c 
 
 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 GIFT OF 
 
 Rollin I!. Perkins 
 
 ^
 
 THE 
 
 LAW OF BUSINESS PAPER 
 
 AND 
 
 SECURITIES 
 
 A Treatment of the Uniform Negotiable Instruments Act for 
 the Lawyer, the Student and the Business Man, With Ex- 
 planations of the Law and Citations to Decisions 
 Interpreting the Act and Others Upon 
 Which Its Provisions Were Based 
 
 TOGETHER WITH 
 
 A Brief Synopsis of the Law of Collections and of the Acts 
 
 Governing Bills of Lading, Warehouse Receipts 
 
 and the Transfer of Certificates of Stock. 
 
 By CHARLES F. DOLLE 
 
 (Of the Cincinnati Bar) 
 
 1920 
 
 T. H. FLOOD & COMPANY 
 
 Publishers 
 
 Chicago, Illinois
 
 
 Copyright 1920 
 
 By 
 
 CHARLES F. DOLLE. 

 
 0>> 
 
 PREFACE. 
 
 I have sought, in the following pages, to set out in concise 
 form a simple and, as far as the nature of the subjects would 
 permit, a non-technical treatment of the Uniform Acts which 
 govern our business instruments. Men occupied in business 
 and in finance ma}' find it interesting and useful. 
 
 The book is offered to business men and to young men get- 
 ting an education in business and in the law, and to lawyers 
 too, although the members of the bar already have at their 
 disposal technical works upon the same subjects written by 
 eminent authors. 
 
 Perhaps I should have resisted more strongly, and even 
 declined altogether, the request of the publishers to address 
 this volume to lawyers as well as to business men and to young 
 men getting a business education and an education in the law, 
 if I had not read a statement by the author of a treatise on the 
 law of commercial paper that his three large volumes on this 
 subject might never have been written if the Uniform Nego- 
 tiable Instruments Law had been enacted before their publi- 
 cation. This is a tribute to the authors of the Act which 
 surely justifies the unselfish labor spent by them in reducing to 
 a few pages the law of more than ten thousand cases. 
 
 I shall not hope that the specialist, or even the mature 
 lawyer, will find of much benefit the explanations I have 
 offered at each section of the Act. These may be unnecessary 
 to his understanding of the law. But he will find in them 
 many cross-references that will help him to visualize at one 
 time all of its provisions (some in widely separated sections), 
 upon any question into which he may be inquiring, and if he 
 will read the book he may not find it uninteresting. 
 
 For the student and the business man without training in 
 the law, the explanations will be an aid. They will help him 
 to better understand the Act, although I frankly confess that 
 it has sometimes seemed futile and quite unnecessary to try to 
 explain its already clearly expressed provisions. He will find 
 these explanations stated in a narrative-expository style that 
 is designed to hold his interest and in language more simple 
 than is customarily used in the treatment of technical subjects. 
 
 For study use the book will present fcAver difficulties and dis- 
 tractions than are commonly met with when the subjects are 
 pursued by the case method, or in a book wholly designed for 
 men already learned in the law. 
 
 iii
 
 iv PREFACE 
 
 The plan of the book, its arrangement and its scope are 
 stated in the historical and introductory chapters at the be- 
 ginning of each of the two main Divisions of the Uniform 
 Negotiable Instruments Law, and it will be profitable to read 
 these before engaging upon the study of the sections of the 
 Act which follow them. 
 
 The Uniform Negotiable Instruments Law which forms the 
 main subject of the book, is now effective in all of the States. 
 The book is therefore adaptable to all, such changes as have 
 been made by any of them being shown by marginal refer- 
 ences and given in full in the Appendix. A merely synoptical 
 treatment of the other subjects is given, it is not offered as 
 anything more. 
 
 Charles F. Dolle. 
 
 Cincinnati, April 17, 1920.
 
 CONTENTS. 
 
 Page 
 THE UNIFORM NEGOTIABLE INSTRUMENTS LAW. 
 
 INTRODUCTORY AND HISTORICAL 1 
 
 TITLE I. 
 NEGOTIABLE INSTRUMENTS IN GENERAL. 
 
 SUBDIVISION I. FORM AND INTERPRETATION 14 
 
 II. CONSIDERATION 62 
 
 III. NEGOTIATION 71 
 
 IV. RIGHTS OP THE HOLDER 93 
 
 V. LIABILITIES OF PARTIES 109 
 
 VI. PRESENTMENT FOR PAYMENT 124 
 
 VIL NOTICE OF DISHONOR 150 
 
 VIII. DISCHARGE OF NEGOTIABLE INSTRUMENTS 176 
 
 TITLE II. 
 BILLS OF EXCHANGE. 
 
 SUBDIVISION I. FORM AND INTERPRETATION 205 
 
 II. ACCEPTANCE 212 
 
 III. PRESENTMENT FOR ACCEPTANCE 228 
 
 rV. PROTEST 239 
 
 V. ACCEPTANCE FOR HONOR 250 
 
 VL PAYMENT FOR HONOR 258 
 
 VIL BILLS IN A SET 265 
 
 TITLE III. 
 PROMISSORY NOTES AND CHECKS. 
 
 SUBDIVISION I. PROMISSORY NOTES AND CHECKS DE- 
 FINED, ETC 270 
 
 TITLE IV. 
 
 GENERAL PROVISIONS. 
 
 SUBDIVISION I. TITLE OP ACT AND DEFINITIONS 299 
 
 SYNOPSIS OP THE LAW GOVERNING THE COLLECTION OF 
 
 CHECKS AND OTHER INSTRUMENTS 300 
 
 QUASI-NEGOTIABLE INSTRUMENTS 304 
 
 EXPLANATIONS OF THE UNIFORM BILLS OP LADING ACT. . . 305 
 EXPLANATIONS OF THE UNIFORM WAREHOUSE RECEIPT 
 
 ACT 318 
 
 DIGEST OP THE LAW OP TRANSFER OP CERTIFICATES OF 
 
 STOCK 336 
 
 APPENDIX. 
 
 Wherein will be found such changes in the Uniform Negotiable 
 
 Instruments Law as have been made in some of the states 365 
 
 INDEX 394
 
 HISTORICAL 
 
 AND 
 
 INTRODUCTORY. 
 
 If there is one branch of the law with which the lawyer 
 and the business man ought to make himself familiar it 
 is that upon the subject of commercial paper. To know 
 all the law is not the province of any man, not even the 
 lawyer, but every man ought to be familiar with the rules 
 which govern the use of his business instruments and 
 the rights and duties of the parties upon this kind of 
 paper. We are all called upon to si{ni our names to 
 promissory notes, bills of exchange and checks, and 
 it is very much worth while to know by what. laws our 
 rights and our duties in respect to these are fixed. When 
 we know where we stand in regard to the negotiable 
 instruioents which we sign and give out or which we re- 
 ceive in the course of our trade transactions we enjoy a 
 sense of security which it is agreeable to feel, and this 
 Dook is intended to be an aid to that useful knowledge. 
 
 Every negotiable promissory note, check, or draft, 
 which we issue or indorse is really a promise to perform 
 an obligation to the person to whom we give it and to all 
 othprs to whom it may be assigned. Commercial paper 
 is the medium by which we settle most of our business 
 transactions and the fundamental principles upon which 
 its negotiable character rests are alike all over the world. 
 It is by reason of its negotiability that it has come to be 
 so extensively used in place of actual money as the means 
 of settling our business obligations.
 
 2 THE NEGOTIABLE INSTRUMENTS LAW 
 
 Meaning of Negotiability means not only that the 
 
 negotiability. note, check, or bill of exchange which we 
 issue may be assigned by one person to another by 
 delivery or indorsement, but it also means that the 
 transferee who becomes the holder of the instrument 
 so transferred will take it free from defenses avail- 
 able to the original and to prior parties among them- 
 selves, may sue upon it in his own name, and that his 
 rights, and the rights and obligations of all parties 
 whose names are upon the instrument, will be deter- 
 mined and enforced according to the well established 
 rules of the Law Merchant. The Law Merchant is a 
 branch of the Common Law comprising all those princi- 
 ples and rulefj of mercantile transactions, not alone con- 
 cerning commercial paper, but the equally well estab- 
 lished rules of Factorage, Brokerage and, in part, of In- 
 surance, which have been in immemorial use and have 
 thereby become universally established and recognized 
 as binding custom and, by sanction of the courts, ob- 
 tained the force of law. 
 
 The unwritten customs of merchants 
 
 Chancellor j^^^^ ^^^^ defined by Chancellor Kent in 
 
 Kent s definition -^ 
 
 of the law his "Commentaries" on the law, quoting 
 
 merchant. from Lord Mansfield, as *'a system of law 
 
 which does not rest essentially on the positive institutions 
 
 and local customs of any particular country, but consists 
 
 of certain principles of equity and usages of trade, which 
 
 g-eneral convenience and a common sense of justice have 
 
 established to regulate the dealings of merchants and 
 
 mariners in all the commercial countries of the civilized 
 
 world." 
 
 Writers agree that the earliest history of the customs 
 
 of merchants is obscure. The use of Bills of Exchange, 
 
 ^hich had their commercial origin in this branch of the
 
 HISTORICAL AND INTRODUCTORY 3 
 
 law, and were the lirst form of commercial paper to be 
 
 ^ . . , , used, caunot be traced to its beginning, 
 Origin and early 
 
 history of Bills but perhaps bills are oi such antiquity 
 of Exchange. ^^.^^ ^j^^^ ^^^j.^ ^j.g^ introduced by that 
 
 merchant said to be mentioned by Isocrates (400 J3. C.) 
 who came to Athens with cargoes of corn and gave 
 an order upon a banker in a town upon the Euxine with 
 whom he had a credit. It is said of Cicero, tnree hundred 
 years later, that he paid the tuition of his son at Athens 
 by an order from a merchant in Rome drawn upon his 
 debtor in the Greek city and perhaps we may believe that 
 in his time ^100 B. C.) bills of exchange, the earliest form 
 of commercial paper, first came into use as a means of 
 making credits available for the payment of the obliga- 
 tions of merchants and traders residing in different dis- 
 tant cities. It would indeed be interesting to know their 
 very first use, but however and whenever that may have 
 been the idea proved too good to be lost and, accordingly, 
 at the end of the twelfth century they were well estab- 
 lished among the merchants of Italy. Then, as now and 
 always, convenience and safety in the transportation and 
 transfer of money inspired their use. Bills later came 
 lo be used in France nnd from thence were introduced 
 into England where their earliest recorded use, so far as 
 may he found in the reports of early cases, is in one de- 
 cided in 1603. They were not at that time employed in 
 England by merchants in theij- domestic transactions, 
 but their use seems to liave been confined to foreign 
 bills drawn by or on foreign merchants. Later, bills 
 drav>Ti by domestic merchants and finally, still later, 
 bills dra-wn by or upon persons not merchants or traders 
 came to be governed by the already well understood and 
 well established rules of the customs of merchants upon 
 which all negotiable instruments codes, and all decisions.
 
 4 THE NEGOTIABLE INSTRUMENTS LAW 
 
 upon the subject, have since been based. At an early 
 period it was disputed in England whether or not the 
 rules of the law merchant applied to promissory notes 
 as well as to bills of exchange but the negotiability of the 
 former was afterward, in 1705, settled by statute. These 
 customs of merchants and mariners based, you will ob- 
 serve, upon the general convenience and a common sense 
 of justice, and recognized as law more than seven cen- 
 turies ago, have since become the public law of every 
 civilized country in the world. 
 
 T, 1' 4. j-««« The French were the first to syste- 
 Earliest codifica- 
 tions of the law matically arrange the rules of the Law 
 
 mere ant. Merchant, in so far as they relate to com- 
 
 mercial paper and, in the 17th Century, codified them 
 in what was kno^\ai as ''The Commercial Code of 
 France." This Code, it is said, formed the basis of all 
 continental codes. Later they were collected and codi- 
 fied in Spain, in 1829, and in Germany in 1848. No gen- 
 eral codification took place in England until 1882. In 
 the United States there had been no attempt to codify 
 the laws relating to commercial paper as established by 
 usage, until 1872 when California did so, in a way, in its 
 ** Civil Code" adopted that year. 
 
 Prior to 1882, in England and in all 
 The need for the United States, with the exception of 
 England and the California, the law upon the subject of 
 
 United States commercial paper consisted in part of 
 
 and the British 
 
 B. of E. act. statutory enactment, but more largely of 
 
 judicial decisions interpreting the estab- 
 lished customs of the banking and business communities. 
 Up to that time there had not been, with the exception 
 referred to, any codification of these decisions and es- 
 tablished rules into written, enacted law in either coun- 
 try. Of course, in this state of the law, varying inter-
 
 HISTORICAL AND IxNTRODUCTORY 5 
 
 pretations of many of the important rules of the law 
 merchant confronted the lawyer in England and in our 
 own country, more particularly in the United States, 
 where there were then, as now, about fifty courts of final 
 resort. Bewildering complications and contradictions 
 resulted from their conflicting decisions and the solu- 
 tion of the perplexing problems which arose out of con- 
 tradictory interpretation of this branch of business law 
 involved, for the lawyer, the laborious examination of 
 a multitude of decisions seldom, even then, providing a 
 clear and uniform rule for the interpretation of the 
 rights and duties of parties to commercial paper, and 
 presented to the business man justifiable occasion for 
 dispute and litigation. 
 
 In England the need for codification was met by the 
 enactment by Parliament in 1882 of the "Bills of Ex- 
 change Act" and this became the first general codifica- 
 tion of the laws relating to commercial paper in any of 
 the English speaking countries. It was designed to 
 codify, as nearly as possible, all the existing law upon 
 the subject in that country. That Act is thoroughly com- 
 prehensive and covers the entire field of commercial 
 
 paper. 
 
 Since our system of law is based upon 
 ^ZJ^e^i^r^^' the jurisprudence of England it was, of 
 ments law. course, a very logical consequence that 
 
 upon this important subject the business community of 
 our 0A\Ti country looked for guidance to the codification 
 of the law merchant in Great Britain when the need 
 for revision was proposed at the annual conference of the 
 Commissioners on Uniform State Laws at their meeting 
 in 1895. In that year, in response to this very general 
 need and urgent demand, which had already engaged the 
 earnest attention of the Uniform Laws Committee of the
 
 6 THE NEGOTIABLE INSTRUMENTS LAW 
 
 American Bankers ' Association, the annual conference of 
 the Commissioners on Uniform State Laws appointed a 
 committee to draft an act which would meet our business 
 needs. The committee to which this work was intrusted 
 was instructed to prepare a bill to be based upon the 
 British Act which had then been in use for nearly four- 
 teen years. This committee was not limited, however, to 
 the consideration of that Act alone but it was instructed 
 to prepare and present a report which should have re- 
 gard also to information to be obtained from whatever 
 other source it might see fit to consult. Therefore, while 
 the British Act forms the basis of our Uniform Nego- 
 tiable Instruments Law, and while the continental codes 
 were all consulted by its authors, the committee, never- 
 theless, did not hesitate to depart from any prior acts 
 whenever they were found to be in conflict with the set- 
 tled law of this country. 
 
 There is a marked difference in the forms of the Brit- 
 ish Act and our own, due very probably to the more com- 
 mon use of bills of exchange in England than in the 
 United States. This difference, is, however, mainly in 
 the structure of the law our own Act being equally as 
 comprehensive as the British Act, and amply providing 
 for an equally general use of bills of exchange in our do- 
 mestic and foreign commerce, which we shall presently 
 see when what seems to be the real business purpose of 
 our new currency legislation is fully taken advantage of 
 by the banks and merchants of this country. Bills are 
 expected then to exercise the same influence upon the 
 movement of trade and the investment of funds in this 
 country as they now do in the countries of Europe where 
 they are so extensively employed. Discounts will in all 
 probability greatly increase and since it is expected that 
 accounts will become available discount items by means
 
 HISTORICAL AND INTRODUCTORY 7 
 
 of time acceptances in lieu of, or as an addition to the 
 present method of obtaining credit by promissory notes, 
 which prevails in most parts of this country, there seems 
 now to be even greater reason than ever before that men 
 engaged in business, and those seeking a business educa- 
 tion, shall make themselves familiar with the law upon the 
 subject of commercial paper and that the lawyer shall 
 have a ready means of reference to the statute when his 
 aid is sought. 
 
 The committee to which the work of drafting a suitable 
 act was intrusted prepared and submitted to the Com- 
 mission at the next Conference in Saratoga, N. Y., held 
 there in 1896, a draft of what is now known as the Uni- 
 form Negotiable Instruments Law. After some amend- 
 ments had been made by the Conference, most of which, 
 the author of the Act says, were such changes in the ex- 
 isting law as he had not felt at liberty to incorporate in 
 his draft of the proposed bill, the Act was agreed upon 
 and prepared for submission to the legislatures of all the 
 States with the recommendation of the Conference for its 
 adoption. At this Conference representatives of four- 
 teen States were present and participated. Its commit- 
 tee had the assistance of an able expert upon the law of 
 commercial paper and during the year of its preparation 
 the draft of the proposed Act was submitted to many of 
 the most eminent American and English authorities 
 upon the subject for their approval and criticism. It 
 was later submitted to the members of tlie committee on 
 Uniform Laws of the American Bankers' Association 
 who, deeming the Act so complete and satisfactory and 
 so much better than any which it could frame, reported 
 it favorably and recommended to the State Associations 
 that they present the Uniform Act to their respective 
 state legislatures and urge its adoption in all the States.
 
 8 THE NEGOTIABLE INSTRUMENTS LAW 
 
 States in which it ^^^ adoption proceeded slowly but now, 
 is in effect. after twenty-one years, the statute has 
 
 been enacted in every State but Georgia and Texas and 
 in the District of Columbia, Hawaii, Alaska and the 
 Philippine Islands, in most, without change, and in all 
 substantially in the form in which it was recommended 
 by the commission. It is, perhaps, to be regretted the 
 legislatures of some have seen fit to change any of the 
 provisions of this Act. Such small ambiguities, discrep- 
 ancies or obscurities as might appear in it can better be 
 cleared away by judicial interpretation, and this seems to 
 have been the conclusion of all subsequent Conferences 
 of the commissioners for, though many amendments to 
 the Act have been proposed, none have been adopted by 
 that body. However, in such States as have altered the 
 law in any material respect, the changes will be indicated 
 in this book by marginal notes. These will refer the 
 reader to an Appendix where they will be found. 
 j^^^ jjg^ The words of the statute are given con- 
 
 controlling effect trolling effect wherever they are in con- 
 flict with the law as it previously existed either by stat- 
 utory enactment or by judicial interpretation of the com- 
 mon law. The Act was intended to be a code of all the 
 laws relating to the use of commercial paper. Its style 
 and language have been said to be better, in some re- 
 spects, than the British Act. It is also said to be simpler, 
 less technical and more easily intelligible than that Act, 
 and it has been commended by the courts and by eminent 
 English authority because of these qualities. 
 
 The purpose of the Act being to clear 
 purp^s'^roflhe up. whatever conflict existed in the law of 
 act. negotiable instruments in this country 
 
 and to establish certainty and uniformity in their con- 
 struction and effect in all the States, in order that the
 
 HISTORICAL AND INTRODUCTORY 9 
 
 business man may more readily understand his rights 
 and his duties in regard to the commercial paper which 
 he issues or accepts or to which he otherwise becomes a 
 party in the course of his business dealings, the Act will 
 be set forth in this volume with such explanations as 
 might be helpful to him. The arrangement of the book 
 The arrangement ^^'^^^ present each section of the Act in the 
 of the book. form in which it is in effect in those States 
 
 where no changes have been made, following these with 
 the explanations which seem necessary to make it intelli- 
 gible to the man of ordinary comprehension and by ref- 
 erences to related sections. Attention will be directed, 
 as has been said, by marginal notes, to such States as 
 have made changes in the Act and what they are. These 
 will be found to be comparatively few and not seriously 
 to impair its essential characteristic of uniformity. 
 
 Citations will be used and these will either illustrate 
 the cases upon which is based the provision in the Act to 
 which they refer, or they will be of cases in which it has 
 been interpreted. The courts of all the States will, of 
 course, be guided by the interpretations of other courts 
 of their own States where they have passed upon the Act, 
 but when they have no precedent decision of their own 
 they will freely accept, with the same authority as their 
 own, the decisions of the courts of other States interpret- 
 ing identical provisions of this Act. This fortunate dis- 
 position toward uniformity in interpretation has made 
 it possible for me to use cases in the citations which aptly 
 well illustrate the conclusions stated in the text, when 
 they are not obviously sustained by the Act itself, with- 
 out cumbering the volume with the multitude of cumula- 
 tive decisions that are available and may be found in the 
 various digests of the law.
 
 10 THE NEGOTIABLE INSTRUMENTS LAW 
 
 Although it is applicable to all forms of negotiable in- 
 struments, the Act has particular reference to promis- 
 sory notes, bills of exchange and checks these being the 
 principal forms of commercial paper and the three with 
 which business men most frequently meet in their daily 
 transactions, and perhaps the reader will be enabled to 
 approach, apply and better understand the provisions of 
 the first title of the Act if he is here made familiar with 
 the definition of each of these instruments as it is con- 
 tained in the law. Accordingly, a negotiable promissory 
 note is defined as follows : 
 
 Definition of * < A negotiable promissory note with- 
 
 promissory note, j^^ ^g-^ jy^EANiNG OP this act is an uncon- 
 ditional promise in writing made by one person to 
 another signed by the maker engaging to pay on de- 
 mand, or at a fixed or determinable future time, a sum 
 certain in money to order or to bearer. Where a note 
 is drawn to the maker^'s own order, it is not complete 
 until indorsed by him.'' 
 
 Not all promissory notes are negotiable, and a written 
 promise to pay money or other thing of value may be re- 
 garded as a promissory note even if it is not negotiable. 
 Its interpretation, however, and the interpretation of the 
 rights and liabilities of its parties are not governed by 
 this Act if it is not a negotiable instrument. This sec- 
 tion contains the definition of a ''negotiable promissory 
 note," and, as it will be seen by reference to Sec. 1 of the 
 Act, the definition incorporates all of the requirements of 
 that section in regard to the form which such an instru- 
 ment must have in order that it may be considered to be 
 a negotiable promissory note. 
 
 The second class of negotiable instruments particu- 
 larly embraced within the Act is bills of exchange, and 
 these are defined as follows:
 
 HISTORICAL AND INTRODUCTORY 11 
 
 Bill of exchange "A bill of exchange is an uncondi- 
 defined. tional order in writing addressed by one 
 
 PERSON TO another, SIGNED BY THE PERSON GIVING IT, REQUIR- 
 ING THE PERSON TO WHOM IT IS ADDRESSED TO PAY ON DEMAND 
 OR AT A FIXED OR DETERMINABLE FUTURE TIME A SUM CER- 
 TAIN IN MONEY TO ORDER OR TO BEARER. ' ' 
 
 A bill of exchange is more commonly known as a 
 ''draft," ''bill," "acceptance" and "trade acceptance," 
 the designation newly applied to bills drawn and accepted 
 by merchants in order to distinguish them from ' ' Bank- 
 ers ' Bills ' ' which are at present used only in transactions 
 growing out of our foreign trade. A bill is usually, 
 though not necessarily, drawn by one person upon an- 
 other with whom he has a credit or who is indebted to 
 him. It directs the person upon whom it is drawn to pay 
 the money due upon the drawer's credit, either immedi- 
 ately upon presentment of the instrument or at a future 
 time, to some other person whom he names. Wlien such 
 an order is to be issued certain requisites of form must 
 be observed. These are fixed in this Act and while, as 
 in other negotiable instruments, the Act does not desig- 
 nate the exact lang-uage to be used in drawing a bill, the 
 substance of the law must be complied with and is suffi- 
 ciently so in the forms with which we are all familiar and 
 can readily obtain. 
 
 In the introduction to the second title, the provisions 
 of which are applicable to bills of exchange, I have used 
 the occasion to outline the principal business features of 
 the new Federal Reserve Bank Act which was designed 
 to permit and encourage the acceptance business by 
 national banks, and to establish a rediscount market in 
 this country similar to those of the financial centers of 
 Europe, based, to a very large extent, upon bankers ' bills. 
 
 The third form of familiar commercial paper to which 
 the law applies is a check, and this is defined in the Act 
 as follows:
 
 12 THE NEGOTIABLE INSTRUMENTS LAW 
 
 A check defined. ' ' A check is a bill of exchange dkawn 
 ox A bank payable ox demaxd. Except as hereix other- 
 A^iSE provided, the peovisioxs of this act applicable to 
 
 A BILL OF EXCHAXGE PAYABLE OX DEMAXD APPLY TO A 
 
 check/' 
 
 A check dra^m upon a bank is, therefore, considered to 
 be and is in fact a bill of exchange payable upon de- 
 mand. Every provision of this Act which governs the 
 interpretation and enforcement of the liabilities and 
 rights of parties to a bill of exchange payable upon de- 
 mand, or at sight, is, by this section, made applicable to a 
 check unless by the Act itself it is otherwise provided. 
 All of its provisions in regard to notice of non-paj^ment 
 and in regard to protest, if the check is upon its face a 
 foreign bill, that is to say, a bill drawn in one State and 
 payable in another, must be complied with. 
 
 The manner in which checks and other instruments are 
 handled for collection and some of the duties and respon- 
 sibilities of banks and collecting agents will be described 
 and explained, with reference to applicable sections of 
 the Act, at the conclusion of the treatment of Title 3. 
 
 Certificates of deposit and bonds and 
 Certificates of v • 4? n +• 1.1 • 
 
 deposit and their coupons, being fully negotiable m- 
 
 ^onds. struments, being in effect, and in fact but 
 
 promissory notns, while they are not specially treated in 
 the Act or in the explanations, are wholly governed by its 
 provisions. At the beginning of Title 3, a short division 
 of the Act, the provisions of which are applicable to prom- 
 issory notes and checks, I shall very briefly mention 
 again that their negotiation and interpretation are gov- 
 erned by the Uniform Negotiable Instruments Law and 
 will state a few of the most important provisions of the 
 law by which their use is governed. 
 
 ^. , , In addition to the three forms of com- 
 
 Quasi-negotiable • j j 
 
 instruments. mercial paper mentioned and to certifi-
 
 HISTORICAL AND INTRODUCTORY 13 
 
 cates of deposit and bonds and their coupons, which are 
 regulated wholly by the Law Merchant, others, consid- 
 ered as quasi-negotiable, that is, having some of the 
 features of negotiable instruments and governed in part 
 by the same or similar laws, are bills of lading, ware- 
 house receipts and certificates of stock. 
 
 These are made the subject of other Uniform Acts 
 proposed by the Commissioners on Uniformity of State 
 Laws notably warehouse receipts, and these, in forty-one 
 States, the District of Columbia, Alaska and the Philip- 
 pine Islands, are now governed by the Uniform Act pre- 
 pared and recommended by the Commissioners for their 
 interpretation. 
 
 Aside from that Act, however, the other Uniform Acts 
 have not yet met \vith a generous approval from the legis- 
 latures of the States. The Bills of Lading Act has been 
 enacted in only twenty-one and the Uniform Stock Trans- 
 fer Act in only twelve States. The principles of the laws 
 which they are designed to partially codify are, how- 
 ever, interpreted to very much the same effect in nearly 
 all. I shall, therefore, attempt to state these general 
 principles in relation to each under the title ''Quasi- 
 Negotiable Instruments." 
 
 Being impressed, now, with the real purpose of the 
 Act, namely, to make uniform the law of negotiable in- 
 strum.ents in all of the States, in order that the business 
 man may readily know and understand what are, every- 
 where, his rights and his duties upon his ordinary com- 
 mercial paper, and repeating that it was prepared and 
 enacted particularly for the benefit of men in business, 
 the reader will, perhaps, with this brief introduction and 
 explanation of its history, be more interested and better 
 prepared to proceed with the examination of the Act 
 itself.
 
 14 THE NEGOTIABLE INSTRUMENTS LAW § 1 
 
 TITLE I. 
 
 NEGOTIABLE INSTRUMENTS IN GENERAL. 
 SUBDIVISION I . 
 
 Form and Interpretation. 
 
 Section Section 
 
 1 Fomi of negotiable instru- 13 AVhen date may be inserted. 
 
 ments. 14 Blanks; when may be filled. 
 
 2 Certainty as to sum — what 15 Incomplete instrument not 
 
 constitutes. delivered. 
 
 3 When promise is uncondi- 16 Delivery; when effectual; 
 
 tional. when presumed. 
 
 4 Detenninable future time; 17 Ambiguous instrument. 
 
 what constitutes. 18 Liability of persons signing 
 
 4 Additional provisions affect- in trade or assumed name. 
 
 ing negotiability. 19 Signature by agent; author- 
 
 6 Omissions; seal; particular ity; how shown. 
 
 money. 20 Liability of persons signing 
 
 7 AVhen payable on demand. as agent, etc. 
 
 8 When payable to order. 21 Signature by procuration; 
 
 9 When payable to bearer. effect of. 
 
 10 Terms — when sufficient. 22 Effect of indorsement of in- 
 
 11 Date; presumption as to. fa"t or corporation. 
 
 12 Antedated and postdated. 23 Forged signature; effect of. 
 
 ''Sec. 1. An- instrument to be negotiable ml^st con- 
 form to the following requirements : 
 Form of negoti- 1- It must be in writing and signed 
 
 able instrument, by the maker or drawer ; 
 '^Wisconsin. 2. Must contain an unconditional 
 
 promise or order to pay a sum certain in money ; 
 
 3. Must be pay'able on demand, or at a fixed or de- 
 terminable FUTURE time; 
 
 4. Must be payable to order or to bearer; and, 
 
 5. Where the instrument is addressed to a drawee, 
 
 HE must be XAIMED OR OTHERWISE INDICATED THEREIN WITH 
 reasonable CERTAINTY. ' '* 
 
 The opening section of the law provides what shall be 
 formal requisites of a negotiable instrument. If any are 
 lacking-, the instrument, although it may be a valid note
 
 § 1 FORM AND INTERPRETATION 15 
 
 or bill, is not negotiable and its interpretation and the 
 rights and liabilities of its parties are not governed by 
 the Act.^ Observe that the instrument must, first of all, 
 be in writing and signed by the person who issues it. He 
 must either himself sign it or his name nmst have been 
 placed upon it by some one whom he has authorized to 
 do it. (Sec. 19.) Writing includes print (Sec. 191) and 
 the instrument may be written in pencil or in ink and 
 the signature made by mark.- It may be written or 
 printed on material other than paper or parchment, 
 though unusual forms of material ought to be avoided 
 as raising a suspicion of irregularity. 
 
 By "maker" is meant the person who makes and is- 
 sues a promissory note. By ''drawer" is meant the per- 
 son who makes and issues bill of exchange or draft, or 
 a check and it must, likewise, be signed. Of course, two 
 or more persons may join in making a promissory note 
 or drawing a bill or a check. 
 
 The drawer of a check is not the person who presents 
 it at the bank upon Avhich it is issued and draws the 
 money upon it, but is the person who signs and issues 
 it. The second requirement of this section is explained 
 in the next two sections of the Act. 
 
 The instrument must be payable in money, except in 
 those States where by other statutes instruments pay- 
 able in anything besides money are declared to be ne- 
 gotiable. 
 
 The third subsection of this section is amplified in sec- 
 tions 4 and 7 and sections 8 and 9 define the terms 
 
 1. Windsor Cement Co. vs. Thompson, 86 Conn. 511. 
 
 2. Gear\- vs. Phvsic, 5 Barn. & Cress. 234. 
 
 Brown vs. Biitchcrs & Drovers Bank, 6 Hill (N. Y.) 443. 41 
 
 Am. Dec. 755. 
 Baker vs. Dening, 8 Adol & Ellis, 94. 
 Reed vs. Roark, 14 Tex. 329, 65 Am. Dec. 127. 
 Closson vs. Steams, 4 Vt. 11, 23 Am. Dec. 245.
 
 16 THE NEGOTIABLE INSTRUMENTS LAW § 2 
 
 ** order" and ''bearer." If the instrument is neither 
 expressly payable to "order" or "bearer," it is not 
 negotiable unless, without the use of these words, negoti- 
 ability may clearly be inferred from other words em- 
 ployed. (Sec. 10.) 
 
 The fifth sub-section requires that the drawee of a 
 draft or bill of exchange, that is, the person, firm or cor- 
 poration upon whom it is drawn, must be named or de- 
 scribed with sufficient certainty and clearness to enable 
 the holder to know to whom and where the bill shall be 
 presented. But if the bill, at its inception, names no 
 drawee but designates a place where it is to be presented 
 for payment, its acceptance by any one at that place will 
 be deemed to be an acknowledgment that he is the per- 
 son to whom it was intended the bill should be presented 
 and that he was intended as the drawee.^ 
 
 Certainty as to "Sec. 2. The sum payable is a SUM 
 
 sum ; what certaiist within the meaning of this act 
 
 constitutes. although it is to be paid : 
 
 1. With interest ; or 
 
 2. By stated installments; or 
 
 ^Wyoming, Idaho, 3. By stated installments, with a 
 Iowa, N. Caro- provision that upon default in payment 
 
 ^i^^- OF ANY installment OR OF INTEREST,'^ THE 
 
 ^Nebraska whole shall become due; or 
 
 N. Carolina, 4. With exchange, whether at a fixed 
 
 S. Dakota. rate or at the current rate ; or 
 
 5. With costs of collection or ax attorney's fee, in 
 
 CASE payment shall NOT BE MADE AT MATURITY."^ 
 
 When an insti*ument is payable with interest the sum 
 payable is not an uncertain amount for it can be as- 
 certained -with exact certainty what sum is payable up- 
 on its maturity. The word "installments" used in this 
 
 3. Blackman vs. Lehman, 63 Ala. 547. 
 Gray vs. Milner. 8 Taunt. 739. 
 Walton vs. Williams, 44 Ala. 347. 
 
 Wheeler vs. Webster, 1 E. D. Smith (N. T.) 1.
 
 §2 FORM AND INTERPRETATION 17 
 
 section means, as in ordinary' usage, partial payments, 
 and when a bill or note is drawn or given to become pay- 
 able in this manner the amount and time when each in- 
 stallment is to be paid must be named; therefore, the 
 word ''stated" is used, meaning, mentioned in or deter- 
 minable from the instrument with certainty as to both 
 time and amount. 
 
 A negotiable instrument which is payable in stated in- 
 stallments,, or in which the interest is payable at stated 
 periods, may contain the provision that if any of these 
 installments or if the interest is not paid when due the 
 whole amount of the instrument shall become payable at 
 once.* It may also contain a provision that the person 
 upon whom a bill is drawn must in addition to the amount 
 named in it pay ''exchange" which is the premium or 
 charge to be collected by reason of the difference in the 
 value of the same amount of money in different countries, 
 or the disparity in the value of the use of the same 
 amount of money in different parts of the same country.'^ 
 Such an instrument usually has written or printed on 
 its face the words "with exchange" and it may fix a 
 definite rate or state that the "exchange" shall be made 
 at the rate prevailing on the date when it is payable and 
 in that event the words "at the current rate," or words 
 of similar import, are usually employed. 
 
 A promissory note or bill of exchange may also con- 
 tain a provision that if it is not paid when due the person 
 obliged to pay it shall pay attorney's fees and other 
 costs of collection in addition to the sum promised. Such 
 a provision is enforceable unless, as is the case in some 
 
 4. Markey vs. Casey, 108 Mich. 184. 
 Hodsre vs. Wallace, 129 Wise. 84. 
 Bright vs. Offield, 81 Wash. 442. 
 
 5. riagg vs. School Dist., 4 N. D. 30. 
 
 Whittle vs. Fond du Lac Natl Bk. (Tex.), 26 S. W. 1106.
 
 18 THE NEGOTIABLE INSTRUMENTS LAW § 2 
 
 States, it is made illegal either by express statute or is 
 held to be so by the courts as. in conflict with the laws of 
 usury.^ In that event, however, the insertion of this 
 provision in the instrument does not destroy its negoti- 
 ability.'' If a draft is presented to the drawee which 
 contains any provisions requiring him to pay exchange, 
 costs or fees of any kind, he should, if he is unwilling to 
 pay them, refuse to accept it. If he does accept it, he 
 will be liable to pay a holder for value strictly in ac- 
 cordance with the terms of the bill, unless other laws of 
 that State under which such an acceptance is to be en- 
 forced negative any provision on the instrument requir- 
 ing him to do so. 
 
 When an instrument is payable in installments, either 
 of principal or interest, and it contains a provision 
 that upon default in the payment of any all shall 
 become due, and one or more of the installments is 
 past due and unpaid, one who takes it afterward with 
 notice of the default will not be considered to be a holder 
 in due course but he will take the instrument subject to 
 all the rights existing between its original parties.* A 
 holder who takes the instrument after a known or appar- 
 ent default in the payment of any installment is charge- 
 able with notice that the party obliged to pay the in- 
 strument may have some good defense available against 
 
 6. Miller vs. Gardner, 49 la. 235. 
 Tyler vs. Walker, 101 Tenn. 306. 
 
 7. Miller vs. Kyle, 85 Ohio St. 186. 
 
 Oppenheimer vs. Fanners & Merch. Bk., 97 Tenn. 19. 
 Montgomery vs. Crossthwaite, 90 Ala. 553. 
 Stapleton vs. Louisville Bankor. Co., 95 Ga. 802, 
 Dorsey vs. Wolff, 142 111., 589. 
 Stoneman vs. Pyle, 35 Ind. 103. 
 
 8. Hodge vs. Wallace, 129 Wis. 84. 
 Vette vs. La Barge, 64 Mo. A. 179. 
 
 Natl. Bk. of N. A. vs. Kirby, 108 Mass. 497. 
 Waverly First Natl. Bk. vs. Forsyth, 67 Minn. 257,
 
 § 3 FORM AND INTERPRETATION 19 
 
 it in the hands of the original payee, and consequently in 
 the hands of any subsequent holder who takes it after 
 any known or apparent default in the payment of an 
 installment of principal or interest.'^ If the instrument 
 does not contain a provision making all installments ma- 
 ture upon default in the payment of any one, or if it is 
 provided that the subsequent installments shall mature 
 at the option of the holder, what I have just said will not 
 apph ', and one taking such an instrument under these 
 circumstances will take it in due course, if he takes the 
 instrument before the holder exercises his election,^** 
 unless he is otherwise disqualified. Also see Sec. 52. 
 Uncertainty in the sum payable will not be imputed when 
 there is an obvious omission or the amount is misspelt.^ ^ 
 Wlien promise is "Sec. 3. An unqualified order or 
 unconditional. promise to pay is unconditional within 
 
 THE MEANING OF THIS ACT THOUGH COUPLED WITH : 
 
 1. An INDICATION OF A PARTICULAR FUND OUT OF WHICH 
 
 reimbursement is to be made, or a particular account 
 to be debited with the amount; or 
 
 2. a statement of the transaction which gives rise 
 to the instrument. 
 
 But an order or promise to pay out of particular 
 
 FUND is not unconditional.^^ 
 
 This section means that a promise or an order to pay, 
 otherwise unqualified, meets the requirement of sub- 
 section 2 of section 1 and is to be considered uncondi- 
 tional, although the instrument contains a reference to a 
 particular fund out of which the person who is to pay it 
 shall reimburse himself.^- It is also unconditional if it 
 
 9. McCorkle vs. Miller, 64 Mo. A. 153, 156. 
 Vette vp. La Barge, 64 Mo. A. 179. 
 
 10. Battle Creek Nat. Bk. vs. Dean. 86 Iowa. 656, 53 N. W. 338. 
 Morgan vs. U. S., 113 U. S. 476. 
 
 11. McCov vs. Gilmore, 7 Ohio, 268. 
 Beardslev vs. Hill, 61 111. 354. 
 Ohm vs. Yung, 63 Ind. 432. 
 
 12. Schmittler vs. Simon, 101 N. Y. 554.
 
 20 THE NEGOTIABLE INSTRUMENTS LAW § 3 
 
 directs the payment to be charged to a particular ac- 
 count. If it contains a ' ' statement, ' ' meaning an indica- 
 tion or description of the nature of the transaction which 
 gives rise to, that is, causes the instrument to be made 
 and issued, it is not to be considered a conditional prom- 
 ise or order and its negotiability is not affected by such 
 a statement.'^ But if the instrument is so drawn that 
 it directs or promises the payment to be made out of 
 a particular fund, it is not unconditional and therefore 
 not a negotiable instrument, for its payment then de- 
 pends upon the sufficiency of the particular fimd out of 
 which it is to be paid. Municipal warrants which are so 
 draAvn, and all usually are, are therefore not negoti- 
 able.^* An order or promissory note drawn to be so pay- 
 able would not be governed by the provisions of this Act 
 and the rights and liabilities of parties to such an in- 
 strument would not be the same as upon a negotiable bill 
 or note. 
 
 Negotiability, however, is not essential to the validity 
 of a bill or note,^-^ and while an instrument which is non- 
 negotiable may be transferred from one person to an- 
 other by indorsement and delivery^® it is, in the hands of 
 any holder, subject to all of the defenses which the maker 
 or other primary party could interpose to prevent its 
 pa^Tnent if still in the hands of the original payee. ^'^ The 
 assignee of such an instrument takes no greater right or 
 title than that of his predecessor. This is not true of 
 
 13. Schmidt vs. Pegg, 172 Mich. 159. 
 
 14. Read vs. Buffalo, 67 Barb. (N. Y.) 526. 
 
 Beverqne vs. San Francisco, 1 Me All (U. S.) 175, 2 Fed. Cas. 
 No. 1137. 
 
 15. Roads vs. Webb, 91 Me. 406, nt 410, 41 Atl. 128. 
 
 16. Richards vs. Warring, 39 Barb (N. Y.) 42. 
 
 17. Warren vs. Scott, 32 Iowa. 22. 
 Ravmond vs. Middleton, 29 Pa. St. 529. 
 Roads vs. Webb, 91 Maine, 406, at 411.
 
 § 4 FORM AND INTERPRETATION 21 
 
 negotiable instruments and forms their principal distin- 
 guishing feature. 
 
 Determinable "Sec. 4. An instrument is payable 
 
 future time; -'^'^ ^ determinable future time, within 
 
 what constitutes, the meaning of this .\ct, which is ex- 
 "Wisconsin. pressed to be payable 
 
 1. At a fixed period after date or sight ; or 
 
 2. On or before a fixed or determinable future time 
 specified therein; or 
 
 3. On or at a fixed period after the occurrence op 
 
 A SPECIFIED event, WHICH IS CERTAIN TO HAPPEN, THOUGH 
 THE TIME OF HAPPENING IS UNCERTAIN. 
 
 "An INSTRUMENT PAYABLE UPON A CONTINGENCY IS NOT 
 NEGOTIABLE, AND THE HAPPENING OF THE EVENT DOES NOT 
 CURE THE DEFECT." 
 
 The first sub-section of this section embraces a note 
 or bill payable a certain number of days, months, or 
 years after date or after sight. 
 
 The second embraces such as are payable on or before 
 a fixed date, and in this would be included such as may 
 be payable '*on or by" a fixed time, the w^ord *'by" be- 
 ing regarded as the equivalent of ** before. "^^ It also 
 embraces one payable on or before a determinable fu- 
 ture time which can be known and determined from the 
 language used in the instrument itself. 
 
 The third embraces such as are payable at a fixed per- 
 iod (number of days, months or years, o?i demand, or at 
 a fixed date) after the happening of a named event which 
 must be certain to happen although the time when it vdW 
 happen may be uncertain. The most common illustra- 
 tion of an instrument payable after the happening of an 
 event certain to happen is of one payable after the 
 death of a person whom it names but, of course, such 
 certainty as this is not always required. A certificate 
 of deposit, for example, may be made payable ''upon re- 
 
 18. Preston vs. Dunham, 52 Ala. 217. 
 Massie vs. Bolford, 68 111. 290.
 
 22 THE NEGOTIABLE INSTRUMENTS LAW § 5 
 
 turn of this certificate ' ' and this has been held to be suffi- 
 ciently certain to meet this requirement and not impair 
 its negotiability, these words being the equivalent of a 
 promise to pay ''on demand. "^^ (See Sec. 17.) 
 
 This section also provides that an instrument pay- 
 able upon a contingency, that is, an uncertainty, is not 
 negotiable, and even though the uncertainty upon which 
 it depends does happen, it does not thereby become 
 negotiable. This so distinctly states the rule that no 
 further explanation seems necessary.^" Examples are 
 to be found in the cases cited. 
 
 * ' Sec. 5. An instkument which contains an order or 
 
 PROMISE to do any ACT IN ADDITION TO THE PAYMENT OF 
 MONEY IS NOT NEGOTIABLE." BuT THE NEGOTIABLE CHARAC- 
 
 Additional "^^^ ^^ -^^" instrument otherwise negoti- 
 
 provisions not able is not affected by a provision 
 
 affecting nego- which — 
 
 tiability. ^ Authorizes the S4LE of collateral 
 
 ^Illinois. 
 
 securities in case the instrument be 
 
 ^N. Carolina. not paid at maturity; or 
 
 ^Kentucky. £. ^Authorizes a confession of judg- 
 
 <^Wisconsin. „ _ 
 
 ment" if the instrument be not paid at 
 
 maturity; or 
 
 3. 'Waives the benefit of any law intended for the 
 advantage or protection of the obligor; or 
 
 4. Gives the holder an election to require some- 
 thing to be done in lieu of payment of money. 
 
 But nothing in this section shall validate any pro- 
 vision or stipulation otherwise illegal.'"^ 
 
 The first paragraph of this section is readily under- 
 stood and, except as it may be otherwise provided in the 
 Act, an instrument which requires the maker or acceptor 
 to perform some act in addition to the payment of money 
 cannot be negotiated in the sense in which that term is 
 used in the Act. Such an instrument would have merely 
 
 19. Citizens Bank vs. Brown, 45 0. S. 39. 
 Miller vs. Austin, 13 How. (U. S.) 218. 
 
 20. Hibemia Bk. & Tr. Co. vs. Dresser, 132 La. 532. 
 Tisdale Lbr. Co. vs. Piquet. 153 App. Div. (N. Y.) 266.
 
 § 5 FORM AND INTERPRETATION 23 
 
 the force and legal effect of a simple contract, would be 
 interpreted under the rules of law which apply to simple 
 contractual relations, and would be assignable as 
 such.^^ There are, however, four exceptions given to 
 this rule which are declared not to affect the negoti- 
 ability of the instrument and either or all of these may 
 appear in it without destroying its negotiable character. 
 
 The first is usually found in that form of promissory 
 note used when a loan is made upon collateral, such as 
 stocks, bonds, etc., which are pledged to secure it. In 
 such an instrument the holder is given pov/er to sell the 
 security pledged. The negotiability of such an instru- 
 ment will not be impaired by a provision requiring addi- 
 tional collateral or authorizing the surrender of the 
 whole or part of the pledge upon the complete or partial 
 performance of the promise,^- but a provision in a mort- 
 gage note accellerating its maturity if the mortgagor 
 shall do anything to impair the security of the pledge 
 will destroy its negotiability.-^ 
 
 The second is of instruments Avhich authorize some 
 one to admit the maker's indebtedness and confess judg- 
 ment upon the obligation if it is not paid at maturity. 
 The instrument may not, however, contain a provision 
 authorizing the confession of judgment before maturity 
 for such a provision would destroy its negotiability.^-* 
 A promissory note of this kind usually contains a waiver 
 of notice and of other benefits which the maker would 
 otherwise be entitled to enjoy and the third sub-section 
 
 21. Reed vs. Murphy, 1 Ga. 236. 
 
 22. Kennedy vs. Broderiok, 216 Fed. 137. 166 C. C. A. 381. 
 Finlev vs. Smith, 16.5 Kv. 445. 
 
 Il?ley vs. Smedes, 15 Dalv (N. Y.) 488, 8 N. Y. Suppl. 470, 
 
 29 N. Y. St. 417. 
 Gross vs. Emerson, 23 N. H. 38. 
 
 23. Bright vs. Offield, 81 Wash. 442. 
 
 24. Wis. Yearlv Meetff. of F. Baptists vs. Babler, 115 Wise. 289. 
 First Nat'l" Bank, Elgin, vs. Rasscll, 124 Tenn. 618.
 
 24 THE NEGOTIABLE INSTRUMENTS LAW § 5 
 
 provides that this waiver, as well as a waiver of any 
 of his other rights and benefits by the person obliged to 
 pay the instrument, secured to him by laws intended for 
 his protection, may be contained in the instrument and, 
 notwithstanding this provision, the instrument will con- 
 tinue to be negotiable.^^ 
 
 The fourth means, as it says, that the instrument may 
 be payable in money and provide as well that the holder, 
 who is the person lawfully having it in his possession, 
 may have the election, that is, the choice, of requiring 
 the person obliged to pay it to make payment in money 
 or, in the alternative, to perform some act instead, as, 
 for example, in lieu thereof to deliver certain property 
 or securities, or perform certain services, which must be 
 set forth in the instrument. ^^ But, observe, that if the 
 instrument itself contains a direction to the person 
 obliged to pay it or contains his promise to do any act in 
 addition to the pajniient of money, it is not negotiable. 
 Another section of the Act (Sec. 132) provides that the 
 acceptance of a bill of exchange may not express that the 
 drawee will perform his promise by any other means 
 than the payment of money. Yet, the negotiability of 
 the instrument would not be affected by an acceptance 
 which agrees to pay the instrument in money but pro- 
 vides also that the holder may, at his election, require 
 something to be done instead. 
 
 If, however, the instrument contains any illegal pro- 
 vision, or stipulation, such a provision or stipulation is 
 not made lawful by this section. There are in all States 
 laws which define what are illegal acts and this section 
 is not intended to make legal any which would otherwise 
 be unlawful. What are unlawful provisions differ in the 
 
 25. Hughitt vs. Johnson, 28 Fed. 865. 
 
 26. Hostetter vs. ^^ilson, 36 Barb. (N. Y.) 307.
 
 § 6 FORM AND INTERPRETATION 25 
 
 several States and to know them the statutes of each 
 State must be examined. Very generally stated they 
 are such as violate positive law, the laws of religion or 
 morality or such as are distinctly opposed to public 
 policy. 
 
 Omissions; seal; ''Sec. 6. The validity and negotiable 
 
 particular character of an instrument are not af- 
 
 money. fected by the fact that^ — 
 
 "Illinois. "1^^ j^ jg -^Q^ dated; or 
 
 2. Does not specify the value given, or that any 
 value has been given therefor; or 
 
 3. Does not specify the place where it is drawn or 
 the place where it is payable ; or 
 
 4. Bears a seal; or 
 
 5. "Designates a particular kind of current money 
 in which payment is to be made. 
 
 But NOTHING IN THIS SECTION SHALL ALTER OR REPEAL 
 ANY STATUTE REQUIRING IN CERTAIN CASES THE NATURE OF 
 THE CONSIDERATION TO BE STATED IN THE INSTBUMENT. '' 
 
 The negotiable character of an instrument, otherwise 
 negotiable, is not destroyed nor is its negotiabilitj^ af- 
 fected by the fact that it is not dated or that the words 
 "value" or "value received" are omitted or it does not 
 specify what value was given for it. Nor is a note or a 
 bill bearing a seal thereby rendered the less negotiable. 
 An investment bond of a municipal or other corporation 
 bearing a seal is negotiable, as are its interest coupons. 
 (See Sec. 184.) 
 
 The instrument is negotiable if it does not appear to 
 have been drawn or made payable at any specified place. 
 Such an instrument is deemed to have been drawn at 
 the place where it is issued and if no place of payment is 
 named, it is payable at the given address of the person 
 who is to pay it; and if this has also l)een omitted then 
 at his residence or place of business. (Sec. 73.) 
 
 A promissory note, bill of exchange, or other nego- 
 tiable instrument may designate payment to be made
 
 26 THE NEGOTIABLE INSTRUMENTS LAW § 7 
 
 in a particular kind of money in common and general 
 use at the place where it is payable, and receivable and 
 passing by law as money, without destroying or affecting 
 its negotiability.^'^ In some of the States there are laws 
 requiring that in certain cases the nature of the consid- 
 eration must be expressed in the instrument, as, in cer- 
 tain States, that a note given for some kinds of cropping 
 seeds must so state, and this section is not intended to 
 alter or rejDeal such laws. Therefore it is provided gen- 
 erally that if the nature of the consideration upon which 
 it is based is expressed in the instrument its negotiability 
 is not affected by such a provision. 
 
 When payable ' ' Sec. 7. An instrument is payable on 
 
 on demand. demand— 
 
 1. Where it is expressed to be payable on demand, or 
 at sight, or on presentation ; or 
 
 2. In which no time for payment is expressed. 
 Where an instrument is issued, accepted, or indorsed 
 
 when overdue, it is, as regards the person so issuing, 
 accepting or indorsing it, payable on demand. '^ 
 
 A promissory note Avhich by its terms is payable upon 
 demand, or a draft or bill of exchange payable at sight 
 or upon presentation, or a note or other negotiable in- 
 strument in which no time for payment is fixed, must be 
 paid by the person who is obliged to pay it, whenever 
 the holder presents it to him and demands its payment. 
 And it is so payable even if it is payable with interest 
 and contains a provision that the interest shall be pay- 
 able annually or at other fixed periods after its date.^^ 
 Such a provision is not regarded as an indication that 
 the holder is not expected to present the instrument 
 for payment until the time at which the interest is payable 
 
 27. Hatch vs. First Nat'l Bank, 94 Me. 348, SO Am. St. Rep. 401. 
 
 28. Header vs. Dollar Savg. Bk., 56 Ga. 605. 
 Converse vs. Johnson, 146 Mass. 20, 14 N. E. 925. 
 Shaw vs. Shaw, 43 N. H. 170. 
 
 Knight vs. Braswell, 70 N. C. 709.
 
 § 7 FORM AND INTERPRETATION 27 
 
 and not at all to be understood to require liim to with- 
 hold demand until that time. 
 
 An instrument which is issued, accepted, or which is 
 transferred from one person to another by indorsement 
 after it is past due, is, as to the person so issuing, accept- 
 ing or indorsing it and, of course, as to all prior parties, 
 payable at once. In order to hold the indorser indorsing 
 such an instrument after maturity the holder must pre- 
 sent it for payment within a reasonable time after its 
 negotiation to him, although it has previously been dis- 
 honored, and if it is not then paid must give notice of 
 dishonor to his transferers^ if his liability had not 
 already been fixed by notice upon its previous dishonor.^^* 
 
 The holder of an instrument payable on demand has 
 the right to demand payment immediately after its issue 
 or negotiation to him.^*^ He may, if he desires, wait a 
 reasonable time before doing so, but what is a reasonable 
 time is a question w^hich will permit of varying con- 
 struction (see sees. 53, 71, 144 & 193) and it is proper, 
 if the instrument bears indorsements, to make demand 
 at once unless a delay has been agreed upon, and then 
 proceed as required under Sees. 89 to 118 inclusive. Of 
 course, it is unusual to do this when the instrument is 
 a promissory note but not at all unusual in this country 
 in the case of bills of exchange payable on demand. In- 
 deed, when the instrument is a check, its detention for a 
 very few days without presenting it for payment has 
 been held to be an unreasonable delay.^^ It is not rec- 
 
 29. Smith vs. Caro & Baum, 9 Oregon, 278. 
 Colt vs. Barnard, 18 Pick. 260. 
 Libbey vs. Pierce, 47 N. H. 309, 314. 
 Beer vs. Clifton, 98 Cal. 323. 
 
 29a. Libbey vs. Pierce, 47 N. H. 309, 314. 
 
 30. Merritt vs. Todd, 23 N. Y. 28. 
 
 31. Nat'l State Bk. vs. Weil, 141 Pa. St. 457; 21 A. 667.
 
 28 THE NEGOTIABLE INSTRUMENTS LAW § 8 
 
 ommended, however, that immediate demand be made 
 for the payment of a bill or note which has been issued 
 or drawn to be used as a credit instrument.^^ 
 
 After demand and notice to the indorsers, the holder 
 may sue upon the instrument at his pleasure and he is 
 limited as to the length of time he may wait before doing 
 so only by the statute of limitations governing such 
 instruments in the State in which they are to be enforced. 
 More will be said upon this subject under the sections 
 above referred to. The maker of a demand note has, of 
 course, the right to pay it at any time after its issue 
 unless a delay has been agreed upon.^^ 
 When payable to ''Sec. 8. The instrument is payable 
 
 PJ,*??^- . TO ORDER where IT IS DRAWN PAYABLE TO 
 
 "Illinois. 
 
 THE ORDER OF A SPECIFIED PERSON OR TO HIM 
 OR TO HIS ORDER. It MAY BE DRAWN PAYABLE TO THE ORDER 
 OF 
 
 1. a payee who is not maker, drawer, or drawee; or 
 
 2. The drawer or maker ; or 
 
 3. The drawee; or 
 
 4. Two or more PAYEES JOINTLY; OR 
 
 5. One or some of several payees ; or 
 
 6. The holder of an office for the time being." 
 Where the instrument is payable to order the payee 
 
 must be named or otherwise indicated therein with 
 reasonable certainty,'' 
 
 An instrument payable to order requires indorsement 
 to pass the title or ownership. To be payable to order 
 the payee must either be named in it or described suffi- 
 ciently so that his identity can be easily ascertained,^* 
 (Sec. 1) and the instrument must state that it is pay- 
 able to the order of the person named or described as 
 the payee. If these words are not used and negotiability 
 
 32. Columbian Banking- Co. vs. Bowen, 134 Wise. 218. 
 Nutting vs. Burked, 48 Mich. 241, 12 N. W. 184. 
 
 33. Stover vs. Hamilton, 21 Gratt (Va.) 273. 
 
 34. United States vs. White, 2 Hill, 59. 
 Blackman vs. Lehman, 63 Ala. 547.
 
 § 8 FORM AND INTERPRETATION 29 
 
 cannot clearly be inferred from other language employed 
 in the instrument it will not be negotiable.^'' 
 
 It is payable to order and must be transferred by 
 indorsement, when it is payable to one's own self or order 
 or, if a bill of exchange, when it is payable to the person 
 upon whom it is drawn or to his order. It is also pay- 
 able to order if it is payable to the order of a person 
 who is not the maker, drawer or drawee. That person 
 is then called the ''payee." The instrument may be 
 made or drawn payable to several persons jointly, or 
 a person and a corporation jointly, a corporation being, 
 by a fiction of the law, an artificial person having a dis- 
 tinct existence as such. It may also be made or drawn 
 payable in the alternative to one or more of several per- 
 sons whose names may be mentioned or who may be 
 described in the instrument. 
 
 The holder of an office need not be designated by 
 name.36 An instrument payable to the holder of an office 
 whose name it does not mention may be presented for 
 payment when due by or to whatever person holds the 
 office designated, and such a presentment is good and the 
 instrument may be negotiated by the indorsement of the 
 person holding the office named. (See Sec. 42.) The de- 
 scription of the officer, as for example, "Pay the Treas- 
 urer of Blank Company," would designate the payee with 
 the certainty required by Section 1, Sub-section 5. So also 
 is a payment made to the holder of the office designated 
 in the instrument or indorsement as the payee good, even 
 if it is not made at the office named. And if a person 
 is named and described as the holder of an office and he 
 has relinquished his office, presentment or payment to, 
 or suit to enforce the instrument by his successor is 
 
 35. Putnam vs. Cryines, 1 McMul. (S. C.) 9, 36 Am. Dec. 250. 
 
 36, McBroom vs. Treas. Lebanon Co., 31 Ind. 268
 
 30 THE NEGOTIABLE INSTRUMENTS LAW § 8 
 
 proper,^" unless the instrument is his own property and 
 the designation of the office he holds is used only for 
 description. However, care must be exercised to see 
 that the proper person accepts the instrument or that 
 pajTiient is made to the proper person when the drawee 
 or payee is the holder of an office and is not mentioned 
 by name, or if he is mentioned by name together with 
 a description of the office he holds, and payment should 
 never be made unless the instrument is at once surren- 
 dered. (Sees. 88, 119.) Even if the instrument is surren- 
 dered, payment to the wrong person will not always dis- 
 charge the obligation. Exceeding great care must be 
 exercised when there is any uncertainty in this regard. 
 Reasonable certainty in describing the drawee or payee is 
 required if he is not designated by name for the reason, 
 as has already been stated, that it must appear to whom 
 and Avhere the instrument is to be presented, and in order 
 that it shall indicate clearly by whose indorsement it may 
 be negotiated and to whom payment is to be made. (Sec. 
 1.) It has been held that an instrument payable to a 
 '* Trustee" is not commercial paper and there are diffi- 
 culties in the way of the transfer of such paper by in- 
 dorsement which very well deserve careful inquiry.^^ 
 (See Sec. 42.) 
 
 If an instrument is payable to a named person but not 
 to his order, and if it is not payable to bearer as is pro- 
 vided in the next section, it is not negotiable, unless from 
 the use of other words negotiability is clearly to be in- 
 ferred. But an instrument which is negotiable at its 
 origin continues to be so until it has been restrictively 
 
 37. McDonald vs. McLaudilin, 74 Me. 480. 
 Tainter vs. Winter, 53 Me. 348. 
 Davis vs. Gore, 6 N. Y. 124. 
 
 38. National Citv Bk. vs. Bankers Trust Co., 37 App. (D. C), 533. 
 Third Nat '1 Bk. vs. Lana:e, 51 Md. 138, 34 Am. R. 304. 
 Sturtevant vs. Jacques, 14 Allen (Mass.) 523.
 
 § 9 FORM AND INTERPRETATION 31 
 
 indorsed or is discharged by payment (sec. 47) and if, 
 during its negotiation, the instrument obtains an in- 
 dorsement from which words are absent wliich imply the 
 power to further negotiate it, that is, which merely omits 
 such words, it continues to be negotiable notwithstand- 
 ing their omission. (Sec. 36.) 
 
 When payable ''Sec. 9. The instrument is payable 
 
 to bearer. r^^ bearer 
 
 "Illinois. I When it is expressed to be so pay- 
 
 able; OR 
 
 2. AVhen it is payable to a person named therein or 
 bearer; or 
 
 3. "^When it is payable to the order of a fictitious 
 OR non-existing person, and such fact was known to 
 the person making it so payable; or 
 
 4. When the name of the payee does not purport 
 
 TO BE the name OF ANY PERSON; OR 
 
 5. "When the only or last indorsement is an in- 
 dorsement IN blank." 
 
 An instrument is payable to and negotiable by the 
 person who has it in his possession when it is written 
 *'pay to bearer," these w^ords meaning that the person 
 who has the instrument in his possession and presents 
 it for payment, is the proper person to receive the money 
 due upon it. (Sec. 51. )• Words of similar import may 
 be employed. Payment to the bearer at the maturity of 
 the instrument is good even though the person receiv- 
 ing payment does so without authority of the owner of 
 the instrument, provided the person paying had at the 
 time of payment no knowledge, or was not charged with 
 any duty to know that the holder acted fraudulently in 
 presenting the instrument and receiving the payment. 
 (Sec. 88.) An instrument which is made payable to a 
 named person whose name is followed by the words *'or 
 bearer" is payable to any one who has it in his posses- 
 sion and can be negotiated by him even if it does not 
 bear the indorsement of the payee whose name appears
 
 32 THE NEGOTIABLE INSTRUMENTS LAW § 9 
 
 upon its face as the person to whom it is payable, for 
 the obvious reason that such an instrument is to be paid 
 either to the person named or to anybody else who 
 bears it. 
 
 When an instrument is payable to a fictitious person, 
 that is, one who is not real, but a pretended person, or if 
 real, one who has no interest in the instrument and 
 whose name is used merely for the purpose of decep- 
 tion, ^^^ and the person making the instrument knows at 
 the time of issuing it that the payee is fictitious, it is 
 
 payable to bearer. The obvious intention of this sub- 
 section is that such an instrument shall not require in- 
 dorsement since no person capable of or interested in in- 
 dorsing it exists. Quite obviously also, an instrument 
 payable to the assumed, trade name under which one may 
 be doing business would not become payable to bearer 
 because the instrument was not made payable to the fic- 
 titious name for the purpose of deception.^^ (See Sec. 
 18.) If the instrument is so written that the words used 
 to indicate to whom it is to he paid do not appear to be 
 the name of any person, for example, a check payable 
 to ^'Cash," or if it does not describe any one with the 
 certainty required, (See Sec. 1) it is then, in either case, 
 also payable to bearer. But the instrument is probably 
 not payable to bearer if the person making it knowingly 
 makes it payable to a person who is dead. Such an in- 
 strument would recjuire the indorsement of the repre- 
 sentatives of the decedent's estate. ^^ 
 
 39. Snvder vs. Corn Exchange Natl. Bk., 221 Pa. 599, 12S Am. 
 
 S. R. 780. 
 Shipman vs. Bank of K Y., 126 N. Y. .318. 
 
 40. Edgerton vs. Preston, 15 111. A. 23. 
 
 Jones vs. Home Furnishing Co., 9 App. Div. 103, 41 N. Y. 
 
 S. 71. 
 Biyant vs. Eastman, 7 Cnsh. (Mass.) 111. 
 
 41. Lewisohn vs. The Kent & Stanley Co., 87 Hun 257.
 
 § 10 FORM AND INTERPRETATION 33 
 
 A negotiable instrument made payable to order, as 
 mider Sec. 8, becomes payable to bearer and can be 
 passed by mere delivery when the only or the last in- 
 dorsement upon it is in blank. An indorsement in blank 
 is made by writing one's name upon the back of the in- 
 strument without any words indicating another to whom 
 it is to be paid. (Sec. 34.) 
 
 An instrument which is made payable to bearer or be- 
 comes so may be transferred by mere delivery. (Sec. 
 30.) It does not require indorsement by the holder to 
 transfer the title. However, no person is liable upon 
 the instrument, except as is otherwise provided in this 
 act (Sees. 18, 19, 20), unless he has placed his signature 
 upon it, and an instrument negotiated by mere delivery 
 does not accumulate the security which added indorse- 
 ments give to one negotiated by indorsement. 
 
 Terms when *'Sec. 10. The instrument need not 
 
 sufficient. follow the language of this act, but 
 
 "Wisconsin. ^^^ tebms aee sufficient which clearly 
 
 indicate an intention to conform to the requirements 
 
 HEREOF. ' '" 
 
 The Negotiable Instruments Act was not intended to 
 make invalid instruments which are not written in the 
 language of this law. Any language, English or for- 
 eign,^ ^ jjiay be used in drawing a bill, note or check which 
 will show clearly that the parties to the instrument in- 
 tended to make such an instrument as will substantially 
 conform to the provisions of the Act. Doubt and uncer- 
 tainty, confusion and delay, expensive litigation and dis- 
 pute will be avoided, however, if instruments ordering 
 or promising the payment of money and which are in- 
 tended for negotiation, that is, for transfer by delivery 
 or indorsement from one person to another in the regu- 
 lar course of trade, are so writte n that there can be no 
 
 42. Debebian vs. Gala, 64 Md. 262, 265.
 
 34 THE NEGOTIABLE INSTRUMENTS LAW § 11 
 
 doubt of their character. Forms are readily obtainable, 
 differing not very materially in their language from 
 those employed since the fourteenth century, and wher- 
 ever practicable they should be used. 
 
 If language is used in an instrument which by long es- 
 tablished custom has obtained a special meaning or sig- 
 nificance different from its ordinary meaning, it will be 
 interpreted according to its special significance unless 
 to do so would ])e clearly inconsistent with the purpose of 
 the instrument.*^ The provisions of this Act definitely 
 fix the rights, liabilities and duties of all the parties to 
 commercial paper. Its provisions cover every require- 
 ment of the commercial relationships between business 
 men and an instrument executed in conformity with this 
 Act will have the same interpretation in every State in 
 which it has been adopted. 
 
 Informal instruments which clearly indicate by the 
 terms used that they are intended to be negotiable and 
 which are not lacking in any of the essential require- 
 ments of this Act will be construed to be, and are, in ef- 
 fect, negotiable instruments.** 
 
 Date; presump- "Sec. 11. Where the instrument or 
 tion as to. ^^^ acceptance or any indorsement 
 
 thereon is dated, such date is deemed prima facie to be 
 the true date of the making, drawing, acceptance or 
 indorsement as the case may be." 
 
 This section means that when an instrument or an 
 acceptance upon a draft or bill of exchange is dated, the 
 date given is presumed to be the date when it was made 
 or given. Likewise when an indorsement is dated. But 
 if the date is an impossible one, then the nearest or prob- 
 
 43. Pilmer vs. Branch of State Bank, 16 Iowa, 321. 
 
 44 Owen vs. Blackburn, 161 App. Div. (N. Y.) 827. 
 Kerr vs. Smith, 156 App. Div. (N. Y.) 807. 
 Westberg vs. Chicago Lbr. Co.. 117 Wise. 589. 
 Gilley vs. Harrell, 118 Tenn. 115.
 
 § 12 FOKM AND INTERPRETATION 35 
 
 able one will be adopted. (April 31st may be April 30th, 
 or May 1st, probably the latter.)"*^ Of course, if the date 
 given is not really the date upon which the act was done, 
 the person disputing it will be permitted to show that it 
 is not the true date and if the question arises in an action 
 upon the instrument he must offer some evidence to sup- 
 port his contention. If he does not, the presumption in 
 its favor mil prevail and the date upon the instrument, 
 
 acceptance, or indorsement will be taken to be its true 
 date.''^ 
 
 Antedated and "Sec. 12. The instrument is not in- 
 
 postdated. valid for the reason only that it is an- 
 
 tedated or postdated, provided this is not done for an 
 illegal or fraudulent purpose, the person to whom 
 an instrument so dated is delivered acquires the titlk 
 thereto as of the date of delivery." 
 
 If an instrument is dated before (antedated) or later 
 than the real date of its issue (postdated) or an indorse- 
 ment or acceptance is so dated, it is not thereby made in- 
 valid, unless the antedating or postdating is done for an 
 unlawful or a fraudulent purpose. A postdated instru- 
 ment is regarded very much the same as a bill payable so 
 many days after sight, and the person to whom an instru- 
 ment so dated is delivered or transferred acquires title 
 to it, that is, he becomes its owner, upon the day when 
 it is delivered or transferred to him and he may nego- 
 tiate it immediately. It is not necessary that he hold 
 it until the day it is dated before transferring it to an- 
 other.^' An instrument so dated, if payable at a given 
 time after its date, does not become due earlier because 
 issued before its date. The fact that it is postdated is 
 not sufficient to put the indorsee upon notice of irregu- 
 
 45. Wa^er vs. Kenncr, 2 Rob. (La.) 120. 
 
 46. Mobley vs. Ryan, 14 111. 51. 
 
 47. Brewster vs. McArdle, 8 Wend. 478. 
 Passmore vs. North, 13 East, 517, 104 Reprint, 471.
 
 36 THE NEGOTIABLE INSTRUMENTS LAW § 13 
 
 larity or fraud,^^ (Sec. 56) and the person who executes 
 and delivers a postdated instrument cannot, in the ab- 
 sence of any agreement to the contrary, recall the in- 
 strument by reason of the fact that it is dated later than 
 the date of its issue. He can, it is true, countermand 
 payment of such an instrument, as he can of one not 
 postdated, but the effect of this would be merely to pre- 
 vent its pajTiient when presented. His countermand 
 would not release him from his obligation to the holder. ^-^ 
 Even if the death of one of the parties to a postdated 
 instrument occurs before the day of its date, this will 
 not render the instrument invalid and will not, in all 
 cases, amount to a revocation.'^" An antedated instru- 
 ment can, of course, be put in issue by its maker at any 
 time after its date. If it is payable at a given time the 
 time of maturity is not postponed by the fact that it was 
 delivered later than its date and if it is issued or nego- 
 tiated after its maturity it is, by the provisions of Sec. 
 7, payable upon demand. 
 
 When date may '*Sec. 13. Where a^ instrument ex- 
 be inserted. pressed to be payable at a fixed period 
 
 AFTER DATE IS ISSUED UNDATED, OR WHERE THE ACCEPTANCE 
 OF AN INSTRUMENT PAYABLE AT A FIXED PERIOD AFTER SIGHT 
 IS UNDATED, ANY HOLDER MAY INSERT THEREIN THE TRUE 
 DATE OF ISSUE OR ACCEPTANCE AND THE INSTRUMENT SHALL 
 BE PAYABLE ACCORDINGLY. ThE INSERTION OF A WRONG DATE 
 DOES NOT AVOID THE INSTRUMENT IN THE HANDS OF A SUB- 
 SEQUENT HOLDER IN DUE COURSE ; BUT AS TO HIM, THE DATE 
 SO INSERTED IS TO BE REGARDED AS THE TRUE DATE." 
 
 If an instrument or an acceptance is payable at a fixed 
 period after date or sight and it is issued or delivered 
 
 48. Albers vs. Hoffman, 64 Misc. (N. Y.) 87. 
 
 49. Usher vs. A. S. Tucker Co., 217 Mass. 441, 105 N. E 360 
 
 50. Passmore vs. North, 13 East. 517, 104 Reprint, 471. 
 Cutts vs. Perkins, 12 Mass. 206. 
 
 Nassano vs. Tuolumne County Nat. Bk., 20 Cal. A. 603, 130 
 P. 29.
 
 §14 FORM AND INTERPRETATION 37 
 
 without bearing a date, the holder may insert the true 
 date of its issue or acceptance for a date is then neces- 
 sary to fix its maturity. If he inserts a wrong date and 
 the instrument in due course, meaning, by a regular 
 transaction and for value before maturity, passes into 
 the hands of another, the date inserted, even though 
 wrong, is, as to this holder in due course, considered to 
 be its true date. As between the maker of the instru- 
 ment or acceptance and the holder who has knowingly 
 inserted a wrong date, and any holder taking with notice 
 of the insertion of the wrong date, it has been held that 
 the instrument is thereby avoided and is not enforce- 
 able.^^ And, it seems, this might be true even though 
 he has made the insertion in good faith believing it to- 
 be the true date. 
 
 Section 6 provides that if the date is omitted alto- 
 gether the instrument is not thereby invalidated and this 
 section gives the holder the right to insert the true date. 
 It follows, therefore, that if the holder of an undated 
 instrument or acceptance does not know its true date 
 he ought not to insert any without the consent of the 
 parties to whom he looks for payment. 
 
 -,, , , "Sec. 14. "Where the instrument is 
 
 Blanks; wnen 
 
 may be filed. wanting in any material, particular, the 
 
 "Wisconsin. person in possession thereof has a prima 
 
 ''Illinois. FACIE AUTHORITY TO COMPLETE IT^ BY FILIr- 
 
 '^So. Dakota. ^^^ ^,p ^^j, blajtks therein. And a sig- 
 
 nature ON a blank PAPER DELIVERED BY THE PERSON :MAK- 
 ING THE SIGNATURE IN ORDER THAT THE PAPER MAY BE CON- 
 VERTED INTO A NEGOTIABLE INSTRUMENT OPERATES AS A PRIMA 
 FACIE" AUTHORITY TO FILL IT UP AS SUCH FOR ANY AMOUNT. 
 In ORDER, HOWEVER, THAT ANY SUCH INSTRUMENT WHEN 
 COMPLETED MAY BE ENFORCED AGAINST ANY PERSON WHO BE-. 
 CAME A PARTY THERETO PRIOR TO ITS COMPLETION, IT MUST 
 BE FILLED UP STRICTLY IN ACCORDANCE WITH THE AUTHORITY 
 GIVEN AND WITHIN A REASONABLE TIME. BUT IF ANY >^rCU 
 
 51. Houston Bank vs. Day, 145 Mo. A. 410, 122 S. W. 756.
 
 38 THE NEGOTIABLE INSTRUMENTS LAW § 14 
 
 INSTRUMENT, AFTER COMPLETION, IS NEGOTIATED TO A HOLDER 
 IN DUE COURSE, IT IS VALID AND EEFECTUAL FOR ALL PURPOSES 
 IN HIS HANDS, AND HE MAY ENFORCE IT AS IF IT HAD BEEN 
 FILLED UP STRICTLY IN ACCORDANCE WITH THE AUTHORITY 
 GIVEN AND WITHIN A REASONABLE TIME/' 
 
 This section grants to the person in possession of the 
 instrument the right to sujjply any material thing which 
 may have been omitted when it was executed. Observe 
 that this right is prima facie, that is to say, he is pre- 
 sumed to have authority to do so and this presumption 
 continues until the person who is affected by what he 
 does disputes it and is able to show by some evidence 
 that he either had not this authority, or if he had, that 
 it has not been properly exercised. If the omissions are 
 correctly supplied and not made contrary to the terms of 
 the transaction out of which the instrument arose, the 
 right to make them will have been properly exercised.'^ 
 
 This section also provides that when a paper which 
 is intended to be used as a negotiable instrument, and 
 it is important that it must have been so intended, ^^ is 
 signed in blank, that is, without having been filled out as 
 to the date, amount, to whom, and the time when it is 
 payable, or in one or some of these particulars, or even 
 if a blank piece of paper is signed by any person and 
 delivered to another in order that it may be converted 
 into and used as a negotiable instrument, the one to whom 
 it is given has the right to supply the omissions or to 
 write over the blank signature words which will con- 
 vert the blank paper into a negotiable instrument for 
 any amount. The person who thus supplies omissions or 
 fills up such a paper cannot himself enforce its payment 
 
 52. Younc: vs. Baker, 29 Ind. A. 130. 64 X. E. 54. 
 Marshall vs. Drescher, 68 Ind. 359. 
 Weyerhauser vs. Dunn, 100 N. Y. 150. 
 
 53. Iowa St. Bank vs. Claypool, 91 Kas. at 251. 
 Richards vs. Day, 137 N. Y. 183.
 
 §14 FORM AND INTERPRETATION 39 
 
 by the one who signed it in blank, unless he has filled it 
 up strictly in accordance with the authority which the 
 signer gave him to do so, and unless he has done it within 
 a reasonable time after its delivery to him. Nor can any 
 one who is not a holder in due course enforce it, unless 
 it was so done. And if one transfers such an instru- 
 ment to another without first completing it in accord- 
 ance with his authority, his transferee will not be deemed 
 a holder in due course and cannot recover upon it.^^ 
 
 But if after completion by any one the instrument is 
 negotiated in due course, that is, transferred before its 
 maturity in a regular transaction for a valuable con- 
 sideration to some other person Avho had no knowledge 
 and is not in law chargeable with notice or any duty to 
 know that it was incomplete when delivered, and not 
 afterward completed in strict accordance with the au- 
 thority given within a reasonable time after being signed 
 in blank, such a holder and subsequent holders for value 
 can enforce it against the signers in blank even if the 
 person who filled up the blanks or converted into a nego- 
 tiable instrument the signed blank piece of paper, did 
 not do so in strict accordance with his authority, and 
 within a reasonable time after it was so signed. Signers 
 in blank cannot resist payment of an instrument in the 
 hands of a holder in due course, even if it has not been 
 filled up and issued in accordance with the authority 
 under which it was given. 
 
 The particular circumstances of each case in which the 
 question of the proper exercise of authority to fill in 
 blank instruments arises will be inquired into and if 
 there is doubt about the authority of the person who fills 
 
 54. Stone vs. Sargent, 220 Mass. 445. 
 Tower vs. Stanley, 220 Mass. 429. 
 Hartington Bk. vs. Rreslin, 88 Neb. 47. 
 Boston Steel & Iron Co. vs. Steuer, 183 Mass. 140.
 
 40 THE NEGOTIABLE INSTRUMENTS LAW § 14 
 
 it up, either of his right to do it or his right to fix the 
 amount of the instrument, the one to whom such paper is 
 offered may be put upon inquiry if any suspicious cir- 
 cumstances appear from the instrument itself ; and if he 
 is chargeable with notice, he cannot recover upon the 
 instrument if the person who filled it up exceeded his 
 authority in doing so. Notice is defined in Sec. 56. 
 
 The authority given by this section to fill up blank 
 spaces in the instrument extends to the person in posses- 
 sion the right to fill up such blanks as are obviously and 
 intentionally left unfilled, but the section is not intended 
 to and does not grant the right to fill in any spaces upon 
 the instrument which are not occupied by written or 
 printed words, by writing additional words or figures 
 upon it when the instrument is not signed in blank and 
 is otherwise complete. Numerous decisions are to be 
 found in the reports of all of the States upon this subject, 
 the courts expressing widely diverging views. These 
 cases have nearly always grown out of instruments upon 
 which blank spaces have not been filled up by lining them 
 out when the Avords or figures written in the instrument 
 do not fully occupy the spaces intended for their inser- 
 tion. Because of the opportunity thus given to alter the 
 instrument, dishonest persons have been enabled to 
 change its amount without in any way indicating that a 
 fraudulent change has been effected. Of course, an obli- 
 gation rests upon every signer of a negotiable instru- 
 ment to so prepare it, or to see that at the time he at- 
 taches his signature to the instrument it is made out in 
 such a way that it cannot readily be changed by fraud in- 
 tending persons into any different contract from that 
 which, on its face, it purports to be. But he is not bound 
 to so prepare it that it is impossible to change it.''^ 
 
 55. Otis El. Co. vs. First Nat. Bk., 163 Cal. 31, 124 P. 704, 41 
 L. R. A. (N. S.) 529 and Note
 
 §14 FOKM AND INTERPRETATION 41 
 
 The strong presumption exists that all men are honest, 
 and if an instrument which is complete when delivered, 
 even though it is so filled out that it is possi))le to change 
 its amount by inserting additional words and figures 
 in it, and it is so altered, this, of itself, is not sufficient 
 to make liable for the altered sum the person whose ob- 
 ligation it is. For example, if a promissory note is writ- 
 ten for seventy-five dollars and these words and figures 
 are written into it, but in such a manner that a space is 
 left before the first word and figure, and such an instru- 
 ment is afterward fraudulently raised by adding the 
 words ''one hundred" before "seventy-five" and the 
 figure 1 before 75, thereby changing it to a note for one 
 hundred and seventy-five dollars, the alteration will be 
 considered material alteration and the instrument un- 
 enforceable in the raised amount. On such a note the 
 parties, except those who became parties after the altera- 
 tion, would be liable only in the original amount.^^ (Sec. 
 125.) Aside from the instrument, however, they might 
 be liable to a holder in due course for the full amount 
 of the altered sum as damages, if their carelessness was 
 responsible for the fraud and his injury, and they would 
 be if their negligence amounted to an estoppel."'^ But- 
 this is a different subject and it is only referred to in 
 order to illustrate the importance of properly making 
 out a negotiable instrument. When the written words 
 and figures do not completely fill the blank spaces, draw 
 
 Garrard vs. Hadden, 67 Pa. St. 82. 
 
 Yocum vs. Smith, 63 111. 321. 
 
 Scotland Co. Nat. Bk. vs. O'Connell, 23 Mo. App. 165. 
 
 Hacket vs. First Nat. Bk. of Louisville, 114 Ky. 193. 
 
 56. Greenfield Savgs. Bk. vs. Gray, 123 Mass. 196. 
 
 Nat. Exchange Bk. vs. Lester, 194 N. Y. 461, 87 N. E. 771,. 
 21 L. R. A. (N. S.) 402, where cases are reviewed. 
 
 57. Holmes vs. Tnimper, 22 Mich. 427. 
 
 Otis El. Co. vs. First Natl. Bk., 163 Cal. 31, 41 L. R. A. 
 (N. S.) 529, 124 S. 704.
 
 42 THE NEGOTIABLE INSTRUMENTS LAW § 15 
 
 a line through the unoccupied parts. Consult section 6 
 for the right to supply omissions, section 23 for what 
 constitutes a forgery and sections 124 and 125 for what 
 are material alterations and their effect upon the instru- 
 ment. 
 
 Incomplete ''Sec. 15. Where an incomplete in- 
 
 instrument not strument has not been delivered it will 
 
 delivered. :soT, if completed and negotiated, with- 
 
 "Wisconsin. ' 
 
 OUT authority, be a valid contract in 
 
 THE hands of any HOLDER, AS AGAINST ANY PERSON WHOSE 
 signature WAS PLACED THEREON BEFORE DELIVERY.'"" 
 
 An initial delivery is essential to the validity of an 
 incomjDlete negotiable instrument. 
 
 Now, if a bill, note, check, or other negotiable instru- 
 ment is incomplete on its face, or is signed in blank, but 
 not voluntarily delivered by the person whose obligation 
 it is to become after it has been lawfully completed and 
 has had a valid initial delivery, and such an instrument 
 is negotiated without authority, it does not bind any one 
 whose signature was placed upon it before its unlawful 
 negotiation, even if it is presented in the hands of a 
 holder in due course. ^^ And when an instrument which is 
 apparently complete but is not so because it lacks the 
 signature of additional parties who are to sign it has been 
 delivered under an agreement that it is not to take effect 
 until the additional signatures are obtained, such an 
 instrument is not a valid instrument between the original 
 parties or a subsequent holder taking with notice. ^^ (See 
 Sec. 55.) 
 
 But persons who become parties to an incomplete 
 undelivered instrument after it has been wrongfully com- 
 pleted and negotiated will be liable upon it to a subse- 
 quent holder in due course, because the contract is theirs 
 
 58. Linick vs. Nuttino:, 140 App. Div. 2G5. 267, 12.5 N. Y. S. 93. 
 Nance vs. Laiy, 5 Ala. 370. 
 
 59. Hodge vs. Smith, 130 Wis. 326.
 
 §16 FORM AND INTERPRETATION 43 
 
 in the rorm in which they signed it. The next section 
 will inform you when and under what circumstances an 
 instrument is deemed to be incomplete. (Also see Sees. 
 55 and 184.) 
 
 Delivery; when ''Sec. 1(3. Every conieact on a nego- 
 
 effectual; when ^j^^le instrument is incomplete and 
 
 Sorth^^c'arolina. RI^vocable until delivery of the instru- 
 
 ftKansas. * ment for the purpose of giving effect 
 
 S. Dakota. . thereto. As between immediate parties, 
 
 AND AS REGARDS A REMOTE PARTY OTHER THAN A HOLDER IN 
 DUE COURSE, THE DELIVERY, IN ORDER TO BE EFFECTUAL, MUST 
 BE MADE EITHER BY OR UNDER THE AUTHORITY OF THE PARTY 
 MAKING, DRAWING, ACCEPTING" OR ENDORSING, AS THE CASE 
 MAY BE ; AND IN SUCH CASE THE DELIVERY MAY BE SHOWN TO 
 HAVE BEEN CONDITIONAL, OR FOR A SPECIAL PURPOSE ONLY, 
 AND NOT FOR THE PURPOSE OF TRANSFERRING THE PROPERTY 
 IN THE INSTRUMENT.'' BuT WHERE THE INSTRUMENT IS IN 
 THE HANDS OF A HOLDER IN DUE COURSE, A VALID DELIVERY 
 THEREOF BY ALL PARTIES PRIOR TO HIM SO AS TO MAKE THEM 
 LIABLE TO HIM IS CONCLUSIVELY PRESUMED. AnD WHERE 
 THE INSTRUMENT IS NO LONGER IN THE POSSESSION OF A PARTY 
 WHOSE SIGNATURE APPEARS THEREON, A VALID AND INTEN- 
 TIONAL DELIVERY BY HIM IS PRESUMED UNTIL THE CONTRARY 
 IS PROVED.'' 
 
 Like other contracts, a negotiable instrument has no 
 valid inception until it has been delivered by the maker 
 or drawer for the purpose of giving effect to it. The 
 contract of indorsement is incomplete until the indorser 
 delivers the instrument to his transferee for the pur- 
 pose of giving effect to his indorsement, and the contract 
 of the acceptor is incomplete until he returns the ac- 
 cepted instrument to the holder for the purpose of giving 
 effect to his acceptance or notifies him of the accept- 
 ance. (Sec. 191.) In every case the contract is 
 revocable until it is delivered for the purpose of giving 
 effect to it ;"« and as to all parties except a holder in due 
 
 60. Burson vs. Huntincrton, 21 Mich. 410, 431. 
 Burr vs. Beckler, 264 111., 230.
 
 44 THE NEGOTIABLE INSTRUMENTS LAW § 16 
 
 course, the delivery is not effectual, that is completed 
 and binding unless it is made by the party who issues, 
 accepts or indorses the instrument or by his authority. 
 x\nd, except when the instrument is in the hands of a 
 holder in due course, it can in every case be shown that 
 the delivery was not for the purpose of giving effect to 
 instrument or transferring its ownership, if it is a fact 
 that its effective delivery was not intended. But if one's 
 signature appears anywhere upon a nego'tiable instru- 
 ment and the instrument is no longer in his possession an 
 intentional and valid delivery by him to any one who 
 holds it will be presumed until he is able to show that he 
 did not deliver or intend to deliver the instrument to the 
 holder, or any other prior party, for the purpose of 
 transferring the ownership of the instrument.^^ 
 
 But now observe that when an instrument which is 
 complete in every other respect except delivery, comes 
 into the hands of a holder in due course, (see sec. 53 
 for definition) a valid delivery by all persons whose 
 signatures appear upon it when it reaches him is con- 
 clusively presumed, that is to say, the contrary cannot 
 be shown, as to him, even if it is true. All parties upon 
 the instrument are liable to this holder in due course not- 
 withstanding any rights or defenses they may have 
 among themselves.*^^ 
 
 By reason of this section a holder in due course of a 
 negotiable instrument which at its inception was com- 
 plete in every other respect except delivery*^^ can enforce 
 it against all parties, and all parties are liable thereon 
 to him if the instrument, after completion, was lost by 
 
 61. Hill vs. Hall, 191 Mass. 253. 
 Niblock vs. Sprague, 200 N. Y. 390. 
 Hodge vs. Smith, 130 Wise. 326. 
 
 62. Buzell vs. Tobin, 201 Mass. 1. 
 
 63. Schaefifer vs. Marsh, 90 Misc. (N. Y.) 307.
 
 §17 FORM AND INTERPRETATION 45 
 
 or stolen from them, or any of them, or from some one 
 not a party to it, or its issue was obtained by fraud."^ 
 However, the hohler of a stok'ii instrument has the bur- 
 den of proving that he is a holder in due course. But 
 this is sufficiently established if he shows that he derives 
 his title from a holder in due course when he does not him- 
 self ))ossess the necessary qualifications.^^. (Sees. 57 
 and 58.) 
 
 _,, , „ " Sec. 1 7. Where the language of the 
 
 When language 
 
 of instrument is instrument is ambiguous or there are 
 ambiguous. omissions therein, the following rules 
 
 «N. Carolina. of construction apply: 
 
 ''Wisconsin. ^ Where the sum payable is ex- 
 
 pressed IN WORDS and also IN FIGURES AND THERE IS A DIS- 
 crepancy between the two, the sum denoted by the 
 words is the sum payable: but if the words are am- 
 biguous or uncertain, reference may be had to the fig- 
 ures to fix the amount ; 
 
 2. "Where the instrument provides for the payment 
 OF interest, without specifying the date from which 
 interest is to run, the interest runs from the date of 
 the instrument, and if the instrument is undated, from 
 .the issue thereof ; 
 
 3. Where the instrument is not dated, it will be 
 considered to be dated as of the time it was issued ; 
 
 4. Where there is a conflict between the written 
 and printed provisions of the instrument, the written 
 provisions prevail ; 
 
 5. Where the instrument is so ambiguous that there 
 IS doubt whether it is a bill or note, the holder may 
 treat it as either, at his election. 
 
 6. Where a signature is so placed upon the instru- 
 ment THAT it is not CLEAR IN WHAT CAPACITY THE PERSON 
 MAKING THE SAME INTENDED TO SIGN, HE IS TO BE DEEMED 
 AN indorser; ^___ 
 
 64. Massachusetts Natl. Bk. vs. Snow, 187 Mass. 160. 
 Jefferson Bk. vs. Cliainnan, 122 Tenn. 415. 
 
 City of Adrian vs. Whitney Center Nat. Bk.. 180 IMich. 
 171, 179. 
 
 65. Nortliamiitoti Natl. Bk. vs. Kidder, 106 N. Y. 221. 
 Hinkley vs. Merch. Bank, 131 Mass. 147.
 
 46 THE NEGOTIABLE INSTRUMENTS LAW § 17 
 
 7. Where an instrument containing the words ''I 
 
 PROMISE TO PAY'^ IS SIGNED BY TWO OR MORE PERSONS, THEY 
 
 are deemed to be jointly and severally liable there- 
 on/'* 
 
 When the meaning of the instrument or of any words 
 or terms used in it is not clear the seven rules given in 
 this section govern in its construction. They cover the 
 ambiguities most frequently met with in negotiable in- 
 struments. 
 
 The first fixes the written words which express the sum 
 payable as determining the amount to be paid upon the 
 instrument. Of course, an effort must be made to recon- 
 cile the words and figures and they ought to be consid- 
 ered together but, strictly speaking, the marginal figures 
 form no part of the instrument; the words control. To 
 such an extent is this true, that the holder may with im- 
 punity change the marginal figures to make them agree 
 with the body of the instrument.^^ 
 
 The second establishes that an instrument payable 
 with interest bears interest from its date, unless it clearly 
 specified that it does not begin to run until a later time. 
 If it is not dated and its true date is not supplied and 
 inserted by the holder, as he has a right to do under 
 Sees. 13 and 14, then interest commences from the date 
 of the delivery of the instrument to the first person who 
 received it from the maker or drawer. If the instru- 
 ment does not expressly declare that it bears interest, 
 and unless it expressly provides that it shall not, it will 
 draw interest from the date of its maturity until paid, 
 at the legal rate in effect at its maturity. The Act does 
 not itself contain a provision to this effect, but such is 
 the universal law and in this case interest is considered 
 
 66. Smith vs. Smith, 1 R. I. 398, 53 Am. D. 652. 
 Shreyer vs. Hawkes, 22 Ohio St. 308. 
 Nonv'ich Bk. vs. Hyde, 13 Conn. 281.
 
 § 17 FORM AND INTERPRETATION 47 
 
 to be in the nature of damages for the failure to pay the 
 debt on the date when, by its terms, the instrument ought 
 to have been paid.^^ 
 
 The third supposes that the date omitted has not been 
 supplied by any holder and in that event the instrument 
 is considered to bear the date of the day when it was 
 issued by the maker or drawer. 
 
 The fourth establishes in respect to the whole instru- 
 ment that when there is a difference or conflict between 
 its Avritten and printed parts the written parts prevail, 
 that is, they are considered to express the true meaning 
 of the instrument, regardless of any contradiction which 
 may appear in its printed portions, if the two cannot be 
 reconciled/"- 
 
 The tilth permits the holder of an instrument which, 
 by reason of ambiguity in the words employed in draw- 
 ing it, may be either a promissory note or a draft, to 
 consider it as either, whichever he may choose. How- 
 ever, if he once elects to consider the instrument a note, 
 and treats it accordingly, he cannot later change his mind 
 and treat it as a bill of exchange, or just the other way.^* 
 
 By the sixth, it is established that if one places his 
 signature anywhere upon the instrument in such a way 
 that it is not clear in what capacity he intended to be 
 bound by it, he is considered an indorser, entitled to an 
 indorser's rights and liable only as such.'^" (See sections 
 63 and 64.) 
 
 If two or more persons sign a promissory note upon 
 its face and it contains a promise in the singular num- 
 
 67. O'Brien vs. Young, 95 N. Y. 428. 
 
 68. Miller vs. Hannibal, Etc., R. R. Co., 90 N. Y. 430. 
 
 69. Dennett vs. Codman, 16S Mass. 468, 47 N. E. 131. 
 
 Arch. Stone Co. vs. St. Louis, 138 Mo. 608, 39 S. W. 467. 
 Terr>- vs. Munger, 121 N. Y. 161, 169. 
 
 70. Germania Natl. Bk. vs. Mariner, 129 Wis. 544, 100 N. W. 574.
 
 48 THE NEGOTIABLE INSTRUMENTS LAAY §18 
 
 ber, "I," then each is severally liable, that is, each is 
 liable to the holder for the full sum promised, and all 
 are as well jointly liable, that is, liable together, for the 
 debt. The importance of the distinction between the 
 joint or several liability of the parties is a matter more 
 particularly for consideration when it becomes neces- 
 sary to bring an action upon the instrument, and then, 
 of course, parties jointly liable must be joined in the 
 suit.'^^ If the liability of the parties upon the instrument 
 is joint and several, separate actions may be maintained 
 against each or they may be joined in one.'^^ 
 
 ''Sec. 18. No person is liable on the 
 Only persons instrument whose signature does not ap- 
 sigmng liab e-— -p^j^^ thereon, except as herein other- 
 liability of per- ' „ -r, 
 
 sons signing in ^^^^^ expressly'' provided. But one who 
 trade or assumed signs in a trade or assumed name will be 
 name. liable to the same extent as if he signed 
 
 -Wyoming. ^^ ^jg own name/' 
 
 While this section provides that no person whose sig- 
 nature does not appear upon the instrument is liable 
 upon it, it is not to be inferred that he must himself have 
 signed it. There is an exception to this rule as will ap- 
 pear in the next two sections. 
 
 When any person conducts his business under a trade 
 name, or any one assumes a name not his own for busi- 
 ness purposes, or for a particular transaction as a substi- 
 tute for his own, and places his trade name, or the name 
 Avhich he has assumed upon a negotiable instrument, he 
 is liable in the same manner and to the same extent as he 
 would be if he had signed his o^^m. The holder of an 
 instrument signed in this manner may present it to the 
 person thus signing it and all notices required by other 
 sections of this Act may be given to him in either his 
 
 71. Foster vs. Collner, 107 Pa. 305. 
 Erwin vs. Scotten, 40 Ind. 389. 
 
 72. Hodgens vs. Jennings, 148 App. Div. 879, 133 N. Y. S. 584.
 
 §19 FORM AND INTERPRETATION 49 
 
 trade or assumed name, or in his real name, if it is 
 known. '3 It is not necessary that they be given in both, 
 but it is good practice to do so. He may be sued in his 
 trade name or his real name.'^* 
 
 An instrument which is made payable to a person 
 under his assumed, business name, does not, by the effect 
 of Section 9, Sub-section 3, become payable to bearer, 
 although that name is, strictly speaking, the name of a 
 fictitious person.*^^ 
 
 Signature by ' ' Sec. 19. "The signature of any party 
 
 agent; authority, may be made by a duly authorized agent. 
 how shown. ^o particular form of appointment is 
 
 "Kentucky. xecessary for this purpose ; and the au- 
 
 thority OF the agent may be established as in other 
 
 CASES OF agency." 
 
 One need not himself sign his name to the instru- 
 ment. He may authorize another to do it for him. The 
 one signing for him is called his agent, and his authority 
 may be either oral or in writing, or it may even be im- 
 plied. It is implied when one person has knowingly per- 
 mitted another to do this for him a sufiScient number of 
 times to amount to a practice'^*' and it has become gen- 
 erally knoAvn,' ' or if he has stood by without objection, 
 in apparent acquiescence, when it was done in his pres- 
 ence, or does not repudiate it when notice of the fact is 
 given him in such a manner and under such circum- 
 stances as require him to speak.'^^ If this can be shown 
 the person whose name is signed upon the instrument 
 
 73. Union Brewing Co. vs. State Bank, 240 HI. 454. 
 
 74. Bresee vs. Snyder, 94 Nebr. 3S4. 143 N. W. 219. 
 Alabama Coal Min. Co. vs. Brainard, 35 Ala. 476. 
 
 75. Jones vs. Home Furn. Co., 9 App. Div. 103. 41 N. Y. S. 71. 
 
 76. Crocker vs. Cohvell, 46 N. Y. 212. 
 DeWitt vs. Walton, 9 N. Y. 571. 
 
 77. Mfrs. & Meroh. Bk. vs. FoUett, 11 R. I. 92. 
 
 78. R. R. Co. vs. Cowell, 28 Pa. St. 329. 
 
 Cornerstone Bk. vs. Rliodes. 5 Ind. T. 256. 260. 82 S. W. 739, 
 67 L. R. A. 812.
 
 50 THE NEGOTIABLE INSTRUMENTS LAW § 20 
 
 by another is liable upon it. When the signature is made 
 by a person who appears to be acting in the capacity of 
 a kno\Mi agent and assumes to sign another's name to 
 an instrument, in the absence of express authority, the 
 transaction of which the instrument forms a part must 
 be of the same general character as others in which the 
 principal has permitted the agent to act, and if there 
 is such a substantial difference, either in the character 
 of the transaction or the amount involved as would place 
 an ordinarily prudent man upon his guard and make him 
 suspicious of the agent's right to sign his principal's 
 name, the one to whom such an instrument is oft'ered 
 ought not to accept it without first satisfying himself 
 that the agent has acted by the authority of the person 
 for whom he claims to act, and within the limits of the 
 authority which he appears to have. The authority, or 
 the lack of it, may be established as in other cases of 
 agency and it is a familiar doctrine of the law of agency 
 that general authority given by one person to another to 
 conduct his business, implies the authority to borrow 
 money in his name for the needs of the business and the 
 power to execute or indorse commercial paper for that 
 purpose. ^'■' The duty to inquire into the actual authority 
 of an agent who signs by virtue of written power is dis- 
 cussed under Section 21. 
 
 Liability of '*Sec. 20. Where the instrument 
 
 persons signing contains Or a person adds to his sicna- 
 as agent, etc. ture words indicating that he signs for 
 "Virginia. ^^ ^^^ behalf of a principal, or in a rep- 
 
 resentative CAPACITY,'* HE IS NOT LIABLE ON THE INSTRU- 
 MENT IF HE WAS DULY AUTHORIZED ; BUT THE MERE ADDITION 
 OF WORDS DESCRIBING HIM AS AN AGENT, OR AS FILLING A 
 REPRESENTATIVE CHARACTER, WITHOUT DISCLOSING HIS 
 PRINCIPAL, DOES NOT EXEMPT HIM FROM PERSONAL LIA- 
 BILITY". ' ' 
 
 79. Valequette vs. Clark Bros. Coal Min. Co., S3 Vt. 53S.
 
 §20 FORM AND INTERPRETATION 51 
 
 An agent who signs his name to an instrument in such 
 a manner that his signature shows or the instrument it- 
 self upon its face, or anywhere, contains words which 
 show that in making, indorsing or accepting it he is act- 
 ing in behalf of another and for whom, is not himself 
 liable upon it and cannot be held to pay it.^<> He must, 
 of course, act mthin his authority otherwise he is liable 
 as though he were acting for himself.^^ If he has acted 
 by and within the limits of the authority granted to him 
 by his principal and the instrument discloses the name of 
 his principal, the latter, and not the agent, will be bound 
 upon it. (Sec. 19.) But if he merely describes himself 
 as an agent, and the instrument contains words which 
 show that he is acting for another without disclosing 
 the name or identity of the person or persons for whom 
 he is acting, he will not be relieved of personal liability 
 to the holder unless the latter knows the nature and the 
 object of the instrument and takes it with knowledge 
 that the agent is authorized and acting in a representa- 
 tive capacity and knows the name of the person foi 
 whom he is acting and that he does not intend to be in- 
 dividually bound upon it.^^ 
 
 80. Hitchcock vs. Buchannan, 105 U. S. 416, 26 L. Ed. 1078. 
 Continental Natl. Bk. vs. Heilman, 81 Fed. 36 (Aff. 86 Fed. 
 
 514). 
 Germania Natl Bk. vs. Mariner, 129 Wis. 544, 546, 100 N. W. 
 
