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The re-exchange is the value of the foreign coin expressed in English money at the rate of exchange on the day of dishonour, with interest and expenses; see Suse v. Pompe, 8 C. B., N. S. 538; 30 L. J., C. P. 75; and evidence of custom amongst merchants, giving the holder the option of recovering the sum which he gave for the bill in England or the re-exchange, is not admissible, as it would contradict the obligation implied by the written instrument. S. C. See further, as to the right to re-exchange, or to a fixed sum by custom in lieu thereof, Willans v. Ayers, 3 App. Ca. 133, P. C. As to the mode of calculating interest on bills and notes, see Action for interest, post, p. 595.
As to the damages recoverable by the drawer against the acceptor for dishonouring bills accepted under the terms of a letter of credit, see Prehn v. Royal Bank of Liverpool, L. R., 5 Ex. 92.
Defences, generally, to Actions on Bills of Exchange. By Rules, 1883, 0. xxi. r. 2, “in actions upon bills of exchange, promissory notes, or cheques, a defence in denial must deny some matter of fact; e. g., the drawing, making, indorsing, accepting, presenting, or notice of dishonour of the bill or note.” See, also, O. xix. r. 17, ante, p. 301. The proofs required on these traverses have already been considered. The following are some of the most usual defences to actions on bills, not already noticed.
Negotiation of overdue or dishonoured bill.] By sect. 36, “(2.) Where an overdue bill is negotiated, it can only be negotiated subject to any defect of title” (vide sect. 29 (2), ante, p. 344) "affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from he took it had.
“(3.) A bill payable on demand” (vide sect. 10, ante, p. 343) "is deemed to be overdue within the meaning and for the purposes of this section, when it appears on the face of it to have been in circulation for an unreasonable length of time. What is an unreasonable length of time for this purpose is a question of fact.”
Sub-sect. (3) applies to cheques, sect. 73, post, p. 395, but not to promissory notes, sect. 86 (3), post, p. 400.
“(4.) Except where an indorsement bears date after the maturity of the bill, every negotiation is primâ facie deemed to have been effected before the bill was overdue.
“(5.) Where a bill which is not overdue has been dishonoured, any person who takes it with notice of the dishonour takes it subject to any defect of title attaching thereto at the time of dishonour, but nothing in this sub-section shall affect the rights of a holder in due course” (vide sect. 29, ante, p. 343).
In sub-sect. (2) and throughout the Act the term "defect of title” is used as equivalent to an equity attaching to the bill itself. See Holmes v. Kidd, 3 H. & N. 891 ; 28 L. J., Ex. 113, Ex. Ch. But the indorsee taking it overdue does not take it subject to claims arising out of collateral matters; Burrough v. Moss, 10 B. & C. 558; Oulds v. Harrison, 10 Exch. 572; 24 L. J., Ex. 66. Thus, the indorsee of an overdue bill of exchange is not liable to have a debt due from the drawer to the acceptor set off against his bill. S. C.
Loss of bill.] Unless the loss is specially pleaded, the plaintiff may,
after proving the loss, give secondary evidence of the bill. Blackie v. Pidding, 6 C. B. 196. See sects. 69, 70, ante, p. 346, as to lost bills.
Wrong stamps, &c.] Vide ante, pp. 219, 237, 238. By sect. 96 (3) (a), the provisions of the Stamp Acts are not affected by the B. of Ex. Act, 1882.
Alteration.] By sect. 64, " (1.) Where a bill or acceptance is materially altered without the assent of all the parties liable on the bill, the bill is avoided except as against a party who has himself made, authorized, or assented to the alteration, and subsequent indorsers.
“ Provided that, “Where a bill has been materially altered, but the alteration is not apparent,
and the bill is in the hands of a holder in due course” (vide sect. 29, ante, p. 343), “such holder may avail himself of the bill as if it had not been altered, and may enforce payment of it according to its original
tenour. “(2.) In particular the following alterations are material, namely, any alteration of the date, the sum payable, the time of payment, the place of payment, and, where a bill has been accepted generally, the addition of a place of payment without the acceptor's assent.”
