It is said, Why introduce the words "or order?" It may be that the purposes of Sigourney require that the bill should be indorsed. But before any person can honestly and bonâ fide take that bill and advance money upon it, he ought, seeing those words on the face of the bill, to satisfy himself from the correspondence, and the state of the accounts between the parties, whether the holder is negotiating it for the benefit of the indorser or for his own use; and if he advance the money upon it without making that enquiry he does it at his peril. But in this instance the present defendants advance the money without making any enquiry, and then they apply the whole of it to the use of Williams. With respect to the case of Evans v. Cramlington, it is sufficient to say, that as that came before the Court on demurrer there was no question there, whether there had been a misapplication of the money which had been received by the means of that bill. Is not this quite a sufficient distinction between that case and the present? In this case there does appear to me to be a gross misapplication. For these reasons I am of opinion that the plaintiff, who guarded himself by that indorsement, gave himself effectual protection, and is entitled to the verdict which has been given for him in this case.

Postea to the plaintiff. (a)

(a) Littledale J. was absent in the Bail Court.

The effect of this decision will certainly be to prevent the negotiating of bills restricted in their terms like the present. It is apprehended, however, that the instances of such restrictions are very few, and that no sensible impediment to the circulation of mercantile securities will be likely to arise from it. The case has seldom, if ever before, come regularly before the courts; but on principle it seems reasonable, that the holder of such an instrument should have the power

1828.

SIGOURNEY

v.

LOYD.

1828.

SIGOURNEY

V.

LOYD.

of limiting the use of it. The correspondent to whom he remits it may be in his debt to an amount which he thinks it prudent not to exceed. Although, therefore, for convenience he empowers him to receive the amount from the acceptor when due, and for that purpose makes it payable to his order, yet it may be desirable to prevent him from availing himself beneficially of it before that time; for in the meanwhile he has the opportunity of making such arrangements as may reduce the balance in his correspondent's hands. Where an indorser, therefore, deviates from the usual mode of transfer, and gives a particular direction, like that upon the bill in question, it may reasonably be presumed that he has this intention. It is objected, that it is unreasonable to expect from a banker, discounting a bill for his customer, that he should take upon himself the responsibility of seeing that the proceeds are applied to the purposes required. But the answer is very plain. He is not compelled to discount it at all; and, in refusing to do so, he will probably best fulfil the intention of the indorser. He cannot be taken by surprise, because the limitation must appear on the face of the instrument, else it can have no effect in restraining the negotiability. With respect to the particular case before the Court, there certainly were no circumstances tending to show a want of confidence on the part of Mr. Sigourney as to the credit and solvency of his correspondent; on the contrary, his letters express satisfaction at the state of his account. But if, as seems to be the fact, qualified indorsements of this kind have been held in the American courts of law to restrict the negotiability, then Mr. Sigourney may be presumed to have acted with this intention. And at all events it was necessary for the Court to be uniform in its construction, and to lay down a general rule, without regard to particular circumstances. In this case there is one peculiarity, which was much insisted upon by the Court during the discussion, but does not seem to have been an ingredient in the judgment, viz. that the bankers were privy to the misapplication. It may be useful, therefore, to remark, that the decision must be considered as independent of this fact, and as having imposed upon the person discounting for the immediate indorsee the duty of taking care that the proceeds shall be applied to the purpose prescribed by the indorsement.

BILL OF EXCHANGE. STOCK-JOBBING

ACT.

1828.

In the KING'S BENCH.-Trinity Term.

GREENLAND and Another v. Dyer.

by an innocent

indorsee of a bill of exchange against the acceptor, it is no de

fence that the

bill was given to settle stockjobbing differences.

