SECOND READING. (Hansard, 27 July 1858)

THE LORD CHANCELLOR,

in moving the second reading of this Bill, said the necessity for it had arisen from defects in preceding legislation. To prevent dishonest persons making an improper use of cheques it was the practice to cross them with a banker's name, which was supposed to give the security that a cheque so crossed would only be paid through a banker. The matter, however, having been brought before the courts of law, it was decided that the crossing did not amount to a direction to the banker only to pay through another banker, but merely to excite his vigilance. Under those circumstances, what was supposed to be a security turned out to be no security whatever, and in 1856 an Act was passed which enacted that where any draft or cheque on a banker had an addition of the words "and Company," either 2162 in full or abbreviated, it should be considered as a direction to the banker only to pay through a banker. The Act was brought to the test at the latter end of last year. A person sent a crossed cheque through the post. The cheque was abstracted from the letter. The words crossed were obliterated; it was presented to the bankers having all the appearance of an uncrossed cheque, and the money was paid. An action was brought by the customer against the bankers, and the Court of Common Pleas first and the Court of Exchequer Chamber afterwards decided that the words of the Act of 1856, that the crossing should be a direction to the banker only to pay through a banker, were applicable not to the time of drawing, but to the time of presentment, and that the crossing was no material part of the cheque. Again, what was supposed to be a complete protection to the customer was found to be no security, and the intentions of the Legislature were frustrated. It therefore became necessary to introduce this measure, by which it was proposed to enact that the crossing of the cheque should be a material and essential part of the cheque, that it should amount to a direction, not from the time of presentment, but from the time of crossing, to pay through a banker, and that an erasure of the crossing should amount to a forgery. He believed there was no doubt as to the propriety of the measure, except as to the fourth clause, which provided that bankers paying a cheque which did not plainly appear to be crossed, or to have been obliterated, should not incur any liability. He understood there was some objection to giving bankers that protection. He had considered the point, and he could not help thinking that the clause was a very reasonable and a very proper one. It should always be borne in mind that a cheque which got into dishonest hands, got there through the negligence or fault of the person who drew it. It was either lost through negligence, or intrusted to a person unworthy of confidence, or stolen. In the great majority of cases the banker could not protect himself, but the customer could, and therefore it would be a most unfair thing if, when giving protection to crossed cheques, they withdrew the protection which bankers now possessed, in the event of a crossed cheque being presented to all appearance an uncrossed cheque, and in such a state as would defy any amount of vigilance to detect the fraud.