CUSTOMER.

Otago Daily Times, Issue 11195, 18 August 1898, Page 3

CUSTOMER.

A SOUTHLAND CASE. In the Supreme Court in Banco on Wednesday, before his Honor' Mr Justice Pennefather, the cast of Fleming ,v. Bar.lc of New Zealand, which had been,reserved for further consideration at the, ■recent civil sittings at Invereargill,. came on. ■ : "The case came up "in the form of a motion by'plaintiff for judgment on .the findings, and motion on behalf of the defendant for a non- ■ suit or for judgment for the bank, or in the alternative for a how-trial on .the grounds of misdirection and the improper admission of evidence, and pn the further ground that the damages-, were excessive. The plaintiff, :James Fleming, farmer, of Rakahouka, Southland, at the; last sittings of the Supreme Court- brought an action against the defendant for damages for the dishonour of cheques drawn Iby him for--which, provision •was alleged to have been made. The cheques were dishonoured, on the 6th .September last, but were paid before nopn on the following i!ay. The jury awarded the plaintiff £2000 damages.- - ■■■ . ■".•• ■ •. . . >.fr Sim and JMi4 Rattray (of Invercargill) appeared on behalf of the - plaintiff, and Mr. Ollivier (of Wellington) and Mt Hosking on behalf of. the. defendant bank. , - When, the casa- was called,1.,. '. • ..- ~. His Honor said: Is it proposed, to go.into the whole question-now? ' , Mr.Sim said,that he understood it was. , His^Honor: I-jagain intimate, as I did '\t Invercargill, that I ..think these proceedings here are inadvisable, and can. ouly result, in a waste of time-iand money. . The best. possible tribunal for a nonsuit or a new trial, is what .is called in England the Divisional Court, composed, of a body of-judges. That is provided in this colony by the Court of Appeal. I think, as 1 .said .before,, that .it would-be betteiyto move the. matter.at price into the Court of Appeal;, which sits in October. I have no power to do this without the consent of the parties, .but I do think, as "the judge who tried:'the case, that the present is a'most inconvenient tribunal. Having given thiit intimation, J can of course say no more. No doubt-the matter,.will come before the Co\irt of Appeal,-.and be tried twice over. Mr Ollivier said he had not understood that his Honor had given so plain an intimation to , that effect. •If h«, had so understood he wbuld have sought to give effect to.it. • His Honor, read the; report of his remarks ori the previous occasion?, and added that by moving the case direct to "the Court of Appeal it-would have come before a court of .which he was one of the judges, whereas by the present arrangement the; case would go before a court on which .the judge who tried the case would- not be sitting, and that, he thought, was a most inconvenient arrangement. Mr Ollivier said "KeJ did not know that he could gi.ye effect to i his Honor's suggestion now,-seeing that it-came to him so late in the day,- He would,! if, his learned friend pleased, take an. opportunity of consulting him on the subject, .but lie could hardly act on the spur of the lajpment. . , ' . .. ' "HisiHonpi- said that^he.had-not had an opportunity of. mentioning the matter to both sides. Having .staled, his views ( he was now propared to go on. Mr Ollivier. submitted, on behalf of the defendants, that thereI'was no contract proved excepting a contract made between the parties on/ the 6th September for the payment of the cheques which had' actually come' before the bank, and that that, contract was performed in"'every respect. The evidence in the case disproved the contract relied, upon by'the plaintiff. The evidence showed that it was arranged on. the 28th August that the plaintiff was to have an'overdraft of'£l2oo, which was 'to,'be cleared by the sale of certain Vlieep that were' then in the freezing' works. ' That vis the aspect: which1! presented itself to the bank manager.- a... ■" '■ ~ ■■•■•• Mr.Sim: WhicbVthe'jury found was not the case. ' ■ .- ~ " ', '".-'■ ". ' .:l Mr Olliyier: Thei-jury found that the aheep we're to be'regarded" as'the source from which that account was to-be cleared. Mr Sim. One of: the'sources. Mr Ollivier: Either, with or without .other property, such,as pelts ; that werei-then in the hands of one of the; tannery companies. Subsequent to that,.-' arrangement, the plaintiff sent to the freezing works from time tci time 1208 more carcases, > a,nd on the 4-tlr Septenv ber he drew certain clieques. in payment, for sheep which he ha,d purchased, from various, persons.. .