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(b) That he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it. (2) In particular the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith (m), or under such circumstances as amount to a fraud.

(3) A holder (whether for value or not) who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.

S. 30.—(1) Every party whose signature appears on a bill is Presumption primâ facie deemed to have become a party thereto for value.

of value and good faith.

(2) Every holder of a bill is primâ facie deemed to be a holder in due course; but if in an action on a bill it is admitted or proved that the acceptance, issue, or subsequent negotiation of the bill is affected with fraud, duress, or force and fear, or illegality, the burden of proof is shifted, unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill (»).

[Sects. 31-38 relate to Negotiations of Bills; sects. 39-52 relate to General Duties of the Holder.]

Liabilities of Parties.

hands of

S. 53. (1) A bill, of itself, does not operate as an assignment Funds in of funds in the hands of the drawee available for the payment drawee. thereof (0), and the drawee of a bill who does not accept as required by this Act is not liable on the instrument. This sub-section shall not extend to Scotland.

(m) But it has been held that in an action on a bill evidence of a contemporaneous oral agreement to renew if the drawer should be unable to meet it at maturity is inadmissible on the ground that parol evidence cannot be admitted to contradict a written document (as to which see p. 105, ante); New London Credit Syndicate v. Neale, [1898] 2 Q. B. 487, C. A.

(n) When fraud is proved, the burden of proof is on the holder to prove both that value has been given and that it has been given in good faith without notice of the fraud. Tatam v. Haslar (1889), 23 Q. B. D. 345.

CH. XVI. 8. 2.

Bills of Exchange.

(0) See Hopkinson v. Forster (1874), L. R., 19 Eq. 74, in which it was held

that the payee of a cheque had no remedy
against a banker for dishonouring it;
Schrader v. Central Bank of London
(1876), 34 L. T. 735; In the matter of
Brown (1843), 2 Story, U. S. Reps. 519.

In regard to cheques, the very im-
portant result follows that, although the
drawer may mean to transfer his whole
balance to a payee, yet if he overdraw
by however slight an amount the banker
may dishonour the cheque; e.g., if A.
owes B. 951. and gives him a cheque for
that amount in payment, yet if A.'s
balance at the bank be only 947., the
banker is not only not A.'s agent to
satisfy B.'s claim as far as A.'s funds
will go, but is justified in disregarding
B.'s claim altogether.

CH. XVI. s. 2.
Bills of
Exchange
(Act of 1882).

Liability of acceptor.

Liability of drawer or indorser.

Stranger signing bill liable as indorser.

(2) In Scotland, where the drawee of a bill has in his hands. funds available for the payment thereof, the bill operates as an assignment of the sum for which it is drawn in favour of the holder, from the time when the bill is presented to the drawee. S. 54. The acceptor of a bill, by accepting it,—

(1) Engages that he will pay it according to the tenor of his acceptance:

(2) Is precluded from denying to a holder in due course :
(a) The existence of the drawer, the genuineness of his signa-
ture, and his capacity and authority to draw the bill:
(b) In the case of a bill payable to drawer's order, the then capa-
city of the drawer to indorse, but not the genuineness or
validity of his indorsement:

(c) In the case of a bill payable to the order of a third person, the existence of the payee and his then capacity to indorse, but not the genuineness or validity of his indorsement.

S. 55.-(1) The drawer of a bill by drawing it—

(a) Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or any indorser who is compelled to pay it, provided that the requisite proceedings on dishonour be duly taken :

(b) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse. (2) The indorser of a bill by indorsing it—

(a) Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or a subsequent indorser who is compelled to pay it, provided that the requisite proceedings on dishonour be duly taken;

(b) Is precluded from denying to a holder in due course the genuineness and regularity in all respects of the drawer's signature and all previous indorsements;

(c) Is precluded from denying to his immediate or a subsequent indorsee that the bill was at the time of his indorsement

a valid and subsisting bill, and that he had then a good title thereto.

S. 56. Where a person signs a bill otherwise than as drawer or acceptor, he thereby incurs the liabilities of an indorser to a holder in due course (p).

(p) The Act has not altered the law as laid down by the House of Lords in Steele v. McKinlay (1880), 5 App. Cas.

754; Jenkins v. Coomber (1898), 78 L. T.

752.

S. 57. Where a bill is dishonoured, the measure of damages, which shall be deemed to be liquidated damages, shall be as follows::

Measure of

(1) The holder may recover from any party liable on the bill, damages and the drawer who has been compelled to pay the bill may against parties to recover from the acceptor, and an indorser who has been com- dishonoured pelled to pay the bill may recover from the acceptor or from the drawer, or from a prior indorser—

bill.

(a) The amount of the bill :

(b) Interest thereon from the time of presentment for payment he bill is payable on demand, and from the maturity of the bill in any other case:

(c) The expenses of noting, or, when protest is necessary, and the protest has been extended, the expenses of protest.

(2) In the case of a bill which has been dishonoured abroad, in lieu of the above damages, the holder may recover from the drawer or an indorser, and the drawer or an indorser who has been compelled to pay the bill may recover from any party liable to him, the amount of the re-exchange with interest thereon until the time of payment.

(3) Where by this Act interest may be recovered as damages, such interest may, if justice require it, be withheld wholly or in part, and where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as interest proper.

(2) A transferor by delivery is not liable on the instrument.

(3) A transferor by delivery who negotiates a bill thereby warrants to his immediate transferee being a holder for value that the bill 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.

