§ 518.

Not discharged by payment by party secondarily liable.

§ 519. Discharge by cancellation or alteration.

§ 520. Renunciation of rights.

§ 515. (Nego. Instru., Sec. 123.) Meaning of term

discharge.

(See following sections.)

§ 516. How negotiable paper discharged.

Case 555. Uniform Negotiable Instruments Act, Sec. 119.

"A negotiable instrument is discharged:

"1. By payment in due course by or on behalf of the principal debtor.

"2. By payment in due course by the party accommodated, where the instrument is made or accepted for accommodation.

"3. By the intentional cancellation thereof by the holder.

4. By any other act which will discharge a simple contract for the payment of money.

5. When the principal debtor becomes the holder of the instrument at or after maturity in his own right."

Question 555: Enumerate the various ways in which a negotiable instrument may be discharged?

§ 517. (Nego. Instru., Sec. 125.) Discharge of persons secondarily liable.

Case 556. Uniform Negotiable Instruments Act, Sec. 120.

"A person secondarily liable on the instrument is discharged:

"1. By an act which discharges the instrument.

"2. By the intentional cancellation of his signature by the holder.

"3. By the discharge of a prior party.

"4. By a valid tender of payment made by a prior party.

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"5. By a release of the principal debtor, unless the holder's right of recourse against the party secondarily liable is expressly reserved, or unless the principal debtor be an accommodating party.

"6. By any agreement binding upon the holder to extend the time of payment, or to postpone the holder's right to enforce the instrument, unless made with the assent of the party secondarily liable, or unless the right of recourse against such party is expressly reserved." Question 556: Enumerate the various ways in which a person secondarily liable is discharged.

§ 518. (Nego. Instru., Sec. 126.) Not discharged by payment by party secondarily liable.

Case 557. Uniform Negotiable Instruments Act, Sec. 121.

"Where the instrument is paid by a party secondarily liable thereon, it is not discharged; but the party so paying it is remitted to his former rights as regards all prior parties, and he may strike out his own and all subsequent indorsements, and again negotiate the instrument, except:

"1. Where it is payable to the order of a third person and has been paid by the drawer; and,

"2. Where it was made or accepted for accommodation, and has been paid by the party accommodated." Question 557: State the provisions of this section.

§ 519. (Nego. Instru., Sec. 127.) Discharge by cancellation or alteration.

(See also Sec. 485, supra.)

Case 558. Uniform Negotiable Instruments Act, Secs. 123, 124, 125.

"[Sec. 123.] A cancellation made unintentionally, or under a mistake, or without the authority of the holder, is inoperative; but where an instrument or any signature thereon appears to have been cancelled, the burden of proof lies on the party who alleges that the cancellation was made unintentionally, or under a mistake or without authority.

"[Sec. 124.] Where a negotiable instrument is materially altered by the holder without the assent of all parties liable thereon, it is avoided except as against a party who has himself made, authorized or assented to the alteration and subsequent indorsers.

"But when an instrument has been materially altered and is in the hands of a holder in due course, not a party to the alteration, he may enforce payment thereof according to its original tenor.

"[Sec. 125.] "1. The date.

Any alteration which changes:

"2. The sum payable, either for principal or interest. "3. The time or place of payment.

"4. The number and the relations of the parties. "5. The medium of currency in which payment is to be made.

"Or which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect, is a material alteration."

Question 558: (1) If a cancellation is made unintentionally, what is the effect?

(2)

What presumption is made as to such cancellation? (3) When an instrument is materially altered, what result follows!

(4) Can suit be brought on it in its original form: (a) by the party altering it; (b) by a holder in due course?

(5) What alterations are considered material?

§ 520. (Nego. Instru., Sec. 128.) Renunciation of rights.

Case 559. Uniform Negotiable Instruments Act, Sec. 122.

"The holder may expressly renounce his right against any party to the instrument before, at, or after its maturity. An absolute and unconditional renunciation of his rights against the principal debtor made at or after the maturity of the instrument, discharges the instrument. But a renunciation does not affect the rights of a holder in due course without notice. A renunciation must be in writing, unless the instrument is delivered up to the person primarily liable thereon."

Question 559: To constitute a renunciation of rights, what is necessary?

Case 560. In re George (1890), 4 Ch. D. 627.

Facts: M. A. Francis gave her note for £2,000 to F. W. George, now deceased. Some hours before his death George directed the promissory note to be brought to him that he might destroy it. The note could not be found. George then sent for the nurse and told her he could not find the note, but that he wished to forgive the debt, and made the nurse promise she would destroy the · note, and that she would testify that it was George's wish that it should be destroyed, and that she should write this down. Thereupon the nurse wrote this memorandum: "30th August, 1889. It is by Mr. George's dying wish that the cheque for £2,000 money lent to Mrs. Francis be destroyed as soon as found. Mr. George is perfectly conscious and in his sound mind. (Signed) Nurse T." After George's death the note was found by the executors, and this is a proceeding to determine whether it has been cancelled.

Point Involved: What amounts to a legal renunciation of rights upon a negotiable instrument.

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CHITTY, J.: Then comes the question, whether there is a 'renunciation' 'in writing' within Sec. 62, Sub-Sec. 1. I entertain no doubt of the integrity and trustworthiness of the witnesses, and I entertain no doubt also that it was the testator's intention to forgive, or discharge this note in favour of the plaintiff. I am quite satisfied with the evidence on this point. Sec. 62, Sub-Sec. 1, says the renunciation must be in writing, unless the bill is delivered up to the 'acceptor,' and, changing the language to suit the present case, that would be, unless the note is delivered up to the maker. The statute contains provisions for the cancellations of bills of exchange, and, therefore, of promissory notes also. So that it is quite clear, that if this note had been in the testator's possession at the time, he would have had it destroyed: upon that point I entertain no doubt. I have, however, to deal with the statute, which is not confined, of course, to cases such as this, but is a statute as to bills of exchange, and has a wide operation among mercantile men; and I feel that I must be on my guard not to allow any sympathy I may have with the plaintiff on the facts of the case in any way to influence my judgment in construing this section; because I might, if I did give way on such a ground as that, be inflicting considerable injury upon merchants and others.

"Now, it is plain that what must be in writing is an absolute and unconditional renunciation of rights. It is not necessary to put those words in; but that must be the effect of the document. Then the document is not to be a note or memorandum of the renunciation or of an intention to do it, but it must be itself the record of the renunciation. I am not called upon to say whether the words, 'the renunciation must be in writing,' involves the signature; and I do not propose to say anything which would tend to show it was my opinion that the renunciation in writing need not be signed. I see great danger in holding that the signature is not required. I leave the point wholly undetermined. This section, as has been properly pointed out, does not, in terms, say that the writing must be signed by the holder of the bill or note;