it was abolished for any part of Canada or Newfoundland and § 136 reduced to two and a half per cent. for other countries. See Foster v. Bowes, 2 U. C. P. R. 256 (1857); Bank of Montreal v. Harrison, 4 U. C. P. R. 331 (1868).

ferrer

137. Where the holder of a bill payable to Transbearer negotiates it by delivery without endorsing by it, he is called a transferrer by delivery.'

delivery.

of.

2. A transferrer by delivery is not liable on the Liability instrument. 53 V., c. 33, s. 58 (1, 2). Imp. Act, ibid.

A bill payable to bearer is one which is expressed to be so payable, or on which the only or last endorsement is in blank sec. 21 (3). The holder of such a bill is the person in possession of it whether as owner or otherwise: sec. 2 (d). It is negotiated when it is transferred from such holder to another in such a manner as to constitute the transferee the holder: sec. 60. If he endorses it he incurs the liabilities of an endorser; but the endorsement is no part of the negotiation, it precedes it.

A transferrer by delivery is no party to the bill, and only those who are parties to it are liable on the instrument.

No person is liable as drawer, endorser or acceptor of a bill who has not signed it as such: sec. 131. See Ex parte Roberts, 2 Cox, 171 (1789); Bank of England v. Newman, 1 Ld. Raym. 442 (1700); Fenn v. Harrison, 3 T. R. 757 (1790).

eration.

The transferrer by delivery, although not liable on the On considinstrument itself, may in certain cases, in the event of its dishonour, be liable on the consideration for which the bill has been transferred: Merchants' Bank v. Whidden, 19 S. C. Can. 53 (1891). This is the case if the bill was given for an antecedent debt: Mitchell v. Holland, 16 S. C. Can. 687 (1889); Ward v. Evans, 2 Ld. Raym. 930 (1703); Camidge v. Allenby, 6 B. & C. 382 (1827); Guardians of Lichfield v. Greene, 1 H. & N. 884 (1857). Or if the delivery was not intended to operate a full and final discharge of the liability of the transferrer: Van Wart v. Woolley, 3 B. & C. 446 (1824).

$ 137

Transferrer by delivery.

Warranty by.

Genuineness.

Right to transfer.

Bona

Fides.

The transferee, in order to hold the transferrer liable, must act with reasonable diligence in seeking to obtain payment, and in giving notice of dishonour or repudiating the transaction: Conn v. Merchants' Bank, 30 U. C. C. P. 380 (1879); Rogers v. Langford, 3 Tyr. 654 (1833); Moule v. Brown, 4 Bing. N. C. 266 (1838); Robson v. Oliver, 10 Q. B. 704 (1847).

Where a person changes bank notes or cashes a cheque payable to bearer to oblige the holder, he can recover back the money if the bank has stopped payment or if the cheque is dishonoured, provided he acts with diligence: Conn v. Merchants' Bank, supra; Turner v. Stones, 7 Jur. 745 (1843); Timmins v. Gibbins, 18 Q. B. 722 (1852); Woodland v. Fear, 7 E. & B. 519 (1857).

Where bill brokers got bills discounted at their banker's for the drawer and acceptor, and made themselves liable to the banker by a separate document but did not indorse the bills, they were, on payment of the bills, held entitled to rank on the estate of the acceptor as if they had actually indorsed the bills: Ex parte Bishop, 15 Ch. D. 400 (1880).

138. A transferrer by delivery who negotiates a bill thereby warrants to his immediate transferee, being a holder for value,

(a) that the bill is what it purports to be; (b) that he has a right to transfer it; and, (c) that at the time of transfer he is not aware of any fact which renders it valueless. 53 V., c. 33, s. 58 (3). Imp. Act, ibid.

Subject to the conditions mentioned under the preceding section, these three warranties appear to comprise all that were recognized in England or Canada before their respective Acts. In some of the United States such a transferrer is held also to warrant the solvency of the maker at the time of the transfer: Roberts v. Fisher, 43 N. Y. 159 (1870); Wainwright v. Webster, 11 Vt. 576 (1839); Westfall v. Braley, 10 Ohio St. 188 (1859); while in others the English

rule is followed: Young v. Adams, 6 Mass. 182 (1810); § 138 Milliken v. Chapman, 75 Me. 306 (1883). Warranty

As appears from some of the illustrations below, the by. word "valueless need not be taken in a strictly literal

sense.

ILLUSTRATIONS.

1. Defendant indorsed, without recourse, a cheque on a N. Y. bank, and delivered it to plaintiff for collection. The proceeds were paid to him. It was claimed that the indorsement of the payee was forged and plaintiff repaid the N. Y. bank. Held, that if the indorsement was forged defendant was liable: Bank of Ottawa v. Harty, 12 O. L. R. 218 (1906).

2. A transferrer by delivery for value impliedly warrants that the maker is not insolvent to his knowledge: Lewis v. Jeffery, M. L. R. 7 Q. B. 141 (1875). See Fenn v. Harrison, 3 T. R. 759 (1790); Delaware Bank v. Jarvis, 20 N. Y. 228 (1859); Bridge v. Batchelder, 9 Allen (Mass.) 394 (1864).

