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Liability and Discharge of the Endorser and Acceptor of Bills of Exchange.

accepted, fails to pay. A refusal to accept is then a breach of the contract, upon the happening of which, a right of action instantly accrues to the payee, to recover from the drawer the value expressed in the bill; that being the consideration the payee gave for it. Such also is the undertaking of an endorser, before the bill has been presented for acceptance, he being, in fact, a new drawer of the same bill, upon the terms expressed on the face of it. Evans v. Gee, 11 Peters, 80.

3. Liability and Discharge of the Endorser of Bills

of Exchange.

to the bill, and must give due notice to them of the dishonour accordingly, otherwise they will be discharged; and a subsequent acceptance by the drawer, on the next day, will not be sufficient to charge the drawer, in case no such notice is given, and the drawer fails before the day of payment. Mitchell v. Degrand, 1 Mason's C. C. R. 176.

4. Liability and Discharge of the Acceptor of Bills of Exchange.

140. The payee must either state that the bill was protested, or show that it was not incum bent on him to protest it, because the drawee had no funds in hand to pay the bill; but this omission can only be taken advantage of by special demurrer. Baker v. Gallagher, 1 Wash. C. C. R. 461.

131. The defendant being indebted to the plaintiff in London, for goods, remitted a bill of exchange, drawn upon London, in his favour, which he endorsed "pay the amount to order for my use." The bill was not accepted, nor paid, and 141. A promise to accept a bill is an acceptwas returned to the plaintiff's agent, who de-ance, when the bill is duly drawn and taken, manded payment of the defendant as endorser. bona fide, on the faith of the promise. Ogden Held, That such special endorsement releases et al. v. Gillingham et al., 1 Baldwin's C. C. the endorser from the payment of damages, and R. 45. prevents the negotiability of the bill. The amount of the bill is to be received by the endorsee, for the use of the endorser. Brown v. John Jackson, 1 Wash. C. C. R. 512.

142. A, residing in Philadelphia, consigned goods to B, residing in New York, and drew his bill on B, promising to pay the balance which might be due after the sale of the goods, if the proceeds did not reimburse B the amount of the bill. B accepted and paid the bill, which exre-ceeded the amount of sales. Held, that A was bound to reimburse B at New York. Ibid.

132. If the endorsee be not a creditor of the endorser, then he is to receive the money, and remit it, or the bill is dishonoured; he is to turn it. lbid.

133. In this case, the plaintiff having received the bill in payment of a debt due him, was entitled to look to every person responsible on the bill, in like manner as if he had bought the bill, with exception of a claim for damages on the endorser. Ibid.

134. The endorser of a bill of exchange is not entitled to recover of the drawer the damages incurred by the non-acceptance of the bill, unless he has been obliged to pay them, or is liable to pay them. Kingston v. Wilson, 4 Wash. C. C. R. 310.

135. An unconditional promise, by the endorser of a bill or note, to pay it, or the acknowledgment of his liability, after knowledge of his discharge from his responsibility by the laches of the holder, amounted to an implied waiver of due notice of a demand from the drawee, acceptor, or maker. Thornton v. Wynn, 12 Wheat. 183; 6 Cond. Rep. 508.

143. Where bills are accepted, payable in London, on a promise to provide funds to meet them, the contract is governed by the law of England. The obligation and rights of the parties to a contract, are governed by the law of the country where the contract is to be executed. The remedies to enforce a contract are governed by the law of the country in which the suit is brought. Ibid.

144. Where a bill of exchange is accepted conditionally, the holder, who would charge the acceptor, must show performance of the condition. Read v. Wilkinson, 2 Wash. C. C. R. 514.

145. A suit was instituted by the bank against Pearson, the drawer of a bill of exchange endorsed by Hatch, which suit stood for trial at an approaching term. The attorney and agent of the bank agreed with Pearson, that the suit against him should be continued, without judgment, until the term after that at which judg. ment would have been entered, if Pearson would permit a person in confinement under an execution, to attend at his suit a distant court as a witness for the bank, in a suit in which the bank was plaintiff. The witness was permitted to 138. If an endorser is once fixed by due no-attend the court, and the suit against Pearson tice of the non-acceptance of a bill, no delay of the holder to return the bill and demand payment, takes away his right of recovery; notwithstanding the drawer may, in the intermediate time, fail. Wild v. Bank of Passamaquoddy, 3 Mason's C. C. R. 505.

