CHEQUES (No. 2) BILL

HC Deb 10 May 1957 vol 569 cc1364-95

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

Clause 1.—(PROTECTION OF BANKERS PAYING UNINDORSED CHEQUES.)

11.58 a.m.

Mr. Graham Page (Crosby)

I beg to move, in page 1, line 6, after "indorsed". to insert "or is irregularly indorsed".

The Chairman

I think that this Amendment goes also with the Amendment in page 1, line 8, after "of". to insert "or irregularity in".

Mr. Page

That is so, Sir Charles. Perhaps we might discuss it at the same time.

Clause 1 deals with the position of the paying banker that is, the banker on whom a cheque is drawn, the drawer's banker. Up to now, the paying banker has required cheques to be endorsed in order that they might be turned into bearer cheques and that he should get the rights which flow from having paid a bearer cheque, and therefore paid it in due course. The Clause provides that an unindorsed cheque shall be deemed to be paid in due course.

In drafting the Bill, I took the view that if a cheque were incorrectly endorsed, irregularly endorsed, badly endorsed. that, in law, was no endorsement at all, and that to mention in the Clause the absence of endorsement itself included irregular endorsement. My attention has since been called to the case of Arab Bank Limited v. Ross, in 1952, which clearly shows that the courts view a bad endorsement as an endorsement. If that is so, one of the main points of the Clause might be lost if the Amendment were not made.

The point to which I refer is the saving of the time spent in examination of cheques by the banks. At present the bank official has to turn the cheque over to see whether it is endorsed and, if it is, whether it is correctly endorsed. Unless the banks are relieved of their present responsibility with regard to irregular endorsements their officials may still have to continue to turn cheques over to see whether they are endorsed, and, if so, properly endorsed. The Amendment adds words which would give relief not only in the case of the absence of an endorsement but also in the case of an irregular one.

12 noon

Mr. Charles Doughty (Surrey, East)

During the Second Reading debate, I gave the Bill my wholehearted support. After having glanced through the list of Amendments, I continue to give it my support. The question we are now considering, however, is that of a particular Amendment, and whether certain words should be inserted. Quite frankly, I have some rather grave doubts about it. I appreciate what is in the mind of my hon. Friend the Member for Crosby (Mr. Page). He is saying, "If we abolish endorsements altogether and provide that an irregular endorsement is no endorsement, why worry about irregular endorsements? "

Upon further consideration, I am sure hon. Members will appreciate that the matter is not quite so simple as that. We usually assume that a cheque is honestly drawn, honestly paid through and honestly credited, and that everything is the best in the best of all worlds. In a very small minority of cases, however—although the sums involved are sometimes not as small as all that—people do pay cheques into their account, or into an account, which they should not do, and they do so very often with criminal intentions.

If a bank negligently allows such a cheque to be paid into the wrong account it may be liable. Very often it is a question of fact whether the bank was negligent in so doing. If there is no endorsement and the cheque is paid in in good faith, the bank has no notice of any irregularity. If, however, there is an endorsement, which is such that it should put the bank upon suspicion—and it is a question of fact whether the endorsement should have had that effect—but the bank still pays the cheque through the account, the situation is different, and I can hardly believe that the Bill was meant to give the bank a complete answer in law, even although it was in fact negligent in the matter.

That is what the effect of the Amendment would be. We can imagine the case of a person who has not read the Bill or been made aware of its contents making an endorsement which the smallest examination would show bore no relation to the name of the payee, paying it into his own account and thereby obtaining the proceeds. I cannot believe that the Bill is meant to be an indemnity Bill to the bank for having carelessly allowed the cheque to go through the account in that way. That is the effect of the Amendment. I mention this matter only in order that Members may ponder over it and give us the benefit of their views upon it before we agree to the Amendment to the Bill, which in itself has my complete support.

Mr. Page

Perhaps I may answer the points which have been raised. The Clause is merely a permissive one. It provides that the bank does not incur liability if it permits a cheque to be passed through without endorsement. My hon. and learned Friend has said that cases might arise where fraudulent persons wrongly had cheques collected for them and received the money. But banks are already protected in the case of forged endorsements, such as my hon. and learned Friend had in mind. They already have full protection by Statute. In fact, they are better protected in the case of a forged endorsement than if the endorsement is written by the person who ought to write it.

If anyone is intended to carry out a fraud, I am sure that he would carefully consider the provisions of a Bill like this and take great care not to put his name on a cheque.

Mr. Doughty

My hon. Friend assumes, not quite correctly, that criminals are always clever people. I am sure that he has not had so much association with criminals as I have had I can assure him that they very often make the most stupid mistakes. To assume that they are clever and that they always look up the law before they commit their crimes, would be an erroneous assumption. They make as many mistakes as honest people. I ask my hon. Friend not to assume the superior cleverness, sagacity and perspicacity of the criminal classes.

Mr. Page

I bow to my hon. and learned Friend's greater knowledge of criminals. I look at the matter from the practical point of view. If bank officials are to be required to look for irregular endorsements the whole purpose of the Clause is defeated. Its idea is to relieve bank officials of the duty of turning cheques over to look for endorsements, and if the Clause does not achieve that object they will still have to continue to carry out that tedious duty. I do not think that there is any real danger in the Amendment.

Mr. G. R. Mitchison (Kettering)

From one point of view I am a little uneasy about the Amendment. When is an endorsement not an endorsement? It seems to me to raise some rather curious questions. I think that what happened in the case to which the hon. Member for Crosby (Mr. Page) referred was that somebody left out the word "company." These are admittedly niceties, but the position is a little puzzling.

When we consider the question of forged endorsements we must also remember the question of unauthorised endorsements, which may or may not amount to forgeries. If we were only dependent upon that we should have to consider rather more carefully than we need, having regard to the rest of the Bill, exactly what was being done here, and whether we were not making it too easy either from criminals on one side or bankers on the other, but since, as I understand it, the result of the Bill will be to dispense with certain requirements only in the case of a cheque which is going to be paid to the account of the payee—I hope that the hon. Member will correct me if I am wrong about that, because it is important—I do not see that any harm can be done. If that is the case it is no doubt advisable to make matters doubly clear and to provide that an irregular endorsement may not amount to any endorsement at all.

It disturbs me considerably that I cannot for the moment remember the case in which somebody asked, "When is something not something? "and the answer was, "When it is something else." Perhaps the hon. Member, whose knowledge of these matters is so wide and general, can supply it. I do not know what views the Financial Secretary to the Treasury has on this Amendment. He always is well informed on any subject he undertakes, and perhaps a few words of counsel and wisdom from him about irregular endorsements would be of real assistance to the Committee.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell)

It is hardly necessary to accept the hon. and learned Gentleman's invitation, since he has put this Amendment into the correct perspective. In fact, the Clause does give an option to dispense with that endorsement, and it is therefore logical that it should make it clear that that option includes the power to dispense with irregular endorsements.

