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the creditor, or the check had passed through his hands. A bank cannot maintain a claim for money lent and advanced, merely by showing the defendant's check paid by them, because the general presumption is, that the bank paid the check because it was drawn by a depositor against funds.
While the death of a drawer countermands his check, if the bank pay it before notice of the death reaches them, they are discharged. This would seem to be almost a necessary infer. ence from the general purpose of banks of deposit, and the use which merchants make of them.
If a bank pay a forged check, it is so far its own loss, that the bank cannot charge the money to the depositor whose name was forged. But the bank could recover the money back from one who presented a forged check, and was paid, provided the payee, if innocent, loses no opportunity of indemnity in the meantime, and can be put in as good a position as if the bank had refused to pay it. But if somebody must lose, the bank should, because it is the duty of the bank to know the writing of its own depositors. If it pay a check of which the amount has been falsely and fraudulently increased, it can charge the drawer only with the original amount. But if the drawer himself causes or facilitates the forgery, as by so carelessly writing it, or leaving it in such hands, that the forgery or alteration is easy, so that it may be called his fault, and the bank is innocent, then the the loss falls on the drawer. If many persons, not partners, join in a deposit, they must join in a check; but if one or more abscond, a court of equity will permit the remainder to draw
6. OF ACCOMMODATION PAPER. -An accommodation bill or note is one for which the acceptor or maker has received no consideration, but has lent his name and credit to accommodate the drawer, payee, or holder. Of course he is bound to all other parties, precisely as if there were a good consideration ; for, otherwise, it would not be an effectual loan of credit. But he is not bound to the party whom he thus accommodates; on the contrary, that party is bound to take up the paper, or to provide the accommodation acceptor, or maker, or indorser, with funds for doing it, or to indemnify him for taking it up. And if, before
the bill or note is due, the party accommodated provides the party lending his credit with the necessary funds, he cannot recall them; and if he becomes bankrupt, they remain the property of the accommodation acceptor, or maker, who, if sued on the bill or note, can charge the party accommodated with the expense of defending the suit, even if the defence were unsuccessful, if he had any reasonable ground of defence, because the defence was for the benefit of the party accommodated; inasmuch as he must repay the accommodation party if he pays the bill or note.
7. OF FOREIGN AND INLAND Bills.-Bills of exchange may be foreign bills, or inland bills. Foreign bills are those which are drawn or payable in a foreign country; and for this purpose, each of our States is foreign to the others. Inland bills are drawn and payable at home. Every bill is, on its face, an inland bill, unless it purports to be a foreign bill. If foreign on its face, evidence is admissible to show that it was drawn at home. If a bill be drawn and accepted here, but afterwards actually signed by the drawer abroad, it is a foreign bill. If a foreign bill be not accepted, or be not paid at maturity, it should at once be protested by a notary public. Inland bills are generally, and promissory notes frequently, protested; but this is not generally required by the law. The holder of a foreign bill, after protest for non-payment, or for non-acceptance, may sue the drawer and indorser, and recover the face of the bill, and, in addition thereto, his damages, which damages on protest are generally adjusted in this country by various statutes,—which give greater damages as the distance is greater; and an established usage would supply the place of statutes if they were wanting.
8. OF THE LAW OF PLACE.—The different States of the Union are, as to questions arising under Mercantile Law, foreign countries as to each other. Important questions sometimes arise in the case of foreign bills (as well as in some other cases), dependent upon what is called the Law of Place, the Latin phrase for which, Lex Loci, is often used. In general, every contract is to be governed by the law of the place where it is made. Thus, if a bill is drawn in France, and there
indorsed in a way which is sufficient here, but insufficient there, the indorsement would here be held void. But if a contrací entered into in one place is to be performed in another, as in the case of a note dated, or a bill drawn, in one State, but payable in another, the prevailing rule is, that the law of the place where the note is payable construes and governs the contract. Therefore, if a bill be drawn in England, payable in France, the protest and notice of dishonor must be regulated by the law of France. But one who makes such a note may elect, for many purposes, which law shall govern it. Thus, if he makes it in New York, and it is payable in Boston, he may promise to pay the legal interest of New York, and will be bound to this payment in Boston, although the legal interest in Boston is less; but if there be no such express promise, the interest payable will be that of the place where the note is payable.