 574. 
 Chipman vs. Foster, 119 Mass. 189. 
 Carpenter vs. Famsworth, 106 Mass. 561, 8 Am. St. R. 360. 
 
 81. Tuttle vs. Greenfield First Nat. Bk., 187 Mass. 533, 105 Am. 
 
 S. R. 563. 
 Bank vs. Loonev, 99 Tenn. 278. 
 
 82. Metcalf vs. Williams, 104 U. S. 93, 98. 
 
 Kirbv vs. Ruej^amer, 107 App. Div. 491. 95 N. Y. Supp. 408. 
 Merch. Natl. Bk. vs. Clark, 139 N. Y. 314, 34 N. E. 910, 36 
 
 Am. S. R. 710. 
 Casco Natl Bk. vs. Clark, 139 N. Y. 307, 34 N. E. 910, 36 
 
 Am. S. R. 705. 
 Keidan vs. Winegar, 95 Mich. 430, 54 N. W. 901, 20 L. R. A 
 
 705. 
 Ne\Ai)ort vs. Smith, 61 Minn. 277.
 
 52 THE NEGOTIABLE INSTRUMENTS LAW § 20 
 
 The holder of such an instrument may recover from 
 the agent or from his principal when he learns for whom 
 he aeted.*^ He must, within a reasonable time after the 
 principal's name becomes known, elect, that is, choose 
 which one, the agent or the principal, he will hold and 
 will be bound by his election.^' If he chooses to hold the 
 principal, he may recover from him upon the original 
 consideration for the instrument but not upon the in- 
 strument itself,^^ for only those persons are liable upon 
 the instrument whose names appear upon it. (Sec. 18.) 
 
 If the agent signs the instrument without authority he 
 is personally liable whether it discloses the name of his 
 pretended principal or does not.^*' Whatever conflict of 
 authority has heretofore existed as to the agent's liability 
 upon the instrument, and there have been decisions on 
 both sides of this question here and in England, is settled 
 by this section. In some jurisdictions it has been held 
 that an agent signing without authority or failing to 
 disclose his principal, is not liable upon the instrument, 
 for the reason that the contract is not his.^'^ He was, 
 therefore, in some jurisdictions, held liable, not on the in- 
 strument itself, but for the damage resulting from his 
 unlawful or unauthorized act.^^ In others, his liability 
 was held to be upon the instrument.^*^ Now, however, he 
 
 83. Kavton vs. Bamett, 116 N. Y. 625, 23 N. E. 24. 
 Chemical Natl. Bk. vs. City Bank, 156 III. 149, 40 N. E. 328. 
 Lovell vs. Williams, 125 Mass. 439. 
 
 84. Meehem Agency, Sec. 173 and Notes. 
 
 85. Coalino' Co. vs. Howard, 130 Ga. 807, 21 L. R. A. (N. S.) 1051. 
 Harper vs. Tiffin Nat. Bk., 54 Oh. St. 425. 44 X. E. 97. 
 
 86. Meehem Agency, Sec. 1374. 
 
 87. Coaling Co. vs. Howard, 130 Ga. 807, 21 L. R. A. (N. S.) 1051. 
 Meehem Agencv, See. 1397. 
 
 Ogden vs. Raymond, 22 Conn. 379, 385, 58 Am. Dec. 429. 
 
 88. Meehem Agency. Sec. 1398. 
 Noyes vs. Loring, 55 Me. 408. 
 
 89. Meehem Agencv, See. 1395. 
 Weare vs. Gove. 44 N. H. 196.
 
 §21 FORM AND INTERPRETATION 53 
 
 is everywhere liable upon the instrument, and though in 
 theory this may not be correct, the rule ''will" as a 
 writer upon the subject has said, ''tend to increase nego- 
 tiability, and in addition to that has the excellent advan- 
 tage of settling all conflict of authority upon the sub- 
 ject." Section 69 provides the manner in which and to 
 what extent an agent or broker is liable who negotiates 
 an instrument by delivery without indorsement. 
 
 Signature by "Sec. 21. A signature by "procura- 
 
 procuration; tion'' operates as notice that the agent 
 
 effect of. ^^g g^^ ^ LIMITED authority to sign, and 
 
 the principal is bound only in case the AGENT IN SO 
 
 signing acted within the actual limits of his au- 
 thority. ' ' 
 
 In this section the technical legal term "by procura- 
 tion" means, in or on behalf of another, acting under 
 his written authority, and it has of course, to do with the 
 doctrine of agency. More definitely, the term means 
 one person's signature attached to an instrument, not 
 i]i his own behalf, and as his own act, but in behalf of 
 some other named person from whom he has express 
 authority to do it, usually in the way of written power 
 of attorne}^ and as whose act it is to be considered. This 
 form of signature is uncommon here and very infre- 
 quently employed upon negotiable instruments of the 
 kind which are used in ordinary commercial transac- 
 tions. Where it is found it is usually abbreviated thus 
 "per. proc." or merely "p. p." or the signature is fol- 
 lowed by the words "attorney in fact," when the agent 
 is acting for an individual. The section would, however, 
 seem to be equally applicable to corporation officers or 
 representatives signing in a representative capacity. 
 Whenever a name is so signed all persons taking the in- 
 strument are by that fact alone notified to be on their 
 guard, and to satisfy themselves positively that the per-
 
 54 THE NEGOTIABLE INSTRUMENTS LAW § 21 
 
 son who so signs the instrument is acting by proper 
 authorization of his principal, and not only that, but to 
 satisfy themselves that he is acting within the actual 
 limits of the authority given him to execute or indorse 
 the instrument. 
 
 When the instrument discloses that the agent signed 
 per power of attorney or formal appointment it cannot 
 be shown that his ostensible authority was greater 
 than that granted in the written authorization. Par- 
 ties dealing with an agent known by them to be 
 acting under an express grant, whether the author- 
 ity ])e general or special, are bound to take notice of 
 the extent of the authority conferred. They must be 
 regarded as dealing with him with that grant before 
 them, and are bound, at their peril, to notice the limita- 
 tions thereto prescribed either by its own terms, or by 
 construction of the law.^^ Thus a signature "per. proc." 
 or made by someone known to be acting under formal au- 
 thorization carries with it a more solemn warning to the 
 person to whom it is offered and puts upon him a graver 
 burden to inquire into the authority of the person who 
 uses it than does the signature by one who is acting under 
 some general authority from his principal, derived from 
 written or oral authorization, or implied from an author- 
 ized course of dealing. One who does not make this in- 
 quiry when chargeable with the duty to do so must bear 
 any loss he may suffer, if the agent signing by procuration 
 exceeds the actual limits of his authority.''^ 
 
 90. Mechem Agency, Sec. 707. 
 
 Mt. Morris Bk. vs. Gorham, 169 Mass. 519. 
 Fereuson vs. Davis, 118 N. C 946. 
 
 91. Mt. Morris Bk. vs. Gorham, 169 Mass. 519.
 
 §22 FORM AND INTERPRETATION 55 
 
 Effect of indorse- "Sec. 22. The indorsement or assign- 
 
 ment by infant ment of the instrument by a corpora- 
 
 or corporation. jios or by an infant" passes the prop- 
 
 Oarolina. ].:kxy therein, notwithstanding that 
 
 FROM want of capacity THE CORPORATION OR INFANT" :MAY 
 incur no liability THEREON." 
 
 Infants, that is, persons who have not yet attained le- 
 gal ago, are not considered in the law to have full capac- 
 ity to enter into business obligations. Any business act 
 which they perform while under legal age, except one by 
 which they provide themselves with their necessaries, is 
 voidable by them when they reach full age. The time at 
 which they attain full age is not alike in all the States. 
 But, in regard to negotiable instruments, while they can- 
 not make or indorse a note, or accept or indorse a bill dur- 
 ing minority which they could not repudiate after coming 
 of age, unless it is one for necessaries, — when a note or 
 bill passes through the hands of an infant, his indorse- 
 ment of his signature upon it transfers the title to the in- 
 strument to the next holder and it may be negotiated by 
 him, and by subsequent holders, as though the infant were 
 under no disability, and may be enforced against all other 
 parties. The section does not deprive an infant of his 
 right to repudiate acts performed during his disability 
 by minority, including the act of passing his title to a 
 negotiable instrument by his indorsement. It seems 
 never to have been specifically decided that he has this 
 right, but if he has, he is not deprived of it by this sec- 
 tion.^- 
 
 A corporation has only such powers as are granted 
 to it in its charter or are incident or necessary to the 
 business in which it is engaged. It cannot be held for 
 acts of its officers which are not properly within the 
 scope of its powers, but, like an infant, its indorsement 
 
 92. Roach vs. Woodhall, 91 Tenn. 206.
 
 56 THE NEGOTIABLE INSTRUMENTS LAW § 23 
 
 upon a negotiable instrument, even though made in a 
 transaction not authorized by its charter, or not incident 
 or necessary to the conduct of its business, will, never- 
 theless, though it may impose no liability upon the cor- 
 poration, operate to pass the title to the next holder who 
 may continue the negotiation. 
 
 v^^^^A r,i ''Sec. 23. Where a signature is forged 
 
 Forged signa- 
 ture; effect of. ^^ MADE WITHOUT AUTHORITY" OF THE PER- 
 
 «Illinois. SON whose signature it purports TO BE, 
 
 IT IS WHOLLY INOPERATIVE, AND NO RIGHT TO RETAIN THE 
 INSTRUMENT, OR TO GIVE A DISCHARGE THEREFOR, OR TO EN- 
 FORCE PAYMENT THEREOF AGAINST ANY PARTY THERETO, CAN 
 BE ACQUIRED THROUGH OR UNDER SUCH SIGNATURE, UNLESS 
 THE PARTY AGAINST WHOM IT IS SOUGHT TO ENFORCE SUCH 
 RIGHT IS PRECLUDED FROM SETTING UP THE FORGERY OR WANT 
 OF AUTHORITY." 
 
 A forged signature or indorsement does not create 
 any liability on the part of the person whose signature it 
 appears to be. One who holds an instrument upon which 
 any signature has been forged and who has obtained 
 title by or through the forged signature or indorsement, 
 has no right to retain the instrument, to receive payment 
 upon it or enforce it against any party, even if the holder 
 is an innocent holder for value. ^^ If the person whose sig- 
 nature is forged pays the instrument, unless he does so 
 voluntarily, knowing its character, he can recover the 
 money he pays upon it,^^ although this right is some- 
 times denied him when innocent persons have suffered 
 loss by reason of his mistake. 
 
 93. Beem vs. Farrell, 135 la. 670, 677. 
 Hovorka vs. Hemma, 108 111. A. 443. 
 
 Stein vs. Empire Trust Co., 148 App. Div. (N. Y.) 850. 
 (^amp vs. Caii^cnter, 52 Mich. 375. 
 
 94. Meyer vs. Rosenheim, 115 Ky. 409. 
 Cobum vs. Neal, 94 Me. 541, 48 A. 178. 
 
 Jones vs. Miners Bk., 144 Mo. A. 428, 128 S. W. 129. 
 Hefner vs. Dawson, 63 111. 403, 14 Am. R. 123. 
 Coi-\vith First St. Bk. vs. Williams, 143 la. 177, 121 N. W. 702, 
 136 Am. St. R. 759, 23 L. R. A. (N. S.) 1234 and Note.
 
 §23 FORM AND INTERPRETATION 57 
 
 When the fraud affects only individual interests and 
 is not a crime"-'' he may, however, be prevented by some 
 act of his own from avoiding the instrument, or recover- 
 ing a payment made by mistake if his signature is forged 
 or made without authority. Such laws as apply to these 
 circumstances are not alike and are not interpreted alike 
 in all States, and they must be examined in each par- 
 ticular transaction of this character in the State where 
 the forged instrument or signature has been executed, 
 or where it is sought to be enforced. When the doctrine 
 of estoppel has been recognized in regard to forged or 
 fraudulent instruments, it is based upon such conduct 
 as would preclude the person asserting it from setting 
 up the forgery or want of authority, and must be a con- 
 duct from which an admission would be implied that he 
 intended to be bound l)y the alleged fraudulent misuse 
 of his name;^^ or the person to be charged may be 
 estopped by an express ratification of his signature. ^^ 
 
 One of the principal applications of this section is 
 to the payment by a bank of checks or other instruments 
 upon which a signature has been forged or fraudulently 
 made. AVhen a bank has certified a check to which the 
 drawer's name has been forged, or which has been raised, 
 and it is at, or after certification, in the hands of a 
 holder in due course he can compel its payment.^^ And, 
 
 95. B. & L. Assn. vs. Walton, 181 Pa. St. 201. 
 Sliisler vs. Van Dyke, 92 Pa. St. 447. 
 Greenfield Bk. vs. Crafts, 4 Allen (Mass.) 447. 
 
 96. Teny vs. Bissell, 26 Conn. 41. 
 
 Pettyjohn vs. Natl. Exchsr. Bk., 101 Va. 111. 
 15. & L. Assn. vs. Walton. 181 Pa. St. 201. 
 
 97. Owsley vs. Philips, 78 Ky. 517, 521. 
 
 Shinew vs. Bowlinir Green 1st Nat. Bk., 84 Ohio St. 497, 36 
 L. R. A. (N. S.) 1006 and Note. Ann. Cases. 1912 C. 587. 
 
 98. Espv vs. Bank of Cinti., 18 Wall. (U. S.) 604. 
 
 Adani vs. Mfrs. Nat. Bk., 63 Misc. (N. Y.) 403, 404 (116 N. Y. 
 
 S. 595). 
 Tmst Co. of Am. vs. Hamilton Bk., 127 App. Div. (N. Y.) 515.
 
 58 THE NEGOTIABLE INSTRUMENTS LAW § 23 
 
 again, if a bank pays to a holder in due course a check 
 drawn upon it to which the drawer's name has been 
 forged it cannot recover from him unless he has con- 
 tributed to the forgery, fraud, or deception by a greater 
 degree of negligence than that of the paying bank, by 
 which I mean that his own negligence must have been 
 responsible for the loss.^^ 
 
 The rule by which it must be determined whether or 
 not recovery may be had when an indorsement is forged 
 upon an otherwise regular instrument not payable to 
 bearer or made in fact to the person entitled thereto^ is, 
 however, quite different. The drawee is presumed to 
 know the drawer's signature (Sec. 62), but no such pre- 
 sumption, is applied to the signature of the indorser. The 
 presenter who receives payment of an instrument upon 
 which an indorsement has been forged or made without 
 authority, wdll be obliged to refund the pa^^ment to the 
 drawee^ unless, by reason of culpable delay in the dis- 
 covery and giving notice of the fraud, his condition has 
 so changed that to require him to do so would be unjust.^ 
 Should he be required to refund, however, he may then 
 recover from prior indorsers who indorsed the instru- 
 ment subsequent to the forgery and who will be held to 
 their warranties as is provided in Sees. 65 and 66, and 
 each of these may in turn recover of his immediate in- 
 dorser, back to the time when the forgery occurred. Prior 
 parties are not affected by the forgery.^ 
 
 99. Comml. Nat. Bk. vs. First Natl. Bk., 30 Md. 11. 
 Woods vs. Colonv Bk., 114 Ga. 683. 
 State Bk of Chicago vs. First Nat. Bk., S7 Nebr. 351 
 First Nat. Bk. vs.^Nor. Western Nat. Bk.. 152 111., 296, 306. 
 1. Bartlett vs. First Nat. Bk.. 247 111. 490, 93 N. E. 337. 
 2. Bartlett vs. First Natl. Bk., 247 111. 490, 93 N. E. 337. 
 
 Gallo vs. Brooklyn Sav. Bk., 119 N. Y. 222, 92 N. E. 633. 
 Ti-ust Co. of Amer. vs. Hamilton Bk., 127 App. Div. 515, 112 
 N. Y. S. 84. 
 
 3. Yatesville Banking Co. vs. Fourth Natl. Bk., 10 Ga. A. 1, 
 
 72 S. E. 528. 
 
 4. Beem vs. Farrell, 135 Iowa, 670.
 
 §23 FORM AND INTERPRETATION 59 
 
 One for whose account a bank has paid or certified 
 a forged or fraudulent instrument owes a duty to the 
 bank to notify it of the fraud immediately upon its dis- 
 covery, and if his negligence or undue delay in giving 
 notice cause the bank to lose an opportunity to indem- 
 nify itself the loss upon the instrument will fall upon 
 him.^ 
 
 Still another distinction exists. When the presenter 
 receives ])ayment as the agent of another for collection, 
 he will be required to refund, unless the instrument dis- 
 closes the name of his principal, thus carrying on its 
 face notice that the presenter is acting merely as agent, 
 and he has actually paid over the amount to his prin- 
 cipal before notice." 
 
 If instead of being a forgery, the signature is made 
 without authority the instrument is, likewise, not en- 
 forceable against the person whose fraudulent signature 
 is placed upon it by some one who pretends to act as his 
 agent but acts without his authority. Such a signature 
 or indorsement does not convey to the transferee the 
 title of the instrument or the right to receive payment, 
 and does not create any obligations on the part of the 
 person whose signature it purports to be. But in this 
 case also the person whose name is so used may become 
 liable and be held to pay the instrument if he has done 
 some act, or omitted to perform some duty in respect to 
 the instrument, which will preclude him from making 
 this defense.'^ (See Sec. 19.) 
 
 5. Leather IVHis. Bk. vs. Morc:aii, 117 U. S. 9(3. 
 Traders Natl. Bk. vs. Ko-ers, 167 Mass. 315. 
 States vs. First Nat. Bk., 203 Pa. 69, 74. 
 
 6. Natl. Park Bk. vs. Seaboard Bk.. 114 N. Y. 28. 20 N. E. 612. 
 Natl. City Bk. vs. Westoott. 118 N. Y. 468, 28 N. E. 900. 16 
 
 Am. S." R. 771. 
 Springs vs. Hanover Natl. Bk., 145 App. Div. (N. Y.) 188. 
 
 7. Terrv vs. Blssell, 26 Conn. 23. 
 Pettvjohn vs. Natl. E. Bk., 101 Va. 111. 
 Jett vs. Standafer, 143 Ky. 787.
 
 60 THE NEGOTIABLE INSTRUMENTS LAW § 23 
 
 There are certain other circumstances out of which a 
 puzzling difficulty has sometimes arisen which is to be 
 determined by the application of this section. I refer 
 to that situation in which one fraudulently impersonating 
 another has procured a bona fide instrument, usually a 
 check, to be issued to him by the drawer who acts in the 
 honest belief that he is issuing the instrument to an en- 
 tirely different person with whom he supposes himself 
 to be dealing. When the instrument which is so pro- 
 cured has been paid by the bank upon which it is drawn 
 or has been negotiated to a holder in due course, the 
 courts have usually held that the drawer must bear the 
 loss -occasioned, notwithstanding that its issue was ob- 
 tained by fraud or misrepresentation.^ Indeed, a deci- 
 sion to the contrary, rendered since the passage of the 
 Act, has been very severely criticised as holding what the 
 learned judge who rendered it thought the law ought to 
 be rather than what it is.^ This criticism is, however, 
 unmerited, for in Ohio, for example, his decision would 
 be regarded as in accord -wdth those of its Supreme 
 Court,^^ although in that State a more recent decision is 
 in conformity with the rather generally accepted view 
 stated above.^^ 
 
 The decisions establishing the rule as I have stated 
 it above are usually based upon the theory that the per- 
 son who issued the instrument intended that it should 
 be paid to the one to whom he delivered it and when that 
 has been accomplished, they hold that the paying bank 
 
 8. Anderson vs. Dundee St. Bk.. 66 Hun (N. Y.) 613. 
 
 9. Tolman vs. Am. Exchg. Natl. Bk., 22 R I. 462, 48 Atl. 480. 
 
 10. Dodge vs. Bank, 20 Ohio St. 234. 
 Armstrong vs. Pomeroy Bk., 46 Ohio State 512. 
 
 11. McHenn^ vs. Nat'l Bk., 85 Ohio State 203, 97 N. E. 395, 
 
 38 L. R. A. (N. S.) 1111 and Note.
 
 §23 FORM AND INTERPKETATJON 61 
 
 has carried out the drawer's intention.^ ^ And yet 
 that is not altogether correct for, to arrive at such a con- 
 chision, these courts must disregard the fact the imper- 
 sonator was not actually the person the drawer had in 
 mind and with whom he supposed himself to be dealing 
 when he delivered the instrument. 
 
 Although the jjreponderance of opinion is as I have 
 stated, yet, it ought not, by any means, to be regarded as 
 a settled doctrine that when a check is delivered and 
 paid to one who fraudulently impersonates another, the 
 drawer must invariably bear the loss. But it is settled 
 that a situation is then presented which requires the 
 court to determine by w4iose" direct negligence the loss 
 was occasioned, that of the drawer by his failure to dis- 
 cover the fraudulent impersonation, or that of the pay- 
 ing bank, for its duty requires it to see to it, at its peril, 
 that it pays the check according to the drawer 's order to 
 the party to whom, by its terms, it is payable. To be re- 
 lieved from this responsibility, the bank must have made 
 the usual inquiries respecting the identity of the pre- 
 senter^^ and have used that degree of care and prudence 
 which its relation to its depositor demands, a conclusion 
 which is clearly indicated in all of the cases cited under 
 this section. But where it appears that one of two inno- 
 cent persons must suffer loss by the fraud or misconduct 
 of a third, the loss must be borne by that one of them who 
 first reposes confidence in the Avrongdoer and commits 
 the first oversight.^* 
 
 12. Land Title & Trust Co. vs. Xoi-tlnvostern Nat. Bk.. 196 Pa. 
 
 230. 
 State vs. First Natl. Bk. of Montrose. 17 Pa. Super. 256, AfE. 
 203 Pa. 69. 
 
 13. Miners, Etc.. Bk. vs. St. Louis Smeltiner Co. (Mo. A.). 178 
 
 S. W. 211, 212. 
 
 14 Morse, Banks & Banking, Vol. 2, See. 474. p. 115 and cases.
 
 62 THE NEGOTIABLE INSTRUMENTS LAW § 24 
 
 SUBDIVISION II, 
 
 Consideration. 
 
 Section Section 
 
 24 Presumption of considera- 27 When lien on instrument 
 
 tion, constitutes holder for 
 
 25 Consideration; what consti- value. 
 
 tutes. 28 Effect of want of considera- 
 
 26 What constitutes holder for tion. 
 
 value. 29 Liability of accommodation 
 
 party. 
 
 Unlike any other simple contract, a negotiable instru- 
 ment implies a consideration. This is because negoti- 
 able instruments are so important as a medium for car- 
 rying on business. They take the place of actual money, 
 and bills, checks and notes are used as a means of set- 
 tling commercial transactions between men much more 
 frequently and to a greater extent than is actual money. 
 Having many of the attributes of money they are safe- 
 guarded in every way consistent with their character 
 and purpose in order that they may readily pass from 
 hand to hand. Therefore, they are deemed to have been 
 issued for a valuable consideration and this presump- 
 tion continues until the contrary is made to appear. The 
 provisions in the Act upon the subject are as follows : 
 Presumption of ''Sec. 24. Every negotiable instru- 
 
 consideration. ment is deemed, prima facie, to have 
 been issued for a valuable consideration : AND every 
 person whose signature appears thereon to have be- 
 come A PARTY thereto FOR VALUE." 
 
 The consideration is the thing of value which is given 
 for the instrument. It does not necessarily mean money 
 or goods, although these are most frequently the consid- 
 eration for such instruments. It may in addition to 
 these be anything of value, including a promise.
 
 §24 CONSIDERATION 6:j 
 
 Consideration is usually stated to be either a thing 
 given for a thing, a thing given for a promise, a prom- 
 ise given for a thing or a promise given for a promise, 
 or instead of a ''thing" there may be an act. (Also see 
 Sec. 25.) It is always presumed, that is supposed and • 
 believed to be true without requiring proof, that a ne- 
 gotiable instrument has been issued for a valuable con- 
 sideration. Any party to the instrument will be permit- 
 ted to show that this presumption is not correct but un- 
 til he does, it is deemed, prima facie, that is, taken for 
 granted without proof, that it has been so issued; and 
 likewise every person who has signed the instrument 
 in any capacity is deemed, until the contrary is shown, 
 to have done so for value. In an action upon the instru- 
 ment it is not necessary that the person seeking to en- 
 force it shall allege and prove that it is supported by a 
 valuable consideration, or that all signatures were placed 
 upon it for value. ^ The production of the instrument 
 sufficiently supports that presumption in its favor. The 
 person denying consideration must set up this plea in 
 his answer to the suit and must prove it or at least offer 
 evidence which tends to prove it,^ w^hereupon his proof 
 must be met and overcome by the person seeking to en- 
 force the instrument, who is aided by this presumption 
 in his favor.^ If the testimony is evenly balanced, the 
 presumption will prevail.^ In the hands of any holder, 
 the instrument will be presumed to have been issued or 
 
 1. First Natl. Bk. vs. Stallo, 160 App. Div. (N. Y.) 702. 
 
 2. Hudson vs. Moon, 42 Utah, 377, 130 P. 774. 
 Dawson vs. Womblos, 123 Mo. App. 340. 
 
 3. Huntinui;on vs. Sluite, 180 Mass. 371, 02 N. E. 380. 91 Am. S. 
 
 R. 309. 
 Ginn vs. Dulan, 81 Oli. S(. 121, <)0 N. E. 380, 91 Am. S. K. 309. 
 Lombard vs. Byrne, 194 Mass. 236, 238. 
 
 4. Star Mills vs. Bailcv, 140 Kv. 194. 201. 130 S. W. 1077, 140 A. 
 
 S. R. 370.
 
 64 THE NEGOTIABLE INSTRUMENTS LAW § 25 
 
 negotiated for value by every person whose name ap- 
 pears upon it. Where the term "value" is used in the 
 Act it means a valuable consideration (Sec. 191), and 
 what constitutes a valuable consideration is defined in 
 the next section. 
 
 Consideration; ''Sec. 25. Value is any considera- 
 
 what constitutes, tion sufficient to support a simple 
 
 "Wisconsin. contract. An antecedent or pre-exist- 
 
 niinois. 
 
 ING DEBT CONSTITUTES VALUE; AND IS 
 deemed SUCH WHETHER THE INSTRUMENT IS PAYABI,E ON 
 DEMAND OR AT A FUTURE TIME. ' '"^ 
 
 The amount and kind of consideration which must be 
 given to support a promise upon a negotiable instru- 
 ment is neither defined nor restricted by the Act. Any 
 consideration which will support a simple contract will 
 be sufficient to support a negotiable instrument. 
 *' Value" is by Sec. 191 declared to mean "valuable con- 
 sideration" and this is understood in the law to be any 
 benefit to the promisor of direct or indirect advantage 
 gained by him, or any loss, detriment or inconvenience 
 Buffered by promisee.-^ It is not necessary that the con- 
 sideration should pass from the person to whom the 
 promise is given to the person who makes the promise, 
 it being quite sufficient if it passes to another in whom 
 the promisor is beneficially interested.^ A merely nom- 
 inal consideration is, however, usually insufficient to sup- 
 port the contract.''^ 
 
 5. Brooklyn Union Bk. vs. Sullivan, 214 N. Y. 332, 108 N. E. 558. 
 Dalrymple vs. Wvker, 60 Ohio State, 108, 112, 53 N. E. 713. 
 Fink vs. Fanners Bank. 178 Pa. 154, 35 A. 636. 
 
 Bingham vs. Kimball, 33 Ind. 184. 
 
 6. Brooklyn Union Bk. vs. Sullivan, 214 N. Y. 332, 108 N. E. 558. 
 Carter vs. Lons:, 125 Ala. 280, 28 S. 74. 
 
 Cobb vs. Heron, 180 111. 49, 54 X. E. 189. 
 
 Am. Boiler Co. vs. Foutham, 50 N. Y. Supp. 351. 
 
 7. Hogg vs. Thurman. 90 Ark. 93, 117 S. W. 1070. 17 .\nn. Cas. 
 
 383 and note. 
 Proctor vs. Cole. 104 Ind. 373, 3 N. E. 106, 4 N. E. 303.
 
 § 25 CONSIDERATION 65 
 
 Although insufficiency or failure of consideration raay 
 avoid a contract and may be a defense between imme- 
 diate parties to a negotiable instrument, it will never 
 avoid the instrument in the hands of a holder for value. 
 It is therefore most important, if a note or bill is given 
 out by the maker or acceptor which is not given for a 
 full consideration, that is, if there is something yet to 
 be given or done by the person to whom it is delivered or 
 is payable, or if it is not to be fully paid at maturity, 
 that this fact be clearly stated upon the instrument. 
 (See Sec. 28.) And if an indorser places his name upon 
 the instrument for any special purpose, or does not wish 
 by his endorsement to make himself liable for the uncon- 
 ditional payment of the instrument, he must indicate 
 that fact by appropriate words, so that all subsequent 
 holders may be notified of his intention. (Sec. 38.) 
 
 An antecedent debt is declared by this section to con- 
 stitute value. Such a debt is one which exists at the time 
 when the negotiable instrument or indorsement is made, 
 of which it forms the consideration and, in the sense in 
 which it is used in the Act, it is intended to distinguish 
 a debt which had been created before the time at which 
 the instrument or indorsement of which it forms the 
 consideration is made, even if it does not grow out of 
 the same transaction, from one contracted immediately 
 at the time of the issue or transfer of the instrument.^ 
 Thus it happens frequently that a bank will take a prom- 
 issory'' note in settlement of an overdraft or, in a trade 
 transaction, that an account, sometimes a very old ac- 
 count, one otherwise unenforceable, ^v\\\ be settled or ex- 
 tinguished by the giving or transfer of a promissory 
 
 8. Murchison Nat. Bk. vs. Dunn Oil Mills, 150 N. C. 718. 
 Israel vs. Gale, 174 U. S. 391. 
 
 Ward vs. City Trust Co., 117 App. Div^ (N. Y.) 130. 
 Mehlinger vs. Harriman, 185 Mass. 245.
 
 66 THE NEGOTIABLE INSTRUMENTS LAW § 2G 
 
 note or bill. In such a transaction the pre-existing debt 
 upon the overdraft or the account will form the valid 
 consideration for the instrument issued or transferred 
 b}' the debtor to his creditor and it is good. 
 
 An instrument given in renewal of another which re- 
 mains unpaid at maturity may be said to be based upon 
 such a consideration and that it is good, is too obvious to 
 require further comment or citation to authority. If an 
 instrument is given in payment of or to secure the debt 
 of another, it is supported by a valid consideration, pro- 
 vided the third person actually owes the debt'' and the 
 person making or transferring the instrument is bene- 
 ficially interested in its payment or settlement. ^"^ And 
 when checks or other instruments are exchanged with- 
 out other consideration the one forms a valid consid- 
 eration for the other.^^ 
 
 What constitutes **Sec. 26. Where value has at any 
 holder for value, r^j^^ been given for the instrument, 
 the holder is deemed a holder for value in respect to 
 all parties who become such prior to that time." 
 
 The holder of an instrument is a "holder for value" if 
 he gives value or if value has been given for the instru- 
 ment by any party prior to the time he became its holder. 
 He is such as against all persons who became parties to 
 the instrument before the negotiation at which value was 
 given. Of course, any one claiming through him like^\ise 
 becomes a holder for value, as against persons whose 
 names were placed upon the instrument before value was 
 given for it. (Sec. 58.) This section, therefore, means 
 that if an instrument was issued without consideration 
 
 9. First Nat. Bk. vs. Hix (Tex. Civ. App.), 164 S. W. 1035. 
 
 10. Ajrricultural Bk. vs. Robinson, 24 Me. 374, 41 Am. D. 385. 
 
 11. Matlock vs. Scheucrman, 51 Or. 49. 
 Miller vs. Marks (Utah), 148 P. 412, 417. 
 Rice vs. Grander, 131 N. Y. 149. 
 Franklvn Bk. vs. Roberts. 168 N. C. 473.
 
 § 2Z CONSIDERATION 67 
 
 and passed through several hands without value having 
 been given for it, while it is not enforceable in the hands 
 of any holder if value has never been given, one giving 
 value, or any one taking it after or through the one who 
 gave value for it, whether for value or not, may en- 
 force it against every person who became a party to the 
 instrument before the transfer at which value was 
 given. 
 
 When lien on *'Sec. 27. Wheke the holder has a 
 
 instrument lien on the instrument, arising either 
 
 constitutes FROM contract or by implication of law, 
 
 holder for value. 
 
 HE is deemed a holder FOR VALUE TO THE 
 
 extent of his lien. ' ' 
 
 A lien, in law, is a legal claim or hold on property as 
 security for a debt. A negotiable instrument is, of 
 course, property and one who holds it as collateral se- 
 curity for a debt or liability owing to him, while not be- 
 ing its o\\Tier, has a claim against the instrument and is 
 considered to be a holder for value to the amount of his 
 claim. He can enforce the instrument for the payment 
 of his claim regardless of rights and duties of the par- 
 ties among themselves and to each other, and even if 
 value had not previously been given by any party, his 
 lien constitutes value, and this is so even if the instru- 
 ment was pledged for an antecedent debt.^^ (Sec. 25.) 
 
 The lien arising by contract needs no explanation. Its 
 effect will be as expressed in the contract by which it is 
 created. In the absence of an express contract a lien 
 arises by implication of law out of those principles of 
 right and justice w^hich lie at the bottom of equitable 
 jurisprudence as applied to the relations of the parties 
 and the circumstances surrounding their dealings. It will 
 arise from any just inference that by reason of advances 
 or services, or other benefit rendered by one person to 
 
 12. Brewster vs. Schrader, 26 Misc. (N. Y.) 480.
 
 68 THE NEGOTIABLE INSTRUMENTS LAW § 28 
 
 another, it was intended that a lien upon the instrument 
 or its proceeds in his possession should be created. A 
 bank advancing money to any one dealing with it is en- 
 titled to a lien upon all of his securities which it holds, 
 and upon any general balance in its possession which 
 may belong to him when these are not held or deposited 
 for some distinct other purpose, or affected by some par- 
 ticular agreement inconsistent with this right. ^^. 
 Effect of want of ''Sec. 28. Absence or failure of con- 
 consideration. sideration is a matter of defense as 
 
 AGAINST ANY PERSON NOT A HOLDER IN DUE COURSE: AND 
 PARTIAL FAILURE OF CONSIDERATION IS A DEFENSE PRO TANTO, 
 WHETHER THE FAILURE IS AN ASCERTAINED AND LIQUIDATED 
 AMOUNT OR OTHERWISE.'' 
 
 If no consideration whatever was given for the in- 
 strument, or if the consideration given was represented 
 to be valuable at the time the instrument Avas made or 
 transferred, but afterward proved to be substantially 
 different and of less value than represented,^^ or if it 
 should appear that an agreement upon which the instru- 
 ment was based was not carried out,^^ or if the consid- 
 eration for which the instrument was issued was not 
 given,^^ or for any other reason there is a total absence 
 or failure of consideration, the person aifected bj^ the 
 failure of consideration may set this up as a matter of 
 defense against any party not a holder in due course in 
 an action upon the instrument and avoid its pajnnent. 
 And if there is a partial absence or failure of considera- 
 tion he may set it up and be relieved ''pro ianto," mean- 
 
 13. Knapp vs. Cowell, 77 Iowa, 528. 42 N. W. 434. 
 Morse Banks & Banking, Sec. 324. 
 
 Talapoosa Co. Bk. vs. Wynn, 173 Ala. 272, 55 So. 1011. 
 Commonwealth vs. Wathen, 126 Ky. 573, 104 S. W. 364. 
 
 14. Shoe, Etc., Natl. Bk. vs. Wood, 142 Mass. 563, 8 N. E. 753. 
 Ferguson vs. Netter, 141 App. Div. (N. Y.) 274. 
 
 15. Brenneman vs. Fumiss, 90 Pa. St. 186. 
 
 16. Agnew vs. Walden, 84 Ala. 502, 4 S. 672.
 
 § 29 CONSIDERATION 69 
 
 ing, for as much of the consideration as is absent or has 
 failed. The partial absence or failure of consideration 
 need not be ascertained and liquidated, which means 
 known and positively determined, but, of course, it must 
 be determinable. Neither of these defenses can, however, 
 be used to defeat the instrument if it is in the hands of a 
 holder in due course, nor do they affect the negotiability 
 of the instrument.^' It must be paid to such a holder re- 
 gardless of the total or partial absence or failure of the 
 consideration. 
 Liability of "8ec. 29. An accommodatiox party 
 
 accommodation is ONE WHO HAS SIGNED THE IxVSTRU- 
 ^'i^y^y*. MKXT AS MAKER, DRAWKR, ACCEPTOR, OR IN- 
 
 «Illinois. « 
 
 DOBSEB,*' WITHOUT EECEIVING VALUE THERE- 
 FOR, AND FOR THE PURPOSE OF LENDING HIS NAME TO SOME 
 OTHER PERSON. SuCH A PERSON IS LIABLE ON THE INSTRU- 
 MENT TO A HOLDER FOR VALUE, NOTWITHSTANDING SUCH 
 HOLDER AT THE TIME OF TAKING THE INSTRUMENT KNEW 
 HIM TO BE ONLY AN ACCOMMODATION PARTY.'"* 
 
 One who, for the benefit of another, signs his name to 
 a negotiable instrument in any capacity mentioned in 
 this section, and who receives nothing of value for or 
 from the instrument, becomes an accommodation party.^^ 
 Such a person will be deemed an accommodation party 
 even if he is paid for the use of his name.^"-' He has 
 loaned his name and credit to the instrument to accom- 
 modate, that is, to aid some other persons and he may do 
 so either as maker, drawer, acceptor or indorser. (See 
 also Sec. 64.) In whatever capacity he may have become 
 an accommodation party he is liable to any holder who 
 has given value for the instrument even if that holder 
 knew at the time of taking it that the maker, drawer, ac- 
 
 17. Dingman vs. Amsink, 77 Pa. St. 114. 
 
 IS. Grcenwav vs. Wm. D. Orthwein Grain Co., 85 Fed. 536. 
 
 Yoiuiu' vs. Exchi-. Bk., 152 Ky. 293, 153 S. W. 444, Ann. Cas. 
 1915, B. 148. " 
 19. Morris County Brick Co. vs. Austin. 79 N. J. L. 273, 75 A. 550.
 
 70 THE NEGOTIABLE INSTRUMENTS LAW § 29 
 
 ceptor, or indorser placed his name upon the instrument 
 as an accommodation party. But an accommodation 
 party is liable upon the accommodation instrument to 
 no person or party other than a holder for value. (See 
 Sees. 26 and 27 for what constitutes holder for value.) 
 
 While this section fixes the liability of accommodation 
 parties to the holder of the instrument, it is pertinent to 
 say something, at this place, about the liability of accom- 
 modation parties to each other. In every case they are 
 liable in the manner in which they agreed among them- 
 selves to be bound upon the instrument, or have among 
 themselves an understanding amounting to an agree- 
 ment.^" If the accommodation parties are indorsers 
 their liability, in the absence of an express agreement 
 to the contrary, and unless they are joint indorsers, is 
 in the order in which their names appear upon the in- 
 strument. They are liable in the successive order in 
 which they indorsed and the doctrine of contribution 
 does not apply.-^ Thus all are liable to the last, each is 
 liable to those who signed after him and the first is liable 
 to them all. (See Sec. 68.) The section is not applic- 
 able to corporations, which, as a rule, have not the power 
 to execute accommodation paper.^^ The power to exe- 
 cute acceptances based upon the import and export of 
 goods, newly created by the Federal Reserve Bank Act, 
 will be explained in the introduction to Title II. 
 
 20. Law vs. Stewart, 15 Fed. Cas. No. 8130, 3 Cranch. (C. C.) 411. 
 Noble vs. Beeman S. & Co.. 65 Oregon 93 ; 131 Pac. 1006 ; 
 
 46 L. R. A. (N. S.) 162. 
 
 21. In re MeCord, 174 Fed. 72, 75. 
 MeCune vs. Belt, 45 Mo. 174, 178. 
 Barnet vs. Youno-. 29 Ohio St. 7. 
 
 Porter vs. Hnic. 04 Ark. 333, 335; 126 S. W. 1069, 28 L. R. 
 A. (N. S.) 1039. 
 
 22. Jacobus vs. Jamestown Mantel Co., 211 N. Y. 154. 
 Owen & Co. vs. Storms, 78 N. J. L. 154.
 
 § 30 NEGOTIATION 71 
 
 SUBDIVISION III 
 
 Negotiation. 
 
 Section Section 
 
 30 What constitutes negotiation. 42 Effect of an instrument 
 
 31 Indorsement ; how made. drawn or indorsed to a i)er- 
 
 32 Indorsement must be of en- son as cashier, etc. 
 
 tire instrument. 43 Indorsement where name is 
 
 33 Kinds of indorsement. misspelled, etc. 
 
 34 Special indorsement — in- 44 Indorsement in representa- 
 
 dorsement in blank. five capacity. 
 
 35 Blank indorsement changed 45 Time of indorsement; i)re- 
 
 to special indorsement. sumption as to. 
 
 36 When iudoi-sement restric- 46 Place of indorsement; pre- 
 
 tive. sumption as to. 
 
 37 Effect of resti-icting indorse- 47 Continuation of negotiable 
 
 ment; rights of indorsee. character. 
 
 38 Qualified indorsement. 48 Striking out indorsement. 
 
 39 Conditional indorsement. 49 Transfer without indorse- 
 
 40 Indorsement of instrument ment; effect of. 
 
 payable to bearer. 50 When prior party may ncgo- 
 
 41 Indorsement where payable tiate instioiment. 
 
 to two or more persons. 
 
 What constitutes "Sec. 30. Ax instrument is negoti- 
 negotiation. ated when it is transferred from one 
 
 PERSON to another IN SUCH MANNER AS TO CONSTITUTE 
 THE TRANSFEREE THE HOLDER THEREOF. If PAYABLE TO 
 BEARER, IT IS NEGOTIATED BY DELIVERY; IF PAYABLE TO 
 
 ORDER IT IS NEGOTIATED BY THE INDORSEMENT OF THE 
 
 HOLDER COMPLETED BY DELIVERY." 
 
 To negotiate the instrument means to issue it or trans- 
 fer it after it has been issued, and by this section it is 
 provided that to constitute a negotiation, the issue or 
 transfer must have been made in such a manner as to 
 make the transferee the holder of the instrument.^ One 
 becomes the holder of an instrument by the fact alone 
 that it has been given into his possession by indorse- 
 
 Bank of Commerce vp. Farmers & Merch. Bk.. 87 Nebr. 841, 843. 
 Aurora St. Bk. vs. Hayes, Eames El. Co., 88 Nebr. 187. 
 Scotland Co. Bk. vs. Hohn, 146 Mo. App. 699.
 
 72 THE NEGOTIABLE INSTRUMENTS LAW § 31 
 
 ment and delivery, or delivery alone at its incep- 
 tion, or when indorsement is not required. The 
 delivery must be made for the purpose of giving the in- 
 strument, together with all its incidents into the right- 
 ful possession of the transferee (Sec. 15 and Sec. 191), 
 either as owner or as the authorized representative of 
 its owTier, or in order to secure a debt or liability omng 
 to him. In the latter case he is more than the represen- 
 tative of its o^vner. He has an interest in the instru- 
 ment to the amount of his lien (see Sec. 27). A transfer 
 which does not meet these requirements is not 
 a negotiation, does not pass the title to the 
 instrument, and does not constitute the person who 
 has taken the instrument without these qualifications 
 a holder within the meaning of this Act. If the 
 instrument is payable to bearer, the mere delivery by 
 one holder to another without indorsement constitutes 
 its negotiation. If it is payable to order the holder must 
 write his name upon the back of instrument thereby in- 
 dorsing it, and he must complete the negotiation by de- 
 livery. How the indorsement must be made is pre- 
 scribed by the next section. 
 
 If a holder in possession of the instrument has in- 
 dorsed it but does not complete the negotiation by deliv- 
 ery, he may erase his name ; and if an instrument is found 
 in the hands of one who had made an indorsement upon it 
 which, if accompanied by delivery, would have amounted 
 to a negotiation, it vnll be presumed that the ne- 
 gotiation was never completed.^ 
 
 Indorsement; *'Sec. 31. The indorsement must be 
 how made. written on the instrument itsei^f, or 
 "Illinois. UPON a paper attached thereto. The 
 signature of the indorser, without additional words, 
 IS A sufficient indorsement."'' 
 
 2. Richards vs. Darst, 51 111. 140. 
 
 McCormick vs. Eckland, 11 Ind. 293.
 
 §32 NEGOTIATION 78 
 
 The place for an indorser's signature is upon the back 
 of the instrument. If there is no room there a piece of 
 paper may be securely attached to it and the indorse- 
 ment made upon that. This is called an "allonge.'" It 
 may be made upon the face of the instrument, but if a 
 signature is placed there the indorser must use words at 
 his signature which clearly manifest his intention to 
 transfer the instrument,'' otherwise he msLj be mistaken 
 for and hold to be liable upon the instrument as a pri- 
 mary party. The rights of the primary parties, as the 
 maker of a promissory note, and an indorser are very 
 different, as is their liability upon the instruments they 
 sign, and too great care cannot be exercised to distin- 
 guish plainly the manner in which one who signs the in- 
 strument elsewhere than upon its back or an attached 
 piece of paper, intends to be bound by his signature. One 
 who intends to assume no greater liability than as in- 
 dorser or does not intend to limit his liability as such, 
 need only write or stamp his name upon the back of the 
 instrument or an attached paper to become an indorser 
 within the meaning of this Act, the contract of indorse- 
 ment being as fully expressed by the signature alone 
 as it would be if it had been written out in full upon the 
 instrument. 
 
 Indorsement ''Sec. 32. The indorsement must be 
 
 must be of entire j^-^ indorsement of the entire instru- 
 instrument. ment. An indorsement, which purports 
 
 to transfer to the indorsee a part only of the amount 
 payable, or which purports to transfer the instrument 
 TO two or more indorsees severally, does not operate 
 as a negotiation of the instrument. But where the 
 instrument has been paid in part, it may be indorsed 
 
 AS TO THE residue. ' ' 
 
 3. Farmers Trust Co. vs. Schenuit, 83 111. A. 267. 
 Walton vs. Williams, 44 Ala. 347 : 
 Perry vs. Bray, 68 Ga. 293. 
 Com. vs. Biitterick. 100 Mass. 12.
 
 74 THE NEGOTIABLE INSTRUMENTS LAW § 33, 34 
 
 The holder of a negotiable instrument cannot transfer 
 a part only of it by indorsement. If he attempts to do so, 
 or if he attempts to transfer the whole instrument by 
 making part payable to one person and part to another, 
 in order that each may own and have a right to receive a 
 separate part of the amount due, this will not operate as 
 a negotiation and has been held to destroy the negoti- 
 ability of the instrument.^ Such an indorsement will 
 only operate to enable the persons to whom the indorser 
 so transfers the instrument to hold it as security for the 
 amounts they are to receive out of its payment but it 
 does not constitute either of them a ''holder" within the 
 meaning of this Act. The indorsement, to amount to a 
 negotiation, must be of the entire instrument.-^ But if 
 there has been partial payment made, the instrument 
 may be indorsed as to the balance remaining due and 
 this would be an entire and complete indorsement and 
 negotiation if followed by delivery. 
 
 Kinds of "Sec. 33. An indoksbment may be 
 
 indorsement. either special or in blank; and it may 
 
 also be either restrictive or qualified, or conditional.'' 
 Two kinds of indorsement are named in this Act, a 
 special indorsement, which is defined in Sec. 34, and an 
 indorsement in blank which is defined in Sees. 34 and 35. 
 These indorsements may be either restrictive, as is ex- 
 plained in Sees. 36 and 37, qualified, as defined in Sec. 
 38, or conditional, as explained in Sec. 39. Each has its 
 distinct effect upon the instrument and serves a partic- 
 ular purpose. > 
 Special indorse- "Sec. 34. A special indorsement 
 ment; indorse- specifies the person to whom, or to 
 ment in blank. whose order, the instrument is to be" 
 "Wyoming. payable,- a nd the indorsement of such 
 
 4. Goldman vs. Blum, 58 Tex. 630. 
 Lind-av vs. Price. 33 Tex. 280, 282. 
 
 5. Barkley vs. Muller. 164 App. Div. 381, 149 N. Y. S. 620. 
 Erwin vs. Lynn, 16 Oh. St. 539.
 
 §34 NEGOTIATION 75 
 
 INDORSEE IS NECESSARY TO THE FURTHER NEGOTIATION OF 
 THE INSTRUMENT, An INDORSEMENT IN BLANK SPECIFIES 
 NO INDORSEE, AND AN INSTRUMENT SO INDORSED IS PAYABLE 
 TO BEARER, AND MAY BE NEGOTIATED BY DELIVERY." 
 
 The special indorsement, sometimes called a ''full in- 
 dorsement" is an order, written on the instrument over 
 his signature by the indorser, directing it to be paid to a 
 person whom he names, or to his order. It is not neces- 
 sary that the words ' ' or order ' ' be used in order to con- 
 stitute the person named in a special indorsement a ''full 
 indorsee," qnd unless words are used prohibiting further 
 negotiation he will take the instrument with all its inci- 
 dents including full negotiability and may transfer it 
 to another by indorsement.^ But it is necessary that 
 the person to whom the instrument is to be transferred 
 by the indorsement shall be named in it. If he is not 
 designated, the indorsement is not special, although it 
 may have been written thus: "Pay to the order of 
 
 "^ When a special indorsement is used 
 
 the instrument is payable to the person named in the in- 
 dorsement or some one to be named by him. If he de- 
 sires the instrument to be paid to another he must him- 
 self indorse it or authorize some one to do so for him, 
 unless the instrument is, upon its face, payable to the 
 bearer (Sec. 40), whereupon he becomes a party to the 
 instrument in the capacity of indorser. 
 
 An indorsement in blank differs from this. This in- 
 dorsement is made by the holder by merely writing his 
 name upon the instrument mthout designating anyone 
 to whom he desires it to be paid. By that act he assumes 
 the same liability as by special indorsement (See Sec. 
 66), but if the instrument is one originally payable to 
 
 6. Fawcott vs. Natl. L. Ins. Co., 97 111. 11, 37 Am. R. 95. 
 Hodj^es vs. Adams. 19 Vt. 74, 46 Am. D. 181. 
 
 7. State vs. Hinton, 56 Ore. 428, 109 Pac. 24. 
 Adams vs. Smith, 35 Me. 324.
 
 76 THE NEGOTIABLE INSTRUMENTS LAW § 35 
 
 order it then becomes payable to bearer and may be 
 negotiated by delivery from one subsequent holder to 
 another wdthout indorsement, until it again becomes 
 specially indorsed. 
 
 Since only those persons whose names appear upon 
 the instrument are liable upon it (Sec. 18), it is desirable, 
 by reason of the additional security which will be given 
 to the instrument, that the transferee, that is the person 
 who is taking it, require the person who is transferring 
 it to him to indorse the instrument. Section 49 of the 
 Act gives to the holder the right to require the indorse- 
 ment of his transferrer if the instrument is one payable 
 to order. One who transfers an instrument by mere de- 
 livery incurs no liability except to the extent of the war- 
 ranties which by Sec. 65 are implied from a negotiation 
 by delivery. 
 
 gj^jj^ '^Sec. 35. The holder may convert a 
 
 indorsement blank indorsement into a special in- 
 
 changed to dorsement by writing over the signa- 
 
 special ture of the indorser in blank any con- 
 
 indorsement. tract consistent with the character of 
 
 THE indorsement." 
 
 If an indorser has made a blank indorsement (Sec. 34) 
 upon the instrument, whoever has it as holder, may write 
 over the signature of the indorser in blank the name of 
 any person to whom, or to whose order, he desires the 
 instrument to be paid. He then need not indorse it him- 
 self but by this act, followed by delivery, he will have 
 transferred the instrument to the person he has named 
 without making himself a party to the transfer^ and, 
 unless the instrument was originally payable to bearer, 
 he thereby changes its character from one payable to 
 bearer to an instrument payable to order. (See Sec. 40.) 
 In accomplishing this the holder may write over the 
 
 8. Evans vs. Gee, 31 Pot. (U. S.) 78. S3.
 
 § 36 NEGOTIATION 
 
 / 1 
 
 blank indorsement any words consistent with the charac- 
 ter of the indorsement and which express the real agree- 
 ment of the blank indorser, but he may not write any 
 words that will change the character of the indorser 's 
 liability or impair or take away any of his legal rights 
 or defenses.^ It has also been held, however, that if the 
 words written over the blank indorsement are made to 
 express a contract different from that which was in- 
 tended, it may be reformed.^" 
 
 When ' ' Sec. 36. An indoksement is restrict- 
 
 indorsement -j^e which either — 
 
 restrictive. -^ Prohibits the further negotiation 
 
 or the instrument; or 
 
 2. Constitutes the indorsee the agent of the in- 
 dorser, OR 
 
 3. Vests the title in the indorsee in trust for or 
 TO the use of some other person. 
 
 But the mere absence of words implying power to 
 negotiate does not make an indorsement restrictive." 
 
 A restrictive indorsement is one which forbids the 
 further negotiation of the instrument or restricts the 
 manner of its tranfer. One form of this indorsement is 
 accomplished by the indorser by Avriting over his signa- 
 ture words which direct pajTnent to a person named and 
 to him only. The person named has then no right to 
 negotiate the instrument further and no other person 
 will be entitled to receive pa^Tnent upon it. Such an in- 
 dorsement implies a promise by the indorser that he will 
 pay the instrument if the maker or acceptor does not and 
 if he is called upon to do so, but that he w^ill be liable 
 and will pay it only to the person named in his indorse- 
 ment. 
 
 9. roltimhia Finnnoe Co. vs. Pnrcell, 140 Fed. 85. 
 Hood vs. bobbins. OS Ala. 484, 13 S. 574. 
 Jordan vs. Lonsr, 100 Ala. 414. 19 S. 447. 
 
 10. Newton vs. Bramlett, 55 111. A. 661. 
 
 Sylvester vs. Downer, 20 Yt. 355, 49 Am. D. 786.
 
 78 THE NEGOTIABLE INSTRUMENTS LAW § 36 
 
 The most common use of the restrictive indorsement 
 however, and the one chiefly contemplated by the con- 
 vention which framed the Act, is that which makes im- 
 possible the further negotiation of instruments indorsed 
 for collection. If an indorser writes over his signature 
 an order to pay the instrument to some person whom 
 he names as his agent as, for example, if he indorses the 
 instrument to a bank for collection and credit to his ac- 
 count, such an indorsement indicates that the person or 
 bank taking the instrument through it does so in the 
 name of and acting on behalf of the restrictive indor- 
 ser who does not intend to part with his title to the in- 
 strument.^^ Under this form of indorsement the o"svner 
 of the instrument will be able to control it or its pro- 
 ceeds until it is returned to him or paid and may inter- 
 cept the proceeds in the hands of an intermediate agent.^^ 
 This form of restrictive indorsement does not entirely 
 destro}' the negotiable character of the instrument, but 
 affects it in the manner described in Sec. 37. 
 
 An indorsement which names one person to take the 
 title in trust for another or for another's use or benefit, 
 is likewise restrictive and it, likewise, does not entirely 
 destroy the further transferability of the instrument. 
 In each form proper language must be used to show that 
 the indorsement is restrictive, for the fact alone that an 
 indorser omits words which give to or imply in the in- 
 dorsee the power to negotiate the instrument further, 
 does not make it so. Thus, if the indorsement is special 
 
 11. Chicago First Nat. Bk. vs. Reno County Bk., 3 Fed. 257. 
 Butchers & Drovers Bk. vs. Hubbell, 117 N. Y. 384. 
 Freeman's Bk. vs. Natl. Tube Wks., 151 Mass. 413. 
 
 12. Bank of America vs. Waydell, 187 N, Y. 115. Where indorse- 
 
 ment in blank accompanied by letter stating draft had been 
 
 sent for collection. 
 Manufacturers Natl. Bk. vs. Continental Bk., 148 Mass. 553. 
 First Natl. Bk. vs. First Natl. Bk., 76 Ind. 561.
 
 §37 NEGOTIATION 79 
 
 aud the words "or order" are omitted the indorsee may 
 nevertheless negotiate the instrument. (See Sees. 34 
 and 47.) 
 
 „^ ^ . "Sec. 37. A restrictive indorsement 
 
 Effect of 
 
 restricting confers upon the indorsee the right — 
 
 indorsement; 1- To Receive payment of the instru- 
 
 rights of ment; 
 
 indorsee. 2. To bring any action thereon that 
 
 "Illinois. ^jjj, jjjDORSER COULD BRING." 
 
 3. To transfer HIS RIGHTS AS SUCH INDORSEE/ WHERE 
 THE form OF THE INDORSEMENT AUTHORIZES HIM TO DO SO. 
 
 But all subsequent indorsees acquire only the title 
 of the first indorsee under the restrictive indorse- 
 MENT."* 
 
 The indorsee who holds under a restrictive indorse- 
 ment has the right to receive payment of the instrument 
 and consequently has the right to compel its paj'"ment, 
 and a discharge given by him for payment will be good. 
 He has the right to bring any action upon the instrument 
 which the indorser w^ho made the restrictive indorse- 
 ment might bring and he can transfer his rights as such 
 indorsee unless the form of the instrument or the re- 
 strictive indorsement prohibits it.^^ But, while he can 
 transfer such rights as are given him by the indorse- 
 ment, all indorsees coming after him take from and 
 through him only such title in the instrument and its pro- 
 ceeds as he acquired under the restrictive indorsement 
 and the form of the indorsement by which the instru- 
 ment was transferred to him is notice to all subsequent 
 indorsees of the limited right of the restrictive indorsee 
 to negotiate the instrument. One who receives an in- 
 strument indorsed to him for collection has therefore no 
 
 13. Smith vs. Bayer, 4(5 Ore. 143. 
 Schmidt vs. Fcgg, 172 Midi. 160. 
 Craig vs. Palo Alto Stock Farm, 10 Idaho, 701. 
 Gleason vs. Thayer, 87 Conn. 248.
 
 80 THE NEGOTIABLE INSTRUMENTS LAW § 38 
 
 power to sell it and cannot convey a good title if he 
 does.^* 
 
 Sub-section 2, it has been said, is unjust in that if a 
 person talking the instrument in trust for another under 
 that form of restrictive indorsement does so for value, 
 he does not secure the right to bring an action upon it 
 against his immediate indorser. However, since his in- 
 dorser had the right to bring an action against all per- 
 sons who preceded him upon the instrument and trans- 
 ferred this right to his transferee, he must be regarded 
 as having thereby included himself as one against whom 
 the holder by restrictive indorsement may bring an ac- 
 tion to enforce the instrument if he fails to qualify his 
 indorsement, since by no other form of indorsement can 
 he make himself a mere assignor of the title, as ^^dll 
 be seen from the following section. 
 
 Qualified "Sec. 38. A qualified indorsement 
 
 indorsement. constitutes the indorsee a mere assignob 
 
 OF THE TITLE TO THE INSTRUMENT. It MAY BE MADE BY 
 ADDING TO THE INDORSER 's SIGNATURE THE WORDS '' WITH- 
 OUT recourse/' or any WORDS OF SIMIL.AR IMPORT. SuCH 
 AN INDORSEMENT DOES NOT IMPAIR THE NEGOTIABLE CHAB- 
 ACTER OF THE INSTRUMENT." 
 
 When a person indorses a negotiable instrument and 
 writes over or under, before or after his signature the 
 words ''\sithout recourse" or "without recourse on me" 
 he makes what is called a qualified indorsement. He is 
 not required to use these words but may use others 
 which mean the same thing or have the same effect. Or 
 he may, if he chooses, write over his signature words of 
 any qualification or limitation that he may wish to im- 
 pose, and his liability to subsequent holders will be no 
 greater or less than that which he ass umes or to which 
 
 14 Peoples & Drovers Bk. vs. Crais:. 63 Oh. St. 374, 59 N. E. 102, 
 81 Am. S. Kep. 639, 52 L. R. A. 872.
 
 § 39 NEGOTIATION 81 
 
 he limits himself by his words of qualification.^^' These 
 must be words which clearly indicate that he intends 
 to limit his liability. He may also qualify his liability 
 by enlarging its limits, as he does when he adds a waiver 
 of the usual requirements of demand and notice of non- 
 payment.^^ (See Sees. 5, 82, 109, 110.) The place 
 where the qualification is written upon the instrument is 
 not of importance and it will operate if it can be clearly 
 identified w4th the indorser's signature.^^ Each indorser 
 must himself write the qualifying words at his o^\^l sig- 
 nature in order that there can be no doubt of their ap- 
 plication to him. When one indorser has qualified his 
 signature, subsequent indorsers placing theirs under his 
 cannot claim that they signed the instrument subject to 
 the same qualification, unless when signing they clearly 
 indicate their intention to do so by appropriate words. ^'^ 
 A qualified indorsement upon the instrument does not 
 interfere w^ith its negotiation. The indorser who limits 
 his indorsement by the qualifying words 'S\dthout re- 
 course" merely transfers the title to the instrument as 
 it w^as when it came to him, and he does not become liable 
 to his transferee, or any subsequent holder, except to 
 the extent of the w^arranties \Yhich by Section 65 are im- 
 plied from this form of indorsement. (See Sec. 65.) 
 Conditional "Sec. 39. Where an indorsement is 
 
 indorsement. conditional, a party required to pay the 
 
 INSTRUMENT MAY DISREGARD THE CONDITION AND MAKE PAY- 
 MENT TO THE INDORSEE OR HIS TRA NSFEREE, WHETHER THE 
 
 15. Fassin vs. Hubbard. 55 N. Y. 465, 470. 
 Markley vs. Corey, 108 Mich. 184. 
 
 16. Allen vs. Ri^htmire, 20 Johns, 365, 11 Am. D. 2SS. 
 Hatcher vs. Chambersburo- Bank, 79 Ga. 542, o S. E. 109. 
 
 17. Doom vs. Shei-win, 20 Colo. 2.34, 38 P. 56. 
 Fitchbur^r Bk. vs. Greenwood, 2 Allen (Mass.) 434. 
 Corbett vs. Fetzer, 47 Nebr. 269, 66 N. W. 417. 
 
 Goolrick vs. Wallace. 154 Ky. 596, 157 S. W. 920, 49 L. R. 
 A. N. S. 789. 
 
 18. Doom vs. Shel•^\•in. 20 Colo. 234, 38 P. 56.
 
 82 THE NEGOTIABLE INSTRUMENTS LAW § 40 
 
 COXDITIOX HAS BEEN FULFILLED OK NOT. BuT ANY PERSON 
 TO WHOM AN INSTRUMENT SO INDORSED IS NEGOTIATED, WILLi 
 HOLD THE SAME, OR THE PROCEEDS THEREOF, SUBJECT TO 
 THE RIGHTS OF THE PERSON INDORSING CONDITIONALLY." 
 
 While the instrument must contain the unconditional 
 promise or order of the person who originally issues it 
 to pay it (Sec. 1), the holder may transfer it by indorse- 
 ment so that it shall become payable to the indorsee only 
 upon the happening- of some condition which he names. 
 The indorser may do this by indicating at his signature 
 the condition upon which it is to become payable to the 
 person to whom he negotiates it. One taking an instru- 
 ment which is indorsed in this manner may in turn 
 transfer it to another, but when the instrument is paid, 
 the holder W'ho receives payment must hold the proceeds 
 subject to the rights of that party who made the condi- 
 tional indorsement. But the one who is required to ])a.y 
 the instrument is not bound by the condition imposed by 
 the indorser, whether it is fulfilled or not. He may disre- 
 gard the condition and pay the instrument to the holder 
 at maturity and his payment will discharge his obliga- 
 tion. He is not bound by the conditional indorsement to 
 see that the proceeds of the instrument are applied in 
 accordance with the condition imposed by the indorser. 
 It will be the duty of the person to whom he pays the 
 instrument to see to that. 
 
 Indorsement of "Sec. 40. Where an instrument," 
 
 instrument paya- payable to bearer, is indorsed specially, 
 ble to bearer. ^^^ nevertheless be further nego- 
 
 "Illinois. 
 
 TIATED BY DELIVERY; BUT THE PERSON IN- 
 DORSING specially IS LIABLE AS INDORSER TO ONLY SUCH 
 HOLDERS AS MAKE TITLE THROUGH HIS INDORSEMENT." 
 
 If an instrument which is upon its face expressly made 
 payable to bearer becomes specially indorsed during its 
 negotiation, that is, if it obtains an indorsement which 
 specifies the person to whom or to whose order it is to
 
 §40 NEGOTIATION 83 
 
 be payable, it may, nevertheless, be transferred by de- 
 livery. In other words, it is not necessary that such an 
 instrument shall be indorsed by the person named in the 
 special indorsement. That person or any subsequent 
 holder may transfer it without indorsement if the trans- 
 feree will accept it so. But the person who indorsed it 
 specially will enjoy a certain immunity from liability, 
 that is, he will be liable upon the instrument only to those 
 persons w^ho make title, which means who constitute 
 some other person the owner of the instrument, through 
 his special indorsement. This, of course, means the one 
 named in the special indorsement and those subsequent 
 holders to whom that one indorses the instrument and 
 who in turn make title to others through their own in- 
 dorsements, and does not include persons who obtain the 
 title to the instrument by mere delivery without the 
 indorsement of the person named in his special indorse- 
 ment. (Also see Sec. 67.) 
 
 The effect of this section is, therefore, that an instru- 
 ment originally payable to bearer which becomes special- 
 ly indorsed may continue to be negotiated without further 
 indorsement, but the liability of the special indorser is 
 transmitted only to such person or persons who made 
 title through his indorsement. It follows from this sec- 
 tion that a restrictive indorsement upon an instrument 
 originally payable to bearer would not be effective. But 
 if such an instrument so indorsed is negotiated in breach 
 of faith by the indorsee, the restrictive indorsement 
 would be deemed to be notice of a defect in the holder's 
 title. (Sees. 55 and 56.) 
 
 A distinction is made in this section between an in- 
 strument which is originally payable to bearer and one 
 originally payable to order which becomes payable to 
 bearer by blank indorsement. The first, though it may
 
 84 THE NEGOTIABLE INSTRUMENTS LAW § 41 
 
 become specially indorsed, does not require a blank in- 
 dorsement to again become an instrument payable to 
 bearer. It continues to be such notwithstanding the 
 special indorsement. But the second, originally payable 
 to order becomes payable to bearer when the only or last 
 indorsement upon it is an indorsement in blank (Sec. 
 9-5), and does require to again be specially indorsed in 
 order to resume its former character as an order instru- 
 ment after it has been changed by blank indorsement to 
 one payable to bearer. (See Sec. 34.) 
 
 Indorsement *'Sec. 41. Where an ixstrument is 
 
 where payable to payable TO THE oeder of two or more 
 
 two or more payees, or" indorsees who are not part- 
 
 persons. ners, all must indorse, unless the one 
 
 "Wisconsin. 
 
 indorsing has authority to indorse for 
 
 THE others," 
 
 When an instrument is expressly made payable to two 
 or more persons who are not partners all who are named 
 as payees must indorse in order to negotiate it, unless 
 one who does it for all acts by the authority of the oth- 
 ers. This authority need not be expressly given but may 
 be implied from the circumstances under which the in- 
 strument was issued or transferred. It has been held, for 
 example, that where two persons sign upon its face an 
 instrument which recites that it is payable to "myself" 
 or order, the one having signed for the accommodation 
 of the other, and it was intended that the latter alone 
 should receive the proceeds of the instrument, a transfer 
 upon his indorsement alone mil vest the holder with 
 title enforceable against both.^^ Wlien the instrument is 
 made payable by indorsement to two or more persons 
 who are not partners, all must indorse it unless one has 
 authority to act for all, but if two or more persons named 
 as payees or indorsees are partners in a trading part- 
 
 19. First Katl. Bank vs. Fowler, 36 Ohio St. 524.
 
 §42 NEGOTIATION 85 
 
 nersliip any partner has the right, m a partnership 
 transaction, even in the absence of express authority, to 
 indorse the instrument in the name of the partnership 
 and all partners will be bound by his act.^° 
 
 ^ . , ''Sec. 42. AVhere an instrument is 
 
 Effect of instru- 
 ment drawn or ^^^^^N OR indorsed to a terson as 
 
 indorsed to a ''cashier'' or other fiscal officer of a 
 
 person as bank or corporation, it is deemed prima 
 
 cashier. facie to be payable to the bank or cor- 
 
 «So. Dakota poration of which he is such officer, 
 
 AND MAY BE NEGOTIATED BY EITHER* THE INDORSEMENT OF 
 THE BANK OR CORPORATION, OR THE INDORSEMENT OF THE 
 OFFICER." 
 
 If an instrument is dra^^aI or is indorsed so that it is 
 payable to a cashier or other "fiscal officer of a bank 
 or corporation" it is taken to be payable to the bank or 
 corporation of which he is such officer, until the contrary 
 is shown. A fiscal officer is one w^hose duties pertain to 
 the finances of the bank or corporation of which he is 
 an officer. Such an instrument is payable to the bank or 
 corporation of which the person named is an officer and 
 may be negotiated by the indorsement of the bank or 
 corporation though made upon it by another of its duly 
 authorized officers, or it may be negotiated by the in- 
 dorsement of the officer named in the instrument. In 
 either case, the indorsement, if made by another by au- 
 thority of the bank or corporation, or if made by such 
 officer, is considered to be the act of the bank or corpora- 
 tion named and is good. The indorsement for transfer 
 by a public officer of an instrument which carries notice 
 upon its face that it is the property of the corporation, 
 will not convey the title to the instrument if the officer 
 
 20. Drexler vs. Smitli, 30 Fed. 754. 
 
 Fulton vs. Loualilin, 118 Ind. 286, 20 K E. 796 
 Moorehead vs Gilmore, 77 Pa. St. 118, 18 Am. Hep. 435. 
 Gansevoort vs. Williams. 14 Wendell (N. Y.) 138.
 
 86 THE NEGOTIABLE INSTRUMENTS LAW § 43 
 
 negotiates it for his private use.-^ As to transfer by or 
 payment to officers of other corporations or public offi- 
 cers, see Sec. 8, Sub-sec. 6, and Sec. 21, • 
 
 Indorsement "Sec. 43. Where the name of a payee 
 
 where name is or indorsee is wrongly designated or 
 misspelled, misspelled, he may indorse the instru- 
 
 fit C fit 61*3. 
 
 ME NT AS THEREIN DESCRIBED, ADDING, IF HE 
 THINK FIT, HIS PROPER SIGNATURE." 
 
 If the nanie of the payee or indorsee is misspelled or 
 he is incorrectly designated or described, he may in- 
 dorse the instrument in the manner in which his name is 
 misspelled or by his w-rong designation.-^ He is not 
 obliged to but he may, in addition thereto, indorse it by 
 his proper name or proper designation, if he think fit, 
 and this is usually done. Indorsement by the i^erson 
 named in his proper name or by his proper designation 
 is, of course, good although he neglects to indorse by 
 the misspelled name or improper designation or descrip- 
 tion. If one does business in the name of a company and 
 the instrument is made payable to the company name, in- 
 dorsement in his o\^^l name ^\ill be sufficient to transfer 
 the title.^^ 
 
 Indorsement ''Sec. 44. Whef^e any person is under 
 
 in representative obligation to indorse in a representa- 
 capacity. ^^^^ capacity, he may indorse in such 
 
 TERMS as to negative PERSONAL LIABILITY." 
 
 When an instrument requires the indorsement of a 
 person who is not a party to it except as the representa- 
 tive of another, he may indorse it in any way he desires 
 in order to show that he does it in his representative 
 capacity, and that he does not intend to assume 
 any personal liability upon the instrument. No particu- 
 
 21. Quincv Mut. Firp Ins. Co. vs. International Trust Co., 217 
 
 Mass. 370. 
 
 22. Hunt vs. Stewart, 7 Ala. 525. 
 
 23. Brj^ant vs. Eastman, 7 Gushing (Mass.) 111.
 
 § 45, 46 NEGOTIATION 87 
 
 lar form of words is required. Any which will convey 
 his meaning will be sufficient.-^ 
 
 Time of *'Sec. 45. Except where an indorse- 
 
 indorsement ; ment bears date after the maturity of 
 
 presumption. ^^^ instrument, every negotiation is 
 
 deemed prima facie to have been effected before the 
 instrument was overdue." 
 
 The date which an indorsement bears is presumed to 
 be the date when it was made. Every undated indorse- 
 ment is presumed, until the contrary appears, to have 
 been made and every negotiation to have been effected 
 before the instrument became past due. This presump- 
 tion may be overcome and, in a controversy, the true 
 date shouni by proof.-^ The rights and liabilities of in- 
 dorsers before and after maturity differ in very impor- 
 tant respects and if an indorsement is placed upon an 
 instrument after its maturity, it ought to be dated, for a 
 date often becomes very important in determining the 
 rights of the interested parties. (See Sec. 52.) 
 Place of "Sec. 46. Except -where the contrary 
 
 indorsement; appears, every indorsement is presum]':d 
 
 presumption. prima facie to have been made at the 
 
 PLACE where the INSTRUMENT IS DATED." 
 
 The place where an indorsement is made sometimes 
 becomes important in fixing the rights or the liability of 
 the indorser, for the reason that each negotiation is re- 
 garded as a distinct and new contract upon the terms of 
 the instrument or upon such modifications as may have 
 been imposed at any negotiation.-^ If the indorsement is 
 made at a place other than that where the instrument is 
 dated, particularly if made in another State whose laws 
 may yet be different from those of the State where the 
 
 24. Chelsea Exchg. Bk. vs. First U. P. ChiTrch, 89 Misc. (In^. Y.) 
 
 616, 620. 
 25 Cedar Rapids Natl. Bk. vs. Bashara, 39 Okla. 4,S2. 
 26. Smith vs. Caro & Brown, 9 Orej^on. 278. 
 Freese vs. Browncll, 35 N. J. L. 285.
 
 88 THE NEGOTIABLE INSTRUMENTS LAW § 47, 48 
 
 instrument was made, it ouglit to indicate that fact.-^ 
 All indorsements are presumed to have been made at 
 the place where the instrument is dated unless the con- 
 trary appears or is showm. This presumption is con- 
 clusive in favor of any holder in due course who had no 
 notice to the contrary before taking the instrument and 
 the contrary cannot be showTi as to him even if true, but 
 it has been held, as to others, that an undated indorse- 
 ment is to be regarded as having been made at the place 
 of residence of the indorser.^^ 
 
 Continuation of "Sec. 47. An instrument negotiable 
 negotiable j>^- jr^j, origin continues to be negotiable 
 
 until it has been restrictively indorsed 
 or dtsch.^rged by payment or otherwise." 
 
 An instrument which is negotiable when first issued 
 continues to be so until it has been restrictively indorsed 
 or until it has been discharged. It continues to be nego- 
 tiable even after maturity.^^ The only form of restric- 
 tive indorsement which entirely destroys its negotiable 
 character is that which forbids its further negotiation. 
 (Sec. 36.) A restrictive indorsement is made in the 
 manner described in Section 36 and confers upon the 
 holder such rights as are set forth in Section 37. The 
 discharge of the instrument may be effected by payment 
 or in any of the ways enumerated under Sec. 119. 
 Striking out **Sec. 48. The holder* may at any 
 
 indorsement. time strike out any indorsement which 
 
 "Kentucky. ^^ ^^^ necessary to his title. The in- 
 
 DORSER whose INDORSEMENT IS STRUCK OUT. AND ALL IN- 
 DORSERS SUBSEQUENT TO HIM, ARE THEREBY RELIEVED EROM 
 LIABILITY ON THE INSTRUMENT." 
 
 The holder, whether he be or be not himself an in- 
 dorser, mav strike out any indorsement upon the instru- 
 
 27. Cliemical Natl. Bk. vs. Kello^s, 183 N. Y. 92, 75 N. E. 1103, 
 
 111 Am. S. R. 717, 2 L. R. A. N. S. 299, 5 Ann. Cas. 158. 
 Mackintosh vs. Gibbs (N. J.). 74 Atl. 708. 
 
 28. Simpson vs. White, 40 N. H. 540. 
 
 29. Oakdale Mf-. Co. vs. Clarke, 29 R. I. 192, 199, 69 Atl. 681.
 
 § 48 NEGOTIATION 89 
 
 ment which is not necessary to prove his ownership of 
 the instrument. Those indorsements necessary to a 
 holder's title are the indorsements of the payee and of 
 subsequent special indorsers and persons named in any 
 special indorsements through whom the holder must 
 trace his ownership.^'^ The indorsement of the payee 
 should never be struck out, and, unless the payee has in- 
 dorsed in blank, the indorsement of all persons named 
 in special indorsements will be necessary to prove the 
 holder's title. But when a blank indorsement appears 
 upon the instrument, whether it be the indorsement of 
 the payee or any subsequent indorser, the holder may 
 strike out all subsequent indorsements and show title 
 under that blank indorsement.^^ And he may do this be- 
 fore or at the trial of an action upon the instrument.^- 
 Such indorsements as are necessary to show how the 
 holder could or did acquire title to the instrument are 
 usually readily ascertainable from the manner in which 
 they are made upon the instrument but the holder must 
 exercise considerable care in striking out the names of 
 those persons upon whom he does not intend to rely. 
 Parties whose names are struck out cease to be liable up- 
 on the instrument as do all those who indorsed subse- 
 quent to that one or those Avhose names are thus elimi- 
 nated. The indorsements of all persons named in special 
 indorsements may be necessary in order to show the hold- 
 er's title to the instrument,^^ and will be necessary if there 
 is no blank indorsement upon it. The occasion for strik- 
 ing out indorsements does not usually arise un- 
 til the instrument has been re-negotiated to a party who 
 
 30. Porter vs. Cushman, 19 111. 572. 
 
 31. Vanarsdale vs. Hax, 107 Fed. 878. 
 
 New Haven Mfg. Co.. vs. New Haven Pulp & Board Co., 76 
 
 Conn. 126. 
 Ensign vs. Fogg, 177 Mich. 317. 
 
 32. Carter vs. Butler, 264 Mo.' 306.
 
 90 THE NEGOTIABLE INSTRUMENTS LAW § 49 
 
 has previously negotiated it, or it returns to the holder 
 after an ineffectual attempt to collect it during which it 
 has obtained indorsements which are in no way neces- 
 sary to establish his relationship to the parties against 
 whom he seeks to enforce it. (See Sec. 121.) The hold- 
 er may then strike out his own indorsement even though 
 it be restrictive.^^ 
 
 Transfer ' ' Sec. 1:9. Wheke the holdee of an in- 
 
 without stkument payable to his order transfers 
 
 indorsement; jrj, ^^^ value without indorsing it, the 
 
 effect of. TRANSFER VESTS IN THE TRANSFEREE SUCH 
 
 "Illinois, „^^T^^ 
 
 Missouri. TITLE as the transferor had THEREIN, 
 
 ^Colorado, and the transferee acquires, in addi- 
 
 Alabama. tion, the right" to have the indorse- 
 
 fWisconsin. ment of the transferor.'' But for the 
 
 purpose of determining whether the transferee is a 
 holder in due course, the negotiation takes effect as 
 
 OF THE time when THE INDORSEMENT IS ACTUALLY MADE."" 
 
 The transfer of an instrument payable to order with- 
 out the indorsement of the payee or the indorsee named 
 in the special indorsement will convey the title to the 
 holder but it is not a negotiation. While the transferee 
 acquires title to the instrument by such a transfer and 
 may bring an action upon it, he does not acquire with its 
 possession the status of a holder in due course (Sec. 59) 
 until he secures the indorsement of his transferor. 
 
 When, upon the transfer of such an instrument, the 
 transferor neglects to indorse it before its transfer, he 
 should be required to do so as quickly as possible if his 
 indorsement was contemplated. Until it is obtained the 
 transferee will hold the instrument subject to all the de- 
 fenses existing between its other parties^* and subject to 
 the same defenses as if the inst rument were non-nego- 
 
 33. Jerman vs. Edwards, 29 App. C. (U. C.) 535. 
 
 34. Martz vs. State Natl. Bk., 147 App. Div. (N. Y.) 250. 
 Goodsell vs. McElrov Bros. Co., 86 Conn. 402. 85 A. 509. 
 Cantrell vs. Davidson. 180 Mo. A. 410, 168 S. W. 271. 
 Kiefer vs. Tolbert, 128 Minn. 519, 151 N. W. 529.
 
 § 50 NEGOTIATION 91 
 
 tiable, unless it is one which was originally payable to 
 bearer. Such an instrument is transferable by mere de- 
 livery even after it has become specially indorsed. (Sec. 
 30.) This section gives the person to whom an instru- 
 ment is so transferred the right to require his transferor 
 to indorse it and he may be compelled to do so by means 
 of an action in equity if he will not do it voluntarily. 
 
 The Act does not provide that any holder subsequent 
 to the transferee has this right but it is undoubted in 
 the transferee and he can compel the transferor to in- 
 dorse the instrument. However, equity will also inter- 
 vene in behalf of subsequent holders and any such could, 
 in a proper proceeding in equity, compel its indorsement. 
 If the indorsement is made later than the date of the 
 transfer of the instrument and it is questioned whether 
 or not the transferee is a holder in due course the nego- 
 tiation is considered to have taken effect upon the date 
 when the indorsement is actually made, and not the date 
 when the instrument was transferred to the holder. If 
 in the interval the transferee without indorsement re- 
 ceives notice of a defect in the instrument, or the title to 
 it, he will be bound by such notice even if he has paid full 
 consideration.^^ 
 
 When prior party ''Sec. 50. Where an instrument is 
 may negotiate xegotiated back to a prior party, SUCH 
 instrument. party may, subject to the provisions of 
 
 THis Act, re-issue and further negotiate the same. But 
 
 HE IS not entitled TO ENFORCE PAYMENT THEREOF AGAIXST 
 ANY INTERVENING PARTY TO WHOM HE WAS PERSONALLY 
 LIABLE." 
 
 A negotiable instrument may be re-issued or re-nego- 
 tiated by a party who has once before had it, if in its 
 course it returns to him, and it is then subject to all of 
 
 35. Benson vs. Abbott. 95 Ga. 69. 
 Weber vs. Orton, 91 Mo. 677. 
 Thompson-Houston El. Co. vs. Capitol El. Co., 56 Fed. 849.
 
 92 THE NEGOTIABLE INSTRUMENTS LAW § 50 
 
 the provisions of this Act as upon its first issue. If, how- 
 ever, any party to the instrument does again receive it 
 and indorses and negotiates it a second time, he cannot 
 enforce its payment against any person to whom he him- 
 self was personally liable on its first negotiation. This 
 includes parties who became such between his first nego- 
 tiation of the instrument and its return to him.^^ One 
 who indorsed the instrument without recourse is, there- 
 fore, not subject to this limitation.^'^ As to others, and 
 new parties the instrument is treated as if it were upon 
 its first issue and negotiation. If the instrument has re- 
 turned to the drawer or maker and it is re-issued by him, 
 the fact that it is in his hands is notice that it has run its 
 course^® but if he re-issues it before maturity, it pro- 
 ceeds as upon a new negotiation and in some jurisdictions 
 it is held that no party to its first negotiation, except 
 himself, is then liable to anyone who takes the instru- 
 ment upon its second issue. In others, it is held, upon 
 what seems to be the better reasoning, that all secondary 
 parties remain liable upon their contracts of endorse- 
 ment until the maturity of the instrument. ^^^ (See also 
 Sees. 119 and 121.) 
 
 36. Adrian vs. McCaskiU, 103 N. C. 182. 
 
 37. Froiieh vs. Barney, 23 N. C. 219. 
 
 38. Quinibv vs. Varnum, 190 Mass. 231, 76 N. E. 671. 
 Downinc; vs. Neeley (Tex. Civ. App.), 129 S. W. 1192. 
 First Nat. Bk. vs. Harris, 7 Wash. 139. 
 
 Aurora St. Bk. vs. Hayes-Eames El. Co., 88 Nebr. 187. 
 38a. See Note L. R. A. 1918 E. 170.
 
 §51 RIGHTS OF HOLDER ^'-^ 
 
 SUBDIVISION IV, 
 
 Eights of Holder. 
 
 Section 1 Section ' \ 
 
 51 Right of holder to sue — 56 What constitutes notice of 
 
 payment. defect. 
 
 52 AYhat constitutes a holder in 57 Riohts of holder in due 
 
 due course. course. 
 
 53 When person not deemed to 58 When subject to original de- 
 
 be a holder in due course. fenses. 
 
 54 Notice before full amount 59 Who deemed holder in due 
 
 paid. course. 
 
 55 When title defective. 
 
 The person who is in lawful possession of the instru- 
 ment as payee, indorsee, or bearer (Sec. 191), is the 
 holder and he is entitled to recover its proceeds and 
 may bring an action upon the instrument in his own 
 name, even if it is the property of another. In this 
 respect, a negotiable instrument differs from a simple 
 contract for the payment of money for of the latter, 
 in States w^here the real party in interest is required to 
 bring an action in his o\\m name, no assignment can be 
 made for the mere purpose of collection which will en- 
 able the assignee to sue upon the contract in his own 
 name. The holder of a negotiable instrument, however, 
 has sufficient title for the purpose of suit even if he is 
 not a holder for value or in due course, or has no inter- 
 est in the instrument or its proceeds. The Court will 
 never inquire whether he brings the action in his own 
 behalf or for another, and will not inquire into his right 
 of possession unless the question is raised as a matter 
 of defense upon an allegation of fraud or bad f aith.^ 
 Right of holder "Sec. 51. The holder of a negotl\ble 
 to sue; payment, instrument may sue thereox in his own 
 
 NAME ; AND PAYMENT TO HIM IN DUE COURSE DISCHARGES THE 
 
 I NSTRUMENT.''^ _^____ 
 
 1. Lowell vs. Bickford. 201 Mass. 543.
 
 94 THE NEGOTIABLE INSTRUMENTS LAW §52 
 
 If the person who is obliged to pay the instrument 
 pays a holder at or after its maturity even though he be 
 not the owner, he will have discharged the obligation 
 completely unless he knows or not knowing, is chargeable 
 with the duty to know that the holder has no authority 
 to receive the payment. The subject of payment will be 
 treated further under Section 88. 
 
 -^^^^ *'SeC. 52. A HOLDER IN DUE COURSE IS A 
 
 constitutes a holder who has taken the instrument 
 
 holder in due under the following conditions: 
 
 course. 1. That it is complete and regular 
 
 •Wisconsin. ^.p^^. ^^^ ^^^^. 
 
 2. That he became the holder of it before it was 
 overdue, and without notice that it had been previ- 
 ously dishonored, if such was the fact ; 
 
 3. That he took it in good faith and for value ; 
 
 4. That at the time it was negotiated to him he had 
 no notice of any infirmity in the instrument or defect 
 in the title of the person negotiating it.""" 
 
 This section defines the term '4iolder in due course" 
 which has been so frequently used up to this time. To 
 become entitled to the protection of the provisions of this 
 Act in favor of a holder in due course, every person who 
 takes a negotiable instrument must see to it that he does 
 so with the necessary qualifications. 
 
 One becomes a holder in due course if the instrument 
 he holds and seeks to enforce is first of all complete and 
 regular upon its face. This general statement would 
 seem to mean that the instrument must have been com- 
 plete when issued and negotiated in accordance with the 
 provisions of this Act and must not, on its face, show 
 that it has been altered,- and these essential requisites to 
 
 2. Manussicr vs. Wriyht, 158 111. A. 214. 
 
 Barton Sav2:s. Bk. Co. vs. Stephenson, 87 Vt. 433, 89 A. 639. 
 Holbart vs. Lauretson," 34 S. D. 267. 
 Marion Natl. Bk. vs. Russell. 14 Kv. L. 368. 
 Critten vs. Chemical Bk.. 171 N. Y. 219, 231. 
 In re Philpot's Est., 151 N. W. (Iowa) 825.
 
 §52 EIGHTS OF HOLDER 95 
 
 his title will appear with appropriate explanations at 
 their proper places. If there are such ambiguities or 
 contradictions in the instrument that they are irrecon- 
 cilable, or they indicate that either one of two interpreta- 
 tions may be applied with equal certainty or uncertainty, 
 this would constitute an irregularity which would destroy 
 its negotiability if they affect the sum payable or the 
 place where, time when, or the parties to whom the in- 
 strument is payable. (Subd'n 1.) The holder must be 
 prepared to show that he acquired the instrument before 
 it matured and if it had previously been dishonored or re- 
 pudiated, he must be prepared to show that he had no 
 notice of its dishonor. He is not obliged to prove these 
 qualifications unless challenged, but if a lack of them is 
 alleged against him, and some proof offered to sustain 
 the allegation, he will have the burden of proving that 
 he is a holder in due course. 
 
 If an instrument which is payable on demand is offered 
 for negotiation an unreasonable length of time after its 
 issue, the person who takes it will not be considered a 
 holder in due course. The term ''due course" supposes 
 that the instrument has passed in a single transaction, or 
 passes steadily and regularly from one person to another 
 in a series of regular business transactions, and is trans- 
 ferred under the usual customs and usages of business, 
 thus including any purchase in good faith for value of a 
 note or bill before maturity.^ If such an instrument stops 
 in its course for an unreasonable length of time in the 
 possession of one holder or continues to be negotiated for 
 an unreasonable length of time after its issue, without 
 presentment and demand for pay ment, a suspicion arises 
 
 3. Tischer vs. Merea, 138 Ind. 586, 21 N. E. 316. 
 Kellogs; vs. Curtis, 69 Me. 212, 31 Am. R. 273. 
 First Natl. Bk. vs. Flath, 10 N. D. 281, 286, 86 N. W. 867. 
 Kimbro vs. Lytle, 10 Yerger (Tenn.), 417, 31 Am. D. 585.
 
 96 THE NEGOTIABLE INSTRUMENTS LAW § 52 
 
 of irregularity, or that some infirmity may have caused 
 the delay in presenting or negotiating it when it is again 
 offered for negotiation. The rigidity with which the Act 
 is applied to the enforcement of the duties of maker, 
 drawer, acceptor, and indorser of a negotiable instrument 
 is not relaxed when its provisions, by which his standing 
 is to be determined, are applied to the holder. If the 
 holder is a "holder in due course" he will hold the in- 
 strument free from all defenses Avhich prior parties 
 might have among themselves (Sec. 57) and a familiarity 
 with the provisions of this subdivision is of the utmost 
 importance. 
 
 The holder must also have taken the instrument in good 
 faith and for value. Value here does not mean full value, 
 but he must have given some consideration for its trans- 
 fer, or have acquired the instrument through some one 
 who did, and that consideration must have been suffi- 
 cient to sustain his right to recover upon the instrument. 
 (For definition of value see Sees. 25 and 191.) 
 
 The discount of negotiable paper by a bank will not 
 constitute the bank a holder in due course, under this 
 section, when it is shown that the proceeds have been 
 placed to the credit of its customer and remain in the 
 bank.* Nor does the mere crediting of a check if the 
 customer's account continues to hold sufficient money to 
 pay it if it is dishonored,^ or the item is credited for 
 collection.^ But if the customer checks against the dis- 
 count or deposit, or the bank incurs a liability upon the 
 items, it then becomes a holder for value. '^ Likewise if 
 
 4. Albany Co. Bank vs. Ice Co., 92 App. Div. (N. Y.) 47. 
 Merchants Bk. vs. Santa Maria Sue:ar Co., 162 App. Div. (N. 
 
 Y.) 248. 
 Miller vs. Norton, 114 Va. 610. 
 McKniii^ht vs. Parsons, 136 la. 390. 
 
 5. Citizens Bk. vs. Cowles, 180 N. Y. 346. 
 
 6. Bank of America vs. Waydell, 187 N. Y. 115. 
 
 7. Montrose Savgs. Bk. vs. Claussen, 137 Iowa, 73.
 
 §52 RIGHTS OF HOLDER 97 
 
 the proceeds are appropriated by the bank to the de- 
 positor's indebtedness to it before receiving notice of 
 any infirmity in the instrmnent or title of its transferor,^ 
 or the bank lends its own credit for the customer's 
 benefit.^ Payment of draft with bill of lading attached by 
 crediting the drawer's checking account will constitute 
 the bank a holder in due course, whether or not the 
 drawer had checks against the deposit at time of the 
 credit.^" 
 
 And, lastly, the holder must not have had notice at the 
 time it was negotiated to him, or before that time, that 
 the instrument is not all right and just what it purports 
 to be, or that the person negotiating it had not a good 
 title to it. The provisions of Section 55 determine when 
 the title is defective. What is to be regarded as notice 
 will be determined by Sec. 56. If none of the defects 
 enumerated in those two sections exist in the title of the 
 holder, and he has not acquired the instrument contrary 
 to the provisions of the next section, he will be deemed a 
 "holder in due course" and can require payment regard- 
 less of any infirmities or defects in the instrument or 
 its prior negotiation and recover against all prior in- 
 dorsers as well as against the persons primarily liable 
 upon it, except those whose signatures have been forged 
 or such as have qualified their liability. To hold the in- 
 dorsers he will be required to observe the provisions re- 
 specting presentment, demand and notice given under 
 Sees. 70 to 118. 
 
 The extent to w^hich the execution and delivery or the 
 negotiation of an instrument on Sunday is affected by 
 the fact that it is done on that day and its effect upon 
 the rights of the holder, will depend altogether upon 
 
 8. City Dep. Bk. vs. Green, 130, Iowa, 384. 
 
 9. Elgin Banking Co. vs. Hall, 199 Tenn. 548 ; 108 S. "W. 1068. 
 
 10. Tapee vs. Varley, 184 Mo. App. 470; 171 S. W. 19.
 
 98 THE NEGOTIABLE INSTRUMENTS LAW § 53, 54 
 
 other statutory enactment. If by statute in the State 
 where the transaction occurs it is made unlawful to 
 transact business on Sunday, then the execution or ne- 
 gotiation of the instrument, if completed on that day, 
 will be illegal and void as between the parties. To affect 
 subsequent holders, however, this infirmity must be ap- 
 parent from the instrument itself. ^^ 
 
 A promissory note providing that default in payment 
 of any installment of the principal or interest shall cause 
 the whole note to become due is overdue upon the fail- 
 ure to pay the matured installment, and one taking it 
 after such default with notice, or if it is apparent upon 
 the face of the instrument, will not be a holder in due 
 course.^^ (See Sec. 2.) 
 
 When person not ' ' Sec. 53. Where an instrument pay- 
 deemed holder in ^ble qn demand is negotiated an unrea- 
 due course 
 
 sonabi^e length of time after its issue, 
 the holder is not deemed a holder in due course. ' ' 
 
 What is an unreasonable length of time is not estab- 
 lished by this act at any fixed period nor has any defi- 
 nite rule applicable to all cases been laid down by the 
 courts. In determining what is a reasonable or an unrea- 
 sonable delay the particular circumstances of each case 
 must be taken into account. (Sec. 193.) 
 
 Parties to the instrument, other than those primarily 
 liable, will be discharged by any unreasonable delay in 
 presenting and demanding payment of an instrument 
 payable on demand. See Sections 7-71-144 and 193 for 
 more on this subject. 
 
 Notice hefore "Sec. 54. When the transferee re- 
 
 full amount paid. cei^t:s notice of any infirmity in the in- 
 strument OR defect in the title of the person nego- 
 tiating the same before he has paid the full amount^ 
 agreed to be paid t herefor, he will be deemed a holder 
 
 11. Gilman vs. Berry, 59 N. H. 62. 
 
 12 Hodge vs. Wallace, 129 Wis. 84; 108 N. W. 212; 116 A. 
 S. R. 938.
 
 §55 RIGHTS OF HOLDER 99 
 
 IN DUE COURSE ONLY TO THE EXTENT OF THE AMOUNT THERE- 
 TOFORE PAID BY HIM." 
 
 It has already been said, under Sec. 52, that to become 
 a holder in due course, one must have acquired the 
 instrument without notice of any defects or infirmities 
 in its title. If it should happen, as it sometimes does, 
 that the transferee has already paid a part of the con- 
 sideration for its transfer to him before becoming aware 
 of the defect which exists in the instrument or in the 
 title of the person who negotiates it to him, he will then 
 be considered a holder in due course only to the extent of 
 the amount he paid before the defect or infirmity became 
 known to him. If after having made a partial payment 
 on account of the transfer of the instrument, he learns of 
 its imperfection, and notwithstanding that fact pays the 
 balance agreed to be paid for the instrument he mil not 
 be in the position of a holder in due course as to the 
 amount he pays after notice, but he is such only to the 
 amount of his payment before notice. ^^ But knowledge 
 alone is not necessarily notice, and what is deemed to be 
 ''notice" is to be determined by the application of the 
 provisions of Sec. 56. 
 
 When title ''Sec. 55. The title of a person who 
 
 defective. negotiates an instrument is defective 
 
 «Wiscoiisiii. within the meaning of this act when he 
 
 obtained the instrument, or any signatures thereto, by 
 
 FRAUD, duress, OR FORCE AND FEAR, OR OTHER UNLAWFUL 
 MEANS, OR FOR AN ILLEGAL CONSIDERATION, OR WHEN HE NE- 
 GOTIATES IT IN BREACH OF FAITH, OR UNDER SUCH CIRCUM- 
 STANCES AS AMOUNT TO A FRAUD. ' ' " 
 
 When the instrument is obtained or negotiated, or any 
 signature upon it is obtained in the manner indicated in 
 this section, the title of the person who so procured the 
 instrument or signature is defective. Any person who 
 
 14. Dresser vs. Missouri, etc R. R. Cons. Co., 93 U. S. 93.
 
 100 THE NEGOTIABLE INSTRUMENTS LAW § 55 
 
 takes the instrument with notice that these defects or 
 any of them exist is also affected by them and will not be 
 considered a holder in due course. The existence of any 
 of them will defeat his right to recover upon the instru- 
 ment against any person who became a party under such 
 circumstances, if it is shown that he knew of them at the 
 time or before he acquired the instrument or if, not 
 knowing of their existence, he is chargeable in law with 
 a duty to know. (See Sec. 56.) 
 
 Fraud consists of any wilful deception by which the 
 execution, indorsement, or negotiation of the instrument 
 is obtained. Whether the fraud is a positive fraud, con- 
 structive fraud, a fraud in law, or the circumstances are 
 such as amount to fraud, must be determined in each par- 
 ticular case, but the following essential elements must 
 exist in it : 
 
 To be the subject of an action, the general rule is that 
 the person chargeable with the fraud must have made a 
 material false representation;^^ he must have known 
 when he made it that it was false, or have made it reck- 
 lessly as a positive assertion, without any knowledge of 
 or in wilful disregard of its truth or falsity.^^ He must 
 have made the false or reckless representation with the 
 intention that it should be acted upon by the person 
 whom he expected to influence by it and the fraudulent 
 representation must actually have been acted upon by 
 
 15. Hall vs. Grayson Co. Natl. Bk., 36 Tex. Civ. App. 317, 81 
 
 S. W. 762. 
 Peden vs. Birkle, 27 Colo. A. 323, 148 P. 913. 
 
 16. Hale vs. Citizens Bank, 111 Ark. 258, 163 S. W. 775. 
 
 Bank vs. Hale, 104 Ark. 388, 149 S. W. 845. 
 
 Hodgens vs. Jennings, 148 App. Div. (N. Y.) 879, 133 N. Y. 
 S. 584.
 
 §55 RIGHTS OF HOLDER 101 
 
 the party using this defense/' who must thereby have 
 suffered loss or injury.^^ 
 
 The concealment of any material fact which it is a 
 duty to disclose will have the same effect as, and be equiv- 
 alent to a positive misrepresentation. Thus, when one 
 obtains or procures the execution or indorsement of a 
 negotiable instrument, or induces or procures any one 
 to become a party to it without disclosing all material 
 facts in relation to the instrument M^hich he owes a duty 
 to disclose to him, he will have perpetrated a fraud upon 
 him and if he thereby obtains title to the instrument his 
 title will be defective. ^^ 
 
 Duress is a condition which exists when one is induced 
 or compelled by the unlawful act of another to make a 
 contract or to do or forego some act under circumstances 
 which overcome the mind and will of a person of ordi- 
 nary^ firmness and deprive him of its free exercise. ^*^ If 
 a signature to a negotiable instrument is procured under 
 unlawful threats of bodily harm or of harm to business^_ 
 reputation and standing, or other serious harm or loss, 
 either to the signer or to some other person, a member 
 of his family or near kinsman, and the one signing is 
 thereby actually put in fear of the threatened danger 
 and for that, and no other reason, makes the signature 
 or indorsement, not otherwise being obliged to do so, 
 
 17. Champion Foundry, etc., Co. vs. Heskett, 125 Mo. A. 516, 
 
 102 S. W. 1050. 
 Hurst vs. Lee, 143 App. Div. (N. Y.) 614, 127 N. Y. S. 1040. 
 Bank vs. Hale, 104 Ark. 388, 149 S. W. 845. 
 
 18. Keller vs. Johnson, 11 Ind. 337, 71 Am. D. 355. 
 Strickland vs. Parlin. etc., Co., 118 Ga. 213, 44 S. E. 997. 
 Bank of Commerce vs. Brayles, 16 N. M. 414, 120 P. 670. 
 
 19. In re Lawrence, 166 Fed., 239, 92 C. C. C. A. 251. 
 Hodge vs. Smith, 130 Wise. 326, 110 N. W. 192. 
 
 20. Cribbs vs. Sowle, 87 Mich. 340, 49 N. W. 587.
 
 102 THE NEGOTIABLE INSTRUMENTS LAW § 55 
 
 such force and fear constitute duress^^ and the title of 
 a person taking the instrument under these circum- 
 stances, or with notice of their existence, is defective. 
 And if the instrument or any signature upon it is ob- 
 tained by other unlawful means, the title of any holder 
 chargeable with notice of the unla^^'ful means by which 
 the instrument or signature was obtained, is defective. 
 
 If the consideration for the instrument or its negotia- 
 tion is illegal, that is, one not lawful, the person obtain- 
 ing the instrument for such unlawful consideration does 
 not obtain a good title to it. Eead what is said under 
 Section 5 in regard to illegal provisions in the instru- 
 ment. 
 
 No person has a right to negotiate the instrument in 
 breach of faith; which means, that when one has the in- 
 strument for a specific purpose, he has no right, without 
 permission, to divert it to a different use. And if any 
 one obtains the instrument, or procures it to be indorsed, 
 or negotiates it under such circumstances as amount to 
 fraud, he cannot obtain or convey a good title to the 
 transferee who is chargeable with notice of its fraudu- 
 lent procurement or negotiation. ^^ 
 
 The defense of want of title cannot be used to defeat 
 the enforcement of the instrument in the hands of one 
 who would otherwise be a holder in due course, unless it 
 
 21. Bush vs. Brown, 149 Ind. 573, 19 Am. Rep. 695. 
 Swear vs. Carr, 76 Ga. 322, 2 A. S. R. 44. 
 
 Com. vs. Reffitt, 149 Ky. 300, 148 S. W. 48, 42 L. R. A. (N. 
 
 S.) 329 and note. 
 Burton vs. McMillan, 52 Fla. 469, 42 So. 849. 
 Fire Ins. Co. vs. Hull, 51 Oh. St. 270, 37 N. E. 1116. 
 Hodge vs. Wallace, 129 Wis. 84, 108 N. W. 212, 116 A. S. 
 
 R. 938. 
 AYiliiamson, Halsell, Frazier Co. vs. Ackerman, 77 Kas. 502. 
 Fountain vs. Bigliam, 2.35 Pa. St. 35. 84 Atl. 131. 
 
 22. Gardner vs. Beacon Tiaist Co., 190 Mass. 27, 76 N. E. 445, 
 
 112 A. M. S. R. 443, 2 L. R. A. (N. S.) 767, 5 Ann. Cas. 
 581 and note 
 Larapman vs. Lampman, 118 Iowa, 140. 143, 91 N. W. 1042.
 
 §56 RIGHTS OF HOLDER 103 
 
 is shown that he had knowledge of it and the next section 
 Ijrovides wliat shall constitute notice. 
 
