§ 36. title than that which had the person from whom he took it: Imp. Act, s. 36 (2).

Overdue. A bill payable on demand is deemed to be overdue when it appears on its face to have been in circulation for an unreasonable length of time: section 36, s-s. 3. A note payable on demand is not deemed to be overdue for the purpose of this sub-section by reason that it appears that a reasonable time for presenting it for payment has elapsed since its issue: section 85, s-s. 3. A time bill or note is overdue after the expiration of the last day of grace: Leftley v. Mills, 4 T. R. 170 (1791).

Defect of title.-This phrase was introduced into the Imperial Act as a substitute for the old expression "equity attaching to the bill," as the latter term was unknown in Scotch law. The corresponding provision in the Quebec Civil Code is found in Art. 2287: "The transfer of a bill by indorsement may be made either before or after it becomes due. In the former case the holder acquires a perfect title free from all liabilities and objections which any parties may have had against it in the hands of the indorser; in the latter case the bill is subject to such liabilities and objections in the same manner, as if it were in the hands of the previous holder." The chief" defects of title" are fraud, duress, force or fear, or other unlawful means in obtaining the bill or the acceptance thereof, illegal consideration, or negotiation in breach of faith: section 29, s-s. 2; or being given for a patent right: section 30, s-s. 4; or set-off or compensation.

Where a bill has been discharged by payment or otherwise and is improperly negotiated after maturity, this is not strictly speaking, a defect of title, as the bill is no longer a bill.

ILLUSTRATIONS.

1. Where plaintiff took a note after maturity from a holder who had agreed that it should be set off against a bond, he took it subject to this defence: Broke v. Arnold, Taylor U. C. 25 (1823).

2. The admissions of the holder of an overdue note are admissible, without calling him, against plaintiff, to whom he subsequently transferred it: Myers v. Cornell, 2 U. C. Q. B. 279 (1846).

3. Where an overdue note is transferred, and there has been a partial failure of consideration, such failure is a good defence pro tanto: Rennie v. Jarvis, 6 U. C. Q. B. 329 (1850).

4. Where a note was given to a person to get discounted for the maker, and he discounted it after maturity for his own benefit, it is a good defence: Kerr v. Straat, 8 U. C. Q. B. 82 (1851).

5. The indorsee of a bill or note is liable to such equities only as attach to the bill or note itself and to nothing collateral due from the indorser to the maker, or indorsee to payee: Wood v. Ross, 8 U. C. C. P. 299 (1859); Metropolitan Bank v. Snure, 10 U. C. C. P. 24 (1860); Hughes v. Snure, 22 U. C. Q. B. 597 (1863); Canadian Securities Co. v. Prentice, 9 Ont. P. R. 324 (1882); Ferguson v. Stewart, 2 U. C. L. J. 116 (1856).

6. Where an agent of the holder disposes of an overdue note, without authority, though for value, the purchaser obtains no title against the principal: West v. MacInnes, 23 U. C. Q. B. 357 (1864); Lloyd v. Howard, 15 Q. B. 995 (1850).

7. A valid agreement to give time is an equity which attaches to a bill as against a person taking it after maturity: Britton v. Fisher, 26 U. C. Q. B. 338 (1867).

8. An agreement not to negotiate a note after maturity is an equity attaching to such note when overdue: Grant v. Winstanley, 21 U. C. C. P. 257 (1871); Parr v. Jewell, 16 C. B. 684 (1855).

$36.

§ 36.

9. The holder of an overdue note agreed to let a board bill go in reduction. Held, that a subsequent transfer is subject to this claim: Ching v. Jeffery, 12 Ont. A. R. 432 (1885).

10. Where the plaintiff received the note sued on after maturity without consideration and was merely an agent, the maker has a right to set up all matters he could have pleaded against the real owner, and also to obtain a reduction of the usurious interest included in the note and of payments made on account thereof: Brooks v. Clegg, 12 L. C. R. 461 (1862).

11. Where the payee of a note after its maturity indorsed it in part payment of goods to a third party, the latter took it subject to all the equities that had arisen meantime between the maker and payee: Duguay v. Senecal, 1 L. C. L. J. 26 (1865).

