5. A bill is accepted for the accommodation of the drawer. He § 139 negotiates it, and at maturity takes it up. Subsequently he reissues it. The holder cannot sue the acceptor, for the bill was discharged when the drawer paid it: Cook v. Lister, 13 C. B. N. S. at p. 591 (1863). See also Lazarus v. Cowie, 3 Q. B. 459 (1842) ; Ralli v. Dennistoun, 6 Ex. 483 (1851); Parr v. Jewell, 16 C. B. at p. 709 (1855); Strong v. Foster, 17 C. B. at p. 222 (1855); Meakins v. Martin, Q. R. 8 S. C. 522 (1895).

140. Subject to the provisions aforesaid as to an Payment accommodation bill, when a bill is paid by the by drawer drawer or an endorser, it is not discharged; but, endorser.

or

(a) where a bill payable to, or to the order of, a Gives third party is paid by the drawer, the drawer rights. may enforce payment thereof against the acceptor, but may not re-issue the bill;

tion.

(b) where a bill is paid by an endorser, or where Second a bill payable to drawer's order is paid by the negotiadrawer, the party paying it is remitted to his former rights as regards the acceptor or antecedent parties, and he may, if he thinks fit, strike out his own and subsequent endorsements, and again negotiate the bill. 53 V., c. 33, s. 59 (2 a, b). Imp. Act, ibid.

The provisions to which this section is subject are those relating to accommodation bills in section 139 (3).

If the endorser, who has paid a bill, desires to negotiate the bill again, he must strike out his own and subsequent endorsements, and if endorsed to him in full he must reendorse it.

The present section contemplates payment at or after maturity; where a bill before maturity is negotiated back to the drawer or an endorser, he may re-issue it, but cannot enforce the bill against any intervening party to whom he was previously liable: sec. 73.

If several persons indorse a bill or note for the accommodation of the acceptor or maker, and one of them pays it, the whole circumstances attendant upon its making, issue

M'L.B.E. .-23

by drawer

or en

dorser.

§ 140 and transference, may be legitimately referred to for the purpose of ascertaining the true relation to each other of Payment the parties who put their signatures upon it, and reasonable inferences from these facts and circumstances are admitted to the effect of qualifying, altering, or even inverting the relative liabilities which the law merchant would otherwise assign to them. Where several directors mutually agreed to become joint sureties for the company, and in pursuance thereof indorsed notes made by the company, they were entitled and liable to equal contributions among themselves: Macdonald v. Whitfield, 8 App. Cas. 733 (1883).

ILLUSTRATIONS.

1. The indorser who pays a note at maturity may at once proceed against the prior parties who are liable to him: Latham v. Norton, 6 U. C. O. S. 82 (1841); McNab v. Wagstaff, 5 U. C. Q. B. 588 (1849).

2. The drawer drew a bill to his own order and specially indorsed it. After dishonor it came back into his hands; he struck out the special indorsement, and indorsed it to the plaintiff, who was held entitled to recover from the acceptor: Black v. Strickland, 3 O. R. 217 (1883); Callow v. Lawrence, 3 M. & S. 95 (1814); Hubbard v. Jackson, 4 Bing. 390 (1827).

3. An indorser who pays is not entitled to and does not need conventional subrogation against prior parties: Bove v. McDonald, 16 L. C. R. 191 (1865).

4. Payment of a bill by the drawer does not discharge the bill or free the acceptor: Goodall v. Exchange Bank, M. L. R. 3 Q. B. 430 (1887).

5. Where two persons indorse a note for the accommodation of the maker, and the last indorser pays it, he is entitled to recover only one-half the amount from the prior indorser: Vallée v. Talbot, Q. R. 1 S. C. 223 (1892).

6. An indorser who pays a note where there was neither protest nor waiver of protest has no recourse against prior indorsers: Savaria v. Paquette, Q. R. 20 S. C. 314 (1899).

66

7. The indorser of a bill writes to the drawer of a bill, promising to retire" it, and accordingly takes it up before maturity. It is not discharged: Elsam v. Denny, 15 C. B. at p. 94 (1854).

8. The drawer or indorser of a bill who pays, is a quasi-surety for the acceptor, and as such is entitled to the benefit of any securities deposited with the holder by the acceptor: Duncan v. N. & S. Wales Bank, 6 App. Cas. 1 (1880). The indorser of a promissory note has the same rights: Aga Ahmed Ispahany v. Crisp, 8 T. L. R. 132 (1891).

141. When an acceptor of a bill is or becomes § 141 the holder of it, at or after its maturity, in his own Acceptor right, the bill is discharged. 53 V., c. 33, s. 60. holding at Imp. Act, s. 61.

If the acceptor becomes the holder of the bill before its maturity it is not discharged, but he may re-issue and further negotiate it; but he is not entitled to enforce payment of it against any intervening party to whom he was previously liable: sec. 73. When a bill is discharged, all rights of action on it are extinguished; it ceases to be a bill.

maturity.

