or in security of a debt, and does not take all steps necessary to preserve recourse, the debtor is discharged, though ultimately the bill is not paid.1 Similarly, if the indorsee of a bill vitiates it, he cannot sue his indorser on the debt for which it was indorsed; but if the drawer or acceptor does so the debt remains.2 ₫ See s. 2. e In resisting a demand founded on a bill on the ground that the holder is not a holder for value, it is necessary to aver that neither he nor any holder between him and the person from whom payment is demanded, gave value for the bill. f Bankers and factors have a general lien over all unappropriated bills and notes in their possession for any balance due to them by their constituent. But a bill which is sent to a banker to be discounted, or is specially appropriated, or is not the property of the customer, cannot be retained against a general balance. 4 In implement of the decree in an action for delivery of a bill, the bill was handed to the pursuer's solicitor. Subsequently the question was raised, but not decided, whether or not the solicitor was a holder for value under this subsection to the amount of his account.5 S. 27. Accommoda 28. (1.) An accommodation party to a billa is a S. 28. person who has signed a bill as drawer, acceptor, or indorser, without receiving value therefor, and for tion bill or the purpose of lending his name. to some other b (2.) An accommodation party is liable on the bill 1 Murray v. Grosset, 1762, M. 1592, rev. 1763, 2 Pat. 81; Brebner v. Haliburton, 1763, 6 Pat. 753; Reid v. Coats, 1794, 3 Pat. 326; Peacock v. Purssell, 1863, 32 L.J. C.P. 266. 2 See s. 64, n.b 8 1 Bell's Com. 294; 2, 109-115; Bell's Prin. 1445, 1451. 4 Bell's Prin. 1451; National Bank of Scotland v. Dickie's Trustee, 1895, 5 Redfern v. Rosenthal, 1902, 18 party. S. 28. to a holder for value; and it is immaterial whether, when such holder took the bill, he knew such party to be an accommodation party or not. a The Act does not define an accommodation bill, which has been defined as "a bill to which the accommodating party, be he acceptor, drawer, or indorser, has put his name, without consideration, for the purpose of benefiting or accommodating some other party, who desires to raise money on it and is to provide for the bill when due."1 On the contrary, it has been said that a bill should be so called only when the acceptor is "in substance a mere surety for some other party, who may or may not be a party thereto." 2 The latter is the sense in which the term is used in this Act. Unless the acceptor is an accommodation party the bill will not be discharged by payment by any other party.3 b See ss. 2 and 27 (1). An accommodation party may be one of the ordinary parties to a bill, or an indorser per aval.* A party who is in effect a surety, is an accommodation party under this section, though he has received a commission.5 The rights of accommodation parties to a bill against those whom they have accommodated, are regulated by the real nature of the transaction, which may be proved by parole. But primd facie the rights and liabilities of the parties to a bill follow upon the order of their names on the bill. A drawee, who appends the words "as cautioner" to his acceptance, does not thereby sign in another character than acceptor. In a question with the holder of the bill he is held to have taken the ordinary responsibilities of an acceptor. But the words may be useful as showing in a question of relief,9 or of discharge by the holder giving time to the principal debtor,10 that he is an accommodation party. Though it is proved or admitted S. 28. that a bill has not been drawn against value, the acceptor will yet be presumed to be the party accommodated, and to be liable to relieve the drawer or indorser who has paid the bill. But if it is proved or admitted that the bill has been accepted for the accommodation of the drawer or indorser, or that certain parties have signed the bill in order jointly to accommodate some other person who may or may not be a party to the bill, the parties will be found liable according to the substance of the transaction.1 A company which required financial assistance, agreed to grant a promissory note with the personal guarantee of the directors in security of advances to be made by a bank. In pursuance of this agreement a note was made by the company in favour of one of the directors, who indorsed it, after which it was indorsed by his co-directors successively, and delivered to the bank. Decree was obtained by the bank against all the indorsers jointly and severally, and thereafter the second indorser endeavoured to obtain relief from the first as on an ordinary bill for value. It was held that the circumstances in which the note was granted should be taken into consideration, that they showed that all the indorsers became parties to the note as co-sureties for the company, and therefore that the pursuer was not entitled to succeed.2 The cases cited do not conflict with the decision in Beveridge v. Liddell and Company, where the facts were that a bill was first accepted for the drawer's accommodation, and subsequently indorsed to enable him to discount it, and retired by the indorser. The Court refused to regard the acceptor and indorser as joint cautioners, and found the acceptor liable to the indorser, holding that the acceptor in putting his name to the bill had intended to enable the drawer to raise money, as had in fact been done. But actions of relief laid on an agreement behind the bill must be distinguished from actions laid on the bill. In the latter class of case the liability of the defender 1 M'Gregor v. Gibson, 1831, 9 S. 483; Macdonald v. Whitfield, 1883, 8 A.C. 733; Crosbie v. Brown, 1900, 3 F. 83; Reynolds v. Wheeler, 1861, 2 Macdonald v. Whitfield, cit. E S. 28. to the pursuer must appear from the bill. For example, in Walker's Trustees v. M'Kinlay,1 it was held that on the bill the defender-an indorser-could not be liable to the pursuer, who was drawer. In these cases it appears that the position of parties on the bill should be conclusive as to their respective liabilities, even when the result is contrary to the intention of parties.2 S. 29. Holder in due course. a When one person accepts a blank bill for the accommodation of another, and the person accommodated does not put his own name to the bill, but hands it to a third person, who makes himself drawer, the acceptor has not the benefits of an accommodation party against the drawer, but is liable on the bill according to the law applicable to blank acceptances.3 A holder for value, unless he is a holder in due course, takes the bill subject to all defects in his author's title.1 But an accommodation party has not as such any defence against a holder for value, though not in due course; 5 and it lies upon an accommodation party to show that the holder did not give value. Though the transference without indorsement of a bill payable to order does not constitute the transferee a holder, it has been held to give him right, if he has given value for the bill, to recover under this sub-section against an accommodation party.7 The holder of an accommodation bill is relieved, in a question with a party accommodated by the acceptor, or his indorsee who is not a holder for value, from the duty of presenting for payment,8 of giving notice of dishonour, or of taking a protest.10 а 29. (1.) A holder in due course is a holder a who 1 1879, 6 R. 1132 affd. 7 R. (H.L.) 85, 5 A.C. 754; see s. 56. n.a 2 See Matthews v. Bloxsome, 1864, 33 L.J. Q.B. 209; commented 3 Russell v. Banknock Coal Co., 4 See ss. 2, n.h, 27 (2, 3), 29. 5 See s. 36, n., but as to giving time, p. 241, infra. 6 S. 30 (1). 7 Hood v. Stewart, 1890, 17 R. 749 but see s. 31, n.o 8 See s. 46 (2 c, d). has taken a bill, complete and regular on the face of S. 29. it, under the following conditions; namely, (a.) That he became the holder of it before it was been previously dishonoured, if such was e (b.) That he took the bill in good faith and for (2.) In particular1 the title of a person who negotiates & a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear,1 or other unlawful means, or for an illegal consideration," or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud.° m (3.) A holder (whether for value or not) who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.P a See s. 2. A holder in due course must not derive title through a forged or unauthorised signature, or he is not a holder, though in every other respect he takes the bill in accordance with this section, for no right can be acquired through a forgery.1 The bill must not be blank in any material particular,2 or bear any sign of having been altered in a material particular. A bill is not irregular because, though payable on demand and bearing a penny stamp, it is post-dated; for 3 |