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the rights of a holder for value against all parties to § 27. the bill except the person from whom he received it. Thus

C., the payee of a bill, holds it for value. He indorses it to D. without value, e.g., by way of gift or for collection. D. is, as regards the drawer and acceptor, a holder for value. “A bill of exchange," says Parke, B., “is a chattel, and the gift is complete by delivery, coupled with the intention to give.”

(3) Where the holder of a bill has a lien on it, having a lien 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.

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ILLUSTRATIONS. 1. D. holds a bill indorsed in blank as agent for C.: D. wrongfully pledges it with E. E. is a holder for value to the extent of the sum he advanced, and if he took the bill without notice of the fraud, he can retain the bill as against C., the true owner.?

2. C., the holder of a bill for 1007., deposits it with D. as security for a running account. At the time the bill matures the balance is in C.'s favour, but subsequently the balance turns against him to the extent of 501. D. is a holder for value as to 507.3

3. C., the holder of a bill for 1001., indorses it to D. as a pledge for 501. D. is a holder for value as to 501., and this is the sum he can recover if he sues 0.4

4. C. keeps with his bankers a loan account and a general account. C. indorses to the bank, as collateral security for his loan account, a bill for 1,0001., and draws against it to the extent of 5001. C. becomes bankrupt, and his general account is overdrawn more than 5001. The bank are holders of the bill for full value.5

5. The drawer of a bill for 1001., which has been accepted for his accommodation, indorses it to C. as a security for 501. If the acceptor becomes bankrupt, C. can tender a proof for 1001., but can only receive dividends to the extent of 501.6

6. A bill indorsed by a customer to his banker and entered

1 Milnes v. Dawson (1850), 5 Exch. 948, at p. 950 : cf. Denton v. Peters (1870), L. R. 5 Q. B. at p. 477.

? Collins v. Martin (1797), 1 B. & P. 648.

3 Atwood v. Crowdie (1816), 1 Stark. 483 ; cf. Pease v. Hirst (1829), 10 B. & C. 122 ; Gray v. Seckham (1872), L. R. 7 Ch. at p. 683.

* Attenborough v. Clarke (1858), 27 L. J. Ex. 138.
5 Re European Bank (1872), L. R. 8 Ch. 41.
6 Ex parte Newton (1880), 16 Ch. D. 330, C. A.

$ 27.

short,” remains the property of the customer, though the banker may have a lien on it.

The “discount” of a bill must be distinguished from the pledge or deposit of a bill as security. A “discounter " is a holder for full value. The position of a pledgee is this : If he sue a third party he sues as trustee for the pledgor, as regards the difference between the amount he has advanced and the amount of the bill. If the pledgor could have sued on the bill, the pledgee can recover the whole. If the title of the pledgor is defective, the pledgee can recover the amount of his advance, provided he took the bill without notice. Like any other bailee, the pledgee of a bill must use due diligence with reference to it, having regard to the peculiar nature of the thing bailed, e.g., he must not part with it: he must if he can collect it at maturity; if he cannot, he must give the proper notices of dishonour.

Banker's Lien.-A banker's lien on negotiable securities is an implied pledge.” 6 A banker has, in the absence of agreement to the contrary, a lien on all bills received from a customer in the ordinary course of banking business in respect of any balance that may be due from such customer.? If the banker knows that the bills do not belong to his customer, no lien can attach.8 A broker who deals in bills may have a lien similar to a banker's.'

The terms on which securities are deposited may, of

| Thompson v. Giles (1824), 2 B. & C. 422 ; distinguished Ex parte Stannard (1893), 10 Morrell, 193, 212 (Cheques).

2 Ex parte Twogood (1812), 19 Ves. 229; Gomersall (1875), 1 Ch. D. at p. 142 ; Ex parte Schofield (1879), 12 Ch. D. 337, C. A., bills indorsed “pending discount. 3 Ibid. ; cf. Thiedman v. Goldsmidt (1859), 1 De G. F. & J. at p. 11. Reid v. Furnival (1833), 1 Cr. & M. 538. 5 Peacock v. Purssell (1863), 32 L. J. C. P. 266. 6 Brandao v. Barnett (1846), 3 C. B. at p. 531, H. L.

A “lien" generally is a mere right to hold a thing till a debt is paid, and is therefore distinct from a pledge, because the pledgee has a special property in the thing pledged ; but in the case of a negotiable security the person who has the lien is the holder of the instrument with the corresponding rights and duties, and be therefore has more than the ordinary lien on an ordinary chattel.

7 Ibid. ; London Chartered Bank of Australia v. White (1879), 4 App. Cas. 413, P. C. ; Johnson v. Robarts (1875), L. R. 10 Ch. 505, where cus. tomer was a country bank ; Currie v. Misa (1876), 1 App. Cas. at p. 569, H. L.

8 Ex parte Kingston (1871), L. R. 6 Ch. 632.
9 Jones v. Peppercorn (1858), John. 430 ; 28 L. J. Ch. 158.

course, be such as to create a particular lien to the exclu- $ 27. sion of the general lien.

Primâ facie, where a bill is negotiated from one person to another, it is deemed to have been wholly transferred to him, and not to have been pledged or deposited as collateral security. 28. (1) An accommodation party to a bill is Accommoda

tion bill or a person who has signed a bill as drawer, acceptor, party. or indorser, without receiving value therefor, and for the purpose of lending his name to some other person.

ILLUSTRATIONS. 1. Bill accepted for the accommodation of the drawer. This is an accommodation bill, and the acceptor is an accommodation acceptor.3

2. Bill drawn, indorsed, and accepted for the accommodation of X., who is not a party thereto. The drawer and acceptor receive a commission for so doing. This is an accommodation bill.