While the law of the place of the contract interprets and construes it as a debt, the law of the place where it is put in suit - which is called the Law of the Forum, or Court - determines all questions as to remedy ; that is, all questions which relate to the legal means of recovering the debt. Thus, in general, the statutes of limitation of the place of the court are applied. But if a cause of action relating to any special subject-matter which has a definite location, as a parcel of land has, be I arred by a statute of limitations where the subject matter is situated, it is barred everywhere. A promisor, not subject to arrest in the country where the note is made, may be arrested under the laws of the country where the note is sued.
It will always be presumed, in the absence of testimony, that the law of a foreign country is the same with that of the country in which the suit is brought. If a difference in this respect is a ground of defence, or of action, it must be proved by evidence.
THE CONSIDERATION OF NEGOTIABLE PAPER.
I. EXCEPTION TO THE COMMON LAW RULE, IN THE CASE OF NEGOTIABLE PAPER.-By the common law of England and of this country, as we have seen, no promise can be enforceci,
unless made for a consideration, or unless it be sealed. But bills and notes payable to order, that is, negotiable, are, to a certain extent an exception to this rule. Thus, an indorsee cannot be defeated by the promisor showing that he received no consideration for his promise; because the promisor made an instrument for circulation as money; and it would be fraudulent to give to paper the credit of his name, and then refuse to honor it. But as between the maker and the payee, or between indorser and indorsee, and, in general, between any two immediate parties, the defendant may rely on the want of consideration; that is, if an indorsee sues the maker, and the maker says he had no consideration for the note, this is no defense; but if the indorsee sues his indorser, and the indorser shows that the indorsee paid him nothing, this would be a good defense; and so it would be if the payee sued the maker. So, if a distant indorsee has notice or knowledge, when he buys a note, that it was made without consideration, he cannot recover on it against the maker, unless it was an accommodation note, or was intended as a gift.
Thus, if A, supposing a balance due from him to B, gives B his negotiable note for the amount, and afterwards discovers that the balance is the other way, B cannot recover of A; nor can any third or more distant indorsee who knows these facts before buying the note. But if A gives B his note wholly without consideration, for the purpose of lending him his credit, or for the purpose of making him a gift to the amount of the note, and C buys the note with a full knowledge of the facts, he will nevertheless hold A, although B could not. If the note was bought honestly for a fair price, the buyer should recover its whole amount. Every promissory note imports a consideration; that is, none, in the first place, need be proved; but when want of consideration is relied on in defence, and evidence is given on one side and the other, the burden of proof is on the plaintiff to satisfy the jury that consideration was given.
If an endorser, sued by an indorsee, shows that the note was originally made in fraud, he may require the holder to prove that he paid consideration; but if this be proved, he must pay the whole of the note, unless he was himself defrauded
by the holder. And if an accommodation note be discounted in violation of the agreement of the party accommodated, the holder can still recover, provided he received the note in good faith, and for valuable consideration.
2. Of “VALUE RECEIVED."-" Value received " is usually written, and therefore should be; but is not necessary. If not written, it will be presumed by the law, or may be supplied by the plaintiff's proof. If expressed, it may be denied by the defendant, and disproved. And if a special consideration be stated in the note, the defendant may prove that there was no consideration, or that the consideration was different. If "value received” be written in a note, it means received by the maker from the payee; if the note be payable to the bearer, it means received by the maker from the holder. In a bill, "value received” means that the value was received from the payee by the drawer. But if the bill be payable to the drawer's own order, then it means received by the acceptor from the drawer.
3. WHAT THE CONSIDERATION MAY BE.--A valuable consid. eration may be either any gain or advantage to the promisor, or any loss or injury sustained by the promisee at the promisor's request. A previous debt, or a fluctuating balance, or a debt due from a third person, might be a valuable consideration. So is a moral consideration, if founded upon a previous legal consideration; as, where one promises to pay a debt barred by the statute of limitations, or by infancy. But a merely moral consideration, as one founded upon natural love and affection, or the relation of parent and child, is no legal consideration.
No consideration is sufficient in law if it be illegal in its nature; and it may be illegal because, first, it violates some positive law, as, for example, the Sunday law, or the law against usury. Secondly, because it violates religion or morality, as an agreement for future illicit cohabitation, or to let lodgings for purposes of prostitution, or an indecent wager; for any bill or note founded upon either of these would be void. Thirdly, if distinctly opposed to public policy; as an agreement in restraint of trade, or injurious to the revenue, or in restraint of marriage, or for procurement of marriage, or suppressing evidence, or withdrawing a prosecution for felony or public misdemeanor.