August 10th, and that the cheque was sent to plaintiffs on the 7th, and reached them and was placed to Mrs. Monson's credit on the 8th, two days that is before its apparent date. So that, in holding the plaintiffs entitled to recover, the Court affirmed the contention that a post-dated cheque is negotiable before the apparent date arrives. I know when we were talking about this last year some gentlemen expressed their views that such cheques could not be passed from hand to hand, and in fact I think someone suggested this as a reason why they did not require a bill-stamp. But you see that is not so, and when one comes to think of it, it seems right. If the cheque is valid, and is a bill at a future date in every respect except the stamp, it must be negotiable, and so can be passed from hand to hand. And the curious points arise when does it become due? when overdue? Could you sue on it before the apparent date arrived, on the contention that it involved a promise to pay on demand, if the banker did not ?

With regard to its due date, the Court held in Foster v. Mackreth, as we saw last year, that the practical effect was that of a bill at so many days' date, and both in that case and also in Gatty v. Fry, I think it is assumed that no action could be brought on it before the apparent date arrived. I think the effect really is that the cheque is payable on demand on or after the apparent date. I think when Lord Esher speaks of the action possibly coming on before the date on the cheque his mind was directed only to the stamp question and I do not think that he intended to intimate any opinion that a holder could bring an action before that date arrived. But, as is sure to be the case when you are dealing with irregular and anomalous instruments, the question cannot be quite clear. Section 13 of the Bills of Exchange Act says the date on a bill is to be treated as the true date unless the contrary is proved. Therefore you may contradict the date. When you have shown the true date, then the cheque ought to become one payable on demand, and then I do not see how any stamp objection could arise, or at any rate be sustained. However, I do not suppose anyone would care to try the experiment of suing before the apparent date has arrived, and so the question will probably remain a theoretical one. Again, I think that such a cheque retains its character of a cheque or bill payable on demand to the extent that it does not become absolutely due on the apparent date, nor are any days of grace allowed. Although up to the apparent date it has the effect of a bill at a fixed date, when the apparent date arrives it has to be treated as a bill or cheque payable on demand. Thus I consider that in deciding whether a holder had taken a post-dated cheque when it was stale or overdue, you would have to look at the apparent date and treat it as if it were an ordinary cheque drawn on that date, and it would not be overdue until an unreasonable time had elapsed from that date. As you know, section 36 of the Bills of Exchange Act says: "A bill payable on demand is deemed to be overdue when

on the

"it appears, on the face of it, to have been in circulation for an "unreasonable length of time. What is an unreasonable length of "time for this purpose is a question of fact." These words " face of it clearly show that to be overdue or stale, time must be reckoned from the ostensible date of the cheque. In the case of a person who takes it after that date that may be fair enough, but it is rather a serious result of these cheques being held negotiable before that date, that a man who took the cheque before its apparent date, perhaps with knowledge that it had been issued weeks before, should be entitled to say when the cheque was dishonoured on the ground of some fraud in its inception: "Oh! it was not overdue or even due when I took it, look at the date.”

Of course, as I have said, the whole thing is an anomaly, and now that the existing law has been held to admit of these cheques being used as bills, to the complication of business and the prejudice of the revenue, they ought to be put a stop to by a short Act of Parliament. It is one of the objects of judicial decisions to draw attention to defects of legislation or existing law with a view to their being remedied. Or if the Inland Revenue succeeded in enforcing the penalty we have referred to, that would probably deter people from drawing post-dated cheques.

But this case opens up another and a very serious consideration on a point we have often touched upon, notably last year, and on which I am frequently receiving communications. And the point is as to the effect of crediting a customer at once with cheques paid in to his credit before you get them cleared.

