acceptor of an accommodation bill may be discharged by the holders, Effect of who were bankers of the drawer, receiving more than sufficient to cover it." indulgence as to prior parties. a commis If, when the bill becomes due, the acceptor be a bunkrupt, the holder of proving may, without the assent of the other parties, prove the bill under the under commission, and receive a dividend or dividends, and such conduct will not discharge the other parties to the bill from their respective lia-ion, or against an bilities to him, if he have given regular notice of non-payment: (383) so insolvent the circumstance of one of the parties to a bill having been charged in debtor, and execution, and discharged as an insolvent, does not preclude the holder of from proceeding against the other parties. But if the holder of a bill compound with the acceptor or other party, without the assent of the drawer, or other subsequent parties, saw that case in Campbell, I was in the same state as Mr. Justice Gibbs, and doubt ed a great deal whether it could be law. The case of Collet v. Haigh must be considered not as a separate decision, but as resting on the authority of the former. It is utterly impossible for any Judge, whatever his learning and abilities may be, to decide at once rightly upon every point that comes before him, at Nisi Prius, and whoever looks through Campbell's Reports, will be greatly surprised to see amongs such an immense number of questions, many of them of the most important kind, which came before that noble and learned Judge, not that there are mistakes, but that he is, in by far the most of the causes, so wonderfully right, beyond the proportion of any other Judges. ner of difference, for he who accepts a bill b See observations in English v. Darley, 412. 286. But in this case we think that we are bound to differ from him, and to hold that it is impossible for us to consider the acceptor of an accommodation bill in the light of the surety for the payment of the drawer, and that we cannot therefore say that he is discharged by the indulgence shown to the drawer; certainly the paying the respect to accommodation bills is not what one would wish to do, seeing the mis chiefs arising from them. One might find here a very important distinction between this case and the case decided by Lord Ellenborough, namely, that here the person taking the bill did not, at the time when he took it, know that it was an accommodation bill, and that if he did not then know it, what does it signify what came to his knowledge afterwards if he took the bill for a valuable consideration; but it is better not to rest this case upon that foundation; for as it appears to me, if the holder had known in the clearest manner at the time of his taking the bill, that it was merely an accommodation bill, it would make no man Stock v. Mawson, 1 Bos. & Pul. Macdonald Bovington, 4 T. R. 825. A bill drawn by Macdonald on Bovington, was indorsed to Thompson, who charged Bovington in execution on it. Bovington was discharged as an insolvent, then Thompson sued Macdonald and recovered. Macdonald paid the bill, sued Bovington, and charged him in execution, and on a rule nisi to discharge him and cause shown, it was urged that Bovington had satisfied the bill by being charged in execution at the suit of Thompson. Sed per Lord Kenyon, nothing can be clearer than that he has not, it was a mere formal satisfaction as to Thompson, not like actual payment, and when Macdonanld was obliged to pay the bill, a new cause of action arose against the defendant by the payment, without regard to what passed in the former action. And per Buller, J. the consequence would be, that because the drawer was obliged to pay the holder, the acceptor would be discharged without paying either. Rule discharged. See also Bayl. 152. (383) So it has been held in New York, that the proceeding under a commission of bankruptcy in London, against the acceptor, was no discharge of the indorser of a bill drawn here. Kenworthy v. Hopkins, 1 John Cas. 107. (1) See on this subject, Bank of Montgomery v. Walker, 9 Serg, & Rawle, 229. CHITTY ON BILLS. Nn com pounding with the acceptor. commis Of proving he thereby releases them from their liabilities, if they had effects in under a the hands of the acceptor or prior indorser; for there is a material sion, or a- distinction between taking a sum of money in part satisfaction of a gainst an debt, as in the case of a dividend, and taking a sum in satisfaction of insolvent, such debt, where the party has an option to refuse less than the whole, and of com- as where he compounds with the acceptor, and thereby deprives all pounding other parties to the bill of the right of resorting to him." acceptor, though the agent of the holder by mistake signed a composition deed in favour of the acceptor, thinking that the proceedings were a bankruptcy, yet it was decided that the drawer was discharged. And with the &c. d Ex parte Wilson, 11 Ves. 410. infra, note. Cooke's Bank. Law, 168. Cullen, 158, 9. and cases there cited. Ex parte Smith, 3 Bro. C. C. 1; see observations on English v. Darley, ante, 290, and post, Chapter on Bankruptcy. 