S. 54. circumstances to be regarded even after the maturity of the bill as entitled to the rights of a cautioner for the acceptor.1 S. 55. Liability of drawer or indorser. b See s. 29. c See ss. 22 and 25. a Capacity to draw involves capacity to indorse, but authority to draw does not involve authority to indorse.2 If a bill is indorsed by a partner or per procuration, the acceptance of the bill does not imply an admission of the authority of the partner or agent to indorse. The acceptor may, apart from this section, be barred by his actings from denying the genuineness and validity of an indorsement. As to bills. drawn by, or payable to, fictitious persons, see s. 7 (3), and as to blank acceptances, see s. 20. 4 55. (1.) The drawer of a bill by drawing it— C (b.) Is precluded from denying to a holder in due (2.) The indorser of a bill by indorsing it— 1 Per Lord Blackburn and Lord с 3 Garland v. Jacomb, 1873, L.R. 8 Ex. 216; Robinson v. Yarrow, 1817, 7 Taunt. 455. 4 See s. 24, n.d. the requisite proceedings on dishonour be S. 55. duly taken; a (b.) Is precluded from denying to a holder in due e course the genuineness and regularity in all respects of the drawer's signature and all previous indorsements; h (c.) Is precluded from denying to his immediate or a The holder undertakes that the bill shall be accepted according to its tenor as drawn.1 b See ss. 43 and 47. c See s. 57. d See ss. 48-51. e See s. 29. f That is, his capacity at the date of drawing. See s. 22. That is, apparently, according to its tenor when indorsed.2 ʼn He is precluded from denying the capacity and authority of prior parties,3 the genuineness of their signatures, and the formal validity of their indorsements. iSee for example s. 64, n.d 56. Where a person signs a bill otherwise than as S. 56. drawer or acceptor, he thereby incurs the liabilities of an indorser to a holder in due course.a 2 66 Save in the case of acceptances for honour or per procuration, no one can become a party to a bill qua acceptor who is not a proper drawee, or, in other words, an 1 See s. 17; as to modifications by the drawee, ss. 19 and 44; as to alterations by other parties, s. 64. 2 See s. 64. 3 See ss. 22 and 25. Stranger signing bill liable as indorser. S. 56. addressee." 1 If a person who is neither drawer, drawee, nor holder of a bill puts his signature upon it, he makes himself liable in accordance with this section to holders in due course to whom the bill is thereafter indorsed.2 But even though he signs before the bill has left the drawer's hands, he does not become liable to the drawer.3 A bill was drawn by A. upon B., and after having been accepted by B. was signed by C., and returned to the drawer. A.'s representatives sued C.'s representatives on the ground that C. was liable on the bill as an acceptor, or otherwise as cautioner for B. It was held that C. could not be liable as an acceptor, because no one could accept a bill except the drawee, or an acceptor for honour; and that he could not be liable as an indorser, because the law merchant only recognised indorsement as creating liability to parties subsequent to the indorser.4 The Act does not provide that the person who becomes liable under this section shall have the rights of an indorser.5 He is apparently entitled, unlike the granter of a separate cautionary obligation, to receive notice of dishonour, for this is a condition of an indorser's liability.6 The obligation created by an indorsement under this section resembles that known in some countries as an aval, in respect that it is in effect a cautionary obligation for some party or parties to a bill. But an aval may be granted in favour of any party to a bill, and under it the granter incurs the same liability as the party for whom it is granted. The obligation under this section, though in effect a guarantee, is not affected by the provisions as to the form of guarantees contained in the Mercantile Law Amendment (Scotland) Act.8 1 Walker's Trs. v. M'Kinlay, infra, per Lord Watson. 2 See Macdonald v. Union Bank, 1864, 2 M. 963. 3 Walker's Trs. v. M'Kinlay, 1879, 6 R. 1132, affd. 1880, 7 R. (H.L.) 85, 5 A.C. 754; Jenkins and Sons v. Coomber [1898], 2 Q.B. 168. 4 Walker's Trs. v. M'Kinlay, cit.; cf. cases of re-indorsement, s. 37. n. 5 See Byles, 182. 6 S. 55 (1 a); see as to cautioners, p. 242, infra. 7 Walker's Trs. v. M'Kinlay, cit., per Lord Blackburn; Pothier, Contrat de Change, p. 1. cap. 4, s. 122. 8 19 and 20 Vict. c. 60, s. 6; Walker's Trs. v. M'Kinlay, cit.; Macdonald v. Union Bank, cit. 57. Where a bill is dishonoured,a the measure of S. 57. damages, which shall be deemed to be liquidated Measure of damages, shall be as follows: damages against parties to dis (1.) The holder may recover from any party liable honoured bill. on the bill, and the drawer who has been compelled to pay the bill may recover from the acceptor, and an indorser who has been compelled to pay the bill may recover from the acceptor or from the drawer, or from a prior indorser ____ (a.) The amount of the billa: (b.) Interest thereon from the time of pre sentment for payment if the bill is (c.) The expenses of noting, or, when pro- (2.) In the case of a bill which has been dis- S. 57. damages may or may not be given at the same rate as interest proper. a See ss. 43 and 47. This provision alters the English rule by which expenses of noting could be recovered only as special damages.1 In Scotland interest and expenses were recoverable under statute.2 • Sub-section (1) applies only to bills dishonoured at home, sub-section (2) applying expressly to those dishonoured abroad. The holder of a bill dishonoured abroad has not the option of proceeding under sub-section (1).3 Though the bill in question has been dishonoured at home, sub-section (1) regulates only the direct rights of holders in this country against parties contracting in this country. "This sub-section does not appear to be addressed to the case of a bill the drawer of which is liable to damages for re-exchange."4 If a bill is drawn abroad upon a person in this country and dishonoured, then (1) the liability of the foreign drawer to the holder in this country is regulated not by this section, but by the law of the foreign country; and (2) the acceptor is liable at common law to the foreign drawer for the amount of his liability to the holder.5 The liability of the foreign drawer is in the general case for re-exchange. Before the passing of this Act it was decided, after some hesitation, that when the drawer was thus liable, the acceptor in this country was ultimately liable to him for re-exchange. The decision in Robarts 5 has been questioned on the ground that the express provisions of sub-section (1) should be held to have abolished this common law liability.8 1 See Dando v. Boden, [1893], 1 2 Act, 1681, c. 20; Thomson, 438, 3 Commercial Bank of South Australia, 1887, 36 Ch. D. 522; Robarts, infra, per Lindley, L.J., 1886, 18 Q.B.D. 292. 4 Per Lindley, L.J., in Robarts, infra; s. 72 (2). 5 Robarts, 1885, 16 Q.B.D. 702; 1886, 18 Q.B.D. 286; s. 97 (2). 6 See p. 124, n.3 7 General South American Co., 1877, 7 Ch. D. 637; see Byles, 445; cf. Strickland v. Neilson and MacIntosh, 1869, 7 M. 400, 405-—drawee refusing acceptance is not liable for re-exchange. 8 English Bank of the River Plate. [1893], 2 Ch. 438. |