Interpretation.

Art. 60. The interpretation of the drawing, indorsement or acceptance of a bill is (generally) determined by the law of the place where such contract is made.

ILLUSTRATIONS.

1. Action in England on a bill drawn and payable in France and there indorsed in blank. The effect of such indorsement is determined by French law, i. e., it operates as a procuration.1

2. A general acceptance given in Paris is (probably) to be interpreted according to French law."

3. Note made and payable in Scotland, in the form, "Pay C. 1007.," without adding the words " or order." By Scotch law such a note is negotiable, though by English law it is not. C., in England, can negotiate it by indorsement.

8

4. A bill drawn in Belgium on England is indorsed in France in blank. The indorsement is (perhaps) to be interpreted according to French law.4

Exception 1.-When an inland bill (Art. 24) is indorsed abroad, the indorsement is to be interpreted according to English law.5

Exception 2.-When a bill is drawn in one country and payable in another, expressions as to time and mode of payment are interpreted by the law of the place of payment."

NOTE.-In Bradlaugh v. De Rin (1870), 5 L. R. C. P. 473, the Exchequer Chamber held that in the court below, and also in Lebel v. Tucker, and Trimby v. Vignier, the French law had been mistaken, and that as regards the point raised-i. e., the right of an indorsee under a blank indorsement to sue in his own namethere was no conflict between the laws of France and England, but the principles laid down in those cases are not questioned.

1 Trimby v. Vignier (1834), 1 Bing. N. C. 151.

2 Cf. Don v. Lipmann (1837), 5 Cl. & F. at 12 and 13,

3 Robertson v. Burdekin (1843), 1 Ross, Scotch L. C. 824.

4 Bradlaugh v. De Rin (1868), 3 L. R. C. P. 538, per Bovill, C. J., and Willes, J., contra M. Smith, J., and Everett v. Vendryes (1859), 19 New York R. 436.

5 Lebel v. Tucker (1867), 3 L. R. Q. B. 77.

6 Arts. 13 and 20. See, too, the duties of the holder: Arts. 180, 202.

CHAPTER II.

CAPACITY AND AUTHORITY OF PARTIES TO A BILL.

Capacity.

rule.

Art. 61. Capacity to incur liability as a party to a General bill is coextensive with capacity to trade and incur trade debts:

Capacity to indorse a bill for the purpose of authorizing the payment thereof, and transferring the property therein, is coextensive with capacity to sell or transfer personal property.

Explanation.-The incapacity of one or more of the parties to a bill does not diminish the liability of the other parties thereto.1

NOTE.-Capacity must be distinguished from authority. Capacity is power to contract bestowed by law. Authority is power to contract bestowed by act of parties. Want of capacity is incurable. Want of authority may be cured by ratification. Capacity or no capacity is a question of law. Authority or no authority is usually a question of fact. Again, capacity to incur liability must be distinguished from capacity to transfer. An executed contract is often valid where an executory contract cannot be enforced : Cf. Arts. 111, 112.

Art. 62. A clergyman, though liable to penalties Clergyfor trading, has full capacity to contract by bill.2

ILLUSTRATION.

B., a clergyman, makes a note in respect of a trade debt. The note is valid in the hands of a holder with notice.3

1 Grey v. Cooper (1782), 3 Dougl. 65; French Code, Art. 114; German Exchange Law, Art. 3.

Cf. 1 & 2 Vict. c. 106, §§ 29 31.

3 Lewis v. Bright (1855), 24 L. J. Q. B. 191.

man.

Minor's liability.

Minor's power to transfer.

Married woman's

Art. 63. An infant incurs no liability by drawing, indorsing, or accepting a bill.1

ILLUSTRATION.

B., an infant within three months of attaining his majority, accepts a bill payable six months after date. He ratifies the transaction on attaining his majority, and the bill is negotiated. B. is not liable on his acceptance."

Exception. An infant who represents himself to be of full age, and thereby induces any person to deal with him, is not allowed to set up his infancy as a defence to a liability thus incurred.3

NOTE. If the consideration for a bill given by an infant be necessaries supplied to him, he may be liable on the consideration, though not on the bill. The age at which infancy ceases differs much in different countries: e. g., in India it is 18; in Germany, 23. In most continental countries a distinction is drawn between infant traders and non-traders; the former having full capacity.

Art. 64. When a bill is payable to the order of an infant, his indorsement (probably) transfers the property therein.*

NOTE. Cf. Art. 68. An infant's executed contracts are usually valid. As an infant may be an agent his indorsement in that character gives rise to no difficulty. In America it is not uncommon to get a bill made payable to the order of an infant clerk; his indorsement then operates as an indorsement sans recours, though without discrediting the bill.

Art. 65. A married woman incurs no liability by liability. drawing, indorsing, or accepting a bill.5

ILLUSTRATION.

A married woman, having no separate estate, makes a note, signing it "J. B., widow." She is not liable thereon."

