CHAPTER VII.

CHEQUES AS INSTRUMENTS OF EVIDENCE.

1. When a cheque is evidence

of the payment of a debt.

cashed, it will not operate as cvidence of a payment.

2. When not evidence of a 4. On the production of a

loan.

3. When a cheque is not received as money and is not

cheque in the custody of bankers.

1. When a cheque is evidence of the payment of a debt.

ONE of the advantages which result from keeping an account with a banker, is the proof which is furnished, by means of the cheques, of the payment of the debts for which they are drawn. So much reliance is placed upon this proof, that receipts are often dispensed with when the payments are made by cheques; and any appearance of want of confidence is avoided.

Where a cheque is drawn in favour of a party, and is indorsed by him and paid, or if the cheque be not endorsed, if the receipt of it be proved by

other means, it will be evidence of payment to that party. Thus, in an action for a debt, the defence was, that the debt had been paid. To prove this, the defendant produced two drafts drawn by him on his bankers in favour of the plaintiff, and which had been paid; on one of them the name of Egg (the plaintiff) was indorsed, and on the other the name of Wilks, whom the defendant proved to be a person employed by the plaintiff to receive money for him.

Lord Kenyon said "I think it evidence of payment, as the giving of the draft may be coupled with the transaction of there being dealings between the parties, though it would not of itself be evidence of a debt." Egg v. Barnett (3 Espinasse's Reports, 196).

In another case, where a cheque, signed by B, was proved to have passed through the hands of A, and to have been appropriated by him to his own purposes, it was held that the cheque was primâ facie evidence of payment. Boswell v. Smith (6 Carrington and Payne, 60).

In Lloyd v. Sandilands (Gow's Reports, 15), it appeared that a cheque for £2,242. 1s. 6d., drawn by the plaintiff upon her bankers, Messrs. Ransom, Morland & Co., and made payable to the defendant, had been presented at that house for payment, and that £1,300, part of it, was carried to the account of the defendant, who likewise banked there, and the residue was paid to the person who presented the cheque. There was no

evidence, however, to show that the plaintiff had given the cheque to the defendant, or in any other manner to connect him with it.

For the plaintiff it was contended, that as part of the cheque had been carried to the credit of the defendant in the bankers' books, it was primâ facie evidence that the defendant received the cheque from the plaintiff, and therefore required explanation.

But Mr. Justice Dallas said-"Although the cheque is made payable to the defendant, yet it might have been given to a third party, and, through that third person, might have got into the hands of the defendant. The plaintiff and the defendant are not by this evidence connected with the cheque. This is not proof of payment."

This case, which appears to conflict with those cases which precede it, was fully considered and explained in the following decision, which is the most recent which bears upon the subject.

In Mountford v. Harper, which was an action for money had and received, the defendant pleaded payment before action brought; at the trial before the Under-Sheriff for Staffordshire, the following facts were proved:-The defendant, who was the steward of Mrs. Offley, to whom the plaintiff was tenant, having received a sum of money, paid by the Grand Junction Railway Company, to be handed over to the plaintiff in respect of damage: done to his interest as tenant, drew a cheque upon. his bankers for £15 in favour of the plaintiff, which

the latter presented for payment at the bankers, and received the proceeds. There was no proof that the cheque had been given by the defendant to the plaintiff. Under these circumstances, it was objected, on behalf of the plaintiff, that sufficient proof of payment had not been produced, and that further evidence ought to have been given to connect the plaintiff with the receipt of the cheque. The Under-Sheriff was of this opinion; and under his direction the jury found a verdict for the plaintiff on the plea of payment, leave being reserved to the defendant to move to enter a verdict for him upon the issue raised on that plea.

A rule nisi having been accordingly obtained, Baron Alderson said "I think the delivery of the proceeds of the cheque to the plaintiff was evidence of payment to him. In the judgment of Dallas, C.J., in Lloyd v. Sandilands, where he states that the circumstance of a cheque being made payable to the defendant, and the defendant having received payment of it, "is not proof of payment," the word "payment" is incorrectly used for "debt." That was the only case that embarrassed me, all the other authorities are clear. The rule must be absolute to enter a verdict for the defendant on the plea of payment." Mountford v. Harper (16 L. J. (Exch.) 184).

But the possession of such a cheque as the foregoing by the drawer is no evidence of a payment, if there be any doubt about the manner in which

it has come back to him. Thus, in a case where the objection relied on was the insufficiency of proof of the petitioning creditor's debt. With respect to this, it appeared that Smith, the petitioning creditor, was one of the assignees, and was consequently in the possession of all the papers of the bankrupt, and that the debt arose out of the loan by Smith to the bankrupt of a cheque for £100, drawn by Smith on his bankers, Sir Peter Pole & Co., and crossed by the bankrupt with the names of Messrs. Sykes, Snaith & Co., his bankers. The only evidence offered to show the payment of the cheque, was the fact of its being in the hands of the drawer, but no evidence was given of the manner in which it had got back into his hands. A clerk of Messrs. Sykes, Snaith & Co., merely proved that £100 were received by them from Sir Peter Pole & Co., on account of the bankrupt, the day after the date of the cheque, and a clerk of Sir Peter Pole & Co. proved that a like sum was, on that day, paid by them on account of the petitioning creditor, but neither of these witnesses could identify the cheque.

Mr. Serjeant Vaughan and Mr. Serjeant Cross contended that the fact of the cheque having found its way back to the hands of the drawer, was sufficient primâ facie evidence of its having been paid in due course, and consequently established the petitioning creditor's debt; particularly as the amount was proved to have been received by Messrs. Sykes, Snaith & Co. from Sir Peter