1

3

4

would be prudent in respect to the party himself, or even of some duty owing to third persons with whom those seeking to set up estoppel are not privy. The inability to recover from the Banker, depends upon the fault of the drawer of the cheque, in the mode of drawing it. Negligence in order to estop must be negligence in the transaction itself. When the customer of a Banker on leaving home, left with his wife a number of blank signed cheques to be filled in by her as occasion required, and she filled them in such a way, that the amounts for which they were drawn could be increased, by the insertion of both words and figures, and were considerably increased by the holder, and paid by the Bankers as altered, it was held, that the Bankers could not be held responsible, as the careless manner in which the cheques were filled in invited the forgery. Negligence in the custody of a negotiable instrument will not disentitle the owner of it, to recover it or its proceeds from a person who has wrongfully obtained possession of it. Where a firm in New York (the plaintiffs), purchased in New York a draft for £1,000 on Smith, Payne & Co., of London, and placed it in a letter, in a letter-box in their office in the usual way to be posted, and it was stolen by one of their clerks, who by means of a forged indorsement obtained the money thereon, by passing it through the defendants who were Bankers; it was held, that plaintiffs were entitled to recover from the defendants who had received the amount from Smith, Payne & Co., as they had got possession of the draft wrongfully, as there had been no negligence by the plaintiff in respect to the draft itself, and that if there had been negligence in its custody or transmission by post, it was not such negligence as would disentitle the plaintiff to recover, as it was not the proximate cause of the forgery, by which payment of the draft had been obtained; where the drawer of a cheque tore it into four pieces and threw it from him, and the four pieces were afterwards neatly pasted together, but the

7

1 Swan v. N. Brit. Austr. Co. H. & N. 603; S. C. 2 H. & C. 175; 32 L. J. (Ex.) 277; per Blackburn, J..

2 Roberts v. Tucker, 16 Q. B. 560.

3 Arnold v. Cheque Bk., 1 C. P. D. at p. 587; Freeman v.

Cooke, 2 Ex. 654; S. C. 18 L. J. (Ex.) 117.

4 Young v. Grote, 4 Bing. 253; see also Halifax v. Wheelwright, L. R. 10 Ex. 183.

5 Arnold v. City Bk., 1 C. P. D. 578.

rents were quite visible, and the face of the cheque soiled and dirty, it was said that, no holder of an instrument in such a condition could enforce it, because, in truth, no man of ordinary intelligence and caution, could fairly regard it as part of the apparent commercial currency.1

Where the maker of a negotiable instrument does some act animo cancellandi, but so imperfectly, that his intention is not manifest on the face of the instrument, and it is afterwards put in circulation, he is responsible to a bona fide holder for value, though the instrument be put in circulation, without his authority; therefore where the acceptor of an accommodation bill of exchange, intrusted it to the drawer for the purpose of getting it discounted, and on the latter failing to do so, tore it in half and threw away the pieces in the street, but the drawer picked them up and put them in his pocket, saying they would be safer there, to which the acceptor said nothing, and afterwards pasted the pieces together, and wrongfully negotiated the bill, there being nothing in the appearance of the bill to excite suspicion; it was held, that the acceptor was liable on the bill to a holder for value without notice.? This case is apparently provided for by Sec. 32, which makes it obligatory on the maker or acceptor to pay according to the apparent tenor, and from the judgment it appears the Court came to the conclusion, that the division of the instrument into two pieces, although manifest on the face of it, was not such an act as primâ facie ought to have indicated to the holder, that it had been withheld or withdrawn from circulation; because, the acceptor by abstaining from an effective cancellation or destruction of the bill, led the holder to become the holder for value, without having any just cause for supposing it had been cancelled or annulled. Negligence in order to operate as an estoppel, must be in or immediately connected with the transfer itself, and also, it must be the proximate cause of the loss.3

The second paragraph of the section corresponds with Sec. 11 of the Crossed Cheques Act (39 and 40 Vict. c. 81.) Where a cheque was crossed by the drawer, but the crossing was erased,

1 Scholey v. Ramsbotham, 2 Camp. 485.

2 Ingham v. Primrose, 7 C. B. (N. S.) 82; S. C. 28 L. J. (C. P.)

204; see also Young v. Grote, 4 Bing. 253.

