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Henry Williams and Others v James Bayley (1866) L.R. 1 H.L. 200

Forgery - Preventing criminal prosecution - Undue pressure - Agreement - Mortgage

Facts:

Bayley’s son took promissory notes to a bank, which he had forged in his father’s name and without his father’s knowledge. The notes were fraudulent. Bayley’s son had done this several times and gotten away with it. On one occasion, the bank called into question the promissory note as it dishonored. The son redeemed it but Bayley did not catch on as to the reason why the note had dishonored, so the son continued. When the forgery was discovered, the son did not deny it. The bank decided to propose that Bayley mortgage his house to pay them back in order to avoid his son’s prosecution. Bayley obliged, but later brought a cause of action over the validity of the agreement with the bank.

Issues:

The issue was whether the agreement between the bank and the father was valid, given it was formed as an alternative to prosecution of the fraudster son.

Held:

The agreement to mortgage the property was invalid. The agreement was only entered into to prevent his son’s criminal prosecution and therefore, the agreement could not be enforceable in equity. Bayley was in a desperate position and was without fault. Thus, he formed an agreement on illegitimate terms, in that his son could avoid prosecution for his criminal act of fraud. The bank had accepted against ethics, justice and morality. This was held to be a grave departure from what an agreement should be, without pressure.


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