As regards the point raised by my hon. Friend the Member for Crosby (Mr. Page), whether this could give protection in the case of a bank negligently paying when, upon the face of it, from the manifest difference between an endorsement and the name of the payee on the cheque the payment was wrongly made, I am advised that this Clause in no way alters the liability for negligence which could be raised in such a case.

Amendment agreed to.

Mr. Philip Bell (Bolton, East)

I beg to move, in page 1, line 6, after "indorsed", to insert: to the credit of an account with such banker or to another banker". Perhaps I might explain to the Committee shortly that the point of this Amendment is to remove from the Bill the permission extended to banks not to require endorsements in the case where the cheque is cashed over the counter.

I make this proposal with less diffidence than usual because it is based on the recommendation in the Mocatta Report, to which I shall refer again in a moment. Unfortunately I was not here on the Second Reading. Had I been here I might have pressed my hon. Friend the Member for Crosby (Mr. Page), who has so skilfully piloted this Bill, a little more on the general principle.

I think it is too late now to see whether we are doing the best thing for all people, but I have little doubt that we are doing a very good thing for the banks by exempting them from what is quite manifestly very often a tedious matter. I did not, however, notice in my hon. Friend's speech, which lasted for about twenty-one minutes, the word "customer". There was a lot of talk about the bank and the bank employees, and of how tedious they found the task of looking at endorsements, but I do not recollect anybody considering the position of the customer.

Perhaps I might recapitulate a little of the history to Which my hon. Friend the Member for Crosby referred. When cheques were originally introduced, the bank was rather on its mettle. It had got to obey the orders of the drawer and if it did not, it could not debit the account of its customer and, what is more, the right man did not get the money. In fact, he was entitled to go back to the drawer and say "You still have not paid your bill."

The next step was this. As commerce became more keen, if there was a genuine endorsement and a thief picked up the cheque and handed it to the bank, the bank was then protected because it was a negotiable instrument and the bank had given value for it. The difficulty arose when there was a fraudulent endorsement. In that case the bank had to pay out, although it had been perfectly innocent, and the drawer might well have to pay again. Hence we get the series of Acts ending with Section 60 of the 1882 Act which says that if a bank acted in good faith and in the ordinary course of business, in honouring a cheque, the fact that the endorsement was forged would not place the bank under any liability.

The Chairman

In view of the Amendment that the Committee has just made, it seems to me that this proposed Amendment as on the Order Paper does not now make sense.

Mr. Bell

That might well be so, Sir Charles. Perhaps I may have an opportunity of seeing whether it does make sense and then I can explain it.

The Chairman

The point is that it does not make sense after the words which the Committee has just inserted.

Mr. Bell

I am rather in your hands, Sir Charles. It was intended to insert the words contained in my Amendment after the original "indorsed." Now that the Amendment in the name of my hon. Friend the Member for Crosby has been made, the words in my proposed Amendment would have to go in after the second "indorsed".

The Chairman

Even then it would not make sense.

12.15 p.m.

Mr. Bell

With respect, Sir Charles, the effect is to say: Where a banker in good faith and in the ordinary course of business pays a cheque drawn on him which is not indorsed to the credit of an account with such banker or to another banker. I think that if my proposed words were inserted after the word "pays" they would have the right effect. Could I put in a manuscript Amendment to that effect?

The Chairman

We cannot put them in before the word "indorsed" in line 6. We have gone past that point now.

Mr. Mitchison

Would it be possible to put in a manuscript Amendment so that the Bill would run: … pays a cheque drawn on him which is not indorsed or is irregularly indorsed and pays that cheque to the credit of…"?

Mr. Bell

That is the sense of what I had in mind.

Mr. Mitchison

Such an Amendment would avoid the difficulty of going back.

The Chairman

If that makes sense, I shall be perfectly happy to accept it.

Mr. Bell

I should be very much obliged to you, Sir Charles, if you would

The Chairman

Will the hon. and learned Member for Kettering (Mr. Mitchison) give the manuscript Amendment to me in writing?

Mr. Bell

I am sorry that this technical point should have arisen, Sir Charles.

I was saying to the Committee that Section 60 of the 1882 Act protected a bank which acted in good faith and in the ordinary course of business and, in fact, had honoured a cheque which was forged. The banks took a rather odd view of their position. They thought "To protect ourselves we must first of all act according to the existing ordinary course of business." Since before the Act of 1882 they had been requiring cheques to be endorsed, they went on doing it in their own interest. They took the view that this act of requiring all cheques to be endorsed afforded them protection.

I do not want to enter into a discussion on that matter now, but I think that was a very doubtful point of view. Certainly a number of textbook writers say that that would not make a cheque negotiable but that it was only a form of receipt. There is authority for that. The banks were however in favour of endorsements. They took the view that endorsements made the cheques negotiable and therefore acted as a protection. The whole idea of endorsement originally came from the banks. They thought that the endorsement supported and strengthened their position.

There is legal doubt about that contention, and my hon. Friend's Amendment will remove that doubt and the banks, at any rate, will not feel that they are under a liability because there has not been an endorsement. There is a good deal to be said for that from the point of view of the customer when the cheque goes through a collecting bank because the customer can check the person who paid it in. It may be a tedious business, but there is no doubt that it is rare that a collecting bank collects for a stranger. It is nearly always for its own customers. Therefore, it was always possible for the drawer of the cheque to find out where the money had gone. When he received the cheque back he would ask his own bank to find out what bank had presented it and from that bank he could find out who got the benefit of the payment.

That does not apply if the transaction is cash over the counter. That is why in the Report of the Committee on Cheque Endorsement, which was the origin of this Bill, in paragraph 63 made this statement—

Mr. Page

The Bill was the origin of the Committee's Report.

