2. A bill is payable to C.'s order. His indorsement is forged. Forged or unauthoD., a subsequent holder, presents the bill for acceptance. The rized sigdrawee accepts it, payable at his bankers'. The bankers pay D. natures. They cannot debit the acceptor with this payment.'

3. A bill is payable to the order of a firm. X., one of the partners, fraudulently indorses it in the firm name to D. in payment of a private debt. The acceptor pays D. X. becomes bankrupt. X.'s copartners and trustee can recover from D. the money he received on the bill."

4. C. specially indorses a bill to D. It is stolen before delivery to D., and D.'s indorsement in blank is forged on it. It comes into X.'s hands, and he gets his bankers to present it for payment. They receive payment and credit X. with the amount. X. subsequently draws out the whole sum. C. can recover the amount of the bill from the bankers.3

Explanation. An unauthorized signature, not amounting to a forgery, may be ratified, but a forged signature cannot be ratified.

ILLUSTRATIONS.

1. Note for 1007. X. forges B.'s signature to it as maker. Be fore the note matures the holder finds out that B.'s signature is a forgery, and threatens to prosecute X. In order to prevent this, B. gives the holder a memorandum, which says, "I hold myself responsible for the note for 1007. bearing my signature." The ratification is invalid. B. is not liable on the note."

2. A. draws a bill payable to C.'s order. As between A. and C. the consideration is fraudulent. X. forges C.'s indorsement, and negotiates the bill to D., who takes it in good faith. D. finds out that C.'s indorsement has been forged, and after the bill is due he obtains a genuine indorsement from C., giving him half the value of the bill. D. cannot sue A.

NOTE.-In America, it is laid down that a forgery may be ratified, but perhaps the cases might be explained on the ground of estoppel. 1 Robarts v. Tucker (1851), 16 Q. B. 560, Ex. Ch.

2 Heilbutt v. Nevill (1870), 5 L. R. C. P. 478, Ex. Ch.

3 Arnold v. Cheque Bank (1876),

well (1877), 2 L. R. C. P. D. at 157.

L. R. C. P. D. 578; Cf. Charles v. Black

4 Brook v. Hook (1871), 6 L. R. Ex. 89; and Cf. Williams v. Bayley (1866), 1 L. R. H. L. 200, at 221.

5 Id.; and Ex parte Edwards (1811), 2 Mon. D. & D. 241.

Esdaile v. Lanauze (1835), 1 Y. & C. 394.

7 Union Bank v. Middlebrook (1865), 33 Connect. 95; Howard v. Duncan (1870), 3 Lans. New York, 174.

F

Forged or

unautho

Exception 1.-A person whose signature is forged or

rized sig placed on a bill without his authority may be estopped

natures.

from setting up the fact. (Cf. Arts. 52 and 73.)

ILLUSTRATIONS.

1. B.'s acceptance to a bill is forged. A holder who takes it bonâ fule is afterwards informed that the signature is not B.'s, and accordingly writes to inquire. B. writes back to say the signature is his. B. is liable on this acceptance.1

2. X., a partner in a trading firm, fraudulently accepts a bill in the firm name for a private debt of his own. It is negotiated to a holder for value without notice. The firm is estopped from setting up X.'s fraud.'

Exception 2.-If a bill is payable to the order of a married woman, as forming part of her separate estate, and her husband forges her indorsement, the property in the bill (probably) passes thereby to a holder who takes it for value and without notice.3

Exception 3.-A banker who, as drawee, pays a cheque held under a forged indorsement is protected by statute. (Art. 263.)

4

Exception 4.-A party to a bill may be estopped by his conduct; or, in certain cases, by the fact of becoming a party,5 from setting up that the signatures of other parties thereto are forged or unauthorized.