136. So an acknowledgment of the drawer's or endorser's liability has the same effect. Ibid. 137. Knowledge of the fact of the laches of the holder is essential, to charge the endorser upon his promise or acknowledgment. Ibid.

139. When, upon a bill payable so many days after sight, the holder presents the bill for acceptance, and elects to consider what passes on such presentment as a non-acceptance, he is bound by such election as to all the other parties

was continued agreeably to the agreement. By the court:-This was an agreement for a valuable consideration, and not a mere voluntary and discretionary exercise of authority on the part of the agent of the bank. It was a virtual discharge of the endorser of the bill. Bank of the United States v. Hatch, 6 Peters, 250.

146. The doctrine is well established, that the acceptor of a bill is bound to know the handwriting of the drawer, and cannot defend himself by a subsequent discovery of the forgev

Liability and Discharge of the Acceptor of Bills of Exchange.

The Bank of the United States v. Bank of Georgia, | has given a consideration for the bill: and this 10 Wheat. 333; 6 Cond. Rep. 132. even though the acceptor has been defrauded by the drawee, if that be not known to such third party. Ibid.

147. If the holder of a bill of exchange, at the time of taking the bill, knew that the drawee had not funds in his hands belonging to the drawer, and took the bill on the promise of the drawee to accept it, expecting to receive funds from the drawer, the promise of the drawee to accept the bill constitutes a valid contract between the parties, notwithstanding the failure of the drawer to place funds in his hands. The acceptance of the drawee of a bill binds him, although it is known to the holder that he has no funds in his hands. It is sufficient that the holder trusts to such acceptance. Townley v. Sumrall, 2 Peters, 183.

148. An action for money had and received, or money paid, will not lie by the acceptor of a bill of exchange who has not paid the same. Parker et al. v. The United States, Peters' C. C. R.

262.

149. The acceptor of a bill of exchange, who, at the time of the acceptance, had no funds in his hands belonging to the drawer, although he had not paid the bill, may sue the drawer, if he has done something equivalent to payment; as if he is in confinement, under a capias ad satisfaciendum, at the suit of the holder. Ibid.

150. The United States instituted a suit against the Bank of the Metropolis, claiming twentyseven thousand eight hundred and eighty-one dollars and fifty-seven cents, the balance, according to the statement of the treasury, due to the United States. The defendant claimed credits amounting to twenty-three thousand dollars, exclusive of interest, which has been presented to the proper accounting officers, for acceptances of the post-office department of the drafts of mail contractors, and an item of six hundred and eleven dollars and fifty-two cents, over-draft of an officer of the post-office department, on the Bank of the Metropolis. The drafts of the contractors, accepted by the post-office department, were discounted by the bank, in the way of business; one draft was accepted unconditionally, the other drafts were accepted, "on condition that the contracts be complied with." Held, that the bank became the holder of the draft unconditionally accepted, for valuable consideration; and its right to charge the United States with the amount, cannot be defeated by any equities between the drawers and the postoffice. The United States v. The Bank of the Metropolis, 15 Peters, 377.

153. If one purpose making a conditional acceptance only, and commit that acceptance to writing, he should be careful to express the condition therein. He cannot use general terms, and then exempt himself from liability by rely ing upon particular facts which have already happened, though they are connected with the conditional acceptance. By express terms the acceptor might have guarded against any construction, other than that which was intended by, or was the apparent meaning of the words of the acceptance. It matters not what the acceptor meant by a cautious and precise phraseology, if it be not expressed as a condition. Ibid.

154. Nothing out of the condition expressed in the words of the acceptance can be inferred, unless it be in a case where the words used are so ambiguous as to make it necessary that parol evidence should be resorted to, to explain them. Ibid.

155. If two persons deal in relation to the executory contracts of a third, and one of them, being the obligee, induces the other to advance money, "upon condition that his contracts be complied with," and he knows that forfeitures have been already incurred by the obligor for breaches of his contract, and does not say so, he shall not be permitted afterwards to get rid of his liability by saying, "I cannot pay you; for when I accepted there was already due to me from the drawer of the bills more than I accepted for; you did not choose to make inquiry." Ibid.

