61 The B i l l s of E x c h a n g e A c t 1882, s. 28(1), d e f i n e s an " a c c o m m o d a t i o n pa r t y " to a bill as:
"[A] p e r s o n w h o has s i g n e d a bill as drawer, a c c e p t o r or indorser, w i t h o u t r e c e i v i n g v a l u e therefor, a nd for
o d a t i o n a c c e p t o r an d a p a r t y a c c o m m o d a t e d is m o r e like that b e t w e e n a s u r e t y and a p r i n c i p a l d e b t o r t h a n the r e l a t i o n s h i p b e t w e e n the a c c e p t o r and the d r a w e r o r i n d o r s e r of an o r d i n a r y b i l l : ® 2 a l t h o u g h the p a r t y a c c o m m o d a t e d do e s not s i g n the bill as the a c c e ptor, he is n o n e t h e l e s s t a k e n to be the p a r t y p r i m a r i l y lia b l e on the bill and the l i a b i l i t y of the a c c o m m o d a t i o n a c c e p t o r of the bill is o n l y s e c o n d ary.® 3
T h e rule has b e e n e s t a b l i s h e d in the c o n t e x t of a c c o m m o d a t i o n b i l l s that w h e n the a c c o m m o d a t i o n p a r t y p a y s the bill, the bill is e x t i n g u i s h e d , ® * a n d the a c c o m m o d a t i o n p a r t y is g i v e n his o wn d i r e c t r i g ht of a c t i o n a g a i n s t the
the p u r p o s e of l e n d i n g his na m e to some o t h e r p e r so n. " W h e r e an a c c o m o d a t i o n p a r t y signs a bill as a c c e ptor, the b i l l m a y be d e s c r i b e d as an " a c c o m m o d a t i o n bill": C h a l m e r s an d G u e s t on B i l l s of E x c h a n g e . 14th ed. b y A.G. G u e s t
(London, 1992) (hereafter, " C h a l m e r s and Gue s t " ) , p. 262. Th e q u e s t i o n has arisen, w h e t h e r a bill d r a w n on a b a n k by its c u s t o m e r u n d e r an a c c e p t a n c e c r e d i t c o n s t i t u t e s an a c c o m m o d a t i o n bill. Since b a n k s i n v a r i a b l y c h a r g e a fee or c o m m i s s i o n for a c c e p t i n g s u c h bills, it is a r g u a b l e that t h e y s h o u l d not be c o n s t r u e d as a c c o m m o d a t i o n bills. H o w ever, the b e t t e r v i e w se e m s to be that the b a n k s h o u l d be c l a s s e d as an a c c o m m o d a t i o n p a r t y in s u c h c i r c u m s t a n c e s , n o t w i t h s t a n d i n g its r e c e i p t of a fee or c o m m i s si on , b e c a u s e it is g e n e r a l l y the i n t e n t i o n of the b a n k an d its c u s t o m e r that the cus t o m e r , r a t h e r t h a n the bank, s h o u l d be the p a r ty p r i m a r i l y l i a b l e on the bill: C h a l m e r s and Guest, pp. 262-263; E.P. E l l i nger, M o d e r n B a n k i n g L a w (Oxford, 1987), pp. 522-525.
®2 P o o l e y V H a r r a d i n e (1857) 7 E. & B. 431; O r i e n t a l F i n a n c i a l Corp. v O v e rend. G u r n e y & Co. (1874) L.R. 7 H.L. 348, a f f i r m i n g (1871) L.R. 7 Ch. App. 142. ®3 C h a l m e r s a n d Guest, p. 495, n. 77; R. Goode, C o m m e r c i a l La w ( H a r m o n d s w o r t h , 1982), pp. 450-451. ® * C o a t s V Th e U n i o n B a n k of S c o t l a n d Ltd. ( 1929) B.C. (H.L.) 114, at 127, p e r L o r d Atkin. 1 3 1
p a r t y a c c o m m o d a t e d to r e c o v e r his p a y m e n t . ® ® It f o l l o w s f ro m this that an a c c o m m o d a t i o n p a r t y s e e k i n g to r e c o v e r his p a y m e n t of a bill f r o m the p a r t y a c c o m m o d a t e d d o e s not n e e d to a c q u i r e the h o l d e r ' s p e r s o n a l r i g h t s a g a i n s t the p a r t y a c c o m m o d a t e d v i a " r e v i vi ng s u br og at io n" , as he ha s an a c t i o n of his o w n already. H o w e v e r , he m a y well w i s h to a c q u i r e su c h s e c u r i t i e s as the p a r t y a c c o m m o