Acceptance of a Non-existing Bill.

The doctrine is established in the United States, as to an acceptance of a non-existing bill, that a letter written within a reasonable time before the drawing of a bill, describing it and promising to accept it, is an ac ceptance in favor of the person to whom such promise was communicated and who took the bill on the credit of it. (Coolidge v. Payson, 2 Wheat. R. 66.) So if a person, in writing, authorizes another to draw a bill of exchange, and promises to honor the bill, and the bill be afterwards drawn, and taken by a third party on the credit of that letter, it amounts to an acceptance of the bill. (Goodrich v. Gordon, 15 Johns. R. 6.) But the rule is applicable only to cases of bills payable on demand, or at a fixed time after date, and not to bills payable at or after sight. (Story on Bills, § 249.)

A parol promise to accept a bill already drawn, or thereafter to be drawn, is binding, if the bill be purchased in consideration of the promise. Thus, where A verbally promised B that A & Co. would honor, accept, or pay bills drawn by C to a certain amount, and B within a reasonable time, upon the credit of this promise, purchased two bills drawn by C on A & Co. to the specified amount, it was held that A was liable to B on this promise, to the amount of the bills, they having been dishonored. (Townsley v. Sumrall, 2 Pet. Sup. Ct. R. 120.) But it does not follow from this, that a parol promise to accept a non-existing till would amount to an acceptance of the bill.

Erasure of the Acceptance.

Although the drawee writes his name on the bill, yet if, before he has parted with the bill, or communicated the fact, he changes his mind, and erases the acceptance, he is not bound. (Kent's Com. III. p. 85.)

The law in regard to the loss or destruction or defacing of bills, in the hands of the drawee, is the same, as we stated before, as the English law.

Form of Acceptance in particular Cases.

Where the bill is drawn on a partnership, it should be accepted in the partnership name, by any one of the partners. When it is drawn on two or more persons, who are not partners, all of them should sign the acceptance; for an acceptance by one will not bind the others; and the holder is entitled to the acceptance of all. An agent must accept in the name of his principal. Where a bill is drawn in sets, the drawee should not accept more than one part of the set, or he might become responsible to different holders upon each of the accepted parts. (Story on Bills, $251.)

Qualified and Conditional Acceptance.

If the bill be accepted in a qualified degree only, and not absolutely, according to the tenor of it, the holder may assent to it, and it will be a good acceptance to that extent; or he may insist upon an absolute acceptance, and for the want of it protest the bill. A conditional acceptance is, for instance, when the drawee accepts a bill "to pay when goods

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conveyed to him are sold," or "when in cash for the cargo of the ship A.," or to accept when a navy bill is paid." The acceptance is quali fied when the drawee absolutely accepts the bill, but makes it payable at a different time or place, or for a different firm, or in a different mode, from the one expressed in the bill.

If the holder take a conditional or qualified acceptance, he does it at his own peril and risk, and he must give notice thereof to the antecedent parties, and if he does not, they will not be bound by it, but be absolved from all responsibility upon the bill; and it should seem that a protest of the bill for the non-acceptance according to the tenor of the bill, is necessary, and that a mere notice without such protest is not sufficient, unless after notice such parties consented to the conditional or qualified acceptance. (Story on Bills, § 240.)

The holder meaning to assent to a conditional offer of acceptance, must do so at the time of the offer; for if he declines it then, it will be a waiver of all right to hold the drawee. If he assents to it, the acceptor will, if the condition be complied with, be bound by it. Any conditions annexed to an acceptance should appear upon the face of the acceptance, if in writing, because any subsequent holder for value, without notice, would not be bound by any verbal conditions.

Acceptance supra Protest.

When a bill has been protested for non-acceptance or non-payment by the drawee, a third person may intervene, and become a party to the bill, by accepting and paying the bill for the honor of the drawer, or of a particular indorser. This acceptance is termed an acceptance supra protest, and such an acceptor becomes liable to the same obligations as if the bill had been directed to him. He has his remedy against the person for whose honor he accepted, and against all the parties who stand before that person. If he takes up the bill for the honor of the indorser, he is like an indorsee, and has the same remedies to which an indorsee would be entitled against all prior parties, and can sue the

drawer and indorsers.

