occasion, however, dangerous to omit notice; and in England it is held, that if the drawee has had effects in his hands, though insufficient to meet the bill, and though the drawer was warned of the insufficiency, he is entitled to notice.1 It would appear that an acknowledgment of liability by the party may preclude him from pleading the want of notice. So it was decided where the drawer had written a letter, requesting indulgence and promising to settle the bill, although he pleaded that when the letter was written he was ignorant of the effect of no notice in his favour.2 Neglect of notice only affects him who has neglected; it will not interfere with the right of an onerous holder, as in the case of a bill at so many days after sight, of which acceptance is refused, being circulated before presentment for payment.3 At the same time the advantage of notice given by the holder accrues to all the intermediate parties. His neglect to give notice, however, will not exonerate them, while notice given by them will be available to him.5 Thus, if A draw and indorse to B, and B indorse to C, if the bill be dishonoured in C's hands, and he give notice to B and to A both, his notice to A will enable B to have recourse on A if he pay the bill. If C only give notice to B however, then to give B recourse on A he must give notice to A, and on this notice, if C should not recover against B, he may against A. It appears to be considered that notice of non-payment by an acceptor will be sufficient to save the holder's recourse.6 Presentment, protest, and notice, when duly performed, are termed due negotiation, and their effect is to render the drawer and indorser immediately liable for the sum contained in the bill, with the expenses incurred. The liability does not, properly speaking, commence until the demand is made, but when made, it must be complied with without delay.7

An acceptor is not entitled to notice; and so it was found that a co-acceptor who had given his name for the accommodation of the other who was the original debtor, was not relieved by not having received notice that that other had failed to pay. In the same case it was decided that the acceptor of a blank bill-stamp is not entitled to notice of the sum filled up in it.8

SECT. 5.-Acceptance, &c., for Honour.

When the party on whom a bill is drawn fails duly to ac

1 Bayley, 300. See Ch. on B. 436.-2 Turnbull v. Hill, 16th Feb. 1831. 3 Bayley, 252.- Th. 497.-5 Ibid.- Ibid. 499.-7 Ibid. 531.-8 Lyon v. Butter, 7th December 1841.

cept or pay it, the obligation may be undertaken by a third party for the honour of the drawer or of an indorser. The drawee too, if he decline to acknowledge the obligation to the drawer involved in his acceptance, or to pay the contents to the holder on his own account, may still choose to accept or pay for the honour of the drawer, preserving recourse against him. This is termed acceptance or payment for honour, or supra protest.1 Before acceptance for honour, the bill must be protested for non-acceptance. The acceptance itself must be made in the presence of a notary and two witnesses, and narrated in an instrument.2 Intimation of such acceptance must be made, and the instrument of protest must be transmitted to the individual for whose honour it is made, to preserve the acceptor's recourse against him.3

It is maintained, that as the holder of a bill has an absolute mandate to a particular party, he cannot be compelled to take acceptance on protest from the drawee or any other person, but should have an absolute acceptance from the drawee. If he take a qualified acceptance, he loses recourse against the drawer, unless he protest for want of absolute acceptance and give notice.5 Two or more persons may accept, each or all for the honour of one or more parties." A general acceptance on protest is presumed to be for honour of the drawer.7

The acceptor supra protest becomes absolutely liable to the holder notwithstanding his protest, which is only to preserve his recourse against the person for whose honour he has accepted, but he is only liable after the drawee, against whom the bill must be protested for non-payment before he can be liable. He has then relief against the person for whose honour he has accepted, and failing him against those persons who would be liable to him, provided they have had notice of the acceptance on protest, either from the drawer or acceptor. But the acceptor for honour of a primary obligant in a bill has no recourse against a person rendering himself subsidiarily liable to the holder; so if one accept for honour of the drawer, he can have no recourse against an indorser.10

When a bill is paid supra protest without having been so accepted, there must be a notarial instrument, as in the case. of acceptance. An unconditional acceptor, if he have no

11

Bayley, 176, et Th. 457, et seq.-2 Th. 460.-3 Ibid. 473.-4 Ch. on B. 287, 300, 345. See Glen on Bills, 130.-5 Th. 459.-6 Ibid.-7 Ch. on B. 346.-8 Th. 461.-9 Ibid. 462.-10 Ch. 352.-" Th. 464.

funds of the drawer in his hands, may pay supra protest for honour of the drawer, not for that of the indorsers, for by the acceptance he is unconditionally bound to them.1 It is held that in the general case, when a person "pays a bill to the holder to which he is no party, and is put in right of the bill, he comes in the place of the holder to the effect of being entitled to claim against all the obligants in the bill, in the same manner as the holder could have done, although he may have been induced to interfere on account, or at the request of a party to the bill, who could either have only claimed against some of the obligants, or, as being the primary debtor, could not have claimed against any of them." 2

SECT. 6.-Transference by Delivery and Indorsation.