3 Bank of Ireland v. Evans Charities, 5 H. L. C. 389.

Extinguish.

before the cheque was presented, by some person who had stolen or found the cheque, and so skilfully that the erasure was difficult of detection and the Banker paid it; in an action by the drawer against the Banker for the balance of his account, it was held that the payment was authorized, there being no negligence either on the part of the drawer or the Banker and that the crossing was no part of the cheque. 1

1

90. If a bill of exchange which has been negotiment of rights ated is, at or after maturity, held by the acceptor in his own right, all rights of action thereon are extinguished.

of action on bill in accep. tor's hands.

The section relates only to bills of exchange, and is founded on the principle, that the obligation being that of the acceptor, his possession of the contract is prima facie proof that it is fulfilled. Where a bill of exchange was produced by the acceptor after due date, and the defendant had received no notice of dishonor, and no demand for payment of the bill, it was held that the presumption was, it had been paid by the acceptor* Byles says, "A bill or note once in circulation overdue, and coming out of the hands of the acceptor or maker is presumed to be paid. Thus it is a maxim of the Scotch law, chirographum apud debitorem repertum præsumitur solutum." But the mere production of the bill from the custody of the acceptor is not prima facie evidence of his having paid it, without proof of its having been once in circulation after it had been accepted. *

3

In his own right.—The rule laid down here is different from English law, under which if the payee and holder of a note appoint the maker his executor, it is a releases but he must, in equity account for the amount of the note as assets.

CHAPTER VIII.

OF NOTICE OF DISHONOR.

91. A bill of exchange is said to be dishonored Dishonor by by non-acceptance when the drawee, or one of non-acceptance. several drawees not being partners, makes default

in acceptance upon being duly required to accept the bill, or where presentment is excused and the bill is not accepted.

Where the drawee is incompetent to contract, or the acceptance is qualified, the bill may be treated as dishonored.

This chapter treats of the necessity of giving notice of dishonor when a bill of exchange has been refused acceptance, or the parties to it, are not competent to contract, or has been accepted in different terms from the order of the drawer2 or when a negotiable instrument has not been paid at maturity. The two first sections are practically definitions of what is meant by the expression "a bill, &c., has been dishonored," and Sec. 91 makes a general definition as to non-acceptance, providing for refusal to accept on being required to do so, or refusal after presentment had been excused;3 whereas Sec. 61 as we have seen only declares a bill dishonored by non-acceptance, where the drawee cannot be found, or is not at the place specified in the bill. "A presentment of the note," says Lord Ellenborough, "at "the house, was a request there, to pay the note, and nonpayment of it is a refusal at the house. A refusal need not be "an affirmative act; the not paying which is only a negative "act, or shutting the door is a refusal."

4

4 Butterworth v. Ld. Despencer, 3 M. & S. 150.

Dishonor by non-payment.

92. A promissory note, bill of exchange or cheque is said to be dishonored by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same.

This is a general section applying to the refusal of payment of negotiable instruments, on due requisition for payment. In Chapter V, we have seen that unless the rules laid down therein, concerning the presentment of negotiable instruments are carried out, by the holder, the parties to the instrument are not liable to him, that is, omission to take the proper steps to obtain acceptance or payment from the party primarily liable, discharges the sureties.1

In this chapter is provided a set of rules, providing for communication to the parties to the instrument of due notice, that though the rules in Chapter V, have been carried out, the holder has not been able to obtain satisfaction thereof from the principal debtor, and that in consequence he intends to hold the sureties liable.

This notice is called "notice of dishonor." With reference to the consequences to follow from non-compliance with the rules contained in this chapter, it is to be observed, that they arise rather by implication, than express provision, for while in Chapter V, the direct consequences of non-presentment in due course are distinctly laid down, viz., the discharge from liability of all parties to the bill or note, Sec. 93 provides, that the holder or some other party to a dishonored instrument must give notice of the dishonor of the instrument to all parties whom he (the holder) seeks to make liable on the same, but does not declare that the party to whom such notice should have been given, shall be discharged by the omission to give such notice. This therefore raises a condition precedent to the liability of the party, which must be fulfilled. The following are the reasons given by Byles3 for requiring notice of dishonor, and the consequences of neglect to give it in due course, "the Law presumes "that if the drawer has not had due notice he is injured,

Secs. 37 & 38.

2 Secs. 61 & 62.

3 Byles on Bills, 13th ed., p. 297.