BILLS
OF
EXCHANGE
249
to the drawer to pay, he may thereby discharge the some other party liable has duly sent notice to the drawer. acceptor. When a foreign bill is dishonoured the holder must cause Holder in due Course.—The holder of a bill has special it to be protested by a notary public. The bill must be rights and special duties. He is the mercantile owner noted for protest on the day of its dishonour. If this be of the bill, but in order to establish his ownership he duly done, the protest, i.e., the formal notarial certificate must show a mercantile title. The bill must be negotiated attesting the dishonour can be drawn up at any time as to him, that is to say, it must be transferred to him of the date of the noting. A dishonoured inland bill may according to the forms prescribed by mercantile law. be noted, and the holder can recover the expenses of If the bill is payable to order, he must not only get noting, but no legal consequences attach thereto. In possession of the bill, but he must also obtain the indorse- practice, however, noting is usually accepted as showing ment of the previous holder. If the bill is payable to that a bill has been duly presented and has been disbearer it is transferable by mere delivery. A bill is pay- honoured. Sometimes the drawer or indorser has reason able to bearer which is expressed to be so payable, or on to expect that the bill may be dishonoured by the drawee. which the only or last indorsement is an indorsement in In that case he may insert the name of a “referee in case blank. If a man lawfully obtains possession of a bill of need.” But whether he does so or not, when a bill has payable to order without the necessary indorsement, he been duly noted for protest, any person may, with the may obtain some common law rights in respect of it, but consent of the holder, intervene for the honour of any he is not the mercantile owner, and he is not technically party liable on the bill. If the bill has been dishonoured the holder or bearer. But to get the full advantages of by non-acceptance it may be “ accepted for honour supra mercantile ownership the holder must be a “ holder in due protest.” If it has been dishonoured by non-payment it course,”—that is to say, he must satisfy three business may be paid supra protest. When a bill is thus paid and conditions. First, he must have given value, or claim the proper formalities are complied with, the person who through some holder who has given value. Secondly, pays becomes invested with the rights and duties of the when he takes the bill, it must be regular on the face of holder so far as regards the party for whose honour he has it. In particular, the bill must not be overdue or known paid the bill, and all parties antecedent to him (§§ 65 to 68). to be dishonoured. An overdue bill, or a bill which has Discharge.—Normally a bill is discharged by payment been dishonoured, is still negotiable, but in a restricted in due course, that is to say, by payment by the drawTee or sense. The transferee cannot acquire a better title than acceptor to the holder at or after maturity. But it may the party from whom he took it had (§ 36). Thirdly, he also be discharged in other ways, as for example by coinmust take the bill honestly and without notice of any cidence of right and liability (§ 61), voluntary renunciation defect in the title of the transferor,—as, for instance, that (§ 62), cancellation (§ 63), or material alteration (§ 64). the bill or acceptance had been obtained by fraud, or Conflict of Laics.—A bill of exchange is the most cosmothreats, or for an illegal consideration. If he satisfies politan of all contracts. It may be drawn in one country, these conditions he obtains an indefeasible title, and can payable in another, and indorsed on its journey to its destienforce the bill against all parties thereto. The Act nation in two or three more. The laws of all these countries substitutes the expression “ holder in due course ” for the may differ. Provision for this conflict of laws is made by somewhat cumbrous older expression “bona-fide holder § 72, which lays down rules for determining by what law for value without notice.” The statutory term has the the rights and duties of the various parties are to be advantage of being positive instead of negative. The measured and regulated. Speaking broadly, these rules French equivalent “ tiers porteur de bonne foi ” is ex- follow the maxim Locus regit actum. A man must be pressive. Forgery, of course, stands on a different footing expected to know and follow the law of the place where from a mere defect of title. A forged signature, as a he conducts his business, but no man can be expected to general rule, is a nullity. A person who claims through know the laws of every country through which a bill may a forged signature has no title himself, and cannot give travel. For safety of transmission from country to country a title to anyone else (§ 24). Two exceptions to this bills are often made out in sets. The set usually consists general rule require to be noted. First, a banker who in of three counterparts, each part being numbered and conthe ordinary course of business pays a demand draft held taining a reference to the other parts. The whole set under a forged indorsement is protected (§ 60). Secondly, then constitutes one bill, and the drawee must be careful if a bill be issued with material blanks in it, any person only to accept one part, otherwise if different accepted in possession of it has privid facie authority to fill them parts get into the hands of different holders, he may be up, and if the instrument when complete gets into the liable to pay the bill twice (§ 71). Foreign bills circulathands of a holder in due course the presumption becomes ing through different countries have given rise to many absolute. As between the immediate parties the trans- intricate questions of law. But the subject is perhaps one action may amount to forgery, but the holder in due of diminishing importance, as in many trades the system course is protected (§ 20). of “ cable transfers ” is superseding the use of bills of exDishonour.—The holder of a bill has special duties change. which he must fulfil in order to preserve his rights against A cheque “is a bill of exchange drawn on a banker the drawers and indorsers. They are not absolute duties; payable on demand” (§ 73). For the most part the rules they are duties to use reasonable diligence. When a bill of law applicable to bills payable on demand cheques is payable after sight, presentment for acceptance is neces- apply in their entirety to cheques. But there sary in order to fix the maturity of the bill. Accordingly are certain peculiar rules relating to the latter which arise the bill must be presented for acceptance within a reason- from the fact that the relationship of banker and customer able time. When a bill is payable on demand it must be subsists between the drawer and drawee of a cheque. For presented for payment within a reasonable time. When it example, when a person has an account at a bank he is, as is payable at a future time it must be presented on the an inference of law, entitled to draw on it by means of day that it is due. If the bill is dishonoured the holder cheques. A right to overdraw can, of course, only arise must notify promptly the fact of dishonour to any drawer from agreement. The drawer of a cheque is not absolutely and indorser he wishes to charge. If, for example, the discharged by the holder’s omission to present it for payholder only gives notice of dishonour to the last indorser, ment within a reasonable time. He is only discharged to he could not sue the drawer unless the last indorser or the extent of any actual damage he may have suffered S. II. — 32
