which of the two has the right to direct to which debt the payment shall be applied? In the absence of any express appropriation, how will it be applied?

A.-The debtor has the first right of appropriating the payment; but if he neglects to do so the creditor may appropriate it to which debt he pleases. It is not, however, essential that the debtor should make an express appropriation at the time of payment; if circumstances show an intention to appropriate to a particular debt, the creditor is bound thereby. If neither party appropriates, the law will do so to the earlier items of account: (see Chit. Cont. 689-694, 11th edit.)

Q. How far are contracts and the remedies thereon affected by statute? State what you know on the subject.

A.-As before fully shown, certain contracts are by the Statute of Frauds, by the 9 Geo. 4, c. 14, and other Acts, required to be in writing, and some are, by the 8 & 9 Vict. c. 106, required to be by deed. If not in writing, in some cases the particular statute says that no action shall be brought, in others that the contract is invalid. The remedies given by the Common Law Procedure Act, 1854 (17 & 18 Vict. c. 125), were specific performance in certain cases, and by 21 & 22 Vict. c. 27, courts of equity might award damages in addition to specific performance. The Equity Division retains its exclusive jurisdiction as to the specific performance of contracts relating to real estates: (36 & 37 Vict, c. 66, s. 34, sub-sect. 3.)

2. Guarantees.

Q. What is the nature of a guarantee?

A.-It is a collateral promise, in writing, to answer for the debt, default, or miscarriage of another, who remains primarily liable for such debt, &c. (Chit. Cont. 475, 11th edit.; Birkmyr v. Darnell, 1 Sm. L. C. 326.)

Q.-Describe the legal incidents of a guarantee. (a)

A.—It must be in writing, signed by the party to be charged or his lawful agent, otherwise it cannot be sued upon : (29 Car. 2, c. 3, s. 4; Birkmyr v. Darnell, sup.) It must contain a promise to pay and the name of the person to whom the promise is made. It requires a consideration : but that need not now appear in the instrument (19 & 20 Vict. c. 97, s. 3), as was formerly necessary: (Wain v. Warlters, 2 Sm. L. C. 251.) So a guarantee must be stamped before it can be given in evidence, if the principal contract would require a stamp: (Sm. M. L. 470, 7th edit.)

Q.-Must a guarantee for a third party be in writing, or will a verbal promise be sufficient?

A.-As above stated, the Statute of Frauds prevents a verbal gurantee from being sued upon : (29 Car. 2, c. 3, s. 4.) Formerly, if a party admitted that he had made a binding guarantee by paying money into court on a count charging him with it, that rendered proof of a written instrument unnecessary: (Sm. M. L. 461, 7th edit.) Again, it must be

(a) Also asked thus: What are the requisites of an undertaking to pay the debt of another?

borne in mind that the statute only applies where the person whose debt, &c., is guaranteed is still to continue liable: (Birkmyr v. Darnell, sup.)

Q.-In what way, other than by a memorandum in writing, can a person render himself liable for the debts of another?

A. Where a third person accompanies another who orders goods for which the seller refuses to give the latter credit, and the third party promises to pay for them, his verbal promise is sufficient to render him. liable; the goods being in fact sold to the third party, though delivered to the other. But if a party who orders the goods be treated by the seller as the debtor, a verbal promise by a third party will not render him liable. The question is to whom was credit given? and this must in general be decided by a jury: (see Sm. M. L. 465, 7th edit.)

Q. In a guarantee on behalf of a third person must be stated, and how, and of what kind should it be?

any

consideration

A. Formerly a consideration must have appeared in the writing (Wain v. Warlters, sup.); but by the 19 & 20 Vict. c. 97, it is not now necessary that the consideration should appear in the writing or by necessary implication from a written document: (see sect. 3; 2 St. C. 104, 8th edit.)

As to the kind of consideration, in general any act in the nature of a benefit to the person promising, or any act which is a detriment to him to whom the promise is made, is sufficient: (see Sm. M. L. 467, 468, 7th edit.)

Q. What is a continuing guarantee? A. and B. jointly guarantee payment of a debt due from C. Under what circumstances might A. and B., or either of them, be released without any action of their own?

