LEGAL DECISIONS AFFECTING BANKERS.

SUFFELL. BANK OF ENGLAND.

(Reported in full, see below.)

[The alteration of the number of a Bank of England note vitiates it].

In this case the plaintiff was a money changer at Brussels. He was the bona fide holder for value of 16 Bank of England notes, the numbers of which had, between the issue of the notes and their purchase by the plaintiff, been fraudulently altered with the object of preventing their being traced.

The law being that a "material alteration" in an instrument vitiates it, it was argued and had been decided in the Court below, that as this particular alteration did not affect the contract by the Bank to pay the notes, it was not such a "material alteration" as would vitiate them.

It was now decided on Appeal that Bank notes being something more than mere promises to pay, viz., a part of the currency of the kingdom, and their numbers, although not part of the contract, having various important uses, any alteration in the numbers was such a "material alteration" as to vitiate the notes.*

[IN THE COURT OF APPEAL.]

SUFFELL . THE BANK OF ENGLAND.

Bank of England-Action on Note-Erasure of Number-Material Alteration. In an action against the Bank of England for the non-payment of notes payable to bearer which had been regularly issued by the bank, it appeared that the notes had been bord fide purchased by the plaintiff for value, but that before the plaintiff took them the notes had been altered by erasing the numbers upon them and substituting others, with the object of preventing the notes from being traced, as payment had been stopped and a notice issued specifying their numbers:

Held, reversing the decision of Lord Coleridge, C.J., that, although the altera

tion did not vary the contract, it was material in the sense of altering the notes in an essential part, and that therefore the notes were vitiated, so that the plaintiff could not recover in his action on them against the bank.

APPEAL from the judgment of Lord Coleridge, C.J., on further consideration (reported 7 Q. B. D. 270).

The question was whether the fraudulent alteration of the number of a Bank of England note was an alteration in such a material particular as to vitiate the note and prevent an innocent holder from recovering thereon.

The plaintiff, who carried on the business of a money changer at Brussels, purchased bona fide in April, 1880, sixteen Bank of England notes, ten being for £20 each, and six for £50 each. These notes had been regularly issued by the bank and formed part of fifty notes of £50 each, bearing date the 2nd of July, 1878, numbered 50,501 to 50,550, and of fifty notes of £20 each bearing date the 3rd of September, 1878, and numbered 56,201 to 56,250, which had been given by the Bank of England in April, 1879, in exchange for three bank notes of £1,000 each and one for £500, which had been fraudulently obtained from Smith, Payne & Co., the bankers. Between the time when these notes of £50 and £20 each had been so received in exchange and the time when they were sold to the plaintiff they were altered by changing the figure 5 to a 3 in the numbers by which they were so numbered. The alteration was made fraudulently, and for the purpose if possible of preventing the notes from being traced, as payment of the notes had been stopped at the bank, and a notice of this with their numbers had been issued.

The Bank of England having refused to pay, the plaintiff brought this action on the notes, which was tried before Lord Coleridge, C.J., at the Guildhall sitting in April, 1881. The jury having been discharged, the cause was reserved for further consideration, and judgement was afterwards given by Lord Coleridge, C.J., for the plaintiff.

The defendants appealed.

April 25. Cohen, Q.C., and Webster, Q.C. (H. D. Greene, with them), for the defendants. The alteration of the number of a Bank of England note is a material alteration. The number is to identify the note and to enable it to be traced, and without it there would be no mode by which payment of the note could be stopped and notice given of its being stopped. It is essential also for enabling the bank to ascertain what notes are out in circulation. A Bank of England note is different from other promissory notes, and is not to be governed by the same rule as ordinary mercantile contracts. It is made a legal tender for sums above £5 by 3 & 4 Wm. 4, c. 98, s. 6, and by 7 & 8 Vict. c. 32, s. 4, the bank is bound to issue a note in exchange for bullion, and the bank of

course would be bound to issue it in the usual form, and therefore with a number on it, so that it could be taken as a tender. By 24 & 25 Vict. c. 98, s. 17, it is forgery to engrave, inter alia, any number intended to resemble any part of a Bank of England note, and by s. 12 of that Act it is also forgery to alter any such note. In Keg. v. Keith (1), where the prisoner was indicted under 11 Geo. 4 & 1 Wm. 4, c. 66, s. 18, which resembles this s. 12 of 24 & 25 Vict. c. 98, for engraving part of a note purporting to be that of a banking company, it was held that every part of what was usually circulated as a note of such company was part of the note within the statute. In the present case, the number on the notes was altered intentionally, and in order to make the notes represent different notes from those that were issued on the day they were dated. That would make them different instruments, and would be such a material alteration as would vitiate the instruments, although the alteration might not affect the contract: Pigot's Case (2); Master v. Miller (3); Mackintosh v. Haydon (4); Burchfield v. Moore (5); Davidson v. Cooper (6); Leake on Contracts, p. 808. The cases of Gardner v. Walsh (7), Catton v. Simpson (8), and Aldous v. Cornwell (9) only shew that the alteration to vitiate the instrument must be a material alteration. Where there is an alteration of the contract the alteration is necessarily material, but there is no decision, binding at least on the Court of Appeal, that the alteration must alter the contract in order to be material in the sense of vitiating the instrument. On the contrary, if the effect of the alteration is to change the instrument, or its operation, it is a material alteration within the meaning of the rule, but not so if the alteration merely adds something which the law would imply, and which is therefore superfluous Calvert v. Baker (10), Knill v. Williams (11), Kershaw v. Cox (12), Trapp v. Spearman (13), Tidmarsh v. Grover (14), and Simmonds v. Taylor (15). That last case was decided before 21 & 22 Vict. c. 79, had made the crossing of a cheque a part of the cheque, and when therefore the effacing the crossing did not affect its validity.

