(a) the existence of the drawer, the genuineness § 129 of his signature, and his capacity and author- Genuineity to draw the bill; 53 V., c. 33, s. 54 (6 1). authority. Imp. Act, s. 54 (2 a).

Precluded here is synonymous with estopped. When it was decided to extend the Imperial Act to Scotland, the present term was used, as estoppel " is not a term of Scotch law.

66

ness and

Section 49 provides that, "subject to the provisions of Forged Signature. the Act," a forged or unauthorized signature is wholly inoperative. The present is one of the provisions which modify that section. This has long been recognized as law: Jones v. Goudie, 2 Rev. de Lég. 334 (1820); McKenzie v. Fraser, ibid. 30 (1825); Ryan v. Bank of Montreal, 12 O. R. 39 (1886); 14 Ont. A. R. 533 (1887); Jenys v. Fawler, 2 Str. 946 (1732); Cooper v. Meyer, 10 B. & C. 468 (1830); Sanderson v. Collman, 4 M. & Gr. 209 (1842); Vagliano v. Bank of England, [1891] A. C. 107; Hoffman v. Bank of Milwaukee, 12 Wall. (U. S.) 193 (1870); Bank of U. S. v. Bank of Georgia, 10 Wheat. (U. S.) 333 (1825).

altered

If the bill be materially altered the acceptor is not pre- As to cluded from setting this up: Burchfield v. Moore, 3 E. & B. bill. 683 (1854); Young v. Grote, 4 Bing. 253 (1827); Marine Nat. Bank v. National City Bank, 59 N. Y. 67 (1874). But where a bank issued a draft for $25 on one of its branches without advice, and the holder raised it to $5,000 and deposited it in another bank which drew the money, and the forgery was discovered six days later, it was held that the bank which had paid could not recover back: Union Bank v. Ontario Bank, 3 L. N. 386; 24 L. C. J. 309 (1880).

Where the drawee of a bill or cheque instead of accepting it, pays it on presentment, and afterwards discovers that the signature of the drawer has been forged, he cannot recover from the holder who presented it in good faith, the amount so paid: Bank of Montreal v. The King, 38 S. C. Can. 258 (1907); Price v. Neal, 3 Burr. 1354 (1762).

$ 129 Capacity of drawer.

If bill indorsed before ac

(b) in the case of a bill payable to drawer's order, the then capacity of the drawer to endorse, but not the genuineness or validity of his endorsement; 53 V., c. 33, s. 54 (b 2). Imp. Act, s. 54 (2 6).

The first part of this sub-section follows from the preceding one, for if the drawer has capacity to draw a bill, he has also capacity to endorse. When he has accepted such a bill, the acceptor is precluded from setting up that the drawer was an infant, an insane person, a married woman (where this is a disability), or a corporation without power to contract by bill: Taylor v. Croker, 4 Esp. 187 (1803) (infant); Smith v. Marsack, 6 C. B. 486 (1848) (married woman); Stoutimore v. Clark, 70 Mo. 477 (1879) (corporation).

Where a bill is drawn by an agent he might have authority to draw but not to endorse. For illustrations of this, see Robinson v. Yarrow, 7 Taunt. 455 (1817); Garland v. Jacomb, L. R. 8 Ex. 216 (1873).

It was for some time a disputed point whether an acceptance admitted the genuineness and validity of the inceptance. dorsement if the bill was indorsed before acceptance: Robarts* v. Tucker, 16 Q. B. at p. 576 (1851); Ashpitel v. Bryan, 3 B. & S. 489 (1864). Before the Act it was, however, settled in Ontario that this did not preclude the acceptor: Ryan v. Bank of Montreal, 14 Ont. A. R. 533, (1887). Before the Act of 1882 it was held in England that when a bill is accepted in blank for the purpose of being negotiated, and is afterwards filled in with the name and signature of a person as drawer and indorser, the acceptor cannot, as against a bona fide indorsee for value, adduce evidence to show that either the drawing or indorsement is a forgery: London and S. W. Bank v. Wentworth, 5 Ex. D. 96 (1880). This was based upon the principle that where one of two innocent persons must suffer from the fraud of a third, the loss should be borne by him who enabled the third person to commit the fraud.

Payee and capacity.

(c) in the case of a bill payable to the order of a third person, the existence of the payee and his

then capacity to endorse, but not the genuineness § 129 or validity of his endorsement. 53 V., c. 33, s. 54 (3). Imp. Act, s. 54 (2c).

A plea by an acceptor, that subsequent to his acceptance As to the payee became insolvent and indorsed it to the plaintiff payee. without the knowledge of the assignee, held to be a good defence: Maclellan v. Davidson, 20 N. B. (4 P. & B.) 338 (1880).

As to forgery of the endorsement of the payee or want of authorization of his signature, see section 49 and the notes thereon. When the payee is fictitious or non-existing, the holder may treat the bill as payable to bearer: section 21. This is the law even when the acceptor is not aware that the payee is a fictitious person: Vagliano v. Bank of England, [1891] A. C. 107; Clutton v. Attenborough, [1897] A. C. 90; City Bank v. Rowan, 14 N. S. W. R. 126 (1893).

