Home >> Dictionary Of Banking >> Companies to Guarantee Guaranty >> Exchange

Exchange

person, payment, money, board, sum, banker, document, stamp and letter

EXCHANGE. (See BANKER s ORDER.) The folkm ing minute of the Hoard of Inland Revenue was passed May, 1904 The attention of the Board of Inland Revenue has been drawn to the fact that certain instruments chargeable, as they are advised, under the Stamp Ai_ t. 1891, with a penny duty as ' Hills of Exchange payable on demand, or at sight, or on presentation,' are suffered to pass without such stamp. The Board have reason to believe that this practice is now very prevalent.

" Section 32 of the Act is as follows : ' For the purposes of this Act the expres sion " Bill of Exchange" includes draft, order, cheque, and letter of credit, and any docu ment or writing (except a bank note) en titling or purporting to entitle any person, whether named therein or not, to payment by any other person of, or to draw upon any other person for any sum of money ; and the expression " Bill of Exchange payable on demand " includes ' (a) An order for the payment of any sum of money by a Bill of Exchange or promissory note, or for the delivery of any Bill of Exchange or promissory note in satisfaction of any sum of money, or for the pay ment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed, or happen ; and (b) An order for the payment of any sum of money weekly, monthly, or at any other stated periods, and also an order for the payment by any person at any time after the date thereof of any sum of money, and sent or delivered by the person making the same to the person by whom the payment is to be made, and not to the person to whom the payment is to be made, or to any person on his behalf.' ' Section 38, sub-section (1), imposes a fine of ten pounds upon every person who issues, indorses, transfers, negotiates, presents for payment, or pays any Bill of Exchange not being duly stamped, and it is provided that the person who takes or receives any such bill shall not be entitled to recover thereon.

" The instruments to which the Board refer appear to be especially made use of by Education Authorities and other Municipal bodies in connection with payments which they desire to be made on their behalf by their Bankers or Treasurers. These instru ments vary, to some extent, in form, but their general nature is as follows :—(1) A document is handed by the Authority to the creditor or other person who is to receive the money, which document informs him that the Treasurer of the Authority, or a certain named Banker, has been authorised to pay him a sum of money, specified on the docu ment, and that payment will be made accordingly, by the Treasurer, or by such Banker, as the case may be, on presentation of the document. (2) Concurrently with or antecedently to the issue of this document a letter is written by the Authority or their Officer to the Banker or Treasurer giving a list of the various persons to whom pay ments are to be made upon presentation of a document in the above form, and requesting the Banker or Treasurer to make such pay ment accordingly.

" The Board are advised that the last men tioned document, namely, the letter of request to the Banker or Treasurer, comes within the paragraph marked (b) of Section 32 above set forth, as being an order for the payment by a person (in this case the Treas urer or Banker) of a sum of money, and sent or delivered by the person making the same (in this case the sender of the letter) to the person by whom the payment is to be made (namely, the Banker or Treasurer) ; and the Board, moreover, are advised that a penny stamp is necessary in respect of each payee's name appearing upon the letter of request, because the payment to be made to each of such persons is in respect of a separate and distinct transaction.

" The Board are also advised that each letter handed to the payee as above men tioned, whether supplemented by a letter of request or not, comes within the words of the first paragraph of Section 32, as being a document purporting to entitle a person to payment by any other person of a sum of money.

" As the question of the liability of either of these two classes of documents has not, so far as the Board know, been directly the subject of any legal decision, it is of course open to Bankers and others interested to test the question whether the Board's view is right, by obtaining a legal decision in the manner pointed out by the Stamp Act. Until, however, the parties see fit to take steps to do this the Board will act upon the view expressed above.

" The Board are confident that they can rely upon the ready assistance of Bankers, Local Authorities and their Officers in seeing that documents of this character are stamped in accordance with the provisions of the law. They feel it to be their duty, however, to point out that should occasion arise after this notice they will have no alternative but to institute proceedings for recovery of the penalties provided by Section 38 of the Act.

" While dealing with the question ot stamp duty on Bills of Exchange, the Board desire to mention that they have some reason to think that orders to Bankers for the payment of sums of money at stated periods (e.g. Club subscriptions, and instalments of the price of articles purchased on the hire system) are frequently not stamped. The omission of the stamp is doubtless due to a misappre hension as to the provisions of the law ; but it is clear that such orders fall within the definition in Section 32 (b) of the Stamp Act, and should in all cases bear stamps "