in cities to confer upon some officer of the bank, generally the cashier, power to certify the cheques of customers of the bank in so far as they have funds on deposit. And of such cases it is held that certification binds the bank, in favor of an innocent holder for value, though in point of fact the drawer had at the time no funds in the bank. It matters not whether the certification in such a case was due to mistake of the bank officer or not.1 The certification means, not that the drawer has funds at the time of the certification, and will continue to have them when payment is demanded, but that the bank will pay the sum to the holder on demand.2

1 Farmers' Bank v. Butchers' Bank, and Merchants' Bank v. State Bank, supra.

2 Mussey v. Eagle Bank, 9 Met. 306.

CHAPTER V.

THE DRAWER'S CONTRACT.

§ 1. DRAWER, MAKER, INDORSER.

THE contract of the drawer of a bill of exchange must be set in bold contrast with that of the maker of a promissory note; in no way are the two in themselves alike. Physically unlike the contract of the maker, the contract of the drawer, whether of a bill or of a cheque, does not appear upon the face of the writing; radically unlike the contract of the maker, the contract of the drawer of a bill is conditional and secondary.

Aside from its merely physical properties, the contract of the drawer of a bill of exchange is in the main like that of an indorser. The drawer stands in the position of first indorser, in order of contract; thus the order of parties to an accepted bill is this: (1) acceptor; (2) drawer, virtually as first indorser; (3) payee, virtually as second indorser, though literally first, or such indorser, if any, as follows negotiation; and then, (4) any subsequent indorsers in order. If the bill is not accepted, the order of parties begins with the drawer, still virtually as first indorser, and then proceeds as in the case of an accepted. bill. This part of the drawer's contract is treated in the chapter on the Indorser's Contract, post, Chapter VI.

§ 2. RIGHT TO DRAW: REASONABLE Ground. Besides these differences between the contract of drawer and that of indorser, there are several substantial legal

differences arising from the very nature of things. A man who draws a bill of exchange is naturally and legally supposed to have something to draw upon in the hands of the drawee, or at all events he is supposed to have a reasonable expectation that the draft will be accepted and paid by the drawee; that is, the drawer is supposed to stand in close relation to the drawee, and to have good ground accordingly for drawing. An indorser, however,

is not supposed to know, and, in fact, generally does not know, anything about the state of things between the drawer and the drawee; and though his indorsement is, by a useful fiction, treated as equivalent in many respects to drawing a bill, and when special, as where the indorsement itself is to 'order,' is also in form like a bill in brief, still it is not a drawing by one having or supposed to have funds with the drawee, or knowledge of the action to be taken by him; that is, the indorser as such is not supposed to stand in any special relation to the drawee.

A rule of law has resulted from this difference of situation, that the drawing of a bill of exchange (or a cheque) may in itself be a fraud; and a fraudulent drawing should and does put the drawer in a different position from that of an honest drawer, and different therefore from that of an indorser, different not merely as regards his liability to some other branch of law, but different as regards his liaThe drawer in such a case bility under the law merchant. becomes, upon dishonor of the paper, if not by the very act of drawing, substantially the maker of a promissory note. For example: A draws a bill of exchange on B, payable to the order of C, having no reasonable ground to believe that the bill will be honored by B; and it is not honored by him. A is liable to C without notice of the dishonor.'1

1 Hopkirk v. Page, 2 Brock. 20; L. C. 96; Robinson v. Ames, 20 Johns. 146; Orear v. McDonald, Gill, 350; Wood v. Price, 46 Ill. 435; Harness v. Davies Sav. Assoc., 46 Mo. 356; Dickins v. Beal, 10

But one is not lightly to be deemed guilty of fraud; and it does not necessarily make one guilty of fraud to draw without having provided and left with the drawee funds with which to pay one's draft, for one may still have reasonable ground to expect that the draft will be honored. Reasonable ground for drawing is the test.1 The exact state of accounts between the drawer and the drawee may not be known by the drawer at the time of drawing; the accounts may be fluctuating from time to time, and balanced only at considerable intervals; and the drawer may reasonably suppose that the balance is in his favor to the amount of the draft; or though he may know that the balance is against him, he may have had assurance from the drawee that the paper will be honored; or he may have felt reasonably justified in drawing from practice between himself and the drawee in such cases. Drawing is not a fraud under circumstances of the kind.2

The holder, however, makes a case, it seems, of presumptive fraud against the drawer, by showing that he had no funds in the hands of the drawee when the bill or cheque was presented; it is then for the drawer to show, if he can, that, notwithstanding the want of funds, he had reasonable ground to believe that the paper would be honored, and hence that the usual steps for fixing the liability of a drawer should have been taken.3

Peters, 577; Brown v. Maffey, 15 East, 216; Rucker v. Hiller, 16 East, 43. It seems that the drawer would be liable without any demand upon the drawee; for why demand payment of a bill fraudulently drawn?

1 See the cases just cited, to which many others might be added. A few early cases, following the discredited decision in Bikerdike v. Bollman, 1 T. R. 405, are contra. See Foard v. Womack, 2 Ala. 368; Tarver v. Nance, 5 Ala. 712; and certain New York cases, in which, however, the point was not raised. The true rule in New York conforms with the text. Robinson v. Ames, 20 Johns. 146.

2 See Dickens v. Beal, 10 Peters, 572; Hopkirk v. Page, 2 Brock. 20; L. C. 96.

3 Harness v. Davies Sav. Assoc., 46 Mo. 357; Story, Bills, § 312.

The 'reasonable ground' of the rule may relate either to the time of the drawing of the instrument, or to the time of presentment. Hence, the drawer may fall without the protection of the rule even where he had funds applicable to the draft at first, or on the way, to meet it, for he may withdraw or intercept them, and then have no reasonable ground to expect that the paper will be honored.

In regard to what amounts to reasonable ground, it is laid down that there must be something more than that which would excite an idle hope or a bare expectation, something more than a remote probability. There must be a prospect such as would create a full, sober expectation or strong probability that the paper will be honored; such a state of things as would induce a merchant of common prudence and fair regard for his commercial credit to draw the draft. The fact that the drawee is indebted to the drawer would create, presumptively, a case of the kind, though in point of fact the drawer have no funds in the drawee's hands. The case would probably be different if the existence of the debt were in dispute. For example: A draws a bill of exchange on B, for an amount which A expects to recover against B in a contested suit by A against B. A has drawn without funds or reasonable ground to draw.3

The drawer may have reasonable ground to draw in certain cases, before any debt exists, by having an indisputable expectation of one, as where, having made a consignment to another, he draws before the consignment has reached the consignee.4 Nor does it affect the case

1 See cases in note 1, p. 48.

2 Walker v. Rogers, 40 Ill. 278.

3 Benoist v. Creditors, 18 La. 522; Williams v. Brashear, 19 La. 370. The second of these cases shows that the test of absence of funds is not conclusive; only the absence of reasonable ground is conclusive.

4 Dickins v. Beal, 10 Peters, 572; Orear v. McDonald, 9 Gill, 350 ; Grosvenor v. Stone, 8 Pick. 79.