It is the duty of a bank to pay a cheque just as it is drawn, and if it makes any mistakes it must suffer. The reason for this rule is that the maker does not expect to see his cheque again after it leaves his hand, and when he puts his money in a bank for safe-keeping the bank virtually says to him that it will pay only on his order just as he has written. It will guard his interests carefully and pay no forged cheques or cheques that have been altered in dates or amounts, to his injury. Now, it is quite a common thing for cheques to be forged, and still more common for them to be raised. A scoundrel gets a cheque that is genuine, ordering a bank to pay $18, and changes it to $1800. He presents it for payment and it is paid. By and by the depositor finds out that he has not as much money in the bank as he supposed he had there. What has happened? Some one has altered one of his cheques and drawn out too much. He goes to the bank and makes inquiry, learns that this is so, and then demands that it shall make the amount good to him. Usually a bank is obliged to pay.
There is one limit to this rule. A man making a cheque must be careful to write it in such a way that changes or alterations cannot easily be made. If he is careless, leaving ample space so that changes can be made in the amount, then he will be considered negligent, and a bank would not be obliged to make good his loss. If, on the other hand, he is careful in drawing his cheques then a bank's duty to protect him is plain, and it is liable in the event of neglecting to do so.
A few years ago a man drew a cheque for $250, dated it three days ahead, and left it with his clerk, directing him to draw the money on the day written in the cheque and pay the men who worked for him, and went away. The clerk thought that he would like to keep that money himself and take a little journey also, so he changed the date to one day earlier, went into the bank on that day and drew the money, and started for the Klondike or some other place. The maker of the cheque soon found out what had happened and demanded of the bank to make the amount good. The bank said to him: "Suppose the clerk had waited one day longer and then drawn the money, you would have been the loser just the same." The man admitted all this, but replied, nevertheless, that he had not changed the date; that the bank ought to have seen the alteration before paying, and as it did not it was negligent in that regard, and the bank was obliged to lose.
When a person takes a cheque he naturally supposes that the bank on which it is drawn owes the money to him because he can truly demand it. Suppose a bank refuses to pay, can the holder then sue the bank for money? In six States—Illinois, South Carolina, Missouri, Kentucky, Colorado, and Texas—the holder of such a cheque can sue the bank and get his money. The courts in those States say that a cheque is an assignment or transfer of the amount of money stated to the holder of the cheque from the time that the cheque was given him. The law in all of the other States is otherwise, and a bank for a good reason can decline to pay a cheque, and, in any event, the holder cannot sue the bank for the amount. If it will not pay he must look to the maker and not the bank for payment. Of course, a cheque must always be drawn against a deposit, and it is a fraud on the part of a person to draw a cheque on a bank when he has no money there. Sometimes mistakes are made by banks in their bookkeeping, and they think they have not the money to pay when in truth they have. In such cases they sometimes decline to pay, but even if they had the money the law says that there is no contract between the holder of a cheque and the bank on which it is drawn, and therefore the holder cannot sue it should it refuse to pay. This rule, however, is rather losing ground and the other is coming into more general favour—that a cheque does operate to transfer the money of the maker to the holder and, consequently, that he has a right to sue the bank for the money.
Cheques are made payable either to bearer or order. If a cheque is made payable to bearer it can be transferred from one person to another simply by handing it to him—by delivery; but if a cheque is made payable to order, then the person who receives it, if wishing to transfer it to some one else, must write his name on the back. If he writes his name on the back it is called a blank indorsement, and this form is often used in transferring cheques. If, however, a person intends to send a cheque through the mail he should never write it payable to bearer, but always payable to the order of a particular person, so as to require his name to be written thereon in order to make a good transfer. This is a much safer way of sending cheques than simply by making them payable to bearer.
XV. THE LAW RELATING TO LEASES
A lease is an agreement, and, as every one knows, usually relates to the hiring of lands and houses. If the agreement is to be for a longer period than one year it should be in writing, for if it be not either party can avoid it, not morally but in law. The statute of frauds, which has been explained, would shield either party in not carrying out such an agreement if it were not in writing if by its terms it was to last for a longer period than one year.
There is another very important reason for putting such an agreement in writing. Much of the law relating to the two parties, landlord and tenant, is one-sided and in favour of the landlord. Our law on that subject is based on the English law. It was imported in the early colonial days, and, though it has been greatly changed by statute and by decisions of the courts, it is still very one-sided, as we shall see before finishing this paper. For this reason, especially, all leases relating to houses and stores or other buildings, even for a short period, should be in writing, with the rights and duties of both parties fully stated, so that both may clearly know what to do and to expect.
Unless something is said in the lease concerning repairs the landlord is not obliged to make any. This statement shows at once the need of having a written lease. If the house is out of order—the locks, blinds, doors, and windows are not in good order—the tenant cannot claim anything of the landlord or require him to put them in good condition. Even if a house should become unfit for habitation in consequence of fire, or is blown down, or is flooded with water, the landlord is not bound to do anything unless he has stated that he will in his lease.
A fire broke out not long since in a large warehouse and burned it so completely as to render it wholly unfit for use; indeed, all the merchandise in it was wholly consumed. Nevertheless, when the lease expired and the tenants refused to pay as they had agreed to do, the landlord brought a legal proceeding against them to compel them to pay during the entire period, as though they had been staying there and selling goods and making money, and they were compelled to pay. This is the common law on the subject, and every tenant is bound to pay in such cases unless he has clearly stated in his lease that he is not to be holden in the event of the destruction of the building by fire, flood, lightning, or other cause.