PAYMENT should be made to the holder and the real proprietor of the bill; for payment to any other party is no discharge to the acceptor; unless, indeed, the money paid finds its way into the holder's hands, and the holder has treated it as received in liquidation of the bill. A. drew a bill upon defendant, which defendant accepted; A. then indorsed it to the plaintiffs, his bankers, who entered it to the credit of plaintiff's account, and, at maturity, presented it to the defendant for payment, and it was dishonoured. The plaintiffs then debited A. with the amount, but did not return him the bill. A few days afterwards, defendant paid the amount to A., A. still continued his banking account with the plaintiffs, and, at different times, paid in more money than was sufficient to cover the amount of the bill, and all the preceding items which stood above it in the account, though there was always a balance against him larger than the amount of the bill. A. failed, and the plaintiffs proved for the whole of their balance under his commission. They then brought this action on the bill against the defendant, the acceptor. Best, C. J., "The payment to A. would not of itself have discharged the defendant, the plaintiffs having been at that time the holders, and entitled to the amount of the bill; but the ground on which the defendant is discharged is, that the plaintiffs not only entered the bill to the credit of A., but treated it as having been paid."(a)

(a) Field v. Carr, 5 Bing. 13; 2 Moo. & P. 46, S. C. Where money is paid into

*It is a common practice in the city of London, to write across [*173] the face of a check the name of a banker. The effect of this crossing is to direct the drawees to pay the check only to the banker whose name is written across, and the object of the precaution is to invalidate the payment to a wrongful holder in case of loss. It seems, however, that the holder may erase the name of the banker and substitute that of another banker.(b) It is also not unusual to write the words, and Co., only in the first instance, leaving the particular banker's name to be filled up afterwards, so as to insure the presentment by some banker or other. (c) C. drew a check on his banker payable to A. and B., assignees of C. or bearer, and wrote the name of their banker across it. B., who had a private account with the banker, paid the check into that account; it was held, that the bankers were justified in applying it to that account, the drawer's writing the name of the bankers of the payee of the check across it, not being, according to the custom of trade, information to the bankers that the money was the money of the payees. (d)

There are some cases in which payment to a wrongful holder is protected, and others in which it is not. (e) If a bill or note, payable to bearer, either originally made so, or become so by an indorsement in blank, be lost or stolen, we have seen that a bona fide holder may compel payment. Not only is the payment to a bona fide holder protected, but payment to the thief or finder himself, will discharge the maker or acceptor,(ƒ) provided such payment were not made with knowledge or suspicion of the infirmity of the holder's title, or under circumstances which might reasonably awaken the suspicions of a prudent man. "For it is a general rule, that where one of two innocent persons must suffer from the acts of a third, he who has

a bank on the joint account of persons not partners in trade, the bankers are not discharged by payment of the check of one of those persons, drawn without the authority of the others. Innes v. Stephenson, 1 Moo. & Rob. 145; Stone v. Marsh, R. & M. 369, unless one alone afterwards become entitled to receive it. Stewart v. Lee, Mood. & M. 160; see ante, p. 18.

(b) Stewart v. Lee, 1 M. & M. 158; and see Boddington v. Schlenker, 4 B. & Ad. 752; 1 N. & M. 540, S. C.

(c) Ibid.

(d) Ibid.

(e) As to payment of a forged bill, see post, the Chapter on Forgery of Bills. (f) Smith v. Sheppard, Sel. Ca. 243, MS. of Mr. Serjeant Bond, Chitty, 9th ed.

enabled such third person to occasion the loss, must sustain it."(g) And supposing the equity of the loser and payer precisely equal, there is no reason why the law should interpose to shift the injury from one innocent man upon another. But, if such a payment be made under suspicious circumstances, or without reasonable [*174] caution, or out of the usual course of business, it will not discharge the payer.(h) If payment be made before the bill or note is due, or long after it is due, or, in case of a check, long after it is drawn, that is a payment out of the usual course of business.

And, therefore, though a check be really drawn by a banker's customer, but torn in pieces before circulation by the drawer, with intention of destroying it, and a stranger, picking up the pieces, pastes them together, and presents the check soiled and so joined together to the banker, and he pays it, the banker cannot charge his customer with this payment, for the instrument was cancelled, and carried with it reasonable notice that it had been cancelled. (i)

If the bill or note be not payable to bearer, but transferable by indorsement only, and be paid to a wrong party, the payer is not discharged.(k)

A bill is not discharged, and finally extinguished, until paid by or on behalf of the acceptor; nor a note until paid by or on behalf of the maker.

It was long an unsettled question, whether payment in part or in full by the drawer to the holder will discharge the acceptor pro tanto, or whether the holder may, nevertheless, recover the whole amount from the acceptor, and hold an equivalent to the amount received

(g) Lickbarrow v. Mason, 2 T. Rep. 70.

(h) There is at present no authority for saying that a party honestly paying, is in as good a situation as a party honestly discounting. See p. 126.

(i) Scholey v. Ramsbottom, 2 Camp. 485.

