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as a fraud should and does put the drawer in a different position from that of an honest drawer, and different therefore from that of an indorser. The drawer in such a case, upon dishonor of the paper, if not by the very act of drawing, is in like position with the maker of a promissory note; he is not entitled to notice of dishonor at any rate. For example: A draws a bill of exchange on B, payable to the order of C, having no reasonable ground to believe that the bill will be honored by B; and it is not honored by him. A is liable to C without notice of the dishonor.2

But one is not lightly to be deemed guilty of fraud; and it does not necessarily make one guilty of fraud to draw without having provided and left with the drawee funds with which to pay oue's draft, for one may still have reasonable ground to expect that the draft will be honored. Reasonable ground for drawing is the test. The exact state of accounts between the drawer and the drawee may not be known by the drawer at the time of drawing; the accounts may be fluctuating from time to time, and balanced only at considerable intervals; and the drawer may reasonably suppose that the balance is in his favor to the amount of the draft; or though he may know that the balance is against him, he may have had assurance from the drawee that the paper will be honored; or he may have felt reasonably justified in drawing from practice between himself and the drawee in such cases. Drawing is not a fraud under circumstances of the kind.

1 N. I. L. § 121, 4.

2 Hopkirk v. Page, 2 Brock. 20; Robinson v. Ames, 20 Johns. 146; Orear v. McDonald, 9 Gill, 350; Wood v. Price, 46 Ill. 435; Harness v. Davies Sav. Assoc., 46 Mo. 356; Dickens v. Beal, 10 Peters, 577; Brown v. Maffey, 15 East, 216; Rucker v. Hiller, 16 East, 43. It seems that the drawer would be liable without any demand upon the drawee; for why demand payment of a bill unreasonably drawn?

See the cases just cited, to which many others might be added. A few early cases, following the discredited decision in Bikerdike v. Bollman, 1 T. R. 405, are contra. See Foard v. Womack, 2 Ala. 368; Tarver v. Nance, 5 Ala. 712; and certain New York cases, in which, however, the point was not raised. The true rule in New York conforms with the text. Robinson v. Ames, 20 Johns. 146.

See Dickens v. Beal, 10 Peters, 572; Hopkirk v. Page, 2 Brock. 20.

The holder, however, makes a case, it seems, against the drawer, by showing that he had no funds in the hands of the drawee when the bill or cheque was presented; it is then for the drawer to show, if he can, that, notwithstanding the want of funds, he had reasonable ground to believe that the paper would be honored, and hence that the usual steps for fixing the liability of a drawer should have been taken.1

The reasonable ground' of the rule may relate either to the time of the drawing of the instrument, or to the time of presentment. Hence, the drawer may fall without the Time of reasonable ground. protection of the rule even where he had funds applicable to the draft at first, or on the way, to meet it, for he may withdraw or intercept them, and then have no reasonable ground to expect that the paper will be honored." On the other hand if the drawer has funds when the bill is presented for payment, he is entitled to notice, though he may not have had funds when he drew the bill or reason, then, to expect that the bill would be honored."

In regard to what amounts to reasonable ground, it is laid down that there must be something more than that which would excite an idle hope or a bare expectation, — something more than a remote probability. There must be a prospect such as would create a full, sober expectation or strong proba bility that the paper will be honored; such a state of things as would induce a merchant of common prudence and fair regard for his commercial credit to draw the draft. The fact that the drawee is indebted to the drawer would create, presumptively, a case of the kind, though in point of fact the drawer have no funds in the drawee's hands." The case would probably be different if the existence of the debt were in dispute. For example: A draws a bill of exchange on B, for an amount which A expects to recover against B in a contested

1 Harness ". Davies Sav. Assoc., 46 Mo. 357; Story, Bills, § 312.

2 N. I. L. § 121, 5:

Where the drawer has countermanded payment."

* See Gage Hotel Co. v. Union Bank, 171 Ill. 531.

4 See cases in note 2, p. 72.

6 Walker v. Rogers, 40 Ill. 278.

suit by A against B. able ground to draw.1

A has drawn without funds or reason


The drawer may have reasonable ground to draw in certain cases, before any debt exists, by having an indisputable expectation of one, as where, having made a consignment to another, he draws before the consignment has reached the consignee. Nor does it affect the case that the consignment, by depreciation of value, may have become insufficient to meet the bill, for that was not to be foreseen; if it was foreseen by the drawer, or was understood by him to be inevitable, the case would probably be different. Again, it makes no difference, and for the same reason, that the consignment may never have reached the consignee. So again the drawer has reasonable ground, where a debtor of his requests him to draw on a certain person, who is represented by the debtor to be indebted to him, especially where the drawee accepts (afterwards refusing to pay). But the drawer of a bill who has no funds with the drawee, except that he has supplied him with goods on credit, which credit does not expire till long after the bill becomes due, has no reasonable ground to draw.


The fact that the bill may have been accepted by the drawee has, by the weight of authority, no decisive bearing upon the question of the right of the drawer to draw. Acceptance may perhaps require the holder to await the maturity of the bill, and then present it again for payment,

Effect of acceptance.