NOTE. Where an estoppel by negligence is relied on, it must appear that the negligence was the direct and proximate cause of the forgery being taken as genuine." Where a bill is held under a forged signature, the Court will restrain its negotiation by injunction, or order it to be given up and cancelled.7

1 Brook v. Hook (1871), 6 L. R. Ex. at 100; Wilkinson v. Stoney (1839),

1 J. & S. 509; Robarts v. Tucker (1851), 16 Q. B. at 577.

2 Hogg v. Skeen (1865), 18 C. B. N. S. at 432 Willes, J.

3 Dawson v. Prince (1858), 27 L J. Ch. 169, L. JJ.

4 Arnold v. Cheque Bank (1876), 1 L. R. C. P. D. 578.

5 Cf. Estoppels, Drawer, Art. 216; Maker of Note, Art. 287; Indorser, Art. 219; Acceptor, Art. 212; Acceptor suprà Protest, Art. 228; Fictitious Payee, Art. 139; Fictitious Drawee, Art. 2.

6 Arnold v. Cheque Bank (1876), 1 L. R. C. P. D. 578.

7 Esdaile v. La Nauze (1835), 1 Y. & C. 394; and Joyce on Injunctions, p. 366.

CHAPTER III.

CONSIDERATION.

defined,

Art. 82. "Value" means "valuable consideration," Value and is constituted by

(a.) Any consideration sufficient to support a simple

2

contract.

ILLUSTRATIONS.

3

1. A cross acceptance, the forbearance of the debt of a third person, the compromise of a disputed liability, a promise to give up a bill thought to be invalid, or a debt barred by the Statute of Limitations, constitutes value.

5

2. A mere moral obligation," a debt represented to be due though not really due,' the giving up a void note, or a voluntary gift of money," do not constitutes value.

(b.) An antecedent or pre-existing debt.10

Explanation.- -When the consideration for the issue or subsequent negotiation of a bill is an antecedent debt, it is immaterial whether the instrument is payable on demand or at a future time."

1 Rose v. Sims (1830), 1 B. & Ad. at 526; Cf. Burdon v. Benton (1847), 9 Q. B. 843; Hornblower v. Proud (1819), 2 B. & Ald. 327.

2 Balfour v. Sea Assur. Co. (1857), 3 C. B. N. S. 300.

3 Cook v. Wright (1861), 30 L. J. Q. B. 321.

• Smith v. Smith (1863), 13 C. B. N. S. 418.

5 Latouche v. Latouche (1865), 3 H. & C. at 576.

Eastwood v. Kenyon (1840), 11 A. & E. 438; Cf. Flight v. Reed (1863) 3 L. J. Ex. 265.

7 Southall v. Rigg (1851), 11 C. B. 481.

8 Coward v. Hughes (1855), 1 K. & J. 443; but Cf. Mather v. Maidstone (1855), 18 C. B. 273, where an estoppel intervened.

9 Hill v. Wilson (1873), 8 L. R. Ch. at 894.

10 Poirier v. Morris (1853), 2 E. & B. 89; Swift v. Tyson (1842), 15 Pet. 1 Sup. Ct. U. S. Story, J.; Cf. Butcher v. Stead (1875), 7 L. R. H. L. 839. il Currie v. Misa (1875), 10 L. R. Ex. 153, Ex. Ch. ; approved but affirmed on another ground, 1 L. R. Ap. Ca. 554.

Value defined.

Holder for value.

NOTE.-Adequacy of value.-Valuable consideration has been defined as 66 some right, interest, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other." The Courts do not inquire into the adequacy of a bona fide consideration. This was always the law as regards considerations other than money, but when the consideration was money, the usury laws formerly created a difficulty. This has now been removed. But inadequacy of consideration may be evidence of bad faith or fraud. Again, inadequacy of consideration must be distinguished from partial absence of consideration (Art. 91), partial failure of consideration (Art. 93), part payment on account, or a mere advance made on a bill which is pledged or deposited as security (Art. 84).

Art. 83. If value has at any time been given for a bill, the holder of it is a holder for value as regards the acceptor and all parties prior to such time."

ILLUSTRATIONS.

