Maker's contract. Maker's demand is necessary (Art. 287) interest as damages, if no demands were made, could it is conceived be recovered only from the date of the writ.' Art. 291. The maker of a note payable to order estoppels. by the fact of making it conclusively admits and warrants to a bona fide holder the existence of the payee and his then capacity to indorse.2 1 Cf. Pierce v. Fothergill (1835), 2 Bing. N. C. 167. 2 Drayton v. Dale (1823), 2 B. & C. 293; Lane v. Kreckle (1869), 22 Iowa R. 399; Cf. Arts. 139, 212, 216. CHAPTER XI. SECURITIES FOR BILLS OF EXCHANGE. Rights of Drawer. lien as Art. 292. Apart from special contract (1.) Where Drawer's goods are sold, to be paid for by buyer's acceptance unpaid of seller's draft, and the acceptor fails or dishonours vendor. the bill, the lien of the drawer as unpaid vendor thereupon revives, if he has not parted with the possession of the goods or can stop them in transitu ; and it is immaterial that the drawer has negotiated the bill.1 (2.) Where an agent buys goods for his principal, and draws on the principal for the price, his rights, in this respect, are the same as those of an ordinary vendor.2 NOTE. It is essential to distinguish between the sale of goods to the acceptor, where the property in them vests absolutely in him, subject only to the vendor's lien until they reach his possession, and the case of goods which are sent to the acceptor as cover for the bill, where there is a kind of mixed property in the goods, both drawer and acceptor having a defeasible interest therein." The rights and duties of a commission merchant who buys for a 1 Gunn v. Bolckow, Vaughan, & Co. (1875), L. R. 10 Ch. 491; Cf. Ex parte Chalmers (1873), L. R. 8 Ch. at 292; Ex parte Lambton (1875), L. R. 10 Ch. at 415. 2 Ex parte Banner (1876), 2 Ch. D. at 287, C. A.; Cf. Ex parte Gomez (1875), L. R. 10 Ch. at 645. 3 Id. See, too, Ex parte Lambton (1875), 10 L. R. Ch. at 416. Drawer's foreign principal are explained by Lord Blackburn in Ireland v. Livingston.' lien as unpaid vendor. Right or lien of Rights of Acceptor. Art. 293. (1.) Where the drawer of a bill of exacceptor. change remits goods or securities to the drawee as cover for it, and the drawee accepts, he thereby acquires a lien upon or right to the goods or securities. If the drawee do not accept he has no right to or lien upon the goods and securities.3 ILLUSTRATIONS. 1. A. consigns goods to B., and draws on him for the price. A. sends the bill of lading and bill of exchange to his own agent who forwards them to B., requesting him to accept the bill. If B. do not accept the bill of exchange he cannot retain the bill of lading.1 2. A., the principal, sends goods to B., his agent, on the terms that B. is to sell the goods, receiving a commission, and to accept A.'s drafts in proportion to the goods sent, and if the proceeds of the goods do not cover the acceptances in full, A. is to remit the difference. B. accepts for 2007. Before the bill matures A., the drawer, fails. B. has a lien on the goods to the extent of 2007.5 3. A. consigns goods to B. for sale, draws on him for the price, and negotiates the bill of exchange with bill of lading attached. B. accepts the bill, payable on delivery of bill of lading. This operates as a pledge of B.'s interest in the goods to the holder, who becomes, as regards B., a secured creditor." 1 Ireland v. Livingston (1872), 5 L. R. H. L. at 408. 2 Ex parte Brett (1871), L. R. 6 Ch. at 841; Ex parte Oriental Bank Corporation (1874), 30 L. T. 803 L. JJ.; Re Pary's Patent Co. (1876), 1 Ch. D. 631; Lutscher v. Comptoir d'Escompte (1876), 1 Q. B. D. 709; Cf. Ex parte Banner (1876), 2 Ch. D. at 287, C. A.; see, too, Steele v. Stuart (1866), L. R. 2 Eq. 84. 3 Shepherd v. Harrison (1871), L. R. 5 H. L. 116; see at 133 per Ld. Cairns, and the comment on this case in Ex parte Banner (1876), 2 Ch. D. at 288, C. A.; see, too, Torrance v. Bank of British America (1873), L. R. 5 P. C. 246. 4 Shepherd v. Harrison (1871), L. R. 5 H. L. 116. 5 Re Pavy's Patent Fabric Co. (1876), 1 Ch. D. 631; see passim Ex parte Dickin (1878), 8 Ch. D. 377. Ex parte Brett (1871) L. R. 6 Ch. at 841. NOTE.