comes the principal debtor, and in effect agrees that he will pay it at maturity according to the terms of his acceptance. (Philpot v. Bryant, 4 Bing. 720; Rowe v. Young, 2 Bligh. H. L. 467.) To a bona fide holder the acceptance of a bill of exchange precludes the acceptor from denying the existence of the drawer; the genuineness of his signature, or his capacity and authority to draw the bill. (N. Park Bank v. North Bank, 46 N. Y. 77.) But this rule is further restricted by the authorities so that the holder in addition to being a holder in good faith, must not have contributed through neglect or otherwise in misleading the acceptor into believing the signature of the drawer to be genuine.*

By accepting a bill payable to drawer's order, the acceptor warrants that the drawer is at the time not incapacitated from indorsing, but does not warrant the genuineness of the signature or the authority to indorse.†

Acceptance of a bill payable to a third person precludes the acceptor from denying the existence of the payee, and his capacity to indorse at the time, but not the genuineness of the indorsement. (Benj.'s Chalmers, B. N. & C., Art. 212.) Where there is a forged indorsement on the bill when issued by the drawer, it could not

*White v. Cont. Bank, 64 N. Y. 316; Peoria R. R. Co. v. Neill, 16 Ill. 269. And by McKleroy v. Bank, 14 La. An. 462, it is held that the genuineness of the signature is only warranted by the acceptor to a holder who takes the bill after the acceptance.

†Braithwaite v. Gardiner, 8 Q. B. 473; Canal Bank v. Bank, 1 Hill 287; Garland v. Jacomb, 8 L. R. Ex. 216. In the latter case a bill drawn and indorsed by a partner in non-trading firm was not warranted by the acceptance.

be set up as against a bona fide holder, as the drawer is responsible for the utterance of the forgery, and can be charged with the bill by the acceptor. (Horstman v. Henshaw, 11 How. 177.)

By refusing to pay the accepted bill at maturity the acceptor becomes liable for the amount of the bill with interest from the date of maturity when the bill is payable on a day certain, or with interest from the date of presentment for payment when payable on demand. (Ayer v. Tilden, 15 Mass. 183; Patrick v. Clay, 4 Bibb. Ky. 246.) And as special damages the acceptor is liable for the expenses of protest, and cost of re-exchange to the party taking up the bill. (Bowen v. Stoddard, 10 Met. 375.)

Sec. 836. LIABILITY OF DRAWER OR INDORSER TO THE HOLDER.-"The drawer of a bill of exchange engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be not so accepted and paid he will indemnify the holder, provided due notice of dishonor be given." (Benj.'s Chalmers, B. N. & C., Art. 215.) And by drawing the bill the drawer warrants and admits to a bona fide holder the existence of the payee and his then capacity to indorse. (Id., Art. 216.)

All persons who sign a negotiable instrument except as a drawer or acceptor, or by way of receipt, incur thereby the liability of indorsers. (Bigelow v. Colton, 13 Gray 309; Ex parte Yates, 3 D. & J. 191.)*

*A person indorsing a bill or note in blank of which he is not the holder or payee, is called a quasi-indorser, and by some

Indorsers, as regards their liability are deemed new drawers. Each indorser, by his indorsement, contracts that the bill will be paid according to its tenor on presentment, and in case it is not accepted and paid he will indemnify the holder upon receiving due notice of dishonor. (1st Natl. Bank v. Marine Bank, 20 Minn. 63.) Each indorser upon indorsement warrants and admits to innocent holders the genuineness and regularity of the drawer's signature, and of all previous indorsements; that the bill is a valid and subsisting one, and that his title to it is lawful. (Williams v. Inst. 57 Miss. 633; Watson v. Chesire, 18 Ia. 202.)

As regards an innocent holder the indorser could not set up as a defense to his liability that the drawer's or acceptor's signature had been forged, or that the bill had been materially altered after issue and before indorsement, since his indorsement operates as a new and independent contract. (Andrews v. Simms, 33 Ark. 771; Dalrymple v. Hillenbrand, 62 N. Y. 5.)

The indorser upon the dishonor of the bill becomes liable to the holder for the amount of the bill with in

authorities is held to incur the liability of an indorser, subject to the true intention of the parties, which, when ascertained controls his liability. And by other authorities he is held liable as a joint promisor or co-maker in case he indorsed the note before issue, and as a guarantor if the indorsement was made after its issue, subject, of course, to the true intention of the parties. For the first rule, see: Browning v. Merritt, 61 Ind. 425; Eilbert v. Finkbeiner, 68 Pa. St. 243. And for the second rule see: Union Bank v. Willis, 8 Met. 504; Good v. Martin, 95 U. S. 90; Herbage v. McEntee, 40 Mich. 337; Chafee v. R. R., 64 Mo. 193.

terest from the date of dishonor, in the case of an inland bill, but interest in the way of damages may or may not be given as the facts of the particular case would warrant. (Keene v. Keene, 3 C. B., N. S., 144.) And upon a foreign bill of exchange, the indorser becomes liable for the face of the bill with interest from the date of dishonor, plus protest fees, re-exchange, interest and expenses.

Sec. 837. SAME SUBJECT-EXCHANGE AND RE-EXCHANGE DISCUSSED.-Ex

change means the cost of transmitting money from one place to another. But as in commercial transactions the bills drawn upon one place are offset by those the place of payment may have upon the town or city drawing, the rate or cost of exchange varies as between two places as the inequality between bills drawn and bills payable increases. In the place of the greater liabilities exchange will be higher or at a premium, and in the other place at a discount. In the case of a bill drawn payable in a foreign country the drawer, and likewise an indorser, agrees that the holder shall receive the full face value of the bill in the place of payment, it has become the rule of the law merchant that the holder, upon dishonor of the bill, from the place of payment may draw a new bill on the indorser or original drawer for such a sum as will be worth in the indorser's or drawer's domicile, the face value of the original bill in its place of payment. This second bill is called a bill of re-exchange, and the cost of such exchange is assessable by way of damages against the drawer or indorser of the dishon

ored bill. (Bank of U. S. v. United States, 2 How. 787.)*

While such a bill of re-exchange is not actually drawn it serves to ascertain the amount of damages to be collected by the holder. And now by statute in most of the States and countries this damage by way of cost of exchange is fixed and a definite amount to be recovered as liquidated damages. (Tiedeman, Com. Pap., Sec. 406.) In case of a conflict of laws, the liability of the drawer or indorser is fixed by the law of the place where the bill is drawn or indorsed, and not by the place of payment. (Crawford v. Bank, 6 Ala. 12; Gibbs v. Fremont, 9 Exch. 25.)

Promissory notes are not within the commercial rule as to re-exchange unless written "with exchange," or until indorsed, when it becomes a sort of bill of exchange upon the maker, and the holder may recover principal, interest, costs, and exchange. (Bank of Mo. v. Wright, 10 Mo. 719; Cash v. Kennion, 10 Ves. 314; contra, Adams v. Cordis, 8 Pick. 260.)

Sec. 838. SAME SUBJECT-INTEREST.Many statutes fix a legal rate of interest and allow a

*"Re-exchange means the loss resulting from the dishonor of a bill of exchange in a country different from that in which it was drawn or indorsed. The re-exchange is ascertained by proof of the sum for which a sight bill (drawn at the time and place of dishonor at the then rate of exchange on the place where the drawer or indorser sought to be charged resides must be drawn in order to realize at the place of dishonor the amount of the dishonored bill and the expenses consequent on its dishonor." (Benj.'s Chalmers, B. N. and Checks, Art. 221.)