XII. by it. Where it does authorize further transfer, all subse- CHAPTER quent indorsees stand in the shoes of the first restricted indorsee (y). "Pay A bill was indorsed by the payee in this form :-A. B., or order, for the account of C. D. ;" A. B. pledged it with the defendant, who advanced money upon it to A. B. personally. Held, that the defendant had sufficient notice, from the indorsement, that A. B. had no authority to raise money on the bill for his own benefit, and, therefore, could not defend an action of trover for the bill, brought by C. D., his principal (z). : A., a merchant at Boston, in New England, remitted a bill to B., his agent in London, indorsing it in this form :"Pay B., or his order, for my use." B. discounted it with his bankers he afterwards failed, and the bankers, to whom he was indebted in more than the amount of the bill, received payment of it at maturity from the acceptors. Held, in an action for money had and received, that the bankers were liable to refund the money to A. (a). Fifthly, as to the liability of a person transferring by LIABILITY delivery only. Where the holder of a bill or note made or become payable to bearer negotiates it without indorsing it, he is called a transferor by delivery, and is not liable on the instrument. He does, however, warrant to his immediate transferee, being a holder for value, that the bill or note is what it purports to be, that he has a right to transfer it, and that at the time of transfer he is not aware of any fact which renders it valueless (b). Cramlington, Carthew, 5; 2 Vent. 307; Treuttel v. Barandon, 8 Taunt. 100; 1 Moore, 543; 19 R. R. 472. The words "value in account with the Oriental Bank," have been held not to be. Murrow v. Stuart, 8 Moore, P. C. 267; Buckley v. Jackson, L. R., 3 Ex. 135; Silkes' case, [1891] 1 Q. B. 435. (y) Code, s. 35 (2) and (3). (2) Treuttel v. Barandon, 8 Taunt. 100; 19 R. R. 472; 1 Moore, 543. (a) Sigourney v. Lloyd, 8 B. & C. 622; 32 R. R. 504; affirmed in the Exchequer Chamber, 5 Bing. 525; 3 Y. & J. 220. (b) Code, s. 58; Fenn v. Harrison, 3 T. R. 757; Gompertz v. Bartlett, 23 L. J., Ex. 68; Leeds Bank v. Walker, 11 Q. B. D. 84, a case of a bank note, of which the date had been altered, and the alteration, though visible to a practised eye, was not conspicuously apparent; sect. 64 was held not to apply as the bank clerk saw it at once. Martin v. Morgan, Gow, 123; 1 B. & B. 289; 3 Moore, 635; 21 R. R. 603; where the defendants, knowing a cheque to be post-dated, and therefore void under the then existing law, and OF PARTY No liability on the instrument. CHAPTER XII. Nor in And it is conceived to be the general rule of the English (c) law, and the fair result of the English authorities, that the transferor is not even liable to refund the consideration, if general on the the bill or note so transferred by delivery without indorseconsideration. ment turn out to be of no value, by reason of the failure of the other parties to it. For the taking to market of a bill or note payable to bearer without indorsing it, is primâ facie a sale of the bill. And there is no implied guarantee of the solvency of the maker, or of any other party (d). Where the bill is con sidered as sold, If a bill or note, made or become payable to bearer, be delivered without indorsement, not in payment of a preexisting debt, but by way of exchange for goods, for other bills or notes, or for money transferred to the party delivering the bill at the same time, such a transaction has been repeatedly held to be a sale of the bill by the party transferring it, and a purchase of the instrument, with all risks, by the transferee. "It is extremely clear," says Lord Kenyon, "that if the holder of a bill send it to market without indorsing his name upon it, neither morality nor the laws of this country will compel him to refund the money for which he sold it, if he did not know at the time that it was not a good bill" (e). So, where A. gave a bankrupt, before his bankruptcy, cash for a bill, but refused to that the drawers were insolvent, (c) In America also it has been error in 13 Wend. 107 ; Harley v. Thornton, 2 Hill, 509; Fogg v. Sawyer, 9 New Hamp. 365; see Story on