. I should be very sorry to see the doctrine of constructive notice introduced into the law of negotiable instruments. But regard to the facts of which the taker of such instruments had notice is most material in considering whether he took in good faith. If there be anything wanting which excites the suspicion that there is something wrong in the transaction, the taker of the instrument is not acting in good faith if he shuts his eyes to the facts presented to him and puts the suspicions aside without further inquiry. . . . It is easy enough to make an elaborate presentation after the event of the speculations with which the bank managers might have occu pied themselves in reference to the capacity in which the broker who offered the bonds as security for an advance held them. I think, however, they were not bound to occupy their minds with any such specula tions. I apprehend that when a person whose honesty there is no reason to doubt offers negotiable securities to a banker or any other person, the only consideration likely to engage his attention is, whether the security is sufficient to justify the ad vance required. And I do not think the law lays upon him the obligation of making any inquiry into the title of the person whom he finds in possession of them ; of course, if there is anything to arouse suspicion, to lead to a doubt whether the person purporting to transfer them is justified in entering into the contemplated transaction, the case would be different, the existence of such suspicion or doubt would be inconsistent with good faith. And if no inquiry were made, or if on inquiry the doubt were not removed and the suspicion dissipated, I should have no hesitation in holding that good faith was wanting in a person thus acting." In the case of bonds not strictly negotiable instruments, if they contain words purport ing to make them transferable by delivery, or by indorsement and delivery, a holder may be estopped from denying their nego tiability if he has so dealt with them as to lead the person taking them to treat them as such. Where certain bonds had been handed to an agent for the purpose of raising money, and an advance was obtained from a moneylender, who afterwards deposited the securities with bankers as cover for advances by the bankers to the moneylender, the bankers (the defendants) claimed to hold the securities for what was due to them by the moneylender, and the plaintiffs claimed that the securities were a security to the defendants for such an amount only as was due by the principal and his agent to the moneylender. Thus, in the case of Easton
v. London Joint Stock Bank (1887, 34 Ch. D. 95), in the Court of Appeal, Bowen, L. J., said " Even if these bonds are not strictly negotiable, and do not possess the incidents of negotiable instruments which are recog nised as such, nevertheless a further question arises, whether S., by the way he has treated these bonds, has not estopped himself from denying their negotiability, whether he has not—by placing for disposal, and with the intention that they should be transferred, in the hands of an agent of his own, bonds which on their very face purport to create a liability quite independent of anterior equities between the company and the person who takes them—really chosen to treat these bonds as negotiable and to authorise his agent to treat them as such. If the negoti ability of these bonds by estoppel. so to speak, arises, that disposes of all difficulty that would arise owing to the seal being attached to these bonds, because it is no longer a question whether they are strictly speaking negotiable, but whether S. has chosen to treat them as such. The second way of looking at the matter may be dealt with from two points of view, but practically they run into one another. You may say that S. having placed in the hands of his agents these bonds with the intention that they should be transferred beyond those agents, and held his agents out to the world as clothed with authority to transfer them as negotiable—cannot afterwards, by any unknown dealing or limitation of authority which he has conferred on his agents, pre judice those who took the bonds which have been so floated. Or you may say, which I think is a sound way of putting it, that as regards S. and the bank these bonds have become negotiable by estoppel, and there fore S. is precluded from saying the legal title to these bonds is not in the bank,"