he had no Immediate Title to a

party from whom the bill is taken, i.e., notice that
right to hold the bill or no right to part with it.1
bill must be distinguished from the right to enforce payment of it
against particular parties-e.g., the donee of a bill has a good title
though he could not enforce payment against the donor. When-
ever a bill is held adversely to the true owner, and there is privity
between the true owner and the de facto holder, a third party if
sued, may set up the jus tertii.3 3. Again, when a person expressly
or impliedly agrees to hold a bill as agent or trustee for another
person, he holds it subject to all defences against the person for
whom he holds, irrespective of the state of accounts between
them."

and remote

parties.

tion of

Art. 89. Every party to a bill is prima facie Presumpdeemed to have become a party thereto for value." value. Art. 90. "Accommodation bill" means a bill Accommowhereof the acceptor (i. e., the principal debtor on the or party. instrument) is substantially a mere surety for some other person who may or may not be a party thereto.o

"Accommodation party" means a person who has signed a bill as drawer, indorser, or acceptor, without receiving value, and for the purpose of lending his name to some other person.

ILLUSTRATIONS.

1. A. draws a bill on B. B. accepts it to accommodate A. It is negotiated. This is an accommodation bill."

2. A. draws and indorses, and B. accepts, a bill for the accommodation of X., who is not a party thereto. A. and B. receive a commission for so doing. This is an accommodation bill.

3. A. draws a bill on B. against a running account. B. accepts.

1 See, e.g., Arts. 23, 54, 55, 134.

2 See, e.g., Art. 83, Expl. 4, and Arts. 91, 134, 141.

3 See, e.g., Arts. 55 and 94.

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

5 Cf. Hatch v. Trayes (1840), 11 A. & E. 702; Foster v. Dawber (1851), 6 Exch. at 853.

6 Cf. Oriental Corp. v. Overend (1871), 7 L. R. Ch. at 146 and 151; and 7 L. R. H. L. at 358; Ex parte European Bank (1871), 7 L. R. Ch. 99.

7 Collott v. Haigh (1812), 3 Camp. 281.

8 Oriental Corp. v. Overend (1871), 7 L. R. Ch. 142.

dation bill

Accommo- This is not an accommodation bill, although the balance may have been against A. when the bill was drawn or accepted, or payable.1

dation bill

or party.

Absence of value.

4. A. draws a bill on B. in favour of C. It appears that B. was indebted to C., and that A. drew the bill to accommodate B. This is not an accommodation bill, though A. is an accommodation drawer."

5. A. draws a bill on B. B. accepts for value. C., whose name is well known, indorses the bill to give it currency. This is not an accommodation bill, but C. is an accommodation indorser.3

Explanation. An accommodation party known to be such, may avail himself of any defence which the person accommodated could have set up.

ILLUSTRATION.

B. and X. make a joint and several note payable to C. B. signs as maker to accommodate X. C. takes the note knowing this. If C. sue B., B. can set off a debt due from C. to X.5

NOTE.-A bill which is signed by one or more accommodation parties is frequently called an accommodation bill, but the definition given above is believed to be more strictly correct. The distinction becomes of importance when questions arise as to what is or is not a discharge of the bill, e. g., payment by person accommodated, or the giving of time to such person. See too Arts. 168, 245.

Art. 91. Mere absence of consideration, total or partial, is matter of defence against an immediate party or a remote party, who is not a holder for value, but it is not a defence against a remote party who is a holder for value."

Explanation.-An accommodation party is liable to a holder for value, who takes a bill knowing him to be such."

1 Ex parte Swan (1869), 6 L. R. Eq. at 356; Cf. Wilks v. Hornby (1862), 10 W. R. 742.

2 Scott v. Lifford (1808), 1 Camp. 246; Cf. Sleigh v. Sleigh (1850), 5 Exch. 514. 3 Cf Re Nunn (1817) Buck. 113. This practice is not uncommon in the case of foreign bills: see, e. g., Société Générale v. Met. Bank (1873), 27 L. T. N. S. 849.