Where a bill is materially altered, the acceptor is not precluded by this section from setting this up.

See also the notes on the preceding clauses of this section.

130. The drawer of a bill, by drawing it,

Drawer.

acceptance and com

(a) engages that on due presentment it shall be Engages accepted and paid according to its tenor, and that a if it is dishonoured he will compensate the holder pensation. or any endorser who is compelled to pay it, if the requsite proceedings on dishonour are duly taken. 53 V., c. 33, s. 55 (1a). Imp. Act, ibid.

This is the ordinary undertaking of a drawer. By section 34 he may negative or limit his liability. The requisite proceedings on dishonour of an inland bill are set out in sections 96 to 103; of a foreign bill and of any bill dishonoured in the province of Quebec, in sections 112 to 126. These, or any of them, may be waived by the drawer: sec. 34 (b). For the compensation due by the drawer to the holder or endorser who pays, see sections 135 and 136.

When a bill is drawn, the drawer is in the position of a principal debtor, and the endorser in that of a surety. When

§ 130 it is accepted the acceptor becomes the principal debtor, and Liability the liability of the drawer and endorsers is conditional, until of parties. the bill is dishonoured. It is only an endorser "who is compelled to pay" the bill, that is, who is under legal liability to pay, that can claim to be compensated by the drawer. See Horne v. Rouquette, 3 Q. B. D. at p. 519 (1878).

Estoppel

or to

payee.

by signa

ment.

The acceptor, drawer and indorsers are jointly and severally liable to the holder of a bill for its acceptance and payment: Rouquette v. Overmann, L. R. 10 Q. B. at p. 537 (1875); C. C. Art. 2310; Code de Com. Art. 140.

If the drawer has not capacity or power to incur liability by bill, he is not liable; but other parties to the bill may be: sec. 48.

(b) is precluded from denying to a holder in due course the existence of the payee and his then capacity to endorse. 53 V., c. 33, s. 55 (16). Imp. Act, ibid.

This has long been the law: Collis v. Emett, 1 H. Bl. 313 (1790). Holder in due course is defined in section 56. Even to him the drawer may deny the genuineness or validity of the endorsement by or on behalf of the payee; to a claim by any other holder all defences are open to him, unless the payee be fictitious or non-existing.

Liability 131. No person is liable as drawer, endorser or ture. acceptor of a bill who has not signed it as such:Irregular Provided that when a person signs a bill otherwise endorse- than as a drawer or acceptor he thereby incurs the liabilities of an endorser to a holder in due course and is subject to all the provisions of this Act respecting endorsers. 53 V., c. 33, ss. 23 and 56. Imp. Act, ibid.

In the Act of 1890, as in the Imperial Act, the first clause of this section formed the first part of section 23, the remainder of that section now being section 132 of the present Act, and relating to a signature in a trade or assumed name or in the name of a firm. Section 56 of the Act of 1890 has become the proviso of the present section.

་་

"Person" here includes any body corporate and politic, § 131 or party, and the heirs, executors, administrators or other Person" legal representatives of such person: R. S. C. c. 1, s. 34 (20), defined. It is not necessary that the person charged should have signed with his own hand, it is sufficient if his name be signed by some other person by or under his authority: section 90; and in the case of a corporation that it be executed by the proper officers, or under the corporate seal, although the Act does not require the bill or note of a corporation to be under seal.

As to the personal liability of officers of corporations Officers. who purport to draw, endorse or accept on behalf of the corporation, see notes on section 52.

As to what is a sufficient signature to a bill see the notes on section 17, p. 49.

If the name of an agent appears on a bill only as agent or attorney of the principal whose name he signs either as drawer, endorser or acceptor, he cannot be held liable on the bill even although he has no authority whatever from the person whose name he uses as principal. Still more so if his own name does not appear at all. If the agent becomes a party to a bill in his own name, his undisclosed principal cannot be held liable on the bill although the agent was duly authorized: Beckham v. Drake, 9 M. & W. 92 (1841); Re Adansonia Co., 43 L. J. Ch. 731 (1874). As between the immediate parties he may nevertheless be liable on the consideration.

Agent.

Subject to the proviso in the latter part of the section, Capacity. the first part enacts that a person is only to be held liable as drawer, endorser or acceptor of a bill when he has signed it "as such." The capacity in which he has signed it, subject to the same proviso, may be determined by the terms. of the bill itself, by the place where the signature appears, by the circumstances under which the signature was affixed, as to which evidence may be taken: Macdonald v. Whitfield, 8 App. Cas. 733 (1883); Glenie v. Bruce Smith, [1907] 2 K. B. at p. 512; Steele v. McKinlay, 5 App. Cas. p. 784. A party cannot be an acceptor unless the bill is addressed to him. In the case of a note a person can only become a party as maker or endorser.