Subject_Bill of Exchange — Negotiable Instrument — Cheque Payable to Order — “Fictitious Person” as Payee — Forged Indorsement — Bills of Exchange Act 1882 (45 and 46 Vict. cap. 61), sec. 7 (3) — Set-off.
Facts:
M was induced by the fraud of W to draw a cheque in favour of K or order. K was an existing person, and when M drew the cheque in his favour he intended that K or his indorsee should receive the money. W obtained the cheque, forged K's indorsement, paid the cheque into his own account with the N. and S. W. Bank, and they, on
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presenting it to M's bank received payment.
Held, that K was not a “fictitious” person within the meaning of section 7, sub-section 3, of the Bills of Exchange Act 1882, and that accordingly the N. and S. W. Bank were liable in the amount of the cheque to M.
Held further, in an action under precisely similar circumstances between I and the bank, that the fact that W had advanced to I a sum of money only £120 less than the sum in the cheque was immaterial, and that the bank had no right of set-off.
Headnote:
Appeals from the judgments of the Court of Appeal (
Lord Alverstone, C. J., Buckley and
Kennedy, L.JJ.) affirming judgments of
Bray, J., at the trial of the actions before him without a jury. The facts are given in the judgment.
Their Lordships gave considered judgment as follows:—
North and South Wales Bank v. Macbeth.
Judgment:
Lord Chancellor (Loreburn)—The reasons for deciding this case in favour of the plaintiff are stated so clearly in the judgments of Bray, J., and of the Court of Appeal, that I need not say much in moving your Lordships to dismiss the present appeal. The plaintiff was induced by the fraud of William White to draw a cheque for £11,250, in favour of one T. A. Kerr, or order. T. A. Kerr was an existing person, and when the plaintiff drew the cheque in his favour he intended that Kerr or his indorsee should receive the money. White obtained the cheque, forged Kerr's indorsement, paid the cheque into his own account at the defendants', the North and South Wales, Bank, and they, on presenting it to the plaintiff's bank, received payment. It was not, in these circumstances, disputed that the defendants were liable to the plaintiff unless they could show that the payee of the cheque, T. A. Kerr, was a “fictitious” person within the meaning of the Bills of Exchange Act, sec. 7, sub-sec. 3. I adopt the language of Bray, J.—“It seems to me that when there is a real drawer who has designated an existing person as a payee, and intends that that person should be the payee, it is impossible that the payee can be fictitious.” If the argument for the appellants were to prevail—namely, that the payee was a fictitious person because White (who was himself no party to the cheque) did not intend the payee to receive the proceeds of the cheque—most serious consequences would ensue. It would follow, as it seems to me, that every cheque to order might be treated as a cheque to bearer if the drawer had been deceived, no matter by whom, into drawing it. To state such a proposition is to refute it. Yet nothing short of this could establish the appellant's contention. As to authorities, I agree with the Court of Appeal in thinking that neither
Bank of England v. Vagliano(1891) A C 107, nor
Clutton v. Attenborough,
(1897) A C 90, govern the present case. I will not discuss the former of those authorities beyond saying that it was not a case in which the drawer intended the payee to receive the proceeds of the bill, and in the latter authority the payee was a non-existent person whom no one either could or did mean to be the recipient of the proceeds of the cheque. That being so, I think that this appeal should be dismissed with costs.
Lord Robertson—We have been frequently told that the question before us is, What is the meaning of the word “fictitious”? It would be more accurate to say that the question is, What is the meaning of the words “fictitious person”? And I cannot help thinking that, at least in the present case, this has not been sufficiently attended to. Dr Johnson, it is true, gives “counterfeit, false, not genuine,” as one meaning of the word “fictitious”; but the illustration given—viz., “fame”—shows that this meaning is applicable to things; he gives another, “feigned, imaginary,” and the illustration given is “The human persons are as fictitious as the airy ones.” This last is the sense applicable to persons, and “person” is the word with which we have to deal. Now, I hope that I shall not be thought too crude if I say that the present question seems to me to be decided when once we know that T. A. Kerr, so far from being a “feigned or imaginary” person, was a living man, in business, known to the drawer of the cheque and intended by him to receive the proceeds. All that has been said against the cheque does not seem to me to touch this question. The argument, if good for anything, brings within this section all bills obtained by fraud, and credits the Legislature with expressing this by describing the payee as a fictitious person. I am unable to adopt this conclusion. The case of
Vagliano is so entirely different in its facts as to be inapplicable to that before us.
Lord Collins concurred.
North and South Wales Bank v. Irvine.
Lord Chancellor (Loreburn)—In this appeal two points were raised by Mr Isaacs. The first is identical with that raised in the case of
North and South Wales Bank v. Macbeth, and ought not in my opinion to prevail, for reasons which I have already stated. The second point made by the appellants is that, assuming the Court of Appeal to be right in giving judgment for the plaintiff, yet the damages ought not to be £2300, but only £120. Irvine, the plaintiff, was induced by the fraud of one White to sign a cheque for £2300, payable to John Davies or order. He intended that Davies, who was a real person well known to all concerned, should receive the money. White forged Davies' name and procured his bankers, the defendants the North and South Wales Bank, to present it and obtain payment from the plaintiff's bankers. For this the defendants are liable to the full extent of £2300, unless the following
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additional fact can in part relieve them. White advanced to the plaintiff £2180 to enable the plaintiff to meet this cheque for £2300. So the plaintiff, in fact, has only lost up to the present time the difference—namely, £120—and the defendants urge that he can recover from them nothing beyond this actual loss. I do not think so. I agree with Buckley, L. J., that the whole £2300 paid to the defendants was paid out of Irvine's money at his own bankers. Where he got that money is irrelevant. He may have to account for £2180 of it to White's trustees. I do not know whether it will be so or not, it will depend on the rights between the plaintiff and White's trustees. But I see nothing that can entitle the defendants to stand in the shoes of White's trustees and claim against the plaintiff what in effect is a set-off arising out of an indebtedness of the plaintiff, not to themselves, but to White. If any case could be cited in favour of the defendants' contention it might be necessary to contrast it with other authorities, but I think there is no such case, and that the law is plain.
Lord Robertson and
Lord Collins concurred.
Appeal dismissed.
Counsel:
Counsel for the Appellants—
Rufus Isaacs, K.C.—
Maurice Hill—
H. Beazley. Agents—
Rawle,
Johnstone, & Company, Solicitors.
Counsel for the Respondents—
Horridge, K.C.—
Leslie Scott. Agents—
Walker,
Son, &
Field, Solicitors.
