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SS. 32, 33, 34. examples of such indorsements, see sect. 35. But the words “pay the
contents of the bill to A. B., being part of the consideration in a certain Requisites of
deed of assignment, executed by the said A. B. to the indorser and valid indorse
others,” have been held not to be a restrictive indorsement, Potts v. Reed, 6 Esp. 57; nor the words“ being the portion of a value as under deposited in security for the payment thereof,” Haussouillier v. Hartsinck, 7 T. R. 733; nor“ pay J. S. or order value in account with H. C. D,” Buckley v. Jackson, L. R. 3 Ex. 135. The omission of the words or order” in the indorsement will not restrain the negotiability of the instrument, see note (j) to this section.
Conditional indorsement, Ind. Act, ss. 50 and 52.
33.—Where a bill purports to be indorsed conditionally, the condition may be disregarded by the payer, and payment to the indorsee is valid whether the condition bas been fulfilled or not (a).
(a) If the indorsement is made conditional before acceptance, the acceptor is bound by the acceptance, Robertson v. Kensington, 4 Taunt. 30; see also Soares v. Glyn, 8 Q. B. 24; 14 L J. Q. B. 313. By the present section it seems that no matter what condition is imposed by the indorsement, it may be totally disregarded by the payer.
34.—(1) An indorsement in blank specifies no indorsee, and a bill so indorsed becomes payable to bearer (a). (2.) A special indorsement specifies the person to whom
or to whose order the bill is to be payable (b). (3.) The provisions of this Act relating to a payee (c)
apply with the necessary modifications to an in
dorsee under a special indorsement. (4.) When a bill has been indorsed in blank, any holder
may convert the blank indorsement into a special indorsement by writing above the indorser's sig. nature a direction to pay the bill to or to the order of himself or some other
Ind. Act, s. 49.
(a) See note (h) to sect. 32 of this Act.
(c) See sub-sects. (1), (2) and (3) of sect. 7 of this Act and the notes thereto.
(d) So held in Clerk v. Pigott, 12 Mod. 193; 1 Salk. 126; Hirschfield v. Smith, L. R. 1 C. P. 340. But in Vincent v. Horlock, 1 Camp. 441, it was held that if A, the payee of a bill, indorses it in blank, and delivers it to B., and B. writes above A.'s indorsement pay the contents to C.," B. is not liable to C. as an indorser of the bill. This
case seems almost self-evident, for no one can be liable on a bill unless SS, 34, 35. his name is on it, see sect. 23. See also note (n) to the 32nd section
Indorsement in of this Act.
special in35.—(1.) An indorsement is restrictive (a) which pro- dorsement. hibits the further negotiation of the bill or which expresses Restrictive that it is a mere authority to deal with the bill as thereby Ind. Act, s. 50. directed, and not a transfer of the ownership thereof (b); as for example, if a bill be indorsed “pay D. only” (e), or
pay D. for the account of X.” (d), or “pay D. or order
right to receive payment of the bill, and to sue any
transfer, all subsequent indorsees take the bill with
(6) “To be sure, he may give a mere naked authority to any person to receive it for him ; he may write upon it, 'Pray pay the money to my servant, for my use,' or use such expressions as necessarily import that he does not mean to indorse it over, but is only authorising a particular person to receive it for him and for his own use. In such case it would be clear that no valuable consideration had been paid him. But, at least, that intention must appear upon the face of the
indorsement,'” per Wilmot, J., in Edie v. The East India Company, 2 Burr. 1227. In Ancher v. The Bank of England, 2 Doug. 637, the following indorsement was held to restrain the negotiability of the bill, viz., “The within must be credited to Captain Morten Larren Dahl, value in account.” But an indorsement, “ Pay J. Spittal or order value in account with H. C. Drinkwater," has been held not to be a : restrictive indorsement, Buckley v. Jackson, L. R. 3 Ex. 135, following Stuart v. Murrow, 8 Moo. P. C. 267; see also sect. 32, note (k).
