ting that though facility for transfer of mercantile instruments, occasionally gave rise to the theft or misappropriation of the security, to the loss of the owner, said, "But this is an evil common to the whole body of negotiable instruments. It is "one which may, in a great degree, be prevented by prudence and care. It is one which is counterbalanced by the general con"venience arising from facility of transfer." 66 66 The omission from the section of any reference to negligence is also worthy of remark, as indicating the intention of the Legislature not to hamper the negotiability of mercantile instruments. The corresponding section in the draft bill contained the expression "without knowing of any defect in the title." Where a Bank Agent entrusted a broker with certain Government currency notes, for the purpose of the broker making a profit out of the purchase of Government securities, which, on purchase, were to be delivered to the Bank, which was to recoup itself out of the resale thereof, and instead of purchasing Government securities, the broker gambled away the currency notes at cards, in a suit brought by the Bank Agent against the person to whom the broker had paid away the currency notes in payment of his gambling debt, it was held, that the broker only held the notes upon a special trust, and had no property in them, and that as the defendant had not taken them in the ordinary course of business, but in payment of a gambling debt, the plaintiff was entitled to recover them, and that defendant was not a bonâ fide holder for value.2 The remarks of Lord Blackburn3 may be aptly quoted here, as showing a guide to the construction of these words; he says, "I consider it fully established, that if value be given for a bill "of exchange, it is not enough to show that there was careless"ness, negligence or foolishness, in not suspecting that the bill was wrong, when there were circumstances which might have "led a man to suspect. I do not think it necessary that he "should have notice of what the particular wrong was. If a man, knowing that a bill was in the hands of a person, who "had no right to it, should happen to think that perhaps the 1 Goodwin v. Robarts, L. R. 10 Ex. 357; Affd. 1 App. Cas. 476; S. C. 44 L. J. (Ex.) 57 & 157. 2 Buldeo Narayan v. Scrymgeour, 6 Beng. L. R. 58. 3 Fones v. Gordon, 2 App. Cas. at p. 628. "" 'Payment in due course." 66 man had stolen it, when, if he had known the real truth, he "would have found, not that the man had stolen it, but that he "had obtained it by false pretences, I think that would not make any difference, if he knew there was something wrong about "it. If he take it in that way, he takes it at his peril. If he "was (if I may use the phrase), honestly blundering and careless, " and so took a bill of exchange, or a bank note when he ought "not to have taken it, still he is entitled to recover on it. But "if the facts and circumstances are such, that the jury, or whoever has to try the question, come to the conclusion, that he was not honestly blundering, but that he must have had suspicion that there was something wrong, and that he refrained "from asking questions, not because he was an honest blunderer or a stupid man, but because he thought in his own secret "mind, I suspect there is something wrong, and if I ask ques❝tions and make further enquiry, it will be no longer my sus"pecting, but my knowing it, and then I shall not be able to "recover, that is dishonesty. I think that that is established, "not only by good sense and reason, but by the authority of the 66 cases themselves." 66 The following have been held to invalidate the holder's title, though value was given, where, a person took a bill specially indorsed;' where an indorsee took a promissory note made in favor of an insolvent and indorsed over to him by the insolvent, with notice of his being insolvent, as against the insolvent's assignee.* Inadequacy of consideration is not sufficient of itself to invalidate a contract freely entered into, but it may be taken into account in determining whether the consent to the contract was free.3 Fraud, coercion, and misrepresentation, invalidate all contracts, and therefore a bill obtained under any of these circumstances, would not be obtained for consideration. 10. "Payment in due course" means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any 1 Thakur Doss v. Futteh Mull, 7 Beng. L. R. 275. 2 Kelly v. Hanlon, 10 Beng. L. R. (App.) 23. 3 Contract Act, Sec. 25, expl. 2. person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned. 2 Payment in due course.-Payment as used in this section would seem to mean, 'payment of money,' for further on in the Act' the term is used with reference to the amount of the instrument, and as distinct from 'discharge' which is defined, and does not necessarily include payment of money. Payment in its strict sense, will not include delivery of property to value of the instrument, nor release from other debts, nor the acceptance of another person as debtor, nor of a less sum than is mentioned therein, but all these may by agreement be accepted. That this is the proper construction of the word will appear from the use of the expression 'payment in due course' in other parts of the Act, where the amount is referred to of a cheque, and paying the same according to the apparent tenor thereof." We have seen that negotiable instruments must be for the payment of money, and therefore except by agreement, nothing can be a payment in due course, except payment of money. 