But if the bill be in the hands of a holder in due course a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed. § 21. (3) Where a bill is no longer in the possession Presumption as to delivery. of a party who has signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved. ILLUSTRATIONS. 1. The holder of a bill specially indorses it to D., and dies before delivering it, but his executor subsequently hands the bill to D. The indorsement to D. is invalid, for an executor is not the agent of his testator. D. cannot sue on the bill.' 2. X., by means of a false pretence, or a promise or condition which he does not fulfil, induces A. to draw a cheque in favour of C. X. delivers it to C., who receives it bonâ fide and for value. C. acquires a good title, and can sue the drawer, for X. is ostensibly the drawer's agent.2 3. A. draws a cheque payable to bearer, intending to pay it to X. It is stolen from his desk before he issues it, and is subsequently negotiated to C., who takes it for value and without notice. C. (perhaps) acquires a good title and can sue A.3 4. B. makes a note payable to C., who sues him on it. B. can defend himself by showing that the note was delivered to C. on condition that it was only to operate if he should procure B. to be restored to a certain office, and that B. was not so restored.' 5. C., the holder of a bill, indorsed it in blank and hands it to D. on the express condition that he shall forthwith retire certain other bills therewith. He does not do so. D. cannot sue C., and if he sue the acceptor, the latter may set up the jus tertii. (1852), 3 H. L. Ca. at p. 518; Castrique v. Buttigieg (1855), 10 Moore, See this case distinguished, 2 Cf. Watson v. Russell (1862), 3 B. & S. 34; 31 L. J. Q. B. 304; affirmed, 5 B. & S. 968, Ex. Ch. ; 11 L. T. N. S. 641. 3 Ingham v. Primrose (1859), 7 C. B. N. S. at p. 85; 28 L. J. C. P. 294; Kinyon v. Wohlford (1872), 10 Amer. R. 165; but see Baxendale v. Bennett (1878), 3 Q. B. D. 531, C. A. Jefferies v. Austin (1725), 1 Stra. 674. Bell v. Lord Ingestre (1848), 12 Q. B. 317; cf. Seligman v. Huth (1877), 37 L. T. N. S. 488. § 21. Conditional delivery. 6. C., the holder of a bill, indorses it specially to D., in order that he may get it discounted for him. D., in breach of trust, negotiates the bill to E. If he take the bill bona fide and for value, he acquires a good title, and can sue all the parties thereto. If he do not so take it, he cannot sue C.; and if he sue the acceptor, the latter may set up that the bill is C.'s; further, C. can bring an action against E. to recover the bill or the proceeds.2 7. C., the payee of a bill, indorses it to D. D. sues C. as indorser. C. may show that he and D. were jointly interested in the bill, and that he indorsed to the latter to collect on joint account. 8. B. makes a note for 100l. payable to C. or order. C. sues B. Evidence is admissible to show that the note was given as collateral security for a running account, and what the state of that account is.4 9. B. makes a note in favour of C., and hands it to X., to deliver it to C., if he shall remain in B.'s service till B.'s death. After B.'s death, X. hands the note to C. C. (perhaps) may prove for the amount against B.'s estate." See "holder in due course," defined by sect. 29. Where the person to whom a bill is delivered conditionally or for a special purpose misappropriates it, the true owner may sue that person or any one else who takes it from him with notice of the facts for the conversion of the bill, or if the bill has been collected the true owner may waive the tort and sue for the proceeds as money received to his use.7 Escrow. A deed delivered conditionally is called an escrow," and by analogy the term is sometimes applied to bills. There is, however, this distinction: a deed cannot be delivered conditionally to the obligee, the delivery must be to a third party. Where a bill is delivered conditionally or for a special purpose, the relations between the person who so delivers it and the person to whom it is delivered Lloyd v. Howard (1850), 15 Q. B. 995; and cf. Barber v. Richards (1851), 6 Exch. 63. 