AN INTERESTING JUDGMENT.

Manawatu Herald, Volume XXXVI, Issue 1246, 16 May 1914, Page 3

AN INTERESTING JUDGMENT.

WHEN IS A CHEQUE STALE ?

Auckland, May 14,

A judgment of considerable interest to the commercial community was given by Mr Fraser, S.M., this morning in a case John Kelly v. G. Carey, relating to the liability of persons concerned in the negotiation of a stopped cheque.

From the proceedings, it appeared that a cheque for £3 was drawn by Carey on the National Bank on October 7, 1912, and, after writing it out, Carey put it in his pocket, and went to keep an appointment with the man to whom he owed £3, and for whom the cheque was intended. On the way to keep the appointment Carey either lost the cheque or it was stolen from him. Next morning he went to the bank and stopped the cheque. Nothing more was heard or seen of the cheque until some time in the neighbourhood of November 18. About that time a man, who was not known and could not be identified, requested that the cheque should be cashed by the licensee of the Imperial Hotel. John Kelly, the licensee, not seeing anything suspicious about the cheque or transaction, handed over Three days later he presented it at the bank for payment through his bank account, and payment was refused. Carey refused to refund the amount to Kelly, on the ground that the cheque had been lost by him, and had not been parted with knowingly by him. Kelly now sued for £3. After quoting the law on the subject, and pointing out the incompleteness of the authorities as to the liability of the person who draws a cheque, and then stops payment, the Magistrate said that the cheque was drawn for a very small amount (£3). That was readily cashable at any bank, hotel or place of business. It was drawn on October 7 in Auckland by an Auckland man upon an Auckland branch of the bank. The cheque was not presented to Kelly until six weeks after this date. An open cheque of the kind was not like an ordinary bill of exchange that passed from hand to hand for an indefinite period. The cheque was intended, as a matter of ordinary business, to be presented very promptly after this date, and it seemed to him that a lapse of six weeks in such circumstances as had been shown in the case, rendered the cheque stale. Kelly, in taking an open cheque for that amount on an Auckland bank, six weeks after it was due, had accepted a cheque which was overdue at the time of its negotiation. Plaintiff would be nonsuited.