QUESTIONS ON POINTS OF PRACTICAL INTEREST,

THE COUNCIL desire to express their readiness to receive at all times questions which are of general interest, and in regard to which it would appear desirable to assimilate the practice of bankers.

The following questions have been received, and answers are appended, which, after careful deliberation, the Council have approved :

Guarantee for Account.

QUESTION L-Brown gives a bank a guarantee for Smith's account for £1,000, which runs :

"That it shall be a continuing guarantee for the benefit of the said bank, however, for the time being constituted, until after three months' notice in writing shall be given by me, my executors, administrators or assigns of determining the same. Brown gives notice of withdrawal of his guarantee when Smith owes £500. Is it safe to continue transactions on the account after notice; may the balance be increased; and also will Brown be liable for the whole if it go up to £1,000?

ANSWER: The difficulty in answering this question arises from the ambiguous wording of the guarantee, as quoted; had the words "until after the expiry of three months' notice" been substituted for those printed in italics, Brown would probably be liable to the full extent of his guarantee until the expiry of the notice; but under the existing terms of the guarantee we do not think that Brown would be held liable for any sum in excess of the £500 owed by Smith at the date of Brown's notice of withdrawal. On the contrary, we are of opinion that, after receipt of such notice by the banker, all sums paid in by Smith to his credit should be applied to the reduction of Brown's liability, and that the banker would only pay against such sums at his own risk.

Cancellation of Cheques.

QUESTION II.-Cheques are usually cancelled by the bank defac ing the drawer's signature. Have they any right to do so; ought not the bank to deface their own name and not interfere with that of the drawer?

ANSWER: The practice of cancelling the signature either of the

drawer of a cheque or of the acceptor of a bill when paid by the banker on whom the cheque is drawn or with whom the bill is domiciled is almost universal, and if not laid down as the law, is abundantly recognised as the custom in many decided cases. It is held that "the cancellation of a signature is prima facie evidence that the liabilities of the party whose signature is cancelled have been discharged." (See "Chalmers on Bills of Exchange," 2nd Edition, page 211.)

Endorsement of Cheque.

QUESTION III.-Is a banker compelled to pay a cheque drawn to the order of the "Commercial Mill Co." and endorsed simply"Commercial Mill Co.,"

or must the cheque bear an official endorsement?

ANSWER: The endorsement referred to is both irregular and insufficient, and on these grounds a banker would not be bound to pay upon it.

The customary signature of a Company is by one of the officers signing per pro of the Company and designating his official position.

Stamp required on Promissory Note.

QUESTION IV.-Does a promissory note on demand to order, containing a provision for interest, require an ad valorem stamp?

ANSWER: All promissory notes, whether payable on demand, or otherwise, require ad valorem stamps. 33 & 34 Victoria, c. 97.

The stamp duty is not chargeable on interest secured by a promissory note; see Answer to Question IV., page 503, of the Journal for October last, which also applies in this case.

Alteration of Cheque from "Order" to "Bearer" by Initials of one of the Drawers.

QUESTION V.-Cheques drawn to order by corporate bodies, trustees and others are not unfrequently altered "to bearer" by a secretary or town clerk, who has countersigned, or by one of the drawers placing his initials against the alteration.

If a cheque so altered be misappropriated, do the bankers upon whom it is drawn incur any liability by paying it without receiving from the several drawers their authority to do so under the altered condition of the instrument?

ANSWER: Yes.

Husband and Wife Accounts. Death of the Wife. Separate Property.

QUESTION VI.-An account is opened in the name of "A. B.," wife of "J. B.," by the husband's authority. Would not the banker, knowing the money to be the property of the wife in her own right, on her death be justified in holding the balance until letters of administration had been granted?

ANSWER: If the money was the separate property of the wife, letters of administration must be exhibited before the banker could safely pay over the balance.

If the money was not the separate property of the wife, her husband could at any time assume control over the account, either in the case of his wife's death or otherwise.

See also questions and answers under the heading of "Husband and Wife," page 795, Index to Volume I. of this Journal.

Deposit in Joint Names. Payment to Survivor.:

QUESTION VII.-A deposit is made in the joint names of "A. B." and "C. B.," spinsters; withdrawals are to bear both signatures.

In case of the death of either, would a banker be justified in paying the balance to the survivor on her signature alone; or, if a written request signed by both parties were given, instructing the banker, in case of the death of either, to so deal with the balance, would he then be justified in doing so?

ANSWER: A banker is not a trustee for his customer, but a debtor to him, and, like any other debtor, may by law safely pay over money due upon a joint account to the survivor in that

account.

We think the instructions given to the banker with regard to the signatures to be required in the case of withdrawals do not alter the case, but that either with or without a special request, instructing the banker to pay to the survivor, he would be justified in so doing.

The answer given to Question IV., printed in Volume I., page 427, of the Journal, seems also applicable to the present question.

NOTES ON RECENT ADDITIONS TO THE LIBRARY.

The Elements of Economics. By HENRY DUNNING MACLEOD, M.A.* Two vols. (of which the first only is now published).

The comments which followed the reading by Mr. Macleod before the Institute in March last, † of his interesting paper on a subject which naturally comes within the scope of these volumes, will have afforded proof, if any were needed, that many of the views and definitions put forward will not be accepted without keen criticism. The happy time when definitions can be stated which will satisfy everybody in regard to such subjects as wealth," "property," and "value," to mention no others, has not yet arrived; nor is this the place to enter into any close examination of the views which are stated with much fulness and great care in this comprehensive manual.

In his preface, Mr. Macleod, after acknowledging the services rendered by previous schools of economists, goes on to say," the fact is that the political economy of Adam Smith, Ricardo and Mill, is now exhausted-it is a caput mortuum from which no further good can be extracted; it is wholly incapable of grasping the great economic problems of the present day-CREDIT, BANKING and the FOREIGN EXCHANGES." And further on, he says, in regard to the character of economic contests up to the present time, that "they have been almost wholly destructive." There are persons who will think that Mr. Macleod himself has shown no little destructive tendency in regard to the reputation of these great authorities.

When Mr. Macleod states that "economic science is the profoundest and most complicated branch of human knowledge," he places it at once on a level above the reach of any "last words "; but none the less has he dore good and valiant service. With learning and ability, which would be looked for in any work by Mr. Macleod, he has stated in terse, clear language, and in a form both striking and simple, a mass of information on the history of the science, the meaning of its terms, and its usages, which every student will find of great value, and which no student can afford to put aside.

1881.

London, 1881: Longmans, Green and Co.

"On the Modern Science of Economics." See the Institute's Journal, June,