It was formerly considered that the transferree's title would be affected by want of due caution on his part, and that he would be liable in trover to the real owner and unable to enforce payment against the parties to the instrument if he were guilty of negligence in taking it. Thus, where a banker, in a small market town, changed a 5001. Bank of England note for a stranger without any further inquiry than merely asking his name, he was held liable in trover to a party from whom the note had been unlawfully obtained; Best, C. J., observing, "The party's caution should increase with the amount of the note which he is called upon to change.(z) A man may change a 207. note without asking a single question, but would that be right as to one of several thousands? More [*166] caution is required in the case of a discounter than of a payer."(a)

But it is now settled that if a man take honestly an instrument made or become payable to bearer he has a good title to it, with whatever degree of negligence he may have acted, unless his gross negligence induce the jury to find fraud. "I believe," says Lord Denman, "we are all of opinion that gross negligence only would not be a sufficient answer by the defendant where the plaintiff has

(z) Snow v. Peacock, 2 C. & P. 221 (12 E. C. L. R.); and see Gill v. Cubitt, 3 B. & C. 466 (10 E. C. L. R.); 5 D. & R. 324; Egan v. Threlfall, 5 D. & R. 326. (a) Query, whether this last proposition is not now incorrect.

451. A note or bill with a seal to it is not a negotiable instrument; but in Georgia it has been held that a bond payable to bearer is: Porter v. McCollum, 15 Georgia 529. A sealed instrument in the form of a negotiable note is not negotiable: Helper v. Alden, 3 Minn. 332. A note under seal is not entitled to days of grace: Skidmore v. Little, 4 Texas 301. Printed letters "L. S." in brackets is a seal: Giles v. Mauldin, 7 Richardson 11. Affixing a seal to a bill of exchange does not deprive it of its commercial character: Bain v. Wilson, 10 Ohio (N. S.) 14.

Indorsement of a note payable to bearer renders the indorser liable as such : Davis v. Wilson, 31 Texas 136.

As to assignment by delivery without indorsement or by separate assignment, see Crosley v. Roub, 16 Wisc. 616; Burnap v. Cook, 32 Illinois 168; Franklin v. Twogood, 18 Iowa 515; Williams v. Norton, 3 Kansas 295; Borum v. King's Adm., 37 Ala. 606; Vansant v. Arnold, 31 Geo. 210; Childs v. Davidson, 38 Illinois 437; Taylor v. Reese, 44 Miss. 89; Eckford v. Hogan, Ibid. 398; Redmond v. Stansbury, 2 Mich. C. C. 124. In equity a good title to a negotiable instrument may be transferred by delivery if indorsement, though intended, is omitted by mistake: Hughes v. Nelson, 29 N. J. Eq. 547.

given consideration for the bill. Gross negligence may be evidence of mala fides, but it is not the same thing. We have shaken off the last remnant of the contrary doctrine."(b)1

If the party presenting a bill or note payable to bearer be a mere agent of another, the agent's title is infected with the infirmity of his principal's title, although the principal is in the agent's debt; and the agent consequently cannot enforce payment of the maker. (c)

It makes no difference that the bill or note is only pledged, and not absolutely transferred; the pawnee acquires a property in it,(1) and is not liable in trover to the real owner, as in the case of goods improperly pledged.(e)

Exchequer bills, which are payable to bearer before the blank is. filled up,(f) bonds of foreign princes and states *payable to bearer,(g) and East India bonds, (h) resemble money and

[*167]

(b) Goodman v. Harvey, 4 Ad. & El. 870 (31 E. C. L. R.); 6 N. & M. 372; Uter v. Rich, 10 Ad. & E. 784 (37 E. C. L. R.) ; 2 P. & D. 579. In the case of Goodman v. Harvey the bill bore on it when discounted the notarial mark of non-acceptance. To use the words of the Lord Chief Justice," the plaintiff received the bill with a death wound apparent on it." See also Backhouse v. Harrison, 5 B. & Ad. 1098 (27 E. C. L. R.) ; 3 N. & M. 188 ; Crook v. Jadis, 5 B. & Ad. 909 (27 E. C. L. R.); 3 N. & L. 257; Foster v. Pearson, 1 C., M. & R. 855; 5 Tyr. 255; Willis v. Bank of England, 4 A. & E. 21 (31 E. C. L. R.); Raphael v. Bank of England, 17 C. B. 161 (84 E. C. L. R.); Carlon v. Ireland, 5 E. & B. 765 (85 E. C. L. R.); Bank of Bengal v. Fagan, 7 Moore P. C. C. 72.

