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After action brought.

Payment by bankers' notes and cheques.

impossible to know whether there had not been an anticipated payment of them" (z).

If an acceptor discount his own acceptance, he may transfer it, and the drawer and indorsers may become liable to a subsequent holder, even with notice (a). But if the acceptor is the holder in his own right when the bill falls due, it is extinguished (b).

If the holder constitute any one of the parties liable to him his executor, and die, the appointment might in law have been equivalent to a release, though it was otherwise in equity unless such were the intention of the testator (c). A premature release will not, any more than a premature payment, protect the releasee from liability to a subsequent holder without notice (d).

But the payment of a note payable on demand will be a defence, even against an indorsee for value without notice (e); for the statute, which imperatively prohibited the re-issuing of such a note, dispensed with notice.

A payment after action brought will not prevent the holder from proceeding for his costs (ƒ).

If the bill be paid, the payer has a right to insist on its being delivered up to him; but if it be not paid the holder should keep it. Yet it has been held, that an agent is justified by the usage of trade, in delivering it up on receiving a cheque, though that cheque is afterwards dishonoured (g). But the drawers or indorsers, in such a case, would be discharged, for they have a right to insist on the production of the bill, and to have it delivered up on payment by them (h). If the holder of a cheque receive bank notes

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to payee's order, s. 59 (2), a.

(b) Code, s. 61.

(e) Freakley v. Fox, 9 B. & C. 130; Strong v. Bird, L. R. 18 Eq. 315; Code, s. 61. And see ante, p. 64.

(d) Dod v. Edwards, 2 C. & P. 602; Code, s. 62 (2).

(e) Bartrum v. Caddy, 9 Ad. & E. 275; 1 Per. & Dav. 207. Payment in due course is a discharge of a bill or note, Code, s. 59.

(f) Toms v. Powell, 6 Esp. 40; 7 East, 536; Ord. XXII. r. 6 (a). (g) Russell v. Hankey, 6 T. R. 12; 3 R. R. 102.

(h) Powell v. Roche, 6 Esp. 76 ; Code, s. 52 (4).


instead of cash, and the banker fail, the drawer is dis- CHAPTER charged (i). If bonds be accepted in payment, the payment is good even though they prove to be valueless (k).

A set-off does not amount to payment, unless it be mutually agreed that one demand shall be set off against the other. Such an agreement amounts to payment (7). And an agreement, even by one of several partners, with a debtor to the firm, that a separate debt due from the partner shall be set off against a joint debt due to the firm, binds the firm (m). Credit given to the holder of a bill by the party ultimately liable is tantamount to payment (n). Where a banker takes from a customer and his surety a promissory note, intended to secure a running balance, and makes advances on the faith of the note, it is not discharged by subsequent unappropriated repayments made by the customer to the banker, but still continues as a security for the existing balance (0).

What amounts to payment.

There are many circumstances under which a legacy by Legacy. a debtor to his creditor, of equal or greater amount than the debt, will be considered a satisfaction of the debt. But a legacy to the holder of a negotiable bill or note can never be considered as a satisfaction of the debt on that instrument. For a legacy is a satisfaction when it may be presumed to have been the intention of the testator that it should so operate; but that cannot be presumed, when, from the assignable nature of the debt, the testator could not tell whether or no the legatee was at the time of the bequest his creditor (p).

Where a man is indebted to another in several items, Appropriation and makes a partial payment, it often becomes a question, of payments. important not only to the parties themselves, but to third

persons, to which of the items the payment shall be imputed.

The rule of the Roman law, and therefore in general of Continental law, is, that a payment shall be appropriated, first, according to the intention of the debtor at the time of

() Vernon v. Borerie, 2 Show. 303. And see Guardians of the Lichfield Union v. Green, 1 H. & N. 884.

(k) Schrader's Case, L. R., 11 Eq. 131.

(1) Callander v. Howard, 19 L. J., C. P. 312; 10 C. B. 290. (m) Wallace v. Kelsall, 7 M. &

W. 264; see Gordon v. Ellis, 7
M. & G. 607; 2 C. B. 821.

(n) Atkins v. Owen, 4 Nev. &
Man. 123; 2 Ad. & El. 35 ; Bell
v. Buckley, 11 Exch. 631.

