Bank of Montreal v. The King

Bank of Montreal v. The King

The drawee bank was liable to the Crown for amounts paid on cheques forged by a departmental officer; the Crown was not estopped by its officers’ acknowledgments made under mistake; and a drawee who pays on a forged drawer signature cannot, as a general rule, recover the amounts from bona fide holders in due course who received the proceeds in good faith (following Price v. Neal and statutory interpretation of the Bills of Exchange Act).

Citation
(1907) 38 SCR 258
Parties
Appellant / Drawee Bank: Bank of Montreal; Plaintiff / Crown: His Majesty The King; Third Party Respondent (payee Bank): The Quebec Bank; Third Party Respondent (payee Bank): The Sovereign Bank of Canada; Third Party Respondent (payee Bank): The Royal Bank of Canada
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
19 February 1907
Procedural Posture
Civil Appeal (banking/forgery) / Appeal to Supreme Court of Canada From Court of Appeal for Ontario; Judgment Affirmed
Outcome
Appeal dismissed; judgment of the Court of Appeal for Ontario affirmed.
Legal Topics
Forgery, Forged Cheques, Payment by Drawee, Estoppel Against the Crown, Mistake and Restitution, Money Had and Received, Liability of Indorsers, Holder in Due Course, Statutory Interpretation of Bills of Exchange Act
Source Language
English
Banking Commercial Law Equity Criminal Law (forgery) Forgery Forged Cheques Payment by Drawee Estoppel Against the Crown +5 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 4 Authorities cited 12 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

Bank of Montreal

Appellant / Drawee Bank

His Majesty The King

Plaintiff / Crown

The Quebec Bank

Third Party Respondent (payee Bank)

The Sovereign Bank of Canada

Third Party Respondent (payee Bank)

The Royal Bank of Canada

Third Party Respondent (payee Bank)

Procedural Posture

Civil Appeal (banking/forgery) / Appeal to Supreme Court of Canada From Court of Appeal for Ontario; Judgment Affirmed

Legal Issues

  1. 1 Whether the Bank of Montreal was liable to the Crown for payments on cheques forged by a departmental clerk
  2. 2 Whether the Crown was estopped from denying the forgeries by its officers’ acknowledgments of bank statements
  3. 3 Whether the drawee bank could recover payments from third party banks/holders who received funds in good faith

Ratio Decidendi

The drawee bank was liable to the Crown for amounts paid on cheques forged by a departmental officer; the Crown was not estopped by its officers’ acknowledgments made under mistake; and a drawee who pays on a forged drawer signature cannot, as a general rule, recover the amounts from bona fide holders in due course who received the proceeds in good faith (following Price v. Neal and statutory interpretation of the Bills of Exchange Act).

Court Disposition

Appeal dismissed; judgment of the Court of Appeal for Ontario affirmed.

Orders

  • His Majesty The King to recover from Bank of Montreal the sum of 71,731.75 CAD and costs
  • Bank of Montreal’s claims against third party banks dismissed except Quebec Bank entitled to recover 5.06 CAD