Payment should be made to the true holder of the bill; for payment to any other party is no discharge to the acceptor; unless, indeed, the money paid finds its way into the holder's hands, and the holder has treated it as received in liquidation of the bill. A. drew a bill upon defendant, which defendant accepted; A. then indorsed it to the plaintiffs, his bankers, who entered i to the credit of plaintifs account, and at maturity, presented it to the defendant for payment, and it was dishonoured. The plaintiff's then debited A. with the amount, but did not return him the bill. A few days afterwards defendant paid the amount to A.; A. still continued his banking account with the plaintiffs, and at different times paid in more money than was sufficient to cover the amount of the bill, and all the preceding items which stood above it in the account, though there was always a balance against him larger than the amount of the bill. A. failed, and the plaintiffs proved for the whole of their balance under his commission. They then brought this action on the bill against the defendant, the acceptor. Best, C.J.: "The payment to A. would not of itself have discharged the defendant, the plaintiff's having been at that time the holders, and entitled to the amount of the bill; but the ground on which the defendant is discharged is, that the plaintiffs not only entered the bill to the credit of A., but treated it as having been paid "(b). There are some cases in which payment to a wrongful holder is protected, and others in which it is not (c). If a bill or note, payable to bearer, either originally made so, or become so by an indorsement in blank, be lost or stolen, we have seen that a bona fide holder may compel payment. Not only is the payment to a bona fide holder protected, but payment to the thief or finder himself will discharge the consideration, breach of faith, &c. As to re-issue, see Chapter on TRANSFER. The Stamp Acts are not touched by the Code; hence, in the case of bankers issuing bank notes unstamped under a composition in lieu of stamps, payment at maturity does not extinguish such bank notes, as under the Stamp Acts they are re-issuable ad infinitum. (b) Field v. Carr, 5 Bing 13; 2 Moo. & P. 46. Where money is paid into a bank on the joint account of persons not partners (c) As to payment of a forged CHAPTER TO WHOM IT SHOULD BE Effect of payment to a wrongful holder of instruments payable to bearer. CHAPTER Of instru payable to Nash v. De Freville [1900] 2Q.B.72. maker or acceptor (d), provided such payment were not made with knowledge or suspicion of the infirmity of the holder's title, or under circumstances which might reasonably awaken the suspicions of a prudent man (e). "For it is a general rule, that where one or two innocent persons must suffer from the acts of a third, he who has, enabled such third person to occasion the loss must sustain it" (ƒ). And supposing the equity of the loser and payer precisely equal, there is no reason why the law should interpose to shift the injury from one innocent man upon another. But, if such payment be made under suspicious circumstances, or without reasonable caution, or out of the usual course of business, it will not as between all parties and for all purposes discharge the payer (g). Payment before the bill or note is due, or long after it is due, or, in case of a cheque, long after it is drawn, or where the marks of cancellation are on the instrument, are examples of payment out of the usual course of business. And, therefore, though a cheque be really drawn by a banker's customer, but torn in pieces before circulation by the drawer, with intention of destroying it, and a stranger, picking up the pieces, pastes them together, and presents the cheque soiled and so joined together to the banker, and he pays it, the banker cannot charge his customer with this payment, for the instrument was cancelled, and carried with it reasonable notice that it had been cancelled (h). If the bill or note be not payable to bearer, but transferable by indorsement only, and be paid to a party whose title is made through the forged indorsement, the payer is not discharged (i). (d) Smith v. Sheppard, Sel. Ca, 243. Ante, p. 192. () We have seen that nothing short of fraud will affect the title of a transferee for value. (f) Lickbarrow v. Mason, 2 T. R. 70; 1 R. R. 425. A (9) There is at present no decided case establishing that a party honestly paying is in as good a situation as a party honestly discounting. See, however, the observations