-Lord Cairns points out in Banner v. Johnston,' that where Right or a bill is only allowed to be drawn against shipments or against lien of bills of lading, the stipulation is for the assurance and protection of acceptor. the drawee, and not for the benefit of the holder. In France it seems the property in the goods would pass with the bill. See Nouguier, § 715, and Belgian Code, Art. 26. (2.) If the acceptor fails during the currency of the bill or dishonours it at maturity, his lien upon or right to the goods or securities is thereby determined, and he holds them at the disposition of the drawer. 2 ILLUSTRATIONS. 1. A. draws on B., and remits to B. bills of other parties which he holds to provide B. with funds. B. accepts, fails before his acceptance matures, and compounds, paying 5s. in the pound. If B. realizes the bills sent him as cover, A. is entitled to the balance of the proceeds after deducting the actual amount paid by B. on his acceptance.3 2. An agent buys goods for his principal, remits them to him, and draws on him for the price. The principal accepts the bill, but fails before it matures. The property in the goods does not re-vest in the drawer, for the goods are the principal's absolutely.* NOTE.Where remittances are made to cover bills, and the drawer by a collateral agreement has assigned his rights to a particular holder, the acceptor holds the remittances for the benefit of that holder as equitable assignee.5 Rights of Holder. Art. 294. Where the drawee or acceptor of a bill Bill not is indebted to, or has in his hands, funds of the 1 Banner v. Johnston (1871), 5 L. R. H. L. at 174. 2 Tooke v. Hollingworth (1793), 5 T. R. 215, approved Ex parte Banner (1876), 2 Ch. D. at 289, C. A.; Ex parte Kelly & Co. (1879), 11 Ch. D. 306, C. A.; Re Gottenburg Commercial Co. (1881), 29 W. R. 358, C. A. ; Cf. Ex parte Smart (1872), 8 L. R. Ch. Ap. at 224. 3 Ex parte Gomez (1875), 10 L. R. Ch. 639. 4 Ex parte Banner (1876), 2 Ch. D. 278, C. A.; see at 289; see also Banco de Lima v. Anglo-Peruvian Bank (1878), 8 Ch. D. 160. 5 Ex parte Carrick (1858), 2 De G. & J. 208. an assignment of funds. Bill not an assign ment of funds. Bill drawn against specific goods. drawer sufficient to meet it, the bill does not operate as an assignment of the debt or funds in favour of the holder.1 Such an assignment can only be effected by agreement extraneous and collateral to the bill.2 ILLUSTRATIONS. 1. A., having a fund in B.'s hands, draws on B. a bill for the exact amount of the fund. This does not operate as an assignment of the fund to the payce.3 2. The holder of a bill purchases it on the faith of a verbal representation made by the drawer that funds sufficient to meet it have been remitted to the drawee, that it is drawn against those funds, and that it certainly will be paid. The drawer fails, and the drawee refuses to accept the bill, though he has funds sufficient to meet it. The bill holder is not entitled to those funds, and the drawee is justified in handing them over to the drawer's trustee.* Art. 295. Subject to Art. 296 (double insolvency), where a bill of exchange is on the face of it expressed to be drawn against specific goods or securities, the holder does not obtain thereby any charge upon the goods or securities if the bill be dishonoured.5 Such charge can only be created by agreement collateral to the bill, and in favour of the person with whom the agreement is made.6 1 Shand v. Du Buisson (1874), L. R. 18 Eq. 283, bill; Hopkinson v. Forster (1874), 19 L. R. Eq. 74, cheque; Schroeder v. Central Bank (1876), 34 L. T. N. S. 735, cheque. 2 Thomson v. Simpson (1870), L. R. 5 Ch. 659; Citizens Bank of Louisiana v. New Orleans Bank (1873), L. R. 6 H. L. 352; see at 360 and 366. 3 Shand v Du Buisson (1874), 18 L. R. Eq. 283. 4 Citizens Bank of Louisiana v. New Orleans Bank (1873), L. R. 6 H L. 352. 5 Inman v. Clare (1858), Johns. R. at 776; Robey v. Ollier (1872), 7 L. R. Ch. 695 at 698. Id.; see Ex parte Imbert (1857), 1 De G. & J. 152; Ex parte Carrick (1858), 2 De G. & J. 208; Ranken v. Alfaro (1877), 5 Ch. D. 786, C. A., where the holder's charge has been upheld, and Latham v. Chartered Bank (1874), 17 L. R. Eq. 205, for the construction of a letter of hypothecation. |