1 Mont. 546. Ex parte Smith, 3 Bro. C. C. 1. Lewis and Potter indorsed certain bills and notes to Esdaile, and became bankrupt. Esdaile proved the amount of the bills and notes under their commission, and afterwards received a composition from the acceptors of the bills, and the makers of the notes, and gave them a full discharge without the knowledge of the assignees of Lewis and Potter. On petition by the assignees to have the debt in respect of the bills and notes expunged, the Chancellor held, that by discharging the acceptors and makers without the consent of the indorser, the latter was discharged also. To the same effect is the case of Ex parte Wilson, 11 Ves. 410. See also Smith v. Knox, 3 Esp. Rep. 46. In a case where an action was brought by several partners, as indorsees of a promissory note against the defendant as indorser, and it appeared in evidence that one of the partners had discharged a prior indorser by a deed of composition, it was holden, that such deed operated as a release to the defendant. Ellison and others v. Dezell, Bristol Summer Assizes, 1811, Selw. N. P. 4th ed. 348. Ex parte Wilson, 11 Ves. 410. In July, 1799, Andrew Paul Pourtales and Andrew George Pourtales, drew two bills of exchange upon Claessen, Kieckhoefer, and Co. of Hamburgh, at three months after date, for 3501. and 2507., payable to the order of the petitioner, for a valuable consideration. The bills were accepted: but before they were due, the acceptors stopped payment; and the bills were returned protested. The drawers afterwards became bankrupt. The petitioner's proof in respect of the bills was objected to, until he should have had recourse to the estate of the acceptors, and have received such dividend as should be payable from their estate. The petitioner sent the bills to his agent at Hamburgh for that purpose; who received a dividend from the estate of the acceptors; and was afterwards admitted to prove the residue of his debt under the commission against the drawers: but be And fore any dividend was received under that proof, it appeared that no proceeding in nature of a commission of bankruptcy had issued against the acceptors, but their affairs were settled by a deed of composition, which the petitioner's agent had signed upon receiving the dividend in full discharge of the estate of the acceptors. The petition prayed, that the dividends under the commission should be paid to the petitioner. It was admitted there was no fraud; but the deed of composition was signed, and the dividend received by his agent without inquiry. The petition stated, that the assignees and the solicitor under the commision pressed the petitioner to apply and receive what might be obtained from the estate of the acceptors, representing, that he should prove for the residue; but upon the affidavits there was no special undertaking; and the transaction appeared to originate in a mistake of all parties; supposing the proceeding at Hamburgh was in the nature of bankruptcy. The Lord Chancellor. The law is not disputed: it was very well settled by Lord Thurlow upon great deliberation, that, if a person, having the security of drawer and acceptor, with effects, (a distinction much to be regretted, having given very mischievous authenticity to accommodation paper) gives the acceptor time, and much more if the holder fully discharges the acceptor by composition, the holder can no longer make a demand upon the drawer, whether solvent or not; for this reason, that if the drawer could come upon the acceptor afterwards, the acceptor does not receive any benefit by the composition. The nature of the contract must therefore be, that the holder shall so deal with the bill that no third person shall come upon the acceptor in consequence of his act. I remember Lord Thurlow said, he had consulted the Judges upon that case. The decision is therefore of very high authority. Lord Rosslyn was struck with this consideration, that if the holder did all he could substantially do for the benefit of the persons whose names were upon the bill, that was all that could be expected, and held that he should if he really acted for the benefit of the other parties by taking a composition from the acceptor, go en against the drawer. But the misfortune of that is, that the other parties have a right by law to consider a where the indorser of a bill of exchange becomes bankrupt, and the Of proving holder proves the amount of the bill under his commission, and after- under commiswards compounds with and discharges the acceptor without the consent sion, &c. of the assignees of the indorser, he thereby also discharges the indorser's estate, and the proof of his debt must be expunged. 