Mr. Bell

I regret that I do my hon. Friend an injustice. The paragraph states: Where a cheque is collected by a bank it is possible to ascertain the account to which it has been credited and hence the identity of the actual recipient, and this will continue to be so whether the cheque is endorsed or not. Where, however, cash is paid against a cheque the identity of the recipient of the payment cannot afterwards be established by the same process of enquiry and the presence of an endorsing signature is thus a most important link in the chain of evidence. We think that in the absence of such a signature drawers of cheques and the banks would be deprived of evidence to prove the facts about the receipt of a payment in cash. In paragraph 65 the Committee deals with cases it has known where the bank makes payment to a third party against a cheque drawn by its own customer; to its own customer against a cheque drawn by a third party; to its own customer against a cheque drawn by himself in favour of himself. The paragraph states: Further, in all the three cases distinguished above, we think that the requirement of endorsement would give an added security to those concerned. If payment in cash could be obtained against an unendorsed cheque, the risk of theft and dishonesty by agents would certainly be increased. The continued need for endorsement in these cases would enable payees to hold cheques without special risks of loss until they were about to be cashed. The final paragraph states: On grounds of both evidence and security, therefore, we consider that endorsement should continue to be required in all cases of encashment of cheques. By the Amendment which I wish to move, and which has been compiled with the help of the hon. and learned Member for Kettering (Mr. Mitchison) to whom I am grateful, I am endeavouring to indicate that what I might call the exemption in Clause 1 should not apply where a cheque is cashed over the counter, whichever type of cheque it might be. May I add that, having discussed this, I do not think we need go very much further with the Amendment to Clause 3 which I have on the Notice Paper—namely, in page 1, line 15, after "drawn", to insert "otherwise than in cash"—because it is to the same effect.

I hope that my hon. Friend will be able to deal with this point. It was an important reservation which was made by the Committee. It is plainly stated there, and it is a matter of surprise to me that during the Second Reading debate no one called the attention of anyone to that reservation. According to the Report of the Committee, it is an important safeguard for the customer. So far this Bill seems to me—quite properly—to have concentrated on relieving banks of what may be thought to be unnecessary work, but this would appear to be one of those cases where the requirement of an endorsement is useful to the customer.

I am not saying that this alteration would seek to restrain or hold back a bank regarding what it should or should not do. But it would be a pity if under the Clause as it is drafted at the moment the bank could be given a free hand and be able to cash cheques without the additional precaution which an endorsement gives under the reasons given in the Report.

I understand, Sir Charles, that the manuscript Amendment is now in your hands. I therefore beg to move, in page 1, line 6, after the words last inserted. to insert: and pays that cheque to the credit of an account with such banker or to another banker.

Mr. Page

My hon. and learned Friend the Member for Bolton, East (Mr. Philip Bell) appeared, in his earlier remarks, to imply that this was a Bill for bankers. I can assure him that if this Bill be accepted there will be as much saving to commerce and industry as to bankers. It is easy to judge the time which would be saved by banks by the absence of endorsements. It is not so easy to make a similar judgment regarding commerce, industry, the professions and private individuals. But undoubtedly this is a Bill which will benefit the recipients of cheques just as much as the banks.

It is with diffidence that I disagree with my hon. and learned Friend on such a subject as this. I am grateful to him for raising this point because it affords me an opportunity to explain why, although I do not agree with his Amendment, I agree entirely with all his remarks about the security of an endorsement on a cheque which is to be cashed across the counter. My hon. and learned Friend has moved an Amendment to Clause I, and that Clause deals with the paying bank on which a cheque is drawn. As I understand it, my hon. and learned Friend has in mind the case where a cheque is handed across the bank counter and drawn on that bank, and the person handing it across the counter is either a customer drawing the cheque in favour of himself or of some third party. The question is whether that cheque should be endorsed before cash is paid across the counter.

I am informed that the banks will still require the endorsement of such cheques. When they encash a cheque by paying cash across the counter they will require the cheque to be endorsed for this reason. Taking the matter step by step, if the bank makes a payment over the counter, it needs to secure for itself a good discharge. A bill of exchange, and therefore a cheque, is discharged by payment in due course. That phrase, "payment in due course" is defined by Section 59 (1) of the 1882 Act. It is a payment to a holder. Elsewhere in the Act a "holder" of a bill of exchange is defined. He is either the payee in possession of an order cheque or the bearer of a bearer cheque. He can be one or the other.

The query arises in the minds of the bankers, when collecting or paying a cheque, "Is the possessor of the cheque the payee named?" The bank cannot be certain of that, and so it has become the practice of banks to say, "We are not going to rely on you handing a cheque across the counter to prove that you are the person named. We want you to turn this cheque into a bearer cheque. You sign on the back of it and we will take it from you as the bearer of a bearer cheque. We are thereby taking it from the holder and making payment in due course, and we are entitled to debit our customer's account."

The Bill says that bankers shall be deemed to have paid in due course, deemed to have paid to the holder in good faith and without notice of any defect, even if the cheque is not endorsed. But it does not automatically turn the cheque into a bearer cheque, it merely deems that the cheque has been paid to the payee in possession. If the bank pays the payee who is in possession of the cheque and hands the cash across the counter, it requires a good discharge. If it is collecting the cheque for a customer and pays that cheque into the customer's account, then it is as sure as possible that it is dealing with the payee in possession. If, on the other hand, the bank pays the cash across the counter and the cheque is not endorsed, the banker is guessing whether he is paying the payee in possession of the cheque. The payee is not the bearer until he endorses the cheque.

12.30 p.m.

I imagine that bankers are not going to guess in that way whether they are getting the benefit of the Clause, and that they will still require the cash recipient to turn himself into the bearer of the cheque by endorsing it. They will, of necessity, or at least in all prudence, do exactly what the Amendment seeks, that is to say, have cheques endorsed if they cash those cheques across the counter.

My hon. and learned Friend may say, "If that will happen, why not put it into the Clause and so provide for it?". There would be harm in inserting the Amendment because it would produce an anomalous position. It would imply that a banker is not absolved from liability if he is paying an unindorsed cheque over the counter, and yet, by Section 80 of the Bills of Exchange Act, 1882, he is absolved if it is a forged endorsement. That is the anomalous position which would be created if the Amendment were inserted. What my hon. and learned Friend requires will happen of necessity from the Clause as it stands. The banks will require a cheque which they are cashing across the counter to be endorsed by the person receiving the cash from them.

Mr. Philip Bell

The view just put forward by my hon. Friend the Member for Crosby (Mr. Page) has been the view taken by the banks, who have always insisted upon endorsement. The danger about Clause 1 is that they will not henceforward always insist upon endorsement, although I respect the view which has been put to us by my hon. Friend.

I can imagine, if an unindorsed cheque has been accepted across the counter for cash and a mistake has been made, the banker being asked what steps he took to make sure that the person who presented it was actually the payee in possession. The banker may be asked, "What steps did you take to verify the identity of the person who produced the cheque?". The banker will reply, "We asked him his name and where he lived. "To the question," Why did you not get him to write his name down?", the banker could answer,"We are not bound, under Section 1 of the Cheques (No. 2) Act, 1957, to do so". That shows the gap that will exist. The banks have hitherto thought that endorsement was a reasonable precaution to take; I am afraid that they might not think it is a necessary or reasonable precaution in the future.

