An accommodation bill is a bill to which the acceptor, drawer, or indorser, as the case may be, has put his name, without consideration, (n) for the purpose of benefiting or accommodating some other party who is to provide for the bill when due.(o) A party who procures another to lend his acceptance, thereby engages either himself to take up the bill, or else within a reasonable time before the bill becomes due to provide the accommodation acceptor with funds for so doing, or, lastly, to indemnify the accommodation acceptor against the consequences of non-payment.(p) And, therefore, where the drawer of an accommodation bill a week before the bill became due, handed over bank notes to the accommodation acceptor, it was held that he could not himself revoke this payment, and that his bankruptcy before the bill became due did not amount to a revocation.(q)(1)

(n) As to his remedy for the costs of an action brought against him, see post, Chapter xxxii.

(0) Bills drawn specifically, the one against the other, for the same amount, are not in this sense accommodation bills. See the Chapter on Bankruptcy. Burdon v. Benton, 9 Q. B. Rep. 843; 16 L. J. 353, Q. B., S. C.; see also King v. Phillips, 12 Mees. & W. 705.

(p) Reynolds v. Doyle, 1 M. & G. 753; 2 Scott, N. R. 45, S. C.

(q) Yates v. Hoppe, 19 L. J. 180, C. P. Had the payment been a fraudulent preferment, it would of course have been otherwise.

(1) If the maker gets an indorsed note discounted, the transaction on its face shows that it was indorsed for the accommodation of the maker. Wallace v. Branch Bank, 1 Alabama, 565. If a prior indorser offer a note to be discounted on his own account, the transaction imports upon its face that the subsequent indorsement was made for the accommodation of the prior indorser. Mauldin v. Branch Bank, 2 Alabama, 502.

An accommodation indorsement need not be exclusively for the benefit of the indorsee, but may be for the mutual accommodation of the drawer and the indorsee. Farrar v. Gregg, 1 Richardson, 378.

Indorsers of promissory notes, indorsed for the use and accommodation of the maker, are co-sureties, and the last indorser cannot recover more than a con

tributive share against a previous indorser. Douglas v. Waddle, 1 Hamm. 413. Contra, Youngs v. Ball, 9 Watts, 139. The last indorser of a note, who pays the amount to the holder, may recover it against any prior indorser, whether the note was indorsed by all for the accommodation of the maker or not. Ibid. Williams v. Basson, 11 Ohio, 62. Cathcart v. Gibson, 1 Richardson, 10. See Hunt v. Armstrong, 5 B. Monroe, 399. Stiles v. Eastman, 1 Kelly, 205. Bank of the U. S. v. Beime, 1 Grattan, 234. Sherrod v. Rhodes, 5 Alabama, 683.

A. procured the discount of two notes, one indorsed by B., and the other by B. and C., for the accommodation of A. When they fell due, A. procured a renewal by giving one note for the amount indorsed by B. and C., but the order

The consideration or contract on a bill or note must not be in fraud either of the defendant or third persons; for fraud totally avoids all contracts, both in law and equity. Thus, as we have just seen, if a

man sells goods, warranting them, and *take a bill or note in [*101]

payment, and the warranty turn out false, and it be proved that

he knew it at the time of sale, he cannot recover on the instrument.() So, where the plaintiff had distrained goods of the defendant on the premises of the plaintiff's tenant, and the defendant, to get rid of the distress, accepted the bill in question, it appearing that there was no rent due at the time of the distress, Best, J., left it to the jury to say, whether the plaintiff had not falsely represented to the defendant that the rent was due, in order to induce him to give his acceptance, and that, if so, the acceptance was fraudulently obtained, and the defendant was entitled to a verdict.(s) So, if by fraudulent representations a man induces another to give him for a business more than it is worth, and take a bill in payment, he cannot recover on the bill.(t) But where the defendant insists on fraud as a defence, he must altogether repudiate the contract and retain no benefit under it.(u) And he must now plead the fraud specially.