 What constitutes "Sec. 56. To constitute notice of an 
 notice of defect, usteikmity in the instrument ob defect 
 IN the title of the person negotiating the same, the 
 person to whom it is negotiated must have had actual 
 knowledge of the infirmity or defect, or knowledge of 
 such facts that his action in taking the instrument 
 amounted to bad faith. ' ' 
 
 A mere suspicion of the existence of an infirmity in an 
 instrument or in the holder's title is not notice that such 
 infirmity exists. Nor is mere rumor, though it has come 
 to be heard by the person who is about to take the in- 
 strument, before doing so. And if the suspicion and 
 rumors which attend the instrument are such as would 
 place any ordinarily prudent man on his g-uard, or any 
 other circumstances surrounding the transaction are 
 such as Avould warn him, or any peculiarity about the bill 
 itself or the parties to it is such as would put an ordi- 
 narily prudent man upon guard against fraud or irregTi- 
 larity, these are not sufficient, of themselves, to defeat 
 the holder's right of recovery upon the instrument. 
 Such things are not considered to be the equivalent of 
 actual notice of infirmity in the instrument or the hold- 
 er's right to negotiate it. Unless he has actual know4- 
 edge of the infirmity or defect in the title of the person 
 from whom he takes the instrument, or unless the defect 
 in the instrument is so cogent and obvious that his ac- 
 tion in taking it, notwithstanding the obvious infirmity 
 in it or defect in the holder's title, amounts to bad faith, 
 the transferee is not chargeable with notice.^^ But if he 
 
 23. Fillebrown vs. Havward, 190 Mass. 472. 77 N. E. 4o. 
 Goodman vs. Simonds, 20 How. 343, 15 L. Ed. 934. 
 Youni? vs. Lowry, 192 Fed. 825, 113 C. C. A. 149. 
 Eoillv vs. McKinnon. 159 Fed. 78. „ ^ ^ * .-.t 
 
 Union Natl. Bk. vs. Neill, 149 Fed. 711, '9 C. C A. 417. 
 Natl. Bk. vs. Weston, 172 N. Y. 250, 64 N. E. 949.
 
 104 THE NEGOTIABLE INSTRUMENTS LAW § 57 
 
 has reason to suspeet fraud or irregularity and he fails to 
 investigate for fear his suspicions will be confirmed, or 
 his investigation disclose a defense to the instrument, he 
 will not be a purchaser in good faith if he then takes it.^^ 
 
 "Sec. 57. A holder in due couese 
 Rights of holder holds the instrument free from any 
 in due course. defects of title of prior parties, and 
 
 fl TllT nmR. 
 
 ^Wisconsin free from defenses available to prior 
 
 parties, among themselves,* and may en- 
 force payment of the instrument for the full amount 
 against all parties liable thereon. ^'^ 
 
 Having become a holder in due course, the person who 
 has actual or constructive possession of the instrument 
 has the absolute right to enforce it against all persons 
 liable upon it. He is not concerned with any defects or 
 imperfections in the instrument or in the manner of its 
 procurement which may amount to matters of defense 
 among the parties themselves and all parties are liable to 
 him for the full amount of the instrument, regardless of 
 their rights and defenses against each other. His title 
 and possession are absolute and he can require pay- 
 ment from all persons whose names are upon the instru- 
 ment except those who have qualified their indorsements 
 by the words "without recourse," or words of equiva- 
 lent meaning (Sec. 38), and those whose names upon it 
 were forged or made mthout authority, or unless the in- 
 strument was void at its inception because made in vio- 
 
 Canajoharie Natl. Bk. vs. Defendorf, 123 N. Y. 191, 25 N. E. 
 
 402, 10 L. R. A. 676 and note. 
 Kitchen vs. Loudenback, 48 Oh. St. 377, 26 N. E. 979, 29 Am. 
 
 S. R. 540. 
 Johnson vs. Way, 27 Oh. St. 374. 
 Kavanagh vs. Bk. of America, 239 111. 404, 88 N. E. 171. 
 
 24. L3i;le vs. Lansing, 147 U. S. 59, 71, 13 S. Ct. 254, 37 L. Ed. 78. 
 In re Stanford Clothing Co.. 187 Fed. 172. 
 In re Hopper-Morgan Co., 156 Fed., 525, 19 Am. Bankr. R. 518.
 
 §58 RIGHTS OF HOLDER 105 
 
 lation of statute law, a (iiiestion upon which, however, tne 
 decisions are conflicting.^^ (Sec. 23.) 
 
 Wten subject to "Sec. 58. In the hands of any hold- 
 original defenses. ^^ other than a holder in due course, a 
 "Illinois, Wis- negotiable instrument is subject to the 
 
 bA^^lf' same defenses AS IF IT WERE NON-NEGO- 
 
 Alabama. tiable. But a holder who derives his 
 
 TITLE through A HOLDER IN DUE COURSE, AND WHO IS NOT 
 HIMSELF A PARTY TO ANY FRAUD" OR ILLEGALITY AFFECTING 
 THE INSTRUMENT, HAS ALL THE RIGHTS OF SUCH'' FORMER 
 HOLDER IN RESPECT OF ALL PARTIES PRIOR TO THE LATTER". ' ' 
 
 The defenses which the original parties to an instru- 
 ment, as the maker and payee of a promissory note, can 
 make among themselves are called "original defenses" 
 and a negotiable instrument is always subject to these 
 while in the hands of the original parties, to the same ex- 
 tent that an instrument would be which is not negotiable. 
 Any holder other than a holder in due course, also takes 
 the instrument subject to these defenses. But a holder 
 who is not a holder in due course, having acquired his 
 title through a holder in due course and not himself 
 a party to any fraud or any of the other infirmities which 
 affect the instrument as provided in Sees. 55 and 56, ob- 
 tains with the transfer to him through the holder in due 
 course, all the rights which that holder had against par- 
 ties who signed the instrument before he became a party 
 to it. By the transfer to a holder in due course the char- 
 acter of the instrument as an available security became 
 established. The subsequent transferee, therefore, even 
 though he purchase with notice, acquires all the rights 
 of the holder in due course and is himself so considered. 
 He can stand on that holde r's title and enforce the in- 
 
 25. Alexander vs. Hazelrigsc, 123 K3^ 677. ^ 
 
 Citizens Bk. vs. Crittenden Record Press. loO Ky. t)34. 
 Sabine vs. Paine, 166 App. Div. (N. Y.) 9. 
 Schlessinger vs. Kelly, 114 App. Div. (N. Y.) 546. 
 Schlesinger vs. Lehmeier, 191 N. Y. 69.
 
 106 THE NEGOTIABLE INSTRUMENTS LAAV § 59 
 
 strument against all parties who became parties prior to 
 that holder in due course through whom he acquired his 
 title.-« 
 
 Who deemed ''Sec. 59. Every holdee is deemed 
 
 holder in due prima facie to be a holder in due course; 
 
 ^^^'^^^^ BUT WHEN IT IS SHOWN THAT THE TITLE OF 
 
 ANY PERSON W^HO HAS NEGOTIATED THE INSTRUMENT WAS DE- 
 FECTIVE, THE BURDEN IS ON THE HOLDER TO PROVE THAT HE 
 OR SOME PERSON UNDER WHOM HE CLAIMS ACQUIRED THE 
 TITLE AS A HOLDER IN DUE COURSE. BuT THE LAST MEN- 
 TIONED RULE DOES NOT APPLY IN FAVOR OF A PARTY WHO BE- 
 CAME BOUND ON THE INSTRUMENT PRIOR TO THE ACQUISI- 
 TION OF SUCH DEFECTIVE TITLE." 
 
 Every holder of an instrument is considered to be a 
 holder in due course until the contrary is shown to be 
 true. And when it is sho^\Ti that the title was defective 
 in the hands of any person who negotiated the instru- 
 ment it is made the duty of that one seeking its enforce- 
 ment to meet and overcome the proof offered and to show 
 that either he himself or some other person under whom 
 he claims became a holder in due course, that is, acquired 
 the instrument under the circumstances and free from 
 the imperfections affecting the title which are enumer- 
 ated in Sec. 55. The holder cannot be required to furnish 
 this proof and his position cannot be assailed, however, 
 by any one who became a party to the instrument before 
 the alleged defect in the title occurred. Such person is 
 not concerned with imperfections occurring after he be- 
 came a party to the instrument and cannot take advan- 
 tage of them. 
 
 A\Tien the instrument concerning which inquiry is 
 made to determine the holder's qualification as a holder 
 
 26. Comstock vs. Buckley, 141 Wis. 228. 233, 123 S. W. 415, 135 
 Am. S. R. 34. 
 Cover vs. Mvers. 75 Md. 406. 
 
 Black vs. 1st Natl. Bk. Westminister. 96 Md. 399. 
 McMuiTav vs. McMun-av, 258 Mo. 405, 417. 
 Horan vs. Mason, 141 App. Div. (N. Y.) 89.
 
 §59 RIGHTS OF HOLDER 107 
 
 in due course is one payable on demand, another ele- 
 ment which, however, does not concern title, must be con- 
 sidered. It is as to the time at which the holder ac- 
 quired the instrument and if it is shown that he ac- 
 quired it an unreasonable length of time after its issue, 
 or last negotiation, if a bill, he will not be considered to 
 be a holder in due course. (Sec. 53.) 
 
 Upon tlie question whether or not the payee is ever to 
 be considered a holder in due course it has not been pos- 
 sible to determine with any degree of assurance from the 
 decisions interpreting the Act, whether he is or is not 
 to be regarded as such a holder. Perhaps it may be best 
 said that he is not in all cases, but it seems to be reason- 
 ably well established that the payee of an instrument is- 
 sued to him as the creditor of a person to whom the 
 maker is indebted is to be regarded as a bona fide pur- 
 chaser, holder in due course, and that the instrument in 
 his hands is not subject to defenses ordinarily available 
 between original parties. In the cases, this conclusion is 
 reached by regarding him in the position he Avould oc- 
 cupy if he had received the instrument b;v indorsement 
 from the creditor.^" 
 
 An examination of the cases cited will reveal that the 
 question of the payee's status as a holder in due course 
 always arises upon instruments on which there are either 
 plural primary parties, or such as have been indorsed 
 for accommodation. Upon such instruments it has been 
 urged with success in some jurisdictions that the payee 
 can never be a holder in due course and take the instru- 
 
 27. Lamson vs. Beard. fl4 Fed. 30, 39, 36 C. C. A. 56, 45 L. R. A. 
 
 822. 
 
 So. Boston Iron Co. vs. Brown, 63 Me. 139. 
 
 Cagle vs. Lane, 49 Ark. 465, 5 S. W. 790. 
 
 City of Adrian vs. Whitney Center Natl. Bk., 180 Mich. 171. 
 
 Regester's Sons Co. vs. Reed, 185 Mass. 226.
 
 108 THE NEGOTIABLE INSTRUMENTS LAW § 59 
 
 ment free from the original defenses. ^^ In others it is 
 held, and it seems to me with the better reason, that if 
 the payee takes the instrument at its initial delivery with- 
 out any notice of equities existing between its other par- 
 ties he is, by virtue of this section and of Section 55 a 
 holder in due course.^^ 
 
 28. St. Charles Savgs. Bk. vs. Edwards, 243 Mo. 553. 
 Builders Lime & Ceni. Co. vs. Weimer, 170 Iowa, 444, 161 
 
 N. W. 100. 
 
 29. Liberty Trust Co. vs. Tilton, 217 Mass. 462. 
 Brown vs. Rowan, 154 N. Y. S. 1098. 
 
 Ex Parte Goldberg & L., 191 Ala. 356, 67 So. 839, L. R. 
 A. 1915 F. 1159.
 
 60 LIABILITIES OF PARTIES 109 
 
 SUBDIVISION V, 
 
 
 Liabilities of Parties. 
 
 Sect: 
 
 Lou 
 
 Sect 
 
 ion 
 
 60 
 
 Liability of maker. 
 
 65 
 
 Warranty where negotiation 
 
 61 
 
 Liability of drawer. 
 
 66 
 
 by delivery, etc. 
 Liability of general indorser. 
 
 62 
 
 Liability of acceptor. 
 
 67 
 
 Liability of general indorser 
 
 63 
 
 When person deemed 
 
 in- 
 
 where paper is negotiable 
 
 
 dorser. 
 
 
 by deliverj^ 
 
 
 
 (iS 
 
 Order in which indorsers are 
 
 64 
 
 Liability of in-egular 
 
 in- 
 
 liable. 
 
 
 dorser. 
 
 69 
 
 Liability of agent or broker. 
 
 The parties to a negotiable instrument, to whom lia- 
 bility attaches, are classified as the maker, the drawer, 
 the acceptor and the indorser. All persons Avho assume a 
 liability upon the instrument become parties as one of 
 these, unless by words of special qualification they as- 
 sume a different liability upon it. Their liability is in the 
 nature of a contract and like any other contract it is to 
 be interpreted in accordance with the language used in 
 the instrument (see Sec. 10). Whether expressed or not, 
 however, certain liabilities attach to the parties to a ne- 
 gotiable instrument and what these are and what admis- 
 sions are deemed to be implied from their signatures 
 are provided in this and the following nine sections of 
 the Act. 
 
 Liability of ''Sec. 60. The maker of a negotiable 
 
 maker. instrument by making it engages that 
 
 HE WILL PAY IT ACCORDING TO ITS TENOR, AND ADMITS THE 
 EXISTENCE OF THE PAYEE AND HIS THEN CAPACITY TO INDORSE. 
 
 The maker of a promissory note agrees that he will 
 pay the instrument according to its tenor, that is, ac- 
 cording to the manner in which he states in the instru- 
 ment that he will do so. By placing his signature upon
 
 110 THE NEGOTIABLE INSTRUMENTS LAW § 61 
 
 the instrument payable to a named payee or his order he 
 admits, by that act alone, that the payee whom he names 
 has a legal existence^ and then has the right and the legal 
 capacity to indorse it, which means that he is not under 
 any legal disability that would render him incompetent 
 to indorse the instrument,^ and, if the instrument is ne- 
 gotiated into the hands of a holder for value, the maker 
 cannot afterward deny either of these admissions (Sec. 
 57). He usually signs the instrument upon its face but if 
 his signature appears elsewhere with identifying words, 
 or if it can be determined from the context of the instru- 
 ment that he intended to sign as an original promisor, 
 he will be liable as maker.^ 
 
 Liability of ,.g g-^ rpjjj, DRA^vER BY DRAWING THE 
 
 drawer. 
 
 ^Illinois INSTRUMENT ADMITS THE EXISTENCE OF THE 
 
 Colorado. PAYEE AND HIS THEN CAPACITY TO INDORSE; 
 
 AND ENGAGES THAT ON DUE PRESENTMENT THE INSTRUMENT 
 WILL BE ACCEPTED AND PAID, OR BOTH, ACCORDING TO ITS 
 TENOR, AND THAT IF IT BE DISHONORED, AND THE NECESSARY 
 PROCEEDINGS ON DISHONOR BE DULY TAKEN, HE WILL PAY THE 
 AMOUNT THEREOF TO THE HOLDER, OR TO ANY SUBSEQUENT^ 
 INDORSER WHO MAY BE COMPELLED TO PAY IT, BUT THE DRAW- 
 ER MAY INSERT IN THE INSTRUMENT AN EXPRESS STIPULATION 
 NEGATIVING OR LIMITING HIS OWN LIABILITY TO THE HOLDER. 
 
 The drawer of a bill of exchange by the act of draw- 
 ing and issuing the bill, like the maker of a promissory 
 note, (Sec. 60), impliedly admits that the payee he names 
 exists and at the time of the delivery of the bill to him has 
 the right to indorse it and is under no legal disability 
 which would prevent him from doing so. He also en- 
 gages by the act of drawing the bill that the person upon 
 whom he draws will either accept or pay the instrument 
 according to its terms and effect, or do both, when it is 
 
 1. Mex. Asph. Pav. Co. vs. Love, 73 111. A. 250. 
 
 2. Bank of Commerce vs. Rogers, 23 Ont. L. (Canada) 109. 
 Smith vs. Marsaek, 6 C. B. (Eng.) 486. 
 
 3. White vs. HoAvland, 9 Mass. 314, 6 Am. Dec. 71.
 
 § 62 LIABILITIES OF PARTIES 111 
 
 duly presented to him. In addition to this, lie agrees by 
 the act of drawing that if the bill is not accepted or paid 
 by the drawee and it thereby becomes dishonored, and if 
 the necessary proceedings to charge him are taken as re- 
 quired by other provisions of this Act (Sees. 89 to 118), 
 upon its dishonor, he will then himself pay the amount 
 called for by the bill to the holder, or to any indorser who 
 may have been ol)liged to pay it. 
 
 This promise is termed an implied promise for the 
 reason that it is understood and agreed to by the drawer 
 by the act of drawing and issuing the bill quite as effect- 
 ually as though it were expressed in the language of the 
 instrument. Though there is no provision in this sec- 
 tion or elsewhere in the Act to the effect that the drawer 
 of a bill or check, by the act of drawing, admits his in- 
 debtedness to the payee in at least the sum for which the 
 bill is drawn, the fact that he does so is firmly estab- 
 lished.'^ 
 
 The drawer may write upon the bill any words indicat- 
 ing that he does not undertake or agree to the promises 
 which are implied from the nature of the instrument he 
 signs and if he does so, or writes other words which lim- 
 it or qualify his liability to the holder, he cannot be held 
 to any greater liability than that to which he limits him- 
 self. 
 
 Liability of ''SeO. 62. The ACCEPTOR BY ACCEPTING 
 
 acceptor. ^^^^ instrument engages that he will 
 
 Missouri, pay tt according to the tenor of his ac- 
 
 ceptance AND ADMITS : 
 
 1 . The existence of the drawer, the genuineness of 
 
 his signature, and his CAPACITY'' AND AUTHORITY TO DRAW 
 
 the instrument and 
 
 2. The existence of the payee and his'' then ca- 
 pacity to indorse. 
 
 4. McKenzie vs. Barrett. 148 111. A. 414.
 
 112 THE NEGOTIABLE INSTRUMENTS LAW § 62 
 
 The person who is named in the bill as the one upon 
 whom it is drawn and who is to indicate when it is pre- 
 sented to him whether or not he will pay it at its matur- 
 ity is, before acceptance, called the drawee. Upon ac- 
 ceptance of the instrument he becomes the acceptor. By 
 his acceptance he admits everything essential to the va- 
 lidity of the bill,^ and promises to pay it according to its 
 terms and according to the purport and effect of his ac- 
 ceptance, even if he has no funds of the drawer in his 
 hands at its maturity.*^ If the bill is payable at a time 
 after sight and the drawee intends to pay it, he is re- 
 quired to write his acceptance and sign it and he usually 
 does this by writing his name upon the instrument with 
 words above it indicating that he assents to the drawer's 
 order. (Sec. 132, 133.) 
 
 By this act he promises and agrees just as fully as 
 though it were expressed in words in the language of the 
 bill, that he will pay the instrument according to the tenor 
 of his acceptance on the day when it becomes due. The 
 act of accepting is also his admission that the drawer 
 exists, that the latter had the right and the power to draw 
 the instrument, and is an admission that the person 
 named as the payee, to whom the instrument is to be paid, 
 exists and has the right and the power to indorse the bill. 
 The acceptor cannot afterward deny the things which his 
 acceptance expressly or impliedly admits if the bill is in 
 the hands of a holder for value or in due course."^ (Sec. 
 570 
 
 5. Ragsdale vs. Gresham, 141 Ala. 308, 37 S. 367. 
 
 6. Jarvis vs. Wilson, 46 Conn. 90, 33 Am. R. 18. 
 
 7. Smith vs. Marsack, 6 C. B. 486. 
 
 Natl. Bank of Commerce vs. Amn. Natl. Bank, 148 Mo. A. 1,. 
 
 127 S. W. 429. 
 Rallo Natl. Bank vs. First Nat. Bank, 141 Mo. A. 719, 125 S, 
 
 W. 513. 
 Meuer vs. Phenix Nat. Bank, 94 App. Div. (N. T.) 331, 88 N. 
 
 Y. S. 83, 183 N. Y. 511, 76 N. E. 1100.
 
 § 63 LIABILITIES OF PARTIES 113 
 
 This section, therefore, in some jurisdictions, effects a 
 very substantial change in the law in one important re- 
 spect. In these, if a bank certifies a check which was 
 fraudulently issued or at the time of its certification had 
 ibeen fraudulently raised, it now is obliged to pay it to a 
 subsequent holder in due course in the amount for which 
 it certified, regardless of the amount for which the check 
 was originally drawn or the manner in which it was ob- 
 tained. (Sec. 14.) 
 
 Its certification is by Section 187 made equivalent to an 
 acceptance which it is by this section required to pay ac- 
 cording to its tenor. And, of course, if the drawee of a 
 bill accepts a fraudulent bill, or accepts it in a raised 
 amount, he must likewise pay a subsequent holder in due 
 course the amount for which he accepted the bill,* with- 
 out regard to the amount for which it was originally 
 drawn (Sec. 14). The kinds of acceptances which may be 
 made and their effect upon the instrument are described 
 in subdivision 2 of Title II, Sees. 132 to 142 inclusive. 
 
 When person ' ' Sec 63. A person placing his signa- 
 
 deemed indorser. ^^rj^g upon an instrument otherwise 
 
 THAN 4S MAKER, DRAWER OR ACCEPTOR, IS DEEMED TO BE AN 
 indorser, U^^LESS he clearly INDICATES BY APPROPRIATE 
 WORDS HIS INTENTION TO BE BOUND IN SOME OTHER CA- 
 PACITY. ' ' 
 
 Every person who places his signature upon an instru- 
 ment otherA\dse than as maker, drawer, or acceptor, is an 
 indorser and he is liable upon the instrument only as 
 such unless he writes at his signature words which show 
 that he intends to assume some other liability and be 
 bound in some other capacity, as, for example, maker, 
 surety or guarantor. Parol evidence is not admissible 
 to show a different int ention.^ 
 
 8. Espy vs. Bank of Cinti., 18 Wall. (U. S.) 604. 
 
 9. Lio-ntner vs. Roach, 95 Atl. (Md.) 62.
 
 114 THE NEGOTIABLE INSTRUMENTS LAW § 64 
 
 All indorser ma}' qualify his indorsement in the man- 
 ner provided in Sec. 38, and he may assume any greater 
 or lesser liability than that of indorser by using Avords 
 clearly indicating that which he assumes, or he may in- 
 dorse merely for identification, in which case he incurs 
 no other liability upon the instrument if he indicates at 
 his signature that he signs only for the purpose of iden- 
 tifying the presenter.^" The liability of an indorser 
 whose signature is not required in the orderly course of 
 the negotiation of the instrument is fixed in the next sec- 
 tion. If any person intending to become an indorser 
 places his name upon .the face of the instrument it is nec- 
 essary that he use words indicating that he signs as an 
 indorser or he may thereby assume the obligation of a 
 primary party, (See Sec. 31.) 
 
 Liability of ''Sec. 64. Wheee a person, not other- 
 
 irregular a\'ISe a party to ax instrument, places 
 
 indorser. thereon his signature in blank before 
 
 "Illinois. delivery, he is liable as indorsee in ac- 
 
 cordance WITH THE FOLLOWING RULES: 
 
 1. "If the INSTRUMENT IS PAYABLE TO THE ORDER OF A 
 THIRD PERSON, HE IS LIABLE TO THE PAYEE AND TO ALL SUB- 
 SEQUENT PARTIES. 
 
 2. "If the INSTRUMENT IS PAYABLE TO THE ORDER OF THE 
 MAKER OR DRAWER, OR IS PAYABLE TO BEARER, HE IS LIABLE TO 
 ALL PARTIES SUBSEQUENT TO THE MAKER OR DRAWER. 
 
 3. If HE SIGNS FOR THE ACCOMMODATION OF THE PAYEE, 
 HE IS LIABLE TO ALL P.ARTIES SUBSEQUENT TO THE PAYEE. 
 
 There is one kind of indorser, called an "irregular in- 
 dorser," who, not otherwise being a party to an instru- 
 ment, places his signature upon it in blank before it is 
 delivered. The section refers, of course, to the delivery 
 at the inception of the instrument, or, if the instrument 
 is a bill to its delivery at that time or at the delivery of 
 
 10. American Bank vs. Macondray, 4 Philippine, 695.
 
 §64 LIABILITIES OF PARTIES 115 
 
 the acceptance. ^^ This indorser is referred to in the ex- 
 planation of the preceding section as the indorser whose 
 signature is not necessary to the orderly negotiation of 
 the instrument, and he is known also as an accommoda- 
 tion indorser. (See Sec. 29.) 
 
 His liability upon the instrument is as follows: If 
 he places his signature upon an instrument payable to 
 the order of a third person, he is liable to the payee and 
 to all parties who take the instrument after him. If 
 he places his name upon an instrument payable to 
 bearer or payable to the maker's or the drawer's own 
 order, he is liable to all parties who subsequently take 
 the instrument, but not to the maker or drawer. If the 
 irregular indorser signs the instrument for the accom- 
 modation of the person named as payee, he is not liable 
 to the payee but he is liable to all parties who take the 
 instrument after that party. 
 
 Attention is directed to the fact that by the literal in- 
 teri^retation of Sub-section 3 one who indorses for the ac- 
 commodation of the acceptor of a bill payable to the 
 drawer's own order, is liable only to holders subsequent 
 to the drawer-payee and not to the drawer. And this is 
 so notwithstanding the fact that he became a party to the 
 instrument entirely for the drawer's security. But the 
 courts have permitted it to be shown, under these cir- 
 cumstances, by other evidence, aside from the instrument 
 itself, that the accommodation indorser signed for the 
 benefit of the drawer-payee and, though not warranted 
 by the language of the sub-section, they hold that one 
 who indorses for the accommodation of the acceptor is 
 
 11. Kolm vs. Consolidated Butter, etc., Co., 30 Misc. 725, 63 N. 
 y. S. 265. 
 Shelmerdine vs. Duft'y, 4 Mart. N. S. (La.) 34. 
 Wilson vs. Hendee, 74 N. J. LaAv, 640, 66 Atl. 413.
 
 116 THE NEGOTIABLE INSTRUMENTS LAW § 65 
 
 liable to the drawer-payee as well as subsequent parties.^^ 
 (See Sec. 68.) 
 
 The irregular indorser becomes a party to the instru- 
 ment for the purpose of lending his credit and worth to 
 the value of the instrument to which he would not other- 
 wise have been a party. It is not at all material, how- 
 ever, for what purpose he indorses the instrument, if he 
 does so, and if he would not otherwise have been a party 
 to it, his liability is as fixed in this section.^ ^ It applies 
 to all irregular indorsers, whether for accommodation or 
 otherwise, and it includes any indorsement in blank of 
 any person whose signature is not required in the due 
 and regular negotiation of the instrument, and all those 
 who become parties before deliver}^ and have heretofore 
 been variously held to be, maker, surety, guarantor or 
 indorser. x\n irregular indorser who signs as surety or 
 guarantor, naming the person for whom he is surety or 
 guarantor, and with other words descriptive of the ca- 
 pacity in which he becomes bound, is held in whatever 
 obligation he assumes (Sec. 63). In the absence of words 
 upon the instrument indicating any other capacity in 
 which he is to be charged he will, however, be held to the 
 liability of an irregular indorser and it may not be shown 
 by extrinsic evidence, except as to his immediate parties^ 
 that he intended to bind himself in any other. 
 
 Warranty where "^^C' ^^- ^^^^^ ^^^^^^ negotiating 
 negotiation by ^^ instrument by delivery or by a quali- 
 delivery, etc. fied indorsement warrants: 
 
 1. That the instrument is genuine and in all re- 
 spects what it purports to be; 
 
 2. That he has a good title to it; 
 
 12. Haddock B. & Co. vs. Haddock, 192 N. Y. 499, 19 L. R. A. 
 
 (N. S.) 136 and note. 
 
 13. Holland Trust Co. vs. Waddell, 75 Hun. 104, 2G N. Y. S. 980, 
 
 151 N. Y. S. 666, 46 N. E. 1148. 
 Chicago Title, etc., Co. vs. Brady, 165 Mo. 197, 65 S. W. 303.
 
 §65 LIABILITIES OF PAKTIES 117 
 
 3. That all prioe pabties had capacity to conteact ; 
 
 4. That he has no knowledge of any fact which 
 would impair the validitit of the instrument or ren- 
 der it valueless. 
 
 But WHEN THE NEGOTIATION IS BY DELI\T:RY ONLY, THE 
 
 warranty extends in favor of no holder other than 
 the imjmediate transferee. 
 
 The pbiOvisions of paragraph numbered three of this 
 
 SECTION do not APPLY TO PERSONS NEGOTIATING PUBLIC OR 
 CORPORATE SECURITIES, OTHER THAN BILLS AND NOTES." 
 
 A warranty is a representation either expressed or im- 
 plied that the thing warranted is really what it appears 
 and is represented to be, and a person who negotiates an 
 instrument by delivery w^ithout indorsement or by quali- 
 fied indorsement (without recourse see Sec. 38), is held 
 to the warranties expressed in this section. While not 
 liable upon the instrument as one Avould be who indorses 
 without qualification, the person negotiating the instru- 
 ment by delivery or this form of indorsement can be held 
 for any failure of his warranty, and he may be sued for 
 its breach independently of any action upon the instru- 
 ment. 
 
 He warrants by his qualified indorsement, or by deliv- 
 ery, that his title to the instrument is good, and if it 
 proves to be defective he will be required to make good 
 any loss which may result from its failure. He also war- 
 rants by delivery or by this form of indorsement that all 
 parties to the instrument who became parties prior to 
 himself had the legal capacity to and were able lawfully 
 to become parties to be bound upon the contract in the 
 manner in which -they signed it.^^ He does not warrant 
 that the instrument is a valid and subsisting contract, as 
 one does who indorses without qualification, but war- 
 
 14. Leonard vs. Draper, 187 Mass. 536, 73 N. E. 644. ^ ^^ ^ 
 Glidden vs. Chamberlin, 167 Mass. 486, 46 N. E. 103, 57 Am. 
 S. Rep. 479 and note.
 
 118 THE NEGOTIABLE INSTRUMENTS LAW § 66 
 
 rants merely that he does not know of any fact or thing 
 which would make the instrument less valid than it ap- 
 pears to be, or which would make it of no value. Thus it 
 has been held that the transferee of a note may recover 
 from the seller the consideration paid for the instrument 
 if the latter knew at the time of the transfer that the 
 parties to it were actually insolvent and concealed that 
 fact from him.^^ One w^ho negotiates the instrument by 
 qualified indorsement warrants also that the instrument 
 and all prior signatures are genuine, that is, that it is 
 not a forged instruments^ and that all parties who signed 
 it prior to its negotiation by him were capable of enter- 
 ing into a legal and enforceable contract. 
 
 A qualified indorser impliedly makes these warranties 
 to all persons who become parties to the instrument after 
 his indorsement, but one who transfers the instrument 
 by mere delivery without indorsement, can be held to 
 them only by the person to whom he has transferred it. 
 
 The warranty that all prior parties had the capacity to 
 contract upon the instrument applies only to the negotia- 
 tion of bills of exchange, promissory notes and checks 
 of corporations but does not apply to public or corpora- 
 tion bonds or other securities. You will observe from the 
 next section that the liability of general indorsers differs 
 very materially from that of parties who negotiate by 
 qualified indorsement or by mere delivery. 
 Liability of ''Sec. 66. Eveky indorser" m^ho in- 
 
 general indorser. dorses without qualification, warrants 
 "Illinois. to all subsequent holders in due course : 
 
 1. The matters and things mentioned in paragraphs 
 numbered one, two and three of the next preceding sec- 
 tion ; and 
 
 15. Leonard vs. Draper, 187 Mass. 536, 73 N. E. 044. 
 Bursfess vs. Chapin. 5 R. I. 225. 
 
 Gordon vs. Irvine, 105 Ga. 144. 3 S. E. 151. 
 
 16. Lennon vs. Gnnicr, 159 N. Y. 433, 54 N. E. 11. 
 
 Farmers Natl. Bank vs. Farmers, etc., Bank, 159 Kv. 141, 
 166 S. W. 986.
 
 §66 LIABILITIES OF PARTIES 119 
 
 2. That the instrument is at the time of his in- 
 dorsement VALID AND SUBSISTING. 
 
 And, in addition, he engages that on due present- 
 ment, IT shall, be accepted or paid, or both, as the case 
 
 MAY be, according TO ITS TENOR, AND THAT IF IT BE DIS- 
 HONORED, AND THE NECESSARY PROCEEDINGS ON DISHONOR BE 
 DULY TAKEN, HE WILL PAY THE AMOUNT THEREOF TO THE 
 HOLDER, OR TO ANY SUBSEQUENT INDORSER WHO MAY BE COM- 
 PELLED TO PAY IT." 
 
 General indorsers are all who indorse without qualifi- 
 cation (Sec. 38), including those who indorse restric- 
 tively, as for collection. They are bound to subsequent 
 holders in due course by the warranties prescribed in 
 Sub-sections 1, 2 and 3 of the preceding section, and 
 more. Their warranty as to the validity of the instru- 
 ment is broader than the warranty of one who qualifies 
 his indorsement, or that of a person not an indorser who 
 negotiates the instrument by delivery, for they warrant 
 not only that the instrument is what it purports to be, 
 and not only that they do not know of anything affecting 
 its validity and that all prior parties had the capacity to 
 enter into a legal and enforceable contract, but warrant 
 that the instrument which they indorse is valid and in 
 force and has effect as .a legal and enforceable nego- 
 tiable instrument at the time they indorse it.^*^ Except 
 in such States as have changed this section in respect to 
 accommodation parties, every accommodation indorser 
 engages in the same warranties as a general indorser. 
 It has been held that these warranties, by the accommo- 
 dation indorser do not extend to the party who first dis- 
 counts the accommodation instruments^ but he is in- 
 cluded in their engagement to pay the instrument if it is 
 dishonored. 
 
 17. Crosby vs. Wright, 70 Minn. 251. 
 
 18. Bouck vs. Lambeck, 63 Misc. (N. Y.) 117, 118 N. Y. S. 494.
 
 120 THE NEGOTIABLE INSTRUMENTS LAW § 66 
 
 A collecting bank which endorses the instrument for 
 collection is bound by these warranties and is in all re- 
 spects liable as an indorser unless it uses words of qual- 
 ification Avhich negative this liability. In this respect 
 this section of the Act was intended to and does effect an 
 important change in the law as it was formerly inter- 
 preted in some States^ '^ and now makes unnecessary the 
 written guaranty of prior indorsements which banks 
 usually stamp upon these items when they forward them 
 for collection to their correspondents, or which are to be 
 collected through the clearing house. This warranty is 
 now implied from their indorsement for collection with- 
 out additional words. 19rt 
 
 Besides engaging in the warranties set forth in this 
 and in the preceding section, a general indorser, includ- 
 ing an accommodation indorser, and one indorsing re- 
 strictively, imj)liedly promises and agrees by his act of 
 indorsing the instrument that upon presentment in due 
 and proper time to the right person, at the right place, 
 it will be accepted or paid in accordance with its pur- 
 port and effect. He further engages that if it is not so 
 accepted or paid, or both, and if all necessary steps are 
 taken by the holder in proceedings upon dishonor to 
 charge him, as is provided in this Act (Sections 70 to 
 118, inclusive), he will immediately pay the amount of 
 the instrument to the holder or to any indorser subse- 
 quent to himself who may be obliged to pay it. It is by 
 reason of this engagement that the holder is not required 
 
 19. First Nat. Bk. of Belmont vs. First Nat. Bk. of Barnesville. 
 
 58 0. S. 207. 
 United States vs. Am. Exclianije Natl. Bank, 70 Fed. 232. 
 Natl. Park Bank vs. Seaboard Bank, 114 N. Y. 28, 20 N. E 
 
 632, 11 Am. S. R. 612. 
 Northwestern! Natl. Bank vs. Kansas Citv Bank of Conunerct 
 
 107 Mo. 402, 17 S. W. 982, 15 L. R. A. 102. 
 
 19a. Interstate Trust Co. vs. U. S. Natl. Bank (Colo.), 185 
 Pac. 260.
 
 §67,68 LIABILITIES OF PARTIES 121 
 
 upon dishonor to first resort to the parties primarily lia- 
 ble upon the instrument. 
 
 T. ,.,-4™ * "Sec. 67. Where a person places his 
 
 Liability of 
 
 indorser where ixdoesement on an instrument negotia- 
 
 paper negotiable ble by delivery he incurs all the liabili- 
 
 by delivery. ties of an indorser." 
 
 A negotiable instrument payable to bearer, being 
 transferable by mere delivery, requires no indorsement, 
 but any person who does indorse such an instrument as- 
 sumes and incurs all of the liabilities of an indorser and, 
 according to the character of his indorsement, his liabil- 
 ity will be as fixed in the two preceding sections. 
 
 Upon dishonor of a bearer instrument which has been 
 indorsed, the same proceedings must be observed in or- 
 der to charge an indorser as are required upon an instru- 
 ment payable to order bearing indorsements. These will 
 be found in the next subdivision of the Act. If he has 
 indorsed specially his liability is limited, however, to 
 only such holders as make title through his indorsement. 
 (Sec. 40.) 
 
 Order in which "Sec. 68. As respects one another, 
 indorsers are indorsers are liable prima facie in the 
 liable. order in which they indorse; but e\t:- 
 
 oHlinois. dence is admissible to show that as be- 
 
 tween OR among themselves they ha^'te agreed other- 
 wise. Joint payees or joint indorsees who indorse are 
 
 deemed to indorse JOINTLY' AND SEVERALLY'."" 
 
 An instrument which passes from one person to an- 
 other, receives indorsement at different times from the 
 holders who negotiate it. Their names appear upon the 
 instrument in the order in which it was held. Upon en- 
 forcement of the indorser 's liability they are all liable 
 to the holder but in their relation to one another, they 
 are liable in the order in which they signed the instru- 
 ment. This is the prima facie order of their liability, but 
 they are permitted to show that as between or among 
 themselves they have agreed to be otherwise bound. The
 
 122 THE NEGOTIABLE INSTRUMENTS LAW § 68 
 
 instrument usually shows in what order the indorsers 
 are to be held among themselves and it is important and 
 proper that each place his name immediately after the 
 name of the person from whom he acquired it in order 
 that his position in the order of liability may be readily 
 ascertained, unless, by agreement, the order of his lia- 
 bility is to be fixed by a different position upon the paper. 
 The position of an indorser's name or the order in which 
 he signed does not in the least affect the holder's right 
 of action against liim upon dishonor of the instrument, 
 but is of importance to determine the liability of the in- 
 dorsers to each other. The holder may sue any indorser 
 or all and by statutory provision may join primary and 
 secondary parties in one action upon the instruments*^ 
 including the personal representative of any who may 
 have died. 
 
 Payees and indorsers who place their names upon an 
 instrument at the same time with the intention of making 
 themselves joint indorsers are severally as well as jointly 
 liable to a subsequent holder.-^ This liability is called 
 joint and several. Between themselves they are equally 
 liable and one paying for all may have contribution from 
 the others, that is, he can recover from the others the 
 part which each ought to pay unless a different liability 
 is fixed by agreement. (See Accommodation In- 
 dorser.) This need not be shown by an express agree- 
 ment but may be made to appear or be inferred from 
 the circumstances of the occasion for their endorsements 
 and it may be shown by parol evidence. ^^ 
 
 20. Bnrdette vs. Bartlett, 95 U. S. 637, 24 L. Ed. 534. 
 Knoxvillc Bank & Tn;st Co. vs. Mershon, 152 Ky. 169. 
 Maddox vs. Duncan, 143 Mo. 613, 45 S. W. 688. 
 Curtis vs. Davidson, 215 N. Y. 395, 109 N. E. 481. 
 
 21. Trejro vs. Cunninghman, 267 111. 367, 108 N. E. 350. 
 
 22. Goldman vs. Goldberger, 208 Fed. 877.
 
 § 69 LIABILITIES OF PARTIES 123 
 
 Liability of an "Sec. 69. ''Wheee a broker or other 
 
 agent or broker, agent negotiates an instrument without 
 "Illinois. indorsement, he incurs all the liabili- 
 
 ties PRESCRIBED BY SECTION 66 OF THIS ACT, UNLESS HE DIS- 
 CLOSES THE NAME OF HIS PRINCIPAL, AND THE FACT THAT HE 
 IS ACTING ONLY AS AN AGENT.'' 
 
 This section determines the liability of an agent who 
 negotiates an instrument without indorsement. Sections 
 19, 20 and 21 fix his liability when he negotiates the in- 
 strument by indorsement and Section 44 prescribes the 
 manner in which one who is under obligation to indorse 
 an instrument in any representative capacity may do so 
 if he does not intend to assume personal liability upon it. 
 The liabilities prescribed by Section 65 are those which 
 attach to a party who negotiates the instrument by de- 
 livery or qualified indorsement, and one who negotiates 
 the instrument in that manner impliedly warrants that 
 the instrument is genuine, that all prior parties had ca- 
 pacity to contract and that he knows of nothing which 
 would impair or destroy its validity. To the extent pre- 
 scribed in that section, an agent or broker who negoti- 
 ates by delivery or qualified indorsement also becomes 
 liable upon the instrument, unless he discloses the name 
 of his principal and the fact that he is acting only as an 
 agent.
 
 124 THE NEGOTIABLE INSTRUMENTS LAW § 70 
 
 SUBDIVISION VI, 
 
 Peesentment for Payment. 
 
 Section Section 
 
 70 Effect of want of demand on 80 Wlien presentment need not 
 
 principal debtor. be made to cliarge indorser. 
 
 71 Presentment where instru- g^ ^jien delav in making pre- 
 
 ment is not payable on de- sentment is excused. 
 
 mand and where payable on ttti a i. i. 
 
 1 -, ^ '' 82 When presentment may be 
 
 on demand. -,. j -ii 
 
 TO TTi t A -J. 4- re • J. dispensed with. 
 
 72 \\ hat constitutes suincient ^ 
 
 presentment. ^^ When instrument dishonored 
 
 73 Place of presentment. by non-pa}Tnent. 
 
 74 Instrument must be exhibited. 84 Liability of person secondar- 
 
 75 Presentment where instru- ily liable when instrument 
 
 ment payable at bank. is dishonored. 
 
 76 Presentment Avhere principal 85 Time of maturity. 
 
 ^- ^ is dead. ,.,,86 Time; how computed. 
 
 1 1 Presentment to persons liable o- t^ i , 
 
 as partners °' nule where instrument paya- 
 
 78 Presentment to joint debtors. ^^^ ^* b^^^- 
 
 79 When presentment need not 88 Wliat constitutes payment in 
 
 be made to chaise drawer. due course. 
 
 The object of presentment for payment is to give the 
 person primarily liable upon the instrument the oppor- 
 tunity to perform his part of the contract to which his 
 signature binds him and, if he does not pay it, to enable 
 the holder to give notice of its dishonor to secondary 
 parties. The secondary parties have impliedly promised 
 to pay only if those primarily liable upon the instrument 
 should fail to do so. "Primary" parties are those who 
 by the terms of the instrument are absolutely required to 
 pay it; all others are "secondarily" liable. (Sec. 192.) 
 These cannot be held to this promise unless the instru- 
 ment is duly and properly presented and pa^onent is de- 
 manded of the person whose primary obligation it is 
 and unless notice of its dishonor is at once given to them. 
 Each secondary party has the right to expect that the in-
 
 §70 PRESENTMENT FOR PAYMENT 125 
 
 strument will be paid at maturity and if it becomes dis- 
 honored he is entitled, except in certain cases which will 
 be afterward mentioned, to immediate notice of its dis- 
 honor in order that he may protect himself against loss 
 by whatever means may lie in his power. 
 
 A holder who fails to use all necessary care in this re- 
 gard is deemed to be guilty of negligence and it fre- 
 quently happens that secondary parties are released 
 from liability by reason of his carelessness. But as the 
 first section of this subdivision provides, the party pri- 
 marily liable upon the instrument, such as the maker of 
 a note or acceptor of a bill, is not entitled to presentment 
 and notice because it is his duty to remember his obli- 
 gation and pay it when it becomes due and Ms sig^la- 
 ture upon the instrument imports an absolute promise 
 to pay it. 
 
 Effect of want of ' ' Sec. 70. Presentment for payment 
 demand on prin- jg -^Qrj, necessary in order to charge the 
 cipal debtor. person primarily liable on the instru- 
 Wisconsin. ment;'' but if the instrument is, by its 
 
 ''Kansas, New terms, payable at a special place, and he 
 York, Ohio. jg able and willing to pay it there at ma- 
 
 turity,^ SUCH ability and willingness are equivalent to 
 a tender of payment on HIS part. But except as herein 
 otherwise provided, presentment, for payment, is neces- 
 sary IN order to charge the drawer and indorsers." 
 
 The person primarily liable upon a promissory note 
 is the maker and presentment for payment is not neces- 
 sary to charge him. Upon a bill of exchange it is the ac- 
 ceptor and his liability is not affected by the holder's 
 failure to present the instrument for payment. The 
 drawer and indorSer of the bill and the indorser of a 
 note, being secondary parties w^hose liability does not be- 
 come fixed until the person primarily liable upon the in- 
 strument fails to pay it, presentment for payment must 
 be made in order to charge them.
 
 126 THE NEGOTIABLE INSTRUMENTS LAW § 71 
 
 If the bill or note is payable at a place named therein, 
 and if the person obliged to pay it is able and willing 
 to pay it there at maturity he is not required to go else- 
 where to make payment. The fact that the maker or 
 acceptor has provided sufficient funds at that place and 
 is able and willing to pay it there, is, of itself, considered 
 to be the equivalent of an offer by him to do so. The 
 next section provides upon what day presentment for 
 payment must be made. 
 
 wrolSLent "Sec. 71. Wheee the instrument ,s 
 
 is not payable on ^'^^T payable on demand, presentment 
 
 demand and must be made on the day it fali^ due. 
 
 where payable on Where it is payable on demand, present- 
 
 •^t"^^ 1 ment must be made within a reasonable 
 
 "Nebraska. 
 New Hampshire time after its issue/ except that in the 
 
 "So. Dakota. case of a bill of exchange, presentment 
 
 ^Vermont. for payment will be sufficient if made 
 
 WITHIN A REASONABLE TIME AFTER'' THE LAST NEGOTIATION 
 THEREOF. '^ 
 
 Unless presentment for payment is dispensed with in 
 the manner provided in this Act or delay in presenting 
 the instrument is excused (Sees. 81 and 82), it must be 
 made upon the very day w-hen it falls due. This applies 
 to instruments payable at a definite and fixed or a deter- 
 minable time after date or acceptance,^ and not to instru- 
 ments payable on demand. The latter are payable at 
 any time the holder may wish to demand payment. If a 
 series of notes contains a provision that in default of 
 payment of one of them at maturity those maturing sub- 
 sequently shall become due at once, and one is dishon- 
 ored, the others need not be presented for pajTuent on 
 the day of the dishonor of the one upon which the maker 
 defaults. They may be presented within a reasonable 
 time after the dishonor of that one of the series which 
 is not paid at maturity.^ 
 
 1. Creteau vs. Foote, etc., Glass Co., 40 App. Div. (N. Y.) 215, 
 57 N. Y. S. 1103.
 
 §71 PKESENTMENT FOR PAYMENT 127 
 
 It is provided by this section, however, that if the 
 instrument is payable on demand it must be presented 
 within a reasonable time after its issue if it is a promis- 
 sory note, or after its last negotiation, if it is a bill. The 
 holder of a promissory note which is payable upon de- 
 mand and bears indorsements, cannot carry the note an 
 indefinite and long time in security without presenting it, 
 making demand for its payment and, if it is not paid, 
 giving notice of its dishonor to the indorsers in the man- 
 ner provided in this Act. But, having made the present- 
 ment and given due notice of its dishonor, he may wait 
 as long as he likes for its payment, the time for enforcing 
 payment then being limited only by the statute of limita- 
 tions applicable to such instruments in the State in which 
 their enforcement is sought. 
 
 Before the adoption of this Act a promissory note 
 bearing indorsements, payable upon demand without in- 
 terest, was held to require presentment, demand and no- 
 tice to indorsers immediately, on the day of or the day 
 after its issue, in order to charge the indorsers. Such a 
 note bearing interest was, however, held to contemplate 
 a continuing loan, and presentment and demand, it was 
 held, might be made and notice given at any time after 
 its issue, within the statute of limitations, of course. But 
 now this Act is interpreted to mean that this distinction 
 does not exist. This section negatives all such decisions 
 in States where a contrary rule prevailed and a promis- 
 sory note bearing indorsements and w^hich is payable on 
 demand, whether it bears interest or does not, must 
 be presented for payment and payment demanded within 
 a reasonable time after its issue.- If it is not paid, no- 
 tice of its dishonor must be given to each indorser in the 
 manner provided in this Act or he will be discharged. 
 
 2. Commercial Nat'l Bank vs. Zimmerman, 185 N. Y. 210, 77 
 N. E. 1020.
 
 128 THE NEGOTIABLE INSTRUMENTS LAW § 71 
 
 What is a reasonable time for presentment is not es- 
 tablished by the Act or by any interpretation of the Act 
 in such a manner as will permit a fixed rule to be given. 
 As short a period as four months has been held to be un- 
 reasonable.2 The New Hampshire Act fixes sixty days, 
 for demand notes. Decisions by courts are uniform that 
 a delay of more than three years to demand payment 
 upon a promissory note payable upon demand is unrea- 
 sonable. This Act provides (Sec. 193) what shall be con- 
 sidered in determining what is a "reasonable" or an 
 "unreasonable" time, but regardless of circumstances, 
 it is thought entirely unsafe to delay presentment and de- 
 mand upon such an instrument longer than four months 
 after its issue. Under certain circumstances delay for a 
 much shorter period might be considered unreasonable. 
 The utmost precaution should be exercised in this regard 
 by the holder and when a demand note contemplates a 
 long time loan indorsers ought to be required to waive 
 presentment, demand, and notice of non-payment, or de- 
 mand should be made and notice given within a short 
 period, not to exceed, in ordinary cases, four months 
 after the note is issued. This being done, if the instru- 
 ment is not replaced by another it may be permitted to 
 run indefinitely, subject to the statute of limitations 
 which fixes the time at which it will be barred. 
 
 In the case of a bill of exchange which is payable on 
 demand, and this includes a check, the demand must be 
 made within a reasonable time after its issue or last ne- 
 gotiation and all that is here said in regard to promis- 
 sory notes applies with equal force to such an instru- 
 ment, except that, it seems to the writer, a delay of four 
 months or even one month, as these instruments are now 
 used, would be regarded as an unreasonable length of 
 
 3. Frazer vs. Plienix Nat. Bank, 161 Ky. 175, 170 S. W. 532.
 
 §71 PRESENTMENT FOR PAYMENT 129 
 
 time to delay presentment or to interrupt the negotia- 
 tion without making presentment. This statement is 
 subject to the qualification that if bills of exchange shall 
 come into more extensive use as the means of discount 
 and investment rather than as collection items, which 
 seems now to be their present most general use in this 
 country, custom will order that the same rules of delay 
 as are now applied to promissory notes shall apply to 
 bills of exchange. 
 
 Checks require even more prompt presentment, par- 
 ticularly when they have been deposited for collection by 
 a bank. I shall present in considerable detail in another 
 part of this book the requirements of the law as they are 
 applicable to the presentment of checks by a bank. While 
 they continue to be negotiated and until they are de- 
 posited in bank, there does not seem to be any good rea- 
 son why checks need be presented with any greater dis- 
 patch than other bills of exchange payable on demand, 
 that is, in so far as the liability of indorsers may be af- 
 fected by the length of time they continue to be negoti- 
 ated. But checks which are not intended for negotiation 
 must be presented at once, the day of or the day after 
 their issue or deposit if they are banked at the place of 
 payment, or they must be forwarded by direct route 
 within that time by the collecting bank for presentment 
 to the bank upon which they are drawn if they are pay- 
 able elsewhere.'* 
 
 This Act provides elsewhere (Sec. 186), that if a check 
 is not presented for payment within a reasonable time 
 after its issue the drawer will be released from liability 
 to the extent of any loss he may suffer by reason of the 
 
 4. Plover Savings Bank vs. Moodie, 135 Iowa, 685, 110 N. W. 29^ 
 113 N. W. 476. 
 Columbian Banking Co. vs. Bowen, 134 Wise. 218.
 
 130 THE NEGOTIABLE INSTRUMENTS LAW § 71 
 
 delay. This is, of course, intended as a protection to 
 him in case the drawee bank should fail before his check 
 is presented. There is no similar provision in favor of 
 indorsers and if it shall be held that they are also re- 
 leased by delay in making presentment of a check it must 
 be because of banking custom and the need of most men 
 for the immediate use of money, supply the other two 
 elements to be taken into account in determining what is 
 or is not a reasonable delay. (Sec. 193.) Read in con- 
 nection with this explanation what has already been said 
 under Sections 7 and 53, and see Sees. 144 and 193, and 
 the synopsis of the law applicable to the collection of 
 checks at the conclusion of Title III. 
 
 When a time instrument is payable in installments sep- 
 arate demand must be made at the maturity of each and 
 upon dishonor, notice must be given in the manner pro- 
 vided in Sees. 89 to 118 as in other cases, unless the in- 
 strument contains a provision that in default in the pay- 
 ment of any installment all shall become due. In that 
 case the presentment and demand at the maturity of the 
 first installment at which default is made effects the dis- 
 honor of the whole instrument if it is not paid and no 
 further presentment or demand need be made. If the 
 later installments are to mature at the option of the 
 holder, demand may be postponed until the last install- 
 ment falls due and then made.^ When the instrument 
 contains a provision that the whole sum shall mature 
 and be payable upon default in the payment of any in- 
 stallment of interest, demand must be made and notice 
 e-iven at the first default in order to hold the in- 
 dorsers,^ unless the accelerated maturity is optional 
 with the holder. (See Sees. 2 and 52.) 
 
 5. Eastman vs. Thurman. 24 Cal. 379. 
 
 6. Mallon vs. Stevens, 6 Ohio Dec. Reprint, 1042, 9 Am. L. B. 702, 
 
 6 Cinti. Law Bui. 69.
 
 §72 PRESENTMENT FOR PAYMENT 131 
 
 What constitutes ' ' Sec. 72. Pkesentment for payment, 
 sufficient TO be sufficient, must be made : 
 
 presentment, ^ j3y the holdek ok by some pebson 
 
 AUTHORIZED TO RECEIVE PAYMENT ON HIS BEHALF ; 
 
 2. At a REASONABLE HOUR ON A BUSINESS DAY; 
 
 3. At a PROPER PLACE AS HEREIN DEFINED; 
 
 4. To THE PERSON PRIMARILY LIABLE ON THE INSTRU- 
 MENT, OR IF HE IS ABSENT OR INACCESSIBLE, TO ANY PERSON 
 FOUND AT THE PLACE WHERE THE PRESENTMENT IS MADE. 
 
 Presentment for payment must be made in the manner 
 prescribed in this section and to be made in a manner 
 that will charge the drawer and indorsers, it must be 
 made at a reasonable hour on a business day by the hold- 
 er or by some person acting for him to whom he has giv- 
 en authority to receive payment upon the instrument. 
 Some one must be sent with the instrument who is au- 
 thorized to receive the money upon it.'^ Therefore, if the 
 person who takes the instrument for the purpose of pre- 
 senting it for pajTiient to the party obliged to pay it 
 when it becomes due, is not authorized by the holder to 
 collect it and surrender the instrument upon payment, 
 or goes merely to notify him that the holder has the in- 
 strument and makes only an informal request, this wdll 
 not be a sufficient presentment.^ 
 
 The mere possession of an instrmnent payable to 
 bearer is sufficient evidence of authority to present it 
 for payment but would not be sufficient if the instrument 
 is payable to order.^ Something more is required of such 
 an instrument and, while the authority to make present- 
 ment and receive payment need not be in writing, it must 
 be shown by satisfactory proof, when required, that the 
 person making presentment did so by authority of the 
 
 7. Foss vs. Norris, 70 Me. 117. 
 
 Fowler Paper Co. vs. Jones Sales Bk. Co., 183 111. A. 310. 
 
 8. St. of N. Y. Natl. Bank vs. Kennedy, 145 App Div. (N.Y.) 669. 
 
 9. Doubleday vs. Kress, 50 N. Y. 410.
 
 132 THE NEGOTIABLE INSTRUMENTS LAW § 72 
 
 holder, if his indorsement does not appear upon the in- 
 strument.^" 
 
 If the instrument is payable at the place of business 
 the party who is to pay it, it must be presented there 
 during business hours on a business day and if sent or 
 taken there too long before the beginning or too long after 
 the close of business hours, the presentment will not have 
 been properly made.^^ 
 
 All days of the year are business days except Sundays 
 and such holidays as are established by statute or by 
 proclamation in the various States. 
 
 The person who makes presentment must go to the 
 proper place, and he must have the instrument with him 
 in order that he may be prepared to exhibit or surren- 
 der it if it becomes necessary to do so. (Sec. 74.) What is 
 the proper place is defined in the next section. (Sec. 73.) 
 Arriving at the proper place at the proper time, he must 
 make the presentment in the manner required by Sec. 
 74 to the person who is to pay the instrument. If that 
 person is absent or access to him is refused or cannot be 
 had, presentment may be made to any one found at the 
 place where presentment is to be made. Although the 
 person fouund there may have no connection with the 
 party primarily liable upon the instrument, presentment 
 to him is good. If the instrument is presented to any 
 person other than the party primarily liable to pay it, 
 diligent inquiry ought to be made by the presenter to 
 learn whether he has any authority to pay the instru- 
 ment and whether or not he has any business connection 
 with the party obliged to pay it. If payment is refused 
 a careful record should be made upon the instrument, or 
 in some other manner if the instrument is lost or mis- 
 
 10. Watt vs. Potter, 29 Fed. Cas. 17,291. 
 Robertson vs. Crane. 27 Miss. 362, 61 Am. D. 520. 
 
 11. Waring vs. Betts, 90 Va. 46, 53,
 
 §73 PRESENTMENT FOR PAYMENT 133 
 
 placed, of the date and hour and the person to whom it 
 was presented and of the reason given for the refusal. 
 
 Presentment and demand for payment by letter or by 
 telephone may not be made and if attempted will not 
 charge an indorser.^^ ^ waiver of presentment by tele- 
 phone is good, however. (Sec. 82.) 
 
 Place of "Sec. 73. Pkesentment foe payment 
 
 presentment. is made at the peoper place. 
 
 1. Wheee a place of payment is specified ]n the in- 
 steitment and it is tpieee peesented ; 
 
 2. Where no place of payment is specified, but the 
 addeess of the peeson to make payment is given in the 
 insteument and it is theee presented; 
 
 3. Wheee no place of payment is specified and no ad- 
 dress IS GIVEN AND THE INSTEUMENT" IS PEESENTED AT THE 
 USUAL PLACE OF BUSINESS OE EESIDENCE OF THE PEESON TO 
 MAKE PAYMENT; 
 
 4. In ANY OTHEE CASE IF PEESENTED TO THE PERSON TO 
 MAKE PAYMENT WHEEEVEE HE CAN BE FOUND, OE IF PEE- 
 SENTED AT HIS LAST KNOWN PLACE OF BUSINESS OE RESI- 
 DENCE." 
 
 The holder is deemed to have made a sufficient present- 
 ment if he has presented the instrument in the manner 
 described in the preceding section, or has caused it to 
 be done, at the place named in it as the place where pre- 
 sentment is to be made. This is true even if the place 
 named is neither the residence nor place of business of 
 the person who is to pay the instrument and he is known 
 to be elsewhere, and not at that place, at the time of 
 presentment, although in that case it would seem to be 
 proper, even if it is not the duty of the presentei', to de- 
 mand payment of the person who is to paj^ the instru- 
 ment at the place where he is known to be if there is no 
 one who is authorized to pay or refuse payment at the 
 place named in the instrument.^^ But, notwithstanding 
 
 12. Gilpin vs. Savaj^e, 201 N. Y. 167. 
 
 13. Snlzbacher vs. Bank of Charleston, 86 Tenn. 201. 
 Pierce vs. Stnatliers, 27 Pa. 249.
 
 134 THE NEGOTIABLE INSTRUMENTS LAW § 73 
 
 former decisions to the contrary, or decisions which in- 
 timate that an attempt ought to be made to find the per- 
 son who is to pay the instrument if he is not at the place 
 named in it and that place has been abandoned by 
 him, the statute does not require this and it need not be 
 done. It is the duty of the person primarily liable upon 
 the instrument to provide the funds for its payment and 
 have them ready at the place of payment in the hands of 
 someone at that place who is authorized to pay the in- 
 strument, and it is equally the duty of the holder of the 
 instrument to present it for payment at that place.^^ 
 
 If no place is mentioned but the address is given of the 
 person who is to pay the instrument, it must be presented 
 at that address. If both are given the place of payment 
 mentioned in the body of the instrument is the place 
 where it must be presented even if it conflicts with the 
 address of the person who is to make paj'^ment. If the 
 instrument is payable at a designated branch of a bank 
 or Trust Company it must be presented at the branch 
 designated, if it is in existence at the maturity of the in- 
 strument. Presentment at the principal office will not, 
 in that case be good.^^ If the branch has been discon- 
 tinued and is no longer doing business at the maturity of 
 the instrument, presentment at the main bank will be 
 proper. ^^ 
 
 When the instrument mentions no place of payment 
 and does not give the address of the person who is to 
 pay it, it may be presented at either his usual place of 
 business or residence. 
 
 14. Ironclad Mfg. Co. vs. Saekin, 129 App. Div. (N. Y.) 555, 114 
 
 N. Y. S. 42. 
 
 15. Ironclad Mfg. Co. vs. Saekin, 129 App. Div. (N. Y.) 555, 114 
 
 N. Y. St. 42. 
 
 16. Nashville Bank vs. Henderson, 5 Yerg. (Tenn.) 104, 26 Am. 
 
 D. 257.
 
 §74 PRESENTMENT FOR PAYMENT 135 
 
 In any other case, presentment may be made to the per- 
 son obliged to pay the instrument at the place where he 
 was last known to have been engaged in business or to 
 have lived, or it may be made to him personally wher- 
 ever he can be found if the instrument cannot be pre- 
 sented for payment in accordance with the other require- 
 ments of this section. 
 
 Instrument must "Sec. 74. The instrument must be 
 be exhibited. exhibited to the person from whom pay- 
 ment IS demanded, and when it is paid must be delivered 
 UP to the party paying it." 
 
 The person who makes presentment of the instrument 
 must have it in his possession and, if requested to do so, 
 must show it to the person of whom payment is de- 
 manded. When it is paid he must deliver it up to the 
 party who pays it. If it is secured by collateral he must 
 be prepared to produce and deliver up the collateral.^' 
 He has no right to reijuire payment unless he is prepared 
 to deliver up the instrument immediately upon its pay- 
 ment. If the instrument is lost or destroyed, present- 
 ment and demand for payment without the bill or note 
 must be made on the day of maturity and while the per- 
 son who is to pay it might properly refuse to do so, if his 
 refusal is not for that reason, notice of its dishonor must 
 be given immediately.^^ If the lost instrument is a bill of 
 exchange and protest is necessary (see Sec. 152), it must 
 be made in the manner described in Sec. 153 upon a copy 
 or written particulars. (Sec. 160.) Wlien the instru- 
 ment or a copy is produced, it might be well to again pre- 
 sent it for payment and if .payment is then refused pro- 
 ceed in the same manner as if it had been dishonored 
 upon the day of its maturity. The loss or destruction of 
 the instrument will occasion complications in determin- 
 
 17. Ocean iS^at '1 Bank vs. Fant, 50 K Y. 474. 
 
 18. Hinsdale vs. Miles, 5 Conn. 331. 
 Klots vs. Silver, 118 N. Y. S. 1090.
 
 136 THE NEGOTIABLE INSTRUMENTS LAW § 75 
 
 ing the liability of the secondary parties the solution of 
 which must depend upon the circumstances of each par- 
 ticular case. 
 
 Presentment ''Sec. 75. Where the instrument is 
 
 where instrnment payable at a bank, presentment for pay- 
 payable at bank, ment must be made during banking 
 "Nebraska. hours/ unless the person to make pay- 
 
 ment HAS NO FUNDS THERE TO MEET IT AT ANY TIME DURING 
 THE DAY, IN WHICH CASE PRESENTMENT AT ANY HOUR BEFORE 
 THE BANK IS CLOSED ON THAT DAY IS SUFFICIENT. ' ' 
 
 If an instrument is to be paid at a bank, it must be 
 presented during banking hours unless the person who is 
 to pay it has not at any time during the day on which it 
 is presented for payment, sufficient money at the bank 
 named with which to pay it. In that case it may be 
 presented at the bank after banking hours but before 
 the bank is closed for the day. Banking hours are those 
 hours during which the bank is open for business of re- 
 ceiving and paying out money, but this may depend up- 
 on local custom and in some localities a presentment at 
 any time while the bank remains open for business is 
 deemed to be sufficient.^^'' Ordinarily, pa^mient at a bank 
 ought to be demanded near the close of banking hours, 
 for if the demand is made early in the day and payment 
 is not obtained, and the person who is to pay the instru- 
 ment later deposits sufficient money to pay it, the early 
 demand will be considered premature.^'' The early pre- 
 sentment is sufficient to charge secondary parties, but the 
 person obliged to pay the instrument would not be 
 chargeable with fees and costs on protest after the pre- 
 
 ISa. Columbian Bk. vs. Bowen. 134 Wis. 218. 
 
 Columbia-Knickerbocker Tr. Co. vs. Miller, 156 App. Div. 
 
 (N. Y.) 810. 
 Citizens Central Bk. vs. Xew Amsterdam Nat. Bk., 128 App. 
 Div. (N. Y.) 554. 
 
 19. German- American Bank vs. Milliman. 31 Misc. (N. Y.) 87, 
 65 N. Y. S. 242.
 
 §76 PRESENTMENT FOR PAYMENT 137 
 
 mature presentment if it is shown that he had sufficient 
 funds at bank to pay the instrument before the close of 
 banking hours on that day. 
 
 Observe that by Section 2 of Section 72 the present- 
 ment must be made at a "reasonable hour." If it is not 
 convenient to present the instrument at a reasonable 
 hour at the bank at which it is payable, it is the custom 
 to send the instrument to the bank where it is to be paid 
 and leave it there until the close of business of the day on 
 which it is payable. (Also see Sec. 87.) 
 
 'Presentment "Sec. 76. Where the person primar- 
 
 where ily liable on the instrument is dead, and 
 
 principal is dead, ^tq place of payment is specified, pre- 
 sentment FOR PAYMENT MUST BE MADE TO HIS PERSONAL 
 representative, IF SUCH THERE BE, AND IF WITH THE EXER- 
 CISE OF REASONABLE DILIGENCE, HE CAN BE FOUND." 
 
 If the person who is first of all liable to pay the in- 
 strument is dead at the time pa\Tnent becomes due and 
 there is no place of payment specified, its presentment 
 for payment must be made to his personal representa- 
 tive. The personal representative of a dead person is 
 the executor or administrator of his estate, acting by ap- 
 pointment of some court. To ascertain who is the proper 
 person to whom presentment should be made when the 
 person primarily liable upon the instrument is dead, the 
 holder is required to use reasonable diligence, which 
 means, he is required to make such active inquiry and 
 effort to learn who he is and where he is to be found as an 
 ordinarily prudent man would make under similar cir- 
 cumstances to protect his own interests. ^^^ 
 
 If there are two or more executors or administrators 
 of the decedent's estate, presentment to one of them is 
 sufficient. If the personal representative of the deceased 
 party prove to be one who is himself a party to the bill, 
 
 19a. Reed vs. Spear, 107 App. Div. (N. Y.) 144.
 
 138 THE NEGOTIABLE INSTRUMENTS LAW § 77 
 
 presentment to him in his representative capacity is 
 nevertheless required.^^' 
 
 If it cannot be determined who is the proper personal 
 representative of the deceased person or where he may 
 be found, the presentment should be made at the dece- 
 dent's late place of residence.-^ If no pernonal representa- 
 tive of the deceased person can be found, the holder may 
 make presentment to the widow or other member of the 
 family of the deceased at his residence and if the in- 
 strument is not paid he must proceed with the steps nec- 
 essary upon dishonor.2- 
 
 Presentment "Sec. 77. Where the persons primar- 
 
 to persons liable ILY liable on the instrument are liable 
 as partners. as partners, and no place of payment is 
 
 specified, presentment for payment may be made to any 
 
 ONE of them, even THOUGH THERE HAS BEEN A DISSOLUTION 
 OF THE FIRM." 
 
 If persons who are partners are primarily liable upon 
 the instrument, or if having become liable as partners, 
 their partnership has been dissolved before the time 
 when presentment must be made and no place of pay- 
 ment is named in the instrument, it may be presented to 
 either of them, notwithstanding the fact that the part- 
 nership has been dissolved. Presentment to one of sev- 
 eral partners or former partners is sufficient and it may 
 be made in the manner prescribed in Section 73. If a 
 place is named in the instrument as the place where it is 
 to be presented for payment, a presentment at that place 
 is a proper presentment even though the partnership 
 has dissolved or ceased to do business there. -^ 
 
 Presentment to "Sec. 78. Where there are several 
 
 joint debtors. persons, not partners, primarily liable 
 on the instrument, and no place of payment is spbci- 
 fied, presentment must be made to them all." 
 
 20. Ma,e:nKler vs. Union Bank, 3 Pet. (U. S.) 87, 87 L. Ed. 612. 
 
 21. Washinj^ton Bank vs. Reynolds, 2 Fed. Cas. No. 954. 
 
 22. Washington Bank vs. Reynolds, 2 Fed. Cas. (U. S.) 954. 
 Reed vs. Spear, 107 App. Div. (N. Y.) 144, 94 N Y. S. 1007. 
 
 23. Cox vs. New York St. Bank, 100 U. S. 704, 25 L Ed. 739.
 
 §79 PRESENTMENT FOR PAYMENT 139 
 
 Several persons may join in the execution of the in- 
 strument and thus all become primarily liable but not 
 as partners. These are called joint makers or acceptors, 
 as the case may be, and in order to be sufficient to charge 
 the indorsers upon their instrument, presentment must 
 be made to each of them if no place of payment is named 
 in the instrument. If they reside in different cities this 
 cannot, of course, be done. In that case the saving clause 
 of Sec. 82 will dispense with presentment to those to 
 whom it cannot be made. 
 
 If a place of payment is named, presentment must be 
 made there and it is good even if none of the joint makers 
 or acceptors are found at that place. And if only one is 
 found there, presentment to him is sufficient. (Sec. 72.) 
 
 When present- ' ' ^^^- ^^- Presentment for payment 
 
 ment not re- is not required in order to charge the 
 quired to charge drawee where he has no right to expect 
 the drawer. q-^ require that the drawee or acceptor 
 
 WILL PAY the instrument." 
 
 Unlike the maker of a promissory note, the drawer of 
 a draft or bill of exchange is entitled to have the instru- 
 ment presented for pajTnent for he is a secondary 
 party, liable to pay only if the drawee or acceptor does 
 not. If the instrument remains unpaid at maturity he 
 will be discharged from liability by the holder's failure 
 to make presentment and demand and give him the notice 
 to which he is entitled. (Sec. 89.) However, if it should 
 appear that the drawer has no right to expect the drawee 
 or acceptor to pay the instrument, or no right to require 
 him to do so, as, for example, when he draws the bill for 
 his own accommodation and, having agreed to do so, he 
 does not put the acceptor in funds with which to pay it 
 when due, he is not then entitled to notice of its dishonor. 
 The failure of the holder to present the instrument and 
 give him notice of its dishonor will not, under these cir-
 
 140 THE NEGOTIABLE INSTRUMENTS LAW § 80 
 
 cumstances, release him from liability. But the fact alone 
 that the drawer had no fmids in the hands of the drawee 
 when he drew the bill is not sufficient to dispense with 
 presentment of the bill for payment,-^ unless he drew^ 
 with the understanding that he would provide the ac- 
 ceptor with funds to pay it at maturity and failed 
 to do so. 
 
 When present- ''Sec. 80. Presentment for payment 
 
 ment not re- is not required in order to charge an in- 
 quirecl to charge dorser where the instrument was made 
 
 the indorser. q^ accepted for his accommodation" and 
 ''Illinois 
 
 HE HAS NO REASON TO EXPECT THAT THE IN- 
 STRUMENT WILIj be paid if PRESENTED." 
 
 This section effects a very important change in the 
 law in respect to the right of an indorser who is himself 
 the accommodated party to require presentment for pay- 
 ment. Lentil its enactment such a party was held not to 
 be discharged from liability upon the instrument under 
 any circumstances, by the failure of the holder to prop- 
 erly present it for payment at maturity. But there is 
 now a ver^^ important qualifying clause in the section 
 which considerably modifies this old and well established 
 rule, so that now, if it can be sho-wm that the accommo- 
 dated indorser had any reason to expect the maker to pay 
 the instrument if presented, he w^ill be discharged by the 
 failure of the holder to make presentment.^^ None of 
 the cases cited directly decides the point as I have stated 
 it and I have not been able to find any that does, but they 
 hold, inf erentially, that if an accommodated indorser has 
 any reason to expect that the instrument will be paid if 
 presented, a failure to present it will discharge him. The 
 
 24. Life Insurance Co. vs. Pendleton, 112 U. S. 696, 708. 
 Welch vs. B. C. Taylor Co., 82 111. 579, 581. 
 
 25. McDonald vs. Luckenbach, 170 Fed. 434 ; 95 C. C. A. 60A. 
 Belch vs. Roberts (Mo.), 177 S. W. 1062. 
 
 Murray vs. Third Nat T Bk., 234 Fed. 481, 148 C. C. A. 247.
 
 §81 PRESENTMENT FOR PAYMENT 141 
 
 section now makes applicable to a promissory note or an 
 acceptance which is made for the accommodation of an 
 indorser, a rule similar to that enunciated in Sec. 79 
 which is applicable to the drawer of a bill, and it seems 
 to provide, by logical inference, that the instniment 
 must be presented for payment in order to charge the 
 accommodated indorser, if he has any reason to expect 
 the maker or acceptor to pay it, as, for example, if he has 
 put into his hands, or under his control, the money with 
 which to pay the instrument at maturity. Except in such 
 States as have omitted the words ''and he has no reason 
 to expect that the instrument will be paid if presented" 
 it is now necessary to present the instrument for pay- 
 ment in order to charge an indorser for whose accommo- 
 dation it was made or accepted, unless it is kno\ra, and 
 can be shown, that he had no reason to expect it to be 
 paid if presented. Section 115, wherein it is provided 
 that notice of dishonor need not be given an indorser for 
 whose accommodation the instrument was made or ac- 
 cepted, does not contain a similar qualification. 
 
 men delay in ''Sec. 81. Delay in making present-- 
 
 making present- ment for payment is excused when the 
 ment is excused, delay is caused by circumstances beyond 
 the control of the holder, and not imputable to his 
 
 DEFAULT, misconduct, OR NEGLIGENCE. AVhEN THE CAUSE 
 OF DELAY CEASES TO OPERATE, PRESENTMENT MUST BE MADE 
 WITH REASONABLE DILIGENCE." 
 
 While by Sec. 71 the instrument, if payable upon a day 
 certain, must be presented upon the day when it falls due, 
 delay in making the presentment is excused when it is 
 caused by circumstances beyond the control of the holder, 
 including a sudden and severe sickness, and not charge- 
 able to his failure to perform a duty which he is himself 
 obliged to perform, or to his own wrongful act, care-
 
 142 THE NEGOTIABLE INSTRUMENTS LAW § 82 
 
 lessness or neglect.^^ The holder owes to all parties to 
 the instrument the duty to act promptly, in good faith 
 and carefuUy, in presenting the instrument for payment, 
 and if he does so and yet, by some circumstances beyond 
 his control, it is not possible for him to present the in- 
 strument for payment upon the day when presentment 
 ought to be made, the delay will be excused. The cases 
 cited enumerate some of the circumstances which do and 
 others which do not dispense with presentment or ex- 
 cuse delay in making it. Upon the removal of the cause 
 of the delay the holder must make the presentment and 
 he must proceed with reasonable diligence. The cir- 
 cumstances which are relied upon by the holder as an ex- 
 cuse for presentment at the proper time, must be alleged 
 and proved by him in any action which he may bring 
 upon the instrument to charge any of the parties liable 
 upon it who are entitled to notice of its proper and timely 
 presentment and dishonor. 
 
 ■y^ljen ''Sec. 82. Presentment for payment 
 
 presentment may is dispensed with : 
 
 be dispensed ^ Where, after the exercise oi' rea- 
 
 ^i*^- sonable diligence presentment as re- 
 
 quired BY this act can NOT BE MADE; 
 
 2. Where the drawee is a fictitious person ; 
 
 3. By waiver of presentment, express or implied." 
 Presentment for payment need not be made at all if 
 
 after the exercise of reasonable diligence it cannot be 
 made in the manner required in this Act. It need not be 
 made of a bill of exchange, or even attempted, if the 
 holder learns that the drawee is a fictitious person, that 
 is, one who is not real or does not exist, or, as the Act 
 
 26. Young vs. Exchange Bank," 152 Ky. 293, 153 S. W. 444, Ann. 
 
 Cas. 1915 B 148. 
 Aebi vs. Bank of Evansville, 124 Wise. 73, 102 N. W. 329, 
 
 68 L. R. A. 964, 109 Am. St. Rep. 925. 
 Wilson vs. Senier, 14 Wis. 380.
 
 §82 PRESENTMENT FOR PAYMENT 143 
 
 has been interpreted to mean, one who though living and 
 real has no interest in the instrument. (Sec. 9.) 
 
 It is also dispensed with by waiver. The waiver 
 may be expressed, w^hich is usually done by incor- 
 porating the waiver in the body of the instrument before 
 its issue, or the person waiving presentment may write 
 words at his signature, or may utter spoken words at 
 the time of transfer which expressly declare that he does 
 not require presentment. The waiver may also be im- 
 plied from his words or conduct. The express waiver 
 may be made before, at or after the maturity of the in- 
 strument. It need not be in writing but it is obvious that 
 when an indorser expresses his willingness to waive pre- 
 sentment for payment, and he writes upon the instrument, 
 at his signature, words expressing that he does so, this 
 will settle all question of his intention. But if .the 
 waiver is expressed in a separate writing, by letter or 
 telegram^T or in spoken words^^ it is equally bind- 
 ing although, of course, in that case, the proof 
 is more difficult. No consideration need be given for the 
 waiver, whether made before or at,-^ or after the ma- 
 turity of the instrument.20 It need not be made by the 
 party himself but may be made by his authorized agent.^^ 
 A waiver of presentment for payment and notice of 
 non-payment may be implied from any words or acts of 
 the person it is sought to c harge, or from any one who 
 
 27. Bankers State Bank vs. Mason Hand Lathe Co., 121 Iowa, 570, 
 
 97 N. W. 70. 
 Corner vs. Pratt. 138 Mass. 446. 
 
 28. Churchill vs. Ycat man-Gray Groc. Co., Ill Ark. 529, 164 S. 
 
 W. 283. 
 
 29. Neal vs. Wood, 23 Ind. 523. 
 
 Robinson vs. Barnett, 19 Fla. 670, 45 Am. R. 24. 
 Uhler vs. Farmers Nat. Bank, 64 Pa. 406. 
 
 30. Bur-ettstown Nat. Bank vs. Nill, 213 Pa. 456 63 A. 186, 3 
 
 L. R. A. N. S. 1079-Note, 5 Ann. Cas. 476 & Note. 
 
 31. Fowler vs. Fleming, 1 McMul. (S. C. L.) 282.
 
 144 THE NEGOTIABLE INSTRUMENTS LAW § 82 
 
 speaks or acts by liis authority in the matter before, at, 
 or after the maturity of the instrument, if the words or 
 acts are of such character as will satisfy any reasonable 
 person that a waiver was intended, or if they are such 
 as will justify him in believing that the drawer or in- 
 dorser intended to dispense with presentment of the in- 
 strument for payment.32 A waiver is also implied if the 
 words or acts are uttered or done in such a manner as 
 will justify the holder in believing that they are intended 
 to induce him to forego the usual proceedings necessary 
 to fix the liability of the drawer and indorser.^^ 
 
 A waiver will not be inferred from doubtful language 
 or acts, and if the words^* or acts proceed from any per- 
 son other than the one to be bound by them, his authority 
 to waive must be clear and without doubt or it will not 
 bind the person for whom he assumes to act. (Also see 
 Sees. 109, 110 and 111.) 
 
 Of course, a waiver binds no one except that person 
 who either expressly makes or authorizes it or against 
 whom, by reason of his words or acts, it is implied (Sec. 
 110) ; and where there are several parties to the instru- 
 ment who are entitled to presentment and notice, a waiver 
 by one will not operate against the others. The language 
 or acts relied upon to sustain a waiver by implication 
 will be strictly construed and will not be interpreted 
 beyond the fair. meaning of the terms used.=^^ 
 
 32. Maj^er & Bros. Appeal, 87 Pa. 129. 
 
 33. Sigerson vs. Matthews, 20 How. (U. S.) 496, 15 L. Ed. 989. 
 Boyd vs. Bank of Toledo, 32 Ohio St. 526. 
 
 AVorley vs. Johnson, 60 Fla. 295. 
 
 34. Ross vs. Hurd, 71 N. Y. 14. 
 Worley vs. Johnson, 60 Fla. 295. 
 
 35. Glidden vs. Chamberlain, 167 Mass. 486, 46 N. E. 103, 57 Am. 
 
 S. R. 477. 
 Lititz Nat Bank vs. Siple, 145 Pa. 49, 22 A. 208.
 
 §83,84 PRESENTMENT FOR PAYMENT 145 
 
 When instrument ''Sec. 83. The instrument is dishon- 
 
 dishonored by ored by non-payment when, 
 
 non-payment. -j^ j^ ^^ ^^^^ presented for PAYMENT 
 
 AND PAYMENT IS REFUSED OR CANNOT BE OBTAINED; OR 
 
 2. PllESENTMENT IS EXCUSED AND THE INSTRUMENT IS 
 OVERDUE AND UNPAID.'' 
 
 The dishonor of the instrument fixes the liability of 
 its parties and the holder may proceed upon the dishonor 
 if he has properly presented the instrument for pay- 
 ment and payment is refused, or if he cannot obtain 
 payment at the place where it is to be made. A neglect 
 to pay the instrument after presentment and demand is 
 equivalent to a refusal to do so. The instrument is also 
 dishonored when it is overdue and remains unpaid and 
 presentment is excused. 
 
 The use of the word ''excused" in this section would 
 seem to be unfortunate and it properly means "dis- 
 pensed with." That term would have been more ap- 
 propriate, although it is sometimes used as a synonym 
 for the former. The Act nowhere "excuses" present- 
 ment. Delay in presentment is "excused" by Sec. 81, 
 but that section also provides that when the cause for 
 delay ceases to operate, presentment "must" be made 
 with reasonable diligence. 
 
 It seems, therefore, that this section must be under- 
 stood to mean that an instrument is dishonored when it 
 is overdue and unpaid and presentment has been dis- 
 pensed with in accordance with Section 82. 
 
 Liability of ''Sec. 84. Subject to the provisions 
 
 person OF this act, when the instrument is dis- 
 
 secondarily liable honored by non-payment an immediate 
 when instrument right of recourse to all. parties second- 
 dishonored. arily liable thereon accrues to the 
 
 holder, ' ' 
 
 The person or persons who by the terms or the nature 
 of the instrument are required to pay it are the persons
 
 146 THE NEGOTIABLE INSTRUMENTS LAW § 85 
 
 primarily liable and all other parties are secondarily 
 liable (Sec. 192). The parties secondarily liable are, 
 therefore, not required to pay the instniment until it has 
 become dishonored by reason of the failure of the person 
 primarily liable to do so. When the instrument .has be- 
 come dishonored, however, all parties secondarily liable 
 are immediately liable to the holder who can not be 
 required to look to a primary party for payment, but 
 may proceed at once against all the parties, subject only 
 to the provisions of this Act. He may proceed against 
 them separately until full satisfaction is obtained, or 
 join them all in one action upon the instrument.^*^ 
 
 *'Sec. 85. Every negotiable instru- 
 Time of maturity, ment* is payable at the time fixed 
 "Massachusetts, t^ereix without grace." When the day 
 New Hampshire, c« 
 
 N. Carolina ^^^ maturity falls upon Sunday, or a 
 
 Iowa. holiday, the instrument is payable on 
 
 ''Arizona, the next succeeding business day.** In- 
 
 Colorado, struments falling due*" on Saturday are 
 
 Kentucky, ^^ ^^ presented for payment on the next 
 
 •^Delaware SUCCEEDING business day, except that in- 
 
 Kansas, STRUMENTS PAYABLE ON DEMAND MAY, AT 
 
 Massachusetts, the option of the holder, be presented 
 
 New York. ^^^ payment BEFORE twelve 'clock NOON 
 
 "Iowa. oi 
 
 eRhode Island ^^ Saturday when that entire day is 
 
 NOT A HOLIDAY.''*^ 
 
 Every negotial)le instrument matures and must be paid 
 on the day when it is expressed to be due if a fixed or 
 determinable date of maturity is mentioned in the in- 
 strument, and it must be presented for payment on that 
 day unless a delay is excused. There are no days of 
 grace except in tliose states indicated in the marginal note. 
 If the instrument falls due on Sunday or upon a holiday, 
 or upon a Saturday if it is not a demand instrument, it 
 must be presented on the next succeeding l)usiness day. 
 
 36. Moore vs. Rogers, 19 111. 347. 
 
 Morrison vs. Fisliell. 64 Ind. 177.
 
 §86,87 PRESENTMENT FOR PAYMENT 147 
 
 An instrument payable on demand may be presented 
 for payment on Saturday when that day is not an entire 
 holiday if the presentment is made before twelve o'clock 
 noon and it need not again be presented on the next 
 succeeding business day. To make presentment of a de- 
 mand instrument on Saturday or to wait until the next 
 succeeding business day is at the option of the holder, 
 but if the presentment is made on Saturday and the 
 instrument is dishonored, the notice of dishonor must be 
 given on that day or the next business day. (Sec. 194.) 
 
 Time; how "Sec. 86. Where the instrument is 
 
 computed. payable at a fixed period after date, 
 
 AFTER SIGHT, OR AFTER THE HAPPENING OF A SPECIFIED EVENT, 
 THE TIME OF PAYMENT IS DETERMINED BY EXCLUDING THE 
 DAY FROM WHICH THE TIME IS TO BEGIN TO RUN, AND BY IN- 
 CLUDING THE DATE OF PAYMENT.'' 
 
 To deteiTQine when an instrument must be paid if it 
 is payable at a fixed number of days after date, sight. 
 or the happening of an event which it names, the day of 
 its date, sight, or of the happening of the event is not 
 included but the last day of the period for which it is to 
 run is included and becomes the day upon which pre- 
 sentment for payment must be made, unless it is excus- 
 ably delayed, or unless it is a Saturday, Sunday or a holi- 
 day. (Sec. 85.) 
 
 "Sec. 87. "Where the instrument is 
 Rule where ^ixde payable at a bank,^ it is equivalent 
 
 pTyable^at bank. TO an order to the bank to PAY the same 
 "Illinois, for the account of the principal debtor 
 
 Nebraska, thereon . ' '" 
 
 mSxiesoU. When an instrument is made payable 
 
 ^Missouri. at a bank the effect of making it so pay- 
 
 able is the same as if an order had been given to the 
 bank to pay it, and when such an instrument is presented 
 to the bank named it is obliged to pay it for the account 
 of the principal debtor out of any suflacient funds he may
 
 148 THE NEGOTIABLE INSTRUMENTS LAW § 88 
 
 have to the credit of his general account on the day of 
 its maturity Avhich are not specially applicable to another 
 purpose.^" An instrument so made payable becomes the 
 equivalent of a check.^^ Therefore, if an instrument 
 thus payable is not charged to the account of the party 
 making it payable at a bank and who has available funds 
 there to pay it at maturity, a collecting bank, if it has the 
 instrument for collection, would be liable to the owner 
 of the instrument in damages if a loss afterward result 
 from its neglect. If the bank at which such an instru- 
 ment is payable has the instrument as holder, for its own 
 account, its failure to obtain payment out of the funds 
 appropriable for that purpose will discharge parties sec- 
 ondarily liable upon it.^^^ A lesser sum than the full 
 amount due upon the instrument need not be appropri- 
 ated. 
 
 What constitutes *'Sec. 88. Payment is made in dub 
 
 pasnnent in due course when it is made at or after the 
 course 
 
 MATURITY OF THE INSTRUMENT TO THB 
 holder thereof in good FAITH AND WITHOUT NOTICE THAT 
 HIS TITLE IS DEFECTIVE.'' 
 
 Payment in due course discharges the instrument and 
 relieves the person making payment from all further 
 obligation upon it. (Sec. 119.) It is made in due course 
 if it is made at the time or after the instrument becomes 
 due and payable and is made to the holder or to some per- 
 son authorized by him to receive pa^nnent.^^ Such a pay- 
 ment will discharge the person obliged to pay the instru- 
 
 37. Commercial Bank vs. Hennincer, 105 Pa. St. 496. 
 Bedford Bank vs. Aeoain. 125 Ind. 584. 
 German Natl. Bank vs. Foreman, 138 Pa. St. 474. 
 
 38. Baldwin's Bank vs. Smith, 215 N. Y. 76. 
 
 Aetna Natl. Bank vs. Fourth Natl. Bank, 46 N. Y. 82, 88. 
 
 38a. Mechanics & Trader's Bk. vs. Seitz, 150 Pa. St. 632. 
 
 39. Madison vs. Cabalek, 86 111. A. 450. 
 
 Marling' vs. Nommensen, 127 Wise. 363, 106 N. W. 844, 115 
 Am. S. R. 1017, 5 L. R. A. N. S. 412, 7 Ann. Cas. 364.
 
 §88 PRESENTMENT FOR PAYMENT 149 
 
 ment even if made to the wrong person or to one who had 
 no title to the instrument, if it is made in good faith and 
 without notice of any deception, or defect in the holder's 
 title.^o 
 
 But payment made before the instrument becomes due 
 is not payment in due course and, if made to the wrong 
 person or to one whose title to the instrument is de- 
 fective, the person paying it is not discharged from lia- 
 bility to the real owner of the instrument, notwithstand- 
 ing that the person asking payment has the instrument 
 in his possession and presents it for payment. A pay- 
 ment before maturity is no defense against a bona fide 
 holder and the payer will make it at his own risk.^^ It 
 binds only t.he party receiving the pa>Tnent. 
 
 It follows, therefore, that one liable to pay an instru- 
 ment should not do so before maturity unless he has 
 satisfied himself positively that the person asking pay- 
 ment is entitled to receive it. You will please refer to 
 Subdivision 8 for the general subject of discharge of the 
 instrument and discharge of parties. 
 
 40. Bambridge vs. Louisville, 83 Ky. 285, 4 Am. S. R. 153. 
 
 41. Williams vs. Keyes, 90 Mich. 290. 51 N. W. 520, 30 Am. S. 
 
 R. 438. 
 Watson vs. Wyman, 161 Mass. 96. 99
 
 150 
 
 THE NEGOTIABLE INSTRUMENTS LAW 
 
 §89 
 
 SUBDIVISION VII, 
 
 Notice of Dishonor. 
 
 Section 
 
 I Section 
 
 89 
 
 90 
 91 
 92 
 
 93 
 
 94 
 
 95 
 96 
 97 
 
 98 
 
 99 
 
 100 
 
 101 
 102 
 
 103 
 
 104 
 
 105 
 
 To whom notice of dishonor 
 must be given. 
 
 By whom given. 
 
 Notice given by agent. 
 
 Effect of notice given on be- 
 half of holder. 
 
 Effect where notice is given 
 by party entitled thereto. 109 
 
 When agent may give no- hq 
 tiee. 
 
 When notice sufficient. 
 
 Form of notice. 
 
 To whom notice mav be 
 
 106 
 
 107 
 
 108 
 
 111 
 112 
 113 
 
 given. 
 
 Notice where party is dead. 
 
 Notice to partners. 
 
 Notice to persons jointly li- 
 able. 
 
 Notice to bankrupt. 
 
 Time within which notice 
 must be given. 
 
 Where parties reside in same ^^ 
 place. 
 
 Where pai'ties reside in dif- 118 
 ferent places. 
 
 114 
 
 115 
 
 116 
 
 When sender deemed to 
 
 have given due notice. 
 Deposit in post office; wL''t 
 
 constitutes. 
 Notice by subsequent party ; 
 
 time of giving. 
 Where notice must be sent. 
 Waiver of notice. 
 Who bound by waiver. 
 Waiver of protest. 
 When notice dispensed with. 
 Delay in giving notice. How 
 
 excused. 
 When notice need not be 
 
 given to drawer. 
 When notice need not be 
 
 given to indorser. 
 Notice of non-payment 
 
 where acceptance refused. 
 Effect of omission to give 
 
 notice of non-acceptance. 
 Protest; when need not be 
 
 made ; when must be made. 
 
 In order to charge the parties secondarily liable upon a 
 negotiable instrument they must be given notice of its 
 •dishonor by non-payment or non-acceptance unless, by 
 reason of the exceptions provided in the Act, the notice 
 may be dispensed with. The giving of notice is made an 
 important duty and any oversight or omission to give it 
 promptly, upon dishonor of the instrument, or a neglect 
 to observe the necessary formalities in giving it within 
 the time provided in this Act, will release the parties en-
 
 §89 NOTICE OF DISHONOR 151 
 
 titled to notice and they cannot again be made liable upon 
 the instrument except by their own voluntary act.^ 
 
 The following sections of the Act prescribe the manner 
 in which, the time at which, and the parties to whom the 
 notice must be given, as well as by whom, and every 
 holder is obliged to observe carefully all of their provi- 
 sions upon this subject if he would save his rights upon 
 the instrument. He is required to act with promptness 
 and dispatch when called upon by default in the accept- 
 ance or payment of the instrument to convey the infor- 
 mation of its dishonor to the secondary parties to whom 
 he looks for its payment, unless the giving of the notice is 
 dispensed with or delay in giving it is excused. Tt is ap- 
 parent, therefore, that a knowledge of how to proceed 
 upon dishonor of the instrument is very essential to his 
 safety. 
 
 The general rule in regard to notice applicable to the 
 three forms of negotiable instruments to which this Act 
 particularly applies, may be understood to be this. The 
 holder in whose hands the instrument is dishonored is 
 required to give notice to every party whom he intends to 
 hold. He may give it to all or select only those to whom 
 he looks for payment, even if they be quite remote. The 
 notice he gives will fix the liability of the parties to whom 
 it is given to him and to persons claiming through him 
 or to whom he is liable, and to all parties prior to the 
 holder who have a right of recourse against the parties 
 notified. Intermediate and prior secondary parties to 
 whom notice is not given will be discharged. Therefore, 
 when an indorser receives notice of the dishonor of the in- 
 strument he ought, for his own protection, himself to give 
 
 1. Aebi vs. Bank of Evansville, 124 Wise. 73, 102 N. W. 329. 
 Smith vs. Rowland, 18 Ala. 665.
 
 152 THE NEGOTIABLE INSTRUMENTS LAW § 89, 90 
 
 notice to the parties to whom he looks for payment. The 
 provisions of the Act in respect to notice are as follows : 
 
 To whom notice ' ' Sec. 89. Except as herein otherwise 
 of dishonor must provided, when a negotiable instrument 
 be given. ^^^^ been dishonored by non-acceptance 
 
 OR non-payment, notice of dishonor must be given to 
 
 THE DRAWER AND TO EACH INDORSER, AND ANY DRAWER OR IN- 
 DORSER TO WHOM SUCH NOTICE IS NOT GIVEN IS DISCHARGED." 
 
 If the instrument which becomes dishonored by non- 
 acceptance or non-payment is a bill of exchange notice of 
 its dishonor must be given to the drawer and to each in- 
 dorser. If the dishonor is of a promissory note, the no- 
 tice is required to be given to each indorser. The maker 
 is not entitled to notice. 
 By whom given. ' ' Sec 90. The notice may be given by 
 
 OR ON behalf of THE HOLDER, OR BY OR ON BEHALF OF ANY 
 PARTY TO THE INSTRUMENT WHO MIGHT BE COMPELLED TO 
 PAY IT TO THE HOLDER, AND WHO, UPON TAKING IT UP, WOULD 
 HAVE A RIGHT TO REIMBURSEMENT FROM THE PARTY TO WHOM 
 THE NOTICE IS GRTEN. " 
 
 The person who ought to, and who usually does give 
 the notice of dishonor, is the holder of the instrument at 
 the time of its dishonor, or it is given by an agent act- 
 ing for him. The agent's authority need not be in writ- 
 ing.- The notice may be given by any party or by any 
 person on behalf of any party who is liable upon the in- 
 strument and who might be compelled to pay it to the 
 holder and would thereupon have a right to recover 
 from the party to whom the notice is given. And a party 
 need not wait until he himself receives notice before giv- 
 ing notice of dishonor to other parties whom he desires 
 to hold. He may give the notice as soon as he becomes 
 aware of the dishonor of the instrument, no matter what 
 his source or means of information. When he receives 
 notice of the dishonor of the instrument, however, he 
 
 2. Utica Bank vs. Smitli, IS Johns. (K Y.) 230.
 
 §91 NOTICE OF DISHONOR 153 
 
 must give notice to other parties to whom he looks for 
 payment within the time prescribed in this Act unless he 
 has already done so or has knowledge that the holder at 
 the time of dishonor has already given the notice to 
 them. 
 
 This section may therefore be understood to mean 
 that all parties to the instrument, except those primarily 
 liable and those not entitled to receive notice, such as 
 one for whose acconmiodation the instrument is made, 
 may give notice of dishonor^ but it may not be given by 
 a stranger. A stranger is one who is neither a party nor 
 the representative of a party to the instrument, and this 
 definition includes a drawee who has refused to accept 
 and a party who has been discharged.^ 
 Notice given by "Sec. 91. Notice of dishonor may be 
 
 ^S^^^- GIVEN BY AN AGENT EITHER IN HIS OWN NAME 
 
 OR IN THE NAME OF ANY PARTY ENTITLED TO GIVE NOTICE, 
 WHETHER THAT PARTY BE HIS PRINCIPAL OR NOT." 
 
 When the notice is given by one person as the agent of 
 another, he may give it in his own name or he may give 
 it in the name of the person for whom he is acting. He 
 may give the notice in the name of any other party who 
 is entitled to give notice even if the party in whose name 
 he gives it is not the person for whom he is acting as 
 agent, but if given in a wrong name it is not a sufficient 
 notice.^ As already stated, his authority need not be in 
 writing.^ 
 
 3. Traders Natl. Bank vs. Jones, 104 App. Div. 433, 93 N. Y. Supp. 
 
 768. 
 
 4. Rrailsford vs. Williams, 15 Md. 150, 74 Am. D. 559. 
 Lawrence vs. Miller, 16 N. Y. 235. 
 
 Payne vs. Patrick, 21 Tex. 680. 
 
 Harrison vs. Rnscoe, 15 L. J. Exchg. 110, 15 M. & W. 231. 
 
 Stanton vs. Blossom, 14 Mass. 116. 
 
 5. Cabot Bank vs. Warner, 92 Mass. 522. 
 
 6. Utica Bank vs. Smith, IS Johns. (N. Y.) 230.
 
 154 THE NEGOTIABLE INSTKUMENTS LAW § 92-94 
 
 Effect of notice ' ' Sec. 92. Wheke notice is given by ok 
 given on behalf qn behalf of the holder., it enures for 
 of holder. ^^^ benefit of all subsequent holders 
 
 AND .\LL PRIOR PARTIES WHO HAVE A RIGHT OF RECOURSE 
 AGAINST THE PARTY TO WHOM IT IS GHT^N." 
 
 If the notice of dishonor is given by the holder, or by 
 someone for him, it operates for his benefit and for the 
 benefit of all persons who aftenvard become holders of 
 the instrument. It operates also for the benefit of all 
 parties before the holder giving notice who have a right 
 to enforce the instrument against the parties to whom the 
 notice is given. In other words, when the holder has 
 given notice of dishonor to all the parties to whom it is 
 required to be given it is not necessary that any other 
 party give it. The notice by the holder operates for the 
 benefit of all,*^ but he is bound only to give it to his im- 
 mediate indorser if he looks to him alone for recourse.* 
 
 Effect where ' ' Sec. 93. Where notice is given by or 
 
 notice is given ON BEHALF OF a PARTY' entitled to give no- 
 by party entitled ^ice, it enures for the benefit of the 
 thereto. holder and all parties subsequent to the 
 
 PARTY TO WHOM NOTICE IS GIVEN." 
 
 If the notice is given by a party to the instrument who 
 is not the holder but who is entitled to give notice, or if it 
 is given by someone for him, the notice operates for the 
 benefit of the holder of the instrument as well as for all 
 who became parties after that one to whom the notice is 
 given. It thus fixes the liability to them of the party to 
 whom the notice is given and fixes it as well to that 
 party from whom he receives the notice. 
 When agent may ''Sec 94. Where the instrument has 
 give notice. been dishonored in the hands of an 
 
 AGENT, HE MAY EITHER HIMSELF GIVE NOTICE TO THE PARTIES 
 LIABL E THEREON, OR HE MAY GIVE NOTICE TO HIS PRINCIPAL. 
 
 7. Ti-aders Natl. Bank vs. Jones, 104 App. Div. 433, 93 N. Y. Supp. 
 
 768. 
 
 8. West River Bank vs. Taylor, 34 N. Y. 128, 131. 
 Linn vs. Horton, 17 Wise. 157.
 
 §95 NOTICE OF DISHONOR 155 
 
 If he give notice to his principal, he must do so within 
 
 THE SAME time AS IF HE WERE THE HOLDER, AND THE PRIN- 
 CIPAL, UPON THE RECEIPT OF SUCH NOTICE, HAS HIMSELF THE 
 SAME TIME FOR GIVING NOTICE AS IF THE AGENT HAD BEEN 
 AN INDEPENDENT HOLDER." 
 
 If the instrument is in the hands of an agent at the 
 time of its dishonor, a collecting bank for example, the 
 agent may give notice of its dishonor to the parties liable 
 upon it or he may give the notice to his principal alone.^ 
 If the agent gives the notice he must do it within the time 
 fixed in Sections 103 and 104. If he fails to give his 
 principal notice within the time in which it is required 
 to be given his neglect will be imputable to his principal 
 and will destroy his principal's right to give notice, not- 
 withstanding that after receiving notice from his agent, 
 the principal may give or attempt to give the notice to 
 his prior parties within the time prescribed in this Act.^*^ 
 A collecting bank will be liable to its customer if it fails 
 in this respect.^ ^ A collecting agent ought not to take 
 anything but money in payment of the instrument, but 
 if it receives a check which afterward proves to be worth- 
 less, it must at once proceed to give notice of dishonor 
 and it must do this within the time required in this sub- 
 division of the Act,^- Upon receiving the notice, the 
 principal, that is, the person for whom it is acting, must 
 in turn give the notice within the prescribed time after 
 receiving notice from his agent. 
 
 When notice "Sec. 95. A written notice* need not 
 
 sufficient. ^^ signed, and an insufficient written' 
 
 "Kentucky. 
 
 notice may be supplemented and vali- 
 dated BY verbal communication. A misdescription of 
 
 9. Gleason vs. Thayer, 87 Conn. 248. 
 Shea vs. Vahev, 215 Mass. 80. 
 
 10. Rosson vs. Carroll, 90 Tenn. 90. 
 
 Sampson vs. Turnev, 5 Hump. (Tenn.), 419, 42 Am. D. 443. 
 
 11. Brill vs. Jefferson Bank, 159 App. Div. (N. Y.) 461. 
 
 12. Young vs. Exchanije Bank, 152 Ky. 293, 153 S. W. 444, Ann. 
 
 Cas. 1915 B. 148.
 
