledgment received. Act, 1891, it was enacted that the Middlesex
When the security is done with, a form of Registry shall be tr; to the Land
[
295
— — —
office. Deeds or memorials of deeds are regis- of an inch wide, and shall be left at
tered at the Middlesex Deeds Registry. At the office by hand, and shall bear Land
the Land Registry {q.v.) the title is registered. Registrv stamps for the amount of the fees,
The Middlesex Deeds Registry applies to and shall be accompanied by the original
all the county of Middlesex and also to all instruments and mortgages respectively.
the county of London north of the Thames, "4. Where the original instrument con-
but not to the city of London. Copyholds, tains a plan, a copy thereof (or of so much
leases at a rack rent, occupation leases for thereof as is referred to in the memorial)
twenty-one years or less are not registered shall be drawn on the memorial, unless owing
at the Middlesex 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 officer of the office. Xo 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 sign-
such deed is registered. ing thereof or the execution of the instru-
Any may search the Register kept
person ment to which it refers ; but the signing of
in the LandRegistry. the certificate of satisfaction of a mortgage
Paragraph 14 of the above-named Act is as shall continue to be verified by oath as
follows : heretofore.
" Any person deriving title under an in- " 6. The witness to the memorial shall be
strument (capable of registration under the a witness or one of the witnesses (if any) to
Acts relating to the Middlesex Registry) the original instrument, unless at the date of
which confers on him the right to apply for the memorial every such witness is dead or
registration with a possessory title, of the absent from the United Kingdom or cannot
land comprised in it under the Land Transfer be found, or some other sufficient cause
Act, 1875, may, at his option, either register exists to prevent it. In such cases a statu-
a memorial of an instrument under the Acts tory declaration shall be furnished, and left
relating to the Middlesex Registry, or apply with the memorial at the Registry, stating
for registration with possessory title under the reason why the witness to the memorial
the Land Transfer Act, 1875. Such regis- is not one of the witnesses to the instrument.
" 9. An ordinary search shall be a search
tration shall, when completed, bear the same
date as the application, and render unneces- made against one name on one day by a
sary the registration of the instrument under person not an officer of the Registry, in any
the Acts relating to the Middlesex Registry." of the indexes, books, or documents open to
It should be noted that, with regard to the public inspection.
Middlesex Registry, registration does not "10. An official search shall be a search
give to a person who has registered his mort- made by an officer of the Registry, in the
gage or deed, any claim to priority over an index onlv, for certain specified years, for all
unregistered prior deed or charge of which entries therein, against one name, affecting
he had notice before registering. This rule lands in a specified parish.
' 12. An official certificate of the result of
differs from that of the Yorkshire Registries.
A mortgagee is not obliged to search the every official search shall be issued from the
register, and a registered deed conveying Registry to the applicant, and a copy, or
the legal estate will take priority to a prior other sufficient record of the same, shall be
registered equitable charge, unless the kept in the office.
" 13. Applications for official searches shall
mortgagee had notice of the prior charge.
Registration in Middlesex does not prevent be subject to the following provisions :
The following are some of the principal for any sufficient reason shall appear
rules under the Land Registry (Middlesex to be impracticable to complete.
Deeds) Act, 1891 :— (6) That the Lord Chancellor
may make
" 2. Memorials, and certificates of satisfac- regulations limiting or extending the
tion of mortgages, shall be written or printed period to be covered by official
on the best white loan paper, 16 inches long by searches."
10 inches wide, with an inner margin 2 inches The following is the form of memorial of a
wide and an outer margin three-quarters deed to be registered :
296
— — * — —
Memorial of a Deed.
Land Registry. Middlesex Deeds Acts.
* [If named in
the deed.) Grantor's Surname. Parish.
Date of deed :
Parties :
• ^As in the
deed.]
Description of lands :
—
Witnesses to execution of 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 :
This is to certify that the subjoined list contains all the entries in the index for the
years to inclusive, appearing therefrom to affect lands in the parish(es)
of entered against the following name :
Surname. :
.
1
1 :
Name
297
——
List of Entries.
If more entries are found than at the Switzerland, and Belgium it is the franc, in
rate of 10 for every 5 years, then Italy the lira, and in Greece the drachma.
for every 5, or part of 5, extra Austria, Finland, Roumania, Servia, and
entries 10 Spain have adopted the system but without
LAND TAX. Where the tax has not been joining the Union. (See Scandinavian
redeemed, it is payable at a rate not exceed- Monetary Union.)
ing one shilling in the pound upon the annual LAW MERCHANT. The rules of common
value of the property. law, including the law merchant, save in so
By the Finance Act, 1898, where the far as they are inconsistent with the express
owner's income does not exceed /160 per provisions of the Bills of Exchange Act,
annum he is exempt from the tax, and where 1882, apply to bills of exchange, promissory
his income does not exceed £400 exemption notes, and cheques (Section 97, s.s. 2, of
is granted to the extent of one-half. that Act).
The tenant of a house pays the tax in the The law- merchant is neither more nor
'
'
first instance, but (unless he has agreed less than the usages of merchants and traders
with the landlord to pay all rent and taxes) in the different departments of trade, rati-
he is entitled to deduct the amount from fied by the decisions of courts of law, wr hich,
the next payment of rent. upon such usages being proved before them,
By the Finance Act, 189S, the tax may be have adopted them as settled law ..."
redeemed on payment of thirty times the (Goodwinv.Robarts, 1875. L.R.10Exch.337).
amount of the tax which it is desired to LEASE AND RELEASE. Prior to the
redeem. Persons who hold at a rack rent, year 1841 the usual method of conveyance
and tenants who hold under the Crown, are of a freehold estate was by a lease and
not allowed to redeem the tax. release. On one day a lease was granted
29S
LEA] DICTIONARY OF BANKING [LEA
for one year to the person to whom the land it isa waiver of any breach of covenant of
was to be transferred, and on the following which the landlord was aware before giving
day a release was granted to him. In olden the receipt, but it is not a waiver with
times a transfer of land was effected by regard to any breach of which he was
means of actual delivery, " livery of seisin " ignorant.
(g.v.) (i.e. delivery of possession), a method A perusal of the deeds will show the nature
of transfer called " feoffment " (g.v.). A of the covenants, and some of them may be
conveyance by lease and release had the very burdensome. A banker taking an
same By
the lease the lessee was
effect. assignment of a lease becomes liable for all
placed in actual possession of the land, and the covenants, but if a mere deposit of the
the next day the grantor released the free- deeds is taken, or a sub-demise, if allowable,
hold or reversion to the lessee, thus making for a day or two short of the remainder of
him the owner. From 1841 to 1845 a the term of the lease, he does not incur any
" release " alone was sufficient to answer liability on the covenants there is, how-
;
the purpose, in accordance with 4 & 5 Vict. ever, the danger that the lease mav be for-
c. 21, "An act for rendering a release as feited through failure of the lessee to fulfil
effectual for the conveyance of freehold the conditions contained therein.
estates as a lease and release by the same Where any part of the property of a bank-
parties." In 1845 it was enacted that the rupt consists of land of any tenure burdened
conveyance of freeholds shall be deemed to with onerous covenants, the trustee may,
lie in grant as well as in livery. Since that with leave of the Court, disclaim the pro-
date freehold land has therefore been perty. Where a trustee disclaims leasehold
transferred by a deed of grant called a property " the Court shall not make a
conveyance. vesting order in favour of any person claim-
LEASEHOLD. (Saxon
leasum, to enter ing under the bankrupt, whether as under-
lawfully.) Where
the owner of freehold land lessee or as mortgagee by demise, except
grants it to a person for a term of years it is upon the terms of making such person
called a lease and the land is then leasehold. subject to the same liabilities and obligations
The person leasing it is the lessor, and the as the bankrupt was subject to under the
party in whose favour the lease is given is lease in respect of the property at the date
the lessee. When a lease is granted for when the bankruptcy petition was filed,
more than three years the land is " de- and any mortgagee or under-lessee declining
mised " by deed to the lessee. (But see to accept a vesting order upon such terms
Walsh v. Lonsdale, 1882, 21 Ch. D. 9). shall be excluded from all interest in and
When the lessee transfers the land to some securitv upon the propertv " (Section 55,
one else he " assigns the lease." s.s. Bankruptcy Act, 188'3).
6,
In Camberwell and South London Building A cannot compel an equitable
lessor
Society v. Holloway (1S79, 13 Ch. D. 754). mortgagee by deposit of a lease to take a
Jessel, M.R.. said "The word 'lease' in
: legal assignment, but if the mortgagee
law a well-known legal term of well-
is enters into possession of the property he is
defined import. No lawyer has ever sug- liable on the covenants of the lease.
gested that the title of the lessor makes any If there is a covenant in the lease that the
difference in the description of the instru- lessee cannot sub-demise or assign without
ment, whether the lease is granted by a the consent of the lessor, the licence of the
freeholder, or bv a copyholder, with the lessor should accompany the deeds where
licence of the lord, or by a man who himself there is an assignment or sub-lease. (See
is a leaseholder. It being well granted for Licence to Assign.)
a term of years it is called a lease. It is It is the rule in open contracts that a
quite true that where the grantor of the purchaser of leasehold property is precluded
lease holds for a term, the second instrument from inquiring into the title of the 1
299
— — —
— :
shall assume, unless the contrary to an abstract of the lease even though more
appears, that the lease was duly than, sixty years old.
granted ;and, on production of the Where a sub-lease is deposited as security,
receipt for the last payment due for it should be accompanied by an attested
rent under the lease before the date copy of the original lease.
of actual completion of the pur- If parts of a leasehold property have been
chase, he shall assume, unless the sub-leased, the counter parts of the sub-leases
contrary appears, that all the cove- should accompany a deposit of the lease or
nants and provisions of the lease assignment thereof.
have been duly performed and By the Finance (1909-10) Act, 1910,
observed up to the date of actual Section 75, it is enacted that the stamp
completion of the purchase." duties chargeable under the heading " Lease
Where land sold is held by under-lease, or Tack" in the Stamp Act, 1891, shall
the purchaser shall assume, unless the con- be double the duties which would have
trary appears, that the under-lease and been chargeable immediately before the
every superior lease were duly granted, and passing of this Act under that heading,
on production of the last receipt for rent he but this Section shall not apply in the case
shall assume that all covenants and pro- of leases or tacks on which a fixed duty of
visions of the under-lease and of every a penny is chargeable under that heading.
superior lease, as well as all rent due, have (The Finance Act was passed April 29, 1910.)
been duly performed and paid up to date '
!
^
lodged by a borrower who has obtained the jectS except
J r or Other-" rent reserved
,, . P , for the definite
.
property consequent upon the death of the wise than as aforesaid term. I
previous owner, it should be remembered (3) For anv other definite term
that the legal estate may still be held by the or for any indefinite term :
300
LEA] DICTIONARY OF BANKING [LEA
term does
*™ If the
e
acceed _ frt „ term
35 y^rs. « d J exceeds
roo years.
— '
Certain Cases may be Denoted by in the United Kingdom of Great Britain and
Duty in
Adhesive Stamp. Ireland constituted under or regulated by
the provisions of any Act of Parliament,
"78. (1) The duty upon an instrument Royal Charter, or letters patent, issuing
(
'
imprisonment.
security but, when the term is for a less
; This Act is still in but its provisions
force,
period, it is necessary that the assignee are disregarded the London Stock
on
enter into possession, otherwise the assign- Exchange, as it is not the practice to specify
ment does not hold good as against creditors. the numbers of bank shares on the contract
(See Title Deeds.) note. Where a person, in ignorance of that
LEEDS. A Stock Exchange name for practice, instructed his brokers to purchase
Lancashire and Yorkshire Railway ordinary for him certain shares in a joint stock bank,
stock. and, before the settling day, repudiated the
LEEMAN'S ACT. (30 Vict. c. 29.) The contract, it was held (Perry v. Barnett, 1S85,
name of an Parliament (passed with
Act of 15 Q.B.D. 388) that the contract, which was
the intention of preventing speculation in made contrary to this Act, was not binding
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
302
— —
the Stock Exchange he cannot repudiate the Succession duty (and not legacy duty) is
contract. payable upon legacies which are charged
Sections 2 and 3 of the Act are as follow :
upon the proceeds of a sale of real estate,
" 2. Joint stock banking companies shall be or where the personal estate is insufficient
bound to show their list of shareholders to any and real estate has to be resorted to for pay-
registered shareholder during business hours, ment, the legacies are liable to a deduction
from ten of the clock to four of the clock. for the rateable part of the duty which
" 3. This Act shall not extend to shares or results from the real estate. (See Succes-
stock in the Bank of England or the Bank sion Duty.) When the deeds of any such
of Ireland." property are lodged as security the succes-
LEGACY DUTY. The duty which is sion duty receipts should accompany the
payable upon bequests of personalty by a deeds.
testator who is domiciled in the United Legacy duty is not levied where the total
Kingdom at the time of his death. value of the personalty does not exceed
The legacy duty rates payable upon the |
^100, nor where the net value of the estate
amount of any legacy, as amended by the does not exceed £l,000, and estate duty
Finance (1909-10) Act, 1910, Section 58, are has been paid. Legacy duty is not payable
as follows : on legacies to lineal descendants if estate
duty has been paid. (See Executor.)
Lineal ancestors or descend-
ants of the testator . . 1 per cent.
LEGAL ESTATE. A person has the legal
estate in land when his title to it is complete.
Brothers and sisters of th
For f xample, where land has been conveyed
testator, or their descend-
to John Brown in fee simple he has the legal
ants 5 per cent.
estate in it. If John Brown conveys it to
Uncles and aunts of the tes-
Jones by way of mortgage to secure the re-
tator, or their descendants 10 per cent.
payment of money lent by Jones to Brown,
Great uncles and great aunts
the kgal estate then vests in Jones, but
of the testator, or their
Brown retains an equitable estate in the
descendants, . . . . 10 per cent.
Any other person. ... 10 per cent.
land.
the
If the debt is not paid according to
terms of the mortgage deed, Jones
Prior to the Finance (1909-10) Act, 1910. becomes, according to law, the owner of the
the husband or wife were not chargeable land, but, according to equity, Brown ha3
with legacy duty on property settled or still the right to redeem the land upon
bequeathed by the other, but this exemption payment of the principal with all interest
did not apply to property settled or be- due and certain costs incurred by Jones in
qeathed by any other person but by the ;
connection with the land. This right is
above Act the duty at the rate of 1 per called the equity of redemption.
cent, is payable where the person taking If land is conveyed to Brown as trustee
the legacy is the husband or wife of the for Jones, the legal estate vests in Brown,
testator, as in cases where the person is a but the equitable estate vests in Jones,
lineal ancestor or descendant but the duty;
!
property. If the difference between the insurable nature. (By Section 23,
amount of the mortgage and the value of the unless an amount is fixed in the
property is considerable, he may, if he wish, mortgage deed the insurance shall
borrow further sums upon a second or a not exceed two-third parts of the
third mortgage, but each mortgage subse- amount that would be required, in
quent to the first is merely an equitable case of total destruction, to restore
mortgage, becausethe legal estate is already the property.)
vested in the first mortgagee, and the mort- (c) A power, when the mortgage money
gagor can only convey what he has left that— has become due, to appoint a
is, an equitable estate in the property. If receiver of the income of the
the mortgagor sells the equity of redemption, mortgaged property or any part
his interest in theproperty is altogether ex- thereof
tinguished. (See Equity of Redemption.) (d) A power while the mortgagee is in
The date for repayment of a mortgage is possession to cut and sell timber.
usually six months, but the period inserted By Section 20 of the same Act :
in mortgages to bankers is often a shorter " A mortgagee shall not exercise the
time, and frequently the money is made power of sale conferred by this Act unless
repayable on demand. If the borrower and until :
does not repay the money at the end of the "(1) Notice requiring repayment of the
prescribed time, or after demand, the mort- mortgage money has been served on
gagee becomes, by law, the full owner of the the mortgagor, or one of several
property. But, although legally he has mortgagors, and default has been
become the owner, the mortgagor still made in payment of the mortgage
retains his equity of redemption and can money, or of part thereof, for three
demand a re-conveyance to himself or a months after such service
; or
transfer of the mortgage to some other party " (2) Some interest under the mortgage is
on payment of the amount owing with in arrear and unpaid for two months
interest and certain charges which may have after becoming due j or
been incurred by the mortgagee in keeping " (3) There has been a breach of some pro-
up the property. vision contained in the mortgage
Unless a contrary intention is expressed deed or in this Act, and on the part
in the mortgage deed, a mortgagee, where of the mortgagor, or of some person
the mortgage is made by deed, shall, by concurring in making the mortgage,
virtue of the Conveyancing and Law of to be observed or performed, other
Property Act, 1881, Section 19, have the than and besides a covenant for
following powers, to the like extent as if payment of the mortgage money or
they had been in terms conferred by the interest thereon."
mortgage deed, but not further, namely : In a banker's mortgage, however, it is
(a) A power, when the mortgage money generally expressly stipulated that his right
has become due, to sell, or to concur to sell the property shall arise immediately
with any other person in selling, the default is made after demand, or on default
mortgaged property, or any part at the end of, say, a period of one month
thereof, either subject to prior after demand. Notice of the intention to
charges, or not, and either together exercise a power of sale should be given to a
or in lots, by public auction or by second mortgagee, if there is one, as well as
private contract, subject to such to the mortgagor.
conditions respecting title, or evi- A mortgagee by deed may either sell the
dence of title, or other matter, as property or appoint a receiver (see Re-
he (the mortgagee) thinks fit, with ceiver) or enter into possession (see Mort-
;
power to vary any contract for sale, gagee in Possession), but he cannot fore-
and to buy in at an auction, or to close without an order of the Court. He can
rescind any contract for sale, and to also sue the mortgagor on the covenant to
without being answerable for
re-sell, repay contained in the mortgage deed, within
any occasioned thereby
loss ;
twelve years from the last payment of
(6) A power, at any time after the date interest by the mortgagor or acknowledge-
of the mortgage deed, to insure and ment of the debt. A mortgagee cannot sell
keep insured against loss or damage the property to himself, or to his own
bv fire any building or property of an a^ent.
304
— —
Bv Section 25 of the Conveyancing and the mortgagee may claim upon the mort-
Law of Property Act, 1881 :— gagor for the deficiency. If, however,
" (1) Any person entitled to redeem mort- instead of selling, the mortgagee forecloses,
gaged property may have a judg- he has no further claim upon the mortgagor.
ment or order for sale instead of for Where a banker takes a mortgage for a
redemption in an action brought by fixed amount, the loan should be upon a
him either for redemption alone, or separate account. A mortgage for a fixed
for sale alone, or for sale or redemp- amount is not a security to cover a working
tion in the alternative. account, as each payment to credit is in
" (2) In any action, whether for fore- effect so much deducted from the amount
closure, or for redemption, or for of the mortgage, and any future advances
sale, or for the raising and payment would not be covered by it. Further, where
in any manner of mortgage money, the mortgage to the banker is for a fixed sum,
the Court, on the request of the simple interest only, in the absence of any
mortgagee, or of any person inter- agreement to the contrary, can be charged.
ested either in the mortgage money By Section 40 of the Property Tax Act,
or in the right of redemption, and, 1853, a mortgagor may deduct income tax
notwithstanding the dissent of any from the amount of interest payable on his
other person, and notwithstanding mortgage. (See Income Tax.)
that the mortgagee, or any person John Brown can deposit as security for his
so interested does not appear in the working account a mortgage to himself from,
action, and without allowing any say, John Jones, and the property, to the
time for redemption or for payment extent of the mortgage, will form a con-
of any mortgage money, may, if it tinuous security. Where a deposit of a
thinks fit, direct a sale of the mort- mortgage deed is taken, the banker should
gaged property, on such terms as it give notice to the mortgagor, in the above
thinks fit. including, if it thinks fit, supposed case to John Jones, that the
the deposit in Court of a reasonable deed has been lodged with him as security.
sum fixed by the Court, to meet the Unless such notice is given, the banker
expenses of sale and to secure per- might find ultimately that John Jones
formance of the terms." had been gradually repaying the debt to
Where a sale has been effected under a '
305
20— (I5J5)
LEG] DICTIONARY OF BANKING [LEG
paid, say, within a month, the bank shall be money, or as purporting that the holder
entitled to exercise the power of sale con- thereofis entitled to demand any value
ferred on mortgagees by statute. It is also denoted thereon."
stipulated in the mortgage that the security By 24 and 25 Vict. c. 99, Section 7, "no
shall not be affected by any other security tender of payment in money made in gold,
held or that may hereafter be held by the silver, or copper coin, defaced by being
bank, and that the bank shall have power stamped with any name or words thereon,
to give time for payment to any other person whether such coin shall or shall not be
liable for the moneys secured by the mortgage. thereby diminished or lightened, shall be
When the security is no longer required allowed to be a legal tender."
the property is reconveyed by the bank, by The gold coinage made at the mints of
an indorsement upon the mortgage deed to Sydney, Melbourne, and Perth (Western
the effect that the bank conveys unto the Australia) was declared legal tender in the
mortgagor all the premises which are vested United Kingdom by Royal Proclamation in
in the bank, subject to redemption, by virtue the years 1866, 1869, and 1897 respectively.
of the within written indenture, to hold the Pre- Victorian sovereigns and half-sove-
same unto the mortgagor freed and dis- reigns are not now legal tender. They were
charged from all moneys secured by the called in by the Coinage Act of 1889.
within written indenture. (See Mortgage, A creditor is not obliged to give change
Title Deeds.) when notes are offered to a greater value
LEGAL TENDER. A legal tender is a than the amount of the debt.
tender of money of such description that the Notes.—By 3 & 4 Will. IV, c. 98, Section
person to whom it is tendered will put him- 6 :
—
" A tender of a note or notes of the
self in the wrong if he refuses to accept it. Bank of England, expressed to be payable
A legal tender requires that the exact to bearer on demand, shall be a legal tender,
sum of the debt must be tendered, without to the amount expressed in such note or
necessitating any change. notes, and shall be taken to be valid as a
Coins.—The Coinage Act, 1870 (33 Vict, tender to such amount for all sums above
c. 10,) Section 4, enacts " a tender of pay- five pounds on all occasions on which any
ment money, if made in coins which have
of tender of money may be legally made, so
been issued by the Mint in accordance with long as the Bank of England shall continue
the provisions of this Act, and have not been to pay on demand their said notes in legal
called in by any proclamation made in coin provided always, that no such note
;
pursuance of this Act, and have not become or notes shall be deemed a legal tender of
diminished in weight, by wear or otherwise, payment by the governor and company of
so as to be of less weight than the current the Bank of England, or any branch bank
weight, that is to say, than the weight (if of the said governor and company but the
;
any) specified as the least current weight in said governor and company are not to
the first schedule to this Act, or less than become liable or be required to pay and
such weight as may be declared by any satisfy, at any branch bank of the said
proclamation made in pursuance of this Act, governor and company, any note or notes
shall be a legal tender, of the said governor and company not made
" In the case of gold coins for a payment specially payable at such branch bank ; but
of any amount : the governor and company shall be liable
" In the case of silver coins for a payment to pay and satisfy at the Bank of England
of an amount not exceeding forty shil- in London all notes of the said governor and
I
306
—
In England and
— — — —
have been allotted to him and requesting The word " share " in the^above schedule
payment of the amount due to be paid upon includes a fractional part of a share (Revenue
the shares. Act, 1909, Section 9).
The following is a specimen of a letter of By the Stamp Act, 1S91, Section 79 :
allotment :
" (1) Every person who executes, grants,
issues, or deliversout any document
The A.B. Company, Limited,
chargeable with duty as a letter of
Carlisle ,19 .
allotment, letter of renunciation, or
Sir- scrip certificate, or as scrip, before
In reply to your application the directors the same is duly stamped, shall incur
have allotted you shares of a fine of twenty pounds.
/ each in this company. " (2) The stamp duty of one penny on a
According to the prospectus per letter of renunciation may be denoted
share is due on allotment and the amount by an adhesive stamp which is to be
due from you is / which please remit to
, cancelled by the person by whom the
the X. & Y. Bank, Limited, Carlisle. letter of renunciation is executed."
After payment of the above amount please The stamp upon a letter of allotment,
retain this letter of allotment and the re- however, must be impres-ed.
ceipt for the amount paid upon application, Receipts upon a duly stamped letter of
to be exchanged for the share certificate allotment are exempt from duty. (See
when ready. Exemption 11 under heading Receipt.)
John Brown, (See Allotment, Companies.)
Secretary. LETTER OF ATTORNEY. See Fower
of Attorney.)
Allotment letters do not form a security for
LETTER OF CHARGE. Where bearer
an advance.
securities are taken as cover for an advance,
Stamp duties : it is usual to take a letter of charge or memor-
Letter of Allotment and Letter of andum of deposit to show the purpose for
Renunciation, or any other document which they have been deposited.
having the effect of a letter of allotment : Certificates are sometimes lodged, along
(1) Of any share of any company or pro- with a simple letter or memorandum of
posed company. deposit, but such a document does not give
(2) In respect of any loan raised, or pro- the banker a good security. (See Transfer
posed to be raised, by any company of Shares.)
or proposed company, or by any A
letter of charge for bearer securities or
municipal body or corporation. certificates is subject to a stamp duty of
(3) Issued or delivered in the United King- sixpence, irrespective of the amount. The
dom, of any share of any foreign or stamp may be either adhesive or impressed.
colonial company or proposed com- (See Memorandum of Deposit.)
pany, or in respect of any loan LETTER OF CREDIT. A letter of credit
raised or proposed to be raised by or is a document issued by a banker authorising
on behalf of any foreign or colonial the banker to whom it is addressed to honour
state, government, municipal body, the cheques of the person named to the ex-
corporation, or company. tent of a certain amount and to charge the
Where the nominal amount which is sums to the account of the grantor or it;
allotted or to which the letter of renunciation may be worded so as to authorise the person
relates is not less than £5, the duty is six- to whom it is addressed to draw on demand,
pence ;where the amount is less than £5, or at a currency, upon the banker issuing the
the duty is one penny. A separate duty letter, and the grantor undertakes, in the
is chargeable in respect of letters of allot- letter, to honour all drafts drawn in accord-
ment and letters of renunciation, although ance with the terms of the credit. The
they may be contained in the same docu- letter states the period for which the credit
ment. The stamp duty of sixpence on a is to remain in force, and it should be in-
letter of renunciation may be denoted by dorsed with particulars of all drafts drawn
an adhesive stamp, which is to be cancelled under the credit. When a letter of credit
by the person by whom the letter of renuncia- is issued, the amount is debited to the cus-
tion is executed (Finance Act, 1899. Section tomer's account and credited to a " Letters
9). of Credit " account.
308
—
cheques under a letter of credit, he must see the indorsement on the notes or signature on
that the signature of the drawer is correct the drafts corresponds with the signature of the
and that the terms of the letter are strictly legitimate holder on the letter of indication.
observed. He should be furnished with a The letter is addressed to the correspondents
specimen of the signature of the person who of the grantors and, when accompanying cir-
is entitled to draw the money. cular notes, supplies the numbers of the notes
Where a letter of credit is shown to a which have been issued to the holder. The
merchant abroad who is selling goods to the notes should not be indorsed except in the
holder of the letter, it has the effect of satisfy- presence of the banker from whom payment
ing the merchant that the bill will be duly is required, and the notes should be carried
accepted by the banker issuing the letter. apart from the letter of indication, so that
The essence of a letter of credit is, as Lord if they are lost the finder will not be able to
Justice Cairns said (in In re Agra & Master- make any use of them in the absence of the
man's Bank, 1867, 2 Ch. 391), "that the letter.
person taking bills on the faith of it is to The following is a specimen of a letter of
have the absolute benefit of the under- indication to accompany circular notes :
309
— —
The following is a specimen of a letter shares have been allotted to a person and
of indication to accompany a letter of he does not wish to keep them, he may
credit :
renounce them in favour of another person.
The document by which this is effected is
No. Date 19 called the Letter of Renunciation.
To Messieurs the Bankers For Stamp duty see Letter of Allot-
mentioned in this Letter of Indication. ment.
Gentlemen, — LETTER OF FEVERSION. In the Stamp
Act, 1891, the reference to the stamp duty
This letter will be handed to you by is :
in whose favour we have issued our Letter Letter of Reversion in Scotland. See
of Credit No. Recommending
.
Mortgage, etc., and Section 86 thereunder.
to your kind attention, and referring you LETTERS DESPATCHED BOOK. Under
to specimen signature below. each day's date is given a complete list, with
Your obedient Servants, addresses, of all letters despatched by post,
and the amount of the postage on each. The
Specimt it Signature.
time at which the letters are posted is given,
(See Circular Letter of Credit, Cir-
and the initials appended of the persons
cular Notes.) who actually posted them. Many banks
insist upon the letters being taken to the post
LETTER OF LICENCE [re Bank Charter in a locked bag, by two persons. Prior to
Act). This is the name given to the official the letters being put into the bag, they are
letter of authority sent by the Government usually examined by a senior clerk to see
to the Bank of England, on the latter's that all are in order.
application, during the crises of 1847, 1S57, The stock of postage stamps on hand is
and 1866, permitting the Bank to break the balanced periodically by means of the money
Act of 1844 and increase their issue of notes column in the letters despatched book.
upon securities. In 1857 the Bank took LETTERS OF ADMINISTRATION. Where
advantage of this authorisation, but in the a person dies and leaves no will, the Probate
two other years mentioned they did not Registry will, on application, appoint a
require to resort to it, public confidence person, the administrator, to wind up the
being restored without. estate, and will grant to him " Letters of
LETTER OF LICENCE (DEBTOR AND Administration," that is, a document em-
CREDITOR). An
agreement between a powering him to administer to the estate of
debtor, who is and his credi-
in difficulties, the deceased. If the deceased person left
tors, under which the creditors agree not to a will but did not nominate any person to
enforce their claims for a certain time, and, act as executor, or if the persons nominated
in the meantime, to allow him to continue are incapable of acting, e.g. infants or
his business. (See Deed of Arrangement.) lunatics, or if the persons nominated re-
LETTER OF LIEN. A debtor sometimes nounce Frobate, that is, the}' decline to act
gives a banker, as security for an advance, as executors, " Letters of Administration
a letter of lien or charge upon goods in the with the \\ ill annexed " will be granted by
hands of a third party. In the case of In the Probate Registry. The administrator
re Hamilton. Young &
Co. (1905, 2 K.B. in such a case must carry out the terms of
772), where a letter of lien over goods in the will just like an executor.
the hands of certain bleachers, accompanied If the balance of a deceased's account is
by their receipt, was given, it was held that very small, some bankers pay it. on receiving
the letter was a document used in the ordi- a satisfactory indemnity, without production
nary course of business as a proof of the of Letters of Administration.
control of goods. The letter should em- Where Letters of Administration are
power the banker to sell, in default of pay- revoked, the banker is protected in any
ment of the debt. (See Trust Receipt.) payments he may have made upon the
LETTER OF REGRET. Upon a new Letters. The sections of the Act relating to
issue of shares, the applicants who are not this point are quoted under Probate (q.v.).
successful in obtaining an allotment receive (See Admin strator, Administrator de
a " letter of regret " announcing the fact Bonis non.)
and returning their money. LETTERS RECEIVED BOOK. All letters
LETTER OF RENUNCIATION. Where received are entered in this book. It is
310
—
ruled to show the date of receipt, person "1. It shall be lawful for anv person or
from whom received, and the subject matter. persons carrying on the business of a banker
A column is also usually provided to show or bankers in England (except within the
the date on which the replv (if any) uas city of London, or within three miles
made. The entries are numbered consecu- thereof), having first duly obtained a licence
tively anil the numbers are placed in for that purpose, and given security by bond,
coloured pencil upon the corresponding in manner hereinafter mentioned, to issue,
letters. When replied to, the letters are on unstamped paper, promissory notes foi
filed away in numerical order, neatly folded any sum of money amounting to £5 or
up with the number, name, and subject upwards, expressed to be payable to the
matter indorsed on the outside. bearer on demand, or to order, at any pi riod
LEVA. (See Foreign Moneys — Bul- not exceeding seven days after sight and ;
being covered by one licence), with the which said licences shall be and are hereby
exception that bankers, who, before Ma}' 6, respectively charged with a stamp duty of
1844, had taken out four licences, and which £30 lor every such licence.
licences were in force on that date for the " 3. A separate licence shall be taken out
issue of notes at more than four places, are in respect of every town or place where anv
not required to obtain more than four such unstamped promissorv notes or lulls
licences for the issue of notes at the same of exchange as aforesaid shall be issui
places. drawn 1 rovided always, that no person or
:
Where a branch having a licence to issue persons shall be obliged to take out more
notes, opens a sub-office in another town or than four licences in all for any number of
place, the banker's own notes cannot be towns or places in England and in a e : i
issued at that sub-office under the licence any person or persons shall issue or draw-
held by the parent branch. such unstamped notes or bills as aforesaid,
The following Sections of 9 Geo. IV. c. 23. at more than lour differen! towns or places,
relate to the powers given to bankers in then, after taking out three distinct licem es
England to issue, on licence, promissory for three of such towns 01 plai es, sin h person
notes and to draw bills not exceeding seven or persons shall lie entitled to have all the
days after sight, or twenty-one days after rest of such towns oi places included in a
date :
fourth liceni i
311
—
Section 22 of 7 & 8 Vict. c. 32 enacts :— consent in writing of the lessor or his agent,
" Every banker who be liable by the necessary licence, when obtained, may
shall
law to take out a licence from the Com- be in the following 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 andinterest 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 Fro-
:
<
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 ba 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 hi 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 hcence 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 hcence 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 1 1 and , forfeiture of, or refusal to renew, the licence.
every hcence 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 continue in force clause as follows :
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
by the said name or style, as the Commis- of the said licence, no claim shall arise under
sioners may think fit, and such licence is to this policy." (See Valuation.)
be as good as if the names and places of I LIEN. A lien is the right to hold a
abode of all the members of the company person's property until payment of a debt
or co-partnership had been specified therein is received. A hen does not, however, give
and the licence granted to them. (See Bank the banker any right to sell the property,
Notes, Bank of Issue, Composition, Note j
and legal advice should be obtained before
Return.) dealing with securities held by way of hen.
LICENCE TO ASSIGN. Where a lessee is A banker has a lien upon all negotiable
unable to assign, demise or sublet the lease- securities deposited with him in his capacity
hold land or premises without the licence or as banker, bv a customer, unless there is an
312
LIE] DICTIONARY OF BANKING [LIE
Bills and documents left for collection are tomer, and handed over to them the policy
part of a banker's ordinary business, and he as security, that they had it in their hands
has a lien upon them. and were entitled to hold it. not only for the
Section 27, s.s. 3, of the Bills of Exchange
Act, 1882, provides :
—
" Where the holder of
£4,000, interest and commission, for which
they had a written agreement, but that in
a bill has a lien on it, arising either from addition they had a further right as bankers
contract or by implication of law, he is to hold it in respect of the rest of his debt to
deemed to be a holder for value to the extent them or in other words they claim a right
;
of the sum for which he has a lien." If a under the special contract in writing and
bill has been transferred absolutely to a also under an implied contract. It appears
banker he is entitled to the full amount of to me that that is inconsistent with the
it, but if he has merely a lien upon it his terms of the agreement, which is for a
interest is limited to the extent of that lien. security for a sum not exceeding £4,000
Where bearer bonds are left with a banker principal and no more, with interest and
in order that the coupons may be cut off commission, and that when the contract
and collected by him, Sir John R. Paget says in so many words that the charge is
considers that a lien probably attaches to for a sum not exceeding £4,000, the charge
the bonds, but no lien would attach if left is limited to that amount. ... It has not
for safe custody, and the customer looked been suggested that the sale was wrong in
after the coupons himself. (See " The Law any way and it may well be that bankers
;
have held that if such securities are deposited different case from the present, where the
by a customer with his banker, and there security is of a wholly different nature, ami
is nothing to show the intention of such the bank had no power of sale. It is quite
deposit one way or the other, the banker true that, after a demand for payment had
has, by custom, a lien thereon for the been made, the bank might have insisted on
balance due from the customer " (Kindersley, having a mortgage with a power of sale. No
V.-C, in Wylde v. Radford, 1863, 33 L.J. Ch. such demand was made or mortgage given,
51). In Davis v. Bowsher (1794. 5 T.R. 488), the bank never had a power to sell and con-
Lord Kenyon said :
" Whenever a banker vert the policy into money. ... It seems
has advanced money to another, he has a i
to me that the express terms of this deposil
lien on all the paper securities which come were that sums not exceeding £4,000
|
into his hands for the amount of his general to be paid out of the policv moneys, and it
balance." would be inconsistent with that, in the
A banker, as gratuitous bailee, has no lien absence of any additional agreement, to
upon articles left for safe custody. allow the bank to hold the policy foi some-
\ onveyance of land is not subject to a
i
thing more."
banker's general lien, but where deeds are Where a customer ha :dit balance m i
313
LIE] DICTIONARY OF BANKING [LIF
the banker has a right to set off one balance also that the register of shares shall be
against the other. This right is sometimes conclusive evidence of the title of a subse-
referred to as a banker's " hen," but the quent holder of any share which the directors
more exact term is " set off." A credit shall have purported to forfeit, sell, or dis-
balanc on an account which has been pose of as aforesaid; and the remedy of any
opened by him in a fiduciary capacity cannot shareholder in respect of any irregularity in
be set off against an overdrawn private the enforcing of any hen, or alleged lien,
account neither has a banker the right to
; shall be in damages against the company
set off the credit balance of a partner's only."
private account against a debt on the Where shares in another banking company
partnership account. are offered as security it should be remem-
The Deed of Settlement of a banking bered that that company will probably have
company may provide that the shares of the a first hen upon its own shares. But in the
members shall be subject to a hen in favour case of the Bradford Banking Co. v. Briggs
of the bank for all moneys due to the bank c~ Co. (1886, 12 A.C. 29), where the articles
in respect of any call or debt due from the of association of a company registered under
shareholder, whether alone or jointly with the Companies Act, 1862, provided that the
any other person, to the bank. It has been company should have " a first and permanent
held that such a power gives the bank a hen and charge, available at law and in
lien upon the dividends, as well as upon the equitv, upon every share for all debts due
shares. from the holder thereof " it was held, revers-
The clause with regard to a hen may take ing the decision of the Court of Appeal, that
the following form :
—" The company shall notice to the company of the deposit of
have a first and permanent lien and charge certificates with the bank was not a notice
available at law and equity on every share of a trust within the meaning of the Com-
of every person who is the holder or one panies Act, 1862, Section 30, and that the
of the joint-holders thereof, for all debts bank by giving notice of the deposit did not
and liabilities on any banking or other seek to affect the company with notice of a
account whatsoever, and for all other debts, trust, but only to affect the company (which
liabilities, and sums of money due or to was a trading company) in their capacity as
become due from him, either alone or jointly traders with notice of the interest of the
with any other person, whether a member bunk. It was also held that the company
or not, to the company at any time whatso- could not in respect of moneys which
ever, whilst he is the registered holder, or became due from the shareholder to the
one of the registered holders, of the share. company after notice of the deposit with
" The directors may forfeit and re-issue, the bank claim priority over advances by
or may sell and dispose of for the benefit of the bank made after such notice.
the company, any shares on which the A vendor has a lien upon the land for any
company shall have such hen as aforesaid, unpaid part of the purchase money as
without any further authority on the part against a subsequent purchaser with notice ;
of the holder or holders thereof, in order to but " a receipt for consideration money or
obtain satisfaction or payment of all or any other consideration in the body of a deed or .
part of such debts, liabilities, or sums of indorsed thereon, shall, in favour of a sub-
money : Provided that no such forfeiture, sequent purchaser, not having notice that
sale, or disposition of shares shall take place the money or other consideration thereby
without one calendar month's notice to the acknowledged to be received was not in fact
holder or holders of the shares in accordance paid or given, wholly or in part, be sufficient
with the articles relating to notice, and evidence of the payment or giving of the
that when any shares shall be so forfeited, whole amount thereof." (Conveyancing
sold, or disposed of, the company shall credit Act, I8S1, Section 55, s.s. 1.) (See Set
such holder or holders in account in case of Off, Title Deeds.)
forfeiture or other disposition not being a LIFE ANNUITY. An annuity, or annual
sale for cash with the value of the shares so payment of a certain sum, which is paj-able
forfeited, sold, or disposed of, ascertained during the life of an individual. Instead of
from the price paid on the last registered an annual payment, it may be actually paid
transfer of shares, and in case of sale for cash quarterly or half-yearly. (See Annuity.)
with the price received by the company as LIFE INTEREST. An interest for life
~
the actual price of the share sold: Provided only. (See Life Tenant.)
314
L1FJ DICTIONARY OF BANKING (LIF
LIFE POLICY. A life policy, duly not apply to a person to whom a policy is
assigned, forms a good banking security to assigned ;it applies only to the parties to
the extent of the surrender value. The the original contract.
longer it exists the more valuable it becomes. The fact that a policy has been issued does
If a debtor gives a security in which he not necessarily imply that the regulation
has merely a life interest, it should be regarding the insurable interest has been
supported by a life policy. observed by the company.
A policy may be either a " whole life The premium is the amounl payable in
—
assurance" that is, not payable till the order to assure the payment of the sum
death of the assured ;or an " endowment- named in the polity at death or at the end
assurance " — that is, payable when the of a certain period. This premium may
assured has arrived at a certain age, or pay- take several forms. It may consist of a
able at death if it occurs before that age is single large payment, or of annual payments
reached or simply an "endowment" —
that for a certain number of years, or of a pay-
is, payable on the insured surviving to a ment every year, or half-year, until death.
certain age. An assurance may be effected A " paid up " or " complete " policy is
—
merely for a temporary period called a one where there are no further premiums
" short term " policy —and is payable only in payable.
the event of death occurring within the There is a " half-credit " system with
period agreed upon. regard to premiums, by which only a half
A policy may be m favour of the assured, of the premium due is paid, the other part
or in the case of a husband in favour of his remaining as a debt upon the policy and
wife or children, or two lives may be assured being payable with interest out of the policy
under the one policy the sum being payable moneys at death.
upon the first death, or in other policies on There is also the " half-premium " system,
the death of the survivor of the two hves. where the premiums are arranged to exclude
The Married Women's Property Act, 1882, the debt and interest of the half-credit
provides that an assurance effected by .1 system. In either case there is no surrender
man on his own life for the benefit of his wife value during the time of the low premiums,
or children, or of his wife and children, or usually for the first five years, and conse-
effected by a woman on her own life for the quently such policies do not form a banking
benefit of her husband or children, or hus- security during that period.
band and children, shall create a trust in There is also a scheme under which policies
favour of the objects named and the moneys are issued with premiums arranged on an
payable shall not form part of the estate of ascending scale, the premium increasing
the insured or be subject to his or her debts ;
according to the length of time the policy
provided that if it be proved that the policy has been in existence.
was effected with intent to defraud the Premiums are usually payable within
creditors they shall be entitled to receive thirty days (called the " days of grace ")
out of the moneys payable under the policy from the due date, and, if death occurs
a sum equal to the premiums so paid. within that time, before pavment of the
By the Gambling Act. 1774 (14 Geo. III. premium, the sums assured and bonuses are
c. 48). no insurance shall be made by any paid in full under deduction of the overdue
person on the life of any person unless he premium.
has an insurable interest in that person. As a protection of policies against lapsing
The interest must be a pecuniary one. For through non-payment of premiums a pro-
example, a wife has an insurable interest in vision is usually made by companies.as for
her husband's life, and a man in his own example : —
life, but a son has not an insurable interest If premiums are not paid within one year
in his father's life (if the son is of age and from the expiry of the thirty days, and death
therefore not legally entitled to maintenance) occurs during that time, th sums assured
and a father has no insurable interest in his and bonuses will be paid in full, under
child. A guarantor has a pecuniary interest deduction of the overdue premium and a
in the debtor for whose debt he is surety, small fine for arrcar, provided the policy
and policy by the surety upon the debtor's
.1 bears a clear surrender value of not less than
life is valid. The policy continues valid after the premium for one complete year but:
the pecuniary interest has ceased. when the policy does not bear such a clear
The question of " insurable interest " does surrender value, it can only lie renewed,
315
—
within the year, on evidence satisfactory paying the premiums, if the customer fails
to the directors as to the health of the life to do so, and debiting the amounts to the
or lives assured and payment of arrears and customer's account, and which also give
fine. power for the policy to be surrendered by the
Where a policy i assigned to a banker, the banker.
notices of premiums falling due are sent by Notice of an assignment must be given
the company to the assured, unless there to the company and an acknowledgment
is a special arrangement to the contrary. received. It is usual to send the notice in
The banker must be careful to see that the duplicate, so that the company may retain
premiums are duly paid. one copy and return the other with an
A deduction is allowed by the income acknowledgment thereon.
tax authorities from a person's income, up The Policies of Assurance Act. 1867 (30 &
to one-sixth thereof, for any premiums on 31 Vict. 144), Section 3, states that no
c.
assurances effected by a man on his own life assignment shall confer on the assignee any
or on that of his wife. right to sue for the amount of the policy
A bonus is the periodical division of until a written notice of the date and pur-
" profits " amongst the policyholders of an port of the assignment have been given to
assurance company. In arriving at the the company at their principal place of busi-
amount of premium to be paid, a company ness. The date on which such notice is
—
" loads " the premium that is, adds to it a received regulates the priority of all claims
sum to meet expenses. Such part of that under any assignment. But a second mort-
" loading " as is not required is returned gagee, with notice of the prior charge, can-
to the holders by way of the bonus. Some not, by giving notice to the company before
policies are " with profits," whilst others are the first mortgagee, obtain priority. By
" without profits." A bonus may be sur- Section 6, the company must, when requested
rendered for a cash payment, or added to the by the person giving the notice, and upon
amount of the policy, or applied in reduction payment of a fee of 5s., give an acknowledg-
of the future premiums, or used to provide ment of the receipt of such notice.
a policy payable at a certain age. In giving notice of an assignment, a banker
The surrender value is the amount which should ask the company if there are any
the company will pay, at any time after, prior charges upon the policy.
usuallv, three vears' premiums have been Where a policy is assigned absolutely
paid, to the policyholder on a surrender of that is, on a sale and not as a mortgage the —
The amount is calculated by the Act provides a very simple form of assign-
the policy.
companv upon the premiums paid and ment, viz. :
—
" I, A. B. of, etc., in considera-
bonuses declared. The amount can be tion of, etc.. do hereby assign unto C. D. of,
ascertained by application to the company. etc., his executors, administrators and
A policv may often be sold at rather more assigns, the [within] policy of assurance
than the surrender value. granted, etc. [here describe the policy']. In
Insurance companies grant loans upon witness, etc."
policies to the extent of 90 or 95 per cent, When a policy is taken as security, it
of the surrender value. should show that the age of the person in-
A simple deposit of a life policy as security sured has been " admitted " by the com-
creates an equitable mortgage, but the usual panv. This is necessary to prevent any
and proper way of taking a security upon a question arising, when the policy becomes
life policy is to have it assigned to the bank a claim, as to the correct amount of the
by way of mortgage. Each person in- premium which should have been paid.
terested" in the policy must join in the All previous assignments and documents
assignment. relating to dealings with a policy must be
If the policy is taken out by a husband carefully preserved as they may be required
for the benefit of his wife, both must sign by the company when the policy becomes
the assignment. If the policy is for the a claim.
benefit of the children, or for the wife and An " industrial " policy does not form a
children, the policy is not available as a banker's security. (See Industrial Life
securitv as the children under age cannot Policy.)
assign. For the stamp duties on policies, see
Bankers have their own forms of assign- Policy of Insurance.
ment which usually provide for the bank's The stamp duty upon an assignment of a
316
— ; —
life policy by way of security is the same as benefit of the life tenant. The monev,
in the case of a mortgage [q.v.) and upon ; called capital money in the Act of 1882,
a sale the same as for a conveyance [q.v.]. " shall be paid either to the trustees of the
Section 118 of the Stamp Act, 1891, settlement or into Court."
enacts :
Where a life tenant gives a banker a charge
" (1) No assignment of a policy of life upon the land in which he holds a life
insurance shall confer on the as- interest, it is customary, seeing that the
signee therein named, his executors, security may disappear at any moment by
administrators, or assigns, any right the death of the tenant, to require a policy
to sue for the moneys assured or upon his life to be assigned to the bank, for
secured thereby, or to give a valid an amount sufficient to cover the amount
discharge for the same, or any part of the advance. Of course the banker must
thereof, unless the assignment is duly see that the rents from the property are
stamped, and no payment shall be sufficient, in the event of the borrower's
made to any person claiming under failure, to pay both the interest upon the
any such assignment unless the same debt and the premiums upon the life policy.
is duly stamped. The banker should see that the premiums
" (2) If any payment is made in contra- are duly paid.
vention of this Section, the stamp LIGHT GOLD. When gold coins fall
duty not paid upon the assignment, below a certain weight they cease to be legal
together with the penalty payable tender. The least current weight, troy, for
on stamping the same, shall be a a half-sovereign is 61 "125 grains, for a sove-
debt due to Her Majesty from the reign 122'5 grains, for a rivo-pound piece 245
person by whom the payment is grains, for a five-pound piece 612.5 grains.
made." The seventh section of the Coinage Act,
In practice, an assignment is usually 1870, gives a person power to cut or deface
stamped to cover the amount of the policy a light coin, but this is never done in the
and also an amount to cover bonuses, when ordinary course of business, as gold coins,
the security is required to that extent. even though they are below the prescribed
In Scotland, assignments or assignations least current weight, pass from hand to
of life policies are given " for certain good hand without question. The words of the
and onerous causes and considerations." Section are :
Stamp duty, 10s. At the same time a letter " Where any gold coin of the realm is below
of deposit is taken, on which the stamp is the current weight as provided by this Act, or
sixpence. (See Tontine Policy.) where any coin is called in by proclamation,
LIFE TENANT. A life tenant is the per- every person shall, by himself or others, cut,
son who has a right or interest in landed break, or deface any such coin tendered to
property for his life, or during the life him in payment, and the person tendering
of some other person (called an estate pur the same shall bear the loss. If any coin
autre vie). If on the death of a life tenant the cut, broken, or defaced in pursuance of this
property returns to the grantor of the life Section is not below the current weight, or
interest, or his heirs, the grantor is said to has not been called in by any proclamation,
hold the reversion, but if it does not revert the person cutting, breaking, or defacing the
to him but passes to another person, that same shall receive the same in payment
person holds the remainder, and is called the according to its denomination."
remainderman. There is no penalty attached for non-
A life tenant may hold the deeds of the compliance with the Act.
property, but he cannot give a charge thereon By the Coinage Act, 1S91, gold coins which
to any greater extent than the life interest he are not more than three grains below the
has in the property. standard weight may be exchanged at the
By the Settled Land Acts a tenant for life Mint for their full value.
has, under certain conditions, power to sell No light gold coins are paid out by the
the settled land, to exchange it for other Bank
of England. As the Bank only makes
property, to grant certain leases and to a charge for receiving light gold coins where
mortgage it where the money is required for there is clear evidence oi ill-usage, there is
enfranchisement or for equality of exchange ; now no tendency for such light gold coins
but money arising from the exercise of such to continue in circulatii >n
powers must not be used for the personal The Bank of England has special machines
3i
— —
for separating light coins from those of full " (4) A body corporate may be a limited
weight. The machines weigh the coins one partner.
by one and shoot off those of full weight in Registration of Limited Partnership required.
one direction and those which are light in
" 5. Every limited partnership must be
another. (See Coinage.)
LIMIT. When a banker agrees to allow registered as such in accordance with the
a customer to overdraw his account up to a provisions of this Act, or in default thereof
certain specified amount, that amount is it shall be deemed to be a general partner-
called the limit. The balance of the account ship, and every limited partner shall be
may vary from day to day, but the limit deemed to be a general partner.
marks the boundary within which the over- Modifications of General Law.
draft is to be confined. (See Advances.)
LIMITED COMPANY. (See Company "6. (1) A limited partner shall not take
the continuance of the partnership, " (6) A limited partner may, with
either directly or indirectly, draw the consent of the general
out or receive back any part of his partners, assign his share in
contribution, and if he does so draw the partnership, and upon
out or receive back any such part such an assignment the
shall be liable for the debts and obli- assign :e shall become a
gations of the firm up to the amount limited partner with all the
so drawn out or received back. risrhts of the assignor ;
318
— —
"(c) The other partners shall not (/) The sum contributed by any
be entitled to dissolve the limited partner ;
S. The
registration of a limited partner- Advei tisemi tit in Gazette.
ship shall be effected by sending by post or "10. (1) Notice of any arrangement or
delivering to the registrar at the register transaction under which any person
office in that part of the United Kingdom will cease to be a general partner in
in which the principal place of business of any firm, and will become a limited
the limited partnership is situated or partner in that firm, or under which
proposed to be situated a statement signed the share of a limited partner in a
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 of this
(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 '
:
(g) 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 Gazi it: .
(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
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.
319
—"
a register and an ind x of all the limited the firm. In a paper read before the Insti-
partnerships registered as aforesaid, and of tute of Bankers by H. E. Gallaher, LL.B., in
all the statements registered in relation to 1 908, he said, with reference to this subject
:
320
—— —
voluntary winding up, see Winding up " (b) To do all acts and to execute,
Voluntarily ; and in the case of a in the name and on behalf
voluntary liquidation under supervision of
of the company, all deeds,
the Court, see Winding up Subject to
receipts, and other docu-
Supervision of the Court. ments, and for that purpose
The powers of liquidators in a winding up to use, when necessary, the
by the Court, or compulsory liquidation, is company's seal :
sanction in this case must be " (e) To raise on the security of the
obtained before the employ- assets of the company any
ment, except in cases of money requisite :
'
ministration or recover the
property, and things in money, be d emed to be due
action of the company by to the liquidator himself:
public auction or private " To do all sucli other things
(?)
contract, with power to as may be necessary for
321
2l ~ ('5.'5>
—
obtaining advances, or for any other livery of seisin is no other than the pure
reason, it is for the advantage of the feodal investiture, or delivery of corporeal
creditors or contributories that the possession of the land or tenement, which
liquidator should have an account was held absolutely necessary to complete
with any other bank, the Board the donation."
shall, on the application of the com- LLOYD'S BONDS. Bonds, named after
mittee of inspection, authorise the the counsel who invented them, which were
liquidator to make his payments devised for the purpose of enabling a raiiway
into and out of such other bank as company to borrow money in excess of its
the committee may select, and there- borrowing powers. Such bonds are void, as
upon those payments shall be made between the company and the original hol-
in the prescribed manner. der ;but a subsequent holder for value is
" (2) If any such liquidator at any time entitled to recover both principal and interest,
retains for more than ten days a sum LOADING. A term used in assurance
exceeding fifty pounds, or such other companies to describe the amount which is
amount as the Board of Trade in any included in a premium in order to cover the
particular case authorise him to expenses of management of the company.
retain, then, unless he explains the The " loading " which is not required forms
retention to the satisfaction of the part of the " profits " and is returned to the
Board, he shall pay interest on the members by way of bonus. (See Life
amount so retained in excess at the Policy.)
rate of twenty per cent, per annum, LOAN CAPITAL. Money raised by a
and shall be liable to disallowance company upon debentures is called loan
of all or such part of his remunera- capital. It forms a debt due by the com-
tion as the Board may think just, pany and is different from the actual capital,
and to be removed from his office by which is money subscribed by the members
the Board, and shall be liable to pay of the company.
any expenses occasioned by reason By the Finance Act, 1S99, Section S :
capital, they shall, before the issue county council, municipal corpora-
thereof, deliver to the Commis- tion, district council, dock trustees,
sioners a statement of the amount harbour trustees, or other local body
proposed to be secured by the issue. by whatever name called."
(2) Subject to the provisions of this By the Finance Act, 1907, Section 10 :
amount of the duty, and a hke sum Section shall not apply to any duty
for every month after the first payable in respect of a mortgage or
month during which the neglect or marketable security which has been
failure continues. paid on any trust deed or other
'
(5) In this Section the expression '
loan document securing the loan capital
capital '
means any debenture which has been issued.
stock, county stock, corporation " (2) If it is represented to the Commis-
Stock, municipal stock, or funded sioners by any such local authority,
debt, by whatever name known, or corporation, company, or body of
any capital raised by anv local persons that loan capital about to be
authority, corporation, company, or issued by them is to be applied, in
body of persons formed or estab- whole or in part, for the purpose of
lished in the United Kingdom, which the conversion or consolidation of
is borrowed, or has the character existing loan capital, the Commis-
of borrowed money, whether it is in sioners may postpone the time for
the form of stock or in any other the delivery of the statement and the
form, but does not include any county payment of duty under Section eight
council or municipal corporation of the Finance Act, 1899, until the
billsrepayable not later than twelve capital has been issued or until such
months from their date or any over- other time as the Commissioners
draft at the bank or other loan think fit for the purpose of enabling
raised for a merely temporary pur- the payment and repayment of the
pose for a period not exceeding duty to take place as one transac-
twelve months, and the expression tion." (See Companies, Share
'
local authority includes
'
any Capital.)
323
—
drawn by the Guardians of the Poor. transaction objected to was merely the pay-
In cases where the Finance Committee ment of interest upon some temporary loan
send to the banker or treasurer a list of the obtained for temporary purposes until other
persons to whom orders have been issued, and —
money as, for instance, rates or moneys
324
—
ments." The consent of the Local Govern- "1. That the overdraft obtained from the
ment Board " does not merely involve the bank for general purposes in respect of bor-
consent to the loan, but an approval of the rowing powers granted for specific purposes
way in which the loan is to be secured was ultra vires and illegal.
according to the Act of Parliament under " That the application of money due to
'_'.
which the securities are issued." The pay- the Consolidated Loans Fund in repayment
ment of interest to the bank in respect of the of such overdraft was ultra vires and illegal.
loans made by the bank, for which no "3. That the borrowing of money from
security had been issued, was held not to be the bank for the purpose of the electricitv
a legal payment. accounts, otherwise than in the exercise of
In Attorney-General v. Tottenham J' borrowing powers with the sanction of the
Council (1910. 73 J P. 437). a sum of £18 350 Local Government Board, was ultra
had been advanced by the defendants' bank- and illegal." (See County Council, Guar-
ers, but the Local Government Board, upon an dians of the Poor, Municipal Corpora-
application in 1907 from the defendants for tion, Parish Council. Rural District
leave to borrow the £18.350. refused their Council, Urban District Council.)
sanction in respect of £4,910. The defendants LOCK UP. Money is said to be locked up
proposed to pay the £4,910 and interest on when it has been lent and repayment cannot
the overdraft out of a general district rate. be obtained when desired, or until the ex-
It was held that the loan of £4,910 by way piration of some fixed period. A prudent
of overdraft without the sanction of the banker avoids as far as possible having his
Local Government Board was illegal, and funds locked up, because he not only desires
that the defendants must be restrained from to have his assets in such a form as to be of
applying any part of the general district rate use in case of emergency, but he prefers to
or any other fund or rate under their control be able to lend the money to various cus-
in repayment of the loan that the defen-
;
tomers at different times, for short periods,
dants were not entitled to make any pay- as may be required, rather than to one or
ment of interest upon money borrowed with- two customers for long periods. If a loan of
out the sanction of the Local Government l.inio is granted to John Brown for, say,
Board that the payment of £855 as interest
; three years, the security may be excellent,
was unlawful and ought to be disallowed on but the money is locked up for that period
audit, but this declaration was to be with- and cannot be used for any other purpose.
out prejudice to the power of the Local On the other hand, a loan may be made to
Government Board to remit such disallow- John Jones repayable on demand, and when
ance ;and that the defendants be perpetu- repayment is requested Jones may be unable
ally restrained from making any further pay- to repay and when the banker turns to the
;
ments of interest upon money borrowed with- security he may find that it cannot be
out the sanction of the Local Government realised and that his money is locked up
Board, or other statutory sanction, whether until a purchaser can be found.
such borrowing was by way of overdraft or LOCUS SIGILLI. Latin, the place for the
otherwise. seal. The letters L.S., inside a circle, are
Another instructive case is the Attn often found on a printed document, such as
'! v. Mayor, County B.
etc.. of the , a form of transfer, to indicate where the seal
;t Ham and others
(1910, 26 T. L. R. or wafer is to be placed. In making a copy
6S3). Mr. Justice Neville, in the course of of a document under seal, the place of the
his judgment, said " The Corporation
: seal is marked in the same way.
appear to have considered and they cer- LOMBARD STREET. A term which is
tainly acted as though they were entitled frequently used when referring to the Money
to use moneys borrowed under specific Market [q
powers not merely for the specific purposes LONDON AGENTS' LEDGER. This
for which the powers were bestowed, but ledger is kept by the head office of a country
325
— —
bank and contains a record of all trans- should, where notice to stop payment has
actions between that country bank, including been received, make very careful inquiries
the branches, and its London agents. All when a " stopped " note is presented for
remittances in and out, payments made, payment.
credits received, drafts drawn and every ;
The finder of a note has a right to it
other description of items pass through this against every person except the individual
account. The ledger is posted from the who lost it. If he transfers it for value, the
daily statements received from the branches, transferee, without notice that the note was
and the items are checked off against the lost, is absolutely entitled to it. The person
statements which are received from the who lost it cannot claim it from such a
London agents. transferee.