Mr. Page

The banks have never been bound to require an endorsement, but have done so for their own benefit, to be able to say that they were holders in due course of the cheque. In this case they will still require that endorsement for their own benefit and will continue to require it in paying cash across the counter.

Mr. Doughty

I think that most hon. Members will agree that the Amendment is rather muddling. Let me begin by trying to see exactly what we want to do.

When a banker pays a cheque for cash across the counter, it will still be necessary for him to require an endorsement. I shall wait to hear what the Financial Secretary to the Treasury has to say about the Amendment, but I believe it is necessary for words to be inserted in the Bill to protect the banker's position. I have heard what my hon. Friend the Member for Crosby (Mr. Page) has said about what bankers will do in the future, but I am afraid that his word is not binding upon all bankers. There may be bankers who do not read his words or do not look upon them as law in their own banks. We must preserve the position that endorsement is required in respect of a cheque upon which cash is paid.

The purpose of the Bill is to obviate, by abolishing endorsement, a large amount of time, work and expense required of those who handle cheques in banks and in large institutions, and it will do so. The number of cheques handed over a counter for cash is extremely small and does not affect the position of people who receive cheques in the course of business, other than banks. The cheques are all paid over in large numbers at the end of the day, or several times a day, and are not handed in for cash.

It is quite a different situation when a person who has an account at the bank comes in with a cheque of his own or of somebody else and demands cash for it. On Second Reading we had in mind not that position but the saving of time for large institutions dealing with large numbers of cheques. We want to make that saving of time, but we want also to maintain endorsement upon cheques when cash is handed over for them.

I shall listen with great interest, as I always do, to the words of the Financial Secretary to the Treasury and to anybody who can assist us in deciding whether, if we do not insert these words, it will still be open to the bank to pay cash in respect of an unendorsed cheque.

Mr. Ronald Bell (Buckinghamshire, South)

I apologise to my hon. Friend the Member for Crosby (Mr. Page) if he has already dealt with the point which I am going to put, but I am a little puzzled by the suggestion that the banker who pays cash for a cheque which is unendorsed will not be protected by Clause 1. If the banker does not ask for endorsement and pays cash over the counter, he will be deemed to have paid it in due course. Therefore, it is merely a precaution by the banker to ask for endorsement. I am not sure whether that is an adequate consideration when we are reshaping the law. I merely put that point forward for my hon. Friend's consideration.

A cheque would simply say, "Pay John Smith £10". Then the banker should not pay anyone but John Smith. He would certainly be wise to get John Smith's signature on the back of the cheque, but he could not be taken to have paid it in due course unless he were in fact paying John Smith and no one else. Yet it seems that, under Clause 1 as it stands, if William Brown presented the cheque made out to John Smith—not a negotiable instrument, not a bill of exchange—and the bank paid over the cash, it would not be protected.

Mr. Page

I should say once again that all that Clause 1 does is to deem that the cheque has been paid in due course, that is, to the holder as defined by the 1882 Act. The holder is one of two people. He is either the person named on the cheque as payee and possessing the cheque, or he is the bearer of a bearer cheque. When a bank credits the cheque to the account of the customer who, as possessor, has handed it in, the bank will be certain that it is paying it to the first type of holder, the payee in possession. If it does not credit that cheque to the account of the customer but instead pays cash for it, it has to make certain that it is paying it to the bearer. Therefore, it will require endorsement of that cheque.

I do not think that it is merely a matter of the banks informing me that they intend to go on requiring endorsements of cheques which they are cashing. I think it is a necessity, from the actual wording of the Clause as it stands, that they must have those endorsements if they are to get the protection which they have had up to the present when cashing cheques across the counter.

Mr. R. Bell

Is not the 1882 Act a Bills of Exchange Act? What about the cheque which is not a bill of exchange? What is the position there?

Mr. Page

That is dealt with in a later Clause and a later Amendment.

Amendment negatived.

Amendment made: In page 1, line 8, after "of", insert "or irregularity in".— [Mr. Page.]

Mr. Page

I beg to move, in page 1. line 9, at the end to add:

1. (2) Where a banker in good faith and in the ordinary course of business pays any such instrument as the following, namely—
2. (a) a document issued by a customer of his which. though not a bill of exchange. is intended to enable a person to obtain payment from him of the sum mentioned in the document;
3. (b) a draft payable on demand drawn by him upon himself, whether payable at the head office or some other office of his bank:
4. he does not, in doing so, incur any liability by reason only of the absence of, or irregularity in, endorsement, and the payment discharges the instrument.

The Chairman

It would be convenient to discuss this Amendment with the last Amendment on the Notice Paper: In Clause 6, page 2, line 21, to leave out "Sections four and five" and to insert "The foregoing provisions".

Mr. Page

This is a new subsection proposed to Clause 1. Banks collect and pay many instruments which are not strictly cheques. For example, there are dividend and interest warrants. Most dividend and interest warrants are in fact cheques, being unconditional orders to pay, but some are drawn so that they do not come within the definition of cheques in the Bills of Exchange Acts. Bank drafts, also, are not strictly cheques if they are drawn by a banker on himself. If those instruments are not cheques, they are, therefore, not negotiable, and to talk about endorsement of them means nothing, because endorsement is a scientific phrase relating to negotiability.

It was my thought in drafting this Bill that to speak of endorsement of those instruments which are not cheques was meaningless. Therefore, I left them out of the Bill altogether, but my attention has been drawn to the fact that it is banking practice to require those instruments to be endorsed and that bankers might still have to examine those instruments to see whether they were endorsed or be held negligent for not doing so. From the practical point of view, one can imagine a pile of cheques being paid in by a customer amongst which are dividend warrants, interest warrants and banker's drafts. In the absence of this Amendment, the bank clerk would have to look through that pile of cheques to decide which were cheques and which were not. He would have to see which of the dividend warrants did not come within the definition of a cheque and to extract them to see if they were endorsed.

12.45 p.m.

I think it wise to include that type of instrument amongst those for which the payee is relieved from making endorsement and the bank is relieved from considering endorsement. That was the recommendation of the Mocatta Committee, and this subsection is intended to carry out that recommendation. A further good reason for recognising these instruments and exempting them from endorsement is that in previous statutes they have already been assimilated to cheques. In Section 17 of the Revenue Act, 1883, this type of dividend warrant, which is not a cheque, was put on the same footing as crossed cheques. The Bills of Exchange Act, 1882, and the amending Act of 1932 did the same for bankers' drafts.