Promissory Notes, p. 125; and Byles on Bills, 6th American edition, 366. It is conceived that the confusion has arisen from neglecting to distinguish between the abstract questions of law and questions of fact in the particular case. (d) See the observations of Littledale, J., in Camidge v. Allenby, 6 B. & C. 373; 30 R. R. 358, and Rogers v. Langford, 1 C. & M. 637, 642. See also the observations of Mr. Baron Bramwell, delivering the judgment of the Court of Exchequer, in Guar dians of the Lichfield Union v. Greene, 26 L. J. 140; 1 H. & N. 884; Smith v. Mercer, L. R., 3 Ex. 51. (e) Fenn v. Harrison, 3 T. R. 757; Evans v. Whyle, 5 Bing. 485; 3 M. & P. 130; Smith v. Mercer, L. R., 3 Ex. 51. XII. allow the bankrupt to indorse it, thinking it better without CHAPTER his name, and afterwards, on dishonour of the bill, proved the amount under the commission, the Lord Chancellor ordered the debt to be expunged, observing, that this was a sale of the bill (f). So, if a party discounts bills with a banker, and receives in part of the discount other bills, but not indorsed by the banker, which bills turn out to be bad, the banker is not liable. "Having taken them without indorsement," says Lord Kenyon, "he has taken the risk on himself. The bankers were the holders of the bills, and by not indorsing them, have refused to pledge their credit to their validity; and the transferee must be taken to have received them on their own credit only" (g). So, where, in the morning A. sold B. a quantity of corn; and, at three o'clock in the afternoon of the same day, B. delivered to A. in payment certain promissory notes of the bank of C., which had then stopped payment, but which circumstance was not at the time known to either party, Bayley, J., said, "If the notes had been given to A. at the time when the corn was sold, he could have had no remedy upon them against B. A. might have insisted on payment in money, but, if he consented to receive the notes as money, they would have been taken by him at his peril" (h). Such seems the general rule governing the transfer by delivery, not only of ordinary bills of exchange and promissory notes, but also of bank notes (i). Nor is there any hardship in such a rule, for the remedy against the transferor may always be preserved by indorsement, or by special contract. The rule, however, is not without exceptions. If a banker's note be given on account of a pre-existing Unless the debt, the note is not to be considered as sold (k). But if bill or note be the banker fail and if the note be duly presented, and due given for a (f) Ex parte Shuttleworth, 3 Ves. 368; 4 R. R. 20. (g) Fydell v. Clark, 1 Esp. 447; Bank of England v. Newman, 1 Ld. Raym. 442; 12 Mod. 241; Com. 57; Emly v. Lye, 15 East, 7; 13 R. R. 347. But in Ex parte Blackburne, 10 Ves. 204; 7 R. R. 389, the Chancellor seemed to think, that, if goods are purchased and paid for at the time by bills not indorsed, the vendee is liable, if the bills turn out to be bad. See Jones v. Ryde, 5 Taunt. 487; 1 Marsh. 157; 15 R. R. 561; Owenson v. Morse, 7 T. R. 64. (h) Camidge_v. Allenby, 6 637. (Though they be country bank notes, issued by the payer himself, when the question arises in favour of sureties. Guardians of Lichfield Union v. Greene, 26 L. J., Exch. 140; 1 H. & N. 884. (k) See as to this exception, however, the language of Lord Campbell, in Timmins v. Gibbins, 18 Q. B. 722. pre-existing debt. XII. Other exceptions to the general rule. notice be given of the dishonour, the remedy for the antecedent debt revives. "I agree," says Holt, C. J., “the difference taken by my brother Darnell, that taking a note for goods sold is a payment, because it was a part of the original contract, but paper is no payment where there is a precedent debt. For when such a note is given in payment, it is always taken to be given under this condition, to be payment, if the money be paid thereon in convenient time"(). The principle of the exception may be this. A creditor is entitled to cash. If, instead of cash, he consent to take notes, not being a legal tender, that is a favour to the debtor, and it will thence be inferred, in the absence of evidence to the contrary, that the notes were