Question 381. - A demand draft in duplicate was drawn on the London office of the drawing bank. The first of exchange was alleged to be lost in transit. The purchaser, not being the payee, presented the second of exchange to the issuing office, which changed the draft, making it payable to bearer, and obtained payment of it from their London office, stopping payment of the first of exchange. If the first of exchange should be negotiated by an outside party, would such party be an innocent holder for value, and would the issuing bank be liable on the first of exchange?

Answer. - The question is not entirely clear, but if the first of exchange should eventually reach the payee and be negotiated in good faith, the bank would have to pay it to an innocent holder for value, notwithstanding that it had already refunded the amount of the draft to the purchaser. In such a case, however, the bank would, of course, have a claim upon the purchaser for the return of the money, and would usually ask for a bond of indemnity.