Such an acceptance is allowable only after the drawee has refused acceptance or payment, and the bill has been protested, and the acceptor must, at the same time, specify for whose honor he accepts, as his rights, if he pay the bill, against the antecedent parties are essentially changed. If he accepts for the drawer only, he will, ordinarily, have no rights of recourse against the indorsers. It is also to be observed, that if the bill, on its face, directs a resort to a third person, in case of refusal by the drawee, (which is expressed at the foot of the bill, by using the words, "In case of need, apply to —,") such direction becomes a part of the contract, and the holder must apply first to such third person. Although, when the drawee has accepted a bill, no other person can intervene and accept, yet in cases of an acceptance supra protest, or for honor, there may be several acceptances for the honor of different parties. Thus, for example, one person may accept the bill supra protest, for the honor of the drawer, another for the honor of the first indorser, and so on. It may be also done by the drawee himself, either in favor of the drawer or of an indorser of the bill.

The Mode of accepting a Bill supra Protest, and the Form of an Act of Honor.

When any person intends to accept a bill supra protest, an act of honor, or an act for honor, as it is sometimes called, must be prepared by a notary, which is a notarial certificate, under the hand and seal of the notary, declaring that the bill, of which a copy is prefixed, having been protested for non-acceptance, a third person (or the drawee, as the case may be) would accept the bill, either for the whole or a part of the amount, for the honor or on account of any party to it; and it commonly concludes with some general declaration, to the effect, that such party (and other proper persons) are held responsible for the amount, and for all costs, damages, interest, etc. It is not necessary to have any attesting witness to it. The act of honor must be truly dated, on the day on which the bill was exhibited and the acceptor for honor undertook to accept it; it is, in fact, a notarial certificate, explaining the nature and objects of the acceptance supra protest. A copy is preserved of the act of honor, and of the bill, in the protest book, or book of registry of the notary.

The protest should be kept by the holder of the bill, as it is for his security, but the act of honor, or a duplicate, should be kept by the acceptor supra protest, who also pays the expense of the act of honor, and if he accept for the whole amount, he also pays or reimburses the expense of the protest.

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After the act of honor has been prepared, or at the same time with it, the acceptor, or some person authorized by him, writes upon the bill an acceptance, which may be and generally is as follows: Accepted supra protest for the honor of the drawer [or the indorser]. 1st March, 1853. A. B."

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Or if for part : — Accepted supra protest for

dollars, being part of the amount of this bill for the honor of - 1st March, 1853."

If it happens that the drawee has not sufficient funds of the drawer on hand to pay the full amount of the bill, and he is willing to accept for a part of the amount only, the proper and regular course is to cause the bill to be absolutely protested, and to state in the protest that the drawee had refused to accept it according to the tenor of the bill; and then to have an act of honor prepared, certifying that the drawee would accept the bill supra protest for part of the amount, for the honor of the drawer; and then for the drawee to make an acceptance supra protest for such part on the bill.

This mode is the safest for the holder, to avoid any question in regard to the discharge of prior parties. (See R. Brooke's Treatise on the Office of a Notary of England, pp. 114-119.)

Duty of the Holder.

The holder must give due notice of the dishonor of the bill to the other parties to the bill, as in ordinary cases of dishonor.

Effect of a General Acceptance supra Protest.

In Chitty on Bills, Ch. VIII. § 3, it is said: "A general acceptance supra protest is considered as made for the honor of the drawer, unless otherwise expressed. Such acceptance, however, may be so worded, that, though it be intended for the honor of the drawer, yet it may equally bind the indorser; but in this case, notice of such acceptance must be sent to the latter. If there be several offers of acceptance for honor, that which is most extensive should, it is said, be preferred. The holder, as well as the acceptor supra protest, should always take care to have the bill protested for non-acceptance before the acceptance for honor is made."

Obligations of an Acceptor supra Protest.

The obligations of an acceptor for honor are conditional, namely, that he will pay the bill, if duly presented to the original drawee for payment, and due protest is made thereof, and due notice is given to him of the dishonor. If these acts are not strictly done, the acceptor for honor is discharged. (Story on Bills, § 261.)

