NOTES OF CASES
| Published date | 01 January 1956 |
| DOI | http://doi.org/10.1111/j.1468-2230.1956.tb00346.x |
| Date | 01 January 1956 |
NOTES
OF
CASES
RECENT DECISIONE
IN
BANKING
LAW
THE main interest of
Welch
v.
Bank
of
England
[1955] 2
W.L.R.
757;
[1955]
1
All
E.R.
811
is the criticism which
it
contains by
Herman
J.
of the much discussed decision
of
McNair
J.
in
Brewer
v.
Westminster Bank Ltd.
[1952]
2
All
E.R.
650.
The facts
of
the case were rather complicated but for the purposes of this note
they may be summarised as follows.
The plaintiff was one of two trustees who were registered as
joint holders of certain consolidated stock transferable by the
defendants in their books in the ordinary way. The other trustee
by
a
series of transactions, in the course
of
which he forged the
plaintiff’s signature
to
a number of deeds of transfer, disposed
of
the stock to third perties for his own benefit and the defendants
accepted the transfers as genuine, and registered the said third
parties in their books as having become the owners. These frauds
were eventually discovered and the fraudulent trustee having died
the plaintiff brought these proceedings against the defendant bank
claiming that her name should be restored to the register as owner
of the stock in question. Similar questions arose‘ in connection
with dividends received upon the stock and cheques received
in
payment for the stock, but these do not need separate consideration
here.
The plaintiff’s claim rested
on
the well-known rule that forgery
being a nullity the defendant bank had
no
authority
on
which they
could properly alter the register of stock holders and transfer the
stock into the name of the third parties
(Davis
v.
Bank
of
England
(1824) 2
Bingh.
asa).
The defendant bank contended that as the
interest of the plaintiff and her cetrustee in the stock was a joint
one she could have
no
better right to complain than he had. They
relied also upon estoppel and ratification.
With regard to these latter contentions the circumstances
attending the different forgeries varied somewhat and gave rise to
interesting discussions as to the precise conduct which will found
estoppel
or
amount
to
ratification in such cases, but there
w?s
no
particular difficulty as to the rules involved and this part of
the case need not concern us further. In the result the learned
judge held that in respect of a large amount of the stock in question
the defendant bank were liable to restore the plaintiff’s name to
the register
of
stockholders.
It
is with the defendant bank’s contention
on
the point of joint
interest of the two trustees that
I
am concerned in this note. This
was considered by the learned judge to raise the defence which
76
JAN.
1966
NOTES
OF
CASES
77
succeeded in the
Brewer
case
(supra),
the facts
of
which it may
be useful to recapitulate shortly. The plaintiff
Miss
Brewer was
one
of two executors of her father’s will and together with the
other executor opened a joint account with the defendant bank,
on
the terms of the banks standard form of mandate. This mandate
provided that cheques upon the account were to be signed by both
parties to
it,
and that the liability of the executors to the bank
on
the account should be joint and several. The plaintiff’s co-
executor forged her name to a number of cheques which he drew
upon this account and by this means obtained and used for his
own
purposes a substantial sum of money belonging to the plaintiff
which
it
was claimed in these proceedings that the defendant bank
were liable to repay to her.
The forged signatures were
so
skilfully executed that
no
question
of negligence
on
the part of the bank arose, and the plaintiff’s
case in effect was that since the forged mandates were nullities in
law the defendant bank must restore the amount paid away
or
alternatively had
no
authority to debit the account. To which the
defendant bank replied that since she was one of two joint creditors
on
a single obligation she could not sue without joining her
fraudulent co-executor: this she accordingly did. She was then
faced with the dilemma that several persons cannot sue at law
jointly unless each one is in a position to sue
(Brandon
v.
Scott
(1857)
7
E.
&
B.
284)
which it was clear the plaintiff was not, for
her right was indivisible from that of her fraudulent ceexecutor.
McNair
J.
considered that this was the correct view of the matter,
and gave judgment for the bank.
In regard to this judgment Harman
J.
in the instant case
remarked shortly
“I
confess that
I
do
not follow that decision.
None of the cases in equity were cited to the judge.
It
may be,
however, that this would be a good defence at law.
It
is
certainly,
I
think,
no
defence
in
equity.”
It
would appear from this statement that there is some well-
known
rule of equity which applies in cases of this kind but which
had been overlooked not only by both judge and counsel in
Brewer’s
case but
also
by the several learned commentators who discussed
that case in the periodicals
(cf.
16
M.L.R.
282).
Harman
J.
does
not indicate what the rule he has in mind is, and
if
we examine the
four cases to which he refers in this part of his judgment we
find
that two
of
them are in fact the decisions
of
common low courts
(Davis
v.
Bank of England, supra,
and
Coles
v.
Bank
of
England
(1889) 10
Ad.
&
El.
487),
which
in
the other two cases
(Sloman
v.
Bank
of
England
(1845)
4
Sim.
475
and
Barton
v.
North
Staflordshire
Ry.
Co.
(1888) 88
Ch.D.
458)
courts of equity followed.
The principal point relied upon in all these cases was that the
forged transfers were nullities; the result being that there was
no
authorisation to the defendants to transfer the stock out
of
the
plaintiff’s name and in each case there was an order to them to
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