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Bankers and Banking.
630 Sect.
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16.
Discounting Bills.
bankruptcy (o). Where the bill is dishonoured, the banker, if he has the customer's indorsement on it, can, after giving due notice of dishonour, debit the account (p).
Advances by Bankers.
Sect. 17.
Sub- Sect. Advances by banker.
Corporations.
Loan.
1272. Where a banker makes a definite advance to his customer, though the amount be carried to current account, the loan {q) is a matter of contract and arrangement, and presents no special feature by reason of the lender being a banker, except that, when and so long as money is actually due and payable to the banker in respect thereof, his lien attaches for the amount. Sub-Sect.
Overdraft.
1.
2.
Overdraft.
1273. In the absence of agreement, express or implied from course of business, a banker is not bound to let his customer overdraw (?•). Such agreement must be supported by good consideration (s). Drawing a cheque or accepting a bill payable at the banker's where there are not funds sufficient to meet it amounts to a request for an overdraft (t). Overdraft is a loan (a), and cannot be recovered against a corporation which has no borrowing powers, or where the overdraft is in But the banker who has permitted excess of those powers (h). such an overdraft is entitled to be subrogated to those creditors of the corporation who have been paid out of the overdraft, and to recover the amounts so paid against the corporation (c).
undertaking giving the banker this
right, see
Encyclopsedia of Forms, Vol.
II.,
p. 487.
(o) s.
Asa
mutual dealing on
credit
(Bankruptcy Act, 1883 (46
&
47 Vict.
c.
52),
38).
The banker, to his remedies
as holder, being entitled to set off his liquidated claim.
on unindorsed
bills, see p.
As
629, ante. (q) For forms relating to equitable mortgages to a bank, see Encyclopaedia of Forms, Vol. II., pp. 478 486. For loans generally, see title Mortgage. (r) Gunliffe Brooks <& Co. v. Blackburn and District Benefit Building Society (1884), 9 App. Cas. 857, ])er Lord Blackburn, at p. 864 ; Gumming v. Shand (I860), 29 L. J. (ex.) 129 (course of business entitling to overdraw). Circumstances may justify a bank in withdrawing the right to overdraw (Parkinson v. Wakefield <& Co. (1889), 5 T. L. 646 (security disturbed by customer)). (s) Fleming v. Bank of New Zealand, [1900] A. C. 577. Implied contract to pay interest would be sufficient consideration. {t) Eaton V. Bell (1821), 5 B. & Aid. 34 Forster v. Clements (1809), 2 Camp. 17 Cunliffe Brooks d; Co. v. Blackburn and District Benefit Building Society, supra, at p. 864. London Chartered Bank of Australia v. McMillan, [1892] A. C. 292, is distinguishable, as the overdrai't arose from the unauthorised act of an agent, and the circumstances should have put the bank on inquiry. (a) Cunliffe Brooks <h Co. v. Blackburn and District Benefit Building Society, supra. As to borrowing (6) Lbid., and see A.-G. v. De Winton, [1906] 2 Ch. 106. powers of corporations, see titles Corporations Local Government. (c) Lhid. Baroness Wenlock v. River Dee Company (1887), 19 Q. B. D. 155, 165. It is not confined to debts existing at the time of the overdraft. The test is whether the liabilities of the corporation are increased by the borrowing.
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