of cheques be verified by the full signature of drawer, in place of the initials hitherto generally in use," to signify the same in the usual manner. way. It seems to be all one On the contrary, if any. I think I may say the meeting is unanimously in favour of that proposal. The CHAIRMAN: I now come to the second point : "Should not 'p. p.' endorsements to cheques to order, presented by a banker, be dealt with by the bank on which they are drawn, as they would have been had the payee personally endorsed ?" Now this is a question which, as far as the London bankers are concerned, has been, as you know, settled long ago; but there are certain parts of the United Kingdom-especially Ireland and some parts of England and Scotland--where cheques endorsed "per procuration" are not paid. Of course, the theory of a cheque is, that it is payable to John Brown, and given to him personally; but when the practice of cheques circulating through the post, and by other means, came into vogue, it very often happened that John Brown was not there to receive the cheque, and he deputes a person in whom he has confidence, and who transacts his business, to sign by procuration. I therefore think that it is acknowledged that cheques can be made use of, not only for a person to go and fetch the money himself from the bankers, but to be paid into his banking account, or circulated, very much as a circulating medium; and it is essential, therefore, that cheques endorsed by a well-known person acting for the firm should be admitted in the same way as cheques endorsed by a payee personally. This is a point on which possibly some gentleman may like to make some general observations. I believe all our correspondents and the council are unanimously of opinion that this is a rule which ought to be adopted. As I have said, it is the uniform custom over the greater part of England, and the difficulty only arises in a limited portion of the United Kingdom. I should be glad, therefore, to hear what any gentleman has to say on the practical bearing of the question. Mr. McKEWAN: This is a subject, I confess, which excited my surprise when I found any question was raised by the proposal on the paper here, that is, that the practice was not now thoroughly recognised by all bankers in all parts of the United Kingdom, because, I take it, it is our business to expedite business, and not to obstruct it. We are obliged to take a certain amount of risk upon ourselves in paying cheques and bills, and so on, and we do not consider that it is necessary to be punctilious on every point, as must be the case with bankers who now consider it necessary to refuse to pay endorsements per procuration, without having the authority vouched. I promise not to detain you long, and I am not going to read any very long papers, but it must be interesting to some of our younger members, who do not know the history of this question, if I very briefly state that, under the 16 and 17 Vict., chap. 59-the Stamp Act, when the duty of a 1d. was for the first time imposed on cheques-the exemption of bankers from liability in the case of forged endorsements was introduced. The clause runs in this way: "It shall not be incumbent on such banker to prove that such endorsement, or any subsequent endorsement, was made by or under the direction or authority of the person to whom the said draft or order was or is made payable either by the drawer or any endorser thereof." Well, that language would appear to be perfectly clear. Nevertheless, doubts did arise, but not for seven years. It was not till 1860, when an action was brought against the Bank of England by a firm of Cookson & Co. Their traveller had collected a cheque of some few hundred pounds, payable to the order of the firm, and endorsed it “p.p.” Cookson & Co., and appropriated the money to himself, and absconded. Cookson & Co. brought an action against the Bank of England, and the case was brought before the Court of Exchequer, and Baron Martin there ruled that the man had not authority, that he had misappropriated the money, but he ruled that the Bank of England were covered by the Act 16 and 17 Victoria. That case was not appealed against; and so it remained till the last year or two. But I will take leave to refer to a case which appears to my mind so clearly and distinctly to have settled the question, that I do not think any doubts ought further to exist. In the first case there might be some doubt, as it was the decision of one judge only, and no appeal, and had it been taken to a higher court, before other judges, the bank might have been held liable. But in 1875 (and I mention this case because, although we were not concerned in the case that is we did not appear-we were virtually the defendants), an action was brought by a firm of Charles, trading under the name of Smith and Co., against Blackwell (of Crosse and Blackwell). The business carried on by Smith and Co. was altogether different from that of Charles-I think they were warehousemen; and those were engaged in some business as importers of Japanese goods. Smith was represented by an agent named Kingsford, and sold to Crosse and Blackwell. Crosse and Blackwell paid money from time to time-considerable sums of money-which Kingsford paid into his own account, accounting to his principals from time to time, but eventually he went wrong, leaving himself a debtor to his principals in the sum of about £200. The last payment received was a particular cheque on which the action arose. The cheque was for a larger amount than the agent was indebted to them, and he endorsed it "Smith and Co., by S. Kingsford, agent." The action went on, and I was in the court at the time and heard Lord Coleridge nonsuit the plaintiff on various technical grounds which I need not refer to, but really and truly that he had endorsed the cheque in such a way as to protect the banker. They applied for a new trial, and it was argued before Justices Brett and Lindley and the Lord Chief Justice, and their application for a new trial was overruled—that is, the rule was refused; but in the following year 1877, they went to the Court of Appeal, and there the case was argued, and I will just read to you half-a-dozen lines out of the judgment of the Lord Chief Justice of the Court of Appeal. It was in February, 1877. After going into the whole circumstances of the case, he says: "In the present case, indeed, the endorsement itself is genuine-that is, what it purports to be, that of the agent, but then the agent had no authority to