sequently holds it as agent for D.: (2) A bill is held by C.'s agent, who subsequently attorns to D., and holds it as his agent (3) A bill is held by D. as agent for C.; he subsequently holds it on his own account. As to the necessity for delivery to complete the contracts on a bill or note, see sect. 21, post, p. 52.

§ 2.

"Holder" means the payee or indorsee of a Holder. bill or note who is in possession of it, or the bearer thereof.

See "holder for value" defined by sect. 27 (2), and "holder in due course 39 by sect. 29.

The term "holder " includes alike the payee, the indorsee, and the bearer of a bill. It signifies the mercantile owner of the instrument, who may or may not be the legal owner of it. Suppose C., the payee of a bill, indorses it in blank and transmits it to D. for some special purpose, e.g., discount or collection. As long as D. retains possession, D., and not C., is the holder, and he alone can negotiate it.2

In the cases the term holder is used in different senses. It is generally used to denote the lawful holder or holder in due course. It then includes (a) the person to whom a bill is by its terms payable, and whose title is good against all the world; (b) the person to whom a bill is by its terms payable, and who, as against third parties, is entitled to enforce payment thereof, though, as between himself and his transferor, he is a mere agent or bailee with a defeasible title, e.g., an indorsee for collection. But "holder" is also used to denote an unlawful holder, that is, the person to whom a bill is by its terms payable, whose possession is unlawful (e.g., the finder of a bill indorsed in blank), but who nevertheless can give a valid discharge to a person who pays it in good faith, and also a good title to a person who takes it before maturity in good faith and for value: see sect. 38, post, p. 121. The above definition includes both classes of holders. An unlawful holder must be dis

1 See, e.g., Field v. Carr (1828), 2 M. & P. 46; Bosanquet v. Forster (1841), 9 C. & P. 659; Belcher v. Campbell (1845), 8 Q. B. 1. Cf., also, Ancona v. Marks (1862), 31 L. J. Ex. 163, ratification of delivery; Ex parte Cote (1873), L. R. 9 Ch. 27, delivery by mistake and revocation thereof by consent. Marston v. Allen (1841), 8 M. & W. at p. 504.

3 See sect. 29, defining holder in due course.

§ 2.

Indorsement.

Issue.

tinguished from a mere wrongful possessor, e.g., a person holding under a forged indorsement, or a person who has stolen a bill payable to the order of another. Such person has no rights, and can give none: see sect. 24, post, p. 71. It is to be noted that possession is an essential part of the definition.2

"Indorsement" means an indorsement completed by delivery.

See sect. 21, post, p. 52, as to delivery; and sect. 32, post, p. 105, as to the requisites of a valid indorsement. "If, then," says Alderson, B., "a transfer by indorsement, as we have before shown, consists in an indorsement (or writing the name of the party transferring the bill on the bill), and a delivery for the purpose of completing such transfer, it will follow that the issue did not indorse involves both these propositions." 3 An indorsement valid as against the acceptor may be inoperative as between indorser and indorsee, as, for example, where a bill is indorsed for the purpose of the indorsee collecting it for the indorser, on a joint account.*

The term "indorsee" is used to denote not only the person to whom a bill is specially indorsed, but also the bearer of a bill indorsed in blank, i.e., any person who makes title to a bill through an indorsement."

The term "indorser" primarily denotes the holder of a bill who indorses it, but it is also used to denote any person who backs a bill with his signature, and thereby incurs the liability of an indorser: see sect. 56, post, p. 188. Under the foreign codes, such person would be spoken of as the giver of an "aval."

"Issue" means the first delivery of a bill or note, complete in form, to a person who takes it as a holder.

1 Cf. Smith v. Union Bank (1875), L. R. 10 Q. B. at pp. 295, 296.

2 Cf. Emmett v. Tottenham (1853), 8 Exch. 884; Ancona v. Marks (1862), 31 L. J. Ex. 163.

3 Marston v. Allen (1841), 8 M. & W. at p. 504; Cf. Lloyd v. Howard (1850), 15 Q. B. 995, at p. 999.

Denton v. Peters (1870), L. R. 5 Q. B. 475.

5 Barber v. Richards (1851), 6 Exch. at p. 65.

See sects. 9, 12, and 72 which require this definition. For stamp purposes a bill is not deemed to be issued till it has reached the hands of a holder for value.1

"Person" includes a body of persons, whether incorporated or not.

