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§ 54.

dorse,' but not the genuineness or

validity of his indorsement. This section deals only with estoppels arising on the bill. There may, of course, be other estoppels arising on evidence, see sect. 24 and notes thereto, ante, p. 71. If the amount of the bill be altered, or if any other material alteration be made in it, the acceptor is not precluded by this section froin setting it up.

The distinction between capacity and authority (ante, p. 60) reconciles the cases, which otherwise appear to be in conflict. It is clear that capacity to draw must be identical with capacity to indorse, this being a question of status ; while an authority to draw on behalf of another does not necessarily include an authority to indorse on his behalf.3

Where the drawer of a bill payable to drawer's order was a fictitious person, it was said in some of the cases that the acceptor undertook to pay to an indorsement in the same handwriting as the drawer's signature ;* but, in other cases, it was said that the bill might be treated as payable to bearer. Sect. 7 (3) of the Act, ante, p. 21, appears to have adopted the latter view.

The acceptor may, of course, decline to pay on the ground that the payee's signature has been forged. If, however, the payee be a fictitious person, the holder is entitled to treat the bill as if drawn payable to bearer. See sect. 7 (3), ante, p. 21.



Liability of drawer.

55. (1) The drawer of a bill by drawing it,
(a) Engages that on due presentment it shall

be accepted and paid according to its tenor,
and that if it be dishonoured he will com-

1 Daniel, $ 536 ; cf. Drayton v. Dale (1823), 2 B. & C. 293, at p. 299.

2 White v. Central National Bank (1876), 64 New York R. 316; cf. Burchfield v. Moore (1854), 23 L. J. Q. B. 261; and sect. 64, post, p. 213, as to alterations.

3 Cf. Prescott v. Plinn (1832), 9 Bing. at p. 22; Indian Code, $ 27.

4 Cooper v. Meyer (1830), 10 B. & C. 468 ; London & S. W. Bank v. Wentworth (1880), 5 Ex. D. 96.

5 Beeman v. Duck (1843), 11 M. & W. at p. 256 ; cf. Phillips v. im Thurn (1866), L. R. 1 C. P. at p. 471.

6 See sect. 24 and notes thereto, ante, p. 71, and cf. Robarts v. Tucker (1851), 16 Q. B. 560.

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pensate the holder or any indorser who is compelled to pay it, provided that the requi

site proceedings on dishonour be duly taken; (6) Is precluded from denying to a holder in

due course the existence of the payee and his

then capacity to indorse.2 As to “dishonour," see sects. 43 and 47. As to express stipulations in the bill restricting the ordinary liability of the drawer, or releasing the holder from the performance of his ordinary duties, see sect. 16, ante, p. 39. As to measure of damages, see sect. 57, post, p. 190.

The drawer and indorsers of a bill are jointly and severally responsible to the holder for the due acceptance and payment thereof. If it be dishonoured the holder may enforce payment from the drawer, or an indorser, or the acceptor, or all or any of them at his option. The liability of the drawer of an accepted bill must in general be measured by that of the acceptor, their relations for most, not all, purposes resembling those of principal and surety.* See note to sect. 54 (1), ante, p. 183.

(2) The indorser of a bill, by indorsing it,
(a) Engages that on due presentment it shall be

accepted and paid according to its tenor, and
that if it be dishonoured he will compensate
the holder or a subsequent indorser who is

Liability of indorser.

See per Lord Lyndhurst in Siggers v. Lewis (1834), 1 C. M. & R. at p. 371 (cause of action); per Parke, B., in Whitehead v. Walker (1842), 9 M. & W. 506, at p. 516 (dishonour by non-acceptance); per Lord Kingsdown in Allen v. K'emble (1848), 6 Moore, P. C. at p. 321 (set-off or compensatio according to foreign law); per Cresswell, J., in Jones v. Broadhurst (1850), 9 C. B. at p. 181 (payment by drawer); per Alderson, B., in Gibbs v. Fremont (1853), 9 Exch. at p. 30 (measure of damages); and see note to sect. 54 (1).