In agreeing the ledger with the balance as If a note is lost in its passage through the
.shown by the London statement, allowance post, the loss falls upon the person to whom
must be made for entries in the ledger which it was sent, provided that he requested it to
have not yet appeared on the statements, be sent to him by post, or that it was the
and entries on the statements which are not custom between the parties to use the post
yet entered in the ledger. for that purpose.
LONDON CLEARING HOUSE. (See There is a difference between notes found
•Clearing House.) 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, was entitled to them,
a two or three months' bill (or bill for any and that he had a right to them against
other long currency as specially quoted) everyone but the true owner. A bank note
drawn upon another country, can be bought. found on the customers' side of a bank
Most of the foreign exchanges are quoted counter would, in the event of no one
in terms of the long rate, but a foreign claiming it, belong to the finder.
banker in London would, if desired, quote The true legal position, according to the
the "short rate" (for drafts up to eight or best authorities seems to be that, if the
"
ten days' currency) or the " cheque rate finder believes at the time of finding a bank
{for sight drafts) on any of the principal note that the owner cannot be found, he is
foreign centres. not guiltv of larceny, although he takes the
The long rate is based upon the cheque note intending to deprive the owner of it,
rate (or sight rate, as it is sometimes and although he afterwards has means of
called), taking into consideration the rate of finding the owner, and, nevertheless, retains
interest current in the country on which the the property for his own use.
bill is drawn, and the state of credit. (See LOST BILL OF EXCHANGE. The Bills
Cheque Rate, Course of Exchange, of Exchange Act, 18S2, Section 69, provides:
culars of the note, including its number, and all persons whatever in case the bill alleged
provide a satisfactory indemnity, that is, a to have been lost shall be found again.
guarantee that the banker shall be refunded " If the drawer on request as aforesaid
in case of the lost note being found by some- refuses to give such duplicate bill, he may be
one and the banker being compelled to pay it compelled to do so."
a second tine. By Section 70 :
Although a banker cannot refuse payment " In any action or proceeding upon a bill,
of his own notes to an innocent holder, he the Court or a judge may order that the
326
LOS] DICTIONARY OF BANKING [LOS
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
'
that payments, in the meantime, will be well as that of the drawer and drawee. (See
parties if the plaintiff knew of the insanity The maker of a note is deemed to
correspond with the acceptor of a bill. (See
when he took the bill, but it is of no avail
against a holder in due course. It is not a Presentment for Payment, Promissory
defence if the bill was given during a lucid Note.)
interval, or, if given during the previous MAKING-UP DAY. The first day of the
period, was confirmed in the same period. settlement on the Stock Exchange. (See
Where a person has been found insane by Contango Day.)
inquisition he is unable legally to deal with MAKING-UP PRICE. At each settlement
his property even during a sane interval. (which occupies three days) on the Stock
If a guarantor becomes insane, and the Exchange, the first day is called contango
banker has notice of the same, the position day or making-up day. On that day a
of the parties is similar to that when a making-up price is officially fixed to each
guarantor dies, namely, the account of the stock, according to certain rules. There is
debtor should be stopped. an additional day for mining securities.
328
MAL] DICTIONARY OF BANKING iMAR
called " mining contango day." Themaking- another, has not, as a rule, any power to
up price is for the purpose of arranging with delegate that authority.
speculators (bears and bulls) who desire to There is no stamp duty upon a mandate
continue their bargain till the next settle- of the above description. (See Delegation
ment. If the making-up price is lower than of Authority.)
that at which a " bull " purchased, he pays MANDATORY. The person in whose
the broker the difference if higher the ; favour a mandate is given. The person who
"
broker pays him. In the case of a " bear gives the mandate is called the mandant or
329
— —— — — —
interest in the ship or its cargo, otherwise shall be made for any
the contract is not legally binding. time exceeding six
There are several kinds of marine policies, months and not ex-
the principal being :
'
(2) There shall be charged on a policy of
sea insurance containing such a
Policy of Sea Insurance £ s. d.
continuation clause a stamp duty of
(1) Where the premium or con- sixpence in addition to the stamp
sideration does not exceed duty which is otherwise chargeable
the rate of 2s. Qd. per centum on the policy.
of the sum insured . . .001 " (3) If the risk covered by the continua-
tion clause attaches and a new policy
(2) In any other case
(a) For or upon any voyage is not issued covering the risk, the
In respect of every full sum of continuation clause shall be deemed
£100, and also any frac- to be a new and separate contract
tional part of £100 thereby of sea insurance expressed in the
insured (Finance Act, 1908) 1 policy in which it is contained, but
[b) For time not covered by the stamp thereon,
In respect of every full sum of and the policy shall be stamped in re-
/1 00, and also any frac- spect of that contract accordingly,but
tional part of £100 thereby may be so stamped without penalty
insured at any time not exceeding thirty days
Where the insurance after the risk has so attached.
shall be made for any '
'
(4) For the purpose of this Section, the
330
.
expression ' continuation clause drawer in the interval has died or become
means an agreement to the following bankrupt. The cheque being to all intents
or the like effect, namely, that in and purposes paid when " marked," the
the event of the ship being at sea drawer cannot stop payment of it after it is
or the voyage otherwise not com- " marked."
pleted on the expiration of the Bankers are occasionally requested by the
policy, the subject-matter of the drawer of a cheque to mark or certify it as
insurance shall be held covered until good for the amount, as for example when
the arrival of the ship, or for a the customer desires to settle for the pur-
reasonable time thereafter not chase of property or to pay customs duties.
exceeding thirty days." A cheque so marked is usually received by
By the Revenue Act, 1903 :— the person to whom it is tendered as being
" Section 8. A policv of insurance made as " good as cash." When a cheque is so
or purporting to be made upon or to cover marked at the request of the drawer, the
anv ship or vessel, or the machinery or banker will, in considering whether subse-
fittings belonging to the ship or vessel whilst quent cheques should be paid which are
under construction, or repair, or on trial, presented for payment before the marked
shall be sufficiently stamped for the purposes cheque is presented, treat the balance of the
of the Stamp Act, 1891, and the Acts customer's account as though the marked
amending that Act, if stamped as a policy cheque had been charged to the account.
of sea insurance made for a voyage and Whenever a cheque is marked at the drawer's
though made for a time exceeding twelve request, a note of the amount should be
months, shall not be deemed to be a policy made in the account, so that the banker,
of sea insurance made for time." (See when other cheques are presented, may not
Mutual Insurance, Ship-Mortgage.) overlook his liability to pay the marked
MARK. (See Foreign Moneys Ger- — cheque. When the cheque is received it
MANY.) must, of course, be paid, and can be charged
MARKED CHEQUE. In connection with to the drawer's account, even if he has died
local exchanges countrv branches, cheques
in or become bankrupt in the meantime. The
are frequently presented by one banker to drawer cannot stop payment of a cheque
"
another in the same town to be " marked marked at his request.
as being good. If the cheque is all right, the Where a cheque is " marked " at the
banker on whom it is drawn initials it and request of the payee or a holder, the position
hands it back to the banker who has pre- would appear to be different.
sented it to be " marked." The banker In an ordinary way there is no contract
holding the cheque can then rest satisfied between a banker and the payee or holder of
that it will be paid when presented through a cheque, but if a banker certifies or marks
the clearing later on in the day, or, if too a cheque for payment at the request of the
late for that dav's clearing, through the payee or holder, the payee or holder of such
clearing on the following day. The arrange- marked cheque could no doubt compel the
ment is one between the two bankers and banker to pay it. And as the drawer's right
has nothing to do either with the drawer, to stop payment would appear not to be
payee or holder. If further cheques should be affected by the marking, the banker might
"
presented for payment, belore the " marked find himself " between two stools," i.e.
cheque arrives through the local clearing, and compelled, at least morally, to pay the
the balance of the customer's account, taking cheque to the holder, and prevented legally
the amount of the " marked " cheque into from debiting it to the drawer's account
consideration, will not permit of their pav- If the drawer dies or becomes bankrupt
ment, the banker is justified in refusing pay- before a chequi I
a1 the payee's or
ment of those subsequent cheques. When holder's request, is presented, the banker
the banker " marked " the cheque he prac- cannot debit il to the' account of the
tically paid it ami is entitled to regard it as dei eased <>r tin- bankrupl
paid, although, for the personal convenience Chalmers' " Bills <>f Exchange " says " At
:
of the two bankers, the cheque itself is per- common law there is no objection t" the
mitted to be passed through the clearing with acceptance of a cheque, it tin' holder likes
the other cheques. The " marked " cheque to take it in lieu ot payment, but the I
will, of course, be debited to the drawer's Charter Acts would in most cases rendei
account when it comes in, even though the this illegal."
331
— ,
The marking of cheques (except as The more money there is in the market,
between bankers) is not a desirable practice that is, the larger the funds that are at anytime
to encourage. It is preferable that, instead in the possession of the banks and brokers
of marking for a holder, the cheque should available for short loans and discounts, the
be paid at once, or the cheque be debited greater is the discrepancy between market
and a banker's draft given for it, or the rate and Bank Rate, for it is then that the
amount be credited to a sundry creditors outside market is in a position to compete
account and a banker's cheque issued. most successfully with the Bank and vice ;
In the United States cheques are freely vers J when the market is "short" its rate
certified by bankers, and such certification approaches close to Bank Rate. In ordinary
is held by law to be equivalent to acceptance. circumstances a well-known example of this
(See Certification of Cheques, Cheque.) occurs every year during the January to
MARKET PARTNERSHIP. A term used March quarter for at this time a great
;
on the London Stock Exchange to describe amount of the floating money in the market
a partnership where two members, who each has become locked up in the Bank of England
deal and settle bargains in their own name, owing to the large part of the assessed taxes,
notify to the secretary that they hold them- which are paid into the Government accounts
selves jointly responsible to the Stock at that period of the year this brings up
;
Exchange for all transactions entered into market rate close on the heels of Bank Rate ;
and brokers) are themselves also borrowers Marketable Security and For-
by way of deposits on which they have to eign or Colonial Share
pay interest it is obvious then that the
;
Certificate.
higher the rate of interest they allow on
deposits the more they must charge for dis- (1) Marketable security [a)
counts in order to recoup themselves and beinga colonial govern-
leave a fair margin of profit. And herein ment security or (b) being a
lies one of the reasons why market rate
security not transferable by
assimilates itself to Bank Rate, for the rate delivery or (c) being a
of interest which banks and brokers allow, security transferable by
known as deposit rate, is dependent on Bank delivery and bearing date
Rate. or signed or offered for
332
———
in respect of according to
the money thereby the nature of chargeable with stamp duty
the security
secured as upon a as a marketable security
mortgage. transferable by delivery,
(2) Transfer,
Assignment, and on every share warrant or stock
Disposition, or Assigna- certificate to bearer by means of
tion of a marketable se- which any share or stock of any
curity of any description company or body of persons formed
pon a sale thereof. See
I
or established out of the United
Conveyance or trans- Kingdom is, after the first day of
on sale.
fer August one thousand eight hundred
Upon a mortgage thereof. and ninety-nine, assigned, trans-
See Mortgage. ferred, or in any manner negotiated
In any other case than a in the United Kingdom, a stamp
sale or mortgage . . 10 duty of one shilling for every ten
(3) Marketable security (ex- pounds, and also for any fractional
cept a colonial government part of ten pounds in the case of a
security) being a security marketable security of the money
transferable by delivery thereby secured, and in the case of
and bearing date or signed a share warrant or stock certificate
or offered for subscription of the nominal value of the share
after the sixth day of or stock to which the warrant or
August one thousand eight certificate relates. (For amendment,
hundred and eighty-five see Section 76 of the Finance (1909
For every £\Q, and also 10) Act, 1910, referred to above.)
for any fractional part "
(2) There shall be charged on every in-
of £10, of the money strument to bearer, not being a
thereby secured
Marketable security
..010 share warrant or stock certificate to
(4) (ex- bearer charged under the foregoing
cept a colonial government provision, by means of which any
security) being such secu- share or stock of any company or
rity as last aforesaid body of persons formed or estab-
n in substitution for a
-
333
— — —
' (a) A marketable security, made Kingdom makes, issues, assigns, transfers,
by or on behalf of
or issued negotiates, or offers for subscription, any
any company or body of foreign security or colonial government
persons corporate or un- security not being duly stamped, shall incur
incorporate formed or estab- a fine of twenty pounds."
lished in the United King- By the Finance Act, 1895 :
334
—
witness, but in other banks both witnesses either deposit the deeds or mortgage the
have to be independent altogether of the property or deal with the future income.
transaction. This point is an important one to bear in
usual for a customer who cannot write,
It is mind and more particularly so, as the deeds
if he going to draw many cheques upon his
is themselves may not show any evidence that
account, to give authority to someone to such a restraint exists.
sign cheques per procuration, and the Where a husband becomes a bankrupt, the
matter is best arranged when the account is wife may prove upon his estate along with
first opened. the other creditors for any money lent to him
When a deed is executed by " mark," a for private purposes, but she may not prove
special form of attestation clause is necessary. with the other creditors for any money she
(See Attestation.) may have lent to him for his business.
In Scotland the execution of a deed by a A married woman is not personally liable
mark is not valid. It must be executed for for borrowed money as is an unmarried
the person by a Notary Public or a Justice woman and a man, but repayment may be
of the Peace before two witnesses. enforced against any separate estate that she
MARRIAGE SETTLEMENT. A settle- may have. Unless she is carrying on a
ment of property, provided by either or business apart from her husband she cannot
both of the parties to the contract of mar- be made a bankrupt.
riage, and made either before or after the MATURITY. The maturity of a biU of
marriage. In the former case it is called an exchange or promissory note is the date upon
ante-nuptial settlement, and in the latter a which it matures or falls due to be paid.
post-nuptial. Except in the case of fraud, MAUNDY MONEY. The money which
an ante-nuptial settlement is one made for the King causes to be distributed on Maundy
valuable consideration, the marriage being —
Thursday that is, the Thursdav in Passion
the consideration. But in the case of a post-
nuptial settlement, there is only what is
—
Week to as many poor men and women as
he is years old. The money consists of four
known in law as " good " consideration, and silver coins, a fourpenny piece, a threepenny
the settlement may be avoided in certain piece, a twopenny piece and a penny piece.
cases if the settlor becomes bankrupt within The coins are not of much use to the recipi-
a certain period after the settlement is made. ents, except to sell to anyone who is inter-
For Stamp Duties see Settlement. ested in coins. Bankers were sometimes
MARRIED WOMAN. A woman mar- requested by customers to obtain a set of
ried since January 1, 1883, is in the same Maundy money to add to a collection of
335
—
coins, but the Mint has now discontinued lodged before the time appointed for the
issuing any sets of Maundy money to banks. meeting.
The origin of the word Maundy is, by some "9. A creditor shall not vote at any such
persons, said to be derived from the Latin meeting in respect of any unliquidated or
words mandatum novum (a new command- contingent debt, or any debt the value of
ment) as those were the first words of the which is not ascertained.
anthem which used to be sung in olden times "10. For the purpose of voting, a secured
when the King, as was the custom then, creditor shall, unless he surrender his se-
performed the ceremony of washing the feet curity, state in his proof the particulars of his
of the poor people. Another explanation security, the date when it was given, and the
of the origin of the word is that it is derived value at which he assesses it, and shall be
from the " maunds," or baskets, in which the entitled to vote only in respect of the balance
food was carried. (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 a "11. A creditor shall not vote in respect of
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
arrangement shall be entertained or whether against whom a receiving order has not been
he shall be adjudged bankrupt. made, as a security in his hands, and to
The following are some of the rules in the estimate the value thereof, and for the pur-
first schedule of the Bankruptcy Act, 1S83, poses of voting, but not for the purposes of
with respect to meetings of creditors : dividend, to deduct it from his proof.
" 1. The first meeting of creditors shall be " 12. It shall be competent to the trustee or
summoned for a day not later than fourteen to the official receiver, within twenty-eight
days after the date of the receiving order, days after a proof estimating the value of a
unless the Court for any special reason deem security as aforesaid has been made use of in
it expedient that the meeting be summoned voting at any meeting, to require the creditor
for a later day. to give up the security for the benefit of the
" 2. The official receiver shall summon the creditors generally on payment of the value
meeting by giving not less than seven days' so estimated, with an addition thereto of
notice of the time and place thereof in the twenty per centum. Provided, that where
London Gazette and in a local paper. a creditor has put a value on such security,
"3. The official receiver shall also, as soon he may, at any time before he has been
as practicable, send to each creditor men- required to give up such security as afore-
tioned in the debtor's statement of affairs, said, correct such valuation by a new proof,
a notice of the time and place of the first and deduct such new value from his debt,
meeting of creditors, accompanied by a but in that case such addition of twenty per
summary of the debtor's statement of affairs, centum shall not be made if the trustee
including the causes of his failure, and any requires the security to be given up.
observations thereon which the official " 13. If a receiving order is made against
receiver may think fit to make ; but the one partner of a firm, any creditor to whom
proceedings at the first meeting shall not be that partner is indebted jointly with the other
invalidated by reason of any such notice or partners of the firm, or any of them, may
summary not having been sent or received prove his debt for the purpose of voting
before the meeting. at any meeting of creditors, and shall be
"8. A person shall not be entitled to vote entitled to vote thereat.
as a creditor at the first or any other meeting "14. The chairman of a meeting shall have
of creditors unless he has duly proved a debt power to admit or reject a proof for the
provable in bankruptcy to be due to him purpose of voting, but his decision shall be
from the debtor, and the proof has been duly subject to appeal to the Court. If he is in
336
—
doubt whether the proof of a creditor should " (2) The directors shall, at least seven days
be admitted or rejected he shall mark the before the day on which the meeting
proof as objected to and shall allow the is held, forward a report (in this Act
creditor to vote, subject to the vote being called the statutory report ') to
'
declared invalid in the event of the objection every member of the company and
being sustained. to every other person entitled under
"15. Acreditor may vote either in person this Act to receive it."
or by proxy. The statutory report shall state, amongst
"17. A creditor may give a general proxy other things, the total number of shares
to his manager or clerk, or an}- other person allotted, the total amount of cash received
in his regular employment. In such case by the company in respect of all shares
the instrument of proxy shall state the rela- allotted, an abstract of the receipts on
tion in which the person to act thereunder account of capital, whether from shares or
stands to the creditor. debentures and of the payments made there-
" 19. A proxy shall not be used unless it is out, and the names, addresses, and descrip-
deposited with the official receiver or trustee tions of the directors, auditors (if any),
before the meeting at which it is to be used. managers (if any), and secretary of the
"26. Xo person acting either under a company.
general or special proxy shall vote in favour
of anj- resolution which would directly or Convening of Extraordinary General Meeting
indirectly place himself, his partner or
on Requisition.
employer, in a position to receive any re-
muneration out of the estate of the debtor " 66. (I ) Notwithstanding anything in the
otherwise than as a creditor rateably with articles of a company, the directors
the other creditors of the debtor. Provided of a company shall, on the requisition
that where any person holds special proxies of the holders of not less than one-
to vote for the appointment of himself as tenth of the issued share capital of
trustee he may use the said proxies and vote the company upon which all calls or
accordingly." (See Acts of Bankruptcy, other sums then due have been paid,
Bankruptcy, Public Examination of forthwith proceed to convene an
Debtor, Receiving Order.! extraordinary general meeting of the
MEETINGS, COMPANIES. The Com- company.
panies (Consolidation) Act, 190S, provides as " (2) The requisition must state the
follows : objects of the meeting, and must
Annual Genoa! Meeting. be signed bv the requisitionists and
deposited at the registered office of
"Section 64. (1) A general meeting of
the company, and may consist of
every company shall be held once at
several documents in like form, each
the least in every calendar year, and
signed by one or more requisitionists.
not more than fifteen months after " (3) If the directors do not proceed to cause
the holding of the last preceding
a meeting to be held within twenty-
general meeting, and, if not so held,
one days from the date of the re-
the company and every director,
quisition being so deposited, the
manager, secretary, and other officer
requisitionists, or a majority of them
of the company, who is knowingly
in value, may
themselves convene
a party to the default, shall be liable
the meeting, but any meeting so
to a fine not exceeding fifty pounds.
convened shall not be held after
First Statutory Meeting of Company. three months from the date of the
"65. (1) Every company limited by shares deposit.
and registered on or after the first " (4) Ifat any such meeting a resolution
day of January nineteen hundred requiring confirmation at another
and one shall, within a period of not meeting is passed, the directors shall
less than one month nor more than forthwith convene a further extra-
three months from the date at which ordinary genera] meeting for the
the company is entitled to commence purpose of considering the res >lution
business, hold a general meeting of and, if thought fit, of confirming it
the members of the company which as a special resolution and, if the
;
337
<I535>
— — — — — :
within seven days from the date "(ii) A company hav ng the liability of its
of the passing of the first resolution, members limited by the memoran-
the requisitionists, or a majority of dum to such amount as the members
them in value, may themselves may respectively thereby undertake
convene the meeting. to contribute to the assets of the
company in the event of its being
Provisions as to Meetings and Votes. wound up (in this Act termed a
" 67. In default of, and subject to, any company limited by guarantee) or ;
regulations in the articles " (iii) A company not having any limit on
" (i) A meeting of a company may be called the liability of its members (in this
by seven days' notice in writing, Act termed an unlimited company).
served on every member in manner
in which notices are required to be
Memorandum of Company Limited by Shares.
served by Table A. in the First "3. In the case of a company limited by
Schedule to this Act : shares
" (ii) Five members may call a meeting :
" (1) The memorandum must state
" (iii) Any person elected by the members " (i) The name of the company,
present at a meeting may be with '
Limited '
as the last
chairman thereof : word in its name ;
" (iv) Every member shall have one vote. " (ii) The part of the United King-
dom, whether England, Scot-
Representation of Companies at Meetings of land, or Ireland, in which
other Companies of which They are Members. the registered office of the
"68. A company which is a member of company
is to be situate ;
another company may, by resolution of the " (iii) The objects of the company ;
any of its officials or any
directors, authorise " (iv) That the liability of the mem-
any meeting of that other company, and the " (v) The amount of share capital
person so authorised --hall be entitled to with which the company
exercise the same powers on behalf of the proposes to b; registered,
company which he represents as if he were and the division thereof into
an individual shareholder of that other shares of a fixed amount
company." (See Companies.) " (2) No subscriber of the memorandum
MEMORANDUM OF ASSOCIATION. The may take less than one share :
Memorandum of Association is the charter of " (3) Each subscriber must write opposite
a company, and is, except in certain specific to his name the number of shares he
cases, the company's unalterable law. takes.
The following are the provisions contained
in the Companies (Consolidation) Act, Memorandum of Company Limited by
1908-.— Guarantee.
"4. In the case of a company limited by
Mode of forming Incorporated Company. guarantee
Any seven or more persons (or, where
" 2. "(1) The memorandum must state
thecompany to be formed will be a private " (i) The name of the company,
company within the meaning of this Act, with '
Limited '
as the last
any two or more persons) associated for any word in its name ;
lawful purpose may, by subscribing their " (ii) The part of the United King-
names to a memorandum of association and dom, whether England,
otherwise complying with the requirements Scotland, or Ireland, in
of this Act in respect of registration, form an which the registered office of
incorporated company, with or without the company is to be situate ;
" (i) A company having the liability of its "(iv) That the liability of the
members limited by the memoran- members is limited ;
338
—— — —
share ;
" (e) to restrict or abandon any of
" (iii) Each subscriber must write the objects specified in the
opposite to his name the memorandum.
number of fhares he takes. '(2) The alteration shall not take effect
until and except in so far as it is
Memorandum of Unlimited Company. confirmed on petition by the Court.
" 5. In the case of an unlimited company (3) Before confirming the alteration the
"(1) The memorandum must state: Court must be satisfied
" (i) The name of the company ;
" (a) that sufficient notice has been
" (ii) The part of the United King- given to every holder of
dom, whether England, debentures of the company,
Scotland, or Ireland, in and to any persons or class
which the registered office of of persons whose interests
the company is to be situate ;
will, in the opinion of the
" The objects of the company.
(iii) Court, be affected by the
" (2) If the company has a share capital alteration and
;
" (i) No subscriber of the memoran- " (b) that, with respect to every
dum may take less than one creditor who in the opinion
share ;
of the Court is entitled to
" (ii) Each subscriber must write object, and who signifies his
opposite to his name the objection in manner directed
number of shares he takes. by the Court, either his
consent to the alteration has
Stamp and Signature of Memorandum. been obtained or his debt or
"6. The memorandum must bear the same claim has been discharged or
stamp as if it were a deed, and must be has determined, or has been
signed by each subscriber in the presence of secured to the satisfaction of
at least one witness who must attest the the Court :
signature, and that attestation shall be Provided that the Court mav. in
sufficient in Scotland as well as in England the case of any person or class, for
and Ireland. special reasons, dispense with thi
Restriction on Alteration of Memorandum. notice required by this Section.
"7. A company may not alter the con- (4) The Court may make an order con-
ditions contained in its memorandum except firming the alteration either wholly
in the cases and in the mode and to the or in part, and on such terms and
339
— —
the company shall be liable to a fine sengers and goods in ships or boats between
not exceeding ten pounds for every such places as the company may from time
day during which it is in default." to time determine, and the doing all such
See also Sections 14, 15, 16, 17, and IS other things as are incidental or conducive
under heading Articles of Association. to the attainment of the above object."
In a limited company the liability of the 4th. The liability of the members is
340
MEM] DICTIONARY OF BANKING [MEM
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.
. . —
342
MEM] DICTIONARY OF BANKING [MIN
name of the bank or its nominees when flanges may afford a certain amount of
requested so to do. protection to the figures on both sides of the
As to the stamp duties see Equitable coin. (See Coinage.)
Mortgage. (See Title Deeds.) MILREIS. (See Foreign Moneys —
MEMORIAL. When a deed of land re- Brazil. Portugal, South Africa.)
quires registration in the public registries MINERAL RIGHTS DUTY. A duty im-
(e.g. in Yorkshire and Middlesex) a memorial posed by the Finance (1909-10) Act, 1910,
(or form giving full particulars of the deed) for the year ending March 31, 1910, and
every subsequent year, on the rental value
is sent to the registrar for that purpose.
When registered the deed is marked " a :
— of all rights to work minerals and of all
memorial was registered at the mineral wayleaves, at the rate in each case
Registry of Deeds at the day of one shilling for every twenty shillings of
of 1910 at in the forenoon in that rental value.
volume page, , number The rental value is taken to be the amount
and the memorandum is sealed and signed by of rent paid by a working lessee in the last
the registrar. working year ; and where the minerals are
By the Stamp Act, 1891, the duty is— worked by the proprietor the amount as
determined by the Commissioners.
MINORS. Persons who are below the age
Memorhl to be registered pur- of twenty-one. (See Infants.)
suant to any Act for the time MINT. Anglo-Saxon mynet, a coin.
being in force relating to the Latin, Moncta, a surname of Juno, whose
public registering of deeds in temple was used by the Romans as a
England or Ireland :
mint.
Where the instrument The place where the money of this country-
registered is chargeable duty as the is coined. It is situated on Tower Hill,
with any dutv not amount- .registered London. There are also mints at Melbourne,
ing to 2s. 6d. Sydney, and Perth in Australia, the gold
In any other case 2 6 coins of which are legal tender in this
country.
MESSUAGE. A dwelling-house and any At one time there were mints at Bristol,
adjoining piece of land. Chester, Exeter. Norwich, and York. (See
METROPOLITAN CLEARING. The Bank of England, Coinage.)
section ofthe business of the London MINT PAR OF EXCHANGE. The Mint
Bankers' Clearing House, including all the Par between any two countries which use the
branches of the Clearing Banks in London same metal for their standard of coinage is
which are contained within the Metro- found by comparing a standard coin of each,
politan area. Cheques on offices in the making the calculation upon the weight and
Metropolitan Clearing have M
printed in fineness of the precious metal only ; in other
the left-hand bottom corner. (See Clearing words the Mint Par between countries A and
House.) B is the number of B coins which contain
MIDDLE PRICE. On the Stock Ex- the same quantity of pure gold (or whatever
change a dealer buys at one price and sells is the standard metal of both countries) as
MILLING. The indented or ridged edge that is to say, there is the same quantity of
of a coin. In olden times the edges of coins pure gold in 25'22 francs as there is m (\ -,
were frequently clipped or filed by dishonest which isarrived at from knowing that by
persons and the clippings or filings sold by English law 480 oz. troy of gold eleven-twelft h
weight. In order to prevent that practice, fine are coined into 1,869 sovereigns, and by
milling was invented. The edge of a coin French la n 1,000 grammes oi gold nine-tenths
is also turned up in order that the raised fine are coined into 155 Napoleons of 20 francs
343
— .
for that purpose. faith and is received in good faith, and there
" (2) Any such minute if purporting to be is an interval of time in which the position
signed by the chairman of the meet- of the holder may be altered, the principle
ing at which the proceedings were seems to apply that money once paid cannot
had, or by the chairman of the be recovered back."
344
MON! DICTIONARY OF BANKING [MON
MONETARY UNION. (See Latin Mone- derived from pecus, cattle that our word fee
;
tary Union, Scandinavian Monetary is nothing but the Anglo-Saxon feoh, meaning
Union.) alike money and cattle ; and that the words
MONETARY UNIT. The in any
coin capital, chattel and cattle are derived from
country which serves as a measure of the the word capitate. Kine were called capitate
value of all the other coins. The unit in this because they were counted by the caput, or
country is the sovereign, in the United head.
States it is the dollar, in Germany the mark, At different periods and in various
and in France the franc. (See Foreign countries many articles have been used to
Moxi.i s meet the necessity, which was felt by all.
MONEY. The standard by which the of having something to act as a measure of
value of commodities is measured, and the value. In India, certain parts of Southern
medium by which they are bought and sold. Asia, and in Africa, shells called cowries are
.Money and credit, to which it gave birth, still used as a currency. Money is repre-
form the basis on which the stupendous sented in Tibet and parts of China by small
business of banking has been built up. blocks of compressed tea ; in Abyssinia by
There is probably nothing which is of greater blocks of rock salt, and in some districts of
importance in the civilised world than money, Africa by dates. Sugar, tobacco, dried cod,
and nothing which comes more closelv in dressed leather, furs, pieces of cloth, elephants'
contact with mankind in every department teeth, carved wood and many other objects
of life. Not only have all conceivable com- have been used for the same purpose.
modities a monetary value attached to Carved pebbles were used by the Ethiopians,
them, but it is customary to ascribe a and Adam Smith relates that, even in his
financial reason as the prime moving cause day (1776), there was a village in Scotland
(either directly or indirectly) in almost every where it was not uncommon for a workman
action in which a man is concerned. In the to earn- nails instead of money to the baker's
primitive ages there was no money, and shop or the ale-house. Although such
when one of the inhabitants of those olden articles, as a circulating medium, represent
times wished to obtain food which belonged a great advance from the barter state of
to another person, possession had to be society, most nations, as already stated, now
obtained by barter that is, some article,
; recognise that the metals, being practically
considered of equal value, and of which the indestructible and not much subject to
person who owned the food was in need, fluctuations in value, are the most convenient
had to be offered in exchange. If one man and best fitted to act as money. Silver
was rich in food possessions and another in was used by the Hebrews, and the first
skins, there would be much inconvenience in mention of money as a medium of exchange
always arranging a suitable exchange, as the is found in Genesis, where Abraham pur-
food owner might not be in need of skins. chased the cave of Machpelah from Ephron
This difficulty- led most nations at a very the Hittite, and weighed to Ephron " four
earh- date, after experience with various hundred shekels of silver, current money
substitutes, to adopt metals, particularly with the merchant." It would appear that
gold and silver, as a circulating medium. In when first the metals, whether iron, copper,
the case supposed, the owner of food was gold or silver, were used they were in rude
then able to exchange his goods for a certain ingots or bars without any stamp or designa-
quantity of metal, which metal he could use tion upon them, and when being paid over
for the purpose of obtaining from other per- they had, as in the case of Abraham's famous
sons articles which were more useful to him purchase, to be weighed in scales. The
than skins. In the " Iliad," Homer says that inconvenience of always having to weigh
the armour of Diomede was worth on'lv nine the metals, and the difficulty also of knowing
oxen, and the armour of Glaucus was worth whether the quality of the metal was really
100 oxen, which indicates that in those days what it was supposed to be, ultimately
oxen were regarded as a standard of value. brought about the invention of coins. The
Cattle were of great importance in the early Chinese are reported to have made coins as
stages of civilisation, and in several languages early as 2250 B.C. The ingots which had
the name for money is identical with that hitherto been so troublesome were, by the
of some kind of cattle or domesticated invention of coins, divided up into pieces of
animal. Professor Jevons points out that different values so that they could be avail-
pecunia, the Latin word for money, is able for the smallest of purchases and
345
—
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 bond 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 bv 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 MONEY LENT AND LODGED BOOK.
his income they are a sort of tickets or
;
A book ruled with various columns so as to
orders which he can present for payment at I show what has been lent by the bank in the
any shop he pleases, and which entitle him to way of loans, overdrafts, discounts, overdue
receive a certain value of any commodity bills, etc. ; and also to show what has been
that he makes choice of." lodged with the bank on current accounts,
The word money is derived from the deposit accounts, and deposit receipts. The
temple of Juno Moneta, which was used by book is useful for purposes of comparison
the Romans as a mint. (See Coinage, and to show how the totals are fluctuating.
Mint.) MONEY MARKET. The money market
MONEY AT CALL AND SHORT NOTICE. is not a particular place or building where
In addition to the money which a banker has money is bought and sold, but is merely a
on hand to meet the ordinary requirements term embracing the Bank of England, Lon-
of his business, he keeps a balance at the don bankers and bill brokers, the Stock Ex-
Bank of England, or with his London agents, change, and dealers in money and credit who
of such an amount as may be deemed have either money to lend or who want to
necessary, and any surplus funds he may borrow money. The bankers collect money
have, and which he desires to keep in an from all over the country and such surplus
available form, may be lent to bill brokers as is not required for current purposes is lent
and stockbrokers against security. Money on the market for various periods, and all the
lent in that way is repayable at " call " or operations between the bankers, brokers
at "short notice," and is therefore almost and discount houses constitute the business
of the money market. If there is a large
immediately obtainable in the event of any
sudden demand upon the banker. A supply of money and the demand for loans
banker's first line of defence is the cash on is small the rates charged will be low, but
if, on the other hand, the supply is
small
hand and his balance at the Bank of
England or with his London agents, which and the demand large, the rates will be
is repayable on demand the second line
;
high.
of defence is the " money at call and short When the Government is in need of
346
— — —
MONOMETALLISM. The system of cur- dispose of the property. Any charge after
rency in which one metal is the standard of the first mortgage is merely an equitable
value. In England gold is the standard of mortgage.
value and is legal tender for any amount, YSTiere a banker takes a charge, which is
silver being merely token money. In India, subject to a prior mortgage, he should give
however, the standard of value is silver. notice of his charge to the prior mortgagee.
(See Bimetallism.] (See Tacking.
MORATORIUM. An extension of time If a mortgagee deposits his mortgage, and
which is sometimes granted by the Govern- the relative deeds, with a banker as security
ment of a country for the payment of debts. for a loan, he can charge it only to the extent
The circumstances under which a mora- of the mortgage debt. For example, if John
torium is allowed are always of a very Brown, who holds a mortgage deed from
exceptional nature. In consequence of the Jones for /500 upon property valued at
great floods in Paris in January, 1910, many /1.500, deposits the mortgage and the deeds
traders suffered severely, and the French relating to the property with his banker for
Government suspended the law regarding an advance, the security is not worth more
the protest of commercial bills, and enacted than /500 to the banker because that is the
that bills falling due between January 26 extent of Brown's interest in the property.
and February 15 were not to be protested In such a case the banker should give notice
for non-payment until after a delay of to the mortgagor that the mortgage deed
twent}' davs. The respite was granted to has been deposited with him as security.
the various departments which were affected When the mortgagor receives the notice, it
by the floods. warns him not to repay the loan to the mort-
During the Franco-German war the French gagee without the banker's consent. All
Government extended the date of payment reductions in the amount of the mortgage
of bills in Paris for three months. debt should be made direct to the banker
The Argentine Republic adopted the by the mortgagor, and as reductions may
device in 1S91 during a monetary panic. have been made before the deeds came into
MORTGAGE. (From wort, dead, and the banker's hands, an acknowledgment
gage, a pledge.) should be obtained from the mortgagor as
A mortgage is a charge which a borrower to the exact amount which is still due.
gives to a lender upon a part or the whole of Mortgages and charges created by
his property. companies must now be registered. (See
For example, if Brown borrows from Registration of Mortgages and Charges.)
Jones the sum of ^100 and, as security for By the Stamp Act, 1891, the stamp duties
the loan, conveys to him the fee simple of a are :
£ «• d. £ s. d.
£250 and not exceeding £300 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 2 6 or of the money thereby
(2) Being a collateral, or auxi- secured :
Denoting Stamps.)
£1,000 = consideration
(3) Being an equitable mort-
gage :
2,500 = half of mortgage
For every £100, and any
£3,500. (See Conveyance.)
fractional part of £100,
of the amount secured
Transfer, Assignment,
.010 The following are
the Sections of the
Act, 1891, relating to mortgages, etc.
Stamp
(4)
Disposition, or Assigna- Meuning of " Mortgage."
tion of any mortgage, "86. (1) For the purposes of this Act the
bond, debenture, or expression mortgage' means a '
348
MORJ DICTIONARY OF BANKING [MOR
arising after August 31, 1903, with a limit of see Mortgage, and Section 86.
105. in respect thereof, under the provisions MORTGAGEE. The person in whose
of Section 7 of the Revenue Act, 1 903. The favour a mortgage is given.
collateral security or securities should also MORTGAGEE IN POSSESSION. Where
bear a duty-paid stamp under Section 1 1 of a mortgagor has failed to repav the money
the Stamp Act, 1891. An additional duty- due under his mortgage, and the mortgagee
paid stamp can be obtained from time to has taken into his own hands the collection
time, as and when additional duty is of the rents and management of the property,
impressed on the primary security. he a mortgagee in possession.
is A mort-
" Equitable —
Mortgages. In the case of gagee, however, usually puts in a receiver to
equitable mortgages, every security, whether manage the estate and collect rents, as the
primary or collateral, is chargeable with the mortgagee thereby avoids the liabilities to
duty of Is. per cent, on the highest amount which he would be exposed by being a
at any one time due in respect of the in- mortgagee in possession. A mortgagee in
debtedness secured to the bank up to date possession may be liable for any damages
(i.e. within thirty days) and with additional that occur, if he gives up possession without
duty from time to time, in accordance with the consent of the mortgagor.
the provisions of Section 88 (2) of the Stamp An equitable mortgagee by deposit of title
Act, 1891, if the indebtedness should deeds can take possession only after he has
subsequentlv reach, at any one time, a higher received the sanction of the Court.
total. By the Conveyancing and Law of Pro-
" In no case can the value of the security perty Act, 1881, Section IS, a mortgagee in
assigned, deposited or charged, be taken as possession shall have, if and as far as a
the basis of assessment for mortgage duty. contrary intention is not expressed in the
" Reconveyances. — Reconveyance duty is mortgage deed, or otherwise in writing,
payable on the highest amount of the in- power to make from time to time, an agri-
debtedness at any one time secured this duty-
; cultural or occupation lease for any term not
is exigible on all reconveyances, where the exceeding twenty-one years a building lease
;
highest amount at any time due on the for any term not exceeding ninety-nine years ;
351
— - " —
lease shall be made in consideration of the every other officer appointed by the
lessee, or some person by whose direction council, and of the clerk to the
the lease is granted, having erected, or agree- justices.
ing to erect within not more than five years "2. The remuneration and allowances
from the date of the lease, buildings, new or by the Treasury to be pay-
certified
additional, or having improved or repaired able to the Treasury in respect of
buildings, or agreeing to improve or repair an election petition.
buildings within that time, or having exe- "3. The remuneration certified by the
cuted, or agreeing to execute within that recorder to be due to any assistant
time, on the land leased, an improvement recorder, assistant clerk of the peace,
for or in connection with building purposes. or additional crier."
A nominal rent may be made payable for the Sub-section 3 provides as follows :
first five years, or anv less part of the term. " No other payment shall be made out
(See Mortgage.) of the borough fund, except
MORTGAGOR. The person who mort- " (a) Under the authority of an
gages or charges his property in favour of a Act of Parliament or ;
partv who has lent him money. " (b) By order of the council or ;
perpetual existence, any payments which " (<?) In cases in which the court of
were due when the estate passed from one quarter sessions for a county,
person to another became non-existent. A or a justice acting in and for
corporation may now hold land in practically a county in the discharge of
the same way as an individual, the holding his judicial duty, might
in mortmain being almost obsolete. make an order for the pay-
MUNICIPAL CORPORATION. The Muni- ment of money on the
cipal Corporations Act, 1882, provides : — treasurer of the county.
" Section 142. (1) All payments to and " (4) Saving, nevertheless, in relation to the
out of the borough fund shall be application of the borough fund as
made to and by the treasurer. authorised by this Section, or other-
" (2) All payments to the treasurer shall wise by this Act, all rights, interests,
go to the borough fund. and demands of all persons in or on
"141. (1) An order of the council for pay- the real or personal estate of the
ment of money out of the borough municipal corporation, by virtue
fund shall be signed by three mem- of an}' legal proceeding, or of any
bers of the council, and counter- mortgage, or otherwise.
signed by the town clerk. When a loan is required, reference should
" (2) Any such order may be removed into be made to the Statute under which the
the Queen's Bench Division of the power to borrow is obtained, so as to ascer-
High Court by writ of certiorari, and tain the extent of the power, and whether the
may be wholly or partly disallowed sanction of the Local Government Board or
or confirmed on motion and hearing, other authority is required.
with or without costs, according to The treasurer's accounts are to be made up
the judgment and discretion of the half-yearly to such dates as the council,
Court." with the approval of the Local Government
Section 140, s.s. 2, enacts that the following Board, shall appoint (Section 26). The
payments may be made without order of the treasurer shall within one month from the
council :•
date to which he is required to make up his
" 1. The remuneration (if any) of the accounts in each half-year, submit them,
mayor, of the recorder any) in his
(if with the necessary vouchers and papers, to
capacity either of recorder or of j udge the borough auditors (Section 27).
of a borough civil court, of the stipen- A vacancy in the office of treasurer shall be
diary magistrate (if any), of the town filled within twenty-one days after its
clerk, of the treasurer, of the clerk of occurrence (Section 18, s.s. 3). (See Local
the peace when paid by salary, of Authorities.)
352
— —
353
= 5— ("535)
NAM] DICTIONARY OF BANKING [NAT
goods, for the amount thereof, tion Is. per certificate. The certificates are
unless the same is duly paid by the issued to " bearer," but a holder can insert
"
company." a name and so make the " certificate
" Limited " must be the last word in a nominal, in which case it cannot be
354
—
re-inscribed in any name other than that so thereof, but no stock can be transferred
inserted unless duly indorsed in the presence until the probate of the will or letters of
of two witnesses. administration has or have been left with
The Bank does not recognise any trust, the Bank for registration.
and when the stock is registered in more Xo stamp duty is payable in respect of
than one name, and one of the parties dies, any dividend warrant, transfer of stock,
the Bank deals only with the surviving holder stock certificate or coupon (National Debt
or holders. Act, 1870, Section 71).
The Bank will not register more than four At foot of page is a copy of a Local Loans
holders in any one account. A holder may Stock receipt and the various notices to
have more than one account provided that holders printed thereon.
each one is distinguished either by a number Should it be desired that the dividends
or by such other designation as may be be paid in some way other than by post to
directed by the Bank, but more than four the first, or sole, stockholder which is done —
accounts in the same name are not permitted. —
without application the necessary instruc-
Stock cannot be added to a joint account tions must be lodged at the Bank.
where the death of one of the holders has Fresh instructions are not required upon
b?en notified to the Bank, but the surviving an alteration in the amount of an existing
holders may open a new account and have account.
the old one transferred to it. Stock may be The following is printed upon the back of
registered in the name of a corporation or of the receipt :
—
two or more bodies corporate and the holding
Notice to Holders
will be deemed by the Bank a joint tenancy.
of
A power of attorney for acceptance, sale or Local Loans £3 per cext. Stock.
transfer, or anv combination thereof (with or
without dividends) costs lis. 6d. A power Dividends are due and payable on and
for sale of English CTOvernment stock, where after the 5th January, 5th April, 5th July
the nominal amount does not exceed £100, and 5th October (unless any of these days
costs 4s. An application for a power of fall on a Sunday or Bank Holiday, in which
attorney must be made personally or by an case they will be payable on the business
agent.
"
If a stockholder acts himself, after dav next following), and will be paid in one
the issue of a power, the power is thereby of the following modes :
tect them-
from fraud,
hereinafter called the said Transferee
are recommended
TransferDays :
the sum of to accept by
Monday, being the consideration for themselves or
their Attorneysall
Tuesday, Interest or Share in the Capital or Joint Stock of Local
Wednesday, Fers made to
Thursday,
Loans £3 per cent, stock forming part of the National them.
Friday, Debt, transferable at the Bank of England, and all
Holidays property and interest in and right to the
excepted. same, and the Dividends thereon, by this £ s. <l.
355
NEG] DICTIONARY OF BANKING [NEG
instructions to the First, Stockholder, delivery, passes the full title to the benefit
contrary. Sole Executor, or Ad- of the instrument to the transferee, who
Stockholder includes ministrator, or to takes it bond fide and for value, irrespective
Sole Surviving Stock- any Person, Firm, or of any defects that there may be in the
holder, Sole Execu- Company, upon the transferor's title, and on which the holder
tor or Administrator, written Request, in is able to sue in his own name.
and Sole Surviving the prescribed form, Acheque, bill, and promissory note are
Executor or Admin- of all the Stock- negotiable instruments, and the Bills of
istrator. First holders, Executors, Exchange Act, 1882, provides that where a
Stockholder includes or Administrators. person is a holder in due course he holds the
the First Executor. bill free from any defect of title of prior
parties and may enforce payment against
(b) Dividends will be paid to any Stock- all parties liable on the bill. A
holder in
holder, Executor, or Administrator, person- due course is a holder who takes a bill com-
ally attending at the Bank, on his written plete and regular on the face, before it is
Request, in the case of a Sole Account, or on overdue, in good faith and for value and
the written Request of all the Stockholders, without notice of any defect in the title of
Executors, or Administrators, in the case of the person who negotiated it. The negoti-
ajoint Account. The Request in either case ability, however, may be destroyed by a
must be in the prescribed form. restrictive indorsement such as " Pay John
Forms of Postal Request can be obtained Brown onlv." A cheque crossed " not nego-
at the Bank of England, at any of their tiable " warns the holder that he obtains no
Branches, or at any Money Order Office better title than the person had from whom
"
throughout the United Kingdom. he obtained it. (See "Not Negotiable
Postal Dividend Warrants will be crossed Cheque.)
" & Co." and must therefore be presented In addition to cheques, bills, and promis-
for payment through a banker. The Bank sory notes, the following are examples of
cannot undertake to cross a Warrant payable negotiable instruments bank notes, coin
:
to a banker with the account to which the of the realm, treasury bills, foreign bonds,
Dividend is to be placed. The Stockholder share warrants and share certificates to
must himself instruct the banker. bearer. Debentures, payable to bearer, of
Persons who receive Warrants by post, an English company have in recent years
should give notice to the Bank if the)' are not been held by the Courts to be negotiable
received on the day on which they ought to instruments. It does not follow that
be delivered ; but need not acknowledge because an instrument is a negotiable
those that arrive in due course. instrument in the country where it has been
Forms of Request, for the receipt of Divi- created, that it will be regarded as such in
dends on Personal Attendance, can be this country. To make it a negotiable
obtained on application at the Dividend instrument in this country there must be
Office, Bank of England. evidence that it is the custom of merchants
Under the provisions of the National Debt to treat it as negotiable. Bigham, J., said
Acts, Stocks and Dividends unclaimed for (in Edchtein v. Schuler, 1902, 2 K.B. 144) :
356
NEG] DICTIONARY OF BANKING [NEG
of goods, the person to whom an indorsed after the event of the speculations with
bill of lading is delivered obtains a right to which the bank managers might have occu-
obtain possession of the goods, but if the pied themselves in reference to the capacity
transferor had no title, or an imperfect title, to in which the broker who offered the bonds
the bill the transferee cannot obtain any better
.
as security for an advance held them. I
title than the transferor had. If the trans- think, however, they were not bound to
feror had no title, the transferee cannot occupy their minds with any such specula-
obtain a title. tions. I apprehend that when a person
Certain American railroad certificates whose honesty there is no reason to doubt
which pass by delivery when the transfer on offers negotiable securities to a banker or
the back has been signed are not negotiable any other person, the only consideration
instruments. (See American Railroad likely to engage his attention is, whether
Certificates.) the security is sufficient to justify the ad-
Where a negotiable instrument is given as vance required. And I do not think the law
security, a banker usually takes a memoran- lays upon him the obligation of making any
dum or agreement stating the purpose for inquiry into the title of the person whom he
which it is pledged, though a memorandum finds in possession of them ; of course, if
is not absolutely necessary. A deed of there is anything to arouse suspicion, to lead
transfer is not required for bearer bonds, as to a doubt whether the person purporting
thev pass bv mere delivery and the banker to transfer them is justified in entering into
obtains a valid security, even if the person the contemplated transaction, the case
from whom he received the bonds had would be different, the existence of such
stolen them or the bonds formed part of a suspicion or doubt would be inconsistent
trust. But it is essential to his security that with good faith. And if no inquiry were
when he took the bonds he had no notice of made, or if on inquiry the doubt were not
the defective title of the transferor. It removed and the suspicion dissipated, I
would appear that mere negligence in taking should have no hesitation in holding that
a negotiable instrument does not fix a good faith was wanting in a person thus
transferee with notice of a defective title ;
acting."
but the transferee must be able to show In the case of bonds not strictly negotiable
that he took the security in good faith and instruments, if they contain words purport-
for value. The law is very clearly laid down ing to make them transferable by delivery,
in the case of London Joint Slock Bank v. or by indorsement and delivery, a holder
Simmons (1S92, A.C. 201), and in the course may be estopped from denying their nego-
of his elaborate judgment Lord Herschell tiability if he has so dealt with them as to
made use of the following expressions "It
: lead the person taking them to treat them
is surely of the very essence of a negotiable as such. Where certain bonds had been
instrument that you may treat the person handed to an agent for the purpose of raising
in possession of it as having authority to money, and an advance was obtained from a
deal with it, be he agent or otherwise, moneylender, who afterwards deposited the
unless you know to the contrary, and are sei unties with bankers as cover for advances
not compelled, in order to secure a good by the bankers to the moneylender, the
title to yourself, to inquire into the nature bankers (the defendants) claimed to hold the
of his title, or the extent of his authority-. securities for what was due to them by the
... I should be very sorry to see the moneylender, and the plaintiffs claimed
doctrine of constructive notice introduced that the securities were a security to the
into the law of negotiable instruments. defendants for such an amount only as was
But regard to the facts of which the taker due by the principal and his agent to the
of such instruments had notice is most moneylender. Thus, in the case of Easton
material in considering whether he took in \ I ondon Joint Stock Bank (1887, 34 Ch. D.
good faith. If there be anything wanting 95) in the Court of Appeal, Bowen, L.J.,
which excites the suspicion that there is said :
" Even if these bonds are not strictly
something wrong in the transaction, the negotiable, and do not possess the incidents
taker of the instrument is not acting in hie instruments which are recog-
good faith if he shuts his eves to the facts nised as such, nevertheless a further question
presented to him and puts the suspicions arises, whether S., by the way lie has treated
aside without further inquiry. . It is easy
. . these bonds, has not estopped himself from
enough to make an elaborate presentation denying their negotiability, whether he has
357
— — —
—
not by placing for disposal, and with the
"
(5) Where any person is under obhgation
intention that they should be transferred, in to indorse a bill in a representative
the hands of an agent of his own, bonds capacity, he may indorse the
which on their very face purport to create a bill in such terms as to negative
—
takes them really chosen to treat these " (1) Where a bill is negotiable in its
bonds as negotiable and to authorise his origin it continues to be negotiable
agent to treat them as such. If the negoti- until it has been (a) restrictively
ability of these bonds by estoppel, so to indorsed or (6) discharged by pay-
speak, arises, that disposes of all difficulty ment or otherwise.
that would arise owing to the seal being " (2) Where an overdue bill is negotiated,
attached to these bonds, because it is no it can only be negotiated subject to
longer a question whether they are strictly any defect of title affecting it at its
speaking negotiable, but whether S. has maturity, and thenceforward no
chosen to treat them as such. The second person who takes it can acquire or
way of looking at the matter may be dealt give a better title than that which
with from two points of view, but practically the person from whom he took it
they run into one another. You may say had.
that S. having placed in the hands of his " (3) A bill payable on demand is deemed
agents these bonds with the intention that to be overdue within the meaning,
they should be transferred beyond those and for the purposes, of this Section,
agents, and held his agents out to the world when it appears on the face of it
as clothed with authority to transfer them to have been in circulation for
—
as negotiable cannot afterwards, by any an unreasonable length of time.
unknown dealing or limitation of authority What is an unreasonable length of
which he has conferred on his agents, pre- time for this purpose is a question
judice those who took the bonds which have of fact.
been so floated. Or you may say, which I " (4) Except where an indorsement bears
think is a sound way of putting it, that as date after the maturity of the bill,
regards S. and the bank these bonds have every negotiation is prima facie
become negotiable by estoppel, and there- deemed to have been effected before
fore S. is precluded from saying the legal the bill was overdue.
title to these bonds is not in the bank." " (5) Where a bill which is not overdue
NEGOTIATION OF BILL OF EXCHANGE. has been dishonoured any person
The of Exchange Act, 1882, Section 8,
Bills who takes it with notice of the
s.s. 2,provides that dishonour takes it subject to any
" A negotiable bill may be payable either defect of title attaching thereto
to order or to bearer." at the time of dishonour, but no-
The negotiation of a bill is defined in thing in this sub-section shall affect
Section 31 : the rights of a holder in due course."
" (1) A bill is negotiated when it is trans- A bill may, in the ordinary course of busi-
ferred from one person to another ness, be negotiated back to a party already
in such a manner as to constitute liable thereon. By Section 37 :
—
the transferee the holder of the bill. " Where a bill is negotiated back to the
" (2) A bill payable to bearer is negotiated drawer, or to a prior indorser or to the
by delivery. acceptor, such party may, subject to the
" (3) A bill payable to order is negotiated provisions of this Act, re-issue and further
by the indorsement of the holder negotiate the bill, but he is not entitled to
completed by delivery. enforce payment of the bill against any
" (4) Where the holder of a bill payable intervening party to whom he was previously
to his order transfers it for value liable."
without indorsing it, the transfer Where a has been transferred by in-
bill
gives the transferee such title as the dorsement four different persons and
to, say,
transferor had in the bill, and the the fourth indorser indorses it back to the
transferee in addition acquires the first, indorser number one cannot enforce
right to have the indorsement of payment against the second, third or fourth
the transferor. indorsers, because each of those three
358
—
indorsers has a claim against him as the first NOMINAL CAPITAL. The amount autho-
indorser. But if the first indorser negatived rised as the capital in the memorandum of
his liability when indorsing the bill, by the association of a joint stock company, called
" "
addition of the words " without recourse also the " authorised " or " registered
to his signature, he can enforce payment, capital. (See Capital.)
when the bill is indorsed back to him, against NOMINAL CONSIDERATION. Where
the said second, third or fourth indorsers shares are transferred without any money
because they have, in that case, no claim being paid for them, as where a holder
against him. transfers them to a bank or to the nominees
By Section 8, s.s. 1 " When a bill contains
: of a bank as security for an overdraft or a
words prohibiting transfer, or indicating an loan, a nominal consideration, generally five
intention that it should not be transferable, shillings or ten shillings, is inserted in the
it is valid as between the parries thereto, but document of transfer.
is not negotiable." (See Bill of Exchange, Such a transfer is subject to a stamp duty
Delivery of Bill, Indorsement.) of ten shillings.
