may arise, where the holder reserves his rights against § 61. other parties to the bill, see the notes on the following sub-section.

bill may in Discharge

2. The liabilities of any party to a bill like manner be renounced by the holder before, at or after its maturity; but nothing in this section shall affect the rights of a holder in due course without notice of renunciation: Imp. Act, s. 62 (2).

"In like manner."-That is, absolutely and unconditionally; and in writing, unless the bill is delivered up.

If the acceptor or any other party to a bill is discharged by the holder before maturity, and no entry be made of it upon the bill, and it come into the hands of a bona fide holder for value before maturity without notice, the party so released would be liable to him.

Principal and Surety.-Where the parties to a bill stand in the relation of principal and surety to each other, the nature of the renunciation of his rights by the holder against the party who stands in the relation of principal to other parties, becomes a matter of great importance. The question arises most frequently in connection with composition and discharge, or the granting of time by taking a renewal.

of party by

waiver.

law.

At common law where parties to a bill stand in the At common relation of principal and surety to each other, if the holder, being aware of the fact, grants a discharge to the principal debtor or gives him time, the sureties are discharged, unless the holder has expressly reserved his rights against the sureties, or has reserved their rights against the principal debtor: Owen v. Homan, 4 H. L. Cas. 997 (1853); Oriental Corporation v. Overend, L. R. 7 Ch. 142 (1871); Polak v. Everett, 1 Q. B. D. at p. 673 (1876); Munster &

§ 61. Leinster Bank v. France, 24 Ir. L. R. 82 (1889); Thurgar v. Travis, N. B. (2 Allen) 272 (1851).

On this subject, Chalmers says, p. 219: "For the present purpose, prima facie the acceptor of a bill is the principal debtor, and the drawer and indorsers are, as regards him, sureties, and the drawer of a bill is the principal as regards the indorsers, and the first indorser is the principal as regards the second and subsequent indorsers, and so on in order; but evidence for the present purpose is admissible to show the real relationship of the parties, and it is immaterial that the holder was ignorant of the relationship when he took the bill, provided he had notice thereof at the time of his dealings with the principal": Ewin v. Lancaster, 6 B. & S. at p. 577 (1865); Oriental Corporation v. Overend, L. R. 7 H. L. 348 (1874).

It was formerly held that an acceptor could not be shewn to be a mere surety, as this would be contradicting the written instrument by parol: Fentum v. Pocock, 5 Taunt. 192 (1813). But now all the attendant facts and circumstances may be referred to, for the purpose of ascertaining the true relation of the parties to each other: Macdonald v. Whitfield, 8 App. Cas. at pp. 745, 748 (1883). Suretyship In Quebec suretyship becomes extinct by the same causes as other obligations: C. C. Art. 1956. For these, see p. 331, ante. The discharge of the principal debtor discharges the surety: C. C. Art. 1958; but delay given to the principal debtor does not discharge the surety, who may in case of such delay sue the debtor in order to compel him to pay: C. C. Art. 1961.

in Quebec.

The suretyship is also at an end when by the act of the creditor the surety can no longer be subrogated in the rights, hypothecs, and privileges of such creditor: C. C. Art. 1959.

As will be seen from the cases cited, the decisions in

the Quebec courts have been conflicting, and where a party § 61. to a bill occupying the relation of a surety, has been released by the mere giving of time, notwithstanding Article 1961 of the Code, it is not usually clear from the report whether this is on account of there having been a novation, or on account of the provision making the law of England as to bills and notes applicable, where the law of the province or the Code has no express provision.

As to the effect of the conflict between the law of Quebec and that of other provinces, see notes on section 71, and on section 8 of the amending Act of 1891.

ILLUSTRATIONS.

1. Time given to the maker of a note, discharges an indorser: Vankoughnet v. Mills, 5 Grant, 653 (1856); Arthur v. Lier, 8 U. C. C. P. 180 (1858); Farrell v. Oshawa Mfg. Co. 9 U. C. C. P. 239 (1859); Bedell v. Eaton, 4 N. B. (2 Kerr) 217 (1843).

2. The holder of a note gave time to two makers who were the principal debtors, without the consent of a third maker who was surety for them. The latter was held not liable to a plaintiff who received the note after maturity with notice: Perley v. Loney, 17 U. C. Q. B. 279 (1858); Shepley v. Hurd, 3 Ont. A. R. 549 (1879); Davidson v. Bartlett, 1 U. C. Q. B. 50 (1844), overruled; Greenough v. McClelland, 2 El. & El. 424 (1860).

