"because otherwise he might have withdrawn his effects from "the hands of the drawee,' and that if, the indorser has not "had timely notice, the remedy against the parties liable to him "is rendered more precarious. The consequence, therefore of neglect of notice is, that the party to whom it should have "been given is discharged from all liability, whether on the bill, or on the consideration for which the bill was paid."2

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93. When a promissory note, bill of exchange or cheque is dishonored by non-acceptance or nonpayment, the holder thereof, or some party thereto who remains liable thereon, must give notice that the instrument has been so dishonored to all other parties whom the holder seeks to make severally liable thereon, and to some one of several parties whom he seeks to make jointly liable thereon.

Nothing in this section renders it necessary to give notice to the maker of the dishonored promissory note, or the drawee or acceptor of the dishonored bill of exchange or cheque.

'Probably from the fact, that all contracts raised upon bills "of exchange except those with the acceptor, are contracts of suretyship or indemnity, though perhaps from other more "strictly mercantile circumstances, as for the purposes of making "other preparations or modifications in business, notice of dis"honor is by the law merchant made a condition of the liability "of the surety. The contracts of indorsement between the "immediate parties3 are conditional and are by way of indem'nity. It follows from this last, that there can be no valid "claim in respect of the indorsement, where there is no liability "in respect of it. And the two together are the reason, why a failure by any indorsee to give due notice of dishonor, not "only disables him from recovering against his immediate “indorser, but disables a prior indorser to him from recovering "against his indorser, or a prior indorser to him. The indorsee

1 Bickerdihe v. Bollman, 2 Sm. L. C. 8th ed., 51; T. R., 405.

2 Bridges v. Terry, 3 Taunt.,

130.

3 See Sec. 44, Expl.

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"who has failed to give notice cannot recover, because he has "not fulfilled the condition of his contract. The others cannot recover, because as they cannot be made liable, they do not require to be indemnified. For example, the indorser to him "who has failed to give due notice is not liable to him, and "therefore cannot claim against his own indorser, and again such "last indorsee cannot claim against his indorser and so on.

This section provides that in case of dishonor of a negotiable instrument, the holder or one of the parties thereto who remains liable thereon, must give notice of such dishonor to all other parties liable thereon and whom the holder seeks to charge. Making an exception however as to the necessity for giving such notice to the maker of a promissory note or the drawee or acceptor of a bill of exchange. Putting all negotiable instru. ments on the same footing as to notice of dishonor, is the English law.

It lays down an absolute rule which applies even to the parties to accommodation bills or notes. Thus where in an action by the indorsee of a bill of exchange against an indorser, it was alleged that the bill had been drawn by the drawer and accepted by the acceptor and indorsed by the defendant for the purpose of raising money for the defendant, and therefore he was not damnified by the omission of the plaintiff to give him notice of the dishonor by the acceptor, it was held that in order to disentitle the defendant as the indorser of a bill of exchange to notice of dishonor, the plaintiff must show, that it was the defendant's duty as between himself and the other parties to it, to provide for it, and the inference from his position on it was that he was not, and he might be damnified, in the legal sense, if he had a remedy over against any of the other parties to it and was not bound between himself and them to meet the bill. And the same was held in the Queen's Bench Division a few days afterwards, and apparently without knowledge of the above case. There the bill was an accommodation bill, and the intention of the parties was, that the last indorser should meet it, and it was held, that as the previous indorsers

Horne v. Rouquette, 3 Q. B. D. per Brett, L. J., at pp. 518, 519; see ante, Effect of indorse. ment, Sec. 50.

2 Foster v. Parker, 2 C. P. D. 18.

were only sureties for the last one, and as such were entitled to notice of dishonor, in default of which, an action could not be maintained against them;' and Lord Kenyon laid it down, "That it was no excuse for neglect of notice to an indorser, that the drawer had no effects in the acceptors hands. That the circumstance would not avail the plaintiff, as the indorser is entitled in all cases to notice, for he has no concern with the accounts between the drawer and the drawee."