Equally unavailing is the instrument, if it were given in fraud of third persons. An insolvent proposed to compound with his creditors, but the plaintiffs, being creditors, refused to execute the deed of composition, unless the insolvent gave them a promissory note for the residue of his debt to them. He accordingly did so, without the knowledge of the other creditors, and the plaintiffs and the rest of the creditors then signed the composition deed. The note was held

(r) Lewis v. Cosgrave, 2 Taunt. 2.
(s) Grew v. Bevan, 3 Stark. 134.
(1) Archer v. Bramford, 3 Stark. 175.
(u) Ibid.

of their indorsements being changed: held, that it was for the jury to determine whether or not such change in the order was intended to change their liabilities. Allison v. Purdy, 6 Barr, 501.

If one of two joint payees and indorsers of a note discounted for the accommodation of the maker die before the note falls due, his representatives are not liable to the holder for any part of the

amount. Kennedy v. Carpenter, 2 Whart. 344.

An accommodation indorser of a note to be discounted in bank may, before the note is discounted, recede from his agreement and direct the bank not to receive the note; and such indorser will not be liable to a third person who takes the note with notice. Dogan v. Dubois, 2 Richardson, Eq. Rep. 85.

void, as a fraud on the other creditors. (v) (1) But if the insolvent pay the bill or note when due to the holder, he cannot recover back from the creditor the money so paid.(w) And the note is equally void, if given, not by the insolvent, but by a third person. So, the note, being given with a fraudulent intention, would have been void, though the composition had never been effected.(x) And any better security than the other creditors have, though for the same amount, if taken without their knowledge, is void as a fraud on them. "The real question is," says Le Blanc, J., "whether one creditor be put in a better situation than he stipulated for with the other creditors, *and [*102] it is immaterial whether that be done by receiving more money, or that which is meant to procure him more money; namely, a better security for the same sum."(y) A compounding creditor cannot split his demand, and compound for part, and afterwards sue for the residue, unless he acquaint the other creditors with his proceeding. Therefore, where the plaintiff held two bills, drawn by the insolvent, both due, one for 400l., the other for 1567. 19s. 10d.; and expecting that the acceptor would pay the first, inserted in the schedule attached to the composition deed the amount of the second only as his debt, it was decided, that he could not afterwards sue the insolvent on the first bill.(z) So, if the agreement of composition contain a stipulation that all securities shall be given up, if the compounding creditor holds bills drawn by the defendant and accepted by a third person, and he afterwards receives the amount of these bills from the acceptor, he must refund the money to the insolvent. (a) But he may retain money so received, if the agreement of composition contained no stipulation for the surrender of securities.(b) A creditor who holds

(v) Cockshott v. Bennett, 2 T. R. 763; Knight v. Hunt, 5 Bing. 432; 3 M. & P. 18, S. C.; Bryant v. Christie, 1 Stark. 329; and see Took v. Tuck, 4 Bing. 224; 13 Moore, 435.

(w) Wilson v. Ray, 10 Ad. & E. 82; 2 Per. & Dav. 253, S. C., overruling Turner v. Hoole, 1 D. & R., N. P. Ca. 27.

(x) Wells v. Girling, 1 B. & B. 447; 3 Moore, 79, S. C.

(y) Leicester v. Rose, 4 East, 372, overruling Feise v. Randall, 6 T. R. 146. (z) Britten v. Hughes, 5 Bing. 460; 3 M. & P. 77, S. C., overruling, perhaps, Payler v. Homersham, 4 M. & Sel. 423; and see Holmer v. Viner, 1 Esp. 132; Cecil v. Plaistow, 1 Anst. 202.

(a) Stock v. Mawson, 1 B. & P. 286.
(b) Thomas v. Courtnay, 1 B. & Ald. 1.

(1) A note given by a bankrupt to a creditor for his consent to the bankrupt's discharge, is void from illegality of con

sideration, though given after his discharge. Rice v. Maxwell, 13 Smeeds & Marsh. 289.

a bill, and accepts a compositon, impliedly engages that the bill is in his own hands. If, therefore, an indorsee of the bill afterwards compels the compounding debtor, to pay the bill, the latter may recover the amount from the compounding creditor as money paid to his use, (e) unless the debtor made the payment voluntarily to a holder who was a mere agent of the original creditor, and known by the debtor to be so.(d) If the creditor of an insolvent compound with him, and take notes of hand for the amounts of their respective compositions, and one creditor in addition to his note of hand fraudulently and clandestinely take a further security, his dealing with the insolvent is one entire transaction, and he cannot recover, even on the promissory note.(e)