2 Goggerley v. Cuthbert (1806), 2 B. & P. N. R. 170; cf. Alsager v. Close (1842), 10 M. & W. 576; Muttyloll Seal v. Dent (1853), 8 Moore, P. C. 319. 3 Denton v. Peters (1870), L. R. 5 Q. B. 475. Cf. Ex parte Twogood (1812), 19 Ves. 227; Re Boys (1870), L. R. 10 Eq. 467. Re Richards (1887), 36 Ch. D. 541; but see comments in Re Whitaker (1889), 42 Ch. D. 119, 125, C. A. 6 Goggerley v. Cuthbert (1806), 2 N. R. 170; Alsager v. Close (1842), 10 M. & W. 576. 7 Arnold v. Cheque Bank (1876), 1 C. P. D. at p. 585. See Muttyloll Seal v. Dent (1853), 8 Moore, P. C. 319. 8 Per Lord Denman, in Bell v. Lord Ingestre (1848), 12 Q. B. at p. 319. are substantially those of principal and agent. The person to whom it is delivered belongs, perhaps, to the class of agents called bailees; 2 at least, if the terms "bailor" and "bailee" be used in the extensive sense given to them by Story in his work on Bailments. By the term "immediate parties" is meant parties who are in direct relation with each other. Thus the drawer and the acceptor, the drawer and the payee, the indorser and the next indorsee are immediate parties. But, as the illustrations show, a remote party may, through absence of consideration, notice of fraud, or other circumstances, stand on the same footing as an immediate party. § 21. Contracts of are contracts A bill or note must be in writing, and so, too, must the supervening contracts thereon, such as acceptance or in- parties to bill dorsement. It follows that the contracts of the various in writing. parties, as interpreted by this Act and by the law merchant, are subject to the ordinary rule as to written contracts. Oral evidence is inadmissible in any way to contradict or vary their effect. But it is admissible (a) to show that what purports to be a complete contract has never come into operative existence; (b) to impeach the consideration for the contract; 6 (c) to show that the contract has been discharged by payment, release or otherwise. Thus 5 1. The mere signature of the holder on the back of a bill (indorsement in blank) is a contract in writing to this effect: 1. I hereby assign this bill to bearer. 2. I hereby undertake that if the bearer duly present this bill, and it is not honoured, 1, on receiving due notice, will indemnify him.7 2. A. draws a bill in favour of C., and issues it to him for value. A. thereby incurs the ordinary obligations of a drawer. If the bill be dishonoured and C. sue A., oral evidence cannot be admitted to show that A.'s liability as drawer was conditional on the performance of certain acts by C., and that C. had not done them. 3. Bill drawn in ordinary form. Action by payee against acceptor. Evidence is not admissible to show that it was intended to be paid out of a particular fund which is no longer available.9 1 Maguire v. Dodd (1859), 9 Ir. Ch. 452. 2 Cf. Lloyd v. Howard (1850), 15 Q. B. at p. 1000, Erle, J.; Manley v. Boycot (1853), 2 E. & B. at p. 56, Ld. Campbell. 3 Cf. Indian Act, s. 44. 4 Foster v. Jolly (1835), 1 C. M. & R. 703. 5 Sect. 21 (2), and cases cited in illustration. Cf. Abrey v. Crux (1869), L. R. 5 C. P. at p. 45. 7 Cf. Suse v. Pompe (1860), 30 L. J. C. P. 75, at p. 80, and sect. 55. 8 Abrey v. Crux (1869), L. R. 5 C. P. 37; cf. sect. 61. 9 Campbell v. Hodgson (1819), Gow, 74; cf. Richards v. Richards (1831), 2 B. & Ad. at pp. 454, 455. § 21. Contracts of parties to bill are contracts in writing. 4. Bill drawn conditionally. Evidence is not admissible to show that the condition has been performed, and that therefore the bill is no longer conditional and invalid. A bill must be valid ab initio.1 5. B. makes a note payable to C. one month after date. C. sues B. Parol evidence is not admissible to show that it was intended to be payable two months after date.2 6. Bill drawn and accepted in the ordinary form. Parol evidence is admissible to show that the holder knew that the bill was accepted for the accommodation of the drawer, and that he gave time to the drawer, thereby discharging the acceptor, whom he knew to be a mere surety.3 7. Note payable fourteen days after date. Parol evidence is not admissible to show that the note was not to be enforced if a verdict was obtained in an action between third parties.