■ These .cheques were drawn by. him at the freezing works' office, arid one of f .the cheques was handed over ,to .Mr , \Thonipson,.' manag-ei ofthe freezing works, oi some of his .assistants, in order thati it might be paid into, the account of the person in whose favour it was made. Tfhe other cheques were given direct to'the severar persons in whose favour ..they, weV.o draw*}, sAt'this time, on that Saturday;,., ijeining'sJtccquht,was overdrawn. ; £llO4, and, he. had, therefore,£96 to draw before .reaching the limit fixed between himself and the bank manager.,' These'cheques which Fleming actually drew oh the Saturday they knew now amounted tq-^something,-like.. £650, with another .cheque which; had [not come- in,-,and which would have carried the account over. the.Jimijt. to something like that extent. Fleming .then, feeling that he was going beyond the permission ho had obtained to over--draw, SQught to see the banker, but it was pa£t banking-hours and the banker had gone. Fleming, actually seemed to : have gone to the bank,'but; the banker having left, he did notchoose to see the accountant or any inferior officer.1 . . ''.'. : ; ---.. ■ . . . ■ . His. .Honor:;,The'bank was closed. Naturally he would, immediately go to the private ho.use of tlie banker,. which he did. 11-1, Mr Qlliyier did not think it-mattered. The fact remained that Fleming sought to see the manager but failed to do so, and went hark to Thompson and said to him something to this-effect,, " Will you :|pay to. my credit on Monday £1000 to meet the cheques ,1 have been. drawing." Thompson said, "Yes; certainly," and Fleming, went away quite contented into the country. On the Monday morning (September 6) Thompson went to the banker about half-past 10 and said aft once, "Fleming has asked nic to pay into his account £1000 to meet cheques which he has been giving for sheep-purchased by him." He did. : n6t pause for an answer, and it did not seem to have needed ah answer, and he went oh to propose something which was entirely different, and which he had no authority to propose. ' "It would suit roe better," he said, "if you would take a store warrant over sheep, to that value." The batiker said it made no difference to him— he''was just as ready to take a) store warrant to, the -value of £1000 ias he was to take £1000 "in cash, 'and Thompson could 'do what he pleased about ;iti Thompson"'; \vent away, and with the assistance of Mr Cochrane prepared a store warrant, not over sheep belonging to him; but over sheep belong ing.to Fleming, which were in the control of ; the Freezing Company at the time. Some little, difference arose between Thompson and CQchrane as to what number of carcases were to;be included in the warrant, but the warrant was made out for 2250 sheep, and was sent won the same morning to the bank. That was absolutely all that, occurred. After the interview between the banker (Mr Chisholm) and Thompson in. the morning, the cheques came pouring into the bank, and these, were put by by. the accountant, and brought to the notice of the manager about 4.30 p.m. The manager seemed to have been. astonished at the amount of these, cheques, and immediately sallied out to make some inquiries. Whether Chisholm was too reticent or not in the inquiries he made was a very nice point. He tried to see Thomas Fleming, a brother of the plaintiff, but Thomas Fleming had left, his office and gone home for the day. The manager was puzzled, but, it occurred' to him that the next best thing to do was to -go back to Thompson; but Chisholm. counsel supposed, was a Scotchman, and though he.put a question to Thompson he did not succeed m eliciting any information on the point on which he wanted to be informed. ■ Then the cheques were returned unpaid, and a letter was written to Fleming, on the afternoon "of the 6th September, by the manager statin* that his account was overdrawn £1195 on that day, and that he regretted he was unable to pay the cheques- presented that day. The account, seemed to have been drawn upon during the day to the extent of the diffeiencibetween £1101 and £1195, go that really there was only a balance 'of £4 odd when-the cheques came tumbling >\in 'on ; the afternoon of :Monday, and it was, therefore, quite clear that unless the manager had pledged that lie would honour cheques in excess of the £1200 limit to which he had agreed on the 2SU; August, the bank was riot bound to |>&? these cheques; It was elementary ]j«w fliat iij order to: constitute an agreement there roust be a consensus ad idem of both parties. The difficulty here was to see whether in the interview of'the 6th September between Thompson and the manager there was any intention whatever on the part of the manager to enter into the new contract set up by the plaintiff. Mr Sim : The jury found that he did. ,Mr Ollivier apprehended that the evidence disproved it entirely. If Thompson was to be anything more than a mere messenger, Ist them, consider how extremely unfit a person he was to be sent as a