not to be payment, if, without the fault of the creditor, they turn out to be of no value. And it is conceived, that as an express contract would make the transferor iiable without indorsement, so there are other circumstances from which a jury may infer that the intention, and implied contract of the parties was, that the notes were not to be payment, if dishonoured (m). If, for example, a man ask another to change a bank note for him as a favour, and the banker fail, it is conceived that a jury would be justified in inferring an implied contract to refund the change, if the note were duly presented and dishonoured, and due notice given (n); and it has been held that if a customer pay to his account with his banker notes of a bank which has failed, and the banker is guilty of no laches, the loss falls on the customer (0). And if a banker cash a cheque on another bank which has failed, he may recover back his money (p). In all cases where the (1) Ward v. Erans, 2 Ld. Raym. 928; Camidge v. Allenby, 6 B. & C. 373; 30 R. R. 358. So held also by Pratt, C. J., in Moore v. Warren, 1 Stra. 415, and by King, C. J., in Holme v. Barry, 1 Stra. 415. In the case of a pre-existing debt paid by notes, if the notes be not paid and the debtor is held liable, there is no doubt as to the original debt for which he is so liable, and there is no need to invent or imply any contract to make out that debt. But where goods are exchanged against money, if the payer is held liable, it is difficult to imply a contract for goods sold and delivered, to be paid for on request. (m) See Van Wart v. Woolley, 3 B. & C. 446; and post, Chapter XXIII. There is no warranty that the stamp on a foreign bill has been duly cancelled. Pooley v. Browne, 11 C. B., N. S. 566. (n) See Rogers v. Langford, 1 C. & M. 637; Turner v. Stones, 1 D. & L. 122; Ex parte 1sbester, 1 Rose, 23; Woodland v. Fear, 7 E. & B. 522. (0) Timmins v. Gibbins, 18 Q. B. 722. (P) Woodland V. Fear, 26 L. J., Q. B. 202; 7 E. & B. 519. receiver of the notes seeks to return them he must do so within a reasonable time (7). The sellers of bills on the London market do not, primâ facie, trust the foreign principal of the English buyer (r). CHAPTER To an agent of a foreign principal. A transferor, by delivery, though he does not impliedly Warranty of warrant the solvency of the parties to a promissory note or genuineness. bill of exchange, does warrant to his immediate transferee for value that the bill or note is what it purports to be, that is to say, not forged or fictitious, that he has a good title thereto and to transfer it, and that he is not aware of any fact that renders it valueless, as for instance, that it is void, or avoided by alteration, or has been dishonoured, or that the parties to it are insolvent (s). And if the bill or note does not in this respect fully answer the warranty (though some signatures be genuine), yet the consideration entirely fails, and the money given for the bill may be recovered back (f), provided it be claimed within a reasonable time (u). A transferor by delivery only warrants to his immediate No liability transferee, and, therefore, cannot be liable in any case to to subsequent a subsequent transferee, either on the instrument or the transferee. consideration. And therefore it has been held that such (q) See Rogers v. Langford, 1 C. & M. 642. (r) Poirier v. Morris, 2 E. & B. 103. (*) Code, s. 58. Jones v. Ryde, 5 Taunt. 487; 1 Marsh. 157; 15 R. R. 561: Young v. Cole, 3 Bing. N. C. 724; Bruce v. Bruce, 1 Marsh. 165; 5 Taunt. 495; 15 R. R. 566, n.; Fuller v. Smith, Ryan & M. 49; Gurney v. Womersley, 4 E. & B. 133. So it has been repeatedly held in America; Ellis v. Wild, 6 Mass. 321; Young v. Adams, ibid. 182; Markle v. Hatfield, 2 John. R. 455; Eagle Bank of Newhaven v. Smith, 5 Con. R. 71; Strange v. Ellison, 2 Bayley, 385; though the instrument be sold. Byles on Bills, 6th American edition, p. 255. Mr. Justice Story lays it down that there is also a warranty of the title of the transferor. Treatise on Promissory Notes, p. 123. The words used in the Code are "that he has a right to (1) In re Barrington, 2 Sch. & (u) Pooley v. Browne, 31 L. J., C. P. 135; 11 C. B., N. S. 566. |