(k) It has been contended, that each indorsement is a warranty of the validity of the prior indorsements, and that an indorser, who has been paid by the acceptor, is liable, if the indorsements to him turn out invalid, to be sued by the acceptor on an implied undertaking, that he, as holder, was entitled to receive the amount of the bill. East India Company v. Tritton, 3 B. & C. 280; 5 Dowl. & R. 214, S. C.; Smith v. Mercer, 6 Taunt. 76; 1 Marsh. 453, S. C. L'endosseur est garant solidaire avec les autres signataires de la verité de la lettre ainsi que du paiement à l'échéance. Pardessus, 376. Tous ceux qui ont signé, accepté, ou endossé une lettre de change, sont tenus à la garantie solidaire envers le porteur. Code de Commerce, 140; Lovell v. Martin, 4 Taunt. 799.

from the drawer, as money received of the acceptor to the drawer's use.(1) It has been thought that the holder can only recover of the [*175] acceptor the amount of the bill *minus the sum paid by the drawer.(m) The acceptor being the principal, and the drawer the security, it might seem that a payment by the drawer discharges the acceptor's liability to the holder pro tanto, and makes the accceptor liable to the drawer for money paid to his use, and that if the drawer pay the whole bill, nominal damages only can be recovered by the holder of the acceptor.(n) The better opinion, however, seems to be, that in an action against the acceptor, payment by the drawer is no plea, but only converts the holder into a trustee for the drawer.(0) But, payment by the drawer of an accommodation bill, is a complete discharge of the bill.(p)

Payment by a stranger of the amount of a bill to the baukers, at whose house the bill is made payable by the acceptor, the party paying obtaining possession of the bill, is not a payment by the acceptor.(q)(1)

(1) In Johnson v. Kennion, 2 Wils. 262, recognised in Walwyn v. St. Quintin, 1 B. & P. 658, it was held, that the holder was entitled to recover the whole amount; but in Bacon v. Searles, 1 H. Bla. 88, it was considered that he could recover only the difference, and the report of the case of Johnson v. Kennion, was reflected on. See Pierson v. Dunlop, Cowp. 571; Reid v. Furnival, 1 C. & Mees. 538; 5 C. & P. 499, S. C.; Browne v. Rivers, Doug. 455. To the doctrine that a payment by a subsequent party operates as a satisfaction of the bill to the amount of the payment, it may be objected, that if the bill be satisfied, the party making the payment can maintain no action on the bill against a prior party, but must sue such prior party for money paid to his use. Whereas it is the constant practice for an intermediate party, who has paid the bill, to sue prior parties on the bill. See Callow v. Laurence, supra. The answer to this objection might have been that such a payment is as to the rights and liabilities of parties, subsequent to the party paying, a satisfaction, but as to the rights and liabilities of prior parties, it may, at the election of the party paying, merely operate to place him in the position of a party, to whom a negotiable instrument is assigned a second time.

(m) Lord Abinger appears to have so ruled at nisi prius. Hemming v. Brook, 1 Car. & M. 57.

(n) Mais comme ces differents debiteurs sont debiteurs envers lui de la même chose, le paiement qui lui est fait par l'un d'eux libere d'autant envers lui les autres. Poth. 106; see Hemming v. Brook, 1 Carr & M. 57.

(0) So held, it is believed, in the C. P. Sittings after T. T. 1850; Jones v. Broadhurst.

(p) Lazarus v. Cowie, 3 Q. B. Rep. 459.

(q) Deacon v. Stodhart, 2 Man. & Gr. 317. As to payment by a stranger, see Jones v. Broadhurst, supra.

(1) Where the holder of a bill of exchange accepted for the accommodation

The acceptor of a bill, whether inland or foreign, or the maker of a note, should pay(r) it on a demand made, at any time within business hours, on the day it falls due. And, if it be not paid on such demand, the holder may instantly treat it as dishonoured. (8)

*But the acceptor has the whole of that day within which

to make payment; and though he should, in the course of that [*176] day, refuse payment, which refusal entitles the holder to give notice of dishonour, yet if he subsequently, on the same day, makes payment, the payment is good, and the notice of dishonour becomes of no avail.(ss)

A plea of tender,(t) by the acceptor after the day of payment, is insufficient.(u)

If a bill or note be paid before it is due, and is afterwards indorsed over, it is a valid security in the hands of a bona fide indorsee. "I agree," says Lord Ellenborough, "that a bill paid at maturity cannot

(r) If a banker who has funds in his hands refuse to pay a check, he thereby subjects himself to an action at the suit of his customer, the drawer. Marzetti v. Williams, 1 B. & Ad. 415; 1 Tyr. 77, S. C. So, if he refuse to pay a bill of his customer, made payable at the banking house; but in order to charge the banker, the presentment must be within banking hours. Whitaker v. Bank of England, 1 C., M. & R. 744; 6 C. & P. 700; 1 Gale, 54, S. C. See the Chapter on Presentment for Payment.

(s) Ex parte Moline, 1 Rose, 303; Burbridge v. Manners, 3 Camp. 193; Leftley v. Mills, 4 T. R. 170; Haynes v. Birks, 3 B. & P. 599.

(88) Hartley v. Case, 1 C. & P. 555; 4 B. & C. 339; 6 D. & R. 505, S. C.

(t) As to payment where there are nominal damages; see Beaumont v. Greathead, 2 C. B. Rep. 494.

(u) Hume v. Peploe, 8 East, 168. But a drawer or indorser is not bound to pay till notice and request; and, therefore, a plea of tender, after the bill became due, might be good, if pleaded by a drawer and indorser. And, as a drawer or indorser has a reasonable time to pay, he might, it should seem, plead a tender even after request, and of principal only, without interest. Walker v. Barnes, 5 Taunt. 240; 1 Marsh. 36, S. C.; Soward v. Palmer, 8 Taunt. 277; 2 Moo. 274; but see Siggers v. Lewis, 1 C. M. & R. 370; 4 Tyrw. 847; 2 Dowl. 681, S. C.; where a plea that the action was commenced before a reasonable time for the defendant, the indorser, to pay the bill was held ill.

of the drawer sends it to a bank for collection, and the bank when the bill comes to maturity, passes the amount thereof to the credit of the holder, this is not such a payment as discharges

the acceptor; but the bank succeeds to the rights of the holder, and may maintain an action on the bill against the acceptor. Pacific Bank v. Mitchell, 9 Metcalf, 297.