12 Ch. D. 337 (1879). If while they are in the possession § 27. of the creditor, the debtor contracts other debts, he will have, in the absence of agreement to the contrary, a lien on them by implication of law for the payment of these new debts: C. C. Art. 1975. In England a banker has a lien by implication of law on all bills or notes received from his customers in the ordinary course of banking business to secure any balance that may be due: Brandao v. Barnett, 3 C. B. at p. 531 (1846); Johnson v. Robarts, L. R. 10 Ch. 505 (1875); Misa v. Currie, 1 App. Cas. at p. 569 (1876); London Chartered Bank of Australia v. White, 4 App. Cas. 413 (1879); re Bowes, 33 Ch. D. 586 (1886). If the amount of the lien is less than the note, the holder is a trustee for the pledgor for the difference: Reid v. Furnival, 1 Cr. & M. 538 (1833). ILLUSTRATIONS. 1. A holder received a £30 note as security for a £10 loan. He can only recover £10 from the accommodation maker: Strathy v. Nicholls, 1 U. C. Q. B. 32 (1844). 2. The holder of promissory notes transferred by the payee as collateral security against a future liability on the holder's part for the payee, can collect the notes at maturity before that liability arises, and hold the proceeds to the extent of his liability Ross v. Tyson, 19 U. C. C. P. 294 (1869). 3. When a $200 note is deposited as collateral to a discounted note of the same amount, it may be retained as collateral to a partial renewal of the discounted note for $175, and the latter not being paid the holder can recover $175 from the maker of the collateral note: Canadian Bank of Commerce v. Woodward, 8 Ont. A. R. 347 (1883). 4. A creditor who has received the promissory notes of third parties as collateral security, is not responsible to the debtor for laches with respect to the collection of the notes or want of § 27. notice to the debtor, unless the latter has been injured thereby : Ryan v. McConnell, 18 O. R. 409 (1889). 5. Where a seller took customers' notes and hire receipts as collateral, discounted the notes with a bank, letting the bank know the circumstances, but not giving the receipts with the notes, the receipts were held to be accessory to the debt, and on default the bank was entitled to have them handed over: Central Bank v. Garland, 20 O. R. 142 (1890); affirmed in Appeal, 18 Ont. A. R. 438 (1891). 6. Bills and notes held as collateral security may found a writ of attachment in insolvency against the maker: Hutchins v. Cohen, 14 L. C. J. 85 (1869). 7. The holder of a promissory note as collateral security for a loan is a holder for value within the meaning of Art. 2287 of the Civil Code: Exchange Bank v. Normand, 13 R. L. 59 (1884). 8. An agent holds a bill indorsed in blank. He fraudulently pledges it to a party who makes an advance on it in good faith. The pledgee can hold it against the principal for the amount due him: Collins v. Martin, 1 B. & P. 648 (1797). 9. A., the holder of a bill for £100, deposits it with B. as security for a running account. When the note matures there is a balance in A.'s favour, but subsequently there is a balance of £50 against him. B. is a holder for value for £50: Atwood v. Crowdie, 1 Stark. 483 (1816). 10. Where a bill is negotiated from one person to another it will be presumed that it has been wholly transferred. He who claims that it was only pledged or deposited as collateral security must prove it: Hills v. Parker, 14 L. T. N. S. 107 (1866); re Boys, L. R. 10 Eq. 467 (1870). 11. If a banker negotiates a bill that he knows does not belong to his customer, no lien can attach: ex parte Kingston, L. R. 6 Ch. 632 (1871). 12. A depositor has two accounts in a bank. He indorses a bill as collateral security for one account and draws for part of the amount. He fails and the other account is overdrawn more § 27. than the balance of the bill. The bank is holder of the bill for full value re European Bank, L. R. 8 Ch. 41 (1872). 13. Where a bill is discounted, the party discounting it does not hold it as collateral security, or as a pledgee, but is a holder for full value: re Gommersall, 1 Ch. D. 142 (1875); ex parte Schofield, 12 Ch. D. 337 (1879). 14. The drawer of an accommodation bill indorses it as a security for a smaller sum. The acceptor fails. The indorsee can prove for the full amount of the bill, but cannot receive dividends in excess of the amount of the loan ex parte Newton, 16 Ch. D. 330 (1880). 