CHAPTER subsequent transferee cannot prove for the value in the event of the first transferor's bankruptcy (x). XII. Effect of fraud. RIGHTS OF Former effect in the transferee. But, in all cases, if notes or bills are transferred as valid, when the transferor knows they are good for nothing, the suppression of the truth is a fraud, and he is liable. "If," continues Mr. Justice Bayley, in the case before referred to, "A. could show fraud or knowledge of the maker's insolvency in the payer, then it would be wholly immaterial whether the notes were taken at the time of sale or afterwards" (y). Sixthly, as to the rights of transferee by delivery. Bills and notes payable to bearer circulate as money, and are considered as such. The bona fide possessor is, therefore, the true owner. For it is essential to the currency of money that property and possession should be inseparable (2). We have already seen that the indorsee of a bill payable to order, and not made payable to bearer by a blank indorsement, has no right to the bill, either so as to retain it against the real owner, or to sue any party upon it, unless the indorser had a right to indorse (a). Whereas, if the cheque, bill, or note, be originally made or have since duly become payable to bearer, the title of the holder, both as against a former owner on the one hand, and against the maker, acceptor, or indorser on the other, is not affected by any infirmity in the title of the transferor, provided the holder took it bonût fide for value. It was formerly considered that the transferee's title would of negligence be affected by want of due caution on his part, and that he would be liable in trover to the real owner, and unable to enforce payment against the parties to the instrument, if he were guilty of negligence in taking it. Thus, where a banker, in a small market town, changed a 5001. Bank of England note for a stranger, without any further inquiry than merely asking his name, he was held liable, in trover, to a party from whom the note had been unlawfully obtained; Best, C. J., observing, "The party's caution should increase with the amount of the note which he is called upon to change (b). A man may change a 207. note () Gurney v. Womersley, 4 E. & B. 133. (y) Camidge v. Allenby, 6 B. & C. 373; 9 D. & R. 391; 30 R. R. 358; Fenn v. Harrison, 3 T. R. 759. (-) See Foster v. Green, 30 L. J.. Ex. 263. (a) Mead v. Young, 4 T. R. 28: 2 R. R. 314: unless there be an estoppel. Code, s. 24. (b) Snow v. Peacock, 2 C. & P. 221; 3 Bing. 406; and see Gill v. Cubitt, 3 B. & C. 466 ; 5 D. & R. 324: Egan v. Threlfall, 5 D. & R. 326. XII. without asking a single question, but would that be right as CHAPTER to one of several thousands? More caution is required in the case of a discounter than of a payer" (c). 66 or fraud. But it is now settled, that if a man take honestly an Present effect instrument made or become payable to bearer, he has a good of negligence title to it, with whatever degree of negligence he may have acted, unless his gross negligence induce the jury to find fraud. "I believe," says Lord Denman, "we are all of opinion that gross negligence only would not be a sufficient answer by the defendant where the plaintiff has given consideration for the bill. Gross negligence may be evidence of mala fides, but it is not the same thing. We have shaken off the last remnant of the contrary doctrine" (d). If the party presenting a bill or note payable to bearer be the mere agent of another, the agent's title is infected with the infirmity of his principal's title, although the principal is in the agent's debt; and the agent consequently cannot enforce payment of the maker (e). It makes no difference that the bill or note is only pledged, and not absolutely transferred; the pawnee acquires a property in it (f), and is not liable in trover, to the real owner, as in the case of goods improperly pledged (g). Exchequer bills, which are payable to bearer before the blank is filled up (h), bonds of foreign princes and states (c) Quare, whether there is any real difference between them. (d) Goodman v. Harvey, 4 Ad. & El. 870; 6 N. & M. 372; Uther v. Rich, 10 Ad. & E. 784; 2 P. & D. 579. In the case of Goodman v. Harrey, the bill bore on it, when discounted, the notarial mark of non-acceptance. To use the words of the Lord Chief Justice, "the plaintiff received the bill with a death wound apparent on it." See