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SS. 29, 30.
or his indorser) by fraud, and that there was no consideration for the indorsement to the plaintiff, was held bad; Masters v. Ibberson, 8 C. B. 100; “A bona fide holder," said Lord Campbell, C J., in Lloyd v. Howard,
supra, who takes before the bill is due, for value and without notice, may recover without further proof of a prior endorsement than by proving the handwriting."
Holder in due course,
30.-(1). Every party whose signature appears on a Presumption bill is primâ facie, deemed to have become a party thereto of value and for value (a).
Ind. Act, s. 118, (2). Every holder of a bill is, primâ facie, deemed to sub-s. (a).
Ind. Act, s. 118, be a holder in due course (6), but if in an action on a
sub-s. (9). bill it is admitted or proved (c) that the acceptance, issue, or subsequent negotiation of the bill is affected with frand (d), duress (e), or force and fear (f), 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 (9).
(a) This follows from the consideration of a bill or note being presumed, see the judgment of Parke, B., in Foster v. Dawber, 6 Ex. 853.
(6) So held before this Act, Mills v. Barber, 1 M. & W. 424; Lloyd v. Howard, 15 Q. B. 995; Fitch v. Jones, 5 E. & B. 238.
(c) Thus it has been long established that as soon as the bill appears by evidence to be affected by fraud or illegality the onus is shifted and the plaintiff is put to the proof of the consideration, as was stated by Lord Blackburn in Jones v. Gordon, 2 Ap. Cas. 627 : “When it is shewn that a bill of exchange was a fraudulent one, or an illegal one, or a stolen one, in any of those cases it being known that the person who holds it was a party to that fraud, to that illegality, or to that theft; and therefore could not sue upon it himself, the presumption is so strong that he would part with it to somebody who could sue for him that that shifts the burden;" see also Bailey v. Bidwell, 13 M. & W. 73; Hall v. Featherstone, 3 H. & N. 284 ; Smith v. Braine, 16 Q. B. 246; Mather v. Lord Maidstone, 1 C. B. N. S. 273; Fitch v. Jones, 5 E. & B. 238. It will be noticed that this section provides four cases only, in which the burden of proof is shifted, viz., fraud, duress, force or fear, and illegality. It is therefore submitted that in none of the other cases or events mentioned in sub-sect. (2) of the last preceding (the 29th) section, will the onus be shifted on the plaintiff as in this section is provided. So that it is submitted in such cases the defendant must first prove the absence of consideration not only for his acceptance but also for the indorsement of it to the plaintiff; that is to say, not
SS. 30, 31.
Presumption of value and good faith.
only that his acceptance was obtained in breach of faith but also that the plaintiff had notice of such breach of faith when the bill was indorsed to him, and then only the plaintiff will be called upon to give any evidence.
(d) As to fraud see note (v) to the 29th section of this Act. As to cases in which the burden of proof has been shifted on the plaintiff on proof of the bill being affected with fraud, see Hall v. Featherstone, 3 H. & N. 284; Smith v. Braine, 16 Q. B. 244; Mather v. Lord Maidstone, 1 C. B. N. S. 273.
(e) As to duress, see note (t) to the 29th section of this Act.
(9) As to illegality see note (9) to the 29th section of this Act and as to cases in which the burden of proof has been shifted on the plaintiff on proof of the bill being affected with illegality, see Hall v. Featherstone, 3 H. & N. 284; Smith v. Braine, 16 Q. B. 244; Bailey v. Bidwell, 13 M. & W. 73; Fitch v. Jones, 5 E. & B. 238. In Jones v. Gordon, L. R. 2 Ap. Cas. at p. 628, Lord Blackburn thought it doubtful whether the onus lies on the plaintiff to shew that he gave value bonâ fide ; this, however, is now settled by this sub-section. But a plea by the defendant that he accepted without consideration will not cast the onus on the plaintiff; Batley v. Catterall, 1 Moo. and Rob. 379.
NEGOTIATION OF BILLS.
Ind. Act, s. 47.
Ind. Act, s. 48.
31.—(1). A bill is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the bill (a).
(2). A bill payable to bearer is negotiated by delivery (b).
