Subsequent decisions : form of instru ment, how far material. to the contract; but this is a rule which must yield when it appears from the nature or terms of the contract that it must have been intended to be assignable free from and unaffected by such equities." Where assignees of a chose in action are enabled by statute to sue at law, similar consequences may be produced by way of estoppel (7); which really comes to the same thing, the doctrine of estoppel being a more technical and definite expression of the same principle. The principle thus laid down has been followed out in several later decisions on the effect of transferable debentures issued by companies. The question whether the holder of such a debenture takes it free from equities is to be determined by the original intention of the parties. The form of the instrument is of course material, but the general tenor is to be looked to rather than the words denoting to whom payment will be made; these cannot be relied on as a sole or conclusive test. Making a debenture payable to the holder or bearer does not necessarily mean more than that the issuing company will not require the holder who presents the instrument for payment to prove his title, especially if the object of the debenture is on the face of it to secure a specific debt (m). But an antecedent agreement to give debentures in such a form is evidence that they were meant to be assignable free from equities (n); and debentures payable to bearer without naming any one as payee in the first instance are prima facie so assignable (o); so again if the document resembles a negotiable instrument rather than a common money bond or debenture in its general form (p). Even when there is nothing on the face of the instrument to show the special intention of the parties, the (1) Webb v. Herne Bay Commissioners, L. R. 5 Q. B. 642. (m) Financial Corporation's claim, 3 Ch. 355, 360. (n) Ex parte New Zealand Banking Corporation, 3 Ch. 154. (0) Ex parte Colborne & Straw bridge, 11 Eq. 478, which cannot now be taken as warranting anything beyond the statement in the text, cp. Crouch v. Crédit Foncier, L. R. 8 Q. B. 374, 385. (p) Ex parte City Bank, 3 Ch. 758. issuer cannot set up equities against the assignee if the instrument was issued for the purpose of raising money on it (g). The general circumstances attending the original contract-e.g. the issue of a number of debentures to a creditor instead of giving a single bond or covenant for the whole amount due-may likewise be important. Moreover, apart from any contract with the original creditor, the issuing company may be estopped from setting up equities against assignees by subsequent recognition of their title (»). The rule extends to an order for the delivery of goods as well as to debentures or other documents of title to a debt payable in money (8). voidable. On principle this doctrine seems inapplicable in a case Qu. when the origiwhere the original contract is not merely subject to a cross nal conclaim but voidable. For the agreement that the contract tract is shall be assignable free from equities is itself part of the contract, and should thus have no greater validity than the rest. A collateral contract for a distinct consideration might be another matter: but the notion of making it a term of the contract itself that one shall not exercise any right of rescinding it that may afterwards be discovered seems to involve the same kind of fallacy as the sovereign power in a state assuming to make its own acts irrevocable. Nor does it make any difference, so long as we adhere to the general rules of contract, that the stipulation is in favour, not of the original creditor, but only of his assignees (t). However, the point has not been distinctly raised in any of the decided cases. (g) Dixon v. Swansea Vale Ry. Co. L. R. 4 Q. B. 44. Graham v. Johnson, 8 Eq. 36, seems not consistent with this. (r) Higgs v. Northern Assam Tea Co. L. R. 4 Ex. 387; Ex parte Universal Life Assurance Co. 10 Eq. 458 (on same facts); Ex parte Chorley, 11 Eq. 157; cp. Re Bahia & San Francisco Ry. Co. L. R. 3 Q. B. 584. Qu. can Athenæum Life In Graham v. John Assurance Soc. v. Pooley, 3 De G. & (s) Merchant Banking Co. of Lon- (t) In principle it is the same as the case put in the Digest (50. 17, de reg. iuris, 23) "non valere si convenerit, ne dolus praestetur," Limits to what can Crouch v. son (u), where the contract was originally voidable (if not altogether void: the plaintiff had executed a bond under the impression that he was accepting or indorsing a bill of exchange) (x), an assignee of the bond as well as the obligee was restrained from enforcing the bond: but the decision was rested on the somewhat unsatisfactory ground that, although the instrument was given for the purpose of money being raised upon it, there was no intention expressed on the face of it that it should be assignable free from equities. However, if the contract were not enforceable as between the original parties only by reason of their being in pari delicto, as not having complied with statutory requirements or the like, an assignee for value without notice of the original defect will, at all events, have a good title by estoppel (y). The transferable debentures, the effect of which came in be done by question in the cases we have just reviewed, were no doubt agreement intended to be equivalent to negotiable instruments, and of