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Theories of Categorization: A Case Study of Cheques

  • Jonnette Watson Hamilton (a1)

Abstract

Categorization plays a key role in legal reasoning but it has been under-theorized, particularly within common law legal systems. In this article, the author uses the Canadian law governing cheques to illustrate two different theories of categorization. The law governing ordinary cheques is relatively certain and the results of its application are mostly predictable. However, when that law is applied to variations on the basic form – to post-dated, certified, and double-dated cheques – the results are wildly unpredictable. The reason for this, the author argues, is the theory of categorization embodied in the governing legislation, the Bills of Exchange Act. That act assumes cheques can be defined by a list of necessary and sufficient conditions. However, such a theory cannot account for consumer and corporate practices. A theory of categorization based upon prototypes is necessary to explain the variations. They are systematic and coherent elaborations of a central model. They are not arbitrary because they are constrained by a prototype, but neither are they predictable. The theory of categorization assumed by the law obscures the complexity and fluidity of even such a seemingly simple category as cheques. A prototype theory of categorization, on the other hand, explains both the structure of the category, accounting for the variations, and the source of the law's indeterminacy.

La catégorisation, bien que primordiale au raisonnement juridique, est un aspect sous-théorisé du droit, particulièrement dans les systèmes de droit commun. Cet article décrit deux théories de catégorisation utilisées par la législation canadienne régissant l'usage des chèques. Les règles de droit régissant l'usage des chèques ordinaires sont d'application connue et relativement prévisible. Toutefois, lorsque appliquées à des catégories spécifiques de chèques – chèques certifiés, post-dates et double-dates – les mêmes règles offrent des résultats forts imprévisibles. Selon l'auteur, ces disparités résultent de la théorie de catégorisation mise en place par la Loi sur les lettres de change, principale source de droit en la matière. Cette loi présume que la notion de chèque peut être définie in abstracto, en référence à une liste exhaustive de critères établis. Toutefois, cette théorie ne peut expliquer les pratiques du droit corporatif et du droit de la consommation. Une théorie de catégorisation faisant usage de prototypes est nécessaire pour expliquer ces disparités: ce sont des elaborations systématiques et cohérentes du modèle central qui ne sont ni arbitraires, car définies par le prototype, ni prévisibles. La théorie de catégorisation proposée par la loi voile la complexité et la fluidité d'une catégorie en apparence simple, soit les chèques. Une théorie prototype de catégorisation, au contraire, permet d'expliquer à la fois la structure de la catégorie, ainsi que ses disparités, et les causes du non-déterminisme de la loi.

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1 R.S.C. 1985, c. B-4 [hereinafter “BEA”].

2 Johnson, M., The Body in the Mind: The Bodily Basis of Meaning, Imagination, and Reason (Chicago: University of Chicago Press, 1987) at 196.

3 See, e.g., the debate about the meaning of “vehicle” in applying a “no vehicles in the park” rule between Hart, H.L.A., “Positivism and the Separation of Law and Morals” (1958) 71 Harv. L. Rev. 593 at 599–612 and Fuller, L.L., “Positivism and Fidelity to Law – A Reply to Professor Hart” (1958) 71 Harv. L. Rev. 630 at 661–69 (discussed in text, infra, accompanying note 51). See also MacCormick, N., Legal Reasoning and Legal Theory (Oxford, Oxford University Press, 1977) at 2052, 117–19.

4 Crawford, B., ed., Crawford and Falconbridge Banking and Bills of Exchange, vol. 2, 8th ed. (Toronto: Canada Law Book, 1986) at 1167, 1171 [hereinafter Crawford and Falsonbridge].

5 Falconbridge, J.D., The Law of Negotiable Instruments in Canada (Toronto: McGraw-Hill Ryerson, 1967) at 2.

6 Bills of Exchange Act 1882 (U.K.), c. 61.

7 Bank of Baroda v. Punjab National Bank, [1944] A.C. 176 at 183 (P.C.).

8 The Bills of Exchange Act, 1890, 53 V., c. 33. Canadian customs which were not covered in this statute included such practices as certification and post-dating. Thus the indeterminacy problems with the BEA are not simply an example of the general phenomenon of facts overtaking legal norms.