The provision in italics is new.
The defence of alteration under this section arises apart from the objection that a bill altered in any material particular after it has been issued is a fresh instrument and requires a new stamp, as to which vide ante, pp. 241, 242, for sect. 97 (3) (a) saves the effect of the Stamp Acts. As to cancellation of acceptance by mistake, vide sect. 63 (3), post,
The alteration is “apparent” if the party liable on the bill can at once discern it on the face of the bill,
though it is not obvious to all the world. Leeds Bank v. Walker, 11 Q. B. D. 84.
The alteration may be material although the contract is unaffected thereby; in such case it is necessary to inquire what was the object of the part which is altered. Suffell v. Bank of England, 9 Q. B. D. 555, C. A. Thus, the number on a Bank of England note has been held to be a material part thereof. S. C.
After a joint and several note, made payable" with lawful interest, had been signed hy three makers, two of the makers, with the assent of the plaintiff
, the payee and holder, wrote on the left-hand corner of it, “with interest at six per cent. ; " held that this avoided it as against the third maker who was sued alone. Warrington v. Early, 2 E. & B. 763 ; 23 L. J., Q. B. 47. So, the addition of a memorandum, which fixes the rate of exchange at which a foreign bill is payable, avoids it. Hirschfield v. Smith, L. R., 1 C. P. 340. And, where the defendant gave a blank acceptance for valuable consideration, it was held that the person to whom it was delivered was only entitled to draw a bill with a general acceptance, and that the insertion of a particular place of payment before the acceptance vitiated the bill, at all events as between the immediate parties. Hanbury v. Lovett, 18 L. T., N. S. 366, E. T. 1868, Ex.; see also Crotty v. Hodges, post, p. 386. So, altering a joint and several note signed by two into a note signed by three, by getting a third maker to join, vitiates the note as against one of the makers who did not assent to the alteration. Gardner v. Walsh, 5 E. & B. 83; 24 L. J., Q. B. 285. Where the defendant had paid two years' interest on an altered note, this was held to be evidence that the alteration was by his consent. Curies v. Tattersall, 2 M. & Gr. 890. It is for the party who sues on an instrument evidently altered, to give some evidence to explain the alteration.
Clifford v. Parker, Id. 909. In a suit by drawer against acceptor: Plea, 1, traverse of acceptance; 2, alteration after acceptance; the proof was, that the bill was drawn in France on the defendant in London, and the defendant had expressly accepted the bill for a less sum than in the body of it, and that the sum had been altered accordingly, but by whom or when did not appear: held that plaintiff ought to recover; for it night be presumed that the defendant consented to alter the bill, and non constat, but that the alteration was made in France, so as not to require an impressed stamp. Hamelin v. Bruck, 9 Q. B. 306. The addition of the words on demand,” to a promissory note which expressed no time for payment, was held to be an immaterial alteration. Aldous v. Cornwell, L. R., 3 Q. B. 573. See further in 1 Smith's L. Cases, notes to Master v. Miller, and cases cited ante, pp. 241–243, and 347.
An alteration of such a kind as to discharge the acceptor was formerly admissible in evidence under a traverse of the acceptance; when the bill was declared on in its altered form. Hirschman v. Budd, L. R., 8 Ex. 171, following Cock v. Coxwell, 2 C. M. & R. 20, and overruling Parry v. Nicholson, 13 M. & W. 778. Where, however, the instrument was declared on in its unaltered form, or the altered part did not appear in the declaration, it was necessary to plead the alteration specially. Mason v. Bradley, 11 M. & W. 590. The defendant authorized W. to put his name to a general acceptance on a blank stamp; this was done, and on filling the bill up, the payee added a place of payment to the acceptance, the bill being declared on without stating the place of payment: on a traverse of the acceptance, the defendant was held entitled to succeed, on the ground apparently that the acceptance never existed on a perfect bill as a general acceptance; and a special one was not authorized by the defendant. Crotty v. Hodges, 4 M. & Gr. 561. And see Hanbury v. Lovett, ante, p. 385. In all the above cases it would now be necessary to plead the defence specially. Rules, 1883, Ord. xix. r. 15, ante, p. 301.
