Foley v Hill
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9 ER 1002
[1843-60] All ER Rep 16
| Foley v Hill | |
|---|---|
 A British colliery | |
| Court | House of Lords |
| Full case name | Edward Thomas Foley v Thomas Hill and Others |
| Decided | 1 August 1848 |
| Citations | (1848) 2 HLC 28 9 ER 1002 [1843-60] All ER Rep 16 |
| Transcripts | United Settlement transcript CommonLII transcript |
| Case history | |
| Appealed from | Foley v Hill 1 Phil 399 |
| Court membership | |
| Judges sitting | Lord Cottenham LC, Lord Lyndhurst, Lord Campbell |
| Keywords | |
| Bank account, limitation periods | |
Foley v Hill (1848) 2 HLC 28, 9 ER 1002 is a judicial decision of the House of Lords in relation to the fundamental nature of a bank account. Together with Joachimson v Swiss Bank Corporation [1921] 3 KB 110 it forms part of the foundational cases relating to English banking law and the nature of a bank's relationship with its customer in relation to the account.[1]
The case decided that a banker does not hold the sums in a bank account on trust for its customer. Instead the relationship between them is that of debtor and creditor. When the customer deposits money in the account it becomes the bank's money, and the bank's obligation to repay an equivalent sum (and any agreed interest) to the customer or the customer's order.[2]
The decision was crucial to the modern evolution of banking. Had the appellant's argument that the bank should be treated as a trustee succeeded then a bank would not be entitled to use the sums deposited with it for lending to other parties because of the rule against trustee's making a profit out of the trust property.[3]
Edward Thomas Foley and Sir Edward Scott (who was not a party to the action) were owners of collieries in Staffordshire. They had jointly opened an account with the defendant bank. In April 1829 £6,117 10s was transferred from that joint account to a separate account in the sole name of Foley. The bank sent a letter enclosing the receipt and agreeing to pay 3 per cent interest on the sum. From 1829 until 1834, when the joint account was closed, Foley's share of the profits of the collieries was paid by cheques drawn on the joint account by the agents managing the collieries. These cheques were paid in cash or by bills drawn by them on their London bankers in favour of Foley, and none of them were paid into his separate account. The only amount ever credited to that account was the initial £6,117 10s together with interest calculated by the bank up to 25 December 1831, but not afterwards.[4]
Foley filed a bill in equity in January 1838 against the banking, claiming that an account should be taken of not only the initial deposit but also all other sums received by the bank for Foley on his private account since April 1829, with interest on the same at the rate of 3 per cent per annum; and also an account of all sums properly paid by them for or to the use of Foley on his said account since that day.[4]
The defendant banks pleaded a defence based upon the Statute of Limitations.[4]