9 Castel, J.-G., The Civil Law System of the Province of Quebec (Toronto: Butterworths, 1962) at 90.

10 Canadian Pacific Railway v. Robinson, [1892] A.C. 481 (P.C.), adopting the language used in Bank of England v. Vagliano Bros., [1891] A.C. 107 (P.C.). Quebec commentators were unanimous that the Privy Council misstated the true vocation of a civil code: Brierly, J.E.C. and Macdonald, R.A., eds., Quebec Civil Law (Toronto: Emond Montgomery, 1993) at 56.

11 See, e.g., Bergel, J.-L., “Principal Features and Methods of Codification” (1988) 48 La. L. Rev. 1073. The author distinguishes between “substantive or true codification” where the object is to “achieve a material and systematic structure of the law” and “formal codification” in which the goal is “regrouping and classifying existing law.”

12 Walton, F.P., The Scope and Interpretation of the Civil Code of Lower Canada (Toronto: Butterworths, 1980) at 95. This systematic treatment of the interpretation of a civil code first appeared in 1907 under the same title (Montreal: Wilson and Lafleur) and was republished in 1980 in both English and French language versions.

13 Quebec Civil Law, supra note 10 at 35.

14 David, R. and Brierley, J.E.C., Major Legal Systems in the World Today, 3rd ed. (London: Stevens & Sons, 1985) at 360–61.

15 Castel, supra note 9 at 35.

16 Quebec Civil Law, supra note 10 at 108.

17 Tetley, W., “Mixed Jurisdictions: common law vs civil law (codified and uncodified)” (1999) 3 Uniform Law Review 591 & (1999) 4 Uniform law Review 877, on-line: International Institute for the Unification of Private Law (UNIDROIT) <http://www.unidroit.org/english/publications/review/articles/1999-3.htm> (last modified: 17 March 2000).

18 Quebec Civil Law, supra note 10 at 178.

19 Desgagné v. Fabrique de la paroisse de St.-Phillippe d'Arrida, [1984] 1 S.C.R. 19, cited in Quebec Civil Law, supra note 10 at 414.

20 Ibid. at 180. For extended examples of struggles to meet new situations that only imperfectly fit existing categories of legal regulation, see the discussion of the notion of “family” and the definition of “filiation” (ibid., at 174–78). See also the discussion of the refined categorization in the law of obligations said to lead to artificial taxonomies and esoteric distinctions and the conclusion that the taxonomie effort as applied to contractual obligations is misguided (ibid. at 382–88).

21 Only four of these eleven sections are relevant to Canadian law and practice. Sections 168 to 175 deal with the practice of crossing cheques, a practice common in the U.K. but rarely seen in Canada.

22 S. 165(2) BEA provides “Except as otherwise provided in this Part, the provisions of this Act applicable to a bill payable on demand apply to a cheque.”

23 S. 186(1) BEA provides “Subject to this Part, and except as provided by this section, the provisions of this Act relating to bills apply, with such modifications as the circumstances require, to notes.”

24 S. 189(1) BEA defines consumer bills as excluding cheques which, at the time they are issued are post-dated not more than thirty days. BEA Part V therefore applies to post dated cheques with dates more than thirty days after the date of their issue.

25 S. 16(2) BEA provides that an “instrument that does not comply with the requirements of subsection (1) … is not … a bill.”

26 S. 55 and 59 BEA. If the instrument is payable to a specified person, it is transferred by endorsement and physical deliver: s. 59(3) BEA.

27 S. 55 BEA.

28 Geva, B., “Negotiable Instruments and Banking” in Ziegal, J.S., Geva, B. & Cuming, R.C.C., Commercial and Consumer Transactions: Cases, Texts and Materials, vol. II, 3rd ed. (Toronto, Emond Montgomery, 1995) at 6.

29 Crawford and Falconbridge, supra note 4 at 1245.

30 Carlos v. Fancourt (1794), 5 T.R. 482; 101 E.R. 272. See also MacLeod Savings & Credit Union v. Perrelt, [1981] 1 S.C.R. 78 at 86–87.