3. Mere delay, or indulgence, or even negligence, is not enough where there is no binding agreement to give time: Thompson v. McDonald, 17 U. C. Q. B. 304 (1858); Wilson v. Brown. 6 Ont. A. R. 87 (1881); Berthelot v. Aylwin, 2 Rev. de Leg. 31 (1819); Merchants' Bank v. Whitfield, 2 Dorion, 157 (1881); Philpot v. Briant, 4 Bing. 717 (1828); Goring v. Edwards, 6 Bing. at p. 99 (1829); Black v. Ottoman Bank, 15 Moore P. C. at p. 484 (1862); Carter v. White, 25 Ch. D. at p. 672 (1883); Hay v. Powrie, 13 Sess. Cas. 777 (1886).

4. A reserve of the rights of the holder against the parties who apparently occupy the relation of sureties, prevents a

§ 61. discharge of the latter: Bank of Upper Canada v. Jardine, 9 U. C. C. P. 332 (1859); Canadian Bank of Commerce v. Northwood, 14 O. R. 207 (1887); Muir v. Crawford, L. R. 2 Sc. App. 456 (1875).

5. When the holders of a note gave time to an indorser, knowing that the maker had signed the note for his accommodation the maker was discharged: Bank of Upper Canada v. Ockermann, 15 U. C. C. P. 363 (1865); ex parte Webster, De Gex, 414 (1847); Bailey v. Edwards, 4 B. & S. 761 (1864).

6. A mother gave her son a note for his accommodation. The holder, who was aware of the facts, took two renewal notes from the son without the mother's knowledge. Held, that she was released: Devanney v. Brownlee, 8 Ont. A. R. 355 (1883). Healey v. Dobson, 8 O. R. 691 (1885).

See

7. Where a bank gave up notes to a principal debtor and took forged renewals in their place, the surety was released: Merchants' Bank v. McKay, 15 S. C. Can. 672 (1888).

8. An indorsement of the payment of interest on a note up to a date beyond, is evidence of an extension of time of payment to such date, and discharges a surety: Ryan v. McKerrall, 15 O. R. 460 (1888).

9. Delay granted to the maker of a note does not liberate the indorser: Massue v. Crebassa, 7 L. C. J. 211 (1863). Contra, St. Aubin v. Fortin, 3 Rev. de Leg. 243 (1845); Desrosiers v. Guerin, 21 L. C. J. 96 (1876); Carslake v. Wyatt, 2 Stephens' Dig. 112 (1877); Banque Ville Marie v. Mallette, 33 L. C. J. 8 (1888): Pelletier v. Brosseau, M. L. R. 6 S. C. 331 (1890).

10. Where the holder accepted a composition from and released an indorser for whose accommodation the note was inade, not knowing that it was for his accommodation, the maker is not discharged: Banque Nationale v. Betournay, 18 R. L. 175 (1887).

11. A creditor took from a debtor a sight bill accepted by a third party and instead of collecting it, took a renewal. The acceptor failed before the renewal matured. Held, that the

original debtor was discharged: O'Brien v. Semple, M. L. R. § 61. 3 Q. B. 55 (1887).

12. An indorser was released before maturity by the bank which held the note at maturity. Held, that the plaintiff who took it when overdue, cannot recover from the indorser: McLeod v. Carman, 12 N. B. (1 Han.) 592 (1869).

13. Taking a renewal bill payable on demand, is a giving of time as well as one payable at a fixed future time: Currie v. Misa, L. R. 10 Ex. at pp. 163, 164 (1875).

14. When two or more sureties contract severally, the creditor by releasing one does not discharge the others; but when the creditor releases one of two or more sureties who have contracted jointly and severally, the others are discharged, the joint suretyship of the others being part of the consideration of the contract of each: Ward v. National Bank of New Zealand, 8 App. Cas. at p. 764 (1883).

15. The discharge of one of two makers of a joint and several promissory note on part payment, does not discharge the other from his liability for the balance: Stephens v. Hughes, 1 T. L. R. 415 (1885).

16. An absolute discharge given to the acceptor discharges him from all liability on the bill. But a discharge with the reservation of the rights of the sureties, the indorsers, only discharges the acceptor from his liability to the person giving the discharge" per Lopes, L.J. in Jones v. Whittaker, 3 T. L. R. 723 (1887).

tion of bill.

62. Where a bill is intentionally cancelled by Cancellathe holder or his agent, and the cancellation is apparent thereon, the bill is discharged:

signature.

2. In like manner, any party liable on a bill of any may be discharged by the intentional cancellation of his signature by the holder or his agent. In such case, any indorser who would have had a right of