Colonial Bank of Australasia Ltd v Marshall
[1906] UKPCHCA 3
•27 July 1906
196HIGH COURT
[1906.
H. C. OF A.
tvith liberty to aj>ply. Respondent to
1906.
pay the. costs of the appeal.
Case re
L.4NOLEY
mitted to the Supreme Court.
V.
Fosteb.
Solicitors, for the appellant, Perkins & Foshery.
Solicitors, for the respondent, John Williamson th Sons.
C. A. W.
CLR304
[PRIVY COUNCIL.]
THE COLONIAL BANK OF AUSTRAL-'|
Appellants ;
ASIA LTD.......................................................j
ANI>
MARSHALL AND ANOTHER
Respondents.
ON APPEAL FROM THE HIGH COURT OF
AUSTRALIA.
Banlcer and cu-itomer— Chf.que—Fraudulent alteration of amount after si/pialure—
—Duty of customer to take precautions against forgery.
Pkivv^Yhatever the duty of a customer towards his banker may be with reference
C’ous'cii.*to the drawing of cheques, the mere fact that a cheque is drawn with spaces
1906.such that a forger can utilize them for the purpose of forgery is not by itself any violation of that obligation.
July 27.
Decision of the High Court {.Uarshall v. The Colonial Hank of Australasia
Ltd., 1 C.L.R., 6.32), affirmed.
Scholfeld V. Ear! of Londesborough, (1896) A.C., 514, followed.
Appeal to His Majesty in Council from the decision of tlte High
Court. {Marshall v. The Colonial Bank of Australasia Ltd. (1).)
* Present.—The Earl of Halsbury,
(1) 1 C.L.R., 632.
Lord Macnaghten, Sir Arthur IVilson,
Sir Alfred Wills.
4 C.L.R.]OF AUBTllALTA.
197
Tlie judgment of their Lordships was delivered by
Covscii
Sir Arthur Wilsox.
The two respondents, Marsliall and
jĝjg
Day, and one Myers, were executors of Ann Myers. As such
^
tliey opened an account with the appellant banking company in
Melbourne on the 24th March 1900, when they paid in a sum of Australasia
.
Ltd.
£1,590 15s. 2d.; and against that account cheques were from time
v.
to time drawn signed by the three executors. On the 25th May 1900, before any of such cheques were drawn, the three executors addressed a letter to the bank, by which they requested the bank to pay clieques signed by the three, and sent specimens of their signatures. The course of business followed by the three executors amongst themselves was this. Myers, wlio alone resided in Melbofirne, drew each of the cheques, sent it for signature to Marshall, who signed first, then to Day, who signed second, and finally added his own signature.
Out of the total number of tlie cheipies so di-awn the jiresent controversy relates to five cheipies, which as originally drawn by Myers and signed by Marshall and Day, were for £10, £2 6s. 4d., £50, £10, and £10. But each of these cheijues was so written out as to leave a space between the left luiiid margin and the statement of the amount of tlie cheque, both as given in words and as given in figures, and in that condition it was signed by Marshall and Day. Myers, by acts amounting to simple forgery, added words and figures to the left of those originally written in the cheijues, so turning them apparently into cheques for £110,
£32 6s. 4d., £150, £110, and £110.
The clieques in their altered
forms were presented to and paid by the bank. And it has been found land their Lordships accept the finding) that the bank could not, by the exercise of ordinary care and caution, have avoided pajdng the cheques as altered.
When the forgeries came to light, the bank claimed to debit the executors’ account with the amounts of the cheques as paid by it in their altered form; wliilst the respondents contended that the debit should only be of the original amounts of the
cheques.
The aggregate of the differences was £450.
The suit out of which the present appeal arises was then brought in the Supreme Court of Victoria by the respondents against the bank, Myers being added as a defendant as he refused to join as
198HIGH COURT
[190G.
Privv a plaiiitifi'. The statement of claim, amongst other allegations,
1906 ™ outline the facts already stated and put the plaintitis’
'—.—"
claim upon several altei’iiative grounds, which need not be con-
Bank̂'of sidered. The defence raised the whole question now material in
Anstralasia paragraph 11, which said:—“ If the said che<|ues or any of them
V.were fraudulently altered and increased in amount, such cheques
Marshall.
were, and each of them was, drawn by the plaintitis and the defendant Myers without reasonable care or precaution, and in a manner and form so negligent, that they enabled and permitted the alterations and erasures, if any.”