So, if a man becomes surety for another for the price of goods-as, for example, by joining him in a joint and several note, and the party to whom the surety is responsible conceals from him a stipulation for an additional sum, which it is secretly agreed between himself and the principal, that the *principal shall pay in liquidation of an [*103] old debt, that is a fraud on the surety, and releases him from his engagement.(f)

But where a fraud has been practised on the maker or acceptor, an indorsee for value without notice may, nevertheless, recover against him. Thus we have seen, that though a partner fraudulently use the names of his co-partners, they will all be bound to pay an innocent indorsee.(g) So, in an action by the indorsee against the maker of a note thirteen years old, the defendant obtained a rule nisi to set aside a judgment by default, on an affidavit that he the defendant was swindled out of the note. An affidavit being made on the other side, that the plaintiff took the note bona fide, and gave a valuable consideration for it, the Court held, that, however improperly it might have been obtained, a third person, who took it fairly and gave a consideration for it, was entitled to recover, and they discharged the rule. (h) A., by false representations, induced B. to sign his name to a blank stamped paper, which A. afterwards secretly filled up as a promissory note for 1007., and induced C. to advance him 1007. upon it. A. was

(c) Hawley v. Beverly, 6 M. & G. 221.

(d) Gibson v. Bruce, 5 M. & G. 399.

(e) Howden v. Haigh, 11 Ad. & E. 1033.

(f) Pidcock v. Bishop, 3 B. & C. 605; 5 D. & R. 505, S. C.

(9) Ante, p. 33.

(h) Morris v. Lee, 2 Raym. 1396; 1 Stra. 629, S. C.; Bayley, 6th ed. 509.

indicted for defrauding C. Held, that C. had his remedy against B. on the note, and that the fraud, therefore, not being upon C., but upon B., the indictment was not sustained by the evidence.(i)

The consideration given for a bill or note, must not be illegal. It is said, that the test, whether a contract be contaminated with an illegal transaction, is this: Does the plaintiff require any aid from the illegal transactions to establish his case. ?(k) Considerations or contracts are illegal, either, first, at common law, or, secondly, by statute.

Considerations illegal at common law are the following :—First, Such as violate the rules of religion or morality. Though the law does not pretend to enforce religious or moral obligations as such, yet it seizes every opportunity of countenancing them; and, therefore will not assist a man whose claim for redress is founded on their violation. Ex turpi causâ non oritur actio. "Justice," says Lord Mansfield, "must be drawn from pure fountains." Thus, for example, a bond or note given in consideration of future illicit cohabitations is void, but past cohabitation is not an illegal consideration so as to avoid

[*104] a deed, though it is not sufficient to suport a promise.(1) So, the rent of lodgings knowingly let for the purpose of prostitution, is an illegal consideration.(m) A wager as to the sex of a third person, is illegal, because it tends to indecent evidence, to injure the feelings of the individual, and disturb the peace of society.(n) So is a wager as to whether an unmarried woman had borne, or would have, a child.(0) And any bill or note founded on such illegal considerations would be void.

The second sort of agreements, illegal at common law, are such as contravene public policy. It is said by Best, C. J.,(p) that if it be merely doubtful whether an agreement be at variance with the public interest, it is not void; it must be clearly and indubitably in contravention of public policy. A contract in general restraint of trade, as,

(i) Rex v. Revett, Bury Summer Assizes, 1829, coram Garrow, B.

(k) Simpson v. Bloss, 7 Taunt. 246; 2 Marsh. 542, S. C.

(1) Binnington v. Wallis, 4 B. & Ald. 651; Gibson v. Dickie, 3 M. & Sel. 463; Nye v. Moseley, 6 B. & C. 133; 9 D. & R. 165, S. C.; Beaumont v. Reeve, 15 L. J. 141, Q. B.; 8 Q. B. 483, S. C.

(m) Girardy v. Richardson, 1 Esp. 13; Howard v. Hodges, Sel. N. P. 7th ed. 68. (n) De Costa v. Jones, Cowp. 729.

(0) Ditchburn v. Goldsmith, 4 Camp. 152.

(p) Richardson v. Mellish, 2 Bing. 229; 9 Moore, 435, S. C.