Mr. Mitchison

I am a little uneasy about the banker's draft and should like to know what the Financial Secretary to the Treasury has to say about it. It seems to me that if this goes through in this form a banker's draft drawn by him upon himself can become virtually equivalent to a currency note. It can be cashed without any endorsement, and cashed by anybody. If the Treasury has no objection to that, perhaps it is not for any of us to bother too much about it.

In a matter of this kind the Treasury can be relied upon to safeguard the public interest and to see that no documents emanating from bankers take the place of ordinary currency notes, but I should like to know what the position is. If the Financial Secretary can assure us that he does not anticipate by reason of this Clause any interference with the currency obligations over which he watches, that will reassure me.

Mr. Powell

I can give the assurance that what this Bill will do in relation to endorsement does not one way or the other affect the power of bankers by means of bankers' drafts to create currency.

Mr. R. Bell

I will repeat to my hon. Friend the Member for Crosby (Mr. Page) the question which I put to him on the previous Amendment in relation to payment in cash over the counter. Let us take the case of an order to pay, as distinct from a bill of exchange—an unconditional order to pay but one which is not a bill of exchange. It is an order to the banker to pay one named person and nobody else. If the banker pays it over the counter to someone else, who presents it, and takes no endorsement, is he deemed to have paid it in due course? If that is right, does it not destroy the whole effect of striking out the words "or Order" on the cheque and making it payable to the payee only?

Mr. Doughty

The point which I intend to raise has not been dealt with except, of course, by my hon. Friend the Member for Crosby (Mr. Page) in moving the Amendment. It concerns dividend warrants.

The Amendment goes far beyond the original intention of the Bill which, as its name implies, is a Bill dealing entirely with cheques. In one sense of the word, a dividend warrant may be a form of cheque, in the sense that it is an order by the drawer to the banker to pay a named person; but in ordinary parlance it is not a cheque.

With respect to my hon. Friend, I do not agree that there is any great difficulty in the receiving bank or the paying bank having to look through its pile of documents to be credited to a customer's account and to sort out the dividend warrants from the ordinary cheques. Banks will have to look through that pile of documents in any event. They will have to look at the cheques. It is true that they will not have to look at the endorsements, but the work of putting warrants to one side is only a small matter in checking those documents.

The ordinary dividend warrant—I receive all too few of them—has on the front of it, as a rule, the signature of the payee. Some have the signature on the back. is there any reason why that space on the front should not be filled in by the payee? My hon. Friend referred on Second Reading and again today to the terrible pastime of continually turning over documents to examine the endorsements, but that comment does not apply to dividend warrants at all. Speaking entirely for myself, I can see no reason why a bank which has a dividend warrant should not look at the face of it to see whether the signature of the payee is the same as the signature of the person in whose favour it is drawn, also on the face of it, and why the law should not continue as I understand it to be at present.

As I said on an earlier Amendment, we do not want by the Bill to make the activities of criminals any easier. Under the Bill anybody who gets hold of a dividend warrant could automatically pay it into an account which he had opened only a few moments before. I foresee considerable difficulty upon this point at any rate, and I should be much obliged if my hon. Friend, with the permission of the House, would deal with it.

Mr. Page

My hon. and learned Friend the Member for Surrey, East (Mr. Doughty) has raised the question of dividend warrants as a whole. Most dividend warrants are in fact cheques, and, as such, we have already dealt with them in the earlier stages of the Bill and have exempted them from endorsement. Perhaps I might read to my hon. and learned Friend paragraph 69 of the Mocatta Report: The great majority of dividend warrants satisfy the statutory definition of a cheque and the changes of the law which we have already recommended would therefore apply to them. Such application was favoured by both the Federation of British Industries and the Committee of London Clearing Bankers. The latter also suggested that similar arrangements should apply to those dividend and interest warrants and comparable instruments which do not come within the statutory definition of a cheque but fall within Section 17 of the Revenue Act, 1883. We agree with this view. This new subsection endeavours to carry into the Bill this recommendation of the Mocatta Committee. These types of dividend warrant which are not cheques have already received considerable attention in the Statutes. In the Revenue Act, 1883, many of the protective Clauses of the Bills of Exchange Act, 1882, have been applied to protect bankers when cashing those types of instruments. There is every reason why we should completely assimilate those instruments to cheques in order that bankers may deal with them all at the same time without having to make the distinction which would be necessary if this subsection were not included.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3.—(UNINDORSED CHEQUES AS EVIDENCE OF PAYMENT.)

Mr. Philip Bell

I beg to move, in page 1, line 15, after "drawn", to insert "otherwise than in cash".

If we first look at Clause 3 we find difficulty with the side-notes. I do not think I can blame my hon. Friend the Member for Crosby (Mr. Page) for the side-notes, but they do not seem to correspond with the Clause. The Clause reads: An unindorsed cheque which appears to have been paid by the banker on whom it is drawn is evidence of the receipt by the payee of the sum payable by the cheque. Light-heartedly, the author of the side-notes has written, Unindorsed cheques as evidence of payment. This draws no distinction between payment and receipt. I suggest that the side-note is a little misleading.

Clause 3 is a remarkable provision. It provides that a cheque, which quite clearly is linked with a bank account, is some evidence of payment; and not merely evidence of payment but evidence that somebody has had it. It is evidence quite apart from having to look at the payee's account. It is evidence of receipt by the payee of the sum; that is, not receipt by anybody else, but receipt by the payee.

Mr. Ede (South Shields)

What does the hon. and learned Member mean by the phrase "had it"? That seems to have two meanings in colloquial English today.

Mr. Bell

It is the situation which sometimes arises when one is interrupted. Sometimes one has "had it."

Consider the case of an unendorsed cheque bearing the name of Brown. The mere production of the cheque, which bears some evidence of having been paid by the banker, is to be evidence that Brown got it. Suppose Brown did not get it.

Mr. Ede

Then he has "had it."