15. Accommodation paper may be pledged as collateral: Washington Bank v. Krum, 15 Iowa 53 (1863). dation 28. An accommodation party to a bill is a per- Accommoson who has signed a bill as drawer, acceptor, or party to a indorser, without receiving value therefor, and for the purpose of lending his name to some other person: Imp. Act, s. 28 (1). A bill may be drawn or indorsed by accommodation parties without being an accommodation bill. It is only when the acceptor of a bill or the maker of a note is an accommodation party, that it is strictly an accommodation bill or note. The person accommodated need not be a party to the bill or note. Where an accommodation bill is paid in due course by the party accommodated the bill is discharged: section 59, s-s. 3. Where an accommodation bill is accepted, for the benefit of the drawer or an indorser, he is liable without presentment for payment protest, or notice of dishonor: section 46, s-s. 2 (c) and (d); section 50, s-s. 2 (c) (4) and s-s. 2 (d) (3); section 51, S-8. 9. As to the negotiation of an overdue accommodation bill see section 36, s-s. 2. Every party whose : $ 28. signature appears on a bill is prima facie deemed to have become a party for value, so that any person claiming to be an accommodation party must make clear proof of that fact section 30; Morehouse v. Burland, Ramsay A. C. 280 (1875); Parker v. Fuller, ibid. 281 (1877). His liability. Where notes were agreed to be made and indorsed indiscriminately by a number of partners and the proceeds to go to the benefit of the joint concern, they were held to be accommodation notes and one partner could not recover as holder from his co-partners: Bowes v. Holland, 14 U. C. Q. B. 316 (1857). Where there is a running account between the drawer and drawee, and a bill is accepted, it is not an accommodation bill, even although the account was against the drawer at the time of acceptance: re Swan, L. R. 6 Eq., 356 (1868). Where the drawer and acceptor receive a commission for drawing and accepting the bill from a person who does not become a party to it, this is an accommodation bill: Oriental Financial Corporation v. Overend, L. R. 7 Ch. 142 (1871). An accommodation bill is not issued, within the meaning of section 64 of the Act (63 of the Canadian Act), until it comes into the hands of some person who can sue upon it: Engel v. Stourton, 5 T. L. R. 444; 53 J. P. 535 (1889). 2. An accommodation party is liable on the bill to a holder for value; and it is immaterial whether, when such holder took the bill, he knew such party to be an accommodation party or not. Imp. Act, s. 28 (2). The rights of a holder for value have been defined in section 27, s-s. 2 and 3. An accommodation party occu pies the relation of a surety with respect to the person § 28. for whose accommodation he has become a party, and may set up any defence connected with the bill, that his principal could. He may also be released by the holder giving time to the principal, if the holder is aware of the relation between them: Bechervaise v. Lewis, L. R. 7 C. P. 372 (1872). ILLUSTRATIONS. 1. A second accommodation indorser, who has paid a note, may recover from a prior accommodation indorser: Breeze v. Baldwin, 5 U. C. O. S. 444 (1837). 2. It is no defence by a maker of a note payable to bearer that it was made for the accommodation of a third party, and that plaintiffs hold it without value or consideration: Muir v. Cameron, 10 U. C. Q. B. 356 (1852); overruling on this point Strathy v. Nicholls, 1 U. C. Q. B. 32 (1844). 3. It is no defence by the maker that the plaintiff, indorsee, gave no value to the indorser for his indorsement, or that he took the note knowing that it was indorsed for the accommodation of the maker, without denying that he is a holder for value: Miller v. Ferrier, 7 U. C. Q. B. 540 (1850). 4. The indorser of a note to enable the maker to get goods from the payee is liable on an action by the payee: Moffatt v. Rees, 15 U. C. Q. B. 527 (1858). See also Peck v. Phippon, 9 U. C. Q. B. 73 (1852); Foster v. Farewell, 13 U. C. Q. B. 449 (1855); Gunn v. McPherson, 18 U. C. Q. B. 244 (1859); Smith v. Richardson, 16 U. C. C. P. 210 (1865). 5. The holder of a bill for value, notwithstanding his having subsequently become aware of its being an accommodation bill, may release the drawer without releasing the acceptor: City of Glasgow Bank v. Murdock, 11 U. C. C. P. 138 (1861). 6. Accommodation indorsers, after the note on which they were liable had matured, filed a bill against the holder and maker to enforce payment against the latter. The relief prayed |