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S. 21.

Delivery.

(2.) As between immediate parties, and as regards a
remote party other than a holder in due course (t) the
delivery,
(a) in order to be effectual must be made either

by or under the authority (s) of the party
drawing, accepting, or indorsing, as the case

may be;

(6) may be shewn to have been conditional (r) or

for a special purpose only (9), and not for the

purpose of transferring the property in the bill. But if the bill be in the hands of a holder in due Ind. Act, s. 118,

sub-s. (a). course a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed.

(3.) Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor, or indorser a valid and unconditional delivery by him is presumed, until the contrary is proved.

(2) Thus where a person having written his acceptance, changed his mind, and before the bill was delivered back to the holder, obliterated his acceptance, it was held that he was not bound as acceptor; his promise, however, is complete unless revoked; Cox v. Troy, 5. B. & Ald. 474; 1 D. & R. 38, as explained in Wilde v. Sheridan, 21 L. J. Q. B. at p. 262. One purpose of the indorsement is to pass the property in the bill, and that purpose is not effected until actual or constructive delivery; Wilde v. Sheridan, supra; Buckly v. Hann, 5 Ex. 43; Roff v. Miller, 19 L. J. C. P. 278; see also the judgments in Montague v. Perkins, 22 L. J. C. P. 187; 1 Parsons on Bills, 48; and the cases cited in note (a) to sect. 2 of this Act, and note (z) to sect. 17 of this Act.

(y) See the last preceding note (2) hereto.

(2) Delivery is by sect. 2 defined to be “transfer of possession, actual or constructive, from one person to another.” A transferor by delivery is not liable on the instrument; see sub-sect. (2) of sect. 58 of this Act and the notes thereto. But he is for the consideration, unless the holder of the instrument has been guilty of laches; Camidge v. Allenby, 6 B. & C. 373; Rogers v. Langford, 1 C. & M. 637; Smith v. Mercer, L. R. 3 Ex. 51. As to constructive transfer of possession, see the cases in notes (a), (b), and (c) to sect. 20 (1) of this Act. As to delivery of a bill of exchange or promissory note as an escrow, see Byles on Bills, 13th ed. 103. In Vallett v. Parker, 6 Wend. 615, it was held that it is no defence as against one who took the note before

SS. 21, 22.

Delivery.

it was due and for, value, and in good faith that it was delivered as an escrow, and was improperly put into circulation.

(w) It is submitted that, as any acceptance is revocable until delivery for value, where a person draws, accepts, or indorses a bill for the accommodation of another party thereto, he may, even after delivery to the person for whose accommodation it is, revoke the acceptance, provided he do so before the instrument gets into the hands of a bonâ fide holder for value.

(v) See Grant v. Hunt, 1 C. B. 44; 14 L. J. C. P. 106.

(t) A holder in due course is by sect. 29 (1) defined to be a holder who has taken a bill, complete and regular, on the face of it under the following conditions: (a) that he has become the holder of it before it was overdue, and without notice that it had been previously dishonoured, if such was the fact; (b) that he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it. See further that section and the notes thereto.

(8) The title of an innocent holder for value cannot be affected by an unauthorized delivery.

(r) The liability of an indorser to his immediate indorsee arises out of a contract between thein, and this contract in no instance consists exclusively of the indorsement, but of that and also of the delivery to the indorsee, and of the intention with which the delivery was made and accepted, of which parol evidence is admissible, Castrique v. Buttigieg, 10 Moore, P. C. C. 94 ; see also Bell v. Lord Ingestre, 12 Q. B. 317; Denton v. Peters, L. R. 5 Q. B. 475.

(9) As for example, as an escrow, as to which, see also note (-) supra.

Capacity of parties.

CAPACITY AND AUTHORITY OF PARTIES. 22.-(1.) Capacity (a) to incur liability as a party to a bill is coextensive with capacity to contract. (b) Provided that nothing in this section shall enable a corporation (c) to make itself liable as drawer, acceptor, or indorser of a bill, unless it is competent to it so to do under the law for the time being in force relating to corporations.