"Value" means valuable consideration.

For the operative definition, see sect. 27, post, p. 80.

"Written" includes printed, and includes print.

“

§ 2.

rson.

Value.

writing" Written.

The definitions in this section are verbal; that is, they define the sense in which the particular terms are used in the Act. The substantial or operative definitions appear in their appropriate places in the Act itself.

1 Downes v. Richardson (1822), 5 B. & Ald. 674; see note to sect. 64 as to alterations, post, p. 214.

§ 3.

Bill of exchange defined.

PART II.

BILLS OF EXCHANGE.

[By sect. 73, except as provided in Part III., the provisions of the Act applicable to a bill payable on demand apply to a cheque; and by sect. 89, with the exceptions and subject to the modifications there specified, the provisions of the Act relating to bills apply also to promissory notes.]

Form and Interpretation.

3. (1) A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer.

(2) An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange.

A bill is sometimes called a draft, and an accepted bill is often referred to as "an acceptance." The person who gives the order is called the drawer. The person thereby ordered to pay is called the drawee, and if he signifies his assent to the order in due form (sect. 17) he is then called the acceptor. The person to whom the money is payable is called the payee or bearer, as the case may be. See "bearer" defined by sect. 2, ante, p. 4. The foreign codes for the most part provide in terms that a bill may be drawn by one person for the account of another. The person for whose account the bill is drawn is spoken of in England as the "third account." For example, a merchant in America may direct his agent in England to draw on a correspondent in Paris for his (the principal's)

account.

Comparing this definition with the wider definition of "bill of exchange" in sect. 32 of the Stamp Act, 1891, post, p. 354, it appears that instruments may require to be stamped as bills which do not possess the mercantile incidents of bills as defined by this Act. An instrument, invalid as a bill under the Act, may be valid as an agreement if it conform with the requirements of the general law as to agreements.1

§ 3.

Under the Act, no special form of words is essential to Form of the validity of a bill. Thus an order, sufficient in other words or respects, running "Credit C. or order in cash," instead of language. "Pay," is a valid bill.2 German Exchange Law, Art. 4, and Italian Code, Art. 251, require the instrument to state that it is a bill of exchange, and the foreign codes generally do not allow a bill originally to be drawn payable to bearer.3

A bill may be drawn in any language.

As to the amount receivable where the sum payable is expressed in

a foreign currency, see sects. 9 and 72 ̊ (5).

Where an instrument is so ambiguously worded that it Ambiguous is doubtful whether it was intended for a bill or for a note, instruments. the holder may treat it at his option as either.5

The Act requires a bill to be signed by the drawer. The Signature of signature may be added at any time (see sects. 18 and 20); drawer. but until it is there the instrument is inchoate and without effect. Thus A. draws a bill on B., but does not sign it. B. accepts, and the instrument is transferred for value to C. The instrument is neither a bill nor a note; but if the instrument were in the drawer's hands so that he could

6

1 See, e.g., Brice v. Bannister (1878), 3 Q. B. D. 569, C. A.; Hamilton v. Spottiswoode (1849), 4 Exch. 200.

2 Ellison v. Collingridge (1850), 9 C. B. 570; Cf. Lovell v. Hill (1838), 6 C. & P. 238; Story, § 33.

3 French Code, Art. 110; German Exchange Law, Art. 4; Netherlands Code, Art. 100.

See, e.g., Re Marseilles Co. (1885), 30 Ch. D. 598, where a bill in French was treated as an English instrument. In India bills drawn in the native language are called "Hundis." See sect. 1 of the Indian Act, saving native usages with respect to them.

5 Edis v. Bury (1827), 6 B. & C. 433; Fielder v. Marshall (1861), 30 L. J. C. P. 158; Indian Act, s. 17: Cf. Allen v. Mawson (1814), 4 Camp. 115.

6 M'Call v. Taylor (1865), 34 L. J. C. P. 365; Cf. Goldsmid v. Hampton (1858), 5 C. B. N. S. 94; 27 L. J. C. P. 286; Ex parte Hayward (1871), L. R. 6 Ch. 546; German Exchange Law, Art. 4; Netherlands Code, Art. 100.