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the indorser. In this respect the case of the promissory note when once indorsed and the bill of exchange are parallel. In the case of the promissory note before indorsement the contract is only a promise to pay, but after indorsement it becomes an order by the indorser upon the maker of the note to pay the debt of the maker transferred to indorser, and again by him as indorser transferred to his indorsee.

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The difference between bills and notes is therefore in this respect but of words, the indorser of a promissory note being almost the same as the drawer of the bill of exchange. It is partly this reason and party the business one that the drawer and indorser may protect themselves, the drawer by withdrawing his effects from the hands of the acceptor, the indorser by taking steps against parties prior to him, that are the foundations of the rule that both drawer and indorser are entitled to the prior presentment and protest and notice. It is also the reason of the es

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48 Heylyn v. Adamson, 2 Burrows, 669. In this case it was held "that in actions upon inland bills of exchange, by an indorsee against an indorser, the plaintiff must prove a demand of, or due diligence to get the money from, the drawee (or acceptor), but need not prove any demand of the drawer; and that, in actions upon promissory notes by an indorsee against the indorser, the plaintiff must prove a demand of, or due diligence to get the money from, the maker of the note."

49 Blesard v. Hirst, 5 Burrows, 2670. This was a case where an inland bill made payable to one was by him indorsed to a third party who tendered it for acceptance and was refused, and who then kept it for some time without giving notice of the refusal. It was held that the third party should have given notice, and that by failing to do so he took the risk upon himself, as the indorser of the bill was imposed upon. The person who neglected to give notice should suffer for it. In the case of Collott v. Haigh, a bill drawn by defendant upon J. D. and accepted by him for defendants' accommodation, was indorsed to plaintiffs. Upon maturity, time was given to J. D. in consideration of his giving security to plaintiffs, which security proved not to be available. It was held that such granting of time to the acceptor did not discharge the defendant, and he could not defend himself on that ground, or for want of notice, as the bill was for his accommodation. 3 Camp. 281; Gale v. Walsh, 5 Term R. 239; Aniba v. Yeomans, 39 Mich. 171; Newberry v. Trowbridge, 13 Mich. 263.

toppels discussed in the next succeeding sections applying to drawer and indorser alike. And it may be stated generally, and the student must fix it in his mind, that the doctrines of the contract of the drawer are the doctrines of the contract of the indorser, because they are, in their legal effect, one.

The second point to be fixed in the mind is the character of the contract of the drawer and of each indorser as several from that of every other party to the contract. It naturally follows that, so long as the promises of the drawer and indorser are separate and independent, they must always be separate in the liability incurred under them. The indorsee enters into a contract with his immediate party from whom he got the bill and who indorsed it to him. Every prior indorser on the bill, by virtue of his indorsement, makes a promise to each new indorsee. If A., B., C., and D. are indorsers on a negotiable instrument, À. makes separate promises to do certain things with B., C., and D.; B. with C. and D.; and so on. Each makes a separate promise with every individual who comes after him on the instrument. The liability of each indorser is in legal phrase several from that of all other parties to the instrument. Under the old common-law rule this meant that the holder might sue the parties to the instrument one at a time, or he might sue separate indorsers in separate actions at the same time. But if any one of these indorsers thus sued should pay the instrument the claim of the holder against each upon it was satisfied.50 It is now generally settled by statute throughout the Union that all the parties to the instrument may be jointly sued upon their several liability, or one or more may be sued at separate times.51

50 Chit. Bills, 538, 539; Daniel, Neg. Inst. § 1203.

51 As to the American statutes, see Rand. Com. Paper, § 1669.

UNDERTAKING OF DRAWER

77. The drawer of a bill before acceptance undertakes with the payee and subsequent holders:

(a) That there is a drawee, and that he is capable of accepting.

(b) That he will accept.

When the drawer issues a bill to the world, he undertakes two things. One is that the situation, nature, or character of the drawee is such that the bill can be accepted; and the other is that the drawee, upon presentment, will accept the bill. The legal interpretation of the words on the face of the bill indicating the place of presentment to the drawee, as, "To John Smith, at Baring Bros.," is that the drawer contracts that the drawee may be found at that place, and the bill presented to him there.52 Thus, in case of a bill 53 drawn on Paris, where the French convention had passed a decree prohibiting the payment of bills drawn in any country at war with France, the court so applied the rule that ultimately the loss should not fall upon the payee or indorser, but upon the drawer who issued the bill, who, it is to be inferred, was deemed to warrant that the situation of affairs would be such that the bill could be presented for acceptance. If this turned out not to be the case, then the drawer must bear the loss. This loss to be borne by him consists of all loss incurred, such as reexchange, notarial expenses, and other damage necessa

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52 Edw. Neg. Inst. §§ 530-534; Wing v. Terry, 5 Hill (N. Y.) 160. 53 Mellish v. Simeon, 2 H. Bl. 378.