156. The terms, "accepted, when the con tracts of the drawer of the bill are complied with," are not retroactive; they do not refer to past transactions, but to the subsequent per formance of the contractors. Ibid.

157. The acceptor of a bill of exchange stands in the same relation to the drawee, as the maker of a note does to the payee; and the acceptor is the principal debtor in the case of a bill, pre cisely like the maker of a note. The liability of the acceptor grows out of and is to be governed by the terms of his acceptance; and the liability of the maker of a note grows out of and is to be governed by the terms of his note; and the place of payment can be of no more importance in the one case than in the other. Wallace v. M'Connell, 13 Peters, 136.

151. It was no matter how the account of the drawer of the draft unconditionally accepted 158. It is of the utmost importance, that all stood with the post-office department; whether rules relating to commercial law should be he was a debtor or a creditor; whether the bank stable and uniform. They are adopted for pracknew one or the other. An unconditional ac- tical purposes, to regulate the course of comceptance was tendered to the bank for discount. mercial transactions. When a note or bill is It was not the duty of the bank to inquire how the made payable at a particular bank, as is geaccount stood, or for what purpose the acceptance nerally the case, it is well known that, according was made. All it had to look to was the genu-to the usual course of business, the note or bill ineness of the acceptance, and the authority of the officer to give it. Ibid.

152. The rule is, that the want of consideration between the drawer and the acceptor is no defence against the rights of a third party, who

is lodged at the bank for collection; and if the maker or acceptor calls to take it up when it falls due, it will be delivered to him, and the business is closed. But should he not find the note or bill at the bank, he can deposit his

Protest and Notice of Dishonour of Bills of Exchange.

money to meet the note when presented; and should he be afterwards prosecuted, he will be exonerated from all costs and damages upon proving such tender and deposite. Or should the note or bill be made payable at some place other than a bank, and no deposite could be made, or he should choose to retain his money in his own possession; an offer to pay the money at the time and place would protect him against interest and costs, on bringing the money into court. lbid.

159. In actions on promissory notes against the maker, or on bills of exchange where the suit is against the maker, in the one case, and the acceptor in the other, and the note or bill is made payable at a specified time and place, it is not necessary to aver in the declaration or prove on the trial, that a demand of payment was made, in order to maintain the action. But if the maker or acceptor was at the place, at the time designated, and was ready and offered to pay the money, it was matter of defence to be pleaded and proved on his part. Ibid.

160. The acceptors of the bill of exchange having, when the bill became due, funds of the drawers in their hands sufficient to pay the same, the liability of the accommodation drawers is as completely discharged on payment of the bill, as that of the principals. Brander v. McKenna, 16 Peters, 121.

161. An accommodation acceptor of a bill of exchange is a surety as to the drawer, but a principal as to the holder; although the holder knew him to be an accommodation acceptor. 3 Story's C. C. R. 193.

5. Protest and Notice of Dishonour of Bills of Exchange.

162. Whether due notice of protest was given, there being no dispute about facts, is a question of law. Jacob Barker v. U. S., 1 Paine's C. C. R.

156.

163. If the drawer of a bill of exchange has no funds in the hands of the drawee, and has no right to expect it will be paid, there being no commercial transactions between the parties, notice of non-payment and protest is unnecessary. But when the drawer has a right to expect that his bill will be honoured, as where there are running accounts between the drawer and drawee, he is entitled to notice, although, in point of fact, he had no funds in the hands of the drawee when the bill was drawn. The sound sense and justice of the exception is, that where a drawer knows he has no right to draw, and has the strongest reason to believe that the bill will not be paid, the motives for requiring notice of the dishonour do not exist, and his case comes within the reason of the exception. Hopkirk v. Page, 2 Brockenb. C. C. R. 20.

164. Where a protested bill of exchange is held up for a long time, without notice of its non-payment and protest, the whole onus probandi is thrown upon the nolder. He must prove every thing, and nothing .s required from the drawer. Ibid.

165. A bill of exchange was drawn in Virginia, in November, 1775, after the commenceVor.. T-21

ment of hostilities between Great Britain and her colonies, payable in England, which was duly protested for non-payment in June, 1776, after all intercourse between the two countries had ceased. Held, that a state of war dispenses with the necessity of giving notice of the nonpayment and protest to the drawer, but notice of its dishonour should be given within a reasonable time after the impediment is removed. Ibid.

