The Negotiable Instruments Act 1881, does not define a negotiable instrument but merely states, a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or bearer. (Section 13).
Thus, a Negotiable Instrument is a document which entitles a person to a sum of money and which is transferable from one person to another by mere delivery or by indorsement and delivery. Characteristics of Negotiable Instruments
a. A negotiable instrument is freely transferable which means that it can be transferred from one person to another by a simple process, i.e. by mere delivery if it is payable to bearer, and by indorsement and delivery if it is payable to order b. The holder in due course (one who acquires the instrument in good faith and consideration) gets it free from all defects. c. He can sue up on the instrument in his own name. d. The transferee of the instrument need not give notice of transfer to the party liable to pay. e. Consideration is presumed to have been given for the instrument. Presumptions: Applicable to negotiable instruments (Secs. 118 and 119). a. Consideration Every negotiable instrument is presumed to have been made, drawn, accepted, indorsed, negotiated or transferred, for consideration
b. Date Every negotiable instrument bearing date is presumed to have been drawn on such date. c. Time of acceptance
When a bill of exchange has been accepted, it is presumed that it was accepted within a reasonable time of its date and before its maturity.
d. Time of transfer Every Transfer of a negotiable instrument is presumed have been made before its maturity e. Order of indorsements The indorsements appearing upon a negotiable instrument or presumed to have made in the order in which they appear thereon. f. Stamp When an instrument has been lost, it is presumed that it was duly stamped g. Holder in due course Every holder of a negotiable instrument is presumed to be holder in due course h. Proof of protest In a suit upon an instrument which has been dishonored the core, on proof of the protest, presumes the fact of dishonor, until such fact is disapproved. Types of Negotiable Instruments 1. Negotiable by Statute (Sec. 13) Promissory notes, bills of exchange and cheques. 2. Negotiable by custom or usage Instruments which have acquired the character of negotiability by usage or custom of trade. E.g.. Government promissory notes, bankers drafts and pay orders, hundis, delivery orders and railway receipts for goods etc.
Promissory Note Definition :
According to Section 4, a promissory note is an instrument in writing ( not being a bank note or currency note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument.
The person who makes the promissory note is called the maker, the person to whom the payment is to be made is called payee.
Essential Elements For an instrument to become a promissory note by following essential elements are required.
1. It must be in writing 2. It must contain an express undertaking or promise to pay 3. The promise to pay should be definite and unconditional 4. It must be signed by the maker 5. The parties i.e. the maker and the payee, must be certain 6. The sum payable must be certain 7. It must contain a promise to pay money only 8. A bank note or currency note is not a promissory note Bill of Exchange : Definition: As per Section 5, a bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. The person who makes the bill is called the drawer. The person who is directed to pay is called a drawee. The person to whom the payment is to be made is called payee. When the drawee accepts the bill is called acceptor
The drawer or the payee who is in possession of the bill is called the holder
When the holder indorses the bill, note or cheque he is called the indorser.
The person to whom the bill, note or cheque is indorsed is called the indorsee
When in the bill or in any indorsement thereon the name of any person is given in addition to the drawee to be referred to incase of need, such person is called a Drawee in case of need ( Section 7).
Distinction between Bill of exchange and Promissory note
Bill of Exchange
1. There are three parties - The drawer, drawee and the payee 2. Contains an unconditional order to pay
Promissory Note
There are two parties- Maker and the Payee
Contains an unconditional promise to pay
3. The Drawer of the bill is the creditor who directs the drawee to pay ( his debtor) 4. The acceptor may accept the bill conditionally because he is not the originator of the bill. The maker of a note is the debtor and he himself undertakes to pay The maker of a note corresponds in general to the acceptor of a bill But, he cannot undertake to pay conditionally. 5. The liability of the drawer of the bill is secondary and conditional 6. In a bill the drawer and payee may be one and the same person 7. A bill payable after sight or after a certain period must be accepted by the drawee before it is presented for payment
The liability of the maker of a note is primary & absolute.