NET, OR NETT, PROFIT. The profit A conveyance or transfer operating as a
which remains after the deduction of all voluntary disposition inter vivos is charge-
expenses, and any losses which may have able with the same stamp duty as if it were a
been incurred. conveyance or transfer on sale, with the sub-
NET, OR NETT, RENTAL. The rent of stitution in each case of the value of the
a property after deduction of all taxes, property conveyed or transferred for the
repairs, etc. (See Valuation.) amount or value of the consideration for the
"NO ACCOUNT." These words are sale. (See Section 74 of the Finance (1909-
written upon a cheque which is returned 10) Act, 1910, under heading Conveyance.)
by the drawee banker, because the drawer But a conveyance or transfer made for
has no account with the banker. nominal consideration for the purpose of
A person is liable to be charged with false securing the repayment of an advance or
pretence if he issues a cheque drawn upon a loan is not chargeable with the duty imposed
banker where he has no account. by that section (see s.s. 6 of Section 74), the
" NO ADVICE." These words (or " no duty remaining at 10s.
orders ") are often written upon a bill by a In the case of transfers, for nominal con-
London banker when he has not received an sideration, to or from banks or their nomi-
advice to pav the bill domiciled with him by nees, the Board of Inland Revenue are of
a customer of a country bank. opinion (see the Board's circular of Sep-
Instead of the words, the abbreviation tember 5. 1910, under Transfer of Shares)
" N.A. " is sometimes used. The danger of that the interests of the Revenue would, as
using those two letters was exhibited in an a general rule, be adequately protected if
unreported case in 1909, where it was sug- registering officers were furnished with a
gested that they might mean " no assets," certificate by the bank to the effect that the
" no account " or " no advice." The bank transfer is excepted from Section 74 of the
claimed that they meant " no advice." Finance (1909-10) Act, 1910, and is duly
Where any doubt could arise as to the stamped.
meaning of letters, when written on a bill Section 17 of the Stamp Act, 1891, imposes
or cheque giving the reason why it is being on all registering officers the duty of satis-
returned unpaid, it is much the wiser plan fying themselves that all instruments of
to write the words in full and so save mis- transfer are adequately stamped before they
takes and misrepresentations. admit them for registration. In a circular
" NO FUNDS." These words, which are in April, 1910, the Board of Inland Revenue
sometimes placed upon a cheque by a banker, point out to all registering officers, who may
mean that the drawer has no funds in his have to deal with instruments purporting to
account with which to pay the cheque. be properly stamped with the fixed duty of
" NO ORDERS." Where a customer of a 10s., the necessity of satisfying themselves
country bank accepts a bill payable at a that the provisions of the law have been
London bank, and when the London bank complied with in each case before they
does not receive an advice from the country admit the instrument to registration.
bank to pav the bill, it is dishonoured and A form, supplied by the Inland Revenue,
usuallv marked " no orders " or " no on which to supply the required explana-
advice." tion, is as follows :
359
— —
" From
To_
Name of Company
" Of the circumstances in which the actual
market value of the securities transferred is
not shown as the consideration :
value, it is said to be " above par " or "at believe that he has an interest in the business,
360
.
he may be held to be liable for the debts to crossed cheques, as denned in the Bills of
of the firm. (See Limited Partnership, Exchange \> the ordinary meaning of
i ;
NON-BUSINESS DAYS. For the pur- cheque drawn payable to " John Brown
poses of the Bills of Exchange Act, 1882, only " is an example of a cheque which
Friday, Christmas Day, a bank holiday in "liable " do not mean that the cheque on
under the Bank Holidays Act, 1871, or Acts which those words are written cannot be
amending it, a day appointed by Royal transferred from one person to another. A
proclamation as a public fast or thanksgiving " not negotiable " cheque may be trans-
day. ferred just as freely as any other cheque, but
Any other day is a business day. (See if the transferor has no title to the cheque,
Section 92 under Bills of Exchange Act, a transferee cannot obtain, even if he gives
1882. value for it, a better title to it than the
NON-CUMULATIVE DIVIDEND. Where transferor had.
the dividend upon preference shares is The words " not negotiable " really act
confined to the profits of each separate year, as a warning to anyone to whom
the cheque
it is a non-cumulative dividend. On the is offered, that, if he must take it
he takes it,
other hand, if the profits of succeeding years subject to any defect there may be in the
may be employed to pay up all dividends title. If such a cheque has been stolen, and
which have accrued on the preference shares, finally comes into the possession of John
before the ordinary shares get anything, Brown, who gives value for it and obtains
the dividend is said to be cumulative. payment through a banker, John Brown is
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 SO 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, how- collecting such a cheque for a customer is
ever, one partner has such an implied protected by Section S2. The true owner
authority. cannot recover from the banker. (See Col-
NORA or NORAS. A
Stock Exchange lecting Banker, Crossed Cheque.)
name for Great Northern Railway deferred But if a banker gives cash for a " not
ordinary stock. (See York Preferred.) negotiable " cheque drawn upon another
NOT NEGOTIABLE BILL. A bill is not banker he is not protected by the Act, and
negotiable when it contains words prohibit- will be liable to the true owner at any time
ing transfer, or indicating an intention that within six years, if there should be a flaw
it should not be transferable, but it is valid in the title, e.g. if the cheque has been
as between the parties thereto. (Section 8, stolen or one of the indorsements is forged.
s.s. 1, Bills of Exchange Act, 1882 \ " not negotiable " cheque may be pre-
" NOT NEGOTIABLE " CHEQUE. A sented for payment by, or may be paid in
cheque which is crossed generally or specially to the credit of, the payee or anyone else
may have the words " not negotiable " added to whom it has been transferred.
thereto, and any holder may add those Cheques are frequently crossed "not
words. negotiable" without the addition of trans-
The Bills of Exchange Act, 18S2, does not verse lines. In such cases the words by
state whether, or not, it is necessary that the themselves do not constitute a crossing in
words " not negotiable " be placed between accordance with the Bills of Exchange \< t,
the transverse lines. In practice they are and they may be ignored.
found sometimes between, and at other 1 1 i, \ ery desii al ile, and is in fact
times either above or below the lines. tomary, tli.it a bankei to whom a cheque is
" Where a person takes a crossed cheque speciallv crossed tiould placi bis stamp
which bears on it the words not negoti-
'
upon tin' cheque .is evidence to th<
361
—
banker to whom it is crossed is not upon the NOTE ISSUE. Certain banks have the
cheque. privilege of issuing their own notes, but the
Where a " cheque " contains, after the amount of the note issue of an English bank
order to pay, the words " provided the form is strictly limited to the amount certified by
of receipt at the foot hereof is duly stamped, the Commissioners of Inland Revenue as
signed and dated," it is not a negotiable being the average amount of the notes of the
instrument. In Bavins, junr., &• Sims v. bank in circulation during a period of
London and South Western Bank (1900, 1 Q.B. twelve weeks preceding April 27, 1844. The
270), where such a " cheque " had been Bank Charter Act of 1844 regulates the
stolen and the receipt and indorsement note issues in England.
forged, it was held that the order for pay- The issue of bank notes in Scotland is
ment, not being unconditional in its terms, regulated by 8 & 9 Vict. c. 38, and in Ireland
was not a cheque, and therefore it was by 8 & 9 Vi'ct. c. 37. Both Acts were passed
not a negotiable instrument. (See Cheque, in 1845, and the regulations are somewhat
Crossed Cheque.) similar the Bank Charter Act, 1844.
to
" NOT PROVIDED FOR." An answer Notes in Scotland and Ireland may be for one
sometimes written by a banker on a cheque pound and upwards, but in England the
which is being returned unpaid for the lowest legal amount is £5.
reason that the drawer has failed to pro- Scotch and Irish banks may have an office
vide funds to meet it. The abbreviation in London without losing the right to issue
occasionally used is " N.P." or " N.P.F." own notes, though the right cannot be
" NOT SUFFICIENT." When the funds exercised bv the London offices.
in a customer's account are insufficient to The " note issue " of a bank means the
meet a cheque which has been presented to total amount of own notes which the bank is
the banker through the clearing or otherwise, legally authorised to issue. The expression
the cheque, on being returned unpaid, is " note circulation " is generally used to
sometimes marked with the words " not mean the total of the bank's own notes which
sufficient," or " not sufficient funds," or the are actually in the hands of the public.
abbreviations " N.S." or " N.S.F." (See Bank of Issue.)
The deficiency must, however, on no NOTE OF HAND. A name occasionally
account be stated. given to a promissory note [q.v.).
of notes of a bank which are actually in the being, of course, the difference between the
hands of the public. The " note issue " balance of the account and the notes on
represents the amount of own notes which hand. The total of the outstanding entries in
a bank is authorised to issue. the register should, of course, agree with
362
,
the balance of the note account. (See Bank An account pursuant to the Act 7 & 8
Notes.) Met. c. 32, of the notes of the said bank in
NOTE RETURN.
Every banker who circulation during the week ending Saturdav,
issues his own
must render weekly
notes the day of 19 .
363
NOTi DICTIONARY OF BANKING [NOT
'
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, 1910, 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
verified bv the oath or affirmation of the
Amount of Amount of Xotes payable
Date. Bank Notes toOrder and Bills of Ex- banker or one of the bankers, or of the
in circulation change in circulation.
cashier, accountant, or chief clerk of the
bank and it should be sent by post,
;
15 .
" The duty, which is 3s. 6d. for every £100,
22
29 ! or fractional" part of £100 of the half-yearly
February 5 .
average, should be transferred to the credit
[and so on up
of the Commissioners of Inland Revenue, at
to] June 25
the Bank of England, within fourteen days
.
authorised to issue. (Section 17, 7 & 8 Vict, first mortgagee is secure as to past ad-
c. 32). (See Bank Notes, Licence.) 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 at once 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 had 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 a 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 <>ii receipt of a second charge,
notice of
advance that the banker may make, after the account should be broken and the
receipt of such notice, will not be recover- advance allowed to remain standing against
able out of the security in priority to the the security, until it is repaid or some
person holding the second charge. It fresharrangement is made, a new account
should be particularly noted that all pay- being opened for future transactions.
ments to credit after the notice will go to Any overdraft on the new account would,
reduce the debt against that security, and of course, be unsecured, unless fresh
all withdrawals will constitute a fresh i
security were given. The security in such
unsecured advance. The fact that the a case should not be given up to the
banker's memorandum of deposit stated debtor without the consent of the second
that the security was to cover future ad- mortgagee.
vances, or that the fixed amount which the The same rule applies if a banker has
banker agreed to lend had not all been notice that the owner of the land, the deeds
taken, would not make anv difference. of which are lodged with him as security,
In West v. Williams (1899, 1 Ch. 132) has contracted to sell the land to a party
Lindley, M.R., said :
" Even if the first who is aware of the banker's charge. After
mortgagee has agreed to make further ad- the notice has been received, all sums paid
vances on the property mortgaged to him, to credit discharge that security to the
the mortgagor is under no obligation to take extent of the credits, and the subsequent
further advances from him, and from no debits are unsecured so far as that particu-
one else ; and if the mortgagor chooses to lar security is concerned.
borrow from someone else and to give him In London and Countv Banking Company,
a second mortgage, the mortgagor thereby Limited v. Ratcliffe (1881, 6 \ 722 where
<
.
releases the first mortgagee from his obliga- a person purchased land, with nut ice that
tion to make further advances. Whatevi r the title deeds were deposited with a banker
prevents the mortgagor from giving to the as a security. James, L.J., in the course of
365
— —
his judgment in the Court of Appeal (of lodged as security, the banker can ascertain
which there is no recognised report) said the existence of a prior charge upon the
that the advances made after the bankers land, either directly, or by reference to some
had notice of a change in the beneficial will or other deed, he has constructive
ownership were not a charge on that owner- notice of the contents of the charge recited
ship. It was true that there had always therein, or if he receives any information
been a large balance due to the bankers, which should reasonably give him a hint of
but according to the rule in Clayton's case the existence of a charge and lead him to
the credits must be attributed to the debits find out about it, it is also a constructive
in order of date, there being nothing special notice. All clues should be carefully
in the case to exempt it from the operation followed up. A tiny thread may lead the
of that rule. If the bankers had been minded way to an important fact. A banker is
to substitute for a security on the property, not legallv fixed with notice of a charge
a charge on the purchase money, it would affecting the security of his customer, by
have been very easy for them to do so by any information regarding that property
getting from the client a direction to the which might be included in deeds deposited
purchaser to pay them the purchase money by other customers, but he would naturally
and giving due notice of it to the purchaser ;
give heed to any such information which
this they had not done and they had failed might come to his notice.
to establish a charge on the property (see With regard to restriction on construc-
Hutchison, vol. iii, p. 178). In the House tive notice,the Conveyancing Act, 1882,
of Lords, Lord Blackburn said
" This, in
: Section 3 provides :
bound to inquire whether the bank has, "(a) It is within his own know-
after receiving notice of this purchase, made ledge, or would have come
fresh advances on the security of the unpaid to his knowledge if such
vendor's hen or whether the burden does
;
inquiries and inspections
not lie on the bank, advancing on the had been made as ought
security of the unpaid vendor's hen, to give reasonably to have been
notice to the purchaser, that it has so done, made by him or ;
or intends so to do. No case was cited in "(b) In the same transaction with
which any such point had been discussed ;
respect to which a question
but I think both convenience and principle of notice to the purchaser
strongly point to the burden of giving arises, it has come to the
notice lying on the bank, and not on the knowledge of his counsel, as
purchaser, whose inquiries might often be such, or of his solicitor, or
annoying and impertinent." other agent, as such, or
Where property which was subject to two would have come to the
mortgages, and the first mortgagees had knowledge of his solicitor, or
received notice of the second mortgage, other agent, as such, if such
was sold by the first mortgagees, who, after inquiries and inspections
satisfying their own charge, forgot about had been made as ought
the notice they had received, and paid the reasonably to have been
surplus of the proceeds of the sale to the made by the solicitor or
mortgagor, was held that they were liable
it other agent."
to the second mortgagee for the amount A second mortgagee should always give
of his mortgage to the extent of the surplus I
notice of his charge to the first mortgagee.
which remained after their own debt was Such notice will prevent the first mortgagee
discharged. See West London Commercial from making any further advances upon the
Bank v. Reliance Permanent Building Society I
property or buying up any mortgage subse-
(1885, 29 Ch. D. 954). quent to the second and tacking it to his own
There are two kinds of notice actual — first mortgage. (See Tacking.)
notice, as in the cases above referred to, Equitable charges rank according to the
where the banker is informed verbally or date of the charge, not according to the
receives notice in writing, and constructive date of notice. If a banker receives a third
notice. If by a perusal of the title deeds charge upon a property, he cannot, by
366
NOT] DICTIONARY OF BANKING [NOV
giving notice to the first mortgagee, before presents the bill again to the drawee tor
the second mortgagee gives notice, obtain acceptance, or to the acceptor for payment,
priority over the second mortgage. or to the bank where accepted payable, and
Where notice is required to be sent to if acceptance or payment is still not obtained
mortgagees or trustees, a separate notice the notary makes an official note of the fact
should be sent to each one and an acceptance upon the bill, or upon a slip which is
of notice received from each. In the case of attached to the bill. In the case of an inland
Saffron Walden Building Society v. Rayner bill, it is not necessary to note or protest
(1880, 14 Ch. D. 406). it was held that notice any such bill in order to preserve the re-
to the solicitor of trustees or mortgagees did course against the drawer or indorsers.
not bind them. James. L.J., in the course of (Section 51, s.s. 1, Bills of Exchange Act,
his judgment, said :
" If the solicitors were 18S2.) When an inland bill is noted, it is
to receive notice in such a way as to affect generally with the idea of getting someone
the trustees with all the consequences of to accept the bill for the honour of one of the
that notice, it would be imposing a most parties to it.
tremendous burthen upon trustees to say In the case of a foreign bill, however,
that merely because they have employed a which has been dishonoured bv non-accept-
solicitor (the trustees having a trust fundi ance or non-payment, it must, in order to
in effecting an investment of the trust fund charge the drawer and indorsers. be duly
upon mortgage, they were in some sense protested for non-acceptance or non-pay-
agents of the trustees to receive any notices ment (Section 51, s.s. 2), unless instructions
of subsequent incumbrances or dealings by are received from the remitter of the bill
the cestuis que trustent of that trust fund. that it is not to be noted or protested.
I find it utterly impossible to arrive at such Noting is a preparatory step to the protest.
a conclusion. We have all had occasion A bill must be noted on the day of its dis-
several times to express our opinion of the honour the protest may be subsequently
;
prevailing fallacv that there is such a thing extended as of the date of the noting.
as the office of a solicitor, that is to say, (Section 51, s.s. 4.) A bill may be noted at
that a man has a solicitor, not as a person any time on the day of maturity in London
;
whom he is employing to do some particular it is not sent to the notary till the bank is
business for him, either conveyancing, closed. Delay in noting is excused when the
scrivening, or conducting an action, but as delay is caused by circumstances beyond the
an official solicitor, and that because a control of the holder and not imputable to
solicitor has been in the habit of acting for his default, misconduct or negligence. (Sec-
him, or been employed to do something for tion 51, s.s. 9.)
him, that solicitor is his agent to bind him A holder of a dishonoured bill is entitled
bv anything he says, or by receiving notices to recover the expenses of noting from any
or information. ... I am prepared, there- party liable on the bill. (See Section 57, under
fore, to sav that before a notice of this kind Dishonour of Bill of Exchange.)
of a charge upon the property can be of the If the services of a notary cannot be
slightest validity it must be given, if given obtained at the place where a bill is dis-
to a solicitor, to a solicitor who is actually honoured, the Bills of Exchange Act, 1S82.
either expressly or plainly authorised as provides that any householder or substantia
agent to receive the notice of that incum- resident of the place may, in the presence
brance." of two witnesses, give a certificate attesting
With respect to the registration of charges, [
the dishonour of the bill, which shall operate
see Land
Registry ; Land
Registry as if it were a formal protest of the bill. (See
(Middlesex Deeds); Registration <>f Bill of Exchange, Protest.)
Mortgages and Charges Yorkshire
; NOTOUR. In Scotland, a " notour bank-
Registry of Deeds. rupt " is an expression meaning a bankrupt
Notice of the assignment of a debt passes who is publicly acknowledged to be insolvent.
the legal right to such debt from the date of NOVATION. Novation is the substitution
such notice. Debts, Assignment of.)
(See of anew obligation for an old one. Where
(See Mortgage, Priorities, Tacking.) one bank amalgamates with another, the
NOTING. Where a bill has been dis- debtors of the old bank, as well as those who
honoured by non-acceptance or by non- have given security in any form, are required
payment it may be handed by the holder to to sign a form of assent agreeing to the
a notary public to be noted. The notary transfer of their obligations from the one
367
—
bank to the other. Until the form of assent banks which have had to close their doors
is signed, the debt, or security, should not reveals the same story of some large over-
be transferred from the one bank to the other. drafts which the banker had been nursing in
Where a creditor of the old bank has the fond hope that he might eventuallv-
received, notice of the amalgamation, Mr. bring matters right.
Justice Bucklev says (in his work on " Com- Whenever the question of nursing an
pany Law ") " Although he do not by an
: account arises, it is highly necessary that a
express agreement assent to the novation, banker give it a most careful consideration,
yet if he acts upon it, and takes the benefits especially if further accommodation is
which he could only be entitled to upon the required under the promise of a large reduc-
assumption that he has assented to it, there tion or the bait of additional doubtful
will be evidence on which the Court may find, security.
and, unless there is something to contradict In the words of the late J. W. Gilbart
it, ought to find, that he has agreed to (" History, Principles and Practice of
take the liabilitv of the new company in Banking "), " we do not mean to imply
substitution for that of the old one." that in every case it is inexpedient to
NURSING AN ACCOUNT. An operation nurse an account.' This is frequently done
'
which, on the one hand, may result in a with the best results but the determina-
;
various ways to bring it back again to that this copy has been examined
I certify
healthy life, in the hope that the money, or, with the original will deposited in this
at anv rate, some portion of it, may ulti- Registry and that it is a true copv. Dated
mately be recovered. A banker may try this of 19 .
than he w-as in when he first discovered the OFFICIAL QUOTATION. (See Quota-
unsatisfactory state into which the account tion on London Stock Exchange.)
had drifted, but when he is tempted to lend OFFICIAL RECEIVER. An official re-
more money under the promise of some large ceiver is a person appointed by the Board
reduction in the near future, he embarks upon of Trade to administer the estates of bank-
a rather perilous voyage. The additional rupts. He acts under the directions of the
loan may, in many cases, be made against a Board of Trade and is also an officer of the
deposit of further security, but, unless the Court to which he is attached. There may
securitv is of such a nature as to be easily be more than one official receiver attached
realised, the end of the matter may be worse to a Court. (Sections 66 and 67 of the
than at the beginning. The historv of mam- Bankruptcy Act, 1883.)
368
— — —
(4)
" To report to the creditois as to
receiver with such information, and (e)
give him such access to, and facilities any proposal which the
for inspecting the bankrupt's books debtor may have made with
and documents and generally shall respect to the mode of
give him such aid, as may be requi- liquidating his affairs :
to perform his duties under this Act. order, the date of the
creditors first meeting and
Duties Receiver as regards the of the debtor's public ex-
of Official
amination, and such other
Debtor's Conduct.
matters as it may be neces-
" 69. As regards the debtor, it shall be the sarv to advertise :
duty of the official receiver " (g) To act as trustee during any
"(1) To investigate the conduct of the vacancy in the office of
debtor and to report to the Court, trustee."
stating whether there is reason to In the winding up of joint stock companies,
believe that the debtor has com- the Companies (Consolidation) Act, 1908,
mitted any act which constitutes a provides as follows :
misdemeanour under the Debtors " 147. (1) Where the Court Englan m
Act, 1869, or any amendment made a winding-up order, there shall
thereof, or under this Act, or which be made out and submitted to the
would justify the Court in refusing, official receiver a statement as to the
suspending or qualifying an order affairs of the company in the pre-
for his discharge. scribed form, verified by affidavit,
" (2) To make such other reports concerning and showing the particulars of its
the conduct of the debtor as the assets, debts, and liabilities, the
Board of Trade may direct. names, residences, and occupations
" (3) To take such part as may be directed of its creditors, the securities held
by the Board of Trade in the public bv them respectively, the dates
examination of the debtor. when the securities were respectively
" (4) To take such part, and give such given, and such further or other
assistance, in relation to the prosecu- information as may be prescribed or
tion of anv fraudulent debtor as the .is the official re< eiver may require."
Board of Trade may direct. (See Bankrupt v, ompanies.)
<
369
2+— ("535)
—
facsimile of the common seal, with the addi- true owner, as no title can be obtained
tion on its face of the name of the place under a forged indorsement. (See Cheque,
where it is to be used. (See Section 79 of Collecting Banker.)
the Companies (Consolidation) Act, 1908, OPEN POLICY. (See Marine Insurance
under Seal.) Policy.)
OLD LADY OF THREADNEEDLE OPENING A CROSSING. Where a cheque
STREET. The term has been applied to the is crossed and the drawer cancels the crossing
Bank of England and the Directors of the j
by writing upon the cheque " Pay Cash "
Bank. In Brewer's " Dictionary of Phrase and adding his signature or initials, the
and Fable " it is stated that the Directors operation is called " opening the crossing."
" were so called by William Cobbett because, Before paying a cheque which has had
like Mrs. Partington, they tried with their the crossing opened, a banker should be
broom to sweep back the Atlantic waves of careful to ascertain that he is not running
national progress." any risk by paying it contrary to the original
OMNIUM. (Latin, of all.) A Stock Ex- crossing. For example, if a cheque, payable
change term denoting the aggregate value to Brown, with a cancelled crossing, is pre-
of the separate stocks or funds which may sented for payment by the payee himself,
form the security for a loan. it will be sufficient protection to the banker
ON 'CHANGE. The expression is used j
if the alteration is initialled or signed by
the London Stock Exchange). The business transferred by Brown, in its crossed condi-
of foreign bills and foreign exchange is tion, to, say, Jones, and after being duly
transacted in the Roval Exchange. indorsed bv Jones is wrongfully obtained by
" ONE MAN " COMPANY. A term Smith, who persuades the drawer to cancel
applied to a limited company where all the the crossing and then cashes the cheque, the
shares are held by one person, with the ex- banker would not be free from liability if,
ception, usually, of six shares, one of which by its payment, any loss is suffered by
is allotted to each of six other persons, so Jones, the true owner, who took it as a
as to make up the necessary number of mem- crossed cheque. (See Crossed Cheque.)
bers, to enable the company to be regis- OPINION BOOK. All bankers' opinions
tered with limited liability. (See Private received are entered up in this book with the
Company.) name of the person reported on, the name of
OPEN CHEQUE. A cheque is an open one the correspondent supplying the information,
when it can be presented by anyone across the date of his letter and the reason why the
the counter of the bank upon which it is inquiry was made. A sufficient space is
drawn, and cash obtained for it. A crossed left after each opinion to admit of further
cheque, on the contrary, can only be paid information being added from time to time.
through a banker, though it may be placed A book is sometimes kept for opinions
to the credit of a customer's account. given to correspondents, though the method
A holder for value has a title against all of taking a press copy of the letter in a special
the parties to the cheque, unless one of the letter book is frequently adopted.
indorsements necessary to transfer the pro- The book is sometimes called the " char-
perty in the cheque is forged but the
; acter book." All such books are carefully
banker on whom the cheque is drawn, even indexed. (See Banker's Opinion.)
if an indorsement is forged, is protected by OPTIONS. A method of speculation on
Section 60 of the Bills of Exchange Act, 1882, the Stock Exchange. The speculator pays
so long as he pays it in good faith and in the a certain sum for the right (or option) to buy
ordinary course of business. (See Payment (or " call," as it is termed) a certain amount
of Bill.) of stock at a fixed price within a specified
A collecting banker, however, who collects time ; or the sum may be paid for the right
an uncrossed cheque is liable to the true to sell (or " put " as it is termed) instead of to
owner thereof in the event of the cheque buy. A right either to buy or sell (called
having been stolen or an indorsement forged. a " put and call ") is termed a " double
If, instead of collecting, he gives cash for it, option."
he a holder in due course and can sue all
is ORDER (CHEQUE OR BILL). The Bills
parties to the cheque but if there should
; of Exchange Act, 1882, Section S, provides
prove to be a forged indorsement upon the as follows :
cheque, the banker will be liable to the " (4) A bill is payable to order which is
370
ORD' DICTIONARY OF BANKING [OVE
The word bill in those sub-sections includes £10, /100 each, and may be either fully
a cheque. paid up or only partlv paid. In some com-
A cheque payable to order should be panies the ordinary shares consist of two
indorsed by the person to whom it is payable. kinds, preferred ordinary and deferred
(Section 31, s.s. 3.) With regard to the ordinary.
question as to a payee's right to refuse to If a company limited by shares is autho-
indorse a cheque when presented by himself rised by its articles, it mav convert its
for payment, see Payee. paid-up shares into stock. The company
The drawer may strike out the word cannot issue original stock. .It must first
" order " and convert the cheque into one issue shares and then, when fully paid,
payable to bearer, which alteration must convert them into stock.
be initialled by him. If there are more The preference stocks of railway com-
drawers than one, each drawer must initial panies form investments for trust moneys
the alteration. provided that a dividend of not less than 3
A bearer cheque may be converted into per cent, has been paid on the ordinary
an order cheque by the word " bearer " being stock for ten years before the date of invest-
crossed out ; and this may be done by the ment. (See Section 1 (g) Trustee Act, 1893,
payee as well as by the drawer. It is not under Trustee Investments.) (See Share
essential to write the word "order." Capital.)
Where the payee of an order cheque ORE. (See Foreign Moneys Norway, —
indorses it merely with his signature, it is Sweden, and Denmark.)
an indorsement in blank, and the cheque OUT CLEARING. When a bank makes
may be transferred as a cheque payable to an exchange of cheques with another bank
bearer. Any subsequent holder, however, the cheques which are given out constitute
may again make the cheque payable to order the " Out " clearing, and the cheques which
by indorsing it, e.g. " Pay John Brown or are received form the " In " clearing. (See
order, T. Jones," or by writing above the Clearing Hot
last indorser's signature a direction to pay OUT OF DATE. (See Stale Cheque.)
the bill or cheque to or to the order of him- OUTSIDE BROKER. A broker who is
self or some other person. (Section 34, s.s. not a member of the Stock Exchange.
4.) OVER-CAPITALISED. When the capital
payable to "
A cheque or order
"
of a company is too large for the earning
is treated as being payable to the order of capacity, the company is said to be over-
the drawer, and requires his indorsement. capitalised.
If payable to " W. Brown or "it OVERDRAFT. Advances.)
(Sue
should be indorsed by W. Brown. If OVERDUE BILL. A
bill of exchange is
payable to " \V. Brown," it is, by the above overdue which has not been paid at maturity.
section, payable to W. Brown or order, but A bill payable on demand is deemed to be
if payable to " W. Brown only," the word overdue within the meaning, and for the
" only " prohibits any further transfer. purposes of Section 36 of the Bills of Ex-
A cheque payable to " wages or order," change Act, 1SS2, when it appears on the
" cash or order," is by most bankers regarded face of it to have been in circulation for an
as being payable to the drawer's order and unreasonable length of time. (See Negotia-
requiring his indorsement. It is customary tion of Bill of Exchange.) Where an
to pay such cheques only to the drawer or overdue bill is negotiated, it can only be
his authorised representative. negotiated subject to any defect of title
371
—
affecting it~at its maturity, and thence- Stanton, John Brown and John Jones,"
forward no person who takes it can acquire the change of names is usually merely
or give a better title than that which the notified in the ledger heading and the
person from whom he took it had. (Section account continued.
36, s.s. 2.) Where there are several overseers, cheques
Except where an indorsement is dated should be signed by all of them, unless they
subsequent to the date of maturity of a give the banker a written authority to
bill, every negotiation is prima facie deemed honour cheques when signed by one or more
to have been effected before the bill was of their number.
overdue. (Section 36, s.s. 4.) Overseers have no power to borrow in
A bill which is twenty years old is by law connection with their duties, and, therefore,
presumed to have been paid. if an overdraft is allowed, it is a debt against
If an overdue bill is presented to the bank them as private individuals, the position
where it is domiciled, it is advisable, in such being the same as in the case of a joint
a case, to obtain a cheque from the acceptor account of ordinary customers.
or a written authority to pay it. (See Bill
of Exchange.) PAID CHEQUES. (See Cancelled
OVERDUE BILLS BOOK. Bills which Cheques and Bills.)
have been dishonoured and which are not PAID-UP CAPITAL. That part of the
debited to the discounter's account, are subscribed, or issued, capital of a company
passed into overdue bills account, and full which has been paid, the other part being
particulars of them are entered in the termed the " uncalled " capital. The capital
overdue bills book, along with a note of is fully paid, if there are no further calls to
charges incurred, interest, payments on be made that is, no " uncalled " capital.
;
372
PAP] DICTIONARY OF BANKING tpar
" It is ready lending which cures panics, and takes the American dollar as of the value of
non-lending or niggardly lending which 4s., whereas the prices of American securities
of our term " supri protest " {q.v.). payment without prejudice to the rights of
PAR OF EXCHANGE. This expression the other parties." The holder can sue for
denotes a state of the foreign exchange be- the balance. Notice that full payment has
tween one country and another when the not been made should be given to the
demand for and supply of bills exactly drawer and indorsers. The bill itself is. of
balance. It is a theoretical phrase only, course, retained by the holder.
because no one knows, as between any two Foreign Bill. — Where a part payment is
nations, when the claims they each have made, a foreign bill must be protested as
upon the other are equal. to the balance.
Distinguish from Mint Par of Exchange —
Cheque. Cheques are either paid in full
or they are not paid at all. A part payment
(q.v.).
PARA. (See Foreign Moneys — Servia, is not made. In Scotland, however, when
Turkey.) a cheque is presented, if payment cannot be
PARCENERS. An abbreviation of co- made in full, any balance in the drawer's
parceners ((/.!'.). account is attached in favour of the pre-
PARI PASSU. (Latin, equal steps.) senter. The banker transfers such amount
Where one matter is progressing pari passu to a special account.
with another, it means that they are both —
Cash Order. Part payment of a cash
progressing with equal steps or equal energy. order is not accepted, unless under instruc-
PARISH COUNCIL. Bankers are fre- tions to do so from the correspondent who
quentlv appointed to be Treasurers of Parish sent the document for collection.
Councils. PARTIAL INDORSEMENT. An indorse-
Every cheque or other order for the pay- ment of a bill of exchange which purports to
ment of money must be signed by two transfer a part only of the amount payable,
members of the Council. (Rule 14. A i
or purports to transfer the bill to two or more
bank should be supplied with specimen indorsees severally, does not operate as a
signatures of all members who are entitled negotiation of the bill. (See Indorsement.)
to sign cheques. PARTICULAR AVERAGE. A term used
When a loan is required, reference should in connection with shipping. In the case of
be made to the Act under which the power a general average, a loss incurred for the
to borrow is to be exercised, so as to ascer- common safety of the ship and cargo is borne
tain the extent of the borrowing powers and- by all the parties interested in the ship and
the regulations with regard to the sanction cargo in proportion to their interests ; but
of the Local Government Board or other a particular average or loss is borne entirely
authority. by the owner (or his insurer) of the property
Any act of the Council may be signified which has been lost or damaged. His
by an instrument executed at a meeting of property may have become damaged by
the Council by the presiding chairman and accident as by the sea, or may have got
two other members. washed overboard, and in such cases, (the
The accounts are made up yearly to March loss or damage not having been incurred
31, and are audited by a Government intentionally to save the ship the owner .
37:5
— —
the person so signing of the names usual partnership form should be signed by
of all persons liable as partners in all the partners. Although a partner may
that firm." (See Bill of Ex- have power to draw cheques in the name of
change.) the firm, it is customary to have a clear
PARTITION. A deed of partition is for arrangement made as to the manner in
the purpose of dividing an estate, which is which cheques are to be signed, and there-
held in common by several persons, into an fore the form should state distinctly what is
estate in severalty so that each person has the arrangement.
then an absolute right to a distinct portion. In many cases a partner merely signs the
firm's name, " J. Brown & Coy.," but a not
By the Stamp Act, 1891, the stamp duty uncommon form is, " For J. Brown & Coy.,
is :
commonly authority is given for cheques to usual way. See Section 5, Partnership Act,
be paid when signed by any one partner, and below.
occasionally the authority is limited to one If a guarantee, signed by each partner
particular partner. A specimen of the personallv, is taken as security for the linn's
firm's signature in the writing of each partner account the banker will thereby have a claim
authorised to sign should be given at the upon the private estate of each partner as
foot of the form. well as upon the partnership estate.
When a firm wishes a banker to honour If a partner deposits his own private
cheques upon the partnership account when property as security for the firm, and the firm
signed by some person who is not a partner, becomes bankrupt, the banker may claim
the form of mandate should be signed by upon the firm's estate for the full amount
all the partners, and particular instructions of the debt.
" The signature of the name of a firm is
should be taken as to whether the authority
is to extend to the account if overdrawn. equivalent to the signature by the person so
If there is only one partner in a firm a signing of the names of all persons liable
form should be signed by him to the effect as partners in that firm." (Section 23,
that " I, the undersigned John Brown, being s.s. 2, Bills of Exchange Act. 1882.)
the sole partner trading under the title of A partner is, as a general rule, able to bind
Thomas Brown & Coy., will sign cheques as all the other partners so long as what he-
below." A specimen of the way in which does comes within the range of their business,
he will sign should be appended. unless the person with whom he is dealing
An authority from all the partners in a has knowledge that the partner is acting
firm for one of their number to sign should contrarv to some particular condition, or
specifically state that he has power to over- limitation of powers in connection with the
draw the account, for although one partner partnership. His position is like that oi a
" general agent," and he is unable to bind
in a trading firm has implied power to borrow
for the purposes of the business, and bind his fellow-partners in matters which are not
the firm, it is better to be on the safe side and connected with their particular business.
include that power in the mandate. A Bills of Exchange drawn, accepted or
partner has power to pledge partnership indorsed by a trading partnership must be
propertv, but when securities are deposited signed in the name of the firm, otherwise,
by a firm it is customary for the memoran- if" signed without the firm's name, the
dum of deposit to be signed by all the partners signing will be liable in their indi-
partners when the securities are in their vidual private capacity, but if the business
names, or the firm's name. If a legal mort- is carried on in the name of one of the
gage is taken all the interested parties must partners, then the signing of his name is
sign it, as one partner cannot bind the other sufficient, because that is the only name the
partners by deed. firm has. Where a partnership is a non-
A notice from one partner to cancel the trading one, as in the case of solicitors and
authority as to signing cheques, or to stop medical men, a partner cannot draw, or
pavment of a cheque signed by any partner accept, bills of exchange, or make promissory
in the firm's name, is sufficient for a banker notes or sign guarantees in the firm's name
to act upon. so as to bind the other partners, but it
A banker cannot set off any credit balance appears that he may by indorsement in the
on the private account of a partner for a debt firm's name transfer a bill from one party
owing bv the firm, nor a credit balance on to another.
the firm's account for an overdraft on a It has been held [Wheatley v. Smil i
375
—
376
C
z
<
3
ft]
H
—
the persons
sharing such returns "(e) Aperson receiving by way oi
have or have not a joint or common annuity or otherwise a por-
right or interest in any property tion of the profits of a busi-
from which or from the use of which ness in consideration of the
the returns are derived. sale by him of the goodwill
(3) The receipt by a person of a share of of the business is not bv
the profits of a business is pi reason only of such receipt
facie evidence that he is a partner in a partner in the business or
the business, but the receipt of such liable as such.
a share, or of a payment contingent
on or varying with the profits of a Postponement of Rights of Person Lending
business, does not of itself make him or Selling Consideration of Share of
in
a partner in the business and in ;
Profits in Case oi Insolvsncy.
particular
" (a) The receipt by a person of a " 3. In the event of any person to whom
debt or other liquidated money has been advanced by way of loan
amount by instalments or upon such a contract as is mentioned in the
otherwise out of the accruing last foregoing Section, or of any buyer of a
profits of a business does not goodwill in consideration of a share of the
of itself make him a partner profits of the business, being adjudged a
in the business or liable as bankrupt, entering into an arrangement to
• such :
pay than twenty shillings
his creditors less
" (6) A contract for the remunera- in the pound, or dying in insolvent circum-
tion of a servant or agent of stances, the lender of the loan shall not be
a person engaged in a busi- entitled to recover anvthing in respect of
ness by a share of the profits and the seller of the goodwill shall
his loan,
of the business does not of not be entitled to recover anvthing in respect
itself make the servant or of the share of profits contracted for, until
agent a partner in the the claims of the other creditors of the
business or liable as such :
borrower or buyer for valuable consideration
" (cj A person being the widow or in money or money's worth have been
child of a deceased partner, satisfied.
and receiving by way of
annuity a portion of the Meaning of I
profits made in the business "4. (1) Persons who have entered into
in which the deceased person partnership with one another are
was a partner, is not bv for the purj oses of this Act called
reason only of such receipt collectively a firm, and the name
a partner in the business or under which their business is carried
liable as such : on is called the firm-name.
" (d) The advance of money by " (2) In Scotland a firm is a legal person
way of loan to a person en- distinct fom
the partners of whom
gaged or about to engage in it composed, but an individual
is
377
— —
matter, and the person with whom he is partner so acting or omitting to act.
dealing either knows that he has no authority,
Misapplication of Money or Property Received
or does not know or believe him to be a
for or in Custody of the Firm.
partner.
"11. In the following cases namely ;
Partners Bound by Acts on Behalf of Finn. " (a) Where one partner acting within the
" 6. An act or instrument relating to the scope of his apparent authority
business of the firm and done or executed receives the money or property of a
in the firm-name, or in any other manner third person and misapplies it and ;
showing an intention to bind the firm, by " (6) Where a firm in the course of its
any person thereto authorised, whether a business receives money or property
partner or not, is binding on the firm and of a third person, and the ney or m
all the partners. property so received is misapplied
"Provided that this section shall not affect by one or more of the partners while
any general rule of law relating to the it is in the custody of the firm ;
execution of deeds or negotiable instruments. the firm is liable to make good the loss.
Partner using Credit of Firm for Private V~Liability for Wrongs Joint and Several.
Purposes. "12. Every partner is liable jointly with
" 7. Where one partner pledges the credit his co-partners and also severally for every-
of the firm for a purpose apparently not thing for which the firm while he is a partner
connected with the firm's ordinary course therein becomes liable under either of the
of business, the firm is not bound, unless two last preceding sections.
he is in fact specially authorised by the
other partners but this Section does not Improper Employment of Trust-Property for
;
Partnership Purposes.
affect any personal liability incurred by an
individual partner. " 13. If a partner, being a trustee, im-
properly employs trust-property in the
Effect of Notice that Firm will not be Bound business or on the account of the partner-
by Acts of Partner. ship, no other partner is liable for the trust-
"8. If it has been agreed between the property to the persons beneficially interested
partners that any restriction shall be placed therein :
bind the firm, no act done in contravention " (1) This Section shall not affect any
of the agreement is binding on the firm with liability incurred by any partner by
respect to persons having notice of the reason of his having notice of a
agreement. breach of trust ; and
" (2) Nothing in this Section shall prevent
Liability of Partners.
trust money from being followed and
" 9. Every partner in a firm is liable jointlv recovered from the firm if still in its
with the other partners, and in Scotland possession or under its control.
severally also, for all debts and obligations
of the firm incurred while he is a partner Persons liable by " Holding Out."
;
and after his death his estate is also severally "14. Everyone who by words spoken
(1)
liable in a due course of administration for or written or by conduct represents
378
PAR] DICTIONARY OF BANKING [PAR
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
sions and Representations of Partners. under this Act for his separate debt.
" 15. An admission or representation made
Rights of Persons dealing with Finn a
by any partner concerning the partnership Apparent Members Firm.
of
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
being members of the firm until he
" 16. Notice to any partner who habitually has notice of the change.
acts in partnership business of any
the " An advertisement in the London
(2)
matter relating to partnership affairs operates 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 Wales, in the Edinburgh Gazette as
consent of that partner. to a firm whose principal place of
business is in Scotland, and in the
Liabilities of Incoming and Outgoing Partners.
Dublin Gazette as to a firm whose
"17. A person who is admitted as a
(1) 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 anvthing before the date of the dissolution or
done before he became a partner. change so advertised.
" (2) A partner who retires from a 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- respective] \.
:<7H
PAS] DICTIONARY OF BANKING [PAS
firm, and the other rights and obligations of balance may be shown daily or at intervals
the partners, continue notwithstanding the as desired. A book of this description is use-
dissolution so far as may be necessary to ful for deposit accounts where customers
wind up the affairs of the partnership, and prefer to have a book rather than a deposit
to complete transactions begun but un- receipt.
finished at the time of the dissolution, but In whatever form the pass book is kept,
not otherwise. it isof the utmost importance that it should
" Provided that the firm is in no case bound be carefullv and correctly written up. All
by the acts of a partner who has become payments to credit should appear therein in
bankrupt ; but this proviso does not affect the precise order in which they occur in the
the liability of any person who has after ledger, and the dates should always coincide.
the bankruptcy represented himself or The same points should be observed in the
knowingly suffered himself to be represented entering of cheques which have been paid.
as a partner of the bankrupt." (See It is the practice in some banks to write up
Companies, Limited Partnership.) the pass books from the actual credit slips
PASS BOOK. The pass book, or passage and cheques, and to compare them with the
book as it was formerly called, is given by a ledgers before giving out the books, but
banker to his customer, and is for the purpose many banks write up the pass books direct
of showing the exact state of the customer's from the ledger accounts, and in some banks
account with the banker. The method of they are afterwards compared with the
writing up the pass book varies in different vouchers. The system where only the pay-
banks. Some banks reverse the entries in ments to credit are entered by the banker in
the ledger by placing the items which are in the pass book, the debit items being entered
the credit column of the ledger on the debit by the customer at the time he issues the
side of the pass book, and the debit items in cheques, is now out of date.
the ledger on the credit side of the pass book. If an entry has been omitted, and it is
Where this is done the first page of the pass entered out of its proper order, a mark of
book will be headed, " Dr. British Banking some kind is usually made in the pass book
Co., Ltd., in account with John Brown, Cr." calling attention to the fact. Where a
Other banks, however, make the pass book customer brings in a payment to credit after
an exact copy of the ledger, and the first the books are closed for the day, the paying-
page of the pass book in such cases is headed in slip should be dated by the customer for
" Dr. John Brown in account with British the following day and an explanation made
Banking Co., Ltd., Cr." 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 i
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 a 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 Xo 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 on the lodgments side the words error, and it is necessary to pass a correcting
" cash " or " cheques " or " sundries," as entrv 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).
380
PAS] DICTIONARY OF BANKING PAS
Some banks supply a form of pass book Some banks have a recognised rule not to
made for the purpose
specially of deposit enter up a pass book while a customer v
accounts where receipts are not given. The but to send it to him by post as soon as
book is ruled, practically, in the same way as possible or to retain it till he calls again.
the book issued by the Post Office Savings The practice in some banks of entering only
Bank. Each item must be initialled by the the credit items when a book is brought in,
cashier and the book must be presented and is waited for, is not a desirable one, as
every time that a transaction takes it do,s not give a proper statement of the
place. position of the customer's account. It is
In some banks, particularly in London, all much better to advise the customer to leave
paid vouchers are returned to the customer the pass book in order that it may be fully
each time the pass book is written up and written up to date. If the customer wishes
given to him. an acknowledgment for the money paid to
In many banks the pass books are num- credit, instead of entering it in the pass book
bered consecutively and a register of them when received, some bankers give the cus-
is kept. Whenever a new pass book is com- tomer a duplicate credit slip initialled, or
menced, a note of it is made in the register, they initial the counterfoil of the customer's
against the number of the book, the date and paying-in slip book. Credits should not, as a
the name of the account being recorded. rule, be entered in a pass book before they are
A pass book and a deposit receipt are the posted in the ledger.
two principal guides by which the outside Where a customer lives abroad, it is some-
public can judge of the quality of the clerical times more convenient to send him, instead
work of a bank office, and if either of them is of a pass book, a copy of his account written
negligently written it reflects upon all the upon sheets of paper ruled in the same way
staff of the office, and is apt to give the bank as a pass book ; these are known as " pass
an undesirable reputation for carelessness. sheets" or "statements of account."
The three essential characteristics of a good In some cases a list of the Bank
pass book clerk are accuracy, neatness, and Holidays is shown at the front of the pass
rapiditv. book, with the information that " Bills of
Pass books should be sorted in alpha- Exchange falling due ore Good Friday and
betical order so that when any are asked for Christmas Da}' are payable on the previous
they can be found at once, and thev should day those due on the other holidavs being
;
the folio of the ledger on which the cus- be plainly marked " duplicate," and a note
tomer's account appears, is noted on the back should be made against the account in the
of the pass book, or some place where it can ledger, stating the reason why a duplicate
be quickly seen. has been given and the date of its issue, as
Some banks have a notice printed at the well as a record made of the fact in the pass
beginning of the book, or on the back, re- book register. Where a pass book is lost
questing the customer to send in the book at some bankers require that an indemnity 1"
certain intervals, say weekly or monthly, to given before a duplicate is issued
be written up, and also to leave it with the In Scotland, the pass books, in some of
bank at the end of each half-year to be the banks, are initialled on the pavments-in
balanced. side by both teller and ledger clerk, and in
381
PAS] DICTIONARY OF BANKING [PAS
other banks by either the teller cr a clerk. one which the Courts will take in such a
The amount paid in is entered in the pass case. For instance, in Chatterton v. London
book in writing as well as in figures. and County Banking Co. (1890, unreported).
The entries made in a pass book by a bank Lord Esher, M.R., expressed the opinion
raav be used in evidence against the bank. that a customer is not bound to examine his
Where an entry showing a pavment to a pass book. He said : "A hundred things
customer's credit has been made in a pass may happen to prevent him from looking
book in error, and the customer, relying upon into it when he has got it, and what right
that credit, has drawn cheques against it or has the bank to infer that he has looked
in some other way altered his position, the into it."
banker will be bound by that entrv. But In Vagliano Brothers v. Bank of England
if the customer's position has not been (1889, 23 Q.B.D. 243), where the plaintiff
altered by the entry, the banker is at had received his pass book half-yearly along
liberty to show that the entry was made by with the paid cheques, which cheques he
mistake. retained, and returned the pass book to the
An entrv in a pass book in favour of a bank without any remark, Bowen, L.J., in
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 time to
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
anv 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
partv 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 prima facie evidence for the bankers dealing with the pass book, or that, having
as those on the other side are prima 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
to his credit, the more difficult it will be to account is considered to be a stated or
prove that the customer has not altered his settled account where the customer has given
position on the strength of that credit. A a definite confirmation of the correctness
banker is at liberty to show that a mistake of the account, or where the account has
has been made even if the entry in the pass I
been balanced and ruled off as is done in pass
book has been formally initialled by an books at the end of each half-year. Some
official of the bank. But a banker is not, authorities consider that where a pass book
of course, excused from liability if he has |
is given out with the balance entered in the
received money for a customer and has book in pencil it should be considered a
omitted to give him credit for it. settled account, but other authorities do not
When a customer obtains his pass book ,
attach much importance to a pencilled bal-
from the bank, keeps.it in his possession for ance and hold that it does not constitute a
a certain time and then returns it to the settled account.
bank without any comment, the ordinary In Kepitigalla Rubber Estates, Ltd. v.
conclusion is that the customer has ex- The National Bank of India, Ltd. (1909,
amined the book and found it to be correct ;
2 K.B. 1010), with reference to the point that
but this view of the matter may not be the when a pass book is taken out of the bank
382
. — —
by a customer or some clerk of his, and is the bank and personally examine his own
returned without objection there is a settled account in the ledger, whereupon he signed
account between the bank and the customer his name under the withdrawal entries, while
by which both are bound, Mr. Justice Bray- the banker certified the payments-in in a
said :
" I know of no authority in this similar way.
country for this proposition." He further PASS BOOK REGISTER. In many banks
said, in commenting upon another case, that all pass books bear a distinctive number,
it would be absurd to " hold that the taking and in the register a complete list of all the
out of the pass book and its return consti- pass books supplied to a branch is entered,
tuted a settled account. It would mean this the numbers being shown in consecutive
— that a secretary of a company by going order. Whenever a new pass book is used,
to the bank for his own purposes in order to the date when it is commenced and the
prevent the discovery of a fraud, and with- name of the account for which it is required
out knowledge on the part of any of the are entered in the register against the same
directors, and getting the pass book (with a .
number as appears upon the pass book. In
pencil entry in it of the balance) can bind I
this way the pass book register corresponds
the company for all purposes." to the book of counterfoils of deposit
A customer, however, will not be able receipts.
successfully to object to the bank charges in PASSING A DIVIDEND. The expression
his pass book if they are similar to those of means not paying a dividend, and is to be
previous half-years to which he never raised distinguished from " passing a resolution to
any objection when returning his pass pav a dividend."
book. PASSPORT. A passport is an official
By 24 & 25 Vict. c. 98. Section 23, a false document issued by the Foreign Office
entry in a pass book with intent to defraud vouching for the respectability of the
is forgery of an accountable receipt. And if person named therein, and which is used
a banker allows any entry in a company's by that person when travelling in foreign
pass book to be made bv an official of the countries.
company, in order to mislead an auditor in The Foreign Office issues the following
the examination of the company's account, regulations respecting passports :
the banker may be held liable for any loss 1 Applications for Foreign Office pass-
which the company may sustain. ports must be made in the form printed on
Although the pass book has continued the back of these regulations, and inclosed
practically in its present form for a centurv, in a cover addressed to " The Passport
Sir John R. Paget states that " the present Department, Foreign Office, London, SAY."
position of the pass book is perhaps the They must reach the Foreign Office before
most unsatisfactory thing in the whole region 5 p.m. on the day prior to that on which the
of English banking law." passport is to be issued.
In view of the various unsatisfactory 2.The charge for a passport, whatever
decisions from a banker's point of view and number of persons may be named in it, is 2s.
the uncertainty which, in so manv ways, Passports are issued at the Foreign Office,
attaches to the entries in a pass book, the between the hours of 1 1 and 4 on the dav
importance of having the book carefully and following that on which the application for
correctly written up cannot be too strongly the passport has been received, except on
insisted upon. A manager should give Sundays and Public Holidays, when the
particular attention to pass books which Passport Office is closed. If the applicant
h ve not been brought in to the bank for does not reside in London, the passport may
some time, and endeavour to obtain them be sent by post, and a postal order for 2s.
for the purpose of being written up and ; should in that case accompanv the applica-
where pass books are allowed by customers to tion. Postage stamps will not be received m
remain in the bank for a long period, it is payment.
advisable to hand them out as opportunity 3. Foreign Office passports are granted
offers. A
manager should aim at having (1)To natural-born British subjects,
as free a circulation of pass books as viz. persons born within His
possible. Majesty's Dominions, and to
It may be of historical interest to mention persons born abroad who derive
that before pass books were introduced, it British nationality from .i i.itheror
was the practice for a customer to come to paternal grandfather born within
383
— —
His Majesty's Dominions, and in the country, the passport will be sent, and
who, under the provisions of the the certificate of naturalisation returned, to
Acts 4 George II, c. 21, and 13 the person who may have verified the declara-
George III, c. 21 are to be tion, for delivery to the applicant.
adjudged and taken to be natural- Naturalised British subjects will be de-
born British subjects. scribed as such in their passports, which will
(2) To the wives and widows of such be issued subject to the necessary qualifica-
persons ; and tions.
(3) To persons naturalised in the United 6. Foreign Office passports are not avail-
Kingdom, in the British Colonies, able bej-ond five years from the date of issue.
or in India. Fresh passports must, then be obtained.
A married woman is deemed to be a sub- 7. A passport cannot be issued by the
)
ject of the State of which her husband is for Foreign Office, or by an agent at an outport,
the time being a subject. on behalf of a person already abroad ; such
4. Passports are granted to such persons person should apply for one to the nearest
as are known to the Secretary of State, or British Mission or Consulate.
recommended to him by some person who is 8. Travellers who intend to visit the Rus-
known to him ; or sian Empire, the Turkish Dominions, the
(1) In the case of natural-born British Kingdom of Roumania, Persia, Colombia,
subjects and persons naturalised Venezuela, Hayti, or Eritrea, in the course
in the United Kingdom, upon the of their travels, must not leave the United
production of a declaration by the Kingdom without having had their passports
applicant in the form printed at vises either at the Russian Consulate-General,
j
the back of these regulations, 17, Great Winchester Street, E.C. the ;
peace, minister of religion, bar- Victoria Street, S.W. the Colombian Con-
;
(2) In the case of children under the age Eritrea), 44, Finsbury Square, E.C, respec-
of 14 years requiring a separate tively, or at one of the other Consulates
passport, upon production of a of those States in the United Kingdom.
declaration made by the child's Travellers about to proceed to any other
parent or guardian, in a Form (B), country need not obtain the visa of the
to be obtained upon application diplomatic or consular agents of such
to the Foreign Office. country.
(3) In the case of persons naturalised in —
N.B. A statement of the requirements
any of the BritishColonies, upon of foreign countries with regard to passports
production of a letter of recom- may be obtained upon application to
mendation from the Colonial "The Passport Department, Foreign Office,
Office ; and in the case of natives London, S.W."
of British India, and persons A specimen signature of the applicant is
I
3S4
PASJ DICTIONARY OF BANKING [PAY
No.
This passport is not in any
circumstance available beyond
five years from the date of
its issue. A fresh passport
must then be obtained.
the bill being dishonoured, the banker can be made. It would appear, however,
could not sue upon it. that, legally, a cheque when presented by the
Where there are several payees and the payee is payable to him without indorsement.
bill is payable in the alternative to one or Sir John R. Paget says :
" The common
some, only those who actually indorse the practice of paying bankers to refuse payment
bill are liable thereon. unless the ostensible payee signs on the
Ifthe payee is an infant, or corporation back of the cheque seems therefore without
having no power to contract, the payee can justification." The custom of always re-
indorse and effectually transfer the bill to quiring the payee's indorsement on an order
another party, but such a payee will not be cheque should, however, not be departed
liable on the bill. from except perhaps in some unusual case
A banker is under no liability to the payee when the payee insists on payment without
of a cheque, unless he has marked the cheque indorsement. In such a case a banker might
for payment, or in some other way given the be able to postpone payment until he had
payee to understand that the cheque will be |
communicated with the drawer. It is some-
paid. (See Marked Cheque.) what difficult to see how a banker could be
In the case of a cheque drawn without a held liable for refusing payment of a cus-
payee's name having been inserted, as tomer's cheque because the payee declined
" Pay or order," it is usually to indorse it in accordance with the custom
treated as being payable to the order of the of bankers. A banker's customer knows
drawer and, therefore, requiring his indorse- that it is the practice to require all cheques
ment. It is not a banker's duty to advise payable to order to be indorsed, and if, on
a holder to insert his own name in the blank. receiving back his paid cheques, he found
If not indorsed by the drawer, the best that a cheque which he had drawn payable
course is to get the incomplete cheque com- to " John Brown or order " was not indorsed
pleted by the drawer. by John Brown, he might reasonably main-
Where a payee is dead, bis executors, or tain that the cheque showed no evidence
administrator, may indorse and negotiate of ever having been in the hands of John
the cheque, and the indorsement should Brown, and that he was entitled to have that
show the capacity in which they sign. evidence.
As provided in Section 7, s.s. 3, a bill pay- If a cheque payable to, say, the British
able to a fictitious or non-existing payee may Baking Company, Ltd., is paid to credit of
be treated as being payable to " bearer." In the manager's or secretary's private account,
the Bank of England v. Vagliano Brothers it should put the banker on inquiry at once,
(1891, A.C. 107) it was held that a fictitious as he mav be held liable if the cheque has
or non-existing person included a real person been misappropriated. If it is necessary
who never had nor was intended to have any for agents, as, for instance, in the case of
right to the bills. (See Fictitious Payee.) insurance companies, to place to the credit
In Scotland, when the payee is a married of their private accounts cheques which
woman, cheques are frequently made pay- are payable to their principals, the banker
able to, e.g. Mrs. Mary Burns or Scott, should be duly authorised in writing by the
Burns being the maiden name and Scott the principals to permit of cheques being dealt
married name. The cheque may be indorsed with in that way.
either " Mary Burns " or " Mary Scott." In the case of a dividend warrant where
Where a cheque is payable to " Wages or several payees are named, it is the custom
order," " Cash or order," or " House to pay upon the indorsement of one of them ;
Account or order," it should be treated as a |
but an interest warrant should, strictly, be
cheque payable to the order of the drawer .
indorsed by all the payees, though this is not
386
—
Cheque crossed " account payee." The — Gold, silver, copper, and notes are shown
words " account payee " do not concern separately. The cheques are separated into
the paying banker, so long as he pays to a three divisions, Leeds, London, and Country,
banker in accordance with the crossing. He- Postal Orders being included with the local
is protected as in the case of an ordinary cheques on Leeds banks. f a separate slip
I
3S7
. . .
entered in total below " Country cheques." paid in, are not available for drawing
There is a space provided on which the against until the proceeds have been received
person paying in may sign, and a place for at the branch.
the initials of the receiving cashier. Where Jones pays in country cheques to
A slight variation in the printing is usually the credit of another customer's account, it
adopted for slips to be used by a person is usual for the banker, when advising that
paving in at one branch for the credit of an customer of the receipt of the credit, to
account at another branch, or at another state that it consists of cheques which have
bank frequently such slips are further
; not yet been cleared.
distinguished by being of a particular colour. Where an official of a company pays in to
There are also many
different forms of slips the credit of the company's account, cheques
in use byfirms and companies,
different payable to the company, it is not permissible
which are used by their agents all over for the official to receive part of the amount
the country in paying in for their credit back in cash by simply making a deduction
in London, or wherever the account is on the credit slip. A banker can pay out
kept. only when a cheque is drawn upon the
If Jones pays in at the British Bank, account in the authorised way.
Leeds, various cheques for the credit of the Credit slips should be retained by a
Universal Bread Co. at the Hull branch of banker and not be given up to a customer
that bank, and one of the cheques should along with paid cheques.
be dishonoured, the Leeds branch will debit The paying-in slips used by depositors
the Hull branch with the amount of the are called " application forms."
unpaid cheque and send the cheque to Hull, —
PAYMENT BY. Bill. Where an undue
and Hull will pass it on to the Bread Co. bill is taken in payment of a debt, the debtor
Some bankers print upon their paying-in cannot be sued for the debt until the bill is
slips a notice that cheques, etc., for collec- due and is dishonoured ; that is, the
tion, though credited to the account when creditor's right to sue for the debt is, by
Gold .