 156 THE NEGOTIABLE INSTRUMENTS LAW § 95, 96 
 
 THE INSTRUMENT DOES NOT VITIATE THE NOTICE UNLESS THE 
 PARTY TO WHOM THE NOTICE IS GIVEN IS IN FACT MISLED 
 THEKEBi'/' 
 
 The person giving written notice of dishonor need not 
 sign it. If he fails to do so and the notice contains all 
 the requirements of the next section, it is nevertheless 
 good. 
 
 If a written notice omits any of the requirements of 
 the next section they may be supplied by verbal com- 
 munication and this will make good a notice which would 
 otherwise be invalid. If the notice incorrectly describes 
 the instrument dishonored it is not, for that reason, in- 
 valid unless the party to whom it is given is actually 
 misled by the mistake. 
 
 Form of notice. '*Sec. 96. The notice may be in weit- 
 
 "Kentucky. ^^^ q^ merely oral*^ and may be gi\'en in 
 
 any terms which sufficiently identify the instrument, 
 and indicate that it has been dishonored by non-ac- 
 CEPTANCE OR NON-PAYMENT. It MAY IN ALL CASES BE GIVEN 
 BY DELIVERING IT PERSONALLY OR THROUGH THE MAILS." 
 
 Notwithstanding that the preceding section will permit 
 the correction of any mistake in the written notice if the 
 party, receiving it has not been misled by the mistake, 
 care must be used in preparing the notice, and it should 
 correctly describe the date, amount and nature of the 
 instrument, by whom made or accepted and indorsed, 
 and distinctly state the fact that it was presented for 
 payment or acceptance, as the case may be, and that 
 pajTnent or acceptance was demanded and was refused. 
 It should also show by whom the notice is given, state 
 where the dishonored instrument is held and the names 
 of all parties to whom notice of its dishonor has been 
 given. However, the terms of the notice are not pre- 
 scribed by the Act in any particular. Any words may be 
 written or spoken to the party to be notified which de- 
 scribe the instrument well enough to enable him to iden-
 
 §97 NOTICE OF DISHONOR 157 
 
 tify it and clearly make him understand that the instru- 
 ment has not been accepted or paid upon presentment, 
 as the case may be, and that the holder looks to him for 
 pajanent.^^ The reasons given by the party refusing 
 to accept or pay the instrument need not be stated in it 
 but they may be for the information of the party notified. 
 If the instrument is protested, however, the cause of 
 protest and the reason given for non-payment or non- 
 acceptance must be stated in the protest. (See Sec. 153.) 
 The notice may be given personally or sent through 
 the mails and when the addresses of all parties to be 
 notified are known to the holder, he will encounter no 
 difficulty in sending the notices promptly and properly. 
 When the parties or their addresses are unknown to the 
 holder it is the very general custom to make out as many 
 copies of the notice as there are separate parties to be 
 notified and send them all to the immediate party froin 
 whom the holder obtained title. He in turn will forward 
 the notices to the next before him and so on back to the 
 party who originally negotiated the instrument. It is 
 entirely proper to do this.^^ Each party who receives 
 notice is entitled under Sec. 107, to the same time for giv- 
 ing notice to parties liable to him as the holder .has in 
 whose hands the instrument meets with dishonor. A 
 notice given by telephone is good if it is clearly shown 
 that the party to be notified was communicated with.^^ 
 
 To whom notice *'Sec. 97. Notice of dishonor may be 
 may be given. given either to the party himself or to 
 HIS agent in that behalf.'^ 
 
 The notice of dishonor may be given to the party to 
 be notified or to an agent who has authority from him to 
 
 13. Zollner vs. Moffitt, 222 Pa. 644, 72 Atl. 235. 
 
 14. Oaklev vs. Carr, 66 Nebr. 751, 92 N. W. 1000, 103 Am. S. R. 
 
 739, 60 L. R. A. 431. 
 
 15. American Nat'l Bank vs. Fertilizer Co., 125 Tenn. 328, 
 337, 143 S. W. 597.
 
 158 THE NEGOTIABLE INSTRUMENTS LAW § 97 
 
 receive it. The words ' ' his agent in that behalf ' ' do not 
 permit that notice of the dishonor of the instrument be 
 given to a party by communicating the fact of its dis- 
 honor to some person who is a mere employe or one who 
 is his agent in other matters unless the agent acts for 
 him in such a capacity as w^ill justify the person gi\^ng 
 the notice in believing that the agent is authorized to 
 act for his principal in the matter of the dishonored 
 instrument. Thus, a notice to an agent who is clothed 
 with general authority to conduct his principal's busi- 
 ness would be proper and sufficient.^*' 
 
 Ordinarily the words ''in that behalf" mean "for that 
 purpose" and if the person giving notice of the dishonor 
 of a negotiable instrument does not know and has not 
 sufficient reason to think that the agent to whom ,he 
 contemplates giving the notice has authority to act for 
 hi's principal in behalf of the dishonored instrument, or 
 if an ordinarily prudent man would have reason to doubt 
 his authority, the notice should not be given to the agent 
 but should be given to the principal, either personally 
 or by mail. Notice given to an attorney or to a ser\^ant 
 is usually insufficient unless it is shown that the attorney 
 or servant was expressly or impliedly authorized to re- 
 ceive it by the person sought to be charged/" but it has 
 been held that a notice given to an agent who has author- 
 ity to indorse negotiable paper will be sufficient.^® Avoid 
 giving notice of dishonor to an agent unless satisfied 
 that he is authorized by the party to be notified to act 
 for him in regard to the dishonored instrument. Costly 
 delay may ensue, and remember that although a second- 
 
 16. Kinc: vs. Grisri^s, 82 Minn. 387, 85 N. W. 162. 
 
 17. Amer. Natl. Bank vs. Fertilizer Co., 125 Tenn. 328, 143 S. W. 
 
 597. 
 N. Y., etc., Contr. Co. vs. Selma Savings Bank, 51 Ala. 305. 
 
 18. N. Y., etc.. Contr. Co. vs. Selma Savin<?s Bnk., 51 Ala. 305, 306. 
 Froth vs. Thrush, 8 Bam. & Cress. 387.
 
 §98 NOTICE OF DISHONOR 159 
 
 ary party may actually know of the dishonor, he will be 
 released from liability upon the instrument if that knowl- 
 edge is not communicated to him within the time pre- 
 scribed in this Act. (Sec. 108.) 
 
 Notice where ''Sec. 98. When any party is dead, 
 
 party is dead. ^^^j^ -g-jg death is known to the party 
 
 GIVING NOTICE, THE NOTICE MUST BE GIVI^N 
 TO A personal REPRESENTATIVE, IF THERE BE ONE, AND IF 
 WITH REASONABLE DILIGENCE HE CAN BE FOUND. If THERE 
 BE NO PERSONAL REPRESENTATIVE, NOTICE MAY ^ BE SENT TO 
 THE LAST RESIDENCE OR THE LAST PLACE OF BUSINESS OF THE 
 DECEASED.'' 
 
 If the party who is to be notified is dead and the per- 
 son giving the notice knows that he is dead, ,he must use 
 reasonable diligence to find and notify the personal rep- 
 resentative of the deceased party. Eeasonable diligence 
 has been defined to be that degree of diligence M^hich busi- 
 ness men usually exercise when their own interests de- 
 pend upon obtaining correct information. If the party 
 giving notice is not aware of the death of the party to be 
 notified, a notice given in the usual manner as to a living 
 person at his last known residence or place of business 
 is sufiicient.^^ AVhat is said under Sec. 76 in regard to 
 presentment where the party is dead to whom present- 
 ment for payment must be made applies also to giving 
 notice of dishonor under such circumstances. If the rep- 
 resentative of the deceased party prove to be one who is 
 himself a party to the instrument in his individual ca- 
 pacity and as such entitled to notice, the notice should 
 be given to him both as an indi\ddual and in his repre- 
 sentative capacity, although knowledge of dishonor 
 gained through the notice given to him in his representa- 
 tive capacity has been held to be the equivalent of indi- 
 vidual notice.^" 
 
 19. Goodnow vs. Warren, 122 Mass. 82. 
 Liudeniau's Executor vs. Guildin, 34 Pa. St. 54. 
 
 20. Count vs. Thompson (Eng.), 7 C. B. 400, 62 E. C. L. 400, 137 
 
 Reprint 159.
 
 160 THE NEGOTIABLE INSTRUMENTS LAW.§ 99, 100 
 
 Notice to "Sec. 99. Where the paeties to be 
 
 pa ners. notified are partners^ notice to any one 
 
 PARTNER IS NOTICE TO THE FIRM EVEN THOUGH THERE HAS 
 BEEN A DISSOLUTION.'' 
 
 Partners who are liable upon the instrument as such 
 are not indi\adually entitled to notice even if at the time 
 notice is to be given the partnership has been dissolved. 
 Notice to one partner is notice to all and to the firm.^^ 
 The fact, however, that two or more persons who are 
 parties to an instrument and entitled to notice are en- 
 gaged in business as partners will not excuse notice to 
 each if they are not liable upon the instrument as part- 
 ners. Unless their liability is clearly as a firm notice 
 of dishonor must be given to each, and if one signs as 
 maker and the other as indorser, the latter cannot be 
 held to his indorsement unless notice of dishonor is 
 given to him.^^ 
 
 Notice to ''Sec. 100. Notice to joint parties 
 
 persons jointly ^y^^^ ^^j, j^.^^ partners must be given to 
 hable. 
 
 each of them, unless one of them HAS 
 
 authority to receive such notice for the others.'' 
 When two or more persons who are not partners are 
 
 jointly liable upon the instrument, notice of its dishonor 
 must be given to each of them unless one has authority 
 to accept notice for the others. This is a situation which 
 requires care in the act of giving notice of dishonor, but 
 all difficulty will be avoided if the notice is given prompt- 
 ly to each of the parties without regard to Avhether 
 they are jointly or severallj^ liable upon the instrument. 
 Joint indorsers who receive notice are not released by 
 failure of the holder to give notice to all and may them- 
 selves give notice to those who indorsed jointly with 
 them and thus preserve their right to contribution.-^ The 
 
 21. AVheeler vs. Maillott & Co., 20 La. Ann. 75. 
 
 22. Folaiul vs. Boyd. 23 Pa. St. 476. 
 
 23. AYilliams vs. Paintsville Natl. Bank, 143 Kv. 781, 137 S. W. 
 
 535, Ann. Cas. 1912 D. 350.
 
 §101-103 NOTICE OF DISHONOR 161 
 
 .holder will be required, however, to look only to those 
 to whom he gives notice. (Sec. 89.) 
 
 Notice to "Sec. 101. Where a party has been 
 
 bankrupt. adjudged a bankrupt or an insolvent, or 
 
 HAS MADE AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS, 
 NOTICE MAY BE GIVEN EITHER TO THE PARTY HIMSELF OR TO 
 HIS TRUSTEE OR ASSIGNEE. ' ' 
 
 Notice to a bankrupt, or to an insolvent who has made 
 an assignment for the benefit of his creditors, is properly- 
 given if it is either given to the bankrupt or insolvent or 
 is given to the trustee appointed in the bankruptcy pro- 
 ceedings or the assignee of the insolvent, and it must be 
 given to one or the other. 
 
 Time within "Sec. 102. Notice may be given as soon 
 
 which notice ^g ^^^ instrument is dishonored: and un- 
 must be given. 
 
 less delay is excused as hereinafter pro- 
 vided, must be given witfiin the times fixed by this 
 
 ACT. ' ' 
 
 It is provided here that the notice may be given at once 
 upon dishonor of the instrument, and that if it is not 
 done immediately it must be given within the time fixed 
 in this Act. The next two sections fix the time within 
 which the notice must be given and in Section 113 will be 
 found the circumstances which excuse delay in giving it. 
 Where parties "Sec. 103. Where the person giving 
 
 reside in same ^^^ r^^^ person to receive notice reside 
 place. 
 
 "Rhode Island ^-^ '^-^■^ same place, notice must be given 
 within the following times: 
 
 1. If given at the place of business of the person to 
 
 RECEI\T1 notice, it MUST BE GIVEN BEFORE THE CLOSE OF 
 
 business hours on the day following. 
 
 2. If given at his residence, it must be given" before 
 the usual hours of rest on the day following. 
 
 3. If sent by mail, it must be deposited in the post- 
 office in time to reach him in usual course on the day 
 following. ' ' 
 
 When delay is not excused by some circumstance men- 
 tioned in Section 113, the notice must be given at the
 
 162 THE NEGOTIABLE INSTRUMENTS LAW § 104 
 
 times provided in this section when the party giving 
 and party entitled to receive the notice reside in the 
 same place. The designation "same place" may he un- 
 derstood to mean the same city, or village, or the same 
 business community outside of a city or village in which 
 the usual business transactions between persons who re- 
 side there are conducted by personal interchange, and not 
 coimnonly by the use of the mails. The term "same 
 place" can not be described as having any definite, fixed 
 boundaries and to avoid any question of the sufficiency 
 of tlie notice it should, whenever possible, be given per- 
 sonally or by messenger upon the day of or the day after 
 dishonor, or ])e deposited in the mail upon the day the 
 instrument is dishonored or the next day. 
 
 If the notice is given at the residence of the party to be 
 notified it must be given before the usual hours of rest 
 on the day folloA\ang the day of dishonor. If it is sent by 
 mail it nmst be deposited in the postoffice in time to 
 reach him before the close of business if addressed to his 
 place of business, and if addressed to his residence it 
 must be delivered there before the usual hours of rest 
 on tlie day following the day of dishonor and it is of no 
 importance that he was not there to receive it.-^ The 
 notice may be communicated by telephone within the 
 same time, except in Kentucky, where it is required to 
 be in writing. 
 Where parties "Sec, 104. Where the person givixg 
 
 reside in ^-v^j^ rpj^^ perSOK TO receive NOTICE RESIDE 
 
 different nlaces. 
 
 ^ ix different places, the notice must be 
 
 gi\t1n within the foli.owing times: 
 
 1. If sent by mail, it must be deposited in the post- 
 office IN TIME TO GO BY MAIL THE DAY FOLLOWING THE DAY 
 OF DISHONOR, OR IF THERE BE NO MAIL AT A CONVENIENT HOUR 
 ON THAT DAY, BY THE NEXT MAIL THEREAFTER. 
 
 24. Wilson vs. Peck. 121 X. Y. Supi). 344. 
 Adams vs. Wright, 14 Wise. 408.
 
 § 105 NOTICE OF DISHONOR 163 
 
 2. If given otherwise than through the postoffice^ 
 then within the time that notice would have been re- 
 ceived in due course of mail. if it had been deposited in 
 the postoffice within the time specified in the last 
 SUBDIVISION. (Sub-section 1 of this section.)" 
 
 The notice may be sent and delivered by mail by one 
 person to another when they reside in different places, 
 and if it is given in this manner it must then be deposited 
 in the postoffice on or before the day following the day 
 of dishonor in time to go by the last mail on that day. If 
 the only mail on the day after the day of dishonor is very 
 early or there is none at a convenient hour, which may 
 be understood to be at or after the beginning of business 
 on that day, the notice must be deposited in time to go by 
 the first mail thereafter.-^" The mails contemplated to 
 be used are the mails at the place of dishonor, or at the 
 place where a party himself receiyes notice of dishonor 
 who desires to notify other parties by mail. 
 
 If the notice is given by delivery in any manner other 
 than through the postoffice, or is given by telegraph or 
 communicated by telephone, it must be given within the 
 time that it would have been received if it had been sent 
 through the mails and within the time above prescribed, 
 and these means may be used to correct a failure to give 
 timely notice by mail or otherwwise.^^^ Notice of dis- 
 honor actually received by the party to be notified, but 
 not given within the time provided in this Act, will not be 
 valid and will not bind any party w^hom it is sought to 
 hold upon the instrument. Section 108 so provides. 
 
 When sender ''Sec. 105. Where notice of dishonor 
 
 deemed to have jg dxjly addressed and deposited in the 
 given due no ice. pqstoffice, the sender is deemed to have 
 given due notice, notwithstanding any miscarriage in 
 the mails. ' ' 
 
 24a. Smith vs. Poillon. 87 N. Y. 590, 597. 
 
 24b. Jnr<]:er.s vs. Wickman, 124 App. Div. (N. Y.), 531.
 
 164 THE NEGOTIABLE INSTRUMENTS LAW § 106 
 
 A notice properly addressed and deposited in the post- 
 office but unstamped or insufficiently stamped, and for 
 that reason undelivered, would not be deemed to have 
 been duly given, unless it was actually received within 
 the time required in Sections 103 and 104. While an un- 
 stamped letter or one with insufficient postage may some- 
 times be delivered and it* delivered would, of course, 
 carry binding notice, a failure of its delivery would be 
 due to the sender's own neglect and delay in the receipt 
 of a notice so sent would not be excused.^'' 
 
 Deposit in "Sec. 106. Notice is deemed to have 
 
 postoffice; what ^^^^^ deposited in the postoffice when 
 constitutes. 
 
 deposited in any branch postoffice or in 
 
 ANY letter box UNDER THE CONTROL OF THE POSTOFFICE DE- 
 PARTMENT." 
 
 Letter boxes sup])lied and placed by the postoffice de- 
 partment, or such as are under its control and used by 
 the department for the collection of mail at regular in- 
 tervals are contemplated by this section of the Act and 
 not such private receptacles as are provided by persons 
 residing upon rural free delivery routes, or private mail 
 boxes in cities.-'' The notice must be deposited in a post- 
 office, a branch postoffice or an official letter box from 
 which mail matter is collected by a mail carrier at reg- 
 ular intervals. If the notice is delivered by the sender 
 to a mail carrier for deposit in the postoffice and he 
 neglects to deposit it there in time, the notice, it has been 
 held, is not deemed to have been duly given. On the other 
 hand, it has also been held that since the U. S. postal 
 regulations require carriers to receive prepaid letters 
 tendered to them for mailing, a letter delivered to a 
 mail carrier is considered to be the equivalent of its 
 
 25. Bank vs. Miller, 139 Wise. 126. 
 
 26. Wilson vs. Peck, 121 N. Y. Supp. 344. 
 Townsend vs. Auld, 10 Misc. (N. Y.) 343.
 
 § 107, 108 NOTICE OF DISHONOR 165 
 
 deposit in a postoffice. The Act seems, however, to re- 
 quire that the notice must be placed in tlie postoffice, 
 branch postoffice or letter box by the sender, and its au- 
 thor has stated, in the latest edition of his book, that it 
 was not deemed wise to adopt the rule that delivery to a 
 letter carrier is sufficient.-''' 
 
 Notice by subse- ' ' Sec. 107. Wheee a party receives no- 
 quent party; time ^j(^ J, qp dishonor, he has, after the re- 
 01 giving. 
 
 CEIPT of such notice, THE SAME TIME FOR 
 GIVING NOTICE TO ANTECEDENT PARTIES THAT THE HOLDER HAS 
 AFTER THE DISHONOR." 
 
 A party who receives notice of dishonor is allowed by 
 this section the same time for himself giving notice to 
 parties liable upon the instrument to and before him, 
 as the holder has under Sections 103, 104, 105 and 106, 
 and he must observe all the requirements of those sec- 
 tions in giving it. For the provisions of the Act concern- 
 ing the form of the notice see Section 96. 
 
 Where notice "Sec. 108. Where a party has added 
 
 must be sent. ^>^t address xo his signature, notice of 
 
 DISHONOR must BE SENT TO THAT ADDRESS; BUT IF HE HAS 
 
 not given such address, then the notice must be sent 
 as follows : 
 
 1. Either to the postoffice nearest to his place of 
 residence, or to the postoffice where he is accustomed 
 
 TO RECEI\T: HIS LETTERS ; OR, 
 
 2. If HE LIVE IN OKE PLAGE, AND HAVE HIS PLACE OF BUSI- 
 NESS IN ANOTHER, NOTICE MAY BE SENT TO EITHER PLACE ; OR, 
 
 3. If HE IS SOJOLTRNING IN ANOTHER PLACE, NOTICE MAY 
 BE SENT TO THE PLACE WHERE HE IS SO SOJOURNING. 
 
 But WHERE THE NOTICE IS ACTUALLY RECEIVED BY THE 
 PARTY WITHIN THE TIME SPECIFIED IN THIS ACT, IT WILL BE 
 SUFFICIENT, THOUGH NOT SENT IN ACCORDANCE WITH THE 
 REQUIREMENTS OF THIS SECTION." 
 
 The place to which the notice must be sent is of the 
 utmost importance. When the party to be notified has 
 
 27. Crawford's Ann. Neg-. Inst's Law, 4th Edn. p. 180, Note to 
 Sec. 106.
 
 166 THE NEGOTIABLE INSTRUMENTS LAW § 108 
 
 added an address to his signature, the notice must be sent 
 to or given at that address even though he may not be 
 there to receive it, or it is not the address at which he 
 usually receives his mail.^* If he has given no address 
 a reasonable effort must be made to find him, that is to 
 say, the holder must make diligent effort to learn his 
 place of residence or usual place of business by making 
 inquiry among persons most likely to know it,^^ and if 
 the notice is sent by mail, it must be addressed to the 
 postoffice at the place where he lives or does business or 
 the one nearest that place, or to the postoffice at which 
 he usually gets his mail, if it is known. If the party 
 lives at one town and has his usual place of business at 
 another, each of which is a postoffice, the notice may be 
 sent to either place. 
 
 If he is temporarily absent from his usual place of 
 business or residence at the time the notice is to be given 
 and the person who is to give it knows his temporary 
 address, the notice may be addressed and sent to him 
 at that place.^^ But, ordinarily, this should not be done. 
 The notice ought to be addressed and sent to the party 
 at his usual place of business or residence although the 
 holder knows his temporary address and knows that the 
 notice would be delivered at the temporary address. If 
 a notice sent to one at the place where he is temporarily 
 sojourning is not received by him it is good if sent in 
 time, but it is not considered that one engaged in business 
 who is absent from his usual place of business is ordinar- 
 ily as well able to attend to the affaii's of business at his 
 place of temporary sojourn as he would be at his usual 
 
 28. Lankofsky vs. Raymond, 217 Mass. 98. 104 N. E. 489. 
 
 29. Dupont Towder Co. vs. Roonev. 63 Misc. 344. 117 N. Y. S. 220. 
 Albany Tr. Co. vs. Frothiuoham, 50 Misc. 598, 99 N. Y. S. 343. 
 Hazlett vs. Bragdon, 7 Pa. Super. 581. 
 
 30. Lowell Trust Co vs. Pratt, 183 Mass. 379. 381, 67 N. E. 363.
 
 §109 NOTICE OF DISHONOR 167 
 
 place of business or residence, it being, besides, more rea- 
 sonable to suppose that lie will leave someone in town to 
 attend to his business. -^^ 
 
 The notice ought not, therefore, to be sent to the place 
 where the party to be notified is sojourning unless the 
 sender has made diligent inquiry to learn his temporary 
 address and is sure of its ijrompt delivery there, or unless 
 requested by the party to do so. 
 
 Actual notice received by the party to be charged is 
 good and will bind him if he receives it within the time 
 provided in this Act, although it may not have been sent 
 in accordance with the above section, and this is so not- 
 withstanding that the section seems to be mandatory in 
 its specific provisions. 
 Waiver of notice. ' ' Sec. 109. Notice of dishonor may be 
 
 WAIVED, EITHER BEFORE THE TIME OF GIVING NOTICE HAS AR- 
 RIVED, OR AFTER THE OMISSION TO GIVE DUE NOTICE, AND THE 
 WAIVER MAY BE EXPRESS OR IMPLIED. ' ' 
 
 A party who would otherwise be entitled to receive no- 
 tice may waive this right at the time he becomes a party 
 to the instrument or at any other time before, at, or after 
 the time for giving notice has arrived. Even after the time 
 provided in this Act for giving notice, a party may waive, 
 although by the omission to give it he would have been 
 discharged from liability upon the instrument. It should 
 then appear, however, that at the time of the v^aiver the 
 party waiving must have knowledge that the holder was 
 in default,^- although it makes no difference that knowing 
 the facts, he was ignorant of the legal effect of the hold- 
 er's omission to give the notice.^^ He may waive notice 
 either expressly, in writing or orally, or it may he im- 
 
 31. Stewart vs. Eden, 2 Caines (N. Y. C. L.) 119. 
 
 32. Aebi vs. Bank of Evansville, 124 Wis. 73, 81, 102 N. W. 
 
 329. 
 
 33. Toole vs. Crafts, 193 Mass. 110.
 
 168 THE NEGOTIABLE INSTRUMENTS LAW § 110 
 
 plied if he does or says anything which may reasonably 
 be interpreted to mean a waiver. (See Sec. 82.) 
 
 If the person otherwise liable upon the instrument, 
 but who claims discharge by reason of no notice, or im- 
 proi3er or insufficient notice of non-payment, has said or 
 done anything which ought fairly to be construed to mean 
 a waiver of notice in favor of the person seeking to en- 
 force the instrument against him, a waiver will be implied 
 and he will be held to his obligation to pay the instru- 
 ment. As has been said under Section 82, the acts or 
 words from which it is sought to imply a waiver must be 
 interpreted according to their fair meaning and the facts 
 and circumstances of each particular case must be taken 
 into account, but doubtful or equivocal acts or language 
 willnot imply a waiver.^^" 
 
 Who bound by ''Sec. 110. Where the waiver is em- 
 
 waiver. BODIED IN THE INSTRUMENT ITSELF, IT IS 
 
 BINDING UPON ALL PARTIES ; BUT WHERE IT IS WRITTEN ABO\T) 
 THE SIGNATURE OF AN INDORSER, IT BINDS HIM ONLY." 
 
 A negotiable instrument may be so drawn that all per- 
 sons who become parties are required to waive present- 
 ment for acceptance or payment and waive notice of its 
 dishonor. Wlien words of waiver are employed in the 
 body of the instrument, making this a condition of its 
 negotiation, all persons who become parties to such an in- 
 strument are bound by the waiver and none are entitled 
 to notice. If it is not embodied in the instrument itself 
 the waiver may be written upon the instrument by an in- 
 dorser and if it is, it binds him only. It does not affect 
 the other parties who became such either before or after 
 him and who do not themselves waive. (See also Sections 
 82, 109 and 111.) 
 
 33a. Ross vs. Hurd, 71 N. Y. 14. 
 
 Turnbull vs. Maddox, 68 Md. 579.
 
 §111-113 NOTICE OF DISHONOR 169 
 
 Waiver of "Sec. 111. A waiver of protest, 
 
 protest. whether in the case of a foreign bill of 
 
 exchange or other negotiable instrument, is deemed to 
 
 BE A waiver not ONLY OF A FORMAL PROTEST, BUT ALSO OF 
 PRESENTMENT AND NOTICE OF DISHONOR." 
 
 If the words employed in the waiver are a waiver of 
 protest, they are considered to be a waiver of present- 
 ment and notice of dishonor as well as of formal protest. 
 Except in the case of a foreign bill of exchange, protest 
 is not required upon dishonor of a negotiable instrument 
 (Sec. 118), but it may be made and if the waiver is em- 
 bodied in an instrument which does not require protest 
 it is, nevertheless, deemed to be a waiver of present- 
 ment, demand and notice of dishonor as w^ell. (Also see 
 Sees. 82, 109, 110.) 
 
 When notice "Sec. 112. Notice of dishonor is dis- 
 
 dispensed with, pe^sed with when, after the exercise of 
 
 REASONABLE DILIGENCE, IT CANNOT BE GIVEN TO OR DOES NOT 
 REACH THE PARTIES SOUGHT TO BE CHARGED." 
 
 Notice of dishonor need not be given if, after every 
 reasonable and diligent effort to give the notice to the 
 party entitled thereto, it cannot be given. It is also dis- 
 pensed with if the party obliged to give the notice has at- 
 tempted with reasonable diligence to give it within the 
 time and in the manner provided in this Act and the no- 
 tice sent does not reach the person for whom it is in- 
 tended. Reasonable diligence is, as it has been defined 
 under Sec. 98, that degree of diligence which men of or- 
 dinary intelligence and prudence usually exercise when 
 their own interests depend upon obtaining correct infor- 
 mation or upon prompt, careful action. 
 Delay in giving "Sec 113. Delay in giving notice of 
 notice; how dishonor is excused when the delay is 
 
 excused. caused by circumstances beyond the con- 
 
 trol OF THE HOLDER, AND NOT IMPUTABLE TO HIS DEFAULT, 
 MISCONDUCT, OR NEGLIGENCE. WhEN THE CAUSE OF DELAY 
 CEASES TO OPERATE, NOTICE MUST BE GIVEN WITH REASONABLE 
 DILIOGNCE. ' '
 
 170 THE NEGOTIABLE INSTRUMENTS LAW § 114 
 
 While notice must be given at the time and in the man- 
 ner required in Sections 103 and 104 if it can be done, a 
 delay caused by circumstances beyond the control of the 
 person whose duty it is to give the notice, and not caused 
 by his fault, his wrongful act, or due to his negligence, 
 will excuse its omission. The notice must be given 
 promptly and properly, however, when the circumstances 
 which cause the delay no longer interfere or prevent it 
 being done. 
 
 When notice *'Sec. 114. Notice of dishoxor is not 
 
 need not be required to be given to the drawer in 
 
 given to drawer. 
 
 either of the following cases: 
 
 1. Where the drawer and drawee are the same 
 person ; 
 
 '2. Where the drawee is a fictitious person or a per- 
 son not having capacity to contract; 
 
 3. Where the drawer is the person to whom the in- 
 strument IS presented for payment; 
 
 4. Where the drawer has no right to expect or re- 
 quire THAT THE DRAWEE OR ACCEPTOR WILL HONOR THE IN- 
 strument ; 
 
 5. Where the drawer has countermanded payment." 
 The drawer of a bill, being a party secondarily liable 
 
 upon the instrument, is entitled to notice of its dishonor, 
 and it must be given to him in the same manner as it is 
 required to be given in order to charge an indorser. 
 However, when one draws the bill upon himself or it is 
 drawn upon him by his agent or branch house (Sec. 130), 
 he is not then entitled to notice of its dishonor, since he 
 himself causes the dishonor by his own failure to accept 
 or pay it, and is fully aware of it without notice. Being 
 then primarily liable upon the instrument and having the 
 same liability as that of the maker of a promissory note, 
 he is not affected by a failure to give him notice, (Sec. 
 130.)
 
 §114 NOTICE OF DISHONOR 171 
 
 If he has drawn the bill upon a fictitious person, that 
 is, as has already been explained, one who does not exist, 
 or if existing, has no interest in the instrument 
 and whose name is used for the purpose of deception 
 (Sec. 9), he is not entitled to notice. Neither is he en- 
 titled to notice if he has drawm the bill upon a person 
 who, from want of capacity to contract, cannot be made 
 to pay the instrument if he does accept it. This seems to 
 be so even if in the last two cases the drawer has 
 issued the bill without knowledge of the fictitious charac- 
 ter of the drawee or without knowledge of his want of 
 capacity to contract. 
 
 If the drawer is the person to whom the instrument is 
 presented for payment, though he may not be named in 
 it as the drawee, he is not entitled to notice upon his own 
 default in its acceptance or payment. When the drawer 
 of a bill has no right to expect that the person upon whom 
 it is drawn will honor it by acceptance and pajmient he 
 is not then entitled to notice if the drawee fails to do 
 either and the bill becomes dishonored. 
 
 A drawer who countermands payment, that is, who 
 notifies the acceptor not to pay the bill, or gives a stop 
 pajmient order and prevents payment of his check at 
 bank, thereby becomes himself responsible for its dis- 
 honor and is not thereafter entitled to notice of its non- 
 payment. If instead of giving notice of countermand 
 he withdraws all of his funds available in the hands of the 
 drawee for the payment of the bill, mthout any expecta- 
 tion of replacing them for the purpose of paying the in- 
 strument, this act is, in effect, a countermand and upon 
 dishonor of the bill he is not entitled to notice.^^ 
 
 34. Valk vs. Simmons, 28 Fed. Cas. No. 16,815, 4 Mason 113. 
 Spangler vs. McDaniel, 3 Ind. 275.
 
 172 THE NEGOTIABLE INSTRUMENTS LAW § 115 
 
 When notice need ''Sec. 115. Notice of dishonor is not 
 
 not be given to required to BE GIVEN TO AN INDORSEE IN 
 
 inciorser. 
 
 either of the following cases : 
 
 1. Where the drawee is a fictitious person or a per- 
 son NOT having capacity TO CONTRACT, AND THE INDORSER 
 
 was aware of the fact at the time he indorsed the in- 
 strument ; 
 
 2. Where the indorser is the person to whom the 
 instrument is presented for payment ; 
 
 3. Where the instrument w^as made or accepted for 
 his accommodation." 
 
 In every case except when dispensed with by this sec- 
 tion, and unless it has been waived, notice of dishonor 
 must be given to the indorsers upon a negotiable instru- 
 ment. The first exception covers that situation in which 
 the indorser upon a bill of exchange knew at the time 
 he indorsed the instrument that the person upon w^hom it 
 was drawn was a fictitious person, or that it was drawn 
 upon one who had not the power to enter into a valid and 
 enforceable contract. (See Sec. 9.) 
 
 The second is that in which the indorser is himself the 
 person to whom the instrument is presented for payment. 
 Under these circumstances the indorser, being the person 
 who refuses payment, need not be given notice of what he 
 already knows. 
 
 The third provides that when the instrument is made 
 or accepted for the accommodation of the indorser, notice 
 of its dishonor need not then be given to him and it is 
 apparent why he is not affected by lack of notice of its 
 non-payment or non-acceptance, for he is himself liable 
 for the payment of the debt evidenced by the instrument 
 and ought to have provided funds to pay it. Examine 
 Sec. 80 of the Act wherein it is provided that presentment 
 for pa^onent is not required in order to charge an accom- 
 modated indorser unless he has no reason to expect that 
 the instrument will be paid if presented.
 
 § 116 NOTICE OF DISHONOR 173 
 
 It is recommended that notice of dishonor be given to 
 each person to be charged upon the instrument notwith- 
 standing that the instiTiment may have been made or ac- 
 cepted for the benefit of any or all of them, even though 
 this may sometimes appear to be an excess of precaution. 
 
 Observe that by the provisions of Sub-section 1 of this 
 section, the indorser upon a bill of exchange drawn upon 
 a fictitious person or one not having capacity to contract 
 is entitled to and must be given notice of dishonor, unless 
 he was aware of the fictitious character of the drawee 
 or of his want of capacity to contract at the time he 
 indorsed the instrument and that in this respect it ditfers 
 from the provision of Sub-section 2 of Sec. 114 which dis- 
 penses with notice to the drawer under similar circum- 
 stances. 
 
 Notice of non- "Sec. 116. Where due notice of dis- 
 
 payment where honor by non-acceptance has been given, 
 acceptance notice of a subsequent dishonor by non- 
 
 refused. payment is not necessary, unless in the 
 
 meantime the instrument has been accepted." 
 
 If an instrument requiring acceptance becomes dis- 
 honored and notice of its dishonor by non-acceptance has 
 been given, no further notice need be given when the date 
 arrives upon which the instrument ought to have been 
 paid and it is again dishonored, this time by non-pay- 
 ment. The notice of dishonor by non-acceptance is suffi- 
 cient to charge all parties, unless the instrument has been 
 accepted in the meantime. If this should occur it will 
 be necessary to give notice again upon dishonor by non- 
 payment in order to charge its parties, even though they 
 were properly notified of the dishonor by non-acceptance. 
 The reason for the rule is, of course, that the drawee's 
 refusal to accept the bill implies a refusal to pay it when 
 due and therefore the bill need not be presented for pay- 
 ment, but if it is, notice of non-payment upon its further
 
 174 THE NEGOTIABLE INSTRUMENTS LAW §117,118 
 
 dishonor at maturity is not required unless, in the mean- 
 time, the bill has been accepted. 
 
 -gggp^ qj ''Sec. 117. An omission to give no- 
 
 omission to give tice of dishonor by non-acceptance does 
 
 notice of non- not prejudice the rights of a holder in 
 
 acceptance. j^^je course subsequent to the omis- 
 
 "Wisconsin. siON "" 
 
 A holder who acquires the instrument in due course 
 after dishonor by non-acceptance, is not affected by an 
 omission to give notice of the dishonor. This situation 
 may arise when a bill requiring acceptance, for example, 
 a bill payable at a fixed period after sight, has been pre- 
 sented for acceptance and refused and it is afterward ne- 
 gotiated into the hands of a holder in due course by the 
 holder who failed to give notice of its dishonor. The in- 
 strument itself may not disclose the fact that it has al- 
 ready been dishonored before its transfer to one who be- 
 came its holder subsequent to its dishonor by non-accep- 
 tance. The holder in due course who now presents the 
 instrument for acceptance, unaware of its previous dis- 
 honor and not chargeable with any duty to know it, is not 
 prejudiced by the failure of his transferer or any former 
 holder to give notice of its previous dishonor. He may 
 proceed to give notice of its refusal when dishonored 
 upon his presentment and he can hold all of the parties 
 who are liable upon the instrument in the same manner 
 and to the same extent as though the bill had not previ- 
 ously met with dishonor, if he does so in the manner and 
 mthin the time prescribed in this subdivision. 
 
 When protest ''Sec 118. Where any negotiable in- 
 
 need not be strument has been dishonored it may be 
 
 made; when protested for non-acceptance or non- 
 
 mnst be made. payment, as the case may be; but the 
 
 PROTEST IS not REQUIRED EXCEPT IN THE CASE OF FOREIGN 
 BILLS OF EXCHANGE. ' '
 
 §118 NOTICE OF DISHONOR 175 
 
 Pi otest is not required to charge the parties to a ne- 
 gotiable instrument upon its dishonor except upon dis- 
 honor of a foreign bill of exchange, or before presentment 
 for payment to the acceptor for honor or referee in case 
 of need. (Sec. 167.) Section 129 defines a foreign bill 
 to be any bill other than one "which is, or on its face pur- 
 ports to be, both drawn and payable within the same 
 State," and it also i3rovides that ''unless the contrary 
 appears on the face of the bill, the holder may treat it as 
 an inland bill." Inland bills of exchange are also defined 
 in Section 129 and are such as are, or which, upon the 
 face purport to be, both drawn and payable within the 
 same State. 
 
 Promissory notes and inland bills of exchange may 
 be protested by the holder if he desires to do it and if at- 
 tempted, the protest must be made as required in Sections 
 152 to 160 of the Act.
 
 176 THE NEGOTIABLE INSTRUMENTS LAW § 119 
 
 SUBDIVISION VIII, 
 
 Discharge of Negotiable Instruments. 
 
 Section Section 
 
 119 Instmment ; liow discharged. 123 Cancellation ; unintentional ; 
 
 120 When person secondarily li- burden of proof. 
 
 able discharged. 124 Alteration of instrument; 
 
 121 Rights of pai-ty who dis- effect of. 
 
 charges instrument. 125 What constitutes a material 
 
 122 Renunciation by holder. alteration. 
 
 Under the provisions of the two preceding subdivisions 
 of the Act which fix the manner and time for presentment 
 for payment and of giving notice of dishonor, the dis- 
 charge of secondary parties to a negotiate instrument is 
 effected by the failure of the liolder to perform any 
 of the important duties which they prescribe or by his 
 negligence in their performance. In this subdi\'ision, 
 however, the Act makes provision for the discharge of the 
 instrument itself and the manner in which a secondary 
 party will be discharged by positive acts of other parties 
 to the instrument. Its provisions are exclusive, and a 
 valid negotiable instrument cannot be discharged in any 
 other different manner.^ 
 
 Instrument: how "Sec. 119. A negotiable instrument 
 discharged. jg discharged: 
 
 '^Illinois. -( -o 
 
 1. By payment in due course by or on 
 
 behalf of the principal debtor; 
 
 2. By payment in due course by the party accommo- 
 dated, 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; 
 
 1. Vanderford vs. Farmers, etc., Natl. Bank, 105 Md. 164, 168, 
 68 A. 47, 10 L. R. A. (N. S.) 99.
 
 § 119 DISCHARGE OF NEG. INSTRUMENTS 177 
 
 5. When the principal debtor becomes the holder 
 OF the instrument at or after maturity in his own 
 
 RIGHT. ' ' 
 
 The complete discharge of the instrument itself is 
 effected when the obligation of the parties primarily 
 liable upon it is performed or extinguished. This oc- 
 curs as a matter of course when the principal debtor 
 pays the instrument in full in lawful funds or some one 
 so pays it for him in the manner described in Section 88, 
 or when it is paid in that manner by the party, or one of 
 several parties, for w^hose accommodation it is made or 
 accepted, if it is an accommodation instrument. If any- 
 thing other than money is offered and received as, for 
 example, a renewal note, check, draft, property, or 
 goods, it must appear that when given and received, the 
 thing offered was intended to be in extinguishment of 
 the note or other instrument which it was given to pay.^ 
 Discharge also occurs when any holder who holds in his 
 own right, cancels the instrument with the intention of 
 discharging it or when one who holds it as the agent of 
 another intentionally cancels it by authority of his prin- 
 cipal. The motive which prompts its cancellation is im- 
 material, and the instrument will be considered to be 
 cancelled if it is intentionally marked so or is mutilated 
 in such a manner as will indicate an intention to cancel 
 it,^ provided there is no fraud, mistake, or duress in the 
 procurement of its cancellation.^ An unintentional can- 
 cellation is not operative, however, as you will observe 
 from Section 123. 
 
 2. romstock vs. Buckley, 141 Wise. 228. 
 Tvler vs. Hyde, SO 111. A. 123. 
 
 In re Utica Natl. Br. Co., 154 N. Y. 268. 
 
 3. Montgomeiy vs. Schwald, 177 Mo. App. 75. 
 
 4. Kester vs. Kecter, 38 Ore?:on, 10, 62 P. 635. 
 Liesemcr vs. Bunr. 106 Mich. 124, 63 N. W. 999. 
 Findley vs. Cowles, 93 Iowa, 389. 61 N. W. 998.
 
 178 THE NEGOTIABLE INSTRUMENTS hX\\ § 120 
 
 The discharge in the manner mentioned in the fourth 
 sub-section of tliis section embraces every voluntary- 
 act which would relieve the person obliged to pay money 
 under the terms of a simple contract from the duty to 
 do so. The act which is relied upon to discharge the in- 
 strument under this sub-section must, however, be one 
 Avhich is engaged in and performed between the right- 
 ful holder and the party primarily liable upon the instru- 
 ment Avhose duty it is to pay it, and it must be of such a 
 nature that it will relieve him of his obligation to pay 
 the instrument to the holder.^ 
 
 The instrument is also discharged when the person 
 who by its terms is required to pay it, and who appears, 
 therefore, to be the principal debtor, or when one for 
 whose accommodation the instrument was made and who 
 is, therefore, in fact the principal debtor, becomes its 
 owner at or after its maturity. To have this effect he 
 must have acquired it in his own right as its absolute 
 owner, free from the rights of all other persons and not in 
 any representative capacity.^ If he becomes the owner of 
 the instrument before maturity he may then re-negotiate 
 it. It is so provided in Section 50. 
 
 *'SeC. 120. A PERSON SECONDARILY LIA- 
 
 When person ^^^ ^^ ^^^ instrument is discharged : 
 
 secondarily liable -, y^ 
 
 on, discharged. . ^- ^^^ ^^^ ^^'^ which discharges the 
 
 "Illinois. INSTRUMENT ; 
 
 ^'Wisconsin. 2. By the intentional cancellation 
 
 l^aryland, ^p jjjg signature by the holder; 
 
 ^'Missouri ^- "^^' '^^^ discharge of a prior 
 
 party f 
 
 4. By a valid tender of payment made by a prior 
 party ;^ 
 
 5. In re Metallic Specialty Co., 210 Fed. 663. 
 Crawford vs. Moore, 28 Fed. 824. 
 
 6. Schwartzman vs. Post, 94 App. Div. (N. Y.) 474, 477. 
 Korkemas vs. Macksoud, 131 App. Div. (X. Y.) 728.
 
 § 120 DISCHARGE OF NEG. INSTRUMENTS 179 
 
 5. By A RELEASE OF THE PRINCIPAL DEBTOR, UNLESS THE 
 holder's right of RECOURSE AGAINST THE PARTY SECOND- 
 arily liable is expressly reserved;* 
 
 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. ' '* 
 
 Parties other than those primarily liable on the in- 
 strument are discharged in the manner provided in this 
 section and, as has already been stated, by the failure 
 of the holder to make proper presentment and to give 
 due notice of dishonor in strict accordance with the pro- 
 visions of subdivisions 6 and 7 of this Title of the Act 
 and the provisions to the same effect in Title 2 relating 
 particularly to bills of exchange. 
 
 Any act whereby the instrument itself is discharged 
 as provided in Section 119, discharges the secondary 
 parties, as a matter of course. A secondary party is 
 also discharged when his signature is intentionally can- 
 celled by the holder. The valid discharge by the holder 
 of a prior party, w^iether primarily or secondarily liable 
 upon the instrument, Avill discharge all subsequent sec- 
 ondary parties. This, however, does not contemplate 
 relief from his obligation upon the instrument obtained 
 by a party in any other manner than by the positive act of 
 another subsequent party to w^iom he is liable. Each sec- 
 ondary party to the instrument engages separately with 
 each subsequent holder that he will pay the instrument 
 if the primary party does not. His engagement is trans- 
 mitted by the negotiation of the instrument to subse- 
 quent holders and his liability extends from one to an- 
 other as the instrument is acquired by them. It may 
 happen that this liability to the holder at maturity will 
 be discharged by the latter 's omission to give him notice
 
 180 THE NEGOTIABLE INSTRUMENTS LAW § 120 
 
 of the dishonor of the instrument but if he is duly noti- 
 fied by an intervening party to whom his liability has been 
 transmitted, he continues to be liable to that intermedi- 
 ate party J You will see, therefore, that although the 
 liability of a secondary party may be completely dis- 
 charged as to one or some other secondary parties, it is 
 not necessarily discharged as to all. There are appro- 
 priate other sections of the Act which govern tlie man-. 
 ner by which secondary parties are discharged under 
 particular circumstances, as by failure to make proper 
 presentment and give notice of dishonor, and these will 
 be found fully indexed. 
 
 A secondary jjarty is also discharged when any prior 
 party offers to pay the instrument and makes a good 
 tender of payment which is refused by the -holder. A 
 valid tender of payment, therefore, operates in favor 
 of all parties subsequent to the one making it, and if it 
 is refused, all such parties are discharged. Such a tender 
 is made, not by the mere expression of a willingness to 
 pay the instrument, but by the actual offer to do so ac- 
 companied by the exact amount of money due upon it.^ 
 
 When a release is granted by the holder to the prin- 
 cipal debtor, that is, the person whose primary obligation 
 the instrument is, secondary parties will be discharged 
 unless the holder reserves his right of recourse against 
 them. If he expressly reserve his right of recourse 
 against them, however, they will not be discharged. Un- 
 der these circumstances the rights of parties secondar- 
 ily liable to recover against the principal debtor are, 
 notwithstanding his release by the holder, impliedly re- 
 served to them, and they may proceed against him upon 
 
 7. West River Bank vs. Taylor, 34 N. Y. 128, 131. 
 
 8. Holmes vs. Holmes, 12 Barbour (N. Y.) 137.
 
 § 121 DISCHARGE OF NEG. INSTRUMENTS 181 
 
 taking up the instrument.^ Therefore, whenever the 
 holder agrees to release the principal debtor from his 
 obligation upon the instrument, he must indorse upon 
 it a declaration or state in the release that he reserves 
 his right of recovery against the parties secondarily 
 liable to him, if he intends to look to them for payment. 
 
 Secondary parties will also be discharged if the holder 
 enters into enforceable agreement with any party by 
 which the time of payment of the instrument is ex- 
 tended, unless the agreement is made with their consent 
 or unless, at the time of making it, the holder expressly 
 reserves his right to proceed against them in the mean- 
 time. If the secondary parties are dissatisfied, their 
 remedy is to take up the instrument and proceed upon 
 it against the principal debtor and prior parties.^^ 
 
 It must be understood that this express reservation of 
 the right of recourse against secondary parties does not 
 dispense with the necessity of presentment, demand, 
 and notice of dishonor, and of protest in the case of a 
 foreign bill of exchange, for if these are omitted when, 
 at its maturity, the instrument is not paid, the second- 
 ary parties cease to be liable and the holder will have 
 no right of recourse against them. (See subdivisions 
 6 and 7.) 
 
 Rights of party "Sec. 121. Wheee the instrument is 
 who discharges p^iD by a party secondarily liable there- 
 instniment. ^^^ ^^ jg ^^^ 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 : 
 
 9. Sec. Natl. Bank vs. Graham, 246 Pa. St. 256. 
 Torabeckbe Bank vs. Stratton, 7 Wend. (N. Y.) 429. 
 Stewart vs. Eden, 2 Cai. 121. 
 
 10. Natl. Park Bank vs. Koehler, 204 N. Y. 174. 
 Rilbe vs. Austin, 155 App. Div. (N. Y.) 207.
 
 182 THE NEGOTIABLE INSTRUMENTS LAW § 121 
 
 1. Where it is payable to the order of a third pek- 
 son, and has been paid by the drawer; and 
 
 2. Where it was made or accepted for accommoda- 
 tion AND HAS BEEN PAID BY THE PARTY ACCOMMODATED." 
 
 By any of the acts set forth in Section 119, the in- 
 strument itself becomes discharged and it cannot again 
 be negotiated upon being discharged in the manner de- 
 scribed in that section at or after its maturity. But 
 when an instrument is negotiated back to a prior party, 
 even to the principal debtor, before maturity, he may 
 again reissue and negotiate it. (Sec. 50.) If he does, no 
 party can be held to his signature placed upon the in- 
 strument prior to its reissue. 
 
 And now, you will observe, it is provided in this sec- 
 tion that when a party secondarily liable takes up the 
 instrument by payment to any holder, either before or 
 after maturity, it is not discharged as to any party upon 
 it except the one to whom the payment is made and 
 those parties subsequent to the indorser who pays it, to 
 whom he would himself ])e liable.^ ^ The party paying is 
 again in the position which he occupied when he first 
 negotiated the instrument and he may strike out his 
 own signature and the signatures of all who became par- 
 ties after him, and negotiate it again as by a new in- 
 dorsement. The instrument remains in effect as before 
 payment by him (Sec. 50) against all parties who placed 
 their signatures upon it prior that of the party who pays 
 it. This cannot be done, however, if the instrument is 
 a bill of exchange payable to a person other than the 
 drawer or the drawee and the drawer himself pays it, 
 or if the instrument is paid by the party for whose ac- 
 commodation it was made. When such a bill is in the 
 hands of the drawer that fact is, of itself, notice that it 
 
 11. Quimby vs. Vanuiin, 190 Mass. 211, 214.
 
 § 122 DISCHARGE OF NEG. INSTRUMENTS 183 
 
 has run its course and is sufficient to cause any ordinar- 
 ily prudent person to make inquiry to learn whether it 
 has not already been paid.^- And when the bill is paid 
 by the accommodated indorser it is extinguished.^^ For 
 the effect of striking out indorsements and what signa- 
 tures may be necessary to show holder's title, see Sec. 
 48. 
 
 Renunciation "by *'Sec. 122. The holder may expressly 
 holder. renounce his rights 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 instru- 
 MENT. But a renunciation does not affect the rights 
 
 OF A holder in due COURSE WITHOUT NOTICE. A RENUN- 
 CIATION MUST BE IN WRITING, UNLESS THE INSTRUMENT IS 
 DELIVERED UP TO THE PERSON PRIMARILY LIABLE THEREON." 
 
 The holder may at any time renounce, that is, volun- 
 tarily give up, release, or abandon all of his rights under 
 the instrument including his right to payment, without 
 transferring them to someone else.^-^ He usually does 
 this without consideration but a renunciation may be 
 made in compromise, or in exchange for something else 
 which the holder accepts in place of the instrument 
 and the section is applicable where the renunciation is 
 executed for a consideration.^^' The renunciation must 
 be in writing unless the instrument is delivered up to 
 the person obliged to pay it. It must be absolute and 
 unconditional.^^ If the party intending to renounce his 
 rights delivers up the instrument before, at or after its 
 maturity to the person primarily liable upon it w^ith the 
 intention of renouncing his interest in it and his rights 
 
 12. First Natl. Bank vs. Harris, 7 Wash. 139. 
 
 13. Qiumby vs. Varnum, 190 Mass. 211. 
 
 14. Pitt vs. Little, 58 Wash. 355, 108 P. 941. 
 
 15. Whiteomb vs. Natl. Exchange Bank, 123 Md. 612. 
 
 16. Leask vs. Dew, 102 App. Div. (N. Y.) 529.
 
 184 THE NEGOTIABLE INSTRUMENTS LAW § 123 
 
 to it, the instrnment is completely discharged; he can- 
 not afterward recover from any party to it. But if the 
 renunciation is made before maturity, in writing, and the 
 instrument is retained by the person giving it and he 
 afterwards negotiates the instrument to a holder in due 
 course, or if he has previously done so, this holder in 
 due course is not bound by the renunciation and can en- 
 force the instrument, unless he had notice of it. And if 
 one to whom the instrument is payable but who no longer 
 holds it, executes a renunciation, this will not affect a 
 holder of the instrument who is a holder in due course 
 without notice. It is obvious then, that if the person 
 primarily liable upon an instrument desires a renun- 
 ciation he must obtain it from the holder and if the in- 
 strument is not delivered to him, its absence must be 
 satisfactorily accounted for or the renunciation may not 
 prove to be an effective discharge. When made in favor 
 of the principal debtor the renunciation discharges the 
 whole instrument, but if made in favor of a secondary 
 party it discharges only that party in whose favor it is 
 made and those parties subsequent to him who w^ould 
 have a right of recourse against him if called upon to 
 pay the instrument. (Sec. 120-3.) 
 
 Cancellation; "Sec. 123. A cancellation made un- 
 
 unintentional ; intentionally, oe under a mistake, or 
 burden of uroof. 
 
 ^ without authority of the holder, is in- 
 
 operative; 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 CANCELLA- 
 TION WAS MADE UNINTENTIONALLY, OR UNDER A MISTAKE OR 
 WITHOUT AUTHORITY. ' ' 
 
 If the cancellation of tlie instrument, or of any sig- 
 nature upon it is made by mistake or without authority 
 of the holder, it is not operative. It does not cancel the 
 instrument or the signature of the party and when any 
 signature upon the instrument or the instrument itself
 
 § 124 DISCHARGE OF NEG. INSTRUMENTS 185 
 
 appears to have been cancelled, the person seeking to 
 enforce the instrument may show that the cancellation 
 was made unintentionally or without authority. But 
 he must prove this to be so by evidence sufficient to 
 overcome any evidence offered by the opposing party in 
 support of his claim that the cancellation was made in- 
 tentionally. 
 
 "Sec. 124. "Where a negotiable ix- 
 strumext is ''materially altered* with- 
 
 Alteration of 
 instrument ; 
 
 effect of. OUT THE ASSENT OF ALL PARTIES LIABLE 
 
 "Illinois. THEREON, IT IS AVOIDED, EXCEPT AS AGAINST 
 
 ^So. Dakota. ^ party who has himself made, author- 
 
 cWisconsin. ized, or assented" to the alteratiox, axd 
 
 subsequext ixdorsers. 
 
 But when an instrument has been" materially al- 
 tered'' axd 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." 
 
 The changes and insertions which may be made in 
 the instrument by the holder without the consent of par- 
 ties are to be found in Sections 13, 14 and 48. Certain 
 material alterations may not be made, however, after 
 the instrument has been issued, without the consent of 
 all parties liable upon it. What these are will appear 
 from the next section. If any material alteration which 
 is prohibited by that section is made without the con- 
 sent of all parties the instrument will be avoided as 
 against all except those who made, authorized or con- 
 sented to the alteration and except those indorsers who, 
 without notice, indorse the instrument after the ma- 
 terial alteration had already been made. When any in- 
 strument Avhich has been materially altered w^ithout the 
 assent of parties is in the hands of a holder in due course, 
 meaning one who took it with the qualifications pre- 
 scribed by Sec. 52, and without notice of the 
 alteration, and he is not a party to the unauthorized
 
 186 THE NEGOTIABLE INSTRUMENTS LAW § 124 
 
 material alteration, lie may enforce it according to its 
 original tenor, meaning that lie may recover upon the 
 instrument in the original amount and according to its 
 original terms against all parties, or he may enforce it 
 according to its altered effect against the parties who 
 made, authorized or consented to the alteration. In this 
 respect, this section effects a change in the law. Hereto- 
 fore it has been almost universally held that an instru- 
 ment which has been materially altered is thereby com- 
 pletely avoided and is unenforceable either in its altered 
 effect or according to its original tenor. 
 
 Upon the general subject of alteration it may be well 
 to explain that in determining its effect upon the 
 instrument a controlling regard will be had to the time 
 when the alteration was made, and whether or not the 
 contract in the form in which it is sought to be enforced 
 is the identical contract upon which the minds of the 
 parties met.^'^ In order to avoid an instrument upon 
 the technical ground of material alteration, it is im- 
 portant that the instrument must have had at 
 the time it was altered an actual, legal existence 
 as a negotiable instrument.^^ The instrument obtains 
 this effect when there has been a valid initial delivery 
 and therefore, except under special circumstances, any 
 alteration made before the inception of the instrument 
 would not avoid it. Even if made after the instrument 
 has been negotiated a change in its language or form 
 which does not disturb its legal effect or in any way im- 
 
 17. Wicker vs. Jones, 159 N. C. 102, 107, 74 S. E. 801. 
 Levi vs. Arons, 81 Misc. (N. Y.) 165. 
 
 18. Builders Lime & Cement Co. vs. Weimer (Iowa), 151 N. W. 100. 
 Bingham vs. Reddy, 3 Fed. Cas. No. 1414, at p. 404. 
 Matson vs. Jarvis (Tex. Civ. App.), 133 S. W. 941, 943. 
 Tliaip vs. Jameson, 154 la. 77. 134 N. W. 583, 39 L. R. A. 
 
 (N. S.) 100. 
 Zander vs. Com., 102 Pa. 434, 439.
 
 § 125 DISCHARGE OF NEG. INSTRUMENTS 187 
 
 pair the obligations of the parties or their rights, or 
 change their identity or the identity of the instrument, 
 will not avoid it or discharge its parties. ^^ 
 
 Since the next section defines what are material al- 
 terations further observations upon their effect upon 
 the instrument will be made there. 
 
 What constitutes ''Sec. 125. Any alteration which 
 a material changes : 
 
 alteration. 1^ The date; 
 
 2. The sum payable, either for principal or interest; 
 
 3. The time or place of payment; 
 
 4. The number or the relations of the parties; 
 
 5. The medium or 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." 
 
 Any of the material alterations enumerated in this 
 section, if made without authority of all parties to the 
 instrument, even though they may appear to be to the 
 advantage of the person who is to pay the instrument, 
 will avoid it as to any party whose authority to make 
 them has not first been obtained or who does not give 
 assent to them after they have been made. 
 
 The sum payable may not be changed, not even less- 
 ened f^ the rate of interest increased or diminished f^ 
 or the instrument made payable with interest when none 
 was contemplated.^^ 
 
 19. Pitt vs. Little, 58 Wash. 355, 108 P. 941. 
 Crowe vs. Beem, 36 Ind. A. 207, 75 N. E. 302. 
 Sanford vs. Cairo Citv Nat. Bank, 15 Ky. L. 607. 
 Kronskup vs. Sliontz. 51 Wise, 204, 8 N. W. 241, 37 Am. R. 
 
 817. 
 
 20. Hewins vs. Car^ill, 67 Me. 554. 
 Batchelder vs. White, 80 Va. 103. 
 
 21. N. Y. Life Ins. Co. vs. Martindale, 75 Kan. 142, 146, 88 P. 
 
 559, 121 Am. S. R. 362, 21 L. R. A. (N. S.) 1045, 12 Ann. 
 Cas. 677. 
 
 22. Broadway Nat. Bank vs. Hefferman, 220 Mass. 247. 
 Columbia Dist. Co. vs. Rech, 151 App. Div. (N. Y.) 128. 
 Comm'l Bank vs. Maguire, 89 Minn. 394, 95 N. W. 212.
 
 188 THE NEGOTIABLE INSTRUMENTS LAW § 125 
 
 A place of payment ma^^ not be inserted without con- 
 sent when the instrument is payable generally,^^ but if 
 the place designated is a bank which is afterward 
 succeeded by another that continues to occupy the 
 premises formerly occupied by the bank designated, the 
 substitution of the name of the successor bank would 
 not be a material alteration.^* 
 
 The time at which the instrument is payable may not 
 be changed^^ and the number of its parties or their re- 
 lation to each other may not be altered Avithout the con- 
 sent of all. If, after a promissory note is executed and 
 delivered, one should add his name as maker, this, it 
 has been held in some jurisdictions, will avoid the in- 
 strument as to those parties who do not consent to the 
 addition of his signature. Such an alteration would de- 
 stroy the identity of the instrument and has very fre- 
 quently been held, before the passage of the Act, to be 
 a material alteration both on this ground and because, 
 in the case of a joint instrument, it confuses the evi- 
 dence of the debt and affects the right of contribution 
 between the parties.^*^ Greater difficulty has been en- 
 countered, however, when a genuine name has been in- 
 tentionally added as maker to an instrument upon Avhich 
 the liabilitv of the makers is several, and the new name 
 
 23. Wilkes-Barre 1st Nat. Bank vs. Barnum, 160 Fed. 245. 
 Pelton vs. San Jacinto Lbr. Co., 113 Cal. 21, 45 P. 12. 
 
 24. Melton vs. Pensacola Bank, 190 Fed. 126, 111 C. C. A. 166. 
 
 25. Pensacola State Bank vs. Melton, 210 Fed. 57. 
 
 26. Baker vs. Lehman, etc., Co. (Ala.), 65 S. 321. 
 Brown vs. Johnson, 127 Ala. 292, 28 S. 579. 
 Soaps vs. Eichbore;, 42 111. A. 375. 
 
 Houck vs. Graham, 106 Ind. 195, 6 N. E. 594. 
 
 Browning vs. Gosnell, 91 la. 448. 
 
 Handsaker vs. Pedersen, 71 Wash. 218. 
 
 Wallace vs. Jewell, 21 Ohio St. 163 (holding also that if a 
 new party signs on the face of note, by mistake, this is not 
 a material alteration, and that his true relation to the 
 instrument may be shown).
 
 § 125 DISCHARGE OF NEG. INSTRUMENTS 189 
 
 has been added as additional security after the instru- 
 ment has been issued and negotiated. ^'^ 
 
 But sub-section 4 of this section seems to have changed 
 the law on this subject and one can now reach no other 
 conclusion than that the addition of another name to the 
 instrument as maker is a material alteration, for this 
 sub-section expressly provides that any alteration which 
 changes the number or the relation of the parties to the 
 instrument is a material alteration, and will avoid the 
 instrument and I think that the decisions abundantly 
 support it, although there is great conflict of authority 
 upon this question. It has even been held that if the 
 additional name is a forgery, the instrument is 
 avoided. ^^ 
 
 If the instrument is payable upon named conditions 
 these may not be changed without consent. The kind of 
 money in which it is payable may not be changed nor 
 may any other alteration be made, without consent, 
 which would change the effect of the instrument in any 
 material respect. 
 
 Under certain circumstances, as, for example, where 
 a note has been taken in extinguishment of a debt, one 
 who alters it in a material respect and thereby avoids it, 
 can have no recovery on the original debt, for that was 
 merged in the note.^'' This is true even if there is an en- 
 tire absence of fraudulent intent in making the altera- 
 tion, unless, perhaps, the alteration was made by a 
 stranger. Where one fraudulently alters the instrument 
 he cannot, of course, recover upon either the instrument 
 or the consideration.^^ 
 
 27. McCauu-hey vs. Smith, 27 N. Y. 39. 
 Brownell vs. Winnie, 29 N. Y. 400. 
 Mersman vs. Weracs, 112 U. S. 139, 141. 
 
 28. Beem vs. Farrell (Iowa), 108 N. W. 1044. 
 
 29. Weston vs. Wilev, 78 Ind. 54. 
 
 30. Columbia Dist. Co. vs. Rech, 151 App. Div. (N. Y.) 128. 
 Harvesting Mach. Co. vs. Blair, 146 Mo. App. 374, 386.
 
 190 THE NEGOTIABLE INSTRUMENTS LAW § 125 
 
 The literal interpretation of Sections 124 and 125 
 must now, however, include alterations made by stran- 
 gers as well as by parties to the instrument. But it had 
 long been held to be the law in this country, prior to 
 the enactment of this section and Section 124 of this Act, 
 that a material alteration made by a stranger to the in- 
 strument, that is, by any person not having a beneficial 
 interest in it, was a mere spoliation of the instrument 
 and that the instrument could be enforced by the holder 
 in its original form.^^ As to a holder in due course this 
 is still the law, since by Section 124 a holder in due 
 course, not a party to the alteration, may enforce the in- 
 strmnent according to its original tenor, no matter by 
 whom the alteration was made. As to the original par- 
 ties themselves, however, a material alteration avoids 
 the instrument even though it was made by a stranger. 
 This interpretation will probably find opposition and 
 doubtless the courts will reluctantly substitute the 
 English rule for that so universally recognized in our 
 o\^^l decisions. These, however, upon examination, will be 
 found to be based upon previous statutes, differing from 
 this section, which declare that a material alteration 
 made by a party or by some one acting with his knowl- 
 edge, consent, or approval, will avoid the instniment. 
 It appears to have been clearly intended to adopt the rule 
 that alteration by a stranger will avoid the instrument 
 and a material alteration by a stranger cannot now, in 
 States where this Act is in effect, be regarded, between 
 original parties to an instrument, as a mere spoliation. 
 Unless this section is changed, its language will not jus- 
 tify any other interpretation. If the instrument has not 
 been altered with fraudulent intent, there may always be 
 a recovery on the original consideration.^^ 
 
 31. Kingan & Co. vs. Silvers, 13 Ind. A. 80. 
 
 32. Harvesting Mach. Co. vs. Blair, 146 Mo. App. 374, 386.
 
 § 125 DISCHARGE OF NEG. INSTRUMENTS 191 
 
 Whenever the matter of intent in making a material al- 
 teration enters into its consideration at all, fraudulent in- 
 tent will be presumed if the material alteration is bene- 
 ficial to the person making it.^^ Alteration by cutting off 
 a part of the paper on which the instrument is w^ritten, 
 in such a manner as to change its etfect, is material and 
 will avoid it.^^ 
 
 The alterations contemplated in this and the preceding 
 section are physical alterations of the instrument itself, 
 and these sections are not to be aijplied to determine the 
 effect of any agreement or understanding between or 
 among the parties to a negotiable instrument by which 
 its terms, or by which their liability upon it is to be 
 changed. Do not alter the instrument in any respect 
 without first obtaining the consent of all parties, except 
 in the manner expressly permitted by Sections 13 and 14. 
 
 If payment has been made on an altered instrument 
 under a mistake of fact, in ignorance of the alteration. by 
 a party who had been discharged by the alteration, he 
 may recover it if no negligence is imputable to him.^^ 
 But if the payment is made under a mistaken knowledge 
 or impression of the legal effect of the alteration upon 
 the rights of the party paying, he cannot then recover it, 
 this being the rule applicable to any payment made under 
 a mist-ake of law.^*' 
 
 33. Dove vs. Fansler, 132 Mo. App. 669, 672, 112 S. W. 1009. 
 
 34. Wicker vs. Jones, 159 N. C. 102, 109. 
 
 35. Sheridan vs. Carpenter, 61 Me. 83. 
 
 36. Tabor vs. New Bedford, 177 Mass. 197. 
 
 Flvnn vs. Howard, 118 N. Y. 19, 22 N. E. 1109.
 
 192 THE NEGOTIABLE INSTRUMENTS LAW 
 
 INTRODUCTORY. 
 
 TO 
 
 TITLE II. 
 
 WITH AN OUTLINE OF THE BUSINESS FEATURE 
 OF THE FEDERAL RESERVE BANK ACT. 
 
 BILLS OF EXCHANGE. 
 
 The provisions of the Act embraced in this second 
 Title relate to bills of exchange. They define a bill, de- 
 clare what its form shall be, how presentment for ac- 
 ceptance must be made, the rights of parties to bills 
 drawn in a set, the manner of accepting and paying for 
 honor and how protest must be made when it is required. 
 Its provisions in regard to protest are, of course, ap- 
 plicable to negotiable instruments other than bills of ex- 
 change when it is to be made. The First Title of the 
 Act, Sections 1 to 125 inclusive, applies to all negotiable 
 instruments and its provisions are applicable alike to 
 bills of exchange and promissory notes. 
 
 As has already been said, while the use of bills of ex- 
 change is at present comparatively less extensive in this 
 country than in England and on the Continent it is never- 
 theless of great advantage to know the law applicable to 
 the interpretation of the rights and duties of the parties 
 to a bill. This is particularly true in view of the declared 
 purpose of the Federal Reserve Bank Act the principal 
 business feature of which is intended to promote their use 
 in this country as a means of discount. These instruments 
 are expected to become a considerable part of the re- 
 sources of banks and that Act being designed to encourage 
 their use, if it is successful in its endeavor it is expected 
 that it will entirelv transform the conditions under which
 
 INTRODUCTOKY TO TITLE U 193 
 
 commercial paper is bought and sold, loans effected be- 
 tween banks, and funds transferred from one part of the 
 country to another. It is the theory of those who have 
 advocated this change in our banking laws that if a dis- 
 count market is created in this country similar to and 
 as wide reaching as those of the principal financial 
 centers of Europe, with a controlling influence to be ex- 
 ercised by the Federal Reserve Board and Banks, in 
 most respects like that exercised by the great central 
 banks of England, Germany and France, the discount of 
 commercial paper between banks will become one of the 
 principal functions of the business banks and not a mere 
 incident to the business of banking, as at present. 
 
 In each of the twelve Federal Reserve Cities in which 
 Federal Reserve Banks have been established the bank- 
 ing activities of the district which each is to sen-e will be 
 centered. These banks are to be primarily banks of re- 
 discount, that is, they will deal only with their member 
 banks, and they are intended to supply the varying need 
 for money in their districts, and in the country generally, 
 by sending to one place any abnormal supply which may 
 be required when local facilities are inadequate to meet 
 the local demand, and withdrawing afterward whatever 
 surplus may exist whenever these extraordinary require- 
 ments have been met and normal business conditions 
 again prevail. The method by which local business banks 
 will be able to obtain funds to supply their customers 
 needs when their own supply is inadequate is altogether 
 by re-discount with the Federal Reserve Banks of the 
 commercial paper in which their own funds are invested. 
 What it is hoped to accomplish and the manner in which 
 it is to be done are best set forth in the report of the 
 Banking and Currency Committee which accompanied the 
 bill and from which I quote the following:
 
 194 THE NEGOTIABLE INSTRUMENTS LAW 
 
 "In Section 14 (which is Section 13 in 
 
 The business ^j^g j^j^ ^g enacted) is set forth the funda- 
 
 section of the ' 
 
 new banking mental business purpose of the bill in 
 
 and currency providing for re-discount operations. The 
 Federal Reserve Banks are at the outset 
 authorized to receive current deposits from their stock- 
 holders or from the Government or from other Federal 
 Reserve Banks in so far as the latter may need to keep 
 funds with them for exchange purposes. 
 
 "The fundamental requirement throughout all of the 
 discount section of the proposed bill is that antecedent 
 to the performance of a service by a Federal Reserve 
 Bank for a member bank which applies therefor the mem- 
 ber bank shall indorse or guarantee the obligations whicli 
 it offers for discount. Subject to this requirement, the 
 proposed bill first of all provides that notes and bills hav- 
 ing a maturity of not over 90 days and drawn for agri- 
 cultural, industrial or commercial purposes or the pro- 
 ceeds of which have been used for such purposes shall 
 be admitted to re-discount. The meaning of this provi- 
 sion is, briefly, that any paper drawn for a legitimate 
 business purpose of any kind may be re-discoimted when 
 within 90 days of maturity. It does not mean that the 
 paper thus re-discounted shall have been originally made 
 for 90 days bnt that it shall have at the time of being re- 
 discounted 90 days more to nm. Thus a paper drawn 
 for 120 days originally could be re-discounted when it 
 was 30 days old. In view of the great difficulty of defin- 
 ing 'commercial paper' the actual definition of the same 
 has been left to the Federal Reserve Board in order that 
 it may adjust the definition to the practices prevailing 
 in ditf erent parts of the country in regard to the transac- 
 tion of business and the making of paper. For obvious 
 reasons it is forbidden that any such paper shall be ad-
 
 INTRODUCTORY TO TITLE II 195 
 
 niitted to re-discouiit if made for the purpose of carry- 
 ing stocks or bonds. (As enacted the bill excludes notes 
 and bonds of the United States from this prohibition.) 
 "It was felt that in some parts of the country the per- 
 mission to re-discount paper having a maturity of 90 
 days might not fulfill all of the requirements imposed 
 by the business practice of those regions, and therefore 
 it is provided in the third paragraph of Section 14 (Sec- 
 tion 13 in the bill as enacted) whenever the reserve of 
 any Federal -Reserve Bank is reasonably above its- re- 
 quired minimum (such excess margin to be determined 
 by the Federal Eeserve Board), the reserve bank may 
 re-discount commercial paper having a maturity of not 
 more than 120 days, provided that not more than one- 
 half of it shall have a maturity exceeding 90 days. This 
 is intended to fulfill the requirements of portions of the 
 country with an extremely long term of credit, but it is 
 clear that no reserve bank should be allowed to put its 
 funds into a form in which thej will be ^ tied up ' to such 
 an extent, unless such a bank has a reserve perfectly 
 adequate to take care of any necessities that are like- 
 ly to present themselves in the meantime, 
 regard'ti''''''' '"^ ^he fourth paragraph of Section 14 (Sec- 
 acceptance by tion 13 in the bill as enacted) grants per- 
 mission to reserve banks to re-discount 
 acceptances of member banks which are based on the ex- 
 portation or importation of goods, run not more than 
 six months, and bear the signature of one member bank 
 in addition to that of the acceptor, the total of such re- 
 discounts not to exceed one-half the capital of the bank 
 for which the re-discounts are made. In the sixth para- 
 graph, national banks are authorized to accept drafts 
 or bills of exchange drawn upon it to an amount not ex- 
 ceeding one-half its capital. The acceptance business,
 
 196 THE NEGOTIABLE INSTRUMENTS LAW 
 
 which it is thus proposed to authorize, is a new form of 
 business heretofore forbidden to national banks, by rea- 
 son of the provisions and interpretations of the national 
 banking act, which have forbidden them to lend their 
 credit or to incur contingent liabilities thereby. The ac- 
 ceptance form of loan is, however, very common in 
 Europe, and has been found exceedingly serviceable. 
 It is the opinion of expert bankers that it could be ap- 
 plied in the United States to excellent advantage. The 
 following extract from a discussion of acceptances by 
 Lawrence Merton Jacobs explains the method and pur- 
 poses of the acceptance business : 
 
 '' 'The fundamental difference between European and 
 American banking has its origin in the dissimilarity be- 
 tween the evidences of indebtedness which lie behind the 
 item of loans and discounts. It is most strikingly evi- 
 denced in the fact that time bills of exchange form a 
 considerable proportion of the resources of the great 
 banks of London, Paris and Berlin, whereas the assets 
 of leading New York banks are largely based on stocks 
 and bonds. 
 
 "Bankers' Bills" " ' ^^^ *^® ^^^^^ ^^ exchange in which are 
 in Europe. employed, either through loans or dis- 
 
 counts, the funds of European banks, an essential part 
 consists of what are known as bankers' bills— that is, 
 bills drawn on bankers and accepted by them on behalf 
 of customers in accordance with arrangement previously 
 made. They are bills in exchange for which, by sale to 
 a broker or by discounting at a bank, bankers' customers 
 or those to whom they are indebted may secure immediate 
 credit. In some instances it is arranged that the cus- 
 tomers themselves shall draw the bills and in others that 
 the bills shall be drawn by third parties for their account. 
 In granting the accommodation the obligation that the
 
 INTRODUCTORY TO TITLE II 197 
 
 bankers take upon themselves is that they will accept 
 the bills upon presentation. This acceptance consists in 
 the bankers writing across the face of the drafts the word 
 '' Accepted," adding their signature and the date. It is 
 in the nature of a certification that the bills will be paid 
 at maturity — that is, a specified number of days or 
 months from the date appearing in the acceptance, or 
 three days later if grace is allowed, as in England. When 
 a banker grants accommodation to a customer by means 
 of an acceptance, he may secure himself in various ways. 
 Ordinarily, a banker accepts a customer's draft merely 
 upon his general responsibility, the banker's risk being 
 much the same as if he had discounted the customer's 
 note running a certain length of time. Where the cus- 
 tomer is an importer the banker ordinarily accepts the 
 drafts upon the delivery to him of the documents cover- 
 ing the shipment, which documents he then turns over 
 to his customer against a trust receipt. When a credit 
 of this kind is opened the usual practice is for the banker 
 to require the signature of a form containing an agree- 
 ment to hold him harmless for accepting the bills, to* 
 place him in funds sufficient to pay off the bills three 
 days prior to their maturity, and to pay him a commis- 
 sion on the transaction, this commission varying accord- 
 ing to the length of time the bills are to run and the 
 financial standing of the customer. The cost of the ac- 
 commodation to the customer is this commission plus the 
 prevailing rate of discount for bankers' bills. 
 
 '' 'In the United States the national- 
 The discount • i i i. 4. 
 
 system in the bank act does not permit banks to accept 
 
 United States. ^-j-^-^^ ]j-||g drawn on them. Although the 
 act does not specifically prohibit such acceptances, the 
 courts have decided that national banks have no power 
 to make them. This restriction has had a very consid-
 
 198 THE NEGOTIABLE INSTRUMENTS LAW 
 
 erable influence upon the development of banking in this 
 country. For some time after the passage of the na- 
 tional-bank act, merchants and manufacturers provided 
 themselves with funds by discounting their promissory 
 notes with their local banker. G-radually, however, many 
 concerns finding that their needs were outstripping the 
 banking accommodation which they could secure in their 
 immediate vicinity, came to place their notes in the hands 
 of brokers who in turn disposed of them to such bankers 
 as possessed greater surplusses than they could satis- 
 factorily invest at home. It is this method of borrowing 
 which is now largely employed. In other words, the pro- 
 hibition of bank acceptances has led to the creation of a 
 vast amount of promissory notes instead of time bills of 
 exchange. 
 
 ^ „. ,. . " 'The difference between these two 
 A pubhc discount 
 
 market will be classes of instruments accounts to a great 
 W u/on tS extent for the difference between Euro- 
 transactions. pean and American banking. In the case 
 of the time bills of exchange drawn on and accepted by 
 prime banks and bankers there is practical uniformity 
 of security. In the case of our promissory notes or com- 
 mercial paper there is no such uniformity, the strength 
 of the paper depending on the standing of miscellaneous 
 mercantile and industrial concerns. 
 
 " 'It is this uniformity of security on the one hand 
 which makes possible a public discount market ; it is the 
 lack of it in single-name paper which makes such a mar- 
 ket impossible. As a result, Ave have great discount 
 markets in London, Paris and Berlin and none in New 
 York. In European centers the discount rate is the rate 
 upon which the eyes of the financial community are fixed. 
 In New York it is the rate for day-to-day loans on the 
 stock exchange.' "
 
 INTRODUCTORY TO TITLE II 199 
 
 To what extent and how rapidly the new form of credit 
 which tlie bill is so admittedly designed to encourage 
 will supplant the present method by which the industries 
 of our country supply themselves with funds will depend 
 vei-y largely upon the si)irit in which the banks accept 
 the proposed change. A variety of opinion exists. Some 
 of the most prominent bankers, whose expressions upon 
 the subject are regarded as profound authority, have 
 expressed the belief that it will be impossible to replace, 
 to any great extent, the firmly established method of 
 making loans on promissory notes bearing one or more 
 individual or firm names, maturing on time or demand 
 and taken either directly from the individual seeking 
 funds or purchased from note brokers whose facilities 
 enable them to place their instruments in markets wher- 
 ever a surplus of funds is known to be seeking invest- 
 ment. These instruments, they believe, bearing bank in- 
 dorsements, will form the largest part of the re-discount 
 operations of the Federal Reserve Banks. In the Eu- 
 ropean markets the acceptances given by lianks are, on 
 the other hand, by far more predominant and these are 
 of two principal kinds of bills : the Documentary Bill 
 and the Commercial Credit Bill. 
 
 ^, ^ . ^ The first form is that of a bill to which 
 
 The documentary ,, i j t* 
 
 till. shipping documents are attached, it, 
 
 under this form of credit, when it shall come into use 
 
 here the American merchant desires to make purchases 
 
 abroad he will first arrange with his bank to accept 
 
 drafts for his account drawn upon his bank or its foreign 
 
 representative to which shall be attached the documents 
 
 covering the shipment of his purchases. The foreign 
 
 merchant from Avhom he makes his purchases, having 
 
 first been assured in some satisfactory way that his 
 
 draft will be accepted, usually by being shown the bank's
 
 200 THE NEGOTIABLE INSTRUMENTS LAW 
 
 agreement to accept, will find a ready sale to his local 
 banker for the bill which he will draw for the account 
 of his American customer. In due time his bill with 
 invoice and document of shipment attached will be for- 
 warded for acceptance to the American bank upon which 
 it is drawn and upon its acceptance the shipping docu- 
 ments will be released to the American merchant. This 
 bill now bearing the acceptance of the American bank, 
 whose primary obligation it now is, is prepared to enter 
 the discount market which is to be created here or those 
 already established in Europe upon an equal credit foot- 
 ing with the acceptances of foreign banks. The effect 
 of this transaction is that the American merchant, by the 
 payment of a small commission, has availed himself of 
 the credit of his bank to pay his obligation abroad, and 
 will be expected to conclude his part of the agreement by 
 placing the bank whose credit he has used in funds to 
 pay the bill a few days prior to its maturity. "When a 
 bill is to be drawn by an American exporter the pro- 
 cedure, long established, is just the same, the bill being 
 then drawn upon the American representative of the 
 foreign bank, principall}^ because few of our own banks 
 are engaged in this kind of operations. 
 
 The commercial The second form of bank acceptances, 
 credit bill. the Commercial Credit Bill, is that bill 
 
 which, to every practical purpose, is the equivalent of a 
 loan by the bank to its customer upon his promissory 
 note with the important difference, however, that instead 
 of being a loan of cash it is, like the one above described, 
 a loan of its credit by the bank to its customer. It means 
 that the bank permits its customer to draw on it at some 
 agreed maturity upon the understanding that the cus- 
 tomer Avill supply the accepting bank with funds to pay 
 the bill before it falls due. The bank is then not re-
 
 INTKODUCTORY TO TITLE II 201 
 
 quired to advance any of its own cash but merely to give 
 its signature to an acceptance which its customer is en- 
 abled readily to discount at some other bank, or with a 
 broker or to individuals wiio will, without doubt, be 
 attracted to this form of investment, and 
 tank is enabled to use the cash thus realize^ 
 
 acceptances. ^^ j^jg bijginess. To the customer, there is 
 
 a distinct advantage in this type of credit and to th^ 
 bank an equally marked gain. In those countries where 
 this system of credit is employed the rate of interest 
 for a cash advance is very much higher than the discount 
 rate for acceptances and it is, as a rule, more advan- 
 tageous to the customer to draw on the banker and pay 
 the charges for acceptance and discount rather than to 
 pay the higher interest rate for a cash advance. To the 
 banker, having no available loanable cash, the accept- 
 ance business enables him to sell his bank's credit with 
 profit. 
 
 Another form of bill of exchange much 
 Customer's bills . -r^ , • -, r. 
 
 (trade m use m JtLiuropean countries and lor- 
 
 acceptances) . merly extensively employed in our own, 
 is the time bill drawn by the merchant or manufacturer 
 upon his customer and accepted by him. Long ago, in 
 certain parts of this country, the use of this bill began to 
 be discontinued as our industries gradually -assumed a 
 cash basis, obtaining the money needed to carry on their 
 business operations by direct loans or loans obtained 
 through note brokers, by means of their own promissory 
 notes placed with banks having loanable funds. Drafts 
 drawn by the merchant or manufacturer upon his cus- 
 tomer now rarely appear here except in their limited 
 use as instruments of value only for the purpose of col- 
 lecting outstanding accounts.
 
 202 THE NEGOTIABLE INSTRUMENTS LAW 
 
 Inasmuch as it has heretofore been the 
 Bills based on • n n 
 
 actual custom of banks to carry practically all 
 
 commercial ^^ their customers' paper, it bein^ even 
 
 transactions . 
 
 desirable as regarded suspiciously as a circumstance 
 
 avaUaSe^for affecting their solvency if any do not, the 
 re-discount. evidences of the banks' investments in 
 
 the form of promissory notes have not been available for 
 the investment of funds of other banks except in the 
 restricted vicinity and among the correspondents of some 
 of the banks in the larger cities which have had the 
 courage to undertake re-discount operations. It has been 
 thought entirely unwise that the credit operations of 
 banks shall be thus limited or that they must dejDend 
 to such a great degree upon the facilities of note brokers 
 for placing desirable credit instruments in markets where 
 idle funds often await investment without any demand 
 for them. It is, therefore, one of the main purposes of 
 the Federal Reserve Bank Act to promote the use of bills 
 of exchange between merchants, manufacturers and per- 
 sons engaged in agricultural pursuits, and their custom- 
 ers, and the return of these instruments as proper and de- 
 sirable items of bank discounts is expected to result as 
 one of the important consequences of the business fea- 
 tures of the bill. It may also be expected that the revival 
 of their use in domestic transactions, as distinguished 
 from bills "arising out of the import and export of goods, 
 will not, at first, meet with the hearty co-operation of 
 the banks for the reason that our industries are now 
 regarded as unchangeably established upon a cash basis. 
 But those who have advocated the renewal of the former 
 and the best use of these instruments are hopeful that 
 the bill will meet with success in , re-establishing this 
 form of credit. They believe that offerings of these bills 
 bearing bank indorsement will freely appear wherever
 
 INTRODUCTORY TO TITLE II 203 
 
 loanable money can be located and that they will even 
 attract the surplus funds of Federal Reserve Banks 
 whenever they shall engage in open market operations. 
 
 The concluding paragraph of the Committee report on 
 the business feature of the bill carries the insinuation 
 that, after the banks of this country become more familiar 
 with the proper use of acceptances, the restriction which 
 limits acceptances by national banks to bills growing out 
 of export and import operations will be removed. It may 
 be hoped, therefore, that eventually, and at no very dis- 
 tant date, bills drawn upon and accepted by banks for 
 actual commercial transactions not limited to export and 
 import operations will also appear for investment and 
 will largely replace bills drawn by the merchant or manu- 
 facturer upon his customer. 
 
 I have given this outline of the business feature of 
 the Banking and Currency Bill in order to illustrate the 
 importance of a practical knowledge of the provisions 
 of this Second Title of the Uniform Negotiable Instru- 
 ments Law" relating to Bills of Exchange. As has been 
 said in the introduction to the First Title there is now, 
 it seems to many men, a greater need than ever before 
 that men interpreting the law, men learning the law as 
 well as men engaged in business, shall become familiar 
 
 with the provisions of this Act. Our 
 Commercial • • , t i j i , 
 
 paper as the commercial paper is intended to be not 
 
 basis for future ^j^jy ^j^g ^f ^j^g principal resources of the 
 currency issues. 
 
 banks of this country, as it already is, 
 
 but, by another provision of the Federal Reserve Bank 
 Act, it is made now the partial and is ultimately to be- 
 conae the sole basis of the future note issues of national 
 banks. These will, in the future, be made only by Fed- 
 eral Reserve Banks, and will replace the present note 
 issues of the business banks based upon the security of
 
 204 THE NEGOTIABLE INSTRUMENTS LAW 
 
 Government and in time of wider need, upon State and 
 Municipal Bonds. In the firm belief that a currency 
 which will automatically expand and contract with the 
 immediate business needs of this country is to be thus 
 provided, the Government is committed by the Act to a 
 guaranty of its soundness. The bank notes which will be 
 issued against a segregated deposit of selected commer- 
 cial paper and bear the Government's guaranty of their 
 redemption in gold, require as an indemnity that an 
 equivalent amount of re-discounted commercial paper 
 bearing the indorsement of one or more member banKb 
 shall be set aside from the assets of the Federal Reserve 
 Bank which issues them, and that there shall also be set 
 aside from its general funds 40 per cent of the amount 
 of the notes in gold or lawful money. With this dignity 
 added to the already grave importance of this class of 
 our business obligations a better knowledge of the laws 
 which govern our commercial paper may very properly 
 be regarded as a duty. To that end, the provisions of 
 this Second Title of the Uniform Negotiable Instruments 
 Law, relating especially to the one form of commercial 
 paper with which business men are not so familiar as 
 with promissory notes and checks, deserve careful study 
 and in this, I trust, the explanations will prove to be 
 an aid.
 
 §126 BILLS OF EXCHANGE 205 
 
 TITLE II 
 
 BILLS OF EXCHANGE. 
 SUBDIVISION I . 
 
 FORM AND INTERPRETATION. 
 
 Section Section 
 
 126 A bill of exchange defined. 129 Inland and foreign bills of 
 
 127 Bill not an assignment of exchange. 
 
 funds in hands of drawee. 130 When bill may be treated as 
 
 128 Bill addressed to more than promissory note. 
 
 one drawee. 131 Referee in case of need. 
 
 A bill of "Sec. 126. A bill of exchange is an 
 
 exchange unconditional order in writing addressed 
 
 defined. BY one person to another, signed by the 
 
 PERSON giving IT, REQUIRING THE PERSON TO WHOM IT IS 
 addressed TO PAY ON DEMAND OR AT A FIXED OR DETERMIN- 
 ABLE FUTURE TIME A SUM CERTAIN IN MONEY TO ORDER OR TO 
 BEARER. ' ' 
 
 A bill of exchange is more commonly known, in this 
 country, as a draft and it is usually, though not neces- 
 sarily, drawn by one person upon another who is in- 
 debted to him or with whom he has established a credit. 
 There is no presumption, except in the case of a check, 
 that a bill of exchange, used as a credit instrument, is 
 drawn against an existing fund.^ It directs the person 
 upon whom it is drawn to pay the money due upon the 
 drawer 's account, or available to his credit, to some other 
 person whom he names. When such an order is to be 
 issued certain requisites of form must be observed. These 
 are fixed in this Act (Title I, Subdivision 1) and while, 
 as in other negotiable instruments, the exact language to 
 
 1. Morrison vs. Bailey, 5 Oh. St. 13, 18, 64 Am. D. 632. 
 Champion vs. Gordon. 70 Pa. 474, 10 Am. R. 681.
 
 206 THE NEGOTIABLE INSTRUMENTS LAW § 127 
 
 be used in drawing a bill is not prescribed, the substance 
 of the law must be complied with. (See Sec. 10.) 
 
 The bill must, of course, be in writing, signed by the 
 person who draws it and must name the person upon 
 whom it is drawn, and who is to pay it, with the degree 
 of certainty required by Section 1 of Title I. It must 
 mention the sum of money to be paid and the time when 
 it is to be paid, with the certainty required by Sections 
 1 and 2. The time may be stated to be on demand, usu- 
 ally in a bill of exchange termed ' ' at sight, ' ' or it may be 
 fixed at a stated period after date, sight or demand. As a 
 rule bills of exchange are not dra^vn for a longer matur- 
 ity than six months and domestic bills rarely for that 
 long. The bill may also be drawn to become payable at 
 a given time after the happening of an event which is 
 certain to happen or its maturity may be fixed in any 
 of the ways mentioned in Section 1 of this Act. 
 
 A bill which is not dra%vn substantially in the manner 
 described in this Act will not be regarded as a negotiable 
 bill of exchange. (See Sec. 10.) 
 
 Bill not an "Sec. 127. A bill of itself does not 
 
 assignment of operate as an assignment of the funds 
 funds in hands in the hands of the drawee available 
 
 drawer. -pQ-^ rpg-E PAYMENT THEREOF; AND THE 
 
 DRAWEE IS NOT LIABLE ON THE BILL UNLESS AND UNTIL HE 
 ACCEPTS THE SAME." 
 
 The bill of itself, even if drawn against existing funds, 
 does not operate as an assignment of the money in the 
 hands of the person upon whom it is drawn and who has 
 funds of, or is indebted to the person who draws it and 
 which are to be applied to its payment. The drawer may 
 withdraw his funds or direct the drawee to apply them 
 in some other way if he does so before the bill is pre- 
 sented and accepted. The relation of the drawee to the 
 drawer of the bill does not change and the drawee does
 
 §127 BILLS OF EXCHANGE 207 
 
 not become liable upon the bill unless he accepts it. The 
 drawee's acceptance of the instrument, however, creates 
 an obligation from him to the holder and all other parties 
 to the instrument, and he must then pay the money due 
 upon the bill at its maturity. When the drawee acceiJts 
 the ))ill he is thereupon entitled immediately to appro- 
 priate sufficient of the drawer's funds to enable him to 
 pay it if the bill was issued against a deposit. 
 
 This section has its most frequent application in the 
 determination of the liability of a bank to the holder of 
 a check upon which the drawer has stopped payment. 
 Applied in its simple sense its language leaves the bank 
 under no uncertainty as to its position in such a situa- 
 tion. The bank is not liable to the holder of a check upon 
 which payment has been stopped unless it has certified 
 or accepted the check. Its certification is by Section 187 
 made the equivalent of an acceptance and after certifica- 
 tion the check must be paid to a holder in due course. 
 It does not then matter whether the certification was 
 given before or after receipt of the stop-pa^mient order, 
 or was given by other mistake.- The payee of a check 
 certified by mistake cannot enforce it against the certify- 
 ing bank because his position has not been altered to his 
 injury or prejudice by the mistake,^ but anyone who 
 takes it from him without notice, may recover upon it. 
 The nature and extent of the acceptor's engagement up- 
 on acceptance or certification are explained in Section 62. 
 
 2. Union Trust Co. vs. Preston Nat'l Bank, 136 Mich. 460, 99 N. 
 
 W. 399. 
 Baldinger, etc, Mfsi'. Co. vs. Mfrs. & Citizen's Trust Co., 156 
 N. Y. S. 445. 
 
 3. Baldino-er, etc., Mfg-. Co. vs. Mfrs. & Citizen's Tmst Co., 156 
 
 N. Y. S. ^45.
 
 208 THE NEGOTIABLE INSTRUMENTS LAW § 128 
 
 Bill addressed to ' ' ^^^- l^^- ^ ^^^^ ^^^ ^^ addressed to 
 more than one two or more drawees jointly, whether 
 drawer. they are partners or not ; but not to two 
 
 "Wisconsin. q^ more drawees in the alternative* or 
 
 IN SUCCESSION." 
 
 A bill, meaning a negotiable bill of exchange, may be 
 drawn upon two or more persons jointly, even though 
 they are not partners, but a negotiable bill may not be 
 drawn upon one person or another so that the holder 
 may or is required to present it to one or the other ; and 
 it may not be drawn upon two or more persons in a man- 
 ner which requires presentment first to one and then to 
 another in successive order. 
 
 Inland and ''Sec. 129. An inland bill of ex- 
 
 foreign bills of change is a bill which is, or on its face 
 exchange. purports to be, both drawn and payable 
 
 WITHIN THE SAME STATE. AnY OTHER BILL IS A FOREIGN 
 
 bill. Unless the contrary appears on the face of the 
 bill, the holder may treat it as an inland bill." 
 
 Any bill which appears upon its face to be drawn and 
 payable at a place (not necessarily the same place) with- 
 in the same State is called an ''inland bill." All others 
 are foreign bills, and in these are included, of course, 
 bills drawn in foreign countries to be payable in our 
 o\vn^ and checks issued in one State and drawn upon a 
 bank in another.^ But if the bill is so drawn that it is 
 not apparent upon its face, that is, if it cannot be deter- 
 mined from the face of the instrument alone, without 
 the aid of anything else, that it is payable outside of the 
 State in which it was drawn the holder may treat it as 
 an inland bill. The distinction between inland and for- 
 eign bills is of importance upon dishonor, for it is pro- 
 vided in the Act that while the former may be pro- 
 
 4. Amsinck vs. Rogers, 189 N. Y. 252. 
 
 Casker vs. Kuhne, 159 App. Div. (N. Y.) 389. 
 
 5. Mankey vs. Hoyt, 27 S. D. 561.
 
 § 130 BILLS OF EXCHANGE 209 
 
 tested upon dishonor tlie latter must be, in order to fix 
 the liability of secondary parties. (Section 152.) 
 When biU may ''^^c. 130. Where in a bill deawer 
 be treated as and dr-^wee are the same person, or 
 promissory note, where the drawer is a fictitious person,* 
 "Wisconsin. q^ ^ person not having capacity to con- 
 
 tract; the holder may treat the instrument, at his 
 option, either as a bill of exchange or a promissory 
 
 NOTE." 
 
 The holder of the bill may treat it as a promissory note 
 if the drawer and drawee are the same person, that is, 
 if a partner draws on his firm,*^ if one makes a draft 
 upon himself, or the bill is drawn upon him by or by him 
 upon his agent or his branch house.'^ Likewise, if the per- 
 son upon w^hom it is draw^n is a fictitious person meaning, 
 as has already been said (Sec. 9), one who does not exist, 
 or if existing, is a person who has not and was not intend- 
 ed to have any interest in the instrument and whose name 
 is used merely for the purpose of deception. If the 
 drawee has no capacity to contract, as a person under 
 some legal disability, for example, a person not of legal 
 age, a person of unsound mind, one the subject of a 
 guardianship, or an officer of a corporation who has no 
 legal authority to bind the corporation by contract, the 
 holder may then treat the bill as the promissory note of 
 the drawer. AVhen any of these conditions exist the right 
 to treat the instrument as a promissory note or as a bill of 
 exchange is optional with the holder. He has this option 
 also if the instrument is so ambiguous that there is doubt 
 whether it is a bill or a note. (See Sec. 17.) If he elects 
 to treat it as a promissory note, the rights, duties and 
 liabilities of the parties to the bill are like those of 
 
 6. New York, etc., Co. vs. Selma Savgs. Bk., 51 Ala. 305. 
 New York, etc., Co. vs. Meyer, 51 Ala. 325. 
 Porthouse vs| Parker. 1 Camp (Eng.) 82. 
 
 7. First Nat'l Bk. vs. Home Ins. Co., 16 N. M. 66. 
 Clemens vs. Staunton Co., 61 Wash. 419.
 
 210 THE NEGOTIABLE INSTRUMENTS LAW § 131 
 
 maker, indorser and payee of a note and it is governed 
 
 by appropriate provisions of this Act other than those 
 
 especially applicable to bills of exchange. 
 
 of need. "Sec. 131. The de\wer of a bill and 
 
 Referee in case any indoeser may insert thereon the 
 
 NAME of a person TO WHOM THE HOLDER MAY EE„SORT IN 
 CASE OF NEED, THAT IS TO SAY, IX CASE TFTE BILL IS DISHON- 
 ORED BY NON-ACCEPTANCE OR NON-PAYMENT. SuCH PERSON 
 IS CALLED THE REFEREE IN CASE OF NEED. It IS IN THE OP- 
 TION OF THE HOLDER TO RESORT TO THE REFEREE IN CASE OF 
 NEED OR NOT, AS HE MAY SEE FIT." 
 
 A referee in case of need is sometimes named in the 
 bill when the drawer or indorser has doubt of the will- 
 ingness or ability of the person upon whom it is drawn 
 to either accept or pay the instrmnent, or both, and does 
 not desire to have the bill meet mth dishonor. He there- 
 fore refers the holder to a person other than the drawer 
 whom he expects to accept or pay it, if tlie one upon 
 whom the instrument is drawn fails or refuses to do so. 
 Any indorser may insert the name of a referee at his in- 
 dorsement or at any other place on the bill. 
 
 The reference in case of need is not usuallly employed 
 unless it is of the utmost importance to the drawer or in- 
 dorser that the bill shall be accepted and paid, as when it 
 is drawn at a considerable distance, or under special cir- 
 cumstances and then as a rule, only when it is desirable to 
 provide against damages and costs on re-exchange or 
 when the circumstances seem to the drawer or indorser to 
 warrant this precaution in order to preserve his credit. 
 The referee in case of need usually pays the bill after pro- 
 test upon its dishonor by the drawer but he may become 
 the acceptor for honor and if he does it will be necessary 
 to observe the requirements of subdivision 5 of this Title 
 in order to preserve his liability. In foreigii bills drawn" 
 in foreign countries the reference is indicated by the 
 French words : ''Au hesoin, ches M. " and the thing
 
 § 131 BILLS OF EXCHANGE 211 
 
 to do when a bill is dishonored which contains these 
 words is to protest it and present it to the person indi- 
 cated who will very likely accept or pay it for the honor 
 of the party who inserted the reference in the bill. If he 
 pays the bill for honor the provisions of subdivision 6 
 of this Title will determine his rights and his duties, and 
 they prescribe the manner in which the payment for 
 honor must be made. You will observe that the holder is 
 not required to resort to the referee in case of need but 
 mav do so if he think fit.
 
 212 THE NEGOTIABLE INSTRUMENTS LAAV § 132 
 
 SUBDIVISION II. 
 
 Acceptance. 
 
 Section Section 
 
 132 Acceptance, how made, etc. 137 Liability of drawee retain- 
 
 133 Holder entitled to accept- i"g ^r destroying bill. 
 
 ance on bill. ^^^ Acceptance ot nicomplete 
 
 134 Acceptance by separate in- ^39 ^^^^^^ ^^ acceptances. 
 
 stiiament. -^^^ ^yj^^^ constitutes a general 
 
 135 Promise to accept; when acceptance. 
 
 equivalent to acceptance. 141 Qualified acceptance. 
 
 136 Time allowed drawee to ac- 142 Rights of parties as to qual- 
 
 cept. ified acceptance. 
 
 Acceptance, how ''Sec. 132. The acceptance of a buAj 
 made, etc. is the signification by the drawee of his 
 
 ASSENT TO THE ORDER OF THE DRAWER. ThE ACCEPTANCE 
 MUST BE IN WRITING AND SIGNED BY THE DRAWEE. It MUST 
 NOT EXPRESS THAT THE DRAWEE WILL PERFORM HIS PROMISE 
 BY ANY OTHER MEANS THAN THE PAYMENT OF MONEY. 
 
 AVlien the person upon whom a bill is drawn which 
 requires presentment intends to pay it (see Sec. 1-43 for 
 the kind which do), he expresses his intention by "ac- 
 cepting" the bill when it is exhibited and presented to 
 him. He must do this by writing appropriate words 
 upon the bill, or upon a separate paper (Sec. 134) and 
 he must sign it. The drawee usually writes the word 
 "accepted" across the face of the bill, and signs his name 
 underneath. Indeed, you will see that by the next sec- 
 tion the holder is given the right to require the accept- 
 ance to be written on the bill. If the drawee dates his 
 acceptance, and he must do it if a date is necessary to 
 fix the maturity of the bill, he ought to date it as of the 
 day when the presentment was made. (Sec. 136.) K 
 the date is omitted and one is necessary to fix the ma-
 
 § 133 BILLS OF EXCHANGE, ACCEPTANCE 213 
 
 turity of the bill, any liolder may insert its true date. 
 
 (Sec. 13.) 
 
