The duty of taking letters from the box in question and conveying them to the post was performed by one of two clerks in the office of the plaintiffs, named Adolphe Hecht and Jacob Hecht, whichever happened to be disengaged. The letter in which the draft was inclosed was in the following terms :

"New York, August 21st, 1874. "Messrs. E. G. Williams & Co., Bradford. "Dear Sirs,-We hand you herewith No. 2132, first bill of exchange, payable on demand, on Messrs. Smith, Payne, & Smith, London, for 10007., which please pass to our credit under advice. Why don't you make us a good shipment of No. 315 Italians? We are entirely out, (Signed) "W. H. Arnold & Co."

Instead, however, of the letter having gone through the post to Messrs. Williams & Co., it was abstracted by some person who had means of access to it, and the draft was stolen: but these facts did not become known to the plaintiffs until after payment of the draft had been obtained by the defendants.

It further appeared that Adolphe Hecht had left the employ of the plaintiffs on the 26th of August, without assigning any reason, and with some portion of his wages unpaid.

On the 10th of September, 1874, a Mrs. Chandler called at the defendants' bank with the draft in question. It then bore on it a forged special indorsement by Messrs. E. G. Williams & Co. to "D. H. Chandler, or order," and a blank indorsement by "D. H. Chandler." Mrs. Chandler came to the defendants without introduction. She was a middle-aged lady of respectable appearance, and said she was from America. She inquired as to the manner in which the defendants conducted their business, and asked if the defendants would receive the draft. She was answered that they would, but that it must first be realized before they could give an equivalent in cheques. She stated that she did not wish to go to.the city that day, and inquired whether the defendants had any one they could send, as it was a draft payable to bearer. The defendants informed her that they had messengers going continually to the city, and would send for her, and then took the draft, and, after stamping it with the name

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BANK,
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V.

CITY BANK.

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v.

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BANK.

of the Cheque Bank, sent it to Smith, Payne, & Co., and received

the amount.

The bank on receiving the money opened an account with Mrs. Chandler, crediting, her with 10007., and Mrs. Chandler received cheque-books, by means of which she drew out the whole amount CITY BANK. with the exception of 1067.

SAME

v.

Evidence was tendered by the defendants, which was rejected, of an usual or almost invariable practice of sending, besides the letter containing the draft, a letter of advice by the same or another ship, for the purpose of shewing that the plaintiffs had by negligence afforded facilities for the fraud which had been prac tised; and, in the result, a verdict was directed for the plaintiffs for the amount of the draft and interest.

On the 9th of November last, an order nisi was obtained by Sir Henry James to set aside the verdict, and for a new trial, on the ground of the rejection of evidence of the plaintiffs' negligence of the ordinary usage of merchants, and in directing a verdict to be entered for the plaintiffs because the money claimed in the action was not the plaintiffs', and the defendants had been guilty of no act of conversion, and had received no money to the use of the plaintiffs; and that the plaintiffs were precluded from recovering, by neglect of proper precautions in the custody and dispatch

of the draft.

Against this order cause was shewn on the 25th and 28th of February last. The questions raised were mainly these,1, whether, under the circumstances, the money received by the defendants in payment of the draft was received to the use of the plaintiffs,-2, whether there was any evidence of negligence by which the plaintiffs were estopped from setting up against the defendants their title to the draft,-3, whether the evidence rejected was admissible for the purpose of shewing such negli

gence.

As regards the first question, it is clear that the property in the draft had never in fact passed out of the plaintiffs; for, indorsement consists not merely of the written indorsement on the draft, but there must also be a delivery with intention to transfer the property: Marston v. Allen. (1) In this case there was no de(1) 8 M. & W. 494.

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BANK.

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V.

livery of the draft to the indorsee, and therefore, unless the plaintiffs are estopped from setting up as against the defendants the forgery of the indorsement of Williams & Co., the bill remained their property when it reached the hands of the defendants, and they are entitled to the draft, for, the statute 16 & 17 Vict. c. 59, s. 19, only protects Messrs. Smith, Payne, & Co., the drawees CITY BANK. (Ogden v. Benas (1)), from the consequences of paying the draft on a forged indorsement, and affords no protection to the defendants. But it was argued that the money received by the defendants could not be regarded as money received to the use of the plaintiffs, because the defendants had been guilty of nothing like a conversion, but had acted as a mere conduit to receive and hand over the amount of the draft to their customer, Mrs. Chandler.

In the case of goods, if a man takes and sells them when he has no right, the owners may waive the tort and recover the proceeds in an action for money had and received: Lamine v. Dorrell (2); Neate v. Harding (3): and see Hollins v. Fowler (4): and equally, as was admitted by the defendants, if a person wrongfully convert a bill of exchange and receive the amount, the owner of the bill may either sue in tort or may waive the tort and recover the money as received to his use.

