Sec. 161.

Drawing

issue and endorsement.

Damages.

Legality of consideration.

Obligation

of drawer or endorser.

that it reproduces his words rather than his meaning. For Story really intended to lay down the rule that each contract embodied in a bill should be interpreted according to the law of the place of performance. Dicey, 606-7; Lafleur on Conflict of Laws, 182-3. Cf. Sanders v. St. Helen's Smelting Co., 1906, 1 East. L.R. 56.

The law governing the drawing and putting in circulation or endorsing of a bill will in general be the law of the place where the bill is signed, but if it is signed in one country and delivered in another, the contract is made in the latter. (Chapman v. Cottrell, 1865, 34 L.J. Ex. 186; Horne v. Rouquette, 1878, 3 Q.B.D. 515, 521, 532-4; as to delivery, see sec. 39.)

As regards damages for default in payment, the place at which each party to a bill undertakes that he himself will pay it determines with regard to him the lex loci contractus according to which his liability is governed. The acceptor is liable to pay interest at the rate fixed by the law of the place where the bill is payable (Cooper v. Waldegrave, 1840, 2 Beav. 282). But the drawer and endorsers do not contract to pay the money in the place on which the bill is drawn (cf. Horne v. Rouquette, 1878, 3 Q.B.D. at p. 523), but only to guarantee its payment in that place by the acceptor, and in default of such payment they agree upon due notice to reimburse the holder in principal and damages at the places where they respectively entered into the contract. Story, sec. 315. The damages against the drawer are measured by he law of the place where the bill is drawn (Gibbs v. Fremont, 1853, 9 Ex. 25), and against each endorser by the law of the place where he endorses. Story, sec. 314. Cf., however, Hooker v. Leslie, 1868, 27 U.C.R. 295, and cases cited; North Western Bank v. Jarvis, 1883, 2 Man. R. 53).

The legality of the consideration as regards the drawer must be determined by the law of the place where the bill was drawn. (Story v. McKay, 1888, 15 O.R. 169.)

Nevertheless the doctrine that the drawer's or endorser's obligation is to be determined by the lex loci of the drawing must be accepted with some qualification.

As the drawer and endorsers are in the nature of sureties for the due performance by the acceptor of his obligation, it is obvious that the law of the place where the bill is payable, which regulates such due performance, must affect their obligation by affecting that of the acceptor. Cf. Westlake, p. 393, and see

Rouquette v. Overmann, 1875, L.R. 10 Q.B. 525 at pp. 536-7, Sec. 161. 4 R.C. 287, at pp. 297-8, where it is said that, at least as regards presentment for payment, protest and notice of dishonour, the liability of the drawer is to be measured by that of the acceptor, whose surety he is, and as the obligations of the acceptor are to be determined by the lex loci of performance, so also must be those of the drawer.

162. The duties of the holder with respect to presentment Law as to duties of for acceptance or payment and the necessity for or sufficiency holder. of a protest or notice of dishonour, are determined by the law of the place where the act is done or the bill is dishonoured. 53 V., c. 33, s. 71. Eng. s. 72.

Cf. sec. 75, as to presentment for acceptance;

sec. 85, as to presentment for payment;

secs. 81 and 85, as to dishonour;

sec. 96, as to notice of dishonour;

secs. 112 and 113, as to protest.

The propositions laid down by Westlake (pp. 294-5) on the subject dealt with in this section are:

solutionis

"231. In case of (the dishonour of a bill) the necessity and Lex loci sufficiency of demand, protest or notice of dishonour, by the last governs holder, in order to charge any other party to the bill, is deter- duties of mined by the law of the place where it is payable.

(Rothschild v. Currie, 1841, 1 Q.B. 43; Hirschfeld v. Smith, 1866, L.R. 1 C.P. 340; Horne v. Rouquette, 1878, 3 Q.B.D. 514; Rouquette v. Overmann, 1875, L.R. 10 Q.B. 525.)

"232. But when an endorser has been made liable on a bill, the notice which he must give to his endorser, or to the drawer if there be no intermediate party, depends on the law governing the contract made by the endorsement to him or by the drawing."