Gold .
Silver .
Silver
Copper Copper
Notes .
Notes
London Cheques.
For Credit of
Tota!- -Leeds Cheques and Postal Orders
-London Cheques
-Country Cheques
at British Banking
the
Company, Ltd., Leeds.
To the British Banking Companv, Ltd., Leeds.
Paid in by . Credit the account of
Received bv
Date . . . .19 Paid in by .
388
— —
taking the bill, postponed till the maturity partv for whose honour he pays,
of the bill. and all parties liable to that
In the event of the acceptor's bankruptcy, party.
the holder of a bill which is not yet due may " (6) The payer for honour on paying
prove upon the estate subject to a rebate to the holder the amount of the
of interest at the rate of 5 per cent, per bill and the notarial expenses
annum from the time when the dividend is incidental to its dishonour is en-
declared to the date when the bill would be titled to receive both the bill itself
due. (Bankruptcv Act, 1SS3, Schedule '-', and the protest. If the holder do
Rule 21.) not on demand deliver them up
—
Cheque. When a cheque is taken in he shall be liable to the payer for
settlement of a debt and the cheque is dis- honour in damages.
honoured, the debt is not discharged, unless " (7) Where the holder of a bill refuses
the person receiving the cheque did not to receive payment supra protest
present it for pavment within a reasonable he shall lose his right of recourse
time. against any party who would have
Country Bank Notes (i/., been discharged by such payment."
PAYMENT FOR HONOUR. When an (See Acceptance for Honour,
acceptor fails to pay a bill at maturity, any Bill of Exchange.)
person may, after trie bill has been protested, PAYMENT OF BILL. A bill of exchange
pav it supra protest for the honour of some is, in the usual course of events, paid by the
party to the bill. acceptor, and when so paid it is discharged
The regulations regarding payment for and the bill delivered up to him. The Bills
honour supra protest are contained in Section of Exchange Act, 1882, provides :
68 of the Bills of Exchange Act, 1882, which " Section 59. (1) A bill is discharged by
is as follows : pavment in due course by or on
" (1) Where a bill has been protested for behalf of the drawee or acceptor.
non-payment, any person may " 'Payment in due course' means
intervene and pay it supra protest payment made at or after the
for the honour of any party liable maturitv of the bill to the holder
thereon, or for the honour of the thereof in good faith and without
person for whose account the bill notice that" his title to the bill is
is drawn. defective.
' Where two or more persons offer " (2) Subject to the provisions hereinafter
(2)
to pav a bill for the honour of contained, when a bill is paid by
different parties, the person whose the drawer or an indorser it is not
payment will discharge most parties discharged but ;
duties of, the holder as regards the paid in due course by the party
389
—
accommodated the bill is dis- banker should place a receipt for the amount
charged." paid upon the back of the bill and qualify
The following Section particularly con- the receipt by adding that the part payment
cerns bankers with respect to "a bill on is accepted by him without prejudice to the
demand drawn on a banker " : rights of anv of the other parties to the bill.
"60. When a bill payable to order on Notice of the part pavment should be given
demand is drawn on a banker, and the to the other parties. The bill itself is not,
banker on whom it is drawn pays the bill in of course, given up against a part payment.
good faith and in the ordinary course of In the case of part payment of a foreign
business, it is not incumbent on the banker bill, the bill must be protested for the
to show that the indorsement of the payee balance.
or any subsequent indorsement was made A hill should not, as a rule, be given up
by or under the authority of the person to an acceptor when, on presenting the bill
whose indorsement it purports to be, and to him for payment, he offers anything
the banker is deemed to have paid the bill except cash or notes. If a cheque, which
in due course, although such indorsement 1
can be collected the same day, is offered, the
has been forged or made without authority." \
bill should be retained until cash has been
" Section 61. When the acceptor of a received for the cheque, but a cheque which
bill is or becomes the holder of it at or after cannot be cashed the same day should not
its maturity, in his own right, the bill is |
be taken. It is necessary to bear in mind
discharged." that if a cheque is taken in payment of a bill
" Section 62. (1) When the holder of a and the cheque is subsequently returned
bill at or after its maturity abso- unpaid, the banker will have lost recourse
lutely and unconditionally re- against the various parties to the bill and
nounces his rights against the will have only the. acceptor to look to for
acceptor the bill is discharged. the money. London bankers accept cheques
" The renunciation must be in upon clearing bankers in payment of bills,
writing, unless the bill is delivered the cheques being attached to the bills and
up to the acceptor. passed at once through the Clearing House,
" (2) The liabilities of any party to a If a bill drawn on John Brown, Leeds,
bill may in like manner be re- payable at sight, contains a note on the bill
that "
payable in London," and John
nounced by the holder before, at, it is
any means, the bill should come into the 459), that the bank had paid the bill in
hands of a holder in due course, before it their capacity as indorsers, and that they
matures, that holder will have a right of reserved to themselves the right to examine
action against the acceptor and all other into the state of the acceptor's accounts and
parties to the bill. determine whether they would honour the
When a bill payable on demand is paid.it bill or not. Mr. Justice Erie said "I think :
is discharged and cannot be re-issued and ; it is clear law that the holder of a bill indorsed
when a bill payable after date is paid at to him by a bank at which the acceptor has
'
390
PAY] DICTIONARY OF BANKING [PAY
the bill you are paid ; if not, we are taking monev from the acceptor with which to pav
"
it up
as indorsers of a dishonoured bill.' the bill.
A banker may, as is the custom with Where a bill is intentionally cancelled
London bankers, debit a bill to an acceptor's by the holder or his agent, and the can-
account, when payable at that banker's, cellation is apparent thereon, the bill is
without requiring any advice from the discharged.
acceptor, the acceptance being a sufficient It is not necessarv, on payment of a bill
authority, but in practice, many country by the acceptor, to give a receipt for the
bankers usually require an advice. Country mi mey, as the delivering up of the bill to the
bankers often receive from an acceptor acceptor is sufficient to cancel his liability
periodicallv a list of his bills falling due upon it, but if, as is sometimes done, a
and an order to pay them. receipt is indorsed upon the bill by the
A banker is not obliged to pay a bill after holder the receipt (except in the case of a
his usual hours of business. banker) requires to be stamped Id. in the
If an acceptor in good faith pays a bill same way as any ordinary receipt.
indorsed in blank and without notice of Where the holder of a bill is bankrupt,
anv defect there may be in the title, the bill payment of the lull requires to be made
is discharged but if the acceptor pays a bill
; to the trustee and not to the bankrupt.
which has been speciallv indorsed and the Where the holder is dead payment must
indorsement should prove to have been be made to the executor or administrator.
forged, the bill is not discharged by such If, instead of pavment, a holder accepts
payment and the acceptor, is liable to pay it .1 fresh bill from the acceptor, the drawer
again to the true owner. and indorsers of the old bill will be dis
In Bank of England v. Vagliano Brothers charged, unless thev are parties to the new
(1891, A.C. 107). Lord Macnaghten said: bill.
" In paving their customers' acceptances in When a banker is employed to collect a
the usual way bankers incur a risk perfectly lull,he should not, unless under instructions
understood, and in practice disregarded. from his correspondent, accept payment
Bankers have no recourse against their subject to any conditions, otherwise he may
customers if they pav on a genuine bill to render himself liable for the amount of the
a person appearing to be the holder, but bill.
claiming through or under a forged indorse- With respect to a bill paid under rebate,
ment. The bill is not discharged the ; see Documentary Bill.
acceptor remains liable the banker has
; If a banker dishonours an
wrongfully
simplv thrown his monev away." acceptance of his customer he will be liable
If the acceptor fails to pay a trade bill at in damages. (See Dishonour of Bill of
maturity and an indorser or the drawer Exchange.) He should, therefore, be care-
pays it, the bill is not discharged by such ful to sec that everything has been credited
pavment, and the drawer can sue the to the account and that the balance is
acceptor for the amount plus expenses and correctlv stated, before returning a bill.
interest, and the indorser can sue the If a banker pays a bill across the counter,
acceptor or any prior parties. and, as soon as he has done so, finds that
But if a bill is an accommodation bill and he should not have paid it, he cannot compel
is not met bv the acceptor when due, it is, the person to whom he paid the money to
if paid by the drawer or indorser, discharged, return it, though if a mistake is made by
when the partv paving it is the person for handing too much money to the customer
whose accommodation the bill was drawn the mistake may be rectified. (See Bill of
or accepted. Exchange, Cancellation of Bill of
If an acceptor or any other person pays Exchange, Payment of Cheque, Time
to a banker an amount for the special pur- of Payment of Bill.)
pose of providing for a bill falling due, that PAYMENT OF CHEQUE. When an opi n
amount is earmarked for that purpose and cheque is presented for payment requires
it
cannot be used by the banker for any other to be carefully scrutinised to see that i
purpose, such as to reduce an overdraft thing is in order. If the account upon w bii h
which the acceptor mav have. the cheque is drawn will admit of its
391
PAY] DICTIONARY OF BANKING [PAY
payment, the banker, before paying it, must the banker at Branch A, when a cheque
be satisfied that it bears the signature of his drawn upon his Branch presented, is not
is
customer, or of the person who may have obliged to take into consideration a balance
been authorised by his customer to sign, and at any other Branch than his own. If,
that payment of the cheque has not been however, the account at Branch B is over-
stopped by the drawer. If it is a cheque drawn and at Branch A is in credit, a
payable to order, all the indorsements must banker may, if necessary, regard them as
be scanned to see that they are apparently one account. (See Branches )
correct. It should also be noticed whether A banker at Branch A is not obliged,
the cheque is post-dated or is stale dated, before dishonouring a cheque, to ascertain,
whether the amount in writing agrees with by wire or otherwise, if the customer has
the amount in figures, and whether, if any paid in at Branch B on that day for his credit
alteration has been made in the cheque, at A, even though the customer is in the
such alteration is duly initialled by the habit of paying in at B.
drawer, or drawers. On being satisfied that It is verv necessary, before paying a
all these various points are in order, and that cheque, that the banker should be fully
there is no other reason why the cheque satisfied that it ought to be paid, because,
should not be paid, the banker may, if the as soon as he hands the money across the
person presenting the cheque appears, so counter, the ownership in that money
far as he can tell, to be entitled to it, pay the passes from the banker to the person pre-
cheque. senting the cheque, and, unless the presenter
If a banker dishonours a cheque which is willing to repay, the banker cannot obtain
ought to be paid he will be liable in damages. it back, even if he discovers immediately
When paying a crossed cheque to another that the money should not have been
banker practicallv the same points require handed over. Chief Justice Erie 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
When a cheque is presented for payment, cheque ; and the moment the person pre-
a banker is required either to pay it or senting the cheque put his hand upon the
dishonour it. If everything is in order he is money it became irrevocably his."
obliged to pay it, or stand the consequences Where a banker has given his agent
of wrongfully refusing to pay. orders to pay certain cheques, or cheques
It is possible for everything connected up to a fixed amount, on behalf of a cus-
with a cheque to be absolutely correct and tomer, the cheques, when paid, are debited
yet the cashier who has to pay it may have to the customer's account on the day the}'
a strong suspicion that the person presenting are received by the banker, but the interest
it is not entitled to it. Lord Halsbury in on the account is reckoned as though the
Vagliano Bros. v. Bank of England (1891, cheques had been debited on the actual date
A.C. 107), said :
" I can well imagine that when they were paid by the banker's agent.
on a person presenting himself, whose Where a cheque for, say, £20 is presented
appearance and demeanour was calculated for payment and the drawer has only ^19 to
to raise a suspicion that he was not likelv credit, and the banker refuses payment, the
to be entrusted with a valuable document presenter should not be told how much is
for which he was to receive payment in cash, short in order to enable him to pay in the
I should think it would be extremely prob- pound and thus obtain payment. But if
able that, whether the document were a the presenter ascertains the amount from
cheque payable to bearer for a large amount some other source, the banker cannot refuse
or a bill, the counter clerk and banker alike to accept the sum for his customer's credit,
would hesitate very much before making even if paid in by the person who imme-
payment." diately thereafter presents the cheque for £20.
When a cheque has a notice upon it that When a banker learns that a customer is
it must be presented for payment within dead or has committed an act of bank-
a certain fixed time from the date of the ruptcy, or has had a receiving order made
cheque, the banker must see that the time against him, or has become insane, he must
has not expired before paying the cheque. not pay any further cheques on the account,
Where a customer has two accounts with but return them to the presenter with
the same bank, one at Branch A and another answer written upon them " Drawer de-
at Branch B, and both are credit accounts, ceased," " Drawer bankrupt," etc.
392
—
and the account will not admit of payment drawn upon the same bank may be returned
of them all, a banker usuallv pays as many unpaid on the following day, but in practice
of them as he can and returns the rest. all cheques are either paid or dishonoured on
Nevertheless, as all the cheques form one |
the day they are received. (See Dishoxoltr
presentment, it is probable that the banker of Bill of Exchangi |
are determined by
Before returning a cheque a banker should " (1) Countermand of payment ;
make certain that everything has been " (2) Notice of the customer's death."
credited to the account and that the balance It desirable that a countermand of
is
pav such cheques or return them unpaid ;.. iving a telegram purporting to stop a
with answer marked thereon " Effects not cheque disregarded it a1 his peril. He found
cleared." that the cheque was countermanded and
A banker who, in good faith and in the gave judgment for plaintiff. The defendants
393
PAY] DICTIONARY OF BANKING [PAY
appealed to the Divisional Court, and serious step of refusing to pay a cheque.
-Air.Justice Darling said that a telegram The appeal must be allowed." (See Bill of
directing the bank not to pay a cheque, Exchange, Cheque, Collecting Banker,
which in fact came from a customer of the Paving Banker, Payment of Bill.)
bank, was a sufficient countermand of pay- PAYMENT STOPPED (CHEQUE). A
ment, and that, on the other hand, if it did customer has the right to give notice to his-
not come from a customer it was not an banker to stop payment of a cheque which
order at all. He therefore held that a tele- he has issued. The notice should be in
gram might be a sufficient countermand of writing, give accurate particulars of the
payment, and he was strengthened in that cheque and be signed bv the drawer.
opinion because a witness from Hoare's If a banker pays a cheque after a " stop
bank said that a large proportion of the order " has been received, he will be hable
countermanding of payment of cheques was for so doing. It is necessary, therefore, to
done bv telegrams. Mr. Justice A. T. Law- warn each branch where the cheque may be
rence thought that merely sending or re- presented of the notice which has been
ceiving a telegram, without the reading of received. A notice should be placed in the
it, was not sufficient. Until the telegram customer's account in the ledger, so that
was read it was not in fact a countermand of anyone referring to the account may at once
payment. Mr. Justice Lawrence withdrew observe particulars of the " stop." A list
his opinion, and the appeal was dismissed. of all orders to stop payment should be kept
The defendants appealed to the Court of in some convenient form for readv reference
Appeal, and the Master of the Rolls said : by those officials who are concerned with the
" The question in this appeal is whether a payment of cheques.
cheque drawn bv the plaintiff upon his The drawer of a cheque is the onlv person
bankers, the defendants, was countermanded who can " stop payment " of it, but bankers-
within the meaning of Section 75 of the often receive notice from the holder of a
Bills of Exchange Act, 1882, by reason of a cheque that it has been lost or stolen.
telegram despatched by the plaintiff to the Where notice is received from a holder, he
bank. . Countermand is really a question
. . should be requested to obtain at once written
of fact. It means much more than a change instructions from the drawer. If the cheque
of purpose on the part of the customer. It be presented before a communication is
means, in addition, the notification of that received from the drawer, the banker will be
change of purpose to the bank. There is no careful to postpone payment till he has heard
such thing as a constructive countermand in from the drawer or is otherwise satisfied,
a commercial transaction of this kind. In particularly if the payee states that it was
my opinion, on the admitted facts of this not indorsed by him before he lost it.
case, the cheque was not countermanded in If the cheque which is lost is signed by
fact, although it mav well be that it was due several persons, a notice from one of them,
to the negligence of the bank that they did e.g. one executor, one trustee, a secretary,
not receive notice of the customer's desire etc., is usually acted upon by a banker.
to stop the cheque. For such negligence the Where the account is in several names and
bank might be liable, but the measure of the lost cheque is signed only by, say, one of
damage would be by no means the same as the account holders, or bv one partner, a
in an action for money had and received. notice from any of the other holders or
I agree with the judgment of Mr. Justice partners is sufficient authority to a banker
Lawrence on this point, and that is sufficient to justify him in stopping payment of the
to dispose of the appeal. But as we have cheque.
had an argument addressed to us as to the When the drawer wishes to cancel his
effect upon the duty of a bank of the mere order to stop payment, it should be done in
receipt of a telegram, I wish to add a few writing and be signed by him.
words. A
telegram may reasonably and in When a drawer wishes to stop payment of
the ordinary course of business be acted a cheque, he is entitled to do so during the
upon bv the bank, at least to the extent of usual business hours, and if a banker pays a
postponing the honouring of the cheque cheque before the commencement of busi-
until further inquiry can be made. But I ness or after the doors are closed, he incurs
am not satisfied that the bank is bound as the risk of paying a cheque which may be
a matter of law to accept an unauthenticated " stopped " as soon as the drawer has the
telegram as sufficient authority for the opportunity.
394
—
payment of a cheque pending inquiry, but cut into halves and quarters to act as half-
he was not satisfied that the bank is bound pence and farthings.
to accept an unauthenticated telegram as A bronze penny is a mixed metal of copper,
sufficient authority upon which to refuse to tin, and zinc. Its standard weight is
'
A holder for yalue without notice that in so signing was acting within the actual
the note has been lost or stolen may limits of his authority." An agent is not
compel the banker to pay it. but where a personally liable if he signs for or on behalf
note is presented, payment of which has of his principal, but the mere addition to
been stopped, a banker should exercise the his signature of words describing him as an
utmost care and make full inquiries before agent does not exempt him from personal
cashing it. lial ility.
served. A record should be kept in the paying an uncrossed cheque with a per pro.
diary of all future payments, so that they indorsement in the event of its being un-
may not be overlooked. (See Application authorised. If the banker on whom the
Payments, Authorities. Banker's >rder.) ' cheque is drawn pay- it in good faith and
PAYMENTS UNDER PROTEST. (See in the ordinary course of business, it is not
Protest Payments i
incumbent on the banker to show that the
PAYMENTS UPON APPLICATION. (See indorsement was in. id. by or under the
Application Payments.) authority of the person whose indorsement
395
PER] DICTIONARY OF BANKING [PER
it purports to be, and the banker is deemed It is not impossible for a marksman to have
to have paid the bill in due course, although power to sign per pro., but it makes an
such indorsement is made without authority. awkward arrangement, and such a signature
It is the custom amongst bankers to accept should usually be confirmed.
per pro. indorsements, and they are justified A firm may have power to sign for a pri-
in doing so both by that Section and the vate individual, as
result of the case Charles v. Blackwell (1S77, per pro. John Brown
2 C.P.D. 151), where it was decided that a
banker is not liable if he pays a cheque pay- J. Jones & Co.
able to order which is indorsed per pro.,
even when the person signing had not the A person who has power to sign per pro-
authority of the principal. curation has not, as a rule, any power to
But if a banker has reason to suspect the delegate his authority to another.
authority of a person so signing, he is, no Per procuration signatures are not ac-
doubt, entitled to ask for evidence of his cepted upon dividend warrants, or interest
authoritv. For instance, if a collecting agent warrants. Cheques which require a form of
for an insurance company were to present receipt to be signed by the payee have some-
cheques payable to the insurance company, times a note upon them to the effect that a
indorsed by him per pro. the company, and per procuration discharge will be accepted
demand cash for them, the banker would if guaranteed by the payee's bankers, and
render himself liable if he paid them with- that in the case of a company the receipt
out authoritv from the company, because it must be signed on its behalf by an authorised
is not the custom for cheques payable to a officer whose position must be stated.
An indorsement J. Brown & Co.,
company to be cashed by an agent. " For
An agent may have authority to indorse Ltd., J. Jones, Secretary," " For John
cheques per pro. and to place them to the Brown, J. Jones, Agent," is often accepted
credit of his principal's account, but he as sufficient. The person signing should
may not have power to take cash for cheques state in what capacity he signs. As to the
so indorsed, or credit them to his own ac- stamp duty on a deed of procuration, see
count. A person may have power to draw Procuration. (See Agent, Authorities,
cheques per pro., or to draw only to a limited Indorsement.)
extent, though he mav not be authorised PER STIRPES. Short for per stirpes et
to accept bills drawn upon his principal. non per capita, meaning by the roots and not
It is, therefore, necessary, not only to be by the heads. An example of the use of the
satisfied that an agent has authority to phrase is where John Brown leaves a sum
draw cheques per pro., but to know the pre- of money to be equally divided amongst his,
cise extent and limitations of his authority. sav, four sons, and if any son dies before the
Some bankers consider that a per pro- testator the share of that deceased son to be
curation signature should include the words equally divided amongst the children of that
per pro. or words having the same meaning, deceased son. The children divide, there-
but Sir John R. Paget states that whenever fore, merely the share of their deceased
'
'
a signature shows by its form that it is put parent, or per stirpes, and do not take, each
on by someone as deputy for another that of them, an equal share of the full sum of
signature must be treated as a per pro. —
money left by John Brown that is, not per
signature, and puts anyone dealing with the capita.
bill on inquiry as to the authority of the PERMANENT BUILDING SOCIETY.
person who so utilises the signature." A society which has not, by its rules, any
fixed date or specified result at which it
A company's signature in the following shall terminate. (See Building Society.)
form, PERPETUAL ANNUITY. The right to an
The Universal Bread Co., Ltd., annual payment of a certain sum in per-
J. Brown, Secretary, petuity. The purchaser cannot obtain the
or principal back, but he can sell his right to
the annual payment to someone else. The
For and on behalf of the X and Y Co., Ltd.
interest on the National Debt is an example
J. Brown, Secretary. of a perpetual annuity. (See Annuity.)
isin effect a procuration signature, though PERPETUAL DEBENTURE. Section
per pro. or p.p. are not used. 103 of the Companies (Consolidation) Act,
396
— — — ,
190S, states that a condition contained in mind considers himself practically the
any debentures or in anv deed for securing acceptor as well as the drawer, Jones on
any debentures, shall not be invalid by Brown is therefore likened to a bill drawn by
reason only that the debentures are made " Pig on Pork " or " Pig upon Bacon."
irredeemable, or redeemable only on the PLEDGE. When negotiable instruments,
happening of a contingency, however remote, and goods, or the symbol of goods, such as
or on the expiration of a period, however bills of lading and dock warrants, are de-
long, any rule of equity to the contrary livered to a banker as security for a debt, the
notwithstanding. delivery is termed a pledge or a pawn.
Although the debentures may be called If the debt is not paid according to agree-
irredeemable or perpetual they are neverthe- ment, the banker has the right, after reason-
less redeemable when the company goes able notice (if no time is fixed), to sell the
into liquidation. The effect of a debenture property in order to satisfy his claim, and
of this nature is to grant an annuity in any surplus belongs to the pledgor. A letter
perpetuity to the holder thereof. (See or memorandum of deposit usually accom-
Debenture.) panies the pledge of goods or negotiable
PERSONAL CHATTELS, i See Chattels.) instruments, and in such cases the terms
PERSONAL SECURITY. An advance is of the letter must be observed before
said to be made upon
personal security when realisation of the property is effected.
another person becomes surety or guarantor A pledge is to be distinguished from the
for the amount. The term is used to distin- lien which a banker has upon anv negotiable
guish the security from a deposit of deeds, or instruments that may be in his hands as
certificates or any other form of impersonal a banker, as the hen gives the banker
security. merely a right to detain the documents until
PERSONALTY. Property such as money, the customer's debt is paid. (See Lien,
goods, furniture, stocks and shares is per- Mortgage.)
sonal estate, or personalty. Leasehold POINTS. The price of stocks and shares
property, even a lease for 999 years, is moves by fractions, as 16J-16J, and by
included in personalty. (Freehold and copy- points, as from 16-17.
hold property is "real estate " or realty.) POLICY OF INSURANCE. By the Stamp
When real estate is directed bv will to be Act, 1891, the stamp duties are :
The words used in a will with respect to the Where the sum insured does
disposal of personal property differ from
those used in connection with real property.
not exceed £10
Exceeds £10 but does not
. . .001
Personalty is bequeathed and the beneficiary exceed £25 3
is called a legatee ; realty is devised and the Exceeds £25 but does not
beneficiary is termed a devisee. (See exceed £500 :
" PIG UPON BACON." In the case of For every sum of full
an accommodation bill, where e.g. Brown £1,000," and
also for
accepts merely to oblige the drawer, Jones, any frai ional part oi
I
397
—
"91. For the purposes of this Act the advertisement in a newspaper or other
expression policy of insurance
' includes
'
means a policy of insurance upon any within the meaning of the Stamp Act, 1891,
life or lives or upon any event or includes a notice or advertisement in a news-
contingency relating to or depending paper or other publication which purports to
upon any life or lives except a policy insure such payment."
of insurance against accident and ; By the Stamp Act, 1891 :—
policy of insurance " 99. The duty of one penny upon a policy
the expression '
398
POS] DICTIONARY OF BANKING |POS
of composition for that duty there shall be a legal instrument and can be negotiated
charged a duty at the rate of £5 per cent, on as soon as drawn.
the aggregate amount of such sums received A post-dated cheque should not be paid
for premiums. This applies to insurances before the date appearing thereon. If a
effected in newspapers. (See Life Policy, banker pays it before that date he will I"
Marine Insurance Policy.) liable for any consequences that mav ensue,
POSSESSORY TITLE. Where a person as, for instance, in the event of the dishonour
has been in the undisturbed possession of of a cheque, which would not have been dis-
real property for twelve years and has not I honoured if the post-dated cheque had not
paid any rent or acknowledged any person's been paid, or in the event of the drawer
right to the property, he acquires a posses- giving notice to " stop payment " before tin-
sory title and becomes the owner of the pro- date of the cheque arrives. A cheque pre-
perty. Hut if the rightful owner was under sented for payment before the date has
a disability, such as infancy or lunacy, an arrived should be returned marked " post-
action may be brought against the person dated."
•claiming a possessory title within six years If a cheque is presented on a Saturday,
after the disability has ceased, but in no and is dated for the next day, Sunday, it
case can the land be recovered after thirty should not be paid on the Saturday.
years from the time when the right of action When the date upon a cheque has arrived,
first accrued, although the person under a banker is entitled to pay it, and incurs no
disability may have remained under dis- liability in doing so.
ability during the whole of the thirty Alter the date any holder mav sue upon
years. the cheque, though before the date he could
POSSESSORY TITLE (LAND REGISTRY). not do so.
Land may be registered under the Land A post-dated cheque is sometimes given
Transfer Acts with possessorv title. Its because the drawer does not expect to have
efifei tnot retrospective
is it keeps the title
; funds to meet it until that date arrives. A
clear for the future, but is no bar to possible purchaser often gives such a cheque, so
adverse claims dating from a time prior to that he may have a few days in which to
its first entrv on the Register books. (See examine his purchase before the cheque can
Land Registry.) be paid.
POST. Where a letter is posted and is If a person draws and issues a cheque on
not returned through the Dead Letter Office, February 1 and dates it March 1, it is
it is a presumption of law that it has been practically the same as if he accepted a bill
received by the person to whom it was ad- payable one month after February 1. But
dressed. The sender, however, must be if he accepted a bill, the stamp dutv would
prepared to prove that he posted the letter. be an ad valorem one, whereas on the post-
For this reason it is important that a book dated cheque the duty is the usual duty upon
be kept containing particulars of all letters a cheque, one penny. It is thought bv some
despatched each day, showing the addresses, authorities that a drawer mav be liable to a
the time the letters were posted and the penalty on the question of insufficient stamp
initials of the person, or persons, who posted duty, under the Stamp Act, 1891, but it is
them. said that that question could not arise in an
Before sending notes by post full particu- action on the cheque after the date of the
lars of thenumber, date, place of issue, and cheque has arrived, because then the cheque
denomination of each note should be taken. would no longer be post-dated.
Some persons cut notes in two and send the When a post-dated cheque is handed to a
halves by different mails, the second halves banker for collection when the date arrives,
not being sent until an acknowledgment is the customer should sign a paving-in slip
Teceived for the first halves. dated for the day on which the cheque is t<i
POST-DATED. A
cheque which is dated be credited.
subsequent to the actual date on which it is Bankers do not discount post-dated
drawn called a post-dated cheque.
is cheques, but money-lenders advertise
A not invalid by reason only that
bill is the -ash them for clients at a ceil, mi
it is post-dated. (Section 13, s.s. (2), Bills discount. (See Bill of Exchangi
of Exchange Act, 1882.) A cheque is POST OBIT BOND. A bond in which a
included under the word " bill " in that person agrees to pay a certain sum ol money
section. A post-dated cheque is therefore alter the death of another person.
399
POS] DICTIONARY OF BANKING ;pow
If there is anything of a fraudulent or over- years old and upwards ; and on behalf and
reaching nature in the bond, the Courts may in the names of children under seven years
set it aside and order repayment merely of old. In this case the money is not repayable
the actual sum lent, plus reasonable interest. until the children attain the age of seven.
POST OFFICE MONEY ORDER. A Post Deposits may be made, without limit, by
money order is not a negotiable instru-
Office a registered Friendly Society and by a
;
ment, and therefore a holder does not obtain Provident Society, Penny Bank, or similar
any better title to it than the person had Institution to the extent of £100 in any one
from whom he received it. year and £300 in the whole, and if the
consent of the National Debt Commissioners
be obtained, without limit as to amount.
If a money order is crossed Every deposit must be entered in the
depositor's book by the postmaster or person
payment by the Post Office will onlv be made receiving it, who must affix his initials and
through a banker, and, if the name of a the stamp of his office to each entry. An
banker is added, payment will onlv be made acknowledgment for every deposit of £5 and
through that banker. upwards, should be received by post from
A postal order may be collected either at the Savings Bank Department in London
the Office where it is made pavablc, or at the Interest at the rate of £2 10s. per cent
General Post Office, London. per annum is allowed on every complete
In receiving postal money orders from pound, and commences on the first day of
customers, bankers either give cash for them the month next following the deposit.
or place themto credit of the customer's When a depositor wishes to withdraw any
account. If orders should prove to
the part of the sum due to him, he must make
have been stolen, the Post Office may return application for the same on a printed form,
them to the banker, even after he has called a notice of withdrawal.
received the proceeds. Depositors may invest their deposits in
Bankers do not, as a rule, merely collect various Government stocks.
a money7 order, but where an order is col- A deposit book is not a proper security for
lected the Post Office (Money Orders) Act, money lent, and no claim by any person
1880 (Section 31, provides that a banker holding a deposit book in respect of a loan will
" who, in collecting for any principal, shall be recognised by the Savings Bank Depart-
have received payment or been allowed by ment. Deposits in the Post Office Savings
the Postmaster-General in account, in respect Bank are not liable to " attachment," or to
of any money order issued under this Act, its Scotch equivalent " arrestment."
or of any document purporting to be such a POSTING. Posting a current account
money order, shall not incur liability to any- ledger is entering therein to the credit of the
one except such principal by reason of having various customers' accounts all the amounts
received such pavment or allowance, or which have been paid in, and to the debit
having held or presented such order or all the cheques which have been paid.
document for pavment." POTS. A Stock Exchange name for North
POST OFFICE SAVINGS BANKS. The Staffordshire Railway stock.
Post Office Savings Banks were established POUND. A sovereign (q.v.). In the time
bv Act of Parliament in 1861, and every of William the Conqueror a pound of silver
depositor has the direct security of the State was coined into 240 silver pence, each equal
for the repayment of his deposits. to a pennyweight, whence the origin of the
No person may, for his own benefit, have word pound.
two accounts in the Post Office Savings A five-pound piece is of the standard
Bank at the same time, or have an account weight of five sovereigns, namely 61637239
in a Trustee Savings Bank. grains troy, and its least current weight is
Money orders and cheques are received 6125 grains.
provided they are not crossed to a particular A two-pound piece is of the standard
bank. weight of two sovereigns, 24654S95 grains
No more than £50 can be deposited in one trov, and its least current weight is 245
year, and no deposit can be made which grains. (See Coinage.)
causes the balance due to a depositor, POWER OF ATTORNEY. A formal docu-
including interest, to exceed £200. ment bv which one person is authorised,
Deposits may be made by children seven or empowered, to act for another.
400
—
for a long time and wishes to give someone instrument, and thing so executed and done
(the donee or grantee) power to act for him shall be as effectual in law, to all intents,
in his absence. The power given in the as if it had been executed or done by the
document varies according to the wish of the donee of the power in the name and with the
donor, and when a power of attorney is signature and seal of the donor thereof."
exhibited to a banker for registration he The following are some of the points
should be careful to observe the exact word- which may be found in a power of attorney :
ing of the instrument, and in particular to Know all men by these Presents that I,
see whether power is given by special John Brown, of in the county of
clause to draw cheques upon the donor's gentleman, being about to
,
account, to make, draw, accept and indorse leave England and to reside abroad for some
promissory notes and bills, to mortgage time, do hereby constitute and appoint my
securities or overdraw his account. A banker son, Tom Brown, of (hereinafter
should require that a certified copy of the called and referred to as my said attorney)
instrument be given to him. my true and lawful attorney for the purposes
An attorney may sign the name of the hereinafter expressed, that is to say :
donor without the addition of any further To demand, sue for and recover from all
words, but the usual and better way is to persons and bodies liable to pay
sign, e.g. the same all sums of money, interest,
" John Brown by his attorney Tom Brown." debts, etc., now owing to me, or which
The authority may relate only to one shall at any time hereafter be owing to
particular act, as. for example, the sale of me, and
Consols, or it may give power to act in all To give, sign, and execute effectual re-
matters connected with some particular ceipts, the same, and on non-
etc., for
business, or it may give full power to act payment to prosecute any action or suit
in every matter in the same way as though for recovering the payment thereof ;
tul
26— (1535)
— — — — —
Brown, his executors and administrators, to Where made for the re-
ratify and confirm. ceipt of one payment
And I declare that this power shall be only
irrevocable for calendar months, com- In any other case
puted from the date hereof. (4) For the receipt of any
In witness whereof I have hereunto set sum of money, or any bill
my hand and seal this day of of exchange or promis-
19 . sory note for anv sum of
igned, sealed and de-
money, not exceeding £20,
livered by the above
or any periodical pay-
named John Brown in
John Brown. ments not exceeding the
annual sum of £10 (not
. the presence of
being hereinbefore charged) 5
enacted by Sections 8 and 9 of the Con-
It is (5) For the sale, transfer, or
acceptance of any of the
veyancing Act, 1882, that if a power of
attorney given for valuable consideration is
Government or Parlia-
in the instrument creating the power ex-
mentary stocks or funds :
402
— —
See also Section SO under Proxy. Dating. — Must be in words, not in figures.
POWER OF ATTORNEY— TRANSFER OF (When a letter of attorney has to be exe-
GOVERNMENT STOCK. British Govern- cuted by more than one person the date of
ment stock is inscribed, that is registered, in the first signature attached thereto should be
the books of the Bank of England, and when inserted.)
a transfer is to be made, the owner must Witnessing. — (1) In the United King-
either attend personally at the Bank or dom.
appoint an attorney to act for him. Two credible witnesses are necessary to
each execution, and they must state their
following is a specimen of a power of
The qualities, professions or occupations, and
attornev to transfer consols, for use by the
respectively give a permanent address
survivors in a joint account :
403
— —
amount does not exceed ^100, 4s. (See PREMIUM. The amount which is pay-
National Debt.) able annually during or during a certain
life,
POWER OF SALE. (See Legal Mort- number of years, in order to assure the pay-
gage.) ment, either at death or at a fixed date, as
PRECEPT OF CLARE CONSTAT. By the the case may be, of the sum named in an
Stamp Act, 1891, the stamp duty is: assurance policv. (See Life Policy.)
Precept of Clare Constat to PREMIUM, AT A. When the market
give seisin of lands or other £ s. d. value of bonds, stocks or shares is above the
heritable subjects in Scotland .050
PREFER-
nominal or face value, they are said to be
at a premium. A share of £\, fully paid,
PREFERENCE SHARES.
ENCE STOCK. Preference shares receive which is selling at £\ 10s. is an example of
a dividend before the ordinary shares, and an investment which is at a premium, or 10s.
they may be either cumulative or non- above par value. When the market value
cumulative. If the former, and no dividend is less, thev are at a discount. (See Par.)
is paid upon them in one year, the profits PREMIUM BOND. An acknowledgment
of succeeding years will be used to pay the of indebtedness by a foreign state. In some
full dividends which have accrued, before cases no interest is paid, and in others only a
any dividend is paid on the ordinary shares. very small rate of interest is given, but, at
If, however, they are non-cumulative, the
certain times, a drawing takes place and the
dividend is payable only out of the profits holders of bonds bearing the numbers that
of each separate year. are drawn may receive large money prizes.
Some preference shares give a preferential Premium bonds are not issued in this
right onlv as regards dividend, but others country. They have been held to come
give in addition a preferential right in the within the Gaming Acts as lotteries.
event of a return of the capital of the PRESCRIPTION In Scotland, Positive
company. Prescription is a title to lands acquired by a
A company limited by shares may, if certain period of uninterrupted possession ;
authorised by its articles, convert its paid- Negative Prescription is the loss of a right by
up shares into stock. A stockholder may neglect to use it during the time limited by
hold any amount of a stock, but a share- law. (See under Statute of Limitations.)
" PRESENT AGAIN." These words are
holder obtains shares of a fixed amount.
(See Share Capital.) sometimes written by a banker upon a
PREFERENTIAL PAYMENTS (BANK- cheque which is returned unpaid because of
RUPTCY). In the distribution of the pro- insufficient funds in the customer's account
to meet it. It is not, however, by itself a
perty of a bankrupt the following debts are
paid' in priority to all other debts, viz., all correct answer to give, as it does not afford
rates due and payable within twelve months any explanation why the cheque has been
before the date of the receiving order, and returned. The best answer to write upon
not exceeding in the whole one year's assess- a dishonoured cheque is " Refer to drawer."
ment ; all wages or salary of any clerk or Sometimes the words are joined with
servant for services rendered to the bankrupt another answer, as " Refer to drawer
during four months before the date of the —
Present again," " Not sufficient Present
receiving order, and not exceeding fifty again." No doubt the words " Present
pounds ;
workmen's wages to a limited again " are used with the idea of minimising
extent ; a landlord may distrain for rent the risk of injury to the drawer's credit by
and if such distress be levied after the com- returning the cheque, but it is perhaps
mencement of the bankruptcy it shall be questionable whether they are altogether
available only for six months rent accrued prudent words to use.
due prior to "the date of the order of adju- The banker to whom a cheque is returned
dication, but the landlord may prove under with a request ''Present again " advises his
the bankruptcy for the surplus due for customer of the dishonour of the cheque and
which the distress may not have been avail- forwards it for representation.
able. The expenses of the proceedings in PRESENTATION. A word which is often
bankruptcy are also payable in priority. used instead of the word presentment. (See
(See Fraudulent- Preference.) Presentment for Acceptance, Present-
PREFIX. French, at a fixed date. A ment for Payment.)
bill drawn payable at a fixed date, or prefix,
PRESENTMENT FOR ACCEPTANCE.
does not take davs of grace. When a bill of exchange is actually
404
— — — —
before it can be presented for " (c) Where the drawee is dead,
payment. presentment may- be made
(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. " (<1\ Where the drawee is bank-
" (4) WTiere 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) Wliere 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 proyides having capacity to contract
as follows :
by bill :
"(11 Subject to the provisions of this Act, " (b) 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. " (r) 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
giyen in Section 41 :
than three days to run before maturity, is,
" (li A duly presented for accept-
bill is 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
405
— — —
get them accepted, they are presented to the " Section 45. Subject to the provisions
drawee on the day of receipt, and if the of this Act a bill must be duly presented for
drawee does not accept when they are pre- payment. If it be not so presented the
sented, it is customary to leave the bills drawer and indorsers shall be discharged.
with him for twenty-four hours (exclusive " A bill is duly presented for payment which
of Sundays and holidays), or until close of is presented in accordance with the following
four hours are not completed, in which to " (1) Where the bill is not payable on
decide whether, or not, he will accept them. demand, presentment must be made
When a bill is left for acceptance a banker on the day it falls due.
marks it so that he may know that he gets " (2) Where the bill is payable on demand,
the same bill back again. If a banker is then, subject to the provisions of
negligent in obtaining an acceptance he may this Act, presentment must be made
render himself liable thereon, especially in within a reasonable time after its
the case of a bill drawn payable at so many issue in order to render the drawer
days " after sight," as the drawer and in- liable, and within a reasonable time
dorsers may thereby be discharged. The after its indorsement, in order to
law does not lay down any absolute rule as render the indorser liable.
" In determining what is a
to what time is reasonable or unreasonable in
which to carry out an instruction to obtain reasonable time, regard shall be
an acceptance, but in most cases a banker had to the nature of the bill, the
would present a bill for acceptance on the usage of trade with regard to
day that he receives it. Having left a bill similar bills, and the facts of the
with a drawee, it is part of the banker's duty particular case.
to call again for it and not to wait till the " (3) Presentment must be made by
drawee returns it to him, though an arrange- the holder or by some person
ment may be made with the drawee to return authorised to receive payment on
it. his behalf at a reasonable hour on
Where bills of lading and other documents a business day, at the proper place
are attached to a bill, they are exhibited to as hereinafter defined, either to the
the drawee at the same time as the bill is person designated by the bill as
presented for acceptance, but if the bill is payer, or to some person authorised
left with the drawee until the next day the to pay or refuse payment on his
documents are retained by the banker and behalf if with the exercise of reason-
not left with the drawee. The banker, how- able diligence such person can
ever, may have instructions to deliver up the there be found.
documents to the drawee after he has ac- " (4) A bill is presented at the proper
cepted the bill. In the case of a foreign bill place :
sent for acceptance, instructions usually " (a) Where a place of payment is
accompany the bill as to what has to be done specified in the bill and the
in the event of non-acceptance, as " protest bill 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 utmost importance that a bill of
the sented to the drawee or
exchange be presented for payment on the acceptor wherever he can be
406
— —
presented at his
found, or if by the omission to present the bill
last known
place of business for payment on the day that it
or residence. matures.
" " In order to render the acceptor of a
(51 Where a bill is presented at the (3)
proper place, and after the exercise bill liable it is not necessary to
who are not partners, and no place deliver it up to the party paying
of payment is specified, presentment it."
must be made to them all. Thoughnon-presentment, or delay in
" (7) Where the drawee or acceptor of a presentment, of a bill releases the drawer
bill is dead, and no place of pay- and indorsers, there are certain cases where
ment is specified, presentment must the Bills of Exchange Act excuses delay, or
be made to a personal representa- non-presentment. They are given in Section
tive, such there be, and with the
if 46:—
exercise of reasonable diligence he " (1) Delay in making presentment for
can be found. payment excused when the delay
is
" Where authorised by agreement or is caused by circumstances beyond
(8)
usage a presentment through the the control of the holder, and not
post office is sufficient." imputable to his default, mis-
It should be noted that a presentment conduct, or negligence. When the
through the post office (s.s. 8) is in order only cause of delay ceases to operate
where authorised by agreement or usage. presentment must be made with
If, therefore, a bill accepted at the X. & Y. reasonable diligence.
Bank, Leeds, is presented by post to that " (2) Presentment for payment is dis-
bank by a stranger, the bank would return pensed with :
407
— — —
at the bank on the due date and said he supra protest, or contains a refer-
could not pay it. If it is accepted payable ence in case of need, it must be
at a bank, and the acceptor says he has protested for non-payment before
nothing in his account to meet the bill, it is it is presented for payment to the
still necessary formally to present the bill acceptor for honour, or referee in
at the bank indicated. It must be presented case of need.
within the usual business hours. " (2) Where the address of the acceptor
Presentment before the actual due date for honour is in the same place
does not preserve recourse against the other where the bill is protested for non-
parties. payment, the bill must be pre-
Where a separate guarantee has been sented to him not later than the
given by anyone on behalf of the drawer or day following its maturity and ;
payable. him.
If an acceptor does not pay a bill when it A cheque must be presented for payment
is presented to him a notice may be left at within a reasonable time. Section 74 of the
his address informing him that the bill lies Bills of Exchange Act provides :
408
—
is presented for payment on the business "86. (1) Where a note payable on de-
day following its receipt. If the person mand has been indorsed, it must be
receiving the cheque and the banker on presented for payment within a
whom it is drawn live in different places, it reasonable time of the indorsement.
is within a reasonable time if sent forward If it be not so presented the
for payment on the business da}- following indorser is discharged.
its receipt. " (2) In determining what is a reasonable
the banker sends it to an agent for
If time, regard shall be had to the
collection, the agent has the day of receipt nature of the instrument, the usage
and the following day in which to present it. of trade, and the facts of the
In practice, however, all cheques are remitted particular case.
for collection on the day that they are " (3) Where a note payable on demand is
received. negotiated, it is not deemed to be
The drawer ot a cheque is liable to the overdue, for the purpose of affecting
holder for six years from the date of the the holder with defects of title of
cheque, and a banker would be justified in which he had no notice, by reason
paying a cheque within that period, but, in that it appears that a reasonable
practice, a banker does not pay a cheque, time for presenting it for payment
which is six (in some banks twelve) months' has elapsed since its issue.
old, unless it is confirmed by the drawer. " 87. (1) Where a promissory note is in
See Stale Cheque.) the body of it made payable at a
Where it is important to know as soon as particular place, it must be pre-
possible whether a certain cheque will be sented for payment at that place
paid or not, it is customary to send it direct, in order to render the maker liable.
instead of through the Clearing House, and In any othei case, presentment for
a stamped telegram form may be enclosed payment is not necessary in order
with a request to the banker on whom it to render the maker liable.
is drawn to " advise fate " of the cheque. " (2) Presentment for payment is neces-
It has been held that, where a foreign snrv in order to render the indorser
cheque is drawn upon a place where the i
note liable.
409
PRE] DICTIONARY OF BANKING [PRE
" (3) Where a note in the body of it
is to his principal's affairs or business
made payable
at a particular place, or for showing or forbearing to show
presentment at that place is neces- favour or disfavour to any person
sary in order to render an indorser in relation to his principal's affairs
liable but when a place of pay-
; or business ; or
ment is indicated by way of " If any person knowingly gives to
memorandum only, presentment any agent, or if any agent knowingly
at that place is sufficient to render uses with intent to deceive his
the indorser liable, but a present- principal, any receipt, account, or
ment to the maker elsewhere, if other document in respect of which
sufficient in other respects, shall the principal is interested, and which
also suffice." contains an}- statement which is
A country bank note should be pre- false or erroneous or defective in any
sented for payment, or put into circulation, material particular, and which to his
not later than the dav following the date knowledge is intended to mislead the
on which it was received, otherwise, if the principal ;
note isdishonoured, the holder mav lose his he shall be guilty of a misdemeanour,
right of action against the person from whom and shall be liable on conviction on
he took the note in payment of a debt. (See indictment to imprisonment, with or
Country Bank Notes.) without hard labour, for a term not
The presentment of a bill or cheque exceeding two years, or to a fine not
through a Clearing House has the same exceeding five hundred pounds, or to
effect as presenting it direct to the banker both such imprisonment and such fine,
on whom ths cheque is drawn or where the or on summary conviction to imprison-
bill is payable. (See Bill of Exchange.) ment, with or without hard labour, for
PRESSURE ON THE MONEY MARKET. a term not exceeding four months, or
An expression which is used to describe the to a fine not exceeding fifty pounds,
position when from any cause, such as a high or to both such imprisonment and such
Bank Rate, there is difficulty in obtaining fine.
loans or discounting bills. " (2) For the purposes of this Act the
PREVENTION OF CORRUPTION ACT, expression consideration
' includes '
1906 (6 Edw. VII, c. 34). An Act for the valuable consideration of any kind ;
better Prevention of Corruption. the expression agent includes
'
'
410
——
included among the offences men- father or mother passes to the eldesl son,
tioned in Section 1 of that Act. in the event of the parent leaving no will.
" (3) Every information for any offence PRIORITIES. In charges upon landed
under this Act shall be upon oath. property, a mortgage conveying the legal
" (4) The expenses of any prosecution on estate comes first, and, after that, all the
indictment under this Act shall be other equitable charges which there may
defrayed as in cases of indictment be rank in order of the dates of the respective
for felony. charges. If, for example, a trustee fraudu-
•'
(5) A court of quarter sessions shall not lently deposits the deeds of trust property
have jurisdiction to inquire of, hear, with a banker, the banker's equitable charge
and determine prosecutions on in- will rank after the equitable charge which
dictments for offences under this already existed, before he took the deeds, in
Act. favour of the persons benefiting under the
'
' (6) Any person aggrieved by a summary trust. But if, on the other hand, a banker
conviction under this Act may is negligent and allows, without a sufficient
appeal to a court of quarter sessions reason, the deeds of the property included
Application to Scotland. in his equitable charge to remain in the
" 3. This
hands of the customer, and the customer
Act to Scotland,
shall extend
obtains a loan upon them from another
subject to the following modifications :
stop the practice of taking and giving secret the banker, as security, the property was
commissions, in consideration for which an mortgaged, say, to Jones, or if Jones had an
agent does something contrary to the equitable mortgage and subsequently, with or
interests of his principal. without noticeof the banker's charge, obtained
Where a broker shares with a banker, a legal mortgage, Jones would then hold the
through whom the order has been received, legal estate and would rank before the
his commission upon any sale or purchase banker's equitable charge. But if Jones was
of stocks or shares, it is now customary to guilty of negligence in not retaining posses-
place a notice upon the contract note that sion of the deeds, or of not obtaining a satis-
the commission is divided with the banker. factory explanation of their absence, which
PRE-VICTORIAN GOLD COINS. Pre- enabled the mortgagor to deposit them
Yictorian sovereigns and half-sovereigns with the banker, the banker's equitable
that is, all gold coins coined before 1837 are — charge might in such a case, in equity, be
not now legal tender. They were called in held to precede the legal mortgage held by
by the Coinage Act, 1889,' and by Royal Jones, provided, of course, that the banker
Proclamation they were declared to be no had no knowledge, at the time he took the
longer current coins after February 28, 1891. deeds, that there was a charge in existence
PRIMA FACIE. On the first view. The in favour of Jones.
appearance of a matter, at first sight, before A prior legal estate would probably not.
examining into it. however, be postponed to a subsequent
PRIMOGENITURE. (Latin Primogenitus, equitable estate, because of mere careless
first-born.) ness, as distinguished from gross negligence,
The law by which the real property of a on the p. in ot the prior mortgagee.
411
— —
The legal estate can be held only by one expression private company means
' '
rank after the prior charge (unless the bers (exclusive of persons
prior equitable mortgagee has been negligent who are in the employment
in not retaining possession of the deeds) ;
of the company) to fifty ;
but if the banker subsequently obtains a and
mortgage conveying the legal estate to " prohibits any invitation to
(c)
ment, or of letters patent. (See Banking Section 82, which obliges companies to
Company.) filea statement with the registrar where
PRIVATE COMPANY. A private com- no prospectus is issued, does not apply
pany may consist of any two or more to a private company. (See Prospectus.)
persons, with limited or unlimited liability. (See Companies.)
(See Memorandum of Association.) PRO RATA. Payment in proportion to
The Companies (Consolidation) Act, 190S, the various interests concerned.
Section 121, defines a private company as PROBATE. The document which is
412
— —
to its tenor
pay," etc., is valid, without his signature ;
if on demand, when the banker calls for note is signed, say, by J. Brown and J. Jones,
repayment. A banker should not refer to payable to the bank and is given as security
Brown as the principal and Jones as the for Brown's account, a memorandum should
surety, but to Brown and Jones as " the be signed by the two makers. The memo-
makers of the note." If Brown does not randum of deposit should state that the note
415
—
is given for securing the sum and sums of containing a promise to pay any
money which shall from time to time be due sum of money.
or owing from the customer on whose
" (2) Anote promising the payment of any
behalf it is given, either alone or with any sum of money out of any particular
other person or persons either on the balance fund which may or may not be
of his current account or otherwise, and that available, or upon any condition
the moneys intended to be secured by the or contingency which may or may
promissory note shall be recoverable there- not be performed or happen, is to
upon, although the bank may have taken or be deemed a promissory note for
may hereafter take any further security, or that sum of money."
may have given time for the payment On all inland promissory notes the stamp
thereof. must be impressed.
promissory note payable on demand,
A The ad valorem duties upon promissory
which is held as security for an account, notes drawn or made out of the United
should, for safety, be renewed, if still re- Kingdom are to be denoted by adhesive
quired, before six years from the date of the stamps. (Stamp Act, 1891, Section 34, s.s. 2.)
note have expired. The adhesive stamps are to be Foreign Bill
A promissory note payable at a fixed stamps. Every person into whose hands such
period after date is not regarded as a con- a promissory note comes in the United King-
tinuing security for an account and to dom before it is stamped shall, before he
establish the contrary, evidence is required. transfers or negotiates or pays the note,
In the case of In re Boys, Eedes v. Boys affix thereto a proper adhesive stamp and
(1S70, 10 Eq. 467), where a note payable cancel every stamp so affixed. (Section 35,
eight months after date was given as security, s.s. 1.) An adhesive stamp is to be cancelled,
416
— —
417
27— (1535)
PR 0] DICTIONARY OF BANKING [PRO
No. 72.— Proof of Debt. General Form.
THE BANKRUPTCY ACTS, 1883 & 1890.
Where the debt
proved for exceed s
o
(i) High Court of Justice, £2, a Shilling
or County Court of
Bankruptcy Stamp
holden at . In the '
Court of ay
mast be affixed
here, or a postal
IN BANKRUPTCY. No. (a) of 1 order for Is. be sent
Here insert the number
(a)
to the Official
If
of matter and the name of
Debtor as given on the notice
RE (a) Receiver, as other-
of meeting. wise the proof can-
(b) Fill in full name, ad- I (b) not be admitted.
dress, and occupation of de- Postage Stamps
ponent.
of cannot be accepted.
strike out clauses (c) and [d). (c) That I am in the employ of the undermentioned creditor ,
If made by Clerk of C n < tor
and that I am duly authorised by
li
and
lars of all Securities held,
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 held,
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. Amount. Due date.
Admitted to vote
for £ : :
this of day
19 .
Official Receiver.
Admitted to rank
for dividend for
£
this day of Sworn at
19 .
in theCounty of Deponent's Signature.
Trustee.
this day of 19
Before me )
418
—
(Signed)
Com missioiwi or Officer administering Oath.
REMARKS.
* The vouchers (if any) by
DATE. ( iiNSIDERATION". AMOUNT. which the account can be sub-
stantiated should be set out
here.
Signature of Deponent
Signature of Commissioner |
the general benefit of the creditors, he may be agreed on between the creditor
prove for his whole debt. and the trustee, or as, in default of
"11. If a secured creditor does not either such agreement, the Court mav
realise or surrender his security, he shall, direct. If the sale be by public
before ranking for dividend, state in his auction the creditor, or the trustee
proof the particulars of his security, the date on behalf of the estate, may bid or
when it was given, and the value at which he purchase.
assesses it, and shall be entitled to receive a (c) Provided that the creditor may at any
dividend only in respect of the balance due time, by notice in writing, require '
to him after deducting the value so assessed. the trustee to elect whether he will
12. (a) Where a security is so valued the or will not exercise his power of
trusteemay at any time redeem it redeeming the security or requiring
on payment to the creditor of the it to be realised, and" if the trustee
assessed value. does not, within six months after
" (b) If the trustee is dissatisfied
with the receiving the notice, signify in writ-
value at which a security is assessed, ing to the creditor his election to
he may require that the property exercise the power, he shall not be
comprised in any security so valued entitled to exercise it ; and the
be offered for sale at such times and equity of redemption, or any other
on such terms and conditions as may interest in the property comprised
419
PRO] DICTIONARY OF BANKING [PRO
in the security which is vested in the shall not prevent proof in respect of the
trustee, shall vest in the creditor, contracts, against the properties respectively
and the amount of his debt shall be liable on the contracts.
reduced by the amount at which the
security has been valued. Periodical Payments.
"13. Where a creditor has so valued his " 19. Whenanyrent or other payment falls
security, he may at any time amend the due at stated periods, and the receiving order
valuation and proof on snowing to the satis- is made at any time other than one of those
faction of the trustee, or the Court, that the periods, the person entitled to the rent or
valuation and proof were made bona fide on payment may- prove for a proportionate part
a mistaken estimate, or that the security has thereof up to the date of the order as if the
diminished or increased in value since its rent or payment grew due from day to day.
previous valuation ; but every such amend-
ment shall be made at the cost of the creditor, Interest.
and upon such terms as the Court shall order, " 20. On any debt or sum certain, payable
unless the trustee shall allow the amend-
at a certain time or otherwise, whereon
ment without application to the Court.
interest is not reserved or agreed for, and
"14. Where a valuation has been amended
which is overdue at the date of the receiving
in accordance with the foregoing rule, the
order and
provable in bankruptcy, the
creditor shall forthwith repay any surplus
dividend which he may have received in
creditor may
prove for interest at a rate not
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 is made applic-
able to the payment of any future dividend,
demand until the time of payment.
but he shall not be entitled to disturb the Debt Payable at a Future Time.
distribution of any dividend declared before
the date of the amendment. "21. A creditor may prove for a debt not
"15. 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 under the provisions of Rule 12, the presently, and may receive dividends equally
net amount realised shall be substituted for with the other creditors, deducting only
the amount of any valuation previously thereout a rebate of interest at the rate of
made by the creditor, and shall be treated five pounds per centum per annum com-
in all respects as an amended valuation puted from the declaration of a dividend to
made by the creditor. the time when the debt would have become
"16. If a secured creditor does not comply payable, according to the terms on which it
with the foregoing rules he shall be excluded was contracted.
from all share in any dividend.
"17. Subject to the provisions of Rule 1 2, a Admission or Rejection of Proofs.
creditor shall in no case receive more than " 22. The trustee shall examine every proof
twenty shillings in the pound, and interest and the grounds and in writing
of the debt,
as provided by this Act. admit or reject it,whole or in part, or
in
require further evidence in support of it. If
Proof in Respect of Distinct Contracts. he rejects a proof he shall state in writing to
"IS. If a debtor was at the date of the the creditor the grounds of the rejection.
receiving order liable in respect of distinct " 23. 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 circumstance 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 "24. If a creditor is dissatisfied with the
contractor is also one of the joint contractors, derision of the trustee in respect of a proof.
