XII. It now, therefore, seems that the original absence of CHAPTER consideration, in the case of accommodation acceptances, the object of which is to raise money, will not defeat the title of an indorsee for value of an overdue bill or note, even although the indorsee had notice of the fact when he took the bill, unless there were an agreement, express or implied, restraining the negotiation of the bill or note after it should become due (y). A bill or note assigned in due time on the day of payment is to be considered as assigned before it is due (z). The assignee of an overdue bill or note is not affected by an infirmity in the title of an original or antecedent party, if his immediate assignor could have maintained an action. A bill was accepted on a smuggling transaction, indorsed before it was due to a bonâ fide holder for value, and by the latter indorsed, after due, to the plaintiff. Held, that as the indorser might have sustained an action against the acceptor, so could his indorsee (a). An indorsee of an overdue bill or note is liable to such defects of title only as attach on the bill or note itself, and not to claims arising out of collateral matters (b). Therefore the indorsee of an overdue note is not liable to a set-off due from the payee to the maker (c). And although the indorsee had notice, gave no consideration, and took the bill on purpose to defeat the set-off (d). Yet it should equities which attach on the instrument and defeat the title of an indorsee for value of an overdue bill, although with notice of the fact. See Carruthers v. West, 11 Q. B. 143, and Er parte Swan, L. R., 6 Eq. 345. The effect of the Code seems to be to uphold Charles v. Marsden, for though sect. 36 declares that if the party transferring when overdue, were not a holder for value, his transferee can have no better title. Sect. 28 (2) makes an accommodating party liable to a holder for value, and sect. 27 (2) constitutes the holder a holder for value, if value have at any time been given, against the acceptor and all parties prior to such time; besides absence of consideration is not one of the defects of title in sect. 29 (2) that attach to an overdue bill or note. (y) Sturterant v. Ford, 4 M. & G. 101; Lazarus v. Cowie, 3 Q. B. 459; and see Stein v. Yglesias, 1 (-) Byles on Bills, 6th Ameri- (a) Chalmers v. Lanion,1 Camp. 383; 10 R. R. 709; Fairclough v. Paria, 9 Exch. 690. (b) Holmes v. Kidd, in error, L. J. 113; 3 H. & N. 891. 28 (c) Burrough v. Moss, 10 B. & C. 558; 5 M. & R. 296; Stein v. Yglesias, 1 C., M. & R. 565; 3 Dowl. 252; 1 Gale, 98. It has been thought that the indorsee would be affected by the set-off, if he have notice of it at the time he takes the bill. Goodall v. Ray, 4 Dowl. 76. But it is now clear that notice makes no difference. Whitehead v. Walker, 11 L. J., Exch. 168; 9 M. & W. 506; 10 M. & W. 696; and Ex parte Swan, L. R., 6 Eq. 345. (d) Oulds v. Harrison, 24 L. J., Exch. 66; 10 Exch. 572. CHAPTER Transfer of an overdue bill on demand or cheque. seem, that where a negotiable instrument is deposited as a security for the balance of accounts, and is afterwards indorsed overdue, in an action by the indorsee against the party originally liable, the state of the account may be gone into (e). And where there has been an agreement for a set-off, the transfer of the bill overdue will not defeat it (f). Where the bill is deposited as a security for the balance of a running account, but at the time when the bill becomes due the balance is in favour of the depositor, and the bill is not withdrawn by him, and afterwards the balance shifts in favour of the depositary, the depositary is not to be considered as the transferee of an overdue bill (g). Bills of exchange payable on demand are deemed overdue when they appear to have been in circulation for an unreasonable length of time, and can thenceforth only be negotiated subject to any defect of title affecting them at maturity. This rule applies to bankers' cheques, transferred a long time after they are issued. The owner of a cheque on a banker for 501., having lost it, the cheque was paid five days after its date to a shopkeeper, who received the amount at the bank. Held, that the shopkeeper was liable to refund the money to the owner of