HC Deb 13 June 1877 vol 234 cc1734-40

Order for Second Reading read.

MR. J. G. HUBBARD

, in moving that the Bill be now read the second time, said, his object was to take out of the hands of thieves the facility of making a profit through such media as crossed cheques on bankers. The right hon. Gentleman gave a history of the introduction and use of cheques in commercial transactions, drawing attention to the several circumstances which had led to the subsequent modifications of those instruments, passing from the open cheque to bearer to the crossed cheque, and then to the cheque to order crossed. Neither one nor other of those modifications had been sufficient to protect the public from the loss arising from bankers paying cheques, in disregard of the instructions in the crossing, to a person who had either stolen it himself, or who had got possession of it, although bonâ fide, after it had been stolen. To remedy such a state of the law, Her Majesty's Government last Session introduced and passed a measure consolidating and declaring the law, but providing no means of enforcing it, except with reference to cheques which should be inscribed with the words "not negotiable;" but neutralizing even that limited protection by exonerating from responsibility the banker through whom the cheque was encashed. He had incor- porated in this Bill nearly the whole of the Act of last Session with the exception of the 12th clause, which in its present form left a large class of cheques payable to order absolutely unprotected. His object was to extend to every cheque payable to order and crossed, the same protection the Act of last Session intended to give to cheques stamped "Not negotiable." That Act had proved an entire failure, so much so that up to two days ago on making inquiries at the Bank of England, the chief cashier told him that of the 5,200 customers, he had not noticed any cheques marked "Not negotiable" sent into the Bank since the passing of the Act of last year, except in the case of one customer, who was a Dutchman, and who, doubtless, did not understand the real meaning of the term. He thought this showed that the Act of last year had failed to accomplish the object it had in view; that, as it stood, it gave security to no one; it only protected a class of cheque which did not and never would exist, and that protection he now proposed to extend to cheques by which nine-tenths of the business of the country was transacted. The right hon. Gentleman concluded by moving the second reading of the Bill.

Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. J. G. Hubbard.)

MR. BACKHOUSE

, in moving "That the Bill be read a second time that day three months," said, the Act of last year had not yet had a fair trial, and that it was premature to attempt any alteration in the law until such time as it had. Indeed, he had not heard of any demand for an alteration of it. Owing to a certain legal decision, there was a general desire that the law should be made clear, and he believed it was made sufficiently clear by the Act, of which no complaint had been made. The Bill was simply a repetition of the Act, except as regarded the change proposed by Clause 9. If that were passed, every cheque would require to be accompanied by something like an abstract of title, and the inconvenience would be a serious restriction upon business; and the real question was whether it was necessary. He never heard of any losses arising through the miscarriage of cheques sent through the post in pay- ment of dividend warrants; and cheques payable to order had become so common, and had been found so convenient, that any restriction upon the use of them would be a serious matter. He was told there were firms of solicitors in London who never paid a cheque that was not marked "Not negotiable," and that showed that the legal Profession were fully alive to the advantages of the endorsement, although time had not allowed the general public to become so. The Act of last Session gave all the protection that was necessary, and, as no case was made out for a change, he would move the rejection of the Bill.

MR. THOMSON HANKEY

seconded the Amendment. He had listened attentively to the remarks of the right hon. Gentleman (Mr. Hubbard), but he was not convinced that there was any occasion to re-open the question. All that had been said now was said in the debate of last year, when the question was also fully discussed in the House of Lords, where the Bill was introduced by the Lord Chancellor. In that circumstance alone the public had the assurance that it had been prepared with the greatest legal care and attention. That day he had made inquiry at the Bank of England, and he was told that there were no complaints of the operation of the Act of last year. No Petitions had been presented to the House against it; and under all the circumstances he hoped the Government would not assent to any change in the law at present.

Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day three months."—(Mr. Backhouse.)

MR. MARTEN

deprecated so large an interference with the negotiability of cheques as would result from passing the measure. Only one case of inconvenience had arisen during the 20 years that cheques payable to order had been in use. The question was, whether Parliament could devise some plan by putting words on cheques so as not to render them negotiable. He believed that the effect of disturbing the existing law would be to unsettle many thousands of transactions in London and all parts of England. The Act of last Session protecting cheques marked "Not negotiable," ex- actly met the particular case which created alarm among bankers and commercial men, and did not interfere with the general practice of the country with regard to the negotiability of the cheques. Beyond that, no question had as yet arisen on the construction of the 12th section of the Act of last Session, so as to render further legislation necessary on this subject. He thought it would be a great mistake to interfere with the working of an Act which had so lately passed into law, and he should, therefore, oppose the Bill.

