INSTRUCTIVE LECTURE.

Poverty Bay Herald, Volume XLVII, Issue 15223, 22 May 1920, Page 3

INSTRUCTIVE LECTURE.

TO BANKERS AND ACCOUNTANTS. A most instructive lecture was delivered by Mr. J. S. Barton on Wednesday evening on the subject of the laws relating to cheques as affecting commercial accountants and bankers. After welcoming the local accountants, and particularly the bank clerks who attended, the speaker pointed out that a complete Knowledge of the Bills of Exchange Act would not be obtained from a study of the Act. It might be said that many of the most important provisions of the Act were not so much substantive provisions as they were statutory exemptions from the general principles of law Even if that statement could not be' passed as strictly accurate by a jurist, he would nevertheless urge it as a safe point of view for the young student. By way of illustration the speaker announced that his remarks would centre chiefly around two general principle* of the law of property, and would show how two most distinctive features of tnt Bills of Exchange Act m relation to cheques were passed to exempt cheque? from the operations of these principles The first principle was that no man could give a title to property unless he had a title fo bestow. Only the true owner of property, or one basing his rights on the t't'.e of the true owner, could pass the title of that property to another. The speaker exemplified this by supposing that he, having no title to the table at which he was standing, purported to sell it to the chairman. That worthy gentleman might purchase it m all good faith, and pay full value for it, but would- not m consequence of that acquire any title, because the speaker could not bestow any title to what he did nur nimself possess. The speaker then supposed that the table was honestly passed on from tin chairman to another gentleman m good faith for value, but stated that the law was that, the final holder under that arrangement would have no title ~and would have to yield up to the true owner. Now, originally cheques were on precisely the same footing, and m principle there was no reason why they should be placed on any other footing. Considerations oi commercial convenience, however, pointed to the necessity which had resulted m cheques being made negotiable instxu ments. The Bills of Exchange Act defines "a holder m due course" of a cheque, and provides that such a holder shall receive a title to the cheque free from all defects m the title of previous holders. Thus, if m the illustration above noted, a cheque should be substituted for the table, the result would be that the final owner, having laken it ir; good faith and being "'a holder m ctnf course," could hold it against the world including the true owner. A warning was, however, necessary. The holder j of a cheque can only claim the benefit 'of this special protection if at all points he is within the definition of a holder m due .course; and thc speaker took his audience carefully over these points. 11 at any point the holder should rail to come within the description, he would not. be entitled to claim the protection vi the provisions referred to, but the ordinary law of property would apply to hif cheque as it would to any other cnattel. The speaker then referred fo the "Not negotiable" crossing, fhe effect, of whirl) was to destroy this feature of negotiable cheques and, to put. it briefly, to place fhe cheque back on the tame level m the table.

The next general principle the speakei referred to was that one who without lawful excuse disposes of the property of another, is liable to the true owner m what is known as an action for conven ience, and this liability exists, notwithstanding the lack of any guilty intention or knowledge on the part of the dantA good illustration of this is the auctioneer who innocently sells goods sent tr him for sale by one who has stolen them. In the absence of any special protection or . lawful excuse, the auctioneer 1 would be liable to the true owner. Once, again it might be said that originally cheques were on the same footing, and. m principle there was no reason why they should not be. If Bill Sykes stole a cheque from one man and a table from another, he might be expected to use the services of a banker to obtain the proceeds of the cheque and the services of an auctioneer to obtain the proceeds of the table. Tno owner of either article would (still bihmhing of the law as it originally stood), have his right of action for conversion equally against the banker '. and the auctioneer, although they both acted without guilty knowledge. Once again, however, considerations of commercial convenience intervened; the present law was parsed as it Is now stated In Section' S2 of the Bills of Exchange Act. That provision' is briefly, that a banker wno acts as agent to collect a crossed cheque for a customer, and acts without negligence, will not be liable to the true owrer If it should turn out that thc banker's customer had no title to the cheque, once again the speaker uttered tho warning that that protection could only .be claimed by a banker whose dealing with a cheque squared at an points with the provisions of the section. In particular there was no protection In respect of uncrossed cheques, oi various Instruments, ifke cheques— bin failing to, come within the true definition of bills of exchange. The speaker then dealt at length with 'ho fnmous "Oordoh case." (Ooioon v. Capital and Counties' Bank (1903), A.C. 240.) He referred to this as the most. Important case ever decided from the standpoint of the banker, nnd much time whs spent m dealing with its various aspects, as illustrating the provisions of Section 82. Finally he called the attention of the audience to sub-section 2 of section 82, which was, he said, added to the section by the New Zealand Parliament m 1905 to meet the position created by the decision of lhe House of Lords m the Gordon case. The address then closed with a" few general injunctions to commercial accountants ami bankers, and the remainder of the time was spent In answering questions.