Kinlan v Ulster Bank, Ltd

CourtSupreme Court (Irish Free State)
Judgment Date26 July 1928
Date26 July 1928
Docket Number(1926. No. 460.)
Kinlan v. Ulster Bank, Ltd.
ULSTER BANK, Limited (1)
(1926. No. 460.)

Supreme Court.

Banker - Customer - Current account - Wrongful refusal by bank to pay customer's cheques - Cheques payable to customer himself - Action for breach of contract - Measure of damages - Special damage.

Plaintiff brought an action against the defendants, a bank, alleging that they had money standing to the credit of his current account, and that he had suffered damage by the defendants' breaches of contract in not paying out of his moneys in their hands applicable to that purpose four cheques drawn by him and duly presented for payment on four different dates. He claimed £200 special damage for loss and damage sustained in rescinding a contract to purchase certain premises from the defendants. All the four cheques were drawn payable to the plaintiff himself. The main defences pleaded were that the money lodged by the plaintiff with the defendants was not applicable to the payment of cheques drawn by the plaintiff, being lodged in connexion with a proposed mortgage of the premises which the plaintiff had contracted to purchase from them; that three of the cheques alleged to have been presented for payment were not in fact presented, and that, as regards the fourth cheque, no damage was suffered by the plaintiff by reason of its non-payment, that at most the plaintiff was entitled to nominal damages, and as to the whole action they paid into Court £10 as sufficient to satisfy the plaintiff's claim. At the trial of the action the jury found that the four cheques were presented for payment; that at the time of presentation there was a sum of money standing to the plaintiff's credit; that that money was lodged by the plaintiff to his current account, and so accepted by the defendants; that there was no agreement between the plaintiff and the defendants whereby the money was to be held by the defendants pending the completion of the agreement for the sale of the said premises; and they found for the plaintiff £250 damages, and judgment was entered for him for that sum. The defendants having applied to the Supreme Court to set aside the judgment and verdict and to order a new trial:

Held by the Supreme Court (Kennedy C. J. and Murnaghan J.; FitzGibbon J. dissenting) that the verdict and judgment must be set aside and judgment entered for the defendants, the special damage pleaded by the plaintiff not having been proved, and the defendants having admitted their liability to pay the plaintiff nominal damages, and having paid £10 into Court.

Per Kennedy C.J.: The principle applied to cases of dishonoured traders' cheques has no application to the facts of the present case. A demand made personally by a customer upon his banker for payment is a two-party transaction. The refusal of payment cannot give rise to the implication of defamation of the customer to a third party, which necessarily arises when a trader's cheque, drawn or endorsed in favour of a third party, is presented by the holder and dishonoured by the banker.

Application on behalf of the defendants for an order that the verdict and judgment for the plaintiff entered on the 24th June, 1926, on the trial of the action before O'Byrne J., be set aside, and that a new trial of the action be ordered.

The facts have been summarised in the head-note, and are fully stated in the judgment of the Chief Justice. The grounds of the application were that the damages awarded were excessive, and that the findings of the jury on the first and fifth questions submitted to them were against evidence and the weight of evidence and were perverse, and that in assessing damages the jury had taken into consideration matters which they should not have considered.

Cur. adv. vult.

Kennedy C.J. :—

This is an application to set aside the verdict and judgment entered for the plaintiff in the action on the 24th June, 1926, or, in the alternative, for a new trial. The action was brought to recover damages for alleged breaches of contract by the defendant bank in not paying, out of the moneys of the plaintiff in the hands of the bank, and applicable to that purpose, four cheques drawn by the plaintiff on the bank, and alleged to have been presented for payment at the Camden Street Branch of the bank on the 13th March, 10th April, 14th April, and 23rd April, 1926, respectively. The statement of claim alleged special damage sustained by the plaintiff in rescinding a contract for the purchase of certain premises known as No. 10aUpper Kevin Street, Dublin, and the surrender of the said premises. The main defences pleaded were that the money lodged by the plaintiff with the defendant bank, amounting to £50, was not applicable to payment of cheques drawn by the plaintiff, and that, particularly as regards the first three dates mentioned, no such cheques were presented in fact at the bank or refused payment; while, as regards the fourth cheque, the case was that no damage was suffered by the plaintiff by reason of its non-payment, and that he was at most entitled to nominal damages on that head.

