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I say "without being a warranty," for a random warranty of a fact which the warrantor did not know to exist, does not amount to fraud; though it does amount to fraud if he knew the warranty to be false.

The means and phases of fraud are so manifold that to attempt much more than a general definition of it would in these pages be impossible. Two instances may nevertheless be mentioned, which, though manifest acts of dishonesty, might not strike an unprofessional person as amounting to legal fraud.

Where a debtor is compounding with his creditors, and without their knowledge gives a bill or note to any creditor, either voluntarily or as an inducement to him to execute the deed of composition, this bill or note is void in the hands of the creditor, as being a fraud upon the body of the creditors. So also, if the deed contain a stipulation for the surrender of securities, no creditor holding a bill of the insolvent's will be allowed to keep the proceeds in fraud of the creditors, but must refund the money.

Another instance shall be mentioned from the law of suretyship. When one man proposes to give a bill or note in payment of a certain debt owed by another, and the creditor and the debtor have a secret understanding that the money is to be otherwise appropriated, (as by payment of a prior debt, or by placing part in the hands of the debtor himself,) such a bill will be a fraud on the surety, and void in the hands of the creditor.

7. A plaintiff cannot recover upon a bill given for illegal consideration, if he is obliged to rely on the illegal transaction in making out his case.

Considerations which are illegal, are so either (1) at common law, i. e. by the general unwritten law of the land, or (2) by statute.

Considerations illegal at common law may be again divided into (1) such as are privately immoral, and (2) such as contravene public policy.

Under the former head come the considerations for bills, notes, or cheques given for future cohabitation, for the rent of apartments knowingly let for the purpose of prostitution, &c.

Under the latter are included the considerations for bills, &c., given upon a contract for the general restraint of trade or business; as if, upon a purchase of the goodwill of a medical practice, or a shoe-maker's shop, it were

bargained that the persons parting with the businesses should thenceforth altogether cease from curing wounds or making shoes respectively. Though there would be no objection to a partial restraint, as to do business only within fifty miles of London, or only with certain classes of customers, as wholesale or retail, &c.

So contracts in restraint of marriage (and it should seem though only in partial restraint) are likewise void; and so are contracts to procure a marriage, or to procure the separation of those already married; also contracts to injure the revenue, to compound a felony or a public misdemeanor, or to induce a person to infringe the law.

Contracts with a public enemy, as bills or notes in their favor, are also illegal, and all bills and notes are worthless in their hands; so also contracts for obtaining public offices, and all bills, &c., given in pursuance of such contracts are illegal at common law. These are also many of them illegal by statute, which is the other main division of illegality.

In treating of considerations illegal by statute, it may be convenient first to mention that the offence of usury has ceased to exist, and no contract can any longer be objectionable on that ground, and that gaming contracts, whether written or verbal, are not in general illegal, but are merely void; i. e. a man may make a wager or a bet if he pleases upon a lawful game, but having made it, he need not pay. Bills, notes, and cheques, therefore, given in pursuance of such bets or wagers, can only be recovered upon by an innocent indorsee or holder who has taken the bill for value, and in ignorance of the transaction out of which it originated.

Though the winner of stakes at a horse-race may, in general, recover them in an action, yet a former statute which rendered void all bills or notes given for such stakes having been preserved in force by the recent statute on the subject (8 & 9 Vict., c. 109, s. 15), it is the opinion of a learned writer that a promissory note given for the amount would be void, except in the hands of an innocent holder for value.

If the loser by play or betting, having given a bill or note, has to pay the innocent holder, the former can recover the amount against the man to whom he lost the bet.

But if one man employs another to bet for him, the employer thereby authorizes his agent to pay losses; the

agent having done so, can recover the money from his principal. Therefore a bill drawn by the agent upon and accepted by the principal for the amount must be paid by him. In this case it will be observed the sum sued for is not money won at play, but a sum paid by 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 creditorto 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 bond fide holder for value without notice of the consideration for which they were given. The Bankruptcy Act, 1861, sec. 166.

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." 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.


Acceptor sued by

Drawer may plead

Acceptor sued by

Indorsee may plead

No consideration (i. e. accommoda-
tion bill).

Illegality of consideration.
Independent agreement.

Accommodation bill, and no consi-
deration from plaintiff, or any of
those through whom he has taken
the bill.

Illegality, with notice.

Illegality, and no consideration (as above).

Fraud, with notice.

Fraud, and no consideration (as above).

Independent agreement, with no


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1. Of Bills and Noves payable to order and to bearer. 2. Of Indorsements, blank and special; their modes and requisites.

3. Liabilities of Indorser.

4. How a Bill may be Indorsed without incurring Liability. -What an Indorsement Warrants.-Striking out Indorsement.

5. Whom the Indorsee may sue, and under what circumstances.

6. Right to compel Indorsement where improperly refused. 7. Indorser becoming afterwards Indorsee.

8. Of Trusts, and restrictive Indorsements.

9. Liability of person transferring by delivery without


10. What warranty is implied in transferring by delivery. 11. Bills and Notes payable to Bearer circulate as Money. 12. Indorsement on Blank Stamp.

13. Rights of Indorsee of unaccepted Bill.

14. Rights of Indorsee of overdue Bill.

15. Note payable on demand, when considered overdue. 16. Payment and other circumstances by which a Bill or Note ceases to be negotiable.

17. Bills and Notes under £5.

1. Transferring a bill or note, means so passing it to another holder as to enable him to recover at maturity against the parties to it.

A bill or note is only transferable when it contains a direction to pay, (1) to the payee's order, or (2) to bearer. If it contain no such direction, it is of no use to any but the original payee.

The payee may be either the drawer or a third person; and therefore a bill when payable to order may either contain the words "pay to me or my order," or "pay to C or his order." (See chap. i, sec. 1.)

In case of a note, the payee is usually a person other than the maker; and then, if the note be payable to order, the promise will be to "pay to C or his order." But a man may make a note payable to himself or order.

If a bill or note be payable to order, it is transferable by indorsement; if to bearer, by delivery; if it be not

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