 The drawee's acceptance is his promise to pay the bill 
 
 when it becomes due and he is not permitted to express 
 
 any other means of payment than payment in money. He 
 
 may, however, state in the acceptance that the holder may 
 
 have the option to require him either to pay the bill 
 
 in money or do something in lieu thereof (Sec. 5), but if 
 
 the acceptance attempts to put any obligation upon the 
 
 holder to receive any other means of pa^nnent than 
 
 money, it is no acceptance at all and the holder must 
 
 treat the bill as dishonored. The acceptance becomes 
 
 effective only by delivery or notification (Sec. 191) to the 
 
 holder and until it is delivered it is incomplete and it 
 
 may be revoked (Sec. 16), unless notice of the acceptance 
 
 has been given to the holder.^ 
 
 Holder entitled ''Sec. 133. The holder of a bill pre- 
 to acceptance senting the same foe ACCEPTAisrcE may be- 
 on the bill. quiee that the acceptance be written on 
 
 THE bill, and, if SUCH REQUEST IS REFUSED, MAY TREAT THE 
 BILL AS DISHONORED.'' 
 
 The person who holds the bill and presents it for ac- 
 ceptance has the right to require the drawee to write his 
 acceptance upon the bill itself. If the drawee refuses 
 to do this the holder may treat the bill as dishonored. 
 By universal custom the proper place for the acceptance 
 is across the face of the bill but an acceptance written 
 anywhere on the instrument has been held to be suffi- 
 cient.2 Any words which will indicate the intention of 
 the drawee to comply with the order of the drawer and 
 
 1. First Nat'l Bk. of Murfreesboro vs. First Natl Bk. of Nash- 
 
 ville, 154 S. W. (Tenn.) 965. 
 Donavan vs. Flvnn, 118 Mass. 537. 
 First Nat'l Bk.'vs. Clark, 61 Md. 400, 48 Am. R. 114. 
 Ilsley vs. Jones, 12 Gray (Mass.), 260. 
 
 2. First Nat'l Bk. vs. Trognitz, 14 Cal. A. 176, 111 P. 402. 
 Brannin vs. Henderson, 12 B. Mon. (Ky.) 61.
 
 214 THE NEGOTIABLE INSTRUMENTS LAW § 134 
 
 pay the instrument at its maturity, will be regarded as 
 an acceptance^ but the simplest, best manner in which 
 it can be done is by writing the word "accepted" on the 
 face of the bill above the signature of the acceptor. It 
 has even been held that the mere signature of the ac- 
 ceptor upon the face of the bill is sufficient.* While the 
 section now seems to require something more than that, 
 the signature of the drawee appearing across the face 
 of the bill has repeatedly been held to import a full assent 
 to the order of the drawer and that parol evidence is 
 not admissible to prove a ditferent intention, but when 
 there is ambiguity parol proof is admissible to make the 
 intention of the signer clear.^ The effect of an accept- 
 ance written upon a paper other than the bill itself and 
 of a promise to accept will appear from the next two 
 sections. 
 
 , ''Sec. 134. Where an acceptance is 
 
 Acceptance by 
 
 separate written on a paper other than the biu. 
 
 instrument. itself, it does not bind the acceptor ex- 
 
 °IUinois cEPT in favor of a person" to whom it is 
 
 So. Dakota. shown and who, on the faith thereof, 
 
 received the bill for value.'' 
 
 You will observe from the above section that the ac- 
 ceptance may be made on a separate paper. If the bill is 
 to be negotiated by the holder an acceptance upon a 
 separate paper, as for example, by letter or telegram, is 
 not desirable and ought not be taken if it can be avoided, 
 although, as this section provides, and the custom of mer- 
 chants sanctioned for the convenience of mercantile af- 
 
 3. O'Donnell vs. Smith, 2 E. D. Smith (N. Y.), 124. 
 Whilden vs. Merch. Nat'l Bk., 64 Ala. 1, 32, 38 Am. R. 1. 
 
 4. Fowler vs. Gate City Nat '1 Bk., 88 Ga. 29. 
 Schwartz vs. Barrinoer, 20 La. Ann. 419. 
 Wheeler vs. Webster, 1 E. D. Smith (N. Y.), 1. 
 Haines vs. Nance, 52 111. A. 406. 
 
 Steele vs. McKinley, 2 App. Cas. 754. 
 
 5. Cook vs. Baldwin, 120 Mass. 317, 21 Am. R. 517. 
 Murrell vs. Edwards (Tex. Civ. App.), 179 S. W. 532.
 
 § 135 BILLS OF EXCHANGE, ACCEPTANCE 215 
 
 fairs, an acceptance on a separate paper may be made.^ 
 Present the bill, even if it is inconvenient to do so, and 
 insist upon the acceptance being written across its face. 
 A separate written acceptance will bind the acceptor in 
 favor of any one .who receives the bill for value after 
 its acceptance in that manner, but only if the subsequent 
 holder has been shown the separate acceptance before 
 taking the bill and receives the bill for value in reliance 
 upon it.'^ 
 
 The language of this section is explicit and excludes 
 liability of the acceptor to persons other than those who 
 receive the bill for value from the holder after having 
 been shown the separate acceptance and who so receive 
 it upon the faith of the separate acceptance. This would 
 seem to create no liability upon the acceptor to pay the 
 bill to the holder to whom he gives the separate accept- 
 ance, and who already had the bill before the separate 
 acceptance was given, but this section must be interpreted 
 in connection with Section 68 to preclude such a conclu- 
 sion. There it is provided that the acceptor, by accept- 
 ing the instrument, engages that he will pay it according 
 to the tenor of his acceptance, and this section permits 
 a separate acceptance to be taken. Now, of course, the 
 acceptor's engagement, when he accepts on a separate 
 paper, is his promise to the holder who already has the 
 bill and it must be kept. However, all dispute and delay 
 in the enforcement of the instrument will be avoided 
 
 6. Clark vs. Cook, 4 East (Eng.), 57, 102 Eeprint, 751. 
 Wells vs. W. U. Tel. Co., 144 la. 605, 619. 
 
 First Nat'l Bk. vs. Comm'l Savsis. Bk.. 74 Kas. 606, 87 P. 746, 
 
 8 L. R. A. N. S. 1148. 11 Ann. Cas. 281 
 First Nat'l Bk. vs. Muskoi^ee Pipe Line Co., 40 Okl. 603, 139 
 
 P. 1136. 
 
 7. Eakin vs. Citizen's St. Bk., 67 Kan. 338, 72 P. 874. 
 
 First Nat'l Bk. vs. Muskogee Pipe Line Co., 40 Okl. 603, 13» 
 
 P. 1136. 
 Lehnhard vs. Sedway, 160 Mo. App. 83.
 
 216 THE NEGOTIABLE INSTRUMENTS LAW § 135 
 
 if the acceptance is obtained in the proper manner, in its 
 proper place upon the bill, and this should be insisted 
 upon whenever practicable. 
 
 Promise to "Sec. 135. An unconditional promise'' 
 
 accept; when in writing to accept a bill before it is 
 ecLuivalent to drawn IS deemed an actual acceptance in 
 acceptance. favor of every person who, upon the 
 
 ^Illinois. FAITH thereof, RECEIVES THE BILL FOR 
 
 value. ' ' 
 
 A promise to accept a bill is not always to be deemed 
 an acceptance of the instrument even though it be made 
 in writing. However, when an unconditional promise 
 to accept is made in writing within a reasonable time 
 before the bill is drawn, it is regarded as the equivalent 
 of and is considered to be in effect an actual acceptance 
 in conformity with this Act in so far as those persons 
 are concerned who receive the bill for value upon the 
 faith of the written promise to accept it when it shall 
 be drawn.^ In this case it is not necessary that one who 
 receives the bill must be shown the written promise to 
 accept as in the last preceding section. It is only required 
 that he take the bill for value upon the strength of the 
 promise, that is, he must have been influenced to take 
 the bill by a knowledge of the written promise that it will 
 be accepted Avhen it is drawn.'^ In order to give to the 
 agreement to accept the effect of a valid acceptance the 
 
 6. Coolidge vs. Payson, 2 Wheat (U. S.), 66, 4 L. Ed. 185 (in which 
 will be found a full review of this subject). 
 Morgantown Bk. vs. Hay, 143 N. C. 326, 55 S. E. 81. 
 Woodward vs. Griffiths-Marshal Co., 43 Minn. 260, 45 N. W. 433. 
 Smith vs. Ledyard, 49 Ala. 279. 
 James vs. E. G. Lyons Co., 134 Cal. 189, 66 P. 210. 
 
 9. Smith vs. Ledyard. 49 Ala. 279. 
 
 Woodward vs. Griffiths-Marshall Co., 43 Minn. 260, 45 N. W. 
 
 433. 
 Mich. Bk. vs. Ely, 17 Wend. (N. Y.) 508.
 
 § 186 BILLS OF EXCHANGE, ACCEPTANCE 217 
 
 bill must be drawn in strict accordance with its terms. ^" 
 But if the bill drawn does not conform to the agreement 
 to accept, another conforming to its terms may be drawn 
 within a reasonable time after the date of the agreement, 
 and if it is, this will bind the drawee.^ ^ 
 
 By the Law Merchant, which governs when it is not 
 otherwise provided in this Act (Sec. 196), authority to 
 draw a bill implies an agreement to accept it when it 
 is drawn, if the authority to draw is known to and relied 
 upon by the person taking the bill.^^ This authority is 
 usually granted in the form of a letter of credit which 
 is given for the purpose of being shown to third parties 
 by the person to whom it is issued, and it imposes upon 
 the person who issues it a binding obligation to accept 
 any bill drawn under its authority when drawn in accord- 
 ance with its conditions. Letters of Credit are of two 
 forms : open and special. The open letter is addressed 
 to any one to whom it may be presented; the special 
 letter to a specified person, requesting him to make ad- 
 vances or extent credit to the person described in the 
 letter and in that case no other person is authorized to 
 make advances or extent credit under its authority. The 
 letter, of either character, is usually limited both as to 
 time and amount and it is the duty of the person making 
 advances to satisfy himself that the authority to draw 
 has not been exceeded in either particular. 
 
 Time allowed ''Sec. 136. The drawee is allowed 
 
 drawee to accept, twenty-four hours after presentment, 
 
 IN WHICH to decide WHETHER OR NOT HE WILL ACCEPT THE 
 bill; but the acceptance, IF GIVEN, DATES A-S OF THE DAY 
 OF PRESENTATION,"' 
 
 10. Hodges vs. Iowa Barb. Steel Co., 80 Iowa, 65, 45 N. W. 541. 
 Brinkman vs. Hunter, 73 Mo. 172, 39 Am. R. 492. 
 Saiilsburj' vs. Blandy, 53 Ga. 665. 
 
 11. Johnson Vs. Clark, 39 N. Y. 216. 
 
 12. Coolid^e vs. Pavson. 2 Wheat (U. S.), 66, 4 L. Ed. 185. 
 Ruiz vs. Renauld, 100 N. Y. 256, 261, 3 N. E. 182.
 
 218 THE NEGOTIABLE INSTRUMENTS LA\Y § 137 
 
 This section must not be understood to grant twenty- 
 four hours for the payment of a bill payable at sight 
 or on demand, for such do not require presentment for 
 acceptance except when drawn to be payable as is pro- 
 vided in Sec. 143, Sub-sec. 3, and are payable at once. 
 But if a bill payable upon demand which requires ac- 
 ceptance or one payable at a fixed time is presented to 
 the drawee for acceptance, he is allowed twenty-four 
 hours from his first sight of the bill within which to ex- 
 amine the state of his accounts with the drawer and 
 determine whether or not he will accept it. If the bill is 
 not left with him and, availing himself of this provision, 
 the drawee does not accept the instrument at once, the 
 holder ought again to request its acceptance within the 
 time he has allowed the drawee for its examination/' 
 and if the drawee signifies his intention of accepting it 
 and it has not been left with him, the holder will, of 
 course, take the bill to him again. Whether the bill has 
 or has not been left with the drawee, if he does not give 
 the acceptance within twenty-four hours, unless a longer 
 time has been granted, the holder must treat the bill as 
 dishonored. (Sec. 150.) 
 
 "Sec. 137.'' Where a drawee to whom 
 Liability of ^ ^^^^ ^^ delivered for acceptance de- 
 
 retaining or stroys the same, or refuses withix twen- 
 
 destroying bill, ty-four hours after such delivery or 
 "Illinois. WITHIN such other period as the holder 
 
 S. Dakota. ^^^^. allow, to return the bill accepted 
 
 ^-Wisconsin. ^^^ non-accepted to the holder he wiix 
 
 BE deemed to have ACCEPTED THE SAME.'"' 
 
 When the holder leaves the bill with the drawee it be- 
 comes his duty to again call upon him at the end of 
 twenty-four hours, or such further time as he may have 
 
 13. Case vs. Burt, 15 Mich. 82. 
 
 Ovei-man vs. Hoboken Citv Bk.. 31 X. J. L. 563, 56o. 
 Montoonieiv Citv Bk. vs. Albany City Bk., S Barb. (N. Y.) 396. 
 AVesfberg vs. Chicago Lbr. Co., 117 Wis. 589, 94 N.W. 572.
 
 § 137 BILLS OF EXCHANGE, ACCEPTANCE 219 
 
 granted foi its consideration, and request the drawee 
 return it, either accepted or non-accepted. If the drawee 
 refuses to return the bill or if he destroys it he will be 
 deemed to have accepted it and will be required to pay 
 it. Section 150 provides that if the bill has been duly 
 presented and is not accepted within the prescribed time, 
 the holder must treat it as dishonored. You then see 
 that a mere neglect unaccompanied by any signification 
 of the drawee's intention to accept the bill is regarded 
 as a dishonor and the holder must treat it as such. It 
 would seem, therefore, that it would be an unwise prac- 
 tice accompanied by considerable risk to grant a request 
 for further time for consideration of the bill if the request 
 for additional time is made later than the day after the 
 last day originally granted. Of course, a bill may be ac- 
 cepted by the drawee after its dishonor by non-accept- 
 ance and thus restored to credit (Sec. 138), but its subse- 
 quent acceptance will not revive the holder's right of 
 recourse against the drawer and indorsers if he lost it 
 by failure to give them notice of dishonor in the manner 
 and within the time prescribed in Subdivision 7, Sees. 
 89 to 118, inclusive, Title I, if the drawee failed to ac- 
 cept within that time. His failure to do so will have 
 effected their discharge (Sec. 50) and they cannot again 
 be made liable upon the instrument except by their o\m 
 voluntary act.^^" It seems to be perfectly proper and 
 safe-, however, to grant a succession of extensions, up to 
 the limit of a reasonable time, when each successive ex- 
 tension is granted before the expiration of the one that 
 went immediately before it, and if this is done the bill 
 need not be treated as dishonored by the drawee's fail- 
 
 13a. Aebi vs. Bank of Evansville, 124 Wise. 73, 102 X. W. 329. 
 Smith vs. Rowland, 18 Ala. 665.
 
 220 THE NEGOTIABLE INSTRUMENTS LAW § 137 
 
 ure to accept it unless it remains unaccepted at the ex- 
 piration of the last extension.^^ (See Sec. 150.) 
 
 It seems, therefore, that the mere failure of the 
 drawee to return the bill if it has been left with him is 
 not, of itself, equivalent to and to be treated as an ac- 
 ceptance but is, on the contrary, a dishonor of the in- 
 strument.15 (Sec. 150.) There must be a positive re- 
 fusal to return the instrument or a destruction of it by 
 the drawee before he is deemed to have accepted it.^^ 
 
 This conclusion is considered to be in accordance with 
 the best decisions on this question and in accordance with 
 the plain meaning of the Act, although there are authori- 
 ties which hold that the drawee's mere failure to return 
 the bill either accepted or non-accepted within the period 
 allowed him for its consideration and examination shall 
 be deemed to be an acceptance of the instrument ;^^ and 
 some of these decisions have been rendered since the 
 adoption of the Act in States where it is in effect. 
 
 The drawee's refusal to return the instrument or his 
 destruction of it being considered an acceptance, the in- 
 strument is not thereby dishonored and no notice need be 
 given to the drawer or indorsers. If the instrument is 
 a foreign bill it need not be protested as for non-accept- 
 ance. Such circumstances being unusual, however, should 
 be communicated to all parties to the instrument imme- 
 diately 'and upon the maturity of the bill, its pa\^nent 
 must be demanded. If it is then refused, the usual pro- 
 
 14. Ingram vs. Foster, 2 Smith K. B. (Enc;.) 242. 
 
 Westbero' vs. Chicago Lumber Co., 117 Wis. 589, 94 X. W. 572. 
 
 15. St. Louis & S. W. Ry. Co. vs. James, 78 Ark. 490, 493, 95 S. 
 
 W. 804, 8 Ann. Cas. 611 and note. 
 Rousch vs. Duff, 35 Mo. 312. 
 Foley vs. New York Savg's Bk., 79 Misc. 220, 139 N. Y. S. 915. 
 
 16. Westburg vs. Chicago Lbr. Co., 117 Wis. 589, 94 N. W. 572. 
 
 17. Wisner vs. First Nat'l Bk., 220 Pa. 21, 68 A. 955, 17 Am S. R. 
 
 955. 17 L. R. A. N. S. 1266 and note.
 
 § 138, 139 BILLS OF EXCHANGE, ACCEPTANCE 221 
 
 ceedings upon dishonor must be taken to charge the 
 drawer and indorsers. 
 
 Acceptance of ' ' Sec. 138. A bill may be accepted be- 
 
 incomplete bill, foee it has been signed by the drawer. 
 OR while otherwise incomplete, or when it is overdue, 
 OR after it has been dishonored by a previous refusal 
 to accept, or by non-payment. But when a bill payable 
 after sight is dishonored by non-acceptance and the 
 
 DRAWEE subsequently ACCEPTS IT, THE HOLDER, IN THE AB- 
 SENCE of any different agreement, IS ENTITLED TO HAVE 
 THE BILL ACCEPTED AS OF THE DATE OF THE FIRST PRESENT- 
 MENT." 
 
 It is not necessary that the bill shall be complete and be 
 sig7ied by the drawer before it is accepted. The acceptor 
 may place his acceptance upon it before it is signed by 
 the drawer or while it is yet incomplete in any other re- 
 spect. If it is overdue or has previously been refused 
 by the drawee and dishonored by non-acceptance or by 
 non-payment, he may nevertheless accept it and thus re- 
 store it to credit. 
 
 But if the instrument is one payable at a period after 
 sight and therefore requires that the acceptance be dated 
 in order to fix its maturity, and if it has been dishonored 
 by non-acceptance and the drawee afterward accepts it, 
 the holder may require him to date his acceptance as of 
 the date when the bill was first presented to him. By 
 agreement, however, between the holder and the accept- 
 or, the acceptance may be given any other different date. 
 Attention is called to the fact, however, that an instru- 
 ment is payable on demand when it is negotiated after 
 maturity. (Sec. 7.) 
 
 Kinds of *'Sec. 139. An acceptance is either 
 
 acceptances. general or qualified. A general accept- 
 
 ance ASSENTS WITHOUT QUALIFICATION TO THE ORDER OF 
 THE DRAWER. A QUALIFIED ACCEPTANCE IN EXPRESS TERMS 
 VARIES THE EFFECT OF THE BILL AS DRAWN."
 
 222 THE NEGOTIABLE INSTRUMENTS LAW § 140 
 
 By accepting the bill generally the acceptor agrees 
 fully to the order of the drawer, agrees to pay the instru- 
 ment in exactly the manner, terms and amount and at 
 the time and place named by the drawer in the bill, to the 
 person to whom the bill directs him to pay it or to the 
 holder. By a qualified acceptance the acceptor promises 
 to pay it subject to the terms which he himself im- 
 poses at his acceptance and such an acceptance changes 
 the effect of the bill to the extent that the qualification 
 imposed by the acceptor may vary the terms expressed 
 by the drawer when he drew the bill. A qualified ac- 
 ceptance is in effect a new offer which in turn requires 
 the consent of the parties already liable on the bill be- 
 fore it will become a binding contract.^* The intention 
 to qualify must be clear and unmistakable and the lan- 
 guage used by the acceptor will be taken most strongly 
 against himself. ^^ Tf it does not distinctly vary the terms 
 of the bill the acceptance will be regarded as general.^" 
 Continue now to the next section and then read these two 
 in connection with Section 62 and what is said there 
 upon the liability of the acceptor. 
 
 What constitutes "Sec. 140. An acceptance to pay at 
 a general a particular place is a general accept- 
 
 acceptance. ance, unless it expressly states that the 
 
 BILL IS to be paid THERE ONLY AND NOT ELSEWHERE." 
 
 A general acceptance has already been partially de- 
 fined in the preceding section. This section is intended 
 to lay down the rule that an acceptance in which the 
 only condition named by the acceptor is that he will pay 
 the instrument at a particular place, without expressly 
 
 18. Stotesburg vs. Massengale, 13 Mo. App. 221. 226. 
 Mvers vs. Standai-t, 11 Oh. St. 29. 37. 
 
 19. Sylvester vs. Staples, 44 Me. 496. 
 
 20. Mvers vs. Standart, 11 Oh. St. 29. 
 
 Clark vs. Gordon, 37 S. C. L. 311, 45 Am. D. 768. 
 Todd vs. State Bk., 3 Bush (Kv.), 626. 
 Citv Bk. vs. Lauman. 19 X. Y. 477.
 
 § 141 BILLS OF EXCHANGE, ACCEPTANCE 223 
 
 stating that he will pay it there only, and not elsewhere, 
 is not a qualified acceptance, but that, notwithstanding 
 the imposition of this condition, such an acceptance is 
 considered to ))e a general one. The holder is not bound 
 to present the instrument for payment at the place named 
 by the acceptor if he does not see fit to do so. An instru- 
 ment accepted in this manner must nevertheless be pre- 
 sented for payment at the place of payment named in the 
 bill itself if one is designated, but if none is designated 
 it may be presented at the acceptor's residence or usual 
 place of business. But, of course, as a matter of accom- 
 modation and convenience the bill ought to be presented 
 at the place designated by the acceptor in his acceptance 
 if the instrument does not require presentment else- 
 where. But now see the next section for the effect of 
 an acceptance which designates that the acceptor will 
 pay at a particular place and there only. 
 
 Qualified '^Sec. 141. An acceptance is quau- 
 
 acceptance. fied which is : 
 
 1. Conditional, that is to say, which makes payment 
 
 BY the acceptor DEPENDENT ON THE FULFILLMENT OF A 
 
 condition therein stated; 
 
 2. Partial, that is to say, an acceptance to pay part 
 
 ONLY OF the amount FOR WHICH THE BILL IS DRAWN ; 
 
 3. Local, that is to say, an acceptance to pay only 
 at a particular place ; 
 
 4. Qualified as to time ; 
 
 5. The acceptance of some one or more of the 
 drawees, but not of all." 
 
 Section 62 provides that the accej)tor engages, that is, 
 he promises and agrees to pay the bill, only in accord- 
 ance w4th the terms of his acceptance and the holder 
 can not require payment upon any other than the terms 
 of his qualification if he takes such an acceptance. The 
 next section declares that the holder may refuse to take 
 a qualified acceptance. Tf he does take it he will have
 
 224 THE NEGOTIABLE INSTRUMENTS LAW § 141 
 
 to abide by its terms and the burden of proving compli- 
 ance with the qualification or condition imposed by the 
 acceptor in his acceptance rests upon the holder.^^ 
 
 The acceptance is qualified when the acceptor prom- 
 ises to pay the instrument only upon the happening or 
 fulfillment of some condition which he names, or the 
 happening of some independent event. This is fre- 
 quently done in such bills as are accompanied by docu- 
 ments of shipment as, for example, when the acceptance 
 is given to become payable only upon the actual arrival 
 of the shipment to pay which it is drawn, or surrender 
 of bill of lading,^^ or upon completion of work in prog- 
 ress of construction. 22 Another frequent use of this 
 form of qualified acceptance is the acceptance of the bill 
 payable "when in funds," which means that the ac- 
 ceptor will pay only when the person for whose account 
 the bill is dra^vTi shall have provided him with the money 
 with which to do so. Such a condition is fulfilled only 
 when the draw^er puts the acceptor in possession or 
 control of actual funds for the purpose of paying the 
 bill.-^ The possession of securities, goods, or property, 
 although of a value more than sufficient to pay the bill, 
 does not fulfill the condition.^^ 
 
 If the acceptor agrees to pay only a part of the amount 
 called for by the bill, his acceptance is qualified and he 
 becomes liable only for the amount for which he ac- 
 
 21. Coloradc Nat. Bk. vs. Boettcbcr, 5 Colo. 185, 191, 40 Am. Rep. 
 
 142. 
 Ford vs. Angelrodt, 37 Mo. 50, 55, 88 Am. Dee. 174. 
 
 22. Lamon vs. French, 25 Wis. 37. 40. 
 
 23. Hogan vs. Globe Mut. Bldg. Assn., 140 Cal. 610, 74 P. 153. 
 Burns Lbr. Co. vs. Doyle,^ 71 Conn. 742, 43 A. 483, 71 Am. 
 
 S R 235 
 Cook vs. Wolfendale, 105 Mass. 401. 
 
 24. Wallace vs. Douglas, 116 N. C. 659, 21 S. E. 387. 
 
 25. Campbell vs. Petteugill, 7 Me. 126, 129, 20 Am. D. 349. . 
 Carlisle vs. Hooks, 58 Tex. 420.
 
 § 142 BILLS OF EXCHANGE, ACCEPTANCE 225 
 
 cepted.^^ The drawee's acceptance is also qualified when 
 he engages to pay the instrument only at a particular 
 place in a city which he names and that place is not 
 the place named in the bill, or if he states in it that he 
 will pay it only at a particular time which is not the 
 time named in the bill, or he intentionally restricts or 
 modifies the time of payment named in the bill in any 
 way. An acceptance is also qualified if it is made by one 
 or more of the drawees but not by all who, by the terms 
 of the instrument, are required to accept it, unless the 
 one accepting has authority to accept for all. (Sec. 145.) 
 If the acceptor attempts to qualify his acceptance by 
 promising performance by any other means than by 
 the payment of money it does not amount to even a qual- 
 ified acceptance and the instrument must be treated as 
 dishonored. (Sec. 132.) But if his acceptance, in addi- 
 tion to promising payment in money as required in the 
 bill, gives the holder the option to require something 
 to be done in lieu thereof, it is not qualified. (Sees. 5 
 and 132.) 
 
 Rights of parties ''Sec. 142, The holder may eefuse to 
 as to qualified take a qualified acceptance, and if he 
 acceptance. j^Q^g ^^^^ obtain an unqualified accept- 
 
 ance, HE MAY TREAT THE BILL AS DISHONORED BY NON-AC- 
 CEPTANCE. Where a qualified acceptance is taken, the 
 
 DRAWER AND INDORSERS ARE DISCHARGED FROM LIABILITY ON 
 THE BILL, UNLESS THEY HAVE EXPRESSLY OR IMPLIEDLY AU- 
 THORIZED THE HOLDER TO TAKE A QUALIFIED ACCEPTANCE, OR 
 SUBSEQUENTLY ASSENT THERETO. WhEN THE DRAWER OR 
 AN INDORSER RECEIVES NOTICE OF A QUALIFIED ACCEPTANCE, 
 HE MUST, WITHIN A REASONABLE TIME, EXPRESS HIS DISSENT 
 TO THE HOLDER, OR HE WILL BE DEEMED TO HAVE ASSENTED 
 THERETO.'' 
 
 26. Ray vs. Faulkner, 73 111. 469. 
 
 27. Fanshawe vs. Peet, 2 H. & N. 1, 4 E. R. C. 243. 
 Myers vs. Standart, 11 Oh. St. 29. 
 
 Niagara Dist. Bk. vs. Fairman Maeh. Tool Co., 31 Barb. 
 403.
 
 226 THE NEGOTIABLE INSTRUMENTS LAW § 142 
 
 When a qualified acceptance is made or offered the 
 holder may refuse to take it. He is entitled to have a 
 general acceptance and if he does not obtain it he im- 
 perils his right of recourse upon the drawer and in- 
 dorsers of the bill. If he suft'ers loss by reason of having 
 taken a qualified acceptance he cannot recover from the 
 parties secondarily liable upon the instrument unless, 
 before he takes it, he obtains authority from each of them 
 to do so, or, having taken it and notified them, they 
 assent to it. Their assent as well as their authority 
 may be either expressly given or it may be implied 
 from their words or conduct in regard to the matter. 
 (See Sec. 82 for explanation of the express waiver and 
 of waiver by implication.) 
 
 Upon receiving notice that a qualified acceptance is 
 offered ])y the drawee, or has been taken, the drawer and 
 indorsers must, within a reasonable time, express their 
 dissent, that is, their refusal to consent that the holder 
 may take it, and anyone who does not express dissent is 
 considered to have assented thereto. What is considered 
 a reasonable time must be determined from Section 193. 
 That section provides that the particular facts and cir- 
 cumstances of each case and the customs of a particular 
 place and business must be taken into consideration. 
 
 In general a qualified accei^tance should be refused by 
 the holder and the instrument proceeded upon as upon 
 dishonor unless the acceptance offered fully protects 
 the rights of all parties to the bill. It has already been 
 seen that an instrument once dishonored by non-accept- 
 ance or even by non-payment may afterward be accepted 
 and restored to credit. (Sec. 138.) By giving notice of 
 dishonor to the drawer and all indorsers, the holder will 
 preserve his rights pending an unqualified, general ac- 
 ceptance, or until such time as the drawer and indorsers
 
 § 142 BILLS OF EXCHANGE, ACCEPTANCE 227 
 
 shall expressly authorize him to take the qualified ac- 
 ceptance offered by the drawee ; but, of course, the holder 
 must use sound judgment in such a matter as this and 
 not hand over the bill for dishonor and protest unless 
 his own interests and the rights of other parties re- 
 quire it.
 
 Section 
 
 148 
 
 When presentment is ex- 
 cused. 
 
 149 
 
 When dishonored by non- 
 
 150 
 
 acceptance. 
 Duty of holder where bill 
 
 151 
 
 not accepted. 
 Rights of holder where bill 
 
 
 not accepted. 
 
 228 THE NEGOTIABLE INSTRUMENTS LAW § 143 
 
 SUBDIVISION III. 
 PRESENTMENT FOR ACCEPTANCE. 
 
 Section 
 
 143 When presentment for ac- 
 
 ceptance must be made. 
 
 144 Wlien failure to present re- 
 
 leases drawer and in- 
 dorser. 
 345 Presentment; how made. 
 
 146 On what days presentment 151 
 
 may be made. 
 
 147 Presentment when time is 
 
 insuflScient. 
 
 "V^en *'Sec. 143. Presentment for accept- 
 
 presentment for ance must be made : 
 
 acceptance must 1, Where the bill is payable after 
 be made. sight, or in any other case, where pre- 
 
 sentment FOR acceptance IS NECESSARY IN ORDER TO FIX 
 
 the maturity of the instrument; or, 
 
 2. Where the bill expressly stipulates that it shall. 
 
 BE presented for ACCEPTANCE; OR, 
 
 3. Where the bill is drawn payable elsewhere than 
 
 AT the residence OR PLACE OF BUSINESS OF THE DRAWEE. 
 
 In no OTHER CASE IS PRESENTMENT FOR ACCEPTANCE NEC- 
 ESSARY IN ORDER TO RENDER ANY PARTY TO THE BILL LIABLE.'' 
 
 Presentment for acceptance must not be confused with 
 presentment for payment, the provisions applicable to 
 which are to be found in Sections 76 to 89 of Title I. 
 
 Presentment for payment is always required in order 
 to charge the drawer and indorsers on the instrument, 
 except as it is otherwise provided in this Act, while the 
 instrument need not be presented for acceptance unless 
 this section expressly requires that it shall be done. 
 This section of the Act designates when presentment 
 for acceptance must be made, and in no other case is it 
 necessary.
 
 § U;3 BILLS OF EXCHANGE 229 
 
 Whether the instrument is an inland or a foreign 
 bill, if it is payable at a fixed period after sight or 
 demand, or if it is subject to any condition requiring 
 acceptance in order to fix its maturity, it must be pre- 
 sented for acceptance. It must be presented, of course, 
 if it expressly provides that it shall be. 
 
 The third sub-section which requires presentment when 
 the bill is payable elsewhere than at the drawee's resi- 
 dence or usual place of business effects a change in the . 
 law in some States. It has been held that a bill of 
 exchange payable upon a day certain or at sight, or on 
 demand after date, need not be presented for acceptance 
 even though the place of payment which it names is not 
 the drawee's usual place of business or residence; that 
 presentment for payment alone is necessary to charge 
 the drawer and indorsers upon such a bill. Sub-section 3 
 nullifies all these decisions and a bill of exchange pay- 
 able at a designated certain time, or at sight, or on 
 demand after its date at any place other than the resi- 
 dence or usual place of business of the drawee, must 
 first be presented to the drawee for acceptance before 
 being presented to him for payment. If it is not pre- 
 sented for acceptance the drawer and all indorsers will 
 be discharged. It is no longer sufficient or proper to 
 await the maturity of a bill so drawn and present it for 
 payment. It must be first presented for acceptance. 
 
 Since a bill may be presented for payment at the 
 residence or usual place of business of the drawee if 
 it specifies no other place of payment (Sec. 73), such an 
 instrument need not be presented for acceptance because 
 of the provision of Sub-section 3, but if its presentment 
 for acceptance is required for some other reason it must 
 be made. If such a bill is presented for acceptance 
 on the day of its maturity and acceptance is refused it
 
 230 THE NEGOTIABLE INSTRUMENTS LAW § 144 
 
 need not again be presented for payment,^ but in such 
 a case the delay to make presentment must be satisfac- 
 torily accounted for. (See next section and Sec. 147.) 
 
 It must not be understood from the provisions of this 
 section that instruments which do not require accept- 
 ances may not be presented. On the contrary, it is usual 
 and best if the bill is intended for further negotiation, 
 to present it for acceptance even when it is payable at 
 a certain future day, for it cannot otherwise be known 
 whether or not the instrument will be paid, nor can the 
 drawee's liability upon the instrument be fixed in any 
 other way.2 
 
 Wlien failure to ''Sec. 144. Except as heeein other- 
 present releases wise provided, the holder of a bill which 
 drawer and is required by the next preceding sec- 
 
 indorser. tion to be presented for acceptance must 
 
 either present it for acceptance or negotiate it within 
 A reasonable time. If he fail to do so, the drawer and 
 all inporsers are discharged." 
 
 So long as a bill which requires presentment continues 
 to be negotiated it need not be presented for acceptance, 
 but its negotiation may not be delayed for an un- 
 reasonable length of time. The holder to whom such 
 an instrument is transferred may pass it on in the usual 
 course of business by indorsement or delivery, according 
 to the character of the bill, and it may thus circulate 
 from one person to another for an indefinite length of 
 time, if payable on demand, or until the day of its ma- 
 turity if payable at a fixed time, but it must not stop 
 too long in its course without further negotiation. One 
 who does not intend to negotiate the instrument further 
 should at once present it to the drawee for acceptance 
 
 1. Plate vs. Reynolds, 27 N. Y. 586. 
 
 2. Nat'l Park Bk. vs. Saitta, 127 App. Div. (N. Y.) 624, 628, 111 
 
 N. Y. 8. 927, 89 N. E. 1106.
 
 § 144 BILLS OF EXCHANGE 231 
 
 and if the instrument is in the hands of an agent, for 
 collection, he is required to do so.^ 
 
 What is an unreasonable delay will be determined in 
 accordance with Section 193. In this connection Section 
 71 and what is there said is referred to and should be 
 read. The custom of merchants and banks differs in 
 regard to presentment of notes and of bills and what 
 would be considered a reasonable delay as to the first, 
 might be and, in their present use, probably would be 
 regarded unreasonable as to the other. Drafts or bills 
 as they are now used in this country, contemplate more 
 prompt negotiation and presentment both for acceptance 
 and payment than do promissory notes and it would 
 be entirely unsafe to delay presentment of a bill for 
 acceptance for the same length of time for which one 
 might safely delay the presentment of a note for pay- 
 ment. Either negotiate the bill within a short time after 
 its receipt or present it to the drawee for his accept- 
 ance. No rule of delay can be given, for the facts of 
 each particular case and the custom of each community 
 or l)usiness are to be regarded. (Sec. 193.) The failure 
 of the holder to present the bill for acceptance or to 
 negotiate it within a reasonable time will release the 
 drawer and all indorsers who became parties prior to 
 that one who is chargeable with the delay, no matter 
 where his position may be in the chain of title, or at 
 what time in the negotiation of the bill the unreasonable 
 delay occurs, and their release will relieve them of all 
 liability to him and to the endorsers subsequent to him. 
 (See Sees. 7, 53, 71.) 
 
 Of course, you have observed the provision in Sec. 127, 
 by which the drawee does not become liable upon the bill 
 unless and until he accepts it. A bill, therefore, which 
 
 3. Allen vs. Snydam, 17 Wend. 368, see note in 34 Am. Dec. 310.
 
 232 THE NEGOTIABLE INSTRUMENTS LAW § 145 
 
 continues to be negotiated without acceptance remains 
 merely an order upon the drawee to pay the sum it men- 
 tions, but does not become his obligation to pay until it 
 obtains his acceptance. 
 
 Presentment; "Sec. 145. Presentment for accept- 
 
 how made. ance must be made by or on behalf of 
 
 THE HOLDER AT A REASONABLE HOUR, ON A BUSINESS DAY AND 
 before the bill is OVERDUE, TO THE DRAWEE OR SOME PER- 
 son authorized to accept or refuse acceptance on his 
 behalf; and: 
 
 1. Where a bill is addressed to two or more drawees 
 WHO are not partners, presentment must be made to 
 
 them all, unless one HAS AUTHORITY TO ACCEPT OR REFUSE 
 ACCEPTANCE FOR ALL, IN WHICH CASE PRESENTMENT MAY BE 
 made TO HIM ONLY; 
 
 2. Where the drawee is dead, presentment may be 
 
 made to his PERSONAL REPRESENTATIVE ; 
 
 3. Where the drawee has been adjudged a bankrupt 
 or an insolvent or has made an assignment for the 
 benefit of creditors, presentment may be made to him 
 or to his trustee or assignee.'' 
 
 The manner of making the presentment is prescribed 
 in this section. When presentment for acceptance is 
 required it must be made before the instrument is over- 
 due, by the holder or some one acting for him, and it 
 must be made to the person named in the bill as the 
 drawee or to some one to whom he has given authority 
 to accept or refuse the bill in his behalf. If an accept- 
 ance is taken from or the presentment is made to any 
 person other than the drawee, it is the holder's duty to 
 satisfy himself that the person who accepts on behalf 
 of the drawee is authorized to so do or, if no acceptance 
 is obtained, to satisfy himself that the person who re- 
 fuses the bill is likewise acting by the drawee's author- 
 ity,^ and the holder may require the agent to show the 
 
 4. Wiseman vs. Chiapella, 23 How. (U. S.) 368, 16 L. Ed. 466. 
 Sharp vs. Drew, 9 Ind. 281. 
 Sehuchardt vs. Hale, 36 Md. 5901, 11 Am. R. 514.
 
 §145 BILLS OF EXCHANGE 233 
 
 nature and extent of the authority he claims to have 
 This authority may have been expressly given or it may 
 be implied from the relations between the drawee and the 
 person who acts for him. The principles of the law of 
 agency from which it can be determined whether the 
 person accepting or refusing to accept the instrument on 
 behalf of his principal are discussed at Section 19, Title I. 
 The presentment must be made at a reasonable hour on a 
 business day. In this connection, read Sections 72 and 85 
 and what is there said in regard to presentment for pay- 
 ment. The requirements of those two sections and of 
 this one are alike and it will not be necessary to repeat 
 the explanations here. 
 
 The provisions of Sub-sections 1 and 3 of this section 
 are similar to those in regard to giving notice of dis- 
 honor when the bill is addressed to two or more drawees 
 who are not partners, or when the drawee, or one of the 
 drawees, is a bankrupt or an insolvent. If one of several 
 drawees or one of a firm accepts the instrument, he will 
 be bound by his acceptance.^ Presentment should then be 
 made or attempted in the manner explained in the treat- 
 ment of the provisions of the Act in regard to giving no- 
 tice of dishonor under similar circumstances. (See Sees. 
 100 and 101.) 
 
 If the drawee is dead, presentment for acceptance to 
 his personal representative need not be attempted. It is 
 excused and the bill may be treated as dishonored by non- 
 acceptance (Sec. 148), but the holder may waive this 
 provision in his favor and present the bill to the per- 
 sonal representative of the deceased drawee if he desires 
 to do so. If the bill is not addressed to anybody but is 
 payable at a designated place, its acceptance by anyone 
 
 5. Smith vs. Melton, 133 Mass. 369, 371.
 
 234 THE NEGOTIABLE INSTRUMENTS LAW § 146 
 
 at that place will be deemed to be an admission that he 
 was intended as the drawee. (Sec. 1, Sub-section 5.) 
 The Act does not attempt to designate the place where 
 presentment for acceptance must be made. Where a 
 place of payment is designated in the instrument present- 
 ment there is regarded as sufficient if the residence or 
 place of business of the drawee is unknown to the holder 
 and cannot be ascertained with reasonable diligence; but 
 where the drawee's residence or place of business is 
 known, or can be ascertained with reasonable diligence, 
 it is required that the presentment be made to him at 
 either the one place or the other.""* And remember that 
 when a bill is payable elsewhere than at the residence or 
 usual place of business of the drawee it must ))e pre- 
 sented for acceptance to the drawee at his residence or 
 place of business or wherever he may be found before it 
 is jH-esented for payment at the place where it is payable. 
 (Sec. 143.) 
 
 V * ^„«- *'SeC. 146. A BILL MAY BE PRESENTED 
 
 On what days 
 
 presentment may ^'^^^ acceptance on any day on which ne- 
 be made. gotiable instruments may be presented 
 
 "Colorado, for payment under the provisions of sec- 
 
 Kentucky, tions seventy-two (72) and eighty-five 
 
 Arizona ^^' ^^'^^ ^^ ^"^^ ^^^- "When Saturday is not 
 
 otherwise a holiday, presentment for 
 
 acceptance MAY' BE MADE BEFORE TWELVE o'CLOCK, NOON, 
 ON THAT DAY\" 
 
 In connection with this section read what has already 
 been said in explanation of Sections 72 and 85. Those 
 two sections are expressly made applicable to this one. 
 While under Section 85 presentment for payment of a 
 bill falling due on Saturday should not be made until the 
 next business day, a bill may be presented for acceptance 
 upon that day if the presentment is made before twelve 
 o'clock,^ noon. 
 
 5a. Mason vs. Donsay, 35 111. 424, 85 Am. Dec. 368.
 
 § 147, 148 BILLS OF EXCHANGE 235 
 
 Presentment "Sec. 147. Where the holder of a 
 
 when time is bill drawn payable elsewhere than at 
 insufficient. rj.^^, place of business or the residence 
 
 OF THE drawee HAS NOT TIME WITH THE EXERCISE OF REA- 
 SONABLE DILIGENCE TO PRESENT THE BILL FOR ACCEPTANCE 
 BEFORE PRESENTING IT FOR PAYMENT ON THE DAY THAT IT 
 FALLS DUE, THE DELAY CAUSED BY PRESENTING THE BILL FOR 
 ACCEPTANCE BEFORE PRESENTING IT FOR PAYMENT IS EXCUSED, 
 AND DOES NOT DISCHARGE THE DRAWER AND INDORSERS/' 
 
 When a time bill which requires presentment for ac- 
 ceptance by reason of Sub-section 3 of Section 143, be- 
 cause it is payable at a place other than the residence or 
 usual place of business of the drawee, comes into the 
 possession of the holder too late to permit its present- 
 ment for acceptance before presenting it for payment at 
 the place where payment must be demanded on the day 
 that it falls due, any necessary delay caused by first pre- 
 senting it for acceptance is excused. The holder of a bill 
 drawn in that manner is required to present it for ac- 
 ceptance to the draw^ee at his residence or his place of 
 business or w^herever he can be found, and if he has used 
 reasonable diligence in attempting to do so and yet is 
 not al)le to present it for pajmient at the place of pay- 
 ment on the day when it becomes due, the delay caused 
 by presenting the bill for acceptance will excuse the de- 
 lay in presenting it for payment. The drawer and in- 
 dorsers will not be discharged by the failure of the holder 
 to present the instrument for pajanent upon the day of 
 its maturity if the delay is caused by the time consumed 
 in the endeavor to first present the bill for acceptance. 
 The holder must, however, present the bill for pa>nnent 
 at the place where it is drawn to be payable as soon as 
 possible, the delay, not presentment for payment, being 
 excused. 
 
 When ''Sec, 148. Presentment for accept- 
 
 presentment is ance is excused, and a bill may'' be 
 excused. treated as dishonored by non-accept- 
 
 ance, IN either of the following cases :
 
 236 THE NEGOTIABLE INSTRUMENTS LAAV §148 
 
 1. Where the drawee is dead, or has absconded, or 
 is fictitious person or a person not having capacity to 
 contract by bill; 
 
 2. Where, after the exercise of reasonable dili- 
 gence, PRESENTMENT CANNOT BE MADE ; 
 
 3. Where, although presentment has been irregu- 
 lar, ACCEPTANCE HAS BEEN REFUSED ON SOME OTHER 
 GROUND." 
 
 Presentment for acceptance need not be made or at- 
 tempted if the drawee is dead, or if he has absconded, 
 that is, if he has departed secretly or is in hiding to es- 
 cape paying his debts or to escape arrest, and the bill need 
 not be presented if the drawee is a fictitious person. The 
 term, ''fictitious person" is used here as elsew^here in 
 this Act in its very broadest sense. It means a non- 
 existing person, or if an existing person, one who is not 
 a party to and who is not interested in the instrument 
 in connection witli whicli his name is used by some other 
 person but w^hose name is employed for the purpose of 
 deception.*^ (Sec. 9.) 
 
 Presentment for acceptance is also excused if the 
 drawee is a person who has not the power to contract 
 by bill, that is, one who has not the capacity to enter into 
 an acceptance to which he can be held in law, as an infant, 
 or person under other legal disability. And if, after at- 
 tempting presentment with reasonable diligence, that is, 
 after making such efforts to present the bill as an ordi- 
 narily prudent and careful person would make under the 
 same or similar circumstances,''' the holder can not do so, 
 its presentment is then also excused. 
 
 If the presentment has been made in an improper man- 
 ner and the bill is refused by the drawee, but his refusal 
 is stated to be upon some other ground, and not by rea- 
 
 6. Phillips vs. Mercantile Nat'l Bk., 140 N. Y. 556, 35 N. E. 982, 
 
 37 A. S. R. 596. 
 
 7. Sulsbacker vs. Bank of Charleston, 86 Tenn. 201.
 
 § 149. 150 BILLS OF EXCHANGE 237 
 
 son of the improper presentment, its proper presentment 
 for acceptance is, under these circumstances, excused. 
 When presentment for acceptance is excused the drawer 
 and indorsers of the bill are not discharged by the fail- 
 ure of the holder to present it. 
 
 When dishonored "Sec. 149. A bilt, is dishonored by 
 
 by non- non-acceptance : 
 
 acceptance. 1^ When it is duly peesented foe ac-" 
 
 CEPTAXCE, and SUCH AN ACCEPTANCE AS IS PRESCRIBED BY 
 
 THIS Act is refused or cannot be obtained; or, 
 
 2. When presentment for acceptance is excused, 
 
 AND the BILL IS NOT ACCEPTED. ' ' 
 
 The bill becomes dishonored by non-acceptance when it 
 is presented and the kind of acceptance that is either • 
 required or permitted under this Act is refused or can- 
 not be obtained, or when its presentment is excused by 
 the preceding section and the bill is not accepted by the 
 drawee. As upon a dishonor by the refusal of the drawee 
 to accept the bill notice must then be given in accord- 
 ance with the provisions of Sections 89 to 118 of Title I, 
 Sub-division 8, and it must be given to all parties whose 
 liability the holder desires to fix. 
 
 Duty of holder "Sec 150. Where a bill is duly pre- 
 
 where bill not sented for acceptance and is not ac- 
 accepted. cepted within the prescribed time, the 
 
 person presenting it must treat the bill as dishonored 
 
 BY non-acceptance OR HE LOSES THE RIGHT OF RECOURSE 
 AGAINST THE DRAWER AND INDORSERS. ' ' 
 
 When the holder has presented the bill for acceptance 
 and it is not accepted by the drawee within the time pro- 
 vided in Sec. 136 and in the manner provided in Sec. 137 
 he must treat it as dishonored by non-acceptance. If 
 he does not at once proceed upon its dishonor and give 
 notice of dishonor to the drawer and all indorsers whom 
 he desires to hold in the manner provided in Sections 89 
 to 118 inclusive, he w^ll lose his right of recovery against
 
 238 THE XEGOTIABLE Ds'STEUMEXTS LAW § 151 
 
 them. If the bill appears npon its face to be a foreign 
 bill (see Sec. 129 for definitioii) it must be protested. 
 (Sec. 152.) The provisions of the Act in regard to pro- 
 test will be fonnd in the next Snb-division. 
 
 Rights of holder ' ' ''*^^*^- I'^l- ^ hex a biul is dishoxobed 
 whete hill aok by xox-acceptaxce. ax immediate right 
 aeeefiied. of recoubse agatxst the drawer axd ix- 
 
 DORSEBS ACCRUES TO THE HOLDER AXD XO PRESEXTilEXT FOR 
 PATMEXT IS XECCESSARY." 
 
 The holder of a bill which has become dishonornd by 
 non-acceptance is not required to proceed against the 
 person upon whom it is drawn to enforce and coUect it, 
 and he is not required to present it for payment after its 
 dishonor by non-acceptance, unless, with his consent, it 
 is subsequently accepted. He has the right to at once 
 proceed against the drawer and indorsers and they must 
 pay the bill regardless of the solvency of the drawee 
 and his ability to pay. ^Vs upon a promissory note which 
 has become dishonored by non-payment, the indorsers 
 upon the bill are each liable to the holder and each is 
 liable to all parties to the instrument subsequent to him- 
 self who may take it up and pay it. The drawer is. of 
 course, liable to all. Their liability among themselves 
 is determined bv Section 68, Title I, Sub-divi5?ion 5.
 
 § 1.52 BILLS OF EXCHANGE. PROTEST 239 
 
 8rBr)ivisir)X IV. 
 
 Peotest. 
 
 Section Section 
 
 1.52 In what cases necessaiy. 158 Protest before niaturilhr (for 
 153 How made, ' better security) , 
 
 1.54 By whom made. 159 When protest dispensed 
 
 155 When to be made. with. 
 
 156 ^Vhere made. 160 Protest where bill is lost. 
 
 157 Protest both for non-accept- 
 
 ance and non-payment. 
 
 In its Strict technical sense the term protest, \rhen 
 nsed in reference to commercial paper, means only the 
 foiTQal declaration of dishonor drawn np and signed 
 by the person making the protest. In its broader, more 
 popular sense and as used among banks and men in 
 business, it includes all of the steps necessary to charge 
 the parties secondarily liable upon the instrument pro- 
 tested as well as the formal declaration of dishonor 
 called protest, and if the protest is to be exclusively 
 relied upon to prove the liability of the parties to be 
 charged iipon dishonor it must show that a demand was 
 made and that all the necessary steps were taken to 
 fix their liability.^ These steps are the presentment for 
 acceptance or payment at maturity and the usual pro- 
 ceedings upon dishonor, and the provisions of this Act 
 bv which these are governed will be found in Sections 
 70 to lis. iuclusive. The protesting officer must be 
 familiar with these as well as the provisions of Sub- 
 division 3 of this Title upon the subject of presentment 
 for acceptance. 
 
 1. Peoples Bank vs. Broc'ke. 31 Mvl. 7. ^ 
 
 Mason vs. Kilconrse. 71 X. J. Law 4«2.
 
 240 THE NEGOTIABLE INSTRUMENTS LAW § 152 
 
 In what cases "Sec. 152. Where a foreign bill ap- 
 
 protest FEARING ON ITS FACE TO BE SUCH IS DISHON- 
 
 necessary. ored by non-acceptance it must be duly 
 
 PROTESTED FOR NON-ACCEPTANCE, AND WHERE SUCH A BILL, 
 WHICH HAS NOT PREVIOUSLY BEEN DISHONORED BY NON- 
 ACCEPTANCE IS DISHONORED BY NON-PAYMENT IT MUST BE 
 DULY PROTESTED FOR NON-PAYMENT. If IT IS NOT SO PRO- 
 TESTED, THE DRAWER AND INDORSERS ARE DISCHARGED. AVhERE 
 A BILL DOES NOT APPEAR ON ITS FACE TO BE A FOREIGN BILL, 
 PROTEST THEREOF IN CASE OF DISHONOR IS UNNECESSARY.^' 
 
 While promissory notes and inland bills of exchange 
 may be protested, protest is not necessarj^ in order to 
 charge any party upon them except in the case of an 
 inland bill of exchange when it contains a reference in 
 case of need and the holder desires to resort to the ref- 
 eree for acceptance (Sec. 167), or if the instrument is 
 a bill which has been accepted for honor supra protest. 
 (Sec. 167.) Upon the dishonor of a foreign bill of ex- 
 change, that is, a bill, including a check, which originated 
 outside and is payable within the United States,^ and, 
 as defined in Sec. 129, one which is not or does not from 
 its face appear to be both drawn and payable in the 
 same State, protest is necessary and it is equally neces- 
 sary whether the dishonor is by non-acceptance or non- 
 payment. The section referred to also provides that 
 "unless the contrary appears on the face of the bill the 
 holder may treat it as an inland bill." A bill, then, 
 which by Sec. 129 may be treated as an inland bill, al- 
 though it is actually drawn in one State and payable in 
 another does not require protest. If the holder neglects 
 to make protest of a bill which requires it he will lose 
 all right of recourse upon the drawer and indorsers. 
 They are discharged. Protest for non-acceptance and for 
 non-payment are made in the same manner and differ 
 only in the statement of the cause for protest. 
 
 2. Mankey vs. Hoyt, 27 S. D. 561, 132 N. W. 230.
 
 § 153 BILLS OF EXCHANGE, PROTEST 241 
 
 Protest: how ''Sec. 153. The protest must be an- 
 
 made. NEXED TO the bill, or must contain a 
 
 COPY THEREOF, AND MUST BE UNDER THE HAND AND SEAL OF 
 THE NOTARY MAKING IT, AND MUST SPECIFY, 
 
 1. The TIME AND PLACE OF PRESENTMENT; 
 
 2. The fact that presentment was made, and the 
 manner thereof ; 
 
 3. The cause or reason for protesting the bill; 
 
 4. The demand made, and the answer given, if any, 
 or the fact that the drawee or acceptor could not be 
 
 FOUND.'' 
 
 The protest is a writing by the person making it, 
 signed by him, containing a copy of the instrument pro- 
 tested, or to which the instrument itself is attached, 
 and a statement that the instrument was presented to 
 the person obliged to pay or accept it, and that its pay- 
 ment or acceptance "was refused. The protest must 
 specify the time and place of presentment and recite 
 that the instrument was presented to the drawee or 
 acceptor or to some other person authorized by him to 
 accept, pay, or refuse it, and that payment or accept- 
 ance was demanded, as the case may be, and was refused. 
 If no person w^as found at the place of presentment and 
 protest, or no one was found upon whom proper demand 
 could be made, the protest must so state. If anyone was 
 found upon whom demand was made, the writing must 
 state what demand was made and what answer, if any, 
 was given, and if any reason was given for the refusal 
 to pay or accept the instrument by the person of whom 
 the demand was made, that reason must be stated in the 
 protest. If the protest is made by a Notary Public he 
 must sign it in his official capacity and attach his notarial 
 seal. If it is made by a person other than a Notary a 
 seal is not required, although it is usual to attest the 
 solemnity of the act of protest by making upon the 
 paper, at his signature, a scroll seal, this being a circle
 
 242 THE NEGOTIABLE INSTRUMENTS LAAV § 154 
 
 or bracket made with the pen within which tlie word 
 *'seal" is written. If the instrument which is to be pro- 
 tested is lost, or the person entitled to hold it cannot 
 obtain it or has no copy, it is provided in Sec. 155 that 
 the protest shall contain written particulars thereof. 
 What are written particulars will be explained under 
 that section. 
 
 Protest: by "Sec. 154. Protest may be made by: 
 
 whom made. ^ j^ Notary Public; or 
 
 2. By any respectable resident of the place where. 
 
 THE bill is dishonored, IN THE PRESENCE OF TWO OR MORE 
 
 credible witnesses. ' ' 
 
 The protest may be and usually is made by a Notary 
 Public but it need not necessarily be made by a Notary. 
 Any respectable resident of the place where the bill is 
 dishonored may make the protest. A resident is a per- 
 son w4io has his place of residence, that is, one who 
 lives at the place where the instrument is dishonored, 
 and a respectable resident is one who is in good stand- 
 ing in the community in which he lives and who enjoys the 
 respect of his neighbors and associates. The protest is 
 a personal act and cannot be made by one person in 
 another's name, unless this is permitted by statute or 
 firmly established and sanctioned by the custom of a 
 particular place.^ If protest is made by a resident, he 
 must make it and sign it in the presence of two credible 
 witnesses or acknowledge to them that he did so. Cred- 
 ible witnesses are such persons whose testimony would 
 be accepted or whose statement of any fact would be 
 believed by other persons in the community in which 
 they live, and who are generally known to be truthful 
 persons. It is not necessary that they accompany the 
 person making protest when he presents the instrmnent 
 
 3. Coinmeroial Bank vs. Varnum, 49 N. Y. 269. 275. 
 Ocean Nafl Bk. vs. ^Yil!iams, 102 Mass. Ml.
 
 § 154 BILLS OF EXCHANGE, PROTEST 243 
 
 to the drawee and makes demand, their presence being 
 required only at the execution and signing of the protest 
 by the person making it, and they must attest the protest 
 as witnesses. One w^ho cannot write his name may sign 
 by mark. 
 
 AVhile it is best that the protest be made by a disinter- 
 ested person the Act does not require it and expressly 
 provides that any person possessing the qualifications 
 which it prescribes may make it. It is not usual that any- 
 one who is a party to the instrument shall make the pro- 
 test but if it is done, and the protesting officer possesses 
 the qualifications of this section, it would not appear to 
 be invalid for that reason'' unless made so by other 
 statute. 
 
 There is always considerable uncertainty and con- 
 fusion, though there need not be, about the right of an 
 officer of a bank to legally protest paper belonging to 
 his bank or in which his bank is interested. In the ab- 
 sence of some prohibitive statute or regulation in the 
 banking laws there is no legal objection to the protest 
 being made by a notary who is also a bank officer,^ even 
 if he is a stockholder in the bank,*'' and it has been held 
 that an officer of a bank who is a notary may protest 
 his own note." But the practice is not recommended. 
 
 The protest is never made until after the instrument 
 has been dishonored except when it is protested for bet- 
 ter security under Section 158. The person making the 
 protest must take the instrument, if it has not been lost, 
 destroyed or wrongfully detained, to the party who is to 
 
 4. Dyknian vs. Northbrid^e. 1 App. Div. 26, 28, 36 N. Y. S. 962. 
 
 5. Nelson vs. First Nat'l Bk., 69 Fed. 798, 29 U. S. App. 554. 
 
 6. Moreland's Assignee vs. Citizen's Svgs. Bk., 97 Ky. 211. 
 Patton vs. Bk. of Lafayette, 124 Ga. 965, 53 S. E. 664, 4 Ann. 
 
 Cas. 639, 5 L. R. A. N. S. 592. 
 
 7. Dvknian vs. Northbridoe, 1 App. Div. (N. Y.) 26, 36 N Y. S. 
 
 "962.
 
 244 THE NEGOTIABLE INSTRUMENTS LAW § 155 
 
 pay or accept it, at the place where it is to be paid or 
 accepted, even if it has already been presented by the 
 holder and payment or acceptance has been refused. 
 Such refusal does not dispense with the formality of 
 presentment and demand by the protesting officer at the 
 place where protest is to be made, except as it is pro- 
 vided in Section 156. 
 
 Protest: when to ''Sec. 155. When a bill is protested, 
 be made. such peotest must be made ox the day 
 
 of its dishonor, unless delay is excused as herein pro- 
 vided. When a bill has been duly noted, the protest 
 
 MAY BE subsequently EXTENDED AS OF THE DAY OF THE 
 NOTING.'" 
 
 The officer must protest the instrument upon the very 
 day of its dishonor unless delay is excused by reason of 
 the provisions of Section 159. When the cause of the 
 delay no longer prevents it being done, the protest must 
 be made with reasonable diligence. The same degree of 
 diligence is required as is ncessary in presenting an in- 
 strument for payment (see Sec. 81) or in giving notice of 
 dishonor. (Sec. 113.) 
 
 The protest usually proceeds in two steps. After pre- 
 senting the instrument, which has already been dishon- 
 ored, making demand and after failure to obtain pay- 
 ment, or acceptance, as the case may be, the person pro- 
 testing the instrument must declare that he does protest 
 the instrument and must write upon it, and in his regis- 
 ter, a memorandum of that fact, the reasons for the 
 protest, the month, date and year when it w^as done, the 
 demand made and the answer given, and such other 
 information as he may think necessary to enable him 
 afterward to make out the formal protest, and sign this 
 memorandum upon the instrument either by name or by 
 his initials. This is called *' noting" and it is done to 
 serve as a truthful reminder which will enable the person
 
 § 156 BILLS OF EXCHANGE, PROTEST 245 
 
 making the protest to later make out his formal cer- 
 tificate. Upon this being done the protest may be made 
 at any subsequent date, even after action has been begun 
 on the instrument, and it may be done as of the date of 
 the noting. This is '* extending the protest." When the 
 protest is extended the protesting officer will issue to the 
 holder a certificate of protest. This certificate is de- 
 scribed in Section 153. Notice of dishonor must, of 
 course, be given upon dishonor of the instrument in the 
 manner and at the time required by Sections 89 to 118, 
 inclusive, and if the notice is given by the protesting 
 officer the protest usually recites that such notice was 
 given and to whom. It is customary, too, that it de- 
 scribe the manner of giving the notice although it is not 
 necessary that the certificate recite that notice was given 
 or state what notice was given, how, or to whom,^ unless, 
 as I have already stated, and now repeat for emphasis, 
 the protest is relied upon exclusively as proof that a 
 demand was made and all necessary steps taken in order 
 to fix the liability of the secondary parties.^ Persons 
 who make protest of negotiable instruments must make 
 themselves familiar with the provisions of Sub-division 
 VII, Title I, of the Act, which governs the manner of 
 giving notice of dishonor. 
 
 Protest: where "Sec. 156. A bill must be protested 
 
 made. ^^ -jhe place where it is dishonored, ex- 
 
 cept THAT WHEN" A BILL DRAWN PAYABLE AT THE PLACE OF 
 business, or residence of some person other than THE 
 DRAWEE, HAS BEEN DISHONORED BY NON-ACCEPTANCE, IT MUST 
 BE PROTESTED FOR NON-PAYMENT AT THE PLACE WHERE IT IS 
 EXPRESSED TO BE PAYABLE, AND NO FURTHER PRESENTMENT 
 FOR PAYMENT TO, OR DEMAND ON, THE DRAAVEE IS NECESSARY.^' 
 
 8. Martin vs. Brown, 75 Ala. 442. 
 
 9. Peoples Bank vs. Brooke, 31 Md. 7. 
 Mason vs. Kilcourse, 71 N. J. Law, 472.
 
 246 THE NEGOTIABLE INSTRUMENTS LAW § 157 
 
 Demand or sight bills, or a bill payable at a fixed 
 period after sight, or one payable at a designated ma- 
 turity are often made payable at a place other than the 
 residence or usual place of business of the drawee and 
 these require presentment for acceptance before being 
 presented for payment. (Sec. 143, Sub-sec. 3.) ''Place" 
 as used in this section may be understood to mean any 
 place in the same city, town or business community other 
 than that at which the drawer lives or where he conducts 
 his business and it may mean another city, town or busi- 
 ness community other than that one in which he lives 
 or does business. When a bill is so drawn it requires 
 presentment for acceptance before being presented for 
 payment, in order that the drawee may have an oppor- 
 tunity to examine the instrument and the state of his 
 accounts with the drawer. If such an instrument is a 
 foreign bill and is dishonored by non-acceptance it would 
 seem that it is necessary to protest it upon its dishonor 
 by non-acceptance (Sec. 152), but the protest must be 
 made at the place where the instrument is expressed 
 to be payable. Xo further demand need be made 
 upon the drawee, whose duty it seems then to ])e, since 
 he has been apprised of the presence of the instrument 
 by its presentment to him for acceptance, to provide 
 funds with which to pay it at the place where it is pay- 
 able if he intends to do so.^*^ 
 
 Protest both for ''^EC. 157. A bill which has been 
 non-acceptance protested for non-acceptai^ce may be 
 and non- subsequently protested for non-pay- 
 
 payment. mext. " 
 
 AMiile protest upon dishonor of the instrument by non- 
 payment after it has already been protested upon non- 
 acceptance, need not be made, except when required by 
 
 10. Mitchell vs. Barino-, 10 Barn & C. 4. 
 
 Mason vs. Franklin, 3 Johns (N. Y.), 202.
 
 § 158 BILLS OF EXCHANGE, PROTEST 247 
 
 the preceding section, it may be done if desired, and if 
 in the meantime the instrument (a foreign bill) has been 
 accepted, it must be done. 
 
 If notice of its dishonor by non-acceptance has al- 
 ready been given, notice of its subsequent dishonor by 
 non-payment is not required (Sec. 116) and no further 
 protest need be made in order to charge drawer and in- 
 dorsers unless the instrument requiring protest has, in 
 the meantime, been accepted or unless, as is provided in 
 the preceding section, the bill has been dishonored by 
 non-acceptance at the drawee's place of business or resi- 
 dence, or elsewhere, and it is payable at the place of 
 business or residence of some person other than the 
 drawee. 
 
 Protest before "Sec. 158. Where the acceptor has 
 
 maturity where been adjudged a bankrupt or an insolv- 
 acceptor is ^^^^ ^^ -^^^ made an assignment for the 
 
 BENEFIT OF CREDITORS, BEFORE THE BILL, MA- 
 TURES, THE HOLDER MAY CAUSE THE BILL TO BE PROTESTED 
 FOR BETTER SECURITY AGAINST THE DRAWER AND INDORSERS.'^ 
 
 When a bill has been accepted and afterward, before 
 its maturity, the acceptor becomes insolvent or a bank- 
 rupt or if he has made an assignment for the benefit of 
 his creditors and the holder has reason to fear that the 
 bill will not be paid at maturity, he may protest it for 
 better securit}^ 
 
 This protest does not hasten the maturity of the bill 
 or dispense with its protest at maturity if protest is then 
 required by the nature of the instrument. Its ordinary 
 effect is to bring about an acceptance for honor and it 
 usually prepares the way for such an acceptance. The 
 manner in which such an acceptance is to be made and 
 the formalities which attend it are prescribed and de- 
 scribed in Sections 161 and 170. This protest does not 
 give the holder an immediate right of recourse against
 
 248 THE NEGOTIABLE INSTRUMENTS LAW §159,160 
 
 drawer and indorsers as upon dishonor and he cannot 
 sue them upon the bill before its maturity. 
 
 When protest ' ' Sec. 159. Protest is dispensed with 
 
 dispensed with, by any circumstances which would dis- 
 pense with notice of dishonor. Delay in noting or 
 protesting is excused when delay is caused by circum- 
 stances BEYOND THE CONTROL OF THE HOLDER AND NOT IM- 
 putable to his default, misconduct or negligence, 
 When the cause of delay ceases to operate, the bill 
 
 MUST BE noted OR PROTESTED WITH REASONABLE DILIGENCE.'' 
 
 The circumstances which dispense with the necessity 
 of giving notice of dishonor will be found in Sections 
 109 to 118, inclusive, Title I. Protest may also be dis- 
 pensed with by waiver. (Sec. 111.) The provision in 
 this section regarding delay in noting or protesting is 
 the same as in Section 113, by which delaj" is excused in 
 giving notice of the dishonor of the instrument by non- 
 payment. After the cause of the delay has been removed, 
 the noting must be done or the protest made promptly. 
 
 Protest where *'Sec. 160. Where a bill is lost or 
 
 bill is lost. destroyed or is wrongly detained from 
 
 the person entitled to hold it, protest may be made on 
 a copy or written particulars thereof." 
 
 If the instrument which is to be protested is lost or 
 destroyed or if it is wrongfully detained from the per- 
 son who is entitled to hold it at the time when protest 
 must be made, the protest may be made upon a copy of 
 the bill if one can be obtained. If a copy cannot be pro- 
 cured a written description of the instrument must be 
 drawn up, with particulars showing its date, amount, 
 w^hen and to whom payable, the names of the drawer 
 and indorsers, or of all whose names can be obtained, 
 and all endeavor used to be correct and exact which the 
 particular circumstances wall permit. This may be sub- 
 stituted for the instrument to be protested if the instru- 
 ment itself cannot be produced by reason of its loss,
 
 § 160 BILLS OF EXCHANGE, PKOTEST 249 
 
 destruction or wrongful detention from the holder and 
 the protest must then be made as though the instrument 
 were actually in the possession of the holder.^^ The 
 holder must himself be without fault in his failure to 
 produce the instrument and if its detention is not wrong- 
 ful, its production is not excused. If he has himself de- 
 liberately and intentionally destroyed the bill he cannot 
 protest on written particulars. His intentional destruc- 
 tion of the instrument will be deemed a cancellation and 
 the instrument discharged. (Sec. 119.) 
 
 11. Hinsdale vs. Miles, 5 Conn. 331.
 
 250 THE NEGOTIABLE INSTRUMENTS LAW § 161 
 
 SUBDIVISION V. 
 
 Acceptance for Honor. 
 
 Section 
 
 161 When bill may be accepted 
 
 for honor. 
 
 162 Acceptance for honor; how 
 
 made. 
 
 163 When deemed to be an ac- 
 
 ceptance for honor of 
 drawer. 
 
 164 Liability of acceptor for 
 
 honor. 
 
 165 Engagement of acceptor for 
 
 honor. 
 
 Section 
 
 166 Maturity of bill payable 
 
 after sight accepted for 
 honor. 
 
 167 Protest of bill accepted for 
 
 honor, etc. 
 
 168 Presentment for payment to 
 
 acceptor for honor; how 
 made. 
 
 169 When delay in making pre- 
 
 sentment is excused. 
 
 170 Dislionor by acceptor for 
 
 honor. 
 
 When bill may ''Sec. 161, Where a bill of exchange 
 be accepted for has been protested for dishonor by non- 
 ^onoT. acceptance or protested for better se- 
 
 curity, AND IS not overdue, ANY PERSON NOT BEING A PARTY 
 already liable thereon MAY, WITH THE CONSENT OF THE 
 HOLDER, INTERVENE AND ACCEPT THE BILL SUpi'tt PROTEST 
 FOR THE HONOR OF ANY PARTY LIABLE THEREON, OR FOR THE 
 HONOR OF THE PERSON FOR WHOSE ACCOUNT THE BILL IS 
 DRAWN. The acceptance for HONOR MAY BE FOR PART 
 ONLY OF THE SUM FOR WHICH THE BILL IS DRAWN ; AND 
 WHERE THERE HAS BEEN AN ACCEPTANCE FOR HONOR FOR ONE 
 PARTY, THERE MAY BE A FURTHER ACCEPTANCE BY A DIFFER- 
 ENT PERSON FOR THE HONOR OF ANOTHER PARTY." 
 
 'Wl\q\\ the drawee has refused to accept the bill as 
 drawii, any person not already a party liable upon it 
 may intervene and, with the consent of the holder, may 
 at any time before maturity accept it for honor 
 after it has been protested for non-acceptance or if, 
 after acceptance by the drawee, the bill is protested 
 before maturity for better security. This acceptance 
 is called an acceptance "Supra protest" for the 
 reason that it can be made only after the bill has been 
 protested. It is an acceptance by a person, a stranger,
 
 §161 BILLS OF EXCHANGE 251 
 
 or tlio drawee, if he is not already a party liable upon 
 the instrument, made in order to save the credit and the 
 honor of the drawer or any other party who is liable 
 upon the bill, or of- that one for Avhose account it has 
 been drawai. The drawee, then, if he is unwilling to 
 accept the bill generally and is not bound in good faith 
 to do so, may accept it for honor and if he does, his ac- 
 ceptance will take the distinctive character of this pecu- 
 liar and very unusual kind.^ The acceptance for honor 
 may be made only with the consent of the holder and if 
 the holder permits the bill to be accepted for honor he 
 has then the right to enforce it against the acceptor for 
 honor as well as all other parties, if it is not paid at ma- 
 turity. He must, however, properly present the l)ill to 
 the drawee at maturity and protest it again if the drawee 
 persists in his determination to allow the bill to go to 
 dishonor and it is not then paid. The holder cannot 
 otherwise require the acceptor for honor to pay the bill. 
 (Sec. 167.) 
 
 When an acceptance for honor is obtained by the 
 holder by reason of its protest before maturity for 
 better security, he is obliged to await maturity of the 
 bill before he can enforce his right of recourse against 
 the acceptor for honor and those parties to the instru- 
 ment for whose honor it was accepted, this form of ac- 
 ceptance creating a conditional obligation to pay the bill 
 only if the drawee does not pay it at maturity.^ 
 
 The acceptance for honor may be for all or a part of 
 the sum for which the bill is drawn and there may be 
 more than one such acceptance for one or more than one 
 party. 
 
 1. Scliimmelpennicli vs. Bavard, 1 Pet. (U. S.) 264. 7 L. Ed. 138. 
 Swope vs. Ross, 40 Pa. 186. 80 Am. D. 567. 
 
 See note 92 Am. Dec. 579, 7 L. R. A. 209 Note. 
 
 2. Walton vs. Williams, 44 Ala. 347. 
 Baring vs. Clark, 19 Pick (Mass.) 220.
 
 252 THE NEGOTIABLE INSTRUMENTS LAW § 162 
 
 While there is no provision in the Act which seems 
 to require it, it is the dnty of the acceptor for honor 
 to immediately give notice of the fact of his acceptance 
 to the party for whose honor he accepts the bill. 
 If he fails to do so the omission, in so far as it can be de- 
 termined from the Act, does not seem to affect injur- 
 iously his right to recover upon the bill if he is required 
 to pay it at maturity. But it has been considered essen- 
 tial to his right of recovery if he pays the bill that he 
 give immediate notice of his intervention, for the 
 reason that the rights of other parties to the bill are 
 thereby suspended and may be injuriously affected by it.* 
 AYhen an acceptance for honor is made for the honor of 
 one party other acceptances may be subsequeiitly made 
 for the honor of other parties liable upon the bill, but it 
 seems there cannot be a series of acceptances of separate 
 parts of the sum for the honor of the same party.^ If 
 any acceptor for honor is required to pay the bill his 
 rights are as fixed by Sections 175 and 177. 
 
 Acceptances for "Sec. 162. An acceptance for honor 
 honor: how supra protest must be in writing, and in- 
 
 made. dicate that it is an acceptance for 
 
 honor, and must be signed by the acceptor for honor/ ^ 
 
 Such an acceptance must be in writing. It is usually 
 made upon the bill and the words generally employed 
 are ''Accepted Supra Protest" or "Accepted for the 
 honor of , " or in their abbreviated form ' ' Ac- 
 cepted S. P. " If the acceptance does not expressly state 
 that it is an acceptance for honor its language must in- 
 dicate that it is and any of the above forms do that suffi- 
 ciently. It must be signed by the acceptor for honor. 
 By the law of agency any one can do b^^ another that 
 
 3. Wood vs. Pui?h, 7 Ohio (Pt. 2) 156. 
 Story on Bills, Sec. 259. 
 
 4. Jackson vs. Hudson, 2 Camp. (Eng.) 447.
 
 § 163, 164 BILLS OF EXCHANGE 253 
 
 wliicli lie can himself do and an acceptance for honor by 
 any person which is made and signed by his agent, duly 
 authorized for that purpose, is valid and enforceable. 
 
 When deemed to * ' Sec. 163. Where an acceptance for 
 
 be an acceptanci honor does not expressly state for whose 
 for honor of the 
 
 drawer. honor it is made, it is deemed to be an ac- 
 
 ceptance FOR the honor of THE DRAWER." 
 
 If the acceptor for honor does not expressly state in 
 his acceptance for whose honor he accepts the bill his 
 acceptance is deemed to be for the honor of the drawer, 
 and in the absence of words positively and clearly stat- 
 ing that the acceptance for honor was made for the 
 honor of some other party to the bill this cannot be shown 
 even if it be a fact, upon the familiar doctrine that a 
 written contract cannot be varied by parol proof. It 
 is therefore most important that the acceptor for honor 
 state clearly for whose honor he accepts the instrument, 
 for his liability is affected thereby as will appear from. 
 the next section, and if his acceptance is deemed to be for 
 the honor of the drawer he will have no right of re- 
 course against the indorsers after payment, for none of 
 these are liable to the drawer.^ 
 
 Liability of the ' ' ^^^- ^^'^- ^^^ acceptor for honor is 
 acceptor for liable to the holder and to all parties 
 
 honor. TO the bill subsequent to the party for 
 
 whose honor he has accepted." 
 
 One who accepts in this manner is liable to the holder 
 
 of the bill to whom he gives the acceptance, of course, 
 
 and he is liable to all parties after that party for whose 
 
 honor he accepts it. It is apparent, therefore, that if 
 
 he does not state for whose honor he accepts the bill, his 
 
 liability extends to all parties subsequent to the drawer. 
 
 5. Gazzam vs. Armstrong, 3 Dana (Ky.) 554, 557.
 
 254 THE NEGOTIABLE INSTRUMENTS LAW §165,166 
 
 Engagement of ''Sec. 165. The acceptor for honor, 
 
 acceptor for gy such acceptance engages that he 
 
 honor. 
 
 WILL, ON DUE presentment, PAY THE BILL 
 ACCORDING TO THE TERMS OF HIS ACCEPTANCE, PROVIDED IT 
 SHALL NOT HAVE BEEN PAID BY THE DRAWEE, AND PROVIDED 
 ALSO, THAT IT SHALL HAVE BEEN DULY PRESENTED FOR PAY- 
 MENT AND PROTESTED FOR NON-PAYMENT AND NOTICE OF DIS- 
 HONOR GIVEN TO HIM." 
 
 His acceptance like any other is in the nature of an 
 agreement that he will pay the bill. While he is a volun- 
 tary party to the instrument and may himself have no 
 interest in the bill or its proceeds, he is bound by his 
 agreement and must pay, but only after the holder has 
 duly presented the bill to the drawee and demanded pay- 
 ment and thereupon duly protests it for non-pa>anent if 
 the drawee does not then pay it.^ Ordinarily when a bill 
 has been dishonored and protested for non-acceptance 
 and due notice given the drawer and indorsers they are 
 not discharged by failure to protest it again for non- 
 payment, or by a failure to give notice of dishonor by 
 non-payment. But in this respect the liability of an ac- 
 ceptor for honor and his rights differ from theirs. He 
 will be discharged if the holder fails to protest the bill 
 upon dishonor by non-pa>anent and to give him due no- 
 tice of the dishonor, although protest had already been 
 made prior to his acceptance for honor and notice of the 
 dishonor of the bill by non-acceptance had already been 
 given. 
 
 Maturity of bill "Sec. 166. Where a bill payable after 
 payable after sight is accepted for honor, its matur- 
 sight, accepted jxy is calculated from the date of the 
 for honor. noting for non-acceptance and not from 
 
 the date of the acceptance for honor." 
 
 A bill payable after sight requires presentment for 
 acceptance to fix its maturity. (Sec. 143.) When such 
 
 6. Schofield vs. Bayard, 3 Wend. (N. Y.) 488. 
 Lenox vs. Leverett, 10 Mass. 1, 6 Am. Dec. 97.
 
 §167,168 BILLS OF EXCHANGE 255 
 
 a bill is dishonored by non-acceptance, and is noted or 
 protested and notice of dishonor is given, and it is after- 
 ward accepted for honor, the date when it is to become 
 due is calculated from and determined by the date when 
 noted upon its dishonor by non-acceptance. Its due date 
 is not to be determined or affected by the date of the ac- 
 ceptance for honor. The act of ''noting" the protest is 
 defined and explained in Sec. 155. 
 
 Protest of bill "Sec. 167. Where a dishonored bill 
 
 accepted for jj^g been accepted for honor supra pro- 
 
 nonor, etc. '^ 
 
 TEST OR CONTAINS A REFERENCE IN CASE OF 
 NEED, IT MUST BE PROTESTED FOR NON-PAYMENT BEFORE IT 
 IS PRESENTED FOR PAYMENT TO THE ACCEPTOR FOR HONOR OR 
 REFEREE IN CASE OF NEED." 
 
 While it is provided in Section 152 that bills other 
 than those appearing upon the face to be foreign bills do 
 not require protest, yet certain bills, inland or foreign, 
 whether they appear upon the face to be such or do not 
 so appear, must be protested for non-payment under cer- 
 tain circumstances. These are bills which have been pro- 
 tested for better security and are then accepted for honor 
 supra protest in accordance with this subdivision and a 
 bill which contains a reference in case of need. The for- 
 mer are described under Section 158 and the latter in Sec- 
 tions 161 and 165. Such bills must be protested upon dis- 
 honor by non-payment before being presented for pay- 
 ment to the acceptor for honor or the referee in case of 
 need and failure to do so will release the acceptor for 
 honor from liability. 
 
 Presentment for ''Sec 168. Presentment for payment 
 
 payment to to the acceptor for honor must be made 
 
 acceptor for as follows: 
 
 honor: how -^ j^, j^ jg ^^ ^j, presented in the place 
 
 made. 
 
 where the protest for non-payment was 
 
 made, it must be presented not later than the day fol- 
 low^ing its maturity.
 
 256 THE NEGOTIABLE INSTRUMENTS LAW §168 
 
 2. IF IT IS TO BE PRESENTED IN SOME OTHER PLACE THAN 
 THE PLACE WHERE IT WAS PROTESTED, THEN IT MUST BE FOR- 
 WARDED WITHIN THE TIME SPECIFIED IN SECTION ONE HUN- 
 DRED AND FOUR." 
 
 The acceptor for honor is entitled to have the bill pre- 
 sented to him for payment and presentment must be 
 made to him within the time provided in this section. 
 If the bill is to be presented to him in the place where it 
 was protested for non-payment it must be presented not 
 later than the day following its maturity. "Place" here 
 means city or village, or business community as defined 
 under Section 103, and attention is directed to Section 
 85 fixing the maturity of instruments which fall due on 
 Saturday, Sunday or any holiday. When the bill is not 
 to be presented to the acceptor for honor in the place 
 where it was protested it must be forwarded within the 
 time provided in Section 104 for giving notice of dis- 
 honor by non-payment. The instrument need not and 
 should not be forwarded to the acceptor for honor but 
 should be sent to some other person or a bank at that 
 place, and that person or bank authorized to present 
 the bill to him and demand its payment. The present- 
 ment must be made at the place named in the bill, if a 
 place of payment is specified, or at the usual place of 
 business or residence of the acceptor for honor unless a 
 different place of presentment is designated in his accept- 
 ance. (See Sec. 73.) If the acceptor for honor does not 
 pay the bill the instrument must again be protested at the 
 place where it is presented to him (Sec. 170) and notice of 
 its non-payment must be given to all parties who are to 
 be charged upon the dishonored instrument, in the man- 
 ner and within the time required by the provisions of 
 Sections 89 to 118, inclusive.
 
 § 169, 170 BILLS OF EXCHANGE 257 
 
 When delay in '*Sec. 169. The provisions of Section 
 
 making Eighty-one apply wheee there is delay 
 
 presentment is in making presentment to the acceptor 
 
 excused. p^P honor or referee in case of need." 
 
 Any of the circumstances which will excuse delay in 
 making presentment of any negotiable instrument for 
 payment as provided in Section 81 will excuse delay in 
 making presentment for pajTnent to the acceptor for 
 honor or to the referee in case of need. But when the 
 causes of the delay no longer prevent it the presentment 
 must be made with the same degree of diligence as is re- 
 quired by that section in other cases. 
 
 Dishonor of bill "Sec. 170. When the bill is dishon- 
 
 by acceptor for ored by the acceptor for honor it must 
 honor. , , 
 
 be protested for non-pay^ment by him. 
 
 Upon dishonor of the bill by the failure or refusal of 
 the acceptor for honor to pay it when called upon to 
 do so at its presentment in accordance with Section 168, 
 it must be again protested. Thus, such a bill may re- 
 quire three protests: First, upon its dishonor for non- 
 acceptance by the drawee, next, upon dishonor by his 
 non-payment, and lastly, by dishonor by non-payment 
 by the acceptor for honor if he fails to pay the bill at ma- 
 turity, and upon each protest notice of dishonor is re- 
 quired to be given the drawer and all indorsers who are 
 to be held upon the instrument. The certificate of pro- 
 test usually states that notice of dishonor was duly and 
 properly given upon dishonor of the instrmnent and 
 when it does, that recital is prima facie evidence that it 
 was done.' When there are several acceptors for honor 
 either of the whole or parts of the sum called for by 
 the bill, it would, it seems, be necessary to make protest 
 upon the dishonor of each. 
 
 7. Zollner vs. Moffitt, 222 Pa. 644, 72 A. 285.
 
 258: THE NEGOTIABLE INSTRUMENTS LAW § 171 
 
 SUBDIVISION VI. 
 
 Payment for Honor Supra Protest. 
 
 Section 
 
 171 Who may make payment for 
 
 honor. 
 
 172 Pa3'ment for honor; how 
 
 made. 
 
 173 Declaration before payment 
 
 for honor. 
 
 174 Preference of parties offer- 
 
 ing to pay for honor. 
 
 Section 
 
 175 Effect on subsequent parties 
 where bill is paid for 
 honor. 
 
 176 Effect of refusal of holder 
 to receive payment for 
 honor. 
 
 177 Rights of paj^er for honor. 
 
 The general rule of law that a stranger cannot vol- 
 untarily pay the debt of another without his knowledge 
 and consent and acquire the right of re-imbursement, is 
 subject to the exception that in the case of bills of ex- 
 change, after protest for non-payment, any person, 
 whether he be a stranger or one already a party to the 
 bill, may intervene and pay it for the honor of some other 
 party. The payment is made in this manner when it is 
 desired to protect the credit of the bill generally, or of 
 the particular party for whose honor it is made. Of 
 course the obviously easy way to accomplish the same 
 purpose is for the person who desires to take up the 
 bill to take it by transfer from the holder. There are no 
 difficulties in the way of accomplishing this if the bill 
 is one payable to bearer or is indorsed in blank and it will 
 not then require the indorsement of the holder. (Sec. 30.) 
 If it requires his indorsement he may transfer the bill 
 without himself incurring any liability upon it by indors- 
 ing without recourse (Sec. 38), if he is unwilling to add 
 his name to the security of the instrument. If ho will 
 not consent to any form of transfer, the payment for 
 honor must be resorted to. The exception is applicable
 
 § 171, 172 BILLS OF EXCHANGE 259 
 
 only to bills of exchange and it is not extended even to 
 negotiable notes. 
 
 The following sections prescribe the manner in which 
 the pajTnent for honor must be made and the rights of the 
 payer for honor and the liability to him of the parties 
 upon the instrument. 
 
 Who may make ''Sec. 171. Where a bill has been pko- 
 
 payment for tested for non-payment, any person may 
 honor. ' 
 
 intervene and pay it supra protest for 
 
 THE honor of any PERSON LIABLE THEREON OR FOR THE 
 HONOR OF THE PERSON FOR WHOSE ACCOUNT IT WAS DRAWN.'* 
 
 Payment for honor may be made by any person, 
 whether an acceptor for honor or not, or whether or not 
 he is already a party to the bill, after the bill has been 
 protested for non-payment. His payment is called a 
 payment "Supra Protest," that is, he pays it after the 
 protest, for the honor of some person liable upon the 
 bill, or for the one for whose account it was drawn. He 
 is thereupon entitled to receive the bill as is provided in 
 Sec. 177. If it is made in strict accordance with the pro- 
 vision of this subdivision of the Act, such a pajTuent is 
 not deemed to be a voluntary pajanent made by a third 
 person, a stranger (Sec. 172), and does not discharge 
 the instrument when it is made in the manner described 
 in the next section although made by a party, even the 
 drawee, unless the bill is drawn against funds of the 
 drawer in his hands and he is bound to pay it.^ 
 
 Payment for ''Sec. 172. The payment for honor 
 honor: how supra protest in order to operate as 
 
 SUCH, AND not AS A MERE VOLUNTARY PAY- 
 MENT, MUST BE ATTESTED BY A NOTARIAL ACT OF HONOR 
 WHICH MAY BE APPENDED TO THE PROTEST OR FORM AN EX- 
 TENSION TO IT. " 
 
 1. Konig vs. Bayard, 1 Pet. (U. S.) 250, 261, 7 L. Ed. 132. 
 Note in 92 Am. Dec. 579.
 
 260 THE NEGOTIABLE INSTRUMENTS LAW § 172 
 
 Considerable formality accompanies a pajment for 
 honor. This is in order that it may be distinguished from 
 a mere voluntary payment. The latter discharges the bill 
 as upon payment by a primary party, while a payment 
 for honor discharges from liability only certain parties 
 to the instrument and constitutes the payer for honor a 
 purchaser of the bill with all the rights of the holder to 
 whom he makes the payment (Sec. 175). It must there- 
 fore be attended and attested by a notarial act of honor 
 which must be executed upon or attached to the protest, 
 or so identified with it that it can readily be perceived to 
 be an extension of it, that is, following after and conse- 
 quent upon the protest. The notarial act of honor is de- 
 scribed in the next section. 
 
 Ordinarily when a third person takes up the instru- 
 ment after maturity without the formality incident to a 
 payment for honor, his act is presumed to be a purchase 
 rather than a payment. ^ A\niether it is to be so regarded, 
 how^ever, will depend upon the intention of the parties, 
 and this is to be determined from the acts and declara- 
 tions of the parties themselves and the circumstances 
 surrounding the transaction.^ 
 
 Whatever inconveniences and difficulties such a payer 
 may encounter when he comes to recover his outlay upon 
 the bill can all be avoided if he will declare his intention 
 to pay for honor and execute it in accordance with the 
 requirements of this subdivision. 
 
 2. Johnson vs. Schnabaum, 86 Ark. 82, 86, 109 S. W. 1163. 
 Mfrs. Natl Bk. vs. Thompson, 129 Mass. 438, 37 Am. R. 376. 
 Irving Bk. vs. Wrtherald, 36 N. Y. 335. 
 
 Cantrel vs. Davidson. 180 Mo. A. 410, 168 S. W. 271. 
 
 3. Wood vs. Guarantee Tr. Co., 128 U. S. 416, 32 L. Ed. 472. 
 Prather vs. HairgTove, 214 Mo. 142, 112 S. W. 552. 
 
 People's Bk. vs. Craig, 63 Oh. St. 374, 59 N. E. 102, 81 Am. 
 S. R. 639, 52 L. R. A. 872.
 
 § IT.S, 174 BILLS OF EXCHANGE 261 
 
 Declaration "8ec. 173. The notarial act of honor 
 
 before payment -^jj^rj^ jgE founded on a declaration made 
 for honor. 
 
 BY THE PAYER FOR HONOR OR BY' HIS AGENT 
 IN THAT BEHALF DECLARING HIS INTENTION TO PAY THE BILL 
 FOR HONOR AND FOR WHOSE HONOR HE PAYS." 
 
 The notarial act to be written upon the protest or ap- 
 pended to it, or which must be identified with it, must 
 contain a statement that the payer for honor or his agent, 
 who is authorized to act for him in that particular mat- 
 ter and for that purpose, has declared his intention to 
 pay the bill for honor. It must also state for whose 
 honor the jjayment is made. It does not require the sig- 
 nature of the payer for honor or his agent, it being suf- 
 ficient that he or his agent declare his intention to the 
 notary who thereupon, over his own signature and seal, 
 writes out the declaration of honor. He then makes a 
 record of the declaration in the protest, or appends it 
 to the protest, or having already written out the pro- 
 test, writes out a separate declaration for honor and 
 identifies it with the protest by reference to it, thus com- 
 pleting the notarial act of honor. 
 
 Preference of ''Seo. 174. Where two or more persons 
 parties offering offer to pay a bill for, the honor of dif- 
 to pay for honor, j^gjjg^^rj, parties, the person whose pay- 
 ment WILL discharge MOST PARTIES TO THE BILL IS TO BE 
 GIVEN THE PREFERENCE." 
 
 This section does not seem to require exx3laiiation. 
 No very good reason can be conceived why a holder 
 should want to prefer one offer to pay for honor over an- 
 other and he is directed by this section to accept that one 
 -which will discharge the most parties to the bill. It is 
 within the possibilities, of course, that the holder might 
 fail to give preference to that offer which would dis- 
 charge the most parties and in that case it is also quite 
 possible that complications will arise. The payer for 
 honor whose payment he accepts will receive the bill and
 
 262 THE NEGOTIABLE INSTRUMENTS LAW § 175 
 
 be subrogated for and succeed to all the rights and du- 
 ties of the holder. (Next section.) Perhaps, in view 
 of Section 120, Sub-section 4, Title I, wherein it is pro- 
 vided that secondary parties are discharged by a valid 
 tender of payment made by a prior party, those par- 
 ties will be discharged who stand between that one on 
 whose behalf a tender was made and the one on whose 
 behalf the offer to pay for honor was accepted. Perhaps 
 Section 176 may be regarded as adding cumulative force 
 to the suggestion that they might be, for you will ob- 
 serve it provides that the holder loses his right of re- 
 covery against any party who Avould have been dis- 
 charged by such payment. If the holder lost this right 
 by his failure to accept the tendered payment he can- 
 not transmit it to the payer for honor whose payment 
 for honor he accepts. I am not aware that this question 
 has ever been raised or decided and there seems to be 
 little probability that it ever will be, if the holder is 
 acquainted with his duty to give preference to that offer 
 to pay for honor which will discharge the most parties 
 liable upon the instrument and of the penalty prescribed 
 by Section 176 for his failure to do so. 
 
 *'Sec. 175. Wheee a bill has been paid 
 subsequent FOR HONOR, all parties subsequent to the 
 
 parties where party for whose honor it is paid are 
 bill is paid for discharged, but the payer for honor is 
 lionor. subrogated for, and succeeds to, both 
 
 the rights and duties of the holder as regards the 
 party for whose honor he pays and all parties liable 
 to the latter." 
 
 Upon payment for honor having been made all par- 
 ties whose liability upon the bill is subsequent to that 
 one for whose honor the payment Avas made, are dis- 
 charged. The payer for honor is regarded as a pur- 
 chaser of the bill who takes it as by indorsement from 
 the holder and is invested with all his rights as against
 
 § 176 BILLS OF EXCHANGE 263 
 
 the person for whose honor the payment was made and 
 all parties liable to that person. If the holder is a holder 
 in due course, the payer for honor becomes so notwith- 
 standing the fact that he acquires the bill after matur- 
 ity (Sec. 58). He is also charged with all the duties of 
 the holder and is obliged to take all steps required of the 
 holder in order to charge the party for whose honor the 
 instrument is paid and to charge all other parties liable 
 to such person. He is, therefore, not excused from giv- 
 ing notice of dishonor if none had been given by the 
 holder previous to his payment for honor* and, in some 
 States, it has been held that he must himself, within a 
 reasonable time, give notice of his payment for honor 
 or cause it to be given. ^ 
 
 . . "Sec. 176. Where the holder of a bill 
 
 of holder to ^^ REFUSES TO RECEIVE PAYMENT Slipra PRO- 
 
 receive payment test, he loses his right of recourse 
 for honor. against any party who would have been 
 
 DISCHARGED BY SUCH PAYMENT." 
 
 The section above states the law in such obviously 
 plain language that no explanation is necessary. It is 
 difficult to conceive of any reason w^hy a holder should 
 refuse payment when it is offered to him but if he does, 
 the section declares that he cannot recover from any 
 party who would have been discharged by the payment. 
 The offer must, of course, be accompanied by a valid ten- 
 der, and what is considered to be such a tender is defined 
 in Section 120. See observations under Section 174. 
 
 Rights of payer "Sec. 177. The payer for honor, on 
 for honor. paying to the holder the amount of the 
 
 BILL AND THE NOTARIAL EXPENSES INCIDENTAL TO ITS DIS- 
 HONOR, IS ENTITLED TO RECEIVE BOTH THE BILL ITSELF AND 
 THE PROTEST. ' ' 
 
 4. Lenox vs. Leverett, 10 Mass. 1, 6 Am. Dec. 97. 
 
 5. Wood vs. Pugh, 7 Ohio (Part 2) 501. 
 Gazzam vs. Armstrong, 3 Dana (Ky.) 554.
 
 264 THE NEGOTIABLE INSTRUMENTS LAW § 177 
 
 The payer for honor must pay the amount due upon 
 the bill, including interest if it is so payable. If it is not 
 payable with interest and is not expressly payable with- 
 out interest, he will be required to pay interest from the 
 date of maturity to the date of his pajTnent. In addition 
 thereto he must pay all notarial expenses caused by the 
 dishonor and protest. Upon doing this the bill and pro- 
 test must be given to him. He then has the right to en- 
 force it against the party for whose honor he paid it and 
 against all parties who are liable to that one.
 
 § 178 BILLS IN A SET 265 
 
 SUBDIVISION VII, 
 
 Bills in a Set. 
 
 Section Section 
 
 178 Bills in sets constitute one igl Acceptance of bills drawn 
 
 . in sets. 
 
 179 Rights of holders where dif- 
 
 ferent parts are nego- 182 Payment by acceptor of 
 tiated. bills drawn in sets. 
 
 180 Liability of holder who in- ^^o t7i«- 2. ^ j- -u • j: 
 
 -, -^ . . 183 Effect of discharginiT one of 
 
 dorses two or more parts ° ^ 
 
 of a set to different per- ^ set. 
 
 sons. 
 
 Bills in a set are such of which an original and one or 
 more duplicate parts are drawn and issued at the same 
 time. Their most common use is in the form of foreign 
 exchange issued in or upon foreign countries. Such bills, 
 of no matter how many parts they may consist, consti- 
 tute but one bill when each part contains a reference to 
 the other part or parts and each is separately numbered. 
 They are usually drawn in three and sometimes as many 
 as four parts. The separate numbering and reference to 
 the other parts contained in each is, of course, intended 
 to be and operates as a notice to every party and to the 
 drawee, that the bill has been issued in several parts. A 
 foreign bill is so issued in order to avoid delay and in- 
 convenience which may result from the loss or miscar- 
 riage of the bill and to facilitate its transmission for ac- 
 ceptance or payment, and to accomplish this the separate 
 parts are usually sent by different means or at different 
 times, or one part sent directly to the drawee for ac- 
 ceptance and the others negotiated.^ 
 
 1. Byles on Bills. 387. 
 
 Caras vs. Thalmann, 138 App. Div. (N. Y.) 297.
 
 266 THE NEGOTIABLE INSTEUMENTS LAW §178,179 
 
 Bills in sets ''Sec. 178. Where a bill is drawn in a 
 
 constitute one g^^ each part of the set being num- 
 bill. 
 
 BERED AND CONTAINING A REFERENCE TO THE 
 OTHER PARTS, THE WHOLE OF THE PARTS CONSTITUTES ONE 
 BILL. ' ' 
 
 A bill issued and marked as is provided in this section 
 
 is notice to every person that its parts, other than that 
 
 one exhibited to him, exist, and when more than one part 
 
 of a bill drawn in a set is negotiated the holders' rights 
 
 and the liability of one who indorses tw^o or more parts to 
 
 different persons, and their manner of acceptance and 
 
 payment are provided for in the five succeeding sections. 
 
 Rights of ' ' Sec. 179. Where two or more parts of 
 
 holders where a set are negotiated to different hold- 
 
 different parts ^^^ ^^ p^,^, bourse, the holder whose 
 
 are negotiated. ' 
 
 TITLE FIRST ACCRUES IS AS BETWEEN SUCH 
 holders THE TRUE OWNER OF THE BILL. BUT NOTHING IN 
 THIS SECTION AFFECTS THE RIGHTS OF A PERSON WHO, IN DUE 
 COURSE, ACCEPTS OR PAYS THE PART FIRST PRESENTED TO 
 HIM." 
 
 The bill is issued in parts only in order to avoid delay 
 and inconvenience which may result from the miscar- 
 riage or loss of the bill and it is not expected that its 
 parts will be separately negotiated. They separate only 
 when they are forwarded for acceptance or payment. If 
 they should be separately negotiated, however, it be- 
 comes necessarj^ to determine who is the owner of the 
 bill. 
 
 A holder who is not a "holder in due course" yet holds 
 one part of the bill, would not be the owner of the bill as 
 against one in possession of another part who is a holder 
 in due course. (As to who is a holder in due course see 
 Section 52.) But two or more persons may each be a 
 holder in due course of a separate part of the bill, and 
 it then becomes necessary to determine who is the true 
 owner of the bill. In that case, that one whose title first 
 accrues is the real owner. His title "accrues" at the
 
 § 180 BILLS IN A SET 267 
 
 time he becomes the owner with the qualifications re- 
 quired by Section 52 of the part of the bill which he holds 
 and therefore, and at that time, he becomes entitled to all 
 the other parts of the bill. 
 
 Anyone taking less than the whole number of parts 
 of the bill, being advised that other parts exist, does so 
 at his own peril.^ But if the person upon whom the bill 
 is drawn accepts or pays in good faith in due course 
 any other part of the bill which is presented to him, be- 
 fore the presentment of that part held by another per- 
 son whose title has first accrued, his rights are not af- 
 fected by this section. He cannot be required to accept 
 or pay any other part, although the right of some person 
 other than the one whose part of the bill is accepted or 
 paid has first accrued. Payment in ''due course" re- 
 member, requires that he have no notice that a prior right 
 to payment has accrued to some one other than the one 
 whose part of the bill he has accepted or paid. The term 
 is defined in Section 88. 
 
 . "Sec. 180. Where the holder of a set 
 
 holder who indorses two or more parts to different 
 
 indorses two or persons he is liable on every such part, 
 more parts of a and every indorser subsequent to him is 
 set to different li^bl^ on the part he has himself in- 
 persons. dorsed, as if such parts were separate 
 
 bills." 
 
 A holder of a set of bills, however, w^ho indorses two or 
 more parts to different persons is liable upon all. And 
 each indorser is liable upon that part which he has in- 
 dorsed. Since only one part of a bill drawn in a set will 
 be accepted, and paid, all other parts which have been 
 separately negotiated will return to and must be taken up 
 by that holder who negotiated the m separately. The in- 
 
 2. Lans vs. Smith, 7 Bing. 284, 294. 
 
 Holdsworth vs. Hunter, 10 C. B. (Eng.) 449. 
 Byles on Bills, 389.
 
 268 THE NEGOTIABLE INSTRUMENTS LAW §181,182 
 
 dorsers' liability is the same as though the parts were 
 separate bills. The parts of a bill which are dishonored 
 by non-acceptance or non-payment must be proceeded 
 upon by the holder^, that is, notice of dishonor must be 
 given or they must be protested, if protest is required, 
 in the same manner as though they were separate bills. 
 Acceptance of "Sec. 181. The acceptance may, be 
 bills drawn in written on any pabt and it must be wkit- 
 ^®*^' ten on one part only. If the drawee 
 
 accepts more than one part, and such accepted parts 
 are negotiated to different holders in due course, he 
 IS liable on every such part as if it were a separate 
 
 BILL. ' ' 
 
 Any part, but only one, of the set of bills may be ac- 
 cepted or paid. If the holder should present more than 
 one part of the bill to the drawee, and he usually presents 
 them all, or if more than one part is presented by sepa- 
 rate holders and the drawee accepts more than one, he 
 will, however, be liable upon each acceptance to its 
 holder and if the accepted parts are negotiated to differ- 
 ent holders in due course, the acceptor is liable upon each 
 even if the acceptances were all given to the holder who 
 presented the several parts of the bill. The acceptor's 
 liability is to each holder in due course upon the ac- 
 cepted part which he holds, and it is the same as if each 
 were a separate bill. Upon presentment of the separate 
 parts to the drawee it is proper for him to take up and 
 retain all but that part upon which he places his accept- 
 ance. This he returns to the holder. 
 Payment by "Sec. 182. When the acceptor of a 
 
 acceptor of bills ^jll drawn IN a SET PAYS IT WITHOUT BE- 
 in sets. quiring the part bearing his acceptance 
 
 TO be delivered up to him, and that part at maturity is 
 outstanding in the hands of a holder in due course, 
 he is liable to the holder thereon. ' ' 
 
 3. Downes & Co. vs. Church, 13 Peters (U. S.) 205. 
 Walsh vs. Blatchford, 6 Wis. 422. 425.
 
 § 183 BILLS IX A SET 269 
 
 Upon paying- a bill drawn in a set the acceptor must re- 
 quire that part of the bill which bears his acceptance to 
 be surrendered to him. If he neglects to do so and it is or 
 has been negotiated and at its maturity is still outstand- 
 ing against him, he is liable to a holder in due course 
 upon such outstanding part bearing his acceptance and 
 must pay that also notwithstanding his payment of any 
 other part of the bill. 
 