Mr. Bell

It seems to me that my hon. Friend has gone a little further than the Mocatta Report recommended. Paragraph 81 of the Mocatta Report reads, after the first few lines: As a result we have formed the opinion that in the present state of the law a paid endorsed cheque is as good evidence of the payment of money as a simple receipt of the kind printed on the backs of cheques. Both according to the law are only in the nature of prima facie evidence capable of being displaced if contrary facts are proved, such as, for example, a forged endorsement or payment to the wrong person. The change in the law which we have proposed above would only dispense with the need for endorsement when a payee paid a cheque into his own bank (or to an agent thereof) for collection and crediting to his account. After the proposed changes, therefore. a paid unendorsed cheque should not have any less value as evidence of payment than a paid endorsed cheque has now. Moreover, the presence of the collecting banker's crossing stamp should enable its course to be traced with reasonable ease. Distinctions are made in respect of a cheque which passes through a collecting bank. There may be some justification for saying that a cheque is some evidence that it was received by the payee because there is the collecting banker's stamp. Where it is a cash transaction, in the absence of a stamp, it seems rather unwise to say that, for the ordinary cheque which has been cashed over the counter. the mere fact that it has been paid is necessarily any sort of evidence that it was paid to the person who was the payee. Undoubtedly that is what it says. It seems to me it is going a little far to make that sort of evidence evidence that the rightful payee has received the money merely because somebody has parted with the money.

1.0 p.m.

It is always rather difficult for the debtor in these matters. because ordinarily he has got to pay cash. He pays by a cheque which he sends through the post in the ordinary way and somebody quite apart from him, out of his control, makes off with it. It seems a little hard that he should in a sense have any responsibility at all, and that although the creditor never got the cheque it should be possible to say, "This is evidence of the receipt of it."

I think, as I rather thought on Clause 1, that this bears a little too harshly against the payee of the cheque. It is a matter of evidence; perhaps, not final; but I cannot see, quite apart from the equity, the necessity for this sort of evidence. Can anyone imagine a case being decided by this statement? It seems to me only a question of shifting the burden of proof and putting the unhappy payee to the necessity of having to go to the court and say, "I never got the money," instead of the person paying it having to prove he has discharged the debt.

Mr. Page

This Clause raises the question of endorsed receipts on cheques, dealt with by the Mocatta Committee's Report. in paragraphs 75 to 82. An endorsement on a cheque is already a good receipt despite the fact that it has become commercial practice to have receipts endorsed on the backs of cheques. I can assure hon. and right hon. Members that there is a perfectly clear case called Egg v. Barnett, in 1800, in which it was decided that an endorsed cheque was a perfectly good receipt or perfectly good evidence of receipt of the money.

Of course, if the drawer of the cheque requires an additional receipt in some way identifying the payment with an account or requiring it to be accepted in full and final settlement there is some point in putting that form of receipt on the back of a cheque for the payee to sign. It is recorded in the Mocatta Report that the banks have said they will still give service to their customers in examining that type of receipt if a customer so requires.

The Clause is intended to apply the law relating to the endorsed cheque to the unendorsed cheque and to say that the unendorsed cheque is evidence of receipt of the money.

I am most grateful to my hon. and learned Friend the Member for Bolton, East (Mr. Philip Bell) for drawing attention to the marginal note. As he knows, a marginal note is not part of a Statute, but it certainly may be misleading, and I think my hon. and learned Friend is quite correct in saying that the word "payment" in the marginal note is misleading. It should be "receipt."

In resisting this Amendment, I rely again on the fact that it will be necessary for the banks to require the endorsement of cheques paid in cash if they are going to get the same sort of protection as they have at present and that if they do cash cheques across the counter they will require endorsement and thus bring into operation the old case of Egg v. Barnett, and there will be the evidence of receipt.

If one endeavours to distinguish, though, in this Bill between the cheque which is paid into the customer's account and the cheque which is cashed across the counter, I think we shall get into the greatest difficulties. This Amendment would undoubtedly put a defendant to the most elaborate proof. Under the Clause as it stands, he is entitled to produce the paid cheque and say, "Here is the paid cheque, this is evidence of the receipt of the money." By the Amendment he might be met with the answer, "Yes, but was that paid in cash across the counter or through an account?"

I think that that defeats the purpose of the Clause, and the purpose of the Clause is to provide only prima facie evidence. Of course, the evidence can be rebutted, but if by this Amendment we try to make a distinction between the cheques which are paid in cash across the counter and those which are paid into an account I think it will raise very great difficulties.

Mr. Mitchison

I am rather puzzled, not only by the Amendment but by the Clause to which it is an Amendment. I have heard the hon. Gentleman say this morning two things to both of which I attach considerable importance. The first I can hardly say he said, but he nodded assent when I said that I understood the purpose of the Bill was to deal with cheques which would be credited to the accounts of payees. The second statement to which I attached importance was that bankers for their own protection would always require endorsement.

I can see the point of that in the case of the ordinary cheque to order if the person tendering it to the bank does not endorse it. The bank acquires, as I understand it, in the first place the right of the person tendering it, and secondly the statutory right to have an endorsement. It is not just a question of bankers' convenience. It is the question of what right they acquire on cheques being passed over to them.

I am sure there is no doubt about it that it is the invariable banking practice to require endorsement even of a cheque to bearer. The hon. Gentleman, who seems well acquainted with banking practice, probably much better than I am, has confirmed that abundantly. Why in those circumstances should special rights in evidence be given in the case of an unendorsed cheque? I do not see the point of it or the need for it. If it is paid in what is from the banking point of view an irregular way without endorsement—I am not saying in an illegal way, but contrary to usual banking practice— then surely the first thing one wants to know is, how did that happen? One begins to be anxious as to what exactly happened.

Turning to the Amendment, I can see no objection whatever to allowing it to be treated as evidence in the case where it goes to the account of the payee. I do not bother about it in that case. However, if there is a man who goes to the bank with a cheque and asks for it to be paid in cash and that cheque is not then endorsed by the banker I begin to wonder what on earth has happened. I do not see any reason why those circumstances should attract any additional legal protection for anybody.

I cannot see, from the point of view of bankers, why they should Object to accepting the Amendment. I should have thought it did not do them any harm at all and merely confirmed, as it were, what they actually do. I cannot see why anybody should object to it, either. The one party whom I should have thought ought to be concerned with this kind of thing is the Treasury, because we have to bear in mind that in all these cases where cheques become evidence of a receipt the Treasury has lost 2d. on another receipt, and I do not see why it should go on extending this legal position beyond what it is at present. It is not my Bill and I am not speaking of a matter of any political import at all, but I should hope that the hon. Member for Crosby (Mr. Page), who is in charge of the Bill, could see his way to accept the Amendment. I do not believe that there is any practical harm in it at all, or that it would make any practical inconvenience to anybody, and that in the few cases where it might serve a purpose that purpose will be a doubtful one.

Mr. Powell

There is a practical difficulty which might be caused by the insertion of the words. I am advised that it is not always possible readily to distinguish between a cheque which has been paid in cash and a cheque which has been paid into an account. Therefore, the evidential value of the cheque would depend upon the person producing it as evidence being able to say that it had not been paid in cash and had been paid into an account. Since the purpose of the Clause is really only to apply the existing law, having regard to what is done by Clause 1, I suggest that it would be a mistake to put that extra burden upon the person producing the cheque.