The question here is, whether what was done by the defendants amounted to a conversion of the bill: and we are of opinion that it did. Payment of the draft was actually obtained by the defendants from Smith, Payne, & Smith; and the next step in dealing with the money was not simply to hand it over to Mrs. Chandler, but to retain it and open an account with her, the effect of which was to appropriate it to their own use as a loan from Mrs. Chandler: see Pott v. Clegg. (5) Under these circumstances, there was nothing in the transaction at all analogous to a mere packing by a packer, or carriage by a carrier, of goods intrusted to them by a person having no title: Greenway v. Fisher (6); and see Hardman v. Booth (8): nor is the employment of banker a public employment which he is in any way bound to exercise. The defendants

(1) Law Rep. 9 C. P. 513.

(2) Ld. Raym. 1216.

(3) 6 Ex. 349.

(4) Law Rep. 7 H. L. 757; 44 L. J. (Q.B.) 169.

(5) 16 M. & W. 321.

(6) 1 C. & P. 190.

(7) 1 H. & C. 803; 32 L. J. (Ex.) 105.

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were at liberty to take the bill or not as they chose. They took it, and received the amount. The evidence also was that the defendants made use of their customers' money by lending it at interest; so that, although no interest or commission was charged on the account, they nevertheless derived benefit from CITY BANK. the transaction.

BANK.
SAME

v.

We are of opinion, therefore, as the property in the bill remained in the plaintiffs, that the money was received by the defendants, under a mistake, it is true, but tortiously as against the plaintiffs, and that, subject to the question whether the plaintiffs have by their conduct disentitled themselves to sue, they may waive the tort and recover the proceeds as money received to their

use.

On the second and third points it was contended by the defendants that there was evidence of negligence in the custody and transmission of the draft by the plaintiffs, which afforded facilities for the forgery and fraud by which the defendants were induced to receive it, and that the evidence which was rejected would have shewn an almost invariable custom for merchants in America remitting bills to correspondents in England to send another independent letter of advice either by the same or a subsequent mail, and that there were opportunities of sending such a letter by other vessels leaving on the same day as the Celtic, or on subsequent days, which would have arrived in time to have enabled Messrs. Williams & Co., in the event of their not having received the draft in due course, to have communicated with Smith, Payne, & Smith, either by letter or telegram, to have stopped payment.

We are of opinion, however, that there was no evidence of negli gence which could operate by way of estoppel to the plaintiffs, and also that the evidence rejected was properly excluded, on the ground that it would not, if admitted, have amounted to any defence.

Reliance was placed by the defendants on the case of Young v. Grote. (1) That case, no doubt, must be considered as well dedecided but various opinions have been expressed as to the real ground of the decision. In the judgment of Parke, B., in Robarts (1) 4 Bing. 254.

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v. Tucker (1), it was put on the ground that the customer had by signing a cheque given authority to any one in whose hands it was to fill it up in whatever way the blank permitted. But we have only to look at the case itself to see that it really proceeded on the authority of the extract from Pothier cited in the judgment of Best, C.J., which makes the inability to recover depend upon the CITY BANK. fault of the drawer of the cheque in the mode of drawing it, and is entirely consistent with the rule laid down and explained on fuller consideration in subsequent cases, viz. that negligence, in order to estop, must be negligence in the transaction itself: see per Blackburn, J., in Swan v. North British Australasian Co. (2) Indeed, in a later case, Bank of Ireland v. Evans's Charities (3), this is stated by Parke, B., himself to be the true ground of decision. He says: "In that case it was held to have been the fault of the drawer of the cheque that he misled the banker on whom it was drawn by want of proper caution in the mode of drawing the cheque, which admitted of easy interpolation, and consequently that the drawer having thus caused the banker to pay the forged cheque by his own neglect in the mode of drawing the cheque itself, could not complain of that payment."

The rule which is expressed by Ashhurst, J., in Lickbarrow v. Mason (4),—" We may lay it down as a broad general principle, that, whenever one of two innocent parties must suffer by the act of a third person, he who has enabled such person to occasion the loss must sustain it,"-was, though not expressly referred to, observed and acted on in Young v. Grote (5); and it has received illustration and explanation in subsequent cases on the subject which shew that the words "enabling a person to occasion the loss" must be understood to mean, by scme act, conduct, or default in the very transaction in question: see Freeman v. Cooke. (6)

The correct rule seems to us to be that which is thus stated by Blackburn, J., in his judgment in Swan v. North British Australasian Co. (2), where, referring to the judgment of Wilde, B., below,