A note cannot be made the payable to the maker himself. A note requires no acceptance as it is signed by the person who is liable to pay
8. A Bill can be so drawn but in no case can a note or bill be drawn payable to bearer on demand 9. The drawer of a bill stands in immediate relation with the acceptor and not the payee
10. Provisions like acceptance, presentment for acceptance etc. are applicable
A note cannot be drawn payable to bearer
The maker of a note stands in immediate relation with the payee.
These are not applicable to bills
11. Notice of dishonor must be given to all persons who are to be made liable to pay.
12. Foreign bills must be protested for dishonor when such protest is required by the law of the place where they are drawn
No such notice is required to be given to the maker in the case of dishonor of a bill
No such protest is required in the case of a note.
Cheque
Definition: According to Section 6 of NI Act. 1981, a cheque is a bill of exchange drawn on a specified banker and payable on demand.
Distinction between a bill of exchange and a cheque
Bill of exchange 1. May be drawn on any person including a banker 2. Must be accepted before the Drawee can be called upon to make payment 3. A bill which is not expressed to be payable on demand is entitled to three days of grace 4. A bill may be payable on demand or after the expiry of a certain period after date or sight
Cheque It is always drawn on a banker
a cheque requires no acceptance
a cheque is not entitled to any grace period
a cheque is always payable on demand 5.A bill must be duly presented for payment to the acceptor or else the drawer of the bill be discharged from liability.
6. A bill may not be crossed
7. A bill, except in certain cases must be stamped
8. Payment of a bill cannot be countermanded.
9. A bill may be noted or protested for dishonour
The drawer of a cheque is not necessarily discharged from his liability by delay of the holder in presenting it for payment.
a cheque may be crossed
a cheque does not require any stamp. The payment of a cheque may be countermanded by the drawer. A cheque is not required to be noted or protested for dishonour
Crossing of Cheques
There are two types of cheques
- Open Cheques - Crossed Cheques
A Cheque which is payable in cash across the counter of a bank is called an open cheque. A crossed cheque is one on which two parallel transverse lines with or without the words & Co. are drawn. The payment of such a cheque can be obtained only through a banker.
Types of crossing 1. General crossing
A cheque is said to be crossed generally where it bears across its face an addition of the words and company or any abbreviation thereof between two parallel transverse lines, either with or without the words not negotiable; or 2. Two parallel transverse lines simply, either with or without words not negotiable (Sec. 123) Specimen of General crossing :
(1) (2) (3) 2. Special crossing :
As per Sec. 124, Where a cheque bears across its face an addition of the name of a banker, either with or without the words not negotiable, the cheque is deem to be crossed specially.
Transverse lines are not necessary in case of special crossing. The payment of specially crossed cheque can be obtained only through the particular banker whose main appears across the face of the cheque or between the transverse lines, if any.
Specimen of special crossing : 3. Restrictive crossing. In addition to the above two types of crossings there is another type which has been adopted by the banking usage. In this type crossing the words A/c Payee are added to the general or special crossing.
4. Not negotiable crossing.
(Sec. 130), the effect of the words not negotiable on a crossed cheque is that the title of the transferee of such a cheque cannot be better than that of its transferor.
Who may a cross a cheque?
A cheque may be crossed by a drawer or the holder or the banker.
Classification of negotiable instruments Barer and order instruments Inland and foreign instruments Demand and time instruments
Accommodation bill is a bill drawn, accepted or indorsed without any consideration. Ambiguous instrument is an instrument is an instrument which owing to its faulty drafting can be interpreted either as a promissory note or a bill of exchange. Inchoate instrument is an instrument which is incomplete in some respect Bill in sets is a bill of exchange drawn in parts generally three. Each part known as via, is sent separately. Maturity and days of grace When promissory note or bill of exchange is payable after a specified period the date on which it falls due, is known as date of maturity. Every instrument is payable otherwise than on demand is entitled to three days of grace time. PAYMENT IN DUE COURSE According Sec. 10, payment in due course means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned.
Parties to Negotiable Instruments
1. Parties to a Promissory Note
Payee Maker Holder Indorsee Indorser 2. Parties to bill of exchange Drawer Drawee Acceptor Payee Holder Indorser Indorsee Drawee incase of need Acceptor for honour
3. Parties to a cheque
Drawer
Drawee
Payee
Holder
Indorser
Indorsee
4. Holder in due course (Sec. 9)
Means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque, if payable to bearer, or the payee or indorsee thereof if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.
