Anyhow this stamp provision affords some protection to drawers of cheques and parties to bills, but alas! none to you. If a bill or cheque is materially altered by someone at any time after it has got into the hands of a bona fide holder, this stamp objection will afford a defence. It is only in the case where the bill or cheque is in the first instance given not to a holder for value and altered by him that the stamp objection is not available. But, of course, as I say, this does not help you; if anything, rather the contrary, as going to invalidate the instrument on which you pay away your customer's money.

Another case bearing on a point we discussed last year has come before the Courts since we met. You remember we discussed the rights and liabilities arising out of the cashing by a bank of a crossed cheque over the counter. And I told you that in my opinion if there was not a forged indorsement the banker could recover; that it was outside any question of the crossed cheques sections altogether, but that if the bank took it honestly, and before it was stale, they became holders for value, entitled to hold the proceeds if paid to them, and entitled to sue on the cheque if it was dishonoured. But that, secondly, if the indorsement turned out to be forged, the bank acquired no title to the cheque, and if it were paid to them by the bank on which it was drawn they would be liable to the true owner whose money they had wrongfully received, inasmuch as the circumstances precluded the protection of the crossed cheques sections, firstly, because such a person was not a customer; secondly, because the money was received not for a customer, but for themselves; thirdly, because the element of negligence might be held to exist, though the latter ground would not necessarily apply in all cases. And you may remember I set a question on this subject in the examination. Now the first point has not, at any rate recently, been the subject of judicial decision, but the second has. The case was Matthews v. Brown and Co., and was heard on appeal from the Leeds County Court by a Divisional Court on April 4th, 1894.

The plaintiff on the 12th of July, 1892, posted a cheque on a Louth bank to Ford & Co., of Manchester, to whom he was indebted. He made it payable to their order and crossed it generally. The cheque was stolen in transit, and on the 14th of July it was presented across the counter with a forged indorsement on it to the defendant bank at Leeds, by an individual who asked them to cash it for him, or to get the money for him. The person who presented it kept no account at the defendant's bank, and it appeared was a stranger to them. They made enquiries of the Louth bank, on which the cheque was drawn, and were told it would be paid, and on the 17th they gave the man who had presented it the money for it, deducting 1s. as discount or commission. On the 14th, when the cheque was first brought to them, they asked the name and address of the person who brought it, and he gave one, but it did not appear that the bank took

any steps to verify it until after disputes arose. They carried the cheque to a "Sundry Persons" account, and when they gave the money for it they took from the person in question a counter cheque for the amount paid.

The defendant bank received the amount of the cheque from the Louth Bank. It was not quite clear whether they received the amount before they paid over the amount of the cheque or not. I was disposed to think that they paid it over before it was actually received, but after they had received the intimation from the Louth Bank that it would be paid. Of course Ford and Company never got their cheque, the plaintiff paid them again, and then brought his action against the Leeds Bank, the defendants, for the money of his which they had wrongfully received and dealt with. The County Court Judge decided in favour of the plaintiff, and the bank appealed.

And the bank relied solely on section 82 of the Bills of Exchange. Act. The forged indorsement of course precluded them from suggesting they were holders for value, inasmuch as, as you know, no title can be gained through a forgery, however much value you give, and however innocently you take the instrument.

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So what the defendants had to show was that they being bankers had in good faith and without negligence received payment for a customer of the cheque, to follow the words of section 82. And the County Court Judge's judgment seems to me so well expressed, that as it was adopted by the Divisional Court, I think I cannot do better than quote it to you. His Honour said: "I do not think that a person who casually enters a bank as he did, and upon the errand "which he had in hand, is a 'customer' within the meaning of "section 82 of the Act, nor is more than a spurious or fictitious 66 customer by the routine entries which were gone through by the "bank. I do not think that the bank was receiving payment,' i.e., "collecting for him, but for itself, and having ascertained that the 'cheque would be honoured and the money forthcoming, it then "discounted the cheque. It seems to me that if I held otherwise, "and were right in doing so, crossed cheques would be stripped of every vestige of security which presumably attends them, and that a thief would find in every bank he passed a safe and certain "channel for realizing the spoils of his crime." On the appeal the court upheld this judgment. Mr. Justice Cave said the County Court: Judge was right in holding this not a case of a customer of the bank. The word "customer" involves use and habit. There was nothing of the kind here, and this man who presented the cheque could not be described as a customer. He was a stranger of whom the bankers who paid him knew nothing. They did not even know his name or place of abode. They knew nothing about him. It was absurd to speak of his being a customer of the bank. One transaction, the one in question, did not make a man a customer. Mr. Justice Wills.

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said he entirely agreed, and he adopted the observations of the County: Court Judge. So you see the appeal turned solely on the question of customer or no customer, and the result fully justified me in what I told you last year on the point.

The County Court Judge, as you see, took the further point which I suggested to you, viz., that payment was received not for the customer but for the bank itself, on the assumption that the bank paid the thief before they received the money.

Now it may have struck you that the remarks of the County Court Judge as to the facilities afforded to a thief if he could be held to be a customer under like circumstances, and the nullification of the protection afforded to drawers and payees of cheques by the crossed cheque system, might equally apply to the other case of a banker cashing a crossed cheque on which there is no forgery. And I ought to tell you that Mr. Justice Wills in the course of the argument, when counsel for the bank suggested that though the account was opened with sundry customers, it was the same thing as if it had been opened with Ford and Co., the payees, remarked "A very favourable view to the felonious part of the population," and in answer to a remark that that was surely a hard view to take, the learned judge added, "If a banker takes a cheque under such circumstances, ought he to be protected?"

