220 / 338
In a recent case the defendant, who was not a
customer of the plaintiffs' bank, endorsed and
cashed on the zoth May 1959, in their Dun Laoghaire
Branch, a cheque drawn in her favour on the National
Bank, College Green, Dublin. The cheque was, in
accordance with the normal practice, sent by the
plaintiffs to their clearing department in their head
office. On the zist May 1959 it was handed over in
the Central Clearing Office to an official of the
National Bank. On the 22nd May 1959, the National
Bank returned the cheque by post to the Dun
Laoghaire Branch of the plaintiffs marked ' effects
not cleared 22.5.59'.
The plaintiffs received the
cheque on the morning of the 23rd May 1959, which
was a Saturday, and, on the zjth May 1959, notified
the defendant by telephone that the cheque had been
dishonoured. The defendant did not repay to the
plaintiffs the amount of the cheque and they accord
ingly sued her.
On
the hearing
in
the High Court, before
Murnaghan J., the defendant contended that she was
not liable as endorser as she did not receive notice
of dishonour within a reasonable time in accordance
with the relevant provisions of the Bills of Exchange
Act 1882.
Section 45 of that Act provides that a
Bill must be presented within a reasonable time
having regard to the nature of the bill, the usage of
trade with regard to similar bills and the facts of the
particular case and that if not so presented an
endorser shall be discharged. Section 49 of the Act
provides that notice of dishonour must be given
within a reasonable time after a bill is dishonoured,
and that to comply with the section, notice must be
given or sent off in time to reach the person receiving
it on the day after the dishonour of the Bill.
Mr. Justice Murnaghan decided that, as section 45
of the Bills of Exchange Act requires that present
ment must be made to some person authorised to
pay or refuse payment, it was not presented when
received at the Central Clearing Office by an officer
of the National Bank, as such officer had no
authority to pay or refuse payment. The cheque
could only be considered for payment under the
deferred posting system at present in operation in
the banks in the Republic after the close of business
on the 22nd May 1959, that is, 48 hours after the
time when the plaintiffs became holders of the
cheque. He held, therefore, that the cheque could
not be considered as presented for payment until
then, and that such presentation was not within a
reasonable time. He therefore held for the defendant.
From this decision the plaintiffs appealed to the
Supreme Court.
The Judgment of that Court was delivered by
Lavery J. He held that it is established that, if a
bill payable at a bank is presented to a clerk or agent
of a bank at the clearing house, that is presentment
8
to the bank and is sufficient (Reynolds
v.
Chettle
(1811) 2 Camp. 595 and Harris
v.
Packer (1833)
3 Tyr. 370). He held, therefore, that the handing
over of the cheque to the representative of the
National Bank in the clearing office was presentment.
Its purpose was a demand for payment by the bank,
and the cheque thereupon came into the possession
of the bank, and it became their duty to pay or dis
honour.
In the absence of special instructions, it
would not have been appropriate for the Plaintiff
Bank to present the cheque for payment in any
other manner.
He goes on : " It is to be noted that while the Act
provides by Section 45 that a bill must be presented
for payment within a reasonable time and that if not
so presented the indorser shall be discharged; and
provides by Section 48 (12) that notice of dishonour
must be given within a reasonable time after dis
honour and that if not so given the indorser is
discharged ; no specific provision is made covering
the interval between presentment and dishonour and
the effect of delay by the paying bank in dealing with
a bill duly presented either by paying or dishonour
ing.
Section 47 (i) provides only that a bill is
dishonoured by non-payment when it is duly
presented for payment and payment is refused or
cannot be obtained or when presentment is excused
and the bill is overdue and unpaid. It is of course the
duty of the paying bank to whom a bill has been
presented to deal with
it forthwith
understanding by
that word not
on the spot
but within such time as is
reasonable.
In determining what is a reasonable
time, we have no doubt that, though not so provided
specifically by the Act, regard should be had to the
nature of the bill, the usage of trade with regard to
similar bills and the facts of the particular case.
Delay in dealing with a bill duly presented is the
responsibility of the paying bank, though I would
have no doubt that a collecting bank, or a bank
presenting as holder, might incur a responsibility if
it failed to use due diligence in requiring the paying
bank to deal with a bill presented and failed to treat
a bill as dishonoured if there was undue delay, on
the ground that payment could not be obtained. On
the view taken the delay, if this is an appropriate
word, in the present case occurred in this interval
between presentment and dishonour. On the case
as presented, it does not arise for consideration
whether this delay was unreasonable on the part of
the National Bank or on the part of the plaintiff bank
in not requiring the National Bank to deal with the
cheque more speedily or treating it as dishonoured
if it was not so dealt with. In our opinion, therefore,
the defence that the cheque was not presented within
a reasonable time, fails."
(The Royal Bank of Ireland Limited
v.
Isobel P.
O'Rorke.)