Where the drawer made an alteration fatal to the bill, as between him and the acceptor, he may recover on a claim for the original consideration; Atkinson v. Hawdon, 2 Ad. & E. 628; aliter, as between indorsee and drawer, the alteration being made by the former. Alderson v. Langdale, 3 B. & Ad. 660. A note so altered as to avoid it may be used by the payee as evidence of an account stated by the maker at the time it was given. Gould v. Coombs, 1 C. B. 543.
Failure or want of consideration.] Sect. 27, ante, p. 343, defines valuable consideration for a bill and a holder for value.
Sect. 28. “(1.) An accommodation party to a bill is a person who has signed a bill 'as drawer, acceptor, or indorser, without receiving value therefor and for the purpose of lending his name to some other person.
“(2.) An accommodation party is liable on the bill to a holder for value; and it is immaterial whether, when such holder took the bill, he knew such party to be an accommodation party or not.'
Wart of consideration alone is only a defence, when the parties to the action are the parties as between whom there was the alleged want of consideration, or as between parties who are in privity with them. A bonâ fide holder for value is not affected by any want of consideration as between antecedent parties to the bill or note.
Formerly, any facts or circumstances which invalidated the original consideration of a bill or note were admitted in support of a general plea of want of consideration; see Mills v. Oddy, 2 C. M. & R. 103, cited post, p. 388 : but it would seem that the facts relied on should now be specially pleaded. Rules 1883, Ord. xix. r. 15, ante, p. 301.
Where a debt is due on a judgment between the parties, there is a good consideration; as the taking the security imports a promise on the part of the judgment debtor to suspend proceedings on the judgment till the maturity of the bill or note; Baker v. Walker, 14 M. & W. 465; the same principle applies where there is a debt from a third person to the payee. Poplewell v. Wilson, Str. 261. A solicitor's bill, though not delivered according to law, is a good consideration. Jeffreys v. Evans, 14 M. & W. 210. In an action by payee against the acceptor of a bill at three months, drawn in consideration of money to be paid in one month by payee to drawer, and accepted for the accommodation of the drawer, if the money be not paid, the consideration fails, and the plaintiff cannot recover. Astley v. Johnson, 5 H. & N. 137; 29 L. J., Ex. 161. A note given by the defendant on the faith of a misrepresentation by the plaintiff of either matter of fact or of law, though made without fraud, may be impeached as for want of consideration. Southall v. Rigg, and Forman v. Wright, 11 C. B. 481 ; 20 L. J., C. P. 145. So, a note given for past gratuitous services, and in consideration for future services, as to which there was no binding contract. Hulse v. Hulse, 17 C. B. 711 ; 25 L. J., C. P. 177. But the compromise of a claim, made bonâ fide, though unfounded, and known by the defendant to be so, but for which the claimant threatened to sue, is a good consideration. Cook v. Wright, 1 B. & S. 559; 30 L. J., Q. B. 321. See Callisher v. Bischoffsheim, L. R., 5 Q. B. 449; and Miles v. New Zealand Alford Estate Co., 32 Ch. D. 266, dissenting from the observations of Brett, L. J., in Ex parte Banner, 17 Ch. D. 480, 490. So is forbearance by the plaintiff, at the defendant's request, to sue A., although there was no contract by the plaintiff to abstain from suing. Crears v. Hunter, 19 Q. B. D. 341, C. A.
In an action by indorsee against acceptor, it is not even primâ facie evidence of want of consideration between the defendant and the drawer, to show that the drawer, on the day before the bill became due, procured all the indorsements to be made without consideration, in order that the action might be brought by the indorsee, and on the understanding that the money should be divided between one of the indorsees and the drawer. Whitaker v. Edmunds, 1 Ad. & E. 638. Where the defence to an action on a note states an executory consideration for it, which was never executed, the defendant is not precluded from proving his defence, although the note professes, on the face of it, to be founded on a past consideration. Abbott v. Hendricks, 1 M. & Gr. 791. And generally the consideration or alleged " value received ” apparent on the face of a note may be contradicted, but not the contract or promise itself. Easter v. Jolly, 1 C. M. & R. 703; and see ante, p. 19.
