Question 269. - Bank A receives from its correspondent in another town a cheque drawn on bank B. When presented for payment bank B refused to pay as there was no war tax stamp affixed. Would not it have been reasonable for bank B to have affixed the stamp which its customer omitted to affix, charge the customer for the stamp, and pay the cheque? If the cheque was returned to the correspondent of bank A on the ground that there was no war tax stamp affixed and later bank A presented it duly stamped to bank B for payment when there were no funds to meet it, although there were funds when the original presentation was made without a stamp, would there be any liability of either of the banks handling the cheque to the payee or endorser?

Answer. - Under the special War Revenue Act of 1915 every bank which pays, presents for payment or accepts payment of a cheque upon which the war tax has not been affixed is liable to a penalty of $100. Bank B is quite justified in refusing to pay such a cheque which would be an illegal instrument, and it is entirely a matter of discretion whether it affixes the tax on its customer's behalf. The drawer is liable to a penalty of $50 for issuing a cheque without a war tax stamp and bank A is liable in a penalty of $100 for presenting it for payment.