After

action

Art. 135. The fact that a bill has been dishonoured

brought. and an action brought thereon does not restrain its

negotiability.1

ILLUSTRATION.

C., the holder of a dishonoured bill accepted by B., commences an action against him. Subsequently C. indorses the bill to D., who has notice of the action. D. can sue B. and recover.

NOTE. If a bill be transferred, after action brought, to embarrass the defendant, his remedy is by application to the Court. The Court, too, has full power over costs.

Holder's rights.

De facto

holder can

title.

Rights acquired by Negotiation.

Art. 136. The person to whom a bill is negotiated becomes the de facto holder (Art. 125) thereof. He thereby acquires the right to sue on the bill in his own name, and the power to further negotiate it3

NOTE.-The power to negotiate must be distinguished from the right to negotiate. The right to negotiate is an incident of ownership. The power to negotiate is an incident of apparent ownership. Again, the right to sue must be distinguished from the right to recover, that depends on the further question whether the holder is a holder for value (Arts. 83 and 84), and in some cases whether he is also a holder for value without notice (Arts. 85 and 86).

Art. 137. The de facto holder of a genuine bill, give good regular on the face of it, who holds it wrongfully or who by parting with it is guilty of a fraud, can negotiate it with a good and complete title to a person who takes it before maturity as a bonâ fide holder for value without notice. Cf. Arts. 92 to 97.

1 Denters v. Townsend (1864), 33 L. J. Q. B. 301; Cf. Woodward v. Pell (1868), 4 L. R. Q. B. 55.

2 Id. at 302, per Cockburn, C. J.

3 Cf. Crouch v. Crédit Foncier (1873), 8 L. R. Q. B. at 380-382.

4 Marston v. Allen (1841), 8 M. & W. at 504, see per Alderson, B., as to the principle.

regularity.

Art. 138. An irregularity patent on a bill is Patent irequivalent to notice of any defect that may be behind it, and deprives the holder of the protection afforded to a bona fide holder for value without notice.1

ILLUSTRATIONS.

1. A., who is in possesion of a blank acceptance signed by B., fills it up as a bill for 1007. in the presence of C., inserting his own name as drawer and C.'s name as payee. A. transfers the bill to C. for value. If it appears that A. had no authority to fill up the bill, or that his authority had been revoked, C. cannot recover against B.

2. A. draws a bill on B. payable to his own order. B. accepts. It is afterwards arranged that the bill shall be cancelled. B. accordingly tears it in half. A. subsequently picks up the pieces, joins them together, and indorses the bill to C., who takes it for value and without notice. If the bill is so torn that it appears to have been divided for safe transmission by post, C. can recover; but if it was so torn as to shew an intention to cancel it, C. cannot recover.3

NOTE. The rule as to overdue bills (Art. 134) is probably a deduction from the same principle. See, too, Art. 74 as to signatures "per proc." and Art. 250 as to alterations. See the distinction between latent and patent defects observed on by Lord Ellenborough and Bayley, J.

payee and

Art. 139. No title can be made to a bill through Fictitious the indorsement of a fictitious or non-existing person indorser. unless the party sued is estopped from setting up the fact. Cf. Art. 81.

ILLUSTRATIONS.

1. A. draws a bill on B. payable to C.'s order. person.

C. is a fictitious

B. accepts in ignorance of this fact. A. then indorses the

1 Colson v. Arnot (1874), 57 New York R. 253; Cf. Angle v. N. W. Ins. Co. (1875), 2 Otto at 342, Sup. Ct. U. S.

2 Hatch v. Searles (1854), 2 Sm. & G. 147, Stanway's case; see, too, Conway's case affirmed, 24 L. J. Ch 22, and Awde v. Dixon (1851), 6 Exch. 869.

3 Ingham v. Primrose (1859), 7 C. B. N. S. 82; Cf. Scholey v. Ramsbottom (1810), 2 Camp. 485; Redmayne v. Burton (1860), 2 L. T. N. S. 324.

4 Dunn v. O'Keefe (1816), 5 M. & S. at 286–289; Cf. Ex parte Dixon (1876), 4 L. R. Ch. D. at 136 (C. A).

Fictitious bill in blank in C.'s name and discounts it with D., who has notice. payee and D. cannot sue B.1 indorser.

2. A. draws a bill on B. payable to C.'s order. C. is a fictitious person. B. knowing this accepts. A. indorses the bill in blank in C.'s name and it is negotiated to D., a bonâ fide holder for value without notice. D. can sue B.2

3. B. is indebted to C. By arrangement between them a bill is drawn in the name of A., a deceased person, on B., payable to drawer's order. B. accepts, and the bill is indorsed in A.'s name to C. C. can sue B.3

4. A bill purporting to be drawn by A. on B., payable to C.'s order and indorsed by C. in blank is held by D. X. accepts it suprà protest for A.'s honour. D., who is a bond fide holder, sues X. It turns out that A.'s signature was forged, and that C. is a fictitious person. X. is estopped from setting up these facts.

5. B., at the request of X., makes a note payable to C.'s order. C. is a fictitious person, but B. does not know this. X. indorses the note in C.'s name and it is negotiated to D., a bonâ fide holder for value without notice. D. can sue B.5

66

NOTE. As to the effect of the drawee being a fictitious person, see Art. 2. In France the signature of a fictitious person on a bill constitutes a supposition de nom," and renders the instrument invalid as a bill in the hands of all parties with notice. The signature of a fictitious person must be distinguished from (a) the signature of a real person who uses a fictitious name (Cf. Art. 71, Expl. 2), and (b) the false signature of a real person (Cf. Art. 81). Art. 140. The drawer of an inland bill of exchange of lost bill. payable after date,' which is lost or has miscarried before maturity, is bound, on request, to give another

Right to

duplicate

1 Hunter v. Jeffery (1797), Peake Ad. Ca. 146; Cf. Bennet v. Farnell (1807), 1 Camp. 129 and 180.

2 Gibson v. Minet (1791), 1 H. Bl. 569, H. L.. ; Cf. Gibson v. Hunter (1794), 2 H. Bl. 288, H. L.

3 Asphitel v. Bryan (1863), 32 L. J. Q. B. 91; per Crompton, J., an estoppel on evidence. Affirmed Ex. Ch. 33 L. J. Q. B. 328; per cur. an estoppel by agreement.