the cheque; for, having taken it after due, he acquired no better title than the party from whom he took it, and that it lay on him to show that his assignor had a title. "A cheque," says Mr. Justice Holroyd," is payable immediately; the holder of it keeps it at his peril, and a person taking it after it is due takes it also at his peril” (h). But a distinction has been taken between the transfer of a bill or note payable at a fixed pericd and overdue, and the transfer of a cheque some days old. For, in the case of such a bill or note, there is a fixed time for payment, after which it cannot possibly circulate without some suspicion; but there is no such fixed time in the case of a cheque. (e) Collenridgev. Farquharson, 1 Stark. 259; and see the obser (f) Such an agreement being C. 330; 6 D. & R. 445; 2 C. & P. 11; Code, s. 36 (3). Sect. 29 (2) enumerates defects of title that attach to a bill or note negotiated after due, or with notice, sub-s. (b). Unreasonable length of time is stated to be a question of fact, and therefore may vary with each particular case, where a bill is payable on demand; as to a note, see s. 86. XII. And therefore, it has been held, that though the taking of CHAPTER a cheque six days old is a circumstance from which the jury may infer fraud, it is not conclusive evidence, so as to prevent the party taking the cheque from suing on it, or retaining it, or the money received upon it, and the same has been held of a cheque eight days old (i). demand. Where a note payable on demand is negotiated, it is not Of note to be deemed overdue, so as to affect a holder without payable on notice with defects of title, because it has been outstanding more than a reasonable time (k). But it must be presented within a reasonable time after indorsement, in order to charge an indorser (1): although it be several years old, and no interest has been paid on it. "A promissory note,' says Mr. Baron Parke, "payable on demand, is intended to be a continuing security; it is quite unlike a cheque, which is intended to be presented speedily" (m). The fact that a note is overdue must have distinctly Pleading. appeared in the pleading (n). Though the maker of a bill or note assigned when overdue might resist payment at law, equity had a concurrent jurisdiction, and might, when justice required, order the instrument to be delivered up to be cancelled, and restrain the holder from proceeding at law (0). Where a banker, on whom a cheque is drawn, is also the banker of the bearer, and the cheque is paid in, there are two characters in which the banker may have received it: he may have received it merely as agent of the bearer, like any other securities which the bearer may have paid in on account; or he may have received it as drawee, and so by receiving it have paid it. Prima facie, he must be taken (i) Rothschild v. Corney, 9 B. & C. 388; 4 M. & R. 411; Dans. & L. 325; 33 R. R. 209. See Serrell v. Derbyshire Railway Company, 9 C. B. 311; London and County Bank v. Groom, 8 Q. B. D. 288; 50 L. J. 517; 51 L. J. 224. (k) Code, s. 86 (3). But if any evidence of payment having been refused is brought home to the holder, it may be otherwise. Barough v. White, 4 B. & C. 327; 6 D. & R. 379; 2 C. & P. 8; Goodall v. Ray, 4 Dowl. 76. (1) Sect. 86 (1). (m) Brooks v. Mitchell, 9 M. & W. 15; Cripps v. Daris, 12 M. & W. 165; see Bartrum v. Caddy, 9 Ad. & E. 275. In America it has been held that such a note, unless transferred within a reasonable time after date, is to be considered as overdue. Byles on Bills, 6th American edition, p. 268. (n) Cripps v. Davis, 12 M. & W. 159. (0) Hodgson v. Murray, 2 Sim. 515; Anon. v. Adams, Younge, 117; 34 R. R. 260. Equitable relief in case of an overdue bill. Transfer of a cheque drawn on the banker of the bearer. CHAPTER After abandonment of right of transferee. After pay ment by party ultimately liable. By other parties. to have received it as agent of the bearer (p), and will discharge himself by giving timely notice of non-payment to the bearer (q); but if, while he keeps the cheque, the drawer pays in money, the banker is bound to appropriate that money to the payment of the cheque, though a larger balance is due to him from the drawer (r). Where a man, to whom a bill is