Mr. Mitchison

Surely that is a rather unconvincing answer. A cheque has to appear to have been paid by a banker and that, presumably, means to have had the banker's stamp put upon it in the usual way. Some of the stamps, at any rate, have some reference to an account put on them, and it would be perfectly simple to arrange for cheques that passed through an account to be stamped in that way. It merely means altering the rubber stamp. The real point is that if in fact bankers will always have these cheques endorsed, what is the point of giving special evidential rights to an unendorsed cheque, when the absence of endorsement by itself indicates some departure from ordinary bank practice?

Mr. R. Bell

I hope that my hon Friend the Financial Secretary will accept the Amendment. It seems to me that the Clause gives definite value, as evidence, to an unindorsed cheque. If that were not the case, there would be no need for the Clause at all. Without the Clause an endorsed cheque would be some evidence of payment. Parliament is always treated in the courts as not merely frustrating itself and the courts presumably would attach some weight to the fact that we expressly provide that an unindorsed cheque shall be evidence of payment. I do not think that it would be argued on that basis that no weight at all should be attached to the cheque unless the parties seeking to produce it could prove that it was paid into an account.

I do not think that it follows that the judge should have to say that Parliament has laid down that it means evidence, to some extent prima facie evidence, and that it shifts the burden of proof against the man who says that he has never had the money. Why should we do it in that way? The Financial Secretary says that it will cause some trouble in the banks if they have to discriminate between cheques paid into an account and others paid over the counter in cash. So be it. Why should the man who denies he ever had the money be put at a disadvantage on that account?

1.15 p.m.

It is quite practicable to distinguish between cheques paid in cash and cheques paid into an account. At the moment cheques are frequently produced as evidence of payment and receipt. If they are cheques paid into an account it is also possible, of course, to produce the accounts, as a rule. There we have strong evidence. If the cheque is paid in cash there is the signature, the endorsement, and that also could be a matter of weight of evidence. But where a cheque is paid over the counter unindorsed for cash why should that be evidence against anyone?

If the retort is, "Why should it not be?" my answer, for what it is worth, is, "Certainly, but do not put a special Clause in the Bill about it. Once you put a special Clause in the Bill you must attach a special significance to it." I have expressed disquiet on other occasions about the lack of provision in the Bill for endorsement for payment in cash, and I am afraid that my hon. Friend the Member for Crosby (Mr. Page) has not satisfied me about that, in so far as he has tried to do so. But when we go further and say that not only is the cheque going to be paid in unindorsed but that it will be some evidence of payment, that is going too far.

We should not merely regard this Bill as something taking the form agreed by the bankers and think that if they do not find any Amendment acceptable that, unfortunately, is the end. I do not think that that is so at all. We should look after everybody's interests, and my hon. Friend the Member for Crosby should accept the Amendment.

Mr. Page

On the remark of my hon. Friend the Member for Buckinghamshire, South (Mr. R. Bell) that this might be merely a Bill agreed by the bankers, I assure him that the bankers are not concerned with Clause 3. This is merely a question of receipt as between the drawer of the cheque and the payee, and the bankers have offered me no comments at all on Clause 3. This is more an accountants' Clause dealing with the question whether the paid cheque is to be accepted by accountants and auditors as a satisfactory receipt. I must inform the Committee that professional associations of accountants have seen no objection to the Clause but I appreciate that there is concern over it on both sides of the Committee.

If my hon. and learned Friend the hon. Member for Bolton, East (Mr. Philip Bell) sees fit to withdraw the Amendment, I will give an undertaking to consider whether we cannot get over the practical difficulty put forward by the Financial Secretary and allay these anxieties in some way. I do not know whether it will be possible, but I will certainly give that undertaking.

Mr. Ede

Does that mean that the hon. Gentleman does not intend to get the Report stage of the Bill today?

Mr. Page

It is not on the Order Paper today. I did not have that in mind.

Mr. Philip Bell

I am bound to say, from looking at the words in Clause 3. the banker on whom it is drawn… that I thought that my hon. Friend the Member for Crosby (Mr. Page) was rather anxious that there should be some evidence in favour of the banker that he had paid the right man, and that, therefore, he was putting in that it is evidence of receipt by the payee of the sum payable.

I am surprised to hear that the bank is not interested in this matter, and that the only people interested are the creditor and debtor. If that be so, when my hon. Friend is reconsidering this Clause he might consider some such words as "should be evidence as between creditor and debtor and not the banker". I appreciate that this aspect raises a number of points. I welcome the suggestion, and on the understanding that my hon. Friend will direct his mind to these points which are causing anxiety on both sides of the Committee, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Philip Bell

On a point of order, Sir Charles, my next Amendment has not been called, namely, page 1, line 15, alter the second "is". to insert "prima facie".

The Chairman

It has not been selected, as I thought it was not necessary.

Mr. Ede

Will the hon. Member for Crosby (Mr. Page) undertake that between now and the Report stage he will consider whether the Clause should be deleted? It seems to me that the arguments of the hon. and learned Member for Bolton, East (Mr. Philip Bell) and of the hon. Member for Buckinghamshire, South (Mr. R. Bell)— whom I am pleased to see here on a Friday, having listened to him so often and at such length on a Wednesday-were directed against the Clause as a whole rather than against the Amendment.

Mr. Page

I will consider anything that falls from the wise lips of the right hon. Gentleman, and in particular whether this Clause is of value or not. I think that it is, but I will consider that.

Mr. Mitchison

May I tell the hon. Gentleman that upon this question we should not regard as sufficient the decision of either a bankers' meeting or a bankers' poll.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 4.—(PROTECTION OF BANKERS COLLECTING PAYMENT OF CHEQUES OR CERTAIN OTHER INSTRUMENTS.)

Mr. Page

I beg to move, in page 2, line 14, at the end to add: (3) A banker is not to be treated for the purposes of this section as having been negligent by reason only of his failure to concern himself with absence of, or irregularity in, indorsement of an instrument.

Clause 4 is rather separate in principle from the rest of the Bill. It was said in paragraph 105 of the Mocatta Committee" Report that if the question of endorsements were to be dealt with by Statute it would be a useful opportunity to clear up one or two other anomalies; and in particular, on the question of Section 82 of the Bills of Exchange Act, 1882, applying only to crossed cheques, they recommended that that Section could usefully apply to uncrossed cheques and other instruments.