Privileges of a holder in due course i. can fill in an inchoate stamped instrument for any amount provided the stamp is sufficient to cover the amount.[Sec.20]
ii. Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied.
iii. If a bill or note is negotiated to a holder in due course, the other parties to the bill or note cant avoid liability on the ground that the delivery of the instrument was conditional or for a specific purpose only. iv. Once a negotiable instrument passes through the hands of a holder in due course it gets cleansed of all its defects
v. The defences on the part of a person liable on a negotiable instrument that it has been lost, or obtained from him by means of an offence or fraud or unlawful consideration, cannot be setup against a holder in due course vi. The law presumes that every holder is a holder in due course, although the presumption is rebuttable. vii. In a suit on a negotiable instrument by a holder in due course, the validity of the instrument as originally made or drawn cannot be denied viii. No indorser of a negotiable instrument is, in a suit thereon by a subsequent holder, permitted to deny the signature or capacity to contract any prior parties to the instrument. Liabilities of Parties (Sec. 30 to 32 & 35 to 45)
Liability of the Drawer Liability of Drawee of a cheque Liability of maker of note and acceptor of bill Liability of indorser Liability of prior parties of a holder in due course
Negotiation of Negotiable Instruments
1. Transfer by negotiation,( sec. 14) or When a promissory note, bill of exchange or cheque is transferred by one party to another, so as to constitute the transferee the holder thereof, the instrument is said to be negotiated. There are two types of transfer by negotiation a. Negotiation of delivery b. negotiation by indorsement and delivery 2. By assignment When a person transfers his right to receive the payment of a debt, assignment of the debt takes place.
Distinction between negotiation and assignment negotiation Consideration is presumed The title of the transferee (i.e., the holder in due course) is better than that of the transferor Notice of transfer to the debtor by the transferee is not necessary. The acceptor of a bill and the maker of a note are liable on maturity to the holder in due course of the Instrument
assignment Consideration must be proved
The title of the assignee is subject to the defects and equities in the title of the assignor An assignment does not bind the debtor until notice of assignment had been given by the assignee to the debtor, and the debtor has expressly or impliedly, assented to it.
4. Instruments payable to bearer are negotiated by mere delivery and instruments payable to order are negotiated by indorsement and delivery
An assignment can only be made in writing either on instrument itself or in a separate document transferring to the assignee the transferors rights in the instrument. Indorsement (Sec. 15) It means writing of a persons name (otherwise than as maker) on the phrase or back of a negotiable instrument or on a slip of paper ( called allonge) annexed thereto, for the purpose of negotiation.
The person who so signs the instrument is called the indorser. and the person whom the instrument is indorsed is called the indorsee. Types of Indorsement 1. Blank or General Indorsement When the indorser signs his name only.
E.g.. A bill is payable to the order of Ram. Ram signs on the back of the bill. This is an indorsement is blank.
2. Full or special indorsement When the indorser signs his name and had a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the indorsement is said to be full.
E.g.. An indorsement pay Ram or order, or pay to Ram followed in both the cases by the signature of the indorser is an indorsement in full.
3. Restrictive Indorsement An indorsement is said to be restrictive when it prohibits further negotiation of the instrument. Eg: 1. Pay the contents to C only. 2. Pay C for my use 3. Pay C or order for the account of B 4. Partial Indorsement When an indorsement purports to transfer to the indorsee a part only of the amount of the instrument, the indorsement is said to be partial. Eg. A is the holder of the bill for Rs. 1,000. He indorses it as Pay B or order Rs.500. This is a partial indorsement. 5. Conditional indorsement An indorsement is called conditional or qualified, if it limits or negatives the liability of the indorser.
