Parties not consenting dis. charged by qualified or limited accept

ance.

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"hindrance to the despatch so essential in banking business, "and would create so serious an impediment to the negotiability "of cheques drawn to order, if a Banker, paying on such an indorsement, were not to be protected and were obliged in every instance first to satisfy himself of the agent's authority, that it may reasonably be assumed that the statutory immunity given to Bankers was intended to include such a case. "The purpose seems to have been, to make the Banker free of 'all responsibility in respect either of the genuineness or validity of the indorsement, whether purporting to be that of "the payee or subsequent indorser on the one hand, or of an "authorized agent on the other hand." When the bill was iutroduced, it was proposed to put indorsements on all negotiable instruments on the same footing, and not to require the drawee to enquire into their genuineness or validity. It is only the drawee, that is the Banker, to whom the protection applies, and not to any other person who takes the cheque on the faith of a forged indorsement, and where a person although in good faith receives payment of a cheque by virtue of a forged indorsement, the drawer is entitled to recover the amount from him. 3

86. If the holder of a bill of exchange acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent is not obtained to such acceptance are discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance.

Explanation. An acceptance is qualified

See the speech of the Honorable Sumner Maine, on introducing the Bill, Supplement to Fort St. George Gazette, 11th October 1867, p. 186 and Sec. 88 of the Draft Bill.

2 See ante, Sec. 6.

3

Ogden v. Benas, L. R. 9 C. P. 513; Arnold v. Cheque Bk., 1 C. P. D. 578.

the pay

(a) where it is conditional, declaring the ment to be dependent on the happening of an event therein stated;

(b) where it undertakes the payment of part only of the sum ordered to be paid;

(c) where, no place of payment being specified on the order, it undertakes the payment at a specified place and not otherwise or elsewhere; or where, a place of payment being specified in the order, it undertakes the payment at some other place and not otherwise or elsewhere;

(d) where it undertakes the payment at a time other than that at which under the order it would be legally due.

We have seen (section 5) that a bill of exchange must be drawn unconditionally, and for payment of a certain sum of money only, but under this section though the order is absolute, a valid acceptance may under certain circumstance, differing from the terms of the order be made, if agreed to by the holder. But such an acceptance will only be binding on the prior parties to the instrument, where they also having had notice of the alteration consent thereto.

The obligation on the holder to give notice to the prior parties, of a difference in the acceptance from the terms of the instrument, is imperative, and the law on the subject has thus been laid down; "If the holder be disposed to take a limited, "conditional or partial acceptance, or one in any way different "from the tenor of the bill, he ought to give immediate notice "of the nature of the acceptance offered, and obtain the consent "of the other parties to the bill, in order to avoid any risk of "discharging the drawers and indorsers from their liability on "it." A man is not bound to receive a limited and qualified acceptance, he may refuse it and resort to the drawer.2

Explanation.-(a). The following are instances of what have been held conditional acceptances: "Accepted, payable on giv

1 Sebag v. Abitbol, 4 M. & S. 466.

2 Gammon V. Schmoll, 5 Taunt. 353.

Effect of mate

"ing up bill of lading for 76 bags of clover seed per Amazon, at "the London and Westminster Bank," which was held to bind the acceptor to pay only, on the bill of lading being handed to him.1 Where the acceptance was "payable in goods" or "payable in bills," it was said, "the plaintiff had a right to "refuse such an acceptance. The drawee of a bill has no right "to vary the acceptance from the terms of the bill, unless they "be unambiguously and unequivocally the same." Or " accept"ed payable when in funds."

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(b.) Where the drawee of a bill for £127-18-4 accepted for £100, or where the acceptance of a bill for £100, expressed it to be payable half in money and half in goods, the acceptance was held valid to the extent of £50.5

(c.) This is taken from 1 and 2 Geo. IV, c. 78. (See notes to Sec. 68.)

(d.) Where a bill was accepted on condition of its being renewed for six months. The case of Walker v. Atwood▾ would seem to come within this rule, there a bill dated 8th April, had no time fixed for payment, was presented to the defendant on the 18th April and he accepted it payable on the 8th September, for by Sec. 19 where in a bill of exchange no time for payment is expressed, it is payable on demand, the acceptance fixing a future date for payment would be a qualified one.

87.

Any material alteration of a negotiable rial alteration. instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties;

Alteration by indorsee.

and any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof.

