LEGAL PRINCIPLE: TORT LAW — Conversion — Payment of Crossed Cheque to Stranger Constitutes Conversion
PRINCIPLE STATEMENT
It is settled law that bankers who collect cheques and pay them to those not entitled to the proceeds are guilty of the tort of conversion.
RATIO DECIDENDI (SOURCE)
Per Mohammed, JSC, in Trade Bank Plc v. Benilux (Nig.) Ltd (2003) NLC-1862000(SC) at p. 6; Paras D–E.
"It is settled law by a long string of authorities that bankers who collect cheques and pay them to those not entitled to the proceeds in the cheques are guilty of the tort of conversion."
EXPLANATION / SCOPE
Payment of a crossed cheque to an unauthorised person constitutes conversion. The principle applies to tort law. The bank is liable to the true owner. The rule protects cheque holders. The bank must ensure proper payment. The principle is well-established.