4thly. Of ment. pay On payment of the amount of a bill or note, it has been considered doubtful whether a person paying can insist on a receipt being given; the receipt but now the party it should seem is entitled to demand a receipt. It for is usual to give a receipt on the back of the bill, and it has been said, that it is the duty of bankers to make some memorandum on bills and 304 ] notes paid by them. Such receipt need not, like other receipts, be stamped. Where a part is paid, the person paying should take care to have the partial receipt marked on the bill, or he may, as it is said, be liable to pay the amount again to a bona fide indorsee. Where an action was brought by the indorser of a bill (who had paid it to an indorsee) against the acceptor, he was nonsuited, although he produced the bill and protest, because he could not produce a receipt for the money paid by him to the indorsee upon the protest, according to the custom of merchants; though Holt, C. J. seemed to be of opinion, that if the plaintiff could have proved payment by any evidence, it would have been sufficient. As it has been held, that a general receipt on the back of a bill of exchange is prima facie evidence of its having been paid by the acceptor," it would perhaps be advisable, in m what is for their benefit, and are the judges of that; and that has been carried so far, that the actual bankruptcy of the acceptor does not dispense with the necessity of notice to the drawer. That being the law, I felt a wish to find that part of the petition sustained, which represents, that the assignees and the solicitor pressed the petitioner to get what benefit he could in the affairs at Hamburgh, intimating that he should afterwards prove under the commission. But the affidavits amount only to this, that the assignees and the solicitor, being persuaded that there was a bankruptcy at Hamburgh, and a dividend actually set apart, so that in bankruptcy it was to be considered as received in diminution of the proof, do make that representation; and that the petitioner shall receive dividends under that bankruptcy, before he comes to prove under the commission in this country, and the future dividends after proof. The petitioner accordingly sent to his agent at Hamburgh, not inquiring whether the proceedings there was a bankruptey or a composition, and the agent signed the deed of composition, which, in respect of payments under it, actually discharges the acceptor. The question whether the petitioner was by fraud drawn in, or required to sign the deed of composition, is a mere question of fact. The whole was a common mistake, under the apprehension of all, that it was a bankruptcy; but, that being misapprehension, the consequence from not knowing what the act was, must fall upon the person who did the act, who therefore having, by himself or his agent, accepted a composition in full of the whole demand, is unfortunately, but effectually, f Ex parte Smith, 3 Bro. C. C. 1. ante, note. 8 Cole v. Blake, Peake Ni. Pri. 179, 180. See Green v. Croft, 2 Hen. Bla. 30, 31, 32. h 43 Geo. 3. c. 126. s. 5. i Burbridge v. Manners, 3 Campb. 193. ante, 286. k 44 G. 3. c. 98. Schedule A. 23 G. 3. c. 49. s. 4 and 7. In 55 G. 3. c. 184, Schedule, part 1, tit. Receipts, the exemptions are as follows: "Receipts or discharges given for any principal money due on exchequer bills. "Receipts or discharges written upon promissory notes, bills of exchange, or drafts or orders for payment of money, duly stamped according to the laws in force at the date thereof, or upon bills of exchange drawn out of, but payable in, Great Britain. "Receipts or discharges given upon bills or notes of the Governor and Company of the Bank of England. "Letters by the General Post, acknowledging the safe arrival of any bills of exchange, promissory notes, or any other securities for money.' I Cooper v. Davies, 1 Esp. 463. m Mendez v. Carreroon, Ld. Raym. 742. Scholey v. Walsby, Peake Rep. 25.; but see Pfel v. Van Battenberg, 2 Campb. 439. 4thly. Of all cases when payment is made by a drawer or indorser, for the holder the receipt to state in the receipt by whom it was paid. In a late case, however, for ment. it was held, that the production of a bill of exchange, from the custody of the acceptor, is not prima facie evidence of his having paid it, without proof that it was once in circulation after it had been accepted; nor is payment to be presumed from a receipt indorsed on the bill, unless such receipt is shown to be in the hand-writing of a person entitled to demand payment. (388) But in another case, it was held, that payment of money may be proved by the lender producing a check drawn by him upon his banker, in favour of the borrower, and indorsed by the latter, though without such indorsement it would not be evidence. Indorsements of partial payments made by the holder himself may, in some cases, be sufficient to take the case out of the Statute of Limita[305]tions. On this point Lord Ellenborough observed, "I have been at a loss to see the principle on which these receipts in the hand-writing of the creditor have sometimes been admitted as evidence against the debtor, and I am of opinion they cannot be properly admitted, unless they are proved to have been written at a time when the effect of them was clearly in contradiction to the writer's interest."". It has been considered, with analogy to the presumption of payment of a bond after twenty years have elapsed, that a note payable on demand, and dated upwards of twenty years before the commencement of the action, may be presumed to have been paid; and that there will be a good defence under the general issue, the Statute of Limitations not having been pleaded. But in an action by the payee of a bill of exchange, accepted by the defendant for a valuable consideration, the evidence that the plaintiff had been discharged as an insolvent debtor after the bill became due, and had given in a blank schedule, is not enough to show that the bill had been satisfied.