Bankers and Banking.
618 Sect, 10.
If
the preservation of negotiability be the ratio decidendi, the banker
might recover the money where the document was a mere counterfeit of Money throughout, e.g., a bearer cheque with drawer's name forged (p). paid on Where the document is a real bill or cheque, it has been held Forged that the fact that the person who was paid was not really a Documents. holder, and would have had no remedy on the bill or cheque if Forged dishonoured, was immaterial, and that if he had had the money in indorsement his possession for such a period that his position might have been and alteraaltered, it would not be recovered from him by the payer {q). This tion. view has been characterised as too sweeping by the Judicial Committee of the Privy Council, who would confine the right to retain the money to payees of negotiable instruments on the dishonour of which notice has to be given to someone who would be discharged from liability unless such notice were given in proper time (r). Even this latter view would include bills or cheques held under genuine indorsements following forged ones, since the holder's remedy against the indorsers subsequent to the forgery is on the instrument by estoppel and dependent on giving notice of dishonour in due time (s) Where a person holds immediately under a forged indorsement, the view taken by the Judicial Committee would entitle the banker to recover the money from him if demanded within a reasonable time after payment. It is somewhat difficult to see how, when the instrument has in Recovery
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the first instance been paid, the right to give notice of dishonour could accrue until repayment was at any rate demanded (t), or why delay in not giving it prior to that date is not, in the circumstances, excused (a).
It is Lex non cogit ad impossibilia. there would be no negligence. suggested that the real ground why the banker cannot charge the customer is the payment without authority. In any case the supposed duty could only extend to the customer, not to third parties, and where there is no duty there can be no negligence. A. C. 49. {p) Compare Imperial Bank of Canada y. Bank of Hamilton, [1903] An instrument which is a mere forgery has none of the attributes of negotiability. B. 7, where the (g) London and River Plate Bank v. Bank of Liverpool, [1896] 1 Q. bill was held under a forged indorsement succeeded by genuine indorsements. (r) Imperial Bank of Canada v. Bank of Hamilton, supra, at p. 58. (s) Not on warranty, which only applies to a transferor by delivery (Bills of See ihid., s. 55 (2) (b), for Exchange Act, 1882 (45 & 46 Vict. c. 61), s. 58). tlie estoppel of the indorser from denying the genuineness of previous indorsements 55 (2) (a), for his. liability to compensate the holder, subject to s. Although the person in possession is notice of dishonour being duly given. not strictly a holder in due course or even a holder, he is so by estoppel against indorsers subsequent to the forgery. {t) " The defendants, while the bill continued paid, could not have given notice to the indorser, for the bill was not dishonoured " {Smith v. Mercer (1816), 6 Taunt. 76, per Gibbs, C.J., at p. 87). It may be (a) See Bills of Exchange Act, 1882 (45 & 46 Vict. c. 61), s. 50 (1). noticed that in the leading case Cocks v. Masterman (1829). 9 B. & C. 902, on which the cases referred to above professed to be based, the prejudice to the holder was defined as being the loss of his right to take steps against other parties to the bill the same day as it is dishonoured. This must refer to his immediate right of recourse on dishonour (Bills of Exchange Act, 1882 (45 & 46 Vict, c. 61), s. 47 (2)), or the equally immediate right to give notice {ihid., s. 49 (12)). There is no right of action until the next day [Kennedy v. Thomas, [1894] 2 Q. B. 759), and the right to give notice would hardly ever be lost until the next day
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