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2 These provisions are “ That the payee (indorsee) must be named or Sec. 34. otherwise indicated with reasonable certainty,” (s. 7.) See also s. 8.

3 This is usual in banks where bills or notes are discounted for the benefit of the customer. It has been recognized as law since A.D. 1698. See Clerk v. Pigot, 12 Mod. 192. But in the Province of Quebec, indorsements in blank can only be validly made by bankers, brokers, and merchants: Bank of Montreal v. Langlois, 3 Rev. Leg. 88.

ILLUSTRATIONS. If A. the drawer and payee of a bill indorse it in blank to B., who, without putting his own indorsement on the bill, writes over

A's. indorsement, a special indorsement as “Pay the contents to C.”: B. cannot be sued as an indorser by a subsequent holder : Vincent v. Hoolock, 1 Camp. 44

An indorsement in blank is an absolute assignment to the indorsee, and comprehends his assigns; and upon it the indorsee may write what he will, and may fill up the blanks as he pleases : More v. Manning, Comyns 311.

A bill indorsed in blank, was afterwards indorsed by A. specially to B. W. & Co., who carried on business under the firms of B. W. & Co., and the Eastwood Company, indorsed the bill in the name of the Eastwood Company. The bill was duly presented, but payment was refused for want of an indorsement by B. W. & Co. ;-Held, that the bill having been indorsed in blank, its negotiability could not afterwards be restrained by a special indorsement; and that the presentment was such as to render A. liable on his indorsement: Walker v McDonald, 2 Ex. 527.

Where a bill is indorsed in blank, and is transferred by the indorsee by delivery only, without any fresh indorsement, the transferee takes as against the acceptor any title which the intermediate indorsee possessed : Fairclough v. Pavia, 9 Ex. 690.


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35. An indorsement is restrictive which prohibits the Restrictive further negotiation of the bill, or which expresses that it defined.

Imp. Act,s.35 is a mere authority to deal with the bill as thereby Ind Act,8.50. directed, and not a transfer of the ownership thereof, as, for example, if a bill is indorsed “Pay D only,” or “ Pay D for the account of X,” or “Pay D, or order, for collec

D tion :

2. A restrictive indorsement gives the indorsee the right Rights of in to receive payment of the bill and to sue any party thereto under. that his indorser could have sued, but gives him no power to transfer his rights as indorsee unless it expressly authorizes him to do so :

3. Where a restrictive indorsement authorizes further Rights of transfer, all subsequent indorsees take the bill with the transferees.

dorsee there.


Sec. 35. same rights and subject to the same liabilities as the first

indorsee under the restrictive indorsement. 1

1 It was argued in the case of Edie v. East India Co., 2 Burr. 1216, that the omission of the words “or order” in an indorsement rendered the bill non-negotiable as being restrictive of the indorsement ; for the cashier of the Bank of England, who was called to give evidence as to the custom of merchants, said that “the Bank if they ever discounted bills not indorsed to order, did it only upon the credit of the indorser ; but that otherwise they would not take them, not considering them as being negotiable.Other merchants gave similar evidence of the custom. But Lord Mansfield, although the jury sustained the merchants, held that he ought not to have admitted this evidence of usage, because bills so indorsed were negotiable. And he held that the words “or order” were as unnecessary to be inserted in an indorsement as the words “executors and administrators.” It was queried in that case whether a negotiable bill could, by any words of restriction, be rendered non-negotiable ; but it was considered that, for the convenience and course of trade, the intention, and not the form, was to be regarded. Where a bill is indorsed restricting its transfer, the relations between the indorser and the indorsee are substantially those of principal and agent; and the payer may, in some cases, be bound to see to the application of the money paid.


“Pay to A. or his order, for my use ” is a restrictive indorsement; and the indorsee of A. must hold the proceeds to the use of the restricting indorser: Lloyd v. Sigourney, 8 B. & C. 622, 5 Bing. 525. See also Munro v. Cox, 30 U. C. Q. B. 363.

“Pay J. S. or order, value in account with H.” is not a restrictive indorsement: Buckley v. Jackson, L. R. 3 Ex. 135.