3 Collis v. Emett (1790), 1 H. Bl. 313 ; cf. Phillips v. im Thurn (1865), 18 C. B. N. S. 694, at p. 701.

3 Rouquette v. Overmann (1875), L. R. 10 Q. B. 525, at p. 537 ; German Exchange Law, Arts. 8 and 19 ; Netherlands Code, Art. 146. By Art. 118 of the French Code the drawer and indorsers are “garants solidaires " for the acceptance and payment of the bill.

* Rouquette v. Orerinann (1875), L. R, 10 Q. B. 525, at pp. 536, 537.

8 55.

compelled to pay it, provided that the re-
quisite proceedings on dishonour be duly

taken ; () Is precluded from denying to a holder in Estoppels

binding due course the genuineness and regularity in indorser. all respects of the drawer's signature and all

previous indorsements;
(c) Is precluded from denying to his immediate

or a subsequent indorsee that the bill was at
the time of his indorsement a valid and sub-
sisting bill, and that he had then a good title

The indorser of a bill is in the nature of a new drawer,
that is to say, his relations with the holder resemble those
of a drawer. “Ce contrat,” says Pothier, No. 79, “est
entièrement semblable à celui qui intervient entre le tireur
et le donneur de valeur.” It is conceived that the words
" according to its tenor,” mean the tenor of the bill at the
time of its indorsement, and not its tenor at the time
it was drawn, if its effect has been varied, e.g., by a quali-
fied acceptance, or by an alteration of the sum payable ;
see next sub-section. As to measure of damages, see sect.
57, post. By sect. 89 (2), where the payee of a promissory
note indorses it, his liability resembles that of the drawer
of an accepted bill payable to drawer's order.

If the holder sue an indorser it is no defence to show that the drawer's or acceptor's signature has been forged,


Suse v. Pompe (1860), 30 L. J. C. P. at p. 78, per Byles, J. ; cf. Duncan, Fox & Co. v. N. & S. Wales Bank (1880), 6 App. Cas. 1, at p. 18, per Lord Blackburn ; German Exchange Law, Art. 18.

? Ex parte Clarke (1792), 3 Brown, C. Ć. 238 ; Thicknesse v. Bromilow (1832), 2 Cr. & J. 425 ; McGregor v. Rhodes (1856), 6 E. & B. 266.

3 Cf. Burchfield v. Moore (1854), 23 L. ). Q. B. 261, as modified by sect. 64.

4 Penny v. Innes (1834), 1 C. M. & R. at p. 441, per Parke, B.; Steele v. M'Kinlay (1880), 5 App. Cas. at pp. 767, 768, per Lord Blackburn ; cf. Burmester v. Hogarth (1843), 11 M. & W. 97.

5 Compare, however, the dictum of Lush, J., in Lebel v. Tucker (1867), L. R. 3 Q. B. at p. 81, with the dictum of Alderson, E., in Gibbs v. Fremont (1853), 9 Exch, at p. 31.

8 55.

or that the amount of the bill was altered after issue and before indorsement, unless such alteration avoids the bill under the stamp laws.

56. Where a person signs a bill otherwise than as drawer or acceptor, he thereby incurs the liabilities of an indorser to a holder in due course. 1

Stranger signing bill liable as indorser.


ILLUSTRATIONS. 1. The holder of a bill already indorsed in blank, and therefore negotiable by mere delivery, indorses it, and passes it away. He thereby incurs the liabilities of an indorser.?

2. A note is made payable to C. or order. After issue D. adds his signature thereto, to accommodate and guarantee the maker. D. is not liable as a new maker, 3 but he is liable as an indorser, even if he write his name on the face of the note.4

3. The payee of a non-negotiable note indorses it to D., who indorses it to the plaintitf. The plaintiff, it seems, cannot recover from D. as an indorser, for the stamp is exhausted.5

4. The drawer of a bill indorses it specially to the plaintiff. C. afterwards backs it with his signature to guarantee the drawer, and then the plaintiff adds his indorsement. The plaintiff can recover from C. as an indorser.6

