Scc. 37. Rights of holder. 1 The power to negotiate a bill must be distinguished from the right to negotiate it. The right to negotiate it is an incident of ownership; the power to negotiate it is an incident of apparent ownership: Chalmers on Bills, 111. Or more properly, it is an incident in the authority of the agent to negotiate the bill. As to bills negotiated back to the drawer, see Woodward v. Pell, L. R. 4 Q. B. 55; to a prior indorser, see Bishop v. Heyward, 4 T. R. 470, and Wilkinson v. Unwin, 7 Q. B. D. 636; and to the acceptor, Attenborough v. Mackenzie, 25 L. J. Ex. 244. 2 Where bills were drawn by a merchant on his debtor, and, in pursuance of a verbal agreement, were indorsed by the merchant to the father of the debtor, who was to be surety for the price of the goods in respect of which the bills were given; and the father thereupon re-indorsed them to the merchant-Held, that although, as a general rule, the indorser of a bill subsequently becomes the indorsee, he can maintain no action against the intermediate indorser, because he would himself be liable to him by reason of his antecedent indorsement, the rule does not apply when such inter mediate indorser has no right of action against such indorser, on his prior indorsation: Wilkinson v. Unwin, 7 Q. B. D. 636. Although under the general rule where a holder suing is liable over to the defendant by reason of a prior indorsement, he cannot recover; yet if he sue with others in another capacity, as an executor, he may : Jenkins v. McKenzie, 6 U. C. Q. B. 544. 38. The rights and powers of the holder of a bill are as Imp. Act.s.38 follows: Ind. Act. ss. 8 & 46. May sue. If holder in due course. Effect of transfer if ive. (a) He may sue on the bill in his own name; 1 (b) Where he is a holder in due course, he holds the bill free from any defect of title of prior parties, as well as from mere personal defences available to prior parties among themselves, and may enforce payment against all parties liable on the bill; 2 (c) Where his title is defective, (1) if he negotiates the title defect bill to a holder in due course, that holder obtains a good and complete title to the bill, and (2) if he obtains payment of the bill the person who pays him in due course gets a valid discharge for the bill. 3 1 The expression " may " is permissive. In the Choses in Action Act of 1872, 35 Vic. c. 12 (now R. S. O. (1887), c. 122), it was made imperative on the assignee of a chose in action to sue thereon in his own name. But it is competent for the holder of a bill or note to hand over the bill or note to third person to sue upon it in the name of such third person, but on Sec. 38. behalf of the holder of the bill. ILLUSTRATIONS. The law which permits the holder of a note or bill to sue all parties liable upon it in one action, does not affect the rights and liabilities of defendants as between themselves, but leaves them as if they had been sued separately: Hamilton v. Phipps, 7 Grant 483. Where a bill is indorsed in blank it is competent to the holder to hand it over to a third person to sue on it on his behalf: Law v. Parnell, 7 C. B. N. S. 282; s. p. Shepley v. Hurd, 3 App. R. 549. Where a note was made by a resident of Upper Canada, payable to P., who died in New York with the note in his possession ;-Held, that his administrators appointed in that state might indorse the note so as to enable the indorseee to sue upon it in this country: Hard v. Palmer, 20 U. C. Q. B. 208. One who held notes indorsed to him in blank, as his father's agent, could as such agent sue upon them in his own name : Ross v. Tyson, 19 U. C. C. P. 294. A party though requested by the holder cannot sue on a bill in which he has no interest and of which he has no possession: Essett v. Tottenham, 8 Ex. 884. If the holder of a note bring several actions against the indorsers, he will be entitled to his full costs in any one suit, and his disbursements in the other Shuter v. Dee, 1 U. C. Q. B.,292. But this rule does not apply where the holder sues on two notes one in the Superior, and the other in the County Court: Geddes v. Rogers, 5 U. C. Q. B. 1. Nor does it apply where one of the parties to the note not sued with the other, is at the commencement of the suit out of the jurisdiction: Bank of British North America v. Elliott, 6 U. C. L. J. 16. Where the holder sued separately the acceptor and indorsers and the acceptor paid the claim without the costs, and judgment was entered and execution issued against him for their amount and the costs against the indorsers, the execution was restrained to the costs against the acceptor alone Gillespie v. Cameron, 3 U. C. Q. B. 45. An action is maintainable by a person assuming to act as agent of the holder although without his knowledge; and if the holder subsequently adopts the acts of the assumed agent, that is a sufficient title, although such adoption is after action brought in his name: Ancona v. Marks, 7 H. & N. 686. 