CROSSED CHEQUES.

New Zealand Times, Volume XXXIV, Issue 5642, 30 April 1879, Page 3

CROSSED CHEQUES.

• . (From the New Zealand Herald.) A case was .heard before the Resident Magistrate yesterday, which possesses for . the trading public more than ordinary interest.. The facts appear to be the following:—Mr, E. Wayte forwarded a “crossed” cheque to Mr. Collier, of Napier, but the cheque did not reach its destination, and Mr. Wayte subsequently paid the amount, £4 ss. 6d., by ordi-, nary remittance. The “ crossed ” however, turned up in the possession of Mr, Davies, a grocer, who said he had received it from a woman who came into his shop. The customer endorsed it, and he gave her cash for it. Mr. Davies got the cheque cashed by ; Mr. David Grubb, who, if the statement be : correct, may have .passed it into the bank to his account. Mr. Wayte sued Mr. Davies for the amount. of the cheque, apparently upon the ground ,that, Davies had no right to cash a “crossed" cheque in the manner described, and was in law responsible to the plaintiff for the amount. The learned Resident Magistrate gave judgment for the defendant, and the decision appears to have occasioned some controversy upon, its soundness in point of law. It has been held by the Judges in the superior Courts at Westminster that “ crossing” a cheque was a mere memorandum for the oonvenienee of bankers in the first instance, out of'which' it was contended that a certain “usage” had grown, which; must be estimated to have the force of law,' But the Judges held that proof of usage must be given, and any usage that exists is of very modern date, and of very uncertain authority. They held a “ crossing" to be “ a mere memorandum on the face of the cheque, which formed no part of the instrument itself, and in no way altered its .effect. (Filch v. Jones, 24 L. J.Q., 8., , 293; Bellamy and Majorebanks;' 7 ' Exeh., 389.) ' The negotiability of the instrument is not thereby affected, so that anyone who took ! such a cheque and bona fide gave value for it was entitled to the money for it.” This contains the‘general principle of law, which does not appear to have been affected by the passing of the 19th and 20th of Victoria, which applied only to the obligations of bankers,'and did not touch the rights .of third parties who might hold such instruments. (Grant’s “ Law of Banking,” p. 74.) This notice of so important a question can only be very cursory and provisional ; but, so far as we can gather' from the authorities we have consulted, we think the Resident Magistrate is right. The Judges, in stating the law as above—namely, that crossing a'cheque does not restrict its negotiability—nevertheless referred to the usage through which fraud might be frequently prevented as one that was “highly benefiq al to the public.” It would therefore appear to be a commercial obligation upon all to observe a custom or usage which has the effect of giving.greater protection dr security to all persons interested in such instruments. ;