166. Where a bill must be presented for acceptance, and even if it be not necessary to present it, yet it is presented and dishonoured, notice of the refusal to accept, or of the protest for non-acceptance, must be given without waiting the maturity of the bill. The U. S. v. Barker's Adm'x., 4 Wash. C. C. R. 464.

167. If the holder has any legal excuse for not having given notice, according to the strict rules of law, it lies on him to prove it. He cannot excuse himself by supposed obstacles. Ibid.

168. Legal notice is given to the party in person, only by leaving a written notice at his place of residence; and this must be proved by him who asserts it. Ibid.

169. The United States purchased from J. B. bills of exchange on Liverpool which were protested for non-acceptance; and the secretary of the treasury omitted, for one day, to give notice of the dishonour of the bills. He sent by mail to New York, after the omission of one day, the protests of the bills, to an agent of the govern ment, directing him to give the drawer notice of the non-acceptance, by means of a notary. Held, that the omission of one day in the notice discharged the drawer. Ibid.

170. A demand of payment of a promissory note must be made of the maker, on the last day of grace; and where the endorser resides in a different place, notice of the default of the maker should be put into the post-office, early enough to be sent by the mail of the succeeding day. Lenox v. Roberts, 2 Wheat. 373; 4 Cond. Rep. 163.

171. Where the second day of grace falls on Saturday, it is the last day of grace; and notice of non-payment given to a drawer of a bill on that day, after a demand upon the acceptor on the same day, is sufficient to charge the drawer. Bussard v. Levering, 6 Wheat. 102; 5 Cond. Rep. 19.

172. Notice to the drawer, by putting the same into the post-office, where the persons live in different places, is good. Ibid.

173. After demand of the maker of a note, on the third day of grace, notice to the endorser on the same day is sufficient, by the general law merchant. Lindenberger v. Beall, 6 Wheat. 104; 5 Cond. Rep. 20.

174. Evidence of a letter containing notice having been put into the post-office, directed to the endorser, at his place of residence, is sufficient proof of the notice to be left to the jury; and it is unnecessary to give notice to the defendant to produce the letter, before such evi dence can be admitted. Ibid.

175. No precise form of notice to the endorser of a promissory note is necessary; and it is not necessary to state, in the notice, who is the

2 r

Protest and Notice of Dishonour of Bills of Exchange.

holder; nor will a mistake as to the date of the | put into the post-office early enough to be sent note vitiate the notice, if it conveys to the party by the mail of the succeeding day. This must a sufficient knowledge of the particular note be done by the agent, in the first instance, which has been dishonoured. Mills v. The where the business is managed by an agent; Bank of the U. S., 11 Wheat. 431; 6 Cond. Rep. and the same diligence is required of the payee. Ibid.

373.

176. It is not necessary that the notice should contain a formal allegation that it was demanded at the place where payable. It is sufficient that it states the fact of non-payment of the note, and that the holder looks to the endorser for indemnity. Ibid.

185. If the notice is to be sent across the sea, it should be by the first regular conveyance. Query. In time of war between the country of the drawer and drawee, what is the rule as to sending notice by the agent of the payee to the drawer? Ibid.

177. It is admitted, that in respect to foreign 186. The want of funds in the hands of the bills of exchange, the notarial certificate of pro- drawee of a bill of exchange, renders notice to test is, of itself, sufficient proof of the dishonour the drawer of the non-acceptance, or non-payof a bill without any auxiliary evidence. Town-ment, unnecessary. Read v. Wilkinson, 2 Wash. ley v. Sumrall, 2 Peters, 179. C. C. R. 514.

178. It is not disputed, that by the general custom of merchants of the United States, bills of exchange drawn in one state on another state, are, if dishonoured, protested by a notary; and the production of such protest is the customary document of dishonour. Ibid.

179. The principle of law which requires notice of the dishonour of a bill to be given by the holder of it, or by an agent, requires notice to be given only to those persons to whom the owner of a bill has a right to look for payment. Third persons, who are not liable on account of the dishonour of a bill, and could look to no person on the bill for indemnification, or for payment of it, are not entitled to notice. Hutz v. Karthause, 4 Wash. C. C. R. 1.