31 S. 16(1) BEA states that, to qualify as a bill of exchange, an instrument must be “an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay, on demand or at a fixed or determi nable future time, a sum certain in money to or to the order of a specified person or to bearer.”

32 S. 176 BEA provides that a promissory note is “an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.”

33 Compare Quebec Civil Law, supra note 10 at 104 (similar irst step in interpretation of a civil code).

34 Quebec Civil Law, supra note 10 at 101.

35 Lakoff, G. & Johnson, M., Metaphors We Live By (Chicago: University of Chicago Press, 1980) at 186–87, 202 [hereinafter Metaphors We Live By].

36 Winter, S.L., “Transcendental Nonsense, Metaphoric Reasoning, and the Cognitive Stakes for Law” (1988) 137 U. Pa. L. Rev. 1105 at 1107–08.

37 Lakoff, G., Women, Fire and Dangerous Things: What Categories Reveal about the Mind (Chicago: University of Chicago Press, 1987) at 172; Lakoff, G. and Johnson, M., Philosophy in the Flesh: The Embodied Mind and its Challenge to Western Thought (New York: Basic Books, 1999) at 379 [hereinafter Philosophy in the Flesh].

38 Johnson, supra note 2 at 22; Philosophy in the Flesh, ibid., at 51.

39 Philosophy in the Flesh, ibid., at 380.

40 Ibid. 380–81.

41 Lakoff, supra note 37 at 272–73.

42 Johnson, supra note 2 at 39; Fauconnier, G., Mappings in Thought and Language (Cambridge: Cambridge University Press, 1997) at 6768.

43 Crawford and Falconbridge, supra note 4; Carlos v. Fancourt and MacLeod Savings & Credit Union v. Perrett, supra note 30.

44 Law Reform Commission of Canada, The Cheque: Some Modernization (Ottawa: Minister of Supply and Services Canada, 1979) at 6.

45 For a history of the cognitive sciences, see Gardner, H., The Mind's New Science: A History of the Cognitive Revolution (New York: Basic Books, 1987).

46 Rosen, E., “Human Categorization” in Warren, N., ed., Advances in Cross-Cultural Psychology, vol. 1 (New York: Academic Press, 1977). This and other papers by Rosch are the classics in prototype theory.

47 See, e.g., Wittgenstein's, L. later work, such as his Philosophical Investigations (Oxford: Basil Blackwell, 1963). In family resemblance, certain non-necessary features are highly common and salient – most typical instances have them. Wittgenstein's famous example of a category whose members do not share common properties but do share family resemblances is the category of games.

48 A prototype is a composite entity formed from some of the most typical features of a particular class. There are various sorts of prototypes: typical cases, ideal cases, social stereotypes, salient examples, cognitive reference points, end points on graded scales, and so on. See Philosophy in the Flesh, supra note 37 at 77.

49 The discussion of the category birds is drawn from Tversky, B. and Hemenway, K., “Objects, Parts, and Categories” (1984) 113 Journal of Experimental Psychology: General 169 and Lakoff, supra note 37 at 41–45.

50 Rips, L.J., “Inductive Judgments about Natural Categories” (1975) 14 Journal of Verbal Learning and Verbal Behavior 665, cited in Lakoff, supra note 37 at 42.

51 Hart, supra note 3; Fuller, supra note 3.

52 The ideas in the discussion of the Hart-Fuller debate are borrowed in an adapted and abbreviated form from a more complete analysis in Winter, supra note 36 at 1172–80 and Winter, S. L., A Clearing in the Forest: Law, Life, and Mind (Chicago: University of Chicago Press, 2001) at 198207 [hereinafter A Clearing in the Forest].