A.-A continuing guarantee is one which is not confined to any one transaction, but which exists until the credit be recalled by notice: (Chit. Cont., 9th edit., 495.) A. and B. would be released by the creditor's releasing the principal debtor, or agreeing to release, or by agreeing for valuable consideration to give him time, without reservation of rights, against the sureties, and in many other cases: (see Chit. Cont., 9th edit., 497.)

Q.-Give an instance of how a surety for the payment of a debt due from a third party can be discharged from his liability by the conduct of the creditor.

A. Any enlargement of the time of payment by a binding contract which ties up the hands of the creditor, and prevents him from suing the principal debtor upon the original obligation, discharges the surety, inasmuch as the situation of the surety is varied and his liability prolonged beyond what was originally contemplated (Coomb v. Woolf, 3 Bing. 163; 2 St. C. 104, 8th edit.); or by B., the creditor, accepting payment otherwise than in money-e.g. in country bank notes, the surety is not liable if the notes are not paid: (Chit. Cont., p. 504, 11th edit.)

Q.-If one of several sureties is called on to pay the whole of a guaranteed debt, has he any, and if any what, remedy against the principal debtor and co-sureties respectively?

A. He may recover against the principal all moneys which he has paid

upon, or any damages which he has incurred under his guarantee, and as against his co-sureties he is entitled to contribution for the sum he has paid in excess of his proportion of the demand; and by 19 & 20 Vict. c. 97, s. 5, he is entitled to have the benefit of all securities held by a creditor, and to use his name, if necessary, to recover upon them, and payment by him cannot be pleaded as a satisfaction of the debt, but as against co-sureties he can only recover the fair proportion: (Chit. Cont. 505, 11th edit.)

Q. When does the right of the surety in a guaranty to compel the principal to indemnify him arise and how may he then be able to improve his position with regard to that principal?

A.-On paying the debt he may proceed as above stated.

Q.-A. B., in the presence of a witness, makes a representation concerning the character of a third party, upon which credit is given to the latter; such representation proving false, can an action be successfully maintained against A. B.?

4.-No; for by 9 Geo. 4, c. 14, it is enacted that no action shall be brought to charge any person, by reason of any representation or assurance made or given concerning or relating to the conduct, credit, ability, trade, or dealings of any other person, to the intent or purpose that such other person may obtain credit, money, or goods upon (a) unless such representation or assurance be made in writing, signed by the party to be charged therewith :" (see 2 St. C. 103, 8th edit.)

Q.-Should you advise that an action would lie upon the following guarantee :-To A. B. I agree to pay for whatever goods you should sell to C. D., in case of his making default in the payment thereof. E. F.? A.-There being a consideration and a promise I should advise an action to be brought: (see Sm. M. L. sup.)

Q.-If a guarantee is given to several persons who are not themselves interested in the subject-matter of the guarantee, who must be the parties to sue on the guarantee ?

A.-If the persons to whom the guarantee is given are entire strangers to the consideration, they cannot sue in their own names; therefore, the person from whom the consideration moves must be the plaintiff : (see Chit. Cont. 53, 11th edit., and the cases there considered.)

Bills of Exchange, Promissory Notes, and Cheques.

Q.-Define a bill of exchange.

A.-It is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requesting the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person or to bearer: (45 & 46 Vict. c. 61, s. 3 (1). (b)

(a) So in the Act.

(b) An instrument bad as a bill of exchange may be good as a promissory note: (Fielder v. Marshall, 3 L. T. Rep. N. S. 858.)

D

Q.-Define a promissory note.

A.—It is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable time a sum certain in money to, or to the order of, a specified person, or to bearer: (45 & 46 Vict. c. 61, s. 83 (1).)

Q.-Define a cheque.

A.-A bill of exchange drawn on a banker, payable on demand: (45 & 46 Vict. c. 61, s. 73.) (a)

Q.-What is the effect of crossing a cheque, and what is the effect of crossing it with the name of a banking firm?

4. The effect of simply crossing a cheque is to make it payable only to or through some banker. If crossed with the name of a banking firm it can only be paid to or through that firm: (Ib., s. 79.)(b)

Q.-A cheque on a banker, payable on demand to A. or order; the indorsement purports to be by A., but is forged. The banker pays the cheque is he responsible?