(c) Solomons v. Bank of England, 13 East 135; 1 Rose 99. As to agent transgressing his authority, see Watson v. Russell, 34 L. J., Q. B. 93.

(d) Barber v. Richards, 20 L. J., Exch. 135.

(e) Collins v. Martin, 1 Bos. & Pul. 648; 2 Esp. 520. See as to lien of banker, post.

(f) Wookey v. Pole, 4 B. & Ald. 1 (6 E. C. L. R.); see as to dividend warrants Partridge v. Bank of England, 13 L. J., Q. B. 281, and 9 Q. B. 424 (58 E. C. L. R.), in error; and see further, as to exchequer bills, Barnett v. Brandao, 6 M. & G. 630; Brandao v. Barnett, 3 C. B. 519 (54 E. C. L. R.). In the state of Georgia it has been held that any bond payable to bearer is a negotiable instrument: Byles on Bills, 6th American edition, p. 257.

(g) Gorgier v. Mieville, 3 B. & C. 45 (10 E. C. L. R.); 4 D. & R. 641; Jones v. Peppercorn, 28 L. J., Chan. 158; 1 Johnston 430; Goodwin v. Robarts, L. R., 10 Ex. 337; 44 L. J. 57 and 157.

(h) 51 Geo. 3, c. 64.

1 McSparran v. Neeley, 91 Pa. St. 17; Frank v. Lilienfeld, 33 Gratt. 377.

bills of exchange payable to bearer in the necessary union of possession and property. Honest acquisition confers title.(¿) 1

A metallic token, like an I O U, should seem at common law to be only evidence of a debt. Though intended for circulation it can therefore at common law give no right of action to a transferree.

But the issuer of tokens made of mixed metals, compounded partly of gold and silver, was formerly liable to the holder.(k) The issuer of a token made wholly or in part of copper is liable only to the original taker.(1)

The issuing of tokens made partly of gold or silver was restrained by the 53 Geo. 3, c. 114 (now repealed by the 24 & 25 Vict. c. 101), and the issuing of tokens made wholly or partly of copper by the 57 Geo. 3, c. 46.

Tokens into the composition of which neither the precious metals nor copper enter, seem left to the common law.

Wages of artificers, however, cannot in certain trades, even by consent, be paid in tokens.(m)

Seventhly, as to transfer under peculiar circumstances.

An indorsement may be made even before the bill or note itself, and so render the indorser liable to subsequent parties to any amount warranted by the stamp.2 The plaintiffs were bankers, with whom

(i) The embezzling of bills by agents, or pledging them beyond their lien, is a misdemeanor punishable by penal servitude or imprisonment: 24 & 25 Vict. c. 96, s. 75. As to LOST BILLS, see the chapter on that subject.

() 53 Geo. 3, c. 114, s. 3. This statute is repealed by 24 & 25 Vict. c. 101. (1) 57 Geo. 3, c. 46.

(m) 1 & 2 Will. 4, c. 37.

1 Negotiability of United States Treasury note: Denman v. Duncan, 57 N. Y. 573; Vermilye v. Adams Express Co., 21 Wall. 138.

An indorsement of commercial paper, blank as to date, time or place of payment, amount or name of payee, and its delivery to the maker, gives authority to the holder to fill the blanks in general conformity to the character of the paper: Spitler v. James, 32 Ind. 202; Dunham v. Clogg, 30 Maryland 284. The indorser of a note in blank cannot deny that the blanks were properly filled in a suit against him by an indorsee for value: Farmers' Bank v. Garten, 34 Mo. 119. When a note is indorsed in blank, a mistake made by writing over the signature a contract not authorized by the circumstances will not discharge the indorser, no fraud being intended: Seymour v. Mickey, 15

one G. had dealings. They refused to let him have more money, unless he procured them the indorsement of a third person. G. accordingly induced the defendant to sign his name across the back of four blank forms of promissory notes. G. then filled them up and delivered them to the plaintiffs, who knew the notes were blank at the time of the indorsement. The notes were not paid by G., the maker, and the plaintiffs called on the defendant as indorser. Lord Mansfield: "Nothing is so clear as that the indorsement on a blank note is a letter of *credit for an indefinite sum. The

defendant said, 'Trust G. to any amount and I will be his [*168] security.' It does not lie in his mouth to say the indorsements were not regular."(n)'