4 Bechervaise v. Lewis (1872), 7 L. R. C. P. 372, at 377.

5 Id.

6 Cf. Forman v. Wright (1851), 11 C. B., at 492.

7 Scott v. Lifford (1808), 1 Camp. 246; Cf. Strong v. Foster (1855), 17 C. B. at 222; Petty v. Cooke (1871), 6 L. R. Q. B. 790; and Arts. 83, 90.

ILLUSTRATIONS.

Absence

1. B., by way of gift, makes a note in favour of C. C. cannot sue B.1 of value. 2. C., the holder of a bill for value, indorses it to D. by way of gift. The property in the bill passes to D., but he cannot sue C.2

3. A. draws a bill on B. for 1007. B. accepts it to accommodate A. A. discounts it with C., who knows that it is an accommodation bill. C. can sue A. or B. for 1007.; but if C., instead of discounting it, merely advanced 507. on it, he can only recover 507.+

4. B. owes A. 507. A. draws a bill on B. for 1007. B., to accommodate A. and at his request, accepts it. If A. sue B. he can recover only 501.5

The bill
This is

5. C. is D.'s agent abroad. C. purchases a bill for D. is made payable to C.'s order, and he indorses it to D. done merely for the purpose of safe transmission, and not to guarantee the bill. If the bill is dishonoured, C. is not liable to D. as indorser.6

6. A. and C. supply goods to B. A. draws a bill on B. for the price, and indorses it to C. to collect on joint account. If the bill is dishonoured, A. is not liable to C."

7. B. accepts a bill drawn by A., to accommodate him. A. indorses it to C. without receiving value. C. indorses it to D. without receiving value. D. cannot recover from B., but it lies on B. to show that neither D. nor any intervening holder was a holder for value.8

failure of

Art. 92. Total failure of consideration is a defence Total against an immediate party, but it is not a defence value. against a remote party who is a bona fide holder for value without notice."

1 Holliday v. Atkinson (1826), 5 B. & C. 501.

2 Easton v. Pratchett (1835), 1 C. M. & R. at 808; Cf. Milnes v. Dawson (1850), 5 Exch. 948.

3 Cf Mills v. Barber (1836), 1 M. & W. 425; Sturtevant v. Ford (1842), 4 M. & Gr. 101.

♦ Nash v. Brown (1817), cited Chitty, p. 60; Jones v. Hibbert (1817), 2 Stark. 304; Re Gomersall (1875), 1 L. R. Ch. D. at 144.

5 Darnell v. Williams (1817), 2 Stark. 166.

6 Castrique v. Buttegieg (1855), 10 Moore P. C. 110; Cf. Re Nunn (1817), Buck. 113.

7 Denton v. Peters (1870), 5 L. R. Q. B. 475.

8 Mills v. Barber (1836), 1 M. & W. 425; Cf. Thompson v. Clubley (1836), 1 M. & W. 212.

9 Robinson v. Reynolds (1841), 2 Q. B. at 211, Ex. Ch. As to what amounts

Total

failure of value.

Partial failure of value.

ILLUSTRATIONS.

1. B. makes a note payable to C. The only consideration is that C. is to act as B.'s executor. C. dies first. His personal representatives cannot enforce payment against B.1

A.

2. B. authorizes A. to draw on him against bills of lading. draws a bill on B. and indorses it to C. with the bill of lading attached. C. gives value to A. B. accepts the bill on receiving from C. the bill of lading. The bill of lading turns out to be a forgery, but C. did not know it when he obtained the acceptances. C. can sue B.2

3. A. draws a bill at three months on B. in favour of C., to be paid for in seven days. B., who is A.'s agent, accepts on his account. C. does not pay A. He cannot sue B.3

4. A. draws a bill on B. payable to his own order. B. accepts. The consideration between A. and B. fails. A. subsequently indorses the bill for value to C., who knows that the consideration between A. and B. has failed. C. cannot sue B.