of Best, C.J., in Snow v. Peacock, 2 C. & P. 221, and the observations of Parke, B., in Robarts v. Tucker, 16 Q. B. 575. The question as to the validity of a payment usually arises between a customer and his banker. But a banker paying a bill made payable at his bank must, it is conceived, exercise due caution. (h) Scholey v. Ramsbottom, 2 Camp. 485. (i) Code, s. 24. A banker, as we have seen, paying a cheque to order bearing a forged indorsement, is not liable, and the same protection has been extended to a bill of exchange on demand on him, which is practically the same thing. Ante, pp. 27 and 257. It has been contended, that as each indorsement is a warranty of the validity of the prior indorsements, an indorser, who has been paid by the acceptor, is liable, if the indorsements to him A bill is not discharged, and finally extinguished, until paid by or on behalf of the acceptor; nor a note until paid by or on behalf of the maker. It was long an unsettled question, whether payment in part or in full by the drawer to the holder will discharge the acceptor pro tanto, or whether the holder may, nevertheless, recover the whole amount from the acceptor, and hold an equivalent to the amount received from the drawer, as money received of the acceptor to the drawer's use (k). It has been thought that the holder can only recover of the acceptor the amount of the bill minus the sum paid by the drawer (/). The acceptor being the principal, and the drawer the surety, it might seem that a payment by the drawer discharges the acceptor's liability to the holder pro tanto, and makes the acceptor liable to the drawer for money paid to his use, and that if the drawer pay the whole bill, nominal damages only can be recovered by the holder of the acceptor (m). The better opinion, however, seems to be, that to an action against the acceptor, payment by the drawer is no plea, but turn out invalid, to be sued by the acceptor on an implied undertaking that he, as holder, was entitled to receive the amount of the bill. East India Company v. Tritton, 3 B. & C. 280 ; 5 Dowl. & R. 214; 27 R. R. 353; Smith v. Mercer, 6 Taunt. 76; 1 Marsh. 453 16 R. R. 576. But by Code, s. 55, he only guarantees his title to his immediate or any subsequent indorsee. L'endosseur est garant solidaire avec les autres signataires de la vérité de la lettre ainsi que du paiement à l'échéance. Pardessus, 376. Tous ceux qui ont signé, accepté, ou endossé, une lettre de change, sont tenus, à la garantie solidaire envers, le porteur. Code de Commerce, 140; Lorell v. Martin, 4 Taunt. 799; 14 R. R. 668. See McGregor v. Rhodes, 25 L. J., Q. B. 318; 6 E. & B. 266; Robarts v. Tucker, 16 Q. B. 575. The true holder can sue for money had and received. In Bobbett v. Pinket, L. R. 1 Ex. Div. 368, the drawer (not the payee) was held entitled to recover. See ante, p. 30. (k) In Johnson v. Kennion, 2 Wils. 262, recognized in Walwyn v. St. Quintin, 1 B. & B. 658, it (1) Lord Abinger appears to (m) Mais comme ces différents débiteurs son débiteurs envers lui de la même chose, la paiement qui lui est fait par l'un d'eux libère d'autant envers lui les autres Poth. 106; see Hemming v. Brook, 1 Car. & M. 57. CHAPTER Payment by acceptor. Payment by drawer. CHAPTER Meaning of the word "retire." By a stranger. By one, who is both agent for the acceptor and only converts the holder into a trustee for the drawer when the holder afterwards recovers of the acceptor (n). But payment in due course of an accommodation bill by the party accommodated is a complete discharge of the bill (0). The verb "retire" in its application to bills of exchange is an ambiguous word. In its ordinary sense it is used of an indorser who takes up a bill by handing the amount to a transferee, after which the indorser holds the instrument with all his remedies against prior parties intact. But it is sometimes used of an acceptor, by whom when a bill is taken up or retired at maturity it is in effect paid, and all the remedies on it extinguished (p). Payment by a stranger of the amount of a bill to the bankers, at whose house the bill is made payable by the acceptor, the party paying obtaining possession of the bill, is not a payment by the acceptor (q). If a banker at whose house a bill is made payable happen also to be indorser of the bill, and on the bill being brought to him when it becomes due he takes it up without also indorser. observation, it is a question of fact for a jury whether he paid it as agent of the acceptor or merely retired it as indorser (r). (n) Jones