BANKER AND CUSTOMER

Hokitika Guardian, 28 April 1926, Page 4

BANKER AND CUSTOMER

(ll.v a London Hanker.) Prominent in the courts last week was the ‘ease of the man who unsuccessfully sued his bank for £3,000. This sum was said to have been lost by him owing to making an investment on the strength of information given by the bank. Hanks arc, of course, consulted by their customers on a variety of subjects and render for them many .services. but it will be seen that they run risks. A mistake made in doing some well-meant, kindness might easily result in a law suit. For instance, a banker is under no obligation to give advice to his customers on investments, but if ho does

so negligently he is liable for damages should any loss result. Jewels, plate and other articles of value are left by customers at their banks for safe custody in the strongrooms. If these were lost owing to the banker’s carelessness the banker would have to make good the loss. He himself, however, has no claim on these goods. A customer might deposit for safe keeping a. diamond worth £I.OOO and later run up an overdraft of £1.000.* The customer c-ould, however, take the jewel away whenever lie wished and the banker would have no right to regard' it as a set-off against the overdraft.

If a banker pays a forged cheque he must in the ordinary way bear the loss himself. Should the customer, however, fail to notify him immediately the forgery is discovered, and thereby lessen the chance of discovering the criminal and recovering the money, the bank is free and the customer suffers.

In the same way if a banker pays a cheque on which the amount has been' fraudulently raised lie can debit bis customer with the correct amount only. If. however, the cheque was drawn' negligently, possibly with blank spaces almost inviting the insertion of additional figures, the whole loss falls on the customer.

'When a customer’s cheque is dishonoured in error bv a hanker heavy damages can sometimes he obtained. It must be proved that actual damage to credit has been caused. If the customer were a. trader he would he almost sure to win his case. If. however. he were a non-trading person—such as a clergyman or a retired Army officer—he would probably get nominal damages only.

There is a widespread notion that a bank will never admit a mistake. It is certainly true that cashiers are remarkably accurate and seldom make mistakes, but when they do they ars always glad to rectify them. In eases where a cashier underpays anyone, it would, of course, be gross dishonesty to refuse.