A banker to whom money is paid to the credit of his customer’s account at his customer’s request, in mistake of fact, is not in a better position than his customer would be, and is not entitled to hold it if his customer would under the circumstances have been bound to refund it had it been paid to him direct.
The appellant was under a contract of ‘standing or renewable credit’ with K. and Co., a New York firm of bankers, that they should from time to time honour the drafts of a certain mining company up to pounds 500. After each such occasion the appellant was to pay in the amount of such drafts to the respondents’ London bank to the credit of K. and Co. The respondents were the agents in London of K. and Company. The appellant was not bound to pay in the stipulated amount until the mining company’s drafts had actually been honoured by K. and Company, but he did so in anticipation of certain drafts. At the date of the payment K. and Co. had, unknown to the appellant, committed an act of bankruptcy and were no longer able to honour the corresponding drafts. The appellant sought repayment of the sum lodged by him in the respondents’ bank, but they claimed to retain it as against the indebtedness of K. and Co. to them.
Held that the respondents were bound to repay the amount to the appellant, the amount having been paid by him before it was legally due and under a mistake of fact as to the solvency of K. and Co.
Judges:
Earl of Halsbury, Lords Atkinson, Shaw, and Mersey
Citations:
[1911] UKHL 683
Links:
Jurisdiction:
England and Wales
Banking
Updated: 23 May 2022; Ref: scu.619224
