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just interesting and maybe useful at some point sometime
from House of Lords Judgement Opinions - National Westminster Bank plc (Respondents) v. Spectrum Plus Limited and others and others (Appellants) 2005
59. As May LJ said in Lipkin Gorman v Karpnale Ltd [1989] 1 WLR 1340, 1353, the money which a customer deposits with a bank becomes the bank's money, but the bank is prima facie bound to meet its debt when called upon to do so by the customer. In Westminster Bank Ltd v Hilton (1926) 43 TLR 124, 126 Lord Atkinson explained the relationship in this way:
The general rule is that a banker is bound to honour his customer's cheque so long as he has funds in his hands if the account is in credit, or up to the agreed limit of any overdraft. He may determine the contract at any time on giving notice to the customer. But he cannot refuse to honour cheques drawn before the notice of determination is received.
60. A banker has a general lien over all bills, notes and negotiable instruments belonging to the customer which his customer may have deposited with him in security of the customer's indebtedness to the bank. But a lien is a right to retain possession of property that belongs to someone else, and the banker has no lien over funds which, when deposited in its account by the customer, become his own property. Moreover the relationship is one where, if the account is in credit, the banker is indebted to his customer. So it was a misuse of the word lien to say that the bank could assert a right of that kind over the proceeds: see Buckley LJ in the Court of Appeal in Halesowen Presswork and Assemblies Ltd v Westminster Bank Ltd [1971] 1 QB 1, 46, and Viscount Dilhorne and Lord Cross of Chelsea in the same case in the House of Lords [1972] AC 785; Lord Hoffmann in In re Bank of Credit and Commerce International S A (No 8) [1998] AC 214, 226. This is not to say that it is impossible to conceive of the creation of an equitable charge over the proceeds of book debts paid into an account in the name the chargor. But the ordinary relationship of banker and customer does not permit the banker, without notice, to refuse to allow his customer to operate a current account as and whenever he wishes while it is credit or is within the limits of any agreed overdraft. The debenture in the Siebe Gorman case, which provided for the payment of the proceeds into an account of that kind,lacked any provision which qualified that relationship.
from House of Lords Judgement Opinions - National Westminster Bank plc (Respondents) v. Spectrum Plus Limited and others and others (Appellants) 2005
59. As May LJ said in Lipkin Gorman v Karpnale Ltd [1989] 1 WLR 1340, 1353, the money which a customer deposits with a bank becomes the bank's money, but the bank is prima facie bound to meet its debt when called upon to do so by the customer. In Westminster Bank Ltd v Hilton (1926) 43 TLR 124, 126 Lord Atkinson explained the relationship in this way:
- "It is well established that the normal relation between a banker and his customer is that of debtor and creditor, but it is equally well established that quoad the drawing and payment of the customer's cheques as against money of the customer's in the banker's hands the relation is that of principal and agent. The cheque is an order of the principal's addressed to the agent to pay out of the principal's money in the agent's hands the amount of the cheque to the payee thereof."
The general rule is that a banker is bound to honour his customer's cheque so long as he has funds in his hands if the account is in credit, or up to the agreed limit of any overdraft. He may determine the contract at any time on giving notice to the customer. But he cannot refuse to honour cheques drawn before the notice of determination is received.
60. A banker has a general lien over all bills, notes and negotiable instruments belonging to the customer which his customer may have deposited with him in security of the customer's indebtedness to the bank. But a lien is a right to retain possession of property that belongs to someone else, and the banker has no lien over funds which, when deposited in its account by the customer, become his own property. Moreover the relationship is one where, if the account is in credit, the banker is indebted to his customer. So it was a misuse of the word lien to say that the bank could assert a right of that kind over the proceeds: see Buckley LJ in the Court of Appeal in Halesowen Presswork and Assemblies Ltd v Westminster Bank Ltd [1971] 1 QB 1, 46, and Viscount Dilhorne and Lord Cross of Chelsea in the same case in the House of Lords [1972] AC 785; Lord Hoffmann in In re Bank of Credit and Commerce International S A (No 8) [1998] AC 214, 226. This is not to say that it is impossible to conceive of the creation of an equitable charge over the proceeds of book debts paid into an account in the name the chargor. But the ordinary relationship of banker and customer does not permit the banker, without notice, to refuse to allow his customer to operate a current account as and whenever he wishes while it is credit or is within the limits of any agreed overdraft. The debenture in the Siebe Gorman case, which provided for the payment of the proceeds into an account of that kind,lacked any provision which qualified that relationship.
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