Question 378. - John Smith draws a cheque in favour of Thomas Jones, who endorses it, places it in his pocket, and afterwards loses it by theft. The cheque is cashed by a bank (which is acquainted with payer's signature) in a town some distance from the point on which it is drawn. Payment in the meantime has been stopped. Has the cashing bank recourse to John Smith for the amount?

Answer. - If the cashing bank acquired the cheque without any notice or knowledge of any defect in title they would be holders in due course for value and entitled to recover the amount from the drawer and endorsers or any one of them.