v. Broadhurst, 9 C. B. 173; Randall v. Moon, 12 C. B. 261; but see Williams v. James, 19 L. J., Q. B. 445; 15 Q. B. 198, S. C.; Jewell v. Parr, 13 C. B. 909; 16 C. B. 684; Kemp v. Balls, 10 Exch. 607; Belshaw v. Bush, 11 C. B. 191; James v. Isaacs, 12 C. B. 791. In an action by indorsee against acceptor, where the consideration for the acceptance had failed, except as to an ascertained amount, for which there was a set-off, and the drawer had paid the indorsee in full, an equitable plea stating these facts was held good. Agra and Masterman Bank v. Leighton, L. R., 2 Ex. 56; 36 L. J. 33. Payment by a drawer or indorser is no discharge of the bill. Code, s. 59 (2). (0) Code, s. 59. Lazarus v. Cowie, 3 Q. B. 459. Of bills not strictly accommodation bills. Cook v. Lister, 32 L. J., C. P. 121. The late Mr. Justice Willes expressed an opinion that payment or satisfaction by a stranger is primâ facie good, and that the assent of the debtor will be presumed. That very learned judge refers to the rule of the civil law, 'Debitorem ignarum seu etiam inritum solvendo liberare possu mus. See the observations of Willes, J., in Cook v. Lister, 32 L. J., C. P. 126, and in Manchester Warehouse Company v. Bertie, C. P., T. T. 1866. But this presumption may be rebutted. Walter v. James, L. R., 6 Ex. 124; 40 L. J. 104. (p) Elsam v. Denny, 15 C. B. 87; Code, ss. 37 and 59. (g) Deacon v. Stodhart, 2 Man. & Gr. 317. As to payment by a stranger, see Jones v. Broadhurst, supra; Simpson v. Eggington, 10 Exch. 845; 24 L. J., Exch. 312; Kemp v. Balls, 10 Exch. 607; note (), supra. (r) Pollard v. Ogden, 2 E. & B. 459. XVIII. The acceptor of a bill, whether inland or foreign, or the CHAPTER maker of a note, should pay (s) it on a demand made, at any time within business hours, on the day it falls due. When to be And, if it be not paid on such demand, the holder may made. instantly treat it as dishonoured (†). But the acceptor has the whole of that day within which At what time to make payment; and though he should, in the course of of day. that day, refuse payment, which refusal entitles the holder to give notice of dishonour, yet if he subsequently, on the same day, makes payment, the payment is good, and the notice of dishonour becomes of no avail (u). A plea of tender (r), by the acceptor after the day of Subsequent payment, is insufficient (y). tender. If a bill or note be paid before it be due, and is after- Before due. wards indorsed over, it is a valid security in the hands of a bonâ fide indorsee. "I agree," says Lord Ellenborough, "that a bill paid at maturity cannot be re-issued, ard that no action can be afterwards maintained upon it, by a subsequent indorsee. A payment before it comes due, however, I think, does not extinguish it any more than if it were merely discounted. A contrary doctrine would add a new clog to the circulation of bills and notes, for it would be (8) If a banker who has funds in his hands refuse to pay a cheque, he thereby subjects himself to an action at the suit of his customer, the drawer. Marzettiv. Williams, 1 B. & Ad. 415; 1 Tyrw. 77; 35 R. R. 329; Rolin v. Steward, 14 C. B. 595, ante, p. 19; Cumming v. Shand, 29 L. J., Exch. 129. So, too, if he wrongfully refuse to pay a bill of his customer, made payable at the banking house; but in order to charge the banker, the presentment must be within banking hours. Whitaker v. The Bank of England, 1 C., M. & R. 744; 6 C. & P. 700; 1 Gale, 54. See the Chapter on PRESENTMENT FOR PAYMENT. (t) Ex parte Moline, 1 Rose, 303; Burbidge v. Manners, 3 Camp. 193; 13 R. R. 786; Leftley v. Mills, 4 T. R. 170; 2 R. R. 350; Haynes v. Birks, 3 B. & P. 599. (u) Hartley v. Case, 1 C. & P. 555; 4 B. & C. 339; 6 D. & R. 505. No action lies until days of grace have expired, Wells v. Giles, 2 Gale, 209; Kennedy v. () As to payment where there (y) Hume v. Peploe, 8 East, 168; 9 R. R. 399. But a drawer or indorser is not bound to pay till notice and request; and, therefore, a plea of tender, after the bill became due, may be good, if pleaded by a drawer or indorser. And as a drawer and indorser has a reasonable time to pay, he may, it should seem, plead a tender even after request, and of principal only, without interest. Walker v. Barnes, 5 Taunt. 240; 1 Marsh. 36; 15 R. R. 655; Soward v. Palmer, 8 Taunt. 277; 2 Moo. 274; 19 R. R. 515; but see Siggers v. Lewis, 1 C., M. & R. 370; 4 Tyrw. 847; 2 Dowl. 681; where a plea that the action was commenced before a reasonable time had elapsed for the defendant, the indorser, to pay the bill, was held ill. |