I have mentioned my doubts on the point till you must be tired of hearing me, and I have always had the impression that you, or many of you, thought there was nothing in it, and I was half inclined to take the same view, inasmuch as I agreed with Judge Chalmers that the case of ex parte Richdale on which the question turned was one of very doubtful authority if followed to its extreme results. But now ex parte Richdale has been distinctly and expressly approved by the Court of Appeal in this case of Bank of Scotland v. Tottenham, and it therefore becomes necessary to go into the whole matter once for all. And so we may as well begin from the beginning.

Now the question is this: What is your position with regard to cheques paid in by your customers, with which you credit them immediately, before you have got the money for the cheque from the bank on which it is drawn? What are your rights in case such cheque is dishonoured? Of course we all know the ordinary course of procedure. If such cheque is dishonoured, you simply debit the amount to your customer and if necessary sue him for the overdraft, irrespective of whether he was overdrawn or not when the cheque was paid in, and equally irrespective of the question whether the cheque was a bearer cheque or an order cheque indorsed by him. Now, of course, that is very convenient, but the recent cases would seem to

make it doubtful whether it is a course you are beyond question and in all cases entitled to adopt. Now the first question is, in what capacity do you receive the instrument? Do you in point of fact discount or purchase the cheque, or do you merely take it as agent for collection? I am trying to go by steps, but it is not easy.

And here comes in the first difficulty. The relation of banker and customer being that of debtor and creditor, it might be said that by taking in cheques you take them as money, as a loan, that is, from your customer, and that you are not entitled to go back on your customer if the cheque be dishonoured any more than if he had paid in sovereigns to the same amount. It is curious, and might be quoted in support of this view, that Lord Justice Kay, in Bank of Scotland v. Tottenham, speaking of the cheque there sent to the plaintiff bank, quotes Lord Cottenham's words in Foley v. Hill, which was the case which established the relation of debtor and creditor between banker and customer.

Those words are as follows: "Money placed in the custody of a banker is to all intents and purposes the money of the banker." Does that mean that the relation of banker and customer is so exclusively that of debtor and creditor that everything that comes to you from the customer is to be treated as absolute money? Clearly not. It would be absurd to ignore the multitude of other relations between banker and customer. Such a construction would eliminate altogether the character of agent for collection, and would absolutely nullify the crossed cheques' sections of the Bills of Exchange Act, by rendering it impossible that a banker should ever receive payment for a customer. I take it the learned Lord Justice only referred to this decision by way of supporting the view that the bank had become a holder for value.

I do not, therefore, consider that any such contention is worth serious consideration. There are plenty of difficulties in the way without it. And a case which seems a good starting point for our argument, inasmuch as it shows the sort of transaction which, though not nominally a discount or sale of a bill, has a like effect, and what that effect is, is an old one in 1699, the Bank of England v. Newman. There Newman brought a bill payable to himself or bearer to the bank and asked how much money they would give him for it. The bank took the bill, and gave him so much money, allowing so much for discount. The bank could not get this money on the bill, and sued Newman for the amount they had given him for it, as for money lent.

The Judge said they could not recover, but the jury found for the bank. Then the Court gave a new trial on the ground that this was a plain sale of the bill. For that if a man has a bill payable to him or bearer, and he delivers it over for money received, without indorsement of the bill, this is a plain sale of the bill, and he who sells it does not become a new security. But that if he had indorsed it, he

would have become a new security, and then he would have been liable on the indorsement.

But, adds the reporter, "Upon the new trial the jury found for the plaintiffs," and there the story ends. They must have been a sporting jury with a due respect for the Bank of England, but I am afraid we must take our law from the judges, not the juries. Of course, in this case, there was nothing to show any relation of banker and customer. Newman may have walked into the bank as he would into any bill-discounter's and on the same errand. What the case does show, however, is that where there is a sale of a bill, the bill is taken for better or worse. It is like buying a horse. If you buy a horse and pay the price, and the horse turns out worthless, you cannot in the absence of fraud or warranty, get your money back. So with the bill. There are, as you know, certain warranties now implied in the case of transfer by delivery of a bill, viz., that the bill is what it purports to be, and that the transferor has the right to transfer, and is not cognisant of any facts affecting its validity. But except on one of these grounds or on that of fraud, you cannot if you buy or discount a bearer bill or cheque, and it is dishonoured, go back on your transferor for money you have paid him. That is law and

common sense.