(2.) Where a bill is drawn or indorsed by an infant, minor, or corporation (d) having no capacity or power to incur liability on a bill, the drawing or indorsement entitles the bolder to receive payment of the bill, and to enforce it against any other party thereto.

(a) “To constitute a binding agreement, there must exist the assent of the parties that a certain act shall be done or omitted. For the purpose of this assent, a person must be endowed with such a degree S. 22. of reason and judgment as will enable him to comprehend the subject

Capacity of of negotiation. The assent, therefore, necessary to give validity to a parties. contract necessarily presupposes a free, fair, and serious exercise of the reasoning faculty; or in other words, the power, both physical and moral, of deliberating upon and weighing the consequences of the engagement about to be entered into. So that if either of the parties to an engagement be absolutely deprived of the use of his understanding, or if he be deemed by law not to have attained to it, there can in such a case be no aggregatio mentium, and consequently no agreement which shall bind him. The rule of law therefore which requires the assent of the parties to a contract, assumes that such assenting parties shall be competent to contract. Accordingly a capacity to contract is absolutely necessary. The incompetency to contract is in some cases general and absolute; in other cases it is limited. In some cases the contract is void as against both the parties; in others, only the incompetent or protected party can shelter himself from liability upon it.” Chitty on Contracts (11th edition), 134 and 135. Thus a contract with an idiot is void. But a contract with an infant or with a person not compos mentis was until lately ble, except for necessaries. It has been held that a person non compos mentis is, like an infant, liable on contracts for necessaries and for monies proper for his protection and support, Wentworth v. Tubb, 1 Y. & C. Chan. Cas. 171; Nelson v. Duncombe, 9 Beav. 211. As to what are necessaries, see Chitty on Contracts, 11th ed. 139–155. But now by s. 1 of the Infants' Relief Act, 1874 (37 & 38 Vict. c. 62) all contracts, whether by specialty or by simple contract, thereafter entered into by infants for the repayment of money lent or to be lent, or for goods supplied or to be supplied (other than contracts for necessaries) and all accorints stated with infants, shall be absolutely void ; and by s. 2 no action can be brought on any ratification by a person after full age of any contract entered into during infancy. So also until recently contracts by married women, except for necessaries, were not binding on them. See as to such contracts Chitty on Contracts (11th Edit.), pp. 155– 181. But now by sec. 1 of 45 & 46 Vict. c. 75, a married woman is capable of acquiring, holding, and disposing by will or otherwise of any real or personal property as her separate property, in the same manner as if she were a feme sole, without the intervention of any trustee. And by section 2, a narried woman is capable of entering into and rendering herself liable in respect of and to the extent of her separate property on any contract, and of suing and being sued, either in contract or in tort or otherwise, in all respects as if she were a feme sole, and her husband need not be joined with her as plaintiff or defendant or be made a party to any action or other legal proceeding brought by or taken against her.

By the present section capacity to incur liability as a party to a bill is

S. 22.

Capacity of parties.

coextensive with capacity to contract. An infant cannot accept a bill of exchange even for necessaries; so held per Lord Mansfield, L. C. J., in Williamson v. Watts, 1 Camp. 552. At the foot of that case is the following note: “I do not find any case in which it has been expressly decided that an infant may not bind himself by a negotiable instrument for necessaries; and in Williams v. Harrison, Carth. 160, the Court of King's Bench in the time of Lord Holt seem rather to have been of opinion that he might, although not liable upon a bill of exchange drawn in the course of trade. It is now settled, however, that an account stated by an infant, even of monies due for necessaries, is invalid, Trueman v. Hurst, 1 T. R. 40; Bartlett v. Emery, 1 T. R. 42 ; and it seems inevitably to follow that he cannot be bound by his signature to a negotiable bill or note, as that not only primâ facie admits the debt, but if valid, would render him liable to an action at the suit of the indorsee, in which the amount of the original debt could not be disputed. The old doctrine, that a single bill given by an infant for necessaries is binding, though of no immediate practical use, such an instrument being now as rare as a statute staple, seems to afford an argument from analogy to shew that a promissory note given by an infant for necessaries would be binding, if payable only to the person who supplied them. Co. Litt. 172, a.” In Stevens v. Jackson, 4 Camp. 164, it was held that a person is liable as acceptor of a bill of exchange which was drawn while he was an infant, but was accepted by him after he came of age. And in a recent case it was also held that an action is maintainable by an indorsee for value, against the acceptor of a bill of exchange, accepted by the latter after attaining twenty-one years of age, for a debt contracted during infancy, and after the passing of the Infants' Relief Act, 1874 (37 & 38 Vict. c. 62), though not in respect of necessaries. The Belfast Banking Company v. Doherty, 4 L. R. Ir. 124. But that as between the immediate parties to the bill the acceptance would be a promise or ratification within the meaning of that Act, upon which an action at the suit of the drawer would not lie. But it has also been held that a person is not liable on a promissory note, bearing interest made during infancy, though the money obtained thereon was applied for necessaries, Bateman v. Kingston, 6 L. R. Ir. 328.

