The Lyttelton Times. MONDAY, JULY 10, 1865.

Lyttelton Times, Volume XXIV, Issue 1427, 10 July 1865, Page 2

The Lyttelton Times. MONDAY, JULY 10, 1865.

A PAET of the law of banking which does not seem to be generally understood, certainly not usually acted upon in this country, was recognized by Judge Chapman a few days ago, in a case which was argued before him in Dunedin. An action was brought by the trustees of a bankrupt estate to recover from the bankers of the insolvent firm a number of bills of exchange deposited with them by the firm. The bankers were under advance to the bankrupts in a sum of about £3000; the bills held, unmatured, amounted to over £7000. When the trustees of the estate found out that negotiable paper to so large an amount was held, they endeavoured to get back the surplus from the bankers, or to recover the whole by paying the amount due from the estate to the bankers in cash. The bankers refused to hand over the bills or any of them, and the action was brought by the trustees for " wrongful conversion." It appears further that the bills had been handed over by the insolvents to the bankers, as a special security against the overdraft and bills likely to be dishonoured. The last fact gives peculiar strength to the bank's position. That is to say, when a customer lodges negotiable paper with his banker for the special purpose of giving security for advances made and bills discounted, the banker has an undoubted lien upon the paper. But, apart from this point in the action, the tendency of the case is to add strength to the rule that a banker has a lien over all negotiable paper deposited by a customer who has overdrawn his account. In other words, a person who lodges bills for collection in a bank cannot, if he owes tjie bank money, enforce the surrender of any of the bills, no matter how large their amount, or how small j his overdraft has been. And therefore, in case of his bankruptcy, the bankers may hold all such bills till j they themselves are satisfied. The difference of amount appears to be no part of the question; for —to quote Judge Chapman's words—" if a banker was entitled to retain bills for an unliquidated balance, he was entitled to retain all that he held ; because it was impossible to foretell, at any particular time, which of the bills retained would ultimately be paid." And this dictum of the Judge in the presont case borne out by the highest English authorities, though it appears at bottom to be nothing more than a custom or usage of banking, grown of sufficient force, by repeated proof, to bo now recognised by the courts of law. Aw to the point in the present- case, relating to the tender by the plaintiffs ot u sum of money sufficient, in their opinion, to meet the banker's claim, it does not appear to have been settled one way or other, so as to affect tlx.' verdict; for it was not actually pleaded 1

by the plaintiffs. But the jury found collaterally that the tender iras insufficient ; and it would appear that, so long aB a banker desires to retain such securities, he can do so, by not making any precise statement of his claim on which an exact tender may be founded. So far as we are acquainted with the practice of the colohy, it has not been the habit hitherto to consider the lien of a bank upon bills put in 4 for collection' indisputable; and the banks have not exercised anj rights under such a rule, though it is well enough known. But the general custom of England, being such as we have described it, and being quoted by the Bench as sound law, in so important a case as that which will be found reported at length in our other columns to-day, will probably be adopted as the rule of banking generally in the colony.

We do not suppose that our advocacy I of prompt action in the matter of the ■ Rakaia Pass road to the West Coast is likely to be put down by the public to partizan feeling. If there are two well defined parties in this little state, with their distinct leaders, principles, and passwords, we can hardly behevt that the distinction has become purely geographical; that politics and passes are synonymous; that Bakaians and Otirans are ranged againßt one another like the ancient Whig and Tory; that the name of Wilberforce has become a symbol of deadly opposition; or that Hall and Dobson, Browning and Griffith, are paired against one another for the future, as rival leaders of two adverse factions in the community. It is possible, we hope, to take a less terribly significant view of a difference .of opinion about the road than this; to admire the Teremakau without admiring tyranny, and to advocate the Bakaia route without meaning revolution. The public, we think, desire to discuss the road question on its own merits, and not to make it a mere hook to hang a quarrel on. We have been taunted with partizanship; yet we hold sentiments on this subject which are shared by those who are no partizan politicians, and by those who might be called, perhaps, partizans of the Government. But, for fear of any mistake being made about the matter, we will agree to say no more about the Otira route which can be construed into hostility to its supporters. We will be content to hold our opinions in silence for the future, on the ground that the Government might perhaps be frightened by opposition into doing nothing at all. We will agree to see any works whatever by Arthur's pass gone on with, if the intention of the Government to go on with the Bakaia pass also, if possible, is made quite clear. Let us only have a definite understanding on this point.