4 Phillips v. Im Thurn (1865), 18 C. B. N. S. 694, on demurrer; see 1 L. R. C. P. 463, on evidence.

5 Lane v. Kreckle (1867), 22 Iowa 477: Cf. Cooper v. Meyer (1830), 10 B. & C. 468; Becman v. Duck (1843), 11 M. & W. 251; Schultz v. Astley (1836), 2 Bing. N. C. 544.

6 Nouguier, §§ 277 and 284-288; Cf. French Code, Art. 112; Italian Code, Art. 198.

7 Sed vide Rhodes v. Moore (1850), 14 Jur. 800. Cheque.

bill of the same tenor, "the person to whom it is so Right to duplicate "delivered giving security, if demanded, to the said of lost bill. "drawer, to indemnify him against all persons what'soever, in case the said bill so alleged to be lost or "miscarried shall be found again."1

NOTE. This remedy is very inadequate. See the provisions of the Foreign Codes, Art. 25 n. As to suing on a lost bill, see Art. 144.

Rights of Action and Proof.

holder's

Art. 141. The de facto holder of a bill is entitled De facto to maintain an action thereon unless it is shewn that right of he holds the bill adversely to the true owner.2

3

Explanation 1.-It is immaterial that the holder never had any interest in the bill, or that he has parted with his interest therein.a

Explanation 2.-When the holder of a bill sues as agent for another person, or when he sues wholly or in part for the benefit of another person, any defence or set-off available against that person is available pro tanto against the holder.5 Cf. Art. 88.

ILLUSTRATIONS.

1. C. the holder of a bill indorses it to D. for collection. D. can sue on it, but any defence available against C. is available against D.6

1 9 & 10 Will. III., c. 17. § 3; Rhodes v. Morse (1850), 14 Jur. 800, cheque ; Cf. Walmsley v. Child (1749), 1 Ves. Sr. at 335, and passim, Thackray v. Blackett (1812), 3 Camp. 164.

2 Jones v. Broadhurst (1850), 9 C. B. 173; Agra Bank v. Leighton (1866), 2 L. R. Ex. at 63-65. See Art. 125, de facto holder defined.

3 Law v. Parnell (1859), 7 C. B. N. S. 282.

4 Williams v. James (1850), 15 Q. B. 498; Poirier v. Morris (1853), 2 E. & B. 89. Cf. Megrath v. Gray (1874), 9 L. R. C. P. 216.

5 Lee v. Zagury (1817), 8 Taunt. 114; Royce v. Barnes (1846), 52 Massachuss. 276; Agra Bank v. Leighton (1866), 2 L. R. Ex. 56; Re Anglo-Greek Navigation Co. (1869), 4 L. R. Ch. 174; Pothier, No. 41; Cf. Beechervaise v. Lewis (1872), 7 L. R. C. P. 372.

6 De la Chaumette v. Bank of England (1829), 9 B. & C. 208, as explained by Goodwin v. Robarts (1875), 10 L. R. Ex. at 164, Ex. Ch.

action.

De facto holder's right of action.

Action on

bill payable

specially.

Action on

bill payable to bearer.

2. D. is the holder of a dishonoured bill for 1007. indorsed by C. C. pays D. 607. D. sues the acceptor. As to 607. D. sues as trustee for C., and only as to 407. on his own account. As regards 607. any set off which the acceptor may have against C. is equally available against D.1

Art. 142. Subject to Arts. 98-102, when a bill is payable to a particular person or persons, or to his or their order, an action thereon must be brought in the name of such person or persons.2

ILLUSTRATIONS.

1. A bill is specially indorsed to the firm of "D. & Co." An action on it must be brought in the name of the firm. The managing partner cannot sue on it in his own name.

2. A bill is specially indorsed to D., a partner in the firm of X. & Co., in payment of a debt due to the firm. An action on it must be brought in D.'s name, and not in the name of the firm.3

NOTE. In the case given in Illust. 1, the managing partner might indorse the bill in the firm's name to himself and then sue. Cf. Art. 119, n., as to striking out indorsements.

Art. 143. Subject to Art. 141, when a bill is payable to bearer an action thereon may be brought in the name of any person who has either the actual or the constructive possession thereof.

ILLUSTRATIONS.

1. C., the holder of a bill, indorses it in blank to D. to collect it for him. Either C. or D. may sue the acceptor.

2. A bill accepted by B. is indorsed in blank by C., D., E. and F. bring an action on the bill against B. They can recover, although there is no evidence to shew that they are partners, or what the nature of their joint interest is.5

1 Thornton v. Maynard (1875), 10 L. R. C. P. 695.

2 Attwood v. Rattenbury (1822), 6 Moore at 583; Pease v. Hirst (1829), 10 B. & C. 122.

3 Bawden v. Howell (1841), 3 M. & Gr. 638.

4 Clerk v. Pigot (1699), 12 Mod. 193; Cf. Stone v. Butt (1834), 2 Cr. & M. 416.

5 Ord v. Portal (1812), 3 Camp. 239; Cf. Rordanz v. Leach (1816), 1 Stark. 446; Low v. Copestake (1828), 3 C. & P. 300.