A. and B. made a note payable to C. without words of negotiability, C. transferred the note to D. with the following indorsement : Received of D. a note on E. for $50 due Dec. 25, 1843. Now if D. does not collect this note, I am to account to him on E's. note" ;-Held, that this indorsement gave no right of action to D. against the makers ; Latham v. Jones, 6 Ark. 371.

How long a bill is negotiable. Imp. Act,8.36

36. Where a bill is negotiable in its origin, it continues

to be negotiable until it has been (a) restrictively inInd. Act,8.57 dorsed, or (b) discharged by payment or otherwise ; 1 Overdue bill 2. Where an overdue bill is negotiated, it can be negot

iated only subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which had the person from whom he took it: 2

negotiated subject to title.

mand bill

honored bill.

3. A bill payable on demard is deemed to be overdue Sec. 36. within the meaning and for the purposes of this section, When de when it appears on the face of it to have been in circula- deemed overtion for an unreasonable length of time; what is an unreasonable length of time for this purpose is a question of fact :3 4. Except where an indorsement bears date after the Presumption

as to negotiamaturity of the bill, every negotiation is prima facie tion. deemed to have been effected before the bill was overdue : 4

5. Where a bill which is not overdue has been dishonor- Taking dised, any person who takes it with notice of the dishonor takes it subject to any defect of title attaching thereto at the time of dishonor, but nothing in this sub-section shall affect the rights of a holder in due course. 5

1 A bill of exchange is negotiable ad infinitum, until it has been paid by or discharged on behalf of the acceptor. If the drawer has paid the bill, it seems that he may sue the acceptor upon the bill ; and if instead of sueing the acceptor, he put it into circulation on his own indorsement only, it does not prejudice any of the other parties who have indorsed the bill, that the holder should be at liberty to sue the acceptor : Callon v. Lawrence, 3 M, & Sel. 95. A payment before a bill becomes due, does not extinguish it, any more than if it were merely discounted. A contrary doctrine would add a new clog to the circulation of bills and notes: Burbidge v. Manners, 3 Camp. 193.

2 The equities attaching to an over-due bill are similar to those which ordinarily attach to choses in action, as between the original and subsequent parties. The overdue bill loses the rights and privileges which, by the law-merchant, attach to bills of exchange, and is relegated to the rights and privileges and equities which are usually incident to a chose in action. Payment and other discharges are sometimes spoken of as equities attaching to an over due bill, but this seems incorrect; they are rather grounds of nullity. That which purports to be a bill, is, on proof of payment or some other acquittance, no longer a bill, but mere waste paper. The position of a holder who takes a bill when overdue is this : he is a holder with notice. He may or may not be a holder for value, and his rights will be regulated accordingly. He is a holder with notice for this reason ; he takes a bill which on the face of it ought to have got home, and to have been paid. He is therefore bound to make two inquiries : 1. Has the bill been discharged ? 2. If not, is there any equity attaching thereto ? i. e., was the title of the person who held it at maturity defective ? Chalmers on Bills, 107.


Sec. 36.


ILLUSTRATIONS. The indorsee of an overdue bill or note, is liable to such equities only as attach to the bill or note itself, and not to collateral claims or debts due from the indorser to the maker, or indorsee to payee : Wood v. Ross, 8 U. C. C. P. 299.

Where an indorsee of a note payable on demand, had taken it two years after its date, with notice of an agreement between the holder and the maker, that it should be set off against a bond, of which the maker was obligee, and the holder obligor ;-Held, a good defence : Brouke v. Armola, Tay. U. C. 25.

An agreement not to negotiate the note after its maturity, is an equity attaching to an overdue note : Grant v. Winstaniey, 21 U. C. C. P. 257. See also Kerr v. Straat, 8 U. C. Q. B. 82.

A valid agreement to give time is an equity which attaches to a bill as against a person taking it at maturity : Britton v. Fisher, 26 U. C. Q. B. 338.

A note given as collateral security for a mortgage for the same amount, may be indorsed over after it becomes due by the original holder and mortgagee, and the mortgagee may proceed to foreclose the mortgage : Shaw v. Boomer, 9 U. C. C. P. 458.

Where an agent of the holder disposes of a over due note without authority, though for good consideration, the person taking it obtains no title as against the real owner : West v. MacInnes, 23 U. C. Q. B. 357.