Section 82 of the 1882 Act has been extended over the years, first by Section 17 of the Revenue Act, 1883, when it was extended to instruments similar to cheques but not cheques themselves, and later, by the 1932 Act, to bankers' drafts. But neither of those amending Acts dealt with uncrossed cheques. What has been done in Clause 4 is to re-enact Section 82 of the 1882 Act, having repealed it by the Schedule, and to include the uncrossed cheque.

Having said that all the instruments already set out in the Bill do not require endorsement, it was thought proper to make it clear that the failure of the collecting banker to look for the endorsements would not be negligence. I think it unlikely that any court would say that it was negligent on the part of the collecting banker not to look for something which the paying banker did not require, but there is that slight risk, so I think it is proper that it should be stated, as it is stated in this proposed subsection. I assure hon. and right hon. Members that the subsection does not give the banker any additional protection. It is merely making clear that, having re-enacted Section 82 of the 1882 Act, the collecting banker shall not be held responsible for doing something which is not required of him by the paying banker.

Mr. Ede

I wonder if the hon. Gentleman could tell me what responsibilities will remain with a banker after this sub- section has been added to the Bill? It seems to me that we have been doing a great deal today to relieve bankers of liabilities, and after this I am not sure what responsibility for cheques remains with the bankers.

The speech of the hon. Gentleman, in moving this Amendment, was far too brief, in view of the importance of the Amendment. The hon. Gentleman is capable of greater things than anything he has shown us this afternoon. It was not so long ago that he kept us a whole hour on a Friday afternoon dealing with a point far more trivial than this one may be.

Mr. Page

The right hon. Gentleman is tempting me.

Mr. Ede

No, I am not tempting the hon. Gentleman. After all, I want to listen to him the next time Standing Committee C proceeds with its business, in order to hear him continue an unfinished speech which has already lasted far longer than all the speeches he has delivered today added together. Therefore, I can assure him that this is not temptation; this is an earnest thirst for knowledge which I hope the hon. Gentleman will adequately assuage.

Mr. Page

The right hon. Gentleman has referred to a speech of mine in a Committee upstairs. Let me assure him that although the Committee has had three sittings, I have spoken for only twenty minutes. It is true that I am in the middle of a speech which has lasted for two days, but I have not yet been able to resume it. However, I am sure I am out of order in referring to that. Sir Charles.

I will read Section 82 of the 1882 Act: Where a banker in good faith and without negligence receives payment for a customer of a cheque crossed generally or specially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment. So that in respect of crossed cheques the bankers were given this very wide protection as long ago as 1882. In the year following, that protection was extended to instruments similar to cheques, and in 1932 was extended to bankers' drafts. All that we are extending it to today under Clause 4 is to uncrossed cheques.

By re-enacting Section 82 of the 1882, Act, and all its Amendments over the years, we are making a tidier job of it.

1.30 p.m.

That having been done, as recommended by the Mocatta Committee, it was necessary to say that the banker should not be deemed to be negligent, under Section 82 as it was, or under this Clause re-enacting Section 82, if he did not examine the cheque for endorsement. That is all that the proposed subsection does. The recommendations of the Mocatta Committee, to clear up the anomalies of Section 82, having been carried out, Section 82 has to be brought, by the proposed subsection (3), alongside the remainder of the Bill.

Mr. Ede

That answers a lot of questions except the question that I asked, which was, what liability is left on the bank?

Mr. Page

The right hon. Gentleman can ascertain what liabilities are left by seeing what liabilities are removed from the bank by Section 82. If I endeavoured to categorise those which are left, I am sure that I should detain the Committee far too long.

Mr. Mitchison

I, too, am not happy about the Clause. It does not seem to me to have very much connection one way or the other with the provisions about endorsement or lack of endorsement. What it does is to extend the crossed cheques protection, as the hon. Member for Crosby (Mr. Page) points out, to certain other instruments, the first of which is cheques of any sort and the next a form of document.

I should like the hon. Gentleman to deal with one form of document which is common nowadays. It is something that at first sight looks like a cheque. It is sent to someone, and by using it he can collect money. He collects the money by signing a receipt on the back of the document. There is usually a printed notice that his signature is also to operate as an endorsement.

Does this provision mean that if the banker pays no attention to the presence or absence of a proper endorsement, a proper signature, on the back of such a document as that he can nevertheless get a crossed cheque protection for it when it is paid over the counter without being crossed? If so, what is the real reason for it?

I should have thought that crossed cheque protection had gone on for a very long time and one ought to be a little careful about extending it to the multifarious variety of instruments that secure payment over the counter. It is this element of the wrong person going into a bank and claiming payment on an instrument with or without an endorsement that is beginning to trouble me a little. What we are dealing with here is the banker's duty to the customer. As my right hon. Friend the Member for South Shields (Mr. Ede) pointed out, we are, in effect, in one way or another whittling it down little by little in the Bill, and so long as the credit squeeze goes on we do not get a quid pro quo from the bankers.

Mr. Page

I think that the hon. and learned Member for Kettering (Mr. Mitchison) is confusing the signature on an instrument which is not a cheque with an endorsement on a cheque. The instruments to which he refers, which are not cheques within the Bills of Exchange Act, 1882, are already given protection under the Revenue Act, 1883. They were given that protection without being in the nature of crossed cheques. They are not negotiable instruments. The signatures upon them are not endorsements in any correct sense of the word. If customers still require their banks to look for those signatures before making payment, it is on record in the Mocatto Committee's Report that the banks will continue to supply that service, but to make it incumbent upon them to do so would defeat the objects of the Bill.

Mr. Mitchison

I am much obliged to the hon. Gentleman. One is always liable to be confused in these matters, but I have the relevant Section of the Revenue Act, 1883, here, and all it does is to apply certain Sections of the 1882 Act to this type of instrument. One of the Sections is Section 82, and Section 82 gives only what I call a crossed cheque protection. I fail to see how the application of that Section could extend to uncrossed documents a protection which it does not apply to uncrossed cheques.

Mr. Page

I think that the hon. and learned Gentleman will find that it has been held to extend the protection of those Sections even to uncrossed instruments of this sort. By means of Clause 4 we are doing the logical thing and applying the provision to uncrossed cheques as well.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

Clause 6.—(CONSTRUCTION, SAVING AND REPEAL.)

Amendment made: In page 2, line 21, to leave out "Sections four and five" and to insert" The foregoing provisions ". —[Mr. Page.]

Clause, as amended, ordered to stand part of the Bill.

Clauses 7 and 8 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, with Amendments; as amended, to be considered upon Friday, 24th May, and to be printed. [Bill 83.]