the instrument is lost or cannot be produced, to be indemnified against any further claim thereon against him. With reference to this section, the Select Committee in their Report dated 4th October 1877, say: "The English Law 17 and "18 Vict. c. 125, s. 87, to which Sec. 14 of Act V of 1866 66 corresponds provides, that in any action upon a negotiable "instrument, the loss of it shall not be set up, as a defence, if an "indemnity is given to the satisfaction of the Court, against the "claims of any other person. And the owner of such a document, "was always entitled in equity to demand payment on giving а sufficient indemnity. We have therefore considered, that we "should correctly embody the English Law, by providing that 'any person liable to pay, and paying the amount due on a lost "note, bill or cheque, shall be entitled to be indemnified." (See ante, Sec. 8.) 66 The case on which the rule is founded that a person paying a bill is entitled to have it delivered up to him is Hansard v. Robinson. A person is not bound to pay a lost bill without indemnity, and if the owner brings a suit without tender of indemnity, he will have to pay the defendants costs taxed as between attorney and client.2 As to suing on a lost negotiable instrument, see Sec. 61, Civil Procedure Code.3 1 7 B. & C. 90; see also Cornes v. Taylor, 10 Exch. 441; Grifin v. Weatherby, L. R. 3 Q. B. 753; Fox v. N. & S. W. Bk,. 6 App. Cas. 17. 2 Story Eq. Jur. Sec. 86 (a) Hansard v. Robinson, 7 B. & C. Discharge from liability by cancella tion; by release; by payment. CHAPTER VII. OF DISCHARGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES. 82. The maker, acceptor or indorser respectively of a negotiable instrument is discharged from liability thereon (a) to a holder thereof who cancels such acceptor's or indorser's name with intent to discharge him, and to all parties claiming under such holder; (b) to a holder thereof who otherwise discharges such maker, acceptor or indorser, and to all parties deriving title under such holder after notice of such discharge; (c) to all parties thereto, if the instrument is payable to bearer, or has been indorsed in blank, and such maker, acceptor or indorser makes payment in due course of the amount due thereon. (a) The gist of this clause is, that the cancellation by the holder is with the intention to discharge the party from liability to pay. From a consideration of the next clause, it would seem the cancellation must be on the instrument itself. (see notes to Sec. 40.) So where the agent of a bank to which a promissory note had been sent for collection, cancelled the maker's signature and wrote paid on the note by mistake, and sent it back with a memorandum stating that it had been cancelled in error, it was held the cancellation could not be held effectual to charge the bank with the receipt of the money.' 1 Prince v. Oriental Bank Corpn., L. R. 3 App. Cas. 325; see also Warwick v. Rogers, 5 M, & Gr. 340. 1 (b) Under this clause it would seem the English rule, that a parol discharge would be valid, even without consideration is made applicable; but the discharge must be express; 2 and by the holder; so where the holder agreed with the acceptor to consider his acceptance at an end, and made the following entry in his bill book, “Mr. Pulteney's acceptance is annulled." But though liability on the instrument may be thus discharged, liability on a collateral agreement may be preserved. Thus where the plaintiff obtained from the defendant an advance of £15,000 upon the security of goods then in transit to Monte Video, consigned to one S., and also of six bills of exchange drawn by plaintiff upon and accepted by S. against the shipments, and the plaintiff authorized the defendant on non-payment of the bills to realize the goods, and held himself responsible for any deficiency. Two of the bills were duly paid, but other two having been dishonored the defendant (at Monte Video) proposed to realize the goods at once; whereupon plaintiff gave him a cheque for £2,500, accompanied by a letter requesting him not to sell, and authorizing him to hold the £2,500 as collateral security for S's acceptances, to be returned when all the bills should have been paid, and the defendant agreed thereto. The other bills having been dishonored the defendant sued S. on his acceptances, and entered into a judicial arrangement with him, without the sanction or knowledge of the plaintiff, by which the goods were to be sold and the bills delivered up cancelled to S. The goods did not realize sufficient to pay all the bills even with the security given by the plaintiff. In a suit by the plaintiff to recover the amount of the cheque deposited with the defendant as security, on the ground that he having cancelled and given up the bills to the acceptor, without their having been fully discharged, the release to him (the acceptor), operated as a discharge to the plaintiff, who was his surety, it was held that though the liability of both the acceptor and the plaintiff on the bills had been discharged by such cancellation and delivering up of the bills by the defendant, and had des 1 Foster v. Dawber, 6 Exch. 851; see Byles on Bills, 13th ed. p. 199. Dingwall v. Dunster Doug. 3 Harmer v. Steele, 14 M. & W. 831; S. C. 4 Exch. 1. 