CHAPTER XLIII.

DISHONOUR.

Subject to the provisions of the Act, when a bill has been dishonoured by non-acceptance (sec. 81) or non-payment (sec. 95) notice of honour must be given to the drawer and to each endorser (sec. 96). The giving of notice is one of the duties of the holder. As to these duties generally, see notes at the beginning of Chapter XLI., supra, p. 484.

Dishonour.

95. A bill is dishonoured by non-payment,

(a) when it is duly presented for payment and payment is refused or cannot be obtained; or,

Non-payment on presentment.

(b) when presentment is excused and the bill is overdue and Excuse. unpaid.

2. Subject to the provisions of this Act, when a bill is dis- Recourse. honoured by non-payment, an immediate right of recourse against the drawer, acceptor and endorsers accrues to the holder. 53 V., c. 33, s. 47. Eng. s. 47.

As to due presentment, see sec. 86.

As to the cases in which presentment is excused, see sec. 92. Sections 81 and 82 dealing with dishonour by non-acceptance Dishonour are as follows:

81. A bill is dishonoured by non-acceptance,(a) When it is duly presented for acceptance, and such acceptance as is prescribed by this Act is refused or cannot be obtained; or,

(b) When presentment for acceptance is excused and the bill is not accepted.

82. Subject to the provisions of this Act, when a bill is dishonoured by non-acceptance an immediate right of recourse against the drawer and endorsers accrues to the holder, and no presentment for payment is necessary.

by nonacceptance.

Sec. 95.

These two sections are strictly parallel with sec. 95, and the Dishonour. revisers might more logically have placed all three sections under the heading "Dishonour." If secs. 81 and 82 are properly relegated to "Presentment for Acceptance" (Chapter XLI.), then sec. 95 belongs to "Presentment for Payment" (Chapter XLII.).

Subject to the provisions of this Act.

See secs. 147 to 155 as to acceptance and payment for honour.

Dishonour by non-payment.

If a note is payable with interest and an instalment of interest comes due before the maturity of the note, non-payment of such instalment probably constitutes dishonour of the note. (Moore v. Scott, 1906, 5 West. L.R. 8, 11, following Jennings v. Napanee, 1885, 4 C.L.T. 595.)

Right of recourse and right of action.

Right of recourse must be distinguished from right of action. As against the acceptor, no notice of dishonour is necessary (sec. 96), and the holder's right of action accrues as soon as the bill is overdue. The word "acceptor" in sub-sec. 2 is not in the English Act, but no change in the law appears to have been made by the insertion of the word in the Canadian Act. The similar provision in regard to dishonour by non-acceptance (sec. 82) omits the word "acceptor."

As against the drawer and each endorser, subject to the provisions of the Act, notice of dishonour must be given (sec. 96). The bill may be, and in certain cases must be, noted or protested (secs. 112 and 113). The holder's right of action dates from the time when notice of dishonour is or ought to be received and not from the time when it is sent. (Castrique v. Bernabo, 1844, 6 Q.B. 498.)

At any time on the day when a bill is payable the holder of a bill may, immediately upon payment being refused by the acceptor, give notice of dishonour to the drawer and the endorsers (sec. 98). But the drawer and endorsers, as well as the acceptor, still have the whole of such day in which to pay the bill, and if payment is made subsequently on the same day, the payment is good and the notice of dishonour becomes of no avail. (Kennedy v. Thomas, [1894] 2 Q.B. at pp. 764, 765.)

Sec. 95.

In Kennedy v. Thomas, the English Court of Appeal decided that an action brought by the holder against the acceptor on No right of the last day of grace must be dismissed as premature. In Upper action on the last day Canada, however, the Court of Queen's Bench had previously of grace. held the contrary. (Sinclair v. Robson, 1858, 16 U.C.R. 211.) Sinclair v. Robson was a case of a promissory note payable at a bank. The note was dishonoured and by virtue of a statute similar to the provision of sec. 121 (authorizing protest for nonpayment on the day of dishonour at any time after three o'clock) was protested for non-payment on the same day. The plaintiff, an endorsee, paid the note at four o'clock, and sued out a writ at five o'clock. Held, that the action was not premature.

A similar question in regard to a bill of exchange came before the Ontario Queen's Bench Division in Edgar v. Magee, 1882, 1 O.R. 287. The case of Sinclair v. Robson was remarked upon but not overruled. One member of the court approved of it, one disapproved, and the third distinguished it on the ground that a cause of action would accrue upon a bill or note on the last day of grace provided it was presented at the place of payment on that day and payment refused. In the result it was held, that by reason of the Statute of Limitations a writ issued on the 1st December, 1881, upon a note falling due on 1st December, 1875, was not too late.