187. The strict rules of law relative to the presentation and notice of the dishonour of a bill of exchange, do not prevail in the same manner against a creditor, to whom the bill has been remitted in payment, as they do against the holder of a bill under other circumstances, Gallagher's Ex'rs. v. Roberts et al., 2 Wash. C. C. R. 191.

188. Although notice of the dishonour of a bill may not have been received by the person who remitted it, it will be sufficient to discharge the holder, if he did all in his power to convey the information of it to him. Ibid.

189. The endorser of a promissory note, given for the accommodation of the maker, is entitled to strict notice of its non-payment. French's Ex'r. v. Bank of Columbia, 4 Cranch, 141; 2 Cond. Rep. 58.

190. If the drawer of a bill of exchange, at the time of drawing, has a right to expect that his bill will be honoured, although he has no funds in the hands of the drawer, he is entitled to strict notice. Ibid.

180. The general rule as to the drawer and endorser is, that due notice of the dishonour of the bill must be given to all to whom the holder means to look. The first exception made to this rule was, in case the suit was against the drawer, where it appeared he had no effects in the hands of the drawee; and this exception was afterwards so qualified as to entitle him to 191. In reason, it would seem that the necesnotice, if he had a reasonable ground to expect sity of notice of non-acceptance or non-paythe bill would be paid. But the exception has ment of a bill of exchange, ought to be disnever been extended to the endorser, and ought|pensed with only in those cases where notice never to be. Ramdulollday v. Darieux, 4 Wash. C. C. R. 61.

181. An action was brought on a bill of exchange drawn by plaintiff in favour of defendant. The second count was on a promise of defendant, in 1804, to the plaintiff, that if the plaintiff would indulge him, he would pay the bill, if he should be able so to do, on an averment that he was able: the protest of a bill of exchange was offered in evidence, and objected to, on the ground that it was an inland, and not a foreign bill, and the evidence was admitted. Lonsdale v. Brown, 4 Wash. C. C. R. 86.

182. Query, If a bill of exchange drawn in one state, on another, is a foreign bill, and whether the protest of such a bill is good evidence? Ibid. Ante, 178.

183. The holder of a protested bill of exchange is bound to give notice to the person he means to look to, by the earliest practicable post after the bill is dishonoured, when the parties do not live in the same town. The U. S. v. Barker's Adm'x., 4 Wash. C. C. R. 464.

184. The letter giving the notice should be

must be unnecessary or immaterial. Ibid.

192. Where the money raised upon the bill is received by the endorser, so that it is discounted, in truth, for his accommodation, not for that of the maker, he is unquestionably without funds in the hands of the acceptor, and must expect to pay the note himself, and cannot require notice of its non-payment by the drawer. Ibid.

193. A bill of exchange, payable after date, need not be presented for acceptance before the day of payment; but, if presented, and acceptance be refused, it is dishonoured, and notice must be given. The absence from his home of the drawee of a bill payable after date, when the holder of a bill, or his agent, calls with it for acceptance, is not a refusal to accept; but such absence, when the bill is due, is a refusal to pay and authorizes a protest. Bank of Washington v. Triplett et al., 1 Peters, 35.

194. In a suit instituted by the holder of a bill against the bank, for negligence, in relation to demand, or notice of non-payment of the bill, the court, although required, are not bound to declare the law as between the holder and the

Bills drawn on a Guarantee or a Letter of Credit.

drawer. The bank was the agent of the holder, | with directions that they should despatch her to and not of the drawer; and might, consequently, so act as to discharge the drawer, without becoming liable to its principal. Ibid. 36.

India, furnishing the master with a letter of credit, entitling him to draw on London for £5000. The master was instructed, if he should not have funds to purchase a cargo in India, to "extend his drawing." Being in want of funds, he drew, not on the house in London, on whom he had

195. Where the notary public called at the boarding-house where the endorser lodged, and inquired of a fellow-boarder for him, and, being informed he was not within, left with the fellow-drawn the £5000, but on the consignees at Antboarder a notice directed to him of the non-payment of a note of which he was endorser, requesting him to deliver it, it was held that the notice was sufficient to make the endorser liable for the payment of the bill. Bank of the U. S. v. Hatch, 6 Peters, 250.