1 Smith v. Vertue 9 C. B., N. S. 214; S. C. 30 L. J. (C. P.) 56. 2 Boehm v. Garcias, 1 Camp. 425.

3 Smith v. Vertue, supra.

4 Wegersloffe v. Keene, 1 Stra. 214.

5 Petit v. Benson, Comb., 452. 6 Russell v. Phillips, 14 Q. B. 891; S. C. 19 L. J. (Q. B.) 297. II Mod. 190.

7

The provisions of this section are subject to those of sections twenty, forty-nine, eighty-six and one hundred and twenty-five.

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The rules contained in this section as to material alterations in negotiable instruments, are the strict ones of English Law, and include the one that, the instrument is rendered invalid by an alteration made even by a stranger. The bill as prepared by the Indian Law Commission departed from the rule, and both the Honorable Sumner Maine and Mr. Massey, in their speeches in Council spoke in favour of not applying what they called the severity of the English Law on the subject, but on the introduction of the bill in October 1867 the Honorable Mr. Stuart Gladstone spoke in favour of the rule as laid down,1 that “ A party "who has the custody of an instrument made for his benefit, is "bound to preserve it in its original state, and that any material "alteration of an unsealed paper will vitiate the instrument" Byles2 thus summarises Davidson v. Cooper "A deed, bill of exchange, promissory note, guarantee or any other executory written contract, is avoided by an alteration in a material part "thereof while it is in the custody of the plaintiff although that alteration be by a stranger. For a person who has the custody "of an instrument is bound to preserve it in its integrity, and as "it would be avoided by his fraud in altering it himself, so it shall "be avoided by his laches in suffering another to alter it." In a case where the obligee of a bond, made in his favour by one of three brothers, forged the signature of the two other brothers to it, and sued upon it in its altered form, it was contended that the English Law did not apply, and that the plaintiff was entitled to judgment against the brother who had actually signed it. But Garth, C. J., said,❜ "I am sure I do not know why it should not and I see much reason why it should. The Law of England "so far as it is consistent with the principles of equity and good "conscience, has generally prevailed in this country unless it "conflicts with the Hindu or Mahomedan Law * * * * * "where a man has been wicked enough to alter a document fraudulently in this way, we do not think it consistent with

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66

1 Davidson v. Cooper, 13 M. &

W.

352.

13th ed., p. 323.

Gogun Chunder Ghouse v. Dhuronidhur Mundul, I. L. R., 7 Cal. at p. 619.

"equity and good conscience or with sound policy that he "should be entitled to recover upon it, * * * * the plaintiff

ought to fail in his contention, because he has not proved the instrument upon which he founded his claim." In another case of adding a party to a promissory note, Campbell, C. J., said, "We conceive that the defendant is discharged from his liability, if the altered instrument, supposing it to be genuine, "would operate differently from the original instrument whether "the alteration be or be not to his prejudice." The question of the materiality of the alteration is to be decided with reference to the contract itself, and not with reference to the surrounding circumstances.2 The alteration must be either something which appears to be attested by the signature, or something which alters the character of the instrument.3 An alteration which vitiates an instrument, must be such as to cause the instrument on the face of it to operate differently from the original instrument. Thus the alteration of the rate of interest, in one of the clauses of a promissory note, was held to be a material alteration, although the clause so altered, was a penal clause, to which even if unaltered, the Court would not give effect.4

Master v. Miller, is generally considered to be the leading case upon the question, as to what amounts to a material alteration in a negotiable instrument and with one extract from the judgment of Ashhurst, J., we will leave the general principles, and give a few instances of what have been held to be material or immaterial alterations. His Lordship there says, "It seems admitted "that if this had been a deed, the alteration would have vitiated "it. Now I cannot see any reason why the principle on which a deed would have been avoided, should not extend to a bill of exchange. There is no magic in parchment or wax, and the principle to be extracted from the cases is, that any alteration "avoids the contract. If A B had brought this action he could "not have recovered, because he must suffer from any alteration

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1 Gardner v. Walsh, 5 E. & B. 83; S. C. 24 L. J. (Q. B.) 285.

2 Vance v. Lowther, 1 Exch. D. 176.

3 Ede v. Kantonath, I. L. R. 3 Cal. 220; see also Chunder Kant Mookerjee v. Kartick Charan Chaile, 5 Beng. L. R. 103.

Oodey chand Boodaji v. Bhaskar Jagganath, I. L. R. 6 Bom. 371

4 T. R. 320; in Error, 2 H. Bl. 140; S. C. 1 Sm. L. C. 8th ed., 857.