Restitution Discussion Group Archives
| Sender: |
Lionel Smith |
| Date: |
Sun, 6 May 2001 22:51:31 -0400 |
| Re: |
Bank Mandate |
Having debited the Payor's account, can the bank also
claim the money back from the payee on the ground of mistake as to the
authenticity of the signature? The bank would argue as follows. The
bank would not have effected the payment instruction but for its mistake
as to the authenticity of the signature. But it was in fact acting without
mandate (Natwest v Barclays Bank [1975] QB 654, 666). Since the bank
was acting without mandate, the payee did not give consideration for
the payment and thus was liable to repay the bank (Barclays Bank v.
Simms). The fact that the bank has debited the Payor's account pursuant
to the indemnity is irrelevant because passing on is not a defence.
This doesn't sound right, does it? If the question is whether, on those facts, the bank could recover from
the payee, I think Barclays v Simms says that it can. But it is not clear
why it would want to, if the customer was not making trouble about the debit,
unless the bank were trying to debit the account AND recover from the payee
...
If the question is whether, having recovered from the
payee, the bank could keep both lots of money, it does not sound right.
Surely the indemnity between banker and customer is just that, an indemnity;
the customer promises to indemnify against loss; once the bank has recovered
from payee, there is no loss, and the bank would have to re-credit the
account. The customer might even have a security interest under Lord Napier
& Ettrick. The fax-instruction indemnity against loss is not the same
as authority to debit the account. It is more like a consensually created
estoppel.
Lionel
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