also Backhouse v. Harrison, 5 B. & Ad. 1098; 3 N. & M. 188; Crook v. Jadis, B. & Ad. 909; 3 N. & L. 257; Foster v. Pearson, 1 C., M. & R. 855; 5 Tyr. 255; Willis v. Bank of England, 4 A. & E. 21; Raphael v. Bank of England, 17 C. B. 161; Carlon v. Ireland, 5 E. & B. 765 ; Bank of Bengal v. Fagan, 7 Moore, B.B.E. P. C. C. 72; and supra pp. 43 (e) Solomons v. Bank of Eng- (f) Barber v. Richards, 20 L. J., Exch. 135; Code, s. 27 (3). (g) Collins v. Martin, 1 Bos. & Pul. 648; 2 Esp. 520; 4 R. R. 752. See as to lien of banker, post. (h) Wookey v. Pole, 4 B. & Ald. 1; 22 R. R. 594, see as to dividend warrants, Partridge v. Bank of England, 13 L. J., Q. B. 281, and 9 Q. B. 424, in error; and see further, as to Exchequer bills, Barnett v. Brandao, 6 M. & G. 630; Brandao v. Barnett, 3 C. B. 519. In the state of Georgia it has been held, that any bond payable to 13 XII. CHAPTER payable to bearer (i), and East India bonds (k), resemble money and bills of exchange payable to bearer, in the necessary union of possession and property. acquisition confers title (/). Metallic tokens. TRANSFER Before bill filled up. Honest A metallic token, like an I O U, should seem at common law to be only evidence of a debt. Though intended for circulation it can therefore at common law give no right of action to a transferee. But the issuer of tokens made of mixed metals, compounded partly of gold or silver, was formerly liable to the holder (m). The issuer of a token, made wholly or in part of copper, is liable only to the original taker (n). The issuing of tokens made partly of gold or silver was restrained by the 53 Geo. 3, c. 114 (now repealed by the 24 & 25 Vict. c. 101), and the issuing of tokens made wholly or partly of copper by the 57 Geo. 3, c. 46. Tokens, into the composition of which neither the precious metals nor copper enter, seem left to the common law. Wages of artificers, however, cannot in certain trades, even by consent, be paid in tokens (0). Seventhly, as to transfer under peculiar circumstances. The An indorsement may be made even before the bill or note itself, and so render the indorser liable to subsequent parties to any amount warranted by the stamp. plaintiffs were bankers, with whom one G. had dealings. They refused to let him have more money, unless he procured them the indorsement of a third person. G. accordingly induced the defendant to sign his name across the back of four blank forms of promissory notes. G. then filled them up, and delivered them to the plaintiffs, who knew the notes were blank at the time of the indorsement. The notes were not paid by G., the maker, and the plaintiffs called on the defendant as indorser. Lord Mansfield : "Nothing is so clear, as that the indorsement on a blank bearer is a negotiable instrument. (i) Gorgier v. Mierille, 3 B. & (k) 51 Geo. 3, c. 64. (1) The embezzling of bills by agents, or pledging them beyond their lien, is a misdemeanor punishable by penal servitude or imprisonment, 24 & 25 Vict. c. 96, s. 75. (m) 53 Geo. 3, c. 114, s. 3. As to medals resembling coins, see 46 & 47 Vict. c. 45, s. 2. () 57 Geo. 3, c. 46. (0) 1 & 2 Will. 4, c. 37. note is a letter of credit for an indefinite sum. The defendant said, 'Trust G. to any amount, and I will be his security.' It does not lie in his mouth to say the indorsements were not regular" (p). CHAPTER An indorsement may be made either before or after After refusal acceptance. If a bill be indorsed after refusal to accept, to accept, where the and notice thereof to the indorsee, or after it is due, these transferee are circumstances which may reasonably excite suspicions has notice of as to the liability or solvency of the antecedent parties. the dishonour. An indorsee, therefore, of a bill dishonoured or after due, with notice thereof, has not all the equity of an indorsee for value in the ordinary course of negotiation. He is held to take the bill on the credit of his indorser, and has no superior title against the other parties (q). Drawer requested defendant to indorse two bills for his, the drawer's, accommodation. He accordingly drew two in favour of the defendant, which defendant indorsed and gave up to him. These bills the drawer then gave to A., and A. signed an agreement with defendant, that if one of the bills were paid, the defendant should be exonerated from the other. One of them the defendant accordingly did pay. The other was presented