2 The definition of a “holder in due course," is given in s. 29. The term "defect in title" is used in s. 29 sub-s. (b) and 2 and s. 36 sub-s. 5, and which may be said to partially define its meaning. See also the notes to those clauses. But the term "free from any defect of title of prior parties as well as from mere personal defences available to prior parties among themselves," is too large; for the defences arising from want of capacity to contract, and therefore of the personal defence of non-liability; and want of authority on the part of agents who sign, accept or indorse, as such, or per proc., to transfer or negotiate the bill or Sec. 38. note, and assume to make their principal personally liable thereunder ; as well as the defect of title arising from the forgery of some of the prior signatures necessary to the chain of title to the bill, may, notwithstanding the wording of this clause, be available against "a holder in due course.” So the words " enforce payment against all parties liable on the bill," do not necessarily mean all parties whose names appear on the bill. It includes only those who are actual parties to the bill, and legally liable as such according to their several contracts with the holder. See also the notes to ss. 20, 22, 24, 29, 54 and 55. Presentment of sight bills. 3 ILLUSTRATIONS. A note intended as the renewal of another note, but not so used, having been left in the maker's hands with an indorser's name upon it, was received by the plaintiff from the maker for value before it became due. The indorser was held liable: Larkin v. Wiard, 5 U. C. O. S. 661. The articles of association of a company contained no provision as to the issue of negotiable instruments, but was implied from the objects of the company. The directors gave to H., for value, an instrument under seal, entitled "debenture," by which the company undertook "to pay to the order of J. H., on 1st July, 1867, £1,000, with interest half yearly, on presentation of the annexed interest warrants ;"--Held, that it might be construed as a promissory note, but, in any event, the indorsee and transferee for value was entitled to prove on it against the company, free from equities between J. H., and the company: In re General Estates Co., L. R. 3 Ch. 758. Where a holder obtained from a partner in a firm of solicitors a note of the firm ;-Held, that such holder was bound to inform himself whether the partner had the authority of his solicitor-partners to pledge their credit by the note, and that, not having done so, he was guilty of negligence, and could not recover against the firm: Smith v. Coleman, 7 Jur. 1053. Negligence in the custody of a draft, or in its transmission by post, will not disentitle the owner of it to recover the draft, or its proceeds, from one who has paid it or wrongfully obtained possession of it: Arnold v. Cheque Bank, 1 C. P. D. 578. A creditor, by becoming executor of his debtor, does not extinguish the debt, although he cannot sue himself for it, and therefore, although executor, he may transfer a note due by his testator to him, so as to give a right of action on it to a transferee: Lowe v. Peskett, 16 C. B. 400; 1 Jur. N. S. 1049. General Duties of the Holder. 1 39. Where a bill is payable at sight or after sight, Imp. Act,8.39 presentment for acceptance is necessary in order to fix the maturity of the instrument : 2 Ind. Act, 8S. 61 & 76. Express stipulation as to presentment. 2. Where a bill expressly stipulates that it shall be presented for acceptance, or where a bill is drawn payable elsewhere than at the residence or place of business of the drawee, it must be presented for acceptance before it can Sec. 39. be presented for payment:3 3. In no other case is presentment for acceptance No presentnecessary in order to render liable any party to the bill: ment in any other case. entation is 4. Where the holder of a bill, drawn payable elsewhere when presthan at the place of business or residence of the drawee, excused. has not time, with the exercise of reasonable diligence, to present the bill for acceptance before presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for payment is excused, and does not discharge the drawer and indorsers. 