MR. GREGORY

, on the other hand, supported the measure. He did not wish to see the negotiability of cheques extended, and thought that it led to much inconvenience in the conduct of business. When he drew a cheque he expected that the person to whom he passed it would at once present it for payment, and not pass it from hand to hand like a bank note, as the longer it was in circulation the more difficult it became for him to keep his accounts in proper order. All the cheques he paid were marked "Not negotiable;" but he did not receive many so marked. He doubted whether the law was, or was likely to be, understood by the public, who supposed that it was sufficient protection to make a cheque payable to order and to cross it. As regarded the provisions of the Act relating to bankers, he quite agreed that every reasonable protection should be given to them, and he knew that all the old banking firms in London and in the Provinces were very careful as to whom they opened accounts with, but there were other firms or companies who did not exercise the same caution, and who were not entitled to the same consideration.

MR. MORLEY

hoped the Bill would not be pressed to a division, as it was too soon to legislate on the question again. He believed there was great value in the words "Not negotiable," and that, as that value became known, they would be more frequently used. But it would be a very serious inconvenience if, as the right hon. Gentleman opposite (Mr. Hubbard) seemed to wish, customers were not allowed to remit in cheques payable to order, the number of which, he believed, exceeded the number payable to bearer. The question was, on the whole, closed very satis- factorily last year, and he thought it would be wise not to make any further alteration in it at least for two years.

MR. MUNTZ

said, that stolen cheques were received like stolen goods, and it must be known in many cases to the parties paying, because the persons who presented them were scarcely able to write their names. Cheques payable to order were intended to be as negotiable as bills of exchange; but as no one ought to take a bill of exchange of which nothing was known, so no one, and especially a banker, ought to take a cheque without some assurance that it was properly presented. If he did, in so doing he aided and abetted a felony. A cheque for a large sum was never posted without some anxiety to hear that it had been received by the person for whom it was intended. It was said by some that cheques ought not to be treated as negotiable; but of what use would cheques be if they were not negotiable? All that they wanted was that bankers should not cash crossed cheques with facility, at least, without great care and caution. If his right hon. Friend went to a division, he should certainly vote in support of his Motion.

THE ATTORNEY GENERAL

said, he hoped the House would not assent to the second reading of the Bill. The circumstances of a recent case rendered it necessary that some alteration should be made in the law, and accordingly the Lord Chancellor introduced his Bill. He (the Attorney General) had the conduct of that Bill in that House, and he had interviews with many persons interested in the matter, and he found there existed among them a general consensus in favour of the negotiability of these crossed cheques. People had become used to them, and persons to whom they were sent were in the habit of passing them on like bank notes. After much consideration, it was thought better to leave these crossed cheques as they were, but to give the drawer the power to insert the words "Not negotiable" in the crossing, which under the clause meant that the person holding the cheque should not be held to have a better title to the cheque than the person he received it from. At present, if a man wanted to make a cheque safe, he had only to write upon it "Not negotiable;" and if in its transit it was stolen, the question might be asked—What would the thief do with it? The answer was that if a person chose to cash it, he would be responsible to the true owner of the cheque, and that the banker who violated the Act of Parliament became responsible for the whole amount, if he passed the cheque. His right hon. Friend (Mr. Hubbard) was not content with this, and wanted to apply the provision to all crossed cheques payable to order, and thus to restrain their negotiability. This was the very thing against which an outcry was raised by the mercantile community last Session, and his right hon. Friend's proposal to engraft the principle of the present Bill on that of last Session was fully discussed and finally rejected by the House. His right hon. Friend in his able speech had repeated those views—views which, if now accepted by the House, would practically complicate and harass the commerce of this country. The Act of last Session, which his right hon. Friend said no one could understand, provided the means for a man to protect himself without unduly interfering with the negotiability of crossed cheques, and it also indicated to bankers the means by which they could protect themselves. The effect of the words "Not negotiable" might not be, properly understood, but the mercantile community would soon get to comprehend the Act. It ought, at all events, to have a little more time given to its operation; because the existing Act undoubtedly gave the means of protection without interfering with the negotiability of cheques.

MR. WHEELHOUSE

considered it was not desirable that the House should now consent to change a law which he believed to be working advantageously to the public interest. They should be extremely careful not to shake confidence in an Act which was only passed 12 months ago, and which was certainly found to give great protection to the drawers of cheques and bankers.

MR. J. G. HUBBARD

, in reply, said, that as he had been asked why he had brought in this Bill, he wished to repeat that some amending Bill was necessary, because the language of the 12th clause of the present Act was absolutely contradictory. It was perfect nonsense, and as a piece of legislation most discreditable. If the House, however, chose to perpetuate such a piece of absurdity, the present Bill would re- main on record as a proof that he, at least, had done his duty.

SIR JOSEPH M'KENNA

said, that his vote for the measure would be given on the ground that he thought it would remedy a defect in last Session's legislation, which enabled a man who had got an instrument by a bad title to convert that title into a good one, and to avoid all responsibility for having taken it with a bad title. He should support the Bill.

Question put, "That the word 'now' stand part of the Question."

The House divided:—Ayes 66; Noes 175: Majority 109.—(Div. List, No.171.)

Words added.

Main Question, as amended, put, and agreed to.

Second Reading put of for three months.