FRAUD, ETC., CURED BY NEGOTIATION.

41

cheque, it is admitted or proved that the acceptance, issue, or subsequent negotiation of the cheque is affected with fraud, duress, or force and fear, 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 cheque. (S. 30 (2).)

See definition of "holder in due course Chapter II.

in s. 8,

The words "or proved" merely mean "if there is evidence to go to a jury." (Tatam v. Haslar, 23 Q. B. D. 345, at pp. 348, 349.)

44.-A holder (whether for value or not) who derives his title to a cheque through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of a holder in due course as regards all parties to the cheque prior to that holder. (S. 29 (3).)

See May v. Chapman, 16 M. & W. 355, which decided that cognizance of a fraud is not privity, and does not prejudice the position of a holder who makes title through a holder in due course.

The following rules as to impeachment of consideration are stated and illustrated in Chalmers, pp. 95-101:—

1. Any defence available against an immediate

42

IMPEACHMENT OF CONSIDERATION.

party is available against a remote party who is in privity with such immediate party.

2. Mere absence of consideration, total or partial, is a 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.

3. Total failure of consideration is a defence against an immediate party, but it is not a defence against a remote party who is a holder in due

course.

4. Partial failure of consideration is a defence pro tanto against an immediate party when the failure is an ascertained or liquidated amount, but not otherwise. It is not a defence against a remote party who is a holder for value.

5. Fraud is a defence against an immediate party and against a remote party who is not a holder in due course.

6. Illegality of consideration, total or partial, is a defence against an immediate party, but not against a holder in due course.

It may here be observed that in many cases a party may sue on the consideration where he cannot sue on the instrument, e.g., when an infant has given a bill or cheque for necessaries. (Cf. In re Soltykoff, 1891, 1 Q. B. 413.)

The burden of proving consideration lies on him,

CHEQUES GIVEN FOR BETS.

43

instead of consideration being presumed, as if he sued on the instrument.

Moreover his rights as plaintiff are personal, not transferable, like his rights on the instrument. The law as to cheques given in respect of bets is as follows:

(1) If the bet was illegal under 5 & 6 Will. IV. c. 41, the bad consideration is a good defence as between the parties. The onus is on a third party suing to show that he was a holder in due course. A cheque given to secure money advanced for payment of racing bets is not deemed to have been given for an illegal consideration within that statute. (Ex parte Pyke, 47 L. J. Bk. 100.)

(2) If the bet was void under 8 & 9 Vict. c. 109, s. 18, a holder need not show that he was a holder in due course. The presumption of valuable consideration is still in his favour (Fitch v. Jones, 5 El. & Bl. 238), and proof that the holder had notice of the consideration as between the parties does not disentitle him to recover. (Lilley v. Rankin, 56 L. J. Q. B. 248.) Whereas if the bet were illegal under 5 & 6 Will. IV. c. 41, the knowledge of the holder as to the consideration as between the parties disentitles him to recover. (Woolf v. Hamilton, 1898, 2 Q. B. 337-C. A.) This case decides that betting on horse racing is "illegal." Beeston v. Beeston, 1 Ex. Div. 13, was

44

CHEQUES IN RESPECT OF HORSE RACING.

not cited.

There it was held that A. could sue B. on his cheque in these circumstances:

A. paid B. money to back certain horses. The horses won, and B. gave A. the cheque the subjectmatter of the action. It was held that the transaction was not illegal within 5 & 6 Will. IV. c. 41, and as the action was on the cheque and not to recover a bet under 8 & 9 Vict. c. 109, the plaintiff could recover.

But in Lynn v. Bell, 10 Ir. R. C. L. 487, the plaintiff was held to be entitled to recover the amounts of certain bearer cheques given in respect of bets on horses. It was held-(1) horse racing was a game within 5 & 6 Will. IV. c. 41; (2) the cheques, paid by the plaintiff's banker, were paid by the plaintiff within s. 2, and he could recover their amount; (3) the defendant could not set off a bearer cheque given by him to the plaintiff in respect of a bet on a horse, drawn by C., as such cheque was "paid" by C., and not by the defendant, within s. 2, and the defendant could not therefore recover its amount.

The Gaming Act of 1892 does not appear to affect the law relating to securities given in respect of gaming transactions.

CHAPTER V.

CROSSED CHEQUES AND CHEQUES MARKED NOT "" NEGOTIABLE.'

45. It is provided by s. 76 of the Act that

(1) Where a cheque bears across its face an addition of (a) the words "and company," or any abbreviation thereof, between two parallel transverse lines, either with or without the words "not negotiable; " or (b) two parallel transverse lines simply, either with or without the words "not negotiable;" that addition constitutes a crossing, and the cheque is crossed generally.

(2) Where a cheque bears across its face an addition of the name of a banker, either with or without the words "not negotiable," that addition constitutes a crossing, and the cheque is crossed specially and to that banker.

46.-It is provided by s. 77 of the Act that

(1) A cheque may be crossed generally or specially by the drawer.

(2) Where a cheque is uncrossed, the holder may cross it generally or specially.