1. B. owes C. 501. In order to pay C., A. at B.'s request, draws a bill on B. for 501. in favour of C. C. is a holder for value and can sue A., though A. has received no value.7

2. A. draws a bill on B. payable to his own order. B. to accommodate A. accepts it. Subsequently A. gives value to B. A. is a holder for value.8

Explanation 1.-It is immaterial that the value is given by or to a person who never signed the instrument, or whose signature has been struck out."

ILLUSTRATIONS.

1. B. makes a note in favour of C. C. is the treasurer of a loan society, and the consideration for the note is money advanced by the society to B. C. is a holder for value.1o

2. C. the holder of a bill indorses it in blank to D., receiving no

1 Currie v. Misa (1875), 10 L. R. Ex. at 162, per Lush, J.

2 Jones v. Gordon (1877), 2 L. R. Ap. Ca. 616, H. L.; Earl v. Peck (1876), 64 New York R. 596.

3 Jones v. Gordım, supra, per Ld. Blackburn at 632.

4 Id.; Cf. Allen v. Davis (1850), 20 L. J. Ch. 44; Simon v. Cridland (1862), 5 L. T. N. S. 524.

5 Dresser v. Missouri Co. (1876), 3 Otto. 92, Sup. Ct. U. S.

6 Hunter v. Wilson (1849), 4 Exch. 489.

7 Scott v. Lifford (1808), 1 Camp. 246.

8 Burdon v. Benton (1847), 9 Q. B. 843.

Cf. Fairclough v. Pavia (1854), 9 Exch. 690 (signature struck out).

10 Lomas v. Bradshaw (1850), 19 L. J. C. P. 273.

value. D. for value transfers it by delivery to E. E. is a holder for Holder for value.1 value.

3. A. at the request of X. draws a bill payable to C. for X.'s account with C. X. remits the bill to C. C. is a holder for value. It is immaterial that there is no consideration between A. and X., or that the consideration fails."

4. S., in the West Indies, is indebted to C. in Paris. In order to pay him S. remits money to X., his correspondent in London, who thereupon obtains a bill for the amount, drawn by A. upon Paris, payable to C.'s order. X. remits the bill to C., but fails before he pays A. for it. S. subsequently pays C. C. is a holder for value, and can sue A.3

NOTE.-In Illust. 4, C. would be trustee for S. As to the effect of this, Cf. Art. 141. Sale of Bill.-In legal language a bill is said to be sold when it is transferred by delivery without indorsement. Not so in mercantile language. Suppose X. in London wishes to pay 1000 rupees to C. in India. X. goes to A., who has a correspondent in Calcutta, and gets him to draw a bill on Calcutta for Rs. 1000. Usually the bill is drawn payable to C., but sometimes it is drawn payable to X., who then indorses it to C. The amount paid by X. to A. for this bill depends on the rate of exchange between London and Calcutta on the day of the transaction. In some trades the custom is for X. to pay A. when he gets the bill; in other trades it is the custom not to pay till the next mail day. Such a transaction is called a sale of the bill by A. to X. X. the buyer, who sends the bill out to India, is called the Remitter. As to fixing the rate of exchange at which a bill is to be sold, see Art. 13, Expl. 1. See, too, the judgment of Wood, V.-C., explaining the practice of paying for bills partly by cash, partly by bankers' "marginal notes." 4

Explanation 2.-Subject to Art. 84, the fact that the holder of a bill is the creditor of the person from whom he received it does not make such holder a holder for value unless he received it in respect of his debt.5

1 Barber v. Richards (1851), 6 Exch. 63.

2 Munroe v, Bordier (1849), 8 C. B. 862; Watson v. Russell (1862), 3 B. & S. 34; 5 B. & S. 968.

3 Poirier v. Morris (1853), 2 E. & B. 89.

Jeffreys v. Agra Bank (1866), 2 L. R. Eq. 676; Cf. Ex parte Kemp (1874), 9 L. R. Ch. 383.

De la Chaumette v. Bank of England (1829), 9 B. & C. 208; explained by Currie v. Misa (1875), 10 L. R. Ex. at 164, Ex. Ch.