Instruments obtained by unlawful means Stolen and lost instruments A person who steals or finds a lost negotiable instrument doesnt acquire a title to the instrument as against the rightful owner. He cannot enforce payment on it against any party thereto. If he obtains payment on it, he is liable to the true owner. If the bill or note is payable to bearer, he can negotiate it to a bona fide transferee for value who acquires a good title to it. But if the bill or note is payable to order, and the thief or finder forges the indorsement of the rightful owner, even a bone fide transferee for value doesnt acquire a title to it. Instruments obtained by fraud If a negotiable instrument is obtained by fraud, the person defrauding is not entitled to recover anything. But the defence of fraud cannot in general be set up against a holder in due course.
Forged instruments Forgery is the fraudulent making or alteration of a negotiable instrument to the prejudice of another mans rights. If any of the signatures on the instrument is forged, the signature in question is wholly inoperative and no person, even if acting in good faith, can acquire rights under the instrument. The most common species of a forgery are : Fraudulently writing the name of an existing person Signing the name of a fictitious or a non-existing person, with a fraudulent intention including belief that the instrument was signed by a real person, or Signing ones own name with the intention that the signature should pass for the signature of the another person of the same name.
Dishonour and Discharge, relation between a Banker and a Customer A drawer of a dishonoured cheque shall be deemed to have committed an offence. For this offence, he shall be punished with imprisonment for a term which may extend to two years. [increased from one year to two years by the Negotiable Instruments (Amendment and Miscellaneous) Act,2002] or with a fine which may extend to twice the amount of the cheque or with both provided :- 1. The cheque has been dishonoured due to insufficiency of funds in the account maintained by him with a banker for payment of any amount of money to another person from out of that account 2. The payment for which the cheque was issued, should have been in discharge of a legally enforceable debt or liability in whole or in part of it;
3. The cheque should have been presented by the payee or the holder in due course with in a period of six months from the date on which it is drawn or within the period of its validity which ever is earlier.
4. The payee or the holder in due course of the cheque should have given notice demanding payment within 30 days from the drawer on receipt of information of dishonour of cheque from the bank. 5. The drawer is liable only if he fails to make payment within 15 days of such notice period and
6. The payee or holder in due course of the cheque dishonoured should have made a complaint within one month of cause of action arising under Sec. 138
Dishonour of a negotiable Instrument
Dishonour by non-acceptance Dishonour by non-payment (Sec. 91) (Sec. 91) A bill may be dishonoured by non-acceptance or by non- payment. A promissory note and a cheque dishonored by non- payment only. The negotiable instrument is dishonoured, the holder must give a notice of dishonour to all the prior parties in order to make them liable on the installment.
If he fails to do so, except in cases when notice of dishonour may be excused, he forfeits his right of action against the prior parties entitled to the notice of dishonour (Sec. 93). Dishonour by non-acceptance (Sec. 91) A bill of exchange is dishonoured by non-acceptance in any one of the following reason : If the drawee does not accept the bill within forty-eight hours from the time of presentment through it is duly presented for acceptance. If there are several drawees and all of them do not accept When presentment for acceptance is excused, and the bill is not accepted When the drawee is incompetent to contract When the drawee gives a qualified acceptance
NOTICE OF WHOM Notice to all parties whom the holder seeks to make liable Notice to party or his agent, or to legal representative or assignee FORM OF NOTICE The notice of dishonour may be oral or written. If it is written, it may be sent by post. If I is duly directed and sent by post, it would be a food notice even though it is miscarried It may be in any form but it must clearly indicate that the instrument has been dishonoured and in what way, and that the party to whom it is being given will be liable on the instrument.
It must be given within a reasonable time at the place of business or at the residence of the party for whom it is intended (Sec. 94). Delay caused by circumstances beyond the control of the party desiring to serve notice is excused provided it is not imputable to his default, misconduct or negligence [Beveridge v. Burgis, (1812) 3 Camp. 262]. What is a Reasonable time? For giving notice of dishonour, regard must be had to the nature of the instrument and the usual course of dealing with respect to similar instruments. In calculating such time, public holidays shall be exclude [Sec. 105]. Duties of the holder upon dishonour Notice of dishonour Noting and protesting Suit for money Instrument acquired after notice of dishonour
The holder of a negotiable instrument, who has acquired it after dishonour, whether by non-acceptance or non- payment, with notice thereof, has only, as against the other parties, the rights of his immediate transferor (Sec. 59). Same is the case when the instrument is acquired after maturity.