The rule was laid down by the Judicial Committee in Trimble v. Hill, 1879, 5 App. Cas. 342, that where a colonial legislature has passed an Act in the same terms as an Imperial Statute, and the latter has been authoritatively construed by the Court of Appeal in England, such construction should be adopted by the courts of the colony. This rule has not been always observed in Ontario (see McDonald v. Elliott, 1886, 12 O.R. 98, under the authority of which in Bank of Toronto v. McBean, 1900, 21 C.L.T. 44, Sinclair v. Robson was followed in preference to Kennedy v. Thomas). The rule has, however, since been applied in various cases. (See Hollender v. Ffoulkes, 1894, 26 O.R. 1; McVity v. Trenmouth, 1905, 9 O.L.R. at p. 109; but see Toronto v. Toronto Ry. Co., 1905, 9 O.L.R. at p. 339, where it is suggested that owing to a provision in the Ontario Judicature Act, the courts of Ontario must follow a decision of the Court of Appeal for Ontario notwithstanding any later expres

sion of opinion in any English court, except the Judicial Committee itself.)

It would appear therefore that Kennedy v. Thomas must be followed in preference to Sinclair v. Robson, unless the absence from the English Act of any provision similar to that of sec. 121 referred to above constitutes a sufficient difference between the two statutes to take the case out of the rule laid down in Trimble v. Hill. Demers v. Rousseau, 1892, Q.R. 1 S.C. 440, is a decision to the same effect as Kennedy v. Thomas.

Accrues to the holder.

A. draws a bill upon B., payable at a bank. The bank is A.'s agent to procure acceptance and payment. A. may bring an action in his own name against B. (Richards v. Bowes, 1892, 31 N.B.R. 144.)

Limitations and prescription.

Limitation of action is usually governed by the law of the place where the action is brought: see Chapter L., infra.

Chalmers (p. 293) lays down the following rules as to the Statute of Limitations:

1. Subject to the case provided for by sec. 96(a) ["where a bill is dishonoured by non-acceptance, and notice of dishonour is not given, the rights of a holder in due course subsequent to the omission shall not be prejudiced by the omission"], and subject to rule 5, no action on a bill can be maintained against any party thereto after the expiration of six years from the time when a cause of action first accrued to the then holder against such party. (Whitehead v. Walker, 1842, 9 M. & W. 506; Woodruff v. Moore, 1850, 8 Barb. (N.Y.) 171.)

2. As against the acceptor, time begins to run from the maturity of the bill, unless,

(1) Presentment for payment is necessary in order to charge the acceptor, in which case time (probably) runs from the date of such presentment (cf. sec. 93); or,

(2) The bill is accepted after its maturity, in which case time (probably) runs from the date of acceptance (cf. sec. 23).

3. As regards the drawer or an endorser, time (generally) begins to run from the date when notice of dishonour is received. (Cf. Castrique v. Bernabo, 1844, 6 Q.B. 498; and notes to sec.

4. When an action is brought against a party to a bill, to enforce an obligation collateral to the bill, though arising out of the bill transaction, the nature of the particular transaction determines the period from which time begins to run.

5. Any circumstance which postpones or defeats the operation of the Statute of Limitations in the case of an ordinary contract postpones or defeats it in like manner in the case of a bill.

No endorsement or memorandum of any payment written or made upon a bill by or on behalf of the party to whom such payment is made is sufficient to defeat the operation of the statute. (9 Geo. IV., c. 14, sec. 3.)

Sec. 95.

dishonour.

96. Subject to the provisions of this Act, when a bill has Notice of been dishonoured by non-acceptance or by non-payment, notice of dishonour must be given to the drawer, and each endorser, and any drawer or endorser to whom such notice is not given is discharged: Provided that,—

holder.

(a) where a bill is dishonoured by non-acceptance, and due Subsequent notice of dishonour is not given, the rights of a holder in due course subsequent to the omission shall not be prejudiced by the omission;

ment.

(b) where a bill is dishonoured by non-acceptance, and due Notice of notice of dishonour is given, it shall not be necessary to non-paygive notice of a subsequent dishonour by non-payment, unless the bill shall in the meantime have been accepted.

2. In order to render the acceptor of a bill liable it is not Notice to acceptor. necessary that notice of dishonour should be given to him. 53 V., c. 33, ss. 48 and 52. Eng. ss. 48 and 52.

Prior to 1906 sub-sec. 2 and sec. 109 formed one sub-section of a section which included the provisions of sec. 93 and subsec. 3 of sec. 85.

As to dishonour by non-acceptance, see sec. 81, and by nonpayment, see sec. 95.

As to holder in due course, see sec. 56.

Secs. 97, et seq., contain the rules regarding the time and manner of giving notice of dishonour, the persons by whom and

33-BANK ACT.