endorse; and does the enactment apply to such a case? The enactment was intended to relieve the banker from liability when paying on endorsements, the genuineness of which he has no means of testing. But was it intended to relieve him from the ordinary duty of looking to see that the endorsement was that of the proper endorser? If so, it would be incumbent on him, on an endorsement by procuration, to ascertain that the agent had authority to endorse. But it would be a most serious hindrance to the despatch so essential in banking business, and it would create a serious impediment to the negotiability of cheques drawn to order, if a banker paying on such an endorsement were not held to be protected, and were obliged in every instance first to satisfy himself of the agent's authority, and it may reasonably be assumed that the statutory indemnity given to bankers was intended to include such a case, and it is, indeed, provided in the enactment that the banker need not prove that the endorsement was made by or with the authority of the person to whom the draft was made payable. The object appears to have been to make the banker free of all liability in respect either of the genuineness or validity of the endorsement, whether purporting to be that of payee or agent." The Justices of Appeal confirmed the decision of the Court below. Now I cannot imagine a stronger decision of a case than that, because they travelled really out of the actual endorsement of this particular cheque, and went into the whole question of the law and what was the intention of the legislature, and the decision at which the Court of Appeal arrived was unquestionably that in "per procuration " endorsements the banker was protected. There is only one other point to refer to, more as a matter of caution to those bankers who are so exceedingly cautious. They will find, then, caution may land them in a difficulty. If we assume that a cheque, with the endorsement "per procuration," is endorsed by a man having a power of attorney, and the banker says "No, I won't pay that cheque till I am satisfied, and the authority is produced," if he says that and refuses, and the cheque is circulated through a number of hands, and eventually comes to the endorser, who says, "Here is my authority,"-if the drawer has failed in the meantime, is it not a question whether he (the banker) would not be liable to pay, as holding that money for the use of that cheque? Mr. HOWARD: I think I may mention that the legal point raised in this question was not so much before me (and I may as well acknowledge the paternity of the question) as an actual case which 72 VOL. XXXIX, came under my observation. We had a cheque paid in by one of our customers, a man well known, drawn by the head office of a bank, on a branch in London, doing a large business; and, although this cheque was so drawn, and the bank consequently liable on it, the London manager refused to pay because it bore an endorsement "p. p." It came before me at the end of the clearing, and I had no help for it but to pay against it. I wrote to the principal office in the provinces--of course, in the morning the agent had instructions by telegraph to pay. The CHAIRMAN: I think we are agreed on this point, but as a matter of formality, I will put the question to the meeting. "Should not 'p. p.' endorsements to cheques to order, presented through a banker, be dealt with by the bank on which they are drawn, as they would have been had the payee personally endorsed ?" Those who are of opinion that that should be the case will please signify the same in the usual manner. On the contrary. I think we are all agreed in favour of that point. to us. That, gentlemen, will conclude the business of this evening. We have to thank Mr. Price for the very interesting paper he has read I think we have also brought out one or two points of interest which will develope themselves, and, it may be, produce benefit; and I hope we may get into the habit of discussing practical points, and expressing our views on them. MELBOURNE BANKS CLEARING HOUSE TRANSACTIONS CIRCULATION OF GOVERNMENT NOTES IN GERMANY. THE German Coinage Law has been much discussed in this country on account of the influence of the sales of demonetized silver by the German Government on the Indian Exchanges. Before the Coinage Law could be brought into full operation it was also needful for the German Government to assimilate a large amount of notes issued by the respective governments which compose the Empire. A statement of the manner in which this operation was carried through, and of the difficulties incurred in the process, will be of historical interest, and will also be of practical service to those who have to follow the movements of banking in Germany. We, therefore, give a translation of the law regulating the issue of Imperial Treasury notes in Germany, with some remarks on the alterations made in it during its passage through the Reichstag. A list of the various issues of notes withdrawn, for which the Imperial Treasury notes are substituted, is added, and a statement showing the proportions in which the Treasury notes were distributed to the various Kingdoms within the boundaries of the Empire. GERMANY. LAW REGULATING THE ISSUE OF IMPERIAL TREASURY NOTES; AND OBSERVATIONS ON THE SAME BY DR. ADOLF SOETBEER— 30TH APRIL, 1874. We, William, by the grace of God, Emperor of Germany, King of Prussia, &c., decree in the name of the Empire of Germany, in accordance with the Federal Council and the Imperial Diet, as follows: § 1. The Chancellor of the Empire is authorised to issue notes of the Imperial Treasury to the amount of 120,000,000 marks (1), divided into notes of 5, 20, and 50 marks (2), and to distribute them amongst the Federal States proportionately to their population according to the census of 1st of December, 1876. The Federal Council will decide as to the distribution of the amount of the separate denominations of the notes. § 2. Each Federal State must call in as speedily as possible and redeem publicly the Government paper money which it has hitherto issued, at latest by July 1st, 1875. The treasuries of those states which have issued the paper money alone are bound to accept Government paper money from January 1st, 1876. §3. Those States whose paper money exceeds the amount of notes of the Imperial Treasury handed over to them according to paragraph 1, will receive two-thirds of the excess of the amount in coin from (1) £6,000,000, (2) say 4s. 10 d., 19s. 7d., £2. 8s. 11fd. |