Again, a bill or note given by a person in favour of another exercising undue influence over the former will not be enforced. Where a father, whose son had forged his indorsement to a promissory note, was appealed to to take upon himself a civil liability, with the knowledge that unless he did so his son would be prosecuted and probably convicted, even though that is not put forward as the motive for the agreement, the father is not a free agent, and the agreement he makes under such circumstances is not enforceable; Williams v. Bayley, L. R. 1 H. L. 200. But where the holder of a bill says to a father,

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“If

you do not take upon yourself your sons debt, we must sue him SS. 22, 23. for the amount,” that is not undue pressure; Williams v. Bayley,

Capacity of supra, at p. 209. A threat to prosecute the debtor is not of itself

parties. illegal, and will not vitiate a subsequent agreement by the debtor himself to give security for the debt which he justly owes; Flower v. Sadler, 10 Q. B. D. at pp. 575, 576. But an agreement given by a third party on such a threat is not enforceable, being made without consideration; Williams v. Bayley, supra; Flower v. Sadler, supra, at pp. 575, 576. A bill or note given by a party in a complete state of drunkenness, unless it is given for actual necessaries, cannot be enforced against him; but it seems that he might ratify the transaction, when sober; Gore v. Gibson, 13 M. & W. 623; Mutthews v. Baxter, L. R. 8 Ex. 132. But if the drunkenness was unknown to the other contracting party, and no advantage was taken of the person drunk, the contract might, perhaps, be enforceable; Molton v. Camroux, 4 Ex. 17. A bill or note drawn, accepted, or made, or indorsed by a lunatic, and who is known to be such at the time by the person in whose favour it is accepted, made, or indorsed, is utterly void ; but where the lunacy was unknown to the other party, and no advantage was taken, especially if the parties cannot be placed in the same position, the bill may, perhaps, be enforced; Molton v. Cumroux, 4 Ex. 17; Sentence v. Poole, 3 C. & P. 1. Also by an alien enemy; Potts v. Bell, 8 T. R. 548; Griswold v. Waddington, 16 Johns. R. 438; Story on Bills, s. 99; Willison v. Patterson, 7 Taunt. 439; 1 Moore, 133.

(6) Whatever of course a man may do by himself he may do by an agent, and the act of such agent is binding on him, the maxim of law being quidquid facit per alium facit per se. But an agent, unless expressly authorised in that behalf, cannot delegate his agency, the maxim being 6 vicarius non vicarium habet, or delegatus non delegare potest.The ordinary personal disabilities, some of which are mentioned above, do not prevent such a person from acting as agent ; 1 Parsons on Bills, 90.

(c) As a rule a corporation cannot contract except under seal. But this general rule admits of an exception in cases where the making of a certain description of contracts is necessary and incidental to the purposes for which the corporation was created-per Wightman, J., in Clarle v. Cuckfield Union, 1 Bail Court Cases, 85 and 86.' Thus in Henderson v. The Australian Royal Mail Steam Navigation Company, 5 E. & B. 409, it was held that a corporation, being a trading one and incorporated for a special purpose, was bound by a contract made in furtherance of the purpose of their incorporation, though not under seal. So also if a person be employed by a corporation, but not by a document under seal, and such person does the work for which he is employed, and such work is necessary and incidental to the purposes for which the corporation was created, he can recover from them the

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