196. The general rule of law, requiring proof of the title of the holders of a note, may be modified by a rule of court, dispensing with proof of the execution of the note, unless the party shall annex to his ple an affidavit that the note was not executed by him. Mills v. Bank of the United States, 11 Wheat. 431; 6 Cond. Rep. 373.

197. Wherever the government of the United States, through its lawfully authorized agents, becomes the holder of a bill of exchange, it is bound to use the same diligence, in order to charge the endorsers, as in a transaction between private individuals. United States v. Barker, 12 Wheat. 559; 6 Cond. Rep. 641.

werp, who had obtained the letter of credit, and to whom the vessel and cargo were to return. Held, That the bills were drawn without authority, and should have been drawn on the house in London. Executors of Clement v. Dickey, 1 Paine's Rep. 377.

202. A letter, written within a reasonable time before or after the date of a bill of exchange, describing it in terms not to be mistaken, and promising to accept it, is, if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance, binding the person who makes the promise. Coolidge et al. v. Payson et al., 2 Wheat. 66; 4 Cond. Rep. 33.

203. The prevailing inducement for considering a promise to accept as an acceptance, is, that thereby credit is given to the bill. Ibid.

204. B., a merchant in New York, wrote to L., a merchant in New Orleans, on the 9th of January, 1806, mentioning, that a ship belonging to T. and Son, of Portland, was ordered to New Orleans for freight, and requesting L. to procure a freight for her, and purchase and put on board of her five hundred bales of cotton on the owners'

198. Where the United States were holders of certain bills of exchange, and their agent, in New York, was directed, by a letter from the secretary of the treasury, dated Washington, December 7th, 1814, to give notice of non-ac-account: "for the payment of all shipments on ceptance to the drawer and endorsers, residing in New York, and notice was given to the endorser on the 12th of the same month, the mail which left on the 8th having arrived at New York at thirty-five minutes past ten o'clock, A. M., on the 10th. Held, that the endorser was discharged by the negligence of the holders. Ibid. 199. So, also, where the United States were the holders of other bills, and their agent, in New York, was directed, by a letter from the secretary of the treasury, dated Washington, May 8th, 1815, to give notice of non-payment to the drawer and endorsers, residing in New York, and notice was given to the endorser on the 12th of the same month, the mail, which left Washington on the 8th having reached New York early on the morning of the 11th; held, That the en-afterwards drew two bills on T. and Son, payable dorser was discharged by the negligence of the holders. Ibid.

200. A bill was drawn by the defendant at New Orleans, on Philadelphia, in favour of the plaintiff, and was by him endorsed, in full, to a third person, and had been regularly protested for non-acceptance and non-payment; but no notice of the dishonour of the bill was proved to have been given to the drawer. The endorsement, being in full, cannot be struck out at time of trial. The want of notice destroys the plaintiff's right to recover from the defendant. Craig v. Brown, Peters' C. C. R. 171.

6. Bills drawn on a Guarantee or a Letter of

Credit.

201. The owner of a vessel sent her from New York, consigned to his correspondent at Antwerp,

owners' account, thy bill on T. and Son, of Portland, or me, sixty days' sight, shall meet due honour." On the 13th February, B. wrote again to L., reiterating the former request, and including a letter from T. and Son to L., containing their instructions to L., with whom they afterwards continued to correspond; adding, "thy bills on me for their account, for cotton they order shipped by the Mac, shall meet with due honour." On the 24th July, 1806, B. again wrote L. on the same subject, saying, "the owners wish her loaded on their own account, for the payment of which thy bills on me shall meet with due honour, at sixty days' sight." L. proceeded to purchase and ship the cotton, and drew several bills on B., which were paid. H.

in New York, which were protested for non-payment, they having, in the mean time, failed; and, about two years afterwards, drew bills on B. for the balance due, including the two protested bills, damages, and interest. Held, That the letters of the 13th of February, and 24th of July, contained no revocation of the undertaking in the letter of the 9th of January; that, although the bills on T. and Son were not drawn according to B.'s assumption, this could only affect th right of L. to recover the damages paid by him on the return of the bills; but that he had still a right to recover on the original guarantee of the debt. Lanusse v. Barker, 3 Wheat. 101; 4 Cond. Rep. 204.

205. It was also held. that L., by making his election to draw upon T. and Son, in the first instance, did not thereby preelre himself from

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