There had been an incoming transfer for value on a particular date and the issue was whether the payment had been made on that date.
Held: The question as to whether a payment had been made on the value date was to be tested by reference to an account entry at the close of business on that date. An account could be held to be effectively credited if the bank’s book entries showed a credit and regardless of whether there was notice of that credit to the customer. ‘… on the 8th a sum was actually placed to the plaintiff’s account; and though no money was transferred in specie, that was an acknowledgement from the bankers that they had received the amount from Ellis. The plaintiff might then have drawn for it, and the bankers could not have refused his draft.’ and ‘The issue is whether or not a completed payment had been made by the defendants to the plaintiffs on June 26. This is a question of law. If the answer is ‘Yes,’ it is not contested that the plaintiffs have a good cause of action. If there were no authorities on this point, I think that the reaction, both of a lawyer and a banker, would be to answer this question in the affirmative. I think that both would say two things. First, that in such circumstances a payment has been made if the payee’s account is credited with the payment at the close of business on the value date, at any rate if it was credited intentionally and in good faith and not by error or fraud. Secondly, I think that they would say that if a payment requires to be made on a certain day by debiting a payor customer’s account and crediting a payee customer’s account, then the position at the end of that day in fact and in law must be that this has either happened or not happened, but that the position cannot be left in the air. In my view both these propositions are correct in law.’
Judges:
Best CJ
Citations:
(1827) 4 Bing 112
Jurisdiction:
England and Wales
Banking
Updated: 24 November 2022; Ref: scu.200663