Where an overdue note is transferred, so much of the original consideration which fails cannot be recovered : Rennie v. Jarvis, 6 Ù. C. Q. B. 329.

A note of hand was transferred when overdue, and there was fraud proved in the transaction ;-Held, that on slight grounds the law would presume that the indorser had knowledge of the fraud, if it appear that he omitted to satisfy himself as to the validity of the note : Hunt v. Lee, 2 Rev. Leg. 28.

A note payable on demand is, after demand of payment and refusal, to be treated as an overdue; and a note whereof payment has actually been made when demanded, cannot stand on a better footing : Dougan v. Small, 2 Kerr N. B. 89.

The general rule is that any person receiving a negotiable instrument after it is due takes it upon the credit of the person from whom he receives it, and subject to all the objections and equities to which it was liable in the hands of the person from whom he takes it; but this does not apply to cheques : London and County Banking Co. v. Groom, 8 Q. B. D. 288.

In an action on a promissory note it was shewn that when overdue and while the payee was the holder, it was agreed that a board bill should be applied in reduction of the note ;-Held, that a subsequent transfer of the overdue note could only be made subject to the claim of the maker for such board : Ching v. Jeffery, 12 App. R. 432.

A promissory note made by the defendant had been held by the Consolidated Bank, and after its maturity, the defendant transferred certain timber limits to the bank as collateral security for the payment of the note, which limits the bank sold. The plaintiffs subsequently became holders of the overdue note, and after the timber limits' transaction. The defendant claimed against the plaintiffs to set off against the note, the value of the timber limits sold by the bank without authority and for an insufficient price, while holders of the note ---Held, not so Sec. 36. entitled : Canadian Securities Co. v. Prentice, 9 Ont. P. R. 324.

3 This clause affirms a new rule as to bills payable on demand. The old rule was that a bill or note payable on demand was not to be considered as overdue without some evidence of payment having been demanded and refused, although it should be several years old, and no interest has been paid on it : Byles on Bills, 131 The clause seems to have been taken from a decision in a Michigan State Court, which affirms that a promissory note payable on demand, unless transferred within a reasonable time, will be considered overdue and dishonored, and that the English rule must be held to be so far modified in the United States : Carll v. Brown, 2 Mich. 401. Hitherto it has been considered that what was a reasonable time for the presentation of a bill or note was a mixed question of law and fact for the determination of the Court and jury, and would depend upon the circumstances of each case: Mullick v. Radakessen, 9 Moo. P. C. C. 46. This clause makes it a question of fact simply ; and in order to arrive at a proper determination of the question of reasonable time, the situation and interests not of the drawer only, nor of the holder only, but the situation and interests of both must be taken into consideration : Mellish v. Rawson, 9 Bing. 423. But the agreement of the parties may take their case out of the Act. Thus where a note dated 10th February, and indorsed, and though payable on demand, was not intended by the makers to be paid at an immediate or specific date, and was not presented until the 14th December ;--Held, that as the note was meant to be a continuing security, the delay was not unreasonable : Chartered Bank v. Dickson, L. R. 3 P. C. 574. See further, notes ss. 20, 40 and 49. This clause does not apply to promissory notes ; see s. 85, sub-s. 3.

* There is no presumption of law as to the time at which a bill or note has been indorsed or negotiated, other than that a bill or note is presumed to have been indorsed and negotiated within a reasonable time after its date, and before it becomes due ; but these presumptions are rebuttable. See note 1 to s. 20, and note 8 to s. 21.

5 This clause places dishonoured bills on the same footing as overilue bills, when a holder takes them with notice of dishonour. The question in such cases is, whether the holder acted in good faith in taking the bill. See Raphael v. Bank of England, 17 C. B. 161, and cases as to notice in the notes to ss. 29 and 38, as to the rights of a “holder in due course ; and note 1 to s. 89.

37. Where a bill is negotiated back to the drawer, or to Bill negoa prior indorser, or to the acceptor, such party may, subject in party. to the provisions of this Act, re-issue and further negotiate ind. Act,s 51 the bill, 1 but he is not entitled to enforce the payment of the bill against any intervening party to whom he was re-issued. previously liable. 2

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