An indorsement may be made either before or after acceptance.2 If a bill be indorsed after refusal to accept and notice thereof to the indorsee, or after it is due, these are circumstances which may reasonably excite suspicions as to the liability or solvency of the antecedent parties. An indorsee, therefore, of a bill dishonored or after due, with notice thereof, has not all the equity of an indorsee for value in the ordinary course of negotiation. He is held to take

(n) Russell v. Langstaffe, Doug. 496; and this seems to be the law in America, though the amount of liability is not there limited by any stamp laws: Byles on Bills, 6th American edition, pp. 260 and 292; Usher v. Dauncy, 4 Camp. 97. A bill may be indorsed before the day of its date: Passmore v. North, 13 East 517; and see Smith v. Mingay, 1 M. & Sel. 87; Cruchley v. Clarence, 2 M. & Sel. 90; and see 17 Geo. 3, c. 30, s. 1; and Shultz v. Astley, 2 Bing. N. C. 544 (29 E. C. L. R.); 2 Scott 815; 1 Hodges 525; but if holder had notice of any fraud he cannot fill in the blanks: Hogarth v. Latham, L. R., 3 Q. B. D. 643. See post, chapter on ACCEPTANCE.

Ohio St. 515. Indorser before delivery to payee is liable as maker: Good v. Martin, 2 Col. 218.

1 A blank indorsement, upon a blank piece of paper, with intent to give a person credit, is in effect a letter of credit; and if a promissory note is afterwards written on the paper, the indorser cannot object that the note was written after the indorsement: Violett v. Patton, 6 Cranch 142.

2 Indorsement on the last day of grace is good: Crosby v. Grant, 36 New Hampshire 273. The indorsements on a note, if not dated, must be taken to be of the same date as the note: Snyder v. Oatman, 16 Indiana 265; Stewart v. Smith, 28 Illinois 397; Bates v. Prichett, 5 Indiana 22. When the indorsement is without date, and is shown not to have been made until after the date of the note, the burden is upon the holder to show that the indorsement was made before suit: Parker v. Tuttle, 41 Maine 349.

the bill on the credit of his indorser, and has no superior title against the other parties.(o)

Drawer requested defendant to indorse two bills for his, the drawer's, accommodation. He accordingly drew two in favor of the defendant, which defendant indorsed and gave up to him. These bills the drawer then gave to A., and A. signed an agreement with defendant that if one of the bills were paid the defendant should be exonerated from the other. One of them the defendant accordingly did pay. The other was presented for acceptance and dishonored; it was, after this, indorsed by A. to the plaintiffs, with notice of the dishonor. On payment being refused, plaintiffs sued defendant. Held that the plaintiffs, having taken the bill after notice of dishonor, took the title of their indorser, and that as the agreement would have been a defence to an action at the suit of A., it was a defence also against the plaintiffs.(p)

But if the indorsee had no notice of the dishonor, he is not prejudiced by it. Payee presented a bill for acceptance, which was refused. He neglected to advise the drawer, and thereby discharged the drawer as between the drawer and himself. [*169] He then indorsed the bill without informing his indorsee of the dishonor. Held that the discharge to the drawer extended only to an action at the suit of the party guilty of the neglect, and that the indorsee having had no notice of the dishonor, the same defence was not available against him as against his indorser.(q)

"After a bill or note is due,"(r) says Lord Ellenborough, "it comes disgraced to the indorsee, and it is his duty to make inquiries concerning it. If he take it, though he give a full consideration for it, he takes it on the credit of the indorser, and subject to all

(0) But as to a bill payable to bearer, see Goodman v. Harvey, 4 Ad. & El. 870 (31 E. C. L. R.); 6 N. & Man. 372; Raphael v. Bank of England, 17 C. B. 161 (84 E. C. L. R.); Carlon v. Ireland, 5 E. & B. 765 (85 E. C. L. R.). (p) Crossley v. Ham, 13 East 498.

(q) O'Keefe v. Dunn, 6 Taunt. 305 (1 E. C. L. R.); 1 Marsh. 613; affirmed in the K. B., 5 M. & S. 282; and see Whitehead v. Walker, 11 L. J., Exch. 168; 9 M. & W. 506; 10 M. & W. 696; and Bartlett v. Benson, 14 M. & W. 733; 3 D. & L. 274; 15 L. J., Exch. 23.

(r) Tinson v. Francis, 1 Camp. 19. It is apprehended that wherever it is alleged that a bill was indorsed when overdue, or under any other peculiar circumstances, it lies on the party averring the fact to prove it on the general principle, "Ei incumbit probatio qui dicit."