420
— — ;
the Court may, on the application of the behalf by the judge of the Court, or, in the
creditor, reverse or vary the decision. case of a person residing in Scotland or in
" 25. The Court may also expunge or reduce Ireland, before a judge ordinary, magistrate,
a proof upon the application of a creditor if or justice of the peace, or, in the case of a
the trustee declines to interfere in the person who is out of the Kingdom of Great
matter, or, in the case of a composition or Britain and Ireland, before a magistrate or
scheme, upon the application of the debtor. justice of the peace or other person qualified
" 26. For the purpose of any of his duties in to administer oaths in the countrv where he
relation to proofs, the trustee may administer resides (he being certified to be a magistrate
oaths and take affidavits. or justice of the peace, or qualified as afore-
"27. The official receiver, before the ap- said by a British minister or British consul,
pointment of a trustee, shall have all the or bv a notarv public)."
powers of a trustee with respect to the The Bankruptcy Act, 1S90, Section 24,
examination, admission, and rejection of enacts that an affidavit mav be sworn " also
proofs, and any act or decision of his in in England and Wales before a justice of the
relation thereto shall be subject to the like peace for the county or place where it is
appeal." sworn."
Where a banker is a holder of a bill and Any alteration or interlineation must be
the acceptor and drawer become bankrupt, authenticated by the initials of the person
he may claim upon both estates for the full taking the affidavit, and in the case of
amount of the bill, but he must not retain erasure the words or figures must be re-
more than the amount of the bill. If a written and signed or initialled in the margin
dividend has already been declared on one bv the person taking it. (See Bankruptcy. \
of the estates before sending in a proof of debt PROPERTY TAX. The popular name for
'
on the other estate, the banker's claim on the income tax upon property in lands and
second estate will be only for the balance buildings. (See Income Tax.)
after crediting the dividend declared. If PROSPECTUS. A prospectus is any
there is any balance standing to the cus- notice, circular, advertisement, or other
tomer's credit it will be retained bv the invitation, offering to the public for sub-
banker against the bill. scription or purchase any shares or deben-
The fee, payable by means of stamps, tures of a company.
upon a proof of debt above £2 (other than A form of application for shares is usually
proof for workmen's wages), is one shilling, sent out along with the prospectus. This
and the stamp may be impressed or adhesive. form is filled up by anyone desiring shares
The adhesive stamp must be a " bank- and is forwarded, along with the amount
ruptcy " stamp. An adhesive stamp shall payable on application, to the company or its
be " cancelled by the various court or other bankers. When the shares are allotted by
officials by perforation or in such manner the company a letter of allotment is sent to
as the Commissioners of Inland Revenue the applicant. (See Allotment.)
mav from time to time direct." (Stamp The name of the company's bankers
Ord'er, 1890.) usually appears upon a prospectus. Unless
An affidavit of proof of debt mav be sworn the banker actually joins in the invitation
before an assistant official receiver or any to the public to subscribe, he is not liable for
clerk of an official receiver dulv authorised any statements contained in the prospectus.
in writing by the Court or the Board of Trade A company should always obtain a banker's
in that behalf. (Bankruptcy Rules, Xo. permission before putting his name in a
219 A.) The trustee may administer oaths prospectus, for although the insertion of a
and take affidavits. (See Rule 26, above.) banker's name does not in any way act as a
Section 135 of the Bankruptcy Act, 1883, guarantee or a recommendation to the pub-
provides :
lic, there is no doubt that it may have
" Subject to general rules, anv affidavit a considerable influence in moving many
to be used in a bankruptcy court may be persons to take up the investment.
sworn before any person authorised to ad- The Companies (Consolidation) Act, 1908,
minister oaths in the High Court, or in the provides :
" (e) the number and amount of Provided that shall not be
it
shares and debentures which necessarv to state the com-
within the two preceding mission payable to sub-
years have been issued, or underwriters and
;
422
PRO! DICTIONARY OF HANKING PRO
at which any material con- whether with or without the right
tract or .i copy thereof to renounce in favour of other
may be inspected Provided : persons, but subject said, i
or, where the interest of such prospectus. The statement must be in the
a director consists in being form set out in the second Schedule to the
a partner in a firm, the above Act. This does not apply to a private
nature and extent of the company. (Section 82.)
interest of the firm, with a All persons who are responsible for the
statement of all sums paid issue of a prospectus are liable to pay com-
or agreed to be paid to him pensation to anyone who subscribes for any
or to the firm in cash or shares or debentures, on the faith of the
shares or otherwise by any prospectus, for loss or damage they may
person either to induce him have sustained by reason of any untrue
to become, or to qualify him statement therein, unless it can be proved
as, a director, or, otherw ise that the} acted honestly in making the
for services rendered by him statements. (See Compaxii
or by the firm in connection PROTEST. A protest is the official certi-
with the promotion or forma- given by a notary public respecting
tion of the company and ; the dishonour of a bill of exchange by non-
where the company is a com- acceptance or non-payment. When a bill
pany having shares of more is dishonoured, a holdei may hand h to a
than one class, the right of notary public to In- protested. London
voting at meetings of the bankers usually hold dishonoured bill till
,i
(7) This Section shall not appl 3 toacircu noted on the day of dishonour it cannot be
lar or notice inviti ting mem- done afterward- to be of any value \
bers or debenture holders of a com- notary may presenl the bill n any time on
pany to subscribe cither for sh the da\ oi maturity.
or for debentures of the compan; It is ncit necessary to note or protest an
123
— —
PRO 1
DICTIONARY OF BANKING [PRO
security asked for, and be protested " (b) When a bill drawn payable
accordingly. at the place of business or
The rules regarding the noting or protest residence of some person
of a bill are contained in Section 51 of the other than the drawee, has
Bills of Exchange Act, 1882 :— been dishonoured by non-
" (1) Where an inland bill has been dis- acceptance, it must be
honoured it may. if the holder protested for non-payment
think fit, be noted for non-accept- at the place where it is ex-
ance or non-payment, as the case pressed to be payable, and
may be but it shall not be neces-
; no further presentment for
sary to note or protest any such bill payment to, or demand on,
in order to preserve the recourse the drawee is necessary.
against the drawer or indorser. " (7) A protest must contain a copy of the
(2) Where a foreign bill, appearing on bill, and must be signed by the
the face of it to be such, has been notary making it, and must
dishonoured by non-acceptance it specify
must be duly protested for non- " (a) The person
at whose request
acceptance, and where such a bill, the protested
bill is :
which has not been previously " (6) The place and date of pro-
dishonoured by non-acceptance, is test, the cause or reason
dishonoured by non-payment it for protesting the bill, the
must be duly protested for non- demand made, and the
payment. If it be not so protested answer given, if any, or
the drawer and indorsers are the fact that the drawee or
discharged. Where a bill does not acceptor could not be found.
appear on the face of it to be a " (8) When a bill is lost or destroyed, or
foreign bill, protest thereof in case is wronglv detained from the person
of dishonour is unnecessarv. entitled to hold it, protest may
" (3) A bill which has been protested for be made on a copy or written
non-acceptance may be subsequently particulars thereof.
protested for non-payment. " (9) Protest is dispensed with by any
" (4) Subject to the provisions of this Act, circumstance which would dispense
when a bill is noted or protested, it with notice of dishonour. Delay
must be noted on the day of its in noting or protesting is excused
dishonour. When a bill has been when the delay is caused by cir-
duly noted, the protest mav be cumstances beyond the control of
subsequently extended as of the the holder, and not imputable to
date of the noting. his default, misconduct, or negli-
" (5) Where the acceptor of a bill becomes gence. When the cause of delay
bankrupt or insolvent or suspends ceases to operate the bill must be
payment before it matures, the noted or protested with reasonable
holder may cause the bill to be diligence."
protested for better security against Section 93 of the Act defines when noting
the drawer and indorsers. is equivalent to protest :
" (6) A bill must be protested at the place " For the purposes of this Act, where a bill
4'2-i
— —
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 below.)
ceeding is taken, it is sufficient that the bill A holder of a dishonoured bill may recover
has been noted for protest before the expira- from any party on the bill the expenses
liable
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 of protest. (Section 57, s.s. 1 (c).) Where
date of the noting." payment is made to a notary when he pre-
Where a notarv 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 : The date on which bills are to be protested
" Where a dishonoured bill or note i^ in foreign countries depends upon the laws
authorised or required to be protested, and of those countries.
the services of a notary cannot be obtained Stamp Duty.— By the Stamp Act, 1891 :-
it the place where the bill is dishonoured,
Protest of any bill of exchange or
any householder or substantial resident of promissory note
the place may, in the presence of two wit- Where the duty on the bill or The same
(
425
— —
the rules for the Metropolitan clearing at more meetings than one, the duty is
under Clearing House.) 10s.
PROVISIONAL CERTIFICATE. The cer- Section 80 of the Stamp Act, 1891, pro-
tificate issued to a person who has
which is vides as follows :
agreed to take up, say, some new bonds " (1) Every letter or power of attorney
which a foreign state is issuing. When the for the purpose of appointing a
various instalments have been paid, the proxy to vote at a meeting, and
bonds are issued in exchange for the pro- every voting paper, hereby respec-
visional or scrip certificate. (See Scrip tively charged with the duty of one
Certificate.) penny, is to specify the day upon
PROXY. The person who acts for an- which the meeting at which it is
other, document appointing him.
also the intended to be used is to be held,
The association of a company
articles of and is to be available only at the
usually provide for votes being given by meeting so specified, and any ad-
proxy. journment thereof.
The instrument appointing a proxy may "(2) The dutv of one penny may be denoted
be in the following form or in any other form by an adhesive stamp, which is to be
which the directors shall approve : cancelled bv the person by whom the
instrument is executed, and a letter
Company, Limited. or power of attorney or voting
I of in the paper charged with the duty of one
county of being a member of the penny is not to be stamped after the
Company, Limited, hereby execution thereof by any person.
appoint of as my "(3) Every person who makes or executes,
proxy to vote for me and on my behalf at the or votes, or attempts to vote, under
[ordinary or extraordinary, as the case may or bv means of any such letter or
be] general meeting of the company to be power of attorney or voting paper,
held on the day of not being duly stamped, shall incur
and at any adjournment thereof. a fine of fifty pounds, and every
Signed this day of
vote given or tendered under the
authority or bv means of the letter
Articles of association often contain a or power of attorney or voting paper,
clause that no person shall act as a proxv shall be void."
unless he is entitled on his own behalf to be By the Finance Act, 1 907, Section 9, so much
present and vote at the meeting at which he of s.s. 2 of Section 80 of the Stamp Act, 1891,
acts as proxy. as prevents the stamping after execution of
Section 68 of the Companies (Consolida- a letter or power of attorney or voting paper
tion) Act, 1908, gives power to a company charged with the duty of one penny, shall
which is a member of another company, by cease to apply as regards any such instru-
resolution of the directors, to authorise any ment which has been first executed at any
of its officials or any other person to act as place out of the United Kingdom, and,
its representative at any meeting of the other accordingly, any such instrument so executed
company, and to exercise the same powers on after the commencement of this Act may be
behalf of the company which he represents, stamped after execution in accordance with
as if he were an individual shareholder of the Section 15 of the said Act. (See Stamp
other company. (See Meetings.) Duties.)
The instrument appointing a proxy must A proxvconnection with bankruptcy
in
be deposited at the registered office of the proceedings exempt from stamp dutv.
is
company within the time specified in the (Bankruptcy Act. 1883, Section 144.) (See
articles. Companies, Votes.)
The stamp duty on a letter or power of PUBLIC ACCOUNT. By Section 18 of the
attorney, or other instrument for the sole Exchequer and Audit Departments Act,
purpose of appointing or authorising a proxy 1866 (29 30 Vict. c. 39) :—
&
to vote at any one meeting at which votes " The Treasury may, from time to time,
may be given by proxy, whether the number determine at what banks accountants shall
of persons named in such instrument be one keep the public monevs entrusted to them ;
or more, is one penny. (See under Power and thev may also determine what accounts
of Attorney.) If trie instrument is for use so opened in the names of public officers or
426
— — —
itselfby a prospectus and annual balance also be open to the inspection of any
sheet it is a public company. A public creditor at all reasonable times.
company must file, with the registrar of com- " (9) When the Courtis of opinion that the
panies, a prospectus or statement before allot- affairs of the debtor have been suffi-
ting any shares or debentures. (See Prospec- ciently investigated, it shall, In-
tus.) (See Companies, Private Company.) order, declare that his examination
PUBLIC EXAMINATION OF DEBTOR. is concluded, but such order shall
When a receiving order has been made, the not be made until after the day
debtor must, within three days, if the order appointed for the first meeting of
is made onthe debtor's petition, or within creditors." (See Bankruptcy.
seven days, if made upon the petition of a PUBLIC FUNDS. (See National Debt.)
creditor, submit a statement of his affairs to PUBLIC TRUSTEE. The powers and
the official receiver. (See Receiving irder.)
( duties of the Public Trustee are detailed
As soon as convenient after '.he expiration in a pamphlet issued from the Public
of the time for delivery of the statement, the Trustee Office, from which the following is
Court shall hold a public sitting for the taken :
examination of the debtor. Section 17 of The Public Trustee Act, 1906, which came
the Bankruptcy Act, 1SS3, is as follows :•
into operation on January 1, 1908, was
" (1) Where the Court makes a receiv- passed with the express object of enabling
ing order it shall hold a public the public to tinst tin
; risks and
sitting, on a day to be appointed by inconveniences which an- incidental to the
<"ourt, for the examination of the employment of private individuals in trust
debtor, and the debtor shall attend matters. On and after the first day of
thereat, and shall be examined as to Januarv, [908, the publii id of
his conduct, dealings, and property. selecting a private individual) secure the
41)7
—
services of the Public Trustee. In the Public The Public Trustee's acceptance of the
Trustee, the public will have an executor or office need not be invited at the time the
trustee, who will never die, never leave the will or codicil is made, although it is desirable
country, and never become incapacitated, that this course should be adopted when the
and whose responsibility is guaranteed trust is of an unusual nature.
by the Consolidated Fund of the United On the death of a testator it is the duty
Kingdom. of the co-executor, if any, to inquire of
Capacities in which the Public Trustee the Public Trustee if he is prepared to act.
—
may act. The Public Trustee is authorised, On acceptance of office he executes an
if dulv appointed, to act in any of the follow- instrument of consent.
ing capacities : Even after probate has been obtained an
(1) Executor or executor and trustee of a executor may, with the sanction of the Court,
will. transfer the estate to the Public Trustee.
(2) Trustee or custodian trustee of a The Public Trustee may be appointed
settlement (including a will). either as an original trustee of a settlement,
(3) Administrator under a will or on an or as a new trustee, or as an additional
intestacy. trustee. In the case of an existing settle-
(4) Administrator of estates of small ment the persons entitled to appoint the
value. Public Trustee are the person or persons
(5) Judicial trustee. having power to do so under the settlement,
(6) Administrator of the property of a or if there are no such persons, then the con-
convict under the Forfeiture Act, tinuing or surviving trustees or their execu-
1870, and tors or administrators. Inquiry should first
(7) Investigator and auditor of trust be made if he will accept office, and notice
accounts. should be sent to all persons beneficially
The Public Trustee has, in addition to cer- interested to ascertain if they are agreeable
tain privileges conferred upon him by the i to the appointment.
Act, all the same powers, duties, and lia- Private trustees may retire, either singly
bilities, and is entitled to the same rights and i' or together, in favour of the Public Trustee.
immunities, and is subject to the control The Public Trustee may be appointed
and orders of the Court, as a private trustee custodian trustee. On appointment, all
acting in the same capacity. The Public securities and documents of title i elating to
Trustee may, however, decline either abso- the trust property, which would otherwise
lutely, or except on conditions prescribed by have remained in the custody of the ordinary
the rules, to accept any trust, but he cannot trustees, are to be transferred to the Public
decline on the ground only of the small value Trustee ; but the management of the trust
of the property. He may not accept any property, as distinct from the custody of the
trust under a deed of arrangement for the securities, is to remain in the hands of the
benefit of creditors, nor for the administra- ordinary or managing trustees.
tion of any estate known or believed by him Any person or persons interested in an
to be insolvent, nor made solely by way of estate, the gross capital value whereof can be
security for money, nor exclusively for proved to the satisfaction of the Public
religious or charitable purposes. irustee to be under ^1,000, may apply in
—
Wills.- The Public Trustee may be writing to the Public Trustee to administer
appointed even although the will was made the estate, and thereupon, unless he sees
or came into operation prior to January 1, good reason to the contrary, if it appears to
1908, either alone or jointly with any other him that the persons beneficially entitled
person or persons as executor, or as trustee, are persons of small means, the Public
or as executor and trustee of a will, and either Trustee will undertake the administration.
as ordinary trustee or as custodian trustee. Under the Public Trustee Act a trustee or
He may be appointed in the simplest form beneficiary can obtain an audit of trust
possible, e.g. "I appoint the Public Trustee
: accounts without applying to the Court.
as the executor and trustee of this my will." Formal application must be made to the
The substitution of the name of the Public Public Trustee for the audit.
Trustee in a will already in existence for the As a rule, the Public Trustee may not agree
names of the executors and trustees named to act as ordinary trustee where the trust
therein, or the addition of his name, can be involves the carrying on of a business, ex-
effected by a simple codicil. cept where the carrying on of the business
42S
— —
Capital Fee. —
Half on acceptance of the
trust, the remainder gradually as the capital
is diminished.
Income Fee. —
This will be deducted from
income.
Investment Fee. —
This is payable on the
making of an investment.
1. Capital Fees. Where the —
Public
Trustee acts as ordinary trustee or executor,
a fee is leviable on acceptance of the trust
and also on the withdrawal of capital there-
from. The former fee is payable in a lump
sum ; the latter, as a rule, in instalments.
Both fees are, unless otherwise desired, paid
out of the capital of the trust funds.
The following table shows the scale of
capital fees ordinarily chargeable the mini- ;
Scale of Fees.*
PUB] DICTIONARY OF BANKING [QUA
Martinmas November
. . 1 1
state on their face the authority under which
the company is constituted, and the amount
QUIT RENT. In feudal times where land of the authorised capital of the company.
was granted by the lord of the manor for The following foot-note should appear on all
certain services to be rendered to the lord, stock and share certificates, " The company
those services could sometimes be got quit will not transfer any stock [shares] without
of by the payment of a rent, called quit the production of a certificate relating to
ent. such stock [shares], which certificate- must
By Section 45 of the Conveyancing Act, be surrendered before any deed of transfer,
1SS1, a quit rent may be redeemed. On the whether for the whole or any portion thereof,
requisition of the owner, the Copyhold Com- can be registered or a new certificate issued
missioners shall certify the amount in con- in exchange." Where the capital of a
sideration whereof the rent may be redeemed. company more than one class of
consists of
QUORUM. Literally, of whom, e.g. there shares of the same denomination, the dis-
may be twenty directors, " of whom " tinctive numbers of the shares of each class
(quorum) three may act. must be printed on the face of the share
A quorum the number of persons which
is certificates. All preference share certifi-
must be present at a meeting of the directors cates should bear on their face a statement
or members of a company before any busi- of the company's capital and the conditions,
ness can be done. In companies which are both as to capital and dividends, under which
governed by Table A (see Articles of the shares are issued. Debentures and
Association"), no business can be transacted debenture stock certificates should, in ad-
at a general meeting unless three members are dition to legal requirements, state on their
present. Regulation 52 of tint Table is. — face the authority under which the company
" If within half an hour from the time is constituted, the nominal capital of the
appointed for the meeting a quorum is not company, the dates when the interest on the
present, the meeting, if convened upon the debentures or debenture stock is payable,
requisition of members, shall be dissolved. and the authority under which the issue is
In any other case it shall stand adjourned made (i.e. articles of association and resolu-
to the same day in the next week at the tions) and on their back the conditions of
;
same time and place, and, if at the adjourned issue, redemption and transfer.
meeting a quorum is not present within half
an hour from the time appointed for the RACK RENT. A rent which, as its name
meeting the members present shall be a implies, hasbeen stretched or raised to the
quorum." full annual value of the property, so that
Where a company has articles other than no more can be obtained.
those of Table A thev should be perused to
RATE OF EXCHANGE. The price of
ascertain how many members constitute a
money one country stated in the currencv
in
quorum. of another country. (See Course of Ex-
QUOTATION ON LONDON STOCK EX- change, Foreign Exchanges.)
CHANGE. The Committee of the Stock RATES. A comparison of the Bank and
Exchange may order the quotation in the money market rates and market discounts
Official List of any security of sufficient mag- may be made from the following list, which
nitude and importance. Applications for
gives the rates on April 7, 1910 :•
431
REA] DICTIONARY OF BANKING [REC
Per a debt payable at a future time, see Rule 21,
c«nt.
under Proof of Debts.
4 months' bank bills .
3J
.
RECEIPT. A receipt is a written acknow-
6 3J-3| ledgment of having received a sum of money.
3 months' fine trade bills 4-4i By the Stamp Act, 1891, the duty is :—
4 4-41
6 44-41-
£ s. d.
Bank Rate, Cheque Rate, Deposit Receipt given for, or upon the
(See
payment of, money amounting
Rate, Discount, Foreign Exchanges,
Interest, Interest on Deposit Receipt, to £2 or upwards .... 1
432
—
(12) Receipt given for any given, on payment of the duty and
allowance by way of draw- a penalty of five pounds ;
back or otherwise upon "(2) After fourteen days, but within one
the exportation of an}' month, after it has been given, on
goods or merchandise payment of the duty and a penaltv
from the United Kingdom. of ten pounds ;
(13) Receipt given for the and shall not in any other case be stamped
return of anv duty of with an impressed stamp.
customs upon a certificate " 103. If any person
of over entry. " (1) Gives a receipt liable to duty and not
duly stamped or ;
Receipts upon a duly stamped letter of " (2) In any case where a receipt would be
allotment or scrip certificate are exempt. liable to duty refuses to give a
The exemption is included in No. 11 (above). receipt duly stamped or;
The Finance Act, 1 895, Section 9, repealed " (3) Upon a payment to the amount of two
exemption number 8 in the Stamp Act, 1891, pounds or upwards gives a receipt
" Receipt written upon a bill of exchange or for a sum not amounting to two
promissory note duly stamped," and enacted pounds, or separates or divides the
that the duty shall be charged as if the amount paid with intent to evade
exemption had not been contained in that the duty ;
Act, provided that neither the name of a he shall incur a fine of ten pounds."
banker (whether accompanied bv words of Where a form of receipt, either on the face
receipt or not) written in the ordinarv course or on the back of a cheque, is signed, it must
of his business as a banker upon a bill of be stamped. The signature of the payee
exchange or promissory note duly stamped, alone is exempt. (See abo\
nor the name of the payee written upon a If a receipt is placed upon a bill or pro-
draft or order, if payable to order, shall missory note (except by a banker), it
constitute a receipt chargeable with stamp requires to be stamped. (See above.)
duty. When a deposit receipt is issued, it does
433
28-(tS35)
— ——
not require a stamp (exemption No. 1, see The receipt, instead of beingon the back,
above), but when it is discharged by the is, as mentioned, sometimes on the face
depositor signing a form of receipt on the below the drawer's signature, and in addition
back, a stamp is required. To save the to the receipt being signed the document
trouble of affixing an adhesive stamp on may require to be indorsed.
payment of a deposit receipt, the receipts Such a document does not agree with the
of many banks are impressed with a penny definition of a cheque in the Bills of Ex-
stamp when issued. change Act, 1882. To comply with that
Where a banker acknowledges the receipt 1
ment was made by cheque, as the person " Sections 76 to 82, both inclusive, ot the
taking the cheque can, in the event of the Bills of Exchange Act, 1882, and Section 25
cheque being dishonoured, sue the debtor of the Forgery Act, 1861, shall extend to
for the amount. anv document issuer! by a customer of any
Receipts for wages, and for subscriptions banker, and intended to enable any person
to charities are chargeable with duty but
; or body corporate to obtain payment from
with regard to the latter, Alpe's " Law of such banker of the sum mentioned in such
Stamp Duties " states that the Commis- document, and shall so extend in like manner
sioners do not enforce a penalty if "a as if the said document were a cheque :
receipt for a donation or subscription to an 1 'rovided that nothing in this Act shall be
institution totally devoted to charitable pur- |
deemed to render any such document a
poses " is given unstamped. (See Receipt negotiable instrument. For the purpose of
on Cheoue.) this Section, Her Majesty's Paymaster-
RECEIPT ON CHEQUE. Many com- General and the Queen's and Lord Trea-
panies use cheques with a form of receipt surer's Remembrancer in Scotland shall be
upon the face or upon the back, such receipt deemed to be bankers, and the public
being, in most cases, the only one which the officers drawing on them shall be deemed
drawer of the cheque requires from the customers." Sir John R. Paget points out in
person to whom the cheque is payable. his " Law of Banking " that the Revenue
A document of this description is some- Act treats these documents as not negoti-
times worded :
—
" Pay or order the able instruments, " not negotiable " having
sum of when the receipt on the back apparently the meaning of not transferable,
hereof has been duly stamped, signed and and adds that it would seem " that the
dated." banker's safer course is in all cases to regard
The printed form on the back may be : documents of this sort as available only in
" Received from the amount named the hands of the payee."
on the face hereof. The use of documents of this nature is
becoming very common, and as the banker's
position with regard to them appears to be
so uncertain and unsatisfactory, it is neces-
Date 19
sary, for the banker's protection, that he
should obtain, from the customer using this
special form, an indemnity to the following
Below the receipt the following words are
sometimes printed —
" The receipt as above
:
effect :
" In consideration of
your allowing me, or
is also the indorsement of the cheque and is persons duly authorised by me, to draw
the only acknowledgment required." drafts on you with receipts attached in the
434
— —
form annexed, I undertake that you shall RECEIVER. When a mortgagee, through
have as against me in respect thereof the pro- default of the mortgagor, is in a position to
tection afforded by Section 60 of the Bills of exercise his power of sale, he may, if he
Exchange Act, 1S82, and that the signature choose, appoint a receiver to collect the rents
of the receipt at the foot of such drafts shall and manage the estate or business. Bv so
have the effect of and operate as an indorse- doing, the mortgagee avoids the risks to
ment within the meaning of the same which he would be liable if he entered into
Section." possession himself.
In addition to the form of document given The Conveyancing and Law of Property
above, some cheques have a note at the foot Act, 1881, defines the appointment, powers,
that " the receipt on the back hereof must remuneration and duties of a receiver as
be stamped, signed and dated." In other follows :
cases no reference at all to a receipt appears "Section 24. (1) A mortgagee entitled to
on the face of the cheque, but on the back appoint a receiver under the power
may be found a receipt such as " Received in that behalf conferred bv this Act
from the amount named on the shall not appoint a receiver until
face hereof he has become entitled to exercise
the power of sale conferred by this
Act, but may then, by writing under
Ins 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 ;
435
—
application made by him for that of the fact to the registrar of com-
purpose. panies, and the registrar shall, on
"(7) The receiver shall, if so directed in payment of the prescribed fee,
writing by the mortgagee, insure enter the fact in the register of
and keep insured against loss or mortgages and charges.
damage by fire, out of the money " (2) If any person makes default in com-
received by him, any building, plving with the requirements of this
effects, or property comprised in the Section he shall be liable to a fine
mortgage, whether affixed to the not exceeding five pounds for
freehold or not, being of an insurable everv dav during which the default
nature. continues.
" (8) The receiver shall apply all money "95. (ll Every receiver or manager oi
received by him as follows (namely i : the property of a company who has
" (a) In discharge of all rents, been appointed under the powers
taxes, rates, and outgoings contained in any instrument, and
whatever affecting the who has taken possession, shall, once
mortgaged property and ;
in everv half-year while he remains
'*
(b) In keeping down all annual in possession, and also on ceasing
sums or other payments, to act as receiver or manager, file
and the interest on all prin- with the registrar of companies an
cipal sums, having priority abstract in the prescribed form of
to the mortgage in right his receipts and payments during
whereof he is receiver and ;
the period to which the abstract
" (c) In payment of his commis- relates, and shall also on ceasing to
sion, and of the premiums act as receiver or manager file with
on fire, or other insur-
life, the registrar notice to that effect,
ances, if any, properly pay- and the registrar shall enter the
able under the mortgage notice in the register of mortgages
deed or under this Act, and and charges.
the cost of executing neces- " (2) Everv receiver or manager who makes
sary or proper repairs default in complying with the
directed in writing by the provisions of this Section shall be
mortgagee ; and liable to a fine not exceeding fifty
" (d) In payment of the interest pounds."
accruing due in respect of
Power in England to Appoint Special Manager.
any principal money due
under the mortgage :
"161. (1) Where the official receiver be-
and shall pay the residue of the comes the liquidator of a company,
monev received bv him to the person whether provisionally or otherwise,
who, but for the possession of the he may, if satisfied that the nature
receiver, would have been entitled of the estate or business of the com-
to receive the income of the mort- pany, or the interests of the creditors
gaged propertv, or who is otherwise or contributories generally, require
entitled to that property." the appointment of a special man-
The appointment of a receiver or manager ager of the estate or business of the
of the propertv of a company is to be notified company other than himself, apply
to the registrar of companies, By the to the Court to, and the Court may
Companies (Consolidation) Act, 1908 : on such application, appoint a special
"Section 94. (1) If any person obtains manager thereof to act during such
an order for the appointment of a time as the Court may direct, with
receiver or manager of the property such powers, including any of the
of a company, or appoints such a powers of a receiver or manager, as
receiver or manager under any may be entrusted to him by the
powers contained in any instrument, Court.
he shall within seven days from " (2) The special manager shall give such
the date of the order or of the security and account in such manner
appointment under the powers con- as the Board of Trade direct.
tained in the instrument give notice " (3) The special manager shall receive
436
—
made, it means that the Court appoints the which the petition is
of the debtor, and thereafter, except " (i) If the order is made on the
as directed by this Act, no creditor petition of the debtor, within
to whom the debtor is indebted in three davs from the date
respect of any debt provable in bank- of the order.
ruptcy shall have anv remedy " (ii) If the order is made on the
against the property or person of petition of a creditor, within
the debtor in respect of the debt, or seven days from the date of
shall commence any action or other the order.
legal proceedings unless with the But the Court may, in either case,
leave of the Court and on such terms for special reasons, extend the time.
as the Court mav impose. " (3) If the debtor fails without reasonable
(2) But this Section shall not affect the excuse to comply with the require-
power of any secured creditor to ments of this Section, the Court may,
realise or otherwise deal with his on the application of the official
security in the same manner as he receiver, or of any creditor, adjudge
would have been entitled to realise him bankrupt.
or deal with it if this Section had " (4) Any person stating himself in writing
not been passed. to be a creditor of the bankrupt may.
438
— —
personally or by agent, inspect this equitable mortgage the same remark applies,
statement at all reasonable times, but there should be an ordinary stamped
and take any copy thereof or receipt showing that the money has been
extract therefrom, but any person repaid.
untruthfully so stating himself to The stamp duty upon a reconveyance is
be a creditor shall be guilty of a sixpence for every /100, and fractional part
contempt of Court, and shall be of ^100, of the total amount of the money
punishable accordingly on the appli- at any time secured. (See Mortgage.)
cation of the trustee or official RECOURSE. Literally, a running back.
receiver." (See Bankruptcy.) In the event of a bill of exchange being dis-
RECONSTRUCTION. There arc various honoured at maturity, the holder has a right
reasons which necessitate the reconstruction of recourse against, that is a right to fall back
of a company, but the commonest is the upon, the other parties to the bill. The
necessity to raise fresh capital. In the case holder, however, has no recourse against
of a company where the capital is all paid any party who qualified his indorsement by
up and further capital is required, the object adding after his signature the words " with-
is frequently attained by the undertaking out recourse " or the French equivalent
being purchased by a new company. The sans rccours. (See Without Recourse.)
shares in the new company, which are given REDEMPTION OF MORTGAGE. The re-
in exchange for the fully paid shares in the payment of the loan secured by the mortgage
old company, are partly paid up shares, and and the consequent freedom of the property
it is from the uncalled capital in the from the charge.
new company that the necessary funds are RE-DISCOUNT. A person who has dis-
obtained to continue the business of the counted a bill may, if he wish, discount it
undertaking. afresh with another person. (See Dis-
A reconstruction may take place conse- counting a Bill.)
quent upon an arrangement with the cre- RE-DRAFT. Whero a foreign bill is
ditors of the company, whereby they may dishonoured and protested, a re-draft is a
receive, in lieu of their claims, debentures fresh bill drawn by the holder upon the
in the company payable at different dates. drawer or indorser for the amount of the
(See Companies, Winding Up.) bill plus expenses of protest, stamp, etc.
The receipt of a building society upon a by special resolution reduce its share
mortgage deed for the amount of the debt capital in any way, and in particular
has the effect of a reconveyance of the (without prejudice to the generality
property and is exempt from stamp duty. of the foregoing power) may
(See Building Society.) i Extinguish or redu< e the lia-
Where a mortgagor is entitled to redeem, bility "ii anj "I its shares in
he has, by virtue of the Conveyancing and respect ol share capital not
Law of Property Act, 1881 (Section 15), paid up or :
439
RED] DICTIONARY OF BANKING [REF
" (c) Either with or without extin- publish the reasons for reduction with a view
guishing or reducing liability to give proper information to the public.
on any of its shares, pay off (Section 55.) (See Companies, Share
any paid-up share capital Capital.)
which is in excess of the RE-EXCHANGE. In the case of a bill
wants of the company, which has been dishonoured abroad, the
and may, if and so far as is necessary, Bills of Exchange Act, 1S82. Section 57 (2)
alter its memorandum by reducing provides that the holder may recover from
the amount of its share capital and i the drawer or an indorser, and the drawer
of its shares accordingly. or an indorser who has been compelled to
" (2) A special resolution under this Section pay the bill may recover from any party
is in this Act called a resolution for liable to him the amount of the re-exchange
reducing share capital. with interest thereon until the time of pay-
ment. Where a bill drawn or indorsed in
Application to Court for Confirming Order one country is dishonoured in another, the
" 47. Where a company has passed and re-exchange is calculated by ascertaining
confirmed a resolution for reducing share the sum for which a bill at sight, at the
capital it may apply by petition to the Court existing rate of exchange, drawn at the time
for an order confirming the reduction. and place of dishonour on the place where
the drawer or indorser resides, can be
Addition to Name of Company of " and obtained, so as to produce at the place of
Reduced." dishonour the amount of the dishonoured
"48. On and from the confirmation by a bill plus cost of protest, commission, post-
company of a resolution for reducing share age and other expenses in connection with
capital, or where the reduction does not the dishonour.
involve either the diminution of any liability " REFER TO DRAWER." The usual
in respect of unpaid share capital or the answer (or its abbreviation R/D) which is
payment to any shareholder of any paid-up placed by the drawee banker upon a cheque
share capital, then on and from the presen- received through the Clearing, or presented
tation of the petition for confirming the across the counter, when the account of the
reduction, the company shall add to its name, drawer does not warrant payment of the
until such date as the Court may fix, the cheque.
words and reduced,' as the last words in
'
The answer " R D " should never be
its name, and those words shall, until that marked on a cheque when the reason for its
date, be deemed to be part of the name of being returned is merely some irregularity
the company : in the cheque itself, such as " Indorsement
"Provided that, where the reduction does irregular," " Amounts differ " or " Post-dated
not involve either the diminution of any cheque."
liability in respect of unpaid share capital " Refer to drawer " is a milder form of
or the payment to any shareholder of any answer than " N/S," " not sufficient."
paid-up share capital, the Court may, if it REFEREE IN CASE OF NEED. The
thinks expedient, dispense altogether with person towhom a holder of a bill of ex-
the addition of the words and reduced.' '
change may apply, in case of the bill being
dishonoured by non-acceptance or non-
Order Confirming Reduction. payment. The name of a referee may be
" 50. The Court, if satisfied, with respect inserted in a bill by the drawer or any
to every creditor of the company who under indorser, and is usually put in the left-hand
this Act is entitled to object to the reduction, bottom corner of the bill, as " In case of need
that either his consent to the reduction has apply to A. & B. Bank, London," or " Incase
been obtained or his debt or claim has been of need with the English Bank, Ltd.,
discharged or has determined, or has been London," or" In need with X. & Y. Bank."
secured, may make an order confirming the By Section 15 of the Bills of Exchange
reduction on such terms and conditions as it
—
Act, 1882 : " The drawer of a bill and any
thinks fit." indorser may insert therein the name of a
The resolution for reduction and the order person to whom the holder may resort in
must be registered, and the resolution takes case of need, that is to say, in case the bill
effect from the date of the registration. is dishonoured by non-acceptance or non-
The Court may require the company to payment. Such person is called the referee
440
— —
or not as he may
think fit.'' " (ii) The date at which each person
No liability attaches to the referee in case was entered in the register
of need until he has accepted for honour. as a member ;
(See Acceptance for Honour, Bill of " The date at which any person
(iii)
a " reference " slip describing the bill to and every director and manager of
bank A. The slip requests A to refer the the company who knowingly and
billto bank B for payment. In sending wilfully authorises or permits the
the bill to B the reference slip must be default shall be liable to the like
attached. penalty.
REGISTER OF COMPANIES. (See
Registrar of Companies.) Annual List of Members and Summary.
REGISTER OF DEBENTURE HOLDERS. "26. (1) Every company having a share
Every register of holders of debentures of a capital shall once at least in every
company is to be open to the inspection of year make a list of all persons who,
the registered holder of any such debentures on the fourteenth day after the first
and of any holder of shares in the companv. or onh ordinary general meeting in
(Section 102 of the Companies (Consolida- the year, are members of the com-
tion) Act, 1908.) (See Debenture.) pany, and of all persons who have
REGISTER OF DIRECTORS. The Com- ceased to be members since the date
panies (Consolidation) Act, 1908 (Section of the last return or (in the case of
75), requires that every companv shall keep the first return) of the incorporation
a register containing the names, addresses, of the company.
and occupations of its directors or managers, " (2) The list must state the names, ad-
and send a copy thereof to the registrar of dresses, and occupations of all the
companies, and from time to time notify to past and present members therein
the registrar any change therein. If this mentioned, and the number of shares
Section is not complied with, the companv held by each of the existing members
shall be liable to a fine not exceeding £5 a at the date of the return, specifying
dav. (See Directors.) shares transferred since the date of
REGISTER OF MEMBERS OF COMPANY. the last return or (in the case of the
The regulations regarding the register of the first return) of the incorporation of
members of a company and the annual the company by persons who are
list of members which must be forwarded to still members and have ceased to be
the registrar of companies are set forth in members respectively and the dates
the following sections of the Companies of registration of the transfers, and
(Consolidation) Act, 1908 :— must contain a summary distinguish-
ing between shares issued for cash
Register of Members. and shares issued as fully or partlv
"25. Every company shall keep in
(1) paid up otherwise than in cash, and
one or more books a register of its specifying the following particu-
members, and enter therein the lars :
441
REG] DICTIONARY OF BANKING [REG
" (d) The total amount of calls been arrived at, but the balance
received ;
sheet need not include a statement
" (e) The total amount of calls of profit and loss.
unpaid ; "(4) The above list and summary must be
'
' (/) The total amount of the sums contained in a separate part of the
(if any) paid by way of register of members, and must be
commission in respect of completed within seven days after
any shares or debentures, the fourteenth day aforesaid, and
or allowed bv way of dis- the company must forthwith for-
count inrespect of any ward to the registrar of companies
debentures, since the date a copy signed by the manager or by
of the last return ;
the secretary of the company.
The total number of shares " (5) If a company makes default in com-
forfeited ;
plying with the requirements of this
'
' (h) The total amount of shares or Section it shall be liable to a fine not
stock for which share war- exceeding five pounds for every day
rants are outstanding at the during which the default continues,
date of the return ;
and every director and manager of
" (/) The total amount of share the company who knowingly and
warrants issued and sur- wilfully authorises or permits the
rendered respectively since default shall be liable to the like
the date of the last return ;
penalty.
" (k) The number of shares or
Trusts not to be Entered on Register.
amount of stock comprised
in each share warrant ;
"27. No
notice of any trust, expressed^
" [l) The names and addresses of implied, or constructive, shall be entered
the persons who at the date on the register, or be receivable by the
of the return are the directors registrar, in the case of companies registered
in England or Ireland.
of the company, or occupy
the position of directors, by Registration of Transfer at Request of
whatever name called and ; Transferor.
" (w) The total amount of debt due "28. On
the application of the transferor
from the company in respect of any share or interest in a company, the
of all mortgages and charges
company shall enter in its register of mem-
which are required (or, in the bers the name of the transferee in the same
case of a company registered
manner and subject to the same conditions
in Scotland, which, if the
as if the application for the entry were made
company had been regis-
by the transferee.
tered in England, would be
required) to be registered \vi th Transfer by Personal Representative.
the registrar of companies "29. A transfer of the share cr other
under this Act, or which interest of a deceased member of a company
would have been required made bv his personal representative shall,
so to be registered if created although the personal representative is not
after the first day of July himself a member, be as valid as if he had
nineteen hundred and eight. been a member at the time of the execution
(;{) The summary must also (except where of the instrument of transfer."
the company is a private company) The register must be open, for not less
include a statement, made up to than two hours each day, to the inspection
such date as may be specified in the of any member gratis, and of any other
statement, in the form of a balance person on payment of one shilling. (Section
sheet, audited by the company's 30, s.s. 1.)
auditors, and containing a summary Any person may obtain a copy of the
of its share capital, its liabilities, and register, or any part, or of the fist and
its assets, giving such particulars as summary, on payment of sixpence for every
will disclose the general nature of 100 words. If an inspection or copy is
those liabilities and assets, and how refused, the Act imposes a penalty not
the values of the fixed assets have exceeding £2 and a further fine of £2 for
442
} 9
to close Register.
of mcmbers foimy time or times not ex eed _
"31. A company may, on giving notice by ing in the whole thirty days in each year. '
2
There has been called up on each of shares, £
There has been called up on each of shares, £
2
There has been called up on each of shares, £
3
Total amount of calls received, including payments on application and {
allotment
Total amount (if any) agreed to be considered as paid on
|
shares which have been issued as fully paid up otherwise than in '
£
cash I
Total amount of shares and stock for which share warrants are out- . 1
standing i '
containing the particulars of the capital, liabilities, and assets of the company.
1
When there are shares of different kinds or amounts [e.g., Pri ference and Irdinary.or /l "i" £5) state
I 11
therein at any time since the date of the last return, showing their names and addresses
and an account of the shares so held.
§ Particulars of
§ Particulars of
Shares transferred
Folio in Shares transferred
Number since the Date of
Register t since the Date of
of Shares the last Return by
Ledger the last Return by Remarks.
Chris- held by Persons who have
containing Ad- Occu- Persons who are
tian existing ceased to be
Particulars. dress. pation. still Members.
Name. Members Members.
at Date of
Return. Date of Date of
Num- Registration
Num- Registration
ber. X ber.!
of Transfer. of Transfer.
t 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.
t 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
the transferee, but the name of the transferee may be inserted in the " Remarks " column immediately
opposite the particulars of each transfer.
Names and Addresses of the persons who are the Directors of the
Limited on the day of 19
Note. — Banking companies must add a list of all their places of business.
(Signature)
(State whether manager or secretary)
445
— ——
where the application is not " (a) a mortgage or charge for the
opposed : purpose of securing any
" (d) To approve compositions issue of debentures or ;
or exercised in chambers : or
" (g) To hear and determine any "(d) a mortgage or charge on any
unopposed or ex parte land, wherever situate, or
application : any interest therein or ;
" (h) To summon and examine any "(e) a mortgage or charge on any
person known or suspected book debts of the company ;
to have in his possession or
446
—
" (1) in the case of a mortgage or " (iv) the holding of debentures
j
4-17
—
debentures of the series, the follow- the amount thereby secured, and the
ing particulars : certificate be conclusive evi-
shall
" (a) the total amount secured by dence that the requirements of this
the whole series and ; Section as to registration have been
" (b) the dates of the resolutions complied with.
authorising the issue of the " (6) The company shall cause a copy of
series and the date of the every certificate of registration given
covering deed, if any, by under this Section to be indorsed on
which the security is created every debenture or certificate of
or defined and ; debenture stock which is issued by
"(c) a general description of the the company, and the payment of
property charged and ; which is secured by the mortgage or
" (d) the names of the trustees, charge so registered :
debentures as security for any debt Provided that, in the case of a series
of the company shall not for the of uniform debentures, a copy of one
purposes of this provision be treated such debenture shall be sufficient.
as the issue of the debentures at a
discount.
Entry of Satisfaction.
(5) The registrar shall give a certificate "97. The registrar of companies may, on
under his hand of the registration of evidence being given to his satisfaction that
any mortgage or charge registered the debt for which any registered mortgage
in pursuance of this Section, stating or charge was given has been paid or satisfied.
448
— — ——
"all mortgages and charges specifically Where the amount does not exceed £200,
'
affecting property of the company, giving 10s.
in each case a short description of the pro- Where the amount exceeds £200, £1,
perty mortgaged or charged, the amount of The fee for registration of a series of
the mortgage or charge, and (except in the debentures is : —
case of securities to bearer) the names of Where the total amount of the series does
the mortgagees or persons entitled thereto." not exceed £200, in,
Section 100.) The register shall be open to Where the total amount of the series
the inspection of any creditor or member, exceeds £200, £1. (See Companies,
without fee, and to any other person on Receiver.!
payment (Section 101.) A
of one shilling. REGISTRATION OF TRANSFERS. (See
nture containing merely a floating Transfer of Shares.)
charge does not require entering in this REICHSBANK. The Imperial Bank. The
register, but if it contains a specific charge most important and powerful financial
it must be entered. A floating charge, how- institution in Germain-.
ever, requires registration with the registrar
of companies. (See Section 93, above.)
REIS. (See Foreign .Moneys Portu- —
gal, South Africa.)
By Section 243 (see under Registrar of RELEASE. From 1841 to 1845 freehold
Companies) any person may inspect the land was conveyed by means of a deed
documents kept by the registrar on payment called a " release." (See Lease and
of a fee not exceeding one shilling. Release.)
When the deeds of a company are
title By the Stamp Act, 1891, the stamp dim-
given as security, either with or without a is :
449
*9— (1535)
REMj DICTIONARY OF BANKING [RES
REMEDY ALLOWANCE. This is the from the situation in which goods are found,
name given to an allowance made in connec- reputed to be the owner thereof. The Bank-
tion with the making of coins. The Coinage ruptcy Act, 1S83, includes amongst the
Act defines the standard weight and fineness property which is divisible amongst the
of each coin, but as in the making of coins creditors of a bankrupt, " all goods being,
it is impossible to produce them absolutely at the commencement of the bankruptcy,
in accordance with the prescribed figures, in the possession, order, or disposition of the
the Act allows certain variations, the bankrupt, in his trade or business, by the
" remedy allowance," from that standard consent and permission of the true owner,
weight and fineness. In gold coins the under such circumstances that he is the
remedy for fineness is two parts in 1,000, reputed owner thereof."
and in silver coins it is four parts in 1,000. " REQUIRES BANKER'S CROSSING. "
For the " remedy " allowed in weight per An answer in these (or similar) words is
piece, see the first Schedule to the Coinage sometimes marked upon cheques by the
Act, under Coinage. drawee banker.
REMITTANCE. The word is commonly The reason given, however, is not con-
used in banks to describe an amount of coin sidered sufficient to justify a cheque being
or notes, or a parcel of cheques or bills sent returned through the clearing. It is desir-
from one office or person to another. A able that the stamp of the banker to whom
remittance is inward or outward according a cheque is crossed, or of the collecting
as it is received by or despatched from the banker if uncrossed or crossed generally, be
bank. placed upon the cheque, and it is custo-
REMOTE PARTIES. The " remote mary for it to be done, but not absolutely
parties " to a bill of exchange are those who necessary.
are not in immediate relationship, e.g. the REQUISITIONS. The requisitions are the
acceptor and an indorsee. (See Parties inquiries submitted by the solicitor for an
to Bill of Exchange.) intending purchaser to the solicitor for the
RENEWAL OF BILL. By arrangement vendor, as to points and questions in con-
amongst the parties to a bill of exchange the nection with the deeds and the title to the
bill may be renewed, that is, a new bill property. The requisitions are written on
may be accepted in place of the old one, to one half of a sheet of paper and the replies
run for a further period of time. If the are placed opposite. If the replies are not
second bill is dishonoured the rights of the complete or satisfactory, further observations
parties on the first bill (if the bill was left may be made.
with the are revived, but those
holder) RESERVE. The cash in hand that is,—
parties who did not assent to the renewal —
notes and gold and silver coin on the assets
are discharged. side of the Bank of England Return (Banking
RENT CHARGE. An annual payment Department) is called the " Reserve." The
arising out of real estate. " Reserve " is the money which the Bank
RENTES. The name given to the annual keeps to meet any demand which may be
interest payable upon the Government debts made upon it by the depositors, both private
of France, Austria, Italy, Greece and some depositors and other banks which keep
other countries. The word is also applied balances at the Bank of England. In addi-
to the debts themselves, e.g. the Rentes in tion to that, the bank's stock of gold is liable
France has the same meaning as Consols to be drawn upon by foreign nations requir-
ing gold. " The quickest and least trouble-
in this country.
RENUNCIATION. In the Stamp Act, some way of obtaining it is to buy bills on
1891, the reference to the stamp duty is : — London, remit them here for discount, turn
Renunciation. See Reconveyance and the proceeds into Bank of England notes
"
Release. and cash the notes at the Issue Department
Renunciation, Letter of. See Letter (George Clare, " Monev Market Primer").
of Allotment. (See Bank Return.)
When the holder of a bill renounces his RESERVE FUND. The directors of a
rights against the acceptor, the bill is dis- joint stockcompany, before recommending
charged, but the renunciation must be in a dividend, may (under most Articles of
writing, unless the bill is delivered up to Association) set aside out of the profits of
the acceptor. (See Payment of Bill.) the company such sums as they think proper
REPUTED OWNER. The person who is, as a reserve, which shall, at the discretion
450
— — — —
builds up from his profits a secret or inner " Section 69. (1) A resolution shall be an
reserve fund, which is not disclosed on the extraordinary resolution when it has
balance sheet. This secret reserve system is been passed by a majority of not
recognised by shareholders as a necessity in less than three fourths "of such
a well-managed bank. members entitled to vote as are
RESERVE LIABILITY. That part of a present in person or by proxv (where
banking company's share capital which, proxies are allowed) at a general
when so resolved by the shareholders, can- meeting of which notice specifying
not be called up except in the event of the the intention to propose the resolu-
company being wound up. Section 59 of the tion as an extraordinary resolution
Companies (Consolidation) Act, 1908, pro- has been dulv given.
vides :
" (2) A resolution shall be a special resolu-
"59. A limited company may by special tion when it has been
resolution determine that any portion of its " («) passed in manner required
share capital which has not been already for the passing of an extra-
called up shall not be capable of being called ordinary resolution and ;
up, except in the event and for the purposes " confirmed by a majority of
(b)
of the company being wound up, and there- such members entitled" to
upon that portion of its share capital shall vote as are present in person
not be capable of being called up except in or by proxy (where proxies
the event and for the purposes aforesaid." are allowed) at a subsequent
See also Section 58 under Company, general meeting, of which
Unlimited. (See Companies, Share notice has been dulv given,
Capital.) and held after an interval of
RESIDUARY DEVISEE. Under a will, not less than fourteen days,
the person who takes allthe real property nor more than one month,
which remains after the devisees have from the date of the first
received their shares. meeting.
RESIDUARY LEGATEE. Under a will, " (3) At any meeting at which an extra-
the person who takes all the personal pro- ordinary resolution is submitted to
perty which remains after the legatees have be passed or a special resolution is
received their shares. submitted to be passed or confirmed,
RESIGNATION. By the Stamp Act, 1891, a declaration of the chairman that
the stamp duties are :
the resolution is earned shall, unless
i s. J. a poll is demanded, be conclusive
Resignation. Principal or ori- evidence of the fact without proof
ginal instrument of resignation, of the number or proportion of the
or service of cognition of heirs, votes recorded in favour of or
or charter or seisin of any against the resolution.
houses, lands, or other heritable " (4) At any meeting at which an extra-
subjects in Scotland holding ordinary resolution is submitted to
burgage, or of burgage tenure
And instrument of resignation of
.050 be passed or a special resolution is
submitted to be passed or confirmed
•151
—
a poll may be demanded, if de- the Bank Charter Act which embodied the
manded by persons for the
three restrictive theory had to be suspended,
time being entitled according to the and the situation was saved by the Govern-
articles to vote, unless the articles ment granting permission to the Bank to
of the company require a demand expand its issue beyond the limit fixed by
by such number of such persons, not the Act. H. D. Macleod, in " The Elements
in any case exceeding five, as may of Banking," wrote :
to which each member is entitled by and that when a commercial panic is im-
the articles of the company." (See pending, the only way to avert and allay it
Companies.) is to give prompt, immediate, and liberal
REST. The item called " Rest " which given as security, notice of the assignment
appears on the liabilities side of the weekly must be given to, and an acknowledgment
" Return " of the Bank of England corre- received from, the person who is liable to
sponds with the item " Reserve Fund " in pay the money to the contractor. (See
the balance sheets of other banks, with this Debts — Assignment of.)
difference that the profits are added to the RETIRING A BILL. Many customers of
" Rest " from time to time, and the divi- country branches accept payable at the
bills
dends to the bank proprietors are paid out head office in London of their banker, or,
of this account. The amount is not allowed in the case of a purely country bank, at the
to fall below £3,000,000. (See Bank latter's London agents. Shortly before
Return.) maturity of the bill, the acceptor gives his
The word " rest " is also applied to the banker a written order to pay or retire the
break which a banker makes in the accounts bill falling due in London. Immediatelv
of his customers on June 30 and December 31 before the due date the banker debits the
for the purpose of entering the amount of customer and credits London with the
interest and charges due to date. When this amount, advising his London agents or
has been done, the account is balanced and London office to pay the bill. In some
ruled off, the balance being carried forward cases, at the beginning of each month, the
to the next half-year's account. acceptor gives one order, on which are
RESTRICTIVE INDORSEMENT. An in- specified all such bills falling due during the
dorsement restrictive which prohibits the
is month. If any of [the bills have docu-
further negotiation of a bill or cheque, or ments attached, the order should supplv an
which expresses that it is a mere authority accurate description of them.
to deal with the bill as thereby directed, An order to retire a customer's own
as " Pay John Brown only." (See Indorse- acceptance, payable either at the branch
ment.) where his account is kept, or at the head
RESTRICTIVE THEORY. The theory office, or at a London bank, does not require
that in a commercial crisis the Bank of a penny stamp. Neither is a stamp re-
England should restrict its issues of notes, quired where a customer gives an order to
but in the great crises of 1S47, 1S57 and 1866 retire the acceptance of another person.
452
ret; DICTIONARY OF BANKING [RET
When an acceptance is withdrawn on the right and place in the policy of assurance
order of a person who is not the acceptor, on his life," etc.
the bill should not be cancelled. RETURNED CHEQUE (OR BILL). A
It is very undesirable that a bill should be cheque be returned unpaid for many
may
domiciled at a bank where the acceptor docs reasons. The drawer may not have sufficient
not keep an account, and the banker is under funds to meet it he may be dead or bank-
;
no obligation to accept funds to meet it. rupt he may have instructed his banker not
;
He is justified in returning any such bill sent to pav it the banker may have received some
;
for collection. This, of course, does not legal notice preventing him from paying any
refer to bills accepted by a country customer further cheques upon the drawer's account ;
and domiciled with a London banker, as in or the cheque itself may not be in order, the
this case the London banker is the agent of date or the amount or other material part
the country banker where the customer keeps may have been altered, and not have been
his account. initialled by the drawer the amount in :
A bill may be retired at maturity by the words and figures may differ the drawer's ;
person holds the instrument with remedy ment may be wrong it may be post-dated
; ;
against all prior parties. In such a case a or crossed to two bankers ; or it may be
written order should be given bv the person stalethrough having been issued so long.
retiring the bill. 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 When the cheque is returned an " answer
bill is due, to withdraw it, giving as a reason is marked upon it by the drawee banker,
that the acceptor has sent him a cheque for usually in the left-hand top corner. A
the amount or that part payment has number of the different " answers " which
been made and a new bill accepted for the are in use are given in the article Answers.
balance. Where a cheque has been received for
The circumstances connected with the collection through the London Clearing
retirement or withdrawal of a bill, by House and is returned for any reason, it
persons other than the acceptor, should must, according to the rules of the Clearing
always be carefully considered, as history House, be sent back direct, by return of post,
shows how the operation raav lend itself to the country bank whose name and address
very readily to the purposes of fraudulent appear upon it.
executors and assignees in and to his own indorsement (e.g. a cheque payabli to
453
—
" Thomas Cluff " indorsed " Thomas the grantor, but to go to some other person,
Clough ") which the collecting banker knows it " remains " to that person, and his interest
to be bond fide, it is customary for him to in it is called a " remainder " (q.v.).
write on the back of the cheque " Indorse- The terms " reversion," or " reversionary
ment confirmed " or " Payee's (or John interest," are often loosely used, in a general
Smith's) indorsement confirmed," and his way, to mean either a true reversion or a
own signature. When the cheque is re- remainder.
presented, the drawee banker usually pays REVERSION DUTY. A dutv imposed
it ;he is not, however, in law bound to do so. by the Finance (1909-10) Act, 1910 (Section
Bankers usually keep a list of all the 13), and payable, on the determination of
cheques and bills they return unpaid, as any lease of land, upon the value of the
well as a list of cheques and bills which have benefit accruing to the lessor by reason of
been returned to them, and in each case the the determination of the lease, at the rate
reason of the " return " is noted in a column of one pound for every complete ^10 of that
provided for the purpose. value.
When a cheque or bill is received back Every lessor is required, on the determina-
" dishonoured," unless it is delivered to the tion of a lease where reversion duty is pay-
customer against cash, the banker charges able, to deliver an account to the Commis-
his customer's account with the amount sioners setting forth particulars and the
and sends the unpaid article to the customer. estimated value of the benefit accruing to
The notices of dishonour to indorsers will him.
be given by the customer. Although not When a mortgagee is liable to pay any
strictlv necessary, some bankers require a sum on account of reversion duty, see Section
cheque to be given by the customer to I 39, s.s. 4 and 5, under heading Increment
confirm the debit to his account for the Value Duty.
returned bill or cheque, whilst other bankers There are special provisions with regard
take an acknowledgment from the customer to reversion duty in the case of a mining
on giving him the dishonoured instrument. lease. (Section 22.)
If the customer's account will not admit of Exemptions :
the dishonoured bill or cheque being charged Where, in the case of a reversion to a lease
to it, the amount should be debited to an purchased before April 30, 1909, the lease
account for returned articles and the banker determines within forty years from the date
should give notice to all parties. Any of the purchase. (This exemption does not
balance there may be in the customer's applv where the lease is determined within
account may be held as a part payment. fortv vears bv agreement between the lessor
A returned cheque may be debited to the and the lessee, not contained in the lease
account of the customer for whom it was itself, unless the lease would, apart from any
sent for collection, even if not indorsed by such agreement, have determined within
him. that period.)
A banker usually cancels his indorsement The determination of a lease on land
on a returned bill. (See Dishonour of which is, at the time of the determination,
Bill of Exchange.) agricultural land.
