The plaintiff had an account with the defendant bank. His wife forged his signature on four cheques, drew out all the money in the account, and lent it to her sister. The plaintiff on discovering the facts did not at once inform the bank, but about nine months later, when his wife told him but she wanted more money for her sister, he stated his intention of going to the bank. That night his wife committed suicide. The plaintiff then went to the bank and told the manager about the cheques. In an action by the plaintiff claiming to be credited by the defendant bank with the amount of the forged checks, the bank pleaded a) adoption and ratification, and b) that the plaintiff was estopped by his silence from alleging that the signatures were forgeries. The tribunal of first instance found that the first cheques were honoured by the carelessness of the bank officials. There was no evidence that the plaintiff had ever adopted the forged cheques as his own.
Held: Ratification had no applicability to a forged signature, but the plaintiff was estopped from alleging the forgeries, because his silence until after his wife’s death had caused the bank to lose their right of action against the forger and therefore the action failed.
A bank’s customer has a duty to inform the bank of any forgery of a cheque purportedly drawn on the account as soon as he, the customer, becomes aware of it.
Lord Tomlin considered the requirements to create an estoppel: ‘The essential factors giving rise to an estoppel are I think: (1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made. (2) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made. (3) Detriment to such person as a consequence of the act or omission.
Mere silence cannot amount to a representation, but when there is a duty to disclose deliberate silence may become significant and amount to a representation.’
Lord Tomlin, Lord Thankerton and Lord MacMillan
[1932] All ER 318, [1933] AC 51, 101 LJKB 623, 147 LT 441, 48 TLR 601, 76 Sol Jo 544, 38 Com Cas 54
England and Wales
Citing:
Affirmed – Greenwood v Martins Bank Limited CA 1932
A husband who failed to disclose that his signature had been forged by his wife was estopped for asserting the forgery against his bank.
The relationship between a bank and its customer is a continuing one and therefore involves a continuing . .
Lists of cited by and citing cases may be incomplete.
Estoppel, Banking
Updated: 07 January 2022; Ref: scu.356585