1 Benoist v. Creditors, 18 La. 522; Williams v. Brashear, 19 La. 370. The second of these cases shows that the test of absence of funds is not conclusive; only the absence of reasonable ground is conclusive.

2 Dickins v. Beal, 10 Peters, 572; Orear v. McDonald, 9 Gill, 350; Grosvenor v. Stone, 8 Pick. 79.

3 Robinson v. Ames, 20 Johns. 146. See Rucker v. Hiller, 16 East, 43. Byles, Bills, 301, 13th Eng. ed.

5 Byles, ut supra, citing Lafitte v. Slatter, 6 Bing. 623.

Id., citing Claridge v. Dalton, 4 Maule & S. 226.

7 See Rhett v. Poe, 2 How. 457; Valk v. Simmons, 4 Mason, 113; Allen v. King, 4 McLean, 128; Kinsley v. Robinson, 21 Pick. 327; Gillespie v. Cammack, 3 La. An. 248; Foard v. Womack, 2 Ala. 368, 371; Hoffman v. Smith, 1 Caines, 157, 160. But see Pons v. Kelly, 2 Hayw. 45, 47; Richie v. McCoy, 13 Smedes & M. 541. See also Orear v. McDonald, 9 Gill, 350, 858.

though that is by no means clear; but whether that be the case or not, acceptance does not certainly show that the drawer had reasonable ground; at most it but indicates a presumptive right to draw, and hence only presumptively entitles the drawer to insist upon the usual steps for fixing his liability.'

Another special feature of a drawer's contract is that where the drawer draws upon himself he is not entitled to notice if the paper is dishonored; 2 for, drawing upon himself, Drawing on he was in honor bound to accept. He may accord- one's self. ingly be treated as the maker of a promissory note. In that view it seems to be unnecessary to make any demand of acceptance or payment of him. The same is true where a corporation or a partnership draws upon itself, or where one draws upon a partnership of which one is a member; and so also, it seems, of the case of drawing paper by one partnership upon another. where the defendant drawer is a member of both.


What has been said in the last section applies mainly to bills of exchange, though it is proper to notice that the drawer of a cheque may, for some special reason not relating to Peculiarity of funds, have had no reasonable ground to draw, and drawer's conso be liable much like the maker of a note. But the contract of the drawer of a cheque is in itself peculiar, as we have elsewhere seen.5


The peculiarity of the contract in question is due, of course, to the special nature of a cheque. Cheques have sometimes been called bills, in cases in which it was not necessary to observe any distinction between the two kinds of paper; but it is never safe to assume that things which are alike are the same,

1 See 2 Daniel, Neg. Inst. § 1082.

2 N. I. L. § 121, 1.

Fairchild v. Ogdensburgh R. R. Co., 15 N. Y. 337; Miller v. Thomson, 3 Man. & G. 576.

See Carew v. Duckworth, L. R. 4 Ex. 313; Gage Hotel Co. v. Union Bank, 171 Ill. 531.

* Ante, p. 12.

and it is certain that cheques are not, even in substance, bills of exchange.

A bill of exchange is supposed to have been drawn, as has already been seen, either upon funds in the hands of the drawee, or upon reasonable ground to believe that the drawee will honor it; a cheque is always supposed to have been drawn upon funds. The drawer of a cheque draws upon his own banker, who, where the transaction is rightful on the part of the drawer, holds money of the drawer subject to his order as manifested by cheques. A bill of exchange is oftener drawn upon some merchant or trader. The cheque is drawn with a view to prompt payment rather than to use as a means of credit,' - though merely to put a cheque into circulation is not in itself improper, so as to discharge the parties; a bill of exchange only performs its ordinary function when it is put into circulation; the one is drawn to obtain money, the other, often to give credit and to take the place of money as far as desired.

The consequence which the law merchant annexes to this difference is that the drawer of a dishonored cheque, not drawn upon sufficient funds applicable to it, is in the position substantially of the maker of a promissory note; at all events, he is liable to the holder without notice of dishonor. Indeed, the drawer of a cheque remains liable, it seems, without notice of dishonor, though he had funds in the hands of the drawee, provided he has not suffered prejudice by the failure to give him notice, or to make an earlier demand than was made. The drawer of a bill, as we have seen, would be discharged in such

a case.

The case of the drawer of a cheque thus far may be put in Want of no- this way: Prima facie, the drawer is entitled to tice: prejudice. notice of dishonor; hence, the plaintiff must offer some legal excuse for the omission when he has failed to give 1 Mussey v. Eagle Bank, 9 Met. 306.

2 Carew v. Duckworth, L. R. 4 Ex. 313.

8 Andrew v. Blackly, 11 Ohio St. 89; Carew v. Duckworth, supra.

4 Pack v. Thomas, 13 Smedes & M. 11; Mohawk Bank v. Broderick, 10 Wend. 304, affirmed, 13 Wend. 133; True v. Thomas, 16 Maine, 36. See Keene v. Beard, 8 C. B. N. s. 372.

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