And it was contended that the plaintiff's were by reason of the facts so stated, “ estopped from alleging that the cheques so altered and increased in amount, were not their checiues, or drawn by them, or with their authority, and from alleging that the said cheques, or any of them, were in fact fraudulently altered and increased in amount.”
The case was tried before Madden C.J., and a jury, and at the trial the facts proved, so far as they are now material, were those which have been stated. The learned Chief Justice in charging the jury left to them the question, “ Were the cheques or any of them drawn by the plaintiffs negligently having regard to what I have told you ?” and he proceeded to say :—“ If a customer of a bank is drawing a cheque upon that bank, it appears, according to our law (as I think it still exists), that the customer is bound to avoid such negligence in drawing out hi.s cheque as will unreasonably expose the banker to the risk of having to pay more than the proper amount of the cheque which was drawn out by such customer.”
The learned Chief Justice afterwards explained his view a little more fully by saying ;—“ If you draw a cheque in a manner which a jury thinks is so negligent that it induced or caused opportunity to a person who chances to be desirous of committing a forgery, to effect that forgery, so that the banker is exposed to the paying of a larger sum than you (the customer) intended when you signed the cheque, then the law i.s, that if a jury is of opinion that such action of the customer amounts t(j negligence, and negligence of such a kind as, in the opinion of the jury, ought to preclude him from complaining of the fact that the banker paid
4 C.L.H.)OF AUSTRALIA.
199
tlie altered cheque, then the customer cannot complain against Privv
the bank.”
1906.
The jury answered the question thus left to them in the affirmative as to all the cheques in controversy, and found a
Colonial
| Bank of |
verdict for
the defendant bank, upon which judgment was Aus'^alasi.i
entered for the defendant hank with costs. And the Full Court,
c.
on appeal, approved the ruling of the Chief Ju.stice, and affirmed '
the judgment.
The now respondents appealed to the High Court of Australia, and that Court reversed the decision of the Supreme Court of Victoria, and dismissed the suit, holding that the ruling of the Chief Justice was not in accordance with law, and that there was no evidence of negligence proper to be left to the jury. Against that decision of the High Court the present appeal has been
brought. ■
.
In the course of the argument of the appeal before their Lord ships, as well as in the Courts of Australia, much was said about the case of Young v. Gvote (1), a case always cited in connection with this branch of the law. That case, however, was critically eKamined in the House of Lords in the case of Scholfield v. Earl of Londenhorough (2), and the latter case has now become the governing authority which must prevail so far as the principles laid down in it extend.
In order to appreciate the effect of that decision, it is necessary to notice the hi.story of the case and the manner in which it came before the House of Lords. The suit was by a holder for value of a bill of exchange against the acceptor, in which the plaintiff sought to make the defendant liable for the full apparent amount of a bill accepted by him, and subsequently increased in apparent amount by ij. forger on the ground that the bill, as accepted by the defendant, was drawn in a manner so negligent as to have facilitated the forgery subsequently committed. The case was tried before Charles J., without a jury, and the learned Judge had to deal, and dealt, with two principal propositions essential to the jilaintiff’s success. The first was, that the law merchant imposes upon everyone who accepts a bill of exchange with a view to its circulation the duty of taking reasonable precautions.
(1)4 Hing., 253.
(2) (1S96) A.C., 514.
200HIGH COURT
[190G.
ConxciL.Privyin order to prevent the possibility of its amount beino- fraudulently
1906.increased. That proposition the learned Judo-e accepted. The ■second principal proposition dealt with by the learned Judge was
C0R0NI.\R that on the facts of that case, the acceptor of the bill had been
Bank
ok
Austrakasia
Ltd.guilty of such negligence as to bring him within the operation of
V.the hr.st proposition. This second proposition was rejected by
Marshall.
the learned Judge, avIio accordingly dismissed the suit. In order to show the connection between that case and the present, it is sufficient to say that there is no suggested ground of negligence in this case which was not present in Scholfield w Earl of Londes- horoiigli (1).
An appeal against the judgment of Charles J., was brought in the Court of Appeal, and in that Court two of the Lords Justices rejected both propositions, holding not only that no such duty as alleged lies upon tlie acceptor of a bill of exchange, but also, that, assuming the existence of .such a duty, it had not been violated. The third Lord Justice accepted both propositions as correct, and thought that the plaintiff in the case ought to succeed.
The appeal to the House of Lords impugned, therefore, the correctness of the two rulings of the majority of the Court of Appeal, and the argument proceeded on the same lines. So that both the propositions referred to were directly in (juestion before the House of Lords.