for acceptance and dishonoured; it was, after this, indorsed by A. to the plaintiffs, with notice of the dishonour. On payment being refused, plaintiff sued defendant. Held, that the plaintiffs, having taken the bill after notice of dishonour, took the title of their indorser, and that, as the agreement would have been a defence to an action at the suit of A., it was a defence also against the plaintiffs (). But if the indorsee had no notice of the dishonour, he is Where the not prejudiced by it. Payee presented a bill for acceptance, (P) Code, ss. 20 and 56 ; Russell v. Langstaffe, 2 Doug. 514; and this seems to be the law in America, though the amount of liability is not there limited by any stamp laws: Byles on Bills, 6th American edition, pp. 260 and 292; Usher v. Dauncy, 4 Camp. 97; 15 R. R. 729. A bill may be indorsed before the day of its date: Pasmore v. North, 13 East, 517; 12 R. R. 420; and see Snaith v. Mingay, 1 M. & Sel. 87; Cruchley v. Clarence, 2 M. & Sel. 90; 14 R. R. 596; and see 17 Geo. 3, c. 30, s. 1 ; and Schultz v. Astley, 2 Bing. N. C. 544; 2 Scott, 815; 1 Hodges, 525; Carter v. White, L. R., 20 (1) Code, s. 36. But as to a (r) Crossley v. Ham, 13 East, 498; 12 R. R. 410. transferee has no notice. CHAPTER XII. After due. which was refused. He neglected to advise the drawer, and thereby discharged the drawer as between the drawer and himself. He then indorsed the bill without informing his indorsee of the dishonour. Held, that the discharge to the drawer extended only to an action at the suit of the party guilty of the neglect, and that the indorsee having had no notice of the dishonour, the same defence was not available against him as against his indorser (s). "After a bill or note is due " (t), says Lord Ellenborough, "it comes disgraced to the indorsee, and it is his duty to make inquiries concerning it. If he take it, though he give a full consideration for it, he takes it on the credit of the indorser, and subject to all the (u) equities with which it may be encumbered." Thus, where the defendant made a promissory note for the accommodation of the payee, and the payee indorsed it, overdue to A., and A. indorsed it to the plaintiff, it was formerly held that, as the absence of consideration would have been a good defence against the payee, it was also available both against A. and the plaintiff (x). (8) Code, s. 36 (5). O'Keefe v. Dunn, 6 Taunt. 305: 1 Marsh. 613; 16 R. R. 623; affirmed in the K. B., 5 M. & S. 282; and see Whitehead v. Walker, 11 L. J., Exch. 168; 9 M. & W. 506; 10 M. & W. 696; and Bartlett v. Benson, 14 M. & W. 733 ; 3 D. & L. 274; 15 L. J., Exch. 23. (t) Tinson v. Francis, 1 Camp. 19; 10 R. R. 617. It is apprehended that wherever it is alleged that a bill was indorsed when overdue, or under any other peculiar circumstances, it lies on the party averring the fact to prove it on the general principle, Ei incumbit probatio qui dicit." (u) In Sturtevant v. Ford, 4 M. & G. 101, Cresswell, J., says, Perhaps the better expression would be, that he takes the bill subject to all its equities." In equity it has been held that where an overdue bill of exchange was bought with stolen money, the claim of the person with whose money it had been bought was an equity attaching to the bill. In re European Bank, L. R., 5 Chan. Ap. 359. Quære, as to there not having been here some ground for constructive notice. Where an agent without authority negotiates a bill overdue, the transferee is affected with the infirmity in the agent's title, and is liable to refund the money to the principal, and so, too, if the bill be renewed. Lee v. Zagury, 8 Taunt. 114; 19 R. R. 476. (x) Tinson v. Francis, 1 Camp. 19; 10 R. R. 617; Brown v. Davies, 3 T. R. 80; 7 T. R. 429 ; sed vide Charles v. Marsden, 1 Taunt. 224; Atwood v. Crowdie, 1 Stark. N. P. 483; Bayley, 6th ed. 161; Chitty, 9th ed. 218; Roscoe, 386. Quare, whether this were at any time the law, supposing a bill to have been accepted after it became due. See Stein v. Yglesias, 1 C., M. & R. 565; 3 Dowl. 252; 1 Gale, 98. So stood the authorities till the Court of C. P.. in Sturtevant v. Ford, and the Court of Q. B., in Lazarus v. Cowie, 3 Q. B. 459, and perhaps the Court of Exch., in Stein v. Yglesias, ante, upheld the authority of Charles v. Marsden, and it should now seem that an original absence of consideration in the case of an accommodation bill, is not one of those |