NOTING AND PROTESTING
NOTING : When a promissory note or bill of exchange is dishonoured, the holder can, after giving due notice of dishonour, sue any or all prior parties liable thereon. But before he does that, he may get the fact of dishonour authenticated by noting by a Notary Public.
Noting means the recording of the fact of dishonour by a Notary Public upon the instrument, or upon a paper attached thereto or partly upon each, with in a reasonable time after dishonour (Sec. 99)
Noting must contain the following particulars : i. The fact of dishonour ii. The date of dishonour iii. The reasons, if any, assigned for such dishonour
iv. If the instrument has not been expressly dishonoured, the reason why the holder treats it as dishonoured; and v. The Notarys charges (Sec. 99) Protest When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may, within a reasonable time, cause such dishonour to be noted and certified by a Notary Public. Such certificate is called a protest (Sec. 100) The protest is the formal notarial certificate attesting the dishonour of a bill or note.
Contents of Protest The instrument or a literal transcript of the instrument The name of the person for whom and against whom the instrument has been protested The fact of, and reason for, dishonour The place and time of dishonour The signature of the Notary Public In case of acceptance for honour or payment for honour, the name of the person accepting or paying and the name of the person for whose honour it is accepted or paid (Sec. 101)
Rules as to Compensation
The compensation payable in case of dishonour of a negotiable instrument includes, besides the principal amount and interest due, and all proper expenses for noting, protesting or for exchange. An indorser who has paid the amount on the instrument is entitled to the amount paid with interest at the rate of 18% per annum from the date of payment until tender or realization of the instrument and all proper expenses caused by the dishonour. The party entitled to compensation may draw a bill on any party liable to compensate him. Such a bill is referred to as a re-draft. The re-draft must be accompanied by the dis-honoured bill and its protest, if any.
DISCHARGE OF A NEGOTIABLE INSTRUMENT
DISCHARGE
Discharge of the Instrument Discharge of one or more of the parties from liability thereon An instrument is said to be discharged when all rates of action under it are completely extinguished and when it ceases to be negotiable. Modes of discharge i. By payment in due course ii. By maker or acceptor becoming the holder iii. By express waiver
iv. By cancellation. It may also be discharged like a contract for the payment of money. v. By discharge as a simple contract A negotiable instrument may be discharged in the same ways as any other contract for the payment of money
Discharge of a Party or Parties
A Party to a negotiable instrument may be discharged from liability By payment By cancellation By release
By allowing drawee more than 48 hours By non-presentment of cheque By material alteration By Operation of law By payment of altered instrument
Banker and Customer
Relationship Between Banker and a Customer
Definition : No statutory definition of the term banker and customer.
Banker : The business of a banker in ordinary course consists in receiving money from or on account of a customer and repaying the same on demand or when drawn by a cheque. The negotiable instrument Act, defines a banker including any person acting as a banker. The Banking Regulation Act, 1949 defines a banking company as company which transacts the business of banking in India.
The term banking has been defined as accepting, for the purpose of lending or investment, of deposits of money from the public repayable on the demand or otherwise, and withdraw able by cheque by cheque, draft, order or otherwise. Customer Is a person who has some sort of account, either deposit or current account with the banker.
Legal relationship between banker and customer 1. The relationship between a banker and his customers is essentially contractual and is that of debtor (banker) and creditor (the customer). This relationship is sometimes reversed. When the banker lends money to the customer. The relationship also partakes many aspects of relationship of agent and principal. Special features of Legal Relationship Obligation to honour cheques Obligation to keep proper record of transactions Obligation to abide by the express instructions of the customer
Obligation not to disclose the state of his customers account or affairs
Right of general lien
Right to discharge incidental charges and interest on money lent
Right to set-off
Right of appropriation 2. Trustee Beneficiary The position of a bank will be that of a trustee; a) A person having no account with a bank, deposit a money with instruction to retain it till further instruction b) The customer instruct a bank to debit his account or deposit an amount for utilizing it for a specific purpose or for remitting to other branch / bank c) Managers properties of its customers
3. Agent Principal When the banker accepts bills etc for collection on behalf of his customer, he acts as an agent and the constituents in such cases the bank is duty bound as per sec. 151 of the Indian Contract Act 1872, to act with reasonable diligence and skill as per instruction of the principal. Failing which, to make good the laws, if any as per sec. 211 and 212 of Indian Contract Act. 4. Bailee Bailor When a bank accepts article for safe custody, its legal position is that of bailer, who is duty bound to take as much care of the goods bail to him as man of ordinary prudence would under similar circumstances, take off his similar goods.