THIS HIS was an action by the indorsee against the acceptor In an action of two bills of exchange, one for 100%., the other for 651. The cause was tried before Lord Tenterden, at Guildhall, at the sittings before Trinity term, when it appeared on cross-examination of the drawer, who was called by the plaintiff, and who was a stock-broker, that there had been some stock-jobbing transactions between the defendant and himself, and that the bills in question were given in payment of differences on time-bargains; but with this fact the plaintiff was altogether unacquainted. A verdict was then taken by consent for the plaintiffs, subject to the opinion of the Court as to the effect of the illegal consideration given for the bills. Accordingly, in this term,

Chitty applied for leave to set aside the verdict, and enter a nonsuit, on the ground that the consideration being illegal by the 7 G. 2. c. 8., which declares all contracts and agreements in the nature of wagers relating to the price of the public stocks to be null and void to all intents and purposes whatsoever, the bills were so tainted that they could not be made available even in the hands of an innocent indorsee. In the hands of the drawer, he argued, they would be undoubtedly void, because to enable him to recover upon them against the acceptor would be to give effect to a contract which it was the express intention of the act to annul; and the

1828.

GREENLAND

v.

DYER.

object would be equally frustrated if he could indorse over such bills, himself receiving the full value, and thereby empower his indorsee to sue upon them. It would be in effect to do through the medium of another what he was forbidden to do himself. In the cases which had been determined under the 9 Anne, c. 14., called the Gaming Act, and the 12 Anne, c. 16., called the Usury Act, it had been expressly holden that even an innocent indorsee for valuable consideration could not recover against the original party, where by so doing it would have the effect of substantiating the illegal conBowyer v. Bampton (a), Lowe and Others v. Waller. (b) But the Court refused the rule,

tract.

Lord TENTERDEN saying, If only the contract is declared void by an act of parliament, it leaves the securities valid in the hands of an innocent party. The distinction between the gaming and usury acts and the present, the 7 G. 2. c. 8., is well known. The contract mentioned in that act, and which is declared void, is a contract in the nature of a wager to give stock at a future day; the contract in this bill of exchange is to pay to the drawer, or his order, a sum of money. The 7 G. 2. declared the contracts mentioned in that act void, but not the securities.

(a) 2 Str. 1159.

(b) Doug. 736. But by 58 G. 3. c. 93. no bill of exchange or promissory note, though it may have been given for a usurious consideration or upon a usurious contract, shall be void in the hands of an indorsee for valuable consideration, unless such indorsee had, at the time of discounting or paying such consideration for the same, actual notice that such bill or note had been originally tainted with usury.

The first section of this act, which owes its origin to Sir John Barnard, and is entitled "An act to prevent the infamous practice of stock-jobbing" (in which it has been

just as effectual as acts of parliament which endeavour to counteract strong propensities generally are), declares, “that all contracts and agreements whatsoever, which shall be made or entered into by or between any person or persons whatsoever, upon which any premium, or consideration in the nature of a premium, shall be given or paid for liberty to put upon, or to deliver, receive, accept, or refuse any public or joint stock, or other public securities whatsoever, or any part, share, or interest therein, and also all wages, or contracts in the nature of wages, and all contracts in the nature of putts and refusals, relating to the then present or future price or value of any such stock or securities as aforesaid, shall be null and void to all intents and purposes whatsoever;" and the fifth section enacts, "that no money or other consideration shall be voluntarily given, paid, had, or received, for the compounding, satisfying, or making up any difference for not transferring public stock, or not performing any contract or agreement stipulated to be performed; but that every such contract and agreement shall be specifically performed;" and adds a penalty of 100%. on all who pay or receive such difference-money. So that the first section expressly avoids all stock-jobbing bargains, and the fifth prohibits and declares illegal both the payment and receipt of difference-money. And certainly, at first sight, the act would seem strong enough to reach the present case. It must be recollected, however, that it has been the policy of the courts of law, out of a due regard to the interests of commerce, to uphold by every means the validity of mercantile securities. They may have been influenced also by the hardship of depriving a holder, who has given the full value, and knows nothing of the original transaction, of his remedy against one who, upon the face of the instrument, is represented as primarily liable, and thought it better to shut their eyes upon the original transaction than to prejudice an innocent party. Even where (as in the usury act) the legislature had expressly declared the assurances, as well as the contracts, void, it was not without great reluctance that they gave effect to this positive enactment, by declaring the instrument void in the hands of a bond fide indorsee without notice. (a) No wonder, then, that where the statute is silent

(a) See the judgment of Lord Mansfield in Lowe v. Waller.

1828.

GREENLAND

v.

DYER.