Charles v. Blackwell

Facts

• A cheque payable to order was presented bearing what appeared to be the payee's endorsement
• The endorsement was in fact forged
• The true payee (Charles) sued the paying banker (Blackwell) for wrongful payment
• The bank argued it paid in due course relying on the apparent endorsement

Issue

1. Whether a paying banker is liable when it pays a cheque bearing a forged endorsement that appears regular on its face.

Held

• The paying banker is protected. S.85 provides that where a cheque payable to order "purports to be endorsed by or on behalf of the payee," the bank is discharged by payment in due course. The word "purports" means the bank need only verify apparent regularity, not actual authenticity of the endorsement.

Ratio Decidendi

S.85 protects the paying banker against forged endorsements provided: (a) the endorsement purports to be by the payee, (b) payment was in due course (S.10). The bank is not required to verify the genuineness of every endorsement.