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United Australia V. Barclays Bank Notes

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This is an extract of our United Australia V. Barclays Bank document, which we sell as part of our Commercial Remedies BCL Notes collection written by the top tier of Oxford students.

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UNITED AUSTRALIA V. BARCLAYS BANK FACTS A company called Lower Ancobra (Gold Coast) Areas, Ld., owed the appellants a sum of 1900l., and in payment drew a cheque for that amount making it payable to the appellant company or order. The appellant company had a secretary named Emons, who had authority to indorse cheques for the purpose of paying them into the appellant company's bank account, but had no authority to indorse cheques specially on behalf of the appellant company for the purpose of enabling payment to be made to a third party. Emons, purporting to act on the appellant company's behalf, specially indorsed the cheque so as to make it payable to the M. F. G. Trust, Ld., of which Emons was a director. Thereupon M. F. G. indorsed the cheque and paid it into its account at the respondent bank. The respondent bank knew that Emons, besides being secretary of the appellant company, was a director of M. F. G., but without making any enquiries the bank collected the proceeds of the cheque and placed them to the credit of M. F. G.'s account. Proceedings by the appellant against MFG: On May 13, 1935, the appellant company issued a writ against M. F. G. claiming the 1900l. as "money lent," or alternatively as "money had and received" by M. F. G. to the use of the appellant company. It will be observed that the appellant company at the time had no knowledge of the cheque, or of how any such cheque had been dealt with by the respondent bank. On October 28, 1935, on the petition of another creditor, a winding-up order was made against M. F.G. The action by the appellant company against M. F. G. was thereupon automatically stayed before trial and no judgment was ever obtained. On December 10, 1935, the appellant company signed an affidavit of proof of debt in the liquidation of M. F. G. stating that M. F. G. was indebted to the amount of 1900l. to the appellant company for money lent or money had and received, but this proof was never admitted. There was thus never any recovery, either by judgment or otherwise, of any part of the sum claimed from M. F. G. Proceedings by the appellant against the Bank: By writ issued on November 8, 1937, the appellant company sued the respondent bank for (1.) damages for conversion; (2.) alternatively, damages for negligence; (3.) in the further alternative, for 1900l. as money had and received by the defendants to the use of the plaintiffs. QUESTION The question to be decided in this appeal is whether the proceedings against M. F. G., carried on up to the point that they in fact reached, constitute a valid ground of defence for

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