drawers, but they were payees and holders for value in the regular course of business, and the case last referred to, which was decided in the Exchequer Chamber, shows that such an acceptance binds the acceptor conclusively as between them and every bont fide holder for value.

Very many cases decide that the drawee of a bill of exchange is bound to know the handwriting of his correspondent, the drawer, and that if he accepts or pays a bill in the hands of a bona fide holder for value, he is concluded by the act, although the bill turns out to be a forgery. If he has accepted he must pay, and if he has paid he cannot recover the money back, as the money, in such a case, is paid in pursuance of a legal obligation as understood in the commercial law. (Goddard v. Merchants' Bank, 4 Comstock, 149; Bank of Commerce v. Union Bank, 3 Id. 234; Bank of the United States v. Bank of Georgia, 10 Wheaton, 348; Price v. Neal, 3 Burrow, 1355).

Difficulty sometimes arises in determining whether the plaintiff, in an action on a bill of exchange, is the immediate promisee of the defendant, or whether he is to be regarded as a remote. party, but it is settled law that the payee, where he discounts the bill at the request of the drawer, is regarded as a stranger to the acceptor in respect to the consideration for the acceptance; consequently, if the acceptance is absolute in its terms and the bill is received in good faith and for value, it is no answer to an action by him that the defendant received no consideration for his acceptance or that the consideration therefor has failed; and it is immaterial in that behalf whether the bill was accepted while in the hands of the drawer and at his request, or whether it had passed into the hands of the payee before acceptance and was accepted at his request. (Parsons on Bills, 179; Munroe v. Bordier, 8 C. B. 862).

Certain other defences, such as that the payments were voluntarily made, and that the title to the bills at the time the payments were made was in the National Park Bank, were also set up by the defendants, but the court does not find it necessary to examine those matters, as they are of the opinion that the payments if made to the payees of the bills, a's contended by the plaintiffs, were made in pursuance of a legal obligation and that the money cannot be recovered back. Judgment affirmed.

WHEN LIEN ON INSTRUMENT CONSTITUTES HOLDER FOR VALUE.

Stoddard v. Kimball (1850), 6 Cush. (Mass.) 469.

§ 29.

O. P. Lord, for the plaintiffs.

N. J. Lord, for the defendant.

SHAW, C.J. This was a suit brought by the plaintiff as indorsee of a promissory note, against the defendant as indorser. The defence relied on was, that the defendant indorsed the note, at the request and for the accommodation of the maker, for a special purpose, that of taking up another note on which he was indorser, and that it was not so applied, but was negotiated to the plaintiffs, as collateral security for a debt due to them. The defendant also contended, that the plaintiffs, at the time of taking the note, had notice of the misapplication of the same, as above stated; but this fact was left to the jury, who found that the plaintiffs had no such notice.

It further appeared, that some payments had been made by the maker of the note to the plaintiffs, towards the discharge of the debt, for securing which to the plaintiffs this note was received, and also that the maker being insolvent, the plaintiffs proved this debt against his estate, and received a dividend.

The defendant contended, that if liable at all, he was liable only for the balance of the debt due the plaintiffs, if less than the amount of the note, and the judge, who tried the cause, so ruled, subject to the opinion of the whole court, and in case they should be of opinion that the plaintiffs are entitled to recover the whole amount, the verdict is to be altered and amended accordingly.

We think the direction was right. An indorser of an accommodation note, passed by indorsement to a bona fide holder, in due course of business, is effectually bound to all the liability, to which, by law, the indorser of a business note is liable. He stipulates to take on himself the qualified obligation of one, who indorses and puts in circulation a note taken by himself for value in the course of business.

If indeed an accommodation note is obtained from another, by fraud, deception, or false practices, or having been obtained for one purpose, is fraudulently misapplied to another, and it is negotiated to one, even for value, with full notice of the fraud in obtaining or misusing it, he cannot recover; he is not a bona fide holder; an attempt to recover it would make him a partaker in the fraud; and the same would be true of a business note.

In the present case, it appearing that the note was negotiated to the plaintiffs before it was due, for a valuable consideration, and the jury having found that they took it without notice of the misapplication by the maker, it is clear that they have a right to recover; and the only remaining question is, for what amount they may recover. In general, the holder of an indorsed note will be entitled to recover the whole amount of the face of the note, because the presumption of fact, in the absence of counter proof, is, that he gave the full value for it, or that he took it from some other holder for value, to collect the amount, receive a certain part to his own use, and account to the party from whom he took it for the surplus. Having taken it to secure a preexisting debt, of a less amount, he is a holder for value in his own right, only to the amount of the debt due him. If therefore it appears in proof, that the plaintiff is not accountable to any third person for any surplus, then there is no reason why he should recover any more than the balance of the debt, for which he is a bona fide holder for value. Here, it appears that the plaintiff received this note of the maker, for whose accommodation the defendant indorsed it. It being obvious, that the plaintiff can recover nothing as trustee for the party from whom he received it, he is liable over to nobody for the surplus, and therefore can have judgment only for the amount due to himself, for his own use and in his own right, which is so much of the note as may be necessary to satisfy the balance of the debt, for the security of which he received it.

