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1. Where a note is made payable to a fictitious payee and not to his order or bearer, a holder for value cannot maintain an action against the maker as on a note payable to bearer, as it is not negotiable: Williams v. Noxon, 10 U. C. Q. B. 259 (1853).
2. A note in favor of one who is absent, and who (as it happens) is dead, is not void and his executors may maintain an action on it: Grant v. Wilson, 2 Rev. de Leg. 29 (1814).
3. When a bill was drawn in favor of a fictitious payee and indorsed by the drawer in that name to the knowledge of the acceptor, the latter is liable to an innocent indorsee for value: Gibson v. Minet, 1 H. Bl. 569 (1791).
4. The holder with notice of a bill payable to a fictitious. payee cannot sue the acceptor : Hunter v. Jeffery, Peake, Ad. Ca. 146 (1797).
5. An agent having money in his hands, purchases with it a bill of exchange, which he indorses specially to his principal; the latter, at the time of the indorsement, was dead, but the fact was not known to the agent. Held, that the property in the bill passed to the administrator of the principal: Murray v. East India Co., 4 B. & Ald. 204 (1821).
6. When a clerk drew and endorsed a bill as attorney for his deceased employer, upon a debtor of the estate who accepted with full knowledge of the facts, the acceptor was liable to the indorsee on the bill: Aspitel v. Bryan, 33 L. J. Q. B. 328 (1864).
7. The innocent acceptor of a forged bill payable to a fictitious payee is liable to a bona fide holder for value, and the bill may be treated as if payable to bearer: Phillips v. im Thurm, L. R. 1 C. P. 463 (1866).
8. Where a promoter of a company induced a friend to subscribe for shares as C., a name not his own, and gave the directors the cheque of a third party to the order of C., which
was not indorsed, the directors could treat the payee as fictitious, and indorse the cheque in the name of C.: Edinburgh Ballarat G. M. Q. Co. v. Sydney, 7 T. L. R. 656 (1891).
9. Where the name of the payee is fictitious it may be indorsed by the person to whom the note is delivered: Blodgett v. Jackson, 40 N. H. 21 (1859).
8. When a bill contains words prohibiting Calls valid transfer, or indicating an intention that it should but not not be transferable, it is valid as between the parties thereto, but it is not negotiable: Imp. Act, s. 8 (1).
If a party to a bill wishes to make it not negotiable, he must do so in clear terms. Where a bill was drawn payable to the order of F. the drawer, and the drawees struck out the word "order" and accepted the bill "in favor of F. only," at a certain bank, it was held that such acceptance did not vary the effect of the bill as drawn: Decroix v. Meyer, 25 Q. B. D. 343 (1890); affirmed by the House of Lords, July 30th, 1891, W. N. 156; 7 T. L. R. 729. Where a cheque payable to the order of M. was crossed "account of M., National Bank, Dublin," it was held that these words in the crossing did not prohibit transfer and that the Bank having credited M. with the amount, could sue the drawer: National Bank v. Silke, (1891) 1 Q. B. 435. For the rule as to bills negotiable in their origin, but which have their negotiability either stopped or limited by a restrictive endorsement, see section 35.
The Old Law.-Formerly a bill payable to a particular person and not to his order or to bearer would have come under this sub-section, and most of the non-negotiable bills and notes in the reported cases are of this class; now, by sub-section 4, such a bill is negotiable. It remains
§ 8. to be seen whether the courts will recognize in third parties the same rights under a sale or assignment of a bill or note whose transfer is prohibited, as they have heretofore done as to a bill not payable to order or bearer. As to the law in England, Chalmers says at p. 129: “A bill may be transferred by assignment or sale, subject to the same conditions that would be requisite in the case of an ordinary chose in action. Thus :-C. is the holder of a note payable to his order. He may transfer his title to D. by a separate writing assigning the note to D.: re Barrington, 2 Scho. & Lef. 112 (1804); or by a voluntary deed constituting a declaration of trust in favor of D.: Richardson v. Richardson, L. R. 3 Eq. 686 (1867); or, by a written contract of sale: Sheldon v. Parker, 3 Hun., 498 (1870). A bill is a chattel, therefore it may be sold as a chattel. A bill is a chose in action, therefore it may be assigned as a chose in action."