A.-No; if a cheque payable to order on demand purports to be indorsed by the person to whom it is made payable, the banker is authorised to pay it to the bearer: (Ib., s. 60.) (c)

Q.—A., owing money to B., draws a cheque on a London joint stock bank to B.'s order, crosses it "and Co.," and marks it "not negotiable." B. receives it, and indorses it, but it is stolen from him, presented through some bankers, and paid. What (if any) remedy has B. against the joint stock bank, or A. ? Give a reason for your answer. Would it make any difference if the cheque had been stolen before it came to B.'s hands, and his indorsement forged?

A.-In the first case the bank is protected by sect. 80 of Bills of Exchange Act, 1882 (45 & 46 Vict. c. 61), and there would be no remedy against A., the cheque having come to the hands of B. In the second case B. could recover against A., as no payment in any form had reached him; but not against the bank, as they are protected by sect. 60 of the above Act.

Q. What is an I O U, and in what respects does it differ from a promissory note?

A.-An IO U is a mere acknowledgment of a debt. It differs from a promissory note in requiring no stamp, that it need not be addressed to

(a) It is now decided that a cheque payable to A. B. or bearer, and indorsed by A. B., may be recovered on in an action by the holder against A. B. But, per Byles, J., the writing the name on the back of the cheque must be done animo endorsandi, to bind the indorser: (Keen v. Beard, sup.)

(b) If paid to another firm, they would be responsible if the indorsement was forged, but not if it was genuine, neither would the other firm in the latter case, although the cheque subsequent to indorsement had been stolen, unless it has been marked "not negotiable" under the new Act, when the holder can give no better title to the cheque than the person from whom he took it had (s. 81): (see Smith v. Union Bank, 45 L. J. 149.)

(c) But the bearer who receives the money is responsible if it is forged: (see Arnold v. Cheque Bank, 45 L. J. 562, and Bobbett v. Tinket, ib. 555); but not the bank collecting it: (s. 60)

anyone, is not negotiable, and cannot be sued upon : (Sm. Man. of C. L. 666-9.)

Q-What is the difference between an inland and a foreign bill of exchange?

A.-An inland bill is a bill which is, or on the face of it purports to be, (a) both drawn and payable within the British Islands (meaning any part of the United Kingdom, the islands of Man, Guernsey, Jersey, Alderney and Sark and the adjacent islands, being part of Her Majesty's dominions), or (b) drawn within the British Islands upon some person resident therein. Any other bill is a foreign bill; but unless the contrary appear on the face of the bill, the holder may treat it as an inland bill: (45 & 46 Vict. c. 61, s. 4.) It is unnecessary to protest a bill which does not show on the face of it that it is a foreign bill (ib., s. 51); but a foreign bill may be stamped after it is drawn, though an inland bill cannot.

Q.-Give the form of a bill of exchange.
A.- £200.

London, Jan. 18, 1878. Three months after date (or any time arranged by the parties) pay to me or my order the sum of two hundred pounds for value received.

To Mr. C. D.

A. B. This is accepted by C. D. writing his name across it and usually specifying where it is payable.

Q.-Describe the parties to a bill of exchange, and state their relative liabilities.

A. The parties are he who draws it, called the drawer; he to whom it is addressed, called the drawee, but after he has accepted he is termed the acceptor; and he to whom the money is to be paid called the payee, There are also, when the bill is made payable to order, other parties, who are the indorsers of the bill, the holder in such case being the indorsee.

The acceptor is primarily liable, and is the principal, all the other parties being merely sureties for him. But they are not as between themselves merely co-sureties, but each prior party is a principal in respect of each subsequent party. Thus an indorser is considered as a new drawer, unless he qualify his indorsement, as by adding the words, "without recourse to me: (Byles, B., ch. 1, and 45 & 46 Vict. c. 61.)

Q. What engagements and admissions are the acceptor, drawer, and indorser of a bill of exchange respectively taken to have made by drawing, accepting, and indorsing it respectively?

A.-The acceptor of a bill, by accepting it—

(1) Engages that he will pay it according to the tenour of his accept

ance;

(2) Is precluded from denying to a holder in due course

(a) The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the bill;

(b) In the case of a bill payable to drawer's order, the then capacity of the drawer to indorse, but not the genuineness or validity of his indorsement;

(c) In the case of a bill payable to the order of a third person, the existence of the payee and his then capacity to indorse, but