 '*Sec. 183. Except as herein^ otherwise 
 Effect of provided, where any one part of a bill 
 
 discharging one drawn IN A SET IS discharged by payment 
 
 of a set. Qj^ otherwise, the whole bill is dis- 
 
 "Wisconsm. , , ' 
 
 CHARGED. ' ' 
 
 Pa^Tuont of one part, or the discharge in any other 
 manner (as provided in Sections 119 to 125) of one part 
 of the bill, discharges the wdiole set.^ This is not so, how- 
 ever, when, as provided in the preceding section, the part 
 of the set bearing his acceptance is not delivered to the 
 acceptor, but has been negotiated and remains outstand- 
 ing in the hands of a holder in due course. (See Section 
 182.) 
 
 4. Caras vs. Thalmaun, 13S App. Div. (N. Y.) 297.
 
 270 THE NEGOTIABLE INSTRUMENTS LAW .^ 184 
 
 TITLE III, 
 
 Promissory Notes and Checks. 
 Forms and Interpretation. 
 
 Section 
 
 184 Promissory note defined; 
 
 certificates of deposit ; 
 bonds and their coupons. 
 
 185 A cheek defined. 
 
 186 Within what time a check 
 
 must be presented :. memo- 
 randum check. 
 
 187 Certification of check; ef- 
 
 fect of. 
 
 Section • 
 
 188 Effect where holder of check 
 procures it to be certified. 
 
 189 When check operates as an 
 assignment. 
 
 Statement of the duties and 
 liabilities of banks and 
 other agents in the col- 
 lection of commercial pa- 
 per. Page 280. 
 
 In this brief title, after defining a promissory note, 
 the distinction between a check and an ordinary bill is 
 pointed out. This distinction exists principally in the 
 consequences which follow upon, and the legal etfect of 
 the failure of the holder to present the check for payment 
 within a reasonable time after its issue, of his failure to 
 give the drawer notice of its dishonor and of its certifica- 
 tion when procured by the holder, but another distinctive 
 characteristic of a bank check is that it is always sup- 
 posed to be drawn upon a fund which exists at its date to 
 the credit of the drawer. The drawer is regarded some- 
 what the same as a maker of a promissory note, that is, he 
 is, from the inception of the check, the principal debtor, 
 and while prompt presentment for payment after its 
 issue or last negotiation is required to charge indorsers 
 upon a check, the failure of the holder to present the 
 check for pa}^nent within a reasonable time after its is- 
 sue and notify the drawer of its dishonor if it is not paid 
 by the bank upon which it is drawn, will release him only 
 if he has suffered a loss through its extended negotia- 
 tion or through a delay or neglect of the holder to pre-
 
 §184 PKOMISSORY NOTES AND CHECKS 271 
 
 sent it promptly for payment. The loss contemplated 
 is a loss which may occur by the failure of the bank 
 upon which the check is drawn, a risk which the law im- 
 poses upon the drawer for a reasonable length of time 
 after its issue. After a reasonable time, however, his 
 risk terminates and is transferred to the holder. At 
 another place (Section 186) something will be said about 
 the degree of diligence required of the holder and about 
 the effect of the certification of the check w^hen procured 
 by the holder. (Sec. 188.) 
 
 Promissory note ''Sec. 184. A negotiable promissory note 
 denned. 
 
 WITHIN THE MEANING OF THIS ACT IS AN 
 unconditional, promise in WRITING MADE BY ONE PERSON 
 TO ANOTHER, SIGNED BY THE MAKER ENGAGING TO PAY ON DE- 
 MAND, OR AT A FIXED OR DETERMINABLE FUTURE TIME, A SUM 
 CERTAIN IN MONEY TO ORDER OR TO BEARER. WhERE A NOTE 
 IS DRAWN TO THE MAKER 's OWN ORDER, IT IS NOT COMPLETE 
 UNTIL INDORSED BY HIM." 
 
 As has already been stated in the introduction to the 
 first Title and at Section 3 in that Title, not all promis- 
 sory notes are negotiable and a written promise to pay 
 money may be regarded as a promissory note although 
 it is not negotiable. Its interpretation and enforcement, 
 however, are not governed by this Act if it is not a ne- 
 gotiable instrument. This section contains the definition 
 of a ''negotiable promissory note" and as it will be seen 
 by reference to Section 1 of Title I, the definition in- 
 corporates all of the requirements of such an instru- 
 ment in order to constitute it a negotiable promissory 
 note. That section and its explanations are referred to 
 without further observation. By Section 30 the nego- 
 tiation of an instrument payable to order is accomplished 
 by its indorsement and delivery by the holder to his 
 transferee. This section is related to Section 30 and to 
 Sections 15 and 16 in that it provides that a promissory 
 note, when payable to the maker's own order, is incom-
 
 272 THE NEGOTIABLE INSTRUMENTS LAW § 184 
 
 plete until it is indorsed by him. When such an instru- 
 ment is negotiated without the indorsement of the maker 
 it will not bind him unless the transfer was made under 
 such circumstances as will entitle the holder by reason 
 of the provisions of Section 49, to require him to in- 
 dorse it. 
 
 You will find no special provision in the Act upon the 
 subject of certificates of deposits or Bonds and their 
 Coupons. These two forms of negotiable instrmnents 
 are in effect and in fact promissory notes. ^ 
 Certificates of The first, a Certificate of Deposit, is the 
 deposit. w^ritten acknowledgment of a bank that 
 
 it has received from the person to whom it is issued the 
 sum of money it mentions, and it contains the promise 
 of the bank to repay the amount upon demand or at a 
 future specified date upon surrender of the certifica:te. 
 Therefore it contains all the elements of, and is in fact, 
 the promissory note of a bank.^ It is fully negotiable 
 if it contains words of negotiability and otherwise meets 
 the requirements of the first Title of the Act (Sections 
 1 to 23). 
 
 The only important distinction between a certificate of 
 deposit and a promissory note may be said to lie in the 
 fact that, by judicial interpretation of the rules of the 
 Law Merchant, (which are yet applicable in the absence 
 of express provision in this Act to the contrary) demand 
 for payiuent is necessary before action to recover from 
 
 1. Forest vs. Safety Bks:. & Tr. Co., 174 Fed. 345. 
 Jensen vs. Wilself, 36 Nev. 37. 
 
 Curran vs. Witter, 68 Wis. 16. 
 Maxwell vs. Agnew, 21 Fla. 154. 
 
 Blackman vs. Lehman, Durr & Co., 63 Ala. 547, 35 Am. R. 
 57, also see Note 4. 
 
 2. Pierce vs. State Nat'l Bk., 215 Mass. 18. 
 
 Citizens Nat'l Bk. vs. Brown, 45 Oh. St. 39, 11 N. E. 799, 4 
 
 A. S. R. 526. 
 Brummagin vs. Tallant, 29 Calif. 503, 89 Am. Dec. 61.
 
 § 184 PROMISSORY NOTES AND CHECKS 273 
 
 the maker of the certificate.^ The decisions are by no 
 means uniform to this effect, but those so holding are re- 
 garded as based upon the sounder principle. As a con- 
 sequence a division of opinion likewise exists as to the 
 application of the statute of limitations, some courts 
 holding that it begins to run from the date of the certifi- 
 cate, others from the date of demand. The view that the 
 statute begins to run from the date of the certificate 
 would seem to be supported also by Section 70 of the Act 
 which seems to dispense with the necessity for demand, 
 particularly when the certificate has been outstanding 
 long enough to raise a presumption that it is past due,^ 
 although it is probably correct to conclude that certifi- 
 cates of deposit were not contemplated when the section 
 was written. In the presence of conflict in regard to the 
 time M'hen the statute of limitations does begin to run 
 and the necessity for demand, it is perhaps better for 
 the holder to adopt the first view and thus preserve his 
 rights beyond the possibility of mistake. 
 
 Bonds, if they contain words of negotiability, are like- 
 wise regarded as, and are in fact the promissory notes 
 Bonds and their *^f ^^^^ person, corporation or the depart- 
 coupons. ment of government which issues them.' 
 
 Their negotiability is not aiTected by the fact that they 
 bear a seal. (Section 6, Title I.) 
 
 Their coupons, so named from the French word 
 "con per" meaning '*to cut," express the amount of in- 
 
 3. Hillsinger vs. Georpa R.' Bk.. 108 Ga. 357, 33 S. E. 985, 75 
 
 Am. S. R. and note. 
 Elliott vs. Cap. City St. Bk., 128 Iowa 275, 103 N. W. 777, 
 
 111 Am. S. R. 198, 1 L. R. A. N. S. 1130 and note. 
 Cottle vs. Buffalo Mar. Bk., 166 N. Y. 53, 59 N. E. 736. 
 
 4. Auten vs. Crahan, 81 111. A. 502. 
 
 See 64 Am. Dec. 428, note; 1 L. R. A. 299 note. 
 Also see Note 1. 
 
 5. Gould vs. Venice, 29 Barb. (N. Y.) 442. 
 
 Brainerd vs. N. Y., etc., R. R. Co., 25 N. Y. 496, 500.
 
 274 THE NEGOTIABLE INSTRUMENTS LAAV § 184 
 
 terest payable and the time at which each installment 
 will be due and, as the date of its maturity approaches, 
 the maturing interest coupon is cut off and presented for 
 payment at the place where it is payable on the date when 
 it is due. The coupons are designed to be the cenvenient 
 instruments for the collection of the interest installments 
 upon the principal obligation, the bond, as they mature 
 and they enable the holder of the bond to dispense with 
 the necessity of presenting it for the purpose of cred- 
 iting upon it the interest payments as they are made. 
 
 Anything which affects the validity of the bond like- 
 wise affects its coupons but they are so far regarded as 
 separate instruments after maturity that they w^U then 
 bear interest if the maker of the bond defaults in the in- 
 terest payments and when detached have all the attri- 
 butes of negotiable instruments and recovery upon them 
 may be had in a separate action when they are them- 
 selves payable to order or to bearer.® 
 
 The bond, of course, must bear the seal of its maker 
 and be signed by its issuing officers, but no seal is re- 
 quired upon the coupons and the signatures upon them 
 are usually a printed or lithographed fac-simile of the 
 signatures upon the bond. 
 
 It is no objection to the negotiability of the bond that it 
 contains a statement of the transaction out of which it 
 arises (Sec. 3), is payable in a particular kind of current 
 money (Sec. 6), that it contains a provision allowing its 
 registry or gives the holder a choice to require something 
 to be done in lieu of its pa\Tnent in money, for example, 
 the privilege to exchange it for securities of a different 
 kind. (Sec. 4.) ^ 
 
 6. Thompson vs. Perrinc, 106 U. S., 589, 27 L. Ed. 29S. 
 
 Kas. City, etc., R. R. Co. vs. Cobb, 100 Ala. 228, 13 S. 938. 
 Trustees of the I. I. Fund vs. Lewis, 34 Fla. 424.
 
 § 185, 186 PROMISSORY NOTES AND CHECKS 275 
 
 Upon registry the bond is transferable in somewhat the 
 same manner as certificates of stock are transferred, then 
 requiring indorsement and the entry of each transfer 
 upon the register of the corporation. Bonds are usually 
 payable to the bearer, and, containing a promise for the 
 unconditional payment of money at a definite and fixed 
 time, or on demand after date, they are in reality the 
 sealed promissorj^ notes of their makers. 
 
 A check defined. '*Sec. 185. A check is a bill of ex- 
 change DRAWN ON A BANK PAYABLE ON DEMAND. ExCEPT AS 
 HEREIN OTHERWISE PROVIDED, THE PROVISIONS OF THIS ACT 
 APPLICABLE TO A BILL OF EXCHANGE PAYABLE ON DEMAND 
 APPLY TO A CHECK." 
 
 A check drawn upon a bank or a banker is considered 
 to be a bill of exchange payable upon demand, unless it 
 is upon its face made payable at a specific date.'^ Every 
 provision of this Act which governs the interpretation 
 and enforcement of the liabilities and rights of parties 
 to a bill payable upon demand, or at sight, is, by this 
 section, made applicable to a check unless by the Act 
 itself it is otherwise provided. All of its provisions in 
 regard to notice of non-payment and in regard to pro- 
 test, if the check is upon its face a foreign bill (Sec. 129) 
 must be complied with in order to charge indorsers. 
 Failure to do so will discharge them as upon failure to 
 give notice or make protest of a bill of exchange. 
 
 But in their effect upon the drawer the provisions 
 of the Act, in this respect, are greatly modified by the 
 next section. 
 
 Wth" what "Sec 186. A check must be presented 
 
 time a check FO^ payment within a reasonable time 
 
 must be after its issue" or the drawer will be 
 
 presented. discharged feom liability THERfeoN to the 
 
 "Illinois. EXTENT OF the loss caused by the delay." 
 
 7. Riddle vs. Bk. of Montreal, 145 App. Div. (N. Y.) 207.
 
 276 THE NEGOTIABLE INSTRUMENTS LAW § 186 
 
 A check ought not to be held an unreasonable length 
 of time either by the payee or by any indorsee. Unless 
 it is the check of a bank and was intended for negotia- 
 tion, there is no good reason why it ought not to be pre- 
 sented at once, after its receipt. A check differs from 
 other bills of exchange payable upon demand in that 
 it is presumed to have been intended for immediate pay- 
 ment and it must be presented for payment within a 
 reasonable time after its issue and not, as is the case with 
 an ordinary bill, after its last negotiation, in order to 
 preserve the liability of the drawer if a loss is sustained 
 through no fault of his. While a check may continue in 
 negotiation for any reasonable length of time after its 
 issue without presentment for payment at the bank upon 
 which it is drawn, yet if it is so delayed and loss is sus- 
 tained, the drawer will be released from liability to the 
 extent of the loss he may have suffered by the delay. 
 Thus, if the bank upon which a check is drawn which has 
 not been presented for payment within a reasonable time 
 were to fail, and its failure cause the loss of the money 
 called for by the check, the drawer will be released from 
 liability upon it. If the check has been transferred from 
 one holder to another without having paused an unrea- 
 sonable length of time in the possession of any one of 
 them, the indorsers will not ])e discharged.^ But if it is 
 detained for an unreasonably long time at any negotia- 
 tion then such indorsers as are not responsible for the 
 delay will be released from liability by its unreasonable 
 detention. (Sections 7 and 71.) 
 
 Upon this subject it is desirable to distinguish more 
 clearly the duty which the holder owes to the drawer 
 and other parties to a check to present the same for pay- 
 
 8. Columbian Banking Co. vs. Bowen, 134 Wis. 218, 114 X. W. 45L 
 Plover Svi-s. Bk. vs. Moodie, 135 la. 685, 110 X. W. 29. 113 
 N. W. 476.
 
 § 186 PROMISSORY NOTES AND CHECKS 277 
 
 ment with the utmost dispatch, when it is no longer to 
 be negotiated. The authorities are quite uniform that 
 the payee or indorsee of a check, or a bank receiving it 
 for deposit or collection, ow^es to every other party to the 
 instrument the duty to present it and obtain the money 
 due upon it immediately. The time for its presentment 
 is usually the day of and never later than the day after 
 its. receipt when a check is deposited in bank, and the 
 established and known custom of the bank in regard to the 
 collection of checks, unless it transcends reasonable limits 
 or is contrary to law% will prevail to determine w^hether or 
 not it has been negligent in the performance of its duty. 
 When out of town checks are deposited with a bank 
 for collection it owes to its depositor the duty to pre- 
 sent them by the most practical and direct method and if 
 it or its banking connections, through which it makes 
 such collections, unduly and unnecessarily delay their 
 presentment and collection and loss is thereby sustained, 
 whether by the failure of the bank upon which the check 
 is drawn or by its dishonor for Avant of funds, any loss 
 occasioned by its delay must, as between the depositor 
 and the bank, be borne by the bank. At the end of this 
 Title I shall describe more fully the duty of banks in 
 the collection of checks and the methods employed. 
 
 You will remember that upon the question of what is 
 or is not a reasonable time the nature of the instrument, 
 w^hatever usage of trade there may be in regard to such 
 instruments, and the facts of each particular case will be 
 taken into consideration. (Sees. 7, 71, 193.) 
 
 When the immediate presentment of the check is not 
 intended by the parties this is usually indicated by writ- 
 ing the word "Memorandum" across its 
 Memorandum ® , . i • i 
 
 check. face. While such a check must be paid 
 
 whenever it is presented, unless it fixes a date when it is
 
 278 THE NEGOTIABLE INSTRUMENTS LAW §187,188 
 
 payable, the delay in presenting it being altogether con- 
 templated by the parties and expressed by the Jiature 
 of the instrument itself, cannot affect their liability upon 
 the instrument/* Such a check is issued as an evidence of 
 an indebtedness owing by the drawer to the person to 
 whom it is issued and to the extent that its immediate 
 presentment is thereby waived by the drawer and all 
 parties, the application of the Act in respect to its im- 
 mediate presentment is thereby modified. In all other 
 respects a memorandum check is governed by its pro- 
 visions. 
 
 Certification of ''Sec. 187. Where a check is certified 
 check: effect of. ^^ the bank on which it is drawn, the 
 
 CERTIFICATION IS EQUIVALENT TO AN ACCEPTANCE." 
 
 The certification of a check by the bank upon which it 
 is drawn is the same as an acceptance of a bill of ex- 
 change and its effect is to make the bank the principal 
 debtor upon the instrument. It does not relieve the 
 holder of the duty to present the check for payment with- 
 in a reasonable time, or in any other way alter the rights 
 and duties of the drawer and indorsers, unless the holder 
 himself procures its certification. Inasmuch as certifica- 
 tion of a check has the effect of making the liank which 
 certifies it the principal debtor, the check is thereby se- 
 cured to the extent that the strength and worth and abil- 
 ity of the bank to pay its obligations are considered se- 
 curity. The liability which the acceptor assumes by cer- 
 tification is discussed under Section 62. 
 
 ,^ '*Sec. 188. Where the holder of a 
 Effect where the _ ^^ ^^ w.^.irr.'nrn np ri?T? 
 
 holder of check check procures it to be accepted or cer- 
 
 procures it to be tified, the drawer and all indorsers are 
 
 certified. discharged from liability thereon." 
 
 9. Franklin Bk. vs. Freeniou, 16 Pick. (Mass.) 535. 
 Cushing- vs. Gore, 15 Mass. 69. 
 Dvkers vs. Leather Mfrs. Bk., 11 Paige (N. Y.) 612.
 
 §189 PROMISSORY NOTES AND CHECKS 279 
 
 Now, when the holder of the check himself procures its 
 certification by the bank he thus, in effect, substitutes the 
 bank as the only party to whom he looks for payment 
 and the drawer and all parties who indorsed the check 
 before certification are discharged from liability upon it. 
 This does not occur, however, when the draw^er procures 
 the certification before delivery, even if it is done at the 
 holder's request.^*^ 
 
 When check "Sec. 189. A check of itself does not 
 
 operates as an operate as an assignment of any paet of 
 assignment. 
 
 the funds to the credit of the drawer 
 
 WITH the bank, and THE BANK IS NOT LIABLE TO THE 
 HOLDER, UNLESS AND UNTIL IT ACCEPTS OR CERTIFIES THE 
 CHECK." 
 
 A check is merely an order upon the bank upon which 
 it is drawn directing that upon presentation the bank 
 shall pay the amount of money for which it is written 
 to the person whom it names or to his order, or directing 
 that it be paid to the bearer. It is not of itself an assign- 
 ment, that is, a setting apart from the rest of the money 
 to the drawer's credit in bank, of the amount for which 
 it calls. This section makes this express provision and 
 thereby repudiates all decisions to the contrary. 
 
 When the bank upon which the check is draw^n accepts 
 it or certifies it, however, it does then operate as an as- 
 signment of so much of the drawer's deposit as is re- 
 quired to pay it and the money to pay the check upon 
 presentation is then immediately, by operation of law, 
 set aside out of the drawer's account for that purpose. ^^ 
 If the l)ank permits the drawer to withdraw his funds 
 required for its payment or to use them for any other 
 
 10. Randolph Nat. Bk. vs. Hoinblower, 160 Mass. 401. 
 
 11. Blake vs. Hamilton, etc., Bk., 79 Oh. St. 189, 87 N. E. 73. 
 Wright vs. MeCarthv, 92 111. A. 120. 
 
 Poess vs. Twelfth Ward Bk., 43 Misc. 45, 86 N. Y. S. 857, 14 
 Ann. Cas. 439.
 
 280 THE NEGOTIABLE INSTRUMENTS LAW 
 
 purpose, it will, nevertheless, be obliged to pay the check 
 so accepted by certification whenever it is presented for 
 payment, 
 
 I shall next indicate the principal duties of banks and 
 other collecting agencies in regard to the collection of 
 checks and other commercial paper. 
 
 A Brief Statement of the Law Relating to the Prin- 
 cipal Duties and Liabilities Assumed by Banks and 
 Other Agents in the Collection of Commercial 
 Paper, and the Methods Employed. 
 
 The deposit of commercial paper with a bank for col- 
 lection constitutes the bank the agent of the holder to 
 collect it and it owes to its customer that degree of care 
 in the performance of this duty which it would use to 
 protect its own interests. 
 
 When the instrument is left for collection at the bank 
 at which it is payable, the bank becomes the agent of the 
 Paper payable holder to receive payment. Its duty re- 
 counting banJc. q^^ires the collecting bank to charge such 
 an instrument to any sufficient deposit M^iich the debtor 
 may have there to the credit of his general account on 
 the day of its maturity, but the bank is not required to 
 appropriate any partial sum belonging to him if it is in- 
 sufficient to pay the w^hole amount of the instrument 
 or to appropriate any special deposit for that purpose. 
 If the instrument is made payable at a bank the fact 
 that it is so made payable is equivalent to an order on 
 the bank to pay it for the account of the principal debtor. 
 (See Sec. 87 of Title I.) If the debtor at the date of its 
 maturity deposits the money required to pay the instru-
 
 RELATING TO COLLECTIONS 281 
 
 ment, for the purpose of paying it, and the instrument is 
 not presented at the bank where it is payable, his readi- 
 ness and ability to pay there will relieve him of the pay- 
 ment of interest and costs if the instrument is not pre- 
 sented there. (Sec. 70.) If the bank at which it is 
 payable fail after that date, his ability to pay the in- 
 strument there at its maturity would, in many cases, 
 effect his discharge, and if the instrument is afterwards 
 dishonored secondary parties will be released by the 
 failure of the holder to make proper presentment. (Sec. 
 70, 120.) 
 
 It is quite immaterial whether or not the bank receives 
 compensation for the service it renders in collecting the 
 instrument and the degree of care which it is required to 
 exercise in the performance of its duty is the same 
 whether it is or is not paid for doing so.^ It is very well 
 recognized that banks frequently, in fact almost always 
 engage in this service without compensation, principally 
 with a view to the advantage they will thereby gain in 
 patronage, or to the profits which they expect to derive 
 because of the chance that they may be allowed to use 
 the proceeds of their collections. 
 
 The authority to collect continues after the maturity 
 of the paper, if it remains unpaid and in the possession 
 of the bank, and in the absence of notice that its agency 
 to collect has terminated, the debtor may safely pay the 
 instrument to the collecting bank at any time after ma- 
 turity.^ If the instrument is in the possession of the bank 
 at or after maturity its possession is prima facie evi- 
 dence of its right to receive payment and, as to the par- 
 ties to the instrument, payment at the collecting bank will 
 
 1. Exdianoe Bk. vs. Tlurd Nafl Bk., 112 U. S. 276, 288, 28 
 
 U. S. (L. Ed.) 722. 
 Bailie vs. Augiista Syc^s. Bk., 95 Ga. 277, 284, 21 S. E. 717. 
 
 2. Alley vs. Rogers, 19 Gratt (60 Va.) 366, 383.
 
 282 THE NEGOTIABLE INSTRUMENTS LAAV 
 
 then discharge the instriinient even it" it is not sur- 
 rendered.3 (Sees. 88, 119 of Title I.) 
 
 The usual The restrictive form of indorsement, 
 
 method of 
 
 indorsing the wliich is explained in Sections 36 and 37 of 
 
 instrmnent for rpj^j^ j -^ ugnally employed when an in- 
 coliection and its j i » 
 
 effect. strument, particularly a check, is depos- 
 
 ited with a hank, but on bills and notes left for collection 
 the special or blank indorsement described in Section 36 
 of Title I is most frequently used. 
 
 The restrictive indorsement, as is explained in the sec- 
 tions referred to, constitutes the indorsee the agent of 
 the indorser and does not transfer to the indorsee the in- 
 dorser's ownership in the funds represented by the in- 
 strument. (Sec. 37.) Its language is usually ''Pay to 
 (name of bank) for collec- 
 tion and credit to the account of 
 
 (signature of depositor)." 
 
 This form of indorsement is a notice to subsequent 
 holders that the instrument may be transferred only for 
 the purpose indicated in the indorsement. One taking 
 the instrument under this form of indorsement, although 
 it is sufficient to enable him to bring an action upon it 
 in his own name, acquires no ownership in the instru- 
 ment or its proceeds except in his representative ca- 
 pacity as the agent of the indorser. This form of in- 
 dorsement is also regarded as notice to the person who is 
 obliged to pay the instrument that if he pays it to any 
 person other than the one named, or his representative, 
 he does so at his own peril. (Sec. 36.) 
 Duties in general If specific instructions are given as to 
 bank. ^^^^ method to be pursued in collecting 
 
 the instrument these must be strictly observed by the 
 
 3. Bliss vs. Cutter, 19 Barb. (N. Y.) 9.
 
 RELATING TO COLLECTIONS 283 
 
 collecting bank,^ and its sub-agents, to whom it must 
 transmit them/"^ In the absence of such instructions, 
 however, the bank is required to perform the various 
 duties which are embraced in the business of col- 
 lections in accordance with its established method, its 
 proper regulations and the law relating to such mat- 
 ters, of which it is presumed to have such a knowledge as 
 is usually possessed by men engaged in that business.^ 
 Its established usage in such cases, unless they are un- 
 reasonable or contrary to law, will have much influence 
 in determining whether or not it has properly performed 
 its duty. A knowledge of these customs will be imputed 
 to its customer even though he did not in fact know of 
 their existence or application, and it will be presumed 
 that he intended the bank to act in accordance with 
 themJ 
 
 Usage can only No matter what usage may prevail in re- 
 collection, gard to the collection of the instrument it 
 will not excuse the performance by the collecting bank 
 of those proceedings which it is obliged to take for the 
 immediate fulfillment of its duty to collect it and to 
 properly protect its customers' rights.® It is only 
 the method of their performance which will be af- 
 fected by custom or usage. No usage will justify its 
 omission to jDerform any substantial or material duty 
 which the collecting bank is required by law to perform, 
 
 4. Milwaukee Nat'l Bk. vs. Citv Bk. of Oswego, 103 U. S. 6(i8, 
 
 26 U. S. (L. Ed.) 417. 
 
 5. See Note in 34 Am. Dec. 309, 77 A. S. R. 627. 
 
 6. Morris vs. Union Nat'l Bk., 13 S. D. 329, 332, 83 N. W. 252, 
 
 50 L. R. A. 182. 
 
 7. Hilsinffer vs. Ti-ickott, 86 Oh. St. 286, 99 N. E. 305, Ann. Cas. 
 
 1913 D. 421. 
 Fanners Bk. vs. Newland, 97 Ky. 464. 
 
 8. Farley Nat'l Bk. vs. Pollock, 145 Ala. 321, 39 S. 612, 8 Ann. 
 
 Cas. 370, 117 Am. S. R. 44, 2 L. R. A. N. S. 194. 
 Nat '1 Bk. of Commerce vs. Amer. Exch. Bk., 151 Mo. 320. 332, 
 52 S. W. 265, 74 Am. S. R. 527.
 
 284 THE NEGOTIABLE INSTRUMENTS LAW 
 
 nor will any usage justify the substitution of any other 
 act as its equivalent. The important and material pro- 
 ceedings to be observed in this business of collection are 
 the presentment and demand for acceptance and pay- 
 ment, notice of dishonor and protest of the instru- 
 ment if it is not paid. The manner in which they are re- 
 quired to be done under the provisions of the Negotiable 
 Instruments Law is explained in appropriate places in 
 the preceding pages, 
 g-jjg If the instrument which is received for 
 
 accompanied by collection is a time bill of exchange re- 
 documents of . . , 1 • 11 
 
 shipment or <iuiring acceptance and is payable more 
 
 collateral. than tliree days after sight, and if it is ac- 
 
 companied by the documents of shipment, these docu- 
 ments, in the absence of any instructions to the contrary, 
 must be released to the drawee by the collecting bank 
 upon his acceptance of the bill unless, in accordance 
 with the customary dealings of the parties, or, by rea- 
 sonable implication, the contrary was intended. '^ If the 
 instrument is a sight draft, or is payable not more than 
 three days after sight, whether these be days of grace or 
 not, the documents must in no case be delivered until it 
 is paid, in the absence of specific instructions requiring 
 that they be delivered before payment.® 
 Presentment of ^^ bank is not liable for its failure to pre- 
 bill of sent for acceptance a bill which does not 
 
 requiring require acceptance and it would be a use- 
 
 acceptance, less procedure to do so when such an in- 
 
 strument is received for collection, for its duty requires 
 that it at once present the instrument for payment. But 
 
 9. Nat'l Bk. of Commerce vs. Mereh. Nat'l Bk., 91 U. S. 92, 23 
 
 L. Ed. 208. 
 Commercial Bk. vs. Chieaoo, etc., R. R. Co.. 160 Til. 401. 43 
 
 N. E. 756. 
 Second Nat'l Bk. vs. Cummiims, 89 Tenn. 609, 18 S. W. 115, 
 
 24 Am. S. R. 618.
 
 RELATING TO COLLECTIONS 285 
 
 if the bank by a mistaken conclusion or opinion as to the 
 legal effect of the instrument, or by a mistake of facts, 
 should fail to make presentment for acceptance when it 
 is required, or should make it improperly, it would be lia- 
 ble for any loss caused by its mistake. Section 143 of 
 the Act determines Avhen presentment for acceptance 
 must be made and in no other case is it necessary. The 
 third sub-section of that section, you will observe, re- 
 quires that a draft, even though payable at sight, must be 
 presented for acceptance if it is payable elsewhere than 
 at the residence or usual place of business of the drawee. 
 It is the bank's duty to present a bill for acceptance at 
 once, on the day of its receipt if acceptance is required, 
 unless it is received after business hours, for the reason 
 that only by acceptance can the drawee be bound, and be- 
 cause the owner of the bill obtains the right of an im- 
 mediate action against the drawer and indorsers upon 
 the failure or refusal of the drawee to accept.^" (Sec. 151.) 
 It is its duty to obtain a general acceptance unless another 
 is authorized or assented to and, if that cannot be ob- 
 tained, it must treat the bill as dishonored. (Sec. 142.) 
 The place where the instrument is to be presented for 
 acceptance and the manner of making presentment are 
 described under. Section 145. 
 
 Upon the dishonor of a bill by non-acceptance the col- 
 lecting bank is obliged either to give notice of its dis- 
 honor or return the instrument to its customer in order 
 that he may do so, and if it chooses the latter course it 
 must return the instrument in time to allow that the no- 
 tice may be given in accordance with the provisions of 
 this Act.^^ These are to be found in Sections 89 to 118 of 
 Title I, comprising subdivision seven of this Act. If the 
 
 10. Exch. Bk. vs. Third Nat'l Bk., 112 U. S. 276, 291, 28 U. S. 
 (L. Ed.) 722. 
 
 11. See Notes in 34 Am. Dec. 61, 34 Am. Dee. 311, 77 A. S. R. 62L
 
 286 THE NEGOTIABLE INSTRUMENTS LAW 
 
 bill requires protest the collecting bank is obliged to de- 
 liver the instrument to a notary for that purpose. It must 
 know and be able to determine when protest is re- 
 quired and it will be liable to its customer if loss result 
 from its failure to perform this duty.^- A bill which is 
 dishonored by non-acceptance need not be presented for 
 payment (Section 151), unless it has been subsequently 
 accepted or has been accepted for honor. (Sec. 167.) 
 
 The degree of diligence which the bank is required to 
 exercise in the performance of its duties in respect to the 
 presentment of a bill for acceptance has been described 
 as that degree which a prudent man, careful of his own 
 affairs, would exercise to protect his own interests. The 
 provisions of the Act which govern the manner of making 
 presentment for acceptance are to be found in Sees. 143 
 to 151 inclusive, Subdivision 3 of Title IT. 
 Presentment of The requirements of the Uniform Nego- 
 piymenr*^ ^^'^ tiable Instruments Law upon the subject 
 of presentment for payment will be found in Sections 70 
 to 88 inclusive comprising Subdivision 6 of Title I. 
 
 It is the custom of most banks to give notice a few days 
 before the maturity of the instruments which they hold 
 for collection, informing the debtor by this means that 
 the instrument is about to fall due and requesting him 
 to call at the bank and pay it at the proper time. While 
 in many places this custom is ver}^ general, an omission 
 to observe it is not regarded as prejudicial to the rights 
 of any of the parties to the instrument, none of whom can, 
 as a matter of right, require the bank to give this notice. 
 But when notice of the approaching maturity of the in- 
 strument has been given it does not dispense with any of 
 the requirements of the Act upon the subject of present- 
 
 12. Georgia Nat '1 Bk. vs. Henderson, 46 Ga. 487, 12 Am. Rep. 590. 
 Louisville BankV Co. vs. Aslier, 112 Ky. 138, 65 S. W. 133, 
 99 Am. St. Rep. 283.
 
 RELATING TO COLLECTIONS 287 
 
 meiit for paymoiit, or dispense witli the necessity of mak- 
 ing deinand and the duty to give notice of its dishonor if 
 the instrument is not then paid. The presentment for 
 payment must be made notwithstanding the notice of its 
 approaching maturity and notwithstanding even that the 
 collecting bank may have knowledge that the instrument 
 will not be paid when presented. Its effect, however, 
 sometimes produces a waiver of presentment, demand 
 and notice of dishonor and the waiver and the manner 
 in which it is accomplished and under what circum- 
 stances it will be implied are discussed in Sections f^2, 
 104, 110 and 111 of Title I. 
 
 The presentment must be made even if the party pri- 
 marily liable upon the instrument is dead. In that case 
 the instrument must be presented for payment to his 
 personal representative, (Sec. 76.) 
 
 When two or more persons primarily liable upon the 
 instrument are partners, presentment may be made to 
 either of them, even if there has been a dissolution of the 
 firm, and where several persons who are not partners 
 are primarily liable upon the instrument, presentment 
 must be made to them all. (Sees. 77 and 78, Title I.) The 
 circumstances under which presentment for payment is 
 not required in order to charge the drawer or indorser 
 will be found in Sections 79 and 80 of the first Title. 
 
 While the presentment for payment must be made 
 upon the day the instrviment falls due if it is a time in- 
 Time when strument, or within a reasonable time 
 plyment must^be after its issue if a note or check, or last 
 made. negotiation if a bill, and it is payable on 
 demand (Sec. 71), any delay in making presentment is 
 excused when the delay is caused by circumstances be- 
 yond the control of the holder and not due to his negli- 
 gence, misconduct or failure to perform a duty (Sec.
 
 288 THE NEGOTIABLE INSTRUMENTS LAW 
 
 81). What will be taken into account to determine 
 whether or not the instrument has been presented within 
 a reasonable time is discussed under Sec. 71 and other 
 sections there referred to. Presentment for payment if 
 dispensed with altogether under the circumstances men- 
 tioned in Section 82. Special provision is made in the 
 act for the presentment of instruments falling due on a 
 Saturday or a Sunday (Sec. 85), and another section 
 (Sec. 192) provides that when the day or the last day for 
 doing any act which is required or permitted by the law 
 to be done falls upon Sunday or a holiday, it may be 
 done on the next succeeding business day. 
 
 If the instrument is paid upon presentment the collect- 
 ing bank must remit the proceeds to the person from 
 Duty of the whom it received the bill or note for coL 
 ^re^entment lection unless it appear that another is 
 
 their true owner.^^ The remittance must be made in 
 accordance with any special instructions which it may 
 have received from its customer or, in the absence of 
 these, in accordance with its general custom,^^ or the cus- 
 tomer must be notified of the payment of the instru- 
 ment and the proceeds lield subject to his order. If the 
 collection is made for the account of a depositor and 
 the proceeds are credited to his general account that will 
 be a fulfillment of the bank's duty to remit, unless it is 
 done contrary to his instructions. This procedure is 
 simple enough upon payment of the instrument but upon 
 its dishonor the collecting bank exposes itself to liability 
 for loss unless it strictly observes the requirements of 
 the Negotiable Instruments Law in regard to the pro- 
 cedure then prescribed. 
 
 13. Bank vs. Friar. 88 Mo. App. 39. 
 
 Union Bk. vs. Johnson, 9 Gill & J. (Md.) 29 1. 
 
 14. Harvesting Mach. Co. vs. Yankton Svg. Bk., 15 S. D. 196, 
 
 87 N. W. 974.
 
 RELATING TO COLLECTIONS 289 
 
 Any negotiable instrument which has been dishonored 
 by non-acceptance or non-payment may be protested upon 
 either dishonor, but protest is not required 
 protest. except in the case of a foreign l)ill of ex- 
 
 change. (Sec. 118.) If the dishonored instrument is a for- 
 eign bill (Sec. 129), or a bill which has been accepted for 
 honor, or one which is presented to the referee in case of 
 need (Sec. 161), it must be protested (Sees. 152 and 167). 
 The place and manner of protest, by whom it is to be made 
 arid the formalities to be observed in making it, are pre- 
 scribed in Sections 152 to 160, inclusive, of the Act. Yon 
 will observe from Section 152 that if any of the require- 
 ments of the Act in that regard are omitted the bill will 
 not have been 'Muly protested" and the drawer and in- 
 dorsers will be discharged. If this should occur 
 through the negligence of the bank it will be liable to its 
 customer.^ "^ The subject is explained generally in Sub- 
 division 4 of Title II. 
 
 When protest is made, and even if it is not required, 
 it is necessary that notice of dishonor be given to all 
 Duty to give parties whom the holder desires to 
 dishonor. charge. A collecting bank, however, be- 
 
 ing the agent of the holder, may avail itself of the pro- 
 vision of Section 94 of the Act and give the notice to its 
 principal alone, and this it usually does. If a different 
 agreement requires it, or if the collecting bank accepts 
 the instrument for collection under circumstances from 
 which a duty to notify all secondary parties can be rea- 
 sonably inferred, it will be obliged to give the notice of 
 dishonor to every party and will obligate itself to its cus- 
 tomer for any loss he may sustain by its failure to do 
 
 15. Georgia Nat '1 Bk. vs. Henderson, 46 Ga. 487, 12 Am. Rep. '/90.
 
 290 THE NEGOTIABLE INSTRUMENTS LAW 
 
 so.^" The provisions of the Act which describe the man- 
 ner in which it must be done and determine when and to 
 w4iom the notice must be given will be found in Sub- 
 division 7 of Title I, in sections numbered from 89 to 118, 
 inclusive. If the instrument has been forwarded for 
 collection through its sub-agents l)y the bank of first de- 
 posit, each sub-agent may give the notice to his immediate 
 transferer within the time fixed in Section 94 or he may 
 give it to the parties generally. 
 
 If the customer actually knows of the dishonor of the 
 instrument and the formal notice of dishonor to other 
 parties is not required to be given, by the bank, the cus- 
 tomer must himself proceed at once to notify all those 
 to whom he looks for payment (Sec. 90). He must not 
 wait until the dishonored instrument is returned to him, 
 at least he ought not to delay beyond the time allowed 
 by Sections 103 and 104, which fix the time within which 
 he is required to give the notice to antecedent parties. 
 The effect of the notice, to and by whom it must be given 
 and wiiat parties are benefited by it are discussed in the 
 sections above referred to. 
 
 When the collection is to be made at a place other 
 than the place where the collecting bank is located, it is 
 Selection of sub- its duty to forward the instrument on the 
 
 care required. ^^J ^^ ^^^^ ^^y ^fter its receipt to a sub- 
 agent. It must use due care in the selection of its sub- 
 agent and must not intrust any of its customers' business 
 to one to whom it would not intrust business of its own.^'^ 
 
 16. Auten vs. Manistee Nt. Bk., 67 Ark. 243, 54 S. W. 337. 47 
 
 L. R. A. 329. 
 Louisville Bksj. Co. vs. Asher, 112 Kv. 138, 65 S. W. 133, 
 99 A. S. R. 283. 
 
 17. Brown vs. Peoples Svc?s. Bk., 59 Fla. 163, 52 S. 719, 52 L. R. 
 
 A. N. S. 608. 
 Wilson vs. Carlinville Nat 'I Bk., 187 111. 222, 58 N. E. 250, 
 
 52 L. R. A. 632. 
 Irwin vs. Reeves Pullev Co.. 20 Ind. A. 101, 48 N. E. 601, 
 
 50 N. E. 317.
 
 RELATING TO COLLECTIONS 291 
 
 If it lias received any specific instructions in regard to 
 the collection of the instrument or the manner in which 
 its endeavor to collect it is to be reported to its customer, 
 it must forward these also.^^ Should its sub-agent neg- 
 lect to acknowledge the receipt of the instrument within 
 a reasonable time after it was sent, the sending bank 
 must make inquiry to learn whether or not it has been re- 
 ceived. Any neglect to do so from which a loss results 
 will impose a liability upon the collecting bank to the 
 extent of the loss sustained.^'* 
 
 If the sub-agent selected to make the collection is the 
 bank ujion wiiich the instrument is drawn, or is in any 
 way interested in the instrument adversely to the in- 
 terest of its owner, the collecting bank will not be deemed 
 to have used due care in its selection if the sub-agent 
 default in the collection of the instrument or the remit- 
 tance of the proceeds, and it will be liable to its customer 
 for his loss.^*^ 
 
 The Act, in Title III, defines a check to be a bill of 
 exchange drawn on a bank and if its presentment for 
 The coUection of pajment is delayed an unreasonable 
 checks. length of time after its issue Section 186 
 
 provides that the drawer will be released from liability 
 to the extent of any loss he may thereby suffer by rea- 
 son of the delay. Elsewhere the act provides that a bill 
 of exchange payable on demand must be presented for 
 payment Mdthin a reasonable time after its last negotia- 
 tion (Section 7). You will observe then that checks re- 
 
 18. Borap vs. Nininger, 5 Minn. 523. 
 
 19. Shipsey vs. Bowery Nat'l Bk., 59 N. Y. 485. 
 Second Nat'l Bk. vs. Merch. Nat'l Bk., Ill Ky. 930. 
 
 20. First Nafl Bk. vs. Fourth Nat'l Bk., 6 C. C. A. 183, 56 Fed. 
 
 967. 
 Planters' Mercantile Co. vs. Armour Pko-. Co., 109 Miss. 470, 
 
 69 So. 293. 
 Am. Exclig. Bk. vs. Metropolitan Bk., 71 Mo. App. 451.
 
 292 THE NEGOTIABLE INSTRUMENTS LAW 
 
 quire more prompt presentment than do bills. The Uni- 
 form Negotiable Instruments Law recognizes in this 
 provision a universal banking custom to handle checks 
 with the utmost dispatch. This provision applies, of 
 course, to the presentment of the check by the holder at 
 the counter of the bank upon which it is drawn as well 
 as when these instruments are collected through other 
 banks, but their collection being peculiarly a function of 
 banks, perhaps it will be interesting to know how checks 
 and the present wonderfully efficient methods of effecting 
 their collection have been evolved from the primitive ne- 
 cessities of the early bankers. 
 
 Early history of It appears that very early in the history 
 banking and the ^^ banking the issue of chocks against 
 evolution of tne ^ i j. • tr' 
 
 check. deposits was unknown, at least m v^ng- 
 
 land, from whence so many of our banking customs have 
 been derived. It w^as the practice then of the goldsmiths, 
 who were the bankers in those early days, to receive de- 
 posits of money from their customers and they combined 
 its care with their business of manufacturing gold and 
 silver plate. As an evidence of their indebtedness to 
 their customers for the deposits made with them they 
 gave them certificates against which their customers were 
 permitted to draw. When the customer wished to draw a 
 part of his deposit he was obliged to present his certificate 
 to his banker so that the amount of his withdrawal might 
 be credited upon it. This becoming inconvenient as men 
 used their banking credits in their business, an improve- 
 ment was evolved by the issue of several receipts in con- 
 venient amounts, instead of a single certificate for the 
 whole deposit. Later these were followed, in about the 
 year 1729, by the issue of printed bank notes which in 
 their wording, according to the Hon. Secretary of the 
 London Bankers Clearing House, Mr. Robert Martin
 
 RELATING TO COLLECTIONS 298 
 
 Holland, resembled the notes of the Bank of England of 
 today. Not yet fully meeting the convenient requirements 
 of their customers the bankers began, a few years later, 
 to issue printed checks to be filled in by the customer 
 himself. 
 
 As the use of checks grew and each bank- 
 Early method of ^ _, ^ . If. n -1 • • -P 
 
 "clearing" and er found himself daily m possession ot 
 settling balances, checks drawn upon other banks which had 
 been left with him for his customers' credit, he was 
 obliged to send out his clerks to collect them at the banks 
 upon which they were drawn. This method of collection 
 being attended with considerable difficulty and involving 
 delay and the danger of loss and robbery, the next devel- 
 opment appears to have been an endeavor to facilitate 
 their collection by sending the ''walk clerks," as the col- 
 lectors were called, to meet at one bank one week and an- 
 other the next to effect exchanges. Again this method 
 proving inconvenient by reason of the increasing number 
 of London bankers, these "walk clerks" formed the prac- 
 tice of meeting at lunch time at the "Five Bells," a public 
 house in Dove Court, Lomlmrd street, near the site of the 
 present London Clearing House. There in the public 
 room, each day after lunch, the exchange of checks was 
 made between the clerks from the different banks and the 
 balances due each were paid in cash. The volume of checks 
 handled at these meetings and the large amount of cash 
 often required to settle the balances, caused the bankers 
 to be alarmed at the attendant risks and they rented a 
 room near this place in which their clerks might meet 
 and make their exchanges and settlements with greater 
 safety. 
 
 From time to time convenient regulations were pro- 
 vided to enable the clearing clerks to complete their ex- 
 changes with dispatch and later the use of cash in set-
 
 294 THE NEGOTIABLE INSTRUMENTS LAW 
 
 tlements was dispensed with altogether, gains or losses 
 being paid by drafts upon the Bank of England at which 
 all bankers then found it convenient to keep balances 
 for that purpose. In this manner was evolved the won- 
 derful organizations of the Clearing Houses of today by 
 means of which, with instant dispatch, millions of dol- 
 lars in the aggregate of checks are daily reduced to com- 
 paratively small ba'lances and immediately paid. 
 
 A description of the methods employed in making the 
 exchanges and settlements at the Clearing Houses would 
 serve no useful purpose here, these being voluntary as- 
 sociations of bankers whose operations are entirely 
 within the control of their members. Compliance with 
 their reasonable regulations for the collection of instru- 
 ments which pass through their control will, however, 
 effectually relieve the collecting bank from any imputa- 
 tion of negligence in effecting its collections, although no 
 usage of the Clearing Houses will dispense with the per- 
 formance by the collecting bank of those duties imposed 
 upon it by law. Being voluntary associations. Clearing 
 Houses control the qualifications of their members and 
 frequently restrict their number or limit their member- 
 ship to National Banks to the exclusion of State Banks 
 and Trust Companies, or private bankers. Non-member 
 banks doing a deposit business are then required to clear 
 their checks through member banks if they would avoid 
 the necessity of presenting them at the counters of the 
 banks upon which they are drawn. They thereby assume 
 a risk not attaching to member banks if checks deposited 
 with them are unduly delayed in presentment because 
 they see fit to present them for payment through clearing 
 banks and, in the absence of permission or assent by 
 their customer to this course of dealing, they are not re- 
 lieved of liability to him if loss is sustained which is at-
 
 KELATlN(i TO COLLECTIONH 29.-) 
 
 tributable to the delay that may be occasioned by thu 
 method of presentment. 
 
 Most banks fix a time in the day's business ]M\)i-i- 
 which checks must be deposited if they are to be col- 
 lected on the day of deposit. It is usually at or about 
 noon and deposits are all, by custom, received and cred- 
 ited to their customers' accounts subject to their pay- 
 ment by the banks upon which the checks are drawn after 
 presentment through the clearing house. Ordinarily a 
 notice to that effect is printed in the customers' deposit 
 book. All checks received before the clearing hour are to 
 be presented on the day of their deposit and a failure to 
 do so might make the bank liable for any loss due to its 
 negligence. (Sec. 186.) Deposits which are received sub- 
 sequent to the clearing hour are, however, properly held 
 until the next day's clearing unless they are received 
 with special instructions re(iuiring their immediate pre- 
 sentment at the counter of the drawee bank or unless, in 
 some special cases, as when the bank receiving the de- 
 posit has knowledge of the impending insolvency of the 
 drawer of the check or the bank upon which it is drawn, 
 the risk of holding it until the next day, would mate- 
 rially increase, particularly if it can be presented at 
 once without great inconvenience.^^ The depositor may 
 give express instructions as to the manner in which he 
 desires his check or other instrument collected and if the 
 deposit is accepted subject to his instructions, or if it 
 is the custom of the bank to handle the deposits of cer- 
 tain of its customers in particular ways, no deviation will 
 be excused notwithstanding its general usage. ^^ 
 
 21. Pinknev vs. Kanawlia Valtev Bk.. 68 W. Va. 254, 9 S. E. 1012, 
 
 Ann. Cas. 1912 B. 115, .32 L. R. A. N. S. 987. 
 First Nat'l Bk. vs. Fourth Nat"l Bk., 77 N. Y. 320, 324. 
 
 22. Second Nat'l Bk. vs. Bank of Alma, 99 Ark. 386, 396, 136 
 
 S. W. 472. 
 Finch vs. Karste, 97 Mich. 21, 56 N. W. 123. 
 Lord vs. Hinsrham Nat'l Bk.. 186 Mass. 161, 71 N. E. 312.
 
 296 THE NEGOTIABLE INSTRUMENTS LAW 
 
 The medium of ^^^^ collecting bank is not authorized to 
 payment. accept in payment of the collection any 
 
 other means of payment than money and when it does ac- 
 cept the check of the debtor or the paying or remitting 
 bank, it does so at its o^^^l risk, in the absence of special 
 authority from its depositor. If it accepts a check or ex- 
 change in pa\mient which should prove uncollectible and 
 its failure to olitain proper payment operate to prejudice 
 the owner of the instrument entrusted to it for collection, 
 the bank will nevertheless be liable to him.^^ If it dis- 
 cover the imposition and recover the instrument for 
 which the worthless check or exchange was given in time 
 to take the necessary steps to preserve the liability of 
 the secondary parties to the owner of the instrument 
 no liability will attach to the collecting bank, for, 
 in that event, its mistake will have proven to be quite 
 harmless. This would have to be done in the case of a 
 foreign bill requiring protest, on the very day of its ma- 
 turity (Sec. 155) and in the case of an ordinary bill or a 
 note before the close of the day after its dishonor. 
 (Sees. 103, 104.) 
 
 Ha\dng accomplished the collection of the mstru- 
 ment it is the bank's duty to remit the proceeds to its 
 customer or dispose of them in the manner I have al- 
 ready described, and it will not be required to concern it- 
 self over any question about the title to the instrument 
 or its proceeds, having fully performed its duty when it 
 pays over the proceeds to its principal.^^ 
 
 I stated at the beginning of this brief exposition of 
 the principal rules whi ch govern the duties and liabilities 
 
 "IT Hazlett vs. Connel Bk., 132 Pa. St. 118 19 AtL 55 
 
 Bank vs. Cumminos, 89 Tenn. 609, 620, 18 S. W. 115. 
 Bank vs. Union Trust Co., 149 111. 34.3. 
 94 Mononealiela Nat'l Bk. vs. First Nat'l Bk., 226 Pa. St. 270, 
 976 75 Atl. 359. 26 L. R. A. N. S. 1098 and note.
 
 RELATING TO COLLECTIONS 297 
 
 of banks and agents in the collection of 
 Relation of 
 
 depositors to commercial paper that the bank which re- 
 sub-agents, ceives the instrument for collection from 
 its customer becomes his agent in its collection. If the 
 collection is effected by the employment by that bank of 
 sub-agents, it must sometimes be determined what rela- 
 tion the sub-agents bear to the owner of the instrument. 
 There appears to be conflict of authority upon this sub- 
 ject based upon conflicting views of the liability of the 
 first bank or any bank in the series through which the col- 
 lection is made, for the acts of each subsequent sub-agent. 
 Some courts hold that each bank is liable only for its own 
 acts or omissions in the performance of its particular 
 duty in the collection and where this interpretation pre- 
 vails, each bank in the series is held to be directly liable to 
 the owner of the instrument.^^ Others hold that all are 
 sub-agents of the first bank and each of the one from 
 which it received the instrument, and these cases hold 
 that the bank which receives the instrument in the first 
 instance, from its customer, is liable to him for the acts 
 or omissions of its sub-agents, but they do not deprive 
 the owner of the instrument of his right of action against 
 the sub-agents, if he elects to pursue it against them.^^ 
 
 Upon the collection of the instrument the agency re- 
 lation ceases and the collecting bank becomes the simple 
 
 25. Wilson vs. Carlinville Natl Bk., 187 111. 222. 58 N. E. 250, 
 
 52 L. R. A. 632. 
 First Natl Bk. Chicago vs. Bank of Whittier, 221 111. 319. 
 Sec. Natl Bk. vs. Merch. Natl Bk., 11 Ky. 930, 65 S. W. 4, 
 
 98 A. S. R. 439. 
 Columbia See. Natl Bk. vs. Cummin^s, 89 Tenn. 609, 18 S. 
 
 W. 115, 24 A. S. R. 618 and note. " 
 
 26. Exchg. Bk. of Pitts, vs. Third Natl Bk. of N. Y., 112 U. S. 276. 
 
 Bailie vs. Augusta Svgs. Bk., 95 Ga. 277, 21 S. E. 717. 
 
 St. Nicholas Bk. vs. Farmer's Natl Bk., 128 N. Y., 26, 27 N. 
 E. 849.
 
 298 THE NEGOTIABLE INSTRUMENTS LAW 
 
 contract debtor of its customer,^'^ unless the collection 
 was undertaken under an agreement by the terms of 
 which the proceeds are to be otherwise held, when, of 
 course, the proceeds will be held under the terms of the 
 trust agreement. 
 
 27. Commercial Bk. of Penn. vs. Armstroiii^. 148 U. S. 50. 13 S. 
 Ct. 533. 
 Nor. Car. Corp. Comm. vs. Merch. & Farmer's Bk., 137 N, C. 
 697, 50 S. E. 308, 2 Ann. Cas. 537.
 
 §190,191 GENERAL PROVISIONS 299 
 
 TITLE IV. 
 
 General Provisions. 
 
 Section 
 
 193 Reasonable time; wliat con- 
 stitutes. 
 
 194 Time, how computed. 
 
 195 Api)lication of Act. 
 1!)() Law M e r c li a n t ; when 
 
 srovems. 
 
 Section 
 
 190 Title of the Act. 
 
 191 Definition and meaning of 
 
 terms. 
 
 192 Persons "primarily liable 
 
 on instiTiment ' ' ; second- 
 ary parties. 
 
 Title of the ''Sec. 190. This Act shall be known as 
 
 Act. XHE Negotiable Instruments Law." 
 
 The title of the Act is omitted in many of the .States 
 and is of importance only for citation and reference. The 
 Act is very generally known as the ''Uniform Negotiable 
 Instruments Law." 
 
 Definition and "Sec. 191. In this Act, unless the con- 
 meaning of text otherwise requires: 
 
 *®"^* 'Acceptance' means an acceptance 
 
 completed by deli\'ery or notification. 
 
 'Action' includes counter-claim and set-off. 
 
 'Bank' includes any person or association of per- 
 sons carrying on the business of banking whether in- 
 corporated OR not. 
 
 'Bearer' means the person in possession of a bill 
 OR note which is payable to bearer. 
 
 'Bill' means a biij:. of exchange, and 'note' means 
 negotiable promissory note. 
 
 'Delivery' means transfer of possession, actual or 
 constructive, from one person to another. 
 
 'Holder' means the payee or indorsee of a bill or 
 note, who is in possession of it, or the bearer thereof. 
 
 'Indorsement' means an indorsement completed by 
 delivery. 
 
 'Instrument' means negotiable instrument.
 
 300 THE NEGOTIABLE INSTRUMENTS LAW § 192 
 
 'Issue' means the first delivery of the instrument, 
 complete in form, to a person who takes it as a holder. 
 
 'Person' includes a body of persons, whether in- 
 corporated OR not. 
 
 'Value' means valuable consideration. 
 
 'Written' includes printed, and 'writing' includes 
 print." 
 
 These definitions seem sufficiently complete to emable 
 any person readily to understand them without further 
 explanation, in view of what has already been said in 
 other places where the terms defined have been em- 
 ployed. 
 
 In determining- the application of this law, the proper 
 course to pursue is first to examine its language and in- 
 ([uire what is its natural meaning. Reference to the law 
 as it previously stood is unnecessary when the language 
 of the Act is itself plain and explicit and fully covers any 
 situation to be inquired into. 
 
 Lord Herchell, commenting judicially on the English 
 Act, has said that it is the duty of courts to give to 
 its language its plain ordinary meaning, uninfluenced by 
 a consideration of how the law previously stood, and our 
 own Act being like the English Act an attempt to em- 
 body in code form all the law upon the subject of nego- 
 tiable instruments, must be interpreted in the same man- 
 ner. It is the law\ Before its simple, plainly expressed 
 terms, all conflicting judicial interpretation of the law 
 merchant cease to be authority. 
 
 Person "Sec 192. ''The person 'primarily' lia- 
 
 primarily liable ble on an instrument is the person who 
 on instrument. gy rpj^j, terms of the instrument is ab- 
 "Kansas. solutely required to pay the same. All 
 
 other parties are 'secondarily' liable." 
 
 It is not difficult to determine who, by the terms of 
 an instrument, is required absolutely to pa}^ it. Upon a 
 promissory note, for example, every person who signs
 
 §193 GENERAL PROVISIONS 301 
 
 it upon its face would appear to l)e the person who pri- 
 marily promises to pay it, unless he indicates by ap- 
 propriate words in writing upon the instrument that 
 he does not undertake to \jay it in the capacity of maker. 
 The acceptor of a bill of exchange is the person appear- 
 ing upon the face of an accex)ted bill to be the one pri- 
 marily and absolutely required to pay it. But when one 
 draws a bill upon himself, the drawer is then the person 
 absolutely obliged to pay even when unaccepted, since 
 by Section 130 the holder may treat such a bill as the 
 promissory note of the drawer. 
 
 Reasonable time: "Sec. 193. In deteemining what is a 
 what constitutes 'reasonable time' or an 'unreasonable 
 "So. Dakota. r^jj^^j,' regard is to be had to the nature 
 
 OF THE INSTRUMENT, THE USAGE OF TRADE OR BUSINESS (iF 
 any) with respect to such INSTRUMENTS, AND THE FACTS 
 OF THE PARTICULAR CASE."" 
 
 Here is a provision for the observance of which it is 
 impossible to state a general rule. What would be a rea- 
 sonable or an unreasonable time in respect to one instru- 
 ment might not be so regarded in respect to another. 
 It seems that the intention of the parties is not at all 
 taken into account, only the nature of the instrument and 
 the usage of a trade or business and the facts of a par- 
 ticular case, unless the last clause of the section is to be 
 regarded as so comprehensive that the intention of the 
 parties in regard to the time the instrument may stop in 
 the course of its negotiation, or may be delayed in its 
 presentation, shall be taken into account as part of the 
 facts of the particular case. Under Sections 7, 53, 71 and 
 144 much has already been said on this subject and the 
 effect of a failure to negotiate or present an instrument 
 for acceptance or for payment within a reasonable time, 
 has already been pointed out. See these sections.
 
 302 THE NEGOTIABLE INSTRUMENTS LAW §194,195 
 
 What usage of a trade or business will excuse prompt 
 presentment of the instrument is also difficult if not im- 
 possible to see. One of the elements of a valid custom, 
 one absolutely necessary to give it the force of law, is 
 that it must be reasonable. If a custom which sanctions 
 long delay in the presentment or negotiation of negotiable 
 instruments is relied on to aid in determining whether or 
 not, in contemplation of the provisions and purposes of 
 this Act, the delay is unreasonable, it is very much doubt- 
 ed that such a custom would excuse the delay, and I have 
 little hesitation in saying that it would not. 
 
 Time: how "Sec. 194. Where the day, or the last 
 
 computed. day, for doing any act herein required 
 
 OR permitted to be done falls on SUNDAY, OR ON A HOLI- 
 DAY, THE ACT MAY BE DONE ON THE NEXT SUCCEEDING SECU- 
 LAR OR BUSINESS DAY.'' 
 
 Section 85 of this Act contains the pro\asion that an in- 
 strument falling due on Sunday or a holiday shall be pre- 
 sented for payment on the next succeeding business day. 
 By this section the same provision is applied to any act 
 which the law requires or permits to be done. Broadly 
 then, when the day for doing any act in connection with 
 the acceptance, presentment, payment, protest, or giving 
 notice of the dishonor of a negotiable instrument falls 
 upon a Sunday or a holiday, it may be done upon the next 
 succeeding business day and, to be effective, it must be so 
 done. ''Secular day" means worldly or business day as 
 distinguished from that day of each week universally 
 given over to religious worship and which, in this coun- 
 try, is Sunday. 
 Application of "^^C- 195. "The provisions of this Act 
 
 Act, do not apply to NEGOTIABLE INSTRUMENTS 
 
 oArizona. made and delivered prior to the taking 
 
 EFFECT hereof." 
 
 Negotiable instruments executed before the passage 
 of this Act are not governed by its provisions. The
 
 §]f)(i GENERAL PH()\'ISl()XS :}0;^. 
 
 rights and liabilities of persons who became parties to an 
 instrument made and delivered before the passage of 
 this Act will be enforced and determined by the law as it 
 was upon the date when the instrument was made and de- 
 livered and not by this Act. The duties and rights of 
 those who become parties to the instrument by indorse- 
 ment after the date when the Act has taken effect are 
 likewise governed by the law in effect at the date when 
 the instrument was made.^ 
 
 Law Merchant: "Sec. 196. In any case not provided for 
 when governs. ix the Act, the rules of the Law Mer- 
 chant SHALL govern." 
 
 Therefore, in any case which is provided for in this 
 Act, the rules of the Law Merchant, in conflict with its 
 provisions, do not apply. In tiie introduction to these 
 papers a brief history of the Law Merchant and of the 
 first recorded use of bills of exchange and promissory 
 notes and a short history of the early codification of the 
 rules of the Law Merchant in respect to them were given. 
 These rules, being embodied in a multitude of judicial 
 decisions, all of which were well kno^v^l to the Conference 
 at which this Act was prepared, it can with safety be said 
 that the negotiable instruments code contains provision 
 for practically every case which may arise in the multi- 
 tude of our business transactions involving the use and 
 interpretation of negotiable instniments. In any case, 
 however, for which no provision is made in the Act the 
 authority upon which our disputes are to be settled nmst 
 still be sought and found in that vast collection of judi- 
 cial decisions upon the "principles of equity and usages 
 of trade, which general convenience and a common sense 
 of justice have established to regiilate the dealings of 
 merchants and mariners in all the commercial countries 
 of the civilized world" — the Law Merchant. 
 
 1. Mackintosh vs. Gibbs, 81 N. J. L. 577, 580. 
 
 Gate City Nafl Bk. vs. Schmidt, 168 Mo. App. 153. 156.
 
 304 QUASI-NEGOTIABLE INSTRUMENTS 
 
 To the class of instruments for the government of 
 which we must yet look to a great extent to the uncodi- 
 fied rules of the Law Merchant and to other statutes, al- 
 though they possess some of the qualities of negotiability, 
 belong, bills of lading, warehouse receipts and certifi- 
 cates of stock. These are called, for the lack of a bet- 
 ter designation, ''Quasi-Negotiable," that is, they are 
 negotiable in a certain sense and to a certain degree and 
 I shall next endeavor to explain the most important prin- 
 ciples of the laws by which they are governed. 
 
 Quasi-negotiable Instruments. 
 
 In the following treatments of the Uniform Bills of 
 Lading Act and the Uniform AVarehouse Receipts Act I 
 will use, as freely as possible, the language of these Acts 
 themselves. References will be made' to sections of these 
 Acts but the Acts themselves will not be reprinted in this 
 book. To do so would be mere repetition for the reason 
 just stated. 
 
 The law^s which govern those instruments which have 
 to some extent the quality of negotiability are not estab- 
 lished with such uniformity as is the law on commercial 
 paper but there is every indication that acts prepared by 
 the conference of the Commissioners on Uniformity of 
 State Law^s will gradually obtain the approval of all or 
 a very substantial number of the States and that they 
 will is, of course, greatly to be desired. Bills of Lading, 
 Warehouse Receipts and Certificates of Stock are closely 
 allied in modern commercial use to promissory notes and 
 bills of exchange. The first two represent the right of
 
 BILLS OF LADING 305 
 
 property and possession in goods, the last an undivided 
 interest in the assets and activities of corporations and 
 the right to receive a proportionate part of their earn- 
 ings and to participate in a distribution of their assets. 
 Each has been accorded by mercantile custom this char- 
 acteristic of negotiability; that after negotiation for 
 value to a holder in due course, without notice, it is free 
 from such defenses as are involved in the title of prior 
 owners. It is not possible, however, to state any general 
 rule or theory of the law in respect to all of these in- 
 struments for each has an origin and nature of its own 
 different from the others and from other kinds of secur- 
 ities. 
 
 Bills of Lading. 
 (The references are to sections of the Uniform Bills of 
 
 Lading Act.) 
 
 Bills of Lading, which are transportation receipts for 
 goods shipped, are issued by railroads or other com- 
 Negotiable bills ^on carriers of freight, and contain an 
 of lading. agreement to deliver the goods described 
 
 to the shipper or consignee or to his order. They are a 
 symbol of the goods which they represent and while the 
 goods yet repose in the custody of the carrier the bill of 
 lading may, as the evidence of their ownership and exis- 
 tence, be the subject of barter and sale. 
 
 In form a bill of lading is required to embody within 
 its written or printed terms the date of its issue, the 
 What must name of the person from whom and the 
 
 '^'StraTghtBill"; pl^ce where the goods have been received, 
 "Order Bill." the place to which the goods are to be 
 transported and a statement whether the goods received 
 will be delivered to a specified person (called a "Straight
 
 mi QUASI-NEGOTIABLE INSTRUMENTS 
 
 Bill), or to his order (known as an "Order Bill"). 
 (Sec. 1.) 
 
 It must also contain a description of the goods, or the 
 packages containing them, and be signed by the carrier or 
 its agent. (Sec. 1.) The carrier may insert in the bill 
 any other terms or conditions consistent with its real 
 agreement with the shipper provided they shall not be 
 contrary to law or public policy, and shall in no wise im- 
 pair its obligation to exercise that degree of care in the 
 transportation of the goods which a reasonably careful 
 man would exercise in regard to similar goods of his 
 own. (Sec. 2.) They have some of the qualities of ne- 
 gotiable instruments. Their principal resemblance to 
 negotiable commercial paper is in the fact that when a 
 bill of lading is issued in which it is stated that the goods 
 it represents are consigned or destined to the order of 
 the person named in the bill, it is transferable by the con- 
 signee or his transferee and any subsequent holder ac- 
 quires the right to the delivery of the goods and to bring 
 an action upon the bill in his own name. 
 
 Upon the liability of the carrier and the rights of the 
 
 holder of a negotiable bill of lading there is extreme 
 
 conflict of opinion, the courts of many 
 
 of States holding and persistently announc- 
 
 ^^^s- ing views directly opposed to those of the 
 
 courts of other States. For the sake of business con- 
 venience and to make uniform the laws of all the States a 
 Bills of Lading Act was prepared by the Conference of 
 Commissioners on the Uniformity of State Laws which 
 is now effective in the following States: Connecticut, 
 Idaho, Illinois, Iowa, Louisiana, Maine, Massachusetts, 
 Maryland, Michigan, Minnesota, Missouri, New Hamp- 
 shire, New^ Jersey, New York, Ohio, Pennsylvania, Rhode 
 Island, Vermont, Washington and Wisconsin.
 
 BILLS OF LADING 307 
 
 Radical changes in the laws of some States are effected 
 by the Act, particularly in regard to the liability of the 
 carrier when the issue of a bill of lading has been, pro- 
 cured without the delivery to the carrier of any or of all 
 of the goods which it describes, and the extent to which 
 it fixes the liability of the carrier to a holder of a bill 
 which has not been taken up and cancelled upon delivery 
 of the goods to the consignee. It will not be possible to 
 include a discussion of this feature of the Act and its ef- 
 fect within this article, it being intended merely to show 
 the nature of these documents and explain some of their 
 features of negotiability. 
 
 At the suggestion and upon the recommendation of 
 the Senate Committee on Interstate Commerce that it 
 be enacted, a bill to make applicable to interstate ship- 
 ments the provisions of the uniform Act prepared 
 by the Conference of the Commissioners on Uniform- 
 ity of State law^s was recently passed by the Congress 
 of the United States. The Act now governs bills of 
 lading issued for interstate shipments, and its speedy 
 adoption by all of the States will, in all probabil- 
 ity, be assured. Should the States which have not yet 
 embraced the Act continue to decline to do so, it would 
 appear, from hearings had before the Interstate Com- 
 merce Commission, the 99% of all commodities shipped 
 would nevertheless be carried upon bills of lading which 
 will l)e subject to the provisions of this Act. It would 
 seem reasonably proper then that this analysis of the law 
 upon the subject be confined to the consideration of the 
 Uniform Act. 
 
 Negotiable bills issued for the transportation of goods 
 to any place in the United States on the continent of 
 May not be North America, excepting Alaska, may 
 
 io'what'' '^*^' not, under the Uniform Act, be issued in 
 countries. sets. If they are the carrier issuing them
 
 308 QUASI-NEGOTIABLE INSTRUMENTS 
 
 will be liable, under that Act, for failure to deliver the 
 goods they describe to anyone who purchases a part of 
 the bill for value in good faith, even if the purchase be 
 made after the delivery of the goods by the carrier to a 
 holder of one of the other parts of the bill. (Sec. 5.) 
 
 The negotiation of the bill may be by special indorse- 
 ment to a specified person or by endorsement in blank. 
 
 Negotiable by (Sec. 18.) A special endorsement speci- 
 indorsement or ^^ j.i i? xi j. i 
 
 delivery. ^^^ ^"^^ name oi the person to whom or 
 
 to whose order the goods are to be transferred, while a 
 blank endorsement specifies no endorsee and under it 
 the goods are deliverable to the bearer of the bill. The 
 bill may also be transferred by delivery when accom- 
 panied by an express or implied agreement to transfer 
 the title to the goods which it represents. (Sec. 29.) 
 The indorsement of the bill does not make the indorser 
 liable for any failure on the part of the carrier and pre- 
 vious indorsers to fulfill their respective obligations. 
 (Sec. 35.) 
 
 But no bill of lading is negotiable unless it expressly 
 states that the goods it represents are destined or con- 
 ^. , .„ signed to the order of the specified per- 
 
 negotiable. son whom it names. And if the bill con- 
 
 tains words of negotiability, that is, if it states that the 
 goods are deliverable to the person named or his order, 
 it is held, upon the best authority, to be negotiable not- 
 withstanding any provision in the bill to the contrary. 
 (Sec. 4.) Its negotiable character is not affected by the 
 fact that it names a person who is to be notified of the 
 arrival of the goods and the fact that it names such a 
 person is not notice to a purchaser of the bill that he has 
 or may have any rights or equities in the goods which 
 it represents. (Sec. 8.)
 
 BILLS OF LADING 309 
 
 The carrier, m the absence of some kiwful excuse, is 
 obliged to deliver the goods described in the bill upon a 
 When carrier demand made either by the consignee or 
 goods^ *° '^'"''®' l^y the holder of the bill, if it has been 
 negotiated, upon his offer to satisfy the carrier's lawful 
 claims against the goods, to surrender the bill properly 
 indorsed and to sign an acknowledgment that the goods 
 have been delivered if requested to do so by the carrier. 
 (Sec. 10.) But a carrier is not obliged to deliver and not 
 .iustified in delivering the goods to an unpaid seller un- 
 less the bill is first surrendered for cancellation. (Sec. 
 10.) 
 
 The carrier is justified in delivering the goods rep- 
 resented by a negotiable bill to the person in whose pos- 
 Carrier liable session it is if by its terms they are de- 
 delivl^.''^^'^ liverable to him, or if he holds the bill un- 
 der a special indorsement by the consignee or an in- 
 dorsement in blank by him or by his mediate or imme- 
 diate indorsee, or it is transferable by delivery. (Sec. 
 11.) This is subject to the qualification, however, that 
 the carrier has not, prior to making actual delivery, been 
 requested ])y or on behalf of a person having a right of 
 property or possession in the goods to withhold such de- 
 livery, or had information at the time of delivery that 
 it w^as to a person not lawfully entitled to their posses- 
 sion. (Sec. 11.) Such a request must have been made 
 or such information given, to be effective, to an officer 
 or agent of the carrier whose actual or apparent duties 
 include the power to act upon it, and it must be made or 
 given in time to enable him to w^hom it is given to act 
 with reasonable diligence to stop delivery of the goods. 
 (Sec. 11.) But when a negotiable bill has been issued no 
 seller's lien or right of stoppage in transitu will affect 
 or defeat the rights of any purchaser for value in good
 
 310 QUASI-NEGOTIABLE INSTRUMENTS 
 
 faith to whom the bill has been negotiated, (Sec. 41.) 
 This is so even if the negotiation has been subsequent to 
 the notice to the carrier of the seller's claim to the goods, 
 or that he claims a lien upon them or claims the right 
 of stoppage in transitu. (Sec. 41.) 
 
 Must take up Upon delivery of the goods the carrier 
 
 and cancel bill, must take up and cancel the negotiable 
 bill and if he fails to do so he will be liable to any one 
 who in good faith purchases the bill for value, whether 
 the purchaser acquired title to the bill before or after 
 such delivery, and notwithstanding the fact that the goods 
 were delivered to the person entitled to their possession. 
 (Sec. 13.) 
 
 ,r» .• , J V -„ If the delivery is of part only of the 
 Partial delivery. j t- j 
 
 goods the carrier must either take up and 
 cancel the bill or plainly write upon it a statement that a 
 partial delivery has been made, describing the goods or 
 packages delivered or the part which still remain in its 
 possession. (Sec. 14.) If it fails to do so the carrier 
 will be liable for its failure to deliver all the goods speci- 
 fied in the bill to any one who in good faith and for value 
 purchases the Ijill, whether he accjuires title to it before 
 or after such partial delivery and notwithstanding the 
 delivery was made to the ]ierson entitled to their posses- 
 sion. (Sec. 14.) 
 
 ., . If the bill is altered or an erasure or 
 
 Alteration „ . . 
 
 of bill. addition is made in it after its issue with- 
 
 out the written authority of the carrier, or unless its 
 authority is noted on the bill, the alteration, erasure or 
 addition is void and the bill will be enforceable according 
 to its original effect. (Sec. 15.) 
 
 If a negotiable bill is lost or destroyed 
 
 the owner of the goods for which it was 
 
 issued can only obtain their delivery, without the carrier's
 
 BILLS OF LADING :ni 
 
 consent, by the aid of a competent court whose order 
 nnist re<iuire liim to indemnify the carrier or any person 
 injured by the delivery against liability or loss by reason 
 of the original bill remaining outstanding. (Sec. 16.) 
 Even upon such an order the carrier will not be relieved 
 of liability to a jjerson to whom the negotiable bill has 
 been negotiated for value without notice of the proceed- 
 ings or the delivery of the goods, but must respond to 
 him, relying for recourse upon its indemnity. 
 
 If more than one person claims title to 
 Interpleader. ^j^^^ goods or the carrier has notice that 
 
 some one other than the person in possession of the l)ill 
 of lading claims them, it may require all claimants to in- 
 ter])lead or may itself bring an action for this purpose. 
 (Sec. 19.) 
 
 ^. ,.,.. » The carrier will be liable to the holder 
 
 Liability oi 
 
 carrier when of a negotiable bill who has given value 
 
 Sf^llo™ for it. relying in good faith upon its de- 
 receipt of goods, scription of the goods which it represents, 
 correspond to ^^ ^^^^ extent of any damage he may suf- 
 description. fer by the non-receipt of all or part of 
 
 the goods or by their failure to correspond to their 
 description in the bill at the time of its issue, even if none 
 of the goods were delivered to the carrier. (Sec. 22.) 
 
 The carrier, however, will not be liable for the failure 
 to deliver goods of the kind and quantity described in 
 the bill of lading if they are described in the bill merely 
 by a statement of the marks or labels upon them, or upon 
 the packages in which they are contained. (Sec. 22.) 
 Nor will it be liable if the bill states that the goods are 
 said to be, or the packages are said to contain, goods of 
 a certain kind or quality, or in a certain condition, or if 
 it contains a statement that the condition of the goods 
 or contents of the packages are unknown to the carrier, 
 or words of like purport. (Sec. 22.)
 
 312 QUASI-NEGOTIABLE INSTRUMENTS 
 
 When the goods are loaded by the ship- 
 Exception when , . . X • J.1 1 -n i.1- 
 "shipper's load per the carrier may insert m the bill the 
 
 and count." words "Shipper's load and count," or 
 
 other words of like import, and, if this statement is true, 
 it will not then be liable for any damages resulting from 
 the improper loading or the misdescription of the goods 
 represented by the bill, or the holder's failure to receive 
 all that are described, unless there has been loss or dam- 
 age in transit for w^hich it would be responsible if due 
 to some negligence of its own. (Sec. 22.) 
 
 -T ^ . , ^ The carrier cannot be compelled to de- 
 
 Not rectuired to 
 
 deliver unless bill liver the goods described in the bill until 
 STor'cha^ges. ^^ ^s surrendered or the goods are im- 
 pounded by a court. (Sec. 23.) It has no lien upon the 
 goods except for freight, storage and other charges inci- 
 dental to the transmission of the very goods described 
 in the bill, unless the bill expressly states for what other 
 charges a lien may be claimed. (Sec. 25.) It is not 
 liable to the holder of the l)ill of lading for delivery after 
 the goods have been sold to satisfy its lien, or because 
 they have not been claimed, or are perishable, or hazard- 
 ous, even if the bill is negotiable. (Sec. 26.) 
 
 . Every person to whom a negotiable bill 
 
 the transferee. of lading has been negotiated acquires 
 whatever title to the goods his transferor had or could 
 convey and such title as the consignee and consignor had 
 or had power to convey to a purchaser in good faith. 
 (Sec. 31.) He also acquires the direct obligation of the 
 carrier to hold the goods for him according to the terms 
 of the bill. (Sec. 31.) If the bill is transferred but not 
 negotiated to the holder, the transferee acquires with the 
 transfer, as against the transferor, the title to the goods 
 sul)ject to the terms of any agreement between them. 
 (Sec. 32.)
 
 BILLS OF LADING 313 
 
 To negotiate the bill means to transfer it from one 
 person to another in such a manner as to make the trans- 
 feree the owner of the property in the -goods which it 
 represents. Courts have never been willing to give the 
 bills of lading the same quality or degree of negotiability 
 which is accorded the bills of exchange and notes, in fact, 
 they have expressly denied it. Their principal attributes 
 of negotiability, with the acknowledged limitations upon 
 them, are, however, admitted to be as follows : 
 
 Right to require If the transfer of a negotiable bill is 
 indorsement. made for value by delivery and its en- 
 dorsement by the transferor is necessary for negotia- 
 tion, the transferee may compel the transferor to in- 
 dorse the bill unless it appears that its indorsement was 
 not intended. (Sec. 33.) The negotiation is regarded as 
 taking effect at the time when the indorsement is actually 
 made and in the interval the title of the transferee is ex- 
 posed to equitable defenses and adverse claims w^hich 
 may be asserted against the transferor. (Sec. 33.) 
 
 Anyone who negotiates or transfers a 
 l^do'JsemU^r bill of lading for value by indorsement or 
 delivery. delivery, including one who assigns for 
 
 value a claim secured by a bill, warrants, unless the con- 
 trary is made to appear, that the bill is genuine, that he 
 has a legal right to transfer it and that he has no know^l- 
 edge of any fact which would impair the validity or value 
 of the bill. (Sec. 34.) He also warrants that he has a 
 right to transfer the title to the goods it represents and 
 he warrants that the goods are merchantable or fit for the 
 particular purpose for which they are intended, provided 
 that these warranties would be implied if the goods them- 
 selves had been transferred under a contract between 
 the parties without the bill. (Sec. 34.) In the case of 
 an assignment of a claim secured by a blil, the liability
 
 314 QUASI-NEGOTIABLE INSTRUMENTS 
 
 of the assignor, upon his warranty, will not exceed the 
 
 amount of the claims to secure which the bill is assigned. 
 
 (Sec. 34.) 
 
 One who indorses a bill of lading is not 
 
 liable for liable for the failure of the carrier or any 
 
 obligations of previous indorsers to fulfill their obliga- 
 
 previous 
 
 indorsers or tions (Sec. 35) and if one who holds the 
 
 carrier. ]-,-jj ^g security, either as mortgagee of 
 
 the goods it respresents or as pledgee, demands and 
 receives payment of the debt for which it is security he 
 is not deemed to represent or warrant the genuineness 
 of the bill or the quantity or quality of the goods it de- 
 scribes. (Sec. 30.) 
 
 The Bills of Lading Act, endeavoring 
 Rights of holder , . ., , , a- 4. ^^ 
 
 without notice of to overcome irreconcilable coimict, pro- 
 fraud, etc. ^j(jgs ^i^^i if tije bill is obtained or nego- 
 tiated by accident, fraud, duress, in breach of faith, or is 
 wrongfully converted by the holder and afterward nego- 
 tiated to a subsequent holder in good faith for value 
 and without notice, the title of such subsequent holder is 
 not affected thereby and the validity of the bill not there- 
 by impaired. (Sec. 37.) It provides further that if one 
 continues in possession of a negotiable bill which has 
 been issued by a carrier for goods in his possession and 
 which have been sold, mortgaged or pledged, and he sub- 
 sequently negotiates the bill to one who in good faith 
 takes it for value, without notice of the previous sale of 
 the goods, the holder will obtain with his purchase of the 
 bill the title to the goods it represents as fully as if the 
 first purchaser of the goods had expressly authorized the 
 subsequent negotiation of the bill. (Sec. 38.) 
 
 Neither of these provisions can, however, be stated 
 to be the law generally, for upon both there is a marked 
 division of opinion furnishing the very best reason why
 
 BILLS OF LADING 315 
 
 either the rule favored by the Act or that announced by 
 those courts holding the contrary ought to be universally 
 adopted for the sake of uniformity. 
 
 When a bill is issued which indicates 
 lYdt'ef as to that the goods it represents are deliver- 
 ownership of able by the carrier to the buyer or his 
 ^°°^^- order, or his agent, its issu-e is deemed to 
 
 be a transfer of the property in the goods and the right 
 to their possession in the buyer if the bill is delivered 
 to him. (Sec. 39.) But if the bill is retained by the 
 seller or his agent he thereby reserves his right to pos- 
 session of the goods and if they are deliverable to the 
 seller or his agent, or his own or his agent's order, the 
 seller thereby reserves his ownership of the goods unless, 
 except for the form of the bill, the property would have 
 passed to the buyer upon shipment of the goods. (Sec. 
 39.) In that event the seller's ownership of the goods 
 will be deemed to be only for the purpose of securing the 
 performance by the buyer of his obligations under his 
 contract with the seller. (Sec. 39.) 
 
 Draft with bill of ^^hen the seller of goods draws upon 
 lading attached, the buyer and transmits the draft to- 
 gether with the bill of lading to the buyer for the purpose 
 of obtaining its acceptance or pajTuent, the buyer is 
 bound to return the bill of lading to the seller if he does 
 not accept or pay the" draft. (Sec. 39.) If , however, the 
 bill of lading provides that the goods are deliverable to 
 the buyer or to his order, or if it is indorsed to him or 
 indorsed in blank by the seller consignee, and the buyer 
 fails to return it but negotiates the bill of lading, one 
 who takes it in good faith, for value without notice of its 
 wrongful negotiation, or who purchases the goods with- 
 out notice of their wrongful sale, will obtain a good title 
 to the bill and the goods, notwithstanding that the seller's
 
 316 QUASI-NEGOTIABLE INSTRUMENTS 
 
 draft which the bill accompanied was not honored. (Sec. 
 39.) 
 
 What intention If the seller of goods draws on the 
 assumed. buyer with bill of lading attached, either 
 
 directly or through a bank or other agency, it is deemed, 
 in the absence of an agreement to the contrary, as fol- 
 lows: 
 
 That if the draft is by its terms or legal effect payable 
 on demand or at sight, or not more than three days 
 thereafter, the parties interested are justified in assum- 
 ing that the seller intended to require payment of the 
 draft before the buyer should be entitled to receive or re- 
 tain the bill, and it must not be delivered up to the buyer 
 until he pays the draft. If the draft is payable at a 
 time more than three days after demand, sight or presen- 
 tation, it is deemed that the seller, in the absence of a 
 different express agreement or of instructions, intended 
 to require acceptance but not payment of the draft before 
 the buyer should be entitled to receive or retain the bill 
 of lading. Upon the acceptance of the draft the bill of 
 lading may be delivered to the buyer. (Sec. 40.) 
 
 Duplicate bills are sometimes issued 
 Duplicate bills. ^^^ when more than one negotiable bill is 
 issued by the carrier for the same goods it is required 
 that the word ''Duplicate" or some other word or words 
 indicating that the document is not an original, shall be 
 stamped or written plainly upon the face of every one 
 except the first one issued. (Sec. 6.) If the carrier fails 
 to so mark any and every duplicate bill it will be liable 
 for any damage caused by its failure to do so to anyone 
 who purchases as an original a duplicate bill not so 
 marked, even if the purchase be made after the delivery 
 of the goods to the holder of the original bill. (Sec. 6.)
 
 BILLS OF LADING 317 
 
 A bill of lading which is issued by a 
 
 «T. !f<t^^?!„'^+^^oT,io carrier and which is not intended to be 
 or noii-negotiable 
 
 bill must be so negotiable is called a "Straight Bill" and 
 must have plainly stamped or written 
 upon it by the carrier the word ''Non-negotiable" or 
 "Not negotiable", unless what purports to be the bill is 
 a mere memorandum or acknowledgment of an informal 
 character. (Sec. 7.) 
 
 Penalties f ^^ ^^^ States provision is made in the 
 
 fraud. laws upon the subject of bills of lading 
 
 against fraud in their issue, and severe penalties are im- 
 posed upon any officer, agent, or servant of a carrier 
 who issues, or aids in issuing, a false or fraudulent bill. 
 Severe penalties are also imposed upon all persons who 
 fraudulently alter or negotiate bills of lading, or procure 
 the transfer of the goods or the bill without title or with 
 intent to defraud, or w^rongfully procure the issue of a 
 fraudulent bill by a carrier. 
 
 In substance, the foregoing is an analysis of the prin- 
 cipal provisions of the Uniform Act upon the subject of 
 bills of lading now in effect in the States I have men- 
 tioned and, either by other statute or judicial interpreta- 
 tion of the Law Merchant, in nearly all the others. It 
 will be of advantage to men engaged in business to know 
 the substance of this Act and you will observe that in 
 a great many respects, as, for example, upon the sub- 
 jects of indorsement and transfer, warranties, and to 
 determine when and under what circumstances a holder 
 acquires title to the bill free from imperfections, the pro- 
 visions of the Uniform Negotiable Instruments Act bear 
 a close analogy to this one and are useful to a proper 
 understanding of the law upon this subject. References 
 to the former are omitted from this analysis of the Bills 
 of Lading Act but they readily suggest themselves in the
 
 318 QUASI-NEGOTIABLE INSTRUMENTS 
 
 use of terms common to both and I suggest that the 
 reader consult the index freely and refer to the explana- 
 tions to be found under appropriate sections of the Uni- 
 form Negotiable Instruments Act. He must bear in 
 mind, however, that a bill of lading is merely a symbol 
 of the existence en route, in the custody of the carrier, 
 of the merchandise for which it is issued and that such 
 an instrument is not as fully negotiable as is commercial 
 paper representing transactions in money rather than 
 goods, and that, being quasi negotiable, bills of lading 
 are not wholly governed by the laws which govern com- 
 mercial paper and do not possess all of the attributes of 
 negotiable instruments. 
 
 When the goods arrive at their destination, unless they 
 are immediately required for sale or consumption, they 
 are usually warehoused. As an evidence of their exist- 
 ence a receipt is issued and I shall next endeavor to 
 explain in what respects and to what extent this receipt 
 is negotiable, and the rights, duties and liabilities of the 
 parties to a warehouse receipt. 
 
 Wabehouse Eeceipts. 
 
 (The references are to sections of the Uniform Ware- 
 house Receipts Act.) 
 
 _ ^ In fortv States and in the District of 
 
 Warehouse - ,, ^ a • 
 
 receipts. Columbia, being all except Arizona, 
 
 Georgia, Indiana, Kentucky, Mississippi, New Hamp- 
 shire, South Carolina and Texas, the Uniform Ware- 
 house Eeceipts Act, prepared and recommended by the 
 Conference of the Commissioners on the Uniformity of 
 State Laws, is in effect. It was enacted for the pur-
 
 WAREHOUSE RECEIPTS 319 
 
 pose of making uniform the laws of all of the States 
 upon this subject and very concisely and clearly states 
 the law which governs the issue and negotiation of re- 
 ceipts for the storage of goods with public warehouse- 
 men. 
 
 ^ ^ . . . A warehouse receipt is a written ac- 
 
 Defimtion of , , ,, , ^.i x 
 
 warehouse knowledgment by the warehouseman that 
 
 receipts. ^le holds certain goods in store for the 
 
 person to whom it is issued. It may be issued for goods 
 deposited with the warehouseman by their owner and in 
 many States for goods of which he is himself the owner. 
 In the absence of any special agreement imposing other 
 obligations upon the warehouseman, the doposit of goods 
 with him for storage and his issue of a receipt for them 
 establishes his relation to the owner of the goods as 
 that of a bailee and he is bound to exercise ordinary care 
 in keeping them, to afford the owner reasonable oppor- 
 tunities of access to his goods and to deliver them upon 
 the terms of the receipt which he issues as an evidence 
 that they are in his custody. 
 
 This receipt is not required to be in any 
 warehouse particular form but every warehouse re- 
 
 receipt, ceipt must embody within its written or 
 
 printed terms the location of the warehouse where the 
 goods are stored, the date of its issue, its consecutive 
 number and a statement whether the goods will be de- 
 livered to the bearer, to a specified person or to a speci- 
 fied person or his order. (Sec. 2.) 
 
 It must also express the rate of storage charges, con- 
 tain a description of the goods for which it is issued or 
 the packages in which they are contained and must be 
 signed by the warehouseman or his authorized agent. 
 (Sec. 2.) If the receipt is issued for goods of which the 
 warehouseman is the owner, either solely or jointly or
 
 320 QUASI-NEGOTIABLE INSTRUMENTS 
 
 in common with otiiers, these facts must be stated in 
 the receipt and it must also contain a statement of any 
 advances made, or liability incurred by him toward the 
 goods stored for which he claims a lien. If the precise 
 amount of his advances or liabilities incurred is unknown 
 to the warehouseman, or to his agent, at the time the 
 receipt is issued, his statement upon the receipt that ad- 
 vances have been made or liabilities incurred will be 
 sufficient if he states for what purpose they were made 
 or incurred. (Sec. 2. ) 
 
 If any of the foregoing requirements are omitted from 
 a negotiable receipt the warehouseman will be liable for 
 all damages caused by their omission. (Sec. 2.) He may 
 insert in his receipt any other terms or conditions which 
 express the terms upon which he receives the goods, pro- 
 vided they shall not be contrary to law or in any wise 
 impair his obligation to exercise that degree of care in 
 the safekeeping of the goods entrusted to him which a 
 reasonably careful man would exercise in regard to sim- 
 ilar goods of his own. (Sec. 3.) 
 
 Non-negotiable "^^^ receipts which may be issued by the 
 
 receipts. warehouseman may be either non-nego- 
 
 tiable or negotiable. One in which it is stated that the 
 goods it describes will be delivered to the depositor, or 
 to any other person, is a non-negotiable receipt. (Sec. 4.) 
 Such a receipt must have plainly written or stamped on 
 its face by the warehouseman issuing it the words : ''Non- 
 negotiable" or "Not negotiable," and if he fails to mark 
 it so anyone purchasing it for value, supposing it to be 
 negotiable, may at his option treat it as imposing upon 
 the warehouseman the same obligations as if it had been 
 negotiable, unless what purports to be, or is claimed to 
 be a warehouse receipt is a letter, or memorandum, or 
 other written agreement of an informal character. 
 (Sec. 7.)
 
 WAREHOUSE RECEIPTS 321 
 
 Negotiable ^ negotiable receipt must contain the 
 
 receipt. statement that the goods received will be 
 
 delivered to the bearer or to the order of any specified 
 person. (Sec. 5.) If such a receipt contains in addi- 
 tion a provision that it is non-negotiable this additional 
 provision is void and notwithstanding it the receipt is 
 deemed to be negotiable. (Sec. 5.) 
 
 Duplicate When more than one negotiable receipt 
 
 receipt. ig issued by a warehouseman for the same 
 
 goods the word '* Duplicate" must be plainly written or 
 stamped upon every one except the first one issued, and 
 the warehouseman who fails to do so will be liable for 
 any damage or loss suffered by anyone who purchased 
 the subsequent receipt for value, supposing it to be an 
 original, even if he purchased it after the delivery of the 
 goods by the warehouseman to the holder of the original 
 receipt. (Sec. 6.) A receipt upon the face of which the 
 word ''duplicate" is plainly placed is considered to be 
 a representation and warranty by the warehouseman 
 that it is an accurate copy of an original receipt properly 
 issued and uncancelled at the date when the duplicate was 
 issued, but it imposes upon him no other liability. (Sec. 
 15.) 
 
 In the absence of some lawful excuse 
 mus't'^divS^'' the warehouseman is bound to deliver 
 goods to holder the goods represented by the receipt to 
 receip . .^^ holder or to the depositor of the goods^ 
 
 upon demand. (Sec. 8.) He must require that the de- 
 mand shall be accompanied by an offer to satisfy his lien 
 for advances and charges, to surrender the receipt, if 
 negotiable, with such indorsements as would be neces- 
 sary for its negotiation into the possession of the person 
 making the demand, in order to show that he is entitled 
 to delivery of the goods, and that the person making the
 
 322 QUASI-NEGOTIABLE INSTRUMENTS 
 
 demand shall sign an acknowledgment that the goods 
 have been delivered. (Sec. 8.) 
 
 Ligjj Qf If a negotiable receipt is issued for the 
 
 warehouseman. goods the warehouseman will be entitled 
 to a lien uj^on them, or their proceeds if sold, only for 
 charges for storage of the goods for which the receipt 
 is issued accruing from the date of the receipt, unless it 
 plainly specifies other charges for which a lien is claimed. 
 (Sec. 30.) In that case the warehouseman will be en- 
 titled to a lien upon the goods or their proceeds for the 
 charges enumerated in the receipt if they are lawful 
 charges for the storage and preservation of the goods it 
 describes, for money advanced, interest, insurance, 
 transportation, weighing, coopering and other reason- 
 able charges and expenses in relation to them. (Sec. 27.) 
 He is also entitled to a lien for charges and expenses for 
 notice and advertisements of sale and for the sale of the 
 goods, if default has been made in satisfying his ordinary 
 charges. (Sec. 27.) 
 
 A warehouseman having a valid lien against the per- 
 son demanding the goods may refuse to deliver them 
 to him until his lien is satisfied. (Sec. 31.) He is en- 
 titled to all of the remedies provided by any law in 
 favor of a creditor against his debtor for the collection 
 from the depositor of the goods of all charges and 
 advances- which the depositor has expressly or impliedly 
 contracted with the warehouseman to pay, and is not re- 
 quired to have recourse first or alone to the goods in his 
 possession to collect his claim. (Sec. 32.) 
 
 The warehouseman will lose his lien 
 upon the goods by surrendering their pos- 
 session without first requiring the payment of his lawful 
 claims against them, or by refusing to comply with a law- 
 ful demand for their delivery. (Sec. 29.) Such a de-
 
 WAREHOUSE RECEIPTS 323 
 
 mand must, of course, be accompanied by an offer to 
 comjjly with the requirements which I have already 
 stated must be met, before the warehouseman can be 
 compelled to deliver the goods to the depositor or holder 
 of the bill. (Sec. 8.) His lien on the goods will not be 
 revived if they are subsequently redeposited with him. 
 
 He may enforce his lien again the goods deposited with 
 him belonging to the debtor for the claims in regard to 
 which the lien is asserted, and may enforce it against 
 goods belonging to other persons deposited at any time 
 by the person who is liable for his claims, provided the 
 person who deposited goods belonging to others had such 
 possession of them that a pledge of them by him at the 
 time of their deposit to one who took the goods in good 
 faith would have been valid. (Sec. 28.) 
 
 Enforcement of ^^ order to enforce his lien for a claim 
 lien. which has become due, the warehouseman 
 
 must give written notice to the person for whose account 
 the goods are held, and to any other person known to 
 have a claim upon or an interest in them. (Sec. 33.) This 
 notice must be given by delivery in person to the one to 
 be notified, or sent by registered letter addressed to his 
 last known place of business or residence. (Sec. 33.) 
 Demand; notice The notice must contain an itemized 
 
 satisfy lien; what statement of the warehouseman's claim, 
 must contain. showing the sum due at the time of the 
 notice and the date or dates when it became due, a brief 
 description of the goods against which the lien exists 
 and a demand that the amount of the claim as stated in 
 the notice, and any additions as shall accrue, must be 
 paid on or before a day mentioned. (Sec. 33.) The time 
 within which payment is required by the notice must not 
 be fixed at less than ten days from the date of the deliv- 
 ery of the notice or the date when it should reach its
 
 324 QUASI-NEGOTIABLE INSTRUMENTS 
 
 destination in due course of post if it is sent by mail. 
 (Sec, 33.) The notice must also contain a statement that 
 unless the claim is paid within the time specified, the 
 goods will be advertised and sold at public auction and 
 the date, time and place of the sale must be specified. 
 (Sec. 33.) 
 
 Auction sale to -^^ auction sale may then be held after 
 satisfy lian. the time specified in the notice has 
 
 elapsed, in accordance with the terms of the notice. It 
 must be held in the place where the lien was acquired 
 unless that place is unsuitable, when it must be held at 
 the nearest suitable place. (Sec. 33.) The sale must be 
 advertised by publication once a week for two consecu- 
 tive weeks in a newspaper published in the place where 
 the goods are to be offered for sale, or if no newspaper 
 is published there, the advertisement must be posted at 
 least ten days before the date when the sale is to be held, 
 in not less than six conspicuous places therein. (Sec. 33.) 
 The advertisement must describe the goods to be sold, 
 state the name of their owner or of the person for whose 
 account they are to be sold and the time and the place 
 of the sale. (Sec. 33.) 
 
 If at any time before the goods are so sold any 
 person claiming a right of property or possession in them 
 offers to pay the amount necessary to satisfy the lien 
 and the reasonable expenses and liabilities incurred in 
 serving notices and advertising and preparing for the 
 sale up to the time of payment, the warehouseman must 
 accept the proffer. He must then deliver the goods to 
 the person making such payment, if he is a person who 
 is entitled to their possession under the provisions of 
 this Act. Otherwise he must retain possession of the 
 unsold portion of the goods according to the terms of the 
 original contract of deposit. (Sec. 33.)
 
 WAREHOUSE RECEIPTS 325 
 
 The remedy provided for eiit'orcing his lien does not 
 preclude the warehouseman from resorting to any other 
 means provided by law for the enforcement of a lien 
 against personal property, nor bar his right to recover 
 from his debtor so much of his claim as may remain 
 unsatisfied after the sale of the stored goods. (Sec. 35.) 
 
 Disposal of The proceeds of any sale of the goods 
 
 proceeds of sale, n^i^igt be applied to pay the warehouse- 
 man's lien, including the reasonable expenses of the sale, 
 and the balance, if any, held by him and delivered upon 
 demand to the person to whom he would have been justi- 
 fied in delivering the goods. (Sec. 34.) If the goods are 
 separable he may not dispose of more of them than will 
 be necessary to satisfy his lawful claims which have 
 accrued. 
 
 Sale of If the goods deposited are of a perish- 
 
 perishable goods, ^ble nature or by keeping will deteriorate 
 greatly in value, or if by their odor, inflammability, leak- 
 age, or explosive nature will be liable to injure other 
 property, the warehouseman may give such reasonable 
 notice to the owner or the person in whose name they are 
 stored as is possible under the circumstances, requiring 
 him to satisfy his charges and remove the goods from 
 the warehouse within a specified time. (Sec. 34.) If the 
 persons so notified do not comply with the notice, the 
 warehouseman may thereupon proceed to sell the goods 
 at public or private sale without advertisement and if 
 after a reasonable effort to do so, he is unable to sell 
 them, he may proceed to dispose of them in any lawful 
 manner without incurring any liability by reason thereof. 
 (Sec. 34.) 
 
 Obligation to When the stored goods have been law- 
 deliver ceases fully sold the warehouseman is not there- 
 gooJs^ after liable for a failure to deliver them
 
 326 QUASI-NEGOTIABLE INSTRUMENTS 
 
 to the depositor or to the holder of the receipt issued 
 for them when they were deposited, even if the receipt is 
 negotiable. (Sec. 36.) 
 
 , The obligation of the warehouseman to 
 
 Proper and ° -r. i v 
 
 improper delivery deliver the goods is fulfilled if he delivers 
 of goods. ^i^^j^ ^^ ^jjg person lawfully entitled to 
 
 their possession or to his agent, or if he delivers the 
 goods to one who is either himself entitled to delivery 
 by the terms of a non-negotiable receipt or who presents 
 written authority from the person so entitled to receive 
 them. (Sec. 9.) 
 
 The delivery is also properly made if the warehouse- 
 man surrenders the goods to a person in possession of 
 a negotiable receipt by the terms of which the goods are 
 deliverable to him or his order, or bearer, or one which 
 has been indorsed to him or in blank, by the person to 
 whom delivery is promised in the receipt, or by his 
 mediate or immediate indorsee. (Sec. 9.) 
 
