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Decisions of the Superior Courts of New South Wales, 1788-1899

Marshall v. Hughes (1843) NSW Sel Cas (Dowling) 414; [1843] NSWSupC 17

bill of exchange

Supreme Court of New South Wales

Dowling C.J., Burton and Stephen JJ, 7 October 1843

Source: Dowling, Select Cases, Vol. 7, S.R.N.S.W. 2/3465, p. 201.

Where a party to a bill acts expressly on the basis that it is acting as an indorser and not as an acceptor, they will not be held liable as acceptors.*

This was an action on a bill of exchange drawn in Sydney on the 3rd July 1841 by one SF Mann upon Messrs J. Gore & Co. of London in favour of the defendants or order at 30 days sight for £6000 and by the defendants indorsed to J. Gore & Co. of Sydney and by the latter indorse to J. Gore & Co. of London, by whom it was indorsed to the plaintiff. There were the common money counts. To the first count, the defendants pleaded that J. Gore & Co. duly accepted the bill and the general issue to the common counts. At the trial before Burton J. and the assessors on the 17th February last, a verdict was taken by consent for £6000 subject to the opinion of the Court on a case with liberty to the Court to draw inferences from the facts stated in the same manner as jury might have done.

The material facts stated in the case were these: on the 17th July 1841 J. Gore & Co. of Sydney having specially indorsed the bill in question to J. Gore & Co. of London, sent it in a letter to them by way of remittance and charged them therewith on account. The defendants were not informed at the time of the manner in which the bill was remitted. Mann, the drawer, had no funds in the hands of J. Gore & Co., nor were the latter at the time it was drawn under any obligation to accept or pay the bill. With the bill, J. Gore & Co. transmitted certain scrip receipts or certificates for shares of the stock of "The British Colonial Bank and Loan Company", with instructions to J. Gore & Co. to raise by sale thereof the necessary funds to answer this bill at maturity which J. Gore & Co. has received from Mann, the drawer, for that express purpose, giving to him as consideration for the same, their own promissory notes only. The bill and the scrip certificates were received by J. Gore & Co. in due course with information of these facts. J. Gore & Co. finding that the scrip was of lesser value in the London market endorsed the bill to the plaintiff, but retained the scrip in their own hands. The time when this indorsement took place was not known, but on the 9th December 1841 the plaintiff formally presented the bill to J. Gore & Co. for acceptance and being refused, was duly protected for non acceptance. On the 11th December 1841, J. Gore & Co. wrote to J. Gore & Co. apprizing them that they had negotiated the bill, but in consequence of their not being in funds had refused to accept it. [Further evidence and the arguments of the parties were then set out.]

Dowling C.J. We are of the opinion under all of the circumstances stated in the case that this bill was not accepted by J. Gore & Co. Being left, by consent of the both parties to draw inferences from the facts stated in the same manner as a jury might have done, it appears to us, that the house of J. Gore & Co. could only have been made liable as indorsers of the bill and not acceptors. This bill being specially indorsed to them as a remittance, they had such a special property in it as to entitle them to put it in a course of negociation. The case is silent as to the precise time and circumstances under which it was indorsed to Marshall and therefore we are left to conclude that nothing passed on the occasion to lead him to believe him that they pledged their credit to the bill as acceptors. We must take it that they became simple indorsers, and that no demand was made by him that they should accept. The subsequent formal presentation for acceptance leads to this conclusion that there had been no prior presentations for acceptance and that this formality was resorted to for more abundant caution, prior to its transcription from London to this country for recovery against other parties to it. Indeed such a presentation was necessary for the protection not only of the plaintiff but J. Gore & Co., as well as to charge the present defendants with liability as indorsers.

The argument derived from the lack of J. Gore & Co. having kept the bill for some time before they indorsed it derives no right in charging them as acceptors, for as special indorsees, having a right to negociate it, they might exercise their own judgment as to the reasonableness of the time and opportunity for that purpose. Neither due, the fact of their keeping the scrip certificate, which were at that time unsaleable and valueless, appear to us to affect their liability in their supposed character as acceptors. These two circumstances seem to us not to raise the implication of law that they had become acceptors. It is conceded that they refused to accept, and the reason for such refusal for the indorsement to Marshall is implicitly stated in the case. They had a right to negociate the bill as indorsees, but it does not follow that because they exercised that right, they should be held liable in another capacity they have expressly repudiated. Looking at the whole of the case, as stated, the inference that we draw from the facts is that J. Gore & Co. indorsed the bill with the intent to charge themselves only as indorsers, and not acceptors, and consequently judgment must be given for the plaintiffs. The verdict will be entered for the plaintiffs for the principal amount of the bill - together with 20 per cent charges by way of re-exchange and charges and 8 per cent interest on the whole from the date of demand.

Published by the Division of Law, Macquarie University