53 Hart, supra note 3 at 606–08; Fuller, supra note 3 at 663–69.

54 Hart, ibid. See also Hart, H.L.A., The Concept of Law (Oxford: Oxford University Press, 1961) at 123–25.

55 Ibid. at 612. See also Weissbourd, B. & Mertz, E., “Rule-Centralism versus Legal Creativity: The Skewing of Legal Ideology through Language” (1985) 19 L. & Soc. Rev. 623 (tracing parallels between Hart's theory of law in Concept of Law supra note 54 and Searle's, J.Linguistic Theory in Speech Acts (Cambridge: Cambridge University Press, 1969)).

56 Winter, supra note 36 at 1178–79. Fuller addressed cultural variations in our understanding of parks in Anatomy of the Law (New York: Frederick A. Praeger, 1968) at 58–59. See A Clearing in the Forest, supra note 52 at 204–07 and 260–66 for an extended discussion of how predictability in interpretations of various laws affecting parks has been structured by their relationships to human purposes and uses that have varied over time and by location and culture.

57 Fuller, supra note 3 at 663–64.

58 Ibid. at 664.

59 Winter, supra note 36 at 1182–83.

60 This example is drawn from Lakoff, supra note 37 at 74–76, 79–87. It is also discussed by Winter in A Clearing in the Forest, supra note 52 at 89–92.

61 Contrast “She is a mother, but she is not a housewife” with “She is a mother, but she is a housewife.” The word “but” is used to mark a situation which contrasts with some model that serves as a norm. The second statement would only be used if stereotypical mothers were not housewives.

62 As Lakoff notes, a stereotypical view of work is also represented here, with work being something that is done away from home and in which housework and child-rearing do not count. Lakoff, supra note 37 at 80.

63 Glucksberg, S. & Keysar, B., “How Metaphors Work” in Ortony, A., ed., Metaphor and Thought, 2nd ed. (Cambridge: Cambridge University Press, 1993) 401; Goatly, A., The Language of Metaphors (London: Routledge, 1997) at 173–77; Metaphors We Live By, supra note 35 at 123–24.

64 Kay, P., “Linguistic Competence and Folk Theories of Language: Two English Hedges” in Proceedings of the Ninth Annual Meeting of the Berkeley Linguistics Society (Berkeley: Berkeley Linguistics Society, 1983) 128, cited in Lakoff, supra note 37 at 122–25.

66 Supra note 6.

67 Supra note 8. See e.g. Emanuel v. Robarts (1868), 9 B. & S. 121, 3 Digest 213; Forster v. Mackreth, [1867] L.R. 2 Ex. 163, 36 L.J. Ex. 94, 4 R.C. 210. Certification was virtually unknown in the U.K., but well established in Canada in the 1880s: see Boyd v. Nasmith (1889), 17 O.R. 40 (C.P.D.).

68 They are also commonly used to make periodic payments of rent, insurance premiums or child maintenance.

69 S. 22(1) BEA provides: “A bill is payable on demand (a) that is expressed to be payable on demand or on presentation; or (b) in which no time for payment is expressed.”

70 Hamilton, J. Watson, “The Canadian Law of Post-Dated Cheques: Indeterminate Rules, Unpredictable Results” (2001) 35 Can.Bus. L.J. 280.

71 Keyes v. Royal Bank of Canada, [1947] S.C.R. 377 at 383 and 386.

72 Quebec Civil Law, supra note 10 at 146.

73 See, e.g., Banque Canadienne Nationale v. Richard Amusement, [1954] C.S. 193; Canadian Bank of Commerce v. Brash, [1957] O.W.N. 322 (CA.); Toronto-Dominion Bank v. Perma-Shine, [1982] O.J. No. 842 (S.C.), online: QL (OJ); Bank of Nova Scotia (c.o.b. “Money Man”) v. Sarkar, [1995] N.S.J. No. 342 (S.C.), online: QL (NSJ).

74 See, e.g., Forster v. Mackreth, supra note 67; Dumai v. Boivin (1936), [1937] 75 R.J. 1; Reisler v. Kulcsar (1965), 57 D.L.R. (2d) 730 (Que. Q.B., Appeal Side); Bobell Trucking v. Trin-Can Enterprises (1982), [1983] 2 W.W.R. 232 (B.C. Co. Ct.); Wheatland Investments (c.o.b. Money Mart Regina) v. SaskTel, [1994] S.J. No. 558 (Q.B.), online: QL (SJ); 360788 B.C. Ltd. (c.o.b. Money Mart) v. 304983 British Columbia (c.o.b. Niners Diner), [1998] B.C.J. No. 3228 (S.C.), online: QL (BCJ).