3. The transferrer of an unindorsed note represented it to be as good as gold when the parties were insolvent to his knowledge. He was held liable for the amount: Miller v. Daudelin, 24 L. C. J. 208 (1879).

4. A vendor of a bill impliedly warrants that it is of the kind and description that it purports on its face to be: Gompertz v. Bartlett, 2 E. & B. 849 (1853).

5. C. discounts with D. a bill payable to bearer without indorsing it, which, unknown to C., had been fraudulently altered in amount by a previous holder. D. can recover from C. the money he paid Jones v. Ryde, 5 Taunt. 488 (1814); Burchfield v. Moore, 3 E. & B. 683 (1854); Bell v. Dagg. 60 N. Y. 530 (1875).

6. A bill broker discounts with a bank a bill indorsed in blank by the payee. The indorser absconds and the signatures of the drawer and acceptor turn out to be forgeries. The bank can recover from the broker the money it paid: Fuller v. Smith, R. & M. 49 (1824).

7. An agent gets a bank to discount a bill drawn and indorsed in blank by his principal, and then pays over the money to his principal. The signature of the acceptor was a forgery, but the agent did not know it. The drawer fails. The bank cannot recover from the agent: Ex parte Bird, 4 De G. & Sm. 273 (1851).

8. The bona fide holder of a bill purporting to be drawn by A., accepted by B., and indorsed in blank by C., discounts it with a banker. It turns out that the signatures of A. and B. were forgeries, and that C., whose indorsement was genuine, is insolvent. The banker can recover from the holder the money he paid: Gurney v. Womersley, 4 E. & B. 139 (1854); Allen v. Clark, 49 Vt. 390 (1877).

138

9. When the tranferee discovers the defect in the bill, he must repudiate the transaction with reasonable diligence: Pooley v. Brown, 11 C. B. N. S. 566 (1862).

DISCHARGE OF BILL.

Sections 139 to 146 inclusive, treat of the circumstances under which a bill is discharged. These are, payment by the acceptor, his becoming the holder, his being released, or the bill being cancelled or materially altered.

"Discharge is a term used to denote either the end of the life of the instrument or the release of a party to the instrument from his liability in respect of it. These divergent meanings require to be carefully distinguished. An instrument to which there are several parties is in reality not one contract, but a series of contracts gathered round the principal contract, which is that between the acceptor (or maker) and the party who is the holder of the instrument at maturity. Completion of the principal contract discharges the instrument and the subsidiary contracts also, but completion or dissolution of the subsidiary contracts does not have this effect; it merely releases the parties liable in respect of such subsidiary contracts." Halsbury's Laws of England, vol. 2, p. 549.

Section 142 (2) treats of the release of a party to a bill from his liability thereon, without the bill itself being discharged. Section 96 had provided for the discharge of a drawer or endorser to whom notice of dishonour was not given.

Besides the foregoing, the liability of a party to a bill may be terminated by the other means by which a debt may be extinguished. In the Province of Quebec an obligation to pay a sum of money may become extinct by payment, by novation, by release, by compensation, by confusion, by prescription, and by some other special causes: C. C. 1138. In the other provinces a bill may be satisfied in several ways, and may be discharged in whole or in part by set-off. In connection with the following sections under this heading these various subjects will be briefly noticed, as will also the release of a surety by the holder's dealings with the principal.

139. A bill is discharged by payment in due § 139 course by or on behalf of the drawee or acceptor. Payment.

course.

2. Payment in due course means payment made Payment at or after the maturity of the bill to the holder in due thereof in good faith and without notice that his title to the bill is defective. 53 V., c. 33, s. 59 (1). Imp. Act, ibid.

Payment is not defined in the Act. A bill is for a sum At or after maturity. certain in money, but it may be satisfied at or after maturity, in any way in which any other contract to pay money may be satisfied; and also as by the holder renouncing his rights against the acceptor at or after maturity even without consideration sec. 142; or by cancellation: sec. 143, in a manner which would not be sufficient in the case of ordinary contracts. "By payment is meant the discharge of a contract to pay money, by giving to the party entitled to receive it the amount agreed to be paid by one of the parties who entered into the agreement. Whether the transaction is a purchase or a payment, is a question to be resolved according to the intention of the parties, and looking to the substance of the matter rather than its form. Credit given by the drawee of a bill or by a party to a bill or note, who is liable for its payment to the holder at his request, is equivalent to payment. Payment of a debt is not necessarily a payment of money; but that is payment which the parties contract shall be accepted as payment, or which the law recognizes as such": 2 Daniel, § 1221.

Payment is what the holder accepts or recognizes as such, or what the law in force in the province where it is to be made or the Act declares to be sufficient to extinguish liability on the bill.

If the drawee or acceptor pays a bill before maturity, it Before is not thereby discharged; he may negotiate it. If the bill maturity. is payable to bearer or endorsed in blank, he may pay to the bearer; if endorsed in full, he may pay to the endorsee or to his order. Payment is in good faith if made honestly; mere negligence is not enough to vitiate it: sec. 3. As to what may render the title of the holder of a bill defective, see section. 56 (2).

M'L.B.E.A.-22