The effect of this section is, to make it obligatory upon all persons, who desire to retain their rights against the parties, to a bill to give them notice of dishonor, thus the holder should give notice to all prior indorsers and the drawer, an indorser to all whose names are to the bill prior to his and to the drawer, but in the case of a promissory note it is not necessary to give notice to the maker, the reason being that he like the acceptor of a bill of exchange, or the drawee of a cheque, is the person whose duty it is, primarily to meet the instrument at maturity. It is further to be observed from the wording of the section, that a person, who on default by others, would be liable on the instrument provided he received due notice of dishonor, is at liberty, at any time, after dishonor, and before he is called upon to pay, to give notice to those whose liability extends to him. The expression "who remains liable on the bill" seeming to mean, not one whose liability bas been preserved by due notice of *dishonor, but rather one whose liability by reason of the dishonor, remains and has not been discharged.3

This is somewhat different from the English Law; for it has been held, that notice by the first indorsee who had not himself received notice from the second indorsee, and who was not therefore obliged to take back the bill, was insufficient as between the second indorsee and the drawer. The effect of this case is however questioned by Byles," as affected by Chapman v. Keane ; and Mr. Smith says, "The notice must

Turner v. Sampson, 2 Q. B. D. 21; see also Carter v. Flower, 16 M. & W., 743.

2 Wilks v. Jack, Peak, 202. • Chapman v. Keane, 3 A. & E. 193; S. C. 4 N. & M. 607; Harrison v. Ruscoe, 15 M. & W. 231; S. C. 15 L. J. (Ex.) 110.

come from the holder or some person entitled, or who as a party to the bill, probably will be entitled to call for payment or reimbursement;" and on the authority of Chapman v. Keane it has been held that a party liable on a bill may give the notice, even though he do not know it has been dishonored.1

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It is no excuse for not giving notice to the drawer, that he had no effects in the drawee's hands, if the drawer would be entitled on taking up the bill to sue either the acceptor or any other party. The rule relating to notice of dishonor in regard to forged acceptances on bills of exchange, does not apply to forged currency notes, and a person who receives a forged currency note, is not bound to give immediate notice of the forgery to the person, who transferred it to him, in order to be paid the amount for which it was transferred.3 Where the plaintiff sold goods to defendant and agreed to accept payment by "approved Banker's bills" and such bills were given to plaintiff by defendant, but to which defendant was no party, and the bills were dishonored; it was held that defendants liability was not more extensive than if they had indorsed the bills and they were discharged not having received due notice of dishonor.4 This would probably be followed in this country, though as a rule, the transfer of a negotiable instrument payable to bearer, by mere delivery, does not render the transferor liable to the transferee, yet from the wording of the section, notice of dishonor is to be given to the parties liable on the instrument, and as the liability, if any, only accrues on its dishonor, due notice, or demand of payment should be at once made on the person to be charged in consequence of the dishonor. A question may arise under this section whether reading it with Sec. 1, it extends to hundis, for though they are not defined in the act, from the side note to the section it would seem that what is meant by them, are instruments in an oriental language, (in the Stamp Act, a bill of exchange, includes a hundi) or whether by reason of the reservation contained in Sec. 1, that nothing in the Act is to

1 Jennings v. Roberts, 4 E. & B. 615; S. C. 24 L. J. (Q. B.)

102.

2 Corey v. Scott, 3 B. & A. 619; Norton v. Pickering, 8 B. & C. 610; S. C. M, & R. 23.

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2

affect any local usage relating to instruments in an oriental language, they are not included in the provisions of the section. From the decisions of the Courts, chiefly of Bengal we find it to be an established rule, that in order for a defence of want of notice of dishonor to prevail, it must be shown that the party charged has been prejudiced, that is subjected to injury or material risk of injury. Although the English Law of prompt notice, by return of post, does not apply to cases of native hundis, drawn by natives upon natives, and indorsed by natives, yet reasonable notice of dishonor is essential. In another case the Bengal High Court said: "We think that as "it has been ruled by several decisions of this Court, that the "strict rules of the Mercantile Law of England, are not applica"ble to transactions in bills and hundis as amongst natives of "this country, equity and good conscience require, that there "should be a finding upon the question whether the indorser (the defendant), has been injured or exposed to material risk "of injury from the want of a notice within reasonable time."3 And in another case 66 as to the notice itself, the law is, that notice should be sent to the drawer of the bill at the time the dishonor takes place," and as the notice had not been sent till ten months after dishonor, the drawers were held discharged. The reason of this may perhaps be found in the fact, "that the Lex "Mercatoria though part of the common law of England, is not "part of the law by which transactions are governed outside the Presidency towns among natives, as the common law of Eng"land was never introduced any where else in India.”5- While however we have positive recent authority for the above propositions, cases are to be found where, the omission of the holder to give notice of dishonor discharges the drawer of a hundi.6 It seems that no notice of dishonor for non-payment is required by Mahommedan law and all that is required is, that demand for

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