5. A bill is drawn payable to drawer's order and accepted. C. afterwards backs it with his signature. C. is liable as indorser to subsequent parties, but parol evidence is not admissible to show that C. intended to be liable to the drawer in case the bill was dishonoured. Such an agreement must be in writing to satisfy the Statute of Frauds.7

6. The drawer of a bill indorses it to C., who has undertaken to be answerable for the price of goods supplied to the acceptor. C. then indorses the bill back to the drawer. The drawer, in his character of indorsee, can sue C. as indorser. 8

Steele v. M Kinlay (1880), 5 App. Cas. at pp. 772, 782. It is clear that an indorsement by way of receipt does not come within this rule. Cf. Keane v. Beard (1860), 8 C. B. N. S. at p. 382, per Byles, J. ; and sect. 59, post,

p. 199.

2 Cf. Fairclough v. Pavia (1854), 9 Exch. at p. 695. 3 Gwinnell v. Herbert (1836), 6 N. & M. 723.

* Ex parte Yates (1858), 2 De G. & J. 191, L.JJ. Qy. If he be liable to the payee, or only to subsequent parties? See Steele v. M'Kinlay, ubi supr«.

5 Plimley v. Westley (1835), 2 Bing. N. C. 249 ; but he can sue on the consideration, although he has not given notice of dishonour.

6 Penny v. Innes (1834), 1 C. M. & R. 439 ; cf. Young v. Glover (1857), 3 Jur. N. S. 637, Q. B.

7 Steele v. M'Kinlay (1880), 5 App. Cas. 754, H. L. ; overruling, it seems, Matthews v. Blossome (1864), 33 L. J. Q. B. 209.

8 Wilkinson v. Unwin (1881), 7 Q. B. D. 636, C. A. ; distinguishing Steele v. M.Kinlay, supra. Cf. sect. 37, ante, p. 120.

§ 56.

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As to the liability of an indorser, see sect. 55 (2), ante, p. 186. As to his power to vary his liability by express stipulation, see sect. 16, ante, p. 39, which may perhaps be regarded as incorporated.

An indorsement, properly so called, must be made by the holder ; but when a person who is not the holder of a bill or note backs it with his signature, he is not an indorser, but a quasi-indorser. The law annexes to his act consequences similar to those which follow the indorsement of a bill by the holder. Formerly, when a stranger to the bill backed it with his signature, a pleading difficulty arose, as to whether he was to be described as an indorser or as a new drawer. The difficulty was, it is submitted, simply technical, for the consequences are identical. Now, it would be sufficient to state the facts or describe him as an indorser. In some American States such person is regarded as an ordinary guarantor, and in others a distinction is drawn between negotiable and non-negotiable bills or notes.

It is to be noted that if two or more persons indorse a bill or note, to accommodate the acceptor or maker, their relations inter se are those of co-sureties, and not of sureties in succession according to the order of their names on the bill.3

Qu. as to the power of the Court to rectify a bill where the parties' names have been transposed by mistake ? 4

Avals.-Such an indorsement as is referred to by this section would in continental countries be termed an "aval,” which is said by Lord Blackburn to be an antiquated term signifying " underwriting.”5 According to Pothier, an aval

might be either on the bill itself or on a separate paper, and if such an “aval” was given by anyone, his obligation to all subsequent holders of the bill was precisely the same as that of the person to facilitate whose transfer the aval was given, and under whose signature it was written. English and Scotch law, as Lord Blackburn proceeds to point out, do not go so far as this. If a person

1 Cf. Jones v. Goodwin (1870), 2 Amer. R. 475, cases reviewed.
? Cromwell v. Hewitt (1869), 40 New York R. 491.
3 Macdonald v. Whitfield (1883), 8 App. Cas. 733, P. C.

+ See Matthews v. Bloxsome (1864), 33 L. J. Q. B. 209, as commented on in teele v. M*Kinlay (1880), 5 App. Cas. at p. 774; Druif v. Parker (1868), L. R. 5 Eq. 131.

5 Steele v. M'k'inlay (1880), 5 App. Cas. at p. 772. 6 As cited by Lord Blackburn, ubi supra.

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