In general, the declarations of a former holder of a bill are not admissible to prove the want of consideration. Shaw v. Broom, 4 D. & Ry. 730. But where the plaintiff and the party whose declarations are offered in evidence, are identified in title; as where the plaintiff took the bill from him after it became due; such declarations are admissible. Benson v. Marshall, cited Id. 732; Beauchamp v. Parry, 1 B. & Ad. 89. So, where the plaintiff, though he did not take the bill after it was due, sues as agent for the party who made the declarations. Welstead v. Levy, 1 M. & Rob. 138.
Fraud.] By sect. 29, “ (2.) In particular, the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as would amount to a fraud.
“ (3.) A holder (whether for value or not) who derives his title to a bill through a holder in due course ” (vide sub-sect. (1), ante, p. 343), " and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.”
See hereon, observations, ante, p. 344.
Fraud, which makes the contract void or voidable as against the defendant, must be specially pleaded. Rules, 1883, 0. xix. r. 15, ante, p. 301. Formerly, when the effect of the fraud was that the defendant never made the contract sued on, the defence arose on a traverse of the indorsement or acceptance, as the case might be. Foster v. Mackinnon, L. R., 4 C. P. 704, vide ante, p. 381. So, when the fraud was one which avoided the consideration, it might be given in evidence under a general plea denying the consideration. Mills v. Oddy, 2 C. M. & R. 103. But a special defence would be required now, under r. 15, supra. The maker of a note pleaded that it was made and delivered to W. only to get it discounted, and that W. fraudulently indorsed it to the plaintiff, who gave no consideration and knew of the fraud: replication de injuriâ; letters written by W., while holder of the note, are not admissible against the plaintiff to prove the fraud, without first establishing, aliunde, a privity between the plaintiff and him. Phillips v. Cole, 10 Ad. & E. 106. A knowledge by the plaintiff indorsee, of fraud in the concoction of a bill, is no defence if he received it for good consideration from an innocent indorser. May v. Chapman, 16 M. & W. 355. As to how far a company are affected by knowledge of their director, from whom they have bought bills which had been fraudulently obtained by him, see Ex parte Oriental Commercial Bank, L. R., 5 Ch. 358.
The holder without indorsement of a draft payable to order, though taken by him bona fide and for value, has no better title than the person from whom he took it; and such holder is affected by fraud of which he has notice before he obtains the formal indorsement. Whistler v. Forster, 14 C. B., N. S. 248; 32 L. J., C. P. 161.
Forgery.] See sect. 24, ante, p. 347. Forgery of the defendant's sig. nature is, of course, evidence under a traverse of the making, &c. ; but, for the purpose of proving the forgery, the defendant cannot be permitted to prove that other bills, with forged signatures of his, had been in the hands of the plaintiff and circulated by him. Griffits v. Payne, 11 Ad. & E. 131. As to the acknowledgment by the defendant of a forged signature, so as to render himself liable thereon by estoppel or ratification,
vide ante, p. 357.
Cancellation so imperfectly effected that the bill is still apparently uncancelled, affords no answer as against a bona fide holder. Therefore, where the acceptor of a bill tore it in two for the purpose of destroying it before circulation, and the drawer fraudulently rejoined the pieces, and passed the bill to a bona fide holder for value, the acceptor was held liable, whether the fraud amounted to forgery or not. Ingham v. Primrose, 7 C. B., N. S. 82; 28 L. J., C. P. 294. The decision in this case was, however, dissented from by Brett, L.J., in Baxendale v. Bennett, 3 Q. B. D. 525, 532, 533, C. A. As to the alteration of the figures in the margin of a bill accepted in blank, see Garrard v. Lewis, ante, p. 357.
Illeyulity.] See Defences to Actions on Simple Contracts, -Illegality, post, pp. 635 et seq. Where a bill has been accepted for good consideration, it