RETURNS. Cheques or bills which are A
lease the original term of which did not
returned either through lack of funds or exceed twentv-one years, nor where the
some irregularity in the instruments them- interest of the lessor expectant on the deter-
selves are commonly called " returns." mination of a lease is a leasehold interest
Returns are also the various statements, which does not exceed that number of years.
dailv, weeklv, monthly, half-yearly, or at Where a lease is determined before the
other times, which are sent by branches to expiration of the term and a fresh lease
the head office. granted to the lessee for at least twenty-one
REVERSION. REVERSIONARY INTER- years beyond the date on which the original
EST. Where a limited estate is granted in a lease would have expired, an allowance is
property, as, for example, in fee tail (where made of 2i per cent, of the duty for every
it is given to a person and the heirs of his year of the original term of the lease which
body), if the succession fails, the property is unexpired, but the allowance shall not
reverts to the grantor. The grantor is there- exceed 50 per cent, of the whole duty
fore said to hold the reversion in the pro- payable.
perty. If the property is not to revert to Where increment value dutv is due and
454
— — — —
are identical, such sums as the Commissioners shall not require the production, or any
determine to have been paid in respect of the abstract or copy, of any deed, will or
one shall be treated as a payment on account other document, dated or made before the
of the other. time prescribed by law, or stipulated, for
Land held for charitable purposes. commencement of the title. ." .
can, unless there is an agreement to the Holidays Act, 1871,' do hereby, by,
contrary, require the title to be deduced for and with the advice of Our Privv
forty years, or longer if it is necessary to Council and in exercise of the powers
go further back to secure a satisfactory conferred bv the Act aforesaid, appoint
commencement. The deed which is taken Tuesday, the Twentv-seventh day of
as the beginning of the title is called the root December next as a special dav to be
of title. observed .is a Bank Holidav throughout
A twenty years' title is often accepted England and Wales, and Ireland, and
as sufficient. every part thereof, under and in accord-
Section 2 of the Vendor and Purchasers ance with the said Act. and We do, bv
Act, 1874, provides as follows :
this Our Royal Proclamation, command
Recitals, statements, and descriptions the said day to be so observed, and all
of facts, matters and parties contained in 1)ur loving subjects to order themselves
deeds, instruments, acts of Parliament or accordingly.
statutory declarations, twenty vears old at "Given .it Our Court at St. farm ' this
the date of the contract, shall, unless and Seventh dav of A n bt in the Yeai
•
, <
except so far as they shall be proved to be of our Lord One thousand nine hundred
455
" —
456
SAF] DICTIONARY OF BANKING [SAF
surrendered to the Bank. The personal Where the lodgment is in the names of
application of the Depositor is particularly trustees, it is particularly necessary to obtain
requested, but if he is unable to attend, the all their signatures before delivery. In
order on the back hereof should also be Mendes v. Guedalla (1862, 2 J. & H. 259),
signed. where a box containing bearer bonds was
lodged for safe custody by three trustees
Received from the British Banking Co., and one of them held the key in order to
Ltd., the above-mentioned securities. cut off the coupons half-yearly, it was held
(Signature) that the bankers " ought not to have parted
Date with the box, or allowed more than the
(Printed on the back.) coupons to be taken out. without the
authority of all the three trustees."
To the Manager,
If a banker receives an authority from a
The British Banking Co., Ltd.,
depositor to allow another person to remove
Carlisle Branch.
a certain article from a box or parcel, the
Please deliver to the bearer the securities banker must see that only the specified
mentioned on the other side. article is taken out.
Signature In the case of In re De Pothonier, Dent
v. De Pothonier (1900. 2 Ch. 529), the follow-
Address
Date ing statement was given as to the practice
in London \\ ith regard to the safe custody
The receipt given is, in some banks, signed of bearer bonds :
—
" It is a common practice
by the manager and the accountant. The of investors to deposit such bonds with their
customer depositing the articles for safe bankers upon a simple acknowledgment by
custody may be required to sign the counter- the bankers of the receipt thereof. In such
foil bearing the same number as the receipt cases the bankers accept the deposit subject
which he obtains. This not only gives the to such responsibility- as is imposed upon
bank a specimen of the depositor's signature them by law for their safe custody, and they
which can be compared with the customer's collect the coupons for their customers, and
receipt when a withdrawal takes place, but it credit them to the account of the customers,
acts as a confirmation from the customer of as and when received. From my own know-
the articles which he has left to be taken care ledge of the course of business in the City,
of. I sav that it is a very common practice
Some bankers, however, do not give any amongst men of business, and joint stock
receipts for articles left with them for safe companies who hold large quantities of
keeping, unless specially requested so to do. bonds, to deposit them with their bankers
They merely keep particulars of them in upon the above terms, and I believe that
the safe custody register, and when the such practice offers to the owner of the
customer receives the articles back again he bonds as good a security for the safe and
signs an acknowledgment for them in the proper custody of such bonds as can be
register. Some bankers, who give no obtained, and is at the same time the most
acknowledgments, permit the customer to convenient course the bond holder can adopt
see the entry of the deposit in the safe as regards the collection of interest on the
custody register. bonds. If bonds to bearer are deposited
When articles have been deposited in with bankers in a locked box or other closed
joint names they should not be given up receptacle, the bankers do not give any
except on the authority of all the parties. receipt for the bonds, but only a general
If one of the depositors has died, the autho- acknowledgment of receipt of the box, and
rity of his legal representatives is usually decline to accept any responsibility for its
obtained before delivery to the survivor or contents." In the same case it was held that
survivors. the trustees were " justified in depositing the
All the executors of a deceased should join bonds with the bankers upon those terms,
in an authority to give up safe custody which will not justify the bankers in parting
articles which were deposited in the name of with the bonds except under the authority
the deceased of all the trustees, but will justify the
Where articles are deposited in the names bankers in cutting ofi the coupon
of executors, the signatures of all, or the leering tin in .is and when they arc due, in
survivors, should be required before delivery. hi
i ordinary course."
457
. —
of the account which the customer keeps place and a reference made to it in the
with him and from which he expects to register.
derive some benefit. If a parcel sealed with the customer's
is
The question as to whether a banker is own a sealed parcel,
seal, it is registered as
a gratuitous bailee or not, does not affect but if it is an open parcel it is customary to
the practical point that a banker must take detail the contents, giving particulars of
all possible care of articles left with him for all certificates, principal deeds, etc. When
safe custody, for if he is negligent and they bearer bonds are lodged for safe custody,
are stolen, or if he parts with them to a the numbers of the bonds are quoted in the
wrong person, he will be liable for the loss to register in all cases. Some bankers keep
his customer. A banker's liability for loss a separate book for the record of all bearer
might probablv be less if it were proved that bonds in their possession.
he was a gratuitous bailee, and not a bailee When a safe custody receipt is issued by
for rewird. the banker, the receipt must be returned
If a banker has doubt as to the genuine- duly indorsed before the articles can be given
ness of a signature upon an order for delivery up. (See Safe Custody.)
of a safe custodv article, or any suspicion SALE OF GOODS ACT, 1893. (56 & 57
as to the authority of the person who pre- Vict. c. Section 25 provides that
71.)
sents the order, he is justified in making a where a person has sold goods and continues
delay in fulfilling the order until he has had in possession of them or of the documents of
the signature confirmed by the customer. In title to the goods and sells or pledges them
the case oiMrs. Law>try v. The Union Bank to any person receiving the same without
of London (which was settled by judgment notice of the previous sale the delivery shall
for the plaintiff by consent for /10,000), have the same effect as if it were authorised
the plaintiff's property was obtained from by the owner of the goods and that where
;
the bank by a person presenting a forged a purchaser obtains possession of the goods
order purporting to be signed by Mrs. or documents and sells or pledges them to
Langtry, requesting the bank to hand her any person receiving them without notice of
box to the bearer. anv lien of the original seller, such delivery
A banker has no lien or charge upon shall have the same effect as if the person
securities or articles left with him for safe making the deliverv were a mercantile agent
custody. If a safe custody article is to be in possession of the goods or documents with
taken as a securitv at anv time, the customer the consent of the owner. This Section is
should sign the necessary document of charge. practically the same as Sections 8 and 9 of
The Bank of France makes a specific the Factors Act, 1889. (See Factors Act.)
charge for taking care of securities and Section 44 enacts as follows :
45S
—
when the buyer of goods becomes insolvent, an ordinary bank, as the depositors cannot
the unpaid seller who has parted with the issue cheques.
possession of the goods has the right of The various Acts relating to Savings
stopping them in transitu, that is to sav, he Banks were consolidated by the Trustee
may resume possession of the goods as long as Savings Bank Act, 1S63 (26 & 27 Vict. c.
they are in course of transit, and mav retain 87). Post
(See >ffice Savings
i
Banks.
them until payment or tender of the price." Trustee Savings Banks i
459
—
460
— —
The word " share " in the above Schedule persons who
witnessed the affixing of the
includes a fractional part of a share. (Sec- seal. The is usually kept in a box or
seal
tion 9, Revenue Act, 1909.) case secured by two locks, the keys of which
Every person who issues any scrip certifi- are held by different persons.
cate, or scrip, before the same is duly Sections 78 and 79 of the Companies
stamped, shall incur a fine of twenty pounds. (Consolidation) Act, 1908, give powers to a
(Section 79, Stamp Act. See Letter of company to empower any person, as its
Allotment.) attorney, to execute deeds abroad and to
The separate receipts upon a scrip certifi- have an official seal for use abroad :
cate are exempt from stamp duty. The " 7S. A company may, by writing under its
exemption is given by the Stamp Act, 1891, common seal, empower any person, either
under Receipt (see Receipt) as follows : generally or in respect of any specified
" Receipt indorsed or otherwise written upon matters, as its attornev, to execute deeds
or contained in anv instrument liable to on its behalf in any place not situate in the
stamp duty, and duly stamped, acknow- United Kingdom and every deed signed
;
ledging the receipt of the consideration by such attorney, on behalf of the company,
money therein expressed, or the receipt of and under his seal, shall bind the companv,
any principal money, interest, or annuity and have the same effect as if it were under
thereby secured or therein mentioned." its common seal.
A coupon attached to a scrip certificate "79. (1) A company whose objects require
requires to be stamped. (See Companies, or comprise the transaction of busi-
Letter of Allotment, Share Capital.) ness in foreign countries mav, if
SEA INSURANCE. (See Marine Insur- authorised by its articles, have for
ance Policy.) use in any territory, district, or place
SEAL. An impression in wax, or other not situate in the United Kingdom,
soft substance, made by an engraved stamp. an official seal, which shall be a
Also the engraved stamp itself. At one time 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 territorv,
•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- " (2) A company having such an official
quently used, as in transfers of shares and seal may, by writing under its
stocks, instead of an impression in wax. common seal, authorise anv person
The letters L.S. inside a circle, thus appointed for the purpose in anv
which are seen on transfer forms, stand territory, district, or place not situate
L.S
for locus sigilli,and mean the place of the L'nited Kingdom, to affix
in
the seal. They do not, however, act instead the same to any deed or other docu-
of a seal, or wafer. ment to which the companv is partv
The seal of a company is called its common in that territory, district, or place.
seal. Every limited company " shall have " (3) The authority of any such agent shall,
its name engraven in legible characters on as between the company and any
its seal." If any director, manager, or person dealing with the agent,
officer of a limited company, or any person continue during the period, if anv,
on its behalf, uses or authorises the use of mentioned in the instrument confer-
any seal purporting to be a seal of the ring the authority, or if no period is
company, whereon its name is not engraven there mentioned, then until notice
as aforesaid, he shall be liable to a fine not of the revocation or determination
exceeding fifty pounds. (See Section 63 of of the agent's authority has been
the Companies (Consolidation) Act, 1908, given to the person dealing with him.
under heading Name of Company.) The "(4) The person affixing any such official
seal of a company is usually affixed in the seal shall, by writing under Ins hand,
presence of two directors, who sign the docu- on the deed or other document to
ment, which is also countersigned by the which the seal is affixed, certify the
secretary or such other person as the date and place of affixing the same.
directors may appoint for the purpose. A " (5) A deed or other document towhichan
record is kept of each document which is official seal is duly affixed shall bind
sealed, the entrv being initialled by the the company as it it had been
461
— "
sealed with the common seal of the taken over by him, and his own debt. Such
company. an operation, however, may result in the
Section 117 provides for the authentication banker finding that his last state is worse
of documents : than the first. (See Mortgage.)
A document or proceeding requiring
" SECOND OF EXCHANGE. (See Bill in
authentication by a company may be signed a Set.)
by a director, secretary, or other authorised SECRECY DECLARATION. All banks
officerof the company, and need not be require every person joining the staff to
under its common seal." (See Companies.) sign a form agreeing to preserve absolute
SEAL BOOK. (See Common Seal Book.) secrecy with regard to the affairs of the
SECOND - CLASS PAPER. First - class customers and all other matters connected
paper includes bank bills and bills bearing with the business of the bank.
names of the highest standing. Where SECRET COMMISSION. Where an agent
the position is not so good, the bills fall corruptly accepts any consideration as an
into a second or a third-class position, or inducement to act contrary to the interests
even into a still lower class, according to or business of his principal, or any per-
circumstances. son corruptly gives such consideration to
SECOND MORTGAGE. A charge upon the agent, it is a misdemeanour. (See
property which ranks after a first mortgage. Prevention of Corruption Act, 1906.)
For example, if Brown gives Jones a legal SECURED CREDITOR. A creditor who
mortgage upon his property, and afterwards holds security from the debtor for the amount
gives his banker a second mortgage, the due to him. (See Proof of Debts.)
banker's charge is available only after Jones SECURITIES BOOK. Securities, of what-
is fully satisfied either b}r having received ever nature, which are left to cover an
repayment of the debt, with interest from advance, are entered in the securities book.
Brown, or by having enforced his mortgage A page is headed with the name of the
and obtained repayment out of the security. customer, his address and designation, and
All mortgages after the first legal mort- underneath are detailed the deeds, certi-
gage are called equitable mortgages (q.v.). ficates, bonds, life policies, guarantees and
A prudent banker avoids, as far as pos- all other securities. Sufficient information
sible, taking a second mortgage as security. is given regarding each different item to
It is, as a rule, a most unsatisfactory form enable anyone to judge, without a reference
of security, and the less a banker has to do to the securities themselves, of what the
with second mortgages the better. security actually consists. In the case of
Where a second mortgage is taken, notice deeds, it is customary to quote the date of
must be given to the first mortgagee, other- the last principal document and the name of
wise he might, without notice, make a further the person to whom the property belongs,
advance to the mortgagor, or he might buy and to state whether the property is freehold,
up a subsequent mortgage and tack it on to leasehold or copyhold. Where the property
his own, and in either case the second has come by will to the person lodging the
mortgagee would be squeezed out of any value security, particulars of that fact are given.
there was in his charge. If the mortgagor The quantity of land, with the number and
fails to pay his interest regularly to the first nature of any buildings thereon, and the
mortgagee, the amount of interest in arrears amount of the consideration money, with
will increase the amount of the first charge, the date, are set forth, and information is
and when it comes to a question of selling
, given as to the nature of the charge (mort-
the property, the first mortgagee will be gage, or memorandum of deposit) which the
quite satisfied if he can obtain from the sale bank has upon the property. Any prior
repayment of the money he has lent upon the mortgage, or charge, or any flaw in the title,
property, without concerning himself with or anything with regard to the property
the interests of any subsequent mortgagee. which may in any way affect the value of
Instead of allowing the first mortgagee to the security to the bank, are duly noted.
sell, a banker holding a second mortgage The probable present market value of the
might, perhaps, be tempted to pay off the property is given, and also the rentals or
first mortgage, in the hope that he may, other information which may help to prove
ultimately, be able to find a purchaser for the estimated value. In leasehold property
the property at a price sufficient to cover the number of years of the lease, and the
both the amount of the first mortgage, ground rents are stated, in addition to the
462
SEC] DICTIONARY OF BANKING [SEC
above information, and in copyhold property a person borrows money from his banker, he
the amount of the fines and fees. Where supplies security, most commonly certifi-
there is insurable property particulars of cates of shares with a transfer into the
the fire policies held are entered. names of the banker's nominees, or the title
Full particulars of all certificates lodged deeds of a property with either a memoran-
are given, including the number of shares, dum of deposit or a legal mortgage, or bearer
the name of the company, the designation bonds or other negotiable instruments, or a
of the shares (or stock), the nominal amount life policy assigned to the banker, or a guar-
and the amount paid up, the name of the antee by some reliable person. The value
person which appears on the certificate, the of the security should always be greater
present market value, the rate of dividend, than the amount of money lent. (See
and the nature of the charge which the bank Advances.)
holds. The security given may belong either to
With regard to life policies, the particulars the debtor himself or to some other person.
which are usually entered in the securities When it belongs to another person it isusuallv
book are, the name of the company, the called " collateral securitv " {q.v.).
number of the policy, the amount and when Where several securities, deposited by
pavable, the amount of the premium and different persons, are held for one account,
the date on which it is payable, the name and one of the depositors dies, the account
of the person in whose favour the policy is should be broken and an arrangement made
granted, the amount of accrued bonuses, with the debtor to pass all future trans-
the present surrender value, a note of anv actions through a new account until fresh
charge upon the policy, and particulars of arrangements are made.
the assignment of the policy to the bank, If security is taken from a customer to
and the acceptance by the company of notice cover an advance already granted, and
of the assignment. the customer shortly afterwards fails, the
Other forms of securities are entered in a security may be objected to on the ground
similar way so as to give full information of fraudulent preference. Bv Section 48 of
as to the nature of the security ami its the Bankruptcy Act, 1SS3 :—
probable value. In the case of guarantees, "(1) Every conveyance or transfer of
recent reports upon the sureties must be property, or charge thereon made,
given. every pavment made, even" obliga-
When securities are deposited, ittheis tion incurred, and everv judicial
practice in some banks for the depositor to proceeding taken or suffered by any
sign the book in which they are entered, or person unable to pay his debts as
where a receipt is given by the banker from they become due from his own
a counterfoil book, to sign the counterfoil. money in favour of any creditor, or
When a security is given up, the receipt of any person in trust for any credi-
the person who lodged it is obtained against tor, with a view of giving such
the entry in the book, or a separate receipt creditor a preference over the other
is taken and a reference made to it in the creditors shall, if the person making,
securities book. taking, paying, or suffering the same
SECURITIES JOURNAL. The book in is adjudged bankrupt on a bank-
which securities are entered as received. ruptcy petition presented within
Thev are afterwards posted in the securities three months after the date of mak-
ledger, which is kept in a manner somewhat ing, taking, paying or suffering the
similar to an ordinarv ledger. same, be deemed fraudulent and
SECURITIES LEDGER. A book in use void as against the trustee in the
in some banks and kept after the manner of bankruptcy.
an ordinary ledger, full particulars of all " (2) This section shall not affect the rights
securities received being entered on the one of any person making title in good
side of an account and those given up being faith and for valuable consideration
written off on the other side. When secu- through or under a creditor of the
rities are received they are first entered in bankrupt.''
the securities journal and then posted into Another ground on which a security may
the correct account in the securities ledger. be objected to is where " undue influence "
SECURITY. That which is given to may have been exercised, as might occur m
secure the repayment of money lent. Where the case of a father, or mother, unduly
463
—
pressing a son, or daughter, who has just The word is also applied to the placing
come of age and succeeded to an estate, to of a property, about which there is a dispute,
give security to a banker for the father's, or in the hands of a third party until the dispute
mother's, overdraft. is settled.
Information regarding the various forms SET, BILL IN A. (See Bill in a Set.)
of securities, and the charges, etc., will be SET OFF. In the absence of any arrange-
found under the respective headings. (See ment, or understanding, to the contrarv. a
Advances, American Railroad Certifi- banker has the right to set off a debt owing
cates, Bearer Bonds, Bill of Lading, by him to a customer against a debt owing
Bill of Sale, Bond of Credit, Certifi- by the customer to the banker. For ex-
cate, Collateral Security, Debenture, ample, a customer has two accounts in his
if
—
Debts Assignment of. Dock Warrant, own name, one entitled No. 1 account, which
Goods, Guarantee, Inscribed Stock, Life is in credit, and the other No. 2 account,
Policy, Negotiable Instruments, Shares, which is in debit, the banker may hold the
Ship-Mortgage, Title Deeds,) credit balance (or so much of it as is neces-
SEIGNIORAGE. The profit which the sary) against the debit balance. But where
Government makes on the manufacture of a customer has several accounts, the banker
silver and bronze coins. These coins are cannot treat as a set off any balance which
token monev, and the value which is affixed he knows held in a fiduciary capacitv.
is
to them by law is greater than the value An account in the name of " John Brown %
of the metal of which they are composed, and Trustee of J. Jones " or " John Brown %
it from that difference that the profit is
is Churchwardens," or in any other similar form,
obtained. Although in the actual coining is clear evidence that the money does not
of silver there is a considerable profit, belong to John Brown and therefore cannot
that profit is utihsed partly in maintaining be used by a banker to liquidate a debt due
the silver coinage of the country in a fit from Brown, but accounts which are named
condition. (See Brassage.) " John Brown a
c House
'
" or " Farm," %
SEISIN. SEIZIN. Possession. (See or such like terms, to distinguish Brown's
Livery of Seisin.) own affairs, may be consolidated.
By the Stamp Act, 1891, the stamp duties A
credit account at one branch mav
are : not contrary to custom or agreement, be
if
of clare constat, or precept from out any right to set off being exercised,
chancery, or upon any wadset, reasonable notice should, as a rule, be given
heritable bond, disposition, ap- before acting upon the right.
prising, adjudication, or other- In the case of a solicitor having a private
wise of any lands or heritable account and an office account, it has been
subjects in Scotland
And any Notarial Instru-
. . .050 held (T. &- H. Greenwood Teale v. William
Williams, Brown &- Co., 1894, 11 T.L.R. 56)
ment to be expeded and that the one may be set off against the
recorded in anv register of even though the money in the office
other,
sasines 5 account may really belong to his clients.
The credit balance on a partner's private
SEIZED OF. Put in possession of. account cannot be taken as a set off to a debt
SELLING OUT. If a purchaser on the on the firm's account but if the customer is
;
Stock Exchange fails to take up at the the sole partner then his private account
appointed time the securities which he agreed balance may be held against a debt on the
to buy, the seller can " sell out " against account in the firm's name, and, conversely,
him that is, he can instruct the Stock Ex-
; a credit on the firm's account against the
change official broker to sell the securities, private account.
and any loss which arises must be paid by A customer's deposit receipt may be held
the purchaser. (See Buying In.) against a debt due from him.
SEN. (See Foreign Moneys
Japan.) — A balance on an executor's account cannot
SEQUESTRATION. In Scotland a decree be transferred by a banker to clear off an
of sequestration is equivalent to an adjudica- overdraft on the deceased's account. A
tion of bankruptcv in England. cheque or order from the executor or
464
— , —
sum of money (whether charged " (a) Where, in the case of a policy,
or chargeable on lands or other no provision is made for
hereditaments or heritable sub- keeping up the policy, the
jects, or not, or to be laid out in ad valorem duty is to be
the purchase of lands or other charged only on the value
hereditaments or heritable sub- of the policy at the date of
jects or not), or any definite and the instrumenl :
certain amount of stock, or any " (b) If in any such case the instru-
security, is settled or agreed to ment contains a statement
be settled in any manner what- of the s lid value, and is
soever :
stamped in accordance with
For every £100, and also for the statement, it is, so far
any fractional part of /100, as regards the policy, to
465
-(T5'5>
.
exceeding ten shillings has been paid of this Section include any convey-
in respect of any property, the ance or transfer of property." (See
settlement is not to be charged with Bankruptcy.)
ad valorem duty in respect of the SETTLING DAYS. The days upon which,
same property. according to the rules of the Stock Exchange,
" (3) In each of the aforesaid cases the the transactions for the accounts are
instruments not chargeable with ad arranged and settled.
valorem duty are to be charged with In the case of most securities dealt in on
the duty of ten shillings." the London Stock Exchange there are two
SETTLEMENTS— SETTLOR BANK- settlements in each month, one about the
RUPT. Voluntary settlements by a person middle and the other near the end, but for
who subsequently becomes bankrupt are Consols there is only one, near the beginning
dealt with by Section 47 of the Bankruptcy of the month. When stock transactions are
Act, 1883 :— done " for the account " it means that pay-
" (1) Any settlement of property not ment must be made on the next settling
being a settlement made before and day dealings " for cash," however, or " for
;
at once irrespective of any regular settling stockholder may obtain anv odd or irregular
day. amount of the stock ; for example, a share
Each Stock Exchange settlement requires may be for /l, £5, £10, £20, £100 and such-
three days the first is known as Contango
;
like amounts, whereas a holding of stock
daj Continuation, or Carrying-over day,
(or may be for £33 16s. llrf. or for anv amount.
or Making-up day) (see Contango) the ;
Before an official quotation on the London
second is Name or Ticket day (see Ticket Stock Exchange can be obtained for stocks
Day) the third Pay dav, i.e. settling day
;
and shares, the certificates must conform to
proper (see Pay Day). For mining securities certain regulations of the committee. (See
there is an additional dav, called " mining Quotation on London Stock Exchange.)
Contango " day. In the case of a new company, before a
Securities payable to bearer are handed special settlement for the bargains for sales
over on the settling dav. Ten days are and purchases of shares can be fixed, various
allowed in which to complete the delivery documents and particulars must be sent
of registered securities but if not delivered
; to the Secretary of the Share and Loan
within that time the stock or shares may be Department. (See Special Settlemi
" bought in " through the official buving-in If certificates of shares are deposited as
department, and the loss must be borne by security without an\- document of charge,
th seller. (See Stock Exchange.) it constitutes an equitable mortgage, and the
SEVERALTY. Where a person holds an banker has the right to apply to the Court
estate in severalty he holds it entirely in his for power to sell. In some cases a memo-
own right, without being joined in interest randum of deposit is taken with certili
with any other person. (See Coparceners, and notice given to the companv.
Joint Tenants, Tenants in Common. Some bankers take a blank transfer that;
SHAHIS. (See Fore ion.Moneys— Persia.) is, a transfer with the space for the trans-
467
[SHA
DICTIONARY OF BANKING
SHA]
Power Company limited by Shares to Alter
of
its Share Capital.
Action
f W
22° (ifThe shares or
member in a com
«£_ ^ (a) increase its share capital by
of
interest of any the issue of new shares
be personal estate tnms such amount as it
thinks
pany shall
ferable in P^^ed
by *he
manner expedient ;
the issue oi
Make arrangements on between
if
• the
(1)
1
difference the reduced share shall be
for a
'
shares of
amounts and same as it was in the case
shareholders in the the
payment of calls on their the share from which
times of
reduced share is derived ;
at the
cancel shares which,
Accept'hom any member whc
.assents ••
i e)
..
the
,2)
1
a part of the date of the passing of
thereto the whole or behalf,
resolution in that
amount remaining unpaid on any or
although no have not been taken
shares held by him, to be taken by any
has been called agreed
part of that amount and diminish the
person,
proportion to the amount of its share capital
Pay dividend in shares
(3)
(
'
where
amount paid up on each share some by the amount of the
amount is paid up on so cancelled.
larger this Section
shares than on others. (2) The powers conferred by
1
'
respect to subdivision of
with
in Thares must be exercised by special
Power Return Accumulated Profits
to
Share Capital. resolution.
Reduct.on of paid-up
Capital.
company has accumu- Re-organisation of Share
40 (1) When a
undivided profits by shares
lated a sum of ..45 (i) A companv limited
which with the sanction of the resolution confirmed
may, bv special
may be .distributed modify the
Thareholders by an order of the Court,
shareholders in the form
among the conditions contained in
its memor-
bonus, it may, by re-organise its share
of a dividend or andum so as to
return the same, the consolida-
special resolution, capital whether by
thereof, to the share- classes or
or anv part
paid-up te^ of shares of different
in reduction of the shares into
holders
the unpaid by the division of its
capital of the company, shares of different
classes :
469
—— .
be registered under the Merchant Shipping of registry of the ship ; and neglect of tins
Act, 1S94. 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, 1S94, the following
When registered, the registrar shall grant Sections regulate mortgages of a ship or
a certificate of registry. The certificate of shares therein :
471
— — —
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 the manner and time of payment.]
shall not, except under the order of a court Now [" 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
mortgage of a ship or
registered being due on this security, whether by way
by any act of
share shall not be affected of principal or interest, at the times and
bankruptcy committed bv 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 sums as 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 power to mortgage 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 y
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 pro- instrument.
perty has been transmitted, and shall be A transfer of mortgage, to be indorsed on
accompanied by the like evidence as is by the original mortgage, is as follows :
this Act required in case of a corresponding ["" I " or " we "] the within-mentioned
472
— 9
consideration of
in this day liability for damage that may be done by
paid to [" me " or " us "] b\ r
hereby the boat to other vessels. A banker should
transfer to [" him " or " them "] the benefit satisfy himself that this important matter
of the within-written security. In witness 1
or constructive shall be entered in the is otherwise, the entry remains, but the
register book. (Section 56.) transfer of the vessel still takes place. The
Any register book may be inspected on effect is that the legistrar gives a mortgagee
payment of a fee not exceeding one shilling. notice, and the mortgagee must then look
(Section 64.) out for himself. It is all important that
Anv instruments used with regard to the the mortgagors should be men of honour, or
registry, ownership and mortgage of a the security may. in the above way, suddenly
British ship are exempt from stamp duty. disappear. (See Certificate of Mortgage
(Section 721.) (See Stamp Duties, General of Ship.)
Exemption, No. 2.) A
British ship is liable to be attached in
•
When a banker takes a mortgage upon a a foreign port for a debt incurred in that
ship the policv of insurance should be left in country, and whenever that happens it is
his possession, and it is better that it should clear that the value of a banker's mortgage
be in the bank's name. In some cases, how- in this country may be seriously affected
ever, it is sufficient if a letter is given by It is also well for a banker to bear in mind
the customer stating that he holds the policy that, in case of loss, the merchant who
on behalf of the bank. supplies a ship with stores for its last voyage
A banker should make quite certain that has a first claim upon the boat, even in
the premiums are dulv paid. When the front of a banker's duly registered mortgage.
premiums are payable quarterly, the brokers The claim of the crew for wages also ranks
of the underwriters will require to hold the in front of a mortgage. (See Valuation
policv, and in that case a letter should be of Ship, next artic le
taken from the brokers stating that they SHIP, VALUATION OF. When a ship,
hold the policv (subject to their claim for or part of a ship, is offered to a banker as a
the amount of any quarterly premiums security, the questions immediately arise,
remaining unpaid), on behalf of the bank, What is the approximate present market
and undertaking to advise the bank of any value, and what change is likely to take
premiums which fall due and are not paid. place in the value in subsequent years ?
The policy should not be in a mutual society Upon the correct answers to those questions
lf the banker has to accept liability for calls. depends the amount which may with safety
(See Mutual Insurance.) In taking policies, be lent upon the security. Where the value
the banker should inquire as to liabilities and, of a security dimini by year, any
rally, as to the nature of the policies. arrangement as to a loan against such a
It is verv essential that a steamer should security must necessarily provide for thai
be entered bv the owner in a Protection. diminution, and. therefore, when the value
Club for the risks of protection, indemnity <>f a ship is written down yearly in the books
and defence, and be insured up to AS per of the bank, the amount of the limit should
ton on her gross registered tonnage against be written down.
473
— .
The valuation of a ship is dependent upon third four years. No. 3 Survey is made.
so manv points requiring special knowledge The survey which takes place after another
that a banker who has not this knowledge four years is called the Special No. 1 Survey,
may easily go far astray in making a valua- and then follows Special No. 2 Survey, and
tion, if he applies the same rule in the case afterwards Special No. 3 Survey. It is
of every ship that floats. In the absence of worthy of note that in the best lines the
an opinion bv an expert, the following owners usually try to take the first four or
remarks may serve to indicate some of the eight years out of a boat, and then to sell
points which should be observed when con- it immediately after the No. 1 or No. 2
sidering the value of a ship. 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,
" know " the ship, because there may be say, £5 per ton, which would make the total
circumstances which will affect its value cost £"40,000. At the end of the first year
quite apart from the original cost or any 10 per cent, depreciation should be written
recognised system of depreciation. off; at the end of the second year nothing
A ship may be built of iron or of steel. need be deducted, but at the end of the
An iron vessel does not wear out so rapidly third and fourth years, 5 per cent, of the
as one of steel (the corrosion being less), and, reduced value should be deducted. At the
therefore, its life is usually a longer one. end of the fifth year, the deduction may be
Most ships, however, are now built of steel, omitted, because in that year the boat must
and the following figures refer more particu- be put into thorough repair and any appre-
larly to them. • • ciable wear and tear made good, in order to
The different classes of steamers are pass No. 1 Survey to the satisfaction of the
passenger boats, cargo and passenger boats, surveyors. At the end of the sixth, seventh,
cargo boats or tramp steamers, as they are and eighth years the 5 per cent, deductions
commonly called, trawlers, and tugs. In should be continued, but at the end of the
making a valuation, each class requires ninth year the deduction may be omitted,
different treatment, but the boats which are because in that year the boat must again
most frequently submitted to the judgment of be put in order so as to pass No. 2 Survey.
a branch manager are trawlers and cargo boats The deductions should go on in the same
The cost of building a boat depends way for the next three years, and again be
principally upon two things : omitted in the year (the thirteenth) when
1. The state of the shipbuilding trade. No. 3 Survey is passed. The 5 per cent,
2. The size of the vessel. deductions may be continued for the fol-
With regard to the former, if trade is boom- lowing four years, including the seventeenth
ing, aboat might cost £8 per ton, dead weight I
year, when the Special No. 1 Survey must be
(the dead weight is its carrying capacity), to j
passed. From this point the deductions
build, whereas in normal times the cost ! should be considerably larger, say 7£ per
might only be /5 per ton. With respect to cent, each year, so as to bring down the
the second point, a smaller boat costs more value, by the time the Special No. 3 Survey
per ton to build than a larger one, because is due (that is in the twenty-fifth year),
the cost of the most expensive parts (the within £T 2,000, as by that time the vessel
machinery, etc.) does not increase in pro- is worth not more than 305. per ton, dead
portion to the size of the boat that is, in ; weight. The scrap or breaking-up value of
a large boat the average cost per ton is an 8,000 tons cargo boat may be taken to
reduced because the cost of providing merely be from about £7,000 to £8,000.
additional bulk is much less than the cost No. 1 Survey does not, as a rule, neces-
of building the expensive portion. sitate much outlay, but a banker should
A
ship depreciates in value, and, there- always bear in mind the importance of the
fore,a sufficient deduction for depreciation succeeding surveys, and should consider
must be made. After each four years a boat carefully, as each one approaches, whether
must undergo a survey to the satisfaction of the owner of the boat will, or will not, be
Lloyds' Registry Surveyors. The survey in a position to carry it through the survey.
which takes place at the end of the first The most important is No. 3 Survey, and a
four years is called No. 1 Survey at the ; sum of at least £2,500 may be required to
end of the second period of four years, No. 2 be spent upon the boat before it will satisfy
Survey takes place and at the end of the
; the surveyors.
474
SHI] DICTIONARY OF BANKING [SHI
The example of the S.000 tons cargo boat, with the deductions for depreciation as above
—
I
36,000
2nd „ no deduction
3rd ,, deduct 5 per cent. = 1,800
34,200
4th 1,710
32,490
5th ,, 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
th - .. ., = 1,543
25-1.323
Sth 1 ,466
27,857
9th no deduction (after No. 2 Survey has been
passed)
10th ,, deduct 5 per cent. = 1,392
26,465
11th 1,323
12th
SHI] DICTIONARY OF BANKING [SHO
14,245
22nd = 1,068
13,177
„ 23rd = 9S8
12,189
24 th = 914
11,275
., 25th (Special No. 3 Survey due) = 845
£10.430
As stated, the above figures relate to a market for trawlers is not so extensive.
cargo boat built in normal times, but if it Sixteen years at the outside may be regarded
is built at a time when trade is booming at as the useful life of a trawler, and a banker
a cost of, say, £7 to £8 per ton, the amount should not look upon it as worth more than
to be written off must be greater. For its breaking-up value after that time. In
example, if at the end of three years from the case of a trawler which cost, in normal
the building of a boat which cost £"8 per ton times, say, £6,500 to build, it might be well
a similar boat can be built for £5 psr ton, to deduct £1,500 in the first year, as a
the original cost must be taken by a banker trawler even after only six months would
as though it had been £5 and not £8 per not, in ordinary tirnes, sell for anything like
ton, and then the deductions may be made its original cost, and to deduct 7\ per cent,
as set forth above. Although the cost of of the reduced value in each subsequent
building varies, it always reverts to about year. When the original cost has been
£5 per ton, and it would, therefore, be reduced by yearly deductions to £2,000, the
imprudent for a banker to advance two- boat might probably retain that value for
thirds of the value of a boat based on an two or three years, if kept up in the ordinary
original cost of more than £5 per ton. If way, but abanker would not, as arule, consider
he advanced two-thirds of the cost of a it prudent, when the value is approaching
boat built at the rate of £8, the value of the that sum, to regard the boat as worth more
boat would suffer a severe fall as soon as than the breaking-up value. The breaking-
the cost of building again declined to the up value of a boat of this description would
normal £5. A banker would usually be safe be very small, probably about £250. (See
in advancing two-thirds of the value of a —
Ship -Mortgage, etc.)
boat, based on a cost of £5 per ton, dead SHIP'S HUSBAND. The person to whom
weight, with deductions for depreciation as the management of a ship is entrusted by or
shown above. on behalf of the owner. Any person whose
In the case of a boat of, say, 2,000 tons, name is so registered at the custom house
the cost of building is, as already explained, of the port of registry of the ship shall, for
more per ton than for one of 8,000 tons. the purposes of the Merchant Shipping Act,
When the cost of a boat of 8,000 tons is 1894, be under the same obligations and
£5, the cost to build one of 2,000 tons subject to the same liabilities as if he were
would probably be, say, £8. The same the managing owner. (Section 59 of the
system of writing down the value would be above named Act.)
adopted as in the example given, and the A
ship's husband, unless authorised by the
breaking-up value might be considered to owners of the ship, has no power to borrow-
be £2,000. so as to bind the owners. (See Ship-
With respect to steam trawlers, the rate Mortgage, etc.)
of deduction for depreciation should be SHORT BILLS. " Short Bills " are bills
greater, because the life of a trawler is of exchange which are left for collection,
shorter than that of a cargo boat, and the but not for discount.
476
SHO] DICTIONARY OF BANKING [SIG
The expression appears to have originated bill payable at a period " after sight " is
from the custom of entering bills left for calculated from the date of sighting. (See
collection in an inner column of the cus- Sighting a Bill.)
tomer's account, or pass-book, that is in a SIGHT RATE. A term used in connection
column " short " of the one in which the with the Foreign Exchanges it is equivalent
;
which has twelve months to run before that he may accept the drawer's order for
maturity, would, if left for collection, be payment by signing his name across the
called a "short bill." face of the bill with the date of his accept-
Short bills remain the property of the ance. The date when the bill will be due
customer, subject to any hen the banker can then be calculated from the date of the
may have upon them for any liability of acceptance. If he omits to insert a date,
the customer to him. (See Bills for the holder may put in what he considers
Collection.) the true date. (See Date.) If the acceptor
SHORT-DATED PAPER. Bills of ex- writes across the bill " Sighted 1st June, ac-
change drawn for a short term, not exceeding cepted 2nd June," the currency is calculated
three months after date. from June 1, as the holder is entitled to have
SHORT EXCHANGE. In connection with the bill accepted with the date when first
the foreign exchanges the short exchange presented for acceptance.
denotes bills at sight and up to eight or ten A bill payable at sight is equivalent to
days after sight. (See Short Rate.) one payable on demand. (See Bill of
SHORT LOAN FUND. By this is meant Exchange.)
the money in the hands of the Bank of SIGNATURE. A banker must know the
England and the other London banks avail- signatures of all his customers and if he
able for granting loans to bill brokers, stock should pay a cheque, drawn upon the
brokers and others for short periods of a few account of one of his customers, where the
davs. In ordinary times this floating drawer's signature has been forged, he cannot
capital does not vary much in total amount, debit it to the account of his customer. It
but it is constantly varying in position, the is very necessary, therefore, that each office
rate of interest charged being lowest when should possess a complete set of specimens
almost the whole sum is in the hands of the of signatures of all customers, whether
competing banks and highest when the Bank current account or deposit, and to have them
of England controls a large part of it. The in such form that they may be readily
loans made by the Bank to bill brokers, out referred to. If a drawer's signature differs
of this so-called fund, are for fixed periods from his usual one and a banker is in doubt
of from three to ten days and at about one- as to whether or not it is genuine, unless he
half per cent, above Bank Rate. It will can readily see the customer about it, it is
easilv be understood that the brokers endea- customary to return the cheque with the
vour to get the money they require from the explanation " signature differs."
outside banks first, partly on account of the Section 91 of the Bills of Exchange Act
more moderate rate of interest and partly savs :
" Where, by this Act, any instrument
because they will be able to arrange loans or writing is required to be signed by anv
which are not fixed but can be paid off in a person, it is not necessary that he should
dav or two, if it suits the convenience of the sign it with his own hand, but it is
borrower. sufficient if his signature is written thereon
SHORT RATE. A term used in connec- by some other person by or under his
tion with the Foreign Exchanges it means ; authority."
the price in one country at which a short- A banker, however, would require a proper
dated draft (up to eight or ten days' currency), authority from a customer before paving
drawn upon another country, can be bought. a cheque on which the drawer's signature
(See Cheque Rate, Course of Exchange, was written by someone other than the
Long Rate.) drawer himself. In cases where a customer
SIGHT BILL. A
of exchange payable
bill desires to give authority to anothe] to draw
" at sight " is on presentation,
payable cheques upon his account, it is much better
without days of grace. The due date of a that the usual method should be adopted
477
SIG] DICTIONARY OF BANKING [SIL
and cheques be signed per procuration. (See with very little delay, whenever he requires
Mandate, Per Procuration.) to verify a signature.
The practice of signing with an ordinary Specimen signatures may be kept on the
pencil is not a desirable one, and it is advis- card index system, a separate card being
able to discourage it as much as possible. used for each signature and the cards sorted
A signature may be lithographed, as in the in strict alphabetical order. On this system
case of dividend warrants, or it may be any specimen can be rapidly found, and
placed on a cheque by means of a rubber specimens which are no longer required can
stamp by the person whose signature be removed.
it is, or by anyone duly authorised by In many cases it may be found that a
him. A rubber stamp signature, however, signature has altered from the specimen
is full of danger, and its use should be obtained, probably years ago, and a fresh
avoided. specimen should be got whenever any
It is very imprudent for anyone to put variation occurs, either from an improve-
his signature on a blank cheque, or indeed ment or other change in the customer's
to any document to be subsequently filled writing.
up, and a person so signing will be liable, When a customer is signing the book or
not for what he expected would be filled in card advisable to point out to him the
it is
above his signature, but for what actually desirability of always signing his cheques
is filled in. or other bank documents in accordance with
If a signatureobtained to a document,
is the specimen given.
and the person signing it is under the impres- A separate signature book in scrap-book
sion that he is signing a document other form is kept by some banks, in which the
than it really is, the Courts would probably specimen signatures received from other
free him from liability. In Lewis v. Clay banks of their authorised officials are pasted.
(1898, 67 L.J., Q.B. 224) Lord Russell said : (See Signature.)
" A promissory note is a contract by the SILVER CERTIFICATES. Certificates
maker to pay the payee. Can it be said which are issued by the Treasury of the
that in this case the defendant ever con- United States as part of the paper currency.
tracted to pay the plaintiff ? His mind They are payable in silver, but are not legal
never went with the transaction for all
;
tender, except in payment of taxes and
that appears, he had never heard of the duties. The smallest denomination is SI.
plaintiff, and his mind was fraudulently SILVER COINS. The British silver coins
directed into a different channel by the are : —
Crown, Double Florin, Half-crown,
statement that he was merely witnessing a Florin, Shilling, Sixpence, Groat, Three-
deed or other document. He had no con- pence, Twopence, Penny. The Groat, Two-
tracting mind, and his signature obtained pence, and silver Penny are now only coined in
by untrue statements fraudulently made to very small quantities as Maundy money (q.v.).
a document of the existence of which he They are a legal tender only to the amount
had no knowledge, cannot bind him." (See of forty shillings. Silver coins are tokens ;
478
SIN] DICTIONARY OF BANKING [SOL
contains a number of trays, and each tray to the whole of the premiums paid after
is made so that all coins mav slip through the year, accumulated at 3 per
first cent,
except the particular coins which it is compound interest, less 7J per cent.
intended to retain. When a quantity of SIXPENCE. Its standard weight is
silver is poured in at the top of the box, the 4363636 grains troy, and its standard fine-
openings in the top tray allow all coins to ness thirtv-seven-fortieths fine silver, three-
pass through, except crowns the next tray
; fortieths alloy. (See Coinage.)
has the openings rather less and retains Sixpences were first coined in 1551.
four-shilling pieces; the tray lower down in SLEEPING PARTNER. Sometimes called
the box has still smaller openings and holds a dormant partner.
all half-crowns, and the succeeding trays in A partner in a firm who does not take any
turn have each smaller openings, so that active part in the management of the busi-
florins are retained in one, shillings in one, ness, but who is entitled to a share in the
sixpences in one, and finally all threepenny profits and is liable for a share of any
pieces will be found on the last tray at the losses that may be incurred.
bottom of the box. In a limited partnership, a limited part-
Silver is generally stored in paper bags ner is a sleeping partner. (See I imited
with the name of the bank and the branch Partnership.)
where they are used printed thereon. Each SMASHER. A slang term for a person
bag is also clearly printed £5, £10, or £20, who puts bad money into circulation.
as the case may be, and the bags may be SOCIETIES. Where an advance is
479
—
document, as distinguished from foreign bilN that sovereigns coined weighing §2 parts of
drawn in a set —that
issued in duplicate or
is, a guinea were to pass for 20s. They were
triplicate. The words " sola bill " are some- issued in 1817. Coins of the same name
times used in the body of the bill, e.g. in a but of different value were coined about
bill drawn by a branch of the Bank of 1489. (See Coinage, Pound, Pre- Victorian
England on London, the words may be Gold Coins.)
"seven days after date pa}- this Zola, bill of SPECIAL CROSSING. Where the name
exchange," etc. (S^e Bill in a Set.) of a banker is written, or stamped, across
SOLD NOTE. The contract note which is the face of a cheque, either with or without
given by a stockbroker to his client, giving the words " not negotiable," that addition
particulars of a sale which lias been effected constitutes a crossing and the cheque is
for him. (See Contract Note.) crossed specially and to that banker.
SOLICITOR S UNDERTAKING. When a The parallel lines which are necessary to
customer desires any of his securities which constitute a general crossing are not neces-
are held bv a banker to be lent to his solicitor sary in a special crossing. The name of the
written instructions should
for inspection, banker may be between parallel lines, or
be taken from the customer. When the it may stand alone without any lines, or it
securities are handed to the solicitor, the may be inside a square, or an}- other sort of
solicitorshould sign an undertaking to re- margin. (See Crossed Cheque.)
turn them in the same condition as he SPECIAL INDORSEMENT. A special
receives them and not to charge them or indorsement the person to whom
specifies
affect the banker's security in any way. or to whose order, a bill or cheque is to be
Bankers have their own forms for use in payable, as " Pay John Brown or order,
these cases. J. Jones." The converse term is an "indorse-
If the securities are to be given up to a ment in blank," where the indorser merely
solicitor, or anyone, against payment of a signs his name. (See Indorsement.)
certain sum, the letter of authority should SPECIAL SETTLEMENT. SPECIAL
specifically state the amount. The under- SETTLING DAY. The day fixed by the
taking will then be to pay the amount or London Stock Exchange committee for the
return the securities. When there is an settlement of sales and purchases of shares
agreement or undertaking to pay a sum of in a new company.
money the document is, probably, chargeable When an application is made to the
with a stamp duty of sixpence. committee for a special settlement, various
SOUTHS. A Stock Exchange name for documents and particulars must be sent to
London and South Western Railway ordinary the secretary of the share and loan depart-
stock. ment. For example, for shares of new
SOVEREIGN. The standard of the companies there must be sent :
general circulate more than about eighteen (4) The nominal amount of each share, and
vears without becoming illegitimately light. the amount paid in cash or credited as paid
This length of time, then, would constitute on each share. (5) In cases where the
what mav be called the legal life of a sove- whole of the capital has not been issued at
reign." Other persons have estimated its !
the time the application is made, whether
legal life to be fifteen or twenty years. the unissued shares are vendors' shares or
By 56 Geo. Ill (1816) it was provided are held in reserve for future issue.
480
SPE' DICTIONARY OF BANKING [SPE
481
JI— (IS*5)
—
4S2
SPO] DICTIONARY OF BANKING [STA
Have the
or notes
bills The claim for allowance must be lodged at
been sold, or have ad- the Spoiled Stamp Office, Somerset House,
vances or credit been and in the case of country bankers (more
obtained on them ? than ten miles from London) the claim must
What has become of be made through an agent in London.
the unstamped parts of
When an allowance granted, stamps of
is
equal amount may be obtained, or cash, less
any of the bills above
a discount, raav be accepted.
mentioned which have
been drawn in sets ?
SPOT PRICE. The " spot " price of
silver is another name for " cash " price for
What use has been delivery at once. The " forward " price is
made of any such un- the quotation for delivery and payment at
stamped parts ? some future time.
SQUATTER'S TITLE. The title which a
And I further say that person may obtain to land after being in
have not been reimbursed or paid the value undisturbed possession of it for twelve
of the said stamps or any part thereof, by years. (See Possessory Title.)
any other person or persons and that if the
;
STAFF REGISTER. The book kept at the
value thereof shall be allowed by the Com- head office of a bank which contains a com-
missioners of Inland Revenue, I will not ask plete list of the staff, with all particulars
or receive any compensation for the same, regarding each member, such as the date of
or any part thereof, from any other person appointment, the age, salary, and position.
or persons, or charge the same, or anv part STAG. The name given to a person who
thereof, in account or otherwise, to any applies for shares in a new company, not in
other person or persons either generally or order to subscribe for them but with the
particularly, so as to be again paid or sole intention of selling them as soon as
compensated for the same, or anv part possible at a profit.
thereof, directly or indirectly in anv manner STALE CHEQUE. A cheque is con-
whatsoever. sidered by bankers to be stale dated six (by
And further say that all the said stamps
I some bankers twelve) months after the date
spoiled or become useless within the
'•een of the cheque, and such a cheque is usually
period of two years preceding the date hereof : returned marked " out of date." When the
and that the application made by me for stale date is confirmed by the drawer the
an ^ allowance for the value of the said cheque is paid. The practice of not paving
stamps is without any fraudulent intention cheques which are " out of date " is not
or collusion whatsoever. sanctioned by law and is simply a custom
And I make this solemn declaration con- (though a desirable one) of bankers. Bv
scientiously believing the same to be true, law the drawer of a cheque isunder
not,
and by virtue of the Statutory Declarations ordinary circumstances, released from lia-
Act, 1835. bility on the cheque until six years from the
date of it, and a banker would, apparently,
Declared at the be justified in paying a cheque at any time
Stamp Office during that period, but, in practice, as
at stated, a cheque which is " out of date " is
paid only when confirmed by the drawer.
this . day o 19
By Section 45, Bills of Exchange Act, 1882,
Before me,
an indorser is discharged if a cheque is not
presented within a reasonable time after its
Distributor of stamps. indorsement. There is no time fixed In-
law as to what is a reasonable time. Six
* The applicant must sign on this line. days from the date of a cheque have been
N.B. — In cases where the declaration is held to be not an unreasonable length of
made by an agent of the principal or firm, time. Sir John R. Paget says: "In the
the person authorised should be in a position absence of special circumstances, ten days
to give full information as to the facts of the or so would probably be held the limit."
transaction. Any neglect of this regulation (See Cheque.)
will probably lead to delay in the settlement STAMP" DUTIES. Bv the Stamp Act,
of the claim. 1891:—
4S3
—
How Instruments
Production of Instruments in Evidence.
are to be Written and
Stamped. Terms upon which Instruments not Duly
"3. (1) Every instrument written upon
Stamped may be Received in Evidence.
stamped material is to be written "14. (1) Upon the production of an
in such manner, and every instru- instrument chargeable with any
ment partly or wholly written duty as evidence in any court of civil
before being stamped is to be so judicature in any part of the United
stamped, that the stamp may Kingdom, or before any arbitrator
appear on the face of the instru- or referee, notice shall be taken by
ment, and cannot be used for or the judge, arbitrator, or referee of
applied to any other instrument any omission or insufficiency of the
written upon the same piece of stamp thereon, and if the instrument
material. isone which may legally be stamped
" (2) If more than one instrument be after the execution thereof, it may,
written upon the same piece of on payment to the officer of the
material, even-one of the instru- Court whose duty it is to read the
ments is to be separately and dis- instrument, or to the arbitrator or
tinctly stamped with the duty with referee, of the amount of the unpaid
which it is chargeable. duty, and the penalty payable on
stamping the same, and of a further
Instruments to Separately Charged
be with sum of one pound, be received in
Duty in Certain Cases. evidence, saving all just exceptions
"4. Except where express provision to the on other grounds.
contrary is made by this or any other Act : " (4) Save as aforesaid, an instrument
" (a) An instrument containing or relating executed in any part of the United
to several distinct matters is to be Kingdom, or relating, wheresoever
separately and distinctly charged, executed, to any property situate,
as if it were a separate instrument, or to any matter or thing done or to
with duty in respect of each of the be done, in any part of the United
matters ; Kingdom, shall not, except in
" (6) Aninstrumentmadefor any considera- criminal proceedings, be given in
tion in respect whereof itis chargeable evidence, or be available for anv
484
— — —
the execution thereof, on payment " (c) If any such instrument exe-
of the unpaid duty and a penalty cuted after the sixteenth day
of ten pounds, and also by way of Mayone thousand eight
of further penalty, where the un- hundred and eighty-eight
paid dutv exceeds ten pounds, of has not been or is not duly
interest on such duty, at the rate of stamped in conformity with
five pounds per centum per annum, the foregoing provisions of
from the day upon which the instru- this sub-section, the person
ment was first executed up to the in that behalf hereinafter
time when the amount of interest specified shall incur a fine
equal to the unpaid duty.
is of ten pounds, and in ad-
" (2) In the case of such instruments herein- dition to the penalty payable
after mentioned as are chargeable on stamping the instrument
with ad valorem duty, the following there shall be paid a further
provisions shall have effect : penaltv equivalent to the
" (a) The instrument, unless it is stamp duty thereon, unless
written upon duly stamped a reasonable excuse for the
material, shall be duly delay in stamping, or the
stamped with the proper omission to stamp, or the
ad valorem duty before the insufficiency of stamp, be
expiration of thirty days afforded to the satisfaction
after it is first executed, or of the Commissioners, or of
after it has been first re- the Court, judge, arbitrator,
ceived in the United King- or referee before whom it is
cuted at any place out of the " (d) The instruments and persons
United Kingdom, unless the to which the provisions of
opinion of the Commis- this sub-section are to apply
sioners with respect to the are as follows :
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 othei person taking the
security.
Convevance 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, "i disp mi
or the person redeeming the security.
Settlement '•
The settlor.
Added bv Section 74 (3) ot the Finance (1909-10) Act.
1910 :
485
DICTIONARY OF BANKING [STA
STA]
" Provided that save where other General Exemptions from all Stamp
(3)
Duties.
express provision is made by this
Act in relation to any particular (1) Transfers of
shares in the Government
instrument : or Parliamentary stocks or funds.
" (a) Any unstamped or insuffi- (2) Instruments
for the sale, transfer, or
ciently stamped instrument other disposition either absolutely or by way
of mortgage, or otherwise, of any ship
which has been first exe- or
cuted at any place out of the vessel, or any part, interest, share, or pro-
United Kingdom, may be perty of or in any ship or vessel.
stamped, at any time within (3) Instruments
of apprenticeship, bonds,
thirty days after it has been contracts, and agreements entered into in the
first received in the United United Kingdom for or relating to the service
Kingdom, on payment of the in any of Her Majesty's colonies or posses-
unpaid duty only and :
sions abroad of any person as an artificer,
" (6) The Commissioners may, if clerk, domestic servant, handicraftsman,
they think fit, at any time mechanic, gardener, servant in husbandry,
within three months after or labourer.
the first execution of any (4) Testaments,
testamentary instruments,
instrument, mitigate or re- and dispositio is mortis causa in Scotland.
mit any penalty payable on (5) Bonds given
to sheriffs or other persons
in Ireland upon the replevy of any goods
stamping. or
•'
(4) The payment of any penalty pay- chattels, and assignments of such bonds.
made by, to, or with the
|
uncreased,
2. The paper must be flat and
with duty, enrols, registers, or enters any
and should neither be gummed nor per-
such instrument not being duly stamped, he
,
486
— —
inch and a half of the edge of the sheet. The I hereby certify that the amount at any
stamp will be placed as near to the position time owing by to
indicated as the circumstances of the case (did not exceed
(a) £
will permit. (a) if the until the day of 19 ),
When
a special position of the stamp is
6.
required in the case of printed forms it is
amount has not
yet been ex- w or nas not any time and
(m
(
l
,
ceeded the sum of
.,
ex- a"t
, ,
' . ,
ceeded caned £ )
, ^ , , ,,
duty may be impressed on the
.
487
.
Particulars of all credits opened should be jurisdiction, appears to the judge that
if it
recorded at the heading of the customer's a person who a contributory of one of the
is
account. The amount of such credits should companies is also a creditor claiming a debt
of course be justified by the nature of the against one of the other companies, the judge
account. may (if after inquiry he thinks fit) direct
The customer is sometimes given a special that the debt, when allowed, shall be at-
form of cheque book, the cheques being tached, and payment thereof to the creditor
drawn upon the banker who is to pay the suspended for a time certain as a security for
cheques and an indication is given upon the payment of any calls that are or may in
•cheques of the name of the bank where the course of liquidation become due from him
drawer's account is kept. to the company of which he is a contribu-
The mere fact that a banker pays a cheque tory ; and the amount thereof shall be
under a standing order does not release him applied to such payment in due course :
—
Acceptor of Bill. An acceptor is liable
and the six years or twenty years then begin to pay it at any time within six years, unless
to run from the date of the last payment or he has suffered damage through delay in
acknowledgment. For example, if Brown '
goes out of the jurisdiction after the cause not prevent the others from pleading the
of action arises the running of the statute statute.
is not affected. If a customer has several accounts they
Wherethere are several debtors (except must all be considered as really one account ;
in the case of a mortgage of land), the debt that is, if a loan account has been absolutely
must be acknowledged by each one in order dormant for six years the customer cannot
to j«_^H: alive against each, and anyone plead that the loan is statute barred if he
whdM Hot acknowledged it may plead the has also other accounts which have been
statute. operated upon.
