$ 47.

Notice of dishonor

and effect

of nonnotice.

In an action on a bill or note payable at a particular place it is not necessary to show that there were not sufficient funds at the place named; all that is necessary, even as against an indorser, is to show presentment, nonpayment and notice of dishonor: McDonald v. McArthur, 8 Ont. A. R. 553 (1883).

48. Subject to the provisions of this Act, when a bill has been dishonored by non-acceptance or by non-payment, notice of dishonor must be given to the drawer and each indorser, and any drawer or indorser to whom such notice is not given is discharged: Imp. Act, s. 48.

The provisions of the Act which dispense with notice of dishonor in certain cases, and excuse delay in giving notice in others are in section 50.

The rules governing notice of dishonor are to be found in section 49. As to when a bill is dishonored by nonacceptance or non-payment, see sections 43 and 47.

The liability of the drawer and indorsers of a bill being contingent upon its non-acceptance or non-payment, notice of dishonor must be given to them, save in the exceptional cases mentioned in section 50, in order to hold them liable.

By section 56, any person who signs a bill otherwise than as a drawer or acceptor, incurs the liabilities of an indorser to a holder in due course, and is subject to all the provisions of the Act respecting indorsers.

Under French law, indorsers are discharged for want of notice, but a drawer is not, unless he can show that the drawee had funds to meet the bill: Code de Com. Art. 170. Under the Act, it is only a drawer as to whom the drawee or acceptor is under no obligation to accept or pay the bill, that must prove this: section 46, s-s. 2 (c).

Mere knowledge of the dishonor of a bill is not enough § 48. to bind a drawer or indorser: Burgh v. Legge, 5 M. & W. at p. 422 (1839); Carter v. Flower, 16 M. & W. at p. 749 (1847). A notice in accordance with the rules in section 49, should be given where notice is not excused.

Before the Act, persons who became parties to bills as warrantors, have been held not entitled to the same notice as ordinary indorsers. As to their position now, see section 50, s-s. 2 (b), and section 56 and notes thereon.

ILLUSTRATIONS.

1. A bill was indorsed for the accommodation of the drawer. The drawee refused to accept, and the bill was protested for nonacceptance and non-payment. Notices of both were sent to the drawer, but of non-payment only to the indorser. Held, that the indorser was discharged, although the drawer had no effects in the hands of the drawee: Gore Bank v. Craig, 7 U. C. C. P. 344 (1858).

2. It is only the drawer or indorser who has not been notified that can claim such discharge: Grant v. Winstanley, 21 U. C. C. P. 257 (1871).

3. A bank's notary received for protest a note made and indorsed for his accommodation which the bank had discounted for him. Instead of protesting it he gave it up to the parties, saying he had paid it. Some months after this he absconded. Held, that by the laches of the bank both maker and indorser were discharged: Canadian Bank of Commerce v. Green, 45 U. C. Q. B. 81 (1880).

4. The omission to give notice of non-acceptance is not cured by notice of non-acceptance given with the notice of nonpayment: Jones v. Wilson, 2 Rev. de Leg. 28 (1813).

5. The indorser of a bill of exchange is in all cases entitled to notice, even when the drawee has no effects in his hands: Griffin v. Phillips, 2 Rev. de Leg. 30 (1821).

$48.

Notice of

non-acceptance not given.

Notice of non-acceptance

6. A person who is interested in the bill, to the knowledge of the holder, but whose name is not on it, is not entitled to notice of dishonor: Anderson v. Archibald, 3 N. S. D. 88 (1872); Swinyard v. Bowles, 5 M. & S. 62 (1816); Hitchcock v. Humfrey, 5 M. & Gr. 559 (1843); Walton v. Mascall, 13 M. & W. 72 (1844); Carter v. White, 25 Ch. D. 666 (1883).

7. A bill is dishonored and the holder gives notice to the indorser but not to the drawer. If the indorser in turn sends a notice to the drawer, the holder can sue both indorser and drawer. If such notice be not given the holder can sue the indorser, but neither of them can sue the drawer: Bickford v. Ridge, 2 Camp. at p. 588 (1810); Miers v. Brown, 11 M. & W. 372 (1843); Berridge v. Fitzgerald, L. R. 4 Q. B. at p. 642 (1869).