Now you may say, and fairly say, "Does not that apply equally or with even greater force to the case where a banker cashes a crossed. cheque absolutely over the counter, without going through even the formality of putting it to a "Sundry Persons" account. Is not that giving even greater facilities for fraud. Must not the judge be understood to have equally condemned the practice of cashing crossed cheques over the counter in all cases, and were you not wrong in saying that the bank in such a case could hold the proceeds or recover on the cheque when there was no question of forgery?

Now, to answer the second question first. No, I do not think I was wrong, and I will give you my reasons presently. With regard to Mr. Justice Wills' remarks and those of the County Court Judge I am ready to admit that the objection on the ground of policy, if it can be sustained, applies possibly more strongly to the case of cashing a crossed cheque immediately than to the case of carrying it to an account and making the presenter call again for the money. I have not the slightest doubt that a thief would wish to get hold of the proceeds of his theft and clear out of the place at the earliest possible, opportunity. I can quite understand a certain reluctance on his part to present himself at the bank again after an interval, which might have been employed not altogether to his advantage. But motives of policy are of no avail where the Legislature has not seen fit to embody them in statutory enactments. I am sure Mr. Justice Wills would be the first to tell you that if in this case the bankers had been within the protection of the Act, the opportunity they.

unwittingly afforded to the thief to realise his plunder could not have affected their rights. The question of inadvisability is like that of hardship, a thing apart altogether from law. It is used as an argument frequently, but it is of no use even as that. Why, in that very case of Richdale, of which we have been speaking, it was contended strenuously that if the bank were held holders for value, "anyone who got possession of a lost or forged cheque could always get the money by paying the cheque to a banker," but the court simply disregarded the argument altogether. So what we must understand by the expressions used by the County Court Judge and Mr. Justice Wills is this, that the case not being within the statute, the inconveniences which would result from the opposite contention were probably what influenced the Legislature in passing the statute. think this is indirectly stated by Mr. Justice Wills when he says "ought a banker acting thus to be protected?" that is, by the statute.

None.

But now with regard to the case of cashing the cheque over the counter when there is no forgery at all-that is quite a different story. Granted, it might be for the benefit of the community that the practice should be stopped. But what statute does it? Section 82, of course, does not protect you, and you do not want its protection, your rights are simply those of a holder in due course under section 38, who has acted honestly even, if possibly, negligently. That is the basis on which I decided the question before, and it appears to me absolutely unshaken by anything which has

occurred or been said since.

I am really disinclined to argue the matter further, but I have a salutary feeling that propositions which appear self-evident to oneself do not always strike other people in the same way, and both from some of the answers in the examination and from communications I have received, it would seem that difficulty has been experienced in some quarters in recognising the position or reconciling it with the case of Matthews v. Brown & Co. Let me, therefore, just put my conclusion in another form.

The fact that a banker cashes a cheque drawn on another bank across the counter for a person not a customer, makes him a holder for value. Now if authority were wanted, that case of Moule v. Brown as interpreted in Robinson v. Hawksford, to which we alluded before, is directly in point.

There, as you may remember, a person obtained cash over the counter from a bank, of which he was not a customer, for a cheque drawn on another bank. Now, in Robinson v. Hawksford, in 1846, Mr. J. Pattison said with regard to this case, which had been quoted in argument "Moule v. Brown was not an action against the maker, and no one said that an action would not have "lain against him," and he practically repeated the same remark in his judgment. This implies beyond doubt that the banker could have recovered against the drawer, and you must remember that

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in those days there was an inclination to treat negligence as invalidating the title of a holder for value, which makes the case a stronger authority. So we have got as far as this, that a banker cashing a cheque drawn on another bank, over the counter, makes him a holder for value.

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Then does it make any difference that the cheque is crossed? And I have no hesitation in saying no. Smith v. Union Bank shows that a crossing does not affect the negotiability of the cheque. But I do not rely on that case alone. Look through the whole series of sections relating to crossed cheques, and I defy you to point out anything which says, or even implies or suggests that a crossing has the effect of putting a person who takes the cheque on enquiry as to his transferor's title. The whole tendency of these sections is the other way. If a crossing by itself could affect your title, what possible sense would there be in section 81, which provides that when a person takes a crossed cheque which bears on it the words "not negotiable " he shall not have and shall not be capable of giving a better title to the cheque than that which the person from whom he took it had. That section would be pure surplusage, and unmitigated nonsense. As was well said in answer to a question on this very point in the Journal of the Institute of Bankers,* last month :- "The crossing of a cheque is merely a direction to the paying banker that the amount should be paid only to a banker, "and does not in any way limit the negotiability of the cheque. The "transaction has nothing to do with banker and customer, and the position of the banker is exactly the same as that of a tradesman or a friend who cashes a cheque for the convenience of the holder. "It was to meet precisely this case that the use of the words 'not "negotiable' were authorized by the Bills of Exchange Act, 1882."" So again Judge Chalmers, in his note to section 81 of the Act, puts this case-Suppose a cheque payable to bearer, and crossed not "negotiable' is stolen. The thief gets a tradesman to cash it for him, "and the tradesman gets the cheque paid on presentment through a "banker. The banker who pays and the banker who receives the "money are protected, but the tradesman would be liable to refund "the money to the true owner, and, assuming payment of the cheque "to have been stopped, he could not sue the drawer." Now, that clearly implies that in the absence of the words "not negotiable the tradesman would not be liable to refund, and would be entitled to recover from the drawer. The banker who cashes the cheque over the counter is precisely in the position of the tradesman, as we have said before, and, therefore, in the absence of the words "not negotiable" and in the absence of forgery, he is not liable to refund, and he is entitled to recover.

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Now, gentlemen, that winds up that argument, and I think you may take the point as settled, until a competent Court holds a contrary view, which I do not think likely.

* Vol. XV., p. 161.