7 5 3 Due course. This has been held to be at maturity. Parke, B. says, "Nothing will discharge the drawer or acceptor except payment according to the Law Merchant, that is payment at maturity, and Lord Ellenborough says, "I agree that a bill paid at maturity cannot be re-issued. 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." In accordance with the apparent tenor.-By this is meant what appears on the face of the instrument to be the intention of the parties, and which appears to have been put there by them, for as we shall see,' any alterations or obliterations, on negotiable 1 Sec. 78. • Sec. 82, (a), (b). 3 Ib. 4 Sec. 82, (c). 5 Sec. 85. 6 Sec. 89. 7 Morley v. Culverwell, 7 M. & W. at p. 182; Attenborough v. Mackenzie, 25 L. J. Ex. 244. Burbidge v. Manners, Camp. 193; see Sec. 90. 9 Secs. 87, 89 & 118. 3 instruments are looked upon with great disfavor by the Courts, and require to be strictly proved, as to when and under what circumstances they were made, though if material alterations have really been made, but from the laches or carelessness of the parties to the instrument they are not plainly discernible, parties acting on the apparent tenor are excused, and incur no liability.' In good faith and without negligence, &c.-This provision is similar to that in the Contract Act for title in the buyer of goods. As we have seen under the preceding section, the question, is whether the payment is made under such circumstances, that the payer must have had suspicion that something was wrong, but refrained from further enquiries, with a view to avoiding discovery. Or as it was put by Parke, J., "Notice and knowledge means not merely express notice, but knowledge or the means of knowledge, to which a party wilfully shuts his eyes, a suspicion in the mind of the party and the means of knowledge in his power, wilfully disregarded.✦ The section of the Draft Bill provided "payment is made in due course, when it is made in good faith, and in accordance with the terms of the instrument itself, to any person whose possession does not appear to be inconsistent with those terms, and under circumstances which are not such, as to raise a reasonable presumption that the possessor is not entitled to receive it." 5 As to hundis, a hundi ought not to be paid by the drawee, unless it has indorsed on it, when presented the name of the 'Shah' by whom it is presented, or rather by whom it is sent for presentation. According to the law merchant of India, the bona fide holder for value of a lost, stolen or forged hundi, is bound to refund to the drawee the amount received thereon, if the drawee has been guilty of no laches, in discovering the infirmity in the title to, or the validity of the instrument, and therefore a payment so made would not be one within the section. The existence of this rule as part of the law merchant of India was held by Arnould, J., to be well established in Bombay.' As to the effect of payment of an invalid instrument, or on an invalid 6 May v. Chapman, 16 M. & 355. 5 Davlatram v. Bulakidas, 6 Bom. H. C. R. at p. 28. 6 Ib., at p. 30. 7 Ib., at p. 31. title to it in the Punjab, see the remarks of the Honorable Mr. Brandreth.1 A person making payment of a negotiable instrument is entitled to have it delivered up to him. 11. A promissory note, bill of exchange or cheque drawn or made in British India, and made payable in, or drawn upon any person resident in, British India shall be deemed to be an inland instrument. The only difficulty likely to arise upon the wording of this section, is that of the meaning of the word 'resident :' but if the explanation to Sec. 17, of the Civil Procedure Code, be taken as a guide, none will occur. That defines residence to be "where a person has a permanent dwelling at one place, and also a lodging at another for a temporary purpose only, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary lodging." The question as to what is residence may arise in reference to the stamp laws. The section will apparently allow of a bill being drawn on a person in England, provided it be payable in British India. Thus a merchant in Calcutta might, when shipping produce against bills to be accepted in England, make them payable in Calcutta. The disjunctive 'or' allowing two sets of sets of circumstances under which a bill of exchange will be deemed an inland bill 1st, drawn on a person in, and payable in British India. 2nd, drawn on a person resident anywhere, and payable in British India. The place where it is negotiated has no effect on the character of the instrument. 3 It is not necessary to note or protest an inland bill; cheques we have seen are defined in the Stamp Act, to be inland bills of exchange. 12. Any such instrument not so drawn, made or made payable shall be deemed to be a foreign instrument. 1 Ante, s. 1, p. 5. * Sec. 81; King v. Zimmer man, L. R. 6 C. P. 466. Hirschfield v. Smith, L. R. 1 C. P. 340; Š. C. 35 L. J., C. P. 177. Inland instru. ment. Foreign instrument. |