75 See, e.g., Sterling Finance Corp. v. Laflamme, [1962] C.S. 145 (Sup. Ct.); Simons v. Ginnetti, [1984] B.C.J. No. 1216 (Co. Ct.), online: QL (BCJ). In one case, a post-dated cheque appears to have been categorized as all three types of BEA instruments: see G.T.S. Contract Sales and Marketing v. Chateau Conservatories, [1994] B.C.J. No. 1584 at para. 15 (Prov. Ct.), online: QL (BCJ): “I find as well or in the alternative that the cheque was, as a bill of exchange, an unconditional promise to pay….”

76 Goatly, supra note 63 at 179–82.

77 Forster v. Mackreth, supra note 67 at 167 [emphasis added].

78 Ex parte Richdale; In Re Palmer, [1882] 19 Ch. D. 409 at 417 (C.A.) [emphasis added].

79 Pollock v. Bank of New Zealand (1901), 20 CA. 174 at 183 [emphasis added].

80 Bank of Baroda, supra note 7 at 190 [emphasis added].

81 Brien v. Dwyer (1978), 22 Australian Law Reports 485 at 488 (H. C. Aus.) [emphasis added].

82 Crawford and Falconbridge, supra note 4 at 1741 [emphasis added]. Note the contradictory use of the hedge “technically” in this quotation and the following one, reaching opposite conclusions about whether a post-dated cheque is a cheque as stipulated by those in whom society has vested the right to so stipulate.

83 Wheatland Investments, supra note 74 at para. 6 [emphasis added].

84 Bank of Baroda, supra note 7 at 190.

85 Brien v. Dwyer, supra note 81 at 486. The metaphorical phrasing is reminiscent of the use prototypical plant and animal taxonomies as a model of categorization.

86 Ibid. at 492 [emphasis added].

87 See e.g. Bank of Nova Scotia v. Kelly Motors Danforth, [1961] O.W.N. 34.

88 Crawford and Falconbridge, supra note 4 at 1744. The differentiation between post-dated cheques and “double-dated instruments” also appears in Ogilvie, M.H., Canadian Banking Law, 2nd ed. (Toronto: Carswell, 1998) at 573.

89 In Lavóte v. Abbott, [1963] C.S. 600 (Superior Court), the double-dating of a cheque was held to deprive “it of the essential characteristic of a cheque that it be payable on demand and it therefore cannot be considered a cheque in virtue of article 165 of the Bills of Exchange Act” (ibid., at 603). Instead, the instrument in Lavoie was found to be a bill of exchange payable at a fixed date. The court also acknowledged that a double-dated cheque functioned like a promissory note and even went on to consider, in the alternative, that the double-dated instrument before it might be “more in the nature of a promissory note than of the nature of a bill of exchange” (ibid. at 604). Regardless of the ambiguous categorization, the court managed to reach a conclusion about the legal rights of the parties to the instrument based on the rules applicable to bills of exchange payable at a fixed or determinable future time.

90 In Flamand v. Martin, [1948] B.R. 33 (CA.), the majority held that the use of two dates transformed the instrument into a promissory note (ibid. at 35 (per Bisonnette, J.)). The concurring opinion of Mackinnon, J. also held that “as this cheque is post-dated it is in effect a promissory note” (ibid. at 37). The Flamand categorization of double-dated cheques as notes was followed in Sterling Finance Corp. v. Laflamme, supra note 75.

91 Supra note 74.

92 Ibid., at 736.

93 See e.g. Flammand v. Martin, supra note 90, where the cheque was marked “payable le 21 mai 1945.”

94 See e.g. Moreault v. Normandin (1933), 71 R. J. 355 (S.C), where the cheques were marked “négociable le 3 mars 1932” and “négociable le 3 avril 1932.”