It is the old legal maxim: "The buyer must look out for himself." Note, moreover, in passing in this case its enunciation of a point I have often mentioned to you, as to the difference in this respect between a bill or cheque, which you take as a bearer document, and one which you take with your transferor's indorsement on it, whether because it was an order bill to begin with, or because, although payable to bearer or indorsed in blank, you get him to indorse it. Where he does not indorse it you have no remedy against him on the bill. You may or may not have a remedy against him on the consideration for the bill, according to circumstances. Where you hold his indorsement, you have a remedy against him on the bill if you have given value, and the bill is dishonoured. I mention this now, because the case illustrates it well, and I shall have to refer to it again.

Now the next stage is to consider whether by so crediting a cheque you put yourself in the same position as if you had discounted it or purchased it,

The old law was clear and comprehensible, cheques or bills paid in were held to be paid in for collection. The custom of banks seems to have been to enter cheques and bills as such, and when the amount was received to carry it to the cash credit. Even if such instruments were credited as cash, such entry was held liable to correction. It was never suggested that the property passed to the banker. The transaction was over and over again distinguished from purchase or discount. If the banker received the money it went to the customer's credit. If the customer was overdrawn, the banker had a lien on the instrument and could sue to the extent of his lien and so on.

D

And the distinction was always based on the point that the banker acquired no property in the instrument.

Take the case of Giles v. Parkins in 1807. Lord Ellenborough says: "Every man who pays bills not then due, into the hands of his "banker, places them there, as in the hands of his agent, to obtain "payment of them when due. If the banker discounts the bill or "advance money upon the credit of it, that alters the case, he then acquires the entire property in it or has a lien upon it pro tanto for "his advance."

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So in Thompson v. Giles, in 1824, Holroyd, J., says: "In order "to change the property it must be shown that the bankers bought the "bills or discounted them, which is indeed the same thing; then the "customer might immediately have sued the bankers for the price they agreed to give for the bills, but still retained in their hands, and if "the customer did not indorse the bills and they were afterwards "dishonoured, the bankers, under such circumstances would have no "remedy against him." And there are other passages in the judgment to the same effect. Now does not that mean that if the property in the instrument has passed, the result is that except on the indorsement, if any, by the customer, there is no remedy against him if the bill or cheque be dishonoured, as in the old case of the Bank of England v. Newman? Is not the passing of the property the criterion?

And if this be the true view of these cases, ex parte Richdale and Bank of Scotland v. Tottenham decide that the crediting a customer's account with a cheque immediately passes the property and makes the banker the holder for value of that cheque, whether the customer's account be overdrawn or not.

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In ex parte Richdale, which was decided by the Court of Appeal, in 1882, and reported 19, Ch. D. 409, Sir George Jessel says: "A. P. paid the cheque to his bankers and they placed the amount of it to "his current account. The bankers were the holders of the cheque "for value; the moment they credited the amount of it to A. P., it "BECAME THEIR PROPERTY " and Brett and Holker, L.JJ., agreed.

There the account was not overdrawn. Now that case was expressly approved and followed as I have told you in Bank of Scotland v. Tottenham, where Lord Esher says: "One defence in this case is "that the bank gave no consideration for the cheque, but this point "is determined against the defendant by the decision of the Court "of Appeal in ex parte Richdale. When the bank received the "cheque from Mrs. Monson they did so on the undertaking to give "her credit to the amount of the cheque on her general account. "This they did, and giving such credit is sufficient consideration as "between a bank and a customer." And Kay, L.J., says: "It was "decided in ex parte Richdale, in this Court, that where a customer pays a cheque to his bankers with the intention that the amount of "it shall be at once placed to his credit, and the bankers carry the