1 Cf. Infants' Relief Act, 1874, 37 & 38 Vict. c. 62.

2 Ex parte Kibble (1875), 10 L. R. Ch. 373.

3 Ex parte Lynch (1876), 2 L. R. Ch. D. 227.

4 Cf. Lebel v. Tucker (1867), 8 B. & S. at 833; Nightingale v. Withington (1818), 15 Mass. 272; Grey v. Cooper (1782), 3 Dougl. 65 ; Indian Draft Code, Art. 13.

5 Cannam v. Farmer (1849), 3 Exch. 698; Cf. Coward v. Hughes (1855), 1 K. & J. 443.

6 Id.

woman's

Exceptions.-1. Married woman having separate Married estate.1 2. Married woman being a sole trader in liability. the City of London, if sued in the City Court.2 3. Married woman whose husband is civiliter mortuus, or an alien resident and domiciled abroad.3

by married

Art. 66. When a bill is payable to the order of a Transfer married woman, she cannot by her indorsement trans- woman. fer the property therein.*

Exception 1.-Bill indorsed by married woman under such circumstances as would render her liable on her indorsement. (Art. 65.)

Exception 2.-Bill indorsed by married woman as agent for her husband.5

ILLUSTRATION.

A bill is payable to the "order of Mrs. C." With the consent of her husband she indorses it, signing her own name.

in the bill passes by this indorsement."

The property

NOTE.-Qu. if in the case given, the husband would not be liable as indorser? See Lindus v. Bradwell (1848), 5 C. B. 583.

company

Art. 67. A corporation incurs no liability by Liability of drawing, indorsing, or accepting a bill, unless ex- or corpopressly or impliedly empowered by its Act of incorporation so to do."

ILLUSTRATIONS.

1. A joint stock company is incorporated for the purpose of forming a société anonyme abroad for the construction of Railways. The directors are empowered by the memorandum and articles of association to do whatever they may from time to time think incidental or conducive to the main object of the company. These

1 McHenry v. Davies (1870), 10 L. R. Eq. 88; Cf. London Chartered Bank v. Lamprière (1873), 4 L. R. P. C. at 593–594.

2 Cf. Beard v. Webb (1800), 2 B. & P. 93.

3 Cf. Chitty on Contracts, 10th ed., 174.

4 Cf. Smith v. Marsack (1848), 18 L. J. C. P. 65; and Art. 98.

5 Prince v. Brunatte (1835), 1 Bing. N. C. 435.

6 Cotes v. Davis (1808), 1 Camp. 485.

7 Re Peruvian Railways Company (1867), 2 L. R. Ch. 617.

ration.

Liability of terms cover the issue of bills, and such a company is liable on its company acceptance.1

or corpora

tion.

Power of

corporation to transfer.

2. A Railway company, incorporated under an ordinary Railway Act, accepts bills which are negotiated. The company is not liable on its acceptances.*

NOTE. In the case of a trading corporation the fact of incorporation for the purposes of trade would give capacity. In the case of non-trading corporations, the power must be expressly given, or there must be terms in the charter wide enough to include it. The Companies Act, 1862, § 47, does not confer capacity on all companies under that Act. It merely prescribes the mode in which such companies as have the requisite capacity are to exercise it.3 A mining company, a cemetery company, a salvage company, a gas company, an alkali works company, and a waterworks company have been held non-trading companies. Cf. Art. 78, as to nontrading partnerships. There is this distinction: A non-trading partnership can adopt a bill, but the bill of a company lacking capacity is, as regards the company, incurably bad; for a contract ultra vires of a corporation cannot be ratified. Query, if the rule as to drawing bills or making notes applies to cheques. Is a nontrading corporation liable on the instrument to the bearer of a dishonoured cheque which it has drawn, or is it only liable on the consideration to its immediate obligee? In America, the capacity of a corporation to bind itself by bill or note is coextensive with its capacity to contract. The capacity of a company ceases when a resolution to wind it up has been passed, although the resolution may not have been notified in the Gazette. See also Arts. 50, 51.

Art. 68. When a bill is payable to the order of a corporation, the indorsement of the corporation passes the property therein, though from want of capacity the corporation may not be liable as indorser."

NOTE. So, too, bankers may be justified in paying cheques out of the funds of a company, where clearly, by the form of the cheques, the company would not be liable as drawers if they had not been paid.

1 Re Peruvian Railways Company (1867), 2 L. R. Ch. 617.

Bateman v. Mid Wales Railway Company (1866), 1 L. R. C. P. 499.

3 Cf. Re Peruvian Railways Company, suprà.

4 Bateman v. Mid Wales Railway (1866), 1 L. R. C. P. 499 at 505.

5 Parsons, pp. 164, 165.

6 Re Bolognesi (1870), 5 L. R. Ch. 567.

7 Smith v. Johnson (1858), 3 H. & N. 222; Cf. Arts. 61, 80, 81.

8 Mahoney v. East Holyford Company (1875), 7 L. R. H. L. 869 and

884.