33

Upon the refusal of the original drawee to pay the bill and its protest, it may or may not be paid by the acceptor for honor. If it is paid by him, it seems clear that he can pay only for the honor of the party for whose honor he accepted. But unless some party or parties are specified in the acceptance supra protest, the courts construe the acceptance as made for the honor of the drawer. Payments of this kind do not, like a single payment by the original drawee, operate as a satisfaction of the bill, but themselves transfer the holder's rights to the party paying. For example, if the payment is made for the honor of a particular indorser, the party paying may sue such indorser and all parties prior to him to whom he could have resorted.35 If he pays for the honor of the bill generally, it is the same as payment for honor of the last indorser, and he may recover against all parties to the bill.36 But if the bill is not paid by the acceptor supra protest, then the rule for recovery against him laid down by Lord Tenterden 38 is generally applied, and the reasons for it accepted as the true ones. "Whatever is requisite to enable a person

34

37

33 Chit. Bills, 387.

32 Chalm. Bills & N. art. 242, note. 34 Smith v. Sawyer, 55 Me. 141, 92 Am. Dec. 576; Vandewall v. Tyrrell, 1 Moody & M. 87. As to payment supra protest, see post, p. 402.

35 Mertens v. Winnington, 1 Esp. 112. In this case it was claimed by the defense that, where a bill is taken up for the honor of any of the parties whose names are on it, only such person is liable. It was held that, in such case, the party so taking up the bill may be considered as an indorsee paying full value, and consequently entitled to all remedies which an indorsee is entitled to, and to sue all parties to the bill.

36 Fairley v. Roch, Lutw. 891. In Ex parte Lambert it was held that where a bill, accepted, being dishonored, was taken up for the honor of the drawer by A., the latter had a clear right as against the drawer. He had a right to stand in the place of the drawer; but he could not make a title stronger than that of the drawer, thus ousting the assignees of the bankrupt drawees of the defense which they would have against him. 13 Ves. 179; Ex parte Wyld, 30 Law J. Bankr. 10.

37 "When a bill of exchange is dishonored by the acceptor supra protest it must (probably) be again protested in order to charge the other parties liable thereon." Chalm. Bills & N. art. 187.

38 Williams v. Germaine, 7 Barn. & C. 468.

who has accepted a bill for honor of another to call upon that person to repay him, and to enable him to recover over against such person, may also be reasonably held necessary to enable another party to recover against such an acceptor for honor. For, if you could recover against an acceptor for honor by proof of less than will enable him to recover against the party for whom he accepts, there would be an inconsistency. For it might be said with some reason that, if the acceptor for honor chose to pay without requiring all the proof from the holder which would be necessary for him to recover upon, the payment would be made in his own wrong, and he would not be entitled to recover over. It seems, therefore, that the same rule as to proof which prevails in the case of an acceptor for honor in suing the party for whose honor he accepts, must also be observed when the holder of a bill sues the person so accepting." This means, if we may be pardoned in amplifying the words of so great a judge, that, in prosecuting the acceptor supra protest, the steps are each to be demonstrated which fix the rights and liabilities of the parties. In the first place it is necessary to show the right of the acceptor supra protest to so accept. This is shown by pleading and proving if such be the case that the bill was first presented to the drawee for acceptance, but that its acceptance was refused and that thereupon, the bill being protested, the acceptance supra protest was made. The contract of the holder at this juncture is construed to be that he and subsequent parties have a right to collect the bill of the acceptor supra protest, provided the bill is not paid when due by the drawee the legal situation of the prior parties remaining unchanged until the liabilities and rights under the instrument are finally fixed at the time of the presentation of the instrument for payment. At this time the holder who has obtained the acceptance supra protest, or subsequent holders, for the reasons we have given, must present the instrument for payment to the drawee, and if payment is refused again protest it and then present it to the acceptor supra protest for payment. At this juncture the rights of the parties are that the holder who obtained the acceptance

NORT.B.& N.(4TH ED.)-14

supra protest and all parties subsequent to him have the right to enforce payment against the acceptor supra protest upon pleading and proving the foregoing facts of the first and second presentment, protest, and notice. It is probably the doctrine that they may also enforce the bill against parties prior to the time of the acceptance supra protest upon the foregoing fact of the protest for non-acceptance. The acceptor supra protest, if he pays the bill, is then not only subrogated to the rights of parties to the bill whom he pays, but also may recover both from the parties for whose honor he has accepted, and from all parties antecedent to them, all damages he may have incurred by reason of his acceptance. But to do so he must plead and prove all the facts upon which his liability rests. There seems to be no reason from the equities of the case why the acceptor supra protest should not be subject to the estoppels which are implied in the acceptance of an ordinary acceptor. And although there is conflicting authority it has been held that they are the same.* He intends to assume by his act the liability of an acceptor, and his liability would probably be held by the courts to be the same were questions of this character often coming before them for decision. But the rule thus laid down has been but little discussed, and this enunciation of them, therefore, is rather speculative than positive.

