SECTION VII-CONTRACT OF SECONDARY PARTIES. CONTRACT OF THE DRAWER. § 63. Whitehead v. Walker (1842), 9 M. & W. 505. Assumpsit by the endorsee against the endorser of a foreign bill of exchange. The declaration stated, that heretofore, to wit, on the 8th of August, 1834, and before the bankruptcy of Benbow, in parts beyond the seas, certain persons made their bill of exchange in writing directed to Messrs. Grayhurst and Company, and thereby requested them to pay to the defendant, ninety days after sight, 7211. os. 3d. value received: that the defendant endorsed the said bill to W. Swainson, who endorsed it to Willis & Co., who endorsed it to Benbow; and that the said Grayhurst & Co. had sight of the said bill, but had not paid the same. To this declaration there were various pleas, the 8th of which was as follows: 8th. That before the said bill became due, or was presented for payment, and after the endorsement to Willis & Co., and before the endorsement to Benbow, the bill was presented to Grayhurst & Co. for their acceptance, but that they refused to accept the same, and the bill was thereupon protested for nonacceptance; and that the defendant had not due notice of the non-acceptance of the bill, or of its having been so protested; and that Benbow, as well as Willis & Co., at the time of the said endorsement to Benbow, had notice that the bill had been so presented for acceptance, and refused and protested for non-accept ance. Verification To the 8th plea, the plaintiff replied de injuria. The judgment of the court was pronounced by PARKE, B. The question raised by the pleadings in this case is, whether, if the endorsee of a foreign bill of exchange has presented it for acceptance, and (acceptance having been refused) has duly presented it and given notice to the drawer, (for the defendant, the endorser, is in the same situation), and so has. acquired a right of action against him by reason of the non-acceptance, a new right of action afterwards accrues to him on the subsequent presentment of the bill for payment, and non-payment according to its tenor. The plaintiffs, indeed, are not the endorsees who presented the bill, but they are averred to have taken the bill with notice of the fact of presentment and dishonour, and therefore stand in the same situation, and are not to be considered as having a title as innocent endorsees. (Dunn v. O'Keefe, 5 M. & Selw. 282). The practical importance of the point in the present case arises from the delay of the holder in bringing his action. The non-acceptance and the protest thereon occurred in September, 1834. The bill, according to its tenor, would not be payable till the subsequent month of December, and this action was commenced in November, 1840; so that if a right of action accrued in December, 1834, the Statute of Limitations cannot be successfully pleaded; whereas, if there was no right of action accruing subsequently to the protest for non-acceptance in September, 1834, the statute is a bar. On the part of the plaintiff it was contended, that although he undoubtedly might have brought an action in the month of September, 1834, founded on the non-acceptance, yet it was optional with him to do so or not; that he might, if he thought fit, waive that action, and proceed merely on the ground of the subsequent non-payment in December, 1834. For the drawer of a bill, it was contended, enters into a double engagement with the payee, and through him with the successive holders of the bill, namely, first, that the drawee shall accept the bill when regularly presented to him for acceptance; and secondly, that he shall pay the bill when regularly presented to him for payment. And if this be a correct representation of the engagement entered into by the drawer, the conclusion seems unavoidable, that whatever right of action the holder might have acquired by the non-acceptance, he certainly is not precluded from suing in respect of the default of payment. But we are of opinion that the contract entered into by the drawer is not such as is contended for by the plaintiff, and that he in fact enters into one contract only; namely in the case of a bill made payable after sight, that the drawee shall, on the bill being presented to him in a reasonable time from the date, accept the same, and having so accepted it, shall pay it when duly presented for payment according to its tenor; and in the case of a bill payable after date, that the drawee shall accept it if it is presented to him before the time of payment, and having so accepted it, shall pay it when it is in due course presented for payment; or if it is not presented for acceptance at all, then that he shall pay it when duly presented for payment. The counsel for the plaintiff, in support of his view of the law, relied mainly on some passages which he cited from the work of Marius on Bills of Exchange, some of which are adopted in Comyns' Digest, tit. "Merchant," (F. 8.) & (F. 9). But with respect to those passages, we must remark that the work of Marius, though undoubtedly one of authority in its way, is scarcely to be looked at as a legal treatise on the subject of bills of exchange. It is, as its title imports, a work giving good practical advice from a practical man to persons receiving and negotiating bills of exchange. The author was a public notary, who lived in the middle of the seventeenth century, when questions of mercantile law were much less perfectly understood than they are now. In some of his notions he was clearly mistaken; as for instance, he considers the holder of a bill of exchange to be in all cases bound to present it for acceptance; and it seems very doubtful whether he supposed the effect of non-acceptance to be anything more than of rendering it incumbent on the drawer to find better security for the satisfaction of the