4 1 The receipt of a bill implies an undertaking from the holder to every party to the bill, who could be entitled to bring an action against another party on paying it, to present the same in proper time to the drawer for acceptance, where acceptance is necessary; and to the acceptor for payment, when the bill has arrived at maturity, and is payable; to allow no extra time for payment to such acceptor, and to give notice without delay, and within a reasonable time, to every such person, of a failure in the attempt to procure a proper acceptance or payment of the bill. Any default or neglect, in any of these respects, will discharge every person from responsibility on account of non-acceptance or non-payment, and will make it operate generally as a satisfaction of any debt, or demand, or value, for which the bill was given: Story on Bills, s. 227. The general duties of the holder prescribed by this Act are not absolute duties; but laches, or non-observance of these duties, without the use of reasonable diligence, will bar the right. 2 It is absolutely necessary that all bills payable at sight, or at so many days after sight, or after any event not absolutely fixed, or after demand, should be presented to the drawee for acceptance, in order to fix the period when the bill is to be paid. But bills payable on demand (which are immediately on presentment), or payable at a certain number of days after date, or after any certain event, need not be presented at all; but only for payment. However in practice, whenever the bill is payable at a certain number of days after date, it is usual, and certainly it is prudent, to present it for acceptance. If presented, the holder must conduct himself in the same way, and make protest, and give notice in the same manner as he would upon a bill payable so many days after sight: Story on Bills, s. 228. 3 The two cases mentioned in the first two clauses of this section, are the only cases in which presentation of a bill for acceptance is necessary. Sec. 39. The definition of a bill payable on "demand" will be found in s. 10, and of a bill payable at a “determinable future time" in s. 11. Where a bill is payable "t sight," or "on demand," or 'on presentation,” acceptance and payment are simultaneous, for such bills are not entitled to the three days' grace (see ss. 10 and 14); therefore presentation for acceptance is not necessary, but optional, except for the process of dishonor. But to charge the drawer of such a bill, some actual evidence of a demand on the drawer to accept must be proved; and also that such demand has been made within a reasonable time. Reasonable time for sight bill. Imp. Act,s.40 Or drawer and indorsers discharged. What is reasonable time. * The provision as to presentment "where a bill is drawn payable elsewhere than at the residence or place of business of the drawee," is new. The Act does not prescribe whether the presentment for acceptance of the bill is to be made at such place, or to the drawee personally. But as the determination of the place of payment is the act of the drawer, and not of the drawee, the presentment should be made personally to the drawee, at his place of residence or business. "Reasonable diligence," like "reasonable time," is a mixed question of law and fact; and is such ordinary diligence as a prudent business man would exercise in cases of urgency. He must, by the best means in his power, and by due and diligent inquiry, find out the proper place to present the bill to the drawee for his acceptance. The law assists those that are diligent, not those who sleep over their rights. The excuses for delay in presenting a bill for acceptance, are detailed in s. 41, sub-s. 2; and for payment in s. 46, sub-s. 2. 40. Subject to the provisions of this Act, when a bill payable after sight is negotiated, the holder must either present it for acceptance or negotiate it within a reasonable time: 1 2. If he does not do so, the drawer and all indorsers prior to that holder are discharged: 3. In determining what is a reasonable time within the meaning of this section, regard shall be had to the nature of the bill, the usage of trade with respect to similar bills, and the facts of the particular case. 2 1 This clause is apparently a legislative recognition of a decision of the Judicial Committee of the Privy Council in a case where it held that, although there was no limited time fixed by statute for the presentment of a bill of exchange for acceptance, and no usage of trade to fix the time, yet such bill must be presented for acceptance within a reasonable time: Mullick v. Radakissen, 9 Moo. P. C. C. 46. It may therefore be a reasonable presumption to draw from the wording of this clause, that the legisla |