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563 NOTES 563 interesting variation of this question. Most of the drafts involved contained references to cotton. Since there was no cotton, did such a reference give the drawee the right to rescind his acceptance or pay- ment? It was easy to decide that the mere use of the word ''cotton" lithographed on the draft effected no alteration in the general rule that the drawee bears the loss.^^ Other drafts described the supposed cotton, in specific terms by the number and marking of the bales — e.g., 100 "charge same to accoimt of r~s"3|~Y bales of cotton." After seven years of litigation on both sides of the Atlantic, the English Court of Appeals has recently decided that in spite of these words the loss still falls on the buyer and not on the lien-holding bank.^^ The decision expressly determines the construction of section 3 of our Negotiable Instruments Law on the subject, which is declared to reach the same result as the English law, so that the case ought to have much weight if the question ever arises again in American courts.^^ " Springs v. Hanover, supra; Vamey v. Monroe, 119 La. Ann. 943, 44 So. 753 (1907) — "2sb/c," i. e., bales of cotton, accord. ^ Hannay and Company, cotton brokers at Liverpool, bought cotton from Knight, Yancey and Company of Alabama, to be paid by shippers' drafts upon the Bank of Liverpool, the buyer guaranteeing acceptance and payment if the shipping documents proved to be in order. In pretended performance of this contract Knight, Yancey and Company forged a through biU of lading running to shippers' order, and attached it to a draft drawn by themselves for the contract price upon the Bank of Liverpool, worded: "Sixty days after sight this first of exchange (second impaid) pay to the order of ourselves Fourteen hundred and sixty four poimds and nine shillings 100 value received, and charge same to account of R~s~M~r ^^^^^ °^ cotton." The draft also contained, in the margin, the date of the sale contract and a reference to the quality of the cotton. The letters R. S. M. 1. purported to be the marks upon the bales. The draft and bill of lading were duly indorsed and sold in New York to the Guaranty Trust Company, an exchange house. The trust company presented the bill to the drawee bank, which accepted under instructions from the buyers after inspection by them of the shipping documents, which were detached and retained by the acceptor. The trust company sold the accepted bill. Some suspicions were afterwards aroused as to the genuineness of the biU of lading, but the acceptor felt itself obhged, against the instructions of the buyer, to pay the ultimate holder of the draft at maturity, and debited the buyers' account with the amoimt. The buyers, on discovering the forgery, sued the Guaranty Trust Company in the United States Circuit Court to recover the amount paid. A demurrer to the complaint was over- ruled, Noyes, J., holding that the draft was conditional upon the existence of the cotton. Hannay v. Guaranty Trust Co., 187 Fed. 686 (C. C. S. D. N. Y,, 1911). At the trial a verdict was directed for the buyers, but on appeal the Circuit Court of Appeals held that EngUsh law governed and that it had been proved at the trial that under English law the draft was unconditional and the money could not be recov- ered. Judgment was accordingly reversed and a new trial ordered. Guaranty Trust Co. V. Hannay, 210 Fed. 810 (C. C. A. 2d, 1913). The Guaranty Trust Company thereupon sued the buyers in England to obtain a declaration that there was no liabiUty to the buyers. The buyers counterclaimed for the amount of the draft. After trial BaiUiache, J., held that the question whether the draft was conditional was governed by American law, under which it was conditional, and allowed the buyers to recover. Guaranty Trust Co. v. Hannay, [1918] i K. B. 43. On appeal this decision was reversed and the trust company held not to be liable on any ground. The Court of Appeal found the draft to be unconditional, even if American law governed. Guaranty Trust Co. v. Hannay, [1918] 2 K. B. 623 (C. A.). ^^ The various decisions in this litigation abstracted in note 15 raise an odd problem in the conflict of laws. The upper American court applied English law, while both English courts applied American law in part. It seems that the English Court of