negotiator to Fleming, armed with a power to make a new contract in Fleming's interest. In the first place, Thompson did not, know that Fleming had' an .overdraft. - His Honor: Does that appear? Mr Ollivier: Quite clearly. Mr Sim: No, not so. His Honor: What evidence is there? Mr Ollivier quoted from the notes of Thompson's evidence: "Did not even know that. Fleming had an overdraft. . Knew nothing of Fleming's banking transactions." Thompson did not know how many cheques had bsen drawn by Fleming in payment, for sheep,, and he did not know the names of the persons in whose favour they were drawn except one, whose cheque had been handed to him in order that it might be. paid into'the batik: on the following morning, but he seemed to know that the clieques

amounted in the aggregate, to about, £650. Though Ise knew that. yet. when li« went to the bank he die! not mention that, aiid therefore they might treat him as if he did not I know that either. He did know that more i sheep had gone into the works and that they 1 held 3458 carcases in the whole, but lie did I not know that' any arrangement at all had i been made by which 2250 of these very sheep j were more or less pledged as the source from which the advance already obtained was to be cleared. Mr Sim: The jury have fqund that they wero not pledged. Mr Ollivier said he took that as a con--1 venierit expression to use. The jury had found at all events that the 2250 sheep, perhaps in. common with something else, were the source from which the overdraft was to ' be-cleared, so that he apprehended . that he was not incorrect in saying that they were more, oi less pledged for the payment of the overdraft. Supposing that Thompson had known that 2250 of these carcases were already indicated as a source from which the overdraft was to be .cleared! it was a curious speculation whether he would have been so ready to say hat he would pay £1000 to Flem- ■ ing's credit, for Thompson had in his hands only 3458 carcases, some fat, and some rejects. ■Thompson went 'there, but did riot communi- < tate the.interesting fact that he had 3458 car-' cases, and did not tell how it was the Freezing Company itself which was making the ad- : vance against property in its possession. • The proposed payment in was treated =at large by ' Thompson -as a mere sum in cash, and there was nothing to indicate that it. was other than a. mere amount of cash to be paid into Flem- { ing's account arising from some source or j other wholly unconnected, with the property that was the source from which the original overdraft was to be cleared. It was quite easy to see that Thompson and the banker were quite at cross purposes during the interview, il any such inference was to be drawii, as. the plaintiff sought to attach to that .interview. Supposing that Fleming had seen the mana'ser instead of failing to see him, how differently would lie have approached the whole n;atter I The manager would then have had an opportunity of considering the circumstances, and would have hail an opportunity of saying V No " —that he did not feel disposed to make any further advance than the £1200 agreed upon on.the 25th August. iCounsel submitted that ajl that took place between ITom'pson and the manager must be criticised by what the manager'knew and 'what Thompson did not know. The manager-know that the existing right to overdraw had. not been exhausted, and therefore when it was proposed that £1000 should be paid in .he was not i» the least surprised to hear that some more , cheques had been drawn, and would:come to hand shortly, and it did not occur to him.at all that he was asked to enter into somenew contract. The ' whole . thing was equivocalit might have meant one thing, or .another, and ;it depended upon the way it presented itself to the mind of Chisholm whether he was tp be held to have contracted oi; not. The j.cluis of proof lay,on tlie;plaintiff and if these ! slight facts. . which,'.were the .only. facts that . iscame into the matter, were capable of being .viewed in! two different lights, then there was no affirmative balance of testimony which 'established the-contract relied on.: There was no consideration for the promise which was alleged to have been made, Eithei.Thompson had a. right to pledge sheep belonging to Fleming oi he had not. If he had not. this point would be untenable, but counsel was assuming that • there was an intentipn to contract; and, passing on from that, he said that no valid contract was made because,the very, security which was proposed could not be giv.en. and was not, effectually. given: ,\'lt could not be given because Thompson Had ivr>fc authority to. give it,and had no right to pledge the goods, and his assumption of. the right to pledge did not really result, ip the : bank