 But if the warehouseman delivers the goods to one 
 w^ho is not in fact lawfully entitled to their possession 
 or, if before delivering them as described in the immedi- 
 ately preceding paragraph to a person in possession of 
 a negotiable receipt and appearing to be entitled to their 
 possession, he is requested by or on behalf of the person 
 lawfully entitled to a right of property or possession in 
 the goods not to make such delivery; or if he has infor- 
 mation that the deliver}' about to be made is not to one 
 lawfully entitled to their possession, he will not be deemed 
 to -have made a proper delivery and will continue to be 
 liable to the real owner of the goods. (Sec. 10.) 
 
 Liability for If the warehouseman fails upon delivery 
 failure to cancel ^ xi j ± ± i i i 
 
 receipt. ^^ ^'^^ goods to take up and cancel a nego- 
 
 tiable receipt which he has issued for them, he will be lia- 
 ble, notwithstanding their deliver}^ to any one who pur-
 
 WAREHOUSE RECEIPTS 327 
 
 chases such receipt in good faith and for value whether 
 he ac(iuired title before or after such delivery and must 
 answer to him for the goods or their value. (Sec. 11.) 
 
 One who has lost a negotiable receipt may apply to a 
 court of competent jurisdiction, if the warehouseman 
 Logt will not otherwise accept indemnity and 
 
 receipt. deliver the goods, for an order for their 
 
 delivery to him and upon satisfactory proof of the loss or 
 destruction of the receipt the court may order that the 
 goods shall be delivered to him upon the execution of a 
 bond with approved sureties to hold the warehouseman 
 harmless from any liability or expense which he or any 
 person injured may thereby sustain, should the original 
 outstanding receipt be presented. The court may also at 
 its discretion order the payment of the warehouseman's 
 reasonable costs and counsel fees. (Sec. 14.) A delivery 
 of the goods even when made under an order of a court, 
 will not relieve the warehouseman of liability to a person 
 to whom the negotiable receipt has been negotiated for 
 value without notice of the proceedings or of their deliv- 
 ery. (Sec. 14.) 
 
 The warehouseman will not be excused from delivering 
 the goods described in his receipt, or from liability for 
 refusing to do so, because he claims title 
 Tannt'Sr to the goods, or the right to their pos- 
 title in himself, session, unless he acquired title or the 
 right directly or indirectly from the depositor of the 
 goods at the time of or subsequent to their deposit with 
 him for storage, or by reason of his warehouseman's 
 lien. (Sec. 16.) 
 
 If two or more persons claim title to the goods he may 
 require them to bring an action of interpleader to deter-
 
 328 QUASI-NEGOTIABLE INSTRUMENTS 
 
 Rieht to mine their respective claims or he may 
 
 interplead himself bring such a suit or set up their 
 
 adverse ^ i • j x i? i i? 
 
 claimants to adverse claims as a matter oi deiense m 
 
 goods. any action brought against him for the 
 
 recovery of the goods and require them to interplead. 
 (Sec. 17.) He may also refuse delivery if he has in- 
 formation that some one other than the depositor claims 
 an interest in the goods and pending a determination 
 of the rights of the prospective adverse claimants, he will 
 be excused from making delivery during such reasonable 
 time as he may require to investigate their claims or to 
 bring legal proceedings to require them to interplead. 
 (Sec. 18.) But except as has been stated herein, when 
 two or more persons claim under the receipt to own the 
 stored goods, no right or title of a third party, a stranger 
 to the receipt, or to the transaction by which the goods 
 were acquired by the warehouseman, will be a defense 
 to any action brought against the warehouseman by the 
 depositor or the holder of the receipt to recover the 
 stored goods. (Sec. 19. ) 
 
 Aside from the penalties which are usually prescribed 
 for the issue of a fraudulent receipt, a warehouseman 
 Liability of ^^'^^^ ^^ liable to the holder of a receipt for 
 
 warehouseman damages caused by the non-existence of 
 for non-existence ^, , „ i • i -i. • i i, 
 
 or failure of ^^^^ goods tor which it was issued or by 
 
 goods to their failure to correspond with their de- 
 
 description, scription in the receipt at the time of its 
 
 issue. (Sec. 20.) But if the goods are described merely 
 by a statement of marks or labels upon them or upon the 
 packages in which they are contained, or if the receipt 
 contains a statement that the goods are said to be, or the 
 packages are said to contain goods of a certain kind, this 
 statement, if true, will relieve him of liability should they 
 prove to be goods of a different kind or quality from that
 
 WAREHOUSE RECEIPTS 329 
 
 indicated by the marks or labels, or different from the 
 kind or quality they were said to be by the depositor. 
 (Sec. 20.) He will be liable, however, for any loss or in- 
 jury to the goods caused by his failure to exercise such 
 care over them while they are in his charge as a reasona- 
 bly careful owner of similar goods would exercise and, in 
 the absence of an express agreement to the contrary, that 
 is the limit of his liability in that regard. (Sec. 21.) He 
 has no insurable interest in goods which are not wholly 
 or partly his own and is under no obligation to the deposi- 
 tor to insure them against destruction by fire while in 
 his custody. 
 
 A warehouseman must keep the goods of each depositor 
 separate from the goods of others and from his own and 
 Separation of ^^^^^ goods of the same depositor for 
 goods. which separate receipts have been issued, 
 
 to such an extent at least, that they may be at all times 
 accessible to the depositor, easily identified, and capable 
 of separate re-delivery. (Sec. 22.) If he is authorized 
 to do so by agreement or by custom, as when grain or 
 iron is warehoused, he may mingle goods of a kind and 
 grade with other goods of the same kind and grade. (Sec. 
 23.) In that case the various depositors will own the 
 mingled mass and each will be entitled to withdraw or 
 dispose of such proportion thereof as the amount depos- 
 ited by him shall bear to the whole. (Sec. 23.) The ware- 
 houseman will be liable to each depositor for the care of 
 and re-delivery of his part of the whole mass in the same 
 manner and to the same extent as if the goods had been 
 kept separate. (Sec. 24.) 
 
 If the receipt which the warehouseman has issued has 
 been fraudulently altered it shall not excuse him from his 
 
 ..^ .. - liabilitv to keep and deliver the goods ac- 
 Alteration of ' . ... 
 
 receipt. cording to its terms as originally issued,
 
 330 QUASI-NEGOTIABLE INSTRUMENTS 
 
 even to the person who so altered it, but it will excuse him 
 from any other liability to that person or a subsequent 
 holder who took it with notice of the alteration and any 
 purchaser for value without notice acquires only such 
 rights against him as he would have acquired if the re- 
 ceipt had not been altered at the time of his purchase. 
 (Sec. 13.) If the alteration is not a material alteration, 
 or was made without fraudulent intent, it does not excuse 
 the warehouseman from liability upon the receipt, accord- 
 ing to its original effect and if authorized he will, of 
 course, be liable according to its altered effect. (Sec. 13.) 
 
 The foregoing are, in substance, the principal provi- 
 sions of the law in respect to the issue of the receipt and 
 the rights and obligations of the warehouseman and of 
 the depositor of the goods and his transferees. The man- 
 ner of its negotiation and how it obtains those qualities 
 which make it akin to fully negotiable instruments are 
 next provided for. 
 
 A negotiable receipt may be negotiated either by de- 
 livery or by indorsement; by delivery merely when, by 
 Negotiation of ^^^^ terms of the receipt the warehouse- 
 receipt, nian undertakes to deliver the goods to 
 bearer, or when the receipt, by its terms, declares that 
 the goods are deliverable -to a specified person or to his 
 order and he has indorsed it in blank or to bearer (Sec. 
 37). When the goods are by the terms of the receipt de- 
 liverable to bearer or to a specified person, or his order, 
 it is negotiable by indorsement and if a receipt originally 
 requiring indorsement has been indorsed in blank, or to 
 bearer, the holder may indorse the same to himself, or to 
 any other specified person, whereupon it can thereafter 
 be negotiated only by his own indorsement or that of the 
 person to whom the goods become deliverable by his in- 
 dorsement (Sec. 37). The negotiation may continue by
 
 WAREHOUSE RECEIPTS 331 
 
 indorsement in blank, to bearer, or to a specified person 
 indefinitely (See. 37). A receipt which is in such form 
 that it cannot be negotiated may be transferred by the 
 holder to a purchaser or as a gift to a donee, but a non- 
 negotiable receipt cannot be negotiated and the indorse- 
 ment of such a receipt confers no additional right upon 
 the indorsee (Sec. 39). 
 
 The negotiation may be by the owner or by the iserson 
 to whom its possession or custody has been entrusted by 
 By whom ^^^^ owner if, by its terms, the warehouse- 
 
 negotiable, nian has agreed to deliver the goods to 
 
 the order of such person, or if it is at that time in such 
 form that it is negotiable by delivery (Sec. 40). 
 
 The jjerson to whom a negotiable receipt has been ne- 
 gotiated acquires with its transfer whatever title the 
 Rights of person from whom he acquired it has in 
 
 holder, the goods or had the ability to convey to 
 
 the purchaser in good faith, for value, and the full title 
 and right to the goods which the depositor had to whom 
 it was issued and had the ability to convey to a purchaser 
 in good faith, for value (Sec. 41). He also acquires the 
 direct obligation of the warehouseman to hold the goods 
 for him as fully as though he had originally contracted 
 with him and the right to sue in his own name to enforce 
 his right to the goods (Sec. 41). One to whom a receipt 
 has been transferred but not negotiated, acquires title 
 to the goods subject to the terms of any agreement with 
 his transferor under which the receipt was transferred 
 to him. If the receipt is non-negotiable he may notify the 
 warehouseman of its transfer to him (Sec. 42). Upon 
 giving such notice he thereby obligates the warehouse- 
 man to hold the goods for him according to the terms of 
 the receipt (Sec. 42). If he neglect to give notice a sub- 
 sequent sale of the goods or a lien acquired by any
 
 332 QUASI-NEGOTIABLE * INSTRUMENTS 
 
 creditor of liis transferor by attachment or execution 
 upon the goods or other process of law, or by notifica- 
 tion to the warehouseman, will have priority over his 
 rights under the receipt and defeat his title and right 
 to acquire the ol)ligation of the warehouseman to hold 
 the goods for him (Sec. 42). 
 
 If a negotiable receii:)t is transferred for value by de- 
 livery and the indorsement of the transferor is essential 
 Eight to require ^o its valid negotiation, the transferee 
 indorsement. ^an compel its indorsement by the trans- 
 
 feror unless it appear that it was not intended that 
 he should do so. The negotiation is considered as tak- 
 ing effect at the date when the indorsement of the trans- 
 feror is obtained and in the meantime the rights of the 
 transferee are subject to intervening rights of other 
 persons claiming an interest in or title to the receipt or 
 the goods Avhicli it represents (Sec. 43). 
 
 One who negotiates or transfers a receipt by indorse- 
 ment or delivery, whether negotiable or non-negotiable, 
 Warranty of or who assigns for value a claim secured 
 transferor. jjy ^ receipt, warrants that the receipt is 
 
 genuine, that he has a legal right to negotiate or trans- 
 fer it, that he has no knowledge of any fact which would 
 impair its validity or value and that he has a right to 
 transfer the title to the goods which it represents. He 
 also warrants that the goods are merchantable or fit 
 for the purpose for which they are represented, provided 
 such warranties would have been implied if the contract 
 had been to transfer without the receipt the actual goods 
 for which it was issued (See. 44). 
 
 One who indorses a receipt does not assume liability 
 for any failure on the part of the warehouseman or pre- 
 Liability cf vious indorsers to fulfil their respective 
 
 indorser. obligations (Sec. 45). When the receipt
 
 WAREHOUSE RECEIPTS 333 
 
 is the subject of" a mortgage or a pledge, or is held as 
 security by one who in good faith demands and receives 
 Pled'^ee or payment of the debt which it secures, the 
 
 mortgagee. person so receiving payment is not 
 
 deemed to represent or warrant the genuineness of the 
 receipt or the quantity or quality of the goods it de- 
 scribes and for which it purports to have been issued 
 (Sec. 46). 
 
 The validity of any otherwise regular negotiation of 
 the receipt will not be impaired by the fact that its ne- 
 
 „ ,. ^. . gotiation was a breach of duty on the 
 Negotiation in '^ • xi i. 
 
 breach of duty or part of the person negotiatmg it, or that 
 by mistake, etc. ^^i^ owner of the receipt was induced by 
 fraud, duress, or mistake to entrust its custody or pos- 
 session to the person so negotiating it, provided the 
 person to whom it was negotiated, or one to whom it is 
 subsequently negotiated, paid value for it without notice 
 of the breach of duty, fraud, duress or mistake (Sec. 47). 
 If, having pledged, mortgaged or sold goods which are 
 in a warehouse and for which a negotiable receipt has 
 been issued, or having so disposed of the receipt, the 
 person so disposing of the goods or the receipt continues 
 in possession of the receipt, a subsequent sale or other 
 disposition of it by him will convey to a purchaser in 
 good faith, without notice of its previous disposition, or 
 the disposition already made of the goods, as good a title 
 as though the first purchaser had authorized its subse- 
 quent disposition (Sec. 48). No right of stoppage in 
 transitu- or seller's lien will defeat the rights of a pur- 
 chaser for value of the receipt to whom such receipt has 
 been negotiated, in good faith, before or after notice to 
 the warehouseman of the claim of the seller of the goods 
 to a lien, or to the right of stoppage in transitu, and no 
 warehouseman is obliged to deliver the goods to an un-
 
 334 QUASI-NEGOTIABLE INSTRUMENTS 
 
 paid seller or justified in doing so, unless the receipt is 
 first surrendered for cancellation (Sec. 49). 
 
 The rules of law and equity, including the law mer- 
 chant, and particularly the principles and rules of the 
 
 ,. ^, law of agency govern in the interpreta- 
 Laws apphcaWe ^ ^^ • % f .-, .- n .. - 
 
 to warehouse tion of the rights and duties oi parties to 
 
 receipts. warehouse receipts when they are not in 
 
 conflict with laws specially enacted for their govern- 
 ment. As is the case with bills of lading and other in- 
 struments partly negotiable and governed by the law 
 merchant, terms are employed in the law relating to 
 warehouse receipts which you will readily recognize as 
 having already been sufficiently explained in the treat- 
 ment of the Uniform Negotiable Instruments Law. Con- 
 sult freely the explanations given there, keeping in mind, 
 however, that although w^arehouse receipts very fre- 
 quently accompany bills of exchange and promissory 
 notes as collateral, and partake to a very great extent of 
 many of their features of negotiability, the explanations 
 of terms common to both are to be applied to them with- 
 in the limits prescribed by the law by which they are 
 governed. 
 
 As in the case of bills of lading, you will doubtless have 
 observed a striking similarity between the provisions 
 of the law for the government of warehouse receipts and 
 the law of negotiable instruments upon the subject of 
 transfer, negotiation, warranties, etc. 
 
 No special provision is made in this Act upon the sub- 
 ject of forgery, a forged signature or indorsement of a 
 Penalties for warehouse receipt, as any forged signa- 
 fraud, etc. ture, being inoperative and imposing no 
 
 obligation whatever upon the person whose signature it 
 purports to be.
 
 WAREHOUSE RECEIPTS 335 
 
 Ol)I)ortiinity for the practice of fraud having developed 
 from the issue of receipts, extreme penalties, heavy fines 
 and imprisonment, are imposed by law upon any one who 
 issues or procures to be issued, or aids in issuing a fraud- 
 ulent receipt, or one who fraudulently misrepresents 
 the title to the goods stored or, with intent to defraud, 
 dis]ioses of stored goods which are subject to a mortgage 
 lien.
 
 336 QUASI-NEGOTIABLE INSTRUMENTS 
 
 CEETl'FICATES OF STOCK. 
 
 In a very restricted sense, certificates of stock have 
 been accorded by mercantile custom and by statute the 
 quality of negotiability, but some writers contend that to 
 term them quasi-iiegoti'dhle is misleading and confusing. 
 Corporations are creations of statute and in all States 
 the laws which authorize incorporation either provide 
 the manner in which their shares may be transferred or 
 that the company itself may do so in its by-laws or regu- 
 lations. To such an extent do the statutes of the States 
 vary in their provisions for incorporation that men about 
 to associate themselves in business as a body corporate 
 are offered a variety of more or less attractive corpora- 
 tion laws from which to choose. In one respect, however, 
 they are all very much alike and that is in their provision 
 that shares of stock, when it is not left to the corporation 
 itself to determine the manner in which they may be 
 transferred, are transferrable only upon the books of 
 the company. 
 
 If a provision to this effect were not interpreted to 
 mean, as indeed it is in nearly all the States, that this 
 restriction is intended for the protection of the corpora- 
 tion and its stockholder of record, certificates of stock 
 would possess none of the qualities of negotiability. In 
 most States it is either now provided by statute, judicial 
 construction, or as a rule of equity, that a written as- 
 signment of the certificate accompanied by delivery vests 
 the legal title to the shares it represents in the trans- 
 feree, even without a formal transfer on the books of
 
 TRANSFER OF CERTIFICATES OF STOCK 337 
 
 the coi'iDoratioii.^ This construction has been adopted 
 for the sake of business convenience and by reason of it 
 stock certificates obtain one of tlieir attributes of nego- 
 tiability. 
 
 >,, „ r Uniformity in the statute law govern- 
 
 Tne Uniform • ^ 
 
 Stock Transfer ing stock transfers is very much to be 
 ^ ■ desired and an Act prepared by the Uni- 
 form Laws Commission by which it is hoped to accom- 
 plish that result is effective now in twelve States; Con- 
 necticut, Illinois, Louisiana, Maryland, Massachusetts, 
 New York, New Jersey, Ohio, Pennsylvania, Rhode 
 Island, Tennessee and Wisconsin. Its provisions in re- 
 spect to the transfer of shares are effective, however, in 
 one form or another, in most of the other States so that 
 it may be said to be declaratory of the law as it exists 
 in nearly all. In this explanation of the law on the 
 subject of the transfer of shares I will cite the pro- 
 visions of that Act whenever it is applicable, using its 
 language as freely as possible and employing the ab- 
 breviated title thus, U. S. T. A. Sec , for reference. 
 
 In sup])ort of those statements of the law upon this sub- 
 ject which, though outside the scope of the Uniform Act, 
 nevertheless are of importance to a general knowledge 
 of the law governing the transfer of shares, I will cite 
 the reader Avho may desire to pursue the subject more 
 thoroughly to approved decisions by the aid of which 
 a very complete understanding of the law may be ob- 
 tained. 
 
 1. .Tohnson vs. Laflin. 303 U. S. 800, 804, 26 U. S. (L. Ed.) 532. 
 O'Neil vs. Walcott Min. Co.. 174 Fed. 527, 98 C. C. A. 309, 27 
 L. R. A., N. S. 200. 
 Cullodeu Bk. vs. Forsvtli Bk., 120 Ga. 575. 48 S. E. 220, 102 
 A. S. R. 115. 
 Gemmell vs. Davis, 75 Md. 546, 23 Atl. 1032.
 
 338 QUASI-NEGOTIABLE INSTRUMENTS 
 
 Methods of Upon examination of the blank form 
 
 effecting transfer. ^^^ transfer which will be found upon the 
 
 back of every stock certificate it will be observed that it 
 provides for the appointment of someone to act as the 
 attorney or agent of the person in whose name the cer- 
 tificate is issued and gives him authority to transfer 
 the shares on the books of the corporation. It is not 
 necessary that this form alone be used or that it be 
 executed in the negotiation of the certificate, for a trans- 
 fer of the shares may be procured by a separate power 
 of attorney (U. S. T. A., Sec. lb), and where shares are 
 used as collateral to a loan or deposited as security for 
 any other purpose a separate power of attorney is usu- 
 ally employed. This is done for the reason that since 
 the immediate transfer of the shares is often not con- 
 templated, it is not at all desirable to have the certificate 
 continue to bear a blank indorsement. There are, then, 
 these two methods of accomplishing the transfer of the 
 shares. In each it is customary upon desiring an actual 
 transfer upon the books of the corporation that the 
 holder of the certificate, or the person authorized to do 
 so by the separate power of attorney, insert in the trans- 
 fer the name of the person to whom he desires the new 
 stock certificate to issue. He need not designate the 
 name of the person to make the actual transfer on the 
 company's stock register, although a space is provided 
 in the form on the back of the certificate for the inser- 
 tion of his name. The secretary of the company or its 
 transfer clerk or agent usually inserts his own name and 
 proceeds to make the transfer upon surrender of the 
 certificate. 
 
 Pending the actual transfer conflicting 
 transfer conveys claims to the ownership of or an interest 
 legal title. jn the stock frequently arise. They usu-
 
 TRANSFER OP CERTIFICATES OF STOCK 339 
 
 ally grow out of claims of creditors of the transferer. 
 In those States in which the Unif oral Stock Transfer Act 
 is in effect, and in nearly all others, it is not requisite to 
 the complete ownership of the shares that they must be 
 transferred of record on the company's books, even 
 though its regulations or the certificates themselves, or 
 the law of the State under which the company is incor- 
 porated seems to require it. (U. S. T. A., Sec. 1.) Such 
 regulatory provision is intended as a protection to the 
 corporation, its members and its creditors, and not for 
 the creditors of the stockholder.- (See note one.) 
 
 ^. ^.,., . However, in the absence of statutory 
 
 Liabihty of ' 
 
 registered owner provision to the contrary, the person 
 continues until ^y\-^Q^(, name is registered on the com- 
 registered. pany's books as the owner of the shares 
 
 will, as between himself and the company, be held liable 
 for calls and assessments upon the shares^ and payment 
 by the company to him of dividends will be a bar to a 
 claim to them by the holder of the certificate to whom 
 it has been transferred^ (U. S. T. A., Sec. 3b), unless 
 the company have valid, binding notice that the stock- 
 holder of record has ceased to be the owner of the shares. 
 An ordinary notice either verbal or in writing that one 
 has acquired the shares of another in the company is 
 usually regarded as sufficient if it is accompanied by an 
 attempt to obtain their transfer upon the company's 
 books.^ In that case, if the transfer is refused or unduly 
 delayed by the company, the notice and attempt to trans- 
 
 2 Mai)leton Bk. vs. Stanvod, S Idaho, 740, 71 Pac. 119. 
 
 State Bank'g & Tr. Co. vs. Taylor, 25 S. D. 577, 127 N. \V. 
 590. 29 L. R. A., N. S. 523. 
 
 3. American Alkali Co. vs. Campbell, 113 Fed. 398. 
 
 4. Gemmell vs. Davis, 75 Md. 546, 23 Atl. 1032, 32 A. S. R. 412. 
 Brisbane vs. Del. River, etc., Ry. Co., 25 Hun (N. Y.), 438. 
 
 5. Real Est. Tr. Co. vs. Bird, 90 Md. 229. 243. 44 Atl. 1048. 
 Guarantv Co. of N. A. vs. E. Rome Town Co., 96 Ga. 511, 23 
 
 S. E. 503, 51 A. S. R. 150.
 
 340 QUASI-NEGOTIABLE INSTRUMENTS 
 
 fer has the same effect as an actual transfer as to the 
 company and all except its creditors.^ As to these, if 
 the vendor has requested the company to make the trans- 
 fer and honestly believes he has done everything neces- 
 sary to make the transfer effective that a prudent and 
 careful business man would do, the authorities are in 
 conflict as to whether or not he will be relieved of future 
 liability as a shareholder/ 
 
 The company too, in the absence of notice, may recog- 
 nize the exclusive right of the owner registered on its 
 books to vote the shares standing there in his name at 
 the meetings of its stockholders.^ (U. S. T. A., Sec. 3 a.) 
 And when there is additional liability upon the stock, 
 imposed by statute for the protection of the creditors of 
 the corporation, the stockholder whose name appears of 
 record is not relieved of this liability until the transfer 
 is actually recorded upon the transfer books of the cor- 
 poration. Even if the corporation has recognized the 
 new holder of the certificates and paid him dividends, or 
 permitted him to vote the shares at its meetings, the 
 shareholder who appears of record to own the shares will 
 continue to be liable to the company's creditors, preserv- 
 ing, of course, his right to reimbursement from his trans- 
 feree.*^ He can only completely sever his connection 
 with the corporation by insisting upon his right to have 
 his transfer of the shares recorded upon the company's 
 transfer book.^*^ 
 
 6. Weber vs. Bullock, 19 Colo. 214. 
 
 7. Bracken vs. Nicol, 124 Ky. 628. 99 S. W. 920, 14 Am. Cas. S96. 
 
 11 R. A. N. S. 818. 
 Contra, Harpold vs. Stobart, 46 Oh. St. 397, 21 N. E. 637. 
 
 8. Roval Cons. Min. Co. vs. Royal Cons. Mines Co.. 157 Calif. 
 
 737, 757, 110 Pac. 123. 
 
 9. Man vs. Bovkin, 79 S. C. 1, 60 S. E. 17, 128 A. S. R. 830. 
 10. Richmond vs. Irons, 121 U. S. 27, 7 S. Ct. 788. 
 
 Visalia, etc., R. R. Co. vs. Hyde, 110 Calif., 632, 636, 43 Pac. 
 
 10, 52 Am. S. Rep. 136. 
 Giesen vs. London, etc., Mi^. Co., 102 Fed. 584, 42 C. C. A. 
 
 515.
 
 TRANSFER OF CERTIFICATES OF STOCK :i41 
 
 Subject to the right to reclaim it which 
 havhig ^possession ^^'^^^ ^^^ afterward explained, the delivery 
 of certificates. of a certificate is effective to transfer title 
 between the vendor and vendee when it is made by one 
 having possession of the certificate if there is upon it a 
 ])roperly executed assignment, or if it is accompanied by 
 a properly executed document containing a written as- 
 signment or power of attorney to sell, assign or transfer 
 the certificate or the shares it represents. (U. S. T. A., 
 Sec. 4.) This is so even if the person delivering the cer- 
 tificate has no right to its possession, is not the person 
 named in the document or power as the- one who is au- 
 thorized to transfer it from its owner, or is not the per- 
 son who appears to be transferring the title to the cer- 
 tificate. (U. S. T. A., Sec. 5.) 
 
 And, subiect to the same right, the in- 
 Effect of indorse- ^ ' . ^-i ^--c x ■■ ^i, 
 
 ment of dorsement of the certmcate by the person 
 
 certificate. appearing in it to be its owner is effectual 
 
 even if the indorser or transferer was induced by fraud, 
 duress or mistake to make the transfer, or if he has al- 
 ready revoked the delivery of the certificate or the au- 
 thority given by the indorsement or delivery of the cer- 
 tificate, or has died, or become legally incapacitated after 
 having made the indorsement, whether before or after 
 the delivery of the certificate, or received no considera- 
 tion for it. (U. S. T. A., Sec. 6.) 
 
 In every such case, however, the pos- 
 ulently ^procured " session of the certificate may be reclaimed 
 as above may be j^^jj its transfer rescinded unless it has 
 been transferred to a purchaser for value, 
 in good faith, without notice of any facts making the 
 transfer wrongful, or unless the injured party has elected 
 to waive the injury, or has been guilty of neglect or
 
 342 QUASI-NEGOTIABLE INSTRUMENTS 
 
 undue delay in endeavoring to enforce his rights. ^^ (U. 
 S. T. A., Sec. 7.) The injured person may have the aid 
 of a court of proper jurisdiction to enforce specifically 
 his right to reclaim possession of his certificate from 
 one who so obtained its delivery or to rescind its trans- 
 fer if the certificate has already been transferred on the 
 company's books, and he may require it to be surren- 
 dered according to the court's order to be held impounded 
 pending the determination of his action to reclaim it, 
 or have an order enjoining its further transfer. (U. S. 
 T. A., Sec. 7.) 
 
 But pending all of these remedies, and 
 Transferee of • . 
 
 certificate so even if the transfer of the certificate or 
 
 procured obtains ^j^g shares which it represents has already 
 indefeasible title. . . 
 
 been rescmded, or set aside, nevertheless, 
 
 if the transferee has possession of the certificate or of a 
 new^ certificate, representing part or all of the same 
 shares, a subsequent transfer of such certificate by him, 
 directly or indirectly to a purchaser for value who takes 
 in good faith, without notice of any facts making the 
 transfer wrongful, will give this purchaser and subse- 
 quent purchasers a right to the certificate and the shares 
 it represents which nothing and nobody can defeat.^^ In 
 this stock certificates obtain their second important char- 
 acteristic of negotiability. (U. S. T. A., Sec. 8.) The 
 rule is otherwise, however, when an indorsed certificate 
 has been lost or stolen, as I shall afterward explain. 
 
 Transfer by "^^^^ ^^^^^^ ^^ *^^^ ^^^ ^^ agency apply 
 
 agent of owner, to the indorsement and transfer of cer- 
 tificates of stock and since the principle upon which that 
 law is based is that one can do by another anything 
 
 11. Dunbar vs. Ainer. Tel., etc., Co., 224 111. 9, 33, 79 N. E. 423, 
 
 8 Ann. Cas. 57. 
 
 12. Machinist's Natl. Bank vs. Field, 126 Mass. 345. 
 Mandelbaum vs. No. Amer. Mining Co., 4 Mich. 465.
 
 TRANSFER OF CERTIFICATES OF STOCK 343 
 
 which lie can himself do, the indorsement of the owner's 
 name upon the certificate by one acting under his au- 
 thority will bind him as effectually as though he had him- 
 self made the signature. (U. 8. T. A., Sec. 18.) If the 
 signature is unauthorized the doctrine of ratification will 
 apply if by his express acts or conduct, or by implication, 
 the principal brings himself fairly within its operation. ^^ 
 And, in that provision of the law under which I have just 
 shown that one taking for value and without notice a 
 certificate duly indorsed by its owner and obtained, or 
 upon which the indorsement was obtained by fraud, 
 duress or mistake, or other unlawful means, and nego- 
 tiated by one appearing to be in lawful possession of it, 
 obtains an indefeasible title to the shares it represents, 
 his right to the certificate is based upon the doctrine of 
 estoppel which imposes upon one who clothes another 
 with power to do an act not wrong in itself, but wrong 
 only because it violates a trust, as between himself and 
 an innocent partj^ to the transaction, who might other- 
 wise suffer thereby, the duty to bear the loss.^'* 
 
 If one who appears to be its owner de- 
 compel indorse- livers the certificate with intent to trans- 
 °^®"*' fer it but without the indorsement neces- 
 
 sary to transfer the shares it represents, he may be 
 compelled to execute the necessary transfer unless there 
 is an agreement to the contrary; and the holder entitled 
 to the transfer may invoke the aid of a court to secure it. 
 Tl » transfer, however, will take effect only at the date 
 when it is actually made. (U. S. T. A., Sec. 9.) A valid 
 agreement to transfer may, likewise, be specifically en- 
 forced and an attempted transfer without deliver}^ of the 
 
 13. See Note Ann. Cas. 1913 E. 1177. 
 
 14. Penn R. Co.'s Appeal, 86 Pa. St. 80. 
 
 Supply Ditch Co. vs. Elliott, 10 Colo. 327, 333, 15 Pae. 691, 3 
 Am. St. Rep. 586.
 
 344 QUASI-NEGOTIABLE INSTRUMENTS 
 
 certificate is the equivalent of a promise to transfer, the 
 obligation to perform which must be determined by the 
 law governing the formation and performance of con- 
 tracts. (U. S. T. A., Sec. 10.) 
 
 Warranties by ^^^^ who, for value, transfers a certifi- 
 
 ^ansfer. cate, including one who assigns for value 
 
 Holder demand- /. *, , ^.^ \ 
 
 ing payment not ^ dami secured by a certificate, warrants, 
 
 a guarantor. unless the contrary appears, that the cer- 
 tificate is genuine, that he has a legal right to transfer 
 it and that he has no knowledge of any fact which would 
 impair its validity.^^^ (U. S. T. A., Sec. 11.) The lia- 
 bility upon this warranty of one who, holding the cer- 
 tificate as security for a claim, transfers it, will not ex- 
 ceed the amount of the claim to secure which it was 
 pledged, and if one who holds the certificate as mortgagee, 
 pledgee, or as security in any other capacity, demands 
 and receives payment of the debt for Avhich it is security 
 he is not deemed to warrant the genuineness of the cer- 
 tificate or the value of the shares it represents upon 
 transfer of the pledged certificate. (U. S. T. A., Sec. 12.) 
 
 Attachment of Certificates of stock, being property, 
 
 certificate; levy, are subject to attachment, the levy of ex- 
 w en va id. ecution or other process of law for the 
 
 enforcement and collection of debts by which a lien or 
 preference is secured by the creditor invoking its aid 
 against the debtor's interest in the shares which the cer- 
 tificate represents. Unless the certificate is surrendered 
 to the corporation or its transfer enjoined, process of 
 this kind served upon the corporation or anyone in pos- 
 session of the certificate is not valid or effective if the 
 officer making the levy or serving the attachment has not 
 actually seized physical possession of the certificate. 
 (U. S. T. A., Sec. 13.) An equitable proceeding in the 
 
 15. Note 53 L. R. A. 153, 10 Ann. Cas. 168.
 
 TRANSFER OF CERTIFICATES OF STOCK 345 
 
 nature of a creditor's bill is provided by law, however, 
 by which the interest of a stockholder debtor may be 
 reached without actual seizure of the certificate, and a 
 creditor whose debtor is the owner of a certificate will be 
 entitled to the aid of the court, by injunction or other- 
 wise, to satisfy his claim by whatever other extraordi- 
 nary remedies in his favor ma}^ be provided by law for 
 his l)enefit when the certificate or the debtor's interest 
 in it or in the corporation cannot be reached by ordinary 
 process of law. (U. S. T. A., Sec. 14.) 
 
 In most States the corporation will 
 
 Corporation lien j^^ve no valid lien upon its shares repre- 
 against its snares. ^ 
 
 sented by a certificate which it issues and 
 
 can impose no restriction upon their transfer by reason 
 of any by-law or otherwise, unless the right to the lien 
 or the restriction upon its transfer is stated upon the 
 certificate. (U. S. T. A., Sec. 15.) You will remember, 
 of course, that such a provision is intended as a protec- 
 tion to the stockholder and the corporation and its cred- 
 itors and that, as has already been stated, no restriction 
 or by-law of the corporation or provision in its charter 
 or articles of incorporation which provides that the 
 shares represented by the certificate shall be transferable 
 only on the books of the corporation, or registered by a 
 registrar, or transferred by a transfer agent, will make 
 less effective and valid the right to a transfer of the 
 title to a certificate, otherwise complete, to a vendee or 
 pledgee of a stockholder, except in those States where 
 the courts yet hold contrary to the trend of usual author- 
 ity. And upon compliance with the company's regula- 
 tions the holder can compel the transfer of the cer- 
 tificate.^*' 
 
 16. Mundt vs. Comnri Nat'I Bank, 35 Utah, 90, 99 P. 454. 
 See Note 136 A. S. R. 1023.
 
 346 QUASI-NEGOTIABLE INSTRUMENTS 
 
 j^^ A corporation cannot, except where the 
 
 certificate. certificate has been lost or destroyed, be 
 
 compelled to issue a new one until the old certificate is 
 .surrendered to it. Where a certificate has been lost or 
 destroyed a court of competent jurisdiction may order 
 the issue of a new one upon notice to the corporation of 
 the application therefor and reasonable notice to all in- 
 terested persons by publication or in any other manner 
 in which the court may direct notice of the application to 
 be given. (U. S. T. A., Sec. 17.) Upon satisfactory proof 
 of the loss or destruction of the certificate and upon giv- 
 ing bond with sufficient sureties to be approved by the 
 court, conditioned to protect the corporation or any per- 
 son injured from any liability or loss by the issue of the 
 new certificate, or expense which it or they may incur by 
 reason of the original certificate remaining outstanding^ 
 the court will usually order the new certificate to be 
 issued. (U. S. T. A., Sec. 17.) The court may also, in its 
 discretion, order the payment of the corporation's rea- 
 sonable costs and counsel fees. (U. S. T. A., Sec. 17.) 
 The issue of a new certificate under an order of a court 
 will not relieve the corporation from liability in dam- 
 ages to a person to whom the original certificate has 
 been before, or shall be thereafter transferred for value, 
 without notice of the proceedings or of the issue of the 
 new certificate. (U. S. T. A., Sec. 17.) 
 
 Transf h "^^^^ transfer of shares by or to a per- 
 
 infant or person son wanting in full legal capacity, or their 
 cSadt^ ^^ purchase or sale by an infant, like any 
 
 other contract made during disability by 
 minority or incapacity except one by which the infant 
 supplies himself with necessaries, is voidable by him 
 upon attaining full age or when the disability is removed. 
 His repudiation must be prompt upon attaining his ma-
 
 TRANSFER OF CERTIFICATES OF STOCK -Ul 
 
 jority or the removal of the disability, or a ratification 
 will be presumed. The corporation may not refuse to 
 register the transfer of shares by a minor if at the time 
 of application for transfer it has had no notice of re- 
 pudiation by him.^"^ 
 
 The power of guardians, executors, ad- 
 Transfer by • • J. i. i x 
 guardians ministrators, trustees or persons occupy- 
 
 executors or ing other fiduciary relations toward the 
 administrators. ^ , , t o I.^ 
 
 owners or shares, to dispose oi them is 
 
 not usually regulated by statute and as a rule they have 
 power to transfer title without having first obtained 
 express authority to do so from the court which con- 
 trols their appointment and the administration of the es- 
 tates which they serve. It is incumbent, however, upon 
 one who would acquire title from or through an executor, 
 administrator, guardian, trustee or other fiduciarj^ to 
 carefully scrutinize his authority to sell and most desir- 
 able that he do so. I will presently explain this more 
 fully. 
 
 Alteration of Certificates of stock are not affected by 
 
 certificates. alteration whether fraudulently made or 
 
 not, and the owner of the altered certificate is not there- 
 by deprived of his title to the shares of which it is the 
 evidence. The transfer of an altered certificate will 
 convey to the tranferee a good title to the certificate and 
 to the shares originally represented by it. (U. S. T. A., 
 Sec. 16.) 
 
 Pledge of When a debtor delivers stock to his 
 
 ^ °^ • creditor to be held by him as security for 
 
 the payment of his debt it is a pledge. The immediate 
 transfer of the certificate is not then contemplated, for 
 the debtor expects to discharge his obligation to his cred- 
 itor and reclaim the shares. It is made by the delivery of 
 
 17. Smith vs. Nashville, etc., R. Co., 91 Tenn. 221, 18 S. W. 54(5.
 
 348 QUASI-NEGOTIABLE INSTRUMENTS 
 
 the certificate indorsed in blank or, more usually, the cer- 
 tificate unindorsed is accompanied by the power of attor- 
 ney previously described, and a description of the certifi- 
 cate and a statement of the fact that is pledged as secur- 
 ity is incorporated in the memorandum, agreement, or 
 promissory note which is the evidence of the debt. 
 
 The pledgee has the right, however, to 
 franfferT/ ^^^' surrender the certificate to the corpora- 
 certificate, tion for transfer and obtain a new one in 
 his own name or in the name of another, but if he does, 
 he will assume all the habilities of a stockholder unless 
 there is statutory provision to the contrary.^^ 
 
 It is held in some States that the pledgee has not the 
 right to transfer the shares before the maturity of the 
 debt which they secure^ ^ but where a transfer is per- 
 mitted it is proper for the corporation, if it have notice 
 that the stock is held by the transferee merely as a 
 pledge, to describe the person to whom the new certifi- 
 cate is issued as "pledgee" or to insert in the certificate 
 after his name a statement that it is held as collateral, 
 and if this is done the pledgee will not ordinarily be 
 liable as a stockholder.^** 
 
 Pledgee may The pledgee will then, after its trans- 
 
 collect dividends, fer, be entitled to receive dividends on 
 the shares during the continuance of the pledge of which 
 he must, of course, account to the pledgor by proper 
 
 18. See notes 10 Ann. Cas. 783, 19 L. R. A., N. S. 249. 
 Pullman vs! Upton, 96 U. S. 328, 24 U. S. (L. Ed.), 818. 
 Tieiney vs. Ledden, 143 la. 286 , 121 N. W. 1050 , 21 Ann. Cas. 
 
 105 and Note. 
 Marshall Field & Co. vs. Evans, .Johnson, Sloan & Co., 106 
 Minn. 85, 118 N. W. .55, 19 L. R. A., N. S. 249 and Note. 
 
 19. Sprcckles vs. Nevada Bank, 113 Calif. 272, 45 Pae. 329 , 54 A. 
 
 S. R. 348, 33 L. R. A. 459. 
 State vs. Smith, 15 Oreg:on, 98, 14 Pac. 814. 
 
 20. Pauly vs. State L. & T. Co., 165 U. S. 606, 17 U. S. S. C. 465.
 
 TRANSFER OF CERTIFICATES OF STOCK 849 
 
 credit upon his dcl)t.^^ Even if he has not secured a 
 
 transfer of the stock from the name of its registered 
 
 owner the pledgee may, by giving notice of the pledge 
 
 to the corporation, require it to pay the dividends to 
 
 him.^- 
 
 _,, , If he secures the transfer of the certifi- 
 
 Pledgee may 
 
 c^ote pledged cate to himself the pledgee may vote the 
 ^ ^^®^' pledged shares unless the right to vote is 
 
 reserved by the ])ledgor,2^ and when his interests or the 
 interests of the corporation are materially affected by 
 the manner in which the shares may be voted, the owner 
 of the shares, tlie pledgor, may require that the pledgee 
 vote them in accordance with his directions and, if nec- 
 essary, he may invoke the aid of a court of equity to 
 reciuire him to do so or to obtain authority to vote them 
 himself. ^^ 
 
 Pledge must be "^'^^ pledgee must retain the stock dur- 
 retained. ing the continuance of the pledge. He 
 
 need not retain actual physical possession of the iden- 
 tical certificates pledged to him, since one share is the 
 equivalent of another, but he must have in his possession 
 always the number of shares pledged.^^ He cannot sepa- 
 rate the pledge from the debt, or lawfully sell or repledge 
 
 21. Guaranty Co. of N. A. vs. East Rome Town Co., 96 Ga. 511, 
 
 23 S. E. 503. 
 
 Gemmcll & Sinclair vs. Davis & Co., 75 Md. 546. 
 
 22. Guaranty Co. of N. A. vs. East Koine Town Co.. 96 Ga. 511, 
 
 23 S. E. 503. • 
 
 23. Comni. vs. Dalzell, 152 Pa. 217, 25 Atl. 535, 35 Am. St. Rep. 
 
 040. 
 
 Franklin Bk. vs. Commercial Bk., 30 Oh. St. 351, 355. 
 
 24. In re Arcus Printing- Co., 1 N. D. 434, 48 N. W. 347. 
 Hoppin vs. Buffum, 9 R. I. 513, 11 Am. Rep. 291. 
 Notes in 121 A. S. R. 196; Ann. Cas. 1912 A. 207. 
 ^Ventworth Co. vs. French, 176 Mass. 442, 57 N. E. 789. 
 
 25. Atkins vs. Gamble, 42 Calif. 86, 101 ; 10 Am. Rep. 282. 
 Berlin vs. Eddy, 33 Mo. 426.
 
 350 QUASI-NEGOTIABLE INSTRUMENTS 
 
 the shares during- the continuance of the pledge to any 
 one with notice. ^"^ 
 
 Pledge may be ^^ ^^^Jy however, assign the principal 
 
 assigned. debt and the pledge with it, provided al- 
 
 ways that he do it in such a manner that the pledgor will 
 not be deprived of his right to redeem. If he does re- 
 pledge the shares one who takes the certificates, if they 
 have been indorsed, from the pledgee without notice of 
 the pledge will be fully protected.^' In that case the 
 owner of the shares can recover them only upon paying 
 the re-pledgee the amount of his advancement on the 
 stock even if this exceeds the amount for which the shares 
 were originally pledged.^^ 
 
 Pledge bv ^^^ executor or administrator has the 
 
 executor, etc. power to pledge stock belonging to the 
 estate Avhich he represents but one taking from an ex- 
 ecutor or administrator for his own debt a pledge of 
 stock which belongs to the estate he represents will ac- 
 quire no right to hold it even if he has secured a transfer 
 of the shares upon the company's books. A trustee, 
 however, has no implied power to pledge shares held in 
 trust and even if the instrument creating the trust grants 
 the power to sell, no power to pledge is thereby implied.-^ 
 
 Upon maturitv of the debt, if it is not 
 Pledgee's reme- 
 dies when debt paid, the pledgee may proceed to sell the 
 
 is not paid. shares pledged to secure it. He may 
 
 26. Lawrence vs. Maxwell. 53 N. Y. 19. 
 
 Dykers vs. Allen, 7 Hill (N. Y.), 497, 42 Ann. Dec. 87. 
 Van Eaman vs. Stanchfield, 13 Minn. 75. 
 Easton vs. Hodges, 18 Fed. 677, 683. 
 
 27. Wood's Appeal, 92 Pa. St. 379, 37 Am. Rep. 694. 
 Coit vs Humbei-t, 5 Calif. 260, 63 Am. Dec. 128. 
 
 28. Wood's Appeal, 92 Pa. St. 379, 37 Am. Rep. 694. 
 Shattuck vs. Am. Cement Co., 205 Pa. St. 197, 54 Atl. 785, 
 
 97 A. S. R. 735. 
 McNeil vs. Tenth Nat '1 Bank, 46 N. Y. 325, 7 A in. Rep. .341. 
 
 29. Patterson Fir^t Nat'l Bank vs. Nat'l Broadwav Bk., 156 N. Y. 
 
 459, 51 N E. 398, 42 L. R. A. 139.
 
 . TRANSFER OF CERTIFICATES OF STOCK .'^')1 
 
 either proceed in equity to foreclose his lien and sell the 
 pledge^" or he may give notice to the pledgor of his in- 
 tention to sell the shares and proceed to sell without 
 any judicial proceedings.^^ The latter course is usually 
 pursued but the pledgee need not do either and if he does 
 not, and the value of the securities pledged declines, he 
 is not liable to their owner by reason of their deprecia- 
 tion. His third remedy is to proceed upon the debt as 
 a creditor of the pledgor and when it is reduced to judg- 
 ment he may cause the pledge to be sold upon execution 
 or attachment and apply the proceeds to the satisfaction 
 of his claim.^^ 
 
 Pledgor entitled ^^ ^^ determines to pursue the second 
 to notice of sale, method and sell the pledge without pro- 
 ceedings in a court, the pledgee must give the pledgor 
 personal notice of his intention to sell and of the time 
 and place at which the pledge will be sold and the manner 
 in which it will be offered. It must be offered at public 
 sale unless a private sale is expressly authorized by the 
 pledgor. By an express agreement the pledgor may 
 waive notice of the sale. Except by express agreement 
 the sale may not be made upon any stock exchange at 
 which the right to bid is limited to its members.^^ 
 
 ^, , ^ In the absence of express authority 
 
 Pledgee may not ^ -' 
 
 buy at his own from the pledgor the pledgee may not 
 ^^^®' purchase the shares at his own sale under 
 
 this form of procedure to sell the pledge. This rule is 
 based upon the principle that to permit the pledgee to 
 do so would afford him an opportunity to use his posi- 
 tion to his own advantage by so conducting the sale that 
 he might be enabled to purchase the shares at a price 
 
 30. Note, 121 A. S. R. 205. 
 
 31. Note in 121 A. S. R. 200. 
 
 32. Note 121 A. S. R. 204. 
 
 33. Brass vs. Worth, 40 Barb. (N. Y.) 648, 654.
 
 352 QUASI-NEGOTIABLE INSTRUMENTS 
 
 below their real value.^^ Such a sale will be very care- 
 fully scrutinized and though the purchase, either directly 
 or indirectly, by the pledgee at his own sale is not void, 
 it is voidable by the pledgor.^^ 
 
 The risk in "^^^^ subject which I have been endeav- 
 
 purchasing stock, oring to explain is almost inexhaustible 
 by reason of the varied complications Avhich may arise 
 in the transfer of certificates of stock and by reason of 
 conflicting laws and decisions interpreting their applica- 
 tion, but those essentials to a valid negotiation which 
 men purchasing and selling validly issued stocks, or 
 dealing in them as pledges, ought to know, can be briefly 
 discussed as follows: 
 
 „ - . One of two or more joint owners cannot 
 
 Purchase from '' 
 
 partners. sell or pledge stock standing in their joint 
 
 names, in the absence of express authority of the others ; 
 but one partner in a trading co-partnership, including 
 one formed for trading in stocks, can sell or pledge stock 
 appearing to be in the partnership name. The contrary 
 is the rule when the partners are associated together in 
 a non-trading co-partnership.^*' 
 
 A director or officer of a corporation 
 
 PiiToTiJi^G from • 
 
 officer or director i^i^ij tleal in its stock and information or 
 of corporation, knowledge of its value which he has by 
 reason of his familiarity with the affairs of the company 
 he represents will not affect the validity of the trans- 
 action ; and if he makes no misrepresentation to or does 
 not actively mislead the person from whom he buys, or 
 to whom he sells, the transaction cannot be attacked for 
 fraud even though he may gain some advantage by rea- 
 son of his superior knowledge or position. ^'^ 
 
 34. Note 121 A. S. R. 203. 
 
 35. Note 121 A. S. R. 203. 
 
 36. Moynahan vs. Prentiss, 10 Colo. App. 295, 51 Pac 94. 
 
 37. Crowell vs. Jackson, 53 N. J. L. 656. 
 Krumbhaar vs. Griffiths. 151 Pa. St. 223.
 
 TRANSFER OF CERTIFICATES OF STOCK :}53 
 
 One who purchases stock at a sale by 
 sheriff, assignee the sheriff under execution or attachment, 
 or bankrupt sale. qj. purchases at an assignee's sale, or a 
 sale in bankruptcy, is exposed to the risk that the legal 
 title to the shares may be in another unless the certifi- 
 cates themselves are produced at the sale. I have pointed 
 out previously tliat it is under such circumstances and 
 at such sales that the convict between claimants to 
 shares which have been sold m' pledged but not trans- 
 ferred on the records of the company usually occur. 
 Since most courts now hold that shares are not held 
 under attachment or execution by the sheriff unless he 
 seize actual physical possession of the certificates, or the 
 laws of most States so provide, (U. S. T. A., Sec. 13) 
 much of the danger of purchasing at such sales has been 
 eliminated. An assignee or trustee in bankruptcy can 
 convey a good title if he delivers the certificates to the 
 purchaser at his sale but there is risk, if the certificates 
 are not in his possession, that they may have been al- 
 ready pledged or sold by the assignor or bankrupt to 
 another who would take a better title than the purchaser 
 at such a sale. (U. S. T. A., Sec. 4.) 
 
 The sale of pledged stock by the pledgee 
 Purchase from i , • i /? 7 
 
 pledgee or taking conveys a good title 10 a bona fide pur- 
 
 repiedge. chaser for value, free from the claims of 
 
 the pledgor and of creditors even if the transfer to the 
 
 pledgee is not recorded on the company's books. ^^ But 
 
 if the purchaser knows that the stock he purchases is 
 
 held by his vendor merely as a pledge he will not be a 
 
 bona fide purchaser, unless he purchases at a sale made 
 
 to satisfy the conditions of the pledge.^® If one take 
 
 38. Coit vs. Humbert, 5 Calif. 260. 63 Ann. Dec. 128. 
 McNeil vs. Tenth Nat. Bank, 46 N. Y. 325. 
 Westino'house vs. German, etc.. Bank, 196 Pa. St. 249. 
 
 39. Westine;liouse vs. German, etc., Bank, 188 Pa. St. 630. 
 Ryman'vs. Gerlach, 153 Pa. St. 197.
 
 354 QUASI-NEGOTIABLE INSTRUMENTS 
 
 from another as a pledge stock which he knows has been 
 pledged to him by its owner he will not obtain its legal 
 title but will hold it subject to the right of its owner to 
 reclaim it.^*^ The right to reclaim the stock exists in 
 its owner in either of these cases if he could originally 
 reclaim it from the one to whom he pledged it. However, 
 the owner would be obliged to pay the repledgee or the 
 purchaser from the original pledgee, purchasing with 
 knowledge of the pledge, the amount of his obligation 
 upon the original pledge before becoming entitled to re- 
 claim the shares.^ ^ The rules which govern the transfer 
 of stock as they are given in this treatment of the sub- 
 ject are all applical)le to its transfer by one who holds it 
 in pledge but one dealing with an agent or trustee know- 
 ing him to be employed to sell shares belonging to an- 
 other cannot lawfully accept such shares in pledge from 
 him, although a sale by the agent would convey the title.*- 
 
 One of the first duties of an executor or 
 Purchase from . . ,. i i , 
 
 executor or administrator oi a deceased person's es- 
 
 administrator. ^^^g j^g f^^ convert the personal property 
 in his charge into money. He therefore has a right to 
 sell shares of stock belonging to the estate wiiich he has 
 been appointed to administer. The laws governing the 
 administration of estates provide in what manner the 
 personal property in the hands of the executor adminis- 
 trator must or may be sold and although it is asserted, 
 and rightly, except where it may be otherwise provided 
 by statute, that an order of court is unnecessary to em- 
 power an administrator or executor to sell shares be- 
 
 40. Gorman Sav. Bk. vs. Renshaw, 78 Md. 475. 
 
 41. Chamberlain vs. Greenleaf, 4 Abb. N. Cas. 178, 182. 
 
 42. Patterson First Nat'l Bank vs. Nat'l Broadway Bk., 156 N. 
 
 Y. 459, 51 N. E. 398, 42 L. R. A. 139. 
 Loring: vs. Brodie, 134 Mass. 45;'.
 
 TRANSFER OF CERTIFICATES OF STOCK 355 
 
 longing to his decedent's estate/^ the purchaser will ex- 
 ercise a wise precaution to insist that such authority 
 shall be obtained and that he be provided with a certified 
 copy of the order and the letters of appointment of the 
 executor or administrator, in order to facilitate the trans- 
 fer of tlie shares upon the books of the corporation. 
 Purchase from '^^^^ duties of guardians in respect to 
 
 Guardian. the sale of shares belonging to their wards 
 
 and their right to sell and transfer the certificates which 
 they hold in a representative capacity is likewise regu- 
 lated by statute. As in the case of executors and adminis- 
 trators one purchasing from a guardian, to be fully pro- 
 tected and to assist in protecting the interests of the es- 
 tate, ought, as a rule, to accept a transfer only when the 
 sale has been made after proper authorization by the 
 court which controls the administration of the estate 
 which he serves, and to require the production of the 
 order under which the sale is directed and a certified copy 
 of the appointment, although there is ample and good 
 authority to support the right of a guardian to sell 
 without it.^^ 
 
 Purchase from < ^^^^ purchasing from a trustee stock 
 
 trustee. which he knows the vendor holds as a part 
 
 of the trust estate is obliged to ascertain whether the 
 trustee is given power to sell by the instrument creating 
 the trust.^^' In the absence of knowledge or notice that the 
 stock offered is trust estate stock the buyer will, however, 
 be regarded as a bona fide purchaser and entitled to its 
 
 43. See Note 45 L. R. A.. N. S. 1079. 
 Leitch vs. Wells, 48 N. Y. 585. 
 Prall vs. Tilt, 27 N. J. Eq. 393. 
 Wood's Appeal, 92 Pa. St. 379. 
 
 44. Lamar vs. Micou, 112 U. S. 452, 475. 
 
 Bank of Virpnia vs. Craig, G Leigh (Va.), 399, 432. > 
 
 Gardner vs. Beacon Trust Co., 190 Mass., 27. i 
 
 45. Patterson First Nat. Bk. vs. Broadway Bk., 156 N. Y. 499.
 
 356 QUASI-NEGOTIABLE INSTRUMENTS 
 
 transfer.^'^ Notice is actual knowledge of or a duty to 
 know any facts which would cause an ordinarily prudent 
 and intelligent man to make inquiry to learn whether the 
 stock belongs to a trust estate, and to learn whether a 
 power to sell is granted by the instr anient creating the 
 trust. The fact that the certificate is made out in the 
 name of a person as ' ' trustee, ' ' or if other words are used 
 which indicate an ownership in a trust capacity, will be re- 
 garded as notice.^^ If there is more than one trustee 
 all must sign the transfer and, as a rule, the corporation 
 will require that the instrument creating the trust shall 
 be exhibited. It ought to, for its own protection."*^ 
 
 One purchasing lost or stolen certifi- 
 Purchase of lost ^ . ■ ^ ^ i J^^ • j. c 
 
 or stolen cer- cates acquires no right to their transfer 
 
 tificates. if they are unindorsed, and even if they 
 
 are indorsed in blank; nor does any one who purchases 
 from or acquires through him these identical certifi- 
 cates.-"^ (U. S. T. A., Sec. 7.) 
 
 In this respect certificates of stock lack one of the 
 most marked qualities of negotiable paper for, under 
 similar circumstances, anyone taking for value and with- 
 out notice a bill, note or check, complete in every other 
 respect except delivery, would own and could enforce it. 
 But, you see, that quality of negotiability is not imparted 
 to certificates of stock and no purchaser, even for value 
 without notice, could acquire title to the lost or stolen 
 certificate. However, if one has procured the transfer of 
 a certificate ^^ hich, bearing a blank indorsement, had been 
 
 4(i. Hushes vs. Drovers, etc., Bk. (Md.), 38 Atl. 936. 
 
 47. See Notes 45 L. R. A. (N. S.) 1078; 15 L. R. A. 643. 
 
 Gevser-Marion Gold Min. Co. vs. Stark, 106 Fed. 558, 45 C. C. 
 
 A. 467, 53 L. R. A. 684. 
 Marbury vs. Ehlen, 72 Md. 206, 19 Atl. 648, 20 A. S. R. 467. 
 
 48 Bayard vs. Farmers, etc., Bk., 52 Pa. St. 232. 
 49. East Birmingham Land Co. vs. Dennis, 85 Ala. 565. 
 Knox vs. Eden Mus., etc., Co., 148 X. Y. 441.
 
 TRANSFER OF CERTIFICATES OF STOCK :Jo7 
 
 lost or stolen, and receives a new certificate in its place, 
 whether he be the finder or thief, or some one who pur- 
 chased from the finder or thief, and transfers this new 
 certificate for value to a bona fide transferee without 
 notice of the manner in which it was obtained, his trans- 
 feree and subsequent transferees acquire the legal and 
 indefeasible title to the shares represented in the new 
 certificate.^" (U. S. T. A., Sec. 8.) 
 
 Since, as you have observed, the holder of certificates 
 which have been assigned to him or to another whom he 
 represents, and the transferer likewise, has the right 
 to require the corporation to transfer the shares upon 
 its books, some inquiry seems fitting into the duty of the 
 corporation to make the transfer and to determine what 
 are the rights of the company in respect to the changes 
 in its membership by the barter and sale of its shares. 
 
 The corporation may refuse transfer except upon com- 
 pliance with its rules for transfer, unless these are con- 
 refuse transfer, trary to law, but it cannot justify a re- 
 Corporation may "^"-'^''^ ^^ ^^^^^ ^^^^ transfer on the ground 
 that it has been requested to refuse transfer by a for- 
 mer owner of the shares. ^^ Unless its charter or the 
 statutes under which it is incorporated give it that right, 
 the corporation may not refuse transfer for the reason 
 that a part of the subscription price remains unpaid or 
 that a call for an assessment or part of the subscription 
 is due and has been made upon the shares and the pay- 
 ment called remains unpaid/''- The transferer remains 
 
 50. Machinists Nat. Bk. vs. Field, 126 Mass. 345. 
 
 Mandelbaiim vs. North Am. Min. Co., 4 Mich. 465. 
 
 51. 'Neil vs. Wolcott Min. Co., 174 Fed. 527, 98 C. C. A. 309. 27 
 
 L. R. A., N. S. 200 and Note. 
 Bond vs. Mt. Hope Iron Co., 99 Mass. 505, 97 Am. Dec. 49. 
 Mundt vs. Commercial Nat. Bk., 35 Utah 90. 99 Pac. 454, 136 
 
 A. S. R. 1023. 
 
 52. Crai^: vs. Hesperia Land Etc. Co., 113 Cal. 7, 45 Pac. 10, 
 
 54 A. S. R. 316. 35 L. R. A. 306
 
 358 QUASI-NEGOTIABLE INSTRUMENTS 
 
 liable for payments called before the transfer but is not, 
 as a rule, liable upon those called afterward. The cor- 
 poration may refuse transfer of its shares if, on the eve 
 of insolvency, a . shareholder presents his shares for 
 transfer with a view to escape liability to its creditors, 
 and may refuse transfer to protect itself from fraud.^* 
 It may also refuse transfer to or by infants or per- 
 sons under other legal disability unless made in the name 
 of the duly appointed guardian, and may 
 
 Transfers to or require the application for transfer to be 
 by infants or per- , „ „ 
 
 sons under accompanied by a certmed copy oi the 
 
 disability. guardian's appointment, but a sale by a 
 
 minor not being void but voidable only, it has also been 
 held that the corporation must make the transfer upon 
 an assignment of shares by an infant unless at the date 
 of the application it had already been repudiated by 
 him.^'"' 
 
 Similarly, transfers by executors or administrators 
 may be refused by the corporation unless accompanied 
 by a certified copy of appointment. The 
 Transfers by transfer of the shares from the deceased 
 administrators owner may be made to the executor or 
 and guardians. administrator as such, or it may be made 
 directly to one who has purchased from him when his 
 qualification is shown. The corporation is not required 
 to look into the necessity to sell the shares in order to pay 
 the debts of the decedent's estate^^ nor to look to the ap- 
 plication to be made by the executor or administrator of 
 the proceeds of their sale.^« It cannot require the pro- 
 
 53. Note, 136 A. S. R. 1030, 1031, 1033. 
 
 54. Smith vs. Nashville Etc. R. R. Co., 91 Teun. 221, 18 S. W. 546. 
 
 55. Bayard vs. Farmers Bk., 52 Pa. St. 232. 
 Peck vs. Providence Gas Co., 17 R. I. 275. 
 
 56. Hutchins vs. State Bank, 12 Mete. (Mass.) 421. 
 Leiteli vs. Wells, 48 N. Y. 585.
 
 TRANSFER OF CERTIFICATES OF STOCK 359 
 
 duction of the order to sell, for none is required. But if 
 the corporation have actual knowledge through its of- 
 ficers, that a breach of trust of misuse of the stock or 
 its proceeds is contemplated by the executor or adminis- 
 trator it is its duty to refuse the transfer. If it never- 
 theless permit the transfer it will be liable to the estate 
 for any loss it may sustain.^' If the executor apply for 
 transfer of stock which the corporation knows has been 
 specifically bequeathed it must allow the transfer, since 
 the proceeds of the shares might be required to pay the 
 decedent's debts. However, such knowledge might very 
 well be regarded as sufficient justification to require the 
 production of an order of court for the sale or transfer 
 of the shares and to excite the inquisitorial activities 
 sometimes required of the corporation to investigate the 
 authority to transfer when the rights of claimants seem 
 to conflict, and would authorize the corporation to delay 
 transfer for such reasonable time as it may require to 
 determine its duty in the matter. The foregoing applies 
 equally to sales by guardians who, however, more fre- 
 quently than do executors and administrators, obtain 
 and present authority of court for the sale of shares 
 which they hold for their wards. ^^ 
 
 It is the duty of the corporation to refuse transfer by 
 a trustee unless it knows that the transfer is authorized 
 Transfer by ^^7 ^^^^ instrument creating the trust and 
 
 trustees. has been executed by all the trustees 
 
 whose signatures it requires.^"' If it permit the transfer 
 of trust stock by one who has no right to make it or whose 
 right is not complete, the corporation w411 be liable to the 
 
 57. Lowry vs. Conuuercial & Farmers Bank, 15 Fed. Cas. No. 
 
 8581. 
 Stewart vs. Fireman's Ins. Co., 53 Md. 564. 576. 
 
 58. Gardner vs. Beacon Trust Co., 190 Mass. 27. 
 
 59. Note, 15 L. K. A. {)43, 45 L. R. A., N. 8. 1078, Ann. Cas. 1913, 
 
 E. 1175
 
 360 QUASI-NEGOTIABLE INSTRUMENTS 
 
 trust estate and may be compelled to replace the stock or 
 respond in damages when the transfer has been made by 
 the trustee in breach of his trust, and its negligence is the 
 cause of any loss sustained by the person for whose 
 benefit the shares are held in trust.^° It should, there- 
 fore, require always that the certificates presented for 
 transfer be accompanied by the instrument creating the 
 trust or that it be exhibited to the transfer officer.®^ 
 
 It is negligence on the part of the corporation to al- 
 low a transfer without a surrender of the certificate for 
 CorForation the shares properly indorsed or accom- 
 
 surrender of panied by proper authority to make the 
 
 certificate. transfer. If this breach of its duty result 
 
 in damage to one who is a bona fide holder of the old cer- 
 tificate it will be liable to him and obliged to respond to 
 him for his loss.^- Even if a new certificate has been 
 issued under an order duly made by a court after a bona 
 fide contest by the corporation, to replace one which has 
 been lost or stolen, the corporation is not relieved of lia- 
 bility to the holder of the old certificate. Its interests and 
 those of a subsequent bona fide purchaser of the lost or 
 stolen certificate are usually protected by a bond of in- 
 demnity ordinarily required by the court to be given by 
 the person sviio invokes its aid to obtain a new certificate 
 in place of one which has been lost. (U. S. T. A., Sec. 17.) 
 And if one fraudulently procures the issue of a new cer- 
 tificate, dishonestly claiming to have lost or destroyed 
 the old one which it replaces, when in fact he has sold 
 
 60. Note, 45 L. R. A.. N. S. 1079. 
 
 Citizens Bk. vs. Robbins, 128 Iiul. 449, 26 N. E. 116. 
 Marbiuy vs. Ehlen. 72 Md. 206, 19 Atl. 648. 
 Wooten vs. Wilminoton & W. R. Co., 128 N. C. 119: 38 S. E. 
 298. 
 
 61. Bayard vs. Farmers, etc., Bank, 52 Pa. St. 232. 
 
 62. Factors Ins. Co. vs. Marine, etc.. Co., 31 La. Ann. 149. 
 Snpplv Ditch Co. vs. Elliot, 10 Colo., 327, 15 Pac. 691, 3 Am. 
 
 St. Rep. 166, 11 L. R. A. 125.
 
 TRANSFER OF CERTIFICATES OF STOCK 361 
 
 it, the owner of the old certificate, if he is without notice 
 of the proceedings, is then entitled to the transfer to 
 him of the shares which he holds and the corporation is 
 required to look to the bond for its indemnity.^^ 
 
 A court's decree in an action wherein it has the power 
 to order the issue of a new certificate or the cancellation 
 
 of one issued by the corporation, must, 
 'Py'o jicf OT" ijY order 
 
 of court in other of course, be obeyed. Ordinarily a court 
 '^^ses. y^j[\i jjQ^ enter a decree by which the cor- 
 
 poration may be exposed to the danger of loss or injury 
 without providing at the same time for its adequate in- 
 demnity. Where there are rival claimants to a certifi- 
 cate the laws of all states provide that the corporation, 
 if it is unable to determine to whom the certificate ought 
 to be issued, or by whom it ought to be transferred, may 
 invoke the aid of a court in an action of interpleader and 
 require the claimants to submit their contention to the 
 court for adjudication if there is a reasonable doubt as 
 to which one is entitled to the shares. A corporation 
 which undertakes to determine the rights of rival claim- 
 ants without interpleader voluntarily assumes a respon- 
 sibility it is not required to take. If by a mistaken con- 
 clusion or opinion of the law its disposition of the rights 
 of the contending claimants to the shares is not sustain- 
 able in law, one w^ho is thereby injuriously affected may 
 compel it to respond in damages. 
 
 A forged signature or one made without authority is 
 inoperative. It conveys no right to the certificate or the 
 
 ««. i. * +^o«e shares it represents. Even if the trans- 
 Effect of trans- ^ 
 
 fer on forged fer has been made upon an assignment 
 ignature. ^^f ^^^ shares to which the signature has 
 
 been forged the new certificate does not replace the old one. 
 
 63. Cleveland, etcc, R. R. Co. vs; Robbins, 35 0. S. 483. 
 Brisbane vs. Delaw, etc., R. R. Co., 94 N.,Y. 204.
 
 362 QUASI-NEGOTIABLE INSTRUMENTS 
 
 The corporation is obliged to know the genuineness of 
 the signature of its stockholders and if it is not certain 
 that the signature presented is genuine it has the right 
 to require the person applying for transfer to produce 
 satisfactory proof that the signature is what it purports 
 to be.''^ 
 
 If, notwithstanding this adequate means of protecting 
 itself, the corporation permits a registry upon a forged 
 transfer it not only does not deprive the real owner of 
 his shares but it cannot cancel the registration of the 
 new certificate if it has passed into the possession of a 
 transferee who took it mediately or immediately, Avithout 
 notice, in good faith and for value, from the holder who 
 procured its transfer. In that situation the owner of 
 the shares may require the corporation to replace those 
 transferred upon his forged signature, even requiring 
 that it enter the market, if necessary, and buy others if 
 the original shares cannot be restored.*^^ He usually 
 prays for alternative relief in damages, however, and it 
 is damages, as a rule, that the corporation is required 
 to pay. 
 
 For a general understanding of the incidents of stock 
 ownership and transfer the explanations I have given of 
 the law will usually suffice for ordinary necessities. This 
 subject, like those which precede it, has been treated for 
 the benefit of persons who are interested in obtaining a 
 salutary knowledge of the important provisions of the 
 law upon these business instruments, and I hope the 
 book will enable many to free themselves from uneasy 
 doubts upon the certainty and safety of their possession 
 
 64. Telegraph Co. vs. Davenport, 97 U. S. 369. 
 65 Machinists Nat. Bank vs. Fiekl, 126 Mass. 345. 
 
 Pratt vs. Boston, etc., K. R. Co., 126 Mass. 443. 
 
 Pratt vs. Machinists Nat. Bk., 123 Mass. 110. 
 
 Boston, etc., R. R. Co. vs. Richardsdon, 135 Mass. 473.
 
 TRANSFER OF CERTIFICATES OF STOCK -363 
 
 and titles to the business paper and securities which 
 they hold. 
 
 Now, in conclusion, the writer expresses the hope that 
 this volume will be of use to business men, and to young 
 men getting a business education. Whatever may be 
 the merit of the explanations which have been offered of 
 these laws, particularly of the Uniform Negotiable In- 
 struments Law, that Act may be regarded as the most 
 remarkable statute ever enacted and it ought to be fa- 
 miliar to every man. The best legal talent was freely 
 expended, gratuitously, in its preparation. It has been 
 in force in some of the States for nearly twenty years. 
 During that time suggestions for its amendment were 
 made at more than one annual Conference of the 
 Commissioner on Uniform State Laws, made up now of 
 representatives of nearly all of the States, but the amend- 
 ments proposed and freely discussed at these Confer- 
 ences were not deemed desirable and were not made. 
 The courts have very generally recognized its inten- 
 tion to make uniform the law upon its subject and, 
 w^ith few exceptions, whenever there has been conflict 
 between its provisions and prior judicial interpretation 
 of the common law they have not hesitated to interpret 
 the Act without reference to the state of the law as it 
 was before its enactment. 
 
 Most of the needs of the business man for legal ad- 
 vice upon his commercial paper and most of his doubts 
 concerning his rights and duties upon such contracts 
 can be readily answered by reference to the Act itself 
 and technical skill is not now so much as formerly re- 
 quired of the lawyer in giving advice upon this sub- 
 ject since the law has been so admirably written. 
 The subtleties of the many questions which will con- 
 tinue to arise to confound the business man, and the
 
 364 QUASI-NEGOTIABLE INSTRUMENTS 
 
 lawyer as well, will not allow that any volume upon the 
 subject can or will be written which will provide a ready 
 answer for every difficulty it may become necessary to 
 meet. But if the book is used for frequent reieixnce to 
 the law, with which every business man ought xo make 
 himself thoroughly familiar, his knowledge of what to 
 do in order to prevent loss upon his commercial paper 
 and of when and how to do it will suffice for most of his 
 ordinary needs and dispense with much unsatisfactory 
 conflict and litigation now so frequent from a lack of 
 this knowledge. The brief analyses of the principles of 
 the laws governing Bills of Lading, Warehouse Receipts 
 and the transfer of Certificates of Stock are designed, 
 likewise, to enable men who handle or deal in these in- 
 struments to better understand their nature and the 
 principal provisions of the laws which govern their in- 
 terpretation and the rights and liabilities of their parties.
 
 APPENDIX 365 
 
 APPENDIX. 
 
 Wherein Will Be Found the Changes in the Law Made 
 BY Some of the States, 
 
 Alabama. 
 
 Sec. 4-9. The words "said holder" are substituted for 
 '' transfer er" at the end of the first sentence. At the end 
 of the section these words are added: ''for the purpose 
 of transferring title only." 
 
 Sec. 58. All of the last sentence between the words 
 ''such" and "latter" are omitted from the second sen- 
 tence of this section. 
 
 ApiZONA. 
 
 Sec. 85. The last sentence, beginning with the words, 
 "instruments falling due," is omitted from the Act. 
 
 Sec. 146. The last sentence relating to Saturday when 
 not a holiday is omitted. 
 
 Sec. 195. The Act omits this section. 
 
 Arkansas. 
 Sec. 98. In the last sentence the words, "must he sent 
 by mail," are substituted for "may he sent." 
 
 Colorado. 
 
 Sec. 49. The Act adds these words to the first sen- 
 tence, "if omitted hy mistake, accident or fraud." 
 
 Sec. 61. The Act omits the word " suh sequent" be- 
 fore "indorser" near the end of the first sentence. 
 
 Sec. 85. The third sentence, beginning "instrmnents
 
 366 APPENDIX 
 
 falling due" is omitted from the Act in this State and 
 this substituted: ''instruments falling due on any day, 
 in any place where any part of such day is a holiday, are 
 to be presented for payment on the next succeeding busi- 
 ness day, except that su^h instruments payable on de- 
 mand may, at the option of the holder, be presented for 
 payment during reasonable hours of the part of such day 
 which is not a holiday." 
 
 Sec. 146. The last sentence is omitted and this sub- 
 stituted: "When any day is in part a holiday present- 
 ment for acceptance may be made during reasonable 
 hours of the part of such day which is not a holiday." 
 
 Delawaee. 
 Sec. 85. The words "or becoming payable" are in- 
 serted in parentheses near the beginning of the third 
 sentence after the words "instruments falling due." 
 
 Idaho. 
 
 Sec. 2. In Sub-section 3 the words "or of interest" 
 
 are omitted. 
 
 Illinois. 
 
 Sec. 5. The Act adds "under this Act" after the last 
 word of the first sentence; it also omits all of Sub-section 
 2 following the word "judgment." 
 
 Sec. 6. At the beginning of Sub-section 5 before the 
 word "designates" these are added: ''Is payable in 
 currency or current funds: or" and it omits the last 
 paragraph. 
 
 Sec. 8. The Act adds the following as additional bub- 
 section: "7. An instrumeyit payable to the estate of a 
 deceased person shall be deemed payable to the order of 
 the administrator or executor of his estate." 
 
 Sec. 9. Sub-sections 3 and 5 are omitted and these
 
 APPENDIX 367 
 
 substituted: "3. When it is payable to the order of a 
 person knotvn by the drawer or Quaker to be fictitious or 
 non-existent, or of a living person not intended to have 
 any interest in it." "5. When, althouqh originally pay- 
 able to order, it is indorsed in blank by the payee or a 
 'subsequent indorsee." 
 
 Sec. 14. The Act inserts these words, "issued or," 
 between the words "is" and "negotiated" near the be- 
 ginning of the last sentence of this section. 
 
 Sec. 23. The Act omits the words "of the person whose 
 signature it purports to be" near the beginning of the 
 first sentence. 
 
 Sec. 25. The last sentence has been changed to read 
 as follows: "An antecedent or pre-existing claim, 
 ivhether for money or not, constitutes value where an 
 instrument is taken either in satisfaction therefor or as 
 security therefor, and is deemed such, whether the in- 
 strument is payable on demand or at a future time." 
 
 Sec. 29. The words "ivithout receiving value there- 
 for" are omitted from the first sentence; at the end of 
 the section these are added, "and in case a transfer after 
 maturity was intended by the accommodating party not- 
 withstanding such holder acquired title after maturity. 
 Sec. 31. These words are added: "And the addition 
 of ivords of assignment or guaranty shall not negative 
 the additional effect of the signature as an indorsement, 
 unless otherivise expressly stated." 
 
 Sec. 37. The Act adds to Sub-section 2, "or except in 
 the case of a restrictive indorsement specified in Section 
 $6, Sub-section 2, any action against the indorser or any 
 prior party that a special indorsee ivould he entitled to 
 bring." It also substitutes for the words ''/*/6' rights as 
 such an indorsee" in Sub-section 3 the words "the i)fstru- 
 ment" and at the end of the last paragraph adds the fol-
 
 368 APPENDIX 
 
 lowing: "Specified in Section 36, Sub-section i, and as 
 against the principal or cestui qui trust only the title of 
 the first indorsee under the restrictive indorsement speci- 
 fied in Section 36, Sub-sections 2 and 3, respectively." 
 
 Sec. 40. The words, '^ payable to bearer," are omitted 
 and these substituted: "originally payable to or indorsed 
 specially to bearer." 
 
 Sec, 49. The last seven words of the first sentence fol- 
 lowing the word "right" are omitted and these substi- 
 tuted, "to enforce the instrument against one who signed 
 for the accommodation of his transferer, and the right 
 to have the indorsement of the transferer, if omitted by 
 accident or mistake." 
 
 Sec. 57. The Act inserts after the word "themselves" 
 a reference to a statute making certain defenses real 
 defenses. 
 
 Sec. 58. In this section the Act inserts the word 
 "duress" after "fraud" near the end of the section and 
 for the last two words, "the latter," substitutes "such 
 holder." 
 
 Sec. 61. The Act omits the word "subsequent" before 
 "indorser" near the end of the first sentence. 
 
 Sec. 64. Sub-sections 1 and 2 are omitted and these 
 substituted: "1 — If the instrument is a note or bill pay- 
 able to the order of a third person, or an accepted bill, 
 payable to the order of the draiver, he is liable to the 
 payee and all subsequent parties." "2 — // the instrip- 
 ment is a note or unaccepted bill payable to the order of 
 the maker or drawer, or is payable to bearer, he is liable 
 to all parties subsequent to the maker or drawer." 
 
 Sec. 66. The Act inserts after "indorser" at the be- 
 ginning of the section the words, "not an accommodating 
 party." It also inserts "and four" after the word 
 "three" in Sub-section 1 and substitutes, "every in-
 
 APPENDIX 360 
 
 dorser" for "he" near the beginning of the last sentence 
 after the words "in addition." 
 
 Sec. 68. The last sentence of this section is omitted 
 and the following snl)stituted : "All parties jointly lior- 
 hle on a negotiable instrument are deemed to be jointly 
 and severally liable." 
 
 Sec. 69. The following is added to this section: 
 "Sec. 69a. Whenever any bill of exchange drawn or in- 
 dorsed within this State and payable without this Si ate >s 
 duly protested for non-acceptance or non-payment, the 
 draiver or indorser thereof, due notice being given of 
 such non-acceptance or non-payment, shall pay such bill 
 at the current rate of exchange and with legal interest 
 from the time such bill ought to have been paid imtil 
 paid, together with the costs and charges of protest, and 
 on bills payable in the United States in case siiit has to 
 be brought thereon and on bills payable without the 
 United States with or without suit, five per cent damages 
 in addition." 
 
 Sec. 70. The section adds the words "except in the 
 case of bank notes" after the word "instrument" where 
 it is first used in the first sentence. 
 
 Sec. 80. The Act omits all following the words, "for 
 his accommodation. ' ' 
 
 Sec. 87. This section is omitted from the Act in this 
 State. 
 
 Sec. 119. Sub-section -i is omitted from th(^ Act in this 
 State. 
 
 Sec. 120. The Act omits Sub-section 3 and Sub-section 
 4 of the Act is given as Sub-section 3. 
 
 Sub-section 5 then becomes Sub-section 4 in this State 
 and contains these additional words: "or unless the 
 principal debtor be an accommodating party." 
 
 Sub-section 6 is numbered 5 in this State and changed
 
 370 APPENDIX 
 
 in the following manner: The second word "any'' is 
 changed to "an" and after "agreement" the words "in 
 favor of the principal debtor" are inserted. Between 
 the words "assent" and "of," which occur at about the 
 middle of the sub-section, the words "prior or subse- 
 quent" are inserted and at the end these words are 
 added: "Or unless the principal debtor be an accom- 
 modating party." 
 
 Sec. 124. The w^ords, "fraudulently or," are inserted 
 before "materially" where it first occurs, near the be- 
 ginning of the first sentence and after the word "al- 
 tered" which follows it, the Act inserts "by the holder." 
 
 Sec. 134. The words "to whom it is shown and" to- 
 ward the end of the section are omitted. 
 
 Sec. 135. The words "or after" are inserted between 
 the words "before" and "it is." 
 
 Sec. 137. This section is omitted from the Act. 
 
 Sec. 186. The Act inserts the following after the words 
 "its issue": "and notice of dishonor given to the drawer 
 as provided for in the case of bills of exchange." 
 
 loWA. 
 
 Sec. 2. In Sub-section 3 the words "or of interest" 
 are omitted. 
 
 Sec. 85. The following has been added to this section : 
 "A demand made on any one of the three days folloiving 
 the day of maturity of the instrument, except on Sundo.y 
 or a holiday, shall be as effectual as though made on the 
 day on which demand may be made under the provisions 
 of this Act, and the provisions of this Act, as to notice 
 of non-payment, non-acceptance and as to protest shall 
 be applicable with reference to such demand as though 
 the demand were made in accordance with the terms of 
 this Act; but the provisions of this section shall not be
 
 APPENDIX 371 
 
 construed as authorizing demand on any day after the 
 third day from that on which the instrument falls due 
 according to its face." 
 
 Kansas. 
 
 Sec. 16. The Act omits the third sentence of this sec- 
 tion. 
 
 Sec. 70. Near the end of the first sentence after the 
 word "maturity" the statute inserts these words, "and 
 has funds there available for that purpose." 
 
 Sec. 85. The words "or becoming payable" are in- 
 serted near the beginning of the third sentence, after the 
 words "instruments falling due." 
 
 Sec. 192. The last sentence is omitted from the Act in 
 
 this State. 
 
 Kentucky. 
 
 Sec. 5. The Act omits Sub-section 3. 
 
 Sec. 19. This section is omitted and the following sub- 
 stituted: "19. The signature of any party may be made 
 by an agent duly authorized in ivriting." 
 
 Sec. 48. The word " oimer" is substituted for 
 "holder" in the first sentence. 
 
 Sec. 85. The third sentence beginning with the words 
 "instruments falling due" is omitted. 
 
 Sec. 95. The Act substitutes the word "must" for 
 ''need not" near the beginning of the first sentence and 
 substitutes "written" for "verbal" at the end of that 
 sentence. 
 
 Sec. 96. The words "merely oral" are omitted from 
 this section. 
 
 Sec. 146. The last sentence, relating to Saturday when 
 not a holiday, is omitted. 
 
 Sec. 196. The Act omits this section.
 
 372 APPENDIX 
 
 Maryland. 
 
 Sec. 120. The Act omits from Sub- section the words 
 '' unless made ivitJi the assent of the party secoridarihi 
 liable." 
 
 Massachusetts. 
 
 Sec. 85. The Act, on the subject of grace, contains this 
 provision: "On all draffs and bills of exchange made 
 payable within this commonwealth at sight, three days 
 of grace shall be alloived, unless there is an express stipu- 
 lation therefor to the contrary." After the words "fall- 
 ing due" near the beginning of the sentence the words 
 "or payable" are inserted, and the following provision 
 is added at the end of the section: "Provided also, that 
 the same shall be duly presented for payment or accept- 
 ance or collection on the next succeeding business day." 
 
 Minnesota. 
 Sec. 87. The word "not" has been inserted between 
 the word "is" and "equivalent" and the provision of 
 this section thus completely negatived. 
 
 Mississippi. 
 
 Sec. 49. The last seven words of the first sentence, 
 following the w^ord "right" are omitted and these sub- 
 stituted: "To enforce the instrument against one ivho 
 signed for the accommodation of transferer, and the 
 right to have the indorsement of the transferer if omitted 
 by accident or mistake." 
 
 Missouri. 
 
 Sec. 49. In the first sentence, the last seven words fol- 
 lowing the word "right" are omitted and these sub- 
 stituted: "To enforce the instrument against one who
 
 APPENDIX 373 
 
 sigtu'd for the accommodation of his transferer, and 
 the rif/Jit to have the indorsement of the transferer, if 
 omitted by accident or mistake." 
 
 Sec. 62. The word "then" before "capacity" in sub- 
 section 2 is omitted. 
 
 Sec. 85. The words "or becoming payable" are in- 
 serted near the beginning of the third sentence after the 
 words "instruments falling due." 
 
 Sec. 87. The foUomng words have been added at the 
 end of this section: "But where the instrument is made 
 payable at a fixed or determinable future time, the order 
 to the bank is limited to the day of maturity only." 
 
 Sec. 120. The Act adds to Sub-section 3 the words 
 "except when such discharge is had in bankruptcy pro- 
 ceedings." 
 
 Nebraska. 
 
 Sec. 2. The Act adds after Sub-section 5: "Provided 
 that nothing herein shall be construed to authorize any 
 court to include in any judgment on am instrum.ent made 
 in this state any sum for attorney's fees or other costs 
 not allowable in other cases." 
 
 Sec. 71. All of this section after the words "within 
 a reasonable time after its issue" is omitted from the 
 Act. 
 
 Sec. 75. The Act omits all of the section following the 
 words "during banking hours." 
 
 Sec. 87. This section is omitted from the Act in this 
 state. 
 
 New Hampshir. 
 
 Sec. 71. The Act adds the following provision defining 
 a reasonable delay: "Upon a promissory note payable 
 on demand, a demand made at the expiration of sixty
 
 374 APPENDIX 
 
 days from the date thereof, ivithout grace, or at any time 
 within that term shall he deemed to he made at a reason- 
 ahle time; and any act, neglect or other thing which hy 
 the provisions of this Act is deemed equivalent to a pre- 
 sentment and demand on a note payahle at a fixed time 
 or which would dispense with such presentment and de- 
 mand, if it occurs at or within the sixty days shall he a 
 dishonor thereof, and shall authorise the holder of the 
 note to give notice of the dishonor to the indorser as 
 upon presentment to the promisor, and his neglect or 
 refusal to pay the same. No presentment of the note 
 to the promisor and demand for payment shall charge 
 the indorser unless made on or hefore the last day of the 
 sixty days." 
 
 Sec. 85. The Act contains this additional provision: 
 "On all drafts and bills of exchange made payahlp unthin 
 this commonwealth at sight, three days of grace shall 
 he allowed, unless there is an express stipulation there- 
 for to the contrary." The words "or payahle" are in- 
 serted after the words "instruments falling due" which 
 begin the third sentence. 
 
 New York. 
 
 Sec. 70. The statute inserts the words "and has 
 funds there available for that purpose" near the end of 
 the first sentence between the words "maturity" and 
 "such." 
 
 Sec. 85. The words "or becoming payahle" are in- 
 serted near the beginning of the third sentence after the 
 words "instruments falling due." 
 
 Sec. 120. The act omits from Sub-section 6 the words 
 "unless made with the assent of the party secondarily 
 liable, or".
 
 APPENDIX 375 
 
 North Carouna. 
 
 Sec. 2. In Sub-section 3 the words "or of interest" 
 are omitted and the following is added at the end of the 
 section: "Nothing in this chapter shall authorize the 
 enforcement of an authorization to confess judgment or 
 a waiver of homestead and personal property/ exemp- 
 tions or a provision to pay counsel fees for collection 
 incorporated in any of the instruments jnentioned- in 
 this chapter: hut the mention of ea-ch provision in such 
 instruments shall not affect the other terms of such in- 
 struments or the negotiability thereof." 
 
 Sec. 5. Sub-section 2 is atTected and qualified, by the 
 change in Section 2 given above. 
 
 Sec. 16. The words ''accepting or" in the second sen- 
 tence are omitted. 
 
 Sec. 17. Sub-section 2 is omitted. 
 
 Sec. 22. The words ''or married woman" are inserted 
 after the word "infant" in this section. 
 
 Sec. 85. Upon the subject of days of grace, the Act 
 provides an exception as follows: "All bills of exchange 
 payable within the state, at sight, in ivhich there is an 
 express stipulation to that effect, and not othencise, 
 shall be entitled to days of grace as the same are allowed 
 by the customs of merchants in foreign bills of exchange, 
 payable at the expiration of a certain period after date 
 or sight; provided, that no days of grace shall be allowed 
 on any bill of exchange, promissory note or draft payable 
 on demand." 
 
 Sec. 194. The section is omitted in this state. 
 
 Ohio. 
 
 Sec. 70. The Act inserts the words "and has funds 
 there available for that purpose" near the end of the
 
 376 APPENDIX 
 
 first sentence between the words ''maturity" and 
 "such." 
 
 Pennsylvania. 
 
 Sec. 137. By amendment the following has been added 
 to this section: "Provided, that the mere retention of 
 such bill by the drawee, unless its return has been de- 
 manded, will not amount to an acceptance; and provided 
 further thai the provisions of this section shall not apply 
 to checks." 
 
 Rhode Island. 
 
 Sec. 85. The words "except sight drafts" are added 
 after the words "every negotiable instrument" in the 
 first sentence. 
 
 Sec. 103. In Sub-section 2 the last nine words are 
 omitted and these substituted: "ten o'clock in the even- 
 ing of the day folloiving". 
 
 South Dakota. 
 
 Sec. 2. The following provision is substituted for Sub- 
 section 5. "Provided that nothing herein contained 
 shall be construed to authorize any court to include in 
 any judgment on an instrument made in this state any 
 sum for attorney's fees or other costs not now taxable 
 by laiv." 
 
 Sec. 14. The section is omitted from the Act and the 
 following substituted: ''Sec. 14. One who makes him- 
 self a party to an instrument intended to be negotiable, 
 but which is left ivholly or partly blank, for the purpose 
 of filling afterwards, is liable upon the instruynent to an 
 indorser thereof in due course, in whatever manner and 
 at whatever time it may be filled so long as it remains 
 negotiable in form." 
 
 Sec. 16. The sentence beginning with the word "hit"
 
 APPENDIX 377 
 
 and ending with the word ''presumed" has been omitted 
 and the following substituted: "An indorsee of a nego- 
 tiable in^rument in due course, acquires an absolute 
 title thereto, so that it is valid in his hands, notwithstand- 
 ing any provision of latv making it generally void or void- 
 able, and notwithstanding any defect in the title of the 
 person from whom he acquired it." 
 
 Sec. 42. The words "the indorsement of" before the 
 words "the bank" near the end of the section, are 
 omitted. 
 
 Sec. 71. See under Sec. 193 below. 
 
 Sec. 87. The section is omitted. 
 
 Sec. 124. The words "by the holder" are inserted 
 after the words "materially altered" in the first sentence 
 of this section. 
 
 Sec. 134. The words, "to ivhom it is shoum" are omit- 
 ted from the section as enacted in this state. 
 
 Sec. 137. This section is omitted. 
 
 Sec. 193. The act contains the following additional 
 sections upon this subject : 
 
 "Sec. 192 A. The apparent maturity of a bill of ex- 
 change payable on sight, or on demand, is: 
 
 1. If it bears interest, one year after its date; 
 
 or, 
 
 2. If it does not bear interest, ten days after its 
 
 date, in addition to the time which ivould 
 suffice, with ordinary diligence, to forward 
 it for acceptance. 
 Sec. 192B. The apparent maturity of a promissory 
 note, payable at sight, or on demand, is: 
 
 1. If it bears interest, one year after its date; 
 
 or, 
 
 2. If it does not bear interest, six months after its 
 
 date,"
 
 378 APPENDIX 
 
 Vermont. 
 
 Sec. 71. The words ''its issue in order to charge the 
 Draiver" are substituted for 'Uhe last negotiation there- 
 of" at the end of the section. 
 
 Sec. 118. The following provision has been added to 
 this section: "But this provision shall not be held to 
 dispense with demand and notice of dishonor as pro- 
 vided by sections 71 and 90." 
 
 Virginia. 
 Sec. 20. After the w^ord "capacity" in this section 
 the act inserts the words "tvitliout disclosing his princi- 
 pal" 
 
 Wisconsin. 
 Sec. 1. The Act adds after sub-section 5 ^^biit no order 
 drawn upon or accepted by the treasurer of any county^ 
 toivn, city, village or school district, whether drawn by 
 any officer thereof or any other person, and no obliga- 
 tion nor instrument made by any such corporation or 
 any officer thereof, unless expressly authorized by law to 
 be made negotiable shall be, or shall be deemed to be, 
 negotiable according to the custom of merchants in 
 whatever form they may be drawn or made. Warehouse 
 receipts, bills of lading and railroad receipts upon the 
 'Qce of which the words 'not negotiable' shall not be 
 plainly written, printed or stamped, shall be negotiable 
 as provided in Sections 1676 of the Wisconsin Statutes 
 of 1878, and in Sections 4194 and 4425 of these statutes, 
 as the sa^ne have been construed by the supreme court." 
 Sec. 4. The last paragraph is omitted and this sub- 
 stituted: "4 — At a fixed period after the date or sight, 
 though payable before then on a contingency. An instru- 
 ment payable upon a contingency is not negotiable, and
 
 APPENDIX 379 
 
 the happening of the event does not cure the defect ex- 
 cept as herein provided." 
 
 Sec, 5. The Act adds after the last word, "illegal,'' 
 these, ''or authorize the waiver of exemptions from exe- 
 cution." 
 
 See. 10. The Act adds to this section ^'memoranda 
 upon the face or hack of the instrument, whether signed 
 or not, material to the contract, if made at the time of 
 delivery, are part of the instrument and parol evidence 
 is admissible to show the circumstances under which they 
 were made." 
 
 Sec. 14. The Act inserts the words ''prior to nego- 
 tiation" before the words "hy filling" near the end of 
 the first sentence. The words "a prima facie" near the 
 end of the second sentence are omitted and it reads 
 *' operates as an authority." 
 
 Section 17. An additional sub-section is added as fol- 
 lows: "8 — Where several writings are executed at 
 about the same time, as parts of the same transactions, 
 intended to accomplish the same object they may be con- 
 strued as one and the same instrument as to all parties 
 having notice thereof." 
 
 Sec. 25. After the word "debt" in the second sen- 
 tence these words are inserted "discharged extin- 
 guished or extended" and these are added to the section; 
 "But the indorsement or delivery of negotiable paper 
 as collateral security for a pre-existing debt, without 
 other consideration, and not in pursuance of an agree- 
 ment at the time of delivery by the maker, does not con- 
 stitute value." 
 
 Sec. 41. The Act inserts the word "joint" before the 
 word indorsees." 
 
 Sec. 49. This sentence is added to the section "when 
 the indorsement was omitted by mistake, or there was an
 
 380 APPENDIX 
 
 agreement to indorse made at the time of the transfer, 
 the indorsement, when made relates back to the time of 
 the transfer." 
 
 Sec. 52. Another sub-section is added, as follows: 
 "5 — That he took it in the usual course of business." 
 
 Sec. 55. That Act adds the following to this section: 
 ''And the title of such person is absolutely void ivhen 
 such instrument or signature was so procured from a 
 person who did not knoiv the nature of the instrument 
 and could not have obtained such knowledge by the use 
 of ordinary care." 
 
 Sec. 57. The following is added to this section: ^'Ex- 
 cept as provided in Sections 1944 and 1945 of these stat- 
 utes, relating to insura^ice premiums; and also on cases 
 ivhere the title of the person negotiating such instrument 
 is void under the provisions of Sec. 55 of this Act." 
 
 Sec. 58. In this section the Act inserts the word 
 ''duress" after ''fraud" near the end of the section and 
 for the last two words "the latter" substitutes "such 
 holder." 
 
 Sec. 70. All of the first sentence after the words "on 
 the instrument" is omitted from the Act. 
 
 Sec. 85. The Act omits the last sentence beginning 
 with the words "instruments falling due." 
 
 Sec. 117. The Act adds this provision: "But this 
 shall not be construed to revive any liability discharged 
 by such omission." 
 
 iSec. 120. A new sub-section is added, as follows: 
 "4a. By giving up or applying to other purposes col- 
 lateral security applicable to the debt, or, there being 
 in the holder* s hands or within his control the means of 
 complete or partial satisfaction, the same are applied 
 to other purposes." 
 
 Where the word "assent" occurs at about the middle
 
 APPENDIX 381 
 
 of Sub-section 6 the Act inserts, immediately following 
 it, the words ^^ prior or subsequent" and at the end of 
 this sub-section adds '^'or unless he is fully indemnified." 
 
 Sec. 124. "Where the word '^assented" occurs near the 
 end of the first sentence it is followed by the words 
 *' orally or in ivriting" which the Act inserts there. 
 
 Sec. 128. The Act omits the last three words "or in 
 succession." 
 
 See. 130. The words "or person" which precede the 
 words "iiot capacity" are omitted. 
 
 Sec. 137. The Act adds: "Mere retention of the hill 
 is not acceptance." 
 
 Sec. 146. The last sentence, relating to Saturday when 
 not a holiday, is omitted. 
 
 Sec. 183. The Act contains two additional sections 
 here, as follows: "Sec. 1682. Whenever any hill of ex- 
 change drawn or indorsed within this State and payahle 
 without the limits of the United States shall he duly 
 protested for non-acceptance or non-payment, the party 
 liable for the contents of such hill shall, on due notice and 
 demand thereof, pay the same at the current rate of ex- 
 change at the time of the demand and damages at the 
 rate of five per cent upon the contents thereof, together 
 with interest on the said contents to he computed from 
 the date of the protest; and said amount of contents, 
 damages and interest shall he in fidl of all damages, 
 charges and expenses. Sec. 1683. If any hill of ex- 
 change drawn upon any person or corporation out of this 
 State, hut within some State or Territory of the United 
 States, for the payment of money shall he dull/ presented 
 for acceptance or payment and protested for non-accept- 
 ance or non-payment, the drawer or indorser thereof, due 
 notice heing given of such non-acceptance or non-pay- 
 ment shall pay said hill with legal interest according to
 
 382 APPENDIX 
 
 its tenor and five per cent damages, together with costs 
 and charges of protest/' 
 
 Wyoming. 
 
 Sec. 2. The words "or of interest" in sub-section 3 
 are omitted. 
 
 Sec. 18. The yvoid'^ expressly" in the first sentence is 
 omitted. 
 
 Sec. 34. The word "made" is inserted between the 
 words "to he" and "payable" in the first clause of the 
 first sentence of this section.
 
 TABLE OF CASES. 
 
 The references 
 
 Adam v. Mfr's. Natl. Bk 57 
 
 Adams v. Wright 162 
 
 Adams v. Smith 75 
 
 Adrian v. M'cCaskill 92 
 
 Aebi V. Bk. of Evansville 
 
 142, 151, 167, 219 
 
 Aetna Nt. Bk. v. Fourth Nat. 
 
 Bk 148 
 
 Agnew V. Walden 68 
 
 Agricultural Bk. v. Robinson.. 66 
 Alabama Coal Mining Co. v. 
 
 Brainard 49 
 
 Albany Tr. Co. v. Frothingham.166 
 
 Albers v. Hoffman 36 
 
 Albany Co. v. Ice Co 96 
 
 Alexander v. Hazelrigg 105 
 
 Allen V. Suydam 231 
 
 Allen V. Rightmire 81 
 
 Alley V. Rogers 281 
 
 American Bk. v. Macondrey. . .114 
 Amer. Boiler Co. v. FOutham.. 64 
 Amer. Nat. Bk. v. Fertilizer Co. 
 
 ■ 157, 158 
 
 Amer. Exchg. Bk. v. Metropoli- 
 tan Bk 291 
 
 Amer. Alkali Co. v. Campbell. .339 
 
 Amsinck v. Rogers 208 
 
 Anderson v. Dundee St. Bk 60 
 
 Arch. Stone Co. v. St. Louis 47 
 
 Argus Printing Co., In re 349 
 
 Armstrong v. Pomeroy Bk 60 
 
 Atkins V. Gamble 349 
 
 Aurora St. Bk. v. Haynes Fames 
 
 El. Co 71, 92 
 
 Auten V. Manistee Nat, Bk 290 
 
 Auten V. Crahan 273 
 
 B. 
 
 Bailie v. Augusta Savgs. Bk 
 
 :i81, 297 
 
 Baker v. Dening 15 
 
 are to pages. 
 
 Baker v. Lehman 188 
 
 Baldinger, etc., Mfg. Co. v. Citi- 
 zens Tr. Co 207 
 
 Baldwin's Bk. v. Smith 148 
 
 Bambridge v. Louisville 149 
 
 Bk. of Amer. v. Waydell 78, 96 
 
 Bank v. Looney 51 
 
 Bank v. Hale 100, 101 
 
 Bk. of Commerce v. Farm. & 
 
 Merch. Bk 71 
 
 Bk. of Commerce v. Brayles. . .101 
 
 Bk. of Commerce v. Rogers 110 
 
 Bank v. Miller 164 
 
 Bank v. Friar 288 
 
 Bank v. Union Tr. Co 296 
 
 Bank of Virginia v. Craig 355 
 
 Bankers St. Bk. v. Mason Hand 
 
 Lathe Co 143 
 
 Baring v. Clark 251 
 
 Barkley v. Muller 74 
 
 Barnet v. Young 70 
 
 Bartlett v. First Nat. Bk 58 
 
 Barton Savings Bk. v, Stephen- 
 son . 94 
 
 Batcheller v. White 187 
 
 Battle Creek Nat'l Bk. v. Dean. 19 
 Bayard v. Farmers & Merch. 
 
 Bk ..356, 358, 366 
 
 Beardsley v. Hill 19 
 
 Beem v. Farrell 56, 58, 189 
 
 Beer v. Clifton 27 
 
 Bedford Bk. v. Acoam 148 
 
 Belch V. Roberts 140 
 
 Benson v. Abbott 91 
 
 Berlin v. Eddy 349 
 
 Beyerque v. San Francisco 20 
 
 Bingham v. Kimball 64 
 
 Bingham v. Reddy 186 
 
 Black V. First Nat'l Bk. of West- 
 minster 106 
 
 Blake v. Hamilton, etc., Bk 279 
 
 Blackman v. Lehman, Durr & 
 Co 16, 28, 272
 
 384 
 
 TABLE OF CASES 
 
 Bliss V. Cutter 282 
 
 Bond V. Mt. Hope Min'g Co 357 
 
 Borup V. Mininger 291 
 
 Boston, etc., R. R. Co. v. Rich- 
 ardson 362 
 
 Boston Steel & Iron Co. v. Stever 
 
 39 
 
 Boyd V. Bank of Toledo 144 
 
 Bracken v. Nicol 340 
 
 Brailsfbrd .V. Williams 153 
 
 Brainerd v. N. Y.. etc., R. R. 
 
 Co 273 
 
 Brannin v. Henderson 213 
 
 Brass v. Worth 351 
 
 Breese v. Snyder 49 
 
 Brenneman v. Furniss 68 
 
 Brewster v. McArdle 35 
 
 Brewster v. Schrader 67 
 
 Bright V. Offield 17, 23 
 
 Brill V. Jefferson Bk 155 
 
 Brinkman v. Hunter 217 
 
 Brisbane v. Delaw. Riv., Etc., R. 
 
