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the agent to a third party at the principal's express or implied request.
Bills and notes given, whether by a bankrupt or other person, to persuade a creditor to forbear opposing the order of discharge, or to forbear to petition for the rehearing of, or to appeal against the same, are void, except in the hands of a bona fide holder for value without notice of the consideration for which they were given.
Stock-jobbing contracts were not merely void, like those founded on gaming or wagering, but were actually forbidden by law; and therefore differences owing by one man to another, or money lent to pay such differences, did not form a good consideration for a bill or note so as to enable a holder cognizant of the transaction to sue upon them. This illegality, however, having been abolished by the Act 23 Vic., c. 28, we need not now consider this question.
No debt can be recovered for selling spirituous liquors in quantities of a less value than 20s., unless delivered at the residence of the purchaser thereof in quantities not less at any one time than a reputed quart; and if any part of the consideration for a bill or note necessarily consists of the price of liquors sold in contravention of this law, the whole note will be void, unless in the hands of an innocent holder for value.
Bills and notes and cheques given to secure the payment of money taken at the doors of an unlicensed theatre, or given by a trader who is a beneficed clergyman, are similarly void in the hands of the parties to the improper transaction.
Where only part of the consideration is fraudulent, the bill or note is bad.
Where an original bill or note is without consideration, or given on an illegal consideration, a renewed bill or note will be open to the same objections, except the amount be reduced by excluding so much of the consideration of the original bill as was illegal.
But if the person who has put his name to the bill or note for a gaming debt actually pays the whole, or any part of the sum secured to an innocent holder for value, the former may recover back the money so paid from the person who originally took the security for the illegal consideration.
In the cases above mentioned, where the security has been declared by statute to be void, it has been provided by the legislature (5 and 6 W. IV, c. 41) that that expression shall be construed as if the Act had said "shall be considered as given for illegal consideration." The effect of this language, as we have seen, is that an innocent holder for value may maintain an action against any party to the bill. But there are other securities rendered void by statute, as to which this liberal interpretation does not apply. For instance, the holder of bills and notes given for the sale of an office to a sheriff for ease and favour, could not sue the party who had given the security on such illegal consideration.
The law laid down in this chapter will be partially illustrated by the following table, showing what will constitute a defence, on the grounds treated of, on the part of the acceptor against the drawer and indorsee respectively; but the reader will always remember that when once fraud or illegality are proved by the defendant, the burthen of proving consideration and bona fides is shifted on to the shoulders of the plaintiff.
1. Meaning of Transfer.
2. What Bills and Notes are transferable. 3. Bills made or become payable to bearer. 4. Of Indorsements, blank and special; their modes and requisites.
5. Liabilities of Indorser.
6. How a Bill may be Indorsed without incurring Liability.-What an Indorsement Warrants.-Striking out Indorsement.
7. Whom the Indorsee may sue, and under what circumstances.
8. Right to compel Indorsement where improperly refused.
9. Indorser becoming afterwards Indorsee.
10. Of Trusts and restrictive Indorsements.
11. Liability of persons transferring by delivery without Indorsement.
12. What warranty is implied in transferring by delivery.
13. Bills and Notes payable to Bearer circulate as Money.
14. Indorsement on Blank Stamp.
15. Rights of Indorsee of unaccepted Bill.
16. Rights of Indorsee of overdue Bill.
17. Note payable on demand, when considered overdue. 18. Payment and other circumstances by which a Bill or Note ceases to be negotiable.
19. Bills and Notes under £20 and under £5.
1. Transferring a bill or note means so passing it to another person as to constitute him the holder of the instrument and enable him to recover against the parties to it. This he may do at maturity and, even before maturity, in the case of an unaccepted draft dishonoured by refusal to accept.
2. A bill or note is transferable when it is payable to the bearer or when it contains a direction-or in the case of a note, a promise to pay to a person named or his order or to the order of a person named, or to a person
named without mentioning his order; for, in this case, the payee may transfer by indorsement unless there are words restricting negotiability, such as "pay C. D. only."
The person named as payee may be and often is the drawer himself; but, where the drawer and drawee are the same person, the holder may, at his option, treat the instrument either as a bill or as a promissory note.
3. Bills and notes expressed to be in favor of a person named, without restriction of negotiability, or of a person named, or his order, are transferable by the indorsement of that person. And when that indorsement is general, i. e. a simple signature, these instruments are become payable to bearer, and pass by simple delivery. A bill or note which is expressed on the face of it to be payable to bearer is, without indorsement, transferable by delivery.
A man may make a note payable to himself order, but it is not a complete note till indorsed. Bills may be transferred by indorsement or by delivery before as well as after acceptance.
4. Indorsements are either blank or special.
A blank indorsement is made by the payee simply writing his name on the back of the bill or note, and this makes it thenceforth transferable by delivery, though in practice the transferor is often asked to endorse each time that the instrument changes hands.
A special endorsement is by writing a direction to pay to a particular person, and may be made by A. B. thus : "Pay C. D. or his order, A. B." The words " or his order," may be omitted, for their omission will not restrict the nogotiability of the instrument.
These indorsements, though not bad if written on the face, are most properly written on the back; and, if more space is wanted, a piece of blank paper, for which no stamp is required, should be pasted on to the end of the bill.
If two persons, not partners, are payees of a bill or note, both must indorse, unless, of course, one has authority to write the other's name.
An indorsement, like an acceptance, is never complete without delivery. Giving or sending a bill to the transferee, or sending it to his place of business, will, of course, constitute delivery; but there are so many cir
cumstances which constitute constructive delivery that the general rule is all that can be given.
An indorsement must indorse away the entire bill. A partial indorsement, (that is, one which purports to transfer a part only of the amount payable, or which purports to transfer the whole amount to two or more persons severally, i. e. in divided shares,) does not operate as a negociation of the bill. (See B. of Ex. Act, s. 32.)
Where a bill is payable to order and the payee or indorsee is wrongly designated, or his name is misspelt, he may indorse the bill as therein described, adding, if he think fit, his proper signature. (See Ibid.)
Indorsements are assumed to have been made in the order in which they stand on the bill. (See Ibid.)
5. Every indorser of a bill is in the position of a new drawer, and is liable to every succeeding holder, in case the drawee does not accept, or having accepted, does not pay at maturity, on proper presentment, as to which see chap. viii. An indorser of a note is a surety for the maker, and liable if he does not pay.
As a consequence of the above rule, a person who indorses a bill which is not negotiable, and therefore does not give the indorsee a right to sue the drawer or acceptor, will himself be liable to his indorsee on the bill, because he, the indorser, is a new drawer.
This, however, is not the case as regards notes, to which the principle would not conveniently apply.
6. An agent, or any other person, who indorses and does not want to become personally liable, should add to his name the words "sans recours," or "without recourse to me.'
An agreement, written or verbal, not to hold the indorser liable, will prevent his indorsee suing him. But a subsequent indorsee without notice of the agreement may of course do so.
Three directors of a company, wishing to guarantee their banker, indorsed a bill, one signing after the other. It was held that the third could not sue the second, nor the second the first, but that they were all co-sureties, and that any one of them, taking up the bill, was entitled to contribution from the others.
Another way in which the holder of a bill or note indorsed to him in blank may transfer it without incurring