Duty of the Holder.

The holder of a bill is not obliged to take an acceptance supra protest, but he would be bound to accept an offer to pay supra protest. But if he does take it, he must strictly conform with the rules of law, as above stated; but having given due notice to the other parties to the bill, he retains his rights against them.

The Drawee may accept for Honor.

The drawee, too, as well as any other person, may accept for honor. Thus, if a bill be drawn by A on account of B, he may accept for the honor of A, and on his account. So the drawee may accept for the honor of an indorser, and on payment of the bill he can sue the indorser or any of the prior parties.

Protest for better Security.

If it happens that, after acceptance, and before the maturity of the bill, the acceptor absconds, or becomes a bankrupt, or insolvent, the holder may protest the bill, at his pleasure, but he is not bound to do so; for if he neglects to make this protest, it will not affect his remedies against the prior parties, either drawers or indorsers. This protest is called a protest for better security. Its principal use seems to be, that by giving notice to the drawers and indorsers of the situation of the acceptor, by which it is become improbable that payment will be made, they are enabled by other means to provide for the payment of the bill when due, and thereby prevent the loss of reëxchange, etc., occasioned by the return of the bill. But though the drawer or indorsers refuse to give better security, the holder must, nevertheless, wait till the bill be due before he can sue either of those parties. (Chitty on Bills, Ch. VIIL § 3, pp. 375, 397, 8th edit.)

This course is principally pursued with respect to foreign bills from the Continent of Europe, as the advantage of it is, that, by the laws of various countries, the holders may, after such a protest, attach the property of, or sue, the parties to them. (See the foreign law, before stated.) As respects legal proceedings in this country, it is not considered incumbent on the holder to make this protest; nor will his neglecting to do sc injure his remedy against the drawer or indorsers.

If the holder should take a protest for better security, and the security should not be given, another protest must be made for non-payment, at the time of maturity of the bill, and due notice must be given, in order to hold the prior parties.

Forgery of the Signature of the Drawer and other Parties.

It must yet be mentioned, that the acceptance, whether general or for honor, or supra protest, after sight of the bill, admits the genuineness of the signature of the drawer, and consequently, if the signature of the drawer should be a forgery, the acceptance will, nevertheless, be binding as to a bonâ fide holder for value, without notice, and entitle such holder to recover. (Canal Bank v. Bank of Albany, 1 Hill, N. Y. R. 287.) But there is no such implied admission, on the part of the acceptor, of the genuineness of the signature of the payee, or of any other indorser; and consequently the holder, in order to recover against the acceptor upon the bill, must establish, by proofs, the genuineness of their signatures, in order to make title thereto, although he need not prove the genuineness of that of the drawer. In like manner, an acceptance admits the ability of the party to draw, and if drawn by an agent in the name of his principal, it also admits that he has full authority to draw the bill. But it does not admit the authority of the agent to indorse the same bill, even though it is made payable to the order of his principal, and is indorsed by the same agent in the name of the principal. Story on Bills, § 262.

The drawee is bound to know the drawer's signature, and if he accepts a forged bill, he is bound to pay it; and if he has paid it to a bonâ fide holder, he cannot recover the money back. Goddard v. Merchants' Bank, 4 Comstock, 147; Bank of Commerce v. Union Bank, 3 Comstock, 234.

This rule is applicable to third persons who intervene for the honor of the supposed drawers, and pay a forged bill, if they have seen the bill before parting with their money. A forged bill, purporting to have been drawn by the Canal Bank at Cleveland, was presented to the drawees in New York on Saturday, and payment refused for want of funds. On Monday after, the plaintiff called at the notary's office and desired to see the bill, but did not see it. He left a check for the amount of the bill, and requested that the bill should be immediately sent to his residence. The check was given by the clerk to the notary, who on the same day delivered it to the holder of the bill, but did not send the bill to the plaintiff. On Tuesday the plaintiff called again, and, upon inspecting the bill, at once pronounced it a forgery; under these circumstances, it was held that the plaintiff was not chargeable with negligence, and that the holder