(c) The word "only” is obviously necessary to make the indorsement restrictive; see sect. 8, sub-s. 4, and the notes thereto. There has been no English decision giving an indorsement like this, except Snee v. Prescott, 1 Atk. 249, where it was, “ Pay the money to my use." See also note (d).
SS. 35, 36.
(d) This is the same as the indorsement in Treuttel v. Barandon, 8 Taunt. 100.
(e) There are one or two American cases showing indorsements like this; they will be found in Chalmers' Digest of Bills, 2nd ed., 110, 111. But there seems to be no English case exactly like it, except three, the indorsements in which are somewhat similar. For instance, in Snee v. Prescott, supra; again, “ Pay to A. or order for the use of B.," Evans v. Cramlington, 2 Show. 495; and “Pay B. or his order for my use," Sigourney v. Lloyd, 8 B. & C. 622.
(f) See notes (6) (c) (d) and (e)
(9) See the judgment of Lord Tenterden in Sigourney v. Lloyd, 8 B. & C. 622; 5 Bing. 525.
36.-(1.) Where a bill is negotiable in its origin it continues to be negotiable until it has been (a) restrictively indorsed (2), or (b) discharged by payment (y) or otherwise. (2.) Where an overdue bill is negotiated, it can only
be negotiated subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from whom he took
it had (a). (3.) A bill payable on demand is deemed to be overdue
within the meaning and for the purposes of this section, when it appears on the face of it to have been in circulation for an unreasonable length of time (w). What is an unreasonable length of
time for this purpose is a question of fact (v). (4.) Except where an indorsement bears date after the
maturity of the bill, every negotiation is primâ facie deemed to have been effected before the bill
was overdue (t). (5.) Where a bill which is not overdue has been
dishonoured, any person who takes it with notice of the dishonour takes it subject to any defect of title attaching thereto at the time of dishonour, but nothing in this sub-section shall affect the rights of a holder in due course (8).
Ind. Act, s. 59.
(z) See the judgment of Wilmot, J., in Edie v. The East India Company, 2 Burr. 1227 ; see also Plimley v. W’estley, 2 Bing. N. C. 249;
also sect. 8, sub-s. 4 and the notes; also notes (j) and (k) to S. 36. sect. 32, and notes (6) and (c) to sect. 35 of this Act.
Negotiation of (3) Payment here means payment at maturity, for it has been overdue or held that although a bill of exchange cannot be re-issued after it dishonoured
bill. has arrived at maturity and been once paid, yet if it is paid and afterwards indorsed before it becomes due, it is a valid security in the hands of a bonâ fide indorsee, Burbridge v. Manners, 3 Camp. 194. As Lord Ellenborough said in his judgment in that case,“ Payment means payment in due course and not by anticipation.” It has also been decided that a promissory note payable on demand cannot be re-issued after it has been paid and has got into the hands of the maker, although the indorsee have no notice that the note has ever been paid or that payment has ever been demanded, Bartrum v. Caddy 9 A. & E. 275.