* Upon payment or satisfaction of a bill or note, the party making such payment should take care that the instrument be delivered up to him, or he may be liable to an action by a third person, who has been a holder of the bill before it became due, for the recovery of the amount." And where there is a competition of evidence upon the question, whe ther the security has been satisfied by payment, it has been held, that the possession of that security by the claimant ought to turn the scale, and entitle him to a verdict. (388 It has been held in Pennsylvania that the mere production of the bill and protest, without a receipt of the money, is not sufficient evidence in an action by the indorser against the acceptor, that the indorser has paid the same to a subsequent indorsee. Gorgerat v. McCarty, 2 Dall. Rep. 144. S. C. 1 Yeates' Rep. 94. And the mere possession of a note by an indorsee, who had indorsed it to another person, is not suffi cient evidence of his right of action against a prior indorser, without a re-assignment or receipt from the last indorsee. Welch v. Lindo, 7 Cranch, 759. of payment, by The effect of payment may in a great measure be collected from the 5thly. Of immediately preceding paragraphs, and from what has been said with the effect respect to a transfer of a bill of exchange after it has been paid. If and of paya person, under a misapprehension of facts, pay a bill which he was ment under no legal obligation to discharge, as where the person whom he mistake. paid had been guilty of laches, which, had the bill not been paid, night, in an action brought upon it, have been a sufficient ground of defence, he may, if prejudiced, perhaps, recover back the money, as had and received to his use (390) and a party knowing a check to be post dated, and that the drawers were insolvent, presented it for payment to the plaintiff's who were bankers, and who, without knowledge of these [ 306 ] facts, paid its amount, although they had no funds of the drawers in their hands at the time, but expected some in the course of the day, it was held, that the plaintiffs were entitled to recover it back in an action for money had and received ;a but a bona fide holder, not guilty of laches, cannot in general be compelled to refund; and where the drawee of two forged bills accepted one and paid the other, it was decided, that he could not recover back the amount from the bona fide holder." But where the Victualling-Office paid a forged victualling bill, and on discovery of the fraud called on the Bank of England, whom they had paid, and they called on the plaintiff, and he on the defendant, through whose hands it had passed, it was held, that the plaintiff was entitled to recover from him. Where A. paid a sum of money into his bankers for a specific purpose, and the bankers clerk, by mistake, paid this money to B. who had no right to it, it was held, that A. could not maintain an action against B. to recover it back, but must sue the bankers, and they sue B. “(391) > See also Hull v. Pitfield, 1 Wils. 46. Bacon v. Searles, 1 Hen. Bla. 88. See the beginning of chap. 5, of the 2d part, post. * Ante, 238. Martin v. Morgan, 3 Moore, 635.-1 Gow. 123. S. C. b Ante, 238. Price v. Neal, 1 Bla. Rep. 390. 3 Burr. 1354, observed on in Jones v. Ryde, 1 Marsh. 160. Price v. Neale, 3 Burr. 1345. 1 Bla. Rep. 390. S. C. Two forged bills were drawn upon the plaintiff, which he accepted and paid. On discovering the forgery, he brought this action for money had and received, to recover back the money; but on a case reserved, the court held, that it would not lie; and Lord Mansfield said, it was incumbent on him to have been satisfied, before he accepted or paid them, that the bills were the drawer's hand. And in Smith v. Chester, 1 T. R. 655, Buller, J. says, when a bill is presented for acceptance, the acceptor looks to the hand-writing of the drawer, which he is afterwards precluded from disputing, and it is on that account that he is liable even though the Smith and others v. Mercer, 6 Taunt. (390) See Garland v. Salem Bank, 9 Mass. Rep. 408. S. P. (391) So where money remitted to pay one bill was applied to the payment of anc ther bill, it was held that no action lay against the holder of the latter in favour of the party remitting the money, but he must look to the other parties to rectify the mistake, if any was made. Dey v. Murray, 9 John. Rep. 171. |