parties: there have been dicta in the Court of Chancery favouring contract cannot be the view that they were such in fact (z). But a later made negotiable decision of the Court of Queen's Bench (1873) shows that this intention cannot be fully carried out. The debtor may contract in such a way as to alter or abandon his own rights as against assignees of the contract; but he cannot alter or abandon the rights of subsequent assignees, and therefore cannot enable an intermediate transferor having no title to give a good title to his transferee (a). Crédit This marks the extreme limit of the extension which can be given to the power of transferring rights under a contract consistently with the general rules of law. (u) 8 Eq. 36. (x) The evidence was conflicting, but the Court took this view of the facts: see at p. 43. (y) See Webb v. Herne Bay Com missioners, L. R. 5 Q. B. 642. (2) See especially Ex parte City Bank, 3 Ch. 758. (a) Crouch v. Crédit Foncier of England, L. R. 8 Q. B. 374. able in ties of assignee of We are now in a position to see the nature of the diffi- Negoticulties which make the mere assignment of a contract struments. inadequate for the requirements of commerce, and to meet Difficulwhich negotiable instruments have been introduced. The assignee of a contract is under two inconveniences (b). ordinary The first is that he may be met with any defence which would have been good against his assignor. This, we have seen, may to a considerable extent if not altogether be obviated by the agreement of the original contracting parties. The second is that he must prove his own title and that of the intermediate assignees, if any; and for this purpose he must inquire into the title of his immediate assignor. This can be in part, but only in part, provided against by agreement of the parties. It is quite competent for them to stipulate that as between themselves. payment to the holder of a particular document shall be a good discharge; but such a stipulation will neither affect the rights of intermediate assignees nor enable the holder to compel payment without proving his title. Parties cannot set up a market overt for contractual rights. The complete solution of the problem, for which the ordinary law of contract is inadequate, is attained by the law merchant (c) in the following manner : (i.) The absolute benefit of the contract is attached to the ownership of the document which according to ordinary rules would be only evidence of the contract. (ii.) The proof of ownership is then facilitated by prescribing a mode of transfer which makes the instrument itself an authentic record of the successive transfers: this is the case with instruments transferable by indorsement. (iii.) Finally this proof is dispensed with by presuming the bona fide possessor of the instrument to be the true owner: this is the case with instruments transferable by delivery, which are negotiable in the fullest sense of the word. Cp. Savigny, Obl. § 62. by statute: 3 & 4 Anne c. 8 (in Rev. contract. Remedy by special lef law mer chant. Negotiable in The result is that the contract is completely embodied (d) struments. for all practical purposes in the instrument which is the Peculiar symbol of the contract; and both the right under the conextensive tract and the property in the instrument are treated in a rights of and bona fide holder. manner quite at variance with the general principles of contract and ownership. We give references to a few passages where specimens will be found of the positive terms in which the privileges of bona fide holders of negotiable instruments have been repeatedly asserted by the highest judicial authority (e). The narrower doctrine which for a time prevailed, requiring a certain measure of caution on the part of the holder, is now completely exploded. Nothing short of actual knowledge of the facts affecting his transferor's title will defeat the holder's right (ƒ). Moreover, there is no discrepance between common law and equity in this matter. Equity has interfered in certain cases of forgery and fraud to restrain negotiation; but at law no title to sue on the instrument can be made through a forgery (g); and "the cases of fraud where a bill has been ordered to be given up are confined to those where the possession, but for the fraud, would be that of the plaintiff in equity" (h). The rights of bona fide holders for value are as fully protected in equity as at common law, and against such a holder equity will not interfere (i). (d) "Verkörperung der Obligation," Savigny. (e) See per Byles, J. Swan v. N. B. Australasian Co. in Ex. Ch. 2 H. & C. 184, 31 L. J. Ex. 425; per Lord Campbell, Brandao v. Barnett, 12 Cl. & F. 105; opinion of Supreme Court, U.S. delivered by Story, J. Swift v. Tyson, 16 Peters 1, 15. The following references as to the nature of the contracts undertaken by the parties to a bill of exchange may be found useful. Acceptor and drawer: Jones v. Broadhurst, 9 C. B. 173, 181; Lebel v. Tucker, L. R. 3 Q. B. 77, 84. Indorser ib. 83, Denton v. Peters, L. R. 5 Q. B. 475, 477. (f) Goodman v. Harvey, 4 A. & E. 876, Raphael v. Bank of England, 17 C. B. 161, 175, 25 L. J. C. P. 33. (g) The bona fide holder of an instrument with a forged indorsement may be exposed to considerable hardship. See Bobbett v. Pinkett, 1 Ex. D. 368. (h) Jones v. Lane, 3 Y. & C. Ex. in Eq. 281, 293. (i) Thiedemann v. Goldschmidt, 1 D. F. J. 4. |