Chose in action.-In Ontario, the Mercantile Amendment Act which gives the assignee of a chose in action the right to sue in his own name, does not apply to bills of exchange or promissory notes: R. S. O. c. 122, s. 13. The Manitoba Statute on the subject makes a similar exception: C. S. Man. c. 37, s. 105; also the Ordinance of the North West Territories: Rev. Ord. c. 51, s. 7; and the Act of British Columbia: Cons. Acts, B. C. c. 19, s. 7.
The law of Quebec is contained in Articles 1570 and and 1571 of the Civil Code, and provides that the sale of debts and rights of action is effected by an instrument of sale, a copy of which is served on the debtor unless he is a party to it. The transferee may then sue in his own name. Article 1573 provides that these provisions do not apply to bills, notes or cheques payable to order or bearer. In McCorkill v. Barrabe, M. L. R. 1 S. C. 319 (1885), it was held that the indorsee of a non-negotiable note could sue
the maker, when a copy of the note and indorsement had § 8. been served upon the latter.
In Brice v. Bannister, 3 Q. B. D. 569 (1878), Bramwell, L.J., in speaking of an assignment of money to be earned under a written contract, says at p. 580: "It does seem to me a strange thing and hard on a man that he should enter into a contract with another and then find that because that other has entered into some contract with a third, he, the first man, is unable to do that which is reasonable and just he should do for his own good. But the law seems to be so; and any one who enters into a contract with A. must do so with the understanding that B. may be the person with whom he will have to reckon. Whether this can be avoided, I know not; may be, if in the contract with A. it was expressly stipulated that an assignment to B. should give no rights to him such a stipulation would be binding. I hope it would be."
This section of the Act appears to furnish the stipulation sugggested by Lord Bramwell, and as the law of Quebec makes provision for transfer the question proposed by him may come up for solution there. If there be a conflict between the Act and the Code there may be still further an important question as to which law shall override the other.
In Quebec it has been held that the indorsee of a nonnegotiable note could sue his immediate indorser but not a more remote party: Jones v. Whitty, 9 L. C. R. 191 (1859).
In Harvey v. The Bank of Hamilton, 16 S. C. Can. 714 (1888), an Ontario case, it was held that although the note was not negotiable the indorsee was entitled to recover from the maker it being shewn that the note was intended by the makers to have been made negotiable, and was issued by them as such, but, by mistake or inadvertence;
8. it was not expressed to be payable to the order of the payee. But, in this case might not the holder have added the words "or order" as having been omitted by inadvertence? In Kershaw v. Cox, 3 Esp. 246 (1801), it was held that the insertion of these words did not vitiate the note.
Pavable to order or bearer.
It has been held that the indorser of a non-negotiable note is not liable to the payee: West v. Bown, 3 U. C. Q. B. 290 (1847); and that the maker of a note payable to the treasurer of a township cannot be sued by the corporation Township of Toronto v. McBride, 29 U. C. Q. B. 13 (1869).
The French Code de Commerce does not recognize a non-negotiable instrument as a bill of exchange: Arts. 110, 136.
2. A negotiable bill may be payable either to order or to bearer: Imp. Act, s. 8 (2).
3. A bill is payable to bearer which is expressed to be so payable, or on which the only or last indorsement is an indorsement in blank: Imp. Act, s. 8 (3).
A bill is payable to bearer, which is payable "to A. B. or bearer," or which is payable "to- or bearer." The last clause of this sub-section altered the law in England, and it also alters the law in Canada. Formerly a bill having been indorsed in blank, its negotiability could not afterwards be restrained by a special indorsement: Walker v. Macdonald, 2 Ex. 517 (1848). No indorsement other than that by the payee can stop the negotiability of the bill Civil Code, Quebec, Art. 2288. A cheque payable to C. M. & S. or bearer was stamped for deposit to their credit in a bank and endorsed by them. Their clerk instead of depositing it drew the funds, the teller not observing the