IMPORTANT BANKING CASE.

Globe, Volume XXIII, Issue 225, 28 June 1881, Page 3

IMPORTANT BANKING CASE.

The following important decision has been given by Mr Hardcastlo, R.M. at Wanganui, in the case of Evans v Bull, the question having arisen whether the onus of verifying the endorsement on a cheque drawn to order lay with the holder of the document: —ln this case the holder for value of an unpaid cheque sues the maker. The quostion is whether it is a sufficient defence to aver Lhat the cheque was payable to order, and that the plaintiff, when presenting it throngh his banker at Bulls, did not procure and offer to the banker on whom it was drawn, verification of the endorsement. Ido not think any such duty lies on the holder. A cheque is as negotiable as a bill of exchange. (Boehm v Sterling, and Keono v Beard.) A bill of exchange passes by endorsement or delivery, and the party paying must ascertain the genuineness of the endorsement at his peril. (Robarts v Tucker.) So also he must asoertain it in case of an endorsed cheque, and he cannot shift that onus to the holder presenting. The defence contended that the cheque as drawn was irregular, and the backer not bound at law to pay it; also that there is a usage to demand verification. It is the duty of a banker to pay tho cheque or draft of his customer presented in banking hours, provided ho has funds. Ido not think the cheque irregular because payable to order, nor do I find any difference in the duty of the banker regarding such cheque. The form and definition of a cheque in Byles, Chitty, and Addison expressly includes cheques payable to order, and many cases have been decided on such cheques without any such objections. They were at one time seldom used, because subject to a higher stamp duty than other cheques, but were not then irregular if duly "stamped. As to the plea of usage. " Whenever the law is silent the usage of merchants is admissablo, but not otherwise." (Edie v East India Co.) Suoh usage must be ' reasonable, certain, and so universally acquiesced in that everybody in the particular trade knows it or might know it if he took tho pains to enquire.' (Place v Alloock.) In Carwick v Vickery the evidenoe admitted was 'of the universal usage and understanding of all the merchants and bankers of London. (Chitty on Bills, 11 ed. 49.) Here I think the alleged usage is neither admissablo nor reasonable, because it contradicts the law mentioned, which gives to bills and cheques a negotiability which such a usage would restrict. I think it not certain, because it is impossible under it to say what or how much evidence the holder is bound to produce to "satisfy the Bank." That it is not universally acquiesced in is clear from tho evidence. Sometimes it is not demanded at all. It is not even universal amongst bankers, although it is entirely to their advantage and to the disadvantage of the mercantile publio. One of the most experienced bankers called denies it. There is no evidenoe whatever of acquiescence in it by tho drawers of cheques, or the mercantile public which negotiates them. It was urged that this usage was valid because 16 and 17 Vic, o. 59, s. 19, is not in force here ; but it seems to mo that if a statute was necessary in England and in Victoria to diminish the risks of bankers, such a statute is, if the Legislature thinks it desirable, the proper protection here, and, failing it, the only means I find is undor a " semble " in Robarts v Tucker, which says —"The bankers have a reasonable time to enquire into tho genuineness of the endorsement of strangers necessary to make out the title to the bill."

Judgment was given for the plaintiff for £24, with £2 12s costs, and £2 2s solicitor's fee.