§ 56. Measure of damages against parties to dishonoured bill. not the holder indorse a bill, he is not a surety for the drawee or acceptor to the drawer; "such an indorsement creates no obligation to those who previously were parties to the bill, it is solely for the benefit of those who take subsequently. It is not a collateral engagement, but one on the bill, and it is for that reason and because the original bill has incident to it the capacity of an indorsement in the nature of an 'aval,' that such an indorsement requires no new stamp." Nouguier, dealing with modern French law, defines an "aval 66 as une convention au moyen de laquelle un tiers, étranger à la lettre de change, se rend caution solidaire du paiement à l'echéance en faveur du tireur, de l'un des endosseurs ou de l'accepteur. Cet acte a recu le nom d'aral parce qu'il signifie faire valoir." 2 If a person undertakes, for a commission, to indorse the bills of another person, the holder should apply for the indorsement within a reasonable time.3 57. Where a bill is dishonoured, the measure of damages, which shall be deemed to be liquidated damages, shall be as follows: (1) The holder may recover from any party liable on the bill, and the drawer who has been compelled to pay the bill may recover from the acceptor, and an indorser who has been compelled to pay the bill may recover 1 Steele v. M'Kinlay (1880), 5 App. Cas. 754; see also at p. 782, per Lord Watson, and his comments thereon in Macdonald v. Whitfield (1883), 8 App. Cas. 733, at p. 748. 2 Nouguier, §§ 821-840; French Code, Arts. 141, 142. See also Spanish Code, Arts. 475-478; Netherlands Code, Arts. 130-132; Italian Code, Arts. 274-276, which regulate avals for their different countries. 3 Payne v. Ives (1823), 3 D. & R. 664, discussed Goring v. Edmonds (1829), 6 Bing. 94, at p. 99. 4 See sect. 43, dishonour by non-acceptance; sect. 47, dishonour by nonpayment. This enables the damages given by this section to be recovered under Order XIV.; London Bank v. Clancarty, (1892) 1 Q. B. 689, "interest till payment or judgment"; Lawrence v. Wilcocks, (1892) 1 Q. B. 696, C. A., noting and interest till payment; Dando v. Boden, (1893) 1 Q. B. 318, "bank charges." At common law the expenses of noting an inland bill could only be recovered as special damages (Rogers v. Hunt (1854), 10 Exch. from the acceptor or from the drawer, or (a) The amount of the bill : (b) Interest thereon from the time of pre- As to interest proper, reserved by the bill itself, see sect. 9 (3), ante, p. 29. As to proceedings under Order XIV. in the High Court, see foot-note to the words "liquidated damages," ante, p. 190. Sect. 57 (1) must be read subject to sub-sect. (3), post. The bill must be produced at the trial to entitle the plaintiff to interest before writ. In one case it was said that interest could only be recovered from the drawer or indorser from the time when he received notice of dishonour. But that case must be regarded either as no longer law, or as a case where interest was under the special circumstances disallowed by the jury, as provided for by sub-sect. (3). Since the Act it seems that when a bill is dishonoured by non-acceptance, interest can only be recovered from the date of its maturity, and not from the date of its dishonour. This seems fair in principle, but perhaps does not accord with the practice before the Act." By French Code, Art. 184, and Netherlands Code, Art. 195, interest accrues from the day of protest for non-payment. By German Exchange Law, Art. 50, interest accrues from the day of maturity. Interest in England is usually calculated and allowed at the rate of 5 per cent. The sub-section though general in terms appears to apply 1 Re East of England Banking Co. (1868), L. R. 4 Ch. 14. 2 Lithgow v. Lyon (1805), Coop. Ch. Ca. 29; Laing v. Stone (1828), 2 M. & Ry. 562. 3 Foreign bill, not note; see sect. 51 (2), ante, p. 171. 4 Hutton v. Ward (1850), 15 Q. B. 26. 5 Walker v. Barnes (1813), 5 Taunt. 240. 6 Harrison v. Dickson (1811), 3 Camp. 52, n.; cf. Suse v. Pompe (1860), 8 C. B. N. S. at p. 566. § 57. § 57. Re-exchange. only to bills dishonoured at home. Bills dishonoured abroad fall exclusively under the next sub-section.1 The sub-section, moreover, is not exhaustive; therefore when a foreign drawer has paid re-exchange, he may recover it from the English acceptor, and if he is liable for re-exchange, he may prove for it in bankruptcy against the acceptor's estate before actual payment.2 In Ex parte Bank of Brazil, Chitty, J., held that where a bill protested for better security, had been accepted by a bank for the honour of the drawer, the bank could not recover the expenses of the acceptance for honour, and commission for so accepting. But this decision may perhaps be some day reconsidered by a court of appeal.3 (2) In the case of a bill which has been dishonoured abroad, in lieu of the above damages, the holder may recover from the drawer, or an indorser, and the drawer or an indorser who has been compelled to pay the bill may recover from any party liable to him, the amount of the re-exchange with interest thereon until the time of payment. 4 It was formerly held that an English acceptor was not liable for re-exchange; but this rule, it appears, is no longer law. "Re-exchange," in its usual application, means the loss resulting from the dishonour of a bill in a country different to that in which it was drawn or indorsed." The 1 Re Commercial Bank of South Australia (1887), 36 Ch. D. 522. 