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ledge or reason to believe, will of course depend upon the circumstances of each case. The section only refers to indorsements on the bill at the time of the acceptance, and it has been held that if the acceptor negotiates a bill which bears forged indorsements, which were there at the time of the acceptance, and by means of which negotiation was effected, he cannot deny their genuineness.' But an acceptance does not admit the ability or signature of the indorser, or his authority to indorse. See post, Sec. 121.

42. An acceptor of a bill of exchange drawn in Acceptance of a fictitious name and payable to the drawer's order fictitious name. is not, by reason that such name is fictitious, relieved from liability to any holder in due course claiming under an indorsement by the same hand as the drawer's signature, and purporting to be made by the drawer.

This section is founded on Cooper v. Meyer,' where bills were drawn in a fictitious name and accepted by the defendant, and indorsed in the same handwriting as that of the supposed drawer. Lord Tenterden in giving judgment said, “The "acceptor ought to know the handwriting of the drawer, and is " therefore precluded from disputing it, but it is said, he may "nevertheless dispute the indorsement :-where the drawer is a real person

do so, but if there is in reality no such person, I think the fair construction of the acceptor's undertaking is, that he will pay to the signature of the same person " that signed for the drawer."

43. A negotiable instrument made, drawn, ac- Negotiable incepted, indorsed or transferred without considera- made, &c., tion, or for a consideration which fails, creates no deration. obligation of payment between the parties to the transaction. But if any such party has transferred

he may

without consi

i Beaman v. Duck, 11 M. & W. 251.

Garland v. Jacomb, L. R. 8 Ex. 216.

3 10 B. & C. 468; S. C. 5 Moo.

& R. 387; see L. & S. W. Bk.
v. Wentworth, 5 Exch. D. 96;
Phillips v. Im Thurm, L. R. I
C. P. 463 ; S. C. 35 L. J. (C. P.)

220,

the instrument with or without indorsement to a holder for consideration, such holder, and every subsequent holder deriving title from him, may recover the amount due on such instrument from the transferor for consideration or any prior party thereto.

Exception 1.—No party for whose accommodation a negotiable instrument has been made, drawn, accepted or indorsed can, if he have paid the amount thereof, recover thereon such amount from any person who became a party to such instrument for his accommodation.

Exception II.--No party to the instrument who has induced any other party to make, draw, accept, indorse or transfer the same to him for a consideration which he has failed to pay or perform in full shall recover thereon an amount exceeding the value of the consideration (if any) which he has actually paid or performed.

This section relates to accommodation instruments. An accommodation bill has been succinctly defined' to be,“ whereof the acceptor is substantially a mere surety for some other person, who may or may not be a party thereto" and

accommodation party' as 'a person, who has signed a bill, as drawer, acceptor or indorser, without receiving value, and for the

purpose of lending his name to some other person. all other bills, the acceptor, is as to holders not parties to the accommodation transaction, primarily liable, even though the holder, may at the time he took the bill have known the acceptor received no consideration for it, for the object of the transaction, was to enable the party accommodated to raise money on the credit of the acceptor. As between parties to the trans

a bill

As on

· Digest of Bills of Exchange by Chalmers, 2nd ed., Art. 90.

2 See Pogose v. Bk. of Bengal, I. L. R. 3 Cal, at p. 184.

s Jewell v. Parr, 13 C. B.909; Parr v. Jewell, 16 C. B. 684 ; S. C. 36 L. J. (Ex.) 33 ; Smith v. Knox, 3 Esp., 46.

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action a promissory note given upon consideration that the payee would give evidence on behalf of the maker in a suit pending in a Court of Justice is given for no consideration,' and so when the consideration was to withdraw opposition in the Insolvent Court.:

Under English law a person who takes an accommodation bill for value, with notice of the accommodation, would in Equity lose his rights against the acceptor, 3 for accommodation bills under English law, form an exception to the general rule, and the drawer is looked upon as the principal debtor, while the acceptor is regarded as the surety. Giving time to the apparent surety, who is really the principal debtor, will discharge the acceptor, who, though apparently the principal, is only the surety to the knowledge of the creditor. (See post, Sec. 59.)

44. When the consideration for which a person signed a promissory note, bill of exchange or cheque consisted of money, and was originally absent in part or has subsequently failed in part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.

Explanation.—The drawer of a bill of exchange Partial absence stands in immediate relation with the acceptor. The money con

sideration,
maker of a promissory note, bill of exchange or
cheque stands in immediate relation with the payee,
and the indorser with his indorsee. Other signers
may, by agreement, stand in immediate relation with
a holder.

ILLUSTRATION.
A draws a bill on B for Rs. 500 payable to the order of A.
B accepts the bill, but subsequently dishonors it by non-payment.
A sues B on the bill. B proves that it was accepted for value as

1 Sashannah Chetti v. Rama 761; S. C. 34 L. J. (Q. B.) 41; sawmy Chetti, 4 M. H. C. R. 7. in Jur. (N. S.) 134.

? Agar Chund v. Viraragha 4 Oriental Finance valu Chetti, 3 M. H. C. R. 172. Overend Gurney, L. R., 7 Ch.

3 Bailey v. Edwards, 4 B. & S. App. 142; L. R. 7 H, L. 348.

Co. v.

86

Partial failure of considera. tion not con. sisting of money.

to Rs. 400, and as an accommodation to the plaintiff as to the residue. A can only recover Rs. 400."

45. Where a part of the consideration for which a person signed a promissory note, bill of exchange or cheque, though not consisting of money, is ascertainable in money without collateral enquiry, and there has been a failure of that part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.

The rule contained in this section is thus laid down by Bayley:2 “The partial failure of consideration will constitute no defence if the quantum to be deducted on that account be matter, not of definite computation, but of unliquidated damages,” or as Pigott, B., put it, the rule only applies to cases of unliquidated damages: Thus in an action by an indorsee against an acceptor, a plea stating that the bill was given for goods to be supplied by the drawer, and that part only of the goods were supplied, of which the defendant accepted a portion, and that by reason of the noncompletion of the contract, the part supplied became valueless to him, and also stating that the plaintiff was not a holder for value, would be good, if the value of the goods accepted is shown to be a definite sum.

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CHAPTER IV

OF NEGOTIATION. 46. The making, acceptance or indorsement of Delivery. a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive.

As between parties standing in immediate relation, delivery to be effectual must be made by the party making, accepting or indorsing the instrument, or by a person authorized by him in that behalf.

As between such parties and any holder of the instrument other than a holder in due course, it may be shown that the instrument was delivered conditionally or for a special purpose only, and not for the purpose of transferring absolutely the property therein.

A promissory note, bill of exchange or cheque payable to bearer is negotiable by the delivery thereof.

A promissory note, bill of exchange or cheque payable to order is negotiable by the holder by indorsement and delivery thereof.

This must be read with Secs. 7, 14 and 15. With reference to acceptance it is to be observed, that the drawee is called the acceptor, after he has signed his assent on the bill, and delivered, or given notice of such signing. With reference to the delivery which completes the instrument, it has been held, that if a defendant having written his acceptance on a bill, with the intention of accepting it, and before it was communicated to the holder, or the bill delivered back to him, obliterates his accept

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