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$37. He struck out all the special indorsements, and indorsed it -to plaintiff who sued the acceptor. Held, that he was entitled to recover: Black v. Strickland, 3 O. R. 217 (1883).
Rights of the holder.
3. A bill was paid after maturity by the drawer who waived protest and indorsed it. Held, that he was liable to the indorsee jointly and severally with the acceptor: Hovey v. Nolin, 18 R. L. 439 (1889).
4. As to a bill negotiated back to the drawer, see Bishop v. Hayward, 4 T. R. 470 (1791); Wilders v. Stevens, 15 M. & W. 212 (1846); Woodward v. Pell, L. R. 4 Q. B. 55 (1868); to a prior indorser, Foster v. Farewell, 13 U. C. Q. B. 449 (1856); Moffatt v. Rees, 15 U. C. Q. B. 527 (1858); Gunn v. Macpherson, 18 U. C. Q. B. 244 (1859); Morris v. Walker, 15 Q. B. 594 (1850); Wilkinson v. Unwin, 7 Q. B. D. 636 (1881); to the acceptor before maturity, Attenborough v. Mackenzie, 25 L. J. Ex. 244 (1856).
5. One of two joint makers of a note to whom it is negotiated back, cannot re-issue and further negotiate it, so as to make the other joint maker liable: Hopkins v. Farewell, 32 N. H. 429 (1855); Patch v. King, 29 Me. 448 (1849).
38. The rights and powers of the holder of a bill are as follows:
(a) He may sue on the bill in his own name : Imp. Act, s. 38 (1).
The "holder" of a bill has been defined in section 2 as the payee or indorsee who is in possession of it, or the bearer thereof; and "bearer" as the person in possession of a bill or note which is payable to bearer. As there pointed out, the holder need not be the owner; it is sufficient for him to be in possession and entitled at law to recover or receive its contents from another.
If a note is non-negotiable in its origin, the payee alone can be the holder; if negotiable in its origin any person
to whom it is negotiated, until it is restrictively indorsed § 38. or discharged, is the holder.
If a holder sues on a note, and he is not the owner but is merely acting for another, any defence that could be set up against the real owner is available against him: Biron v. Brossard, M. L. R. 2 S. C. 105 (1880): Lee v. Zagury, 8 Taunt, 114 (1817); re Anglo Greek Navigation. Co., L. R. 4 Ch. 174 (1869); Thornton v. Maynard, L. R. 10 C. P. 695 (1875).
This section furnishes one of the tests of whether or not an instrument is negotiable. If it may pass by delivery or indorsement as provided in section 31, and if the holder who so acquires it can sue upon it in his own name, then it is in the proper sense of the term a negotiable instrument, and has the special privileges accorded to such instruments by the law merchant.
The right to sue upon a bill accrues upon its dishonor for non-acceptance: section 43, s-s. 2; or for non-payment: section 47, s-s. 2.
As to an action on a lost bill or note, see section 69.
In the case of the death of the holder of a bill, his executor or personal representative would have the same right to sue as he himself would have had. So also would the assignee or trustee of a bankrupt holder.
1. Defendant gave to plaintiff's wife his note in payment of a legacy. She died before the note was paid. Her husband sued the maker. A defence that the note was in the wife's possession up to her death and that there was no administration to her estate was upheld: Robinson v. Cripps, 6 U. C. C. P. 381 (1857).
2. Plaintiffs declared against the acceptor of a bill as drawn in their favor. It was on its face payable "to the order of
$38. T. G. Ridout, cashier," and indorsed "Pay J. Smart, cashier or order, T. G. Ridout," but the signature T. G. Ridout, had been erased. At the trial an amendment was allowed alleging that the bill was payable to the order of Ridout, who indorsed to Smart, and that Ridout and Smart being plaintiff's cashiers and agents received the bill for them and as their property. Held, that the beneficial interest plaintiffs were alleged to have in the bill did not entitle them to sue on it in their own name : Bank of U. C. v. Ruttan, 22 U. C. Q. B. 451 (1863).
3. The holder of notes as collateral security against future liability can sue upon them when they mature and before the liability arises. Plaintiff who held the notes indorsed in blank, as his father's agent, could sue upon them in his own name: Ross v. Tyson, 19 U. C. C. P. 294 (1869).
4. A note indorsed in blank may be sued in the name of a person to whom the owner has handed it for that purpose, even although the plaintiff has no beneficial interest in the note: Shepley v. Hurd, 3 Ont. A. R. 549 (1879).
5. The indorsee and holder of a promissory note for collection may in his own name sue the maker and indorser: Mills v. Philbin, 3 Rev. de. Leg. 255 (1848).