Adebt of a deceased person which is In an ordinary loan account the statute
statute barred may legally be paid by his runs from the date when the money was
executor, as in an ordinary contract the paid and not necessarily from the date of the
statute does not bar the right but only the cheque.
remedy. If a loan is statute barred it does not
Where a loan is granted against security follow that the interest on the loan is also
and the debt has become statute barred, the barred. (See Interest below.)
banker is unable to sue the customer for the Bank Notes. —
The Statute of Limitations
debt, but the fact of the banker's claim does not apply to bank notes, either those
against the debtor personally having been of the Bank of England or of a country
discharged does not affect his claim upon the banker. Xo matter how long it may be after
security, nor does it affect his claim upon any their issue before they are presented for
securities or money belonging to the debtor payment, the banker is still liable to pa}
which may come into his possession as a them. In the Acts regulating the issue of
banker after his right to sue the debtor is notes in Ireland and in Scotland it is specially
statute barred. mentioned th.it " all bank notes shall lie
48.-*
STA] DICTIONARY OF BANKING [STA
banker, or any servant or agent of such that item became due and was not paid.
banker, until the same shall have been Acknowledgments by a debtor do not keep
actually returned to such banker or some the debt alive as against a guarantor.
servant or agent of such banker." The safest plan in connection with guar-
—
Bill of Exchange. An action on a bill antees is to have them renewed before the
of exchange must be commenced within six expiration of six years from their date, and
years from the time when the cause of action this is usually done by bankers. Instead of
arose that is, from the date when the bill
; a fresh guarantee being taken a written
was due to be paid. acknowledgment upon the old guarantee by
—
Bond. A bond continues for twenty the surety, or sureties, that the guarantee
years from the date on which the right to is still in force is sometimes taken.
bring an action first accrues. If, however, the guarantee is drawn as
490
—
covered by distress, action, or suit, but example, if it should be necessary for Smith
491
—— —
to have proof that Brown has been (as he stated day, pay to the mortgagee the
maintains) in possession of a certain property stated mortgage money, with in-
for a specified period, Smith may be satisfied terest thereon in the meantime, at
to accept a statutory declaration from, say, the stated rate, and will thereafter,
Jones, formally stating that he is able, from if and as long as the mortgage
his own knowledge, to vouch for the accuracy money, or any part thereof, remains
of Brown's assertion. unpaid, pay to the mortgagee in-
STATUTORY MEETING OF COMPANY. terest thereon, or on the unpaid
Everv company limited by shares and part thereof, at the stated rate, by
registered after January 1, 1901, shall,
on or equal half-yearly payments, the
within a period of not less than one month first thereof to be made at the end
nor more than three months from the date of six calendar months from the day
at which the company is entitled to com- stated for payment of the mortgage
mence business, hold a general meeting of money :
if any, as circumstances may require, and This Indenture made by way of statutory
the provisions of Section 26 of the Act shall transfer of mortgage the day of
applv thereto : 1883, between A. of [etc.] of the first part
B. of [etc] of the second part and C. of [etc.]
Deed of Statutory Mortgage. 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
of M. in fee simple for securing payment on joins herein as covenantor hereby conveys
the day of 1883, of the prin- and transfers to C. the benefit of the said
cipal sum of / as the mortgage money mortgage.
with interest thereon at the rate of [four] In witness, etc.
per centum per annum. By Section 27, the deed shall have effect as
In witness, etc. follows :
—
By Section 26 :— "2. (a) There shall become vested in the
"
(2) There shall be deemed to be in- person to whom the benefit of the
cluded, and there shall by virtue of mortgage is expressed to be trans-
this Act be implied, in the mortgage ferred, who. with his executors, ad-
deed ministrators, and assigns, is here-
"First, a covenant
with the after in this Section designated the
mortgagee by the person expressed transferee, the right to demand, sue
therein to convey as mortgagor to for, recover, and give receipts for
the effect following (namely) : the mortgage money, or the unpaid
" That the mortgagor will, on the part thereof, and the interest then
492
— —
" That the covenantor will, on the next This statutorv receipt vacates the mort-
of the days by the mortgage deed fixed for gage and vests the estate of and in the pro-
payment of interest, pay to the transferee perty therein comprised in the person for the
the stated mortgage money, or so much time being entitled to the equity of redemp-
thereof as then remains unpaid, with interest tion, without any reconveyance or re-sur-
thereon, or on the unpaid part thereof, in render whatever (Building Societies' Act.
the meantime, at the rate stated in the 1874, Section 42). The receipt is exempt
mortgage deed and will thereafter, as long
; from stamp dutv. (See Building Society.)
as the mortgage money, or any part thereof, STATUTORY" REPORT. The directors
remains unpaid, pay to the transferee of a company
limited by shares shall, at least
interest on that sum, or the unpaid part seven days before the date on which the
thereof, at the same rate, on the successive statutory meeting (q.v.) is held, forward a
days by the mortgage deed fixed for payment report, called the statutory report, to every
of interest." member of the company and to every other
The following is the form of deed of person entitled under the Companies (Con-
statutory reconveyance of mortgage, given solidation) Act, 1908, to receive it. For the
in the Act : requirements of the Act regarding this report
This Indenture made by way of statutory see under heading Meetings.
reconveyance of mortgage the day of STERLING. When gold and silver are
1884, between C. of [etc.] of the one of the standard fineness they are called
part and B. of [etc.] of the other part supple- sterling metals. Various explanations are
mental to an indenture made by way of given as to the original meaning of the word
statutory transfer of mortgage dated the sterling. A coin called an " Easterling "
day of 1883, and made between was introduced into the coinage in the
[etc.] Witnesseth that in consideration of reign of King Richard I and as that coin was
all principal money and interest due under considered superior to other coins in circula-
that indenture having been paid of which tion at that time it is probable that the word
principal and interest C. hereby acknow- sterling took its rise from the Easterling.
ledges the receipt C. as mortgagee hereby Another suggestion (given in Hutchison's
conveys to B. all the lands and heredita- " Practice of Banking ") is that the word was
ments now vested in C. under the said in- derived. " from Easterling. a name given to
denture To hold to and to the use of B. in persons who periodically examined the mint
fee simple discharged from all principal and regulated the coinage, possibly at Easter,
money and interest secured by and from so that the term means true money accord-
all claims and demands under the said ing to the last examination, as 100 pennies,
indenture. or pounds, Easterling, or sterling." (See
In Witness, etc. Coinage.)
(See Mortgage.) STERLING BONDS. I ion. Is of a foreign
STATUTORY RECEIPT. When the countrv which are payable in English
moneys intended to be secured by a mort- currency.
gage to a building society have been fully STET. (Lafin, let it stand.) When
paid, the society may indorse upon or annex entries in a book have been ruled ou1 id
493
— —
—— . — —
mistake, instead of erasing the line, it is any such aliquot part of stock as would not,
sometimes a convenient way of correcting if existing in shares, have conferred that
the error to write the word " stet " in a privilege or advantage.
different coloured ink, thus indicating that "34. Such of the regulations of the com-
the entries stand as they were before the line pany (other than those relating to share
was passed through them. warrants) as are applicable to paid-up shares
STOCK. The capital of a company is the shall apply to stock, and the words share '
'
that way ; but if the capital is divided into varies in different classes of stocks. There
shares of, say, £5 each, fully paid, then the is no fixed scale of charges, though the usual
person with the same holding would have commission on the London Stock Exchange
thirty-three shares £5 each. Stock, by its is as follows :
nature, is fully paid up, but upon shares there British and Indian Government securities,
is often a liability. 2s. 6d. per cent.
There may be varieties of stock as guaran- Colonial, corporation and foreign securities,
teed, preference, ordinary, deferred and other 5s. per cent.
kinds, which entitle the holders to different Home railway securities, 5s. to 105. per
rights in the matter of dividends and in a cent.
division upon a winding up of the company. American and foreign railway securities,
In companies where Table A applies (see 5s. to 10s. per cent.
Section 11 under Articles of Association) Mining and industrial shares :
494
STO DICTIONARY OF BANKING [STO
Exceeding 850 and not exceeding banker should receive a letter or memoran-
Sinn 1/- per share. dum from the broker's client agreeing to the
Exceeding S100 1/6
Colonial Bonds and Stocks .. ..5/0 per cent.
broker charging the securities to the extent
on money value. of the client's indebtedness to the broker.
STOCKBROKING TRANSACTIONS. When
The same
commission is charged for a banker is requested by a customer to
buying or selling, but when a stock is both instruct his brokers to purchase or sell certain
bought and sold within the same Stock stocks or shares, the request should be made
Exchange account, or when one stock is in writing so that no mistake or misunder-
sold and the proceeds at once invested in standing may arise. In the case of a sale,
another stock, the order for sale and purchase it should be signed by the person in whose
being given at the same time, most brokers name the stocks or shares are registered ;
charge one commission only. (See Stock if registered in several names, the signature
495
STO] DICTIONARY OF BANKING l
STO
certificate to bearer has been entered their clients' instructions as to buying and
on the register of the local authority selling, and themselves doing the actual
as the owner of the share of stock business with the jobbers, selling to them
described in the certificate, the the securities their clients sell and obtaining
certificate shall be forthwith can- from them the stocks and shares their clients
celled so as to be incapable of being buy. Thus the jobbers are merchants and
re-issued to any person. act as middlemen between those brokers
'
' (2) Every person by whom a stock certifi- who have stock for sale and those who wish
issued without being
cate to bearer is to purchase and the method in which they
;
duly stamped shall incur a fine of make their profit is different from that of the
fifty pounds." brokers, for the latter are paid by the com-
By Section 5 of the Finance Act, 1899, the mission, at so much per cent, or per share,
duty on stock certificates to bearer shall which they receive from their clients
extend to any instrument to bearer issued whilst the jobbers take the " turn " between
by or on behalf of any company or body of the price they give for a stock and the rate
persons in the United Kingdom and having at which they sell it again.
a like effect as a stock certificate to bearer. On
receiving instructions from his client a
Stock certificates to bearer for various I broker buys so much stock from a jobber or
Government and corporation stocks trans- sells so much to him, as the case may be,
ferable at the Bank of England can be at the price which he offers, subject to the
obtained from the Bank. The stockholder client's " limit " ; he then sends his client
must either attend at the Bank in person to a contract note which, amongst other par-
transfer the stock and receive the certifi- ticulars, quotes the settling day when the
cates, or grant a power of attorney to some price is due to be paid. A large proportion of
person, or firm, for this purpose. the Stock Exchange business is speculative,
By Section 7 of the Trustee Act, 1893, (1) however, and the price is not paid ; instead,
a trustee, unless authorised by the terms of if the transaction has been a purchase and
his trust, shall not apply for or hold any cer- the stock has risen in price by the time
tificate to bearer issued under the authority settling day arrives, the client may request
of any of the following acts : — his broker to sell again and the broker will
(a) The India Stock Certificate Act, 1863. then merely send him a cheque for the profit
(b) The National Debt Act, 1870. (c) The on the " deal." (See Bull and Bear.)
Local Loans Act, 1875. (d) The Colonial In most stocks there are two settlements
Stock Act, 1877. (See Marketable per month, one near the middle and the
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 " oi " for cash,"
change is the most important in the world that is, for immediate payment. (See
and the number and amount of the trans- Settling Days.)
actions that take place here in the course of If, on settling day, the client does not
a single day ar ; very great. As other stock wish to complete a purchase, the broker will
exchanges are managed on somewhat similar bv arrangement carry over the bargain
lines, it will suffice to give a few particulars until the following settlement again, charging
of this one. a contango for the service. (See Contango.)
The business 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 deal with the outside public, taking Exchange settling dav, at which time the
496
STO] DK riONARY OF BANKING .STO
amount of the loan, margin, rate of interest, jobber's profit (called the jobber's turn) is
etc., must be rearranged. the difference between his buying and selling
For the sake of brevity some stocks quoted prices. He is also called a dealer. (See
on the Stock Exchange are occasionally Stock Exchange.)
referred to by brokers and in the press by STOCK RECEIPT. The receipt which is
abbreviated names some are readilv dis-
; given by the seller or his attorney, to the
tinguishable, but it may be well to mention purchaser, when inscribed stocks are trans-
a few of the more important Anglo A =
: ferred. It is of no value as a securitv. A
Anglo-American Telegraph Co. Deferred holder's title is the entry in the stock books
ordinary stock ;Bags = Buenos Ayres at the bank where the stocks are domiciled.
Great Southern Railway ordinary stock. Certain stocks may be converted by a holder
Berthas = London, Brighton and South into certificates to
bearer. (See National
Coast Railway Deferred ordinary stock. Debt, Stock Certificate to Bearer.)
See Berwicks, Brighton A, Brums, Caleys, In order that inscribed stock may be taken
Canpacs, Chartereds, Chathams, Chops, as a security for an advance, it must be
Claras, Districts, Doras, Dover A, registered in the name of the bank or in the
Easterns, Kaffirs, Kangaroos, Leeds, names of the bank's nominees.
N'oras, Pots, Souths, Trunks, Westerns, STOCK TRUST CERTIFICATE. The
York Preferred, Yorks. name of a certificateissued by certain
The principal foreign stock exchanges are American railroad companies. It certifies
New York, Paris, Berlin, Yienna, Frankfort- that, on surrender, " John Brown " will be
on-Maine, Brussels, and Amsterdam. In entitled,out of certificates delivered to
many places stock exchange business is undersigned voting trustees, to receive a
conducted at the Bourses. (See Bourse.) certificate for shares of
(See Account, Backwardation, Bear dollars, etc.
and Bull, Carrying Over, Contango, On the back is a form of transfer and
Contract Note, Making-up Price, Official an appointment of an attorney to transfer
List, Options, Quotation on London all interest in the stock trust certificate on
Stock Exchange, Settling Days, Special the books of the voting trustees. (See
Settlement, Stockbroker, Stock Jobber.) American Railroad Certificates.)
STOCK EXCHANGE HOLIDAYS. The STOCK WARRANT. A stock warrant to
Stock Exchange is closed on the following bearer entitles the bearer of the warrant to
days: January 1, Easter Monday, May 1, the stock therein specified.
Whit Monday, first Monday in August, A stock warrant is included in the expres-
November 1, December 26, unless specially sion " share warrant " in the Companies
ordered otherwise by the Committee for (Consolidation) Act, 190S. (See Share
General Purposes. When January 1, May 1, Warrant.)
November 1 or December 26 falls on a A stock warrant is a negotiable instru-
Sunday the " House " is closed on the day ment.
following. STOLEN BANK NOTES. Where bank
STOCK EXCHANGE SETTLEMENT. notes have been stolen, a holder for value,
The adjustment of differences between without notice that they have been stolen,
brokers and clients, when payment is made is entitled to payment and the person who
to clients for stocks sold on their behalf and lost them cannot recover from him. But
payment received from clients for stocks where it is proved that bank notes have been
bought. In most " markets," as the various stolen, the burden of proof that they were
departments are called into which the stocks taken in good faith and for value rests upon
dealt in on the London Stock Exchange are the holder.
divided, the settlement takes place twice a A banker cannot refuse to pay his own
month, near the middle and near the end ; notes, but where he has information that
but there is only one settlement for the certain notes have been stolen he would
Consols " market," that is about the begin- naturally make full inquiry before paying
ning of the month. (See Settling Days.) such notes.
STOCK JOBBER. A dealer in stocks and The numbers, when known, of notes which
shares who conducts his business with the have been stolen are usually notified to
stockbrokers, acting as intermediary be- bankers and money changers, but it has
tween those brokers who have securities for been held that the mere fact that a person
sale and those who wish to purchase. The has possession of a list of the numbers of
497
<i^>
ST01 DICTIONARY OF BANKING [STO
stolen notes will not, if he has, in good faith, 578, at p. 584). If, on the contrary, the bill
given value for one of them, prevent him is indorsed in blank and stolen, a holder in
from recovering upon any such note [Raphael good faith and without notice that his title
v. Bank of England, 1855, 25 L.J.C.P. 33). to the bill is defective is entitled to demand
It is quite clear, therefore, that the notice payment of the same. And if a bill indorsed
which is sometimes found in newspapers in blank is stolen whilst in the course of
that " payment has been stopped " of stolen negotiation for any person who was the
or lost bank notes is legally of no value holder of it, the payment at maturity by
whatever. the acceptor, provided he acts in good faith,
STOLEN BILL. A bill of exchange is a good discharge of the bill, even though
can be the subject of larceny like any other the payment is made to the actual thief
valuable document of title, but it is un- (see Smith v. Sheppard, 1776. a case cited
necessary to inquire into anything beyond by Chitty in his " Bills of Exchange," 10th
the civil position as to liability in connection ed., p. 180, «.).
with the matter. When a bill is in the hands of a holder in
By Section 20 of the Bills of Exchange due course a valid delivery of the bill by all
Act, 1882, very full authority is given to fill parties prior to him so as to make them
up an inchoate instrument (q.v.) and turn it liable to him is conclusively presumed.
into a complete bill. But this does not (Section 21.)
permit of the filling up and the conversion With regard toexchange in
bills of
being effected by any other than the duly general, that is, which do not
those bills
authorised person. If, therefore, an in- fall within the definition of a cheque (see
choate instrument is stolen before comple- Section 60), a banker is in no better position
tion, no action can be brought upon it, for than a private individual, unless special
it would have to be signed by some person arrangements are made by the banker when
or other, and the signature would be either a bill is made payable at his bank.
forged or unauthorised, having been made STOLEN CHEQUE. For most pur-
by some person other than the one entitled poses a cheque is legally regarded as a bill
to complete the bill. The forged or un- of exchange but the law is not quite the
;
authorised signature is wholly inoperative same with regard to the two instruments, at
(Section 24). This is well established by the least as far as the larceny of them is con-
case of Baxendale v. Bennett (1878, 3 Q.B.D. cerned. The civil liability when a bill is
525). B put his blank acceptance in a stolen has been referred to in the last article,
desk. It was stolen, filled up as a bill by but it would appear that when a cheque is
C with his own name as drawer, and nego- stolen, the position of the banker ispeculiar.
tiated. It was held that even a holder in The crossing of cheques, and the marking of
due course could not recover from B, as he them as " not negotiable," have safeguarded
had never delivered the inchoate instrument the public to a remarkable extent by making
for the purpose of being converted into a it more difficult for a thief to obtain cash for
bill by C. Whatever remedies there may the cheques, though the mere crossing of
be for those persons who have dealt in and a cheque does not affect its negotiability
with the instrument, they are independent of if it is regular in every other respect. If
the document, which never became a bill at all. a cheque is stolen whilst in course of trans-
Again, if a bill complete in form is stolen, mission, a holder in due course is entitled
the liability of the parties will depend upon to the amount of it, and may sue the drawer
the particular circumstances. Thus, C, the or any other party to the cheque upon
holder of a bill, specially indorsed it to D, it if payment has been stopped. But, of
and forwarded it in a letter to D. In the course, if the cheque is specially indorsed
course of transmission the bill was stolen and and the indorsee's signature has not been
D's indorsement forged. The bill was after- added, an unauthorised or a forged signature
wards negotiated. Since the indorsement of would be appended, and through this
D was necessary for negotiation, and this had signature (by Section 24) no title could be
not been obtained, the signature was, under made to it. The property would remain in
Section 24, wholly inoperative, and C still the last indorser.
retained the property in the bill. No liability In the case of a cheque which has been
rested on any person who was a party to the crossed with the addition of the words " not
bill prior to the time of D's forged indorse- negotiable " any person taking such a
in :nt (Arnold v. Cheque Bank, 1876, 1 C.P.D. cheque shall not have, and shall not be
498
STO DICTIONARY OF BANKINI, [SUB
capable of giving a better title to the cheque sub-branches are open only on one, two, or
than that which the person had from whom three days a week. When the sub is open
he took it. (Section 81.) daily it ma}', so far as book-keeping is con-
If the banker on whom an open cheque cerned, be worked as though it were a
is drawn pays it in good faith and in the separate branch, but when it is not open
ordinary course of business, then (by Section dailv all the transactions are passed through
60) the banker is entitled to charge his the parent branch. Cheque books are often
customer, and there is no responsibility supplied for the use of sub-branch customers,
resting upon him if the indorsement has been when the office is open daily, bearing the
forged and the cheque stolen. If the cheque name of the sub. Such cheques are strictly
is payable to bearer, or if, after having been payable at the sub-office on which they are
made payable to order it bears the true drawn, in the same way that cheques drawn
signature of the indorsee, it gets into circu- on the parent office are payable there and
lation, it becomes the property of any holder not at the sub-branch. As a rule, a branch
who has taken it in good faith and has had and its sub are in close communication so as
no reason to doubt that it was regular in to avoid refusing payment of a cheque at
every respect. the branch when the drawer of the cheque
In the case of a crossed cheque which has paid in to credit at the sub-office. A
has been stolen, the banker on whom it is banker, however, is not liable if he should dis-
drawn is protected if he pays it in accordance honour a cheque at the one office when
with Section 80, and a collecting banker in sufficient money is paid in to meet it at the
accordance with Section 82. (See Crossed other office on the same day. as he cannot be
Cheque.) expected to know of the credit till advice
•
At a first view it seems that the position is received in due course. But if a clerk at
taken up by a banker as to paying a cheque the sub pays a cheque drawn on the parent
drawn upon him without his knowing that branch and the cheque is dishonoured, he
it had been delivered or issued is not quite may not be able to recover the money from
in accordance with the law. But as far as the person to whom he paid it. In cases of
practice is concerned, it seems that the doubt, the cheque on the parent office should
position correctly stated in Morse's " Law
is be received merely for collection, and, in any
of Banking " (4th ed., p. 6S7) "If a
: case, there is always the possibility that
cheque is stolen, or if after being lost by payment of it may have been stopped. ]
the drawer it is found by some other person, SUB-LEASE. Where a sub-lease is de-
it is not, in the hands of the thief or of the posited as security, it should be accompanied
finder issued as against the drawer. But
' '
by an attested copy of the original lease.
so far as concerns the bank, it would be (See Leasehold.)
considered as issued, and the bank would be SUBPOZNA. (Latin, sub under, poena, pun-
protected in paying it, provided it did so ishment.)
bona fide, and with no knowledge of the A writ by which the attendance of a
precedent circumstances." (See Section 21 person in Court is commanded, under a
of the Bills of Exchange Act, 1882.) penalty.
ORDER.
STOP STOP PAYMENT. SUBROGATION. If a banker lends
STOPPED CHEQUE. (See Payment money company, which has no power to
to a
Stopped.) borrow, he cannot recover from the com-
STOTINKIS. (See Foreign Moneys- pany, but the banker has the right of sub-
Bulgaria.) rogation that is, he is entitled to occupy the
;
STREET PRICES. After the London position of such creditors of the company as
Stock Exchange is closed for the day, the were paid out of the money he advai
dealers in American securities continue their to the company and to recover from the
business in the street, whence the terms company the debts of the creditors so paid.
"street market" and "street prices." Where a guarantor repays the full debt
STUBS. An American term for the due to the banket on the unit for which
counterfoils of cheques. he is surety, he is subrogated to the rights
SUB-BRANCH. A successful branch very of the banker —
thai is, lu- is therebj entitled
often works one or more sub-branches, or to the banker's right to sue the debtor, orto
agencies. They may be open daily and have claim upon his estate, and to the benefit of
a resident clerk in charge, or be worked by a any securities which the banker held. (See
clerk from the parent office. In many cases, Guarani
1^9
— — —
SUBSCRIBED CAPITAL. That part of after that date, and in the case of a succes-
the nominal or authorised capital which has sion arising under a disposition, only if the
been issued by the directors of a company first succession under the disposition arises
and subscribed or taken up by the share- on or after that date.
holders. It may be fully paid up, or only When a person who has succeeded to a
partly paid, in which latter case the remain- property lodges the deeds thereof as security,
der is termed the " uncalled " capital. (See the succession duty receipts should be pro-
Capital, Uncalled Capital.) duced, as the duty forms a charge upon the
SUCCESSION DUTY. A duty which is property.
payable by the person who succeeds to real By the Customs Act, 1889, special pro-
or leasehold property in the United King- vision has been made in favour of pur-
dom, upon the death of another person. chasers with regard to succession duty,
The duty is also payable upon legacies which freeing the land therefrom after twelve
are charged upon the proceeds of a sale of years in some cases and six vears in others.
real estate, or on so much of the proceeds (Section 12.)
of a sale of real estate as may be required to If property is conveyed to two or more per-
discharge legacies where the personal estate sons as joint tenants and one joint tenant
has proved insufficient, and upon personal dies, the surviving joint tenant or tenants
property included in a settlement. must pay duty on the beneficial interest
The succession duty rates, payable upon accruing to him, her, or them by the
the value of the succession as amended by survivorship.
the Finance (1909-10) Act, 1910, Section Succession duty is not payable where the
58, are as follows :• principal value of the estate does not exceed
per cent. £100 nor by lineal descendants or lineal
;
On the succession of lineal ancestors ancestors where estate duty has been paid
or descendants of the deceased . . 1
on the full value of the property.
Brothers and sisters of the deceased SUMMARY ADMINISTRATION. In the
and their descendants, or their case of a small bankruptcy, where the
husbands or wives 5 debtor's estate is not likely to exceed £300,
Uncles and aunts of the deceased and the estate may be administered in a simpler
their descendants, or their husbands manner than in an ordinary bankruptcv.
or wives 10 Section 121 of the Bankruptcy Act, 1883,
Great uncles and great aunts of the provides :-
of which estate duty is payable does not (2) There shall be no committee of inspec-
'
'
exceed £15,000, nor where the successions tion, but the official receiver may
derived by the same person from the de- do with the permission of the Board
ceased do not exceed £1,000, nor where the of Trade all things which may be
person taking the succession is the widow or done by the trustee with the per-
a child under the age of twenty-one of the mission of the committee of inspec-
deceased, and the value of the succession tion :
derived by the same person from the " (3) Such other modifications may be
deceased does not exceed £2,000. made in the provisions of this Act
The above shall take effect in the case of a as may be prescribed by general
succession arising through devolution by rules with the view of saving ex-
law, only where the succession arises on or pense and simplifying procedure ;
500
— —
but nothing in this Section shall surrender; (2) a surrender combined with
permit the modification of the admittance :
the manor to the use and behoof of the pur- Last admittance did surrender into the hands
chaser. A surrender may be made either in of the Lord of the said
court, or out of court. The actual sur- Manor All that Cottage
C s. d.
render is usually preceded by a covenant Rent etc.
to surrender. For further information, see Fine of the Yearly Copyhold
Copyhold. i
of To the
By the Stamp Act, 1891, the stamp duty use and behoof of C D his
is : heirs and assigns for ever
Surrender — according to the uston <
501
—
and took of the Lord of the order to obtain* gold or silver dust as a
-.
said Manor by the hands of result of the friction, is termed " sweating."
his Steward the said Cot- The process would naturally do the coins
tage aforesaid with the i great injurv. (See Coinage.)
appurtenances To hold the j
SWEATING ROOM. The bank room in
same to him his heirs and which customers are interviewed some-
is
assigns for ever according times facetiously called the sweating room,
to the Custom of the said in allusion, no doubt, to the supposed effect
Manor Paying the Rents and of certain interviews.
performing the Services of
Right due and accustomed TABLE A. Table A, which is so frequently
and having paid the Lord referred to in connection with companies,
for his Fine as in the margin is contained in the first Schedule of the
and done his fealty is there- Companies (Consolidation) Act, 1908, and
upon admitted tenant by supplies model regulations for the manage-
pledges of E F and G H. ment of a company limited by shares. It
J. K., Steward. contains 114 clauses.
SURRENDER VALUE. The amount In the case of a company limited by shares
which an assurance company will pay, after, and registered after April 1, 1909 (that is.
say, two or three years premiums have been the commencement of the above named
paid, to the holder of a life policv, upon a Act), if articles are not registered, or, if
surrender of the policy. An advance should articles are registered, in so far as the
not, as a rule, be made upon a life policy articles do not exclude or modify the regula-
beyond the amount of the surrender value. tions in Table A, those regulations are to
A banker can ascertain the surrender value be the regulations of the company in the
by applying to the assurance company. same manner and to the same extent as if
A life policy may often be sold at rather they were contained in duly registered
more than the surrender value. (See Life articles.
Policy.) Various clauses of Table A will be found
SUSPENSE ACCOUNT. Items which, for under the following headings Call^
:
,
502
—
at the time he lent the money, that Smith requires to pay for a purchase. (See
held a charge, that knowledge would Givers On.)
prevent him " tacking." If Smith gave TAKING UP A BILL. (Sec Retiring a
notice to Jones that he held a second charge, Bill.)
that would not prevent Robinson from TALLY. An account is said to tally when
tacking his third to the first. it agrees or corresponds with another
Another example of tacking is where the account. The origin of the word is found
legal mortgagee makes a further advance, in the name of a notched stick which, at one
subsequent to an equitable charge and time, was used for the purpose of keeping a
without any notice of that charge, and adds record of business transactions. When a
the amount of the further advance to the sale took place a stick was marked (by small
original advance. If, however, the legal notches for pence, larger ones for shillings
mortgagee had notice of the equitable charge, and larger again for pounds) with the quan-
at the time he lent the second amount, he tity of the goods sold or the amount of the
could not tack. Where Jones holds a legal price, and the stick was then split in two.
mortgage and there are also, on the same One of the halves remained in the custody
propertv, charges to Smith and Robinson, of the seller and the other was taken by the
Jones mav, if he likes, purchase the equitable purchaser. When a settlement of the trans-
charge of Robinson and tack or add it to his action took place, the purchaser produced
own legal mortgage, provided that he, the stick and the seller compared it with the
Jones, had no knowledge of the charge to one in his possession to see that the notches
Smith at the time of purchasing Robinson's tallied that is, that they were the same on
;
503
TEL] DICTIONARY OF BANKING [TIC
for three months' bills nor the short rate way of release, notby conveyance. The
for drafts up to ten davs, applies. interests of a joint tenant must all be
TELEGRAPHIC TRANSFERS. The pay- created at the same time and under the
ment of money
in a foreign country may, same instrument.
when necessary, be effected by telegraph, Where deeds are deposited as security
the banker in London sending a cable, with by tenants in common, the document of
the necessary particulars, to his foreign charge should be signed by all the owners
correspondent. The cost of the cable is of the property, and it is advisable that a
charged to the customer at whose request banker's legal mortgage be taken. (See
the transfer is made. An exporter of goods Coparceners, Joint Tenants.)
from this country can, as soon as he has TENDER. When a new stock is to be
shipped the goods, communicate with his issued (as in the case of Corporation stock
agent abroad by wire to sell the goods at or Colonial issues) instead of being offered
once, and send payment immediately by to the public at a certain price, the public is
telegraph through 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
receiving tellers and paying tellers the: those who have offered the highest price.
former receive credits and the latter pay A corporation inviting tenders usually
cash for cheques and bills. Where necessary fixes a minimum price, below which no
the work may be further subdivided, one tender will be accepted.
teller, or cashier as they are usually called, Treasury Bills are issued by the Govern-
receiving credits only for customers whose ment upon the tender system, and the
names commence with one of the letters tenders are received at the Bank of England.
from, say, A to F, the other cashiers being India Bills and London County Council Bills
similarly concerned only with customers and others are also issued by way offender.
whose names begin with certain other letters. TENURE. The manner in which real
TENANT FOR LIFE. (See Life Tenant.) property is held, e.g. copyhold tenure is
TENANTS IN COMMON. A property bv copy of the court roll.
may be conveyed to several persons as
"
TERM OF A BILL. The period for which
tenants in common. Tenants in common a bill of exchange is drawn.
have a unity of possession in the property, TERMINABLE ANNUITY. An annuity,
but each has a separate and distinct share or annual payment of a certain sum, which
which can be disposed of by will, or in- ceases at the expiration of a specified time,
herited by the deceased's representatives. or upon the death of an individual. (See
There is no right of survivorship that is,
; Annuity.)
when one dies his share does not pass to the TERMINATING BUILDING SOCIETY.
survivor. A society which, by its rules, is to terminate
Tenants in common may have either equal at a fixed date, or when a result specified in
or unequal shares, and one tenant may its rules is attained. (See Building Society.)
convey his share to another tenant. It is TESTING CLAUSE. (See Attestation.)
not necessary that their interests should all THALER. (See Foreign Moneys —
be created at the same time or under the Germany.)
same instrument. THIRD OF EXCHANGE. (See Bill in a
If a property is devised to several persons Set.)
without saying whether they are to be THREEPENCE. A silver coin with a
tenants in common or joint tenants, thev are standard weight of 2 1 -SI 81 8 grains troy.
regarded as joint tenants. (See Coinage.)
The difference between tenants in com- TICKET DAY. Also called Name Day.
mon and joint tenants should be noted. The title of the second day in a settlement
When a joint tenant dies, his interest in the on the London Stock Exchange when
property goes to the surviving joint tenant. brokers pass the names of the purchasers of
They cannot dispose of their interests by stocks since the last settlement, certain
will. Their shares in the property are equal " tickets " being exchanged preparatory
;
504
— — — — ——
TIGHT. The word is sometimes used in happening of th? event does not cure the
connection with the money market, when defect."
money is dear and not easily obtained. As to the computation of time of payment
TILL. The drawer in which a cashier of a bill payable after date, the Act provide.-,
keeps the money that is in use. The as follows :
word is also commonly used to mean all "14. Where a bill is not payable on
the cash and notes which are in the charge demand the day on which it falls due is
of a cashier for use at the counter, as dis- determined as follows :
tinguished from the stock of cash left in the " (1) Three days, called days of grace, are,
safe or strong room. Each cashier is in every case where the bill itself
responsible for the accuracy of his own till, does not otherwise provide, added
and he generally checks the amount of it to the time of payment as fixed by
before starting operations each morning to the bill, and the bill is due and pay-
make certain that the amount agrees with able on the last day of grace Pro- ;
the security will rise before the appointed " (6) When
the last day of grace
time so that he mav sell at a profit. is a bank holiday (other
TIME OF PAYMENT OF BILL. Bill than Christmas Day or Good
Payable on Demand. By Section 10 — of the Friday) under the Bank-
Bills of Exchange Act, 1882 :— Holidays Act, 1871, ami
" (1) A bill is payable on demand : Acts amending or extending
" (a) 'Which is expressed to be it, or when the last day of
505
— .
" '
Non-business days '
for the purposes of date of the When drawn payable at so
bill.
this Act mean : many days months after sight, the date is
or
" (a) Sunday, Good Friday, Christmas calculated in the same way, but from the
Day :'
date when the bill was sighted. If the
" (6) A bank holiday under the Bank acceptor writes on the bill "sighted 1st Febru-
Holidays Act, 1871, or Acts amend- ary, accepted 2nd February," the currency
ing it : is calculated from the date when it was
" (c) A day appointed by Royal proclama- sighted, February 1
tion as a public fast or thanksgiving The following are a few examples of the
day. calculation of the time of payment. In each
"Any other day is a business day." case if the last day of grace is a Sunday
The due date of a bill that is, the date — or holiday, the bill will be due and payable
when it becomes payable is calculated, in — either on the preceding business day or suc-
the case of a bill drawn payable three months ceeding business day in accordance with the
after date, bv counting three calendar provisions of Section 14, s.s. 1 (a) and (6)
months, plus three days of grace, from the (see above).
A Bill dated (or sighted) January 1, payable one month after date (or sight), is due and payable on
February 4.
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
leap year "ii March 5").
it
„ March pav'able thirty days after date (or sight), is due and payable on April 3.
1,
April 1, payable thirty days after date (or sight), is due and payable on May 4.
January 28^ payable one month after date (or sight), is due and payable on March 3
(if leap year on March 2).
„ January 29, payable one month after date (or sight), is due and payable on
March 3.
January payable one month after date (or sight), is due and payable on
30,
March 3.
January 31, payable one month after date (or sight), is due and payable on
March 3.
„ January 1, payable three weeks (=21 days) after date (or sight), is due and
payable on January 2.j.
„ 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.
,, 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.
March 1, payable "one month after date, without days of grace," is due and payable
m April 1.
March 1, payable |
at sight i is due and payable on demand and no days of
]
on presentation '. grace are allowed.
|
on demand I
A bill dated March payable one month after date, is due and payable April 4
1, if accepted " payable mi ;
1st April,"' present on April 1 if days of grace are then claimed, have the bill noted and
;
deducted before ascertaining the due date. It payable at three months it will be due
on April I, without days oi grai
Whn, thi last day oi graci falls on Sunday a bill is payable on the preceding
business day.
,, .. Christmas lay I
., ,, .. k>od Friday
i
J .
Monday
after Christmas Hay (if Christma D a Sunday) a bill
payable on the succeeding bus
i- day.
x First .Monday in May a bill is payable on thi succeeding 1
day.
iy in August a bill is payable on the succeeding b
I
day.
„ „ Monday Bank Holiday, a bill is payable on the 1' sday. 1 1
The time of payment of bills payable in of several ways, he may have bought the
foreign countries is regulated by the laws property, or inherited it. or have had it left
and customs of those countries. to him by will, or have had a present made
In France, for example, a bill which is due of it, or obtained it through foreclosure of
on a Sunday is payable on the Monday, and a mortgage.
does not take any days of grace, and the The greatest interest that a person can
same custom is observed in most of the other have in land is the fee simple, that is he is the
continental countries. (See Bank Holidays, absolute owner, and a conveyance to a
Bill of Exchange, Days of Grace.) purchaser of freehold land will include the
TIME POLICY. (See Marine Insurance clause " to have and to hold all the said
Policy.) hereditaments . unto and to the use
. .
TITHES. Originally the tenth part of the of the said John Brown in fee simple," or
annual crop or produce of stock which was " unto and to the use of the said John Br< iwn,
paid voluntarily in support of the church. his heirs and assigns for ever." In such a
Tithes are now commuted into tithe rent case the fee simple is vested in John Brown.
charges varying according to the average In the case of an assignment of leasehold
price of the crops, and are payable by the property to John Brown, John Brown ha
owner of the land, not by the tenant." legal estate, but the fee simple remains with
TITLE DEEDS. A person's right or title the lessor; and in copyhold land the fee
to a piece of land is proved by the docu- simple is with the lord of the manor.
ments called "title deeds." They show in The possessor of an estate in fee simple
whom the legal estate is vested, and how. may create lessei estates out of it. He may,
through a long course of years, the land has for example, grant a life interest, or 1<
been transferred from one person to another but so long as he does not transfer the fee
by deed or by will, till finally it is transferred simple the reversion remains with him.
to the present owner. The present owner If John Brown lodges a parcel of deeds of a
may have acquired his title to the land in one freehold estate as security, the deeds and
507
TIT] DICTIONARY OF BANKING [TIT
banker must ascertain if the legal estate in been purchased from one of several joint
the land is held by the party pledging the tenants, or tenants in common, or from a
deeds. remainderman or the property may,
;
Along with the deeds there is usually, originally, have been part of a larger estate,
though not always, an abstract of title. and no prior deeds have been handed over
The abstract is prepared by the vendor's on a sale. Where there is a defective title
solicitor and gives, in order of date, a sum- or document, the contract or special con-
mary of all the deeds, wills or other docu- ditions of sale often state the defect and
ments, and also all other particulars which are preclude a purchaser from raising any objec-
necessary to show the purchaser how his tion to it, and this may, in some cases, be
title is derived. The abstract begins with the explanation why a defective title has been
what is called the " root of title," and follows taken.
the step by step till it reaches the vendor.
title If the purchaser, through his solicitor, is
When a sale is arranged it may be agreed in satisfied with the title, after investigation or
the contract to commence with a certain inspection of any of the abstracted docu-
deed as the root of title, but if no special ments, he usually receives an acknowledg-
agreement is made, the purchaser has the ment, either in the conveyance or by a
right to require evidence of the title for the separate document, of his right to production
last forty years, or longer, if necessary, to of the documents. Where a person retains
find a satisfactory beginning. A title of possession of documents, and gives to an-
twenty years is often accepted as sufficient. other an acknowledgment in writing of the
By the Vendor and Purchaser Act, 1874, right of that other to production of those
recitals, statements and descriptions of facts, documents and to delivery of copies thereof,
matters and parties contained in deeds, that acknowledgment (by Section 9 of the
instruments, acts of Parliament or statutory Conveyancing Act, 1881) shall bind the
declarations, twenty years old at the date of documents to which it relates in the posses-
the contract, shall, unless and except so far sion or under the control of the person who
as they shall be proved to be inaccurate, retains them, and in the possession or under
be taken to be sufficient evidence of the the control of every other person having
truth of such facts, matters and descriptions. possession or control thereof from time to
All the deeds and documents which are time, but shall bind each individual possessor
referred to in the abstract of title may be or person as long only as he has possession
508
— ,
509
TIT] DICTIONARY OF BANKING [TIT
legacies have been satisfied and all death happened in the following case might happen
duties paid should be produced. again. In Dixon v. Muckleston (1872, L.R.
Some bankers require that the title of all 8 Ch. 155) certain earlier deeds of a farm
deeds offered as security should be investi- were pledged with a private party for a
gated by their solicitors, but there are many loan, he being informed in writing that they
cases in which a banker is dependent upon were the title deeds of the farm, and some
his own examination of the title. Where a later deeds of the farm were lodged with
banker knows his customer and is already bankers as security. It was held that the
well acquainted with the property repre- first deposit created an equitable charge,
sented by the deeds, and has (as often is the and that the owner of the prior charge had
case in country towns) a good knowledge not been guilty of negligence.
of the history of the property, knowing from It is possible that deeds may be handed to
whom it was acquired and practically all a banker as security, which are already
about it, he will, as a rule, feel satisfied, in mortgaged to some other person. If the
taking such a security, that he is quite safe. banker accepts them without any knowledge
But in the absence of such knowledge and of the mortgage, he may find that his charge
in the presence of a title which is not entirely is postponed to the party holding the legal
" plain sailing," he would not, as a rule, be estate. But under such circumstances the
justified in advancing money upon the banker would have a good right to maintain
security until he had received a report upon his claim and to sa}' that the person holding
the title from his solicitor. the .mortgage had been negligent, that he
No doubt a banker may frequently scruti- should have got the title deeds into his own
nise an ordinary simple title with quite satis- possession and not left them in the mort-
factory results, but if there is any difficulty gagor's hands.
at all, arising from mortgages, life interests, There may be exceptional cases in which
settlements or anvthing which requires a borrower desires to give a charge upon a
special knowledge to investigate, a banker property which is included in a conveyance
would be acting imprudently if he did not containing other properties in mortgage,
go to his solicitor for a report. It is quite say to Brown. If the property to be charged
possible for the property to be subject to a to the bank is not included in Brown's
mortgage, life interest or some trust, with- mortgage, the difficulty may be overcome, if
out the bundle of documents handed to the thought desirable, by the deeds being placed
banker showing any evidence thereof. A in the hands of a trusted party to hold on
solicitor's opinion in every case would be behalf of Brown as regards the property in
desirable, but, in practice, this cannot always mortgage to him, and on behalf of the
be obtained. It is well to remember that, banker for the portion upon which he has a
though a deed may appear on the face of it charge.
to be all right, it is quite possible that it may Some bankers accept deeds as security and
not be what it appears to be, and so a lay- do not take any document of charge, but, as
man is wise if he does not depend too much a rule, a banker takes either a legal mortgage
upon his own investigation of the title. The [q.v.) memorandum of deposit (q.v.).
or a
more a banker knows about the nature of the Where the security consists of houses there
documents he is dealing with the better, but should be a fire insurance policy and the
a little knowledge should not lead him to banker should see, by obtaining the receipts,
too much self-confidence. that the premiums are duly paid.
Subject to these remarks a banker must, It has been held that a deposit of title
when he has to examine a title, do the best deeds for the purpose of securing a debt,
he can. The points to be attended to will without any document of charge whatever,
vary according to the nature of the estate, is an equitable mortgage. The deeds, how-
whether freehold, leasehold, or copyhold. ever, must have been deposited expresslv
Whenever possible, a banker should as a security in order to give the banker
actually see the property which is offered a charge upon the property represented by
to him as security, for what looks verv valu- the deeds. If a borrower should contend
able on parchment may be quite the opposite that the deeds were left with the banker for
in reality. some other reason than for security, he may
If a bundle of old deeds is handed to the have much trouble to defend his claim,
banker along with the more modern ones the whereas if a memorandum of deposit is taken
old ones should not be refused, for what no such contention could be maintained.
510
TIT] DICTIONARY OF BANKING [TIT
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
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 convevance in the same condition.
of the property to be made to him. (See If the customer desires thai leeds be
Executor.) given up to a solicitor againsl paymenl 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
in the personal representatives. should be worded accordingly.
Where an agent is authorised to deposit When the title di a company's
511
— —
TITLE DEEDS. NOTES RE TITLE. If it does, has the mortgage been dis-
It is impracticable to detail all the points charged and is it with the deeds ? If
which may require attention when examining not with the deeds, it should be asked
title deeds, but the following are some of the for. It may still be a charge on the
more important of them : property. Or the mortgage may be
There should be an Abstract of 1 itle. with the deeds and not have been
The purchaser has the right to one unless reconveyed. This should be seen to,
there was a special condition in the contract as until a reconveyance is obtained the
to the contrary. The abstract ought to legal estate is outstanding. Is the
accompany the deeds, but very often it is reconveyance stamped ?
retained by the solicitor. If there have been any mortgages since
The Abstract should commence with the the last conveyance, have they all been
root of
title. A purchaser of a freehold discharged ?
entitled to a forty years' title, but
is What is the consideration ?
he may agree to accept a shorter, or the How does the amount compare with the
conditions of sale may stipulate for a consideration, say, forty years ago ?
shorter. If more, what has caused the increase ?
In leaseholds the lease should be abstracted Have houses been built ?
even if more than forty years old. If less, is that due to portions having
In enfranchised lands the abstract should been sold, or to a depreciation in the
commence with the deed of enfranchise- value of the property ?
ment. Are there any memoranda of sales indorsed
Sort the deeds in order of date. upon the deed ?
Compare with the abstract to see that all Have any sales taken place which are
are there. not indorsed upon the deed ? This is
If there are deeds on the abstract which a very frequent occurrence and most
are not deposited, there should be an misleading.
acknowledgment for production and Are the particulars of the property in the
safe custody from the person who last deed the same as in the first ab-
retains possession of them, either in stracted deed ? If not, what has caused
the purchase deed, or by a separate the difference ?
512
—— —
covenants in the deed ? For example, tain from J ones what anion nl is still owing.
is he responsible for the making or In each case an acknowledgment of the
maintenance of any roads ? notice should be obtained, if possible
Where property has passed by will and Leaseholds :
is subject to legacies, receipts for the
In addition to the abo\ points so Eai .is
legacies should be produced.
thev apply :
If the last deed is in favour, say, of the What is the length of the lease, and the
depositor's father, see copy of the
amount of the ground rent ?
testator's will. His widow may have Is the rent paid up to date ? The receipt
a life interest in the property, and should be produced. A receipt for the
should in that case join in any charge.
rent means, as a rule, that all covenants
If the deceased died intestate, the
have been observed up to date, except
widow has a life interest in one-third of where it is a peppercorn rent.
the real estate. A widower has a right
If the lessor's licence or consent in writing
for life to the rents of the real estate of
to assign or mortgage is necessarv. has
his deceased wife, if she died intestate
it been obtained ? (See Leasehold.)
and had a child by the husband and
such child was capable of inheriting. Copyholds : —
(See Intestacy.) As the customs of manors vary so much,
The legal estate of freeholds, on a death made with regard to
inquiry should be
since January 1, 1898, vests in the legal each manor.
representatives (executors or adminis- Has the customer been admitted, and is
trators) and the formal assent of those there a copy admittance, signed by the
representatives to the devisee, or a steward or deputy steward of the
conveyance from them to the devisee manor ?
in any way. The trustees of the settle- is the most satisfactory form in which
ment ought strictly to keep the deeds to obtain a security over copvholds.
m their possession, but this is not \ mortgagee can at any subsequent
always done, and the mere fact that date perfect his title by being admitted
Mary Brown has the deeds does not of as from the date of the surrender. (See
itself prove that she has power to Copyhold.)
deposit them as secuntv. Customary :
513
33— («535)
——
great difficulty when the security is to value of the metal in them is less than the
be realised, in finding anyone to take value attached to the coins by law. The
it up, if indeed anyone ever is found. Government makes a profit called " Seignior-
(See Valuation.) age " upon the coining of silver and bronze.
Insurance : Silver is legal tender only to the extent of
Is all the insurable property insured in a forty shillings, and bronze to the extent of
good office ? one shilling. (See Coinage.)
Is the last premium receipt with the TOMAN. (See Foreign Moneys-
deeds ? Persia.)
It is better that the bank's name should TONTINE POLICY. A life policy on
appear in the policy. which no bonus is payable in the event of the
In the case of leasehold property, does the death of a policy holder, such bonus only
lease stipulate that the premises must vesting on the policy maturing at the end
be insured in a particular company, and of a given period, usually fifteen or twenty
in the joint names of the lessor and years. During that term of years (the
lessee ? Tontine period) the policy will not have a
•Charge : surrender value. In the case of an ordinary
Detail or at least the principal, deeds
all, endowment assurance, the bonus additions
upon the memorandum of deposit, or are payable in the event of the death of the
the banker's legal mortgage. assured, or on such policy maturing.
If the document is signed in front of the TOT UP. To sum up figures so as to
514
TOW] DICTIONARY OF RANKING [TRA
ascertain the total, or tot as it is called, for " (1) No transfer by the Public Trustee
short. of any securities or assurance by
TOWN
CLEARING. The Town Clearing him of any land forming part of
is a section of the business of the London the trust property shall be made
Bankers' Clearing House, and includes the except under the hand and official
head offices of the clearing banks and most seal of the Public Trustee, or under
of their branches in the City. Cheques on the hand and seal of an officer of
offices included in the Town Clearing have the Public Trustee authorised in writ-
T printed on the left-hand bottom corner. ing bv him to act in that behalf either
There are two Town Clearings each day, in generally or in any particular case.
the morning and in the afternoon. (See " (2) Anv such transfer or assurance by
Clearing House.) an officer so authorised shall have
TRADE BILL. A bill drawn in connection the same effect as if the same were
with actual trade operations. The term is made bv the Public Trustee under
used to distinguish the paper from a bank hand and official seal."
his
bill or from a " kite " or " accommodation and purchases of investments are
Sales
bill" {q.v.). made only upon the written order of the
TRANSFER CERTIFICATE. In the Public Trustee.
few companies which do not issue a fresh Where registered stocks are to be trans-
certificate upon a transfer of the shares, a ferred to the Public Trustee, the deed of
transfer certificate is issued to be preserved transfer is signed by the Public Trustee.
along with the original certificate. For If there are several accounts in his name,
example, where John Brown holds ten each account is ear-marked by a name, a
certificates for one share each in the King- letter, a figure, or a combination thereof.
moor Water Companv, Ltd., and he sells The ear-marking is added to the deed of
the shares to John Jones, the company transfer in the Department of the Public
gives Jones a transfer certificate in the Trustee. The object of the car-mark is to
following form —
I do hereby certify that a
: enable the Public Trustee to identify each
deed of transfer of ten ordinary shares, etc., holding with the particular trust to which
in the Kingmoor Water Company, Ltd., it belongs. In the case of a joint account
bearing date the day of ,
in the names of the Public Trustee and
19 , from John Brown, of to another person, no ear-marking is necessary
John Jones, of , has been as the additional name is sufficient identifi-
deposited at the office of the said Company cation, but if there are two or more joint
in Carlisle, and duly registered in their accounts in the same names it is requisite
books on the dav of , to ear-mark them.
19 . Banks and other companies recognise this
Secretary. practice, and make out separate dividend
warrants for each account.
The ten
old certificates and the transfer
certificate are, of course, kept by Jones.
When a sale or transfer of registered
stock takes place, the (Iced of transfer is
TRANSFER DAYS. The Transfer Days executed by the Public Trustee. Upon a
at the Bank of England are Monday, Tues- sale, the Public Trustee requires payment
dav, Wednesday, Thursday and Friday. of the proceeds by means of a banker's
Those are the days on which transfers may draft. Upon a purchase, payment is made
be made of those stocks which are registered by the Public Trustee only when a duly
in the books of the bank. If a transfer is certified transfer, or an executed transfer
made on a Saturday a fee of 2s. 6d. is charged. with the relative certificate attached, is
(See National Debt.) delivered at the Securities Department
TRANSFER OF SECURITIES (PUBLIC of the Public Trustee Office or at a bank,
TRUSTEE). In addition to the information as may be arranged.
given under Public Trustee (q.v.) regard- In connection with the purchase or sale
ing the powers and (duties of the Public of bearer securities the Public Trustee may,
Trustee, bankers should note the somewhat upon a sale, request a banker to surrender
peculiar practice of the Department in such securities against payment of the
connection with the transfer of securities. proceeds, and, upon a purchase, may request
'
By Rule 25 of the Statutorv Rules and
• him to make payment therefor upon
Orders, 1907 :— delivery of the securities.
515
— —
19..
Description of Securities.
TRA] DICTIONARY OF BANKING [TRA
XI .
TRA] DICTIONARY OF BANKING [TRA
Country bankers are often requested to register of members "opposite the name of the
send certificates to their London office or transferor.
London agents to be handed over to a broker In the case of shares which are not fully
against cash for a specified amount. They paid, the directors of a company should
are also often requested to instruct their consider whether a proposed transferee is
agents or London office to pay cash to good for the liability upon the shares that ;
brokers in exchange for certain securities. is, if the articles give the directors power to
In either case the country banker should refuse to register an unsatisfactory person.
obtain the instructions in writing from the If the articles do not give such power the
customer, so that there may be no mis- directors cannot refuse to register a transfer.
understanding on any point. Where the Shares are very frequently transferred
request is to take up securities, the customer into a banker's name, or the names of his
should state whether payment to the broker nominees, as security for a loan or overdraft.
may be made by instalments according to When a banker, without notice of any prior
the value of the securities he delivers. equitable charge, obtains a transfer duly
Where a transfer and certificates are to be executed in his own favour and gets it
received, the customer should state whether registered, he has a legal title to the shares
a certified transfer (that is, a transfer or stock transferred by the instrument.
bearing a note by the company that the When the banker is registered as the owner
certificate is in the company's office) may be of shares which are not fully paid he becomes
accepted. liable for any calls that may be made, which
The instrument of transfer must be is not the case if he merely holds the certifi-
executed both by the transferor and trans- cate with a blank transfer, or does not
feree. When the document has been signed register a completed transfer. Though
by the transferor he hands it, with the certifi- registration is necessary to give a banker a
cate, against payment of the purchase legal title, he will, as a rule, be quite safe
money, to the transferee, who also signs it if he holds the certificate and a duly executed
and then sends the transfer and the certifi- transfer, and gives notice to the company.
cate to the company's office along with the It is necessary to give notice to the com-
company's fee for registration in order that pany, otherwise the banker may find his
the shares may be registered in his name. security postponed .to a subsequent charge.
The process is usually carried through by a In a case of fraud it is possible for another
broker. When a transfer is received for party to get registered in front of the banker
registration it must be carefully scrutinised holding the certificate. It has been held that
and the particulars of the shares be com- a foot-note upon a certificate to the effect
pared with the share register. If the instru- that it must be surrendered before a transfer
ment is correctly stamped and properly of the shares can be registered is not binding
filled up and executed, the company will, upon the company. (See Certificate.) The
before issuing a new certificate, send a notice company may probably not accept notice,
to the transferor advising him that a docu- or even acknowledge receipt of the letter
ment of transfer purporting to be signed by sending it, and it is, therefore, advisable for
him has been received and that the shares a banker to be able to prove that the notice
will, unless he replies by return (or within, was sent to the company.
say, three days) to the contrary, be regis- A trading company very often has a hen
tered in the name of the transferee. Such upon its shares for any money owing by the
a notice helps to prevent a company register- shareholders to the company, a fact which,
ing a transferee upon a forged transfer. A in some cases, may greatly affect the value of
company must, within two months after the the banker's security, unless the shares are
registration of a transfer, have the new registered in his name. (See Lien.)
certificate ready for delivery. (See Section Before registering shares in the bank's
92 of the Companies (Consolidation) Act, name, or the names of its nominees, a banker
1908, under Certificate.) naturally ascertains if there is any liability
When transfers have been passed by the upon the shares. The certificate, however,
directors and new certificates issued, they does not always show how much has been
should be filed away in such a manner that paid up per share, and the information
any one may be found at a moment's notice must be obtained from other sources.
if required. A good plan is to number each The transfer can be sent in to the company
one and to place the same number in the j
at any subsequent date for registration, and
518
—
the names of a bank's nominees, and those such transfer shall, unless the Court other-
nominees be regarded by the company as wise orders, be void. (Section 205, Com-
the actual owners of the shares and the panies (Consolidation \. 1908. t
security, with a nominal consideration of, the following circular was issued by the
say, ten shillings, the deed of transfer takes a Inland Revenue, 29th April, 1910 :—
stamp of ten shillings (see Nominal Con- " It has been brought to the notice of the
sideration), and the agreement under 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 duty.
ad valorem duty like a mortgage. (See " The Board believe that, in the majority
Section 86, s.s. 1 (d), under Mortgage.) of these cases, the mistake has been due to
A transfer must be stamped within thirty a misapprehension of the requirements of the
days after its execution, or within thirty law. They accordingly desire to make the
days from the date of its arrival in the provisions of the law which affect this matter
United Kingdom. more generally known, in order to protect
Transfers of shares relating to property those who are responsible for seeing that the
in foreign countries are, if executed in the transfers are propsrly stamped, more especi-
United Kingdom, liable to stamp duty. ally the registering officers of public com-
As to composition for stamp duty see panies and municipal corporations, from
Composition (Transfers, Shares). penalties which may be inadvertently in-
By the Stamp Act, 1891, the stamp duty, curred.
with respect to transfers of shares in cost "
Instruments of transfer are properly
book mines is : stamped with the fixed duty of 10s. when
£ s -
d - the transaction falls within one of the fol-
Transfer. Any
request or au- lowing descriptions :
thority to the purser or other (a) Vesting the property in trustees on the
officer ofany mining company, appointment of a new trustee, or
conducted on the cost book the retirement of a trustee.
system, to enter or register any (6) A transfer, as for a nominal con-
transfer of any share, or part of sideration, to a mere nominee of the
a share, in any mine, or any transferor where no beneficial interest
notice to such purser or officer in the property passes.
of any such transfer . . .006 (c) A transfer by way of security for a
or a retransfer to the original
And see Section 1 10, as follows : loan ;
"
(1) The duty upon a request or authority transferor on repayment of a loan.
to the purser or other officer of a (d) A transfer to a residuary legatee of
mining company conducted on the stock, etc., which forms part of the
cost book system to enter or register residue divisible under a will.
the transfer of any share or part of (e) A transfer to a beneficiary under a will
a share of the mine, and the duty of a specific legacy of stock, etc.
upon a notice to such purser or (/) A transfer of stock, etc., being the
officer ofany such transfer, may be property of a person dying intestate,
denoted by an adhesive stamp, to the party or parties entitled to it.
" In cases (b) and (c) a certificate setting
which is to be cancelled by the per-
son by whom the request, authority, forth the facts of the transaction, signed by
or notice is written or executed. both the transferor and the transferee,
" (2) Every person who writes or executes should be required.
