and Co. v. John Wallace and Co.1 it was held in very similar S. 25. circumstances that the pursuers were not entitled to recover on either ground, though the defaulting agent had employed the money which he had borrowed from them in reducing his indebtedness to his employers, the defenders. It was observed that the result might have been different if the defenders had been lucrati by having in their possession. cash to which they had no right.2 On the other hand, though an agent abuse his authority, so long as he keeps within its terms the principal will be bound to any person dealing with the agent in good faith and to the holder in due course of any bill so granted by the agent. Whenever the very act of the agent is authorised by the terms of the power, that is, whenever by comparing the act done by the agent with the words of the power, the act is in itself warranted by the words used, such act is binding on the constituent as to all persons dealing in good faith with the agent; such persons are not bound to inquire into facts aliunde. The apparent authority is the real authority." If an agent who has authority to indorse bills per procuration of a company, discounts bills so indorsed with a bank and appropriates the proceeds, the company is liable to the bank for the amount.4 "The question with the bank was not whether he was carrying through transactions with a view to selling the defender's goods. It was, what was his authority-not his authority to sell goods, but his authority to make negotiable instruments."5 If an agent "3 has a general authority to carry on a business, his principal is liable for money borrowed by him ostensibly for the business, though really for his own purposes, so long as his actings may reasonably have been thought to have been warranted by the necessities of the business." 26. (1.) Where a person signs a bill as drawer, S. 26. 1 1880, 7 R. 874. 2 See also Johnston, Sharp, and Co. v. Phillips, 1822, 1 S. App. 244, Partnership, and s. 23, n.e 3 Westfield Bank v. Cornen, 1867, 37 N. Y.R. 320, 93 Am. Dec. 573. 4 Bryant, Powis, and Co. v. Quebec Bank, [1893], A. C. 170, 179; Union Person signing Bank v. Makin, 1873, 11 M. 499. as agent or in 5 Union Bank v. Makin, cit. per capacity. representative L.P. Inglis, 505. 6 Montaignac v. Shitta, 1890, 15 A.C. 357. S. 26. indorser, or acceptor, and adds words to his signature indicating that he signs for or on behalf of a principal, or in a representative character, he is not personally liable thereon; but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not exempt him from personal liability.a (2.) In determining whether a signature on a bill is that of the principal or that of the agent by whose hand it is written, the construction most favourable to the validity of the instrument shall be adopted." a An agent, when signing a bill in his own name for his principal's business, may negative or limit his personal liability in accordance with s. 16. There is no authority as to the meaning of the words “in a representative character." They may have the effect of relieving persons who sign bills as trustees or executors or in an official capacity, from personal liability. But it is competent and advisable for such parties to negative personal liability expressly.2 The liability to his principal of an agent who signs a bill in his own name without limiting his liability 3 depends on the purpose for which the bill was delivered, and ultimately on the consideration. A bill may be indorsed by an agent for the purpose of guaranteeing its payment,5 or merely for that of transferring it." An agent is not entitled to suspend a charge at his principal's instance without finding caution.7 In the following cases the person signing has been held not to be personally liable. Three directors and the secre tary of a company signed a note as follows:-"Three months S. 25. after date we promise to pay in stock on account of the X. Company, for value received For MISTLEY THORPE & WALTON RAILWAY CO., JOHN SIZER, Secretary." 2 In the following cases the person signing has been held personally liable. A promissory note was granted in the following terms:-"We, the directors of the A. B. Company, Limited, do promise to pay C. D. the sum of £1600. (Signed) E. F., Chairman, G.H., R.L." This note had the company's seal affixed in one corner. It was held that these terms merely described the signers as filling a representative capacity.3 A., who occasionally acted as factor for B., accepted a bill drawn upon himself for a certain sum "for behoof of B. for value received in meal." It was held that these words were merely a description of the value given, or a note of the account to which the bill was to be debited.1 A. accepted a bill addressed to him as "factor of B.," for "value on account with B."5 A bill was addressed to certain persons as A.'s executors, and accepted by them without qualification. A bill was addressed to B. U. and S., trustees of the New Imperial Building Association,” and accepted by them without any qualification. A note was granted as follows:-"We, the trustees of the late A. B., promise to pay," and signed without further qualification.8 A note was granted "for and on behalf of the X. Church," 1 Lindus v. Melrose, 1857, 27 L.J. Ex. 326. 2 Alexander v. Sizer, 1869, L.R. 4 Ex. 102. 8 Dutton v. Marsh, 1871, L.R. 6 Q.B. 361; see also Brown v. Sutherland, 1875, 2 R. 615. 4 Webster v. M'Calman, 1848, 10 D. 1133. 5 Chiene v. Western Bank of Scotland, 1848, 10 D. 1523. 6 Eaton, Hammond, and Sons v. Macgregor's Executors, 1837, 15 S. 1012. 7 Brown v. Sutherland, 1875, 2 R. 615. 8 Thomson v. M'Lachlan, 1829, 7 S. 787, but judgment on specialties. S. 26. and signed by certain persons without further qualification.1 S. 27. Value and holder for value. b For example, a bill addressed to "A. B., general agent of the X. Company," is accepted thus:-" Accepted on behalf of the Company, A. B." A. B. is personally liable. The company not being the addressee, cannot be the acceptor,2 The Consideration for a Bill. 27. (1.) Valuable consideration be constituted by, for a bill may (a.) Any consideration sufficient to support a simple contract ; (b.) An antecedent debt or liability. Such a debt or liability is deemed valuable consideration whether the bill is payable on demand or at a future time. (2.) Where value has at any time been given for a bill the holder is deemed to be a holder for value as regards the acceptor and all parties to the bill who become parties prior to such time. (3.) Where the holder of a bill has a lien on it, arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien.f a The rule of Scots law that valuable consideration is not necessary to support an obligation,3 is not inconsistent with the terms of this section, and accordingly its application to bills of exchange is not affected by this Act. By the law of England each contract on a bill must be granted for valuable consideration, which has been defined as "some right, in 1 M'Meekin v. Easton, 1889, 16 R. 363. 2 Herald v. Connah, 1876, 34 L.T. N.S. 885; Nicholls v. Diamond, 1853, 23 L.J. Ex. 1. See also s. 23, n. as 3 Bell's Prin. 8, 63, 64. terest, profit, or benefit accruing to one party, or some for- S. 27. bearance, detriment, loss, or responsibility given, suffered, or undertaken by the other."1 "According to the law of Scotland onerosity of a bill is to be assumed, and non-onerosity can only be proved by writ or oath,2 but it is not always a good defence." 3 5 Gratuitous bills were formerly held invalid on the ground that donation was not a purpose proper to bills, but it is now competent to grant any obligation on a bill by way of gift. It has been decided in England that a donatio mortis causa cannot be made by granting a cheque, but it is thought that this decision is not law in Scotland. On the contrary, a bill which bears to be payable after the death of the person liable thereon, is ineffectual; for a testamentary bequest cannot be made by a bill or note.8 Both in Scotland and in England the holder of a bill may transfer it gratuitously either inter vivos or mortis causa.10 In England the donor, though he indorses the bill, merely transfers his rights without incurring any obligation to the donee.1 11 In Scotland the donor, if he indorses the bill, becomes liable to the donee, but it does not appear that he incurs any obligation by transferring a bill payable to order without indorsement, or by delivering a bill payable to bearer.12 It has been held in England that there may be a good donatio mortis causa of a bill payable to order by delivery without indorsement, but there is no authority for the view that the donee is entitled to have the indorsement of the transferor's executor as if he were a holder for value.13 |