d a t e d m a y have g i v e n to the h o l d e r in r e s p e c t of his l i a b i l i t y on the bill, and it a p p e a r s that he w il l be e n t i t l e d to a c q u i r e t h e s e v ia " r e v i v i n g s u b r o g a t i o n " in the same w a y th a t a s u r e t y is e n t i t l e d to a c q u i r e the s e c u r i t i e s g i v e n b y the p r i n c i p a l d e b t o r to the c r e di to r. ®® B y an e x t e n s i o n of ® ® R e y n o l d s v D ov l e (1840) 1 Man. & G. 753 ; H a w l e y v B e v e r l e y (1843) 6 M. & G. 221, at 227, p e r Maule, J .; As p- re y v L e v y (1847) 16 M. & W . 851. Ju st as a s u r e t y is e n t i t l e d to r e c o v e r fr o m his p r i n c i p al d e b t o r the c o s ts of d e f e n d i n g c e r t a i n t y p e s of a c t i o n b r o u g h t a g a i n s t h i m by the c r e d i t o r (see p. 113, n. 25, s u p r a . and a c c o m p a n y i n g text), the a c c o m m o d a t i o n a c c e p t o r of a bill is e n t i t l e d to r e c o v e r fr o m the p a r t y a c c o m m o d a t e d the c o s t s of d e f e n d i n g an a c t i o n b r o u g h t a g a i n s t h i m by the h o l d e r of the bill: H o w e s v M a r t i n (1794) 1 Esp. 162.
® ® B e c h e r v a i s e v Le w i s ( 1872 ) L.R. 7 C.P. 372, at 377, p e r W i lles, J.; G r a y v S e c k h a m (1872) L.R. 7 Ch. App. 680. See too C h a l m e r s an d Guest, p. 267; E.P. Ell i n g e r , M o d e r n B a n k i n g L a w (London, 1987), p. 526.
W h e r e the d r a w e r of an a c c o m m o d a t i o n bi l l has g i v e n s e c u r i t i e s to the a c c o m m o d a t i o n ac c e p t o r , a n d b o t h d r a w e r and a c c e p t o r t h e n b e c o m e i n s o lvent, the h o l d e r of the bill is e n t i t l e d to be p a i d in full out of the s e c u r i t i e s g i v e n b y the d r a w e r to the a c c eptor: Ex p a r t e W a r i n g (1815) 19 Ves. Jun. 345; P o w l e s v H a r g r e a v e s (1853) 3 De G.M. & G . 430. T h i s rule is c r i t i c i s e d in E.P. E l l i n g e r , "S e c u r i t i b a n k *s C o l l a p s e an d the C o m m e r c i a l B i l l s M a r k e t of N e w Z e a l and", (1978) 20 Mai. L.R. 84, pp. 92-101. E l l i n g e r w r i t e s at p. 101 that: "The rule in ex p a r t e W a r i n g . . . [ p r o d u c e s an u n just result]. It gi v e s all bill h o l ders, r e g a r d l e s s of w h e t h e r t h e y ha v e or h a v e not b e e n i n f o r m e d a b o u t the
t hi s p r i nc ip l e , w h e r e an a c c o m m o d a t i o n bill is drawn, and an a c c o m m o d a t i o n i n d o r s e r w h o has put his n a m e to the bill is o b l i g e d to p a y it, a l t h o u g h v i s - à - v i s the d r a w e r (the p a r t y a c c o m m o d a t e d ) the a c c o m m o d a t i o n i n d o r s e r and the a c c o m m o d a t i o n a c c e p t o r are c o- su r e t i e s , t h e y are not c o - s u r e t ies in eq u a l degree. B e t w e e n t h e m s e lv es , t h e y r a t h e r st a n d in the r e l a t i o n of s u r e t y an d p r i n c i p a l debtor. Thus, no r i g ht of c o n t r i b u t i o n a r i s e s b e t w e e n them, but the a c c o m m o d a t i o n i n d o r s e r s ho ul d be e n t i t l e d to be s u b r o g a t e d to s u c h s e c u r i t i e s as the d r a w e r m a y ha v e g i v e n the a c c o m m o d a t i o n a c c e p t o r . 67
iii) A s s i g n e e s of l e ases
It w as h e l d in M o u l e v G a r r e t t 6 8 that the u l t i m a t e a s s i g
nee of a l e a s e was l i a b l e to the o r i g i n a l lessee, a f t e r the o r i g i n a l l e s s ee h a d b e e n f o rc ed to p a y the l e s s o r for b r e a c h e s of c o v e n a n t in the l e as e to k e e p the p r o p e r t y in a