Proposition 231 is a consequence of the principle of the lex loci actus. Sec. 162 appears to agree with it notwithstanding the strange wording by which Parliament is made to say that the necessity of an act is to be determined by the law of the place where it is done, while it is just when an act has not been done that the question of its necessity arises. Westlake, p. 294.

last holder.

Sec. 162.

Special rule.

Currency.

Due date.

As to proposition 232, the drawer of the bill, and each endorser, contracts with the next following party to pay him on due notice of dishonour being given; and such notice must be measured by the law of the contract, whenever no question arises about the formalities to be observed in a particular place. The doctrine of the proposition is asserted by the judges in Horne v. Rouquette, supra, and according to Westlake, is not overruled by the Act. Sec. 162 must therefore be interpreted as applying only to the last holder. The words or is not done" must be understood after the word "done" in the section. Westlake, p. 295.

66

By sec. 114, in the case of an inland bill drawn upon any person in the Province of Quebec or payable or accepted at any place in the said province the parties liable on the said bill other than the acceptor are, in default of protest for non-acceptance or non-payment as the case may be, and of notice thereof, discharged, except in cases where the circumstances are such as would dispense with notice of dishonour.

163. Where a bill is drawn out of but payable in Canada, and the sum payable is not expressed in the currency of Canada, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts at the place of payment on the day the bill is payable. 53 V., c. 33, s. 71. Eng. s. 72.

Cf. sec. 136.

The addition to a bill by the holder of words professing to fix the rate of exchange at which the bill is payable, as "at the rate of 25 fr. 75 c. for £1 value received," is a material alteration which avoids the contract, as the rate of exchange at maturity might be lower than the rate mentioned. Hirschfeld v. Smith, 1866, L.R. 1 C.P. at p. 353.

164. Where a bill is drawn in one country and is payable in another, the due date thereof is determined according to the law of the place where it is payable. 53 V., c. 33, s. 71. Eng.

Cf. notes to sec. 161.

Sec. 164.

solutionis

By English law days of grace are allowed on bills payable after date. By French law they are not. A bill drawn in Paris Lex loci on London is entitled to 3 days grace, but a bill drawn in Lon- governs don on Paris is not entitled to grace. (Rouquette v. Overmann, due date. 1875, L.R. 10 Q.B. 525, at pp. 535-538, 4 R.C. 287, at pp. 296299; cf. Bank of America v. Copland, 1881, 4 L.N. 154.)

A bill is drawn in England payable in Paris 3 months after date. After the bill is drawn, but before it is due, a "moratory" law is passed in France, in consequence of war, postponing the maturity of all current bills for one month. The maturity of this bill is for all purposes to be determined by French law. (Ibid.)

Cheque defined.

Provisions as to bills apply.

Cheque defined.

CHAPTER LI.

CHEQUES ON A BANK.

The relation of a banker and customer in regard to cheques has been already discussed in Chapter XVIII., supra, especially at pp. 221 and 212. In this chapter we are concerned with a cheque in regard to its characteristics as a negotiable instrument by the law merchant or, under the Act, as a bill of exchange drawn on a bank payable on demand.

PART III.

CHEQUES ON A BANK.

165. A cheque is a bill of exchange drawn on a bank, payable on demand.

2. Except as otherwise provided in this Part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque. 53 V., c. 33, s. 72. Eng. s. 73.

A cheque under the Act is drawn upon a "bank” (i.e., an incorporated bank or savings bank carrying on business in Canada: see sec. 2-the corresponding word in the English Act is "banker," the definition of which is pointed out in the notes. to sec. 2). It has been held that an instrument in the form of a cheque drawn on a private banker is not a cheque within the meaning of the Act, but a bill of exchange. (Trunkfield v. Proctor, 1901, 2 O.L.R. 326.) Quære, however, whether, independently of the Act, such an instrument is not still a cheque by the law merchant.

If this section is read with sec. 17, which defines a bill of exchange, a cheque may be said to be defined by the Act as "an unconditional order in writing addressed to a bank, signed by the person giving it, requiring the bank to pay on demand a sum certain in money to or to the order of a specified person, or to bearer."