 R- Co 339, 361 
 
 Broadway Nat'l. Bk. v. Heffer- 
 
 man 187 
 
 Brooklyn Union Bk. v. Sullivan 
 
 b4 
 
 Brown v. Butchers & Drovers 
 
 Bk 15 
 
 Brown v. Peoples Sav. Bk 290 
 
 Brown v. Rowan 108 
 
 Brown v. Johnson 188 
 
 Brownell v. Winnie 189 
 
 Browning v. Gosnell 188 
 
 Brunnagin v. Tallant 2/2 
 
 Bryant v. Eastman 32, 86 
 
 Bouck v. Lambeck 119 
 
 Builders L. & C. Co. v. Weimer 
 
 108, 186 
 
 Buildg. & Loan Ass'n v. Walton 
 
 57 
 
 Burdette v. Bartlett 122 
 
 Burgess v. Chapin 118 
 
 Burgettstown Nat. Bk. v. Nill..l43 
 
 Burns Lbr. Co. v. Doyle 224 
 
 Burr v. Beckler 43 
 
 Burson v. Huntington 43 
 
 Burton v. McMillan 102 
 
 Bush V. Brown 102 
 
 Butchers & Drovers Bk. v. Hub- 
 bell 78 
 
 Buzell V. Tobin 44 
 
 C. 
 
 Cabot Bk. v. Warner 153 
 
 Cagle V. Lane 107 
 
 Camp V. Carpenter 56 
 
 Campbell v. Pettingill 224 
 
 Canajoharie Natl. Bk. v. Defen- 
 
 dorf 104 
 
 Cantrell v. Davidson 90, 260 
 
 Caras v. Thalmann 265, 269 
 
 Carlisle v. Hooks 224 
 
 Carpenter v. Farmsworth 51 
 
 Carter v. Butler 89 
 
 Carter v. Long 64 
 
 Casco Nat'l Bk. v. Clark 51 
 
 Casker v. Kuhne ' 208 
 
 Case V. Burt 218 
 
 Cedar Rapids Nat. Bk. v. Ba- 
 
 shara . . 87 
 
 Chamberlain v. Greenleaf 354 
 
 Champion v. Gordon 205 
 
 Champion F'dry, etc., Co. v. 
 
 Heskett 101 
 
 Chelsea Exch'g Bk. v. First U. 
 
 P. Ch 87 
 
 Chemical Nat. Bk. v. City Bank 
 
 52 
 
 Chemical Nat. Bk. v. Kellogg. . 88 
 Chicago First Nat. Bk. v. Reno 
 
 Co. Bk 78 
 
 Chicago Title, etc., Co. v. Brady 
 
 116 
 
 Chipman v. Foster 51 
 
 Churchill v. Yeatman 143 
 
 Citizens Bk. v. Brown 22, 272 
 
 Citizens Bk. v. Cowles 96 
 
 Citiz. Bk. V. Crittenden Rec. 
 
 Press 105 
 
 Citiz. Bank v. Robbins 360 
 
 Citiz. Cent. Bk. v. New Amster- 
 dam N. Bk 136 
 
 City of Adrian v. Whitney Cntr. 
 
 Nat. Bk 45, 107 
 
 City Dep. Bk. v. Green 97 
 
 City Bk. V. Lauman 222
 
 TABLE OF CASES 
 
 385 
 
 Clark V. Cook. 215 
 
 Clark V. Gordon 222 
 
 Clemens v. Staunton 209 
 
 Cleveland, etc., R. R. Co. v. 
 
 Robbins 361 
 
 Closson V. Stearns 15 
 
 Coaling Co. v. Howard 52 
 
 Cobb V. Heron 64 
 
 Coburn v. Neale 56 
 
 Coit V. Humbert 353 
 
 Colt V. Barnard 27 
 
 Columbian Bkg. Co. v. Bowen.. 
 
 28, 129, 136, 276 
 
 Columbia Dist. Co. v. Rech.187, 189 
 Columbia Finance Co. v. Pur- 
 cell 77 
 
 Columbia Knickerbocker Tr. Co. 
 
 V. Miller 136 
 
 Columbia Second Nat. Bk. v. 
 
 Cummings 296, 297 
 
 Colo. Nat. Bk. v. Boettcher 224 
 
 Commercial Bk. of Pa. v. Arm- 
 strong 298 
 
 Commercial Bk. v. Chicago, etc., 
 
 R. R. Co 284 
 
 Commercial Nat'l Bk. v. First 
 
 Nat. Bk 58 
 
 Commercial Bk. v. Henninger. ,148 
 Commerical Bk. v. McGuire. . . .187 
 Commercial Bk. v. Varnum. . . .242 
 Commercial Nat. Bk. v. Zimmer- 
 man 127 
 
 Comm V. Dalzell 349 
 
 Commonwealth v. Butterick. . . 73 
 
 Commonwealth v. Wathen 68 
 
 Commonwealth v. Reffitt 102 
 
 Comstock V. Buckley 106, 177 
 
 Continental Nat. Bk. v. Heil- 
 
 man 51 
 
 Converse v. .Johnson 26 
 
 Cook v. Baldwin 214 
 
 Cook V. Wolfendale 224 
 
 Corbett v. Fetzer 81 
 
 Coolidge V. Payson 216, 217 
 
 Corner v. Pratt 143 
 
 Cornerstone Bk. v. Rhodes 49 
 
 Corwith First St. Bk. v. Wil- 
 liams 56 
 
 Cottle V. Buffalo Marine Bk 273 
 
 Count V. Thompson 159 
 
 Cover V. Myers 106 
 
 Cox V. N. Y. St. Bk 138 
 
 Craig V. Hesperia Land, etc., 
 
 Co 357 
 
 Craig V. Palo Alto Stock Farm. 79 
 
 Crawford v. Moore 178 
 
 Creteau v. Foote, etc.. Glass Co. 
 
 Cribbs v. Sowle 101 
 
 Critten v. Chemical Bk 94 
 
 Crocker v. Colwell 49 
 
 Crosby v. Wright 119 
 
 Crowe v. Beem 187 
 
 Crowell V. .Jackson 352 
 
 Culloden Bk. v. Forsyth 337 
 
 Curren v. Witter 272 
 
 Curtis V. Davidson 122 
 
 Cushing V. Gore 278 
 
 Cutts V. Perkins 36 
 
 D. 
 
 Dalrymple v. Wyker 64 
 
 Davis V. Gore 30 
 
 Dawson v. Wombles 63 
 
 Debebian v. Gala 33 
 
 Dennett v. Codman 47 
 
 DeWitt V. Walton 49 
 
 Dingman v. Amsinck 69 
 
 Dodge V. Bank 60 
 
 Donovan v. Flynn 213 
 
 Doom v. Sherwin 81 
 
 Dorsey v. Wolff 18 
 
 Doubleday v. Kress 131 
 
 Dove V. Fansler 191 
 
 Downes & Co. v. Church 268 
 
 Downing v. Neeley 92 
 
 Dresser v. Mo. R. R. Cons. Co. . . 99 
 
 Drexler v. Smith 85 
 
 Dunbar v. Amer. Tel., etc., Co. .342 
 Dupont Powder Co. v. Rooney..l66 
 
 Dykers v. Allen 350 
 
 Dykers v. Leather Mfrs. Bk...278 
 Dykman v. Northbridge 243 
 
 E. 
 E. Birmingham Land Co. v. Den- 
 nis 356 
 
 Eastman v. Thurman :^30 
 
 Eakin v. citizens St. Bk 215
 
 386 
 
 TABLE OF CASES 
 
 Easton v. Hodges 350 
 
 Edgerton v. Preston 32 
 
 Elgin Bkg. Co. v. Hall 97 
 
 Ellicott V. Martin 
 
 Elliott V. Cap. City St. Bk 273 
 
 Ensign v. Fogg 89 
 
 Erwin v. Lynn 74 
 
 Erwin v. Scotten 48 
 
 Espy V. Bank of Cincinnati. .57, 113 
 
 Evans v. Gee 76 
 
 Exchg. Bk. V. Third Nat. Bk 
 
 281, 285, 297 
 
 Ex parte Goldberg 
 
 F. 
 
 Factors' Ins. Co. v. Marine Ins. 
 
 Co 360 
 
 Fanshaw v. Peet 225 
 
 Farmers' Bk. v. Newland 283 
 
 Farmers' Nat. Bk. v. Farmers' 
 
 etc.. Bank 118 
 
 Farmers' Tr. Co. v. Schenuit... 73 
 
 Farley Nat. Bk. v. Pollock 283 
 
 Fassin v. Hubbard 81 
 
 Fawcett v. Nat. Life Ins. Co 75 
 
 Ferguson v. Davis 54 
 
 Ferguson v. Netter 68 
 
 Fillebrown v. Hayward 103 
 
 Finch V. Karste 295 
 
 Findlay v. Cowles 177 
 
 Fink V. Farmers' Bk 64 
 
 Finley v. Smith 23 
 
 Fire Ins. Co. v. Hull 102 
 
 First Nat. Bk. v. Hix 66 
 
 First Nat. Bk. v. Stallo 63 
 
 First Nat. Bk. of Elgin v. Rus- 
 sell 23 
 
 First Nat. Bk. v. First Nat. Bk. 78 
 
 First Nat. Bk. v. Fowler 84 
 
 First Nat. Bk. v. Harris 92, 183 
 
 First Nat. Bk. v. Home Ins. Co. 209 
 
 First Nat. Bk. v. Flath 95 
 
 First Nat. Bk. of Belmont v. 
 First Nat. Bk. of Barnesville. .120 
 
 First Nat'l. Bk. v. Trognitz 213 
 
 First Nat. Bk. of Murfreesboro 
 V. First Nat. Bk. of Nashville. 213 
 
 First Nat. Bk. .v. ClarK 213 
 
 Ffrst Nat. Bk. v. Comm'l Sav. 
 Bk 215 
 
 First Nat. Bk. v. Muskogee Pipe 
 
 L. Co 215 
 
 First Nat. Bk. v. Fourth Nat. 
 
 Bk. (U. S.) 291 
 
 First Nat. Bk. v. Fourth Nat. Bk. 
 
 (N. Y.) 295 
 
 First Nat. Bk. Chicago v. Bk. of 
 
 Whittier 297 
 
 First Nat. Bk. v. Nor'west'n Nat. 
 
 Bk 58 
 
 Flagg V. School Dist 17 
 
 Fitchburg Bk. v. Greenwood.... 81 
 
 Flynn v. Howard 191 
 
 Foland v. Boyd 160 
 
 Foley V. N. Y. Sav. Bk 220 
 
 Ford V. Angelrodt 224 
 
 Forest v. Safety Bkg. & Tr. Co. .272 
 
 Foss V. Norris 131 
 
 Foster v. Collner 48 
 
 Fountain v. Bigham 102 
 
 Fowler v. Fleming 143 
 
 Fowler v. Gate City Nat. Bk....214 
 Fowler Paper Co. v. Jones Sales 
 
 Bk. Co 131 
 
 Franklin Bk. v. Freeman 278 
 
 Franklyn Bk. v. Roberts 66 
 
 Franklyn Bk. v. Comm'l Bk 349 
 
 Frazer v. Phenix Nat. Bk 128 
 
 Freeman's Bk. v. Nat. Tube Wks. 
 
 78 
 
 Freese v. Brownell 87 
 
 French v. Barney ■. 92 
 
 Froth V. Thrush 158 
 
 Fulton V. Loughlin 85 
 
 •G. 
 
 Gallo V. Brooklyn Sav. Bk 58 
 
 Gansevobrt v. Williams 85 
 
 Gardner v. Beacon Tr. Co 
 
 102, 355, 359 
 
 Garrard v. Hadden 41 
 
 Gate City Nat. Bk. v. Schmidt.. 303 
 
 Gazzan v. Armstrong 253, 263 
 
 Geary v. Physic 15 
 
 Gemmell v. Davis 337, 339, 349 
 
 Georgia Nat. Bk. v. Henderson . , 
 
 286, 289 
 
 German-Amer. Bk. v. Milliman.136 
 German Nat. Bk. v. Foreman. . . .148 
 German Sav. Bk. v. Renshaw. . .354
 
 TABLE OF CASES 
 
 387 
 
 Germania Nat. Bk. v. Mariner.. 
 
 47, 51 
 
 Geyser-Marion Gold Min'g Co. v. 
 
 Stark 356 
 
 Giesen v. London, etc., Mfg. Co. .340 
 
 Gilley v. Harrell 34 
 
 Oilman v. Berry ., 98 
 
 Gilpin V. Savage. 133 
 
 Ginn v. Dolan 63 
 
 Gleason v. 1 uayer 79, 155 
 
 Glidden v. Chamberlain. .. .117, 144 
 
 Goldberg, Ex parte 108 
 
 Goldman v. Blum 74 
 
 Goldman v. Goldberger 122 
 
 Goodman v. Simonds 103 
 
 Goodnow V. Warren 159 
 
 Goodsell V. McElroy Bros 90 
 
 Goolrick v. Wallace 81 
 
 Gordon v. Irvine 118 
 
 Gould V. Venice ". 273 
 
 Gray v. Milner 15 
 
 Greenfield Bk. v. Crafts 57 
 
 Greenfield Sav. Bk. v. Gray 41 
 
 Greenway v. Wm. D. Orthwine 
 
 Grain Co 69 
 
 Gross V. Emerson 23 
 
 Guaranty Co. of N. A. v. East 
 
 Rome Town Site Co 339, 349 
 
 H. 
 
 Racket v. First Nat. Bk. of Lou- 
 isville 41 
 
 Haddock Blanchard & Co. v. Had- 
 dock 116 
 
 Haines v. Nance 214 
 
 Hale V. Citizens Bk 100 
 
 Hall V. Grayson . .100 
 
 Handsacker v. Pedersen 188 
 
 Harper v. Tiffin Nat. Bk 52 
 
 Harpold v. Stobart 340 
 
 Harrison v. Ruscoe 153 
 
 Hartington Bk. v. Breslin.. 39 
 
 Harvesting Mach. Co. v. Blair.. 
 
 189, 190 
 
 Harvesting Mach. Co. v. Yank- 
 ton Sav. Bk 288 
 
 Hatcher v. Chambersburg Bk... 81 
 
 Hatch V. First Nat. Bk 26 
 
 Hazlett V. Bragdon 166 
 
 Hazlett V. Connell Bk 296 
 
 Hefner v. Dawson 56 
 
 Hewins v. Cargill 187 
 
 Hibernia Bk. & Tr. Co. v. Dres- 
 ser 22 
 
 Hill V. Hall 44 
 
 Hilsinger v. Georgia R. Bk 273 
 
 Hilsinger v. Trickett 283 
 
 Hinkley v. Merchants Bk 45 
 
 Hinsdale v. Miles 135, 249 
 
 Hitchcock V. Buchanan 51 
 
 Hodge V. Smith 42,44,101 
 
 Hodge V. Wallace 17, 18, 98, 102 
 
 Hodgens v. Jennings 48, 100 
 
 Hodges V. Adams 75 
 
 Hodges V. Iowa Barb. Steel Co.. 217 
 Hogan V. Globe Mut. Biug. Assn. 
 
 224 
 
 Hogg V. Thurman 64 
 
 Holbart v. Lauretson 94 
 
 Holdsworth v. Hunter 267 
 
 Holland Tr. Co. v. Waddell. 116 
 
 Holmes v. Holmes 180 
 
 Hood V. Robbins 77 
 
 Holmes v. Trumper 41 
 
 Hopper-Morgan Co., In re 104 
 
 Hoppin v. Buff um 349 
 
 Horan v. Mason 106 
 
 Hostetter v. Wilson 24 
 
 Houck V. Graham 188 
 
 Houston Bk. v. Day 37 
 
 Hovorka v. Hemma 56 
 
 Hudson V. Moon 63 
 
 Hughes V. Drovers, etc., Bk....356 
 
 Hughitt V. Johnson 24 
 
 Hurst V. Lee .101 
 
 Hunt V. Stewart 86 
 
 Huntington v. Shute 63 
 
 Hutchins v. State Bk 358 
 
 I. 
 
 Ilsley V. Jones 213 
 
 Ilsley V Smedes 23 
 
 Ingram v. Foster 220 
 
 Iowa St. Bk. V. Claypool 38 
 
 Ironclad Mfg. Co. v. Sackin. . . .134 
 
 Irving V. Wetherald 260 
 
 Irwin V. Reeves Pulley Co 290 
 
 Israel v. Gale 65
 
 388 
 
 TABLE OF OASES 
 
 J. 
 
 Jackson v. Hudson 252 
 
 Jacobus V. Jamestown Mantel Co. 
 
 70 
 
 James v. E. G. Lyon Co 216 
 
 Jarvis v. Wilson 112 
 
 Jefferson Bk. v. Chapman 45 
 
 Jensen v. Wilself 272 
 
 Jerman v. Edwards 90 
 
 Jett V. Standafer 59 
 
 Johnson v. Clark 217 
 
 Johnson v. Laflln 337 
 
 Johnson v. Schnabaum 260 
 
 Johnson v. Way 104 
 
 Jones V. Home Furn. Co 32, 49 
 
 Jones V. Miners' Bk 56 
 
 Jordon v. Long 77 
 
 Jurgens v. Wickman 163 
 
 K. 
 Kansas City, etc., R. R. Co. v. 
 
 Cobb 274 
 
 Kavanagh v. Bk. of America. . .104 
 
 Kayton v. Barnett 52 
 
 Keidan v. Winegar 51 
 
 Keller v. Johnson 101 
 
 Kellogg V. Curtis 95 
 
 Kennedy v. Broderick 23 
 
 Kerr v. Smith 34 
 
 Kester v. Kester 177 
 
 Kiefer v. Tolbert 90 
 
 Kimbro v. Lytle 95 
 
 King V. Griggs 158 
 
 Kingan & Co. v. Silvers 190 
 
 Kirby v. Ruegamer 51 
 
 Kitchen v. Laudenback 104 
 
 Klotz V. Silver 135 
 
 Knapp V. Cowell 68 
 
 Knight V. Braswell 26 
 
 Knox V. Eden Musee, etc., Co.. 
 
 356 
 
 Knoxville Bk. & Tr. Co. v. Mer- 
 
 shon 121i 
 
 Kohn V. Consolidated Butter, 
 
 etc., Co 115 
 
 Konig V. Bayard 259 
 
 Korkemas v. Macksoud 178 
 
 Krouskop V. Shontz 187 
 
 Krumbhaar v. Griffiths 352 
 
 L. 
 
 Lamar v. Micou 355 
 
 Lamon v. French 224 
 
 Lampman v. Lampman 102 
 
 Lamson v. Beard 107 
 
 Land Title & Tr. Co. v. North- 
 western Nat. Bk 61 
 
 Lang V. Smith 267 
 
 Lankofsky v. Raymond 166 
 
 Law v. Stewart 70 
 
 Lawrence, In re 101 
 
 Lawrence v. Miller 153 
 
 Lawrence v. Maxwell 350 
 
 Leask v. Dew 183 
 
 Leather Mfrs. Bk. v. Morgan... 59 
 
 Lehnhard v. Sedway 215 
 
 Leitch V. Wells 355, 358 
 
 Lennon v. Gruner 118 
 
 Lenox v. Leverett 254, 263 
 
 Leonard v. Draper 117, 118 
 
 Levy V. Arons 186 
 
 Lewisohn v. The Kent & Stanley 
 
 Co 32 
 
 Liberty Tr. Co. v. Tilton 108 
 
 Libby v. Pierce 27 
 
 Liesemer v. Burg 177 
 
 Life Ins. Co. v. Pendleton 140 
 
 Lightner v. Roach 113 
 
 Lindeman's Bxtr. v. Guildin. . . .159 
 
 Lindsay v. Price 74 
 
 Linick v. Nutting 42 
 
 Linn v. Horton 154 
 
 Lititz Nat. Bk. v. Siple 144 
 
 Lombard v. Byrne 63 
 
 Lord V. Hingham Nat. Bk 295 
 
 Loring v. Brodie 354 
 
 Louisville Bkg. Co. v. Asher 
 
 286, 290 
 
 Lovell V. Williams 52 
 
 Lowell V. Bickford 93 
 
 Lowell Tr. Co. v. Pratt 166 
 
 Lowrey v. Comm'l & Farmer's 
 
 Bk 359 
 
 Lytle v. Lansing 104 
 
 . M. 
 McBroom v. Treas. Lebanon 
 
 County 29 
 
 McCaughey v. Smith 189
 
 TABLE OF CASES 
 
 389 
 
 McCord, In re 70 
 
 McCorkle v. Miller 19 
 
 McCormick v. Eckland (2 
 
 McCoy V. Gilmore 15^ 
 
 McCune v. Belt "'0 
 
 McDonald v. Luckenbach 140 
 
 McDonald v. Mclaughlin 30 
 
 McHenry v. Nat. Bk 60^ 
 
 McKenzie v. Barrett Ill 
 
 McKnight v. Parsons 96 
 
 MIcMurray v. McMurray 106 
 
 McNeil V. Tenth Nat. Bk..350, 353 
 Machinists Nat. Bk. v. Field... 
 
 342, 357 
 
 Mackintosh v. Gibbs 88, 303 
 
 Madison v. Cabelek 148 
 
 Maddox v. Duncan 122 
 
 Magruder v. Union Bk 138 
 
 Mallon V. Stevens 130 
 
 Man V. Boykin 340 
 
 Mandelbaum v. N. Amer. Mng. 
 
 Co 342, 357 
 
 Mankey v. Hoyt 208, 240 
 
 Mnfrs. Nat. Bk. v. Continental 
 
 Bk 78 
 
 Mnfrs. & Merch. Bk. v. Follett.. 49 
 Mutrs. Nat. Bk. v. Thompson. . .260 
 
 Manussier v. Wright 94 
 
 Mapleton Bk. v. Stanrod 339 
 
 Marbury v. Ehlen 356, 360 
 
 Marion Nat. Bk. v. Russell 94 
 
 Markey v. Casey 17 
 
 Markley v. Corey 81 
 
 Marling v. Mommensen 148 
 
 Marshall Field & Co. v. Evans, 
 
 Johnson, Sloan Co 348 
 
 Martin v. Brown 245 
 
 Martz V. St. Nat. Bk 90 
 
 Mason v. Dousey 234 
 
 Mason v. Franklin 246 
 
 Mason v. Kilcourse 239, 245 
 
 Massachusetts Nat. Bk. v. Snow 
 
 45 
 
 Massie v. Belford 21 
 
 Matlock V. Scheuerman 66 
 
 Matson v. Jarvis 186 
 
 Maxwell v. Agnew 272 
 
 Mayer & Bros. Appeal 144 
 
 Mechanics & Traders' Bk. v. 
 
 Seitz 148 
 
 Meader v. Dollar Savg. Bk 26 
 
 Mehlinger v. Harriman 65 
 
 Melton V. Pensacola Bk 188 
 
 Merch. Nat. Bk. v. Clark 51 
 
 Merch. Bk. v. Santa Maria Sug. 
 
 Co 95 
 
 Merritt v. Todd 27 
 
 Mersman v. Werges 189 
 
 Metallic Specialty Co., In re 178 
 
 Metcalfe v. Williams 51 
 
 Meuer v. Phenix Nat. Bk 112 
 
 Meyer v. Rosenheim 56 
 
 Mexican Asph. Pav. Co. v. Love. 110 
 
 Michigan Bk. v. Ely 216 
 
 Miller v. Austin 22 
 
 Miller v. Gardner 18 
 
 Miller v. Hannibal, etc.,' R. R. 
 
 Co 47 
 
 Miller v. Kyle 18 
 
 Miller v. Marks 66 
 
 Miller v. Norton 96 
 
 Milwaukee Nat. Bk. v. City Bk. 
 
 of Oswego 283 
 
 Miners, etc., Bk. v. St. Louis 
 
 Smelting Co 61 
 
 Mitchell V. Baring 246 
 
 Mobley v. Ryan 35 
 
 Monongahela Nat. Bk. v. First 
 
 Nat. Bk 296 
 
 Montgomery City Bk. v. Albany 
 
 City Bk 218 
 
 Montgomery v. Crossthwait 18 
 
 Montgomery v. Schwald 177 
 
 Montrose Sav. Bk. v. Claussen. 96 
 
 Moore v. Rogers 146 
 
 Moorhead v. Gilmore 85 
 
 Morelahd's Assignee v. Citizens 
 
 Savings Bk 243 
 
 Morgan v. U. S 19 
 
 Morgantown Bk. v. Hay 216 
 
 Morris v. Union Nat. Bk 283 
 
 Morris Co. Br. Co. v. Austin 69 
 
 Morrison v. Bailey 205 
 
 Morrison v. Fishell 
 
 Mount Morris. Bk. v. Gorham... 54 
 
 Moynahan v. Prentiss ..352 
 
 Mundt V. Comm'l. Nat. Bk, .345, 357 
 A.urchison Nat. Bk. v. Dunn Oil 
 
 Mills 65 
 
 Murray v. Third Natl Bk 140
 
 390 
 
 TABLE OF CASES 
 
 Murrell v. Edwards 214 
 
 Myers v. Standart 222, 225 
 
 N. 
 
 Nance v. Lary 42 
 
 Nashville Bk. v. Henderson 134 
 
 Nassano 1. Tuolumne Co. Bk... 36 
 
 Nat. Bk. V. Weston 1^3 
 
 Nat. Bk. of N. Amer. v. Kirby.. IS 
 Nat. Bk. of Commerce v. Amer. 
 
 Nat. Bk 112 
 
 Natl. Bk. of Commerce v. Amer. 
 
 Ex. Bk 283 
 
 Nat. Bk. of Commerce v. Merch. 
 
 Nat. Bk 284 
 
 Nat. City Bk. v. Bkrs' Tr. Co.. . . 30 
 
 Nat. City Bk. v. Westcott .. 59 
 
 Nat. Exchg. Bk. v. Lester 41 
 
 Nat. Park Bk. v. Koehler 181 
 
 Nat. Park Bk. v. Saitta 230 
 
 Nat. Park Bk. v. Seaboard Bk. 
 
 59, 120 
 
 Nat. St. Bk. V. Weil 27 
 
 Neal V. Wood 143 
 
 Nelson v. First Nat. Bk 248 
 
 New Haven Mfg. Co. v. New 
 
 Haven Pulp & Board Co 89 
 
 Newport v. Smith 51 
 
 Newton v. Bramlett 77 
 
 New York, etc., Contr. Co. v. 
 
 Selma Savgs. Bk 158, 209 
 
 New York, etc., Co. v. Meyer 209 
 
 N. Y. Life Ins. Co. v. Martindale 
 
 187 
 
 Niagara Dist. Bk. v. Fairman 
 
 Mach. Tool Co 225 
 
 Niblock v. Sprague 44 
 
 Noble v. Beeman S. & Co 70 
 
 North Car. Corp. Comm. v. 
 
 Merch. & Farmers Bk 298 
 
 Northampton Nat. Bk. v. Kidder 45 
 Northwestern Nat. Bk. v. Kan- 
 sas City Bk. of Commerce 120 
 
 Norwich Bk. v. Hyde 46 
 
 Noyes v. Loring 52 
 
 Nutting V. Burked 28 
 
 O. 
 
 Oakdale Mfg. Co. v. Clarke 88 
 
 Oakley v. Carr 157 
 
 O'Brien v. Young 47 
 
 Ocean Nat. Bk. v. Fant 135 
 
 Ocean Nat. Bk. v. Williams 242 
 
 O'Donnell v. Smith 214 
 
 Ogden v. Raymond 52 
 
 Ohm V. Yung 19 
 
 O'Neil V. Walcott Min. Co.. .337, 357 
 Oppenheimer v. Farmers & 
 
 Merch. Bk 18 
 
 Otis Elevator Co. v. First Nat. 
 
 Bk 40, 41 
 
 Overman v. Hoboken City Bk..218 
 
 Owen V. Blackburn 34 
 
 Owen & Co. v. Storms 70 
 
 Owsley V. Phillips 57 
 
 P. 
 
 Passmore v. North 35, o6 
 
 Patterson First Nat. Bk. v. Nat. 
 
 Broadway Bk 350, 354, 355 
 
 Patton V. Bk. of Lafayette 243 
 
 Pauley v. State Life & Tr. Co... 348 
 
 Payne v. Patrick 153 
 
 Peck V. Providence Gas Co 358 
 
 Peden v. Birkle 100 
 
 Pelton V. San Jacinto Lbr. Co.. 188 
 
 Penn. R. R. Co.'s Appeal 343 
 
 Pensacola Bk. v. Melton 188 
 
 Peoples Bk. v. Brooke 239, 245 
 
 Peoples and Drovers Bk. v. Craig 
 
 80, Z60 
 
 Perry v. Bray 73 
 
 Pettyjohn v. Nat. Exchg. Bk.57, 59 
 Phillips V. Mercantile Nat. Bk..236 
 
 Philpot's Est., In re 94 
 
 Pierce v. State Nat. Bk 272 
 
 Pierce v. Struthers 133 
 
 Pilmer v. Branch of St. Bk 34 
 
 Pinkney v. Kanawha Valley Bk.295 
 
 Pitt v. Little 183, 187 
 
 Planters Mercantile Co. v. Ar- 
 mour Pkg. Co 291 
 
 Plate V. Reynolds 230 
 
 Plover Sav. Bk. v. Moodie..l29, 276 
 
 Poess V. Twelfth Ward Bk 279 
 
 Porter v. Cushman 89 
 
 Porter v. Huie 70 
 
 Porthouse v. Parker 209 
 
 Prall V. Tilt 355
 
 TABLE OF CASES 
 
 391 
 
 Prather v. Hairgrove 260 
 
 Pratt V. Boston, etc., R. R. Co.. 362 
 
 Pratt V. Mach. Nat. Bk 362 
 
 Preston v. Dunham 21 
 
 Proctor V. Cole 64 
 
 Pullman v. Upton 348 
 
 Putnam v. Crymes 29 
 
 Q. 
 
 Qulmby v. Varnum 92, 182, 183 
 
 Quincy Mut. Fire Ins. Co. v. In- 
 ternal. Tr. Co 86 
 
 R. 
 
 Ragsdale v. Gresham 112 
 
 Railroad Co. v. Cowell 49 
 
 Rallo Nat. Bk. v. First Nat. Bk..ll2 
 Randolph Nat. Bk. v. Hornblow- 
 
 er 279 
 
 Ray V. Faulkner 225 
 
 Raymond v. Middleton 20 
 
 Read v. Buffalo 20 
 
 Real Est. Tr. Co. v. Bird 339 
 
 Reed v. Murphy 23 
 
 Reed v. Roark 15 
 
 Reed v. Spear 137, 138 
 
 Regester's Sons v. Reea 107 
 
 Reilly v. McKinnon 103 
 
 Rice V. Granger 66 
 
 Richards v. Darst ■... 72 
 
 Richards v. Day 38 
 
 Richards v. Warring 20 
 
 Richmond v. Irons 340 
 
 Riddle v. Bk. of Montreal 275 
 
 Rilbe V. Austin 181 
 
 Roach V. Woodhall 55 
 
 Roads V. Webb 20 
 
 Robertson v. Crane 132 
 
 Robinson v. Barnett 143 
 
 Ross V. Hurd 144, 168 
 
 Rosson V. Carroll 155 
 
 Rousch V. Duff 220 
 
 Royal Cons. Min. Co. v. Royal 
 
 Cons. Mines Co 340 
 
 Ruiz V. Renauld 217 
 
 Ryman v. Gerlach 353 
 
 S. 
 
 Sabine v. Payne 105 
 
 Sampson v. Turney 155 
 
 Sanford v. Cairo City Nat. Bk..l87 
 
 Saulsbury v. Blandy 217 
 
 Schaefer v. Marsh 44 
 
 Schimmelpennick v. Bayard. .. .251 
 
 Schlessinger v. Kelly 105 
 
 Schlessinger v. Lehmeier. 105 
 
 Schmidt v. Pegg 20, 79 
 
 Schmittler v. Simon 19 
 
 bchofield V. Bayard 254 
 
 Schwartz v. Barringer 214 
 
 Schwartzman v. Post 178 
 
 Schuchardt v. Hale 232 
 
 Scotland Co. Bk. v. Hohn 71 
 
 Scotland Co. Nat. Bk v. O'Con- 
 
 nell 41 
 
 Second Nat. Bk. v. Bk. of Alma. 295 
 Second Nat. Bk. v. Cummings. . .284 
 
 Second Nat. Bk. v. Graham 181 
 
 Second Nat. Bk. v. Merch. Nat. 
 
 Bk 291, 297 
 
 Sharp V. Drew 232 
 
 Shattuck V. Amer. Cement Co. . .350 
 
 Shaw V. Shaw 26 
 
 Shea V. Vahey 155 
 
 Shelmerdine v. Duffy 115 
 
 Sheridan v. Carpenter 191 
 
 Shinew v. Bowling Green First 
 
 Nat. Bk 57 
 
 Shipman v. Bk. of N. Y 32 
 
 Shipsey v. Bowery Nat. Bk 291 
 
 Shisler v. Van Dyke 57 
 
 Shoe, etc., Nat. Bk. v. Wood 68 
 
 Shreyer v. Hawkes 46 
 
 Sigerson v. Matthews 144 
 
 Simpson v. White 88 
 
 Smith V. Bayer 79 
 
 Smith V. Caro & Brown 27, 87 
 
 Smith V. Ledyard 216 
 
 Smith V. Marsack 110, 112 
 
 Smith V. Melton 233 
 
 Smith V. Nashville, etc., R. R. 
 
 Co 347, 358 
 
 Smith V. Poillon '.163 
 
 Smith V. Rowland 151, 219 
 
 Smith V. Smith 46 
 
 Snyder v. Corn Exchg. Bk 32 
 
 Soaps V. Eichberg 188 
 
 So. Boston Iron Co. v. Brown... 107 
 Spangler v. McDaniel 171
 
 392 
 
 TABLE OF CASES 
 
 Spreckles v. Nevada Bk 348 
 
 Springs v. Hanover Nat. Bk. . . . 5» 
 
 Stanford Cloth'g Co., hi re 104 
 
 Steele v. McKinley 214 
 
 Stanton v. Blossom 153 
 
 Stapleton v. Louisville Bkg. Co. 18 
 
 Star Mills v. Bailey 63 
 
 State v. First Nat. Bk. of Mont- 
 rose " 
 
 State v. Hinton "75 
 
 State V. Smith 348 
 
 State Bk. of Chicago v. First 
 
 Nat. Bk 5^ 
 
 State Bkg. & Tr. Co. v. Taylor.. 339 
 State of N. Y. Nat. Bk. v. Kenne- 
 dy 131 
 
 States V. First Nat. Bk 59 
 
 Steele v. McKinley 214 
 
 Stern v. Empire Tr. Co 56 
 
 Stewart v. Eden 167,181 
 
 Stewart v. Firemans' Ins. Co... 359 
 St. Nicholas Bk. v. Farmers' Nat. 
 
 Bk 297 
 
 St. Louis & S. W. Ry. Co. v. 
 
 James 220 
 
 St. Charles Sav. Bk. v. Edwards. 108 
 
 Stone V. Sargent 39 
 
 Stoneman v. Py\e 18 
 
 Stotesburg v. Massingale 222 
 
 Stover V. Hamilton 28 
 
 Strickland v. Parlln, etc., Co... 101 
 
 Sturtevant v. Jacques 30 
 
 Sulzbacher v. Bk. of Charleston 
 
 li;3, 236 
 
 Supply Ditch Co. v. Elliott. .343, 360 
 
 Swear v. Carr 102 
 
 Swope V. Ross 251 
 
 Sylvester v. Downer 77 
 
 Sylvester v. Staples 222 
 
 T. 
 
 Tabpr v. New Bedford 191 
 
 Tainter v. Winter 30 
 
 Talapoosa Co. Bk. v. Wynn 68 
 
 Tapee v. Farley 97 
 
 Telegraph Co. v. Davenport. .. .362 
 
 Terry v. Bissell 57, 59 
 
 Terry v. Munger 47 
 
 Tharp v. Jameson 186 
 
 Third Nat. Bk. v. Lange 30 
 
 Thompson Houston El Co. v. 
 
 Capitol El. Co 91 
 
 Thompson v. Perrine 274 
 
 Tierney v. Ledden 348 
 
 Tischer v. Merea 95 
 
 Tisdale Lbr. Co. v. Piquet 22 
 
 Todd V. State Bk 222 
 
 Tolman v. Amer. Exchg. Nat. Bk. 
 
 60 
 
 Tombeckbe Bk. v. Stratton 181 
 
 Toole v. Crafts 167 
 
 Tower v. Stanley 39 
 
 Townsend v. Auld 164 
 
 Traders Nat. Bk. v. Jones.. 153, 154 
 Traders' Nat. Bk. v. Rogers.... 59 
 
 Trego v. Cunningham 122 
 
 Trust Co. of Amer. v. Hamilton 
 
 Bk 57, 58 
 
 Trustees of the I. I. Fund v. 
 
 Lewis 274 
 
 Turnbull v. Maddox '. . . 168 
 
 Tuttle v. Greenfield First Nat. 
 
 Bk 51 
 
 Tyler v. Hyde 177 
 
 Tyler v. Walker 18 
 
 U. 
 
 Uhler V. Farm. Nat. Bk 143 
 
 Union Bk. v. Johnson 288 
 
 Union Nat. Bk. v. Neill 103 
 
 Union Br. Co. v. State Bk 49 
 
 Union Tr. Co. v. Preston Nat. 
 
 Bk 207 
 
 U. S. v. Am. Exchg. Nat. Bk 120 
 
 U. S. V. White 28 
 
 Usher v. Tucker 36 
 
 Utica Nat. Br. Co., In re 177 
 
 Utica Bk. v. Smith 152, 153 
 
 V. 
 Valequette v. Clark Bros Coal 
 
 Min. Co 50 
 
 Valk v. Simmons 171 
 
 Vanarsdale v. Hax 89 
 
 Vanderford v. Farmers', etc., 
 
 Nat. Bk 176 
 
 Van Eaman v. Stanchfield 350 
 
 Vette V. La Barge 18, 19 
 
 Visalia, etc., R. R. Co. v. Hyde. .340
 
 TABLE OF CASES 
 
 393 
 
 w. 
 
 Wagner v. Kenner 35 
 
 Wallace v. Jewell 188 
 
 Wallace v. Douglas 224 
 
 Walsh V. Blatchford 268 
 
 Walton V. Williams 16, 73, 251 
 
 Ward V. City Tr. Co 65 
 
 Waring v. Betts 132 
 
 Warren v. Scott 20 
 
 Washington Nat. Bk. v. Reyn- 
 olds 138 
 
 Watson V. Wyman 149 
 
 Watt V. Potter 132 
 
 Waverly First Nat. Bk. v. For- 
 syth 18 
 
 Weare v. Gove 52 
 
 Weber v. Bullock 340 
 
 Weber v. Orton 91 
 
 Welch V. B. C. Taylor Co 140 
 
 Wells V. West. Union Tel. Co 
 
 , 140, 215 
 
 Wentworth Co. v. French 349 
 
 West River Bk. v. Taylor.. 154, 180 
 
 Westberg v. Chicago Lbr. Co 
 
 34, 218, 220 
 
 Westinghouse v. German, etc., 
 
 Bk 353 
 
 Weston V. Wiley 189 
 
 Weyerhauser v. Dunn 38 
 
 Wheeler v. Maillott 160 
 
 Wheeler v. Webster 16, 214 
 
 Whilden v. Merch, Nat. Bak...214 
 Whitcombe v. Nat. Exchg. Bk. .183 
 
 White V. Rowland 110 
 
 "V^Tiittle V. Fond du Lac Nat. 
 
 Bk 17 
 
 Wicker v. Jones 186, 191 
 
 Wilkesbarre 1st Nat. Bk. v. Bar- 
 
 num 188 
 
 Williams v. Keyes 149 
 
 Williams v. Paintsville Nat. Bk. 
 
 160 
 
 Williamson, Halsell, Frazier Co. 
 
 V. Ackerman 102 
 
 Wilson V. Hendee 115 
 
 Wilson V. Peck 162, 164 
 
 Wilson V. Senier 142 
 
 Wilson V. Carlinville Nat. Bk... 
 
 290, 297 
 
 Windsor Cement Co. v. Thomp- 
 son 15 
 
 Wisconsin Y'rly Meet'g, etc., v. 
 
 Babbler 23 
 
 Wiseman v. Chiapella 232 
 
 Wisner v. First Nat. Bk 220 
 
 Wood V. Guaranty Tr. Co 260 
 
 Wood V. Pugh 252, 263 
 
 Wood's Appeal 350, 355 
 
 Woods V. Colony Bk 58 
 
 Woodward v. Griffith-Marshall 
 
 Co 216 
 
 Wooten v. Wilmington, etc., R. R. 
 
 Co 360 
 
 Worley v. Johnson 144 
 
 Wright V. McCarthy 279 
 
 X. 
 
 Xander v. Comm 186 
 
 Y. 
 Yatesville Bnkg. Co. v. Fourth 
 
 Nat. Bk 58 
 
 Yocum v. Smith 41 
 
 Young v. Baker 38 
 
 Young V. Exchange Bk 142, 155 
 
 Young V. Lowry 103 
 
 Z. 
 Zollner v. Moffitt 157, 257
 
 INDEX. 
 
 Except where otherwise stated, the references are to the Section num- 
 bers of the Uniform Negotiable Instruments Act. 
 
 A. 
 
 Acceptance (See also "Acceptor")— Section 
 
 Drawee not liable on bill unless and until he accepts it 127 
 
 What it is and what promise it implies 132 
 
 Meaning of term 191 
 
 When incomplete 16. 191 
 
 May not express performance by any means other than the 
 
 payment of money 132 
 
 How made 132, 133 
 
 Must be signed by drawee 132 
 
 Holder entitled to on face of instrument 133 
 
 How and where to be made on bill 133 
 
 Must be in writing 132, 133 
 
 If refused, holder may treat bill as dishonored 133 
 
 By separate instrument 134 
 
 By separate instrument does not bind acceptor, when 134 
 
 Promise to accept bill, virtual acceptance, when deemed an 
 
 acceptance 135 
 
 Promise to accept bill must be unconditional and in writing. . 135 
 
 Promise to accept bill is implied when 135 
 
 Time allowed drawee to accept bill 136 
 
 If not given within 24 hours bill must be treated as dishon- 
 ored 136, 150 
 
 Dates as of day of presentation if given later 136 
 
 Drawee deemed to have accepted bill if he refuses to return 
 
 the bill within 24 hours or destroys it 137 
 
 Bill may be accepted while incomplete or unsigned 138 
 
 Or when overdue 138 
 
 Or after previous refusal to accept 138 
 
 Or after dishonor by non-payment 138 
 
 Holder, in absence of any different agreement, entitled to have 
 
 acceptance dated as of day of first presentation 138 
 
 But it may be given any other different date 138 
 
 When date may be inserted 13 
 
 Certification of check by bank is 187 
 
 Of bills in a set 181 
 
 General acceptance, what is 139, 140 
 
 Qualified acceptance, what is 139, 141 
 
 Conditional acceptance, what is 141 
 
 Acceptance to pay at a particular place, is general when 140
 
 INDEX 395 
 
 Section 
 
 Acceptance to pay only at a particular place is qualified 141 
 
 Acceptance to pay part only of amount of bill, is qualified.. 141 
 
 Acceptance which is qualified as to time 141 
 
 Acceptance by one of several drawees 141, 145 
 
 Acceptance to pay upon fulfillment of a condition therein 
 
 stated, is qualified 141 
 
 Holder may refuse to take qualified acceptance 142 
 
 When unqualified acceptance is refused he may treat bill as 
 
 dishonored 142 
 
 Where qualified acceptance is taken, drawer and indorsers are 
 
 released unless then assent 142 
 
 When drawer and indorsers are deemed to assent to quali- 
 fied acceptance 142 
 
 Acceptance by Banks (See introduction to Title II) — 
 Acceptance, Presentment for (See Presentment for Acceptance) — 
 
 Acceptance for Honor 161-170 
 
 When may be made 161 
 
 By whom may be made 161, 162 
 
 For whose honor may be made 161 
 
 May be made for more than one party 161 
 
 May be made for whole bill or part only 161 
 
 May be more than one acceptance for honor 161 
 
 Can only be made after protest 161 
 
 How made, and by whom 161, 162 
 
 Must be in writing 162 
 
 Must be signed by acceptor for honor 162 
 
 Is deemed to be made for honor of drawer unless it expressly 
 
 states for whose honor it is made 163 
 
 When bill payable after sight matures if accepted for honor. 166 
 
 Protest of bill accepted for honor 167 
 
 Liability of acceptor for honor 164, 165 
 
 Agreement of acceptance for honor. 164, 165 
 
 Delay in making presentment to acceptor for honor excused, 
 
 when 169 
 
 Protest upon failure or refusal of acceptor for honor to pay.. 170 
 
 Acceptor for honor discharged, when 165 
 
 How presentment for payment must be made to acceptor for 
 
 honor and when 168 
 
 Bill must be protested upon dishonor by acceptor for honor.. 170 
 Acceptor, Admissions of and promise implied from acceptance.. 62 
 
 Liability of 62 
 
 Admits that drawer exists and has capacity and authority 
 
 to draw the instrument 62 
 
 Admits that payee exists and has capacity and authority to 
 
 indorse the instrument 62 
 
 Cannot afterward deny the things which his acceptance 
 
 admits 62
 
 396 INDEX 
 
 Section 
 Engages to pay the instrument according to the tenor of his 
 
 acceptance 62 
 
 Liable to holder in due course for amount of his acceptance 
 
 even though amount of bill raised 62 
 
 Bank certifying raised check is liable for amount certified, 
 
 when 62 
 
 Presentment for payment not necessary to charge acceptor. . . 70 
 Not released from liability by holder's failure to present in- 
 strument for payment 70 
 
 Is a primary party "^0 
 
 (See also Acceptance, Drawee) — 
 
 Accomodation Indorser (See also "Irregular Indorser") — 
 
 Liability of 29 
 
 Accommodation Instrument — 
 
 Discharged when paid by party accommodated 119 
 
 May not be re-issued when paid by accommodated party 121 
 
 Liability of accommodation party 29 
 
 Accommodation party deemed such even though he is paid for 
 
 use of his name 29 
 
 Accommodation party is liable only to holder for value 29 
 
 And is liable to him notwithstanding at the time of taking the 
 instrument he knew him to be only an accommodation party. 29 
 Action (See Indorser) — 
 
 Meaning of term 191 
 
 Includes counterclaim and setoff 191 
 
 Holder may bring in his own name 51 
 
 Holder may proceed by, against secondary parties immediately 
 
 upon dishonor of instrument 84, 151 
 
 Addition of parties or words — 
 
 Is material alteration, when 124 
 
 Administrator or Executor — 
 
 Signature by 20, 44 
 
 Presentment to 76, 145 
 
 Notice to 98 
 
 Admissions implied from signatures of parties, (See "War- 
 ranty") 60, 61, 62 
 
 Agent — 
 
 Signature by 19 
 
 Authority of, when implied 19 
 
 Ratification of signature by principal 19, 23 
 
 Authority need not be in writing 19 
 
 When principal's failure to repudiate agent's unauthorized 
 
 act may be deemed a ratification . . . , 19 
 
 Liability of persons signing by agent 20 
 
 Not exempted from personal liability, when 20, 69 
 
 Liability of agent when principal's name not disclosed 20, 69 
 
 Effect of signataure "by procuration" 21
 
 INDEX 397 
 
 Section 
 Agent signing "by procuration" must have written authority 
 
 from principal 21 
 
 And must act within the actual limits of his authority or prin- 
 cipal not bound 21 
 
 A signature "by procuration" is notice to everybody that agent 
 
 has only limited authority 21 
 
 Indorsement, by ^^ 
 
 Indorsement by, unauthorized (See Forgery). 
 
 Liability of, when instrument is negotiated by agent without 
 
 authority or "for collection" 36, 37 
 
 Notice of dishonor by (See Notice of Dishonor). 
 
 Alteration of Instrument 124, 125 
 
 Effect of material 124 
 
 Effect of material upon rights of holder in due course 124 
 
 Effect of alteration by stranger, spoliation 125 
 
 What alterations are material 125 
 
 Physical alterations in instrument itself are meant 125 
 
 Fraudulent intent presumed, when 125 
 
 Payment made by mistake on altered instrument may be re- 
 covered 125 
 
 Alternative Drawees, bill may not be drawn upon one or another. 128 
 
 Alternative Payees, Instrument may be so payable 8 
 
 Ambiguous Instrument, how construed 17 
 
 Amount, certainty as to 1. 2 
 
 When there is discrepancy between words and figures, words 
 
 control 17 
 
 Antecedent Debt, constitutes value 25 
 
 What is 25 
 
 Antedated or Post-Dated Instrument, is not, for that reason in- 
 valid 12 
 
 Of what date holder acquires title 12 
 
 Time of maturity not postponed 12 
 
 May be negotiated at any time after its delivery 12 
 
 Assignment, bill is not, of itself, an assignment of drawer's funds. 127 
 Check is not, of itself, an assignment of drawer's funds. . . .127, 189 
 
 Assumed Name, Liability of person signing in 18 
 
 Attorney's Fee — 
 
 Negotiable instrument may contain provision for payment of. 2 
 Such a provision enforceable unless, by other laws, it is made 
 
 illegal 2 
 
 In that event it does not effect negotiable character of instru- 
 ment 2 
 
 B. 
 
 Bank, acceptance by, (See Introduction to Title III) — 
 
 Meaning of 191 
 
 Banking hours, what are 75
 
 398 INDEX 
 
 Section 
 
 Indorsement to or by "for collection" 36 
 
 Warranty by, under indorsement "for collection" 66 
 
 Certifying check is liable for amount certified 62 
 
 Is liable, though check has been raised 62 
 
 Making instrument payable at, is equivalent to an order on 
 
 bank to pay it 87 
 
 Duty of bank to pay such an instrument and liability for fail- 
 ure 87 
 
 Presentment of instrument payable at 75 
 
 When deposit constitutes bank holder for value 52 
 
 Presentment of instrument payable at branch bank 75 
 
 Time when instrument so payable must be presented 75 
 
 Certification of check is equivalent to an acceptance by 187 
 
 Not liable on check unless it accepts or certifies it 189 
 
 Certification of check by, operates as assignment of drawer's 
 
 funds, (See Checks: Collection of Checks) 189 
 
 Bankers' Bills (See Introduction to Title II) — 
 
 Banking hours, what are "75 
 
 Bankrupt or Insolvent presentment to 72 
 
 For acceptance 145 
 
 Notice of dishonor to 101 
 
 Bearer, meaning of • 191 
 
 Instrument is payable to, when 9 
 
 Negotiation of instrument payable to 30 
 
 Effect of special indorsement of instrument, payable to 40 
 
 Instrument originally payable to order becomes payable to 
 
 bearer by blank indorsement, when 34 
 
 Instrument originally payable to, may be transferred by deliv- 
 ery even though specially indorsed 40 
 
 Better Security, bill may be protested for, when 158 
 
 Bill, meaning of 127, 191 
 
 Bill of Exchange, defined, (Historical reference to early use will 
 
 be found in the Introduction to Title I) 126 
 
 "Bill" in act, means bill of exchange 127, 191 
 
 Commonly known as "draft" 1. 126 
 
 Ambiguous instrument may be treated as bill or note 17 
 
 Bill payable to drawer's own order may be treated as a promis- 
 sory note ISO 
 
 Inland bill defined 129 
 
 Foreign bill defined 129 
 
 Is not, of itself, an assignment of drawer's funds 127 
 
 Protest of (See Protest). 
 
 When may be treated as promissory note 17, 130 
 
 General Provisions as to form and interpretation 126-131 
 
 General provisions as to acceptance 132-142 
 
 General provisions as to presentment for acceptance 143-151 
 
 General provisions as to protest 152-160
 
 INDEX 399 
 
 Section 
 
 Bills in a set, what are ^'^^ 
 
 Constitute one bill ^'^^ 
 
 Rights of holders when different parts negotiated 179 
 
 Effect of discharge of one part of set 183 
 
 Payment of one part of set 182, 183 
 
 Liability of acceptor who pays one part without requiring 
 
 surrender of part bearing his acceptance 182 
 
 Acceptance must be written on one part only 181 
 
 Liability of acceptor if more than one part accepted 181 
 
 Liability of holder who indorses two or more parts 180 
 
 Rights of holders where different parts are negotiated 179 
 
 Discharge by material alteration of one part 183 
 
 Bills of Lading (See Quasi-Negotiable Instruments). 
 
 Blanks, what may be filled in and by whom 13, 14 
 
 When true date may be inserted 13 
 
 Instrument is avoided if holder inserts wrong date 13 
 
 Effect of insertion of wrong date if instrument is in hands 
 
 of a holder in due course 13 
 
 Blank paper, signed, may be converted into a negotiable in- 
 strument, when 1^ 
 
 But it must be done strictly in accordance with the authority 
 
 given by party making the signature 14 
 
 And within a reasonable time 14 
 
 Rights of holder in due course in such case if authority not 
 
 properly exercised 1^ 
 
 Omissions may be supplied 6 
 
 (See Alteration; Incomplete Instrument; Omissions) — 
 
 Blank Indorsement (See Indorsement) — 
 
 Bonds, are negotiable 6. 184 
 
 Interest coupons of, are negotiable 6 
 
 Persons negotiating bonds of public or private corporations, by 
 delivery, do not warrant certain things 65 
 
 Broker, liability of, negotiating instrument, (See Agent) 69 
 
 Business Day, what is 194 
 
 Instrument must be presented on, at reasonable hour 72 
 
 Business Hours, what are, at bank 75 
 
 C. 
 
 Cancellation, as discharge of instrument 119 
 
 Must be by holder in his own right 119 
 
 Of signature, effect of 120 
 
 Unintential, is inoperative 123 
 
 By mistake is inoperative 123 
 
 Without authority is inoperative 123 
 
 Capacity — 
 
 To indorse, admissions as to by maker 60 
 
 By drawer ^^
 
 400 INDEX 
 
 Section 
 By acceptor 62 
 
 Warranty as to (See Warranty). 
 
 "Cash" instrument drawn payable to, is payable to bearer 9 
 
 Cashier — 
 
 How instrument payable to may be negotiated 42 
 
 Instrument payable to, is deemed, prima facie, payable to 
 
 bank or corporation of which he is officer 42 
 
 Certainty — 
 
 As to sum, what constitutes 2 
 
 Drawee must be named or described with 1 
 
 Certificate of Deposit, as negotiable instruments 184 
 
 Certification (See Check) — 
 
 Check (A statement of the law of collection of checks, etc., and 
 of the principal duties of banks and collecting agents will be 
 
 found at 280-299 
 
 Is subject to all provisions of this Act applicable to bills of 
 
 exchange payable on demand 185 
 
 Exchange of checks as consideration 25 
 
 Within what time must be presented for payment 186 
 
 Effect of unreasonable delay to present for payment 186 
 
 Upon its dishonor, like proceedings must be had as upon a '^'°" 
 
 bill of exchange 185 
 
 Certification of, is equivalent to acceptance 187 
 
 Effect of certification procured by holder 188 
 
 Bank is not liable upon, until it accepts or certifies 189 
 
 Does not, of itself, operate as assignment of any part of 
 
 drawer's funds 189 
 
 Certification of check does so operate 189 
 
 Liability of bank upon certification or payment of forged or 
 
 raised check 23, 62 
 
 Collateral Securities — ■ 
 
 Negotiable instrument may contain provision for sale of . . . . 5 
 Holder making presentment for payment must be prepared to 
 
 deliver up 74 
 
 Collection — ■ 
 
 Provision in instrument for costs of, does not render sum 
 
 uncertain 2 
 
 Indorsement of instrument for, by restrictive indorsement.. 36 
 Collection of Checks, etc., a statement of the law of collections 
 and duties of banks and collecting agents will be found at.. 280-299 
 
 Complete, holder may, by filling up blanks in instrument 14 
 
 When contract on instrument is deemed not 16 
 
 When instrument is complete and regular 52 
 
 Conditional Acceptance (See Qualified Acceptance) — 
 
 Conditional Indorsement, may be made 39 
 
 But may be disregarded by party required to pay instrument. 39 
 Holder takes instrument, or its proceeds, subject to rights of 
 person making 39
 
 INDEX 401 
 
 Section 
 Confession of Judgment, negotiable instrument may contain provi- 
 sion authorizing 5 
 
 Conflict in terms of instrument or discrepancy between words and 
 
 figures, rule as to 17 
 
 Consideration, generally 24-29 
 
 What is 24, 25 
 
 Presumption as to 24 
 
 What constitutes 25 
 
 Exchange of checks as 25 
 
 When absence or failure of is a defense 28 
 
 Partial failure is a defense "pro tanto" 28 
 
 What consideration sufficient to support instrument 25 
 
 When lien constitutes value 27 
 
 Antecedent debt as value 25 
 
 (See Value). 
 
 Contingency, instrument payable on is not negotiable 4 
 
 Even if contingency does happen 4 
 
 Corporation, included in designation "person" 191 
 
 Officer of, how instrument payable to may be negotiated 22 
 
 Fiscal officer of, as payee, how instrument negotiable by and 
 
 to whom payable 42 
 
 Warranties implied by negotiation not applicable to bonds of. 65 
 Countermand of Payment by drawer dispenses with notice to him 
 
 of dishonor of instrument 137 
 
 Withdrawal of funds as 137 
 
 Current Money or Funds negotiable instrument may designate kind 
 
 in which it is payable 6 
 
 Custom, and usage of business or trade to be regarded in determin- 
 ing what is or is not a reasonable time 193 
 
 And usage of business as affecting interpretation of language 
 
 of instrument , 60 
 
 Custom of Merchants (See Law Merchant) — 
 
 D. 
 
 Date, omission of does not affect negotiability 6 
 
 Omission of may be supplied 13 
 
 Of instrument is prima facie true date 11 
 
 Instrument may be antedated or post-dated 12 
 
 True date may be inserted , 13 
 
 Effect of insertion of wrong date 13 
 
 Of instrument, presumption as to 11 
 
 Of indorsement, presumption as to 45 
 
 If antedated or post-dated, person to whom instrument is de- 
 livered acquires title as of date of delivery 12 
 
 From which interest is calculated if not specified in instru- 
 ment 17 
 
 Alteration of 125
 
 402 INDEX 
 
 Section 
 
 Days of Grace, there are none, (exceptions in certain states) 85 
 
 Death of Party, effect on presentment and notice of 
 
 dishonor 76, 98, 145, 148 
 
 Defect, what is, in title of person negotiating instrument 55 
 
 What constitutes notice of 56 
 
 Defenses, wlien instrument subject to original 58 
 
 In hands of transferee without indorsement 49 
 
 Not available against holder in due course 58 
 
 Or one who derives title through a holder in due course 59 
 
 (See Equities). 
 
 Definitions, of terms used in the Act 191 
 
 Delay in presentment for payment, when excused 81 
 
 When cause of is removed, presentment must be made 81 
 
 In giving notice of dishonor; how excused 113 
 
 In presenting check releases drawer, to what extent 186 
 
 Effect of delay for an unreasonable time to present bill for 
 
 acceptance 144 
 
 For unreasonable time to demand payment of instrument pay- 
 able on demand, effect of .7, 53, 71, 193 
 
 Delivery, meaning of 191 
 
 Necessary to complete every contract upon a negotiable in- 
 strument 16 
 
 When effectual and -when presumed 16 
 
 Every instrument incomplete and revocable without 16 
 
 Effect of negotiation of instrument incomplete for want of 
 
 delivery 15 
 
 Valid delivery conclusively presumed, when and as to whom., 16 
 
 Is presumed, when 16 
 
 When conditional delivery may be shown 16 
 
 Is necessary to complete negotiation of instrument payable to 
 
 order 30 
 
 Instrument payable to bearer is negotiable by 30 
 
 Instrument payable to bearer which has been specially in- 
 dorsed may, nevertheless, be negotiated by 40 
 
 Warranty of person negotiating instrument by 65 
 
 Instrument payable to order may be negotiated by, when 34 
 
 Of bill for acceptance 137 
 
 Effect of its destruction by drawee 137 
 
 Or of his refusal to return it 137 
 
 Holder must call for it and demand its acceptance or return. . 137 
 Acceptance not complete without delivery or notification. .16, 191 
 
 Of instrument upon payment 74 
 
 Of instrument without indorsement, effect of 49 
 
 Demand, when instrument payable on 1, 7 
 
 When instrument payable on, is negotiated an unreasonable 
 
 length of time after issue, effect 53 
 
 Effect on such an instrument of unreasonable delay. . .7, 53, 71, 193
 
 INDEX 403 
 
 Section 
 When presentment and demand for payment of instrument 
 payable on demand must be made 71 
 
 Destruction of Bill, intentional, when considered acceptance.... 137 
 Protest of lost or destroyed bill 160 
 
 lieterminable Future Time, instrument may be payable at 1 
 
 What is 4 
 
 Diligence required in making presentment for acceptance 144 
 
 Required in making demand for payment of instrument pay- 
 able on demand 7, 53, 71, 193 
 
 Discharge of Instrument and Parties 119-125 
 
 By payment, by principal debtor 119 
 
 By payment by party accommodated 119 
 
 By cancellation of instrument by the holder 119 
 
 By any act which will discharge a simple contract for pay- 
 ment of money 119 
 
 When principal debtor becomes owner after maturity 119 
 
 By material alteration 124 
 
 By renunciation by holder 122 
 
 Of party secondarily liable 120 
 
 By discharge of the instrument 120 
 
 By intentional cancellation of his signature 120 
 
 By discharge of a prior party 120 
 
 By tender of payment made by prior party 120 
 
 By release of principal debtor 120 
 
 , By agreement to extend time of payment 120 
 
 Rights of party who discharges instrument 121 
 
 Right to re-negotiate instrument 121 
 
 Unintentional cancellation, or one made by mistake, or without 
 
 authority, does not 123 
 
 Party claiming mistake has burden of proof 123 
 
 Instrument is discharged by material alteration unless made 
 with assent of all parties, except as against those making, 
 
 authorizing or assenting, See "Alteration" 124 
 
 Of one of a set of bills, (See also Drawer, Indorser) 183 
 
 Dishonor of Instrument (See also Notice of Dishonor, Protest) — 
 
 By non-payment 83 
 
 Liability of parties secondarily liable upon 84 
 
 Engagement of drawer upon 61 
 
 Rights of holder upon 84 
 
 Effect of dishonor by non-payment 84 
 
 Protest upon (See Protest). 
 
 Acceptance after dishonor 138 
 
 By non-acceptance 149 
 
 Duty of holder upon 150 
 
 Rights of holder upon 151 
 
 Presentment for payment unnecessary, when 15t 
 
 (See also Protest, Payment for Honor, Acceptance for Honor)
 
 404 INDEX 
 
 Section 
 
 Drawee, meaning of ^ 
 
 Must be named, or described with reasonable certainty 1 
 
 Instrument may be payable to 8 
 
 May be payee ° 
 
 Not liable on bill unless he accepts 127, 189 
 
 128 
 
 But not in alternative 12S 
 
 May be two or more. 
 
 Or in succession. 
 
 128 
 
 Admissions by, upon acceptance 62 
 
 And drawer same person 130 
 
 Bill may then be treated as a promissory note 130 
 
 When is fictitious person or person not having capacity to 
 
 contract, holder may treat bill as. promissory note 130 
 
 What time allowed to accept 136 
 
 Refusal to surrender or destruction of bill by, is considered 
 
 an acceptance 137 
 
 Mere retention of bill by, unaccompanied by refusal to sur- 
 render, is not an acceptance 137 
 
 Acceptance by, how made 132 
 
 Must sign acceptance 132 
 
 Acceptance by one or more, effect of 141 
 
 (See also Acceptance, Acceptor). 
 Drawer — 
 
 Bill may be payable to 8 
 
 What signature of admits 61 
 
 Liability of 61 
 
 May limit his liability to holder 61 
 
 Entitled to notice of dishonor, when 89 
 
 When not entitled to notice of dishonor 114 
 
 When notice of dishonor to is dispensed with 112 
 
 Bill may be treated as promissory note when drawer and 
 
 drawee are same person 130 
 
 Or when drawee is fictitious person, or one not having capac- 
 ity to contract 130 
 
 Existence of and authority of to draw admitted by acceptance. 62 
 
 When presentment for acceptance is necessary to charge 143 
 
 When failure to present for acceptance releases 144 
 
 When failure to negotiate bill within a reasonable time dis- 
 charges 144, and see 7, 53, 71, 193 
 
 When presentment for payment is necessary to charge 70 
 
 When presentment for payment is not necessary to charge. ... 79 
 
 Time when liability of, accrues 84, 151 
 
 When notice of dishonor required to charge 89, 150 
 
 When not 112, 114 
 
 Liability upon dishonor by non-acceptance 151 
 
 When protest necessary to charge 152 
 
 When failure to present check discharges 186
 
 TNDEX 405 
 
 Section 
 
 To what extent 186 
 
 Discharged when holder procures certification of check 188 
 
 Due Course, meaning of 53 
 
 (See Holder in Due Course). 
 
 Due Diligence (See Diligence) — 
 
 Duress, what is 55 
 
 Effect on title when instrument or signature obtained by. . . . 55 
 
 E. 
 
 Election, effect of provision In bill giving holder 5 
 
 Right to treat instrument as either bill or note 17, 130 
 
 Equities, when instrument subject to 58 
 
 What constitutes notice of 56 
 
 Rights of holder when part of consideration paid before no- 
 tice of 54 
 
 (See Defenses). 
 
 Exchange, meaning of 2 
 
 Instrument may contain provision for payment of 2 
 
 Bill may prescribe rate of 2 
 
 Executor or Administrator, signature by 20, 44 
 
 Presentment and notice to 76, 98, 145, 148 
 
 Exhibition of Instrument, instrument must be exhibited when pay- 
 ment is demanded 74 
 
 And upon payment, must be delivered up 74 
 
 Extension of Time, effect of granting, as release of secondary par- 
 ties 120 
 
 (See Discharge of Instrument and Parties). 
 
 F. 
 
 Facts, nature of instrument, and trade usages and customs to be 
 
 regarded in determining reasonable or unreasonable time 193 
 
 Failure of Consideration (See Consideration) — 
 
 Fear, instrument or signature obtained by, effect on title 55 
 
 Fictitious Person, who is 82, 130 
 
 Instrument knowingly made payable to is payable to bearer.. 9 
 
 Assumed or trade name is not name of 18 
 
 When drawee is, bill may be treated as a promissory note... 130 
 
 Presentment dispensed with when drawee is 82 
 
 Notice of dishonor need not be given drawer when drawee is. 114 
 Notice of dishonor need not be given indorser if aware of 
 
 fictitious character of drawee 115 
 
 Figures, words in instrument govern when there is conflict or 
 
 ambiguity 17 
 
 Fiscal Officer, of bank or corporation, how instrument may be 
 
 negotiated or indorsed by 42 
 
 Force, instrument or signature obtained by, effect on title 55 
 
 Foreign Bill, what is 129
 
 406 INDEX 
 
 Section 
 Must be protested 118, 152 
 
 Forgery of Signature, effect of 23 
 
 Warranties as to, by parties who negotiate instrument 65, 66 
 
 Fraud, wliat is 55 
 
 When presumed 55, 125 
 
 Instrument or signature obtained by, effect upon title 55 
 
 Form and Interpretation of Negotiable Instruments 1-23 
 
 G. 
 
 General Indorser, liability of 66, 67, 68 
 
 (See Indorser). 
 Genuineness, of instrument, warranty of, where negotiated by 
 delivery or qualified indorsement 65 
 
 Warranty as to, by general indorser 66 
 
 Of signature of drawer, acceptor admits 62 
 
 (See Warranty). 
 Grace, days of, none allowed 85 
 
 H. 
 
 Holder, meaning of 191 
 
 Rights of, in general 51-59 
 
 Payment to, discharges instrument 51, 119 
 
 Cancellation of instrument by 119 
 
 Unintentional cancellation by, is inoperative ,.... 123 
 
 May sue in his own name 51 
 
 Even though instrument does not belong to him 51 
 
 Effect of release of principal debtor by 120 
 
 May renounce his rights when and effect of 122 
 
 Alteration of instrument by 124 
 
 May fill up and convert signed blank piece of paper into a 
 
 negotiable instrument 14 
 
 May fill up blanks in instrument 14 
 
 May insert true date in instrument or acceptance 13 
 
 Effect of insertion of wrong date by 13 
 
 When incomplete instrument not valid contract in hands of . . 15 
 
 When instrument subject to equities in hands of 58 
 
 Every holder deemed, prima facie, a holder in due course.... 59 
 
 Rights of, upon dishonor by non-payment 84 
 
 Rights of upon dishonor by non-acceptance 151 
 
 Duty of demand payment within reasonable time, of certain 
 
 instruments 53, 71 
 
 Effect of refusal by, to accept payment "supra protest" 176 
 
 Holder for Value, who is 26, 27 
 
 To extent of lien held 27 
 
 (See Value). 
 
 Holder in Due Course, who is 52, 59 
 
 Payee as 59 
 
 When holder not, of instrument payable on demand 53
 
 INDEX 407 
 
 Section 
 
 When for only part of amount of consideration paid 54 
 
 How determined when instrument transferred without indorse- 
 ment ^^ 
 
 When title of transferrer defective 55 
 
 What constitutes notice of defect 56 
 
 Title of, and right to enforce instrument 57 
 
 Rights of one not such a holder but who claims under a 58 
 
 Every holder deemed, prima facie, to be 59 
 
 How proved when it is shown that title of any prior holder 
 
 was defective 59 
 
 Person who became party and was bound prior to defect in 
 
 title cannot take advantage of it against 59 
 
 Warranties of parties in favor of 65, 66 
 
 Rights of, on altered instrument 124 
 
 Rights of, on instrument filled up or negotiated without au- 
 thority 14 
 
 When delivery presumed as to 16 
 
 Holder of Office, how must be described when named as payee.. 8 
 How instrument negotiated or indorsed when payee is cashier 
 
 or fiscal officer of a bank or corporation 42 
 
 Holiday, maturity of instrument falling due on 85 
 
 Wlien day on which act is required to be done is, when must 
 
 be done 194 
 
 Honor, (See Acceptance for Honor, Payment for Honor, Referee 
 
 in Case of Need). 
 
 I. 
 
 "I" — when construed as "we" 17 
 
 Illegal Stipulation, not validated by section affecting additional 
 
 provisions in instrument 5 
 
 Illegality, of consideration, how affects title of person negotiating 
 
 instrument 55 
 
 Effect on title of subsequent holders, if instrument obtained 
 
 through fraud or 58 
 
 Immediate Parties, delivery necessary as to 16 
 
 Impersonator, fraudulent, determination of responsibility for loss 
 
 when instrument issued or paid to 23 
 
 Incomplete Instrument, what blanks may be filled 13, 14 
 
 Not valid contract if not delivered 15 
 
 Acceptance of 138 
 
 (See Blanks; Complete). 
 
 Indorsees, Joint, indorsement by 41, 68 
 
 Indorsement, meaning of 191 
 
 Anomalous 64 
 
 Note payable to maker's own order not complete without 184 
 
 By corporation or infant 22 
 
 Necessary to negotiation of instrument payable to order 30 
 
 Transfer of instrument without, effect of 49 
 
 Transferee has right to require 49
 
 408 INDEX I 
 
 Section 
 Time at which negotiation takes effect when obtained after 
 
 transfer, without 49 
 
 Must be upon instrument, or upon attached piece of paper... 31 
 
 How made 31 
 
 Kinds of 33 
 
 Must be of entire instrument or entire unpaid part 32 
 
 Special indorsement, what is 34 
 
 In blank, what is 34 
 
 In blank, makes instrument payable to bearer 9 
 
 In blank, how changed to special indorsement 36 
 
 Restrictive, what is 36 
 
 Restrictive, effect of 37 
 
 Restrictive, rights of indorsee under 37 
 
 Qualified, what is 38 
 
 Qualified, effect of 38 
 
 Qualified, how made 38 
 
 Conditional, right of party required to pay instrument to dis- 
 regard condition .39 
 
 Effect of special, upon instrument payable to bearer 40 
 
 When instrument payable to two or more separate persons or 
 
 as partners 41 
 
 When instrument drawn or payable to a person as cashier or 
 
 other fiscal officer 42 
 
 Where name is misspelled, etc 43 
 
 Where indorsee or payee is wrongly designated 43 
 
 By person in representative capacity 44 
 
 (See Agent, Broker). 
 
 Presumption as to time of 45 
 
 Presumption as to place of 46 
 
 Striking out, effect of 48 
 
 (See Indorser, Negotiation, Warranty). 
 
 Indorser, when person signing instrument deemed to be 17, 63 
 
 Anomalous or irregular 64 
 
 Discharged, when, by positive act of another party.. 120, 122, 124 
 
 By failure to make presentment for payment 70 
 
 By failure to give notice of dishonor 89 
 
 When holder takes qualified acceptance without his assent... 142 
 
 By failure to negotiate or present bill for acceptance 144 
 
 By failure to make protest 152 
 
 By failure of holder to receive payment for honor 176 
 
 By discharge of one of a set of bills 183 
 
 When holder procures certification of check 188 
 
 Irregular, or accommodation 64 
 
 Liability of irregular or accommodation 64 
 
 Warranty of, when instrument negotiated by qualified in- 
 dorsement 65 
 
 Liability of general 66
 
 INDEX 409 
 
 Section 
 Liability of person who indorses an instrument which is nego- 
 tiable by delivery 67 
 
 Order in which indorsers are held 68 
 
 Liability of joint indorsers 68 
 
 Presentment for payment is necessary to charge 70 
 
 When not necessary 80 
 
 Released if instrument payable on demand is not presented 
 
 within reasonable time 73 
 
 Liability of, upon dishonor of instrument 84, 151 
 
 When notice of dishonor required to charge 89 
 
 When notice of dishonor not required to charge 112, 115 
 
 Waiver of notice by 109 
 
 Payment of instrument by, effect of 121 
 
 When discharged by renunciation by holder 122 
 
 Discharged by alteration of instrument 124 
 
 ■\\Tien discharged if holder takes qualified acceptance 142 
 
 When discharged by failure of holder to negotiate or present 
 
 bill for acceptance 144 
 
 "V\nien discharged by failure to protest bill 152 
 
 Liability of, of parts of bills in a set 180 
 
 Infant, effect of indorsement by 22 
 
 Infirmity, in instrument (See Title). 
 
 Informal Instrument, interpretation of 10 
 
 Inland Bill, what is 129 
 
 Protest not required 118 
 
 Insolvency, how presentment must be made and notice of dis- 
 honor given in case of 101, 145 
 
 Of drawer or acceptor, protesting instrument for better secur- 
 ity 158 
 
 Installments, instrument payable in is negotiable 2 
 
 Holder who takes with notice after default in payment of is 
 
 not holder in due course 2, 52 
 
 Separate demand must be made at maturity of each 71 
 
 Instrument, interpretation of , 10 
 
 Meaning of 191 
 
 Nature of to be regarded in determining reasonable or unrea- 
 sonable time 193 
 
 Interest, date from which it runs, when instrument ambiguous.. 17 
 
 Sum not uncertain when instrument payable with 2 
 
 May be payable in installments 2 
 
 Holder who takes after default in payment of installment 
 
 not holder in due course 2 
 
 Default in payment of may hasten maturity of instrument 2 
 
 When not reserved in instrument, is payable after maturity . . 2 
 
 Alteration of instrument as to 125 
 
 Irregular Indorser, who is and liability of 64 
 
 (See Accommodation Indorser). 
 Issue, meaning of 191
 
 410 INDEX 
 
 J. Section 
 
 Joint and Several Parties, who are 17 
 
 As indorsers 68 
 
 Payees, how must indorse 41 
 
 Joint Debtors, presentment to 78 
 
 Notice of dishonor to 100 
 
 L. 
 
 Language of Instrument, ambiguity in, rules for construction.... 17 
 
 Need not follow Act 10 
 
 Law Merchant, definition and brief history of codification of rules 
 in regard to Negotiable Instruments will be found in Introduc- 
 tion to Title I — 
 
 Rules of, govern in any case not provided for in Act 196 
 
 Laws, in conflict with Act are superceded 191 
 
 Liabilities of Parties 60-69 
 
 Of maker 60 
 
 Of drawer 61 
 
 Of acceptor 62 
 
 Of irregular or accommodation indorser 64 
 
 Indorser may indicate in what other capacity he intends to be 
 
 bound 63 
 
 Warrant by delivery or qualified indorsement 65 
 
 Warranty of general indorser 66 
 
 Of person who indorses paper negotiable by delivery 67 
 
 Order in which indorsers are liable 68 
 
 Of agent or broker 69 
 
 Of person signing in trade or assumed name 18 
 
 (See Signature, Warranty). 
 
 Lien, what is 27 
 
 When lien on instrument constitutes holder for value 27 
 
 Lien of bank on customer's deposits and securities 27 
 
 Local Acceptance, what is, how may be made and effect of 141 
 
 Lost Instruments, presentment, protest and notice when instru- 
 ment lost 74, 160 
 
 M. 
 
 Mail, notice of dishonor may be given by 96 
 
 Within what time notice must be given by 103, 104 
 
 When parties reside in same place 103 
 
 When party giving and parties to receive notice reside in 
 
 different places 104 
 
 When sender deemed to have given due notice by 105 
 
 ElTect of miscarriage of 105 
 
 Deposit in post office, what constitutes 106 
 
 (See Notice). 
 
 Maker, who is 1 
 
 May be payee 8
 
 INDEX 411 
 
 Section 
 
 Joint, deemed joint and several, when 17 
 
 note paj'able to order of, incomplete until indorsed 184 
 
 Admissions and liabilities of 60 
 
 Not discharged by failure to present instrument for payment. . 70 
 
 Not entitled to notice of dishonor 89 
 
 Marginal Figures, effect to be given to, when they conflict with 
 
 words 17 
 
 Material, instrument may be written or printed upon any kind of. 1 
 Material Alteration, (See Alteration). 
 
 Memorandum Check, what it is and effect of 186 
 
 Misspelling, indorsement where name wrongly spelled 43 
 
 Money, instrument must be payable in 1, 6, 132 
 
 Instrument may designate paj'ment in particular kind 6 
 
 Effect of alteration of sum payable 124, 125 
 
 Instrument may contain provision giving holder election to 
 
 require something in lieu of payment in 5 
 
 Municipal Securities, negotiability of 6, 184 
 
 Liability of persons negotiating 65 
 
 Municipal Warrants, payable out of particular fund, not negotiable. 3 
 
 Maturity, time of, how computed 85 
 
 Instrument may be payable "on or before" a fixed or determ- 
 inable future time 4 
 
 Not affected by post-dating or ante-dating instrument 12 
 
 N. 
 
 Name, liability of persons signing in trade or assumed 18 
 
 Indorsement where misspelled 43 
 
 National Banks, provisions of Federal Reserve Act concerning 
 acceptance by, will be found in the Introduction to Title II. 
 
 Negotiability, meaning of, is given in introduction to Title I — 
 
 what provisions in instrument impair or destroy 3, 4, 5 
 
 what provisions do not affect 2, 3, 4, 5, 6 
 
 Effect of omission of words of, from indorsement 34, 36 
 
 Of instrument, negotiable in its origin, continues until paid 
 or restrictively indorsed 47 
 
 Negotiable Instrument, meaning of term 191 
 
 General provisions as to Form and Interpretation 1-23 
 
 General provisions as to Consideration 24-29 
 
 General provisions as to Negotiation 30-50 
 
 General provisions as to Rights of Holder 50-59 
 
 General provisions as to Liabilities of Parties 60-69 
 
 General provisions as to Presentment for Payment 61-88 
 
 General provisions as to Notice of Dishonor, of 89-118 
 
 General provisions as to Discharge of 119-125 
 
 Negotiable Instruments Law, brief history of, in introduction to 
 Title I— 
 Title known by 190
 
 412 INDEX 
 
 Section 
 Does not apply to instruments made and delivered prior to 
 
 the taking effect thereof 195 
 
 Rule for interpretation and application of 191 
 
 Negotiation 30-50 
 
 What constitutes 30 
 
 Transfer without indorsement 49 
 
 When prior party may negotiate instrument 50 
 
 After payment by party secondarily liable 121 
 
 Of different parts of a set of bills, rights of holder 179 
 
 (See Indorsement, Indorser). 
 
 Non-existing Person, (See Fictitious Person). 
 
 Non-Negotiable Instruments, distinguished 3 
 
 Notary Public, protest by 154 
 
 (See Protest). 
 
 Note, meaning of 191 
 
 (See Promissory Note). 
 
 Notice, signature "by procuration"" is of itself notice of limited 
 
 authority of agent so signing 21 
 
 What constitutes notice of defect in instrument or title 56 
 
 Notice of Dishonor 89-118 
 
 To whom must be given , . . 89 
 
 By whom, given 90 
 
 Given by agent 91, 94 
 
 Effect of notice given on behalf of holder 92 
 
 Effect where given by party entitled thereto 93 
 
 Agent may give notice to his principal 94 
 
 Principal has then same time from its receipt himself to 
 
 give notice to other parties 94 
 
 When notice sufficient 95 
 
 Effect of misdescription of instrument 95 
 
 Written notice may be supplemented by verbal communication. 95 
 
 Form of 96 
 
 May be in writing or merely oral 96 
 
 May be delivered personally or by mail 96 
 
 To whom may be given 97 
 
 How given to partners 99 
 
 How given where party dead 98 
 
 How given to persons jointly liable 100 
 
 How given to bankrupt or insolvent 101 
 
 Time within which must be given 102 
 
 Time within which must be given, where parties reside in same 
 
 place 103 
 
 Time within which must be given when parties reside in differ- 
 ent places 104 
 
 When sender deemed to have given due notice 105 
 
 Effect of miscarriage in the mails 105 
 
 What constitutes deposit in post office 106
 
 INDEX 413 
 
 Section 
 Within what time party receiving notice must give notice 
 
 to prior parties 107 
 
 Where must be sent 108 
 
 Where must be sent if address added to signature 108 
 
 Where must be sent if no address given 108 
 
 Where must be sent if party live in one place and has place 
 
 of business at another 108 
 
 Where must be sent if party is sojourning at temporary place 
 
 of residence 108 
 
 Is sufficient wherever sent if actually received by party within 
 
 time specified in Act 108 
 
 May be waived 82, 110 
 
 When waiver implied 82 
 
 Waiver of protest includes Ill 
 
 When dispensed with 112, 114, 115 
 
 When delay in giving excused 113 
 
 When need not be given drawer 114 
 
 When need not be given indorser 115 
 
 When need not be given after instrument has been dishonored 
 
 by non-acceptance 116 
 
 Effect of omission to give notice of non-acceptance 117 
 
 Notice of Equities, what constitutes 56 
 
 Rights of holder when part consideration paid before 54 
 
 Noting for Protest, what is and effect of 155 
 
 (See Protest.) 
 
 O. 
 
 Office, instrument may be payable to holder of, without designa- 
 tion by name 8 
 
 Instrument payable to holder of, is payable to order 8 
 
 How such an instrument negotiable and to whom payment 
 
 may be made 8 
 
 Officer, of bank or corporation, negotiation and indorsement by.. 42 
 Omissions, what and when do not affect validity and negotiable 
 
 character of instrument 6 
 
 Of time at which payable, effect of 7 
 
 Of date, presumption in that case 17 
 
 Right to fill in blanks 14 
 
 (See Blanks). 
 
 Option, to require payment "on or before" 4 
 
 Or election by holder to require something to be done in lieu 
 of payment in money, instrument may contain such a provi- 
 sion 5 
 
 To declare instrument due on failure to pay interest or in- 
 stallment 2, 52 
 
 To treat instrument as bill or note 17, 130 
 
 Order, when instrument payable to 1, 8
 
 414 INDEX 
 
 Section 
 Overdue, when instrument is, upon default in payment of in- 
 stallment 2, 52 
 
 When demand instrument is 7, 52, 53, 71, 144, 193 
 
 Partial Acceptance, what is, how may be made and effect of 141 
 
 (See Acceptance). 
 
 Particular Facts, and nature of instrument to be regarded in de- 
 termining what is reasonable or unreasonable time 193 
 
 Parties, to instrument 1, 60 
 
 Liabilities of 60-69 
 
 (See Liabilities of Parties). 
 
 Alteration of instrument by change in number or relation of. 125 
 
 (See Alteration of Instrument). 
 
 Partners, indorsement of instrument by 41 
 
 Presentment to persons liable as 77, 145 
 
 Notice to 99 
 
 Payee, who may be 8 
 
 As holder in due course 59 
 
 Must be named or described with certainty 8 
 
 When holder of oflBce, negotiation by 8 
 
 Effect of making instrument payable to fictitious or non-ex- 
 isting person 9 
 
 Effect when name of payee does not purport to be name of any 
 
 person 9 
 
 How instrument must be indorsed when two or more are named 
 
 who are not partners , 41 
 
 Existence of, and capacity to indorse admitted by signature of 
 
 maker gO 
 
 Same, by signature of drawer 61 
 
 Same, by signature of acceptor 62 
 
 Presumption when instrument is indorsed by joint payees 68 
 
 Liability of accommodation indorser to 64 
 
 Payment, time of maturity, how computed 86 
 
 In due course, what is 88 
 
 Discharge by 51, 119 
 
 By accommodated party, effect of 119, 121 
 
 Tender of, discharges person secondarily liable 120 
 
 Effect of alteration of medium of 125 
 
 (See Alteration of Instruments). 
 
 Of bill in a set 182, 183 
 
 (See Presentment for Payment). 
 
 Payment for Honor, 171-177 
 
 What is, when, by whom and for whom it may be made 171 
 
 How made 172, 173 
 
 To whom preference must be given when more than one offer. 174 
 Rights of person making 175, 177
 
 INDEX 415 
 
 Section 
 
 Effect on subsequent parties 175 
 
 Effect of refusal to receive 176 
 
 Person, meaning of 191 
 
 Fictitious or non-existing as payee 9 
 
 Fictitious, as drawee, bill may be treated as promissory note. 130 
 Indorsing instrument negotiable by delivery, liability of 67 
 
 Person Primarily Liable, who is 70, 192 
 
 Presentment for payment not necessary to charge 70 
 
 Exception 70 
 
 Person Secondarily Liable, who is 192 
 
 Liability of, when instrument dishonored 84 
 
 Discharge of 120 
 
 Recourse against 84, 151 
 
 (See Notice of Dishonor). 
 
 Personal Representative, who is, of deceased person, presentment 
 
 for payment to 76 
 
 Notice of dishonor to 98 
 
 Presentment for acceptance to 144 
 
 Place, omission to specify where drawn or payable, does not affect 
 
 validity or negotiability 6 
 
 Presumption in that case 6 
 
 Of indorsement, presumption as to 46 
 
 Of presentment for payment 72, 73 
 
 Of presentment for acceptance 143, 145, 147 
 
 Alteration which changes, is material 125 
 
 Demand, when instrument payable at special 70 
 
 Effect of acceptance to pay at a particular 140, 141 
 
 Post-Dated or Antedated Instrument, is not invalid 12 
 
 Of what date holder acquires title 12 
 
 Time of maturity not postponed 12 
 
 May be negotiated at any time after delivery 12 
 
 Not notice of irregularity or fraud 12, 56 
 
 Post Office, what constitutes deposit in 106 
 
 Effect of miscarriage of mails 105 
 
 Pre-Existing, or antecedent debt, what is 25 
 
 Constitutes value 25 
 
 Presentation, instrument payable on, is payable on demand 7 
 
 Presentment for Acceptance, provisions respecting 143-151 
 
 When must be made 143 
 
 When failure to present releases drawer and indorsers 144 
 
 When failure to negotiate bill or present it releases drawer 
 
 and indorsers 144 
 
 How made 145 
 
 On what days may be made 146 
 
 When time is insufficient 147 
 
 When excused 148
 
 416 INDEX 
 
 Section 
 
 Presentment for Payment, provisions respecting 70-88 
 
 Effect of failure to make demand on principal debtor 70 
 
 Whien must be made if instrument is payable on demand and 
 
 wlien not payable on demand 71 
 
 When must be made of bill of exchange payable on demand. 71 
 
 What is reasonable time within which to make 71 
 
 No distinction between demand instruments payable with or 
 
 without interest 71 
 
 When instrument payable in installments 71 
 
 What constitutes sufficient 72 
 
 By whom where, at what time, and to whom must be made.. 72 
 
 What is proper place for 73 
 
 Instrimient must be exhibited 74 
 
 Of instrument payable at a bank 75 
 
 Where principal debtor is dead 76 
 
 To persons liable as partners 77 
 
 To joint debtors 78 
 
 When not required to charge drawer 79 
 
 When not required to charge indorsers 80 
 
 When delay in making is excused 81 
 
 Must be made promptly when cause of delay is removed 81 
 
 When dispensed with 82 
 
 When to be made if instrument matures on Saturday, Sunday 
 
 or a holiday 85 
 
 Time of, how computed , 86 
 
 How made to acceptor for honor 168 
 
 When delay in presenting to acceptor for honor excused 169 
 
 Of certificate of deposit 184 
 
 Of check, within what time must be made 186 
 
 Of check, effect of failure to make 186 
 
 To what extent drawer is released by failure to make 186 
 
 Presumption, of consideration, (See Consideration) — 
 
 As to date H 
 
 As to right to fill up blanks 14 
 
 As to delivery 16 
 
 As to time when indorsement was made 45 
 
 As to negotiation 45 
 
 As to place of indorsement 46 
 
 As to holder in due course 59 
 
 As to order in which indorsers are liable 68 
 
 As to arrival of notice of dishonor duly addressed and depos- 
 ited in post office 105 
 
 Primary Party, (See Persons Primarily Liable). 
 
 Principal, signature of may be made by authorized agent 18, 19 
 
 Authority of agent, how shown 19 
 
 (See Agent). 
 
 Liability of persons signing by agent 20
 
 INDEX 417 
 
 Section 
 
 Signature by "procuration," effect of ^ 21 
 
 (See Agent). 
 Procuration, signature by, and effect of 21 
 
 (See Agent). 
 Promissory Note, defined 184, 191 
 
 Payable to makers own order not complete until indorsed by 
 him 184 
 
 When bill of exchange may be treated as 17, 130 
 
 Protest 152-160 
 
 When need not be made 118 
 
 In what cases must be made 118, 152 
 
 How made 
 
 153 
 
 What must specify 153 
 
 By whom made 154 
 
 If made by person other than a notary must be attested by 
 
 witnesses 154 
 
 When to be made 155 
 
 Where to be made 156 
 
 May be made both for non-acceptance and non-payment 157 
 
 When may be made for better security 158 
 
 When delay in making excused 159 
 
 How made where instrument is lost, destroyed or wrongly 
 
 detained 160 
 
 Waiver of, what includes HI 
 
 Of bill accepted for honor 167 
 
 Upon dishonor by acceptor for honor 170 
 
 Provisions of Instrument, ambiguity or conflict in, what rules of 
 construction govern 17 
 
 Q. 
 
 Qualified Acceptance, what is, how may be made and effect of 141 
 
 (See Acceptance). 
 Qualified Indorsement, what is, how made and effect of 38 
 
 Warranty of person negotiating instrument by 65 
 
 Quasi-Negotiable Instruments; Bills of Lading; Warehouse Re- 
 ceipts; Certificates of Stock) — 
 
 (The References Here Are to Pages) 
 Bills of Lading — 
 
 Negotiable Bill of Lading— Page 
 
 Definition and form of 305 
 
 What must contain 306 
 
 May not be issued in sets, excepting to Alaska. 307 
 
 Negotiation by indorsement or delivery 308 
 
 When negotiable 308 
 
 Duplicate bills must be plainly stamped "Duplicate".. 316 
 
 Liability of carrier for failure to so mark them 316 
 
 When carrier bound to deliver goods 309
 
 418 INDEX 
 
 Page 
 Carrier not required to deliver unless bill Is sur- 
 rendered 309 
 
 Liability of carrier for wrongful delivery 309 
 
 Duty of carrier to take up and cancel bill 310 
 
 Duty of carrier when only partial delivery 310 
 
 Delivery, how obtained when bill lost 310 
 
 Duty of carrier when rival claimants to goods 311 
 
 Liability of carrier when negotiable bill issued with- 
 out receipt of goods or for failure of goods to coi-- 
 
 respond to description in bill 311 
 
 Exception when "shipper's load and count" 312 
 
 Transfer of Bill- 
 Title acquired by transfer 312 
 
 Right to require indorsement 313 
 
 Warranty of indorser implied by indorsement 313 
 
 Indorser not. liable for obligations of previous in- 
 dorser 314 
 
 Rights of holder without notice of fraud, etc 314 
 
 What bill indicates as to ownership of goods 315 
 
 Draft with Bill of Lading Attached — 
 
 "When bill must be surrendered 315 
 
 Non-negotiable or "straight bill" must be so marked 317 
 
 Warehouse Receipts — 
 
 Definition of warehouse receipt 318, 319 
 
 Negotiable and non-negotiable receipts 320, 321 
 
 Duplicate receipts must be so marked 321 
 
 Duty of warehouseman to deliver goods 321 
 
 Lien of warehouseman 322 
 
 Loss of lien 322 
 
 Enforcement of lien 323 
 
 Demand and notice of intention to satisfy lien 323 
 
 Auction sale of goods to satisfy lien 324 
 
 Disposal of proceeds of sale 325 
 
 Sale of perishable goods 325 
 
 Obligation to deliver ceases upon sale of goods 325 
 
 Proper and improper delivery of goods 326 
 
 Liability of warehouseman for failure to cancel receipt... 326 
 
 Lost receipt 327 
 
 Warehouseman cannot claim title to goods in himself.... 327 
 
 Right to interplead adverse claimants 328 
 
 Liability of warehouseman for non-existence of goods or 
 
 failure to correspond to description 328 
 
 Duty to keep goods of each depositor separate 329 
 
 Except fungible goods, as grain, iron, etc 329 
 
 Alteration of receipt, effect of 329 
 
 Negotiation of receipt 330 
 
 By whom negotiable 331
 
 INDEX 419 
 
 Page 
 
 Rights of holder ^^^ 
 
 Right to require indorsement 332 
 
 Warranty of transferer 332 
 
 Liability of indorser, pledgee or mortgagee 333 
 
 Negotiation in breach of duty or by mistake 333 
 
 By what laws interpretation of warehouse receipts are 
 
 004 
 governed 
 
 Penalties for fraud 334 
 
 Certificates of Stock- 
 Transfer — 
 
 . Methods of effecting transfer 338 
 
 Unregistered transfer conveys legal title 338 
 
 Liability of registered owner after sale of shares 339 
 
 Transfer of certificate by anyone having possession.. 341 
 
 Effect of indorsement of certificate 341 
 
 Right of owner to reclaim certificate fraudulently pro- 
 cured • ^^^ 
 
 Title obtained by transferee of certificate so procured. 342 
 
 Transfer by agent of owner 342 
 
 Right of purchaser to compel indorsement 343 
 
 Warranties implied from transfer 344 
 
 Attachment of certificate; levy of execution, when 
 
 valid 344 
 
 Lien of corporation on shares 345 
 
 Lost certificate 346 
 
 Transfer by infant or other person under disability 
 
 or wanting in capacity 346 
 
 Transfer by executor, administrator or guardian 347 
 
 Alteration of certificate ; 347 
 
 Pledge of Stock; nature of 347 
 
 Right of pledgee to obtain transfer 348 
 
 Right of pledgee to collect dividends 348 
 
 Duty to retain pledge 349 
 
 Right of pledgee to vote shares 349 
 
 Right to assign pledge 350 
 
 Pledge by executor, etc. 
 
 350 
 
 Remedies of pledgee when debt unpaid 350 
 
 Sale of pledge 351 
 
 Pledgor entitled to notice of sale 351 
 
 Pledgee may not buy at own sale 351 
 
 Risk in purchasing stock; purchase from co-partners 352 
 
 Purchase from officer or director of corporation 352 
 
 Purchase at sheriff, assignee or bankrupt sale 353 
 
 Purchase from pledgee or taking re-pledge 353 
 
 Purchase from executor, administrator, or guar- 
 dian 354, 355 
 
 Purchase from trustee 355
 
 420 INDEX 
 
 Page 
 
 Purchase of lost or stolen certificates 356 
 
 Refusal of corporation; to transfer shares; right to refuse 
 
 transfer 357 
 
 Refusal of transfers to or from infants or other per- 
 sons under disability 358 
 
 Refusal of transfers by executors, etc 358 
 
 Refusals of transfers by trustees 359 
 
 May refuse transfer unless certificate surrendered.... 360 
 
 Transfer by order of court 361 
 
 Transfer on forged signature 361 
 
 R. 
 (The References are again to Section Numbers) Section 
 
 Ratification of Unauthorized Signature 19, 23 
 
 Reasonable Diligence, what is ''6 
 
 (See Diligence). 
 
 Reasonable Time, what constitutes and how determined. .. .53, 71, 193 
 
 As affected by usage of trade 193 
 
 No fixed rule given "71 
 
 For presentment of demand note 71 
 
 Effect of failure to make presentment within 144 
 
 For presentment of bill of exchange 71 
 
 For presentment of check 186 
 
 Effect of delay to present or negotiate instrument payable 
 upon demand beyond 53 
 
 Recourse, indorsement "without recourse" 38 
 
 Warranty of person negotiating instrument by qualified in- 
 dorsement 65 
 
 Holder's right of, upon dishonor of instrument 84, 151 
 
 Referee in Case of Need, defined, and purpose of reference 131 
 
 Bill obtaining reference must be protested before presenting to. 167 
 Holder may disregard reference 131 
 
 Refusal, to return bill, effect of 137 
 
 Re-issue and Re-negotiation of Instrument, when party may 50 
 
 Instrument is not enforceable against certain parties, upon 
 
 re-issue 50 
 
 By secondary party who pays instrument 121 
 
 Release of Parties, (See Discharge). 
 
 Renunciation, of rights by holder, how made and effect of 122 
 
 When does not affect rights of holder in due course 122 
 
 Must be in writing or instrument must be delivered to person 
 
 primarily liable thereon 122 
 
 Effect of, upon parties secondarily liable upon instru- 
 ment 119, 120, 122 
 
 Restrictive Indorsement, what is, how made and effect of 36 
 
 Rights acquired by indorsee under 37 
 
 Destroys negotiable character of instrument, when 37, 47
 
 INDEX 421 
 
 S. Section 
 
 Saturday, Sunday or Holiday, when instrument falling due on must 
 
 be presented for payment 85 
 
 Presentment for acceptance on 146 
 
 How time computed when last day for doing any act falls on.. 194 
 
 Seal, negotiable instrument may bear 6 
 
 Secondary Parties, who are 192 
 
 (See Person Secondarily Liable). 
 Securities, warranty as to public or corporation, negotiation of, 
 
 other than bills and notes 65 
 
 Bonds and interest coupons are negotiable 6, 184 
 
 Separate Paper, acceptance upon, is valid 134 
 
 Indorsement written upon must be attached to instrument.... 31 
 
 Sight, instrument is payable on demand if payable at 7 
 
 Instrument is payable at, if issued, accepted or indorsed when 
 
 overdue, as to whom 7 
 
 Bill payable after sight must be presented for acceptance to 
 
 fix maturity 143 
 
 Instrument payable elsewhere than residence or usual place 
 of business of drawee, must be presented for acceptance be- 
 fore being presented for payment 143 
 
 Signature, no person liable upon instrument unless it bears his. ... 18 
 
 By trade or assumed name, liability of person so signing 18 
 
 By agent 18 
 
 Authority of agent, how shown 18 
 
 Liability of persons signing by agent 19 
 
 How interpreted when effect uncertain 17 
 
 By "procuration," effect of 21 
 
 Of person as agent, or in representative capacity 20 
 
 (See Agent, Procuration). 
 
 Of infant or corporation . -. 22 
 
 Forged, effect of 23 
 
 Made without authority, effect of 23 
 
 (For Warranties and admissions implied by Signature, see 
 under Warranty). 
 
 Spoliation, of instrument, effect of alteration by stranger 125 
 
 Striking Out, indorsement, effect of 48, 121 
 
 Sum, certainty as to, what constitutes 2 
 
 Sunday, Saturday or Holiday, instrument made on 52 
 
 W^hen instrument falling due on must be presented for pay- 
 ment 85 
 
 Presentment for acceptance on 146 
 
 How time computed when last day for doing any act falls on. . 194 
 
 T. 
 
 Tender, what is valid 120 
 
 As discharge of party secondarily liable 120 
 
 When ability and willingness to pay at a special place operates 
 as 70
 
 422 INDEX 
 
 Section 
 Of payment for honor, effect of refusal to receive 176 
 
 Terms of Instrument, and language used, need not follow act 10 
 
 Informal instruments are negotiable, when 10 
 
 Time, of indorsement, presumption as to 45 
 
 Of negotiation, presumption as to 45 
 
 Of maturitj% provisions as to 85 
 
 How computed 86 
 
 When Act takes effect and instruments to which it is applic- 
 able 195 
 
 Title, when passes if instrument requiring indorsement is trans- 
 
 fered without indorsement 49 
 
 When defective 55 
 
 What constitutes notice of defect in 54, 56 
 
 (See Equities, Notice). 
 
 Notice of defect before full amount paid ■ . 54 
 
 Rights of holder in due course when title defective 57 
 
 Of person who acquires through holder in due course 58 
 
 Burden of proof when title of any person is shown to be defec- 
 tive 59 
 
 Exception 59 
 
 Acquired by subsequent indorsees after restrictive indorsement. 37 
 Of Act 190 
 
 Trade Name, liability of person signing by 18 
 
 Transfer, without indorsement, effect of 49 
 
 By broker, without indorsement, liability of broker 65, 69 
 
 (See Delivery, Indorser). 
 
 Trust, effect of restrictive indorsement creating ; 36 
 
 Trustee, instrument payable to not commercial paper 8 
 
 Notice of trust capacity carried by instrument payable to 
 officer of corporation 42 
 
 U. 
 
 Unconditional, when promise or order is 3 
 
 Undisclosed Principal, liability of agent who signs without disclos- 
 ing name of 20 
 
 (See Agent). 
 
 Uniform Negotiable Instruments Law, brief history of, will be 
 found in Introduction to Title I. 
 
 Usage of Business, or trade, to be regarded in determining what 
 is or is not reasonable time 193 
 
 V. 
 
 Validity of Instrument, provisions which do not affect 6 
 
 Value, meaning of 191 
 
 Instrument need not contain words "value" or "value re- 
 ceived" '• 6 
 
 What constitutes 25
 
 INDEX 423 
 
 Section 
 
 Antecedent or pre-existing debt as 25 
 
 Holder for, what constitutes 26 
 
 Holder who has a lien upon instrument deemed holder for. ... 27 
 
 Accommodation party liable although he receives no 29 
 
 (See Consideration). 
 
 W. 
 
 Waiver, of benefit of any law for protection of obligor does not 
 
 impair validity or negotiability of instrument 5 
 
 Presentment for payment dispensed with by 82 
 
 How expressed 82 
 
 Of notice of dishonor 109 
 
 Time of 109 
 
 Contained in instrument, binds all parties 110 
 
 Written above signature of indorser, binds him only 82, 110 
 
 Of protest deemed to be waiver of presentment and notice of 
 
 dishonor also Ill 
 
 Warehouse Receipts, (See Quasi-Negotiable Instruments). 
 Warrant, Municipal, payable out of particular fund not negotiable 
 
 instrument 3 
 
 Warranty, where instrument negotiated by delivery or qualified 
 
 indorsement 65 
 
 Upon sale of securities of public or private corporation 65 
 
 Of general indorser 66 
 
 And liability of person indorsing an instrument which is ne- 
 gotiable by delivery 67 
 
 Engaged in by broker or agent who negotiates without indorse- 
 ment 69 
 
 "Without Recourse," effect of such indorsement and how made 38 
 
 Writing, what includes 191 
 
 Renunciation must be in, unless instrument surrendered 122 
 
 Acceptance must be in 132 
 
 Written Parts, of instrument prevail over printed parts if there is 
 
 conflict 17
 
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