getting security at, all,* and\ Fleming , might have appeared five .minutes 'afterwords and said to Chisholm that Thompson had no authority to give a store warrant,; and that lie (Fleming) insisted on its being-returned. . '. If that was so, the very security which .the •banker was supposing he, was getting was no security at all, but was fib much waste .paper, and consequently as a special' contract was now rejied on to provide for cheques,over and 'above the .funds belonging to the customer there'must be a consideration to;support it; and here, if there was absence of -authority, to pledge, there was no pledge,, and if there was no pledge there was no consideration., The so-called contract. was to pay cheques, the number, amounts, and payees of which ■ iyere unknown to the. banker, in order.; to pay for sheep that Fleming had purchased."Where a person was getting value for a cheque, all business 'people recognised that they ■ would • be justified in making a substantial advarice against it, for they knew that>the customer ' had got an equivalent., Whose ■'duty : was. it to identify the cheques which-came, .within that category? Without hesitation .he. said it was the duty of the customer, to make it quite '■ cigar, to.ithe!:banker.;what, cheques,he.had Uo. ' pay under that obligation which the bank ;Was said to have entered into. The bank would' hot be bound to pay a cheque drawn by Fleming,-for some other-purpose;-"It would not be bound" to pay cheques' which' he might have given,:if ;he; had:been a cpij^yactor, .^n connection with a contract he was .carrying on, and it would-..not be bound—to put.an extreme hypothesis —*to ; pay , cheques for. money lost in wagering or any other purpose which obviously, would not result in his haying a- quid pro quo. The banker would be justified in paying any cheque -signed by Fleming, but he would not be'bound, and as it was an obligation he was ■ said to ;have undertaken, he was entitled tq restrict his obligation as much as .possible. ' . ■'.'.■ : His Honor: Take a parallel case. Mr Ollivier. Supposing! -write to my banker -in' Loudon a-s>cl-• Ray :■'• "During the year I'am going to remain in New Zealand I shall want to go on paying ray usual cha'ritaljle subsorip- ; iiens in London, and I hope you will kindly honour my oh ec-ties," and .the-- banker writes jto me to say, "T. will honoiir the-cheques [ you refer to."' Chequer, ar'p. presented to him. and he refuses to pay on the ground that he does not know if they arc. for charitable subscriptions or not. Is he /justified in refusing to honour on the ground'that,he does not know if they «re drawn for charitable subscriptions or not? ■.. ■• ■■ .'.'j '•' ■< ~ Mr Ollivier did not admit that the cases were parallel, and he suspected that m the case his Honor had put .the banker would be quite prepared to pay any cheques that came to hand. In the present, case cheques were (indicated in a shadowy manner, and a rest'ricj tion was imposed on the .cheques and; on the j obligation of the banker to pay, and that re-, istriction was in favouv.of the/banker.. The customer should have; identified each cheque as it, was presented, .and .saioV'.". I have got .value for this ; cheque; -you; are; bound: tp pay; under.'the..-contract.;' . , : ~ -. -..'.:•.• : '..■■-!!;. 1 His Honor: The banker was not bound to 'ask him'? :• ,v ■'■•:-.■ .•■ ■■". . - .:. / .' • '■'.'■'■ Mr Ollivier:: -No'. .'.■';; The'^obligation ■ undertaken, by the bank: was-only to pay; cheques' for which value had been received. : ' . ' ' . His Honor: If your take that point at all, why not cany it a step further? The money' was to be paid for sheep. If the. cheques were given for pigs the banker would not be bound to pay? '.'''. Mr Ollivier: Clearly. Mr Hosking: He might be justified, but he would not be bound.- \ Mr Ollivier: Assuming a. contract had been made, and if it was a contract suppdrtedby good consideration, and if lit' ,vvas riot open .to any'of the. objections urged against it, it was a contract of very short duration, for it; was broken on the afternoon of the day on which it vras entered into. It only had an existence of five or 6ix hours. ■ His Honor: I must tell you that my feeling so far is that if an agent .goes and says, " i am told to do so-and-so, but I will, with'your consent, do something different,", and the person he is sent to says, "Do as you will,'- it j is not open to the latter to turn round and j say the agent had no • authority to' make a ! contract;' but I was impressed very much at i luvercargill by your argument' that the con- ' tract had been broken. i Mr Ollivier: The contract had a very ! limited existence—at most' it endured for a few hours. All the chequeß came to hand on that same afternoon. , They .might not have done so—they might have been held for i days or weeks or have come in at intervals— but they did not do so. It was clear that a persoii" bound .'