41

40

39 Baring v. Clark, 19 Pick. (Mass.) 220; Gazzam v. Armstrong's Ex'r, 3 Dana (Ky.) 554; Wood v. Pugh, 7 Ohio, 156, pt. 2.

40 Schofield v. Bayard, 3 Wend. (N. Y.) 491; Ex parte Wackerbarth, 5 Ves. 574; Hoare v. Cazenove, 16 East, 391; Byles, Bills, pp. 267, 271.

41 Goddard v. Merchants' Bank, 4 N. Y. 147; Salt Springs Bank v. Syracuse Savings Inst., 62 Barb. (N. Y.) 101. See, contra, Wilkinson v. Johnson, 3 Barn. & C. 428. But see Phillips v. Thurn, L. R. 1 C. P. 463, 18 C. B. 694, holding that it admits the drawer's signature alone.

DRAWER AND INDORSER

73a. The drawer, by drawing the instrument, admits the existence of the payee and his then capacity to indorse.12

74. Every drawer promises the payee and subsequent holders, and every indorser promises his indorsee and subsequent holders, that if the bill or note is presented for payment to the drawee, acceptor, or maker, and payment demanded and refused, and the necessary proceedings on dishonor be taken, he will indemnify the holder for loss.48

75. The drawer of a bill of exchange promises the payee and subsequent holders, and the indorsers before acceptance promise subsequent holders, that if on due presentment the bill be not accepted, and necessary proceedings on dishonor be taken, he will indemnify them for loss.**

76. The liability of the drawer and of each indorser is several from that of all the other parties to the instrument.

In the chapter relating to "Indorsement" the student was introduced to two of the ideas embodied in the principal text. The first was that an indorsement was a contract separate and apart from that evidenced by the terms set forth on the face of the paper. The second was that in addition to these terms so set forth it was a contract in which the law itself implied others equally important. The terms last spoken of consist of certain conditions precedent to the right of its enforcement as a contract of indemnity, which were presentment for acceptance to the drawee or for payment either to the acceptor of the bill or

45

42 N. I. L. § 61; B. E. A. § 55 (1) (b). 48 Compare N. I. L. § 61. 44 These propositions are adopted from Ames, Bills & N. p. 817. Compare N. I. L. §§ 61, 66.

45 See, also, Castrique v. Buttigieg, 10 Moore, P. C. Cas. 94.

the maker of the note, and in case of its dishonor then that due notice of that fact should be given the indorser. In the chapter relating to "Acceptance," and in a foregoing section of this chapter, the student was further introduced to the idea that the liability of the drawer is a shifting one. Before acceptance he is the party primarily liable; after acceptance he is the party secondarily liable, his position being that substantially of an indorser, and subject to the rules we have just stated. In a later section of this work we shall show that presentment for acceptance by a holder is not vital to the life of his various contracts with the other parties to the bill. It is only for his better security. And although the holder of a bill, by its nonacceptance, may acquire a right of action against the drawer and indorsers prior to himself, it is not absolutely necessary for him to do so. These facts being explained, it leaves little to be said about the principal text. In fact, the principal text is set out mainly that the student may fix its statements in mind by way of contrast to the contract of the maker and acceptor.

46

47

There are, however, two points to be noticed. They are that the liability of the drawer and indorser is in most respects identical, and that their liability is several. "There is no distinguishing the case of an indorser from that of the drawer," said Lord Ellenborough, "it having been long ago decided that every indorser is in the nature of a new drawer, every indorsement as a new bill, and that the indorser stands to his indorsee in the law merchant the same as the drawer." With both drawer and indorser a distinct bill is drawn. With the drawer, the contract is between himself and the payee; with the indorser, between himself and his indorsee, the indorser standing in the place. of the drawer, the remedy of the indorsee being first against his immediate indorser and then against the original drawer as the assignee and standing in the place of

46 Walker v. Stetson, 19 Ohio St. 400, 2 Am. Rep. 405, Johns. Cas. Bills & N. 89; Cashman v. Harrison, 90 Cal. 297, 27 Pac. 283, Johns. Cas. Bills & N. 104.

47 Ballingalls v. Gloster, 3 East, 481.