(0) Pease v. Hirst, 10 B. & C. 122; 5 M. & Ry. 88 ; 34 R. R. 343. (p) Carr v. Estabrook, 3 Ves.



making it (); but if that be unknown, then, secondly, at the election of the creditor (r), signified to the debtor at the time of receiving it (s). If the intention of neither be known, payment must then be appropriated according to the presumed intention of the debtor, and it will be presumed that he meant to discharge such debts as were most burdensome as, a debt carrying interest, rather than one which carries none; a debt secured by a penalty, rather than one resting on a simple stipulation; a debt on which he may be made a bankrupt, rather than one which will not subject him to such a liability. If all the debts are equal in degree, the payment must then be imputed to them according to their respective priority in the order of time (f). Such is the rule of the civil law, from which, in some particulars, the common law differs.

Wherever, according to the English law, the transactions between the two parties form one general account current, or are treated by them as such, payments are to be imputed to debts in the order of time, and the balance is to be struck at the foot of the account (u). But, if an unappropriated payment be made on account of several distinct insulated debts, which cannot be considered in the light of a running account between the parties, the common law then differs from the civil law and gives the creditor a right of appropriating it at any time before action (a), as he pleases (y), provided a prior appropriation have not been communicated to the debtor.

() Quotiens quis debitor ex pluribus causis unum debitum solvit, est in arbitrio solventis dicere quod potius debitum voluerit solutum, et quod dixerit, id erit solutum. D. 46, 3, 1. Vide etiam Cod. 8, 43, 1.

() Quotiens vero non dicimus ad quod solutum sit, in arbitrio est accipientis cui potius debito acceptum ferat. D. 46, 3, 1. Cod. 8. 43. 1.

() Dum in re agenda (in re præsenti hoc est statim atque solutum est) hoe fiat; ut vel credi tori liberum sit non accipere vel debitori non dare, si alio nomine exsolutum quis eorum velit : cæterum postea non permititur. D. 46, 3, 1, 2, 3.

(1) D. 46, 3. If all the debts were equal and alike in every respect, the sum paid was applied

to a rateable reduction of them all. A rateable appropriation is also sometimes made by the English law. See an example in Farenc v. Bennett, 11 East, 36; 10 R. R. 425. But this presumption is capable of being rebutted by circumstances. Henniker v. Wigg, 4 Q. B. 782; City Discount Co. v. Mc Lean, L. R., 9 C. P. 693.

(u) Clayton's case, 1 Meriv. 604; 15 R. R. 161; Genke v. Jackson. 36 L. J., C. P. 108.

(a) Simpson v. Ingham, 2 B. & C. 65; 3 D. & R. 249; 26 R. R. 273: Mills v. Fowkes, 5 Bing. N. C. 455; 7 Scott, 444; The Mecca, 1897] Ap. Ca. 286.

(y) Clayton's case, 1 Meriv. 604; 15 R. R. 161: Bodenham v. Purchas, 2 B. & Ald. 39; 20 R. R. 342: Storeld v. Eade, 4 Bing. 12; 12 Moo. 370; Field v. Carr, 2


An appropriation which would have the effect of paying CHAPTER one man's debt with another man's money will not be allowed (z). Nor can there be an appropriation which would deprive a debtor of a benefit, such as the taxation of costs (a). And it seems that an appropriation by the creditor, without the knowledge or consent of the debtor, will not of itself afford sufficient ground for raising against the debtor a new promise to pay (b).

A payment may be imputed to a demand for which the creditor could not recover at law (c). But where a payment is made by a debtor on account generally, the court will not refer it to a debt barred by the statute, if it can be attributed to any debt not so barred (d). The law will ascribe a payment to a legal debt, rather than to an illegal one (e). A party receiving money for the use of another from a third person, which is not properly a payment but a set-off, cannot appropriate the money without the knowledge or consent of him for whom it has been received (f). It has been held, that a payment may be appropriated to a disputed debt, if it be really a good debt (g).

There are cases where a payment is appropriated by law Rateable to several debts proportionally. appropriation.

Thus, where a principal debtor has assigned his effects to a trustee for his creditors, a creditor who has a guarantee for part of his debt will be forced, even at law, to apply in

Moo. & P. 46; 5 Bing. 13; Goddard v. Cox, 2 Stra. 1194; Bosanquet v. Wray, 6 Taunt. 597; 2 Marsh. 319; 16 R. R. 677; Kirby v. Duke of Marlborough, 2 M. & Sel. 18; 14 R. R. 573; Plomer v. Long, 1 Stark. 153; Woodroffe v. Hayne, 1 C. & P. 600; Shaw v. Picton, 4 B. & C. 715; 7 Dowl. & R. 201; 28 R. R. 455; Marsh v. Houlditch, Chitty, 9th ed. 404 ; Hammersley v. Knowlys, 2 Esp. 666; 5 R. R. 764; Birch v. Tebbutt, 2 Stark. 74; Marryatts v. White, 2 Stark. 101; Meggott v. Mills, 1 Lord Raym. 286; Dawe v. Houldsworth, Peake, 64; 15 R. R. 595, n.; Peters v. Anderson, 5 Taunt. 596; 15 R. R. 592; Wright v. Laing, 3 B. & C. 165; 4 Dowl. & R. 783; 27 R. R. 313; Gough v. Davies, 4 Price, 200; 18 R. R. 697; Strange v. Lee, 3 B.B.E.

