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Subject to the provisions of this Act, where a signature on a bill is forged or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the bill or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority.
Provided that nothing in this section shall affect the ratification of an unauthorized signature not amounting to a forgery.
The word "cheque" should be read here for the
FICTITIOUS PAYEE AND FORGERY.
word "bill.” It seemed better to cite the original section in this instance. When the “ forged or unauthorized signature" is in fact unnecessary to negotiate or pass à title to the cheque, as in the case of a "bearer” cheque, a holder for value can acquire a good title, and is not liable to the drawer or any other party, if he obtains payment of the cheque, since his title cannot be affected by the signature, delivery without indorsement conferring it. (Cf. Sweeney v. Feedman, 35 Ir. L. T. 187.)
The great case on this section was Bank of England v. Vagliano, 1891, A. C. 107, on a bill of exchange, which was a forgery throughout, the drawer's signature, the name and indorsement of the payees all being forged. The name of the payees was not a name of fictitious persons: there were in fact such persons, but their name had been inserted in a bill, which was a fiction throughout, and it was held that the bill was payable to fictitious persons (a) within s. 7 (3), and so was payable to bearer.
It was followed in Clutton v. Attenborough, 1897, A. C. 90.
Clutton's clerk procured by fraudulent representations cheques to be drawn by Clutton in favour of & fictitious person “G. B.” (The payees in Vagliano's Case were real persons, though not real
(a) See § 12 in Chapter II.
CLUTTON V. ATTENBOROUGH.
payees, & point unsuccessfully raised by Russell, Q.C., for the acceptor, Vagliano.)
The clerk indorsed the cheques “G. B.” and negotiated them to Attenborough. It was held that the cheques were drawn payable to "a ficti- . tious or non-existing person ” within s. 7 (1), and accordingly were rightly treated as payable to bearer, and that it was immaterial that Clutton, when he so drew the cheques, believed there was such a person as G. B., and accordingly Clutton would not recover from Attenborough the amount of the cheques paid to Attenborough by the bank on which they were drawn.
Lord Bramwell and Lord Field dissented in Vagliano's Case, the former with characteristic vigour and frankness. But Clutton v. Attenborough is not so strong & case. The payee there was an absolutely non-existing person; in Vagliano's Case, the payees were a well-known firm, who could only be described as “fictitious persons" by a straining of language. They were so considered because the bill was a fiction throughout. It was as if the forger had opened a directory and put down the first name he came across. (Cf. Halsbury, L.C., , at p. 121.)
59.-When a cheque is drawn on a banker, and the banker on whom it is drawn pays in good faith and in
PROTECTION TO BANKER PAYING FORGED CHEQUE. 79
the ordinary course of business, it is not incumbent on the banker to show that the indorsement of the payee or any subsequent indorsement was made by or under the authority of the person whose indorsement it purports to be, and the banker is deemed to have paid the cheque in due course, although such indorsement has been forged or made without authority. (S. 60.)
(Cf. Hare v. Copeland, 13 Ir. C. L. R. 426.) This is the chief of the provisions excepted in
The section does not cover the case of a person receiving payment on a forged indorsement (Cf. Ogden v. Benas, 43 L. J. C. P. 259), or a banker paying on a forged drawers signature. (Cf. Orr v. Union Bank of Scotland, 1 Macq. 513.)
The payment must be “in the ordinary course of business.” A bank paying a crossed cheque in contravention of the crossing could not rely on this section. (Cf. Smith v. Union Bank, L. R. 10 Q. B. at p. 296.)
Charles v. Blackwell (1 C. P. D. 548, 2 C. P. D. 151) was on 16 & 17 Vict. c. 59, s. 19, which is superseded by s. 60 of the present Act, and it was decided that a banker was protected, who paid the amount of a cheque to an agent, who without any authority so to do, indorsed it “per pro” and kept the proceeds. The loss fell on his principal.
S. 60 undoubtedly covers sucb a case.
ESTOPPEL BY CONDUCT.
Ss. 54 and 55 contain further exceptions to s. 24. The material provisions of these have been set out in Chapter II., $ 5 and § 16 (b) and (c).
Ss. 80 and 82 (set out in Chapter V., $$ 49 and 51) protect a banker on whom a crossed cheque is drawn, and the banker who collects such cheque respectively.
60.-A customer of a banker, who by his conduct has led the banker to believe that the signatures of any cheques purporting to be drawn by him are his, whereby the banker has been induced to pay such cheques and has paid them without negligence, may be precluded from denying against such banker the genuineness of such signature.
This is on the ground of estoppel. M'Kenzie v. British Linen Co., 6 A. C. 82, was a case on a bill with a forged drawer's signature. On dishonour it was sent to the drawer. The acceptor got the bill renewed for a smaller sum, paying the difference in cash to the bank, and again forged the drawer's signature. The drawer did not repudiate the transaction for fourteen days. Held, he was not estopped from denying his signature.
So mere silence does not easily raise an estoppel.
In Chatterton v. London and County Bank (Journal XI., 333), Day, J., advised the jury that the plaintiff should suffer the loss incurred by