NOTE.-Failure of consideration, it seems, is a defence against a remote holder for value with notice. The reason probably is that it is in the nature of a fraud to negotiate a bill when the holder knows that the consideration on which he received it has failed." But might there not be cases in which it would not be a fraud to do so? Again, qu. as to the effect of failure of consideration after the maturity of the bill, i. e., after a cause of action has accrued ?6 When the consideration for a bill fails, the Court will usually restrain its negotiation by injunction."

Art. 93. Partial failure of consideration is a defence pro tanto against an immediate party when the failure is an ascertained and liquidated amount,

to total failure, Wells v. Hopkins (1839), 5 M. & W. 7; Hooper v. Treffery (1847), 1 Exch. 17.

1 Solly v. Hinde (1834), 2 Cr. & M. 516.

2 Robinson v. Reynolds (1841), 2 Q. B. 196, Ex. Ch. ; Cf. Leather v. Simpson (1871), 11 L. R. Eq. 398.

3 Astley v. Johnson (1860), 5 H. & N. 137.

4 Lloyd v. Davies (1824), 3 L. J. K. B. 38; Cf. Fairclough v. Pavia (1854), 9

Ex. Ch. 690 (same principle assumed).

5 Cf. Oulds v. Harrison (1854), 10 Exch. at 579.

6 Cf. Watson v. Russell (1864), 5 B. & S. at 968.

7 Cf. Patrick v. Harrison (1792), 3 Bro. C. C. 476; Bainbridge v. Heming

way (1865), 12 L. T. N. S. 74.

but not otherwise.

It is not a defence against a Partial

remote party who is a holder for value.2

ILLUSTRATIONS.

1. B. acccepts a bill for 1007. drawn by A. This is the agreed price of goods to be supplied by A. to B. When the goods arrive they are found to be inferior to sample, and worth only 807. B. retains the goods. If A. sue B. on the bill, this is not a defence pro tanto.3

2. B. accepts a bill for 1007. This is the agreed price of two bales of cotton to be supplied by A. to B. A. only delivers one bale. A. indorses the bill to C. his agent to collect. C. can only recover 501.4

3. B. accepts a bill drawn by A. for 1007. This is the agreed price of two bales of cotton to be supplied by A. to B. When the cotton arrives, one bale is found to be inferior to sample and is returned as useless. A. indorses the bill to C. without value. If C. sues B. he can only recover 50l., the price of the one bale which is kept.

5

NOTE.-In some cases of partial failure of consideration, the Court would perhaps restrain the holder from negotiating the bill after notice."

failure of

value.

duress.

Art. 94. Fraud is a defence against an immediate Fraud or party and against a remote party who is not a bond fide holder for value without notice."

Explanation 1.-A bill is affected with fraud when the issue or any subsequent negotiation of it is obtained by fraud, or coercion, or when it is

1 Day v. Nix (1824), 9 Moore, 159; Warwick v. Nairn (1855), 10 Exch. 762.

2 Archer v. Bamford (1822), 3 Stark. 175.

3 Glennie v. Imri (1839), 3 Y. & C. 436.

4 Cf. Agra Bank v. Leighton (1866), 2 L. R. Ex. at 64, 65.

5 Cf. Agra Bank v. Leighton (1866), 2 L. R. Ex. at 64, 65.

6 Cf. Jacobson v. Shanks (1866), 12 Jur. N. S. 917.

7 Arts. 85 and 137; Whistler v. Forster (1863), 14 C. B. N. S. at 258.

8 Wienholt v. Spitta (1813), 3 Camp. 376; Dawes v. Harness (1875), 10 L. R. C. P. 166.

9 As to duress, Duncan v. Scott (1807), 1 Camp. 100 (onus probandi); Kearns v. Durrell (1857), 6 C. B. 596; White v. Heylman (1859), 34 Pennsyl. R. 143; Loomis v. Ruck (1874), 56 New York R. 462.