Judgment on the verdict for the plaintiff for the smaller sum.

Redfern et al. v. Rosenthal et al. (1902), 86 L. T. R. 855.

This was an appeal by the defendants from a judgment of the King's Bench Division (Channell and Bucknill, JJ.), affirming a decision of the judge of the Birmingham County Court.

The action was brought against the acceptors of a bill of exchange, dated the 23d June, 1899, for 200l., payable four months after date.

The facts appear in the judgment of the Master of the Rolls. It may further be added that, on the 7th Oct., 1899, it appeared that the plaintiffs first learnt that the bill was an accommodation bill.

The judgment of the King's Bench Division is reported 85 L. T. Rep. 313.

The Bills of Exchange Act 1882 (45 and 46 Vict. c. 61) provides as follows:

Sect. 27, sub-sect. 3. Where the holder of a bill has a lien on it, arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien.

COLLINS, M.R. This is an appeal from a judgment of the Divisional Court, consisting of Channell and Bucknill, JJ., who affirmed a decision of the judge of the Birmingham County Court, but on different grounds. The transaction which gave rise to the action is somewhat complicated, but the facts are shortly these: Rosenthal Brothers were desirous of raising some money, and for this purpose sent to Bischoffswerder a bill of exchange, dated the 23d June, 1899, payable four months after date accepted by them, and they requested him to fill in his name as drawer, and get the bill discounted for them. Bischoffswerder filled in his name as drawer, indorsed the bill in blank, and handed it to a man named Lewis, who agreed to get it discounted. Lewis then claimed a right to keep the bill, on the ground of Bischoffswerder being in debt to him. The bill in Lewis' hands being a fully negotiable instrument, Bischoffswerder at once in July instructed his solicitors, Messrs. Redfern and Son, who are the plaintiffs in the present action, to commence an action against Lewis in order to stop him from negotiating it, and to get it back from him. An interlocutory injunction was obtained, restraining Lewis until the trial of the action from negotiating the bill. The action came on for trial at Birmingham Assizes in Dec., 1899, so that by that time the bill was overdue. Bischoffswerder obtained a verdict and judgment for the recovery of the bill. At the end of the trial the bill was handed over by Lewis to the managing clerk of Messrs. Redfern and Son. The clerk showed the bill to Bischoffswerder and to Rosenthal Brothers, who were present in court, but after looking at it they handed it back to the clerk, who said that Messrs. Redfern and Son had a right to retain it as they had a lien on it for their costs. The present action was then brought by Messrs. Redfern and Son to recover the amount of their costs in Bischoffswerder's action against Lewis. The action is brought not only against Bischoffswerder, who is clearly liable for the costs, but also against Rosenthal Brothers as acceptors of the bill, for so much of the amount due upon the bill as will satisfy the plaintiffs' claim for costs. The County Court judge held

that Rosenthal Brothers were liable upon the bill, under sect. 27, sub-sect. 3, of the Bills of Exchange Act 1882, and that judgment was affirmed by the King's Bench Division. Rosenthal Brothers have appealed against this decision. Bischoffswerder is no party to the appeal. Now, sect. 27, sub-sect. 3, provides that where the holder of a bill has a lien on it, arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien. The plaintiffs' argument was that they were holders of the bill, and as they had a lien on it, they were holders for value, and were therefore entitled to recover in this action. Now, there was some evidence at the trial of the action that Rosenthal Brothers and Bischoffswerder, after some discussion with the plaintiffs' clerk, had handed the bill to him for the purpose of Messrs. Redfern and Son's lien so as to make him holder for value. A controversy arose as to this evidence, and thereupon the plaintiffs said that they did not wish to rely upon that ground, and that they relied solely upon their common law rights of lien and on the Bills of Exchange Act 1882. Now, upon these facts I am of opinion that the plaintiffs have no right of action against Rosenthal Brothers. The bill was handed by Rosenthal Brothers to Bischoffswerder for a specific purpose-namely, to get it discounted-and that purpose failed. When the bill came into the plaintiffs' hands it was overdue. It was not a negotiable instrument. As between the plaintiffs and the defendants the bill never was a living instrument. The plaintiffs when they first got possession of the document as Bischoffswerder's solicitors knew all these facts about it. Yet it was contended that by getting the physical custody of this piece of paper and having done work as solicitors they had acquired the rights of a holder for value under the Bills of Exchange Act 1882 and could sue the acceptors of the bill. It seems to me impossible to say that by getting hold of an overdue bill such as this they became holders for value. The bill should have been re-issued in order to give them any rights upon it. They have misconceived their position. Their rights against the defendants in respect of their lien were no greater than the rights of Bischoffswerder on the bill against the defendants. Bischoffswerder, under the circumstances that I have mentioned, could not, with the plaintiffs' knowledge of the facts, give them any rights on the bill quâ bill. The instrument when they received it was dead, and they could not treat it as a living one. That is enough to decide this case. It is not necessary to give any opinion as to what the plaintiffs' rights would have been if