April 27. W. G. Harrison, Q.C., and C. H. Anderson, for the plain

tiff. To be a material alteration within the meaning of the rule laid down by Master v. Miller (1) it must be material to the contract. "Material," said the Master of the Rolls in Ireland, in Caldwell v. Parker (2), "when applied to words for this purpose means, I think, having an effect on some contract or right contained in or arising. out of the instrument itself. It does not mean capable of possibly affecting some right or contract which is not created by the instrument." In that case there had been a deed of indemnity given by a debtor to idemnify his sureties against any loss in respect of their being his sureties, and, after the deed had been executed, one of the sureties had drawn a pen through his own signature and that of another surety. The sureties were simply covenantees, and the deed imposed no liability on them. The Master of the Rolls therefore held that such an alteration of the deed was not a material one, and did not avoid the deed. In Trapp v. Spearman (3), Lord Kenyon, who was one of the judges in Master v. Miller (1), decided that the alteration of a bill of exchange by the addition of the words, "when due at the Cross Keys, Blackfriars Road," was not such as would invalidate the bill in an action on it against the acceptor. In a note to Cordwell v. Martin (4) it is stated, "words written on a bill which do not affect the responsibility of the parties will not vitiate it," citing Marson v. Petit (King's Bench sittings after Michaelmas Term, 47 Geo. 3). The cases of Henfree v. Bromley (5), Waugh v. Bussell (6), Trew v. Burton (7), Collins v. Prosser (8), and Sanderson v. Symonds (9) furnish instances of alterations which have been held to be immaterial and not to vitiate the instrument, and in those cases the alteration did not vary the contract, or at least was not considered to do so by the judges who decided them. In Mollet v. Wackerbarth (10) the alteration, which altered the rights of one of the parties, was held to be a material alteration of the contract, and that therefore it avoided it. In the present case the number on the Bank of England note is immaterial. It is equally a promise to pay the sum mentioned in it whether there be a number or not on the note. It is the same note which the bank issued, and issued for value received, and the bank therefore ought to be bound to pay it. The removal of the number is no more than would be the act of clipping a sovereign, an unlawful act which might subject the person committing it to punishment,

but which would not destroy the validity of the note or sovereign in the hands of a bona fide and innocent holder.

Cohen, Q.C., replied.

April 28. JESSEL, M.R. This is an appeal from the decision of the Lord Chief Justice of England in a case which raises the very important question, what is the effect of an alteration in the number of a note of the Bank of England as regards the liability of the bank to pay such note to a person who is an innocent holder of it for value. The question is one depending partly upon general law, and partly upon special considerations affecting the peculiar nature of a Bank of England note. It appears to me that the attention of the Lord Chief Justice was not directed to the very important distinction there is between a Bank of England note and an ordinary promissory note, for if it had been I think it is by no means probable that his decision would have been to the same effect that it was. Another point which I think I ought to remark upon is this, that a very large number of cases were cited in the Court below which are not technically binding upon this Court, but which were certainly to a great extent binding on that Court, and it may well be that in differing from the judgment of the Lord Chief Justice, we may be at liberty to do so by reason of that distinction.

I will first of all consider the general law on the subject, which I take to be settled now beyond dispute. The leading case, and which from the time of James I. has always been so treated, is Pigot's Case (1), and whatever may be said of the first resolution in Pigot's Case (1), no doubt has ever been raised as to the second resolution, which is this, "that when any deed is altered in a point material by the plaintiff himself, or by any stranger without the privity of the obligee, be it by interlineation, addition, rasing, or by drawing of a pen through a line or through the midst of any material word, the deed thereby becomes void." So that even if a single word which is material is erased it destroys the instrument. It was next decided that such rule of law which applied to deeds applied to documents not under seal. The case which decided this was the well-known case of Master v. Miller (2), decided in the year 1791. There Lord Kenyon, who was Lord Chief Justice of the Queen's Bench, held that the rule which applied to instruments under seal applied to documents not under seal, "because," he said, "no man shall be permitted to take the chance of committing a fraud without running any risk of losing by the event, when it is detected." Then he added, "The cases cited which were all of deeds were decisions which applied to and embraced the

(1) 11 Rep. 26.

(2) 4 T. R. 320; 1 Sm. L. C. 8th ed. p. 857.