4 Walpole v. Pulteney, cited Doug. 249. Discharge by allowing drawee more than twentyfour hours to accept. When cheque not duly presented and drawer damaged thereby. Cheque payable to order. troyed plaintiff's right to recover against the acceptor, the circumstances under which the bills were cancelled, did not amount to payment of them, for the defendant had not by the cancellation intended to discharge plaintiff from the security which he held of him, and therefore he was not entitled to recover it back. According to English law, if the holder of a bill constitute the acceptor, or the payee of a note, constitute the maker his executor, he and all parties are discharged from liability thereon.2 (c) This must be read with Secs. 10 and 78. 83. If the holder of a bill of exchange allows the drawee more than twenty-four hours, exclusive of public holidays, to consider whether he will accept the same, all previous parties not consenting to such allowance are thereby discharged from liability to such holder. See notes to Sec. 63. 84. When the holder of a cheque fails to present it for payment within a reasonable time, and the drawer thereof sustains loss or damage from such failure, he is discharged from liability to the holder. See Secs. 64 and 723 85. Where a cheque payable to order purports to be indorsed by or on behalf of the payee, the JR 15 Baudrawee is discharged by payment in due course. 267 4 This section, is founded on Sec. 19 of 16 and 17, Vict. c. 59 and the case of Charles v. Blackwell, where it was held that an indorsement of the name of the payee (principal) by an Agent, on a cheque was sufficient authority to the Banker to pay the amount of the cheque, although the agent had no authority to indorse. I say this section is founded on the English Statute and the case conjointly, because in the section the words purports to be indorsed by or on behalf of the payee," occur, whereas in the English Statute the words are, purport to be indorsed by the person to whom the same is drawn payable" and in the case referred to, the point considered was whether an indorsement, "Smith & Co. per S. Kingsford Agent," was within the words "purport to be indorsed by the person to whom the same was drawn payable" and they were held to be so, by the Court of Common Pleas1 and by the Court of appeal2 Cockburn, C. J., after referring to the reasons which had induced the legislature to protect the Banker who paid on a forged indorsement of the name of the payee from liability said,3 "But "the danger to which the Banker is thus exposed from his "ignorance of the handwriting of the indorsement, exists as much "where the indorsement purports to be by an agent, as where "it purports to be that of a payee. The form of indorsement by procuration, though not so common as the immediate indorse"ment of the payee, is yet sufficiently so, to expose the Banker "to danger from spurious indorsements in this form, and we "cannot doubt that it was the intention of the legislature to pro"tect him from the liability he could not guard against, whatever the form which the indorsement might assume. The enactment must have been intended to apply to both forms of “indorsement to that purporting to be by procuration, as well as "to that purporting to be the indorsement of the payee." It is well to observe that this rule as to payment on a forged indorsement operating as a discharge to the drawee is only applicable to cheques, and not to other negotiable instruments for payment in due course is defined, and though to discharge the drawee of a cheque the payment must be in due course, by the use of the words here, they must I think be taken as in the definition, subject to the custom of the trade of Bankers; for as was said by Cockburn, C. J., in the same case" "On the other hand it may be said, "that though an individual or a company, taking a negotiable "instrument by indorsement, may well be expected to ascertain "the authority of the agent before they consent to take such an “instrument on his indorsement, it would be a most serious 66 1 1 C. P. D. 548. 2 2 C. P. D. 151. 3 At p. 157. 4 Sec. 10. 5 Charles v. Blackwell, 2 C. P. D. at p. 160. |