.by .' a:* contract that, was'not under seal might, before breach, be 'exonerated i from observance by word of mouth without i any value for consideration, and this contract between Thpmpßon andphisholm might-have been waived by the same parties before the re : j turn of the cheque.. . .' ' " ." i His Honor: Would it be open, to the agent ! and banker to resolve to undo a contract, the i banker knowing that the original authority j had not been carried .out? . Mr Ollivier: I am assuming absence of authority in Thompson. - " ! His Honor: But Thompson was authorised to go in and pay £1000, .and lie-made an arrangement with the banker instead of that. Would the bank be allowed to'say it had agreed with the agent, Thqmpson, to. undo • the contract?—and then the £1000 had not i been paid in, though Thompson had been ordered to pay it in. .. ' '. ■ ' Mr-Ollivier did not contend if the'agent was an agent for the making of a- contract that he was' at liberty to undo the contract. The payment of the £1000. would, involve no contract so far as the banker was concerned. His flpnor: Put it this way: The agent was authorised to perform a certain transj action, and he gets the consent of the bank | to allow him to do something else" instead of 'r performing that transaction. Would the bank I be justified in undoing that something he had done instead, knowing that the original order had not been carried out? • ' ■ Mr Ollivier: That depended on the'extent of the authority vested in Thompson. Learned counsel argued that there was no evidence of assent or intention on Ohisholm's part to the 1 contract; that even if there wero a contract made then the contract was made by a per-i-son who had no authority-to do so-and he ! remained in ignorance of it until aftor the" ' dishonour of the ohe.aucs; that the contract,

' if.any, was a special contract, and not an implied contract, and Lhere was no course of proceedings from which an implied contract could arise; that by virtue of want of author:ty tliere was no consideration; and that t.he ratification came too late. The whole conduct of' Chisholm was inconsistent with such a contract. If them was a contract there was no breach, because the obligation was to pay cheques ■ given for sheep,and the plaintiff ought to have identified the cheques which fell with- ■ in that category.; and the plaintiff could not adopt a contract which was no longer in esse. i His Honor,, at the close of Mr OUivier's : argument',1 said he was still' of opinion, though the case had gone so far, that the best course would be that the1 case should be argued here, but that he should not give judgment—that the case should go. to the Court of Appeal, where he would like to be one of the court himself. Mr Hosking following on behalf of the defendant, maintained .that Chisholm was not conscious that.he had entered into an active contract'which he was called upon to perform, and no obligation could arise to communicate his intention not to perform. His Honor, said if what Chisholm did was to accept warrants in respect of some cheques and then when tjie cheques .came in,■ he became 'alarmed ,'at.-what,he .had done and re- ' solved to-take, what.' he - foolishly thought would be a prudent course, and if he did not 'cash the cheques till tlie next day, surely he ought to have given notice to the person with whom he contracted. The jury found that Ctisholm had - undertaken to honour the cheques, and: if that was so, he did not see how Chisholm could be anything but bound, if he changed his mind and resolved not to honour them, to tell Thompson. Mr Hosking: If that was so, was his duty in respect to Thompson or Fleming? If his duty was to Thompson, then Thompson n list sue, and-if his duty was tp Fleming, when did it arise, for Fleming did not become bound until lie adopted,the contract. Until Fleming came in and said, " I adopt what Thompson has done," he.had a perfect right to say that lie wanted the warrants back, even after" the cheques were' paid. In order that there• should- be a proper ratification, the mutter must. he in such a position that tho person ratifying it could have made it at the lime There Was .no acceptance of consideration- for. a contract until the principal had come in and ratified it. It could not be ulle'o'cd that on the 6UI September, before Fleming was communicated with, there had •■lie™ cmv;ider:>tiori, for there was no contract It could only be said that certain forms had been '■ gone into between the banker and the a'ient, but they.' did not amount to a con- ' ■ rAt 5 p.m., Mr Hosking's argument not being concluded, the court rose until 11 o'clock- next ■• ',„„,,„