8. Where the drawer or an indorser of a bill is discharged for want of notice of dishonor, he is also discharged from any liability on the consideration for the bill: Bridges v. Berry, 3 Taunt. 130 (1810); Peacock v. Pursell, 14 C. B. N. S. 728 (1863). So also is any person who is a warrantor or surety for him Anderton v. Beck, 16 East 248 (1812); Hopkins v. Ware, L. R. 4 Ex. 268 (1869).

(a.) Where a bill is dishonored by non-acceptance, and notice of dishonor is not given, the rights of a holder in due course subsequent to the omission shall not be prejudiced by the omission: Imp. Act, s. 48 (1).

A person acquiring such a bill might become a holder in due course if it bore no mark of dishonor, and he was not aware of the dishonor: section 29; Roscow v. Hardy, 12 East, 434 (1810): Dunn v. O'Keefe, 5 M. & S. 282 (1816); Whitehead v. Walker, 9 M. & W. 506 (1842).

(b.) Where a bill is dishonored by non-acceptsufficient. ance and due notice of dishonor is given, it shall

not be necessary to give notice of a subsequent § 48. dishonor by non-payment, unless the bill shall in the meantime have been accepted. Imp. Act, s. 48 (2).

The subsequent acceptance referred to here may be either an acceptance by the drawee, or by an acceptor for honor or referee in case of need: section 66.

notice of dishonor.

49. Notice of dishonor, in order to be valid Rules as to and effectual, must be given in accordance with the following rules: Imp. Act, s. 49.

These rules are taken from section 49 of the Imperial Act, with the exception of that in sub-section 4, which declares a notice of protest or dishonor to be sufficient if posted on the day after the protest and dishonor, addressed to the party at his usual address or residence or at the place where the bill is dated unless he has given some other address on the bill. This latter provision obviates many of the difficulties that arise, which have been urged as reasons for delay in giving notice or for excusing notice altogether, in England and the United States, where they have no law making the place where the bill is dated a sufficient address. See the notes and illustrations under subsection 4.

Sub-section 10 of the Imperial Act allowing notice to be given to the trustee of a bankrupt was omitted as being inapplicable to Canada, there being no bankrupt law here, and the Act not recognizing or taking notice of the provincial Acts relating to assignments for the benefit of creditors, or the appointment of trustees or curators to the estates of those unable to pay their debts.

or indorser

(a.) The notice must be given by or on behalf By holder of the holder, or by or on behalf of an indorser M'C.B.E.A.-18

§ 49. who, at the time of giving it, is himself liable on the

By agent.

bill;

(b.) Notice of dishonor may be given by an agent either in his own name, or in the name of any party entitled to give notice, whether that party is his principal or not: Imp. Act, s. 49 (1) (2); C. C. 2326.

The holder or his agent may give notice to all the antecedent parties entitled to notice, or only to such of them as he may desire to hold liable on the bill. In the latter case, an indorser receiving notice may thereupon give notice to any additional parties entitled to notice, whom he desires to hold liable: sub-sections 2 and 3. The usual practice in Canada is for the holder to give notice to all prior parties who have not waived notice on the bill.

ILLUSTRATIONS.

1. When a note payable at a bank is sent there for collection, the protest may properly be made and notice given by the bank although it has no interest in the note: Wilson v. Pringle, 14 U. C. Q. B. 230 (1856); Girvan v. Price, 8 N. B. (3 Allen) 409 (1857); Howard v. Godard, 9 N. B. (4 Allen) 452 (1860). Also by any person authorized to receive payment: Rowe v. Tipper, 13 C. B. 249 (1853).

2. An indorser is notified of dishonor by a person who formerly held the bill, but had not at the time of dishonor any such relation as above indicated. He is released: Stewart v. Kennett, 2 Camp. 177 (1809); Chanoine v. Fowler, 3 Wend. 173 (1829).

3. The drawee may act as agent for a party entitled to give notice Rosher v. Kieran, 4 Camp. 87 (1814), as modified by Harrison v. Ruscoe, 15 M. & W. at p. 235 (1846). If, however, the drawee be not properly authorized the notice is bad: Stanton v. Blossom, 14 Mass. 116 (1817).