" As errors are believed to occur, especially
any such request, authority, or
notice, not being duly stamped, in cases of transfers made in distributing the
and every purser or other officer of estate of a deceased person, the Board wish
any such company who in any to point out that the fixed duty does not
manner obeys, complies with, or apply to transfers made for this purpose
gives effect to any such request, except when they fall within one of the
authority, or notice, not being duly descriptions (d), (e) and (/), mentioned above.
stamped, shall incur a fine of twenty It follows therefore that any transfer of stock
, ,
520
— —
valorem duty at the rate of 10s. per cent, issued the Inland Revenue, as follows
!>v :
on the amount of the legacy, or of such part With reference to the circular to secre-
of it as is discharged bv the transfer, and taries oi Public Companies dated 29 April
this amount should be set forth in the last, the attention of tin- Board of Inland
instrument as the consideration for the Revenue has been called to the fact that
transfer. difficult v is sometimes experienced in obtain-
" Similarly if a transfer is made on a sale, ing, in the cases (b) and mentioned in the
| I
521
— —
" (2) A transferor by delivery is not liable "21. The executors or administrators of a
on the instrument. deceased sole holder of a share shall be the
" (3) A transferor by delivery who nego- only persons recognised by the company as
tiates a bill thereby warrants to his having any title to the share. In the case
immediate transferee being a holder of a share registered in the names of two or
for value that the bill is what it more holders, the survivors or survivor,
purports to be, that he has a right or the executors or administrators of the
to transfer it, and that at the time deceased survivor, shall be the only persons
522
— —
dence being produced as may from time to sary for him to indorse the cheque as well
time be required by the directors, have the as to countersign it.
right, either to be registered as a member Parties presenting cheques for encash-
in respect of the share or, instead of being ment should receive the face amount, or its
registered himself, to make such transfer of nominated equivalent in countries especially
the share as the deceased or bankrupt person mentioned upon the face of the cheque, and
could have madebut the directors shall,
; in all other countries the equivalent of the
have the same right to decline
in cither case, sterling amount at the current rate of
or suspend registration as thev would have exchange.
had in the case of a transfer of the share by In the case of doubt as to the authenticity
the deceased or bankrupt person before the of the cheque, if it is held up to the light cer-
death or bankruptcy. tain planchettes will be seen, and no cheque
" 23. A person becoming entitled to a share is genuine without them. Planchettes, it is
by reason of the death or bankruptcv of the explained, are small discs in three colours
holder shall be entitled to the same dividends embedded in the pulp of the paper at the
and other advantages to which he would be time of its manufacture.
entitled if he were the registered holder of The form of the cheque is as follows :
the share, except that he shall not, before
being registered as a member in respect of S20 American Bankers' ^Association $20
the share, be entitled in respect of it to Travellers' Cheque.
exercise any right conferred by membership Bankers' Trust Companv,
in relation to meetings of the com pan v." New York City.
(See Companies, Shares, Transfer of
No.
Shares.) Current in all parts
TRAVELLERS' CHEQUES. The system
of travellers' cheques was inaugurated by the
When countersigned below
with this signature, at any
American Bankers' Association for the use
time within two years
members, that Association,
of its it is stated,
from date to wit
having contracted with the Bankers' Trust ,
The cheques are issued in denominations Pay to the order of S20p° or its
of 810, S20, $50 and SI 00, tinted respectively
equivalent as below.
in blue, green, straw and orange.
The idea is that, if the cheques are in Countersignature
proper order, they will be cashed by bankers,
hotels and others.
According to the instructions issued bv the We hereby accept
Association :
the foregoing order
W a™
... ...
The holder may identify himself bv sign- and will pay the ,
f«f| °J
an nnted l0 be P
ing his name in ink in your presence in the same, when properly \
\
space left for that purpose upon the face of negotiated through >
523
—
of the ground, it is not treasure trove, and Per Acts 40 Vict. c. 2 & 52 Vict. c. 6.
the finder has a title to it against the whole
world except the true owner. 001706
TREASURY BILLS. These bills are issued £1,000. London, 18th Dec, 1909.
by the Treasury under 40 Vict. c. 2 for money
borrowed by the Government and form part This Treasury Bill entitles *
of the unfunded debt of the country.
or to payment of One Thousand
order
They Pounds at the Bank of England out of the
may be payable at three, or six. or nine, but
not more than twelve, months from the date Consolidated Fund of the United Kingdom
of the bill. By Section 5 the principal money on the 18th day of March, 1910.
of any Treasury bill shall be charged on and Secretary to His Majesty's Treasury.
payable out of the Consolidated Fund of the * If this blank be not ailed in, the Bill will ,be
United Kingdom. Section S says with paid to Bearer.
respect to the issue of Treasury bills the
following provisions shall have effect TREASURY BOND.
(1) : Another name for
Treasury bills shall be issued by the Bank of Exchequer Bond.
England under the authority of a warrant TREASURY NOTES. Notes issued by
from the Treasury, countersigned by the the Treasury of the United States, where they
Comptroller and Auditor-General of the re- are a legal tender. They form part of the
ceipt and issue of Her Majesty's Exchequer paper currency. The notes are mostly for
;
(2) each Treasury bill shall be' for the amount small amounts, the largest denomination
directed by the Treasury. being 81,000.
By Section 13 the Bank of England may TRIAL BALANCE. A banker usually
lend to Her Majesty upon the credit of makes a trial balance a day or so before a
1 reasury bills, any sum or sums not exceeding half-yearly balance, in order to test the
in the whole the principal sums named in
accuracy of all accounts and thus help to
such bills. The first issue of Treasury bills expedite the actual balance at the close of
was in 1877. business on the last day.
In a letter to the " Economist," Novem- TRIAL OF THE PYX.' The Pyx is a box
ber, 1909, Lord Welby explained that in which are preserved samples of the coins
Treasurybills were invented by Mr. Walter made at the Mint. A jury of the Goldsmiths'
Bagehot in 1877. The Chancellor of the Company, who are summoned by the Lord
Exchequer wished to provide certain funds Chancellor, test the coins annually (called
by an increase of the floating debt. Mr. the Trial of the Pyx) to see that the
524
TRU] DICTIONARY OF BANKING TRU
egal weight and fineness of the coins are of the sum £ of value a mist
maintained. by your paying to
TRUNKS. A Stock Exchange name for the above amount against documents for
Grand Trunk Railway of Canada stock. said goods and we have to request you to
;
TRUST DEED FOR DEBENTURES. The pass said amount with £ commission
debentures themselves may create a charge % to our debit. . These goods,
. .
upon the property of the company, or there besides being subject to your usual bankers'
mar be a separate trust deed. When there lien, are, inconsideration of the said advance,
is a trust deed the company's property, free- hereby specially hypothecated to you, and
hold and leasehold, is by it vested in the a specific lien is hereby given to vou thereon
trustees on behalf of the debenture holders, and on the proceeds thereof (the same being
and power is given therein to the trustees, from this date out of our order and disposi-
upon the occurrence of certain events, to tion) till the amount which you have paid
enter into possession and realise the pro- as an advance to us against and upon
perty for their benefit. It is much more security of same, with all interest, commis-
convenient for the debenture holders to sion and charges, be paid or discharged, we
have two or three trustees to protect their hereby admitting that such advance is made
interests,than for the debenture holders on security of the hypothecation charge and
themselves to do so. lien which we hereby create on the said
Every debenture holder lias the right (on i
goods in your favour and on the express
certain payments) to a copy of any trust condition that all rights, property and in-
deed. (See Section 102, s.s. 2, of the Com- terest to and in the said goods or proceeds
panies (Consolidation) Act, 1908, under are vested in vou as beneficial owners. We
Debenture.) further request you to send the bill of lading
Atrust deed must be registered in the in trust to upon conditions
company's register of mortgages and particu- that buyers are to make payment direct to
lars delivered to the registrar of companies. you, and, in the event of payment being
(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 madeagainst bills of lading, some banks, 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 notice from you."
to hold the goods as the bank's property, to The stamp duty is sixpence.
keep them warehoused in the name of the In Reg. v. Townshend (1884, 15 Cox, 466).
bank, and. when the goods are sold, to pay where a letter of hypothecation of goods
the proceeds to the bank. The effect of the was given by a fruit broker to his bankers,
document is to make the customer, so far in which he undertook to hold the goods in
as the goods represented by the bills of trust for the bankers and to pay over to
lading are concerned, the trustee for the them the proceeds as and when received, it
bank. was held that the letter was a bill of sale,
In such cases, a bank has to rely to a being a declaration of trust without transfer.
great extent upon the honour of his cus- (See Bill of Sale.)
tomer. If it should happen that there In In re Hamilton, Young e> Co. (1905,
should be a contra account due from the 2 K.B. 772), where a letter of hen, accom-
customer to the purchaser of his goods, the panied by bleachers' receipts for certain
purchaser would be entitled (not having any goods, was given as security, it was held
notice of the hypothecation to the bank) to that the letter was a document used in the
deduct the contra account from the purchase ordinary course of business as proof of the
price. control of goods, and therefore not a bill of
A separate account is usually opened for sale. (See Documentary Bill.)
each operation. TRUSTEE. A trustee is the person to
In some cases the document takes the whom property is intrusted in order that he
following form :"
— We
acknowledge receipt may deal with it in accordance with the
of the advance made by you to us (upon the directions given by the creator of the trust.
security and conditions hereinafter stated) The person for whose benefit a tin
525
TRU] DICTIONAKY OF BANKING ITRU
created is called the cestui que trust (plural, proved to be trust moneys, so long as the
cestuis que trustent). banker had no knowledge of the fact.
A trustee must take as much care of the In Ex parte Kingston (1871, 6 Ch. 632).
" We are not
trust property as a reasonable business man Lord Justice Mellish said :
trouble, that he was unaware that it was a that a personal benefit to the banker is stipu-
trust account. As a matter of fact, accounts lated for, it will most readily establish the
frequently are, by the express wish of cus- fact that the banker is in privity with the
tomers, opened with a direct reference to a breach of trust.
trust. When this is so the banker must be Moneys belonging to clients and paid in
careful to see that every cheque is signed by to the credit of sharebrokers' or solicitors'
all the parties who held themselves out to be accounts do not fix a banker with notice of a
trustees when the account was opened. It trust. Heber Hart says (" Law of Bank-
" Where a solicitor keeps two
is not customary to inquire if the names in ing," p. 159) :
which the account is opened are all the accounts with a banker, one under the head
trustees who were appointed in the will or office account,' and another under the head
'
526
—
Where trustees offer as security the deeds number of trustees may be increased. (Sec-
of property held by them in trust, the banker tion 10, s.s. 2.)
should ascertain from the trust deed exactly Section 17, s.s. 2 and 3, enacts :
what powers the trustees possess with regard " (2) A trustee may appoint a banker or
to charging the property. solicitor to be his agent to receive
If deeds of a trust estate are lodged as and give a discharge for any money
security, with a memorandum of deposit, payable to the trustee under or by
and the banker has no notice of the trust, the virtue of a policy of assurance, by
equitable interest of the beneficiaries will permitting the banker or solicitor
rank in front of the equitable interest of the to have the custody of and to pro-
banker. But if the banker holds a legal duce the policy of assurance with a
mortgage his claim may take priority to that receipt signed by the trustee, and a
of the beneficiaries. trustee shall not be chargeable with
If a trustee himself has a beneficial interest a breach of trust by reason only of
in a trust property, his interest is subject his having made or concurred in
to any claim that may arise through a making any such appointment.
breach of trust. " (3) Nothing in this Section shall exempt
A bank may act as sole executor under a a trustee from any liability which
will,or as trustee under a will or settlement, he would have incurred if this Act
provided that it has power to do so by its had not been passed, in case he
memorandum of association. permits any such money, valuable
By Section 10 of the Trustee Act, 1893 :— consideration, or property to remain
" (1) Where a trustee, either original or in the hands or under the control of
substituted, and whether appointed the banker or solicitor for a period
by a Court or otherwise, is dead, or longer than is reasonably necessary
remains out of the United Kingdom to enable the banker or solicitor (as
for more than twelve months, or the case may be) to pay or transfer
desires to be discharged from all or the same to the trustee."
any of the trusts or powers reposed The High Court has power to appoint new
in or conferred on him, or refuses or trustees whenever it is found inexpedient or
is unfit to act therein, or is incapable impracticable to appoint them without the
of acting therein, then the person or assistance of the Court. (Section 25.)
persons nominated for the purpose Where any moneys or securities are de-
of appointing new trustees by the posited with a banker, and the majority of
instrument, if any, creating the the trustees are desirous of paying or deliver-
trust, or if there is no such person, ing the same into Court, but the concurrence
or no such person able and willing of the others cannot be obtained, the Court
to act, then the surviving or con- may order payment or delivery to the
tinuing trustees or trustee for the majority of the trustees, for the purpose of
time being, or the personal repre- payment into Court, and the payment and
sentatives of the last surviving or delivery shall take effect as if the same had
continuing trustee, may, by writing, been made on the authority of all the trus-
appoint another person or other per- tees. (Section 42, s.s. 3.) (See Custodian
sons to be a trustee or trustees in the Trustee, Death of Trustee, Public
place of the trustee dead, remaining Trustee, Trustee Investments.)
out of the United Kingdom, desiring TRUSTEE IN BANKRUPTCY. When a
to be discharged, refusing, or being , debtor is adjudicated bankrupt, his property
unfit or being incapable, as aforesaid. shall become divisible amongst his creditors,
'
(4) The provisions of this Section relative and shall vest in a trustee. (See Adjudica-
to a trustee who is dead include the tion of Bankruptcy.) Until a trustee is
case of a person nominated trustee appointed the official receiver acts as trustee.
in a will but dying before the testa- The trustee may be appointed by the credi-
tor, and those relative to a continu- tors, or they may leave his appointment to
ing trustee include a refusing or the committee of inspection. The trustee
retiring trustee, if willing to act in must give security to the satisfaction of the
the execution of the provisions of Board of Trade, and the Board, when satis-
'
527
— : — —
The Bankruptcy Act, 1883, provides : purpose of raising money for the
Powers Trustee to Deal with Property.
of payment of his debts :
" 56. Subject to the provisions of this Act, " (6) Refer any dispute to arbitration, com-
the trustee may do all or any of the following promise all debts, claims, and lia-
things : bilities, whether present or future,
" (1) Sell all or anv part of the property of certain or contingent, liquidated or
the bankrupt (including the goodwill unliquidated, subsisting or supposed
of the business, if any, and the book to subsist betw-een the bankrupt and
debts due or growing due to the any person who may have incurred
bankrupt), by public auction or any liability to the bankrupt, on the
private contract, with power to receipt of such sums, payable at such
transfer the whole thereof to any times, and generally on such terms
person or company, or to sell the as may be agreed on :
same in parcels :
" (7) Make such compromise or other
" (2) Give receipts for any money received arrangement as may be thought
by him, which receipts shall effectu- expedient with creditors, or persons
ally discharge the person paying the claiming to be creditors, in respect
money from all responsibility in of any debts provable under the
respect of the application thereof. bankruptcy :
" (3) Prove, rank, claim, and draw a divi- " (8) Make such compromise or other ar-
dend in respect of any debt due to rangement as may be thought expe-
the bankrupt dient with respect to any claim
" (4) Exercise any powers the capacity to arising out of or incidental to the
exercise which is vested in the trustee property of the bankrupt, made or
under this Act, and execute any capable of being made on the trustee
powers of attorney, deeds, and other by any person or by the trustee on
instruments for the purpose of carry- any person :
ing into effect the provisions of this " (9) Divide in its existing form amongst
Act : the creditors, according to its esti-
" (5) Deal with any property to which the mated value, any property which
bankrupt is beneficially entitled as from its peculiar nature or other
tenant in tail in the same manner as special circumstances cannot be
the bankrupt might have dealt readily or advantageously sold.
with it. The permission given for the purposes of this
Section shall not be a general permission to-
Powers Exercisable by Trustee with Permission do all or any of the above-mentioned things,
of Committee of Inspection. but shall only be a permission to do the-
" 57. The trustee may, with the permission particular thing or things for which permis-
of the committee of inspection, do all or any sion is sought in the specified case or cases.
of the following things :
" ( Carry on the business of the bankrupt, Power to Allow Bankrupt to Manage Property.
)
1
so far as may be necessary for the "64. (1) The trustee, with the permission
beneficial winding up of the same : of the committee of inspection, may
" (2) Bring, institute, or defend any action appoint the bankrupt himself to-
or other legal proceeding relating to superintend the management of the
the property of the bankrupt : property of the bankrupt or of any
" (3) Employ a solicitor or other agent to part thereof, or to carry on the trade
take any proceedings or do any (if any) of the bankrupt for the
business which may be sanctioned benefit of his creditors, and in any
by the committee of inspection : other respect to aid in administering
" (4) Accept as the consideration for the the property in such manner and on
sale of any property of the bankrupt such terms as the trustee may
a sum of money payable at a future direct.
time subject to such stipulations
as to security and otherwise as the Allowance to Bankrupt for Maintenance of
committee think fit :
Service.
" (5) Mortgage or pledge any part of the " The trustee may from time to time,
(2)
property of the bankrupt for the with the permission of the committee-
528
TRIP DICTIONARY OF BANKING [TRU
of inspection, make such allowance payments into and out of such local
as he mav think just to the bankrupt bank as the committee may select.
out of his property for the support " Such account shall be opened and
of the bankrupt and his family, or in kept by the trustee in the name of
consideration of his services if he is the debtor's estate and any interest
;
529
34—<I535)
— — ——
" No. 340. Where the trustee is authorised "Section 1. A trustee may, unless ex-
to have an account at a local bank, he shall pressly forbidden by the instrument (if any)
forthwith pay all moneys received by him creating the trust, invest any trust funds in
in to the credit of the estate. All payments his hands, whether at the time in a state of
out shall be made by cheque payable to investment or not, in manner following, that
order, and every cheque shall have marked is to say :
least one member of the committee of in- (6) On real or heritable securities in Great
'
'
as the creditors or the committee of inspec- " (c) In the stock of |the Bank of England
tion may appoint." or the Bank of Ireland :
The trustee shall, as soon as may be, take " (rf) In India Three and a half per cent,
possession of the bankrupt's property. By stock and India Three percent, stock,
Section 50, s.s. 6 : or in any other capital stock which
" (6) Any treasurer or other officer, or any may at any time hereafter be issued
banker, attorney, or agent of a bank- by the Secretary of State in Council
rupt, shall pay and deliver to the of India under the authority of Act
trustee all money and securities in of Parliament, and charged on the
his possession or power, as such revenues of India :
officer, banker, attorney, or agent, " (e) In any securities the interest of which
which he is not by law entitled to is for the time being guaranteed by
retain as against the bankrupt or the Parliament :
trustee. If he does not he shall be " (/) In consolidated stock created by the
guilty of a contempt of Court, and Metropolitan Board of Works, or by
530
TRU] DICTIONARY OF BANKING [TRU
the London County Council, or in Parliament or by Royal Charter,
debenture stock created bv the and having during each of the ten
receiver for the Metropolitan Police years last past before the date of
District : investment paid a dividend of not
(g) In the debenture or rent charge, or less than five pounds per centum on
guaranteed or preference stock of its ordinary stock :
any railway company in Great " (»i) In nominal or inscribed stock issued,
Britain or Ireland incorporated by or to be issued, by the corporation
special Act of Parliament, and hav- of any municipal borough having,
ing during each of the ten years last according to the returns of the last
past before the date of investment census prior to the date of invest-
paid a dividend at the rate of not ment, a population exceeding fifty
less than three per centum per thousand, or by any countv council,
annum on its ordinary stock : under the authority of anv Act of
(h) In the stock of any railway or canal Parliament or Provisional Order :
company in Great Britain or Ireland " (n) In nominal or inscribed stock issued
whose undertaking is leased in per- or to be issued by any commissioners
petuity or for a term of not less than incorporated by Act of Parliament
two hundred years at a fixed rental for the purpose of supplying water,
to any such railway company as is and having a compulsory power of
mentioned in sub-section (g), either levying rates over an area having,
alone or jointly with any other according to the returns of the last
railway company : census prior to the date of invest-
(i) In the debenture stock of anv railwav ment, a population exceeding fifty
company in India the interest on thousand, provided that during each
which is paid or guaranteed by the of the ten years last past before the
Secretary of State in Council of date of investment the rates levied
India : by such commissioners shall not have
1
(/) In the " B " annuities of the Eastern exceeded eighty per centum of the
Bengal, the East Indian, and the amount authorised bv law to be
Scinde Punjaub and Delhi Railways, levied :
and any like annuities which may " (o) In any of the stocks, funds, or se-
at any time hereafter be created on curities for the time being author-
the purchase of any other railway ised for the investment of cash
by the Secretary of State in Council under the control or subject to the
of India, and charged on the re- order of the High Court,
venues of India, and which may be and may also from time to time vary any-
authorised by Act of Parliament to such investment.
be accepted by trustees in lieu of " 2. (1) A trustee may under the powers
any stock held by them in the pur- of this Act invest in any of the
chased railway ; also in deferred securities mentioned or referred to
annuities comprised in the register in Section one of this Act, notwith-
of holders of annuity Class D and standing that the same may be
annuities comprised in the register redeemable, and that the price
of annuitants Class C. of the East exceeds the redemption value.
Indian Railway Company :
•'
(2) Provided that a trustee may not under
(k) In the stock of any railway company the powers of this Act purchase at a
in India upon which a fixed or price exceeding its redemption value
minimum dividend in sterling is paid any stock mentioned or referred to
or guaranteed by the Secretary of in sub-sections [g), (i), (A), ([), and (m)
State in Council of India, or upon the of Section one, which is liable to be
capital of which the interest is so redeemed within fifteen years of the
guaranteed : date of purchase at par or at some
(/) In the debenture or guaranteed or other fixed rate, or purchase any
preference stock of any company in such stock as is mentioned or referred
i
treat Britain or Ireland, established to in the sub-sections aforesaid,
for the supply of water for profit, and which is liable to be redeemed at par
incorporated by special Act of or at some other fixed rate, at a price
531
—
532
TUR] DICTIONARY OF BANKING [UNC
A depositor must not have a deposit in any contracts arc classified as those of uberrima
other savings bank in Great Britain or Ire- fidei.
land. The rate of interest is fixed at 2\ per ULTRA VIRES. That is, beyond the
cent, per annum. powers. The expression is often used in
The trustees must pay all money belong- connection with the borrowing powers of a
ing to the bank into the Bank of England or company. If the directors have power,
Ireland in the names of the Commissioners under the memorandum and articles of
for the Reduction of the National Debt, and association, to borrow up to a certain fixed
no sums whatever shall be deposited with amount, it is of vital importance that a
any banker except such sums as shall neces- banker, who contemplates a loan to the
sarily remain in the treasurer's hands to company, should see that, before granting
answer the exigencies of the business. the loan, the directors are not acting ultra
Weekly returns must be sent to the Com- vires, that is, that they are not exceeding
missioners for the Reduction of the National or going beyond their powers. The directors
Debt, showing the amounts of the week's are hedged in by the memorandum of
transactions and the balance remaining in association and beyond that hedge they
the treasurer's hands. cannot go. Intra vires means within the
A bank manager is frequently the trea- powers given in the memorandum.
surer of a savings bank. UNCALLED CAPITAL. The capital of a
In the case of the death of a depositor company may be either fully, or only partly,
whose account does not exceed /100, if the called up. The part which has not been
will is not proved or letters of administration called up is the uncalled capital. The
taken out within two months from the de- uncalled capital may consist of a portion
positor's death, the trustees may pay the which may be called up by the directors of
money to the persons who shall appear to be the company, as required, and also, as in the
entitled to it according to the Statute of case of a banking company which has adopted
Distributions. certain provisions of the Companies Acts, of
Trustee savings banks are now over- a portion which constitutes a reserve liability
shadowed to a considerable extent by the and is not capable of being called up except
Post Office Savings Bank. in the event and for the purposes of the
TURN OF THE MARKET. On the company being wound up. (See Reserve
Stock Exchange, a jobber is prepared to buy Liability.)
at one price and to sell at a higher, the When debentures are issued by a com-
difference between the two prices being pany they usually include a charge upon the
termed the " turn of the market " or the uncalled capital. Such a charge does not
"jobber's turn," and constituting the source prevent the directors of the company making
of his profits. calls upon the shareholders as may be
TURN-OVER. The amount of money required for the purposes of the business.
turned over in a business within a specified Although the uncalled capital may have
period. The turn-over in a customer's been a considerable item when first the
current account for a half-year is the amount debentures were issued, it may have shrunk
which passes through the account. A to a very small figure, or vanished alto-
banker usually takes, as the turn-over, the gether, by the time the debentures are
total of the debit column, less the balance required to be paid.
brought forward, if a debit one, or the balance In certain cases uncalled capital may be
to be carried forward, if a credit one that ; specially assigned or hypothecated. When
is,the total of the actual amount drawn out this is done each shareholder should be
of the account. served with notice that the unpaid capital
TWOPENCE. A silver coin of that must be paid only to the person to whom it
denomination is now only issued as Maundv has been assigned. (See Capital.)
Money (</.;'.). Its standard weight is UNCLAIMED BALANCES. The credit
14\S4545 grains troy. (See Coinage.) balances of accounts which have not been
operated upon for a long time, by the per-
UBERRIMA FIDEI.
(Latin, of the sons in whose names the accounts stand in
utmost good In the case of certain
faith.) the books of the bank. According to tin-
contracts, especially those of insurance, it is Statute of Limitations a dormant balance
essential that there should be the most com- cannot, apparently, be claimed after the
plete disclosure of all material facts. Such expiration of six years, but no banker would
533
—
ever think of taking advantage of the paid does not exceed the amount or
statute. With regard to the proposals rate so authorised, and if the
recently made that an Act should be passed amount or rate per cent, of the
making it compulsory upon bankers to hand commission paid or agreed to be paid
over to the Public Trustee all credit balances is
six years, the " Bankers' Magazine " pointed " (6) In the case of shares not
out in August, 1908, that " so long as the offered to the public for
Statute of Limitations is part of the law of subscription, disclosed in the
the land, all legal right to insist on payment statement in lieu of pros-
of a balance unclaimed for six years is gone, pectus, or in a statement in
and there can be no justification for calling the prescribed form signed
on a banker to hand over to a third party in like manner
as a state-
the amount of a debt which he is under no ment in lieu of prospectus
legal obligation to pay to the interested and filed with the registrar
party himself." If the statute does not of companies,and, where
begin to run until a cheque is presented and a or notice, not
circular
dishonoured, " the banker's liability to the being a prospectus, inviting
customer is still existent, and there is here subscription for the shares
also no justification for asking the banks to is issued, also disclosed in
hand over the money to a third party, that circular or notice.
seeing that at any time the banker may be " (2) Save as aforesaid, no company shall
called upon to pay the amount to the apply any of its shares or capital
customer himself." money either directly or indirectly
UNDERWRITING. An
underwriter is a in payment
of any commission,
person who, when an issue of shares is being discount, or allowance, to any person
made by a company, agrees, in consideration in consideration of his subscribing or
of a certain commission, to apply for, or find agreeing to subscribe, whether abso-
someone else to apply for, a certain number lutely or conditionally, for any
or all of the shares which are not applied shares of the company, or procuring
for by the public. An underwriter should, or agreeing to procure subscriptions,
of course, be financially able to fulfil his whether absolute or conditional, for
agreement if necessary. If the shares are any shares in the company, whether
not favoured by the public, the underwriters the shares or money be so applied
may be saddled with a heavy weight of them, by being added to the purchase
whereas if the issue is eagerly taken up they money of any property acquired by
may receive the commission without having the company or to the contract
to apply for any shares at all. price of any work to be executed
An agreement, under hand, to underwrite for the company, or the money be
requires a sixpenny stamp. If under seal paid out of the nominal purchase
the duty is ten shillings. money or contract price, or
The provisions of the Companies (Con- otherwise.
solidation) Act, 1908, are as follow : — " (3) Nothing in this Section shall affect the
" 89. (1) Itshall be lawful for acompany power of any company to pay such
to pay a commission to any person brokerage as it has heretofore been
in consideration of his subscribing or lawful for a company to pay, and a
agreeing to subscribe, whether abso- vendor to, promoter of, or other
lutely or conditionally, for any person who receives payment in
shares in the company, or procuring money or shares from, a company
or agreeing to procure subscriptions, shall have and shall be deemed
whether absolute or conditional, always to have had power to apply
for any shares in the company, if any part of the money or shares so
the payment of the commission is received in payment of any com-
authorised by the articles, and the mission, the payment of which, if
commission paid or agreed to be made directly by the company,
534
UND] DICTIONARY OF BANKING [UND
imposed by the Finance (1909-10) Act, 1910 where it is so used under an agreement
(Section 16), and payable for the year ending with the owner which, as originally
March 31, 1910, and every subsequent year, made, could not be determined for a
in respect of the site value of undeveloped period of at least five years.
land, of one halfpenny for every twenty Land not exceeding an acre occupied
shillings of that site value. together with a dwelling-house, or
Land is deemed to be undeveloped if it land being gardens so occupied when
has not been developed by the erection of the site value of the gardens and the
dwelling-houses or of buildings for the pur- house does not exceed twenty times
poses of any business, trade, or industry the annual value of the gardens and
other than agriculture, or is not otherwise house as adopted for the purpose of
used bond fide for any business, trade, or income tax under Schedule A. (This
industry other than agriculture. exemption shall not apply so as to
Where land has been so developed or used exempt more than 5 acres. Where
and the buildings become derelict or the land there are more than 5 acres the
not used for those purposes, it shall, on the Commissioners shall determine which
expiration of one year from the time the five are to be exempted.)
buildings became derelict or the land not so Where agricultural land is held under
used, be treated as undeveloped land. a tenancy created by a lease or agree-
Where, with a view to land being deve- ment made before April 30, 1909, no
loped, an expenditure on roads or sewers duty is to be charged on the site value
has been incurred, the land shall, to the during the original term of the lease
extent of one acre for every £100 of that or agreement while the tenancy
expenditure, be treated as developed land continues thereunder.
(unless ten years have elapsed since the Agricultural land, occupied and culti-
date of the expenditure). vated by the owner, where the total
Where increment value duty has been paid value of all land belonging to the
in respect of any undeveloped land, the site s.i me owner does not exceed £500.
value shall, for the purposes of assessment (" Owner " includes a person who
for the undeveloped land duty, be reduced holds land under a lease originally
by a sum equal to five times the amount granted for fifty years or more.)
paid as increment value duty. Land held for charitable purposes.
Undeveloped land does not include Land whilst it is held by a statutory
minerals. company for the purposes of the
Section 28 enacts, that the Commissioners undertaking and which cannot be
shall, for the purpose of obtaining a periodi- appropriated excepl 1<> those pur-
cal valuation, cause a valuation to be made poses. (Statutory company means
of undeveloped land, in 1914 and in every any railway, canal, dock, or water
subsequent fifth year. company.)
535
— :
(q.v.). In each case the principal is repay- ceived nor to state a consideration.
'
able by the Government, but in the operation "4. Usances shall be abolished.
of " funding the unfunded debt," the "5. It is desirable that the validity of a
principal becomes no longer repayable, and, Bill of Exchange should not be
instead, there is created the right to receive affected by the absence or insuffi-
interest in perpetuity on the amount. The ciency of a stamp.
right to this interest, or annuity, may be "6. A Bill of Exchange shall be deemed
sold, and has practically the same effect as negotiable to order, unless restricted
selling so much stock. words on the face of the
in express
UNIFICATION OF LAWS OF BILLS instrument or on an indorsement.
OF EXCHANGE. The laws relating to "7. The making of a Bill of Exchange to
bills of exchange vary considerably in bearer shall be allowed.
different countries, and though it may be A Bill of Exchange shall be negotiable
impossible to make one international law by blank indorsement.
to cover all the existing differences between The Bill of Exchange shall not be
nations, much mav no doubt be done, invalid by reason that it is not dated
particularly with regard to cheques, in the or does not specify the place where
direction of greater uniformity. it is drawn or the place where it is
Various rules relating to bills of exchange payable.
were recommended at the Budapest Con- " 10 The rule of law of distantia loci shall
ference of the International Law Associa- not apply to Bills of Exchange.
tion, on September 24th, 1908 and at the;
" 11 The mere fact that the Bill of Ex-
London Conference of the same Association, change was overdue at the time of
in 1910, seven rules with regard to cheques an indorsement shall not affect the
were recommended for adoption by all character of this indorsement as such.
nations, and these rules as to cheques are " 12 The acceptance of a Bill of Exchange
to be laid before the Hague Conference in must be in writing on the bill itself.
1911. The recommendations would mean The signature of the drawee (without
the adoption by foreign countries of several additional words) shall constitute
particulars of British practice, whilst at the acceptance, if written on the face of
same time necessitating conformitv in this the bill.
country with some foreign requirements. " 13 . The drawee may accept for a less
It is not to be expected, however, that all sum than the amount of the bill
the suggested rules will find favour either anv other restriction should be
with the bankers or the traders in this equivalent to refusal.
country. " 14 In case of dishonour for non-accept-
The rules which have been recommended ance or for conditional acceptance,
are as follows :
the holder shall have an immediate
Adopted at the Budapest Conference, right of action against the drawer,
1908 :— the indorsers, and any other parties
"1. The capacity to contract by means liable, for payment of the amount of
of a Bill of Exchange shall be deter- the bill and expenses, less discount.
mined by the general capacity to " 15 Where an acceptance is written on a
enter into a contract but a person,
; bill, and the drawee has parted with
although incapable of binding him- the possession of it or has given
self by such a contract in his own written notice to, or according to
country, shall also be bound if he is the directions of, the person entitled
capable of so binding himself under to the bill, that he has accepted it,
the law of the countrv in which he the cancellation of the acceptance
contracts. shall be of no effect.
" 2. To constitute a Bill of Exchange it " 16 Where the acceptor shall have com-
shall be necessary to insert on the mitted an act of bankruptcy before
face of the instrument the words due date, the holder shall have an
536
UNI] DICTIONARY OF BANKING [UNI
the extent of the loss or damage " 2. A cheque shall be payable on demand
caused by the want of such notice. only and shall be dated.
2t> The time within which protest must "3. It shall not be obligatory to write the
be made shall be extended in the day of date all in letters nor to have
case of vis maior during the time of it written by the hand of the writer
537
UNI] DICTIONARY OF BANKING [VAL
UNIT OF VALUE. The coin in any Brown, " to the use of John Brown in trust
country by which the value of all the other for John Jones," Brown has the legal estate
coins are measured. The monetary unit, or and Jones the beneficial interest if, how-
;
unit of value, in this country is the sovereign, ever, the conveyance is "to John Brown
in France it is the franc, in India the rupee, to the use of John Jones," Jones takes the
and in the United States the dollar. (See legal estate.
Foreign Moneys.) USURY. An exorbitant rate of interest
UNLIMITED COMPANY. (See Company- charged by money lenders. Where proceed-
Unlimited.) ings are taken by a money lender for the
UNUSED STAMPS. USELESS STAMPS. recovery of monev lent the Court may, upon
(See Spoiled Stamps.) evidence, decide that the interest charged
URBAN DISTRICT COUNCIL. The in respect of the sum actually lent is exces-
Public Health Act, 1875, provides that the sive, and may relieve the person sued from
Treasurer is to keep a separate account payment of any sum in excess of the sum
called the " District Fund Account " of all adjudged by the Court to be fairly due in
moneys carried to the account of the Dis- respect of principal, interest and charges.
trict Fund, and such moneys are to be (See Money Lender.)
applied by the Urban Authority in defraying
such of the expenses chargeable thereon VALUATION. In endeavouring to arrive
under the Act as they may think proper. at the value of a property for the purpose of
Orders drawn upon the Treasurer are granting a loan thereon, it is necessary to
usually signed by three members of the ascertain as nearly as possible what it would
Council and countersigned by the clerk. A be likely to sell for at the present moment.
banker should be furnished with a copy of a It may be expected that the land will, from
resolution by the Council as to the manner various causes, probably increase in value
in which orders are to be signed and with within a few years, but a banker does not
specimens of all necessary signatures. Per lend money upon a prospective value but
i
procuration indorsements are not accepted. upon its present value. Having ascer-
1
The Treasurer must keep an account in tained what may safely be regarded as its
the prescribed form of all moneys received present sale value, a banker then considers
and paid by him on behalf of the Council, to what extent of that value he should
and must balance and sign the account advance. Mortgagees do not, as a rule,
quarterly, or at such other times as may be advance more than two-thirds of the value,
directed by the Council. and in some cases, owing to the particular
With regard to the borrowing powers of nature of the property or the position of the
the Council, reference should be made to the borrower, not more than one-half its value.
Statute under which a power to borrow is Though bankers may wisely, and for safety,
I
obtained, so as to ascertain the extent of the be guided by the practice of ordinary mort-
power, and whether the sanction of the gagees when advancing upon properties,
Local Government Board or other authority there are frequently, with bankers, other
i
538
— —
outgoings in order to fine! the net income. 7 J- per cent, or 10 per cent, of the rent.
Having ascertained the net income, that 10 per cent, will probably be sufficient for
amount must, to arrive at the capital value, repairs.
be multiplied by the number of years pur- In an agricultural estate the rent of
chase which is customary the district
in farms, fields, cottages, woods, etc., should
on a sale of a similar property. If, for be ascertained to find the gross rental, and
example, cottage property sells, as a rule, in all outgoings such as repairs, taxes, insur-
a certain district at ten years' purchase it is ance, tithe rent-charges, etc., should be
clear that if a banker, after having ascer- deducted therefrom to arrive at the net
tained the net income, assessed its value on income. Questions which may arise are :
a twenty years' purchase, and lent two- Is the rent a reasonable one, and can the
thirds thereon, he would, when he required tenant by cultivating the land pay the rent
to realise, find himself in an uncomfortable and liveupon the profit which remains ?
position, e.g. a prudent banker would say How does the rent compare with adjacent
Income £30 properties ? What sort of land is it, is it
10 years' purchase. poor, clayey soil, or bog-land, or steep
difficult land to cultivate, or good loam soil
300 capable of good results ? What buildings
Advance two-thirds =200 are there on the land, and are they suitable
for a farmer ? In what state of repair are
Margin =£100 they ? Is there a good and satisfactory
water supply ? Is the supply from a river
But if a banker (forgetting local circum- or from wells ? How is the property situ-
stances) estimated the value on a twenty ated with regard to a railway ? How far
years' purchase, which he knows to be the off is the station ? What is the distance
custom in some other district, his figures from the nearest market town ? (Land
would be near a town is much more valuable than
Income £30 when far removed.) Is there any timber
20 vears' purchase. upon the land ? Are the buildings, hedges
and fences in a good state of repair ?
600 These, and other questions which would be
Advance two-thirds =400 sure to arise, should be considered when
examining the figures representing the gross
Margin =£200 income. With regard to repairs, if the
propertv is not in good order a sum suffi-
The property on a sale would, of course cient to put it into repair must be deducted,
(other things being equal), realise only what as well as a sum estimated as being necessary
is usual in the district, namely ten years' yearly to preserve the property in good
purchase on the net income, £300. The condition.
banker therefore who advanced the £200 If the property is leasehold the ground
would easily get his money back, but the rent, length of term, and covenants must be
banker who lent £400 would have to look taken into account. If the term is a short
elsewhere for £100. one the value will diminish as the date of
Even where house property is usually the expiry approaches.
saleable at about twenty years' purchase, a If the propertv is copyhold what fines and
banker should for safetv base his valuation fees are payable ? Are fines payable upon
on, say, a fifteen years' purchase. There is the death of the lord or upon the death of
usuallv a considerable difference between the tenant ? or are they payable upon the
the price paid for a property and what is death both of the lord and tenant ? Is
obtainable on a forced sale. there a heriot (i.e. a tribute of the best
If the rent of a house is, say, £30 per beast or other chattel) payable to the lord ?
annum, a deduction of, say, 10 per cent, for The expression " years' purchase " means
repairs and 5 per cent, for collection of rents, the number of years net income which should
etc., should be made in order to obtain the be paid in order to produce a certain rate
net rental. per cent. The number of years is found by
In the case of tenement property where dividing 100 by the rate per cent, of interest
the rents are collected weekly, the charge which is required. For example, if an
for rent collection, etc., should be put at tmenl is required to yield 5 per cent..
539
— —— —
.
.
The following are a few simple calculations VALUE IN ACCOUNT. A foreign bill
in connection with investments : often terminates with such words as " value
1. To find the price at which £100 stock in account." " winch place to account .is
bearing 5 per cent, interest must be bought advised," or " which place to account with
to yield, sav, 4 per cent. : or without advice." The words are merely
£100 a communication between the drawer and
5 the acceptor, and do not affect a banker.
VALUE RECEIVED. The last words in
4)500
the body of a bill are very frequently " value
£125
received," but they are not necessary to the
That is,multiply the amount by the rate validity of an inland bill, as it is always
of interest it bears, and divide by the rate implied in a bill of exchange that value has
of interest required. been received. The words should appear on
2. To find what interest £100 stock, bearing
a foreign bill.
interest at 5 per cent., will yield when VALUEDPOLICY. (See Marine In-
bought at a certain price, say, £"150 :
surance Policy.)
£100 VALUER. (See Appraiser.)
5 VENDOR'S SHARES. Where a private
150)500 business is converted into a limited com-
£3 6s. 8d. pany, the vendor may receive shares instead
of cash, in payment of the purchase price.
That is, multiply the nominal amount of
stock by the interest it bears and divide by
The vendor's shares may rank along with the
ordinary shares, or they may form the
the price to be paid for it.
divide subject of special agreement as to dividend.
3. In the purchase of property,
VESTED REMAINDER. (See Remain-
£100 bv the number of years' purchase to be
der.)
paid, to find the rate per cent, which the
investment will yield. The " years' pur- VISE. (French, seen.) When a passport
is to be used in, say, Russia or Turkey, it is
chase " equals the rent multiplied by the
necessary that the intending traveller to
number of years required to make the
I
those countries should get the document
purchase price.
officially indorsed at the Russian or Turkish
4. To find the number of years' purchase to
Consulate in London.
give in order to obtain a certain rate per
cent., divide 100 by the rate per cent. To To vise a passport is therefore to examine
and indorse it. (See Passport.)
pav 5 per cent, the number of years would
be twenty thus — :
VOLUNTARY LIQUIDATION. VOLUN-
Rent /in TARY WINDING UP. (See Winding up
Voluntarily.)
20
VOTES. The articles of association of a
Price £200
companv should be perused when informa-
5. Where a property has been purchased tion is required respecting the voting power
for, say, £1,000, and the rent is £50 per In the case of a company to
of members.
annum, divide the rent into the price
which the regulations in Table A apply (see
.
30) —
1,000
20
Section 1 1 of the Companies (Consolidation)
Act, 1908, under Articles of Association)
and the quotient is the number of years' the rules are as follow :
purchase which has been paid. Twenty "60. On a show of hands every member
years' purchase equals 5 per cent, (see No. present in person shall have one vote. On
3, above). (See Advances, Title Deeds.) a poll every member shall have one vote for
VALUE. The value of money, or of any each share of which he is the holder.
other commodity, is what it can be ex- " 61. In the case of joint holders the vote
changed for. It has no value if it cannot of the senior who tenders a vote whether in ,
other amount or commodit}', but in a country be determined by the order in which the
where bank notes are unknown it would have names stand in the register of members.
no value. Intrinsic value is an erroneous " 62. A member of unsound mind, or in
expression. respect of whom an order has been made by
541
— —
542
9 —
i
WAS] DICTIONARY OF BANKING [WEI
WASTE BOOK. WASTE SHEETS. In the company to provide such a fund. The
the waste book the various transactions Court of Appeal have held " that there is no
which occur in a bank office during the day law to prevent a company from sinking its
are entered and split up under different capital in the purchase of a property pro-
headings. For example, if a customer pays ducing income, and dividing that income
in to his credit an amount consisting of cash without making provision for keeping up the
and cheques, the full sum is entered in the value of the capital, and that fixed capital
" credit current accounts " column on the may be sunk and lost and yet the excess of
" cash out " side, and on the opposite side current receipts over current expenses may
of the book, the "cash in" side, the credit be applied in payment of a dividend, though
is analysed, gold, silver and notes being where the income of a company arises from
placed in separate columns, and the cheques the turning over of circulating capital, no
being separated, e.g. in a country bank, into dividend can be paid unless the circulating
columns for London, local, head office, capital is kept up to its original value, as
country, own cheques, or such divisions as otherwise there would be a payment out of
are considered necessary. capital." [Verner v. General and Commercial
Similarly, if a cheque is cashed over the Investment Trust, 1894, 2 Ch. 239.)
counter, the cheque is entered in the correct A patent worked by a company is a wasting
column on the " cash in " side and particulars asset, and as it can only, as a rule, be kept
of the kind of cash paid away are extended alive by payment of certain fees for fourteen
on the " cash out " side. years, that period is called the life of the
At the end of the day the combined totals patent.
of the one side will agree with the combined WATERED CAPITAL. WATERED
totals of the other side. STOCK. The
stock, or capital, of a company
The waste book may be planned so as is said to be " watered " when it is added to, or
to balance with, and act as a check upon, increased, by way of paper entries only, or
the day book and the various outward when further shares are issued without any
remittances, etc. The columns ahd method provision being made to provide interest
of keeping the book vary somewhat in thereon. For example, if a company with
different banks. 1,000 shares on which it pays 10 per cent,
Instead of a book some banks, for con- increases the number to 2,000, the interest
venience, use loose sheets, called waste on the 2,000 will only be 5 per cent., unless
sheets, the sheets being bound up into book arrangements are made to provide more
form at intervals. interest.
WASTING ASSETS. Assets, such as WEIGHT-NOTE. A document issued by
mines or quarries, which become used up some dock companies giving the weight of
in course of time by working them. A certain goods in their possession, and stating
mine, for example, which is being steadily the amount of the purchase money which is
worked will become less valuable year by owing. The possessor of the weight-note is
year as the mineral is extracted. To meet entitled to the warrant for the goods upon
this depreciation in the value of the pro- complying with the conditions of sale and
perty, a certain sum should be provided out paying the balance of the purchase money as
of each year's profits. Although it is a expressed on the weight-note on or before the
prudent and usual course for a company to expiration of the time for payment of the
adopt, there is, however, no obligation upon purchase money.
Rods= =4
Chain.
1
544
WES, DICTIONARY OF BANKING [WIL
Surface.
Square Measure.
144 Sq. Inches = 1 Square Foot.
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.
27 cubic feet = 1 cubic yard.
Troy Weight.
1 7 grains = 1 carat.
24 ,, =1 pennyweight (dwt.).
20 pennyweights = 1 ounce.
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.
Paper Measure.
24 Sheets =1 Quire.
25 ,, =1 Printer's Quire.
20 Quires =1 Ream.
2H =1 Printer's Ream.
,,
2 Reams = 1 Bundle.
10 1 Bale.
545
35—(153=0
— —
official copy of the will issued by the regis- " (ii) voluntary or ;
trar of the registry where the will is proved. " subject to the supervision
iiii)
any winding up subject to " (2) After five years from the dissolution
supervision, with the sanc- of the company no responsibility
tion of the Court ; and shall rest on the company, or the
" (< in the case of a voluntary
)
liquidators, or any person to whom
winding up, with the sanc- the custody of the books and papers
tion of an extraordinary has been committed, by reason of
resolution of the company, the same not being forthcoming to
do the following things or any of any person claiming to be interested
them : therein."
" (i) Pav any classes of creditors in If a liquidator has any moneys repre-
full ;
senting unclaimed or undistributed assets
" (ii) Make any compromise or of the company which have remained in his
arrangement with creditors hands for six months after the date of their
or persons claiming to be receipt, he shall pay the same to the Com-
creditors, or having or al- panies Liquidation Account at the Bank of
leging themselves to have England. Any person claiming to be en-
any claim, present or future, titled to any of such moneys may applv to
certain or contingent, ascer- the Board of Trade for payment of the same.
tained or sounding only in Companies Liquidation Account Define:/.
damages against the com-
pany, or whereby the com-
229. (1) An
account, called the Com-
panies Liquidation Account, shall
pany may be rendered liable
"
;
be kept by the Board of Trade with
(hi) Compromise all calls and
the Bank of England, and all moneys
liabilities to calls, debts, and
received by the Board in respect of
liabilities capable of result-
proceedings under this Act in con-
ing in debts, and all claims,
nection with the winding up of
present or future, certain or
companies in England shall be paid
contingent, ascertained or
to that account.
sounding only in damages,
subsisting or supposed to
" (2 1
All payments out of money standing
to the credit of the Board of Trade
subsist between the com-
in the Companies Liquidation Ac-
pany and a contributory,
count shall be made bv the Bank of
or alleged contributory, or
England in the prescribed manner.
other debtor or person ap-
prehending liability to the Investment of Surplus Funds on Gen
company, and all questions Account.
in any way relating to or " -M). (1) Whenever the cash balance
affecting the assets or the standing to the credit of the Com-
winding up of the company, panies Liquidation Account is in
on such terms as may be excess of the amount which in the
agreed, and take any se- opinion of the Board of Trade is
curity for the discharge of required for the time being to answer
any such call, debt, liability demands in respect of compan
or claim, and give a com- estates, the Board shall notify the
plete discharge in respect excess to the [reasury, and shall pay
thereof. over the whole or any part of that
S47
— — —
excess as the Treasury may require, this Section shall be paid to thecredit
to the Treasury, to such account as of the company.
the Treasury ma}' direct, and the " (4) When the balance at the credit of any
Treasury mav invest the sums paid company's account in the hands of
over, or any part thereof, in Govern- the Board of Trade exceeds two
ment securities, to be placed to the thousand pounds, and the liquidator
credit of the said account. gives notice to the Board that the
" (2) When any part of the money so in- excess is not required for the pur-
vested is, in the opinion of the Board poses of the liquidation, the com-
of Trade, required to answer any pany shall be entitled to interest
demands in respect of companies' on the excess at the rate of two per
estates, the Board shall notify to the cent, per annum." (See Companies.)
Treasury the amount so required, WINDING UP BY THE COURT. A
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 Where the paid-up capital does not exceed
Companies Liquidation Account, and /l 0,000 proceedings for a winding up may
for that purpose mav direct the sale be taken in the County Court, unless the
of such part of the said securities Lord Chancellor has excluded it from having
as may be necessary. jurisdiction. The Metropolitan County
" (3) The dividends on investments under Courts are not included, as they have no
this Section shall be paid to such jurisdiction in winding up. Where the
account as the Treasury mav direct, capital exceeds ^10,000, proceedings must
and regard shall be had to the be taken in the High Court, or, if the regis-
amount thus derived in fixing the tered office of the company is situated within
fees payable in respect of proceed- the jurisdiction of the Chancery Courts of
ings in the winding up of companies the Counties Palatine of Lancaster and Dur-
in England. ham, in the Palatine Court or High Court.
Section 129 of the Companies (Con-
Separate Accounts of Particular Estates.
solidation) Act, 1908, details the circum-
"231. (1) An account shall be kept by the stances in which a company may be wound
Board of Trade of the receipts and up by the Court :
opinion of the committee of inspec- " (ii) if default is made in fifing the statu-
tion, is required for the time being tory report or in holding the
to answer demands in respect of that statutory meeting :
company's estate, the Board shall, " (iii) if the company does not commence
on the request of the committee, its business within a year from its
invest the amount not so required incorporation, or suspends its busi-
in Government securities, to be ness for a whole year :
placed to the credit of the said " (iv) if the number of members is reduced,
account for the benefit of the in the case of a private company,
company. below two, or, in the case of any
" (2) When any part of the money so in- other company, below seven :
vested is, in the opinion of the com- " (v) if the company is unable to pay its
mittee of inspection, required to debts :
548
— — — —
(1) An
" (iii) if, in Scotland, the induciaa of a unregistered company shall, for
charge for payment on an extract the purpose of determining the Court h,i\ ing
decree, or an extract registered bond, jurisdiction in the matter of winding up.
or an extract registered protest be deemed to be registered where its
have expired without payment being principal place of business is situate.
made or ; (2) No unregistered company shall be-
" (iv) if it is proved to the satisfaction of wound up under this Act voluntarily or
the Court that the company is subject to supervision.
unable to pay its debts, and, in (3) The circumstances in which an un-
determining whether a company is registered company may be wound up are as
unable to pay its debts, the Court follows (that is to say) :
shall take into account the contin- (a) It the company is dissolved, or has
gent and prospective liabilities of ceased to carry on business, or is
the company." (See Companies, carrying on business only for the
Winding Up purpose of winding up its affairs ;
voluntary liquidation the Court may make (c) If the Court is of opinion that it is-.
an order that it shall continue but subject just and equitable that the company
to the supervision of the Court. should be wound up.
The Companies (Consolidation) Act, 1908, Section 268, s s. 6, provides that :
provides :
'
A winding up a trustee
petition for
"Section 199. When a company has by savings bank may be presented by the
special or extraordinary resolution resolved National Debt Commissioners, or by a
to wind up voluntarily, the Court may make commissioner appointed under the Trustee-
an order that the voluntary winding up shall Savings Banks Act, 1S87, as well as by any
continue but subject to such supervision person authorised under the other pro-
of the Court, and with such liberty for visions of this Act to present a petition for
creditors, contributories, or others to apply winding up a company." (See COMPANIES.)
to the Court, and generally on such terms WINDING UP VOLUNTARILY. A volun-
and conditions as the Court thinks just. tary winding up, or liquidation, is one which
21 The Court mav, in deciding between
1 1 . is brought about by the resolution of the
a winding up by the Court and a winding compai Where a solvenl company
'
549
35* —(1531)
: ———
The Companies (Consolidation) Act, 1908, " (iii) On the appointment of a liquidator
provides :
all the powers of the directors shall
" 182. A company may be wound up cease, except so far as the company
-voluntarily in general meeting, or the liquidator,
" (1) When the period (if any) fixed for the sanctions the continuance thereof :
duration of the company by the " (iv) The liquidator may, without the
articles expires, or the event (if any) sanction of the Court, exercise all
occurs, on the occurrence of which powers by this Act given to the
the provide
articles that the liquidator in a winding up by the
company be dissolved, and
is to Court :
the compan}' in general meeting " (v) The liquidator may exercise the
has passed a resolution requiring powers of the Court under this Act
the company to be wound up of settling a list of contributories,
voluntarily : and of making calls, and shall pay
" (2) If the company resolves by special the debts of the company, and ad-
resolution that the company be just the rights of the contributories
wound up voluntarily : among themselves :
" (3) If the company resolves by extra- " (vi) The list of contributories shall be
ordinary resolution to the effect that primti facie evidence of the liability
it cannot bv reason of its liabilities of the persons named therein to be
continue its business, and that it is contributories :
advisable to wind up. " (vii) When several liquidators are ap-
" 183. A voluntary winding up shall be pointed, every power hereby given
•deemed to commence at the time of the may be exercised by such one or
passing of the resolution authorising the more of them as may be determined
winding up. at the time of their appointment,
" 184. When a company is wound up or in default of such determination
voluntarily the company shall, from the by any number not less than two :
commencement of the winding up, cease to " (viii) If from any cause whatever there
carry on its business, except so far as may is no liquidator acting, the Court
be required for the beneficial winding up may, on the application of a con-
thereof tributory, appoint a liquidator :
" Provided that the corporate state and " (ix) The Court may, on cause shown,
corporate powers of the company shall, not- remove a liquidator, and appoint
withstanding anything to the contrary in another liquidator."
its articles, continue until it is dissolved. The creditors have the right to apply to
" 185. When a company has resolved by the Court for the appointment of a liquidator
special or extraordinary resolution to wind in the place of, or jointly with, the liquidator
up voluntarily, it shall give notice of the appointed by the company, or for the ap-
resolution by advertisement in the Gazette. pointment of a committee of inspection.
As soon as the company's affairs are fully
Consequences of Voluntary Winding Up. wound up, the liquidator shall lay an account
" 186. The following consequences shall of the winding up before a general meeting
ensue on the voluntary winding up of a of the company. Within one week after the
•company :
meeting the liquidator shall make a return
" (i) The property of the company shall be to the registrar of companies of the holding
applied in satisfaction of its liabilities of the meeting, and on the expiration of
pari passu, and, subject thereto, three months from the registration of the
shall, unless the articles otherwise return the company shall be deemed to be
provide, be distributed among the dissolved, unless otherwise determined by
members according to their rights the Court.
and interests in the company :
"'
(ii) The company in general meeting shall Saving for Rights of Creditors and Contri-
butories.
appoint one or more liquidators for
the purpose of winding up the " 197. The voluntary winding up of acom-
affairs and distributing the assets of pany shall not bar the right of any creditor
the company, and may fix the remu- or contributory to have it wound up by the
neration to be paid to him or them : Court, if the Court is of opinion, in the case
550
— — —
(1) negativing or limiting his own liability Northallerton for the North Riding
to the holder, (2) waiving as regards himself (established 1734).
some or all of the holder's duties. (Section Beverley for the East Riding (established
16.1 (See Drawer, Indorser.) 1707). The East Riding includes Kingston-
WRIT. By the Stamp Act, 1891, the upon-Hull.
stamp duty is Wakefield for the West Riding (estab-
—
:
s.Sl
— —
leasehold property are not registered. and any disposition of land, or charge on
Registration does not add any fresh docu- land, which if unregistered would be fraudu-
ment to the title or affect the title, but with lent and void, shall, notwithstanding regis-
regard to priorities (see sections below), it tration, be fraudulent and void in like
is of great importance to bankers, for, 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 as priority cannot be obtained
it is different,
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 :
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 not
of six months : provided that nothing in affect the banker's charge which is registered.
this Act shall interfere with the priorities As a rule it is sufficient if the Register is
as between themselves of any assurances or searched since the person bought it who
wills the dates of registration of which may conveyed to the present owner, or since the
be identical. last mortgage. When a banker takes the
" All priorities given by this Act shall have deeds he is usually satisfied if the Register
full effect in all Courts, except in cases of reveals no other charge at the date when he
actual fraud, and all persons claiming there- takes the security, and if he retains the deeds
under any legal or equitable interests shall it is not likely, in an ordinary case, that a
be entitled to corresponding priorities, and charge will subsequently be registered while
no such person shall lose any such priority they are in his possession.
552
—
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 scaled with
from upon pavment of the prescribed fees. the Registry seal.
Where any instrument is required to be Where a mortgage oi charge affei
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 pei on
seal of the corporation, and a firm may act entitled to any interest in such lands
by any of its members. present an affidavit of di nli 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 prescribe.! form. Every signature must be
by inches in breadth, or thereabouts,
10 verified by the oath of some redible w itness
<
with an inner margin about 2 inches wide, Where such mortgage or charge was origin-
and an outer margin about three-quarters of ally created by deed or writin original
an inch wide. shall be produced to the registrar with an
Where any map or plan is indorsed upon entry thereon showing that [celled.
i
thereto.
Where any instrument is required be
;>' stamped. If i1 has to bi ed b
enrolled in the Register at full length, a true tered post a e of sixpen
f< ting must i
for the purpose of being actually en; The following is the form of memorial
and bound up in the Register, and (except
553
YOR" DICTIONARY OF BANKING [YOR
FORM No. 7.
FORM OF MEMORIAL OF DEED.
5. Fill in a description
Description of Lands 1
554
— . — .
bv Section 9 of the
Act) except a Caveat Five shilh
For every additional md
period of five \ ears sixpi
Registration or Enrol-
ment of any Caveat Two . shillit Typewritten Memorials may be received
Copy or Extract. at the Registrj under the following con-
Where Copy or Ex- ditions :
tract does not ex- The Memorials must be typed with a pure
ceed two folios On, .
black carbon record ink from ribbons
For each additional or pads which are not exhausted, but
folio ....
Fourpence. give a distinct black impression and
an addi-
If certified, i
in no aniline dye ;
THE EXD
. Batii
r
'
,
Robaitf
^J
UNIVERSITY OF TORONTO
LIBRARY