12. A person receiving by indorsement a note after it was due, held it under Art. 2287 C. C., subject to the objections to which it was liable in the hands of the indorser. This article differs from the law of England which makes the indorser liable only to the equities attaching to the note itself, that is to the equities arising out of the transaction in the course of which the note was made, but not to those arising out of a collateral matter: Amazon Ins. Co. v. Quebec and Gulf Ports S. S. Co. 2 Q. L. R. 310 (1876). As to law of England see Whitehead v. Walker, 10 M. & W. 696 (1842); Oulds v. Harrison, 10 Ex. 572 (1851).

13. Where a person indorsed a note at the request of the payee on the understanding that he was not to be held liable, he is not liable to a party to whom the payee afterwards indorsed it after it was due McQuin v. Sorrell, 7 N. B. (2 Allen) 140 (1851).

14. A. made a note payable to his own order, and indorsed and delivered it to his son-in-law B. as a gift by way of advancement to B.'s wife. B. transferred it for value after maturity. Held, that the holder could not recover from A.'s executors as the note was void for want of consideration and he took it subject to that defect: Thomas v. McLeod, 12 N. B. (1 Han.) 588 (1869).

15. A note is made payable for an illegal consideration. After § 36. maturity the payee indorses it. The indorsee cannot recover from the maker: Amory v. Merryweather, 2 B. & C. 573 (1824).

16. The indorsee of an overdue note is liable in an action against the maker, to all equities arising out of the note transaction itself, but not to a set off in respect of a debt due from the indorser to the maker of the note, arising out of collateral matters: Burrough v. Moss, 10 B. & C. 558 (1830).

17. Part payment is an equity which attaches to a bill: Graves v. Key, 3 B. & Ad. at p. 319 (1832).

18. The fact of a bill being an accommodation bill, is not an equity attaching to it in the hands of a holder to whom the drawer, who is also payee, has indorsed it after maturity: Stein v. Yglesias, 1 C. M. & R. 565 (1834).

19. The fact that a bill is an accommodation bill does not prevent its being negotiated after maturity. A plea to that effect by the acceptor in an action by the indorsee, held bad: Sturtevant v. Ford, 4 M. & G. 101 (1842); ex parte Swan, L. R. 6 Eq. 344 (1868).

20. A plea that a previous action was begun by another person and is pending, is no defence to an action on a note brought by a holder who acquired it after maturity: Deuters v. Townsend, 5 B. & S. 613 (1864).

deemed

3. A bill payable on demand is deemed to When bill be overdue within the meaning and for the pur- overdue. pose of this section, when it appears on the face of it to have been in circulation for an unreasonable length of time; what is an unreasonable length of time for this purpose is a question of fact: Imp. Act, s. 36 (3).

As to this sub-section, Chalmers says, p. 118: "There appears to be no English or American case as to a bill, but the enactment is probably declaratory." It will

§ 36. be observed that the rule here laid down is only for the purpose of this section, and not the purpose of the statute of limitations, prescription, interest or the like. The rule here laid down was adopted in England before the Act of 1882 with regard to cheques, which are bills of exchange drawn on a bank, payable on demand Down v. Halling, 4 B. & C. 330 (1825); Rothschild v. Corney, 9 B. & C. 388 (1829); Serrell v. Derbyshire Ry. Co., 9 C. B. 811 (1850); London & County Banking Co. v. Groome, 8 Q. B. D. 288 (1881).

Presumption as to negotiation.

subsequent to dishonor.

:

To determine what is a reasonable time the judge or jury should take into consideration all the facts of the case section 40, s-s. 3.

This sub-section does not apply to promissory notes payable on demand which have been negotiated: section 85 s-s. 3.

4. Except where an indorsement bears date after the maturity of the bill, every negotiation is prima facie deemed to have been effected before the bill was overdue: Imp. Act, s. 36 (4).

If the indorsement bears a date, it is presumed to be the true date of indorsing. If undated, it is presumed to have been indorsed before maturity and either on the date of the bill or within a reasonable time thereafter. In any of such cases the contrary may be proved: see Lewis v. Parker, 4 A. & E. 838 (1836); Parkin v. Moon, 7 C. & P. 408 (1836); Bounsall v. Harrison, 1 M. & W. 611 (1836); Good v. Martin, 95 U. S. (5 Otto) 94 (1877).

Taking bill 5. Where a bill which is not overdue has been dishonored, any person who takes it with notice of the dishonor, takes it subject to any defect of title attaching thereto at the time of dishonor;