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2. The indorser of a bill, by indorsing it
(a.) Engages that on due presentment it shall Liability. be accepted and paid according to its tenor, and if it is dishonored he will compensate the holder or a subsequent indorser who is compelled to pay it, provided that the requisite proceedings on dishonor are duly taken: Imp. Act, s. 55 (2) (a).
As regards the holder of a bill an indorser has been. compared to a new drawer: Penny v. Innes, 1 C. M. & R. at p. 441 (1834); Steele v. McKinlay, 5 App. Cas. at 769 (1880).
This sub-section sets out the ordinary contract of the indorser. It may, like that of the drawer, be varied in different ways. His liability may be limited or even negatived; or he may waive, as regards himself, some or all of the duties imposed on the holder as to presentment, protest and notice: section 16. See also sections 31 and 32, and the preceding sub-section.
As to the nature of the contract of indorsement, see the the remarks of Maule, J., in Castrique v. Buttigieg, 10 Moore P. C. at p. 108 (1855).
The indorsers may have an agreement varying as between themselves the undertaking in this section, and even reversing the order in which they are to be liable. to each other. If two or more persons indorse a bill or note to accommodate the acceptor or maker, their relation to each other is that of co-sureties, irrespective of the order in which they have indorsed: Macdonald v. Whitfield, 8 App. Cas. 733 (1883). See Small v. Riddell, 31 U. C. C. P. 373 (1880).
(b.) Is precluded from denying to a holder in Estoppel of due course the genuineness and regularity in all
§ 55. respects of the drawer's signature and all previous Estoppel of indorsements;
(c.) Is precluded from denying to his immediate or a subsequent indorsee that the bill was, at the time of his indorsement, a valid and subsisting bill, and that he had then a good title thereto. Imp. Act, s. 55 (2) (b) (c).
An indorser by putting his name on the back of the bill has in effect made these representations, and he is estopped from denying them to one who has in good faith given value for it while current, without notice of any defect.
1. In an action against the last indorser, it is no defence that the names of the maker and prior indorsers are forged: Eastwood v. Westley, 6 U. C. O. S. 55 (1839); McLeod v. Carman, 12 N. B. (1 Han.) 592 (1869).
2. The indorser of an unaccepted bill is estopped from denying the signature or the competence of the drawer, a married woman: Ross v. Dixie, 7 U. C. Q. B. 414 (1850). See also Griffin v. Latimer, 13 U. C. Q. B. 187 (1856); Hanscome v. Cotton, 16 U. C. Q. B. 98 (1857).
3. The indorser of a note made by a corporation is estopped from alleging that it was ultra vires: Merchants' Bank v. United Empire Club Co., 44 U. C. Q. B. 468 (1879).
4. An indorser sued on a note by the indorsee cannot plead that the note is null, because made by a married woman without the authorization of her husband: Leblanc v. Rollin, Mont. Cond. Rep. 68 (1854); Norris v. Condon, 14 Q. L. R. 184 (1888).
5. A note in favor of two payees jointly was indorsed by one of them to a person who in turn indorsed it to another. The latter sued the payee who had indorsed. Held, that defendant was estopped from setting up the want of indorsement by the other payee: Thurgar v. Clarke, 4 N. B. (2 Kerr) 370 (1844).
6. Where a partner having authority to draw and indorse, § 55. raised money for firm use by drawing bills in fictitious names and indorsing them in the firm name, the other partner was liable to an indorsee: Thicknesse v. Bromilow, 2 Cr. & J. 425 (1832).
7. A plea denying the indorsement to defendant who indorsed it to plaintiff is bad: MacGregor v. Rhodes, 6 E. & B. 266 (1856). See Lambert v. Pack, 1 Salk. 127 (1699); Bomley v. Frazier, 1 Stra. 441 (1721).
signing bill, liable as
56. Where a person signs a bill otherwise than Stranger as a drawer or acceptor, he thereby incurs the liabili- indorser. ties of an indorser to a holder in due course, and is subject to all the provisions of this Act respecting indorsers: Imp. Act, s. 56.
This section in the Imperial Act ends with the word, "due course. The last clause was added in the Senates in order to make it clear, that a person who signs a bill as warrantor is entitled to notice of dishonor. In Quebec, under Article 2311 of the Civil Code, a warrantor, or aral, as he is called in French law, was bound whenever the party for whom he became warrantor was bound, and he was not entitled to any notice of dishonor or protest, apart from that given to his principal.
The English decisions regarding such warrantors were Warrannot uniform or consistent; but this section of the Imperial Act was framed in accordance with the doctrine laid down in Steele v. McKinlay, where it was held that a person who put his name on the back of a bill was not liable on the bill to the drawer. It had been long settled in England that he could not be held liable as an acceptor, as he was not a drawee, or an acceptor supra protest.
