BILLS OF EXCHANGE ACT (1882) AMENDMENT BILL. (Hansard, 15 June 1906)

§ SIR JOHN WALTON,
in moving the Second Heading of this Bill, said the best testimony in its favour was that the Lords in their legislative capacity supported it in order to correct the effect of their decisions in their judicial capacity. A measure similar to this had with this purpose been introduced by an ex-Lord Chancellor into the House of Lords and passed through that House three times. The effect of the decision which it was desired to correct was that if a crossed cheque was credited by a banker to his customer before he recieved payment, and if it turned out that the customer was not entitled to the cheque, the banker would be liable for the amount, although he had credited his 1290 customer with it in good faith and for that customer's convenience. The amendment of the law was not so much a banker's as a commercial question; for if the banker was not to be considered as merely acting as agent for his customer, and if he could not immediately treat the cheque paid into a customer's account as one against which that customer could draw, there would be an impediment to commerce. In ninety-nine cases out of 100 a crossed cheque paid into a customer's account was as good as cash, and if the banker was not allowed to regard it as safe to give the usual accommodation to the customer great inconvenience and delay in commercial transactions must result.

§ SIR F. DIXON-HARTLAND (Middlesex, Uxbridge)
thanked the Attorney-General for bringing in this Bill, and agreed with him that it dealt with a commercial rather than a banker's question. With the banker this was merely a question of bookkeeping. It was only because bankers had taken a risk which they were not obliged to take, and had trusted to Parliament to amend the law, that commercial proceedings had not been thrown out of gear. On Stock Exchange Settlement days an enormous number of cheques were paid into the banks, and put one against another in the bankers' books so that stocks could at once be delivered. If the bankers chose to say that in consequence of legal decisions based on the wording of the Act of Parliament they would not credit the cheques to the accounts of customers until they had been cleared, Stock Exchange business would be delayed. The Bill was absolutely necessary because customers could not ask their bankers to take that risk, and it was necessary to put the bankers in the position which they were supposed, before these legal decisions were given, to occupy.

§ MR. SAMUEL ROBERTS (Sheffield, Ecclesall)
said he also thanked the Government for bringing in this little measure which was simply a measure of justice to give effect to what was really the intention of the legislature to give 1291 protection to the banker. The difficulty had arisen from the words in Section 82 of the Act "for a customer." The House of Lords in its judicial capacity took the line that under certain circumstances the bankers collected cheques, not for their customers, but for themselves. It would be, as the hon. and learned Attorney-General pointed out, most inconvenient if all crossed cheques had to be placed to a suspense account until they had been cleared. Suppose an ordinary commercial cheque was sent to a tradesman, and his clerk misappropriated it, endorsed his employer's signature, and paid it into his own account, and drew the money and absconded, the banker had no protection as he had before the decisions of the House of Lords had been given. He thanked the Government for bringing in this Bill.

§ *MR. GEORGE FABER (York)
said he agreed entirely with what his hon. friend had said in support of the Bill. It would be of ultimate advantage to every one who possessed a banking account, and passed crossed cheques through it. The decision of the House of Lords practically said that bankers, by not taking the course of hanging up crossed cheques in a suspense account until they were cleared, had taken upon themselves the risk of their not being paid. Bankers had so acted for the sake of the community in order not to throw out of gear the cheque system of this country. Now that the community had seen the risk which bankers took for them, it was quite time that the bankers should be done an act of justice in this matter, otherwise it might become necessary for bankers to hang up cheques until they wore cleared.

§ *SIR ARTHUR BIGNOLD (Wick Burghs)
said he was sure that the Attorney-General was well acquainted with the present Clearing House system which solely depended upon the various banks who wont to the Clearing House treating crossed cheques paid in by customers as cash. As an illustration: if a man's banking account was in credit, say £100, and he received various cheques amounting to £400,000 or £500,000 and paid the same in to his banking account at one minute to four, having drawn cheques for a like amount himself, he could attend at the Clearing House 1292 an hour afterwards and then ascertain that all the cheques he had both received and paid had been honoured. This was accomplished by what was known as the system of reading. But beyond the ordinary crossed cheque was the crossed cheque with the words "not negotiable" written between the lines, the virtue of the words "not negotiable" being, under an Act passed by the late Lord Cairns, that the holder of the cheque—no matter through how many hands it might pass— had a no better title to the money it represented, than had the party from whom he (the holder) had received it. This gave protection to the drawer in case of those cheques which had been lost or stolen, which protection the ordinary crossed cheque did not possess. He hoped that the learned Attorney-General would be in a position to assure the House that the Act now proposed would in no way interfere with or over-ride the Act of Lord Cairns.