A bill not payable on demand is at maturity on the last When at maturity. day of grace: sec. 42. A bill payable on demand is at maturity immediately on its being issued: Edwards v. Walters, [1896] 2 Ch. 157; Re George, 44 Ch. D. 627 (1890).

At common law if the acceptor or maker became the administrator of the holder, the bill or note was not discharged; but if he became the executor of the holder it was discharged, though he had to account for the amount of it as assets: Freakley v. Fox, 9 B. & C. 130 (1829). The rule in Chancery, however, was that being appointed executor did. not operate as a discharge; and under the Judicature Act the equity rule prevailed. It never was a ground of discharge in Quebec.

The discharge of the bill frees all parties to it: Jenkins v. McKenzie, 6 U. C. Q. B. 544 (1849); Lowe v. Peskett, 16 C. B. 500 (1855).

If a bill, accepted by two or more joint acceptors, is held by one of them at or after maturity, it is discharged; but such acceptor does not thereby lose his recourse or right of contribution against his co-acceptors: Harmer v. Steele, 4 Ex. 1 (1819). See Neale v. Turton, 4 Bing. at p. 151 (1827).

A note is discharged when the holder at or after maturity upon payment of a part surrenders the note to the maker, although the latter promised at the time to pay the balance Schwartzman v. Post, 94 N. Y. App. Div. 474; 872 (1904).

§ 141

A note is discharged when it is surrendered to the maker after maturity in exchange for a renewal note, although the maker had altered the renewal note by striking out the name of one of the payees and substituting his own name: First National Bank v. Gridley, 112 N. Y. App. Div. 398 (1906). Confusion. The principle of this section is what is known in the civil law as "confusion." The law of Quebec on the subject is contained in the following Articles of the Civil Code:"1198. When the qualities of creditor and debtor are united in the same person, there arises a confusion which extinguishes the obligation.-1199. The confusion which takes place by the concurrence of the qualities of creditor and principal debtor in the same person avails the sureties." It only takes place when the person is both creditor and debtor personally, in his own right, or when he is both debtor and creditor in the same capacity or quality.

Construed

in England.

In His Own Right.-If the person who has accepted the bill in his own name, is, at maturity, the holder as agent, or in his capacity of executor, administrator, trustee, assignee, tutor, curator or the like, the bill would not be discharged. The converse would likewise be true. These words do not appear to have been construed in any Canadian case, but this has been held to be the meaning of the same words in the New York Negotiable Instruments Law, sec. 200 (5); Schwartzman v. Post, ante p. 355.

This section was considered by the English Court of Appeal in Nash v. De Freville [1900] 2 Q. B. 72. Defendant had given demand notes for value to his solicitor on condition that they were not to be negotiated. However, he negotiated them for value to plaintiffs, who became holders in due course. Defendant paid the notes to the solicitor, who subsequently obtained the notes from the plaintiffs by fraud and sent them to defendant. It was argued for defendant that he had become the holder of the notes "in his own right," and not in a representative capacity, and that they were consequently discharged. For the plaintiff, it was claimed that these words meant "when he becomes the holder as of right," and did not apply to a case where the notes were obtained from the holder by fraud. Defendant was held liable on the principle "That wherever one of two innocent persons must

suffer by the acts of a third, he who has enabled such third § 141 person to occasion the loss must sustain it." It was also put on the ground of estoppel, and that the notes were past due when returned to defendant, who then gave no value for them, and acquired no greater right in them than that of the solicitor who gave them to him.

In his own

Smith, L.J., added that plaintiff's counsel were right in their construction of section 61, that that section did not right. apply to the case, and the words "in his own right" do not mean in contradistinction to a representative capacity. Collins, L.J., also agreed with plaintiffs' counsel, and said the words meant something more than "not in a representative Meaning capacity." If not, and a thief stole a note and placed it in of. the possession of the maker at or after maturity, the note should ipso facto be satisfied; and this would be the result if the words bore the limited meaning suggested. He thought they must mean "having a right not subject to that of any else but his own-good against all the world." Romer, L.J., did not deal with this point.

There was no question of any representative capacity in that case, and all that was said on this point was obiter. The words of the Act might have the meaning first suggested above, and also bear the meaning suggested by Collins, L.J. His objection was merely to restricting them to the "limited meaning suggested."

In Quebec law the phrase in question is one in frequent use, and the natural and ordinary meaning attached to it, is that first suggested. It is also a circumstance worthy of mention that in the French version of the Act, as the equivalent, Parliament used the expression "de son propre chef," words whose ordinary meaning is the opposite of representative capacity.

It remains to be seen how the Canadian Courts will deal with the question when it arises.

Renounc

142. When the holder of a bill, at or after its maturity, absolutely and unconditionally renounces ing rights. his rights against the acceptor, the bill is discharged. 53 V., c. 33, s. 61 (1). Imp. Act, s. 62 (1).