$125

Protest
Forms.

When notice of protest shall be given.

The forms in the schedule to the Act are copied without change from Schedule B to R. S. C. (1886) c. 123, where they were applicable to the Province of Quebec alone, having been inserted there from the schedules to chapter 64 of the Consolidated Statutes of Lower Canada.

It will be observed that even the words "protested in duplicate" have been retained. In Quebec it was formerly compulsory to make out the protest in duplicate and to copy the bill or note in the protest. Neither of these is required by the present Act, so that these words are now inappropriate.

Form J also provides for an attesting witness and the seal of the justice of the peace, although neither of these is required by the Act. As a matter of prudence it might be well to have a witness sign and to affix the seal in such a case, although the use of the forms is not imperative, and immaterial variations would not vitiate them: R. S. C. c. 1, s. 31 (d).

It is a recognized rule in the construction of statutes that their operation will not be restrained by any reference to the words of a form given for convenience sake in a schedule; and if the enacting part and the schedule do not correspond, the latter must yield to the former: Re Baines, 1 Cr. & P. 31 (1840); Dean v. Green, 8 P. D. at pp. 89, 90 (1882).

126. Notice of the protest of any bill payable in Canada shall be sufficiently given and shall be sufficient and deemed to have been duly given and served, if given during the day on which protest has been made or on the next following juridical or business day, to the same parties and in the same manner and addressed in the same way as is provided by this Part for notice of dishonour. 53 V., c. 33, s. 49.

Protest must be made or noted on the day of the dishonour of a bill: sec. 119.

As to the time within which notice of protest must be given the Act adopted the rule formerly in force in Ontario:

R. S. C. (1886), c. 123, s. 23. In Quebec the notice might § 126 be given within three days after protest: C. C. Art. 2330.

Notice must be given to the drawer and endorsers: sec. 96; and in the case of death, to their personal representatives: sec. 97 (c).

Notice may be given them personally or to their agent in that behalf: sec. 98; or through the post office: sec. 103.

LIABILITIES OF PARTIES.

Sections 127 to 138, inclusive, treat of the liability of the several parties to a bill-the drawee, the acceptor, the drawer, the endorser-also of a stranger who puts his name upon it, and of a transferrer by delivery. The measure of damages against those who are parties to a dishonoured bill is also declared in section 134.

assign

ment.

127. A bill, of itself, does not operate as an as- Equitable signment of funds in the hands of the drawee available for the payment thereof, and the drawee of a bill who does not accept as required by this Act is not liable on the instrument. 53 V., c. 33, 8. 53. Imp. Act, ibid.

Scotland.

Section 53 of the Imperial Act, from which the fore-Law of going is taken, provides that it shall not apply to Scotland, and the following sub-section is added:-" (2) In Scotland, where the drawee of a bill has in his hands funds available for the payment thereof, the bill operates as an assignment of the sum for which it is drawn in favor of the holder from the time when the bill is presented to the drawee." The law of France is similar to that of Scotland: Nouguier, §§ 392,

431.

An order to pay out of a particular fund is not a bill of exchange, not being unconditional: sec. 17, s.s. 3. It would not therefore come within the provisions of the present Act, or within the jurisdiction of the Parliament of Canada; but would derive its validity and effect, if any, from the law of the particular province as to the transfer of a debt or chose in action: Lane v. Dungannon, 22 O. R. 264 (1892).

$127

Bill not an assign

ment.

The drawee of an unaccepted bill is not liable to the payee or other holder for want of privity. Nor is he liable to the drawer "on the instrument." It will be observed that the section says that a bill does not "of itself " operate as an assignment of funds in the hands of the drawee. This, however, may be effected by an agreement outside of the bill: Robey v. Ollier, L. R. 7 Ch. 695 (1872); Ranken v. Alfaro, 5 Ch. D. 786 (1877). In such a case the drawee will be liable for the damages that are the reasonable and natural consequence of his breach of contract: Prehn v. Royal Bank of Liverpool, L. R. 5 Ex. 92 (1870).

has long been recogGriffin v. Weatherby, Du Buisson, L. R. 18

The rule laid down in this section nized in England as to ordinary bills: L. R. 3 Q. B. 753 (1868); Shand v. Eq. 283 (1874); even in case of a bill accepted payable at a banker's: Yates v. Bell, 3 B. & Ald. 643 (1820); Moore v. Bushell, 27 L. J. Ex. 3 (1857); Hill v. Royds, L. R. 8 Eq. 290 (1869). Also in Ontario: Lamb v. Sutherland, 37 U. C. Q. B. 143 (1875); Hall v. Prittie, 17 Ont. A. R. 306 (1890) and in the United States: Carr v. Nat. Bank, 107 Mass. 45 (1871); Bank of Commerce v. Bogy, 44 Mo. 15 (1869); First Nat. Bank v. Dubuque, 52 Iowa, 378 (1879).