* 8. Bill payable six months after date. Evidence may be given of a contemporaneous written agreement to renew the bill on request.' 9. Action on a bill for 901. Evidence is not admissible to show that the acceptor and drawer agreed that only 601. should be paid, and that the payment should be by instalments, even though the indorsee is not a holder for value." 10. A promissory note is made payable on demand. Evidence is not admissible to prove an oral agreement that payment should not be enforced till after the maker's death." 11. C. makes an advance to B. of 5001., and B. subsequently gives him a note for that amount. Evidence, it seems, is not admissible to show that the principal was not intended to be repaid, and that the note was only given to secure payment of interest during C.'s life. 12. Bill drawn in the ordinary form, payable to drawer's order, and accepted. D. writes his name on the back. Parol evidence is not admissible to show that he intended thereby to guarantee the payment of the bill to the drawer. The Statute of Frauds requires such a guarantee to be in writing and signed." 1 Colehan v. Cooke (1742), Willes, 397; cf. sect. 11 (2), ante, p. 31. 2 Cf. Drain v. Harvey (1855), 17 C. B. 257. 3 Ewin v. Lancaster (1865), 6 B. & S. 571; Overend v. Oriental Finan. Corp. (1874), L. R. 7 H. L. 348; Hubbard v. Gurney (1876), 64 New York R. 457. Foster v. Jolly (1835), 1 C. M. & R. 703. Maillard v. Page (1870), L. R. 5 Ex. 312. "If the agreement is merely collateral, it only affords ground for a cross-action [or counterclaim], but there are many cases in which it has been held that the bill and the writing together form only one contract." Per Channell, B., at p. 319; cf. Young v. Austen (1869), L. R. 4 C. P. 553. Besant v. Cross (1851), 10 C. B. 895. 7 Woodbridge v. Spooner (1819), 3 B. & Ald. 233; cf. Stott v. Fairlamb (1883), 52 L. J. Q. B. 420. 8 Hill v. Wilson (1873), L. R. 8 Ch. App. 888, at p. 898. 13. A note made by a company is indorsed by three directors in succession. In an action for contribution evidence is admissible to show that they indorsed as co-sureties, and not as sureties in succession.1 3 As between immediate parties, a contemporaneous writing, or a subsequent written agreement, may control the effect of a bill, subject to the same conditions that would be requisite in the case of an ordinary contract: but the mere fact that a bill refers to a collateral writing or agreement which is conditional in its terms, will not vitiate the bill in the hands of a person who has no notice of its contents. See English and American cases reviewed: Taylor v. Curry (1871), 109 Massachusetts, 36. Though the terms of a bill or note may not be contradicted by oral evidence, yet effect may be given to a collateral or prior oral agreement by cross-action or counterclaim. "Evidence," says Byles, J., " may be given of an oral agreement which constitutes a condition on which the performance of the written agreement is to depend; and if evidence may be given of an oral agreement which affects the performance of the written one, surely evidence may be given of a distinct oral agreement upon a matter on which the written contract is silent." 5 1 Macdonald v. Whitfield (1883), 8 App. Cas. 733; cf. Batson v. King (1859), 28 L. J. Ex. at p. 328. 2 Cf. Brown v. Langley (1842), 4 M. & Gr. 466; Salmon v. Webb (1852), 3 H. L. Ca. 510; Maillard v. Page (1870), L. R. 5 Ex. 312, at p. 319. 3 McManus v. Bark (1870), L. R. 5 Ex. 65. Jury v. Barker (1858), E. B. & E. 459. 5 Lindley v. Lacey (1864), 34 L. J. C. P. 7, at p. 9. § 21. |