It is always advisable to sign for or on behalf of a company, and to state in what capacity one signs, so as to avoid a personal liability.
An agent who signs under a power of attorney, usually indorses: “Thomas Brown by his attorney William Smith.” It is as well to remember that a power of attorney often confines the agent’s power, as in the case of a letter of authority, within very narrow limits, and that the principal is only bound by its provisions.
Banker’s Liability on Forged Indorsements.
The paying banker is not liable upon a forged or unauthorized indorsement, but the collecting banker is in the case of uncrossed cheques, and, according to a recent decision by the House of Lords, may be upon crossed ones. If a banker credit his customer’s account with the amount of a crossed cheque after it has been cleared, he is protected by Section 82 of the Bills of Exchange Act; but should he credit his client’s account with the said cheque before he himself has collected it, then he ceases to be a mere agent, and becomes a holder for value, and, consequently, liable upon a forged indorsement. As it is usual, both in London and the provinces, to credit a customer’s account with cheques on the day that he pays them in, it follows that an employer, if his agent have indorsed crossed cheques without authority and placed them to an account in his own name, can recover their amount from his agent’s banker.
Banker’s Liability where Drawer’s Signature is Forged.
The banker is liable to a customer upon any forged cheque he debits to his account.
When a Cheque is Legally Paid.
A banker, having passed the cash across his counter, cannot legally demand it back again, and the presenter may please himself whether or not, if asked, he will return the money. The banker has no power to compel him.
Stopping Payment of a Cheque or Bill.
This must be done by the drawer or acceptor, as the case may be, and by him alone. He should write a note to his banker, giving an exact copy of the cheque or bill he wishes returned, and the banker will then mark his ledger and instruct the cashiers to refuse payment of the document, if presented. Should he pay the instrument in spite of the customer’s order to the contrary, he will have to make good any loss occasioned by his negligence.