Sec. 152 of the same Act says that the bailee, in the absence of any contract to the contrary is not responsible for any laws if the bailee has taken care as required in terms of Sec. 151 of the Act. 5. Lessor -Lessee On hiring out of locker bank becomes lessor and the hirer a lessee and the relationship is that of land lord and tenant. The lesser is not responsible for any loss or damage. Suitable class to the effect is also incorporated in the lease deed and hirers are advised, in their own interest to insure their valuables deposited in the locker Obligations / Duties of a banker 1. Primary Duty of a banker is to honour cheque of its customer subject to certain conditions. 2. Sec. 31 of NI Act says that the drawee (bank) of a cheque having sufficient funds of the drawer, property applicable to the payment of such cheque must pays such cheque. For wrongful dishonour the customer may claim damage for any laws due to it Erroneous Credit If some money is paid into the account of a customer by a third party even through erroneously the bank cant refuse to credit it into the account of the customer without the customers specific authority / consent.
Pass Book / Statement of Accounts The customer is under no obligation to examine the pass book or statement of accounts to acknowledge that the entries their in or correct and report in accuracy if any. A banker is obliged to maintain secrecy of the state of accounts even after the closure of the accounts of its customer, unless required to do so (a) by law, (b) in public interest ( c) in banks interest (d) as per consent of the customer Disclosure under compulsion of law is required in circumstances as stated below :
a. Bankers Books Evidence Act 1981: b. Code of Civil / Criminal procedures c. Company Act 1956 d. Tax Laws e. The Reserve Bank of India Act, Banking Regulation Act 3. The Banking is responsible to the customer for fraud committed by its employees 4. An instrument with forged signature no mandate at all and hence bank cant debit its customers account in such a case
Right of Banker 1. Bankers lien 2. Right of Set off : Banker has right to combine two or more accounts if one of them is in debit of customer in the same name and same right Right of Appropriation Eg a deposit without specifying account to which is meant, may be credited to an account of the customer showing debit balance. With regard to deposit in one account the credit entries are appropriated against debit in chronological order as per Claytons Rule Garnishee order and attachment order: when the debtor fails to pay the debt to hi creditor, the latter may approach the court for issuance of garnishee order on the banker of the debtor. A garnishee order is an order issued by court under provision of Order 21 rule 46 of the code of Civil Procedure 1908 . Claytons Rule In case of multiple debts, credits will be appropriated: To discharge the particular debt as per the instructions of the debtor If debtor doesnt intimate or the circumstances do not indicate, as per the discretion of the creditor When neither party indicates, to discharge of debts in order of time First to discharge of interest and then principal in chronological order
Protection of paying Banker
Protection of Paying Banker
Where a cheque payable to order purports to be indorsed by or on behalf of the payee, the drawee is discharged by payment in due course (i.e. in good faith and without negligence in accordance with the provision of Sec. 126). Where a cheque is originally expressed to be payable to bearer, the drawer is discharged by payment in due course to the bearer thereof, notwithstanding that any such indorsement purports to restrict or exclude further negotiation (Sec. 85)
Protection of Collecting Banker The collecting banker may collect proceeds of a cheque in the capacity of an agent of his customer, or of a holder in due course. Collecting banker has an agent The position of collecting banker has an agent may be studied in relation to crossed cheques and open cheques. Crossed Cheques : A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself, does not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such payment (Sec. 131) Collecting banker as a holder in due course
If a collecting banker acquires a cheque for value in good faith he collects it for himself and has all the privileges of a holder in due course.