(3). A bill payable to order is negotiated by the indorsement of the holder completed by delivery (c).
(4). Where the holder of a bill payable to his order transfers it for value without indorsing it, the transfer gives the transferee such title as the transferor had in the bill (d), and the transferee in addition acquires the right to have the indorsement of the transferor (e).
(5). Where any person is under obligation to indorse a bill in a representative capacity, he may indorse the bill in such terms as to negative personal liability (f).
Ind. Act, s. 29.
(a) That is, transferred by delivery or indorsement; as to the modes of indorsement see sub-sects. (2) and (3) of this section.
SS. 31, 32.
Negotiation of bills.
(6) See notes (h) and (k) to sect. 2 and note (m) to sect. 3 of this Act. If indorsed, the indorser is liable on his indorsement; Keene v. Beard, 8 C. B. N. S. 372.
(c) See notes (h) and (k) to sect. 2, and note (m) to sect. 3 of this Act. Every indorser of a bill is a new drawer; and it is part of the inherent property of the original instrument that an indorsement operates as against the indorser in the nature of a new drawing of the bill by him ; per Parke, B., in Penny v. Innes, 1 C. M. & R. 441. If a person indorse a bill which is not negotiable, he is liable on his indorsement as a new drawer; Gwinnell v. Herbert, 5 A. & E. 436; Burmester v. Hogarth, 11 M. & W. 97.
(d) In Whistler v. Forster, 14 C. B. N. S. 248, it was held that one who receives a bill of exchange unindorsed (though for value), acquires no better title under it than the person from whom he receives it himself has. In a recent case in America, it has been decided that a cheque payable to order may be transferred by the payee by delivery without indorsement, and that the transferee of such cheque only acquires the right which the payee had in it at the time of the transfer, Freund v. The Importers' National Bank, 76 N. Y. Rep. 352.
(e) A note being handed over for valuable consideration, the indorsement is a form which the party is entitled to call for; per Sir Thomas Plumer, M. R., in Watkins v. Maule, 2 Jac. & Walker, 237; following Smith v. Pickering, Peake's N. P. R. 69; Story on Bills, s. 201. Even after bankruptcy ; Ex parte Mowbray, 1 Jac. & W. 428.
(f) A person who signs a bill in a representative capacity, or as agent for his principal, is personally liable, even though he be known to be an agent; Leadbitter v. Farrow, 5 M. & S. 345; or his representative character be described in the instrument; Liverpool Bank v. Walker, 4 De G. & J. 24; so also if he sign in an official character, e.g., as director; see Gray v. Raper, L. R. 1 C. P. 694; Courtauld v. Saunders, 16 L. T. N. S. 562; Dutton v. Marsh, L. R. 6 Q. B. 361. But see Alexander v. Sizer, L. R. 4 Ex. 102, where the note was signed by the maker as secretary of a railway company, and the Lord Chief Baron distinguished it on that ground from the above cases, and held that those words excluded personal liability. This section would seem to be a sequel to that decision. Therefore a trustee, executor, overseer, &c., who is compelled to sign a bill in his fiduciary or official capacity, should under this sub-section so sign it as to negative personal liability.
32.—An indorsement in order to operate as a negotiation Requisites of a must comply with the following conditions, namely:(1.) It must be written on the bill itself and be signed Ind. Act, s. 15.
by the indorser (a). The simple signature (b) of
Requisites of a
Ind. Act, s. 56.
the indorser on the bill without additional words is sufficient.
An indorsement written on an allonge (c), or on a "copy" of a bill issued or negotiated in a country where “copies” (d) are recognised, is
deemed to be written on the bill itself. (2.) It must be an indorsement of the entire bill. A
partial indorsement, that is to say, an indorsement which purports to transfer to the indorsee a part only of the amount payable (e), or which purports to transfer the bill to two or more indorsees severally, does not operate as a negotiation of the
bill. (3.) Where a bill is payable to the order of two or more
payees or indorsees who are not partners, all must indorse, unless the one indorsing has authority to
indorse for the others (). (4.) Where, in a bill payable to order, the payee or
indorsee is wrongly designated, or his name is misspelt, he may indorse the bill as therein described,
adding, if he think fit, his proper signature (g). (5.) Where there are two or more indorsements on a
bill, each indorsement is deemed to have been made in the order in which it appears on the bill,
until the contrary is proved. (6.) An indorsement may be made in blauk (h) or
special (j). It may also contain terms making it restrictive (k).
