a bank note which belonged to B; he passed it on to C, CHAP. IX. who took it bona fide and for value, and who passed it on cover, Oct. to D, who also took it bona fide and for value. D paid Cf. W.N. it into the Commercial Bank, by whom it was presented 24th, 1901. to the Australian Joint Stock Bank, whose note it was. At the time of presentation the fact of the theft, and the number of the note, had become known to both banks; the Australian Joint Stock Bank paid it, and was legally bound to do so. The thief was prosecuted and convicted, and upon application being made the Court ordered restitution of the note to B. The effect of such an order would be to compel the bank to pay the note twice over. A great deal of comment was caused at the time by this order. It is clear, however, that it was not good law. For the third subsection of sec. 438, under which the order was made, provides that, where any valuable security has been paid by some person liable to the payment thereof, or, being a negotiable instrument, has been taken for a valuable consideration without notice or cause to suspect that the same had been dishonestly come by, the Court shall not order such restitution. (Valuable security in this connection includes bills, notes, and cheques.) The case is therefore only used by way of illustration. Indeed, the note, having been once legally redeemed by the bank, was no longer an obligation, and was therefore unfitted to be the subject of an order for restitution. This would have been quite clear had the bank at once stamped the note "cancelled." (See an English banknote case to that effect, Rex v. Stanton, 7 C. & P. 431.) It remains to consider whether restitution can be of coin. ordered in New South Wales of coin. If this can be done, it would seem that metallic money is less freely exchangeable than paper money, though the negotiability of paper money is derived from and based upon the law with regard to coin as appears from Miller v. Race. Yet this result might easily flow from an accident of the CHAP. IX. statute law. Cf. ante, p. 115, and post, p. 124. Money has no earmark. Literally, a sovereign is an instrument, but the term negotiable instrument has a special meaning embracing a group of certain well-known written documents, so that probably a current coin is not a negotiable instrument within the meaning of the Crimes Act. There is no statutory definition of negotiable instrument in either the Crimes or the Bills of Exchange Act. We must, therefore, leave on one side the proviso with regard to negotiable instruments, and refer to the principal subsection of section 438 of the Crimes Act: “(1) Where a person is convicted under this Act of stealing, embezzling, or receiving property, the Court may order the restitution thereof in a summary manner to the owner or his representative." Now, there is no doubt that money is property under this section, and therefore its full and free exchange in currency can only be legally secured to the coinage by some legal doctrine rendering it unfit for restitution; this may be found in the quaint saying, "Money has no earmark." "It may be that the Legislature did not think it necessary to protect, by including them in the proviso, persons who had, bona fide, taken stolen money, because, in the great majority of cases, it would be impossible, in fact, to identify the money, so that only in rare cases would protection be wanted; but that hardly seems satisfactory. It seems to me that the Legislature must have assumed that persons having, bona fide, taken stolen money did not come within the statute. The matter is very doubtful; but, on the whole, I think the explanation may be thus: it may be that the true meaning of the saying, 'That money has no earmark,' is, that when current coins of the realm have passed, bona fide, from hand to hand as currency and as money, they are considered, for all purposes of property in them, not to be identifiable. The doctrine that money has no earmark, whatever it means, is undoubtedly a doctrine of our law." CHAP. IX. (Per Channell, J., in the judgment of Moss v. Hancock.) In Moss v. Hancock the Judges thought that stolen money which had subsequently passed in currency as money, and in good faith, could not be made the subject of a restitution order, though they avoided deciding so much. Trade and I have already indicated the view that in describing "Money, the currency one should include bank notes, but draw Industry." the line at cheques; and for this view I adopt the reasons suggested by Professor Walker, viz., that though, as between the bank and bearer, its note may be a form of credit, still it is not so between the parties who use it as money. As between the buyer and seller of goods, and as between any debtor and creditor, the bank note need not be accepted, but when accepted it is in full payment for commodities, and final discharge of indebtedness; and if the law in exceptional circumstances gives See post, p. recourse upon the transferror of the note, this is a legal 126. incident which in practice is never asked for nor looked to. It is otherwise in the case of cheques or any other class of bill of exchange. Undoubtedly the saving of labour that is effected in a modern mercantile community by the use of cheques, bills, and promissory notes, is comparable in extent with the work done by actual money, and very much the same in kind. The circulation, both of cheques and paper money, may be spoken of as the life-blood of our commercial system, and if anything happened which put a stop to this circulation, the result would be chaos. СНАР. Х. Dealings in credit. CHAPTER X BANKERS' DOCUMENTS OF CREDIT-NOTES, It is important to devote some attention to the word "credit." Probably a junior bank clerk would find some difficulty in giving a clear definition of what banking is, if asked to do so, though not without practical knowledge on the point. To completely define banking may be a difficult matter, and many definitions more or less lengthy and more or less adequate have been given, to which there is no need now to refer. The short definition, that banking is a trade in money and credit, is sufficient for the present. And banks' officers, and others, should realise that the company employing them is a trader whose business it is to deal in credit, just as the Colonial Sugar Refining Company is a trader, whose business it is to deal in sugar; and by looking at it in this way, get rid of the idea that it is correct to say that a man has so much money in the bank, or that he puts his money in the bank these are figures of speech. Of course, we all know really that only the bank itself has money in the bank, and, that its customers who have current accounts in credit, have not any specific money in the bank which can be pointed to as theirs, and which the bank is keeping for them. For when they pay in money, that money is not merely entrusted by them to the bank, but given to the bank to belong to itself in exchange for the credit in account which is thereupon entered to the customer. And what the bank does is, to receive the money as its own, and mix it at once with CHAP. X. other of its own moneys, and to invest it, or part of it, exactly as it pleases, and put by in reserve some such proportion of its own money as is safe and necessary. And in all this the bank is doing simply what it legally and properly ought to do. In making its investments and in determining what quantity of gold to keep, the bank is answerable to no one, the reason being that the money is its own, obtained from customers in exchange for the credit they obtain in account by depositing it. Thus the chief business which is carried on in the banking room is the exchange of money for credit and of credit for money. And there are two chief ways in which the banking company deals in money and credit: the one by giving credit to customers in current account; the other by issuing to its customers documents of credit wherewith cash may be obtained elsewhere, or at a later date, and in a different way than by the drawing of cheques upon the customer's ordinary account. Of the latter kind is the issue of notes, drafts, and letters of credit. With these I have classed fixed deposits, because they are formal written instruments, which the customer as a rule carries away with him, though in most respects they are more in the nature of an account. Before mentioning the peculiar characteristics of notes, it will be well to make clear some of the features which belong to instruments of this class. In the first place, all these papers, or instruments, are forms of personal property. Personal property has been divided into chattels real and chattels personal. Chattels real are dealt with in the law of real property, and for the present we leave them on one side altogether. All other personal property is described under the heading, chattels personal, and in this sense the word "chattels," which is almost synonymous with goods, includes forms of property which are intangible, and con |