(x) The “defects of title” are set out in sect. 29, sub-sect. 2. They used to be called “equities attaching to the bill”; as to the former decisions showing what they were, see Burrough v. Moss, 10 B. & C. 558; Holmes v. Kidd, 3 H. & N. 891; Oulds v. Harrison, 10 Ex. 572; Ex parte Swan, L. R. 6 Eq. 344; Story on Bills, ss. 187, 220. That the bill was originally an accommodation bill, i.e. given without consideration, is not a defect of title; though this was not always considered so. Thus it was held in Tinson v. Francis, 1 Camp. 19, that although the bonâ fide holder of a promissory note, made without consideration, himself gave a full consideration for it; yet if he took it after it was due from an indorser who gave none, he cannot maintain an action upon it against the maker. In Brown v. Davies, 3 T. R. 80, it was held that where a promissory note had been indorsed to the plaintiff after it became due who sued the maker upon it, the latter might show by evidence that the note was paid as between him and the original payee, from whom the plaintiff received it. See further Jones v. Broadhurst, 9 C. B. 173; Agra Bank v. Leighton, L. R. 2 Ex. 56. But this was afterwards departed from in Charles v. Marsden, 1 Taunt. 224, in which it was held that it is not of itself a defence to an action by the indorsee of a bill of exchange to plead that it was accepted for the accommodation of the drawer without consideration, and was indorsed over to the plaintiff after it became due, unless it had been shewn also that it was agreed not to be indorsed after due. And this ruling was approved and followed in several cases, Stein v. Yglesias, 1 C. M. & R. 565; Sturtevant v. Ford, 4 M. & G. 101; Carruthers v. West, 11 Q. B. 143; and Ex parte Swan, In re Overend, Gurney & Co., L. R. 6 Eq. 345, where the authorities are elaborately reviewed, and where it was held that the indorsee for value of a bill after dishonour has a right to recover against the acceptor, whether the bill was given for value or not, unless there be an equity attached to the bill itself amounting to a discharge of it. See also Greenwell v. Haydon, 39 Am. Rep. 237. See also
Negotiation of overdue or dishonoured bill.
sect. 10, note (w). Bat the rule of law as to bills and notes, that an indorsee taking them after maturity takes them upon the credit of and can stand in no better position than his indorser, does not apply to cheques, The London & County Bank 7 Groome, 8 Q. B. D. 288; 51 L. J. Q. B. D. 224; 46 L. T. X. S. 60; 30 W. R. 382. As to this see note to sect. 24,"overdue cheques." As to a prior defect of title, see sect. 29, sub-sect. 3. It has been decided that if the person who indorsed it to the plaintiff can himself sue upon it, any prior defect will not affect the plaintiff's rights; Chalmers v. Lanion, 1 Camp. 383. As regards the defect of title affecting a bill it must be such equities only as attach to the bill or note itself, or to use the language of Williams, J., “the equities must arise out of the original transaction;" Holmes v. Kidd, 3 H. & X. 893; or to use the language of Malins, V.-C., “the equities of the bill, not the equities of the parties.” Thus a set-off due from the payee to the maker is not such an equity, Burrough v. Moss, 10 B. & C. 558; Oulds v. Harrison, 10 Ex. 572; 24 L. J. Ex. 66 and Ex parte Swan, In re Overend, Gurney & Co., L. R. 6 Eq. 345. See further sect. 38 (2) of this Act and note (w) thereto. A bill, given instead of one indorsed by an agent in breach of trust when overdue, cannot be recovered on, Lee v. Zagury, 8 Taunt. 114. The purchase of overdue bills with another person's money is an equity, Ex parte Oriental Bank, L. R. 5 Ch. 358; 39 L. J. Ch. 588.
(w) This sub-section has been taken from the American law, vide Byles on Bills (5th American Edit.), p. 287. A promissory note payable on demand is sometimes considered as a continuing security, vide sect. 86 and the notes thereto.
(v) This subsection is not quite the same as what was laid down formerly by judicial decision, viz., that what is reasonable time is a mixed question of law and fact, for the determination of a jury with the assistance of a judge, where trial by jury exists, and for the determination of the Court, where they exercise the functions of a jury as well as those of judges, Mullick v. Radakissen, 9 Moo. P. C. C. 66; following Mellish v. Rawdon, 9 Bing. 423. As a question of fact it is one for the jury. What is a reasonable time will depend on the circumstances of each case. In Mellish v. Raudon, supra, following Muilman v. D'Eguino. 2 H. Bl. 565, and Fry v. Hill, 7 Taunt. 397, it was held that in order to arrive at a proper determination of the question of reasonable time, the situation and interests not of the drawer only, or of the holder only, but the situation and interests of both must be taken into consideration. As to what has or has not been considered reasonable time, see the above cases and Shute v. Robins, 3 C. & P. 80; 1 M. & M. 133.
(t) On the principle that every negotiation is presumed to have been effected before the bill was due, so the onus lies on the defendant to show that the bill was overdue when indorsed, Lewis v. Parker,