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a contractor in the United States. The price is £5,000, and one way, both a risky and a costly one, of paying the price would be, for Jones to remit to Smith by the next mail steamer gold coin to the amount of £5,000. It happens, however, that Smith owes £5,000 to Brown, also in the United States; in which case, it is obviously more convenient for Jones to pay £5,000, the price of the rails, to Brown; and then Smith's, Brown's, and Jones' accounts will be square. In order to effect this, Smith, on shipping the rails, draws a bill on Jones for £5,000 "against the rails," directing Jones to pay £5,000 to Brown, and sends the draft by post to Brown. Brown will then present the draft to Jones for acceptance, who will accept it, and pay it, if payable at sight, immediately; if payable at a later date, upon its being presented for payment after that date.

Now, if the bill were drawn by Smith to Brown's order, Brown, on receiving it, might "put it in circulation" by indorsing his name on the back, and handing it to anyone who would give him cash for it. It would then be the duty of the bearer to present the bill to Jones for acceptance; and then, again, if the bill were payable at some subsequent date, and were passed on to others, for whoever was the bearer, at the time the bill became due, to present it to the acceptor for payment.

Or again, instead of indorsing the bill in blank, Brown might have indorsed it to the order of Black, Black might have indorsed it to the order of Green, Green to the order of White, White to the order of Grey, and so on until the time during which it was current had expired, each transferor receiving cash in exchange for the bill from his immediate transferee. The following would be

the form of such a bill of exchange, before acceptance :

Stamp.

1 April, 1880.

Two months after date (or at sight) pay to

the order of John Brown, Esq., the sum of

£5,000.

To Mr. William Jones.

THOS. SMITH.]

§ THE CHARACTERISTICS OF A BILL OF EXCHANGE ARE-
1. That it is a contract, which is assignable at law.
[NOTE. The transfer is made-

(i) By indorsement and delivery, when the bill is
drawn "to order."

(ii) By delivery only, when drawn "to bearer."] 2. That the law presumes that consideration has been given for it, until the contrary appears.

§ OF THE NATURE OF THE LIABILITY OF THE RESPECTIVE

PARTIES TO A BILL OF EXCHANGE.

1. The promise of the acceptor is an absolute promise to pay the bill, when duly presented.

2. The promise of the drawer is a conditional one to pay, if the acceptor does not.

3. The promise of the indorser is the same; he being, as

far as his next indorsee is concerned, in the same position as the drawer, in regard to him, the indorser. 4. And so is the promise of each subsequent indorser, as far as each next indorsee is concerned.

5. The acceptor is primarily liable to the holder, and

each indorser, beginning with the latest, and going back to the first, and finally the drawer, is in the position of a surety, who promises to pay if the principal debtor (the acceptor) does not.

H. A PROMISSORY NOTE is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable

future time, a certain sum in money to or to the order of a specific person, or to bearer. (a)

The person giving a promissory note is called the "maker."

The following is a form of a promissory note :

Stamp.

I promise to pay Mr. John Jones, or his order, the
sum of £100 in two months from the date hereof.
1st April, 1880.
WILLIAM SMITH.

[NOTE. A promissory note is inchoate and incomplete until its delivery to the payee or bearer.(b)]

§ A BANK NOTE is a promissory note, given by a bank to the public, and the sum mentioned in it is payable on demand, to the bearer, on presentation at the bank.

§ AN I.O.U. is not a promissory note, and is not transferable. It is merely evidence of the admission of a debt; what is called " an account stated.”

III. A CHEQUE ON A BANKER is a bill of exchange, payable on demand, drawn on the banker by his customer, and may be made payable either to order or to bearer.(c)

§ The banker is in the position only of a drawee, who has not yet accepted a bill, and so cannot be sued by the payee.

[§ IT DIFFERS FROM A BILL OF EXCHANGE

(i) In the amount of the stamp impressed on it. A cheque

on a banker only bearing duty to the amount of one penny and no more, whatever the amount for which it is drawn. Whereas a bill of exchange bears an ad valorem stamp.

(a) 45 & 46 Vict. c. 61, s. 83 (1).

(b) 45 & 46 Vict. c. 61, s. 84. A promissory note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof (s. 83).

(c) Sect. 73.

(ii) It must be payable on demand, and not on a day later than the date of issue.

If a cheque is post dated, it is the same thing as a bill of exchange, at so many days' date as intervene between the delivery of the cheque and the date marked on it.(a)]

1. A banker is bound to honour his customer's cheque, so long as he has funds to meet it of the customer's in his hands; and is liable to an action, if he does not, for damaging his customer's credit.

2. If a banker pays a forged cheque, the loss is his, and not that of his customer whose name has been forged. 3. But he is not responsible to the customer, if he pays on a forged indorsement.(b)

4. Payment by cheque is a good payment—

(i) If the cheque is honoured; and,

(ii) It comes into the hands of the payee.

§ CROSSED CHEQUES. A cheque may, for greater security, be
1. "Crossed." That is to say, two parallel lines may be
drawn across the face of it, between which are written
(i) The words "and Company" (a general crossing).
(ii) The name of a particular banker (a special
crossing).

And where this is done, it is the duty of the banker,
on whom the cheque is drawn, only to pay it to-
(i) Another banker (if it is crossed generally).
(ii) The specified banker (if it is crossed

specially).(c)

2. The words "not negotiable" may also be written across the face of a cheque, in addition to a general or

special "crossing." Any person taking such a cheque

(a) Forster v. Mackreth, L. R. 2 Ex. 163.

(b) 16 & 17 Vict. c. 59, s. 19: and see 45 & 46 Vict, c. 61, s. 78, as to forged "crossings."

(c) 45 & 46 Vict. c. 61, ss. 76-82.

can neither obtain nor transfer a better title to it than the party had from whom he took it.(d)

[NOTE. The effect of this will be, that no person taking a cheque crossed "not negotiable" from one who has improperly obtained it, will be able to plead that he is "a holder for value without notice" (see post) or become the "true owner" of the cheque. 3. A banker on whom a cheque is drawn, who pays it otherwise than as directed by the crossing, is liable to the "true owner for any loss the latter may sustain.(e)

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4. A cheque, which has been issued uncrossed, or only crossed generally, may be subsequently crossed, either generally or specially, by the lawful holder.(ƒ)

5. A cheque may not be crossed specially to more than one banker, except when crossed to an agent for collection by the banker to whom it is first specially indorsed.(g) 6. A banker who collects for his customer a cheque crossed generally or specially, is not liable to the true owner should the customer's title to such cheque prove defective.(h)

CONSIDERATION.

§ CONSIDERATION is presumed. That is to say, in an action on a negotiable instrument, there is a presumption that consideration has been given for it, and the plaintiff will not be put to the proof thereof.

Unless the defendant can make out a prima facie case that,―

1. The bill or note was obtained by undue means, such as fraud, or force; or,

(d) 45 & 46 Vict. c. 61, s. 81.

(e) 46 & 47 Vict. c. 79 (2).

(f) Ibid., s. 77 (2).

(g) Ibid., s. 77 (5).

(h) Ibid., s. 82: see Matthiessen v. London and County Bank, 5 C. P. D. 7.

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