The aval was fully recognized in French law, both Aval. ancient and modern. Pothier speaks of it, Change, No. 122, as "the contract of warranty undertaken by a person,
§ 56. either for the drawer, by putting his signature at the foot of the bill; or for the indorser by signing below the indorsement; or for the acceptor by signing below the acceptance." Such person assumes towards the creditor all the obligations of the party whose warrantor he becomes. See Code de Com. Arts. 141, 142. It is also recognized in Louisiana : McGuire v. Bosworth, 1 La. Ann. 248 (1846).
In Lower Canada before the Code, it was held, following the old French law prior to the Commercial Ordinance of 1673, that an indorser pour aval was not entitled to notice of dishonor or protest, and this rule was adopted by the Civil Code in Article 2311.
It is only to a holder in due course that the person signing a bill otherwise than as a drawer or acceptor, is said to incur the liabilities of an indorser. Section 55, s-s. 2, defines what these liabilities are. They may be varied as provided in section 16. It is to be observed that the Imperial Act does not say that he is an indorser or even that he has the rights of an indorser. The latter are clearly given him here by the added words. As between the immediate parties, these rights and liabilities may be varied by agreement; if the bill has not passed into the hands of a holder in due course it may be subject to these as defects of title.
See section 23, and illustrations ante, p. 189.
1. A bill or note is payable to bearer, or is indorsed in blank. A person who puts his name on it to enable another to negotiate it, or who signs and negotiates it himself, is liable as an indorser to the holder: Scott v. Douglas, 5 U. C. O. S. 207 (1836); Ramsdell v. Telfer, 5 U. C. Q. B. 508 (1848); Booth v. Barclay, 6 ibid. 215 (1849); Vanleuven v. Vandusen, 7 ibid. 176 (1849); Fairclough v. Pavia, 9 Ex. p. 695 (1854).
2. A. made a note payable to B. or order, and C. wrote his § 56. name on the back, without B.'s first indorsement. Held, that C. could not be considered as a new maker, and that the note would not support a recovery against him by B.: Steer v. Adams, 6 U. C. O. S. 60 (1839); Jones v. Ashcroft, ibid. 154 (1841); Wilcocks v. Tinning, 7 U. C. Q. B. 372 (1850); Skilbeck v. Porter, 14 ibid. 430 (1856); Moffatt v. Rees, 15 ibid. 522 (1857); Robertson v. Lonsdale, C. P. D. (Ont.) 1892, to appear in 22 O. R.; Morton v. Campbell, 3 N. S. (Cochran) 5 (1859); Burns v. Snow, 3 N. S. D. 530 (1875); Smith v. Hill, 6 N. B. (1 Allen) 213 (1848); Gwinnell v. Herbert, 5 A. & E. 436 (1843).
3. A. made a note to the order of B, for value, and before delivery it was indorsed by C. as surety for the maker. B. indorses it "without recourse above C.'s signature, and then sues C. He can recover: Peck v. Phippon, 9 U. C. Q. B. 73 (1841); Smith v. Richardson, 16 U. C. C. P. 210 (1865). See also, Wordsworth v. Macdougall, 8 U. C. C. P. 403 (1858); Wilders v. Stevens, 15 M. & W. 208 (1846); Smith v. Marsack, 6 C. B. 486 (1848); Morris v. Walker, 15 Q. B. 589 (1850); Wilkinson v. Unwin, 7 Q. B. D. 636 (1881); Holmes v. Durkee, C. & E. 23 (1883); Seabury v. Hungerford, 2 Hill (N. Y.) 80 (1841); Hall v. Newcomb, 3 Hill (N. Y.) 233 (1842).
4. Defendant having indorsed, as security for the maker, a promissory note payable to plaintiff, but not negotiable, he was held not liable as a maker: West v. Bown, 3 U. C. Q. B. 290 (1846); McMurray v. Talbot, 5 U. C. C. P. 157 (1855). Contra, Piers v. Hall, 18 N. B. (2 P. & B.) 34 (1878).
5. A guarantee indorsed on a note at the time of its execution as follows: "We guarantee the payment of the within note," does not show a sufficient consideration for the promise, the case being within the Statute of Frauds: Lock v. Reid, 6 U. C. O. S. 295 (1842).
6. Defendant owing plaintiff delivered him a note made by a third party payable to defendant or bearer, on the back of which defendant had written "In consideration of $100, I guarantee payment of the within note." Held, that defendant was liable M'C.B.E.A.-21