Where there is a named payee, the transference of bills or notes is accomplished by indorsation; where the payee is not named but simply described as "bearer" or otherwise, the conveyance may be accomplished by mere delivery. In the former case, the person who parts with the bill becomes a party to it in the capacity of a new drawer, and so responsible to the holder; in the latter, he merely hands over the right as it stood in his own person, without incurring any responsibility as a party to the bill. Part of this subject has already been discussed. (See above, p. 304.) Delivery is necessary to constitute the transference in either case, and will be presumed from possession.3 Where the indorsement mentions the indorsee's name it is a special indorsement,-where it is a mere signature it is called a blank indorsement. In the former case a new payee is created, and the bill can only be paid to him or to his indorsee; in the latter it is payable, like a bill which has never had a payee's name, to any bearer. In many instances prudence will suggest the propriety of a full in preference to a blank indorsement, as a safeguard against the effect of the bill being lost or stolen. In England, to render a bill or note transferable by Indorsement, it must contain after the payee's name the words 66 to order" or some others, indicating that a new payee may be constituted. A note drawn by a person residing in Edinburgh, in favour of a person residing in London, but not made payable in any express place, was held a Scottish note,

8

Th. 463.- Johnstone v. Inglis' Trustee, 19th July 1843.- Th. 256.Ibid. 270.-5 Smith's M. L. 172, 182.

and transferable by indorsement in England, without having any indorsable terms.1

66

3

A person indorsing a bill, of which he is not payee, may become responsible as a new drawer, but does not convey the bill. The holder of a bill may limit its negotiability by a restrictive indorsement, as, 66 pay to A B only," or pay to A B for my use," and such a bill cannot be re-indorsed; but in the latter case, it would appear that a second indorsee may discount the bill, since the money drawn by him on discounting it will be held to have been received for his constituents' behoof. If a bill should return to one of the indorsers of it, it becomes a negotiable instrument in his hands by the simple scoring out of the indorsations subsequent to his own, and he can hand it over as indorsed by himself to any third party. A bill may be indorsed before acceptance, and even when it is blank in every thing but the drawer and indorser's name, or after being protested, and even after the protest is recorded, but to transfer the protest along with it there must be a separate assignment. After being paid, bills or notes cease to be documents of debt; they are only receipts, and cannot be transferred. This rule is subject to the exceptions stated under the head of stamps. (See above, p. 308.)

If a bill is null, it cannot be validated by indorsement, so as to give the holder, however onerous may have been the transaction by which he has obtained it, a right to recover payment. When the bill is only invalid in respect of the conduct of a party connected with it, and with reference to him, the right of an indorsee depends on onerosity and good faith. It has been a subject of much discussion whether a bill, by being indorsed after the period at which it is payable, subjects the indorsee to exceptions which may be pleaded against the indorser, such as want of value, fraud, &c. In England, that the bill has been so indorsed appears to be considered an article of evidence against the indorsee's having acquired it in good faith. "Therefore, if a bill or note, founded on a smuggling or stock-jobbing transaction, be indorsed after the same became due, to a person ignorant of the illegality, and for full value paid by him, he cannot recover. It seems to be the principle of the law of Scotland, that receiving a bill after the term at which it was payable does not raise a presumption against the indorsee, and

118

Robertson v. Burdekin, 14th November 1843.- Th. 273.-3 Bayley, 125.- Th. 274.-5 Adam v Watson, 13th December 1827.-6 Th. 264.— 7 Ibid. 265.-8 Ch. on B. 218.

that his not being an onerous holder lies to be proved. Thus, in 1826, where action was brought on a bill indorsed five years after the term of payment, and alleged by the creditor to have been fraudulently indorsed, the court found that having no mark of dishonour about it, if the indorsee obtained it onerously, and without fraud, he was entitled to the contents, and that fraud or want of value could only be proved by his oath, observing, that as there was no mark of dishonour, "this bill continued to be a negotiable document till it was extinguished by the lapse of six years;" but Mr Thomson holds that the presumption against such a document, "though not yet admitted in Scotland, appears to be well founded in principle."2

It is an effect of indorsation to assign or transfer the money of the drawer in the hands of the drawee, from the indorser to the indorsee; and so, after the bill is accepted, even should an arrestment by the payee's creditors intervene between the acceptance and indorsation, the indorsee will have a preference if there be no collusion.4 An arrestment in the hands of the acceptor is not invalid, so long as the debtor continues to be holder of the bill. It is therefore a measure of prudence on the part of the arresting creditor to apply to the court to take the bill into custody, and thus prevent its being indorsed until he succeed in a forthcoming.5 ( (See Index, Arrestment.) Although an indorsee may be obliged to account with the indorser for the proceeds of an indorsed bill, it is decided that no arrestment in his hands by the indorser's creditors, of the bill or the contents of it, is available, the indorsee not having property of the indorser in his hands, though he has a document which may afterwards put property of the indorser in his hands. A condition annexed to an indorsation, before acceptance, will bind any one accepting under it. If the indorser annex to the indorsation the words "without recourse," no demand can be made on him in case of the other parties failing to pay ; in that case he gives their security merely, not his own. If there is no such reservation, the indorser incurs the responsibility of a new drawer, and on the refusal of the person drawn on to pay or accept, becomes immediately liable for the contents. But to render his right available, the indorsee must attend to the rules of negotiation, protest, and notice.

1 M'Gowan v. M'Kellar, 24th February 1826. See also Young v. Pollock, 15th November 1831.-2 Th. 307.-3 Ibid. 289.- Ibid. 290.-. 5 Ibid. 295.- Ibid. 291.-7 Ch. on B. 234.-8 Ibid. 235.