95 In Moreault v. Normandin, ibid., the court did not categorize the instruments before it but did hold that the words “négociable le 3 mars 1932” signified that the cheque could not be transferred with the legal effects of bills of exchange (material negotiability) before the date specified. After that date, the cheque was fully negotiable.

96 Boyd v. Nasmith (1889), 17 O.R. 40 (C.P.D.), referring to the “usual custom of the bank when cheques are marked ‘good’.”

97 Sections 126 and 127 BEA must be read together to understand the notion of “accepting” bills of exchange. Section 126 provides that “[a] bill, of itself, does not operate as an assignment of funds in the hands of the drawee available for the payment thereof, and the drawee of a bill who does not accept as required by this Act is not liable on the instrument” and section 127 provides that “[t]he acceptor of a bill by accepting it engages mat he will pay it according to the tenor of his acceptance.” Nowhere in me BEA does it say that a cheque cannot be accepted by its drawee, the drawer's bank. It is merely a matter of custom that banks, which are always the drawees of cheques, do not accept them and, therefore, do not become liable to pay them. Banks are only liable to pay cheques (and only if the drawer has sufficient funds in his account) under the common law governing the bank-customer relationship.

98 Geva, supra note 28 at 312. Certification of a cheque is demonstrated by a bank's physical marking of the paper. It is said to show three things: the cheque is drawn by the person who purports to have drawn it, it is drawn upon an existing account with the drawee bank, and there are sufficient funds to meet the cheque which have been transferred from the drawer's account to a special bank suspense account.

99 Supra note 7. See also Re Commercial Bank of Manitoba (1894), 10 Man. L.R. 187 at 199, where Bain J. held “that when a banker marks or certifies a cheque … he does not intend to accept it but only to certify it, and there is a difference between “acceptance” and “certification.”

100 Supra note 7 at 184 [emphasis added].

101 The ascendancy of the equivalent to acceptance theory over the payment theory was capped by A.E. LePage Real Estate Services Ltd. v. Rattray Publications (1991), 5 O.R. (3d) 216 (Gen. Div.), aff'd (1995), 21 O.R. (3d) 164 (CA.).

102 (1987), 60 O.R. (2d) 189 (H.C.J.), aff'd (1987), 62 O.R. (2d) 220 (CA.).

103 Geva, B., “Irrevocability of Bank Drafts, Certified Cheques and Money Orders” (1985) 65 Can. Bar Rev. 107 at 129 [emphasis added].

104 (1925), [1926] 1 D.L.R. 433 (S.C.C.).

105 Ibid. at 433 [emphasis added]. Duff J., using a metaphoric reference to a container theory of categorization, also noted “[t]he order in question, as accepted, is obviously not payable on demand, and consequently is not a cheque within this definition” (ibid., at 434) [emphasis added].

106 See, e.g., Rapid Discount v. Geintzer, [1963] C.S. 454 (Sup. Ct.) and Nadeau v. Turner, [1957] C.S. 355 (Sup. Ct.).

107 This diagram does not make use of the metaphor Categories are Containers, but of the metaphor Similarity is Proximity. Conceptual and functional similarity is metaphorically mapped onto the closeness in physical space and the observation that similar objects tend to cluster together. See Philosophy in the Flesh, supra note 37 at 51.

108 See Winter, S.L., “The Meaning of ‘Under Color of Law’” (1992) 91 Mich. L. Rev. 32 and Winter, S.L., “The Metaphor of Standing and the Problem of Self – Governance” (1988) 40 Stan. L. Rev. 1371 for arguments based on the author's applications of a cognitive theory of categorization to the concepts “under color of law” and “standing” that there are three major kinds of indeterminacy which are unavoidable when we try to apply laws and general rules.

* I greatly appreciate the comments of my colleagues, Nigel Bankes and Ian Rounthwaite, on earlier drafts of this paper and those of an anonymous reviewer for this journal. I am also indebted to LL.M. candidate, Daniel Bélanger, for his assistance with civil law literature on metaphors and categorization

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Theories of Categorization: A Case Study of Cheques

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