transferred, sends it back as useless, that is an abandonment of his right as transferee, and he cannot, by getting the bill again into his hands, acquire a right to sue without a new transfer (s). After payment in due course by or on behalf of the acceptor or maker, bills or notes are extinguished and cannot be transferred (t), except promissory notes payable to bearer on demand, re-issued by the original maker, having taken out a licence for that purpose (u). And an accommodation bill paid by the party accommodated () at maturity cannot be re-issued. And a note payable on demand, which has been paid, cannot be re-issued by the maker, although the indorsee have no notice that the note has ever been paid, or that payment has ever been demanded (y). "A bill of exchange," says Lord Ellenborough, "is negotiable, ad infinitum, until it has been paid by or discharged on behalf of the acceptor" (z). (p) Boyd v. Emerson, 2 Ad. & E. 184; 4 N. & M. 99. (q) Ibid.; he being a holder for value. Ex parte Richdale, 19 Ch. D. 409. (r) Kilsby v. Williams, 5 B. & Ald. 815; 1 D. & R. 476 ; 24 R. R. 564. (8) Cartwright v. Williams, 2 Stark. 340. This practice is now recognized by the Code, s. 49 (6), as a notice of dishonour when the bill or note has really been dishonoured. Quære, whether the rights against the other parties are not abandoned if this be the method adopted. It was rarely used except by bankers, who of course did not in such case credit the customer with the amount, and are therefore unaffected. (t) 55 Geo. 3, c. 184, s. 19; Code, s. 59. (u) 55 Geo. 3, c. 184, ss. 14, 24; and now 54 & 55 Vict. c. 39, s. 30. Until a bill or note has been paid by the maker or acceptor, or on their behalf, it has not discharged its functions, and does not require a new stamp, though re-issued after due, and after it has been paid by an indorser. Callow v. Lawrence, 3 M. & Sel. 95; 15 R. R. 423. (r) Lazarus v. Cowie, 3 Q. B. 464; Parr v. Jewell, 16 C. B. 684; Code, s. 59 (3). (y) Bartrum v. Caddy, 9 Ad. & E. 275; 1 Per. & D. 207. (2) Callow v. Lawrence, 3 M. & S. 95; 15 R. R. 423; Hubbard v. Jackson, 3 C. & P. 134; 4 Bing. 390; 29 R. R. 582; Roberts v. Eden, 1 B. & P. 398; Bartrum v. Caddy, 9 A. & E. 275; Woodward v. Pell, 37 L. J., Q. B. 41; L. R., 4 Q. B. 55, where an indorser had paid the amount of the bill and the acceptor the costs. Code, ss. 36 (1) and 59. CHAPTER XII. A bill of exchange, therefore, or promissory note, unless paid by the party ultimately liable, can in general be re-issued (a). Thus, where a bill or note is paid by an Re-issue. indorser, or a bill payable to drawer's order is paid by the drawer, the party paying is remitted to his former rights, as regards the acceptor, maker, or other antecedent parties, and may, after striking out his own and subsequent indorsements, re-issue the bill or note (b). If a bill or note be paid before it is due, and is after- After wards indorsed over, it is a valid security in the hands of a premature bona fide indorsee. "I agree," says Lord Ellenborough, payment. "that a bill paid at maturity cannot be re-issued, and that no action can afterwards be maintained upon it by a subsequent indorsee. A payment before it becomes due, however, I think, does not extinguish it any more than if it were merely discounted. A contrary doctrine would add a new clog to the circulation of bills and notes; for it would be impossible to know whether there had not been an anticipated payment of them. It is the duty of bankers to make some memorandum on bills and notes which have been paid, and if they do not, the holders of such securities cannot be affected by any payment made before they are due" (c). After a partial payment, at maturity, by the acceptor, After partial or any other party really the principal debtor, the holder payment. cannot recover of the acceptor more than the balance (d). A question sometimes arises whether a bill have been paid or transferred. Though the holder give to a person taking up the bill a general receipt, importing that he has received payment, evidence is admissible to show that such person taking up the bill paid the money, not as agent for the acceptor or drawer, but as indorsee (e). Where there is a doubt whether the bill were paid or transferred. |