aspects]
BANKING 123 whom the cheque was drawn to exercise caution in paying the defendants were protected by sec. 82, having received the cheque otherwise than to a banker if crossed generally, payment of the cheque for a customer in good faith and or to a particular banker if crossed specially. Various without negligence, and gave judgment in favour of the statutes, now repealed, were passed between 1856 and bank. This judgment was reversed by the House of 1882 dealing with the subject, the effect of which is Lords, and judgment given for the plaintiffs, the main reproduced by the Bills of Exchange Act, 1882. That grounds of the judgment being that the dealings between statute authorizes various forms of crossing, and renders Huggins and the bank were not properly describable as the paying banker liable, not only to the drawer, but also banking transactions, and could not therefore, however to the true owner, for any loss he may have sustained by long continued, constitute him a customer, and secondly reason of the banker having paid the cheque contrary to that, whether the bank were to be regarded as having the crossing. The system, designed in the interest and purchased the cheque or as having advanced the full for the protection of the public, imposed new burdens on amount on the security of it, they had received the prothe paying banker and indirectly on the collecting banker. ceeds for themselves and not for Huggins. It may now It necessitated the intervention of a banker for the therefore be taken as settled law that to constitute a man obtaining payment of any crossed cheque, thus largely a customer within this 82nd section he must either have increasing the mass of such business and the risk of the an account with the bank or at the least must be in the collecting banker being held liable in any case where he habit of resorting to the bank in the course of ordinary had collected a cheque for a person who had no title to it, banking transactions productive of advantage to both as where it was held under a forged indorsement. Some parties, and further, that a bank which has given cash over counterbalancing advantages were therefore conferred on the counter for a cheque drawn on another bank cannot bankers. By sec. 80 it was enacted that where a subsequently set up that it received the proceeds for any banker on whom a crossed cheque is drawn, in good faith one but itself. Lord Brampton in this case enunciated a and without negligence pays it, if crossed generally, to dictum or suggestion to the effect that, even supposing the a banker, and, if crossed specially, to the banker to whom case had been one of banker and customer and of genuine it is crossed or his agent for collection, being a banker, he collection for the customer, still the fact of the cheque shall be entitled to the same rights and be placed in the being marked “not negotiable” would or might have same position as if payment of the cheque had been made made a difference and deprived the bank of the protection to the true owner thereof. Exemption from liability in of the section, on the ground that it was negligence to respect of payment of a crossed cheque was thus ensured collect such a cheque without inquiry, even for the ostento the paying banker in certain cases in which he might sible payee. Obviously such addition to the crossing not have been able to debit his customer with payment can have no application whatever where there has been of an open cheque. The protection to the collecting no transfer of the cheque. And it is equally obvious banker is contained in sec. 82, which enacts that “ when that the fact of the customer being the transferee of a a banker in good faith and without negligence receives cheque crossed “not negotiable” in nowise affects the payment for a customer of a cheque crossed generally, or liability of the collecting banker. Under sec. 76 of the specially to himself, and the customer has no title or a Bills of Exchange Act the words “not negotiable” are defective title thereto, the banker shall not incur any simply made an optional integral part of the crossing, and liability to the true owner of the cheque by reason only so when sec. 82 speaks of negligence in relation to a of having received such payment.” This section has been crossed cheque, it can only mean negligence altogether the subject of much judicial interpretation, both as to what independent of the form of the crossing. Again, the constitutes a customer and when a bank receives payment bearing and design of the “ not negotiable ” crossing is, for the customer and when for itself. A single isolated under sec. 81, to affect the title of the transferee, and transaction cannot constitute a man a customer {Matthews sec. 82 specially protects the banker in cases where, other v. Williams, Brown & Co., 10 Times L. R. 386 ■ Lacave v. conditions being fulfilled, the customer has either no title Credit Lyonnais, 1897,1 Q. B. 148). But where the relation or a defective title to the cheque. Section 77, subs. 6, of of banker and customer exists, the fact that the account is the Bills of Exchange Act provides that “when an uncrossed overdrawn does not preclude the banker who has received cheque, or a cheque crossed generally, is sent to a banker for the proceeds of a cheque paid in by his customer from pro- collection he may cross it specially to himself.” It would tection {Clarhe v. The London and County Bank, 1897, 1 appear somewhat doubtful whether this enables a banker Q. B. 552), the transaction being regarded as in substance to avail himself of the protection of sec. 82 by crossing a collection for the customer, although the banker might an open cheque received by him for collection. In Bissell be benefited by the reduction of the overdraft. The v. Fox, 51 Law Times Rep. 663, Denman, J., expressed judgment of the House of Lords (given on 22nd July the opinion that sec. 82 only applied where the banker 1901) in the case of The Great Western Railway Co. received the cheque already crossed, but this subsection v. The London and County Bank (1901, A. C. 414) was not brought to his notice, not being applicable to contains an authoritative exposition of this section. In the case, and there are grounds for believing that it was that case a rate-collector named Huggins had for many expressly introduced for the purpose of enabling bankers years been in the habit of obtaining at one of the branches so to protect themselves. The addition to a crossing of of the defendant bank cash for cheques drawn in his the words “ not negotiable ” was sanctioned and its effect favour on other banks. He was consequently well known defined by the Crossed Cheques Act, 1876, and re-enacted there, but kept no account with the defendant bank, and by sec. 81 of the Bills of Exchange Act, 1882. Curious his only transactions with them were of the above nature. misapprehensions have existed with regard to this crossing, He fraudulently obtained from the plaintiff company a owing probably to the somewhat ambiguous words emcheque to his own order crossed “not negotiable.” This ployed. The presence of such a crossing does not preclude cheque he took to the defendants’ branch and endorsed to the transfer of the cheque. The word “ negotiable ” is them, receiving the full face value at once, save for a small not used as equivalent to “ transferable ” as it is elsewhere balance which by his direction was put to another account, in the Act (see sec. 8, subs. 1). It denotes that the and the defendant bank in due course received the proceeds cheque is not fully negotiable, and the statutory effect of the cheque from the bank on which it was drawn. The annexed by the section to such crossing is to put the jndge of first instance and the Court of Appeal held that cheque on the footing of an overdue bill, with the result