3. Bill drawn against a running account, and accepted. This, it seems, is not an accommodation bill, though the account may have been against the drawer when the bill was drawn, or accepted or payable.

4. Bill drawn payable to the order of C., and accepted. It appears that the acceptor was indebted to C., but that the drawer signed to accommodate the acceptor. This is not an accommodation bill, though the drawer is an accommodation drawer.6

5. Bill payable to drawer's order is accepted for value. C., whose name is well known, indorses the bill to give it currency. This is not an accommodation bill, but C. is an accommodation indorser.?

A bill which is signed by one or more accommodation parties is frequently spoken of as an accommodation bill,

i Re Bowes (1886), 33 Ch. D. 586.

? Hills v. Parker (1866), 14 L. T. N. S. 107; Re Boys (1870), L. R. 10 Eq. 467 ; cf. Attenborough v. Clarke (1858), 27 L. J. Ex. 138.

3 Collott v. Haigh (1812), 3 Camp. 281.
* Oriental Pinancial Corporation v. Overend (1871), L. R. 7 Ch. 142.

5 Ex parte Swan (1868), L. R. 6 Eq. at p. 356 ; Cf. Wilks v. Hornby (1862), 10 W. R. 742.

6 Scott v. Lifford (1808), 1 Camp. 246 ; Cf. Sleigh v. Sleigh (1850), 5 Exch. 514.

7 Cf. Re Nunn (1817), Buck, 113. This practice is not uncommon in the case of foreign bills, a small commission being usually charged. See e.g., Société Générale v. Metropolitan Bank (1873), 27 L. T. N. S. 849.

§ 28.

but this is incorrect. An accommodation bill is a bill whereof the acceptor (i.e., the principal debtor according to the terms of the instrument) is in substance a mere surety for some other person who may or may not be a party thereto. The distinction is material when questions arise as to what is a discharge of the bill. An accommodation bill is discharged when it is discharged by the person who is in substance, though not in form, the principal debtor (see e.g., sect. 59 (3)), or if time be given to such person. As a general rule the drawer or indorser for whose accommodation a bill is accepted, cannot avail himself of want of due presentment for payment (sect. 46 (2) ), or notice of dishonour (sect. 50 (2)), or protest (sect. 51 (9) ), because it is his own duty to provide the funds to meet the bill at maturity. As to negotiation of overdue accommodation bill, see note to sect. 36 (2), post, p. 116.

(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.

Conversely, an accommodation party, known to be such, may avail himself of any defence, arising out of the bill transaction, which the person accommodated could have set up: 3 see "holder for value” defined by sect. 27 (2)

Liability of accommodation party.

and (3).

Holder in due course.

29. (1) A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions ; namely: (a) That he became the holder of it before it

was overdue, and without notice that it had

1 Cf. Oriental Financial Corporation v. Overend (1871), L. R. 7 Ch. at pp. 146, 151, and Ibid., L. R. 7 H. L. at p. 358; Ex parte European Bank (1871), L. R. 7 Ch. 99.

? See last note. And see post, p. 220, Principal and Surety.
3 Bechervaise v. Lewis (1872), L. R. 7 C. P. 372, at p. 377.

been previously dishonoured, if such was the 8 29.

fact:
(6) That he took the bill in good faith and

for value, and that at the time the bill was
negotiated to him he had no notice of

any
defect in the title of the person who nego-
tiated it.

ILLUSTRATIONS. 1. C., the holder of a bill payable to his order, transfers it to D. Holder in due for value, but without indorsing it. C.

has obtained this bill by course. fraud, but D. has no notice of this. D. is not a holder in due course.

2. C., who resides abroad, transmits a bill for collection to his agent in England. c. has obtained this bill by fraud, but his agent does not know it. At the time the agent receives the bill, C. is indebted to him on the balance of account. The agent is not a holder in due course, and cannot recover on the bill. Aliter, if the bill had been transmitted to the agent in payment of his debt.

3. C. indorses a bill to D. for value. D. suspects that C. stole the bill. As a fact he obtained it by false pretences. D. is not a holder in due course.3

4. The manager of a bank steals negotiable securities from the bank, and pledges them with C. He afterwards obtains them back from C. by a fraud, and replaces them in the bank. The bank know nothing of the transactions. The bank is a holder in due course of these securities, and entitled to retain them against C.4

5. X., by false pretences, induces A. to draw a cheque in favour of C., who takes it in good faith and for value. C. is a holder in due course.

By sect. 2, "holder" means the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof; and “bearer” means the person in possession of a bill or note which is payable to bearer : see "value" defined by sect. 27 (1); and “holder for value” by sect. 27 (2) (3). As to the rights of the “holder” and

1 Whistler v. Purster (1863), 14 C. B. N. S. at p. 258; 32 L. J. C. P. at p. 163. D. is not the “holder" as defined by sect. 2.

· De la Chaumette v. Bank of England (1829), 9 B. & C. 208, as explained by Currie v. Misa (1875), L. R. 10 Ex. at p. 164 ; and M‘Lean v. Clydesdale Bank (1883), 9 App. Cas. at p. 114.

3 Cf. Jones v. Gordon (1877), 2 App. Cas. at p. 628.
4 London and County Bank v. River Plate Bank (1888), 21 Q. B. D. 535,

A. ; cf. London Joint Stock Bank v. Simmons, (1892) A. C. 201.
5 Watson v. Russell (1862), 3 B. & S. 34 ; 31 L. J. Q. B. 304.

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