6. An action on a promissory note not produced will be dismissed Hudon v. Girouard, 21 L. C. J. 15 (1875).
7. The holder of a promissory note, although without personal interest in it, may sue on it in his own name, the defendant being sufficiently protected by being allowed to set up any defence he may have against the real owner: McKinnon v. Kerouack, 15 R. L. 34 (1877); Biron v. Brossard, M. L. R. 2 S. C. 105 (1880); Leet v. Ingram, ibid. (1885); Allison v. Central Bank, 9 N. B. (4 Allen) 270 (1859); Howard v. Godard, ibid. 452 (1860); Street v. Quindon, 18 N. B. 567 (1879).
8. The maker of a note when sued by the indorsee has no right to plead that the note belongs to the insolvent estate of the payee and not to plaintiff: Lemay v. Boissinot, 10 Q. L. R. 90 (1884).
9. A promissory note made payable to John Souther & Son, § 38. was sued by John Souther & Co. It being clear from the evidence that the plaintiffs were the persons designated as payees, it was held that they could recover: Wallace v. Souther, 16 S. C. Can. 717 (1889), affirming 20 N. S. 509 (1888).
10. Where a bill is made payable to bearer, or is indorsed in blank, the person who has actual or constructive possession of it may sue upor it, and the person liable on the bill cannot question his right: Clerk v. Pigot, 12 Mod. 193 (1699); Ord v. Portal, 3 Camp. 239 (1812); Low v. Copestake, 3 C. & P. 300 (1828); Wood v. Connop, 5 Q. B. 292 (1843); Emmett v. Tottenham, 8 Ex. 884 (1853); Demuth v. Cutler, 50 Me. 300 (1862).
11. But possession by a nominal holder does not give him the right to sue if he holds the bill adversely to the real owner: Jones v. Breadhurst, 9 C. B. 173 (1850); Logan v. Cassell, 88 Penn. St. 290 (1879); Towne v. Wason, 128 Mass. 517 (1880).
12. The holder may sue on a bill without ever having had any interest therein: Law v. Parnell, 7 C. B. N. S. 282 (1859); Jenkins v. Tongue, 29 L. J. Ex. 147 (1860); or after he has parted with his interest: Williams v. James, 15 Q. B. 498 (1850); Poirier v. Morris, 2 E. & B. 89 (1853).
13. The holder of a bill, without the knowledge or authority of the plaintiff, indorsed and delivered it to an attorney for the plaintiff, in order that an action might be brought upon it in his name, and the plaintiff after action brought ratified the Act. Held, that the subsequent ratification was equivalent to a prior authority, and that the plaintiff had a valid title to sue on the bill: Ancona v. Marks, 7 H. & N. 686 (1862).
(b.) Where he is a holder in due course, he Rights of holds the bill free from any defect of title of prior due course. parties, as well as from mere personal defences available to prior parties among themselves, and
§ 38 may enforce payment against all parties liable on the bill; Imp. Act, s. 38 (2).
A "holder in due course," is one who takes a bill, complete and regular on its face, before maturity, in good faith, without notice of any defect in the bill or in the title of the person negotiating it to him. The principal defects of title arise from fraud, duress or other unlawful means, illegal consideration or fraudulent negotiation: section 29. "Mere personal defences" might include the foregoing, and also set-off, compensation, etc. They would not include want of capacity, want of authority, the defence of forgery or the like.
Anything which renders a note absolutely void would not be included in either of the above terms.
See illustrations under section 29, s-s. 2, and 30 s-s. 2.
1. A note indorsed on condition that it was to be used to renew another note was fraudulently negotiated by the maker for value before maturity. Held, that the holder, being in good faith could recover from the indorser: Larkin v. Wiard, 5 U. C. O. S. 661 (1838); Cross v. Currie, 5 Ont. A. R. 31 (1880).
2. A note given for lottery tickets is not void under 12 Geo. 2, c. 28, in the hands of a bona fide holder for value before maturity Evans v. Morley, 21 U. C. Q. B. 547 (1862).
3. Where the maker signed a blank note and delivered it to the payee to fill up, and the latter fraudulently filled it up for a larger sum than authorized, the plaintiff, an indorsee before maturity for value without notice, can recover the full amount from the maker: McInnes v. Milton, 30 U. C. Q. B. 489 (1870); Merchants Bank v. Good, 6 Man. L. R. 339 (1890).
4. A cheque given in settlement of losses at matching coppers is a note of hand given in consideration of a gambling debt within R. S. O. c. 47, s. 53, s-s. 3, and such a security is void