DEFRAUDED BY LORD

Hokitika Guardian, 29 January 1931, Page 2

DEFRAUDED BY LORD

VICTIM SUCCEEDS AGAINST BANK.

JUDGE AND CHEQUE

“SUPER SLEUTH-HOUND NEEDED.

Judgment was delivered by Lords Justices Smitten, Greer and Slesser in the case of Reckitt v the Midland BankLtd., the question raised being as to which of two innocent parties should suffer for the 'frauds of Lord Terrington, (the solicitor, who received a sentence of penal servitude. Sir Harold James Reckitt appealed from' the judgment of Mr Justice Rowlatt, in the King’s Bench Division, in favour of the Midland Bank, against whom Sir Harold Reckitt brought the action to recover .£17,890, the proceed i of cheques drawn on his aceoiint by Lord Terrington and paid by him into his own account with the Midlane Bank.

The appeal was allowed witii respect to all but two cheques, and judgment was entered for Sir Harold for £13,JSO.

BANK’S GOOD FAITH. Sir Harold alleged that lie was entitled to recover the money as being the proprietor of cheques drawn by Lord Terrington as his attorney. The bank opposed the claim on the ground that they had collected the cheques for their customer, Lord Terrington, in good faith and without negligence. They also alleged that Sir Harold had been guilty of negligence in not checking his pass-book, and so found out that Lord Terrington was drawing extensively. In all the circumstances the bank contended that Sir Harold was stopped from setting up that they could not he paid the amount of the cheques. Lord Justice Scrutton, in giving judgment, said that in whatever way .lie case was approached, the vital question was, “Had the bank such notice of the fradulent character as to put them on inquiry as to the circumstances in which the cheques were drawn, so that if they did not make such inquiry they were guilty of some legal duty which made them liable?” The good faith of the bane was ulmitted, and they claimed to have proved the absence of notice of any facts to put them on inquiry.

SHOULD HAVE ENQUIRED. “It would require a super-slouth-hound,” said Lord Justice. Scrutton, “to discover the irregularity of the first cheque in 1912. The second cheque was drawn 17 months later, and with regard to that also, the facts j did not put the bank oil inquiry,” On one other case the bank won?.’ not have been put on inquiry if it had stood alone, but coming as it did between others, they were liable. In all the other eases the facts were such that the bank should have inquired. One one occasion five cheques lor £2OOO in all were drawn by Lord Terrington within a eriod of 16 weeks, to pay off overdrafts ; on another occasion five cheques for a total of £BOOO, for which the hank should have been put on inquiry.

ihe innocence of the hank was no defence. They had failed to prowfacts which brought them within the protection afforded by Section 82 of the Bills of Exchange Act in regard to all but two of the cheques. The result was that the appeal would be allowed, and judgment entered for Sir Harold Reckitt for £13,-19;;. Lords Justices Greer and Siessei delivered judgments to the same effect.