S. 58.-(1) Where the holder of a bill payable to bearer nego- Transferor tiates it by delivery without indorsing it, he is called a "transferor and transby delivery by delivery."

feree.

CH. XVI. s. 2.
Bills of
Exchange.

(2) Subject to the provisions hereinafter contained, when a bill is paid by the drawer or an indorser it is not discharged; but

Discharge of Bill.

S. 59.-(1) A bill is discharged by payment in due course Payment in by or on behalf of the drawee or acceptor.

due course.

""

"Payment in due course means payment made at or after the maturity of the bill to the holder thereof in good faith and without notice that his title to the bill is defective.

CH. XVI. s. 2.
Bills of
Exchange
(Act of 1882).

(3) Where an accommodation bill is paid in due course by the party accommodated the bill is discharged.

Banker paying demand

S. 60. When a bill payable to order on demand is drawn on

draft whereon banker, and the banker on whom it is drawn pays the bill in good

faith and in the ordinary course of business, it is not incumbent on the banker to show that the indorsement of the payee or any subsequent indorsement was made by or under the authority of the person whose indorsement it purports to be, and the banker is deemed to have paid the bill in due course, although such indorsement has been forged or made without authority (q).

S. 61. When the acceptor of a bill is or becomes the holder of it at or after its maturity, in his own right, the bill is discharged.

S. 62.-(1) When the holder of a bill at or after its maturity absolutely and unconditionally renounces his rights against the acceptor the bill is discharged.

The renunciation must be in writing (7), unless the bill is delivered up to the acceptor (8).

(2) The liabilities of any party to a bill may in like manner be renounced by the holder before, at, or after its maturity; but nothing in this section shall affect the rights of a holder in due course without notice of the renunciation.

indorsement is forged.

Acceptor the holder at

maturity.

Express waiver.

(a) Where a bill payable to, or to the order of, a third party is paid by the drawer, the drawer may enforce payment thereof against the acceptor, but may not re-issue the bill. (b) Where a bill is paid by an indorser, or where a bill payable to drawer's order is paid by the drawer, the party paying it is remitted to his former rights as regards the acceptor or antecedent parties, and he may, if he thinks fit, strike out his own and subsequent indorsements, and again negotiate the bill.

Cancellation.

S. 63. (1) Where a bill is intentionally cancelled by the holder or his agent, and the cancellation is apparent thereon, the bill is discharged.

(2) In like manner any party liable on a bill may be discharged by the intentional cancellation of his signature by the holder or his agent. In such case any indorser who would have had a right of recourse against the party whose signature is cancelled, is also discharged.

(9) See Bank of England v. Vagliano, [1891] A. C. 107, and p. 432 (h), ante ; Gordon v. London, City and Midland Bank; Gordon v. Capital and Counties Bank, [1902] 1 K. B. 242, C. A., and p. 444 (y), post.

The banker's liability ordinarily is to his customer, not to the payce. See Marzetti v. Williams (1830), 1 B. & Ad. 415.

(2) This alters the common law, by which the renunciation was good without writing, and even without consideration. Foster v. Dawber (1851), 6 Ex. 839.

(s) Or his executors or administrator; see Edwards v. Walters, [1896] 2 Ch. 157, in which the delivery of a promissory note to the devisee of the maker was held not to operate as a discharge.

(3) A cancellation made unintentionally, or under a mistake, or without the authority of the holder, is inoperative; but where a bill or any signature thereon appears to have been cancelled the burden of proof lies on the party who alleges that the cancellation was made unintentionally, or under a mistake, or without authority.

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of bill.

S. 64. (1) Where a bill or acceptance is materially altered Alteration without the assent of all parties liable on the bill, the bill is avoided except as against a party who has himself made, authorised, or assented to the alteration, and subsequent indorsers (t). Provided that,

Where a bill has been materially altered, but the alteration is not apparent, and the bill is in the hands of a holder in due course, such holder may avail himself of the bill as if it had not been altered, and may enforce payment. of it according to its original tenor.

(2) In particular the following alterations are material, namely, any alteration of the date, the sum payable, the time of payment, the place of payment, and, where a bill has been accepted generally, the addition of a place of payment without the acceptor's assent.

(2) A bill may be accepted for honour for part only of the sum for which it is drawn.

for honour

S. 65.-(1) Where a bill of exchange has been protested for Acceptance dishonour by non-acceptance, or protested for better security, suprà protest. and is not over-due, any person, not being a party already liable thereon, may, with the consent of the holder, intervene and accept the bill suprà protest, for the honour of any party liable thereon, or for the honour of the person for whose account the bill is drawn.

(3) An acceptance for honour suprà protest in order to be valid

must

(a) be written on the bill, and indicate that it is an acceptance for honour:

(b) be signed by the acceptor for honour.

(4) Where an acceptance for honour does not expressly state for whose honour it is made, it is deemed to be an acceptance for the honour of the drawer.

(t) The acceptor of a bill owes no duty to the drawer, or to any one taking the bill, other than to pay the bill on presentment, so that if the bill be accepted as presented, the acceptor is not liable, even if negligent, to a holder for value of a bill fraudulently altered after acceptance: Scholfield v. Earl of Londes

CH. XVI. s. 2.
Bills of
Exchange.
Mode of can-
cellation.

borough, [1896] A. C. 514, aff. [1895] 1
Q. B. 536, C. A., diss. Lopes, J. In
this case a bill for 500l. was altered by
the drawer into a bill for 3,5007.; the
stamp was large enough to cover the
larger amount, and there were spaces in
which the necessary words and figures
were written after acceptance.

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