Foley v Hill
Money paid into a bank account belongs to the bank, and the relationship between banker and customer is that of debtor and creditor, not trustee and beneficiary.
Facts
Mr Foley deposited money with a bank, which agreed to pay interest on it. Several years later, he brought a claim in equity for an account of the money, arguing that the bank held it as his trustee or agent, so that the ordinary limitation period for debts did not apply. The bank argued that it was simply his debtor.
Legal principle
The House of Lords held that the bank was a debtor and not a trustee. Lord Cottenham LC said that money, when paid into a bank, ceases altogether to be the money of the principal; it is then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it. The banker is not answerable to the customer if he puts the money into jeopardy, or engages in a hazardous speculation, but he is answerable for the amount, because he has contracted to repay it. The claim was a claim for a debt, which should have been brought at law, and was time barred. The case remains the foundation of the banker and customer relationship.
Related cases on the banker and customer relationship
- Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567
- Greenwood v Martins Bank Ltd [1933] AC 51
- Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 728
- Lloyds Bank Ltd v Bundy [1975] QB 326
- London Joint Stock Bank Ltd v Macmillan and Arthur [1918] AC 777
- N Joachimson v Swiss Bank Corp [1921] 3 KB 110
- Office of Fair Trading v Abbey National plc [2009] UKSC 6, [2010] 1 AC 696
- Shah v HSBC Private Bank (UK) Ltd [2010] EWCA Civ 31
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