Tlie first proposition was expres.sly negatived by the House of Lords, but so far the decision does not directly affect the present case, for the contractual relation existing between a banker and his customer differentiates their case from that of the acceptor and the holder of a bill, and this was pointed out by several of their Lordships. It was recognized that there is or may be a duty on the part of the drawer of a cheipie toward.s-his banker which does not exist on the part of the acceptor of a bill towards the liolder. It was recognized that “ if . . . the customer by any act of hi.s has induced the banker to act upon the document by his act or neglect of some act usual in the course of dealing between them, it is quite intelligible that he should not be per mitted to set up his own act or neglect to the prejudice of the banker whom he has thus misled, or by neglect permitted to be
(1) (1896) A.C., 514.
4 C.L.K.]OF AUSTRALIA.
■201
laiHled.” No attempt was made to define the extent of sncli
obligation ; it was unnecessary to do so in that case, nor do their
jggg
Lords! dps propose now to attempt any abstract definition of sucli
"
duty. Indeed, it would be impo.s.sible to do so, seeing that the extent of the duty may depend upon an agreed or e.stablished Aus-m̂ÂASiA
course of dealing between the parties.
V.
Marshali,.
But the duty, which, according to the ruling of the learned Chief Justice, subsists between customer and banker, is sub stantially the same as that contended for in Scholjidd v. Earl of Londeshorouf/lt (1) as exi,sting between the acceptor and the holder of a bill. And as has been pointed out, the House of Lords had before them, on the appeal, the question whether the Court of Appeal was right in ruling that the facts found in that case (which included everything existing in the present ca.se) did not amount to a bi’cach of the obligation, supposing that obliga tion to exist.
Not one of the members of their Lordships’ House appears to have expressed the slightest disapproval of that ruling, and most of their Lordships distinctly approved of it. The Lord Chan cellor (2) expre.s.sed his concurrence in the opinion of Lindley L.J., “ that it was wrong to contend that it is negligence to sign a negotiable instrument so that somebody else can tamper with it; and the wider proposition of Bovil C.J., in a former case, Societe Generate v. Metropolitan Bank (3), that people are not supposed to commit forgery, and that the protection again.st forgery is not the vigilance of parties excluding the possibility of committing forgery, but the law of the land.” Lord IFatso?? (4) approved the same rulings. Lord Macnaghten (5) expre.ssed the same opinion, and Lord Davey concurred in the judgment of Lord ]Vatson.
The principles there laid down appear to their Lordships to warrant the projwsition that, whatever the duty of a customer towards his hanker may be with reference to the drawing of cheques, the mere fact that the cheejue is drawn with spaces such that a forger can utilise them for the purpose of forgery is not bĵ itself any violation of that obligation. Their Lordships therefore
(1) (I89(i) A.C., .'iu.(4) (1896) A.C., 514, at p. 540.
(2) (1896) A.C., oU, at p, 532. (5) (1896) A.C., 514, at p. .544.
(.3) 27 L.T.N.S., 849, at p. 856.
202HIGH COURT
[1906,
Privyagree with tlie Higli Court of Australia in
holding- that there was
Council.
1906.no evidence proper to be left to the jury of negligence on the part of the respondents. They will humbly advise His Majesty that
Colonial
this appeal should be dismissed.
Bank
of
Australasia
The appellant bank will pay the respondents’ costs of and
I^TD.
V.incidental to the appeal as between solicitor and client.
Marshall.
Appeal dismissed witlt costs.
[PRIVY COUNCIL.]
WTLFLEY ORE CONCENTRATOR SYNDI-]
iAppellants ;
CATE LIMITED
N. GUTHRIDGE LIMITED
Defendants.
ON APPEAL FROM THE HIGH COURT OF AUSTRALIA.
Privv
Appeal to the Pi'ivy Council from Hiijh Court—Special leave—No question of law—
Council*
Case of qreat importance to parlies—No question of public importance.
1906.
There being in a judgment of the High Court no question of law upon whioh June '27.that judgment could be objected to, the fact that the case is one of a sub stantial character and of great importance to the parties is not a sufficient ground for granting special leave to appeal to the Privy Council.
Petition for special leave to appeal from the judgment of the High Court in
N. Outhriihje Limited v. Wilfley Ore Concentrator Syndicate Limited,
C. L.R., 583, dismissed.
Petition for special leave to appeal to His Maje.sty in Council
from the decision of the High Court; iV. Gatltndge Limited v.
]Vilttei/ Ore Concentrator Syndicate Limited (1).
* Present.—Lord Davey, Sir Arthur
(1) 3 C.L.R., 583.
Wilson, Sir Alfred Wills.
0
0
0