2 Ex parte Robarts, Re Gillespie (1886), 16 Q. B. D. 702; affirmed, with reduction of amount, 18 Q. B. D. 286, C. A. According to the judgment of Cave, J., the object of the section is to fix the amount which may be inserted in a specially-indorsed writ as liquidated damages, and not to deprive any party of special damages. 3 Ex parte Bank of Brazil, (1893) 2 Ch. 438. 4 Napier v. Schneider (1810), 12 East, 420; Woolsey v. Crawford (1810), 2 Camp. 445; Dawson v. Morgan (1829), 9 B. & C. at p. 620. 5 Ex parte Robarts (1886), 16 Q. B. D. 702, affirmed 18 Q. B. D. 286, C. A.: Re General South American Co. (1877), 7 Ch. D. 637 ; Pothier, No. 117: Story, § 398; unless the cases be explained as resting on the special contract between drawer and drawee. This might reconcile the decisions, but does not appear to be the ground of decision. 6 Cf. Willans v. Ayers (1877), 3 App. Cas. at p. 146, P. C.; and see re-exchange is ascertained by proof of the sum for which a sight bill (drawn at the time and place of dishonour at the then rate of exchange on the place where the drawer or indorser sought to be charged resides) must be drawn in order to realise at the place of dishonour the amount of the dishonoured bill and the expenses consequent on its dishonour.1 The expenses consequent on dishonour are the expenses of protest, postage, customary commission and brokerage, and, when a re-draft is drawn, the price of the stamp. The holder may recoup himself by drawing a sight bill for such sum on either the drawer or one of the indorsers. Such bill is called a "re-draft." The indorser who pays a re-draft may in like manner draw upon an antecedent party.2 For example:-A., in England, draws a bill for 1007. on B. in Calcutta, payable there at a rate of exchange indorsed thereon. This entitles the holder to receive (say) Rupees 1000. The bill is dishonoured, and the expenses of protest, &c., come to Rs. 10. The holder is then entitled to Rs. 1010 in Calcutta. At the time of dishonour sight bills on England are at 5 p. c. discount. Accordingly a sight bill on England for 1067. 18. Od., would realize in Calcutta Rs. 1010. The holder may either draw a sight bill on A. for 1067. 1s. Od., and thus recoup himself, or he may sue A. in England for 1057. and interest, and 17. 18. Od. expenses. A custom according to which the holder may recover either the sum he gave for the bill or the re-exchange, at his option, is invalid; but a custom according to which a fixed rate of damages is substituted for re-exchange is probably valid. In some countries a fixed rate is provided for by statute.5 3 The term "re-exchange" is used to signify (1) the amount of a re-draft, (2) the loss on a particular trans Mellish v. Simeon (1794), 2 H. Bl. 378 (cumulative re-exchange against drawer); Suse v. Pompe (1860), 8 C. B. N. S. 538, see at pp. 566, 567; French Code, Arts. 177-186. 1 De Tastet v. Baring (1809), 11 East, at p. 269; Suse v. Pompe (1860), 8 C. B. N. S. at pp. 566, 567; German Exchange Law, Art. 50. Cf. Mellish v. Simeon (1794), 2 H. Bl. 378; Suse v. Pompe (1860), 8 C. B. N. S. at p. 565; French Code, Art. 178; German Exchange Law, Art. 53. 3 Suse v. Pompe (1860), 8 C. B. N. S. 538. 4 Willans v. Ayers (1877), 3 App. Cas. at p. 144, P. C. 5 Tobago, for example; see Ex parte Robarts (1886), 18 Q. B. D. 286, C. A. § 57. § 57. Control over interest. Transferor by delivery and transferee. action occasioned by the exchange being adverse, (3) the course of exchange itself, or (4) the right to the sum which would be secured by a re-draft; so the context must always be looked to. When English law governs, the right to reexchange arises on dishonour by non-acceptance, as well as on non-payment. Under the continental codes it only arises on dishonour by non-payment. For the reason, see ante, p. 140. See the subject of re-exchange carefully worked out, German Exchange Law, Arts. 49-54; French Code, Arts. 177-186; Nouguier, §§ 1336-1366. (3) Where by this Act interest may be recovered as damages, such interest may, if justice require it, be withheld wholly or in part, and where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as interest proper. 3 For example, if a valid tender had been made interest might be withheld from date of tender.* 58. (1) Where the holder of a bill payable to bearer negotiates it by delivery without indorsing it, he is called a "transferor by delivery." See holder defined by section 2, ante, p. 5; bill payable to bearer by sect. 8 (3), ante, p. 24; and negotiation by sect. 31, ante, p. 102. When a bill is transferred by delivery, the transaction is frequently spoken of in the cases as a sale of the bill. In mercantile phraseology sale has a different meaning, see ante, p. 84. 1 Cf. Suse v. Pompe (1860), 8 C. B. N. S. at p. 566. 2 See rate reduced, Ward v. Morrison (1842), Car. & M. 136; and see per Cotton, L. J., in Webster v. British Empire Co. (1880), 15 Ch. D. at pp. 175, 176. 3 Keene v. Keene (1857), 3 C. B. N. S. 144; cf. Ackermann v. Ehrensperger (1846), 16 M. & W. at p. 103; Laing v. Stone (1828), 2 M. & Ry. 562. Dent v. Dunn (1812), 3 Camp. 296; see further Murray v. East India Co. (1821), 5 B. & Ald. 204 (holder dead and no demand of payment made); Phillips v. Franklin (1820), Gow, 196 (bill payable at particular place, and no demand there proved); cf. Bann v. Dalzell (1828), M. & M. 228. |