holder. It is not, however, absolutely necessary to decide that Marius is wrong, for he nowhere lays down the proposition now insisted on, namely, that after a protest for non-acceptance, a second right of action accrues to the holder on the non-payment. He speaks, indeed, of the holder retaining the bill after non-acceptance, and applying for payment, and suing on default of payment; and this, as a matter of prudence, may probably be the wisest course which a party can pursue. In spite of the non-acceptance, the drawer still may pay the bill when at maturity, and the holder having by protest and notice on nonacceptance put himself in a condition to sue the drawer, may very reasonably, as a matter of prudence, retain the bill, and endeavour to obtain payment when the bill is at maturity, and not involve himself in litigation until there has been a failure of payment as well as of acceptance. It by no means, however, follows, because this is spoken of as being, what probably it still is, the usual course, that any second right of action arises on the second default. For let us consider what is the nature of the right which the holder acquires on the default of the drawee to accept. It is clear (whatever might formerly have been considered on the subject) that by the non-acceptance, followed by the protest and notice, the holder acquires an immediate right of action against the drawer-a right of action, be it observed, not in respect of any special damage from the non-acceptance, but a right of action on the bill, i. e., a right of action to recover the full amount of the bill. The effect of the refusal to accept is, (according to the language of the Court of King's Bench in Macarty v. Barrow, as quoted by C. J. Wilmot, in 3 Wils. 16), that the drawee says to the holder, "I will not pay your bill; you must go back to the drawer, and he must pay you." The holder thus acquires by the non-acceptance the most complete right of action against the drawer which the nature of the case admits, and no subsequent act or omission of the drawee can give him a more extensive right against the drawer than he has already acquired. But further, on failure of acceptance, the holder is bound to give immediate notice to the drawer, and if he omits to do so, he forfeits all right of action against him, not only in respect of the default of acceptance, but also in respect of the subsequent nonpayment. Now it is very difficult to reconcile this doctrine with the notion that a new right of action arises from the non-payment; for if that were so, it could hardly be that such new right of action could be destroyed by the previous neglect to give notice of a matter unconnected with that out of which the second right of action is supposed to arise. The argument of the plaintiffs must be, that a second right of action on the bill arises from the default of payment in those cases only in which the holder has duly given notice of the non-acceptance, i. e., in those cases only in which the holder, by the hypothesis, must have already acquired a right of action precisely similar to and co-extensive with that which is thus supposed to vest in him by the default of payment. This seems to us to be a proposition so much fraught with inconsistency, and so entirely destitute of principle and authority, that we cannot hold it to be law. It may be added, that if the law were as is contended for the plaintiffs, this inconvenience would follow, that the holder of a bill might at the same time be prosecuting two actions on the same bill against the same party, for the recovery of precisely the same sum. On these grounds we are of opinion that there must be judgment for the defendant on the demurrers to his 7th and 9th pleas. With regard to the 8th plea, we think the replication de injuriâ is good, and judgment on that plea will therefore be for the plaintiffs. Judgment accordingly. ADMISSIONS OF THE DRAWER. Kohn et al. v. Watkins (1882), 26 Kan. 691. Error from Douglas District Court. § 63. Action brought by Solomon H. Kohn, Morris Kohn, and M. W. Levy, partners as Kohn Brothers & Company, against Watkins, upon certain drafts, copies of which are as follows: No. 6639. Office of J. B. Watkins & Co., Pay to the order of Geo. W. Cobb, three hundred and fifty- five dollars. $355. [Indorsements:] No. 6652. To Merchants' Bank, Lawrence, Kas. GEO. W. COBB. R. G. MCLAIN. Office of J. B. Watkins & Co., LAWRENCE, KAS., April 21, 1880. Pay to the order of Michael A. Becker, three hundred and fifty-five dollars. $355. [Indorsements:] No. 6656. J. B. WATKINS & Co. To Merchants' Bank, Lawrence, Kas. Pay to the order of R. G. McLain. R. G. MCLAIN. Office of J. B. Watkins & Co., LAWRENCE, Kas., April 21, 1880. Pay to the order of Henry Greer, four hundred and fortyfour dollars. $444. [Indorsements:] J. B. WATKINS & Co. HENRY GREER. R. G. MCLAIN. Plaintiffs alleged in their petition that they are the bona fide holders and owners of said drafts; that they paid a valuable consideration therefor, and that they are wholly unpaid. The further facts sufficiently appear from the opinion. Sluss & Hatton, for plaintiffs in error. R. J. Borgholthaus, W. J. Patterson, and John Hutchings, for defendant in error. The opinion of the court was delivered by HORTON, C. J. Upon the record of this case two different questions are presented for our decision. The first is, whether a draft or bill of exchange payable to a real person known at the time to exist, and present to the mind of the drawer when he made it, as the party to whose order it is to be paid, must bear the genuine indorsement of such payee in order that a bona fide indorsee may recover thereon, when such bill has been drawn without the knowledge or consent of the person named therein as payee through the false representations of a party forging the |