The plaintiff is a trader who formerly carried on business in the County Longford. He came to Dublin, and started business for himself in the year 1923 in premises which he purchased with borrowed money. These premises he sold in the month of January, 1926, and out of the proceeds of the sale, after repaying the original borrowed purchase money, he had a balance of £200, which he placed on deposit receipt in the Hibernian Bank. At this time the premises, No. 10a Kevin

Street, were on the market, at the instance of the defendant, the Ulster Bank, Ltd., as mortgagee. The plaintiff, with his capital of £200, came on the scene, and made an offer through Mr. Byrne, the auctioneer, who had carriage of the sale. The auctioneer introduced the plaintiff to the manager of the defendant's Camden Street Branch, Mr. W. H. Tighe, with whom the plaintiff entered into negotiations for the purchase. Certain terms of purchase were arrived at, and Tighe sent the plaintiff to the auctioneer for the purpose of completing the preliminary agreement. A contract was drawn up in the auctioneer's printed form and signed by the plaintiff. The purchase price is there stated as £675, whereof the plaintiff was immediately to pay £150 as deposit and as a part payment in cash of the purchase money. The balance of the purchase money, £525, was to remain out as a loan from the bank to the plaintiff on the security of the premises, or, as it is actually expressed in the contract, "the Ulster Bank lying out of £525." The provision as to the amount which was to remain outstanding was inserted by the auctioneer in writing in the printed form of contract. Called as a witness by the defendant bank, he said that before agreeing to this figure he had submitted the proposed contract in these terms to the bank, and had received express instructions to close on that basis. The contract was signed on the 30th January, 1926. For the purpose of paying his deposit on the sale, the plaintiff drew £150 from the sum which he had at the Hibernian Bank, leaving a balance, as he states, on his account in that bank of between £70 and £80.

On the 2nd of February he drew a further sum of £50, and brought it over to the defendant's branch in Camden Street, where he lodged it for the purpose of opening a current account. A simple receipt for the amount was issued to him. The bank's record of this lodgment is in evidence as a "memorandum pending entry in pass-book," and is not subject to any condition or qualification of any kind. The plaintiff having made his lodgment went away without having obtained a cheque book, because, as he says, the bank officials were busy, and he did not require it immediately. The bank sought at the trial to set up as a defence that the sum of £50 was lodged by the plaintiff not to his own current account, upon which he might draw as he wished, but as a kind of security in relation to the purchase transaction, subject to a condition that no cheques should be drawn against it. This defence wholly broke down at the trial, and there is no question now but that the £50 was, as found by the jury, lodged by the plaintiff to a simple current account on the ordinary basis between bank and customer. This finding is not in question before us, and it has been common ground upon which the important questions for decision have been argued. At the same time, the fact of the particular defence having been made, and its rebuttal, both by documentary evidence, and by the discrediting of the bank manager's evidence by the evidence of the auctioneer, who was one of the bank's witnesses, are matters to be noted in relation to the grounds of appeal upon which the bank relied here. Upon completion of the contract, the plaintiff put his solicitor in charge of the investigation of the title, and he himself took in hand at once the putting of the premises, which turned out to be in a bad state, into repair and into a condition fit for the purposes of his business. He obtained a number of estimates, and finally agreed with a contractor named Dargle to do the work. Dargle having worked for about a fortnight, asked the plaintiff for a payment on account to enable him to meet the workmen's wages and to buy materials for carrying out the contract. This request was made, according to the plaintiff's evidence, on Friday, the 12th March, and on the following day (Saturday, the 13th of March), the plaintiff alleged that he presented the first of the four cheques, the subject of this action.

The story of this transaction told by the plaintiff at the trial is as follows:—He happened to have a cheque book of the Hibernian Bank, Ltd., Thomas Street Branch, where he had previously kept his account. Not having procured a cheque book from the Ulster Bank at the time of opening the current account there, he took one of the Hibernian Bank cheques...

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