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Stolen Bill

person, holder, section, exchange and bills

STOLEN BILL. A bill of exchangecan be the subject of larceny like any other valuable document of title, but it is un necessary to inquire into anything beyond the civil position as to liability in connection with the matter.

By Section 20 of the Bills of Exchange Act, 1882, very full authority is given to fill up an inchoate instrument (q.v.) and turn it into a complete bill. But this does not permit of the filling up and the conversion being effected by any other than the duly authorised person. If, therefore, an inchoate instrument is stolen before comple tion, no action can be brought upon it, for it would have to be signed by some person or other, and the signature would be either forged or unauthorised, having been made by some person other than the one entitled to complete the bill. The forged or un- ' authorised signature is wholly inoperative (Section 24). This is well established by the case of Baxendale v. Bennett (1878, 3 Q.B.D. 525). B put his blank acceptance in a desk. It was stolen, filled up as a bill by C with his own name as drawer, and nego tiated. It was held that even a holder in due course could not recover from B, as he had never delivered the inchoate instrument for the purpose of being converted into a bill by C. Whatever remedies there may be for those persons who have dealt in and with the instrument, they are independent of the document, which never became a bill at all.

Again, if a bill complete in form is stolen, the liability of the parties will depend upon the particular circumstances. Thus, C, the holder of a bill, specially indorsed it to D, and forwarded it in a letter to D. In the

course of transmission the bill was stolen and D's indorsement forged. The bill was after wards negotiated. Since the indorsement of D was necessary for negotiation, and this had not been obtained, the signature was, under Section 24, wholly inoperative, and C still retained the property in the bill. No liability rested on any person who was a party to the bill prior to the time of D's forged indorse ment (Arnold v. Cheque Bank, 1876, 1 C.P.D.

578, at p. 5S4). If, on the contrary, the bill is indorsed in blank and stolen, a holder in good faith and without notice that his title to the bill is defective is entitled to demand payment of the same. And if a bill indorsed in blank is stolen whilst in the course of negotiation for any person who was the holder of it, the payment at maturity by the acceptor, provided he acts in good faith, is a good discharge of the bill, even though the payment is made to the actual thief (see Smith v. Sheppard, 1776, a case cited by Chitty in his " Bills of Exchange," 10th ed., p. 180, n.).

When a bill is in the hands of a holder in due course a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed. (Section 21.) With regard to bills of exchange in general, that is, those bills which do not fall within the definition of a cheque (see Section 60), a banker is in no better position than a private individual, unless special arrangements are made by the banker when a bill is made payable at his bank.