54 Auriol v. Thomas, 2 Term R. 52. In this case a bill of exchange, 2,800 star pagodas, payable to defendant or order, and directed to G. M., Madras, was indorsed to plaintiffs, who discounted it at the rate of exchange, 6s. 6d. per pagoda. On sending the bill to Madras it was returned protested for non-acceptance and non-payment. The plaintiffs recovered 10s. per pagoda and £5 per cent. after end of 30 days' notice to defendant. Such recovery was held not usurious, as it was proved to be the usual custom in case of such bills, as such recovery included charges of exchange and other incidental expenses as well as legal interest. In Gantt v. Mackenzie, a bill of exchange was pre

rily incidental to the failure to obtain the acceptance, because the party taking the bill was obliged to make these expenditures to collect the bill, and if the drawer's contract was broken, and such collection failed, the drawer must reimburse such party.55 The holder of a bill, whom it reaches, in the course of its circulation, may present the bill to the drawee; and, if he refuses to accept, although the bill is not due, the holder may at once turn and hold the drawer, indorsers, and all parties upon the bill prior to himself. The reason of this is to guaranty the circulation of bills, by preventing the drawer from withdrawing funds from the hands of the drawee before the bill is presented, and also to assure the holder that, if anything is wrong between the drawer and drawee, and the drawee refuses to accept, he may at once turn for reimbursement to the parties through whom the bill has been circulated, and who treated it as the equivalent of cash, and were paid money, each in turn, for it.56 The further effect of this rule will be considered in the chapter on "Presentment.”

The courts speak of this legal relation of the drawer as a stipulation or part of the contract rather than as an estoppel. This is because the reason of the rule is somewhat different from that which is the basis of the estoppels of the acceptor. It is argued that the main purpose of the contract between the drawer, on the one hand, and the payee and person to whom he transfers his rights, on the other, is to remit money. For this purpose the payee and

sented for acceptance and refused, April 17, 1809, and was presented for payment on the 19th of June of the same year. It was decided that the holder was entitled to £10 per cent. as damages, and interest was to be allowed from the time of presentation for payment. 3 Camp. 51. In Mellish v. Simeon, it was held that where the holder has been guilty of no default, the drawer is answerable for the amount of the bill, and also for the re-exchange which is a consequence of the bill not being paid. 2 H. Bl. 378.

55 Byles, Bills, 402; Daniel, Neg. Inst. § 1445; Weldon v. Buck, 4 Johns. (N. Y.) 144.

56 Ballingalls v. Gloster, 3 East, 481; Mason v. (N. Y.) 202; Weldon v. Buck, 4 Johns.

Franklin, 3 Johns.

(N. Y.) 144; Miller v. Hackley,

5 Johns. (N. Y.) 375, 4 Am. Dec. 372; Bank of Rochester v. Gray, 2 Hill (N. Y.) 227.

subsequent holders pay valuable consideration. To effect this purpose, the drawer, on his part, agrees that the money shall be paid at the time, place, and by the person nominated in the bill. Of the very essence of this agreement, therefore, is the fact that the drawee, who may be a stranger to the payee or subsequent holder, should be found in the place where he is described to be.57 Otherwise, it would be the duty of the holder to search the world over for the person to pay him in turn the money he had paid the drawer. It is also of its essential nature that the drawee shall have funds in his hand to warrant his accepting, or that he accepts from some other consideration, immaterial to the payee, perhaps, but good as between the drawer and drawee. In other words, as between the drawer and payee, the drawee, though he is designated as the person to make the payment, is a mere agent of the drawer; and the latter, therefore, since he undertakes for his agent's acts, "undertakes that the acceptance be made at all events."

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WARRANTIES OF INDORSER

78. Every indorser who indorses without qualification warrants to his indorsee and to all subsequent hold

ers:

(a) That the bill or note is, in every respect and as to all prior parties, genuine, and neither forged, fictitious, nor altered.

(b) That the bill or note is a valid and subsisting obligation, and that the contract obligations of all prior parties are valid.

57 De Wolf v. Murray, 2 Sandf. (N. Y.) 166; Hine v. Allely, 4 Barn. & Adol. 624. In this case an accepted bill was presented at the place of payment specified in the instrument, but the house was closed. It was objected that for this reason there had been no presentment, but it was held that the presentment as described was good. Buxton v. Jones, 1 Man. & G. 83; Pierce v. Struthers, 27 Pa. 249. As to presentment for acceptance, however, see infra, Chapter IX.

58 Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367, 38 Am. Rep. 518.

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