Ind. Act, s. 118, sub-s. (e).
Ind. Act, s. 15.
(a) No particular form or language or expression is necessary for an indorsement; Story on Bills, s. 204; a blank indorsement has generally been made by the signature of the indorser generally on the back of the bill, see Gibson v. Minet, 1 H. Bl. 569; Lecann v. Kirkman, 6 Jur. N. S. 17; although it has not been necessary to make the indorsement on the back of the bill, for indorsements on the face of it have been allowed; see Ex parte Yates, 27 L. J. Bankr. 9. The effect of such an indorsement is to make the instrument thereafter payable to bearer, sect. 34, subs. 1; Peacock v. Rhodes, 2 Doug. 633. The allegation of the indorsement of a bill in an action by the indorsee against the acceptor does not necessarily mean such an indorsement as will give a right of action against the indorser, but only such an indorsement as gives the plaintiff a title to the bill; Smith v. Johnson, S. 32. 3 H. & N. 222.
Requisites of a (6) So held hitherto, Pinkney v. Hall, 1 Ld. Raym. 175. The
valid indorseindorsement may be made by a mark, George v. Surrey, 1 M. & M. 516. ment.
(c) An allonge is a paper annexed to the bill, which is necessary, when there are a series of indorsements; see Story on Bills, s. 204 ; Byles on Bills (13th Edition), 152.
(d) Copies of bills are not much used in this country, Byles on Bills, 13th ed., 395; nor in America; 1 Parsons on Bills, 60.
(e) By sect 56 of the Indian Act, where a bill has been partly paid, a note to that effect may be indorsed on it, and it may be negotiated for the balance. If the indorsee pay only a part of the amount of the bill, he is still entitled to recover the whole amount of the bill, Johnson v. Kennion, 2 Wils. 262; Reid v. Furnival, 5 C. & P. 499; 1 Cr. & M. 538. If the holder receives payment in whole or in part from the drawer and recovers from the acceptor, he must pay over to the drawer the amount which he received from him; Solomon v. Davis, 1 Cab. & El. N. P. C. 85. But if the indorsee has been a party to a fraud, he can recover only the amount actually paid by him, Jones v. Gordon, L. R. 2 Ap. Cas. 627 ; In re Gomersall, L. R. 1 Ch. D. 137.
(f) As to partners, see sec. 24, note (6).
(9) Thus where a bill was by the defendant indorsed thus : “Pay Messrs. Terney and Farley or order," and they indorsed it in blank by writing thereon, “ Thomas Terney and Farelly,” the indorsement was held to be good and the defendant liable, Leonard v. Wilson, 2 Cr. & M. 589.
(h) As to blank and special indorsements, see Byles on Bills (13th Edition), 151 ; note (a) hereto; and sect. 34 (1) of this Act and the notes thereto which defines a special indorsement. A blank indorsement may be converted into a special indorsement, Clerk v. Pigot, 1 Salk. 126; 12 Mod. 193; Hirschfield v. Smith, L. R. 1 C. P. 340; but when an instrument is once indorsed in blank, a special indorsement made afterwards will not restrain its negotiability, Smith v. Clarke, 1 Esp. 180; Walker v. M'Donald, 2 Ex. 527; Sigourney v. Lloyd, 8 B. & C. 622; Story on Bills, s. 207.
(j) As to a special indorsement, see Sect. 34 (2) of this Act and the notes thereto. Even before this Act (sect. 8, sub-s. 4) an indorsement need not have had the words “
“ It is well settled, that if a note be made payable to J. S. or order, and he indorse the note to S., without adding “or order,” S. may convey a good title to any other person by indorsement, Gay v. Lander, 6 C. B. 362. See also the last preceding note (h) hereto as to the conversion of a blank into a special indorsement.
(k) “The payee or indorsee, having the property in the bill, can limit the payment to whom he pleases "; Story on Bills, s. 210. For