East, 484 Simpson v. Ingham,
2 B. & C. 65; 3 Dowl. & R. 249;
26 R. R. 273; Mills v. Fowkes, 5
Bing. N. C. 455; 7 Scott, 444.

() Thompson v. Brown, 1 M.
& M. 40; 31 R. R. 710.

(a) James v. Child, 2 Tyrwh. 735; 2 C. & J. 252.

(b) Nash v. Hodgson, 6 De G., M. & G. 474; 25 L. J., Chan. 186; 23 L. J., Chan. 780.

(c) Crookshanks v. Rose, 1 M. & R. 100; 5 C. & P. 19; 38 R. R. 788.

(d) Nash v. Hodgson, 6 De G., M. & G. 474; 25 L. J., Chan. 186; 23 L. J., Chan. 780.

(e) Wright v. Laing, 3 B. & C.
165; 4 Dowl. & R. 783; 27 R. R.

(f) Waller v. Lacy, 1 M. &
Gr. 54; 1 Scott, N. R. 186.
(g) Williams v. Griffith, 5 M.
& W. 300.



Part payment.

When pay

ment will be presumed.

Evidence of payment.

discharge thereof a rateable part of any payment that he may receive from the trustee (h).

Part payment of the debt by the party liable is no discharge of the whole debt (i), but part payment by a stranger may be (k). And it has been held, that where a promissory note is due and unpaid, so that not only the principal, but interest (at least to a nominal amount) is due also, the principal may be taken in satisfaction of the debt and damages (1).

As the lapse of twenty years (m) is sufficient to raise a presumption that a bond has been paid, so it has been held to be a good defence to an action on a promissory note payable on demand (n). But if during this period the plaintiff was an alien enemy, and payment to him would consequently have been illegal, such a presumption would not, it seems, arise (o).

The production of a cheque drawn by the defendant on his banker, and indorsed by the plaintiff, is evidence of payment (p); but not if there have been several transactions between the parties, without evidence to connect the delivery of the cheque with the payment in question (9). A bill or note once in circulation overdue, and coming out of the hands of the acceptor or maker, is presumed to be paid. Thus, it is a maxim of the Scotch law, chirographum apud debitorem repertum præsumitur solutum. But the mere production of a bill from the custody of the acceptor is not primâ facie evidence of his having paid it, without proof of its having been once in circulation after it had been accepted (r).

(h) Baidwell v. Lydall, 7 Bing. 489; 33 R. R. 540; see Raikes v. Todd, 1 P. & D. 138; 8 Ad. & E. 846; Paley v. Field, 12 Ves. jun. 435; 8 R. R. 349. See other instances of rateable appropriation in Farenc v. Bennett, 11 East, 36; 10 R. R. 425; and Perris v. Roberts, 1 Vernon, 34; 2 Chan, Ca. 83; Thompson v. Hudson, L. R., 6 Chan. Ap. 320.

(i) Fitch v. Sutton, 5 East, 230. When a bill or note may be satisfaction, see post, Chap. XIX.

(k) Welby v. Drake, 1 C. & P. 557; 28 R. R. 787.

(1) Beaumont v. Greathead, 3 D. & L. 631; 2 C. B. 494.

(m) See now 3 & 4 Will. 4,
c. 42, s. 3.

(n) Duffield v. Creed, 5 Esp. 52.
(0) Du Beloix v. Lord Water-

park, 1 D. & R. 16; 24 R. R. 628.

(p) Egg v. Barnett, 3 Esp. 196. (q) Aubert v. Walsh, 4 Taunt. 293 12 R. R. 651.

(r) Pfiel v. Vanbatenberg, 2 Camp. 439.

In America it is held that if a bill be sent to the drawee and he be directed to pass it to the credit of the holder, and do so credit it, the bill is functus officio, and' cannot be further negotiated.

Where a promissory note that has been negotiated comes into the possession of one of the parties liable to pay it, such possession is prima facie evidence of payment by him, and he is to be treated as the bona fide holder unless the contrary is made to appear.

The possession of a bill by the

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