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Windt q.q. v. Truckland Zuid-Holland and ABN AMRO bank

2009 April 9
by Hein Kernkamp

Court: Netherlands Supreme Court

Date: September 19th, 2008

LJN number: BD0723

Case: A customer of ETSC draws two cheques on Citybank in Amsterdam, in order to pay for transport services performed by ETSC. At the time, ETSC was under a suspension of payment regime. The factual director of ETSC, who also was director of a company called Intestem, fraudulently amended the payee, so that it read ETSC/Intestem.  He then endorsed the cheques to Truckland on behalf of Intestem, where Truckland in its turn endorsed the cheques to ABN AMRO bank, who in its turn collected the checks from Citybank. Truckland later refunded the director of Intestem, as the anticipated transaction between the companies was cancelled. ETSC went bankrupt. Alleging that an unlawful act had been committed, the official receiver of ETSC claimed damages from Truckland and ABN AMRO bank. The Court held that Truckland acted in good faith and dismissed the claim. The receiver appealed and added that Truckland could not have acted in good faith, as it was under an obligation to verify the authority of Intestem to negotiate the cheques, which it failed to do. The appeal was also dismissed. The case was subsequently brought before the Supreme Court where the parties argued over the meaning of Article 182 section 1 of the Dutch Commercial Code, that codifies that a cheque may be made payable to a specified person (in singular).

Held: The Supreme Court ruled that Article 182 section 1 of the Dutch Commercial Code does not forbid to make a cheque payable to more than one payee. Conventions should be interpreted in a uniform manner. The text of Article 182 section 1 is identical to the text of Article 5 of the Uniform Law on Cheques, which is attached as Annex 1 to the Geneva Convention providing a uniform law for Cheques of March 19th 1931, to which The Netherlands is a party. In other jurisdictions that have implemented the Uniform Law on Cheques, like in Germany and Belgium cheques may be made payable to two or more payees. The  UK Bills of exchange act 1882 also provides for the possibility that bills are made payable to two or more payees. The not yet in force UNCITRAL Convention on International Bills of Exchange and International Promissory Notes of 1988, also allows a bill to be drawn payable to two or more payees. Hence, the same uniform interpretation should be followed in The Netherlands.

The Supreme Court further ruled that where the two payees are divided by an 'or' or a slash, the cheque is payable in the alternative to one of the two payees as bearer of the cheque and one of the payees is entitled to endorse the cheque.

Obviously adding a third party as a payee to a cheque does not give this third party any title to collect or endorse the cheque. However, where someone fraudulently adds a second payee and then collects it or endorses it, the bank or the endorsee may deem this added person to be the lawful holder as meant in Article 196 of the Dutch Commercial Code, if the fraud cannot be established by reasonably required examination of the cheque and where the fraud is not known from other sources. Under such circumstances payment by the bank releases it from its obligations towards the payee. Appeal dismissed.

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