Cheque It was formerly considered in England that a cheque and equiwas in the nature of an equitable assignment of funds in the table assignment. hands of the banker: Keene v. Beard, 8 C. B. N. S. at p. 381 (1860). But it was well settled before the Act of 1882, that a cheque was not an equitable assignment, but a bill of exchange drawn upon a banker, that there was no privity between the banker and the holder of the cheque, and the latter had no action, even if there were funds: Hopkinson v. Forster, L. R. 19 Eq. 74 (1874); Schroeder v. Central Bank, 34 L. T. N. S. 735 (1876). It was also held in Ontario that an unaccepted cheque was not an equitable assignment, and the holder had no action against the bank: Caldwell v. Merchants' Bank, 26 U. C. C. P. 294 (1876). In Quebec, however, it was held that a cheque was a transfer of so much of the funds of the drawer in the bank and gave the holder a right of action Marler v. Molsons Bank, 23 L. C. J. 293 (1879); but not so now: Silverstone v. Bank of Hochelaga, 21 C. L. T. 309 (1901). The general rule in the United States is

similar to that of England, and an action cannot be main- § 127 tained against a bank by the holder of an unaccepted cheque: Drawee Fourth Street Bank v. Yardley, 165 U. S. 634 (1897). In not liable. several of the States, however, the holder was allowed to sue on an unaccepted cheque;-in Louisiana: Gordon v. Mulcher, 34 La. Ann. 608 (1882);-in Illinois: Union Nat. Bank v. Oceana Co. Bank, 80 Ill. 212 (1875); Springfield Ins. Co. v. Peck, 102 Ill. 265 (1882); in Missouri: Senter v. Continental Bank, 7 Mo. App. 532 (1879); in Kentucky: Lester v. Given, 8 Bush (Ky.), 358 (1871);-and in South Carolina: Fogarties v. State Bank, 12 Richardson, 518 (1860) ;* Simmons Hardware Co. v. Bank, 41 S. C. 177 (1893). In those States which have adopted the Negotiable Instruments Law, the English rule applies, as section 321 defines a cheque as a bill of exchange drawn on a bank, payable on demand; and section 325 provides that it shall not operate as an assignment of the funds of the drawer in the bank, and that the bank shall not be liable to the holder, unless or until it accepts or certifies the cheque.

a bill.

Since the coming into force of the present Act, the Cheque English and Ontario rule prevails throughout Canada, as section 165 of the Act provides that "a cheque is a bill of exchange drawn on a bank," and the present section applies to cheques as well as to other bills: Re Commercial Bank, 10 Man. 171 (1894).

Letter of

A letter of credit is similar in this respect to a bill of exchange: Morgan v. Larivière, L. R. 7 H. L. 432 (1875); credit. British Linen Co. v. Caledonian Ins. Co., 4 Macq. H. L. 109 n. (1861); Union Bank v. Cole, 47 L. J. C. P. 109 (1878). Where, however, an open letter of credit contained a provision that parties negotiating bills under it were requested to indorse particulars on the back of it, and the payee of a bill drawn under it had the particulars duly indorsed, he was allowed to rank on the insolvent estate of the bank issuing the letter: Re Agra Bank, L. R. 2 Ch. 391 (1867). See also Ex parte Stephens, L. R. 3 Ch. 756 (1868); Citizens' Bank v. New Orleans Bank, L. R. 6 H. L. 352 (1873). Bills of exchange drawn under a letter of credit. are not affected by a private arrangement between the parties not appearing on the face of the instrument: Merchants Bank v. Winter, Nfld. Reports, 1898, p. 30.

§ 128

ment by

accept

ance.

Promise to accept.

Estoppel.

128. The acceptor of a bill, by accepting it, engages that he will pay it according to the tenor of his acceptance. 53 V., c. 33, s. 54 (1). Imp. Act, ibid.

See section 36 as to the form of a valid acceptance.

An acceptance may be either general or qualified: sec. 38. In the former case the undertaking of the acceptor is that he will pay the bill according to its terms; in the latter that he will pay it as modified by the terms of his qualified acceptance. By his acceptance he becomes the primary debtor, the drawer and indorsers being only secondarily or conditionally liable: Rowe v. Young, 2 Bligh H. L. 467 (1820); Philpot v. Briant, 4 Bing. 720 (1828); Jones v. Broadhurst, 9 C. B. 181 (1850); Smith v. Vertue, 9 C. B. N. S. 214 (1860); Cox v. National Bank, 100 U. S. (10 Otto) 712 (1879); C. C. Art. 2294.

The position of the drawer and indorsers after dishonour of a bill is analogous in several respects to that of a surety: Cook v. Lister, 13 C. B. N. S. 543 (1863); Rouquette v. Overmann, L. R. 10 Q. B. 536 (1875); Duncan v. North & S. W. Bank, 6 App. Cas. 19 (1880).

See Harmer v. Steele, 4 Ex. Ch. 13 (1849), on the relation of several joint acceptors who are not partners.

Drawees who have agreed to accept, or who have knowingly accepted the benefit of funds obtained on a representation that they would accept, have been held liable: Torrance v. Bank of British North America, 15 L. C. J. 169; 17 L. C. J. 185; L. R. 5 P. C. 246 (1873); Molsons Bank v. Seymour, 21 L. C. J. 82; in appeal, Dunspaugh v. Molsons Bank, 23 L. C. J. 57 (1878); Bank of Montreal v. Thomas, 16 0. R. 503 (1888).

See section 52 as to an acceptor signing as an agent or in a representative character.

129. The acceptor of a bill by accepting it is precluded from denying to a holder in due course,—